PRAIRIE FUNDS
Three First National Plaza
Chicago, Illinois 60670
Dear Prairie International Equity Fund Shareholder:
The Board of Trustees of the Prairie Funds has called a Special Meeting of
Shareholders on July 31, 1996 concerning matters that are important to you.
As you may be aware, First Chicago Corporation recently completed a merger
with NBD Bancorp, Inc. ("NBD") on December 1, 1995. As a result, the new
organization has since taken steps to consolidate the mutual fund investment
advisory activities of both bank holding companies. First Chicago Investment
Management Company currently provides investment advisory services to the
Prairie Funds. 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 the Prairie
International Equity Fund will transfer substantially all its assets and
liabilities to the existing Woodward International Equity Fund.
The transaction is expected to occur on or after August 9, 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 objective and policies of the
Woodward International Equity Fund will be substantially similar to the
current investment objective and policies of your Prairie International
Equity Fund, except as stated in the enclosures.
. Shareholders will benefit from improved shareholder servicing and the
elimination of redundant administration costs to the fund.
AS A RESULT, THE BOARD OF TRUSTEES OF THE PRAIRIE FUNDS, 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 for the meeting. We urge you to read the enclosed
proxy statement and to vote by completing, signing and returning the enclosed
proxy ballot form(s) in the prepaid envelope. Please vote and return EACH proxy
card you receive. EVERY VOTE COUNTS.
First Chicago NBD Corporation is pleased with the opportunities the
Reorganization will provide to better serve our mutual fund investors. If you
have any questions, your account manager will be happy to assist you. Otherwise,
please 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,
/s/ Mark A. Dillon
------------------
Mark A. Dillon
President
<PAGE>
PRAIRIE FUNDS
Three First National Plaza
Chicago, IL 60670
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on July 31, 1996
To Prairie International Equity Fund Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders
("Shareholders") of the Prairie International Equity Fund of Prairie Funds
("Prairie") will be held at the offices of BISYS Fund Services, Inc., 3435
Stelzer Road, Columbus, Ohio, on July 31, 1996 at 9:00 a.m. (Eastern time) for
the following purposes:
ITEM 1. 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 Prairie
International Equity Fund (the "Prairie Fund") to the Woodward
International Equity Fund (the "Woodward Fund") in exchange for
Class A, Class B or Class I shares, as applicable, of the
Woodward Fund; and (b) the distribution of such Woodward Fund
shares to the shareholders of the Prairie Fund according to their
respective interests.
ITEM 2. 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 June 12, 1996 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE EACH ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY PRAIRIE'S
BOARD OF TRUSTEES. 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 26, 1996
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
Dated June 26, 1996
THE WOODWARD INTERNATIONAL EQUITY FUND
900 Tower Drive
P. O. Box 7058
Troy, Michigan 48007-7058
(800) 688-3350
To acquire the assets of the:
PRAIRIE INTERNATIONAL EQUITY FUND
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 Board of Trustees of Prairie Funds ("Prairie") in
connection with a Special Meeting (the "Meeting") of the shareholders
("Shareholders") of the Prairie International Equity Fund ("Prairie Fund") to be
held on July 31, 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. Concurrent with, but not
contingent upon, the approval of the Reorganization, other series of Prairie are
being asked to approve similar reorganizations with corresponding series of
Woodward at a special meeting on July 10, 1996. These other reorganizations are
covered by separate combined prospectus/proxy statements issued to such other
Funds' shareholders.
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 Board 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 the Prairie Fund ("Prairie
Fund"), a series of Prairie, will transfer substantially all its assets and
liabilities to the existing Woodward International Equity Fund ("Woodward
Fund"), a series of Woodward. The Woodward Fund will be the surviving portfolio
for purposes of maintaining the financial statements and performance history in
the post-reorganization portfolio.
In exchange for the transfer of these assets and liabilities, Woodward will
issue shares in the Woodward Fund to the Prairie Fund. The transaction is
expected to occur on or after August 9, 1996.
The Prairie Fund has three classes of shares outstanding. The Woodward Fund
currently has two classes of shares outstanding; however, in connection with the
Reorganization, the Woodward Fund will adopt a share class structure
substantially similar to the Prairie Fund's. Holders of each class of shares of
the Prairie Fund will receive the corresponding class of shares of the Woodward
Fund.
<PAGE>
The Prairie Fund will make liquidating distributions of the Woodward Fund
shares to the Shareholders of the Prairie Fund, so that a holder of a class of
shares in the Prairie Fund will receive a class of shares (as described herein)
of the Woodward Fund with the same aggregate net asset value as the Shareholders
had in the Prairie Fund immediately before the transaction. Following the
Reorganization, Shareholders of the Prairie Fund will be Shareholders of the
Woodward Fund, and Prairie will be terminated under state law and the Investment
Company Act of 1940, as amended (the "1940 Act").
The Woodward Fund currently is conducting investment operations as described
in this Combined Prospectus/Proxy Statement.
This Combined Prospectus/Proxy Statement sets forth the information that a
Shareholder of the Prairie Fund should know before voting on the Reorganization
Agreement (and related transactions), and should be retained for future
reference. The Prospectus relating to the shares of the Woodward Fund, which
describes the Fund's operations, accompanies this Combined Prospectus/Proxy
Statement. Additional information is set forth in the Statements of Additional
Information relating to the Woodward Fund and this Combined Prospectus/Proxy
Statement, which are dated April 15, 1996 and June 26, 1996, respectively, and
in the Prospectus and Statement of Additional Information, each dated April 11,
1996, relating to the Prairie Fund. 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.
This Combined Prospectus/Proxy Statement constitutes the Proxy Statement of
the Prairie Fund for the meeting of its Shareholders, and Woodward's Prospectus
for the shares of the Woodward Fund that have been registered with the SEC and
are to be issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement is expected to first be sent to
Shareholders on or about June 26, 1996.
THE SECURITIES OF THE WOODWARD FUND HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY PRAIRIE OR WOODWARD.
SHARES OF THE WOODWARD FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, FIRST NATIONAL BANK OF CHICAGO OR NBD BANK OR ANY OF
THEIR AFFILIATES. SHARES OF THE WOODWARD FUND 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 FUND, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AN INVESTMENT IN
THE WOODWARD FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary.............................................................................. 1
Proposed Reorganization............................................................ 1
Reasons for the Reorganization..................................................... 1
Federal Income Tax Consequences.................................................... 1
Overview of the Prairie Fund and Woodward Fund..................................... 1
Certain Arrangements with Service Providers--The Prairie Fund...................... 2
Certain Arrangements with Service Providers--Woodward Fund......................... 3
Comparative Fee and Expense Tables................................................. 5
Expense Ratios..................................................................... 7
Expense Caps....................................................................... 7
Voting Information................................................................. 8
Risk Factors....................................................................... 8
Information Relating to the Proposed Reorganization.................................. 9
Description of the Reorganization Agreement........................................ 9
Board Consideration................................................................ 10
Capitalization..................................................................... 10
Federal Income Tax Consequences.................................................... 11
Comparison of Investment Policies and Risk Factors................................... 12
Prairie International Equity Fund and Woodward International Equity Fund........... 12
Investment Policies and Risks--General............................................. 12
Investment Limitations............................................................. 16
Purchase and Redemption Information, Exchange Privileges, Distribution and
Pricing.............................................................................. 19
Other Information.................................................................. 19
Information Relating to Voting Matters............................................... 20
General Information................................................................ 20
Shareholder and Board Approvals.................................................... 20
Appraisal Rights................................................................... 26
Quorum............................................................................. 27
Annual Meetings.................................................................... 27
Additional Information about Woodward................................................ 27
Additional Information about Prairie................................................. 27
Litigation........................................................................... 28
Financial Statements................................................................. 28
Other Business....................................................................... 28
Shareholder Inquiries................................................................ 28
Appendix I--Agreement and Plan of Reorganization..................................... I-1
Appendix II--Manager's Discussion of Fund Performance--the Woodward Fund............. II-1
Appendix III--Shareholders Transactions and Services................................. III-1
</TABLE>
<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 the Prairie and Woodward Funds, and the Reorganization
Agreement attached to this Combined Prospectus/Proxy Statement as Appendix I.
The Prairie Fund's Annual Report to Shareholders may be obtained free of charge
by calling 1-800-370-9446 or writing Three First National Plaza, Chicago,
Illinois 60670. The Woodward Fund's Annual Report to Shareholders may be
obtained free of charge by calling 1-800-688-3350 or writing P.O. Box 7058,
Troy, Michigan 48007-7058.
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 1-8 hereof summarize the proposed Reorganization.
PRAIRIE'S BOARD OF TRUSTEES RECOMMENDS 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 the Prairie Fund 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 fund 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
Board of Trustees of Prairie has 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 the Reorganization that the
transaction will not give rise to the recognition of income, gain or loss for
federal income tax purposes to the Prairie Fund, the Woodward Fund or their
respective shareholders. See "Information Relating to the Proposed
Reorganization--Federal Income Tax Consequences."
OVERVIEW OF THE PRAIRIE FUND AND WOODWARD FUND. The investment objectives
and policies of the Prairie Fund and Woodward Fund are similar. There are no
material differences between the investment objectives and policies except as
noted below.
The Prairie Fund's investment objective is to seek to achieve long-term
capital appreciation. The Woodward Fund's investment objective is to achieve
long-term capital appreciation and, secondarily, to produce current income. The
Funds invest primarily in equity securities of foreign issuers.
See "Comparison of Investment Policies and Risk Factors" below and the
Prairie Fund and Woodward Fund 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 Fund and the
Woodward Fund.
1
<PAGE>
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS--THE PRAIRIE FUND. FCIMCO serves
as investment adviser for the Prairie Fund and is entitled to receive an
advisory fee from it, computed daily and paid monthly, at the annual rate of
0.80% of the Fund's average daily net assets. The actual advisory fee rate for
the period ended December 31, 1995 (after waivers) was 0.47%.
Pursuant to the Prairie investment advisory contract, FCIMCO provides the
day-to-day management of the Prairie Fund's investments, subject to the overall
authority of the Board and in conformity with applicable state law and the
stated policies of the Fund. FCIMCO is responsible for making investment
decisions for the Prairie Fund, placing purchase and sale orders and providing
research, statistical analysis and continuous supervision of the Fund's
investments.
In connection with the Reorganization, the shareholders of the Woodward Fund
are being asked to approve a new advisory agreement (excluding administration
services) with an advisory fee of 0.80% of the Woodward Fund's average daily net
assets. In the event Woodward's shareholders do not approve the new advisory
agreement, the current advisory agreement (including administration services)
with an advisory fee of .75% of the Fund's average daily net assets will remain
in effect. Approval by Shareholders of the Reorganization is not contingent upon
Woodward shareholders' approval of the proposed new advisory agreement.
FCIMCO has engaged ANB-Investment Management and Trust Company ("ANB-IMC"),
a wholly-owned subsidiary of American National Bank and Trust Company, which in
turn is a wholly-owned subsidiary of First Chicago NBD Corporation, to serve as
sub-investment adviser to the Prairie Fund under a sub-advisory agreement
between FCIMCO and ANB-IMC. Subject to the supervision and approval of FCIMCO,
the sub-adviser provides investment advisory assistance and the day-to-day
management of the Prairie Fund's investments, as well as investment research and
statistical information. ANB-IMC provides the services under this agreement in
accordance with the Prairie Fund's investment objective, policies, and
limitations. For the services provided as the Prairie Fund's sub-adviser,
ANB-IMC is entitled to receive a fee from FCIMCO, computed daily and paid
monthly, at the annual rate of 0.40% of the Fund's average daily net assets.
FCIMCO also serves as the Prairie Fund'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 the Prairie Fund. For the period
ended December 31, 1995, FCIMCO received at that rate. 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 Fund. FCIMCO, and not the Prairie Fund, 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 Fund.
The Bank of New York provides custodial services to the Prairie Fund. It is
anticipated that on or about July 1, 1996, NBD will begin providing custodial
services to the Prairie Fund.
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 the Prairie Fund have agreed to pay CFG for advertising, marketing and
distributing shares of the Fund at an aggregate annual rate of 0.75% of the
average daily net asset value of the Fund's outstanding Class B Shares. CFG may
pay institutions, including FCIMCO, 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
2
<PAGE>
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 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 the Prairie Fund's Class
A and Class B Shares (each a "Shareholder Services Plan"). Under each
Shareholder Services Plan, the Prairie Fund 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 Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. Under the
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 Plan.
For the 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 FUND. NBD currently
serves as investment adviser to the Woodward Fund and is entitled to receive an
advisory fee, computed daily and paid monthly, at the annual rate of 0.75% of
the Fund's average daily net assets. The actual advisory fee rate for the year
ended December 31, 1995 (after waivers) was .67%.
As investment adviser, NBD currently manages the investments of the Woodward
Fund, makes decisions with respect to and places orders for all purchases and
sales of the Fund's securities, and maintains certain records relating to such
purchases and sales.
In connection with the 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 the Woodward Fund's investments as co-adviser, subject to the
overall authority of Woodward's Board and in conformity with Massachusetts law
and the stated policies of the Fund. FCIMCO and NBD have advised Woodward's
Board that investment management for the Woodward Fund 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 Fund, computed daily
and payable monthly, at the annual rate of .80% of the Fund's average daily net
assets.
Under the current advisory agreement, NBD also provides the 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
the Trust will pay to NBD and FCIMCO, as agents for the administrators, a fee,
computed daily and payable monthly, at the annual rate of 0.15% of the average
daily net assets of the Woodward Fund.
See "Management--Investment Adviser, Custodian and Transfer Agent" in
Woodward's Prospectus accompanying this Combined Prospectus/Proxy Statement,
which is incorporated herein by reference, for additional information on NBD.
For additional information on FCIMCO, see "Management
3
<PAGE>
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 the Woodward
Fund, NBD (i) maintains separate accounts in the name of the Fund, (ii) collects
and makes disbursements of money on behalf of the Fund, (iii) issues and redeems
shares of the Fund, (iv) collects and receives all income and other payments and
distributions on account of the portfolio securities of the 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
the Woodward Fund 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 an annual account fee of $1,000
and $1.54 per month per asset held in the Fund. 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. NBD is
also entitled to foreign transaction charges of $175 per transaction in South
Korea, Taiwan or Thailand; $145 per transaction in Chile; $130 per transaction
in Argentina and Brazil; $80 per transaction in Hong Kong, Malaysia or New
Zealand; $60 per transaction in Australia, Austria, Belgium, Denmark, Finland,
Ireland, Italy, the Netherlands, Norway, Sweden and Switzerland; $50 per
transaction in France, Mexico, Singapore and Spain; $35 per transaction in
Canada and Germany; $30 per transaction in Japan; $25 per transaction in the
United Kingdom; and $5 per transaction in the United States. In addition to the
service fees above, the Trust will reimburse the Custodian for its out-of-pocket
expenses including, but not limited to, postage, telephone, telex, facsimile,
Federal Express and Federal Reserve wire fees, incurred on behalf of the Trust.
For its services as Transfer Agent, NBD is also entitled to receive a
minimum annual fee from the Woodward Fund of $11,000, $15 annually per account
from the Fund for the preparation of statements of account, and $1.00 for each
confirmation of purchase and redemption transactions. Charges for providing
computer equipment and maintaining a computerized investment system are expected
to approximate $350 per month for the 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
the 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
Woodward may enter into servicing agreements with banks and financial
institutions, including NBD, FCIMCO, the First National Bank of Chicago ("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,
the Woodward Fund 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. At Woodward's option, it may also
4
<PAGE>
reimburse such agents for their out-of-pocket expenses. See "Management-Sponsors
and Co-Distributors," "Service and Distribution Plan" and "Shareholder Servicing
Plan" in the Woodward Prospectus accompanying this Combined Prospectus/Proxy
Statement, which is 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 fees pursuant to
the Woodward 12b-1 Plan of $1,289,788, which represented .02% of Woodward's
average net assets during that period.
For the fiscal year ended December 31, 1995, Woodward paid fees pursuant to
the Shareholder Servicing Plan of $376,700, which represented .01% of Woodward's
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 sale and
distribution of shares for 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.
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 the Woodward Fund 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 the 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, the 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 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 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 the Prairie Fund
and by each class of shares of the 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 Fund and the Woodward Fund, respectively, expect to
5
<PAGE>
incur during the current fiscal year, and (ii) estimated fees and expenses on a
pro forma basis giving effect to the proposed Reorganization.
<TABLE>
<CAPTION>
PRAIRIE WOODWARD
INTERNATIONAL EQUITY INTERNATIONAL EQUITY PRO FORMA
FUND FUND COMBINED
---------------------------------- -------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS I CLASS A CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- -------
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............ .80% .80% .80% .75% .75% .80% .80% .80%
12b-1 Fees None .75% None .004% .004% None .75% None
Other Expenses (after fee
waivers and/or expense
reimbursements)........... .50%(2)(4) .50%(2)(4) .25%(1)(4) .656%(3)(5) .406%(5) .80%(2) .80%(2) .28%(1)
Total Operating Expenses
(after fee waivers
and/or expense
reimbursements)........... 1.30%(6) 2.05%(6) 1.05%(6) 1.41%(7) 1.16%(7) 1.60% 2.35% 1.08%
</TABLE>
- ------------
+ 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) Includes shareholder servicing fees of 0.25%.
(4) Other Expenses, absent fee waivers and/or expense reimbursements, would have
been 1.16%, 2.28% and 0.58%, respectively, for the Class A, Class B and
Class I Shares of the Prairie Fund.
(5) Other Expenses, absent fee waivers and/or expense reimbursements, would have
been 0.846% and 0.596%, respectively, for the Class A and Class I Shares of
the Woodward Fund.
(6) Absent voluntary waivers, which can be terminated at any time, the total
operating expenses for Class A Shares, Class B Shares and Class I Shares of
the Prairie Fund would have been 1.96%, 3.83% and 1.38%, 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 Fund would
have been 1.60% and 1.35%, respectively.
6
<PAGE>
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 Equity Fund
Class A Shares............................................ $ 58 $ 84 $ 113 $195
Class B Shares............................................ $ 71 $ 94 $ 130 $210
Class I Shares............................................ $ 11 $ 33 $ 58 $128
Woodward International Equity Fund
Class A Shares............................................ $ 64 $ 93 $ 124 $212
Class I Shares............................................ $ 12 $ 37 $ 64 $142
Pro Forma Combined
Class A Shares............................................ $ 65 $ 98 $ 133 $231
Class B Shares............................................ $ 74 $ 103 $ 146 $241
Class I Shares............................................ $ 11 $ 34 $ 60 $132
</TABLE>
EXPENSE RATIOS--PRAIRIE FUND. The following table sets forth (i) the ratios
of operating expenses to average net assets of the Prairie Fund for the period
ended December 31, 1995 (a) after fee waivers and expense reimbursements, and
(b) absent fee waivers and expense reimbursements:
<TABLE>
<CAPTION>
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
EXPENSE EXPENSE
PRAIRIE FUND REIMBURSEMENTS REIMBURSEMENTS
- ------------ ------------------- -------------------
<S> <C> <C>
Class A Shares......................................... 1.50% 1.96%
Class B Shares......................................... 2.28% 3.83%
Class I Shares......................................... 1.05% 1.38%
</TABLE>
EXPENSE RATIOS--WOODWARD FUND. The following table sets forth (i) the ratios
of operating expenses to average net assets of the Woodward Fund 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
WOODWARD FUND REIMBURSEMENTS REIMBURSEMENTS
- ------------- ------------------- -------------------
<S> <C> <C>
Single Class Shares.................................... 1.16% 1.24%
</TABLE>
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 the
Woodward Fund exceed the amount set forth in the table below.
<TABLE>
<CAPTION>
EXPENSE
POST-REORGANIZATION FUND LIMITATION
- ------------------------ ----------
<S> <C>
Woodward International Equity Fund
Class A........................................................ 1.71%
Class B........................................................ 2.46%
Class I........................................................ 1.18%
</TABLE>
7
<PAGE>
VOTING INFORMATION. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies by Prairie's Board of
Trustees in connection with the Special Meeting of Shareholders to be held at
the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio, on
Monday, July 31, 1996 at 9:00 a.m. (Eastern time). Only Shareholders of record
at the close of business on June 12, 1996 will be entitled to notice of and to
vote at the Meeting. Each share or fraction thereof is entitled to one vote or
fraction thereof. Shares represented by a properly executed proxy will be voted
in accordance with the 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 Fund and the Woodward Fund 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. There is no assurance that the
post-reorganization Fund will achieve its investment objective.
Because of the similarities of the investment objectives and policies of the
Prairie Fund and the Woodward Fund, management believes that an investment in
the Woodward Fund involves risks that are similar to those of the Prairie Fund.
These investment risks include those typically associated with investing in a
portfolio of equity securities of foreign companies.
There are differences, however, between the Prairie Fund and the Woodward
Fund as noted above under "Summary--Overview of the Prairie Fund and the
Woodward Fund" and below under "Comparison of Investment Policies and Risk
Factors." These differences can result in different risks.
The per share price of the Funds 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. The
Funds seek to achieve their investment objectives through investments in
securities of foreign issuers that involve risks not typically associated with
U.S. issuers. They also may invest in debt instruments with the lowest
investment grade rating which are speculative; illiquid instruments; and certain
options, futures and foreign currency transactions. They may engage in
securities lending transactions and 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 fund may decline below the price of the securities the
fund is obligated to purchase.
The non-diversified status of the Prairie Fund and the post-reorganization
Woodward Fund, present additional risks as stated in their current Prospectuses.
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 Fund will not
acquire such derivatives for speculative purposes, and will only acquire them
for investment or hedging purposes as specifically described in its Prospectus
and in its Statement of Additional Information.
8
<PAGE>
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
Prairie has entered into an agreement whereby the Prairie Fund is to be
acquired by the Woodward Fund. 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. The assets of the Prairie Fund
will be acquired by the Woodward Fund. The Reorganization Agreement provides,
first, that substantially all of the assets and liabilities of the Prairie Fund
will be transferred to the Woodward Fund. The holders of each class of shares of
the Prairie Fund will receive the class of shares of the Woodward Fund. The
number of each class of shares to be issued by the Woodward Fund will have an
aggregate net asset value equal to the aggregate net asset value of the
corresponding class or classes of shares of the Prairie Fund 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 the transaction.
The Prairie Fund may liquidate a limited number of its holdings in light of
the investment policies of the Woodward Fund and the strategies of its
investment adviser. 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 Reorganization which, together with all previous
dividends, will have the effect of distributing to the Shareholders of the
Prairie Fund 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 Fund to
the Woodward Fund, and the issuance of shares by the Woodward Fund to the
Prairie Fund, the Prairie Fund will distribute the class of shares of the
Woodward Fund pro rata to the holders of classes of shares of the Prairie Fund
as described above in liquidation of the Prairie Fund. Each holder of a class of
shares of the Prairie Fund will receive an amount of equal value of the
corresponding class of shares of the 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.
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 the
Prairie Fund; 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 Transaction is expected to occur on or after August
9, 1996.
The expenses of the Woodward Fund and of the Prairie Fund 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 authorized officers and with or without the
approval of their respective
9
<PAGE>
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, February 20, 1996 and May
21, 1996, the Board of Trustees 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 International Equity
Funds into a single, larger consolidated Fund. Accordingly, FCIMCO and NBD
recommended that the Prairie Fund be reorganized as described in this Combined
Prospectus/Proxy Statement. The Board of Trustees of Prairie considered the
recommendation of FCIMCO and NBD with respect to the proposed consolidation of
the Prairie and Woodward Funds; the investment capabilities of the co-advisers;
the compatibility of the investment objectives and policies of the Prairie Fund
and the Woodward Fund; 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 Fund; the historical and projected expense ratios of the Woodward
Fund as compared to those of the Prairie Fund; the comparative investment
performance of the Prairie Fund and the Woodward Fund; 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.
After considering the foregoing factors, together with such other
information as they believed to be relevant, Prairie's Trustees unanimously
approved the Reorganization Agreement and directed that it be submitted to
Shareholders for approval.
PRAIRIE'S BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE REORGANIZATION AGREEMENT.
The Prairie Board of Trustees has not determined what action Prairie will
take in the event the Shareholders of the Prairie Fund fail to approve the
Reorganization Agreement or for any reason the Reorganization is not
consummated. In either such event, the Trustees will consider other appropriate
courses of action, including continuing operations of the Prairie Fund in its
present form.
At meetings held on November 27 and 28, 1995, January 9, 1996, February 20,
1996 and May 21, 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
Trustees unanimously determined that the proposed Reorganization is in the best
interests of the Woodward Fund and its shareholders, and that the interests of
existing shareholders of the Woodward Fund would not be diluted as a result of
the transaction.
CAPITALIZATION. Because the Prairie Fund will be combined in the
Reorganization with the Woodward Fund, the total capitalization of the Woodward
Fund after the Reorganization is expected to be greater than the current
capitalization of the Prairie Fund. The following sets forth as of December 31,
1995, (i) the capitalization of the Prairie Fund and Woodward Fund and (ii) the
pro forma capitalization of the Woodward Fund as adjusted to give effect to the
Reorganization. If consummated,
10
<PAGE>
the capitalization of the Woodward Fund is likely to be different at the
effective time of the Reorganization as a result of daily share purchase and
redemption activity in the Funds.
<TABLE>
<CAPTION>
PRAIRIE WOODWARD
INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY FUND EQUITY FUND COMBINED
------------- ------------- ------------
<S> <C> <C> <C>
Total Net Assets............................ $ 104,389,377 $ 107,288,301 $211,677,678
Class A Shares............................ $ 2,749,124 N/A $ 3,674,486
Class B Shares............................ $ 192,707 N/A $ 192,707
Class I Shares............................ $ 101,447,546 N/A $207,810,485
Single Class Shares....................... N/A $ 107,288,301 N/A
Shares Outstanding.......................... 9,343,629 9,712,891 19,163,186
Class A Shares............................ 246,447 N/A 332,654
Class B Shares............................ 17,292 N/A 17,292
Class I Shares............................ 9,079,890 N/A 18,813,240
Single Class Shares....................... N/A 9,712,891 N/A
Net Asset Value Per Share
Class A Shares............................ $ 11.16 N/A $ 11.05
Class B Shares............................ $ 11.14 N/A $ 11.14
Class I Shares............................ $ 11.17 N/A $ 11.05
Single Class Shares....................... N/A $ 11.05 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 the Prairie Fund (except
for a cash reserve in an amount necessary for the discharge of all known and
reasonably anticipated liabilities of the Prairie Fund) to the Woodward Fund in
exchange for shares of the Woodward Fund and liquidating distributions to
Shareholders of the Prairie Fund of the shares of the Woodward Fund so received,
as described in the Reorganization Agreement, will constitute a reorganization
within the meaning of Section 368(a)(1)(C) or Section 368(a)(1)(D) of the
Internal Revenue Code of 1986, as amended (the "Code"), and with respect to the
Reorganization, the Prairie Fund and Woodward Fund each will be considered "a
party to a reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Prairie Fund as a result of such
transaction; (iii) no gain or loss will be recognized by the Woodward Fund as a
result of such transaction; (iv) no gain or loss will be recognized by the
Shareholders of the Prairie Fund on the distribution to them by Prairie of
shares of any class of the Woodward Fund in exchange for their shares of a
comparable class of the Prairie Fund; (v) the aggregate basis of the Woodward
Fund shares received by a shareholder of the Prairie Fund will be the same as
the aggregate basis of the shareholder's Prairie Fund shares immediately prior
to the Reorganization; (vi) the basis of the Woodward Fund in the assets of the
Prairie Fund received, 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 International Equity Funds into a single, larger
consolidated Fund. Accordingly, FCIMCO and NBD recommended that the Prairie Fund
be reorganized as described in this Combined Prospectus/Proxy Statement. The
Board of Trustees of Prairie considered the recommendation of FCIMCO and NBD
with respect to the proposed consolidation of the Prairie and Woodward Funds;
the investment capabilities of the co-advisers; the compatibility of the
investment objectives and policies of the Prairie Fund and the Woodward Fund;
the improvement of operational efficiencies and achievementhe 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.
11
<PAGE>
The Woodward Fund is currently voting on certain matters related to changes
in the Fund's objectives and fundamental limitations. In the event that certain
items are not approved, the Reorganization will still occur.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objective and policies of the Prairie Fund are, in many
respects, similar to those of the 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 Fund and the Woodward Fund and is qualified in its entirety by the
Prospectuses and Statements of Additional Information of the Prairie Fund and
the Woodward Fund which are incorporated herein by reference. For a discussion
of certain investment policies of the Prairie Fund and Woodward Fund and related
risk factors, see "Investment Policies and Risks--General" below.
The investment objectives and certain investment policies of the Prairie
Fund and Woodward Fund 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 Fund and Woodward
Fund that are not fundamental may be changed by each Fund's respective Board of
Trustees.
PRAIRIE INTERNATIONAL EQUITY FUND AND WOODWARD INTERNATIONAL EQUITY FUND
Each Fund invests primarily in equity securities of foreign issuers. Under
normal market conditions, the Prairie Fund invests in countries which are
included in the Morgan Stanley Capital International--Europe, Australia and Far
East ("EAFE") Index. The Prairie Fund shifts its regional holdings to emphasize
or de-emphasize regions of the international market based on the relative
attractiveness of the region. The Woodward Fund's investments will generally be
allocated among countries and geographic regions which may include, but are not
limited to, the United Kingdom and European continent, Japan, other Far East
areas and Latin America. The Woodward Fund's assets will be invested at all
times in the securities of issuers located in at least three different foreign
countries. Both Funds invest in futures, options and other derivative
instruments.
INVESTMENT POLICIES AND RISKS--GENERAL
The Prairie Fund and the Woodward Fund are permitted to (i) enter into
repurchase agreements and reverse repurchase agreements; and (ii) purchase
obligations of the U.S. Government, its agencies and instrumentalities. The
Prairie Fund may invest generally in bank obligations whereas the Woodward Fund
may only invest in bank obligations of financial institutions having total
assets at the time of purchase of $1 billion.
Foreign 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,
12
<PAGE>
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 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 Fund and the Woodward Fund are expressly permitted to invest in
securities of foreign issuers in the form of ADRs or similar securities
representing securities of foreign issuers and may invest in securities of
foreign issuers in the form of EDRs or similar securities representing
securities of foreign issuers. This policy will continue with respect to the
post-reorganization Fund.
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 Fund and the Woodward Fund
may invest in foreign currency and foreign commodity transactions.
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 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.
Supranational Bank Obligations. The Prairie Fund may invest in obligations
of supranational banks which are international banking institutions designated
or supported by national governments to
13
<PAGE>
promote reconstruction, development or trade between nations (e.g., the World
Bank). After the Reorganization, the Woodward Fund will be permitted to invest
in obligations of supranational banks.
Derivative Instruments. The Prairie Fund and the Woodward Fund 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 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. The Prairie Fund and the Woodward Fund are
permitted to invest in asset-backed and mortgage-backed securities. The
post-reorganization Fund will not be permitted to invest in such securities.
Municipal Securities. The Prairie Fund is expressly permitted to invest up
to 25% of its assets in Municipal Securities. Following its Reorganization, the
Woodward Fund is not expecting to invest in Municipal Securities.
Leveraging on an Unsecured Basis. The Prairie Fund may utilize leveraging in
that it may borrow for investment purposes on an unsecured basis. The Woodward
Fund will not engage in such leveraging after the Reorganization.
Interest Rate and Equity Index Swaps. The Prairie Fund is permitted to enter
into interest rate and equity index swaps. After the Reorganization, the
post-reorganization Fund 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 the 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.
A Fund will usually 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.
14
<PAGE>
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. The Prairie Fund 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. The post-reorganization Fund will not make
short sales of securities.
Options Transactions. The Prairie Fund 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 Fund 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 Woodward Fund 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 the Fund's net assets. The
Fund may also write covered call and secured put options not exceeding 25% of
the value of its net assets. In addition, the Fund may purchase and sell call
and put options on foreign currency for the purpose of hedging against changes
in foreign currency exchange rates.
The post-reorganization Fund 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% of the market value of its net
assets. The 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. The Prairie Fund 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 Fund may trade futures contracts and related options in
U.S. domestic markets. In addition, the Funds may purchase and sell currency
futures contracts and options thereon.
The post-reorganization Fund may enter into futures contracts and options on
future contracts and 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 the Fund will not be a commodity pool, it 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.
The Prairie, Woodward and post-reorganization Fund's commodities
transactions must constitute bona fide hedging or other permissible transactions
pursuant to regulations promulgated by the CFTC. In addition, the Funds may not
engage in such transactions if the sum of the amount of initial margin deposits
and premiums paid for unexpired commodity options, other than for bona fide
hedging transactions, would exceed 5% of the liquidation value of its assets,
after taking into account unrealized profits and unrealized losses on such
contracts it has entered into; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may be
excluded in
15
<PAGE>
calculating the 5%. To the extent a Fund engages in the use of futures and
options on futures for other than bona fide hedging purposes, it may be subject
to additional risk.
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 Funds 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 a Fund's net investment results if market movements are not
as anticipated when the hedge is established.
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 the 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. The Prairie Fund is permitted to invest in
closed-end investment companies, as permitted by the 1940 Act, which principally
invest in securities in which the Fund invests. The Woodward Fund is permitted
to invest in securities issued by investment companies which invest in high
quality, short-term debt securities. After the Reorganization, the
post-reorganization Fund will be permitted to invest, to the extent permitted by
the 1940 Act, in open and closed-end investment companies which principally
invest in securities in which the Fund invests; this limitation is expected to
become a nonfundamental limitation in connection with the Reorganization. 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 a Fund bears directly in connection with its own operations.
INVESTMENT LIMITATIONS
Neither the Prairie Fund nor the Woodward Fund may change its 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 Fund.
Policies which may be changed without shareholder approval are deemed to be
non-fundamental. The investment limitations of the Prairie Fund and the Woodward
Fund are similar, but not identical.
Diversification. The Woodward Fund is currently classified as a
"diversified" investment portfolio. As a matter of fundamental policy, the 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.
16
<PAGE>
The Prairie Fund is classified as a non-diversified portfolio under the 1940
Act and is not subject to a fundamental limitation on diversification. The 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 the 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 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 the Fund 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, the Fund expects to be classified as a
non-diversified portfolio.
Borrowings. The Prairie Fund 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 fund's total assets and may engage in reverse repurchase
transactions. The Woodward Fund may borrow money from banks and enter into
reverse repurchase agreements for temporary purposes. The 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,
the 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. Neither the Prairie Fund, the Woodward Fund or the
post-reorganization Fund, 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. The Prairie Fund and Woodward Fund have adopted fundamental
policies on concentration. The Prairie Fund may invest up to 25% of its
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.
The Woodward Fund does not purchase any securities which would cause 25% or
more of the value of its total assets at the time of purchase to be invested in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and repurchase agreements secured by such instruments, (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, and (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.
Following its Reorganization, the Fund will not purchase any securities
which would cause 25% or more of the value of its total assets at the time of
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that (a)
there is no limitation with respect to obligations issued 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.
17
<PAGE>
These limitations are fundamental for each of the Funds.
Real Estate. Neither the Prairie Fund, Woodward Fund or the
post-reorganization Fund 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 which are secured by
interests in real estate.
Underwriting Securities. The Prairie Fund and the Woodward Fund have adopted
fundamental policies 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 after the Reorganization.
Commodities. Neither the Prairie Fund, Woodward Fund nor the
post-reorganization Fund 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.
Illiquid Securities. The Prairie Fund and Woodward Fund must limit their
investments in illiquid securities to 15% of net assets. These limitations are
currently fundamental limitations for the Woodward Fund although they are
expected to become non-fundamental, and thus may be changed without shareholder
approval, in connection with the Reorganization.
Margin Transactions. As a matter of fundamental policy, the Prairie Fund may
purchase securities on margin, although the Fund may make margin deposits in
connection with various transactions such as options and futures contracts. The
Prairie Fund is permitted to make short sales, which are transactions in which
it 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 Woodward Fund 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 the Fund's transactions in such instruments as futures contracts
and options, and (ii) the 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 Woodward Fund although
they are expected to become non-fundamental, and thus may be changed without
shareholder approval, in connection with the Reorganization.
Options. The Prairie Fund is not permitted to purchase, sell or write puts,
calls or combinations thereof, except as described in its Prospectus and
Statement of Additional Information which are incorporated herein by reference.
These limitations are non-fundamental. The Woodward Fund 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 Woodward Fund
although they are expected to become non-fundamental in connection with the
Reorganization.
Other Investment Companies. See page 16 above.
Miscellaneous. As a matter of non-fundamental policy, the Prairie Fund 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 its 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.
18
<PAGE>
The Woodward Fund has no corresponding limitation on investment in companies
with less than three years' continuous operation. The post-reorganization Fund
will also have no such limitation. The Woodward Fund, as a matter of fundamental
policy, may not mortgage, pledge or hypothecate its assets, except in connection
with its borrowings. The post-reorganization Fund will not be permitted to
mortgage, pledge or hypothecate its assets except to the extent permitted by the
1940 Act.
In addition, the Prairie Fund, as a matter of non-fundamental policy, may
not invest in securities of a company for the purpose of exercising management
or control. The Woodward Fund currently is subject to the foregoing limitation
as a matter of fundamental policy. The post-reorganization Fund expects 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 Fund's Prospectus and Statement 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 Fund and the Woodward Fund are discussed
above under "Summary--Overviews of the Prairie Fund and Woodward Fund" 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. Prairie currently offers
seventeen investment portfolios and Woodward currently offers seventeen
investment portfolios.
Woodward and Prairie Funds are each organized as Massachusetts business
trusts and are subject to the provisions of their respective Declarations of
Trust and By-laws. Shares of both Prairie and Woodward: (i) are 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; 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 Fund have a par value of $.001. Shares of the
Woodward Funds have a par value of $.10. In addition, shares of the Prairie Fund
and Woodward Fund have no preemptive rights and only such conversion and
exchange rights as the respective Boards of Trustees may grant in their
discretion. When issued for payment as described in its prospectus, Prairie Fund
shares and Woodward Fund shares are fully paid and non-assessable by such
entities except as required under Massachusetts law with respect to Woodward and
Prairie Funds. 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 and Prairie Funds
upon written request at the addresses shown on the cover page of this Combined
Prospectus/Proxy Statement.
19
<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 Board of
Trustees 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 June 12, 1996 will
be entitled to vote at the Meeting. On that date there were outstanding and
entitled to be voted 12,827,615 shares of Prairie International Equity Fund.
Each share or fraction thereof is entitled to one vote or fraction thereof, and
all shares will vote separately.
Prairie and Woodward have been advised by FCIMCO that the shares of the
Prairie Fund 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 the Prairie Fund
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
Fund in accordance with the provisions of the Prairie Declaration of Trust and
the requirements of the 1940 Act. The term "majority of the outstanding shares"
of the Prairie Fund as used herein means more than 50% of its outstanding
shares.
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.
20
<PAGE>
The approval of the Reorganization by the shareholders of Woodward is not
being solicited because their approval or consent is not legally required.
At June 12, 1996, FCIMCO and its affiliates held beneficially 43.49% of the
aggregate total assets of the Prairie Fund.
At June 12, 1996, the name, address and percentage of ownership of the
persons who owned of record 5% or more of any class of the Prairie Fund, and the
percentage of the respective share classes of the Woodward Fund that would be
owned by those persons upon the consummation of the Reorganizing Transaction
based upon their holdings on April 11, 1996, are as follows:
<TABLE>
<CAPTION>
PERCENTAGE
PERCENTAGE OF CLASS OF
PERCENTAGE OF PRAIRIE WOODWARD
OF CLASS FUND SHARES FUND
CLASS OF OWNED ON OWNED ON OWNED ON
PRAIRIE FUND NAME AND ADDRESS SHARES OWNED RECORD DATE RECORD DATE CONSUMMATION
------------ ---------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
International Equity Fund NSR Pension Plan 25,776.70 7.52% .20% 5.46%
Class A 16 Kimberly Cir.
Oak Brook, IL 69521
</TABLE>
At April 11, 1996, the name, address and share ownership of the persons who
owned of record 5% or more of Prairie investment portfolios not involved in the
Reorganization were as follows;
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND CLASS OWNERSHIP
---------------- ---- ---------------
<S> <C> <C>
Arthur F. Stake.................................... Managed Assets 71.04%
Eklund & Eklund Class I
c/o John Livensparger
1 First National Plaza
Chicago, IL 60603
Stradford M. Dick, Jr. Trust....................... 27.80%
2309 Central Street
Apartment 2
Evanston, Il 60201
NSR Pension Plan................................... Bond Fund 22.83%
16 Kimberly Circle Class A
Oak Brook, IL 60521
Joe Keim Builders Inc. Inv......................... U.S. Government 8.32%
301 E. Longfellow Securities Fund
Wheaton, IL 60187
CHGO Com TR Island Comb Fds........................ Bond Fund Class I 6.90%
Chicago Comm. Trust
c/o Carol Crenshaw
222 N. LaSalle, Suite 1400
Chicago, IL 60601
CHGO Com TR FNB Var Inst Fd........................ 6.88%
Chicago Comm. Trust
c/o Carol Crenshaw
222 N. LaSalle, Suite 1400
Chicago, IL 60601
Eliz Morse Charitable Trust........................ Bond Fund 6.00%
William Alexander Class I
Suite 905, 79 W. Monroe
Chicago, Il 60603-4907
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND CLASS OWNERSHIP
---------------- ---- ---------------
<S> <C> <C>
R. Allerton Endowment Fd........................... 5.26%
Robert Mars The Art
Institute of Chicago
111 S. Michigan Ave.
Chicago, IL 60603-6110
Andres Gabel MD IRA................................ Managed Assets 25.98%
2509 Partridge Ln., Income Fund
Northbrook, IL 60062 Class I
Taylor William-Martial Trust....................... 18.30%
633 E. Woodland Rd.
Lake Forrest, IL 60045
G. Fremn & FT...................................... 14.26%
Fremn Linda FD
633 E. Woodland Rd.
Lake Forrest, IL 60045
FT Freeman, LJ..................................... 10.81%
Freeman Acct.
633 E. Woodland Rd.
Lake Forrest, IL 60045
Lincoln Cnty Hertiage Trust........................ 5.56%
c/o Frances Freemena
34 W 040 White Thom
Box 205, Wayne, IL 60184
James R. Zeilstra.................................. 5.40%
1332 S. 60th Ct.
Cicero, IL 60650
Eliz Morse Charitable Trust........................ International Bond Fund 7.65%
William Alexander Class I
Suite 905, 79 W. Monroe
Chicago, IL 60603-4907
Jep J Dau.......................................... 6.05%
United Charities of Chicago
c/o Controller
14 E. Jackson
Chicago, IL 60604
George Plessing.................................... 5.11%
c/o Arthur J. Kenning
12803 Circle Parkway
Palos Park, IL 60464
NSR Pension Plan................................... International Bond Fund 15.84%
16 Kimberly Cir. Class A
Oak Brook, IL 60521
Eliz Morse Charitable Trust........................ International Equity Fund 5.21%
William Alexander Class I
Suite 905, 79 W. Monroe
Chicago, IL 60603-4907
</TABLE>
At June 12, 1996, the trustees and officers of Prairie, as a group, owned
less than 1% of the outstanding shares of the Prairie Fund. At June 12, 1996,
the trustees and officers of Woodward owned less than 1% of the outstanding
shares of the Woodward Fund.
22
<PAGE>
At June 12, 1996, the name, address and percentage of ownership of the
persons who owned of record 5% or more of any class of shares of the Woodward
Fund are as follows:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OWNED OF SHARES
ON OWNED ON
NAME AND ADDRESS FUND RECORD DATE RECORD DATE
---------------- ---- ------------ -----------
<S> <C> <C> <C>
Employees Retirement...................... International Equity Fund 4,539,536.76 32.65%
Plan of NBD Bank Class I Shares
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
BHC Securities............................ International Equity Fund 23,047.97 18.00%
One Commerce Square Class A Shares
2005 Market Street
Philadelphia, PA 19103
Catherine J. Karbum (Trustee) 8,650.39 6.76%
20135 Elwood
Beverly Hills, MI 48025-5015
</TABLE>
On April 11, 1996, Trussal & Co., 900 Tower Drive, Troy, Michigan 48908,
held of record the outstanding Class I Shares, as listed below, of each Fund 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
such Fund) 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 such class and 19.12% of 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 such class and 9.47% of such Fund)
Fund)
Tax-Exempt Money Market 525,590,084.000 (or 84.48% of 289,351,959 (or 46.51% of
Fund......................... such class and 80.73% of such such class and 44.44% of such
Fund) Fund)
Michigan Tax-Exempt 41,814,954.000 (or 68.09% of 20,301,858 (or 33.06% of such
Money Market Fund........... such class and 31.18% of such class and 15.14% of 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 such class and 87.94% of such
Fund) Fund)
Intermediate Bond Fund....... 36,903,910.695 (or 100% of 33,119,176 (or 89.74% of such
such class and 97.01% of such class and 87.06% of 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 such class and 94.30% of such
Fund) Fund)
Municipal Bond Fund.......... 7,043,673.027 (or 100% of 5,020,214 (or 71.27% of such
such class and 85.55% of such class and 60.97% of such
Fund) Fund)
Michigan Municipal Bond 3,124,974.746 (or 100% of 1,975,178 (or 63.21% of such
Fund......................... such class and 61.60% of such class and 38.93% of 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 such class and 84.48% of 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 such class and 80.71% of 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 such class and 79.91% of 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 such class and 89.54% of such
Fund) Fund)
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
WOODWARD FUNDS TRUSSAL & CO. NBD BANK
-------------- ------------- --------
<S> <C> <C>
Balanced Fund................ 8,487,031.272 (or 99.84% of 8,322,312 (or 97.90% of such
such class and 90.37% of such class and 88.62% of 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 such class and 91.48% of 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 such class and 89.57% of such
Fund) Fund)
</TABLE>
At April 11, 1996, the Automated Cash Management System ("ACMS"), 9000
Haggerty, Belleville, Michigan 48111, held of record the following Class I
Shares on behalf of its participants owned beneficially 5% or more of such
Shares.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
CLASS OWNED FUND SHARES
NUMBER OF ON OWNED ON
SHARES HELD APRIL 11, 1996 APRIL 11, 1996
--------------- -------------- --------------
<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, Renaissance Center, 26th Floor, Detroit, MI 48243, held of
record, but not beneficially, 49,760,829 Class A Shares of the Michigan
Tax-Exempt Money Market Fund, representing 68.43% of such and 36.27% of such
Fund.
At April 11, 1996, the name, address and share ownership of the persons who
owned beneficially 5% or more of Woodward's investment portfolios not involved
in the Reorganization were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND CLASS OWNERSHIP
---------------- ---- ---------------
<S> <C> <C>
BHC Securities........................ Money Market Fund--Class A 18.30%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities........................ Government Fund--Class A 19.04%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
SEC Lending Collateral-............... Government Fund--Class I 5.66%
Lehman
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
BHC Securities........................ Treasury Money Market Fund-Class A 55.28%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Walter International Congo Inc........ 12.83%
One Jackson Square
BHC Securities........................ Tax-Exempt Money Market Fund-- Class A 18.09%
One Commence Square
2005 Market Street
Philadelphia, PA 19103
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND CLASS OWNERSHIP
---------------- ---- ---------------
<S> <C> <C>
Michigan School Asbestos Trust........ Michigan Tax-Exempt 13.90%
Humphrey, Farrington, McClain PC Money Market Fund--Class I
c/o Scott Manuel
221 W. Lexington
Suite 400
P.O. Box 900
Independence, MS 64051
NBD Bancorp Inc....................... Bond Fund--Class I 5.21%
Employees' Savings and Investment
Plan Trust Administration
611 Woodward Avenue
Detroit, MI 48232
Henry Ford Investment................. 19.00%
Management-Account
600 Fisher Building
Detroit, MI 48202
BHC Securities........................ Intermediate Bond Fund--Class A 12.11%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities........................ Short Bond Fund--Class A 31.03%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Benjamin J. Soleau.................... 6.44%
543 Adams
Plymouth, MI 48170
Richard A. Poel....................... 7.38%
10 Lakeview Drive
Beale AFB, Ca 95903
Richard L. Foersterling............... 25.95%
1256 Penniman
Plymouth, MI 48170
Michael G. Hall Family Trust.......... 5.10%
1006 Cumber Road
Ubly, MI 48475
The Wellness Plan..................... Short Bond Fund--Class I 24.82%
6500 John C. Lodge
Detroit, MI 48202
Kresge Foundation..................... 24.50%
3215 W. Big Beaver
P.O. Box 3151
Troy, MI 48007-3151
BHC Securities........................ Municipal Bond Fund--Class A 6.32%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Charles J. Lefler Revocable Trust..... Municipal Bond Fund--Class I 8.81%
39740 Walker Court
Northville, MI 48167
Consumer Power........................ 22.57%
212 W. Michigan Avenue
Jackson, MI 49201
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND CLASS OWNERSHIP
---------------- ---- ---------------
<S> <C> <C>
Carol Lefler Revocable Trust.......... Michigan Municipal Bond Fund-- 6.72%
39740 Walker Court Class I
Northville, MI 48167
BHC Securities........................ Growth/Value Fund--Class A 11.66%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities........................ Opportunity Fund--Class A 9.85%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities........................ Intrinsic Value Fund--Class A 11.90%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities........................ Capital Growth Fund--Class A 13.64%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities........................ Balanced Fund--Class A 5.26%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
NBD Bancorp, Inc...................... Balanced Fund--Class I 22.81%
Employees' Savings and Investment
Plan Trust Administration
611 Woodward Avenue
Detroit, MI 48232
Dickinson/Wright Target Benefit....... 12.39%
500 Woodward Avenue
Suite 4000
Detroit, MI 48226
Albert Kahn and Associates............ 5.52%
7430 Second Avenue
Detroit, MI 48202
BHC Securities........................ Equity Index Fund--Class A 38.63%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Whirlpool............................. Equity Index Fund--Class I 28.06%
2000 M-63 North
Benton Harbor, MI 49022
Oakland County Retirement System...... 7.75%
1200 North Telegraph
Pontiac, MI 48053
Consumer Power Union Welfare Benefit.. 7.84%
212 W. Michigan Avenue
Jackson, MI 49201
McGregor Fund......................... 7.78%
333 West Fort Street
Detroit, MI 48226
</TABLE>
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
26
<PAGE>
Massachusetts, in connection with the Reorganization. Shareholders have,
however, the right to redeem from Prairie their Prairie Fund 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 the Prairie Fund prior to any such adjournment if sufficient votes have been
received for approval with respect to the Prairie Fund. A quorum is constituted
with respect to the Prairie Fund by the presence in person or by proxy of the
holders of more than 30% of the outstanding shares of the Fund entitled to vote
at the Meeting. Prairie proxies properly 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 Woodward Fund is included in the Prospectus
accompanying this Combined Prospectus/Proxy Statement, which are incorporated by
reference herein. Additional information about this Fund is included in its
Statement of Additional Information dated April 15, 1996 which has 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
27
<PAGE>
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.
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 Fund or the Woodward Fund.
FINANCIAL STATEMENTS
The financial highlights and financial statements for the Prairie Fund for
the 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 Woodward Fund for the fiscal year ended December 31, 1995 is
contained in Woodward's Annual Report to Shareholders and in Woodward's
Prospectus and Statement of Additional Information dated April 15, 1996, which
is incorporated by reference in this Combined Prospectus/Proxy Statement.
The audited financial statements of the Prairie Fund for the 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 Woodward Fund for the fiscal year
ended December 31, 1995, contained in Woodward's Annual Report and incorporated
by reference in this Combined Prospectus/Proxy Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto and is incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing.
OTHER BUSINESS
The Boards of Trustees 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.
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.
28
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
THE WOODWARD FUNDS AND PRAIRIE FUNDS
DATED MAY 21, 1996
I-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
I. Transfer of Assets............................................................ 3
II. Liquidating Distribution and Termination of Prairie........................... 4
III. Valuation Time................................................................ 4
IV. Certain Representations, Warranties and Agreements of Prairie................. 5
V. Certain Representations, Warranties and Agreements of Woodward................ 6
VI. Shareholder Action on Behalf of the Acquired Fund............................. 8
VII. N-14 Registration Statement and Proxy Solicitation Materials.................. 8
VIII. Effective Time of the Reorganization.......................................... 8
IX. Woodward Conditions........................................................... 8
X. Prairie Conditions............................................................ 10
XI. Tax Documents................................................................. 11
XII. Finder's Fees................................................................. 12
XIII. Announcements................................................................. 12
XIV. Further Assurances............................................................ 12
XV. Termination of Representations and Warranties................................. 12
XVI. Termination of Agreement...................................................... 12
XVII. Amendment and Waiver.......................................................... 12
XVIII. Governing Law................................................................. 13
XIX. Successors and Assigns........................................................ 13
XX. Beneficiaries................................................................. 13
XXI. Prairie Liability............................................................. 13
XXII. Woodward Liability............................................................ 13
XXIII. Notices....................................................................... 13
XXIV. Expenses...................................................................... 14
XXV. Entire Agreement.............................................................. 14
XXVI. Counterparts.................................................................. 15
</TABLE>
I-2
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made as of May 21, 1996 by and between
The Woodward Funds, a Massachusetts business trust ("Woodward") and Prairie
Funds, a Massachusetts business trust ("Prairie").
WHEREAS, the parties desire that substantially all of the assets and
liabilities of the Prairie International Equity Fund (the "Acquired Fund"), an
investment portfolio offered by Prairie, be transferred to, and be acquired and
assumed by, the Woodward International Equity Fund (the "Acquiring Fund"), an
investment portfolio offered by Woodward, in exchange for Class A, Class B or
Class I Shares, as applicable, of the Acquiring Fund which shall thereafter be
distributed by Prairie to the holders of Class A, Class B or Class I Shares, as
applicable, of the Acquired Fund, all as described in this Agreement (the
"Reorganization");
WHEREAS, the parties intend that the Reorganization 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 the
Acquired Fund 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.
1.01 (a) At the Effective Time of the Reorganization (as defined in Article
VIII), all property of every description, and all interests, rights, privileges
and powers of the 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 Fund Assets") shall be transferred and conveyed by the
Acquired Fund to Woodward on behalf of the Acquiring Fund, and shall be accepted
by Woodward on behalf of the Acquiring Fund, and Woodward, on behalf of the
Acquiring Fund, shall assume all known liabilities whether accrued, absolute,
contingent or otherwise, of the Acquired Fund reflected in the calculation of
the Acquired Fund's net asset value (the "Acquired Fund Liabilities"), so that
at and after the Effective Time of the Reorganization with respect to the
Acquired Fund: (i) all assets of the Acquired Fund shall become and be the
assets of the Acquiring Fund; and (ii) all known liabilities of the Acquired
Fund reflected as such in the calculation of the Acquired Fund's net asset value
shall attach to the Acquiring Fund as aforesaid and may thenceforth be enforced
against the 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 the
Acquired Fund, and (subject to Section 1.01(b)) any deferred or prepaid expenses
shown as an asset on the Acquired Fund's books, at the Effective Time of the
Reorganization of the Acquired Fund, and all good will, all other intangible
property and all books and records belonging to the Acquired Fund. Recourse by
any person for the Acquired Fund Liabilities assumed by the Acquiring Fund
shall, at and after the Effective Time of the Reorganization of the Acquired
Fund, be limited to the Acquiring Fund.
(b) Notwithstanding Section 1.01(a), unamortized organizational expenses
of the Acquired Fund shall not be transferred or assumed hereunder. The
parties have been advised that such expenses will be paid to the Acquired
Fund by one or more third parties and will be eliminated from the balance
sheets of the Acquired Fund prior to the Effective Time of the
Reorganization.
I-3
<PAGE>
1.02 The holders of Class A Shares, Class B Shares and Class I Shares of the
Acquired Fund shall receive, respectively, Class A Shares, Class B Shares and
Class I Shares of the Acquiring Fund. In connection with the Reorganization, the
Board of Trustees of Woodward has adopted resolutions authorizing (i) the change
of designations of the classes of the Acquiring Fund as used in Woodward's
Prospectus from Retail Shares to Class A and from Institutional Shares to Class
I, and (ii) the establishment of Class B Shares for the Acquiring Fund. These
changes will be effective by the Effective Time of the Reorganization with
respect to the 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 the Acquired Fund a
number of full and fractional shares to the third decimal place, of the
Acquiring Fund and of the class or classes identified in Section 1.02, all
determined and adjusted as provided in this Agreement. The shares of each class
of the Acquiring Fund so issued will have an aggregate net asset value equal to
the value of the Acquired Fund Assets that are represented by shares of the
corresponding class of the Acquired Fund.
1.04 The net asset value of each class of shares of the Acquiring Fund and
the net asset value of each class of shares of the Acquired Fund shall be
determined as of the Valuation Time.
1.05 The net asset value of each class of shares of the Acquiring Fund shall
be computed in the manner set forth in the Acquiring Fund's then current
prospectus 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 portfolio
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 Fund to the Acquiring Fund, each security
shall be priced in accordance with the policies and procedures of Woodward
described in its then current prospectus and statement 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.
II. Liquidating Distribution and Termination of Prairie. Immediately after
the Effective Time of the Reorganization, the 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 to be received by the record holders of such class of the
Acquired Fund. In addition, each shareholder of record of the 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 the 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 the 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 the 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, and the Acquired
Fund's transfer books shall be closed permanently. As soon as practicable after
the Effective Time of the Reorganization, 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
Investment Company Act of 1940 (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.
III. Valuation Time. The Valuation Time for the Reorganization 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.
I-4
<PAGE>
IV. Certain Representations, Warranties and Agreements of Prairie. Prairie,
on behalf of itself and its Acquired Fund, represents and warrants to, and
agrees with, Woodward 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. The 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 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) The 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.
(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
the 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 the Acquired Fund for the fiscal 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 the Acquired Fund as of December 31, 1995 and the results of its
operations for the period then ending, in conformity with generally accepted
accounting principles.
(g) Prior to the Valuation Time, the Acquired Fund shall have declared a
dividend or dividends, with a record date and ex-dividend date prior to the
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 period ended on December 31, 1995
and for the period from said date to and including the Effective Time of the
Reorganization (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.
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(h) At both the Valuation Time and the Effective Time of the
Reorganization, there shall be no known liabilities of the 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 set forth 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 threatened, against Prairie
or the Acquired Fund which could result in liability on the part of Prairie
or the Acquired Fund.
(j) Subject to the approvals of shareholders referred to herein, at both
the Valuation Time and the Effective Time of the Reorganization, the
Acquired Fund shall have full right, power and authority to sell, assign,
transfer and deliver the Acquired Fund Assets of the Acquired Fund and, upon
delivery and payment for the Acquired Fund Assets as contemplated herein,
the 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 ("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 Fund that will be registered with the SEC pursuant to this
Agreement, which, without limitation, shall include a proxy statement of
Prairie and the prospectus of Woodward with respect to the transaction
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 the 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 the
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 the
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 the
Acquiring Fund to be received in the transactions contemplated herein,
except in distribution to its shareholders as contemplated herein.
V. Certain Representations, Warranties and Agreements of Woodward. Woodward,
on behalf of itself and the 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. The Acquiring Fund is registered with the SEC as an open-end
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<PAGE>
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) The Acquiring Fund 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; the Acquiring Fund 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 the Acquiring Fund 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 the Acquiring Fund as of December 31, 1995 and the results of
its operations for the year then ended, in conformity with generally
accepted accounting principles.
(f) At both the Valuation Time and the Effective Time of the
Reorganization, there shall be no known liabilities of the 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.
(g) There are no legal, administrative or other proceedings pending or,
to its knowledge, threatened against Woodward or the Acquiring Fund which
could result in liability on the part of Woodward or the 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 the 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 the Acquiring Fund to be issued and
delivered to the Acquired Fund for the account of record holders of shares
of the Acquired Fund, pursuant to the terms
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<PAGE>
hereof, shall have been duly authorized as of the Effective Time of the
Reorganization 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 Fund.
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 and as a condition to the Reorganization, the Board of Trustees
of Prairie shall call, and Prairie shall hold, a meeting of the shareholders of
the Acquired Fund 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 the
Acquired Fund to the Acquiring Fund, and the assumption by the Acquiring
Fund of the Acquired Fund Liabilities, in exchange for shares of a class
or classes of shares of the Acquiring Fund, as set forth in Section 1.02.
(ii) The liquidation of the Acquired Fund through the distribution to
its record holders of shares of the class or classes of shares of the
Acquiring Fund as described in this Agreement.
(b) Such other matters as may be determined by the Boards of Trustees or
authorized officers of the parties.
6.02 Approval of this Reorganization Agreement by the shareholders of the
Acquired Fund shall constitute the waiver of the application of any fundamental
policy of the Acquired Fund 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 Time of the Reorganization. Delivery of the Acquired Fund
Assets of the Acquired Fund and the shares of the classes of the Acquiring Fund
to be issued pursuant to Article I and the liquidation of the Acquired Fund
pursuant to Article II shall occur at the opening of business on the next
business day following the Valuation Time, 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 date and time at which such actions are
taken are referred to herein as the "Effective Time of the Reorganization." To
the extent the Acquired Fund Assets are, for any reason, not transferred at the
Effective Time of the Reorganization, Prairie shall cause the 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 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 the Acquired Fund, in the
manner required by law.
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<PAGE>
(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 the Acquired Fund in and to the
Acquired Fund Assets. The Acquired Fund Assets shall be accompanied by all
necessary state stock transfer stamps or cash for the appropriate purchase
price therefor.
(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
the Valuation Time and the Effective Time of the Reorganization. As of the
Valuation Time and the Effective Time of the Reorganization there shall have
been no material adverse change in the financial position of the 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, substantially to the effect that: (i)
Prairie Funds is a Massachusetts business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts; (ii) the
shares of the Acquired Fund outstanding at such time are duly authorized,
validly issued, fully paid and non-assessable by the Acquired Fund, and to
such counsel's knowledge, no shareholder of the Acquired Fund has any
option, warrant or pre-emptive right to subscription or purchase in respect
thereof; (iii) 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 the Acquired 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, 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 substantially to the
effect that for federal income tax purposes (i) the transfer of the Acquired
Fund Assets hereunder, and the assumption by the Acquiring Fund of Acquired
Fund Liabilities, in exchange for shares of each class of the Acquiring
Fund, and the distribution of said shares to the shareholders of the
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 the 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 the Acquiring Fund as a result of such
transactions; (iv) in accordance with Section 354(a)(1) of the
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<PAGE>
Code, no gain or loss will be recognized by the shareholders of the Acquired
Fund on the distribution to them by the Acquired Fund of shares of any class
of the 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 the 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 the 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 the Acquired Fund as a capital
asset; and (viii) in accordance with Section 1223(2) of the Code, the
holding period of the Acquiring Fund with respect to the Acquired Fund
Assets will include the period for which the Acquired Fund Assets were held
by the 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 the Valuation Time and the 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 the
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.
X. Prairie Conditions. The obligations of Prairie hereunder with respect to
the 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 the 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 the Valuation Time and the Effective Time of the Reorganization.
As of the Valuation Time and the Effective Time of the Reorganization there
shall have been no material adverse change in the financial condition of the
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.
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<PAGE>
(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 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 the Acquiring
Fund to be delivered at such time to the Acquired Fund as provided for by
this Agreement are duly authorized and upon delivery will be validly issued,
fully paid and non-assessable by the Acquiring Fund and to such counsel's
knowledge, no shareholder of the 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 the 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 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 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 the Valuation Time and the 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.
XI. Tax Documents. Prairie shall deliver to Woodward at the Effective Time
of the Reorganization confirmations or other adequate evidence as to the
adjusted tax basis of the Acquired Fund Assets then delivered to the Acquiring
Fund in accordance with the terms of this Agreement.
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<PAGE>
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 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.
XVI. Termination of Agreement.
16.01 This Agreement may be terminated by a party at any time at or prior to
the Effective Time of the Reorganization of the Acquired Fund and the Acquiring
Fund at any time at or prior to the Effective Time of the Reorganization, by the
Board of Trustees of Woodward or the Board of Trustees 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 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
Trustees, as the case may be, or their respective Presidents or any Vice
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).
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<PAGE>
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 name "Prairie Funds," refer respectively to the trust created and
the trustees, as trustees but not individually or personally, acting from time
to time under the Declaration of Trust dated October 20, 1994 which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of 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 the Acquired Fund,
shall be discharged only out of the assets of the 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 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 the Acquiring Fund, or in
connection with the transactions contemplated herein with respect to the
Acquiring Fund, shall be discharged only out of the assets of the 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
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<PAGE>
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
If to Prairie:
Prairie Funds
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 hicago 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
Fund.
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.
I-14
<PAGE>
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.
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.
<TABLE>
<S> <C>
THE WOODWARD FUNDS
ATTEST:
By:
- ------------------------------------ -----------------------------
PRAIRIE FUNDS
ATTEST:
By:
- ------------------------------------ -----------------------------
</TABLE>
I-15
<PAGE>
APPENDIX II
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD INTERNATIONAL EQUITY FUND
OBJECTIVE:
The Woodward International Equity Fund (the "Fund") is an equity mutual fund
which invests primarily in equity securities of foreign companies. The Fund's
objective is to achieve long-term capital appreciation and, secondarily, to
produce current income. The Fund seeks to achieve this objective by emphasizing
active country selection involving global economic and political assessments
together with valuation analysis of selected countries' securities markets. The
Fund may exhibit more volatility than the U.S. equity market in general.
PERFORMANCE HIGHLIGHTS:
International equity markets appreciated during 1995 as slower economic
growth and modest inflationary pressures resulted in lower interest rates. The
Morgan Stanley Capital International EAFE Index returned 11.2 percent in U.S.
dollar terms during 1995. European equity markets advanced 21.6 percent in U.S.
dollars on good earnings gains and lower interest rates. The Japanese stock
market lagged with a U.S. dollar return of 0.7 percent. This stock market
declined during the first half of the year on concerns about the anemic business
outlook, trade tensions with the U.S. and increasing nonperforming loans at
Japanese banks. The MSCI Pacific ex-Japan index returned 12.9 percent, led by a
return of 22.6 percent in Hong Kong. Latin American equity markets generally
declined in response to a financial crisis in Mexico.
During the calendar year ended December 31, 1995, the Fund returned 11.5
percent (without sales charge). The net asset value increased from $10.005 to
$11.046. Distributions from ordinary income were $0.107 per share and there was
no long-term capital gains distribution.
The Fund's performance compared favorably with the Morgan Stanley Capital
International EAFE Index, a market value weighted index of about 1,100 equity
securities issued by foreign companies with a total market value of
approximately US $5.3 trillion. This index is not subject to expenses of a
mutual fund. The Fund outperformed primarily due to its underweighting of
equities in Japan and overweighting of equities in Europe. The Fund also
outperformed the Lipper International Universe average return of 9.4 percent for
1995.
Over the long term, international equities have historically provided
returns superior to U.S. large capitalization stocks although, at a higher level
of volatility. We continue to recommend that long-term investors have a portion
of their assets invested internationally to capture the benefits of portfolio
diversification and potential capital appreciation.
II-1
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
WOODWARD INTERNATIONAL EQUITY FUND (CONTINUED)
Growth of $10,000 Invested in the
Woodward International Equity Fund and the
Morgan Stanley Capital International EAFE Index
$15,000
$14,362
$14,000
$13,511
$13,000 [GRAPH]
$12,836
$12,000
$11,000
$10,000
$9,000
6/94 12/94 6/95 12/95
12/3/94 6/95 12/95
------- ------- -------
Fund(1) ..... $ 9,500 $10,004 $10,595
Fund(2) ..... $10,000 $10,531 $11,153
Index(3)..... $10,000 $10,492 $11,372
(1) Includes maximum sales charge of 5.0%.
(2) Excludes maximum sales charge of 5.0%.
(3) Excludes expenses.
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURN ONE INCEPTION
THROUGH 12/31/95 YEAR (12/3/94)
--------------------------- ---- ---------
<S> <C> <C>
Woodward International Equity Fund (with maximum 5.0% sales charge)....... 5.9% 5.5%
Woodward International Equity Fund (without sales charge)................. 11.5% 10.7%
Morgan Stanley Capital International EAFE Index........................... 11.2% 12.7%
</TABLE>
Past performance is not predictive of future performance.
II-2
<PAGE>
APPENDIX III
SHAREHOLDER TRANSACTIONS AND SERVICES
This Appendix compares the shareholder transactions and services that are
available in connection with: 1) the Woodward Fund and 2) the Prairie Fund.
References to the Woodward Fund refers to the post-reorganization Fund.
I. THE WOODWARD INTERNATIONAL EQUITY FUND
AND THE
PRAIRIE INTERNATIONAL EQUITY FUND
A. SALES CHARGES AND EXEMPTIONS.
CLASS A SHARES
CLASS A SHARES
MAXIMUM SALES CHARGE
<TABLE>
<CAPTION>
PRAIRIE FUND/ CURRENT PROPOSED
WOODWARD FUND SALES LOAD SALES LOAD
------------- ---------- ----------
<S> <C> <C>
International Equity Fund/International 4.5% 5.0%
Equity Fund
</TABLE>
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
AMOUNT INVESTED OR YEAR SINCE PURCHASE
REDEMPTION PROCEEDS PAYMENT WAS MADE
------------------- -------------------
1.00 % First
0.50 % Second
CLASS A SHARES--SALES LOAD WAIVERS
a. Class A Shares of the Woodward Fund and Prairie Fund may be purchased at net
asset value and without a sales load by certain purchasers. The sales load
waivers applicable to the post-reorganization Fund are substantially similar
to the Prairie Fund's sales load waivers.
b. Reduced sales loads apply to any purchase of the Prairie Fund and Woodward
Fund 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 Fund 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,
III-1
<PAGE>
trust company or thrift institution, acting as a fiduciary or custodian,
other than 401(k) and other deferred 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 Fund's 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 Woodward Fund and Prairie Fund 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 the Woodward Fund, but not until the time
of the Reorganizing Transaction. The following table sets forth the rates of
the CDSC for the Woodward Fund and the Prairie Fund:
CLASS B SHARES
MAXIMUM CDSC
<TABLE>
<CAPTION>
PRAIRIE FUND/ CURRENT PROPOSED
WOODWARD FUND SALES LOAD SALES LOAD
-------------- ---------- ----------
<S> <C> <C>
International Equity Fund/International Equity 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 Fund and the Woodward Fund 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
III-2
<PAGE>
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.
CLASS I SHARES
Class I shares are sold at net asset value with no sales charge to qualified
trust, custody and/or agency account clients of FNBC, ANB or their affiliates,
to qualified plans with plan assets of at least $100 million invested in shares
of the Funds or other investment companies or accounts advised by either NBD or
FCIMCO.
B. PURCHASE POLICIES
The following table summarizes the Woodward and Prairie Fund's existing
purchase policies:
<TABLE>
<CAPTION>
WOODWARD FUND PRAIRIE FUND
------------- ------------
<S> <C> <C>
Minimum Initial Investment $1,000 ($250 for IRAs) for $1,000 ($250 for IRAs).
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.
Minimum Subsequent $100. $100.
Investment
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.
</TABLE>
The following table summarizes the post reorganization Fund's purchase
policies:
III-3
<PAGE>
<TABLE>
<S> <C>
Minimum Initial Investment $1,000 ($250 for IRAs).
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 Woodward Fund and Prairie Fund each reserves the right to reject any
purchase order.
C. REDEMPTION POLICIES
The following table summarizes the Woodward and Prairie Fund's existing
redemption policies:
<TABLE>
<CAPTION>
WOODWARD FUND PRAIRIE FUND
------------- ------------
<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 N/A N/A
Automatic Cash Available for shareholders N/A
Withdrawal Plan who own Class A Shares having
a minimum value of $15,000.
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 Fund's 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-4
<PAGE>
<TABLE>
<S> <C>
Check Writing Privilege N/A
Automatic Cash Available for shareholders who own shares of
Withdrawal Plan a Fund having a minimum value of $15,000.
Reinstatement Privilege Available for shareholders who purchase
shares within 120 days of redemption.
</TABLE>
The Prairie Fund 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 $1,000 or less. The 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, due to share redemptions, the account's net asset value is $1,000 or
less. The post-reorganization Fund 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, due to share redemptions, $1,000 or
less. Under certain circumstances the Woodward Fund 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
CLASS A SHARES AND 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 Woodward Fund will permit investors to purchase, in exchange for shares
of a Fund which has been owned for at least 30 days, shares of the same Class of
the other Funds of the 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
III-5
<PAGE>
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 lives 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 Fund reserves 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 Fund 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 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.
After the reorganization, Woodward Class B Shares will automatically convert
to Class A Shares in the eighth year 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.
III-6
<PAGE>
II. DIVIDENDS AND DISTRIBUTIONS
The Woodward Fund and Prairie Fund distribute their 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.
CURRENT DIVIDEND
DECLARED/PAID
----------------
Prairie International Equity Fund Quarterly/Quarterly
Woodward International Equity Fund Annually/Annually
Post-Reorganization Fund Quarterly/Quarterly
III-7
<PAGE>
PART B
THE WOODWARD FUNDS
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007
PRAIRIE FUNDS
Three First National Plaza
Chicago, Illinois 60670
STATEMENT OF ADDITIONAL INFORMATION
(1996 Special Meetings of Shareholders of
Prairie Funds)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Combined Prospectus/Proxy Statement dated June 26,
1996 for the Special Meetings of Shareholders of Prairie Funds ("Prairie") to be
held on July 31, 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
Woodward Fund is contained in and incorporated by reference to Woodward's
Statement of Additional Information dated April 15, 1996, a copy of which are
included herewith. The audited financial statements and related independent
accountant's report for the Woodward Fund contained in the Annual Report dated
December 31, 1995, is 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 Fund 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 26, 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 International Equity Fund to
the Woodward International Equity Fund in exchange for full and fractional
shares representing interests in the Woodward Fund. 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 Fund that are outstanding
immediately before the effective time of the reorganization.
Following the exchange, the Prairie Fund will make a liquidating
distribution of the Woodward Fund shares to their shareholders. Each
shareholder owning shares of the Prairie Fund at the effective time of the
Reorganization will receive shares of the 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 Fund 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 31, 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 Fund, 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,
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 Fund, 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-3
<PAGE>
THE PRAIRIE/WOODWARD FUNDS
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 a pro forma
balance sheet as of December 31, 1995, and a pro forma statement of income for
the 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.
PFS-1
<PAGE>
Prairie/Woodward Funds
International Equity Fund
Pro Forma Combining Statement of Assets and Liabilities
December 31, 1995
(Unaudited)
<TABLE><CAPTION>
Woodward Prairie Pro Forma
International International Combined
Equity Fund Equity Fund Adjustments (Note 1)
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Cost $ 100,165,227 $ 96,241,231 $ -- $ 196,406,458
============= ============= ============= =============
At Value $ 107,690,899 $ 102,116,486 $ -- $ 209,807,385
Cash 364,232 89,437 -- 453,669
Cash denominated in foreign currencies -- 948,475 -- 948,475
Receivable for securities sold 8,253 -- -- 8,253
Receivable from Advisor -- -- 60,697 (c) 60,697
Receivable for Fund shares sold -- 447,060 -- 447,060
Unrealized appreciation on foreign exchange contracts 52 -- -- 52
Withholding tax receivable 140,894 55,468 -- 196,362
Income receivable 178,985 1,089,681 -- 1,268,666
Deferred organization expenses 49,159 60,697 (60,697)(c) 49,159
Prepaids and other assets 27,321 3,482 -- 30,803
------------- -------------- ------------- -------------
TOTAL ASSETS 108,459,795 104,810,786 -- 213,270,581
------------- -------------- ------------- -------------
LIABILITIES:
Payable for securities purchased 770,234 -- -- 770,234
Unrealized depreciation on foreign exchange contracts 267 -- -- 267
Accrued investment advisory fee 67,327 31,952 -- 99,279
Accrued distribution fees 516 -- -- 516
Accrued custodial fees 14,528 -- -- 14,528
Administration fees payable -- 12,564 -- 12,564
Dividends payable 306,527 203,585 -- 510,112
Other accrued expenses and payables 12,095 173,308 -- 185,403
------------- ------------- ------------- -------------
TOTAL LIABILITIES 1,171,494 421,409 -- 1,592,903
------------- ------------- ------------- -------------
NET ASSETS $ 107,288,301 $ 104,389,377 $ -- $ 211,677,678
============= ============= ============= =============
Net assets consist of:
Capital shares, at par $ 971,289 $ 9,344 $ 935,686 (a) $ 1,916,319
Additional paid-in capital 98,938,436 95,968,721 (935,686)(a) 193,971,471
Accumulated undistributed net investment income 803 134,091 -- 134,894
Accumulated undistributed net realized gains (losses)
from investments and foreign currency transactions (154,256) 1,502,766 -- 1,348,510
Net unrealized appreciation on investments,
foreign currency translations and financial futures 7,532,029 6,774,455 -- 14,306,484
------------- ------------- ------------- -------------
TOTAL NET ASSETS $ 107,288,301 $ 104,389,377 $ -- $ 211,677,678
============= ============= ============= =============
Class A shares:
Net assets $ -- $ 2,749,124 $ 925,362 (b) $ 3,674,486
Shares outstanding -- 246,447 86,207 (a,b) 332,654
Net asset value per class A share $ -- $ 11.16 $ -- $ 11.05
Maximum offering price per share $ -- $ 11.69 $ -- $ 11.63
Class B Shares
Net Assets $ -- $ 192,707 $ -- $ 192,707
Shares outstanding -- 17,292 -- 17,292
Net asset value per class B share $ -- $ 11.14 $ -- $ 11.14
Class I shares:
Net assets $ -- $ 101,447,546 $ 106,362,939 (b) $ 207,810,485
Shares outstanding -- 9,079,890 9,733,350 (a,b) 18,813,240
Net asset value per class I share $ -- $ 11.17 $ -- $ 11.05
Single class shares:
Net assets $ 107,288,301 $ -- $(107,288,301)(b) $ --
Shares outstanding 9,712,891 -- $ (9,712,891)(b) --
Net asset value per single class share $ 11.05 $ -- $ -- $ --
Maximum offering price per share $ 11.63 $ -- $ -- $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward International Equity
shares in exchange for shares of the Prairie International Equity Fund
in connection with the proposed reorganization.
(b) Adjustment reclassifies Woodward International Equity shares to reflect
the multi-class environment of the proposed reorganized entity.
(c) Remaining unamortized organizational costs of the Prairie International
Equity Fund will be assumed by the investment advisor prior to merger
date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-2
<PAGE>
Prairie/Woodward Funds
International Equity Fund
Pro Forma Combining Statement of Operations
For the Period
Ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Woodward Prairie Pro Forma
Internatonal International Combined
Equity Fund Equity Fund (1) Adjustments (Note 1)
----------- --------------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 538,478 $ 746,158 $ -- $ 1,284,636
Dividends (net of foreign taxes withheld
of $98,515 for Woodward and $134,218
for Prairie) 1,279,198 973,285 -- 2,252,483
------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME 1,817,676 1,719,443 -- 3,537,119
------------ ------------ ------------ ------------
EXPENSES:
Advisory fees 529,312 506,105 24,343 (a) 1,059,760
Distribution fees 4,063 -- (4,063)(b) --
Administration fees -- 94,372 104,333 (a) 198,705
Shareholder servicing fees 252 3,253 1,264 (a) 4,769
Custodian fees and expenses 133,650 159,181 -- 292,831
Professional fees 66,313 28,042 (19,355)(c) 75,000
Amortization of organization expenses 10,714 15,262 (15,262)(d) 10,714
Transfer agent fees and expenses -- 16,161 -- 16,161
Marketing expenses 46,449 -- (46,449)(b) --
Registration, filing fees and other expenses 76,994 58,582 -- 135,576
------------ ------------ ------------ ------------
TOTAL EXPENSES 867,747 880,958 44,811 1,793,516
Expense reimbursements (51,707) (213,519) 45,161 (e) (220,065)
------------ ------------ ------------ ------------
NET EXPENSES 816,040 667,439 89,972 1,573,451
------------ ------------ ------------ ------------
NET OPERATING INCOME 1,001,636 1,052,004 (89,972) 1,963,668
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gains (losses) on investments (147,589) 505,347 -- 357,758
Net realized losses on foreign
currency transactions (475) (236,752) -- (237,227)
Net realized gains on futures transactions -- 3,503,125 -- 3,503,125
Net change in unrealized appreciation on
investments 7,523,087 5,875,255 -- 13,398,342
Net change in unrealized appreciation on
assets and liabilities denominated
in foreign currencies and financial futures 6,376 899,200 -- 905,576
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCY 7,381,399 10,546,175 -- 17,927,574
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,383,035 $ 11,598,179 $ (89,972) $ 19,891,242
============ ============ ============ ============
<FN>
(1) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(a) Adjustment to reflect the proposed contractual fee structure of Woodward
International Equity Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by the
Woodward International Equity 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 International
Equity 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 International Equity Fund after
reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-3
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
International Equity Fund
- ------------------------------------------------------------------------------
Pro Forma Combining
PORTFOLIO OF INVESTMENTS
December 31, 1995
(Unaudited)
- ------------------------------------------------------------------------------
Pro Forma Pro Forma
Combined Combined
Woodward Prairie Shares Woodward Prairie Market Value
Shares Shares (Note 1) Description Market Value Market Value (Note 1)
-------- ------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS -- 84.4%
AUSTRALIA -- 2.8%
-- 2,400 2,400 Aberfoyle -- 5,266 5,266
-- 3,800 3,800 Adelaide Brighton Limited -- 3,392 3,392
9,799 15,300 25,099 Amcor Limited 69,247 108,121 177,368
-- 6,900 6,900 Ampolex -- 15,090 15,090
-- 7,000 7,000 Ashton Mining Limited -- 10,154 10,154
-- 18,800 18,800 Australian National Industries
Limited -- 13,983 13,983
17,000 27,500 44,500 Boral Limited 42,996 69,550 112,546
8,027 5,500 13,527 Brambles Industries Limited 89,565 61,369 150,934
28,140 47,000 75,140 Broken Hill Proprietary Co 397,716 664,270 1,061,986
-- 12,200 12,200 Burns Philip & Co -- 27,316 27,316
-- 4,300 4,300 Caltex Limited -- 16,985 16,985
14,487 9,600 24,087 Coca-Coca Amatil 115,631 76,623 192,254
18,791 26,612 45,403 Coles Myer Limited 58,568 82,944 141,512
10,620 16,017 26,637 CRA Limited 155,938 235,192 391,130
-- 2,400 2,400 Crusader(b) -- 2,535 2,535
27,466 22,700 50,166 CSR Limited 89,488 73,959 163,447
-- 2,160 2,160 Dominion Mining Limited(b) -- 1,125 1,125
-- 6,900 6,900 Email Limited -- 16,424 16,424
-- 1,600 1,600 Emperor Mines Limited(b) -- 2,559 2,559
-- 7,600 7,600 FAI Insurances(b) -- 4,127 4,127
22,347 48,900 71,247 Fosters Brewing Group 36,737 80,387 117,124
-- 15,200 15,200 General Property Trust -- 26,910 26,910
-- 23,800 23,800 Gold Mines of Kalgoorlie -- 22,129 22,129
23,031 29,900 52,931 Goodman Fielder Limited 23,128 30,026 53,154
-- 9,600 9,600 Hardie (James) Industries -- 16,567 16,567
11,453 7,400 18,853 ICI Australia 87,751 56,697 144,448
-- 6,000 6,000 Lend Lease Corp -- 87,032 87,032
23,841 39,700 63,541 MIM Holdings Limited 32,986 54,925 87,911
38,710 34,900 73,610 National Australia Bank 348,421 314,124 662,545
-- 5,800 5,800 Newcrest Mining Limited -- 24,419 24,419
37,765 -- 37,765 News Corporation(Aust Listing) 201,702 -- 201,702
30,504 -- 30,504 News Corporation Preferred
Limited Voting Shares 142,726 -- 142,726
-- 49,700 49,700 News Corporation Limited -- 265,443 265,443
-- 17,100 17,100 North Limited -- 47,700 47,700
-- 3,500 3,500 OPSM Protector Limited -- 5,467 5,467
44,367 28,800 73,167 Pacific Dunlop Limited 103,960 67,481 171,441
-- 22,100 22,100 Pioneer International Holdings -- 57,045 57,045
13,882 -- 13,882 Pioneer International 35,832 -- 35,832
-- 15,100 15,100 QCT Resources -- 16,960 16,960
-- 5,000 5,000 RGC Limited -- 24,920 24,920
-- 2,500 2,500 Rothman's Holdings Limited -- 10,228 10,228
33,203 21,000 54,203 Santos Limited 97,066 61,389 158,455
-- 9,100 9,100 Schroders Property Fund -- 14,892 14,892
-- 4,200 4,200 Smith Howard Limited -- 19,839 19,839
-- 1,800 1,800 Sons of Gwalia Limited -- 9,908 9,908
-- 23,400 23,400 Southcorp Holdings -- 54,482 54,482
PFS-4
<PAGE>
-- 7,400 7,400 Stockland Trust Group -- 17,064 17,064
-- 14,400 14,400 TNT Limited(b) -- 19,066 19,066
-- 6,900 6,900 Tubemakers of Australia Limited -- 21,403 21,403
-- 23,700 23,700 Westfield Trust -- 42,662 42,662
55,410 45,500 100,910 Westpac Banking Corp 245,657 201,720 447,377
36,388 27,600 63,988 WMC Limited 233,866 177,385 411,251
----------- ------------- -----------
2,608,981 3,339,254 5,948,235
BELGIUM -- 2.2% ----------- ------------- -----------
220 -- 220 Bekaert Sa 181,283 -- 181,283
4,250 -- 4,250 Electrabel 1,010,905 -- 1,010,905
3,700 -- 3,700 Fortis Ag 450,099 -- 450,099
80 -- 80 Fortis Ag (VVPR) 9,745 -- 9,745
1,300 -- 1,300 Generale De Banque 460,514 -- 460,514
2,300 -- 2,300 Gpe Bruxelles Lam 319,259 -- 319,259
1,550 -- 1,550 Kredietbank 423,985 -- 423,985
2,160 -- 2,160 Petrofina Sa 661,305 -- 661,305
850 -- 850 Solvay 459,240 -- 459,240
1,300 -- 1,300 Tractebe Inv Cap 536,714 -- 536,714
1,804 -- 1,804 Union Miniere(b) 120,761 -- 120,761
----------- ------------- -----------
4,633,809 -- 4,633,809
----------- ------------- -----------
DENMARK -- 1.1%
275 -- 275 Carlsberg 'A' 15,383 -- 15,383
2,018 -- 2,018 Carlsberg 'B' 112,884 -- 112,884
15 -- 15 D/S 1912 'B' 286,910 -- 286,910
9 -- 9 D/S Svendborg 'B' 248,475 -- 248,475
3,695 -- 3,695 Danisco 178,689 -- 178,689
3,641 -- 3,641 Den Danske Bank 251,634 -- 251,634
2,800 -- 2,800 Iss International Series 'B' 63,156 -- 63,156
2,449 -- 2,449 Novo-Nordisk As 'B' 335,855 -- 335,855
1,175 -- 1,175 Sophus Berendsen 'B' 132,516 -- 132,516
8,786 -- 8,786 Tele Danmak 'B' 480,378 -- 480,378
3,535 -- 3,535 Unidanmark 'A' (Reg'd) 175,417 -- 175,417
----------- ------------- -----------
2,281,297 -- 2,281,297
----------- ------------- -----------
FINLAND -- 1.8%
3,800 -- 3,800 Amer Group 'A' 59,424 -- 59,424
500 -- 500 Cultor Oy Series '2' 20,728 -- 20,728
2,500 -- 2,500 Cultor Oy Series '1' 103,639 -- 103,639
12,000 -- 12,000 Kesco 149,516 -- 149,516
700 -- 700 Kone Corp 'B' 58,521 -- 58,521
12,500 -- 12,500 Kymmene Corp 331,068 -- 331,068
119,766 -- 119,766 Unitas Ser 'A'(b) 303,414 -- 303,414
2,000 -- 2,000 Metro AB 'A' 82,450 -- 82,450
24,500 -- 24,500 Nokia (AB) Oy Series 'A' 964,876 -- 964,876
PFS-5
<PAGE>
18,600 -- 18,600 Nokia (AB) Oy Series 'K' 736,802 -- 736,802
19,500 -- 19,500 Outokumpo Oy 'A' 309,880 -- 309,880
3,800 -- 3,800 Pohjola Series 'B' 49,010 -- 49,010
23,400 -- 23,400 Repola 441,915 -- 441,915
2,200 -- 2,200 Sampo 'A' 118,056 -- 118,056
1,600 -- 1,600 Stockmann Oy 'A' 91,386 -- 91,386
----------- ------------- -----------
3,820,685 -- 3,820,685
FRANCE -- 4.3% ----------- ------------- -----------
757 100 857 Accor 98,139 12,964 111,103
996 250 1,246 Air Liquide 165,173 41,459 206,632
2,544 1,700 4,244 Alcatel Alsthom 219,631 146,766 366,397
1,981 600 2,581 AXA 133,677 40,488 174,165
-- 4,500 4,500 Banque Nationale de Paris -- 203,266 203,266
-- 100 100 BIC -- 10,183 10,183
-- 100 100 Bouygues -- 10,087 10,087
3,615 -- 3,615 Banque National Paris 163,291 -- 163,291
766 3,300 4,066 Carnaudmetalbox(b) 35,086 151,154 186,240
586 150 736 Carrefour(b) 356,006 91,128 447,134
-- 250 250 Casino Guich-Perr -- 7,264 7,264
-- 50 50 Chargeurs -- 9,969 9,969
1,834 2,300 4,134 Cie De St Gobain 203,262 254,909 458,171
1,251 2,400 3,651 Cie De Suez 51,673 99,133 150,806
2,318 -- 2,318 Cie Fin Paribas 'A' 127,267 -- 127,267
-- 50 50 Cie Geophysique(b) -- 1,646 1,646
-- 50 50 Club Mediterranee(b) -- 3,998 3,998
-- 1,210 1,210 Compagnie Bancaire -- 135,589 135,589
-- 3,600 3,600 Compagnie UAP -- 94,152 94,152
-- 50 50 Comptoirs Modern -- 16,256 16,256
3,520 450 3,970 CSF (Thomson) 78,528 10,039 88,567
1,520 -- 1,520 Danone (Ex Bsn) 251,138 -- 251,138
-- 50 50 Docks de France -- 7,607 7,607
-- 50 50 Dollfus-Meig & Cie PV -- 2,044 2,044
2,307 2,700 5,007 Eaux-Cie Generale 230,635 269,924 500,559
5,566 3,300 8,866 ELF-Aquitane 410,646 243,466 654,112
861 100 100 Eridania Beghin-Say 147,890 17,177 165,067
-- 50 50 Essilor International -- 9,570 9,570
-- 25 25 Europe 1(b) -- 5,061 5,061
-- 250 250 Groupe Danone -- 41,306 41,306
-- 50 50 GTM Entrepose -- 3,512 3,512
-- 50 50 Imetal -- 5,981 5,981
985 250 250 L'oreal 264,056 67,019 331,075
1,800 330 2,130 Lafarge-Coppee 116,126 21,290 137,416
-- 350 350 Lagardere Groupe -- 6,441 6,441
500 500 1,000 Legrand 77,295 77,295 154,590
2,000 1,600 1,600 LVMH Moet Hennessy 417,146 333,716 750,862
1,753 100 1,853 Lyonnais Des Eaux-Dumez 169,013 9,641 178,654
2,150 2,300 4,450 Michelin, Class B 85,861 91,852 177,713
PFS-6
<PAGE>
-- 100 100 Moulinex(b) -- 1,374 1,374
-- 50 50 Nord Est -- 1,159 1,159
1,114 -- 1,114 Pernod-Ricard 63,395 -- 63,395
793 1,300 2,093 Peugeot SA 104,752 171,725 276,477
-- 100 100 Pinault-Printemps -- 19,978 19,978
600 -- 600 Printemps (Av) 119,868 -- 119,868
433 50 483 Promodes 101,911 11,768 113,679
5,686 1,250 6,936 Rhone Poulenc, Series A 121,966 26,813 148,779
2,339 3,300 5,639 Sanofi 150,134 211,818 361,952
3,630 500 4,130 Schneider SA 124,257 17,115 141,372
986 50 1,036 Sefimeg 65,527 3,323 68,850
-- 200 200 Seita -- 7,259 7,259
-- 50 50 Simco -- 4,754 4,754
1,829 2,500 4,329 Societe Generale 226,270 309,281 535,551
-- 50 50 Sodexho(b) -- 14,723 14,723
350 50 400 St Louis 93,040 13,291 106,331
4,716 4,800 9,516 Total, Class B 318,715 324,392 643,107
-- 50 50 Union Immobiliere de France -- 4,334 4,334
----------- ------------- -----------
5,291,375 3,696,459 8,987,834
GERMANY -- 4.1% ----------- ------------- -----------
250 -- 250 Allianz (Regd) 491,869 -- 491,869
-- 50 50 AMB AAchener & Muench -- 36,331 36,331
1,026 600 1,626 BASF AG 231,540 135,404 366,944
1,100 600 1,700 Bayer AG 292,662 159,634 452,296
5,140 3,000 8,140 Bayerische Vereinsbank 154,422 90,129 244,551
-- 50 50 Beiersdorf AG, Series ABC -- 34,410 34,410
-- 50 50 Bilfinger & Berger -- 19,039 19,039
-- 50 50 Brau Und Brunnen -- 7,616 7,616
-- 150 150 Bremer Vulkan AG -- 4,192 4,192
-- 50 50 CKAG Colonial -- 41,921 41,921
-- 500 500 Commerzbank AG -- 118,950 118,950
-- 1,000 1,000 Continental AG -- 14,148 14,148
384 350 734 Daimler Benz AG 194,243 177,045 371,288
-- 100 100 Degussa AG -- 33,746 33,746
10,440 8,000 18,440 Deutsche Bank AG 496,734 380,639 877,373
-- 400 400 Deutsche Lufthansa AG -- 55,475 55,475
-- 50 50 Didier-Werke AG(b) -- 4,045 4,045
7,140 -- 7,140 Dredsner Bank (Var) 191,810 -- 191,810
-- 50 50 FAG Kugelfischer Georg(b) -- 6,428 6,428
-- 55 55 Heidelberger Zement -- 34,508 34,508
357 100 100 Hochtief AG 152,899 42,829 195,728
402 300 702 Kaufhof Holding AG 122,739 91,597 214,336
156 100 256 Linde AG 92,645 59,388 152,033
-- 50 50 Linotype Hell AG(b) -- 5,153 5,153
1,707 -- 1,707 Lufthansa Ag 236,739 -- 236,739
-- 100 100 MAN AG 365,512 27,737 393,249
1,146 450 1,596 Mannesmann AG 313,042 143,526 456,568
PFS-7
<PAGE>
145 100 245 Muenchener Ruckvers -- 215,891 215,891
-- 50 50 PWA Papier Waldhof(b) 303,153 7,406 310,559
1,074 800 1,874 Preussag AG -- 225,812 225,812
516 300 816 RWE AG 188,010 109,308 297,318
600 500 1,100 SAP AG 91,303 77,553 168,856
1,350 1,000 2,350 Schering AG 89,888 66,584 156,472
704 650 1,354 Siemens AG(b) 387,592 357,862 745,454
716 350 1,066 Thyssen AG(b) 130,916 63,995 194,911
10,150 7,000 17,150 Veba AG 435,422 300,291 735,713
419 -- 419 Viag (VAR) 173,014 -- 173,014
506 200 706 Volkswagon AG 170,048 67,212 237,260
----------- ------------- -----------
5,306,203 3,215,804 8,522,008
HONG KONG -- 2.0% ----------- ------------- -----------
-- 6,000 6,000 Bank of East Asia -- 21,534 21,534
37,000 23,000 60,000 Cathay Pacific Airway 56,467 35,100 91,567
23,000 18,000 41,000 Cheung Kong Holdings 243,665 109,649 353,314
34,700 25,000 25,000 China Light and Power Co, Limited 159,769 115,105 274,874
-- 12,000 12,000 Chinese Estates Holdings -- 7,837 7,837
-- 5,000 5,000 Dickson Concepts IntlLimited -- 4,656 4,656
-- 4,000 4,000 Giordano International Holdings -- 3,414 3,414
-- 10,000 10,000 Hang Lung Development Co -- 15,908 15,908
39,400 21,800 61,200 Hang Seng Bank Limited 352,881 195,247 548,128
-- 1,200 1,200 Hong Kong Aircraft -- 3,104 3,104
20,000 -- 20,000 Hong Kong Electric 65,572 -- 65,572
203,600 106,400 310,000 Hong Kong Telecom 363,386 189,903 553,289
34,800 -- 34,800 Hong Kong & China Gas 56,035 -- 56,035
50,000 35,000 85,000 Hopewell Holdings 28,777 20,143 48,920
56,000 46,000 102,000 Hutchison Whampoa 341,131 280,214 621,345
10,000 8,000 18,000 Hysan Development Limited 26,449 21,158 47,607
-- 3,000 3,000 Johnson Electric Holdings -- 5,354 5,354
-- 3,000 3,000 Kumagai Gumi -- 2,173 2,173
-- 2,000 2,000 Lai Sun Garment International -- 1,940 1,940
-- 4,000 4,000 Miramar Hotel & Investment -- 8,432 8,432
31,366 13,000 44,366 New World Development Co 136,710 56,661 193,371
52 -- 52 New World Infrastr(b) 100 -- 100
-- 12,000 12,000 Oriental Press Group -- 3,647 3,647
-- 4,000 4,000 Peregrine Investment Holdings -- 5,173 5,173
-- 4,000 4,000 Playmates Toys Holdings -- 796 796
-- 22,000 22,000 Regal Hotel Holdings -- 5,177 5,177
-- 8,000 8,000 Shangri-La Asia -- 9,778 9,778
-- 12,000 12,000 Shun Tak Holdings Limited -- 8,458 8,458
12,000 12,000 South China Morning Post -- 7,333 7,333
45,700 25,000 70,700 Sun Hung Kai Properties 373,842 204,508 578,350
23,500 20,000 43,500 Swire Pacific Limited 182,361 155,200 337,561
-- 3,000 3,000 Television Broadcasts Limited -- 10,689 10,689
30,000 39,000 69,000 Wharf Holdings Limited 99,910 129,882 229,792
16,848 1,200 18,048 Wing Lung Bank 94,351 6,720 101,071
PFS-8
<PAGE>
-- 2,000 2,000 Winsor Industrial Corp Limited -- 1,693 1,693
----------- ------------- -----------
2,581,406 1,646,586 4,227,992
IRELAND -- 1.0% ----------- ------------- -----------
82,680 -- 82,680 Allied Irish Banks 447,907 -- 447,907
26,825 -- 26,825 Bank of Ireland (Dublin Listing) 193,904 -- 193,904
48,929 -- 48,929 Crh 367,014 -- 367,014
18,405 -- 18,405 Independent News 117,406 -- 117,406
24,349 -- 24,349 Greencore 209,568 -- 209,568
56,656 -- 56,656 Irish Life 215,211 -- 215,211
28,760 -- 28,760 Kerry Group 'A' 218,954 -- 218,954
139,859 -- 139,859 Smurfit(Jefferson) (Dublin Listing) 329,517 -- 329,517
----------- ------------- -----------
2,099,481 -- 2,099,481
JAPAN -- 36.2% ----------- ------------- -----------
-- 6,000 6,000 77 Bank -- 55,084 55,084
-- 1,000 1,000 Advantest Corp -- 51,380 51,380
36,000 10,000 46,000 Ajinomoto Co, Inc 401,351 111,485 512,836
-- 3,000 3,000 Alps Electric Co(b) -- 34,608 34,608
-- 28,000 28,000 Amada Co -- 276,871 276,871
-- 2,000 2,000 Aoki Corp(b) -- 8,394 8,394
-- 1,000 1,000 Aoyama Trading(b) -- 31,991 31,991
34,000 41,000 75,000 Asahi Bank Limited (c) 428,495 516,710 945,205
-- 8,000 8,000 Asahi Breweries -- 94,617 94,617
63,000 27,000 27,000 Asahi Chemical Industries 482,493 206,781 689,274
-- 33,000 33,000 Asahi Glass Co -- 367,903 367,903
-- 10,000 10,000 Ashikaga Bank -- 62,431 62,431
28,000 36,000 64,000 Bank of Tokyo 491,315 631,687 1,123,002
-- 20,000 20,000 Bank of Yokohama -- 163,836 163,836
-- 2,000 2,000 Banyu Pharmaceutical -- 24,624 24,624
31,000 16,000 47,000 Bridgestone Corp 492,866 254,382 747,249
-- 4,000 4,000 Brother Industries Limited -- 21,754 21,754
21,000 24,000 45,000 Canon, Inc 380,702 435,086 815,788
-- 1,000 1,000 Casio Computer Co -- 9,791 9,791
-- 13,000 13,000 Chiba Bank -- 117,205 117,205
6,000 7,000 13,000 Chichibu Onada Cement 32,050 37,391 69,441
-- 2,000 2,000 Chugai Pharmaceutical Co -- 19,176 19,176
-- 19,000 19,000 Citizen Watch Co Limited -- 145,513 145,513
-- 3,000 3,000 Cosmo Oil Co -- 16,403 16,403
-- 2,000 2,000 Credit Saison -- 47,697 47,697
-- 26,000 26,000 Dai Nippon Co Limited(b) -- 441,098 441,098
19,000 8,000 27,000 Dai Nippon Ink & Chemical 88,598 37,304 125,902
33,000 -- 33,000 Dai Nippon Printing 559,855 -- 559,855
-- 2,000 2,000 Dai Nippon Screen -- 17,566 17,566
40,000 64,000 104,000 Dai-Ichi Kangyo Bank 787,190 1,259,501 2,046,691
-- 13,000 13,000 Daicel Chemical Industries -- 73,978 73,978
-- 2,000 2,000 Daido Steel Co Limited -- 10,082 10,082
-- 9,000 9,000 Daiei Inc -- 109,062 109,062
PFS-9
<PAGE>
33,000 3,000 36,000 Daiichi Pharmaceuticals Co Limited 470,278 42,752 513,030
-- 27,000 27,000 Daikin Industries -- 264,368 264,368
-- 3,000 3,000 Daikyo(b) -- 22,394 22,394
-- 2,000 2,000 Daimaru(b) -- 15,511 15,511
13,000 1,000 14,000 Daishowa Paper(b) 100,822 7,756 108,578
-- 1,000 1,000 Daito Trust -- 11,827 11,827
-- 20,000 20,000 Daiwa Bank -- 161,896 161,896
-- 14,000 14,000 Daiwa House Industries -- 230,727 230,727
-- 3,000 3,000 Daiwa Kosho Lease Co Limited -- 29,956 29,956
34,000 24,000 58,000 Daiwa Securities 520,786 367,613 888,399
-- 3,000 3,000 Denki Kagaku Kogyo -- 10,906 10,906
-- 2,000 2,000 Ebara Corp -- 29,277 29,277
-- 3,000 3,000 Eisai Co -- 52,641 52,641
-- 2,000 2,000 Ezaki Glico Co -- 19,350 19,350
-- 7,000 7,000 Fanuc Co -- 303,339 303,339
43,000 56,000 99,000 Fuji Bank 950,445 1,237,785 2,188,230
-- 11,000 11,000 Fuji Photo Film Limited -- 317,783 317,783
6,000 3,000 9,000 Fujita Corp 27,106 13,553 40,659
-- 2,000 2,000 Fujita Kanko -- 44,207 44,207
10,000 43,000 53,000 Fujitsu Limited 111,486 479,390 590,876
-- 3,000 3,000 Furukawa Electric -- 14,687 14,687
-- 2,000 2,000 Gakken Co(b) -- 13,184 13,184
-- 9,000 9,000 Gunma Bank -- 96,847 96,847
-- 4,000 4,000 Gunze Limited(b) -- 24,236 24,236
65,000 12,000 77,000 Hankyu Corp(b) 356,029 65,728 421,757
-- 1,000 1,000 Hanyu Department Stores -- 14,833 14,833
57,000 2,000 59,000 Haseko Corp(b) 230,428 8,085 238,513
-- 2,000 2,000 Hazama Corp(b) -- 8,531 8,531
-- 3,000 3,000 Higo Bank -- 24,139 24,139
78,000 81,000 159,000 Hitachi Limited (b) 786,415 816,658 1,603,073
-- 5,000 5,000 Hokkaido Bank -- 16,965 16,965
-- 11,000 11,000 Hokuriku Bank -- 68,995 68,995
27,000 19,000 46,000 Honda Motor Co 557,528 392,335 949,863
48,000 2,000 50,000 Honshu Paper Co 294,091 12,254 306,345
-- 2,000 2,000 House Foods Corp(b) -- 36,063 36,063
-- 1,000 1,000 Hoya Corp -- 34,415 34,415
-- 26,000 26,000 Inax Corp -- 247,013 247,013
23,000 47,000 70,000 Industrial Bank of Japan 697,904 1,426,149 2,124,053
-- 2,000 2,000 Isetan Co -- 32,961 32,961
-- 2,000 2,000 Ishihara Sangyo Kaisha(b) -- 6,495 6,495
6,000 13,000 19,000 Ito Yokado Co 369,941 801,537 1,171,478
38,000 26,000 64,000 Itochu Corp 256,031 175,178 431,209
-- 3,000 3,000 Itoham Foods -- 22,685 22,685
-- 3,000 3,000 Iwantani International Corp(b) -- 15,996 15,996
-- 2,000 2,000 Jaccs -- 20,746 20,746
46,000 33,000 79,000 Japan Air Lines Co(b) 305,472 219,143 524,615
19,000 5,000 24,000 Japan Energy Corp 63,731 16,771 80,502
-- 1,000 1,000 Jeol -- 8,512 8,512
PFS-10
<PAGE>
-- 1,000 1,000 JGC Corp(b) -- 10,567 10,567
36,000 14,000 50,000 Joyo Bank 289,671 112,650 402,321
-- 4,000 4,000 Jusco Co(b) -- 104,312 104,312
11,000 12,000 23,000 Kajima Corp 108,772 118,660 227,432
-- 1,000 1,000 Kaken Pharmaceutical -- 9,016 9,016
-- 1,000 1,000 Kandenko Limited -- 12,506 12,506
-- 9,000 9,000 Kanebo Corp(b) -- 22,335 22,335
-- 3,000 3,000 Kaneka Corp -- 18,933 18,933
13,900 20,100 34,000 Kansai Electric Power (c) 336,883 487,146 824,029
-- 2,000 2,000 Kansai Paint Co Limited -- 9,307 9,307
-- 9,000 9,000 Kao Corp -- 111,680 111,680
-- 1,000 1,000 Katokichi -- 20,843 20,843
-- 11,000 11,000 Kawasaki Kisen Kaisha(b) -- 34,977 34,977
47,000 39,000 86,000 :Kawasaki Steel Corp 164,030 136,110 300,140
-- 6,000 6,000 Keihin Electric -- 36,005 36,005
-- 16,000 16,000 Keio Teito Electric Railway -- 93,221 93,221
-- 3,150 3,150 Kikkoman Corp -- 23,208 23,208
-- 2,000 2,000 Kinden Corp -- 34,124 34,124
-- 31,000 31,000 Kinki Nippon Railway -- 234,410 234,410
-- 19,000 19,000 Kirin Brewery Co -- 224,717 224,717
34,000 30,000 64,000 Kobe Steel(b) 105,146 92,775 197,921
33,000 9,000 42,000 Komatsu Limited (c) 271,930 74,162 346,092
-- 1,000 1,000 Konica Corp -- 7,251 7,251
60,000 13,000 73,000 Kubota Corp 386,809 83,808 470,617
-- 5,000 5,000 Kumagai Gumi Co -- 20,116 20,116
-- 5,000 5,000 Kurabo Industries -- 19,147 19,147
-- 8,000 8,000 Kuraray Co Limited -- 87,638 87,638
-- 2,000 2,000 Kureha Chemical Industries Co(b) -- 9,404 9,404
11,000 3,000 14,000 Kyocera Corp 817,922 223,070 1,040,992
-- 5,000 5,000 Kyowa Hakko Kogyo -- 47,212 47,212
-- 2,000 2,000 Lion Corp -- 11,808 11,808
-- 6,000 6,000 Maeda Road Construction -- 111,098 111,098
-- 2,000 2,000 Makita Corp -- 31,992 31,992
68,000 28,000 96,000 Marubeni Corp 368,506 151,738 520,244
-- 2,000 2,000 Marudai Food Co(b) -- 14,348 14,348
-- 4,000 4,000 Maruha Corp(b) -- 13,533 13,533
-- 5,000 5,000 Marui Co(b) -- 104,215 104,215
56,000 40,000 96,000 Matsushita Electric Industries 912,055 651,464 1,563,519
-- 4,000 4,000 Meija Milk Products -- 23,964 23,964
-- 5,000 5,000 Meiji Seika Kaisha -- 30,150 30,150
-- 1,000 1,000 Misawa Homes -- 8,803 8,803
-- 12,000 12,000 Mitsubishi Bank -- 282,690 282,690
-- 29,000 29,000 Mitsubishi Chemical Corp -- 141,131 141,131
26,000 29,000 55,000 Mitsubishi Corp 320,111 357,045 677,156
48,000 32,000 80,000 Mitsubishi Electric Corp 345,743 230,493 576,236
49,000 24,000 73,000 Mitsubishi Estate 612,787 300,139 912,926
19,000 3,000 22,000 Mitsubishi Gas(b) 85,651 13,524 99,175
79,000 68,000 147,000 Mitsubishi Heavy Industries Limited 630,305 542,538 1,172,843
PFS-11
<PAGE>
-- 21,000 21,000 Mitsubishi Materials -- 108,917 108,917
-- 2,000 2,000 Mitsubishi Oil Co -- 17,780 17,780
-- 34,000 34,000 Mitsubishi Paper -- 204,687 204,687
17,000 1,000 18,000 Mitsubishi Steel Manufacturing(b) 88,995 5,235 94,230
11,000 24,000 35,000 Mitsubishi Trust and Banking Limited 183,419 400,186 583,605
-- 29,000 29,000 Mitsui & Co Limited -- 254,710 254,710
-- 1,000 1,000 Mitsui Engine & Shipbuilding(b) -- 2,782 2,782
-- 13,000 13,000 Mitsui Fire & Marine Insurance -- 92,756 92,756
-- 15,000 15,000 Mitsui Fudosan Co -- 184,679 184,679
-- 9,000 Mitsui Mining and Smelting(b) -- 36,122 36,122
63,000 20,000 83,000 Mitsui OSK Lines(b) 202,159 64,176 266,335
-- 6,000 6,000 Mitsui Toatsu Chemical -- 24,139 24,139
-- 22,000 22,000 Mitsui Trust and Banking Co -- 241,003 241,003
-- 6,000 6,000 Mitsukoshi Limited(b) -- 56,422 56,422
-- 1,000 1,000 Mochida Pharmaceuticals -- 13,863 13,863
-- 4,000 4,000 Murata Manufacturing Co -- 147,356 147,356
-- 1,000 1,000 Nagase & Co(b) -- 8,609 8,609
61,000 11,000 72,000 Nagoya Railroad Co 307,508 55,452 362,960
-- 6,000 6,000 Nankai Electric Railway -- 40,717 40,717
-- 30,000 30,000 NEC Corp -- 366,450 366,450
-- 8,000 8,000 New Oji Paper -- 72,437 72,437
-- 44,000 44,000 NGK Insulators -- 439,349 439,349
-- 8,000 8,000 Nichido Fire and Marine Insurance -- 64,371 64,371
47,000 22,000 69,000 Nichii Co Limited 624,226 292,191 916,417
-- 5,000 5,000 Nichirei Corp -- 32,476 32,476
30,000 4,000 34,000 Nihon Cement Co 200,675 26,756 227,431
-- 2,600 2,600 Nintendo Co -- 197,864 197,864
-- 2,000 2,000 Nippon Beet Sugar(b) -- 8,880 8,880
1,000 -- 1,000 Nippon Communications Systems Corp(b) -- 10,567 10,567
25,000 19,000 44,000 Nippon Denso 467,758 355,496 823,254
-- 16,000 16,000 Nippon Express Co -- 154,179 154,179
-- 11,000 11,000 Nippon Fire and Marine Insurance -- 74,647 74,647
-- 10,000 10,000 Nippon Light Metal -- 57,391 57,391
-- 16,000 16,000 Nippon Meat Packers -- 232,666 232,666
86,000 11,000 97,000 Nippon Oil Co 540,253 69,102 609,355
-- 10,000 10,000 Nippon Paper Industries -- 69,509 69,509
-- 2,000 2,000 Nippon Seiko Kab Kai -- 14,542 14,542
-- 5,000 5,000 Nippon Shinpan Co -- 37,808 37,808
-- 2,000 2,000 Nippon Shokubai Kagaku Kogyo -- 19,583 19,583
108,000 138,000 246,000 Nippon Steel Corp 370,639 473,588 844,227
-- 4,000 4,000 Nippon Suisan(b) -- 16,558 16,558
-- 22,000 22,000 Nippon Yusen Kab Kai -- 127,752 127,752
-- 2,000 2,000 Nishimatsu(b) -- 23,460 23,460
53,000 46,000 99,000 Nissan Motor Co 407,449 353,634 761,083
-- 4,000 4,000 Nisshinbo Industries, Inc -- 38,778 38,778
-- 2,000 2,000 Nissin Food Products Co, Limited(b) -- 46,921 46,921
48,000 40,000 88,000 NKK Corp(b) 129,363 107,800 237,163
-- 2,000 2,000 NOF Corp -- 10,877 10,877
44,000 36,000 80,000 Nomura Securities 959,752 785,250 1,745,002
PFS-12
<PAGE>
-- 1,000 1,000 NTN Corp -- 6,689 6,689
8,000 8,000 16,000 Obayashi Corp 63,596 63,595 127,191
-- 10,000 10,000 Odakyu Electric Railway -- 68,345 68,345
-- 3,000 3,000 Okamoto Industries -- 19,486 19,486
-- 1,000 1,000 Okumura(b) -- 9,113 9,113
-- 1,000 1,000 Olympus Optical Co, Limited -- 9,694 9,694
17,000 3,000 20,000 Omron Corp 392,238 69,218 461,456
-- 3,000 3,000 Onward Kashiyama(b) -- 48,860 48,860
-- 5,000 5,000 Oreint Corp -- 28,405 28,405
-- 3,000 3,000 Orix Corp -- 123,604 123,604
124,000 117,000 241,000 Osaka Gas Co 429,154 404,925 834,079
-- 2,000 2,000 Penta-Ocean(b) -- 15,511 15,511
-- 8,000 8,000 Pioneer Electronic -- 146,580 146,580
-- 2,000 2,000 QP Corp(b) -- 17,431 17,431
-- 5,000 5,000 Renown, Inc(b) -- 17,402 17,402
55,000 5,000 60,000 Ricoh Co 602,511 54,774 657,285
-- 2,000 2,000 Rohn Company Limited -- 113,037 113,037
-- 4,000 4,000 Sagami -- 17,334 17,334
19,000 61,000 80,000 Sakura Bank 241,295 774,682 1,015,977
-- 2,000 2,000 Sankyo Aluminum -- 10,722 10,722
15,000 19,000 34,000 Sankyo Co 337,367 427,331 764,698
-- 1,000 1,000 Sanrio Corp(b) -- 11,536 11,536
-- 2,000 2,000 Sanwo Shutter Corp -- 14,522 14,522
34,000 32,000 66,000 Sanyo Electric Corp 196,119 184,582 380,701
-- 6,000 6,000 Sapporo Corporation -- 55,840 55,840
12,000 -- 12,000 Sato Kogyo Co 73,872 -- 73,872
-- 7,000 7,000 Secom Co -- 487,243 487,243
-- 1,000 1,000 Sega Enterprises -- 55,258 55,258
-- 10,000 10,000 Seino Transportation -- 167,714 167,714
-- 2,000 2,000 Seiyu(b) -- 24,818 24,818
15,000 8,000 23,000 Sekisui Chemical 221,034 117,884 338,918
43,000 54,000 97,000 Sekisui House 550,258 691,016 1,241,274
-- 1,000 1,000 Settsu Corp(b) -- 3,151 3,151
7,000 8,000 15,000 Seven-Eleven Japan NPV 494,030 564,605 1,058,635
24,000 18,000 42,000 Sharp Corp 383,901 287,924 671,825
25,000 9,000 34,000 Shimizu Corp 254,480 91,612 346,092
13,000 4,000 17,000 Shin-Etsu Chemical Co 269,700 82,984 352,684
-- 16,000 16,000 Shinmaywa Industries -- 132,154 132,154
-- 3,000 3,000 Shiongoi & Co -- 25,273 25,273
-- 4,000 4,000 Shiseido Co -- 47,696 47,696
-- 14,000 14,000 Shizuoka Bank -- 176,438 176,438
-- 1,000 1,000 Shochiku Co(b) -- 10,955 10,955
-- 1,000 1,000 Shokusan(b) -- 3,665 3,665
102,000 10,000 112,000 Showa Denko KK(b) 320,383 31,410 351,793
-- 2,000 2,000 Skylark Co -- 36,839 36,839
-- 5,000 5,000 Snow Brand Milk(b) -- 31,992 31,992
-- 6,200 6,200 Sony Corp -- 372,054 372,054
37,000 63,000 100,000 Sumitomo Bank 785,542 1,337,540 2,123,082
92,000 20,000 112,000 Sumitomo Chemical 459,324 99,852 559,176
PFS-13
<PAGE>
34,000 20,000 54,000 Sumitomo Corp 346,092 203,582 549,674
-- 22,000 22,000 Sumitomo Electric Industries -- 264,464 264,464
-- 2,000 2,000 Sumitomo Forestry -- 30,634 30,634
83,000 -- 83,000 Sumitomo Heavy Industries(b) 298,522 -- 298,522
-- 12,000 12,000 Sumitomo Marine and Fire Insurance -- 98,651 98,651
156,000 36,000 192,000 Sumitomo Metal Industries(b) 473,361 109,235 582,596
-- 10,000 10,000 Sumitomo Metal Mining -- 89,964 89,964
-- 5,000 5,000 Sumitomo Osaka Cement -- 23,267 23,267
47,000 11,000 58,000 Taisei Corp 313,936 73,473 387,409
-- 4,000 4,000 Taisho Pharmaceutical Co -- 79,107 79,107
-- 2,000 2,000 Taiyo Yuden -- 21,522 21,522
-- 4,000 4,000 Takara Shuzo(b) -- 38,274 38,274
-- 2,000 2,000 Takara(b) -- 22,879 22,879
-- 2,000 2,000 Takashimaya Co(b) -- 31,992 31,992
24,000 32,000 56,000 Takeda Chemical Industries 395,534 527,376 922,910
-- 2,000 2,000 Tanabe -- 14,406 14,406
-- 8,000 8,000 TDK Corp -- 408,718 408,718
-- 11,000 11,000 Teijin Limited -- 56,305 56,305
-- 1,000 1,000 TOA Corp(b) -- 7,368 7,368
-- 12,000 12,000 Tobu Railway Co -- 75,151 75,151
-- 8,080 8,080 Tohoku Electric Power -- 195,045 195,045
25,000 36,000 61,000 Tokai Bank 349,001 502,560 851,561
-- 29,000 29,000 Tokio Marine and Fire Insurance -- 379,538 379,538
-- 3,000 3,000 Tokyo Broadcasting -- 49,442 49,442
-- 3,000 3,000 Tokyo Dome Corp -- 51,477 51,477
36,600 27,200 63,800 Tokyo Electric Power 979,296 727,782 1,707,078
-- 3,000 3,000 Tokyo Electronics -- 116,333 116,333
15,000 43,000 58,000 Tokyo Gas Co 52,932 151,734 204,666
-- 20,000 20,000 Tokyo Steel Manufacturing Co Limited -- 368,388 368,388
-- 2,000 2,000 Tokyo Style Co(b) -- 34,318 34,318
-- 4,000 4,000 Tokyo Tatemono(b) -- 19,001 19,001
-- 5,000 5,000 Tokyoto Keiba Co -- 20,843 20,843
47,000 16,000 63,000 Tokyu Corp 332,161 113,075 445,236
-- 20,000 20,000 Tonen Corp -- 292,772 292,772
-- 14,000 14,000 Toppan Printing Co -- 184,582 184,582
20,000 90,000 110,000 Toray Industries Inc 131,845 593,298 725,143
-- 88,000 88,000 Tosihiba Corp -- 690,166 690,166
-- 5,000 5,000 Tosoh Corp(b) -- 24,091 24,091
5,000 3,000 8,000 Tostem Corp 166,260 99,756 266,016
15,000 4,000 19,000 Toto Limited 209,400 55,840 265,240
-- 1,000 1,000 Toyo Engineering -- 6,301 6,301
-- 3,000 3,000 Toyo Kanetsu KK -- 15,385 15,385
12,000 2,000 14,000 Toyo Seikan Kaisha 359,471 59,912 419,383
-- 13,000 13,000 Toyobo Co(b) -- 46,756 46,756
12,000 2,000 14,000 Toyoda Automatic Loom Works Limited 215,217 35,869 251,086
56,000 77,000 133,000 Toyota Motor Corp 1,188,929 1,634,772 2,823,701
-- 2,000 2,000 UBE Industries(b) -- 7,562 7,562
-- 3,000 3,000 Unitika Limited(b) -- 9,132 9,132
PFS-14
<PAGE>
-- 3,000 3,000 Yamaguchi Bank -- 51,187 51,187
34,000 22,000 56,000 Yamaichi Securities Co 264,678 171,261 435,939
-- 4,000 4,000 Yamanouchi Pharmaceutical -- 86,087 86,087
-- 4,000 4,000 Yamato Transport -- 47,696 47,696
14,000 3,000 17,000 Yamazaki Baking Co 260,587 55,840 316,427
-- 20,000 20,000 Yasuda Trust and Bank -- 118,466 118,466
-- 7,000 7,000 Yokogawa Bridge Works Corp -- 105,863 105,863
-- 4,000 4,000 Yokogawa Electric -- 37,847 37,847
----------- ------------- -----------
32,893,948 43,005,659 75,899,607
MALAYSIA -- 1.0% ----------- ------------- -----------
6,000 -- 6,000 Ammb Holdings Berhad 68,534 -- 68,534
5,000 -- 5,000 Commerce Asset Holding 25,208 -- 25,208
17,000 -- 17,000 Dcb Holdings Berhad 49,549 -- 49,549
17,000 -- 17,000 Edaran Otomobil 127,890 -- 127,890
31,000 -- 31,000 Golden Hope Plants 51,770 -- 51,770
7,000 -- 7,000 Hong Leong Properties 7,279 -- 7,279
16,000 -- 16,000 Hume Inds (M) Berhad 76,884 -- 76,884
6,000 -- 6,000 Landmarks Berhad 7,988 -- 7,988
41,333 -- 41,333 Leader Univ Holdings 94,423 -- 94,423
61,500 -- 61,500 Magnum Corp Berhad 116,271 -- 116,271
8,000 -- 8,000 Malaysian Airline Systems 25,995 -- 25,995
32,000 -- 32,000 Malayan Bkg Berhad 269,723 -- 269,723
28,000 -- 28,000 Malayan Utd Inds 22,718 -- 22,718
22,000 -- 22,000 Malaysian Int Ship (Alien Market) 57,623 -- 57,623
2,000 -- 2,000 Nestle Malay Berhad 14,652 -- 14,652
14,000 -- 14,000 Public Bank Berhad 19,631 -- 19,631
51,000 -- 51,000 Public Bank Berhad (Alien Market) 97,625 -- 97,625
19,000 -- 19,000 Resorts World Berhad 101,776 -- 101,776
10,000 -- 10,000 Rothmans Pall Mall 82,319 -- 82,319
52,200 -- 52,200 Sime Darby Berhad 138,780 -- 138,780
21,000 -- 21,000 Tech Res Inds Berhad(b) 62,035 -- 62,035
41,000 -- 41,000 Telekom Malaysia 319,744 -- 319,744
74,000 -- 74,000 Tenaga Nasional 291,465 -- 291,465
8,000 -- 8,000 United Engineers Berhad 51,046 -- 51,046
----------- ------------- -----------
2,180,927 -- 2,180,927
----------- ------------- -----------
MEXICO -- 0.5%
3,500 -- 3,500 Alfa Sa Series 'A' (Cpo) 44,791 -- 44,791
29,937 -- 29,937 Cemex Sa Ser 'A' 98,692 -- 98,692
147,000 -- 147,000 Cifra Sa De Cv 'B'(b) 154,541 -- 154,541
17,000 -- 17,000 Fomento Economico Mexico Series 'B' 39,274 -- 39,274
685 -- 685 Gpo Financiero Banamex-Ac Series 'L' 1,006 -- 1,006
13,700 -- 13,700 Gpo Financiero Banamex-Ac Series 'B' 22,831 -- 22,831
55,000 -- 55,000 Gpo Financiero Bancomer Series 'B' 15,490 -- 15,490
2,037 -- 2,037 Gpo Financiero Bancomer Series 'L' 523 -- 523
12,000 -- 12,000 Grupo Ind Bimbo Series 'A' 49,061 -- 49,061
16,000 -- 16,000 Grupo Carso Series 'A1' (b) 85,350 -- 85,350
11,500 -- 11,500 Grupo Televisa Ptg Certs
Repr 1 A,L,D Shs 130,452 -- 130,452
10,000 -- 10,000 Industrias Penoles 41,273 -- 41,273
PFS-15
<PAGE>
11,000 -- 11,000 Kimberly Clark Mexico 'A' 166,326 -- 166,326
162,000 -- 162,000 Telefonos De Mexico Series 'L' 258,620 -- 258,620
(Ltd Voting) ----------- ------------- -----------
1,108,231 -- 1,108,231
----------- ------------- -----------
NETHERLANDS -- 3.1%
11,227 -- 11,227 ABN Amro Holding 511,977 -- 511,977
4,389 -- 4,389 Ahold (kon) Nv 179,340 -- 179,340
2,562 -- 2,562 Akzo Nobel Nv 296,638 -- 296,638
23,480 -- 23,480 Elsevier Nv 313,460 -- 313,460
1,734 -- 1,734 Heineken Nv 307,968 -- 307,968
8,743 -- 8,743 ING Groep Nv Cva 584,689 -- 584,689
2,341 -- 2,341 KLM 82,366 -- 82,366
2,446 -- 2,446 KNP BT (Kon) Nv 62,867 -- 62,867
1,568 -- 1,568 Kon Hoogovens Nv Cva 52,528 -- 52,528
15,198 -- 15,198 Kon Ptt Nederland 552,745 -- 552,745
11,082 -- 11,082 Philips Electronic 400,974 -- 400,974
16,546 -- 16,546 Royal Dutch Petroleum (Br) 2,314,186 -- 2,314,186
5,151 -- 5,151 Unilever Nv Cva 724,616 -- 724,616
2,079 -- 2,079 Wolters Kluwer Cva 196,877 -- 196,877
----------- ------------- -----------
6,581,230 -- 6,581,230
----------- ------------- -----------
NORWAY -- 1.8%
7,100 -- 7,100 Bergesen Dy As 'A' 141,599 -- 141,599
2,400 -- 2,400 Bergensen Dy As 'B' Non-Voting 47,105 -- 47,105
4,900 -- 4,900 Dyno Industrier 114,786 -- 114,786
10,010 -- 10,010 Hafslund Nycomed Series 'A' 262,218 -- 262,218
6,018 -- 6,018 Hafslund Nycomed Series 'B' 152,882 -- 152,882
3,900 -- 3,900 Kvaerner As Series 'A' 130,867 -- 130,867
5,750 -- 5,750 Kvaerner As Series 'B' 203,867 -- 203,867
4,600 -- 4,600 Leif Hoegh & Co 68,441 -- 68,441
35,100 -- 35,100 Norsk Hydro As 1,477,812 -- 1,477,812
4,100 -- 4,100 Norske Skogsindust 'A' 120,706 -- 120,706
6,150 -- 6,150 Orkla As 'A' 306,631 -- 306,631
1,200 -- 1,200 Orkla As 'B' 57,361 -- 57,361
14,721 -- 14,721 Transocean (b) 255,142 -- 255,142
51,053 -- 51,053 Uni Storebrand As 'A' (b) 282,826 -- 282,826
4,000 -- 4,000 Unitor As 55,082 -- 55,082
----------- ------------- -----------
3,677,324 -- 3,677,324
SINGAPORE -- 4.2% ----------- ------------- -----------
-- 20,000 20,000 Amcol Holdings -- 55,144 55,144
-- 13,000 13,000 Chaun Hup Holdings -- 11,764 11,764
37,600 52,000 89,600 City Developments 273,799 378,654 652,453
30,000 16,000 46,000 Cycle and Carriage 299,053 159,494 458,547
21,831 -- 21,831 Dairy Farms Intl (Sing Quote) 20,084 -- 20,084
-- 61,000 61,000 DBS Land Limited -- 206,137 206,137
35,250 45,000 80,250 Development Bank Singapore 438,611 559,926 998,537
-- 16,000 16,000 First Capital Corp -- 44,341 44,341
PFS-16
<PAGE>
18,000 16,000 34,000 Fraser and Neave Limited 229,062 203,610 432,672
-- 29,000 29,000 Hai Sun Hup Group -- 19,476 19,476
-- 12,000 12,000 Haw Par Brothers International -- 25,620 25,620
25,975 -- 25,975 Hong Kong Land Holdings (Sing Quote) 48,054 -- 48,054
-- 27,000 27,000 Hotel Properties Limited -- 41,801 41,801
-- 11,000 11,000 Inchcape Berhad -- 35,306 35,306
2,041 -- 2,041 Jardine Matheson (Sing Quote) 13,981 -- 13,981
13,000 7,000 20,000 Jurong Shipyard 100,179 53,942 154,121
45,000 34,000 79,000 Keppel Corp 400,858 302,869 703,727
-- 4,000 4,000 Low Keng Huat Limited -- 2,234 2,234
-- 22,000 22,000 Lum Chang Holdings Limited -- 18,352 18,352
-- 7,000 7,000 Metro Holdings -- 27,218 27,218
-- 22,000 22,000 Natsteel Limited -- 45,104 45,104
-- 46,000 46,000 Neptune Orient Lines -- 51,704 51,704
33,833 61,000 94,833 Overseas Chinese Banking Corp 423,371 763,324 1,186,695
-- 8,000 8,000 Overseas Union Enterprises -- 40,439 40,439
-- 19,000 19,000 Parkway Holdings Limited -- 51,581 51,581
-- 3,000 3,000 Prima Limited -- 11,453 11,453
-- 4,000 4,000 Robinson and Company -- 16,684 16,684
-- 10,000 10,000 Shangri-La Hotel -- 38,883 38,883
-- 86,000 86,000 Sia Limited Foreign -- 802,561 802,561
48,000 -- 48,000 Singapore Airlines (Alien Market) 447,943 -- 447,943
16,000 22,800 38,800 Singapore Press Holdings 282,792 402,979 685,771
44,000 40,000 84,000 Straits Steamship 148,692 135,172 283,864
36,000 20,000 56,000 Straits Trading Co 84,498 46,942 131,440
-- 90,000 90,000 United Industrial Corp -- 88,443 88,443
40,804 60,600 101,404 United Overseas Bank 392,328 582,663 974,991
-- 33,000 33,000 United Overseas Land -- 62,756 62,756
----------- ------------- -----------
3,603,305 5,286,576 8,889,881
----------- ------------- -----------
SPAIN -- 1.2%
401 -- 401 Acerinox Sa (Reg'd) 40,557 -- 40,557
3,909 -- 3,909 Argentaria Corp Banc 161,108 -- 161,108
6,059 -- 6,059 Autopistas Cesa 68,923 -- 68,923
5,568 -- 5,568 Banco Bilbao Vizcaya (Reg'd) 200,568 -- 200,568
3,721 -- 3,721 Banco Central Hispan (Reg'd) 75,453 -- 75,453
4,588 -- 4,588 Banco Santander (Reg'd) 230,315 -- 230,315
947 -- 947 Corporation Mapfre (Ref'd) 53,003 -- 53,003
6,839 -- 6,839 Empresa Nac Electricid 387,285 -- 387,285
588 -- 588 Fomento Const Y Contra 45,076 -- 45,076
1,341 -- 1,341 Gas Natural Sdg Sa 208,916 -- 208,916
19,807 -- 19,807 Iberdrola Sa 181,227 -- 181,227
8,351 -- 8,351 Repsol Sa 273,626 -- 273,626
1,599 -- 1,599 Tabacalera Sa Series 'A' (Reg'd) 60,630 -- 60,630
24,037 -- 24,037 Telefonica De Espana 332,867 -- 332,867
12,958 -- 12,958 Union Electrical Fenosa 77,973 -- 77,973
2,815 -- 2,815 Vallehermoso Sa 52,325 -- 52,325
PFS-17
<PAGE>
310 -- 310 Zardoya-Otis 33,858 -- 33,858
----------- ------------- -----------
2,483,710 -- 2,483,710
----------- ------------- -----------
SWITZERLAND -- 2.8%
240 -- 240 Bbc Brown Boveri (Br) 279,494 -- 279,494
108 -- 108 Alusuisse-Lonza Holdings (Reg'd) 85,788 -- 85,788
380 -- 380 Ciba-Geigy (Reg'd) 335,202 -- 335,202
120 -- 120 Ciba-Geigy (Br) 105,332 -- 105,332
6,034 -- 6,034 Cs Holding (Reg'd) 620,102 -- 620,102
55 -- 55 Holderbank Fn Glarus Wts (Pur Br)(b)* 50 -- 50
135 -- 135 Holderbank Fn Glarus (Br) 103,833 -- 103,833
80 -- 80 Merkur Hldg Ag (Reg'd) 17,590 -- 17,590
673 -- 673 Nestle Sa (Reg'd) 746,315 -- 746,315
44 -- 44 Roche Holdings (Br) 617,564 -- 617,564
113 -- 113 Roche Holdings Genusscheine Npv 896,124 -- 896,124
835 -- 835 Sandoz (Reg'd) 766,314 -- 766,314
566 -- 566 Schweiz Bangesellsch (Br) 614,870 -- 614,870
252 -- 252 Schweiz Bangesellsch (Reg'd) 57,380 -- 57,380
700 -- 700 Schweiz Bankverein (Reg'd) 143,267 -- 143,267
24 -- 24 Sgs Holding (Br) 47,764 -- 47,764
475 -- 475 Smh Ag Neuenburg (Reg'd) 62,334 -- 62,334
25 -- 25 Smh Ag Neuenburg (Br) 14,992 -- 14,992
13 -- 13 Sulzer Ag Ptg 6,948 -- 6,948
1,200 -- 1,200 Zurich Versicherun (Reg'd) 359,796 -- 359,796
----------- ------------- -----------
5,881,058 -- 5,881,058
----------- ------------- -----------
UNITED KINGDOM -- 14.3%
38,813 21,900 60,713 Abbey National PLC(b) 383,260 216,252 599,512
-- 3,000 3,000 Anglian Water PLC -- 28,180 28,180
17,988 2,900 20,888 Argos PLC 166,452 26,835 193,287
-- 11,000 11,000 Argyll Group -- 58,067 58,067
-- 11,100 11,100 Arjo Wiggins -- 28,435 28,435
33,128 2,400 35,528 Associated Brittish FDS 189,793 13,750 203,543
34,087 26,900 60,987 Barclays PLC(b) 391,104 308,643 699,747
24,550 27,900 52,450 Bass(b) 274,056 311,450 585,506
67,568 35,500 103,068 Bat Industries 595,342 312,791 908,133
-- 3,200 3,200 BBA Group -- 14,383 14,383
-- 48,400 48,400 Bet Pub Limited -- 95,435 95,435
-- 2,800 2,800 BICC PLC -- 11,998 11,998
-- 9,900 9,900 Blue Circle Industries -- 52,644 52,644
13,799 6,500 20,299 BOC Group 193,033 90,928 283,961
16,553 9,300 25,853 Boots Co PLC 150,594 84,613 235,207
-- 6,800 6,800 BPB Industries -- 31,884 31,884
-- 2,200 2,200 British Aerospace -- 27,223 27,223
44,575 13,000 57,575 British Airways 322,505 94,056 416,561
123,228 116,800 240,028 British Gas 485,962 460,612 946,574
-- 5,000 5,000 British Land Co(b) -- 29,577 29,577
PFS-18
<PAGE>
125,393 61,800 187,193 British Petroleum 1,049,353 517,173 1,566,526
37,990 27,500 65,490 British Steel 95,995 69,487 165,482
130,594 131,700 262,294 British Telecom 717,771 723,850 1,441,621
78,087 61,600 139,687 BTR PLC(b) 398,873 314,653 713,526
52,660 18,900 71,560 Cable & Wireless 376,096 134,982 511,078
27,535 16,400 43,935 Cadbury Schweppes PLC 227,434 135,461 362,895
-- 2,300 2,300 Carlton Communities PLC(b) -- 34,496 34,496
-- 2,800 2,800 Chubb Security(b) -- 13,846 13,846
-- 15,600 15,600 Coats Viyella -- 42,385 42,385
-- 11,100 11,100 Commercial Union -- 108,228 108,228
-- 5,500 5,500 Courtaulds PLC -- 34,755 34,755
-- 2,200 2,200 De La Rue PLC (b) -- 22,236 22,236
-- 1,200 1,200 Delta PLC -- 7,434 7,434
-- 5,800 5,800 Electrocomponent PLC -- 32,418 32,418
33,609 4,200 37,809 English China Clays 165,415 20,671 186,086
-- 15,800 15,800 Forte PLC -- 81,075 81,075
-- 3,400 3,400 General Accident -- 34,365 34,365
59,140 46,000 105,140 General Electric 325,964 253,538 579,502
-- 4,700 4,700 GKN PLC -- 56,845 56,845
63,234 46,900 110,134 Glaxo Holdings PLC 898,321 666,271 1,564,592
47,103 39,300 86,403 Grand Metropolitan 339,333 283,117 622,450
19,328 9,800 29,128 Great Universe Stores PLC 205,559 104,226 309,785
-- 6,600 6,600 Guardian Royal Exchange PLC -- 28,282 28,282
59,179 43,200 102,379 Guinness 435,517 317,922 753,439
-- 3,900 3,900 :Hammerson PLC -- 21,344 21,344
107,145 75,200 182,345 Hanson 320,230 224,750 544,980
-- 9,600 9,600 Harrison & Crossfield PLC -- 23,847 23,847
-- 3,300 3,300 Hepworth Ceramic -- 16,344 16,344
42,779 -- 42,779 HSBC Holdings (UK Regd)) 652,231 -- 652,231
24,871 43,800 68,671 HSBC Holdings 388,464 684,117 1,072,581
-- 4,400 4,400 IMI PLC -- 22,441 22,441
17,053 9,900 26,953 Imperial Chemical Industries 202,016 117,278 319,294
11,605 -- 11,605 Inchcape 44,865 -- 44,865
11,117 6,500 17,617 Kingfisher PLC 93,551 54,698 148,249
64,565 19,400 83,965 Ladbroke Group PLC(b) 146,857 44,125 190,982
-- 6,900 6,900 Land Securities PLC -- 66,099 66,099
-- 74,200 74,200 Lasmo PLC -- 201,601 201,601
-- 9,700 9,700 Legal and General -- 100,903 100,903
74,113 180,086 254,199 Lloyds TSB Group 381,450 926,867 1,308,317
-- 3,300 3,300 London Electricity PLC -- 29,409 29,409
-- 9,000 9,000 Lonrho PLC(b) -- 24,593 24,593
-- 28,300 28,300 Lucas Industries PLC -- 79,529 79,529
53,864 46,700 100,564 Marks & Spencer PLC 376,332 326,279 702,611
15,356 5,500 20,856 MEPC 94,175 33,730 127,905
-- 8,200 8,200 Metal Box-Caradon(b) -- 24,889 24,889
-- 2,910 2,910 National Grid Group(b) -- 9,013 9,013
34,132 13,000 47,132 National Power 238,205 90,726 328,931
-- 3,700 3,700 Next PLC -- 26,195 26,195
-- 3,800 3,800 Northwest Water Group(b) -- 36,343 36,343
-- 10,100 10,100 P & O Steam Nav(b) -- 74,642 74,642
PFS-19
<PAGE>
-- 6,500 6,500 Pearson PLC -- 62,973 62,973
-- 10,800 10,800 Pilkington Ord PLC -- 33,871 33,871
68,435 31,700 100,135 Prudential Corp 440,947 204,249 645,196
-- 11,300 11,300 Rank Organisation PLC -- 81,757 81,757
-- 22,600 22,600 Reckitt and Coleman -- 250,182 250,182
-- 7,100 7,100 Redland PLC -- 42,881 42,881
-- 9,400 9,400 Reed International -- 143,317 143,317
39,031 27,800 66,831 Reuters Holdings PLC(b) 357,537 254,656 612,193
-- 6,800 6,800 Rexam PLC -- 37,374 37,374
19,470 2,700 22,170 RMC Group 299,571 41,543 341,114
54,712 39,300 94,012 Rolls Royce 160,548 115,322 275,870
-- 13,300 13,300 Royal Bank of Scotland PLC -- 121,006 121,006
-- 24,200 24,200 Royal Insurance PLC -- 143,528 143,528
27,830 17,800 45,630 RTZ Corp 404,435 258,675 663,110
-- 8,700 8,700 Rugby -- 14,858 14,858
32,305 17,600 49,905 Sainsbury (J) PLC 197,116 107,390 304,506
-- 3,200 3,200 Schroders PLC(b) -- 67,966 67,966
-- 1,000 1,000 Scottish & New Castle PLC(b) -- 9,517 9,517
-- 13,600 13,600 Scottish Power PLC(b) -- 78,127 78,127
50,391 88,800 139,191 Sears 81,367 143,385 224,752
-- 24,700 24,700 Sedgwick Group -- 46,401 46,401
-- 200 200 Seeboard PLC(b) -- 1,633 1,633
-- 5,300 5,300 Slough Estate PLC -- 18,021 18,021
22,799 4,100 26,899 Smith Industries 225,130 40,485 265,615
22,566 50,400 72,966 Smithkline Beecham 245,953 549,320 795,273
24,860 12,900 37,760 Smithkline Beecham, Class A 274,043 142,202 416,245
-- 200 200 Southern Electric PLC(b) -- 2,807 2,807
-- 1,700 1,700 Southern Water PLC -- 18,159 18,159
-- 4,200 4,200 T & N PLC -- 10,564 10,564
-- 12,600 12,600 Tarmac PLC -- 20,148 20,148
-- 1,000 1,000 Tate & Lyle PLC -- 7,328 7,328
91,386 5,200 96,586 Taylor Woodrow PLC 166,716 9,486 176,202
47,446 77,700 125,146 Tesco 218,784 358,290 577,074
26,744 22,800 49,544 Thames Water PLC 233,358 198,944 432,302
12,257 7,100 19,357 Thorn EMI PLC(b) 288,688 167,226 455,914
-- 5,500 5,500 TI Group PLC(b) -- 39,195 39,195
-- 12,600 12,600 Trafalgar House PLC(b) -- 5,428 5,428
-- 600 600 Unigate Limited -- 3,829 3,829
14,968 13,500 28,468 Unilever PLC 301,910 277,301 579,211
-- 1,400 1,400 United Biscuts PLC -- 5,564 5,564
74,958 26,200 101,158 Vodafone Group 268,255 93,762 362,017
-- 7,900 7,900 Williams Holdings -- 40,231 40,231
-- 3,200 3,200 Willis Corroon PLC -- 7,005 7,005
-- 4,900 4,900 Wimpey George PLC -- 10,955 10,955
-- 7,500 7,500 Wolseley -- 52,517 52,517
17,984 8,900 26,884 Zeneca Group 347,908 172,172 520,080
----------- ------------- -----------
15,838,374 14,106,784 29,945,158
----------- ------------- -----------
----------- ------------- -----------
Total Common Stocks (cost $164,108,114) 102,871,344 74,297,122 177,168,466
----------- ------------- -----------
PFS-20
<PAGE>
PREFERRED STOCKS -- 0.3%
AUSTRALIA -- 0.0%
-- 24,100 24,100 News Corp, Limited Voting Preferred Shares -- 112,761 112,761
----------- ------------- -----------
FRANCE -- 0.0%
-- 50 50 Casino Guich-Perr, Preferred Shares -- 1,135 1,135
----------- ------------- -----------
GERMANY -- 0.3%
-- 200 200 Allianz AG, Preferred Shares Nonvoting -- 393,495 393,495
-- 500 500 Kloeckner AG, Preferred Shares Nonvoting -- 3,022 3,022
-- 50 50 Lufthansa AG, Preferred Shares Nonvoting -- 6,550 6,550
-- 50 50 Man AG, Preferred Shares Nonvoting -- 10,753 10,753
-- 150 150 RWE AG, Preferred Shares Nonvoting -- 41,921 41,921
-- 500 500 SAP AG, Preferred Shares Nonvoting -- 76,085 76,085
-- 50 50 Volkswagon AG, Preferred Shares Nonvoting -- 12,150 12,150
----------- ----------- -----------
-- 543,976 543,976
----------- ----------- -----------
----------- ----------- -----------
Total Preferred Stocks (cost $580,168) -- 657,872 657,872
----------- ----------- -----------
PFS-21
<PAGE>
<CAPTION>
Pro Forma Pro Forma
Combined Combined
Woodward Prairie Principal Woodward Prairie Market
Principal Principal Amount Market Market Value
Amount Amount (Note 1) Description Value Value (Note 1)
- -------- --------- --------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN CORPORATE OBLIGATIONS -- 6.3%
GERMANY -- 6.3%
-- 18,700,000 18,700,000 ** Bundeslaender Versicher, 8.63%, 2/20/96
(cost $12,896,203) -- 13,143,650 13,143,650
SHORT-TERM INVESTMENTS -- 9.0%
Repurchase Agreements -- 2.3%
Salomon Brothers, Revolving Repurchase
Agreement, 5.875%, 1/3/95 (secured by
various US Treasury Strips with
maturities ranging from 2/15/95 through
4,819,555 -- 4,819,555 5/15/99, all held at Chemical Bank) 4,819,555 -- 4,819,555
US Treasury Bills -- 6.7%
-- 1,000,000 1,000,000 US Treasury Bill, 5.61%*, 2/08/96 -- 994,320 994,320
-- 2,000,000 2,000,000 US Treasury Bill, 5.48%*, 2/15/96 -- 1,986,675 1,986,675
-- 2,500,000 2,500,000 US Treasury Bill, 5.54%*, 3/07/96 -- 2,478,150 2,478,150
-- 1,600,000 1,600,000 US Treasury Bill, 5.07%*, 3/28/96 -- 1,581,232 1,581,232
-- 3,500,000 3,500,000 US Treasury Bill, 5.35%*, 5/02/96 -- 3,441,883 3,441,883
-- 1,500,000 1,500,000 US Treasury Bill, 5.65%*, 7/25/96 -- 1,457,802 1,457,802
-- 1,150,000 1,150,000 US Treasury Bill, 5.61%*, 8/22/96 -- 1,113,305 1,113,305
-- 1,000,000 1,000,000 US Treasury Bill, 5.61%*, 9/19/96 -- 964,475 964,475
Total Short Term Investments ----------- ----------- -----------
(cost $18,821,973) 4,819,555 14,017,842 18,837,397
----------- ----------- -----------
Total Investments (cost $196,406,458) 107,690,899 102,116,486 209,807,385
=========== =========== ===========
<FN>
_______________
(b) Represents non-income producing securities
* Yield at purchase
** Denominated in local currency
</TABLE>
<PAGE>
Industry Diversification
Percentage of
Industry Investment Portfolio
----------------------------- --------------------
Banking 14.69%
U.S. Treasury Securities 6.76%
Energy and Utilities 6.40%
Foreign Bond 6.34%
Electronics 4.60%
International Oil 3.55%
Retailing 3.49%
Food and Agriculture 3.37%
Chemicals 3.37%
Drugs and Medicine 3.09%
Producer Goods 2.94%
Automobiles 2.90%
Construction 2.76%
Insurance 2.69%
Beverages and Tobacco 2.50%
Financial Services 2.33%
Revolving Repurchase Agreement 2.32%
Telecommunications 2.32%
Multi-Industry/Conglomerates 2.07%
Real Estate 1.91%
Steel 1.72%
Health and Personal Care Products 1.61%
Machinery and Equipment 1.32%
Air Transportation 1.30%
Metals 1.23%
Business Services 1.13%
Media 1.13%
Forest and Paper Products 1.10%
Railroad and Shipping 1.09%
Leisure, Travel and Recreation Products 0.96%
Household Furniture and Appliances 0.91%
Consumer Durables 0.85%
Industrial Goods and Equipment 0.76%
Basic Materials 0.67%
Business Machine 0.62%
Trading Companies 0.62%
Building Materials 0.58%
Surface Transportation 0.56%
Broadcasting and Publishing 0.49%
Data Processing Systems 0.30%
Resorts and Entertainment 0.19%
Shipping and Storage 0.15%
Textile 0.14%
Aerospace and Defense 0.14%
Mining 0.03%
Other 1.13%
-----
100%
=====
<PAGE>
FORWARD FOREIGN CURRENCY CONTRACTS -- Woodward
As of December 31, 1995, the Fund had entered into two forward
foreign currency exchange contracts that obligate the Fund to deliver
currencies at specified future dates.
Outstanding contracts as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency To Value As Of Currency To Value as of Unrealized
Settlement Date Be Delivered Dec. 31, 1995 Be Received Dec. 31, 1995 Gain (Loss)
- --------------- ------------ ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Jan. 2, 1996...... 770,501 $770,501 3,344,361 $770,234 $(267)
U.S. Dollars Finnish Marks
Jan. 3, 1996...... 5,349 (8,305) 8,253 (8,253) 52
G.B. Pounds U.S. Dollars
-------- -------- -----
$762,196 $761,981 $(215)
======== ======== =====
</TABLE>
<TABLE>
<CAPTION>
FOREIGN CURRENCY INVESTMENTS -- Prairie
Contract Contract Unrealized
Price Value (Depreciation)
-------- -------- --------------
<S> <C> <C> <C>
Currency Purchased:
German Deutsche Mark.......... $0.698600 $328,907 $ (3,032)
Japanese Yen(a)............... $0.960000 504,385 (69,326)
U.K. Pound Sterling........... $1.552600 115,183 (1,442)
-------- ---------
Total Foreign Currency Investments
(cost $1,022,275)............. $948,475 $ (73,800)
======== =========
<FN>
(a) Pledged to cover margin requirements for open futures positions.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL FUTURES -- Prairie
Unrealized
Market Value Appreciation
Number of Covered (Depreciation)
Contracts by Contracts Expiration at 12/31/95
--------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
Financial Futures Purchased
Long:
British Pound -- FTSE(1)..... 57 $ 8,134,087 March 1996 $ 54,862
German Deutsche Marks --
DAX(1)..................... 3 447,415 March 1996 12,404
Japanese Yen -- TOPIX(1)..... 120 18,426,486 March 1996 851,509
Financial Futures Sold Short:
German Deutsche Marks(2)..... 130 $11,340,875 March 1996 (71,500)
Japanese Yen(2).............. 69 8,491,312 March 1996 101,775
---------
$ 949,050
=========
<FN>
(1) Exchange traded local currency denominated futures contracts.
(2) U.S. Dollar denominated futures contracts.
</TABLE>
PFS-22
<PAGE>
THE 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 Statement of Assets and Liabilities and Pro Forma Combining
Statement of Operations reflect the accounts of the Woodward
International Equity Fund and Prairie International Equity Fund for the
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 Prairie International Equity fund
in exchange for shares of the Woodward International Equity Fund.
In accordance with generally accepted accounting principles, the
historical cost of investment securities will be carried forward to the
Woodward International Equity Fund and the results of operations for
pre-combination periods for the Woodward International Equity Fund will
not be restated. The pro forma statements do not reflect the expenses of
any fund in carrying out their obligation under the Agreement and Plan
of Reorganization. Under the terms of the Plan of Reorganization, the
combination of the funds will be taxed as a tax free business
combination and accordingly will be accounted for by a method of
accounting for tax free mergers of investment companies (sometimes
referred to as the pooling without restatement method).
The Pro Forma Combining Schedule of Investments, Statement of Assets and
Liabilities and Statement of Operations should be read in conjunction
with the historical financial statements of the funds included or
incorporated by reference in the Statement of Additional Information.
(2) Portfolio Valuation-
Investments held by the Woodward International Equity Fund and the
Prairie International Equity Fund are stated at market value.
(3) Capital Shares-
The pro forma net asset value per share assumes the issuance of
additional shares of the Woodward International Equity Fund which would
have been issued at December 31, 1995, in connection with the proposed
reorganization. The pro forma number of shares outstanding of 19,163,186
consists of 9,450,295 additional shares assumed issued in the
reorganization plus 9,712,891 shares of the Woodward International
Equity Fund outstanding at December 31, 1995.
PFS-23
