PRAIRIE FUNDS
PRAIRIE INTERMEDIATE BOND FUND
PRAIRIE MUNICIPAL BOND FUND, INC.
Three First National Plaza
Chicago, Illinois 60670
Dear Prairie Shareholder:
The Boards of Trustees of the Prairie Funds, Prairie Intermediate Bond Fund
and Prairie Municipal Bond Fund, Inc. have called a Special Meeting of
Shareholders on July 10, 1996 concerning matters that are important to you.
As you may be aware, First Chicago Corporation recently completed a merger
with NBD Bancorp, Inc. ("NBD") on December 1, 1995. As a result, the new
organization has since taken steps to consolidate the mutual fund investment
advisory activities of both bank holding companies. First Chicago Investment
Management Company currently provides investment advisory services to the
Prairie Funds, Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund,
Inc. NBD Bank currently provides investment advisory services to The Woodward
Funds.
As the next step in the consolidation process, you are asked to consider and
approve a proposed Agreement and Plan of Reorganization (the "Reorganization
Agreement"). The Reorganization Agreement provides that initially each of the
following seven investment portfolios of Prairie will transfer substantially all
its assets and liabilities to the existing Woodward investment portfolio
identified below opposite its name:
Prairie Woodward
- ---------------------------------- ---------------------------------
Money Market Fund Money Market Fund
U.S. Government Money Market Fund Treasury Money Market Fund
Municipal Money Market Fund Tax-Exempt Money Market Fund
Growth Fund Capital Growth Fund
Bond Fund Bond Fund
Municipal Bond Fund Municipal Bond Fund
Managed Assets Fund Balanced Fund
<PAGE>
The Reorganization Agreement also provides that subsequently each of the
following six investment portfolios of Prairie will transfer all its assets and
liabilities to the newly organized Woodward investment portfolio identified
below opposite its name:
Prairie Woodward
- ---------------------------------- ---------------------------------
Equity Income Fund Equity Income Fund
International Bond Fund International Bond Fund
Special Opportunities Fund Small-Cap Opportunities Fund
Intermediate Municipal Bond Fund Intermediate Municipal Bond Fund
Intermediate Bond Fund Income Fund
Managed Assets Income Fund Managed Assets Conservative Fund
The transactions are expected to be completed on or after August 30, 1996.
After the Prairie Funds reorganize into the Woodward Funds, the combined
investment company will be renamed Pegasus Funds.
WHAT DO THESE CHANGES MEAN TO YOU?
. Although the number of shares you hold may change, the value of the shares
you hold at the time of the Reorganization will not change as a result of
the transaction, and will be the same immediately after the
Reorganization.
. The Reorganization will be tax-free and will not involve any sales loads,
commissions or transaction charges.
. Following the Reorganization, the investment objectives and policies of
the new portfolios under the Woodward registered investment company will
be substantially similar to the current investment objectives and policies
of your Prairie Funds, Prairie Intermediate Bond Fund and Prairie
Municipal Bond Fund, Inc., except as stated in the enclosures.
. Shareholders will benefit from improved shareholder servicing and the
elimination of redundant administration of the funds.
AS A RESULT, THE BOARDS OF TRUSTEES AND DIRECTORS OF THE PRAIRIE FUNDS,
PRAIRIE INTERMEDIATE BOND FUND AND PRAIRIE MUNICIPAL BOND FUND, INC. HAVE VOTED
IN FAVOR OF THE PROPOSED REORGANIZATION AGREEMENT AND STRONGLY ENCOURAGE THAT
YOU VOTE "FOR" THE PROPOSAL AS WELL.
The Reorganization Agreement and other related matters are discussed in
detail in the enclosed materials, which you should read carefully.
VOTING INSTRUCTIONS
Enclosed is a proxy card(s) for the meeting. We urge you to read the
enclosed proxy statement and to vote by completing, signing and returning the
enclosed proxy card(s) in the prepaid envelope. If you
2
<PAGE>
are a stockholder of more than one Fund, you will receive a proxy card for each
of your Funds. Please vote and return EACH proxy card you receive. EVERY VOTE
COUNTS.
First Chicago NBD Corporation is pleased with the opportunities the
Reorganization will provide to better serve our mutual fund investors. If you
have any questions, your account manager will be happy to assist you. Otherwise,
you may call Shareholder Communications Corporation which has been retained to
assist in the solicitation of proxies at (800) 733-8481 ext. 458. Thank you for
your cooperation.
Sincerely,
Mark A. Dillon
President
3
<PAGE>
PRAIRIE FUNDS
PRAIRIE INTERMEDIATE BOND FUND
PRAIRIE MUNICIPAL BOND FUND, INC.
THREE FIRST NATIONAL PLAZA
CHICAGO, IL 60670
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 10, 1996
To Prairie Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders
("Shareholders") of each Portfolio of Prairie Funds, Prairie Intermediate Bond
Fund and Prairie Municipal Bond Fund, Inc. (collectively, "Prairie") will be
held at the offices of BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus,
Ohio, on July 10, 1996 at 9:00 a.m. (Eastern time) for the following purposes:
ITEM 1. With respect to each investment portfolio (a "Prairie Portfolio") of
Prairie:
To consider and act upon a proposal to approve an Agreement and Plan of
Reorganization (the "Reorganization Agreement") and the transactions
contemplated thereby, including (a) the transfer of substantially all of the
assets and liabilities of the Money Market Fund, U.S. Government Money
Market Fund, Municipal Money Market Fund, Growth Fund, International Bond
Fund, Equity Income Fund, Special Opportunities Fund, Bond Fund,
Intermediate Municipal Bond Fund, Municipal Bond Fund, Intermediate Bond
Fund, Managed Assets Fund and Managed Assets Income Fund to corresponding
investment portfolios of The Woodward Funds (the "Woodward Funds") in
exchange for Class A, Class B or Class I shares, as applicable, of the
Woodward Funds; (b) the distribution of such Woodward Fund shares to the
shareholders of the Prairie Portfolios according to their respective
interests; and (c) the termination under state law and the Investment
Company Act of 1940, as amended, of Prairie.
ITEM 2. With respect to each Prairie Portfolio:
To transact such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
The proposed reorganization and related matters are described in the
attached Combined Prospectus/Proxy Statement. Appendix I to the Combined
Prospectus/Proxy Statement is a copy of the Reorganization Agreement.
Shareholders of record as of the close of business on April 11, 1996 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
<PAGE>
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE EACH ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY PRAIRIE'S
BOARDS OF TRUSTEES AND DIRECTORS, AS APPLICABLE. THIS IS IMPORTANT TO ENSURE A
QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY
ARE EXERCISED BY SUBMITTING TO PRAIRIE A WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN
PERSON.
......................................
George O. Martinez
Secretary
June 11, 1996
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
Dated June 11, 1996
THE WOODWARD FUNDS
900 Tower Drive
P. O. Box 7058
Troy, Michigan 48007-7058
(800) 688-3350
To acquire the assets of the:
PRAIRIE FUNDS
PRAIRIE INTERMEDIATE BOND FUND
PRAIRIE MUNICIPAL BOND FUND, INC.
Three First National Plaza
Chicago, Illinois 60670
(800) 733-8481 ext. 458
(for calls concerning the proxy statement)
This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by the Boards of Trustees and Directors of Prairie
Funds, Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc.
(collectively, "Prairie") in connection with a Special Meeting (the "Meeting")
of Shareholders ("Shareholders") to be held on July 10, 1996 at 9:00 a.m.
(Eastern time) at the offices of BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio at which Shareholders will be asked to consider and approve a
proposed Agreement and Plan of Reorganization dated May 21, 1996 (the
"Reorganization Agreement"), by and between Prairie and The Woodward Funds
("Woodward") and the matters contemplated therein. A copy of the Reorganization
Agreement is attached as Appendix I.
Prairie and Woodward are each open-end, management investment companies.
First Chicago Investment Management Company ("FCIMCO") currently provides
investment advisory services to Prairie. NBD Bank ("NBD") currently provides
investment advisory services to Woodward. In reviewing the proposed
reorganization (the "Reorganization"), the Prairie Boards considered, among
other things, the recently completed merger of First Chicago Corporation, the
parent company of FCIMCO, and NBD Bancorp, Inc., the parent company of NBD; the
effect of such merger on Prairie; the fact that FCIMCO and NBD would serve as
co-advisers to Woodward after the Reorganization; the recommendations of FCIMCO
and NBD with respect to the proposed consolidation of Prairie and Woodward; the
fact that the Reorganization would constitute a tax-free reorganization; and the
fact that the interests of Shareholders would not be diluted as a result of the
Reorganization.
The Reorganization Agreement provides that initially each of the following
seven investment portfolios of Prairie (collectively, the "Reorganizing
Portfolios") will transfer substantially all its assets
<PAGE>
and liabilities to the existing Woodward investment portfolio (collectively, the
"Existing Woodward Funds") identified below opposite its name:
Reorganizing Portfolios Existing Woodward Funds
- ---------------------------------- ---------------------------------
Money Market Fund Money Market Fund*
U.S. Government Money Market Fund Treasury Money Market Fund*
Municipal Money Market Fund Tax-Exempt Money Market Fund*
Growth Fund* Capital Growth Fund
Bond Fund Bond Fund*
Municipal Bond Fund* Municipal Bond Fund
Managed Assets Fund Balanced Fund*
The Reorganization Agreement also provides that subsequently each of the
following six investment portfolios of Prairie (collectively, the "Continuing
Portfolios") will transfer all its assets and liabilities to the newly organized
Woodward investment portfolio (collectively, the "New Woodward Funds")
identified below opposite its name:
Continuing Portfolios New Woodward Funds
- ---------------------------------- ---------------------------------
Equity Income Fund* Equity Income Fund
International Bond Fund* International Bond Fund
Special Opportunities Fund* Small-Cap Opportunity Fund
Intermediate Municipal Bond Fund* Intermediate Municipal Bond Fund
Intermediate Bond Fund* Income Fund
Managed Assets Income Fund* Managed Assets Conservative Fund
In exchange for the transfers of these assets and liabilities, Woodward will
issue shares in the thirteen Woodward investment portfolios listed above
(collectively, the "Woodward Funds") to the corresponding Prairie investment
portfolios listed above (collectively, the "Prairie Portfolios"). The
transaction between the Reorganizing Portfolios and the Existing Woodward Funds
is referred to herein as the "Reorganizing Portfolios Transaction" and the
subsequent transaction between the Continuing Portfolios and the New Woodward
Funds is referred to herein as the "Continuing Portfolios Transaction." The
transactions are expected to occur on or after August 9, 1996 and August 30,
1996, respectively.
Most of the Prairie Portfolios have three classes of shares outstanding.
After the Reorganization, Woodward will offer comparable classes of shares.
Holders of each class of shares of a Prairie Portfolio will receive the class of
shares of the corresponding Woodward Fund as set forth in the table on pages
30-31 under "Information Relating to the Proposed Reorganization--Description of
the Reorganization Agreement."
- ------------
* Denotes the surviving or continuing portfolio for the purposes of maintaining
the financial statements and performance history in the post-reorganization
portfolios.
2
<PAGE>
The Prairie Portfolios will make liquidating distributions of the Woodward
Funds' shares to the Shareholders of the Prairie Portfolios, so that a holder of
a class of shares in a Prairie Portfolio will receive a class of shares (as
described herein) of the corresponding Woodward Fund with the same aggregate net
asset value as the Shareholder had in the Prairie Portfolio immediately before
the transaction. Following the Reorganization, Shareholders of the Prairie
Portfolios will be Shareholders of their corresponding Woodward Funds, and
Prairie will be terminated under state law and the Investment Company Act of
1940, as amended (the "1940 Act").
The Existing Woodward Funds currently are conducting investment operations
as described in this Combined Prospectus/Proxy Statement. The New Woodward Funds
have recently been organized for the purpose of continuing the investment
operations of the Prairie Equity Income Fund, International Bond Fund, Special
Opportunities Fund, Intermediate Municipal Bond Fund, Intermediate Bond Fund and
Managed Assets Income Fund, and have no substantial assets or prior history of
investment operations.
This Combined Prospectus/Proxy Statement sets forth the information that a
Shareholder of Prairie should know before voting on the Reorganization Agreement
(and related transactions), and should be retained for future reference. The
Prospectuses relating to the shares of the Existing Woodward Funds, which
describe those Funds' operations, accompany this Combined Prospectus/Proxy
Statement. Additional information is set forth in the Statements of Additional
Information relating to those Woodward Funds and this Combined Prospectus/Proxy
Statement, which are dated April 15, 1996 and June 11, 1996, respectively, and
in the Prospectus and Statement of Additional Information, each dated April 11,
1996 relating to Prairie. Each of these documents is on file with the Securities
and Exchange Commission (the "SEC"), and is available without charge upon oral
or written request by writing or calling either Prairie or Woodward at the
respective addresses or telephone numbers indicated above. The information
contained in the Prospectus and Statement of Additional Information, dated April
11, 1996 relating to Prairie is incorporated herein by reference.
This Combined Prospectus/Proxy Statement constitutes the Proxy Statement of
Prairie for the meeting of its Shareholders, and Woodward's Prospectus for the
shares of its Existing Woodward Funds that have been registered with the SEC and
are to be issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement is expected to first be sent to
Shareholders on or about June 11, 1996.
THE SECURITIES OF THE WOODWARD FUNDS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN
3
<PAGE>
BY REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PRAIRIE OR WOODWARD.
SHARES OF THE WOODWARD FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, NBD BANK, FIRST NATIONAL BANK OF CHICAGO OR ANY OF
THEIR AFFILIATES. SHARES OF THE WOODWARD FUNDS ARE NOT FEDERALLY INSURED BY,
GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENT RETURN AND PRINCIPAL VALUE WILL VARY AS A RESULT
OF MARKET CONDITIONS OR OTHER FACTORS SO THAT SHARES OF THE WOODWARD FUNDS, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AN INVESTMENT IN
THE WOODWARD FUNDS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
THERE CAN BE NO ASSURANCE THAT THE WOODWARD MONEY MARKET FUND, TREASURY
MONEY MARKET FUND OR TAX-EXEMPT MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
4
<PAGE>
TABLE OF CONTENTS
<TABLE><CAPTION>
PAGE
------
<S> <C>
Summary.............................................................................. 1
Proposed Reorganization............................................................ 1
Reasons for the Reorganization..................................................... 1
Federal Income Tax Consequences.................................................... 1
Overview of the Prairie Portfolios and Woodward Funds.............................. 1
Voting Information................................................................. 28
Risk Factors....................................................................... 28
Information Relating to the Proposed Reorganization.................................. 30
Description of the Reorganization Agreement........................................ 30
Capitalization..................................................................... 34
Federal Income Tax Consequences.................................................... 38
Comparison of Investment Policies and Risk Factors................................... 39
Prairie Money Market Fund and Woodward Money Market Fund........................... 39
Prairie U.S. Government Money Market Fund and Woodward Treasury Money Market
Fund............................................................................... 40
Prairie Municipal Money Market Fund and Woodward Tax-Exempt Money Market Fund...... 40
Prairie Growth Fund and Woodward Capital Growth Fund............................... 41
Prairie Bond Fund and Woodward Bond Fund........................................... 41
Prairie Municipal Bond Fund and Woodward Municipal Bond Fund....................... 42
Prairie Managed Assets Fund and Woodward Balanced Fund............................. 42
Prairie Equity Income Fund and Woodward Equity Income Fund......................... 43
Prairie International Bond Fund and Woodward International Bond Fund............... 43
Prairie Special Opportunities Fund and Woodward Small-Cap Opportunity Fund......... 43
Prairie Intermediate Municipal Bond Fund and Woodward Intermediate Municipal Bond
Fund............................................................................... 44
Prairie Intermediate Bond Fund and Woodward Income Fund............................ 44
Prairie Managed Assets Income Fund and Woodward Managed Assets Conservative Fund... 44
Investment Policies and Risks--General............................................. 45
Investment Limitations............................................................. 52
Purchase and Redemption Information, Exchange Privileges, Distribution and
Pricing............................................................................ 56
Other Information.................................................................. 56
Information Relating to Voting Matters............................................... 58
General Information................................................................ 58
Shareholder and Board Approvals.................................................... 59
Appraisal Rights................................................................... 67
Quorum............................................................................. 67
Annual Meetings.................................................................... 68
Additional Information about Woodward................................................ 68
Additional Information about Prairie................................................. 68
</TABLE>
i
<PAGE>
<TABLE><CAPTION>
PAGE
------
<S> <C>
Litigation........................................................................... 69
Financial Statements................................................................. 69
Other Business....................................................................... 69
Shareholder Inquiries................................................................ 70
Appendix I--Agreement and Plan of Reorganization..................................... I-1
Appendix II--Manager's Discussion of Fund Performance--Existing Woodward Funds....... II-1
Appendix III--Shareholders Transactions and Services................................. III-1
</TABLE>
ii
<PAGE>
SUMMARY
The following is a summary of certain information relating to the
Reorganization, the parties thereto and the related transactions, and is
qualified by reference to the more complete information contained elsewhere in
this Combined Prospectus/Proxy Statement, the Prospectuses and Statements of
Additional Information of Prairie and Woodward, and the Reorganization Agreement
attached to this Combined Prospectus/Proxy Statement as Appendix I. Prairie's
Annual Reports to Shareholders may be obtained free of charge by calling
1-800-370-9446 or writing Three First National Plaza, Chicago, Illinois 60670.
Woodward's Annual Reports to Shareholders may be obtained free of charge by
calling 1-800-688-3350 or writing P.O. Box 7058, Troy, Michigan 48007-7058.
Proposed Reorganization. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, Prairie's and Woodward's Boards, including their members
who are not "interested persons" within the meaning of the 1940 Act, have
unanimously determined that the proposed Reorganization is in the best interests
of their Funds' respective Shareholders and that the interests of such
Shareholders will not be diluted as a result of such Reorganization.
The Cover Page and pages 1-29 hereof summarize the proposed Reorganization.
PRAIRIE'S BOARDS OF TRUSTEES AND DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE REORGANIZATION AGREEMENT.
Reasons for the Reorganization. The primary reason for the Reorganization is
the recently completed merger between NBD Bancorp, Inc., the parent of NBD, and
First Chicago Corporation, the parent of FCIMCO. This Reorganization presents
the opportunity to combine the separate Prairie and Woodward mutual fund
families into a single, larger consolidated group. NBD and FCIMCO have
recommended that each of the Prairie Portfolios be reorganized as described in
this Combined Prospectus/Proxy Statement. In light of this recommendation, after
consideration of the reasons therefor and the proposed operations of the
combined funds after the Reorganization, and in consideration of the fact that
the Reorganization will be tax-free and will not dilute the interests of Prairie
Shareholders, the Boards of Trustees and Directors of Prairie have authorized
the Agreement and Plan of Reorganization and recommended approval of the
Reorganization by Shareholders.
Federal Income Tax Consequences. Drinker Biddle & Reath, independent outside
counsel to Woodward and to its Board of Trustees, will issue an opinion (based
on certain assumptions) as of the effective time of each of the Reorganizing
Portfolios Transaction and the Continuing Portfolios Transaction that the
transaction will not give rise to the recognition of income, gain or loss for
federal income tax purposes to the Prairie Portfolios or the Woodward Funds in
the transaction or their respective shareholders. See "Information Relating to
the Proposed Reorganization--Federal Income Tax Consequences."
Overview of the Prairie Portfolios and Woodward Funds. The investment
objectives and policies of the Prairie Portfolios are similar to those of the
corresponding Woodward Funds. There are no
1
<PAGE>
material differences between the investment objectives and policies of the
corresponding Prairie Portfolios and Woodward Funds except as noted below.
Prairie Money Market Fund and Woodward Money Market Fund.
The Prairie Money Market Fund's investment objective is to seek to provide
as high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity. The Woodward Money Market Fund's
investment objective is to seek to provide a high level of current income
consistent with the preservation of capital and liquidity. Each Fund pursues its
investment objective by investing in a diversified portfolio of high quality
money market instruments.
Prairie U.S. Government Money Market Fund and Woodward Treasury Money Market
Fund.
The Prairie U.S. Government Money Market Fund's investment objective is to
seek to provide as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. The Woodward Treasury
Money Market Fund's investment objective is to seek to provide a high level of
current income consistent with the preservation of capital and liquidity. The
Prairie U.S. Government Money Market Fund invests only in short-term securities
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities and may enter into repurchase agreements. The
Woodward Treasury Money Market Fund invests only in short-term obligations of
the U.S. Treasury and in repurchase agreements relating to direct Treasury
obligations.
Prairie Municipal Money Market Fund and Woodward Tax-Exempt Money Market
Fund.
The Prairie Municipal Money Market Fund's investment objective is to seek to
provide as high a level of current income exempt from federal income tax as is
consistent with the preservation of capital and the maintenance of liquidity.
The investment objective of the Woodward Tax-Exempt Money Market Fund is to seek
to provide a high level of current interest income that is exempt from federal
income taxes consistent with the preservation of capital and liquidity. Both
Funds intend, under normal market conditions, to invest at least 80% of their
assets in short-term, high quality obligations issued by states, territories and
possessions of the United States, by the District of Columbia, and by their
respective political subdivisions, agencies, instrumentalities and authorities,
the interest on which is exempt from regular federal income tax ("Municipal
Securities").
In connection with the Reorganization, the Woodward Tax-Exempt Money Market
Fund is expected to change its name to the Woodward Municipal Money Market Fund.
Prairie Growth Fund and Woodward Capital Growth Fund.
The Prairie Growth Fund's investment objective is to seek long-term capital
appreciation. The Woodward Capital Growth Fund's current investment objective is
to seek to maximize long-term capital appreciation with current income not a
significant consideration. Under normal market conditions, each Fund expects to
invest at least 65% of its total assets in equity securities.
The Woodward Capital Growth Fund is expected to change certain of its
investment policies before the Reorganizing Portfolios Transaction to more
closely resemble the investment policies of the Prairie
2
<PAGE>
Growth Fund. Specifically, subject to the approval of its shareholders, the
Woodward Capital Growth Fund is expected to amend its investment objective to
delete any reference to current income, such that its new investment objective
would be identical to that of the Prairie Growth Fund. In addition, it is
intended that the Woodward Capital Growth Fund will change its name to the
Woodward Growth Fund in connection with its Reorganization.
Prairie Bond Fund and Woodward Bond Fund.
The Prairie Bond Fund's investment objective is to seek to provide as high a
level of current income as is consistent with the preservation of capital. The
investment objective of the Woodward Bond Fund is to maximize total rate of
return by investing predominantly in intermediate and long-term debt securities.
In connection with its Reorganization, the Woodward Bond Fund's investment
objective will change slightly so that it will seek to maximize total rate of
return by investing predominantly in intermediate and long-term debt securities.
Under normal market conditions, each Fund expects to invest at least 65% of its
total assets in debt obligations.
Prairie Municipal Bond Fund and Woodward Municipal Bond Fund.
The Prairie Municipal Bond Fund's investment objective is to seek to provide
as high a level of current income exempt from federal income tax as is
consistent with the preservation of capital. The Woodward Municipal Bond Fund's
investment objective is to seek as high a level of current income exempt from
federal income tax as is consistent with relative stability of principal. Under
normal conditions, each Fund invests at least 80% of its assets in investment
grade Municipal Securities. Each Fund is also permitted to invest up to 20% of
the value of its net assets, or without limitation for temporary defensive
purposes, in taxable cash equivalent and other short-term securities.
In connection with the Reorganization and subject to the approval of its
shareholders, the Woodward Municipal Bond Fund is expected to change certain of
its investment policies to more closely resemble those of the Prairie Municipal
Bond Fund.
Prairie Managed Assets Fund and Woodward Balanced Fund.
The Prairie Managed Assets Fund's investment objective is to seek to
maximize total return, consisting of capital appreciation and current income,
without assuming undue risk. The Woodward Balanced Fund's investment objective
is to achieve long-term total return through a combination of capital
appreciation and current income. Both Funds pursue their objectives by following
an asset allocation strategy of investing in equity securities, fixed income
securities and cash equivalent or short-term securities.
The Woodward Balanced Fund is expected to change its name before the
Reorganizing Portfolios Transaction to the Woodward Managed Assets Balanced
Fund.
3
<PAGE>
Prairie Equity Income Fund and Woodward Equity Income Fund.
The investment objectives of the Prairie Equity Income and Woodward Equity
Income Funds are identical. The Funds attempt to achieve their objectives by
investing primarily in income-producing equity securities of domestic issuers.
Prairie International Bond Fund and Woodward International Bond Fund.
The investment objectives of these Funds are identical. Each Fund seeks to
provide both long-term capital appreciation and current income. They invest
primarily in investment grade debt securities of foreign issuers.
Prairie Special Opportunities Fund and Woodward Small-Cap Opportunity Fund.
Both the Prairie Special Opportunities Fund's and Woodward Small-Cap
Opportunity Fund's investment objective is to seek long-term capital
appreciation. The Prairie Special Opportunities Fund pursues its investment
objective investing primarily in equity securities of small to medium-sized
emerging growth domestic issuers. The Woodward Small-Cap Opportunity Fund
pursues its investment objective by investing primarily in equity securities of
companies with small capitalizations.
Prairie Intermediate Municipal Bond Fund and Woodward Intermediate Municipal
Bond Fund.
The Prairie Intermediate Municipal Bond Fund's investment objective is to
seek to provide as high a level of current income exempt from federal income tax
as is consistent with the preservation of capital. The Woodward Intermediate
Municipal Bond Fund's investment objective is to seek to provide as high a level
of current income exempt from federal income tax as is consistent with relative
stability of principal. Both Funds seek to achieve their objectives by investing
in investment grade Municipal Securities with dollar-weighted average maturities
between three and ten years under normal market conditions. Each Fund is also
permitted to invest up to 20% of the value of its net assets, or without
limitation for temporary defensive purposes, in taxable cash equivalent and
short-term securities.
Prairie Intermediate Bond Fund and Woodward Income Fund.
The Prairie Intermediate Bond Fund's investment objective is to seek to
provide as high a level of current income as is consistent with the preservation
of capital. The investment objective of the Woodward Income Fund is to seek to
provide as high a level of current income as is consistent with relative
stability of principal. Both Funds invest primarily in U.S. dollar denominated
investment grade fixed income securities which, under normal conditions, have
dollar-weighted average maturities between three and ten years.
Prairie Managed Assets Income Fund and Woodward Managed Assets Conservative
Fund.
The Prairie Managed Assets Income Fund's investment objective is to seek to
maximize current income; capital appreciation is a secondary, but nonetheless
important, goal. The Woodward Managed Assets Conservative Fund's investment
objective is to seek to provide long-term total return; capital appreciation is
a secondary consideration. Both Funds pursue their objectives by following an
asset
4
<PAGE>
allocation strategy of investing in equity securities, fixed income securities
and short-term instruments of domestic and foreign issuers.
A description of the additional investment policies of these Funds is
contained in "Comparison of Investment Policies and Risk Factors" below. See
that section and the Prairie and Woodward Prospectuses, which are incorporated
by reference herein, for a more detailed description of the similarities and
differences between the investment objectives and policies of the Prairie
Portfolios and the corresponding Woodward Funds.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS--THE PRAIRIE PORTFOLIOS. FCIMCO
serves as investment adviser for the Prairie Portfolios and is entitled to
receive advisory fees from them, computed daily and paid monthly, at the
following annual rates, expressed as a percentage of a Portfolio's average daily
net assets:
<TABLE><CAPTION>
Actual Advisory
Fee
Received for
Fiscal
Year or Period
Ended December 31,
1995 (after
Prairie Portfolios Advisory Fee waivers)
- --------------------------------------------- ------------ ------------------
<S> <C> <C>
Money Market Fund............................ 0.40% 0.13%
U.S. Government Money Market Fund............ 0.40% 0.14%
Municipal Money Market Fund.................. 0.40% 0.17%
Growth Fund.................................. 0.65% 0.53%
International Bond Fund...................... 0.70% 0.09%
Equity Income Fund........................... 0.50% 0.37%
Special Opportunities Fund................... 0.70% 0.46%
Bond Fund.................................... 0.55% 0.40%
Intermediate Municipal Bond Fund............. 0.40% 0.30%
Municipal Bond Fund.......................... 0.40% 0.27%
Intermediate Bond Fund....................... 0.40% 0.27%
Managed Assets Fund.......................... 0.65% 0.05%
Managed Assets Income Fund................... 0.65% 0.30%
</TABLE>
Pursuant to the Prairie investment advisory contracts, FCIMCO provides the
day-to-day management of each Prairie Portfolio's investments, subject to the
overall authority of the Boards and in conformity with applicable state law and
the stated policies of the Portfolio. FCIMCO is responsible for making
investment decisions for each Prairie Portfolio, placing purchase and sale
orders and providing research, statistical analysis and continuous supervision
of each Portfolio's investments.
FCIMCO also serves as each Prairie Portfolio's administrator pursuant to a
separate administration agreement. For its services as administrator, FCIMCO is
entitled to receive a fee, calculated daily and paid monthly, at the annual rate
of 0.15% of the average daily net assets of each Prairie Portfolio. For the
fiscal year or period ended December 31, 1995, FCIMCO received administration
fees (after fee waivers) at the effective annual rates of 0.15%, 0.13%, 0.15%,
0.15%, 0.12%, 0.15%, 0.15%, 0.15%, 0.15%, 0.15%, 0.14%, 0.09% and 0.15% of the
average daily net assets of the Money Market, U.S.
5
<PAGE>
Government Money Market, Municipal Money Market, Growth, International Bond,
Equity Income, Special Opportunities, Bond, Intermediate Municipal Bond,
Municipal Bond, Intermediate Bond, Managed Assets and Managed Assets Income
Funds, respectively. 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 Prairie Portfolios. FCIMCO, and not the
Prairie Portfolios, bears the fees for Concord's services as sub-administrator.
Primary Funds Service Corp. ("PFSC") serves as Prairie's transfer agent. It
is anticipated that on or about July 12, 1996, First Data Investor Services
Group, Inc., will begin providing transfer agency services to each Prairie
Portfolio.
The Bank of New York currently provides custodial services to each Prairie
Portfolio. It is anticipated that on or about July 1, 1996, NBD will begin
providing custodial services to each Prairie Portfolio.
Concord Financial Group, Inc. ("CFG") is the principal underwriter and
distributor for Prairie. CFG is a wholly-owned subsidiary of Concord.
Prairie has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (the "Prairie 12b-1 Plan"). Under the Prairie 12b-1 Plan, the Class B
Shares of each of the Prairie Portfolios (except the U.S. Government Money
Market and Municipal Money Market Funds) have agreed to pay CFG for advertising,
marketing and distributing shares of each Portfolio at an aggregate annual rate
of 0.75% of the average daily net asset value of such Portfolio's outstanding
Class B Shares. CFG may pay institutions, including FCIMCO, ANB-Investment
Management and Trust Company ("ANB-IMC") and their affiliates (including First
NBD Investment Services, Inc.), certain banks, securities dealers and other
industry professionals such as investment advisers, accountants and estate
planning firms (collectively, "Service Agents") for distribution services to
Class B shareholders. CFG determines the amounts, if any, to be paid to Service
Agents under the Prairie 12b-1 Plan and the basis on which such payments are
made. The fees payable under the Prairie 12b-1 Plan are payable without regard
to actual expenses incurred.
For the fiscal year or period ended December 31, 1995, Prairie paid, in the
aggregate, fees to CFG pursuant to the Prairie 12b-1 Plan of $13,831, which
represents 0.60% of the average net assets of Prairie's Class B Shares during
that period.
Prairie has adopted a Shareholder Services Plan for each of its Class A and
Class B Shares (each a "Shareholder Services Plan"). Under each Shareholder
Services Plan, each Prairie Portfolio pays CFG for the provision of certain
administrative support services to the shareholders of these shares a fee at the
annual rate of 0.25% of the value of the average daily net assets of such Class
A or Class B Shares. The services provided may include personal services related
to shareholder accounts, such as answering shareholder inquiries regarding the
applicable Portfolio and providing reports and other information, and services
related to the maintenance of shareholder accounts. Under each Shareholder
Services Plan, CFG may make payments to Service Agents in respect of those
services. FCIMCO, ANB-IMC, NBD, First National Bank of Chicago and their
affiliates may act as Service Agents and receive fees under the Shareholder
Services Plans.
6
<PAGE>
For the fiscal year or period ended December 31, 1995, Prairie paid, in the
aggregate, fees to CFG pursuant to each Shareholder Services Plan of $1,380,591
and $10,195, of the Class A and Class B Shares, respectively. Such payments
represented 0.10% and 0.01% of the average net assets of the Class A and Class B
Shares, respectively.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS--WOODWARD FUNDS. NBD currently
serves as investment adviser to the Existing Woodward Funds and is entitled to
receive advisory fees computed daily and paid monthly, at the following annual
rates, expressed as a percentage of each Fund's average daily net assets:
<TABLE><CAPTION>
Actual Advisory
Fee Received For
Year Ended
Existing December 31, 1995
Woodward Funds Advisory Fee (after waivers)
- ------------------------------------- ------------------------------------- -----------------
<S> <C> <C>
Money Market Fund 0.45% of the Fund's first billion in
net assets, plus 0.425% of the Fund's
next billion in assets, plus 0.40% of
the Fund's net assets in excess of $2
billion. 0.44%
Treasury Money Market Fund 0.45% of the Fund's first billion in
net assets, plus 0.425% of the Fund's
next billion in assets, plus 0.40% of
the Fund's net assets in excess of $2
billion. 0.45%
Tax-Exempt Money Market Fund* 0.45% of the Fund's first billion in
net assets, plus 0.425% of the Fund's
next billion in assets, plus 0.40% of
the Fund's net assets in excess of $2
billion. 0.45%
Capital Growth Fund** 0.75% 0.71%
Bond Fund 0.65% 0.65%
Municipal Bond Fund 0.65% 0.51%
Balanced Fund*** 0.75% 0.57%
</TABLE>
- ------------
* Fund will be renamed "Municipal Money Market Fund" in connection with the
Reorganization.
** Fund will be renamed "Growth Fund" in connection with the Reorganization.
*** Fund will be renamed "Managed Assets Balanced Fund" in connection with the
Reorganization.
As investment adviser, NBD currently manages the investments of each
Woodward Fund, makes decisions with respect to and places orders for all
purchases and sales of a Fund's securities, and maintains certain records
relating to such purchases and sales.
In connection with the Reorganization, Woodward expects to present a
proposal to its shareholders to approve a new advisory agreement. Pursuant to
the new agreement, FCIMCO and NBD have jointly agreed to provide day-to-day
management of each Woodward Fund's investments as co-adviser, subject
7
<PAGE>
to the overall authority of Woodward's Board and in conformity with
Massachusetts law and the stated policies of each Fund. FCIMCO and NBD have
advised Woodward's Board that investment management for the Woodward Funds will
be provided by NBD's investment management staff. Under the new advisory
agreement, FCIMCO and NBD will be jointly entitled to receive a fee from the
Woodward Funds, computed daily and payable monthly, at the following annual
rates, expressed as a percentage of each Fund's average daily net assets:
<TABLE><CAPTION>
Woodward Funds Advisory Fee
- --------------------------------------------- ---------------------------------------------
<S> <C>
Money Market Fund 0.30% of the first $1.0 billion, 0.275% of
the next $1 billion and 0.25% of the Fund's
average daily net assets in excess of $2
billion.
Treasury Money Market Fund 0.30% of the first $1.0 billion, 0.275% of
the next $1 billion and 0.25% of the Fund's
average daily net assets in excess of $2
billion.
Municipal Money Market Fund 0.30% of the first $1.0 billion, 0.275% of
the next $1 billion and 0.25% of the Fund's
average daily net assets in excess of $2
billion.
Growth Fund 0.60%
Bond Fund 0.40%
Municipal Bond Fund 0.40%
Managed Assets Balanced Fund 0.65%
Equity Income Fund* 0.50%
International Bond Fund* 0.70%
Small-Cap Opportunity Fund* 0.70%
Intermediate Municipal Bond Fund* 0.40%
Income Fund* 0.40%
Managed Assets Conservative Fund* 0.65%
</TABLE>
- ------------
* These are new portfolios which have not commenced investment operations as of
the date hereof.
Under the current advisory agreement, NBD also provides each Woodward Fund
with various administrative services without additional compensation. In
connection with the Reorganization, it is expected that Woodward will enter into
a new administration agreement with NBD, FCIMCO and BISYS Fund Services
("BISYS"), under which these parties will jointly agree to provide
administrative services to Woodward as co-administrators, subject to the overall
authority of Woodward's Board in accordance with Massachusetts law. BISYS is a
wholly-owned subsidiary of The BISYS Group, Inc. and is affiliated with Concord,
the current sub-administrator of Prairie. This new administration arrangement is
expected to be effective at the time of the Reorganization. For their services
as co-administrators, Woodward will pay to NBD and FCIMCO, as agents for the
three co-administrators, a fee, computed daily and paid monthly, at the annual
rate of 0.15% of the average daily net assets of each Woodward Fund.
See "Management--Investment Adviser, Custodian and Transfer Agent" in
Woodward's Prospectuses accompanying this Combined Prospectus/Proxy Statement,
which are incorporated herein by
8
<PAGE>
reference, for additional information on NBD. For additional information on
FCIMCO, see "Management of the Funds--Investment Adviser and Administrator" in
Prairie's Prospectus, which is incorporated herein by reference.
NBD also receives compensation as Woodward's Custodian and Transfer Agent
under separate agreements. As Custodian and as Transfer Agent for Woodward, NBD
(i) maintains separate accounts in the name of each Fund, (ii) collects and
makes disbursements of money on behalf of each Fund, (iii) issues and redeems
shares of each Fund, (iv) collects and receives all income and other payments
and distributions on account of the portfolio securities of each Fund, (v)
addresses and mails all communications by Woodward to its shareholders,
including reports to shareholders, dividend and distribution notices and proxy
materials for any meeting of shareholders, (vi) maintains shareholder accounts,
(vii) makes periodic reports to the Board of Trustees concerning Woodward's
operations, and (viii) maintains on-line computer capability for determining the
status of shareholder accounts.
For its services as Custodian, NBD is also entitled to receive a fee from
each Woodward Fund, and will continue to do so after the Reorganization. For
each Fund other than the International Bond, Money Market, Treasury Money Market
and Tax-Exempt Money Market Funds, the custody fee is at the following annual
rate based on the aggregate market value of such Fund's portfolio securities NBD
holds 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. For its
services as Custodian to the International Bond Fund, NBD will be entitled to
receive a fee at the following annual rate based on the aggregate market value
of the Fund's portfolio securities NBD holds as Custodian: .125% of the first
$100 million; .10% of the next $100 million; .08% of the next $100 million; .07%
of the next $100 million; and .06% of the balance over $400,000,000. NBD is also
entitled to receive from the International Bond Fund specified per-transaction
charges for securities in various countries.
NBD is also entitled to receive from each Woodward Fund, other than the
Money Market, Treasury Money Market and Tax-Exempt Funds, an annual per 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.
For its services as Custodian to the Money Market, Treasury Money Market and
Tax-Exempt Money Market Funds, NBD is entitled to receive from such Funds $11.00
for each clearing and settlement transaction and $12.00 for each accounting and
safekeeping service with respect to investments, in addition to activity changes
for master control and master settlement accounts.
9
<PAGE>
For its services as Transfer Agent, NBD is also entitled to receive a
minimum annual fee from each Woodward Fund of $11,000, $15 annually per account
for the preparation of statements of account, and $1.00 for each confirmation of
purchase and redemption transactions. Charges for providing computer equipment
and maintaining a computerized investment system are expected to approximate
$350 per month for each Fund.
In connection with the Reorganization, it is expected that First Data
Investor Services Group, Inc. ("First Data") will replace NBD as Woodward's
Transfer Agent.
Woodward's shares are currently offered on a continuous basis through First
of Michigan Corporation ("FoM") and Essex National Securities, Inc. ("Essex" and
collectively with FoM as the "Co-Distributors").
Woodward has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (the "Woodward 12b-1 Plan"). Under the Woodward 12b-1 Plan, shares of
each Woodward Fund bear expenses of distribution fees payable in an amount not
to exceed 0.35% of the value of the Trust's average daily net assets to finance
activities primarily intended to result in the sale of Woodward shares.
Additionally, Woodward has adopted a Shareholder Servicing Plan under which
servicing agreements may be entered into with banks and financial institutions,
including NBD, FCIMCO, FNBC and their affiliates ("Shareholder Servicing
Agents") requiring such institutions to provide shareholder administrative
support services for their customers who beneficially own Woodward Fund Class A
Shares. For these services, Woodward may pay fees at an annual rate of up to
0.25% of the average daily net asset value of the Class A Shares held by
Shareholder Servicing Agents for the benefit of their customers. See
"Management-Sponsors and Co-Distributors," "Service and Distribution Plan" and
"Shareholder Servicing Plan" in the Woodward Prospectuses accompanying this
Combined Prospectus/Proxy Statement, which are incorporated herein by reference,
for additional information on the Co-Distributors, the Woodward 12b-1 Plan and
the Shareholder Servicing Plan.
For the fiscal year ended December 31, 1995, Woodward paid, in the
aggregate, fees pursuant to the Woodward 12b-1 Plan of $1,289,788, which
represented .02% of the Woodward Funds' average net assets during that period.
For the fiscal year ended December 31, 1995, Woodward paid, in the
aggregate, fees pursuant to the Shareholder Servicing Plan of $376,700, which
represented .01% of the Woodward Funds' average net assets during that period.
In connection with the Reorganization, it is expected that the Distribution
Agreement with FoM and Essex will be terminated and the Woodward 12b-1 Plan and
Shareholder Servicing Plan will be cancelled. At the time of the Reorganization,
BISYS will enter into a distribution agreement to act as agent for the
distribution of shares of Woodward. Additionally, Woodward is expected to adopt
a share class structure substantially similar to Prairie's, a Distribution Plan
pursuant to Rule 12b-1 for its Class B Shares (the "New 12b-1 Plan"), and a
Shareholder Administrative Services Plan for its Class A and Class B Shares (the
"New Shareholder Services Plan"). Class I Shares will bear no 12b-1 or
shareholder servicing fees.
10
<PAGE>
The New 12b-1 Plan and Shareholder Services Plan will be substantially
similar to those currently in place for Prairie. Under the New 12b-1 Plan, the
Class B Shares of each of the Woodward Funds (other than the Woodward Treasury
Money Market and Tax-Exempt Money Market Funds which will not issue Class B
Shares) will bear the expense of distribution fees payable to BISYS at an annual
rate of up to 0.75% of the average daily net asset value of such Fund's
outstanding Class B Shares to finance activities which are primarily intended to
result in the sale of Class B Shares. BISYS may enter into agreements with
Service Agents which provide distribution services to Class B shareholders.
Services provided by such Service Agents will include advertising, marketing and
distributing Class B Shares. Additionally, BISYS may use payments under the New
12b-1 Plan to defray the costs of commissions paid to Service Agents for the
sale of Class B Shares.
The New 12b-1 Plan is a "compensation" plan as opposed to a "reimbursement"
type plan. Accordingly, payments by Class B Shares under the New 12b-1 Plan will
be based on the stated fee rather than on the specific amounts expended by BISYS
for distribution purposes. BISYS may be able to recover such amounts or may earn
a profit from payments made by Class B Shares of Woodward under the New 12b-1
Plan.
Under the New Shareholder Services Plan, each Woodward Fund will pay BISYS
for the provision of certain services to the shareholders of Class A and Class B
Shares a fee at the annual rate of up to 0.25% of the value of the average daily
net assets of such shares. The services provided may include personal services
related to shareholder accounts, such as answering shareholder inquiries
regarding the applicable Woodward Fund, providing beneficial shareholders
reports and other information, and providing services related to the maintenance
of shareholder accounts. Under the New Shareholder Services Plan, BISYS may make
payments to Service Agents in respect of those services. NBD, FCIMCO, FNBC,
ANB-IMC and their affiliates may act as Service Agents and receive fees under
the New Shareholder Services Plan.
Comparative Fee and Expense Tables. The tables below show (i) information
regarding the fees and expenses paid by each class of shares of each Prairie
Portfolio and by each class of shares of each Woodward Fund as of their most
recent fiscal years or periods, restated as of April 11, 1996 and April 15, 1996
to reflect expenses the Prairie Portfolio and the Woodward Fund, respectively,
expect to incur during the current fiscal year, and (ii) estimated fees and
expenses on a pro forma basis giving effect to the proposed Reorganization.
11
<PAGE>
COMPARATIVE FEE TABLE FOR EACH PORTFOLIO
<TABLE><CAPTION>
Prairie
Money Market Woodward
Fund Money Market Fund Pro Forma Combined
----------------- ----------------- -------------------------------------------
Class A Class B Class A Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES (as a
percentage of average net assets)
Advisory Fees....................... .40% .40% .44% .44% .29%(1) .29%(1) .29%(1)
12b-1 Fees.......................... N/A .75% .025% .025% N/A .75% N/A
Other Expenses (after fee waivers
and/or expense reimbursements)..... .40%(2)(4) .40%(2)(4) .285%(3)(7) .055% .46%(2)(4) .46%(2)(4) .21%(5)
Total Operating Expenses (after fee
waivers and/or expense
reimbursements)..................... .80%(6) 1.55%(6) .75%(7) .52% .75%(8) 1.50%(8) .50%(8)
</TABLE>
- ----------------
(1) Absent voluntary waivers, the Advisory Fees for the Pro Forma Combined Fund
would be 0.30% for each of the Class A, Class B and Class I Shares,
respectively.
(2) Includes administration fees of 0.15% and shareholder servicing fees of
0.25%.
(3) Includes shareholder servicing fees of 0.25%.
(4) Other Expenses, before fee waivers and/or expense reimbursements, would have
been 0.67% and 0.87%, respectively, for the Class A and Class B Shares of
the Prairie Money Market Fund.
(5) Includes administration fees of 0.15%.
(6) Absent voluntary waivers and expense reimbursements, which can be terminated
at any time, the total operating expenses for the Class A Shares and Class B
Shares of the Prairie Money Market Fund would have been 1.07% and 2.02% ,
respectively.
(7) Absent voluntary waivers and reimbursements, which can be terminated at any
time, the other expenses and total expenses for the Class A Shares of the
Woodward Money Market Fund would have been .293% and .758%, respectively.
(8) Absent voluntary waivers and expense reimbursements, which can be terminated
at any time, the total operating expenses for the Class A, Class B and Class
I Shares of the Pro Forma Combined Fund would be 0.76%, 1.51% and 0.51%,
respectively.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Money Market Fund
Class A Shares.................................................. $ 8 $ 26 $ 44 $ 99
Class B Shares.................................................. $ 16 $ 49 $ 84 $155
Woodward Money Market Fund
Class A Shares.................................................. $ 8 $ 24 $ 42 $ 93
Class I Shares.................................................. $ 5 $ 17 $ 29 $ 65
Pro Forma Combined
Class A Shares.................................................. $ 8 $ 24 $ 42 $ 93
Class B Shares.................................................. $ 15 $ 48 $ 82 $160
Class I Shares.................................................. $ 5 $ 16 $ 28 $ 63
</TABLE>
12
<PAGE>
<TABLE><CAPTION>
Prairie U.S. Woodward Woodward Treasury
Government Government Money Market Pro Forma
Money Market Fund+ Fund Combined
------------ ------------------- ----------------- -----------------
Class A Class A Class I Class A Class I Class A Class I
Shares Shares Shares Shares Shares Shares Shares
------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory Fees.......................... .40% .45% .45% .45% .45% .30% .30%
12b-1 Fees............................. N/A .007% .007% .024% .024% N/A N/A
Other Expenses (after fee waivers
and/or expense reimbursements)........ .40%(1)(4) .293%(2)(5) .083% .276%(2)(5) .076% .43%(1) .18%(3)
Total Operating Expenses (after fee
waivers and/or expense
reimbursements)........................ .80%(4) .75%(5) .54% .75%(5) .55% .73% .48%
</TABLE>
- ----------------
+ The Woodward Government Fund is expected to merge into the Woodward Treasury
Money Market Fund in connection with the Reorganization. The merger of the
Woodward Government Fund into the Woodward Treasury Money Market Fund and the
Reorganization of the Prairie U.S. Government Money Market Fund and Woodward
Treasury Money Market Fund will occur only if the shareholders of the
appropriate funds approve each transaction.
(1) Includes administration fees of 0.15% and shareholder servicing fees of
0.25%.
(2) Includes shareholder servicing fees of 0.25%.
(3) Includes administration fees of 0.15%.
(4) Absent voluntary waivers and expense reimbursements, which can be terminated
at any time, the other expenses and total operating expenses for the Class A
Shares of the Prairie U.S. Government Money Market Fund would have been
0.67% and 1.07%, respectively.
(5) Absent voluntary waivers and expense reimbursements, which can be terminated
at any time, the other expenses and total operating expenses for the Class A
Shares of the Woodward Government Fund would have been .30% and .757%,
respectively, and for the Woodward Treasury Money Market Fund, such expenses
would have been .312% and .786%, respectively.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie U.S. Government Money Market Fund
Class A Shares.................................................. $ 8 $ 26 $ 44 $ 99
Woodward Government Fund
Class A Shares.................................................. $ 8 $ 24 $ 42 $ 93
Class I Shares.................................................. $ 6 $ 17 $ 30 $ 68
Woodward Treasury Money Market Fund
Class A Shares.................................................. $ 8 $ 24 $ 42 $ 93
Class I Shares.................................................. $ 6 $ 18 $ 31 $ 69
Pro Forma Combined
Class A Shares.................................................. $ 7 $ 23 $ 41 $ 91
Class I Shares.................................................. $ 5 $ 15 $ 27 $ 61
</TABLE>
13
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Municipal Tax-Exempt
Money Market Money Market Pro Forma
Fund Fund* Combined
------------ ------------------- -----------------
Class A Class A Class I Class A Class I
Shares Shares Shares Shares Shares
------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES (as a percentage
of average net assets)
Advisory Fees.................................... .40% .45% .45% .30% .30%
12b-1 Fees....................................... N/A .017% .017% N/A N/A
Other Expenses (after fee waivers and/or expense
reimbursements).................................. .30%(1)(4) .283%(2)(5) .053% .44%(1) .19%(3)
Total Operating Expenses (after fee waivers
and/or expense reimbursements)................... .70%(4) .75%(5) .52% .74% .49%
</TABLE>
- ----------------
* It is expected that the Woodward Tax-Exempt Money Market Fund will change its
name in connection with the Reorganization to the Woodward Municipal Money
Market Fund.
(1) Includes administration fees of 0.15% and shareholder servicing fees of
0.25%.
(2) Includes shareholder servicing fees of 0.25%.
(3) Includes administration fees of 0.15%.
(4) Absent voluntary waivers and expense reimbursements, which can be terminated
at any time, the other expenses and total operating expenses for the Class A
Shares of the Prairie Municipal Money Market Fund would have been 0.54% and
0.94%, respectively.
(5) Absent voluntary waivers and expense reimbursements, which can be terminated
at any time, the other expenses and total operating expenses for the Class A
Shares of the Woodward Tax-Exempt Money Market Fund would have been .307%
and .774%, respectively.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Municipal Money Market Fund
Class A Shares.................................................. $ 7 $ 22 $ 39 $ 87
Woodward Tax-Exempt Money Market Fund
Class A Shares.................................................. $ 8 $ 24 $ 42 $ 93
Class I Shares.................................................. $ 5 $ 17 $ 29 $ 65
Pro Forma Combined
Class A Shares.................................................. $ 8 $ 24 $ 41 $ 92
Class I Shares.................................................. $ 5 $ 16 $ 27 $ 62
</TABLE>
14
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Equity Income Equity Income Pro Forma
Fund Fund* Combined
--------------------------- --------------------------- ---------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 4.50% None None 5.00% None None 5.00% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable).......... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None None
Exchange Fee............ None None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees........... .50% .50% .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees.............. None .75% None None .75% None None .75% None
Other Expenses(1) (after
fee waivers and/or
expense
reimbursements)......... .40%( )(3) .40%( )(3) .15%( )(3) .54%(2) .54%(2) .20%(1) .54%(2) .54%(2) .20%(1)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... .90%(4) 1.65%(4) .65%(4) 1.04% 1.79% .70% 1.04% 1.79% .70%
</TABLE>
- ----------------
<TABLE>
<C> <S>
* The Woodward Equity Income Fund has not yet commenced investment operations. The
Woodward Equity Income Fund will continue the operations of the Prairie Equity Income
Fund upon consummation of the Reorganization relating to that Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15%.
(2) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(3) Other Expenses, before fee waivers and/or expense reimbursements, would have been 0.94%,
1.40%, and 0.27%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Equity Income Fund.
(4) Absent voluntary waivers and expense reimbursements, which can be terminated at any
time, total operating expenses for the Class A, Class B and Class I Shares of the
Prairie Equity Income Fund would have been 1.44%, 2.65%, and 0.77%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Equity Income Fund
Class A Shares.................................................. $ 54 $ 72 $ 93 $151
Class B Shares.................................................. $ 67 $ 82 $ 110 $166
Class I Shares.................................................. $ 7 $ 21 $ 36 $ 81
Woodward Equity Income Fund
Class A Shares.................................................. $ 60 $ 82 $ 105 $171
Class B Shares.................................................. $ 68 $ 87 $ 118 $192
Class I Shares.................................................. $ 7 $ 22 $ 39 $ 87
Pro Forma Combined
Class A Shares.................................................. $ 60 $ 82 $ 105 $171
Class B Shares.................................................. $ 68 $ 87 $ 118 $192
Class I Shares.................................................. $ 7 $ 22 $ 39 $ 87
</TABLE>
15
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Growth Capital Growth Pro Forma
Fund Fund* Combined*
------------------------------ -------------------- ---------------------------
Class A Class B Class I Class A Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 4.50% None None 5.00% None 5.00% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable).......... None+ 5.00% None None None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None
Exchange Fee............ None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees........... .65% .65% .65% .75% .75% .60% .60% .60%
12b-1 Fees.............. None .75% None .005% .005% None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)......... .40%(1)(3) .40%(1)(3) .15%(3)(4) .375%(2)(5) .125%(5) .65%(1) .65%(1) .18%(4)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... 1.05%(6) 1.80%(6) .80%(6) 1.13%(7) .88%(7) 1.25% 2.00% .78%
</TABLE>
- ----------------
<TABLE>
<C> <S>
* It is expected that the Woodward Capital Growth Fund will change its name and investment
policies upon consummation of the Reorganization and that it will continue the
operations of the Prairie Growth Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(2) Includes shareholder servicing fees of 0.25%.
(3) Other Expenses, before fee waivers and/or expense reimbursements, would have been 0.74%,
1.20% and 0.27%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Growth Fund.
(4) Includes administration fees of 0.15%.
(5) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.395%
and 0.145%, respectively, for the Class A and Class I Shares of the Woodward Capital
Growth Fund.
(6) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie Growth Fund would have
been 1.39%, 2.60% and 0.92%, respectively.
(7) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A and Class I Shares of the Woodward Capital Growth Fund would have
been 1.15% and 0.90%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Growth Fund
Class A Shares.................................................. $ 55 $ 77 $ 100 $167
Class B Shares.................................................. $ 68 $ 87 $ 117 $183
Class I Shares.................................................. $ 8 $ 26 $ 44 $ 99
Woodward Capital Growth Fund
Class A Shares.................................................. $ 61 $ 84 $ 109 $181
Class I Shares.................................................. $ 9 $ 28 $ 49 $109
Pro Forma Combined
Class A Shares.................................................. $ 62 $ 88 $ 115 $194
Class B Shares.................................................. $ 71 $ 93 $ 129 $214
Class I Shares.................................................. $ 8 $ 25 $ 43 $ 97
</TABLE>
16
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Special Opportunities Small-Cap Opportunity Pro Forma
Fund Fund* Combined
--------------------------------- ------------------------------ ---------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 4.50% None None 5.00% None None 5.00% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable).......... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None None
Exchange Fee............ None None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees........... .70% .70% .70% .70% .70% .70% .70% .70% .70%
12b-1 Fees.............. None .75% None None .75% None None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)......... .40%(2)(3) .40%(2)(3) .15%(1)(3) .85%(2) .85%(2) .24%(1) .85%(2) .85%(2) .24%(1)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... 1.10%(4) 1.85%(4) .85%(4) 1.55% 2.30% .94% 1.55% 2.30% .94%
</TABLE>
- ----------------
<TABLE>
<C> <S>
* The Woodward Small-Cap Opportunity Fund has not yet commenced investment operations. The
Woodward Small-Cap Opportunity Fund will continue the operations of the Prairie Special
Opportunities Fund upon consummation of the Reorganization relating to that Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15%.
(2) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(3) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 1.86%,
8.07% and 0.39%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Special Opportunities Fund.
(4) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie Special Opportunities
Fund would have been 2.56%, 9.52% and 1.09%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Special Opportunities Fund
Class A Shares.................................................. $ 56 $ 78 $ 103 $173
Class B Shares.................................................. $ 69 $ 88 $ 120 $188
Class I Shares.................................................. $ 9 $ 27 $ 47 $105
Woodward Small-Cap Opportunity Fund
Class A Shares.................................................. $ 65 $ 97 $ 131 $226
Class B Shares.................................................. $ 74 $ 103 $ 144 $246
Class I Shares.................................................. $ 10 $ 30 $ 52 $116
Pro Forma Combined
Class A Shares.................................................. $ 65 $ 97 $ 131 $226
Class B Shares.................................................. $ 74 $ 103 $ 144 $246
Class I Shares.................................................. $ 10 $ 30 $ 52 $116
</TABLE>
17
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
International Bond International Bond Pro Forma
Fund Fund* Combined
------------------------------ ---------------------------- ---------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 4.50% None None 4.50% None None 4.50% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable).......... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None None
Exchange Fee............ None None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees........... .70% .70% .70% .28%(1) .28%(1) .28%(1) .28%(1) .28%(1) .28%(1)
12b-1 Fees.............. None .75% None None .75% None None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)......... .50%(3)(4) .50%(3)(4) .25%(2)(4) 1.20%(3) 1.20%(3) .55%(2) 1.20%(3) 1.20%(3) .55%(2)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... 1.20%(5) 1.95%(5) .95%(5) 1.48%(6) 2.23%(6) .83%(6) 1.48%(6) 2.23%(6) .83%(6)
</TABLE>
- ----------------
<TABLE>
<C> <S>
* The Woodward International Bond Fund has not yet commenced investment operations. The
Woodward International Bond Fund will continue the operations of the Prairie
International Bond Fund upon consummation of the Reorganization relating to that Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Absent voluntary waivers, the Advisory Fees for the Pro Forma Combined Fund would be
0.70% for each of the Class A, Class B and Class I Shares, respectively.
(2) Includes administration fees of 0.15%.
(3) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(4) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 2.95%,
7.24% and 1.23%, respectively, for the Class A, Class B and Class I Shares of the
Prairie International Bond Fund.
(5) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie International Bond Fund
would have been 3.65%, 8.69%, and 1.93%, respectively.
(6) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A , Class B and Class I Shares of the Pro Forma Combined Fund would
be 1.90%, 2.65%, and 1.25%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie International Bond Fund
Class A Shares.................................................. $ 57 $ 81 $ 108 $184
Class B Shares.................................................. $ 70 $ 91 $ 125 $199
Class I Shares.................................................. $ 10 $ 30 $ 53 $117
Woodward International Bond Fund
Class A Shares.................................................. $ 59 $ 90 $ 123 $215
Class B Shares.................................................. $ 73 $ 100 $ 140 $239
Class I Shares.................................................. $ 9 $ 27 $ 46 $103
Pro Forma Combined
Class A Shares.................................................. $ 59 $ 90 $ 123 $215
Class B Shares.................................................. $ 73 $ 100 $ 140 $239
Class I Shares.................................................. $ 9 $ 27 $ 46 $103
</TABLE>
18
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Intermediate Bond Income Pro Forma
Fund Fund* Combined
----------------------------- ----------------------------- ---------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 3.00% None None 3.00% None None 3.00% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable)......... None+ 3.00% None None+ None None None+ 3.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None None
Exchange Fee............ None None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees........... .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees.............. None .75% None None .75% None None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)......... .40%(2)(3) .40%(2)(3) .15%(1)(3) .50%(2) .50%(2) .21%(1) .50%(2) .50%(2) .21%(1)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... .80%(4) 1.55%(4) .55%(4) .90% 1.65% .61% .90% 1.65% .61%
</TABLE>
- ----------------
<TABLE>
<C> <S>
* The Woodward Income Fund has not yet commenced investment operations. The Woodward
Income Fund will continue the operations of the Prairie Intermediate Bond Fund upon
consummation of the Reorganization relating to that Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15%.
(2) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(3) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.75%,
0.63% and 0.27%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Intermediate Bond Fund.
(4) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B Shares and Class I Shares of the Prairie Intermediate Bond
Fund would have been 1.15%, 1.78%, and 0.67%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Intermediate Bond Fund
Class A Shares.................................................. $ 38 $ 55 $ 73 $126
Class B Shares.................................................. $ 46 $ 70 $ 94 $146
Class I Shares.................................................. $ 6 $ 18 $ 31 $ 69
Woodward Income Fund
Class A Shares.................................................. $ 39 $ 58 $ 79 $138
Class B Shares.................................................. $ 47 $ 72 $ 100 $176
Class I Shares.................................................. $ 6 $ 20 $ 34 $ 76
Pro Forma Combined
Class A Shares.................................................. $ 39 $ 58 $ 79 $138
Class B Shares.................................................. $ 47 $ 72 $ 100 $176
Class I Shares.................................................. $ 6 $ 20 $ 34 $ 76
</TABLE>
19
<PAGE>
<TABLE><CAPTION>
Prairie Bond Woodward Bond Pro Forma
Fund Fund Combined
------------------------------ ----------------- ---------------------------
Class A Class B Class I Class A Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- --------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load Imposed on
Purchases...................... 4.50% None None 4.75% None 4.50% None None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price)......................... None None None None None None None None
Deferred Sales Load (as a
percentage of original
purchase price or redemption
proceeds,
as applicable)................ None+ 5.00% None None None None+ 5.00% None
Redemption Fee (as a percentage
of amount redeemed, if
applicable).................... None None None None None None None None
Exchange Fee................... None None None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Advisory Fees.................. .55% .55% .55% .65% .65% .40% .40% .40%
12b-1 Fees..................... None .75% None .01% .01% None .75% None
Other Expenses (after fee
waivers and/or expense
reimbursements)................ .40%(1)(2) .40%(1)(2) .15%(2)(3) .31%(4) .06% .65%(1) .65%(1) .18%(3)
Total Operating Expenses (after
fee waivers and/or expense
reimbursements)................ .95%(5) 1.70%(5) .70%(5) .97% .72% 1.05% 1.80% .58%
</TABLE>
- ----------------
<TABLE>
<C> <S>
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(2) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 1.02%,
2.61% and 0.32%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Bond Fund.
(3) Includes administration fees of 0.15%.
(4) Includes shareholder servicing fees of 0.25%.
(5) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A , Class B and Class I Shares of the Prairie Bond Fund would have
been 1.57%, 3.91%, and 0.87%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Bond Fund
Class A Shares.................................................. $ 54 $ 74 $ 95 $156
Class B Shares.................................................. $ 67 $ 84 $ 112 $172
Class I Shares.................................................. $ 7 $ 22 $ 39 $ 87
Woodward Bond Fund
Class A Shares.................................................. $ 57 $ 77 $ 99 $161
Class I Shares.................................................. $ 7 $ 23 $ 40 $ 90
Pro Forma Combined
Class A Shares.................................................. $ 55 $ 77 $ 101 $168
Class B Shares.................................................. $ 68 $ 87 $ 118 $193
Class I Shares.................................................. $ 6 $ 19 $ 33 $ 73
</TABLE>
20
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Municipal Bond Municipal Bond Pro Forma
Fund Fund* Combined
------------------------------ ----------------- ---------------------------
Class A Class B Class I Class A Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load Imposed on
Purchases.................... 4.50% None None 4.75% None 4.50% None None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price)....................... None None None None None None None None
Deferred Sales Load (as a
percentage of original
purchase price or redemption
proceeds,
as applicable).............. None+ 5.00% None None None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if applicable)..... None None None None None None None None
Exchange Fee................. None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a percentage of
average net assets)
Advisory Fees................ .40% .40% .40% .65% .65% .40% .40% .40%
12b-1 Fees................... None .75% None .017% .017% None .75% None
Other Expenses (after fee
waivers and/or expense
reimbursements).............. .40%(1)(2) .40%(1)(2) .15%(2)(3) .303%(4)(5) .153%(4) .54%(1) .54%(1) .19%(3)
Total Operating Expenses
(after fee waivers and/or
expense reimbursements)...... .80%(6) 1.55%(6) .55%(6) .97%(7) .82%(7) .94% 1.69% .59%
</TABLE>
- ----------------
<TABLE>
<C> <S>
* It is expected that the Woodward Municipal Bond Fund will change its investment policies
upon consummation of the Reorganization and that it will continue the operations of the
Prairie Municipal Bond Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(2) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.64%,
0.89% and 0.27%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Municipal Bond Fund.
(3) Includes administration fees of 0.15%.
(4) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.51%
and 0.263%, respectively, for the Class A and Class I Shares of the Woodward Municipal
Bond Fund.
(5) Includes shareholder servicing fees of 0.25%.
(6) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie Municipal Bond Fund
would have been 1.04%, 2.04%, and 0.67%, respectively.
(7) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A and Class I Shares of the Woodward Municipal Bond Fund would have
been 1.18% and 0.93%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Municipal Bond Fund
Class A Shares.................................................. $ 53 $ 69 $ 87 $140
Class B Shares.................................................. $ 66 $ 79 $ 104 $155
Class I Shares.................................................. $ 6 $ 18 $ 31 $ 69
Woodward Municipal Bond Fund
Class A Shares.................................................. $ 57 $ 77 $ 99 $161
Class I Shares.................................................. $ 8 $ 26 $ 46 $102
Pro Forma Combined
Class A Shares.................................................. $ 54 $ 74 $ 95 $156
Class B Shares.................................................. $ 67 $ 83 $ 112 $181
Class I Shares.................................................. $ 6 $ 19 $ 33 $ 74
</TABLE>
21
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Intermediate Intermediate
Municipal Bond Municipal Bond Pro Forma
Fund Fund* Combined
------------------------------- --------------------------- ---------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 3.00% None None 3.00% None None 3.00% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable)......... None+ 3.00% None None+ 3.00% None None+ 3.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None None
Exchange Fee............ None None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES(as a
percentage of average
net assets)
Advisory Fees........... .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees.............. None .75% None None .75% None None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)......... .40%(2)(3) .40%(2)(3) .15%(1)(3) .52%(2) .52%(2) .20%(1) .52%(2) .52%(2) .20%(1)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... .80%(4) 1.55%(4) .55%(4) .92% 1.67% .60% .92% 1.67% .60%
</TABLE>
- ----------------
<TABLE>
<C> <S>
* The Woodward Intermediate Municipal Bond Fund has not yet commenced investment
operations. The Woodward Intermediate Municipal Bond Fund will continue the operations
of the Prairie Intermediate Municipal Bond Fund upon consummation of the Reorganization
relating to that Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Includes administration fees of 0.15%.
(2) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(3) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.57%,
0.86% and 0.28%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Intermediate Municipal Bond Fund.
(4) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie Intermediate Municipal
Bond Fund would have been 0.97%, 2.01%, and 0.68%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Intermediate Municipal Bond Fund
Class A Shares.................................................. $ 38 $ 55 $ 73 $126
Class B Shares.................................................. $ 46 $ 69 $ 94 $146
Class I Shares.................................................. $ 6 $ 18 $ 31 $ 69
Woodward Intermediate Municipal Bond Fund
Class A Shares.................................................. $ 39 $ 59 $ 80 $140
Class B Shares.................................................. $ 47 $ 73 $ 101 $179
Class I Shares.................................................. $ 6 $ 19 $ 34 $ 75
Pro Forma Combined
Class A Shares.................................................. $ 39 $ 59 $ 80 $140
Class B Shares.................................................. $ 47 $ 73 $ 101 $179
Class I Shares.................................................. $ 6 $ 19 $ 34 $ 75
</TABLE>
22
<PAGE>
<TABLE><CAPTION>
Prairie Woodward
Managed Managed
Assets Income Assets Conservative Pro Forma
Fund Fund* Combined
------------------------------- ---------------------------- ---------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on Purchases... 4.50% None None 5.00% None None 5.00% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a
percentage of offering
price).................. None None None None None None None None None
Deferred Sales Load (as
a percentage of
original purchase price
or redemption proceeds,
as applicable)......... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if
applicable)............. None None None None None None None None None
Exchange Fee............ None None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees........... .65% .65% .65% .55%(1) .55%(1) .55%(1) .55%(1) .55%(1) .55%(1)
12b-1 Fees.............. None .75% None None .75% None None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)......... .40%(3)(4) .40%(3)(4) .15%(2)(3) .70%(4) .70%(4) .30%(2) .70%(4) .70%(4) .30%(2)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)......... 1.05%(5) 1.80%(5) .80%(5) 1.25%(6) 2.00%(6) .85%(6) 1.25%(6) 2.00%(6) .85%(6)
</TABLE>
- ----------------
<TABLE>
<C> <S>
* The Woodward Managed Assets Conservative Fund has not yet commenced investment
operations. The Woodward Managed Assets Conservative Fund will continue the operations
of the Prairie Managed Assets Income Fund upon consummation of the Reorganization
relating to that Fund.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Absent voluntary waivers, the Advisory Fees for the Pro Forma Combined Fund would be
0.65% for each of the Class A, Class B and Class I Shares, respectively.
(2) Includes administration fees of 0.15%.
(3) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.89%,
0.72% and 0.57%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Managed Assets Income Fund.
(4) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(5) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie Managed Assets Income
Fund would have been 1.54%, 2.12%, and 1.22%, respectively.
(6) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for the Class A, Class B and Class I Shares of the Pro Forma Combined Fund
would be 1.35%, 2.10% and 0.95%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Managed Assets Income Fund
Class A Shares.................................................. $ 55 $ 77 $ 100 $167
Class B Shares.................................................. $ 68 $ 87 $ 117 $183
Class I Shares.................................................. $ 8 $ 26 $ 44 $ 99
Woodward Managed Assets Conservative Fund
Class A Shares.................................................. $ 62 $ 88 $ 115 $194
Class B Shares.................................................. $ 71 $ 93 $ 129 $214
Class I Shares.................................................. $ 9 $ 27 $ 47 $105
Pro Forma Combined
Class A Shares.................................................. $ 62 $ 88 $ 115 $194
Class B Shares.................................................. $ 71 $ 93 $ 129 $214
Class I Shares.................................................. $ 9 $ 27 $ 47 $105
</TABLE>
23
<PAGE>
<TABLE><CAPTION>
Prairie Managed Woodward
Assets Balanced Pro Forma
Fund Fund Combined
------------------------------ ---------------------- ---------------------------
Class A Class B Class I Class A Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
Maximum Sales Load
Imposed on
Purchases............. 4.50% None None 5.00% None 4.50% None None
Maximum Sales Load
Imposed on Reinvested
Dividends (as a per-
centage of offering
price)................ None None None None None None None None
Deferred Sales Load
(as a percentage of
original purchase
price or redemption
proceeds, as applica-
ble).................. None+ 5.00% None None None None+ 5.00% None
Redemption Fee (as a
percentage of amount
redeemed, if applica-
ble).................. None None None None None None None None
Exchange Fee.......... None None None None None None None None
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
Advisory Fees......... .65% .65% .65% .75% .75% .54%(1) .54%(1) .54%(1)
12b-1 Fees............ None .75% None .013% .013% None .75% None
Other Expenses (after
fee waivers and/or
expense
reimbursements)....... .40%(2)(3) .40%(2)(3) .15%(3)(4) .437%(5)(6) .187%(5) .71%(2) .71%(2) .30%(4)
Total Operating
Expenses (after fee
waivers and/or
expense reim-
bursements)........... 1.05%(7) 1.80%(7) .80%(7) 1.20%(8) .95%(8) 1.25%(9) 2.00%(9) .84%(9)
</TABLE>
- ----------------
<TABLE>
<C> <S>
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain redemptions
of Class A Shares purchased without an initial sales charge.
(1) Absent voluntary waivers, the Advisory Fees for the Pro Forma Combined Fund would be
0.65% for each of the Class A, Class B and Class I Shares, respectively.
(2) Includes administration fees of 0.15% and shareholder servicing fees of 0.25%.
(3) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 2.50%,
5.44% and 3.47%, respectively, for the Class A, Class B and Class I Shares of the
Prairie Managed Assets Fund.
(4) Includes administration fees of 0.15%.
(5) Other Expenses, absent fee waivers and/or expense reimbursements, would have been 0.577%
and 0.327%, respectively, for the Class A and Class I Shares of the Woodward Balanced
Fund.
(6) Includes shareholder servicing fees of 0.25%.
(7) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for Class A, Class B and Class I Shares of the Prairie Managed Assets Fund
would have been 3.15%, 6.84%, and 4.12%, respectively.
(8) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses of the Class A Class I Shares of the Woodward Balanced Fund would have been
1.34% and 1.09%, respectively.
(9) Absent voluntary waivers, which can be terminated at any time, the total operating
expenses for the Class A, Class B and Class I Shares of the Pro Forma Combined Fund
would be 1.36%, 2.11% and 0.95%, respectively.
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE><CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie Managed Assets Fund
Class A Shares.................................................. $ 55 $ 77 $ 100 $190
Class B Shares.................................................. $ 68 $ 87 $ 117 $183
Class I Shares.................................................. $ 8 $ 26 $ 44 $ 99
Woodward Balanced Fund
Class A Shares.................................................. $ 62 $ 86 $ 113 $189
Class I Shares.................................................. $ 10 $ 30 $ 53 $117
Pro Forma Combined
Class A Shares.................................................. $ 57 $ 83 $ 111 $190
Class B Shares.................................................. $ 71 $ 93 $ 129 $214
Class I Shares.................................................. $ 9 $ 27 $ 47 $104
</TABLE>
24
<PAGE>
Expense Ratios--Prairie Portfolios. The following table sets forth (i) the
ratios of operating expenses to average net assets of the Prairie Portfolios for
the fiscal year or period ended December 31, 1995 (a) after fee waivers and
expense reimbursements, and (b) absent fee waivers and expense reimbursements:
<TABLE><CAPTION>
Fiscal Year or Period Ended December 31, 1995
--------------------------------------------------
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Net Assets Absent
Fee Waivers and Fee Waivers and
Prairie Portfolios Expense Reimbursements Expense Reimbursements
- ---------------------------------- ----------------------- -----------------------
<S> <C> <C>
Money Market Fund
Class A Shares................... 0.79% 1.07%
Class B Shares................... 1.51% 2.02%
U.S. Government Money Market Fund
Class A Shares................... 0.78% 1.07%
Municipal Money Market Fund
Class A Shares................... 0.70% 0.94%
Growth Fund
Class A Shares................... 1.21% 1.39%
Class B Shares................... 2.04% 2.60%
Class I Shares................... 0.80% 0.92%
International Bond Fund
Class A Shares................... 1.33% 3.65%
Class B Shares................... 2.03% 8.69%
Class I Shares................... 0.95% 1.93%
Equity Income Fund
Class A Shares................... 1.11% 1.44%
Class B Shares................... 1.90% 2.65%
Class I Shares................... 0.65% 0.77%
Special Opportunities Fund
Class A Shares................... 1.25% 2.56%
Class B Shares................... 2.00% 9.52%
Class I Shares................... 0.85% 1.09%
Bond Fund
Class A Shares................... 1.02% 1.57%
Class B Shares................... 1.87% 3.91%
Class I Shares................... 0.70% 0.87%
Intermediate Municipal Bond Fund
Class A Shares................... 0.83% 0.97%
Class B Shares................... 1.71% 2.01%
Class I Shares................... 0.55% 0.68%
Municipal Bond Fund
Class A Shares................... 0.89% 1.04%
Class B Shares................... 1.66% 2.04%
Class I Shares................... 0.54% 0.67%
Intermediate Bond Fund
Class A Shares................... 0.94% 1.15%
Class B Shares................... 1.60% 1.78%
Class I Shares................... 0.55% 0.67%
Managed Assets Fund
Class A Shares................... 1.26% 3.15%
Class B Shares................... 2.00% 6.84%
Class I Shares................... 0.80% 4.12%
Managed Assets Income Fund
Class A Shares................... 1.17% 1.54%
Class B Shares................... 1.92% 2.12%
Class I Shares................... 0.77% 1.22%
</TABLE>
25
<PAGE>
Expense Ratios--Woodward Funds. The following tables set forth (i) the
ratios of operating expenses to average net assets of the Woodward Funds for the
fiscal year ended December 31, 1995 (a) after fee waivers and expense
reimbursements, and (b) absent fee waivers and expense reimbursements:
<TABLE><CAPTION>
Fiscal Year Ended December 31, 1995
------------------------------------------
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Net Assets Absent
Fee Waivers and Fee Waivers and
Expense Expense
Reimbursements Reimbursements
------------------- -------------------
WOODWARD FUNDS
- ----------------------------------------
<S> <C> <C>
Money Market Fund....................... N/A 0.51%
Government Fund......................... N/A 0.51%
Treasury Money Market Fund.............. N/A 0.53%
Tax-Exempt Money Market Fund............ N/A 0.53%
Capital Growth Fund..................... 0.86% 0.90%
International Bond Fund................. --(1) --(1)
Equity Income Fund...................... --(1) --(1)
Small-Cap Opportunity Fund.............. --(1) --(1)
Bond Fund............................... N/A 0.74%
Intermediate Municipal Bond Fund........ --(1) --(1)
Municipal Bond Fund..................... 0.79% 0.93%
Income Fund............................. --(1) --(1)
Balanced Fund........................... 0.91% 1.09%
Managed Assets Conservative Fund........ --(1) --(1)
</TABLE>
- ----------------
(1) The Woodward International Bond, Equity Income, Small-Cap Opportunity,
Intermediate Municipal Bond, Income and Managed Assets Conservative Funds
will not commence investment operations until the Reorganization is
effective.
26
<PAGE>
Expense Caps. Although under no contractual obligation, FCIMCO, NBD and
BISYS have informed Woodward and Prairie that they expect to waive fees and
reimburse expenses for the current fiscal year ending December 31, 1996 to the
extent the total operating expenses applicable to each class of shares of each
Fund exceed the amount set forth in the table below.
Post-Reorganization Expense
Portfolio Limitation
- ----------------------------------------------------------------- ----------
Money Market Fund
Class A........................................................ 0.75%
Class B........................................................ 1.50%
Class I........................................................ 0.50%
Treasury Money Market Fund
Class A........................................................ 0.75%
Class I........................................................ 0.50%
Municipal Money Market Fund (formerly, Tax-Exempt Money Market
Fund)
Class A........................................................ 0.75%
Class I........................................................ 0.50%
Growth Fund (formerly, Capital Growth Fund)
Class A........................................................ 1.34%
Class B........................................................ 2.09%
Class I........................................................ 0.98%
Bond Fund
Class A........................................................ 1.09%
Class B........................................................ 1.84%
Class I........................................................ 0.93%
Municipal Bond Fund
Class A........................................................ 0.97%
Class B........................................................ 1.72%
Class I........................................................ 0.70%
Managed Assets Balanced Fund (formerly, Balanced Fund)
Class A........................................................ 1.25%
Class B........................................................ 2.00%
Class I........................................................ 0.96%
Equity Income Fund
Class A........................................................ 1.14%
Class B........................................................ 1.89%
Class I........................................................ 1.01%
International Bond Fund
Class A........................................................ 1.48%
Class B........................................................ 2.23%
Class I........................................................ 0.84%
27
<PAGE>
Post-Reorganization Expense
Portfolio Limitation
- ----------------------------------------------------------------- ----------
Small-Cap Opportunity Fund
Class A........................................................ 1.75%
Class B........................................................ 2.50%
Class I........................................................ 1.10%
Intermediate Municipal Bond Fund
Class A........................................................ 0.99%
Class B........................................................ 1.74%
Class I........................................................ 0.75%
Income Fund
Class A........................................................ 1.09%
Class B........................................................ 1.84%
Class I........................................................ 0.93%
Managed Assets Conservative Fund
Class A........................................................ 1.25%
Class B........................................................ 2.00%
Class I........................................................ 0.97%
Voting Information. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies by Prairie's Boards of
Trustees and Directors in connection with Special Meetings of Shareholders to be
held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio,
on Wednesday, July 10, 1996 at 9:00 a.m. (Eastern time). Only Shareholders of
record at the close of business on April 11, 1996 will be entitled to notice of
and to vote at the Meeting. Each share or fraction thereof is entitled to one
vote or fraction thereof and all shares will vote separately by Portfolio.
Shares represented by a properly executed proxy will be voted in accordance with
the instructions thereon, or if no specification is made, the persons named as
proxies will vote in favor of each proposal set forth in the Notice of Meeting.
Proxies may be revoked at any time before they are exercised by submitting to
Prairie a written notice of revocation or a subsequently executed proxy or by
attending the Meeting and voting in person. For additional information,
including a description of the Shareholder vote required for approval of the
Reorganization Agreement and related transactions contemplated thereby, see
"Information Relating to Voting Matters."
Risk Factors. The following discussion highlights the principal risk factors
associated with an investment in the Prairie Portfolios and the Woodward Funds
and is qualified in its entirety by the more extensive discussion of risk
factors set forth below under "Comparison of Investment Policies and Risk
Factors" and related Prospectuses and Statements of Additional Information which
are incorporated herein by reference.
Because of the similarities of the investment objectives and policies of the
Prairie Portfolios and their corresponding Woodward Funds, management believes
that an investment in a Woodward Fund involves risks that are similar to those
of the corresponding Prairie Portfolio. These investment risks include those
typically associated with investing in a portfolio of high quality, short-term
money market instruments in the case of the money market portfolios; government
or investment grade bonds in the
28
<PAGE>
case of the taxable and tax-exempt bond portfolios; and common stocks in the
case of the stock portfolios.
There are differences, however, between the Prairie Portfolios and the
Woodward Funds as noted above under "Summary--Overview of the Prairie Portfolios
and the Woodward Funds" and below under "Comparison of Investment Policies and
Risk Factors." These differences can result in different risks.
Although the money market portfolios offered by both Prairie and Woodward
seek to maintain a stable net asset value of $1.00 per share, there is no
assurance they will be able to do so. The per share values of the other
portfolios will fluctuate with changes in value of the investments held by each
portfolio. Generally, the market value of debt securities will vary inversely to
changes in prevailing interest rates. Certain portfolios may seek to achieve
their investment objectives through investments in securities of foreign issuers
that involve risks not typically associated with U.S. issuers; debt instruments
with the lowest or below investment grade rating which are speculative;
mortgage-backed and asset-backed securities; illiquid instruments; and certain
options, futures and foreign currency transactions. Certain portfolios may
engage in securities lending transactions. Certain of the Prairie Portfolios and
Woodward Funds may engage in the use of reverse repurchase agreements that can
cause their net asset values to rise or fall faster than they otherwise would.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by a portfolio may decline below the price of the securities the
portfolio is obligated to purchase.
The ability of the Woodward Tax-Exempt Money Market Fund to invest more than
25% of its assets in municipal obligations issued by any State, the
non-diversified status of each Prairie Portfolio other than the Prairie Money
Market, U.S. Government Money Market, Municipal Money Market, Managed Assets and
Managed Assets Income Funds, and the non-diversified status of the Woodward
International Bond, Municipal Bond and Intermediate Municipal Bond Funds,
present additional risks as stated in their current Prospectus. Investment
return on a non-diversified portfolio typically is dependent upon the
performance of a smaller number of securities relative to the number held in a
diversified portfolio. Consequently, the change in value of any one security may
affect the overall value of a non-diversified portfolio more than it would a
diversified portfolio, and thereby subject its net asset value per share to
greater fluctuation. In addition, a non-diversified portfolio may be more
susceptible to economic, political and regulatory developments affecting the
portfolio's investment sector than a diversified investment portfolio with
similar objectives would be.
A "derivative" is often defined as an instrument that derives its value from
the price of different securities, interest or currency exchange rates, or
indices. Woodward considers the following types of securities to be
"derivatives" because they may present atypical or unexpected risks: forward
foreign currency contracts, futures contracts, put and call options purchased on
securities and indices, asset-backed and mortgage-backed securities, "stripped
securities" and variable and floating rate notes. The Woodward Funds will not
acquire such derivatives for speculative purposes, and will only acquire them
for investment or hedging purposes as specifically described in their
Prospectuses and in their Statements of Additional Information. There is no
assurance that any portfolio will achieve its investment objective.
29
<PAGE>
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
Prairie has entered into agreements whereby all of its investment portfolios
are to be acquired by portfolios of Woodward. While significant provisions of
the Reorganization Agreement are summarized below, this summary is qualified in
its entirety by reference to the Reorganization Agreement, a copy of which is
attached as Appendix I to this Combined Prospectus/Proxy Statement.
Description of the Reorganization Agreement. There are fourteen separate
Prairie investment portfolios, thirteen of which are proposed for reorganization
purusant to the Reorganization Agreement. (The Prairie International Equity Fund
is covered by a separate reorganization agreement.) Initially, the assets of
seven of them will be acquired by seven similar investment portfolios currently
offered by Woodward. Subsequently, the remaining six Prairie Portfolios will be
acquired by six new Woodward Funds which have been organized to continue the
operations of these Prairie Portfolios.
The Reorganization Agreement provides, first, that substantially all of the
assets and liabilities of the Reorganizing Portfolios will be transferred to the
Existing Woodward Funds identified in the table below. Not less than seven
calendar days thereafter, substantially all of the assets and liabilities of the
Continuing Portfolios will be transferred to the New Woodward Funds identified
in the table below. The holders of each class of shares of a Prairie Portfolio
will receive the class of shares of the corresponding Woodward Fund identified
in the table. In the tables, (a) opposite the name of each Prairie Portfolio is
the name of the Woodward Fund which will issue shares to such Prairie Portfolio,
and (b) opposite the name of each class of shares of the Prairie Portfolio is
the name of the class of shares of the Woodward Fund to be distributed to the
holders of such Prairie class. The number of each class of shares to be issued
by the Woodward Funds will have an aggregate net asset value equal to the
aggregate net asset value of the corresponding class or classes of shares of the
particular Prairie Portfolio as of the regular close of the New York Stock
Exchange, currently 4:00 p.m. New York time, on the business day immediately
preceding each transaction. The three Woodward money market portfolios (Woodward
Money Market, Treasury Money Market and Tax-Exempt Money Market Funds) may have
immaterial differences in market-based net asset values per share from their
Prairie counterparts; however, it is a condition of the Reorganization that the
per-share amortized cost values of these portfolios be identical with those of
the Prairie money market portfolios.
30
<PAGE>
Reorganizing Existing Woodward Funds
Portfolios and Classes and Classes
- --------------------------------------------- ---------------------------------
Money Market Fund Money Market Fund*
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares
U.S. Government Money Market Fund Treasury Money Market Fund*
Class A Shares Class A Shares
Class I Shares
Municipal Money Market Fund Tax-Exempt Money Market Fund*
Class A Shares Class A Shares
Class I Shares
Growth Fund* Capital Growth Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Bond Fund Bond Fund*
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Municipal Bond Fund* Municipal Bond Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Managed Assets Fund Balanced Fund*
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Continuing New Woodward Funds
Portfolios and Classes and Classes
- --------------------------------------------- ---------------------------------
International Bond Fund* International Bond Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Equity Income Fund* Equity Income Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Special Opportunities Fund* Small-Cap Opportunity Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Intermediate Municipal Bond Fund* Intermediate Municipal Bond Fund
Class A Shares Class A Shares
- ----------------
* Denotes the surviving or continuing portfolio for the purposes of maintaining
the financial statements and performance history in the post-reorganization
portfolio.
31
<PAGE>
Continuing New Woodward Funds
Portfolios and Classes and Classes
- --------------------------------------------- -------------------------------
Class B Shares Class B Shares
Class I Shares Class I Shares
Intermediate Bond Fund* Income Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Managed Assets Income Fund* Managed Assets Conservative Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class I Shares Class I Shares
Prairie may liquidate a limited number of holdings of certain of the Prairie
Portfolios in light of the investment policies of Woodward and the strategies of
its investment adviser. Similarly, the Woodward Capital Growth Fund and Woodward
Municipal Bond Fund may liquidate a limited number of holdings in light of their
intentions to change investment policies to resemble those of the Prairie Growth
Fund and Prairie Municipal Bond Fund, respectively. The transaction costs that
will result from such sales are expected to be minimal.
The Reorganization Agreement provides that Prairie will declare a dividend
or dividends prior to the Reorganizing Portfolios Transaction which, together
with all previous dividends, will have the effect of distributing to the
Shareholders of each of the Reorganizing Portfolios all undistributed ordinary
income earned and net capital gains realized up to and including the effective
time of the Reorganization.
Following the transfers of assets and liabilities from the Prairie
Portfolios to the Woodward Funds, and the issuance of shares by the Woodward
Funds to the Prairie Portfolios, each of the Prairie Portfolios will distribute
the class of shares of the Woodward Funds pro rata to the holders of classes of
shares of the Prairie Portfolios as described above in liquidation of the
Prairie Portfolios. Each holder of a class of shares of a Prairie Portfolio will
receive an amount of equal value of the corresponding class of shares of the
corresponding Woodward Fund, plus the right to receive any declared and unpaid
dividends or distributions. Following the Reorganization, the registration of
Prairie as an investment company under the 1940 Act will be terminated, and
Prairie will be terminated under state law.
- ----------------
* Denotes the surviving or continuing portfolio for the purposes of maintaining
the financial statements and performance history in the post-reorganization
portfolio.
32
<PAGE>
The stock transfer books of Prairie will be permanently closed after the
Reorganization.
The Reorganization is subject to a number of conditions, including approval
of the Reorganization Agreement and the transactions contemplated thereby
described in this Combined Prospectus/Proxy Statement by the Shareholders of
Prairie; the receipt of certain legal opinions described in the Reorganization
Agreement; the receipt of certain certificates from the parties concerning the
continuing accuracy of their representations and warranties in the
Reorganization Agreement and other matters; and the parties' performance in all
material respects of their agreements and undertakings in the Reorganization
Agreement. Assuming satisfaction of the conditions in the Reorganization
Agreement, the Reorganizing Portfolios Transaction is expected to occur on or
after August 9, 1996 and the Continuing Portfolios Transaction is expected to
occur on or after August 30, 1996.
The expenses of Woodward and of Prairie incurred in connection with the
Reorganization will be borne by First Chicago NBD Corporation or its
subsidiaries, except that Woodward will bear any related registration fees
payable under the Securities Act of 1933 and state blue sky laws.
The Reorganization may be abandoned prior to its consummation by the mutual
consent of the parties to the Reorganization Agreement. The Reorganization
Agreement provides further that at any time prior to, or (to the fullest extent
permitted by law) after, the approval of the Reorganization Agreement by Prairie
Shareholders (a) the parties thereto may, by written agreement approved by their
respective Boards of Trustees or Directors, or authorized officers and with or
without the approval of their respective Shareholders, amend any of the
provisions of the Reorganization Agreement; and (b) either party may waive any
breach by the other party or the failure to satisfy any of the conditions to its
obligations with or without the approval of such party's Shareholders.
Board Consideration. In giving its approval to the Reorganization at
meetings held on December 6, 1995, January 9, 1996 and February 20, 1996, the
Boards of Trustees and Directors of Prairie considered, primarily, the recent
merger between First Chicago Corporation, the parent company of FCIMCO, and NBD
Bancorp, Inc., the parent company of NBD. This Reorganization presents the
opportunity to combine the separate Prairie and Woodward mutual fund families
into a single, larger consolidated group, offering shareholders a full spectrum
of funds. Accordingly, FCIMCO and NBD recommended that each of the Prairie
Portfolios be reorganized as described in this Combined Prospectus/Proxy
Statement. The Boards of Trustees and Directors of Prairie considered the
recommendation of FCIMCO and NBD with respect to the proposed consolidation of
Prairie and Woodward; the investment capabilities of the co-advisers; the
compatibility of the investment objectives and policies of the Prairie
Portfolios and their corresponding Woodward Funds; the improvement of
operational efficiencies and achievement of economies of scale through the
consolidation of investment portfolios that are substantially similar; the
management and other fees paid by the Woodward Funds; the historical and
projected expense ratios of the Woodward Funds as compared to those of the
Prairie Portfolios; the comparative investment performance of the Prairie
Portfolios and their corresponding Woodward Funds; the fact that the
Reorganization would constitute a tax-free reorganization; and that the
interests of Shareholders would not be diluted as a result of the
Reorganization.
33
<PAGE>
After considering the foregoing factors, together with such other
information as they believed to be relevant, Prairie's Trustees and Directors
unanimously approved the Reorganization Agreement and directed that it be
submitted to Shareholders for approval.
PRAIRIE'S BOARDS OF TRUSTEES AND DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE REORGANIZATION AGREEMENT.
The Boards of Trustees and Directors of Prairie have not determined what
action Prairie will take in the event the Shareholders of any Prairie Portfolio
fail to approve the Reorganization Agreement or for any reason the
Reorganization is not consummated. In either such event, the Trustees and
Directors will consider other appropriate courses of action, including
continuing operations of the Prairie Portfolios in their present form.
At meetings held on November 27 and 28, 1995, January 9, 1996 and February
20, 1996, the Woodward Board of Trustees considered the proposed Reorganization.
Based upon their evaluation of the relevant information provided to them, and in
light of their fiduciary duties under federal and state law, the Board of
Trustees unanimously determined that the proposed Reorganization is in the best
interests of Woodward and its shareholders, and that the interests of existing
shareholders of Woodward would not be diluted as a result of the transactions.
Capitalization. Because the Reorganizing Portfolios will be combined in the
Reorganization with the Existing Woodward Funds, the total capitalization of
each of the Existing Woodward Funds after the Reorganization is expected to be
greater than the current capitalization of the corresponding Reorganizing
Portfolios. In addition, because the Continuing Prairie Portfolios will be
combined in the Reorganization with the newly organized New Woodward Funds
having only nominal assets and liabilities, information on the capitalization of
the Continuing Prairie Portfolios and New Woodward Funds is not included. The
following table sets forth as of December 31, 1995, (i) the capitalization of
each of the Reorganizing Portfolios and (ii) the pro forma capitalization of
each of the Existing Woodward Funds as adjusted to give effect to the
Reorganization. If consummated, the capitalization of
34
<PAGE>
each Portfolio is likely to be different at the effective time of the
Reorganizing Portfolios Transaction as a result of daily share purchase and
redemption activity in the Portfolios.
<TABLE><CAPTION>
Prairie Money Woodward Money Pro Forma
Market Fund Market Fund Combined
------------- -------------- --------------
<S> <C> <C> <C>
Total Net Assets................................ $ 204,059,218 $1,639,694,814 $1,843,754,032
Class A Shares................................. $ 203,994,341 N/A $ 384,360,771
Class B Shares................................. 64,877 N/A $ 64,877
Class I Shares................................. N/A N/A $1,459,328,384
Single Class Shares............................ N/A $1,639,694,814 N/A
Shares Outstanding.............................. 204,027,364 1,639,694,814 1,843,722,178
Class A Shares................................. 203,962,497 N/A 384,328,927
Class B Shares................................. 64,867 N/A 64,867
Class I Shares................................. N/A N/A 1,459,328,384
Single Class Shares............................ N/A 1,639,694,814 N/A
Net Asset Value Per Share
Class A Shares................................. $ 1.00 N/A $ 1.00
Class B Shares................................. $ 1.00 N/A $ 1.00
Class I Shares................................. N/A N/A $ 1.00
Single Class Shares............................ N/A $ 1.00 N/A
<CAPTION>
Prairie U.S. Woodward Woodward
Government Money Treasury Money Government Pro Forma
Market Fund Market Fund Money Market Fund Combined
---------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Total Net Assets............ $ 57,264,060 $927,695,502 $ 474,376,855 $1,459,336,417
Class A Shares............. $ 57,264,060 N/A N/A $ 142,846,537
Class B Shares............. N/A N/A N/A N/A
Class I Shares............. N/A N/A N/A $1,316,489,880
Single Class Shares........ N/A $927,695,502 $ 474,376,855 N/A
Shares Outstanding.......... 57,280,045 927,695,502 474,376,855 1,459,352,402
Class A Shares............. 57,280,045 N/A N/A 142,862,522
Class B Shares............. N/A N/A N/A N/A
Class I Shares............. N/A N/A N/A 1,316,489,880
Single Class Shares........ N/A 927,695,502 474,376,855 N/A
Net Asset Value Per Share
Class A Shares............. $ 1.00 N/A N/A $ 1.00
Class B Shares............. N/A N/A N/A N/A
Class I Shares............. N/A N/A N/A $ 1.00
Single Class Shares........ N/A $ 1.00 $ 1.00 N/A
</TABLE>
35
<PAGE>
<TABLE><CAPTION>
Prairie Municipal Woodward Tax-
Money Exempt Money Pro Forma
Market Fund Market Fund Combined
----------------- ------------- ------------
<S> <C> <C> <C>
Total Net Assets................................. $ 228,511,278 $564,413,476 $792,924,754
Class A Shares.................................. $ 228,511,278 N/A $254,135,650
Class B Shares.................................. N/A N/A N/A
Class I Shares.................................. N/A N/A $538,789,104
Single Class Shares............................. N/A $564,413,476 N/A
Shares Outstanding............................... 228,564,929 564,413,476 792,978,405
Class A Shares.................................. 228,564,929 N/A 254,189,301
Class B Shares.................................. N/A N/A N/A
Class I Shares.................................. N/A N/A 538,789,104
Single Class Shares............................. N/A 564,413,476 N/A
Net Asset Value Per Share
Class A Shares.................................. $ 1.00 N/A $ 1.00
Class B Shares.................................. N/A N/A N/A
Class I Shares.................................. N/A N/A $ 1.00
Single Class Shares............................. N/A $ 1.00 N/A
<CAPTION>
Woodward
Prairie Capital Pro Forma
Growth Fund Growth Fund Combined
------------ ------------ ------------
<S> <C> <C> <C>
Total Net Assets.................................... $298,541,346 $195,861,178 $494,402,524
Class A Shares..................................... $ 4,329,204 N/A $ 9,450,974
Class B Shares..................................... $ 268,039 N/A $ 268,039
Class I Shares..................................... $293,944,103 N/A $484,683,511
Single Class Shares................................ N/A $195,861,178 N/A
Shares Outstanding.................................. 24,943,560 14,765,837 41,307,993
Class A Shares..................................... 361,669 N/A 789,550
Class B Shares..................................... 22,438 N/A 22,438
Class I Shares..................................... 24,559,453 N/A 40,496,005
Single Class Shares................................ N/A 14,765,837 N/A
Net Asset Value Per Share
Class A Shares..................................... $ 11.97 N/A $ 11.97
Class B Shares..................................... $ 11.95 N/A $ 11.95
Class I Shares..................................... $ 11.97 N/A $ 11.97
Single Class Shares................................ N/A $ 13.26 N/A
</TABLE>
36
<PAGE>
<TABLE><CAPTION>
Prairie Woodward Pro Forma
Bond Fund Bond Fund Combined
------------ ------------ ------------
<S> <C> <C> <C>
Total Net Assets.................................... $127,308,669 $517,565,579 $644,874,248
Class A Shares..................................... $ 1,846,532 N/A $ 32,279,388
Class B Shares..................................... $ 61,260 N/A $ 61,260
Class I Shares..................................... $125,400,877 N/A $612,533,600
Single Class Shares................................ N/A $517,565,579 N/A
Shares Outstanding.................................. 11,774,608 49,523,843 61,705,323
Class A Shares..................................... 170,875 N/A 3,088,689
Class B Shares..................................... 5,669 N/A 5,669
Class I Shares..................................... 11,598,064 N/A 58,610,965
Single Class Shares................................ N/A 49,523,843 N/A
Net Asset Value Per Share
Class A Shares..................................... $ 10.81 N/A $ 10.45
Class B Shares..................................... $ 10.81 N/A $ 10.81
Class I Shares..................................... $ 10.81 N/A $ 10.45
Single Class Shares................................ N/A $ 10.45 N/A
<CAPTION>
Prairie Woodward
Municipal Municipal Pro Forma
Bond Fund Bond Fund Combined
------------ ----------- ------------
<S> <C> <C> <C>
Total Net Assets..................................... $247,823,150 $76,963,564 $324,786,714
Class A Shares...................................... $ 7,425,897 N/A $ 18,616,399
Class B Shares...................................... $ 237,697 N/A $ 237,697
Class I Shares...................................... $240,159,556 N/A $305,932,618
Single Class Shares................................. N/A $76,963,564 N/A
Shares Outstanding................................... 19,617,499 7,205,434 26,209,625
Class A Shares...................................... 587,619 N/A 1,473,135
Class B Shares...................................... 18,797 N/A 18,797
Class I Shares...................................... 19,011,083 N/A 24,217,693
Single Class Shares................................. N/A 7,205,434 N/A
Net Asset Value Per Share
Class A Shares...................................... $ 12.64 N/A $ 12.64
Class B Shares...................................... $ 12.65 N/A $ 12.65
Class I Share....................................... $ 12.63 N/A $ 12.63
Single Class Shares................................. N/A $ 10.68 N/A
</TABLE>
37
<PAGE>
<TABLE><CAPTION>
Prairie Woodward Pro Forma
Managed Balanced Combined
Assets Fund Fund -
----------- ----------- ------------
<S> <C> <C> <C>
Total Net Assets.................................... $ 9,559,001 $93,623,801 $103,222,802
Class A Shares.................................... $ 8,355,636 N/A $ 17,234,917
Class B Shares.................................... $ 832,603 N/A $ 832,603
Class I Shares.................................... $ 410,762 N/A $ 85,155,282
Single Class Shares............................... N/A $93,623,801 N/A
Shares Outstanding.................................. 834,991 8,328,682 9,182,165
Class A Shares.................................... 726,432 N/A 1,533,356
Class B Shares.................................... 72,716 N/A 72,716
Class I Shares.................................... 35,843 N/A 7,576,093
Single Class Shares............................... N/A 8,328,682 N/A
Net Asset Value Per Share
Class A Shares.................................... $ 11.50 N/A $ 11.24
Class B Shares.................................... $ 11.45 N/A $ 11.45
Class I Shares.................................... $ 11.46 N/A $ 11.24
Single Class Shares............................... N/A $ 11.24 N/A
</TABLE>
Federal Income Tax Consequences. Consummation of the Reorganization is
subject to the condition that Prairie and Woodward receive an opinion from
Drinker Biddle & Reath to the effect that for federal income tax purposes: (i)
the transfer of all of the assets and liabilities of each of the Reorganizing
Portfolios (except in each case for a cash reserve in an amount necessary for
the discharge of all known and reasonably anticipated liabilities of each of the
Reorganizing Portfolios) and each of the Continuing Funds to the corresponding
Woodward Fund in exchange for shares of the corresponding Woodward Fund and
liquidating distributions to Shareholders of the Prairie Portfolios of the
shares of the Woodward Fund so received, as described in the Reorganization
Agreement, will constitute reorganizations within the meaning of Section
368(a)(1)(C), Section 368(a)(1)(D) or Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended (the "Code"), and with respect to the
Reorganization, each Prairie Portfolio and Woodward Fund will be considered "a
party to a reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by any Prairie Portfolio as a result of
such transactions; (iii) no gain or loss will be recognized by any Woodward Fund
as a result of such transactions; (iv) no gain or loss will be recognized by the
Shareholders of any Prairie Portfolio on the distribution to them by Prairie of
shares of any Class of the corresponding Woodward Fund in exchange for their
shares of any class of the Prairie Portfolio; (v) the aggregate basis of the
Woodward Fund shares received by a shareholder of a Prairie Portfolio will be
the same as the aggregate basis of the Shareholder's Prairie Portfolio shares
immediately prior to the Reorganization; (vi) the basis of each Woodward Fund in
the assets of the corresponding Prairie Portfolio received pursuant to the
Reorganization will be the same as the basis of the assets in the hands of the
Prairie Portfolio immediately before the Reorganization; (vii) a shareholder's
holding period for Woodward Fund shares will be determined by including the
period for which the shareholder held the Prairie Portfolio shares exchanged
therefor, provided that the shareholder held such Prairie Portfolio shares as a
capital asset; and (viii) each Woodward Fund's holding period with respect to
the assets received in the Reorganization will include the period for which such
assets were held by the corresponding Prairie Portfolio.
38
<PAGE>
Woodward and Prairie have not sought a tax ruling from the Internal Revenue
Service ("IRS"), but are acting in reliance upon the opinion of counsel
discussed in the previous paragraph. That opinion is not binding on the IRS and
does not preclude the IRS from adopting a contrary position. Shareholders should
consult their own advisers concerning the potential tax consequences to them,
including state and local income taxes.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objective and policies of each Prairie Portfolio are, in many
respects, similar to those of the corresponding Woodward Fund. There are,
however, certain differences. The following discussion summarizes the more
significant differences in the investment policies, risk factors and limitations
of the Prairie Portfolios and their corresponding Woodward Funds and is
qualified in its entirety by the Prospectuses and Statements of Additional
Information of the Prairie Portfolios and the Woodward Funds which are
incorporated herein by reference. For a discussion of certain investment
policies of the Prairie Portfolios and Woodward Funds and related risk factors,
see "Investment Policies and Risks--General" below.
The investment objective and certain investment policies of each of the
Prairie Portfolios and Woodward Funds are fundamental. This means that they may
not be changed without a vote of the holders of a majority of a fund's
outstanding shares, as defined by the 1940 Act. Investment policies of the
Prairie Portfolios and Woodward Funds that are not fundamental may be changed by
the respective Board of Trustees or Directors.
The Woodward Funds are currently voting on certain matters related to
changes in the Funds' objectives and fundamental limitations. In the event that
certain items are not approved, the Reorganization will still occur.
PRAIRIE MONEY MARKET FUND AND WOODWARD MONEY MARKET FUND
Each Fund is a money market fund that seeks to maintain a net asset value of
$1.00 per share, although there is no assurance either will be able to do so.
Each 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 in
the Funds' Prospectuses and Statements of Additional Information which are
incorporated herein by reference.
Both the Prairie Money Market Fund and Woodward Money Market Fund may invest
in a broad range of U.S. dollar-denominated, high quality, short-term
instruments, including U.S. Government obligations, commercial paper, corporate
obligations, bank obligations, repurchase agreements and other short-term
obligations including those with floating or variable rates of interest.
The Funds may invest in U.S. dollar-denominated bank obligations of foreign
and domestic banks such as certificates of deposit, time deposits and bankers'
acceptances. The Prairie Money Market Fund has a fundamental policy requiring it
to invest, except when it has adopted a temporary defensive position, at least
25% of its total assets in bank obligations. The Woodward Money Market Fund is
not bound by this restriction. However, all investments in bank obligations by
the Woodward Money
39
<PAGE>
Market Fund are limited to those of financial institutions with more than $1
billion in total assets at the time of purchase.
The Woodward Money Market Fund may invest in U.S. dollar- denominated
obligations issued or guaranteed by the government of Canada, a Province of
Canada, or an instrumentality or political subdivision thereof. The Prairie
Money Market Fund is not expressly permitted to invest in these securities.
Additionally, the Woodward Money Market Fund may, subject to its limitation
on illiquid investments, make limited investments in guaranteed investment
contracts issued by highly rated U.S. insurance companies. The Prairie Money
Market Fund is not expressly permitted to invest in such securities.
PRAIRIE U.S. GOVERNMENT MONEY MARKET FUND AND WOODWARD TREASURY MONEY MARKET
FUND
Each Fund is a money market fund that seeks to maintain a net asset value of
$1.00 per share, although there is no assurance either will be able to do so.
The Funds have similar, but not identical, investment policies.
The Prairie U.S. Government Money Market Fund invests in short-term
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities, and related repurchase
agreements. The Woodward Treasury Money Market Fund invests only in U.S.
Treasury bills, notes and direct U.S. Treasury obligations having remaining
maturities of 13 months or less and related repurchase agreements.
PRAIRIE MUNICIPAL MONEY MARKET FUND AND WOODWARD TAX-EXEMPT MONEY MARKET FUND
Each Fund is a money market fund that seeks to maintain a net asset value of
$1.00 per share, although there is no assurance it will be able to do so. Both
Funds invest at least 80% of their assets in the same types of Municipal
Securities. They may invest in securities rated in the two highest rating
categories by a Rating Agency, or, if unrated, in securities that are determined
to be of comparable quality. In addition, both are permitted to invest in
taxable obligations for temporary defensive purposes or when suitable Municipal
Securities are not available.
The Prairie Municipal Money Market Fund may invest without limitation in
Municipal Securities which constitute certain types of private activity bonds as
defined in the Code. The interest on these bonds, while exempt from regular
federal income tax, is a tax preference item for purposes of the federal
alternative minimum tax. The Woodward Tax-Exempt Money Market Fund is currently
limited to investing no more than 20% of its net assets in these private
activity bonds and taxable investments. Following its Reorganization, the
Woodward Tax-Exempt Money Market Fund, to be renamed the Woodward Municipal
Money Market Fund, is expected to conform its policy to the policy adopted by
the Prairie Municipal Money Market Fund regarding these investments.
40
<PAGE>
PRAIRIE GROWTH FUND AND WOODWARD CAPITAL GROWTH FUND
It is expected that the Woodward Capital Growth Fund will change its name to
the Growth Fund and adopt investment policies that are substantially identical
to the Prairie Growth Fund in connection with its Reorganization.
The principal difference in the investment policies of the Funds is that the
Prairie Growth Fund is classified as a non-diversified investment company under
the 1940 Act, which permits a relatively high percentage of the Fund's assets to
be invested in the obligations of a limited number of issuers. The Woodward
Capital Growth Fund is classified as a diversified investment company under the
1940 Act and expects to continue to operate as a diversified portfolio after the
Reorganization. See "Investment Limitations" below for a discussion of
diversification.
Under normal market conditions, each Fund expects to invest at least 65% of
its total assets in equity securities. The Woodward Capital Growth Fund
currently invests primarily in equity securities of companies with a market
capitalization of at least $1 billion, while the Prairie Growth Fund has no
market capitalization requirement. Following its Reorganization, the Woodward
Capital Growth Fund will no longer be subject to a market capitalization
requirement.
Both Funds intend to invest primarily in the equity securities of domestic
issuers; however, the Prairie Growth Fund may invest in depository receipts of
foreign issuers and may invest up to 20% of its total assets in equity
securities of foreign issuers. The Woodward Capital Growth Fund is presently
permitted to invest up to 25% of its total assets in the securities of foreign
issuers, either directly or through American Depository Receipts ("ADRs"). The
post-reorganization Fund will be permitted to invest up to 25% of its total
assets in the securities of foreign issuers.
Each Fund may invest a portion of its assets in fixed income securities
rated in the four highest rating categories (i.e., investment grade) by a Rating
Agency (or, if unrated, deemed comparable in quality by the Fund's adviser).
Both Funds may invest in convertible securities although there are differences
in the quality of the convertible securities each Fund may purchase. The Prairie
Growth Fund may invest up to 35% of its net assets in convertible securities
rated below investment grade, whereas the Woodward Capital Growth Fund is
currently limited to investing no more than 5% of its net assets in convertible
securities rated lower than investment grade. The post-reorganization Fund will
invest only in investment grade securities.
Both Funds may enter into futures contracts and related options and may
utilize options and other derivative instruments.
PRAIRIE BOND FUND AND WOODWARD BOND FUND
The primary investment related distinction between the Funds is that the
Prairie Bond Fund is classified as a non-diversified investment company under
the 1940 Act and the Woodward Bond Fund is classified as a diversified
investment company. Following its Reorganization, the Woodward Bond Fund will
continue its operations as a diversified portfolio. See "Investment Limitations"
below for a discussion of diversification.
41
<PAGE>
Both Funds normally invest at least 65% of their assets in debt obligations.
The types of debt securities eligible for investment by the Funds are
substantially identical, although applicable rating requirements differ. Debt
securities acquired by the Woodward Bond Fund must be rated in the four highest
rating categories by a Rating Agency (i.e., investment grade), whereas the
Prairie Bond Fund is limited, as to 65% of its total assets, to investments in
the three highest rating categories. The remainder of the Prairie Bond Fund's
assets may be invested in securities rated below the three highest rating
categories, including securities rated below investment grade, provided that
such securities are rated no lower than B by a Rating Agency. Unrated securities
deemed by a Fund's adviser to be comparable in quality to securities rated in
the above categories are eligible for investment by the Fund.
The Woodward Bond Fund currently maintains an average weighted maturity of
between 6 and 12 years; the Prairie Bond Fund has no stated range regarding its
average weighted maturity.
Both Funds may invest in futures, options and other derivative instruments.
PRAIRIE MUNICIPAL BOND FUND AND WOODWARD MUNICIPAL BOND FUND
It is expected that the Woodward Municipal Bond Fund will, prior to its
Reorganization, adopt investment policies substantially identical to those of
the Prairie Municipal Bond Fund. It is also expected that, subject to
shareholder approval, the Woodward Municipal Bond Fund will change its status as
a diversified investment company within the meaning of the 1940 Act to a
non-diversified one.
Under normal market conditions, each Fund invests at least 80% of its net
assets in Municipal Securities rated in the four highest rating categories by a
Rating Agency, or if unrated, deemed comparable in quality by the Fund's
adviser. In addition, each Fund may also invest up to 20%, or without limitation
for temporary defensive purposes, of its net assets in taxable cash equivalent
and short-term securities. The Funds may also invest in options, futures and
other derivative instruments.
PRAIRIE MANAGED ASSETS FUND AND WOODWARD BALANCED FUND
It is expected that the Woodward Balanced Fund will, prior to the
Reorganizing Portfolios Transaction, change its name to the Woodward Managed
Assets Balanced Fund.
The equity and fixed income securities eligible for purchase by the Funds
are substantially similar. They may invest in securities of foreign issuers in
the form of ADRs and, in the case of the Prairie Managed Assets Fund, European
Depository Receipts ("EDRs"). The post-reorganization Fund will be permitted to
invest in ADRs and EDRs. Each Fund invests at least 25% of its assets in fixed
income securities which generally must be rated in one of the four highest
rating categories by a Rating Agency, or if unrated, deemed comparable in
quality by the Fund's adviser. The Prairie Managed Assets Fund may invest 20% of
its net assets in securities rated below the four highest rating categories.
Each Fund may also invest in futures, options and other derivative instruments.
42
<PAGE>
PRAIRIE EQUITY INCOME FUND AND WOODWARD EQUITY INCOME FUND
The principal investment related difference between the Funds involves the
classification of the Prairie Equity Income Fund as a non-diversified investment
company under the 1940 Act and the classification of the Woodward Equity Income
Fund as a diversified investment company. Following its Reorganization, the
Woodward Equity Income Fund will continue its operations as a diversified
portfolio.
Each Fund invests at least 65% of its total assets in income-producing
equity securities of domestic issuers. The fixed income securities acquired by
the Funds generally must be rated in one of the four highest rating categories
by a Rating Agency (or, if unrated, deemed comparable in quality by the Funds'
advisers), although the Prairie Equity Income Fund is permitted to invest up to
35% of its assets in convertible debt securities which may be rated lower than
investment grade.
The equity and fixed income securities eligible for purchase by the Funds
are substantially the same. Both Funds may invest in securities of foreign
issuers either directly or through depository receipts and may invest in
futures, options and other derivative instruments.
PRAIRIE INTERNATIONAL BOND FUND AND WOODWARD INTERNATIONAL BOND FUND
Both Funds normally invest at least 65% of their assets in debt obligations
of issuers located throughout the world, except the United States. The Funds
also may invest in convertible preferred stocks, hold foreign currency and
purchase debt securities or hold currencies in combination with forward currency
exchange contracts. Each Fund is required to invest at least 65% of its total
assets in fixed income securities rated A or better by a Rating Agency and is
permitted to invest the remainder of its portfolio in assets rated no lower than
B by a Rating Agency. Each Fund may also invest in securities which, while not
rated, are determined by the adviser to be of comparable quality to those rated
securities in which the Fund may invest. Both Funds may invest in futures,
options and other derivative instruments.
PRAIRIE SPECIAL OPPORTUNITIES FUND AND WOODWARD SMALL-CAP OPPORTUNITY FUND
The Prairie Special Opportunities Fund invests primarily in equity
securities of small to medium-sized emerging growth domestic issuers (typically
with market capitalizations of $100 million to $750 million) that the adviser
believes are undervalued in the marketplace. The Woodward Small-Cap Opportunity
Fund invests in equity securities of small domestic issuers with market
capitalizations of $100 million to $1 billion. The Prairie Special Opportunities
Fund is permitted to invest in depository receipts of foreign issuers and may
invest up to 20% of its total assets in equity securities of foreign issuers.
The Woodward Small-Cap Opportunity Fund may invest up to 25% of its total assets
in the securities of foreign issuers, either directly or through depository
receipts. Both Funds may invest in futures, options and other derivative
instruments.
43
<PAGE>
The Prairie Special Opportunities Fund is classified as a non-diversified
investment company under the 1940 Act. The Woodward Small-Cap Opportunity Fund
is classified as a diversified investment company. Following the Reorganization,
the Woodward Small-Cap Opportunity Fund will continue its operations as a
diversified portfolio. See "Investment Limitations" below for a discussion of
diversification.
PRAIRIE INTERMEDIATE MUNICIPAL BOND FUND AND WOODWARD INTERMEDIATE MUNICIPAL
BOND FUND
Both Funds normally invest at least 80% of their net assets in Municipal
Securities rated in the four highest rating categories by a Rating Agency (or,
if unrated, determined by the adviser to be comparable in quality to instruments
that are so rated) which, under normal market conditions, will have
dollar-weighted average maturities expected to range between three and ten
years. From time to time, each Fund may invest up to 20%, or without limitation
for temporary defensive purposes, of its net assets in taxable cash equivalent
and other short-term securities. The Funds may invest in options, futures and
other derivative instruments.
PRAIRIE INTERMEDIATE BOND FUND AND WOODWARD INCOME FUND
Each Fund invests in a portfolio of U.S. dollar-denominated 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 types of debt securities eligible for purchase
by the Funds are substantially similar, although applicable rating requirements
of the Funds are different. Debt securities acquired by the Woodward Income Fund
must be rated in the four highest rating categories by a Rating Agency or, if
unrated, deemed by the adviser to be comparable in quality at the time of
purchase. The Prairie Intermediate Bond Fund is required, under normal market
conditions, to invest at least 65% of its total assets in securities rated A or
better by a Rating Agency or, if unrated, deemed by the adviser to be comparable
in quality at the time of purchase. The remainder of the Prairie Intermediate
Bond Fund's assets may be invested in securities rated within the two highest
rating categories by a Rating Agency.
The major investment related difference between the Funds is that the
Prairie Intermediate Bond Fund is classified as a non-diversified investment
company under the 1940 Act whereas the Woodward Income Fund is classified as a
diversified investment company. After its Reorganization, the Woodward Income
Fund expects to continue its operations as a diversified portfolio. See
"Investment Limitations" below.
PRAIRIE MANAGED ASSETS INCOME FUND AND WOODWARD MANAGED ASSETS CONSERVATIVE FUND
Both Funds invest in a portfolio of equity securities, fixed income
securities and cash equivalent securities. The types of securities eligible for
purchase by the Funds are substantially the same. The fixed income securities
acquired by the Funds generally must be rated in one of the four highest rating
categories by a Rating Agency or, if unrated, deemed by the adviser to be
comparable in quality at the
44
<PAGE>
time of purchase, although the Prairie Managed Assets Income Fund may invest up
to 5% of its net assets in convertible bonds rated below investment grade. Each
Fund may invest in securities of foreign issuers through depository receipts and
may engage in futures, options and other derivative transactions.
INVESTMENT POLICIES AND RISKS--GENERAL
Money Market Instruments. Each Prairie Portfolio and Woodward Fund is
permitted to (i) enter into repurchase agreements and reverse repurchase
agreements; and (ii) purchase obligations of the U.S. Government, its agencies
and instrumentalities, except that the Woodward Treasury Money Market Fund is
limited to investments in direct U.S. Treasury obligations. Each Prairie
Portfolio may invest generally in bank obligations whereas each Woodward Fund
may only invest in bank obligations of financial institutions having total
assets at the time of purchase of $1 billion.
Foreign Securities. Each Prairie Portfolio, other than the U.S. Government
Money Market, Municipal Money Market, Municipal Bond and Intermediate Municipal
Bond Funds, and the Woodward Capital Growth, Bond and Balanced Funds may invest
in the securities of foreign issuers. Following its Reorganization, each
Woodward Fund except for the Money Market, Treasury Money Market, Municipal
Money Market, Municipal Bond and Intermediate Municipal Bond Funds will be
permitted to invest in such securities.
Foreign securities markets generally are not as developed or efficient as
those in the United States. Securities of foreign issuers, whether made directly
or indirectly, involve 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, and may be less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times, volatility
of price can be greater than in the United States. 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. Investments by a Fund in foreign securities, with respect to certain
foreign countries, exposes a Fund 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.
Because of these and other factors, securities of foreign companies acquired by
a Fund 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 a Fund
changes 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
45
<PAGE>
increasing the realized loss on such securities at the time of sale. Income
received by the Funds 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 such
taxes. All such taxes paid by a Fund will reduce its net income available for
distribution to investors.
The Prairie Growth, Managed Assets, Managed Assets Income, Equity Income,
International Bond and Special Opportunities Funds and the Woodward Capital
Growth and Balanced Funds are expressly permitted to invest in securities of
foreign issuers in the form of ADRs or similar securities representing
securities of foreign issuers and each of the same Prairie Funds and the
Woodward Capital Growth Fund may invest in securities of foreign issuers in the
form of EDRs or similar securities representing securities of foreign issuers.
Following its Reorganization, each of the Woodward Capital Growth, Balanced,
Equity Income, Small-Cap Opportunity and Managed Assets Conservative Funds will
be authorized to invest in ADRs and EDRs.
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. 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. These securities may not be
denominated in the same currency as the securities they represent. Certain
institutions issuing ADRs or EDRs 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.
Currency and Commodity Transactions. The Prairie Managed Assets, Managed
Assets Income, Growth, Special Opportunities and International Bond Funds may
invest in foreign currency and foreign commodity transactions. After the
Reorganization, only the Balanced, Managed Assets Conservative and International
Bond Funds will be permitted to invest in such securities.
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 such 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 ("CFTC")
and may be subject to greater
46
<PAGE>
risks than trading on domestic exchanges. In addition, any profits that a Fund
might realize in trading could be eliminated by adverse changes in the exchange
rate, or such 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.
Lower Rated Securities. Each of the Prairie Bond and International Bond
Funds may invest up to 35% of its net assets in debt securities rated as low as
B by a Rating Agency. The Managed Assets Fund may invest up to 20% of its net
assets in debt securities, and each of the Equity Income, Growth and Special
Opportunities Funds may invest up to 35%, and the Managed Assets Income Fund may
invest up to 5%, of its net assets in convertible securities, rated as low as
the lowest rating assigned by a Rating Agency.
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 fixed income securities. In addition, such securities have either
speculative characteristics or are predominantly speculative with respect to
their capacity to pay interest and repay principal in accordance with the terms
of the obligation. Such debt obligations are commonly referred to as "junk
bonds."
Only the Woodward International Bond Fund will be permitted to invest in
lower rated securities after the Reorganization.
Supranational Bank Obligations. Each of the Prairie Funds, with the
exception of the Prairie Equity Income, Municipal Bond and Intermediate
Municipal Bond Funds, and the Woodward Balanced and Bond Funds may invest in
obligations of supranational banks which are international banking institutions
designated or supported by national governments to promote reconstruction,
development or trade between nations (e.g., the World Bank). After the
Reorganization, each of the Woodward Funds, other than the Money Market,
Treasury Money Market, Tax-Exempt Money Market, Municipal Bond and Intermediate
Municipal Bond Funds, will be permitted to invest in obligations of
supranational banks.
Derivative Instruments. Each of the Prairie Portfolios, other than the Money
Market, U.S. Government Money Market and Municipal Money Market Funds, and
Woodward Funds, other than the Money Market, Treasury Money Market and
Tax-Exempt Money Market Funds, may invest in certain "derivative" instruments.
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 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
47
<PAGE>
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.
Asset-Backed Securities. Each of the Prairie Portfolios, other than the
Money Market, U.S. Government Money Market, Municipal Money Market, Municipal
Bond and Intermediate Municipal Bond Funds, and the Woodward Bond and Balanced
Funds may invest in asset-backed and mortgage-backed securities. After its
Reorganization, each of the Woodward Bond, International Bond, Income, Balanced
and Managed Assets Conservative Funds will be permitted to invest in such
securities.
Asset backed securities arise through the grouping by governmental,
government-related and private organizations of mortgages, loans, receivables
and other assets originated by various lenders ("Asset Backed Securities"). 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. 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
calculating the average weighted maturity of the Funds, the maturity of Asset
Backed Securities will be based on estimates of average life. 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.
Asset Backed Securities acquired by the Funds listed above consist of both
mortgage and non-mortgage backed securities. 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") 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. Mortgage pass-through certificates provide the holder with a
pro rata interest in the underlying mortgages. 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.
48
<PAGE>
Non-mortgage backed securities include 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. These 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 leverage 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.
Municipal Securities. Each Prairie Portfolio, other than the money market
and municipal funds, is expressly permitted to invest up to 25% of its assets in
Municipal Securities. Currently, the Woodward Balanced and Bond Funds intend to
invest less than 5% of their respective assets in Municipal Securities.
Following its Reorganization, each of the Woodward Balanced, Managed Assets
Conservative, Bond, International Bond and Income Funds will be subject to a 25%
limitation similar to Prairie's limitation described above.
Leveraging on an Unsecured Basis. The Prairie Funds, other than the
Intermediate Municipal Bond and Municipal Bond Funds, may utilize leveraging in
that they may borrow for investment purposes on an unsecured basis. No Woodward
Fund will engage in such leveraging after the Reorganization.
Interest Rate and Equity Index Swaps. Each Prairie Portfolio, other than the
Money Market, U.S. Government Money Market, Municipal Money Market, Municipal
Bond and Intermediate Municipal Bond Funds, may enter into interest rate swaps
and equity index swaps, as applicable, in pursuit of its investment objective.
After the Reorganization, each Woodward Fund, except for the money market funds,
will be permitted to invest in interest rate and equity index swaps.
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.
49
<PAGE>
Each of these 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 in the highest rating category by a Rating
Agency, or (ii) for transactions with maturities greater than one year, the
counterparty has outstanding debt securities rated in the two highest rating
categories by a Rating Agency. If there is a default by the other party to such
a transaction, the fund will have contractual remedies pursuant to the
agreements related to the transaction.
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 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.
Short Selling. Each of the Prairie Portfolios, other than the Money Market,
U.S. Government Money Market, Municipal Money Market, Municipal Bond and
Intermediate Municipal Bond Portfolios, may make short sales, which are
transactions in which a fund sells a security it does not own in anticipation of
a decline in the market value of that security. No post-reorganization Fund will
make short sales of securities.
Options Transactions. Each of the Prairie Portfolios, other than the Money
Market, U.S. Government Money Market, Municipal Money Market, Municipal Bond and
Intermediate Municipal Bond Portfolios, may invest up to 5% of its total assets
in the purchase of call and put options and may write covered call option
contracts and covered put option contracts not exceeding 20% of the market value
of its net assets. Each such Portfolio may also purchase and sell call and put
options on foreign currency for the purpose of hedging against changes in future
currency exchange rates, cash-settled options on interest rate swaps and equity
index swaps and call and put options on stock indexes listed on U.S. securities
exchanges or traded in the over-the-counter market.
The Existing Woodward Capital Growth, Balanced, Bond and Municipal Bond
Funds may purchase and sell put and call options listed on a national securities
exchange and issued by the Options Clearing Corporation for hedging purposes in
an amount not exceeding 5% of a Fund's net assets. Each such Fund may also write
covered call and secured put options not exceeding 25% of the value of its net
assets. In addition, the Balanced Fund may purchase and sell call and put
options on foreign currency for the purpose of hedging against changes in
foreign currency exchange rates.
Each post-reorganization Fund, other than the Money Market, Treasury Money
Market and Tax-Exempt Money Market Funds, may invest up to 5% of its total
assets in the purchase of call and put options and may write covered call option
contracts and covered put option contracts not exceeding 25%
50
<PAGE>
of the market value of its net assets. Each such Fund will also be permitted to
purchase and sell call and put options on foreign currency for the purpose of
hedging against changes in future currency exchange rates, cash-settled options
on interest rate swaps and equity index swaps and call and put options on stock
indexes listed on U.S. securities exchanges or traded in the over-the-counter
market.
Futures Contracts and Options on Futures Contracts. Each Prairie Portfolio,
other than the money market portfolios, may enter into stock index futures
contracts, interest rate futures contracts and currency futures contracts, and
options with respect to such contracts. Currently, the Woodward Capital Growth,
Balanced and Bond Funds may trade futures contracts and related options in U.S.
domestic markets. In addition, the Balanced Fund may purchase and sell currency
futures contracts and options thereon.
Each post-reorganization Fund (other than the money market funds) may enter
into futures contracts and options on future contracts. The Managed Assets
Conservative, Balanced and Capital Growth Funds may enter into stock index
futures contracts and each Fund may enter into interest rate futures contracts
and currency futures contracts, and options with respect thereto. These
transactions will be entered into as a substitute for comparable market
positions in the underlying securities or for hedging purposes. 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.
Each of the Prairie, Woodward and post-reorganization Funds' commodities
transactions must constitute bona fide hedging or other permissible transactions
pursuant to regulations promulgated by the CFTC. In addition, no fund may 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 the fund's 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, the
fund may be subject to additional risk.
There are a number of particular risks associated with futures and related
options transactions. To the extent a fund is engaging in a futures 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 used as a hedging device, it is possible that the hedge
will not be fully effective. In futures contracts based on indices, the risk of
imperfect correlation increases as the composition of the fund 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
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.
51
<PAGE>
Successful use of futures by a fund 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 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.
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.
Other Investment Companies. Each of the Prairie Growth, Managed Assets,
Managed Assets Income, International Bond and Special Opportunities Funds are
permitted to invest in closed-end investment companies, as permitted by the 1940
Act, which principally invest in securities in which the Portfolio invests. Each
of the Existing Woodward Funds is permitted to invest in securities issued by
investment companies which invest in high quality, short-term debt securities.
After the Reorganization, each Woodward Fund will be permitted to invest in open
and closed-end investment companies which principally invest in securities in
which the Fund invests. 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.
INVESTMENT LIMITATIONS
Neither the Prairie Portfolios nor the Woodward Funds may change their
fundamental investment limitations without the affirmative vote of the holders
of a majority of the outstanding shares, as defined in the 1940 Act, of the
particular Prairie Portfolio or Woodward Fund. The investment limitations of the
Prairie Portfolios and the corresponding Woodward Funds are similar, but not
identical.
Diversification. The Prairie Money Market, U.S. Government Money Market,
Municipal Money Market, Managed Assets and Managed Assets Income Funds are
"diversified" investment portfolios. As a matter of fundamental policy, each
such diversified fund 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 the fund's 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 the fund, except that up to 25% of the fund's total assets may be
invested without regard to these limitations.
The remaining Prairie Portfolios and the Woodward International Bond and
Intermediate Municipal Bond Funds are classified as non-diversified investment
companies under the 1940 Act and are not subject to a fundamental limitation on
diversification. Each such fund conducts its operations so as to qualify as a
regulated investment company under the Code, which generally requires, among
other things, that, with respect to at least 50% of the total assets of a fund,
no more than 5% may be invested in securities of a single issuer (with certain
exceptions), and no more than 25% of the fund's total assets
52
<PAGE>
may be invested in the securities of a single issuer (with certain exceptions)
at the close of each quarter of each fiscal year. Since a relatively high
percentage of the assets of each of these funds 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 of securities may be more susceptible
to economic, political or regulatory occurrences than the portfolio of a
diversified investment company.
After its Reorganization, each of the Woodward Money Market, Treasury Money
Market, Tax-Exempt Money Market, Capital Growth, Bond, Balanced, Equity Income,
Small-Cap Opportunities, Income and Managed Assets Conservative Funds will be
classified as diversified investment companies. This policy is fundamental with
respect to each of these funds. The Woodward International Bond, Municipal Bond
and Intermediate Municipal Bond Funds will be classified as non-diversified
investment companies.
Borrowings. Each Prairie Portfolio may borrow money to the extent permitted
under the 1940 Act, which currently limits borrowing to no more than one-third
of the value of a Portfolio's total assets and may engage in reverse repurchase
transactions. The Existing Woodward Funds may borrow money from banks and enter
into reverse repurchase agreements for temporary purposes, and then in amounts
not in excess of 20% of the value of the Money Market, Treasury Money Market and
Tax-Exempt Money Market Funds' respective total assets and 10% of the value of
the Capital Growth, Bond, Municipal Bond and Balanced Funds' respective total
assets. An Existing Woodward Fund will not purchase securities while its
borrowings, including reverse repurchase agreements, exceed 5% of the total
assets of the Fund. After the Reorganization, each Woodward Fund will be
permitted to borrow money directly and engage in reverse repurchase transactions
to the extent permitted under the 1940 Act. These limitations are fundamental
for each fund.
Loans. None of the Prairie Portfolios, Woodward Funds or any of the
post-reorganization Funds, may make loans, except that each may: (i) lend
portfolio securities in an amount not exceeding 1/3 of its total assets; (ii)
purchase or hold debt instruments in accordance with its investment objective;
and (iii) enter into repurchase agreements. These limitations are fundamental
for each fund.
Concentration. Each of the Prairie Portfolios and Woodward Funds has adopted
a fundamental policy on concentration. The Prairie Portfolios may invest up to
25% of their respective total assets in the securities of issuers in a single
industry, although there is no limitation on the purchase of obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities or, in
the case of the Prairie Intermediate Municipal Bond and Municipal Bond Funds,
Municipal Securities. In addition, the Prairie Money Market Fund invests, except
when it has adopted a temporary defensive position, at least 25% of its total
assets in securities issued by banks, including foreign banks and branches.
The Existing Woodward Funds do not purchase any securities which would cause
25% or more of the value of a Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting their principal
business activities in the same industry, provided that (a) there is no
limitation with respect to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements secured
by such instruments, and in the case of the Money
53
<PAGE>
Market, Treasury Money Market and Tax-Exempt Money Market Funds, there is no
limitation with respect to domestic bank obligations, (b) wholly-owned finance
companies are considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents, (c)
utilities are divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone are each considered a
separate industry, (d) with respect to the Money Market, Treasury Money Market,
Tax-Exempt Money Market, Bond and Municipal Bond Funds only, personal credit and
business credit businesses will be considered separate industries, and (e) with
respect to the Tax-Exempt Money Market and Municipal Bond Funds only, there is
no limitation with respect to or arising out of investments in Municipal
Securities (other than private activity bonds).
Following its Reorganization, no Woodward Fund will purchase any securities
which would cause 25% or more of the value of a Fund's total assets at the time
of purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that (a)
there is no limitation with respect to obligations issued or guaranteed by the
U.S. Government, any state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies, instrumentalities or
political subdivisions 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 their 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 business will be considered separate industries.
These limitations are fundamental for each of the funds.
Real Estate. None of the Prairie Portfolios, Existing Woodward Funds or any
of the post-reorganization Funds, may purchase or sell real estate as a matter
of fundamental policy, except that each fund may purchase securities of issuers
which deal in real estate and may purchase securities (Municipal Securities only
in the case of the Prairie Intermediate Municipal Bond and Municipal Bond Funds)
which are secured by interests in real estate.
Underwriting Securities. The Prairie Portfolios and the Woodward Funds have
adopted a fundamental policy to the effect that they may not act as an
underwriter of securities within the meaning of the Securities Act of 1933
except insofar as a fund might be deemed to be an underwriter upon the
disposition of portfolio securities and except to the extent that the purchase
of obligations directly from the issuer thereof in accordance with a fund's
investment objective, policies and limitations may be deemed to be underwriting.
This policy will continue with respect to the Woodward Funds after the
Reorganization.
Commodities. None of the Prairie Portfolios, Existing Woodward Funds or
post-reorganization Funds, may invest in commodities, except that, to the extent
appropriate to its investment objective, each may purchase and sell options,
forward contracts, futures contracts, including without limitation those
relating to indices, and options on futures contracts or indices. In addition,
these funds may purchase publicly traded securities of companies engaging in
whole or in part in such activities. This limitation is a fundamental policy for
each fund.
54
<PAGE>
Illiquid Securities. With the exception of the money market portfolios and
the Woodward Bond and Municipal Bond Funds, each Prairie Portfolio and Woodward
Fund must limit their investments in illiquid securities to 15% of net assets.
The Prairie Money Market, U.S. Government Money Market and Municipal Money
Market Funds and the Woodward Money Market, Treasury Money Market and Tax-Exempt
Money Market, Bond and Municipal Bond Funds are subject to a 10% limitation in
illiquid securities. These limitations are currently fundamental limitations for
the Existing Woodward Funds although they are expected to become
non-fundamental, and thus may be changed without shareholder approval, in
connection with the Reorganization. These policies are non-fundamental with
respect to the New Woodward Funds. Following the Reorganization, it is expected
that the Woodward Bond and Municipal Bond Funds will be subject to a 15%
limitation on illiquid investments.
Margin Transactions. As a matter of fundamental policy, no Prairie Portfolio
may purchase securities on margin, although each Portfolio may make margin
deposits in connection with various transactions such as options and futures
contracts. The three Prairie money market portfolios have adopted a
non-fundamental policy prohibiting them from selling securities short. The
Prairie Growth, Bond, Managed Assets, Equity Income, International Bond, Special
Opportunities, Intermediate Bond and Managed Assets Income Funds are permitted
to make short sales, which are transactions in which a fund sells a security it
does not own in anticipation of a decline in the market value of that security,
and otherwise maintain a short position.
The Existing Woodward Money Market, Treasury Money Market and Tax-Exempt
Money Market Funds may not purchase securities on margin, make short sales with
securities or maintain a short position in any security. The remaining Existing
Woodward Funds may not purchase securities on margin, make short sales of
securities or maintain a short position, except that (i) this limitation does
not apply to a Fund's transactions in such instruments as futures contracts and
options, and (ii) each Fund may obtain short-term credit as may be necessary for
the clearance of purchases and sales of portfolio securities. These limitations
are currently fundamental limitations for the Existing Woodward Funds although
they are expected to become non-fundamental, and thus may be changed without
shareholder approval, in connection with the Reorganization. These policies are
non-fundamental with respect to the New Woodward Funds.
Options. The Prairie Portfolios are not permitted to purchase, sell or write
puts, calls or combinations thereof, except as described in their Prospectus and
Statement of Additional Information which are incorporated herein by reference.
These limitations are non-fundamental. The non-money market Woodward Funds may
not write or sell put options, call options, straddles, spreads, or any
combination thereof, except for transactions in options on securities or indices
of securities, futures contracts and options on futures contracts and in similar
investments. These limitations are currently fundamental limitations for the
Existing Woodward Funds although they are expected to become non-fundamental in
connection with the Reorganization. These policies are non-fundamental with
respect to the New Woodward Funds.
Other Investment Companies. Neither the Prairie Portfolios nor the Woodward
Funds may 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 by the 1940
55
<PAGE>
Act. The foregoing limitations on investments in other investment companies are
currently fundamental as to the Existing Woodward Funds but are expected to
become non-fundamental in connection with the Reorganization. These policies are
non-fundamental with respect to the New Woodward Funds.
Miscellaneous. As a matter of non-fundamental policy, each Prairie Portfolio
may (i) purchase securities of any company having less than three years'
continuous operation (including operations of any predecessors) if such purchase
does not cause the value of such Fund's investments in all such companies to
exceed 10% of the value of its total assets; and (ii) pledge, hypothecate,
mortgage or otherwise encumber its assets, but only to secure permitted
borrowings.
The Existing Woodward Funds have no corresponding limitations on investment
in companies with less than three years' continuous operation. The
post-reorganization Funds will also have no such limitation. The Existing
Woodward Funds, as a matter of fundamental policy, may not mortgage, pledge or
hypothecate their assets, except in connection with their borrowings. The
post-reorganization Funds will not be permitted to mortgage, pledge or
hypothecate their assets except to the extent permitted by the 1940 Act.
In addition, each Prairie Portfolio (other than the Intermediate Bond Fund
which has no express policy), as a matter of non-fundamental policy, may not
invest in securities of a company for the purpose of exercising management or
control. The Existing Woodward Funds currently are subject to the foregoing
limitation as a matter of fundamental policy. The post-reorganization Funds
expect to adopt this limitation as a matter of non-fundamental policy.
For additional investment limitations and more detailed information on the
above limitations, see "Investment Limitations" and "Additional Investment
Limitations" in the Woodward Funds' Prospectuses and Statements of Additional
Information and "Description of the Funds" and "Investment Objectives and
Management Policies" in Prairie's Prospectus and Statement of Additional
Information, which are incorporated herein by reference.
Purchase and Redemption Information, Exchange Privileges, Distribution and
Pricing. The purchase, redemption, conversion, exchange privileges and
distribution policies of the Prairie Portfolios and the Woodward Funds are
discussed above under "Summary-- Overviews of the Prairie Portfolios and
Woodward Funds" and below in Appendix III to this Combined Prospectus/Proxy
Statement.
Other Information. Prairie and Woodward are registered as open-end
management investment companies under the 1940 Act. Currently, Prairie consists
of four open-end management companies offering seventeen investment portfolios
(only three of these open-end management investment companies covering thirteen
investment portfolios are covered by this Combined Prospectus/Proxy Statement)
and Woodward currently offers seventeen investment portfolios.
Woodward, Prairie Funds and Prairie Intermediate Bond Fund are each
organized as Massachusetts business trusts and are subject to the provisions of
their respective Declarations of Trust and By-laws. Prairie Municipal Bond Fund,
Inc. is organized as a Maryland corporation and subject to the provisions of its
Articles of Incorporation and By-laws. Shares of both Prairie and Woodward: (i)
are
56
<PAGE>
entitled to one vote for each full share held and a proportionate fractional
vote for each fractional share held; (ii) will vote in the aggregate and not by
class except as otherwise expressly required by law or when class voting is
permitted by the respective Boards of Trustees or Directors; and (iii) are
entitled to participate equally in the dividends and distributions that are
declared with respect to a particular investment portfolio and in the net
distributable assets of such portfolio on liquidation. Shares of the Prairie
Portfolios have a par value of $.001. Shares of the Woodward Funds have a par
value of $.10. In addition, shares of the Prairie Portfolios and Woodward Funds
have no preemptive rights and only such conversion and exchange rights as the
respective Boards of Trustees or Directors may grant in their discretion. When
issued for payment as described in their prospectuses, Prairie Portfolio shares
and Woodward Fund shares are fully paid and non-assessable by such entities
except as required under Massachusetts law with respect to Woodward, the Prairie
Funds and Prairie Intermediate Bond Fund. Woodward is not required under
Massachusetts law to hold annual shareholder meetings and intends to do so only
if required by the 1940 Act. Shareholders have the right to remove Trustees. To
the extent required by law, Woodward will assist in shareholder communications
in such matters.
The foregoing is only a summary. Shareholders may obtain copies of the
Declarations of Trust and By-laws (as applicable) of Woodward, the Prairie Funds
and Prairie Intermediate Bond Fund, and the Articles of Incorporation and
By-laws of Prairie Municipal Bond Fund, Inc. upon written request at the
addresses shown on the cover page of this Combined Prospectus/Proxy Statement.
57
<PAGE>
INFORMATION RELATING TO VOTING MATTERS
General Information. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies by Prairie's Boards of
Trustees and Directors in connection with the Meeting. It is expected that the
solicitation of proxies will be primarily by mail. Officers and service
contractors of Prairie may also solicit proxies by telephone, telegraph,
facsimile or personal interview. Shareholder Communications Corporation ("SCC")
has been retained to assist in the solicitation of proxies primarily by
contacting shareholders by telephone and telegram. Authorizations to execute
proxies may be obtained by telephonic or electronically transmitted instructions
in accordance with procedures designed to authenticate the shareholder's
identity. In all cases where a telephonic proxy is solicited, the shareholder
will be asked to provide his or her address, social security number (in the case
of an individual) or taxpayer identification number (in the case of an entity)
and the number of shares owned and to confirm that the shareholder has received
the Combined Prospectus/Proxy Statement and proxy card in the mail. Within 72
hours of receiving a shareholder's telephonic or electronically transmitted
voting instructions, a confirmation will be sent to the shareholder to ensure
that the vote has been taken in accordance with the shareholder's instructions
and to provide a telephone number to call immediately if the shareholder's
instructions are not correctly reflected in the confirmation. Prairie has been
advised by its counsel that the use of telephonic or electronically transmitted
voting instructions complies with applicable state law. Shareholders requiring
further information with respect to telephonic or electronically transmitted
voting instructions or the proxy generally should contact SCC toll-free at
1-800-733-8481, extension 458. Any shareholder giving a proxy may revoke it at
any time before it is exercised by submitting to Prairie a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
voting in person.
Only shareholders of record at the close of business on April 11, 1996 will
be entitled to vote at the Meeting. On that date there were outstanding and
entitled to be voted 248,125,796 shares of Prairie Money Market Fund, 68,021,604
shares of Prairie U.S. Government Money Market Fund, 258,715,401 shares of
Prairie Municipal Money Market Fund, 24,623,245 shares of Prairie Growth Fund,
1,577,346 shares of Prairie International Bond Fund, 23,869,381 shares of
Prairie Equity Income Fund, 7,891,162 shares of Prairie Special Opportunities
Fund, 11,867,588 shares of Prairie Bond Fund, 32,867,801 shares of Prairie
Intermediate Municipal Bond Fund, 19,138,457 shares of Prairie Municipal Bond
Fund, 25,018,216 shares of Prairie Intermediate Bond Fund, 841,033 shares of
Prairie Managed Assets Fund and 3,883,927 shares of Prairie Managed Assets
Income Fund. Each share or fraction thereof is entitled to one vote or fraction
thereof, and all shares will vote separately by Fund.
58
<PAGE>
Prairie and Woodward have been advised by FCIMCO that the shares of each
Prairie Portfolio over which First Chicago NBD Corporation or its affiliates
have voting power will, wherever possible, be voted in accordance with
instructions received from beneficial owners or fiduciaries of such accounts who
are not related to First Chicago NBD Corporation or its affiliates. As to
employee benefit plans, First Chicago NBD Corporation may vote such shares in
accordance with the recommendation of an independent fiduciary. Where First
Chicago NBD Corporation is required to vote Prairie shares, it will vote them in
the same proportions as the shares of all other voting shareholders of each
respective Prairie Portfolio were actually voted.
If the accompanying proxy is executed and returned in time for the Meeting,
the shares covered thereby will be voted in accordance with the proxy on all
matters that may properly come before the Meeting or any adjournment thereof.
For information on adjournment of the meeting, see "Quorum" below.
Shareholder and Board Approvals. The Reorganization Agreement (and the
transactions contemplated thereby) is being submitted for approval at the
Meeting by the holders of a majority of the outstanding shares of the Prairie
Money Market Fund, U.S. Government Money Market Fund, Municipal Money Market
Fund, Growth Fund, International Bond Fund, Equity Income Fund, Special
Opportunities Fund, Bond Fund, Intermediate Municipal Bond Fund, Municipal Bond
Fund, Intermediate Bond Fund, Managed Assets Fund and Managed Assets Income Fund
in accordance with the provisions of Prairie Funds' and Prairie Intermediate
Bond Fund's Declaration of Trust, Prairie Municipal Bond Fund's Articles of
Incorporation, and the requirements of the 1940 Act. The term "majority of the
outstanding shares" of a Prairie Portfolio as used herein means more than 50% of
the outstanding shares of such Prairie Portfolio.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted for purposes of determining whether or not a quorum is present for
purposes of convening the meeting. On the Reorganization proposal abstentions
and broker non-votes will be considered to be a vote against the Reorganization
proposal.
The approval of the Reorganization by the shareholders of Woodward is not
being solicited because their approval or consent is not legally required.
At April 11, 1996, FCIMCO and its affiliates held beneficially 73.9% of the
aggregate total assets of the Prairie Money Market Fund, U.S. Government Money
Market Fund, Municipal Money Market Fund, Growth Fund, International Bond Fund,
Equity Income Fund, Special Opportunities Fund, Bond Fund, International Bond
Fund, Intermediate Municipal Bond Fund, Municipal Bond Fund, Intermediate Bond
Fund, Managed Assets Fund and Managed Assets Income Fund.
At April 11, 1996, the name, address and percentage of ownership of the
persons who owned of record 5% or more of any class of the Reorganizing
Portfolios, and the percentage of the respective share classes of the
corresponding Existing Woodward Funds that would be owned by those persons
59
<PAGE>
upon the consummation of the Reorganizing Portfolios Transaction based upon
their holdings on April 11, 1996, are as follows:
<TABLE><CAPTION>
Percentage
Percentage of Class of
of Reorganizing Existing
Percentage Portfolio's Woodward
of Class Shares Fund
Reorganizing Class of Owned on Owned on Owned on
Portfolio Name and Address Shares Owned Record Date Record Date Consummation
- ----------------- ---------------------------- ------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Managed Assets Arthur F. Stoke
Class I Eklund & Eklund
c/o John Livensparger
1 First National Plaza
Chicago, IL 60603 25,485.230 71.04% 3.03% 0.31%
Stradford M. Dick Jr. Trust
2309 Central Street
Apartment 2
Evanston, IL 60201 10,000.000 27.80% 1.19% 0.12%
Bond Fund Class A NSR Pension Plan
16 Kimberly Circle
Oak Brook, IL 60521 42,876.790 22.83% .37% 0.09%
U.S. Government Joe Keim Builders Inc. Inv.
Money Market 301 E. Longfellow
Fund Wheaton, IL 60187 5,656,282.500 8.32% 8.32% 6.22%
Bond Fund Class I CHGO Com TR Island
Comb Fds
Chicago Comm. Trust
c/o Carol Crenshaw
222 N LaSalle, Suite 1400
Chicago, IL 60601 805,237.150 6.90% 6.79% 1.38%
CHGO Com TR FNB Var
Inst Fd
Chicago Comm. Trust
c/o Carol Crenshaw
222 N LaSalle, Suite 1400
Chicago, IL 60601 802,737.150 6.88% 6.77% 1.37%
Eliz Morse Charitable Trust
William Alexander
Suite 905, 79 W. Monroe
Chicago, IL 60603-4907 700,431.744 6.00% 5.04% 1.20%
R. Allerton Endowment Fd
Robert Mars The Art
Institute of Chicago
111 S. Michigan Ave.
Chicago, IL 60603-6110 614,628.952 5.26% 5.18% 1.05%
</TABLE>
60
<PAGE>
At April 11, 1996, the name, address and percentage of ownership of each
person who owned of record 5% or more of any class of shares of the Continuing
Portfolios is listed below. Prior to the Continuing Portfolios Transaction, the
New Woodward Funds will have only nominal assets. Accordingly, the persons who
own of record 5% or more of any class of shares of the Continuing Portfolios
will not materially change upon consummation of the Continuing Portfolios
Transaction.
<TABLE><CAPTION>
Percentage
of Reorganizing
Percentage Portfolio's
of Class Shares
Reorganizing Class of Owned on Owned on
Portfolio Name and Address Shares Owned Record Date Record Date
- ----------------- ---------------------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Managed Assets Andres Gabel MD IRA
Income Fund 2509 Partridge Ln.,
Class I Northbrook, IL 60062 22,497.253 25.98% .58%
Taylor William-Martial
Trust
633 E. Woodland Rd.
Lake Forrest, IL 60045 15,850.192 18.30% .41%
G. Fremn & FT
Fremn Linda FD
633 E. Woodland Rd.
Lake Forrest, IL 60045 12,347.111 14.26% .32%
FT Freeman, LJ
Freeman Acct.
633 E. Woodland Rd.
Lake Forrest, IL 60045 9,364.170 10.81% .25%
Lincoln Cnty Hertiage Trust
c/o Frances Freemena
34 W 040 White Thom
Box 205, Wayne, IL 60184 4,814.310 5.56% .13%
James R. Zeilstra
1332 S. 60th Ct.
Cicero, IL 60650 4,672.835 5.40% .12%
International Eliz Morse Charitable Trust
Bond Fund William Alexander
Class I Suite 905, 79 W. Monroe
Chicago, IL 60603-4907 116,837.790 7.65% 7.41%
Jep J Dau
United Charities of Chicago
c/o Controller
14 E. Jackson
Chicago, IL 60604 92,389.238 6.05% 5.86%
George Plessing
C/O Arthur J. Kenning
12803 Circle Parkway
Palos Park, IL 60464 78,014.659 5.11% 4.95%
</TABLE>
61
<PAGE>
<TABLE><CAPTION>
Percentage
of Reorganizing
Percentage Portfolio's
of Class Shares
Reorganizing Class of Owned on Owned on
Portfolio Name and Address Shares Owned Record Date Record Date
- ----------------- ---------------------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
International NSR Pension Plan
Bond Fund 16 Kimberly Cir.
Class A Oak Brook, IL 60521 7,881.458 15.84% .50%
International Eliz Morse Charitable Trust
Equity Fund William Alexander
Class I Suite 905, 79 W. Monroe
Chicago, IL 60603-4907 587,439.106 5.21% 5.05%
International NSR Pension Plan
Equity Fund 16 Kimberly Cir.
Class A Oak Brook, IL 69521 36,325.957 11.34% .32%
</TABLE>
At April 11, 1996, the trustees/directors and officers of Prairie, as a
group, owned less than 1% of the outstanding shares of each of the Prairie
Portfolios. At April 11, 1996, the trustees and officers of Woodward owned less
than 1% of the outstanding shares of each of the corresponding Woodward Funds.
On April 11, 1996, Trussal & Co., 9000 Haggerty Road, Belleville, Michigan
48111, held of record the outstanding Class I Shares, as listed below, of each
investment portfolio of The Woodward Funds as nominee of NBD Bank's Trust
Division and affiliated banks which acted as agent or custodian on behalf of
their customers. NBD Bank possessed or shared voting or investment power and may
be deemed for certain purposes to be the beneficial owner with respect to those
Class I Shares listed below at April 11, 1996.
<TABLE><CAPTION>
Woodward
Funds Trussal & Co. NBD Bank
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Money Market Fund 1,119,337,926.000 (or 66.31% 565,859,843 (or 33.52% of
of such class and 59.15% of such class and 29.90% of
such Fund) such Fund)
Government Fund 220,130,889.000 (or 63.52% of 75,558,448 (or 21.80% of such
such class and 55.71% of class and 19.12% of such
such Fund) Fund)
Treasury Money Market Fund 652,126,413.000 (or 73.25% of 86,455,763 (or 9.71% of such
such class and 71.40% of class and 9.47% of such
such Fund) Fund)
Tax-Exempt Money Market Fund 525,590,084.000 (or 84.48% of 289,351,959 (or 46.51% of
such class and 80.73% of such class and 44.44% of
such Fund) such Fund)
Michigan Tax-Exempt Money 41,814,954.000 (or 68.09% of 20,301,858 (or 33.06% of such
Market Fund such class and 31.18% of class and 15.14% of such
such Fund) Fund)
Bond Fund 47,618,354.685 (or 99.95% of 44,508,677 (or 93.42% of such
such class and 94.08% of class and 87.94% of such
such Fund) Fund)
</TABLE>
62
<PAGE>
<TABLE><CAPTION>
Woodward
Funds Trussal & Co. NBD Bank
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Intermediate Bond Fund 36,903,910.695 (or 100% of 33,119,176 (or 89.74% of such
such class and 97.01% of class and 87.06% of such
such Fund) Fund)
Short Bond Fund 16,509,198.961 (or 100% of 15,640,213 (or 94.74% of such
such class and 99.54% of class and 94.30% of such
such Fund) Fund)
Municipal Bond Fund 7,043,673.027 (or 100% of 5,020,124 (or 71.27% of such
such class and 85.55% of class and 60.97% of such
such Fund) Fund)
Michigan Municipal Bond Fund 3,124,974.746 (or 100% of 1,975,178 (or 63.21% of such
such class and 61.60% of class and 38.93% of such
such Fund) Fund)
Growth/Value Fund 50,464,520.428 (or 99.94% of 45,936,420 (or 90.97% of such
such class and 92.81% of class and 84.48% of such
such Fund) Fund)
Opportunity Fund 37,334,158.331 (or 99.32% of 33,910,365 (or 90.21% of such
such class and 88.86% of class and 80.71% of such
such Fund) Fund)
Intrinsic Value Fund 19,810,622.098 (or 99.77% of 17,076,428 (or 86.00% of such
such class and 92.70% of class and 79.91% of such
such Fund) Fund)
Capital Growth Fund 15,315,972.114 (or 99.99% of 14,084,067 (or 91.95% of such
such class and 97.38% of class and 89.54% of such
such Fund) Fund)
Balanced Fund 8,487,031.272 (or 99.84% of 8,322,312 (or 97.90% of such
such class and 90.37% of class and 88.62% of such
such Fund) Fund)
Equity Index Fund 42,169,892.577 (or 99.83% of 38,996,471 (or 92.32% of such
such class and 98.92% of class and 91.48% of such
such Fund) Fund)
International Equity Fund 12,205,925.791 (or 99.71% of 11,060,436 (or 90.35% of such
such class and 98.84% of class and 89.57% of such
such Fund) Fund)
</TABLE>
At April 11, 1996, the Automated Cash Management System ("ACMS"), 9000
Haggerty Road, Belleville, Michigan 48111, held of record the following Class I
Shares on behalf of its participants (no participant owned beneficially 5% or
more of such Shares):
<TABLE><CAPTION>
Percent Percent of
of Class Fund Shares
Number of Owned on Owned on
Shares Held Record Date Record Date
--------------- ----------- -----------
<S> <C> <C> <C>
Money Market Fund.................................. 315,383,261.080 18.68% 16.66%
Government Fund.................................... 37,001,111.750 10.68% 9.36%
Treasury Money Market Fund......................... 202,888,627.970 22.79% 22.22%
Tax-Exempt Money Market Fund....................... 64,407,122.370 10.35% 9.89%
Michigan Tax-Exempt Money Market Fund.............. 10,087,603.910 16.43% 7.52%
</TABLE>
At April 11, 1996, First of Michigan Corporation, Woodward's current
co-distributor, 100 Renaissance Center, 26th Floor, Detroit, MI 48243, held of
record, but not beneficially, 49,760,829.190 Class A Shares of the Michigan
Tax-Exempt Money Market Fund, representing 68.43% of such class and 36.27% of
such Fund.
63
<PAGE>
At April 11, 1996, the name, address and share ownership of the persons who
may have beneficially owned 5% or more of the outstanding shares of the
respective share classes of each investment portfolio of The Woodward Funds were
as follows:
<TABLE><CAPTION>
Percentage of
Percentage of Fund Shares
Existing Class and Amount Class Owned on Owned on
Woodward Fund Name and Address of Shares Owned Record Date Record Date
- ---------------------------- ---------------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
Money Market Fund BHC Securities Class A 18.30% 1.98%
One Commerce Square 37,408,131.480
2005 Market Street
Philadelphia, PA 19103
Government Fund SEC Lending Collateral Class I 5.66% 4.96%
-Lehman Trust 19,603,000.000
Administration
611 Woodward Avenue
Detroit, MI 48232
BHC Securities Class A 19.04% 2.34%
One Commerce Square 9,250,911.230
2005 Market Street
Philadelphia, PA 19103
Tax-Exempt Money Market Fund BHC Securities Class A 18.09% 0.80%
One Commerce Square 5,229,907.990
2005 Market Street
Philadelphia, PA 19103
Treasury Money Market Fund BHC Securities Class A 55.28% 1.39%
One Commerce Square 12,731,953.930
2005 Market Street
Philadelphia, PA 19103
Walter International Class A 12.83% 0.32%
Congo, Inc. 2,955,354.150
One Jackson Square
Jackson, MI 49201
Bond Fund NBD Bancorp, Inc. Class I 5.21% 4.91%
Employees Savings and 2,482,665.331
Investment Plan
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
Henry Ford Investment Class I 19.00% 17.89%
Management Account 9,054,319.689
600 Fisher Building
Detroit, MI 48202
Municipal Bond Fund Charles J. LeFler Class I 8.81% 7.53%
Revocable Trust 620,328.325
39740 Walker Court
Northville, MI 48167
Consumer Power Class I 22.5% 19.30%
212 W. Michigan Avenue 1,589,431.300
Jackson, MI 49201
</TABLE>
64
<PAGE>
<TABLE><CAPTION>
Percentage of
Percentage of Fund Shares
Existing Class and Amount Class Owned on Owned on
Woodward Fund Name and Address of Shares Owned Record Date Record Date
- ---------------------------- ---------------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
BHC Securities Class A 6.32% 0.91%
One Commerce Square 75,215.365
2005 Market Street
Philadelphia, PA 19103
Capital Growth Fund BHC Securities Class A 13.64% 0.36%
One Commerce Square 56,155.051
2005 Market Street
Philadelphia, PA 19103
Balanced Fund NBD Bancorp, Inc. Class I 22.81% 20.65%
Employees Savings and 1,939,412.930
Investment Plan
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
Dickinson/Wright Target Class I 12.39% 11.22%
Benefit 1,053,549.999
500 Woodward Avenue
Suite 400
Detroit, MI 48226
Albert Kahn and Class I 5.52% 5.00%
Associates 468,889.357
7430 Second Avenue
Detroit, MI 48202
BHC Securities Class A 5.26% 0.50%
One Commerce Square 46,818.554
2005 Market Street
Philadephia, PA 19103
Michigan Tax-Exempt Money Michigan School Class I 13.90% 6.37%
Market Fund Asbestos Trust 8,527,688.000
Humphrey, Farrington,
McClain, P.C.
c/o Scoot Manual
221 W. Lexington
Suite 400
P.O. Box 900
Independence, MO 64051
Intermediate Bond Fund BHC Securities Class A 12.11% 0.36%
One Commerce Square 137,965.479
2005 Market Street
Philadelphia, PA 19103
Short Bond Fund The Wellness Plan Class I 24.82% 24.71%
6500 John C. Lodge 4,098,062.186
Detroit, MI 48202
Kresge Foundation Class I 24.50% 24.38%
3215 W. Big Beaver 4,044,108.681
P.O. Box 3151
Troy, MI 48007-3151
</TABLE>
65
<PAGE>
<TABLE><CAPTION>
Percentage of
Percentage of Fund Shares
Existing Class and Amount Class Owned on Owned on
Woodward Fund Name and Address of Shares Owned Record Date Record Date
- ---------------------------- ---------------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
BHC Securities Class A 31.03% 0.14%
One Commerce Square 23,873.240
2005 Market Street
Philadelphia, PA 19103
Benjamin J. Soleau Class A 4,950.679 6.44% 0.03%
543 Adams
Plymouth, MI 48170
Richard A. Poel Class A 5,679.723 7.38% 0.03%
10 Lakeview Drive
Beale AFB, CA 95903
Richard L. Foesterling Class A 25.95% 0.12%
1256 Penniman 19,965.303
Plymouth, MI 48170
Michael G. Hall Family Class A 3,922.694 5.10% 0.02%
Trust
1006 Cumber Road
Ubly, MI 48475
Michigan Municipal Bond Fund Carol LeFler Revocable Class I 6.72% 4.14%
Trust 209,878.635
39740 Walker Court
Northville, MI 48167
Growth/Value Fund BHC Securities Class A 11.66% 0.83%
One Commerce Square 452,039.547
2005 Market Street
Philadelphia, PA 19103
Opportunity Fund BHC Securities Class A 9.85% 1.04%
One Commerce Square 435,386.057
2005 Market Street
Philadelphia, PA 19103
Instrinsic Value Fund BHC Securities Class A 11.90% 0.84%
One Commerce Square 180,106.171
2005 Market Street
Philadelphia, PA 19103
Dickinson/Wright Target Class I 12.39% 11.22%
Benefit 1,053,549.999
500 Woodward Avenue
Suite 4000
Detroit, MI 4822
Albert Kahn and Class I 5.52% 5.00%
Associates 468,889.357
7430 Second Avenue
Detroit, MI 48202
BHC Securities Class A 5.26% 0.50%
One Commerce Square 46,818.554
2005 Market Street
Philadelphia, PA 19103
</TABLE>
66
<PAGE>
<TABLE><CAPTION>
Percentage of
Percentage of Fund Shares
Existing Class and Amount Class Owned on Owned on
Woodward Fund Name and Address of Shares Owned Record Date Record Date
- ---------------------------- ---------------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
Equity Index Fund Whirlpool Class I 28.06% 27.80%
2000 M-63 North 11,851,242.721
Benton Harbor, MI 49002
Oakland County Class I 7.75% 7.68%
Retirement System 3,271916.412
1200 N. Telegraph
Pontiac, MI 48053
Consumer Power Union ClassI 7.84% 7.76%
Welfare Benefit 3,310,073.383
212 W. Michigan Avenue
Jackson, MI 49201
McGregor Fund Class I 7.78% 7.70%
333 West Fort Street 3,284,511.667
Detroit, MI 48226
BHC Securities Class A 38.63% 0.35%
One Commerce Square 149,705.069
2005 Market Street
Philadelphia, PA 19103
</TABLE>
At April 11, 1996, the trustees and officers of The Woodward Funds, as a
group, owned less than 1% of the outstanding shares of the respective share
classes of each of Woodward's investment portfolios.
Appraisal Rights. Shareholders are not entitled to any rights of share
appraisal under Prairie's Declarations of Trust or Articles of Incorporation, or
under the laws of the Commonwealth of Massachusetts or the State of Maryland, in
connection with the Reorganization. Shareholders have, however, the right to
redeem from Prairie their Prairie Portfolio shares at net asset value until the
effective time of the Reorganization, and thereafter shareholders may redeem
from Woodward the Woodward shares acquired by them in the Reorganization at net
asset value.
Quorum. In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve
the Reorganization Agreement and the transactions contemplated thereby are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares affected by the
adjournment that are represented at the Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote FOR the Reorganization Agreement, in favor of such
adjournments, and will vote those proxies required to be voted AGAINST such
proposals against any adjournment. A shareholder vote may be taken with respect
to one or more Prairie Portfolios prior to any such adjournment if sufficient
votes have been received for approval with respect to any such Prairie
Portfolio. A quorum is constituted with respect to a Prairie Portfolio by the
presence in person or by proxy of the holders of more than 30% (33 1/3% with
respect to Prairie Municipal Bond Fund, Inc.) of the outstanding shares of the
Portfolios entitled to vote at the Meeting. Prairie proxies properly
67
<PAGE>
executed and marked with a negative vote or an abstention will be considered to
be present at the Meeting for the purposes of determining the existence of a
quorum for the transaction of business.
Annual Meetings. Woodward does not presently intend to hold annual meetings
of shareholders for the election of trustees and other business unless and until
such time as less than a majority of the trustees holding office have been
elected by the shareholders, at which time the trustees then in office will call
a shareholders' meeting for the election of trustees. Shareholders have the
right to call a meeting of shareholders to consider the removal of one or more
trustees or for other matters and such meetings will be called when requested in
writing by the holders of record of 10% or more of Woodward's outstanding shares
of beneficial interest. To the extent required by law, Woodward will assist in
shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT WOODWARD
Information about the Existing Woodward Funds is included in the
Prospectuses accompanying this Combined Prospectus/Proxy Statement, which are
incorporated by reference herein. Additional information about these Funds is
included in their Statements of Additional Information dated April 15, 1996
which have been filed with the SEC. Copies of the Statements of Additional
Information may be obtained without charge by writing to Woodward c/o NBD, P.O.
Box 7058, Troy, Michigan 48007, or by calling Woodward at 1-800-688-3350.
Woodward is subject to the informational requirements of the Securities Exchange
Act of 1934 and the 1940 Act, as applicable, and, in accordance with such
requirements, files proxy materials, reports and other information with the SEC.
These materials can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
ADDITIONAL INFORMATION ABOUT PRAIRIE
Information about Prairie is incorporated herein by reference from its
Prospectus dated April 11, 1996 and Statement of Additional Information, dated
April 11, 1996, copies of which may be obtained without charge by writing or
calling Prairie at the address and telephone number shown on the cover page of
this Combined Prospectus/Proxy Statement. Reports and other information filed by
Prairie can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such material can be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
68
<PAGE>
LITIGATION
Neither Prairie nor Woodward is involved in any litigation or proceeding
that is believed likely to have any material adverse effect upon the ability of
the co-advisers to provide investment advisory services or any material adverse
effect upon either the Prairie Portfolios or the Woodward Funds.
FINANCIAL STATEMENTS
The financial highlights and financial statements for the Prairie Portfolios
for the fiscal year or period ended December 31, 1995 are contained in Prairie's
Annual Report to Shareholders and in Prairie's Prospectus and Statement of
Additional Information dated April 11, 1996, each of which is incorporated by
reference into this Combined Prospectus/Proxy Statement. The financial
highlights and the financial statements for the Existing Woodward Funds for the
fiscal year ended December 31, 1995 are contained in Woodward's Annual Reports
to Shareholders and in Woodward's Prospectuses and Statements of Additional
Information each dated April 15, 1996, each of which is incorporated by
reference in this Combined Prospectus/Proxy Statement.
The audited financial statements of the Prairie Portfolios for the fiscal
year or period ended December 31, 1995, contained in Prairie's Annual Report and
incorporated by reference in this Combined Prospectus/Proxy Statement, have been
incorporated herein in reliance on the report of Ernst & Young LLP, independent
auditors, given upon the authority of such firm as experts in accounting and
auditing.
The audited financial statements of the Existing Woodward Funds for the
fiscal year ended December 31, 1995, contained in Woodward's Annual Reports and
incorporated by reference in this Combined Prospectus/Proxy Statement, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto and are incorporated herein in reliance upon
the authority of said firm as experts in accounting and auditing.
OTHER BUSINESS
The Boards of Trustees and Directors of Prairie know of no other business to
be brought before the Meeting. However, if any other matters come before the
Meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
69
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Prairie in writing at the address
on the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-370-9446.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN EACH ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
70
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
THE WOODWARD FUNDS AND PRAIRIE FUNDS
DATED May 21, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE><CAPTION>
Page
----
<S> <C> <C>
I. Transfer of Assets of Prairie Portfolios................................... 1
II. Liquidating Distributions and Termination of Prairie....................... 4
III. Valuation Times............................................................ 5
IV. Certain Representations, Warranties and Agreements of Prairie.............. 5
V. Certain Representations, Warranties and Agreements of Woodward............. 8
VI. Shareholder Action on Behalf of the Acquired Funds......................... 9
VII. N-14 Registration Statement and Proxy Solicitation Materials............... 10
VIII. Effective Times of the Reorganization...................................... 10
IX. Woodward Conditions........................................................ 10
X. Prairie Conditions......................................................... 13
XI. Tax Documents.............................................................. 14
XII. Finder's Fees.............................................................. 14
XIII. Announcements.............................................................. 14
XIV. Further Assurances......................................................... 15
XV. Termination of Representations and Warranties.............................. 15
XVI. Termination of Agreement................................................... 15
XVII. Amendment and Waiver....................................................... 15
XVIII. Governing Law.............................................................. 16
XIX. Successors and Assigns..................................................... 16
XX. Beneficiaries.............................................................. 16
XXI. Prairie Liability.......................................................... 16
XXII. Woodward Liability......................................................... 16
XXIII. Notices.................................................................... 17
XXIV. Expenses................................................................... 18
XXV. Entire Agreement........................................................... 18
XXVI. Counterparts............................................................... 18
</TABLE>
i
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made as of May 21, 1996 by and among
The Woodward Funds, a Massachusetts business trust ("Woodward"), Prairie Funds
and Prairie Intermediate Bond Fund, each a Massachusetts business trust, and
Prairie Municipal Bond Fund, Inc., a Maryland corporation (Prairie Funds,
Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc. are
hereinafter referred to collectively as "Prairie").
WHEREAS, the parties desire that substantially all of the assets and
liabilities of Prairie's portfolios be transferred to, and be acquired and
assumed by, certain Woodward portfolios in exchange for Class A, Class B or
Class I Shares, as applicable, of the Woodward portfolios which shall thereafter
be distributed by Prairie to the holders of Class A, Class B or Class I Shares,
as applicable, of its portfolios, all as described in this Agreement (the
"Reorganization");
WHEREAS, the parties intend that the Woodward Managed Assets Conservative,
Equity Income, Small-Cap Opportunities, International Bond, Intermediate
Municipal Bond and Income Funds will each have nominal assets and liabilities
before the Reorganization and will continue the investment operations of the
Prairie Managed Assets Income, Equity Income, Special Opportunities,
International Bond, Intermediate Municipal Bond and Intermediate Bond Funds (the
"Continuing Funds"), respectively, after the Reorganization;
WHEREAS, the Reorganization with respect to the Prairie Managed Assets,
Growth, Bond, U.S. Government Money Market, Money Market, Municipal Money Market
and Municipal Bond Funds (the "Reorganizing Funds") shall occur on a date that
is prior to the Reorganization with respect to the Continuing Funds;
WHEREAS, the parties intend that the transfers of assets, assumptions of
liabilities, and distributions of Class A, Class B and Class I Shares in each
Prairie portfolio, as the case may be, be treated as a tax-free reorganization
under Section 368(a)(1)(C), 368(a)(1)(D) or 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, the parties intend that in connection with the Reorganization each
of the Prairie portfolios shall be terminated and Prairie shall be terminated
under state law and deregistered as described in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and subject to the terms and conditions hereof, and
intending to be legally bound hereby, Woodward and Prairie agree as follows:
I. Transfer of Assets of Prairie Portfolios.
1.01 (a) At the Effective Time of the Reorganization (as defined in Article
VIII) with respect to each of the Prairie portfolios (each, an "Acquired Fund"),
all property of every description, and all interests, rights, privileges and
powers of each Acquired Fund other than cash in an amount necessary to pay any
unpaid dividends and distributions as provided in Article IV(g) (such assets,
the "Acquired
I-1
<PAGE>
Fund Assets") shall be transferred and conveyed by such Acquired Fund to
Woodward on behalf of one of its portfolios as set forth in Section 1.02 (each,
an "Acquiring Fund"), and shall be accepted by Woodward on behalf of such
Acquiring Fund, and Woodward, on behalf of such Acquiring Fund, shall assume all
known liabilities whether accrued, absolute, contingent or otherwise, of such
Acquired Fund reflected in the calculation of such Acquired Fund's net asset
value (the "Acquired Fund Liabilities"), so that at and after the Effective Time
of the Reorganization with respect to such Acquired Fund: (i) all assets of such
Acquired Fund shall become and be the assets of its Acquiring Fund; and (ii) all
known liabilities of such Acquired Fund reflected as such in the calculation of
the Acquired Fund's net asset value shall attach to its Acquiring Fund as
aforesaid and may thenceforth be enforced against such Acquiring Fund to the
extent as if the same had been incurred by it. Without limiting the generality
of the foregoing, the Acquired Fund Assets shall include all property and assets
of any nature whatsoever, including, without limitation, all cash, cash
equivalents, securities, other investments, claims and receivables (including
dividend and interest receivables) owned by an Acquired Fund, and (subject to
Section 1.01(b)) any deferred or prepaid expenses shown as an asset on an
Acquired Fund's books, at the Effective Time of the Reorganization of such
Acquired Fund, and all good will, all other intangible property and all books
and records belonging to an Acquired Fund. Recourse by any person for the
Acquired Fund Liabilities assumed by an Acquiring Fund shall, at and after the
Effective Time of the Reorganization of such Acquired Fund, be limited to such
Acquiring Fund.
1.02 The assets of each Acquired Fund shall be acquired by the Acquiring
Fund identified below opposite its name, and the holders of each class of shares
of such Acquired Fund shall receive the class of shares of common stock of the
Acquiring Fund identified below opposite the name of such class:
<TABLE><CAPTION>
PRAIRIE PORTFOLIOS AND CLASSES WOODWARD PORTFOLIOS AND CLASSES
- --------------------------------------------- ---------------------------------
<S> <C>
Managed Assets Income Fund Managed Assets Conservative Fund
Class A Class A
Class B Class B
Class I Class I
Managed Assets Fund Balanced Fund
Class A Class A
Class B Class B
Class I Class I
Equity Income Fund Equity Income Fund
Class A Class A
Class B Class B
Class I Class I
Growth Fund Capital Growth Fund
Class A Class A
Class B Class B
Class I Class I
Special Opportunities Fund Small-Cap Opportunity Fund
Class A Class A
Class B Class B
Class I Class I
</TABLE>
I-2
<PAGE>
<TABLE><CAPTION>
PRAIRIE PORTFOLIOS AND CLASSES WOODWARD PORTFOLIOS AND CLASSES
- --------------------------------------------- --------------------------------
<S> <C>
Bond Fund Bond Fund
Class A Class A
Class B Class B
Class I Class I
International Bond Fund International Bond Fund
Class A Class A
Class B Class B
Class I Class I
Intermediate Municipal Bond Fund Intermediate Municipal Bond Fund
Class A Class A
Class B Class B
Class I Class I
U.S. Government Money Market Fund Treasury Money Market Fund
Class A Class A
Money Market Fund Money Market Fund
Class A Class A
Class B Class B
Municipal Money Market Fund Tax-Exempt Money Market Fund
Class A Class A
Intermediate Bond Fund Income Fund
Class A Class A
Class B Class B
Class I Class I
Municipal Bond Fund Municipal Bond Fund
Class A Class A
Class B Class B
Class I Class I
</TABLE>
In connection with the Reorganization, the Board of Trustees of Woodward has
adopted resolutions authorizing the change of names of the Tax-Exempt Money
Market Fund to the Municipal Money Market Fund, the Capital Growth Fund to the
Growth Fund and the Balanced Fund to the Managed Assets Balanced Fund, the
change of designations of the classes of each Acquiring Fund as used in
Woodward's Prospectuses (i) from Retail Shares to Class A for each Acquiring
Fund, (ii) from Institutional Shares to Class I for each Acquiring Fund, and
(iii) the establishment of Class B Shares for each Acquiring Fund other than the
Treasury Money Market and Tax-Exempt Money Market Funds. These changes will be
effective by the Effective Time of the Reorganization with respect to each
Acquiring Fund.
1.03 In exchange for the transfer of the Acquired Fund Assets and the
assumption of the Acquired Fund Liabilities, Woodward shall simultaneously issue
at the applicable Effective Time of the Reorganization to each Acquired Fund a
number of full and fractional shares to the third decimal place, of the
Acquiring Fund specified in Section 1.02 and of the class or classes identified
in Section 1.02, all determined and adjusted as provided in this Agreement. The
number of shares of each class of the Acquiring Funds so issued will have an
aggregate net asset value equal to the value of the Acquired
I-3
<PAGE>
Fund Assets that are represented by shares of the corresponding class of the
Acquired Fund, the holders of which shall receive shares of such class of the
Acquiring Fund, as specified in Section 1.02, all determined and adjusted as
provided in this Agreement.
1.04 The net asset value of each class of shares of the Acquiring Funds and
the net asset value of each class of shares of the Acquired Funds shall be
determined as of the applicable Valuation Time with respect to each Acquired
Fund specified in Article III.
1.05 The net asset value of each class of shares of each Acquiring Fund
shall be computed in the manner set forth in such Acquiring Fund's then current
prospectus(es) under the Securities Act of 1933, as amended (the "1933 Act").
The net value of the Acquired Fund Assets to be transferred by the Prairie
portfolios shall be computed by Prairie and shall be subject to adjustment by
the amount, if any, agreed to by Woodward and Prairie. In determining the value
of the securities transferred by the Acquired Funds to the Acquiring Funds, each
security shall be priced in accordance with the policies and procedures of
Woodward described in its then current prospectuses and statements of additional
information and adopted by Woodward's Board of Trustees, which are and shall be
consistent with the policies now in effect for Prairie. For such purposes, price
quotations and the security characteristics relating to establishing such
quotations shall be determined by Woodward, provided that such determination
shall be subject to the approval of Prairie.
The value of the Acquired Fund Assets of the Prairie Money Market, U.S.
Government Money Market and Municipal Money Market Funds (each, a "Prairie Money
Market Fund") and the value of the shares of the corresponding Acquiring Funds
for purposes of sales and redemptions shall be based on the amortized cost
valuation procedures that have been adopted by the Board of Trustees of Prairie
and Woodward, respectively. Any provision in this Agreement to the contrary
notwithstanding, if the difference between the per share net asset values of a
Prairie Money Market Fund and its corresponding Acquiring Fund equals or exceeds
$.0025 at the applicable Valuation Time, as computed by using such market values
in accordance with the policies and procedures established by Woodward (or as
otherwise mutually determined by the Board of Trustees of Prairie and Woodward),
either the Board of Trustees of Prairie or of Woodward shall have the right to
postpone the applicable Valuation Time and the applicable Effective Time of the
Reorganization with respect to such Prairie Money Market Fund until such time as
the per share difference is less than $.0025.
II. Liquidating Distributions and Termination of Prairie.
Immediately after the Effective Time of the Reorganization with respect to
each Acquired Fund, such Acquired Fund shall distribute in complete liquidation
pro rata to the record holders of each class of its shares at the applicable
Effective Time of the Reorganization the shares of the class of the Acquiring
Fund identified in Section 1.02 to be received by the record holders of such
class of such Acquired Fund. In addition, each shareholder of record of an
Acquired Fund shall have the right to receive any unpaid dividends or other
distributions which were declared before the applicable Effective Time of the
Reorganization with respect to the shares of an Acquired Fund that are held by
the shareholder at the applicable Effective Time of the Reorganization. In
accordance with instructions it receives from Prairie, Woodward shall record on
its books the ownership of each class of shares of each
I-4
<PAGE>
Acquiring Fund by the record holders of the class of shares of the Acquired Fund
identified in Section 1.02. All of the issued and outstanding shares of each
class of each Acquired Fund shall be redeemed and canceled on the books of
Prairie at the Effective Time of the Reorganization of such Acquired Fund and
shall thereafter represent only the right to receive the class of shares of the
Acquiring Fund identified in Section 1.02, and the Acquired Fund's transfer
books shall be closed permanently. As soon as practicable after the Effective
Time of the Reorganization with respect to the Continuing Funds, Prairie shall
make all filings and take all other steps as shall be necessary and proper to
effect its complete dissolution, and shall file an application pursuant to
Section 8(f) of the 1940 Act for an order declaring that it has ceased to be an
investment company and any and all documents that may be necessary to terminate
its existence under state law. After the Effective Time of the Reorganization
with respect to the Continuing Funds, Prairie shall not conduct any business
except in connection with its liquidation, dissolution, and deregistration.
III. Valuation Times.
Subject to Section 1.05 hereof, (a) the Valuation Time for the
Reorganization with respect to each of the Reorganizing Funds shall be 4:00
P.M., Eastern Time, on such date as may be agreed in writing by the duly
authorized officers of both parties hereto, and (b) the Valuation Time for the
Reorganization with respect to each of the Continuing Funds shall be 4:00 p.m.,
Eastern Time, on such date as may be agreed in writing by the duly authorized
officers of both parties hereto, which date shall be not less than seven
calendar days following the Valuation Time for the Reorganization with respect
to each of the Reorganizing Funds.
IV. Certain Representations, Warranties and Agreements of Prairie.
Each Prairie entity, on behalf of itself and each of its Acquired Funds,
represents and warrants to, and agrees with, Woodward as follows:
(a) It is, in the case of each of the Prairie Funds and Prairie
Intermediate Bond Fund, a Massachusetts business trust duly created pursuant
to its Agreement and Declaration of Trust for the purpose of acting as a
management investment company under the 1940 Act and is validly existing
under the laws of, and duly authorized to transact business in, the
Commonwealth of Massachusetts, and in the case of Prairie Municipal Bond
Fund, Inc., it is a Maryland corporation duly organized and validly existing
under the laws of the State of Maryland. Each Acquired Fund is registered
with the Securities and Exchange Commission (the "SEC") as an open-end
management investment company under the 1940 Act and such registration is in
full force and effect.
(b) It has power to own all of its properties and assets and, subject to
the approvals of shareholders referred to herein, to carry out and
consummate the transactions contemplated hereby, and has all necessary
federal, state and local authorizations to carry on its business as now
being conducted and to consummate the transactions contemplated by this
Agreement.
(c) This Agreement has been duly authorized, executed and delivered by
Prairie, and represents Prairie's valid and binding contract, enforceable in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium, and other
I-5
<PAGE>
similar laws of general applicability relating to or affecting creditors'
rights and to general principles of equity. The execution and delivery of
this Agreement does not and will not, and the consummation of the
transactions contemplated by this Agreement will not, violate Prairie's
Agreement and Declaration of Trust, Charter or By-laws, as applicable, or
any agreement or arrangement to which it is a party or by which it is bound.
(d) Each Acquired Fund has elected to qualify and has qualified as a
"regulated investment company" under Subtitle A, Chapter 1, Subchapter M,
Part I of the Code, as of and since its first taxable year; has been such a
regulated investment company at all times since the end of its first taxable
year when it so qualified; and qualifies and shall continue to qualify as a
regulated investment company until the Effective Time of the Reorganization
with respect to such Acquired Fund.
(e) All federal, state, local and foreign income, profits, franchise,
sales, withholding, customs, transfer and other taxes, including interest,
additions to tax and penalties (collectively, "Taxes") relating to the
Acquired Fund Assets due or properly shown to be due on any return filed by
any Acquired Fund with respect to taxable periods ending on or prior to, and
the portion of any interim period up to, the date hereof have been fully and
timely paid or provided for; and there are no levies, liens, or other
encumbrances relating to Taxes existing, threatened or pending with respect
to the Acquired Fund Assets.
(f) The financial statements of each Prairie portfolio for the fiscal
year or period ended December 31, 1995, examined by Ernst & Young LLP,
copies of which have been previously furnished to Woodward, present fairly
the financial position of each Acquired Fund as of December 31, 1995 and the
results of its operations for the year or period then ending, in conformity
with generally accepted accounting principles.
(g) Prior to the Valuation Time applicable to a Reorganizing Fund, that
Reorganizing Fund shall have declared a dividend or dividends, with a record
date and ex-dividend date prior to such Valuation Time, which, together with
all previous dividends, shall have the effect of distributing to its
shareholders all of its investment company taxable income, if any, for the
taxable periods or years ended on or before December 31, 1995 and for the
period from said date to and including the Effective Time of the
Reorganization applicable to the Reorganizing Fund (computed without regard
to any deduction for dividends paid), and all of its net capital gain, if
any, realized in taxable periods or years ended on or before December 31,
1995 and in the period from said date to and including the Effective Time of
the Reorganization applicable to the Reorganizing Fund.
(h) At both the Valuation Time and the Effective Time of the
Reorganization with respect to each Acquired Fund, there shall be no known
liabilities of such Acquired Fund, whether accrued, absolute, contingent or
otherwise, not reflected in the net asset values per share of its
outstanding classes of shares.
(i) Except as disclosed in a letter that Prairie has supplied to
Woodward dated the date hereof, there are no legal, administrative or other
proceedings pending or, to Prairie's knowledge
I-6
<PAGE>
threatened, against Prairie or an Acquired Fund which could result in
liability on the part of Prairie or an Acquired Fund.
(j) Subject to the approvals of shareholders referred to herein, at both
the Valuation Time and the Effective Time of the Reorganization with respect
to each Acquired Fund, it shall have full right, power and authority to
sell, assign, transfer and deliver the Acquired Fund Assets of such Acquired
Fund and, upon delivery and payment for the Acquired Fund Assets as
contemplated herein, an Acquiring Fund shall acquire good and marketable
title thereto, free and clear of all liens and encumbrances, and subject to
no restrictions on the ownership or transfer thereof (except as imposed by
federal or state securities laws).
(k) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Prairie of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934
Act"), the 1940 Act, the rules and regulations under those Acts, and state
securities laws.
(l) Insofar as the following relate to Prairie, the registration
statement filed by Woodward on Form N-14 relating to the shares of the
Acquiring Funds that will be registered with the SEC pursuant to this
Agreement, which, without limitation, shall include a proxy statement of
Prairie and the prospectuses of Woodward with respect to the transactions
contemplated by this Agreement, and any supplement or amendment thereto or
to the documents contained or incorporated therein by reference (the "N-14
Registration Statement"), on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein and
at each Effective Time of the Reorganization: (i) shall comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act, the rules and regulations thereunder, and state securities laws,
and (ii) shall not contain any 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; provided, however, that the
representations and warranties in this subsection shall apply only to
statements in or omissions from the N-14 Registration Statement made in
reliance upon and in conformity with information furnished by Prairie for
use in the N-14 Registration Statement.
(m) All of the issued and outstanding shares of each class of each
Acquired Fund have been duly and validly issued, are fully paid and
non-assessable, and were offered for sale and sold in conformity with all
applicable federal and state securities laws, and no shareholder of an
Acquired Fund has any preemptive right of subscription or purchase in
respect of such shares.
(n) Prairie shall not sell or otherwise dispose of any shares of an
Acquiring Fund to be received in the transactions contemplated herein,
except in distribution to its shareholders as contemplated herein.
I-7
<PAGE>
V. Certain Representations, Warranties and Agreements of Woodward.
Woodward, on behalf of itself and each Acquiring Fund, represents and
warrants to, and agrees with, Prairie as follows:
(a) It is a Massachusetts business trust duly created pursuant to its
Agreement and Declaration of Trust for the purpose of acting as a management
investment company under the 1940 Act and is validly existing under the laws
of, and duly authorized to transact business in, the Commonwealth of
Massachusetts. Each Acquiring Fund is registered with the SEC as an open-end
management investment company under the 1940 Act and such registration is in
full force and effect.
(b) It has power to own all of its properties and assets and to carry
out and consummate the transactions contemplated herein, and has all
necessary federal, state and local authorizations to carry on its business
as now being conducted and to consummate the transactions contemplated by
this Agreement.
(c) This Agreement has been duly authorized, executed and delivered by
Woodward, and represents Woodward's valid and binding contract, enforceable
in accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium, and other similar laws
of general applicability relating to or affecting creditors' rights and to
general principles of equity. The execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated by this
Agreement will not, violate Woodward's Agreement and Declaration of Trust or
By-laws or any agreement or arrangement to which it is a party or by which
it is bound.
(d) Each Acquiring Fund has elected or will elect to qualify, and each
of the Woodward Balanced, Capital Growth, International Equity, Bond,
Treasury Money Market, Money Market, Tax-Exempt Money Market and Municipal
Bond Funds ("Woodward Operating Funds") has qualified, as a "regulated
investment company" under Subtitle A, Chapter 1, Subchapter M, Part I of the
Code, as of and since its first taxable year; each of the Woodward Operating
Funds has been such a regulated investment company at all times since the
end of its first taxable year when it so qualified and intends to continue
to qualify as a regulated investment company.
(e) The financial statements of each of the Woodward Operating Funds for
its fiscal year ended December 31, 1995, examined by Arthur Andersen LLP,
copies of which have been previously furnished to Prairie, present fairly
the financial position of each such Acquiring Fund as of December 31, 1995
and the results of its operations for the year or period then ending, in
conformity with generally accepted accounting principles.
(f) At both the Valuation Time and the Effective Time of the
Reorganization with respect to each Acquiring Fund, there shall be no known
liabilities of such Acquiring Fund, whether accrued, absolute, contingent or
otherwise, not reflected in the net asset values per share of its
outstanding classes to be issued pursuant to this Agreement.
I-8
<PAGE>
(g) There are no legal, administrative or other proceedings pending or,
to its knowledge, threatened against Woodward or an Acquiring Fund which
could result in liability on the part of Woodward or an Acquiring Fund.
(h) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Woodward of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, the rules and regulations
under those Acts, and state securities laws.
(i) Insofar as the following relate to Woodward, the N-14 Registration
Statement on its effective date, at the time of any shareholders' meetings
referred to herein and at each Effective Time of the Reorganization: (i)
shall comply in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act, the rules and regulations thereunder, and
state securities laws, and (ii) shall not contain any 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; provided,
however, that the representations and warranties in this subsection shall
apply only to statements in or omissions from the N-14 Registration
Statement made in reliance upon and in conformity with information furnished
by Woodward for use in the N-14 Registration Statement.
(j) The shares of each class of each Acquiring Fund to be issued and
delivered to an Acquired Fund for the account of record holders of shares of
an Acquired Fund, pursuant to the terms hereof, shall have been duly
authorized as of the Effective Time of the Reorganization applying to such
Acquiring Fund and, when so issued and delivered, shall be registered under
the 1933 Act and under applicable state securities laws, duly and validly
issued, fully paid and non-assessable, and no shareholder of Woodward shall
have any preemptive right of subscription or purchase in respect thereto.
VI. Shareholder Action on Behalf of the Acquired Funds.
6.01 As soon as practicable after the effective date of the N-14
Registration Statement, but in any event prior to the Effective Time of the
Reorganization applicable to the Reorganizing Funds and as a condition to the
Reorganization, the Board of Trustees/Directors of Prairie shall call, and
Prairie shall hold, a meeting of the shareholders of the Acquired Funds for the
purpose of considering and voting upon:
(a) Approval of this Agreement and the transactions contemplated hereby,
including, without limitation:
(i) The transfer of the Acquired Fund Assets belonging to each
Acquired Fund to an Acquiring Fund, and the assumption by such Acquiring
Fund of the Acquired Fund Liabilities of such Acquired Fund, in exchange
for shares of a class or classes of shares of such Acquiring Fund, as set
forth in Section 1.02.
(ii) The liquidation of each Acquired Fund through the distribution
to its record holders of shares of the class or classes of shares of an
Acquiring Fund as described in this Agreement.
I-9
<PAGE>
(b) Such other matters as may be determined by the Boards of
Trustees/Directors or authorized officers of the parties.
6.02 Approval of this Reorganization Agreement by the shareholders of the
Acquired Funds shall constitute the waiver of the application of any fundamental
policy of such Acquired Funds that might be deemed to prevent them from taking
the actions necessary to effectuate the Reorganization as described, and such
policies, if any, shall be deemed to have been amended accordingly.
VII. N-14 Registration Statement and Proxy Solicitation Materials.
Woodward shall file the N-14 Registration Statement under the 1933 Act, and
Prairie shall file the combined prospectus/proxy statement contained therein
under the 1934 Act and 1940 Act proxy rules, with the SEC as promptly as
practicable. Each of Woodward and Prairie has cooperated and shall continue to
cooperate with the other, and has furnished and shall continue to furnish the
other with the information relating to itself that is required by the 1933 Act,
the 1934 Act, the 1940 Act, the rules and regulations under each of those Acts
and state securities laws, to be included in the N-14 Registration Statement.
VIII. Effective Times of the Reorganization.
Delivery of the Acquired Fund Assets of each Acquired Fund and the shares of
the classes of its Acquiring Fund to be issued pursuant to Article I and the
liquidation of each Acquired Fund pursuant to Article II shall occur at the
opening of business on the next business day following the Valuation Time
applicable to such Acquired Fund, or on such other date, and at such place and
time and date, as may be determined by the President or any Vice President of
each party hereto. The respective date and time at which such actions are taken
with respect to an Acquired Fund are referred to herein as the "Effective Time
of the Reorganization." To the extent any Acquired Fund Assets are, for any
reason, not transferred at the applicable Effective Time of the Reorganization,
Prairie shall cause such Acquired Fund Assets to be transferred in accordance
with this Agreement at the earliest practicable date thereafter.
IX. Woodward Conditions.
The obligations of Woodward hereunder with respect to each Acquiring Fund
shall be subject to the following conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the shareholders of such Acquired Fund, in the
manner required by law.
(b) Prairie shall have duly executed and delivered to Woodward such
bills of sale, assignments, certificates and other instruments of transfer
("Transfer Documents") as may be necessary or desirable to transfer all
right, title and interest of Prairie and such Acquired Fund in and to the
Acquired Fund Assets of such Acquired Fund. The Acquired Fund Assets shall
be accompanied by all necessary state stock transfer stamps or cash for the
appropriate purchase price therefor.
I-10
<PAGE>
(c) All representations and warranties of Prairie made in this Agreement
shall be true and correct in all material respects as if made at and as of
each Valuation Time and each Effective Time of the Reorganization. As of the
Valuation Time and the Effective Time of the Reorganization applicable to
each Acquired Fund, there shall have been no material adverse change in the
financial position of such Acquired Fund since December 31, 1995 other than
those changes incurred in the ordinary course of business as an investment
company. No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
(d) Woodward shall have received an opinion of Stroock & Stroock & Lavan
addressed to Woodward in form reasonably satisfactory to it and dated the
Effective Time of the Reorganization applicable to each Acquired Fund,
substantially to the effect that: (i) Prairie Funds and Prairie Intermediate
Bond Fund are each a Massachusetts business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts; (ii) Prairie
Municipal Bond Fund, Inc. is a Maryland corporation duly organized and
validly existing under the laws of the State of Maryland; (iii) the shares
of such Acquired Fund outstanding at such time are duly authorized, validly
issued, fully paid and non-assessable by such Acquired Fund, and to such
counsel's knowledge, no shareholder of such Acquired Fund has any option,
warrant or pre-emptive right to subscription or purchase in respect thereof;
(iv) this Agreement and the Transfer Documents have been duly authorized,
executed and delivered by Prairie and represent legal, valid and binding
contracts, enforceable in accordance with their terms, subject to the effect
of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar
laws relating to or affecting creditors' rights generally and court
decisions with respect thereto, and such counsel shall not be required to
express an opinion with respect to the application of equitable principles
in any proceeding, whether at law or in equity, or with respect to the
provisions of this Agreement intended to limit liability for particular
matters to an Acquired Fund and its assets; (v) the execution and delivery
of this Agreement did not, and the consummation of the transactions
contemplated by this Agreement will not, violate the Agreement and
Declaration of Trust, Charter or By-laws, as applicable, of Prairie or any
material agreement known to such counsel to which Prairie is a party or by
which Prairie is bound; and (v) to such counsel's knowledge, no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by Prairie of the transactions contemplated by
this Agreement, except such as have been obtained under the 1933 Act, the
1934 Act, the 1940 Act, the rules and regulations under those Acts and such
as may be required under the state securities laws. Such opinion may rely on
the opinion of other counsel to the extent set forth in such opinion,
provided such other counsel is reasonably acceptable to Woodward.
(e) Woodward shall have received an opinion of Drinker Biddle & Reath,
addressed to Woodward and Prairie in form reasonably satisfactory to them
and dated the Effective Time of the Reorganization applicable to each
Acquired Fund, substantially to the effect that for federal income tax
purposes (i) the transfers of all of the Acquired Fund Assets hereunder, and
the assumption by its Acquiring Fund of Acquired Fund Liabilities, in
exchange for shares of each
I-11
<PAGE>
class of such Acquiring Fund, and the distribution of said shares to the
shareholders of such Acquired Fund, as provided in this Agreement, will each
constitute a reorganization within the meaning of Section 368(a)(1)(C),
368(a)(1)(D) or 368(a)(1)(F) of the Code and with respect to each
reorganization, the Acquired Fund and the Acquiring Fund will each be
considered "a party to a reorganization" within the meaning of Section
368(b) of the Code; (ii) in accordance with Sections 361(a), 361(c)(1) and
357(a) of the Code, no gain or loss will be recognized by such Acquired Fund
as a result of such transactions; (iii) in accordance with Section 1032(a)
of the Code, no gain or loss will be recognized by an Acquiring Fund as a
result of such transactions; (iv) in accordance with Section 354(a)(1) of
the Code, no gain or loss will be recognized by the shareholders of such
Acquired Fund on the distribution to them by such Acquired Fund of shares of
any class of an Acquiring Fund in exchange for their shares of the
corresponding class of the Acquired Fund; (v) in accordance with Section
358(a)(1) of the Code, the aggregate basis of Acquiring Fund shares received
by each shareholder of any class of an Acquired Fund will be the same as the
aggregate basis of the shareholder's Acquired Fund shares immediately prior
to the transactions; (vi) in accordance with Section 362(b) of the Code, the
basis of the Acquired Fund Assets to any Acquiring Fund will be the same as
the basis of such Acquired Fund Assets in the hands of the corresponding
Acquired Fund immediately prior to the exchange; (vii) in accordance with
Section 1223(1) of the Code, a shareholder's holding period for Acquiring
Fund shares will be determined by including the period for which the
shareholder held the shares of an Acquired Fund exchanged therefor, provided
that the shareholder held such shares of an Acquired Fund as a capital
asset; and (viii) in accordance with Section 1223(2) of the Code, the
holding period of an Acquiring Fund with respect to the Acquired Fund Assets
will include the period for which such Acquired Fund Assets were held by an
Acquired Fund.
(f) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act.
(g) The N-14 Registration Statement shall have become effective under
the 1933 Act and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Woodward, contemplated by the SEC and the
parties shall have received all permits and other authorizations necessary
under state securities laws to consummate the transactions contemplated by
this Agreement.
(h) The President or a Vice President of Prairie shall have certified
that Prairie has performed and complied in all material respects with each
of its agreements and covenants required by this Agreement to be performed
or complied with by it prior to or at each Valuation Time and each Effective
Time of the Reorganization.
(i) Prairie shall have delivered or caused to be delivered to Woodward
each account, book, record or other document of Prairie applicable to such
Acquired Fund which is required to be maintained by Section 31(a) of the
1940 Act and Rules 31a-1 to 31a-3 thereunder (regardless of what person
possesses the same). Prairie has instructed its service contractors to
provide Woodward upon request with access to and copies of all documents
belonging to Prairie.
I-12
<PAGE>
(j) With respect to the Reorganization of the Continuing Funds, the
Reorganization of all of the Reorganizing Funds shall have been consummated.
X. Prairie Conditions.
The obligations of Prairie hereunder with respect to each Acquired Fund
shall be subject to the following conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the shareholders of such Acquired Fund, in the
manner required by law.
(b) All representations and warranties of Woodward made in this
Agreement shall be true and correct in all material respects as if made at
and as of each Valuation Time and each Effective Time of the Reorganization.
As of the Valuation Time and the Effective Time of the Reorganization
applicable to each Acquired Fund, there shall have been no material adverse
change in the financial condition of its Acquiring Fund since December 31,
1995 other than those changes incurred in the ordinary course of business as
an investment company. No action, suit or other proceeding shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein.
(c) Prairie shall have received an opinion of Drinker Biddle & Reath,
addressed to Prairie in form reasonably satisfactory to it and dated the
Effective Time of the Reorganization applicable to each Acquired Fund,
substantially to the effect that: (i) Woodward is a Massachusetts business
trust duly organized and validly existing under the laws of the Commonwealth
of Massachusetts and is qualified to do business and in good standing in
each state in which such qualification is required; (ii) the shares of each
class of each Acquiring Fund to be delivered at such time to an Acquired
Fund as provided for by this Agreement are duly authorized and upon delivery
will be validly issued, fully paid and non-assessable by such Acquiring Fund
and to such counsel's knowledge, no shareholder of an Acquiring Fund has any
option, warrant or pre-emptive right to subscription or purchase in respect
thereof; (iii) this Agreement has been duly authorized, executed and
delivered by Woodward and represents a legal, valid and binding contract,
enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions
with respect thereto, and such counsel shall not be required to express an
opinion with respect to the application of equitable principles in any
proceeding, whether at law or in equity, or with respect to the provisions
of this Agreement intended to limit liability for particular matters to an
Acquiring Fund and its assets; (iv) the execution and delivery of this
Agreement did not, and the consummation of the transactions contemplated by
this Agreement will not, violate the Agreement and Declaration of Trust or
By-laws of Woodward, or any material agreement known to such counsel to
which Woodward is a party or by which Woodward is bound; and (v) to such
counsel's knowledge no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by Woodward
of the transactions contemplated by this Agreement, except such as have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act, the rules and
I-13
<PAGE>
regulations under those Acts and such as may be required under the state
securities laws. Such opinion may rely on the opinion of other counsel to
the extent set forth in such opinion, provided such other counsel is
reasonably acceptable to Prairie.
(d) Prairie shall have received an opinion of Drinker Biddle & Reath,
addressed to Woodward and Prairie in the form reasonably satisfactory to
them and dated the Effective Time of the Reorganization applicable to each
Acquired Fund, with respect to the matters specified in Section IX(e).
(e) The N-14 Registration Statement shall have become effective under
the 1933 Act and no stop order suspending such effectiveness shall have been
instituted, or to the knowledge of Woodward, contemplated by the SEC and the
parties shall have received all permits and other authorizations necessary
under state securities laws to consummate the transactions contemplated by
this Agreement.
(f) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act.
(g) The President or Vice President of Woodward shall have certified
that Woodward has performed and complied in all material respects with each
of its agreements and covenants required by this Agreement to be performed
or complied with by it prior to or at each Valuation Time and each Effective
Time of the Reorganization.
(h) Prairie shall have received from the SEC a written order of
exemption, satisfactory in form and substance to Prairie and Woodward,
exempting the Reorganization from Sections 17(a) and 17(d) of the 1940 Act
and Rule 17d-1 thereunder.
(i) With respect to the Reorganization of the Continuing Funds, the
Reorganization of all of the Reorganizing Funds shall have been consummated.
XI. Tax Documents.
Prairie shall deliver to Woodward at each Effective Time of the
Reorganization confirmations or other adequate evidence as to the adjusted tax
basis of the Acquired Fund Assets then delivered to an Acquiring Fund in
accordance with the terms of this Agreement.
XII. Finder's Fees.
Each party represents and warrants to each of the other parties hereto that
there is no person who is entitled to any finder's or other similar fee or
commission arising out of the transactions contemplated by this Agreement.
XIII. Announcements.
Any announcements or similar publicity with respect to this Agreement or the
transactions contemplated herein shall be at such time and in such manner as the
parties shall agree; provided, that
I-14
<PAGE>
nothing herein shall prevent any party upon notice to the other parties from
making such public announcements as such party's counsel may consider advisable
in order to satisfy the party's legal and contractual obligations in such
regard.
XIV. Further Assurances.
Subject to the terms and conditions herein provided, each of the parties
hereto shall use its best efforts to take, or cause to be taken, such action, to
execute and deliver, or cause to be executed and delivered, such additional
documents and instruments, and to do, or cause to be done, all things necessary,
proper or advisable under the provisions of this Agreement and under applicable
law to consummate and make effective the transactions contemplated by this
Agreement.
XV. Termination of Representations and Warranties.
The representations and warranties of the parties set forth in this
Agreement shall terminate at the Effective Time of the Reorganization of the
Continuing Funds.
XVI. Termination of Agreement.
16.01 This Agreement may be terminated as to one or more investment
portfolios by a party at any time at or prior to (i) the Effective Time of the
Reorganization of the Reorganizing Funds, or (ii) with respect to the Continuing
Funds and the corresponding Acquiring Funds at any time at or prior to the
Effective Time of the Reorganization of the Continuing Funds, by the Board of
Trustees of Woodward or the Board of Trustees or Directors of Prairie, as
provided below:
(a) By Woodward if the conditions set forth in Article IX are not
satisfied as specified in said Section;
(b) By Prairie if the conditions set forth in Article X are not
satisfied as specified in said Section;
(c) By the mutual consent of the parties.
16.02 If a party terminates this Agreement as to any investment portfolio
because one or more of its conditions precedent have not been fulfilled, or if
this Agreement is terminated by mutual consent, this Agreement will become null
and void without any liability of either party or any of their investment
portfolios to the other; provided, however, that if such termination is by
Woodward pursuant to Section 16.01(a) as a result of a breach by Prairie of any
of its representations, warranties or covenants in this Agreement, or such
termination is by Prairie pursuant to Section 16.01(b) as a result of a breach
by Woodward of any of its representations, warranties or covenants in this
Agreement, nothing herein shall affect the non-breaching party's right to
damages on account of such other party's breach.
XVII. Amendment and Waiver.
At any time prior to or (to the fullest extent permitted by law) after
approval of this Agreement by the shareholders of Prairie, (a) the parties
hereto may, by written agreement authorized by their respective Boards of
Directors or Trustees, as the case may be, or their respective Presidents or any
Vice
I-15
<PAGE>
Presidents, and with or without the approval of their shareholders, amend any of
the provisions of this Agreement, and (b) either party may waive any breach by
the other party or the failure to satisfy any of the conditions to its
obligations (such waiver to be in writing and authorized by the President or
Vice President of the waiving party with or without the approval of such party's
shareholders).
XVIII. Governing Law.
This Agreement and the transactions contemplated hereby shall be governed,
construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the conflicts of law principles
otherwise applicable therein.
XIX. Successors and Assigns.
This Agreement shall be binding upon the respective successors and permitted
assigns of the parties hereto. This Agreement and the rights, obligations and
liabilities hereunder may not be assigned by either party without the consent of
the other party.
XX. Beneficiaries.
Nothing contained in this Agreement shall be deemed to create rights in
persons not parties hereto, other than the successors and permitted assigns of
the parties.
XXI. Prairie Liability.
21.01 The names "Prairie Funds," "Prairie Intermediate Bond Fund" and
"Trustees of Prairie" refer respectively to the trusts created and the trustees,
as trustees but not individually or personally, acting from time to time under
Declarations of Trust dated October 20, 1994 and March 12, 1992, respectively,
which are hereby referred to and copies of which are on file at the office of
the State Secretary of the Commonwealth of Massachusetts and at the principal
office of Prairie. The obligations of Prairie 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 Prairie personally, but bind only
the trust property, and all persons dealing with any portfolio of Prairie must
look solely to the trust property belonging to such portfolio for the
enforcement of any claims against Prairie.
21.02 Both parties specifically acknowledge and agree that any liability of
Prairie under this Agreement with respect to an Acquired Fund, or in connection
with the transactions contemplated herein with respect to an Acquired Fund,
shall be discharged only out of the assets of that Acquired Fund and that no
other portfolio of Prairie shall be liable with respect thereto.
XXII. Woodward Liability.
22.01 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
I-16
<PAGE>
Massachusetts and at the principal office of Woodward. The obligations of
Woodward 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
Woodward personally, but bind only the trust property, and all persons dealing
with any portfolio of Woodward must look solely to the trust property belonging
to such portfolio for the enforcement of any claims against Woodward.
22.02 Both parties specifically acknowledge and agree that any liability of
Woodward under this Agreement with respect to an Acquiring Fund, or in
connection with the transactions contemplated herein with respect to an
Acquiring Fund, shall be discharged only out of the assets of that Acquiring
Fund and that no other portfolio of Woodward shall be liable with respect
thereto.
XXIII. Notices.
All notices required or permitted herein shall be in writing and shall be
deemed to be properly given when delivered personally or by telecopier to the
party entitled to receive the notice or when sent by certified or registered
mail, postage prepaid, or delivered to a nationally recognized overnight courier
service, in each case properly addressed to the party entitled to receive such
notice at the address or telecopier number stated below or to such other address
or telecopier number as may hereafter be furnished in writing by notice
similarly given by one party to the other party hereto:
If to Woodward:
The Woodward Funds
Earl I. Heenan, Jr., President
c/o NBD Bank Attn: Richard L. Foersterling
611 Woodward Avenue
Detroit, Michigan 48226
Telecopier Number: (313) 225-3940
With a copy to:
W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, PA 19107
Telecopier Number: (215) 988-2757
I-17
<PAGE>
If to Prairie:
(a) Prairie Funds
c/o Mark A. Dillon, President
Three First National Plaza
Chicago, Illinois 60670
Telecopier Number: (312) 732-3864
(b) Prairie Intermediate Bond Fund
c/o Mark A. Dillon, President
Three First National Plaza
Chicago, Illinois 60670
Telecopier Number: (312) 732-3864
(c) Prairie Municipal Bond Fund, Inc.
c/o Mark A. Dillon, President
Three First National Plaza
Chicago, Illinois 60670
Telecopier Number: (312) 732-3864
With a copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Telecopier Number: (212) 806-6006
XXIV. Expenses.
Each party represents to the other that its expenses incurred in connection
with the Reorganization will be borne by First Chicago NBD Corporation or one or
more of its affiliates, provided, however, that Woodward shall bear any filing
fees under the 1933 Act and state securities laws in connection with its Class
A, Class B and Class I Shares to be distributed to shareholders of the Acquired
Funds.
XXV. Entire Agreement.
This Agreement embodies the entire agreement and understanding of the
parties hereto and supersedes any and all prior agreements, arrangements and
understandings relating to matters provided for herein.
XXVI. Counterparts.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
I-18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the date first
written above.
[SIGNATURES OMITTED]
I-19
<PAGE>
APPENDIX II
EXISTING WOODWARD FUNDS MD&A
II-1
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD GROWTH/VALUE FUND
OBJECTIVE:
The Woodward Growth/Value Fund (the "Fund") seeks to achieve long-term
capital appreciation and, secondarily, to produce current income approximating
that prevailing within the general equity market. The Fund strives to purchase
issues, primarily of larger domestic companies, that have superior growth
potential and are judged mispriced by the market. The Fund is broadly
diversified and has market risk similar to the S&P 500.
PERFORMANCE HIGHLIGHTS:
The stock market ended 1995 with its third best year since 1948 and its best
year since 1958 as measured by the S&P 500 Index's 37.5% return. Mutual funds
mirrored this rise, but at a more modest rate. The average diversified U.S.
stock fund returned 31.1% for the year, as measured by Lipper Analytical
Services. The dichotomy between the S&P Index return and the Lipper 31.1% return
and the Growth/Value Fund's 28.0% return (without sales charge) primarily
reflected two points. First, in contrast to most mutual funds, the S&P 500 Index
is a cashless portfolio dominated by companies averaging over $30 billion in
market capitalization. Second, during 1995, the S&P return was dominated by the
finance, technology and healthcare sectors. To have generated larger returns,
the Growth/Value Fund would have been forced to unduly concentrate, thereby
incurring unacceptable levels of risk. Net, the Fund's 28.0% return for 1995 was
nearly three times the stock market's historic annual average return. It was a
very good year to be a common stock investor.
As the technology sector continued to weaken during the fourth quarter and
the market breadth widened, the Growth/Value Fund continued the performance
rebound begun during the third quarter. The Fund recorded a 5.7% return for the
final quarter of 1995, within three-tenths of one percent of the S&P return of
6.0%. This was good progress when compared to other mutual funds. Lipper
classifies the Growth/Value Fund as a "Growth and Income" fund. The average
fourth quarter return for Lipper Growth and Income funds was 4.5%. The average
diversified U.S. stock fund recorded a 3.1% return for the period. If sector and
foreign funds are included, the average stock fund return was 2.5%.
During the year, the net asset value of the Fund advanced from $10.67 to
$13.16. Distributions from net investment income totaled $0.22 per share and
capital gains distributed were $0.26 per share. Turnover during the year was
moderate at approximately 27%. Cash was reduced from 12.8% to 3.3% during the
year. The Fund will remain as fully invested in stocks as practicable. Cash will
not be used for market timing or asset allocation purposes.
As measured from virtually any historical perspective, the Fund provided a
very large absolute return during 1995. In addition, as the year proceeded and
the market became more broad based, the Fund's relative performance advanced
versus the market and similar funds. Although it is impossible to predict
whether 1996 will provide common stock investors with another year of
historically high returns, we are confident the Fund's balance provides the
appropriate mix of risk versus return for a long-term core equity investment.
II-2
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD GROWTH/VALUE FUND (Continued)
Growth of $10,000 Invested in the
Woodward Growth/Value Fund and the
Standard & Poor's 500 Index
$19,000
$17,000 $17,991
[GRAPH] $16,105
$15,000 $15,300
$13,000
$11,000
$9,000
<TABLE><CAPTION>
6/91 12/91 6/92 12/92 6/93 12/93 6/94 12/94 6/95 12/95
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund (1) $ 9,500 $ 9,507 $ 9,760 $10,446 $11,124 $11,886 $11,822 $11,951 $13,546 $15,300
Fund (2) $10,000 $10,000 $10,274 $11,000 $11,709 $12,512 $12,445 $12,580 $14,259 $16,105
Index (3) $10,000 $10,901 $10,830 $11,736 $12,313 $12,924 $12,483 $13,094 $15,721 $17,991
</TABLE>
(1) Includes maximum sales charge of 5.0%.
(2) Excludes maximum sales charge of 5.0%.
(3) Excludes expenses.
(4) Maximum sales charge of 5.0% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $15,381.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (6/1/91)
- -------------------------------------------------------------------------- ---- ---------
<S> <C> <C>
Woodward Growth/Value Fund (with maximum 5.0% sales charge)............... 21.6% 9.7%(1)
Woodward Growth/Value Fund (without sales charge)......................... 28.0% 10.9%
S&P 500 Index*............................................................ 37.5% 13.7%
</TABLE>
- ----------------
* A broad-based, unmanaged equity index comprised of larger U.S. publicly traded
corporations.
(1) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 9.8%.
Past performance is not predictive of future performance.
II-3
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD OPPORTUNITY FUND
OBJECTIVE:
The Woodward Opportunity Fund (the "Fund") maintains a portfolio of stocks
of smaller to mid-sized companies. The Fund's objective is to achieve long-term
capital appreciation and, secondarily, to maintain a moderate level of dividend
income. The Fund concentrates on quality companies with above average growth
potential and superior returns on investment.
PERFORMANCE HIGHLIGHTS:
During the Fund's fiscal year ended December 31, 1995, small to
mid-capitalization company stocks returned 31.7% as measured by the Russell 2500
Index. This compares to the 37.5% return for the large capitalization oriented
Standard and Poor's 500 Index. This marks the second consecutive year that
small-cap stocks have lagged their large-capitalization counterparts.
The Opportunity Fund returned 19.9% (without the sales charge) in 1995.
During the year the net asset value of the Fund increased from $13.34 to $15.15.
Distributions from net investment income were $.06 per share and long-term
capital gain distributions were $.76 per share. While the absolute return for
the Fund was strong, it lagged behind the Russell 2500 Index, which is an
unmanaged, broad based index of small to intermediate capitalization equities.
The Index has similar market capitalization characteristics as the Fund but is
not subject to the expenses of a mutual fund.
The Fund's performance relative to the Russell 2500 was primarily the result
of two factors: 1) a market environment that favored high growth, momentum
oriented investment styles; and 2) a narrow market with only the technology and
financial services sectors outperforming the overall index. As a result of the
Woodward Opportunity Fund's emphasis on companies exhibiting above average
growth with reasonable valuations and the desire to keep the portfolio broadly
diversified, the Fund has typically lagged in the type of market environment
experienced in 1995.
Over the very long-term, small capitalization stocks have provided returns
superior to their large capitalization counterparts, but with more volatility.
The Fund employs a conservative approach intended to provide exposure to small
capitalization stocks while dampening the volatility inherent in this sector of
the market. This is done by: 1) focusing on high quality companies with above
average growth prospects; 2) utilizing a disciplined valuation approach; and 3)
being well diversified among various market sectors. We believe this strategy
has produced favorable performance in a variety of market environments, and we
are optimistic our approach will prove rewarding over the long-term.
II-4
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD OPPORTUNITY FUND (Continued)
Growth of $10,000 Invested in the Woodward
Opportunity Fund and the Standard & Poor's 500
and the Russell 2500 Stock Indices
$19,000 $19,787
$18,830
$17,000 [GRAPH] $17,991
$17,889
$15,000
$13,000
$11,000
$9,000
<TABLE><CAPTION>
6/91 12/91 6/92 12/92 6/93 12/93 6/94 12/94 6/95 12/95
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund (1) $ 9,500 $ 9,997 $10,257 $12,452 $13,714 $15,442 $14,703 $14,937 $16,896 $17,889
Fund (2) $10,000 $10,523 $10,716 $13,108 $14,435 $16,254 $15,744 $15,723 $17,786 $18,830
S&P 500 (3) $10,000 $10,901 $10,830 $11,736 $12,313 $12,924 $12,483 $13,094 $15,721 $17,991
Russell 2500 (3) $10,000 $11,204 $11,153 $13,017 $13,920 $15,170 $14,317 $15,026 $17,574 $19,787
</TABLE>
(1) Includes maximum sales charge of 5.0%.
(2) Excludes maximum sales charge of 5.0%.
(3) Excludes expenses.
(4) Maximum sales charge of 5.0% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $17,983.
<TABLE><CAPTION>
Since
Average Annual Total Return One Inception
Through 12/31/95 Year (6/1/91)
- -------------------------------------------------------------------------- ---- ---------
<S> <C> <C>
Woodward Opportunity Fund (with maximum 5.0% sales charge)................ 13.9% 13.5%(1)
Woodward Opportunity Fund (without sales charge).......................... 19.9% 14.8%
S&P 500 Index*............................................................ 37.5% 13.7%
Russell 2500 Index........................................................ 31.7% 16.1%
</TABLE>
- ----------------
* A broad-based, unmanaged equity index comprised of larger U.S. publicly trade
corporations.
(1) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 13.7%.
Past performance is not predictive of future performance.
II-5
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD INTRINSIC VALUE FUND
OBJECTIVE:
The Woodward Intrinsic Value Fund (the "Fund") seeks to provide long-term
capital growth, with income a secondary consideration, by investing, primarily
in equity securities of companies believed to represent a value or potential
worth which is not fully recognized by prevailing market prices. 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. Equities purchased are often deemed to be overlooked and out
of favor by the marketplace. In general, the Fund's investments are diversified
among industry groups to reduce certain of the risks inherent in common stock
investments.
PERFORMANCE HIGHLIGHTS:
Our 1995 results were both gratifying and disappointing. The Fund's overall
performance depends on how we compare it. In absolute terms we earned a solid
24.4% return, the best year in our history as a mutual fund. Net asset value
increased from $10.48 to $11.89 per share, while dividend and capital gain
distributions totaled $0.30 and $0.82 per share, respectively. However, compared
to the S&P 500 Index we lagged considerably. Last year this market benchmark
posted a stunning 37.5% advance, fueled by a surge in a narrow group of large
capitalization stocks. We hope our investors will keep in mind that 1995 is only
one lap in a very long race and that our more conservative portfolio will
typically lag in such a "hot" market environment.
What was successful for us in 1995 and what wasn't? Our best results were in
the finance sector, driven by lower interest rates and a merger mania among
banks. Our holdings in Loews, Federal National Mortgage, Old Republic, and
Allmerica Property & Casualty all rose over 60 percent last year. Another hot
area was in consumer non-durables, but specifically in larger capitalization
food and drug companies like Philip Morris, Bristol Myers, American Home
Products, and Anheuser Busch. Returns here were in the 35%-65% range. Concerns
about a slowing economy are once again making these "defensive" stocks
attractive to investors. We note, however, that they are also getting very
expensive (just as in 1990-91) and we are continuing to take profits. An area of
disappointment was clearly in retail related sectors, where consumer spending
remained weak and margins were tight. On average, these stocks produced only
modest returns for us. Our lack of "hot" technology stocks also hurt
performance. However, we don't think our longer-term results will suffer from
having missed this buying frenzy. In addition, our smaller capitalization stocks
as a group were not as popular as the larger ones, despite fundamentals which
generally met our expectations. This was especially true in the financed sector
with stocks like Financial Security Assurance, Fund American, and Home
Beneficial. Some of these lesser known stocks did not catch investor attention
during this year's buying stampede, but we're confident they're attractive
enough to eventually turn investors' heads.
How was the fundamental progress of the companies in our portfolio? In
general, we think it was good. Less than a third of our holdings did not live up
to our expectations. Examples last year include Handleman, Reebok, Angelica, and
Ashland Coal. However, we realize that mistakes are inevitable in a portfolio
with about 50 stocks. Our experience indicates that if we keep our mistakes to
less than a third of our portfolio, our longer-term results will be fine. During
the year we sold some of our poorly performing investments but did not sell
others because we continued to believe the longer-term outlook was positive.
Finally, how does the market look today? Last year we thought it was
expensive. This year it's even more expensive. Many investors continue to pour
money into the market and buy just about any stock at any price. Why? Because
they think stocks go nowhere but up. However, we think investors lacking
discipline will eventually get an eye-opening lesson in the risk/return
characteristics of such an approach. Sensibly priced stocks continue to be more
and more difficult to find but we'll continue to search for them and maintain a
longer-term focus with a strong valuation discipline--just as we have always
done. Thanks for your continued confidence.
II-6
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD INTRINSIC VALUE FUND (Continued)
Growth of $10,000 Invested in the
Woodward Intrinsic Value Fund and the
Standard & Poor's 500 Index
$19,000
[GRAPH]
$17,000 $17,991
$16,492
$15,000 $15,668
$13,000
$11,000
$9,000
<TABLE><CAPTION>
6/91 12/91 6/92 12/92 6/93 12/93 6/94 12/94 6/95 12/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund (1) $ 9,500 $ 9,644 $10,230 $11,068 $11,804 $12,673 $12,282 $12,597 $14,383 $15,668
Fund (2) $10,000 $10,152 $10,769 $11,629 $12,423 $13,340 $12,929 $13,260 $15,145 $16,492
Index (3) $10,000 $10,901 $10,830 $11,736 $12,313 $12,924 $12,483 $13,094 $15,721 $17,991
</TABLE>
(1) Includes maximum sales charge of 5.0%.
(2) Excludes maximum sales charge of 5.0%.
(3) Excludes expenses.
(4) Maximum sales charge of 5.0% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $15,750.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (6/1/91)
- -------------------------------------------------------------------------- ---- ---------
<S> <C> <C>
Woodward Intrinsic Value Fund (with maximum 5.0% sales charge)............ 18.2% 10.3%(1)
Woodward Intrinsic Value Fund (without sales charge)...................... 24.4% 11.5%
S&P 500 Index*............................................................ 37.5% 13.7%
</TABLE>
- ----------------
* A broad-based, unmanaged equity index comprised of larger U.S. publicly traded
corporations.
(1) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 10.4%.
Past performance is not predictive of future performance.
II-7
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD CAPITAL GROWTH FUND
OBJECTIVE:
The Woodward Capital Growth Fund commenced operations at the close of
business on July 1, 1994. It invests in common stocks of primarily domestic
companies with prospects for superior, sustainable annual earnings growth,
ideally supported by strong, unit-driven revenue growth and margin expansion as
well as conservative financial leverage. The Fund is intended for the investor
whose principal objective is long-term capital appreciation and, at the same
time, is tolerant of variable dividend income. The portfolio is managed with an
average risk profile by investing in larger, better managed companies having
above average historical earnings growth and consistency. The Fund is expected
to outperform the broad market and the average of similarly managed portfolios
over time.
PERFORMANCE HIGHLIGHTS:
During 1995, the net asset value of the Fund advanced from $10.44 to $13.26.
Distributions from net investment income totaled $0.08 per share and realized
gain distributions were $0.11 per share. Turnover during the year was very low
at 7%, but this is a distorted number because strong cash inflows throughout the
year allowed repositioning of individual stocks within the Fund as necessary.
For all of 1995, the Fund returned 28.9% (excluding the sales charge).
Although this represents an acceptable absolute return in its own right, the
Fund lagged its benchmarks for the year as a whole: the S&P 500 total return,
which is not impacted by transaction or management fees, was 37.5%, the median
gross return for a broad universe of Fund managers was 33.9%, and the average
return for a universe of growth managers was 30.8%, net of fees, as reported by
Lipper Analytical Services. So while the Capital Growth Fund participated in the
third best market rally since 1948, it is noteworthy that its best relative
returns came in the first and fourth quarters when the market had broadened, and
its worst performance occurred in narrow leadership markets in the second and
third quarters. It is the intent of fund management to run this as a broadly
diversified equity product, with the expectation to do well in markets not
defined by narrow leadership.
The year as a whole proved to be a difficult climate in which to excel for
broadly diversified, longer term oriented funds such as the Capital Growth Fund.
Notwithstanding the very near-term horizon, affected by modest but slowing
economic growth, a stabilization in growth expectations, and increasingly
difficult earnings comparisons in the operationally levered cyclical industries,
the outlook for equities is positive. Supportive forces for the equity market
include both a monetary policy with sufficient room for easing due to the
absence of visible inflationary pressures, and record levels of free cash flow
generation. Investing in high quality stocks is more relevant now than has been
the case all year, and we remain enthused about growth investing in general and
the prospects for the Woodward Capital Growth Fund, in particular, as we focus
on companies with superior, top-line driven growth opportunities.
II-8
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD CAPITAL GROWTH FUND (Continued)
Growth of $10,000 Invested in the
Woodward Capital Growth Fund and the
Standard & Poor's 500 Index
[GRAPH]
6/94 12/94 6/95 12/95
------- ------- ------- -------
Fund (1) $ 9,500 $ 9,958 $11,618 $12,836
Fund (2) $10,000 $10,481 $12,229 $13,511
Index (3) $10,000 $10,442 $12,550 $14,362
(1) Includes maximum sales charge of 5.0%.
(2) Excludes maximum sales charge of 5.0%.
(3) Excludes expenses.
(4) Maximum sales charge of 5.0% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $12,903.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (7/1/94)
- -------------------------------------------------------------------------- ---- ---------
<S> <C> <C>
Woodward Capital Growth Fund (with maximum 5.0% sales charge)............. 22.5% 18.1%(1)
Woodward Capital Growth Fund (without sales charge)....................... 28.9% 22.2%
S&P 500 Index*............................................................ 37.5% 27.3%
</TABLE>
- ----------------
* A broad-based, unmanaged equity index comprised of larger U.S. publicly traded
corporations.
(1) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 18.5%.
Past performance is not predictive of future performance.
II-9
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD BALANCED FUND
OBJECTIVE:
The Woodward Balanced Fund maintains a portfolio of equities, fixed income
and cash equivalent securities. The Fund's objective is to achieve a long-term
total return through a combination of capital appreciation and current income.
The Fund seeks to achieve its investment objective through active management of
the relative weights of stocks, bonds and cash equivalents and by superior
securities selection within each of these major asset groups.
PERFORMANCE HIGHLIGHTS:
During the year ended December 31, 1995, the fund's asset allocation between
stocks and bonds remained relatively constant at approximately 53 percent stocks
and 38 percent bonds. Cash equivalents rose slightly from 6 percent to 9 percent
as we reduced our exposure slightly to stocks and bonds.
Dividends paid in 1995 were $0.466 per share. The short and long term
capital gains distributions were .055 and .064 per share, respectively. During
the year, net asset value moved from its initial price of $9.53 to $11.24. The
Woodward Balanced Fund provided a 23.2 percent return (without sales charge) for
1995. The Lipper Balanced Fund Index net of fee returns for 12 months ending
December 31, 1995 was 25.2 percent. Despite the fourth quarter relative out
performance, the strong equity performance throughout 1995 caused us to lag the
index for the year. The blended return of the S&P 500 and the Lehman Aggregate
Bond Index generated a one-year return of 29.7 percent. This synthetic blend of
indices has similar asset allocation characteristics but is not subject to
expenses of a mutual fund.
The stock market ended 1995 with its third best year since 1948 as measured
by the S&P 500 Index's 37.5 percent return. The year ended December 31, 1995
with our equity portfolio providing an attractive absolute annual return from
virtually any historical perspective. In addition, as the year proceeded and the
market became more broad based, our relative performance advanced versus the
market and similar funds. The dichotomy between the S&P 500 Index return and the
equity portion of our return can be explained in large part due to the continued
surge in a narrow group of large capitalization stocks. Namely, the market was
dominated by finance, technology and healthcare companies averaging over $30
billion in market capitalization. The risk profile associated with beating the
index would require a level of concentration that would violate our discipline
to remain well diversified. The merit to our low risk approach has gained favor
as the technology sector weakened and relative performance improved in the
fourth quarter.
In the fixed income markets, yields declined across the yield curve during
the second half of the year as the Federal Reserve lowered the Fed Funds rate to
5.50 percent during the fourth quarter of 1995 and the economy showed more signs
of sluggish growth with no signs of accelerating inflation. Our strong fixed
income performance both on an absolute basis and versus the Lehman Aggregate
Bond Index was the result of a number of strategies performing well. Our
position within Mortgage Backed Securities (MBS) was a large positive, as it has
been all year. The fund benefited from declining yields through price
appreciation, particularly on discount Collateralized Mortgage Obligations
(CMOs). Also, premium CMOs backed by very seasoned high coupon loans prepaid
relatively slowly all year, thus enhancing return. The high yield provided by
Inverse Floater CMOs and the price appreciation of discount inverse floaters and
principal only CMOs made a significant contribution to the higher return for the
year. Moreover, our slightly longer duration also helped performance. Our
defensive position in longer Treasury Strips had a slightly negative impact due
to the modest steepening in the yield curve. Our overweighting in 2-4 year
Treasuries has had a positive impact as evidenced by the modest yield curve
steepening that occurred in the fourth quarter of 1995.
II-10
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD BALANCED FUND (Continued)
Growth of $10,000 Invested in the
Woodward Balanced Fund and the Lipper Balanced Universe
and a 60% S&P 500; 40% Lehman Aggregate Bond Index Blend
[GRAPH]
12/93 6/94 12/94 6/95 12/95
------- ------- ------- ------- -------
Fund (1) $ 9,500 $ 9,226 $ 9,309 $10,531 $11,466
Fund (2) $10,000 $ 9,712 $ 9,799 $11,085 $12,069
Lipper (3) $10,000 $ 9,568 $ 9,749 $11,077 $12,184
Index Blend (3) $10,000 $ 9,643 $ 9,967 $11,624 $12,922
(1) Includes maximum sales charge of 5.0%.
(2) Excludes maximum sales charge of 5.0%.
(3) Excludes expenses.
(4) Maximum sales charge of 5.0% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $11,527.
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (1/1/94)
- -------------------------------------------------------------------------- ---- ---------
<S> <C> <C>
Woodward Balanced Fund (with maximum 5.0% sales charge)................... 17.0% 7.1%(1)
Woodward Balanced Fund (without sales charge)............................. 23.2% 9.9%
Lipper Balanced Universe.................................................. 25.2% 10.4%
60% S&P 500; 40% Lehman Aggregate Bond Index.............................. 29.7% 13.7%
</TABLE>
- ----------------
(1) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 7.4%.
Past performance is not predictive of future performance.
II-11
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD BOND FUND
OBJECTIVE:
The Woodward Bond Fund (the "Fund") seeks to maximize total rate of return
by investing predominately in intermediate and long-term debt securities. The
Fund attempts to achieve a total return exceeding that of the Lehman Brothers
Aggregate Bond Index (the "Index") over an interest rate cycle or five years.
The Fund is managed on the basis of both the extended outlook for interest rates
and trends in rates anticipated over the next 3 to 12 months. Active management
strategies include sector rotation, intra-sector adjustments, yield curve
positioning and convexity considerations.
PERFORMANCE HIGHLIGHTS:
During the Fund's fiscal year ended December 31, 1995, interest rates
declined along the yield curve. The two-year U.S. Treasury Note declined in
yield from a 7.69% level on December 31, 1994 to 5.15% on December 31, 1995. The
thirty-year U.S. Treasury Bond dropped in yield from 7.88% to 5.95% during the
same period. This larger decline in two-year yields resulted in a "steepening"
of the yield curve. For the year, the Index returned 18.47%.
The Fund returned 23.75% (without the sales charge) in 1995. During the
year, the net asset value of the Fund rose from $9.01 to $10.45. Distributed
dividends were $.64 per share and there were no capital gains distributions.
This return placed the Fund first in its Lipper category (Intermediate U.S.
Government) for the year. This return also compares very favorably versus the
Index which is an unmanaged, broad based bond index. Although the Fund maintains
a higher quality profile than the Index with over 95% of assets rated AA or
better, in general the long-term risk characteristics are similar. The Index,
however, is not subject to the expenses of a mutual fund.
The Fund's high absolute return was the result of yield declines and price
increases in most sectors of the bond market. The exceptional performance of the
Fund versus the Index was primarily the result of positioning and security
selection within the bond market. The higher duration of the Fund (a measure of
interest rate risk) versus that of the Index during the year was a positive.
Mortgage-Backed Securities (MBS) in general underperformed Treasuries in 1995
because of fears of faster prepayments, but the Fund's positioning within the
MBS sector was a large positive for the year. The Fund benefited from the high
yield and high price appreciation of discount CMOs. In particular, the higher
yield provided by inverse floater CMOs and the price appreciation of discount
inverse floater and principal only CMOs contributed to the higher return for the
year. Also, premium CMOs backed by very seasoned high coupon loans prepaid
relatively slowly all year, thus enhancing return. The Fund's overweighting in 2
to 4 year Treasuries was also a positive for the year. The Fund's positioning in
longer Treasury Strips was a small negative as they were hurt from the yield
curve steepening. However, their high convexity benefited the portfolio during
the year due to the large decline in rates.
II-12
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD BOND FUND (Continued)
Growth of $10,000 Invested in the
Woodward Bond Fund and the
Lehman Brothers Aggregate Bond Index
[GRAPH]
<TABLE>
<CAPTION>
6/91 12/91 6/92 12/92 6/93 12/93 6/94 12/94 6/95 12/95
------- ------- ------- ------- ------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund (1) $ 9,525 $10,544 $10,794 $11,235 $12,186 $12,515 $11,893 $11,640 $13,356 $14,404
Fund (2) $10,000 $11,070 $11,332 $11,796 $12,794 $13,139 $12,486 $12,220 $14,021 $15,122
Index(3) $10,000 $11,099 $11,400 $11,920 $12,744 $13,083 $12,576 $12,701 $14,154 $15,048
</TABLE>
(1) Includes maximum sales charge of 4.75%.
(2) Excludes maximum sales charge of 4.75%.
(3) Excludes expenses.
(4) Maximum sales charge of 4.75% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $14,442.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (6/1/91)
- ------------------------------------------------------------------------- ----- ---------
<S> <C> <C>
Woodward Bond Fund (with maximum 4.75% sales charge)..................... 17.86% 8.28%(2)
Woodward Bond Fund (without sales charge)................................ 23.75% 9.43%
Lehman Bros Aggregate Bond Index(1)...................................... 18.47% 9.33%
</TABLE>
- ----------------
(1) Includes Treasury, agency, mortgage-backed, asset-backed and investment
grade corporate debt with maturities of one year or longer.
(2) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 8.34%.
Past performance is not predictive of future performance.
II-13
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD INTERMEDIATE BOND FUND
OBJECTIVE:
The Woodward Intermediate Bond Fund (the "Fund") seeks to maximize total
rate of return while providing relative stability of principal by investing
predominately in intermediate-term debt securities. The Fund attempts to achieve
a total return exceeding that of the Lehman Brothers Intermediate
Government/Corporate Bond Index (the "Index") over an interest rate cycle or
five years. The Fund is managed on the basis of anticipated trends in interest
rates over the next 3 to 12 months. Active management strategies include sector
rotation, intra-sector adjustments, yield curve positioning and convexity
considerations.
PERFORMANCE HIGHLIGHTS:
During the Fund's fiscal year ended December 31, 1995, interest rates
declined along the yield curve. The two-year U.S. Treasury Note declined in
yield from a 7.69% level on December 31, 1994 to 5.15% on December 31, 1995. The
thirty-year U.S. Treasury Bond dropped in yield from 7.88% to 5.95% during the
same period. This larger decline in two-year yields resulted in a "steepening"
of the yield curve. For the year, the Index returned 15.33%.
The Fund returned 19.48% (without the sales charge) in 1995. During the
year, the net asset value of the Fund rose from $9.21 to $10.37. Distributed
dividends were $.59 per share and there were no capital gains distributions.
This return placed the Fund first in its Lipper category (Short U.S. Government)
for the year. The Fund's return was significantly greater than the Index, which
is a broad based bond index made up of U.S. Treasury and Agency debt instruments
and investment grade corporate bonds with maturities from 1 to 10 years.
Although the Fund maintains a higher quality profile than the Index with nearly
97% of assets rated AA or better, in general the long-term risk characteristics
are similar. The Index, however, is not subject to the expenses of a mutual
fund.
The Fund's high absolute return was the result of yield declines and price
increases in most sectors of the bond market. The exceptional performance of the
Fund versus the Index was primarily the result of positioning and security
selection within the bond market. The higher duration of the Fund (a measure of
interest rate risk) versus that of the Index during the year was a positive.
Mortgage-Backed Securities (MBS) in general underperformed Treasuries in 1995
because of fears of faster prepayments, but the Fund's positioning within the
MBS sector was a large positive for the year. The Fund benefited from the high
yield and high price appreciation of discount CMOs. In particular, the higher
yield provided by inverse floater CMOs and the price appreciation of discount
inverse floater and principal only CMOs contributed to the higher return for the
year. Also, premium CMOs backed by very seasoned high coupon loans prepaid
relatively slowly all year, thus enhancing return. The Fund's overweighting in 2
to 4 year Treasuries was also a positive for the year.
II-14
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD INTERMEDIATE BOND FUND (Continued)
Growth of $10,000 Invested in the Woodward
Intermediate Bond Fund and the Lehman Brothers
Intermediate Government/Corporate Bond Index
$16,000
$15,000
[GRAPH] $14,492
$14,000 $14,105
$13,000 $13,435(4)
$12,000
$11,000
$10,000
$9,000
<TABLE><CAPTION>
6/91 12/91 6/92 12/92 6/93 12/93 6/94 12/94 6/95 12/95
------- ------- ------- ------- ------- ------- -------- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund (1) $ 9,525 $10,446 $10,734 $11,071 $11,749 $12,002 $11,497 $11,245 $12,629 $13,435
Fund (2) $10,000 $10,966 $11,269 $11,623 $12,335 $12,600 $12,070 $11,806 $13,258 $14,105
Index (3) $10,000 $10,993 $11,324 $11,782 $12,513 $12,016 $12,480 $12,569 $13,774 $14,492
</TABLE>
(1) Includes maximum sales charge of 4.75%.
(2) Excludes maximum sales charge of 4.75%.
(3) Excludes expenses.
(4) Maximum sales charge of 4.75% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $13,470.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (6/1/91)
- ------------------------------------------------------------------------- ----- ---------
<S> <C> <C>
Woodward Intermediate Bond Fund (with maximum 4.75% sales charge)........ 13.80% 6.65%(2)
Woodward Intermediate Bond Fund (without sales charge)................... 19.48% 7.78%
Lehman Bros Intermediate Govt/Corp Bond Index(1)......................... 15.33% 8.43%
</TABLE>
- ----------------
(1) Includes Treasury, agency and investment grade corporate debt with
maturities from one to ten years.
(2) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 6.71%.
Past performance is not predictive of future performance.
II-15
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD SHORT BOND FUND
OBJECTIVE:
The Woodward Short Bond Fund (the "Fund") objective is to maximize total
rate of return while providing relative stability of principal. While the
portfolio may purchase securities with maturities or average lives of up to 10
years, during normal market conditions, its average weighted portfolio maturity
will be limited to a maximum of 3 years. The Fund is managed on the basis of
both the extended outlook for interest rates and trends in rates anticipated
over the next 3 to 12 months. Active management strategies include sector
rotation, intra-sector adjustments, yield curve positioning and convexity
considerations.
PERFORMANCE HIGHLIGHTS:
Interest rates declined across the yield curve during 1995 as the economy
showed signs of sluggish growth with no indications of accelerating inflation.
The two-year U.S. Treasury Note declined in yield from a 7.69% level on December
31, 1994 to 5.15% on December 31, 1995. The thirty-year U.S. Treasury Bond
dropped in yield from 7.88% to 5.95% during the same period. This larger decline
in two-year yields resulted in a "steepening" of the yield curve. For the year,
the Salomon Brothers Government/Corporate 1-3 Year Bond Index returned 10.89%.
The Fund returned 10.07% (without the sales charge) in 1995. During the
year, the net asset value of the Fund rose from $9.84 to $10.23. Distributed
dividends were $0.58 per share and capital gains distributions were $.0016 per
share. This return underperformed the Salomon Brothers Government/Corporate 1-3
Year Index (the "Index") for 1995. The Index is made up of U.S Treasury, Agency
and investment-grade Corporate securities with maturities from 1 to 3 years. The
Index, however, is not subject to the expenses of a mutual fund.
The Fund's attractive absolute return was largely due to the substantial
drop in interest rates throughout 1995. The one, two, and five-year Treasury
declined 203, 254, and 245 basis points, respectively. The relative
underperformance of the Fund versus the Index was primarily the result of the
expenses paid by the Fund versus no expenses paid by the Index. The Fund's
slightly higher duration (a measure of interest rate risk) versus that of the
Index during the year helped performance as interest rates declined. During the
year, the Fund had generally higher yielding, (yield-to-maturity) securities
than the Index which benefited performance. The Fund was overweighted in less
than one-year and three to five-year average life securities which proved to be
a detriment to performance as the yield curve steepened in 1995. Also, the
portfolio's overweighted position in short-term premium Mortgage-Backed
securities was a negative as spreads widened on these securities during the
year. As of December 31, 1995, the Fund held 75% in Treasury and Agency
securities, 9% in Corporate securities, 2% in Asset-Backed securities and 14% in
Mortgage-Backed securities. The Fund held 92% AAA securities, 2% AA securities
and 6% A securities at year end.
II-16
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD SHORT BOND FUND (Continued)
Growth of $10,000 Invested in the Woodward
Short Bond Fund and the Salomon Brothers
Government/Corporate 1-3 Year Bond Index
$12,000
$11,081
$11,000
[GRAPH] $11,016
$10,685
$10,000
$9,000
9/16/94 12/94 6/95 12/95
------- ----- ---- -----
Fund (1) $ 9,700 $ 9,700 $10,272 $10,685
Fund (2) $10,000 $10,008 $10,610 $11,016
Index (3) $10,000 $ 9,993 $10,654 $11,081
(1) Includes maximum sales charge of 3%.
(2) Excludes maximum sales charge of 3%.
(3) Excludes expenses.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (9/17/94)
- -------------------------------------------------------------------------- ----- ---------
<S> <C> <C>
Woodward Short Bond Fund (with maximum 3% sales charge)................... 6.77% 5.27%
Woodward Short Bond Fund (without sales charge)........................... 10.07% 7.78%
Salomon Bros Govt/Corp 1-3 Bond Index(1).................................. 10.89% 8.29%
</TABLE>
- ----------------
(1) Includes Treasury, agency and investment grade corporate debt with
maturities from one to three years.
Past performance is not predictive of future performance.
II-17
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD MUNICIPAL BOND FUND
OBJECTIVE:
The Woodward Municipal Bond Fund (the "Fund") seeks to provide as high a
level of current income exempt from federal tax as is consistent with relative
stability of principal. The Fund is managed on the basis of both the extended
outlook for interest rates and the underlying credit characteristics and value
of each asset. Active management strategies include duration management, sector
rotation, intra-sector adjustments, yield curve positioning and convexity
considerations.
PERFORMANCE HIGHLIGHTS:
Municipal bond investors experienced one of their best performance years
during 1995 as slower economic growth, continued subdued inflation and market
technicals helped set a positive tone throughout the year. Much of the rally was
fueled by a record level of bond maturities, calls and redemptions that came in
the face of a sharp decrease in new issue supply. New issue volume in 1995
totaled approximately $155 billion, well below the 1993 peak of $292 billion and
over 5% below the $164 billion issued in 1994. The municipal yield curve
flattened by 5 basis points in the 2 to 30-year sector while the comparable
Treasury curve steepened by 61 basis points. For the year, Aaa rated municipals
underperformed Treasuries with the range of 5 to 30-year Municipal yields as a
percentage of Treasury yields ending the year at 76.3% to 87.5%, up from 69.0%
to 83.8% from the previous year-end. The "20-Bond" Bond Buyer Index, which is
comprised of high quality, tax-exempt general obligation bonds in the 20-year
area, fluctuated within a 136 basis point range throughout the year (one
percentage point equals 100 basis points). Given the overall strong tone of the
market, the "20-Bond" Index closed the year at 5.44%, 127 basis points lower
than 1994.
The Fund returned 16.54% without the sales charge for 1995. During the year,
the net asset value of the Fund rose from $9.59 to $10.68. Distributions from
net investment income were $.472 per share compared to $.493 the previous year
and there were no capital gain distributions for the year. The Fund's total
return without the sales load was below the Lehman Brothers Municipal Bond Index
(the "Index") which returned 17.45%. Although the Fund continues to maintain a
higher quality profile than the Index with over 91% of assets rated Aa or better
and no holdings rated below A, in general the risk characteristics are similar.
The Index, however, is not subject to expenses of a mutual fund.
The Fund's 1995 return was generally attributable to an overall decrease of
interest rates along the yield curve. The primary focus of the Fund was to
maintain a high quality portfolio while providing a steady level of income. The
overall underperformance by the Fund relative to the Index was attributable to
its underweighting in the 20 to 30-year sector of the market and its negative
convexity position. The narrowing of quality spreads also negatively affected
yearly performance. Overweighting in revenue and insured securities relative to
the Index, a slightly longer duration (a measure of interest rate risk) and its
minimal average cash position were all contributing factors to the Fund's
positive performance. Despite a lethargic year for positive municipal mutual
bond fund cash flows, due to a resilient equity market, talk of tax reform and
investor resistance to lower yields, the Fund's cash flows increased by nearly
14% as compared to the overall municipal market increase of less than 1%.
II-18
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD MUNICIPAL BOND FUND (Continued)
Growth of $10,000 Invested in the
Woodward Municipal Bond Fund and the
Lehman Brothers Municipal Bond Index
[GRAPH]
2/1/93 6/93 12/93 6/94 12/94 6/95 12/95
------- ------- ------- ------- ------- ------- --------
Fund (1) $ 9,952 $10,067 $10,612 $10,135 $10,025 $10,982 $11,682
Fund (2) $10,000 $10,569 $11,172 $10,671 $10,587 $11,642 $12,264
Index(3) $10,000 $10,588 $11,099 $10,606 $10,525 $11,561 $12,363
(1) Includes maximum sales charge of 4.75%.
(2) Excludes maximum sales charge of 4.75%.
(3) Excludes expenses.
(4) Maximum sales charge of 4.75% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $11,712.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (2/1/93)
- ------------------------------------------------------------------------- ----- ---------
<S> <C> <C>
Woodward Municipal Bond Fund (with maximum 4.75% sales charge)........... 10.99% 5.49%(2)
Woodward Municipal Bond Fund (without sales charge)...................... 16.54% 7.27%
Lehman Brothers Municipal Bond Index(1).................................. 17.45% 7.54%
</TABLE>
- ----------------
(1) Includes investment grade general obligation, revenue, insured and
prerefunded issues with maturities from one to thirty years. Index began
July 1993.
(2) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 5.58%.
Past performance is not predictive of future performance.
II-19
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD MICHIGAN MUNICIPAL BOND FUND
OBJECTIVE:
The Woodward Michigan Municipal Bond Fund (the "Fund") seeks to provide as
high a level of current income exempt from federal, and to the extent possible,
from State of Michigan income taxes as is consistent with relative stability of
principal. The Fund is managed on the basis of both the extended outlook for
interest rates and the underlying credit characteristics and value of each
asset. Active management strategies include duration management, sector
rotation, intra-sector adjustments, yield curve positioning and convexity
considerations.
PERFORMANCE HIGHLIGHTS:
The Michigan municipal bond market, along with all fixed-income markets,
rode the downward drop in interest rates to one of their best performance years
in 1995. Despite talk of tax reform, the municipal market moved onward as an
overall decrease in supply accompanied with record levels of calls, coupon
payments and maturities drove interest rates down approximately 120 basis points
along the yield curve. Unlike the general market, new-issue volume in Michigan
was $5.6 billion, an increase of approximately 48% from the previous year. The
overall Municipal bond market saw a decrease in new-issue volume of over 5% from
the previous year. The substantial increase in new-issue volume raised the
State's national ranking for issuance to 7th versus 13th place last year. The
Michigan municipal market experienced a boost during July when the State's
credit rating was upgraded. In addition, the State Budget Stabilization Fund
(Rainy Day) exceeded $1 billion at the end of fiscal year 1995, among the
highest in the nation. The State's unemployment rate ended the year at 5.3%
(seasonally adjusted), lower than the 5.6% for the rest of the country, further
proof of a sustained recovery.
The Fund returned 16.49% without the sales charge for 1995. During the year,
the net asset value increased from $9.54 to $10.60. Distributions from net
investment income were $0.48 per share compared to $0.50 the previous year and
there were no capital gain distributions for the year. The Fund's total return
without the sales load was below the return of the Lehman Brothers Michigan
Municipal Bond Index which returned 18.44%. Due to the increase in the State's
school bond credit rating, the Fund's quality is now higher than the Index and
it's general characteristics are slightly different due to the seasoned and
larger issues that comprise it. The Index however, is not subject to the
expenses of a mutual fund.
The Fund's overall return during 1995 was centrally attributable to a
decrease in interest rates along the yield curve. The primary focus of the Fund
was to maintain a high quality portfolio while providing a steady level of
income. The overall underperformance by the Fund relative to the Index was
largely attributable to the narrowing of quality spreads and its negative
convexity position. Overweighting in the prerefunded sector and a shorter
duration (a measure of interest rate risk) than the Index also proved to be a
negative for yearly performance. The Fund's overweighting in State qualified
general obligation school district bonds (the State's credit rating was upgraded
to Aa from A1 during July) and its gradual increase in the revenue sector
provided good performance. The Fund's discount bond position also contributed to
positive performance during the year. Despite a lethargic year for positive
municipal mutual bond fund cash flow, due to a resilient equity market, talk of
tax reform and investor resistance to lower yields, the Fund's cash flows
increased by over 6% as compared to the overall municipal market increase of
less than 1%.
II-20
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD MICHIGAN MUNICIPAL BOND FUND (Continued)
Growth of $10,000 Invested in the
Woodward Michigan Municipal Bond Fund and the
Lehman Brothers Michigan Municipal Bond Index
$13,000
$12,460
$12,000 $12,179
[GRAPH] $11,600(4)
$11,000
[PLOT POINTS TO COME]
$10,000
$9,000
<TABLE><CAPTION>
2/1/91 6/93 12/93 6/94 12/94 6/95 12/95
-------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fund (1) $ 9,523 $10,033 $10,528 $10,021 $ 9,958 $10,857 $11,600
Fund (2) $10,000 $10,533 $11,063 $10,551 $10,517 $11,511 $12,179
Index (3) $10,000 $10,588 $11,084 $10,789 $10,525 $11,589 $12,480
</TABLE>
(1) Includes maximum sales charge of 4.75%.
(2) Excludes maximum sales charge of 4.75%.
(3) Excludes expenses.
(4) Maximum sales charge of 4.75% commenced 10-1-94. A Shareholder investment at
the original offer price (4.5% sales charge) is currently valued at $11,631.
<TABLE><CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (2/1/93)
- ------------------------------------------------------------------------- ----- ---------
<S> <C> <C>
Woodward Michigan Municipal Bond Fund (with maximum 4.75% sales
charge).................................................................. 10.96% 5.23%(2)
Woodward Michigan Municipal Bond Fund (without sales charge)............. 16.49% 7.01%
Lehman Brothers Michigan Municipal Bond Index(1)......................... 18.44% 7.83%
</TABLE>
- ----------------
(1) Includes investment grade general obligation, revenue, insured and
prerefunded issues with maturities from one to thirty years. Index began
July 1993.
(2) Return for shareholders who invested at the original offer price (4.5% sales
charge) was 5.33%.
Past performance is not predictive of future performance.
II-21
<PAGE>
APPENDIX III
SHAREHOLDER TRANSACTIONS AND SERVICES
This Appendix compares the shareholder transactions and services that are
available in connection with: 1) the New Woodward and Existing Woodward Funds
and 2) the Prairie Portfolios. References to the Woodward Funds refer to the
post-reorganization Funds.
I. NEW WOODWARD AND EXISTING WOODWARD FUNDS
AND THE
CORRESPONDING PRAIRIE PORTFOLIOS*
*(Includes Shares of the Prairie Money Market Fund, U.S. Government Money
Market Fund, Municipal Money Market Fund, Growth Fund, Equity Income Fund,
Special Opportunities Fund, Bond Fund, International Bond Fund, Intermediate
Municipal Bond Fund, Municipal Bond Fund, Intermediate Bond Fund, Managed Assets
Fund and Managed Assets Income Fund.)
A. SALES CHARGES AND EXEMPTIONS.
CLASS A SHARES
a. Class A Shares of the Woodward Money Market, Treasury Money Market Fund
and Tax-Exempt Money Market Funds are sold without a sales charge. Class A
Shares of the corresponding Prairie Portfolios, the Money Market, U.S.
Government Money Market and Municipal Money Market Funds, are currently sold
without a sales charge.
b. Class A Shares of the remaining New and Existing Woodward Funds and the
corresponding Prairie Portfolios are as follows:
III-1
<PAGE>
CLASS A SHARES
MAXIMUM SALES CHARGE
<TABLE><CAPTION>
Current Prairie Portfolios/ Current Proposed
Corresponding Woodward Fund Sales Load Sales Load
- ----------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Intermediate Bond Fund/Income Fund..................................... 3.0% 3.0%
Intermediate Municipal Bond Fund/Intermediate Municipal Bond Fund...... 3.0% 3.0%
Bond Fund/Bond Fund.................................................... 4.5% 4.5%
Municipal Bond Fund/Municipal Bond Fund................................ 4.5% 4.5%
International Bond Fund/International Bond Fund........................ 4.5% 4.5%
Equity Income Fund/Equity Income Fund.................................. 4.5% 5.0%
Growth/Capital Growth Fund............................................. 4.5% 5.0%
Special Opportunities Fund/Small-Cap Opportunity Fund.................. 4.5% 5.0%
Managed Assets Fund/Balanced Fund...................................... 4.5% 5.0%
Managed Assets Income Fund/Managed Assets Conservative Fund............ 4.5% 5.0%
</TABLE>
c. Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 or other sales load waiver as described below,
and where such shares are redeemed within two years after purchase, a contingent
deferred sales charge ("CDSC") will be imposed at the time of redemption unless
the investor qualifies for a waiver of the CDSC as described below under "Class
B Shares Waiver of CDSC." The following table sets forth the rates of such CDSC
for the indicated time periods:
CDSC as a % of Year Since
Amount Invested or Purchase
Redemption Proceeds Payment Was Made
- ------------------------- ----------------
1.00%.................... First
0.50%.................... Second
The Reorganizing Portfolios currently impose a CDSC on Class A Shares which
were purchased only as part of an investment of at least $1,000,000. The
following table sets forth the rates of such CDSC for the Reorganizing
Portfolios:
<TABLE><CAPTION>
Amount of CDSC as a % of
Transaction at Amount Invested or Year Since Purchase
Offering Price Redemption Proceeds Payment Was Made
- --------------------------------------- ------------------- --------------------
<S> <C> <C>
$1,000,000 to less than $2,500,000..... 1.00% First or Second
$2,500,000 to less than $5,000,000..... 0.50% First
$5,000,000 and above................... 0.25% First
</TABLE>
CLASS A SHARES-SALES LOAD WAIVERS
a. Class A Shares of the non-money market Woodward Funds and Prairie
Portfolios may be purchased at net asset value and without a sales load by
certain purchasers. The sales load waivers applicable to the post-reorganization
Funds are substantially similar to the Prairie Portfolios' sales load waivers.
III-2
<PAGE>
b. Reduced sales loads apply to any purchase of such Prairie Funds and New
and Existing Woodward Funds' Class A Shares where the dollar amount of shares
transacted or accumulated within a shareholder's account is at least $50,000.
c. After the Reorganization, the following types of purchasers may purchase
Class A Shares of the Woodward Funds with no sales charge: (i) full-time
employees of NASD member firms which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage-related or clearing arrangement with an NASD member firm with respect
to sales of Fund shares), their spouses and minor children; (ii) accounts opened
by a bank, trust company or thrift institution, acting as a fiduciary or
custodian (other than 401(k) and other defined contribution or other retirement
plan accounts), provided that they have furnished the Distributor appropriate
notification of such status at the time of the investment and such other
information as it may request from time to time in order to verify eligibility
for this privilege; (iii) purchases for accounts registered under the Uniform
Gifts to Minors Act or Uniform Transfers to Minors Act which are opened through
FNIS and 401(k) and other defined contribution or other retirement plan accounts
for which FNBC or ANB has served as custodian or trustee since at least June 1,
1995 or NBD or its subsidiaries or affiliates, other than FNBC or ANB, has
served as administrator or Trustee since January 1, 1996; (iv) directors and
full-time or part-time employees of FCN, or any of its affiliates and
subsidiaries, retired employees of FCN, or any of its affiliates and
subsidiaries, Board members of a fund advised by the Investment Advisers,
including members of the Funds' Board of Trustees, or the spouses, children,
grandchildren, siblings, parents, grandparents and in-laws of any of the
foregoing individuals; (v) purchases through certain broker-dealers, registered
investment advisers and other financial institutions which have entered into an
agreement with the Distributor, which includes a requirement that such shares be
sold for the benefit of clients participating in a "wrap account" or a similar
program under which such clients pay a fee to such broker-dealer, registered
investment adviser or other financial institution; and (vi) employees
participating in qualified plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a minimum of 200
employees eligible for participation in such plans or programs or (ii) such
plan's or program's assets exceed one million dollars.
d. Class A shares also may be purchased at net asset value, without a sales
charge, with the proceeds from the redemption of shares of an investment company
sold with a sales charge or commission or annuity contract or guaranteed
investment contract subject to a surrender charge. This also includes shares of
an investment company that were or would be subject to a contingent deferred
sales charge upon redemption. The purchase must be made within 60 days of the
redemption, and the Transfer Agent must be notified in writing by the investor
at the time the purchase is made.
e. Class A and Class B Shares of the non-money market Woodward Funds and
Prairie Portfolios also offer rights of accumulation and letter of intent
programs that can reduce the sales charge payable on share purchases.
CLASS B SHARES
a. Class B Shares will be offered for each New Woodward Fund and Existing
Woodward Fund, other than the Treasury Money Market and Tax-Exempt Money Market
Funds which will not offer Class B Shares.
III-3
<PAGE>
b. Class B Shares of each New Woodward Fund and Existing Woodward Fund will
not be offered until the time of the Reorganizing Portfolios Transaction and
Continuing Portfolios Transaction, as applicable. Class B shares of the Money
market Fund are offered only through an exchange of Class B shares of one of the
Trust's other portfolios. The following table sets forth the rates of the CDSC
for the New and Existing Woodward Funds and the corresponding Prairie
Portfolios:
CLASS B SHARES
MAXIMUM CDSC
<TABLE><CAPTION>
Current Prairie Portfolios/ Current Proposed
Corresponding Woodward Fund Sales Load Sales Load
- ----------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Intermediate Bond Fund/Income Fund..................................... 3.0% 3.0%
Intermediate Municipal Bond Fund/Intermediate Municipal Bond Fund...... 3.0% 3.0%
Bond Fund/Bond Fund.................................................... 5.0% 5.0%
Municipal Bond Fund/Municipal Bond Fund................................ 5.0% 5.0%
International Bond Fund/International Bond Fund........................ 5.0% 5.0%
Equity Income Fund/Equity Income Fund.................................. 5.0% 5.0%
Growth/Capital Growth Fund............................................. 5.0% 5.0%
Special Opportunities Fund/Small-Cap Opportunity Fund.................. 5.0% 5.0%
Managed Assets Fund/Balanced Fund...................................... 5.0% 5.0%
Managed Assets Income Fund/Managed Assets Conservative Fund............ 5.0% 5.0%
</TABLE>
CLASS B SHARES-WAIVER OF CDSC
a. In connection with redemptions of Class B Shares (and Class A Shares
subject to a CDSC), the Prairie Portfolios and the New and Existing Woodward
Funds will waive the CDSC in connection with (a) redemptions made within one
year after the death of the shareholder, (b) redemptions by shareholders after
age 70 1/2 for purposes of the minimum required distribution from an IRA, Keogh
plan or custodial account pursuant to Section 403(b) of the Code, (c)
distributions from a qualified plan upon retirement or termination of
employment, (d) redemption of shares acquired through a contribution in excess
of permitted amounts, (e) in-service withdrawals from tax qualified plans by
participants and (f) redemptions initiated by a Fund of accounts with net assets
of less than $1,000 ($500 in the case of the Prairie Municipal Bond Fund).
CLASS I SHARES
Class I shares are sold at net asset value with no sale charge to qualified
trust, custody and/or agency account clients of FNBC, ANB or their affiliates
and to certain qualified benefits plans or other programs and to institutional
shareholders of the Trust's money market funds with accounts of at least $1
million.
III-4
<PAGE>
B. PURCHASE POLICIES
The following table summarizes the Woodward and Prairie Funds' existing
purchase policies:
<TABLE><CAPTION>
Woodward Funds Prairie Funds
----------------------------- -----------------------------
<S> <C> <C>
Minimum Initial Investment $1,000 ($500 for the money $1,000 ($250 for IRAs).
Minimum market funds) ($250 for IRAs)
for initial purchases of
Class A Shares. NBD and its
affiliated and correspondent
banks (the "Banks") may
impose different minimum
investment requirements on
Class I Shares.
Subsequent Investment $100. $100.
Automatic Investment Plan Class A Shares may be Shares may be purchased on a
purchased on a monthly basis monthly basis through
through automatic deductions automatic deductions from a
from a shareholder's checking shareholder's checking or
or savings account; $25 savings account. No minimum.
minimum per transaction.
Purchase Methods Shares are sold by First of Shares are sold by Concord
Michigan Corporation ("FoM") Financial Group, Inc.
and Essex National Securities ("Concord") directly and
("Essex") directly and through broker/dealers having
through broker/dealers having a dealer agreement with
a dealer agreement with FoM Concord or through procedures
or Essex, or through established by Concord in
procedures established by FoM connection with the
or Essex in connection w/the requirements of accounts at
requirements of accounts at First Chicago; by mail; by
NBD Bank; by mail; by telephone.
telephone.
Payment Methods By check or wire. By check or wire.
<CAPTION>
The following table summarizes the post reorganization Funds' purchase
policies:
<S> <C>
Minimum Initial Investment $1,000 ($250 for IRAs) for all non-money
market funds. $2,500 ($250 for IRAs) for all
money market funds.
</TABLE>
III-5
<PAGE>
<TABLE>
<S> <C>
Minimum Subsequent Investment $100.
Automatic Investment Plan Shares may be purchased on a monthly basis
from a shareholder's checking or savings
account. $100 minimum per transaction.
Purchase Methods Shares are offered to the general public and
may be purchased through a number of
institutions, including FCN, the Investment
Advisers, ANB and their affiliates, other
Service Agents, and directly through the
Distributor; by mail; by telephone.
Payment Methods By check or wire.
</TABLE>
The Existing Woodward Funds, New Woodward Funds and Prairie Funds each
reserve the right to reject any purchase order.
C. REDEMPTION POLICIES
The following table summarizes the Woodward and Prairie Funds' existing
redemption policies:
<TABLE><CAPTION>
Woodward Funds Prairie Funds
----------------------------- -----------------------------
<S> <C> <C>
Redemption Methods Redemption requests placed Redemption requests placed
with or through the with FCIMCO, FNBC, ANB or a
investor's financial Service Agent or by written
institution or the Transfer request to the Transfer
Agent; by mail; by telephone. Agent; by mail; by telephone.
Payment Methods By check or wire. By check or wire.
Check Writing Privilege Available for Class A Shares Available for Class A Shares
of the money market funds of the money market funds
only. only ($500 minimum).
Automatic Cash Withdrawal Available for shareholders N/A
Plan who own Class A Shares having
a minimum value of $15,000
($5,000 for the money market
funds).
Reinstatement Privilege Available for shareholders Available for shareholders
who purchase shares within who purchase shares within 30
120 days of redemption. days of redemption.
</TABLE>
The following table summarizes the Post Reorganization Funds' redemption
policies:
<TABLE><CAPTION>
<S> <C>
Redemption Methods Redemption requests placed with the Transfer
Agent or, if the investor is a participant in
a fiduciary account or retirement plan (as
described in the prospectus), by following
instructions pertaining to such account or
plan; by mail; by telephone.
Payment Methods By check or wire.
</TABLE>
III-6
<PAGE>
<TABLE>
<S> <C>
Check Writing Privilege Available for the money market funds only
($500 minimum).
Automatic Cash Withdrawal Plan Available for shareholders who own shares of
a Fund having a minimum value of $15,000
($5,000 for the money market funds).
Reinstatement Privilege Available for shareholders who purchase
shares within 120 days of redemption.
</TABLE>
Each Prairie Portfolio reserves the right to redeem an investor's account at
the Fund's option upon not less than 45 days' written notice if the account's
net asset value is $1000 or less ($500 or less in the case of the Municipal Bond
Fund). Each Woodward Fund reserves the right to redeem an investor's account at
the Trust's option upon not less than 60 days' written notice if the account's
net asset value is $1,000 or less ($400 or less in the case of the money market
funds). The post reorganization Funds will reserve the right to redeem an
investor's account at the Trust's option upon not less than 30 days' within
notice if the account's net asset value is $1,000 or less ($400 or less in the
case of the money market funds). Under certain circumstances the New and
Existing Woodward Funds may make payment for redemptions in securities or other
property.
A Prairie shareholder who, at the effective time of the Reorganization,
meets the Prairie, but not the Woodward, minimum investment requirement, will
not be required to redeem the Woodward shares received in connection with the
Reorganization, unless the balance in the shareholder's account drops below the
Prairie minimum as a result of redemptions, or unless redemption appears
appropriate in light of Woodward's responsibilities under the 1940 Act.
D. SHARE EXCHANGES
<TABLE><CAPTION>
Prairie--
Class A Shares,
Woodward-- Class B Shares and
Class A Shares Class I Shares
--------------------------- -------------------
<S> <C> <C>
By Mail Yes. Yes.
By Telephone Yes. Yes.
Minimum Must equal minimum No minimum.
investment required of the
portfolio being acquired.
</TABLE>
Class I Shares of Woodward do not have an exchange privilege. With respect
to the Woodward Class A Shares and the Prairie Class A, Class B and Class I
Shares, a shareholder may exchange shares of a load portfolio for shares of a no
load portfolio or another load portfolio at net asset value. Any exchange of
shares of a no load portfolio for shares of a load portfolio will be subject to
the payment of the applicable sales load. Exchanges of Prairie Class B Shares
will be subject to the higher applicable CDSC of the two Funds. Woodward and
Prairie both reserve the right to modify or terminate exchange privileges with
60 days' notice and to reject any exchange request in whole or in part.
Exchanges are only available in states where exchanges can lawfully be made from
one Portfolio to another, and must satisfy the requirements relating to the
minimum initial investment in a Fund.
The New and Existing Woodward Funds will permit investors to purchase, in
exchange for shares of a Fund which have been owned for at least 30 days, shares
of the same Class of the other Funds of the
III-7
<PAGE>
Trust. Exchanges may be made to the extent the shares being received in the
exchange are offered for sale in the shareholder's state of residence. Shares of
the same Class of Funds purchased by exchange will be purchased on the basis of
relative net asset value per share as follows: (i) shares of Funds purchased
with or without a sales load may be exchanged without a sales load for shares of
other Funds sold without a sales load; (ii) shares of Funds purchased without a
sales load may be exchanged for shares of other Funds sold with a sales load,
and the applicable sales load will be deducted; (iii) shares of Funds purchased
with a sales load, shares of Funds acquired by a previous exchange from shares
purchased with a sales load and additional shares acquired through reinvestment
of dividends or distributions of any such Funds (collectively referred to herein
as "Purchased Shares") may be exchanged for shares of other Funds sold with a
sales load (referred to herein as "Offered Shares"), provided that, if the sales
load applicable to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the time the
Purchased Shares were acquired), without giving effect to any reduced loads, the
difference will be deducted; (iv) shares of Funds subject to a CDSC that are
exchanged for shares of another Fund will be subject to the higher applicable
CDSC of the two Funds, and for purposes of calculating CDSC rates and conversion
periods, if any, will be deemed to have been held since the date the shares
being exchanged were initially purchased; and (v) a qualified or non-qualified
employee benefit plan with assets of at least $1 million or 200 eligible
participants may be exchanged from Class B shares to Class A shares on or after
January 1 of the year following the year of the plan's eligibility, provided
that the sponsor of the plan has so notified the Service Agent of its
eligibility and in turn, the Service Agent has notified the Trust of such
eligibility.
No fees currently will be 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 Securities and Exchange Commission. The Funds will reserve
the right to reject any exchange request in whole or in part.
E. RESPONSIBILITY FOR TELEPHONE INSTRUCTIONS
Woodward, Prairie, their administrators and their distributors are not
liable for any loss, liability, cost or expense for acting upon telephone
instructions that are reasonably believed to be genuine. In attempting to
confirm that telephone instructions are genuine, procedures are used that are
considered reasonable, which may include recording telephone instructions and
requesting information as to account registration (such as the name in which an
account is registered, the account number, recent transactions in the account
and the account holder's Social Security number, address and/or bank).
F. CONVERSIONS
Prairie Class B Shares automatically convert to Class A Shares in the eighth
year (seventh year in the case of the Intermediate Bond and Intermediate
Municipal Bond Funds) after the date of purchase. Prairie Class I shares held by
investors who after purchasing Class I shares for their qualified trust, custody
and/or agency account clients of the FCN or its affiliates withdraw from such
accounts will convert to Class A shares automatically upon such withdrawal,
based on the relative net asset values for shares of each such Class, and will
be subject to the annual service fee charged to Class A shares.
III-8
<PAGE>
After the reorganization, Woodward Class B Shares will automatically convert
to Class A Shares in the eighth year (seventh year in the case of the Income and
Intermediate Municipal Bond Funds) after the date of purchase. Woodward Class I
shares held by investors who after purchasing Class I shares for their qualified
trust, custody and/or agency account clients of the FCN or its affiliates
withdraw from such accounts will convert to Class A shares automatically upon
such withdrawal, based on the relative net asset values for shares of each such
Class, and will be subject to the annual service fee charged to Class A shares.
II. DIVIDENDS AND DISTRIBUTIONS
Each Existing Woodward Fund and Prairie Portfolio distributes its net
capital gains to Shareholders at least annually. The following table shows the
policies concerning the declaration and payment of dividends from net investment
income.
<TABLE><CAPTION>
Current Current Current
Prairie Dividend Woodward Dividend Post-Reorganization Dividend
Portfolio Declared/Paid* Fund+ Declared/Paid*+ Fund Declared/Paid*
- ------------------- -------------- ------------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Money Market Fund D/M Money Market Fund D/M Money Market Fund D/M
U.S. Government D/M Treasury Money D/M Treasury Money D/M
Money Market Fund Market Fund Market Fund
Municipal Money D/M Tax-Exempt Money D/M Municipal Money D/M
Market Fund Market Fund Market Fund
Bond Fund D/M Bond Fund M/M Bond Fund M/M
Municipal Bond Fund D/M Municipal Bond Fund M/M Municipal Bond M/M
Fund
International Bond D/M N/A N/A Income Fund M/M
Fund
Intermediate Bond D/M N/A N/A Intermediate Bond M/M
Fund Fund
Intermediate D/M N/A N/A Intermediate M/M
Municipal Bond Municipal Bond
Fund Fund
Managed Assets M/M N/A N/A Managed Assets M/M
Income Conservative
Fund
Equity Income Fund M/M N/A N/A Equity Income M/M
Fund
Managed Assets Fund Q/Q Balanced Fund Q/Q Managed Assets Q/Q
Balanced Fund
Special Q/Q N/A N/A Small-Cap Q/Q
Opportunities Fund Opportunity Fund
Growth Fund Q/Q Capital Growth Fund Q/Q Growth Fund Q/Q
</TABLE>
- ------------
* D/M = Daily/Monthly
M/M = Monthly/Monthly
Q/Q = Quarterly/Quarterly
+ N/A = These are the Woodward shell portfolios
III-9
<PAGE>
PART B
PRAIRIE FUNDS
PRAIRIE INTERMEDIATE BOND FUND
PRAIRIE MUNICIPAL BOND FUND, INC.
Three First National Plaza
Chicago, Illinois 60670
THE WOODWARD FUNDS
900 Tower Drive
P. O. Box 7058
Troy, Michigan 48007
STATEMENT OF ADDITIONAL INFORMATION
(1996 Special Meetings of Shareholders of
Prairie Funds, Prairie Intermediate Bond Fund,
Prairie Municipal Bond Fund, Inc.)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Combined Prospectus/Proxy Statement dated June 11,
1996 for the Special Meetings of Shareholders of Prairie Funds, Prairie
Intermediate Bond Fund, Prairie Municipal Bond Fund, Inc. (collectively
"Prairie") to be held on July 10, 1996. Copies of the Combined Prospectus/Proxy
Statement may be obtained at no charge by calling Prairie at 1-800-370-9446.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Combined
Prospectus/Proxy Statement.
Further information about the Class A, Class B and Class I Shares of the
Existing Woodward Funds is contained in and incorporated by reference to
Woodward's Statements of Additional Information dated April 15, 1996, copies of
which are included herewith. The audited financial statements and related
independent accountant's report for the Existing Woodward Funds contained in the
Annual Report dated December 31, 1995, are hereby incorporated herein by
reference. No other parts of the Annual Reports are incorporated by reference
herein.
Further information about the Class A, Class B and Class I Shares of the
Prairie Portfolios is contained in and incorporated by reference to Prairie's
Statement of Additional Information dated April 11, 1996, a copy of which is
included herewith. The audited financial statements and related independent
accountant's report for Prairie contained in the Annual Report dated
December 31, 1995 are incorporated herein by reference. No other parts of the
Annual Report are incorporated by reference herein.
The date of this Statement of Additional Information is June 11, 1996.
<PAGE>
TABLE OF CONTENTS
Page
----
General Information . . . . . . . . . . . . . . . . B-3
Pro Forma Financial Statements . . . . . . . . . . PFS-1
B-2
<PAGE>
GENERAL INFORMATION
The Shareholders of Prairie are being asked to approve or disapprove an
Agreement and Plan of Reorganization (the "Reorganization Agreement") dated as
of May 21, 1996 between Prairie and Woodward, and the transactions contemplated
thereby. The Reorganization Agreement contemplates the transfer of
substantially all of the assets and liabilities of Prairie Money Market Fund,
U.S. Government Money Market Fund, Municipal Money Market Fund, Growth Fund,
International Bond Fund, Equity Income Fund, Special Opportunities Fund, Bond
Fund, Intermediate Municipal Bond Fund, Municipal Bond Fund, Intermediate Bond
Fund, Managed Assets Fund and Managed Assets Income Fund to corresponding
Woodward Funds in exchange for full and fractional shares representing interests
in such corresponding Woodward Funds. The shares issued by Woodward will have
an aggregate net asset value equal to the aggregate net asset value of the
shares of the respective Prairie Portfolios that are outstanding immediately
before the effective time of the reorganization.
Following the exchange, the Prairie Portfolios will make a liquidating
distribution of corresponding Woodward Funds shares to their shareholders. Each
shareholder owning shares of a particular Prairie Portfolio at the effective
time of the Reorganization will receive shares of the corresponding Woodward
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the effective time of the Reorganization
on Prairie Portfolio shares. Upon completion of the Reorganization, Prairie
will be terminated under state law and deregistered under the Investment Company
Act of 1940.
The Special Meeting of Shareholders of Prairie to consider the
Reorganization Agreement and the related transactions will be held at 9:00 a.m.
Eastern time on July 10, 1996 at the offices of BISYS Fund Services, Inc., 3435
Stelzer Road, Columbus, Ohio. For further information about the transaction,
see the Combined Prospectus/Proxy Statement.
Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling, or distributing securities such as shares
of the Woodward Funds, but do not prohibit such a bank holding company or its
affiliates or banks generally from acting as investment adviser, transfer agent,
administrator or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of customers. FCIMCO,
B-3
<PAGE>
NBD and financial intermediaries which agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the Woodward Funds, Woodward might be required to alter materially or
discontinue its arrangement with such companies and change its method of
operation. It is anticipated, however, that any resulting change in Woodward's
method of operation would not affect a Woodward Fund's net asset value per share
or result in financial loss to any shareholder.
B-4
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
These pro forma financial statements are presented in accordance with the
rules prescribed by the Securities and Exchange Commission (SEC) to reflect
for the benefit of the shareholders of the Woodward and Prairie Funds the
effect of the merger of these Funds had the merger taken place effective for
the periods presented in the accompanying pro forma statements.
In accordance with SEC rules, Woodward and Prairie must present pro forma
balance sheets as of December 31, 1995, and pro forma statements of income for
the year (or period) ended December 31, 1995. The amounts presented for the
Woodward and Prairie Funds reflect the amounts shown on both Woodward's and
Prairie's financial reports filed with the SEC for the periods reflected.
The pro forma adjustments are explained in more detail in the notes to the pro
forma statements. Under SEC regulations, pro forma adjustments may only be
reflected for the effects which are directly related to the merger, expected
to have a continuing impact, and are factually supportable. As such, pro forma
adjustments have been reflected only for those expense items of the funds
which are subject to contractual terms. Increased interest income or other
expense efficiencies resulting from the merger have not been reflected as such
adjustments are not permitted under the current SEC regulations. The pro forma
statements may not be indicative of the results that would have occurred if
the merger had taken place during the periods presented, nor may they be
reflective of the results that may be obtained in the future.
The reorganized Treasury Money Market Fund includes the Woodward Treasury
Money Market Fund, Woodward Government Fund and Prairie U.S. Government
Money Market Fund. The related pro forma financial statements only reflect
the scenario whereby all three portfolios will reorganize (combine) since this
proposed reorganization is structured such that all three portfolios must
combine or none are to reorganize.
In accordance with Item 14.a.(2) of Form N-14, pro forma financial statements
were not prepared for the proposed combination of the Woodward Balanced Fund
and the Prairie Managed Assets Fund since the net asset value of the Prairie
Managed Assets Fund (non-surviving fund) did not exceed ten percent of the net
asset value of the Woodward Balanced Fund (surviving fund) on April 8, 1996.
PFS-1
1
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Money Market Fund
Pro Forma Combining Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Money Market Money Market Combined
Fund Fund Adjustments (Note 1)
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Amortized Cost $1,624,604,821 $205,176,423 $ -- $1,829,781,244
============== ============ =============== ==============
At Value $1,624,604,821 $205,176,423 $ -- $1,829,781,244
Cash 109 -- (109)(d) --
Receivable for investment securities sold -- 1,938 -- 1,938
Receivable from adviser -- -- 61,354 (c) 61,354
Interest receivable 16,341,428 496,734 -- 16,838,162
Deferred organization expenses -- 61,354 (61,354)(c) --
Prepaids and other assets 298,771 110,035 -- 408,806
-------------- ------------ --------------- --------------
TOTAL ASSETS 1,641,245,129 205,846,484 (109) 1,847,091,504
-------------- ------------ --------------- --------------
LIABILITIES:
Accrued investment advisory fee 743,967 41,802 -- 785,769
Accrued distribution fees 16,841 -- -- 16,841
Accrued custodial fees 2,795 4,441 -- 7,236
Administration fees payable -- 31,447 -- 31,447
Bank overdrafts -- 1,334,167 (109) (d) 1,334,058
Dividends payable 738,061 58,489 -- 796,550
Other accrued expenses and payables 48,651 316,920 -- 365,571
-------------- ------------ --------------- --------------
TOTAL LIABILITIES 1,550,315 1,787,266 (109) 3,337,472
-------------- ------------ --------------- --------------
NET ASSETS $1,639,694,814 $204,059,218 $ -- $1,843,754,032
============== ============ =============== ==============
Net assets consist of:
Capital shares, at par $ 163,969,481 $ 204,027 $ 20,198,710 (a) $ 184,372,218
Additional paid-in capital 1,475,725,333 203,823,336 (20,198,710)(a) 1,659,349,959
Accumulated undistributed net realized gains -- 31,855 31,855
-------------- ------------ --------------- --------------
TOTAL NET ASSETS $1,639,694,814 $204,059,218 $ -- $1,843,754,032
============== ============ =============== ==============
Class A shares:
Net assets $ -- $203,994,341 $ 180,366,430 (b) $ 384,360,771
Shares outstanding -- 203,962,497 180,366,430 (b) 384,328,927
Net asset value per class A share $ -- $ 1.00 $ 1.00 $ 1.00
Class B shares:
Net assets $ -- $ 64,877 $ -- $ 64,877
Shares outstanding -- 64,867 -- 64,867
Net asset value per class A share $ -- $ 1.00 $ -- $ 1.00
Class I shares:
Net assets $ -- $ -- $ 1,459,328,384 (b) $1,459,328,384
Shares outstanding -- -- 1,459,328,384 (b) 1,459,328,384
Net asset value per class I share $ -- $ -- $ 1.00 $ 1.00
Single class shares:
Net assets $1,639,694,814 $ -- $(1,639,694,814)(b) $ --
Shares outstanding 1,639,694,814 -- (1,639,694,814)(b) --
Net asset value per single class share $ 1.00 $ -- $ 1.00 $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward Money Market shares in
exchange for shares of the Prairie Money Market Fund in connection
with the proposed reorganization.
(b) Adjustment reclassifies Woodward Money Market shares to reflect the
multi-class environment of the proposed reorganized entity.
(c) Remaining unamortized organizational costs of the Prairie Money Market
Fund will be assumed by the investment advisor prior to merger date.
(d) Adjustment to net cash of the Woodward Money Market Fund with overdrafts
of the Prairie Money Market Fund.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-2
2
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Money Market Fund
Pro Forma Combining Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Money Market Money Market Combined
Fund Fund Adjustments (Note 1)
------------ ----------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $98,415,963 $8,980,167 $ -- $107,396,130
----------- ---------- ----------- -----------
TOTAL INVESTMENT INCOME 98,415,963 8,980,167 -- 107,396,130
----------- ---------- ----------- -----------
EXPENSES:
Advisory fees 7,225,557 631,448 $(2,679,789)(a) 5,177,216
Administration fees -- 220,431 2,687,572 (a) 2,908,003
Distribution Fees 152,873 -- (152,873)(b) --
Shareholder servicing fees 450,637 380,585 (173)(a) 831,049
12b-1 fees -- 154 -- 154
Custodian fees and expenses 60,686 58,917 -- 119,603
Professional fees 48,970 57,347 (31,317)(c) 75,000
Amortization of organization expenses -- 7,228 (7,228)(d) --
Transfer agent fees and expenses 81,059 185,048 -- 266,107
Marketing expenses 102,871 -- (102,871)(b) --
Registration, filing fees and other expenses 317,151 89,834 -- 406,985
----------- ---------- ----------- -----------
TOTAL EXPENSES 8,439,804 1,630,992 (286,679) 9,784,117
Expense reimbursements -- (431,210) 431,210 (e) --
----------- ---------- ----------- -----------
NET EXPENSES 8,439,804 1,199,782 144,531 9,784,117
----------- ---------- ----------- -----------
NET OPERATING INCOME (LOSS) 89,976,159 7,780,385 (144,531) 97,612,013
----------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments -- 179,219 -- 179,219
----------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS -- 179,219 -- 179,219
----------- ---------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $89,976,159 $7,959,604 $ (144,531) $97,791,232
=========== ========== =========== ===========
<FN>
(a) Adjustment to reflect the proposed contractual fee structure of Woodward
Money Market Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Woodward Money Market Fund except for those distribution fees payable
pursuant to the Fund's 12b-1 plan assessed only to the class B shares.
(c) Reduction reflects expected savings when the two funds become one.
(d) Remaining unamortized organizational costs of the Prairie Money Market
Fund will be assumed by the investment advisor prior to merger date.
(e) Adjustment to reduce reimbursements from the advisor to reflect the
new fee structure of the Woodward Money Market Fund after reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-3
3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Prairie/Woodward Funds
Pro Forma Combining
Money Market Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
[Unaudited]
- ------------------------------------------------------------------------------
Pro Forma
Combined
Woodward Prairie Principal
Principal Principal Amount
Amount Amount (Note 1) Description
-------- --------- ---------- -----------
<S> <C> <C> <C>
BANKERS ACCEPTANCES- 0.5%
-- 5,000,000 5,000,000 Bank of Tokyo
-- 5,000,000 5,000,000 Dai-Ichi Kangyo
Total Bankers Acceptances
CORPORATE NOTES- 15.3%
15,000,000 -- 15,000,000 American Express Centurion Bank
28,850,000 -- 28,850,000 Associates Corp. of North America Debenture
7,378,000 -- 7,378,000 Associates Corp. of North America Euro Dollar Debenture
20,000,000 -- 20,000,000 Boatmens National Bank of St. Louis
13,000,000 -- 13,000,000 Comerica Bank
27,500,000 -- 27,500,000 First Bank, N.A.
5,000,000 -- 5,000,000 First Union National Bank N. C.
Ford Motor Credit Co. Medium Term Notes:
12,000,000 -- 12,000,000 Note
5,000,000 -- 5,000,000 Note
5,000,000 -- 5,000,000 Note
30,000,000 -- 30,000,000 Huntington National Bank
29,980,000 -- 29,980,000 J.P. Morgan
20,000,000 -- 20,000,000 PNC Bank
10,000,000 -- 10,000,000 Seattle First National Bank
2,425,000 -- 2,425,000 Smithkline Beecham Corp.
23,500,000 -- 23,500,000 Society National Bank Cleveland Ohio Medium Term Note
25,000,000 -- 25,000,000 Trust Company Bank
Total Corporate Notes
CERTIFICATES OF DEPOSIT- 18.1%
U.S. Branches of Foreign Banks
-- 7,000,000 7,000,000 ABN Ambro
-- 5,000,000 5,000,000 Bank of Montreal
-- 7,000,000 7,000,000 Banque Nationale de Paris
10,000,000 -- 10,000,000 Bayerische Landesbank Girozentrale
29,980,000 -- 29,980,000 Bayerische Vereinsbank AG
24,980,000 -- 24,980,000 Canadian Imperial Bank of Commerce
-- 7,000,000 7,000,000 Canadian Imperial Bank of Commerce
-- 5,000,000 5,000,000 Commerz Bank AG
15,000,000 -- 15,000,000 Dresdner Bank AG
-- 7,000,000 7,000,000 Fuji Bank, Ltd
14,975,000 -- 14,975,000 Harris Trust & Savings Bank
-- 5,000,000 5,000,000 Industrial Bank of Japan
-- 7,000,000 7,000,000 Mitsubishi Bank, Ltd
-- 5,000,000 5,000,000 National Westminster Bank
15,000,000 -- 15,000,000 National Westminster Bank PLC
20,000,000 -- 20,000,000 PNC Bank Corp.
-- 5,000,000 5,000,000 Rabobank
Royal Bank of Canada:
2,980,000 -- 2,980,000 Note
8,000,000 -- 8,000,000 Note
-- 7,000,000 7,000,000 Sanwa Bank, Ltd.
Societe Generale:
20,000,000 -- 20,000,000 Note
5,000,000 -- 5,000,000 Note
-- 7,000,000 7,000,000 Societe Generale
-- 7,000,000 7,000,000 Sumitomo Bank
Toronto-Dominion Bank Euro:
24,980,000 -- 24,980,000 Note
30,000,000 -- 30,000,000 Note
10,000,000 -- 10,000,000 Wachovia Bank of Georgia, NA
20,000,000 -- 20,000,000 Wachovia Bank of North Carolina
Total Certificates of Deposit
PFS-4
4
<PAGE>
TIME DEPOSITS- 1.3%
23,000,000 -- 23,000,000 Mitsubishi Bank London
COMMERCIAL PAPER- 44.3%
-- 7,000,000 7,000,000 AT&T
-- 7,500,000 7,500,000 Barclays Funding
-- 7,500,000 7,500,000 Ciesco L.P.
-- 7,000,000 7,000,000 Corporate Asset Funding Co., Inc.
-- 6,000,000 6,000,000 Exxon Imperial
-- 7,500,000 7,500,000 Ford Motor Credit
-- 7,000,000 7,000,000 Goldman Sachs
-- 7,000,000 7,000,000 Morgan Stanley & Co.
-- 7,000,000 7,000,000 Nestle Capital
-- 7,000,000 7,000,000 Philip Morris
-- 7,000,000 7,000,000 Bayerische Vereinsbank
-- 5,000,000 5,000,000 Dresdner Finance
-- 7,000,000 7,000,000 Deutsche Bank
29,980,000 -- 29,980,000 Abbey National North America
8,000,000 -- 8,000,000 Accor
15,000,000 -- 15,000,000 AESOP Funding Corp.
Allomon Funding Corp.:
10,000,000 -- 10,000,000 Note
10,135,000 -- 10,135,000 Note
8,000,000 -- 8,000,000 Alpine Securitization Corp.
20,000,000 -- 20,000,000 American Express Credit Corp.
7,500,000 -- 7,500,000 Avnet Inc.,
10,000,000 -- 10,000,000 B.A.T. Capital Corp.
17,000,000 -- 17,000,000 Barton Capital Corp.
10,815,000 -- 10,815,000 Bass Finance (C.I.) Ltd.
19,980,000 -- 19,980,000 BCI Funding Corp.
19,980,000 -- 19,980,000 BEAL Cayman Ltd
20,000,000 -- 20,000,000 Clipper Receivables Corp.
17,000,000 -- 17,000,000 Corporate Receivables Corp.
15,000,000 -- 15,000,000 Echlin, Inc.
6,060,000 -- 6,060,000 Eksportfinans A/S
5,000,000 -- 5,000,000 Electronic Data Systems Corp.
10,970,000 -- 10,970,000 Engelhard Corp.
English China Clays PLC:
10,000,000 -- 10,000,000 Note
10,000,000 -- 10,000,000 Note
10,254,000 -- 10,254,000 Note
Enterprise Funding Corp.:
6,451,000 -- 6,451,000 Note
13,072,000 -- 13,072,000 Note
9,000,000 -- 9,000,000 Note
Explorer Pipeline Co.:
7,775,000 -- 7,775,000 Note
10,500,000 -- 10,500,000 Note
10,000,000 -- 10,000,000 Note
8,000,000 -- 8,000,000 Franklin Resources, Inc.
Greenwich Funding Corp.:
10,000,000 -- 10,000,000 Note
10,000,000 -- 10,000,000 Note
10,000,000 -- 10,000,000 Halifax Building Society
10,000,000 -- 10,000,000 Hercules, Inc.
12,730,000 -- 12,730,000 International Lease Finance Corp.
International Securitization Corp.:
17,000,000 -- 17,000,000 Note
9,530,000 -- 9,530,000 Note
Kingdom of Sweden:
15,000,000 -- 15,000,000 Note
6,980,000 -- 6,980,000 Note
10,000,000 -- 10,000,000 Note
20,000,000 -- 20,000,000 New Center Asset Trust
10,000,000 -- 10,000,000 Pacific Dunlop Holdings, Inc.
5,000,000 -- 5,000,000 Pacific Dunlop Ltd
Pooled Accounts Receivable Capital Corp.:
11,000,000 -- 11,000,000 Note
10,160,000 -- 10,160,000 Note
Preferred Receivables Funding Corp.:
15,975,000 -- 15,975,000 Note
8,050,000 -- 8,050,000 Note
Premium Funding, Inc.:
10,113,000 -- 10,113,000 Note
11,162,000 -- 11,162,000 Note
13,000,000 -- 13,000,000 Ranger Funding Corp.
10,970,000 -- 10,970,000 San Paolo US Financial Co.
12,980,000 -- 12,980,000 Sheffield Receivable Corp.
St. Michael Finance Ltd.:
9,272,000 -- 9,272,000 Note
5,694,000 -- 5,694,000 Note
PFS-5
5
<PAGE>
10,000,000 -- 10,000,000 Note
Sunbelt-Dix, Inc.:
4,000,000 -- 4,000,000 Note
11,980,000 -- 11,980,000 Note
12,000,000 -- 12,000,000 Note
5,250,000 -- 5,250,000 Note
17,000,000 -- 17,000,000 TI Group, Inc.
5,000,000 -- 5,000,000 US Borax & Chemical Corp.
Windmill Funding Corp.:
10,000,000 -- 10,000,000 Note
15,000,000 -- 15,000,000 Note
15,480,000 -- 15,480,000 WMX Technologies, Inc.
Total Commercial Paper
U.S. GOVERNMENT AGENCY OBLIGATIONS- 4.0%
Small Business Administration,
-- 6,000 6,000 Pool #500870
13,950,000 -- 13,950,000 Federal Farm Credit Bank
Federal Home Loan Bank:
12,000,000 -- 12,000,000 Note
5,000,000 -- 5,000,000 Note
2,000,000 -- 2,000,000 Federal National Mortgage Assn. Deb.
Federal National Mortgage Assn. Medium Term Note:
4,000,000 -- 4,000,000 Note
9,000,000 -- 9,000,000 Note
27,500,000 -- 27,500,000 Student Loan Marketing Assn.
Total U.S. Government Agency Obligations
TEMPORARY CASH INVESTMENTS- 3.6%
5,000,000 -- 5,000,000 Allstate Life Insurance Co. Master Note
15,000,000 -- 15,000,000 American General Finance, Inc. Master Note
5,000,000 -- 5,000,000 Commonwealth Life Insurance Co. Master Note
5,000,000 -- 5,000,000 Peoples Security Life Insurance Co. Master Note
10,000,000 -- 10,000,000 Sun Life Insurance Co. of America Master Note
25,000,000 -- 25,000,000 Transamerica Finance Group, Inc. Master Note
Total Temporary Cash Investments
REPURCHASE AGREEMENTS- 12.9%
-- 15,000,000 15,000,000 Daiwa Securities
Dated 12/29/95, with a maturity value of
$15,009,116
-- 10,100,000 10,100,000 National Westminster Bank
Dated 12/29/95, with a maturity value of
$10,106,431
NationsBank Capital Markets, Inc., Revolving Repurchase
Agreement (secured by various U.S. Treasury
Obligations with maturities ranging from
2/15/96 through 11/15/05
at various interest rates ranging
from 0.00% to 12.375%, all held
56,503,093 -- 56,503,093 at Chemical Bank)
Nomura Securities International, Inc., Revolving
Repurchase Agreement
(secured by varioius U.S. Treasury
obligations with maturities
ranging from 1/18/96 through 9/10/02
at various interest rates
77,000,000 -- 77,000,000 ranging from 0.00% to 8.26%, all held
at the Bank of New York)
Salomon Brothers, Revolving Repurchase Agreement
(secured by various U.S. Treasury Strips
with maturities ranging from 2/15/96
through 11/15/05 and U.S. Treasury Notes,
73,407,000 -- 73,407,000 5.50%, 11/15/98, all held at Chemical Bank)
Yamaichi Revolving Repurchase Agreement,
(secured by various U.S. Treasury
obligations with maturities
ranging from 12/31/95 through
8/15/05 at various interest rates
4,000,000 -- 4,000,000 ranging from 0.00% to 11.625%, all
held at Chemical Bank)
Total Repurchase Agreements
- ------------- ----------- -------------
1,628,686,093 205,606,000 1,834,292,093 TOTAL INVESTMENTS
============= =========== =============
PFS-6
6
<PAGE>
<CAPTION>
Pro Forma
Combined
Woodward Prairie Amortized
Maturity Amortized Amortized Cost
Description Rate Date Cost Cost (Note 1)
----------- ---- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BANKERS ACCEPTANCES- 0.5%
Bank of Tokyo 5.81% 1/8/96 -- 4,994,351 4,994,351
Dai-Ichi Kangyo 5.81% 2/15/96 -- 4,963,688 4,963,688
------------- ----------- -------------
Total Bankers Acceptances -- 9,958,039 9,958,039
------------- ----------- -------------
CORPORATE NOTES- 15.3%
American Express Centurion Bank 5.82% 1/17/96 15,000,652 -- 15,000,652
Associates Corp. of North America Debenture 7.50% 10/15/96 29,222,978 -- 29,222,978
Associates Corp. of North America
Euro Dollar Debenture 10.50% 3/12/96 7,424,686 -- 7,424,686
Boatmens National Bank of St. Louis 6.00% 6/12/96 20,000,000 -- 20,000,000
Comerica Bank 5.70% 9/3/96 12,991,077 -- 12,991,077
First Bank, N.A. 5.96% 3/4/96 27,499,558 -- 27,499,558
First Union National Bank N. C. 5.76% 2/2/96 5,000,000 -- 5,000,000
Ford Motor Credit Co. Medium Term Notes:
Note 6.25% 5/10/96 12,013,087 -- 12,013,087
Note 14.00% 7/5/96 5,198,163 -- 5,198,163
Note 9.10% 7/18/96 5,083,739 -- 5,083,739
Huntington National Bank 5.67% 8/29/96 29,988,082 -- 29,988,082
J.P. Morgan 5.75% 8/7/96 29,986,992 -- 29,986,992
PNC Bank 5.65% 9/18/96 19,996,215 -- 19,996,215
Seattle First National Bank 5.51% 6/14/96 10,000,000 -- 10,000,000
Smithkline Beecham Corp. 5.25% 1/16/96 2,423,784 -- 2,423,784
Society National Bank Cleveland Ohio
Medium Term Note 6.88% 10/15/96 23,683,821 -- 23,683,821
Trust Company Bank 6.50% 3/21/96 24,994,577 -- 24,994,577
------------- ----------- -------------
Total Corporate Notes 280,507,411 -- 280,507,411
------------- ----------- -------------
CERTIFICATES OF DEPOSIT- 18.1%
U.S. Branches of Foreign Banks
ABN Ambro 5.78% 2/1/96 -- 7,000,494 7,000,494
Bank of Montreal 5.78% 1/17/96 -- 5,000,060 5,000,060
Banque Nationale de Paris 5.75% 2/5/96 -- 7,000,251 7,000,251
Bayerische Landesbank Girozentrale 6.00% 9/12/96 10,000,000 -- 10,000,000
Bayerische Vereinsbank AG 5.95% 7/22/96 29,980,000 -- 29,980,000
Canadian Imperial Bank of Commerce 5.95% 10/23/96 24,980,000 -- 24,980,000
Canadian Imperial Bank of Commerce 5.60% 3/12/96 -- 7,000,000 7,000,000
Commerz Bank AG 5.77% 1/17/96 -- 5,000,044 5,000,044
Dresdner Bank AG 7.00% 2/5/96 15,000,000 -- 15,000,000
Fuji Bank, Ltd 6.09% 1/18/96 -- 7,000,099 7,000,099
Harris Trust & Savings Bank 5.72% 2/29/96 14,975,000 -- 14,975,000
Industrial Bank of Japan 5.82% 1/17/96 -- 4,999,747 4,999,747
Mitsubishi Bank, Ltd 5.86% 3/6/96 -- 7,000,849 7,000,849
National Westminster Bank 5.78% 1/16/96 -- 5,000,054 5,000,054
National Westminster Bank PLC 5.83% 1/12/96 15,000,045 -- 15,000,045
PNC Bank Corp. 5.74% 9/30/96 19,985,384 -- 19,985,384
Rabobank 5.75% 1/22/96 -- 5,000,029 5,000,029
Royal Bank of Canada:
Note 6.60% 4/3/96 2,980,399 -- 2,980,399
Note 6.55% 4/9/96 8,000,000 -- 8,000,000
Sanwa Bank, Ltd. 6.03% 1/17/96 -- 6,999,953 6,999,953
Societe Generale:
Note 7.05% 2/14/96 20,000,000 -- 20,000,000
Note 6.80% 3/1/96 5,000,000 -- 5,000,000
Societe Generale 5.77% 2/2/96 -- 7,000,392 7,000,392
Sumitomo Bank 6.06% 1/18/96 -- 7,000,066 7,000,066
Toronto-Dominion Bank Euro:
Note 6.80% 3/11/96 24,987,939 -- 24,987,939
Note 5.84% 11/7/96 30,000,000 -- 30,000,000
Wachovia Bank of Georgia, NA 5.85% 1/10/96 10,000,000 -- 10,000,000
Wachovia Bank of North Carolina 7.13% 1/26/96 19,997,687 -- 19,997,687
------------- ----------- -------------
Total Certificates of Deposit 250,886,454 81,002,038 331,888,492
------------- ----------- -------------
TIME DEPOSITS- 1.3%
Mitsubishi Bank London 12.00% 1/2/96 23,000,000 -- 23,000,000
------------- ----------- -------------
PFS-7
7
<PAGE>
COMMERCIAL PAPER- 44.3%
AT&T 5.54% 3/19/96 -- 6,915,977 6,915,977
Barclays Funding 5.67% 1/19/96 -- 7,478,737 7,478,737
Ciesco L.P. 5.70% 1/19/96 -- 7,478,625 7,478,625
Corporate Asset Funding Co., Inc. 5.65% 2/9/96 -- 6,957,154 6,957,154
Exxon Imperial 5.62% 1/16/96 -- 5,985,950 5,985,950
Ford Motor Credit 5.63% 2/13/96 -- 7,449,565 7,449,564
Goldman Sachs 5.55% 4/2/96 -- 6,900,717 6,900,717
Morgan Stanley & Co. 6.00% 1/3/96 -- 6,997,667 6,997,667
Nestle Capital 5.73% 1/12/96 -- 6,987,744 6,987,744
Philip Morris 5.72% 1/19/96 -- 6,979,980 6,979,980
Bayerische Vereinsbank 5.73% 1/18/96 -- 6,992,201 6,992,201
Dresdner Finance 5.69% 1/3/96 -- 4,998,419 4,998,420
Deutsche Bank 5.74% 1/12/96 -- 6,987,723 6,987,723
Abbey National North America 5.64% 3/6/96 29,677,951 -- 29,677,951
Accor 5.74% 2/15/96 7,943,000 -- 7,943,000
AESOP Funding Corp. 5.82% 1/22/96 14,949,250 -- 14,949,250
Allomon Funding Corp.:
Note 5.78% 1/12/96 9,982,369 -- 9,982,369
Note 5.77% 1/25/96 10,096,149 -- 10,096,149
Alpine Securitization Corp. 5.76% 2/13/96 7,945,342 -- 7,945,342
American Express Credit Corp. 5.69% 2/27/96 19,821,400 -- 19,821,400
Avnet Inc., 5.72% 2/16/96 7,445,567 -- 7,445,567
B.A.T. Capital Corp. 5.77% 1/23/96 9,964,861 -- 9,964,861
Barton Capital Corp. 5.80% 1/26/96 16,931,764 -- 16,931,764
Bass Finance (C.I.) Ltd. 5.71% 2/14/96 10,740,052 -- 10,740,052
BCI Funding Corp. 5.74% 2/9/96 19,856,623 -- 19,856,623
BEAL Cayman Ltd. 5.73% 2/23/96 19,812,923 -- 19,812,923
Clipper Receivables Corp. 5.76% 1/17/96 19,948,889 -- 19,948,889
Corporate Receivables Corp. 5.81% 1/5/96 16,989,026 -- 16,989,026
Echlin, Inc. 5.76% 1/18/96 14,959,342 -- 14,959,342
Eksportfinans A/S 5.54% 1/8/96 6,053,484 -- 6,053,484
Electronic Data Systems Corp. 5.56% 3/21/96 4,939,000 -- 4,939,000
Engelhard Corp. 5.75% 1/19/96 10,938,571 -- 10,938,571
English China Clays PLC:
Note 5.78% 1/22/96 9,966,400 -- 9,966,400
Note 5.73% 2/20/96 9,921,111 -- 9,921,111
Note 5.70% 3/1/96 10,157,442 -- 10,157,442
Enterprise Funding Corp.:
Note 5.76% 1/12/96 6,439,666 -- 6,439,666
Note 5.76% 1/16/96 13,040,652 -- 13,040,652
Note 5.76% 2/9/96 8,944,230 -- 8,944,230
Explorer Pipeline Co.:
Note 5.76% 1/24/96 7,746,487 -- 7,746,487
Note 5.78% 1/30/96 10,451,365 -- 10,451,365
Note 5.72% 2/16/96 9,927,422 -- 9,927,422
Franklin Resources, Inc. 5.73% 2/20/96 7,936,889 -- 7,936,889
Greenwich Funding Corp.:
Note 5.76% 1/8/96 9,988,819 -- 9,988,819
Note 5.78% 1/11/96 9,983,972 -- 9,983,972
Halifax Building Society 5.77% 1/3/96 9,996,794 -- 9,996,794
Hercules, Inc. 5.60% 6/21/96 9,739,611 -- 9,739,611
International Lease Finance Corp. 5.76% 1/9/96 12,713,734 -- 12,713,734
International Securitization Corp.:
Note 5.78% 2/2/96 16,913,111 -- 16,913,111
Note 5.52% 6/10/96 9,300,277 -- 9,300,277
Kingdom of Sweden:
Note 5.71% 2/16/96 14,891,325 -- 14,891,325
Note 5.72% 3/1/96 6,914,039 -- 6,914,039
Note 5.73% 3/12/96 9,888,175 -- 9,888,175
New Center Asset Trust 5.78% 1/31/96 19,904,167 -- 19,904,167
Pacific Dunlop Holdings, Inc. 5.75% 2/21/96 9,919,250 -- 9,919,250
Pacific Dunlop Ltd 5.67% 1/23/96 4,982,736 -- 4,982,736
Pooled Accounts Receivable Capital Corp.:
Note 5.83% 1/9/96 10,985,773 -- 10,985,773
Note 6.02% 1/25/96 10,119,360 -- 10,119,360
Preferred Receivables Funding Corp.:
Note 5.73% 2/2/96 15,894,060 -- 15,894,060
Note 5.75% 2/21/96 7,984,996 -- 7,984,996
Premium Funding, Inc.:
Note 5.78% 2/7/96 10,053,235 -- 10,053,235
Note 5.79% 2/14/96 11,083,556 -- 11,083,556
Ranger Funding Corp. 5.75% 1/12/96 12,977,199 -- 12,977,199
San Paolo US Financial Co. 5.68% 3/15/96 10,843,498 -- 10,843,498
Sheffield Receivable Corp. 5.73% 2/1/96 12,916,290 -- 12,916,290
St. Michael Finance Ltd.:
Note 5.75% 2/20/96 9,198,597 -- 9,198,597
Note 5.64% 3/5/96 5,637,516 -- 5,637,516
Note 5.64% 3/8/96 9,896,150 -- 9,896,150
PFS-8
8
<PAGE>
Sunbelt-Dix, Inc.:
Note 5.76% 1/30/96 3,981,537 -- 3,981,537
Note 5.79% 2/13/96 11,897,721 -- 11,897,721
Note 5.71% 3/5/96 11,879,467 -- 11,879,467
Note 5.67% 3/25/96 5,181,400 -- 5,181,400
TI Group, Inc. 5.70% 3/4/96 16,832,210 -- 16,832,210
US Borax & Chemical Corp. 5.73% 2/1/96 4,975,458 -- 4,975,458
Windmill Funding Corp.:
Note 6.02% 1/16/96 9,975,000 -- 9,975,000
Note 5.82% 1/24/96 14,944,417 -- 14,944,417
WMX Technologies, Inc. 5.50% 9/9/96 14,905,692 -- 14,905,692
------------- ----------- -------------
Total Commercial Paper 720,826,369 89,110,459 809,936,828
------------- ----------- -------------
U.S. GOVERNMENT AGENCY OBLIGATIONS- 4.0%
Small Business Administration,
Pool #500870 7.63% 4/25/96 -- 5,887 5,887
Federal Farm Credit Bank 5.60% 7/1/96 13,930,941 -- 13,930,941
Federal Home Loan Bank:
Note 5.63% 6/26/96 11,992,746 -- 11,992,746
Note 5.98% 8/14/96 5,000,000 -- 5,000,000
Federal National Mortgage Assn. Deb. 8.75% 6/10/96 2,025,084 -- 2,025,084
Federal National Mortgage Assn.
Medium Term Note:
Note 5.97% 5/16/96 4,002,877 -- 4,002,877
Note 5.71% 6/10/96 8,994,375 -- 8,994,375
Student Loan Marketing Assn. 6.14% 6/30/96 27,528,471 -- 27,528,471
------------- ----------- -------------
Total U.S. Government Agency Obligations 73,474,494 5,887 73,480,381
------------- ----------- -------------
TEMPORARY CASH INVESTMENTS- 3.6%
Allstate Life Insurance Co. Master Note 5.93% 1/2/96 5,000,000 -- 5,000,000
American General Finance, Inc. Master Note 5.85% 1/2/96 15,000,000 -- 15,000,000
Commonwealth Life Insurance Co. Master Note 6.03% 1/2/96 5,000,000 -- 5,000,000
Peoples Security Life Insurance Co. Master Note 6.03% 1/2/96 5,000,000 -- 5,000,000
Sun Life Insurance Co. of America Master Note 6.13% 1/2/96 10,000,000 -- 10,000,000
Transamerica Finance Group, Inc. Master Note 5.85% 1/2/96 25,000,000 -- 25,000,000
------------- ----------- -------------
Total Temporary Cash Investments 65,000,000 -- 65,000,000
------------- ----------- -------------
REPURCHASE AGREEMENTS- 12.9%
Daiwa Securities 5.50% 1/2/96 -- 15,000,000 15,000,000
Dated 12/29/95, with a maturity value of
$15,009,116
National Westminster Bank 5.65% 1/2/96 -- 10,100,000 10,100,000
Dated 12/29/95, with a maturity value of
$10,106,431
NationsBank Capital Markets, Inc.
Revolving Repurchase Agreement
(secured by various U.S. Treasury 6.00% 1/2/96
Obligations with maturities ranging
from 2/15/96 through 11/15/05
at various interest rates ranging
from 0.00% to 12.375%, all held
at Chemical Bank) 56,503,093 -- 56,503,093
Nomura Securities International, Inc.,
Revolving Repurchase Agreement 6.00% 1/2/96
(secured by varioius U.S. Treasury
obligations with maturities
ranging from 1/18/96 through
9/10/02 at various interest rates
ranging from 0.00% to 8.26%, all
held at the Bank of New York) 77,000,000 -- 77,000,000
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) 73,407,000 -- 73,407,000
PFS-9
9
<PAGE>
Yamaichi Revolving Repurchase Agreement, 6.00% 1/2/96
(secured by various U.S. Treasury
obligations with maturities
ranging from 12/31/95 through
8/15/05 at various interest rates
ranging from 0.00% to 11.625%,
all held at Chemical Bank) 4,000,000 -- 4,000,000
------------- ----------- -------------
Total Repurchase Agreements 210,910,093 25,100,000 236,010,093
------------- ----------- -------------
TOTAL INVESTMENTS 1,624,604,821 205,176,423 1,829,781,244
============= =========== =============
</TABLE>
PFS-10
10
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Treasury Money Market Fund
Pro Forma Combining Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Treasury Woodward U.S. Government Combined
Money Market Government Money Market Adjustments (Note 1)
------------ ------------ ---------------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Amortized Cost $921,643,450 $469,643,055 $57,441,060 $ -- $ 1,448,727,565
============ ============ =========== ================ ================
At Value $921,643,450 $469,643,055 $57,441,060 $ -- $ 1,448,727,565
Cash 104 320 -- (424)(c) --
Receivable from adviser -- -- -- 57,957 (d) 57,957
Interest receivable 6,544,562 5,112,013 3,973 -- 11,660,548
Deferred organization expenses 6,063 -- 57,957 (57,957)(d) 6,063
Prepaids and other assets 295,486 41,286 60,156 -- 396,928
------------ ----------- ----------- ---------------- ----------------
TOTAL ASSETS 928,489,665 474,796,674 57,563,146 (424) 1,460,849,061
------------ ----------- ----------- ---------------- ----------------
LIABILITIES:
Accrued investment advisory fee 340,328 195,644 13,690 -- 549,662
Accrued distribution fees 5,377 3,417 -- -- 8,794
Accrued custodial fees 869 685 -- -- 1,554
Administration fees payable -- -- 19,610 -- 19,610
Bank overdraft -- -- 111,239 (424)(c) 110,815
Dividends payable 413,557 210,856 20,092 -- 644,505
Other accrued expenses and payables 34,032 9,217 134,455 -- 177,704
----------- ------------ ----------- ----------------- ----------------
TOTAL LIABILITIES 794,163 419,819 299,086 (424) 1,512,644
------------ ------------ ----------- ----------------- ----------------
NET ASSETS $927,695,502 $474,376,855 $57,264,060 $ -- $1,459,336,417
============ ============ =========== ================= ================
Net assets consist of:
Capital shares, at par $ 92,769,550 $ 47,437,686 $ 57,280 $ 5,670,724 (a) $ 145,935,240
Additional paid-in capital 834,925,952 426,939,169 57,222,765 (5,670,724)(a) 1,313,417,162
Accumulated undistributed
net realized (losses) -- -- (15,985) -- (15,985)
----------- ------------ ----------- ----------------- ----------------
TOTAL NET ASSETS $927,695,502 $474,376,855 $57,264,060 $ -- $ 1,459,336,417
============ ============ =========== ================ ================
Class A shares:
Net assets $ -- $ -- $57,264,060 $ 85,582,477 (b) $ 142,846,537
Shares outstanding -- -- 57,280,045 85,582,477 (b) 142,862,522
Net asset value per class A share $ -- $ -- $ 1.00 $ 1.00 $ 1.00
Class I shares:
Net assets $ -- $ -- $ -- $ 1,316,489,880 (b) $ 1,316,489,880
Shares outstanding -- -- -- 1,316,489,880 (b) 1,316,489,880
Net asset value per class I share $ -- $ -- $ -- $ 1.00 $ 1.00
Single class shares:
Net assets $927,695,502 $474,376,855 $ -- $ (1,402,072,357)(b) $ --
Shares outstanding 927,695,502 474,376,855 -- (1,402,072,357)(b) --
Net asset value per single class share $ 1.00 $ 1.00 $ -- $ 1.00 $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward Treasury Money Market
shares in exchange for shares of the Woodward Government and Prairie
U.S. Government Money Market Funds in connection with the proposed
reorganization.
(b) Adjustment reclassifies Woodward Government and Woodward Treasury
Money Market shares to reflect the multi-class environment of the
proposed reorganized entity.
(c) Adjustment to net cash of the Woodward Treasury Money Market Fund and
Woodward Government Fund with overdrafts of the Prairie U.S. Government
Money Market Fund.
(d) Remaining unamortized organizational costs of the Prairie U.S. Government
Money Market Fund will be assumed by the investment advisor prior to
merger date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-11
11
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Treasury Money Market Fund
Pro Forma Combining Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Treasury Woodward U.S. Government Combined
Money Market Government Money Market Adjustments (Note 1)
------------ ---------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $42,755,302 $26,262,034 $ 3,925,073 $ -- $72,942,409
----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENT INCOME 42,755,302 26,262,034 3,925,073 -- 72,942,409
----------- ----------- ----------- ----------- -----------
EXPENSES:
Advisory fees 3,248,535 1,987,590 297,377 $(1,838,383) (a) 3,695,119
Distribution fees 53,755 34,919 -- (88,674) (b) --
Administration fees -- -- 94,631 1,752,929 (a) 1,847,560
Shareholder servicing fees 298,599 60,644 170,762 (196,642) (a) 333,363
Custodian fees and expenses 12,919 8,370 47,037 -- 68,326
Professional fees 48,970 48,970 22,236 (45,176) (c) 75,000
Amortization of organization expenses 8,021 -- 8,303 (8,303) (d) 8,021
Transfer agent fees and expenses 11,445 24,255 37,804 73,504
Marketing expenses 41,925 36,670 -- (78,595) (b) --
Registration, filing fees and other expenses 117,097 58,072 53,977 229,146
----------- ----------- ----------- ---------- -----------
TOTAL EXPENSES 3,841,266 2,259,490 732,127 (502,844) 6,330,039
Expense reimbursements -- -- (198,986) 198,986 (e) --
----------- ----------- ----------- ---------- -----------
NET EXPENSES 3,841,266 2,259,490 533,141 (303,858) 6,330,039
----------- ----------- ----------- ---------- -----------
NET OPERATING INCOME 38,914,036 24,002,544 3,391,932 (303,858) 66,612,370
----------- ----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments -- -- 32,485 -- 32,485
Net change in unrealized appreciation on
investments -- -- -- -- --
----------- ----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS -- -- 32,485 -- 32,485
----------- ----------- ----------- ---------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $38,914,036 $24,002,544 $ 3,424,417 $ 303,858 $66,644,855
=========== =========== =========== ========== ===========
<FN>
(a) Adjustment to reflect the proposed contractual fee structure of Woodward
Treasury Money Market Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Woodward Treasury Money Market Fund after reorganization
(c) Reduction reflects expected savings when the three funds become one.
(d) Remaining unamortized organizational costs of the Prairie U.S. Government
Money Market Fund will be assumed by the investment advisor prior to
merger date.
(e) Adjustment to reduce reimbursements from the advisor to reflect the
new fee structure of the Woodward Treasury Money Market Fund after
reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-12
12
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
PRAIRIE/WOODWARD FUNDS
Pro Forma Combining
Treasury Money Market Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
[Unaudited]
- ------------------------------------------------------------------------------
Pro Forma
Woodward Woodward Prairie Combined
Treasury MM Gov't US Gov't MM Face Amount
Face Amount Face Amount Face Amount (Note 1) Description
- ----------- ----------- ------------ ----------- -----------
<C> <C> <C> <C> <C>
U.S. GOVERNMENT AND GOVERNMENT OBLIGATIONS- 32.1%
U.S. Treasury Bills
-- -- 10,000,000 10,000,000 U.S. Treasury Bill
-- -- 5,000,000 5,000,000 U.S. Treasury Bill
-- -- 10,000,000 10,000,000 U.S. Treasury Bill
-- -- 7,500,000 7,500,000 U.S. Treasury Bill
-- -- 7,500,000 7,500,000 U.S. Treasury Bill
3,000,000 -- -- 3,000,000 U.S. Treasury Bill
-- -- 7,500,000 7,500,000 U.S. Treasury Bill
U.S. Treasury Notes
8,000,000 -- -- 8,000,000 U.S.Treasury Note
5,000,000 -- -- 5,000,000 U.S.Treasury Note
14,000,000 5,000,000 -- 19,000,000 U.S.Treasury Note
10,000,000 -- -- 10,000,000 U.S.Treasury Note
20,000,000 -- -- 20,000,000 U.S.Treasury Note
10,000,000 -- -- 10,000,000 U.S.Treasury Note
7,000,000 -- -- 7,000,000 U.S.Treasury Note
-- 15,000,000 -- 15,000,000 U.S.Treasury Note
6,000,000 -- -- 6,000,000 U.S.Treasury Note
15,000,000 -- -- 15,000,000 U.S.Treasury Note
35,000,000 -- -- 35,000,000 U.S.Treasury Note
2,000,000 -- -- 2,000,000 U.S.Treasury Note
4,000,000 -- -- 4,000,000 U.S.Treasury Note
15,000,000 -- -- 15,000,000 U.S.Treasury Note
5,000,000 -- -- 5,000,000 Principal Strip from US Treasury Bond
Agency Obligations
-- 10,000,000 -- 10,000,000 Federal Farm Credit Bank
-- 10,000,000 -- 10,000,000 Federal Farm Credit Bank
-- 4,000,000 -- 4,000,000 Federal Farm Credit Bank
-- 25,000,000 -- 25,000,000 Federal Farm Credit Bank
-- 10,000,000 -- 10,000,000 Federal Farm Credit Bank
-- 10,000,000 -- 10,000,000 Federal Home Loan Bank
-- 19,000,000 -- 19,000,000 Federal Home Loan Bank
-- 24,000,000 -- 24,000,000 Federal Home Loan Bank
-- 2,500,000 -- 2,500,000 Federal Home Loan Bank
-- 5,000,000 -- 5,000,000 Federal Home Loan Bank
-- 2,000,000 -- 2,000,000 Federal Home Loan Bank
-- 5,000,000 -- 5,000,000 Federal Home Loan Bank
-- 6,000,000 -- 6,000,000 Federal Home Loan Bank
-- 15,000,000 -- 15,000,000 Federal Home Loan Mortgage Corp.
-- 8,400,000 -- 8,400,000 Federal National Mortgage Association
-- 5,000,000 -- 5,000,000 FNMA Medium Term Note
-- 18,000,000 -- 18,000,000 FNMA Medium Term Note
-- 25,000,000 -- 25,000,000 FNMA Medium Term Note -- A/R
-- 11,700,000 -- 11,700,000 Studen Loan Mortgage Association -- A/R
-- 10,000,000 -- 10,000,000 Studen Loan Mortgage Association -- A/R
-- 12,500,000 -- 12,500,000 Studen Loan Mortgage Association -- A/R
- ----------- ----------- ---------- -----------
159,000,000 258,100,000 47,500,000 464,600,000 TOTAL U.S. GOVERNMENT AND GOVERNMENT OBLIGATIONS
=========== =========== ========== ===========
PFS-13
13
<PAGE>
TEMPORARY CASH INVESTMENTS-- 67.9%
Revolving Repurchase Agreements
-- -- 10,200,000 10,200,000 NATIONAL WESTMINSTER
Dated 12/29/95, with a maturity value of $10,206.403
AUBREY LANGSTON, Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 8/31/97 through 11/15/05 at various interest
rates ranging from 4.75% to 13.75%, all held at Chemical
43,000,000 -- -- 43,000,000 Bank)
BEAR STEARNS & Co., INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 5/15/96 through 8/15/23 at various interest
rates ranging from 0.00% to 8.875% all held at the Custodial
215,000,000 -- -- 215,000,000 Trust Co.)
DAIWA SECURITIES AMERICA, INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 4/30/96 through 11/15/01 at various interest rates
ranging from 0.00% to 15.75%, all held at
43,000,000 -- -- 43,000,000 Bank of New York)
FIRST BOSTON , INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury Notes with maturities ranging
from 11/15/96 through 2/15/03 at various interest rates ranging
36,000,000 -- -- 36,000,000 from 4.375% to 6.25%, all held at Chemical Bank)
LEHMAN BROTHERS, INC., Revolving Repurchase Agreement,
(secured by U.S. Treasury Note, 5.875%, 7/31/97, held at Chemical
43,000,000 -- -- 43,000,000 Bank)
MORGAN STANLEY & CO. INC., Revolving Repurchase Agreement,
(secured by U.S. Treasury Note, 6.125%, 5/31/97, held at the Bank
43,000,000 -- -- 43,000,000 of New York)
NATIONSBANK CAPITAL MARKETS, INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 2/15/96 through 11/15/05 at various interest rates
ranging from 0.00% to 12.375%, all held at
216,533,000 73,569,000 -- 290,102,000 Chemical Bank)
NIKKO SECURITIES CO. INTERNATIONAL, INC., Revolving Repurchase
Agreement, (secured by various U.S. Treasury obligations with
maturities ranging from 7/31/96 through 8/15/00 at various
interest rates ranging from 0.00% to 8.75%, all
40,000,000 -- -- 40,000,000 held at the Bank of New York)
NOMURA SECURITIES INTERNATIONAL, INC., Revolving Repurchase
Agreement, (secured by various U.S. Treasury obligations with
maturities ranging from 1/18/96 through 9/10/02 at various
interest rates ranging from 0.00% to 8.26%, all
-- 23,000,000 -- 23,000,000 held at the Bank of New York)
NOMURA SECURITIES INTERNATIONAL, INC., Revolving Repurchase
Agreement, (secured by various U.S. Treasury obligations with
maturities ranging from 8/31/97 through 5/15/01 at various
interest rates ranging from 0.00% to 6.00%, all
40,000,000 -- -- 40,000,000 held at the Bank of New York)
SANWA BGK SECURITIES CO., L.P., Revolving Repurchase Agreement,
(secured by U.S. Treasury Note, 5.50%, 11/15/98, held at the Bank
43,000,000 -- -- 43,000,000 of New York)
YAMAICHI, Revolving Repurchase Agreement,(secured by various
U.S. Treasury obligations with maturities ranging from 12/31/95
through 8/15/05 at various interest rates ranging from 0.00% to
-- 115,000,000 -- 115,000,000 11.625%, all held at Chemical Bank)
- ----------- ----------- ---------- -------------
762,533,000 211,569,000 10,200,000 984,302,000 TOTAL TEMPORARY CASH INVESTMENTS
=========== =========== ========== =============
921,533,000 469,669,000 57,700,000 1,448,902,000 TOTAL INVESTMENTS
=========== =========== ========== =============
PFS-14
14
<PAGE>
<CAPTION>
Pro Forma
Woodward Woodward Combined
Treasury MM Gov't MM Prairie Amortized
Maturity Amortized Amortized Amortized Cost
Description Rate Date Cost Cost Cost (Note 1)
----------- ---- -------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AND GOVERNMENT
OBLIGATIONS-- 32.1%
U.S. Treasury Bills
U.S. Treasury Bill 5.350% * 1/11/96 -- -- 9,985,194 9,985,194
U.S. Treasury Bill 5.320% * 1/18/96 -- -- 4,987,451 4,987,451
U.S. Treasury Bill 5.340% * 1/25/96 -- -- 9,964,400 9,964,400
U.S. Treasury Bill 5.320% * 2/15/96 -- -- 7,450,125 7,450,125
U.S. Treasury Bill 5.300% * 3/7/96 -- -- 7,427,194 7,427,194
U.S. Treasury Bill 6.260% 3/7/96 2,965,955 -- -- 2,965,955
U.S. Treasury Bill 4.820% * 3/14/96 -- -- 7,426,696 7,426,696
U.S. Treasury Notes
U.S.Treasury Note 4.000% 1/31/96 7,988,924 -- -- 7,988,924
U.S.Treasury Note 4.375% 11/15/96 4,943,974 -- -- 4,943,974
U.S.Treasury Note 4.375% 8/15/96 13,873,585 4,957,174 -- 18,830,759
U.S.Treasury Note 4.625% 2/15/96 9,976,935 -- -- 9,976,935
U.S.Treasury Note 5.500% 4/30/96 19,970,088 -- -- 19,970,088
U.S.Treasury Note 5.875% 5/31/96 10,001,983 -- -- 10,001,983
U.S.Treasury Note 6.125% 7/31/96 7,013,918 -- -- 7,013,918
U.S.Treasury Note 7.000% 9/30/96 -- 15,150,150 -- 15,150,150
U.S.Treasury Note 7.250% 11/15/96 6,086,851 -- -- 6,086,851
U.S.Treasury Note 7.500% 2/29/96 15,016,012 -- -- 15,016,012
U.S.Treasury Note 7.875% 2/15/96 35,049,857 -- -- 35,049,857
U.S.Treasury Note 7.875% 7/15/96 2,021,778 -- -- 2,021,778
U.S.Treasury Note 7.875% 7/31/96 4,046,593 -- -- 4,046,593
U.S.Treasury Note 8.000% 10/15/96 15,256,312 -- -- 15,256,312
Principal Strip from
US Treasury Bond 0.000% 5/15/96 4,897,685 -- -- 4,897,685
Agency Obligations
Federal Farm Credit Bank 5.600% 11/1/96 -- 10,002,747 -- 10,002,747
Federal Farm Credit Bank 6.390% 4/17/96 -- 10,022,719 -- 10,022,719
Federal Farm Credit Bank 6.610% 4/12/96 -- 4,006,934 -- 4,006,934
Federal Farm Credit Bank 5.780% 2/9/96 -- 24,998,664 -- 24,998,664
Federal Farm Credit Bank 5.590% 6/7/96 -- 9,998,338 -- 9,998,338
Federal Home Loan Bank 5.770% 11/20/96 -- 9,998,229 -- 9,998,230
Federal Home Loan Bank 5.980% 8/14/96 -- 19,000,000 -- 19,000,000
Federal Home Loan Bank 6.850% 2/28/96 -- 24,012,415 -- 24,012,415
Federal Home Loan Bank 6.300% 3/1/96 -- 2,474,042 -- 2,474,042
Federal Home Loan Bank 5.900% 7/25/96 -- 5,000,000 -- 5,000,000
Federal Home Loan Bank 6.000% 8/16/96 -- 2,000,411 -- 2,000,411
Federal Home Loan Bank 4.840% 8/26/96 -- 4,976,737 -- 4,976,737
Federal Home Loan Bank 5.050% 6/7/96 -- 5,983,328 -- 5,983,328
Federal Home Loan
Mortgage Corp. 6.790% 2/20/96 -- 14,999,678 -- 14,999,678
Federal National Mortgage
Association 5.580% 2/21/96 -- 8,334,074 -- 8,334,074
FNMA Medium Term Note 5.710% 6/10/96 -- 4,998,939 -- 4,998,939
FNMA Medium Term Note 5.500% 6/12/96 -- 17,969,843 -- 17,969,843
FNMA Medium Term
Note -- A/R 5.500% 1/26/96 -- 24,998,973 -- 24,998,973
Studen Loan Mortgage
Association -- A/R 6.060% 7/1/96 -- 11,700,000 -- 11,700,000
Studen Loan Mortgage
Association -- A/R 6.050% 10/4/96 -- 10,000,000 -- 10,000,000
Studen Loan Mortgage
Association -- A/R 6.130% 6/30/96 -- 12,490,660 -- 12,490,661
TOTAL U.S. GOVERNMENT AND ----------- ----------- ---------- -----------
GOVERNMENT OBLIGATIONS 159,110,450 258,074,055 47,241,060 464,425,565
=========== =========== ========== ===========
PFS-15
15
<PAGE>
TEMPORARY CASH INVESTMENTS-- 67.9%
Revolving Repurchase Agreements
NATIONAL WESTMINSTER 5.650% 1/2/96 -- -- 10,200,000 10,200,000
Dated 12/29/95, with a maturity
value of $10,206.403
AUBREY LANGSTON, Revolving
Repurchase Agreement, (secured
by various U.S. Treasury
obligations with maturities
ranging from 8/31/97 through
11/15/05 at various interest
rates ranging from 4.75% to
13.75%, all held at Chemical
Bank) 5.920% 1/2/96 43,000,000 -- -- 43,000,000
BEAR STEARNS & Co., INC.,
Revolving Repurchase Agreement,
(secured by various U.S. Treasury
obligations with maturities
ranging from 5/15/96 through
8/15/23 at various interest
rates ranging from 0.00% to
8.875% all held at the Custodial
Trust Co.) 5.820% 1/2/96 215,000,000 -- -- 215,000,000
DAIWA SECURITIES AMERICA, INC.,
Revolving Repurchase Agreement,
(secured by various U.S. Treasury
obligations with maturities
ranging from 4/30/96 through
11/15/01 at various interest
rates ranging from 0.00% to
15.75%, all held at
Bank of New York) 5.900% 1/2/96 43,000,000 -- -- 43,000,000
FIRST BOSTON , INC., Revolving
Repurchase Agreement, (secured
by various U.S. Treasury Notes
with maturities ranging from
11/15/96 through 2/15/03 at
various interest rates ranging
from 4.375% to 6.25%, all held
at Chemical Bank) 5.850% 1/2/96 36,000,000 -- -- 36,000,000
LEHMAN BROTHERS, INC.,
Revolving Repurchase Agreement,
(secured by U.S. Treasury Note,
5.875%, 7/31/97, held at
Chemical Bank) 5.920% 1/2/96 43,000,000 -- -- 43,000,000
MORGAN STANLEY & CO. INC.,
Revolving Repurchase Agreement,
(secured by U.S. Treasury Note,
6.125%, 5/31/97, held at the Bank
of New York) 5.870% 1/2/96 43,000,000 -- -- 43,000,000
NATIONSBANK CAPITAL MARKETS,
INC., Revolving Repurchase
Agreement, (secured by various
U.S. Treasury obligations with
maturities ranging from 2/15/96
through 11/15/05 at various
interest rates ranging from
0.00% to 12.375%, all held at
Chemical Bank) 6.000% 1/2/96 216,533,000 73,569,000 -- 290,102,000
NIKKO SECURITIES CO.
INTERNATIONAL, INC.,
Revolving Repurchase Agreement,
(secured by various U.S.
Treasury obligations with
maturities ranging from
7/31/96 through 8/15/00 at
various interest rates
ranging from 0.00% to 8.75%, all
held at the Bank of New York) 5.900% 1/2/96 40,000,000 -- -- 40,000,000
NOMURA SECURITIES INTERNATIONAL,
INC., Revolving Repurchase
Agreement, (secured by various
U.S. Treasury obligations with
maturities ranging from 1/18/96
through 9/10/02 at various
interest rates ranging from
0.00% to 8.26%, all
held at the Bank of New York) 6.000% 1/2/96 -- 23,000,000 -- 23,000,000
PFS-16
16
<PAGE>
NOMURA SECURITIES INTERNATIONAL,
INC., Revolving Repurchase
Agreement, (secured by various
U.S. Treasury obligations with
maturities ranging from 8/31/97
through 5/15/01 at various
interest rates ranging from
0.00% to 6.00%, all
held at the Bank of New York) 5.960% 1/2/96 40,000,000 -- -- 40,000,000
SANWA BGK SECURITIES CO., L.P.,
Revolving Repurchase Agreement,
(secured by U.S. Treasury Note,
5.50%, 11/15/98, held at the
Bank of New York) 5.900% 1/2/96 43,000,000 -- -- 43,000,000
YAMAICHI, Revolving Repurchase
Agreement,(secured by various
U.S. Treasury obligations with
maturities ranging from 12/31/95
through 8/15/05 at various
interest rates ranging from
0.00% to 11.625%, all held
at Chemical Bank) 6.000% 1/2/96 -- 115,000,000 -- 115,000,000
----------- ----------- ---------- -------------
TOTAL TEMPORARY CASH INVESTMENTS -- 762,533,000 211,569,000 10,200,000 984,302,000
=========== =========== ========== =============
TOTAL INVESTMENTS -- 921,643,450 469,643,055 57,441,060 1,448,727,565
=========== =========== ========== =============
<FN>
* Yield at purchase.
A/R Adjustable Rate
</TABLE>
PFS-17
17
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Municipal Money Market Fund
Pro Forma Combining Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Tax-Exempt Municipal Money Combined
Money Market Fund Market Fund Adjustments (Note 1)
----------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities:
At Amortized Cost $564,592,007 $227,760,412 $ -- $792,352,419
============ ============ ============= ============
At Value $564,592,007 $227,760,412 $ -- $792,352,419
Cash 52,509 234,790 287,299
Receivable from Adviser -- -- 83,300 (c) 83,300
Interest receivable 5,203,797 1,016,229 -- 6,220,026
Deferred organization expenses -- 83,300 (83,300) (c) --
Prepaids and other assets 13,394 122,258 -- 135,652
------------ ------------ ------------- ------------
TOTAL ASSETS 569,861,707 229,216,989 -- 799,078,696
------------ ------------ ------------- ------------
LIABILITIES:
Payable for securities purchased 5,000,000 -- -- 5,000,000
Accrued investment advisory fee 225,584 30,811 -- 256,395
Accrued distribution fees 3,880 -- -- 3,880
Accrued custodial fees 3,312 3,577 -- 6,889
Administration fees payable -- 45,718 -- 45,718
Shareholder servicing fees payable -- 283,674 -- 283,674
Dividends payable 190,363 304,350 -- 494,713
Other accrued expenses and payables 25,092 37,581 -- 62,673
------------ ------------ -------------- ------------
TOTAL LIABILITIES 5,448,231 705,711 -- 6,153,942
------------ ------------ -------------- ------------
NET ASSETS $564,413,476 $228,511,278 $ -- $792,924,754
============ ============ ============== ============
Net assets consist of:
Capital shares, at par $ 56,441,348 $ 228,565 $ 22,627,928 (a) $ 79,297,841
Additional paid-in capital 507,972,128 228,322,787 (22,627,928) (a) 713,666,988
Accumulated undistributed net realized gains
(losses) -- (40,074) -- (40,074)
------------ ------------ -------------- ------------
--
TOTAL NET ASSETS $564,413,476 $228,511,278 $ -- $792,924,754
============ ============ ============== ============
Class A shares:
Net assets $ -- $228,511,278 $ 25,642,372 (b) $254,135,650
Shares outstanding -- 228,564,929 25,624,372 (b) 254,189,301
Net asset value per class A share $ -- $ 1.00 $ 1.00 $ 1.00
Class I shares:
Net assets $ -- $ -- $ 538,789,104 (b) $538,789,104
Shares outstanding -- -- 538,789,104 (b) 538,789,104
Net asset value per class I share $ -- $ -- $ 1.00 $ 1.00
Single class shares:
Net assets $564,413,476 $ -- $ (564,413,476)(b) $ --
Shares outstanding 564,413,476 -- (564,413,476)(b) --
Net asset value per single class share $ 1.00 $ -- $ 1.00 $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward Tax-Exempt Money Market
Fund shares in exchange for shares of the Prairie Municipal Money Market
Fund in connection with the proposed reorganization.
(b) Adjustment reclassifies Woodward Tax-Exempt Money Market Fund shares to
reflect the multi-class environment of the proposed reorganized entity.
(c) Remaining unamortized organizational costs of the Prairie Municipal
Money Market Fund will be assumed by the investment advisor prior to
merger date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-18
18
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Municipal Money Market Fund
Pro Forma Combining Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Tax-Exempt Municipal Money Combined
Money Market Fund Market Fund Adjustments (Note 1)
----------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $21,196,396 $7,967,822 $ -- $29,164,218
----------- ---------- ------------ -----------
TOTAL INVESTMENT INCOME 21,196,396 7,967,822 -- 29,164,218
----------- ---------- ------------ -----------
EXPENSES:
Advisory fees 2,458,246 860,103 (1,069,719) (a) 2,248,630
Administration fees -- 292,778 831,537 (a) 1,124,315
Shareholder servicing fees 86,193 508,602 (24,197) (a) 570,598
Distribution fees 44,226 -- (44,226) (b) --
Custodian fees and expenses 41,886 67,687 -- 109,573
Professional fees 48,970 54,617 (28,587) (c) 75,000
Amortization of organization expenses -- 9,259 (9,259) (d) --
Marketing fees 42,552 -- (42,552) (b) --
Registration,filing fees and other expenses 173,183 134,897 -- 308,080
----------- ---------- ------------ -----------
TOTAL EXPENSES 2,895,256 1,927,943 (387,003) 4,436,196
Expense reimbursements -- (489,926) 11,257 (e) (478,669)
----------- ---------- ------------ -----------
NET EXPENSES 2,895,256 1,438,017 (375,746) 3,957,527
----------- ---------- ------------ -----------
NET OPERATING INCOME 18,301,140 6,529,805 375,746 25,206,691
----------- ---------- ------------ -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments -- (44) -- (44)
----------- ---------- ------------ -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS -- (44) -- (44)
----------- ---------- ------------ -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $18,301,140 $6,529,761 $ 375,746 $25,206,647
=========== ========= ============ ===========
<FN>
(a) Adjustment to reflect the proposed contractual fee structure of Woodward
Municipal Money Market Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Woodward Municipal Money Market Fund after reorganization.
(c) Reduction reflects expected savings when the two funds become one.
(d) Remaining unamortized organizational costs of the Prairie Municipal
Money Market Fund will be assumed by the investment advisor prior to
merger date.
(e) Adjustment to reduce reimbursements from the advisor to reflect the
new fee structure of the Woodward Municipal Money Market Fund after
reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-19
19
<PAGE>
- ------------------------------------------------------------------------------
Prairie/Woodward Funds
Pro Forma Combining
Municipal Money Market Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31,1995
[Unaudited]
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma
Combined
Woodward Prairie Principal
Principal Principal Amount
Amount Amount (Note 1) Description
- -------------- --------- ---------- ------------
<S> <C> <C> <C>
Alaska-6.6%
City of Valdez, Marine Terminal
Revenue, CP, Refunding, ARCO
-- 3,500,000 3,500,000 Transportation Project, Series A
City of Valdez, Marine Terminal
Revenue, CP, Refunding, ARCO
-- 4,000,000 4,000,000 Transportation Project, Series A, 1994 A
11,100,000 -- 11,100,000 Anchorage Electric Utilities (MBIA Insured)
Valdez Marine Terminal-Arco Transportation:
8,000,000 -- 8,000,000 Commercial Paper
3,900,000 -- 3,900,000 Commercial Paper
1,700,000 -- 1,700,000 Commercial Paper
8,000,000 -- 8,000,000 VRDB,
Valdez Marine Terminal-Exxon Pipeline Co.
12,000,000 -- 12,000,000 VRDB,
Alabama-1.5%
-- 6,000,000 6,000,000 Phenix City Alabama (A.M.T.) (LC ABN AMRO)
Alabama HFA Mulit-Family CP:
3,200,000 -- 3,200,000 Commercial Paper
2,700,000 -- 2,700,000 Commercial Paper
Arizona -0.7%
3,600,000 -- 3,600,000 Chandler IDR VRDB-Parsons Municipal Services,
Maricopa Co. School District GO Unlimited Tax
2,000,000 -- 2,000,000 Series A
California-1.2%
Southeast Resource Recovery
Facility, Authority of California
Lease Revision, VRDN, Series A, (LC
-- 9,500,000 9,500,000 Industrial Bank of Japan Ltd)
Colorado-3.3
-- 5,000,000 5,000,000 Burke County Denver (LC Credit Swisse)
Colorado Student Obligation Bond
Authority, VRDN, Student Loan
Revenue, Series 1990A, (A.M.T.)
(LC Student Loan Marketing
-- 5,000,000 5,000,000 Association)
3,000,000 -- 3,000,000 Adams Co. IDR VRDB-City View Park,
2,000,000 -- 2,000,000 Englewood HFA Multi-Family VRDN - Mark Project,
Lakewood Multi-Family Housing (FGIC Insured)
8,250,000 -- 8,250,000 VRDB-St. Moritz & Diamond Head,
3,000,000 -- 3,000,000 Moffat Co. PCR VRDB,
Delaware-1.0%
7,600,000 -- 7,600,000 Delaware EDC VRDB-Hospital Billing Series B,
Florida-3.5%
-- 7,500,000 7,500,000 Florida Municipal Power (LC First Union)
-- 5,600,000 5,600,000 West Orange Hosp (LC Rabobank)
-- 6,000,000 6,000,000 West Orange Hospital (LC Rabobank)
3,270,000 -- 3,270,000 Florida GO Unlimited Tax
Florida HFA Multi-Family (MBIA Insured)
5,595,000 -- 5,595,000 VRDB-Lake Northdale
PFS-20
20
<PAGE>
Georgia-2.8%
-- 5,000,000 5,000,000 Georgia Municipal Gas (LC Wachovia Bank)
Thomaston - Upson County,
Industrial Development
Authority, Yamaha Music
Manufactoring, (A.M.T.) (LC Bank of
-- 2,300,000 2,300,000 Tokyo Ltd.)
1,200,000 -- 1,200,000 College Park IDR-VRDB-Marriott Corp.,
Cobb Co. Housing Multi-Family VRDB-Pittco
5,900,000 -- 5,900,000 Frey Associates Project,
Fulton Co. Development IDR VRDN-Palisades
2,235,000 -- 2,235,000 West Ltd.,
Georgia Municipal Gas Authority-Southern
5,100,000 -- 5,100,000 Portfolio I Project,
Hawaii-1.7%
Hawaii Dept. of Budget & Finance Mortgage:
4,000,000 -- 4,000,000 VRDN-Kuakini Medical Center
2,100,000 -- 2,100,000 VRDB-Wilcox Memorial Hospital
Hawaii State Housing Finance & Development
7,500,000 -- 7,500,000 Corp. VRDB-Rental Housing Systems
Iowa-0.8%
Iowa School Corps., Warrant
Certificates, Iowa School Cash
Anticipation Program, Series A
-- 6,000,000 6,000,000 (CGIC Insured)
Illinois-6.8%
Southwestern Illinois Development
Authority, Enviromental Impact
Revenue, Shell Oil Co. Wood
-- 6,175,000 6,175,000 River Project, (A.M.T.)
6,100,000 -- 6,100,000 Chicago GO Tender Notes
Chicago O'Hare International Airport-American
Airlines VRDB
15,000,000 -- 15,000,000 Series C
15,000,000 -- 15,000,000 Series D
1,000,000 -- 1,000,000 Illinois GO
6,950,000 -- 6,950,000 Illinois State Sales Tax
300,000 -- 300,000 Illinois State Toll Highway Authority, VRDB
Northwest Suburban Municipal Joint Account
3,440,000 -- 3,440,000 (MBIA Insured)-Water Agency Supply System
Indiana-2.9%
Seymour Economic Development
Authority Revenue, Kobelco
Metal Powder Project, (A.M.T.)
(LC Industrials Bank of Japan,
-- 3,700,000 3,700,000 Limited)
Jasper Co. PCR CP-Northern Indiana Public
2,000,000 -- 2,000,000 Services
Mt. Vernon PCR CP-General Electric Project,
6,900,000 -- 6,900,000 Commercial Paper
2,790,000 -- 2,790,000 Commercial Paper
Rockport Pollution Control (AMBAC Insured)
5,500,000 -- 5,500,000 VRDB-AEP Generating Co.
2,000,000 -- 2,000,000 VRDB-Indiana Michigan Power Co.
Kansas-0.8%
6,700,000 -- 6,700,000 Olathe GO Unlimited Tax,
Kentucky-1.8%
Bowling Green, Industrial Building
Revenue, VRDN, Bando
Manufacturing America Project,
(A.M.T.)(LC Industrial Bank of
-- 2,655,000 2,655,000 Japan, New York, Expires 12/15/95)
Bowling Green, Industrial Building
Revenue, VRDN, Twin Faste
Inc. Project (A.M.T.)(LC Industrial
-- 2,400,000 2,400,000 Bank of Japan)
Henderson County, Solid Waste
Disposal Revenue, VRDN,
Hudson Foods Inc. Project
(A.M.T.)(LC Rabobank
-- 2,000,000 2,000,000 Netherland)
PFS-21
21
<PAGE>
Kentucky Higher Education Student
Loan Corp., Insured Student
Loan, Series E, (A.M.T.) (LC Sumitomo
-- 4,000,000 4,000,000 Bank, Chicago)
Mason Co. PCR E. Kentucky Power VRDB-CFC
3,000,000 -- 3,000,000 Power National Rural Utilities B-1
Louisiana-1.5%
New Orleans Exhibition Hall
Authority, Series B, (A.M.T.) (LC Sanwa
-- 5,000,000 5,000,000 Bank Ltd.)
-- 7,000,000 7,000,000 State of Louisiana (LC Credit Locale)
Maryland-0.8%
6,000,000 -- 6,000,000 Baltimore PCR VRDB- SCM Plants
Michigan-9.2%
Clinton Township EDC (MBIA Insured) VRDB
300,000 -- 300,000 Sisters of Charity St. Joseph,
Dearborn EDC VRDB-Oakbrook Common:
2,300,000 -- 2,300,000 Variable Rate Demand Bond
200,000 -- 200,000 Variable Rate Demand Bond
Delta Co. EDC-Mead Escanaba Paper:
4,200,000 -- 4,200,000 Series D
4,300,000 -- 4,300,000 Series F
Farmington Hills EDR VRDB-Brookfield Building
2,000,000 -- 2,000,000 Associates
3,600,000 -- 3,600,000 Grand Rapids EDC VRDB-Amway
Ingham Co. EDC VRDB-Martin Luther
5,870,000 -- 5,870,000 Memorial Home, Inc.
2,600,000 -- 2,600,000 Kent Hospital VRDB-Butterworth Hospital
Meridian Limited Obligation EDC VRDN-
500,000 -- 500,000 Service Merchandise Co.
5,000,000 -- 5,000,000 Michigan State Building Authority
Michigan State Hospital VRDB-Hospital
Equipment Loan Program:
1,600,000 -- 1,600,000 Variable Rate Demand Bond
8,900,000 -- 8,900,000 Variable Rate Demand Bond
Michigan State Hospital VRDB-Mt. Clemens
4,600,000 -- 4,600,000 Hospital
Michigan State HDA VRDB:
400,000 -- 400,000 Laurel VY,
2,800,000 -- 2,800,000 Shoal Creek,
Michigan State Job Development Authority
5,800,000 -- 5,800,000 VRDB-Gordon Food Service,
4,500,000 -- 4,500,000 PCR VRDB-Mazda Motor Corp.,
Michigan State Strategic Fund VRDB-
400,000 -- 400,000 Allen Group, Inc.
University of Michigan Hospital VRDB:
1,200,000 -- 1,200,000 Variable Rate Demand Bond
11,610,000 -- 11,610,000 Variable Rate Demand Bond
Minnesota-1.1%
5,000,000 -- 5,000,000 Hennepin Co. GO,
100,000 -- 100,000 Rochester GO Various Sales Tax,
St. Paul Housing & Redevelopment Authority
3,900,000 -- 3,900,000 VRDB,
Mississippi-1.0%
8,200,000 -- 8,200,000 Perry Co. PCR VRDB-Leaf River Forest,
Missouri-2.0%
Missouri Higher Education Loan
Authority, VRDN, Series A, (A.M.T.)
(LC National Westminster
-- 3,000,000 3,000,000 Place)
-- 4,800,000 4,800,000 Burlington G& E VRDN
2,400,000 -- 2,400,000 Independence Water Utility Improvements CP
Missouri State Environmental Improvement
Energy Research PCR-Union Electric Co.
1,000,000 -- 1,000,000 Series A
4,750,000 -- 4,750,000 Series B
PFS-22
22
<PAGE>
New Hampshire-1.5%
New Hampshire Business Finance
Authority, Pollution Control
Revenue Refunding, Public
Service Co. of New Hampshire
Project, VRDN, Series 1992D,
-- 10,000,000 10,000,000 (A.M.T.)(LC Bank Barclays Bank PLC)
New Hampshire IDR VRDB-Oerlikon-Burlhe
1,800,000 -- 1,800,000 USA,
Nevada-3.3%
Clark County Industrial
Development Revenue,
Nevada Power Co. Project,
Series A, (A.M.T.)(LC Bank Barcia,
-- 8,000,000 8,000,000 Place)
Clark Co. Airport Improvement (MBIA
8,600,000 -- 8,600,000 Insured) VRDB,
Clark Co. PCR VRDB-Nevada Power Co.
6,300,000 -- 6,300,000 Variable Rate Demand Bond
3,000,000 3,000,000 Washoe County Nevada (LC Union Bank
of Switzerland)
New Jersey-0.2%
1,220,000 -- 1,220,000 Rutgers State University
New York-4.7%
New York City General Obligation,
-- 4,200,000 4,200,000 Series F-6 (LC Noeinchukin)
New York City GO (MBIA Insured) VRDB
11,000,000 -- 11,000,000 Variable Rate Demand Bond
New York City Housing Development
Corp. Mortgage Revenue,
Multifamily 400 West 59th-A-2,
(A.M.T.)(LC Bayerische
-- 9,000,000 9,000,000 Hypotheken)
New York State Energy Research
& Development Authority,
Pollution Control Revenue,
New York Electric & Gas - D
(LC Union Bank of
-- 6,000,000 6,000,000 Switzerland)
New York State Energy Research
& Development Authority,
Pollution Control Revenue,
Niagara Power Corp. Project - B,
(A.M.T.)(LC Morgan Guaranty,
-- 2,000,000 2,000,000 New York)
St. Lawrence County Industrial
Development Agency,
Environmental Impact Revenue
Reynolds Metals Co. Project,
(A.M.T.)(LC Royal Bank of
-- 4,900,000 4,900,000 Canada)
North Carolina-1.9%
North Carolina Eastern Municipal Power
15,000,000 -- 15,000,000 Agency-Power System
Ohio-1.7%
1,400,000 -- 1,400,000 Columbus Electric System VRDB
3,150,000 -- 3,150,000 Cincinnati/Hamilton Co. EDR
Franklin Co. IDR VRDB-Capital South
700,000 -- 700,000 Community Redevelopment,
Ohio Environmental Improvements CP, U.S.
8,300,000 -- 8,300,000 Steel Corp.
Oregon-2.35
State of Oregon General Obligation,
VRDN, Veterans, Welfare Bond,
Series 1973F, (LC Mitsubishi
-- 4,000,000 4,000,000 Bank Ltd.)
Medford Hospital VRDB-Rogue Valley Manor,
4,000,000 -- 4,000,000 Variable Rate Demand Bond
5,700,000 -- 5,700,000 Port Morrow VRDB-General Elecitric
3,875,000 -- 3,875,000 Tualatin Hills Parks & Recreation TRAN
PFS-23
23
<PAGE>
Pennsylvania-5.4%
-- 3,700,000 3,700,000 Allegheny County Pennsylvania (LC Norinchukin)
-- 7,000,000 7,000,000 Carbon County Pennsylvania (A.M.T.) (LC Nat West)
Allegheny Co. Industrial Development VRDB-
United Jewish Federation:
10,000,000 -- 10,000,000 Series B
1,100,000 -- 1,100,000 Series C
Delaware Co. IDR (FGIC Insured) CP-
2,400,000 -- 2,400,000 Philadelphia Electric
Montgomery Co. Higher Education Health
5,000,000 -- 5,000,000 Authority VRDB-Philadelphia Presbytery
6,800,000 -- 6,800,000 Schuylkill Co. IDR VRDB-Westwood Energy
3,800,000 3,800,000 Montgomery County (LC Deutsche Bank)
3,000,000 -- 3,000,000 Upper Allegheny Joint Sanitary Authority
Rhode Island-0.4%
Providence Off Street Public
Parking Facility Revenue, VRDN,
Wash Street Garage Corp.
Project, (A.M.T.) (LC Morgan Guaranty
-- 3,000,000 3,000,000 Trust)
South Carolina-2.4%
South Carolina Jobs, Economic
Development Authority, VRDN,
Hospital Facilities Revenue,
Baptist Healthcare System
-- 7,000,000 7,000,000 (LC Credit Local de France)
Richland Co. School District TAN GO Unlimited
8,300,000 -- 8,300,000 Tax.
3,500,000 -- 3,500,000 South Carolina GO State Capital Improvement,
South Dakota-0.3%
2,715,000 -- 2,715,000 South Dakota HDA,
Tennessee-2.3%
Memphis Shelby County (A.M.T.)
-- 6,405,000 6,405,000 (LC Canadian Imperial Bank of Commerce)
Knox Co. Board IDR VRDB-Service
800,000 -- 800,000 Merchandise Co., Inc.,
Metropolitan Government Nashville &
6,000,000 -- 6,000,000 Davidson Co.,
Metropolitan Government Nashville &
5,100,000 -- 5,100,000 Davidson Co., VRDB-Nashville Apartments
Texas-10.0%
Brazos Higher Education
Authority, Student Loan
Revenue, VRDN, Series B-1,
(A.M.T.)(LC Student Loan
-- 6,000,000 6,000,000 Marketing Assoc.)
Brazos River Texas (A.M.T.) (LC Canadian
-- 3,000,000 3,000,000 Imperial Bank of Commerce)
Gulf Coast Industrial Development
Authority, Texas Solid Waste
Disposal Revenue, Citgo
Petroleum Corp. Project, (A.M.T.)
-- 2,700,000 2,700,000 (LC NationsBank of Texas)
Milam County Industrial Development
Corp., Pollution Control Revenue
Refunding, Aluminum Co. of America
-- 5,000,000 5,000,000 Project (LC Credit Suisse)
Panhandle Plains Higher Education
Authority Revenue, VRDN,
Student Loan Revenue, Series A,
(A.M.T.)(LC Student Loan
-- 6,000,000 6,000,000 Marketing Association)
5,400,000 -- 5,400,000 Austin Utilities System CP
3,000,000 -- 3,000,000 Houston Water & Sewer System (MBIA Insured)
5,600,000 -- 5,600,000 North Central HCFA VRDB-YMCA Dallas
Texas State Higher Education Authority (FGIC
Insured) VRDB-Educational Equipment &
2,510,000 -- 2,510,000 Improvements,
PFS-24
24
<PAGE>
3,000,000 -- 3,000,000 Texas State Public Finance Authority:
5,000,000 -- 5,000,000 CP
12,750,000 -- 12,750,000 Texas TRAN
5,000,000 -- 5,000,000 Texas Transportation CP,
Texas Hospital Equipment Finance Council
8,045,000 -- 8,045,000 (MBIA Insured) VRDN
Texas Small Business IDR VRDB-Texas Public
2,300,000 -- 2,300,000 Facilities Capital Access
Tyler Health Facilities Development Corp. CP-
3,700,000 -- 3,700,000 East Texas Medical Center Regional Health
Utah-2.8%
-- 5,500,000 5,500,000 Emery County (LC Credit Suisse)
4,700,000 -- 4,700,000 Intermountain Power Agency,
Salt Lake Co. PCR VRDB-Pacific Corp.
12,100,000 -- 12,100,000 Variable Rate Demand Bond
Vermont-1.3%
5,975,000 -- 5,975,000 Vermont Educational Health Agency,
Vermont Student Assistance Corp. VRDN,
4,600,000 -- 4,600,000 Variable Rate Demand Note
Virginia-0.3%
2,700,000 -- 2,700,000 Loudoun Co. IDR VRDB
Washington-1.3%
Port Townsend IDR VRDB-Townsend Paper
5,100,000 -- 5,100,000 Corp.
5,500,000 -- 5,500,000 Seattle Municipal Light & Power Co.,
West Virginia-1.1%
-- 6,000,000 6,000,000 West Virginia Public Energy (A.M.T.) (LC Swiss Bank)
2,700,000 -- 2,700,000 Raleigh Co. Health Care System VRDB
Wisconsin-4.1%
Milwaukee School Order Notes
15,000,000 -- 15,000,000 Series B
14,000,000 -- 14,000,000 Waukesha School District TRAN
Wisconsin State Transportation Transit
3,000,000 -- 3,000,000 Improvements,
Wyoming-1.7%
Sweetwater City, Wyoming (A.M.T.)
-- 5,400,000 5,400,000 (LC West Deutsche Landesbank)
8,000,000 -- 8,000,000 Lincoln Co. PCR VRDB-Pacificorp Project
----------- ----------- -----------
563,100,000 227,735,000 790,835,000
=========== =========== ===========
PFS-25
25
<PAGE>
<CAPTION>
Pro Forma
Combined
Woodward Prairie Amortized
Maturity Amortized Amortized Cost
Description Rating Rate Date Cost Cost (Note 1)
----------- ------ ---- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alaska-6.6%
City of Valdez, Marine Terminal
Revenue, CP, Refunding, ARCO
Transportation Project, Series A VMIG1/A-1 3.50% 2/5/96 -- 3,500,000 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 -- 4,000,000 4,000,000
Anchorage Electric Utilities
(MBIA Insured) Aaa 7.63% 12/1/15 11,423,545 -- 11,423,545
Valdez Marine Terminal-Arco
Transportation:
Commercial Paper VMIG 1 3.50% 5/1/31 8,000,000 -- 8,000,000
Commercial Paper VMIG 1 3.55% 5/1/31 3,900,000 -- 3,900,000
Commercial Paper VMIG 1 3.75% 5/1/31 1,700,000 -- 1,700,000
VRDB, VMIG 1 3.50% 5/1/31 8,000,000 -- 8,000,000
Valdez Marine Terminal-Exxon
Pipeline Co. VRDB, P 1 5.95% 10/1/25 12,000,000 -- 12,000,000
----------- ----------- -----------
45,023,545 7,500,000 52,523,545
Alabama-1.5%
Phenix City Alabama
(A.M.T.)(LC ABN AMRO) P-1/NR 3.55% 2/7/96 -- 6,000,000 6,000,000
Alabama HFA Mulit-Family CP:
Commercial Paper VMIG 1 3.50% 12/1/13 3,200,000 -- 3,200,000
Commercial Paper VMIG 1 3.60% 12/1/13 2,700,000 -- 2,700,000
----------- ----------- -----------
5,900,000 6,000,000 11,900,000
Arizona -0.7%
Chandler IDR VRDB-Parsons
Municipal Services, A 1+ 4.25% 12/15/09 3,600,000 -- 3,600,000
Maricopa Co. School District
GO Unlimited Tax
Series A Aa 3.75% 7/1/96 2,000,952 -- 2,000,952
----------- ----------- -----------
5,600,952 -- 5,600,952
California-1.2%
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 -- 9,500,000 9,500,000
----------- ----------- -----------
Colorado-3.3%
Burke County Denver
(LC Credit Swisse) VMIG1/A-1+ 3.40% 3/7/96 5,000,000 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 -- 5,000,000 5,000,000
Adams Co. IDR VRDB-City View Park, A 1+ 5.20% 12/1/15 3,000,000 -- 3,000,000
Englewood HFA Multi-Family
VRDN - Mark Project, A 1+ 5.25% 12/15/97 2,000,000 -- 2,000,000
Lakewood Multi-Family
Housing (FGIC Insured)
VRDB-St. Moritz & Diamond Head, VMIG 1 4.00% 10/1/07 8,250,000 -- 8,250,000
Moffat Co. PCR VRDB, VMIG 1 4.65% 7/1/10 3,000,000 -- 3,000,000
----------- ----------- -----------
16,250,000 10,000,000 26,250,000
Delaware-1.0%
Delaware EDC VRDB-Hospital
Billing Series B VMIG 1 5.25% 12/1/15 7,600,000 -- 7,600,000
----------- ----------- -----------
PFS-26
26
<PAGE>
Florida-3.5%
Florida Municipal Power (LC First Union) P-1/A-1 3.50% 2/8/96 -- 7,500,000 7,500,000
West Orange Hosp (LC Rabobank) VMIG1/NR 3.75% 1/3/96 -- 5,600,000 5,600,000
West Orange Hospital (LC Rabobank) VMIG1/NR 3.80% 1/11/96 -- 6,000,000 6,000,000
Florida GO Unlimited Tax Aaa 7.20% 7/1/08 3,355,215 -- 3,355,215
Florida HFA Multi-Family
(MBIA Insured)
VRDB-Lake Northdale Aaa 3.75% 6/1/07 5,595,000 -- 5,595,000
----------- ----------- -----------
8,950,215 19,100,000 28,050,215
Georgia-2.8%
Georgia Municipal Gas (LC Wachovia Bank) A1+/NR 3.80% 2/5/96 -- 5,000,000 5,000,000
Thomaston - Upson County,
Industrial Development
Authority, Yamaha Music
Manufactoring, (A.M.T.) (LC Bank of
Tokyo Ltd.) NR/A-1 5.80%*** 8/1/18 -- 2,300,000 2,300,000
College Park IDR-VRDB-Marriott Corp., Aa 3 6.10% 8/1/15 1,200,000 -- 1,200,000
Cobb Co. Housing Multi-Family VRDB-Pittco
Frey Associates Project, VMIG 1 5.20% 6/1/23 5,900,000 -- 5,900,000
Fulton Co. Development IDR VRDN-Palisades
West Ltd., Aaa 5.15% 9/1/96 2,235,000 -- 2,235,000
Georgia Municipal Gas Authority-Southern
Portfolio I Project, VMIG 1 3.75% 4/1/96 5,100,000 -- 5,100,000
----------- ----------- -----------
14,435,000 7,300,000 21,735,000
Hawaii-1.7%
Hawaii Dept. of Budget & Finance Mortgage:
VRDN-Kuakini Medical Center VMIG 1 3.75% 7/1/04 4,000,000 -- 4,000,000
VRDB-Wilcox Memorial Hospital VMIG 1 5.95% 7/1/18 2,100,000 -- 2,100,000
Hawaii State Housing Finance & Development
Corp. VRDB-Rental Housing Systems VMIG 1 5.15% 7/1/24 7,500,000 -- 7,500,000
----------- ----------- -----------
13,600,000 -- 13,600,000
Iowa-0.8%
Iowa School Corps., Warrant
Certificates, Iowa School Cash
Anticipation Program, Series A
(CGIC Insured) VMIG1/SP-1+ 4.75% 6/28/96 -- 6,025,412 6,025,412
----------- ----------- -----------
Illinois-6.8%
Southwestern Illinois Development
Authority, Enviromental Impact
Revenue, Shell Oil Co. Wood
River Project, (A.M.T.) VMIG1/AAA 6.15% 10/1/25 -- 6,175,000 6,175,000
Chicago GO Tender Notes VMIG 1 3.75% 10/31/96 6,100,000 -- 6,100,000
Chicago O'Hare International
Airport-American
Airlines VRDB
Series C P 1 6.10% 12/1/17 15,000,000 -- 15,000,000
Series D P 1 6.10% 12/1/17 15,000,000 -- 15,000,000
Illinois GO AA- 7.13% 4/1/06 1,022,317 -- 1,022,317
Illinois State Sales Tax Aaa 7.63% 6/15/15 7,132,216 -- 7,132,216
Illinois State Toll
Highway Authority, VRDB VMIG 1 5.05% 1/1/10 300,000 -- 300,000
Northwest Suburban Municipal Joint Account
(MBIA Insured)-Water Agency Supply System Aaa 7.20% 5/1/03 3,490,557 -- 3,490,557
----------- ----------- -----------
48,045,090 6,175,000 54,220,090
Indiana-2.9%
Seymour Economic Development
Authority Revenue, Kobelco
Metal Powder Project, (A.M.T.)
(LC Industrials Bank of Japan,
Limited) NR/A-1 5.80% 12/1/97 -- 3,700,000 3,700,000
Jasper Co. PCR CP-Northern
Indiana Public
Services VMIG 1 3.70% 11/1/16 2,000,000 -- 2,000,000
Mt. Vernon PCR CP-General
Electric Project,
Commercial Paper P 1 3.50% 12/1/04 6,900,000 -- 6,900,000
Commercial Paper P 1 3.70% 12/1/04 2,790,000 -- 2,790,000
PFS-27
27
<PAGE>
Rockport Pollution Control
(AMBAC Insured)
VRDB-AEP Generating Co. Aaa 5.95% 7/1/25 5,500,000 -- 5,500,000
VRDB-Indiana Michigan Power Co. Aaa 5.00% 6/1/25 2,000,000 -- 2,000,000
----------- ----------- -----------
19,190,000 3,700,000 22,890,000
Kansas-0.8%
Olathe GO Unlimited Tax, MIG 1 4.50% 5/1/96 6,700,000 -- 6,700,000
----------- ----------- -----------
Kentucky-1.8%
Bowling Green, Industrial Building
Revenue, VRDN, Bando
Manufacturing America Project,
(A.M.T.)(LC Industrial Bank of
Japan, New York, Expires 12/15/95) NR/A-1 5.80%*** 12/1/07 -- 2,655,000 2,655,000
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 -- 2,400,000 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 -- 2,000,000 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 -- 4,000,000 4,000,000
Mason Co. PCR E. Kentucky Power VRDB-CFC
Power National Rural Utilities B-1 P 1 4.65% 10/15/14 3,000,000 -- 3,000,000
----------- ----------- -----------
3,000,000 11,055,000 14,055,000
Louisiana-1.5%
New Orleans Exhibition Hall
Authority, Series B, (A.M.T.)
(LC Sanwa Bank Ltd.) VMIG1/A-1 5.50% 7/1/18 -- 5,000,000 5,000,000
State of Louisiana (LC Credit Locale) VMIG1/A-1+ 3.80% 1/3/96 -- 7,000,000 7,000,000
----------- ----------- -----------
-- 12,000,000 12,000,000
Maryland-0.8%
Baltimore PCR VRDB- SCM Plants A 1+ 5.10% 2/1/00 6,000,000 -- 6,000,000
----------- ----------- -----------
6,000,000 -- 6,000,000
Michigan-9.2%
Clinton Township EDC (MBIA Insured) VRDB
Sisters of Charity St. Joseph, VMIG 1 5.00% 5/1/13 300,000 -- 300,000
Dearborn EDC VRDB-Oakbrook Common:
Variable Rate Demand Bond A 1 5.10% 3/1/23 2,300,000 -- 2,300,000
Variable Rate Demand Bond A 1 5.10% 3/1/25 200,000 -- 200,000
Delta Co. EDC-Mead Escanaba Paper:
Series D P 1 6.00% 12/1/23 4,200,000 -- 4,200,000
Series F P 1 6.10% 12/1/13 4,300,000 -- 4,300,000
Farmington Hills EDR
VRDB-Brookfield Building
Associates A 1 5.20% 11/1/10 2,000,000 -- 2,000,000
Grand Rapids EDC VRDB-Amway A 1 5.10% 12/1/06 3,600,000 -- 3,600,000
Ingham Co. EDC VRDB-Martin Luther
Memorial Home, Inc. A 1+ 5.20% 4/1/22 5,870,000 -- 5,870,000
Kent Hospital VRDB-Butterworth Hospital VMIG 1 5.40% 1/15/20 2,600,000 -- 2,600,000
Meridian Limited Obligation EDC VRDN-
Service Merchandise Co. A 1+ 4.00% 12/15/99 500,000 -- 500,000
Michigan State Building Authority AA- 3.75% 10/1/96 5,005,297 -- 5,005,297
Michigan State Hospital VRDB-Hospital
Equipment Loan Program:
Variable Rate Demand Bond VMIG 1 5.20% 12/1/23 1,600,000 -- 1,600,000
Variable Rate Demand Bond VMIG 1 5.20% 12/1/23 8,900,000 -- 8,900,000
Michigan State Hospital VRDB-Mt. Clemens
Hospital VMIG 1 5.00% 8/15/15 4,600,000 -- 4,600,000
Michigan State HDA VRDB:
Laurel VY, VMIG 1 5.10% 12/1/07 400,000 -- 400,000
Shoal Creek, VMIG 1 5.10% 10/1/07 2,800,000 -- 2,800,000
Michigan State Job Development Authority
VRDB-Gordon Food Service, Aaa 5.00% 8/1/15 5,800,000 -- 5,800,000
PCR VRDB-Mazda Motor Corp., VMIG 1 5.25% 10/1/08 4,500,000 -- 4,500,000
Michigan State Strategic Fund VRDB-
Allen Group, Inc. VMIG 1 5.00% 11/1/25 400,000 -- 400,000
PFS-28
28
<PAGE>
University of Michigan Hospital VRDB:
Variable Rate Demand Bond VMIG 1 5.90% 12/1/19 1,200,000 -- 1,200,000
Variable Rate Demand Bond VMIG 1 5.90% 12/1/27 11,610,000 -- 11,610,000
----------- ----------- -----------
72,685,297 -- 72,685,297
Minnesota-1.1%
Hennepin Co. GO, VMIG 1 5.15% 12/1/06 5,000,000 -- 5,000,000
Rochester GO Various Sales Tax, 5.00% 11/1/99 100,000 -- 100,000
St. Paul Housing & Redevelopment Authority
VRDB, A 1+ 3.80% 12/1/12 3,900,000 -- 3,900,000
----------- ----------- -----------
9,000,000 -- 9,000,000
Mississippi-1.0%
Perry Co. PCR VRDB-Leaf River Forest, P 1 5.30% 10/1/12 8,200,000 -- 8,200,000
----------- ----------- -----------
Missouri-2.0%
Missouri Higher Education Loan
Authority, VRDN, Series A, (A.M.T.)
(LC National Westminster
Place) VMIG1/NR 5.25%*** 6/1/17 -- 3,000,000 3,000,000
Burlington G& E VRDN P-1/A-1+ 3.65% 3/11/96 -- 4,800,000 4,800,000
Independence Water Utility Improvements CP VMIG 1 3.40% 11/1/16 2,400,000 -- 2,400,000
Missouri State Environmental Improvement
Energy Research PCR-Union Electric Co.
Series A P 1 4.00% 6/1/14 1,000,000 -- 1,000,000
Series B P 1 4.00% 6/1/14 4,750,217 -- 4,750,217
----------- ----------- -----------
8,150,217 7,800,000 15,950,217
New Hampshire-1.5%
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 -- 10,000,000 10,000,000
New Hampshire IDR VRDB-Oerlikon-Burlhe
USA, A 1+ 3.75% 7/1/13 1,800,000 -- 1,800,000
----------- ----------- -----------
1,800,000 10,000,000 11,800,000
Nevada-3.3%
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 -- 8,000,000 8,000,000
Clark Co. Airport Improvement (MBIA
Insured) VRDB, VMIG 1 5.15% 7/1/12 8,600,000 -- 8,600,000
Clark Co. PCR VRDB-Nevada Power Co.
Variable Rate Demand Bond A 1+ 5.00% 10/1/23 6,300,000 -- 6,300,000
Washoe County Nevada (LC Union Bank
of Switzerland) P-1/A-1+ 4.00% 1/22/96 -- 3,000,000 3,000,000
----------- ----------- -----------
14,900,000 11,000,000 25,900,000
New Jersey-0.2%
Rutgers State University AA 4.25% 5/1/96 1,221,741 -- 1,221,741
----------- ----------- -----------
New York-4.7%
New York City General Obligation,
Series F-6 (LC Noeinchukin) VMIG1/A-1+ 5.50% 2/15/18 -- 4,200,000 4,200,000
New York City GO (MBIA Insured) VRDB
Variable Rate Demand Bond VMIG 1 5.90% 8/15/22 11,000,000 -- 11,000,000
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 -- 9,000,000 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 -- 6,000,000 6,000,000
PFS-29
29
<PAGE>
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 -- 2,000,000 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 -- 4,900,000 4,900,000
----------- ----------- -----------
11,000,000 26,100,000 37,100,000
North Carolina-1.9%
North Carolina Eastern Municipal Power
Agency-Power System Aaa 7.75% 1/1/15 15,000,000 -- 15,000,000
----------- ----------- -----------
Ohio-1.7%
Columbus Electric System VRDB A 1 3.90% 9/1/09 1,400,000 -- 1,400,000
Cincinnati/Hamilton Co. EDR **N/R 3.90% 8/1/15 3,150,000 -- 3,150,000
Franklin Co. IDR VRDB-Capital South
Community Redevelopment, **N/R 4.10% 12/1/05 700,000 -- 700,000
Ohio Environmental Improvements CP, U.S.
Steel Corp. P 1 5.50% 5/1/11 8,300,000 -- 8,300,000
----------- ----------- -----------
13,550,000 -- 13,550,000
Oregon-2.35%
State of Oregon General Obligation,
VRDN, Veterans, Welfare Bond,
Series 1973F, (LC Mitsubishi
Bank Ltd.) VMIG1/A-1 5.15%*** 12/1/17 -- 4,000,000 4,000,000
Medford Hospital VRDB-Rogue Valley Manor,
Variable Rate Demand Bond VMIG 1 5.20% 12/1/15 4,000,000 -- 4,000,000
Port Morrow VRDB-General Elecitric P 1 6.00% 10/1/13 5,700,000 -- 5,700,000
Tualatin Hills Parks & Recreation TRAN SP 1+ 4.25% 6/28/96 3,882,320 -- 3,882,320
----------- ----------- -----------
13,582,320 4,000,000 17,582,320
Pennsylvania-5.4%
Allegheny County Pennsylvania
(LC Norinchukin) P-1/A-1+ 3.70% 2/2/96 -- 3,700,000 3,700,000
Carbon County Pennsylvania
(A.M.T.) (LC NatWest) P-1/A-1+ 3.45% 3/6/96 -- 7,000,000 7,000,000
Allegheny Co. Industrial Development VRDB-
United Jewish Federation:
Series B VMIG 1 5.25% 10/1/25 10,000,000 -- 10,000,000
Series C VMIG 1 5.25% 10/1/15 1,100,000 -- 1,100,000
Delaware Co. IDR (FGIC Insured) CP-
Philadelphia Electric VMIG 1 3.40% 12/1/12 2,400,000 -- 2,400,000
Montgomer Co. Higher Education Health
Authority VRDB-Philadelphia Presbytery VMIG 1 5.25% 7/1/25 5,000,000 -- 5,000,000
Schuylkill Co. IDR VRDB-Westwood Energy P 1 6.25% 11/1/09 6,800,000 -- 6,800,000
Montgomery County (LC Deutsche Bank) 3.80% 2/7/96 3,800,000 3,800,000
Upper Allegheny Joint Sanitary Authority MIG 1 4.50% 9/1/26 3,001,004 -- 3,001,004
----------- ----------- -----------
28,301,004 14,500,000 42,801,004
Rhode Island-0.4%
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 -- 3,000,000 3,000,000
----------- ----------- -----------
South Carolina-2.4%
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 -- 7,000,000 7,000,000
Richland Co. School District
TAN GO Unlimited Tax MIG 1 4.00% 4/15/96 8,305,660 -- 8,305,660
PFS-30
30
<PAGE>
South Carolina GO State Capital Improvement, Aaa 7.30% 2/1/96 3,509,443 -- 3,509,443
----------- ----------- -----------
11,815,103 7,000,000 18,815,103
South Dakota-0.3%
South Dakota HDA, Aa 1 3.90% 5/1/96 2,715,000 -- 2,715,000
----------- ----------- -----------
Tennessee-2.3%
Memphis Shelby County
(A.M.T.) (LC Canadian Imperial
Bank of Commerce) P-1/A-1+ 3.70% 2/22/96 -- 6,405,000 6,405,000
Knox Co. Board IDR VRDB-Service
Merchandise Co., Inc., A 1+ 4.00% 12/15/08 800,000 -- 800,000
Metropolitan Government Nashville &
Davidson Co., AA 6.50% 6/15/06 6,142,843 -- 6,142,843
Metropolitan Government Nashville &
Davidson Co., VRDB-Nashville Apartments Aa 3 5.15% 9/1/15 5,100,000 -- 5,100,000
----------- ----------- -----------
12,042,843 6,405,000 18,447,843
Texas-10.0%
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 -- 6,000,000 6,000,000
Brazos River Texas (A.M.T.)
(LC Canadian Imperial Bank
of Commerce) VMIG1/A-1+ 3.95% 1/18/96 -- 3,000,000 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 -- 2,700,000 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 -- 5,000,000 5,000,000
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 -- 6,000,000 6,000,000
Austin Utilities System CP P 1 3.65% 4/9/96 5,400,000 -- 5,400,000
Houston Water & Sewer System (MBIA Insured) Aaa 7.13% 12/1/16 3,150,445 -- 3,150,445
North Central HCFA VRDB-YMCA Dallas VMIG 1 5.65% 6/1/21 5,600,000 -- 5,600,000
Texas State Higher Education
Authority (FGIC
Insured) VRDB-Educational
Equipment &
Improvements, VMIG 1 5.15% 12/1/25 2,510,000 -- 2,510,000
Texas State Public Finance Authority: Aa 6.40% 10/1/96 3,061,190 -- 3,061,190
CP P 1 3.75% 8/20/96 5,000,000 -- 5,000,000
Texas TRAN MIG 1 4.75% 8/30/96 12,812,314 -- 12,812,314
Texas Transportation CP P 1 3.65% 8/20/96 5,000,000 -- 5,000,000
Texas Hospital Equipment Finance Council
(MBIA Insured) VRDN VMIG 1 5.45% 4/7/05 8,045,000 -- 8,045,000
Texas Small Business IDR VRDB-Texas Public
Facilities Capital Access VMIG 1 5.20% 7/1/26 2,300,000 -- 2,300,000
Tyler Health Facilities
Development Corp. CP-
East Texas Medical Center
Regional Health VMIG 1 3.65% 11/1/25 3,700,000 -- 3,700,000
----------- ----------- -----------
56,578,949 22,700,000 79,278,949
Utah-2.8%
Emery County (LC Credit Suisse) P-1/A-1+ 3.90% 1/10/96 -- 5,500,000 5,500,000
Intermountain Power Agency, Aaa 7.75% 7/1/17 4,889,980 -- 4,889,980
Salt Lake Co. PCR VRDB-Pacific Corp.
Variable Rate Demand Bond P 1 5.95% 2/1/08 12,100,000 -- 12,100,000
----------- ----------- -----------
16,989,980 5,500,000 22,489,980
PFS-31
31
<PAGE>
Vermont-1.3%
Vermont Educational Health Agency, A 1+ 3.80% 11/1/27 5,975,000 -- 5,975,000
Vermont Student Assistance Corp. VRDN,
Variable Rate Demand Note P 1 3.75% 1/1/04 4,600,000 -- 4,600,000
----------- ----------- -----------
10,575,000 -- 10,575,000
Virginia-0.3%
Loudoun Co. IDR VRDB A 1 6.45% 11/1/24 2,700,000 -- 2,700,000
----------- ----------- -----------
Washington-1.3%
Port Townsend IDR VRDB-Townsend Paper
Corp. VMIG 1 5.15% 3/1/09 5,100,000 -- 5,100,000
Seattle Municipal Light & Power Co., VMIG 1 3.50% 11/1/15 5,500,000 -- 5,500,000
----------- ----------- -----------
10,600,000 -- 10,600,000
West Virginia-1.1%
West Virginia Public Energy (A.M.T.)
(LC Swiss Bank) P-1/A-1+ 3.70% 2/22/96 -- 6,000,000 6,000,000
Raleigh Co. Health Care System VRDB VMIG 1 5.25% 9/1/06 2,700,000 -- 2,700,000
----------- ----------- -----------
2,700,000 6,000,000 8,700,000
Wisconsin-4.1%
Milwaukee School Order Notes
Series B MIG 1 4.50% 8/22/96 15,046,050 -- 15,046,050
Waukesha School District TRAN SP 1 4.25% 8/23/96 14,020,236 -- 14,020,236
Wisconsin State Transportation Transit
Improvements, AAA 7.90% 7/1/02 3,123,465 -- 3,123,465
----------- ----------- -----------
32,189,751 -- 32,189,751
Wyoming-1.7%
Sweetwater City, Wyoming
(A.M.T.)(LC West Deutsche LandesBank) VMIG1/A-1+ 3.70% 2/1/96 -- 5,400,000 5,400,000
Lincoln Co. PCR VRDB-Pacificorp Project VMIG 1 3.40% 1/1/16 8,000,000 -- 8,000,000
----------- ----------- -----------
8,000,000 5,400,000 13,400,000
----------- ----------- -----------
564,592,007 227,760,412 792,352,419
=========== =========== ===========
</TABLE>
PFS-32
32
<PAGE>
PRAIRIE/WOODWARD FUNDS
MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (continued)
December 31, 1995
Investment Abbreviations
AMBAC -- AMBAC Indemnity Corporation
A.M.T. -- Subject to Alternative Minimum Tax
CGIC -- Capital Guaranty Insurance Corporation
BIGI -- Bond Investors Guaranty Insurance Co.
CP -- Commercial Paper
EDC -- Economic Development Corporation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Securities Assurance Corp.
GO -- General Obligation
HFC -- Health Care Facilities
HR -- Housing Revenue
HDA -- Housing Development Authority
HFA -- Housing Finance Authority
IDA -- Individual Development & Export Authority
IDR -- Industrial Development Revenue
LC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
PCR -- Pollution Control Revenue
PFA -- Public Facilities Authority
TAN -- Tax Anticipation Note
TRAN -- Tax Revenue Anticipation Note
UPDATE -- Unit Priced Daily Adjustable Tax Exempt Securities
VRDB -- Variable Rate Demand Bond
VRDN -- Variable Rate Demand Note
* Moody's when rated, otherwise Standard & Poors'.
** N/R investment is not rated, yet deemed by the Investment
Advisor as an acceptable credit and having characteristics
equivalent to obligations rated AA or MIG by Moody's,
AA or A-1+ by Standard & Poor's.
*** Interest rates on variable rate securities are adjusted
periodically based on appropriate indexes. The interest rates
shown are the rates in effect at December 31, 1995.
PFS-33
33
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Growth Fund
Pro Forma Combining Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Capital Growth Growth Combined
Fund Fund Adjustments (Note 1)
-------------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Cost $164,013,755 $250,136,384 $ -- $414,150,139
============ ============ ============== ============
At Value $196,462,000 $295,869,250 $ -- $492,331,250
Receivable for shares purchased 22,908 -- -- 22,908
Receivable from Advisor -- -- 28,388 (c) 28,388
Receivable for investment securities sold -- 5,224,933 -- 5,224,933
Income Receivable 179,422 639,875 -- 819,297
Receivable for Fund shares sold -- 103,710 -- 103,710
Deferred organization expenses 28,388 59,746 (28,388) (c) 59,746
Prepaids and other assets 43,804 7,172 -- 50,976
------------ ------------ -------------- ------------
TOTAL ASSETS 196,736,522 301,904,686 -- 498,641,208
------------ ------------ --------------- ------------
LIABILITIES:
Payable for securities purchased 459,114 1,593,065 -- 2,052,179
Payable for shares redeemed 218,571 -- -- 218,571
Accrued investment advisory fee 123,751 139,215 -- 262,966
Accrued distribution fees 825 -- -- 825
Accrued custodial fees 2,805 -- -- 2,805
Administration fees payable -- 42,597 -- 42,597
Bank Overdraft -- 262,146 -- 262,146
Dividends payable 56,269 844,773 -- 901,042
Payable For Fund Shares Redeemed -- 326,751 -- 326,751
Other accrued expenses and payables 14,009 154,793 -- 168,802
------------ ------------ -------------- ------------
TOTAL LIABILITIES 875,344 3,363,340 -- 4,238,684
------------ ------------ -------------- ------------
NET ASSETS $195,861,178 $298,541,346 $ -- $494,402,524
============ ============ ============== ============
Net assets consist of:
Capital shares, at par $ 1,476,584 $ 24,944 $ 2,629,271 (a) $ 4,130,799
Additional paid-in capital 161,372,369 247,530,554 (2,629,271) (a) 406,273,652
Accumulated undistributed net investment income 11,301 3,678 -- 14,979
Accumulated undistributed net realized gains 552,679 5,249,304 -- 5,801,983
Net unrealized appreciation on investments 32,448,245 45,732,866 -- 78,181,111
------------ ------------ ------------- ------------
TOTAL NET ASSETS $195,861,178 $298,541,346 $ -- $494,402,524
============ ============ ============= ============
Class A shares:
Net assets $ -- $ 4,329,204 $ 5,121,770 (b) $ 9,450,974
Shares outstanding -- 361,669 427,881 (a,b) 789,550
Net asset value per class A share $ -- $ 11.97 $ -- $ 11.97
Maximum offering price per class A share $ -- $ 12.53 $ -- $ 12.53
Class B shares:
Net assets $ -- $ 268,039 $ -- $ 268,039
Shares outstanding -- 22,438 -- 22,438
Net asset value per class B share $ -- $ 11.95 $ -- $ 11.95
Class I shares:
Net assets $ -- $293,944,103 $ 190,739,408 (b) $484,683,511
Shares outstanding -- 24,559,453 15,936,552 (a,b) 40,496,005
Net asset value per class I share $ -- $ 11.97 $ -- $ 11.97
Single class shares:
Net assets $195,861,178 $ -- $(195,861,178) (b) $ --
Shares outstanding 14,765,837 -- (14,765,837) (b) --
Net asset value per single class share $ 13.26 $ -- $ -- $ --
Maximum offering price per single class share $ 13.96 $ -- $ -- $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward Capital Growth Fund
shares (at the Prairie Growth Fund's net asset value per share since
this portfolio is the accounting survivor) in connection with the
proposed reorganization.
(b) Adjustment reclassifies Woodward Capital Growth Fund shares to
reflect the multi-class environment of the proposed
reorganized entity.
(c) Remaining unamortized organizational costs of the Woodward Capital
Growth Fund will be assumed by the investment advisor prior to
merger date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-34
34
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Growth Fund
Pro Forma Combining Statement of Operations
For The Year Ended December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Capital Growth Growth Combined
Fund Fund (1) Adjustments (Note 1)
--------------- --------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 436,419 $ 4,772,025 $ -- $ 5,208,444
Dividend 1,676,890 1,172,933 -- 2,849,823
---------- ------------ --------- ------------
TOTAL INVESTMENT INCOME 2,113,309 5,944,958 -- 8,058,267
---------- ------------ --------- ------------
EXPENSES:
Advisory fees 1,064,273 1,714,125 (347,391) (a) 2,431,007
Administration fees -- 395,568 212,184 (a) 607,752
Custodian fees and expenses 30,473 74,792 -- 105,265
12b-1 fees -- 670 -- 670
Distribution Fees 9,455 -- (9,455) (b) --
Shareholder servicing fee 494 4,884 8,689 (a) 14,067
Professional fees 56,031 57,332 (38,363) (c) 75,000
Amortization of organization expenses 8,111 17,201 (8,111) (d) 17,201
Transfer agent fees and expenses 12,933 16,912 -- 29,845
Marketing expenses 32,082 -- (32,082) (b) --
Registration, filing and other expense 51,123 151,143 -- 202,266
----------- ----------- --------- ------------
TOTAL EXPENSES 1,264,975 2,432,627 (214,529) 3,483,073
Expense reimbursements (58,424) (314,740) 373,164 (e) --
----------- ----------- --------- ------------
NET EXPENSES 1,206,551 2,117,887 158,635 3,483,073
----------- ----------- --------- ------------
NET OPERATING INCOME (LOSS) 906,758 3,827,071 (158,635) 4,575,194
----------- ----------- --------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments 2,343,100 26,140,162 -- 28,483,262
Net change in unrealized appreciation on
investments 30,092,839 45,732,866 -- 75,825,705
----------- ----------- --------- ------------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS 32,435,939 71,873,028 -- 104,308,967
----------- ----------- --------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $33,342,697 $75,700,099 $(158,635) $108,884,161
=========== =========== ========= ============
- --------------
<FN>
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(a) Adjustment to reflect the proposed contractual fee structure of Prairie
Growth Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Prairie Growth Fund except for those distribution fees payable pursuant to
the Fund's 12b-1 plan assessed only to the class B shares.
(c) Reduction reflects expected savings when the two funds become one.
(d) Remaining unamortized organizational costs of the Woodward Capital Growth
Fund will be assumed by the investment advisor prior to
merger date.
(e) Adjustment to reduce reimbursements from the advisor to reflect the
new fee structure of the Prairie Growth Fund after reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-35
35
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Prairie/Woodward Funds
Pro Forma Combining
Growth Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
[Unaudited]
- ------------------------------------------------------------------------------
Pro Forma
Pro Forma Combined
Combined Woodward Prairie Market
Woodward Prairie Shares Market Market Value
Shares Shares (Note 1) Description Value Value (Note 1)
-------- ------ ---------- ----------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS- 96.8%
Advertising and Marketing Services- 1.6%
110,000 -- 110,000 Donnelley (R.R.) & Sons Co. ............ 4,331,250 -- 4,331,250
-- 55,000 55,000 Interpublic Group of Cos., Inc. ........ -- 2,385,625 2,385,625
-- 40,000 40,000 Omnicon Group .......................... -- 1,490,000 1,490,000
- ----------- ----------- ----------- ----------- ----------- -----------
110,000 95,000 205,000 4,331,250 3,875,625 8,206,875
- ----------- ----------- ----------- ----------- ----------- -----------
Automotive Parts & Equipment- 0.6%
-- 80,000 80,000 Echlin, Inc. ........................... -- 2,920,000 2,920,000
- ----------- ----------- ----------- ----------- ----------- -----------
Beverages, Food, and Tobacco- 9.6%
-- 55,000 55,000 Coca Cola Co. .......................... -- 4,083,750 4,083,750
-- 110,000 110,000 ConAgra, Inc. .......................... -- 4,537,500 4,537,500
-- 140,000 140,000 General Mills, Inc. .................... -- 8,085,000 8,085,000
-- 60,000 60,000 Hershey Foods Corp. .................... -- 3,900,000 3,900,000
-- 90,000 90,000 Hudson Foods, Inc. Class A ............. -- 1,552,500 1,552,500
-- 130,000 130,000 PepsiCo, Inc. ......................... -- 7,263,750 7,263,750
-- 140,000 140,000 Philip Morris Cos., Inc. ............... -- 12,670,000 12,670,000
-- 170,000 170,000 Sara Lee Corp. ......................... -- 5,418,750 5,418,750
-- 8,000 8,000 Schweitzer-Mauduit Intl. ............... -- 185,000 185,000
- ----------- ----------- ----------- ----------- ----------- -----------
-- 903,000 903,000 -- 47,696,250 47,696,250
- ----------- ----------- ----------- ----------- ----------- -----------
Business Services- 2.5%
58,000 -- 58,000 Automatic Data Processing, Inc. ........ 4,306,500 -- 4,306,500
105,000 -- 105,000 Interpublic Group of Companies, Inc. ... 4,554,375 -- 4,554,375
115,000 -- 115,000 WMX Technologies, Inc. ................. 3,435,625 -- 3,435,625
- ----------- ----------- ----------- ----------- ----------- -----------
278,000 -- 278,000 12,296,500 -- 12,296,500
- ----------- ----------- ----------- ----------- ----------- -----------
Chemicals- 5.0%
-- 85,000 85,000 Eastman Chemical Co. .................. -- 5,323,125 5,323,125
58,000 -- 58,000 Great Lakes Chemical Corp. ............. 4,176,000 -- 4,176,000
-- 150,000 150,000 Morton Int'l ........................... -- 5,381,250 5,381,250
-- 145,000 145,000 Praxair, Inc. ......................... -- 4,875,625 4,875,625
57,000 -- 57,000 Sigma-Aldrich Corp. .................... 2,821,500 -- 2,821,500
-- 90,000 90,000 Wellman, Inc. ......................... -- 2,047,500 2,047,500
- ----------- ----------- ----------- ----------- ----------- -----------
115,000 470,000 585,000 6,997,500 17,627,500 24,625,000
- ----------- ----------- ----------- ----------- ----------- -----------
Computer Software and Peripherals- 5.1%
-- 80,000 80,000 Automatic Data Processing, Inc. ....... -- 5,940,000 5,940,000
-- 40,000 40,000 Compaq Computer Corp. .................. -- 1,920,000 1,920,000
-- 100,000 100,000 Computer Associates Int., Inc. ......... -- 5,687,500 5,687,500
-- 70,000 70,000 Intel Corp. ........................... -- 3,972,500 3,972,500
90,400 -- 90,400 Autodesk, Inc. ......................... 3,096,200 -- 3,096,200
55,000 -- 55,000 Microsoft Corp.*........................ 4,826,250 -- 4,826,250
- ----------- ----------- ----------- ----------- ----------- -----------
145,400 290,000 435,400 7,922,450 17,520,000 25,442,450
- ----------- ----------- ----------- ----------- ----------- -----------
Construction- 1.9%
73,000 -- 73,000 Fluor Corp. ............................ 4,818,000 -- 4,818,000
100,000 -- 100,000 York International Corp. ............... 4,700,000 -- 4,700,000
- ----------- ----------- ----------- ----------- ----------- -----------
173,000 -- 173,000 9,518,000 -- 9,518,000
- ----------- ----------- ----------- ----------- ----------- -----------
PFS-36
36
<PAGE>
Consumer Goods and Services- 7.4%
-- 70,000 70,000 American Home Products Corp. .......... -- 6,790,000 6,790,000
-- 75,000 75,000 Clorox Co. ............................. -- 5,371,875 5,371,875
-- 100,000 100,000 Hillenbrand Industries, Inc. .......... -- 3,387,500 3,387,500
-- 80,000 80,000 Kimberly-Clark Corp. ................. -- 6,620,000 6,620,000
140,000 -- 140,000 Newell Co. ............................. 3,622,500 -- 3,622,500
80,000 -- 80,000 Rubbermaid, Inc. ....................... 2,040,000 -- 2,040,000
-- 115,000 115,000 Service Corp. Int. ..................... -- 5,060,000 5,060,000
-- 105,000 105,000 Stewart Enterprises, Inc. ............. -- 3,885,000 3,885,000
- ----------- ----------- ----------- ----------- ----------- -----------
220,000 545,000 765,000 5,662,500 31,114,375 36,776,875
- ----------- ----------- ----------- ----------- ----------- -----------
Consumer Non-Durables- 2.7%
-- 55,000 55,000 Alberto-Culver Co., Class A ............ -- 1,677,500 1,677,500
250,000 -- 250,000 Cracker Barrel Old Country Store, Inc. . 4,312,500 -- 4,312,500
73,650 -- 73,650 CUC International, Inc.*................ 2,513,306 -- 2,513,306
115,000 -- 115,000 Service Corp. International ............ 5,060,000 -- 5,060,000
- ----------- ----------- ----------- ----------- ----------- -----------
438,650 55,000 493,650 11,885,806 1,677,500 13,563,306
- ----------- ----------- ----------- ----------- ----------- -----------
Containers- 0.8%
100,000 -- 100,000 Crown Cork & Seal Co., Inc. ............ 4,175,000 -- 4,175,000
- ----------- ----------- ----------- ----------- ----------- -----------
Electronics- 5.7%
-- 120,000 120,000 AMP, Inc. ............................. -- 4,605,000 4,605,000
-- 80,000 80,000 Emerson Electric ....................... -- 6,540,000 6,540,000
-- 180,000 180,000 General Electric Co. .................. -- 12,960,000 12,960,000
-- 75,000 75,000 Motorola, Inc. ........................ -- 4,275,000 4,275,000
- ----------- ----------- ----------- ----------- ----------- -----------
-- 455,000 455,000 -- 28,380,000 28,380,000
- ----------- ----------- ----------- ----------- ----------- -----------
Entertainment and Leisure- 3.5%
180,000 -- 180,000 Carnival Corp., Class A ............... 4,387,500 -- 4,387,500
131,000 -- 131,000 Gaylord Entertainment Co., Class A ..... 3,635,250 -- 3,635,250
-- 120,000 120,000 Time Warner, Inc. ..................... -- 4,545,000 4,545,000
80,000 -- 80,000 Walt Disney Co. ........................ 4,720,000 -- 4,720,000
- ----------- ----------- ----------- ----------- ----------- -----------
391,000 120,000 511,000 12,742,750 4,545,000 17,287,750
- ----------- ----------- ----------- ----------- ----------- -----------
Electronics- 2.5%
95,000 -- 95,000 General Motors Corp., Class E .......... 4,940,000 -- 4,940,000
37,000 -- 37,000 Hewlett-Packard Co. .................... 3,098,750 -- 3,098,750
75,000 -- 75,000 Intel Corp. ............................ 4,256,250 -- 4,256,250
- ----------- ----------- ----------- ----------- ----------- -----------
207,000 -- 207,000 12,295,000 -- 12,295,000
- ----------- ----------- ----------- ----------- ----------- -----------
Energy Raw Materials- 1.7%
52,000 -- 52,000 Schlumberger Ltd. ...................... 3,601,000 -- 3,601,000
90,000 -- 90,000 Western Atlas, Inc.* ................... 4,545,000 -- 4,545,000
- ----------- ----------- ----------- ----------- ----------- -----------
142,000 -- 142,000 8,146,000 -- 8,146,000
- ----------- ----------- ----------- ----------- ----------- -----------
Finance- 2.4%
-- 100,000 100,000 State Street Bank ...................... -- 4,500,000 4,500,000
80,000 -- 80,000 Banc One Corp. ......................... 3,020,000 -- 3,020,000
127,000 -- 127,000 Norwest Corp. .......................... 4,191,000 -- 4,191,000
- ----------- ----------- ----------- ----------- ----------- -----------
207,000 100,000 307,000 7,211,000 4,500,000 11,711,000
- ----------- ----------- ----------- ----------- ----------- -----------
Food and Agriculture- 1.5%
57,000 -- 57,000 CPC International, Inc. ............... 3,911,625 -- 3,911,625
113,000 -- 113,000 Sysco Corp. ............................ 3,672,500 -- 3,672,500
- ----------- ----------- ----------- ----------- ----------- -----------
170,000 -- 170,000 7,584,125 -- 7,584,125
- ----------- ----------- ----------- ----------- ----------- -----------
Health Industries- 2.3%
-- 145,000 145,000 Horizon HealthCare Corp. ............... 3,661,250 3,661,250
95,000 95,000 Proctor & Gamble Co..................... 7,885,000 7,885,000
- ----------- ----------- ----------- ----------- ----------- -----------
240,000 240,000 11,546,250 11,546,250
- ----------- ----------- ----------- ----------- ----------- -----------
PFS-37
37
<PAGE>
Insurance- 5.2%
100,000 -- 100,000 AFLAC, Inc. ............................ 4,337,500 -- 4,337,500
56,000 75,000 131,000 American International Group, Inc. .... 5,180,000 6,937,500 12,117,500
-- 65,000 65,000 Chubb Corp. ............................ -- 6,288,750 6,288,750
-- 20,000 20,000 General RE Corp. ....................... -- 3,100,000 3,100,000
- ----------- ----------- ----------- ----------- ----------- -----------
156,000 160,000 316,000 9,517,500 16,326,250 25,843,750
- ----------- ----------- ----------- ----------- ----------- -----------
Manufacturing- 0.6%
-- 100,000 100,000 Corning, Inc. .......................... -- 3,200,000 3,200,000
- ----------- ----------- ----------- ----------- ----------- -----------
Medical Care & Products- 0.5%
-- 80,000 80,000 Sofamor Danek Group .................... -- 2,270,000 2,270,000
- ----------- ----------- ----------- ----------- ----------- -----------
Miscellaneous & Conglomerates- 1.0%
90,000 -- 90,000 Duracell International, Inc. ........... 4,657,500 -- 4,657,500
- ----------- ----------- ----------- ----------- ----------- -----------
Oil & Gas- 2.0%
-- 70,000 70,000 British Petroleum Co. ADR............... -- 7,148,750 7,148,750
-- 100,000 100,000 Unocal Corp. ........................... -- 2,912,500 2,912,500
- ----------- ----------- ----------- ----------- ----------- -----------
-- 170,000 170,000 -- 10,061,250 10,061,250
- ----------- ----------- ----------- ----------- ----------- -----------
Pharmaceuticals- 12.4%
-- 90,000 90,000 Elan Corp. PLC ADR ..................... -- 4,376,250 4,376,250
-- 50,000 50,000 Forest Labs, Inc. ...................... -- 2,262,500 2,262,500
-- 100,000 100,000 Ivax Corp. ............................ -- 2,850,000 2,850,000
70,000 95,000 165,000 Johnson & Johnson ...................... 5,993,750 8,134,375 14,128,125
67,000 -- 67,000 Medtronic, Inc. ........................ 3,743,625 -- 3,743,625
-- 105,000 105,000 Mylan Labs ............................. -- 2,467,500 2,467,500
225,000 -- 225,000 Pall Corp. ............................. 6,046,875 -- 6,046,875
-- 160,000 160,000 Pfizer, Inc. ........................... -- 10,080,000 10,080,000
-- 75,000 75,000 Pharmacia & Upjohn ..................... -- 2,906,250 2,906,250
-- 50,000 50,000 Smithkline - Beecham ADR ............... -- 2,775,000 2,775,000
83,000 -- 83,000 Stryker Corp. .......................... 4,357,500 -- 4,357,500
76,000 -- 76,000 United Healthcare Corp. ................ 4,978,000 -- 4,978,000
- ----------- ----------- ----------- ----------- ----------- -----------
521,000 725,000 1,246,000 25,119,750 35,851,875 60,971,625
- ----------- ----------- ----------- ----------- ----------- -----------
Pollution Control- 2.5%
-- 185,000 185,000 Browning-Ferris ........................ -- 5,457,500 5,457,500
-- 230,000 230,000 WMX Technologies, Inc. ................. -- 6,871,250 6,871,250
- ----------- ----------- ----------- ----------- ----------- -----------
-- 415,000 415,000 -- 12,328,750 12,328,750
- ----------- ----------- ----------- ----------- ----------- -----------
Producer Goods- 1.4%
76,000 -- 76,000 Illinois Tool Works, Inc. .............. 4,484,000 -- 4,484,000
100,000 -- 100,000 Stewart & Stevenson Services, Inc. ..... 2,525,000 -- 2,525,000
- ----------- ----------- ----------- ----------- ----------- -----------
176,000 -- 176,000 7,009,000 -- 7,009,000
- ----------- ----------- ----------- ----------- ----------- -----------
Retail Stores-6.1%
132,000 -- 132,000 Albertsons, Inc. ....................... 4,339,500 -- 4,339,500
-- 110,000 110,000 Eckerd Corp. ........................... -- 4,908,750 4,908,750
135,000 -- 135,000 Home Depot, Inc. ....................... 6,463,125 -- 6,463,125
-- 110,000 110,000 May Department Stores Co. ............. -- 4,647,500 4,647,500
130,000 -- 130,000 Toys R Us*.............................. 2,827,500 -- 2,827,500
132,000 100,000 232,000 Walgreen Co. ........................... 3,943,500 2,987,500 6,931,000
- ----------- ----------- ----------- ----------- ----------- -----------
529,000 320,000 849,000 17,573,625 12,543,750 30,117,375
- ----------- ----------- ----------- ----------- ----------- -----------
Telecommunications- 5.8%
170,000 -- 170,000 AirTouch Communications, Inc.*.......... 4,802,500 -- 4,802,500
-- 140,000 140,000 AT&T Corp. ............................. -- 9,065,000 9,065,000
-- 50,000 50,000 Century Telephone Enterprises, Inc. ... -- 1,587,500 1,587,500
-- 40,000 40,000 DSC Communications Corp. .............. -- 1,475,000 1,475,000
175,000 275,000 450,000 MCI Communications Corp. ............... 4,571,875 7,184,375 11,756,250
- ----------- ----------- ----------- ----------- ----------- -----------
345,000 505,000 850,000 9,374,375 19,311,875 28,686,250
- ----------- ----------- ----------- ----------- ----------- -----------
PFS-38
38
<PAGE>
Tobacco- 0.7%
110,000 -- 110,000 UST, Inc. .............................. 3,671,250 -- 3,671,250
- ----------- ----------- ----------- ----------- ----------- -----------
Utilities- 1.2%
-- 80,000 80,000 AES Corp. .............................. -- 1,910,000 1,910,000
100,000 -- 100,000 Enron Corp. ............................ 3,812,500 -- 3,812,500
- ----------- ----------- ----------- ----------- ----------- -----------
100,000 80,000 180,000 3,812,500 1,910,000 5,722,500
- ----------- ----------- ----------- ----------- ----------- -----------
Total Common Stocks
4,724,050 5,668,000 10,392,050 191,503,381 285,206,250 476,709,631
=========== =========== =========== =========== =========== ===========
SHORT-TERM INVESTMENT- 3.2%
Time Deposit 5.81%
-- 10,663,000 10,663,000 Berlin/Frankfort Bank (cost $10,663,000) -- 10,663,000 10,663,000
Temporary Cash Investment
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,
4,958,619 -- 4,958,619 all held at Chemical Bank) ............. 4,958,619 -- 4,958,619
- ----------- ----------- ----------- ----------- ----------- -----------
4,958,619 10,663,000 15,621,619 4,958,619 10,663,000 15,621,619
- ----------- ----------- ----------- ----------- ----------- -----------
9,682,669 298,541,346 308,224,015 TOTAL INVESTMENTS 196,462,000 295,869,250 492,331,250
=========== =========== =========== =========== =========== ===========
<FN>
* -- Non-income producing security
</TABLE>
PFS-39
39
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Bond Fund
Pro Forma Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Pro Forma
Woodward Prairie Combined
Bond Fund Bond Fund Adjustments (Note 1)
--------- --------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Cost $481,852,916 $120,011,126 $ -- $601,864,042
============ ============ ============= ============
At Value $512,978,615 $126,282,920 $ -- $639,261,535
Receivable for investment securities sold 225,826 -- 225,826
Receivable from advisor -- -- 57,260 (c) 57,260
Receivable for Fund shares sold -- 58,546 -- 58,546
Interest receivable 5,748,712 1,667,756 -- 7,416,468
Deferred organization expenses 6,439 57,260 (57,260)(c) 6,439
Prepaids and other assets 4,113 5,854 -- 9,967
------------ ------------ ------------- ------------
TOTAL ASSETS 518,963,705 128,072,336 -- 647,036,041
------------ ------------ ------------- ------------
LIABILITIES:
Payable for securities purchased 456,491 -- -- 456,491
Accrued investment advisory fee 283,332 46,708 -- 330,040
Accrued distribution fees 5,095 -- -- 5,095
Accrued custodial fees 7,282 1,873 -- 9,155
Administration fees payable -- 17,390 -- 17,390
12b-1 fees payable -- 94 -- 94
Bank overdraft -- 175 -- 175
Dividends payable 582,184 631,870 -- 1,214,054
Payable for fund shares redeemed -- 2,797 -- 2,797
Other accrued expenses and payables 63,742 62,760 -- 126,502
------------ ----------- ------------- ------------
TOTAL LIABILITIES 1,398,126 763,667 $ -- 2,161,793
------------ ----------- ------------- ------------
NET ASSETS $517,565,579 $127,308,669 $ -- $644,874,248
============ ============ ============= ============
Net assets consist of:
Capital shares, at par $ 4,952,384 $ 11,774 $ 1,206,374 (a) $ 6,170,532
Additional paid-in capital 509,179,119 118,554,093 (1,206,374)(a) 626,526,838
Accumulated undistributed net investment income 233,362 -- -- 233,362
Accumulated undistributed net realized gains (27,924,985) 2,471,008 -- (25,453,977)
Net unrealized appreciation on investments 31,125,699 6,271,794 -- 37,397,493
------------ ------------- ------------- ------------
TOTAL NET ASSETS $517,565,579 $127,308,669 $ -- $644,874,248
============ ============ ============= ============
Class A shares:
Net assets $ -- $ 1,846,532 $ 30,432,856 (b) $ 32,279,388
Shares outstanding -- 170,875 2,917,814 (a,b) 3,088,689
Net asset value per class A share $ -- $ 10.81 $ -- $ 10.45
Maximum offering price per Class A share $ -- $ 11.32 $ -- $ 10.94
Class B shares:
Net assets $ -- $ 61,260 $ -- $ 61,260
Shares outstanding -- 5,669 -- 5,669
Net asset value per class B share $ -- $ 10.81 $ -- $ 10.81
Class I shares:
Net assets $ -- $125,400,877 $ 487,132,723 (b) $612,533,600
Shares outstanding -- 11,598,064 47,012,901 (a,b) 58,610,965
Net asset value per class I share $ -- $ 10.81 $ -- $ 10.45
Single class shares:
Net assets $517,565,579 $ -- $(517,565,579)(b) $ --
Shares outstanding 49,523,843 -- (49,523,843)(b) --
Net asset value per single class share $ 10.45 $ -- $ -- $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward Bond Fund
shares in exchange for shares of the Prairie Bond
Fund in connection with the proposed reorganization.
(b) Adjustment reclassifies Woodward Bond Fund shares to
reflect the multi-class environment of the proposed
reorganized entity.
(c) Remaining unamortized organizational costs of the Prairie
Bond Fund will be assumed by the investment advisor prior to
merger date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-40
40
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Bond Fund
Pro Forma Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Pro Forma
Woodward Prairie Combined
Bond Fund Bond Fund (1) Adjustments (Note 1)
--------- ------------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 34,039,591 $ 7,432,982 $ -- $ 41,472,573
------------ ----------- ----------- ------------
TOTAL INVESTMENT INCOME 34,039,591 7,432,982 -- 41,472,573
------------ ----------- ----------- ------------
EXPENSES:
Advisory fees 3,121,267 571,379 (1,366,959) (a) 2,325,687
Administration fees -- 155,831 716,302 (a) 872,133
Distribution fees 51,487 -- (51,487) (b) --
Shareholder servicing fees 2,360 2,161 67,814 (a) 72,335
12b-1 fees -- 116 -- 116
Custodian fees and expenses 80,898 55,999 -- 136,897
Professional fees 69,263 29,720 (23,983) (c) 75,000
Amortization of organization expenses 15,455 16,042 (16,042) (d) 15,455
Transfer agent fees and expenses 38,611 15,614 -- 54,225
Marketing expenses 43,247 -- (43,247) (b) --
Security pricing services 13,033 -- -- 13,033
Registration, filing and other expenses 116,084 61,712 -- 177,796
------------ ----------- ---------- ------------
TOTAL EXPENSES 3,551,705 908,574 (717,602) 3,742,677
Expense reimbursements -- (178,732) (44,040) (e) (222,772)
------------ ----------- ---------- ------------
NET EXPENSES 3,551,705 729,842 (761,642) 3,519,905
------------ ----------- ---------- ------------
NET OPERATING INCOME 30,487,886 6,703,140 761,642 37,952,668
------------ ----------- ---------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments (1,566,826) 6,908,795 -- 5,341,969
Net change in unrealized appreciation on
investments 72,514,668 6,271,794 -- 78,786,462
------------ ----------- ---------- ------------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS 70,947,842 13,180,589 -- 84,128,431
------------ ----------- ---------- ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $101,435,728 $19,883,729 $ 761,642 $122,081,099
============ =========== ========== ============
- ----------------
<FN>
(1) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(a) Adjustment to reflect the proposed contractual fee structure of Woodward
Bond Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Woodward Bond Fund except pursuant to those distribution fees payable
pursuant to the Fund's 12b-1 plan assessed only to the class B shares.
(c) Reduction reflects expected savings when the two funds become one.
(d) Remaining unamortized organizational costs of the Prairie Bond
Fund will be assumed by the investment advisor prior to
merger date.
(e) Adjustment to increase reimbursements from the advisor to reflect the
new fee structure of the Woodward Bond Fund after reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-41
41
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Pro Forma Combining
Bond Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31,1995
[Unaudited]
- ------------------------------------------------------------------------------
Pro Forma
Principal
Woodward Prairie Amount
Principal Principal Combined
Amount Amuont (Note 1) Description
- ----------------- -------------- ---------------- -----------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS- 19.9%
Asset-Backed Securities- 1.5%
Advanta Mortgage Loan Trust, Series
-- 1,625,000 1,625,000 1994-3, Class A2
First U.S.A. Credit Card Master Trust,
-- 833,000 833,000 Series 1992-1, Class A
Green Tree Financial Corporation,
Manufactured Housing Senior
Subordinate Passthrough, Series
-- 3,000,000 3,000,000 1995-4, Class A6
Security Pacific Acceptance Corp.
Manufactured Housing Contract Senior
-- 2,000,000 2,000,000 Subordinate, Series 1995-1, Class A3
Standard Credit Card Master Trust I,
Participation Certificates, Series 1994-2,
-- 1,800,000 1,800,000 Class A
- ----------------- -------------- ----------------
-- 9,258,000 9,258,000
- ----------------- -------------- ----------------
Banking- 3.2%
ABN-ARMO Bank N.V., Chicago
-- 2,000,000 2,000,000 Subordinate Note
-- 2,000,000 2,000,000 Chase Manhattan Corp., Subordinate Note
Chemical Master Credit Card Trust, I,
-- 1,000,000 1,000,000 Series 1995-3, Asset-Backed CTF, Class A
Chevy Chase Auto Receivables Trust,
-- 2,000,000 2,000,000 Series 1995-2 Class A
-- 2,000,000 2,000,000 First Union Corp., Subordinate Note
Interamerican Development Bank,
-- 1,800,000 1,800,000 Debentures
Interamerican Development Bank,
-- 2,200,000 2,200,000 Debentures
International Bank for Reconstruction and
-- 1,500,000 1,500,000 Development Debentures
-- 1,500,000 1,500,000 Midland Bank PLC, Subordinate Note
-- 2,500,000 2,500,000 Solomon, Inc., Senior Notes
- ----------------- -------------- ----------------
-- 18,500,000 18,500,000
- ----------------- -------------- ----------------
Beverage, Food and Tobacco- 0.3%
Grand Metro Investment Corp.,
-- 800,000 800,000 Guaranteed Note
995,000 -- 995,000 Dominos Pizza Funding Corp., Series A
- ----------------- -------------- ----------------
995,000 800,000 1,795,000
- ----------------- -------------- ----------------
Cable TV Systems- 0.6%
-- 3,500,000 3,500,000 Cablevision Industries Corp., Senior Debentures
- ----------------- -------------- ----------------
Chemicals- 0.3%
-- 1,500,000 1,500,000 Monsanto Co., Debenture
- ----------------- -------------- ----------------
Entertainment- 0.4%
-- 2,500,000 2,500,000 News America Holdings, Senior Note
- ----------------- -------------- ----------------
PFS-42
42
<PAGE>
Finance- 6.5%
-- 800,000 800,000 American Express Co., Debentures
-- 1,600,000 1,600,000 Sears Credit Master Trust II, Series 1995-3, Class A
1,400,000 -- 1,400,000 American Express Co.
2,350,000 -- 2,350,000 Associates Corp. of North America
3,085,000 -- 3,085,000 Associates Corp. of North America
Collaterized Mortgage Securities Corp. CMO:
3,070,227 -- 3,070,227 Trust 10-Z
889,933 -- 889,933 Trust 12-D
491,993 -- 491,993 Trust 16-Q
1,692,081 -- 1,692,081 Chase Manhattan Grantor Trust, Series 95-B
2,040,088 -- 2,040,088 Ford Credit Grantor Trust, Series 94-A
2,150,000 -- 2,150,000 Ford Motor Credit Co.
2,500,000 -- 2,500,000 General Motors Acceptance Corp. Medium Term Note
Government National Mortgage Assn. Backed Trust I
354,912 -- 354,912 CMO, Class A, Zero Coupon
Kidder Peabody Mortgage Assets Trust CMO,
1,125,000 -- 1,125,000 Series 24 Class E
4,000,000 -- 4,000,000 Merrill Lynch Trust Series 43 Class E CMO
Morgan Stanley Mortgage Trust CMO:
5,248 -- 5,248 Series 35-2, HB, IF
5,996 -- 5,996 Series 37-2, HB, IF
999,131 -- 999,131 Series 39-3, PO
PaineWebber CMO Trust:
1,030,480 -- 1,030,480 Series H-4
2,479,357 -- 2,479,357 Series P-4
Rural Housing Trust 1987-1 Sr. Mortgage Pass
1,199,436 -- 1,199,436 Thru Ctf., Class 3-B
Shearson Lehman, Inc. CMO, Mortgage Backed
322,556 -- 322,556 Sequential Pay Bond, Series U, Sequence U-1
Standard Credit Card Master Trust Asset Backed Ctf.,
2,000,000 -- 2,000,000 Series 1995-5, Class A, Adjustable Rate
Toyota Auto Receivables Grantor Trust, Series 95-A
1,314,302 -- 1,314,302 Class A
World Omni Automobile LSE SEC Trust, Series 95-5
1,500,000 -- 1,500,000 Class A
- ----------------- -------------- ----------------
36,005,740 2,400,000 38,405,740
- ----------------- -------------- ----------------
Forest and Paper Products- 0.1%
-- 800,000 800,000 Weyerhaeuser Co., Debentures
- ----------------- -------------- ----------------
Foreign- 2.6%
1,572,000 -- 1,572,000 African Development Bank Note
2,000,000 -- 2,000,000 Kingdom of Belgium Put Euro Dollar
2,250,000 -- 2,250,000 Metropolis of Tokyo
800,000 -- 800,000 National Australia Bank Ltd
1,415,000 -- 1,415,000 Province of Ontario
4,300,000 -- 4,300,000 Province of Ontario Eurobond
2,515,000 -- 2,515,000 Province of Quebec
- ----------------- -------------- ----------------
14,852,000 -- 14,852,000
- ----------------- -------------- ----------------
Health Care & Hospital Management- 0.8%
-- 2,000,000 2,000,000 Coastal Corp.
-- 2,500,000 2,500,000 Columbia/HCA Healthcare Corp.
- ----------------- -------------- ----------------
-- 4,500,000 4,500,000
- ----------------- -------------- ----------------
Hotels and Gaming- 0.3%
Marriott International, Inc., Senior Note,
-- 2,000,000 2,000,000 Series B
- ----------------- -------------- ----------------
Industrial- 0.8%
2,695,000 -- 2,695,000 General Motors Corp.
1,730,000 -- 1,730,000 Boeing Co.
- ----------------- -------------- ----------------
4,425,000 -- 4,425,000
- ----------------- -------------- ----------------
Retail Stores- 1.2%
-- 1,500,000 1,500,000 Dayton Hudson Credit Card Master Trust Series 95-1, Class A
-- 1,800,000 1,800,000 Dayton Hudson Corp., Debenture
-- 4,000,000 4,000,000 Federated Department Stores, Senior Notes
- ----------------- -------------- ----------------
-- 7,300,000 7,300,000
- ----------------- -------------- ----------------
PFS-43
43
<PAGE>
Telecommunications- 0.9%
-- 3,500,000 3,500,000 TCI Communications, Inc.
-- 2,000,000 2,000,000 ITT Corp
- ----------------- -------------- ----------------
-- 5,500,000 5,500,000
- ----------------- -------------- ----------------
Utilities- 0.4%
-- 1,000,000 1,000,000 West Texas Utilities First Mortgage, Series U
1,355,000 -- 1,355,000 Nippon Telegraph & Telephone Corp.
- ----------------- -------------- ----------------
1,355,000 1,000,000 2,355,000
- ----------------- -------------- ----------------
TOTAL CORPORATE OBLIGATIONS
U.S. GOVERNMENT OBLIGATIONS- 37.6%
U.S. Treasury Bonds- 9.1%
3,720,000 -- 3,720,000 Strip from U.S. Treasury Bond Principal
3,950,000 -- 3,950,000 Strip from U.S. Treasury Bond Principal
- ----------------- -------------- ----------------
7,670,000 -- 7,670,000
- ----------------- -------------- ----------------
1,800,000 -- 1,800,000 Strip from U.S. Treasury Securities
1,500,000 -- 1,500,000 Strip from U.S. Treasury Securities
1,700,000 -- 1,700,000 Strip from U.S. Treasury Securities
3,355,000 -- 3,355,000 Strip from U.S. Treasury Securities
7,450,000 -- 7,450,000 Strip from U.S. Treasury Securities
4,525,000 -- 4,525,000 Strip from U.S. Treasury Securities
9,338,000 -- 9,338,000 Strip from U.S. Treasury Securities
4,555,000 -- 4,555,000 Strip from U.S. Treasury Securities
10,594,000 -- 10,594,000 Strip from U.S. Treasury Securities
8,950,000 -- 8,950,000 Strip from U.S. Treasury Securities
61,840,000 -- 61,840,000 Strip from U.S. Treasury Securities
55,640,000 -- 55,640,000 Strip from U.S. Treasury Securities
- ----------------- -------------- ----------------
171,247,000 -- 115,607,000
- ----------------- -------------- ----------------
U.S. Treasury Bonds- 5.6%
9,000,000 -- 9,000,000 U.S. Treasury Bond
8,830,000 -- 8,830,000 U.S. Treasury Bond
-- 1,000,000 1,000,000 U.S. Treasury Bond
-- 3,500,000 3,500,000 U.S. Treasury Bond
-- 1,760,000 1,760,000 U.S. Treasury Bond
-- 1,000,000 1,000,000 U.S. Treasury Bond
- ----------------- -------------- ----------------
17,830,000 7,260,000 25,090,000
- ----------------- -------------- ----------------
U.S. Treasury Notes- 22.9%
-- 3,850,000 3,850,000 U.S. Treasury Note
-- 3,500,000 3,500,000 U.S. Treasury Note
12,592,000 700,000 13,292,000 U.S. Treasury Note
-- 6,450,000 6,450,000 U.S. Treasury Note
-- 1,500,000 1,500,000 U.S. Treasury Note
-- 6,200,000 6,200,000 U.S. Treasury Note
-- 2,000,000 2,000,000 U.S. Treasury Note
-- 6,000,000 6,000,000 U.S. Treasury Note
-- 8,500,000 8,500,000 U.S. Treasury Note
5,001,000 -- 5,001,000 U.S. Treasury Note
1,000,000 -- 1,000,000 U.S. Treasury Note
4,400,000 -- 4,400,000 U.S. Treasury Note
3,890,000 -- 3,890,000 U.S. Treasury Note
2,100,000 -- 2,100,000 U.S. Treasury Note
3,505,000 -- 3,505,000 U.S. Treasury Note
3,130,000 -- 3,130,000 U.S. Treasury Note
1,000,000 -- 1,000,000 U.S. Treasury Note
18,900,000 -- 18,900,000 U.S. Treasury Note
6,150,000 -- 6,150,000 U.S. Treasury Note
8,780,000 -- 8,780,000 U.S. Treasury Note
3,000,000 -- 3,000,000 U.S. Treasury Note
16,125,000 -- 16,125,000 U.S. Treasury Note
4,000,000 -- 4,000,000 U.S. Treasury Note
7,410,000 -- 7,410,000 U.S. Treasury Note
- ----------------- -------------- ----------------
100,983,000 38,700,000 139,683,000
- ----------------- -------------- ----------------
PFS-44
44
<PAGE>
TOTAL U.S. GOVERNMENT OBLIGATIONS
U.S. Agency Government Obligations- 36.4%
Government National Mortgage Association
-- 77,000 77,000 Pool #201299
- ----------------- -------------- ----------------
Agency Obligations
Federal Home Loan Mortgage Corp. Participation Ctfs.:
1,938,783 -- 1,938,783 #170269
314,427 -- 314,427 #200070
95,532 -- 95,532 #274081
171,732 -- 171,732 #289711
887,323 -- 887,323 #555238
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
1,255,907 -- 1,255,907 Series 10 Class D
1,500,000 -- 1,500,000 Series 11 Class D
1,104,876 -- 1,104,876 Series 22 Class C
823,046 -- 823,046 Series 23 Class E
1,150,000 -- 1,150,000 Series 23 Class F
24,545,249 -- 24,545,249 Series 29 Class SD, GNMA
1,000,494 -- 1,000,494 Series 32 Class B
596,952 -- 596,952 Series 38 Class C
141,037 -- 141,037 Series 41 Class I, HB,
500,000 -- 500,000 Series 47 Class F
802,603 -- 802,603 Series 51 Class D
2,220,582 -- 2,220,582 Series 56 Class E
1,000,000 -- 1,000,000 Series 82 Class D
2,181,715 -- 2,181,715 Series 99 Class Z
3,500,000 -- 3,500,000 Series 129 Class E
1,177,894 -- 1,177,894 Series 134 Class B, IO
21,745 -- 21,745 Series 204 Class E, HB, IF
696,411 -- 696,411 Series 1022 Class G
5,071 -- 5,071 Series 1045 Class G, HB
1,429,602 -- 1,429,602 Series 1051 Class D
2,000,000 -- 2,000,000 Series 1065 Class J
35,279 -- 35,279 Series 1072 Class A, HB
1,332,679 -- 1,332,679 Series 1079 Class S, IF
2,000,000 -- 2,000,000 Series 1084 Class F, IF
1,400,000 -- 1,400,000 Series 1084 Class S, IF
91,366 -- 91,366 Series 1089 Class C, IF
15,632 -- 15,632 Series 1098 Class M, HB
2,000,000 -- 2,000,000 Series 1144 Class KB
21,071 -- 21,071 Series 1172 Class L, HB
93,403 -- 93,403 Series 1196 Class B, HB, IF
2,400,000 -- 2,400,000 Series 1295 Class JB
1,699,404 -- 1,699,404 Series 1297 Class H
9,000 -- 9,000 Series 1298 Class L, HB
5,014,742 -- 5,014,742 Series 1329 Class S, IO, IF
2,500,000 -- 2,500,000 Series 1360 Class PK
600,000 -- 600,000 Series 1370 Class F
1,500,000 -- 1,500,000 Series 1378 Class H
2,280,849 -- 2,280,849 Series 1378 Class JZ
2,250,000 -- 2,250,000 Series 1418 Class B
6,500,000 -- 6,500,000 Series 1456 Class G
29,155,288 -- 29,155,288 Series 1465 Class SA, IO, IF
3,150,000 -- 3,150,000 Series 1483 Class E
2,087,129 -- 2,087,129 Series 1489 Class L
1,632,714 -- 1,632,714 Series 1506 Class F, AR
583,112 -- 583,112 Series 1506 Class S, IF
27,449,198 -- 27,449,198 Series 1506 Class SD, IO, IF
8,872,418 -- 8,872,418 Series 1508 Class KB, IO, IF
1,127,152 -- 1,127,152 Series 1531 Class K
927,383 -- 927,383 Series 1554 Class KA, PO
1,270,128 -- 1,270,128 Series 1583 Class NS, IF
2,271,596 -- 2,271,596 Series 1585 Class NB, IF
1,478,062 -- 1,478,062 Series 1586 Class A
14,871,975 -- 14,871,975 Series 1595 Class S, IO, IF
701,374 -- 701,374 Series 1604 Class SE, IF
2,550,000 -- 2,550,000 Series 1628 Class S, IF
1,102,202 -- 1,102,202 Series 1640 Class A
1,494,755 -- 1,494,755 Series 1655 Class F, AR
344,875 -- 344,875 Series 1655 Class SA, IF
1,115,049 -- 1,115,049 Series 1681 Class K
1,535,892 -- 1,535,892 Series 1686 Class SH, IF
1,725,000 -- 1,725,000 Series 1689 Class SD, IF
1,418,419 -- 1,418,419 Series 1694 Class SE, IF
5,227,604 -- 5,227,604 Series 1706 Class LA
3,532,192 -- 3,532,192 Series 1757-A, Class A
1,000,000 -- 1,000,000 Series 1796-A, Class S, IF
2,250,000 -- 2,250,000 Series 1798-B, Class C
PFS-45
45
<PAGE>
Federal Housing Administration Merrill Lynch Project
1,368,496 -- 1,368,496 Pool 170 Pass Thru Ctfs.
Federal National Mortgage Assn. Mortgage Backed
Securities, Stripped Trust:
1,348,966 -- 1,348,966 23, Class 2, IO
180,863 -- 180,863 50, Class 2, IO
Federal National Mortgage Assn. Pass Thru Securities:
350,441 -- 350,441 Pool #44699
2,047,461 -- 2,047,461 Pool #50966
603,874 -- 603,874 Pool #70226, AR
2,562,238 -- 2,562,238 Pool #116612, AR
2,391,211 -- 2,391,211 Pool #160330
2,182,598 -- 2,182,598 Pool #303306
Federal National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
841,800 -- 841,800 1988 Class 7-Z
736,900 -- 736,900 1988 Class 17-B
827,434 -- 827,434 1989 Class 27-D
1,000,000 -- 1,000,000 1989 Class 34-E
2,250,000 -- 2,250,000 1989 Class 69-G
2,000,000 -- 2,000,000 1989 Class 70-G
1,299,464 -- 1,299,464 1989 Class 73-C, PO
1,250,000 -- 1,250,000 1989 Class 78-H
3,200,000 -- 3,200,000 1990 Class 1-D
750,000 -- 750,000 1990 Class 60-K
900,000 -- 900,000 1990 Class 63-H
1,500,000 -- 1,500,000 1990 Class 93-G
36,402 -- 36,402 1990 Class 94-H, HB
20,445 -- 20,445 1990 Class 95-J, HB
4,000,000 -- 4,000,000 1990 Class 102-J
1,135,711 -- 1,135,711 1990 Class 106-H
1,210,648 -- 1,210,648 1990 Class 134-SC, IF
23,237 -- 23,237 1990 Class 140-K, HB
11,237 -- 11,237 1991 Class 4-N, HB
8,010 -- 8,010 1991 Class 7-K, HB
10,292 -- 10,292 1991 Class 33-J, HB
3,554 -- 3,554 1991 Class 55-G, HB
2,134,822 -- 2,134,822 1991 Class 144-PZ
35,593 -- 35,593 1992 Class 13-S, HB, IF
1,633,455 -- 1,633,455 1992-G Class 15-Z
7,749 -- 7,749 1992-G Class 27-SQ, HB, IF
1,644,947 -- 1,644,947 1992-G Class 42-Z
1,300,000 -- 1,300,000 1992-G Class 59-C
1,028,251 -- 1,028,251 1992-G Class 61-Z
1,000,000 -- 1,000,000 1992 Class 135-LC
2,297,663 -- 2,297,663 1992 Class 137-BA
13,023,680 -- 13,023,680 1992 Class 199-S, IO, IF
4,300,000 -- 4,300,000 1992 Class 204-B
16,001,583 -- 16,001,583 1993 Class 8-SB, IO, IF
7,558,799 -- 7,558,799 1993 Class 12-S, IO, IF
59,767 -- 59,767 1993 Class 12-SB, HB, IF
2,000,000 -- 2,000,000 1993 Class 13-G
792,410 -- 792,410 1993 Class 15-K
3,265,000 -- 3,265,000 1993 Class 19-G
2,208,259 -- 2,208,259 1993-G Class 19-K
1,343,715 -- 1,343,715 1993-G Class 27-SE, IF
1,888,847 -- 1,888,847 1993 Class 32-K
33,215,974 -- 33,215,974 1993 Class 38-S, IO, IF
11,772,196 -- 11,772,196 1993 Class 44-S, IF
2,065,801 -- 2,065,801 1993 Class 58-J
1,299,186 -- 1,299,186 1993 Class 94-K
8,861,933 -- 8,861,933 1993 Class 113-S, IO, IF
3,450,311 -- 3,450,311 1993 Class 139-SG, IF
1,000,000 -- 1,000,000 1993 Class 152-D, PO
4,166,134 -- 4,166,134 1993 Class 155-LA
10,689,381 -- 10,689,381 1993 Class 155-SB, IO, IF
1,250,000 -- 1,250,000 1993 Class 156-SD, IF
1,776,420 -- 1,776,420 1993 Class 167-S, IF
1,719,713 -- 1,719,713 1993 Class 190-SE, IF
3,435,541 -- 3,435,541 1993 Class 207-SC, IF
3,632,376 -- 3,632,376 1993 Class 209-KB
838,760 -- 838,760 1993 Class 214-L
2,087,684 -- 2,087,684 1993 Class 220-SD, IF
2,901,860 -- 2,901,860 1993 Class 223-SB, IF
5,732,752 -- 5,732,752 1993 Class 223-FB, IF
1,600,000 -- 1,600,000 1993 Class X-225CVO, IF
2,249,815 -- 2,249,815 1994 Class 8-G, PO
2,359,038 -- 2,359,038 1994-G Class 13-ZB
2,519,478 -- 2,519,478 1994 Class 19-C
2,278,569 -- 2,278,569 1994 Class 26-G, PO
1,953,476 -- 1,953,476 1994 Class 30-LA
PFS-46
46
<PAGE>
7,651,123 -- 7,651,123 1994 Class 36-SG, IO, IF
2,061,342 -- 2,061,342 1994 Class 36-SE, IF
1,133,152 -- 1,133,152 1994 Class 39-F, AR
435,828 -- 435,828 1994 Class 39-S, IF
2,500,000 -- 2,500,000 1994 Class 53-CA, PO
1,766,334 -- 1,766,334 1994 Class 59-PK
41,672,922 -- 41,672,922 1994 Class 82-SA, IO, IF
3,457,934 -- 3,457,934 1995 Class 13-B
1,000,000 -- 1,000,000 1995 Class XG1C C
Government National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
7,700,000 -- 7,700,000 1994 Class 4-SA, IO, IF
Government National Mortgage Assn. Pass Thru Pool:
453,589 -- 453,589 #023594
445,009 -- 445,009 #190923
3,428,413 -- 3,428,413 #297628
2,076,338 -- 2,076,338 #313110
852,574 -- 852,574 #345288
2,000,000 -- 2,000,000 International Bank For Reconstruction & Development
- ----------------- -------------- ----------------
492,744,701 -- 492,744,701
- ----------------- -------------- ----------------
SHORT-TERM INVESTMENTS- 6.1%
Repurchase Agreement
Repurchase agreement with National
-- 11,167,000 11,167,000 Westminster Bank dated 12/29/95, with a maturity
value of $11,174,010.
Salomon Brothers, Revolving Repurchase Agreement,
(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,
16,559,026 -- 16,559,026 all held at Chemical Bank)
Nikko Securities, Revolving Repurchase Agreement,
(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
11,500,000 -- 11,500,000 of New York)
- ----------------- -------------- ----------------
28,059,026 11,167,000 39,226,026
================= ============== ================
<CAPTION>
Pro Forma
Combined
Maturity Woodward Prairie Market Value
Description Rate Date Market Value Market Value (Note 1)
----------- ---- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CORPORATE OBLIGATIONS- 19.9%
Asset-Backed Securities- 1.5%
Advanta Mortgage Loan Trust, Series
1994-3, Class A2 7.600% 7/25/10 -- 1,679,030 1,679,030
First U.S.A. Credit Card Master Trust,
Series 1992-1, Class A 5.200% 6/15/98 -- 832,116 832,116
Green Tree Financial Corporation,
Manufactured Housing Senior
Subordinate Passthrough, Series
1995-4, Class A6 7.300% 7/15/25 -- 3,169,227 3,169,227
Security Pacific Acceptance Corp.
Manufactured Housing Contract Senior
Subordinate, Series 1995-1, Class A3 7.250% 4/10/20 -- 2,119,118 2,119,118
Standard Credit Card Master Trust I,
Participation Certificates, Series 1994-2,
Class A 7.250% 4/7/06 -- 1,945,636 1,945,636
--------- ---------- ----------
-- 9,745,127 9,745,127
--------- ---------- ----------
PFS-47
47
<PAGE>
Banking- 3.2%
ABN-ARMO Bank N.V., Chicago
Subordinate Note 7.250% 5/31/05 -- 2,141,566 2,141,566
Chase Manhattan Corp., Subordinate Note 9.750% 11/1/01 -- 2,359,862 2,359,862
Chemical Master Credit Card Trust, I,
Series 1995-3, Asset-Backed CTF, Class A 6.230% 4/15/05 -- 1,022,699 1,022,699
Chevy Chase Auto Receivables Trust, Series
1995-2 Class A 5.800% 6/15/02 -- 2,010,458 2,010,458
First Union Corp., Subordinate Note 6.880% 9/15/05 -- 2,086,634 2,086,634
Interamerican Development Bank,
Debentures 8.500% 3/15/11 -- 2,152,114 2,152,114
Interamerican Development Bank,
Debentures 7.000% 6/15/25 -- 2,347,633 2,347,633
International Bank for Reconstruction and
Development Debentures 9.640% 4/30/99 -- 1,685,392 1,685,392
Midland Bank PLC, Subordinate Note 8.630% 12/15/04 -- 1,727,549 1,727,549
Solomon, Inc., Senior Notes 6.700% 12/1/98 -- 2,516,825 2,516,825
--------- ---------- ----------
-- 20,050,732 20,050,732
--------- ---------- ----------
Beverage, Food and Tobacco- 0.3%
Grand Metro Investment Corp.,
Guaranteed Note 7.130% 9/15/04 -- 854,929 854,929
Dominos Pizza Funding Corp., Series A A/R 4/1/96 1,005,235 -- 1,005,235
--------- ---------- ----------
1,005,235 854,929 1,860,164
--------- ---------- ----------
Cable TV Systems- 0.6%
Cablevision Industries Corp., Senior Debentures 9.250% 4/1/08 -- 3,797,500 3,797,500
--------- ---------- ----------
Chemicals- 0.3%
Monsanto Co., Debenture 8.200% 4/15/25 -- 1,725,809 1,725,809
--------- ---------- ----------
Entertainment- 0.4%
News America Holdings, Senior Note 8.500% 2/15/05 -- 2,821,893 2,821,893
--------- ---------- ----------
Finance- 6.5%
American Express Co., Debentures 8.630% 5/15/22 -- 911,707 911,707
Sears Credit Master Trust II, Series 1995-3,
Class A 7.000% 10/15/04 -- 1,679,742 1,679,742
American Express Co. 11.625% 12/12/00 1,562,750 -- 1,562,750
Associates Corp. of North America 9.125% 4/1/00 2,652,372 -- 2,652,372
Associates Corp. of North America 8.150% 8/1/09 3,516,838 -- 3,516,838
Collaterized Mortgage Securities Corp. CMO:
Trust 10-Z 8.950% 12/1/16 3,121,344 -- 3,121,344
Trust 12-D 9.500% 2/1/17 953,517 -- 953,517
Trust 16-Q 14.750% 3/20/18 521,513 -- 521,513
Chase Manhattan Grantor Trust, Series 95-B 5.900% 11/15/01 1,702,943 -- 1,702,943
Ford Credit Grantor Trust, Series 94-A 6.350% 5/15/99 2,061,344 -- 2,061,344
Ford Motor Credit Co. 9.625% 2/27/96 2,161,761 -- 2,161,761
General Motors Acceptance Corp. Medium Term Note 7.550% 1/14/97 2,550,125 -- 2,550,125
Government National Mortgage Assn. Backed Trust I
CMO, Class A, Zero Coupon 5/20/17 278,101 -- 278,101
Kidder Peabody Mortgage Assets Trust CMO,
Series 24 Class E 8.940% 4/1/19 1,162,405 -- 1,162,405
Merrill Lynch Trust Series 43 Class E CMO 6.500% 8/27/15 3,979,956 -- 3,979,956
Morgan Stanley Mortgage Trust CMO:
Series 35-2, HB, IF 4/20/21 760,996 -- 760,996
Series 37-2, HB, IF 7/20/21 779,480 -- 779,480
Series 39-3, PO 12/20/21 815,851 -- 815,851
PaineWebber CMO Trust:
Series H-4 8.750% 4/1/18 1,080,241 -- 1,080,241
Series P-4 8.500% 8/1/19 2,620,405 -- 2,620,405
Rural Housing Trust 1987-1 Sr. Mortgage Pass
Thru Ctf., Class 3-B 7.330% 4/1/26 1,225,594 -- 1,225,594
Shearson Lehman, Inc. CMO, Mortgage Backed
Sequential Pay Bond, Series U, Sequence U-1 8.750% 8/27/17 325,249 -- 325,249
Standard Credit Card Master Trust
Asset Backed Ctf., Series 1995-5,
Class A, Adjustable Rate A/R 5/8/00 2,000,620 -- 2,000,620
Toyota Auto Receivables Grantor Trust, Series 95-A
Class A 5.850% 3/15/01 1,320,767 -- 1,320,767
World Omni Automobile LSE SEC Trust, Series 95-5
Class A 6.050% 11/25/01 1,513,619 -- 1,513,619
--------- ---------- ----------
38,667,791 2,591,449 41,259,240
---------- ---------- ----------
PFS-48
48
<PAGE>
Forest and Paper Products- 0.1%
Weyerhaeuser Co., Debentures 8.380% 2/15/07 -- 943,652 943,652
---------- ---------- ----------
Foreign- 2.6%
African Development Bank Note 9.300% 7/1/00 1,784,786 -- 1,784,786
Kingdom of Belgium Put Euro Dollar 9.200% 6/28/10 2,542,500 -- 2,542,500
Metropolis of Tokyo 8.700% 10/5/99 2,483,620 -- 2,483,620
National Australia Bank Ltd 9.700% 10/15/98 879,136 -- 879,136
Province of Ontario 15.750% 3/15/12 1,653,031 -- 1,653,031
Province of Ontario Eurobond 7.000% 1/27/99 4,461,250 -- 4,461,250
Province of Quebec 9.125% 8/22/01 2,849,809 -- 2,849,809
---------- ---------- ----------
16,654,132 -- 16,654,132
---------- ---------- ----------
Health Care & Hospital Management- 0.8%
Coastal Corp. 7.750% 10/15/35 -- 2,136,354 2,136,354
Columbia/HCA Healthcare Corp. 7.580% 9/15/25 -- 2,723,243 2,723,243
---------- ---------- ----------
-- 4,859,597 4,859,597
---------- ---------- ----------
Hotels and Gaming- 0.3%
Marriott International, Inc., Senior Note,
Series B 7.880% 4/15/05 -- 2,175,162 2,175,162
---------- ---------- ----------
Industrial- 0.8%
General Motors Corp. 8.800% 3/1/21 3,321,668 -- 3,321,668
Boeing Co. 7.950% 8/15/24 2,036,573 -- 2,036,573
---------- ---------- ----------
5,358,241 -- 5,358,241
---------- ---------- ----------
Retail Stores- 1.2%
Dayton Hudson Credit Card Master Trust
Series 95-1, Class A 6.100% 2/25/02 -- 1,525,948 1,525,948
Dayton Hudson Corp., Debenture 7.880% 6/15/23 -- 1,867,500 1,867,500
Federated Department Stores, Senior Notes 8.130% 10/15/02 -- 4,040,000 4,040,000
---------- ---------- ----------
-- 7,433,448 7,433,448
---------- ---------- ----------
Telecommunications- 0.9%
TCI Communications, Inc. 8.750% 8/1/15 -- 3,862,891 3,862,891
ITT Corp 7.750% 11/15/25 -- 2,052,980 2,052,980
---------- ---------- ----------
-- 5,915,871 5,915,871
---------- ---------- ----------
Utilities- 0.4%
West Texas Utilities First Mortgage, Series U 6.380% 10/1/05 -- 1,017,028 1,017,028
Nippon Telegraph & Telephone Corp. 9.500% 7/27/98 1,479,850 -- 1,479,850
---------- ---------- ----------
1,479,850 1,017,028 2,496,878
---------- ---------- ----------
TOTAL CORPORATE OBLIGATIONS 63,165,249 63,932,197 127,097,446
========== ========== ===========
U.S. GOVERNMENT OBLIGATIONS- 37.6%
U.S. Treasury Bonds- 9.1%
Strip from U.S. Treasury Bond Principal 5/15/18 932,976 -- 932,976
Strip from U.S. Treasury Bond Principal 5/15/05 2,324,614 -- 2,324,614
---------- ---------- ----------
3,257,590 -- 3,257,590
---------- ---------- ----------
PFS-49
49
<PAGE>
Strip from U.S. Treasury Securities 5/15/98 1,592,856 -- 1,592,856
Strip from U.S. Treasury Securities 8/15/98 1,309,425 -- 1,309,425
Strip from U.S. Treasury Securities 11/15/98 1,464,992 -- 1,464,992
Strip from U.S. Treasury Securities 2/15/99 2,851,146 -- 2,851,146
Strip from U.S. Treasury Securities 2/15/99 6,332,128 -- 6,332,128
Strip from U.S. Treasury Securities 2/15/11 1,832,172 -- 1,832,172
Strip from U.S. Treasury Securities 5/15/11 3,716,898 -- 3,716,898
Strip from U.S. Treasury Securities 2/15/12 1,721,061 -- 1,721,061
Strip from U.S. Treasury Securities 5/15/13 3,684,064 -- 3,684,064
Strip from U.S. Treasury Securities 2/15/14 2,962,897 -- 2,962,897
Strip from U.S. Treasury Securities 11/15/18 15,020,318 -- 15,020,318
Strip from U.S. Treasury Securities 8/15/20 12,111,715 -- 12,111,715
---------- ---------- ----------
54,599,672 -- 54,599,672
---------- ---------- ----------
U.S. Treasury Bonds- 5.6%
U.S. Treasury Bond 12.750% 11/15/10 13,708,080 -- 13,708,080
U.S. Treasury Bond 10.375% 11/15/12 12,207,475 -- 12,207,475
U.S. Treasury Bond 10.750% 5/15/03 -- 1,314,686 1,314,686
U.S. Treasury Bond 11.130% 8/15/03 -- 4,702,026 4,702,026
U.S. Treasury Bond 12.000% 8/15/13 -- 2,717,000 2,717,000
U.S. Treasury Bond 9.875% 11/15/15 -- 1,448,125 1,448,125
---------- ---------- ----------
25,915,555 10,181,837 36,097,392
---------- ---------- ----------
U.S. Treasury Notes- 22.9%
U.S. Treasury Note 5.880% 5/31/96 -- 3,860,822 3,860,822
U.S. Treasury Note 4.750% 2/15/97 -- 3,483,588 3,483,588
U.S. Treasury Note 7.880% 1/15/98 13,231,422 735,875 13,967,297
U.S. Treasury Note 5.000% 1/31/99 -- 6,403,631 6,403,631
U.S. Treasury Note 7.750% 11/30/99 -- 1,625,625 1,625,625
U.S. Treasury Note 6.750% 4/30/00 -- 6,527,428 6,527,428
U.S. Treasury Note 7.750% 2/15/01 -- 2,210,000 2,210,000
U.S. Treasury Note 7.500% 11/15/01 -- 6,615,000 6,615,000
U.S. Treasury Note 7.250% 5/15/04 -- 9,458,894 9,458,894
U.S. Treasury Note 7.375% 5/15/96 5,039,308 -- 5,039,308
U.S. Treasury Note 6.125% 7/31/96 1,004,840 -- 1,004,840
U.S. Treasury Note 8.000% 10/15/96 4,490,728 -- 4,490,728
U.S. Treasury Note 7.250% 11/15/96 3,954,418 -- 3,954,418
U.S. Treasury Note 6.750% 2/28/97 2,135,763 -- 2,135,763
U.S. Treasury Note 8.500% 4/15/97 3,645,761 -- 3,645,761
U.S. Treasury Note 8.500% 5/15/97 3,263,995 -- 3,263,995
U.S. Treasury Note 6.750% 5/31/97 1,020,620 -- 1,020,620
U.S. Treasury Note 8.625% 8/15/97 19,892,250 -- 19,892,250
U.S. Treasury Note 8.750% 10/15/97 6,518,016 -- 6,518,016
U.S. Treasury Note 8.875% 11/15/97 9,345,169 -- 9,345,169
U.S. Treasury Note 8.125% 2/15/98 3,172,500 -- 3,172,500
U.S. Treasury Note 7.875% 4/15/98 17,027,032 -- 17,027,032
U.S. Treasury Note 5.375% 5/31/98 4,013,120 -- 4,013,120
U.S. Treasury Note 6.875% 7/31/99 7,780,500 -- 7,780,500
---------- ---------- ----------
105,535,442 40,920,863 146,456,305
----------- ---------- -----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 189,308,259 51,102,700 240,410,959
=========== ========== ===========
U.S. Agency Government Obligations-36.4%
Government National Mortgage Association
Pool #201299 8.500% 2/15/17 -- 81,023 81,023
----------- ---------- -----------
Agency Obligations
Federal Home Loan Mortgage Corp.
Participation Ctfs.:
#170269 12.000% 8/1/15 2,173,246 -- 2,173,246
#200070 7.500% 4/1/02 321,520 -- 321,520
#274081 7.500% 7/1/16 97,744 -- 97,744
#289711 7.500% 4/1/17 175,599 -- 175,599
#555238 12.000% 7/1/19 994,945 -- 994,945
PFS-50
50
<PAGE>
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D 10.000% 7/15/18 1,288,962 -- 1,288,962
Series 11 Class D 9.500% 7/15/19 1,669,289 -- 1,669,289
Series 22 Class C 9.500% 4/15/20 1,251,748 -- 1,251,748
Series 23 Class E 9.400% 8/15/19 849,687 -- 849,687
Series 23 Class F 9.600% 4/15/20 1,283,652 -- 1,283,652
Series 29 Class SD, GNMA 4/25/24 613,631 -- 613,631
Series 32 Class B 9.500% 8/15/19 1,020,613 -- 1,020,613
Series 38 Class C 9.500% 1/15/19 612,735 -- 612,735
Series 41 Class I, HB, 84.000% 5/15/20 331,436 -- 331,436
Series 47 Class F 10.000% 6/15/20 559,415 -- 559,415
Series 51 Class D 10.000% 5/15/19 807,105 -- 807,105
Series 56 Class E 9.600% 5/15/20 2,215,606 -- 2,215,606
Series 82 Class D 8.900% 10/15/20 1,018,119 -- 1,018,119
Series 99 Class Z 9.500% 1/15/21 2,347,545 -- 2,347,545
Series 129 Class E 8.850% 6/15/09 3,565,136 -- 3,565,136
Series 134 Class B, IO 9.000% 8/15/22 265,026 -- 265,026
Series 204 Class E, HB, IF 5/15/23 478,384 -- 478,384
Series 1022 Class G 8.000% 2/15/19 699,815 -- 699,815
Series 1045 Class G, HB 1066.2085% 2/15/21 135,144 -- 135,144
Series 1051 Class D 7.000% 11/15/19 1,447,085 -- 1,447,085
Series 1065 Class J 9.000% 4/15/21 2,175,618 -- 2,175,618
Series 1072 Class A, HB 1008.500% 5/15/06 697,117 -- 697,117
Series 1079 Class S, IF 5/15/21 1,501,756 -- 1,501,756
Series 1084 Class F, IF 5/15/21 2,039,918 -- 2,039,918
Series 1084 Class S, IF 5/15/21 1,820,000 -- 1,820,000
Series 1089 Class C, IF 6/15/21 1,000,233 -- 1,000,233
Series 1098 Class M, HB 10.080% 6/15/06 326,711 -- 326,711
Series 1144 Class KB 8.500% 9/15/21 2,117,078 -- 2,117,078
Series 1172 Class L, HB 1167.776% 11/15/21 611,045 -- 611,045
Series 1196 Class B, HB, IF 1/15/22 934,965 -- 934,965
Series 1295 Class JB 4.500% 3/15/07 2,173,605 -- 2,173,605
Series 1297 Class H 7.500% 1/15/20 1,741,021 -- 1,741,021
Series 1298 Class L, HB 981.867% 6/15/07 328,500 -- 328,500
Series 1329 Class S, IO, IF 8/15/99 269,542 -- 269,542
Series 1360 Class PK 10.000% 12/15/20 2,869,872 -- 2,869,872
Series 1370 Class F 6.750% 3/15/19 606,329 -- 606,329
Series 1378 Class H 10.000% 1/15/21 1,728,119 -- 1,728,119
Series 1378 Class JZ 7.500% 11/15/21 2,318,934 -- 2,318,934
Series 1418 Class B 6.500% 11/15/19 2,253,062 -- 2,253,062
Series 1456 Class G 6.500% 12/15/18 6,506,818 -- 6,506,818
Series 1465 Class SA, IO, IF 2/15/08 1,439,397 -- 1,439,397
Series 1483 Class E 6.500% 2/15/20 3,148,138 -- 3,148,138
Series 1489 Class L 5.500% 4/15/08 2,036,306 -- 2,036,306
Series 1506 Class F, AR 5/15/08 1,640,877 -- 1,640,877
Series 1506 Class S, IF 5/15/08 530,632 -- 530,632
Series 1506 Class SD, IO, IF 5/15/08 1,269,525 -- 1,269,525
Series 1508 Class KB, IO, IF 5/15/23 571,118 -- 571,118
Series 1531 Class K 6.000% 4/15/08 1,093,314 -- 1,093,314
Series 1554 Class KA, PO 8/15/08 736,685 -- 736,685
Series 1583 Class NS, IF 9/15/23 939,895 -- 939,895
Series 1585 Class NB, IF 9/15/23 1,839,993 -- 1,839,993
Series 1586 Class A 6.000% 9/15/08 1,422,175 -- 1,422,175
Series 1595 Class S, IO, IF 10/15/11 604,100 -- 604,100
Series 1604 Class SE, IF 11/15/08 561,099 -- 561,099
Series 1628 Class S, IF 12/15/23 1,606,500 -- 1,606,500
Series 1640 Class A 5.500% 10/15/07 1,073,455 -- 1,073,455
Series 1655 Class F, AR 12/15/08 1,483,544 -- 1,483,544
Series 1655 Class SA, IF 12/15/08 257,146 -- 257,146
Series 1681 Class K 7.000% 8/15/23 1,090,606 -- 1,090,606
Series 1686 Class SH, IF 2/15/24 1,132,720 -- 1,132,720
Series 1689 Class SD, IF 3/15/24 1,535,250 -- 1,535,250
Series 1694 Class SE, IF 5/15/23 1,290,761 -- 1,290,761
Series 1706 Class LA 7.000% 3/15/24 5,121,740 -- 5,121,740
Series 1757-A, Class A 9.500% 5/15/23 3,757,369 -- 3,757,369
Series 1796-A, Class S, IF 2/15/09 755,000 -- 755,000
Series 1798-B, Class C 6.500% 3/15/08 2,200,073 -- 2,200,073
Federal Housing Administration
Merrill Lynch Project Pool 170
Pass Thru Ctfs. 7.430% 8/1/20 1,413,821 -- 1,413,821
Federal National Mortgage Assn. Mortgage Backed
Securities, Stripped Trust:
23, Class 2, IO 10.000% 9/1/17 346,521 -- 346,521
50, Class 2, IO 10.500% 3/25/19 46,912 -- 46,912
PFS-51
51
<PAGE>
Federal National Mortgage Assn.
Pass Thru Securities:
Pool #44699 7.000% 4/1/17 355,329 -- 355,329
Pool #50966 7.000% 1/1/24 2,068,364 -- 2,068,364
Pool #70226, AR 1/1/19 604,629 -- 604,629
Pool #116612, AR 3/1/19 2,651,219 -- 2,651,219
Pool #160330 6.345% 3/1/99 2,433,057 -- 2,433,057
Pool #303306 12.500% 1/1/16 2,515,988 -- 2,515,988
Federal National Mortgage Assn.
Pass Thru Securities
Guaranteed Remic Trust:
1988 Class 7-Z 9.250% 4/25/18 897,829 -- 897,829
1988 Class 17-B 9.400% 10/25/17 760,273 -- 760,273
1989 Class 27-D 10.000% 1/25/16 852,744 -- 852,744
1989 Class 34-E 9.850% 8/25/14 1,066,785 -- 1,066,785
1989 Class 69-G 7.600% 10/25/19 2,321,397 -- 2,321,397
1989 Class 70-G 8.000% 10/25/19 2,122,378 -- 2,122,378
1989 Class 73-C, PO 10/25/19 1,015,206 -- 1,015,206
1989 Class 78-H 9.400% 11/25/19 1,393,024 -- 1,393,024
1990 Class 1-D 8.800% 1/25/20 3,400,189 -- 3,400,189
1990 Class 60-K 5.500% 6/25/20 713,669 -- 713,669
1990 Class 63-H 9.500% 6/25/20 1,003,301 -- 1,003,301
1990 Class 93-G 5.500% 8/25/20 1,427,669 -- 1,427,669
1990 Class 94-H, HB 505.000% 8/25/20 527,832 -- 527,832
1990 Class 95-J, HB 1118.040% 8/25/20 654,236 -- 654,236
1990 Class 102-J 6.500% 8/25/20 3,990,276 -- 3,990,276
1990 Class 106-H 8.500% 1/25/19 1,137,731 -- 1,137,731
1990 Class 134-SC, IF 11/25/20 1,325,659 -- 1,325,659
1990 Class 140-K, HB 652.145% 12/25/20 426,391 -- 426,391
1991 Class 4-N, HB 758.750% 1/25/06 162,935 -- 162,935
1991 Class 7-K, HB 908.500% 2/25/21 172,206 -- 172,206
1991 Class 33-J, HB 1008.250% 4/25/06 206,673 -- 206,673
1991 Class 55-G, HB 1148.550% 2/25/05 14,215 -- 14,215
1991 Class 144-PZ 8.500% 6/25/21 2,258,319 -- 2,258,319
1992 Class 13-S, HB, IF 1/25/99 263,385 -- 263,385
1992-G Class 15-Z 7.000% 1/25/22 1,588,745 -- 1,588,745
1992-G Class 27-SQ, HB, IF 5/25/22 1,118,615 -- 1,118,615
1992-G Class 42-Z 7.000% 7/25/22 1,620,098 -- 1,620,098
1992-G Class 59-C 6.000% 12/25/21 1,261,831 -- 1,261,831
1992-G Class 61-Z 7.000% 10/25/22 946,207 -- 946,207
1992 Class 135-LC 7.500% 9/25/07 1,035,809 -- 1,035,809
1992 Class 137-BA 3.500% 1/25/17 2,212,970 -- 2,212,970
1992 Class 199-S, IO, IF 11/25/99 577,861 -- 577,861
1992 Class 204-B 6.000% 10/25/20 4,160,418 -- 4,160,418
1993 Class 8-SB, IO, IF 8/25/06 729,992 -- 729,992
1993 Class 12-S, IO, IF 2/25/23 481,873 -- 481,873
1993 Class 12-SB, HB, IF 2/25/23 552,847 -- 552,847
1993 Class 13-G 6.000% 6/25/20 1,962,738 -- 1,962,738
1993 Class 15-K 7.000% 2/25/08 788,415 -- 788,415
1993 Class 19-G 5.000% 5/25/19 3,096,457 -- 3,096,457
1993-G Class 19-K 6.500% 6/25/19 2,169,833 -- 2,169,833
1993-G Class 27-SE, IF 8/25/23 863,337 -- 863,337
1993 Class 32-K 6.000% 3/25/23 1,816,240 -- 1,816,240
1993 Class 38-S, IO, IF 11/25/22 913,439 -- 913,439
1993 Class 44-S, IF 4/25/23 518,683 -- 518,683
1993 Class 58-J 5.500% 4/25/23 1,930,512 -- 1,930,512
1993 Class 94-K 6.750% 5/25/23 1,271,473 -- 1,271,473
1993 Class 113-S, IO, IF 7/25/23 509,561 -- 509,561
1993 Class 139-SG, IF 8/25/23 2,675,060 -- 2,675,060
1993 Class 155-LA 6.500% 5/25/23 4,109,970 -- 4,109,970
1993 Class 155-SB, IO, IF 9/25/23 581,182 -- 581,182
1993 Class 156-SD, IF 10/25/19 900,000 -- 900,000
1993 Class 167-S, IF 9/25/23 1,314,551 -- 1,314,551
1993 Class 190-SE, IF 10/25/08 1,336,526 -- 1,336,526
1993 Class 207-SC, IF 11/25/23 2,507,945 -- 2,507,945
1993 Class 209-KB 5.659% 8/25/08 3,466,773 -- 3,466,773
1993 Class 214-L 6.000% 12/25/08 829,005 -- 829,005
1993 Class 220-SD, IF 11/25/13 1,622,506 -- 1,622,506
1993 Class 223-SB, IF 12/25/23 2,321,488 -- 2,321,488
1993 Class 223-FB, IF 12/25/23 5,646,761 -- 5,646,761
1993 Class X-225CVO, IF 12/25/22 1,456,000 -- 1,456,000
1994 Class 8-G, PO 11/25/23 1,631,116 -- 1,631,116
1994-G Class 13-ZB 7.000% 11/17/24 2,258,067 -- 2,258,067
1994 Class 19-C 5.000% 1/25/24 2,329,230 -- 2,329,230
1994 Class 26-G, PO 2/25/24 1,458,284 -- 1,458,284
1994 Class 30-LA 6.500% 2/25/09 1,929,623 -- 1,929,623
PFS-52
52
<PAGE>
1994 Class 36-SG, IO, IF 8/25/23 399,236 -- 399,236
1994 Class 36-SE, IF 11/25/23 1,649,073 -- 1,649,073
1994 Class 39-F, AR 3/25/24 1,125,356 -- 1,125,356
1994 Class 39-S, IF 3/25/24 387,067 -- 387,067
1994 Class 53-CA, PO 11/25/23 1,731,250 -- 1,731,250
1994 Class 59-PK 6.000% 3/25/24 1,717,140 -- 1,717,140
1994 Class 82-SA, IO, IF 5/25/23 1,119,751 -- 1,119,751
1995 Class 13-B 6.500% 3/25/09 3,381,203 -- 3,381,203
1995 Class XG1C C 8.800% 1/25/25 1,096,116 -- 1,096,116
Government National Mortgage Assn.
Pass Thru Securities
Guaranteed Remic Trust:
1994 Class 4-SA, IO, IF 10/16/22 490,875 -- 490,875
Government National Mortgage Assn.
Pass Thru Pool:
#023594 8.500% 7/15/08 479,352 -- 479,352
#190923 9.000% 12/15/16 474,753 -- 474,753
#297628 8.000% 9/15/22 3,581,557 -- 3,581,557
#313110 7.500% 11/15/22 2,140,142 -- 2,140,142
#345288 7.500% 3/15/23 878,329 -- 878,329
International Bank For Reconstruction
& Development 2/15/15 576,830 -- 576,830
----------- ----------- ------------
232,446,081 -- 232,446,081
----------- ----------- ------------
SHORT-TERM INVESTMENTS- 6.1%
Repurchase Agreement
Repurchase agreement with National
Westminster Bank Dated 12/29/95, with a
maturity value of $11,174,010 5.650% 1/2/96 -- 11,167,000 11,167,000
Salomon Brothers, Revolving Repurchase Agreement,
(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) 5.930% 1/2/96 16,559,026 -- 16,559,026
Nikko Securities, Revolving Repurchase Agreement,
(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) 5.900% 1/2/96 11,500,000 -- 11,500,000
----------- ----------- ------------
28,059,026 11,167,000 39,226,026
=========== =========== ============
TOTAL INVESTMENTS 512,978,615 126,282,920 639,261,535
=========== =========== ============
</TABLE>
PFS-53
53
<PAGE>
PRAIRIE/WOODWARD FUNDS
Pro Forma Combining
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 in the Woodward Bond Fund. 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 in the Woodward Bond Fund. The write down results in a
lower cost of investments than the tax cost.
PFS-54
54
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Municipal Bond Fund
Pro Forma Combining Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Municipal Municipal Combined
Bond Fund Bond Fund Adjustments (Note 1)
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Cost $75,750,865 $231,324,230 $ -- $307,075,095
=========== ============ ============ ============
At Value $78,252,712 $244,998,503 $ -- $323,251,215
Receivable for Fund shares sold -- 39,250 39,250
Receivable from adviser -- 108,845 6,315 (c) 115,160
Interest receivable 1,277,409 4,307,370 5,584,779
Deferred organization expenses 6,315 4,453 (6,315)(c) 4,453
Prepaids and other assets 36,597 21,770 58,367
----------- ------------ ------------ ------------
TOTAL ASSETS 79,573,033 249,480,191 -- 329,053,224
----------- ------------ ------------ ------------
LIABILITIES:
Payable for securities purchased 2,372,029 -- -- 2,372,029
Accrued investment advisory fee 41,971 51,660 -- 93,631
Accrued distribution fees 1,295 -- -- 1,295
Accrued custodial fees 1,459 14,882 -- 16,341
Administration fees payable -- 31,720 -- 31,720
Bank Overdrafts -- 198,527 -- 198,527
Dividends payable 190,088 991,881 -- 1,181,969
Payable for Fund shares redeemed -- 306,469 -- 306,469
Other accrued expenses and payables 2,627 61,902 -- 64,529
----------- ------------- ------------ ------------
TOTAL LIABILITIES 2,609,469 1,657,041 -- 4,266,510
----------- ------------- ------------ ------------
NET ASSETS $76,963,564 $247,823,150 $ -- $324,786,714
=========== ============ ============ ============
Net assets consist of:
Capital shares, at par $ 720,543 $ 19,618 $ 1,830,802 (a) $ 2,570,963
Additional paid-in capital 74,166,371 233,921,388 (1,830,802)(a) 306,256,958
Accumulated undistributed net investment income 5,107 -- -- 5,107
Accumulated undistributed net realized gains (430,304) 207,871 -- (222,433)
Net unrealized appreciation on investments 2,501,847 13,674,273 -- 16,176,120
----------- ----------- ------------ ------------
TOTAL NET ASSETS $76,963,564 $247,823,150 $ -- $324,786,714
=========== =========== ============ ============
Class A shares:
Net assets $ -- $ 7,425,897 $ 11,190,502 (b) $ 18,616,399
Shares outstanding -- 587,619 885,516 (a,b) 1,473,135
Net asset value per class A share $ -- $ 12.64 $ -- $ 12.64
Maximum offering price per Class A share $ -- $ 13.24 $ -- $ 13.24
Class B shares:
Net assets $ -- $ 237,697 $ -- $ 237,697
Shares outstanding -- 18,797 -- 18,797
Net asset value per class B share $ -- $ 12.65 $ -- $ 12.65
Class I shares:
Net assets $ -- $240,159,556 $ 65,773,062 (b) $305,932,618
Shares outstanding -- 19,011,083 5,206,610 (a,b) 24,217,693
Net asset value per class I share $ -- $ 12.63 $ -- $ 12.63
Single class shares:
Net assets $76,963,564 $ -- $(76,963,564)(b) $ --
Shares outstanding 7,205,434 -- (7,205,434)(b) --
Net asset value per single class share $ 10.68 $ -- $ -- $ --
Maximum offering price per single class share $ 11.21 $ -- $ -- $ --
since this portfolio is the accounting survivor) in connection with the
proposed reorganization.
(b) Adjustment reclassifies Woodward Municipal Bond Fund shares to
reflect the multi-class environment of the proposed
reorganized entity.
(c) Remaining unamortized organizational costs of the Woodward Municipal
Bond Fund will be assumed by the investment advisor prior to
merger date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-55
55
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Municipal Bond Fund
Pro Forma Combining Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Municipal Municipal Combined
Fund Bond Fund Adjustments (Note 1)
--------- ------------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 3,692,331 $12,004,208 $ -- $15,696,539
----------- ----------- --------- -----------
TOTAL INVESTMENT INCOME 3,692,331 12,004,208 -- 15,696,539
----------- ----------- --------- -----------
EXPENSES:
Advisory fees 444,288 872,577 $(11,904) (a) 1,304,961
Administration fees -- 326,505 162,144 (a) 488,649
Shareholder servicing fees 2,156 17,850 22,679 (a) 42,685
12b-1 fees -- 600 -- 600
Distribution fees 13,331 -- (13,331) (b) --
Custodian fees and expenses 17,836 49,974 -- 67,810
Registration fees 4,740 99,377 -- 104,117
Professional fees 54,065 65,867 (44,932) (c) 75,000
Amortization of organization expenses 3,031 148 (3,031) (d) 148
Transfer agent fees and expenses 11,521 26,324 -- 37,845
Marketing expenses 34,056 -- (34,056) (b) --
Registration, filing and other expenses 45,096 46,516 -- 91,612
----------- ----------- --------- -----------
TOTAL EXPENSES 630,120 1,505,738 77,569 2,213,427
Expense reimbursements (88,071) (311,807) 399,878 (e) --
----------- ----------- --------- -----------
NET EXPENSES 542,049 1,193,931 477,447 2,213,427
----------- ----------- --------- -----------
NET OPERATING INCOME (LOSS) 3,150,282 10,810,277 (477,447) 13,483,112
----------- ----------- --------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments (132,105) 5,061,415 -- 4,929,310
Net change in unrealized appreciation on
investments 7,347,301 13,796,670 -- 21,143,971
----------- ----------- --------- -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS 7,215,196 $18,858,085 -- 26,073,281
----------- ----------- --------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $10,365,478 $29,668,362 $(477,447) $39,556,393
=========== =========== ========= ===========
<FN>
- ----------------
(a) Adjustment to reflect the proposed contractual fee structure of Prairie
Municipal Bond Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Prairie Municipal Bond Fund except for those distribution fees payable
pursuant to the Fund's 12b-1 plan assessed only to the class B shares.
(c) Reduction reflects expected savings when the two funds become one.
(d) Remaining unamortized organizational costs of the Woodward Municipal Bond
Fund will be assumed by the investment advisor prior to
merger date.
(e) Adjustment to reduce reimbursements from the advisor to reflect the
new fee structure of the Prairie Municipal Bond Fund after reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-56
56
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Pro Forma Combining
Municipal Bond Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31,1995
[Unaudited]
- ------------------------------------------------------------------------------
Pro Forma
Combined
Woodward Prairie Principal
Principal Principal Amount
Amount Amount (Note 1) Description
--------- ---------- --------- -------------
<S> <C> <C> <C>
MUNICIPAL BONDS
Alaska-1.1%
Alaska Student Loan Corp., Student Loan Revenue State Assisted,
-- 800,000 800,000 Series A (AMBAC Insured), (A.M.T.)
2,500,000 -- 2,500,000 Fairbanks North Star Borough Series S (MBIA Insured)
Arizona-1.3%
Maricopa County School District No. 028, Kyrene Elementary,
-- 2,500,000 2,500,000 Series B (FGIC Insured)
1,000,000 -- 1,000,000 Phoenix General Obligation Refunding, Series A
Salt River Project Agricultural Improvement Power District Revenue
625,000 -- 625,000 Electric System, Series D
California- 12.5%
Central Valley Financing Authority, Califogeneration Project Revenue,
-- 5,600,000 5,600,000 Carson Ice Generation Project
Cupertino Certificates of Participation, Open Space Acquisition
Project, Collateralized by U.S. Government Securities
-- 2,675,000 2,675,000 (Pre-refunded at 102 on 4/1/01)
Fresno Health Facilities Revenue, Holy Cross Health System Corp.
-- 1,850,000 1,850,000 (MBIA Insured)
1,000,000 -- 1,000,000 Los Angeles Waste Water System Revenue Series D (MBIA Insured)
Los Angeles Waste Water System Revenue Series D (MBIA Insured)
Collateralized by U.S. Government Securities (Pre-refunded at
-- 10,000,000 10,000,000 102 on 12/1/00)(MBIA Insured)
Northern California Power Agency, Public Power Revenue Refunding,
-- 3,500,000 3,500,000 Geothermal Project No.3, Series A
Northern California Power Agency, Public Power Revenue Refunding,
-- 4,800,000 4,800,000 Geothermal Project No.3, Series A
Northern California Power Agency, Public Power Revenue Refunding,
-- 4,000,000 4,000,000 Geothermal Project No.3, Series A
-- 1,500,000 1,500,000 Sacramento Cogeneration Authority Rev., Procter & Gamble Project
-- 2,500,000 2,500,000 Sacramento Cogeneration Authority Rev., Procter & Gamble Project
Colorado-9.3%
Denver City and County Airport Revenue,
-- 2,500,000 2,500,000 Series A (A.M.T.)
Denver City and County Airport Revenue,
-- 2,295,000 2,295,000 Series A (A.M.T.)
Denver City and County Airport Revenue,
-- 3,000,000 3,000,000 Series B (A.M.T.)
Denver City and County Airport Revenue,
-- 2,000,000 2,000,000 Series C (A.M.T.)
Denver City and County Airport Revenue,
-- 9,355,000 9,355,000 Series C (A.M.T.)
Denver City and County Airport Revenue,
-- 6,925,000 6,925,000 Series D (A.M.T.)
Denver Metropolitan Major League Baseball Stadium
District Revenue Refunding, Sales Tax, Baseball
-- 1,600,000 1,600,000 Stadium Project (FGIC Insured)
Florida-4.1%
Broward County Educational Facilities Authority Revenue,
-- 1,440,000 1,440,000 Nova Southeastern University Projects (Connie Lee Insured)
Florida State Board Of Education Capital Outlay Public Education,
1,650,000 -- 1,650,000 Series C
Florida State Board, Education Capacity Outlay, General Obligation,
-- 5,800,000 5,800,000 Series D
1,400,000 -- 1,400,000 Florida State Pollution Control, Series Y
850,000 -- 850,000 Gainesville Utilities System Revenue, Series B
Orlando Florida Utilities Commission Water and Electric Revenue,
-- 2,000,000 2,000,000 Series D
PFS-57
57
<PAGE>
Georgia-10.0%
-- 5,000,000 5,000,000 Fulton County School District General Obligation
-- 8,500,000 8,500,000 Georgia State General Obligation
-- 10,000,000 10,000,000 Georgia State General Obligation
Georgia State General Obligation,
-- 3,060,000 3,060,000 Series F
Georgia State Housing And Finance Authority Revenue,
650,000 -- 650,000 Series B
Illinois-11.8%
Chicago Airport Revenue Refunding, 2nd Lien, O'Hare Int'l Airport,
-- 2,490,000 2,490,000 Series C (MBIA Insured)
1,000,000 -- 1,000,000 Chicago Metropolitan Water Capital Improvement
1,000,000 -- 1,000,000 Chicago School Finance Authority (FGIC Insured), Series A
Cook County Community College, District No. 508 Lease,
-- 5,000,000 5,000,000 Series C (MBIA Insured)
Cook County General Obligation,
-- 2,535,000 2,535,000 Series B
1,750,000 -- 1,750,000 DuPage Co. Forest Preservation District
1,000,000 -- 1,000,000 Evanston General Obligation Unlimited Tax
250,000 -- 250,000 Illinois Dedicated Tax Revenue (AMBAC Insured) Civic Center
Illinois Health Facilities Authority Revenue Northwestern Memorial
1,000,000 -- 1,000,000 Hospital, Series A
Illinois Health Facilities Authority Revenue Refunding, Bro Menn Healthcare
-- 1,000,000 1,000,000 (SPA -- Bankers Trust Co.), (FGIC Insured)
Illinois Health Facilities Authority Revenue Refunding & Improvement
-- 2,600,000 2,600,000 Swedish Covenant, Series A
Illinois Health Facilities Authority Revenue Refunding & Improvement
-- 2,375,000 2,375,000 Swedish Covenant, Series A
2,000,000 -- 2,000,000 Illinois Housing Development, Series A
Illinois State Sales Tax Revenue Refunding,
-- 5,000,000 5,000,000 Series Q
Illinois State Toll Highway Authority Revenue,
2,666,000 -- 2,666,000 Series A
-- 3,600,000 3,600,000 Winnebago & Boone Counties School District No. 205 (CGIC Insured)
Indiana-5.0%
400,000 -- 400,000 Ball State University Revenue (FGIC Insured) Student Fee, Series G
1,100,000 -- 1,100,000 Fort Wayne Sewer Works Improvement Revenue Indiana (FGIC Insured)
Indiana State Office Bldg. Commission, Correctional Facilities Revenue,
-- 5,000,000 5,000,000 Series A
1,000,000 -- 1,000,000 Indiana State Vocational Technology Revenue, Series D
Indiana Transmission Financing Authority Highway Revenue
-- 1,200,000 1,200,000 Series A
1,500,000 -- 1,500,000 Indiana Transportation Finance Authority, Series A
-- 1,935,000 1,935,000 Indiana University Revenue, Series K
1,000,000 -- 1,000,000 North Adams Community Schools Participation Ctfs.
1,200,000 -- 1,200,000 Perry Township Multi School Corporation Revenue
St. Joseph Co. Hospital Authority Facilities Revenue (MBIA Insured),
1,000,000 -- 1,000,000 Memorial Hospital South Bend Project
Kentucky-0.4%
Kentucky State Turnpike Authority Economic Development Revenue
1,175,000 -- 1,175,000 (AMBAC Insured) Refunding
Maryland- 0.3%
Maryland State Community Development Administration Dept.
1,000,000 -- 1,000,000 Housing & Community Development, First Series
Massachusetts- 10.4%
500,000 -- 500,000 Massachusetts General Obligation Series A
Massachusetts Municipal Electric Co., Power Supply Systems Revenue
-- 4,535,000 4,535,000 Series B
Massachusetts State Finance Agency,
2,265,000 -- 2,265,000 Series F
Massachusetts State Refunding,
-- 12,000,000 12,000,000 Series A
Massachusetts State Refunding,
-- 2,300,000 2,300,000 Series B
Massachusetts State Refunding,
-- 1,730,000 1,730,000 Series B
New England Educational Loan Marketing Corp., Mass. Student Loan
-- 8,000,000 8,000,000 Revenue Refunding, Series G
PFS-58
58
<PAGE>
Michigan- 2.1%
250,000 -- 250,000 Grand Rapids Water Supply System Revenue (FGIC Insured)
600,000 -- 600,000 Michigan State Building Authority Revenue, Series I
Michigan State Housing Development Authority Revenue,
1,450,000 -- 1,450,000 Series C
500,000 -- 500,000 Michigan State Trunk Line Revenue Series, B-2
Rochester Community School District School Building & Site
250,000 -- 250,000 Unlimited Tax
Royal Oak Hospital Finance Authority Revenue, W. Beaumont Hospital:
250,000 -- 250,000 Series C
850,000 -- 850,000 Series G
250,000 -- 250,000 Saranac Community School District
2,000,000 -- 2,000,000 Wyandotte Electric Revenue
Missouri-1.9%
Kansas City School District Building Revenue Elementary School
1,905,000 -- 1,905,000 Project, Series D
-- 3,710,000 3,710,000 Sikeston Electric Revenue Refunding (MBIA Insured)
Nevada-1.8%
Clark County Industrial Development Revenue
Refunding, Nevada Power Co. Project, Series C
-- 4,115,000 4,115,000 (AMBAC Insured)
1,100,000 -- 1,100,000 Nevada General Obligation, Series B; Prison Board Limited Tax
New Jersey- 0.2%
Gloucester Co. Improvement Authority Gtd. Revenue, Solid Waste
400,000 -- 400,000 Landfill Project Series AA
250,000 -- 250,000 Monmouth Co. General Obligation Utility Unlimited Tax
New York-1.2%
New York City General Obligation,
-- 2,000,000 2,000,000 Sub Series A-9
New York State Thruway Authority Highway Revenue,
1,500,000 -- 1,500,000 Series B
Tri-Borough Bridge & Tunnel Authority Revenue General Purpose,
250,000 -- 250,000 Series X
North Carolina-1.3%
1,000,000 -- 1,000,000 Charlotte North Carolina General Obligation, Series A
2,000,000 -- 2,000,000 Mecklenberg County General Obligation Unlimited Tax
1,000,000 -- 1,000,000 North Carolina Municipal Power Agency Catawba Electric Revenue
Ohio- 3.2%
-- 688,000 688,000 Columbus School District, 144A
Franklin Co. Hospital Revenue, Children's Hospital,
950,000 -- 950,000 Series A
Ohio State Building Authority Revenue, State Facilities Adult
250,000 -- 250,000 Correctional Building Fund, Series A
-- 1,600,000 1,600,000 Ohio State Highway, Series T
Ohio State Public Facilities Commission, Higher Education Capital
-- 2,890,000 2,890,000 Facilities, Series II A (AMBAC Insured)
1,000,000 -- 1,000,000 Ohio State Water Development Authority Revenue (MBIA Insured)
Ohio General Obligation State of Public & Sewer Imports
1,000,000 -- 1,000,000 Unlimited Tax
Ohio Housing Financial Agency Mortgage Revenue Residential
1,670,000 -- 1,670,000 GNMA Series, A-1
Oklahoma- 1.2%
Oklahoma State Industrial Authority Revenue Refunding, Health Facilities
-- 3,600,000 3,600,000 Sisters of Mercy, Series A
Pennsylvania- 0.4%
Philadelphia Gas Works Revenue
-- 1,220,000 1,220,000 Fifteenth Series (FSA Insured)
Rhode Island- 1.6%
RI Depositors Economic Protection Corp.,
-- 4,640,000 4,640,000 Series A (MBIA & FSA Insured)
South Dakota-0.7%
South Dakota Housing Development Authority Revenue,
1,000,000 -- 1,000,000 Series C
1,200,000 -- 1,200,000 South Dakota State Building Authority Lease Revenue (AMBAC Insured)
PFS-59
59
<PAGE>
Tennessee- 4.1%
Knox County Health, Educational & Housing Facilities Board,
Hospital Facilities Revenue Refunding, Fort Sanders Alliance
-- 8,900,000 8,900,000 (MBIA Insured)
Knox County Health, Educational & Housing Facilities Board,
Hospital Facilities Revenue Refunding, Fort Sanders Alliance
-- 1,360,000 1,360,000 (MBIA Insured)
1,000,000 -- 1,000,000 Metropolitan Government Nashville/Davis County Revenue
Texas- 6.1%
250,000 -- 250,000 Austin Utilities System Revenue (AMBAC Insured)
500,000 -- 500,000 El Paso General Obligation Unlimited Tax
250,000 -- 250,000 Harris Co. Flood Control District Refunding General Obligation
400,000 -- 400,000 Houston General Obligation Series C
500,000 -- 500,000 Round Rock General Obligation (AMBAC Insured) Unlimited Tax
250,000 -- 250,000 San Antonio Water Revenue (MBIA Insured)
Tarrant Co. Water Control & Improvement District #1 Revenue,
400,000 -- 400,000 Series A
1,305,000 -- 1,305,000 Texas General Obligation
1,000,000 -- 1,000,000 Texas General Obligation Refunding Series A Unlimited Tax
Texas City Industrial Development Corp.,
-- 4,650,000 4,650,000 Marine Terminal Revenue Refunding, Arco Pipe Line Co. Project
-- 4,000,000 4,000,000 Texas State College Student Loan (A.M.T.)
Texas State Public Finance Authority,
-- 3,930,000 3,930,000 Series A
Virginia- 2.2%
1,500,000 -- 1,500,000 Norfolk Virginia General Obligation
1,500,000 -- 1,500,000 Virginia State Housing Development Authority Revenue
Virginia State Housing Development Commonwealth,
1,000,000 -- 1,000,000 Series H
500,000 -- 500,000 Virginia State Public School Authority Revenue, Series A
2,500,000 -- 2,500,000 Virginia State Transportation Board Contract Revenue #58 Corridor
Washington- 2.9%
-- 2,150,000 2,150,000 Chelan County Public Utilities District No. 001, Series E
1,300,000 -- 1,300,000 Kent General Obligation (AMBAC Insured) Unlimited Tax
550,000 -- 550,000 King Co. General Obligation, Series A
500,000 -- 500,000 Seattle General Obligation
Washington State Public Power Supply System Nuclear
-- 4,000,000 4,000,000 Project No.2 Revenue, Series C
Wisconsin- 2.6%
Wisconsin Housing And Economic Development Authority Revenue
1,500,000 -- 1,500,000 Series A
Wisconsin Public Power System Revenue (AMBAC Insured), Power
Supply System:
400,000 -- 400,000 Series A
700,000 -- 700,000 Series A
Wisconsin State General Obligation,
-- 4,160,000 4,160,000 Series B
Wisconsin State Health & Educational Facilities Authority
Revenue, Lutheran Hospital Benevolent Development Fund,
450,000 -- 450,000 Series A
1,000,000 -- 1,000,000 Wisconsin State Transportation Revenue, Series B
Wyoming- 0.3%
Wyoming Community Development Authority, Single Family
-- 800,000 800,000 Series D, (FHA/VA Mortgage Insured)
Temporary Cash Investments- 0.0%
48,195 -- 48,195 Woodward Tax Exempt Money Market Fund
- ----------- ----------- -----------
74,659,195 222,913,000 297,572,195 TOTAL INVESTMENTS
=========== =========== ===========
PFS-60
60
<PAGE>
<CAPTION>
Pro Forma
Combined
Woodward Prairie Market
Maturity Market Market Value
Description Rate Date Value Value (Note 1)
----------- ---- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS
Alaska-1.1%
Alaska Student Loan Corp., Student
Loan Revenue State Assisted,
Series A (AMBAC Insured), (A.M.T.) 6.125% 7/1/05 -- 832,792 832,792
Fairbanks North Star Borough (MBIA Insured) 5.45% 3/1/06 2,602,825 -- 2,602,825
---------- ----------- -----------
2,602,825 832,792 3,435,617
---------- ----------- -----------
Arizona-1.3%
Maricopa County School District No. 028,
Kyrene Elementary,
Series B (FGIC Insured) 6.00% 7/1/14 -- 2,631,675 2,631,675
Phoenix General Obligation Refunding, Series A 5.00% 7/1/03 1,036,700 -- 1,036,700
Salt River Project Agricultural Improvement
Power District Revenue
Electric System, Series D 6.00% 1/1/08 680,319 -- 680,319
---------- ----------- -----------
1,717,019 2,631,675 4,348,694
---------- ----------- -----------
California- 12.5%
Central Valley Financing Authority,
Califogeneration Project Revenue,
Carson Ice Generation Project 6.00% 7/1/09 -- 5,699,344 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) 7.125% 4/1/16 -- 3,064,186 3,064,186
Fresno Health Facilities Revenue, Holy
Cross Health System Corp.
(MBIA Insured) 5.25% 12/1/05 -- 1,922,446 1,922,446
Los Angeles Waste Water System
Revenue Series D (MBIA Insured) 6.25% 12/1/15 1,052,030 -- 1,052,030
Los Angeles Waste Water System
Revenue Series D (MBIA Insured)
Collateralized by U.S. Government
Securities; Pre-refunded at
102 on 12/1/00 6.70% 12/1/00 -- 11,316,500 11,316,500
Northern California Power Agency, Public
Power Revenue Refunding,
Geothermal Project No.3, Series A 5.60% 7/1/06 -- 3,728,620 3,728,620
Northern California Power Agency, Public
Power Revenue Refunding,
Geothermal Project No.3, Series A 5.65% 7/1/07 -- 5,115,936 5,115,936
Northern California Power Agency, Public
Power Revenue Refunding,
Geothermal Project No.3, Series A 5.80% 7/1/09 -- 4,309,440 4,309,440
Sacramento Cogeneration Authority Rev.,
Procter & Gamble Project 7.00% 7/1/05 -- 1,666,005 1,666,005
Sacramento Cogeneration Authority Rev.,
Procter & Gamble Project 6.20% 7/1/06 -- 2,567,950 2,567,950
---------- ----------- -----------
1,052,030 39,390,427 40,442,457
---------- ----------- -----------
Colorado-9.3%
Denver City and County Airport Revenue,
Series A (A.M.T.) 8.50% 11/15/23 -- 2,865,025 2,865,025
Denver City and County Airport Revenue,
Series A (A.M.T.) 8.00% 11/15/25 -- 2,576,229 2,576,229
Denver City and County Airport Revenue,
Series B (A.M.T.) 7.25% 11/15/05 -- 3,292,680 3,292,680
Denver City and County Airport Revenue,
Series C (A.M.T.) 6.50% 11/15/06 -- 2,100,160 2,100,160
Denver City and County Airport Revenue,
Series C (A.M.T.) 6.125% 11/15/25 -- 9,373,242 9,373,242
Denver City and County Airport Revenue,
Series D (A.M.T.) 7.75% 11/15/13 -- 8,332,160 8,332,160
PFS-61
61
<PAGE>
Denver Metropolitan Major League
Baseball Stadium
District Revenue Refunding,
Sales Tax, Baseball
Stadium Project (FGIC Insured) 4.50% 10/1/04 -- 1,593,600 1,593,600
---------- ----------- -----------
-- 30,133,096 30,133,096
---------- ----------- -----------
Florida-4.1%
Broward County Educational Facilities
Authority Revenue,
Nova Southeastern University
Projects (Connie Lee Insured) 5.70% 4/1/05 -- 1,523,678 1,523,678
Florida State Board Of Education
Capital Outlay Public Education,
Series C 5.10% 6/1/09 1,656,765 -- 1,656,765
Florida State Board, Education Capital
Outlay, General Obligation,
Series D 5.125% 6/1/18 -- 5,663,758 5,663,758
Florida State Pollution Control, Series Y 6.40% 7/1/08 1,527,624 -- 1,527,624
Gainesville Utilities System Revenue, Series B 5.50% 10/1/13 860,804 -- 860,804
Orlando Florida Utilities Commission
Water and Electric Revenue,
Series D 5.00% 10/1/23 -- 1,908,940 1,908,940
---------- ----------- -----------
4,045,193 9,096,376 13,141,569
---------- ----------- -----------
Georgia-10.0%
Fulton County School District
General Obligation 6.375% 5/1/10 -- 5,716,650 5,716,650
Georgia State General Obligation 7.10% 9/1/09 -- 10,358,185 10,358,185
Georgia State General Obligation 6.75% 9/1/11 -- 11,956,500 11,956,500
Georgia State General Obligation,
Series F 6.50% 12/1/05 -- 3,530,750 3,530,750
Georgia State Housing And Finance
Authority Revenue,
Series B 6.10% 12/1/12 669,922 -- 669,922
---------- ----------- -----------
669,922 31,562,085 32,232,007
---------- ----------- -----------
Illinois-11.8%
Chicago Airport Revenue Refunding,
2nd Lien, O'Hare Int'l Airport,
Series C (MBIA Insured) 5.75% 1/1/09 -- 2,665,769 2,665,769
Chicago Metropolitan Water Capital
Improvement 5.50% 12/1/12 1,046,100 -- 1,046,100
Chicago School Finance Authority
(FGIC), Series A 5.20% 6/1/06 1,020,120 -- 1,020,120
Cook County Community College,
District No. 508 Lease,
Series C (MBIA Insured) 7.70% 12/1/04 -- 6,090,800 6,090,800
Cook County General Obligation,
Series B 5.50% 11/15/22 -- 2,511,982 2,511,982
DuPage Co. Forest Preservation District 6.00% 11/1/03 1,910,790 -- 1,910,790
Evanston General Obligation Unlimited Tax 6.10% 12/1/09 1,082,480 -- 1,082,480
Illinois Dedicated Tax Revenue
(AMBAC Insured) Civic Center 6.25% 12/15/11 280,255 -- 280,255
Illinois Health Facilities Authority
Revenue Northwestern Memorial
Hospital, Series A 5.60% 8/15/06 1,056,800 -- 1,056,800
Illinois Health Facilities Authority
Revenue Refunding, Bro Menn Healthcare
(SPA -- Bankers Trust Co.),
(FGIC Insured) 6.00% 8/15/05 -- 1,087,560 1,087,560
Illinois Health Facilities Authority
Revenue Refunding & Improvement
Swedish Covenant, Series A 6.10% 8/1/08 -- 2,686,528 2,686,528
Illinois Health Facilities Authority
Revenue Refunding & Improvement
Swedish Covenant, Series A 6.30% 8/1/13 -- 2,446,298 2,446,298
Illinois Housing Development, Series A 5.95% 7/1/21 2,013,240 -- 2,013,240
Illinois State Sales Tax Revenue Refunding,
Series Q 5.75% 6/15/06 -- 5,376,300 5,376,300
Illinois State Toll Highway Authority Revenue,
Series A Variable 1/1/10 2,666,000 -- 2,666,000
Winnebago & Boone Counties School
District No. 205 (CGIC Insured) 7.35% 2/1/04 -- 4,280,976 4,280,976
---------- ----------- -----------
11,075,785 27,146,213 38,221,998
---------- ----------- -----------
PFS-61
62
<PAGE>
Indiana-5.0%
Ball State University Revenue (FGIC
Insured) Student Fee, Series G 6.125% 7/1/09 427,724 -- 427,724
Fort Wayne Sewer Works Improvement R
Revenue (FGIC Insured) 5.75% 8/1/10 1,131,482 -- 1,131,482
Indiana State Office Bldg. Commission,
Correctional Facilities Revenue,
Series A 5.50% 7/1/20 -- 5,002,100 5,002,100
Indiana State Vocational Technology
Revenue, Series D 5.90% 7/1/06 1,077,090 -- 1,077,090
Indiana Transmission Financing
Authority Highway Revenue
Series A 6.80% 12/1/16 -- 1,411,512 1,411,512
Indiana Transportation Finance
Authority, Series A 6.25% 11/1/16 1,551,255 -- 1,551,255
Indiana University Revenue, Series K 6.50% 8/1/05 -- 2,197,289 2,197,289
North Adams Community Schools
Participation Ctfs. 5.75% 7/15/12 1,031,960 -- 1,031,960
Perry Township Multi School
Corporation Revenue 5.20% 1/15/11 1,176,672 -- 1,176,672
St. Joseph Co. Hospital Authority
Facilities Revenue (MBIA Insured),
Memorial Hospital South Bend Project 6.25% 8/15/12 1,064,990 -- 1,064,990
---------- ----------- -----------
7,461,173 8,610,901 16,072,074
---------- ----------- -----------
Kentucky-0.4%
Kentucky State Turnpike Authority
Economic Development Revenue
(AMBAC Insured) Refunding 5.50% 7/1/06 1,250,223 -- 1,250,223
---------- ----------- -----------
Maryland- 0.3%
Maryland State Community Development
Administration Dept.
Housing & Community Development,
First Series 5.80% 4/1/07 1,026,520 -- 1,026,520
---------- ----------- -----------
Massachusetts- 10.4%
Massachusetts General Obligation Series A 5.25% 2/1/08 503,930 -- 503,930
Massachusetts Municipal Electric Co.,
Power Supply Systems Revenue
Series B 6.625% 7/1/03 -- 5,060,516 5,060,516
Massachusetts State Finance Agency,
Series F 6.00% 1/1/15 2,377,781 -- 2,377,781
Massachusetts State Refunding,
Series A 6.25% 7/1/02 -- 13,197,840 13,197,840
Massachusetts State Refunding,
Series B 5.30% 11/1/05 -- 2,395,611 2,395,611
Massachusetts State Refunding,
Series B 5.40% 11/1/06 -- 1,813,075 1,813,075
New England Educational Loan Marketing
Corp., Mass. Student Loan
Revenue Refunding, Series G 5.20% 8/1/02 -- 8,160,480 8,160,480
---------- ----------- -----------
2,881,711 30,627,522 33,509,233
---------- ----------- -----------
Michigan- 2.1%
Grand Rapids Water Supply
System Revenue (FGIC Insured) 6.30% 1/1/04 272,323 -- 272,323
Michigan State Building Authority
Revenue, Series I 6.40% 10/1/04 659,724 -- 659,724
Michigan State Housing Development
Authority Revenue,
Series C 6.375% 12/1/11 1,514,293 -- 1,514,293
Michigan State Trunk Line Revenue
Series, B-2 5.75% 10/1/12 510,315 -- 510,315
Rochester Community School District
School Building & Site
Unlimited Tax 6.50% 5/1/06 278,455 -- 278,455
Royal Oak Hospital Finance
Authority Revenue,
W. Beaumont Hospital:
Series C 7.20% 1/1/05 276,582 -- 276,582
Series G 5.60% 11/15/11 860,225 -- 860,225
Saranac Community School District 6.00% 5/1/13 263,870 -- 263,870
PFS-62
63
<PAGE>
Wyandotte Electric Revenue 6.25% 10/1/17 2,140,200 -- 2,140,200
---------- ----------- -----------
6,775,987 -- 6,775,987
---------- ----------- -----------
Missouri-1.9%
Kansas City School District Building
Revenue Elementary School
Project, Series D 5.10% 2/1/07 1,937,995 -- 1,937,995
Sikeston Electric Revenue Refunding
(MBIA Insured) 6.00% 6/1/05 -- 4,069,165 4,069,165
---------- ----------- -----------
1,937,995 4,069,165 6,007,160
---------- ----------- -----------
Nevada-1.8%
Clark County Industrial
Development Revenue
Refunding, Nevada Power Co.
Project, Series C
(AMBAC Insured) 7.20% 10/1/22 -- 4,711,387 4,711,387
Nevada General Obligation, Series B;
Prison Board Limited Tax 6.30% 4/1/05 1,201,310 -- 1,201,310
---------- ----------- -----------
1,201,310 4,711,387 5,912,697
---------- ----------- -----------
New Jersey- 0.2%
Gloucester Co. Improvement Authority
Gtd. Revenue, Solid Waste
Landfill Project Series AA 6.20% 9/1/07 428,084 -- 428,084
Monmouth Co. General Obligation
Utility Unlimited Tax 7.00% 8/1/08 282,723 -- 282,723
---------- ----------- -----------
710,807 -- 710,807
---------- ----------- -----------
New York-1.2%
New York City General Obligation,
Sub Series A-9 5.10% 8/1/18 -- 2,000,000 2,000,000
New York State Thruway Authority
Highway Revenue,
Series B 5.125% 4/1/15 1,482,705 -- 1,482,705
Tri-Borough Bridge & Tunnel Authority
Revenue General Purpose,
Series X 6.625% 1/1/12 290,767 -- 290,767
---------- ----------- -----------
1,773,472 2,000,000 3,773,472
---------- ----------- -----------
North Carolina-1.3%
Charlotte North Carolina General
Obligation, Series A 5.50% 7/1/07 1,057,440 -- 1,057,440
Mecklenberg County General Obligation -
Unilimited Tax 5.50% 4/1/12 2,096,180 -- 2,096,180
North Carolina Municipal Power Agency
Catawba Electric Revenue 6.00% 1/1/05 1,049,610 -- 1,049,610
---------- ----------- -----------
4,203,230 -- 4,203,230
---------- ----------- -----------
Ohio- 3.2%
Columbus School District, 144A 9.39% 5/1/97 -- 702,076 702,076
Franklin Co. Hospital Revenue,
Children's Hospital,
Series A 6.50% 5/1/07 1,035,329 -- 1,035,329
Ohio State Building Authority Revenue,
State Facilities Adult
Correctional Building Fund, Series A
6.125% 10/1/09 269,080 -- 269,080
Ohio State Highway, Series T 4.80% 5/15/02 -- 1,644,592 1,644,592
Ohio State Public Facilities Commission,
Higher Education Capital
Facilities, Series II A
(AMBAC Insured) 4.30% 12/1/08 -- 2,676,920 2,676,920
Ohio State Water Development Authority
Revenue (MBIA Insured) 5.75% 12/1/05 1,072,750 -- 1,072,750
Ohio General Obligation State
of Public & Sewer
Imports Unlimited Tax 6.00% 8/1/07 1,103,350 -- 1,103,350
PFS-63
64
<PAGE>
Ohio Housing Financial Agency
Mortgage Revenue
Residential GNMA Series, A-1 6.20% 9/1/14 1,732,542 -- 1,732,542
---------- ----------- -----------
5,213,051 5,023,588 10,236,639
---------- ----------- -----------
Oklahoma- 1.2%
Oklahoma State Industrial Authority Revenue
Refunding, Health Facilities
Sisters of Mercy, Series A 5.20% 6/1/05 -- 3,719,016 3,719,016
---------- ----------- -----------
Pennsylvania- 0.4%
Philadelphia Gas Works Revenue
Fifteenth Series (FSA Insured) 5.125% 8/1/05 -- 1,248,255 1,248,255
---------- ----------- -----------
Rhode Island- 1.6%
RI Depositors Economic Protection
Corp., Series A (MBIA & FSA Insured), 6.30% 8/1/05 -- 5,182,880 5,182,880
---------- ----------- -----------
South Dakota-0.7%
South Dakota Housing Development
Authority Revenue,
Series C 6.25% 5/1/15 1,024,390 -- 1,024,390
South Dakota State Building Authority Lease
Revenue (AMBAC Insured) 6.625% 9/1/12 1,390,464 -- 1,390,464
---------- ----------- -----------
2,414,854 -- 2,414,854
---------- ----------- -----------
Tennessee- 4.1%
Knox County Health, Educational &
Housing Facilities Board,
Hospital Facilities
Revenue Refunding,
Fort Sanders Alliance
(MBIA Insured) 7.25% 1/1/08 -- 10,731,709 10,731,709
Knox County Health, Educational & Housing
Facilities Board,
Hospital Facilities
Revenue Refunding,
Fort Sanders Alliance
(MBIA Insured) 7.25% 1/1/09 -- 1,649,299 1,649,299
Metropolitan Government Nashville/Davis
County Revenue 7.00% 1/1/14 1,022,250 -- 1,022,250
---------- ----------- -----------
1,022,250 12,381,008 13,403,258
---------- ----------- -----------
Texas- 6.1%
Austin Utilities System
Revenue (AMBAC Insured) 6.50% 5/15/11 273,917 -- 273,917
El Paso General Obligation Unlimited Tax 5.00% 8/15/09 498,505 -- 498,505
Harris Co. Flood Control District
Refunding General Obligation 6.25% 10/1/05 269,060 -- 269,060
Houston General Obligation Series C 6.00% 3/1/05 427,328 -- 427,328
Round Rock General Obligation (AMBAC
Insured) Unlimited Tax 5.30% 8/15/05 515,450 -- 515,450
San Antonio Water Revenue (MBIA Insured) 6.50% 5/15/10 275,483 -- 275,483
Tarrant Co. Water Control & Improvement
District #1 Revenue,
Series A 6.10% 3/1/05 423,912 -- 423,912
Texas General Obligation 7.70% 8/1/06 1,444,257 -- 1,444,257
Texas General Obligation
Refunding Series A
Unlimited Tax 6.00% 10/1/05 1,102,350 -- 1,102,350
Texas City Industrial Development Corp.,
Marine Terminal Revenue Refunding, Arco
Pipe Line Co. Project 7.75% 10/1/20 -- 5,791,436 5,791,436
Texas State College Student Loan (A.M.T.) 6.50% 8/1/07 -- 4,362,360 4,362,360
Texas State Public Finance Authority,
Series A 8.00% 10/1/99 -- 4,458,821 4,458,821
---------- ----------- -----------
5,230,262 14,612,617 19,842,879
---------- ----------- -----------
PFS-64
65
<PAGE>
Virginia- 2.2%
Norfolk Virginia General Obligation 7.00% 10/1/07 1,643,494 -- 1,643,494
Virginia State Housing Development
Authority Revenue 5.60% 11/1/10 1,496,880 -- 1,496,880
Virginia State Housing Development
Commonwealth,
Series H 6.20% 1/1/08 1,035,660 -- 1,035,660
Virginia State Public School
Authority Revenue, Series A 6.25% 1/1/11 524,575 -- 524,575
Virginia State Transportation Board Contract
Revenue #58 Corridor 6.00% 5/15/19 2,567,650 -- 2,567,650
---------- ----------- -----------
7,268,259 -- 7,268,259
---------- ----------- -----------
Washington- 2.9%
Chelan County Public Utilities
District No. 001, Series E 5.70% 7/1/08 -- 2,199,257 2,199,257
Kent General Obligation (AMBAC
Insured) Unlimited Tax 5.40% 12/1/06 1,360,021 -- 1,360,021
King Co. General Obligation, Series A 7.00% 12/1/07 617,034 -- 617,034
Seattle General Obligation 4.90% 12/1/05 506,420 -- 506,420
Washington State Public Power
Supply System Nuclear
Project No.2 Revenue, Series C 7.625% 7/1/10 -- 4,673,720 4,673,720
---------- ----------- -----------
2,483,475 6,872,977 9,356,452
---------- ----------- -----------
Wisconsin- 2.6%
Wisconsin Housing And Economic
Development Authority Revenue
Series A 6.15% 9/1/17 1,525,305 -- 1,525,305
Wisconsin Public Power System Revenue
(AMBAC Insured), Power
Supply System:
Series A 5.20% 7/1/06 410,560 410,560
Series A 5.30% 7/1/08 710,969 710,969
Wisconsin State General Obligation,
Series B 5.50% 5/1/09 -- 4,290,083 4,290,083
Wisconsin State Health & Educational
Facilities Authority
Revenue, Lutheran Hospital
Benevolent Development Fund,
Series A 5.60% 2/15/09 462,920 -- 462,920
Wisconsin State Transportation
Revenue, Series B 5.75% 7/1/12 1,077,410 -- 1,077,410
---------- ----------- -----------
4,187,164 4,290,083 8,477,247
---------- ----------- -----------
Wyoming- 0.3%
Wyoming Community Development
Authority, Single Family
Series D, (FHA/VA Mortgage Insured) 7.60% 6/1/17 -- 856,440 856,440
---------- ----------- -----------
Temporary Cash Investments- 0.0%
Woodward Tax Exempt Money Market Fund 48,195 -- 48,195
---------- ----------- -----------
TOTAL INVESTMENTS 78,252,712 244,998,503 323,251,215
========== =========== ===========
</TABLE>
PFS-65
66
<PAGE>
PRAIRIE/WOODWARD FUNDS
Notes to Pro Forma Financial Statements
(Unaudited)
(1) Basis of Combination-
The unaudited Pro Forma Combining Schedule of Investments, Pro Forma
Combining Statements of Assets and Liabilities and Pro Forma Combining
Statements of Operations reflect the accounts of the Woodward Money
Market Fund and Prairie Money Market Fund; Woodward Treasury Money
Market Fund, Woodward Government Fund, and Prairie U.S. Government
Money Market Fund; Woodward Tax-Exempt Money Market Fund and Prairie
Municipal Money Market Fund; Woodward Bond Fund and Prairie Bond Fund;
Woodward Municipal Bond Fund and Prairie Municipal Bond Fund; and
Woodward Capital Growth Fund and Prairie Growth Fund, at and for the
year (or period) ended December 31, 1995. These statements have been
derived from the funds' books and records utilized in calculating
daily net asset value at December 31, 1995.
The pro forma statements give effect to the proposed transfer of the
assets and stated liabilities of the non-surviving fund, in exchange
for shares of the surviving entity as stated below:
- ------------------------------------------------------------------------------
Non-Surviving Fund: Surviving Fund:
- ------------------------------------------------------------------------------
Prairie Money Market Fund Woodward Money Market Fund
Prairie U.S. Government Money Market Woodward Treasury
Fund and Woodward Government Fund Money Market Fund
Prairie Municipal Money Market Woodward Tax-Exempt
Market Fund Money Market Fund
Prairie Bond Fund Woodward Bond Fund
Woodward Municipal Bond Fund Prairie Municipal Bond Fund
Woodward Capital Growth Fund Prairie Growth Fund
- ------------------------------------------------------------------------------
In accordance with generally accepted accounting principles, the
historical cost of investment securities will be carried forward to
the surviving fund and the results of operations for pre-combination
periods for the surviving fund will not be restated. The pro forma
statements do not reflect the expenses of either fund in carrying out
its obligation under the Agreement and Plan of Reorganization. Under
the terms of the Plan of Reorganization, the combination of the funds
will be taxed as a tax free business combination and accordingly will
be accounted for by a method of accounting for tax free mergers of
investment companies (sometimes referred to as the pooling without
restatement method).
The Pro Forma Combining Schedule of Investments, Statement of Assets
and Liabilities and Statement of Operations should be read in
conjunction with the historical financial statements of the funds
included or incorporated by reference in the Statement of Additional
Information.
(2) Portfolio Valuation-
Portfolio securities of the Prairie and Woodward Long-Term Funds are
stated 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 in accordance with procedures approved by the
Board of Trustees. The Prairie and Woodward Money Market Funds are
stated at amortized cost which approximates market.
(3) Capital Shares-
The pro forma net asset value per share assumes the issuance of shares
of the surviving funds which would have been issued at December 31,
1995, in connection with the proposed reorganization. The number of
shares assumed to be issued is equal to the net asset value of shares
of the non-surviving fund, as of December 31, 1995, divided by the net
asset value per share of the shares of the surviving fund as of
December 31, 1995. The pro forma total number of shares outstanding
for each combined fund consists of the following at December 31, 1995:
PFS-66
67
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
COMBINED TOTAL SHARES SHARES OF ADDITIONAL SHARES ASSUMED
FUND OUTSTANDING SURVIVING FUND ISSUED IN THE REORGANIZATION:
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market 1,843,722,178 1,639,694,814 204,027,364
Treasury Money
Market 1,459,352,402 927,695,502 531,656,900
Municipal Money
Market 792,978,405 564,413,476 228,564,929
Growth 41,307,993 24,943,560 16,364,433
Bond 61,705,323 49,523,843 12,181,480
Municipal Bond 25,709,625 19,617,499 6,092,126
</TABLE>
(4) Investments-
At December 31, 1995, the Woodward Bond Fund, Woodward Municipal Bond
Fund, Prairie U.S. Government Money Market Fund, and Prairie Municipal
Money Market Fund had net capital loss carryforwards of approximately
$20,997,598, $429,976, $16,000 and $40,000 available to offset future
capital gains, respectively. To the extent that these carryforward
losses are used to offset capital gains, it is probable that any gains
so offset will not be distributed.
PFS-67
68