Registration Nos. 33-56217
811-07231
============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
--
Pre-Effective Amendment No. _____ / /
Post-Effective Amendment No. 2 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/X/
Amendment No. 2 /X/
(Check appropriate box or boxes)
PRAIRIE FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670 60670
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 732-4231
Bradford M. Markham, Esq.
c/o First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on April 11, 1996 pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has registered an indefinite number of its shares of beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal
year ended December 31, 1995 was filed on February 29, 1996.
<PAGE>
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Page Cover
2 Synopsis 4
3 Condensed Financial Information 8
4 General Description of Registrant 18, 42
5 Management of the Fund 38
5(a) Management's Discussion of Fund's *
Performance
6 Capital Stock and Other Securities 42
7 Purchase of Securities Being Offered 31
8 Redemption or Repurchase 35
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-23
15 Control Persons and Principal Holders
of Securities B-53
16 Investment Advisory and Other Services B-25
17 Brokerage Allocation B-43
Items in
Part B of
Form N-1A Caption Page
18 Capital Stock and Other Securities B-53
19 Purchase, Redemption and Pricing of
Securities Being Offered B-35
20 Tax Status B-45
21 Underwriters B-1
22 Calculations of Performance Data B-48
23 Financial Statements B-74
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-3
26 Number of Holders of Securities C-3
27 Indemnification C-4
28 Business and Other Connections of
Investment Adviser C-4
29 Principal Underwriters C-5
30 Location of Accounts and Records C-5
31 Management Services C-6
32 Undertakings C-6
- ---------
*Omitted since answer is negative or inapplicable.
<PAGE>
Prospectus APRIL 11, 1996
[PRAIRIE FUNDS LOGO]
The Prairie Funds are open-end, management investment companies. Through
this Prospectus, investors may invest in any of 14 separate funds (the "Funds"),
divided into five general fund types: Asset Allocation; Equity; Bond; Municipal
Bond; and Money Market.
First Chicago Investment Management Company ("FCIMCO" or the "Investment
Adviser") serves as each Fund's investment adviser and administrator. The
Investment Adviser has engaged ANB Investment Management and Trust Company
("ANB-IMC") to serve as sub-investment adviser to the International Equity Fund
and to provide day-to-day management of that Fund's investments.
Concord Financial Group, Inc. (the "Distributor") serves as each Fund's
distributor. By this Prospectus, Class A shares of each Fund, Class B shares of
each Fund other than the U.S. Government Money Market and Municipal Money Market
Funds, and Class I shares of each Fund other than the Money Market Funds, are
being offered.
Class A shares of each Fund, other than the Money Market Funds,
are subject to a sales charge imposed at the time of purchase and Class B shares
of each such Fund are subject to a contingent deferred sales charge imposed on
redemptions made within up to six years of purchase. Class A and Class B shares
are offered to any investor. Each Fund offers these alternatives to permit an
investor to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the investor expects to hold the
shares and other circumstances. Class B shares of the Money Market Fund may be
acquired only through the exchange of Class B shares of the other Funds.
Class I shares are offered without a sales charge and are sold only to
qualified trust, custody and/or agency account clients of The First National
Bank of Chicago ("FNBC"), American National Bank and Trust Company ("ANB") or
their affiliates and to certain qualified employee benefit plans or other
programs.
Other differences between the Classes include the services offered to and
expenses borne by each Class and certain voting rights, as described herein.
Fund shares are not deposits or obligations of, or guaranteed by, any bank,
and are not federally insured by the Federal Deposit Insurance Corporation
("FDIC"), the Federal Reserve Board, or any other agency. Fund shares involve
certain investment risks, including the possible loss of principal. For all
Funds other than the Money Market Funds, investors should recognize that the
share price, yield and investment return of each Fund fluctuate and are not
guaranteed.
For the Money Market Funds, investors should recognize that an investment
in a Money Market Fund is neither insured nor guaranteed by the U.S. Government.
There can be no assurance that the Money Market Funds will be able to maintain a
stable net asset value of $1.00 per share.
This Prospectus sets forth concisely information about the Funds that an
investor should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated April 11, 1996, which may be
revised from time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to some investors. It
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. For a free copy, write to the Prairie Funds at Three First
National Plaza, Chicago, Illinois 60670, or call 1-800-224-4800.
----------------------------------------------
ASSET ALLOCATION FUNDS
The Managed
Assets Income Fund
The Managed
Assets Fund
EQUITY FUNDS
The Equity Income Fund
The Growth Fund
The Special Opportunities Fund
The International Equity Fund
BOND FUNDS
The Intermediate Bond Fund
The Bond Fund
The International Bond Fund
MUNICIPAL BOND FUNDS
The Intermediate Municipal
Bond Fund
The Municipal Bond Fund
MONEY MARKET FUNDS
The U.S. Government
Money Market Fund
The Money Market Fund
The Municipal
Money Market Fund
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Table of Contents
4 Fee Table
8 Condensed Financial Information
18 Highlights
22 Description of the Funds
27 Risk Factors
30 Alternative Purchase Methods
31 How to Buy Shares
34 Shareholder Services
35 How to Redeem Shares
38 Management of the Funds
40 Distribution Plans and
Shareholder
Services Plans
40 Dividends, Distributions and
Taxes
41 Performance Information
42 General Information
A-1 Appendix
The Prairie Funds
ASSET ALLOCATION FUNDS
These Funds will follow an asset allocation strategy by investing in equity
securities, fixed-income securities and short-term instruments of domestic and
foreign issuers:
The Managed Assets Income Fund
seeks to maximize current income; capital appreciation is a secondary, but
nonetheless important, goal.
The Managed Assets Fund
seeks to maximize total return, consisting of capital appreciation and current
income, without assuming undue risk.
EQUITY FUNDS
These Funds will invest principally in equity securities:
The Equity Income Fund
seeks to provide income; capital appreciation and growth of earnings are
secondary, but nonetheless important, goals. This Fund will invest primarily in
income-producing equity securities of domestic issuers.
The Growth Fund
seeks long-term capital appreciation. This Fund will invest primarily in equity
securities of domestic issuers believed by the Fund's investment adviser to have
above-average growth characteristics.
The Special Opportunities Fund
seeks long-term capital appreciation. This Fund will invest primarily in equity
securities of small- to medium-sized emerging growth domestic issuers that the
Fund's investment adviser believes are undervalued in the marketplace.
The International Equity Fund
seeks long-term capital appreciation. This Fund will invest primarily in equity
securities of foreign issuers.
BOND FUNDS
These Funds will invest principally in fixed-income securities:
The Intermediate Bond Fund
seeks to provide as high a level of current income as is consistent with the
preservation of capital. This Fund will invest primarily in a portfolio of U.S.
dollar denominated investment grade fixed-income securities of domestic and
foreign issuers which, under normal market conditions, will have a
dollar-weighted average maturity expected to range between three and ten years.
The Bond Fund
seeks to provide as high a level of current income as is consistent with the
preservation of capital. This Fund will invest primarily in a portfolio of U.S.
dollar denominated investment grade fixed-income securities of domestic and
foreign issuers, without regard to maturity.
The International Bond Fund
seeks to provide both long-term capital appreciation and current income. This
Fund will invest primarily in investment grade debt securities of foreign
issuers.
MUNICIPAL BOND FUNDS
These Funds will invest principally in Municipal Obligations:
The Intermediate Municipal Bond Fund
seeks to provide as high a level of current income exempt from Federal income
tax as is consistent with the preservation of capital. This Fund will invest
primarily in a portfolio of investment grade Municipal Obligations which, under
normal conditions, will have a dollar-weighted average maturity expected to
range between three and ten years.
The Municipal Bond Fund
seeks to provide as high a level of current income exempt from Federal income
tax as is consistent with the preservation of capital. This Fund will invest
primarily in a portfolio of investment grade Municipal Obligations without
regard to maturity.
MONEY MARKET FUNDS
These Funds will invest in various kinds of money market instruments and will
seek a stable net asset value of $1.00 per share:
The U.S. Government Money Market Fund
seeks to provide as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. This Fund will invest
only in short-term securities issued or guaranteed as to principal or interest
by the U.S. Government, its agencies and instrumentalities, and repurchase
agreements in respect of such securities.
The Money Market Fund
seeks to provide as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. This Fund will invest
in short-term money market instruments.
The Municipal Money Market Fund
seeks to provide as high a level of current income exempt from Federal income
tax as is consistent with the preservation of capital and the maintenance of
liquidity. This Fund will invest in short-term Municipal Obligations.
The Prairie Funds
Fee Table
<TABLE>
<CAPTION>
------------------------------ ------------------------- ---------
CLASS A CLASS B CLASS I
- ------------------------------------------------------------------------------------------------------------------------
All Other
Money Intermediate All Funds All Funds
SHAREHOLDER Market Bond Other Intermediate Offering Offering
TRANSACTION EXPENSES Funds Funds Funds Bond Funds Class B Class I
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
Imposed On Purchases
(as a percentage of offering price) None 3.00% 4.50% None None None
Sales Charge On
Reinvested Dividends None None None None None None
Maximum Deferred Sales
Charge Imposed On Redemptions
(as a percentage of the amount
subject to charge) None None* None* 3.00% 5.00% None
Redemption Fees None None None None None None
Exchange Fees None None None None None None
</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 as
part of an investment of $1 million or more.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
- --------------------------------
Class A Shares
<TABLE>
<CAPTION>
EXAMPLE
An investor would pay the following
expenses on a $1,000 investment,
assuming
(1) 5% annual return and (2) redemption
TOTAL at the end of each time period:
MANAGEMENT 12b-1 OTHER OPERATING 5 10
FEES* FEES EXPENSES* EXPENSES* 1 YEAR 3 YEARS YEARS YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund 0.65% none 0.40% 1.05% $55 $77 $100 $167
Managed Assets Fund 0.65% none 0.40% 1.05% $55 $77 $100 $167
EQUITY FUNDS:
Equity Income Fund 0.50% none 0.40% 0.90% $54 $72 $ 93 $151
Growth Fund 0.65% none 0.40% 1.05% $55 $77 $100 $167
Special Opportunities Fund 0.70% none 0.40% 1.10% $56 $78 $103 $173
International Equity Fund 0.80% none 0.50% 1.30% $58 $84 $113 $195
BOND FUNDS:
Intermediate Bond Fund 0.40% none 0.40% 0.80% $38 $55 $ 73 $126
Bond Fund 0.55% none 0.40% 0.95% $54 $74 $ 95 $156
International Bond Fund 0.70% none 0.50% 1.20% $57 $81 $108 $184
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund 0.40% none 0.40% 0.80% $38 $55 $ 73 $126
Municipal Bond Fund 0.40% none 0.40% 0.80% $53 $69 $ 87 $140
MONEY MARKET FUNDS:
U.S. Government Money Market Fund 0.40% none 0.40% 0.80% $8 $26 $44 $99
Money Market Fund 0.40% none 0.40% 0.80% $8 $26 $44 $99
Municipal Money Market Fund 0.40% none 0.30% 0.70% $7 $22 $39 $87
</TABLE>
* After expense reimbursements or fee waivers.
- - THE PRAIRIE FUNDS
- --------------------------------
Class B Shares
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT 12b-1 OTHER OPERATING
FEES* FEES EXPENSES* EXPENSES*
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund 0.65% 0.75% 0.40% 1.80%
Managed Assets Fund 0.65% 0.75% 0.40% 1.80%
EQUITY FUNDS:
Equity Income Fund 0.50% 0.75% 0.40% 1.65%
Growth Fund 0.65% 0.75% 0.40% 1.80%
Special Opportunities Fund 0.70% 0.75% 0.40% 1.85%
International Equity Fund 0.80% 0.75% 0.50% 2.05%
BOND FUNDS:
Intermediate Bond Fund 0.40% 0.75% 0.40% 1.55%
Bond Fund 0.55% 0.75% 0.40% 1.70%
International Bond Fund 0.70% 0.75% 0.50% 1.95%
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund 0.40% 0.75% 0.40% 1.55%
Municipal Bond Fund 0.40% 0.75% 0.40% 1.55%
MONEY MARKET FUNDS:
Money Market Fund 0.40% 0.75% 0.40% 1.55%
<CAPTION>
EXAMPLE
An investor would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) except where
noted, redemption at the end of each
time period:
10
1 YEAR 3 YEARS 5 YEARS YEARS+
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund $68/$18** $87/$57** $117/$ 97** $183
Managed Assets Fund $68/$18** $87/$57** $117/$ 97** $183
EQUITY FUNDS:
Equity Income Fund $67/$17** $82/$52** $110/$ 90** $166
Growth Fund $68/$18** $87/$57** $117/$ 97** $183
Special Opportunities Fund $69/$19** $88/$58** $120/$100** $188
International Equity Fund $71/$21** $94/$64** $130/$110** $210
BOND FUNDS:
Intermediate Bond Fund $46/$16** $69/$49** $ 94/$ 84** $146
Bond Fund $67/$17** $84/$54** $112/$ 92** $172
International Bond Fund $70/$20** $91/$61** $125/$105** $199
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund $46/$16** $69/$49** $ 94/$84** $146
Municipal Bond Fund $66/$16** $79/$49** $104/$84** $155
MONEY MARKET FUNDS:
Money Market Fund $16 $49 $84 $155
</TABLE>
* After expense reimbursements or fee waivers.
** Assuming no redemption of Class B shares.
+ Ten-year figures assume conversion of Class B shares to Class A shares.
- --------------------------------
Class I Shares
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT 12b-1 OTHER OPERATING
FEES* FEES EXPENSES* EXPENSES*
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund 0.65% none 0.15% 0.80%
Managed Assets Fund 0.65% none 0.15% 0.80%
EQUITY FUNDS:
Equity Income Fund 0.50% none 0.15% 0.65%
Growth Fund 0.65% none 0.15% 0.80%
Special Opportunities Fund 0.70% none 0.15% 0.85%
International Equity Fund 0.80% none 0.25% 1.05%
BOND FUNDS:
Intermediate Bond Fund 0.40% none 0.15% 0.55%
Bond Fund 0.55% none 0.15% 0.70%
International Bond Fund 0.70% none 0.25% 0.95%
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund 0.40% none 0.15% 0.55%
Municipal Bond Fund 0.40% none 0.15% 0.55%
<CAPTION>
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 each time period:
10
1 YEAR 3 YEARS 5 YEARS YEARS
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund $8 $26 $44 $99
Managed Assets Fund $8 $26 $44 $99
EQUITY FUNDS:
Equity Income Fund $7 $21 $36 $81
Growth Fund $8 $26 $44 $99
Special Opportunities Fund $9 $27 $47 $105
International Equity Fund $11 $33 $58 $128
BOND FUNDS:
Intermediate Bond Fund $6 $18 $31 $69
Bond Fund $7 $22 $39 $87
International Bond Fund $10 $30 $53 $117
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund $6 $18 $31 $69
Municipal Bond Fund $6 $18 $31 $69
</TABLE>
* After expense reimbursements or fee waivers.
THE AMOUNTS LISTED IN THE EXAMPLES SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. MOREOVER, WHILE EACH EXAMPLE ASSUMES A 5% ANNUAL RETURN, A FUND'S
ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS
THAN 5%.
The purpose of the foregoing tables is to assist investors in understanding
the costs and expenses that investors in a Fund will bear, directly or
indirectly, the payment of which will reduce investors' annual return. With
respect to each Fund, Total Operating Expenses noted above have been restated to
reflect an undertaking by the Investment Adviser that if, in the fiscal year
ending December 31, 1996, Fund expenses, including the investment advisory fee,
exceed the Total Operating Expenses noted in the tables above for such Fund for
the fiscal year, the Investment Adviser may waive its investment advisory fee or
bear certain other expenses to the extent of such excess expense. Long-term
investors in Class B shares of a Fund could pay more in 12b-1 fees than the
economic equivalent of paying a front-end sales charge. FCIMCO, FNBC, ANB and
their affiliates and certain Service Agents (as defined below) may charge their
clients direct fees for effecting transactions in Fund shares; such fees are not
reflected in the foregoing tables. See "How to Buy Shares," "Management of the
Funds" and "Distribution Plans and Shareholder Services Plans." The Other
Expenses and Total Operating Expenses noted in the foregoing tables for each
Fund, without expense reimbursements or fee waivers, and estimated 1996 Total
Operating Expenses are as follows:
- --------------------------------
Class A Shares
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING ESTIMATED 1996 TOTAL
EXPENSES EXPENSES OPERATING EXPENSES
<S> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund 0.89% 1.54% 1.53%
Managed Assets Fund 2.50% 3.15% 2.61%
EQUITY FUNDS:
Equity Income Fund 0.94% 1.44% 1.00%
Growth Fund 0.74% 1.39% 1.18%
Special Opportunities Fund 1.86% 2.56% 1.31%
International Equity Fund 1.16% 1.96% 1.45%
BOND FUNDS:
Intermediate Bond Fund 0.75% 1.15% 0.95%
Bond Fund 1.02% 1.57% 1.18%
International Bond Fund 2.95% 3.65% 2.16%
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund 0.57% 0.97% 0.88%
Municipal Bond Fund 0.64% 1.04% 0.90%
MONEY MARKET FUNDS:
U.S. Government Money Market Fund 0.67% 1.07% 1.25%
Money Market Fund 0.67% 1.07% 1.17%
Municipal Money Market Fund 0.54% 0.94% 0.94%
</TABLE>
- THE PRAIRIE FUNDS
Class B Shares
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING ESTIMATED 1996 TOTAL
EXPENSES EXPENSES OPERATING EXPENSES
<S> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund 0.72% 2.12% 2.28%
Managed Assets Fund 5.44% 6.84% 3.36%
EQUITY FUNDS:
Equity Income Fund 1.40% 2.65% 1.75%
Growth Fund 1.20% 2.60% 1.93%
Special Opportunities Fund 8.07% 9.52% 2.06%
International Equity Fund 2.28% 3.83% 2.20%
BOND FUNDS:
Intermediate Bond Fund 0.63% 1.78% 1.70%
Bond Fund 2.61% 3.91% 1.93%
International Bond Fund 7.24% 8.69% 2.91%
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund 0.86% 2.01% 1.63%
Municipal Bond Fund 0.89% 2.04% 1.65%
MONEY MARKET FUNDS:
Money Market Fund 0.87% 2.02% 1.92%
</TABLE>
- --------------------------------
Class I Shares
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING ESTIMATED 1996 TOTAL
EXPENSES EXPENSES OPERATING EXPENSES
<S> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Income Fund 0.57% 1.22% 1.28%
Managed Assets Fund 3.47% 4.12% 2.36%
EQUITY FUNDS:
Equity Income Fund 0.27% 0.77% 0.75%
Growth Fund 0.27% 0.92% 0.93%
Special Opportunities Fund 0.39% 1.09% 1.06%
International Equity Fund 0.58% 1.38% 1.20%
BOND FUNDS:
Intermediate Bond Fund 0.27% 0.67% 0.70%
Bond Fund 0.32% 0.87% 0.93%
International Bond Fund 1.23% 1.93% 1.91%
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund 0.28% 0.68% 0.63%
Municipal Bond Fund 0.27% 0.67% 0.65%
</TABLE>
Condensed Financial Information
The information in the following tables has been audited by Ernst & Young
LLP, each Fund's independent auditors, whose report thereon appear in the
Statement of Additional Information. Further financial data and related notes
are included in the Statement of Additional Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
Class A, Class B and Class I of the Managed Asset Income Fund (including its
predecessor fund--First Prairie Diversified Asset Fund) for the periods
indicated. This information has been derived from information provided in the
Funds' financial statements.
MANAGED ASSETS INCOME FUND(1):
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
Fiscal Year Ended December 31,
--------------------------------------------------------
1986(2) 1987 1988 1989 1990 1991
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
period $10.00 $10.75 $9.73 $10.66 $11.54 $10.79
INVESTMENT OPERATIONS:
Investment income-net 0.63 0.70 0.78 0.88 0.86 0.83
Net realized and unrealized
gain (loss) on investments 0.70 (0.85) 0.92 1.10 (0.54) 1.77
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.33 (0.15) 1.70 1.98 0.32 2.60
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.58) (0.77) (0.74) (0.89) (0.88) (0.83)
Distributions from net realized
gain on investments -- (0.10) (0.03) (0.21) (0.19) --
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.58) (0.87) (0.77) (1.10) (1.07) (0.83)
Net asset value, end of period $10.75 $9.73 $10.66 $11.54 $10.79 $12.56
TOTAL INVESTMENT RETURN(7) 13.59%(8) (1.73%) 17.78% 19.08% 2.94% 24.87%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets -- -- -- -- -- --
Ratio of net investment income
to average net assets 5.90%(8) 6.61% 7.38% 7.74% 7.71% 7.04%
Decrease reflected in above
expense ratios due to
undertakings 1.41%(8) 2.69% 2.62% 2.96% 2.58% 2.16%
Portfolio Turnover Rate 15.19%(8) 23.99% 15.71% 49.46% 29.97% 26.02%
Net Assets, end of period
(000's omitted) $2,212 $4,989 $5,900 $7,407 $8,950 $14,038
<CAPTION>
CLASS A
--------------------------------------------
Fiscal Year Ended December 31,
--------------------------------------------
1992 1993 1994 1995
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
period $12.56 $12.68 $13.11 $12.13
INVESTMENT OPERATIONS:
Investment income-net 079 0.72 0.73 0.64
Net realized and unrealized
gain (loss) on investments 0.26 0.61 (0.98) 2.48
TOTAL FROM INVESTMENT
OPERATIONS 1.05 1.33 (0.25) 3.12
DISTRIBUTIONS:
Dividends from investment
income-net (0.77) (0.72) (0.72) (0.68)
Dividends from net realized
gain on investments (0.16) (0.18) (0.01) (0.03)
TOTAL DISTRIBUTIONS (0.93) (0.90) (0.73) (0.71)
Net asset value, end of period $12.68 $13.11 $12.13 $14.54
TOTAL INVESTMENT RETURN(7) 8.68% 10.70% (1.92%) 26.40%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets 0.02% 0.39% 0.63% 1.17%
Ratio of net investment income
to average net assets 6.24% 5.54% 5.77% 4.88%
Decrease reflected in above
expense ratios due to
undertakings 1.86% 1.26% 1.04% 0.37%
Portfolio Turnover Rate 22.14% 16.40% 28.69% 8.23%
Net Assets, end of period
(000's omitted) $34,262 $51,586 $44,367 $51,997
<CAPTION>
CLASS I
--------
CLASS B Fiscal
------------------ Period
Fiscal Period Ended Ended
------------------------ ------
December December
December 31, 31,
2, 1994(3) 1995(4) 1995(5)
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
period $13.05 $12.42 $12.42
INVESTMENT OPERATIONS:
Investment income-net 0.51 0.45 0.57
Net realized and unrealized
gain (loss) on investments (0.91) 2.17 2.18
TOTAL income (loss) from
INVESTMENT OPERATIONS (0.40) 2.62 2.75
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.54) (0.45) (0.57)
Distributions from net realized
gain on investments (0.01) (0.03) (0.03)
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.55) (0.48) (0.60)
Net asset value, end of period $12.10(6) $14.56 $14.57
TOTAL INVESTMENT RETURN(7) (3.13%)(8) 21.42% 22.55%(8)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets 1.21%(9) 1.92% 0.77%(9)
Ratio of net investment income
to average net assets 4.10%(9) 3.89% 5.12%(9)
Decrease reflected in above
expense ratios due to
undertakings 0.96%(9) 0.20% 0.45%(9)
Portfolio Turnover Rate 28.69% 8.23% 8.23%(8)
Net Assets, end of period
(000's omitted) -- $2,175 $1,294
</TABLE>
(1) On March 3, 1995, all of the assets and liabilities of First Prairie
Diversified Asset Fund were transferred to the Managed Assets Income Fund in
exchange for Class A shares of the Managed Assets Income Fund. The financial
data provided above for periods prior to such date is for First Prairie
Diversified Asset Fund.
(2) From January 23, 1986 (commencement of operations) to December 31, 1986.
(3) For the period February 8, 1994 (initial offering date of Class B
shares) through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of the then-existing Class B shares and converted Class B shares
outstanding at that time to Class A shares. The Fund commenced offering Class B
shares under the current sales load structure on March 3, 1995.
(4) From March 3, 1995 (re-offering date of Class B shares) to December 31,
1995.
(5) From March 3, 1995 (initial offering date of Class I shares) to December 31,
1995.
(6) Conversion to Class A shares. See note 3 above.
(7) Excludes sales charges.
(8) Not annualized.
(9) Annualized.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
Class A, Class B and Class I of the Intermediate Bond Fund for the periods
indicated. This information has been derived from information provided in the
Funds' financial statements.
INTERMEDIATE BOND FUND(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------- ----------------------
Fiscal Fiscal Eleven-Month Fiscal Fiscal
Period Year Period Period Period
Ended Ended Ended Ended Ended
January January December December December
31, 31, 31, 2, 31,
1994(3) 1995 1995(4) 1994(5) 1995(6)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period $8.36 $8.25 $7.68 $8.16 $8.13
INVESTMENT OPERATIONS:
Investment income-net 0.47 0.52 0.44 0.40 0.24
Net realized and unrealized
gain (loss) on investments (0.09) (0.57) 0.72 (0.55) 0.27
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.38 (0.05) 1.16 (0.15) 0.51
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.47) (0.52) (0.44) (0.40) (0.24)
Distributions from net realized
gain on investments (0.02) -- (0.22) -- (0.22)
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.49) (0.52) (0.66) (0.40) (0.46)
Net asset value, end of period $8.25 $7.68 $8.18 $7.61(7) $8.18
TOTAL INVESTMENT RETURN(8) 5.16%(9) (0.45%) 15.55%(10) (1.82%)(10) 6.41%(10)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets -- 0.04% 0.94%(9) -- 1.60%(9)
Ratio of net investment income
to average net assets 5.96%(9) 6.70% 5.72%(9) 6.48%(9) 5.00%(9)
Decrease reflected in above
expense ratios due to
undertakings 3.67%(9) 2.74% 0.21%(9) 2.58%(9) 0.18%(9)
Portfolio Turnover Rate 26.54%(10) 71.65% 173.26%(10) 71.65%(10) 173.26%(10)
Net Assets, end of period (000's
omitted) $65 $69 $6,095 -- $259
<CAPTION>
CLASS I (2)
--------------------------------------
Fiscal Eleven-Month
Fiscal Year Period
Period Ended Ended
Ended January December
January 31, 31, 31,
1994(3) 1995 1995(4)
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period $8.36 $8.25 $7.68
INVESTMENT OPERATIONS:
Investment income-net 0.47 0.52 0.47
Net realized and unrealized
(loss) on investments (0.09) (0.57) 0.72
TOTAL GAIN (LOSS) FROM
INVESTMENT OPERATIONS 0.38 (0.05) 1.19
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.47) (0.52) (0.47)
Distributions from net realized
gain on investments (0.02) -- (0.22)
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.49) (0.52) (0.69)
Net asset value, end of period $8.25 $7.68 $8.18
TOTAL INVESTMENT RETURN(8) 5.16%(9) (0.48%) 15.90%(10)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets -- 0.04% 0.55%(9)
Ratio of net investment income
to average net assets 6.21%(9) 6.70% 6.34%(9)
Decrease reflected in above
expense ratios due to
undertakings 2.64%(9) 2.66% 0.12%(9)
Portfolio Turnover Rate 26.54% 71.65% 173.26%(10)
Net Assets, end of period (000's
omitted) $5,128 $7,101 $191,930
</TABLE>
(1) On January 17, 1995, the management policies of the Intermediate Bond Fund
were changed as described under "General Information."
(2) Formerly, Class F shares.
(3) From March 5, 1993 (commencement of operations) to January 31, 1994.
(4) Effective February 1, 1995, the Fund changed its fiscal year-end from
January 31 to December 31. The figures presented are from February 1, 1995
to December 31, 1995.
(5) For the period February 8, 1994 (initial offering date of Class B
shares) through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of the then-existing Class B shares and converted Class B shares
outstanding at that time to Class A shares. The Fund commenced offering Class B
shares under the current sales load structure on May 31, 1995.
(6) From May 31, 1995 (re-offering date of Class B shares) to December 31,
1995.
(7) Conversion to Class A shares. See note 5 above.
(8) Excludes sales charges.
(9) Annualized.
(10) Not annualized.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
Class A, Class B and Class I of the Intermediate Municipal Bond Fund (including
its predecessor fund--the Intermediate Series of First Prairie Municipal Bond
Fund, Inc.) for the periods indicated. This information has been derived from
information provided in the Funds' financial statements.
INTERMEDIATE MUNICIPAL BOND FUND(1):
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
Ten-
Month
Period
Ended
Fiscal Year Ended February 28/29, December
----------------------------------------------------------- 31,
1989(2) 1990 1991 1992 1993 1994 1995 1995(3)
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $11.46 $11.43 $11.65 $11.95 $12.25 $12.79 $12.18 $11.79
INVESTMENT OPERATIONS:
Investment income-net 0.79 0.78 0.80 0.76 0.64 0.61 0.55 0.44
Net realized and
unrealized gain
(loss) on investments (0.03) 0.22 0.31 0.37 0.68 0.01 (0.36) 0.56
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.76 1.00 1.11 1.13 1.32 0.62 0.19 1.00
DIVIDENDS AND DISTRIBUTIONS:
Dividends from
investment income-net (0.79) (0.78) (0.80) (0.76) (0.64) (0.61) (0.55) (0.44)
Distributions from net
realized gain on
investments -- -- (0.01) (0.07) (0.14) (0.62) (0.03) (0.10)
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.79) (0.78) (0.81) (0.83) (0.78) (1.23) (0.58) (0.54)
Net asset value, end
of period $11.43 $11.65 $11.95 $12.25 $12.79 $12.18 $11.79 $12.25
TOTAL INVESTMENT
RETURN(9) 6.82%(10) 9.00% 9.94% 9.78% 11.26% 4.94% 1.64% 8.58%(11)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- -- -- 0.06% 0.29% 0.83%(10)
Ratio of net
investment income to
average net assets 6.83%(10) 6.62% 6.76% 6.15% 5.16% 4.78% 4.73% 4.30%(10)
Decrease reflected in
above expense ratios
due to undertakings 2.25%(10) 2.75% 2.75% 1.72% 1.31% 1.21% 1.09% 0.14%(10)
Portfolio Turnover
Rate 101.17%(11) 46.68% 12.22% 86.91% 63.67% 167.95% 128.02% 44.75%(11)
Net Assets, end of
period (000's
omitted) $2,593 $4,582 $7,251 $18,310 $27,885 $28,826 $17,243 $17,777
<CAPTION>
CLASS B CLASS I
--------------------------------------------------- -----------------------
Ten- Ten-
Month Month
Fiscal Period Fiscal Period
Period Period Period Ended Period Ended
Ended Ended Ended December Ended December
February December February 31, February 31,
28, 1994(4) 2, 1994(5) 28, 1995(6) 1995(3) 28, 1995(7) 1995(3)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $12.32 $12.18 $11.57 $11.80 $11.57 $11.80
INVESTMENT OPERATIONS:
Investment income-net 0.03 0.37 0.04 0.37 0.04 0.47
Net realized and
unrealized gain
(loss) on investments (0.14) (0.72) 0.23 0.55 0.23 0.55
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS (0.11) (0.35) 0.27 0.92 0.27 1.02
DIVIDENDS AND DISTRIBUTIONS:
Dividends from
investment income-net (0.03) (0.37) (0.04) (0.37) (0.04) (0.47)
Distributions from net
realized gain on
investments -- (0.03) -- (0.10) -- (0.10)
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.03) (0.40) (0.04) (0.47) (0.04) (0.57)
Net asset value, end
of period $12.18 $11.43(8) $11.80 $12.25 $11.80 $12.25
TOTAL INVESTMENT
RETURN(9) (0.93%)(11) (2.98%) 2.30%(11) 7.75% 2.37%(11) 8.76%(11)
RATIOS/SUPPLEMENTAL DATE
Ratio of expenses to
average net assets 0.75%(10) 0.76%(10) 1.36%(10) 1.71% 0.50%(10) 0.55%(10)
Ratio of net
investment income to
average net assets 1.68%(10) 4.03%(10) 3.72%(10) 3.36%(10) 4.79%(10) 4.78%(10)
Decrease reflected in
above expense ratios
due to undertakings 2.25%(10) 1.24%(10) 0.28%(10) 0.30%(10) 0.10%(10) 0.13%(10)
Portfolio Turnover
Rate 167.95% 128.02% 128.02% 44.75%(11) 128.02% 44.75%(11)
Net Assets, end of
period (000's
omitted) $12 -- $6 341 $365,801 $373,753
</TABLE>
(1) On January 31, 1995, all of the assets and liabilities of the Intermediate
Series of First Prairie Municipal Bond Fund, Inc. were transferred to the
Intermediate Municipal Bond Fund in exchange for Class A shares of the
Intermediate Municipal Bond Fund. The financial data provided above for
periods prior to such date is for the Intermediate Series of First Prairie
Municipal Bond Fund, Inc.
(2) From March 1, 1988 (commencement of operations) to February 28, 1989.
(3) Effective March 1, 1995, the Fund changed its fiscal year-end from February
28/29 to December 31. The figures presented are from March 1, 1995 to
December 31, 1995.
(4) For the period February 8, 1994 (initial offering date of Class B
shares) to February 28, 1994.
(5) For the period March 1, 1994 through December 2, 1994. On December 2, 1994,
the Fund terminated its offering of the then-existing Class B shares and
converted Class B shares outstanding at that time to Class A shares. The
Fund commenced offering Class B shares under the current sales load
structure on January 30, 1995. See note 5 below.
(6) For the period January 30, 1995 (re-offering date of Class B shares) to
February 28, 1995.
(7) For the period January 30, 1995 (initial offering date of Class I
shares) to February 28, 1995.
(8) Conversion to Class A shares. See note 5 above.
(9) Excludes sales charges.
(10) Annualized.
(11) Not annualized.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
Class A, Class B and Class I of the Municipal Bond Fund for the periods
indicated. This information has been derived from information provided in the
Funds' financial statements.
MUNICIPAL BOND FUND(1):
<TABLE>
<CAPTION>
Fiscal Year Ended February 28/29
----------------------------------------------------------
1989(2) 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period $11.94 $11.82 $11.77 $12.10 $12.49 $13.25 $12.13
INVESTMENT OPERATIONS:
Investment income-net 0.89 0.81 0.81 0.76 0.70 0.63 0.60
Net realized and unrealized
gain (loss) on investments (0.12) 0.28 0.33 0.47 1.01 (0.15) (0.07)
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.77 1.09 1.14 1.23 1.71 0.48 0.53
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.89) (0.81) (0.81) (0.76) (0.70) (0.63) (0.60)
Distributions from net realized
gain on investments -- (0.33) -- (0.08) (0.25) (0.96) --
Distributions from excess net
realized gain on investments -- -- -- -- -- (0.01) --
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.89) (1.14) (0.81) (0.84) (0.95) (1.60) (0.60)
Net asset value, end of period $11.82 $11.77 $12.10 $12.49 $13.25 $12.13 $12.06
TOTAL INVESTMENT RETURN(9) 6.82%(10) 9.39% 10.13% 10.50% 14.37% 3.70% 4.45%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets -- -- -- -- -- -- 1.98%
Ratio of net investment income
to average net assets 7.46%(10) 6.60% 6.87% 5.99% 5.49% 4.85% 5.09%
Decrease reflected in above
expense ratios due to
undertakings 2.25%(10) 2.75% 2.75% 2.75% 1.59% 1.44% 1.91%
Portfolio Turnover Rate 36.19%(11) 85.07% 32.40% 66.28% 88.53% 175.06% 60.78%
Net Assets, end of period
(000's omitted) $673 $1,192 $2,244 $6,591 $11,290 $9,234 $6,840
<CAPTION>
CLASS A CLASS I
-------- CLASS B -------------------
------------------------------ Ten-
Ten- Fiscal Fiscal Fiscal Month
Month Year Period Period Period
Period Ended Ended Ended Ended
Ended February December December February December
December 28, 2, 31, 28, 31,
31, 1995(3) 1994(4) 1994(5) 1995(6) 1995(7) 1995(3)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period $12.06 $12.37 $12.14 $12.17 $12.06 $12.06
INVESTMENT OPERATIONS:
Investment income-net 0.48 0.03 0.41 0.34 0.05 0.52
Net realized and unrealized
gain (loss) on investments 0.82 (0.23) (0.70) 0.72 -- 0.81
TOTAL INCOME GAIN (LOSS) FROM
INVESTMENT OPERATIONS 1.30 (0.20) (0.29) 1.06 0.05 1.33
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.48) (0.03) (0.41) (0.34) (0.05) (0.52)
Distributions from net realized
gain on investments (0.24) -- -- (0.24) -- (0.24)
Distributions from excess net
realized gain on investments -- -- -- -- -- --
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.72) (0.03) (0.41) (0.58) (0.05) (0.76)
Net asset value, end of period $12.64 $12.14 $11.44 $12.65 $12.06 $12.63
TOTAL INVESTMENT RETURN(9) 10.95%(11) (1.64%)(11) (4.30%) 8.81%(11) 0.39%(11) 11.20%(11)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets 0.89%(10) 0.50%(10) 3.18%(10) 1.66%(10) 0.65%(10) 0.54%(10)
Ratio of net investment income
to average net assets 4.57%(10) 4.10%(10) 4.51%(10) 3.61%(10) 5.45%(10) 4.95%(10)
Decrease reflected in above
expense ratios due to
undertakings 0.15%(10) 2.41%(10) 2.67%(10) 0.38%(10) 0.14%(10) 0.13%(10)
Portfolio Turnover Rate 69.31%(11) 175.06% 60.78% 69.31%(11) 60.78% 69.31%(11)
Net Assets, end of period
(000's omitted) $7,426 $2 -- $238 $220,143 $240,160
</TABLE>
(1) On September 12, 1989 and on January 17, 1995, the management policies of
the Municipal Bond Fund were changed as described under "General
Information."
(2) From March 1, 1988 (commencement of operations) to February 28, 1989.
(3) Effective March 1, 1995, the Fund changed its fiscal year-end from February
28/29 to December 31. The figures presented are from March 1, 1995 to
December 31, 1995.
(4) From February 8, 1994 (commencement of initial offering of Class B
shares) to February 28, 1994.
(5) For the period March 1, 1994 through December 2, 1994. On December 2, 1994,
the Fund terminated its offering of the then-existing Class B shares and
converted Class B shares outstanding at that time to Class A shares. The
Fund commenced offering Class B shares under the current sales load
structure on April 4, 1995.
(6) From April 4, 1995 (re-offering date of Class B shares) to December 31,
1995.
(7) From February 1, 1995 (commencement of initial offering of Class I) to
February 28, 1995.
(8) Conversion to Class A shares. See note 5 above.
(9) Excludes sales charges.
(10) Annualized.
(11) Not annualized.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
the U.S. Government Money Market Fund (including its predecessor fund--the
Government Money Market Series of First Prairie Money Market Fund) for the
periods indicated. This information has been derived from information provided
in the Funds' financial statements for its U.S. Government Money Market Series.
U.S. GOVERNMENT MONEY MARKET FUND(1):
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
------------------------------------------------------
1987(2) 1988 1989 1990 1991
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period $1.0000 $1.0004 $1.0001 $1.0000 $1.0000
INVESTMENT OPERATIONS:
Investment income-net 0.0409 0.0652 0.0811 0.0715 0.0498
Net realized gain (loss) on
investments 0.0004 -- -- -- --
TOTAL INCOME FROM
INVESTMENT OPERATIONS 0.0413 0.0652 0.0811 0.0715 0.0498
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.0409) (0.0652) (0.0811) (0.0715) (0.0498)
Distributions from net realized gain
on investments -- (0.0003) (0.0001) -- --
TOTAL DIVIDENDS AND DISTRIBUTIONS (0.0409) (0.0655) (0.0812) (0.0715) (0.0498)
CAPITAL CONTRIBUTION FROM AN
AFFILIATE OF THE INVESTMENT
ADVISER -- -- -- -- --
Net asset value, end of period $1.0004 $1.0001 $1.0000 $1.0000 $1.0000
TOTAL INVESTMENT RETURN 6.21%(3) 6.75% 8.43% 7.39% 5.10%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets 0.56%(3) 0.80% 0.93% 0.93% 0.90%
Ratio of net investment income to
average net assets 6.11%(3) 6.56% 8.05% 7.09% 4.97%
Decrease reflected in above expense
ratios due to expense
reimbursements 0.42(3) 0.17% 0.02% -- --
Net Assets, end of period (000's
omitted) $99,904 $141,348 $272,578 $777,257 $990,897
<CAPTION>
1992 1993 1994 1995
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period $1.0000 $1.0000 $0.9999 $0.9996
INVESTMENT OPERATIONS:
Investment income-net 0.0283 0.0249 0.0379 0.0498
Net realized gain (loss) on
investments -- (0.0001) (0.0083) 0.0001
TOTAL INCOME FROM INVESTMENT OPERATIONS 0.0283 0.0248 0.0296 0.0499
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.0283) (0.0249) (0.0379) (0.0498)
Distributions from net realized gain on
investments -- -- -- --
TOTAL DIVIDENDS AND DISTRIBUTIONS (0.0283) (0.0249) (0.0379) (0.0498)
CAPITAL CONTRIBUTION FROM AN
AFFILIATE OF THE INVESTMENT
ADVISER -- -- 0.0080 --
Net asset value, end of period $1.0000 $0.9999 $0.9996 $0.9997
TOTAL INVESTMENT RETURN 2.87% 2.52% 3.86% 5.09%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets 0.91% 0.74% 0.86% 0.78%
Ratio of net investment income to
average net assets 2.87% 2.48% 3.73% 4.97%
Decrease reflected in above expense
ratios due to expense
reimbursements -- 0.14% 0.02% 0.29%
Net Assets, end of period (000's
omitted) $548,733 $154,613 $116,353 $57,264
</TABLE>
(1) On May 20, 1995, all of the assets and liabilities of the U.S. Government
Money Market Series of First Prairie Money Market Fund were transferred to
the U.S. Government Money Market Fund in exchange for shares of the U.S.
Government Money Market Fund. The financial data provided above for periods
prior to such date is for the U.S. Government Money Market Series of First
Prairie Money Market Fund.
(2) From May 1, 1987 (commencement of operations) to December 31, 1987.
(3) Annualized.
(4) Had there not been a capital contribution from an affiliate of the
Investment Adviser during the year, the Fund's total return would have been
2.83%.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
Class A and Class B of the Money Market Fund (including its predecessor
fund--the Money Market Series of First Prairie Money Market Fund) for the
periods indicated. This information has been derived from information provided
in the Funds' financial statements.
MONEY MARKET FUND(1):
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
Fiscal Year Ended December 31,
-------------------------------------------------------------
1986(2) 1987 1988 1989 1990 1991
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $1.0000 $1.0000 $0.9999 $1.0000 $1.0000 $1.0000
INVESTMENT OPERATIONS:
Investment income-net 0.0552 0.0585 0.0679 0.0842 0.0734 0.0543
Net realized gain (loss)
on investments -- (0.0001) 0.0001 -- -- --
TOTAL INCOME FROM INVESTMENT
OPERATIONS 0.0552 0.0584 0.0680 0.0842 0.0734 0.0543
DIVIDENDS AND DISTRIBUTIONS:
Dividends from
investment income-net (0.0552) (0.0585) (0.0679) (0.0842) (0.0734) (0.0543)
Distributions from net
realized gain on
investments -- -- -- -- -- --
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.0552) (0.0585) (0.0679) (0.0842) (0.0734) (0.0543)
CAPITAL CONTRIBUTION
FROM AN AFFILIATE OF
THE INVESTMENT
ADVISER -- -- -- -- -- --
Net asset value, end of
period $1.0000 $0.9999 $1.0000 $1.0000 $1.0000 $1.0000
TOTAL INVESTMENT
RETURN 6.26%(4) 6.01% 7.01% 8.75% 7.59% 5.57%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets 0.88%(4) 0.96% 0.98% 0.95% 0.96% 0.97%
Ratio of net investment
income to average net
assets 5.73%(4) 5.82% 6.82% 8.34% 7.33% 5.42%
Decrease reflected in
above expense ratios
due to expense
reimbursements 0.23%(4) 0.03% 0.01% -- -- --
Net Assets, end of
period (000's omitted) $174,024 $128,485 $159,814 $355,260 $414,258 $456,791
<CAPTION>
CLASS B
---------
Fiscal
CLASS A Period
------------------------------------------------- Ended
Fiscal Year Ended December 31, December
------------------------------------------------- 31,
1992 1993 1994 1995 1995(3)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $1.0000 $1.0000 $1.0001 $0.9998 $1.0000
INVESTMENT OPERATIONS:
Investment income-net 0.0313 0.0274 0.0355 0.0514 0.0162
Net realized gain (loss)
on investments -- 0.0001 (0.0109) 0.0010 0.0008
TOTAL INCOME FROM INVESTMENT
OPERATIONS 0.0313 0.0275 0.0246 0.0524 0.0170
DIVIDENDS AND DISTRIBUTIONS:
Dividends from
investment income-net (0.0313) (0.0274) (0.0355) (0.0514) (0.0162)
Distributions from net
realized gain on
investments -- -- (0.0002) (0.0006) (0.0006)
TOTAL DIVIDENDS AND
DISTRIBUTIONS (0.0313) (0.0274) (0.0357) (0.0520) (0.0168)
CAPITAL CONTRIBUTION
FROM AN AFFILIATE OF
THE INVESTMENT
ADVISER -- -- 0.0108 -- --
Net asset value, end of
period $1.0000 $1.0001 $0.9998 $1.0002 $1.0002
TOTAL INVESTMENT
RETURN 3.18% 2.77% 3.63%(5) 5.33% 1.69%(6)
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to
average net assets 0.98% 0.94% 1.02% 0.79% 1.51%(4)
Ratio of net investment
income to average net
assets 3.17% 2.73% 3.51% 5.12% 4.33%(4)
Decrease reflected in
above expense ratios
due to expense
reimbursements -- 0.05% -- 0.28% 0.51%(4)
Net Assets, end of
period (000's omitted) $260,865 $162,623 $119,400 $203,994 $65
</TABLE>
(1) On May 20, 1995, all of the assets and liabilities of the Money Market
Series of First Prairie Money Market Fund were transferred to the Money
Market Fund in exchange for Class A shares of the Money Market Fund. The
financial data provided above for periods prior to such date is for the
Money Market Series of First Prairie Money Market Fund.
(2) From February 5, 1986 (commencement of operations) to December 31, 1986.
(3) From May 20, 1995 (initial offering date of Class B shares) to December
31, 1995.
(4) Annualized.
(5) Had there not been a capital contribution from an affiliate of the
Investment Adviser during the year, the Fund's total return would have been
2.61%.
(6) Not annualized.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for a share of
the Municipal Money Market Fund (including its predecessor fund--First Prairie
Municipal Money Market Fund) for the periods indicated. This information has
been derived from information provided in the Funds' financial statements.
MUNICIPAL MONEY MARKET FUND(1):
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
----------------------------------------------------
1986(2) 1987 1988 1989 1990
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
of period $1.0000 $0.9998 $0.9999 $0.9999 $0.9999
INVESTMENT OPERATIONS:
Investment income-net 0.0383 0.0410 0.0480 0.0580 0.0527
Net realized and unrealized
gain (loss)
on investments (0.0002) 0.0001 -- -- --
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.0381 0.0411 0.0480 (0.0580) (0.0527)
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.0383) (0.0410) (0.0480) (0.0580) (0.0527)
Net asset value, end of
period $0.9998 $0.9999 $0.9999 $0.9999 $0.9999
TOTAL INVESTMENT RETURN 4.30% 4.18% 4.91% 5.96% 5.40%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets 0.71% 0.96% 0.98% 0.98% 1.00%
Ratio of net investment
income
to average net assets 4.02% 4.08% 4.79% 5.79% 5.27%
Decrease reflected in above
expense ratios due to
undertakings 0.34% -- -- -- --
Net Assets, end of period
(000's omitted) $211,271 $145,524 $142,806 $158,515 $176,009
<CAPTION>
Fiscal Year Ended December 31,
----------------------------------------------------
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
of period $0.9999 $0.9999 $0.9999 $0.9999 $0.9997
INVESTMENT OPERATIONS:
Investment income-net 0.0413 0.0236 0.0174 0.0234 0.0322
Net realized and unrealized
gain (loss) on investments -- -- -- (0.0002) 0.0001
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS 0.0413 0.0236 0.0174 0.0232 0.0323
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment
income-net (0.0413) (0.0236) (0.0174) (0.0234) (0.0322)
Net asset value, end of
period $0.9999 $0.9999 $0.9999 $0.9997 $0.9998
TOTAL INVESTMENT RETURN 4.21% 2.38% 1.75% 2.36% 3.26%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets 0.98% 0.95% 0.79% 0.68% 0.70%
Ratio of net investment
income
to average net assets 4.11% 2.38% 1.74% 2.33% 3.21%
Decrease reflected in above
expense ratios due to
undertakings -- 0.01% 0.16% 0.25% 0.24%
Net Assets, end of period
(000's omitted) $233,675 $210,000 $177,698 $173,130 $228,511
</TABLE>
(1) On May 20, 1995, all of the assets and liabilities of First Prairie
Municipal Money Market Fund were transferred to the Municipal Money Market
Fund in exchange for shares of the Municipal Money Market Fund. The
financial data provided above for periods prior to such date is for First
Prairie Municipal Money Market Fund.
(2) From February 5, 1986 (commencement of operations) to December 31, 1986.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data, total investment
return, ratios to average net assets and other supplemental data for the Class,
Fund and periods indicated. This information has been derived from information
provided in the Funds' financial statements.
Class A Shares
<TABLE>
<CAPTION>
For the Fiscal Period Ended December 31, 1995
------------------------------------------------------------------------
Equity Special International International Managed
Income Growth Opportunities Bond Bond Equity Assets
Fund(1) Fund(1) Fund(1) Fund(1) Fund(2) Fund(3) Fund(4)
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Investment income-net 0.36 0.11 0.02 0.98 0.57 0.10 0.14
Net realized and unrealized gain
on investments 2.57 2.86 2.45 1.10(5) 1.20 1.40(5) 1.50
TOTAL INCOME FROM INVESTMENT OPERATIONS 2.93 2.97 2.47 2.08 1.77 1.50 1.64
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment income-net (0.36) (0.11) (0.02) (0.98) (0.57) (0.09) (0.14)
In excess of net investment income (0.01) - - (0.01) - - -
Distributions from net realized gains on
investments and foreign currency transactions (0.34) (0.89) (0.25) (0.34) (0.39) (0.25) -
Net asset value, end of period $12.22 $11.97 $12.20 $10.75 $10.81 $11.16 $11.50
TOTAL INVESTMENT RETURN(5) 29.78% 29.98% 24.80% 21.10% 18.22% 15.16% 16.48%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(6) 1.11% 1.21% 1.25% 1.33% 1.02% 1.50% 1.26%
Ratio of net investment income
to average net assets(6) 3.33% 0.86% 0.19% 4.91% 5.94% 1.19% 2.45%
Decrease reflected in above expense ratios due to fee
waivers and expense reimbursements(6) 0.33% 0.18% 1.31% 2.32% 0.55% 0.46% 1.89%
Portfolio Turnover Rate(7) 44.07% 106.02% 38.89% 48.03% 156.11% 5.65% 2.25%
Net Assets, end of period (000's omitted) $2,873 $4,329 $672 $487 $1,847 $2,749 $8,356
</TABLE>
(1)For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2)For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(3)For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4)For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(5)The total return figures provided are not annualized and do not include the
effect of any sales charges.
(6) Annualized.
(7) Not annualized.
Class B Shares
<TABLE>
<CAPTION>
For the Fiscal Period Ended December 31, 1995
---------------------------------------------------------------------------
Equity Special International International Managed
Income Growth Opportunities Bond Bond Equity Assets
Fund(1) Fund(1) Fund(1) Fund(1) Fund(2) Fund(3) Fund(4)
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Investment income-net 0.29 0.06 (0.03) 0.91 0.50 0.05 0.13
Net realized and unrealized gain on investments 2.56 2.84 2.40 1.16 1.20 1.39 1.45
TOTAL INCOME FROM INVESTMENT OPERATIONS 2.85 2.90 2.37 2.07 1.70 1.44 1.58
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment income-net (0.29) (0.06) - (0.91) (0.50) (0.05) (0.13)
In excess of net investment income - - - (0.01) - - -
Distributions from net realized gains on
investments and foreign currency transactions (0.34) (0.89) (0.25) (0.34) (0.39) (0.25) -
Net asset value, end of period $12.22 $11.95 $12.12 $10.81 $10.81 $11.14 $11.45
TOTAL INVESTMENT RETURN(5) 28.97% 29.15% 23.76% 20.90% 17.41% 14.52% 15.83%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(6) 1.90% 2.04% 2.00% 2.03% 1.87% 2.28% 2.00%
Ratio of net investment income to average net
assets(6) 2.65% 0.02% (0.51)% 4.39% 5.22% 0.40% 1.69%
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements(6) 0.75% 0.56% 7.52% 6.66% 2.04% 1.55% 4.84%
Portfolio Turnover Rate(7) 44.07% 106.02% 38.89% 48.03% 156.11% 5.65% 2.25%
Net Assets, end of period (000's omitted) $593 $268 $15 $4 $61 $193 $833
</TABLE>
(1)For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2)For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(3)For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4)For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(5)The total return figures provided are not annualized and do not include the
effect of any sales charges.
(6) Annualized.
(7) Not annualized.
Class I Shares
<TABLE>
<CAPTION>
For the Fiscal Period Ended December 31, 1995
----------------------------------------------------------------------------
Equity Special International International Managed
Income Growth Opportunities Bond Bond Equity Assets
Fund(1) Fund(1) Fund(1) Fund(1) Fund(2) Fund(3) Fund(4)
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Investment income-net 0.42 0.15 0.06 1.02 0.61 0.14 0.22
Net realized and unrealized gain on investments 2.55 2.86 2.44 1.16 1.20 1.40 1.46
TOTAL INCOME FROM INVESTMENT OPERATIONS 2.97 3.01 2.50 2.18 1.81 1.54 1.68
DIVIDENDS AND DISTRIBUTIONS:
Dividends from investment income-net (0.42) (0.15) (0.06) (1.02) (0.61) (0.12) (0.22)
In excess of net investment income - - - (0.01) - - -
Distributions from net realized gains on
investments and foreign currency transactions (0.34) (0.89) (0.25) (0.34) (0.39) (0.25) -
Net asset value, end of period $12.21 $11.97 $12.19 $10.81 $10.81 $11.17 $11.46
TOTAL INVESTMENT RETURN(5) 30.27% 30.38% 25.08% 22.13% 18.57% 15.62% 16.90%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(6) 0.65% 0.80% 0.85% 0.95% 0.70% 1.05% 0.80%
Ratio of net investment income to average net
assets(6) 4.08% 1.46% 0.59% 5.71% 6.48% 1.70% 3.06%
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements(6) 0.12% 0.12% 0.24% 0.98% 0.17% 0.33% 3.32%
Portfolio Turnover Rate(7) 44.07% 106.02% 38.89% 48.03% 156.11% 5.65% 2.25%
Net Assets, end of period (000's omitted) $283,927 $293,944 $92,926 $14,504 $125,401 $101,448 $411
</TABLE>
(1)For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2)For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(3)For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4)For the period April 1, 1995 (commencement of operations) through December
31, 1995.
(5)The total return figures provided are not annualized and do not include the
effect of any sales charges.
(6) Annualized.
(7) Not annualized.
Further information about performance is contained in the Fund's annual
report, which may be obtained without charge by writing to the address or
calling the number set forth on the cover page of this Prospectus.
Highlights
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
THE FUNDS
Each of the Intermediate Bond Fund and Municipal Bond Fund is a separate
open-end, management investment company organized under the name Prairie
Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc., respectively. The
remaining Funds are series of Prairie Funds, an open-end, management investment
company.
PROPOSED REORGANIZATION
On December 1, 1995, FCIMCO's ultimate parent company, First Chicago
Corporation, merged with NBD Bancorp, Inc., with the combined company renamed
First Chicago NBD Corporation ("FCNBD"). FCNBD has now begun the process of
reorganizing their proprietary mutual funds: Prairie Funds, Prairie
Institutional Funds and The Woodward Funds (whose investment adviser is NBD
Bank, a wholly-owned subsidiary of FCNBD). A Special Meeting of Shareholders of
each Fund will be held in June 1996 to consider an Agreement and Plan of
Reorganization ("Reorganization"). The proposed Reorganization generally
provides for the transfer of all or substantially all of each Fund's assets,
subject to liabilities, to a corresponding series of The Woodward Funds, which
would be co-advised by FCIMCO and an affiliate, in a tax free exchange for
shares of such series of The Woodward Funds, and the assumption by such series
of stated liabilities. Shares of The Woodward Funds' series would be distributed
to the relevant Fund's shareholders and the Funds would be dissolved. A
Prospectus/Proxy Statement which describes The Woodward Funds and the
transactions contemplated with respect to the proposed Reorganization will be
mailed to Fund shareholders.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
Each Fund's investment objective is set forth on the cover page of this
Prospectus. The differences in objectives and policies among the Funds determine
the types of portfolio securities in which each Fund invests and can be expected
to affect the degree of risk to which each Fund is subject and each Fund's yield
or return. The Funds' management policies are described on the page of this
Prospectus indicated below.
NAME OF FUND PAGE
Managed Assets Income Fund 23
Managed Assets Fund 23
Equity Income Fund 24
Growth Fund 24
Special Opportunities Fund 24
International Equity Fund 24
Intermediate Bond Fund 25
Bond Fund 25
International Bond Fund 25
Intermediate Municipal Bond Fund 26
Municipal Bond Fund 26
U.S. Government Money Market Fund 26
Money Market Fund 26
Municipal Money Market Fund 26
INVESTMENT ADVISER AND ADMINISTRATOR
FCIMCO is each Fund's investment adviser and administrator. Each Fund has
agreed to pay the Investment Adviser an annual fee as set forth under
"Management of the Funds." The Investment Adviser has engaged ANB-IMC to serve
as sub-investment adviser to the International Equity Fund.
ALTERNATIVE PURCHASE METHODS
Each Fund offers Class A shares; each Fund, other than the U.S. Government
Money Market and Municipal Money Market Funds, offers Class B shares; and each
Fund, other than the Money Market Funds, offers Class I shares. Each Class A,
Class B and Class I share represents an identical pro rata interest in the
relevant Fund's investment portfolio. Class A shares are sold at net asset value
per share plus, for each Fund, other than the Money Market Funds, an initial
sales charge imposed at the time of purchase. The initial sales charge may be
reduced or waived for certain purchases. See "How to Buy Shares--Class A
Shares." Class A shares of each Fund are subject to an annual service fee. Class
A shares held by investors who after purchasing Class A shares establish a
Fiduciary Account (as defined below) automatically will convert to Class I
shares, based on the relative net asset values for shares of each such Class.
Class B shares are sold at net asset value per share with no initial sales
charge at the time of purchase; as a result, the entire purchase price is
immediately invested in the Fund. Class B shares are subject to a contingent
deferred sales charge ("CDSC"), which is assessed only if the Class B shares are
redeemed within six years (five years in the case of the Intermediate Bond Fund
and Intermediate Municipal Bond Fund) of purchase. Class B shares of the Money
Market Fund may be acquired only through the exchange of Class B shares of the
other Funds and are subject to the CDSC, if any, of the shares with which the
exchange is made. See "How to Redeem Shares--Contingent Deferred Sales
Charge--Class B Shares." Class B shares are subject to an annual distribution
fee and service fee. The distribution fee paid by Class B will cause Class B to
have a higher expense ratio and to pay lower dividends than Class A.
Approximately eight years (seven years in the case of the Intermediate Bond Fund
and Intermediate Municipal Bond Fund) after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative net asset
values for shares of each such Class, and will no longer be subject to a
distribution fee. Class I shares are sold at net asset value with no sales
charge. Class I shares are offered exclusively to qualified trust, custody
and/or agency account clients of FNBC, ANB or their affiliates ("Fiduciary
Accounts") and qualified benefit plans or other programs with assets of at least
$100 million invested in shares of the Funds or other investment companies or
accounts advised by the Investment Adviser ("Eligible Retirement Plans"). Class
I shares held by investors who after purchasing Class I shares withdraw from
their Fiduciary Accounts automatically will convert to Class A shares, based on
the relative net asset values for shares of each such Class, and will be subject
to the annual service fee charged Class A. See "Alternative Purchase Methods."
HISTORICAL PERFORMANCE INFORMATION
Composite performance for the Funds or predecessor funds, as the case may
be, for various periods ended December 31, 1995.
- ---------------------------
Class A Shares
(Maximum Offering Price)
<TABLE>
<CAPTION>
Average Annual Total Return
3 5 10
1 Year Years Years Years
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Fund (1) 11.25% N/A N/A N/A
Managed Assets Income Fund (2) 20.83% 9.02% 11.94% 11.10%(3)
EQUITY FUNDS:
Equity Income Fund (4) 23.95% 10.19% 13.63% 10.90%
Growth Fund (4) 24.14% 10.63% 15.63% 12.40%
Special Opportunities Fund (4) 19.20% 7.95% 18.20% 12.75%
International Equity Fund (1) 9.99% N/A N/A N/A
BOND FUNDS:
Intermediate Bond Fund 13.61% 5.65%(5) N/A N/A
Bond Fund (4) 14.66% 6.49% 8.23% 8.21%
International Bond Fund (4) 15.66% 11.36% 10.09% N/A
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund (2) 9.21% 5.47% 7.08% 7.46%(6)
Municipal Bond Fund 11.67% 6.60% 8.21% 8.30%(6)
MONEY MARKET FUNDS:
U.S. Government Money Market Fund (2) 5.09% 3.82% 3.88% 5.31%(7)
Money Market Fund (2) 5.33% 3.90% 4.08% 5.58%(8)
Municipal Money Market Fund (2) 3.26% 2.46% 2.79% 3.86%(8)
</TABLE>
- --------------------------
Class A Shares
(Net Asset Value)
<TABLE>
<CAPTION>
Average Annual Total Return
3 5 10
1 Year Years Years Years
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Fund (1) 16.48% N/A N/A N/A
Managed Assets Income Fund (2) 26.50% 10.89% 12.98% 11.62%(3)
EQUITY FUNDS:
Equity Income Fund(4) 29.78% 11.91% 14.69% 11.42%
Growth Fund (4) 30.57% 12.82% 14.09% 12.67%
Special Opportunities Fund (4) 24.80% 9.63% 19.29% 13.26%
International Equity Fund (1) 15.16% N/A N/A N/A
BOND FUNDS:
Intermediate Bond Fund 17.19% 6.80%(5) N/A N/A
Bond Fund (4) 20.07% 8.13% 9.24% 8.71%
International Bond Fund (4) 21.09% 13.05% 11.12% N/A
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund(2) 12.55% 6.54% 7.72% 7.88%(6)
Municipal Bond Fund 16.89% 8.26% 9.20% 8.94%(6)
MONEY MARKET FUNDS:
U.S. Government Money Market Fund (2) 5.09% 3.82% 3.88% 5.31%(7)
Money Market Fund (2) 5.33% 3.90% 4.08% 5.58%(8)
Municipal Money Market Fund (2) 3.26% 2.46% 2.79% 3.86%(8)
</TABLE>
THE PRAIRIE FUNDS
---------------------------
Class B Shares
(Net Asset Value/With CDSc)
<TABLE>
<CAPTION>
Average Annual Total Return
3 5 10
1 Year Years Years Years
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Fund (1) 15.84%/10.83% N/A N/A N/A
Managed Assets Income Fund (2) 25.69%/21.69% 11.40%/9.47% N/A N/A
EQUITY FUNDS:
Equity Income Fund (4) 28.97%/24.97% 11.12%/10.58% 13.87% 10.61%
Growth Fund (4) 29.15%/25.15% 11.55%/11.01% 15.51% 12.08%
Special Opportunities Fund (4) 23.76%/19.76% 8.77%/ 8.21% 18.38% 12.41%
International Equity Fund (1) 14.52%/ 9.52% N/A N/A N/A
BOND FUNDS:
Intermediate Bond Fund 16.68%/13.68% 7.71%/ 6.22%(9) N/A N/A
Bond Fund (4) 19.18%/15.18% 7.32%/ 6.74% 8.43% 7.90%
International Bond Fund (4) 20.90%/16.90% 12.43%/11.90% 10.42% N/A
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund (2) 8.40%/ 5.40% 4.21%/ 2.68%(9) N/A N/A
Municipal Bond Fund 16.22%/12.22% 6.65%/ 4.64%(9) N/A N/A
MONEY MARKET FUND:
Money Market Fund (10) 1.69% N/A N/A N/A
</TABLE>
- ---------------------------
Class I Shares
<TABLE>
<CAPTION>
Average Annual Total Return
3 5 10
1 Year Years Years Years
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Fund (1) 16.90% N/A N/A N/A
Managed Assets Income Fund (10) 22.55% N/A N/A N/A
EQUITY FUNDS:
Equity Income Fund (4) 30.27% 12.45% 15.26% 11.99%
Growth Fund (4) 30.38% 13.86% 16.91% 13.48%
Special Opportunities Fund (4) 25.08% 10.09% 19.84% 13.82%
International Equity Fund (1) 15.62% N/A N/A N/A
BOND FUNDS:
Intermediate Bond Fund 17.53% 6.91%(5) N/A N/A
Bond Fund (4) 20.48% 8.63% 9.78% 9.27%
International Bond Fund (4) 22.13% 13.77% 11.78% N/A
MUNICIPAL BOND FUNDS:
Intermediate Municipal Bond Fund(2) 11.33%(11) N/A N/A N/A
Municipal Bond Fund 14.20%(12) N/A N/A N/A
</TABLE>
(1) No predecessor fund existed; thus, the average annual total return
information for the Fund presented is for the Fund since its
inception on April 3, 1995 for Managed Assets Fund and on March 3,
1995 for International Equity Fund.
(2) The Fund commenced operations through a transfer of assets from a
predecessor investment company advised by FNBC, using substantially the
same investment objective, policies, restrictions and methodologies as the
Fund. The predecessor funds were: for Managed Assets Income Fund, First
Prairie Diversified Asset Fund; for Intermediate Municipal Bond Fund, the
Intermediate Series of First Prairie Municipal Bond Fund; for U.S.
Government Money Market Fund, the Government Series of First Prairie Money
Market Fund; for Money Market Fund, the Money Market Series of First
Prairie Money Market Fund; and for Municipal Money Market Fund, First
Prairie Municipal Money Market Fund. The performance shown is that of the
predecessor fund and, in the case of the Intermediate Municipal Bond Fund
only, the Fund.
(3) From commencement of operations on January 23, 1986.
(4) The Fund commenced operations through a transfer of assets from a common
trust fund managed by FNBC, using substantially the same investment
objective, policies, restrictions and methodologies as the Fund. The common
trust fund did not charge any expenses. The performance information
reflects the maximum operating expenses that may be charged as more fully
set forth in the Fee Table above.
(5) From commencement of operations on March 5, 1993.
(6) From commencement of operations on March 1, 1988.
(7) From commencement of operations on May 1, 1987.
(8) From commencement of operations on February 5, 1986.
(9) From date of initial offering on February 8, 1994.
(10) No predecessor class existed; thus, the performance information for
the Class presented is for the Class since its initial offering date on
May 20, 1995 for Money Market Fund and March 3, 1995 for Managed Assets
Income Fund.
(11) From date of initial offering on January 30, 1995.
(12) From date of initial offering on February 1, 1995.
The historical pro-forma performance information presented above for each
Fund listed is deemed relevant because the predecessor fund was advised by FNBC
which reorganized the personnel responsible for advising the predecessor fund
into FCIMCO, its wholly-owned subsidiary, which manages the Fund, using
substantially the same investment objective, policies, restrictions and
methodologies as those used by the Fund. However, this performance information
is not necessarily indicative of the future performance of any Fund. Because
each Fund will be actively managed, its investments will vary from time to time
and will not be identical to the past portfolio investments of the predecessor
fund. Each Fund's performance will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
HOW TO BUY SHARES
Orders for the purchase of Class A and Class B shares may be placed through
a number of institutions including FCIMCO, FNBC, ANB and their affiliates,
including First Chicago Investment Services, Inc. ("FCIS"), a registered
broker-dealer, the Distributor and certain banks, securities dealers and other
industry professionals such as investment advisers, accountants and estate
planning firms (collectively, "Service Agents").
Investors purchasing Class I shares through their Fiduciary Accounts at FNBC,
ANB or their affiliates should contact such entity directly for appropriate
instructions, as well as for information about conditions pertaining to the
account and any related fees. Class I shares may be purchased for a Fiduciary
Account or Eligible Retirement Plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Account or Plan.
The minimum initial investment is $1,000. All subsequent investments must
be at least $100. See "How to Buy Shares."
SHAREHOLDER SERVICES
The Funds offer shareholders certain services and privileges including:
Exchange Privilege, Letter of Intent and Automatic Investment Plan. Certain
services and privileges may not be available through all Service Agents.
HOW TO REDEEM SHARES
Generally, investors should contact their representatives at FCIMCO, FNBC,
ANB or appropriate Service Agent for redemption instructions. Investors who are
not clients of FCIMCO, FNBC, ANB or a Service Agent may redeem Fund shares by
written request to the transfer agent. See "How to Redeem Shares."
Description of the Funds
GENERAL
Each of the Intermediate Bond Fund and Municipal Bond Fund is a separately
organized mutual fund. Each of the remaining Funds is a separate portfolio of
Prairie Funds (the "Trust"), which is a mutual fund divided into separate
portfolios known as a "series fund." Each portfolio is treated as a separate
entity for certain matters under the Investment Company Act of 1940, as amended
(the "1940 Act"), and for other purposes, and a shareholder of one portfolio is
not deemed to be a shareholder of any other portfolio. As described below, for
certain matters Trust shareholders vote together as a group; as to others they
vote separately by portfolio. By this Prospectus, shares of 12 of the Trust's
portfolios and shares of the Intermediate Bond Fund and Municipal Bond Fund are
being offered: five of the Funds are diversified investment companies (the
"Diversified Funds")--Managed Assets Income Fund, Managed Assets Fund, U.S.
Government Money Market Fund, Money Market Fund and Municipal Money Market
Fund--and nine of the Funds are non-diversified investment companies (the
"Non-Diversified Funds")--Equity Income Fund, Special Opportunities Fund, Growth
Fund, International Equity Fund, Intermediate Bond Fund, Bond Fund,
International Bond Fund, Intermediate Municipal Bond Fund and Municipal Bond
Fund.
INVESTMENT OBJECTIVES
Each Fund's investment objective is set forth on the cover page of this
Prospectus. The differences in objectives and policies among the Funds determine
the types of portfolio securities in which each Fund invests and can be expected
to affect the degree of risk to which each Fund is subject and each Fund's yield
or return. See "Management Policies" below, and "Appendix." Each Fund's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the 1940 Act) of such Fund's outstanding voting
securities. There can be no assurance that each Fund's investment objective will
be achieved.
MANAGEMENT POLICIES
The following section should be read in conjunction with "Certain Portfolio
Securities" and "Investment Techniques" in the Appendix.
Asset Allocation Funds
Each of the Managed Assets Income Fund and Managed Assets Fund will follow
an asset allocation strategy by investing in equity, fixed-income and short-term
securities of domestic and foreign issuers. For each Asset Allocation Fund, the
asset classes, market sectors, securities and portfolio strategies selected will
be those that the Investment Adviser believes prudent and offer the greatest
potential for achieving the relevant Asset Allocation Fund's investment
objective. The Investment Adviser has broad latitude in selecting investments
and portfolio strategies. See "Risk Factors--Investing in Foreign Securities"
below. The equity securities in which each Asset Allocation Fund may invest
consist of common stocks, preferred stocks and convertible securities, including
those in the form of depositary receipts, as well as warrants to purchase such
securities (collectively, "Equity Securities"). The fixed-income securities in
which each Asset Allocation Fund may invest include bonds and debentures
(including those that are convertible), notes, mortgage-related securities,
asset-backed securities, municipal obligations and convertible debt obligations
(collectively, "Fixed-Income Securities"), with maturities of more than three
years. The short-term securities which may be purchased by an Asset Allocation
Fund include fixed-income securities with maturities of less than three years at
the time of purchase, and money market instruments of the type in which the
Money Market Fund invests (collectively, "Money Market Instruments"), as
described below.
Each Asset Allocation Fund's portfolio of debt securities will consist
primarily of those which are rated no lower than Baa by Moody's Investors
Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Group ("S&P"),
Fitch Investors Service, L.P. ("Fitch") or Duff & Phelps Credit Rating Co.
("Duff "), or, if unrated, deemed to be of comparable quality by the Investment
Adviser. Debt securities rated Baa by Moody's or BBB by S&P, Fitch or Duff are
considered investment grade obligations which lack outstanding investment
characteristics and have speculative characteristics as well. The Managed Assets
Fund may invest up to 20% of its net assets in debt securities rated below
investment grade and the Managed Assets Income Fund may invest up to 5% of its
net assets in convertible bonds rated below investment grade. See "Risk
Factors-- Lower Rated Securities" below.
The following table sets forth for each Asset Allocation Fund the asset
classes, benchmark percentages and asset class strategy ranges within which the
Investment Adviser intends to manage the Fund's assets:
<TABLE>
<CAPTION>
MANAGED ASSETS INCOME FUND MANAGED ASSETS FUND
-------------------------- ----------------------
ASSET Benchmark Strategy Benchmark Strategy
CLASS Percentage Range Percentage Range
<S> <C> <C> <C> <C>
Equity 40% 25-55% 60% 45-75%
Fixed-Income
and Money Market
Instruments 60% 45-75% 40% 25-55%
</TABLE>
"Benchmark percentage" represents the asset mix the Investment Adviser would
expect to maintain when its assessment of economic conditions and investment
opportunities indicate that the financial markets are fairly valued relative to
each other. The asset class "strategy range" indicates ordinarily expected
variations from this benchmark and reflects the fact that the Investment Adviser
expects to make policy weight shifts within specific asset classes. Under normal
conditions, the Investment Adviser expects to adhere to the asset class strategy
ranges set forth above; however, the Investment Adviser reserves the right to
vary the asset class mix and the percentage of securities invested in any asset
class or market from the benchmark percentages and asset class strategy ranges
set forth above as the risk/return characteristics of either markets or asset
classes, as assessed by the Investment Adviser, vary over time. When the
Investment Adviser determines that adverse market conditions exist, each Asset
Allocation Fund may adopt a temporary defensive posture and invest its entire
portfolio in Money Market Instruments. Each Asset Allocation Fund will invest in
substantially the same securities within an investment class. The amount of each
Asset Allocation Fund's aggregate assets invested in a particular investment
class, and thus in particular securities, will differ, but the relative
percentage that a particular security comprises within an investment class
ordinarily will remain substantially the same. The asset allocation mix selected
will be a primary determinant in the respective Asset Allocation Fund's
investment performance. Under certain market conditions, limiting the Asset
Allocation Fund's asset allocation among these asset classes may inhibit their
ability to achieve their respective investment objectives.
Each Asset Allocation Fund also may engage in futures and options
transactions and other derivative securities transactions, such as interest rate
and equity index swaps, leveraging, short-selling, foreign exchange transactions
and lending portfolio securities, each of which involves risk. See "Risk
Factors" below and "Appendix--Investment Techniques."
Equity Funds
Each of the Equity Income Fund, Growth Fund, Special Opportunities Fund and
International Equity Fund (the "Equity Funds") will invest at least 65% of the
value of its total assets (except when maintaining a temporary defensive
position) in Equity Securities, as defined under "Asset Allocation Funds" above.
Each Equity Fund may invest, in anticipation of otherwise investing cash
positions, to meet asset segregation or margin requirements or as otherwise
noted below, in Money Market Instruments. Under normal market conditions, no
Equity Fund expects to have a substantial portion of its assets invested in
Money Market Instruments. However, when the Investment Adviser determines that
adverse market conditions exist, an Equity Fund may adopt a temporary defensive
posture and invest entirely in Money Market Instruments.
Each Equity Fund also may invest in Fixed-Income Securities (as defined under
"Asset Allocation Funds" above) to the extent described below.
Each Equity Fund also may engage in futures and options transactions and
other derivative securities transactions, such as equity index swaps,
leveraging, short-selling and lending portfolio securities, and, except for the
Equity Income Fund, may engage in foreign exchange transactions, each of which
involves risk. See "Risk Factors" below and "Appendix--Investment Techniques."
The EQUITY INCOME FUND will invest primarily in income-producing Equity
Securities of domestic issuers. The Investment Adviser will be particularly
alert to companies which pay above-average dividends, yet offer opportunities
for capital appreciation and growth of earnings. In addition, the Fund may
invest up to 35% of the value of its total assets in convertible debt securities
that generally have features similar to both common stocks and bonds and offer
the potential for current income and capital appreciation over time.
While the Fund will invest primarily in Equity Securities of domestic
issuers, the Fund also may invest in depositary receipts of foreign issuers. See
"Risk Factors--Investing in Foreign Securities" below. The Fund also may invest
in Fixed-Income Securities and Money Market Instruments based on the Investment
Adviser's assessment of economic conditions and investment opportunities. The
Fixed-Income Securities, other than convertible debt securities, in which the
Fund may invest must be rated investment grade, or, if unrated, deemed to be of
comparable quality by the Investment Adviser. The convertible debt securities in
which the Fund may invest may be rated lower than investment grade. See "Risk
Factors--Lower Rated Securities" below.
The GROWTH FUND will invest primarily in Equity Securities of domestic
issuers believed by the Investment Adviser to have above-average growth
characteristics. The Investment Adviser will consider some of the following
factors in making its investment decisions: the development of new or improved
products or services, a favorable outlook for growth in the industry, patterns
of increasing sales and earnings, the probability of increased operating
efficiencies, cyclical conditions, or other signs that the company is expected
to show greater than average earnings growth and capital appreciation.
While the Fund will invest primarily in Equity Securities of domestic
issuers, the Fund also may invest in depositary receipts of foreign issuers and
may invest up to 20% of its total assets (valued at the time of investment) in
Equity Securities of foreign issuers. See "Risk Factors--Investing in Foreign
Securities" below. The Fund also may invest in Fixed-Income Securities which,
other than convertible debt securities, are rated investment grade, or, if
unrated, deemed to be of comparable quality by the Investment Adviser. The Fund
may invest in convertible debt securities rated lower than investment grade. See
"Risk Factors-- Lower Rated Securities" below.
The SPECIAL OPPORTUNITIES FUND will invest primarily in Equity Securities of
small- to medium-sized emerging growth domestic issuers (typically with market
capitalizations of $100 million to $750 million) that the Investment Adviser
believes are undervalued in the marketplace. The Investment Adviser will
consider some of the following factors in making its investment decisions: high
quality management, significant equity ownership positions by management, a
leading or dominant position in a major product line, a sound financial position
and a relatively high rate of return on invested capital. The Fund also may
invest in companies that offer the possibility of accelerating earnings growth
because of management changes, new products or structural changes in industry or
the economy.
While the Fund will invest primarily in Equity Securities of domestic
issuers, the Fund also may invest in depositary receipts of foreign issuers and
may invest up to 20% of its total assets (valued at the time of investment) in
Equity Securities of foreign issuers. See "Risk Factors--Investing in Foreign
Securities" below. The Fund also may invest in Fixed-Income Securities which,
other than convertible debt securities, are rated investment grade, or, if
unrated, deemed to be of comparable quality by the Investment Adviser. The Fund
may invest in convertible debt securities rated lower than investment grade. See
"Risk Factors-- Lower Rated Securities" below.
The INTERNATIONAL EQUITY FUND will invest in Equity Securities of issuers
located throughout the world, except the United States. As a neutral position,
the Fund will hold Equity Securities of issuers located in the countries which
constitute the Morgan Stanley Capital International-Europe, Australia and Far
East ("EAFE") Index. The EAFE Index is a broadly diversified international index
composed of the Equity Securities of approximately 1,000 companies located
outside the United States. Building on this base, the Investment Adviser and
ANB-IMC will shift the Fund's holdings to emphasize or de-emphasize regions of
the international market based on such region's relative attractiveness. In
making these shifts, the Investment Adviser and ANB-IMC will use a
computer-based model which takes into account a number of factors, including
relative economic strength, relative inflation rates, relative valuation of
equity markets, bond yield differentials, forecasts of trade flows and financial
market volatility. See "Risk Factors--Investing in Foreign Securities" below.
The Fund will seek to identify those countries offering the greatest relative
potential investment return, rather than selecting individual companies in each
country which will outperform the major stock index of their respective
countries. Thus, the individual stocks selected will generally be chosen through
a statistical procedure to approximate the investment performance of the
relevant country index. The Fund is not an index fund and is neither sponsored
by nor affiliated with Morgan Stanley Capital International.
Bond Funds
Each of the Intermediate Bond Fund, Bond Fund and International Bond Fund
(the "Bond Funds") will invest at least 65% of the value of its total assets
(except when maintaining a temporary defensive position) in bonds, debentures
and other debt instruments. Each Bond Fund will invest in Fixed-Income
Securities. When management believes it advisable for temporary defensive
purposes or in anticipation of otherwise investing cash positions, each Bond
Fund may invest in Money Market Instruments.
Each Bond Fund also may engage in futures and options transactions and other
derivative securities transactions, such as interest rate swaps, leveraging,
short-selling and lending portfolio securities, and the International Bond Fund
may engage in foreign exchange transactions, each of which involves risk. See
"Risk Factors" below and "Appendix--Investment Techniques."
The INTERMEDIATE BOND FUND invests in a portfolio of U.S. dollar denominated
Fixed-Income Securities of domestic and foreign issuers which, under normal
market conditions, will have a dollar-weighted average maturity expected to
range between three and ten years. Under normal market conditions, at least 65%
of the value of the Intermediate Bond Fund's total assets will consist of Fixed-
Income Securities rated A or better by Moody's, S&P, Fitch or Duff. The
remainder of the Fund's assets may be invested in investment grade Fixed-Income
Securities and Money Market Instruments rated within the two highest rating
categories by Moody's, S&P, Fitch or Duff. The Fund also may invest in
Fixed-Income Securities which, while not rated, are determined by the Investment
Adviser to be of comparable quality to those rated securities in which the Fund
may invest. The Fund is not limited in the maturities of the securities in which
it invests and the maturity of a portfolio security may range from overnight to
40 years. See "Risk Factors--Lower Rated Securities" and "--Investing in Foreign
Securities" below.
The BOND FUND will invest in a broad range of U.S. dollar denominated
Fixed-Income Securities of domestic and foreign issuers, without regard to
maturity. Under normal market conditions, at least 65% of the value of the
Fund's total assets will consist of Fixed-Income Securities rated A or better by
Moody's, S&P, Fitch or Duff. The remainder of the Fund's assets may be invested
in Fixed-Income Securities rated no lower than B by Moody's, S&P, Fitch and
Duff. The Fund also may invest in Fixed-Income Securities which, while not
rated, are determined by the Investment Adviser to be of comparable quality to
those rated securities in which the Fund may invest. See "Risk Factors--Lower
Rated Securities" and "--Investing in Foreign Securities" below.
The INTERNATIONAL BOND FUND will invest in Fixed-Income Securities of issuers
located throughout the world, except the United States. The Fund also may invest
in convertible preferred stocks. The Fund may hold foreign currency, and may
purchase debt securities or hold currencies in combination with forward currency
exchange contracts. The Fund will be alert to opportunities to profit from
fluctuations in currency exchange rates. The Fund will be particularly alert to
favorable arbitrage opportunities (such as those resulting from favorable
interest rate differentials) arising from the relative yields of the various
types of securities in which the Fund may invest and market conditions
generally. The Fund may invest without restriction in companies in, or
governments of, developing countries. Developing countries have economic
structures that are generally less diverse and mature, and political systems
that are less stable, than those of developed countries. The markets of
developing countries may be more volatile than the markets of more mature
economies; however, such markets may provide higher rates of return to
investors. See "Risk Factors--Investing in Foreign Securities" below.
Under normal market conditions, at least 65% of the value of the Fund's total
assets will consist of Fixed-Income Securities rated A or better by Moody's,
S&P, Fitch or Duff. The remainder of the Fund's assets may be invested in
Fixed-Income Securities rated no lower than B by Moody's, S&P, Fitch and Duff.
The Fund also may invest in Fixed-Income Securities which, while not rated, are
determined by the Investment Adviser to be of comparable quality to those rated
securities in which the Fund may invest. See "Risk Factors--Lower Rated
Securities" below.
Municipal Funds
It is a fundamental policy of each of the Intermediate Municipal Bond Fund
and Municipal Bond Fund (the "Municipal Bond Funds" and, together with the
Municipal Money Market Fund, the "Municipal Funds") that it will invest (except
when maintaining a temporary defensive position) at least 80% of the value of
its net assets in Municipal Obligations and at least 65% of the value of its
total assets in bonds, debentures and other debt instruments. Municipal
Obligations in which the Municipal Funds will invest are debt obligations issued
by states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multi-state agencies or authorities, the interest from which is, in the opinion
of bond counsel to the issuer, exempt from Federal income tax. From time to
time, each Municipal Fund may invest more than 25% of the value of its total
assets in industrial development bonds which, although issued by industrial
development authorities, may be backed only by the assets and revenues of the
non-governmental users. Interest on Municipal Obligations (including certain
industrial development bonds) which are specified private activity bonds, as
defined in the Internal Revenue Code of 1986, as amended (the "Code"), issued
after August 7, 1986, while exempt from Federal income tax, is a preference item
for the purpose of the alternative minimum tax. Where a regulated investment
company receives such interest, a proportionate share of any exempt-interest
dividend paid by the investment company may be treated as such a preference item
to the shareholder. Each Municipal Fund may invest without limitation in such
Municipal Obligations if the Investment Adviser determines that their purchase
is consistent with the Fund's investment objective. See "Risk Factors--Municipal
Obligations" below.
From time to time, on a temporary basis other than for temporary defensive
purposes (but not to exceed 20% of the value of the Fund's net assets) or for
temporary defensive purposes, each Municipal Fund may invest in taxable Money
Market Instruments. Dividends paid by the Fund that are attributable to income
earned by it from these securities will be taxable to investors. See "Dividends,
Distributions and Taxes." Under normal market conditions, it is anticipated that
not more than 5% of the value of a Municipal Fund's total assets will be
invested in any one category of these securities.
Each Municipal Bond Fund also may engage in futures and options transactions
and lending portfolio securities, each of which involves risk. Futures and
options transactions involve derivative securities. See "Risk Factors" below and
"Appendix--Investment Techniques."
The INTERMEDIATE MUNICIPAL BOND FUND will invest in a portfolio of Municipal
Obligations which, under normal market conditions, will have a dollar-weighted
average maturity expected to range between three and ten years. The Fund will
purchase Municipal Obligations only if rated investment grade, or, if unrated,
determined by the Investment Adviser to be of comparable quality to the rated
securities in which the Fund may invest.
The MUNICIPAL BOND FUND will invest in a portfolio of Municipal Obligations
without regard to maturity. The Fund will purchase Municipal Obligations only if
rated at least Baa, MIG-2/VMIG-2 or Prime-1 (P-1) by Moody's, BBB, SP-2 or A-1
by S&P, BBB or F-2 by Fitch or BBB or Duff-2 by Duff or, if unrated, determined
by the Investment Adviser to be of comparable quality to the rated securities in
which the Fund may invest.
Money Market Funds
Each of the U.S. Government Money Market Fund, Money Market Fund and
Municipal Money Market Fund (the "Money Market Funds") seeks to maintain a net
asset value of $1.00 per share for purchases and redemptions. To do so, each
Money Market Fund uses the amortized cost method of valuing its securities
pursuant to Rule 2a-7 under the 1940 Act, certain requirements of which are
summarized below. In accordance with Rule 2a-7, each Money Market Fund is
required to maintain a dollar-weighted average portfolio maturity of 90 days or
less, purchase only instruments having remaining maturities of 13 months or less
and invest only in U.S. dollar denominated securities determined in accordance
with procedures established by the Board to present minimal credit risks and, in
the case of the Money Market Fund and Municipal Money Market Fund, which are
rated in one of the two highest rating categories for debt obligations by at
least two nationally recognized statistical rating organizations (or one rating
organization if the instrument was rated by only one such organization) or, if
unrated, are of comparable quality as determined in accordance with procedures
established by the Board. The nationally recognized statistical rating
organizations currently rating instruments of the type the Money Market Fund and
Municipal Money Market Fund may purchase are Moody's, S&P, Duff, Fitch, IBCA
Limited and IBCA Inc., and Thomson BankWatch, Inc. and their rating criteria are
described in the Appendix to the Statement of Additional Information. For
further information regarding the amortized cost method of valuing securities,
see "Determination of Net Asset Value" in the Statement of Additional
Information. There can be no assurance that each Money Market Fund will be able
to maintain a stable net asset value of $1.00 per share.
The U.S. GOVERNMENT MONEY MARKET FUND will invest only in short-term
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities and may enter into repurchase
agreements. The Fund also may lend securities from its portfolio as described
under "Appendix--Investment Techniques."
The MONEY MARKET FUND will invest in short-term money market obligations,
including securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations issued by domestic banks, foreign
branches of domestic banks, foreign subsidiaries of domestic banks, domestic and
foreign branches of foreign banks and thrift institutions, repurchase
agreements, and high quality domestic and foreign commercial paper and other
short-term corporate obligations, including those with floating or variable
rates of interest. See "Risk Factors--Investing in Foreign Securities" below. In
addition, the Money Market Fund is permitted to lend portfolio securities and
enter into reverse repurchase agreements to the extent described under
"Appendix--Investment Techniques." During normal market conditions, at least 25%
of the Fund's total assets will be invested in bank obligations.
The MUNICIPAL MONEY MARKET FUND will invest at least 80% of the value of its
net assets (except when maintaining a temporary defensive position) in
short-term Municipal Obligations. Subject to the requirements of Rule 2a-7, the
Fund will engage in management policies that are substantially identical to
those of the Intermediate Municipal Bond Fund. See "Appendix--Certain Portfolio
Securities--Municipal Obligations." The Fund also may lend securities from its
portfolio as described under "Appendix--Investment Techniques."
CERTAIN FUNDAMENTAL POLICIES
Each Fund may (i) borrow money to the extent permitted under the 1940 Act,
which currently limits borrowing to no more than 33 1/3% of the value of the
Fund's total assets; and (ii) invest up to 25% of the value of its total assets
in the securities of issuers in a single industry, provided there is no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or, in the case of the Municipal
Funds, Municipal Obligations. In addition, (i) each of the Diversified Funds may
invest up to 5% of its total assets in the obligations of any one issuer, except
that up to 25% of the value of the Fund's total assets may be invested (subject,
in the case of the Money Market Funds, to the provisions of Rule 2a-7), and
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities may be purchased, without regard to any such limitation; and
(ii) the Money Market Fund will invest, except when it has adopted a temporary
defensive position, at least 25% of its total assets in securities issued by
banks, including foreign banks and branches. This paragraph describes
fundamental policies that cannot be changed as to a Fund without approval by the
holders of a majority (as defined in the 1940 Act) of such Fund's outstanding
voting shares. See "Investment Objectives and Management Policies--Investment
Restrictions" in the Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each 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 such Fund's investments in all such
companies to exceed 10% of the value of its total assets; (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (iii) invest up to 15% (10% in the case of the Money
Market Funds) of the value of its net assets in repurchase agreements providing
for settlement in more than seven days after notice and in other illiquid
securities. See "Investment Objectives and Management Policies--Investment
Restrictions" in the Statement of Additional Information.
RISK FACTORS
General
Since each Fund will pursue different types of investments, the risks of
investing will vary depending on the Fund selected for investment. Before
selecting a Fund in which to invest, the investor should assess the risks
associated with the types of investments made by the Fund. The net asset value
per share of each Fund, other than a Money Market Fund, is not fixed and should
be expected to fluctuate. Investors should consider each Fund as a supplement to
an overall investment program and should invest only if they are willing to
undertake the risks involved. See also the Appendix beginning on page A-1 for a
further discussion of certain considerations.
Investment Techniques
Each Fund may engage in various investment techniques to the extent
described herein. The use of investment techniques such as short-selling,
engaging in financial futures and options transactions, leverage through
borrowing, purchasing securities on a forward commitment basis, and lending
portfolio securities--techniques that are not necessarily employed by each
Fund--involves greater risk than that incurred by many other funds with similar
objectives that do not engage in such techniques. See "Appendix-- Investment
Techniques." Futures and options transactions involve derivative securities.
Using these techniques may produce higher than normal portfolio turnover and may
affect the degree to which a Fund's net asset value fluctuates. Higher portfolio
turnover rates are likely to result in comparatively greater brokerage
commissions or transaction costs. In addition, short-term gains realized from
portfolio transactions are taxable to shareholders as ordinary gains. A Fund's
ability to engage in certain short-term transactions may be limited by the
requirement that, to qualify as a regulated investment company, it must earn
less than 30% of its gross income from the disposition of securities held for
less than three months. This 30% test limits the extent to which a Fund may sell
securities held for less than three months and invest in certain futures
contracts, among other strategies. However, portfolio turnover will not
otherwise be a limiting factor in making investment decisions. See "Portfolio
Transactions" in the Statement of Additional Information.
Equity Securities
(Asset Allocation and Equity Funds only) Investors should be aware that
Equity Securities fluctuate in value, often based on factors unrelated to the
value of the issuer of the securities, and that fluctuations can be pronounced.
Changes in the value of a Fund's portfolio securities will result in changes in
the value of such Fund's shares and thus the Fund's yield and total return to
investors. The securities of the smaller companies may be subject to more abrupt
or erratic market movements than larger, more-established companies, both
because the securities typically are traded in lower volume and because the
issuers typically are subject to a greater degree to changes in earnings and
prospects.
Fixed-Income Securities
(Asset Allocation, Equity, Bond and Municipal Bond Funds and, to a limited
extent, each Money Market Fund) Investors should be aware that even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. The values of Fixed-Income Securities also may be affected by
changes in the credit rating or financial condition of the issuing entities.
Certain securities that may be purchased by these Funds, such as those rated Baa
by Moody's and BBB by S&P, Fitch and Duff, may be subject to such risk with
respect to the issuing entity and to greater market fluctuations than certain
lower yielding, higher rated Fixed-Income Securities. See "Lower Rated
Securities" below and "Appendix-- Certain Portfolio Securities--Ratings" and
Appendix in the Statement of Additional Information.
Lower Rated Securities
(Asset Allocation, Equity Income, Growth, Special Opportunities, Bond and
International Bond Funds only) Investors should carefully consider the relative
risks of investing in the higher yielding (and, therefore, higher risk) debt
securities rated below investment grade by Moody's, S&P, Fitch or Duff (commonly
known as junk bonds). Each of the Bond Fund and International Bond Fund may
invest up to 35% of its net assets in debt securities rated as low as B by
Moody's, S&P, Fitch and Duff. The Managed Assets Fund may invest up to 20% of
its net assets in debt securities, and each of the Equity Income, Growth and
Special Opportunities Funds may invest up to 35%, and the Managed Assets Income
Fund may invest up to 5%, of its net assets in convertible securities, rated as
low as the lowest rating assigned by Moody's, S&P, Fitch or Duff. The Bond Fund,
International Bond Fund, Equity Income Fund, Growth Fund and Special
Opportunities Fund each intend to invest less than 35% of the value of its net
assets in such securities. Securities rated below investment grade generally are
not meant for short-term investing and may be subject to certain risks with
respect to the issuing entity and to greater market fluctuations than certain
lower yielding, higher rated fixed-income securities. Securities rated Ba by
Moody's are judged to have speculative elements; their future cannot be
considered as well assured and often the protection of interest and principal
payments may be very moderate. Securities rated BB by S&P, Fitch or Duff are
regarded as having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other speculative
grade debt, they face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. Securities rated C by
Moody's are regarded as having extremely poor prospects of ever attaining any
real investment standing. Securities rated D by S&P, Fitch and Duff are in
default and the payment of interest and/or repayment of principal is in arrears.
Such securities, though high yielding, are characterized by great risk. See
Appendix in the Statement of Additional Information for a general description of
securities ratings. Although these ratings may be an initial criterion for
selection of portfolio investments, the Investment Adviser also will evaluate
these securities and the ability of the issuers of such securities to pay
interest and principal. The Fund's ability to achieve its investment objectives
may be more dependent on the Investment Adviser's credit analysis than might be
the case for a fund that invested in higher rated securities. See
"Appendix--Certain Portfolio Securities--Fixed-Income Securities--Ratings." The
market price and yield of securities rated Ba or lower by Moody's and BB or
lower by S&P, Fitch or Duff are more volatile than those of higher rated
securities. Factors adversely affecting the market price and yield of these
securities will adversely affect the Fund's net asset value. In addition, the
retail secondary market for these securities may be less liquid than that of
higher rated securities; adverse conditions could make it difficult at times for
the Fund to sell certain securities or could result in lower prices than those
used in calculating such Fund's net asset value. The market values of certain
lower rated debt securities tend to reflect specific developments with respect
to the issuer to a greater extent than do higher rated securities, which react
primarily to fluctuations in the general level of interest rates, and tend to be
more sensitive to economic conditions than are higher rated securities. Issuers
of such debt securities often are highly leveraged and may not have available to
them more traditional methods of financing. Therefore, the risk associated with
acquiring the securities of such issuers generally is greater than is the case
with higher rated securities.
Municipal Obligations
(Municipal Funds only) Certain provisions in the Code relating to the
issuance of Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions could be to
increase the cost of the Municipal Obligations available for purchase by the
Municipal Funds and thus reduce the available yield. Shareholders of the
Municipal Funds should consult their tax advisers concerning the effect of these
provisions on an investment in the Fund. Proposals that may restrict or
eliminate the income tax exemption for interest on Municipal Obligations may be
introduced in the future. If any such proposal were enacted that would reduce
the availability of Municipal Obligations for investment by any of these Funds
so as to adversely affect its shareholders, the Board would reevaluate the
affected Fund's investment objective and policies and submit possible changes in
the Fund's structure to shareholders for their consideration. If legislation
were enacted that would treat a type of Municipal Obligation as taxable, the
Municipal Funds would treat such security as a permissible taxable investment
within the applicable limits set forth herein. Each Municipal Fund may invest
more than 25% of the value of its total assets in Municipal Obligations which
are related in such a way that an economic, business or political development or
change affecting one such security also would affect the other securities; for
example, securities the interest upon which is paid from revenues of similar
types of projects, or securities of issuers that are located in the same state.
As a result, each Municipal Fund may be subject to greater risk as compared to a
fund that does not follow this practice. Certain municipal lease/purchase
obligations in which the Municipal Funds may invest may contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease payments in future years unless money is appropriated
for such purpose on a yearly basis. Although "non-appropriation" lease/purchase
obligations are secured by the leased property, disposition of the leased
property in the event of foreclosure might prove difficult. In evaluating the
credit quality of a municipal lease/purchase obligation that is unrated, the
Investment Adviser will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Foreign Securities
(Asset Allocation, Growth, Special Opportunities, International Equity and
International Bond Funds and, to a limited extent, Equity Income, Bond,
Intermediate Bond and Money Market Funds only) Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable U.S. issuers. Similarly, volume and liquidity in most
foreign securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States. 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. See "Appendix--Certain Portfolio Securities--Taxable Money Market
Securities--Bank Obligations." Because evidences of ownership of such securities
usually are held outside the United States, each of these Funds will be subject
to additional risks which include possible adverse political and economic
developments, possible seizure or nationalization of foreign deposits and
possible adoption of governmental restrictions which might adversely affect the
payment of principal and interest on the foreign securities or might restrict
the payment of principal and interest to investors located outside the country
of the issuers, whether from currency blockage or otherwise. Custodial expenses
for a portfolio of non-U.S. securities generally are higher than for a portfolio
of U.S. securities. Many developing countries have experienced substantial, and
in some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
In an attempt to control inflation, wage and price controls have been imposed in
certain countries. To the extent a Fund invests in sovereign debt obligations,
the Fund will be exposed to the direct or indirect consequences of political,
social and economic changes in various developing countries. Political changes
in a country may affect the willingness of a foreign government to make or
provide for timely payments of its obligations. The country's economic status,
as reflected, among other things, in its inflation rate, the amount of its
external debt and its gross domestic product, also will affect the government's
ability to honor its obligations. 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
generally will be incurred when a Fund changes investments from one country to
another. Furthermore, some of these securities may be subject to brokerage or
stamp taxes levied by foreign governments, which have the effect of increasing
the cost of such investment and reducing the realized gain or increasing the
realized loss on such securities at the time of sale. Income received by a Fund
from sources within foreign countries may be reduced by withholding and 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 its
shareholders.
Foreign Currency Exchange
(Asset Allocation, Growth, Special Opportunities, International Equity and
International Bond Funds only) Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by
intervention by U.S. or foreign governments or central banks, or the failure to
intervene, or by currency controls or political developments in the United
States or abroad. The foreign currency market offers less protection against
defaults in the forward trading of currencies than is available when trading in
currencies occurs on an exchange. Since a forward currency contract is not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits or force such Fund to cover its
commitments for purchase or resale, if any, at the current market price.
Foreign Commodity Transactions
(Asset Allocation, Growth, Special
Opportunities, International Equity and International Bond Funds only) Unlike
trading on domestic commodity exchanges, trading on foreign commodity exchanges
is not regulated by the Commodity Futures Trading Commission (the "CFTC") and
may be subject to greater risks than trading on domestic exchanges. For example,
some foreign exchanges are principal markets so that no common clearing facility
exists and an investor may look only to the broker for performance of the
contract. In addition, any profits that the 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.
Mortgage-Related Securities
(Asset Allocation, Equity and Bond Funds only) No assurance can be given as
to the liquidity of the market for certain mortgage-backed securities, such as
collateralized mortgage obligations and stripped mortgage-backed securities.
Determination as to the liquidity of interest-only and principal-only fixed
mortgage-backed securities issued by the U.S. Government or its agencies and
instrumentalities will be made in accordance with guidelines established by the
Board. In accordance with such guidelines, the Investment Adviser will monitor
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. Each
of these Funds intends to treat other stripped mortgage-backed securities as
illiquid securities. Mortgage-related securities are a form of derivative
security. See "Appendix--Certain Portfolio Securities--Fixed-Income
Securities--Mortgage-Related Securities" and "--Illiquid Securities."
Zero Coupon Securities
(Asset Allocation, Equity, Bond and Municipal Bond Funds only) Federal
income tax law requires the holder of a zero coupon security or of certain
pay-in-kind bonds to accrue income with respect to these securities prior to the
receipt of cash payments. To maintain its qualification as a regulated
investment company and avoid liability for Federal income taxes, each Fund that
invests in such securities may be required to distribute such income accrued
with respect to these securities and may have to dispose of portfolio securities
under disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements. Such Fund will not be able to purchase additional
income producing securities with cash used to make such distributions and its
current income may be reduced as a result.
Other Investment Considerations
The classification of each Non-Diversified Fund as a "non-diversified"
investment company means that the proportion of such Fund's assets that may be
invested in the securities of a single issuer is not limited by the 1940 Act. A
"diversified" investment company is required by the 1940 Act generally, with
respect to 75% of its total assets, to invest not more than 5% of such assets in
the securities of a single issuer and to hold not more than 10% of the voting
securities of any single issuer. However, each Fund intends to conduct its
operations so as to qualify as a "regulated investment company" for purposes of
the Code, which requires that, at the end of each quarter of its taxable year,
(i) at least 50% of the market value of its total assets be invested in cash,
U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities of any one issuer
limited for the purposes of this calculation to an amount not greater than 5% of
the value of each such Fund's total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its total
assets be invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies). Since a relatively high percentage of each Non-Diversified Fund's
assets may be invested in the securities of a limited number of issuers, some of
which may be within the same industry or economic sector, its portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified investment
company. Investment decisions for each Fund are made independently from those of
the other investment companies or investment advisory accounts that may be
advised by the Investment Adviser. However, if such other investment companies
or managed accounts are prepared to invest in, or desire to dispose of,
securities in which a Fund invests at the same time as the Fund, available
investments or opportunities for sales will be allocated equitably to each of
them. In some cases, this procedure may adversely affect the size of the
position obtained for, or disposed of by, a Fund or the price paid or received
by a Fund.
Alternative Purchase Methods
This Prospectus offers investors three methods of purchasing Fund shares.
Orders for purchases of Class I shares, however, may be placed only for certain
eligible investors as described below. An investor who is not eligible to
purchase Class I shares may choose from Class A and Class B the Class of shares
that best suits the investor's needs, given the amount of purchase, the length
of time the investor expects to hold the shares and any other relevant
circumstances. Each Class A, Class B and Class I share represents an identical
pro rata interest in a Fund's investment portfolio. Class A shares are sold at
net asset value per share plus, for each Fund other than a Money Market Fund, a
maximum initial sales charge of 4.50% (3.00% in the case of the Intermediate
Bond Fund and Intermediate Municipal Bond Fund) of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced or
waived for certain purchases. See "How to Buy Shares-- Class A Shares." Class A
shares of each Fund are subject to an annual service fee at the rate of up to
.25% of the value of the average daily net assets of Class A. See "Distribution
Plans and Shareholder Services Plans." Class A shares held by investors who
after purchasing Class A shares establish a Fiduciary Account will convert to
Class I shares automatically upon the establishment of such Account, based on
the relative net asset values for shares of each such Class. Class B shares are
sold at net asset value per share with no initial sales charge at the time of
purchase; as a result, the entire purchase price is immediately invested in the
Fund. Class B shares are subject to a maximum 5.00% (3.00% in the case of the
Intermediate Bond Fund and Intermediate Municipal Bond Fund) CDSC, which is
assessed only if Class B shares are redeemed within six years (five years in the
case of the Intermediate Bond Fund and Intermediate Municipal Bond Fund) of
purchase. Class B shares of the Money Market Fund may be acquired only through
exchanges with Class B shares of the other Funds and are subject to the CDSC, if
any, of the shares with which the exchange is made. See "How to Buy
Shares--Class B Shares" and "How to Redeem Shares--Contingent Deferred Sales
Charge--Class B Shares." Class B shares are subject to an annual service fee and
distribution fee. See "Distribution Plans and Shareholder Services Plans."
Approximately eight years (seven years in the case of the Intermediate Bond Fund
and Intermediate Municipal Bond Fund) after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative net asset
values for shares of each such Class, and will no longer be subject to the
distribution fee. Class B shares that have been acquired through the
reinvestment of dividends and distributions will be converted on a pro rata
basis together with other Class B shares, in the proportion that a shareholder's
Class B shares converting to Class A shares bears to the total Class B shares
not acquired through the reinvestment of dividends and distributions. Class I
shares are sold at net asset value with no sales charge. Class I shares are sold
exclusively to qualified trust, custody and/or agency account clients of FNBC,
ANB or their affiliates ("Fiduciary Accounts") and to qualified benefit plans or
other programs with assets of at least $100 million invested in shares of the
Funds or other investment companies or accounts advised by the Investment
Adviser ("Eligible Retirement Plans"). Class I shares are not subject to an
annual service fee or distribution fee. Class I shares held by investors who
after purchasing Class I shares for their Fiduciary Accounts 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 Class A. Class B shares will
receive lower per share dividends and at any given time the performance of Class
B should be expected to be lower than for shares of each other Class because of
the higher expenses borne by Class B. Similarly, Class A shares will receive
lower per share dividends and the performance of Class A should be expected to
be lower than Class I shares because of the higher expenses borne by Class A.
See "Fee Table." An investor who is not eligible to purchase Class I shares
should consider whether, during the anticipated life of the investor's
investment in the Fund, the accumulated distribution fee and CDSC on Class B
shares prior to conversion would be less than the initial sales charge, if any,
on Class A shares purchased at the same time, and to what extent, if any, such
differential would be offset by the return of Class A. Additionally, investors
qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution fees on Class B shares
may exceed the initial sales charge on Class A shares during the life of the
investment. Generally, Class A shares may be more appropriate for investors who
invest $500,000 or more in Fund shares.
How to Buy Shares
INFORMATION APPLICABLE TO ALL PURCHASERS
When purchasing Fund shares, an investor must specify the Class of shares
being purchased. If no Class of shares is specified, Class A shares will be
purchased.
Class A and Class B shares are offered to the general public and may be
purchased through a number of institutions, including FCIMCO, FNBC, ANB and
their affiliates, other Service Agents, and directly through the Distributor.
Class B shares of the Money Market Fund may be acquired only through the
exchange of Class B shares of the other Funds.
Orders for purchases of Class I shares may be placed only for clients of
FNBC, ANB or their affiliates for their Fiduciary Accounts maintained at FNBC,
ANB or one of their affiliates and Eligible Retirement Plans with assets of at
least $100 million invested in shares of the Funds or other investment companies
or accounts advised by the Investment Adviser. Class I shares may be purchased
for a Fiduciary Account or Eligible Retirement Plan only by a custodian,
trustee, investment manager or other entity authorized to act on behalf of such
Account or Plan.
Share certificates will not be issued. It is not recommended that any of the
Municipal Funds be used as a vehicle for Keogh, IRA or other qualified
retirement plans. The Funds reserve the right to reject any purchase order.
The minimum initial investment for each Class is $1,000. However, for IRAs
and other retirement plans, the minimum initial purchase is $250. All subsequent
investments must be at least $100. The initial investment must be accompanied by
the Account Application. FCIMCO and Service Agents may impose initial or
subsequent investment minimums which are higher or lower than those
specified above and may impose different minimums for different types of
accounts or purchase arrangements.
As to each Fund, net asset value per share of each Class is computed by
dividing the value of the Fund's net assets represented by such Class (i.e., the
value of its assets less liabilities) by the total number of shares of such
Class outstanding. See "Determination of Net Asset Value" in the Statement of
Additional Information.
Each Money Market Fund's net asset value per share is determined as of 12:00
Noon, New York time, on each business day (which, as used herein, shall include
each day the New York Stock Exchange is open for business, except Martin Luther
King, Jr. Day, Columbus Day and Veterans Day).
Shares of each Money Market Fund are sold on a continuous basis at the net
asset value per share next determined after an order in proper form and Federal
Funds (moneys of member banks within the Federal Reserve System which are held
on deposit at a Federal Reserve Bank) are received by the Transfer Agent. If an
investor does not remit Federal Funds, his payment must be converted into
Federal Funds. This usually occurs within one business day of receipt of a bank
wire and within two business days of receipt of a check drawn on a member bank
of the Federal Reserve System. Checks drawn on banks which are not members of
the Federal Reserve System may take considerably longer to convert into Federal
Funds. Prior to receipt of Federal Funds, the investor's money will not be
invested.
For each Fund, other than the Money Market Funds, shares are sold on a
continuous basis at the public offering price (i.e., net asset value plus the
applicable sales load, if any, set forth below). Net asset value per share of
these Funds is determined as of the close of trading on the floor of the New
York Stock Exchange (currently 4:00 p.m., New York time), on each business day.
For purposes of determining net asset value per share, options and futures
contracts will be valued 15 minutes after the close of trading on the New York
Stock Exchange. Each of these Funds' investments are valued each business day by
one or more independent pricing services approved by the Board and are valued at
fair value as determined by the pricing service. Each pricing service's
procedures are reviewed under the general supervision of the Board.
For each Fund, other than the Money Market Funds, if an order is received by
the Transfer Agent by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time) on any business day, shares will
be purchased at the public offering price determined as of the close of trading
on the floor of the New York Stock Exchange on that day. Otherwise, shares will
be purchased at the public offering price determined as of the close of trading
on the floor of the New York Stock Exchange on the next business day.
Federal regulations require that an investor provide a certified Taxpayer
Identification Number ("TIN") upon opening or reopening an account. See
"Dividends, Distributions and Taxes" and the Account Application for further
information concerning this requirement. Failure to furnish a certified TIN to
the Fund could subject an investor to a $50 penalty imposed by the Internal
Revenue Service (the "IRS").
Class A Shares
The public offering price for Class A shares of each Fund, other than the
Money Market Funds, is the net asset value per share of that Class plus a sales
load as shown below:
ASSET ALLOCATION FUNDS, EQUITY FUNDS, BOND FUND,
INTERNATIONAL BOND FUND AND MUNICIPAL BOND FUND
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Total Sales Load
--------------------------------- Dealers'
As a % of As a % of Reallowance
offering price net asset value as a % of
AMOUNT OF TRANSACTION per share per share offering price
<S> <C> <C> <C>
Less than $50,000 4.50 4.70 4.00
$50,000 to less than $100,000 4.00 4.20 3.50
$100,000 to less than $250,000 3.00 3.10 2.50
$250,000 to less than $500,000 2.00 2.00 1.50
$500,000 to less than $1,000,000 1.50 1.50 1.25
$1,000,000 and above none none none
<CAPTION>
INTERMEDIATE BOND FUND AND
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
Total Sales Load
--------------------------------- Dealers'
As a % of As a % of Reallowance
offering price net asset value as a % of
AMOUNT OF TRANSACTION per share per share offering price
<S> <C> <C> <C>
Less than $50,000 3.00 3.10 2.75
$50,000 to less than $100,000 2.50 2.60 2.25
$100,000 to less than $250,000 2.00 2.00 1.75
$250,000 to less than $500,000 1.50 1.50 1.25
$500,000 to less than $1,000,000 1.00 1.00 0.75
$1,000,000 and above none none none
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or more of
Class A shares. However, if an investor purchases Class A shares without an
initial sales charge as part of an investment of at least $1,000,000 and redeems
those shares within a certain period after purchase, a CDSC will be imposed at
the time of redemption as described below. The terms set forth under "How to
Redeem Fund Shares--Contingent Deferred Sales Charge--Class B" (other than the
amount of the CDSC and its time periods) are applicable to the Class A shares
subject to a CDSC. Letter of Intent and Right of Accumulation apply to such
purchases of Class A shares. The following table sets forth the rates of such
CDSC for the indicated time periods:
<TABLE>
<CAPTION>
AMOUNT OF CDSC as a % of
TRANSACTION AT Amount Invested or Year Since Purchase
OFFERING PRICE Redemption Proceeds Payment Was Made
<S> <C> <C>
$1,000,000 to
less than $2,500,000 1.00% First or Second
$2,500,000 to
less than $5,000,000 0.50% First
$5,000,000 and above 0.25% First
</TABLE>
The dealer reallowance may be changed from time to time but will remain the
same for all dealers. With respect to purchases of $1,000,000 or more of Class A
shares made through Service Agents, the Distributor may pay such Service Agents
from its own funds a fee of up to .75% for the Intermediate Bond Fund and
Intermediate Municipal Bond Fund and 1.00% for each other Fund of the amount
invested to compensate such Service Agents for their distribution assistance in
connection with such purchases.
Full-time employees of NASD member firms and full-time employees of other
financial institutions 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 or other
financial institution with respect to sales of Fund shares), their spouses and
minor children, and accounts opened by a bank, trust company or thrift
institution, acting as a fiduciary or custodian, may purchase Class A shares for
themselves or itself, as the case may be, at net asset value, 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. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose employees are eligible to purchase Class A shares at net
asset value. In addition, Class A shares may be purchased at net asset value for
accounts registered under the Uniform Gifts to Minors Act or Uniform Transfers
to Minors Act which are opened through FCIS and 401(k) and other defined
contribution or qualified retirement plan accounts for which FNBC or ANB, since
at least June 1, 1995, or any of their affiliates, since at least January 1,
1996, has served as administrator or trustee. Class A shares are also offered at
net asset value to directors and full-time or part-time employees of First
Chicago Corporation, or any of its affiliates and subsidiaries, retired
employees of First Chicago Corporation, or any of its affiliates and
subsidiaries, Board members of a fund advised by the Investment Adviser,
including members of the Funds' Board, or the spouse or minor child of any of
the foregoing.
Class A shares may be purchased at net asset value 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.
FCIMCO will pay a fee of up to 1% of the amount invested by a participant in its
Investment Architect Account, or any other wrap account, to FCIS, FNBC or other
third-parties.
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 and not distributed by the Distributor 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 Distributor must be notified
in writing by the investor, or by the investor's investment professional, at the
time the purchase is made.
Class A shares also will be offered at net asset value without a sales load
to employees participating in qualified or nonqualified employee benefit 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 ("Eligible Benefit Plans").
Class B Shares
The public offering price for Class B shares is the net asset value per
share of that Class. No initial sales charge is imposed at the time of purchase.
A CDSC is imposed, however, on certain redemptions of Class B shares, as
described under "How to Redeem Shares." The Distributor may compensate certain
Service Agents for selling Class B shares at the time of purchase from its own
assets. Proceeds of the CDSC and distribution fees payable to the Distributor,
in part, would be used to defray these expenses.
Class I Shares
The public offering price for Class I shares is the net asset value per
share of that Class. No sales charge is imposed for Class I shares.
Purchasing Shares Through Accounts with FCIMCO, FNBC, ANB or a Service
Agent Investors who desire to purchase shares through their accounts at FCIMCO,
FNBC, ANB or their affiliates or a Service Agent should contact such entity
directly for appropriate instructions, as well as for information about
conditions pertaining to the account and any related fees. Service Agents,
FCIMCO, FNBC and ANB may charge clients direct fees for effecting transactions
in shares, as well as fees for other services provided to clients in connection
with accounts through which shares are purchased. These fees, if any, would be
in addition to fees received by a Service Agent under a Shareholder Services
Plan or fees received by FCIMCO under an Investment Advisory Agreement or
Administration Agreement. Each Service Agent has agreed to transmit to its
clients a schedule of such fees. In addition, Service Agents, FCIMCO, FNBC and
ANB may receive different levels of compensation for selling different Classes
of shares and may impose minimum account and other conditions, including
conditions which might affect the availability of certain shareholder privileges
described in this Prospectus. Certain investor accounts with FNBC, ANB and their
affiliates and certain Service Agents may be eligible for an automatic
investment privilege, commonly called a "sweep," under which amounts in excess
of a certain minimum held in these accounts will be invested automatically in
shares at predetermined intervals. Each investor desiring to use this privilege
should consult FNBC, ANB or his Service Agent for details. It is the
responsibility of FNBC, ANB and Service Agents to transmit orders on a timely
basis.
Copies of the Prospectus and Statement of Additional Information may be
obtained from the Distributor, FCIMCO, certain affiliates of FCIMCO or certain
Service Agents, as well as from the Funds.
Right of Accumulation--Class A Shares
Reduced sales loads apply to any purchase of Class A shares where the
dollar amount of shares being purchased, plus the value of shares of such Fund,
shares of other Funds, and shares of certain other investment companies advised
by the Investment Adviser purchased with a sales load or acquired by a previous
exchange of shares purchased with a sales load (hereinafter referred to as
"Eligible Funds") held by an investor and any related "purchaser" as defined in
the Statement of Additional Information, is $50,000 or more. If, for example, an
investor previously purchased and still holds Class A shares of the Equity
Income Fund, or of any other Eligible Fund or combination thereof, with an
aggregate current market value of $40,000 and subsequently purchases Class A
shares of such Fund or an Eligible Fund having a current value of $20,000, the
sales load applicable to the subsequent purchase would be reduced to 4.00% of
the offering price (4.20% of the net asset value). All present holdings of
Eligible Funds may be combined to determine the current offering price of the
aggregate investment in ascertaining the sales load applicable to each
subsequent purchase.
To qualify for reduced sales loads, at the time of a purchase an investor or
his Service Agent must notify the Distributor if orders are made by wire, or the
Transfer Agent if orders are made by mail. The reduced sales load is subject to
confirmation of the investor's holdings through a check of appropriate records.
Shareholder Services
The Exchange Privilege and Automatic Investment Plan are available to
shareholders of any Class. The Letter of Intent and Reinstatement Privilege are
available only for Class A and Class B shareholders, respectively. In addition,
such services and privileges may not be available to clients of certain Service
Agents and some Service Agents may impose certain conditions on their clients
which are different from those described in this Prospectus. Each investor
should consult his Service Agent in this regard.
EXCHANGE PRIVILEGE
The Exchange Privilege enables an investor to purchase, in exchange for
shares of a Fund, shares of the same Class of the other Funds. This privilege
may be expanded to permit exchanges between a Fund and other funds that, in the
future, may be advised by the Investment Adviser. 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:
A. 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.
B. Shares of Funds purchased without a sales load may be exchanged for shares
of other Funds sold with a sales load, and the applicable sales load will be
deducted.
C. 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.
D. 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.
To accomplish an exchange under item C above, shareholders must notify the
Transfer Agent of their prior ownership of Fund shares and their account number.
No fees currently are charged shareholders directly in connection with
exchanges although the Funds reserve the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Funds reserve the
right to reject any exchange request in whole or in part. The Exchange Privilege
may be modified or terminated at any time upon notice to shareholders.
The exchange of shares of one Fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
LETTER OF INTENT--CLASS A SHARES
By signing a Letter of Intent form, available from the Distributor, FCIMCO,
certain affiliates of FCIMCO, or certain Service Agents, an investor becomes
eligible for the reduced sales load applicable to the total number of Eligible
Fund shares purchased in a 13-month period (beginning up to 30 days before the
date of execution of the Letter of Intent) pursuant to the terms and conditions
set forth in the Letter of Intent. A minimum initial purchase of $5,000 is
required. To compute the applicable sales load, the offering price of shares the
investor holds (on the date of submission of the Letter of Intent) in any
Eligible Fund that may be used toward "Right of Accumulation" benefits described
above may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if the investor does not
purchase the full amount indicated in the Letter of Intent. The escrow will be
released when the investor fulfills the terms of the Letter of Intent by
purchasing the specified amount. Assuming completion of the total minimum
investment specified under a Letter of Intent, an adjustment will be made to
reflect any reduced sales load applicable to shares purchased during the 30-day
period before submission of the Letter of Intent. In addition, if the investor's
purchases qualify for a further sales load reduction, the sales load will be
adjusted to reflect the investor's total purchase at the end of 13 months. If
total purchases are less than the amount specified, the investor will be
requested to remit an amount equal to the difference between the sales load
actually paid and the sales load applicable to the aggregate purchases actually
made. If such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A shares held in escrow to realize the difference.
Signing a Letter of Intent does not bind the investor to purchase, or the Trust
to sell, the full amount indicated at the sales load in effect at the time of
signing, but the investor must complete the intended purchase to obtain the
reduced sales load. At the time an investor purchases Class A shares, the
investor must indicate his or her intention to do so under a Letter of Intent.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan permits an investor to purchase shares at
regular intervals selected by the investor. Provided the investor's bank or
other financial institution allows automatic withdrawals, shares may be
purchased by transferring funds from the bank account designated by the
investor. At the investor's option, the account designated will be debited in
the specified amount, and shares will be purchased, once a month, on either the
first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish an Automatic Investment Plan
account, the investor must check the appropriate box and supply the necessary
information on the Account Application. Investors may obtain the necessary
applications from the Distributor. Investors should be aware that periodic
investment plans do not guarantee a profit and will not protect an investor
against loss in a declining market. An investor may cancel his or her
participation in the Plan or change the amount of purchase at any time by
mailing written notification to Primary Funds Service Corp., P.O. Box 9743,
Providence, Rhode Island 02940-9743, and such notification will be effective
three business days following receipt. The Funds may modify or terminate the
Automatic Investment Plan at any time or charge a service fee. No such fee
currently is contemplated.
REINSTATEMENT PRIVILEGE
The Reinstatement Privilege enables investors who have redeemed Class A or
Class B shares to purchase, within 30 days of such redemption, Class A shares
without the imposition of a sales load in an amount not to exceed the redemption
proceeds received. Class A shares so reinstated or purchased will be offered at
a purchase price equal to the then-current net asset value of Class A determined
after a reinstatement request and payment for Class A shares are received by the
Transfer Agent. This privilege also enables such investors to reinstate their
account for the purpose of exercising the Exchange Privilege. To use the
Reinstatement Privilege, an investor must submit a written reinstatement request
to the Transfer Agent. The reinstatement request and payment must be received
within 30 days of the trade date of the redemption. There currently are no
restrictions on the number of times an investor may use this privilege.
How to Redeem Shares
GENERAL
An investor may request redemption of his shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. An
investor who has purchased shares through his Fiduciary Account or as a
participant in an Eligible Retirement Plan must redeem shares by following
instructions pertaining to such Account or Plan. It is the responsibility of the
entity authorized to act on behalf of such Account or Plan to transmit the
redemption order to the Transfer Agent and credit the investor's account with
the redemption proceeds on a timely basis. When a request is received in proper
form, the Fund will redeem the shares at the next determined net asset value as
described below. If an investor holds Fund shares of more than one Class, any
request for redemption must specify the Class of shares being redeemed. If an
investor fails to specify the Class of shares to be redeemed, Class A shares
will be redeemed first. If an investor owns fewer shares of the Class than
specified to be redeemed, the redemption request may be delayed until the
Transfer Agent receives further instructions from the investor or his Service
Agent.
The Funds impose no charges when shares are redeemed. However, the
Distributor may impose a CDSC as described below. Service Agents may charge a
nominal fee for effecting redemptions of Fund shares. The value of the shares
redeemed may be more or less than their original cost, depending upon the Fund's
then-current net asset value.
A Fund ordinarily will make payment for all shares redeemed within seven days
after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission.
HOWEVER, IF AN INVESTOR HAS PURCHASED FUND SHARES BY CHECK OR THROUGH THE
AUTOMATIC INVESTMENT PLAN AND SUBSEQUENTLY SUBMITS A WRITTEN REDEMPTION REQUEST
TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO THE
INVESTOR PROMPTLY UPON BANK CLEARANCE OF THE INVESTOR'S PURCHASE CHECK OR
AUTOMATIC INVESTMENT PLAN ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR
MORE. IN ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS FOR A PERIOD OF
EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR
AUTOMATIC INVESTMENT PLAN ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED.
THESE PROCEDURES WILL NOT APPLY IF THE INVESTOR OTHERWISE HAS A SUFFICIENT
COLLECTED BALANCE IN HIS OR HER ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR
TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE
AND BE PAYABLE, AND THE INVESTOR WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS
OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received the investor's Account Application.
Each 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 ($500 or less in the case of the Municipal Bond Fund)
and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE--
CLASS B
A CDSC payable to the Distributor may be imposed on redemptions of Class B
shares depending on the number of years such shares were held by the investor.
The following tables set forth the rates of the CDSC applied for the indicated
Funds:
ASSET ALLOCATION FUNDS, EQUITY FUNDS, BOND FUND,
INTERNATIONAL BOND FUND AND MUNICIPAL BOND FUND
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CDSC as a % of
Amount Invested
or
Year Since Redemption
Purchase Payment Was Made Proceeds
<S> <C>
First 5.00
Second 4.00
Third 3.00
Fourth 3.00
Fifth 2.00
Sixth 1.00
Seventh None
Eighth *
</TABLE>
* Conversion to Class A shares.
INTERMEDIATE BOND FUND AND INTERMEDIATE MUNICIPAL BOND FUND
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CDSC as a % of
Amount Invested
or
Year Since Redemption
Purchase Payment Was Made Proceeds
<S> <C>
First 3.00
Second 3.00
Third 2.00
Fourth 2.00
Fifth 1.00
Sixth None
Seventh *
</TABLE>
* Conversion to Class A shares.
In determining whether a CDSC is applicable to a redemption, the calculation
will be made in a manner that results in the lowest possible rate. Class B
shares redeemed will not be subject to a CDSC to the extent that the value of
such shares represents capital appreciation or reinvestment of dividends or
distributions. It will be assumed that the redemption is made first of Class B
shares acquired pursuant to the reinvestment of dividends and distributions or
representing any capital appreciation in the value of the Class B shares held by
the investor; then of Class B shares held for the longest period of time.
WAIVER OF CDSC
The CDSC will be waived 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) redemptions of shares acquired through a contribution in excess
of permitted amounts, (e) in-service withdrawals from tax qualified plans by
participants and (f) redemptions initiated by a Fund of accounts with net assets
of less than $1,000 ($500 in the case of the Municipal Bond Fund).
CONVERSION OF CLASS B SHARES
Class B shares automatically convert to Class A shares (and thus become
subject to the lower expenses borne by Class A shares) in the eighth year
(seventh year in the case of the Intermediate Bond Fund and Intermediate
Municipal Bond Fund) after the date of purchase, together with the pro rata
portion of all Class B shares representing dividends and other distributions
paid in additional Class B shares. The conversion will be effected at the
relative net asset values per share of the two Classes on the first business day
of the month following the seventh anniversary (sixth anniversary in the case of
the Intermediate Bond Fund and Intermediate Municipal Bond Fund) of the original
purchase. If any exchanges of Class B shares during the eight-year or
seven-year, as the case may be, period occurred, the holding period for the
shares exchanged will be counted toward the eight-year or seven-year, as the
case may be, period. At the time of the conversion the net asset value per share
of the Class A shares may be higher or lower than the net asset value per share
of the Class B shares; as a result, depending on the relative net asset values
per share, a shareholder may receive fewer or more Class A shares than the
number of Class B shares converted.
Each Fund reserves the right to cease offering Class B shares for sale at any
time or reject any order for the purchase of Class B shares and to cease
offering any services provided by a Service Agent.
PROCEDURES
An investor who has purchased shares through his account at FCIMCO, FNBC or
a Service Agent must redeem shares by following instructions pertaining to such
account. If an investor has given his Service Agent authority to instruct the
Transfer Agent to redeem shares and to credit the proceeds of such redemption to
a designated account at the Service Agent, the investor may redeem shares only
in this manner and in accordance with a written redemption request described
below. It is the responsibility of FCIMCO, FNBC or the Service Agent, as the
case may be, to transmit the redemption order and credit the investor's account
with the redemption proceeds on a timely basis.
An investor may redeem or exchange shares by telephone if the investor has
checked the appropriate box on the Account Application. By selecting a telephone
redemption or exchange privilege, an investor authorizes the Transfer Agent to
act on telephone instructions from any person representing himself or herself to
be the investor, or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine. The Funds will require
the Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine and, if it
does not follow such procedures, the Fund or the Transfer Agent may be liable
for any losses due to unauthorized or fraudulent instructions. Neither the Fund
nor the Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, an investor may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures described herein. Use of these other
redemption procedures may result in the investor's redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
WRITTEN REDEMPTION REQUESTS
Investors may redeem shares by written request mailed to The Prairie Family
of Funds, P.O. Box 9743, Providence, Rhode Island 02940-9743. Redemption
requests must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
CHECK REDEMPTION PRIVILEGE
Class A of Money Market Funds only
A Money Market Fund shareholder may request on the Account Application or
by later written request to the Fund that the Money Market Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. Redemption
Checks should not be used to close an account. Redemption Checks are free, but
the Transfer Agent will impose a fee for stopping payment of a Redemption Check
at the investor's request or if the Transfer Agent cannot honor the Redemption
Check due to insufficient funds or other valid reason. An investor should date
his Redemption Checks with the current date when the investor writes them.
Please do not postdate Redemption Checks. If an investor does, the Transfer
Agent will honor, upon presentment, even if presented before the date of the
check, all postdated Redemption Checks which are dated within six months of
presentment of payment, if they are otherwise in good order. This Privilege may
be modified or terminated at any time by the Fund or the Transfer Agent upon
notice to shareholders.
Management of the Funds
INVESTMENT ADVISER AND ADMINISTRATOR
First Chicago Investment Management Company, located at Three First
National Plaza, Chicago, Illinois 60670, is each Fund's investment adviser and
administrator. FCIMCO is a registered investment adviser and a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), which in turn is a
wholly-owned subsidiary of First Chicago NBD Corporation, a registered bank
holding company. As of December 31, 1995, FCIMCO provided investment management
services to portfolios containing approximately $71 billion in assets.
FCIMCO serves as investment adviser for each Fund pursuant to an Investment
Advisory Agreement. Under the relevant Investment Advisory Agreement, FCIMCO
provides the day-to-day management of each 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 each Fund, placing purchase and sale orders (which may be
allocated to various dealers based on their sales of Fund shares) and providing
research, statistical analysis and continuous supervision of each Fund's
investment portfolio. FCIMCO has advised the Funds that in making its investment
decisions FCIMCO does not obtain or use material inside information in its or
any of its affiliate's possession.
FCIMCO has engaged ANB-IMC, located at 1 North LaSalle Street, Chicago,
Illinois 60690, to serve as the International Equity Fund's sub-investment
adviser. ANB-IMC, a registered investment adviser formed in 1973, is a
wholly-owned subsidiary of American National Bank and Trust Company, which in
turn is a wholly-owned subsidiary of FCNBD. As of December 31, 1995, ANB-IMC
managed approximately $ 21 billion in assets, including over $358 million in
international equities, primarily for pension funds. ANB-IMC, subject to the
supervision and approval of FCIMCO, provides investment advisory assistance and
the day-to-day management of the International Equity Fund's investments, as
well as investment research and statistical information, under a Sub-Investment
Advisory Agreement with FCIMCO, subject to the overall authority of the Board in
accordance with Massachusetts law.
The Funds' primary portfolio managers currently are: for Managed Assets
Income Fund and Managed Assets Fund, Claude B. Erb (since inception of the
Fund), who has been employed by FNBC since 1993 and, prior thereto, was Deputy
Chief Investment Officer and Senior Vice President for Trust Services of America
and TSA Capital Management; for Equity Income Fund, Chris M. Gassen (since March
1996), who has been employed by NBD Bank, a wholly-owned subsidiary of FCNBD,
since 1985, and F.Richard Neumann (since March 1996), who has been employed by
NBD Bank since 1981; for Growth Fund, Jeffrey C. Beard (since March 1996), who
has been employed by NBD Bank since 1982, and Gary L. Konsler (since March
1996), who has been employed by NBD Bank since 1973; for Special Opportunities
Fund, Ronald L. Doyle (since March 1996), who has been employed by NBD Bank
since 1982, and Joseph R. Gatz (since March 1996), who has been employed by NBD
Bank since 1986; for International Equity Fund, Peter M. Jankovskis (since
inception of the Fund), who has been employed by ANB-IMC since 1992 and, prior
thereto, was a faculty member of the University of California at Santa Barbara;
for Bond Fund, Douglas S. Swanson (since March 1996), who has been employed by
NBD Bank since 1983; for Intermediate Bond Fund, Ricardo F. Cipicchio (since
March 1996), who has been employed by NBD Bank since 1989; for International
Bond Fund, Claude B. Erb (since inception of the Fund); and for Intermediate
Municipal Bond Fund and Municipal Bond Fund, Robert T. Grabowski (since March
1996), who has been employed by NBD Bank since 1970.
Under the terms of the relevant Investment Advisory Agreement, FCIMCO
receives a monthly fee at the annual rate of .65% of the value of each Asset
Allocation Fund's average daily net assets; .50% of the value of the Equity
Income Fund's average daily net assets; .65% of the value of the Growth Fund's
average daily net assets; .70% of the value of the Special Opportunities Fund's
average daily net assets; .80% of the value of the International Equity Fund's
average daily net assets; .55% of the value of the Bond Fund's average daily net
assets; .70% of the value of the International Bond Fund's average daily net
assets; .40% of the value of each of the Intermediate Bond, Intermediate
Municipal Bond and Municipal Bond Fund's average daily net assets; and .40% of
the value of each Money Market Fund's average daily net assets. The investment
advisory fee payable by the International Equity Fund is higher than that paid
by most other funds. For the fiscal year ended December 31, 1995, each Fund paid
FCIMCO an investment advisory fee at the effective annual rate set forth below
pursuant to undertakings in effect:
<TABLE>
<CAPTION>
Effective Annual Rate
As a Percentage of
Name of Fund Average Daily Net Assets
<S> <C>
Managed Assets Income .30%
Managed Assets .05%
Equity Income .37%
Growth .53%
Special Opportunities .46%
International Equity .47%
Intermediate Bond .27%
Bond .38%
International Bond .10%
Intermediate Municipal Bond .28%
Municipal Bond .26%
U. S. Government Money Market .14%
Money Market .13%
Municipal Money Market .17%
</TABLE>
For the fiscal year ended December 31, 1995, FCIMCO paid ANB-IMC a
sub-investment advisory fee at the annual rate of .40% of the value of
the International Equity Fund's average daily net assets.
FCIMCO serves as each Fund's administrator pursuant to an Administration
Agreement. Under the Administration Agreement, FCIMCO generally assists in all
aspects of the Funds' operations, other than providing investment advice,
subject to the overall authority of the Board in accordance with applicable
state law. Under the terms of the relevant Administration Agreement, FCIMCO
receives a monthly fee at the annual rate of .15% of the value of each Fund's
average daily net assets. For the fiscal year ended December 31, 1995, each Fund
paid FCIMCO an administrative fee at the effective annual rate set forth below
pursuant to undertakings in effect:
<TABLE>
<CAPTION>
Effective Annual Rate
As a Percentage of
Name of Fund Average Daily Net Assets
<S> <C>
Managed Assets Income .15%
Managed Assets .09%
Equity Income .15%
Growth .15%
Special Opportunities .15%
International Equity .15%
Intermediate Bond .14%
Bond .15%
International Bond .12%
Intermediate Municipal Bond .15%
Municipal Bond .15%
U. S. Government Money Market .13%
Money Market .15%
Municipal Money Market .15%
</TABLE>
FCIMCO has engaged Concord Holding Corporation, a wholly-owned subsidiary of
The BISYS Group, Inc., located at 3435 Stelzer Road, Columbus, Ohio 43219-3035
(the "Sub-Administrator"), to assist it in providing certain administrative
services for the Funds pursuant to a Master Sub-Administration Agreement between
FCIMCO and the Sub-Administrator. FCIMCO, from its own funds, will pay the
Sub-Administrator for the Sub-Administrator's services.
DISTRIBUTOR
Concord Financial Group, Inc., located at 3435 Stelzer Road, Columbus, Ohio
43219-3035, serves as principal underwriter and distributor of each Fund's
shares. The Distributor, a wholly-owned subsidiary of the Sub-Administrator, was
organized to distribute shares of mutual funds to institutional and retail
investors. The Distributor distributes the shares of other investment companies
with over $80 billion in assets.
TRANSFER AND DIVIDEND DISBURSING
AGENT AND CUSTODIAN
Primary Funds Service Corp., 100 Financial Park, Franklin, Massachusetts
02038, is the Funds' Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Funds' Custodian.
EXPENSES
All expenses incurred in the operation of the Trust, Prairie Intermediate
Bond Fund and Prairie Municipal Bond Fund are borne by such company, except to
the extent specifically assumed by FCIMCO. The expenses borne by the Trust,
Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc. include:
organizational costs, taxes, interest, loan commitment fees, interest and
distributions paid on securities sold short, brokerage fees and commissions, if
any, fees of Board members, Securities and Exchange Commission fees, state Blue
Sky qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining each
Fund's existence, costs of independent pricing services, costs attributable to
investor services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders, and any extraordinary
expenses. In addition, Class B shares are subject to an annual distribution fee
for advertising, marketing and distributing such shares and Class A and Class B
shares are subject to an annual service fee for ongoing personal services
relating to shareholder accounts and services related to the maintenance of
shareholder accounts. See "Distribution Plans and Shareholder Services Plans."
Expenses attributable to a particular Fund, in the case of the Trust's series,
or Class are charged against the assets of that Fund or Class, respectively;
other expenses of the Trust are allocated among such Funds on the basis
determined by the Board, including, but not limited to, proportionately in
relation to the net assets of each such Fund. The imposition of the advisory
fee, as well as other operating expenses, including the fees paid under any
Distribution Plan and Shareholder Services Plan, will have the effect of
reducing the yield to investors. From time to time, FCIMCO may waive receipt of
its fees and/or voluntarily assume certain expenses of a Fund, which would have
the effect of lowering that Fund's overall expense ratio and increasing yield to
investors at the time such amounts are waived or assumed, as the case may be.
The Fund will not pay FCIMCO at a later time for any amounts which may be
waived, nor will the Fund reimburse FCIMCO for any amounts which may be assumed.
Distribution Plans and
Shareholder Services Plans
Class B shares of each Fund are subject to an annual distribution fee
pursuant to a Distribution Plan. Class A and Class B shares of each Fund are
subject to an annual service fee pursuant to a Shareholder Services Plan.
DISTRIBUTION PLANS
(Class B only) Under separate Distribution Plans, adopted pursuant to Rule
12b-1 under the 1940 Act, each of the Trust, Prairie Intermediate Bond Fund and
Prairie Municipal Bond Fund has agreed to pay the Distributor for advertising,
marketing and distributing shares of the relevant Fund at an aggregate annual
rate of .75% of the value of the average daily net assets of Class B. The
Distributor may pay one or more Service Agents in respect of these services.
FCIMCO, FNBC, ANB and their affiliates may act as Service Agents and receive
fees under the relevant Distribution Plan. The Distributor determines the
amounts, if any, to be paid to Service Agents under the Distribution Plan and
the basis on which such payments are made. The fees payable under each
Distribution Plan are payable without regard to actual expenses incurred.
SHAREHOLDER SERVICES PLANS
(Class A and Class B) Under separate Shareholder Services Plans, each of
the Trust, Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund pays
the Distributor for the provision of certain services to the holders of these
shares a fee at an annual rate of .25% of the value of the average daily net
assets of Class A or Class B. The services provided may include personal
services relating 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 each
Shareholder Services Plan, the Distributor may make payments to Service Agents
in respect of these services. FCIMCO, FNBC, ANB and their affiliates may act as
Service Agents and receive fees under the Shareholder Services Plan. The
Distributor determines the amounts to be paid to Service Agents. Each Service
Agent is required to disclose to its clients any compensation payable to it by
the Funds pursuant to the Shareholder Services Plan and any other compensation
payable by their clients in connection with the investment of their assets in
Fund shares.
Dividends, Distributions and Taxes
MANAGED ASSETS, GROWTH, SPECIAL OPPORTUNITIES AND INTERNATIONAL EQUITY FUNDS
- --Declare and pay dividends from net investment income quarterly.
MANAGED ASSETS INCOME AND EQUITY INCOME FUNDS -- Declare and pay dividends from
net investment income monthly, usually on the last calendar day of the month.
BOND, MUNICIPAL BOND AND MONEY MARKET FUNDS -- Declare dividends from net
investment income on each day the New York Stock Exchange is open for business,
except for the Money Market Fund on Martin Luther King, Jr. Day, Columbus Day
and Veterans Day. Dividends usually are paid on the last calendar day of each
month. Shares begin accruing dividends on the next business day after the
purchase order is effective. The earnings for Saturdays, Sundays and holidays
are declared as dividends on the preceding business day.
APPLICABLE TO ALL FUNDS --Each Fund will make distributions from net realized
securities gains, if any, once a year, but may make distributions on a more
frequent basis to comply with the distribution requirements of the Code, in all
events in a manner consistent with the provisions of the 1940 Act. Dividends are
automatically reinvested in additional Fund shares of the same Class from which
they were paid at net asset value, unless payment in cash is requested.
Dividends paid by each Fund, other than a Municipal Fund, derived from net
investment income and dividends paid by a Municipal Fund derived from taxable
investments, together with distributions from any net realized short-term
securities gains, will be taxable to U.S. investors as ordinary income whether
or not reinvested in additional Fund shares. Distributions from net realized
long-term securities gains, if any, will be taxable to U.S. shareholders as
long-term capital gains for Federal income tax purposes, regardless of how long
investors have held shares and whether such distributions are received in cash
or reinvested in additional shares.
Except for dividends from taxable investments, it is anticipated that
substantially all dividends paid by a Municipal Fund will not be subject to
Federal income tax. Dividends and distributions paid by a Municipal Fund may be
subject to the alternative minimum tax and to certain state and local taxes.
Notice as to the tax status of an investor's dividends and distributions will
be mailed to such investor annually. Each investor also will receive periodic
summaries of such investor's account which will include information as to
dividends and distributions from securities gains, if any, paid during the year.
Participants in a Retirement Plan should receive periodic statements from the
trustee, custodian or administrator of their Plan.
Federal regulations generally require the Funds to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN furnished
in connection with opening an account is correct or that such shareholder has
not received notice from the IRS of being subject to backup withholding as a
result of a failure to properly report taxable dividend or interest income on a
Federal income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or if
a shareholder has failed to properly report taxable dividend and interest income
on a Federal income tax return. A TIN is either the Social Security number or
employer identification number of the record owner of the account.
Management believes that each Fund has qualified as a "regulated investment
company" for the fiscal year ended December 31, 1995. Each Fund intends to
continue to so qualify, if such qualification is in the best interests of its
shareholders. Such qualification relieves the Fund of any liability for Federal
income tax to the extent its earnings are distributed in accordance with
applicable provisions of the Code. In addition, each Fund is subject to a
non-deductible 4% excise tax, measured with respect to certain undistributed
amounts of taxable investment income and capital gains.
Each investor should consult his or her tax adviser regarding specific
questions as to Federal, state or local taxes.
Performance Information
SPECIAL OPPORTUNITIES, GROWTH AND INTERNATIONAL EQUITY FUNDS --For purposes
of advertising, performance of these Funds may be calculated on the bases of
average annual total return and/or total return. Average annual total return is
calculated pursuant to a standardized formula which assumes that an investment
in such Fund was purchased with an initial payment of $1,000 and that the
investment was redeemed at the end of a stated period of time, after giving
effect to the reinvestment of dividends and distributions during the period. The
return is expressed as a percentage rate which, if applied on a compounded
annual basis, would result in the redeemable value of the investment at the end
of the period. Advertisements of a Fund's performance will include such Fund's
average annual total return for one, five and ten year periods, or for shorter
time periods depending upon the length of time during which the Fund has
operated. Computations of average annual total return for periods of less than
one year represent an annualization of the Fund's actual total return for the
applicable period.
Total return is computed on a per share basis and assumes the reinvestment of
dividends and distributions. Total return generally is expressed as a percentage
rate which is calculated by combining the income and principal changes for a
specified period and dividing by the maximum offering price per share at the
beginning of the period. Advertisements may include the percentage rate of total
return or may include the value of a hypothetical investment at the end of the
period which assumes the application of the percentage rate of total return.
Total return also may be calculated by using the net asset value per share at
the beginning of the period instead of the maximum offering price per share at
the beginning of the period for Class A shares or without giving effect to any
applicable CDSC at the end of the period for Class B shares. Calculations based
on the net asset value per share do not reflect the deduction of the applicable
sales charge which, if reflected, would reduce the performance quoted.
ASSET ALLOCATION, EQUITY INCOME, BOND AND MUNICIPAL BOND FUNDS --For purposes of
advertising, performance of these Funds may be calculated on several bases,
including current yield, average annual total return and/or total return.
Current yield refers to the Fund's annualized net investment income per share
over a 30-day period, expressed as a percentage of the net asset value per share
at the end of the period. For purposes of calculating current yield, the amount
of net investment income per share during that 30-day period, computed in
accordance with regulatory requirements, is compounded by assuming that it is
reinvested at a constant rate over a six-month period. An identical result is
then assumed to have occurred during a second six-month period which, when added
to the result for the first six months, provides an "annualized" yield for an
entire one-year period.
The Municipal Bond Funds may advertise tax equivalent yield, which is
calculated by determining the pre-tax yield which, after being taxed at a
certain rate, would be equivalent to a stated current yield calculated as
described above.
Average annual total return and total return will be calculated as described
above.
MONEY MARKET FUNDS --From time to time, each Money Market Fund may advertise its
yield and effective yield. Both yield figures are based on historical earnings
and are not intended to indicate future performance. It can be expected that
these yields will fluctuate substantially. The yield of the Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
The Municipal Money Market Fund also may advertise tax equivalent yield,
which would be calculated as described above.
APPLICABLE TO ALL FUNDS --Performance will vary from time to time and past
results are not necessarily representative of future results. Investors should
remember that performance is a function of the type and quality of portfolio
securities held by the Fund and is affected by operating expenses. Yield and
performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance. Performance for each Class will be
calculated separately.
Comparative performance information may be used from time to time in
advertising or marketing a Fund's shares, including data from Lipper Analytical
Services, Inc., Bank Rate Monitor(TM), N. Palm Beach, Fla. 33408, Bond 20-Bond
Index, Moody's Bond Survey Bond Index, Lehman Corporate Bond Index,
IBC/Donoghue's Money Fund Report(R), S&P 500 Index, Lehman Brothers
Government/Corporate Bond Index, the Dow Jones Industrial Average,
CDA/Wiesenberger Investment Companies Service, Mutual Fund Values; Mutual Fund
Forecaster, Schabacker Investment Management, Inc., Morningstar, Inc. and other
industry publications.
General Information
The Trust and Prairie Intermediate Bond Fund are organized as
unincorporated business trusts under the laws of the Commonwealth of
Massachusetts and Prairie Municipal Bond Fund, Inc. is incorporated under
Maryland law. The Trust, Prairie Intermediate Bond Fund and Prairie Municipal
Bond Fund, Inc. commenced operations on January 17, 1995, March 5, 1993 and
March 1, 1988, respectively. The Trust and Prairie Intermediate Bond Fund are
authorized to issue an unlimited number of shares of beneficial interest and
Prairie Municipal Bond Fund, Inc. is authorized to issue 10 billion shares of
common stock, each with a par value of $.001 per share. Shares of each Fund are
classified into three classes. Each share has one vote and shareholders will
vote in the aggregate and not by class except as otherwise required by law or
with respect to any matter which affects only one class.
Prior to January 17, 1995, Prairie Intermediate Bond Fund's name was First
Prairie U.S. Government Income Fund and it was required to invest at least 65%
of its assets in U.S. Government securities and was a diversified investment
company. Any reference herein and in the Statement of Additional Information to
Prairie Intermediate Bond Fund, including any financial information and
performance data, relating to such periods reflect the Fund's portfolio as
constituted prior to such revisions.
Prior to January 17, 1995, Prairie Municipal Bond Fund, Inc.'s name was First
Prairie Tax Exempt Bond Fund, Inc. and, from September 12, 1989 to January 17,
1995, its shares were offered as the Insured Series and it invested at least 65%
of the value of its total assets in Municipal Obligations insured as to timely
payment of principal and interest by recognized insurers of Municipal
Obligations. Prior to September 12, 1989, the Fund was not required to invest
such portion of its assets in insured Municipal Obligations and, under normal
market conditions, the dollar-weighted average maturity of its portfolio
exceeded ten years and it invested in Municipal Obligations rated A or better by
Moody's or S&P. Any reference herein and in the Statement of Additional
Information to Prairie Municipal Bond Fund, Inc., including any financial
information and performance data, relating to such periods reflect the Fund's
portfolio as constituted prior to such revisions.
To date, the Trust's Board has authorized the creation of 12 separate
portfolios of shares for the Trust. All consideration received by the Trust for
shares of one of the portfolios and all assets in which such consideration is
invested will belong to that portfolio (subject only to the rights of creditors
of the Trust) and will be subject to the liabilities related thereto. The income
attributable to, and the expenses of, one portfolio (and as to classes within a
portfolio) are treated separately from those of the other portfolios (and
classes). The Trust has the ability to create, from time to time, new portfolios
without shareholder approval which may be sold pursuant to other offering
documents.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of a Massachusetts business trust.
However, the Trust Agreement for each of Prairie Intermediate Bond Fund and the
Trust disclaims shareholder liability for acts or obligations of such entities
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by such entities or a Trustee.
Each Trust Agreement provides for indemnification from the Fund's property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder paying such liability will be entitled to reimbursement
from the general assets of the Fund. The Trustees intend to conduct the
operations of the Trust and Prairie Intermediate Bond Fund in such a way so as
to avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Trust or Prairie Intermediate Bond Fund, as the case may be.
The Funds ordinarily will not hold shareholder meetings; however,
shareholders under certain circumstances have the right to call a meeting of
shareholders for the purpose of voting to remove Board members.
Although each Fund is offering only its own shares, it is possible that a
Fund might become liable for any misstatement in this Prospectus about another
Fund. The Funds' Board has considered this factor in approving the use of this
single combined Prospectus.
The Transfer Agent maintains a record of each investor's ownership and sends
confirmations and statements of account.
Investor inquiries may be made by writing to the address shown on page one or
by calling the appropriate telephone number.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUNDS'
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS' SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
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Appendix
CERTAIN PORTFOLIO SECURITIES
Equity Securities
American, European and Continental Depositary Receipts-- (Asset Allocation,
Equity Income, Growth, International and Special Opportunities Funds only)
Securities of foreign issuers may be sold in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs"). These securities
may not necessarily be denominated in the same currency as the securities into
which they may be converted. ADRs are receipts typically issued by a United
States bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs, which are sometimes referred to as
Continental Depositary Receipts ("CDRs"), are receipts issued in Europe
typically by non-United States banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in the United States securities markets and EDRs and CDRs in
bearer form are designed for use in Europe. Warrants--(Asset Allocation and
Equity Funds only) A warrant is an instrument issued by a corporation which
gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time. Each
of these Funds may invest up to 5% of its net assets in warrants, valued at the
lesser of cost or market, except that this limitation does not apply to warrants
acquired in units or attached to securities. Included in such amount, but not to
exceed 2% of the value of the Fund's net assets, may be warrants which are not
listed on the New York or American Stock Exchange.
Fixed-Income Securities
Convertible Securities--(Asset Allocation, Equity and Bond Funds only)
Convertible securities may be converted at either a stated price or stated rate
into underlying shares of common stock. Convertible securities have general
characteristics similar to both fixed-income and equity securities. Although to
a lesser extent than with fixed-income securities generally, the market value of
convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible securities tends to vary
with fluctuations in the market value of the underlying common stock, and,
therefore, also will react to variations in the general market for equity
securities. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.
As fixed-income securities, convertible securities are investments that
provide for a stable stream of income with generally higher yields than common
stocks. Of course, like all fixed-income securities, there can be no assurance
of current income because the issuers of the convertible securities may default
on their obligations. Convertible securities, however, generally offer lower
interest or dividend yields than non-convertible securities of similar quality
because of the potential for capital appreciation. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to benefit
from increases in the market price of the underlying common stock. There can be
no assurance of capital appreciation, however, because securities prices
fluctuate. Convertible securities generally are subordinated to other similar
but non-convertible securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
U.S. Government Securities--These securities are described under "Taxable Money
Market Instruments-- U.S. Government Securities" below and may be purchased
without regard to maturity. Zero Coupon and Stripped Securities--(Asset
Allocation, Equity, Bond and Municipal Bond Funds only) Zero coupon U.S.
Treasury securities are Treasury Notes and Bonds that have been stripped of
their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Zero coupon securities also are issued by corporations and financial
institutions which constitute a proportionate ownership of the issuer's pool of
underlying U.S. Treasury securities. A zero coupon security pays no interest to
its holder during its life and is sold at a discount to its face value at
maturity. The amount of the discount fluctuates with the market price of the
security. The market prices of zero coupon securities generally are more
volatile than the market prices of securities that pay interest periodically and
are likely to respond to a greater degree to changes in interest rates than
non-zero coupon securities having similar maturities and credit qualities.
Participation Interests--(Asset Allocation, Equity, Bond and Money Market Funds
only) A participation interest gives the purchaser an undivided interest in a
security in the proportion that such purchaser's participation interest bears to
the total principal amount of the security. These instruments may have fixed,
floating or variable rates of interest, with, in the case of the Money Market
Fund, remaining maturities of 13 months or less. If the participation interest
is unrated, or has been given a rating below that which is permissible for
purchase by a Fund, the participation interest will be backed by an irrevocable
letter of credit or guarantee of a bank, or the payment obligation otherwise
will be collateralized by U.S. Government securities, or, in the case of unrated
participation interests, the Investment Adviser must have determined that the
instrument is of comparable quality to those instruments in which such Fund may
invest.
Mortgage-Related Securities--(Asset Allocation, Equity and Bond Funds only)
Mortgage-related securities are securities collateralized by pools of mortgage
loans assembled for sale to investors by various governmental agencies, such as
the Government National Mortgage Association and government-related
organizations such as the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation, as well as by private issuers such as commercial
banks, savings and loan institutions, mortgage banks and private mortgage
insurance companies, and similar foreign entities. Mortgage-related securities
are a form of derivative security. The mortgage-related securities which may be
purchased include those with fixed, floating and variable interest rates, those
with interest rates that change based on multiples of changes in interest rates
and those with interest rates that change inversely to changes in interest
rates, as well as stripped mortgage-backed securities. Stripped mortgage-backed
securities usually are structured with two classes that receive different
proportions of interest and principal distributions on a pool of mortgage-backed
securities or whole loans. A common type of stripped mortgage-backed security
will have one class receiving some of the interest and most of the principal
from the mortgage collateral, while the other class will receive most of the
interest and the remainder of the principal. In the most extreme case, one class
will receive all of the interest (the interest-only or "IO" class), while the
other class will receive all of the principal (the principal-only or "PO"
class). Although certain mortgage-related securities are guaranteed by a third
party or otherwise similarly secured, the market value of the security, which
may fluctuate, is not so secured. If a mortgage-related security is purchased at
a premium, all or part of the premium may be lost if there is a decline in the
market value of the security, whether resulting from changes in interest rates
or prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of certain of these securities are
inversely affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true, since in periods of declining interest rates the mortgages
underlying the security are more likely to prepay. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages, and, therefore, it is not possible to
predict accurately the security's return to a Fund. Moreover, with respect to
stripped mortgage-backed securities, if the underlying mortgage securities
experience greater than anticipated prepayments of principal, the Fund may fail
to fully recoup its initial investment in these securities even if the
securities are rated in the highest rating category by a nationally recognized
statistical rating organization. In addition, regular payments received in
respect of mortgage-related securities include both interest and principal. No
assurance can be given as to the return the Fund will receive when these amounts
are reinvested. For further discussion concerning the investment considerations
involved, see "Description of the Funds-- Risk Factors--Fixed-Income Securities"
and "Illiquid Securities" below and "Investment Objectives and Management
Policies--Portfolio Securities--Mortgage-Related Securities" in the Statement of
Additional Information.
Asset-Backed Securities--(Asset Allocation, Equity and Bond Funds only) The
securitization techniques used for asset-backed securities are similar to those
used for mortgage-related securities. Asset-backed securities are a form of
derivative security. These securities include debt securities and securities
with debt-like characteristics. The collateral for these securities has included
home equity loans, automobile and credit card receivables, boat loans, computer
leases, airplane leases, mobile home loans, recreational vehicle loans and
hospital account receivables. These Funds may invest in these and other types of
asset-backed securities that may be developed in the future.
Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities do not have the benefit
of the same security interest in the related collateral. Credit card receivables
generally are unsecured and the debtors are entitled to the protection of a
number of state and Federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of asset-backed securities backed by
automobile receivables permit the servicers of such receivables to retain
possession of the underlying obligations. If the servicer were to sell these
obligations to another party, there is a risk that the purchaser would acquire
an interest superior to that of the holders of the related asset-backed
securities. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of asset-backed securities backed by automobile receivables may not
have a proper security interest in all of the obligations backing such
receivables. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities.
Municipal Obligations--(Asset Allocation, Equity, Bond and Municipal Funds
only) Municipal Obligations generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. While in general, Municipal
Obligations are tax exempt securities having relatively low yields as compared
to taxable, non-municipal obligations of similar quality, certain issues of
Municipal Obligations, both taxable and non-taxable, offer yields comparable and
in some cases greater than the yields available on other permissible
investments. Dividends received by shareholders of a Fund, other than a
Municipal Fund, which are attributable to interest income received by it from
Municipal Obligations generally will be subject to Federal income tax. Municipal
Obligations bear fixed, floating or variable rates of interest, which are
determined in some instances by formulas under which the Municipal Obligation's
interest rate will change directly or inversely to changes in interest rates or
an index, or multiples thereof, in many cases subject to a maximum and minimum.
Municipal Obligations the interest rates for which are determined by such
formulas are a form of derivative security. Each of these Funds, other than the
Municipal Funds, currently intends to invest no more than 25% of its respective
assets in Municipal Obligations. However, this percentage may be varied from
time to time without shareholder approval.
Investment Companies-- Each Fund may invest in securities issued by
investment companies which invest in securities in which the Fund invests. Under
the 1940 Act, the Fund's investment in such securities, subject to certain
exceptions, currently is limited to (i) 3% of the total voting stock of any one
investment company, (ii) 5% of the Fund's total assets with respect to any one
investment company and (iii) 10% of the Fund's total assets in the aggregate.
Such purchases will be made in the open market where no commission or profit to
a sponsor or dealer results from the purchase other than the customary brokers'
commissions. Investments in the securities of other investment companies may
involve duplication of advisory fees and certain other expenses.
Unregistered Notes--(Asset Allocation, Equity, Bond and Money Market Funds
only) Each of these Funds may purchase unsecured promissory notes ("Notes")
which are not readily marketable and have not been registered under the
Securities Act of 1933, as amended, provided such investments are consistent
with such Fund's goal.
Foreign Government Obligations; Securities of Supranational
Entities--(Asset Allocation, International Equity, Growth, Special
Opportunities, Bond and Money Market Funds only) Each of these Funds may invest
in obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by the Investment Adviser to be of comparable quality to the other obligations
in which such Fund may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank.
The percentage of a Fund's assets invested in securities issued by foreign
governments will vary depending on the relative yields of such securities, the
economic and financial markets of the countries in which the investments are
made and the interest rate climate of such countries.
Ratings--The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, the Investment Adviser also will evaluate
such obligations and the ability of their issuers to pay interest and principal.
Each Fund will rely on the Investment Adviser's judgment, analysis and
experience in evaluating the creditworthiness of an issuer. In this evaluation,
the Investment Adviser will take into consideration, among other things, the
issuer's financial resources, its sensitivity to economic conditions and trends,
the quality of the issuer's management and regulatory matters. It also is
possible that a rating agency might not timely change the rating on a particular
issue to reflect subsequent events. Once the rating of a security held by a Fund
has been changed, the Investment Adviser will consider all circumstances deemed
relevant in determining whether such Fund should continue to hold the security.
Taxable Money Market Instruments
Each Fund may invest, in the circumstances described under "Description of
the Funds--Management Policies," in the following types of Money Market
Instruments, each of which at the time of purchase must have or be deemed to
have under the rules of the Securities and Exchange Commission remaining
maturities of 13 months or less.
U.S. Government Securities--Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that differ in their interest rates, maturities and times of issuance. Treasury
Bills have initial maturities of one year or less; Treasury Notes have initial
maturities of one to ten years; and Treasury Bonds generally have initial
maturities of greater than ten years. Some obligations issued or guaranteed by
U.S. Government agencies and instrumentalities, for example, Government National
Mortgage Association pass-through certificates, are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the U.S. Treasury; others, such
as those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Principal
and interest may fluctuate based on generally recognized reference rates or the
relationship of rates. While the U.S. Government provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no assurance can
be given that it will always do so, because it is not so obligated by law.
Bank Obligations--(each Fund, except U.S. Government Money Market Fund)
Bank obligations include certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations of domestic banks, foreign
subsidiaries of domestic banks, foreign branches of domestic banks, and domestic
and foreign branches of foreign banks, domestic savings and loan associations
and other banking institutions. With respect to such securities issued by
foreign branches of domestic banks, foreign subsidiaries of domestic banks, and
domestic and foreign branches of foreign banks, a Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible future political and economic developments,
the possible imposition of foreign withholding taxes on interest income payable
on the securities, the possible establishment of exchange controls or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on these securities and the possible
seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by each Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the FDIC.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
Repurchase Agreements--Repurchase agreements involve the acquisition by a
Fund of an underlying debt instrument, subject to an obligation of the seller to
repurchase, and such Fund to resell, the instrument at a fixed price usually not
more than one week after its purchase. Certain costs may be incurred by a Fund
in connection with the sale of the securities if the seller does not repurchase
them in accordance with the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the securities,
realization on the securities by a Fund may be delayed or limited. Pursuant to
an order obtained from the Securities and Exchange Commission, each Fund also is
permitted to enter into overnight repurchase agreements with FNBC or an
affiliate of FNBC subject to the terms and conditions of such order.
Certain Corporate Obligations--(each Fund, except U.S. Government Money
Market Fund) Commercial paper consists of short-term, unsecured promissory notes
issued by domestic or foreign entities to finance short-term credit needs.
Floating and variable rate demand notes and bonds are obligations ordinarily
having stated maturities in excess of one year, but which permit the holder to
demand payment of principal at any time or at specified intervals. Variable rate
demand notes include variable amount master demand notes, which are obligations
that permit a Fund to invest fluctuating amounts at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the borrower.
These notes permit daily changes in the amounts borrowed. As mutually agreed
between the parties, the Fund may increase the amount under the notes at any
time up to the full amount provided by the note agreement, or decrease the
amount, and the borrower may repay up to the full amount of the note without
penalty. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus accrued interest,
at any time. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, a Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand.
Tax Exempt Money Market Instruments
Tax Exempt Participation Interests--(Municipal Funds only) A participation
interest in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements) gives the purchaser an undivided interest
in the Municipal Obligation in the proportion that such purchaser's
participation interest bears to the total principal amount of the Municipal
Obligation. These instruments may have fixed, floating or variable rates of
interest, with remaining maturities of 13 months or less. If the participation
interest is unrated, or has been given a rating below that which otherwise is
permissible for purchase by a Fund, the participation interest will be backed by
an irrevocable letter of credit or guarantee of a bank that the Board has
determined meets the prescribed quality standards for banks set forth above, or
the payment obligation otherwise will be collateralized by U.S. Government
securities. For certain participation interests, a Fund will have the right to
demand payment, on not more than seven days' notice, for all or any part of such
Fund's participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, each Fund intends to exercise its right to
demand payment only upon a default under the terms of the Municipal Obligation,
as needed to provide liquidity to meet redemptions, or to maintain or improve
the quality of its investment portfolio. No Fund will invest more than 15% (10%
in the case of the Municipal Money Market Fund) of the value of its net assets
in participation interests that do not have this demand feature, and in other
illiquid securities.
Tender Option Bonds--(Municipal Funds only) A tender option bond is a
Municipal Obligation (generally held pursuant to a custodial arrangement) having
a relatively long maturity and bearing interest at a fixed rate substantially
higher than prevailing short-term tax exempt rates, that has been coupled with
the agreement of a third party, such as a bank, broker-dealer or other financial
institution, pursuant to which such institution grants the security holders the
option, at periodic intervals, to tender their securities to the institution and
receive the face value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the difference between the
Municipal Obligation's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period, that
would cause the securities, coupled with the tender option, to trade at par on
the date of such determination. Thus, after payment of this fee, the security
holder effectively holds a demand obligation that bears interest at the
prevailing short-term tax exempt rate. The Investment Adviser, on behalf of a
Fund, will consider on an ongoing basis the creditworthiness of the issuer of
the underlying Municipal Obligation, of any custodian and of the third party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in payment
of principal or interest on the underlying Municipal Obligations and for other
reasons. No Fund will invest more than 15% (10% in the case of the Money Market
Funds) of the value of its net assets in securities that are illiquid, which
would include tender option bonds as to which it cannot exercise the tender
feature on not more than seven days' notice if there is no secondary market
available for these obligations.
Stand-By Commitments--(Municipal Funds only) Each Municipal Fund may
acquire "stand-by commitments" with respect to Municipal Obligations held in its
portfolio. Under a stand-by commitment, the Fund obligates a broker, dealer or
bank to repurchase, at the Fund's option, specified securities at a specified
price and, in this respect, stand-by commitments are comparable to put options.
The exercise of a stand-by commitment therefore is subject to the ability of the
seller to make payment on demand. Each Municipal Fund will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. Each Municipal Fund may pay
for stand-by commitments if such action is deemed necessary, thus increasing to
a degree the cost of the underlying Municipal Obligation and similarly
decreasing such security's yield to investors.
Illiquid Securities
Each Fund may invest up to 15% (10% in the case of the Money Market Funds)
of the value of its net assets in securities as to which a liquid trading market
does not exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain options traded in
the over-the-counter market and securities used to cover such options. As to
these securities, a Fund is subject to a risk that should such Fund desire to
sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of such Fund's net assets could be
adversely affected.
INVESTMENT TECHNIQUES
Leverage Through Borrowing--(Asset Allocation, Equity, Bond and, to a
limited extent, Money Market Funds only) Borrowing for investment purposes is
known as leveraging and generally will be unsecured, except to the extent a Fund
enters into reverse repurchase agreements described below. The Money Market Fund
may borrow for investment purposes only through entering into reverse repurchase
agreements. Leveraging will exaggerate the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money borrowed
for leveraging will be subject to interest costs that may or may not be
recovered by appreciation of the securities purchased; in certain cases,
interest costs may exceed the return received on the securities purchased.
Among the forms of borrowing in which a Fund may engage is the entry into
reverse repurchase agreements with banks, brokers or dealers. These transactions
involve the transfer by the Fund of an underlying debt instrument in return for
cash proceeds based on a percentage of the value of the security. The Fund
retains the right to receive interest and principal payments on the security. At
an agreed upon future date, the Fund repurchases the security at principal, plus
accrued interest. In certain types of agreements, there is no agreed upon
repurchase date and interest payments are calculated daily, often based on the
prevailing overnight repurchase rate.
Short-Selling--(Asset Allocation, Equity and Bond Funds only) Each of these
Funds may make short sales, which are transactions in which the Fund sells a
security it does not own in anticipation of a decline in the market value of
that security. To complete such a transaction, the Fund must borrow the security
to make delivery to the buyer. The Fund then is obligated to replace the
security borrowed by purchasing it at the market price at the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the Fund. The Fund will incur a loss as a result of the
short sale if the price of the security increases between the date of the short
sale and the date on which the Fund replaces the borrowed security. The Fund
will realize a gain if the security declines in price between those dates.
Each Fund may purchase call options to provide a hedge against an increase in
the price of a security sold short by such Fund. When a Fund purchases a call
option it has to pay a premium to the person writing the option and a commission
to the broker selling the option. If the option is exercised by the Fund, the
premium and the commission paid may be more than the amount of the brokerage
commission charged if the security were to be purchased directly. See "Options
Transactions" below.
It is expected that the frequency of short sales on behalf of each Fund will
vary substantially under different market conditions, and it is not intended
that any specified portion of a Fund's assets, as a matter of practice, will be
invested in short sales. However, no securities will be sold short if, after
effect is given to any such short sale, the total market value of all securities
sold short would exceed 25% of the value of the Fund's net assets. A Fund will
not sell short the securities of any single issuer listed on a national
securities exchange to the extent of more than 2% of the value of such Fund's
net assets and will not sell short the securities of any class of an issuer to
the extent, at the time of transaction, of more than 2% of the outstanding
securities of that class.
In addition to the short sales discussed above, each Fund may make short
sales "against the box," a transaction in which a Fund enters into a short sale
of a security which such Fund owns. The proceeds of the short sale will be held
by a broker until the settlement date at which time the Fund delivers the
security to close the short position. The Fund receives the net proceeds from
the short sale. At no time will a Fund have more than 15% of the value of its
net assets in deposits on short sales against the box.
Options Transactions--(Asset Allocation, Equity and Bond Funds only) Each
of these Funds is permitted to invest up to 5% of its total assets, represented
by the premium paid, in the purchase of call and put options. Options
transactions are a form of derivative security.
Each of these Funds is permitted to purchase call and put options in
respect of specific securities (or groups or "baskets" of specific securities)
in which the Fund may invest. Each Fund may write (i.e. sell) covered call
option contracts on securities owned by the Fund not exceeding 20% of the market
value of its net assets at the time such option contracts are written. Each Fund
also may purchase call options to enter into closing purchase transactions. Each
Fund also may write covered put option contracts to the extent of 20% of the
value of its net assets at the time such option contracts are written. A call
option gives the purchaser of the option the right to buy, and obligates the
writer to sell, the underlying security at the exercise price at any time during
the option period. Conversely, a put option gives the purchaser of the option
the right to sell, and obligates the writer to buy, the underlying security at
the exercise price at any time during the option period. A covered put option
sold by a Fund exposes the Fund during the term of the option to a decline in
price of the underlying security or securities. A put option sold by a Fund is
covered when, among other things, cash or liquid securities are placed in a
segregated account with the Fund's custodian to fulfill the obligation
undertaken.
Each of these Funds also may purchase and sell call and put options on
foreign currency for the purpose of hedging against changes in future currency
exchange rates. Call options convey the right to buy the underlying currency at
a price which is expected to be lower than the spot price of the currency at the
time the option expires. Put options convey the right to sell the underlying
currency at a price which is anticipated to be higher than the spot price of the
currency at the time the option expires.
Each of these Funds also may purchase cash-settled options on interest rate
swaps, interest rate swaps denominated in foreign currency and equity index
swaps. See "Interest Rate and Equity Index Swaps" below. A cash-settled option
on a swap gives the purchaser the right, but not the obligation, in return for
the premium paid, to receive an amount of cash equal to the value of the
underlying swap as of the exercise date. These options typically are purchased
in privately negotiated transactions from financial institutions, including
securities brokerage firms.
Each of these Funds may purchase and sell call and put options on stock
indexes listed on U.S. securities exchanges or traded in the over-the-counter
market. A stock index fluctuates with changes in the market values of the stocks
included in the index. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular stock,
whether a Fund will realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of stock prices in the
stock market generally or, in the case of certain indexes, in an industry or
market segment, rather than movements in the price of a particular stock.
Successful use by a Fund of options will be subject to the Investment
Adviser's ability to predict correctly movements in the direction of individual
stocks, the stock market generally, foreign currencies or interest rates. To the
extent the Investment Adviser's predictions are incorrect, the Fund may incur
losses which could adversely affect the value of a shareholder's investment.
Futures Contracts and Options on Futures Contracts--(Asset Allocation,
Equity, Bond and Municipal Bond Funds only) Each of these Funds may enter into
stock index futures contracts, interest rate futures contracts and currency
futures contracts, and options with respect thereto. See "Options Transactions"
above. These transactions will be entered into as a substitute for comparable
market positions in the underlying securities or for hedging purposes. Although
none of these Funds would be a commodity pool, each would be subject to rules of
the CFTC limiting the extent to which it could engage in these transactions.
Futures and options transactions are a form of derivative security.
Each of these Funds' commodities transactions must constitute bona fide
hedging or other permissible transactions pursuant to regulations promulgated by
the CFTC. In addition, a Fund may not engage in such transactions if the sum of
the amount of initial margin deposits and premiums paid for unexpired commodity
options, other than for bona fide hedging transactions, would exceed 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts it has entered into; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%. To the
extent a Fund engages in the use of futures and options on futures for other
than bona fide hedging purposes, the Fund may be subject to additional risk.
Engaging in these transactions involves risk of loss to a Fund which could
adversely affect the value of a shareholder's investment. Although each of these
Funds intends to purchase or sell futures contracts 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. Many futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during the
trading day. Futures contract prices could move to the limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Fund to
substantial losses. In addition, engaging in futures transactions in foreign
markets may involve greater risks than trading in domestic exchanges.
Successful use of futures by a Fund also is subject to the Investment
Adviser's ability to predict correctly movements in the direction of the market,
interest rates or foreign currencies and, to the extent the transaction is
entered into for hedging purposes, to ascertain the appropriate correlation
between the transaction being hedged and the price movements of the futures
contract. For example, if a Fund has hedged against the possibility of a decline
in the market adversely affecting the value of securities held in its portfolio
and prices increase instead, the Fund will lose part or all of the benefit of
the increased value of securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. Such sales of securities may, but will not
necessarily, be at increased prices which reflect the rising market. A Fund may
have to sell securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, each of these Funds may be required to segregate cash or
high quality money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of limiting the
Fund's ability otherwise to invest those assets.
Interest Rate and Equity Index Swaps--(Asset Allocation, Equity and Bond
Funds only) Each of these Funds may enter into interest rate swaps and equity
index swaps, to the extent described under "Description of the Funds--Management
Policies," in pursuit of their respective investment objectives. Interest rate
swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest (for example, an exchange of
floating-rate payments for fixed-rate payments). Equity index swaps involve the
exchange by a Fund with another party of cash flows based upon the performance
of an index or a portion of an index which usually includes dividends. In each
case, the exchange commitments can involve payments to be made in the same
currency or in different currencies. Swaps are a form of derivative security.
Each of these Funds usually will enter into swaps on a net basis. In so
doing, the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments. If a Fund
enters into a swap, it would maintain a segregated account in the full amount
accrued on a daily basis of the Fund's obligations with respect to the swap.
Each of these Funds will enter into swap transactions with counterparties only
if: (i) for transactions with maturities under one year, such counterparty has
outstanding short-term paper rated at least A-1 by S&P, Prime-1 by Moody's, F-1
by Fitch or Duff-1 by Duff, or (ii) for transactions with maturities greater
than one year, the counterparty has outstanding debt securities rated at least
Aa by Moody's or AA by S&P, Fitch or Duff. If there is a default by the other
party to such a transaction, the Fund will have contractual remedies pursuant to
the agreements related to the transaction.
The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
security transactions. There is no limit on the amount of swap transactions that
may be entered into by a Fund. These transactions do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps is limited to the net amount of payments that a Fund
is contractually obligated to make. If the other party to a swap defaults, the
relevant Fund's risk of loss consists of the net amount of payments that such
Fund contractually is entitled to receive.
Foreign Currency Transactions--(Asset Allocation, Growth, International
Equity, Special Opportunities and International Bond Funds only) Each of these
Funds may engage in currency exchange transactions either on a spot (i.e., cash)
basis at the rate prevailing in the currency exchange market, or through
entering into forward contracts to purchase or sell currencies. A forward
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which must be more than two days from the date of the
contract, at a price set at the time of the contract. These contracts are
entered into in the interbank market conducted directly between currency traders
(typically commercial banks or other financial institutions) and their
customers.
Each of these Funds also may combine forward currency exchange contracts with
investments in securities denominated in other currencies.
Each of these Funds also may maintain short positions in forward currency
exchange transactions, which would involve it agreeing to exchange an amount of
a currency it did not currently own for another currency at a future date in
anticipation of a decline in the value of the currency sold relative to the
currency such Fund contracted to receive in the exchange.
Future Developments--(Asset Allocation, Equity, Bond and Municipal Bond
Funds only) Each of these Funds may take advantage of opportunities in the area
of options and futures contracts, options on futures contracts and any other
derivative investments which are not presently contemplated for use by a Fund or
which are not currently available but which may be developed, to the extent such
opportunities are both consistent with a Fund's investment objective and legally
permissible for such Fund. Before entering into such transactions or making any
such investment, the Fund will provide appropriate disclosure in its prospectus.
Lending Portfolio Securities--From time to time, each Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33- 1/3% of the value of a Fund's total assets. In
connection with such loans, a Fund will receive collateral consisting of cash,
U.S. Government securities or, except in the case of the U.S. Government Money
Market Fund, irrevocable letters of credit which will be maintained at all times
in an amount equal to at least 100% of the current market value of the loaned
securities. Each Fund can increase its income through the investment of such
collateral. A Fund continues to be entitled to payments in amounts equal to the
interest, dividends and other distributions payable on the loaned security and
receives interest on the amount of the loan. Such loans will be terminable at
any time upon specified notice. A Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction breaches
its agreement with such Fund.
Forward Commitments--Each Fund may purchase securities on a when-issued or
forward commitment basis, which means that the price is fixed at the time of
commitment, but delivery and payment ordinarily take place a number of days
after the date of the commitment to purchase. A Fund will make commitments to
purchase such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities before the settlement date if
it is deemed advisable. The Fund will not accrue income in respect of a security
purchased on a forward commitment basis prior to its stated delivery date.
Securities purchased on a when-issued or forward commitment basis and
certain other securities held in a Fund's portfolio are subject to changes in
value (both generally changing in the same way, i.e., appreciating when interest
rates decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Securities purchased on a
when-issued or forward commitment basis may expose a Fund to risk because they
may experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued or forward commitment basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself. A
segregated account of each Fund consisting of cash or U.S. Government securities
or other high quality liquid debt securities of the type in which the Fund
invests at least equal at all times to the amount of the when-issued or forward
commitments will be established and maintained at the Fund's custodian bank.
Purchasing securities on a forward commitment basis when a Fund is fully or
almost fully invested may result in greater potential fluctuation in the value
of such Fund's net assets and its net asset value per share.
Borrowing Money--As a fundamental policy, each Fund is permitted to borrow
to the extent permitted under the 1940 Act. However, each of the Municipal Bond
Fund, Intermediate Municipal Bond Fund, Municipal Money Market Fund and U.S.
Government Money Market Fund currently intends to borrow money only for
temporary or emergency (not leveraging) purposes, in an amount up to 15% of the
value of its total assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of such Fund's total
assets, the Fund will not make any additional investments.
<PAGE>
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THE PRAIRIE FUNDS
CLASS A, CLASS B AND CLASS I SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
APRIL 11, 1996
- ------------------------------------------------------------------------------
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus for 14 separate funds (each, a "Fund"), dated April 11, 1996, as it
may be revised from time to time. To obtain a copy of the Prospectus, please
write to the Prairie Funds at Three First National Plaza, Chicago, Illinois
60670, or call toll free 1-800-370-9446.
First Chicago Investment Management Company (the
"Investment Adviser" or "FCIMCO") serves as each Fund's
investment adviser and administrator.
Concord Financial Group, Inc. (the "Distributor")
serves as the distributor of the Funds' shares.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies............................ B-2
Management of the Funds.................................................. B-23
Management Arrangements.................................................. B-25
Purchase of Shares....................................................... B-34
Distribution Plans and Shareholder Services Plans........................ B-36
Redemption of Shares..................................................... B-40
Determination of Net Asset Value......................................... B-40
Portfolio Transactions................................................... B-43
Dividends, Distributions and Taxes....................................... B-45
Yield and Performance Information..........................................B-48
Information About the Funds................................................B-53
Counsel and Independent Auditors...........................................B-63
Appendix...................................................................B-64
Financial Statements.......................................................B-73
Report of Independent Auditors.............................................B-
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Prospectus entitled "Description of the Funds" and
"Appendix."
General
The Prairie Funds are divided into five general fund types: Asset
Allocation (Managed Assets Income Fund and Managed Assets Fund); Equity (Equity
Income Fund, Growth Fund, Special Opportunities Fund and International Equity
Fund); Bond (Bond Fund, Intermediate Bond Fund and International Bond Fund);
Municipal Bond (Municipal Bond Fund and Intermediate Municipal Bond Fund); and
Money Market (U.S. Government Money Market Fund, Money Market Fund and Municipal
Money Market Fund). Each of the Intermediate Bond Fund and Municipal Bond Fund
is a separate open-end, management investment company organized under the name
Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc.,
respectively. The remaining Funds are series of Prairie Funds (the "Trust"), an
open-end, management investment company.
Portfolio Securities
Bank Obligations. (Each Fund, except the U.S. Government Money Market Fund)
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be members of
the Federal Reserve System and to have their deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks organized under state
law are supervised and examined by state banking authorities but are members of
the Federal Reserve System only if they elect to join. In addition, state banks
whose certificates of deposit ("CDs") may be purchased by each Fund are insured
by the FDIC (although such insurance may not be of material benefit to a Fund,
depending on the principal amount of the CDs of each bank held by such Fund) and
are subject to Federal examination and to a substantial body of Federal law and
regulation. As a result of Federal or state laws and regulations, domestic
branches of domestic banks whose CDs may be purchased by the Fund generally are
required, among other things, to maintain specified levels of reserves, are
limited in the amounts which they can loan to a single borrower and are subject
to other regulation designed to promote financial soundness. However, not all of
such laws and regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries of
domestic banks and domestic and foreign branches of foreign banks, such as CDs
and time deposits ("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms of a specific
obligation and governmental regulation. Such obligations are subject to
different risks than are those of domestic banks. These risks include foreign
economic and political developments, foreign governmental restrictions that may
adversely affect payment of principal and interest on the obligations, foreign
exchange controls and foreign withholding and other taxes on interest income.
These foreign branches and subsidiaries are not necessarily subject to the same
or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial record keeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a foreign
bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal or state regulation
as well as governmental action in the country in which the foreign bank has its
head office. A domestic branch of a foreign bank with assets in excess of $1
billion may be subject to reserve requirements imposed by the Federal Reserve
System or by the state in which the branch is located if the branch is licensed
in that state.
In addition, Federal branches licensed by the Comptroller of the Currency
and branches licensed by certain states ("State Branches") may be required to:
(1) pledge to the regulator, by depositing assets with a designated bank within
the state, a certain percentage of their assets as fixed from time to time by
the appropriate regulatory authority; and (2) maintain assets within the state
in an amount equal to a specified percentage of the aggregate amount of
liabilities of the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State Branches generally
must be insured by the FDIC if such branches take deposits of less than
$100,000.
In view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, the Investment Adviser carefully evaluates such investments on a
case-by-case basis.
Repurchase Agreements. The Funds' custodian or sub-custodian will have
custody of, and will hold in a segregated account, securities acquired by a Fund
under a repurchase agreement. Repurchase agreements are considered by the staff
of the Securities and Exchange Commission to be loans by the Fund. In an attempt
to reduce the risk of incurring a loss on a repurchase agreement, each Fund will
enter into repurchase agreements only with domestic banks with total assets in
excess of one billion dollars, or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to securities of
the type in which the Fund may invest, and will require that additional
securities be deposited with it if the value of the securities purchased should
decrease below the resale price. The Investment Adviser will monitor on an
ongoing basis the value of the collateral to assure that it always equals or
exceeds the repurchase price. The Fund will consider on an ongoing basis the
creditworthiness of the institutions with which the Fund enters into repurchase
agreements.
Commercial Paper and Other Short-Term Corporate Obligations. (Each Fund,
except the U.S. Government Money Market Fund) Variable rate demand notes include
variable amount master demand notes, which are obligations that permit a Fund to
invest fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. These notes permit
daily changes in the amounts borrowed. As mutually agreed between the parties,
the Fund may increase the amount under the notes at any time up to the full
amount provided by the note agreement, or decrease the amount, and the borrower
may repay up to the full amount of the note without penalty. Because these
obligations are direct lending arrangements between the lender and borrower, it
is not contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value, plus accrued interest, at any time.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, a Fund's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. In connection
with floating and variable rate demand obligations, the Investment Adviser will
consider, on an ongoing basis, earning power, cash flow and other liquidity
ratios of the borrower, and the borrower's ability to pay principal and interest
on demand. Such obligations frequently are not rated by credit rating agencies,
and a Fund may invest in them only if at the time of an investment the borrower
meets the criteria set forth in the Prospectus for other commercial paper
issuers.
Mortgage-Related Securities (Asset Allocation, Equity and Bond
Funds only)
Government Agency Securities. Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the department of Housing and Urban
Development. GNMA certificates also are supported by the authority of GNMA to
borrow funds from the U.S. Treasury to make payments under its guarantee.
Government Related Securities. Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the United States. The FNMA is a government-sponsored organization
owned entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also
known as "Freddie Macs" or "PCs"). The FHLMC is a corporate instrumentality of
the United States created pursuant to an Act of Congress, which is owned
entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the
United States or by any Federal Home Loan Bank and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by the
FHLMC. The FHLMC guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. When the FHLMC does not
guarantee timely payment of principal, FHLMC may remit the amount due on account
of its guarantee of ultimate payment of principal at any time after default on
an underlying mortgage, but in no event later than one year after it becomes
payable.
Municipal Obligations. (Asset Allocation, Equity, Bond and Municipal Funds
only) Municipal Obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the issuer's pledge of
its faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds and generally do not carry
the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities. Certain Municipal
Obligations are subject to redemption at a date earlier than their stated
maturity pursuant to call options, which may be separated from the related
Municipal Obligation and purchased and sold separately. Each of these Funds will
invest in Municipal Obligations, the ratings of which correspond with the
ratings of other permissible Fund investments.
For the purpose of diversification under the Investment Company Act of
1940, as amended (the "1940 Act"), the identification of the issuer of Municipal
Obligations depends on the terms and conditions of the security. When the assets
and revenues of an agency, authority, instrumentality or other political
subdivision are separate from those of the government creating the subdivision
and the security is backed only by the assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the case
of an industrial development bond, if that bond is backed only by the assets and
revenues of the non-governmental user, then such non-governmental user would be
deemed to be the sole issuer. If, however, in either case, the creating
government or some other entity guarantees a security, such a guaranty would be
considered a separate security and will be treated as an issue of such
government or other entity.
The yields on Municipal Obligations are dependent on a variety of factors,
including general economic and monetary conditions, money market factors,
conditions in the Municipal Obligations market, size of a particular offering,
maturity of the obligation, and rating of the issue. The imposition of the
Fund's advisory and administration fees, as well as other operating expenses,
will have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease obligations") have special risks not ordinarily associated
with Municipal Obligations. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged, a lease obligation ordinarily is backed by the municipality's covenant
to budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non- appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Although "non-appropriation" lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure
might prove difficult. The Municipal Money Market Fund will seek to minimize
these risks by investing only in those lease obligations that (1) are rated in
one of the two highest categories for debt obligations by at least two
nationally recognized statistical rating organizations (or one rating
organization if the lease obligation was rated by only one such organization);
or (2) if unrated, are purchased principally from the issuer or domestic banks
or other responsible third parties, in each case only if the seller shall have
entered into an agreement with the Municipal Money Market Fund providing the
seller or other responsible third party will either remarket or repurchase the
lease obligations within a short period after demand by the Fund. With respect
to the Intermediate Municipal Bond Fund and Municipal Bond Fund, the Board has
established guidelines for the Investment Adviser to determine the liquidity and
appropriate valuation of lease obligations based on factors which include: (1)
the frequency of trades and quotes for the lease obligation or similar
securities; (2) the number of dealers willing to purchase or sell the lease
obligation or similar securities and the number of other potential buyers; (3)
the willingness of dealers to undertake to make a market in the security or
similar securities; and (4) the nature of the marketplace trades, including the
time needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer. Not more than 15% (10% in the case of the Municipal Money
Market Fund) of the value of the Fund's net assets will be invested in lease
obligations that are illiquid and in other illiquid securities. See "Investment
Restrictions" below.
Each of the Intermediate Municipal Bond Fund and Municipal Bond Fund will
purchase tender option bonds only when it is satisfied that the custodial and
tender option arrangements, including the fee payment arrangements, will not
adversely affect the tax exempt status of the underlying Municipal Obligations
and that payment of any tender fees will not have the effect of creating taxable
income for the Fund. Based on the tender option bond agreement, each such Fund
expects to be able to value the tender option bond at par; however, the value of
the instrument will be monitored to assure that is valued at fair value.
The Municipal Money Market Fund will not purchase tender option bonds
unless (a) the demand feature applicable thereto is exercisable by the Fund
within 13 months of the date of such purchase upon no more than 30 days' notice
and thereafter is exercisable by the Fund no less frequently than annually upon
no more than 30 days' notice and (b) at the time of such purchase, the
Investment Adviser reasonably expects (i) based upon its assessment of current
and historical interest rate trends, that prevailing short-term tax exempt rates
will not exceed the stated interest rate on the underlying Municipal Obligations
at the time of the next tender option to terminate the tender option would not
occur prior to the time of the next tender opportunity. At the time of each
tender opportunity, the Fund will exercise the tender option with respect to any
tender option bonds unless the Investment Adviser reasonably expects, (x) based
upon its assessment of current and historical interest rate trends, that
prevailing short-term tax exempt rates will not exceed the stated interest rate
on the underlying Municipal Obligations at the time of the next tender fee
adjustment, and (y) that the circumstances which might entitle the grantor of a
tender option to terminate the tender option would not occur prior to the time
of the next tender opportunity. The Municipal Money Market Fund will exercise
the tender feature with respect to tender option bonds, or otherwise dispose of
its tender option bonds, prior to the time the tender option is scheduled to
expire pursuant to the terms of the agreement under which the tender option is
granted. The Municipal Money Market Fund otherwise will comply with the
provisions of Rule 2a-7 in connection with the purchase of tender option bonds,
including, without limitation, the requisite determination by the Board that the
tender option bonds in question meet the quality standards described in Rule
2a-7, which, in the case of a tender option bond subject to a conditional demand
feature, would include a determination that the security has received both the
required short-term and long-term quality rating or is determined to be of
comparable quality. In the event of a default of the Municipal Obligation
underlying a tender option bond, or the termination of the tender option
agreement, the Municipal Money Market Fund would look to the maturity date of
the underlying security for purposes of compliance with Rule 2a-7 and, if its
remaining maturity was greater than 13 months, the Fund would sell the security
as soon as would be practicable. The Municipal Money Market Fund will purchase
tender option bonds only when it is satisfied that the custodial and tender
option arrangements, including the fee payment arrangements, will not adversely
affect the tax exempt status of the underlying Municipal Obligations and that
payment of any tender fees will not have the effect of creating taxable income
for the Fund. Based on the tender option bond agreement, the Municipal Money
Market Fund expects to be able to value the tender option bond at par; however,
the value of the instrument will be monitored to assure that it is valued at
fair value.
If, subsequent to its purchase by the Municipal Money Market Fund, (a) an
issue of rated Municipal Obligations ceases to be rated in the highest rating
category by at least two ratings organizations (or one rating organization if
the instrument was rated by only one such organization), or the Board determines
that it is no longer of comparable quality; or (b) the Investment Adviser
becomes aware that any portfolio security not so highly rated or any unrated
security has been given a rating by any rating organization below the rating
organization's second highest rating category, the Board will reassess promptly
whether such security presents minimal credit risk and will cause the Fund to
take such action as it determines is in the best interest of the Fund and its
shareholders, provided that the reassessment required by clause (b) is not
required if the portfolio security is disposed of or matures within five
business days of the Investment Adviser becoming aware of the new rating and the
Board is subsequently notified of the Investment Adviser's actions.
To the extent that the ratings given by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P") or Fitch Investors Service,
L.P. ("Fitch") for Municipal Obligations may change as a result of changes in
such organizations or their rating systems, the Municipal Funds will attempt to
use comparable ratings as standards for its investments in accordance with the
investment policies contained in the Prospectus and this Statement of Additional
Information. The ratings of Moody's, S&P and Fitch represent their opinions as
to the quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and are
not absolute standards of quality. Although these ratings may be an initial
criterion for selection of portfolio investments, the Investment Adviser will
also evaluate these securities and the creditworthiness of the issuers of such
securities.
For the Municipal Bond Fund, the average distribution of investments (at
value) in Municipal Obligations by ratings for the fiscal year ended December
31, 1995, computed on a monthly basis, was as follows:
Fitch or Moody's or S&P Percentage of Value
AAA Aaa AAA 50%
AA Aa AA 14%
A A A 20%
BBB Baa BBB 16%
---
100.0%
Convertible Securities. (Asset Allocation, Equity and Bond Funds only) In
general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common stock if
the security is converted). As a fixed-income security, the market value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not readily
marketable, the Fund will endeavor to obtain the right to registration at the
expense of the issuer. Generally, there will be a lapse of time between a Fund's
decision to sell any such security and the registration of the security
permitting sale. During any such period, the price of the securities will be
subject to market fluctuations. However, where a substantial market of qualified
institutional buyers develops for certain unregistered securities purchased by a
Fund pursuant to Rule 144A under the Securities Act of 1933, as amended, such
Fund intends to treat them as liquid securities in accordance with procedures
approved by the Board. Because it is not possible to predict with assurance how
the market for restricted securities pursuant to Rule 144A will develop, the
Board has directed the Investment Adviser to monitor carefully each Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, a Fund's investing in
such securities may have the effect of increasing the level of illiquidity in
such Fund during such period.
Management Policies
Leveraging. (Asset Allocation, Equity, Bond and, to a limited extent, Money
Market Funds only) Each of these Funds may borrow for investment purposes. The
Money Market Fund may borrow for investment purposes only through entering into
reverse repurchase agreements. The 1940 Act requires the Fund to maintain
continuous asset coverage (that is, total assets including borrowings, less
liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300%
asset coverage should decline as a result of market fluctuations or other
reasons, the Fund may be required to sell some of its portfolio holdings within
three days to reduce the debt and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities at
that time. The Fund also may be required to maintain minimum average balances in
connection with such borrowings or to pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.
With respect to repurchase agreements, the Fund will maintain in a
segregated custodial account cash or U.S. Government securities or other high
quality liquid debt securities at least equal to the aggregate amount of its
reverse repurchase obligations, plus accrued interest, in certain cases, in
accordance with releases promulgated by the Securities and Exchange Commission.
The Securities and Exchange Commission views reverse repurchase transactions as
collateralized borrowings by the Fund. These agreements, which are treated as if
reestablished each day, are expected to provide the Fund with a flexible
borrowing tool.
Short-Selling. (Asset Allocation, Equity and Bond Funds only) Each of these
Funds may engage in short-selling. Until the Fund replaces a borrowed security
in connection with a short sale, the Fund will: (a) maintain daily a segregated
account, containing cash, cash equivalents or U.S. Government securities, at
such a level that the amount deposited in the account plus the amount deposited
with the broker as collateral always equals the current value of the security
sold short; or (b) otherwise cover its short position.
Options Transactions. (Asset Allocation, Equity and Bond Funds only) Each
of these Funds may engage in options transactions, such as purchasing or writing
covered call or put options. The principal reason for writing covered call
options is to realize, through the receipt of premiums, a greater return than
would be realized on a Fund's securities alone. In return for a premium, the
writer of a covered call option forfeits the right to any appreciation in the
value of the underlying security above the strike price for the life of the
option (or until a closing purchase transaction can be effected). Nevertheless,
the call writer retains the risk of a decline in the price of the underlying
security. Similarly, the principal reason for writing covered put options is to
realize income in the form of premiums. The writer of a covered put option
accepts the risk of a decline in the price of the underlying security. The size
of the premiums that a Fund may receive may be adversely affected as new or
existing institutions, including other investment companies, engage in or
increase their option- writing activities.
Options written ordinarily will have expiration dates between one and nine
months from the date written. The exercise price of the options may be below,
equal to or above the market values of the underlying securities at the time the
options are written. In the case of call options, these exercise prices are
referred to as "in-the-money," "at-the-money" and "out-of-the- money,"
respectively. Each Fund may write (a) in-the-money call options when the
Investment Adviser expects that the price of the underlying security will remain
stable or decline moderately during the option period, (b) at-the-money call
options when the Investment Adviser expects that the price of the underlying
security will remain stable or advance moderately during the option period and
(c) out-of-the-money call options when the Investment Adviser expects that the
premiums received from writing the call option plus the appreciation in market
price of the underlying security up to the exercise price will be greater than
the appreciation in the price of the underlying security alone. In these
circumstances, if the market price of the underlying security declines and the
security is sold at this lower price, the amount of any realized loss will be
offset wholly or in part by the premium received. Out-of-the-money, at-the-money
and in-the-money put options (the reverse of call options as to the relation of
exercise price to market price) may be utilized in the same market environments
that such call options are used in equivalent transactions.
So long as a Fund's obligation as the writer of an option continues, such
Fund may be assigned an exercise notice by the broker-dealer through which the
option was sold, requiring the Fund to deliver, in the case of a call, or take
delivery of, in the case of a put, the underlying security against payment of
the exercise price. This obligation terminates when the option expires or a Fund
effects a closing purchase transaction. A Fund can no longer effect a closing
purchase transaction with respect to an option once it has been assigned an
exercise notice.
While it may choose to do otherwise, each Fund generally will purchase or
write only those options for which the Investment Adviser believes there is an
active secondary market so as to facilitate closing transactions. There is no
assurance that sufficient trading interest to create a liquid secondary market
on a securities exchange will exist for any particular option or at any
particular time, and for some options no such secondary market may exist. A
liquid secondary market in an option may cease to exist for a variety of
reasons. In the past, for example, higher than anticipated trading activity or
order flow, or other unforeseen events, at times have rendered certain clearing
facilities inadequate and resulted in the institution of special procedures,
such as trading rotations, restrictions on certain types of orders or trading
halts or suspensions in one or more options. There can be no assurance that
similar events, or events that otherwise may interfere with the timely execution
of customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. If as a covered call option
writer a Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise or it otherwise
covers its position.
Stock Index Options. (Asset Allocation and Equity Funds only) Each of these
Funds may purchase and write put and call options on stock indexes listed on a
securities exchange or traded in the over-the-counter market. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
Options on stock indexes are similar to options on stock except that (a)
the expiration cycles of stock index options are generally monthly, while those
of stock options are currently quarterly, and (b) the delivery requirements are
different. Instead of giving the right to take or make delivery of a stock at a
specified price, an option on a stock index gives the holder the right to
receive a cash "exercise settlement amount" equal to (i) the amount, if any, by
which the fixed exercise price of the option exceeds (in the case of a put) or
is less than (in the case of a call) the closing value of the underlying index
on the date of exercise, multiplied by (ii) a fixed "index multiplier." Receipt
of this cash amount will depend upon the closing level of the stock index upon
which the option is based being greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option. The amount of cash
received will be equal to such difference between the closing price of the index
and the exercise price of the option expressed in dollars times a specified
multiple. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may offset its position in
stock index options prior to expiration by entering into a closing transaction
on an exchange or it may let the option expire unexercised.
Futures Contracts and Options on Futures Contracts. (Asset Allocation,
Equity, Bond and Municipal Bond Funds Only) Each of these Funds may trade
futures contracts and options on futures contracts in U.S. domestic markets,
such as the Chicago Board of Trade and the International Monetary Market of the
Chicago Mercantile Exchange, or, to the extent permitted under applicable law,
on exchanges located outside the United States, such as the London International
Financial Futures Exchange and the Sydney Futures Exchange Limited. Foreign
markets may offer advantages such as trading in commodities that are not
currently traded in the United States or arbitrage possibilities not available
in the United States.
Initially, when purchasing or selling futures contracts a Fund will be
required to deposit with the Fund's custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index or securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Fund may elect to close the position by taking an opposite
position, at the then prevailing price, which will operate to terminate the
Fund's existing position in the contract.
Although each of these Funds intends to purchase or sell futures contracts
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. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting a Fund to
substantial losses. If it is not possible, or the Fund determines not, to close
a futures position in anticipation of adverse price movements, the Fund will be
required to make daily cash payments of variation margin. In such circumstances,
an increase in the value of the portion of the portfolio being hedged, if any,
may offset partially or completely losses on the futures contract. However, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide an
offset to losses on the futures contract.
In addition, 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
owned by the Fund 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 that, for example, losses on the portfolio securities may be
in excess of gains on the futures contract or losses on the futures contract may
be in excess of gains on the portfolio securities that were the subject of the
hedge. In futures contracts based on indexes, the risk of imperfect correlation
increases as the composition of a Fund's investments 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 futures contracts, the Fund may buy or sell futures contracts in a greater or
lesser dollar amount than the dollar amount of the securities being hedged if
the historical volatility of the futures contract has been less or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect a Fund's net investment results if market movements are not as
anticipated when the hedge is established.
Upon exercise of an option, the writer of the option will deliver to the
holder of the option the futures position and the accumulated balance in the
writer's futures margin account, which represents the amount by which the market
price of the futures contract exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of options on futures contracts is
limited to the premium paid for the option (plus transaction costs). Because the
value of the option is fixed at the time of sale, there are no daily cash
payments to reflect changes in the value of the underlying contract; however,
the value of the option does change daily and that change would be reflected in
the net asset value of each Fund.
Foreign Currency Transactions. (Asset Allocation, Growth, International
Equity, Special Opportunities and International Bond Funds only) If a Fund
enters into a currency transaction, it will deposit, if so required by
applicable regulations, with its custodian cash or readily marketable securities
in a segregated account of the Fund in an amount at least equal to the value of
the Fund's total assets committed to the consummation of the forward contract.
If the value of the securities placed in the segregated account declines,
additional cash or securities will be placed in the account so that the value of
the account will equal the amount of the Fund's commitment with respect to the
contract.
At or before the maturity of a forward contract, the Fund either may sell a
security and make delivery of the currency, or retain the security and offset
its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Fund will obtain, on the same maturity date, the
same amount of the currency which it is obligated to deliver. If the Fund
retains the portfolio security and engages in an offsetting transaction, such
Fund, at the time of execution of the offsetting transaction, will incur a gain
or loss to the extent movement has occurred in forward contract prices. Should
forward prices decline during the period between the Fund's entering into a
forward contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will realize a
gain to the extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Fund will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The cost to each of these Funds of engaging in currency transactions varies
with factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because transactions in currency
exchange usually are conducted on a principal basis, no fees or commissions are
involved. The use of forward currency exchange contracts does not eliminate
fluctuations in the underlying prices of the securities, but it does establish a
rate of exchange that can be achieved in the future. If a devaluation generally
is anticipated, a Fund may not be able to contract to sell the currency at a
price above the devaluation level it anticipates. The requirements for
qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), may cause the Fund to restrict the degree to
which each Fund engages in currency transactions. See "Dividends, Distributions
and Taxes."
Lending Portfolio Securities. To a limited extent, each Fund may lend its
portfolio securities to brokers, dealers and other financial institutions,
provided it receives cash collateral which at all times is maintained in an
amount equal to at least 100% of the current market value of the securities
loaned. By lending its portfolio securities, a Fund can increase its income
through the investment of the cash collateral. For purposes of this policy, each
Fund considers collateral consisting of U.S. Government securities or, except in
the case of the U.S. Government Money Market Fund, irrevocable letters of credit
issued by banks whose securities meet the standards for investment by such Fund
to be the equivalent of cash. From time to time, the Fund may return to the
borrower or a third party which is unaffiliated with the Fund, and which is
acting as a "placing broker," a part of the interest earned from the investment
of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Fund must receive at least 100% cash collateral from the borrower; (2) the
borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Fund must be able
to terminate the loan at any time; (4) the Fund must receive reasonable interest
on the loan, as well as any dividends, interest or other distributions payable
on the loaned securities, and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the Board must
terminate the loan and regain the right to vote the securities if a material
event adversely affecting the investment occurs. These conditions may be subject
to future modification.
Investment Restrictions
Applicable to Trust only. Each Fund that is a series of the Trust has
adopted investment restrictions numbered 1 through 7 as fundamental policies. In
addition, the Money Market Fund has adopted investment restrictions numbered 14
and 15, the Municipal Funds have adopted investment restriction number 16, the
Diversified Funds, other than the Money Market Fund, have adopted investment
restrictions numbered 17 and 18, and each Fund, other than the Money Market Fund
and Municipal Funds, have adopted investment restriction number 19 as additional
fundamental policies. These restrictions cannot be changed, as to a Fund,
without approval by the holders of a majority (as defined in the 1940 Act) of
such Fund's outstanding voting shares. Investment restrictions numbered 8
through 13 and 20 through 22 are not fundamental policies and may be changed by
vote of a majority of the Trust's Trustees at any time. No Fund may:
1. Invest in commodities, except that each Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
2. Purchase, hold or deal in real estate, including real estate
limited partnership interests, or oil, gas or other mineral leases or
exploration or development programs, but each Fund may purchase and sell
securities that are secured by real estate or issued by companies that
invest or deal in real estate.
3. Borrow money, except to the extent permitted under the 1940 Act.
For purposes of this investment restriction, a Fund's entry into options,
forward contracts, futures contracts, including those relating to indexes,
and options on futures contracts or indexes shall not constitute borrowing.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, each Fund
may lend its securities in an amount not to exceed 33-1/3% of the value of
its total assets. Any loans of portfolio securities will be made according
to guidelines established by the Securities and Exchange Commission and the
Trust's Board of Trustees.
5. Act as an underwriter of securities of other issuers, except to the
extent a Fund may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities, and
except that the Fund may bid separately or as part of a group for the
purchase of Municipal Obligations directly from an issuer for its own
portfolio to take advantage of the lower purchase price available.
6. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act), except to the extent the activities permitted under
Investment Restriction Nos. 1, 3, 9 and 10 may be deemed to give rise to
senior securities.
7. Purchase securities on margin, but each Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indexes, and options on
futures contracts or indexes.
8. Invest in the securities of a company for the purpose of exercising
management or control, but each Fund will vote the securities it owns in
its portfolio as a shareholder in accordance with its views.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when- issued or forward
commitment basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures contracts,
including those relating to indexes, and options on futures contracts or
indexes.
10. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Prospectus and this Statement of Additional
Information.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 15% (10% in the case of a Money Market Fund) of
the value of the Fund's net assets would be so invested.
12. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
13. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 10% of the value of its total assets.
The following investment restrictions numbered 14 and 15 apply only to
the Money Market Fund. The Money Market Fund may not:
14. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Money Market Fund's total
assets may be invested (subject to Rule 2a-7 under the 1940 Act) without
regard to any such limitation.
15. Invest less than 25% of its total assets in securities issued by
banks or invest more than 25% of its assets in the securities of issuers in
any other industry, provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. Notwithstanding the foregoing, for temporary
defensive purposes, the Money Market Fund may invest less than 25% of its
total assets in bank obligations.
The following investment restriction number 16 applies only to the
Municipal Funds. None of these Funds may:
16. Invest more than 25% of its total assets in the securities of
issuers in any single industry, provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
The following investment restrictions numbered 17 and 18 apply only to
the Diversified Funds, other than the Money Market Fund. None of these
Funds may:
17. Invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of the Fund's total assets may
be invested, and securities issued or guaranteed by the U.S. Government, or
its agencies or instrumentalities may be purchased, without regard to any
such limitation.
18. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to 75%
of the Fund's total assets.
The following investment restriction number 19 applies to each Fund,
other than the Money Market Fund and Municipal Funds. None of these Funds
may:
19. Invest more than 25% of its assets in the securities of issuers in
any single industry, except that, there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
The following investment restriction number 20, which is not a
fundamental policy, applies only to the Money Market Funds. None of these
Funds may:
20. Sell securities short.
The following investment restriction number 21, which is not a
fundamental policy, applies only to the Municipal Money Market Fund. The
Municipal Money Market Fund may not:
21. Purchase securities other than municipal obligations and taxable
Money Market Instruments.
The following investment restriction number 22, which is not a
fundamental policy, applies only to the U.S. Government Money Market Fund.
The U.S. Government Money Market Fund may not:
22. Purchase common stocks, preferred stocks, warrants or other equity
securities, or purchase corporate bonds (except as set forth in the
Prospectus) or debentures, state bonds, municipal bonds or industrial
revenue bonds.
For purposes of Investment Restriction No. 16, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as an
"industry."
Applicable to Prairie Intermediate Bond Fund only. The Intermediate Bond
Fund has adopted investment restrictions numbered 1 through 7 as fundamental
policies. These restrictions cannot be changed without approval by the holders
of a majority (as defined in the 1940 Act) of the Intermediate Bond Fund's
outstanding voting shares. Investment restrictions numbered 8 through 11 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Trustees at any time. The Intermediate Bond Fund may not:
1. Invest in commodities, except that the Fund may purchase
and sell options, forward contracts, futures contracts, including those
relating to indexes, and options on futures contracts or indexes.
2. Purchase, hold or deal in real estate, real estate limited
partnership interests, or oil, gas or other mineral leases or
exploration or development programs, but the Fund may purchase and sell
securities that are secured by real estate and may purchase and sell
securities issued by companies that invest or deal in real estate.
3. Borrow money, except to the extent permitted under the 1940
Act. For purposes of this investment restriction, the entry into
options, forward contracts, futures contracts, including those relating
to indexes, and options on futures contracts shall not constitute
borrowing.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of
the value of its total assets. Any loans of portfolio securities will
be made according to guidelines established by the Securities and
Exchange Commission and the Fund's Board of Trustees.
5. Act as an underwriter of securities of other
issuers.
6. Invest more than 25% of its assets in the securities of
issuers in any single industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
7. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act), except to the extent the activities
permitted in Investment Restriction Nos. 1, 3, 8 and 9 may be deemed to
give rise to a senior security.
8. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent
related to the deposit of assets in escrow in connection with writing
covered put and call options and the purchase of securities on a
when-issued or delayed- delivery basis and collateral and initial or
variation margin arrangements with respect to options, forward
contracts, futures contracts, including those related to indexes, and
options on futures contracts or indexes.
9. Purchase, sell or write puts, calls or combinations
thereof, except as described in the Prospectus and this Statement of
Additional Information.
10. Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 15% of the value of the
Fund's net assets would be so invested.
11. Purchase securities of other investment
companies, except to the extent permitted under the 1940
Act.
Applicable to Prairie Municipal Bond Fund, Inc. only. The Municipal Bond
Fund has adopted investment restrictions numbered 1 through 8 as fundamental
policies. These restrictions cannot be changed without approval by the holders
of a majority (as defined in the 1940 Act) of the Municipal Bond Fund's
outstanding voting shares. Investment restrictions numbered 9 through 13 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Directors at any time. The Municipal Bond Fund may not:
1. Invest more than 25% of its assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Borrow money, except to the extent permitted under the 1940
Act. For purposes of this investment restriction, the entry into
options, forward contracts, futures contracts, including those relating
to indexes, and options on futures contracts or indexes shall not
constitute borrowing.
3. Purchase or sell real estate, or oil and gas interests, but
the Fund may invest in Municipal Obligations secured by real estate or
interests therein.
4. Underwrite the securities of other issuers, except that the
Fund may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to
take advantage of the lower purchase price available, and except to the
extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of
the value of its total assets. Any loans of portfolio securities will
be made according to guidelines established by the Securities and
Exchange Commission and the Fund's Board of Directors.
6. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act), except to the extent that the
activities permitted in Investment Restriction Nos. 2, 7, 8 and 11 may
be deemed to give rise to a senior security.
7. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indexes, and options on
futures contracts or indexes.
8. Invest in commodities, except that the Fund may purchase
and sell forward contracts, futures contracts, including those relating
to indexes, and options on futures contracts or indexes.
9. Purchase securities other than Municipal Obligations and
taxable Money Market Instruments and those arising out of transactions
in futures and options or as otherwise provided in the Prospectus.
10. Invest in securities of other investment
companies, except to the extent permitted under the 1940
Act.
11. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to the extent necessary to secure permitted borrowings
and to the extent related to the deposit of assets in escrow in
connection with the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures
contracts, including those related to indexes and options on futures
contracts, or indexes.
12. Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase securities which are
illiquid (which securities could include participation interests
(including municipal lease/purchase agreements) that are not subject to
the demand feature described in the Prospectus and floating and
variable rate demand notes and bonds as to which the Fund cannot
exercise the demand feature described in the Prospectus on less than
seven day's notice and as to which there is no secondary market), if,
in the aggregate, more than 15% of its net assets would be so invested.
13. Invest in companies for the purpose of exercising
control.
For purposes of Investment Restriction No. 1, industrial development bonds,
where the payment of principal and interest is the ultimate responsibility of
companies within the same industry, are grouped together as an "industry."
-------------------------------
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.
A Fund may make commitments more restrictive than the restrictions listed
above so as to permit the sale of Fund shares in certain states. Should a Fund
determine that a commitment is no longer in the best interests of the Fund and
its shareholders, each Fund reserves the right to revoke the commitment by
terminating the sale of such Fund's shares in the state involved.
MANAGEMENT OF THE FUNDS
Board members and officers of each Fund, together with information as to
their principal business occupations during at least the last five years, are
shown below.
Board Members of the Funds
JOHN P. GOULD, Board Member. Distinguished Service Professor of
Economics of the University of Chicago Graduate School of
Business. From 1983 to 1993, Dean of the University of
Chicago Graduate School of Business. Dean Gould also
serves as Director of Harpor Capital Advisors. Mr. Gould
is also a Board member of The Woodward Funds and all four
funds in the Prairie Family of Funds. He is 57 years old
and his address is 1101 East 58th Street, Chicago, Illinois
60637.
MARILYN McCOY, Board Member. Vice President of Administration and Planning of
Northwestern University. From 1981 to 1985, she was the Director of
Planning and Policy Development for the University of Colorado. She
also serves on the Board of Directors of Evanston Hospital, the Chicago
Metropolitan YMCA, the Chicago Network and United Charities. Mrs. McCoy
is a member of the Chicago Economics Club. Mrs. McCoy is also a Board
member of The Woodward Funds and all four funds in the Prairie Family
of Funds. She is 47 years old and her address is 1100 North Lake Shore
Drive, Chicago, Illinois 60611.
RAYMOND D. ODDI, Board Member. Private consultant. A Director
of Caremark International, Inc. and Medisense, Inc.,
companies in the health care industry, and Baxter Credit
Union. From 1978 to 1986, Senior Vice President of Baxter
Inter- national, Inc., a company engaged in the production
of medical care products. He also is a member of the
Illinois Society of Certified Public Accountants. Mr. Oddi
is a Board member of all four funds in the Prairie Family
of Funds. He is 68 years old and his address is 1181 Loch
Lane, Lake Forest, Illinois 60045.
For so long as a plan described in the section captioned "Distribution
Plans and Shareholder Services Plans" remains in effect, the Board members who
are not "interested persons" of the Fund, as defined in the 1940 Act, will be
selected and nominated by the Board members who are not "interested persons" of
the Fund.
Officers of the Funds
MARK A. DILLON, President. An employee of BISYS Fund Services, which is a
affiliate of Concord Holding Corporation, the Funds' sub-administrator
(the "Sub-Administrator"). He is 33 years old and his address is 3435
Stelzer Road, Columbus, Ohio 43219.
ANN E. BERGIN, Vice President. An employee of the Sub-
Administrator and an officer of other investment companies
administered by the Sub-Administrator. She is 35 years old
and her address is 125 West 55th Street, New York, New York
10019.
D'RAY BREWER, Vice President. An employee of BISYS Fund Services, and an
officer of other investment companies administered by the
Sub-Administrator. She is 36 years old and her address is 3435 Stelzer
Road, Columbus, Ohio 43219.
MARTIN R. DEAN, Treasurer. An employee of BISYS Fund Services, since May 1994,
and an officer of other investment companies administered by the
Sub-Administrator. Prior thereto, he was a Senior Manager at KPMG Peat
Marwick LLP. He is 32 years old and his address is 3435 Stelzer Road,
Columbus, Ohio 43219.
GEORGE O. MARTINEZ, Secretary. Senior Vice President and Director of Legal and
Compliance Services with BISYS Fund Services, since April 1995, and an
officer of other investment companies administered by the
Sub-Administrator. Prior thereto, he was Vice President and Associate
General Counsel with Alliance Capital Management L.P. He is 36 years
old and his address is 3435 Stelzer Road, Columbus, Ohio 43219.
ROBERT L.TUCH, Assistant Secretary. An employee of BISYS Fund Services, since
June 1991, and an officer of other investment companies administered by
the Sub-Administrator. From July 1990 to June 1991, he was Vice
President and Associate General Counsel with National Securities
Research Corp. Prior thereto, he was an Attorney with the Securities
and Exchange Commission. He is 44 years old and his address is 3435
Stelzer Road, Columbus, Ohio 43219.
Each Fund pays the Board members its allocable share of the aggregate of a
fixed fee of $25,000 per annum and a per meeting fee of $1,000 for all funds in
the Prairie Family of Funds. The aggregate amount of compensation payable to
each Board member by the Trust, Prairie Intermediate Bond Fund and Prairie
Municipal Bond Fund, Inc. and all other funds in the Prairie Family of Funds for
which such person is a Board member for the fiscal year ended December 31, 1995
were as follows:
<TABLE>
<CAPTION>
(3) (5)
(2) Pension or (4) Total Compensation
(1) Aggregate Retirement Benefits Estimated Annual From Fund and
Name of Board Compensation from Accrued as Part of Benefits Upon Fund Complex Paid
Member Fund Fund's Expenses Retirement to Board Member
<S> <C> <C> <C> <C>
John P. Gould
Trust $21,175 None None $30,000
Prairie Intermediate Bond Fund $ 1,765 None None
Prairie Municipal Bond Fund,
Inc. $ 1,765 None None
Marilyn McCoy $30,000
Trust $21,175 None None
Prairie Intermediate Bond Fund $ 1,765 None None
Prairie Municipal Bond Fund,
Inc. $ 1,765 None None
Raymond D. Oddi $30,000
Trust $21,175 None None
Prairie Intermediate Bond Fund $ 1,765 None None
Prairie Municipal Bond Fund,
Inc. $ 1,765 None None
</TABLE>
Board members and officers of the Funds, as a group, owned less than 1% of
any Fund's shares outstanding on March 27, 1996.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Management of the Funds."
Investment Advisory Agreements. FCIMCO provides investment advisory
services pursuant to separate Investment Advisory Agreements (each, an
"Agreement") dated as of November 30, 1995 with the Trust, Prairie Intermediate
Bond Fund and Prairie Municipal Bond Fund, Inc. As to each Fund, the Agreement
is subject to annual approval by (i) the Board or (ii) vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Fund,
provided that in either event the continuance also is approved by a majority of
the Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund or FCIMCO, by vote cast in person at a meeting called for the
purpose of voting on such approval. Shareholders of each Fund approved the
respective Agreement on November 28, 1995. The Board, including a majority of
the Board members who are not "interested persons" of any party to the
Agreement, last approved the Agreement at a meeting held on September 19, 1995.
As to each Fund, the Agreement is terminable without penalty, on 60 days'
notice, by the Board or by vote of the holders of a majority of such Fund's
shares, or, on not less than 90 days' notice, by FCIMCO. The Agreement will
terminate automatically, as to the relevant Fund, in the event of its assignment
(as defined in the 1940 Act).
FCIMCO is responsible for investment decisions for each Fund in accordance
with the stated policies of such Fund, subject to the approval of the Board. All
purchases and sales are reported for the Board member's review at the meeting
subsequent to such transactions.
The following persons are officers and/or directors of FCIMCO: J. Stephen
Baine, Chairman of the Board of Directors, Chief Executive Officer and
President; Alan F. Delp, William G. Jurgensen, Thomas H. Hodges and David J.
Vitale, Directors; Terrall J. Janeway, Treasurer, Chief Financial and Accounting
Officer and Managing Director; Bradford M. Markham, Secretary and Chief Legal
Officer; and George Abel, Timothy Kerr, Ronald Doyle, Deborah L. Edwards, Marco
Hanig, David R. Kling and Stephen P. Manus, Managing Directors.
Sub-Investment Advisory Agreement. ANB Investment Management and Trust
Company ("ANB-IMC") provides investment advisory assistance and day-to-day
management of the International Equity Fund's investments pursuant to the Sub-
Investment Advisory Agreement dated as of November 30, 1995 between ANB-IMC and
FCIMCO. The Sub-Investment Advisory Agreement is subject to annual approval by
(i) the Board or (ii) vote of a majority (as defined in the 1940 Act) of the
International Equity Fund's outstanding voting securities, provided that in
either event the continuance also is approved by a majority of the Board members
who are not "interested persons" (as defined in the 1940 Act) of the Trust or
ANB-IMC, by vote cast in person at a meeting called for the purpose of voting on
such approval. Shareholders of the International Equity Fund approved the
Sub-Investment Advisory Agreement on November 28, 1995. The Board, including a
majority of the Board members who are not "interested persons" of any party to
the Sub-Investment Advisory Agreement last approved the Sub- Investment Advisory
Agreement at a meeting held on September 19, 1995. The Sub-Investment Advisory
Agreement is terminable without penalty, (i) by FCIMCO on 60 days' notice, (ii)
by the Board or by vote of the holders of a majority of the Fund's outstanding
voting securities on 60 days' notice, or (iii) upon not less than 90 days'
notice, by ANB-IMC. The Sub-Investment Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
ANB-IMC provides day-to-day management of the International Equity Fund's
investments, subject to the supervision of FCIMCO and the Board. As compensation
for ANB- IMC's services, FCIMCO has agreed to pay ANB-IMC a sub- investment
advisory fee, computed daily and paid monthly, at an annual rate of .40 of 1% of
the value of the International Equity Fund's average daily net assets. For the
period March 3, 1995 (commencement of operations of International Equity Fund)
through December 31, 1995, the sub-investment advisory fee payable by FCIMCO to
ANB-IMC amounted to $254,628.
The following persons are officers and/or directors of ANB-IMC: Terrall J.
Janeway, Neil R. Wright, Stephen P. Manus, Alan F. Delp, David P. Bolger, Thomas
P. Michaels and J. Stephen Baine.
Administration and Sub-Administration Agreements. Pursuant to separate
Administration Agreements dated November 30, 1995 with the Trust, Prairie
Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc., FCIMCO assists in
all aspects of the Funds' operations, other than providing investment advice,
subject to the overall authority of the Board in accordance with applicable
state law. FCIMCO has engaged the Sub-Administrator to assist it in providing
certain administrative services to the Funds. Pursuant to its agreement with
FCIMCO (the "Sub-Administration Agreement"), the Sub- Administrator assists
FCIMCO in furnishing the Funds clerical help and accounting, data processing,
bookkeeping, internal auditing and legal services and certain other services
required by the Funds, preparing reports to the Funds' shareholders, tax
returns, reports to and filings with the Securities and Exchange Commission and
state Blue Sky authorities, calculating the net asset value of each Fund's
shares and generally in providing for all aspects of operation, other than
providing investment advice. The fees payable to the Sub-Administrator for its
services are paid by FCIMCO.
Each Fund has agreed that FCIMCO, ANB-IMC and the Sub-Administrator will
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which respective
agreements relate, except for a loss resulting from wilful misfeasance, bad
faith or gross negligence on the part of FCIMCO in the performance of its
obligations or from reckless disregard by it of its obligations and duties under
its agreements or on the part of ANB-IMC or the Sub-Administrator in the
performance of their respective obligations or from reckless disregard by either
of its obligations and duties under its agreement.
Expenses and Expense Information. All expenses incurred in the operation of
the Trust, Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc.
are borne by such company, except to the extent specifically assumed by FCIMCO.
The expenses borne by the Trust, Prairie Intermediate Bond Fund and Prairie
Municipal Bond Fund, Inc. include: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Board members, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of independent
pricing services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders' reports
and meetings, costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. In addition, Class A and Class B
are subject to an annual distribution and/or service fee. Expenses attributable
to a particular Fund or Class are charged against the assets of that Fund or
Class, respectively; other expenses of the Trust are allocated among the Funds
that are series of the Trust on the basis determined by the Board, including,
but not limited to, proportionately in relation to the net assets of each such
Fund.
The Agreement provides that if, in any fiscal year, the aggregate expenses
of a Fund, exclusive of taxes, brokerage, interest on borrowings and (with the
prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the advisory fee, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may deduct
from the payment to be made to FCIMCO under the Agreement, or FCIMCO will bear,
such excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or paid,
as the case may be, on a monthly basis.
The aggregate of the fees payable to FCIMCO is not subject to reduction as
the value of a Fund's net assets increases.
As compensation for FCIMCO's investment advisory services, each Fund has
agreed to pay FCIMCO an advisory fee, computed daily and paid monthly, at an
annual rate as set forth below. Except as otherwise noted, for the period
January 17, 1995 (effective date of the Investment Advisory Agreement) through
December 31, 1995, the advisory fee payable, the reduction in the fee payable
pursuant to undertakings and the net fee paid were as follows:
<TABLE>
<CAPTION>
Annual Fee
Payable As a % Reduction Net
of Average Amount of In Fee Fee
Name of Fund Daily Net Assets Fee Payable Payable Paid
- ------------ ---------------- ----------- --------- ----
<S> <C> <C> <C> <C>
Managed Assets Income .65% $ 321,175 $178,658 $ 142,517
Managed Assets .65% $ 25,214(1) $ 23,352 $ 1,862
Equity Income .50% $1,106,755(2) $277,716 $ 829,039
Growth .65% $1,714,489(2) $314,740 $1,399,749
Special Opportunities .70% $ 487,653(2) $168,733 $ 318,920
International Equity .80% $ 506,306(3) $213,520 $ 292,786
Intermediate Bond .40% $ 612,316 $185,678 $ 426,638
Bond .55% $ 571,383(4) $178,730 $ 392,653
International Bond .70% $ 79,134(2) $ 68,517 $ 10,617
Intermediate Municipal
Bond .40% $1,368,542 $429,888 $ 938,654
Municipal Bond .40% $ 870,774 $304,953 $ 565,821
U.S. Government Money
Market .40% $ 281,056 $187,035 $ 94,021
Money Market .40% $ 616,814 $429,314 $ 187,527
Municipal Money Market .40% $ 826,343 $489,926 $ 336,417
- ------------------------------
(1) For the period April 3, 1995 (commencement of operations)
through December 31, 1995.
(2) For the period January 27, 1995 (commencement of
operations) through December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations)
through December 31, 1995.
(4) For the period February 10, 1995 (commencement of
operations) through December 31, 1995.
</TABLE>
As compensation for FCIMCO's administrative services, each Fund has agreed
to pay FCIMCO an administrative fee, computed daily and paid monthly, at an
annual rate of .15 of 1% of the value of the Fund's average daily net assets.
Except as otherwise noted, for the period January 17, 1995 (effective date of
the Administration Agreement) through December 31, 1995, the administrative fee
payable, the reduction in the fee payable pursuant to undertakings and the net
fee paid were as follows:
<TABLE>
<CAPTION>
Reduction Net
Amount of In Fee Fee
Name of Fund Fee Payable Payable Paid
<S> <C> <C> <C>
Managed Assets Income $ 70,857 $ 0 $ 70,857
Managed Assets $ 5,818(1) $2,274 $ 3,544
Equity Income $332,027(2) $ 0 $332,027
Growth $395,652(2) $ 0 $395,652
Special Opportunities $104,497(2) $ 0 $104,497
International Equity $ 94,410(3) $ 0 $ 94,410
Intermediate Bond $229,619 $ 0 $229,619
Bond $155,832(4) $ 0 $155,832
International Bond $ 16,958(2) $4,407 $ 12,551
Intermediate Municipal Bond $475,635 $ 0 $475,635
Municipal Bond $310,972 $ 0 $310,972
U.S. Government Money Market $ 94,631 $8,954 $ 85,677
Money Market $220,431 $ 0 $220,431
Municipal Money Market $292,778 $ 0 $292,778
- ------------------------------
(1) For the period April 3, 1995 (commencement of operations)
through December 31, 1995.
(2) For the period January 27, 1995 (commencement of
operations) through December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations)
through December 31, 1995.
(4) For the period February 10, 1995 (commencement of
operations) through December 31, 1995.
</TABLE>
Prairie Intermediate Bond Fund only. Prior to January 17, 1995, The First
National Bank of Chicago ("FNBC") provided management services to the Fund
pursuant to a management agreement (the "Prior Management Agreement"). Under the
terms of the Prior Management Agreement, Prairie Intermediate Bond Fund agreed
to pay FNBC a monthly fee at the annual rate of .60 of 1% of the value of the
Fund's average daily net assets. For the fiscal years ended January 31, 1993 and
1994 and the period from February 1, 1994 through January 17, 1995, no fees were
paid by the Fund to FNBC pursuant to various undertakings by FNBC.
Prior to January 17, 1995, The Dreyfus Corporation ("Dreyfus") provided the
Fund administrative services pursuant to an administration agreement between
FNBC and Dreyfus. FNBC paid Dreyfus for Dreyfus' services.
Prairie Municipal Bond Fund, Inc. only. Prior to January 17, 1995, FNBC
provided advisory services to the Fund pursuant to an investment advisory
agreement (the "Prior Advisory Agreement"). Under the terms of the Prior
Advisory Agreement, Prairie Municipal Bond Fund, Inc. agreed to pay FNBC a
monthly fee at the annual rate of .40 of 1% of the value of the Fund's average
daily net assets. For the fiscal years ended February 28/29, 1993 and 1994 and
for the period from March 1, 1994 through January 17, 1995, no fees were paid by
the Fund to FNBC pursuant to various undertakings by FNBC.
Prior to January 17, 1995, Dreyfus provided the Fund administrative
services pursuant to an administration agreement (the "Prior Administration
Agreement"). As compensation for Dreyfus' services to the Fund, the Fund agreed
to pay Dreyfus pursuant to the Prior Administration Agreement a fee, computed
daily and paid monthly, at an annual rate of .20 of 1% of the value of the
Fund's average daily net assets. For the fiscal years ended February 28/29, 1993
and 1994, no administration fees were paid by the Fund to Dreyfus pursuant to
various undertakings by Dreyfus. For the period March 1, 1994 through January
17, 1995, the Fund paid Dreyfus $25,853 pursuant to the Prior Administration
Agreement.
Intermediate Municipal Bond Fund only. Prior to January 17, 1995, FNBC
provided advisory services to the Intermediate Series of First Prairie Municipal
Bond Fund, Inc. (the predecessor fund of the Intermediate Municipal Bond Fund)
pursuant to an investment advisory agreement (the "Prior Advisory Agreement").
Under the terms of the Prior Advisory Agreement, the Intermediate Series agreed
to pay FNBC a monthly fee at the annual rate of .40 of 1% of the value of the
Intermediate Series' average daily net assets. For the fiscal years ended
February 28/29, 1993 and 1994 and for the period from March 1, 1994 through
January 17, 1995, no fees were paid by the Intermediate Series to FNBC pursuant
to various undertakings by FNBC.
Prior to January 17, 1995, Dreyfus provided the Intermediate Series of
First Prairie Municipal Bond Fund, Inc. administrative services pursuant to an
administration agreement (the "Prior Administration Agreement"). As compensation
for Dreyfus' services to the Intermediate Series, the Intermediate Series agreed
to pay Dreyfus pursuant to the Prior Administration Agreement a fee, computed
daily and paid monthly, at an annual rate of .20 of 1% of the value of the
Intermediate Series' average daily net assets. For the fiscal years ended
February 28/29, 1993 and 1994, no administration fees were paid by the
Intermediate Series to Dreyfus pursuant to various undertakings by Dreyfus. For
the period March 1, 1994 through January 17, 1995, the Intermediate Series paid
Dreyfus $46,815 pursuant to the Prior Administration Agreement.
Managed Assets Income Fund only. Prior to January 17, 1995, FNBC provided
advisory services to First Prairie Diversified Asset Fund (the predecessor fund
of the Managed Assets Income Fund) pursuant to an investment advisory agreement
(the "Prior Advisory Agreement"). Under the terms of the Prior Advisory
Agreement, First Prairie Diversified Asset Fund agreed to pay FNBC a monthly fee
at the annual rate of .65 of 1% of the value of the fund's average daily net
assets. For the fiscal years ended December 31, 1992, 1993 and 1994, no fees
were paid by First Prairie Diversified Asset Fund to FNBC pursuant to various
undertakings by FNBC.
Prior to January 17, 1995, Dreyfus provided First Prairie Diversified Asset
Fund administrative services pursuant to an administration agreement (the "Prior
Administration Agreement"). As compensation for Dreyfus' services to First
Prairie Diversified Asset Fund, the fund agreed to pay Dreyfus pursuant to the
Prior Administration Agreement a fee, computed daily and paid monthly, at an
annual rate of .30 of 1% of the value of the fund's average daily net assets.
For the fiscal years ended December 31, 1992 and 1993, no administration fees
were paid by First Prairie Diversified Asset Fund to Dreyfus pursuant to various
undertakings by Dreyfus. For the period January 1, 1994 through December 31,
1994, First Prairie Diversified Asset Fund paid Dreyfus $26,667 pursuant to the
Prior Administration Agreement.
Municipal Money Market Fund only. From May 1, 1993 to January 17, 1995,
FNBC provided management services to First Prairie Municipal Money Market Fund
(the predecessor fund of the Municipal Money Market Fund) pursuant to a
management agreement (the "Prior Agreement") with the fund and engaged Dreyfus
to provide administrative services. Pursuant to the Prior Agreement, First
Prairie Municipal Money Market Fund agreed to pay FNBC a management fee at the
annual rate of .55 of 1% of the value of the fund's average daily net assets.
Prior to April 30, 1993, FNBC provided investment advisory services to First
Prairie Municipal Money Market Fund pursuant to an investment advisory agreement
(the "Prior Advisory Agreement") with the fund and Dreyfus provided
administrative services to the fund pursuant to an administration agreement (the
"Prior Administration Agreement") with First Prairie Municipal Money Market
Fund. Pursuant to the Prior Advisory Agreement, First Prairie Municipal Money
Market Fund agreed to pay FNBC an advisory fee at the annual rate of .40 of 1%
of the value of the fund's average daily net assets. Pursuant to the Prior
Administration Agreement, First Prairie Municipal Money Market Fund agreed to
pay Dreyfus an administration fee at the annual rate of .20 of 1% of the value
of the fund's average daily net assets.
The fees paid to FNBC pursuant to the Prior Advisory Agreement for the
fiscal year ended December 31, 1992 was $914,834. For the period January 1, 1993
through April 29, 1993, the fee payable to FNBC pursuant to the Prior Advisory
Agreement was $266,582. For the period from April 30, 1993 (effective date of
the Prior Agreement) through December 31, 1993 and for the fiscal year ended
December 31, 1994, the fees payable to FNBC were $699,072 and $1,069,636,
respectively. For the fiscal years ended December 31, 1992, 1993 and 1994, the
fees payable to FNBC were reduced pursuant to undertakings in effect resulting
in net fees paid of $895,911 in fiscal 1992, $647,661 in fiscal 1993 and
$485,987 in fiscal 1994.
The fee paid to Dreyfus pursuant to the Prior Administration Agreement for
the fiscal year ended December 31, 1992 was $457,417. For the period January 1,
1993 through April 29, 1993, the fee payable to Dreyfus pursuant to the Prior
Administration Agreement was $133,291.
Money Market Fund only. From May 1, 1993 to January 17, 1995, FNBC provided
management services to the Money Market Series of First Prairie Money Market
Fund (the predecessor fund of the Money Market Fund) pursuant to a management
agreement (the "Prior Agreement") with the fund and engaged Dreyfus to provide
administrative services. Pursuant to the Prior Agreement, the Money Market
Series agreed to pay FNBC a fee at the annual rate of .55 of 1% of the value of
the Money Market Series' average daily net assets. Prior to April 30, 1993, FNBC
provided investment advisory services to the Money Market Series pursuant to an
investment advisory agreement (the "Prior Advisory Agreement") with the fund and
Dreyfus provided administrative services to the Money Market Series pursuant to
an administration agreement (the "Prior Administration Agreement") with the
fund. Pursuant to the Prior Advisory Agreement, the Money Market Series agreed
to pay FNBC an advisory fee at the annual rate of .40 of 1% of the value of the
Money Market Series' average daily net assets. Pursuant to the Prior
Administration Agreement, the Money Market Series agreed to pay Dreyfus an
administration fee at the annual rate of .20 of 1% of the value of the Money
Market Series' average daily net assets.
The fees paid to FNBC pursuant to the Prior Advisory Agreement with respect
to the Money Market Series for the fiscal year ended December 31, 1992 was
$1,565,674. For the period January 1, 1993 through April 29, 1993, the fee
payable to FNBC pursuant to the Prior Advisory Agreement was $345,615. For the
period from April 30, 1993 (effective date of the Prior Agreement) through
December 31, 1993 and for the fiscal year ended December 31, 1994, the fees
payable to FNBC were $649,937 and $859,905, respectively. For the fiscal year
ended December 31, 1993, the fee payable to FNBC was reduced by $70,345,
pursuant to an undertaking in effect resulting in net fees paid of $925,207.
The fee paid to Dreyfus pursuant to the Prior Administration Agreement with
respect to the Money Market Series for the fiscal year ended December 31, 1992
was $782,837. For the period January 1, 1993 through April 29, 1993, the fee
payable to Dreyfus pursuant to the Prior Administration Agreement was $172,808;
however, pursuant to an undertaking in effect, Dreyfus reduced its fee by
$32,272, resulting in a net fee of $140,536.
Government Money Market Fund only. From May 1, 1993 to January 17, 1995,
FNBC provided management services to the Government Money Market Series of First
Prairie Money Market Fund (the predecessor fund of the Government Money Market
Fund) pursuant to a management agreement (the "Prior Agreement") with the fund
and engaged Dreyfus to provide administrative services. Pursuant to the Prior
Agreement, the Government Money Market Series agreed to pay FNBC a fee at the
annual rate of .55 of 1% of the value of the Government Money Market Series'
average daily net assets. Prior to April 30, 1993, FNBC provided investment
advisory services to the Government Money Market Series pursuant to an
investment advisory agreement (the "Prior Advisory Agreement") with the fund and
Dreyfus provided administrative services to the Government Money Market Series
pursuant to an administration agreement (the "Prior Administration Agreement")
with the fund. Pursuant to the Prior Advisory Agreement, the Government Money
Market Series agreed to pay FNBC an advisory fee at the annual rate of .40 of 1%
of the value of the Government Money Market Series' average daily net assets.
Pursuant to the Prior Administration Agreement, the Government Money Market
Series agreed to pay Dreyfus an administration fee at the annual rate of .20 of
1% of the value of the Government Money Market Series' average daily net assets.
The fees paid to FNBC pursuant to the Prior Advisory Agreement
with respect to the Government Money Market Series for the fiscal year ended
December 31, 1992 was $2,661,832. For the period January 1, 1993 through April
29, 1993, the fee payable to FNBC pursuant to the Prior Advisory Agreement was
$730,686. For the period from April 30, 1993 (effective date of the Prior
Agreement) through December 31, 1993 and for the fiscal year ended December 31,
1994 the fees payable to FNBC were $1,635,057 and $692,452, respectively. For
the fiscal years ended December 31, 1993 and 1994, the fees payable to FNBC were
reduced by $567,879 and $29,785, respectively, pursuant to an undertaking in
effect resulting in net fees paid of $1,797,864 in fiscal 1993 and $662,667 in
fiscal 1994.
The fee paid to Dreyfus pursuant to the Prior Administration Agreement with
respect to the Government Money Market Series for the fiscal year ended December
31, 1992 was $1,330,916. For the period January 1, 1993 through April 29, 1993,
the fee payable to Dreyfus pursuant to the Prior Administration Agreement was
$365,343; however, pursuant to an undertaking in effect, Dreyfus reduced its fee
by $103,746, resulting in a net fee of $261,597.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves on a best efforts basis as each
Fund's distributor pursuant to an agreement which is renewable annually.
For the fiscal year ended December 31, 1995, the Distributor retained
$10,669 from sales loads on Fund shares.
Sales Loads--Class A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Code) although more than one beneficiary
is involved; or a group of accounts established by or on behalf of the employees
of an employer or affiliated employers pursuant to an employee benefit plan or
other program (including accounts established pursuant to Sections 403(b),
408(k), and 457 of the Code); or an organized group which has been in existence
for more than six months, provided that it is not organized for the purpose of
buying redeemable securities of a registered investment company and provided
that the purchases are made through a central administration or a single dealer,
or by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering price
of the Class A shares of the Managed Assets Income Fund. The example assumes a
purchase of Class A shares of the Fund aggregating less than $50,000 subject to
the current schedule of sales charges set forth in the Funds' Prospectus at a
price based upon the net asset value of the Managed Assets Income Fund's Class A
shares on December 31, 1995:
Net Asset Value per Share $ 14.54
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $ .69
-------
Per Share Offering Price to
the Public $ 15.23
=======
Using Federal Funds. Primary Funds Service Corp., the Funds' transfer and
dividend disbursing agent (the "Transfer Agent"), or the Fund may attempt to
notify the investor upon receipt of checks drawn on banks that are not members
of the Federal Reserve System as to the possible delay in conversion into
Federal Funds and may attempt to arrange for a better means of transmitting the
money. If the investor is a customer of a securities dealer, bank or other
financial institution and his order to purchase Fund shares is paid for other
than in Federal Funds, the securities dealer, bank or other financial
institution, acting on behalf of its customer, generally will complete the
conversion into, or itself advance, Federal Funds on the business day following
receipt of the customer order. The order is effective only when so converted and
received by the Transfer Agent. An order for the purchase of Fund shares placed
by an investor with a sufficient Federal Funds or cash balance in his brokerage
account with a securities dealer, bank or other financial institution will
become effective on the day that the order, including Federal Funds, is received
by the Transfer Agent.
DISTRIBUTION PLANS AND SHAREHOLDER SERVICES PLANS
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Distribution Plans and Shareholder
Services Plans."
Distribution Plans. Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only pursuant to
a plan adopted in accordance with the Rule. The Board has adopted such a plan
for each of the Trust, Prairie Intermediate Bond Fund and Prairie Municipal Bond
Fund, Inc. with respect to Class B shares of each Fund (the "Distribution
Plan"), pursuant to which the Fund pays the Distributor for advertising,
marketing and distributing Class B shares of the relevant Fund. The Distributor
may pay one or more banks, securities dealers and other industry professionals
such as investment advisers, accountants and estate planning firms
(collectively, "Service Agents"), in respect of these services. In some states,
banks or other institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law. The Board believes that
there is a reasonable likelihood that the Distribution Plan will benefit each
Fund and the holders of its Class B shares.
A quarterly report of the amounts expended under each Distribution Plan,
and the purposes for which such expenditures were incurred, must be made to the
Board members for their review. In addition, the Distribution Plan provides that
it may not be amended to increase materially the cost which holders of Class B
shares of the Fund may bear pursuant to the Distribution Plan without the
approval of the shareholders of such Class and that other material amendments of
the Distribution Plan must be approved by the Board and by the Board members who
are not "interested persons" (as defined in the 1940 Act) of the Fund and have
no direct or indirect financial interest in the operation of the Distribution
Plan or in any agreements entered into in connection with the Distribution Plan,
by vote cast in person at a meeting called for the purpose of considering such
amendments. The Distribution Plan is subject to annual approval by such vote of
the Board members cast in person at a meeting called for the purpose of voting
on the Distribution Plan. Each Distribution Plan was last so approved on
December 6, 1995. The Distribution Plan may be terminated at any time by vote of
a majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Distribution Plan
or in any agreements entered into in connection with the Distribution Plan or by
vote of the holders of a majority of Class B shares of the Fund.
Except as otherwise noted, for the period January 17, 1995
(effective date of Distribution Plan) through December 31, 1995, the fee
payable, the reduction in the fee payable pursuant to undertakings and the net
fee paid pursuant to the Distribution Plan with respect to Class B of the
indicated Fund were as follows:
<TABLE>
<CAPTION>
Reduction Net
Amount of In Fee Fee
Name of Fund Fee Payable Payable Paid
<S> <C> <C> <C>
Managed Assets Income $5,831 $ 0 $5,831
Managed Assets $3,325(1) $ 0 $3,325
Equity Income $1,283(2) $ 0 $1,283
Growth $ 670(2) $ 0 $ 670
Special Opportunities $ 56(2) $ 0 $ 56
International Equity $ 379(3) $ 0 $ 379
Intermediate Bond $ 563 $ 0 $ 563
Bond $ 116(4) $ 0 $ 116
International Bond $ 30(2) $ 0 $ 30
Reduction Net
Amount of In Fee Fee
Name of Fund Fee Payable Payable Paid
Intermediate Municipal Bond $ 824 $ 0 $ 824
Municipal Bond $ 600 $ 0 $ 600
Money Market $ 154 $ 0 $ 154
- ------------------------------
(1) For the period April 3, 1995 (commencement of operations)
through December 31, 1995.
(2) For the period January 27, 1995 (commencement of
operations) through December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations)
through December 31, 1995.
(4) For the period February 10, 1995 (commencement of
operations) through December 31, 1995.
</TABLE>
Shareholder Services Plans. The Trust, Prairie Intermediate Bond Fund and
Prairie Municipal Bond Fund, Inc. have adopted separate Shareholder Services
Plans, pursuant to which each Fund pays the Distributor for the provision of
certain services to the holders of Class A and Class B shares of such Fund. The
services provided may include personal services relating 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 each Shareholder Services Plan, the Distributor
may make payments to Service Agents in respect of these services. FCIMCO, FNBC,
ANB and their affiliates may act as Service Agents and receive fees under the
Shareholder Services Plan.
A quarterly report of the amounts expended under the Shareholder Services
Plan, and the purposes for which such expenditures were incurred, must be made
to the Board members for their review. In addition, the Shareholder Services
Plan provides that it may not be amended without approval of the Board, and by
the Board members who are neither "interested persons" (as defined in the 1940
Act) of the Fund nor have any direct or indirect financial interest in the
operation of the Shareholder Services Plan or in any agreements entered into in
connection with the Shareholder Services Plan, by vote cast in person at a
meeting called for the purpose of considering such amendments. The Shareholder
Services Plan is subject to annual approval by such vote of the Board members
cast in person at a meeting called for the purpose of voting on the Shareholder
Services Plan. Each Shareholder Services Plan was so approved on December 6,
1995. The Shareholder Services Plan is terminable at any time by vote of a
majority of the Board members who are not "interested persons" and who have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan.
Except as otherwise noted, for the period January 17, 1995
(effective date of Shareholder Services Plan) through December 31, 1995, the fee
payable under the Shareholder Services Plan with respect to Class A and Class B
of the indicated Fund was as follows:
<TABLE>
<CAPTION>
Name of Fund Amount of Fee Payable
Class A Class B
<S> <C> <C>
Managed Assets Income $112,993 $ 1,837
Managed Assets(1) $ 7,918 $ 1,092
Equity Income(2) $ 2,475 $ 407
Growth(2) $ 4,568 $ 219
Special Opportunities(2) $ 741 $ 18
International Equity(3) $ 3,057 $ 109
Intermediate Bond $ 5,960 $ 198
Bond(4) $ 2,105 $ 36
International Bond(2) $ 632 $ 39
Intermediate Municipal Bond $ 38,833 $ 3,950
Municipal Bond $ 16,461 $ 2,240
U.S. Government Money Market $156,897 N/A
Money Market $365,201 $ 50
Municipal Money Market $485,617 N/A
- ------------------------------
(1) For the period April 3, 1995 (commencement of operations)
through December 31, 1995.
(2) For the period January 27, 1995 (commencement of
operations) through December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations)
through December 31, 1995.
(4) For the period February 10, 1995 (commencement of
operations) through December 31, 1995.
</TABLE>
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "How to Redeem Fund Shares."
Redemption Commitment. Each of the Trust, Prairie Intermediate Bond Fund
and Prairie Municipal Bond Fund, Inc. has committed itself to pay in cash all
redemption requests by any shareholder of record of the Fund, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of such
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such amount, the
Board reserves the right to make payments in whole or in part in securities or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing shareholders.
In such event, the securities would be valued in the same manner as the Fund's
securities are valued. If the recipient sold such securities, brokerage charges
would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closing), (b) when trading
in the markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "How to Buy Shares."
Applicable to each Fund, other than the Money Market Funds--Equity
Securities and covered call options written by a Fund are valued at the last
sale price on the securities exchange or national securities market on which
such securities primarily are traded. Equity Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the most recent bid prices. Any securities or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in good faith by the Board.
Fixed-Income Securities are valued each business day using available market
quotations or at fair value as determined by one or more independent pricing
services (collectively, the "Service") approved by the Board. The Service may
use available market quotations, employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures are
reviewed by the Fund's officers under the general supervision of the Board.
Municipal Obligations are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
municipal bonds of comparable quality, coupon, maturity and type; indications as
to values from dealers; and general market conditions. The Service also may
employ electronic data processing techniques and/or a matrix system to determine
valuations. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of the
market, these investments are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for such
securities).
Short-term investments are carried at amortized cost, which approximates
value.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board, are valued at fair value as determined in good
faith by the Board. The Board will review the method of valuation on a current
basis. In making its good faith valuation of restricted securities, the Board
generally will take the following factors into consideration: restricted
securities which are, or are convertible into, securities of the same class of
securities for which a public market exists usually will be valued at market
value less the same percentage discount at which purchased. This discount will
be revised periodically by the Board if its members believe that the discount no
longer reflects the value of the restricted securities. Restricted securities
not of the same class as securities for which a public market exists usually
will be valued initially at cost. Any subsequent adjustment from cost will be
based upon considerations deemed relevant by the Board.
Any assets or liabilities initially expressed in terms of foreign currency
will be translated into dollars at the midpoint of the New York interbank market
spot exchange rate as quoted on the day of such translation by the Federal
Reserve Bank of New York or if no such rate is quoted on such date, at the
exchange rate previously quoted by the Federal Reserve Bank of New York or at
such other quoted market exchange rate as may be determined to be appropriate by
the Investment Adviser. Forward currency contracts will be valued at the current
cost of offsetting the contract. Because of the need to obtain prices as of the
close of trading on various exchanges throughout the world, the calculation of
net asset value for the International Equity and International Bond Funds does
not take place contemporaneously with the determination of prices of such
securities. In addition, portfolio securities held by such Funds may be traded
actively in securities markets which are open for trading on days when the Fund
will not be determining its net asset value. Accordingly, there may be occasions
when these Funds will not calculate it net asset value but when the value of the
Fund's portfolio securities will be affected by such trading activity.
Expenses and fees of a Fund, including the advisory fee, are accrued daily
and taken into account for the purpose of determining the net asset value of
that Fund's shares.
Money Market Funds. The valuation of each Money Market Fund's investment
securities is based upon their amortized cost which does not take into account
unrealized capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold the instrument.
The Board has established procedures, as a particular responsibility within
the overall duty of care owed to the Money Market Fund's investors, reasonably
designed to stabilize the Money Market Fund's price per share as computed for
purposes of purchases and redemptions at $1.00. Such procedures include review
of each Money Market Fund's portfolio holdings by the Board, at such intervals
as it deems appropriate, to determine whether the Money Market Fund's net asset
value calculated by using available market quotations or market equivalents
deviates from $1.00 per share based on amortized cost. In such review of the
portfolio of the Money Market Fund and U.S. Government Money Market Fund,
investments for which market quotations are readily available will be valued at
the most recent bid price or yield equivalent for such securities or for
securities of comparable maturity, quality and type, as obtained from one or
more of the major market makers for the securities to be valued. Other
investments and assets of these Money Market Funds will be valued at fair value
as determined in good faith by the Board. Market quotations and market
equivalents used in such review of the Municipal Money Market Fund are obtained
from an independent pricing service (the "Service") approved by the Board. The
Service will value the Municipal Money Market Fund's investments based on
methods which include consideration of: yields or prices of municipal
obligations of comparable quality, coupon, maturity and type; indications of
values from dealers; and general market conditions. The Service also may employ
electronic data processing techniques and/or a matrix system to determine
valuations.
The extent of any deviation between a Money Market Fund's net asset value
based upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by the Board. If such deviation exceeds
1/2 of 1%, the Board will consider what actions, if any, will be initiated. In
the event the Board determines that a deviation exists which may result in
material dilution or other unfair results to investors or existing shareholders,
it has agreed to take such corrective action as it regards as necessary and
appropriate, including: selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital gains;
redeeming shares in kind; or establishing a net asset value per share by using
available market quotations or market equivalents.
New York Stock Exchange Closings. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
PORTFOLIO TRANSACTIONS
Transactions for a Fund are allocated to various dealers by the Fund's
investment personnel in their best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected to act on an agency basis for
research, statistical or other services to enable the Investment Adviser to
supplement its own research and analysis with the views and information of other
securities firms.
Research services furnished by brokers through which the Funds effect
securities transactions may be used by the Investment Adviser in advising other
funds or accounts it advises and, conversely, research services furnished to the
Investment Adviser by brokers in connection with other funds or accounts the
Investment Adviser advises may be used by the Investment Adviser in advising the
Funds. Although it is not possible to place a dollar value on these services, it
is the opinion of the Investment Adviser that the receipt and study of such
services should not reduce the overall expenses of its research department.
Brokers also are selected because of their ability to handle special
executions such as are involved in large block trades or broad distributions,
provided the primary consideration is met. Large block trades may, in certain
cases, result from two or more clients the Investment Adviser might advise being
engaged simultaneously in the purchase or sale of the same security.
When transactions are executed in the over-the-counter market, the
Investment Adviser will deal with the primary market makers unless a more
favorable price or execution otherwise is obtainable.
Portfolio turnover may vary from year to year, as well as within a year.
Higher turnover rates are likely to result in comparatively greater brokerage
expenses. The overall reasonableness of brokerage commissions paid is evaluated
by the Investment Adviser based upon its knowledge of available information as
to the general level of commissions paid by other institutional investors for
comparable services.
Under normal market conditions, the portfolio turnover rate of each Fund,
other than the Money Market Funds, generally will not exceed 100%.
Purchases and sales of Fixed-Income Securities and Money Market Instruments
usually are principal transactions. These portfolio securities ordinarily are
purchased directly from the issuer or from an underwriter or market maker.
Usually no brokerage commissions are paid by the Fund for such purchases and
sales. The prices paid to the underwriters of newly-issued securities usually
include a concession paid by the issuer to the underwriter, and purchases of
securities from market makers may include the spread between the bid and asked
price.
For the fiscal year ended December 31, 1995, the amount of brokerage
commissions paid by each Fund indicated below, none of which was paid to the
Distributor, were as follows:
<TABLE>
<CAPTION>
Total Brokerage
Name of Fund Commissions Paid
<S> <C>
Managed Assets Income $ 13,601
Managed Assets $ 10,462
Equity Income $379,012
Growth $929,747
Special Opportunities $178,632
International Equity $ 89,528
</TABLE>
There were no spreads or concessions on principal transactions. No other
Fund paid brokerage commissions.
Managed Assets Income Fund only. For its portfolio securities transactions
during the fiscal years ended December 31, 1993 and 1994, First Prairie
Diversified Asset Fund (the predecessor fund of the Managed Assets Income Fund)
paid total brokerage commissions of $29,826 and $47,110, respectively, none of
which was paid to the fund's former distributors. There were no spreads or
concessions on principal transactions in fiscal 1993 and 1994.
DIVIDENDS, DISTRIBUTION AND TAXES
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Dividends, Distributions and
Taxes."
Management believes that each Fund has qualified for the fiscal year ended
December 31, 1995 as a "regulated investment company" under the Code. Each Fund
intends to continue to so qualify if such qualification is in the best interests
of its shareholders. To qualify as a regulated investment company, a Fund must
pay out to its shareholders at least 90% of its net income (consisting of net
investment income from tax exempt obligations and net short-term capital gain),
must derive less than 30% of its annual gross income from gain on the sale of
securities held for less than three months, and must meet certain asset
diversification and other requirements. Qualification as a regulated investment
company relieves the Fund from any liability for Federal income taxes to the
extent its earnings are distributed in accordance with the applicable provisions
of the Code. The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any government
agency.
Any dividend or distribution paid shortly after an investor's purchase may
have the effect of reducing the aggregate net asset value of his shares below
the cost of his investment. Such a distribution would be a return on investment
in an economic sense although taxable as stated in "Dividends, Distributions and
Taxes" in the Prospectus. In addition, the Code provides that if a shareholder
holds shares for six months or less and has received a capital gain dividend
with respect to such shares, any loss incurred on the sale of such shares will
be treated as a long-term capital loss to the extent of the capital gain
dividend received.
Except for dividends from taxable investments, the Fund anticipates that
substantially all dividends paid by a Municipal Fund will not be subject to
Federal income tax. Dividends and distributions paid by a Municipal Fund may be
subject to certain state and local taxes. Although all or a substantial portion
of the dividends paid by a Municipal Fund may be excluded by shareholders of the
Fund from their gross income for Federal income tax purposes, each Municipal
Fund may purchase specified private activity bonds, the interest from which may
be (i) a preference item for purposes of the alternative minimum tax, (ii) a
component of the "adjusted current earnings" preference item for purposes of the
corporate alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to which
a shareholder's Social Security benefits are taxable. If a Municipal Fund
purchases such securities, the portion of its dividends related thereto will not
necessarily be tax exempt to shareholders subject to the alternative minimum tax
and/or tax on Social Security benefits and may cause such shareholders to be
subject to such taxes.
Dividends paid by a Fund to qualified Retirement Plans or certain
non-qualified deferred compensation plans ordinarily will not be subject to
taxation until the proceeds are distributed from the Retirement Plan. The Funds
will not report dividends paid by a Fund to such Plans to the IRS. Generally,
distributions from such Retirement Plans, except those representing returns of
non-deductible contributions thereto, will be taxable as ordinary income and, if
made prior to the time the participant reaches age 59-1/2, generally will be
subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) for any taxable year following the year in
which the participant reaches age 70-1/2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian of
such a Retirement Plan will be responsible for reporting distributions from such
Plans to the IRS. Participants in qualified Retirement Plans will receive a
disclosure statement describing the consequences of a distribution from such a
Plan from the administrator, trustee or custodian of the Plan prior to receiving
the distribution. Moreover, certain contributions to a qualified Retirement Plan
in excess of the amounts permitted by law may be subject to an excise tax.
Taxable dividends derived from net investment income and distributions from
net realized short-term securities gains paid by a Fund to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate of 30%,
unless the foreign investor claims the benefits of a lower rate specified in a
tax treaty. Distributions from net realized long-term securities gains paid by a
Fund to a foreign investor, as well as the proceeds of any redemptions from a
foreign investor's account, regardless of the extent to which gain or loss may
be realized, will not be subject to U.S. nonresident withholding tax. However,
such distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, a portion of the gain or loss
realized from the disposition of non-U.S. dollar denominated securities
(including debt instruments, certain financial futures and options, and certain
preferred stock) may be treated as ordinary income or loss under Section 988 of
the Code.
Under Section 1256 of the Code, gain or loss realized by a Fund from
certain financial futures and options transactions (other than those taxed under
Section 988 of the Code) will be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Gain or loss will arise upon the
exercise or lapse of such futures and options as well as from closing
transactions. In addition, any such futures or options remaining unexercised at
the end of the Fund's taxable year will be treated as sold for their then fair
market value, resulting in additional gain or loss to the Fund characterized in
the manner described above.
Offsetting positions held by a Fund involving certain contracts or options
may constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, overrides or modifies the provisions of Sections 1256 and 988 of
the Code. As such, all or a portion of any short-term or long-term capital gain
from certain "straddle" transactions may be recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of its engaging
in certain forward contracts or options transactions, such "straddles" would be
characterized as "mixed straddles" if the forward contracts or options
transactions comprising a part of such "straddles" were governed by Section 1256
of the Code. A Fund may make one or more elections with respect to "mixed
straddles." Depending on which election is made, if any, the results to the Fund
may differ. If no election is made to the extent the "straddle" and conversion
transactions rules apply to positions established by the Fund, losses realized
by the Fund will be deferred to the extent of unrealized gain in the offsetting
position. Moreover, as a result of the "straddle" rules, short-term capital loss
on "straddle" positions may be recharacterized as long-term capital loss, and
long-term capital gains may be treated as short-term capital gains or ordinary
income.
Investment by a Fund in securities issued or acquired at a discount, or
providing for deferred interest or for payment of interest in the form of
additional obligations could under special tax rules affect the amount, timing
and character of distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the Fund could be
required to accrue a portion of the discount (or deemed discount) at which the
securities were issued and to distribute such income in order to maintain its
qualification as a regulated investment company. In such case, the Fund may have
to dispose of securities which it might otherwise have continued to hold in
order to generate cash to satisfy these distribution requirements.
If a Fund invests in an entity that is classified as a
"passive foreign investment company" ("PFIC") for federal income tax purposes,
the operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In addition, gain
realized from the sale or other disposition of PFIC securities may be treated as
ordinary income under Section 1291 of the Code.
YIELD AND PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Performance Information."
Special Opportunities, Growth and International Equity Funds. Average
annual total return is calculated by determining the ending redeemable value of
an investment purchased with a hypothetical $1,000 payment made at the beginning
of the period (assuming the reinvestment of dividends and distributions),
dividing by the amount of the initial investment, taking the "n"th root of the
quotient (where "n" is the number of years in the period) and subtracting 1 from
the result. A Class's average annual total return figures calculated in
accordance with such formula assume that in the case of Class A the maximum
sales load has been deducted from the hypothetical initial investment at the
time of purchase or in the case of Class B the maximum applicable contingent
deferred sales charge ("CDSC") has been paid upon redemption at the end of the
period.
Total return is calculated by subtracting the amount of the Fund's maximum
offering price per share in the case of Class A or the net asset value per share
in the case of Class B or Class I at the beginning of a stated period from the
net asset value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period and, in the case
of Class B, any applicable CDSC, and dividing the result by the maximum offering
price per share in the case of Class A or the net asset value per share in the
case of Class B or Class I at the beginning of the period. Total return also may
be calculated based on the net asset value per share at the beginning of the
period instead of the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any applicable CDSC at the
end of the period for Class B shares. In such cases, the calculation would not
reflect the deduction of the sales load with respect to Class A shares or any
applicable CDSC with respect to Class B shares which, if reflected, would reduce
the performance quoted.
The total return for each of these Funds for the period from
inception of the Fund through December 31, 1995 for each Class was as follows:
<TABLE>
<CAPTION>
Class A Class B Class I
Based on Maximum Based on Net Based on Net Based on
Name of Fund Offering Price Asset Value Asset Value Maximum CDSC
- ------------ ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Special 19.20% 24.80% 23.76% 18.76% 25.08%
Opportunities(1)
Growth(1) 24.14% 29.98% 29.15% 24.15% 30.38%
International 9.99% 15.16% 14.52% 9.52% 15.62%
Equity(2)
- ---------------------
(1) For the period January 27, 1995 (commencement of operations) through December 31, 1995.
(2) For the period March 3, 1995 (commencement of operations) through December 31, 1995.
</TABLE>
Asset Allocation, Equity Income, Bond and Municipal Bond Funds. Current
yield is computed pursuant to a formula which operates as follows: The amount of
the Fund's expenses accrued for the 30-day period (net of reimbursements) is
subtracted from the amount of the dividends and interest earned by the Fund
during the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were entitled
to receive dividends, and (b) the net asset value per share on the last day of
the period less any undistributed earned income per share reasonably expected to
be declared as a dividend shortly thereafter. The quotient is then added to 1,
and that sum is raised to the 6th power, after which 1 is subtracted. The
current yield is then arrived at by multiplying the result by 2.
With respect to the Municipal Funds, tax equivalent yield is computed by
dividing that portion of the current yield (calculated as described above) which
is tax-exempt by 1 minus a stated tax rate and adding the quotient to that
portion, if any, of the yield of the Fund that is not tax-exempt. The tax
equivalent yields noted below represent the application of the highest Federal
marginal personal income tax rate presently in effect. The tax equivalent yield
figures, however, do not reflect the potential effect of any state or local
(including, but not limited to, county, district or city) taxes, including
applicable surcharges. In addition, there may be pending legislation which could
affect such stated tax rate or yields. Each investor should consult its tax
adviser, and consider its own factual circumstances and applicable tax laws, in
order to ascertain the relevant tax equivalent yield.
The current yield for each of these Funds for the 30- day period ended
December 31 1995, for each Class outstanding was as follows:
<TABLE>
<CAPTION>
Class A Class B Class I
Net of Net of Net of
Current Absorbed Current Absorbed Current Absorbed
Name of Fund Yield Expenses Yield Expenses Yield Expenses
- ------------ ------ -------- ------ -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Managed Assets 3.01% 3.01% 2.45% 2.45% 3.59% 3.18%
Income
Managed Assets 1.97% 1.54% 1.32% .91% 2.59% 1.90%
Equity Income 3.11% 3.11% 2.45% .99% 3.74% 3.57%
Intermediate Bond 5.06% 5.06% 4.43% 4.43% 5.55% 5.47%
Bond 5.13% 5.13% 4.47% 1.66% 5.78% 5.63%
International Bond 3.60% 1.09% 2.98% (21.76)% 4.33% 4.05%
Intermediate 3.65% 3.54% 2.83% 2.05% 4.12% 3.90%
Municipal Bond
Municipal Bond 4.02% 4.02% 3.33% 2.81% 4.63% 4.46%
</TABLE>
Based upon a 1995 Federal income tax rate of 39.6%, the tax equivalent
yield for the Municipal Funds for the 30-day period ended December 31, 1995 for
each Class was as follows:
<TABLE>
<CAPTION>
Class A Class B Class I
Tax Net of Tax Net of Tax Net of
Equivalent Absorbed Equivalent Absorbed Equivalent Absorbed
Name of Fund Yield Expenses Yield Expenses Yield Expenses
- ------------ ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Intermediate 6.04% 5.86% 4.69% 3.39% 6.82% 6.46%
Municipal Bond
Municipal Bond 6.66% 6.66% 5.51% 4.65% 7.67% 7.38%
</TABLE>
Average annual total return and total return is calculated as described
above.
The average annual total return for the indicated Funds and periods ended
December 31, 1995 for each Class outstanding was as follows:
<TABLE>
<CAPTION>
Class A Class B Class I
Name of Fund 1-Year 5-Year 10-Year 1-Year 5-Year 10-Year 1-Year 5-Year 10-Year
- ------------ ------ ------ ------- ------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Managed Assets 20.83% 11.94% 11.10%(1) 21.69%(2) N/A N/A N/A N/A N/A
Income
Intermediate Bond 13.61% 5.65%(3) N/A 13.68%(2) N/A N/A 17.53% 6.91%(3) N/A
Intermediate 9.21% 7.08% 7.46%(4) 5.40% 2.68%(2) N/A N/A N/A N/A
Municipal Bond
Municipal Bond 11.67% 8.21% 8.30%(4) 12.22% 4.64%(2) N/A N/A N/A N/A
- ---------------------------
(1) For the period January 23, 1986 through December 31, 1995.
(2) For the period February 8, 1994 through December 31, 1995.
(3) For the period March 5, 1993 through December 31, 1995.
(4) For the period March 1, 1988 through December 31, 1995.
</TABLE>
The total return for each of these Funds for the period from inception of
the Fund through December 31, 1995, except where noted, for each Class was as
follows:
<TABLE>
<CAPTION>
Class A Class B Class I
Based on Maximum Based on Net Based on Net Based on
Name of Fund Offering Price Asset Value Asset Value Maximum CDSC
- ------------ ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Managed Assets(1) 11.25% 16.48% 15.83% 10.83% 15.62%
Managed Assets 184.94% 198.34% 22.72% 18.72% 22.55%
Income(2)
Equity Income(3) 23.95% 29.78% 28.97% 23.97% 30.27%
Intermediate 16.82% 20.45% 15.11% 12.11% 20.79%
Bond(4)
Bond(5) 12.91% 18.22% 17.41% 12.41% 18.57%
International 15.66% 21.10% 20.49% 15.49% 22.13%
Bond(3)
Intermediate 75.86% 81.22% 8.13% 5.14% 11.33%
Municipal Bond(6)
Municipal Bond(6) 86.92% 95.68% 12.98% 8.98% 14.20%
- ---------------------
(1) For the period April 3, 1995 (commencement of operations) through December 31, 1995.
(2) For the period January 23, 1986 (commencement of operations) through December 31, 1995.
(3) For the period January 30, 1995 (commencement of operations) through December 31, 1995.
(4) For the period March 5, 1993 (commencement of operations) through December 31, 1995.
(5) For the period February 16, 1995 (commencement of operations) through December 31, 1995.
(6) For the period March 1, 1988 (commencement of operations) through December 31, 1995.
</TABLE>
For purposes of advertising, calculations of average annual total return
and total return for each of the Managed Assets Income Fund and Intermediate
Municipal bond Fund will take into account the performance of its corresponding
predecessor fund--namely First Prairie Diversified Asset Fund and the
Intermediate Series of First Prairie Municipal bond Fund, Inc.--the assets and
liabilities of which were transferred to the relevant Fund in exchange for Class
A shares of such Fund on March 3, 1995 and January 31, 1995, respectively. In
addition, performance figures for the Intermediate Municipal Bond Fund for
periods prior to July 1, 1992 reflect the Intermediate Series' management policy
at the time to invest in municipal obligations rated A or better by Moody's or
S&P.
Performance figures for Prairie Municipal Bond Fund, Inc. (the Municipal
Bond Fund) reflect the fact that for the period September 12, 1989 through
January 17, 1995 the Fund's then existing management policies required it to
invest at least 65% of the value of its total assets in municipal obligations
insured as to timely payment of principal and interest by recognized insurers of
municipal obligations. In addition, prior to September 12, 1989, the Municipal
Bond Fund's management policies required the Fund to invest in municipal
obligations rated A or better by Moody's or S&P.
Performance figures for Prairie Intermediate Bond Fund (the Intermediate
Bond Fund) for periods prior to January 17, 1995 reflect the Intermediate Bond
Fund's fundamental policy at the time to invest at least 65% of the value of its
total assets in U.S. Government securities, which included U.S. Treasury
securities, agency securities and mortgage-related securities issued or
guaranteed by U.S. Government agencies or instrumentalities.
Money Market Funds. Yield will be computed in accordance with a
standardized method which involves determining the net change in the value of a
hypothetical pre-existing Fund account having a balance of one share at the
beginning of a seven calendar day period for which yield is to be quoted,
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return, and annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the value of additional shares purchased with dividends
declared on the original share and any such additional shares and fees that may
be charged to shareholder accounts, in proportion to the length of the base
period and the Fund's average account size, but does not include realized gains
and losses or unrealized appreciation and depreciation. Effective annualized
yield is computed by adding 1 to the base period return (calculated as described
above), raising that sum to a power equal to 365 divided by 7, and subtracting 1
from the result.
For the seven-day period ended December 31, 1995, each Money Market Fund's
yield, effective yield and, for the Municipal Money Market Fund only, tax
equivalent yield were as follows:
Tax
Effective Equivalent
Name of Fund Yield Yield Yield
U.S. Government Money Market 4.63% 4.73% N/A
Money Market
Class A 5.03% 5.15% N/A
Class B 4.29% 4.37% N/A
Municipal Money Market 3.85% 3.92% 6.37%
Yields will fluctuate and are not necessarily representative of future
results. Investors should remember that yield is a function of the type and
quality of the instruments held, their maturity and operating expenses. An
investor's principal in a Money Market Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which the
Money Market Fund's price per share is determined.
All Funds. From time to time, advertising materials for a Fund may refer to
or include commentary by the Fund's portfolio managers relating to investment
strategy, the investment outlook for the Fund, current or past business,
political, economic or financial conditions in general and other matters of
interest to investors. Such materials also may refer to commentary by recognized
authorities on investment strategies in general and provide risk-return
comparisons of various investments. Advertising materials for a Fund also may
provide an investor profile, biographical information on the Fund's portfolio
managers, as well as specific descriptions of the Fund's portfolio, such as its
top holdings and sectors of investment, maturity allocation, composition by
credit quality and other relevant data.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Shares have no
preemptive or subscription rights and are freely transferable.
As of March 27, 1996, the following shareholders were record owners of 5%
or more of the indicated Fund's outstanding shares:
Percent of Managed
Assets Income Fund
Class B Shares
Name and Address Outstanding
Donaldson Lufkin & Jenrette 21.4%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Percent of Managed Assets
Income Fund Class I
Name and Address Shares Outstanding
Eagle and Co. 99.4%
c/o American National Bank
Mutual Fund Processing Unit
1 North LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Managed
Assets Fund Class A
Name and Address Shares Outstanding
Corelink Financial, Inc. 19.1%
P.O. Box 4054
Concord, PA 94524-4054
Dr. R. Neidballa 18.1%
Dupage Internal Med Empl
Ret Plan
c/o First Chicago
218 E. Wesley, Ste. 2030
Wheaton, IL 60187-5323
First Chicago TTEE 11.4%
FBO Gottlieb Bros Profit SHR/TRU
Gottlieb Bros., Inc.
55 E. Washington Street
Suite 745
Chicago, IL 60602-2107
First Chicago as Trustee 10.9%
Brook Clinic
210 West 22nd Street
Suite 118
Oak Brook, IL 60521-1544
First Chicago TTEE 8.4%
ChemPet Employee's
2100 Clearwater Drive
Suite 102
Oak Brook, IL 60521-1941
First Chicago, as Investment Manager 5.0%
FBO Midaco Corp.
2000 E. Touhy Ave.
Elk Grove, IL 60007-5318
Percent of Managed
Assets Fund Class B
Name and Address Shares Outstanding
First Chicago, as Agent 53.7%
FBO BMC Inc.
Money Purchase PL
3N497 N. 17th Street
St. Charles, IL 60174-1658
Percent of Managed
Assets Fund Class I
Name and Address Shares Outstanding
Eagle & Co. 98.9%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Equity Income
Fund Class A Shares
Name and Address Outstanding
Donaldson Lufkin & Jenrette 6.5%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Bank of Homewood TTEE 5.6%
Louise D. Weinberg Trust
3043 Ridge Road
Lansing, IL 60438-3068
First Chicago TTEE 5.0%
Fancy Colours & Co. Savings Plan
218 E. Wesley
Suite 2030
Wheaton, IL 60187-5323
Percent of Equity Income
Fund Class B Shares
Name and Address Outstanding
Corelink Financial, Inc. 21.1%
P.O. Box 4054
Concord, CA 94542-4054
Donaldson Lufkin & Jenrette 20.8%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Percent of Equity Income
Fund Class I Shares
Name and Address Outstanding
Eagle & Co. 81.8%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Growth Fund
Class A
Name and Address Shares Outstanding
Corelink Financial, Inc. 24.6%
P.O. Box 4054
Concord, CA 94524-4054
First Chicago, as Custodian for 7.5%
Ravenswood Medical Group
1945 West Wilson
Chicago, IL 60640-5208
First Chicago, as 5.2%
Investment Manager
for ChicagoLand Hygiene PST
37 W. 919 Tanglewood Drive
Batavia, IL 60510-9506
Percent of Growth
Fund Class B
Name and Address Shares Outstanding
Corelink Financial, Inc. 60.1%
P.O. Box 4054
Concord, CA 94524-4054
Donaldson Lufkin & Jenrette 18.4%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Percent of Growth
Fund Class I
Name and Address Shares Outstanding
Eagle & Co. 97.5%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Special
Opportunities Fund Class
Name and Address A Shares Outstanding
The Northern Trust Company TTEE 42.3%
Henry B. Babson Trust
P.O. Box 92956
Chicago, IL 60675-0001
First Chicago, as Investment 8.4%
Manager for ChicagoLand Hygiene PST
37 W. 919 Tanglewood Drive
Batavia, IL 60510-9506
Percent of Special
Opportunities Fund Class
Name and Address B Shares Outstanding
Donaldson Lufkin & Jenrette 69.2%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Concord Holding Corporation 29.4%
125 West 55th Street
11th Floor
New York, NY 10019
Percent of Special
Opportunities Fund Class
Name and Address I Shares Outstanding
Eagle & Co. 98.2%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of International
Equity Fund Class A
Name and Address Shares Outstanding
Corelink Financial, Inc. 17.3%
P.O. Box 4054
Concord, CA 94524-4054
First Chicago, Discretionary 10.4%
Three First National Plaza
Chicago, IL 60670
First Chicago TTEE 5.1%
Hope Publishing Company
380 S. Main Place
Carol Stream, IL 60188-2448
Percent of International
Equity Fund Class B
Name and Address Shares Outstanding
Corelink Financial, Inc. 21.0%
P.O. Box 4054
Concord, CA 94524-4054
Donaldson Lufkin & Jenrette 5.4%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Percent of International
Equity Fund Class I
Name and Address Shares Outstanding
Eagle & Co. 94.7%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Intermediate
Bond Fund Class A
Name and Address Shares Outstanding
Corelink Financial, Inc. 12.0%
P.O. Box 4054
Concord, CA 94524-4054
First Chicago TTEE 11.3%
FBO WJ Dennis & Co.
1111 Davis Road
Elgin, IL 60120
First Chicago TTEE 8.1%
McDonough Assoc.
218 E. Wesley
Suite 2030
Wheaton, IL 60187-5323
First Chicago TTEE 5.2%
Hope Publishing Company
380 S. Main Place
Carol Stream, IL 60188-2448
Percent of Intermediate
Bond Fund Class B
Name and Address Shares Outstanding
Donaldson Lufkin & Jenrette 30.0%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Corelink Financial, Inc. 26.3%
P.O. Box 4054
Concord, CA 94524-4054
Percent of Intermediate
Bond Fund Class I
Name and Address Shares Outstanding
Eagle & Co. 96.5%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Bond Fund
Class A
Name and Address Shares Outstanding
First Chicago, Discretionary 23.2%
Three First National Plaza
Chicago, IL 60670
First Chicago, as Agent 10.7%
FBO BMC Inc.
3N497 N. 17th Street
St. Charles, IL 60174-1658
First Chicago TTEE 5.3%
Hope Publishing Company
380 S. Main Place
Carol Stream, IL 60188-2448
Percent of Bond Fund
Shares Outstanding
Donaldson Lufkin & Jenrette 89.1%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Concord Holding Corporation 8.5%
125 West 55th Street
11th Floor
New York, NY 10019
Percent of Bond Fund
Class I
Name and Address Shares Outstanding
Eagle & Co. 99.6%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of International
Bond Fund Class A
Name and Address Shares Outstanding
First Chicago TTEE 19.9%
Hope Publishing Company
380 S. Main Place
Carol Stream, IL 60188-2448
First Chicago, Discretionary 17.0%
Three First National Plaza
Chicago, IL 60670
First Chicago, as Agent 6.8%
FBO BMC Inc.
3N497 N. 17th Street
St. Charles, IL 60174-1658
First Chicago, as Investment Manager 5.3%
for ChicagoLand Hygiene PST
37 W. 919 Tanglewood Drive
Batavia, IL 60510-9506
Percent of International
Bond Fund Class B
Name and Address Shares Outstanding
Concord Holding Corporation 100.0%
125 West 55th Street
11th Floor
New York, NY 10019
Percent of International
Bond Fund Class I
Name and Address Shares Outstanding
Eagle & Co. 96.3%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Intermediate
Municipal Bond Fund
Class A
Name and Address Shares Outstanding
Leonard Nieder & Mary Nieder 5.4%
JT TEN
6405 N. Kilbourn Avenue
Lincolnwood, IL 60646-3434
Percent of Intermediate
Municipal Bond Fund Class
Name and Address B Shares Outstanding
Donaldson Lufkin & Jenrette 66.7%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-9998
Percent of Intermediate
Municipal Bond Fund Class
Name and Address I Shares Outstanding
Eagle & Co. 98.5%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Municipal Bond
Fund Class A
Name and Address Shares Outstanding
Hardis A. Ueland 5.2%
317 Patricia Lane
Bartlett, IL 60103-3033
Percent of Municipal Bond
Fund Class B
Name and Address Shares Outstanding
Donaldson Lufkin & Jenrette 66.9%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303-2052
Percent of Municipal Bond
Fund Class I
Name and Address Shares Outstanding
Eagle & Co. 99.3%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Municipal
Money Market Fund
Name and Address Shares Outstanding
Eagle & Co. 42.7%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Craylon Corporation 9.1%
2500 W. Arthington
Chicago, IL 60612-4108
Percent of U.S.
Government Money
Market Fund
Name and Address Shares Outstanding
Potomac Corporation 9.6%
P.O. Box 67-A
100 W. Willow Road
Wheeling, IL 60090-6522
Eagle & Co. 6.0%
American National Bank
Mutual Fund Processing Unit
1 N. LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Money Market
Fund Class B
Name and Address Shares Outstanding
Corelink Financial, Inc. 99.9%
P.O. Box 4054
Concord, CA 94524-4054
A shareholder who beneficially owns, directly or indirectly, more than 25%
of a Fund's voting securities may be deemed a "control person" (as defined in
the 1940 Act) of the Fund.
The Prairie Funds may be used in conjunction with other investment products
or services offered by FCIMCO, FNBC or its affiliates. Such products and
services involve fees that differ and may be in addition to the fees charged by
the Prairie Funds. For more information about these products or services please
contact your Service Agent.
Each Fund will send annual and semi-annual financial statements to all its
shareholders.
<PAGE>
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-2696,
as counsel for the Funds, has rendered its opinion as to certain legal matters
regarding the due authorization and valid issuance of the shares being sold
pursuant to the Funds' Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Funds.
<PAGE>
APPENDIX
Description of certain ratings assigned by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors Service,
L.P. ("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"), IBCA Inc. and IBCA
Limited ("IBCA") and Thomson BankWatch, Inc. ("BankWatch"):
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions would likely impair capacity or willingness to
pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payments of principal. In the event of adverse business, financial or
economic conditions, it is not likely to have the capacity to pay interest and
repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
ratings categories.
Commercial Paper Rating
The designation A-1 by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an A-2 designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what generally are known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and therefore not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
categories below B. The modifier 1 indicates a ranking for the security in the
higher end of a rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates a ranking in the lower end of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or relating supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of a specific debt issue or class of debt. The ratings take into
consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest and/or
principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of interest
and/or principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for recovery
on these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA category covering 12-36 months or the DDD, DD
or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the existence
of liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payments, but the margin of safety is not as great as
the F-1+ and F-1 categories.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection factors but
still considered sufficient for prudent investment. Considerable variability in
risk during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as likely
to meet obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds may
be in default or have considerable uncertainty as to timely payment of interest,
preferred dividends and/or principal. Protection factors are narrow and risk can
be substantial with unfavorable economic or industry conditions and/or with
unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled principal
and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except AAA) to
indicate the relative position of a credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small.
IBCA
Bond and Long-Term Ratings
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated AA by IBCA. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic or financial conditions may increase investment risk albeit
not very significantly.
Commercial Paper and Short-Term Ratings
The designation A1 by IBCA indicates that the obligation is supported by a
very strong capacity for timely repayment. Those obligations rated A1+ are
supported by the highest capacity for timely repayment. Obligations rated A2 are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.
International and U.S. Bank Ratings
An IBCA bank rating represents IBCA's current assessment of the strength of
the bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, IBCA assigns
banks Long- and Short-Term Ratings as used in the corporate ratings discussed
above. Legal Ratings, which range in gradation from 1 through 5, address the
question of whether the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings are considered by
IBCA to be a prime factor in its assessment of credit risk. Individual Ratings,
which range in gradations from A through E, represent IBCA's assessment of a
bank's economic merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support from state
authorities or its owners.
BankWatch
Commercial Paper and Short-Term Ratings
The rating TBW-1 is the highest short-term rating assigned by BankWatch;
the rating indicates that the degree of safety regarding timely repayment of
principal and interest is very strong.
In addition to ratings of short-term obligations, BankWatch assigns a
rating to each issuer it rates, in gradations of A through E. BankWatch examines
all segments of the organization including, where applicable, the holding
company, member banks or associations, and other subsidiaries. In those
instances where financial disclosure is incomplete or untimely, a qualified
rating (QR) is assigned to the institution. BankWatch also assigns, in the case
of foreign banks, a country rating which represents an assessment of the overall
political and economic stability of the country in which the bank is domiciled.
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--25.7%
AUTOMOBILES--LEASING--0.9%
Hertz Corp., Junior Subordinate Note.... 6.63% 7/15/00 $ 500 $ 511,596
-----------
BANKING--2.4%
Citicorp, Subordinate Capital Note...... 9.75% 8/1/99 250 281,881
Citicorp, Subordinate Debenture......... 8.63% 12/1/02 350 399,187
NationsBank Corp., Subordinate
Debenture............................. 8.13% 6/15/02 350 386,750
Westpac Banking Limited, Subordinate
Debenture............................. 9.13% 8/15/01 250 285,192
-----------
1,353,010
-----------
BEVERAGES, FOOD AND TOBACCO--4.8%
Grand Metro Investment Corp., Guaranteed
Debenture, Yankee Bond................ 9.00% 8/15/11 250 309,616
Philip Morris Cos., Inc., Corporate
Note.................................. 8.63% 3/1/99 500 539,361
Philip Morris Cos., Inc., Corporate
Note.................................. 7.13% 10/1/04 250 264,357
RJR Nabisco, Inc. ...................... 8.30% 4/15/99 750 799,769
RJR Nabisco, Inc. ...................... 8.63% 12/1/02 700 727,012
-----------
2,640,115
-----------
CONSUMER GOODS AND SERVICES--1.0%
Time Warner, Inc., Corporate Note....... 7.95% 2/1/00 500 528,668
-----------
ENERGY--3.1%
Burlington Resources, Inc., Corporate
Note.................................. 8.50% 10/1/01 250 279,853
Coastal Corp., Senior Debenture......... 10.25% 10/15/04 500 623,257
Occidental Petroleum Corp., Senior Note. 11.13% 8/1/10 400 558,388
Shell Canada Limited, Corporate Note.... 7.38% 6/1/99 250 263,587
-----------
1,725,085
-----------
FINANCIAL SERVICES--9.2%
Barclay American Corp., Senior
Debenture............................. 9.13% 12/1/97 750 796,317
Chemical Banking Corp., Subordinate
Note.................................. 7.63% 1/15/03 500 542,021
Discover Credit Corp., Medium Term Note. 8.37% 4/28/99 250 268,483
General Motors Acceptance Corp.,
Corporate Note........................ 7.75% 4/15/97 250 254,756
General Motors Acceptance Corp.,
Corporate Note........................ 7.00% 3/1/00 500 520,157
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
FINANCIAL SERVICES (CONTINUED)
General Motors Acceptance Corp.,
Medium Term Note...................... 8.65% 5/29/96 $ 400 $ 405,094
International Lease Finance,
Corporate Note........................ 8.35% 10/1/98 500 533,594
KFW International Finance, Inc.
Guaranteed Note....................... 8.85% 6/15/99 250 274,728
Progessive Corp., Ohio, Corporate Note.. 6.60% 1/15/04 500 509,013
Salomon Inc., Senior Note............... 7.50% 2/1/03 500 514,213
Wells Fargo & Co., Subordinate Note..... 8.38% 5/15/02 400 447,822
-----------
5,066,198
-----------
HEATH CARE AND HOSPITAL MANAGEMENT--0.5%
Multicare Cos., Inc.,
Subordinate Debenture*................ 7.00% 3/15/03 250 271,250
-----------
RETAIL--0.5%
May Department Stores Co.,
Medium Term Note...................... 9.45% 2/2/99 250 275,701
-----------
STEEL--0.9%
USX-Marathon Group, Corporate Note...... 6.38% 7/15/98 500 505,561
-----------
TECHNOLOGY INDUSTRIES--1.0%
Digital Equipment Corp., Debenture...... 8.63% 11/1/12 500 547,116
-----------
UTILITIES--1.4%
Commonwealth Edison Co., First Mortgage,
Series 81, Corporate Note............. 8.63% 2/1/22 250 275,250
Pacific Bell, Corporate Note............ 7.00% 7/15/04 500 525,940
-----------
801,190
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $13,587,940)..................... 14,225,490
-----------
U.S. GOVERNMENT OBLIGATIONS--3.7%
U.S. Treasury Notes..................... 8.50% 5/15/97 100 104,344
U.S. Treasury Notes..................... 8.13% 2/15/98 500 528,750
U.S. Treasury Notes..................... 6.25% 5/31/00 850 879,218
U.S. Treasury Notes..................... 8.00% 5/15/01 500 560,000
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $1,960,714)...................... 2,072,312
-----------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS--1.7%
Federal National
Mortgage Association.. 7.60% 1/10/97 $ 400 $ 409,250
Federal National
Mortgage Association.. 8.35% 11/10/99 500 547,694
----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(COST $900,628)........ 956,944
----------
<CAPTION>
Shares
------
<S> <C> <C> <C> <C>
PREFERRED CONVERTIBLE
STOCKS--7.0%
AUTOMOBILES--3.1%
Ford Motor Co., Series
A, $4.20.............. 9,000 852,750
General Motors Corp.,
Series C, $3.25....... 12,000 879,000
----------
1,731,750
----------
BANKING AND FINANCE--3.9%
Citicorp, Series 13,
$5.38................. 6,000 1,098,750
First USA, Inc., 6.25%.. 15,000 592,500
National City Corp.,
8.00%................. 6,000 472,500
----------
2,163,750
----------
TOTAL PREFERRED
CONVERTIBLE STOCKS
(COST $2,643,539)...... 3,895,500
----------
COMMON STOCKS--41.9%
AUTOMOBILES--1.7%
Ford Motor Co. ......... 4,000 116,000
General Motors Corp..... 14,886 787,097
----------
903,097
----------
BANKING AND FINANCE--5.1%
Bank of Boston Corp. ... 21,000 971,250
First Union Corp. ...... 11,000 611,875
NationsBank Corp. ...... 13,912 968,623
Citicorp................ 4,280 287,830
----------
2,839,578
----------
BEVERAGE, FOOD AND
TOBACCO--3.3%
Philip Morris Cos.,
Inc. ................. 20,000 1,810,000
----------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
ELECTRICAL AND ELECTRONIC EQUIPMENT--0.6%
Hubbell, Inc., Class B.......................... 5,000 $ 328,750
-----------
HEALTH INDUSTRIES--3.6%
National Health Investors, Inc. ................ 61,000 2,020,625
-----------
INSURANCE--3.1%
AON Corp. ...................................... 28,500 1,421,438
Exel, Ltd. ..................................... 5,200 317,200
-----------
1,738,638
-----------
OIL & GAS--3.9%
Atlantic Richfield Co. ......................... 5,000 553,750
British Petroleum PLC ADR....................... 9,000 919,125
Texaco, Inc. ................................... 9,000 706,500
-----------
2,179,375
-----------
PHARMACEUTICALS--5.8%
Bristol Myers Squibb Co. ....................... 8,000 687,000
Johnson & Johnson............................... 8,000 685,000
Pfizer, Inc. ................................... 20,000 1,260,000
Warner Lambert Co. ............................. 6,000 582,750
-----------
3,214,750
-----------
REAL ESTATE INVESTMENT TRUSTS--2.0%
Amli Residential Property Trust................. 55,000 1,100,000
-----------
TELECOMMUNICATIONS--6.0%
Brittish Telecom PLC ADR........................ 10,000 565,000
GTE Corp. ...................................... 26,000 1,144,000
Sprint Corp. ................................... 20,000 797,500
US West, Inc. .................................. 15,000 536,250
US West Media Group............................. 15,000 285,000
-----------
3,327,750
-----------
UTILITIES--6.8%
Detroit Edison Co. ............................. 20,000 690,000
Entergy Corp. .................................. 20,000 585,000
Peco Energy Co. ................................ 25,000 753,125
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UTILITIES (CONTINUED)
Texas Utilities Co. ................... 30,000 $ 1,233,750
United Illuminating Co. ............... 14,000 523,250
-----------
3,785,125
-----------
TOTAL COMMON STOCKS
(COST $17,046,251).................... 23,247,688
-----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
SHORT TERM INVESTMENT--19.2%
U.S. TREASURY BILL--19.2%
U.S. Treasury Bill (cost $10,607,930).. 5.31%** 2/29/96 $10,700 10,617,075
-----------
TOTAL INVESTMENTS--99.2%
(COST $46,747,002)(A)................. 55,015,009
Other assets in excess of liabilities--
0.8%.................................. 450,318
-----------
NET ASSETS--100.0%...................... $55,465,327
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $55,465,327.
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
** Yield at purchase.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $8,452,650
Unrealized depreciation......................................... (184,643)
----------
Net unrealized appreciation..................................... $8,268,007
==========
</TABLE>
ADR--American Depository Receipts.
See Notes to Financial Statements.
28
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--61.4%
ALUMINUM--1.1%
Aluminum Co. of America...................... 1,900 $ 100,462
----------
AUTOMOBILES--0.9%
Ford Motor Co................................ 3,000 87,000
----------
AUTOMOTIVE PARTS & EQUIPMENT--0.9%
Echlin, Inc.................................. 2,400 87,600
----------
BANKING--3.7%
BankAmerica Corp............................. 1,900 123,025
NationsBank Corp............................. 1,700 118,363
State Street Bank(b)......................... 2,600 117,000
----------
358,388
----------
BEVERAGE, FOOD & TOBACCO--4.5%
Anheuser-Busch Cos., Inc..................... 1,200 80,250
Coca-Cola Co................................. 1,600 118,800
PepsiCo, Inc................................. 2,000 111,750
Philip Morris Cos., Inc...................... 1,300 117,650
----------
428,450
----------
BROKERAGE SERVICES--0.7%
Dean Witter, Discover & Co................... 1,400 65,800
----------
BUSINESS & DATA PROCESSING EQUIPMENT--1.6%
International Business Machines.............. 1,700 155,975
----------
CHEMICALS--3.6%
E. I. du Pont de Nemours & Co................ 1,100 76,863
Monsanto Co.................................. 700 85,750
Morton Int'l................................. 2,900 104,037
Praxair, Inc................................. 2,300 77,337
----------
343,987
----------
COMPUTERS-MICRO--0.9%
Compaq Computer Corp.(b)..................... 1,700 81,600
----------
COMPUTERS-SOFTWARE & PERIPHERALS--2.1%
Computer Association Int'l., Inc. ........... 1,550 88,156
Microsoft Corp.(b)........................... 1,300 114,075
----------
202,231
----------
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
CONGLOMERATES--3.4%
Allied Signal, Inc........................... 1,700 $ 80,750
General Electric Co.......................... 2,500 180,000
ITT Corp..................................... 900 47,700
ITT Industries, Inc.(b)...................... 900 21,600
----------
330,050
----------
CONSUMER GOODS--1.0%
Service Corp. International.................. 2,100 92,400
----------
ELECTRONIC EQUIPMENT--2.7%
Emerson Electric Co.......................... 2,000 163,500
Motorola, Inc................................ 1,700 96,900
----------
260,400
----------
FINANCE COMPANIES--1.1%
Federal Home Loan Mortgage Corp.............. 1,300 108,550
----------
FOOD PROCESSING--0.9%
CPC Int. .................................... 1,300 89,212
----------
FOOD PRODUCTS--0.8%
Hershey Foods................................ 1,200 78,000
----------
HOUSEHOLD & PERSONAL CARE PRODUCTS--1.2%
Procter & Gamble Co. ........................ 1,400 116,200
----------
INSURANCE--1.9%
American International Group, Inc. .......... 1,500 138,750
ITT Hartford Group(b)........................ 900 43,538
----------
182,288
----------
LEISURE & ENTERTAINMENT--1.1%
Walt Disney Co............................... 1,800 106,200
----------
NEWSPAPERS AND PUBLISHING--0.7%
News Corp., Ltd. ADR......................... 3,300 70,538
----------
OIL-DOMESTIC--3.9%
Chevron Corp................................. 2,300 120,750
Mobil Corp................................... 1,200 134,400
Unocal Corp.................................. 4,100 119,413
----------
374,563
----------
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
OIL-FIELD SERVICES AND EQUIPMENT--0.9%
Schlumberger, Ltd. ........................... 1,200 $ 83,100
----------
OIL & GAS--2.0%
British Petroleum Co. ADR..................... 900 91,913
Royal Dutch Petroleum Co...................... 700 98,788
----------
190,701
----------
PHARMACEUTICALS--5.5%
Bristol Myers Squibb Co....................... 1,200 103,050
Johnson & Johnson............................. 1,500 128,437
Merck & Co., Inc.............................. 1,800 118,350
Pfizer, Inc................................... 1,600 100,800
Smithkline Beecham ADR........................ 1,300 72,150
----------
522,787
----------
POLLUTION CONTROL--0.9%
WMX Technologies.............................. 3,000 89,625
----------
RAILROADS--1.1%
CSX Corp...................................... 2,400 109,500
----------
RESTAURANTS--0.8%
McDonald's Corp............................... 1,600 72,200
----------
RETAIL--3.1%
Home Depot, Inc............................... 2,400 114,900
May Department Stores Co...................... 1,500 63,375
Wal Mart Stores, Inc.......................... 5,400 120,825
----------
299,100
----------
TELECOMMUNICATIONS--6.9%
AT&T Corp..................................... 2,100 135,974
General Instrument Corp.(b)................... 1,300 30,388
GTE Corp...................................... 3,800 167,200
MCI Communications Corp....................... 2,800 73,150
NYNEX Corp.................................... 2,100 113,400
Pacific Telesis Group......................... 1,800 60,525
Telcom Corp. New Zealand ADR.................. 1,200 83,250
----------
663,887
----------
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UTILITIES--1.5%
FPL Group, Inc.......................... 3,200 $ 148,400
----------
TOTAL COMMON STOCKS
(COST $5,270,362)...................... 5,899,194
----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
----- -------- ---------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--26.0%
U.S. TREASURY NOTES
U.S. Treasury Note...................... 6.25% 5/31/00 $ 800 827,500
U.S. Treasury Note...................... 7.50% 11/15/01 700 771,750
U.S. Treasury Note...................... 6.38% 8/15/02 850 893,296
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $2,398,249)...................... 2,492,546
----------
SHORT TERM INVESTMENT--11.7%
U.S. TREASURY BILL
U.S. Treasury Bill (cost $1,120,308).... 5.31%* 2/29/96 1,130 1,121,243
----------
TOTAL INVESTMENTS
(COST $8,788,919)(A)--99.1% ........... 9,512,982
Other assets in excess of liabilities--
0.9%................................... 86,019
----------
NET ASSETS--100.0%....................... $9,599,001
==========
</TABLE>
- -----------
Percentages indicated are based on net assets of $9,599,001.
*Yield at purchase.
(a)Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................... $766,286
Unrealized depreciation........................................... (42,223)
--------
Net unrealized appreciation....................................... $724,063
========
</TABLE>
(b)Represents non-income producing security.
ADR--American Depository Receipts.
See Notes to Financial Statements.
32
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--87.4%
AUTOMOBILES--1.4%
Ford Motor Co.............................. 140,000 $ 4,060,000
------------
AUTOMOTIVE PARTS & EQUIPMENT--1.7%
Echlin, Inc................................ 135,000 4,927,500
------------
BANKS--5.7%
Bankers Trust.............................. 115,000 7,647,500
First Union Corp. ......................... 90,000 5,006,250
NationsBank Corp........................... 55,000 3,829,375
------------
16,483,125
------------
BEVERAGES, FOOD & TOBACCO--2.8%
ConAgra, Inc............................... 81,418 3,358,492
Philip Morris Cos., Inc.................... 50,841 4,601,111
------------
7,959,603
------------
CHEMICALS--6.3%
ARCO Chemical.............................. 106,000 5,154,250
Dow Chemical............................... 93,000 6,544,875
E. I. du Pont de Nemours & Co.............. 90,000 6,288,750
------------
17,987,875
------------
COMPUTER SOFTWARE AND PERIPHERALS--1.3%
International Business Machines............ 40,000 3,670,000
------------
CONSTRUCTION--0.5%
Vulcan Materials........................... 23,000 1,325,375
------------
CONSUMER PRODUCTS--3.8%
Clorox Co. ................................ 100,000 7,162,500
Southern Co. .............................. 150,000 3,693,750
------------
10,856,250
------------
DEFENSE--1.7%
Lockheed Martin............................ 60,000 4,740,000
------------
ELECTRICAL EQUIPMENT--2.2%
Emerson Electric Co. ...................... 48,000 3,924,000
Hubbell, Inc., Class B..................... 20,000 1,315,000
Thomas & Betts Corp. ...................... 15,000 1,106,250
------------
6,345,250
------------
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FOREST AND PAPER PRODUCTS--1.4%
Weyerhaeuser Co............................. 95,000 $ 4,108,750
------------
INSURANCE--5.8%
AON Corp. .................................. 137,000 6,832,875
FPL Group, Inc. ............................ 75,000 3,478,125
Lincoln National Corp. ..................... 120,000 6,450,000
------------
16,761,000
------------
METALS--1.0%
Phelps Dodge Corp. ......................... 45,000 2,801,250
------------
NATURAL GAS--3.0%
National Fuel Gas Co. ...................... 25,000 840,625
Sonat, Inc.................................. 40,000 1,425,000
Tenneco, Inc. .............................. 130,000 6,451,250
------------
8,716,875
------------
OIL & GAS--19.0%
AMOCO Corp.................................. 140,000 10,062,500
Atlantic Richfield Corp..................... 55,000 6,091,250
British Petroleum Co. PLC, ADR.............. 70,000 7,148,750
Exxon Corp.................................. 15,000 1,201,875
Mobil Corp.................................. 105,000 11,760,000
Occidental Petroleum Corp. ................. 195,000 4,168,125
Texaco, Inc................................. 125,000 9,812,500
Unocal Corp................................. 153,000 4,456,125
------------
54,701,125
------------
PHARMACEUTICALS--2.9%
Warner Lambert Co. ......................... 86,000 8,352,750
------------
REAL ESTATE INVESTMENT TRUSTS--3.8%
Amli Residential Properties Trust........... 140,000 2,800,000
Equity Residential Properties Trust ........ 80,000 2,450,000
National Health Investors, Inc. ............ 174,000 5,763,750
------------
11,013,750
------------
RETAIL STORES--2.3%
May Department Stores Co. .................. 156,938 6,630,631
------------
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
TELECOMMUNICATIONS--8.7%
British Telecom PLC ADR.................. 70,000 $ 3,955,000
GTE Corp. ............................... 210,000 9,240,000
Sprint Corp.............................. 156,938 6,257,903
U.S. West, Inc........................... 156,938 5,610,533
------------
25,063,436
------------
UTILITIES--12.1%
Cinergy Corp............................. 130,000 3,981,250
Detroit Edison Co. ...................... 196,173 6,767,969
Houston Industries....................... 260,000 6,305,000
Pacific Gas & Electric Co................ 54,928 1,558,582
Peco Energy Co. ......................... 129,769 3,909,291
Texas Utilities Co. ..................... 156,938 6,454,075
United Illuminating Co................... 156,938 5,865,558
------------
34,841,725
------------
TOTAL COMMON STOCKS
(COST $213,380,725)..................... 251,346,270
------------
CONVERTIBLE PREFERRED STOCKS--2.9%
AUTOMOBILES--2.2%
Ford Motor Company, Series A, $4.20...... 66,699 6,319,730
------------
STEEL--0.7%
WHX Corp., Series B, $3.00............... 45,694 1,941,995
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $7,461,465)....................... 8,261,725
------------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
CONVERTIBLE BOND--2.7%
BANKS--2.7%
Bank of New York, Inc.
Subordinate Convertible Debenture
(cost $4,984,156)...................... 7.50% 8/15/01 $ 3,139 7,816,110
------------
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--7.1%
TIME DEPOSIT--7.1%
Berlin/Frankfurt Bank
(cost $20,271,000).................... 5.81% 1/2/96 $20,271 $ 20,271,000
------------
TOTAL INVESTMENTS
(COST $246,097,346)(A)--100.1%......... 287,695,105
Liabilities in excess of other
assets--(0.1%)......................... (301,578)
------------
NET ASSETS--100.0%....................... $287,393,527
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $287,393,527.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $42,227,078
Unrealized depreciation........................................ (629,319)
-----------
Net unrealized appreciation.................................... $41,597,759
===========
</TABLE>
ADR--American Depository Receipt.
See Notes to Financial Statements.
36
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--95.5%
ADVERTISING AND MARKETING SERVICES--1.3%
Interpublic Group of Companies, Inc. ........ 55,000 $ 2,385,625
Omnicon Group................................ 40,000 1,490,000
------------
3,875,625
------------
AUTOMOTIVE PARTS & EQUIPMENT--1.0%
Echlin, Inc. ................................ 80,000 2,920,000
------------
BANKING--1.5%
State Street Bank(b)......................... 100,000 4,500,000
------------
BEVERAGES, FOOD AND TOBACCO--16.0%
Coca Cola Co. ............................... 55,000 4,083,750
ConAgra, Inc. ............................... 110,000 4,537,500
General Mills, Inc. ......................... 140,000 8,085,000
Hershey Foods Corp. ......................... 60,000 3,900,000
Hudson Foods, Inc. Class A................... 90,000 1,552,500
PepsiCo, Inc. ............................... 130,000 7,263,750
Philip Morris Cos., Inc. .................... 140,000 12,670,000
Sara Lee Corp. .............................. 170,000 5,418,750
Schweitzer-Mauduit Int'l.(b)................. 8,000 185,000
------------
47,696,250
------------
CHEMICALS--5.9%
Eastman Chemical Co. ........................ 85,000 5,323,125
Morton Int'l ................................ 150,000 5,381,250
Praxair, Inc. ............................... 145,000 4,875,625
Wellman, Inc. ............................... 90,000 2,047,500
------------
17,627,500
------------
COMPUTERS--MICRO--0.7%
Compaq Computer Corp.(b)..................... 40,000 1,920,000
------------
COMPUTER SOFTWARE AND PERIPHERALS--5.2%
Automatic Data Processing, Inc. ............. 80,000 5,940,000
Computer Associates Int'l., Inc. ............ 100,000 5,687,500
Intel Corp. ................................. 70,000 3,972,500
------------
15,600,000
------------
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
CONSUMER GOODS AND SERVICES--10.4%
American Home Products Corp. ................ 70,000 $ 6,790,000
Clorox Co. .................................. 75,000 5,371,875
Hillenbrand Industries, Inc. ................ 100,000 3,387,500
Kimberly-Clark Corp. ........................ 80,000 6,620,000
Service Corp. Int'l. ........................ 115,000 5,060,000
Stewart Enterprises, Inc. ................... 105,000 3,885,000
------------
31,114,375
------------
CONSUMER NON-DURABLES--0.6%
Alberto-Culver Co., Class A.................. 55,000 1,677,500
------------
ELECTRONICS--9.5%
AMP, Inc. ................................... 120,000 4,605,000
Emerson Electric............................. 80,000 6,540,000
General Electric Co. ........................ 180,000 12,960,000
Motorola, Inc. .............................. 75,000 4,275,000
------------
28,380,000
------------
ENTERTAINMENT AND LEISURE--1.5%
Time Warner, Inc. ........................... 120,000 4,545,000
------------
HEALTH INDUSTRIES--3.9%
Horizon HealthCare Corp.(b).................. 145,000 3,661,250
Procter & Gamble Co. ........................ 95,000 7,885,000
------------
11,546,250
------------
INSURANCE--5.4%
American International Group, Inc. .......... 75,000 6,937,500
Chubb Corp. ................................. 65,000 6,288,750
General RE Corp. ............................ 20,000 3,100,000
------------
16,326,250
------------
MANUFACTURING--1.1%
Corning, Inc. ............................... 100,000 3,200,000
------------
MEDICAL CARE & PRODUCTS--0.7%
Sofamor Danek Group(b)....................... 80,000 2,270,000
------------
OIL & GAS--3.4%
British Petroleum Co. ADR.................... 70,000 7,148,750
Unocal Corp. ................................ 100,000 2,912,500
------------
10,061,250
------------
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
PHARMACEUTICALS--12.0%
Elan Corp. PLC ADR(b)......................... 90,000 $ 4,376,250
Forest Labs, Inc.(b).......................... 50,000 2,262,500
Ivax Corp. ................................... 100,000 2,850,000
Johnson & Johnson............................. 95,000 8,134,375
Mylan Labs.................................... 105,000 2,467,500
Pfizer, Inc. ................................. 160,000 10,080,000
Pharmacia & Upjohn(b)......................... 75,000 2,906,250
Smithkline Beecham ADR........................ 50,000 2,775,000
------------
35,851,875
------------
POLLUTION CONTROL--4.1%
Browning-Ferris............................... 185,000 5,457,500
WMX Technologies, Inc. ....................... 230,000 6,871,250
------------
12,328,750
------------
RETAIL--4.2%
Eckerd Corp.(b)............................... 110,000 4,908,750
May Department Stores Co. .................... 110,000 4,647,500
Walgreen Co.(b)............................... 100,000 2,987,500
------------
12,543,750
------------
TELECOMMUNICATIONS--6.5%
AT&T Corp. ................................... 140,000 9,065,000
Century Telephone Enterprises, Inc. .......... 50,000 1,587,500
DSC Communications Corp.(b)................... 40,000 1,475,000
MCI Communications Corp. ..................... 275,000 7,184,375
------------
19,311,875
------------
UTILITIES--0.6%
AES Corp.(b).................................. 80,000 1,910,000
------------
TOTAL COMMON STOCKS
(COST $239,473,384).......................... 285,206,250
------------
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--3.6%
TIME DEPOSIT--3.6%
Berlin/Frankfort Bank
(cost $10,663,000).................... 5.81% 1/2/96 $10,663 $ 10,663,000
------------
TOTAL INVESTMENTS
(COST $250,136,384)(A)--99.1%.......... 295,869,250
Other assets in excess of liabilities--
0.9%................................... 2,672,096
------------
NET ASSETS--100.0%....................... $298,541,346
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $298,541,346.
(a) Represents cost for financial reporting purposes. Cost for federal income
tax purposes was $250,657,238 and differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $48,528,373
Unrealized depreciation........................................ (3,316,361)
-----------
Net unrealized appreciation.................................... $45,212,012
===========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipts.
See Notes to Financial Statements.
40
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--93.9%
ADVERTISING AND MARKETING SERVICES--1.3%
Interpublic Group of Companies, Inc. ......... 12,000 $ 520,500
Omnicon Group................................. 20,000 745,000
-----------
1,265,500
-----------
APPAREL--1.1%
Tommy Hilfiger Corp.(b)....................... 24,100 1,021,238
-----------
AUTOMOTIVE PARTS AND EQUIPMENT--3.0%
Borg Warner................................... 30,000 960,000
Simpson Industries............................ 70,000 630,000
Superior Industries Int'l, Inc. .............. 45,000 1,186,875
-----------
2,776,875
-----------
BANKS--13.0%
First of America.............................. 50,000 2,218,750
Firstar Corp.................................. 60,000 2,377,500
Northern Trust Corp. ......................... 50,000 2,800,000
Old Kent Financial............................ 60,000 2,467,500
Southern National............................. 60,000 1,575,000
Southtrust Corp. ............................. 30,000 768,750
-----------
12,207,500
-----------
BEVERAGES, FOOD AND TOBACCO--3.0%
Dean Foods Co. ............................... 35,000 962,500
Hudson Foods, Inc., Class A................... 110,000 1,897,500
-----------
2,860,000
-----------
BUSINESS EQUIPMENT AND SERVICES--1.1%
Proxima Corp.(b).............................. 45,000 995,625
-----------
CHEMICALS--2.0%
Airgas, Inc.(b)............................... 55,000 1,828,750
-----------
CONSUMER GOODS AND SERVICES--2.1%
Service Corp Int'l. .......................... 45,000 1,980,000
-----------
CONSUMER NON-DURABLES--1.8%
Alberto-Culver Co., Class A................... 55,000 1,677,500
-----------
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
ELECTRONICS--1.9%
Memec Electric Materials, Inc.(b)............. 14,000 $ 456,750
Methode Electronics, Inc., Class A............ 37,500 534,375
Molex, Inc. .................................. 25,000 793,750
-----------
1,784,875
-----------
ENTERTAINMENT AND LEISURE--1.1%
Royal Caribbean Cruise Ltd. .................. 48,000 1,056,000
-----------
HEALTH CARE PRODUCTS AND SERVICES--14.4%
American Medical Response, Inc.(b)............ 55,000 1,787,500
Amerisource Health Corp., Class A(b).......... 60,000 1,980,000
Genesis Health Ventures, Inc.(b).............. 50,000 1,825,000
Healthcare & Retirement Corp.(b).............. 55,000 1,925,000
Horizon HealthCare Corp.(b)................... 95,000 2,398,750
Multicare Cos., Inc.(b)....................... 50,000 1,200,000
OEA, Inc...................................... 42,000 1,254,750
Summit Care Corp.(b).......................... 50,000 1,143,750
-----------
13,514,750
-----------
INSURANCE--13.6%
Ace Limited................................... 40,000 1,590,000
AMBAC, Inc.................................... 60,000 2,812,500
American Re Corp.............................. 50,000 2,043,750
Integon, Corp................................. 100,000 2,062,500
National Re Corp.............................. 60,000 2,280,000
Sphere Drake Holdings Ltd..................... 68,024 952,336
Western National Corp......................... 60,000 967,500
-----------
12,708,586
-----------
INVESTMENT MANAGEMENT--0.5%
Phoenix Duff & Phelps Corp.................... 62,471 429,488
-----------
MANUFACTURING--1.0%
Holophane(b).................................. 45,000 978,750
-----------
MEDICAL CARE AND PRODUCTS--4.8%
Rural/Metro(b)................................ 80,000 1,810,000
Sofamor Danek Group(b)........................ 95,000 2,695,625
-----------
4,505,625
-----------
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
NATURAL GAS--0.4%
Swift Energy Co.(b)............................ 35,000 $ 420,000
-----------
OIL & GAS--3.5%
Noble Affiliates............................... 50,000 1,493,750
Smith Intl., Inc.(b)........................... 75,000 1,762,500
-----------
3,256,250
-----------
PHARMACEUTICALS--7.6%
A.L. Pharmaceuticals, Inc...................... 85,000 2,220,625
Elan Corp. PLC ADR(b).......................... 50,000 2,431,250
Ivax Corp. .................................... 85,000 2,422,500
-----------
7,074,375
-----------
POLLUTION CONTROL--0.7%
Waste Management PLC ADR(b).................... 65,000 698,750
-----------
RAILROAD EQUIPMENT--0.3%
Johnstown America Industries, Inc.(b).......... 60,000 300,000
-----------
REAL ESTATE DEVELOPMENT--1.8%
Stewart Enterprises, Inc., Class A ............ 45,000 1,665,000
-----------
RESTAURANTS--1.9%
IHOP Corp.(b).................................. 60,000 1,560,000
Starbucks Corp................................. 10,000 210,000
-----------
1,770,000
-----------
RETAIL AND WHOLESALE DISTRIBUTION--1.0%
Corporate Express, Inc.(b)..................... 30,000 903,750
-----------
RETAIL STORES--4.1%
Eckerd Corp.(b)................................ 55,000 2,454,375
Officemax, Inc................................. 60,193 1,346,818
-----------
3,801,193
-----------
TELECOMMUNICATIONS--2.8%
Centennial Cellular Corp., Class A(b).......... 30,000 513,750
Century Telephone Enterprises, Inc. ........... 65,000 2,063,750
-----------
2,577,500
-----------
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UTILITIES--4.1%
AES Corp.(b)............................ 80,000 $ 1,910,000
Public Service Co. of New Mexico(b)..... 35,000 616,875
South Industries G&E Co.(b)............. 36,800 1,278,800
-----------
3,805,675
-----------
TOTAL COMMON STOCKS
(COST $72,403,453)..................... 87,863,555
-----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--6.3%
TIME DEPOSIT
Berlin/Frankfort Bank
(cost $5,914,000)..................... 5.81% 1/2/96 $5,914 5,914,000
-----------
TOTAL INVESTMENTS
(COST $78,317,453)(A)--100.2%.......... 93,777,555
Liabilities in excess of other assets--
(0.2%)................................. (164,612)
-----------
NET ASSETS--100.0%....................... $93,612,943
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $93,612,943.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $16,914,276
Unrealized depreciation........................................ (1,454,174)
-----------
Net unrealized appreciation.................................... $15,460,102
===========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipts.
See Notes to Financial Statements.
44
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--71.2%
AUSTRALIA--3.2%
Aberfoyle................................... 2,400 $ 5,266
Adelaide Brighton Limited................... 3,800 3,392
Amcor Limited............................... 15,300 108,121
Ampolex..................................... 6,900 15,090
Ashton Mining Limited....................... 7,000 10,154
Australian National Industries Limited...... 18,800 13,983
Boral Limited............................... 27,500 69,550
Brambles Industries Limited................. 5,500 61,369
Broken Hill Proprietary Co. ................ 47,000 664,270
Burns Philip & Co. ......................... 12,200 27,316
Caltex Limited.............................. 4,300 16,985
Coca-Coca Amatil............................ 9,600 76,623
Coles Myer Limited.......................... 26,612 82,944
CRA Limited................................. 16,017 235,192
Crusader(b)................................. 2,400 2,535
CSR Limited................................. 22,700 73,959
Dominion Mining Limited(b).................. 2,160 1,125
Email Limited............................... 6,900 16,424
Emperor Mines Limited(b).................... 1,600 2,559
FAI Insurances(b)........................... 7,600 4,127
Fosters Brewing Group....................... 48,900 80,387
General Property Trust...................... 15,200 26,910
Gold Mines of Kalgoorlie.................... 23,800 22,129
Goodman Fielder Limited..................... 29,900 30,026
Hardie (James) Industries................... 9,600 16,567
ICI Australia............................... 7,400 56,697
Lend Lease Corp. ........................... 6,000 87,032
MIM Holdings Limited........................ 39,700 54,925
National Australia Bank..................... 34,900 314,124
Newcrest Mining Limited..................... 5,800 24,419
News Corporation Limited.................... 49,700 265,443
North Limited............................... 17,100 47,700
OPSM Protector Limited...................... 3,500 5,467
Pacific Dunlop Limited...................... 28,800 67,481
Pioneer International Holdings.............. 22,100 57,045
QCT Resources............................... 15,100 16,960
RGC Limited................................. 5,000 24,920
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
AUSTRALIA (CONTINUED)
Rothman's Holdings Limited................. 2,500 $ 10,228
Santos Limited............................. 21,000 61,389
Schroders Property Fund.................... 9,100 14,892
Smith Howard Limited....................... 4,200 19,839
Sons of Gwalia Limited..................... 1,800 9,908
Southcorp Holdings......................... 23,400 54,482
Stockland Trust Group...................... 7,400 17,064
TNT Limited(b)............................. 14,400 19,066
Tubemakers of Australia Limited............ 6,900 21,403
Westfield Trust............................ 23,700 42,662
Westpac Banking Corp....................... 45,500 201,720
WMC Limited................................ 27,600 177,385
------------
3,339,254
------------
FRANCE--3.5%
Accor...................................... 100 12,964
Air Liquide................................ 250 41,459
Alcatel Alsthom............................ 1,700 146,766
AXA........................................ 600 40,488
Banque Nationale de Paris.................. 4,500 203,266
BIC........................................ 100 10,183
Bouygues................................... 100 10,087
Carnaudmetalbox(b)......................... 3,300 151,154
Carrefour(b)............................... 150 91,128
Casino Guich-Perr.......................... 250 7,264
Chargeurs.................................. 50 9,969
Cie De St Gobain........................... 2,300 254,909
Cie De Suez................................ 2,400 99,133
Cie Geophysique(b)......................... 50 1,646
Club Mediterranee(b)....................... 50 3,998
Compagnie Bancaire......................... 1,210 135,589
Compagnie UAP.............................. 3,600 94,152
Comptoirs Modern........................... 50 16,256
CSF (Thomson).............................. 450 10,039
Docks de France............................ 50 7,607
Dollfus-Meig & Cie PV...................... 50 2,044
Eaux-Cie Generale.......................... 2,700 269,924
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FRANCE (CONTINUED)
ELF-Aquitane............................... 3,300 $ 243,466
Eridania Beghin-Say........................ 100 17,177
Essilor International...................... 50 9,570
Europe 1(b)................................ 25 5,061
Groupe Danone.............................. 250 41,306
GTM Entrepose.............................. 50 3,512
Imetal..................................... 50 5,981
Lafarge-Coppee............................. 330 21,290
Lagardere Groupe........................... 350 6,441
Legrand.................................... 500 77,295
L'oreal.................................... 250 67,019
LVMH Moet Hennessy......................... 1,600 333,716
Lyonnais Des Eaux-Dumez.................... 100 9,641
Michelin, Class B.......................... 2,300 91,852
Moulinex(b)................................ 100 1,374
Nord Est................................... 50 1,159
Peugeot SA................................. 1,300 171,725
Pinault-Printemps.......................... 100 19,978
Promodes................................... 50 11,768
Rhone Poulenc, Series A.................... 1,250 26,813
Sanofi..................................... 3,300 211,818
Schneider SA............................... 500 17,115
Sefimeg.................................... 50 3,323
Seita...................................... 200 7,259
Simco...................................... 50 4,754
Societe Generale........................... 2,500 309,281
Sodexho(b)................................. 50 14,723
St. Louis.................................. 50 13,291
Total, Class B............................. 4,800 324,392
Union Immobiliere de France................ 50 4,334
------------
3,696,459
------------
GERMANY--3.1%
AMB AAchener & Muench...................... 50 36,331
BASF AG.................................... 600 135,404
Bayer AG................................... 600 159,634
Bayerische Vereinsbank..................... 3,000 90,129
</TABLE>
See Notes to Financial Statements.
47
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
GERMANY (CONTINUED)
Beiersdorf AG, Series ABC................... 50 $ 34,410
Bilfinger & Berger.......................... 50 19,039
Brau Und Brunnen............................ 50 7,616
Bremer Vulkan AG............................ 150 4,192
CKAG Colonial............................... 50 41,921
Commerzbank AG.............................. 500 118,950
Continental AG.............................. 1,000 14,148
Daimler Benz AG............................. 350 177,045
Degussa AG.................................. 100 33,746
Deutsche Bank AG............................ 8,000 380,639
Deutsche Lufthansa AG....................... 400 55,475
Didier-Werke AG(b).......................... 50 4,045
FAG Kugelfischer Georg(b)................... 50 6,428
Heidelberger Zement......................... 55 34,508
Hochtief AG................................. 100 42,829
Kaufhof Holding AG.......................... 300 91,597
Linde AG.................................... 100 59,388
Linotype Hell AG(b)......................... 50 5,153
MAN AG...................................... 100 27,737
Mannesmann AG............................... 450 143,526
Muenchener Ruckvers......................... 100 215,891
Preussag AG................................. 800 225,812
P.W.A. Papier Waldhof(b).................... 50 7,406
RWE AG...................................... 300 109,308
SAP AG...................................... 500 77,553
Schering AG................................. 1,000 66,584
Siemens AG(b)............................... 650 357,862
Thyssen AG(b)............................... 350 63,995
Veba AG..................................... 7,000 300,291
Volkswagon AG............................... 200 67,212
------------
3,215,804
------------
HONG KONG--1.6%
Bank of East Asia........................... 6,000 21,534
Cathay Pacific Airway....................... 23,000 35,100
Cheung Kong Holdings........................ 18,000 109,649
China Light and Power Co., Limited.......... 25,000 115,105
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
HONG KONG (CONTINUED)
Chinese Estates Holdings................... 12,000 $ 7,837
Dickson Concepts Intl. Limited............. 5,000 4,656
Giordano International Holdings............ 4,000 3,414
Hang Lung Development Co................... 10,000 15,908
Hang Seng Bank Limited..................... 21,800 195,247
Hong Kong Aircraft......................... 1,200 3,104
Hong Kong Telecom.......................... 106,400 189,903
Hopewell Holdings.......................... 35,000 20,143
Hutchison Whampoa.......................... 46,000 280,214
Hysan Development Limited.................. 8,000 21,158
Johnson Electric Holdings.................. 3,000 5,354
Kumagai Gumi............................... 3,000 2,173
Lai Sun Garment International.............. 2,000 1,940
Miramar Hotel & Investment................. 4,000 8,432
New World Development Co................... 13,000 56,661
Oriental Press Group....................... 12,000 3,647
Peregrine Investment Holdings.............. 4,000 5,173
Playmates Toys Holdings.................... 4,000 796
Regal Hotel Holdings....................... 22,000 5,177
Shangri-La Asia............................ 8,000 9,778
Shun Tak Holdings Limited.................. 12,000 8,458
South China Morning Post................... 12,000 7,333
Sun Hung Kai Properties.................... 25,000 204,508
Swire Pacific Limited...................... 20,000 155,200
Television Broadcasts Limited.............. 3,000 10,689
Wharf Holdings Limited..................... 39,000 129,882
Wing Lung Bank............................. 1,200 6,720
Winsor Industrial Corp. Limited............ 2,000 1,693
------------
1,646,586
------------
JAPAN--41.2%
Advantest Corp. ........................... 1,000 51,380
Ajinomoto Co., Inc. ....................... 10,000 111,485
Alps Electric Co.(b)....................... 3,000 34,608
Amada Co. ................................. 28,000 276,871
Aoki Corp.(b).............................. 2,000 8,394
Aoyama Trading............................. 1,000 31,991
</TABLE>
See Notes to Financial Statements.
49
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Asahi Bank Limited(c)....................... 41,000 $ 516,710
Asahi Breweries............................. 8,000 94,617
Asahi Chemical Industries................... 27,000 206,781
Asahi Glass Co. ............................ 33,000 367,903
Ashikaga Bank............................... 10,000 62,431
Bank of Tokyo............................... 36,000 631,687
Bank of Yokohama............................ 20,000 163,836
Banyu Pharmaceutical........................ 2,000 24,624
Bridgestone Corp. .......................... 16,000 254,382
Brother Industries Limited.................. 4,000 21,754
Canon, Inc. ................................ 24,000 435,086
Casio Computer Co. ......................... 1,000 9,791
Chiba Bank.................................. 13,000 117,205
Chichibu Onada Cement....................... 7,000 37,391
Chugai Pharmaceutical Co. .................. 2,000 19,176
Citizen Watch Co. Limited................... 19,000 145,513
Cosmo Oil Co. .............................. 3,000 16,403
Credit Saison............................... 2,000 47,697
Dai Nippon Co. Limited.(b).................. 26,000 441,098
Dai Nippon Ink & Chemical................... 8,000 37,304
Dai Nippon Screen........................... 2,000 17,566
Daicel Chemical Industries.................. 13,000 73,978
Daido Steel Co. Limited..................... 2,000 10,082
Daiei Inc. ................................. 9,000 109,062
Dai-Ichi Kangyo Bank(c)..................... 64,000 1,259,501
Dai-Ichi Pharmaceuticals Co. Limited........ 3,000 42,752
Daikin Industries........................... 27,000 264,368
Daikyo(b)................................... 3,000 22,394
Daimaru(b).................................. 2,000 15,511
Daishowa Paper(b)........................... 1,000 7,756
Daito Trust................................. 1,000 11,827
Daiwa Bank.................................. 20,000 161,896
Daiwa House Industries...................... 14,000 230,727
Daiwa Kosho Lease Co. Limited............... 3,000 29,956
Daiwa Securities............................ 24,000 367,613
Denid Kagaku Kogyo.......................... 3,000 10,906
Ebara Corp. ................................ 2,000 29,277
</TABLE>
See Notes to Financial Statements.
50
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Eisai Co. ................................. 3,000 $ 52,641
Ezaki Glico Co. ........................... 2,000 19,350
Fanuc Co. ................................. 7,000 303,339
Fuji Bank(c)............................... 56,000 1,237,785
Fuji Photo Film Limited(c)................. 11,000 317,783
Fujita Corp. .............................. 3,000 13,553
Fujita Kanko............................... 2,000 44,207
Fujitsu Limited............................ 43,000 479,390
Furukawa Electric.......................... 3,000 14,687
Gakken Co.(b).............................. 2,000 13,184
Gunma Bank................................. 9,000 96,847
Gunze Limited(b)........................... 4,000 24,236
Hankyu Corp.(b)............................ 12,000 65,728
Hanyu Department Stores.................... 1,000 14,833
Haseko Corp.(b)............................ 2,000 8,085
Hazama Corp.(b)............................ 2,000 8,531
Higo Bank.................................. 3,000 24,139
Hitachi Limited(c)......................... 81,000 816,658
Hokkaido Bank.............................. 5,000 16,965
Hokuriku Bank.............................. 11,000 68,995
Honda Motor Co. ........................... 19,000 392,335
Honshu Paper Co. .......................... 2,000 12,254
House Foods Corp.(b)....................... 2,000 36,063
Hoya Corp. ................................ 1,000 34,415
Inax Corp. ................................ 26,000 247,013
Industrial Bank of Japan(c)................ 47,000 1,426,149
Isetan Co. ................................ 2,000 32,961
Ishihara Sangyo Kaisha(b).................. 2,000 6,495
Ito Yokado Co.(c).......................... 13,000 801,537
Itochu Corp. .............................. 26,000 175,178
Itoham Foods............................... 3,000 22,685
Iwantani International Corp.(b)............ 3,000 15,996
Jaccs...................................... 2,000 20,746
Japan Air Lines Co.(b)..................... 33,000 219,143
Japan Energy Corp. ........................ 5,000 16,771
Jeol....................................... 1,000 8,512
JGC Corp.(b)............................... 1,000 10,567
</TABLE>
See Notes to Financial Statements.
51
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Joyo Bank.................................. 14,000 $ 112,650
Jusco Co.(b)............................... 4,000 104,312
Kajima Corp. .............................. 12,000 118,660
Kaken Pharmaceutical....................... 1,000 9,016
Kandenko Limited........................... 1,000 12,506
Kanebo Corp.(b)............................ 9,000 22,335
Kaneka Corp. .............................. 3,000 18,933
Kansai Electric Power(c)................... 20,100 487,146
Kansai Paint Co. Limited................... 2,000 9,307
Kao Corp. ................................. 9,000 111,680
Katokichi.................................. 1,000 20,843
Kawasaki Kisen Kaisha(b)................... 11,000 34,977
Kawasaki Steel Corp........................ 39,000 136,110
Keihin Electric............................ 6,000 36,005
Keio Teito Electric Railway................ 16,000 93,221
Kikkoman Corp.............................. 3,150 23,208
Kinden Corp................................ 2,000 34,124
Kinki Nippon Railway....................... 31,000 234,410
Kirin Brewery Co........................... 19,000 224,717
Kobe Steel(b).............................. 30,000 92,775
Komatsu Limited(c)......................... 9,000 74,162
Konica Corp................................ 1,000 7,251
Kubota Corp................................ 13,000 83,808
Kumagai Gumi Co............................ 5,000 20,116
Kurabo Industries.......................... 5,000 19,147
Kuraray Co. Limited........................ 8,000 87,638
Kureha Chemical Industries Co.(b).......... 2,000 9,404
Kyocera Corp............................... 3,000 223,070
Kyowa Hakko Kogyo.......................... 5,000 47,212
Lion Corp.................................. 2,000 11,808
Maeda Road Construction.................... 6,000 111,098
Makita Corp................................ 2,000 31,992
Marubeni Corp.............................. 28,000 151,738
Marudai Food Co............................ 2,000 14,348
Maruha Co.(b).............................. 4,000 13,533
Marui Co.(b)............................... 5,000 104,215
Matsushita Electric Industries............. 40,000 651,464
</TABLE>
See Notes to Financial Statements.
52
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Meija Milk Products......................... 4,000 $ 23,964
Meiji Seika Kaisha.......................... 5,000 30,150
Misawa Homes................................ 1,000 8,803
Mitsubishi Bank............................. 12,000 282,690
Mitsubishi Chemical Corp.................... 29,000 141,131
Mitsubishi Corp............................. 29,000 357,045
Mitsubishi Electric Corp.................... 32,000 230,493
Mitsubishi Estate........................... 24,000 300,139
Mitsubishi Gas(b)........................... 3,000 13,524
Mitsubishi Heavy Industries Limited......... 68,000 542,538
Mitsubishi Materials........................ 21,000 108,917
Mitsubishi Oil Co........................... 2,000 17,780
Mitsubishi Paper............................ 34,000 204,687
Mitsubishi Steel Manufacturing(b)........... 1,000 5,235
Mitsubishi Trust and Banking Limited........ 24,000 400,186
Mitsui Engine & Shipbuilding(b)............. 1,000 2,782
Mitsui Fire & Marine Insurance.............. 13,000 92,756
Mitsui Fudosan Co. ......................... 15,000 184,679
Mitsui Mining and Smelting(b)............... 9,000 36,122
Mitsui O.S.K. Lines(b)...................... 20,000 64,176
Mitsui Toatsu Chemical...................... 6,000 24,139
Mitsui Trust and Banking Co................. 22,000 241,003
Mitsui & Co. Limited........................ 29,000 254,710
Mitsukoshi Limited(b)....................... 6,000 56,422
Mochida Pharmaceuticals..................... 1,000 13,863
Murata Manufacturing Co..................... 4,000 147,356
Nagase & Co.(b)............................. 1,000 8,609
Nagoya Railroad Co.......................... 11,000 55,452
Nankai Electric Railway..................... 6,000 40,717
NEC Corp. .................................. 30,000 366,450
New Oji Paper............................... 8,000 72,437
NGK Insulators.............................. 44,000 439,349
Nichido Fire and Marine Insurance........... 8,000 64,371
Nichii Co. Limited.......................... 22,000 292,191
Nichirei Corp............................... 5,000 32,476
Nihon Cement Co............................. 4,000 26,756
Nintendo Co................................. 2,600 197,864
</TABLE>
See Notes to Financial Statements.
53
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Beet Sugar(b)........................ 2,000 $ 8,880
Nippon Communications Systems Corp.(b)...... 1,000 10,567
Nippon Denso................................ 19,000 355,496
Nippon Express Co........................... 16,000 154,179
Nippon Fire and Marine Insurance............ 11,000 74,647
Nippon Light Metal.......................... 10,000 57,391
Nippon Meat Packers......................... 16,000 232,666
Nippon Oil Co. ............................. 11,000 69,102
Nippon Paper Industries..................... 10,000 69,509
Nippon Seiko Kab Kai........................ 2,000 14,542
Nippon Shinpan Co. ......................... 5,000 37,808
Nippon Shokubai Kagaku Kogyo................ 2,000 19,583
Nippon Steel Corp. ......................... 138,000 473,588
Nippon Suisan(b)............................ 4,000 16,558
Nippon Yusen Kab Kai........................ 22,000 127,752
Nishimatsu(b)............................... 2,000 23,460
Nissan Motor Co. ........................... 46,000 353,634
Nisshinbo Industries, Inc. ................. 4,000 38,778
Nissin Food Products Co., Limited(b)........ 2,000 46,921
NKK Corp.(b)................................ 40,000 107,800
NOF Corp. .................................. 2,000 10,877
Nomura Securities........................... 36,000 785,250
NTN Corp. .................................. 1,000 6,689
Obayashi Corp. ............................. 8,000 63,595
Odakyu Electric Railway..................... 10,000 68,345
Okamoto Industries.......................... 3,000 19,486
Okumura(b).................................. 1,000 9,113
Olympus Optical Co., Limited................ 1,000 9,694
Omron Corp. ................................ 3,000 69,218
Onward Kashiyama(b)......................... 3,000 48,860
Orient Corp. ............................... 5,000 28,405
Orix Corp. ................................. 3,000 123,604
Osaka Gas Co. .............................. 117,000 404,925
Penta-Ocean(b).............................. 2,000 15,511
Pioneer Electronic.......................... 8,000 146,580
Q.P. Corp.(b)............................... 2,000 17,431
Renown, Inc. ............................... 5,000 17,402
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Ricoh Co. .................................. 5,000 $ 54,774
Rohn Company Limited........................ 2,000 113,037
Sagami...................................... 4,000 17,334
Sakura Bank................................. 61,000 774,682
Sankyo Co. ................................. 19,000 427,331
Sankyo Aluminum............................. 2,000 10,722
Sanrio Corp.(b)............................. 1,000 11,536
Sanwo Shutter Corp. ........................ 2,000 14,522
Sanyo Electric Corp......................... 32,000 184,582
Sapporo Corporation......................... 6,000 55,840
Secom Co. .................................. 7,000 487,243
Sega Enterprises............................ 1,000 55,258
Seino Transportation........................ 10,000 167,714
Seiyu(b).................................... 2,000 24,818
Sekisui Chemical............................ 8,000 117,884
Sekisui House............................... 54,000 691,016
Settsu Corp.(b)............................. 1,000 3,151
Seven-Eleven Japan NPV...................... 8,000 564,605
Sharp Corp. ................................ 18,000 287,924
Shimizu Corp. .............................. 9,000 91,612
Shin-Etsu Chemical Co. ..................... 4,000 82,984
Shinmaywa Industries........................ 16,000 132,154
Shiongoi & Co. ............................. 3,000 25,273
Shiseido Co. ............................... 4,000 47,696
Shizuoka Bank............................... 14,000 176,438
Shochiku Co.(b)............................. 1,000 10,955
Shokusan(b)................................. 1,000 3,665
Showa Denko KK(b)........................... 10,000 31,410
Skylark Co. ................................ 2,000 36,839
Snow Brand Milk(b).......................... 5,000 31,992
Sony Corp. ................................. 6,200 372,054
Sumitomo Bank............................... 63,000 1,337,540
Sumitomo Chemical........................... 20,000 99,852
Sumitomo Corp. ............................. 20,000 203,582
Sumitomo Electric Industries................ 22,000 264,464
Sumitomo Forestry........................... 2,000 30,634
Sumitomo Marine and Fire Insurance.......... 12,000 98,651
</TABLE>
See Notes to Financial Statements.
55
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Sumitomo Metal Industries(b)................ 36,000 $ 109,235
Sumitomo Metal Mining....................... 10,000 89,964
Sumitomo Osaka Cement....................... 5,000 23,267
Taisei Corp. ............................... 11,000 73,473
Taisho Pharmaceutical Co. .................. 4,000 79,107
Taiyo Yuden................................. 2,000 21,522
Takara(b)................................... 2,000 22,879
Takara Shuzo(b)............................. 4,000 38,274
Takashimaya Co.(b).......................... 2,000 31,992
Takeda Chemical Industries.................. 32,000 527,376
Tanabe...................................... 2,000 14,406
TDK Corp. .................................. 8,000 408,718
Teijin Limited.............................. 11,000 56,305
TOA Corp.(b)................................ 1,000 7,368
Tobu Railway Co. ........................... 12,000 75,151
Tohoku Electric Power....................... 8,080 195,045
Tokai Bank.................................. 36,000 502,560
Tokio Marine and Fire Insurance............. 29,000 379,538
Tokyo Broadcasting.......................... 3,000 49,442
Tokyo Dome Corp. ........................... 3,000 51,477
Tokyo Electric Power........................ 27,200 727,782
Tokyo Electronics........................... 3,000 116,333
Tokyo Gas Co. .............................. 43,000 151,734
Tokyo Steel Manufacturing Co. Limited....... 20,000 368,388
Tokyo Style Co.(b).......................... 2,000 34,318
Tokyo Tatemono(b)........................... 4,000 19,001
Tokyoto Keiba Co. .......................... 5,000 20,843
Tokyu Corp. ................................ 16,000 113,075
Tonen Corp. ................................ 20,000 292,772
Toppan Printing Co. ........................ 14,000 184,582
Toray Industries Inc. ...................... 90,000 593,298
Toshiba Corp.(c)............................ 88,000 690,166
Tosoh Corp.(b).............................. 5,000 24,091
Tostem Corp. ............................... 3,000 99,756
Toto Limited................................ 4,000 55,840
Toyo Engineering............................ 1,000 6,301
Toyo Kanetsu KK............................. 3,000 15,385
</TABLE>
See Notes to Financial Statements.
56
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Toyo Seikan Kaisha.......................... 2,000 $ 59,912
Toyobo Co.(b)............................... 13,000 46,756
Toyoda Automatic Loom Works Limited......... 2,000 35,869
Toyota Motor Corp.(c)....................... 77,000 1,634,772
UBE Industries(b)........................... 2,000 7,562
Unitika Limited(b).......................... 3,000 9,132
Yamaguchi Bank.............................. 3,000 51,187
Yamaichi Securities Co. .................... 22,000 171,261
Yamanouchi Pharmaceutical................... 4,000 86,087
Yamato Transport............................ 4,000 47,696
Yamazaki Baking Co. ........................ 3,000 55,840
Yasuda Trust and Bank....................... 20,000 118,466
Yokogawa Bridge Works Corp. ................ 7,000 105,863
Yokogawa Electric........................... 4,000 37,847
77 Bank..................................... 6,000 55,084
------------
43,005,659
------------
SINGAPORE--5.1%
Amcol Holdings.............................. 20,000 55,144
Chaun Hup Holdings.......................... 13,000 11,764
City Developments........................... 52,000 378,654
Cycle and Carriage.......................... 16,000 159,494
DBS Land Limited............................ 61,000 206,137
Development Bank Singapore.................. 45,000 559,926
First Capital Corp. ........................ 16,000 44,341
Fraser and Neave Limited.................... 16,000 203,610
Hai Sun Hup Group........................... 29,000 19,476
Haw Par Brothers International.............. 12,000 25,620
Hotel Properties Limited.................... 27,000 41,801
Inchcape Berhad............................. 11,000 35,306
Jurong Shipyard............................. 7,000 53,942
Keppel Corp. ............................... 34,000 302,869
Low Keng Huat Limited....................... 4,000 2,234
Lum Chang Holdings Limited.................. 22,000 18,352
Metro Holdings.............................. 7,000 27,218
Natsteel Limited............................ 22,000 45,104
Neptune Orient Lines........................ 46,000 51,704
Overseas Chinese Banking Corp. ............. 61,000 763,324
</TABLE>
See Notes to Financial Statements.
57
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
SINGAPORE (CONTINUED)
Overseas Union Enterprises................. 8,000 $ 40,439
Parkway Holdings Limited................... 19,000 51,581
Prima Limited.............................. 3,000 11,453
Robinson and Company....................... 4,000 16,684
Shangri-La Hotel........................... 10,000 38,883
Sia Limited Foreign........................ 86,000 802,561
Singapore Press Holdings................... 22,800 402,979
Straits Steamship.......................... 40,000 135,172
Straits Trading Co. ....................... 20,000 46,942
United Industrial Corp. ................... 90,000 88,443
United Overseas Bank....................... 60,600 582,663
United Overseas Land....................... 33,000 62,756
------------
5,286,576
------------
UNITED KINGDOM--13.5%
Abbey National PLC(b)...................... 21,900 216,252
Anglian Water PLC.......................... 3,000 28,180
Argos PLC.................................. 2,900 26,835
Argyll Group............................... 11,000 58,067
Arjo Wiggins............................... 11,100 28,435
Associated British FDS..................... 2,400 13,750
Barclays PLC(b)............................ 26,900 308,643
Bass(b).................................... 27,900 311,450
Bat Industries............................. 35,500 312,791
BBA Group.................................. 3,200 14,383
Bet Pub Limited............................ 48,400 95,435
BICC PLC................................... 2,800 11,998
Blue Circle Industries..................... 9,900 52,644
BOC Group.................................. 6,500 90,928
Boots Co. PLC.............................. 9,300 84,613
BPB Industries............................. 6,800 31,884
British Aerospace.......................... 2,200 27,223
British Airways............................ 13,000 94,056
British Gas................................ 116,800 460,612
British Land Co.(b)........................ 5,000 29,577
British Petroleum.......................... 61,800 517,173
British Steel.............................. 27,500 69,487
</TABLE>
See Notes to Financial Statements.
58
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
British Telecom............................ 131,700 $ 723,850
BTR PLC.................................... 61,600 314,653
Cable & Wireless........................... 18,900 134,982
Cadbury Schweppes PLC...................... 16,400 135,461
Carlton Communities PLC(b)................. 2,300 34,496
Chubb Security(b).......................... 2,800 13,846
Coats Viyella.............................. 15,600 42,385
Commercial Union........................... 11,100 108,228
Courtaulds PLC............................. 5,500 34,755
De La Rue PLC(b)........................... 2,200 22,236
Delta PLC.................................. 1,200 7,434
Electrocomponent PLC....................... 5,800 32,418
English China Clays........................ 4,200 20,671
Forte PLC.................................. 15,800 81,075
General Accident........................... 3,400 34,365
General Electric........................... 46,000 253,538
GKN PLC.................................... 4,700 56,845
Glaxo Holdings PLC......................... 46,900 666,271
Grand Metropolitan......................... 39,300 283,117
Great Universe Stores PLC.................. 9,800 104,226
Guardian Royal Exchange PLC................ 6,600 28,282
Guinness................................... 43,200 317,922
Hammerson PLC.............................. 3,900 21,344
Hanson..................................... 75,200 224,750
Harrison & Crossfield PLC.................. 9,600 23,847
Hepworth Ceramic........................... 3,300 16,344
HSBC Holdings.............................. 43,800 684,117
IMI PLC.................................... 4,400 22,441
Imperial Chemical Industries............... 9,900 117,278
Kingfisher PLC............................. 6,500 54,698
Ladbroke Group PLC(b)...................... 19,400 44,125
Land Securities PLC........................ 6,900 66,099
Lasmo PLC.................................. 74,200 201,601
Legal and General.......................... 9,700 100,903
Lloyds TSB Group........................... 180,086 926,867
London Electricity PLC..................... 3,300 29,409
Lonrho PLC(b).............................. 9,000 24,593
</TABLE>
See Notes to Financial Statements.
59
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Lucas Industries PLC....................... 28,300 $ 79,529
Marks & Spencer PLC........................ 46,700 326,279
Metal Box-Caradon(b)....................... 8,200 24,889
MEPC....................................... 5,500 33,730
National Grid Group(b)..................... 2,910 9,013
National Power............................. 13,000 90,726
Next PLC................................... 3,700 26,195
Northwest Water Group(b)................... 3,800 36,343
P & O Stream Nav(b)........................ 10,100 74,642
Pearson PLC................................ 6,500 62,973
Pilkington Ord PLC......................... 10,800 33,871
Prudential Corp. .......................... 31,700 204,249
Rank Organisation PLC...................... 11,300 81,757
Reckitt and Coleman........................ 22,600 250,182
Redland PLC................................ 7,100 42,881
Reed International......................... 9,400 143,317
Reuters Holdings PLC(b).................... 27,800 254,656
Rexam PLC.................................. 6,800 37,374
RMC Group.................................. 2,700 41,543
Rolls Royce................................ 39,300 115,322
Royal Bank of Scotland PLC................. 13,300 121,006
Royal Insurance PLC........................ 24,200 143,528
RTZ Corp................................... 17,800 258,675
Rugby...................................... 8,700 14,858
Sainsbury (J) PLC.......................... 17,600 107,390
Schroders PLC.............................. 3,200 67,966
Scottish & New Castle PLC(b)............... 1,000 9,517
Scottish Power PLC(b)...................... 13,600 78,127
Sears...................................... 88,800 143,385
Sedgwick Group............................. 24,700 46,401
Seeboard PLC(b)............................ 200 1,633
Slough Estate PLC.......................... 5,300 18,021
Smith Industries........................... 4,100 40,485
Smithkline Beecham, Class A................ 12,900 142,202
Smithkline Beecham......................... 50,400 549,320
Southern Electric PLC(b)................... 200 2,807
Southern Water PLC......................... 1,700 18,159
</TABLE>
See Notes to Financial Statements.
60
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
T & N PLC.................................. 4,200 $ 10,564
Tarmac PLC................................. 12,600 20,148
Tate & Lyle PLC............................ 1,000 7,328
Taylor Woodrow PLC......................... 5,200 9,486
Tesco...................................... 77,700 358,290
Thames Water PLC........................... 22,800 198,944
Thorn EMI PLC(b)........................... 7,100 167,226
TI Group PLC(b)............................ 5,500 39,195
Trafalgar House PLC(b)..................... 12,600 5,428
Unigate Limited............................ 600 3,829
Unilever PLC............................... 13,500 277,301
United Biscuits PLC........................ 1,400 5,564
Vodafone Group............................. 26,200 93,762
Williams Holdings.......................... 7,900 40,231
Willis Corroon PLC......................... 3,200 7,005
Wimpey George PLC.......................... 4,900 10,955
Wolseley................................... 7,500 52,517
Zeneca Group............................... 8,900 172,172
------------
14,106,784
------------
TOTAL COMMON STOCKS
(COST $68,762,442)........................ 74,297,122
------------
PREFERRED STOCKS--0.6%
AUSTRALIA--0.1%
News Corp., Limited Voting Preferred Voting
Shares................................... 24,100 112,761
------------
FRANCE--0.0%
Casino Guich-Perr, Preferred Shares........ 50 1,135
------------
GERMANY--0.5%
Allianz AG, Preferred Shares Nonvoting..... 200 393,495
Kloeckner AG, Preferred Shares Nonvoting... 500 3,022
Lufthansa AG, Preferred Shares Nonvoting... 50 6,550
Man AG, Preferred Shares Nonvoting......... 50 10,753
RWE AG, Preferred Shares Nonvoting......... 150 41,921
</TABLE>
See Notes to Financial Statements.
61
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
GERMANY (CONTINUED)
SAP AG, Preferred Nonvoting........... 500 $ 76,085
Volkswagon AG, Preferred Shares
Nonvoting........................... 50 12,150
------------
543,976
------------
TOTAL PREFERRED STOCKS
(COST $580,168)...................... 657,872
------------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
FOREIGN CORPORATE OBLIGATION--12.6%
GERMANY--12.6%
Bundeslaender Versicher
(cost $12,896,203).................. 8.63% 2/20/96 18,700** 13,143,650
------------
SHORT-TERM INVESTMENTS--13.4%
U.S. TREASURY BILLS--13.4%
U.S. Treasury Bill.................... 5.61%* 2/8/96 1,000 994,320
U.S. Treasury Bill.................... 5.48%* 2/15/96 2,000 1,986,675
U.S. Treasury Bill.................... 5.54%* 3/7/96 2,500 2,478,150
U.S. Treasury Bill.................... 5.07%* 3/28/96 1,600 1,581,232
U.S. Treasury Bill(c)................. 5.35%* 5/2/96 3,500 3,441,883
U.S. Treasury Bill.................... 5.65%* 7/25/96 1,500 1,457,802
U.S. Treasury Bill.................... 5.61%* 8/22/96 1,150 1,113,305
U.S. Treasury Bill(c)................. 5.61%* 9/19/96 1,000 964,475
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $14,002,418)................... 14,017,842
------------
TOTAL INVESTMENTS
(COST $96,241,231)(A)--97.8%......... 102,116,486
Other assets in excess of liabilities--
2.2%................................. 2,272,891
------------
NET ASSETS--100.0%..................... $104,389,377
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $104,389,377.
* Yield at purchase.
** Denominated in local currency.
See Notes to Financial Statements.
62
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 7,077,639
Unrealized depreciation........................................ (1,202,384)
-----------
Net unrealized appreciation.................................... $ 5,875,255
===========
</TABLE>
(b) Represents non-income producing security.
(c) Securities partially or fully pledged as collateral to cover open futures
positions.
<TABLE>
<CAPTION>
Contract Contract Unrealized
Price Value (Depreciation)
-------- -------- --------------
<S> <C> <C> <C>
FOREIGN CURRENCY INVESTMENTS
CURRENCY PURCHASED:
German Deutsche Mark......................... $0.698600 $328,907 $ (3,032)
Japanese Yen(d).............................. $0.960000 504,385 (69,326)
U.K. Pound Sterling.......................... $1.552600 115,183 (1,442)
-------- --------
TOTAL FOREIGN CURRENCY INVESTMENTS
(COST $1,022,275)........................... $948,475 $(73,800)
======== ========
</TABLE>
(d) Pledged to cover margin requirements for open futures positions.
<TABLE>
<S> <C> <C> <C> <C>
FINANCIAL FUTURES
<CAPTION>
UNREALIZED
MARKET VALUE APPRECIATION
NUMBER OF COVERED (DEPRECIATION)
CONTRACTS BY CONTRACTS EXPIRATION AT 12/31/95
--------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
Financial Futures Purchased
Long:
British Pound--FTSE(1)...... 57 $ 8,134,087 March 1996 $ 54,862
German Deutsche Marks--
DAX(1).................... 3 447,415 March 1996 12,404
Japanese Yen--TOPIX(1)...... 120 18,426,486 March 1996 851,509
Financial Futures Sold Short:
German Deutsche Marks(2).... 130 $11,340,875 March 1996 (71,500)
Japanese Yen(2) 69 8,491,312 March 1996 101,775
--------
$949,050
========
</TABLE>
(1) Exchange traded local currency denominated futures contracts.
(2) U.S. Dollar denominated futures contracts.
See Notes to Financial Statements.
63
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--33.6%
ASSET-BACKED SECURITIES--7.0%
Advanta Mortgage Loan Trust,
Series 1994-3, Class A2............... 7.60% 7/25/10 $ 3,915 $ 4,045,170
First Federal Savings & Loan
Association, Chicago, Mortgage Backed
Certificates, Series A, Passthrough
Notes(b).............................. 8.75% 6/1/06 7 7,113
Green Tree Home Improvement Loan Trust,
Series 1994-B1, Class A1.............. 7.15% 7/15/14 1,045 1,071,326
MBNA Master Credit Card Trust,
Series 1994-C, Class A................ 6.25% 3/15/04 1,655 1,661,206
Midlantic Auto Grantor Trust,
Series 1992-1, Class A................ 4.30% 9/15/97 125 124,509
Olympic Automobiles Receivables Trust,
Series 1995-D......................... 6.15% 7/15/01 2,300 2,333,781
People's Bank Credit Card Master Trust,
Series 1993-1, Class A................ 4.80% 12/15/99 2,480 2,476,352
Security Pacific Acceptance Corp.,
Series 1995-1......................... 7.25% 4/10/20 2,000 2,119,118
------------
13,838,575
------------
BANKING--11.3%
AAB, Global Bond, Bank Guaranteed....... 7.25% 5/31/05 2,800 2,998,192
Chase Manhattan Corp., Subordinate Note. 9.75% 11/1/01 2,500 2,949,827
Chevy Chase Auto Receivables Trust
Class A............................... 5.80% 6/15/02 3,000 3,015,687
First Union Corp., Subordinate Note..... 6.88% 9/15/05 3,000 3,129,951
Mellon Financial Co., Senior Notes...... 7.63% 11/15/99 2,310 2,449,360
Midland Bank PLC, Subordinate Notes..... 8.63% 12/15/04 2,230 2,568,289
Norwest Corp., Medium Term Note......... 7.75% 3/1/02 1,500 1,639,203
Saloman, Inc. Senior Notes.............. 6.70% 12/1/98 3,700 3,724,901
------------
22,475,410
------------
ENTERTAINMENT--3.2%
News America Holdings................... 8.50% 2/15/05 2,500 2,821,893
Time Warner Entertainment............... 9.63% 5/1/02 3,000 3,476,898
------------
6,298,791
------------
FINANCE--2.2%
Associates Corp., North America,
Corporate Notes....................... 6.63% 6/15/05 1,700 1,757,470
Chemical Master Credit Card Trust,
Series 1995-3, Class A................ 6.23% 4/15/02 2,500 2,556,748
------------
4,314,218
------------
</TABLE>
See Notes to Financial Statements.
64
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
HEALTH CARE & HOSPITAL MANAGEMENT--2.2%
Columbia HCA/Health, Medium Term Note... 6.87% 9/15/03 $ 4,250 $ 4,421,896
------------
HOTELS AND GAMING--1.4%
Marriot International, Inc., Senior
Note.................................. 7.88% 4/15/05 2,500 2,718,953
------------
INDUSTRIAL--3.9%
ITT Corp., Debentures................... 7.38% 11/15/15 5,000 5,132,450
TCI Communications, Senior Notes........ 8.00% 8/1/05 2,500 2,672,875
------------
7,805,325
------------
RETAIL STORES--1.3%
Dayton Hudson Credit Card Master Trust,
Series 1995-1, Class A................ 6.10% 2/25/02 2,500 2,543,247
------------
SUPRANATIONALS--0.6%
European Investment Bank................ 8.88% 3/1/01 1,000 1,143,335
------------
UTILITIES--0.5%
West Texas Utilities.................... 6.38% 10/1/05 1,000 1,017,028
------------
TOTAL CORPORATE OBLIGATIONS
(COST $64,213,422)..................... 66,576,778
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--7.5%
Federal Farm Credit Bank,
Medium Term Note...................... 7.00% 4/18/97 6,000 6,032,004
Federal Home Loan Mortgage Corporation,
Debenture............................. 7.35% 3/22/05 8,000 8,807,624
Federal Home Loan Mortgage Corporation,
Pool #555124 ......................... 9.50% 12/1/18 1 1,010
Government National Mortgage
Association, Pool #304382............. 8.50% 3/15/23 64 67,206
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $14,201,890)..................... 14,907,844
------------
U.S. GOVERNMENT OBLIGATIONS--47.5%
U.S. TREASURY BOND--0.6%
U.S. Treasury Bond...................... 8.13% 8/15/19 1,000 1,257,812
------------
U.S. TREASURY NOTES--46.9%
U.S. Treasury Note...................... 5.88% 5/31/96 2,650 2,657,449
U.S. Treasury Note...................... 7.88% 1/15/98 2,900 3,048,625
U.S. Treasury Note...................... 5.38% 5/31/98 375 376,288
U.S. Treasury Note...................... 5.13% 6/30/98 400 399,125
U.S. Treasury Note...................... 4.75% 10/31/98 19,000 18,750,625
U.S. Treasury Note...................... 5.00% 1/31/99 550 546,046
U.S. Treasury Note...................... 6.88% 8/31/99 1,785 1,875,921
U.S. Treasury Note...................... 7.13% 9/30/99 165 174,900
U.S. Treasury Note...................... 7.88% 11/15/99 990 1,076,625
</TABLE>
See Notes to Financial Statements.
65
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES (CONTINUED)
U.S. Treasury Note...................... 7.75% 11/30/99 $ 2,440 $ 2,644,350
U.S. Treasury Note...................... 7.75% 1/31/00 12,100 13,151,187
U.S. Treasury Note...................... 8.50% 2/15/00 830 925,708
U.S. Treasury Note...................... 6.88% 3/31/00 800 846,250
U.S. Treasury Note...................... 6.13% 7/31/00 5,000 5,150,000
U.S. Treasury Note...................... 8.75% 8/15/00 1,870 2,125,369
U.S. Treasury Note...................... 7.50% 11/15/01 18,050 19,900,125
U.S. Treasury Note...................... 7.50% 5/15/02 150 166,500
U.S. Treasury Note...................... 7.25% 5/15/04 1,500 1,669,217
U.S. Treasury Note...................... 7.25% 8/15/04 2,365 2,631,063
U.S. Treasury Note...................... 7.88% 11/15/04 9,700 11,236,829
U.S. Treasury Note...................... 7.63% 2/15/25 3,000 3,666,558
------------
93,018,760
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $90,128,484)..................... 94,276,572
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $168,543,796).................... 175,761,194
------------
SHORT-TERM INVESTMENT--10.5%
REPURCHASE AGREEMENT--10.5%
Repurchase Agreement with National
Westminster Bank dated 12/29/95, with
a maturity value of $20,870,094 (See
Footnote A)........................... 5.65% 1/2/96 20,857 20,857,000
------------
TOTAL SHORT-TERM INVESTMENT (COST
$20,857,000)........................... 20,857,000
------------
TOTAL INVESTMENTS--99.1%
(COST $189,400,796)(A)................. 196,618,194
Other assets in excess of liabilities--
0.9%................................... 1,665,477
------------
NET ASSETS--100.0%....................... $198,283,671
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $198,283,671.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $7,224,889
Unrealized depreciation......................................... (7,491)
----------
Net unrealized appreciation..................................... $7,217,398
==========
</TABLE>
(b) Illiquid security.
Footnote A: Collateralized by $22,100,000 U.S. Treasury Bill due 9/19/96, with
a value of $21,293,129.
See Notes to Financial Statements.
66
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--50.2%
ASSET-BACKED SECURITIES--7.7%
Advanta Mortgage Loan Trust,
Series 1994-3, Class A2............... 7.60% 7/25/10 $ 1,625 $ 1,679,030
First U.S.A. Credit Card Master Trust,
Series 1992-1, Class A................ 5.20% 6/15/98 833 832,116
Green Tree Financial Corporation,
Manufactured Housing Senior
Subordinate Passthrough,
Series 1995-4, Class A6............... 7.30% 7/15/25 3,000 3,169,227
Security Pacific Acceptance Corp.
Manufactured Housing Contract
Senior Subordinate, Series 1995-1,
Class A3.............................. 7.25% 4/10/20 2,000 2,119,118
Standard Credit Card Master Trust I,
Participation Certificates,
Series 1994-2, Class A................ 7.25% 4/7/06 1,800 1,945,636
------------
9,745,127
------------
BANKING--15.8%
ABN-AMRO Bank N.V., Chicago Subordinate
Note.................................. 7.25% 5/31/05 2,000 2,141,566
Chase Manhattan Corp.,
Subordinate Note...................... 9.75% 11/1/01 2,000 2,359,862
Chemical Master Credit Card Trust I,
Series 1995-3, Asset-Backed CTF, Class
A..................................... 6.23% 4/15/05 1,000 1,022,699
Chevy Chase Auto Receivables Trust,
Series 1995-2 Class A................. 5.80% 6/15/02 2,000 2,010,458
First Union Corp., Subordinate Note..... 6.88% 9/15/05 2,000 2,086,634
Interamerican Development Bank,
Debentures............................ 8.50% 3/15/11 1,800 2,152,114
Interamerican Development Bank,
Debentures............................ 7.00% 6/15/25 2,200 2,347,633
International Bank for Reconstruction
and Development Debentures............ 9.64% 4/30/99 1,500 1,685,392
Midland Bank PLC, Subordinate Note...... 8.63% 12/15/04 1,500 1,727,549
Solomon, Inc., Senior Notes............. 6.70% 12/1/98 2,500 2,516,825
------------
20,050,732
------------
</TABLE>
See Notes to Financial Statements.
67
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
BEVERAGE, FOOD AND TOBACCO--0.7%
Grand Metro Investment Corp.,
Guaranteed Note....................... 7.13% 9/15/04 $ 800 $ 854,929
------------
CABLE TV SYSTEMS--3.0%
Cablevision Industries Corp., Senior
Debentures............................ 9.25% 4/1/08 3,500 3,797,500
------------
CHEMICALS--1.4%
Monsanto Co., Debenture................. 8.20% 4/15/25 1,500 1,725,809
------------
ENTERTAINMENT--2.2%
News America Holdings, Senior Note...... 8.50% 2/15/05 2,500 2,821,893
------------
FINANCE--2.0%
American Express Co., Debentures........ 8.63% 5/15/22 800 911,707
Sears Credit Master Trust II,
Series 1995-3, Class A................ 7.00% 10/15/04 1,600 1,679,742
------------
2,591,449
------------
FOREST AND PAPER PRODUCTS--0.7%
Weyerhaeuser Co., Debentures............ 8.38% 2/15/07 800 943,652
------------
HEALTH CARE & HOSPITAL MANAGEMENT--3.8%
Coastal Corp. .......................... 7.75% 10/15/35 2,000 2,136,354
Columbia/HCA Healthcare Corp. .......... 7.58% 9/15/25 2,500 2,723,243
------------
4,859,597
------------
HOTELS AND GAMING--1.7%
Marriott International, Inc., Senior
Note, Series B........................ 7.88% 4/15/05 2,000 2,175,162
------------
RETAIL STORES--5.8%
Dayton Hudson Credit Card Master Trust
Series 95-1, Class A.................. 6.10% 2/25/02 1,500 1,525,948
Dayton Hudson Corp., Debenture.......... 7.88% 6/15/23 1,800 1,867,500
Federated Department Stores, Senior
Notes................................. 8.13% 10/15/02 4,000 4,040,000
------------
7,433,448
------------
TELECOMMUNICATIONS--4.6%
ITT Corp................................ 7.75% 11/15/25 2,000 2,052,980
TCI Communications, Inc. ............... 8.75% 8/1/15 3,500 3,862,891
------------
5,915,871
------------
</TABLE>
See Notes to Financial Statements.
68
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
UTILITIES--0.8%
West Texas Utilities First Mortgage,
Series U............................. 6.38% 10/1/05 $ 1,000 $ 1,017,028
------------
TOTAL CORPORATE OBLIGATIONS
(COST $60,247,885).................... 63,932,197
------------
U.S. GOVERNMENT OBLIGATIONS--40.1%
U.S. TREASURY BONDS--8.0%
U.S. Treasury Bond..................... 10.75% 5/15/03 1,000 1,314,686
U.S. Treasury Bond..................... 11.13% 8/15/03 3,500 4,702,026
U.S. Treasury Bond..................... 12.00% 8/15/13 1,760 2,717,000
U.S. Treasury Bond..................... 9.88% 11/15/15 1,000 1,448,125
------------
10,181,837
------------
U.S. TREASURY NOTES--32.1%
U.S. Treasury Note..................... 5.88% 5/31/96 3,850 3,860,822
U.S. Treasury Note..................... 4.75% 2/15/97 3,500 3,483,588
U.S. Treasury Note..................... 7.88% 1/15/98 700 735,875
U.S. Treasury Note..................... 5.00% 1/31/99 6,450 6,403,631
U.S. Treasury Note..................... 7.75% 11/30/99 1,500 1,625,625
U.S. Treasury Note..................... 6.75% 4/30/00 6,200 6,527,428
U.S. Treasury Note..................... 7.75% 2/15/01 2,000 2,210,000
U.S. Treasury Note..................... 7.50% 11/15/01 6,000 6,615,000
U.S. Treasury Note..................... 7.25% 5/15/04 8,500 9,458,894
------------
40,920,863
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $48,518,853).................... 51,102,700
------------
U.S. GOVERNMENT AGENCY
OBLIGATION--0.1%
Government National Mortgage
Association, Pool #201299 (cost
$77,388).............................. 8.50% 2/15/17 77 81,023
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $108,844,126)................... $115,115,920
------------
</TABLE>
See Notes to Financial Statements.
69
<PAGE>
PRAIRIE FUNDS
BOND FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--8.8%
REPURCHASE AGREEMENT--8.8%
Repurchase agreement with National
Westminster Bank dated 12/29/95, with a
maturity value of $11,174,010 (see
Footnote A)............................ 5.65% 1/2/96 $11,167 $ 11,167,000
------------
TOTAL SHORT-TERM INVESTMENT
(COST $11,167,000)...................... 11,167,000
------------
TOTAL INVESTMENTS
(COST $120,011,126)(A)--99.2%........... 126,282,920
Other assets in excess of liabilities--
0.8%.................................... 1,025,749
------------
NET ASSETS--100.0%........................ $127,308,669
============
</TABLE>
- -----------
Percentages are based on net assets of $127,308,669.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $6,271,794
Unrealized depreciation......................................... --
----------
Net unrealized appreciation..................................... $6,271,794
==========
</TABLE>
Footnote A: Collateralized by $11,300,000 U.S. Treasury Note, 5.63%, due
10/31/97; with a value of $11,480,710.
See Notes to Financial Statements.
70
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000)* (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--5.3%
BRITISH POUNDS STERLING--1.3%
Barclays Bank........................... 10.25% 12/10/97 120 $ 197,956
-----------
FRENCH FRANCS--1.9%
Unilever NV............................. 9.88% 9/4/97 1,300 284,768
-----------
JAPANESE YEN--2.1%
Export-Import Bank of Japan............. 4.38% 10/1/03 30,000 319,530
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $456,789)........................ 802,254
-----------
FOREIGN GOVERNMENT
OBLIGATIONS--50.0%
BELGIUM FRANCS--3.6%
Belgium Government, Series 19........... 6.50% 3/31/05 16,000 536,496
-----------
BRITISH POUNDS STERLING--3.0%
United Kingdom Exchequer................ 12.25% 3/26/99 250 451,346
-----------
CANADIAN DOLLARS--3.7%
Canadian Government..................... 9.75% 10/1/97 200 156,206
Canadian Government..................... 10.75% 3/15/98 500 402,832
-----------
559,038
-----------
DANISH KRONE--2.6%
Kingdom of Denmark...................... 9.00% 11/15/98 2,000 393,120
-----------
FINLAND--2.3%
Republic of Finland..................... 6.00% 1/29/02 30,000 346,800
-----------
FRENCH FRANCS--5.4%
France O.A.T............................ 8.50% 6/25/97 2,800 599,348
France O.A.T............................ 5.50% 4/25/04 1,100 210,265
-----------
809,613
-----------
GERMAN DEUTSCHEMARKS--9.2%
Austria Republic........................ 6.00% 4/1/98 600 435,555
Bundesrepublic.......................... 9.00% 10/20/00 600 488,375
Deutsche Bundespost..................... 7.50% 8/2/04 600 453,497
-----------
1,377,427
-----------
</TABLE>
See Notes to Financial Statements.
71
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000)* (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
ITALIAN LIRA--6.1%
Italy Government.............. 8.50% 1/1/99 15,000,000 $ 910,500
-----------
JAPANESE YEN--5.6%
Japan Development Bank........ 6.50% 9/20/01 35,000 414,155
Japan Government Bank, Series
175......................... 4.50% 12/20/04 40,000 430,240
-----------
844,395
-----------
NETHERLAND GUILDERS--5.0%
Netherland Government......... 5.75% 1/15/04 1,200 744,109
-----------
SPANISH PESETAS--3.5%
Spanish Government............ 8.00% 5/30/04 70,000 523,040
-----------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS
(COST $7,387,364)............ 7,495,884
-----------
SUPRANATIONAL OBLIGATIONS--13.4%
GERMAN DEUTSCHEMARKS--3.1%
European Investment Bank...... 7.50% 11/4/02 600 457,982
-----------
JAPANESE YEN--10.3%
Asian Development Bank........ 5.00% 2/5/03 40,000 441,080
Council of Europe............. 6.88% 3/5/01 30,000 356,250
IBRD.......................... 5.25% 3/20/02 30,000 337,890
Interamerican Development
Bank........................ 7.25% 5/15/00 35,000 415,625
-----------
1,550,845
-----------
TOTAL SUPRANATIONAL OBLIGATIONS
(COST $2,035,096)............ 2,008,827
-----------
SHORT-TERM INVESTMENT--32.1%
U.S. TREASURY BILL--32.1%
U.S. Treasury Bill............ 5.18%** 1/4/96 4,815(b) 4,812,922
-----------
TOTAL SHORT-TERM INVESTMENT
(COST $4,812,922)............ 4,812,922
-----------
TOTAL INVESTMENTS
(COST $14,692,171)(A)--
100.8%....................... 15,119,887
Liabilities in excess of
assets--(0.8%)............... (124,599)
-----------
TOTAL NET ASSETS--100.0%....... $14,995,288
===========
</TABLE>
See Notes to Financial Statements.
72
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
- -----------
Percentages indicated are based on net assets of $14,995,288.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................... $427,716
Unrealized depreciation........................................... --
--------
Net unrealized appreciation....................................... $427,716
========
</TABLE>
(b) Denominated in U.S. dollars.
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY CONTRACT
Principal Market
Amount in Value
Local in U.S. Unrealized
Currency Proceeds Dollars Appreciation
--------- -------- ------- ------------
<S> <C> <C> <C> <C>
Japanese Yen, expiring 2/10/96 300,000,000 $3,036,130 $2,928,038 $108,092
========
</TABLE>
* Numbers are presented in local currency unless otherwise indicated.
** Yield at purchase.
See Notes to Financial Statements.
73
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS--98.9%
ALASKA--0.7%
Alaska Student Loan Corp.,
Student Loan Revenue,
State Assisted, Series A
(A.M.T.)................. A/A 5.50% 7/1/04 $ 1,000 $ 1,007,940
North Slope Boro Refunding,
Series G (FSA Insured)... Aaa/AAA 8.35% 6/30/98 1,500 1,650,360
------------
2,658,300
------------
ARIZONA--1.3%
Maricopa County University
School District No. 41,
Series C, Collateralized
by U.S. Government
Securities (Pre-refunded
at 100 on 7/1/04)(FGIC
Insured)................. Aaa/AAA 6.10% 7/1/14 2,000 2,219,600
Pima County Refunding,
Series A................. Aa/A+ 5.00% 7/1/02 3,000 3,103,440
------------
5,323,040
------------
CALIFORNIA--12.5%
California Health
Facilities Financing
Authority Revenue
Refunding, Catholic
Health Facilities
Insured, Series B (AMBAC
Insured)................. Aaa/AAA 4.50% 7/1/02 2,500 2,506,275
California Health
Facilities Financing, St.
Joseph's Health Systems,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
7/1/99).................. NR/AA- 6.90% 7/1/14 6,750 7,490,137
</TABLE>
See Notes to Financial Statements.
74
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Central Valley Financing
Authority,
Califcogeneration Project
Revenue, Carson Ice
Generation Project....... NR/BBB- 5.50% 7/1/01 $ 975 $ 993,515
Central Valley Financing
Authority,
Califcogeneration Project
Revenue, Carson Ice
Generation Project....... NR/BBB- 5.40% 7/1/00 2,550 2,598,909
Fresno Health Facilities
Revenue, Holy Cross
Health Systems Corp.
(MBIA Insured)........... A1/AA- 5.10% 12/1/03 1,570 1,626,834
Fresno Health Facilities
Revenue, Holy Cross
Health Systems Corp.
(MBIA Insured)........... A1/AA- 5.10% 12/1/03 635 657,987
Fresno Health Facilities
Revenue, Holy Cross
Health Systems Corp.
(MBIA Insured)........... A1/AA- 5.00% 12/1/02 1,500 1,548,900
Los Angeles Wastewater
Systems Revenue, Series A
(MBIA Insured)........... Aaa/AAA 8.50% 6/1/00 1,360 1,592,519
MSR Public Power Agency
California, San Juan
Project
Revenue Refunding, Series F
(AMBAC Insured).......... Aaa/AAA 5.55% 7/1/02 1,615 1,721,429
Northern California Power
Agency, Public Power
Refunding, Geothermal
Project #3, Series A..... Aaa/AAA 5.85% 7/1/10 4,625 4,983,946
Northern California Power
Agency, Public Power
Refunding, Series B-1,
Collateralized by U.S.
Government Securities
(Pre-refunded at 100 on
7/1/98).................. NR/AAA 8.00% 7/1/24 3,000 3,291,660
</TABLE>
See Notes to Financial Statements.
75
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble Project. NR/BBB- 5.90% 7/1/02 $ 1,000 $ 1,027,670
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble Project. NR/BBB- 5.80% 7/1/01 1,300 1,333,800
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble Project. NR/BBB- 5.60% 7/1/99 3,300 3,373,557
South Coast Air Quality
Management District
Building Corp.,
California Revenue
Institutional Sale,
Series B, (Pre-refunded
at 102 on 8/1/99)........ Aaa/AAA 7.13% 8/1/14 3,650 4,092,270
University of California
Revenue Refunding,
Multiple Purpose Projects
(MBIA Insured)........... Aaa/AAA 6.20% 9/1/01 6,675 7,312,129
University of California
Revenue Refunding,
Multiple Purpose
Projects, Series B (MBIA
Insured)................. Aaa/AAA 4.90% 9/1/08 3,140 3,064,514
------------
49,216,051
------------
COLORADO--8.3%
Adams County Single Family
Mortgage Revenue, Series
A, Collateralized by U.S.
Government Securities.... Aaa/AAA 8.88% 8/1/03 1,230 1,579,037
Denver City and County
Airport, Series A
(A.M.T.)................. Baa/BB 7.40% 11/15/04 200 224,006
Denver City and County
Airport, Series A........ Aaa/AAA 8.50% 11/15/07 2,000 2,344,740
Denver City and County
Airport, Series A........ B/BB 8.00% 11/15/17 4,215 4,505,624
Denver City and County
Airport, Series A........ NR/NR 8.00% 11/15/25 1,360 1,542,158
</TABLE>
See Notes to Financial Statements.
76
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
COLORADO (CONTINUED)
Denver City and County
Airport, Series B
(A.M.T.)................. NR/NR 7.25% 11/15/05 $ 2,000 $ 2,195,120
Denver City and County
Airport, Series C........ B/BB 6.55% 11/15/03 1,145 1,219,425
Denver City and County
Airport, Series D........ B/BB 7.30% 11/15/00 2,900 3,171,556
Denver City & County Water
Refunding................ Aa/AA 7.00% 10/1/99 8,665 9,548,137
Denver Metropolitan Major
League Baseball Stadium,
Colorado Revenue
Refunding, Sales Tax,
Baseball Stadium Project
(FGIC Insured)........... Aaa/AAA 4.60% 10/1/05 2,000 1,982,040
Poudre Valley Hospital
District Revenue,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 101 on
12/1/01) (AMBAC Insured). Aaa/AAA 6.63% 12/1/01 3,750 4,243,163
------------
32,555,006
------------
DISTRICT OF COLUMBIA--4.9%
District of Columbia,
Series A, Collateralized
by U.S. Government
Securities (Pre-refunded
at 102 on 6/1/00)........ Aaa/AAA 7.25% 6/1/05 1,125 1,283,299
District of Columbia
Hospital Revenue,
Washington Hospital
Center Corp. Issue,
Series A, Collateralized
by U.S. Government
Securities (Pre-refunded
at 102 on 1/1/01)........ NR/BBB 8.75% 1/1/15 2,750 3,330,608
</TABLE>
See Notes to Financial Statements.
77
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
DISTRICT OF COLUMBIA (CONTINUED)
District of Columbia Refunding,
Series A-1 (MBIA Insured).... Aaa/AAA 4.75% 6/1/03 $ 2,960 $ 2,950,735
District of Columbia Refunding,
Series A-1 (MBIA Insured).... Aaa/AAA 4.65% 6/1/02 1,500 1,494,180
District of Columbia Refunding,
Series B-1 (AMBAC Insured)... Aaa/AAA 5.10% 6/1/03 3,000 3,055,530
District of Columbia Refunding,
Series B-1 (AMBAC Insured)... Aaa/AAA 5.40% 6/1/06 4,850 4,966,303
District of Columbia Refunding,
Series B-3 (MBIA Insured).... Aaa/AAA 5.20% 6/1/04 2,000 2,040,920
------------
19,121,575
------------
FLORIDA--3.6%
Florida State Board of
Education Capital Outlay
Refunding, Series A,
Collateralized by U.S.
Government Securities (Pre-
refunded at 102 on 6/1/00)... Aaa/AAA 7.25% 6/1/23 4,620 5,282,185
Orlando Utilities Commission
Water & Electric Revenue,
Series A..................... Aa/AA 5.25% 10/1/23 7,500 7,343,775
Orlando Utilities Commission
Water & Electric Revenue,
Series D..................... Aa/AA- 5.00% 10/1/23 1,500 1,431,705
------------
14,057,665
------------
GEORGIA--6.0%
Georgia State,
General Obligation........... Aaa/AA+ 7.25% 9/1/04 9,440 11,310,253
</TABLE>
See Notes to Financial Statements.
78
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
GEORGIA (CONTINUED)
Georgia State,
General Obligation....... Aaa/AA+ 7.25% 9/1/05 $ 10,130 $ 12,235,014
------------
23,545,267
------------
HAWAII--2.5%
Hawaii State Department of
Budget & Finance Special
Purpose Mortgage Revenue,
Kapiolani Healthcare
System................... A/A 5.60% 7/1/02 2,065 2,130,770
Hawaii State Refunding,
Series C................. Aa/AA 4.25% 7/1/99 7,500 7,549,800
------------
9,680,570
------------
ILLINOIS--12.2%
Chicago Metropolitan Water
Reclamation District..... Aa/AA 5.00% 12/1/02 4,500 4,671,720
Chicago Public Community
Building Revenue, Series
A (MBIA Insured)......... Aaa/AAA 4.90% 12/1/01 3,000 3,087,600
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 5.20% 10/1/03 750 753,743
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 5.10% 10/1/02 1,180 1,185,263
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 5.00% 10/1/01 1,120 1,124,357
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 4.90% 10/1/00 825 827,714
</TABLE>
See Notes to Financial Statements.
79
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Illinois Health
Facilities Authority
Revenue Refunding &
Improvement, Swedish
Covenant,
Series A.............. Baa1/A- 6.10% 8/1/08 $ 1,000 $ 1,033,280
Illinois State Sales Tax
Revenue, Series S..... A1/AAA 4.85% 6/15/06 11,300 11,276,722
Illinios State Toll
Highway Authority,
Toll Highway Priority
Revenue, Series A..... A1/A 3.50% 1/1/05 4,000 3,630,240
Illinois Health
Facilities Authority
Revenue Refunding,
Illinois Memorial
Hospital.............. VMIG1/NR 5.60% 1/1/16 1,930 1,930,000
Metropolitan Pier &
Exposition Authority,
Illinois Dedicated
State Tax Revenue..... A/A+ 6.40% 6/1/03 10,495 11,636,226
Metropolitan Pier &
Exposition Authority,
Illinois Dedicated
State Tax Revenue..... A/A+ 6.50% 6/1/05 2,960 3,336,482
Regional Transportation
Authority, Series A
(AMBAC Insured)....... Aaa/AAA 8.00% 6/1/03 2,785 3,357,067
------------
47,850,414
------------
IOWA--0.8%
Iowa Student Loan
Liquidity Corp.
Student Loan Revenue,
Series A.............. Aa1/NR 6.00% 3/1/98 3,000 3,104,850
------------
INDIANA--3.1%
Indiana Bond Bank,
Special Program,
Series A-2............ A/NR 4.75% 11/1/02 375 374,760
Indiana Bond Bank,
Special Program,
Series A-2............ A/NR 4.65% 11/1/01 375 374,599
Indiana Bond Bank
Revenue Guarantee,
State Revolving Fund
Program, Series A..... NR/A 5.80% 2/1/02 500 527,185
</TABLE>
See Notes to Financial Statements.
80
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
INDIANA (CONTINUED)
Indiana Bond Bank Revenue
Guarantee, State Revolving
Fund Program, Series A.... NR/A 5.60% 2/1/05 $ 700 $ 727,230
Indiana Health Facility,
Funding Authority Revenue,
Capital Access Designated
Pool...................... VMIG1/NR 5.60% 12/1/10 1,000 1,000,000
Indiana State Office
Community Building Capital
Complex Revenue Refunding,
State Office Building II
Facilities, Series D...... A1/A+ 6.50% 7/1/99 3,000 3,187,590
Indianapolis Economic
Development Water
Facilities Revenue
Refunding, Indianapolis
Water Co. Project......... A1/A+ 5.20% 5/1/01 5,810 5,948,162
------------
12,139,526
------------
MASSACHUSETTS--3.9%
Massachusetts Bay
Transportation Authority,
General Transportation
Systems, Series A,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
3/1/01)................... Aaa/A+ 7.00% 3/1/22 3,500 4,000,500
Massachusetts Municipal
Wholesale Electric Company
Supply System Revenue,
Series B.................. Aaa/AAA 4.50% 7/1/04 4,215 4,163,703
Massachusetts State General
Obligation, Series B...... A/A+ 9.25% 7/1/00 2,000 2,400,240
Massachusetts State
Refunding, Series A....... A1/A+ 6.25% 7/1/02 4,500 4,949,190
------------
15,513,633
------------
</TABLE>
See Notes to Financial Statements.
81
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEVADA--3.4 %
Clark County General
Obligation................ A1/A+ 7.00% 9/1/00 $ 6,705 $ 7,482,914
Las Vegas Refunding......... A1/A 6.40% 10/1/03 2,250 2,488,680
Nevada State Municipal Bond
Bank Project No. R-5,
Series A.................. Aa/AA 6.00% 5/1/02 1,000 1,083,500
Nevada State Municipal Bond
Bank Project No. R-5,
Series A.................. Aa/AA 4.50% 11/1/02 1,020 1,026,212
Nevada State Refunding,
Series C.................. Aa/AA 5.90% 4/1/01 1,000 1,074,230
------------
13,155,536
------------
NEW YORK--8.9%
New York City, General
Obligation, Series F...... Aaa/AAA 3.00% 11/15/00 3,000 2,857,260
New York City Municipal
Water Financing Authority
Water & Sewer Systems
Revenue, Series C,
Collateralized by U.S.
Government Securities
(Pre-refunded at 101.5 on
6/15/01) (FGIC Insured)... Aaa/AAA 7.00% 6/15/16 3,805 4,369,548
New York State Local
Assistance Corp., Series
A, Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
4/1/01)................... Aaa/AAA 7.25% 4/1/18 2,000 2,319,020
New York State Local
Assistance Corp., Series
B, Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
4/1/01)................... Aaa/AAA 7.50% 4/1/20 4,255 4,983,456
</TABLE>
See Notes to Financial Statements.
82
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York State Local
Assistance Corp., Series
C, Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
4/1/01)................... Aaa/AAA 7.00% 4/1/21 $ 825 $ 946,960
New York State Throughway
Authority, Highway &
Bridge Traffic Fund,
Series A.................. A/A- 6.00% 4/1/99 17,025 17,736,645
Triborough Bridge & Tunnel
Authority, New York
Revenue, Series R,
Collateralized by U.S.
Government Securities
(Pre-refunded at 100 on
1/1/00)................... Aaa/AAA 6.00% 1/1/20 1,500 1,604,865
------------
34,817,754
------------
NORTH CAROLINA--0.8%
North Carolina Municipal
Power Agency No. 1,
Catawba Electric Revenue,
(MBIA Insured)............ Aaa/AAA 7.25% 1/1/07 2,500 2,989,300
------------
PENNSYLVANIA--10.7%
Geisinger Authority Health
Systems, Series A......... NR/NR 5.50% 7/1/03 2,895 3,063,489
Pennsylvania
Intergovernmental
Cooperative Authority,
Special Tax Revenue, City
of Philadelphia Funding
Program Collateralized by
U.S. Government Securities
(Pre-refunded at 100 on
6/15/02).................. Aaa/AAA 6.80% 6/15/22 9,375 10,662,094
Pennsylvania
Intergovernmental
Cooperative Authority,
Special Tax Revenue, City
of Philadelphia Funding
Program (FGIC Insured).... Aaa/AAA 6.00% 6/15/00 7,000 7,497,280
</TABLE>
See Notes to Financial Statements.
83
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia Gas Works
Revenue, Fourteenth
Series.................... Aaa/AAA 7.00% 7/1/02 $12,090 $ 13,759,992
Philadelphia Gas Works
Revenue, Fifteenth Series
(FSA Insured)............. Aaa/AAA 4.90% 8/1/02 1,350 1,378,903
Pittsburgh Water & Sewer
Authority, Water & Sewer
System Revenue, Series A,
(Pre-refunded at 102 on
9/1/01)................... Aaa/AAA 6.50% 9/1/14 5,000 5,642,850
------------
42,004,608
------------
SOUTH CAROLINA--1.3%
South Carolina State Public
SVC Authority Revenue,
Series A.................. A1/A+ 5.00% 7/1/01 5,000 5,137,900
------------
TENNESSEE--1.3%
Chattanooga-Hamilton County,
Hospital Authority
Hospital Revenue, Enlanger
Medical Center............ Aaa/AAA 5.63% 10/1/09 5,000 5,274,550
------------
TEXAS--1.2%
Dallas Independent School
District, Collateralized
by U.S. Government
Securities................ Aa/AAA 8.70% 8/1/00 1,000 1,188,280
Humble Independent School
District Refunding
(PSFG Insured)............ Aaa/AAA 6.00% 2/15/04 2,035 2,203,132
Texas State Public Financing
Authority, Series A....... Aa/AA 8.00% 10/1/99 1,000 1,134,560
------------
4,525,972
------------
VIRGINIA--1.7%
Fairfax County Refunding,
Series A.................. Aaa/AAA 5.80% 6/1/02 5,250 5,373,060
Virginia Beach Public
Improvement, Series A..... Aa/AA 6.85% 5/1/99 1,100 1,187,384
------------
6,560,444
------------
</TABLE>
See Notes to Financial Statements.
84
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
WASHINGTON--2.3%
King County General
Obligation, Series A. Aa1/AA+ 9.00% 12/1/99 $ 1,200 $ 1,407,888
Snohomish County Public
Utilities District
No. 001, Electric
Revenue Generation
System,
Series B (A.M.T.).... A1/A+ 5.15% 1/1/03 1,280 1,299,533
Washington State Health
Care Facility
Authority Revenue,
Fred Hutchinson
Cancer............... VMIG1/NR 6.00% 1/1/18 450 450,000
Washington State Health
Care Facility
Authority Revenue,
Fred Hutchinson
Cancer............... VMIG1/NR 6.00% 1/1/18 1,335 1,335,000
Washington State Public
Power Supply Systems,
Nuclear Project No. 1
Revenue, Series A,
Collateralized by
U.S. Government
Securities (Pre-
refunded at 102 on
7/1/99) (MBIA
Insured)............. Aaa/AAA 7.50% 7/1/15 1,420 1,603,279
Washington State Public
Power Supply Systems,
Nuclear Project No. 2
Revenue, Series B
(MBIA Insured)....... Aaa/AAA 5.10% 7/1/04 2,800 2,844,408
------------
8,940,108
------------
WEST VIRGINIA--1.7%
Pleasants County
Pollution Control
Revenue Refunding,
Monongahela Power
Co., Series B........ A1/NR 6.88% 4/1/98 6,105 6,502,558
------------
</TABLE>
See Notes to Financial Statements.
85
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
WISCONSIN--5.8%
Wisconsin Health
Facility Authority
Revenue, Franciscan
Health Care.......... VMIG1/A-1+ 5.50% 1/1/16 $ 235 $ 235,000
Wisconsin State General
Obligation, Series B. Aa/AA 7.00% 5/1/01 3,950 4,454,652
Wisconsin State General
Obligation, Series B. Aa/AA 7.00% 5/1/02 4,155 4,750,328
Wisconsin State General
Obligation, Series B. Aa/AA 7.00% 5/1/03 4,625 5,345,205
Wisconsin State General
Obligation, Series 2. Aa/AA 5.13% 11/1/08 3,000 3,039,270
Wisconsin State
Refunding, Series 3.. Aa/AA 4.25% 11/1/99 4,895 4,924,908
------------
22,749,363
------------
TOTAL INVESTMENTS
(COST
$370,618,759)(A)--
98.9%................. 387,423,990
Other assets in excess
of liabilities--1.1%.. 4,446,727
------------
NET ASSETS--100.0%...... $391,870,717
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $391,870,717.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from the value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $16,805,231
Unrealized depreciation........................................ --
-----------
Net unrealized appreciation.................................... $16,805,231
===========
</TABLE>
AMBAC--American Municipal Bond Assurance Corporation.
A.M.T.--Subject to Alternative Minimum Tax.
FGIC--Financial Guaranty Insurance Company.
FSA--Financial Security Assurance.
MBIA--Municipal Bond Insurance Association.
NR--No rating available.
PSFG--Permanent School Fund Guaranty.
See Notes to Financial Statements.
86
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS--98.9%
ALASKA--0.3%
Alaska Student Loan
Corp., Student Loan
Revenue State
Assisted, Series A
(AMBAC Insured),
(A.M.T.).............. Aaa/AAA 6.13% 7/1/05 $ 800 $ 832,792
------------
ARIZONA--1.1%
Maricopa County School
District No. 028,
Kyrene Elementary,
Series B
(FGIC Insured)........ Aaa/AAA 6.00% 7/1/14 2,500 2,631,675
------------
CALIFORNIA--15.9%
Central Valley Financing
Authority,
Califogeneration
Project Revenue,
Carson Ice Generation
Project............... Bbb-/BBB- 6.00% 7/1/09 5,600 5,699,344
Cupertino Certificates
of Participation, Open
Space Acquisition
Project,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102
on 4/1/01)............ NR/NR 7.13% 4/1/16 2,675 3,064,186
Fresno Health Facilities
Revenue, Holy Cross
Health System Corp.
(MBIA Insured)........ A1/AA 5.25% 12/1/05 1,850 1,922,446
Los Angeles Wastewater
Systems Revenue,
Series D,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102
on 12/1/00) (MBIA
Insured).............. Aaa/AAA 6.70% 12/1/21 10,000 11,316,500
Northern California
Power Agency, Public
Power Revenue
Refunding, Geothermal
Project No. 3, Series
A..................... Aaa/AAA 5.60% 7/1/06 3,500 3,728,620
</TABLE>
See Notes to Financial Statements.
87
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Northern California
Power Agency, Public
Power Revenue
Refunding, Geothermal
Project No. 3, Series
A.................... Aaa/AAA 5.65% 7/1/07 $ 4,800 $ 5,115,936
Northern California
Power Agency, Public
Power Revenue
Refunding, Geothermal
Project No. 3, Series
A.................... NR/NR 5.80% 7/1/09 4,000 4,309,440
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble
Project.............. NR/BBB- 7.00% 7/1/05 1,500 1,666,005
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble
Project.............. NR/BBB- 6.20% 7/1/06 2,500 2,567,950
------------
39,390,427
------------
COLORADO--12.2%
Denver City and County
Airport Revenue,
Series A (A.M.T.).... Baa/BB 8.50% 11/15/23 2,500 2,865,025
Denver City and County
Airport Revenue,
Series A (A.M.T.).... Baa/BB 8.00% 11/15/25 2,295 2,576,229
Denver City and County
Airport Revenue,
Series B (A.M.T.).... Baa/BB 7.25% 11/15/05 3,000 3,292,680
Denver City and County
Airport Revenue,
Series C (A.M.T.).... Baa/BB 6.50% 11/15/06 2,000 2,100,160
Denver City and County
Airport Revenue,
Series C (A.M.T.).... Baa/BB 6.13% 11/15/25 9,355 9,373,242
Denver City and County
Airport Revenue,
Series D (A.M.T.).... Baa/BB 7.75% 11/15/13 6,925 8,332,160
</TABLE>
See Notes to Financial Statements.
88
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
COLORADO (CONTINUED)
Denver Metropolitan
Major League Baseball
Stadium District
Revenue Refunding,
Sales Tax, Baseball
Stadium Project
(FGIC Insured)........ Aaa/AAA 4.50% 10/1/04 $ 1,600 $ 1,593,600
------------
30,133,096
------------
FLORIDA--3.7%
Broward County
Educational Facilities
Authority Revenue,
Nova Southeastern
University Project
(Connie Lee Insured).. NR/AAA 5.70% 4/1/05 1,440 1,523,678
Florida State Board,
Education Capacity
Outlay, General
Obligation, Series D.. Aa/AA 5.13% 6/1/18 5,800 5,663,758
Orlando Florida
Utilities Commision
Water & Electric
Revenue, Series D..... Aa/AA- 5.00% 10/1/23 2,000 1,908,940
------------
9,096,376
------------
GEORGIA--12.7%
Fulton County School
District, General
Obligation............ Aa/AA 6.38% 5/1/10 5,000 5,716,650
Georgia State General
Obligation............ Aaa/AA+ 7.10% 9/1/09 8,500 10,358,185
Georgia State General
Obligation............ Aaa/AA+ 6.75% 9/1/11 10,000 11,956,500
Georgia State General
Obligation, Series F.. Aaa/AA+ 6.50% 12/1/05 3,060 3,530,750
------------
31,562,085
------------
ILLINOIS--11.0%
Chicago Airport Revenue
Refunding, 2nd Lien,
O'Hare International
Airport, Series C
(MBIA Insured)........ Aaa/AAA 5.75% 1/1/09 2,490 2,665,769
</TABLE>
See Notes to Financial Statements.
89
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Cook County Community
College, District No.
508 Lease, Series C
(MBIA Insured)........ Aaa/NR 7.70% 12/1/04 $ 5,000 $ 6,090,800
Cook County, General
Obligation, Series B.. Aaa/AAA 5.50% 11/15/22 2,535 2,511,982
Illinois Health
Facilities Authority
Revenue Refunding, Bro
Menn Healthcare (SPA--
Bankers Trust
Co.)(FGIC Insured).... Aaa/AAA 6.00% 8/15/05 1,000 1,087,560
Illinois Health
Facilities Authority
Revenue Refunding &
Improvement, Swedish
Covenant,
Series A.............. Baa1/A- 6.10% 8/1/08 2,600 2,686,528
Illinois Health
Facilities Authority
Revenue Refunding &
Improvement, Swedish
Covenant,
Series A.............. Baa1/A- 6.30% 8/1/13 2,375 2,446,298
Illinois State Sales Tax
Revenue Refunding,
Series Q.............. A1/AAA 5.75% 6/15/06 5,000 5,376,300
Winnebago & Boone
Counties School
District No. 205 (CGIC
Insured).............. Aaa/AAA 7.35% 2/1/04 3,600 4,280,976
------------
27,146,213
------------
INDIANA--3.5%
Indiana State Office
Building Commission,
Correctional
Facilities Revenue,
Series A.............. Aaa/AAA 5.50% 7/1/20 5,000 5,002,100
Indiana Transmission
Financing Authority
Highway Revenue,
Series A.............. A1/A+ 6.80% 12/1/16 1,200 1,411,512
</TABLE>
See Notes to Financial Statements.
90
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
INDIANA (CONTINUED)
Indiana University
Revenue, Series K..... Aa/AA- 6.50% 8/1/05 $ 1,935 $ 2,197,289
------------
8,610,901
------------
MASSACHUSETTS--12.4%
Massachusetts Municipal
Electric Co., Power
Supply Systems
Revenue, Series B..... A/BBB+ 6.63% 7/1/03 4,535 5,060,516
Massachusetts State
Refunding, Series A... A1/A+ 6.25% 7/1/02 12,000 13,197,840
Massachusetts State
Refunding, Series B... A1/A+ 5.30% 11/1/05 2,300 2,395,611
Massachusetts State
Refunding, Series B... A1/A+ 5.40% 11/1/06 1,730 1,813,075
New England Educational
Loan Marketing Corp.,
Massachusetts Student
Loan Revenue
Refunding,
Series G.............. A1/A- 5.20% 8/1/02 8,000 8,160,480
------------
30,627,522
------------
MISSOURI--1.6%
Sikeston Electric
Revenue Refunding
(MBIA Insured)........ Aaa/AAA 6.00% 6/1/05 3,710 4,069,165
------------
NEVADA--1.9%
Clark County Industrial
Development Revenue
Refunding, Nevada
Power Co. Project,
Series C (AMBAC
Insured).............. Aaa/AAA 7.20% 10/1/22 4,115 4,711,387
------------
NEW YORK--0.8%
New York City General
Obligation, Sub Series
A-9................... A1/A+ 5.10% 8/1/18 2,000 2,000,000
------------
OHIO--2.0%
Columbus School
District, 144A*....... NR/NR 9.39% 5/1/97 688 702,076
</TABLE>
See Notes to Financial Statements.
91
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
OHIO (CONTINUED)
Ohio State Highway,
Series T............. Aa/AAA 4.80% 5/15/02 $ 1,600 $ 1,644,592
Ohio State Public
Facilities
Commission, Higher
Education Capital
Facilities, Series II
A
(AMBAC Insured)...... Aaa/AAA 4.30% 12/1/08 2,890 2,676,920
------------
5,023,588
------------
OKLAHOMA--1.5%
Oklahoma State
Industrial Authority
Revenue Refunding,
Health Facilities,
Sisters of Mercy,
Series A............. Aa/AA 5.20% 6/1/05 3,600 3,719,016
------------
PENNSYLVANIA--0.5%
Philadelphia Gas Works
Revenue, Fifteenth
Series, (FSA
Insured)............. Aaa/AAA 5.13% 8/1/05 1,220 1,248,255
------------
RHODE ISLAND--2.1%
Rhode Island Depositors
Economic Protection
Corp., Series A (FSA
and MBIA Insured).... Aaa/AAA 6.30% 8/1/05 4,640 5,182,880
------------
TENNESSEE--5.0%
Knox County Health,
Educational & Housing
Facilities Board,
Hospital Facilities
Revenue Refunding,
Fort Sanders Alliance
(MBIA Insured)....... Aaa/AAA 7.25% 1/1/08 8,900 10,731,709
Knox County Health,
Educational & Housing
Facilities Board,
Hospital Facilities
Revenue Refunding,
Fort Sanders Alliance
(MBIA Insured)....... Aaa/AAA 7.25% 1/1/09 1,360 1,649,299
------------
12,381,008
------------
</TABLE>
See Notes to Financial Statements.
92
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TEXAS--5.9%
Texas City Industrial
Development Corp.,
Marine Terminal
Revenue Refunding,
Arco Pipe Line Co.
Project.............. A1/A 7.38% 10/1/20 $ 4,650 $ 5,791,436
Texas State College
Student Loan
(A.M.T.)............. Aa/AA 6.50% 8/1/07 4,000 4,362,360
Texas State Public
Finance Authority,
Series A............. Aa/AA 8.00% 10/1/99 3,930 4,458,821
------------
14,612,617
------------
WASHINGTON--2.8%
Chelan County Public
Utilities District
No. 001, Revenue,
Series E............. A1/A+ 5.70% 7/1/08 2,150 2,199,257
Washington State Public
Power Supply System
Nuclear Project No. 2
Revenue, Series C.... NR/AAA 7.63% 7/1/10 4,000 4,673,720
------------
6,872,977
------------
WISCONSIN--1.7%
Wisconsin State General
Obligation, Series B. Aa/AA 5.50% 5/1/09 4,160 4,290,083
------------
WYOMING--0.3%
Wyoming Community
Development
Authority, Single
Family, Series D
(FHA/VA Mortgage
Insured)............. Aa/AA 7.60% 6/1/17 800 856,440
------------
TOTAL INVESTMENTS
(COST
$231,324,230)(A)--
98.9%................. 244,998,503
Other assets in excess
of liabilities--1.1%.. 2,824,647
------------
NET ASSETS--100.0%...... $247,823,150
============
</TABLE>
See Notes to Financial Statements.
93
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
- -----------
Percentages indicated are based on net assets of $247,823,150.
* Securities exempt from registration under Rule 144A of the Securities Act
of 1993. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from the value by net unrealized appreciation of the
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $13,674,273
Unrealized depreciation......................................... --
-----------
Net unrealized appreciation..................................... $13,674,273
===========
</TABLE>
AMBAC--American Municipal Bond Assurance Corporation.
A.M.T.--Subject to Alternative Minimum Tax.
CGIC--Capital Guaranty Insurance Corporation.
FGIC--Financial Guaranty Insurance Company.
FHA/VA--Federal Housing Association/Veterans Administration.
FSA--Financial Security Assurance.
MBIA--Municipal Bond Insurance Association.
NR--No rating available.
SPA--Standby Purchase Agreement.
See Notes to Financial Statements.
94
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Maturity Amount Cost
Description Rate Date (000) (Note 2(a))
----------- ------ -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--82.5%
U.S. TREASURY BILLS--82.5%
U.S. Treasury Bill..................... 5.35%* 1/11/96 $10,000 $ 9,985,194
U.S. Treasury Bill..................... 5.32%* 1/18/96 5,000 4,987,451
U.S. Treasury Bill..................... 5.34%* 1/25/96 10,000 9,964,400
U.S. Treasury Bill..................... 5.32%* 2/15/96 7,500 7,450,125
U.S. Treasury Bill..................... 5.30%* 3/7/96 7,500 7,427,194
U.S. Treasury Bill..................... 4.82%* 3/14/96 7,500 7,426,696
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $47,241,060).................... 47,241,060
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $47,241,060).................... 47,241,060
-----------
REPURCHASE AGREEMENTS--17.8%
Repurchase agreement with National
Westminster, dated 12/29/95, with a
maturity value of $10,206,403 (see
Footnote A).......................... 5.65% 1/2/96 10,200 10,200,000
-----------
TOTAL INVESTMENTS
(COST $57,441,060)(A)--100.3%......... 57,441,060
Liabilities in excess of other assets--
(0.3%)................................ (177,000)
-----------
NET ASSETS--100.0%...................... $57,264,060
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $57,264,060.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Yield at purchase.
Footnote A: Collateralized by $10,100,000 U.S. Treasury Note, due 03/31/97;
with a value of $10,474,323.
See Notes to Financial Statements.
95
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
BANKERS ACCEPTANCES--4.9%
Bank of Tokyo............... P-1/A-1 5.81% 1/8/96 $ 5,000 $ 4,994,351
Dai-Ichi Kangyo............. P-1/A-1 5.81% 2/15/96 5,000 4,963,688
------------
TOTAL BANKERS ACCEPTANCES
(COST $9,958,039).......... 9,958,039
------------
CERTIFICATES OF DEPOSIT--39.7%
U.S. BRANCHES OF FOREIGN
BANKS--39.7%
ABN Amro.................... P-1/A-1+ 5.78% 2/1/96 7,000 7,000,494
Bank of Montreal............ P-1/A-1+ 5.78% 1/17/96 5,000 5,000,060
Banque Nationale de Paris... P-1/A-1 5.75% 2/5/96 7,000 7,000,251
Canadian Imperial Bank of
Commerce.................. P-1/A-1+ 5.60% 3/12/96 7,000 7,000,000
Commerz Bank AG............. P-1/A-1+ 5.77% 1/17/96 5,000 5,000,044
Fuji Bank, Ltd. ............ P-1/A-1 6.09% 1/18/96 7,000 7,000,099
Industrial Bank of Japan.... P-1/A-1 5.82% 1/17/96 5,000 4,999,747
Mitsubishi Bank, Ltd. ...... P-1/A-1+ 5.86% 3/6/96 7,000 7,000,849
National Westminster Bank... P-1/A-1+ 5.78% 1/16/96 5,000 5,000,054
Rabobank.................... P-1/A-1+ 5.75% 1/22/96 5,000 5,000,029
Sanwa Bank, Ltd. ........... P-1/A-1+ 6.03% 1/17/96 7,000 6,999,953
Societe Generale............ P-1/A-1 5.77% 2/2/96 7,000 7,000,392
Sumitomo Bank............... P-1/A-1 6.06% 1/18/96 7,000 7,000,066
------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $81,002,038)......... 81,002,038
------------
COMMERCIAL PAPER--43.7%
DOMESTIC--34.4%
AT&T........................ P-1/A-1+ 5.54% 3/19/96 7,000 6,915,977
Barclays Funding............ P-1/A-1+ 5.67% 1/19/96 7,500 7,478,737
Ciesco L.P. ................ P-1/A-1+ 5.70% 1/19/96 7,500 7,478,625
Corporate Asset
Funding Co., Inc. ........ P-1/A-1+ 5.65% 2/9/96 7,000 6,957,154
Exxon Imperial.............. P-1/A-1+ 5.62% 1/16/96 6,000 5,985,950
Ford Motor Credit........... P-1/A-1 5.63% 2/13/96 7,500 7,449,565
Goldman Sachs............... P-1/A-1+ 5.55% 4/2/96 7,000 6,900,717
Morgan Stanley & Co. ....... P-1/A-1+ 6.00% 1/3/96 7,000 6,997,667
Nestle Capital.............. P-1/A-1+ 5.73% 1/12/96 7,000 6,987,744
Philip Morris............... P-1/A-1 5.72% 1/19/96 7,000 6,979,980
------------
70,132,116
------------
</TABLE>
See Notes to Financial Statements.
96
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
FOREIGN--9.3%
Bayerische Vereinsbank..... P-1/A-1+ 5.73% 1/8/96 $ 7,000 $ 6,992,201
Dresdner Finance........... P-1/A-1+ 5.69% 1/3/96 5,000 4,998,419
Deutsche Bank.............. P-1/A-1+ 5.74% 1/12/96 7,000 6,987,723
------------
18,978,343
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST
$89,110,459).............. 89,110,459
------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--0.0%
Small Business
Administration,
Pool #500870V*............ NR/NR 7.63% 4/25/96 6 5,887
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(AMORTIZED COST $5,887)... 5,887
------------
TOTAL INVESTMENTS IN
SECURITIES (AMORTIZED COST
$180,076,423)............. 180,076,423
------------
REPURCHASE AGREEMENTS--12.3%
Repurchase agreement with
Daiwa Securities, dated
12/29/95, with a maturity
value of $15,009,166 (see
Footnote A).............. NR/NR 5.50% 1/2/96 15,000 15,000,000
Repurchase agreement with
National Westminster
Bank, dated 12/29/95,
with a maturity value of
$10,106,431 (see
Footnote B).............. NR/NR 5.65% 1/2/96 10,100 10,100,000
------------
TOTAL REPURCHASE AGREEMENTS
(AMORTIZED COST
$25,100,000).............. 25,100,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST
$205,176,423)(A)--100.6%.. 205,176,423
Liabilities in excess of
other assets--(0.6%)...... (1,117,205)
------------
NET ASSETS--100.0%.......... $204,059,218
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $204,059,218.
(a) Cost for federal income tax and financial reporting purposes are the same.
NR--No rating available.
* Variable rate security. Interest rate stated is as of December 31, 1995.
Maturity date reflects the later of the next rate change or the next put
date.
Footnote A: Collateralized by $14,800,000 U.S. Treasury Note, 5.88%, due
07/31/97; with a value of $15,313,017.
Footnote B: Collateralized by $10,000,000 U.S. Treasury Note, 6.63%, due
03/31/97; with a value of $10,287,625.
See Notes to Financial Statements.
97
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
ALASKA--3.3%
City of Valdez, Marine
Terminal Revenue, CP,
Refunding, ARCO
Transportation
Project, Series A..... VMIG1/A-1 3.50% 2/5/96 $ 3,500 $ 3,500,000
City of Valdez, Marine
Terminal Revenue, CP,
Refunding, ARCO
Transportation
Project, Series A,
1994 A................ VMIG1/A-1 3.55% 1/5/96 4,000 4,000,000
------------
7,500,000
------------
ALABAMA--2.6%
Phenix City Alabama
(A.M.T.)(LC
ABN Amro)............. P-1/NR 3.55% 2/7/96 6,000 6,000,000
------------
CALIFORNIA--4.2%
Southeast Resource
Recovery Facility,
Authority of
California Lease
Revision, VRDN, Series
A, (LC Industrial Bank
of Japan Ltd)......... VMIG1/A-1 5.15%* 12/1/18 9,500 9,500,000
------------
COLORADO--4.4%
Burke County
(LC Credit Swisse).... VMIG1/A-1+ 3.40% 3/7/96 5,000 5,000,000
Colorado Student
Obligation Bond
Authority, VRDN,
Student Loan Revenue,
Series 1990A (A.M.T.)
(LC Student Loan
Marketing
Association).......... VMIG1/NR 5.20%* 9/1/24 5,000 5,000,000
------------
10,000,000
------------
FLORIDA--8.4%
Florida Municipal Power
(LC First Union)...... P-1/A-1 3.50% 2/8/96 7,500 7,500,000
West Orange Hospital
(LC Rabobank)......... VMIG1/NR 3.75% 1/3/96 5,600 5,600,000
West Orange Hospital
(LC Rabobank)......... VMIG1/NR 3.80% 1/11/96 6,000 6,000,000
------------
19,100,000
------------
</TABLE>
See Notes to Financial Statements.
98
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
GEORGIA--3.2%
Georgia Municipal Gas
(LC Wachovia Bank).... A1+/NR 3.80% 2/5/96 $ 5,000 $ 5,000,000
Thomaston--Upson County,
Industrial Development
Authority, Yamaha
Music Manufacturing,
(A.M.T.) (LC Bank of
Tokyo Ltd.)........... NR/A-1 5.80%* 8/1/18 2,300 2,300,000
------------
7,300,000
------------
IOWA--2.6%
Iowa School Corps.,
Warrant Certificates,
Iowa School Cash
Anticipation Program,
Series A
(CGIC Insured)........ VMIG1/SP-1+ 4.75% 6/28/96 6,000 6,025,412
------------
ILLINOIS--2.7%
Southwestern Illinois
Development Authority,
Environmental Impact
Revenue, Shell Oil Co.
Wood River Project,
(A.M.T.).............. VMIG1/AAA 6.15% 10/1/25 6,175 6,175,000
------------
INDIANA--1.6%
Seymour Economic
Development Authority
Revenue, Kobelco Metal
Powder Project
(A.M.T.) (LC
Industrial Bank of
Japan, Limited)....... NR/A-1 5.80% 12/1/97 3,700 3,700,000
------------
KENTUCKY--4.8%
Bowling Green,
Industrial Building
Revenue, VRDN, Bando
Manufacturing America
Project (A.M.T.) (LC
Industrial Bank of
Japan, New York)...... NR/A-1 5.80%* 12/1/07 2,655 2,655,000
</TABLE>
See Notes to Financial Statements.
99
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
KENTUCKY (CONTINUED)
Bowling Green,
Industrial Building
Revenue, VRDN, Twin
Faste Inc. Project
(A.M.T.) (LC
Industrial Bank of
Japan)................ NR/A-1 5.80%* 3/1/08 $ 2,400 $ 2,400,000
Henderson County, Solid
Waste Disposal
Revenue, VRDN, Hudson
Foods Inc. Project
(A.M.T.)
(LC Rabobank
Netherland)........... VMIG1/NR 5.10%* 3/1/15 2,000 2,000,000
Kentucky Higher
Education Student Loan
Corp., Insured Student
Loan, Series E,
(A.M.T.) (LC Sumitomo
Bank, Chicago)........ VMIG1/A-1 5.60% 12/1/11 4,000 4,000,000
------------
11,055,000
------------
LOUISIANA--5.3%
New Orleans Exhibition
Hall Authority, Series
B, (A.M.T.) (LC Sanwa
Bank Ltd.)............ VMIG1/A-1 5.50% 7/1/18 5,000 5,000,000
State of Louisiana
(LC Credit Locale).... VMIG1/A-1+ 3.80% 1/3/96 7,000 7,000,000
------------
12,000,000
------------
MISSOURI--3.4%
Missouri Higher
Education Loan
Authority, VRDN,
Series A (A.M.T.) (LC
National Westminster
Place)................ VMIG1/NR 5.25%* 6/1/17 3,000 3,000,000
Burlington G&E VRDN..... P-1/A-1+ 3.65%* 3/11/96 4,800 4,800,000
------------
7,800,000
------------
</TABLE>
See Notes to Financial Statements.
100
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEW HAMPSHIRE--4.4%
New Hampshire Business
Finance Authority,
Pollution Control
Revenue Refunding,
Public Service Co. of
New Hampshire Project,
VRDN, Series 1992D,
(A.M.T.) (LC Barclays
Bank PLC)............. VMIG1/A-1+ 5.15%* 5/1/21 $ 10,000 $ 10,000,000
------------
NEVADA--4.8%
Clark County Industrial
Development Revenue,
Nevada Power Co.
Project, Series A,
(A.M.T.) (LC Bank
Barcia Place)......... NR/A-1+ 5.35% 10/1/30 8,000 8,000,000
Washoe County Nevada (LC
Union Bank of
Switzerland).......... P-1/A-1+ 4.00% 1/22/96 3,000 3,000,000
------------
11,000,000
------------
NEW YORK--11.4%
New York City General
Obligation, Series F-6
(LC Noeinchukin)...... VMIG1/A-1+ 5.50% 2/15/18 4,200 4,200,000
New York City Housing
Development Corp.
Mortgage Revenue,
Multifamily 400 West
59th-A-2 (A.M.T.)
(LC Bayerische
Hypotheken)........... NR/A-1 5.00% 9/1/30 9,000 9,000,000
New York State Energy
Research & Development
Authority, Pollution
Control Revenue, New
York Electric & Gas--D
(LC Union Bank of
Switzerland).......... VMIG1/A-1+ 5.30% 10/1/29 6,000 6,000,000
</TABLE>
See Notes to Financial Statements.
101
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York State Energy
Research & Development
Authority, Pollution
Control Revenue,
Niagara Power Corp.
Project--B, (A.M.T.)
(LC Morgan Guaranty
New York)............. NR/A-1+ 5.60% 7/1/27 $ 2,000 $ 2,000,000
St. Lawrence County
Industrial Development
Agency, Environmental
Impact Revenue
Reynolds Metals Co.
Project, (A.M.T.) (LC
Royal Bank of Canada). VMIG1/A-1+ 5.00% 5/1/25 4,900 4,900,000
------------
26,100,000
------------
OREGON--1.8%
State of Oregon General
Obligation, VRDN,
Veterans' Welfare
Bond, Series 1973F,
(LC Mitsubishi Bank
Ltd.)................. VMIG1/A-1 5.15%* 12/1/17 4,000 4,000,000
------------
PENNSYLVANIA--6.4%
Allegheny County
Pennsylvania (LC
Norinchukin).......... P-1/A-1+ 3.70% 2/2/96 3,700 3,700,000
Carbon County
Pennsylvania (A.M.T.)
(LC NatWest).......... P-1/A-1+ 3.45% 3/6/96 7,000 7,000,000
Montgomery County (LC
Deutsche Bank)........ P-1/A-1+ 3.80% 2/7/96 3,800 3,800,000
------------
14,500,000
------------
RHODE ISLAND--1.3%
Providence Off Street
Public Parking
Facility Revenue,
VRDN, Wash Street
Garage Corp. Project,
(A.M.T.) (LC Morgan
Guaranty Trust)....... NR/A-1+ 5.10%* 12/1/22 3,000 3,000,000
------------
</TABLE>
See Notes to Financial Statements.
102
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
SOUTH CAROLINA--3.0%
South Carolina Jobs,
Economic Development
Authority, VRDN,
Hospital Facilities
Revenue, Baptist
Healthcare System (LC
Credit Local de
France)............... VMIG1/A-1+ 5.05%* 8/1/17 $ 7,000 $ 7,000,000
------------
TENNESSEE--2.8%
Memphis Shelby County
(A.M.T.) (LC Canadian
Imperial Bank of
Commerce)............. P-1/A-1+ 3.70% 2/22/96 6,405 6,405,000
------------
TEXAS--9.9%
Brazos Higher Education
Authority, Student
Loan Revenue, VRDN,
Series B-1 (A.M.T.)
(LC
Student Loan Marketing
Assoc.) .............. VMIG1/NR 5.20%* 6/1/23 6,000 6,000,000
Brazos River Texas
(A.M.T.) (LC Canadian
Imperial Bank of
Commerce)............. VMIG1/A-1+ 3.95% 1/18/96 3,000 3,000,000
Gulf Coast Industrial
Development Authority,
Texas Solid Waste
Disposal Revenue,
Citgo Petroleum Corp.
Project (A.M.T.)
(LC NationsBank of
Texas)................ VMIG1/NR 6.15% 5/1/25 2,700 2,700,000
Milam County Industrial
Development Corp.,
Pollution Control
Revenue Refunding,
Aluminum Co. of
America Project (LC
Credit Suisse)........ VMIG1/NR 4.60% 3/1/01 5,000 5,000,000
</TABLE>
See Notes to Financial Statements.
103
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
TEXAS (CONTINUED)
Panhandle Plains Higher
Education Authority
Revenue, VRDN,
Student Loan Revenue,
Series A, (A.M.T.)
(LC Student Loan
Marketing
Association)......... VMIG1/NR 5.20%* 6/1/21 $ 6,000 $ 6,000,000
------------
22,700,000
------------
UTAH--2.4%
Emery County (LC Credit
Suisse).............. P-1/A-1+ 3.90% 1/10/96 5,500 5,500,000
------------
WEST VIRGINIA--2.6%
West Virginia Public
Energy (A.M.T.) (LC
Swiss Bank).......... P-1/A-1+ 3.70% 2/22/96 6,000 6,000,000
------------
WYOMING--2.4%
Sweetwater City,
Wyoming (A.M.T.) (LC
West Deutsche
LandesBank).......... VMIG1/A-1+ 3.70% 2/1/96 5,400 5,400,000
------------
TOTAL INVESTMENTS--99.7%
(COST
$227,760,412)(A)...... 227,760,412
Other assets in excess
of liabilities--0.3%.. 750,866
------------
NET ASSETS--100.0%...... $228,511,278
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $228,511,278.
(a) Cost for federal income tax and financial reporting purposes are the same.
A.M.T.--Subject to Alternative Minimum Tax.
CGIC--Capital Guaranty Insurance Corporation.
CP--Commercial Paper.
LC--Letter of Credit.
NR--No rating available.
VRDN--Variable Rate Demand Note.
* Variable rate security. Interest rate stated is as of December 31, 1995.
Maturity date reflects the later of the next rate change or the next put
date.
See Notes to Financial Statements.
104
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
105
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $46,747,002, $8,788,919,
$246,097,346, $250,136,384,
$78,317,453, $96,241,231 and
$168,543,796, respectively).......... $55,015,009 $9,512,982 $287,695,105
Repurchase Agreements (cost $0, $0, $0,
$0, $0, $0 and $20,857,000,
respectively)........................ -- -- --
Cash................................... 23,959 27,271 --
Cash denominated in foreign currencies. -- -- --
Receivable for investment securities
sold................................. -- -- --
Receivable for Fund shares sold........ 42,814 16,051 59,398
Receivable from Adviser................ -- -- --
Dividends receivable................... 130,722 10,670 1,011,718
Interest receivable.................... 341,392 31,618 98,743
Foreign tax reclaim receivable......... -- -- --
Deferred organization expenses......... 76,450 61,278 60,637
Prepaid expenses and other assets...... 20,666 5,397 7,051
----------- ---------- ------------
Total Assets.......................... 55,651,012 9,665,267 288,932,652
----------- ---------- ------------
LIABILITIES:
Advisory fees payable.................. 32,187 1,596 80,927
Administration fees payable............ 9,160 534 33,314
Shareholder Services fees payable
(Class A Shares)..................... 30,702 4,618 1,548
Shareholder Services fees payable
(Class B Shares)..................... 1,269 486 302
12b-1 fees payable (Class B Shares).... 4,502 1,419 892
Bank overdrafts........................ -- -- 438,819
Dividends payable...................... 19,103 2,812 847,092
Payable for Fund shares redeemed....... 59,709 -- --
Payable for investment securities
purchased............................ -- 23,593 --
Payable for variation margin........... -- -- --
Other accrued expenses................. 29,053 31,208 136,231
----------- ---------- ------------
Total Liabilities..................... 185,685 66,266 1,539,125
----------- ---------- ------------
NET ASSETS.............................. $55,465,327 $9,599,001 $287,393,527
=========== ========== ============
</TABLE>
See Notes to Financial Statements.
106
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate
Fund Fund Fund Bond Fund
------ ------------- ------------- ------------
<S> <C> <C> <C>
$295,869,250 $93,777,555 $102,116,486 $175,761,194
-- -- -- 20,857,000
-- 7,474 89,437 1,010
-- -- 948,475 --
5,224,933 -- -- --
103,710 13,900 447,060 56,077
-- -- -- 192,506
634,710 33,175 129,246 --
5,165 2,865 960,435 2,452,092
-- -- 55,468 --
59,746 60,194 60,697 38,759
7,172 3,042 3,482 13,068
- ------------ ----------- ------------ ------------
301,904,686 93,898,205 104,810,786 199,371,706
- ------------ ----------- ------------ ------------
139,215 39,946 31,952 53,803
42,597 11,526 10,626 25,102
2,545 359 1,592 3,312
148 10 90 136
437 28 256 451
262,146 -- -- --
844,773 180,457 203,585 929,545
326,751 -- 634 --
1,593,065 -- -- --
-- -- 72,514 --
151,663 52,936 100,160 75,686
- ------------ ----------- ------------ ------------
3,363,340 285,262 421,409 1,088,035
- ------------ ----------- ------------ ------------
$298,541,346 $93,612,943 $104,389,377 $198,283,671
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
107
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
CLASS A SHARES:
Net Assets........................... $51,996,986 $8,355,636 $ 2,872,994
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 3,576,517 726,432 235,161
----------- ---------- ------------
Net Asset Value per Share............ 14.54 11.50 12.22
Maximum Sales Charge................. 0.68* 0.54* 0.58*
----------- ---------- ------------
Maximum Offering Price............... $ 15.22 $ 12.04 $ 12.80
=========== ========== ============
CLASS B SHARES:
Net Assets........................... $ 2,174,744 $ 832,603 $ 593,200
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 149,364 72,716 48,550
----------- ---------- ------------
Net Asset Value per Share............ $ 14.56 $ 11.45 $ 12.22
=========== ========== ============
CLASS I SHARES:
Net Assets........................... $ 1,293,597 $ 410,762 $283,927,333
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 88,785 35,843 23,259,373
----------- ---------- ------------
Net Asset Value per Share............ $ 14.57 $ 11.46 $ 12.21
=========== ========== ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at
par................................ $ 3,815 $ 835 $ 23,544
Additional paid-in-capital........... 47,372,999 8,874,025 240,515,461
Accumulated net realized gains
(losses) from investment
transactions....................... (179,714) 5 5,265,350
Undistributed net investment income
(loss)............................. 220 73 (8,587)
Net unrealized appreciation on
investments........................ 8,268,007 724,063 41,597,759
Net unrealized appreciation of assets
and liabilities denominated in
foreign currencies and financial
futures............................ -- -- --
----------- ---------- ------------
NET ASSETS, DECEMBER 31, 1995.......... $55,465,327 $9,599,001 $287,393,527
=========== ========== ============
</TABLE>
- -----------
* Sales charge is 4.50% of Maximum Offering Price.
** Sales charge is 3.00% of Maximum Offering Price.
See Notes to Financial Statements.
108
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Opportunities Equity Intermediate
Growth Fund Fund Fund Bond Fund
----------- ------------- ------------- ------------
<S> <C> <C> <C>
$ 4,329,204 $ 671,776 $ 2,749,124 $ 6,094,679
361,669 55,070 246,447 744,997
------------ ----------- ------------ ------------
11.97 12.20 11.16 8.18
0.56* 0.57* 0.53* 0.25**
------------ ----------- ------------ ------------
$ 12.53 $ 12.77 $ 11.69 $ 8.43
============ =========== ============ ============
$ 268,039 $ 15,387 $ 192,707 $ 259,384
22,438 1,269 17,292 31,701
------------ ----------- ------------ ------------
$ 11.95 $ 12.12 $ 11.14 $ 8.18
============ =========== ============ ============
$293,944,103 $92,925,780 $101,447,546 $191,929,608
24,559,453 7,623,036 9,079,890 23,455,341
------------ ----------- ------------ ------------
$ 11.97 $ 12.19 $ 11.17 $ 8.18
============ =========== ============ ============
$ 24,944 $ 7,679 $ 9,344 $ 24,232
247,530,554 78,254,290 95,968,721 188,432,293
5,249,304 (113,066) 1,502,766 2,609,748
3,678 3,938 134,091 --
45,732,866 15,460,102 5,875,255 7,217,398
-- -- 899,200 --
------------ ----------- ------------ ------------
$298,541,346 $93,612,943 $104,389,377 $198,283,671
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
109
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
International Municipal
Bond Fund Bond Fund Bond Fund
--------- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $108,844,126, $14,692,171,
$370,618,759, $231,324,230,
$47,241,060, $180,076,423 and
$227,760,412, respectively)......... $115,115,920 $15,119,887 $387,423,990
Repurchase agreements (amortized cost
$11,167,000, $0, $0, $0,
$10,200,000, $25,100,000 and $0,
respectively)....................... 11,167,000 -- --
Cash.................................. -- 20,834 --
Receivable for investment securities
sold................................ -- -- --
Receivable for Fund shares sold....... 58,546 5,713 2,889
Receivable from Adviser............... -- -- 142,179
Interest receivable................... 1,667,756 380,503 6,122,544
Unrealized appreciation on forward
foreign currency contracts.......... -- 108,092 --
Deferred organization expenses........ 57,260 56,533 45,319
Prepaid expenses and other assets..... 5,854 6,525 29,721
------------ ----------- ------------
Total Assets......................... 128,072,336 15,698,087 393,766,642
------------ ----------- ------------
LIABILITIES:
Advisory fees payable................. 46,708 4,784 65,306
Administration fees payable........... 17,390 1,942 50,362
Shareholder Services fees payable
(Class A Shares).................... 1,007 283 59,716
Shareholder Services fees payable
(Class B Shares).................... 33 4 160
12b-1 fees payable (Class B Shares)... 94 8 568
Bank overdrafts....................... 175 -- 92
Dividends payable..................... 631,870 665,559 1,447,504
Payable for Fund shares redeemed...... 2,797 -- 170,000
Other accrued expenses................ 63,593 30,219 102,217
------------ ----------- ------------
Total Liabilities.................... 763,667 702,799 1,895,925
------------ ----------- ------------
NET ASSETS............................. $127,308,669 $14,995,288 $391,870,717
============ =========== ============
</TABLE>
See Notes to Financial Statements.
110
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
--------- --------------- ------------ ------------
<S> <C> <C> <C>
$244,998,503 $47,241,060 $180,076,423 $227,760,412
-- 10,200,000 25,100,000 --
-- -- -- 234,790
-- -- 1,938 --
39,250 -- --
108,845 -- -- --
4,307,370 3,973 496,734 1,016,229
-- -- -- --
4,453 57,957 61,354 83,300
21,770 60,156 110,035 122,258
- ------------ ----------- ------------ ------------
249,480,191 57,563,146 205,846,484 229,216,989
- ------------ ----------- ------------ ------------
51,660 13,690 41,802 30,811
31,720 19,610 31,447 45,718
22,133 117,924 227,761 283,674
123 -- 36 --
462 -- -- --
198,527 111,239 1,334,167 --
991,881 20,092 58,489 304,350
306,469 -- -- --
54,066 16,531 93,564 41,158
- ------------ ----------- ------------ ------------
1,657,041 299,086 1,787,266 705,711
- ------------ ----------- ------------ ------------
$247,823,150 $57,264,060 $204,059,218 $228,511,278
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
111
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
Bond International Municipal
Fund Bond Fund Bond Fund
---- ------------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
CLASS A SHARES:
Net Assets........................ $ 1,846,532 $ 486,840 $ 17,776,872
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 170,875 45,289 1,451,741
------------ ----------- ------------
Net Asset Value per Share......... 10.81 10.75 12.25
Maximum Sales Charge.............. 0.51* 0.51* 0.38**
------------ ----------- ------------
Maximum Offering Price............ $ 11.32 $ 11.26 $ 12.63
============ =========== ============
CLASS B SHARES:
Net Assets........................ $ 61,260 $ 4,478 $ 340,913
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 5,669 414 27,834
------------ ----------- ------------
Net Asset Value per Share......... $ 10.81 $ 10.81 $ 12.25
============ =========== ============
CLASS I SHARES:
Net Assets $125,400,877 $14,503,970 $373,752,932
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 11,598,064 1,342,032 30,509,460
------------ ----------- ------------
Net Asset Value per Share......... $ 10.81 $ 10.81 $ 12.25
============ =========== ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at
par............................. $ 11,774 $ 1,387 $ 31,989
Additional paid-in-capital........ 118,554,093 14,473,243 375,105,416
Accumulated net realized gains
(losses) on investment
transactions.................... 2,471,008 (37,381) (71,919)
Accumulated net investment loss... -- (13,857) --
Net unrealized appreciation on
investments..................... 6,271,794 427,716 16,805,231
Net unrealized appreciation of
assets and liabilities
denominated in foreign
currencies...................... -- 144,180 --
------------ ----------- ------------
NET ASSETS, DECEMBER 31, 1995....... $127,308,669 $14,995,288 $391,870,717
============ =========== ============
</TABLE>
- -----------
*Sales charge is 4.50% of Maximum Offering Price.
**Sales charge is 3.00% of Maximum Offering Price.
(1) The Municipal Bond Fund has authorized 2.5 billion shares for Class A and
Class B and has authorized 5.0 billion shares for Class I.
See Notes to Financial Statements.
112
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
--------- --------------- ------------ ------------
<S> <C> <C> <C>
$ 7,425,897 $57,264,060 $203,994,341 $228,511,278
587,619 57,280,045 203,962,497 228,564,929
- ------------ ----------- ------------ ------------
12.64 1.00 1.00 1.00
0.60* -- -- --
- ------------ ----------- ------------ ------------
$ 13.24 $ 1.00 $ 1.00 $ 1.00
============ =========== ============ ============
$ 237,697 $ 64,877
18,797 64,867
- ------------ ------------
$ 12.65 $ 1.00
============ ============
$240,159,556
19,011,083
- ------------
$ 12.63
============
$ 19,618 $ 57,280 $ 204,027 $ 228,565
233,921,388 57,222,765 203,823,336 228,322,787
207,871 (15,985) 31,855 (40,074)
-- -- -- --
13,674,273 -- -- --
-- -- -- --
- ------------ ----------- ------------ ------------
$247,823,150 $57,264,060 $204,059,218 $228,511,278
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
113
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund(6) Assets Fund(1) Income Fund(2)
------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $134,218,
for International Equity Fund).. $ 1,219,984 $ 52,630 $ 8,875,334
Interest income................... 1,726,718 91,756 1,593,621
----------- -------- -----------
2,946,702 144,386 10,468,955
----------- -------- -----------
EXPENSES:
Advisory fees..................... 331,535 25,209 1,106,473
Administration fees............... 70,850 5,818 331,942
Shareholder Services fees (Class A
Shares and Class B Shares)...... 120,334 9,051 2,981
12b-1 fees (Class B Shares)....... 5,831 3,325 1,283
Custodian fees and expenses....... 56,320 37,950 81,104
Registration fees................. 13,918 -- 74,275
Legal and audit fees.............. 31,696 22,325 45,392
Amortization of organization
expenses........................ 10,067 10,494 17,155
Transfer agent fees and expenses.. 80,641 10,246 17,960
Reports to shareholders........... 14,504 12,129 20,660
Trustees' fees.................... 1,760 2,265 5,848
Miscellaneous expenses............ 13,157 2,182 17,505
----------- -------- -----------
Total Expenses.................... 750,613 140,994 1,722,578
Less: Expense reimbursements...... (179,574) (89,978) (277,704)
----------- -------- -----------
Net Expenses..................... 571,039 51,016 1,444,874
----------- -------- -----------
NET INVESTMENT INCOME............ 2,375,663 93,370 9,024,081
----------- -------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gains (losses) on
investment transactions......... (324,052) 5 12,993,377
Net realized losses on foreign
currency transactions........... -- -- --
Net realized gains on futures
transactions.................... -- -- --
Net change in unrealized
appreciation (depreciation) on
investments..................... 9,391,499 724,063 41,597,759
Net unrealized appreciation of
assets and liabilities
denominated in foreign
currencies and financial
futures......................... -- -- --
----------- -------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS.. 9,067,447 724,068 54,591,136
----------- -------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS. $11,443,110 $817,438 $63,615,217
=========== ======== ===========
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 1, 1995 through December 31, 1995.
(5) For the year ended January 31, 1995.
(6) For the year ended December 31, 1995.
See Notes to Financial Statements.
114
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate Intermediate
Fund(2) Fund(2) Fund(3) Bond Fund(4) Bond Fund(5)
------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
$ 4,772,025 $ 611,057 $ 973,285
1,172,933 394,772 746,158 $10,539,377 $ 348,758
- ----------- ----------- ----------- ----------- ---------
5,944,958 1,005,829 1,719,443 10,539,377 348,758
- ----------- ----------- ----------- ----------- ---------
1,714,125 487,460 506,105 612,312 30,810
395,568 104,456 94,372 229,617 252
4,884 778 3,253 5,767 170
670 56 379 563 8
74,792 62,572 159,181 60,572 3,383
104,974 16,430 28,299 31,550 3,428
57,332 28,516 28,042 37,450 53,810
17,201 17,259 15,262 148 8,592
16,912 16,800 16,161 23,464 8,893
23,464 15,120 12,673 26,193 17,714
4,088 4,032 5,593 1,670 5,602
18,617 8,410 11,638 7,006 7,099
- ----------- ----------- ----------- ----------- ---------
2,432,627 761,889 880,958 1,036,312 139,761
(314,740) (168,733) (213,519) (185,219) (137,928)
- ----------- ----------- ----------- ----------- ---------
2,117,887 593,156 667,439 851,093 1,833
- ----------- ----------- ----------- ----------- ---------
3,827,071 412,673 1,052,004 9,688,284 346,925
- ----------- ----------- ----------- ----------- ---------
26,140,162 1,749,697 505,347 7,844,775 (63,605)
-- -- (236,752) -- --
-- -- 3,503,125 -- --
45,732,866 15,460,102 5,875,255 7,312,968 (304,664)
-- -- 899,200 -- --
- ----------- ----------- ----------- ----------- ---------
71,873,028 17,209,799 10,546,175 15,157,743 (368,269)
- ----------- ----------- ----------- ----------- ---------
$75,700,099 $17,622,472 $11,598,179 $24,846,027 $ (21,344)
=========== =========== =========== =========== =========
</TABLE>
See Notes to Financial Statements.
115
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Intermediate
International Municipal Municipal
Bond Fund(1) Bond Fund(2) Bond Fund(3) Bond Fund(4)
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (net of
foreign withholding
taxes of $13,850 for
International Bond
Fund).................. $ 7,432,982 $ 717,469 $16,586,298 $2,141,819
----------- ---------- ----------- ----------
7,432,982 717,469 16,586,298 2,141,819
----------- ---------- ----------- ----------
EXPENSES:
Advisory fees............ 571,379 79,128 1,294,971 213,509
Administration fees...... 155,831 16,957 488,746 27,546
Shareholder Services fees
(Class A Shares and
Class B Shares)........ 2,161 684 38,461 60,314
12b-1 fees (Class B
Shares)................ 116 30 824 175
Custodian fees and
expenses............... 55,999 34,025 76,502 5,329
Registration fees........ 31,690 5,776 142,121 33,720
Legal and audit fees..... 29,720 24,652 41,560 59,478
Amortization of
organization expenses.. 16,042 16,769 12,943 --
Transfer agent fees and
expenses............... 15,614 16,432 22,560 17,386
Reports to shareholders.. 13,762 12,840 28,882 18,415
Trustees' fees........... 5,642 2,352 1,586 5,076
Miscellaneous expenses... 10,618 6,748 13,408 11,946
----------- ---------- ----------- ----------
Total Expenses........... 908,574 216,393 2,162,564 452,894
Less: Expense
reimbursements......... (178,732) (110,736) (403,299) (296,239)
----------- ---------- ----------- ----------
Net Expenses............ 729,842 105,657 1,759,265 156,655
----------- ---------- ----------- ----------
NET INVESTMENT INCOME... 6,703,140 611,812 14,827,033 1,985,164
----------- ---------- ----------- ----------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON
INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gains
(losses) on investment
transactions........... 6,908,795 1,020,021 3,839,621 (757,908)
Net realized gains on
foreign currency
transactions........... -- 30,644 -- --
Net change in unrealized
appreciation on
investments............ 6,271,794 427,716 13,694,976 2,898,764
Translation of assets and
liabilities denominated
in foreign currencies.. -- 144,180 -- --
----------- ---------- ----------- ----------
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS AND
FOREIGN CURRENCY
TRANSACTIONS.......... 13,180,589 1,622,561 17,534,597 2,140,856
----------- ---------- ----------- ----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $19,883,729 $2,234,373 $32,361,630 $4,126,020
=========== ========== =========== ==========
</TABLE>
- -----------
(1) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 1, 1995 through December 31, 1995.
(4) For the year ended February 28, 1995.
(5) For the year ended December 31, 1995.
See Notes to Financial Statements.
116
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Municipal Money Market Money Market Money Market
Bond Fund(3) Bond Fund(4) Fund(5) Fund(5) Fund(5)
------------ ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
$ 11,366,541 $ 984,395 $3,925,073 $8,980,167 $7,967,822
--------------- ---------- ---------- ---------- ----------
11,366,541 984,395 3,925,073 8,980,167 7,967,822
--------------- ---------- ---------- ---------- ----------
829,219 84,738 297,377 631,448 860,103
310,957 15,548 94,631 220,431 292,778
15,010 20,089 170,762 380,585 508,602
600 183 -- 154 --
43,173 5,356 47,037 58,917 67,687
95,405 30,271 7,824 26,695 19,626
56,450 25,959 22,236 57,347 54,617
148 -- 8,303 7,228 9,259
22,392 15,883 37,804 185,048 56,756
26,190 13,517 14,357 25,741 14,373
2,650 1,718 2,138 5,185 8,633
11,000 8,105 29,658 32,213 35,509
--------------- ---------- ---------- ---------- ----------
1,413,194 221,367 732,127 1,630,992 1,927,943
(278,552) (167,016) (198,986) (431,210) (489,926)
--------------- ---------- ---------- ---------- ----------
1,134,642 54,351 533,141 1,199,782 1,438,017
--------------- ---------- ---------- ---------- ----------
10,231,899 930,044 3,391,932 7,780,385 6,529,805
--------------- ---------- ---------- ---------- ----------
5,020,578 (260,986) 32,485 179,219 (44)
-- -- -- -- --
11,041,965 2,624,847 -- -- --
-- -- -- -- --
--------------- ---------- ---------- ---------- ----------
16,062,543 2,363,861 32,485 179,219 (44)
--------------- ---------- ---------- ---------- ----------
$ 26,294,442 $3,293,905 $3,424,417 $7,959,604 $6,529,761
=============== ========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
117
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
--------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................... $ 2,375,663 $ 2,808,997
Net realized gains (losses) on investment
transactions...................................... (324,052) 210,291
Net change in unrealized appreciation (depreciation)
on investments.................................... 9,391,499 (4,108,668)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 11,443,110 (1,089,380)
----------- ------------
Net equalization credits............................ -- 2,562
----------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares..................................... (2,441,590) (2,753,670)
Class B Shares..................................... (31,089) (34,937)
Class I Shares..................................... (36,073) --
----------- ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.................... (2,508,752) (2,788,607)
----------- ------------
Net realized gains on investments:
Class A Shares..................................... (108,059) (19,340)
Class B Shares..................................... (4,560) (323)
Class I Shares..................................... (2,720) --
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS................ (115,339) (19,663)
----------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....................... 9,561,625 6,725,337
Dividends reinvested................................ 2,415,006 2,336,101
Cost of shares redeemed............................. (9,697,497) (12,384,919)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS............................... 2,279,134 (3,323,481)
----------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 11,098,153 (7,218,569)
NET ASSETS:
Beginning of year................................... 44,367,174 51,585,743
----------- ------------
End of year (includes undistributed net investment
income of $220 in 1995 and $133,309 in 1994)...... $55,465,327 $ 44,367,174
=========== ============
</TABLE>
See Notes to Financial Statements.
118
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
119
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- ------- -------
<S> <C> <C> <C>
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income.............. $ 93,370 $ 9,024,081 $ 3,827,071
Net realized gains on investment
transactions..................... 5 12,993,377 26,140,162
Net realized gains (losses) on
foreign currency transactions.... -- -- --
Net realized gains on futures
transactions..................... -- -- --
Net change in unrealized
appreciation on investments...... 724,063 41,597,759 45,732,866
Net unrealized appreciation of
assets and liabilities
denominated in foreign currencies
and financial futures............ -- -- --
---------- ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... 817,438 63,615,217 75,700,099
---------- ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares.................... (77,991) (36,341) (20,056)
Class B Shares.................... (7,493) (4,665) (128)
Class I Shares.................... (7,813) (8,991,662)(5) (3,803,209)
---------- ------------ ------------
TOTAL DIVIDENDS TO SHAREHOLDERS... (93,297) (9,032,668) (3,823,393)
---------- ------------ ------------
Net realized gains on investments:
Class A Shares.................... -- (76,484) (297,846)
Class B Shares.................... -- (15,958) (18,522)
Class I Shares.................... -- (7,635,585) (20,574,490)
---------- ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS.................... -- (7,728,027) (20,890,858)
---------- ------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold...... 9,391,817 258,157,716 300,831,887
Dividends reinvested............... 85,512 6,638,209 15,027,099
Cost of shares redeemed............ (602,469) (24,256,920) (68,303,488)
---------- ------------ ------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS......... 8,874,860 240,539,005 247,555,498
---------- ------------ ------------
TOTAL INCREASE IN NET ASSETS..... 9,599,001 287,393,527 298,541,346
NET ASSETS:
Beginning of period................ -- -- --
---------- ------------ ------------
End of period(6)................... $9,599,001 $287,393,527 $298,541,346
========== ============ ============
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(5) Includes distributions in excess of net investment income of $8,587.
(6) Includes undistributed net investment income of $73, $0, $3,678, $3,938,
$134,091, $0 and $0, respectively.
See Notes to Financial Statements.
120
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
------------- ------------- ------- -------------
<S> <C> <C> <C>
$ 412,673 $ 1,052,004 $ 6,703,140 $ 611,812
1,749,697 505,347 6,908,795 1,020,021
-- (236,752) -- 30,644
-- 3,503,125 -- --
15,460,102 5,875,255 6,271,794 427,716
-- 899,200 -- 144,180
--------------- ------------ ------------ -----------
17,622,472 11,598,179 19,883,729 2,234,373
--------------- ------------ ------------ -----------
(807) (12,465) (50,085) (13,458)
-- (174) (755) (173)
(407,928) (905,274) (6,652,300) (612,038)
--------------- ------------ ------------ -----------
(408,735) (917,913) (6,703,140) (625,669)
--------------- ------------ ------------ -----------
(13,273) (60,752) (63,549) (33,914)
(308) (4,283) (2,117) (311)
(1,849,182) (2,203,921) (4,372,121) (1,053,821)
--------------- ------------ ------------ -----------
(1,862,763) (2,268,956) (4,437,787) (1,088,046)
--------------- ------------ ------------ -----------
89,942,654 100,265,824 129,396,150 15,584,504
1,194,408 1,535,547 2,974,473 380,496
(12,875,093) (5,823,304) (13,804,756) (1,490,370)
--------------- ------------ ------------ -----------
78,261,969 95,978,067 118,565,867 14,474,630
--------------- ------------ ------------ -----------
93,612,943 104,389,377 127,308,669 14,995,288
-- -- -- --
--------------- ------------ ------------ -----------
$ 93,612,943 $104,389,377 $127,308,669 $14,995,288
=============== ============ ============ ===========
</TABLE>
See Notes to Financial Statements.
121
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended For the Period Ended
December 31, January 31, January 31,
1995(1) 1995 1994(2)
-------------------- ------------------ --------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 9,688,284 $ 346,925 $ 269,055
Net realized gains
(losses) on
investment
transactions......... 7,844,775 (63,605) 13,430
Net change in
unrealized
appreciation
(depreciation) on
investments.......... 7,312,968 (304,664) (60,015)
------------ ----------- ----------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS..... 24,846,027 (21,344) 222,470
------------ ----------- ----------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (137,077) (4,217) (1,326)
Class B Shares........ (3,518) (99) --
Class I Shares........ (9,547,689) (342,609) (267,729)
------------ ----------- ----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (9,688,284) (346,925) (269,055)
------------ ----------- ----------
Net realized gains on
investments:
Class A Shares........ (157,731) (16) (152)
Class B Shares........ (6,773) (1) --
Class I Shares........ (5,006,911) (1,196) (12,072)
------------ ----------- ----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ (5,171,415) (1,213) (12,224)
------------ ----------- ----------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 200,868,057 7,682,912 5,298,453
Dividends reinvested... 4,026,532 9,789 6,783
Cost of shares
redeemed............. (23,767,145) (5,345,718) (154,029)
------------ ----------- ----------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. 181,127,444 2,346,983 5,151,207
------------ ----------- ----------
TOTAL INCREASE IN NET
ASSETS............. 191,113,772 1,977,501 5,092,398
NET ASSETS:
Beginning of period.... 7,169,899 5,192,398 100,000
------------ ----------- ----------
End of period.......... $198,283,671 $ 7,169,899 $5,192,398
============ =========== ==========
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
See Notes to Financial Statements.
122
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended For the Year Ended
December 31, February 28, February 28,
1995(1) 1995 1994(2)
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 14,827,033 $ 1,985,164 $ 1,394,851
Net realized gains
(losses) on
investment
transactions......... 3,839,621 (757,908) 1,275,347
Net change in
unrealized
appreciation on
investments.......... 13,694,976 2,898,764 (1,243,092)
------------ ------------ -----------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 32,361,630 4,126,020 1,427,106
------------ ------------ -----------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (619,417) (1,214,913) (1,394,847)
Class B Shares........ (3,609) (17) (4)
Class I Shares........ (14,204,008) (770,234) --
------------ ------------ -----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (14,827,034) (1,985,164) (1,394,851)
------------ ------------ -----------
Net realized gains on
investments:
Class A Shares........ (143,000) (62,814) (1,471,722)
Class B Shares........ (2,501) (284) --
Class I Shares........ (3,007,029) -- --
------------ ------------ -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ (3,152,530) (63,098) (1,471,722)
------------ ------------ -----------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 48,746,625 367,446,983 6,646,160
Dividends reinvested... 2,914,315 851,803 1,972,931
Cost of shares
redeemed............. (57,221,370) (16,165,822) (6,226,132)
------------ ------------ -----------
NET INCREASE
(DECREASE) IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. (5,560,430) 352,132,964 2,392,959
------------ ------------ -----------
TOTAL INCREASE IN NET
ASSETS............. 8,821,636 354,210,722 953,492
NET ASSETS:
Beginning of period.... 383,049,081 28,838,359 27,884,867
------------ ------------ -----------
End of period.......... $391,870,717 $383,049,081 $28,838,359
============ ============ ===========
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995.
(2) Includes Class B Shares for the period February 8, 1994 (initial offering
date of Class B Shares) through February 28, 1994.
See Notes to Financial Statements.
123
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended For the Year Ended
December 31, February 28, February 28,
1995(1) 1995 1994(2)
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 10,231,899 $ 930,044 $ 497,241
Net realized gains
(losses) on
investment
transactions......... 5,020,578 (260,986) 607,250
Net change in
unrealized
appreciation on
investments.......... 11,041,965 2,624,847 (728,931)
------------ ------------ -----------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 26,294,442 3,293,905 375,560
------------ ------------ -----------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (268,916) (409,080) (497,237)
Class B Shares........ (2,833) (67) (4)
Class I Shares........ (9,960,150) (520,897) --
------------ ------------ -----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (10,231,899) (930,044) (497,241)
------------ ------------ -----------
Net realized gains on
investments:
Class A Shares........ (135,418) -- (717,815)
Class B Shares........ (4,334) -- --
Class I Shares........ (4,405,351) -- --
------------ ------------ -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ (4,545,103) -- (717,815)
------------ ------------ -----------
In excess of net
realized gains on
investments:
Class A Shares........ -- -- (6,618)
------------ ------------ -----------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 34,482,785 222,400,536 3,588,206
Dividends reinvested... 3,928,330 323,826 956,597
Cost of shares
redeemed............. (29,087,608) (7,342,155) (5,752,746)
------------ ------------ -----------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. 9,323,507 215,382,207 (1,207,943)
------------ ------------ -----------
TOTAL INCREASE IN NET
ASSETS............. 20,840,947 217,746,068 (2,054,057)
NET ASSETS:
Beginning of period.... 226,982,203 9,236,135 11,290,192
------------ ------------ -----------
End of period.......... $247,823,150 $226,982,203 $ 9,236,135
============ ============ ===========
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995.
(2) Includes Class B Shares for the period February 8,1994 (initial offering
date of Class B Shares) through February 28, 1994.
See Notes to Financial Statements.
124
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
---------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income........................... $ 3,391,932 $ 4,694,844
Net realized gains (losses) on investment
transactions.................................. 32,485 (961,178)
------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... 3,424,417 3,733,666
------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Class A Shares.................................. (3,391,932) (4,694,844)
------------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold................... 250,085,862 677,021,399
Dividends reinvested............................ 2,488,380 1,310,332
Cost of shares redeemed......................... (311,695,323) (716,564,214)
------------- ------------
NET DECREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS................................. (59,121,081) (38,232,483)
------------- ------------
Increase due to capital contribution from
affiliate of investment adviser (Note 3(d)).... -- 933,054
------------- ------------
TOTAL DECREASE IN NET ASSETS................... (59,088,596) (38,260,607)
NET ASSETS:
Beginning of year............................... 116,352,656 154,613,263
------------- ------------
End of year..................................... $ 57,264,060 $116,352,656
============= ============
</TABLE>
See Notes to Financial Statements.
125
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
-----------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income.......................... $ 7,780,385 $ 5,491,950
Net realized gains (losses) on investment
transactions................................. 179,219 (1,309,831)
------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 7,959,604 4,182,119
------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares................................ (7,779,495) (5,491,950)
Class B Shares................................ (890) --
------------- --------------
TOTAL DIVIDENDS TO SHAREHOLDERS............... (7,780,385) (5,491,950)
------------- --------------
Net realized gains on investments:
Class A Shares................................ (123,505) (23,361)
Class B Shares................................ (35) --
------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS........... (123,540) (23,361)
------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS................................ (7,903,925) (5,515,311)
------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.................. 803,027,143 1,724,346,455
Dividends reinvested........................... 6,873,012 2,559,069
Cost of shares redeemed........................ (725,296,634) (1,770,081,791)
------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS..................... 84,603,521 (43,176,267)
------------- --------------
Increase due to capital contribution from
affiliate of investment adviser (Note 3(d))... -- 1,286,000
------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... 84,659,200 (43,223,459)
NET ASSETS:
Beginning of year.............................. 119,400,018 162,623,477
------------- --------------
End of year.................................... $ 204,059,218 $ 119,400,018
============= ==============
</TABLE>
See Notes to Financial Statements.
126
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
---------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................. $ 6,529,805 $ 4,523,891
Net realized losses on investment transactions.... (44) (36,537)
------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... 6,529,761 4,487,354
------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares................................... (6,529,805) (4,523,891)
------------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold..................... 534,326,783 428,067,086
Dividends reinvested.............................. 3,305,612 2,261,400
Cost of shares redeemed........................... (482,251,105) (434,859,851)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS............................. 55,381,290 (4,531,365)
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......... 55,381,246 (4,567,902)
NET ASSETS:
Beginning of year................................. 173,130,032 177,697,934
------------- ------------
End of year....................................... $ 228,511,278 $173,130,032
============= ============
</TABLE>
See Notes to Financial Statements.
127
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--GENERAL
Prairie Funds (the "Trust") is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"). At
December 31, 1995, the Trust consisted of twelve separate investment
portfolios. The accompanying financial statements include the results of
operations for the following portfolios of the Trust: Managed Assets Income
Fund, Managed Assets Fund, Equity Income Fund, Growth Fund, Special
Opportunities Fund, International Equity Fund, Bond Fund, International Bond
Fund, Intermediate Municipal Bond Fund, U.S. Government Money Market Fund,
Money Market Fund, and Municipal Money Market Fund. Additionally, the
accompanying financial statements include the results of operations for the
Prairie Municipal Bond Fund, Inc. and the Prairie Intermediate Bond Fund, two
open-end management investment companies registered under the Act (together
with the Trust's portfolios, the "Funds").
First Chicago Investment Management Company ("FCIMCO"), a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), serves as each
Fund's investment adviser and administrator. FCIMCO has engaged ANB Investment
Management and Trust Company ("ANB") to serve as sub-investment adviser for the
International Equity Fund. Additionally, FCIMCO has engaged Concord Holding
Corporation ("Concord"), a wholly-owned subsidiary of The BISYS Group, Inc., to
assist it in providing certain administrative services for the Funds. Concord
Financial Group, Inc., a wholly-owned subsidiary of Concord, serves as the
principal underwriter and distributor of each Fund's shares.
The Funds (except for the U.S. Government Money Market Fund and Municipal
Money Market Fund, which offer Class A shares only, and the Money Market Fund
which offers Class A shares and Class B shares) each offer Class A shares,
Class B shares and Class I shares. Class A shares, Class B shares and Class I
shares are substantially the same except that Class A shares are subject to a
sales charge imposed at the time of purchase and are subject to fees charged
pursuant to a Shareholder Services Plan. Class B shares are subject to a
contingent deferred sales charge imposed at the time of redemption and are
subject to fees charged pursuant to a Distribution Plan adopted pursuant to
Rule 12b-1 under the Act and fees charged pursuant to the Shareholder Services
Plan. Class I shares are not subject to any sales charge, shareholder services
fees or distribution fees.
During the period January 27, 1995 through March 3, 1995, various common
trust funds and collective trust funds managed by FNBC transferred cash and
securities to certain Funds in exchange for Class I shares of the corresponding
Fund. The following table sets forth the date on which such transfers occurred,
the transferring entity, the corresponding Fund, the market value of the
securities and cash transferred and the amount of Class I shares issued in
connection with such transfer:
128
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class I
Shares
Date of Transfer Transferring Entity Fund Market Value Issued
---------------- ------------------- ---- ------------ -------
<S> <C> <C> <C> <C>
January 27, 1995........ First Chicago Personal Equity Income $198,087,162 19,808,716
Trust Equity Fund Fund
January 27, 1995........ First Chicago Personal Growth Fund 245,392,975 24,539,297
Trust Endowment Equity
Fund and First Chicago
Personal Trust Growth
Equity Fund
January 27, 1995........ First Chicago Personal Special 51,316,357 5,131,636
Trust Special Equity Opportunities
Fund Fund
January 27, 1995........ First Chicago Personal International 8,955,517 895,552
Trust International Bond Bond Fund
Fund
February 10, 1995....... First Chicago Personal Bond Fund 98,997,057 9,899,706
Trust Taxable Bond Fund
And First Chicago
Personal Trust
Endowment Bond Fund
February 10, 1995....... First Chicago Personal Intermediate 129,394,694 16,848,267
Trust Intermediate Bond Fund
Taxable Bond Fund and
Lake Shore Common
Trust Taxable Fixed
Income Fund
February 10, 1995....... First Chicago Personal Municipal Bond 213,488,376 17,910,099
Trust Tax-Exempt Bond Fund
Fund
February 10, 1995....... First Chicago Personal Intermediate 349,656,211 29,885,146
Trust Intermediate Tax- Municipal Bond
Exempt Bond Fund and Fund
Lake Shore Common
Trust Municipal Bond
Fund
March 3, 1995........... First Chicago Personal International 48,338,875 4,833,888
Trust International Equity Equity Fund
Fund
</TABLE>
At meetings of the shareholders of the First Prairie Diversified Assets Fund,
First Prairie Municipal Bond Fund--Intermediate Series, First Prairie Money
Market Fund--Money Market Series and Government Series, and First Prairie
Municipal Money Market Fund (collectively, the "First Prairie Funds") held on
January 17, 1995, shareholders of each such Fund approved an Agreement and Plan
of Exchange (the "Plan") which called for the transfer of the assets, subject
to the liabilities, of each First Prairie Fund to the Prairie Managed Assets
Income Fund,
129
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
Prairie Intermediate Municipal Bond Fund, Prairie Money Market Fund, Prairie
U.S. Government Money Market Fund, and Prairie Municipal Money Market Fund,
respectively. The Plan also called for the issuance of shares by the respective
Prairie Funds to the shareholders of the corresponding First Prairie Fund, such
shares being equal in value to the net assets so transferred.
The following table sets forth the date on which this transfer took place
along with the net assets transferred and the number of shares issued:
<TABLE>
<CAPTION>
Net Assets
Fund Date of Transfer Transferred Shares Issued
---- ---------------- ----------- -------------
<S> <C> <C> <C>
Managed Assets Income Fund...... March 3, 1995 $ 43,698,653 3,518,593
Intermediate Municipal Bond
Fund........................... January 27, 1995 22,331,512 1,930,122
Money Market Fund............... May 20, 1995 127,355,807 127,197,352
U.S. Government Money Market
Fund........................... May 20, 1995 52,257,087 52,273,072
Municipal Money Market Fund..... May 20, 1995 178,386,094 178,439,745
</TABLE>
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. These principles
require management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses for the period. Actual results
could differ from those estimates.
(A) Portfolio Valuation: Bonds, debentures, notes, mortgage-related
securities, asset-backed securities, municipal obligations and convertible debt
obligations ("Fixed Income Securities") are valued daily using available market
quotations or at fair value as determined by one or more independent pricing
services (the "Service") approved by the Board of Trustees (or the "Board").
Fixed Income Securities for which quoted bid prices are readily available and
are representative of the bid side of the market, in the judgment of the
Service, are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities). Other
Fixed Income Securities are carried at fair value as determined by the Service,
based upon methods which include consideration of yields or prices of
securities of comparable quality, coupon rate, maturity and type, indications
as to values from dealers, and general market conditions. Fixed Income
Securities with maturities less than 60 days are carried at amortized cost,
which approximates market value.
Common stocks, preferred stocks and convertible securities, as well as
warrants to purchase such securities ("Equity Securities"), and call options
written by a Fund are valued at the last sale price on the securities exchange
or national securities market on which such securities are primarily traded.
Equity securities not
130
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
listed on an exchange or national securities market, or securities for which
there were no transactions, are valued at the most recent bid prices. Any
securities or other assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by the Board.
Restricted securities, illiquid securities and securities for which market
quotations are not readily available, if any, are valued at fair value using
methods approved by the Board.
Investments of the U.S. Government Money Market Fund, Money Market Fund and
Municipal Money Market Fund (the "money market funds") are valued at amortized
cost, which approximates market value. Under the amortized cost method,
discount or premium is amortized on a constant basis to the maturity of the
security. In addition, the money market funds may not (a) purchase any
instruments with a remaining maturity greater that thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a dollar-weighted
average maturity which exceeds 90 days.
(B) Foreign currency translations: The books and records of the International
Bond Fund and the International Equity Fund are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars on
the following basis: (i) investment securities, other assets and liabilities
initially expressed in foreign currencies are converted each business day into
U.S. dollars at the midpoint of the New York interbank market spot exchange
rate as quoted on the day of such translation by the Federal Reserve Bank of
New York or at such other quoted market exchange rate as may be determined to
be appropriate by the investment adviser; (ii) purchases and sales of foreign
securities, income and expenses are converted into U.S. dollars based upon
currency exchange rates prevailing on the respective dates of such
transactions. The Funds generally do not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized and unrealized gains and losses on foreign currency
represent: (i) foreign exchange gains and losses from the sale and holding of
foreign currencies, forward contracts and foreign currency denominated debt
obligations; (ii) gains and losses between trade date and settlement date on
investment securities transactions and forward exchange contracts; and (iii)
gains and losses from the difference between amounts of dividends and interest
recorded and the amounts actually received.
(C) Futures contracts: The International Equity Fund may engage in futures
contracts for the purpose of hedging against changes in the value of its
portfolio securities and in the value of securities it intends to purchase.
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount. This is known as the "initial margin". Subsequent payments
("variation margin") are made
131
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the value of the contract are
recorded as unrealized gains or losses. The Fund recognizes, when the contract
is closed, a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the time it was closed. Futures
contracts open at December 31, 1995 and their related unrealized market
appreciation (depreciation) are set forth in the notes to the Portfolio of
Investments of the International Equity Fund.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments or indices, which may not
correlate with the change in value of the hedged investments. In addition,
there is the risk that the Fund may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Forward foreign currency contracts--The International Bond Fund may enter
into forward foreign currency contracts in order to hedge its exposure to
changes in foreign currency exchange rates on its foreign portfolio holdings.
When executing forward foreign currency contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the future.
With respect to sales of forward foreign currency contracts, the Fund would
incur a loss if the value of the contract increases between the date the
forward contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract decreases between those
dates. With respect to purchases of forward foreign currency contracts, the
Fund would incur a loss if the value of the contract decreases between the date
the forward contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract increases between those
dates. The Fund is also exposed to credit risk associated with counter party
nonperformance on these forward foreign currency contracts which is typically
limited to the unrealized gains on such contracts that are recognized in the
Statement of Assets and Liabilities.
(E) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, adjusted for
amortization of premiums and, when appropriate, discounts on investments, is
earned from settlement date and recognized on the accrual basis. Securities
purchased or sold on a when-issued or delayed-delivery basis may be settled a
month or more after the trade date.
Each Fund may enter into repurchase agreements with financial institutions
deemed to be creditworthy by FCIMCO, subject to the seller's agreement to
repurchase and the Fund's agreement to resell such securities at a mutually
agreed upon price. Securities purchased subject to repurchase agreements are
deposited with the Fund's custodian and, pursuant to the terms of the
repurchase agreement, must have an aggregate market value greater than or equal
to the repurchase price
132
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
plus accrued interest at all times. If the value of the underlying securities
falls below the value of the repurchase price plus accrued interest, the Fund
will require the seller to deposit additional collateral by the next business
day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller.
(F) Expenses: Expenses directly attributable to a Fund are charged to that
Fund's operations; expenses which are applicable to all Funds are allocated
among them on the basis of relative net assets. Fund expenses directly
attributable to a class of shares are charged to that class; expenses which are
applicable to all classes are allocated among them.
(G) Dividends to shareholders: It is the policy of Managed Assets Income Fund
and Equity Income Fund to declare and pay dividends from net investment income
monthly while the Managed Assets Fund, Growth Fund, Special Opportunities Fund
and International Equity Fund declare and pay dividends quarterly. The Bond
Fund, Intermediate Bond Fund, International Bond Fund, Municipal Bond Fund,
Intermediate Municipal Bond Fund, U.S. Government Money Market Fund, Money
Market Fund and Municipal Money Market Fund declare dividends daily from net
investment income, payable monthly. Distributions from net realized capital
gains, if any, are normally declared and paid annually, but each Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code (the "Code"). However, to the extent
that net realized capital gains of a Fund can be reduced by capital loss
carryovers, if any, such gains will not be distributed.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles. To
the extent these differences are permanent in nature, such amounts are
reclassified within the composition of net assets based on their federal tax-
basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions in excess of net investment income or
net realized capital gains. To the extent they exceed net investment income and
net realized gains for tax purposes, they are reported as distributions of
capital.
(H) Federal income taxes: It is the policy of each Fund to qualify as a
regulated investment company by complying with the provisions available to
certain investment companies, as defined in applicable sections of the Code,
and to make distributions of income and net realized capital gains sufficient
to relieve it from all, or substantially all, Federal income and excise taxes.
Capital losses incurred after October 31 ("Post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Municipal Money Market Fund and the Special Opportunities
Fund
133
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- -------------------------------------------------------------------------------
incurred and may elect to defer net capital losses of approximately $50 and
$113,000, respectively.
At December 31, 1995, the Managed Asset Income Fund had unused capital loss
carryovers of approximately $317,000, which are available for Federal income
tax purposes to be applied against future net capital gains, if any, realized
subsequent to December 31, 1995. If not applied, the carryover expires in
2003.
At December 31, 1995, the U.S. Government Money Market Fund had unused
capital loss carryovers of approximately $16,000, which are available for
Federal income tax purposes to be applied against future net capital gains, if
any, realized subsequent to December 31, 1995. If not applied, the carryover
expires in 2002.
At December 31, 1995, the Municipal Money Market Fund had unused capital
loss carryovers of approximately $40,000, which are available for Federal
income tax purposes to be applied against future net capital gains, if any,
realized subsequent to December 31, 1995. If not applied, $1,000 of the
carryover expires in 1999, $2,000 expires in 2001, $1,000 expires in 2002 and
$36,000 expires in 2003.
At December 31, 1995, with the exception of the Growth Fund, the cost of the
Funds' investments for Federal income tax purposes was substantially the same
as the cost for financial reporting purposes (see Portfolios of Investments).
(I) Other: Organization expenses incurred by the Funds are being amortized
to operations over the period during which it is expected that a benefit will
be realized, not to exceed five years.
(J) Concentration of risk: Investing in securities of foreign issuers and
foreign currency transactions may involve certain considerations and risks not
typically associated with investments in the United States. These risks
include revaluation of currencies, adverse fluctuations in foreign currency
values and possible adverse political, social and economic developments,
including those particular to a specific industry, country or region, which
could cause the securities and their markets to be less liquid and prices more
volatile than those of comparable U.S. securities. These risks are greater
with respect to securities of issuers located in emerging market countries in
which certain Funds are authorized to invest. The ability of the issuers of
debt securities held by the Funds to meet their obligations may be affected by
economic and political developments particular to a specific industry, country
or region.
134
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 3--INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
(A) The Trust has an Investment Advisory Agreement with FCIMCO pursuant to
which FCIMCO has agreed to provide day-to-day management of each Fund's
investments at the following annual rates:
<TABLE>
<S> <C>
Managed Assets Income Fund............................................. 0.65%
Managed Assets Fund.................................................... 0.65%
Equity Income Fund..................................................... 0.50%
Growth Fund............................................................ 0.65%
Special Opportunities Fund............................................. 0.70%
International Equity Fund.............................................. 0.80%
Intermediate Bond Fund................................................. 0.40%
Bond Fund.............................................................. 0.55%
International Bond Fund................................................ 0.70%
Intermediate Municipal Bond Fund....................................... 0.40%
Municipal Bond Fund.................................................... 0.40%
U.S. Government Money Market Fund...................................... 0.40%
Money Market Fund...................................................... 0.40%
Municipal Money Market Fund............................................ 0.40%
</TABLE>
The Trust has an Administration Agreement with FCIMCO pursuant to which
FCIMCO has agreed to assist in all aspects of the Funds' operations at an
annual rate of 0.15% of each Fund's average daily net assets. FCIMCO has
engaged Concord to provide certain administrative services to the Funds
pursuant to a Master Sub-Administration Agreement between FCIMCO and Concord.
FCIMCO has agreed to pay Concord a fee for the services stipulated in the
Master Sub-Administration Agreement.
For the period ended December 31, 1995, FCIMCO voluntarily agreed to
reimburse a portion of the operating expenses of the Funds to the extent that
the Funds' expenses exceeded the following amounts, excluding shareholder
servicing fees and 12b-1 fees (as a percentage of each Fund's average net
assets):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS I
------- ------- -------
<S> <C> <C> <C>
Managed Assets Income Fund.............................. 1.31% 2.06% 0.80%
Managed Assets Fund..................................... 1.33% 2.08% 0.80%
Equity Income Fund...................................... 1.18% 1.93% 0.65%
Growth Fund............................................. 1.33% 2.08% 0.80%
Special Opportunities Fund.............................. 1.38% 2.13% 0.85%
International Equity Fund............................... 1.58% 2.33% 1.05%
Intermediate Bond Fund.................................. 1.15% 1.90% 0.55%
Bond Fund............................................... 1.23% 1.98% 0.70%
International Bond Fund................................. 1.48% 2.23% 0.95%
Intermediate Municipal Bond Fund........................ 0.90% 1.83% 0.55%
</TABLE>
135
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Class I
------- ------- -------
<S> <C> <C> <C>
Municipal Bond Fund..................................... 1.08% 1.83% 0.55%
U.S. Government Money Market............................ 0.80% NA NA
Money Market Fund....................................... 0.80% 1.55% NA
Municipal Money Market Fund............................. 0.70% NA NA
</TABLE>
As such, FCIMCO reimbursed expenses during the period ending December 31,
1995 in the following amounts:
<TABLE>
<CAPTION>
Expense
Reimbursement
-------------
<S> <C>
Managed Assets Income Fund..................................... $179,574
Managed Assets Fund............................................ 89,978
Equity Income Fund............................................. 277,704
Growth Fund.................................................... 314,740
Special Opportunities Fund..................................... 168,733
International Equity Fund...................................... 213,519
Intermediate Bond Fund......................................... 185,219
Bond Fund...................................................... 178,732
International Bond Fund........................................ 110,736
Intermediate Municipal Bond Fund............................... 403,299
Municipal Bond Fund............................................ 278,552
U.S. Government Money Market Fund.............................. 198,986
Money Market Fund.............................................. 431,210
Municipal Money Market Fund.................................... 489,926
</TABLE>
The Distributor is not entitled to any fees pursuant to the Distribution
Agreement; however, the Distributor may receive payments of sales charges or
contingent deferred sales charges.
(B) The Funds' Class A shares and Class B shares have a Shareholder Services
Plan (the "Plan") pursuant to which the Funds pay the Distributor a fee, at an
annual rate of 0.25% of the average daily net assets of the outstanding Class A
shares and Class B shares. Pursuant to the terms of the Plan, the Distributor
has agreed to provide certain shareholder services to the holders of these
shares. Additionally, under the terms of the Plan, the Distributor may make
payments to other shareholder service agents who may include FCIMCO, FNBC and
their affiliates. For the period ended December 31, 1995, the Funds paid the
following amounts under the Plan:
<TABLE>
<CAPTION>
Amounts paid to
FCIMCO, FNBC Amounts paid to Amounts
and other service retained by
its affiliates organizations Distributor
--------------- --------------- -----------
<S> <C> <C> <C>
Managed Assets Income Fund...... $7,185 $111,163 $809
Managed Assets Fund............. 7,036 1,892 124
Equity Income Fund.............. 417 2,510 54
Growth Fund..................... 1,788 2,959 137
Special Opportunities Fund...... 304 454 19
</TABLE>
136
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amounts paid to
FCIMCO, FNBC Amounts paid to Amounts
and other service retained by
its affiliates organizations Distributor
--------------- --------------- -----------
<S> <C> <C> <C>
International Equity Fund....... $ 1,363 $ 1,791 $ 98
Intermediate Bond Fund.......... 3,487 2,209 72
Bond Fund....................... 1,230 898 33
International Bond Fund......... 415 240 29
Intermediate Municipal Bond
Fund........................... 23,617 13,617 1,227
Municipal Bond Fund............. 7,593 7,151 266
U.S. Government Money Market
Fund........................... 168,470 2,292 --
Money Market Fund............... 378,833 1,372 380
Municipal Money Market Fund..... 508,558 28 17
</TABLE>
(C) The Funds' Class B shares have a Distribution Plan adopted pursuant to
Rule 12b-1 under the Act (the "12b-1 Plan") pursuant to which the Funds have
agreed to pay the Distributor for advertising, marketing and distributing Class
B Shares of the Funds at an annual rate of .75% of the average daily net assets
of the Funds' outstanding Class B shares. Under the terms of the 12b-1 Plan,
the Distributor may make payments to FCIMCO, FNBC and their affiliates in
respect of these services. For the period ended December 31, 1995, the Funds
made the following payments under the 12b-1 Plan, all of which was retained by
the Distributor:
<TABLE>
<S> <C>
Managed Assets Income Fund........................................... $5,831
Managed Assets Fund.................................................. 3,325
Equity Income Fund................................................... 1,283
Growth Fund.......................................................... 670
Special Opportunities Fund........................................... 56
International Equity Fund............................................ 379
Intermediate Bond Fund............................................... 563
Bond Fund............................................................ 116
International Bond Fund.............................................. 30
Intermediate Municipal Bond Fund..................................... 824
Municipal Bond Fund.................................................. 600
Money Market Fund.................................................... 154
</TABLE>
(D) During the fiscal year ended December 31, 1994, an affiliate of FCIMCO
purchased securities from the Money Market Fund and the U.S. Government Money
Market Fund at an amount in excess of the securities' fair market value. These
Funds recorded a realized loss on these sales in the amount of $1,286,000 and
$933,054, respectively, and an offsetting capital contribution from the
affiliate. As a result of varying treatments for book and tax purposes, the
capital contributions were reclassified from additional paid-in-capital to
accumulated net realized losses in the Statement of Assets and Liabilities.
137
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4--SECURITIES TRANSACTIONS
The following summarizes the securities transactions entered into by the
Funds, excluding short-term investments, for the period ended December 31,
1995:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Managed Assets Income Fund........................ $ 3,357,559 $ 7,795,562
Managed Assets Fund............................... 7,772,725 99,502
Equity Income Fund................................ 317,060,048 94,711,633
Growth Fund....................................... 488,008,493 274,675,271
Special Opportunities Fund........................ 96,866,413 26,212,656
International Equity Fund......................... 72,831,246 3,326,924
Intermediate Bond Fund............................ 410,895,956 256,675,480
Bond Fund......................................... 265,646,537 167,721,527
International Bond Fund........................... 14,226,845 4,749,719
Intermediate Municipal Bond Fund.................. 167,757,833 164,745,501
Municipal Bond Fund............................... 174,644,032 162,078,544
</TABLE>
At December 31, 1995, accumulated net unrealized appreciation (depreciation)
on investments was as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized Net Unrealized
Appreciation Depreciation Appreciation
------------ ------------ --------------
<S> <C> <C> <C>
Managed Assets Income Fund.......... $ 8,452,650 $ (184,643) $ 8,268,007
Managed Assets Fund................. 766,286 (42,223) 724,063
Equity Income Fund.................. 42,227,078 (629,319) 41,597,759
Growth Fund......................... 48,630,652 (2,897,786) 45,732,866
Special Opportunities Fund.......... 16,914,276 (1,454,174) 15,460,102
International Equity Fund........... 7,077,639 (1,202,384) 5,875,255
Intermediate Bond Fund.............. 7,224,889 (7,491) 7,217,398
Bond Fund........................... 6,271,794 -- 6,271,794
International Bond Fund............. 427,716 -- 427,716
Intermediate Municipal Bond Fund.... 16,805,231 -- 16,805,231
Municipal Bond Fund................. 13,674,273 -- 13,674,273
</TABLE>
138
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 5--CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds are summarized below:
<TABLE>
<CAPTION>
MANAGED ASSETS
INCOME FUND
---------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
--------------------- ---------------------- -------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares:
Shares Issued........... $ 6,191,735 463,615 $ 5,577,372 441,901
Dividends reinvested.... 2,369,623 177,490 2,307,933 185,739
Shares redeemed......... (9,494,631) (723,267) (11,257,088) (903,518)
----------- -------- ------------ --------
Net Increase (decrease). $ (933,273) (82,162) $ (3,371,783) (275,878)
=========== ======== ============ ========
Class B Shares:
Shares Issued........... $ 2,007,221 146,972 $ 1,147,965 90,904
Dividends reinvested.... 33,593 2,392 28,168 2,281
Shares redeemed......... -- -- (1,127,831) (93,185)(d)
----------- -------- ------------ --------
Net Increase............ $ 2,040,814 149,364 $ 48,302 --
=========== ======== ============ ========
Class I Shares:
Shares Issued........... $ 1,362,669 103,183 -- --
Dividends reinvested.... 11,790 865 -- --
Shares redeemed......... (202,866) (15,263) -- --
----------- -------- ------------ --------
Net Increase............ $ 1,171,593 88,785 $ -- --
=========== ======== ============ ========
Net Increase (decrease)
in Fund................ $ 2,279,134 320,311 $ (3,323,481) (275,878)
=========== ======== ============ ========
</TABLE>
139
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED ASSETS EQUITY INCOME
FUND FUND
-----------------------------------------------
FOR THE PERIOD FOR THE PERIOD
APRIL 3, 1995 JANUARY 27, 1995
THROUGH THROUGH
DECEMBER 31, 1995(A) DECEMBER 31, 1995(A)
-----------------------------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued........... $8,265,007 774,054 $ 3,147,813 274,126
Dividends reinvested.... 77,996 6,993 96,740 8,056
Shares redeemed......... (582,928) (54,615) (548,876) (47,021)
----------- -------- ------------ ----------
Net Increase............ $7,760,075 726,432 $ 2,695,677 235,161
=========== ======== ============ ==========
Class B Shares:
Shares Issued........... $ 763,106 73,866 $ 549,799 47,321
Dividends reinvested.... 7,435 679 20,644 1,708
Shares redeemed......... (19,541) (1,829) (5,669) (479)
----------- -------- ------------ ----------
Net Increase............ $ 751,000 72,716 $ 564,774 48,550
=========== ======== ============ ==========
Class I Shares:
Shares Issued........... $ 363,704 35,836 $254,460,104 24,853,530
Dividends reinvested.... 81 7 6,520,825 538,073
Shares redeemed......... -- -- (23,702,375) (2,132,230)
----------- -------- ------------ ----------
Net Increase............ $ 363,785 35,843 $237,278,554 23,259,373
=========== ======== ============ ==========
Net Increase in Fund.... $ 8,874,860 834,991 $240,539,005 23,543,084
=========== ======== ============ ==========
</TABLE>
140
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL
GROWTH OPPORTUNITIES
FUND FUND
------------------------ ------------------------
FOR THE PERIOD FOR THE PERIOD
JANUARY 27, 1995 JANUARY 27, 1995
THROUGH THROUGH
DECEMBER 31, 1995(A) DECEMBER 31, 1995(A)
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued............... $ 4,175,044 365,857 $ 621,648 57,254
Dividends reinvested........ 284,304 24,056 13,920 1,177
Shares redeemed............. (339,951) (28,244) (38,190) (3,361)
------------ ---------- ------------ ----------
Net Increase................ $ 4,119,397 361,669 $ 597,378 55,070
============ ========== ============ ==========
Class B Shares:
Shares Issued............... $ 246,223 21,032 $ 13,756 1,248
Dividends reinvested........ 18,650 1,584 308 26
Shares redeemed............. (2,126) (178) (52) (5)
------------ ---------- ------------ ----------
Net Increase................ $ 262,747 22,438 $ 14,012 1,269
============ ========== ============ ==========
Class I Shares:
Shares Issued............... $296,410,620 29,238,077 $89,307,250 8,700,086
Dividends reinvested........ 14,724,145 1,243,736 1,180,180 99,691
Shares redeemed............. (67,961,411) (5,922,360) (12,836,851) (1,176,741)
------------ ---------- ------------ ----------
Net Increase................ $243,173,354 24,559,453 $77,650,579 7,623,036
============ ========== ============ ==========
Net Increase in Fund........ $247,555,498 24,943,560 $78,261,969 7,679,375
============ ========== ============ ==========
</TABLE>
141
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY INTERMEDIATE BOND
FUND FUND
---------------------- ------------------------
FOR THE PERIOD FOR THE PERIOD
MARCH 3, 1995 FEBRUARY 1, 1995
THROUGH THROUGH
DECEMBER 31, 1995(A) DECEMBER 31, 1995(B)
---------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued................. $ 2,704,994 256,160 $ 7,282,071 895,627
Dividends reinvested.......... 72,968 6,664 288,362 35,401
Shares redeemed............... (171,519) (16,377) (1,588,172) (194,954)
----------- --------- ------------ ----------
Net Increase.................. $ 2,606,443 246,447 $ 5,982,261 736,074
=========== ========= ============ ==========
Class B Shares:
Shares Issued................. $ 177,315 16,903 $ 303,451 37,048
Dividends reinvested.......... 4,093 407 7,835 961
Shares redeemed............... (193) (18) (50,817) (6,308)
----------- --------- ------------ ----------
Net Increase.................. $ 181,215 17,292 $ 260,469 31,701
=========== ========= ============ ==========
Class I Shares:
Shares Issued................. $97,383,515 9,484,283 $193,282,535 24,813,641
Dividends reinvested.......... 1,458,486 131,833 3,730,335 459,341
Shares redeemed............... (5,651,592) (536,226) (22,128,156) (2,742,147)
----------- --------- ------------ ----------
Net Increase.................. $93,190,409 9,079,890 $174,884,714 22,530,835
=========== ========= ============ ==========
Net Increase in Fund.......... $95,978,067 9,343,629 $181,127,444 23,298,610
=========== ========= ============ ==========
</TABLE>
142
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE BOND
FUND
---------------------------------------------
FOR THE PERIOD
FOR THE YEAR MARCH 5, 1993
ENDED THROUGH
JANUARY 31, 1995 JANUARY 31, 1994(A)
--------------------- ----------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued..................... $ 19,449 2,527 $ 51,267 6,185
Dividends reinvested.............. 4,153 533 1,484 180
Shares redeemed................... (15,285) (1,997) -- --
---------- --------- ----------- --------
Net Increase...................... $ 8,317 1,063 $ 52,751 6,365
========== ========= =========== ========
Class B Shares:
Shares Issued..................... $ 2,000 245 $ -- --
Dividends reinvested.............. 99 13 -- --
Shares redeemed................... (2,099) (258) -- --
---------- --------- ----------- --------
Net Increase...................... $ -- -- $ -- --
========== ========= =========== ========
Class I Shares:
Shares Issued..................... $7,661,463 1,001,211 $5,247,186 628,922
Dividends reinvested.............. 5,537 710 5,299 639
Shares redeemed................... (5,328,334) (698,958) (154,029) (18,488)
---------- --------- ----------- --------
Net Increase...................... $2,338,666 302,963 $5,098,456 611,073
========== ========= =========== ========
Net Increase in Fund.............. $2,346,983 304,026 $5,151,207 617,438
========== ========= =========== ========
</TABLE>
143
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BOND
BOND FUND FUND
------------------------ ----------------------
FOR THE FOR THE PERIOD
PERIOD JANUARY 27, 1995
FEBRUARY 10, 1995 THROUGH
THROUGH DECEMBER 31,
DECEMBER 31, 1995(A) 1995(A)
------------------------ ----------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... $ 1,854,556 174,316 $ 480,966 42,767
Dividends reinvested.... 110,618 10,293 47,097 4,274
Shares redeemed......... (148,560) (13,734) (19,999) (1,752)
------------ ---------- ----------- ---------
Net increase............ $ 1,816,614 170,875 $ 508,064 45,289
============ ========== =========== =========
Class B Shares:
Shares issued........... $ 58,404 5,401 $ 3,704 370
Dividends reinvested.... 2,873 268 484 44
Shares redeemed......... -- -- -- --
------------ ---------- ----------- ---------
Net increase............ $ 61,277 5,669 $ 4,188 414
============ ========== =========== =========
Class I Shares:
Shares issued........... $127,483,190 12,620,870 $15,099,834 1,442,838
Dividends reinvested.... 2,860,982 267,174 332,915 29,708
Shares redeemed......... (13,656,196) (1,289,980) (1,470,371) (130,514)
------------ ---------- ----------- ---------
Net increase............ $116,687,976 11,598,064 $13,962,378 1,342,032
============ ========== =========== =========
Net increase in Fund.... $118,565,867 11,774,608 $14,474,630 1,387,735
============ ========== =========== =========
</TABLE>
144
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE MUNICIPAL
BOND FUND
--------------------------------------------------
FOR THE PERIOD
MARCH 1, 1995 FOR THE
THROUGH YEAR ENDED
DECEMBER 31, FEBRUARY 28,
1995(C) 1995
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... $ 2,036,319 167,138 $ 920,191 78,527
Dividends reinvested.... 579,220 47,958 829,334 70,747
Shares redeemed......... (2,724,405) (225,316) (12,219,977) (1,053,197)
------------ ---------- ------------ ----------
Net decrease............ $ (108,866) (10,220) $(10,470,452) (903,923)
============ ========== ============ ==========
Class B Shares:
Shares issued........... $ 348,000 28,626 $ 115,550 9,750
Dividends reinvested.... 4,876 399 1,971 169
Shares redeemed......... (20,212) (1,672) (123,958) (10,419)
------------ ---------- ------------ ----------
Net increase (decrease). $ 332,664 27,353 $ (6,437) (500)
============ ========== ============ ==========
Class I Shares:
Shares issued........... $ 46,362,306 3,850,432 $366,411,242 31,318,358
Dividends reinvested.... 2,330,219 191,337 20,498 1,737
Shares redeemed......... (54,476,753) (4,527,302) (3,821,887) (325,102)
------------ ---------- ------------ ----------
Net increase (decrease). $ (5,784,228) (485,533) $362,609,853 30,994,993
============ ========== ============ ==========
Net increase (decrease)
in Fund................ $ (5,560,430) (468,400) $352,132,964 30,090,570
============ ========== ============ ==========
</TABLE>
145
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
MUNICIPAL MUNICIPAL BOND
BOND FUND FUND
--------------------- ------------------------
FOR THE FOR THE PERIOD
YEAR ENDED MARCH 1, 1995
FEBRUARY 28, THROUGH
1994 DECEMBER 31, 1995(C)
--------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.................. $ 6,634,160 523,996 $ 1,295,558 103,426
Dividends reinvested........... 1,972,927 158,309 346,338 27,700
Shares redeemed................ (6,226,132) (496,647) (1,377,127) (110,562)
----------- -------- ------------ ----------
Net increase................... $ 2,380,955 185,658 $ 264,769 20,564
=========== ======== ============ ==========
Class B Shares:
Shares issued.................. $ 12,000 980 $ 228,602 18,257
Dividends reinvested........... 4 1 6,838 543
Shares redeemed................ -- -- (39) (3)
----------- -------- ------------ ----------
Net increase................... $ 12,004 981 $ 235,401 18,797
=========== ======== ============ ==========
Class I Shares:
Shares issued.................. $ -- -- $ 32,958,625 2,685,708
Dividends reinvested........... -- -- 3,575,154 285,358
Shares redeemed................ -- -- (27,710,442) (2,219,888)
----------- -------- ------------ ----------
Net increase................... $ -- -- $ 8,823,337 751,178
=========== ======== ============ ==========
Net increase in Fund........... $ 2,392,959 186,639 $ 9,323,507 790,539
=========== ======== ============ ==========
</TABLE>
146
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BOND
FUND
-----------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
FEBRUARY 28, 1995 DECEMBER 31, 1994
------------------------ -----------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued................. $ 301,216 25,507 $ 3,586,206 275,363
Dividends reinvested.......... 319,837 27,236 956,593 75,829
Shares redeemed............... (2,895,171) (246,815) (5,752,746) (441,865)
------------ ---------- ----------- --------
Net decrease.................. $ (2,274,118) (194,072) $(1,209,947) (90,673)
============ ========== =========== ========
Class B Shares:
Shares issued................. $ -- -- $ 2,000 161
Dividends reinvested.......... 66 6 4 1
Shares redeemed............... (2,071) (168) -- --
------------ ---------- ----------- --------
Net increase (decrease)....... $ (2,005) (162) $ 2,004 162
============ ========== =========== ========
Class I Shares:
Shares issued................. $222,099,320 18,631,505 $ -- --
Dividends reinvested.......... 3,923 325 -- --
Shares redeemed............... (4,444,913) (371,925) -- --
------------ ---------- ----------- --------
Net increase.................. $217,658,330 18,259,905 $ -- --
============ ========== =========== ========
Net increase (decrease) in
Fund......................... $215,382,207 18,065,671 $(1,207,943) (90,511)
============ ========== =========== ========
</TABLE>
147
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
-------------------------- ----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... 250,085,862 677,021,399 802,777,063 1,724,346,455
Dividends reinvested.... 2,488,380 1,310,332 6,872,109 2,559,069
Shares redeemed......... (311,695,323) (716,564,214) (725,110,518) (1,770,081,791)
------------ ------------ ------------ --------------
Net increase (decrease). (59,121,081) (38,232,483) 84,538,654 (43,176,267)
============ ============ ============ ==============
Class B Shares:
Shares issued........... -- -- 250,080 --
Dividends reinvested.... -- -- 903 --
Shares redeemed......... -- -- (186,116) --
------------ ------------ ------------ --------------
Net increase............ -- -- 64,867 --
============ ============ ============ ==============
Net increase (decrease)
in Fund................ (59,121,081) (38,232,483) 84,603,521 (43,176,267)
============ ============ ============ ==============
</TABLE>
148
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL
MONEY MARKET
FUND
------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ------------------
SHARES SHARES
------ ------
<S> <C> <C>
Class A Shares:
Shares issued.............................. 534,326,783 428,067,086
Dividends reinvested....................... 3,305,612 2,261,400
Shares redeemed............................ (482,251,105) (434,859,851)
------------ ------------
Net increase (decrease) in Fund............ 55,381,290 (4,531,365)
============ ============
</TABLE>
- -----------
(a) Period from commencement of operations.
(b) Effective February 1, 1995, the Fund changed its fiscal year end from
January 31 to December 31.
(c) Effective March 1, 1995, the Fund changed its fiscal year end from February
28 to December 31.
(d) Includes 91,228 shares converted to Class A Shares on December 2, 1994.
NOTE 6--MERGER AND SUBSEQUENT EVENT
On December 1, 1995, FCIMCO's ultimate parent company, First Chicago
Corporation, merged with NBD Bancorp., Inc., with the combined company renamed
First Chicago NBD Corporation (FCNBD). FCNBD has now begun the process of
reorganizing their proprietary mutual funds: Prairie Funds, Prairie
Institutional Funds and the Woodward Funds (whose investment adviser is NBD
Bank, a wholly owned subsidiary of FCNBD).
On February 20, 1996, the Board of Trustees of The Woodward Funds and the
Board of Trustees/Directors of the Prairie Funds, Prairie Municipal Bond Fund,
Inc. and Prairie Intermediate Bond Fund approved Reorganization Agreements,
which are subject to shareholder approval. The expenses incurred in connection
with entering into and carrying out provisions of the Reorganization
Agreements, whether or not the transactions contemplated thereby are
consummated, will be paid by FCNBD. The reorganization is intended to be
effected on a tax-free basis, so that none of the Fund's shareholders will
recognize taxable gains or losses as a result of the reorganization.
A proxy statement/prospectus describing the reorganization and the reasons
therefore will be sent to shareholders.
149
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 7--ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Trust designates the following eligible distributions for the dividends
received deduction for corporations for the year ended December 31, 1995:
<TABLE>
<CAPTION>
MANAGED
ASSETS MANAGED EQUITY
INCOME ASSETS INCOME
FUND FUND FUND
------- ------- ------
<S> <C> <C> <C>
Dividend Income................................... $1,219,984 $52,630 $8,875,334
Dividend Income Per Share--Class A Shares......... 0.28 0.05 0.32
Dividend Income Per Share--Class B Shares......... 0.22 0.05 0.26
Dividend Income Per Share--Class I Shares......... 0.28 0.08 0.36
</TABLE>
<TABLE>
<CAPTION>
GROWTH SPECIAL INTERNATIONAL
FUND OPPORTUNITIES FUND EQUITY FUND
------ ------------------ -------------
<S> <C> <C> <C>
Dividend Income.................... $4,772,025 $611,057 $973,285
Dividend Income Per Share--Class A
Shares............................ 0.10 0.01 0.05
Dividend Income Per Share--Class B
Shares............................ 0.05 0.00 0.03
Dividend Income Per Share--Class I
Shares............................ 0.12 0.04 0.07
</TABLE>
150
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of
Year.......................... $ 12.13 $ 13.11 $ 12.68 $ 12.56 $ 10.79
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERA-
TIONS:
Net investment income (loss)... 0.64 0.73 0.72 0.79 0.83
Net realized and unrealized
gains (losses) on invest-
ments........................ 2.48 (0.98) 0.61 0.26 1.77
------- ------- ------- ------- -------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS....... 3.12 (0.25) 1.33 1.05 2.60
------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBU-
TIONS:
From net investment income..... (0.68) (0.72) (0.72) (0.77) (0.83)
From net realized gains on in-
vestments.................... (0.03) (0.01) (0.18) (0.16) --
------- ------- ------- ------- -------
TOTAL DIVIDENDS AND DISTRIBU-
TIONS....................... (0.71) (0.73) (0.90) (0.93) (0.83)
------- ------- ------- ------- -------
Net change in net asset value... 2.41 (0.98) 0.43 0.12 1.77
------- ------- ------- ------- -------
Net Asset Value, End of Year.... $ 14.54 $ 12.13 $ 13.11 $ 12.68 $ 12.56
======= ======= ======= ======= =======
- ---------------------------------
TOTAL RETURN (EXCLUDES SALES
CHARGE) 26.40% (1.92)% 10.70% 8.68% 24.87%
- ---------------------------------
- ---------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------
Ratio of expenses to average net
assets........................ 1.17% 0.63% 0.39% 0.02% --
Ratio of net investment income
to average net assets......... 4.88% 5.77% 5.54% 6.24% 7.04%
Ratio of expenses to average net
assets*....................... 1.54% 1.67% 1.65% 1.88% 2.16%
Ratio of net investment income
to average net assets*........ 4.51% 4.73% 4.28% 4.38% 4.88%
Portfolio turnover.............. 8.23% 28.69% 16.40% 22.14% 26.02%
Net assets, end of period (000's
omitted)...................... $51,997 $44,367 $51,586 $34,262 $14,038
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been as indicated.
See Notes to Financial Statements.
151
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Period Ended Period Ended
December 31, December 2,
1995(2) 1994(1)
------------ ------------
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............... $12.42 $13.05
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.45 0.51
Net realized and unrealized gains (losses) on
investments..................................... 2.17 (0.91)
------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS... 2.62 (0.40)
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.45) (0.54)
From net realized gains on investments............ (0.03) (0.01)
------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.48) (0.55)
------ ------
Net change in net asset value...................... 2.14 (0.95)
------ ------
Conversion to Class A Shares(3).................... NA 12.10
------ ------
Net Asset Value, End of Period..................... $14.56 $ --
====== ======
- ----------------------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 21.42%++ (3.13)%++
- ----------------------------------------------------
- ----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------------------
Ratio of expenses to average net assets............ 1.92%+ 1.21%+
Ratio of net investment income to average net as-
sets............................................. 3.89%+ 4.10%+
Ratio of expenses to average net assets*........... 2.12%+ 2.17%+
Ratio of net investment income to average net as-
sets*............................................ 3.70%+ 3.14%+
Portfolio turnover................................. 8.23%++ 28.69%++
Net assets, end of period (000's omitted).......... $2,175 $ --
</TABLE>
- -----------
(1) For the period February 8, 1994 (initial offering date of Class B Shares)
through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of Class B Shares under the then-current sales load schedule and
such shares converted to Class A Shares.
(2) For the period March 3, 1995 (re-offering date of Class B Shares) through
December 31, 1995.
(3) On December 2, 1994, the Fund terminated its offering of Class B shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
152
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period Ended
December 31,
1995(1)
------------
<S> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............................. $12.42
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................................... 0.57
Net realized and unrealized gains on investments................ 2.18
------
TOTAL INCOME FROM INVESTMENT OPERATIONS........................ 2.75
------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................................... (0.57)
From net realized gains on investments.......................... (0.03)
------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............................. (0.60)
------
Net change in net asset value.................................... 2.15
------
Net Asset Value, End of Period................................... $14.57
======
- ------------------------------------------------------------------
TOTAL RETURN 22.55%++
- ------------------------------------------------------------------
- ------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------------
Ratio of expenses to average net assets.......................... 0.77%+
Ratio of net investment income to average net assets............. 5.12%+
Ratio of expenses to average net assets*......................... 1.22%+
Ratio of net investment income to average net assets*............ 4.66%+
Portfolio turnover............................................... 8.23%++
Net assets, end of period (000's omitted)........................ $1,294
</TABLE>
- -----------
(1) For the period March 3, 1995, (initial offering date of Class I Shares)
through December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
153
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- ------- -------
<S> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period........ $10.00 $10.00 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.14 0.36 0.11
Net realized and unrealized gains on in-
vestments................................ 1.50 2.57 2.86
------ ------ ------
TOTAL INCOME FROM INVESTMENT OPERATIONS... 1.64 2.93 2.97
------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................. (0.14) (0.36) (0.11)
In excess of net investment income......... -- (0.01) --
From net realized gains on investments and
foreign currency transactions............ -- (0.34) (0.89)
------ ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS......... (0.14) (0.71) (1.00)
------ ------ ------
Net change in net asset value............... 1.50 2.22 1.97
------ ------ ------
Net Asset Value, End of Period.............. $11.50 $12.22 $11.97
====== ====== ======
- ----------------------------------------------
TOTAL RETURN (EXCLUDES SALES CHARGE) 16.48%++ 29.78%++ 29.98%++
- ----------------------------------------------
- ----------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------------
Ratio of expenses to average net assets..... 1.26%+ 1.11%+ 1.21%+
Ratio of net investment income to average
net assets................................ 2.45%+ 3.33%+ 0.86%+
Ratio of expenses to average net assets*.... 3.15%+ 1.44%+ 1.39%+
Ratio of net investment income (loss) to av-
erage net assets*......................... 0.56%+ 2.99%+ 0.68%+
Portfolio turnover.......................... 2.25%++ 44.07%++ 106.02%++
Net assets, end of period (000's omitted)... $8,356 $2,873 $4,329
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
154
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
------------- ------------- ------- -------------
<S> <C> <C> <C>
$10.00 $10.00 $10.00 $10.00
-------- ------ ------ ------
0.02 0.10 0.57 0.98
2.45 1.40 1.20 1.10
-------- ------ ------ ------
2.47 1.50 1.77 2.08
-------- ------ ------ ------
(0.02) (0.09) (0.57) (0.98)
-- -- -- (0.01)
(0.25) (0.25) (0.39) (0.34)
-------- ------ ------ ------
(0.27) (0.34) (0.96) (1.33)
-------- ------ ------ ------
2.20 1.16 0.81 0.75
-------- ------ ------ ------
$12.20 $11.16 $10.81 $10.75
======== ====== ====== ======
24.80%++ 15.16%++ 18.22%++ 21.10%++
1.25%+ 1.50%+ 1.02%+ 1.33%+
0.19%+ 1.19%+ 5.94%+ 4.91%+
2.56%+ 1.96%+ 1.57%+ 3.65%+
(1.12)%+ 0.72%+ 5.39%+ 2.59%+
38.89%++ 5.65%++ 156.11%++ 48.03%++
$ 672 $2,749 $1,847 $ 487
</TABLE>
See Notes to Financial Statements.
155
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
For the Period Ended December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- ------- -------
<S> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period....... $10.00 $10.00 $ 10.00
------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).............. 0.13 0.29 0.06
Net realized and unrealized gains on in-
vestments............................... 1.45 2.56 2.84
------ ------ -------
TOTAL INCOME FROM INVESTMENT OPERATIONS.. 1.58 2.85 2.90
------ ------ -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................ (0.13) (0.29) (0.06)
In excess of net investment income........ -- -- --
From net realized gains on investments and
foreign currency transactions........... -- (0.34) (0.89)
------ ------ -------
TOTAL DIVIDENDS AND DISTRIBUTIONS........ (0.13) (0.63) (0.95)
------ ------ -------
Net change in net asset value.............. 1.45 2.22 1.95
------ ------ -------
Net Asset Value, End of Period............. $11.45 $12.22 $ 11.95
====== ====== =======
- ---------------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 15.83%++ 28.97%++ 29.15%++
- ---------------------------------------------
- ---------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------
Ratio of expenses to average net assets.... 2.00%+ 1.90%+ 2.04%+
Ratio of net investment income (loss) to
average net assets....................... 1.69%+ 2.65%+ 0.02%+
Ratio of expenses to average net assets*... 6.84%+ 2.65%+ 2.60%+
Ratio of net investment income (loss) to
average net assets*...................... (3.15)%+ 1.90%+ (0.54)%+
Portfolio turnover......................... 2.25%++ 44.07%++ 106.02%++
Net assets, end of period (000's omitted).. $ 833 $ 593 $ 268
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. if such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
156
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
------------- ------------- ------- -------------
<S> <C> <C> <C>
$10.00 $10.00 $10.00 $10.00
-------- ------ ------ ------
(0.03) 0.05 0.50 0.91
2.40 1.39 1.20 1.16
-------- ------ ------ ------
2.37 1.44 1.70 2.07
-------- ------ ------ ------
-- (0.05) (0.50) (0.91)
-- -- -- (0.01)
(0.25) (0.25) (0.39) (0.34)
-------- ------ ------ ------
(0.25) (0.30) (0.89) (1.26)
-------- ------ ------ ------
2.12 1.14 0.81 0.81
-------- ------ ------ ------
$12.12 $11.14 $10.81 $10.81
======== ====== ====== ======
23.76%++ 14.52%++ 17.41%++ 20.90%++
2.00%+ 2.28%+ 1.87%+ 2.03%+
(0.51)%+ 0.40%+ 5.22%+ 4.39%+
9.52%+ 3.83%+ 3.91%+ 8.69%+
(8.04)%+ (1.15)%+ 3.19%+ (2.28)%+
38.89%++ 5.65%++ 156.11%++ 48.03%++
$ 15 $ 193 $ 61 $ 4
</TABLE>
See Notes to Financial Statements.
157
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
For the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- -------- --------
<S> <C> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period........ $10.00 $ 10.00 $ 10.00
------ -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.22 0.42 0.15
Net realized and unrealized gains on in-
vestments................................ 1.46 2.55 2.86
------ -------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS... 1.68 2.97 3.01
------ -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................. (0.22) (0.42) (0.15)
In excess of net investment income......... -- -- --
From net realized gains on investments and
foreign currency transactions............ -- (0.34) (0.89)
------ -------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS......... (0.22) (0.76) (1.04)
------ -------- --------
Net change in net asset value............... 1.46 2.21 1.97
------ -------- --------
Net Asset Value, End of Period.............. $11.46 $ 12.21 $ 11.97
====== ======== ========
- ---------------------------------------------
TOTAL RETURN 16.90%++ 30.27%++ 30.38%++
- ---------------------------------------------
- ---------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------
Ratio of expenses to average net assets..... 0.80%+ 0.65%+ 0.80%+
Ratio of net investment income to average
net assets................................ 3.06%+ 4.08%+ 1.46%+
Ratio of expenses to average net assets*.... 4.12%+ 0.77%+ 0.92%+
Ratio of net investment income (loss) to av-
erage net assets*......................... (0.26)%+ 3.96%+ 1.34%+
Portfolio turnover.......................... 2.25%++ 44.07%++ 106.02%++
Net assets, end of period (000's omitted)... $ 411 $283,927 $293,944
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
158
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
- ------------- ------------- ------- -------------
<S> <C> <C> <C>
$ 10.00 $ 10.00 $ 10.00 $ 10.00
-------- -------- -------- -------
0.06 0.14 0.61 1.02
2.44 1.40 1.20 1.16
-------- -------- -------- -------
2.50 1.54 1.81 2.18
-------- -------- -------- -------
(0.06) (0.12) (0.61) (1.02)
-- -- -- (0.01)
(0.25) (0.25) (0.39) (0.34)
-------- -------- -------- -------
(0.31) (0.37) (1.00) (1.37)
-------- -------- -------- -------
2.19 1.17 0.81 0.81
-------- -------- -------- -------
$ 12.19 $ 11.17 $ 10.81 $ 10.81
======== ======== ======== =======
25.08%++ 15.62%++ 18.57%++ 22.13%++
0.85%+ 1.05%+ 0.70%+ 0.95%+
0.59%+ 1.70%+ 6.48%+ 5.71%+
1.09%+ 1.38%+ 0.87%+ 1.93%+
0.36%+ 1.36%+ 6.31%+ 4.73%+
38.89%++ 5.65%++ 156.11%++ 48.03%++
$92,926 $101,448 $125,401 $14,504
</TABLE>
See Notes to Financial Statements.
159
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Period Ended Year Ended Period Ended
December 31, January 31, January 31,
1995(1) 1995 1994(2)
------------ ----------- ------------
<S> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period.... $ 7.68 $ 8.25 $ 8.36
------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERA-
TIONS:
Net investment income.................. 0.44 0.52 0.47
Net realized and unrealized gains
(losses) on investments.............. 0.72 (0.57) (0.09)
------ ------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS.......................... 1.16 (0.05) 0.38
------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income............. (0.44) (0.52) (0.47)
From net realized gains on investments. (0.22) -- (0.02)
------ ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS..... (0.66) (0.52) (0.49)
------ ------ ------
Net change in net asset value........... 0.50 (0.57) (0.11)
------ ------ ------
Net Asset Value, End of Period.......... $ 8.18 $ 7.68 $ 8.25
====== ====== ======
- -----------------------------------------
TOTAL RETURN (EXCLUDES SALES CHARGE) 15.55%++ (0.45)% 5.16%+
- -----------------------------------------
- -----------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------
Ratio of expenses to average net assets. 0.94%+ 0.04% --
Ratio of net investment income to
average net assets.................... 5.72%+ 6.70% 5.96%+
Ratio of expenses to average net as-
sets*................................. 1.15%+ 2.78% 3.67%+
Ratio of net investment income to
average net assets*................... 5.51%+ 3.96% 2.29%+
Portfolio turnover...................... 173.26%++ 71.65% 26.54%++
Net assets, end of period (000's omit-
ted).................................. $6,095 $ 69 $ 65
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995. Effective
February 1, 1995, the Fund changed its fiscal year end from January 31 to
December 31.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
160
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Period Ended Period Ended
December 31, December 2,
1995(1) 1994(2)
------------ ------------
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............... $ 8.13 $ 8.16
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.24 0.40
Net realized and unrealized gains (losses) on
investments..................................... 0.27 (0.55)
------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS... 0.51 (0.15)
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.24) (0.40)
From net realized gains on invesments............. (0.22) --
------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.46) (0.40)
------ ------
Net change in net asset value...................... 0.05 (0.55)
------ ------
Conversion to Class A Shares(3).................... NA 7.61
------ ------
Net Asset Value, End of Period..................... $ 8.18 $ --
====== ======
- ----------------------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 6.41%++ (1.82)%++
- ----------------------------------------------------
- ----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------------------
Ratio of expenses to average net assets............ 1.60%+ --
Ratio of net investment income to average net as-
sets............................................. 5.00%+ 6.48%+
Ratio of expenses to average net assets*........... 1.78%+ 2.58%+
Ratio of net investment income to average net as-
sets*............................................ 4.83%+ 3.90%+
Portfolio turnover................................. 173.26%++ 71.65%++
Net assets, end of period (000's omitted).......... $ 259 $ --
</TABLE>
- -----------
(1) For the period May 31, 1995 (re-offering date of Class B Shares) through
December 31, 1995. Effective February 1, 1995, the Fund changed its fiscal
year end from January 31 to December 31.
(2) For the period February 8, 1994 (initial offering date of Class B Shares)
through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of Class B Shares and such shares converted to Class A Shares.
(3) On December 2, 1994, the Fund terminated the offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
161
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Period Ended Year Ended Period Ended
December 31, January 31, January 31,
1995(1) 1995 1994(2)
------------ ----------- ------------
<S> <C> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period... $ 7.68 $ 8.25 $ 8.36
-------- ------ ------
INCOME (LOSS) FROM INVESTMENT OPERA-
TIONS:
Net investment income................. 0.47 0.52 0.47
Net realized and unrealized gains
(losses) on investments............. 0.72 (0.57) (0.09)
-------- ------ ------
TOTAL INCOME FROM INVESTMENT
OPERATIONS......................... 1.19 (0.05) 0.38
-------- ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income............ (0.47) (0.52) (0.47)
From net realized gains on invesments. (0.22) -- (0.02)
-------- ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS.... (0.69) (0.52) (0.49)
-------- ------ ------
Net change in net asset value.......... 0.50 (0.57) (0.11)
-------- ------ ------
Net Asset Value, End of Period......... $ 8.18 $ 7.68 $ 8.25
======== ====== ======
- ----------------------------------------
TOTAL RETURN 15.90%++ (0.48)% 5.16%++
- ----------------------------------------
- ----------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------
Ratio of expenses to average net as-
sets................................. 0.55%+ 0.04% --
Ratio of net investment income to
average net assets................... 6.34%+ 6.70% 6.21%+
Ratio of expenses to average net as-
sets*................................ 0.67%+ 2.78% 2.64%+
Ratio of net investment income to
average net assets*.................. 6.22%+ 3.96% 3.57%+
Portfolio turnover..................... 173.26%++ 71.65% 26.54%++
Net assets, end of period (000's omit-
ted)................................. $191,930 $7,101 $5,128
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995. Effective
February 1, 1995, the Fund changed its fiscal year end from January 31 to
December 31.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
162
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Year Ended
Period Ended ---------------------------------------------------
December 31, February 28, February 28, February 28, February 29,
1995(1) 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Begin-
ning of Period....... $ 11.79 $ 12.18 $ 12.79 $ 12.25 $ 11.95
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. 0.44 0.55 0.61 0.64 0.76
Net realized and
unrealized gains
(losses) on invest-
ments............... 0.56 (0.36) 0.01 0.68 0.37
------- ------- ------- ------- -------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS......... 1.00 0.19 0.62 1.32 1.13
------- ------- ------- ------- -------
LESS DIVIDENDS AND DIS-
TRIBUTIONS:
From net investment
income.............. (0.44) (0.55) (0.61) (0.64) (0.76)
From net realized
gains on invest-
ments............... (0.10) (0.03) (0.62) (0.14) (0.07)
------- ------- ------- ------- -------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.54) (0.58) (1.23) (0.78) (0.83)
------- ------- ------- ------- -------
Net change in net asset
value................ 0.46 (0.39) (0.61) 0.54 0.30
------- ------- ------- ------- -------
Net Asset Value, End of
Period............... $ 12.25 $ 11.79 $ 12.18 $ 12.79 $ 12.25
======= ======= ======= ======= =======
- ------------------------
TOTAL RETURN (EXCLUDES
SALES CHARGE) 8.58%++ 1.64% 4.94% 11.26% 9.78%
- ------------------------
- ------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------
Ratio of expenses to
average net assets... 0.83%+ 0.29% 0.06% -- --
Ratio of net investment
income to average net
assets............... 4.30%+ 4.73% 4.78% 5.16% 6.15%
Ratio of expenses to
average net assets*.. 0.97%+ 1.38% 1.27% 1.31% 1.72%
Ratio of net investment
income to average net
assets*.............. 4.16%+ 3.64% 3.57% 3.85% 4.43%
Portfolio turnover..... 44.75%++ 128.02% 167.95% 63.67% 86.91%
Net assets, end of
period
(000's omitted)...... $17,777 $17,243 $28,826 $27,885 $18,310
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
163
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended
----------------------------------------------------
December 31, February 28, December 2, February 28,
1995(1) 1995(2) 1994(3) 1994(4)
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Begin-
ning of Period........ $11.80 $ 11.57 $ 12.18 $ 12.32
------ ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.37 0.04 0.37 0.03
Net realized and
unrealized gains
(losses) on
investments.......... 0.55 0.23 (0.72) (0.14)
------ ------- ------- --------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS.......... 0.92 0.27 (0.35) (0.11)
------ ------- ------- --------
LESS DIVIDENDS AND DIS-
TRIBUTIONS:
From net investment in-
come................. (0.37) (0.04) (0.37) (0.03)
From net realized gains
on investments....... (0.10) -- (0.03) --
------ ------- ------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS....... (0.47) (0.04) (0.40) (0.03)
------ ------- ------- --------
Net change in net asset
value................. 0.45 0.23 (0.75) (0.14)
------ ------- ------- --------
Conversion to Class A
shares(3)............. NA NA 11.43 NA
------ ------- ------- --------
Net Asset Value, End of
Period................ $12.25 $ 11.80 $ -- $ 12.18
====== ======= ======= ========
- -------------------------
TOTAL RETURN (EXCLUDES
REDEMPTION CHARGE) 7.75%++ 2.30%++ (2.98)++ (0.93)%++
- -------------------------
- -------------------------
RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Ratio of expenses to av-
erage net assets...... 1.71%+ 1.36%+ 0.76%+ 0.75%+
Ratio of net investment
income to average net
assets................ 3.36%+ 3.72%+ 4.03%+ 1.68%+
Ratio of expenses to
average net assets*... 2.01%+ 1.64%+ 2.00%+ 3.00%+
Ratio of net investment
income (loss) to
average net assets*... 3.06%+ 3.44%+ 2.79%+ (0.57)%+
Portfolio turnover...... 44.75%++ 128.02%++ 128.02%++ 167.95%++
Net assets, end of pe-
riod (000's omitted).. $ 341 $ 6 $ -- $ 12
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period January 30, 1995 (re-offering date of Class B Shares)
through February 28, 1995.
(3) For the period March 1, 1994 through December 2, 1994. On December 2,
1994, the Fund terminated its offering of Class B Shares and such shares
converted to Class A Shares.
(4) For the period February 8, 1994 (initial offering date of Class B Shares)
through February 28, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
164
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Period Ended Year Ended
December 31, February 28,
1995(1) 1995(2)
------------ ------------
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period.............. $ 11.80 $ 11.57
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.47 0.04
Net realized and unrealized gains on investments. 0.55 0.23
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS......... 1.02 0.27
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (0.47) (0.04)
From net realized gains on investments........... (0.10) --
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (0.57) (0.04)
-------- --------
Net change in net asset value..................... 0.45 0.23
-------- --------
Net Asset Value, End of Period.................... $ 12.25 $ 11.80
======== ========
- ---------------------------------------------------
TOTAL RETURN 8.76%++ 2.37%++
- ---------------------------------------------------
- ---------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------
Ratio of expenses to average net assets........... 0.55%+ 0.50%+
Ratio of net investment income to average net as-
sets............................................ 4.78%+ 4.79%+
Ratio of expenses to average net assets*.......... 0.68%+ 0.60%+
Ratio of net investment income to average net as-
sets*........................................... 4.65%+ 4.69%+
Portfolio turnover................................ 44.75%++ 128.02%++
Net assets, end of period (000's omitted)......... $373,753 $365,801
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period February 1, 1995 (initial offering date of Class I Shares)
through February 28, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
165
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Year Ended
Period Ended ---------------------------------------------------
December 31, February 28, February 28, February 28, February 29,
1995(1) 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value,
Beginning of Period.. $12.06 $12.13 $13.25 $ 12.49 $12.10
------ ------ ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. 0.48 0.60 0.63 0.70 0.76
Net realized and
unrealized gains
(losses) on
investments......... 0.82 (0.07) (0.15) 1.01 0.47
------ ------ ------ ------- ------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS......... 1.30 0.53 0.48 1.71 1.23
------ ------ ------ ------- ------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.............. (0.48) (0.60) (0.63) (0.70) (0.76)
From net realized
gains on
investments......... (0.24) -- (0.96) (0.25) (0.08)
In excess of net
realized gains on
investments......... -- -- (0.01) -- --
------ ------ ------ ------- ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.72) (0.60) (1.60) (0.95) (0.84)
------ ------ ------ ------- ------
Net change in net asset
value................ 0.58 (0.07) (1.12) 0.76 0.39
------ ------ ------ ------- ------
Net Asset Value, End of
Period............... $12.64 $12.06 $12.13 $ 13.25 $12.49
====== ====== ====== ======= ======
- ------------------------
TOTAL RETURN (EXCLUDES
SALES CHARGE) 10.95%++ 4.45% 3.70% 14.37% 10.50%
- ------------------------
- ------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------
Ratio of expenses to
average net assets... 0.89%+ 1.98% -- -- --
Ratio of net investment
income to average net
assets............... 4.57%+ 5.09% 4.85% 5.49% 5.99%
Ratio of expenses to
average net assets*.. 1.04%+ 3.89% 1.44% 1.59% 2.75%
Ratio of net investment
income to average net
assets*.............. 4.43%+ 3.18% 3.41% 3.90% 3.24%
Portfolio turnover..... 69.31%++ 60.78% 175.06% 88.53% 66.28%
Net assets, end of
period
(000's omitted)...... $7,426 $6,840 $9,234 $11,290 $6,591
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
166
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended
----------------------------------------
December 31, December 2, February 28,
1995(1) 1994(2) 1994(3)
------------ ----------- ------------
<S> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period. $ 12.17 $12.14 $ 12.37
------- ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............... 0.34 0.41 0.03
Net realized and unrealized gains
(losses) on investments........... 0.72 (0.70) (0.23)
------- ------ -------
TOTAL INCOME FROM INVESTMENT
OPERATIONS....................... 1.06 (0.29) (0.20)
------- ------ -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income.......... (0.34) (0.41) (0.03)
From net realized gains on invest-
ments............................. (0.24)
------- ------ -------
TOTAL DIVIDENDS AND DISTRIBUTIONS.. (0.58) (0.41) (0.03)
------- ------ -------
Net change in net asset value........ 0.48 (0.70) (0.23)
------- ------ -------
Conversion to Class A Shares(4)...... NA 11.44 NA
------- ------ -------
Net Asset Value, End of Period....... $ 12.65 $ NA $ 12.14
======= ====== =======
- --------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION
CHARGE) 8.81%++ (4.30)%++ (1.64)%++
- --------------------------------------
- --------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------
Ratio of expenses to average net
assets............................. 1.66%+ 3.18%+ 0.50%+
Ratio of net investment income to
average net assets................. 3.61%+ 4.51%+ 4.10%+
Ratio of expenses to average net
assets*............................ 2.04%+ 5.85%+ 2.91%+
Ratio of net investment income to
average net assets*................ 3.23%+ 1.84%+ 1.69%+
Portfolio turnover................... 69.31%++ 60.78%++ 175.06%++
Net assets, end of period (000's
omitted)........................... $ 238 $ -- $ 2
</TABLE>
- -----------
(1) For the period April 4, 1995 (re-offering date of Class B Shares) through
December 31, 1995. Effective March 1, 1995, the Fund changed its fiscal
year end from February 28 to December 31.
(2) For the period March 1, 1994 through December 2, 1994. On December 2,
1994, the Fund terminated its offering of Class B Shares and such shares
converted to Class A Shares.
(3) For the period February 8, 1994 (initial offering date of Class B Shares)
through February 28, 1994.
(4) On December 2, 1994, the Fund terminated its offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
167
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended
-------------------------------
December 31, February 28,
1995(1) 1995(2)
------------ ------------
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period.......... $ 12.06 $ 12.06
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.52 0.05
Net realized and unrealized gains on invest-
ments...................................... 0.81 --
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS..... 1.33 0.05
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................... (0.52) (0.05)
From net realized gains on investments....... (0.24) --
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS........... (0.76) (0.05)
-------- --------
Net change in net asset value................. 0.57 --
-------- --------
Net Asset Value, End of Period................ $ 12.63 $ 12.06
======== ========
- -----------------------------------------------
TOTAL RETURN 11.20%++ 0.39%++
- -----------------------------------------------
- -----------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------
Ratio of expenses to average net assets....... 0.54%+ 0.65%+
Ratio of net investment income to average net
assets...................................... 4.95%+ 5.45%+
Ratio of expenses to average net assets*...... 0.67%+ 0.79%+
Ratio of net investment income to average net
assets*..................................... 4.81%+ 5.31%+
Portfolio turnover............................ 69.31%++ 60.78%++
Net assets, end of period (000's omitted)..... $240,160 $220,143
</TABLE>
- -----------
(1) For the period March 1, 1995, through December 31, 1995. Effective March
1, 1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period February 1, 1995 (initial offering date of Class I Shares)
to February 28, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
168
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------
1995 1994 1993 1992 1991
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Year................... $0.9996 $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000
------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPER-
ATIONS:
Net investment income...... 0.0498 0.0379 0.0249 0.0283 0.0498
Net realized and unrealized
gains (losses) on
investments.............. 0.0001 (0.0083) (0.0001) -- --
------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT OPERATIONS... 0.0499 0.0296 0.0248 0.0283 0.0498
------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBU-
TIONS:
From net investment income. (0.0498) (0.0379) (0.0249) (0.0283) (0.0498)
------- -------- -------- -------- --------
Increase due to voluntary
capital contribution from
an affiliate of the In-
vestment Adviser (Note
3(d))..................... -- 0.0080 -- -- --
------- -------- -------- -------- --------
Net change in net asset val-
ue........................ 0.0001 (0.0003) (0.0001) -- --
------- -------- -------- -------- --------
Net Asset Value, End of
Year...................... $0.9997 $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000
======= ======== ======== ======== ========
- -----------------------------
TOTAL RETURN 5.09% 3.86%* 2.52% 2.87% 5.10%
- -----------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------
Ratio of expenses to average
net assets................ 0.78% 0.86% 0.74% 0.91% 0.90%
Ratio of net investment
income to average net
assets.................... 4.97% 3.73% 2.48% 2.87% 4.97%
Ratio of expenses to average
net assets**.............. 1.07% 0.88% 0.88% 0.91% 0.90%
Ratio of net investment
income to average net
assets**.................. 4.67% 3.71% 2.34% 2.87% 4.97%
Net assets, end of period
(000's omitted)........... $57,264 $116,353 $154,613 $548,733 $990,897
</TABLE>
- -----------
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
2.83%.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
See Notes to Financial Statements.
169
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Year.................. $ 0.9998 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OP-
ERATIONS:
Net investment income..... 0.0514 0.0355 0.0274 0.0313 0.0543
Net realized and
unrealized gains (loss-
es) on investments...... 0.0100 (0.0109) 0.0001 -- --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.. 0.0524 0.0246 0.0275 0.0313 0.0543
-------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRI-
BUTIONS:
From net investment in-
come.................... (0.0514) (0.0355) (0.0274) (0.0313) (0.0543)
From net realized gains on
investments............. (0.0006) (0.0002) -- -- --
-------- -------- -------- -------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS......... (0.0520) (0.0357) (0.0274) (0.0313) (0.0543)
-------- -------- -------- -------- --------
Increase due to voluntary
capital contribution from
an affiliate of the
Investment Adviser (Note
3(d)).................... -- 0.0108 -- -- --
-------- -------- -------- -------- --------
Net change in net asset
value.................... 0.0004 (0.0003) 0.0001 -- --
-------- -------- -------- -------- --------
Net Asset Value, End of
Year..................... $ 1.0002 $ 0.9998 $ 1.0001 $ 1.0000 $ 1.0000
======== ======== ======== ======== ========
- ----------------------------
TOTAL RETURN 5.33% 3.63%* 2.77% 3.18% 5.57%
- ----------------------------
- ----------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------
Ratio of expenses to
average net assets....... 0.79% 1.02% 0.94% 0.98% 0.97%
Ratio of net investment
income to average net
assets................... 5.12% 3.51% 2.76% 3.17% 5.42%
Ratio of expenses to
average net assets**..... 1.07% 1.02% 0.99% 0.98% 0.97%
Ratio of net investment
income to average net
assets**................. 4.83% 3.51% 2.71% 3.17% 5.42%
Net assets, end of period
(000's omitted).......... $203,994 $119,400 $162,623 $260,865 $456,791
</TABLE>
- -----------
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
2.61%.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
See Notes to Financial Statements.
170
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS-- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
Ended
December 31,
1995(1)
--------------
<S> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period........................... $1.0000
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................................... 0.0162
Net realized and unrealized gains on investments.............. 0.0008
-------
TOTAL INCOME FROM INVESTMENT OPERATIONS...................... 0.0170
-------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income.................................... (0.0162)
From net realized gains on investments........................ (0.0006)
-------
TOTAL DIVIDENDS AND DISTRIBUTIONS........................... (0.0168)
-------
Net change in net asset value.................................. 0.0002
-------
Net Asset Value, End of Period................................. $1.0002
=======
- -----------------------------------------------------------------
TOTAL RETURN 1.69%++
- -----------------------------------------------------------------
- -----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------
Ratio of expenses to average net assets........................ 1.51%+
Ratio of net investment income to average net assets........... 4.33%+
Ratio of expenses to average net assets*....................... 2.02%+
Ratio of net investment income to average net assets*.......... 3.82%+
Net assets, end of period (000's omitted)...................... $ 65
</TABLE>
- -----------
(1) For the period May 20, 1995 (initial offering of Class B Shares) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
171
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Year................... $ 0.9997 $ 0.9999 $ 0.9999 $ 0.9999 $ 0.9999
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPER-
ATIONS:
Net investment income...... 0.0322 0.0234 0.0174 0.0236 0.0413
Net realized and unrealized
gains (losses) on
investments.............. 0.0001 (0.0002) -- -- --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT OPERATIONS... 0.0323 0.0232 0.0174 0.0236 0.0413
-------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBU-
TIONS:
From net investment income. (0.0322) (0.0234) (0.0174) (0.0236) (0.0413)
-------- -------- -------- -------- --------
Net change in net asset val-
ue........................ 0.0001 (0.0002) -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of
Year...................... $ 0.9998 $ 0.9997 $ 0.9999 $ 0.9999 $ 0.9999
======== ======== ======== ======== ========
- -----------------------------
TOTAL RETURN 3.26% 2.36% 1.75% 2.38% 4.21%
- -----------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------
Ratio of expenses to average
net assets................ 0.70% 0.68% 0.79% 0.95% 0.98%
Ratio of net investment
income to average net
assets.................... 3.21% 2.33% 1.74% 2.38% 4.11%
Ratio of expenses to average
net assets*............... 0.94% 0.93% 0.95% 0.96% 0.98%
Ratio of net investment
income to average net
assets*................... 2.97% 2.08% 1.58% 2.37% 4.11%
Net assets, end of period
(000's omitted)........... $228,511 $173,130 $177,698 $210,000 $233,675
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
See Notes to Financial Statements.
172
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
Prairie Funds
Prairie Municipal Bond Fund, Inc.
Prairie Intermediate Bond Fund
The Members of the Boards and Shareholders
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Prairie Funds (comprising,
respectively, the Managed Assets Income, Managed Assets, Equity Income,
Growth, Special Opportunities, International Equity, Bond, International Bond,
Intermediate Municipal Bond, U.S. Government Money Market, Money Market and
Municipal Money Market Funds), Prairie Municipal Bond Fund, Inc. and Prairie
Intermediate Bond Fund (collectively, the "Funds") as of December 31, 1995 and
the related statements of operations for the periods then ended, and the
statements of changes in net assets and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of December 31, 1995 by correspondence with the custodians and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the Prairie Funds, Prairie Municipal Bond
Fund, Inc. and Prairie Intermediate Bond Fund at December 31, 1995, the
results of their operations for the periods then ended, and the changes in
their net assets and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
February 23, 1996
<PAGE>
PRAIRIE FUNDS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information.
Included in Part B of the Registration Statement:
Portfolio of Investments.
Statements of Assets and Liabilities.
Statements of Operations.
Statements of Changes in Net Assets.
Notes to Financial Statements.
Financial Highlights.
Report of Ernst & Young LLP, Independent
Auditors.
(b) Exhibits:
(1) Amended and Restated Agreement and
Declaration of Trust is incorporated by
reference to Exhibit (1) of Pre-Effective
Amendment No. 2 to the Registration
Statement on Form N-1A, filed on November
28, 1994.
(2) By-Laws are incorporated by reference to
Exhibit (2) of Pre-Effective Amendment No.
2 to the Registration Statement on Form
N-1A, filed on November 28, 1994.
(5)(a) Investment Advisory Agreement.
(b) Sub-Investment Advisory Agreement.
(6) Distribution Agreement is incorporated by
reference to Exhibit (6) of Post-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on May 1,
1995.
(8) Custody Agreement is incorporated by
reference to Exhibit (8) of Post-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on May 1,
1995.
(9)(a) Administration Agreement.
(9)(b) Master Sub-Administration Agreement is
incorporated by reference to Exhibit (9)(b)
to Post Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed
on May 1, 1995.
(9)(c) Shareholder Services Plan is incorporated
by reference to Exhibit (9)(c) of Pre-
Effective Amendment No. 2 to the
Registration Statement on Form N-1A, filed
on November 28, 1994.
(10) Opinion (including consent) of Stroock &
Stroock & Lavan is incorporated by
reference to Exhibit (10) of Pre-Effective
Amendment No. 3 to the Registration
Statement on Form N-1A, filed on
December 12, 1994.
(11) Consent of Independent Auditors.
(15) Distribution Plan is incorporated by
reference to Exhibit (15) of Pre-Effective
Amendment No. 2 to the Registration
Statement on Form N-1A, filed on
November 28, 1994.
(16) Performance Calculation Schedule is
incorporated by reference to Exhibit (16)
of Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed
on May 1, 1995.
(17) Financial Data Schedules are incorporated
by reference to the Registrant's Annual
Report on Form N-SAR for the year ended
December 31, 1995.
(18) Rule 18f-3 Plan is incorporated by
reference to Exhibit (18) of Post-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on May 1,
1995.
Other Exhibit:
Secretary's Certificate is incorporated by
reference to Other Exhibit of Pre-Effective
Amendment No. 3 to the Registration
Statement on Form N-1A, filed on
December 12, 1994.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Holders
Title of Class as of February 27, 1996
-------------- -----------------------
Shares of beneficial interest,
par value $.001 per share
Managed Assets Fund
Class A 87
Class B 48
Class I 2
Managed Assets Income Fund
Class A 2,826
Class B 113
Class I 8
Equity Income Fund
Class A 155
Class B 50
Class I 14
Growth Fund
Class A 168
Class B 20
Class I 16
International Equity Fund
Class A 182
Class B 47
Class I 17
Special Opportunities Fund
Class A 116
Class B 5
Class I 14
International Bond Fund
Class A 97
Class B 1
Class I 15
Bond Fund
Class A 91
Class B 6
Class I 10
Intermediate Municipal Bond Fund
Class A 474
Class B 19
Class I 14
U.S. Government Money Market Fund
Class A 1,573
Money Market Fund
Class A 11,771
Class B 2
Municipal Money Market Fund
Class A 2,050
Item 27. Indemnification
Reference is made to Article EIGHTH of the Registrant's Amended and
Restated Declaration of Trust incorporated by reference to Exhibit 1. The
application of these provisions is limited by Article 10 of the Registrant's
By-Laws incorporated by reference to Exhibit 2 and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a trustee, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference also is made to the Distribution Agreement previously filed as
Exhibit 6.
Item 28. Business and Other Connections of Investment Adviser
(a) Investment Adviser
Registrant is fulfilling the requirement of this Item 28 to provide a list
of the officers and directors of First Chicago Investment Management Company
(the "Investment Adviser"), together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by the
Investment Adviser or those of its officers and directors during the past two
years, by incorporating by reference the information contained in the Form ADV
filed with the SEC pursuant to the Investment Advisers Act of 1940 by the
Investment Adviser (SEC File No. 801-47947).
(b) Sub-Investment Adviser
Registrant is fulfilling the requirement of this Item 28 to provide a list
of the officers and directors of ANB Investment Management and Trust Company
(the "Sub-Adviser"), together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by the
Sub-Adviser or those of its officers and directors during the past two years, by
incorporating by reference the information contained in the Form ADV filed with
the SEC pursuant to the Investment Advisers Act of 1940 by the Sub-Adviser (SEC
File No. 801-33358).
Item 29. Principal Underwriters
(a) Other investment companies for which Registrant's principal underwriter
(exclusive distributor) acts as principal underwriter or exclusive distributor:
The Infinity Mutual Funds, Inc.
Pacific Horizon Funds, Inc.
Prairie Institutional Funds
Prairie Municipal Bond Fund, Inc.
Prairie Intermediate Bond Fund
(b) The information required by this Item 29(b) regarding each director or
officer of Concord Financial Group, Inc. is incorporated by reference to
Schedule A of Form BD filed by Concord Financial Group, Inc. pursuant to the
Securities Exchange Act of 1934 (SEC File No. 8-37601).
Item 30. Location of Accounts and Records
1. First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670
2. Concord Financial Group, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-3035
3. Primary Funds Service Corp.
100 Financial Park
Franklin, Massachusetts 02038
4. The Bank of New York
90 Washington Street
New York, New York 10286
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Registrant hereby undertakes
(1) To call a meeting of shareholders for the purpose of
voting upon the question of removal of a trustee or
trustees when requested in writing to do so by the
holders of at least 10% of the Registrant's outstand-
ing shares of beneficial interest and in connection
with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with
a copy of the Registrant's latest Annual Report to
Shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
this City of New York, and State of New York, on the 9th day of April, 1996.
PRAIRIE FUNDS
BY:/s/ Mark A. Dillon*
Mark A. Dillon, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
/s/Mark A. Dillon* President April 9, 1996
- ------------------------
Mark A. Dillon (Principal
Executive Officer)
/s/Martin R. Dean* Treasurer April 9, 1996
Martin R. Dean (Principal Financial
and Accounting
Officer)
/s/ John P. Gould* Trustee April 9, 1996
- ---------------------------
John P. Gould
/s/ Marilyn McCoy* Trustee April 9, 1996
Marilyn McCoy
/s/ Raymond D. Oddi* Trustee April 9, 1996
- ---------------------------
Raymond D. Oddi
*By: /s/ Ann E. Bergin April 9, 1996
----------------------
Ann E. Bergin, As
Attorney-in-fact
PRAIRIE FUNDS
Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
Page
(5)(a) Investment Advisory Agreement................................
(5)(b) Sub-Investment Advisory Agreement............................
(9)(a) Administration Agreement.....................................
(11) Consent of Independent Auditors..............................
<PAGE>
EXHIBIT (5)(a)
INVESTMENT ADVISORY AGREEMENT
PRAIRIE FUNDS
125 West 55th Street
New York, New York 10019
November 30, 1995
First Chicago Investment
Management Company
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund") consisting of the series
named on Schedule 1 hereto, as such Schedule may be revised from time to time
(each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ you to act as its
investment adviser.
In this connection it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect. We have
discussed and concur in your employing on this basis each sub-investment adviser
indicated on Schedule 1 hereto (each, a "Sub-Investment Adviser") for the Series
indicated thereon, as such Schedule may be revised from time to time.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of each Series' portfolio in accordance with such
Series' investment objectives and policies as stated in the Fund's Prospectus
and Statement of Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment research and will
supervise each Series' investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and reinvestment of such
Series' assets. You will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or contemplate purchasing, as
the Fund may reasonably request. The Fund wishes to be informed of important
developments materially affecting any Series' portfolio and shall expect you, on
your own initiative, to furnish to the Fund from time to time such information
as you may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder and the Fund agrees as an inducement to your
undertaking the same that neither you nor a Sub-Investment Adviser shall be
liable hereunder for any error of judgment or mistake of law or for any loss
suffered by one or more Series, provided that nothing herein shall be deemed to
protect or purport to protect you or a Sub-Investment Adviser against any
liability to the Fund or a Series or to its security holders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder (hereinafter
"Disabling Conduct") or to which any Sub-Investment Adviser would otherwise be
subject by reason of Disabling Conduct.
In consideration of services rendered pursuant to this Agreement, the Fund
will pay you on the first business day of each month a fee at the rate set forth
opposite each Series' name on Schedule 1 hereto. Net asset value shall be
computed on such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information. The fee for the
period from the date of the commencement of the public sale of a Series' shares
to the end of the month during which such sale shall have been commenced shall
be pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement and will pay all fees of each Sub-Investment
Adviser in connection with its duties in respect of the relevant Series. All
other expenses to be incurred in the operation of the Fund will be borne by the
Fund, except to the extent specifically assumed by you. The expenses to be borne
by the Fund include, without limitation, the following: organizational costs,
taxes, interest, loan commitment fees, interest and distributions paid on
securities sold short, brokerage fees and commissions, if any, fees of Board
members, Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Series' existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
As to each Series, if in any fiscal year the aggregate expenses of a Series
(including fees pursuant to this Agreement, but excluding interest, taxes,
brokerage and, with the prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over such Series, the Fund may deduct from the fees to be
paid hereunder, or you will bear, such excess expense to the extent required by
state law. Your obligation pursuant hereto will be limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.
The Fund understands that you now act, and that from time to time hereafter
you may act, as investment adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of the same issuer
is suitable for the investment objectives of two or more companies or accounts
managed by you which have available funds for investment, the available
securities will be allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by one or more Series or the size of
the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to assist in
the performance of your duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict your
right or the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
Neither you nor any Sub-Investment Adviser shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except, in the case of you,
for a loss resulting from Disabling Conduct on your part and, in the case of a
Sub-Investment Adviser, for a loss resulting from Disabling Conduct on its part.
Any person, even though also your officer, director, partner, employee or agent,
who may be or become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting on any business
of the Fund, to be rendering such services to or acting solely for the Fund and
not as your officer, director, partner, employee or agent or one under your
control or direction even though paid by you.
As to each Series, this Agreement shall continue until the date set forth
opposite such Series' name on Schedule 1 hereto (the "Reapproval Date") and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Series' outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. As to
each Series, this Agreement is terminable without penalty, on 60 days' notice,
by the Fund's Board or by vote of holders of a majority of such Series' shares
or, upon not less than 90 days' notice, by you. This Agreement also will
terminate automatically, as to the relevant Series, in the event of its
assignment (as defined in said Act).
The Fund is agreeing to the provisions of this Agreement that limit a
Sub-Investment Adviser's liability and other provisions relating to the
Sub-Investment Adviser so as to induce the Sub-Investment Adviser to enter into
its Sub-Investment Advisory Agreement with you and to perform its obligations
thereunder. Each Sub-Investment Adviser is expressly made a third party
beneficiary of this Agreement with rights as respects the Fund to the same
extent as if it had been a party hereto.
The Fund recognizes that from time to time your directors, officers and
employees may serve as directors, trustees, partners, officers and employees of
other corporations, business trusts, partnerships or other entities (including
other investment companies) and that such other entities may include the name
"Prairie" as part of their name, and that your corporation or its affiliates may
enter into investment advisory or other agreements with such other entities. If
you cease to act as the Fund's investment adviser, the Fund agrees that, at your
request, the Fund will take all necessary action to change the name of the Fund
to a name not including "Prairie" in any form or combination of words.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in such person's capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the Fund and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE FUNDS
By:/s/ D'Ray Brewer
Accepted:
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:/s/ Terrall J. Janeway
<PAGE>
SCHEDULE 1
Annual Fee as a
Percentage of
Average Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Bond Fund .55% December 31, 1996 December 31st
Equity Income Fund .50% December 31, 1996 December 31st
Growth Fund .65% December 31, 1996 December 31st
Intermediate Municipal
Bond Fund .40% December 31, 1996 December 31st
International Bond
Fund .70% December 31, 1996 December 31st
International Equity
Fund1 .80% December 31, 1996 December 31st
Managed Assets Fund .65% December 31, 1996 December 31st
Managed Assets Income
Fund .65% December 31, 1996 December 31st
Money Market Fund .40% December 31, 1996 December 31st
Municipal Money Market
Fund .40% December 31, 1996 December 31st
Special Opportunities
Fund .70% December 31, 1996 December 31st
U.S. Government Money
Market Fund .40% December 31, 1996 December 31st
- --------
1 ANB Investment Management and Trust Company is the Series'
Sub-Investment Adviser.
<PAGE>
EXHIBIT (5)(B)
SUB-INVESTMENT ADVISORY AGREEMENT
FIRST CHICAGO INVESTMENT MANAGEMENT COMPANY
Three First National Plaza
Chicago, Illinois 60670
November 30, 1995
ANB Investment Management and
Trust Company
1 North LaSalle Street
Chicago, Illinois 60690
Dear Sirs:
As you are aware, each series of Prairie Funds (the "Fund") desires to
employ its capital by investing and reinvesting the same in investments of the
type and in accordance with the limitations specified in its charter documents
and in its Prospectus and Statement of Additional Information as from time to
time in effect, copies of which have been or will be submitted to you, and in
such manner and to such extent as from time to time may be approved by the
Fund's Board. The Fund intends to employ First Chicago Investment Management
Company (the "Adviser") to act as its investment adviser pursuant to a written
agreement (the "Investment Advisory Agreement"), a copy of which has been
furnished to you. The Adviser desires to employ you to act as the sub-investment
adviser to the International Equity Fund (the "Series"), which is a series of
the Fund.
In this connection, it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect.
Subject to the supervision and approval of the Adviser, you will provide
investment management of the Series' portfolio in accordance with the Series'
investment objectives and policies as stated in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect. In
connection therewith, you will supervise the Series' investments and conduct a
continuous program of investment, evaluation and, if appropriate, sale and
reinvestment of the Series' assets. You will furnish to the Adviser or the Fund
such statistical information, with respect to the investments which the Series
may hold or contemplate purchasing, as the Adviser or the Fund may reasonably
request. The Fund and the Adviser wish to be informed of important developments
materially affecting the Series' portfolio and shall expect you, on your own
initiative, to furnish to the Fund or the Adviser from time to time such
information as you may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the services to be
provided hereunder, and the Adviser agrees as an inducement to your undertaking
the same that you shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by the Adviser, the Fund or the Series'
shareholders, as the case may be, provided that nothing herein shall be deemed
to protect or purport to protect you against any liability to the Adviser, the
Fund or the Series' shareholders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of your duties hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay you, on the first business day of each month, out of the
investment advisory fee it receives with respect to the Series and only to the
extent thereof, a fee calculated daily and paid monthly at the annual rate of
.40 of 1% of the Series' average daily net assets, for the preceding month.
Net asset value shall be computed on such days and at such time or times as
described in the Fund's then-current Prospectus and Statement of Additional
Information. The fee for the period from the date following the commencement of
sales of the Series' shares to the end of the month during which such sales
shall have been commenced shall be pro-rated according to the proportion which
such period bears to the full monthly period, and upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall be
pro-rated according to the proportion which such period bears to the full
monthly period and shall be payable within 10 business days of the date of
termination of this Agreement.
For the purpose of determining fees payable to you, the value of the
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of net asset value.
You will bear all expenses in connection with the performance of your
services under this Agreement. All other expenses to be incurred in the
operation of the Fund (other than those borne by the Adviser) will be borne by
the Fund, except to the extent specifically assumed by you. The expenses to be
borne by the Fund include, without limitation, the following: organizational
costs, taxes, interest, loan commitment fees, interest and distributions paid on
securities sold short, brokerage fees and commissions, if any, fees of Board
members, Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Series' existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing, printing and distributing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
If in any fiscal year the aggregate expenses of the Fund (including fees
with respect to the Series pursuant to the Investment Advisory Agreement, but
excluding interest, taxes, brokerage and, with the prior written consent of the
necessary state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund, the Adviser
may deduct from the fees to be paid hereunder, or you will bear such excess
expense on a pro-rata basis with the Adviser, in the proportion that the
sub-advisory fee payable to you pursuant to this Agreement bears to the
investment advisory fee with respect to the Series payable to the Adviser
pursuant to the Investment Advisory Agreement, to the extent required by state
law. Your obligation pursuant hereto will be limited to the amount of your fees
hereunder. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.
The Adviser understands that you now act, and that from time to time
hereafter you may act, as investment adviser to one or more other investment
companies and fiduciary or other managed accounts, and the Adviser has no
objection to your so acting, provided that when purchase or sale of securities
of the same issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds for investment,
the available securities will be allocated in a manner believed by you to be
equitable to each company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by the Series or the
size of the position obtainable for or disposed of by the Series.
In addition, it is understood that the persons employed by you to assist in
the performance of your duties hereunder will not devote their full time to such
services and nothing contained herein shall be deemed to limit or restrict your
right or the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
You shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Adviser, the Fund or the Series' shareholders, as the
case may be, in connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith or gross
negligence on your part in the performance of your duties or from reckless
disregard by you of your obligations and duties under this Agreement. Any
person, even though also your officer, director, partner, employee or agent, who
may be or become an officer, Board member, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or acting on any business of the
Fund, to be rendering such services to or acting solely for the Fund and not as
your officer, director, partner, employee, or agent or one under your control or
direction even though paid by you.
This Agreement shall continue until December 31, 1996, and thereafter shall
continue automatically for successive annual periods ending on December 31st of
each year, provided such continuance is specifically approved at least annually
by (i) the Fund's Board or (ii) vote of the holders of a majority (as defined in
the Investment Company Act of 1940, as amended) of the Series' outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty (i) by the Adviser upon 60 days' notice
to you, (ii) by the Fund's Board or by vote of the holders of a majority of the
Series' outstanding voting securities upon 60 days' notice to you, or (iii) by
you upon not less than 90 days' notice to the Fund and the Adviser. This
Agreement also will terminate automatically in the event of its assignment (as
defined in said Act). In addition, notwithstanding anything herein to the
contrary, if the Investment Advisory Agreement terminates for any reason, this
Agreement shall terminate effective upon the date the Investment Advisory
Agreement terminates.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By: /s/ Terrall J. Janeway
Accepted:
ANB INVESTMENT MANAGEMENT
AND TRUST COMPANY
By: /s/ Thomas P. Michaels
<PAGE>
EXHIBIT (9)(a)
ADMINISTRATION AGREEMENT
PRAIRIE FUNDS
125 West 55th Street
New York, New York 10019
November 30, 1995
First Chicago Investment
Management Company
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund") consisting of the series,
if any, named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ you to act as its
administrator.
In this connection it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect. We have
discussed and concur in your employing on this basis Concord Holding Corporation
(the "Sub-Administrator").
Pursuant to this agreement and subject to the supervision and control of
the Fund's Board, you will assist in supervising all aspects of the Fund's
operations, except investment management of the Series' portfolios. It is
understood that, pursuant to this Agreement, you shall not act and shall not be
required to act as an investment adviser or have any authority to supervise the
investment or reinvestment of the cash, securities or other property comprising
the Series' assets or to determine what securities or other property may be
purchased or sold by the Fund.
You will supply office facilities (which may be in your own offices), data
processing services, clerical, accounting and bookkeeping services, internal
auditing and legal services, internal executive and administrative services, and
stationery and office supplies; prepare reports to each Series' stockholders,
tax returns, reports to and filings with the Securities and Exchange Commission
and state Blue Sky authorities; calculate the net asset value of each Series'
shares; and generally assist in all aspects of the Fund's operations.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder and the Fund agrees as an inducement to your
undertaking the same that neither you nor the Sub-Administrator shall be liable
hereunder for any error of judgment or mistake of law or for any loss suffered
by one or more Series, provided that nothing herein shall be deemed to protect
or purport to protect you or the Sub-Administrator against any liability to the
Fund or a Series or to its security holders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder, or to which the Sub-Administrator would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties under the agreement by which you
engage it (the "Master Sub-Administration Agreement"), or by reason of its
reckless disregard of its obligations and duties under such agreement.
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay you on the first business day of each month a fee at the rate set
forth opposite each Series' name on Schedule 1 hereto. Net asset value shall be
computed on such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information. The fee for the
period from the date of the commencement of the public sale of a Series' shares
to the end of the month during which such sale shall have been commenced shall
be pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement and will pay all fees of the Sub-Administrator in
connection with its duties in respect of the Series. All other expenses to be
incurred in the operation of the Fund will be borne by the Fund, except to the
extent specifically assumed by you. The expenses to be borne by the Fund
include, without limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid on securities
sold short, brokerage fees and commissions, if any, fees of Board members,
Securities and Exchange Commission fees and state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside auditing
and legal expenses, costs of independent pricing services, costs of maintaining
the Series' existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing stockholders, costs of stockholders'
reports and corporate meetings, and any extraordinary expenses.
The Fund understands that, from time to time hereafter, you may act as
administrator to one or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so acting. In addition,
it is understood that the persons employed by you to assist in the performance
of your duties hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
Neither you nor the Sub-Administrator shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement or the Master Sub-Administration
Agreement relates, except, in the case of you, for a loss resulting from willful
misfeasance, bad faith or gross negligence on your part in the performance of
your duties or from reckless disregard by you of your obligations and duties
under this Agreement and, in the case of the Sub-Administrator, for a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under the Master Sub-Administration Agreement. Any
person, even though also your officer, Board member, partner, employee or agent,
who may be or become an officer, Board member, partner, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as your officer, Board member, partner, employee, or agent or one
under your control or direction even though paid by you.
As to each Series, this Agreement shall continue until the date set forth
opposite such Series' name on Schedule 1 hereto (the "Reapproval Date"), and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Series' outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. As to
each Series, after the Reapproval Date, this Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board or by vote of holders of a
majority of such Series' shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically, as to the relevant Series, in
the event of its assignment (as defined in said Act).
The Fund is agreeing to the provisions of this Agreement that limit the
Sub-Administrator's liability and other provisions relating to the
Sub-Administrator so as to induce the Sub-Administrator to enter into the Master
Sub-Administration Agreement with you and to perform its obligations thereunder.
The Sub-Administrator is expressly made a third party beneficiary of this
Agreement with rights as respects the Fund to the same extent as if it had been
a party hereto.
The Fund recognizes that from time to time your directors, officers and
employees may serve as directors, trustees, partners, officers and employees of
other corporations, business trusts, partnerships or other entities (including
other investment companies) and that such other entities may include the name
"Prairie" as part of their name, and that your corporation or its affiliates may
enter into administration or other agreements with such other entities. If you
cease to act as the Fund's administrator, the Fund agrees that, at your request,
the Fund will take all necessary action to change the name of the Fund to a name
not including "Prairie" in any form or combination of words.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The obligations
of this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Board member, officer or shareholder of the
Fund individually.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE FUNDS
By:
Accepted:
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:
<PAGE>
SCHEDULE 1
- -----------------------------------------------------------------------------
Annual Fee
as a
Percentage
of Average
Daily Net
Name of Fund or Series Assets Reapproval Date Reapproval Day
- --------------------------------------------------------------------------------
Bond Fund .15% December 31, 1997 December 31st
Equity Income Fund .15% December 31, 1997 December 31st
Growth Fund .15% December 31, 1997 December 31st
Intermediate Municipal Bond
Fund .15% December 31, 1997 December 31st
International Bond Fund .15% December 31, 1997 December 31st
International Equity Fund .15% December 31, 1997 December 31st
Managed Assets Fund .15% December 31, 1997 December 31st
Managed Assets Income Fund .15% December 31, 1997 December 31st
Money Market Fund .15% December 31, 1997 December 31st
Municipal Money Market Fund .15% December 31, 1997 December 31st
Special Opportunities Fund .15% December 31, 1997 December 31st
U.S. Government Money
Market Fund .15% December 31, 1997 December 31st
================================================================================
<PAGE>
EXHIBIT (11)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" in the Prospectus and "Counsel and Independent Auditors"
in the Statement of Additional Information and to the use of our report dated
February 23, 1996 in this Registration Statement (Form N-1A No. 33-56217) of
Prairie Funds.
ERNST & YOUNG LLP
New York, New York
April 9, 1996
