Registration No. 33-_____
=================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Pre-Effective Amendment No. __ Post-Effective Amendment No. __
(Check appropriate box or boxes)
PRAIRIE INSTITUTIONAL FUNDS
(Exact Name of Registrant as Specified in Charter)
(312) 732-4231
(Area Code and Telephone Number)
Three First National Plaza, Chicago, Illinois 60670
(Address of Principal Executive Offices: Number,
Street, City, State, Zip Code)
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement is declared
effective.
_____________________
Registrant has previously filed a declaration of indefinite
registration of its shares pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith. Registrant's Rule 24f-2 Notice
for the fiscal year ending September 30, 1995 is expected to be
filed on November 28, 1995.
It is proposed that this filing will become effective on
November 30, 1994 pursuant to Rule 488.
PRAIRIE INSTITUTIONAL FUNDS
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Joint Proxy
Statement/
Form N-14 Item No. Prospectus Caption
Part A
Item 1. Beginning of Registration
Statement and Outside Front
Cover Page of Prospectus
Prospectus Cover
Item 2. Beginning and Outside Back
Cover Page of Prospectus Cover Page
Item 3. Synopsis Information and Risk
Factors Not Applicable
Item 4. Information About the
Transaction Letter to Shareholders;
Proposal No. 1; Certain
Differences Between the
Existing Funds and the Series
Item 5. Information About the
Registrant Letter to Shareholders;
Certain
Differences Between the
Existing Funds and the Series
Item 6. Information About the Company
being Acquired Letter to Shareholders;
Certain
Differences Between the
Existing Funds and the Series
Item 7. Voting Information Letter to Shareholders; Voting
Information
Item 8. Interest of Certain Persons
and Experts Not Applicable
Item 9. Additional Information
Required for Reoffering by
Persons Deemed to be Under-
writers Not Applicable
Statement of
Additional
Part B Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Not Applicable
Item 12. Additional Information about
the Registrant Statement of Additional
Information of Prairie
Institutional Funds dated
______, 1994<F1>
<F1> Incorporated herein by reference to the Registration
Statement of the Registrant on Form
N-1A dated October , 1994 (File No. 33-_____).
Item 13. Additional Information about
the Company being Acquired Statements of Additional
Information of (i) First
Prairie Cash Management
dated
October 31, 1994<F2>and
(ii)
First Prairie U.S. Treasury
Securities Cash Management
dated August 18, 1994<F3>
<F1> Incorporated herein by reference to the Registration
Statement of the Registrant on Form N-1A dated October 28, 1994
(File No.33-_____).
<F2> Incorporated herein by reference to Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A dated
October _, 1994 (File No. 33-42637).
<F3> Incorporated herein by reference to Post-Effective
Amendment No. 5 to the Registration Statement on Form N-1A dated
August 18, 1994 (File No. 33-42636).
Item 14. Financial Statements Statement of Additional
Information of Prairie
Institutional Funds dated
______, 1994(f4)
Part C
Item 15. Indemnification
Item 16. Exhibits
Item 17. Undertakings
Preliminary Copy
FIRST PRAIRIE CASH MANAGEMENT
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
Three First National Plaza
Chicago, Illinois 60670
Dear Shareholder:
As a shareholder of First Prairie Cash Management or
First Prairie U.S. Treasury Securities Cash Management (each, an
"Existing Fund" and, collectively, the "Existing Funds"), you are
entitled to vote on the proposal described below and in the
enclosed materials.
Each Existing Fund is organized as a separate
Massachusetts business trust. Because each Existing Fund is part
of the Prairie Family of Funds and each is designed for
institutional investors, management of each Existing Fund has
determined that certain operational efficiencies might be
achievable if each Existing Fund--while continuing as a separate
entity for purposes of the Investment Company Act of 1940--were
to reorganize as a separate series of a single Massachusetts
business trust. The transaction will not result in the
imposition of Federal income tax on you.
The proposal provides that each Existing Fund exchange
all of its assets, subject to its liabilities, for Institutional
Shares ("Series Shares") of a separate new series of Prairie
Institutional Funds, a newly-formed investment company organized
as a Massachusetts business trust (the "Trust"). The Trust is
comprised of four series, including the Cash Management Series--
into which First Prairie Cash Management is proposed to be
reorganized--and the U.S. Government Securities Cash Management
Series--into which First Prairie U.S. Treasury Securities Cash
Management is proposed to be reorganized (each, a "Series" and,
collectively, the "Series"). Upon consummation of this
transaction (the "Exchange"), the Series Shares received by each
Existing Fund will be distributed by such fund to its
shareholders (the "Shareholders"), with each Shareholder
receiving the same number of Series Shares (or fractions thereof)
as Existing Fund Shares held immediately before the Exchange.
The Existing Fund then will be liquidated and dissolved.
Each Series will have the same investment objective as
the Existing Fund with which it is to be reorganized. As holders
of Series Shares of your Series, you will be subject to
investment advisory and other fees at the same contractual rates
as you were as a Shareholder of your Existing Fund. In addition,
your Series will have the same purchase and redemption options
with respect to Series Shares as those offered by the Existing
Funds and will offer you the same shareholder services. The
First National Bank of Chicago serves as investment advisor of
each Existing Fund and Series. Certain management policies will
differ, all as more fully set forth in the enclosed Joint Proxy
Statement/Prospectus.
Further information about the transaction is contained
in the enclosed materials, which you should review carefully.
You are entitled to vote on the proposed transaction with respect
to each Existing Fund in which you are a Shareholder.
Please take the time to consider the enclosed materials
and then vote by completing, dating and signing the enclosed
proxy card(s). A self-addressed, postage-paid envelope has been
enclosed for your convenience.
EACH EXISTING FUND'S BOARD MEMBERS RECOMMEND THAT ITS
SHAREHOLDERS VOTE IN FAVOR OF THE PROPOSED TRANSACTION. If you
have any questions after considering the enclosed materials,
please feel free to call between the hours of 9:00
a.m. and 5:30 p.m. (New York time), Monday through Friday.
Sincerely,
[NAME],
[TITLE]
_________ __, 1994
Preliminary Copy
FIRST PRAIRIE CASH MANAGEMENT
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
Notice of Special Meetings of Shareholders
To the Shareholders:
Special Meetings of Shareholders of each of First
Prairie Cash Management and First Prairie U.S. Treasury
Securities Cash Management (each, an "Existing Fund" and,
collectively, the "Existing Funds") will be held at the offices
of [NAME, ADDRESS], on Thursday, December 15, 1994 at __:__ _.m.
for the following purposes:
1. To consider an Agreement and Plan of Exchange
(each, a "Plan" and, collectively, the "Plans") for each
Existing Fund providing for the transfer of all or
substantially all of its assets, subject to its liabilities,
to a separate new series (each, a "Series") of Prairie
Institutional Funds, a newly created Massachusetts business
trust (the "Trust"). Under the Plans, each Existing Fund
would receive in consideration of such transfer
Institutional Shares of beneficial interest, par value $.001
per share ("Series Shares"), of the corresponding Series
(the "Exchange"). Series Shares received in the Exchange
will be distributed by each Existing Fund to its
shareholders in liquidation of the Existing Fund, after
which the Existing Fund will be dissolved; and
2. To transact such other business as may properly
come before the meetings, or any adjournment or adjournments
thereof.
Shareholders of record at the close of business on
November 14, 1994, will be entitled to receive notice of and to
vote at the meetings.
By Order of the Boards of Trustees
[NAME]
[TITLE]
[PLACE]
_________ __, 1994
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS VOTE IS NOT IMPORTANT, BUT
IT IS VITAL. BY LAW, THE MEETING OF SHAREHOLDERS OF AN
EXISTING FUND WILL HAVE TO BE ADJOURNED WITHOUT
CONDUCTING ANY BUSINESS IF LESS THAN A MAJORITY OF ITS
SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT,
SUCH FUND, AT ITS SHAREHOLDERS' EXPENSE, WOULD CONTINUE
TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM.
CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE YOUR
FUND TO HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN
YOUR PROXY CARD IMMEDIATELY. YOU AND ALL OTHER
SHAREHOLDERS WILL BENEFIT FROM YOUR COOPERATION.
Preliminary Copy
FIRST PRAIRIE CASH MANAGEMENT
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
JOINT PROXY STATEMENT/PROSPECTUS
Special Meetings of Shareholders
to be held on December 15, 1994
This Joint Proxy Statement/Prospectus is furnished in
connection with a solicitation of proxies by the Boards of each
of First Prairie Cash Management and First Prairie U.S. Treasury
Securities Cash Management (each, an "Existing Fund" and,
collectively, the "Existing Funds") to be used at the Special
Meetings of Shareholders (each, a "Meeting"), to be held on
Thursday, December 15, 1994 at __:__ _.m., at the offices of
[NAME, ADDRESS] for the purposes set forth in the accompanying
Notice of Special Meetings of Shareholders. Shareholders of
record at the close of business on November 14, 1994 (each, a
"Shareholder" and, collectively, the "Shareholders") are entitled
to receive notice of and to vote at their respective Meetings.
Shareholders are entitled to one vote for each share of
beneficial interest of an Existing Fund, par value $.001 per
share ("Existing Fund Share"), held and fractional votes for each
fractional Existing Fund Share held. Existing Fund Shares
represented by executed and unrevoked proxies will be voted in
accordance with the specifications made thereon. If the enclosed
form of proxy is executed and returned, it nevertheless may be
revoked by giving another proxy or by letter or telegram directed
to the relevant Existing Fund, which must indicate the
Shareholder's name and account number. To be effective, such
revocation must be received before the relevant Existing Fund's
Meeting. Also, any Shareholder who attends an Existing Fund's
Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given. As of November __, 1994,
the following numbers of Existing Fund Shares were issued and
outstanding:
Name of Existing Fund Shares
Outstanding
First Prairie Cash Management _____
First Prairie U.S. Treasury Securities Cash Management _____
[5% holders of each Existing Fund to be inserted]
Joint Proxy materials will be mailed to Shareholders of
record on or about November __, 1994. The Existing Funds'
principal executive offices are located at Three First National
Plaza, Chicago, Illinois 60670.
This Joint Proxy Statement/Prospectus is being used in
order to reduce the preparation, printing, handling and postage
expenses that would result from the use of a separate proxy
statement/prospectus for each Existing Fund and, because
Shareholders may own Existing Fund Shares of both Existing Funds,
to avoid burdening Shareholders with more than one proxy
statement/prospectus. Shareholders of each Existing Fund will
vote separately as a single class on Proposal No. 1. Separate
proxy cards are enclosed for each Existing Fund in which a
Shareholder is a record owner of Existing Fund Shares. Thus, if
Proposal No. 1 is approved by Shareholders of one Existing Fund,
but not by Shareholders of the other Existing Fund, the proposal
will be implemented for the Existing Fund that approved the
proposal and will not be implemented for the Existing Fund that
did not approve the proposal. Therefore, it is essential that
Shareholders complete, date, sign and return each enclosed proxy
card.
PROPOSAL 1. APPROVAL OF AN AGREEMENT AND PLAN OF EXCHANGE
PROVIDING FOR THE TRANSFER OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF AN
EXISTING FUND TO A SEPARATE NEW SERIES OF A
NEWLY CREATED MASSACHUSETTS BUSINESS TRUST
Introduction
It is proposed that each Existing Fund transfer all or
substantially all of its assets, subject to its liabilities, to a
separate new series of Prairie Institutional Funds, a newly
created Massachusetts business trust (the "Trust"). The Trust is
comprised of four series, including the Cash Management Series--
into which First Prairie Cash Management is proposed to be
reorganized--and the U.S. Government Securities Cash Management
Series--into which First Prairie U.S. Treasury Securities Cash
Management is proposed to be reorganized--(each, a "Series" and,
collectively, the "Series"), each having the same investment
adviser and investment objective and management policies, except
to the extent described below under "Certain Differences Between
the Existing Funds and the Series," as its corresponding Existing
Fund. Under the Plans, each Existing Fund would receive, in
consideration of such transfer, Institutional Shares of
beneficial interest of its corresponding Series, par value $.001
per share ("Series Shares"), as more fully described herein (the
"Exchange"). Upon consummation of the Exchange, the Series
Shares received by an Existing Fund will be distributed to its
Shareholders, with each Shareholder receiving a distribution of
an identical number of Series Shares (or fractions thereof) for
Existing Fund Shares held prior to the Exchange. The Existing
Fund then will be dissolved.
The First National Bank of Chicago ("FNBC") serves as
investment adviser to (i) First Prairie U.S. Treasury Securities
Cash Management pursuant to a Management Agreement dated as of
October 2, 1991 and (ii) First Prairie Cash Management pursuant
to a Management Agreement dated as of October 2, 1991 (each such
management agreement, an "Existing Fund Management Agreement").
FNBC also will serve as the Series' investment adviser. The
Trust, on behalf of each Series, has entered into a Management
Agreement (the "Series Management Agreement") with FNBC. The
Series Management Agreement is substantially identical to its
corresponding Existing Fund Management Agreement, except for its
effective date and its renewal date.
At a meeting of the Boards of the Existing Funds held
on October 28, 1994, FNBC recommended that the Board of each
Existing Fund consider, and the Boards approved, an Agreement and
Plan of Exchange (each, a "Plan" and, collectively, the "Plans"),
a form of which is attached hereto as Exhibit A, and the
Exchange.
The Plans
The following summary of the important terms and
conditions of the Plans is qualified in its entirety by reference
to the Plans. The Plans are identical except for the name of the
parties. Each Plan provides that, subject to the requisite
approval of its Shareholders, on the date of the Exchange each
Existing Fund shall assign, transfer and convey to its
corresponding Series all of the assets (subject to liabilities)
of the Existing Fund, including all securities and cash, in
exchange for Series Shares having an aggregate net asset value
equal to the value of the net assets of the Existing Fund
acquired. Each Existing Fund will distribute all Series Shares
received by it among its Shareholders so that each Shareholder
will receive Series Shares identical in number to the number of
Existing Fund Shares held by such Shareholder immediately before
the Exchange. Thereafter, the Existing Fund will dissolve. The
dissolution of each Existing Fund is expected to occur as soon as
practicable after the related Exchange. Immediately following
the Exchange, the former Shareholders of each Existing Fund will
hold the only outstanding corresponding Series Shares (other than
one Series Share which will be held by Concord Financial Group,
Inc., each Series' distributor, for regulatory purposes). After
the Exchange has been completed, each Series will operate as an
open-end, diversified management investment company.
Unless postponed by an Existing Fund and its
corresponding Series, the Exchange is expected to occur on
December __, 1994, on the basis of the net assets of each
Existing Fund as of 2:00 p.m., Central Standard time, on that
day. The Exchange will not be effected with regard to an
Existing Fund until certain conditions are satisfied, including
approval of the Plan by its Shareholders.
The Plans may be amended at any time prior to the
Exchange.
The total expenses of the Exchange are expected to be
approximately $ for First Prairie Cash Management and
$ for First Prairie U.S. Treasury Securities Cash
Management. Each Existing Fund will bear its own expenses,
except for the expenses of preparing, printing and mailing this
Joint Proxy Statement/Prospectus, the proxy cards and other
related materials, which will be borne by each Existing Fund
ratably according to their respective aggregate net assets on the
date of the Exchange.
If the Exchange is not approved by an Existing Fund's
Shareholders, the Existing Fund's Board will consider other
appropriate courses of action, including continuing to operate as
the Existing Fund currently is operating.
Reasons for the Exchange
The Exchanges will establish the Series as successor
investment vehicles to the Existing Funds. It is believed that
reorganization of each of the Existing Funds as a separate new
series of a newly created Massachusetts business trust will prove
beneficial in that the Series will be less expensive to operate
than the Existing Funds separately.
Tax Consequences
The exchange of Existing Fund assets for Series Shares
is intended to qualify for Federal income tax purposes as a tax-
free reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). As a condition to the
closing of the Exchange, the Series and Existing Funds will
receive the opinion of Stroock & Stroock & Lavan, counsel to each
of the Series and each of the Existing Funds, to the effect that,
on the basis of the existing provisions of the Code, Treasury
regulations issued thereunder, current administrative regulations
and pronouncements and court decisions, and certain facts,
assumptions and representations, for Federal income tax purposes:
(1) the transfer of all or substantially all of an Existing
Fund's assets in exchange for Series Shares and the assumption by
a Series of Existing Fund liabilities will constitute a
"reorganization" within the meaning of Section 368(a)(1)(F) of
the Code; (2) no gain or loss will be recognized by a Series upon
the receipt of its corresponding Existing Fund assets solely in
exchange for Series Shares and the assumption by the Series of
liabilities of the Existing Fund; (3) no gain or loss will be
recognized by an Existing Fund upon the transfer of its assets to
its corresponding Series in exchange for Series Shares and the
assumption by the Series of the Existing Fund's liabilities or
upon the distribution (whether actual or constructive) of Series
Shares to Shareholders in exchange for their Existing Fund
Shares; (4) no gain or loss will be recognized by the Existing
Fund Shareholders upon the exchange of Existing Fund Shares for
Series Shares; (5) the aggregate tax basis for Series Shares
received by each Existing Fund Shareholder pursuant to the
Exchange will be the same as the aggregate tax basis for Existing
Fund Shares held by such Shareholder immediately prior to the
Exchange, and the holding period of Series Shares to be received
by each Existing Fund Shareholder will include the period during
which Existing Fund Shares surrendered in exchange therefor were
held by such Shareholder (provided Existing Fund Shares were held
as capital assets on the date of the Exchange); and (6) the tax
basis of Existing Fund assets acquired by the Series will be the
same as the tax basis of such assets to the corresponding
Existing Fund immediately prior to the Exchange, and the holding
period of Existing Fund assets in the hands of the corresponding
Series will include the period during which those assets were
held by the Existing Fund.
None of the Existing Funds or Series has sought a tax
ruling from the Internal Revenue Service ("IRS"). The opinion of
counsel is not binding on the IRS nor does it preclude the IRS
from adopting a contrary position. Existing Fund Shareholders
should consult their tax advisers regarding the effect, if any,
of the proposed Exchange in light of their individual
circumstances. Since the foregoing discussion relates only to
the Federal income tax consequences of the Exchange, Existing
Fund Shareholders also should consult their tax advisers as to
state and local tax consequences, if any, of the Exchange.
Securities to be Issued
Each Series will issue Series Shares in exchange for
the transfer of its corresponding Existing Fund's assets. Series
Shares have no preemptive, subscription or conversion rights and
are freely transferable. Series Shares issued in the Exchange
will be fully paid, legally binding and non-assessable by the
issuing Series. Each Series has authorized an indefinite number
of shares of beneficial interest and has classified its shares as
Institutional Shares--which are referred to herein as Series
Shares--and Service Shares. Each Series intends to offer Service
Shares which bear certain costs related to a Service Plan adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"). See "--Service Plan" in the
Prospectus of Prairie Institutional Funds dated November __,
1994, which is furnished herewith.
Required Vote and Boards' Recommendation
The Board of each Existing Fund has approved the Plan
and the Exchange and has determined that (i) participation in the
Exchange is in the respective Existing Fund's best interests and
(ii) the interests of Shareholders of such Existing Fund will not
be diluted as a result of the Exchange. Pursuant to each
Existing Fund's charter documents, an affirmative vote of a
majority of its Shareholders is required to approve its Plan and
the Exchange.
THE BOARD OF EACH EXISTING FUND, INCLUDING THE "NON-
INTERESTED" BOARD MEMBERS, RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE EXISTING FUND'S PLAN AND THE EXCHANGE.
Certain Differences Between the Existing Funds and the Series
Investment Restrictions. Each Existing Fund has adopted
investment restrictions as fundamental policies that cannot be
changed without Shareholder approval. These investment
restrictions are set forth in each Existing Fund's Statement of
Additional Information under "Investment Objective and Management
Policies--Investment Restrictions."
The 1940 Act requires that a relatively limited number
of investment policies and restrictions be designated as
fundamental policies. These policies relate to (a) the
classification and subclassification under the 1940 Act within
which an Existing Fund may operate, (b) borrowing money, (c)
issuing senior securities, (d) engaging in the business of
underwriting securities issued by other persons, (e)
concentrating investments in a particular industry or group of
industries, (f) purchasing and selling real estate or commodities
and (g) making loans to other persons. When each Existing Fund
was formed, its Board designated a number of other policies as
fundamental, in large part in response to certain regulatory,
business or industry conditions that are no longer believed to be
in effect.
When determining each Series' investment restrictions,
the Trust's Board considered the foregoing and adopted for the
Series investment restrictions which offer somewhat broader
investment opportunities than those of the Existing Funds. If
the Exchange is consummated, the Shareholders of each Existing
Fund will become shareholders of a Series with these different
investment restrictions.
The investment restrictions of the Series and Existing
Funds are set forth below. Unless otherwise noted, language
pertaining only to the Series is underscored; language pertaining
only to the Existing Funds is bracketed. Neither the Series nor
the Existing Funds may:
[1. Purchase common stocks, preferred stocks, warrants
or other equity securities, or purchase corporate bonds or
debentures, state bonds, municipal bonds or industrial revenue
bonds.]
This Investment Restriction has been deleted for the
Series because it could be viewed as preventing the Series
from purchasing securities that, while technically equity
securities or longer term debt instruments, have the
investment characteristics of the other securities in which
the Series are permitted to invest.
[2]1. Borrow money, except from banks for temporary
or emergency (not leveraging) purposes in an amount up to 15% of
the value of the Fund's total assets (including the amount
borrowed) based on the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
[3]2. Pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure borrowings for temporary or
emergency purposes.
[4]3. Sell securities short or purchase securities
on margin.
[5]4. Write or purchase put or call options or
combinations thereof.
[6]5. [Underwrite the] ACT AS AN UNDERWRITER OF
securities of other issuers,<F4> 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.
<F4> WITH RESPECT TO FIRST PRAIRIE CASH MANAGEMENT: [or enter
into repurchase agreements providing for settlement in
more than seven days or purchase securities which are
illiquid (which securities could include floating and variable
rate demand obligations as to which no secondary market
exists and the Fund cannot exercise the demand feature
described in the Prospectus on less than seven days' notice), if,
in the aggregate, more than 10% of its net assets would be
so invested].
WITH RESPECT TO FIRST PRAIRIE U.S. TREASURY SECURITIES
CASH MANAGEMENT: [. The Fund may not enter into repurchase
agreements providing for settlement in more than seven
days after notice or purchase securities which are
illiquid, if, in the aggregate more than 10% of its net assets
would be so invested].
The Series have a similar investment restriction with
respect to illiquid securities. See Series' Investment
Restriction No. 10. This Investment Restriction
contains the same language with respect to illiquid securities as
First Prairie U.S. Treasury Securities Cash Management's
Investment Restriction No. 6. This Investment
Restriction differs from First Prairie Cash Management's
Investment Restriction No. 6 only in that examples of specific
types of illiquid securities have been deleted from this
Investment Restriction so as to conform such Investment
Restriction with similar Investment Restrictions
applicable to other funds in the Prairie Family of Funds.
EACH SERIES INTENDS TO CONTINUE TO TREAT AS ILLIQUID ALL TYPES
OF SECURITIES IT PREVIOUSLY TREATED AS ILLIQUID UNTIL SUCH
TIME AS A LIQUID SECONDARY MARKET EXISTS FOR THEM.
<PAGE>
This Investment Restriction has been changed for the
Series in response to the possibility that when disposing of
certain securities a Series might be considered an
underwriter under the Securities Act of 1933 and might
thereby be restricted from doing so at a time the Series'
investment adviser deemed appropriate.<F1>
[7]6. Purchase or sell real estate, real estate
investment trust securities, commodities or commodity contracts,
or oil and gas interests.
[8]7. Make loans to others, except through the
purchase of debt obligations<F5> referred to in the Fund's
Prospectus,<F6> except that the Fund may lend its portfolio
securities in an amount not to exceed 33-1/3% of the value of its
total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and
Exchange Commission and the [Fund's] Trust's Trustees.
<F5> WITH RESPECT TO FIRST PRAIRIE U.S. TREASURY SECURITIES
CASH MANAGEMENT: [and the entry into repurchase agreements].
<F6> WITH RESPECT TO FIRST PRAIRIE U.S. TREASURY SECURITIES
CASH MANAGEMENT: [and].
<F7> 8. Invest in companies for the purpose of
exercising control.
<F7> WITH RESPECT TO FIRST PRAIRIE CASH MANAGEMENT: [11].
WITH RESPECT TO FIRST PRAIRIE U.S. TREASURY SECURITIES
CASH MANAGEMENT: [10].
<F8> 9. Invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
<F8> WITH RESPECT TO FIRST PRAIRIE CASH MANAGEMENT: [12].
WITH RESPECT TO FIRST PRAIRIE U.S. TREASURY SECURITIES
CASH MANAGEMENT: [11].
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
10% OF THE VALUE OF THE FUND'S NET ASSETS WOULD BE SO INVESTED.
This Investment Restriction for the Series represents a
simplification of Investment Restriction No. 6 for each of
the Existing Funds. For the Series, this Investment
Restriction is a non-fundamental policy, which means that it
can be changed by a vote of a majority of the Trust's Board
of Trustees; fundamental policies cannot be changed without
approval by the holders of a majority (as defined in the
1940 Act) of the outstanding voting securities of the Series
or Existing Fund, as applicable. The Series' management
believes that the change will enable the Series to respond
rapidly to regulatory developments, such as revised SEC
policies, that may affect illiquid securities.
<F9> 11. Invest in oil, gas and other mineral
leases, or real estate limited partnerships.
<F9> This investment restriction is not numbered with respect
to the Existing Funds.
<PAGE>
The following investment restrictions numbered [9]12
and [10]13 apply only to First Prairie Cash Management and the
Cash Management Series. Neither First Prairie Cash Management
nor the Cash Management Series may:
[9]12. Invest more than 5% of its assets in the
obligations of any one issuer, except that up to 25% of the value
of the Cash Management Fund's total assets may be invested
(subject to Rule 2a-7 under the 1940 Act) without regard to any
such limitations.
[10]13. 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 Cash Management Fund may invest less than
25% of its total assets in bank obligations.
The following investment restriction number [9]14
applies only to First Prairie U.S. Treasury Securities Cash
Management and the U.S. Government Securities Cash Management
Series. Neither First Prairie U.S. Treasury Securities Cash
Management nor the U.S. Government Securities Cash Management
Series may:
[9]14. 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 investments in
obligations issued or guaranteed by the U.S. Government, ITS
AGENCIES OR INSTRUMENTALITIES.
This Investment Restriction for the U.S. Government
Securities Cash Management Series has been changed to
clarify that such Series may invest, without limitation, in
obligations issued or guaranteed by the U.S. Government and
its agencies or instrumentalities. See "--Comparison of
First Prairie U.S. Treasury Securities Cash Management with
U.S. Government Securities Cash Management Series" below.
COMPARISON OF FIRST PRAIRIE U.S. TREASURY SECURITIES CASH
MANAGEMENT WITH U.S. GOVERNMENT SECURITIES CASH MANAGEMENT
SERIES. First Prairie U.S. Treasury Securities Cash Management
invests only in U.S. Treasury securities and in other securities
guaranteed as to principal and interest by the U.S. Government,
and repurchase agreements in respect thereof. The U.S.
Government Securities Cash Management Series--into which First
Prairie U.S. Treasury Securities Cash Management is proposed to
be reorganized--is permitted to invest in short-term securities
issued or guaranteed by the U.S. Government and its agencies or
instrumentalities, and may enter into repurchase agreements.
Securities issued or guaranteed as to principal and
interest by agencies and instrumentalities of the U.S. Government
include those supported by (a) the right of the issuer to borrow
from the Treasury; for example, securities issued by the Federal
Home Loan Banks; (b) discretionary authority of the U.S.
Government to purchase certain obligations of an agency or
instrumentality; for example, securities issued by the Federal
National Mortgage Association; and (c) only the credit of an
agency or instrumentality; for example, securities issued by the
Student Loan Marketing Association. While the U.S. Government
provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it
will always do so, since it is not so obligated by law. The
Series will invest in such securities only when it is satisfied
that the credit risk with respect to the issuer is minimal.
ADDITIONAL INFORMATION ABOUT THE EXISTING FUNDS AND SERIES
Information about First Prairie Cash Management is
included in its current Prospectus and Statement of Additional
Information, each dated October 31, 1994. Information about
First Prairie U.S. Treasury Securities Cash Management is
included in its current Prospectus and Statement of Additional
Information, each dated August 18, 1994. Information about each
Series is included in the Trust's current Prospectus and
Statement of Additional Information for the Series, each dated
November __, 1994. Copies of each of the Existing Funds' and
Series' Prospectuses and Statements of Additional Information are
being furnished with this Joint Prospectus/Proxy Statement and
are incorporated by reference herein.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of First Prairie Cash
Management for its fiscal year ended June 30, 1994, and of First
Prairie U.S. Treasury Securities Cash Management for its fiscal
year ended May 31, 1994, which are included in the respective
Existing Fund's Statement of Additional Information, have each
been examined by Ernst & Young LLP, independent auditors, whose
respective reports thereon are included therein. The financial
statements of each Existing Fund examined by Ernst & Young LLP
have been incorporated herein by reference in reliance upon their
reports given on their authority as experts in accounting and
auditing.
OTHER MATTERS
Each Existing Fund's Trustees are not aware of any
other matters which may come before each Meeting. However,
should any such matters properly come before a Meeting, it is the
intention of the persons named in the accompanying form of proxy
to vote the proxy in accordance with their judgment on such
matters.
VOTING INFORMATION
In addition to the use of the mails, proxies may be
solicited personally, by telephone or by telegraph, and each
Existing Fund may pay persons holding its Existing Fund Shares in
their names or those of their nominees for their expenses in
sending soliciting materials to their principals.
If a proxy is properly executed and returned
accompanied by instructions to withhold authority to vote,
represents a broker "non-vote" (that is, a proxy from a broker or
nominee indicating that such person has not received instructions
from the beneficial owner or other person entitled to vote
Existing Fund Shares on a particular matter with respect to which
the broker or nominee does not have discretionary power) or is
marked with an abstention (collectively, "abstentions"), the
Existing Fund Shares represented thereby will be considered to be
present at a Meeting for purposes of determining the existence of
a quorum for the transaction of business. Abstentions, however,
will have the effect of a "no" vote for the purpose of obtaining
requisite approval for Proposal No. 1.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise the Existing Funds, in care of The First
National Bank of Chicago, Three First National Plaza, Chicago,
Illinois 60670, Attention: _______________, whether other
persons are the beneficial owners of Existing Fund Shares for
which proxies are being solicited from you, and, if so, the
number of copies of the Joint Proxy Statement/Prospectus and
other soliciting material you wish to receive in order to supply
copies to the beneficial owners of Existing Fund Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE
URGED TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE
ENCLOSED STAMPED ENVELOPE.
Dated: November __, 1994
Exhibit A
FORM OF
AGREEMENT AND PLAN OF EXCHANGE
AGREEMENT AND PLAN OF EXCHANGE dated ________________,
1994 (the "Agreement"), between <F10> , a
Massachusetts business trust (the "Existing Fund"), and
<F11> (the "Series"), a series of PRAIRIE
INSTITUTIONAL FUNDS, a Massachusetts business trust (the
"Trust").
<F10> Insert FIRST PRAIRIE CASH MANAGEMENT or FIRST PRAIRIE
U.S. TREASURY SECURITIES CASH MANAGEMENT, as
appropriate.
<F11> Insert CASH MANAGEMENT SERIES or U.S. GOVERNMENT
SECURITIES CASH MANAGEMENT SERIES, as appropriate.
WHEREAS, the Boards of Trustees of the Existing Fund
and the Trust have determined that it is in the best interests of
the Existing Fund and Series, respectively, that the assets of
the Existing Fund be acquired by the Series pursuant to this
Agreement and in accordance with the applicable statutes of The
Commonwealth of Massachusetts; and
WHEREAS, the parties desire to enter into a plan of
exchange pursuant to Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW THEREFORE, in consideration of the premises and of
the covenants and agreements hereinafter set forth, the parties
agree as follows:
1. PLAN OF EXCHANGE.
(a) Subject to the requisite approval of the
shareholders of the Existing Fund (the "Shareholders"), and to
the terms and conditions contained herein, on the Exchange Date
(as defined herein) the Existing Fund shall assign, transfer and
convey to the Series, and the Series shall acquire, all of the
assets of the Existing Fund, including all securities and cash
(subject to liabilities), for full Institutional Shares of
beneficial interest of the Series, par value $.001 per share (the
"Series Shares") and, to the extent necessary, a fractional
Series Share, to be issued by the Series, having an aggregate net
asset value equal to the value of the net assets of the Existing
Fund acquired. The value of the Existing Fund's assets to be
acquired by the Series and the net asset value per share of the
Series Shares shall be determined, as of the Exchange Date, in
accordance with the procedures for determining the value of the
Series' assets set forth in the Series' Agreement and Declaration
of Trust and in the then-current prospectus and statement of
additional information that forms part of the Existing Fund's
Registration Statement on Form N-1A. In lieu of delivering
certificates for the Series Shares, the Series shall credit the
Series Shares to the Existing Fund's account on the share record
books of the Series and shall deliver a confirmation thereof to
the Existing Fund. The Existing Fund shall then deliver written
instructions to the Series' transfer agent to establish accounts
for the Shareholders on the share record books of the Series.
(b) Delivery of the assets of the Existing Fund to be
transferred shall be made not later than the next business day
following the Exchange Date. Assets transferred shall be
delivered to The Bank of New York, 110 Washington Street, New
York, New York, the Series' custodian (the "Custodian"), for the
account of the Series, with all securities not in book entry or
bearer form duly endorsed, or accompanied by duly executed
separate assignments or stock powers, in proper form for
transfer, with signatures guaranteed, and with all necessary
stock transfer stamps, sufficient to transfer good and marketable
title thereto (including all accrued interest and dividends and
rights pertaining thereto) to the Custodian for the account of
the Series free and clear of all liens, encumbrances, rights,
restrictions and claims. All cash delivered shall be in the form
of immediately available funds payable to the order of the
Custodian for the account of the Series.
(c) The Existing Fund will pay or cause to be paid to
the Series any interest received on or after the Exchange Date
with respect to assets transferred to the Series hereunder. The
Existing Fund will transfer to the Series any distributions,
rights or other assets received by the Existing Fund after the
Exchange Date as distributions on or with respect to the
securities transferred. Such assets shall be deemed included in
assets transferred to the Series on the Exchange Date and shall
not be separately valued.
(d) The Exchange Date shall be ____________, 1994, or
such earlier or later date as may be mutually agreed upon by the
parties.
(e) As soon as practicable after the Exchange Date the
Existing Fund shall distribute all Series Shares received by it
among the Shareholders in proportion to the number of shares each
Shareholder holds in the Existing Fund (the "Existing Fund
Shares"), and thereafter will dissolve.
2. THE EXISTING FUND'S REPRESENTATIONS AND WARRANTIES.
2.1. The Existing Fund represents and warrants to and
agrees with the Series as follows:
(a) The Existing Fund is a business trust duly
organized and validly existing under the laws of The Commonwealth
of Massachusetts and has power to own all of its properties and
assets and, subject to the approval of the Shareholders, to carry
out this Agreement.
(b) The Existing Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as
an open-end, diversified, management investment company, and such
registration has not been revoked or rescinded and is in full
force and effect.
(c) Except as shown on the financial statements
of the Existing Fund for the period ended <F9> and
as incurred in the ordinary course of the Existing Fund's
business since <F12> , the Existing Fund has no
known liabilities of a material amount, contingent or otherwise,
and there are no material legal, administrative or other
proceedings pending or threatened against the Existing Fund.
<F12> With respect to First Prairie U.S. Treasury
Securities Cash Management, insert May 31, 1994 and, with respect
to First Prairie Cash Management Series, insert June 30, 1994.
(d) For each fiscal year of its operation, the
Existing Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment
company.
(e) On the Exchange Date, the Existing Fund will
have full right, power and authority to sell, assign, transfer
and deliver the assets to be transferred by it hereunder.
3. THE SERIES' REPRESENTATIONS AND WARRANTIES.
The Series represents and warrants to and agrees with
the Existing Fund as follows:
(a) The Series (i) is a series of the Trust, a
business trust duly organized, validly existing and in good
standing under the laws of The Commonwealth of Massachusetts, and
(ii) has power to carry on its business as it is now being
conducted and to carry out this Agreement.
(b) The Series is registered under the 1940 Act
as an open-end, diversified, management investment company, and
such registration has not been revoked or rescinded and is in
full force and effect.
(c) The Series has no known liabilities of a
material amount, contingent or otherwise, and there are no
material legal, administrative or other proceedings pending or
threatened against the Series.
(d) For its fiscal year in which the exchange
contemplated hereby occurs and for each taxable year thereafter,
the Series intends to meet the requirements of Subchapter M of
the Code for qualification and treatment as a regulated
investment company.
(e) At the Exchange Date, the Series Shares to be
issued to the Existing Fund (the only Series Shares to be issued
as of the Exchange Date, except for the initial capital of the
Series) will have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly
issued and will be fully paid and non-assessable by the Series.
No Series shareholder will have any preemptive right of
subscription or purchase in respect thereof.
4. THE SERIES' CONDITIONS PRECEDENT.
The obligations of the Series hereunder shall be
subject to the following conditions:
(a) The Existing Fund shall have furnished to the
Series a statement of the Existing Fund's assets, including a
list of securities owned by the Existing Fund with their
respective tax costs and values determined as provided in Section
1 hereof, all as of the Exchange Date.
(b) As of the Exchange Date, all representations
and warranties of the Existing Fund made in this Agreement shall
be true and correct as if made at and as of such date, and the
Existing Fund shall have complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
(c) A vote approving this Agreement and the
transactions and exchange contemplated hereby shall have been
adopted by the holders of at least a majority of the outstanding
Existing Fund Shares entitled to vote.
5. THE EXISTING FUND'S CONDITIONS PRECEDENT.
The obligations of the Existing Fund hereunder shall be
subject to the condition that as of the Exchange Date all
representations and warranties of the Series made in this
Agreement shall be true and correct as if made at and as of such
date, and that the Series shall have complied with all of the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such date.
6. THE SERIES' AND THE EXISTING FUND'S CONDITIONS
PRECEDENT:
The obligations of both the Series and the Existing
Fund hereunder shall be subject to the following conditions:
(a) This Agreement and the transactions
contemplated hereby shall have been approved by the affirmative
vote of at least a majority of the Existing Fund Shares as of the
close of business on _____________, 1994, or such earlier or
later date as may be mutually agreed upon by the parties.
(b) There shall not be any material litigation
pending with respect to the matters contemplated by this
Agreement.
7. EXPENSES
The Existing Fund understands that concurrently with
the transactions contemplated hereby<F10> , intends to
enter into a similar transaction (the "Concurrent Exchange") with
a separate series of the Trust. The parties hereto agree that
the expenses incurred in connection with the preparation,
printing and mailing of the Joint Proxy Statement/Prospectus,
proxy cards [and other related materials] for the Concurrent
Exchange and the Exchange shall be allocated on a pro rata basis
between the Existing Fund and <F13> (each, a
"Fund"),
according to the aggregate net assets of each such Fund on the
Exchange Date.
<F13> Insert FIRST PRAIRIE CASH MANAGEMENT or FIRST PRAIRIE
U.S. TREASURY SECURITIES CASH MANAGEMENT, as appropriate.
8. TERMINATION OF AGREEMENT.
This Agreement and the transactions contemplated hereby
may be terminated and abandoned by resolution of the Board of
Trustees of either the Existing Fund or the Trust, at any time
prior to the Exchange Date (and notwithstanding any vote of the
Shareholders) if circumstances should develop that, in the
opinion of either of the Boards of Trustees, make proceeding with
this Agreement inadvisable.
If this Agreement is terminated and the exchange
contemplated hereby is abandoned pursuant to the provisions of
this Section 8, this Agreement shall become void and have no
effect, without any liability on the part of any party hereto or
the Trustees, officers or shareholders of the Series or Trust, or
of the Existing Fund, in respect of this Agreement.
9. WAIVER.
At any time prior to the Exchange Date, any of the
foregoing conditions may be waived by the Board of Trustees of
either the Existing Fund or the Trust, if, in the judgment of the
waiving party, such waiver will not have a material adverse
effect on the benefits intended under this Agreement to the
Shareholders.
10. NO SURVIVAL OF REPRESENTATIONS.
None of the representations and warranties included or
provided for herein shall survive consummation of the
transactions contemplated hereby.
11. GOVERNING LAW.
This Agreement shall be governed and construed in
accordance with the internal laws of the State of New York,
without giving effect to principles of conflict of laws;
provided, however, that the due authorization, execution and
delivery of this Agreement shall be governed and construed in
accordance with the internal laws of The Commonwealth of
Massachusetts, without giving effect to principles of conflict of
laws.
12. COUNTERPARTS.
This Agreement may be executed in counterparts, each of
which, when executed and delivered, shall be deemed to be an
original.
13. LIMITATION OF LIABILITY.
(a) The names " <F14> " and "Trustees of
the
Trust" refer, respectively, to the Series and the Trustees of the
Trust, as trustees but not individually or personally, acting
from time to time under the Trust's Agreement and Declaration of
Trust, a copy of which is on file at the office of the Secretary
of State of The Commonwealth of Massachusetts and at the
principal office of the Trust. The obligations of the Series
entered into in the name or on behalf thereof by any of the
Trustees of the Trust, or its representatives or agents are made
not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, representatives or agents
of the Series or Trust personally, but bind only the Series'
property, and all persons dealing with any class or series of
shares of the Series must look solely to the Series' property
belonging to such class or series for the enforcement of any
claims against the Series.
<F14> Insert CASH MANAGEMENT SERIES or U.S. GOVERNMENT
SECURITIES CASH MANAGEMENT SERIES, as appropriate.
(b) The names " <F15> " and "Trustees of
the
Existing Fund" refer, respectively, to the Existing Fund and the
Trustees of the Existing Fund, as trustees but not individually
or personally, acting from time to time under the Existing Fund's
Agreement and Declaration of Trust, a copy of which is on file at
the office of the Secretary of State of The Commonwealth of
Massachusetts and at the principal office of the Existing Fund.
The obligations of the Existing Fund entered into in the name or
on behalf thereof by any of its Trustees, representatives or
agents are made not individually, but in such capacities, and are
not binding upon any of the Trustees, shareholders,
representatives or agents of the Existing Fund personally, but
bind only the Existing Fund's property, and all persons dealing
with any class or series of shares of the Existing Fund must look
solely to the Existing Fund's property belonging to such class or
series for the enforcement of any claims against the Existing
Fund.
<F15> Insert FIRST PRAIRIE CASH MANAGEMENT or FIRST PRAIRIE
U.S. TREASURY SECURITIES CASH MANAGEMENT, as appropriate.
IN WITNESS WHEREOF, each of the Existing Fund and the
Series has caused this Agreement and Plan of Exchange to be
executed and attested on its behalf by its duly authorized
representatives as of the date first above written.
PRAIRIE INSTITUTIONAL FUNDS,
on behalf of<F16>
<F16> Insert CASH MANAGEMENT SERIES or U.S. GOVERNMENT
SECURITIES CASH MANAGEMENT SERIES, as appropriate.
ATTEST: By:
[Name, Title] [Name, Title]
<F17>
<F17> Insert FIRST PRAIRIE CASH MANAGEMENT or FIRST PRAIRIE
U.S. TREASURY SECURITIES CASH MANAGEMENT, as appropriate.
ATTEST: By:
[Name, Title] [Name, Title]
Preliminary Copy
FIRST PRAIRIE CASH MANAGEMENT
The undersigned shareholder of First Prairie Cash Management
(the "Fund") hereby appoints __________________ and
______________________, and each of them, the attorneys and
proxies
of the undersigned, with full power of substitution, to vote, as
indicated herein, all of the shares of beneficial interest of the
Fund standing in the name of the undersigned at the close of
business on November 14, 1994, at a Special Meeting of
Shareholders to be held
at the offices of [NAME], [ADDRESS], at __:__ .m. on Thursday,
December 15, 1994, and at any and all adjournments thereof, with
all of the powers the undersigned would possess if then and there
personally present and especially (but without limiting the
general authorization and power hereby given) to vote as
indicated on the proposal, as more fully described in the Joint
Proxy Statement/Prospectus for the meeting.
Please mark boxes in blue or black ink.
1. To approve an Agreement and Plan of Exchange between the
Fund and the Cash Management Series of Prairie Institutional
Funds, providing for the transfer of substantially all of the
assets of the Fund, subject to its liabilities, and for its
subsequent dissolution.
___ FOR ___ AGAINST ___ ABSTAIN
2. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting,
or any adjournment(s) thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE
VOTED FOR THE ABOVE PROPOSAL UNLESS OTHERWISE INDICATED.
Signature(s) should be exactly as name or names
appearing on this proxy. If shares are held
jointly, each holder should sign. If signing
is by attorney, executor, administrator, trustee or guardian,
please give full title.
Dated: , 1994
Signature(s)
Signature(s)
Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope
Preliminary Copy
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
The undersigned shareholder of First Prairie U.S. Treasury
Securities Cash Management (the "Fund") hereby appoints
__________________ and ______________________, and each of them,
the
attorneys and proxies of the undersigned, with full power of
substitution, to vote, as indicated herein, all of the shares of
beneficial interest of the Fund standing in the name of the
undersigned at the close of business on November 14, 1994, at a
Special Meeting of Shareholders to be held at the offices of
[NAME], [ADDRESS], at __:__ .m. on Thursday, December 15, 1994,
and at any and all adjournments thereof, with all of the powers
the undersigned
would possess if then and there personally present and especially
(but without limiting the general authorization and power hereby
given) to vote as indicated on the proposal, as more fully
described in the Joint Proxy Statement/Prospectus for the
meeting.
Please mark boxes in blue or black ink.
1. To approve an Agreement and Plan of Exchange between the
Fund and the U.S. Government Securities Cash Management Series of
Prairie Institutional Funds, providing for the transfer of
substantially all of the assets of the Fund, subject to its
liabilities, and for its subsequent dissolution.
___ FOR ___ AGAINST ___ ABSTAIN
2. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting,
or any adjournment(s) thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE
VOTED FOR THE ABOVE PROPOSAL UNLESS OTHERWISE INDICATED.
Signature(s) should be exactly as name or names
appearing on this proxy. If shares are held
jointly, each holder should sign. If signing is
by attorney, executor, administrator, trustee
or guardian, please give full title.
Dated: , 1994
Signature(s)
Signature(s)
Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
PROSPECTUS
The First National Bank of Chicago
Manager
Concord Financial Group, Inc.
Distributor
Prospectus begins on page one.
PRAIRIE INSTITUTIONAL FUNDS
PROSPECTUS - __________, 1994
Prairie Institutional Funds (the "Trust") is an
open-end, management investment company, known as a series fund.
By this Prospectus, the Trust is offering Institutional and
Service shares of four separate diversified, money market series
(each, a "Fund"): Cash Management Fund, Municipal Cash
Management Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund. Each Fund's goal is
to provide investors with as high a level of current income as
is consistent with the preservation of capital and the
maintenance of liquidity, and, in the case of the Municipal Cash
Management Fund, exempt from Federal income tax.
Each Fund is designed for institutional investors,
including banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, public agencies
and municipalities. Fund shares may not be purchased directly
by individuals, although institutions may purchase shares for
accounts maintained by individuals. Such institutions have
agreed to transmit copies of this Prospectus to each individual
or entity for whose account the institution purchases Fund
shares, to the extent required by law.
Each Fund's shares are sold without a sales
charge.
Investors can invest or reinvest in or redeem shares at any time
without charge or penalty imposed by the Fund.
Institutional shares and Service shares are
identical, except as to the services offered to and expenses
borne by each Class. Service bears certain costs pursuant to a
Service Plan adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940.
The First National Bank of Chicago (the
"Manager")serves as each Fund's investment adviser.
Concord Financial Group, Inc. (the "Distributor")
serves as each Fund's distributor.
An investment in a Fund is neither insured nor
guaranteed by the U.S. Government. There can be no assurance
that each Fund will be able to maintain a stable net asset value
of $1.00 per share.
Mutual fund shares are not deposits or
obligations of, or guaranteed or endorsed by, any bank, and are
not federally insured by the Federal Deposit Insurance
Corporation ("FDIC"),
the Federal Reserve Board, or any other agency. Money market
mutual shares involve certain investment risks, including the
possible loss of principal.
This
Prospectus sets forth concisely information about
the Trust and Funds that an investor should know before
investing. It should be read and retained for future reference.
Part B (also known as the Statement of Additional
Information), dated ___________, 1994, which may be revised from
time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to
some investors. It has been filed with the Securities and
Exchange Commission and is incorporated herein by reference.
For a free copy, write to the Trust at
_________________________, or call ______________.
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
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . .
Description of the Funds . . . . . . . . . . . . . . . . . . . .
Management of the Trust. . . . . . . . . . . . . . . . . . . . .
How to Buy Fund Shares . . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . .
How to Redeem Fund Shares. . . . . . . . . . . . . . . . . . . .
Service Plan . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends, Distributions and Taxes . . . . . . . . . . . . . . .
Yield Information. . . . . . . . . . . . . . . . . . . . . . . .
General Information. . . . . . . . . . . . . . . . . . . . . . .
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
Cash Management Municipal Cash
Series Management Series
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees........................ .35% .35% .35% .35%
12b-1 Fees (distribution and
servicing)........................... None .25% None .25%
Total Fund Operating Expenses.......... .35% .60% .35% .60%
Example:
An investors 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:
Institutional Service Institutional Service
Shares Shares Shares Shares
1 Year............................... $ 4 $ 6 $ 4 $ 6
3 Years.............................. $10 $19 $10 $19
U.S. Government
Treasury Prime Cash Securities Cash
Management Series Management Series
Institutional Service Institutional Service
Shares Shares Shares Shares
Management Fees......................... .35% .35% .35% .35%
12-b Fees (distribution and
servicing)............................ None .25% None .25%
Total Fund Operating Expenses........... .35% .60% .35% .60%
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:
Institutional
Service Institutional Service
Shares Shares Shares Shares
1 Year............................... $ 4 $ 6 $ 4 $ 6
3 Years.............................. $10 $19 $10 $19
</TABLE>
The amounts listed in the examples should not be considered as
representative of future expenses and actual expenses may
be greater or less than those indicated. Moreover, while the
example assumes a 5% annual return, each Fund's actual
performance will vary and may result in an actual return greater
or less than 5%.
The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses borne by a Fund,
and therefore indirectly by investors, the payment of which will
reduce investors' return on an annual basis. The Manager
has undertaken, as to each Fund, until such time as it gives
investors at least 90 days' notice to the contrary, that if, in
any
fiscal year, certain expenses, including the management fee,
exceed .35% and .60% of the value of the average net assets of
Institutional and Service, respectively, for the fiscal year, the
Trust may deduct from the payment to be made to the Manager
under the Management Agreement, or the Manager will bear, such
excess expense. Institutions effecting transactions in Fund
shares may charge their clients direct fees in connection with
such transactions; such fees are not reflected in the foregoing
table. See "Management of the Trust," "How to Buy Fund Shares"
and "Service Plan."
DESCRIPTION OF THE FUNDS
General
The Trust is a "series fund," which is a mutual
fund divided into separate portfolios. Each portfolio is
treated as a separate entity for certain matters under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
for other purposes, and a shareholder of one portfolio is not
deemed to be a shareholder of any other portfolio. As
described below, for certain matters Trust shareholders vote
together as a group; as to others they vote separately by Fund.
By this Prospectus, two classes of shares of
each Fund are being offered--Institutional shares and Service
shares (each such class being referred to as a "Class"). The
Classes are identical, except that Service shares are subject to
an
annual distribution and service fee at the rate of .25% of the
value of the average daily net assets of Service. The fee is
payable to the Trust's distributor for advertising, marketing and
distributing Service shares and for ongoing personal services
relating to Service shareholder accounts and services related to
the maintenance of such shareholder accounts pursuant to a
Service Plan adopted in accordance with Rule 12b-1 under the 1940
Act. The Trust's distributor may make payments to
certain financial institutions, securities dealers and other
industry professionals (collectively, "Service Agents") in
respect of
these services. See "Service Plan." The distribution and
service fee paid by Service will cause such Class to have a
higher
expense ratio and to pay lower dividends than Institutional.
When used in this Prospectus and the Statement
of Additional Information, the terms "investor" and
"shareholder" refer to the institution purchasing Fund shares and
do not refer to any individual or entity for whose account
the institution may purchase Fund shares. Such institutions have
agreed to transmit copies of this Prospectus and all
relevant Fund materials, including proxy materials, to each
individual or entity for whose account the institution purchases
Fund shares, to the extent required by law.
Investment Objective
Each Fund's goal is to provide investors with
as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity, and, in
the case of the Municipal Cash Management Fund, exempt
from Federal income tax. Each Fund's investment objective cannot
be changed without approval by the holders of a majority
(as defined in the 1940 Act) of such Fund's outstanding voting
shares. There can be no assurance that the Fund's investment
objective will be achieved. Securities in which the Funds invest
may not earn as high a level of current income as long-term
or lower quality securities which generally have less liquidity,
greater market risk and more fluctuation in market value.
Management Policies
Each Fund seeks to maintain a net asset value
of $1.00 per share for purchases and redemptions. To do so,
the Trust uses the amortized cost method of valuing each Fund's
securities pursuant to Rule 2a-7 under the 1940 Act, certain
requirements of which are summarized below.
In accordance with Rule 2a-7, each Fund is
required to maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase only instruments having
remaining maturities of 13 months or less and invest only in
U.S. dollar denominated securities determined in accordance with
procedures established by the Board of Trustees to present
minimal credit risks and, in the case of the Cash Management Fund
and Municipal Cash Management Fund, which are rated
in one of the two highest rating categories for debt obligations
by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was
rated by only one such organization) or, if unrated, are of
comparable quality as determined in accordance with procedures
established by the Board of Trustees. The Cash
Management Fund and Municipal Cash Management Fund will purchase
only instruments so rated in the highest rating
category or, if unrated, of comparable quality as determined in
accordance with procedures established by the Board of
Trustees. The nationally recognized statistical rating
organizations currently rating instruments of the type the Cash
Management Fund and Municipal Cash Management Fund may purchase
are Moody's Investors Service, Inc., ("Moody's"),
Standard & Poor's Corporation ("S&P"), Duff and Phelps, Inc.,
Fitch Investors Service, Inc. ("Fitch"), IBCA Limited and
IBCA Inc., and Thomson BankWatch, Inc. and their rating criteria
are described in the Appendix to the Statement of
Additional Information. For further information regarding the
amortized cost method of valuing securities, see
"Determination of Net Asset Value" in the Statement of Additional
Information. There can be no assurance that each Fund
will be able to maintain a stable net asset value of $1.00 per
share.
Cash Management Fund invests in short-term money
market obligations, including securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities, certificates of deposit, time deposits,
bankers' acceptances and other short-term obligations issued by
domestic banks, foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of
foreign banks and thrift institutions, repurchase agreements,
and high quality domestic and foreign commercial paper and other
short-term corporate obligations, including those with
floating or variable rates of interest. See "Appendix--Portfolio
Securities." In addition, the Fund is permitted to lend
portfolio securities to the extent described under
"Appendix--Investment Practices." During normal market
conditions, at least 25% of the Fund's total assets will be
invested in bank obligations.
The Fund will not invest more than 5% of its
total assets in the securities (including the securities
collateralizing a repurchase agreement) of, or subject to puts
issued by, a single issuer, except that (i) the Fund may invest
more than 5% of its total assets in a single issuer for a period
of up to three business days in certain limited circumstances,
(ii) the Fund may invest in obligations issued or guaranteed by
the U.S. Government without any such limitation, and (iii) the
limitation with respect to puts does not apply to unconditional
puts if no more than 10% of the Fund's total assets is invested
in securities issued or guaranteed by the issuer of the
unconditional put. As to each security, these percentages are
measured at the time the Fund purchases the security.
Municipal Cash Management Fund invests at least
80% of the value of its net assets (except when
maintaining a temporary defensive position) in Municipal
Obligations. Municipal Obligations 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. See "Appendix--Portfolio
Securities."
From time to time, the 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. The Fund may invest without
limitation in such Municipal Obligations if the Manager
determines that their purchase is consistent with the Fund's
investment objective. See "Risk Factors--Fixed-Income
Securities" 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, the Fund may invest in taxable money market
instruments of the type in which the Cash Management Fund may
invest. 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." If the
Fund
purchases taxable money market instruments the Trust will value
them using the amortized cost method and comply with the
provisions of Rule 2a-7 relating to purchases of taxable
instruments. Under normal market conditions, the Trust
anticipates that not more than 5% of the value of the Fund's
total assets will be invested in any one category of these
securities. See "Appendix--Portfolio Securities."
Treasury Prime Cash Management Fund invests
only in securities issued or guaranteed as to principal or
interest by the U.S. Government. These securities include U.S.
Treasury securities, which differ in their interest rates,
maturities and times of issuance. See "Appendix--Portfolio
Securities." The Fund does not invest in repurchase agreements,
securities issued by agencies or instrumentalities of the Federal
government that are not guaranteed by the U.S. Government
or any other type of money market instrument or security.
U.S. Government Securities Cash Management
Fund invests only in short-term securities issued or
guaranteed as to principal or interest by the U.S. Government,
its agencies or instrumentalities and may enter into repurchase
agreements. See "Appendix--Portfolio Securities." The Fund also
may lend securities from its portfolio as described under
"Appendix--Investment Practices."
Certain Fundamental Policies
Each Fund may (i) 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
Cash Management Fund, Municipal Obligations; and (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only
to secure permitted borrowings (this policy, however, is not
fundamental in the case of the Municipal Cash Management Fund and
Treasury Prime Cash Management Fund). In
addition, (i) each of the Municipal Cash Management Fund and
Treasury Prime Cash Management Fund may borrow money
to the extent permitted under the 1940 Act; (ii) each of the Cash
Management Fund and U.S. Government Securities Cash
Management Fund may borrow money from banks, but only for
temporary or emergency (not leveraging) purposes, in an
amount up to 15% of the value of the Fund's total assets
(including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at
the time the borrowing is made. While borrowings exceed 5%
of the value of the Fund's total assets, the Fund will not make
any additional investments; (iii) each of the Cash Management
Fund and Municipal Cash Management Fund 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 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 (iv) the Cash Management 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, except as noted, 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 Objective and Management
Policies--Investment Restrictions" in the Statement of Additional
Information.
Certain Additional Non-Fundamental Policy
Each Fund may invest up to 10% of the value of
its net assets in illiquid securities. See "Investment
Objective and Management Policies--Investment Restrictions" in
the Statement of Additional Information.
Risk Factors
Foreign Securities--(Cash Management Fund) Since the Cash
Management Fund's portfolio may contain securities issued by
foreign branches of domestic and foreign banks, domestic and
foreign branches of foreign banks and thrift institutions, and
commercial paper issued by foreign issuers, the Fund may be
subject to additional investment risks with respect to such
securities that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S.
domestic issuers, although such obligations may be higher
yielding when compared to the securities of U.S. domestic
issuers.
Such risks include possible future political and economic
developments, the possible imposition of foreign withholding
taxes
on interest income payable on the securities, the possible
establishment of exchange controls or the adoption of other
foreign
governmental restrictions which might adversely affect the
payment of principal and interest on these securities and the
possible seizure or nationalization of foreign deposits.
Fixed-Income Securities--(Municipal Cash Management Fund)
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 Fund and thus
reduce the available yield. Shareholders of the Municipal
Cash Management Fund 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 the Fund so as to adversely affect the Fund's
shareholders, the Trust would reevaluate the 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 Trust would treat such security as a
permissible taxable investment within the applicable limits set
forth herein.
The Municipal Cash Management 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, the 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 Cash Management Fund 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 Manager 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.
Other Investment Considerations--Each Fund will attempt to
increase yields by trading to take advantage of short-term
market variations. This policy is expected to result in high
portfolio turnover but should not adversely affect the Funds
since
each Fund usually will not pay brokerage commissions on purchases
of short-term debt obligations, including U.S.
Government securities. The value of the securities held by each
Fund will vary inversely to changes in prevailing interest
rates. Thus, if interest rates have increased from the time a
security was purchased, such security, if sold, might be sold at
a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security,
if sold, might be sold at a price greater than its purchase cost.
In either instance, if the security is held to maturity, no gain
or loss will be realized.
Each Fund may purchase securities on a when-issued
basis, 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. The 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, although any gain
realized on such sale would be taxable. The Fund will not accrue
income in respect of a when-issued security prior to its
stated delivery date. No additional when-issued commitments will
be made by the Municipal Cash Management Fund if
more than 20% of the value of such Fund's net assets would be so
committed.
Securities purchased on a when-issued basis and
certain other securities held in the 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 basis may expose the Fund to risk
because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued 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
the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the
when-issued
commitments will be established and maintained at the Trust's
custodian bank. Purchasing securities on a when-issued basis
when the Fund is fully or almost fully invested may result in
greater potential fluctuation in the value of the Fund's net
assets and its net asset value per share.
Investment decisions for each Fund are made
independently from those of other investment companies or
investment advisory accounts that may be advised by the Manager.
However, if such other investment companies or managed
accounts are prepared to invest in, or desire to dispose of,
securities of the type in which a Fund may invest at the same
time
as such Fund, available investments or opportunities for sales
will be allocated equitably to each of them. In some cases, this
procedure may adversely affect the size of the position obtained
for or disposed of by the Fund or the price paid or received
by the Fund.
MANAGEMENT OF THE TRUST
Manager
The Manager, located at Three First National
Plaza, Chicago, Illinois 60670, is the Fund's investment
adviser. The Manager, a wholly-owned subsidiary of First Chicago
Corporation, a registered bank holding company, a
commercial bank offering a wide range of banking and investment
services to customers throughout the United States and
around the world. As of June 30, 1994, the Manager was one of
the largest commercial banks in the United States and the
largest in the mid-western United States in terms of assets
($41.8 billion) and in terms of deposits ($23.8 billion). As of
June 30, 1994, the Manager provided investment management
services to portfolios containing approximately $9.6 billion in
assets.
The Manager serves as investment adviser for the Trust pursuant
to a Management Agreement dated as of ____________,
1994. Under the Management Agreement, the Manager supervises and
assists in the overall management of the Trust's
affairs, subject to the overall authority of the Trust's Board of
Trustees and in conformity with Massachusetts law and the
stated policies of the Trust. The Manager is responsible for
making investment decisions for the Trust, placing purchase and
sale orders (which may be allocated to various dealers based on
their sales of Fund shares) and providing research, statistical
analysis and continuous supervision of each Fund's investment
portfolio. The Manager has advised the Trust that in making
its investment decisions the Manager does not obtain or use
material inside information in the possession of any other
division or department of the Manager or in the possession of any
affiliate of the Manager.
The Manager has engaged Concord Holding
Corporation, located at 125 West 55th Street, New York, New
York 10019 (the "Administrator"), to assist it in providing
certain administrative services for the Trust pursuant to a
Master Administration Agreement between the Manager and the
Administrator. The Administrator currently provides
administrative services or sub-administrative services to other
investment companies with over $33 billion in assets. The
Manager, from its own funds, will pay the Administrator for the
Administrator's services.
Under the terms of the Management Agreement,
the Trust has agreed to pay the Manager a monthly fee at
the annual rate of .35 of 1% of the value of each Fund's average
daily net assets.
Glass-Steagall Act
The Glass-Steagall Act and other applicable
laws prohibit Federally chartered or supervised banks from
engaging in certain aspects of the business of issuing,
underwriting, selling and/or distributing securities, although
banks such
as the Manager are permitted to purchase and sell securities upon
the order and of the account of their customers. The
Manager has advised the Trust of its belief that, based on
existing judicial and regulatory interpretations of the
Glass-Steagall
Act, it may perform the services for the Trust contemplated by
the Management Agreement and this Prospectus without
violating the Glass-Steagall Act or other applicable banking laws
or regulations. The Manager has pointed out, however, that
future changes in either Federal or state statutes and
regulations relating to permissible activities of banks and their
subsidiaries and affiliates, as well as future judicial or
administrative decisions or interpretations of present and future
statutes and regulations, could prevent the Manager from
continuing to perform such services for the Trust. If the
Manager
were to be prevented from providing such services to the Trust,
the Trust's Board of Trustees would review the Trust's
relationship with the Manager and consider taking all actions
necessary in the circumstances.
Distributor
Concord Financial Group, Inc. (the
"Distributor"), located at 125 West 55th Street, New York, New
York 10019, serves as the Trust's principal underwriter and
distributor of the Funds' shares. The Distributor, a
wholly-owned
subsidiary of the 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 $21 billion in assets.
Transfer and Dividend Disbursing Agent and Custodian
The Shareholder Services Group, Inc., is the
Trust's Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). The Bank of New York is the Trust's Custodian.
Expenses
All expenses incurred in the operation of the
Trust are borne by the Trust, except to the extent specifically
assumed by the Manager. The expenses borne by the Trust include:
organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Trustees who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory
fees,
charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of maintaining the
Trust's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders'
reports and meetings, costs of preparing and printing
prospectuses and statements of additional information for
regulatory
purposes and for distribution to existing shareholders, and any
extraordinary expenses. In addition, Service shares are subject
to an annual distribution and service fee pursuant to a plan
adopted in accordance with Rule 12b-1 under the 1940 Act. See
"Service Plan." Expenses attributable to a particular Fund are
charged against the assets of that Fund; other expenses of the
Trust are allocated among the Funds on the basis determined by
the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Fund.
The Manager has undertaken, as to each Fund,
until such time as it gives investors at least 90 days' notice to
the contrary, that if, in any fiscal year the aggregate expenses
of the Fund, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary
state securities commissions) extraordinary expenses, but
including the management fee, exceed .35 and .60 of 1% of the
value of the average net assets of Institutional and Service,
respectively, for the fiscal year, the Trust may deduct from the
payment to be made to the Manager under the Management
Agreement, or the Manager will bear, such excess expense.
HOW TO BUY FUND SHARES
Each Fund is designed for institutional
investors, including banks (such as the Manager), acting for
themselves or in a fiduciary, advisory, agency, custodial or
similar capacity, public agencies and municipalities. Fund
shares
may not be purchased directly by individuals, although
institutions may purchase shares for accounts maintained by
individuals. Generally, each investor will be required to open a
single master account with the Fund for all purposes. In
certain cases, the Trust may request investors to maintain
separate master accounts for shares held by the investor (i) for
its
own account, for the account of other institutions and for
accounts for which the institution acts as a fiduciary, and (ii)
for
accounts for which the investor acts in some other capacity. An
institution may arrange with the Transfer Agent for sub-
accounting services and will be charged directly for the cost of
such services. Certain accounts may be eligible for an
automatic investment privilege, commonly called a "sweep," under
which amounts in excess of a certain minimum held in
those accounts will be invested automatically in shares at
pre-determined intervals. Each investor desiring to use this
privilege should consult its bank for details.
The minimum initial investment is $1,000,000 or
any lesser amount if, in the Distributor's opinion, the
investor has adequate intent and availability of funds to reach a
future level of investment of $1,000,000. There is no
minimum for subsequent purchases. The initial investment must be
accompanied by the Account Application. The Trust
does not impose any sales charges in connection with purchases of
Fund shares, although Service Agents and other
institutions may charge their clients fees in connection with
purchases for the accounts of their clients. These fees would be
in addition to any amounts which might be received under the
Service Plan. Service Agents may receive different levels of
compensation for selling different classes of shares. Each
Service Agent has agreed to transmit to its clients a schedule of
such fees. The Fund does not issue share certificates. The
Trust reserves the right to reject any purchase order. It is not
recommended that the Municipal Cash Management Fund be used as a
vehicle for Keogh, IRA or other qualified retirement
plans.
Fund shares may be purchased by wire, by
telephone or through compatible computer facilities. All
payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. Investors may
telephone orders for purchases of Fund shares by calling
____________. For instructions concerning purchases and to
determine whether their computer facilities are compatible with
the Trust's, investors should call
_________________________.
Fund shares are sold on a continuous basis at
the net asset value per share next determined after an order in
proper form and Federal Funds (monies of member banks in the
Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received by the Transfer Agent. If an
investor does not remit Federal Funds, its payment must be
converted into Federal Funds. This usually occurs within one
business day of receipt of a bank wire and within two business
days of receipt of a check drawn on a member bank of the Federal
Reserve System. Checks drawn on banks which are not
members of the Federal Reserve System may take considerably
longer to convert into Federal Funds. Prior to receipt of
Federal Funds, the investor's money will not be invested.
Each Fund's net asset value per share is
determined as of 2:00 p.m., Central Standard time, on each day
that
the New York Stock Exchange is open for business, except Martin
Luther King, Jr. Day, Columbus Day and Veterans Day.
Net asset value per share of each Class is computed by dividing
the value of the Fund's net assets represented by such Class
(i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. See "Determination
of Net Asset Value" in the Statement of Additional Information.
Investors whose payments are received in or
converted into Federal Funds by 2:00 p.m., Central Standard
time, by the Transfer Agent will receive the dividend declared
that day. Investors whose payments are received in or
converted into Federal Funds after 2:00 p.m., Central Standard
time, by the Transfer Agent will begin to accrue dividends on
the following business day.
Federal Regulations require that an investor
provide a certified Taxpayer Identification Number ("TIN")
upon opening or reopening an account. See "Dividends,
Distributions and Taxes" and the Account Application for further
information concerning this requirement. Failure to furnish a
certified TIN to the Trust could subject an investor to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
EXCHANGE PRIVILEGE
The Exchange Privilege enables an investor to
purchase, in exchange for shares of a Fund, shares of the
other Funds offered by this Prospectus. The Exchange Privilege
may be expanded to permit exchanges between the Funds
and certain other series or funds that, in the future, may be
advised by the Manager, to the extent the shares of such series
or
funds are offered for sale in the investor's state of residence.
If an investor desires to use this Privilege, the investor should
consult the Manager or the Distributor to determine if it is
available and whether any conditions are imposed on its use.
To use this Privilege, an investor must give
exchange instructions to the Transfer Agent in writing, by wire
or
by telephone. If an investor previously has established the
Telephone Exchange Privilege, the investor may telephone
exchange instructions by calling _______________ or, if calling
from overseas, by calling ________________. See "How to
Redeem Fund Shares--Procedures." When establishing a new account
by exchange, the shares being exchanged must have a
value of at least $1,000,000.
Shares will be exchanged at the next determined
net asset value. No fees currently are charged shareholders
directly in connection with exchanges, although the Trust
reserves the right, upon not less than 60 days' written notice,
to
charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The
Fund reserves 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. See
"Exchange Privilege" in the Statement of Additional Information.
The exchange of shares of one series or 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.
HOW TO REDEEM FUND SHARES
General
Investors may request redemption of shares at
any time and the shares will be redeemed at the next
determined net asset value.
The Trust imposes no charges when shares are
redeemed. Service Agents and other institutions may charge
their clients 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 relevant Fund's
then-current net asset value.
If a request for redemption is received in
proper form by the Transfer Agent by 2:00 p.m., Central Standard
time, the proceeds of the redemption, if transfer by wire is
requested, ordinarily will be transmitted in Federal Funds on the
same day and the shares will not receive the dividend declared on
that day. If the request is received later that day by the
Transfer Agent, the shares will receive the dividend on the
Fund's shares declared on that day and the proceeds of
redemption, if wire transfer is requested, ordinarily will be
transmitted in Federal Funds on the next business day.
The Trust 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.
Procedures
Investors may redeem shares by wire or
telephone, or through compatible computer facilities as described
below.
An investor may redeem or exchange shares by
telephone if the investor has checked the appropriate box on
the Account Application or has filed a Shareholder Services Form
with the Transfer Agent. 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 an authorized
representative of the investor and reasonably believed by the
Transfer
Agent to be genuine. The Trust will require the Transfer Agent
to employ reasonable procedures, such as requiring a form
of identification, to confirm that instructions are genuine and,
if it does not follow such procedures, the Trust or the Transfer
Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Trust nor the Transfer
Agent
will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market
conditions, investors 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.
Redemption by Wire or Telephone--Investors may redeem Fund shares
by wire or telephone. The redemption proceeds will
be paid by wire transfer. Investors can redeem shares by
telephone by calling ________________. The Trust reserves the
right to refuse any request made by wire or telephone and may
limit the amount involved or the number of telephone
redemptions. This procedure may be modified or terminated at any
time by the Transfer Agent or the Trust. The Statement
of Additional Information sets forth instructions for redeeming
shares by wire.
Redemption Through Compatible Computer Facilities--The Trust
makes available to institutions the ability to redeem shares
through compatible computer facilities. Investors desiring to
redeem shares in this manner should call __________________
to determine whether their computer facilities are compatible and
to receive instructions for redeeming shares in this manner.
SERVICE PLAN
(Service Shares Only)
Service shares are subject to a Service Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. Under the
Service Plan, each Fund pays the Distributor for advertising,
marketing and distributing the Fund's Service shares and for the
provision of certain services to the holders of Service shares a
fee at the annual rate of .25 of 1% of the value of the average
daily net assets of Service. 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 such shareholder accounts. The fee payable for
such services is intended to be a "service fee" as defined in
Article III, Section 26 of the NASD Rules of Fair Practice.
Under the Service Plan, the Distributor may make payments to
Service Agents in respect of these services. The Manager and its
affiliates may act as Service Agents and receive fees under
the Service 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
Fund pursuant to the Service Plan and any other compensation
payable by their clients in connection with the investment of
their assets in Fund shares. From time to time, the Distributor
may defer or waive receipt of fees under the Service Plan while
retaining the ability to be paid by the Fund under the Service
Plan thereafter. The fees payable to the Distributor under the
Service Plan for advertising, marketing and distributing Service
shares and for payments to Service Agents are payable without
regard to actual expenses incurred.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund ordinarily declares dividends from
net investment income on each day the New York Stock
Exchange is open for business, except on Martin Luther King, Jr.
Day, Columbus Day and Veterans Day. Fund shares begin
earning income dividends on the day the purchase order is
effective. Dividends usually are paid on the last calendar day
of
each month, and are automatically reinvested in additional shares
of the Fund from which they were paid at net asset value
or, at the investor's option, paid in cash. Each Fund's earnings
for Saturdays, Sundays and holidays are declared as dividends
on the preceding business day. If an investor redeems all shares
in its account at any time during the month, all dividends to
which the investor is entitled will be paid along with the
proceeds of the redemption. Distributions from net realized
securities gains, if any, generally are declared and paid once a
year, but a Fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Code,
in all events in a manner consistent with the provisions of the
1940 Act. No Fund will make distributions from net realized
securities gains unless capital loss carryovers, if any, have
been
utilized or have expired. Investors may choose whether to
receive distributions in cash or to reinvest in additional shares
of
the Fund from which they were paid at net asset value. All
expenses are accrued daily and deducted before declaration of
dividends to investors. Dividends paid by each Class will be
calculated at the same time and in the same manner and will be
of the same amount, except that the expenses attributable solely
to Institutional or Service will be borne exclusively by such
Class. Service shares will receive lower per share dividends
than Institutional shares because of the higher expenses borne by
Service. See "Annual Fund Operating Expenses."
Dividends paid by the Cash Management, Treasury
Prime Cash Management and U.S. Government
Securities Cash Management Funds derived from net investment
income and dividends paid by the Municipal Cash
Management Fund derived from taxable investments, together with
distributions from any net realized short-term securities
gains and all or a portion of any gain realized from the sale or
other disposition of certain market discount bonds, will be
taxable to U.S. investors as ordinary income whether or not
reinvested in additional Fund shares. Distributions from net
realized long-term securities gains, if any, will be taxable as
long-term capital gains for Federal income tax purposes if the
beneficial holder of Fund shares is a citizen or resident of the
United States, regardless of how long investors have held
shares and whether such distributions are received in cash or
reinvested in additional shares.
Except for dividends from taxable investments,
the Trust anticipates that substantially all dividends paid by
the Municipal Cash Management Fund will not be subject to Federal
income tax. Dividends and distributions paid by the
Fund may be subject to certain state and local taxes. Although
all or a substantial portion of the dividends paid by the
Municipal Cash Management Fund may be excluded by shareholders of
the Fund from their gross income for Federal income
tax purposes, the 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 the Social Security
benefits of a beneficial holder of the Fund's shares are taxable.
If the Fund purchases such securities, the portion of its
dividends related thereto will not necessarily be tax exempt to a
beneficial holder of the Fund's shares who is subject to the
alternative minimum tax and/or tax on Social Security benefits
and may cause such investor to be subject to such taxes.
Dividends and distributions attributable to
interest from direct obligations of the United States and paid by
the Treasury Prime Cash Management Fund currently are not subject
to state personal income tax. The Trust intends to
provide shareholders of the Treasury Prime Cash Management Fund
with a statement which sets forth the percentage of
dividends and distributions paid by the Fund that is attributable
to interest income from direct obligations of the United
States.
Dividends paid by a Fund derived from net
investment income, together with distributions from net realized
short-term securities gains and all or a portion of any gain
realized from the sale or other disposition of certain market
discount bonds, paid by such Fund to a foreign investor who is
the beneficial owner of such Fund's shares generally are
subject to U.S. nonresident withholding taxes at the rate of 30%,
unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from net realized
long-term securities gains paid by the Fund to such foreign
investor
generally will not be subject to U.S. nonresident withholding
tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status.
Federal regulations generally require the Trust
to withhold ("backup withholding") and remit to the U.S.
Treasury 31% of dividends and distributions from net realized
securities gains paid to a shareholder if such shareholder fails
to certify either that the TIN furnished in connection with
opening an account is correct, or that such shareholder has not
received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable
dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Trust to institute backup
withholding if the IRS determines a shareholder's TIN is
incorrect or if a shareholder has failed to properly report
taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or
employer identification number of the record owner of the
account. Any tax withheld as a result of backup withholding does
not constitute an additional tax imposed on the record
owner of the account, and may be claimed as a credit on the
record owner's Federal income tax return.
Notice as to the tax status of dividends and
distributions will be mailed to investors annually. Each
investor
also will receive periodic summaries of its account which will
include information as to dividends and distributions from
securities gains, if any, paid during the year. For the
Municipal Cash Management Fund, these statements will set forth
the dollar amount of income exempt from Federal tax and the
dollar amount, if any, subject to Federal tax. These dollar
amounts will vary depending on the size and length of time of the
investor's investment in the Municipal Cash Management
Fund. If the Municipal Cash Management Fund pays dividends
derived from taxable income, it intends to designate as
taxable the same percentage of the day's dividend as the actual
taxable income earned on that day bears to total income
earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day. No
dividend will qualify for the dividends received deduction
allowable to certain U.S. corporations.
It is expected that each Fund will qualify as a
"regulated investment company" under the Code so long as
such qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves the
Fund of any liability for Federal income tax to the extent its
earnings are distributed in accordance with applicable provisions
of the Code. Each Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed
amounts of taxable income and capital gains, if any.
Each investor and beneficial shareholder should
consult its tax adviser regarding questions as to Federal,
state or local taxes.
YIELD INFORMATION
From time to time, each Fund will advertise its
yield and effective yield. Both yield figures are based on
historical earnings and are not intended to indicate future
performance. It can be expected that these yields will fluctuate
substantially. The yield of a Fund refers to the income
generated by an investment in the Fund over a seven-day period
(which period will be stated in the advertisement). This income
is then annualized. That is, the amount of income generated
by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated
similarly, but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of
the
compounding effect of this assumed reinvestment. Each Fund's
yield and effective yield may reflect absorbed expenses
pursuant to any undertaking that may be in effect. See
"Management of the Trust." Both yield figures also take into
account
any applicable distribution and service fees. As a result, at
any given time, the performance of Service should be expected to
be lower than that of Institutional. See "Service Plan."
Tax equivalent yield for the Municipal Cash
Management Fund is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to
a stated yield or effective yield calculated as described above.
Yield information is useful in reviewing a
Fund's performance, but because yields will fluctuate, under
certain conditions such information may not provide a basis for
comparison with domestic bank deposits, other investments
which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of
computing yield.
Comparative performance information may be used
from time to time in advertising or marketing Fund
shares, including data from Lipper Analytical Services, Inc.,
Bank Rate Monitor*, N. Palm Beach, Fla. 33408,
IBC/Donoghue's Money Fund Report and other industry publications.
GENERAL INFORMATION
The Trust was organized as an unincorporated
business trust under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust
(the "Trust Agreement") dated October 20, 1994, and has
not engaged in active business to the date of this Prospectus.
The Trust is authorized to issue an unlimited number of shares
of beneficial interest, par value $.001 per share. Each Fund's
shares are classified into two 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. Holders of Service shares only,
however, will be entitled to vote on matters submitted to
shareholders pertaining to the Service Plan. Investors have
agreed to vote Fund shares for which they are the record owners
according to voting instructions received from the beneficial
holder of such shares.
To date, the Board of Trustees has authorized
the creation of four separate portfolios of shares. The other
portfolios are not being offered by this Prospectus. 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.
Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted under the provisions of the
1940 Act or applicable state law or otherwise to the holders of
the outstanding voting securities of an investment company,
such as the Trust, will not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the
outstanding shares of each Fund affected by such matter. Rule
18f-2 further provides that a Fund shall be deemed to be
affected by a matter unless it is clear that the interests of
such Fund in the matter are identical or that the matter does not
affect any interest of such Fund. However, the Rule exempts the
selection of independent accountants and the election of
Trustees from the separate voting requirements of the Rule.
Under Massachusetts law, shareholders could,
under certain circumstances, be held liable for the obligations
of the Trust. However, the Trust Agreement disclaims shareholder
liability for acts or obligations of the Trust and requires
that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or
a
Trustee. The Trust Agreement provides for indemnification from
the Trust's property for all losses and expenses of any
shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its
obligations, a possibility which management believes is remote.
Upon payment of any liability incurred by the Trust, the
shareholder paying
such liability will be entitled to reimbursement from the general
assets of the Trust. The Trustees intend to conduct the
operations of the Trust in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities
of
the Trust. As described under "Management of the Trust" in the
Statement of Additional Information, the Trust ordinarily
will not hold shareholder meetings; however, shareholders under
certain circumstances may have the right to call a meeting of
shareholders for the purpose of voting to remove Trustees.
The Transfer Agent maintains a record of each
investor's ownership and sends confirmations and statements
of account.
Investor inquiries may be made by writing to
the Trust at the address shown on the front cover or by calling
the telephone number shown on the front cover.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IN THE TRUST'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUNDS' SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR
TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
APPENDIX
Portfolio Securities
To the extent set forth in this Prospectus and
except as noted below, each Fund may invest in the following
securities:
U.S. Treasury Securities--Each Fund may invest
in U.S. Treasury securities which include Treasury Bills,
Treasury Notes and Treasury Bonds that differ in their interest
rates, maturities and times of issuance. Treasury Bills have
initial maturities of one year or less; Treasury Notes have
initial maturities of one to ten years; and Treasury Bonds
generally
have initial maturities of greater than ten years.
U.S. Government Securities--In addition to U.S.
Treasury securities, each Fund (the U.S. Treasury Prime
Cash Management Fund to a limited extent) may invest in
securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities. Some obligations issued or
guaranteed by U.S. Government agencies and instrumentalities, for
example, Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the
Treasury; others, such as those issued by the Federal National
Mortgage Association, by discretionary authority of the U.S.
Government to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or
variable rates of interest. Interest may fluctuate based on
generally recognized reference rates or the relationship of
rates.
While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no
assurance can be given that it will always do so, since it is not
so obligated by law. Each Fund will invest in such securities
only when the Trust is satisfied that the credit risk with
respect to the issuer is minimal.
Repurchase Agreements--Each Fund, except the
U.S. Treasury Prime Cash Management Fund, may enter
into repurchase agreements, which involve the acquisition by a
Fund of an underlying debt instrument, subject to an
obligation of the seller to repurchase, and such Fund to resell,
the instrument at a fixed price usually not more than one week
after its purchase. The Trust's 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
entering into them. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, each of these Funds
will enter into repurchase agreements only with registered
or unregistered securities dealers or banks with total assets in
excess of one billion dollars, with respect to securities in
which
such Fund may invest and will require that additional securities
be deposited with it if the value of the securities purchased
should decrease below resale price. The Manager will monitor on
an ongoing basis the value of the collateral to assure that
it always equals or exceeds the repurchase price. Certain costs
may be incurred by a Fund in connection with the sale of the
securities if the seller does not repurchase them in accordance
with the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be
delayed or limited. Each of these Funds will consider on an
ongoing basis the creditworthiness of the institutions with which
it enters into repurchase agreements.
Bank Obligations--The Cash Management Fund
will, and, to a limited extent, the Municipal Cash
Management Fund may, invest in bank obligations, including
certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations of domestic banks, foreign
subsidiaries of domestic banks, foreign branches of domestic
banks,
and domestic and foreign branches of foreign banks and thrift
institutions. Certificates of deposit are negotiable
certificates
evidencing the obligation of a bank to repay funds deposited with
it for a specified period of time. Time deposits are non-
negotiable deposits maintained in a banking institution for a
specified period of time at a stated interest rate. Time
deposits
which may be held by the Fund will not benefit from insurance
from the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the Federal Deposit Insurance
Corporation. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by
a customer. These instruments reflect the obligation both of
the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may
include uninsured, direct obligations, bearing fixed, floating or
variable interest rates.
Commercial Paper and other Short-Term Corporate
Obligations--The Cash Management Fund and, to a
limited extent, the Municipal Cash Management Fund may invest in
commercial paper, which consists of short-term,
unsecured promissory notes issued to finance short-term credit
needs. The commercial paper purchased by these Series will
consist only of direct obligations issued by domestic and foreign
entities. The other corporate obligations in which these
Funds may invest consist of high quality, U.S. dollar denominated
short-term bonds and notes (including variable amount
master demand notes) issued by domestic and foreign corporations.
Floating and Variable Rate Obligations--The
Cash Management Fund and the Municipal Cash Management
Fund also may purchase floating and variable rate demand notes
and bonds, which are obligations ordinarily having stated
maturities in excess of 13 months, but which permit the holder to
demand payment of principal at any time, or at specified
intervals not exceeding 13 months, in each case upon not more
than 30 days' notice. Variable rate demand notes include
master demand notes which are obligations that permit the Fund to
invest fluctuating amounts, which may change daily
without penalty, pursuant to direct arrangements between the
Fund, as lender, and the borrower. The interest rates on these
notes fluctuate from time to time. The issuer of such
obligations normally has a corresponding right, after a given
period, to
prepay in its discretion the outstanding principal amount of the
obligations plus accrued interest upon a specified number of
days' notice to the holders of such obligations. The interest
rate on a floating rate demand obligation is based on a known
lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate
on
a variable rate demand obligation is adjusted automatically at
specified intervals. Frequently, such obligations are secured by
letters of credit or other credit support arrangements provided
by banks. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these
obligations, although they are redeemable at face value.
Accordingly, where these obligations are not secured by letters
of credit or other credit support arrangements, the Fund's
right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies and, if not so
rated, each of these Funds may invest in them only if the
Manager determines that at the time of investment the obligations
are of comparable quality to the other obligations in which
the Fund may invest. The Manager, on behalf of the Fund will
consider on an ongoing basis the creditworthiness of the
issuers of the floating and variable rate demand obligations held
by the Fund. Neither of these Funds will invest more than
10% of the value of its net assets in floating or variable rate
demand obligations as to which it cannot exercise the demand
feature on not more than seven days' notice if there is no
secondary market available for these obligations, and in other
securities that are illiquid.
Municipal Obligations--The Municipal Cash
Management Fund will invest in Municipal Obligations.
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. 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. Municipal Obligations bear fixed, floating or
variable rates of interest. 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.
Participation Interests--The Municipal Cash
Management Fund may purchase from financial institutions
participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/purchase
agreements). A participation interest gives the Fund an
undivided interest in the Municipal Obligation in the proportion
that
the Fund'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 the Fund, the participation
interest will be backed by an irrevocable letter of credit or
guarantee of a bank that the Board of Trustees 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,
the Fund will have the right to demand payment, on not
more than seven days' notice, for all or any part of the Fund's
participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, the 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. The Municipal Cash Management Fund
will not invest more than 10% 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--The Municipal Cash
Management Fund may purchase tender option bonds. 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 Manager, on behalf of the 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. The Municipal Cash Management Fund will not invest more
than 10% 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--The Municipal Cash
Management 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. The Municipal Cash Management Fund will
acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Municipal Cash
Management 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.
Investment Practices
Lending Portfolio Securities--From time to
time, each of the Cash Management Fund and U.S. Government
Securities Cash Management Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the
relevant Fund's total assets. In connection with such loans,
each of these Funds will receive collateral consisting of cash or
U.S. Government securities or, with respect to the Cash
Management Fund only, irrevocable letters of credit issued by
financial institutions. Such collateral will be maintained at
all times in an amount equal to at least 100% of the current
market value of the loaned securities. Each of these Funds can
increase its income through the investment of such collateral.
Each of these Funds continues to be entitled to payments in
amounts equal to the interest and other distributions payable on
the loaned security and receives interest on the amount of the
loan. Such loans will be terminable at any time upon specified
notice. A Fund might experience risk of loss if the institution
with which it has engaged in a portfolio loan transaction
breaches its agreement with such Fund.
Illiquid Securities--Each Fund may invest up to
10% of the value of its net assets in securities as to which a
liquid trading market does not exist, provided such investments
are consistent with its investment objective. Such securities
may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual
restrictions on resale, participation interests that are not
subject to the demand feature described above, floating and
variable
rate demand obligations as to which the Fund cannot exercise the
related demand feature described above on not more than
seven days' notice and as to which there is no secondary market
and repurchase agreements providing for settlement in more
than seven days after notice. However, if a substantial market
of qualified institutional buyers develops pursuant to Rule
144A under the Securities Act of 1933, as amended, for certain
unregistered securities held by a Fund, the Trust intends to
treat such securities as liquid securities in accordance with
procedures approved by the Trust's Board of Trustees. Because it
is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the
Trust's Board of Trustees has directed the Manager to monitor
carefully the investments of the Funds in such securities with
particular regard to trading activity, availability of reliable
price information and other relevant information.
Borrowing Money--As a fundamental policy, each
of the Municipal Cash Management Fund and Treasury
Prime Cash Management Fund is permitted to borrow money to the
extent permitted under the 1940 Act. However, each of
these Funds currently intends to borrow money from banks for
temporary or emergency (not leveraging) purposes in an
amount up to 15% of the value of its total assets (including the
amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of a Fund's
total assets, such Fund will not make any additional investments.
PROSPECTUS OCTOBER 31, 1994
FIRST PRAIRIE CASH MANAGEMENT
FIRST PRAIRIE CASH MANAGEMENT (THE "FUND") IS AN
OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A
MONEY MARKET MUTUAL FUND. ITS GOAL IS TO PROVIDE INVESTORS WITH
AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT WITH THE
PRESERVATION OF CAPITAL AND THE MAINTENANCE OF
LIQUIDITY.
THE FUND IS DESIGNED FOR INSTITUTIONAL INVESTORS,
INCLUDING BANKS, ACTING FOR THEMSELVES OR IN A FIDUCIARY,
ADVISORY, AGENCY, CUSTODIAL OR SIMILAR CAPACITY, PUBLIC AGENCIES
AND MUNICIPALITIES. FUND SHARES MAY NOT BE PURCHASED DIRECTLY BY
INDIVIDUALS, ALTHOUGH INSTITUTIONS MAY PURCHASE SHARES
FOR ACCOUNTS MAINTAINED BY INDIVIDUALS. SUCH INSTITUTIONS HAVE
AGREED TO TRANSMIT COPIES OF THIS PROSPECTUS TO EACH INDIVIDUAL
OR ENTITY FOR WHOSE
ACCOUNT THE INSTITUTION PURCHASES FUND SHARES, TO THE EXTENT
REQUIRED BY LAW.
THE FUND'S SHARES ARE SOLD WITHOUT A SALES CHARGE.
INVESTORS CAN INVEST OR REINVEST IN OR REDEEM SHARES AT ANY TIME
WITHOUT CHARGE OR PENALTY.
THE FIRST NATIONAL BANK OF CHICAGO (THE "MANAGER")
SERVES AS THE FUND'S INVESTMENT ADVISER.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OF OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. MONEY MARKET MUTUAL FUND SHARES
INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT
THE FUND THAT AN INVESTOR SHOULD KNOW BEFORE INVESTING. IT SHOULD
BE READ AND RETAINED FOR FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL
INFORMATION), DATED OCTOBER 31, 1994, 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 FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW
YORK 11556-0144, OR CALL 1-800-821-1185. WHEN TELEPHONING, ASK
FOR OPERATOR 666.
TABLE OF CONTENTS
PAGE PAGE
ANNUAL FUND OPERATING HOW TO BUY FUND SHARES. . . 9
EXPENSES. . . . . . . 2 EXCHANGE PRIVILEGE. . . . . 10
CONDENSED FINANCIAL HOW TO REDEEM FUND SHARES. .10
INFORMATION. . . . . . 2 DIVIDENDS, DISTRIBUTIONS
YIELD INFORMATION. . . . 3 AND TAXES . . . . . . . . 11
DESCRIPTION OF THE FUND. 3 GENERAL INFORMATION . . . .13
MANAGEMENT OF THE FUND.. 7
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.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fee (after expense reimbursement)..... .23%
Other Expenses................................... .08%
Total Fund Operating Expenses
(after expense reimbursement).................. .31%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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: $3 $10 $17 $39
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE
CONSIDERED AS REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND
ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE
ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
The purpose of the foregoing table is to assist
investors in understanding the various costs and expenses borne
by the Fund, and therefore
indirectly by investors, the payment of which will reduce
investors' return
on an annual basis. The expenses noted above, without
reimbursement, would
be: Management Fees_.35% and Total Fund Operating Expenses_.43%;
and the
amount of expenses that an investor would pay, assuming
redemption after one,
three, five and ten years, would be $4, $14, $24 and $54,
respectively. The
Manager has undertaken until such time as it gives investors at
least 90 days' notice to the contrary that if, in any fiscal
year, certain expenses,
including the management fee, exceed .35 of 1% of the value of
the Fund's
average net assets for the fiscal year, the Fund may deduct from
the payment
to be made to the Manager under the Management Agreement, or the
Manager will
bear, such excess expense. Institutions effecting transactions
in Fund shares
for the accounts of their clients may charge their clients
direct fees in
connection with such transactions; such fees are not reflected
in the
foregoing table. See "Management of the Fund."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited
by Ernst & Young LLP, the Fund's independent auditors, whose
report thereon appears 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
for a share of beneficial interest outstanding, total investment
return, ratios to average net assets and other supplemental data
for each year indicated. This information has been derived from
the Fund's financial statements.
YEAR ENDED JUNE 30,
PER SHARE DATA: 1993(1) 1994
Net asset value, beginning of year $1.0000 $.9999
INVESTMENT OPERATIONS:
Investment income--net .0297 .0333
Net realized (loss)
on investments (.0001) (.0006)
TOTAL FROM INVESTMENT
OPERATIONS .0296 .0327
DISTRIBUTIONS:
Dividends from investment
income-net (.0297) (.0333)
Net asset value, end of
year $ .9999 $ .9993
TOTAL INVESTMENT RETURN 3.25%(2) 3.38%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets .05%(2) .31%
Ratio of net investment income
to average net assets 3.19%(2) 3.33%
Decrease reflected in above
expense ratios due to
undertakings by the
Manager .51%(2) .12%
Net Assets, end of year (000's
omitted) $175,713 $243,820
(1)From July 30, 1992 (commencement of operations) to June 30,
1993.
(2)Annualized.
YIELD INFORMATION
From time to time, the Fund advertises 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 Fund's yield and effective yield may reflect absorbed
expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund."
Yield information is useful in reviewing the Fund's
performance, but
because yields will fluctuate, under certain conditions such
information may
not provide a basis for comparison with domestic bank deposits,
other investments which pay a fixed yield for a stated period of
time, or other
investment companies which may use a different method of
computing yield.
Comparative performance information may be used from
time to time in
advertising or marketing the Fund's shares, including data from
Lipper Analytical Services, Inc., Bank Rate Monitor trademark, N.
Palm Beach, Fla.
33408, IBC/Donoghue's Money Fund Report, Morningstar, Inc. and
other industry publications.
DESCRIPTION OF THE FUND
WHEN USED IN THIS PROSPECTUS AND THE STATEMENT OF
ADDITIONAL INFORMATION, THE TERMS "INVESTOR" AND "SHAREHOLDER"
REFER TO THE INSTITUTION
PURCHASING FUND SHARES AND DO NOT REFER TO ANY INDIVIDUAL OR
ENTITY FOR WHOSE
ACCOUNT THE INSTITUTION MAY PURCHASE FUND SHARES. Such
institutions have
agreed to transmit copies of this Prospectus and all relevant
Fund materials,
including proxy materials, to each individual or entity for
whose account the
institution purchases Fund shares, to the extent required by
law.
INVESTMENT OBJECTIVE--The Fund's goal is to provide investors
with as high a
level of current income as is consistent with the preservation
of capital and
the maintenance of liquidity. The Fund's investment objective
cannot be
changed without approval by the holders of a majority (as
defined in the
Investment Company Act of 1940) of the Fund's outstanding voting
shares.
There can be no assurance that the Fund's investment objective
will be achieved. Because, as described below, the Fund will
invest only in highest
rated or comparable short-term securities, its portfolio
securities may not
earn as high a level of current income as long-term or lower
quality securities which generally have less liquidity, greater
market risk and more fluctuation in market value.
MANAGEMENT POLICIES--To achieve its goal, the Fund invests in
short-term
money market obligations, including securities issued or
guaranteed by the
U.S . Government or its agencies or instrumentalities,
certificates of
deposit, time deposits, bankers' acceptances and other
short-term obligations
issued by domestic banks, foreign branches of domestic banks,
foreign
subsidiaries of domestic banks, domestic and foreign branches of
foreign banks
and thrift institutions, repurchase agreements, and high quality
domestic
and foreign commercial paper and other short-term corporate
obligations,
including those with floating or variable rates of interest. In
addition, the
Fund is permitted to lend portfolio securities to the extent
described below.
During normal market conditions, at least 25% of the Fund's
total assets will
be invested in bank obligations. The Fund will not invest more
than one-third of its assets in securities issued by foreign
branches of foreign banks and
in commercial paper issued by foreign corporations.
The Fund seeks to maintain a net asset value of $1.00
per share for
purchases and redemptions. To do so, the Fund uses the amortized
cost method
of valuing its securities pursuant to Rule 2a-7 under the
Investment Company
Act of 1940, certain requirements of which are summarized below.
In accordance with Rule 2a-7, the 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 of Trustees to present
minimal credit
risks and which are rated in one of the two highest rating
categories for
debt obligations by at least two nationally recognized
statistical rating
organizations (or one rating organization if the instrument was
rated by only
one such organization) or, if unrated, are of comparable quality
as
determined in accordance with procedures established by the
Board of
Trustees. Moreover, the Fund will purchase only securities so
rated in the
highest rating category or, if unrated, of comparable quality as
determined
in accordance with procedures established by the Board of
Trustees. The
nationally recognized statistical rating organizations currently
rating
instruments of the type the Fund may purchase are Moody's
Investors Service,
Inc., Standard & Poor's Corporation, Duff & Phelps, Inc., Fitch
Investors
Service, Inc., IBCA Limited and IBCA Inc. and Thomson BankWatch,
Inc., and
their rating criteria are described in the Appendix to the
Fund's Statement
of Additional Information.
In addition, the Fund will not invest more than 5% of
its total
assets in the securities (including the securities
collateralizing a
repurchase agreement) of, or subject to puts issued by, a single
issuer,
except that (i) the Fund may invest more than 5% of its total
assets in a
single issuer for a period of up to three business days in
certain limited
circumstances, (ii) the Fund may invest in obligations issued or
guaranteed
by the U.S. Government without any such limitation, and (iii)
the limitation
with respect to puts does not apply to unconditional puts if no
more than 10%
of the Fund's total assets is invested in securities issued or
guaranteed by
the issuer of the unconditional put. As to each security, these
percentages
are measured at the time the Fund purchases the security. For
further
information regarding the amortized cost method of valuing
securities, see
"Determination of Net Asset Value" in the Fund's Statement of
Additional
Information. There can be no assurance that the Fund will be
able to maintain
a stable net asset value of $1.00 per share.
Securities issued or guaranteed by the U.S. Government
or its
agencies or instrumentalities include U.S. Treasury securities,
which 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 and
Small Business
Administration guaranteed loans, are supported by the full faith
and credit
of the U.S. Treasury; others, such as those of the Federal Home
Loan Banks,
by the right of the issuer to borrow from the Treasury; others,
such as those
issued by the Federal National Mortgage Association, by
discretionary
authority of the U.S. Government to purchase certain obligations
of the
agency or instrumentality; and others, such as those issued by
the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or
variable rates of
interest. Interest rates may fluctuate based on generally
recognized
reference rates or the relationship of rates. While the U.S.
Government
provides financial support to such U.S. Government-sponsored
agencies or
instrumentalities, no assurance can be given that it will always
do so, since
it is not so obligated by law. The Fund will invest in such
securities only
when it is satisfied that the credit risk with respect to the
issuer is minimal.
The Fund will invest in 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. See "Risk Factors" below. Certificates of deposit
are negotiable certificates evidencing the obligation of a bank
or thrift
institution 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 (in no event longer
than seven days) at a stated interest rate. Time deposits which
may be held by the Fund will not benefit from insurance from the
Bank Insurance Fund or
the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation. 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 involve the acquisition by the
Fund of an
underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Fund to resell, the instrument at a
fixed price usually
not more than one week after its purchase. The Fund's custodian
or sub-custodian will have custody of, and will hold in a
segregated account,
securities acquired by the 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, the Fund will
enter into
repurchase agreements only with registered or unregistered
securities dealers
or banks with total assets in excess of one billion dollars,
with respect to
securities of the type in which the Fund may invest, and will
require that
additional securities be deposited with it if the value of the
securities
purchased should decrease below resale price. The Fund will
limit further the
entities with which it will enter into repurchase agreements to
those whose
securities are eligible for purchase by the Fund. The Manager
will monitor on
an ongoing basis the value of the collateral to assure that it
always equals
or exceeds the repurchase price. Certain costs may be incurred
by the Fund in
connection with the sale of the securities if the seller does
not repurchase
them in accordance with the repurchase agreement. In addition,
if bankruptcy
proceedings are commenced with respect to the seller of the
securities,
realization on the securities by the Fund may be delayed or
limited. The Fund
will consider on an ongoing basis the creditworthiness of the
institutions
with which it enters into repurchase agreements.
Commercial paper consists of short-term, unsecured
promissory notes
issued to finance short-term credit needs. The commercial paper
purchased by the Fund will consist only of direct obligations
issued by domestic and
foreign entities. The other corporate obligations in which the
Fund may invest consists of high quality, U.S. dollar denominated
short-term bonds and
notes issued by domestic and foreign corporations.
The Fund may purchase floating and variable rate demand
notes, which
are obligations ordinarily having stated maturities in excess of
13 months, but which permit the holder to demand payment of
principal at any time, or at
specified intervals not exceeding 13 months, in each case upon
not more than 30 days' notice. Variable rate demand notes include
master demand notes which
are obligations that permit the Fund to invest fluctuating
amounts, which may
change daily without penalty, pursuant to direct arrangements
between the
Fund, as lender, and the borrower. The interest rates on these
obligations
fluctuate from time to time. The issuer of such obligations
ordinarily has a
corresponding right, after a given period, to prepay in its
discretion the
outstanding principal amount of the obligations plus accrued
interest upon a
specified number of days' notice to the holders of such
obligations. The
interest rate on a floating rate demand obligation is based on a
known lending rate, such as a bank's prime rate, and is adjusted
automatically each
time such rate is adjusted. The interest rate on a variable rate
demand obligation is adjusted automatically at specified
intervals. Frequently, such
obligations are secured by letters of credit or other credit
support arrangements provided by banks. Because these obligations
are direct lending
arrangements between the lender and borrower, it is not
contemplated that
such instruments generally will be traded, and there generally
is no established secondary market for these obligations,
although they are
redeemable at face value. Accordingly, where these obligations
are not secured by letters of credit or other credit support
arrangements, the Fund's
right to redeem is dependent on the ability of the borrower to
pay principal
and interest on demand. Such obligations frequently are not
rated by credit
rating agencies and the Fund may invest in obligations which are
not so rated
only if the Manager determines that at the time of the
investment the
obligations are of comparable quality to the other obligations in
which the Fund may
invest.
The Manager, on behalf of the Fund, will consider on an ongoing
basis the
creditworthiness of the issuers of floating and variable rate
demand
obligations in the Fund's portfolio. The Fund will not invest
more than 10% of the value of its net assets in floating or
variable rate
demand obligations as to which the Fund cannot exercise the
demand feature on
not more than seven days' notice if there is no secondary market
available
for these obligations, and in other securities that are
illiquid. See "Certain Fundamental Policies" below.
The Fund may invest up to 10% 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 and repurchase agreements providing for settlement in
more than seven
days after notice. However, if a substantial market of qualified
institutional
buyers develops pursuant to Rule 144A under the Securities Act
of 1933, as
amended, for such securities held by the Fund, the Fund intends
to treat such
securities as liquid securities in accordance with procedures
approved by the
Fund's Board of Trustees. Because it is not possible to predict
with
assurance how the market for restricted securities pursuant to
Rule 144A will
develop, the Fund's Board of Trustees has directed the Manager
to monitor
carefully the 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 such restricted securities
pursuant to
Rule 144A, the Fund's investing in such securities may have the
effect of
increasing the level of illiquidity in the Fund's portfolio
during such
period.
From time to time, the 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 331/3%
of the value of the Fund's total assets. In connection with such
loans, the
Fund will receive collateral consisting of cash, U. S.
Government securities
or irrevocable letters of credit issued by financial
institutions. Such
collateral will be maintained at all times in an amount equal to
at least
100% of the current market value of the loaned securities. The
Fund can
increase its income through the investment of such collateral.
The Fund
continues to be entitled to payments in amounts equal to the
interest or
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. The Fund might experience risk of loss if the
institution
with which it has engaged in a portfolio loan transaction
breaches its
agreement with the Fund. The Fund will limit the entities with
which it will
enter into securities lending transactions to those whose
securities are
eligible for purchase by the Fund.
CERTAIN FUNDAMENTAL POLICIES -- The Fund (i) may borrow money
from banks, but
only for temporary or emergency (not leveraging) purposes in an
amount up to
15% of the value of the Fund's total assets (including the
amount borrowed)
valued at the lesser of cost or market, less liabilities (not
including the
amount borrowed) at the time the borrowing is made. While
borrowings exceed
5% of the value of the Fund's total assets, the Fund will not
make any
additional investments; (ii) may pledge, hypothecate, mortgage
or otherwise
encumber its assets, but only to secure borrowings for temporary
or emergency
purposes; (iii) may invest up to 5% of the value of its total
assets in the
obligations of any issuer, except that up to 25% of the value of
the Fund's
total assets may be invested (subject 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;
(iv) will invest, under normal market conditions, at least 25%
of the value
of its total assets in securities issued by banks and may invest
up to 25% of
the value of its total assets in the securities of issuers in
any other
industry, provided that there is no limitation on investments in
obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; and (v) may invest up to 10% of its net
assets in
repurchase agreements providing for settlement in more than
seven days after
notice and in other securities that are illiquid (which securi-
ties could include floating and variable rate demand obligations
as to which the Fund cannot exercise the demand feature described
above and as to which
there is no secondary market). This paragraph describes
fundamental policies
that cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940) of
the Fund's outstanding
voting shares. See "Investment Objective and Management
Policies_Investment
Restrictions" in the Statement of Additional Information.
RISK FACTORS -- Since the Fund's portfolio may contain
securities issued by
foreign branches of domestic and foreign banks, domestic and
foreign branches
of domestic banks, and commercial paper issued by foreign
issuers, the Fund
may be subject to additional investment risks with respect to
such securities
that are different in some respects from those incurred by a
fund which
invests only in debt obligations of U.S. domestic issuers,
although such
obligations may be higher yielding when compared to the
securities of U.S.
domestic issuers. Such risks include possible future political
and economic
developments, the possible imposition of foreign withholding
taxes on interest income payable on the securities, the possible
establishment of
exchange controls or the adoption of other foreign governmental
restrictions
which might adversely affect the payment of principal and
interest on these
securities and the possible seizure or nationalization of
foreign deposits.
OTHER INVESTMENT CONSIDERATIONS -- The Fund attempts to increase
yields by
trading to take advantage of short-term market variations. This
policy is
expected to result in high portfolio turnover but should not
adversely affect
the Fund since the Fund usually does not pay brokerage
commissions when it
purchases short-term debt obligations. The value of the
portfolio securities
held by the Fund will vary inversely to changes in prevailing
interest rates.
Thus, if interest rates have increased from the time a security
was purchased, such security, if sold, might be sold at a price
less than its
cost. Similarly, if interest rates have declined from the time a
security was
purchased, such security, if sold, might be sold at a price
greater than its
purchase cost. In either instance, if the security was purchased
at face
value and held to maturity, no gain or loss would be realized.
Investment decisions for the Fund are made independently
from those
of other investment companies, investment advisory accounts,
custodial
accounts, individual trust accounts and commingled funds that
may be advised
by the Manager. However, if such other investment companies or
managed
accounts are prepared to invest in, or desire to dispose of,
securities of
the type in which the 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 the Fund or the price
paid or
received by the Fund.
MANAGEMENT OF THE FUND
MANAGER -- The Manager, located at Three First National Plaza,
Chicago, Illinois 60670, is the Fund's investment adviser. The
Manager, a wholly-owned
subsidiary of First Chicago Corporation, a registered bank
holding company,
is a commercial bank offering a wide range of banking and
investment services
to customers throughout the United States and around the world.
As of June 30, 1994, it was one of the largest commercial banks
in the United States and
the largest in the mid-western United States in terms of assets
($64 billion)
and in terms of deposits ($28.5 billion). As of June 30, 1994,
the Manager
provided investment management services to portfolios containing
approximately $9.6 billion in assets. The Manager serves as
investment adviser for the Fund pursuant to a Management
Agreement dated as of October
2, 1991. Under the Management Agreement, the Manager supervises
and assists in the overall management of the Fund's affairs,
subject to the overall
authority of the Fund's Board of Trustees and in conformity with
Massachusetts law and the stated policies of the Fund. The
Manager is responsible for making investment decisions for the
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 the
investment portfolio.
The Manager provides these services through its Investment
Management Department. The investment advisory services of the
Manager are not exclusive
under the terms of the Management Agreement. The Manager is free
to, and does, render investment advisory services to others
including other investment
companies as well as commingled trust funds and a broad spectrum
of individual trust and investment management portfolios, which
have varying investment
objectives. The Manager has advised the Fund that in making its
investment decisions the Manager does not obtain or use material
inside information in
the possession of any division or department of the Manager or
in the possession of any affiliate of the Manager.
The Manager has engaged The Dreyfus Corporation
("Dreyfus"), located
at 200 Park Avenue, New York, New York 10166, to assist it in
providing
certain administrative services for the Fund pursuant to a
separate agreement
between it and Dreyfus. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon
Bank Corporation. The
Manager, from its own funds, will pay Dreyfus for Dreyfus'
services. Dreyfus
was formed in 1947 and as of September 30, 1994, managed or
administered
approximately $69 billion in assets for more than 1.9 million
investor accounts nationwide.
Under the terms of the Management Agreement, the Fund
has agreed to
pay the Manager a monthly fee at the annual rate of .35 of 1% of
the value of
the Fund's average daily net assets. For the fiscal year ended
June 30, 1994,
the Fund paid the Manager a monthly management fee at the
effective annual
rate of .23 of 1% of the value of the Fund's average daily net
assets pursuant to undertakings by the Manager.
GLASS-STEAGALL ACT -- The Glass-Steagall Act and other
applicable laws
prohibit Federally chartered or supervised banks from engaging
in certain
aspects of the business of issuing, underwriting, selling and/or
distributing
securities, although banks such as the Manager are permitted to
purchase and
sell securities upon the order and for the account of their
customers. The
Manager has advised the Fund of its belief that it may perform
the services
for the Fund contemplated by the Management Agreement and this
Prospectus with
out violating the Glass-Steagall Act or other applicable banking
laws or
regulations. The Manager has pointed out, however, that there
are no cases
deciding whether a bank such as the Manager may perform services
comparable
to those performed by the Manager and that future changes in
either Federal
or state statutes and regulations relating to permissible
activities of banks
and their subsidiaries and affiliates, as well as future
judicial or
administrative decisions or interpretations of present and
future statutes
and regulations, could prevent the Manager from continuing to
perform such
services for the Fund. If the Manager were to be prevented from
providing
such services to the Fund, the Fund's Board of Trustees would
review the
Fund's relationship with the Manager and consider taking all
actions
necessary in the circumstances.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- The
Shareholder
Services Group, Inc., a subsidiary of First Data Corporation,
P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New
York, 110 Washington
Street, New York, New York 10286, is the Fund's Custodian.
EXPENSES -- All expenses incurred in the operation of the Fund
are borne by
the Fund, except to the extent specifically assumed by the
Manager. The
expenses borne by the Fund include the following: organizational
costs, taxes, interest, brokerage fees and commissions, if any,
fees of Trustees who
are not officers, directors, employees or holders of 5% or more
of the
outstanding voting securities of the Manager, 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.
The Manager has undertaken until such time as it gives
investors at
least 90 days' notice to the contrary that if, in any fiscal
year, the
aggregate expenses of the Fund, exclusive of taxes, brokerage,
interest on
borrowings and (with the prior written consent of the necessary
state securities commissions) extraordinary expenses, but
including the management
fee, exceed .35% of 1%of the value of the Fund's average net
assets for the
fiscal year, the Fund may deduct from the payment to be made to
the Manager
under the Management Agreement, or the Manager will bear, such
excess
expense.
HOW TO BUY FUND SHARES
The Fund's distributor is Premier Mutual Fund Services,
Inc. (the "Distributor"), located at One Exchange Place, Boston,
Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of Institutional
Administration
Services, Inc., a provider of mutual fund administration
services, the parent
company of which is Boston Institutional Group, Inc.
The Fund is designed for institutional investors,
including banks
(such as the Manager), acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, public agencies
and municipalities.
Fund shares may not be purchased directly by individuals,
although institutions may purchase shares for accounts maintained
by individuals.
Generally, each investor will be required to open a single
master account
with the Fund for all purposes. In certain cases, the Fund may
request investors to maintain separate master accounts for shares
held by the
investor (i) for its own account, for the account of other
institutions and
for accounts for which the institution acts as a fiduciary, and
(ii) for
accounts for which the investor acts in some other capacity. An
institution
may arrange with the Transfer Agent for sub-accounting services
and will be
charged directly for the cost of such services. Certain accounts
may be
eligible for an automatic investment privilege, commonly called
a "sweep,"
under which amounts in excess of a certain minimum held in these
accounts
will be invested automatically in shares at pre-determined
intervals. Each
investor desiring to use this Privilege should consult its bank
for details.
The minimum initial investment is $1,000,000 or any
lesser amount if,
in the Distributor's opinion, the investor has adequate intent
and availability of funds to reach a future level of investment
of $1,000,000.
There is no minimum for subsequent purchases. The initial
investment must be
accompanied by the Fund's Account Application. The Fund does not
impose any
sales charges in connection with purchases of its shares,
although
institutions may charge their clients fees in connection with
purchases for
the accounts of their clients. Share certificates are issued
only upon the
investor's written request. No certificates are issued for
fractional shares.
The Fund reserves the right to reject any purchase order.
Fund shares may be purchased by wire, by telephone or
through
compatible computer facilities. All payments should be made in
U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S.
banks. Investors
may telephone orders for purchase of the Fund's shares by
calling 1-800-227-0072 or, if calling from overseas,
1-401-455-3309. For instructions
concerning purchases and to determine whether their computer
facilities are
compatible with those of the Fund, investors should call
1-800-227-0072 or, if calling from overseas, 1-401-455-3309.
Fund shares are sold on a continuous basis at the net
asset value per share next determined after an order in proper
form and Federal Funds (monies
of member banks in the Federal Reserve System which are held on
deposit at a Federal Reserve Bank) are received by the Transfer
Agent. If an investor does
not remit Federal Funds, its payment must be converted into
Federal Funds.
This usually occurs within one business day of receipt of a bank
wire and
within two business days of receipt of a check drawn on a member
bank of the
Federal Reserve System. Checks drawn on banks which are not
members of the
Federal Reserve System may take considerably longer to convert
into Federal
Funds. Prior to receipt of Federal Funds, the investor's money
will not be invested.
The Fund's net asset value per share is determined as of
2:00 p.m., Chicago time, on each day the New York Stock Exchange
is open for business,
except on Martin Luther King, Jr. Day, Columbus Day
and Veterans Day. Net asset value per share is computed by
dividing the value
of the Fund's net assets (i.e., the value of its assets less
liabilities) by
the total number of shares outstanding. See "Determination of
Net Asset Value"
in the Fund's Statement of Additional Information.
Investors whose payments are received in or converted
into Federal
Funds by 2:00 p.m., Chicago time, by the Transfer Agent will
receive the
dividend declared that day. Investors whose payments are
received in or
converted into Federal Funds after 2:00 p.m., Chicago time, by
the Transfer
Agent will begin to accrue dividends on the following business
day.
Federal Regulations require that an investor provide a
certified
Taxpayer Identification Number ("TIN") upon opening or reopening
an account.
See "Dividends, Distributions and Taxes" and the Fund's 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").
EXCHANGE PRIVILEGE
The Exchange Privilege enables an investor to purchase,
in exchange
for shares of the Fund, shares of First Prairie U.S. Treasury
Securities Cash
Management, a fund advised by the Manager, which has the same
investment
objective, but different management policies that may be of
interest to
investors. The Exchange Privilege may be expanded to permit
exchanges between
the Fund and certain other funds that, in the future, may be
advised by the
Manager, to the extent the shares of such funds are offered for
sale in the
investor's state of residence. If an investor desires to use
this Privilege,
the investor should consult the Manager or call 1-800-645-6561
to determine
if it is available and whether any conditions are imposed on its
use.
To use this Privilege, an investor must give exchange
instructions to
the Transfer Agent in writing, by wire or by telephone. If an
investor
previously has established the Telephone Exchange Privilege, the
investor may
telephone exchange instructions by calling 1-800-227-0072 or, if
calling from
overseas,1-401-455-3309. See "How to Redeem Fund
Shares_Procedures." Before
any exchange, the investor must obtain and should review a copy
of the current
prospectus of the fund into which the exchange is being made.
Prospectuses
may be obtained by calling 1-800-645-6561, the Manager or
certain affiliates
of the Manager. When establishing a new account by exchange, the
shares being
exchanged must have a value of at least $1,000,000.
Shares will be exchanged at the next determined net
asset value. No
fees currently are charged shareholders directly in connection
with
exchanges, although the Fund reserves the right, upon not less
than 60 days'
written notice, to charge shareholders a nominal fee in
accordance with rules
promulgated by the Securities and Exchange Commission. The Fund
reserves 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 shareholder
s. See "Exchange Privilege" in the Statement of Additional
Information.
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.
HOW TO REDEEM FUND SHARES
GENERAL--Investors may request redemption of shares at any time
and the
shares will be redeemed at the next determined net asset value.
The Fund imposes no charges when shares are redeemed.
Institutions
may charge their clients a nominal fee for effecting redemptions
of Fund
shares. Any certificates representing Fund shares being redeemed
must be
submitted with the redemption request. 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.
If a request for redemption is received in proper form
by the Transfer Agent by 2:00 p.m., Chicago time, the proceeds of
the redemption, if
transfer by wire is requested, ordinarily will be transmitted in
Federal Funds on the same day and the shares will not receive the
dividend declared
on that day. If the request is received later that day by the
Transfer Agent,
the shares will receive the dividend on the Fund's shares
declared on that
day and the proceeds of redemption, if wire transfer is
requested, ordinarily
will be transmitted in Federal Funds on the next business day.
The 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.
PROCEDURES -- Investors may redeem shares by wire or telephone,
or through
compatible computer facilities as described below.
An investor may redeem or exchange shares by telephone
if the investor has checked the appropriate box on the Fund's
Account Application or
has filed a Shareholder Services Form with the Transfer Agent.
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 an authorized representative of the
investor and
reasonably believed by the Transfer Agent to be genuine. The
Fund will
require the Transfer Agent to employ reasonable procedures, such
as requiring
a form of identification, to confirm that instructions are
genuine and, if it
does not follow such procedures, the 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,
investors 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.
REDEMPTION BY WIRE OR TELEPHONE -- Investors may redeem Fund
shares by wire
or telephone. The redemption proceeds will be paid by wire
transfer.
Investors can redeem shares by telephone by calling
1-800-227-0072 or, if
calling from overseas, 1-401-455-3309. The Fund reserves the
right to refuse
any request made by wire or telephone and may limit the amount
involved or
the number of telephone redemptions. This procedure may be
modified or
terminated at any time by the Transfer Agent or the Fund. The
Fund's
Statement of Additional Information sets forth instructions for
redeeming
shares by wire. Shares for which certificates have been issued
may not be
redeemed by wire or telephone.
REDEMPTION THROUGH COMPATIBLE COMPUTER FACILITIES -- The Fund
makes available
to institutions the ability to redeem shares through compatible
computer
facilities. Investors desiring to redeem shares in this manner
should call
1-800-227-0072 or, if calling from overseas, 1-401-455-3309 to
determine
whether their computer facilities are compatible and to receive
instructions
for redeeming shares in this manner.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net
investment income on
each day the New York Stock Exchange is open for business,
except on Martin
Luther King, Jr. Day, Columbus Day and Veterans Day. Fund shares
begin
earning income dividends on the day the purchase order is
effective.
Dividends usually are paid on the last calendar day of each
month, and are
automatically reinvested in additional Fund shares at net asset
value or, at
the investor's option, paid in cash. The Fund's earnings for
Saturdays,
Sundays and holidays are declared as dividends on the preceding
business day.
If an investor redeems all shares in its account at any time
during the
month, all dividends to which the investor is entitled will be
paid along
with the proceeds of the redemption. Distributions from net
realized
securities gains, if any, generally are declared and paid once a
year, but
the Fund may make distributions on a more frequent basis to
comply with the distribution
requirements
of the Internal Revenue Code of 1986, as amended (the "Code"),
in all events
in a manner consistent with the provisions of the Investment
Company Act of
1940. The Fund will not make distributions from net realized
securities gains
unless capital loss carryovers, if any, have been utilized or
have expired.
Investors may choose whether to receive distributions in cash or
to reinvest
in additional Fund shares at net asset value. All expenses are
accrued daily
and deducted before declaration of dividends to investors.
Dividends paid by the Fund derived from net investment
income,
together with distributions from any net realized short term
securities gains
and all or a portion any of gains realized from the sale or
other disposition
of certain market discount bonds, will be taxable to U.S.
investors as
ordinary income, whether received in cash or reinvested in
additional Fund
shares. No dividend paid by the Fund will qualify for the
dividends received
deduction allowable to certain U.S. corporations. Distributions
from net
realized long-term securities gains, if any, of the Fund will be
taxable to
U.S. investors as long-term capital gains regardless of how long
investors
have held Fund shares and whether such distributions are
received in cash or
reinvested in additional Fund shares. The Code provides that the
net capital
gain of an individual generally will not be subject to Federal
income tax at a rate in excess of 28%.
Dividends derived from net investment income, together
with distributions from net realized short-term securities gains
and all or a
portion of any gains realized from the sale or other disposition
of certain
market discount bonds, paid by the Fund with respect to Fund
shares
beneficially owned by a foreign person generally are subject to
U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign person
claims the benefit of a lower rate specified in a tax treaty.
Distributions
from net realized long-term securities gains paid by the Fund
with respect to
Fund shares beneficially owned by a foreign person generally
will not be
subject to U.S. nonresident withholding tax. However, such
distributions may
be subject to backup withholding, as described below, unless the
foreign person certifies his non-U.S. residency status.
Notice as to the tax status of dividends and
distributions will be
mailed to investors annually. Each investor also will receive
periodic
summaries of its account which will include information as to
dividends and
distributions from securities gains, if any, paid during the
year.
Federal regulations generally require the Fund to
withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends
and
distributions from net realized securities gains of the Fund
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. Any tax withheld as a
result of
backup withholding does not constitute an additional tax imposed
on the
record owner of the account, and may be claimed as a credit on
the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has
qualified for the
fiscal year ended June 30, 1994 as a "regulated investment
company" under the
Code. The 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. The Fund is
subject to a non-deductible 4% excise tax measured with respect
to certain
undistributed amounts of taxable investment income and capital
gains.
Dividends and distributions may be subject to certain
state and local
taxes. Each investor and beneficial holder of Fund shares should
consult its
tax adviser regarding specific questions as to Federal, state or
local taxes.
GENERAL INFORMATION
The Fund was organized as an unincorporated business
trust under the
laws of the Commonwealth of Massachusetts pursuant to an
Agreement and
Declaration of Trust (the "Trust Agreement") dated September 12,
1990, and
commenced operations on July 30, 1992. The Fund is authorized to
issue an
unlimited number of shares of beneficial interest, par value
$.001 per share.
Each share has one vote. Investors have agreed to vote Fund
shares for which
they are the record owners according to voting instructions
received from the beneficial holder of such shares.
Under Massachusetts law, shareholders could, under
certain circumstances, be held liable for the obligations of the
Fund. However, the
Trust Agreement disclaims shareholder liability for acts or
obligations of
the Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed
by the Fund or a
Trustee. The 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 Fund in such a
way as to
avoid, as far as possible, ultimate liability of the
shareholders for
liabilities of the Fund. As discussed under "Management of the
Fund" in the
Statement of Additional Information, the Fund ordinarily will
not hold
shareholder meetings; however, shareholders under certain
circumstances may
have the right to call a meeting of shareholders for the purpose
of voting to
remove Trustees.
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 Fund at
the address
shown on the front cover 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 FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND. 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.
PROSPECTUS
FIRST (First Prairie wheat Logo) PRAIRIE
CASH
MANAGEMENT
*No sales load
*No redemption fee
*Exchange privileges
THE FIRST NATIONAL BANK OF CHICAGO
Manager
PREMIER MUTUAL FUND SERVICES, INC.
Distributor
370P4103194
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PROSPECTUS AUGUST 18, 1994
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
- ---------------------------------------------------------------
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT (THE
"FUND") IS AN OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT
COMPANY, KNOWN AS A MONEY MARKET MUTUAL FUND. ITS GOAL IS TO
PROVIDE INVESTORS WITH AS HIGH A LEVEL OF CURRENT INCOME AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE
OF LIQUIDITY. THE FUND WILL INVEST ONLY IN U.S. TREASURY
SECURITIES AND IN OTHER SECURITIES GUARANTEED AS TO PRINCIPAL AND
INTEREST BY THE U.S. GOVERNMENT, AND REPURCHASE AGREEMENTS IN
RESPECT THEREOF.
THE FUND IS DESIGNED FOR INSTITUTIONAL INVESTORS, INCLUDING
BANKS, ACTING FOR THEMSELVES OR IN A FIDUCIARY, ADVISORY, AGENCY,
CUSTODIAL OR SIMILAR CAPACITY, PUBLIC AGENCIES AND
MUNICIPALITIES.
FUND SHARES MAY NOT BE PURCHASED DIRECTLY BY INDIVIDUALS,
ALTHOUGH INSTITUTIONS MAY PURCHASE SHARES FOR ACCOUNTS
MAINTAINED BY INDIVIDUALS. SUCH INSTITUTIONS HAVE AGREED TO
TRANSMIT COPIES OF THIS PROSPECTUS TO EACH INDIVIDUAL OR ENTITY
FOR WHOSE ACCOUNT THE INSTITUTION PURCHASES FUND SHARES, TO THE
EXTENT REQUIRED BY LAW.
THE FUND'S SHARES ARE SOLD WITHOUT A SALES CHARGE. INVESTORS
CAN INVEST OR REINVEST IN OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY.
THE FIRST NATIONAL BANK OF CHICAGO (THE "MANAGER") SERVES AS
THE FUND'S INVESTMENT ADVISER. DREYFUS SERVICE CORPORATION (THE
"DISTRIBUTOR"), A WHOLLY-OWNED SUBSIDIARY OF THE DREYFUS
CORPORATION, SERVES AS THE FUND'S DISTRIBUTOR.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OF OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. MONEY MARKET MUTUAL FUND
SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE
FUND THAT AN INVESTOR SHOULD KNOW BEFORE INVESTING. IT SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL
INFORMATION), DATED AUGUST 18, 1994, 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 FUND AT 144 GLENN CURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-821-1185. WHEN
TELEPHONING, ASK FOR OPERATOR 666.
- ----------------------------------------------------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
PAGE
<S> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES............... 2 HOW TO BUY FUND SHARES......... 6
CONDENSED FINANCIAL INFORMATION.............. 2 EXCHANGE PRIVILEGE............. 7
YIELD INFORMATION............................ 3 HOW TO REDEEM FUND SHARES...... 8
DESCRIPTION OF THE FUND...................... 3 DIVIDENDS, DISTRIBUTIONS AND TAXES 9
MANAGEMENT OF THE FUND....................... 5 GENERAL INFORMATION............. 10
</TABLE>
- ----------------------------------------------------------------
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>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fee (after expense
reimbursement)........................ .24%
Other Expenses.................... .06%
Total Fund Operating Expenses (after expense
reimbursement)......... .30%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
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: $3 $10 $17 $38
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
- -----------------------------------------------------------------
The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses borne by the Fund,
and therefore indirectly by investors, the payment of which will
reduce investors' return on an annual basis. The expenses noted
above, without reimbursement, would be: Management Fees-.35%,
Other Expenses-.06% and Total Fund Operating Expenses-.41%; and
the amount of expenses that an investor would pay, assuming
redemption after one, three, five and ten years, would be $4,
$13, $23 and $52, respectively. The Manager has undertaken until
such time as it gives investors at least 90 days' notice to the
contrary that if, in any fiscal year, certain expenses, including
the management fee, exceed .35 of 1% of the value of the Fund's
average net assets for the fiscal year, the Fund may deduct from
the payment to be made to the Manager under the Management
Agreement, or the Manager will bear, such excess expense.
Institutions effecting transactions in Fund shares for the
accounts of their clients may charge their clients direct fees in
connection with such transactions; such fees are not reflected in
the foregoing table. See "Management of the Fund."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report
thereon appears 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 for a
share of beneficial interest outstanding, total investment
return, ratios to average net assets and other supplemental data
for each year indicated. This information has been derived from
the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
PER SHARE DATA: 1993(1) 1994
<S> <C> <C>
Net asset value, beginning of year...................... $1.0000 $1.0000
INVESTMENT OPERATIONS:
Investment income__net.................................. .0319 .0302
Net realized (loss) on investments...................... __ (.0001)
TOTAL FROM INVESTMENT OPERATIONS....................... .0319 .0301
DISTRIBUTIONS;
Dividends from investment income_net.................... (.0319) (.0302)
Net asset value, end of year............................ $1.0000 $ .9999
TOTAL INVESTMENT RETURN................................... 3.25%(2) 3.06%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. .02%(2) .30%
Ratio of net investment income to average net assets.... 3.10%(2) 3.02%
Decrease reflected in above expense ratios due to
undertakings by the Manager........................... .47%(2) .11%
Net Assets, end of year (000's omitted)................. $264,527 $413,634
(1) From June 2, 1992 (commencement of operations) to May 31,
1993.
(2)Annualized.
</TABLE>
<PAGE>
YIELD INFORMATION
From time to time, the Fund advertises 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 Fund's yield and effective yield may
reflect absorbed expenses pursuant to any undertaking that may be
in effect. See "Management of the Fund."
Yield information is useful in reviewing the Fund's
performance, but because yields will fluctuate, under certain
conditions such information may not provide a basis for
comparison with domestic bank deposits, other investments which
pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of
computing yield.
Comparative performance information may be used from time to time
in advertising or marketing the Fund's shares, including data
from Lipper Analytical Services, Inc., Bank Rate Monitor
trademark, N. Palm Beach, Fla. 33408, IBC/Donoghue's Money Fund
Report, Morningstar, Inc. and other industry publications.
DESCRIPTION OF THE FUND
WHEN USED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL
INFORMATION, THE TERMS "INVESTOR" AND "SHAREHOLDER" REFER TO THE
INSTITUTION PURCHASING FUND SHARES AND DO NOT REFER TO ANY
INDIVIDUAL OR ENTITY FOR WHOSE ACCOUNT THE INSTITUTION MAY
PURCHASE FUND SHARES. Such institutions have agreed to transmit
copies of this Prospectus and all relevant Fund materials,
including proxy materials, to each individual or entity for whose
account the institution purchases Fund shares, to the extent
required by law.
INVESTMENT OBJECTIVE - The Fund's goal is to provide investors
with as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. The
Fund's investment objective cannot be changed without approval by
the holders of a majority (as defined in the Investment Company
Act of 1940) of the Fund's outstanding voting shares. There can
be no assurance that the Fund's investment objective will be
achieved. Because, as described below, the Fund will invest only
in direct obligations of the U.S. Government, its portfolio
securities may not earn as high a level of current income as
long-term or lower quality securities which generally have less
liquidity, greater market risk and more fluctuation in market
value.
MANAGEMENT POLICIES - It is a fundamental policy of the Fund that
it will invest at least 65% of the value of its net assets in
U.S. Treasury securities and repurchase agreements in respect
thereof. The remainder may be invested in other securities
guaranteed as to principal and interest by the U.S. Government
and repurchase agreements in respect thereof.
Instruments which are issued or guaranteed as to principal
and interest by the U.S. Government constitute direct obligations
of the United States of America. The Fund will not invest in
securities issued or guaranteed by U.S. Government agencies,
instrumentalities or government-sponsored enterprises that are
not backed by the full faith and credit of the United States.
The Fund seeks to maintain a net asset value of $1.00 per
share for purchases and redemptions. To do so, the Fund uses the
amortized cost method of valuing its securities pursuant to Rule
2a-7 under the Investment Company Act of 1940. In accordance with
Rule 2a-7, the 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. There can be no assurance that the Fund will be able
to maintain a stable net asset value of $1.00 per share. For
further information regarding the amortized cost method, see
"Determination of Net Asset Value" in the Fund's Statement of
Additional Information.
U.S. Treasury securities 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. Securities
guaranteed as to the payment of principal and interest
by the U.S. Government include obligations issued by the Small
Business Administration and Government National Mortgage
Association.
Repurchase agreements involve the acquisition by the Fund of
an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Fund to resell, the instrument at a
fixed price usually not more than one week after its purchase.
The Fund's custodian or sub-custodian will have custody of, and
will hold in a segregated account, securities acquired by the
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, the Fund will enter into repurchase agreements only
with registered or unregistered securities dealers or banks with
total assets in excess of one billion dollars, with respect to
securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the
value of the securities purchased should decrease below resale
price. The Fund will limit further the entities with which it
will enter into repurchase agreements to those whose securities
would be First Tier Securities, as defined in Rule 2a-7 under the
Investment Company Act of 1940.
The Manager will monitor on an ongoing basis the value of the
collateral to assure that it always equals or exceeds the
repurchase price.
Certain costs may be incurred by the Fund in connection with the
sale of the securities if the seller does not repurchase them in
accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller
of the securities, realization on the securities by the Fund may
be delayed or limited. The Fund will consider on an ongoing basis
the creditworthiness of the institutions with which it enters
into repurchase agreements.
From time to time, the Fund may lend securities from its
portfolio to brokers, dealers and other institutional investors
needing to borrow securities to complete certain transactions.
Such loans may not exceed 331/3% of the value of the Fund's total
assets. In connection with such loans, the Fund will receive
collateral consisting of cash or U.S. Government securities. Such
collateral will be maintained at all times in an amount equal to
at least 100% of the current market value of the loaned
securities. The Fund can increase its income through the
investment of such collateral. The Fund continues to be entitled
to payments in amounts equal to the interest or 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. The Fund might
experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement
with the Fund. The Fund will limit the entities with which it
will enter into securities lending transactions to those whose
securities would be First Tier Securities.
CERTAIN FUNDAMENTAL POLICIES - The Fund may (i) borrow money from
banks, but only for temporary or emergency (not leveraging)
purposes, in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) valued at the lesser of
cost or market, less liabilities (not including the amount
borrowed) at the time the borrowing is made. While borrowings
exceed 5% of the value of the Fund's total assets, the Fund will
not make any additional investments; (ii) pledge, hypothecate,
mortgage or otherwise encumber its assets, but only to secure
borrowings for temporary or emergency purposes; and (iii) invest
up to 10% of its net assets in repurchase agreements providing
for settlement in more than seven days after notice. This
paragraph describes fundamental policies that cannot be changed
without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting
shares. See "Investment Objective and Management
Policies-Investment Restrictions" in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS - The Fund attempts to increase yields
by trading to take advantage of short-term market variations.
This policy is expected to result in high portfolio turnover but
should not adversely affect the Fund since the Fund usually does
not pay brokerage commissions when it purchases U.S. Government
securities. The value of the portfolio securities held by the
Fund will vary inversely to changes in prevailing interest rates.
Thus, if interest rates have increased from the time a
security was purchased, such security, if sold, might be sold at
a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security,
if sold, might be sold at a price greater than its purchase cost.
In either instance, if the security was purchased at face value
and held to maturity, no gain or loss would be realized.
Dividends and distributions paid by the Fund that are
attributable to interest from direct obligations of the United
States currently are not subject to personal income tax in most
states. However, dividends and distributions attributable to
interest from repurchase agreements may be subject to state tax.
MANAGEMENT OF THE FUND
MANAGER - The Manager, located at Three First National Plaza,
Chicago, Illinois 60670, is the Fund's investment adviser. The
Manager, a wholly-owned subsidiary of First Chicago Corporation,
a registered bank holding company, is a commercial bank offering
a wide range of banking and investment services to customers
throughout the United States and around the world. As of March
31, 1994, it was one of the largest commercial banks in the
United States and the largest in the mid-western United
States in terms of assets ($59.8 billion) and in terms of
deposits ($28.8 billion). As of March 31, 1994, the Manager
provided investment management services to portfolios containing
approximately $15.5 billion in assets. The Manager serves as
investment adviser for the Fund pursuant to a Management
Agreement dated as of October 2, 1991. Under the Management
Agreement, the Manager supervises and assists in the overall
management of the Fund's affairs, subject to the overall
authority of the Fund's Board of Trustees and in conformity with
Massachusetts law and the stated policies of the Fund. The
Manager is responsible for making investment decisions for the
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 the investment portfolio. The Manager provides
these services through its Investment Management Department. The
investment advisory services of the Manager are not exclusive
under the terms of the Management Agreement. The Manager is free
to, and does, render investment advisory services to others
including other investment companies as well as commingled trust
funds and a broad spectrum of individual trust and investment
management portfolios, which have varying investment objectives.
The Manager has advised the Fund that in making its investment
decisions the Manager does not obtain or use material inside
information in the possession of any division or department of
the Manager or in the possession of any affiliate of the
Manager.
The Manager has engaged The Dreyfus Corporation ("Dreyfus"),
located at 200 Park Avenue, New York, New York 10166, to assist
it in providing certain administrative services for the Fund
pursuant to a separate agreement between it and Dreyfus. The
Manager, from its own funds, will pay Dreyfus for Dreyfus'
services. Dreyfus was formed in 1947 and, as of July 31, 1994,
managed or administered approximately $70 billion in
assets for more than l.9 million investor accounts nationwide.
Under the terms of the Management Agreement, the Fund has
agreed to pay the Manager a monthly fee at the annual rate of .35
of l % of the value of the Fund's average daily net assets. For
the fiscal year ended May 31,1994, the Fund paid the Manager a
monthly management fee at the effective annual rate of .24 of 1%
of the value of the Fund's average daily net assets pursuant to
undertakings by the Manager.
GLASS-STEAGALL ACT - The Glass-Steagall Act and other applicable
laws prohibit Federally chartered or supervised banks from
engaging in certain aspects of the business of issuing,
underwriting, selling and/or distributing securities, although
banks such as the Manager are permitted to purchase and sell
securities upon the order and for the account of their
customers. The Manager has advised the Fund of its belief that it
may perform the services for the Fund contemplated by the
Management Agreement and this Prospectus without violating the
Glass-Steagall Act or other applicable banking laws or
regulations. The Manager has pointed out, however, that there are
no cases deciding whether a bank such as the Manager may perform
services comparable to those performed by the Manager and that
future changes in either Federal or state statutes and
regulation relating to permissible activities of banks and their
subsidiaries and affiliates, as well as future judicial or
administrative decisions or interpretations of present and future
statutes and regulations, could prevent the Manager from
continuing to perform such services for the Fund. If the Manager
were to be prevented from providing such services to the Fund,
the Fund's Board of Trustees would review the Fund's relationship
with the Manager and consider taking all action necessary in the
circumstances.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN - The
Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island
02940-9671,is the Fund's Transfer and Dividend Disbursing Agent
(the "Transfer Agent").
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's Custodian.
EXPENSES - All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by
the Manager. The expenses borne by the Fund include the
following: organizational costs, taxes, interest, brokerage fees
and commissions, if any, fees of Trustees who are not officers,
directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, 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.
The Manager has undertaken until such time as it gives
investors at least 90 days' notice to the contrary that if, in
any fiscal year, the aggregate expenses of the Fund, exclusive of
taxes, brokerage, interest on borrowings and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed
.35 of 1% of the value of the Fund's average net assets for the
fiscal year, the Fund may deduct from the payment to be made to
the Manager under the Management Agreement, or the Manager will
bear such excess expense.
HOW TO BUY FUND SHARES
The Fund's distributor is Dreyfus Service Corporation, a
wholly-owned subsidiary of Dreyfus, located at 200 Park Avenue,
New York, New York 10166. The shares it distributes are not
deposits or obligations of The Dreyfus Security Savings Bank,
F.S.B. or the Manager and therefore are not insured by the FDIC.
The Fund is designed for institutional investors, including
banks (such as the Manager), acting for themselves or in a
fiduciary, advisory, agency, custodial or similar capacity,
public agencies and municipalities. Fund shares may not be
purchased directly by individuals, although institutions
may purchase shares for accounts maintained by individuals.
Generally, each investor will be required to open a single master
account with the Fund for all purposes. In certain cases, the
Fund may request investors to maintain separate master accounts
for shares held by the investor (i) for its own account, for the
account of other institutions and for accounts for
which the institution acts as a fiduciary, and (ii) for accounts
for which the investor acts in some other capacity. An
institution may arrange with the Transfer Agent for
sub-accounting services and will be charged directly for the cost
of such services. Certain accounts may be eligible for
an automatic investment privilege, commonly called a "sweep,"
under which amounts in excess of a certain minimum held in these
accounts will be invested automatically in shares at
pre-determined intervals. Each investor desiring to use this
Privilege should consult its bank for details.
The minimum initial investment is $l,000,000 or any lesser
amount if, in the Distributor's opinion, the investor has
adequate intent and availability of funds to reach a future level
of investment of $1,000,000. There is no minimum for subsequent
purchases. The initial investment must be accompanied by the
Fund's Account Application. The Fund does not impose any sales
charges in connection with purchases of its shares, although
institutions may charge their clients fees in connection
with purchases for the accounts of their clients. Share
certificates are issued only upon the investor's written request.
No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order.
Fund shares may be purchased by wire, by telephone or through
compatible computer facilities. All payments should be made in
U.S. dollars and, to avoid fees and delays, should be drawn only
on U.S. banks. Investors may telephone orders for purchases of
Fund shares by calling l-800-227-0072 or, if calling from
overseas, 1-401-455-3309. For instructions concerning purchases
and to determine whether their computer facilities are compatible
with those of the Fund, investors should call l-800-227-0072 or,
if calling from overseas, l-401-455-3309.
Fund shares are sold on a continuous basis at the net asset
value per share next determined after an order in proper form and
Federal Funds (monies of member banks in the Federal Reserve
System which are held on deposit at a Federal Reserve Bank) are
received by the Transfer Agent. If an investor does not remit
Federal Funds, its payment must be converted into Federal Funds.
This usually occurs within one business day of receipt
of a bank wire and within two business days of receipt of a check
drawn on a member bank of the Federal Reserve System. Checks
drawn on banks which are not members of the Federal Reserve
System may take considerably longer to convert into Federal
Funds. Prior to receipt of Federal Funds, the investor's money
will not be invested.
The Fund's net asset value per share is determined as of 2:00
p.m., Chicago time, on each day the New York Stock Exchange is
open for business, except on Martin Luther King, Jr. Day,
Columbus Day and Veterans Day. Net asset value per share is
computed by dividing the value of the Fund's net assets (i.e.,
the value of its assets less liabilities) by the total
number of shares outstanding. See "Determination of Net Asset
Value" in the Fund's Statement of Additional Information.
Investors whose payments are received in or converted into
Federal Funds by 2:00 p.m., Chicago time, by the Transfer Agent
will receive the dividend declared that day. Investors whose
payments are received in or converted into Federal Funds after
2:00 p.m., Chicago time, by the Transfer Agent will begin to
accrue dividends on the following business day.
Federal regulations require that an investor provide a
certified Taxpayer Identification Number ("TIN") upon opening or
reopening an account. See "Dividends, Distributions and Taxes"
and the Fund's 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").
EXCHANGE PRIVILEGE
The Exchange Privilege enables an investor to purchase, in
exchange for shares of the Fund, shares of First Prairie Cash
Management, a fund advised by the Manager, which has the same
investment objective, but different management policies that may
be of interest to investors. The Exchange Privilege may be
expanded to permit exchanges between the Fund and certain other
funds that, in the future, may be advised by the Manager,
to the extent the shares of such funds are offered for sale in
the investor's state of residence. If an investor desires to use
this Privilege, the investor should consult the Manager or the
Distributor to determine if it is available and whether any
conditions are imposed on its use.
To use this Privilege, an investor must give exchange
instructions to the Transfer Agent in writing, by wire or by
telephone. If an investor previously has established the
Telephone Exchange Privilege, the investor may telephone exchange
instructions by calling 1-800-227-0072 or, if calling from
overseas, 1-401-455-3309. See "How to Redeem Fund
Shares-Procedures." Before any exchange, the investor must obtain
and should review a copy of the current prospectus of the fund
into which the exchange is being made. Prospectuses may be
obtained from the Distributor, the Manager or certain affiliates
of the Manager. When establishing a new account by exchange, the
shares being exchanged must have a value of at least $1,000,000.
Shares will be exchanged at the next determined net asset
value. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge
shareholders a nominal fee in accordance with rules promulgated
by the Securities and Exchange Commission. The Fund reserves 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. See "Exchange Privilege" in the
Statement of Additional Information. 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.
HOW TO REDEEM FUND SHARES
GENERAL - Investors may request redemption of shares at any time
and the shares will be redeemed at the next determined net asset
value.
The Fund imposes no charges when shares are redeemed.
Institutions may charge their clients a nominal fee for effecting
redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption
request. 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.
If a request for redemption is received in proper form by the
Transfer Agent by 2:00 p.m., Chicago time, the proceeds of the
redemption, if transfer by wire is requested, ordinarily will be
transmitted in Federal Funds on the same day and the shares will
not receive the dividend declared on that day. If the request is
received later that day by the Transfer Agent, the shares will
receive the dividend on the Fund's shares declared on that day
and the proceeds of redemption, if wire transfer is requested,
ordinarily will be transmitted in Federal Funds on the next
business day.
The 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.
PROCEDURES - Investors may redeem shares by wire or telephone, or
through compatible computer facilities as described below.
An investor may redeem or exchange shares by telephone if the
investor has checked the appropriate box on the Fund's Account
Application or has filed a Shareholder Services Form with the
Transfer Agent. 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 an authorized representative of the investor and
reasonably believed by the Transfer Agent to be genuine. The
Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of identification, to
confirm that instructions are genuine and, if it does not follow
such procedures, the 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,
investors 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.
REDEMPTION BY WIRE OR TELEPHONE __ Investors may redeem Fund
shares by wire or telephone. The redemption proceeds will be paid
by wire transfer. Investors can redeem shares by telephone by
calling 1-800-227-0072 or, if calling from overseas,
1-401-455-3309. The Fund reserves the right to refuse any request
made by wire or telephone and may limit the amount involved or
the number of telephone redemptions. This procedure may be
modified or terminated at any time by the Transfer Agent
or the Fund. The Fund's Statement of Additional Information sets
forth instructions for redeeming shares by wire. Shares for which
certificates have been issued may not be redeemed by wire or
telephone.
REDEMPTION THROUGH COMPATIBLE COMPUTER FACILITIES - The Fund
makes available to institutions the ability to redeem shares
through compatible computer facilities. Investors desiring to
redeem shares in this manner should call l-800-227-0072 or, if
calling from overseas, 1-401-455-3309 to determine whether their
computer facilities are compatible and to receive instructions
for redeeming shares in this manner.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net investment
income on each day the New York Stock Exchange is open for
business, except on Martin Luther King, Jr. Day, Columbus Day and
Veterans Day. Fund shares begin earning income dividends on the
day the purchase order is effective. Dividends usually are paid
on the last calendar day of each month, and are automatically
reinvested in additional Fund shares at net asset value or,
at the investor's option, paid in cash. The Fund's earnings for
Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If an investor redeems all shares in its
account at any time during the month, all dividends to which the
investor is entitled will be paid along with the proceeds of the
redemption. Distributions from net realized securities gains, if
any, generally are declared and paid once a year, but the Fund
may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code of
1986, as amended (the "Code"), in all events in a manner
consistent with the provisions of the Investment Company Act of
1940. The Fund will not make distributions from net realized
securities gains unless capital loss carryovers, if any, have
been utilized or have expired. Investors may choose whether to
receive distributions in cash or to reinvest in additional Fund
shares at net asset value. All expenses are accrued daily
and deducted before declaration of dividends to investors.
Dividends paid by the Fund derived from net investment
income, together with distributions from any net realized
short-term securities gains and all or a portion of gains
realized from the sale or other dispostion of certain market
discount bonds will be taxable to U.S. investors as ordinary
income, whether received in cash or reinvested in additional Fund
shares. No dividend paid by the Fund will qualify for the
dividends received deduction allowable to certain U.S.
corporations. Distributions from net realized long-term
securities gains, if any, of the Fund will be taxable to U.S.
investors as long-term capital gains regardless of how long
investors have held Fund shares and whether such distributions
are received in cash or reinvested in additional Fund shares.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains paid
by the Fund with respect to Fund shares beneficially owned by a
foreign person generally are subject to U.S. nonresident
withholding taxes at the rate of 30%, unless the foreign person
claims the benefit of a lower rate specified in a tax treaty.
Distributions from net realized long-term securities gains paid
by the Fund with respect to Fund shares beneficially owned by a
foreign person generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign person
certifies his non-U.S. residency status.
Notice as to the tax status of dividends and distributions
will be mailed to investors annually. Each investor also will
receive periodic summaries of its account which include
information as to dividends and distributions from securities
gains, if any, paid during the year.
Dividends and distributions attributable to interest from
direct obligations of the United States paid by the Fund
currently are not subject to personal income tax in most states.
Dividends and distributions attributable to interest from the
entry into repurchase agreements may be subject to state tax. The
Fund intends to provide shareholders with a statement which sets
forth the percentage of dividends and distributions paid by the
Fund that is attributable to interest income from direct
obligations of the United States.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of
taxable dividends and distributions from net realized securities
gains of the Fund 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. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and
may be claimed as a credit on the record owner's Federal income
tax return.
Management of the Fund believes that the Fund has qualified
for the fiscal year ended May 31, 1994 as a "regulated investment
company" under the Code. The 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.
The 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 and beneficial holder of Fund shares should
consult its tax adviser regarding specific questions as to
Federal, state or local taxes.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to
an Agreement and Declaration of Trust (the "Trust Agreement")
dated September 12, 1990, and commenced operations June 2, 1992.
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, par value $.001 per share. Each share has
one vote. Investors have agreed to vote
Fund shares for which they are the record owners according to
voting instructions received from the beneficial holder of such
shares.
Under Massachusetts law, shareholders could, under certain
circumstances, be held liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such
disclaimer be given in each agreement, obligation or investment
entered into or executed by the Fund or a Trustee. The 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 Fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities
of the Fund. As discussed under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not
hold shareholder meetings; however, shareholders under certain
circumstances may have the right to call a meeting of
shareholders for the purpose of voting to remove Trustees.
The Transfer Agent maintains a record of each investor's
ownership andsends confirmations and statements of account.
Investor inquiries may be made by writing to the Fund at the
address shown on the front cover 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 FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. 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.
<PAGE>
FIRST (FIRST PRAIRIE LOGO) PRAIRIE
U.S. TREASURY
SECURITIES
CASH MANAGEMENT
NO SALES LOAD
NO REDEMPTION FEE
EXCHANGE PRIVILEGES
THE FIRST NATIONAL BANK OF CHICAGO
MANAGER
PREMIER MUTUAL FUND SERVICE, INC.
DISTRIBUTOR
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
PART B
STATEMENT OF ADDITIONAL INFORMATION
_______, 1994
Acquisition of the Assets of
FIRST PRAIRIE CASH MANAGEMENT
By and in Exchange for Institutional Shares of
CASH MANAGEMENT SERIES OF PRAIRIE INSTITUTIONAL FUNDS
Acquisition of Assets of
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
By and in Exchange for Institutional Shares of
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT SERIES OF
PRAIRIE INSTITUTIONAL FUNDS
This Statement of Additional Information, which is not
a prospectus, supplements and should be read in conjunction with
the Joint Proxy Statement/Prospectus dated _______, 1994,
relating specifically to the proposed transfer of all or
substantially all of the assets and liabilities of (i) First
Prairie Cash Management in exchange for Institutional Shares of
the Cash Management Series of
Prairie Institutional Funds and (ii) First Prairie U.S. Treasury
Securities Cash Management in exchange for Institutional Shares
of the U.S. Government Securities Cash Management Series of
Prairie Institutional Funds. Each such transfer is to occur
pursuant to an
Agreement and Plan of Exchange. This Statement of Additional
Information consists of this cover page and the following
described documents, each of which is attached hereto and
incorporated herein by reference:
1. The Statement of Additional Information of the
Cash Management Funds of Prairie Institutional Funds dated
______, 1994.
2. The Statement of Additional Information of First
Prairie Cash Management dated October 31, 1994.
3. The Statement of Additional Information of First
Prairie U.S. Treasury Securities Cash Management dated
August 18, 1994.
The Joint Proxy Statement/Prospectus dated _______,
1994 may be obtained by writing to Prairie Institutional Funds,
Three First National Plaza, Chicago, Illinois 60670.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
Cash Management Funds
Institutional AND Service SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
__________, 1994
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with
the current Prospectus of Cash Management Fund, Municipal Cash
Management Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund (each, a "Fund") of
Prairie Institutional Funds (the "Trust"), dated _________, 1994,
as it may be revised from time to time. To obtain a copy of the
Funds' Prospectus, please write to the Trust at
_______________________ or call toll free 1-800-________.
The First National Bank of Chicago (the "Manager") serves as
each Fund's investment adviser.
Concord Financial Group, Inc. (the "Distributor") is the
distributor of the Funds' shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies B-2
Management of the Trust B-11
Management Agreement B-11
Purchase of Fund Shares B-14
Service Plan B-15
Redemption of Fund Shares B-16
Determination of Net Asset Value B-17
Portfolio Transactions B-18
Exchange Privilege B-19
Dividends, Distributions and Taxes B-19
Yield Information B-20
Information About the Trust B-21
Counsel and Independent Auditors B-21
Appendix B-22
Financial Statements B-27
Report of Independent Auditors B-__
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS
ENTITLED "DESCRIPTION OF THE FUNDS."
Bank Obligations. (Cash Management Fund and, to a limited
extent, Municipal Cash Management Fund) Domestic commercial
banks organized under Federal law are supervised and examined by
the Comptroller of the Currency and are required to be members of
the Federal Reserve System and to have their deposits insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Domestic
banks organized under state law are supervised and examined by
state banking authorities but are members of the Federal Reserve
System only if the elect to join. In addition, state banks whose
certificates of deposit ("CDs") may be purchased by the Fund are
insured by the FDIC (although such insurance may not be of
material benefit to the Fund, depending on the principal amount
of the CDs of each bank held by the Fund) and are subject to
Federal examination and to a substantial body of Federal law and
regulation. 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 recordkeeping requirements. In addition, less
information may be publicly available about a foreign branch of a
domestic bank or about a foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may
be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific
obligation or by Federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with assets
in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which
the branch is located if the branch is licensed in that state.
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 Manager carefully evaluates such investments on a
case-by-case basis.
These Funds may purchase CDs issued by banks, savings and
loan associations and similar thrift institutions with less than
$1 billion in assets, which are members of the FDIC, provided the
Fund purchases any such CD in a principal amount of not more than
$100,000, which amount would be fully insured by the Bank
Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC. Interest payments on such a CD are not
insured by the FDIC. Neither of these Funds will own more than
one such CD per such issuer.
Foreign Securities. (Cash Management Fund) Foreign
securities markets generally are not as developed or efficient as
those in the United States. Securities of some foreign issuers
are less liquid and more volatile than securities of comparable
U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at
times, volatility of price can be greater than in the United
States.
Furthermore, some of these securities are subject to
brokerage taxes levied by foreign governments, which have the
effect of increasing the cost of such investment and reducing the
realized gain or increasing the realized loss on such securities
at the time of sale. Custodial expenses for a portfolio of non-
U.S. securities generally are higher than for a portfolio of U.S.
securities. Income earned or received by the Cash Management
Fund from sources within foreign countries may be reduced by
withholding and other taxes.
Municipal Obligations. (Municipal Cash Management Fund)
The term "Municipal Obligations" generally includes debt
obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Obligations may be
issued include refunding outstanding obligations, obtaining funds
for general operating expenses and lending such funds to other
public institutions and facilities. In addition, certain types
of industrial development bonds are issued by or on behalf of
public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately
operated housing facilities, sports facilities, convention or
trade show facilities, airport, mass transit, industrial, port or
parking facilities, air or water pollution control facilities and
certain local facilities for water supply, gas, electricity, or
sewage or solid waste disposal; the interest paid on such
obligations may be exempt from Federal income tax, although
current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal
Obligations if the interest paid thereon qualifies as exempt from
Federal income tax in the opinion of bond counsel to the issuer.
There are, of course, variations in the security of Municipal
Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand notes and bonds are tax
exempt obligations ordinarily having stated maturities in excess
of 13 months, but which permit the holder to demand payment of
principal at any time, or at specified intervals not exceeding 13
months, in each case upon not more than 30 days' notice. The
issuer of such obligations ordinarily has a corresponding right,
after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders thereof. The
interest rate on a floating rate demand obligation is based on a
known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate
on a variable rate demand obligation is adjusted automatically at
specified intervals.
For the purpose of diversification under the Investment
Company Act of 1940 (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 management fee, 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 Cash Management 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 Cash Management 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. Not more than 10% 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.
The Municipal Cash Management 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 Manager 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 Manager
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 Cash Management 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 Cash Management 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 of Trustees 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 Cash Management 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 Cash Management 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 Cash Management 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 Cash
Management 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
Trust's Board determines that it is no longer of comparable
quality; or (b) the Manager 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 Trust's Board
will reassess promptly whether such security presents minimal
credit risk and will cause the Trust 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 Manager becoming aware
of the new rating and the Trust's Board is subsequently notified
of the Manager's actions.
To the extent that the ratings given by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P")
or Fitch Investors Service Inc. ("Fitch") for Municipal
Obligations may change as a result of changes in such
organizations or their rating systems, the Municipal Cash
Management Fund 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 Manager will also evaluate these securities and
the creditworthiness of the issuers of such securities.
Lending Portfolio Securities. (Cash Management Fund and
U.S. Government Securities Cash Management Fund) To a limited
extent, each of these Funds may lend its portfolio securities to
brokers, dealers and other financial institutions, provided it
receives cash collateral which at all times is maintained in an
amount equal to at least 100% of the current market value of the
securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash
collateral. For purposes of this policy, the Trust considers
collateral consisting of U.S. Government securities or, in the
case of the Cash Management Fund only, irrevocable letters of
credit issued by banks whose securities meet the standards for
investment by the Fund to be the equivalent of cash. Such loans
may not exceed 33-1/3% of the Fund's total assets. From time to
time, the Fund may return to the borrower or a third party which
is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The Securities and Exchange Commission currently requires
that the following conditions must be met whenever portfolio
securities are loaned: (1) the Fund must receive at least 100%
cash collateral from the borrower; (2) the borrower must increase
such collateral whenever the market value of the securities rises
above the level of such collateral; (3) the Fund must be able to
terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase
in market value; and (5) the Fund may pay only reasonable
custodian fees in connection with the loan. These conditions may
be subject to future modification.
Investment Restrictions
Cash Management and U.S. Government Securities Cash
Management Funds only. Each of the Cash Management Fund and U.S.
Government Securities Cash Management Fund has adopted investment
restrictions numbered 1 through 9 below as fundamental policies.
In addition, the Cash Management Fund has adopted investment
restrictions numbered 12 and 13 and the U.S. Government
Securities Cash Management Fund has adopted investment
restriction number 14 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 10 and 11 below are not fundamental policies and may be
changed by vote of a majority of the Trust's Trustees at any
time. Neither of these Funds may:
1. Borrow money, except from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of the
value of the Fund's total assets (including the amount borrowed)
based on the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made.
While borrowings exceed 5% of the value of the Fund's total
assets, the Fund will not make any additional investments.
2. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure borrowings for temporary or emergency
purposes.
3. Sell securities short or purchase securities on margin.
4. Write or purchase put or call options or combinations
thereof.
5. Act as an underwriter of securities of other issuers,
except to the extent the Fund may be deemed an underwriter under
the Securities Act of 1933, as amended, by virtue of disposing of
portfolio securities.
6. Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or oil and
gas interests.
7. Make loans to others, except through the purchase of
debt obligations referred to in the Fund's Prospectus, except
that the Fund may lend its portfolio securities in an amount not
to exceed 33-1/3% of the value of its total assets. Any loans of
portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and the
Trust's Trustees.
8. Invest in companies for the purpose of exercising
control.
9. Invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation
or acquisition of assets.
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
10% of the value of the Fund's net assets would be so invested.
11. Invest in oil, gas and other mineral leases, or real
estate limited partnerships.
The following investment restrictions numbered 12 and 13
apply only to the Cash Management Fund. The Cash Management Fund
may not:
12. Invest more than 5% of its assets in the obligations of
any one issuer, except that up to 25% of the value of the Cash
Management Fund's total assets may be invested (subject to Rule
2a-7 under the 1940 Act) without regard to any such limitations.
13. 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 Cash Management Fund may invest less than
25% of its total assets in bank obligations.
The following investment restriction number 14 applies only
to the U.S. Government Securities Cash Management Fund. The U.S.
Government Securities Cash Management Fund may not:
14. 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 investments in obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Municipal Cash Management and Treasury Prime Cash Management
Funds only. Each of the Municipal Cash Management Fund and
Treasury Prime Cash Management Fund has adopted investment
restrictions numbered 1 through 7 below as fundamental policies.
In addition, the Municipal Cash Management Fund has adopted
investment restriction number 13 and the Treasury Prime Cash
Management Fund has adopted investment restriction number 14 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 12 are
not fundamental policies and may be changed by vote of a majority
of the Trust's Trustees at any time. Neither of these Funds may:
1. Invest in commodities, except that each of these Funds
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, or oil, gas or
other mineral leases or exploration or development programs, but
each of these Funds 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.
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 Municipal Cash
Management 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 of these Funds
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 of these Funds 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
10% 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 Act.
The following investment restriction number 13 applies only
to the Municipal Cash Management Fund. The Municipal Cash
Management Fund may not:
13. 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 restriction number 14 applies only
to the Treasury Prime Cash Management Fund. The Treasury Prime
Cash Management Fund may not:
14. 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 investments in obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities.
For purposes of the Municipal Cash Management Fund's
Investment Restriction No. 13, 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.
The Trust may make commitments more restrictive than the
restrictions listed above so as to permit the sale of a Fund's
shares in certain states. Should the Trust determine that a
commitment is no longer in the best interests of a Fund and its
shareholders, the Trust reserves the right to revoke the
commitment by terminating the sale of such Fund's shares in the
state involved.
MANAGEMENT OF THE TRUST
Trustees and officers of the Trust, together with informa-
tion as to their principal business occupations during at least
the last five years, are shown below. Each Trustee who is deemed
to be an "interested person" of the Fund, as defined in the 1940
Act, is indicated by an asterisk.
Trustees and Officers of the Trust
[TO BE PROVIDED]
For so long as a Fund's plan described in the section
captioned "Service Plan" remains in effect, the Trustees of the
Trust who are not "interested persons" of the Trust, as defined
in the 1940 Act, will be selected and nominated by the Trustees
who are not "interested persons" of the Trust.
Officers of the Trust Not Listed Above
[TO BE PROVIDED]
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled
"Management of the Trust."
Management Agreement. The Manager provides management
services pursuant to the Management Agreement (the "Agreement")
dated , 1994, with the Trust. As to each Fund, the
Agreement is subject to annual approval by (i) the Trust's Board
of Trustees or (ii) vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of such Fund, provided
that in either event the continuance also is approved by a
majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust or the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval. As to each Fund, the Agreement is terminable
without penalty, on 60 days' notice, by the Trust's Board of
Trustees or by vote of the holders of a majority of such Fund's
shares, or, on not less than 90 days' notice, by the Manager.
The Agreement will terminate automatically, as to the relevant
Fund, in the event of its assignment (as defined in the 1940
Act).
The Manager is responsible for investment decisions and
manages each Fund's portfolio of investments in accordance with
the stated policies of such Fund, subject to the approval of the
Trust's Board of Trustees. All purchases and sales are reported
for the Trustees' review at the meeting subsequent to such
transactions.
As compensation for the Manager's services to the Trust, the
Trust has agreed to pay the Manager a monthly management fee at
the annual rate of .35 of 1% of the value of each Fund's average
daily net assets.
The Manager has engaged Concord Holding Corporation (the
"Administrator") to assist it in providing certain administrative
services to the Trust. Pursuant to its agreement with the
Manager (the "Administration Agreement"), the Administrator
furnishes the Trust clerical help and accounting, data
processing, bookkeeping, internal auditing and legal services and
certain other services required by the Trust, prepares reports to
the Funds' shareholders, tax returns, reports to and filings with
the Securities and Exchange Commission and state Blue Sky
authorities, calculates the net asset value of each Fund's shares
and generally assists the Manager in providing for all aspects of
the Trust's operation, other than providing investment advice.
The fees payable to the Administrator for its services are paid
by the Manager.
The Trust has agreed that neither the Manager nor the
Administrator will be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust in connection with
the matters to which the Agreement or the Administration
Agreement relates, except for a loss resulting from wilful
misfeasance, bad faith or gross negligence on the part of the
Manager in the performance of its obligations or from reckless
disregard by it of its obligations and duties under the Agreement
or on the part of the Administrator in the performance of its
obligations or from reckless disregard by it of its obligations
and duties under the Administration Agreement. The
Administration Agreement contains a similar provision whereby the
Manager has agreed to limit the Administrator's liability.
Expenses and Expense Information. All expenses incurred in
the operation of the Trust are borne by the Trust, except to the
extent specifically assumed by the Manager. The expenses borne
by the Trust include: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Trustees who are
not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of the Manager or the
Administrator, Securities and Exchange Commission fees, state
Blue Sky qualification fees, advisory fees, charges of
custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Trust's
existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports
and meetings, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and
for distribution to existing shareholders, and any extraordinary
expenses. In addition, Service of each Fund is subject to an
annual distribution and service fee. See "Service Plan."
Expenses attributable to a particular Fund are charged against
the assets of that Fund; other expenses of the Trust are
allocated among the Funds on the basis determined by the Board of
Trustees, including, but not limited to, proportionately in
relation to the net assets of each Fund.
The Manager has undertaken, as to each Fund, until such time
as it gives investors at least 90 days' notice to the contrary,
that if, in any fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings and (with
the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management
fee, exceed .35 and .60 of 1% of the value of the average net
assets of Institutional and Service, respectively, for the fiscal
year, the Trust may deduct from the payment to be made to the
Manager under the Agreement, or the Manager will bear, such
excess expense.
In addition, 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 management fee, exceed
the expense limitation of any state having jurisdiction over the
Fund, the Trust may deduct from the payment to be made to the
Manager under the Management Agreement, or the Manager 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 the Manager is not
subject to reduction as the value of the Fund's net assets
increases.
PURCHASE OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"HOW TO BUY FUND SHARES."
The Distributor. The Distributor serves as the Trust's
distributor pursuant to an agreement which is renewable annually.
Using Federal Funds. The Shareholder Services Group, Inc.,
the Trust's transfer and dividend disbursing agent (the "Transfer
Agent"), or the Trust may attempt to notify the investor upon
receipt of checks drawn on banks that are not members of the
Federal Reserve System as to the possible delay in conversion
into Federal Funds and may attempt to arrange for a better means
of transmitting the money. If the investor is a customer of a
securities dealer, bank or other financial institution and his
order to purchase Fund shares is paid for other than in Federal
Funds, the securities dealer, bank or other financial
institution, acting on behalf of its customer, generally will
complete the conversion into, or itself advance, Federal Funds on
the business day following receipt of the customer order. The
order is effective only when so converted and received by the
Transfer Agent. An order for the purchase of Fund shares placed
by an investor with a sufficient Federal Funds or cash balance in
his brokerage account with a securities dealer, bank or other
financial institution will become effective on the day that the
order, including Federal Funds, is received by the Transfer
Agent. In some states, banks or other institutions effecting
transactions in Fund shares may be required to register as
dealers pursuant to state law.
SERVICE PLAN
(Service Shares Only)
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"SERVICE PLAN."
Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 1940 Act provides, among other
things, that an investment company may bear expenses of
distributing its shares only pursuant to a plan adopted in
accordance with the Rule. The Trust's Board of Trustees has
adopted such a plan (the "Service Plan") with respect to each
Fund's Service shares, pursuant to which each Fund pays the
Distributor for advertising, marketing and distributing such
Fund's Service shares and for the provision of certain services
to the holders of Service shares. Under the Service Plan, the
Distributor may make payments to certain financial institutions,
securities dealers and other financial industry professionals
(collectively, "Service Agents") in respect to these services.
The Trust's Board of Trustees believes that there is a reasonable
likelihood that the Service Plan will benefit each Fund and the
holders of Service shares.
A quarterly report of the amounts expended under the Service
Plan, and the purposes for which such expenditures were incurred,
must be made to the Trustees for their review. In addition, the
Service Plan provides that it may not be amended to increase
materially the costs which holders of Service shares may bear
pursuant to the Service Plan without the approval of the holders
of Service shares and that other material amendments of the
Service Plan must be approved by the Board of Trustees and by the
Trustees who are not "interested persons" (as defined in the 1940
Act) of the Trust and have no direct or indirect financial
interest in the operation of the Service Plan or in any
agreements entered into in connection with the Service Plan, by
vote cast in person at a meeting called for the purpose of
considering such amendments. The Service Plan is subject to
annual approval by such vote of the Trustees cast in person at a
meeting called for the purpose of voting on the Service Plan.
The Service Plan was so approved by the Trustees at a meeting
held on , 1994. As to each Fund, the Service Plan may be
terminated at any time by vote of a majority of the Trustees who
are not "interested persons" and have no direct or indirect
financial interest in the operation of the Service Plan or in any
agreements entered into in connection with the Service Plan or by
vote of the holders of a majority of such Fund's Service shares.
REDEMPTION OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"HOW TO REDEEM FUND SHARES."
Redemption by Wire or Telephone. By using this procedure, the
investor authorizes the Transfer Agent to act on wire or
telephone redemption instructions from any person representing
himself or herself to an authorized representative of the
investor and reasonably believed by the Transfer Agent to be
genuine. Ordinarily, the Trust will initiate payment for shares
redeemed pursuant to this procedure on the same business day if
the Transfer Agent receives the redemption request in proper form
prior to 2:00 p.m., Central Standard time, on such day;
otherwise, the Trust will initiate payment on the next business
day. Redemption proceeds will be transferred by Federal Reserve
wire only to a bank that is a member of the Federal Reserve
System.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the
following transmittal code which may be used for domestic or
overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
_______________ _________________
Investors who do not have direct access to telegraphic
equipment may have the wire transmitted by contacting a TRT
Cables operator at 1-800-654-7171, toll free. Investors should
advise the operator that the above transmittal code must be used
and should also inform the operator of the Transfer Agent's
answer back sign.
Redemption Commitment. The Trust has committed itself to pay
in cash all redemption requests by any shareholder of record of a
Fund, limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the value of such Fund's net assets at the
beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In
the case of requests for redemption in excess of such amount, the
Board of Trustees reserves the right to make payments in whole or
in part in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In such
event, the securities would be valued in the same manner as the
Fund's securities are valued. If the recipient sold such
securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period
when the New York Stock Exchange is closed (other than customary
weekend and holiday closing), (b) when trading in the markets the
Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so
that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such
other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"HOW TO BUY FUND SHARES."
Amortized Cost Pricing. The valuation of each Fund's portfolio
securities is based upon their amortized cost which does not take
into account unrealized capital gains or losses. This involves
valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the
market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than
the price the Fund would receive if it sold the instrument.
The Board of Trustees has established procedures, as a
particular responsibility within the overall duty of care owed to
each Fund's investors, reasonably designed to stabilize the
Fund's price per share as computed for purposes of purchases and
redemptions at $1.00. Such procedures include review of each
Fund's portfolio holdings by the Board of Trustees, at such
intervals as it deems appropriate, to determine whether the
Fund's net asset value calculated by using available market
quotations or market equivalents deviates from $1.00 per share
based on amortized cost. In such review of the portfolio of the
Cash Management Fund, Treasury Prime Cash Management Fund and
U.S. Government Securities Cash Management 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
Funds will be valued at fair value as determined in good faith by
the Board of Trustees. Market quotations and market equivalents
used in such review of the Municipal Cash Management Fund are
obtained from an independent pricing service (the "Service")
approved by the Board of Trustees. The Service will value the
Municipal Cash Management 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 Fund's net asset value
based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the
Board of Trustees. If such deviation exceeds 1/2 of 1%, the
Board of Trustees will consider what actions, if any, will be
initiated. In the event the Board of Trustees determines that a
deviation exists which may result in material dilution or other
unfair results to investors or existing shareholders, it has
agreed to take such corrective action as it regards as necessary
and appropriate, including: selling portfolio instruments prior
to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying dis-
tributions 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
Newly-issued portfolio securities of the Municipal Cash
Management Fund and portfolio securities of each other Fund
ordinarily are purchased directly from the issuer or from an
underwriter or a market maker for the securities. Other
purchases and sales for the Municipal Cash Management Fund
usually are placed with those dealers from which it appears that
the best price or execution will be obtained. Ordinarily, no
brokerage commissions are paid by the Fund for such purchases.
Purchases from underwriters of portfolio securities may include a
concession paid by the issuer to the underwriter and the purchase
price paid to, and sales price received from, market makers for
the securities may reflect the spread between the bid and asked
price. No brokerage commissions have been paid by any Fund to
date.
Transactions are allocated to various dealers by the Trust's
investment personnel in their best judgment. The primary
consideration is prompt and effective execution of orders at the
most favorable price. Subject to that primary consideration,
dealers may be selected for research, statistical or other
services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms
and may be selected based upon their sales of Fund shares.
Research services furnished by brokers through which the Fund
effects securities transactions may be used by the Manager in
advising other funds or accounts it advises and, conversely,
research services furnished to the Manager by brokers in
connection with other funds or accounts the Manager advises may
be used by the Manager in advising the Fund. Although it is not
possible to place a dollar value on these services, it is the
opinion of the Manager that the receipt and study of such
services should not reduce the Manager's overall research
expenses.
EXCHANGE PRIVILEGE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"EXCHANGE PRIVILEGE."
By using this Privilege, the investor authorizes the Transfer
Agent to act on exchange instructions from any person
representing himself or herself to be an authorized
representative of the investor and reasonably believed by the
Transfer Agent to be genuine. Telephone exchanges may be subject
to limitations as to the amount involved or the number of
telephone exchanges permitted. Shares will be exchanged at the
net asset value next determined after receipt of an exchange
request in proper form.
The Trust reserves 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 investors.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in Funds' Prospectus entitled
"Dividends, Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However,
all or a portion of the gain realized from the disposition of
certain market discount bonds will be treated as ordinary income
under Section 1276 of the Internal Revenue Code of 1986, as
amended.
YIELD INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"YIELD INFORMATION."
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 the shareholder's account,
in proportion to the length of the base period and the Fund's
average account size, but does not include realized gains and
losses or unrealized appreciation and depreciation. Effective
yield is computed by adding 1 to the base period return
(calculated as described above), raising that sum to a power
equal to 365 divided by 7, and subtracting 1 from the result.
Tax equivalent yield for the Municipal Cash Management Fund
is computed by dividing that portion of the yield or effective
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 figure, however, does not include 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 rates 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.
Yields will fluctuate and are not necessarily representative
of future results. Each investor should remember that yield is a
function of the type and quality of the instruments in the
portfolio, portfolio maturity and operating expenses. An
investor's principal in the Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner
in which the Fund's price per share is determined.
INFORMATION ABOUT THE TRUST
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED
"GENERAL INFORMATION."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Trust will send annual and semi-annual financial
statements to all its shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New
York 10004-2594, as counsel for the Trust, has rendered its
opinion as to certain legal matters regarding the due
authorization and valid issuance of the shares of beneficial
interest 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 Trust.
APPENDIX
Description of the highest commercial paper, municipal bond
and note and other short- and long-term rating categories
assigned by Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), Fitch Investors Service,
Inc. ("Fitch"), Duff and Phelps, Inc. ("Duff"), IBCA Limited and
IBCA Inc. ("IBCA") and Thomson BankWatch, Inc. ("BankWatch"):
S&P
Commercial Paper and Short-Term Ratings
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.
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific
obligation.
The ratings are based on current information furnished by the
issuer or obtained by S&P from other sources it considers
reliable, and will include: (1) likelihood of default-capacity
and willingness of the obligor as to the timely payment of
interest and repayment of principal in accordance with the terms
of the obligation; (2) nature and provisions of the obligation;
and (3) protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree. The AA ratings may be modified by the addition of
a plus (+) or a minus (-) sign, which is used to show relative
standing within the category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are
given a plus (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
Moody's
Commercial Paper and Short-Term Ratings
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 of
funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins and 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.
Municipal 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.
Moody's applies the numerical modifiers 1, 2 and 3 to show
relative standing within the AA rating category. 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.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade (MIG).
Such ratings recognize the difference between short-term credit
risk and long-term risk. Factors affecting the liquidity of the
borrower and short-term cyclical elements are critical in short-
term ratings, while other factors of major importance in bond
risk, long-term secular trends for example, may be less important
over the short run.
A short-term rating may also be assigned on an issue having a
demand feature. Such ratings will be designated as VMIG or, if
the demand feature is not rated, as NR. Short-term ratings on
issues with demand features are differentiated by the use of the
VMIG symbol to reflect such characteristics as payment upon
periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be
alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the
issuer in the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment
Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name
implies, when Moody's assigns a MIG or VMIG rating, all
categories define an investment grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for
refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
Fitch
Commercial Paper and Short-Term Ratings
The rating Fitch-1 (Highest Grade) is the highest commercial
paper rating assigned by Fitch. Paper rated Fitch-1 is regarded
as having the strongest degree of assurance for timely payment.
Municipal 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 apply
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+. Plus (+) and minus (-) signs are used with
a rating symbol to indicate the relative position of a credit
within the rating category.
Duff
Commercial Paper and Short-Term Ratings
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.
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. Plus
(+) and minus (-) signs are used with a rating to indicate the
relative position of a credit within the AA rating category.
IBCA
Commercial Paper and Short-Term Ratings
The designation A-1 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.
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.
IBCA also assigns a rating to certain international and U.S.
banks. 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.
FINANCIAL STATEMENTS
[To Be Provided]
<PAGE>
FIRST PRAIRIE CASH MANAGEMENT
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
OCTOBER 31, 1994
This Statement of Additional Information, which is not a
prospectus,
supplements and should be read in conjunction with the current
Prospectus of First
Prairie Cash Management (the "Fund"), dated October 31, 1994 as
it may be revised
from time to time. To obtain a copy of the Fund's Prospectus,
please write to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or call toll free
1-800-821-1185.
The First National Bank of Chicago (the "Manager") serves as
the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is
the distributor of the
Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . B-5
Management Agreement . . . . . . . . . . . . . . . . . . . B-8
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . B-10
Redemption of Fund Shares. . . . . . . . . . . . . . . . . B-10
Determination of Net Asset Value . . . . . . . . . . . . . B-12
Portfolio Transactions . . . . . . . . . . . . . . . . . . B-13
Exchange Privilege . . . . . . . . . . . . . . . . . . . . B-13
Dividends, Distributions and Taxes . . . . . . . . . . . . B-14
Yield Information. . . . . . . . . . . . . . . . . . . . . B-14
Information About the Fund . . . . . . . . . . . . . . . . B-15
Counsel and Independent Auditors . . . . . . . . . . . . . B-15
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . B-16
Financial Statements . . . . . . . . . . . . . . . . . . . B-18
Report of Independent Auditors . . . . . . . . . . . . . . B-25
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "Description of the
Fund."
Portfolio Securities.
Bank Obligations. Domestic commercial banks organized
under
Federal law are
supervised and examined by the Comptroller of the Currency and
are required to be
members of the Federal Reserve System and to have their deposits
insured by the
Federal Deposit Insurance Corporation (the "FDIC"). Domestic
banks organized under
state law are supervised and examined by state banking
authorities but are members of
the Federal Reserve System only if they elect to join. In
addition, state banks whose
certificates of deposit ("CDs") may be purchased by the Fund are
insured by the FDIC
(although such insurance may not be of material benefit to the
Fund, depending on the
principal amount of the Cds of each bank held by the Fund) and
are subject to Federal
examination and to a substantial body of Federal law and
regulation. 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. Foreign branches and subsidiaries are not
necessarily subject to the
same or similar regulatory requirements that apply to domestic
banks, such as
mandatory reserve requirements, loan limitations, and accounting,
auditing and financial
recordkeeping requirements. In addition, less information may be
publicly available
about a foreign branch of a domestic bank or about a foreign bank
than about a
domestic bank.
Obligations of United States branches of foreign banks may
be general
obligations of the parent bank in addition to the issuing branch,
or may be limited by
the terms of a specific obligation or by Federal or state
regulation as well as
governmental action in the country in which the foreign bank has
its head office. A
domestic branch of a foreign bank with assets in excess of $1
billion may be subject to
reserve requirements imposed by the Federal Reserve System or by
the state in which
the branch is located if the branch is licensed in that state.
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
Manager carefully evaluates such investments on a case-by-case
basis.
The Fund may purchase Cds issued by banks, savings and loan
associations and
similar thrift institutions with less than $1 billion in assets,
which are members of the
FDIC, provided the Fund purchases any such CD in a principal
amount of not more
than $100,000, which amount would be fully insured by the Bank
Insurance Fund or the
Savings Association Insurance Fund administered by the FDIC.
Interest payments on
such a CD are not insured by the FDIC. The Fund will not own
more than one such
CD per such issuer.
Foreign Securities. Foreign securities markets generally
are not as developed or
efficient as those in the United States. Securities of some
foreign issuers are less liquid
and more volatile than securities of comparable U.S. issuers.
Similarly, volume and
liquidity in most foreign securities markets are less than in the
United States and, at
times, volatility of price can be greater than in the United
States.
Furthermore, some of these securities are subject to
brokerage taxes levied by
foreign governments, which have the effect of increasing the
cost
of such investment
and reducing the realized gain or increasing the realized loss
on
such securities at the
time of sale. Custodial expenses for a portfolio of non-U.S.
securities generally are
higher than for a portfolio of U.S. securities. Income earned
or
received by the Fund
from sources within foreign countries may be reduced by
withholding and other taxes.
Lending Portfolio Securities. To a limited extent, the
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, the
Fund can increase its income through the investment of the cash
collateral. For the
purposes of this policy, the Fund considers collateral
consisting
of U.S. Government
securities or irrevocable letters of credit issued by banks
whose
securities meet the
standards for investment by the Fund to be the equivalent of
cash. Such loans may not
exceed 33/% of the value of the Fund's total assets. From time
to time, the Fund may
return to the borrower and/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
interest or other
distributions payable on the loaned securities, and any increase
in market value; and (5)
the Fund may pay only reasonable custodian fees in connection
with the loan. These
conditions may be subject to future modification.
Investment Restrictions. The Fund has adopted the
following
restrictions as
fundamental policies. These restrictions cannot be changed
without approval by the
holders of a majority (as defined in the Investment Company Act
of 1940 (the "Act"))
of the Fund's outstanding voting shares. The Fund may not:
1. Purchase common stocks, preferred stocks, warrants or
other equity
securities, or purchase corporate bonds or debentures,
state bonds,
municipal bonds or industrial revenue bonds.
2. Borrow money, except from banks for temporary or
emergency (not
leveraging) purposes in an amount up to 15% of the
value of the Fund's
total assets (including the amount borrowed) based on
the lesser of cost
or market, less liabilities (not including the amount
borrowed) at the time
the borrowing is made. While borrowings exceed 5% of
the value of the
Fund's total assets, the Fund will not make any
additional investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to
secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Write or purchase put or call options or combinations
thereof.
6. Underwrite the securities of other issuers or enter
into repurchase agreements providing for settlement in more than
seven days or purchase securities which are illiquid (which
securities could include floating and variable rate demand
obligations as to which no secondary market exists
and the Fund cannot exercise the demand feature
described in the
Prospectus on less than seven days' notice), if, in the
aggregate, more than 10% of its net assets would be so invested.
7. Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or oil and
gas interests.
8. Make loans to others, except through the purchase of
debt obligations referred to in the Fund's Prospectus, except
that the Fund may lend its portfolio securities in an amount not
to exceed 33-1/3% of the value of its total assets. Any loans
of portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and
the Fund's Trustees.
9. Invest more than 5% of its assets in the obligations of any
one issuer, except that up to 25% of the value of the Fund's
total assets may be invested (subject to Rule 2a-7 under the Act)
without regard to any such limitations.
10. Invest less than 25% of its 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 Fund may invest less than 25% of its assets in bank
obligations.
11. Invest in companies for the purpose of exercising
control.
12. Invest in securities of other investment companies,
except as they may be
acquired as part of a merger, consolidation or
acquisition of assets.
While not a fundamental policy, the Fund will not invest in
oil, gas and other
mineral leases, or real estate limited partnerships.
If a percentage restriction is adhered to at the time of
investment, a later
increase or decrease in percentage resulting from a change in
values or assets will not
constitute a violation of such restriction.
The Fund may make commitments more restrictive than the
restrictions listed
above so as to permit the sale of Fund shares in certain states.
Should the Fund
determine that a commitment is no longer in the best interests of
the Fund and its
shareholders, the Fund reserves the right to revoke the
commitment by terminating the
sale of Fund shares in the state involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information
as to their principal
business occupations during at least the last five years, are
shown below.
Trustees and Officers of the Fund
JOHN P. GOULD, Trustee. Distinguished Service Professor of
Economics of the
University of Chicago Graduate School of Business. From
1983 to 1993, Dean of
the University of Chicago Graduate School of Business.
Since 1986, Mr. Gould
also has served as a Director of DFA Investment Dimensions
Group, a series
mutual fund. Mr. Gould also serves as Director of Harpor
Capital Advisors.
His address is 1101 East 58th Street, Chicago, Illinois
60637.
MARILYN McCOY, Trustee. Vice President of Administration and
Planning of
Northwestern University. From 1981 to 1985, she was the
Director of Planning
and Policy Development for the University of Colorado. She
also serves on the
Board of Directors of Evanston Hospital, the Chicago
Metropolitan YMCA, the
Chicago Network and United Charities. Ms. McCoy is a member
of the Chicago Economic Club. Her address is 1100 North Lake
Shore Drive, Chicago, Illinois 60611.
RAYMOND D. ODDI, Trustee. 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 and Chief
Financial Officer of Baxter International, Inc., a company
engaged in the
production and distribution of medical care products. He
also is a member of
the Illinois Society of Certified Public Accountants. His
address is 1181 Loch
Lane, Lake Forest, Illinois 60045.
Each of the "non-interested" Trustees also is a trustee of
First Prairie Diversified
Asset Fund, First Prairie Money Market Fund, First Prairie
Municipal Money Market
Fund, First Prairie U.S. Treasury Securities Cash Management and
First Prairie U.S.
Government Income Fund and a director of First Prairie Municipal
Bond Fund.
The Fund does not pay any remuneration to its officers and
Trustees other than
fees and expenses to Trustees who are not officers, directors,
employees or holders of
5% or more of the outstanding voting securities of the Manager or
The Dreyfus
Corporation ("Dreyfus"), or any affiliate of either of them,
which totaled $6,262 for the
fiscal year ended June 30, 1994 for all such Trustees, as a
group.
Ordinarily, there will be no meetings of shareholders for
the purpose of electing
Trustees unless and until such time as less than a majority of
the Trustees holding office
have been elected by shareholders, at which time the Trustees
then in office will call a
shareholders' meeting for the election of Trustees. Under the
Act, shareholders of
record of not less than two-thirds of the outstanding shares of
the Fund may remove a
Trustee through a declaration in writing or by vote cast in
person or by proxy at a
meeting called for that purpose. Under the Fund's Agreement and
Declaration of
Trust, the Trustees are required to call a meeting of
shareholders for the purpose of
voting upon the question of removal of any such Trustee when
requested in writing to
do so by the holders of record of not less than 10% of the Fund's
outstanding shares.
Officers of the Fund Not Listed Above
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Operating
Officer of the Distributor and an officer of other
investment companies advised
or administered by the Manager. From December 1991 to July
1994, she was
President and Chief Compliance Officer of Funds Distributor,
Inc., a wholly-
owned subsidiary of The Boston Company, Inc. Prior to
December 1991, she
served as Vice President and Controller, and later as Senior
Vice President, of
The Boston Company Advisors, Inc.
JOHN E. PELLETIER, Secretary. Senior Vice President and General
Counsel of the
Distributor and an officer of other investment companies
advised or
administered by the Manager. From February 1992 to July
1994, he served as
Counsel for The Boston Company Advisors, Inc. Prior
thereto, he was employed
as an Associate at Ropes & Gray, and prior to August 1990,
he was employed as
an Associate at Sidley & Austin.
JOSEPH F. TOWER,III, Assistant Treasurer. Senior Vice President,
Treasurer and
Chief Financial Officer of the Distributor and an officer of
other investment
companies advised or administered by the Manager. From July
1988 to August
1994, he was employed by The Boston Company, Inc. where he
held various
management positions in the Corporate Finance and Treasury
areas.
FREDERICK C. DEY, Assistant Treasurer. Senior Vice President of
the Distributor
and an officer of other investment companies advised or
administered by the
Manager. From 1988 to August 1994, he was Manager of the
High Performance
Fabric Division of Springs Industries Inc.
ERIC B. FISCHMAN, Assistant Secretary. Associate General Counsel
of the
Distributor and an officer of other investment companies
advised or
administered by the Manager. From September 1992 to August
1994, he was an
attorney with the Board of Governors of the Federal Reserve
System. Prior to
September 1992, he attended the Boston University School of
Law.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President
of the Distributor
and an officer of other investment companies advised or
administered by the
Manager. From March 1992 to July 1994, she was a Compliance
Officer for The
Managers Funds, a registered investment company. From March
1990 until
September 1991, she was Development Director of The Rockland
Center for the
Arts and, prior thereto, was employed as a Research
Assistant for the Bureau of
National Affairs.
The address of each officer of the Fund is 200 Park Avenue,
New York, New
York 10166.
Trustees and officers of the Fund, as a group, owned less
than 1% of the Fund's
shares of beneficial interest outstanding on August 24, 1994.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "Management of the
Fund."
Management Agreement. The Manager provides management
services pursuant
to the Management Agreement (the "Agreement") dated October 2,
1991 with the
Fund, which is subject to annual approval by (i) the Fund's Board
of Trustees or (ii)
vote of a majority (as defined in the Act) of the outstanding
voting securities of the
Fund, provided that in either event the continuance also is
approved by a majority of
the Trustees who are not "interested persons" (as defined in the
Act) of the Fund or the
Manager, by vote cast in person at a meeting called for the
purpose of voting on such
approval. The Board of Trustees, including a majority of the
Trustees who are not
"interested persons" of any party to the Agreement, last voted to
renew the Agreement
on December 10, 1993. The Agreement is terminable without
penalty, on 60 days'
notice, by the Fund's Board of Trustees or by vote of the holders
of a majority of the
Fund's shares or, upon not less than 90 days' notice, by the
Manager. The Agreement
will terminate automatically in the event of its assignment (as
defined in the Act).
The Manager is responsible for investment decisions and
manages the Fund's
portfolio of investments in accordance with the stated policies
of the Fund, subject to
the approval of the Fund's Board of Trustees. All purchases and
sales are reported for
the Trustees' review at the meeting subsequent to such
transactions.
As compensation for the Manager's services to the Fund, the
Fund has agreed to
pay the Manager a monthly management fee at the annual rate of
.35 of 1% of the
value of the Fund's average daily net assets. For the period
July 30, 1992
(commencement of operations) through June 30, 1993, no management
fee was paid by
the Fund pursuant to an undertaking by the Manager. For the
fiscal year ended June
30, 1994, the management fee payable by the Fund was $892,114,
which was reduced by
$304,836, pursuant to undertakings in effect, resulting in a net
fee paid by the Fund of
$587,278.
The Manager has engaged Dreyfus to assist it in providing
certain administrative
services to the Fund. Pursuant to its agreement with the Manager
(the "Administration
Agreement"), Dreyfus furnishes the Fund clerical help and
accounting, data processing,
bookkeeping, internal auditing and legal services and certain
other services required by
the Fund, prepares reports to the Fund's shareholders, tax
returns, reports to and filings
with the Securities and Exchange Commission and state Blue Sky
authorities, calculates
the net asset value of the Fund's shares and generally assists
the Manager in providing
for all aspects of the Fund's operation, other than providing
investment advice. The
fees payable to Dreyfus for its services are paid by the Manager.
The Fund has agreed that neither the Manager nor Dreyfus
will 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 the Agreement or the Administration
Agreement relates,
except for a loss resulting from wilful misfeasance, bad faith or
gross negligence on the
part of the Manager in the performance of its obligations or from
reckless disregard by
it of its obligations and duties under the Agreement or on the
part of Dreyfus in the
performance of its obligations or from reckless disregard by it
of its obligations and
duties under the Administration Agreement. The Administration
Agreement contains a
similar provision whereby the Manager has agreed to limit
Dreyfus' liability.
Expenses and Expense Information. All expenses incurred in
the operation of
the Fund are borne by the Fund, except to the extent specifically
assumed by the
Manager. The expenses borne by the Fund include the following:
organizational costs,
taxes, interest, brokerage fees and commissions, if any, fees of
Trustees who are not
officers, directors, employees or holders of 5% or more of the
outstanding voting
securities of the Manager or Dreyfus, 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.
The Manager has agreed that if in any fiscal year the
aggregate expenses of the
Fund, exclusive of taxes, brokerage, interest on borrowings and
(with the prior written
consent of the necessary state securities commissions)
extraordinary expenses, but
including the management fee, exceed the expense limitation of
any state having
jurisdiction over the Fund, the Fund may deduct from the payment
to be made to the
Manager under the Management Agreement, or the Manager 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 the Manager is not
subject to reduction as
the value of the Fund's net assets increases.
Glass-Steagall Act. For an additional discussion of the
Glass-Steagall Act in
connection with the Fund's operations, see the Fund's Prospectus.
From time to time, legislation has been introduced and may
be reintroduced in
Congress, which would permit a bank, a bank holding company or a
subsidiary thereof
to organize, sponsor, control and distribute shares of an
investment company such as
the Fund, notwithstanding present restrictions under the
Glass-Steagall Act and the
Federal Bank Holding Company Act of 1956. As described herein,
the Fund is
currently distributed by the Distributor, and Dreyfus, its
parent, sponsors the Fund and
provides it with administrative services. If current
restrictions preventing a bank from
legally sponsoring, organizing, controlling or distributing
shares of an investment
company were relaxed, the Fund expects that the Manager would
consider the
possibility of offering to perform some or all of the services
now provided by Dreyfus or
the Distributor. It is not possible, of course, to predict
whether or in what form such
legislation might be enacted or the terms upon which the Manager
might offer to
provide services.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "How to Buy Fund
Shares."
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an
agreement which is renewable annually. The Distributor also acts
as distributor for the
other funds in the First Prairie Family of Funds, the funds in
the Dreyfus Family of
Funds and certain other investment companies.
Transactions through Securities Dealers. In some states,
banks or other financial
institutions effecting transactions in Fund shares may be
required to register as dealers
pursuant to state law.
Using Federal Funds. The Shareholder Services Group, Inc.,
the Fund's 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, will complete the
conversion into, or itself advance, Federal Funds on the business
day following receipt
of the customer order. The order is effective only when so
converted and received by
the Transfer Agent. An order for the purchase of Fund shares
placed by an investor
with a sufficient Federal Funds or cash balance in his brokerage
account with a
securities dealer, bank or other financial institution will
become effective on the day
that the order, including Federal Funds, is received by the
Transfer Agent. In some
states, banks or other financial institutions effecting
transactions in Fund shares may be
required to register as dealers pursuant to state law.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
Redemption by Wire or Telephone. By using this Privilege,
the investor
authorizes the Transfer Agent to act on wire or telephone
redemption instructions from
any person representing himself or herself to be an authorized
representative of the
investor and reasonably believed by the Transfer Agent to be
genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this
procedure on the same
business day if the Transfer Agent receives the redemption
request in proper form prior
to 2:00 p.m., Chicago time, on such day; otherwise, the Fund will
initiate payment on
the next business day. Redemption proceeds will be transferred
by Federal Reserve
wire only to a bank that is a member of the Federal Reserve
System.
Investors with access to telegraphic equipment may wire
redemption requests to
the Transfer Agent by employing the following transmittal code
which may be used for
domestic or overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic
equipment may have the
wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free.
Investors should advise the operator that the above transmittal
code must be used and
should also inform the operator of the Transfer Agent's answer
back sign.
Redemption Commitment. The Fund has committed itself to pay
in cash all
redemption requests by any shareholder of record, limited in
amount during any 90-day
period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the
beginning of such period. Such commitment is irrevocable without
the prior approval
of the Securities and Exchange Commission. In the case of
requests for redemption in
excess of such amount, the Board of Trustees reserves the right
to make payments in
whole or in part in securities or other assets of the Fund 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 portfolio is 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 Fund's Prospectus entitled "How to Buy Fund
Shares."
Amortized Cost Pricing. The valuation of the Fund's
portfolio securities is based
upon their amortized cost which does not take into account
unrealized capital gains or
losses. This involves valuing an instrument at its cost and
thereafter assuming a
constant amortization to maturity of any discount or premium,
regardless of the impact
of fluctuating interest rates on the market value of the
instrument. While this method
provides certainty in valuation, it may result in periods during
which value, as
determined by amortized cost, is higher or lower than the price
the Fund would receive
if it sold the instrument.
The Board of Trustees has established, as a particular
responsibility within the
overall duty of care owed to the Fund's investors, procedures
reasonably designed to
stabilize the Fund's price per share as computed for the purpose
of purchases and
redemptions at $1.00. Such procedures include review of the
Fund's portfolio holdings
by the Board of Trustees, at such intervals as it deems
appropriate, to determine
whether the Fund's net asset value calculated by using available
market quotations or
market equivalents deviates from $1.00 per share based on
amortized cost. In such
review, 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 will be
valued at fair value as determined in good faith by the Board of
Trustees.
The extent of any deviation between the Fund's net asset
value based upon
available market quotations or market equivalents and $1.00 per
share based on
amortized cost will be examined by the Board of Trustees. If
such deviation exceeds
1/2 of 1%, the Board of Trustees will consider what action, if
any, will be initiated. In
the event the Board of Trustees determines that a deviation
exists which may result in
material dilution or other unfair results to investors or
existing shareholders, it 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 distribu-
tions 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
Portfolio securities ordinarily are purchased directly from
the issuer or from an
underwriter or a market maker for the securities. Ordinarily, no
brokerage commissions
are paid by the Fund for such purchases. Purchases from
underwriters of portfolio
securities may include a concession paid by the issuer to the
underwriter and the
purchase price paid to, and sales price received from, market
makers for the securities
may reflect the spread between the bid and asked price. No
brokerage commissions
have been paid by the Fund to date.
Transactions 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 for research, statistical or other services to enable
the Manager to
supplement its own research and analysis with the views and
information of other
securities firms and may be selected based upon their sales of
Fund shares.
Research services furnished by brokers through which the
Fund effects securities
transactions may be used by the Manager in advising other funds
or accounts it advises
and, conversely, research services furnished to the Manager by
brokers in connection
with other funds or accounts the Manager advises may be used by
the Manager in
advising the Fund. Although it is not possible to place a dollar
value on these services,
it is the opinion of the Manager that the receipt and study of
such services should not
reduce its overall research expenses.
EXCHANGE PRIVILEGE
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "Exchange
Privilege."
By using this Privilege, the investor authorizes the
Transfer Agent to act on
exchange instructions from any person representing himself or
herself to be an
authorized representative of the investor and reasonably believed
by the Transfer Agent
to be genuine. Telephone exchanges may be subject to limitations
as to the amount
involved or the number of telephone exchanges permitted. Shares
will be exchanged at
the net asset value next determined after receipt of an exchange
request in proper
form.
The Fund reserves 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
investors.
This Privilege is available to shareholders resident in any
state in which shares of
the fund being acquired may legally be sold.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with
the section in Fund's Prospectus entitled "Dividends,
Distributions and Taxes"
Ordinarily, gains and losses realized from portfolio
transactions will be treated as
capital gain or loss. However, all or a portion of any gains
realized from the sale or
other disposition of certain market discount bonds will be
treated as ordinary income
under Section 1276 of the Internal Revenue Code of 1986, as
amended.
YIELD INFORMATION
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "Yield
Information."
For the seven-day period ended June 30, 1994, the Fund's
yield was 4.03% and
its effective yield was 4.11%. These yields reflect the
absorption of certain expenses by
the Manager and/or the waiver of part of the management fee,
without which the
Fund's seven-day yield and effective yield for the period ended
June 30, 1994 would
have been 3.97% and 4.05%, respectively. See "Management of the
Fund" in the
Prospectus. Yield is computed in accordance with a standardized
method which
involves determining the net change in the value of a
hypothetical pre-existing Fund
account having a balance of one share at the beginning of a seven
calendar day period
for which yield is to be quoted, dividing the net change by the
value of the account at
the beginning of the period to obtain the base period return, and
annualizing the results
(i.e., multiplying the base period return by 365/7). The net
change in the value of the
account reflects the value of additional shares purchased with
dividends declared on the
original share and any such additional shares and fees that may
be charged to the
shareholder's account, in proportion to the length of the base
period and the Fund's
average account size, but does not include realized gains and
losses or unrealized
appreciation and depreciation. Effective yield is computed by
adding 1 to the base
period return (calculated as described above), raising that sum
to a power equal to 365
divided by 7, and subtracting 1 from the result.
Yields will fluctuate and are not necessarily representative
of future results.
Each investor should remember that yield is a function of the
type and quality of the
instruments in the portfolio, portfolio maturity and operating
expenses. An investor's
principal in the Fund is not guaranteed. See "Determination of
Net Asset Value" for a
discussion of the manner in which the Fund's price per share is
determined.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with
the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for
in accordance with
the terms of the offering, is fully paid and non-assessable.
Fund shares are of one class
and have equal rights as to dividends and in liquidation. Shares
have no preemptive,
subscription or conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements
to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New
York 10004-
2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters
regarding the due authorization and valid issuance of the shares
of beneficial interest
being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Description of the highest commercial paper, bond and other
short- and long-
term rating categories assigned by Standard & Poor's Corporation
("S&P"), Moody's
Investors Service, Inc. ("Moody's"), Fitch Investors Service,
Inc. ("Fitch"), Duff &
Phelps, Inc. ("Duff"), IBCA Limited and IBCA Inc. ("IBCA") and
Thomson BankWatch,
Inc. ("BankWatch"):
Commercial Paper and Short-Term Ratings
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.
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 of funds
employed, conservative
capitalization structures with moderate reliance on debt and
ample asset protection,
broad margins and 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.
The rating Fitch-1 (Highest Grade) is the highest commercial
paper rating
assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of
assurance for timely payment.
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.
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.
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.
Bond and Long-Term Ratings
Bonds rated AAA are considered by S&P to be the highest
grade obligations and
possess an extremely strong capacity to pay principal and
interest.
Bonds which are rated Aaa by Moody's are judged to be of the
best quality.
Bonds rated AAA by Fitch are judged by Fitch to be strictly
high grade, broadly
marketable, suitable for investment by trustees and fiduciary
institutions and liable to
but slight market fluctuation other than through changes in the
money rate. The prime
feature of an AAA bond is a showing of earnings several times or
many times interest
requirements, with such stability of applicable earnings that
safety is beyond reasonable
question whatever changes occur in conditions.
Bonds rated AAA by Duff are considered to be of the highest
credit quality.
The risk factors are negligible, being only slightly more than
U.S. Treasury debt.
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.
IBCA also assigns a rating to certain international and U.S.
banks. 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.
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.
Letter to Shareholders
Dear Shareholder:
The yield for First
Prairie Cash Management was 3.33% for the twelve months ended
June 30, 1994. This is the equivalent of an effective yield of
3.38% after taking into account the effect of compounding.*
The lower rates provided by the Federal Reserve Board over the
last few years have done their job. The U.S. economy is again on
a growth path as evidenced by the 7% gain in Gross Domestic
Product for the fourth quarter 1993. Consequently, the Fed has
begun the next phase of the interest rate cycle by boosting
short-term interest rates. The Fed has publicly stated that they
want the Fed Funds rate at a neutral level. Earlier this
year, in accordance with this policy, the Fed began a series of
rate hikes, initially with quarter-point moves. Federal Reserve
Board Chairman Alan Greenspan wants the bond market to know that
he has been and will be an inflation hawk. In anticipation of
this change of policy, we began to shorten the average maturity
of the Fund earlier this year. After the May 17th Federal Open
Market Committee meeting, the Fed raised the Fed Funds rate and
the Discount rate by 50 basis points each to 4.25% and 3.50%
respectively. We began to lengthen our portfolio maturity
immediately after these rate boosts because we felt the Fed
would keep rates stable for three to four months to observe the
effect that increasing rates would have on the economy. Later
this year, depending upon how strong the economy is, we
anticipate the Fed will again raise rates. Consequently, we
currently intend to manage the Fund with an average maturity in
the 50- to 60-day range. We thank you for your investment in
this Fund and will continue to use our best efforts to provide a
high level of income, while safeguarding the integrity of
principal.
Sincerely,
(logo signature)
T. Scott McCartan
Chief Investment Officer
First Prairie Funds
July 16, 1994
New York, N.Y.
* Effective yield is based upon dividends
declared daily and reinvested monthly.
<PAGE>
First Prairie Cash Management
Statement of Investments JUNE 30, 1994
Principal
Amount Value
NEGOTIABLE BANK CERTIFICATES OF
DEPOSIT-11.9%
Dai-Ichi Kangyo Bank Ltd. (Yankee)
4.16%, 7/20/94 $ 10,000,000 $10,000,311
Mitsubishi Bank Ltd. (Yankee)
4.50%, 8/15/94 10,000,000 10,002,807
Rabobank Nederland N.V. (Yankee)
4.20%, 8/12/94 9,000,000 8,993,483
TOTAL NEGOTIABLE BANK CERTIFICATES OF
DEPOSIT
(cost $28,996,601) $ 28,996,601
BANKERS' ACCEPTANCES-8.2%
Fuji Bank Ltd. (Yankee)
4.51%, 8/15/94 $ 10,000,000 $9,944,250
Sakura Bank Ltd.(Yankee)
4.39%, 7/15/94 10,000,000 9,983,044
TOTAL BANKERS' ACCEPTANCES
(cost $19,927,294) $ 19,927,294
COMMERCIAL PAPER-34.6%
ABN-Amro Bank N.V.
4.53%, 8/17/94 $ 10,000,000 $9,941,511
Banc One Corp.
4.51%, 8/31/94 10,000,000 9,924,597
Bank of Nova Scotia
3.84%, 7/11/94 10,000,000 9,989,444
Barclays Bank of Canada
4.67%, 10/3/94 10,000,000 9,879,889
Enterprise Funding Corp.
4.60%, 9/23/94(a) 10,000,000 9,894,300
Iris Partners L.P.
3.97%, 7/12/94(a) 5,084,000 5,077,895
MCA Funding Corp.
4.63%, 10/24/94. 10,000,000 9,854,653
WMX Technologies Inc.
4.71%, 10/18/94 10,000,000 9,859,814
Woodside Finance Ltd.
4.56%, 9/12/94 10,000,000 9,908,750
TOTAL COMMERCIAL PAPER
(cost $84,330,853) $ 84,330,853
CORPORATE NOTES-8.2%
General Electric Capital Corp.
3.48%, 8/25/94 $ 10,000,000 $ 9,999,311
Merrill Lynch & Co. Inc.
4.40%, 6/7/95(b) 10,000,000 10,000,000
TOTAL CORPORATE NOTES
(cost $19,999,311) $ 19,999,311
<PAGE>
First Prairie Cash Management
Statement of Investments (continued)
JUNE 30, 1994
Principal
SHORT-TERM BANK NOTES-4.1% Amount Value
NationsBank of North Carolina N.A.
3.52%, 8/18/94 $ 5,000,000 $ 4,999,869
PNC Bank N.A.
3.63%, 1/20/95 5,000,000 4,997,859
TOTAL SHORT-TERM BANK NOTES
(cost $9,997,728) $ 9,997,728
U.S. TREASURY BILLS-4.0%
4.59%, 12/15/94
(cost $9,792,410) $ 10,000,000 $ 9,792,410
U.S. GOVERNMENT AGENCIES-16.4%
Agency for International Development
Floating Rate Notes
5.05%, 5/1/2023(b) $ 5,000,000 $ 5,000,000
Federal Home Loan Banks
Floating Rate Notes
4.92%, 3/17/2000(b) 10,000,000 10,000,000
Student Loan Marketing
Association
Floating Rate Notes
3.99%, 6/8/95(b) 25,000,000 25,000,000
TOTAL U.S. GOVERNMENT
AGENCIES
(cost $40,000,000) $ 40,000,000
TOTAL INVESTMENTS
(cost $213,044,197) 87.4% $213,044,197
CASH AND RECEIVABLES
(NET) 12.6% $ 30,775,727
NET ASSETS 100.0% $243,819,924
Notes To Statement of Investments:
(a) Backed by an irrevocable letter of credit.
(b) Variable interest rate - subject to periodic change.
See notes to financial statements.
<PAGE>
First Prairie Cash Management
Statement of Assets and Liabilities
JUNE 30, 1994
ASSETS:
Investments in securities, at value-
Note 1(a) $213,044,197
Cash 4,934,072
Receivable for investment securities
sold 25,168,213
Interest receivable 779,843
Prepaid expenses 65,750
243,992,075
LIABILITIES:
Due to The First National Bank of
Chicago $ 96,084
Accrued expenses and other
liabilities 76,067 172,151
NET ASSETS $243,819,924
REPRESENTED BY:
Paid-in capital $243,979,657
Accumulated net realized
(loss) on investments (159,733)
NET ASSETS at value applicable to
243,979,657 outstanding shares of
Beneficial Interest, equivalent to
$1.00 per share (unlimited number of
$.001 par value shares
authorized) $243,819,924
NET ASSET VALUE, offering and
redemption price per
share ($243,819,924 divided by
243,979,657 shares) $1.00
Statement of Operations YEAR ENDED JUNE 30, 1994
INVESTMENT INCOME:
Interest Income $ 9,285,026
Expenses:
Management fee-Note 2(a) $ 892,114
Professional fees 49,300
Registration fees 48,880
Custodian fees 42,222
Prospectus and shareholders'
reports 17,514
Trustees' fees and expenses-
Note 2(b) 6,262
Shareholder servicing
costs 3,753
Miscellaneous 35,851
1,095,896
Less-reduction in management
fee due to undertakings-
Note 2(a) 304,836
Total Expenses 791,060
INVESTMENT INCOME-NET 8,493,966
NET REALIZED (LOSS)
ON INVESTMENTS-Note 1(b) (136,023)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,357,943
See notes to financial statements.
<PAGE>
First Prairie Cash Management
Statement of Changes in Net Assets
Year Ended June 30,
1993* 1994
OPERATIONS:
Investment income-net $ 2,487,708 $ 8,493,966
Net realized (loss) on
investments (23,710) (136,023)
Net Increase In Net Assets
Resulting From
Operations 2,463,998 8,357,943
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net (2,487,708) (8,493,966)
BENEFICIAL INTEREST
TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 1,971,179,813 2,167,517,783
Dividends reinvested 100,330 654,107
Cost of shares
redeemed (1,795,643,634) (2,099,928,742)
Increase In Net Assets From
Beneficial Interest
Transactions 175,636,509 68,243,148
Total Increase In Net
Assets 175,612,799 68,107,125
NET ASSETS:
Beginning of year 100,000 175,712,799
End of Year $ 175,712,799 $ 243,819,924
* From July 30, 1992 (commencement of operations) to June 30,
1993.
See notes to financial statements.
<PAGE>
First Prairie Cash Management
Financial Highlights
contained below is per share operating performance data for a
share of Beneficial
Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated.
This information has been derived from the Fund's financial
statements
Year Ended June 30,
PER SHARE DATA: 1993(1) 1994
Net asset value, beginning
of year $1.0000 $ .9999
Investment Operations:
Investment income-net .0297 .0333
Net realized (loss) on
investments (.0001) (.0006)
Total from Investment
Operations Distributions; .0296 .0327
Dividends from investment
income-net (.0297) (.0333)
Net asset value, end of
year $ .9999 $ .9993
TOTAL INVESTMENT
RETURN 3.25%(2) 3.38%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets .05%(2) .31%
Ratio of net investment
income to average net
assets 3.19%(2) 3.33%
Decrease reflected in above
expense ratios due to
undertakings by the
Manager .51%(2) .12%
Net Assets, end of
year (000's omitted) $175,713 $243,820(1)
From July 30, 1992
(commencement of operations)
to June 30, 1993.(2)
Annualized.
See notes to financial statements.
<PAGE>
First Prairie Cash Management
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act ("Act")
as a diversified open-end management investment company. The
First National Bank of Chicago ("Manager") serves as the Fund's
investment adviser. The Dreyfus Corporation ("Dreyfus") provides
certain administrative services to the Fund-see Note 2(a).
Dreyfus Service Corporation ("Distributor"), a wholly-owned
subsidiary of Dreyfus, acts as the exclusive distributor of the
Fund's shares, which are sold without a sales charge. It is
the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to
enable it to do so.
(A) PORTFOLIO VALUATION: Investments are
valued at amortized cost, which has been determined by the
Fund's Board of Trustees to represent the fair value of the
Fund's investments.
(B) SECURITIES TRANSACTIONS AND
INVESTMENT INCOME: Securities transactions are recorded on a
trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments
represent amortized cost.
(C) DIVIDENDS TO SHAREHOLDERS: It
is the policy of the Fund to declare dividends daily from
investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally
declared and paid annually, but the Fund may make distributions
on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that
net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund
to continue to qualify as a regulated investment company, if
such qualification is in the best interests of its shareholders,
by complying with the provisions available to certain investment
companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of taxable income
sufficient to relieve it from all, or substantially all, Federal
income taxes. The Fund has an unused capital loss carryover
of approximately $19,000 available for Federal income tax
purposes to be applied against future net securities profits, if
any realized subsequent to June 30, 1994. The carryover does not
include net realized securities losses from November 1, 1993
through June 30, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, the
carryover expires in fiscal 2002. At June 30, 1994, the cost
of investments for Federal income tax purposes was substantially
the same as the cost for financial reporting purposes (see the
Statement of Investments).
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management
agreement ("Agreement") with the Manager, the management fee is
computed at the annual rate of .35 of 1% of the average daily
value of the Fund's net assets and is payable monthly. The
Agreement further provides that if in any full fiscal year the
aggregate expenses of the Fund exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payments to be made to the
Manager, or the Manager will bear such excess to the extent
required byFirst Prairie Cash Management
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
state law. The most stringent state
expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full fiscal year that such
expenses (excluding certain expenses as described above) exceed
2 1/2% of the first $30 million, 2% of the next $70 million and
1 1/2% of the excess over $100 million of the average value of
the Fund's net assets in accordance with California "blue sky"
regulations. The Manager has engaged Dreyfus to assist it in
providing certain administrative services for the Fund pursuant
to a Master Administration Agreement between the Manager and
Dreyfus. Pursuant to its agreement with Dreyfus, the Manager has
agreed to pay Dreyfus a monthly fee at the annual rate of .05 of
1% of the value of the Fund's average daily net assets. During
the year ended June 30, 1994, $127,445 is payable to Dreyfus by
the Manager pursuant to the agreement. However, the Manager
had undertaken from June 1, 1993 to November 30, 1993 to reduce
the management fee paid by and reimburse such excess expenses of
the Fund, to the extent that the Fund's aggregate expenses
(excluding certain expenses as described above) exceeded
specified annual percentages of the Fund's average daily net
assets. The Manager has currently undertaken from December 1,
1993 to assume all expenses of the Fund in excess of an annual
rate of .35 of 1% of the Fund's average daily net assets. The
reduction in management fee, pursuant to the undertakings,
amounted to $304,836, for the year ended June 30, 1994. The
undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be
less than the amount required pursuant to the Agreement.
(B) Certain officers and trustees of the Fund are "affiliated
persons," as defined in the Act, of the Manager and/or the
Distributor. Each trustee who is not an "affiliated person"
receives an annual fee of $1,500 and an attendance fee of $250
per meeting.
(C) On December 5, 1993, Dreyfus entered into an
Agreement and Plan of merger providing for the Merger of Dreyfus
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that Dreyfus will be a
direct subsidiary of Mellon Bank, N.A. Closing of this merger is
subject to a number of contingencies, including receipt of
certain regulatory approvals and approvals of the stockholders
of Dreyfus and of Mellon. The merger is expected to occur in
August 1994, but could occur later.
<PAGE>
First Prairie Cash Management
Report of Ernst & Young LLP, Independent Auditors
SHAREHOLDERS AND BOARD OF TRUSTEES
FIRST PRAIRIE CASH MANAGEMENT
We have audited the accompanying statement of
assets and liabilities of First Prairie Cash Management,
including the statement of investments, as of June 30, 1994, and
the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits. We conducted our 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 securities owned as of June 30, 1994 by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the
financial statements and financial highlights referred to above
present fairly, in all material respects, the financial position
of First Prairie Cash Management at June 30, 1994, the results
of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended,
and the financial highlights for each of the indicated years, in
conformity with generally accepted accounting
principles.
(Signature Logo)
New York, New York
August 3, 1994
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
AUGUST 18, 1994
This Statement of Additional Information, which is not a
prospectus, supplements
and should be read in conjunction with the current Prospectus of
First Prairie U.S.
Treasury Securities Cash Management (the "Fund"), dated August
18, 1994, as it may be
revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to
the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call toll
free 1-800-821-1185.
The First National Bank of Chicago (the "Manager") serves as
the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a
wholly-owned subsidiary of The
Dreyfus Corporation ("Dreyfus"), is the distributor of the Fund's
shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . B-3
Management Agreement. . . . . . . . . . . . . . . . . . . . B-5
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-7
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-8
Determination of Net Asset Value. . . . . . . . . . . . . . B-9
Portfolio Transactions.. . . . . . . . . . . . . . . . . . B-10
Exchange Privilege. . . . . . . . . . . . . . . . . . . . B-10
Dividends, Distributions and Taxes. . .. . . . . . . . . . B-11
Yield Information . . . . . . . . . . .. . . . . . . . . . B-11
Information About the Fund. . . . . . .. . . . . . . . . . B-12
Counsel and Independent Auditors. . . .. . . . . . . . . . B-12
Financial Statements. . . . . . . . . .. . . . . . . . . . B-13
Report of Independent Auditors. . . . .. . . . . . . . . . B-18
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "DESCRIPTION OF THE
FUND."
LENDING PORTFOLIO SECURITIES. To a limited extent, the Fund
may lend its portfolio
securities to brokers, dealers and other institutional investors,
provided it receives cash
collateral which at all times is maintained in an amount equal to
at least 100% of the
current market value of the securities loaned. By lending its
portfolio securities, the
Fund can increase its income through the investment of the cash
collateral. For the
purposes of this policy, the Fund considers collateral consisting
of U.S. Government
securities to be the equivalent of cash. Such loans may not
exceed 33/% of the value of
the Fund's total assets. From time to time, the Fund may return
to the borrower and/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
interest or other distributions
payable on the loaned securities, and any increase in market
value; and (5) the Fund may
pay only reasonable custodian fees in connection with the loan.
These conditions may be
subject to future modification.
INVESTMENT RESTRICTIONS. The Fund has adopted the following
restrictions as
fundamental policies. These restrictions cannot be changed
without approval by the
holders of a majority (as defined in the Investment Company Act
of 1940 (the "Act")) of
the Fund's outstanding voting shares. The Fund may not:
1. Purchase common stocks, preferred stocks, warrants or
other equity securities,
or purchase corporate bonds or debentures, state bonds, municipal
bonds or industrial
revenue bonds.
2. Borrow money, except from banks for temporary or
emergency (not
leveraging) purposes in an amount up to 15% of the value of the
Fund's total assets
(including the amount borrowed) based on the lesser of cost or
market, less liabilities
(not including the amount borrowed) at the time the borrowing is
made. While
borrowings exceed 5% of the value of the Fund's total assets, the
Fund will not make any
additional investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to
secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Write or purchase put or call options or combinations
thereof.
6. Underwrite the securities of other issuers. The Fund
may not enter into
repurchase agreements providing for settlement in more than seven
days after notice or
purchase securities which are illiquid if, in the aggregate, more
than 10% of its net assets
would be so invested.
7. Purchase or sell real estate, real estate investment
trust securities, commodities
or commodity contracts, or oil and gas interests.
8. Make loans to others, except through the purchase of
debt obligations and the
entry into repurchase agreements referred to in the Fund's
Prospectus, and except that
the Fund may lend its portfolio securities in an amount not to
exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities
will be made according to
guidelines established by the Securities and Exchange Commission
and the Fund's
Trustees.
9. 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
investments in obligations
issued or guaranteed by the U.S. Government.
10. Invest in companies for the purpose of exercising
control.
11. Invest in securities of other investment companies,
except as they may be
acquired as part of a merger, consolidation or acquisition of
assets.
While not a fundamental policy, the Fund will not invest in
oil, gas and other
mineral leases, or real estate limited partnerships.
If a percentage restriction is adhered to at the time of
investment, a later increase
or decrease in percentage resulting from a change in values or
assets will not constitute a
violation of such restriction.
The Fund may make commitments more restrictive than the
restrictions listed
above so as to permit the sale of Fund shares in certain states.
Should the Fund
determine that a commitment is no longer in the best interests of
the Fund and its
shareholders, the Fund reserves the right to revoke the
commitment by terminating the
sale of Fund shares in the state involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information
as to their principal
business occupations during at least the last five years, are
shown below. The Trustee
who is deemed to be an "interested person" of the Fund, as
defined in the Act, is
indicated by an asterisk.
TRUSTEES AND OFFICERS OF THE FUND
*JOSEPH S. DiMARTINO, President and Trustee. President, Chief
Operating Officer
and a Director of Dreyfus, Executive Vice President and a
Director of the
Distributor and an officer, director or trustee of other
investment companies
advised or administered by Dreyfus. He is also a Director
of Noel Group, Inc.,
Vice President and former Treasurer and Director of the
National Muscular
Dystrophy Association and a Trustee of Bucknell
University.
His address is 200
Park Avenue, New York, New York 10166.
JOHN P. GOULD, Trustee. Distinguished Service Professor of
Economics, of the
University of Chicago Graduate School of Business. From
1983 to 1993, Dean of
the University of Chicago Graduate School of Business.
Since 1986, Dean Gould
also has served as a Director of DFA Investment Dimensions
Group, a series
mutual fund. Dean Gould also serves as Director of Harpor
Capital Advisors.
His address is 1101 East 58th Street, Chicago, Illinois
60637.
MARILYN McCOY, Trustee. Vice President of Administration
and Planning of
Northwestern University. From 1981 to 1985, she was the
Director of Planning
and Policy Development for the University of Colorado.
She also serves on the
Board of Directors of Evanston Hospital, the Chicago
Metropolitan YMCA, the
Chicago Network and United Charities. Ms. McCoy is a
member of the Chicago
Economic Club. Her address is 1100 North Lake Shore
Drive, Chicago, Illinois 60611.
RAYMOND D. ODDI, Trustee. 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 and Chief
Financial Officer of Baxter International, Inc., a
company engaged in the
production and distribution of medical care
products. He also is a member of the
Illinois Society of Certified Public Accountants. His
address is 1181 Loch Lane,
Lake Forest, Illinois 60045.
Each of the "non-interested" Trustees also is a trustee of
First Prairie Cash
Management, First Prairie Diversified Asset Fund, First Prairie
Money Market Fund,
First Prairie Municipal Money Market Fund and First Prairie U.S.
Government Income
Fund and a director of First Prairie Municipal Bond Fund.
The Fund does not pay any remuneration to its officers and
Trustees other than
fees and expenses to Trustees who are not officers, directors,
employees or holders of
5% or more of the outstanding voting securities of the Manager or
Dreyfus, or any
affiliate of either of them, which totaled $6,145 for the fiscal
year ended May 31, 1994 for
all such Trustees as a group.
Ordinarily, there will be no meetings of shareholders for
the purpose of electing
Trustees unless and until such time as less than a majority of
the Trustees holding office
have been elected by shareholders, at which time the Trustees
then in office will call a
shareholders' meeting for the election of Trustees. Under the
Act, shareholders of
record of not less than two-thirds of the outstanding shares of
the Fund may remove a
Trustee through a declaration in writing or by vote cast in
person or by proxy at a
meeting called for that purpose. Under the Fund's Agreement and
Declaration of Trust,
the Trustees are required to call a meeting of shareholders for
the purpose of voting
upon the question of removal of any such Trustee when requested
in writing to do so by
the holders of record of not less than 10% of the Fund's
outstanding shares.
OFFICERS OF THE FUND NOT LISTED ABOVE
DANIEL C. MACLEAN, Vice President. Vice President and General
Counsel of
Dreyfus, Secretary of the Distributor and an officer of
other investment companies
advised or administered by Dreyfus.
JEFFREY N. NACHMAN, Vice President and Treasurer. Vice
President - Mutual
Fund Accounting of Dreyfus and an officer of other
investment companies advised
or administered by Dreyfus.
PAUL R. CASTI, JR., Controller. Senior Accounting Manager
of the Fund Accounting
Department of Dreyfus and an officer of other investment
companies advised or
administered by Dreyfus.
MARK N. JACOBS, Secretary. Secretary and Deputy General
Counsel of Dreyfus and
an officer of other investment companies advised or
administered by Dreyfus.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary
of Dreyfus and other
investment companies advised or administered by Dreyfus.
The address of each officer of the Fund is 200 Park Avenue,
New York, New
York 10166.
Trustees and officers of the Fund, as a group, owned less
than 1% of the Fund's
shares of beneficial interest outstanding on July 21, 1994.
The following entities are known by the Fund to own of
record 5% or more of the
Fund's voting securities outstanding on July 21, 1994: The First
National Bank of
Chicago, Corporate Trust Administration, One First National
Plaza, Chicago, Illinois
60670 - 66.5% and The First National Bank of Chicago, Corporate
Asset Services, One
First National Plaza, Chicago, Illinois 60670 - 24.6%. A
shareholder who beneficially
owns, directly or indirectly, more than 25% of the Fund's voting
securities may be
deemed to be a "control person" (as defined in the Act) of the
Fund.
MANAGEMENT AGREEMENT
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "MANAGEMENT OF THE
FUND."
MANAGEMENT AGREEMENT. The Manager provides management
services pursuant
to the Management Agreement (the "Agreement") dated October 2,
1991 with the Fund,
which is subject to annual approval by (i) the Fund's Board of
Trustees or (ii) vote of a
majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided
that in either event the continuance also is approved by a
majority of the Trustees who
are not "interested persons" (as defined in the Act) of the Fund
or the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval. The
Board of Trustees, including a majority of the Trustees who are
not "interested persons"
of any party to the Agreement, last voted to renew the Agreement
on December 10,
1993. The Agreement is terminable without penalty, on 60 days'
notice, by the Fund's
Board of Trustees or by vote of the holders of a majority of the
Fund's shares, or, upon
not less than 90 days' notice, by the Manager. The Agreement
will terminate
automatically in the event of its assignment (as defined in the
Act).
The Manager is responsible for investment decisions and
manages the Fund's
portfolio of investments in accordance with the stated policies
of the Fund, subject to the
approval of the Fund's Board of Trustees. All purchases and
sales are reported for the
Trustees' review at the meeting subsequent to such transactions.
As compensation for the Manager's services to the Fund, the
Fund has agreed to
pay the Manager a monthly management fee at the annual rate of
.35 of 1% of the value
of the Fund's average daily net assets. For the period June 2,
1992 (commencement of
operations) through May 31, 1993, no management fee was paid by
the Fund pursuant to
an undertaking by the Manager. For the fiscal year ended May 31,
1994, the
management fee payable by the Fund was $1,478,021, which was
reduced by $477,943
pursuant to undertakings in effect, resulting in a net fee paid
of $1,000,078 .
The Manager has engaged Dreyfus to assist it in providing
certain administrative
services to the Fund. Pursuant to its agreement with the Manager
(the "Administration
Agreement"), Dreyfus furnishes the Fund clerical help and
accounting, data processing,
bookkeeping, internal auditing and legal services and certain
other services required by
the Fund, prepares reports to the Fund's shareholders, tax
returns, reports to and filings
with the Securities and Exchange Commission and state Blue Sky
authorities, calculates
the net asset value of the Fund's shares and generally assists
the Manager in providing
for all aspects of the Fund's operation, other than providing
investment advice. The fees
payable to Dreyfus for its services are paid by the Manger.
The Fund has agreed that neither the Manager nor Dreyfus
will 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 the Agreement or the Administration
Agreement relates,
except for a loss resulting from wilful misfeasance, bad faith or
gross negligence on the
part of the Manager in the performance of its obligations or from
reckless disregard by it
of its obligations and duties under the Agreement or on the part
of Dreyfus in the
performance of its obligations or from reckless disregard by it
of its obligations and
duties under the Administration Agreement. The Administration
Agreement contains a
similar provision whereby the Manager has agreed to limit
Dreyfus' liability.
EXPENSES AND EXPENSE INFORMATION. All expenses incurred in
the operation of the
Fund are borne by the Fund, except to the extent specifically
assumed by the Manager.
The expenses borne by the Fund include the following:
organizational costs, taxes,
interest, brokerage fees and commissions, if any, fees of
Trustees who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of the
Manager or Dreyfus, 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.
The Manager has agreed that if in any fiscal year the
aggregate expenses of the
Fund, exclusive of taxes, brokerage, interest on borrowings and
(with the prior written
consent of the necessary state securities commissions)
extraordinary expenses, but
including the management fee, exceed the expense limitation of
any state having
jurisdiction over the Fund, the Fund may deduct from the payment
to be made to the
Manager under the Management Agreement, or the Manager 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 the Manager is not
subject to reduction as
the value of the Fund's net assets increases.
GLASS-STEAGALL ACT. For an additional discussion of the
Glass-Steagall Act in
connection with the Fund's operations, see the Fund's Prospectus.
From time to time, legislation has been introduced and may
be reintroduced in
Congress, which would permit a bank, a bank holding company or a
subsidiary thereof to
organize, sponsor, control and distribute shares of an investment
company such as the
Fund, notwithstanding present restrictions under the
Glass-Steagall Act and the Federal
Bank Holding Company Act of 1956. As described herein, the Fund
is currently
distributed by the Distributor, and Dreyfus, its parent, sponsors
the Fund and provides it
with administrative services. If current restrictions preventing
a bank from legally
sponsoring, organizing, controlling or distributing shares of an
investment company were
relaxed, the Fund expects that the Manager would consider the
possibility of offering to
perform some or all of the services now provided by Dreyfus or
the Distributor. It is not
possible, of course, to predict whether or in what form such
legislation might be enacted
or the terms upon which the Manager might offer to provide
services.
PURCHASE OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY FUND
SHARES."
THE DISTRIBUTOR. The Distributor serves as the Fund's
distributor pursuant to an
agreement which is renewable annually. The Distributor also acts
as distributor for the
other funds in the First Prairie Family of Funds, the funds in
the Dreyfus Family of
Funds and certain other investment companies.
TRANSACTIONS THROUGH SECURITIES DEALERS. In some states,
banks or other financial
institutions effecting transactions in Fund shares may be
required to register as dealers
pursuant to state law.
USING FEDERAL FUNDS. The Shareholder Services Group, Inc.,
the Fund's 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,
will complete the
conversion into, or itself advance, Federal Funds on the business
day following receipt of
the customer order. The order is effective only when so
converted and received by the
Transfer Agent. An order for the purchase of Fund shares placed
by an investor with a
sufficient Federal Funds or cash balance in his brokerage account
with a securities
dealer, bank or other financial institution will become effective
on the day that the order,
including Federal Funds, is received by the Transfer Agent. In
some states, banks or
other financial institutions effecting transactions in Fund
shares may be required to
register as dealers pursuant to state law.
REDEMPTION OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO REDEEM FUND
SHARES."
REDEMPTION BY WIRE OR TELEPHONE. By using this Privilege,
the investor
authorizes the Transfer Agent to act on wire or telephone
redemption instructions from
any person representing himself or herself to be an authorized
representative of the
investor and reasonably believed by the Transfer Agent to be
genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this
procedure on the same
business day if the Transfer Agent receives the redemption
request in proper form prior
to 2:00 p.m., Chicago time, on such day; otherwise, the Fund will
initiate payment on the
next business day. Redemption proceeds will be transferred by
Federal Reserve wire
only to a bank that is a member of the Federal Reserve System.
Investors with access to telegraphic equipment may wire
redemption requests to
the Transfer Agent by employing the following transmittal code
which may be used for
domestic or overseas transmission:
TRANSFER AGENT'S
TRANSMITTAL CODE ANSWER BACK SIGN
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic
equipment may have the
wire transmitted by contacting a TRT Cables operator at
1-800-654-7171 toll free.
Investors should advise the operator that the above transmittal
code must be used and
should also inform the operator of the Transfer Agent's answer
back sign.
REDEMPTION COMMITMENT. The Fund has committed itself
to pay in cash all
redemption requests by any shareholder of record, limited in
amount during any 90-day
period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the
beginning of such period. Such commitment is irrevocable without
the prior approval of
the Securities and Exchange Commission. In the case of requests
for redemption in
excess of such amount, the Board of Trustees reserves the right
to make payments in
whole or in part in securities or other assets of the Fund 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 portfolio is 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 FUND'S PROSPECTUS ENTITLED "HOW TO BUY FUND
SHARES."
AMORTIZED COST PRICING. The valuation of the Fund's
portfolio securities is based
upon their amortized cost which does not take into account
unrealized capital gains or
losses. This involves valuing an instrument at its cost and
thereafter assuming a constant
amortization to maturity of any discount
or premium, regardless
of the impact of
fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result
in periods during
which value, as determined by
amortized cost, is higher or lower than the price the Fund
would receive if it sold the
instrument.
The Board of Trustees has established, as a particular
responsibility within the
overall duty of care owed to the Fund's investors, procedures
reasonably designed to
stabilize the Fund's price per share as computed for the purpose
of purchases and
redemptions at $1.00. Such procedures include review of the
Fund's portfolio holdings by
the Board of Trustees, at such intervals as it deems appropriate,
to determine whether
the Fund's net asset value calculated by using available market
quotations or market
equivalents deviates from $1.00 per share based on amortized
cost. In such review,
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 will
be valued at fair value as
determined in good faith by the Board of Trustees.
The extent of any deviation between the Fund's net asset
value based upon
available market quotations or market equivalents and $1.00 per
share based on
amortized cost will be examined by the Board of Trustees. If
such deviation exceeds 1/2
of 1%, the Board of Trustees will consider what action, if any,
will be initiated. In the
event the Board of Trustees determines that a deviation exists
which may result in
material dilution or other unfair results to investors or
existing shareholders, it 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
Portfolio securities ordinarily are purchased directly from
the issuer or from an
underwriter or a market maker for the securities. Ordinarily, no
brokerage commissions
are paid by the Fund for such purchases. Purchases from
underwriters of portfolio
securities may include a concession paid by the issuer to the
underwriter and the
purchase price paid to, and sales price received from, market
makers for the securities
may reflect the spread between the bid and asked price. No
brokerage commissions
have been paid by the Fund to date.
Transactions 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 for research, statistical or other services to enable
the Manager to supplement
its own research and analysis with the views and information of
other securities firms and
may be selected based upon their sales of Fund shares.
Research services furnished by brokers through which the
Fund effects securities
transactions may be used by the Manager in advising other funds
or accounts it advises
and, conversely, research services furnished to the Manager by
brokers in connection with
other funds or accounts the Manager advises may be used by the
Manager in advising the
Fund. Although it is not possible to place a dollar value on
these services, it is the
opinion of the Manager that the receipt and study of such
services should not reduce its
overall research expenses.
EXCHANGE PRIVILEGE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "EXCHANGE PRIVILEGE."
By using this Privilege, the investor authorizes the
Transfer Agent to act on
exchange instructions from any person representing himself or
herself to be an
authorized representative of the investor and reasonably believed
by the Transfer Agent
to be genuine. Telephone exchanges may be subject to limitations
as to the amount
involved or the number of telephone exchanges permitted.
Shares will be exchanged at
the net asset value next determined after receipt
of an exchange request in proper form.
The Fund reserves 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
investors.
This Privilege is available to shareholders resident in any
state in which shares of
the fund being acquired may legally be sold.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "DIVIDENDS,
DISTRIBUTIONS AND TAXES."
Ordinarily, gains and losses realized from portfolio
transactions will be treated as
capital gain or loss. However, all or a portion of any gain
realized from the sale or other
disposition of certain market discount bonds will be treated as
ordinary income under
Section 1276 of the Internal Revenue Code of 1986, as amended.
YIELD INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE
SECTION IN THE FUND'S PROSPECTUS ENTITLED "YIELD INFORMATION."
For the seven-day period ended May 31, 1994, the Fund's
yield was 3.67% and its
effective yield was 3.74%. These yields reflect the absorption
of certain expenses by the
Manager and/or the waiver of part of the management fee, without
which the Fund's
seven-day yield and effective yield for the period ended May 31,
1994 would have been
3.62% and 3.69%, respectively. See "Management of the Fund" in
the Prospectus. Yield
is computed in accordance with a standardized method which
involves determining the
net change in the value of a hypothetical pre-existing Fund
account having a balance of
one share at the beginning of a seven calendar day period for
which yield is to be
quoted, dividing the net change by the value of the account at
the beginning of the
period to obtain the base period return, and annualizing the
results (i.e., multiplying the
base period return by 365/7). The net change in the value of the
account reflects the
value of additional shares purchased with dividends declared on
the original share and
any such additional shares and fees that may be charged to the
shareholder's account, in
proportion to the length of the base period and the Fund's
average account size, but
does not include realized gains and losses or unrealized
appreciation and depreciation.
Effective yield is computed by adding 1 to the base period return
(calculated as described
above), raising that sum to a power equal to 365 divided by 7,
and subtracting 1 from the
result.
Yields will fluctuate and are not necessarily representative
of future results. Each
investor should remember that yield is a function of the type and
quality of the
instruments in the portfolio, portfolio maturity and operating
expenses. An investor's
principal in the Fund is not guaranteed. See "Determination of
Net Asset Value" for a
discussion of the manner in which the Fund's price per share is
determined.
INFORMATION ABOUT THE FUND
The following information supplements and should
be read in conjunction with the
section in the Fund's Prospectus entitled
"General Information."
Each Fund share has one vote and, when issued
and paid for
in accordance with
the terms of the offering, is fully paid and non-assessable.
Fund shares are of one class
and have equal rights as to dividends and in liquidation. Shares
have no preemptive,
subscription or conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements
to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New
York 10004-2696, as counsel for the Fund, has rendered its
opinion as to
certain legal matters
regarding the due authorization and valid issuance
of the shares
of beneficial interest
being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019,
independent auditors, have been selected as auditors of the Fund.
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholder:
The yield for First Prairie U.S. Treasury Securities Cash
Management was
3.02% for the fiscal year ended May 31, 1994. After taking into
account the
effect of compounding, the effective yield was 3.06%.*
The lower rates provided by the Federal Reserve Board over
the last few
years have done their job. The U.S. economy is again on a growth
path as
evidenced by the 7% gain in GDP for the fourth quarter 1993. The
economy will
probably continue to grow over the next couple of years albeit at
a much
slower pace than fourth quarter '93. As an example, Gross
Domestic Product
for the first quarter of the year was originally reported as 3%.
Consequently, the Fed has begun the next phase of the interest
rate cycle by
beginning to boost short-term interest rates. At a Federal Funds
rate level
of 3%, monetary policy was in an expansionary phase. Now the
economy is
growing and the Fed has publicly stated they want the Fed Funds
rate at a
neutral level.
Earlier this year, in accordance with this policy, the Fed
began a series
of rate hikes, initially with quarter-point moves. Federal
Reserve Board
Chairman Alan Greenspan wants the bond market to know that he has
been and
will be an inflation hawk. He wants to squelch any hint of
inflation before
it rears its ugly head. As of May 31, the Fed Funds rate has
increased 125
basis points from 3% to 4.25%. In anticipation of this change in
policy, we
began to shorten the average maturity of the Fund earlier this
year. After
the May 17th Federal Open Market Committee meeting, the Fed
raised the Fed
Funds rate and the Discount rate by 50 basis points each to 4.25%
and 3.50%
respectively. We began to lengthen our portfolio maturity
immediately after
these rate boosts because we felt the Fed would keep rates stable
for 3 to 6
months to observe the effect that increasing rates would have on
the economy.
Later this year, depending upon how strong the economy is, we
anticipate
the Fed will again raise rates. Consequently, we currently intend
to manage
the Fund with an average maturity in the 50-to-60-day range.
We thank you for your investment in this cash management fund
and will
continue to use our best efforts to provide a high level of
income, while
safeguarding the integrity of principal.
Sincerely,
(T. Scott McCartan Signature)
T. Scott McCartan
Chief Investment Officer
First Prairie Funds
June 24, 1994
New York, N.Y.
* Effective yield is based upon dividends declared daily and
reinvested
monthly.
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
STATEMENT OF INVESTMENTS
MAY 31, 1994
ANNUALIZED
YIELD ON
U.S. TREASURY DATE OF PRINCIPAL
BILLS--75.6% PURCHASE AMOUNT VALUE
------------ ------------- -------------
6/9/1994 3.52% $90,000,000 $ 89,930,333
6/23/1994 3.10 45,000,000 44,915,988
7/7/1994 3.38 50,000,000 49,833,250
8/25/1994 3.29 5,500,000 5,458,444
9/1/1994 4.28 25,000,000 24,729,750
9/22/1994 3.45 5,000,000 4,947,424
11/17/1994 4.65 50,000,000 48,933,775
11/25/1994 4.73 25,000,000 24,431,510
12/15/1994 4.59 20,000,000 19,510,236
-------------
TOTAL U.S. TREASURY BILLS
(cost $312,690,710) $312,690,710
=============
U.S. GOVERNMENT AGENCIES--20.0%
Agency for International
Development, Floating Rate
Notes (a)
3/1/2008 5.08% $12,766,942 $ 12,820,953
1/1/2012 3.52 500,000 500,000
1/1/2018 4.03 12,500,000 12,772,366
7/1/2018 5.10 10,000,000 10,000,000
12/1/2018 5.52 7,500,000 7,563,627
1/1/2021 4.51 25,000,000 25,000,000
7/1/2023 5.00 14,100,000 14,100,000
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $82,756,946) $ 82,756,946
=============
REPURCHASE AGREEMENT--5.1%
National Westminster Bank USA
dated 5/31/1994, due 6/1/1994
in the amount of $21,002,491
(fully collateralized by
$22,430,000 U.S.
Treasury Notes 5.375%,
due 5/31/1998, value
$21,458,991) (cost
$21,000,000) 4.27% $21,000,000 $ 21,000,000
=============
TOTAL INVESTMENTS
(cost $416,447,656) 100.7% $416,447,656
====== =============
LIABILITIES, LESS
CASH AND RECEIVABLES (.7%) $ (2,813,685)
====== =============
NET ASSETS 100.0% $413,633,971
====== =============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate - subject to periodic change.
See notes to financial statements.
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
ASSETS:
Investments in securities,
at value--Note 1(a, b) $416,447,656
Interest receivable 1,499,083
Prepaid expenses 58,191
--------------
418,004,930
LIABILITIES:
Due to The First National
Bank of Chicago $ 200,245
Due to Custodian 4,053,934
Accrued expenses 116,780 4,370,959
------------ -------------
NET ASSETS $413,633,971
=============
REPRESENTED BY:
Paid-in capital $413,680,487
Accumulated net realized
(loss) on investments (46,516)
--------------
NET ASSETS at value applicable to 413,680,487 shares
outstanding (unlimited number of $.001 par value of
Beneficial Interest authorized). $413,633,971
=============
NET ASSET VALUE, offering and redemption price per share
($413,633,971 divided by 413,680,487 shares) $1.00
=====
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1994
INVESTMENT INCOME:
Interest Income $ 14,033,118
Expenses:
Management fee--Note 2(a) $1,478,021
Registration fees 82,477
Custodian fees 81,457
Prospectus and
shareholders' reports 26,444
Professional fees 41,336
Trustees' fees and
expenses -Note 2(b) 6,145
Miscellaneous 43,644
------------
1,759,524
Less--reduction in management
fee due to undertakings--
Note 2(a) 477,943
------------
TOTAL EXPENSES 1,281,581
-------------
INVESTMENT INCOME--NET 12,751,537
NET REALIZED (LOSS) ON INVESTMENTS--NOTE 1(B)
(42,640)
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 12,708,897
=============
See notes to financial statements.
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
--------------------
OPERATIONS: 1993* 1994
-------- --------
Investment income--net $ 5,009,723 $ 12,751,537
Net realized (loss) on investments (3,877) (42,640)
------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 5,005,846 12,708,897
----------- ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net (5,009,723) (12,751,537)
---------- -----------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 2,224,947,105 4,379,511,392
Dividends reinvested 101,156 563,903
Cost of shares redeemed (1,960,617,531)(4,230,925,537)
-------------- ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST
TRANSACTIONS 264,430,730 149,149,758
-------------- ------------
TOTAL INCREASE IN NET ASSETS 264,426,853 149,107,118
NET ASSETS:
Beginning of year 100,000 264,526,853
----------- -----------
End of year $264,526,853 $413,633,971
============ ============
* From June 2, 1992 (commencement of operations) to May 31, 1993.
FINANCIAL HIGHLIGHTS
<PAGE>
Contained below is per share operating performance data for a
share of
Beneficial Interest outstanding, total investment return, ratios
to average
net assets and other supplemental data for each year indicated.
This
information has been derived from the Fund's financial
statements.
YEAR ENDED MAY 31,
- ----------------------
PER SHARE DATA:
1993(1) 1994
------ --------
Net asset value, beginning of year $1.0000 $1.0000
------ --------
INVESTMENT OPERATIONS:
Investment income--net .0319 .0302
Net realized (loss) on investments ._ (.0001)
------ --------
TOTAL FROM INVESTMENT OPERATIONS .0319 .0301
------ --------
DISTRIBUTIONS;
Dividends from investment
income--net (.0319) (.0302)
------- --------
Net asset value, end of year $1.0000 $ .9999
======== ========
TOTAL INVESTMENT RETURN 3.25%(2) 3.06%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets .02%(2) .30%
Ratio of net investment income
to average net assets 3.10%(2) 3.02%
Decrease reflected in above
expense ratios due to
undertakings by Manager .47%(2) .11%
Net Assets, end of year (000's
Omitted) $ 264,527 $413,634
- --------------------------
(1) From June 2, 1992 (commencement of operations) to
May 31, 1993.
(2) Annualized.
See notes to financial statements.
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of
1940 ("Act")
as a diversified open-end management investment company. The
First National
Bank of Chicago ("Manager") serves as the Fund's investment
adviser. The
Dreyfus Corporation ("Dreyfus") provides certain administrative
services to
the Fund-see Note 2(a). Dreyfus Service Corporation
("Distributor"), a
wholly-owned subsidiary of Dreyfus, acts as the exclusive
distributor of the
Fund's shares, which are sold without a sales charge.
It is the Fund's policy to maintain a continuous net asset
value per
share of $1.00; the Fund has adopted certain investment,
portfolio valuation
and dividend and distribution policies to enable it to do so.
(A) PORTFOLIO VALUATION: Investments are valued at amortized
cost, which
has been determined by the Fund's Board of Trustees to represent
the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain
and loss from
securities transactions are recorded on the identified cost
basis. Interest
income is recognized on the accrual basis. Cost of investments
represents
amortized cost.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager,
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 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.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund
to declare
dividends daily from investment income-net. Such dividends are
paid monthly.
Dividends from net realized capital gain, if any, are normally
declared and
paid annually, but the Fund may make distributions on a more
frequent basis
to comply with the distribution requirements of the Internal
Revenue Code. To
the extent that net realized capital gain can be offset by
capital loss
carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to
continue to
qualify as a regulated investment company, if such qualification
is in the
best interests of its shareholders, by complying with the
applicable
provisions of the Internal Revenue Code, and to make
distributions of taxable
income sufficient to relieve it from substantially all, Federal
income taxes.
The Fund has an unused capital loss carryover of
approximately $7,000
available for Federal income tax purposes to be applied against
future net
securities profits, if any realized subsequent to May 31, 1994.
The carryover
does not include net realized securities losses from November 1,
1993 through
May 31, 1994 which are treated, for Federal income tax purposes,
as arising
in fiscal 1995. If not applied, the carryover expires in fiscal
2002.
At May 31, 1994, the cost of investments for Federal income
tax purposes
was substantially the same as the cost for financial reporting
purposes (see
the Statement of Investments).
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager,
the management fee is computed at the annual rate of .35 of 1% of
the average
daily value of the Fund's net assets and is payable monthly. The
Agreement
further provides that if in any full fiscal year the aggregate
expenses of
the Fund exclusive of taxes, brokerage, interest on borrowings
and
extraordinary expenses, exceed the expense limitation of any
state having
jurisdiction over the Fund, the Fund may deduct from the payments
to be made
to the Manager, or the Manager will bear such excess to the
extent required
by state law. The most stringent state expense limitation
applicable to the
Fund presently requires reimbursement of expenses in any full
fiscal year
that such expenses (excluding certain expenses as described
above) exceed 2
1/2% of the first $30 million, 2% of the next $70 million and 1
1/2% of the
excess over $100 million of the average value of the Fund's net
assets in
accordance with California "blue sky" regulations.
The Manager has engaged Dreyfus to assist it in providing
certain
administrative services for the Fund pursuant to a Master
Administration
Agreement between the Manager and Dreyfus. Pursuant to its
agreement with
Dreyfus, the Manager has agreed to pay Dreyfus a monthly fee at
the annual
rate of .05 of 1% of the value of the Fund's average daily net
assets.
However, the Manager had undertaken from June 1, 1993 to
November 30,
1993 to reduce the management fee paid by and reimburse such
excess expenses
of the Fund, to the extent that the Fund's aggregate expenses
(excluding
certain expenses as described above) exceeded specified annual
percentages of
the Fund's average daily net assets. The Manager has currently
undertaken
from December 1, 1993 to assume all expenses of the Fund in
excess of an
annual rate of .35 of 1% of the Fund's average daily net assets.
The
reduction in management fee, pursuant to the undertakings,
amounted to
$477,943 for the year ended May 31, 1994.
The undertaking may be modified by the Manager from time to
time,
provided that the resulting expense reimbursement would not be
less than the
amount required pursuant to the Agreement.
(B) Certain officers and trustees of the Fund are "affiliated
persons,"
as defined in the Act, of the Manager and/or the Distributor.
Each trustee
who is not an "affiliated person" receives an annual fee of
$1,500 and an
attendance fee of $250 per meeting.
(C) On December 5, 1993, Dreyfus entered into an Agreement
and Plan of
Merger providing for the merger of Dreyfus with a subsidiary of
Mellon Bank
Corporation ("Mellon").
Following the merger, it is planned that Dreyfus will be a
direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject
to a number
of contingencies, including receipt of certain regulatory
approvals and
approvals of the stockholders of Dreyfus and of Mellon. The
merger is
expected to occur in August 1994, but could occur later.
<PAGE>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
We have audited the accompanying statement of assets and
liabilities of
First Prairie U.S. Treasury Securities Cash Management, including
the
statement of investments, as of May 31, 1994, and the related
statement of
operations for the year then ended, the statement of changes in
net assets
for each of the two years in the period then ended, and financial
highlights
for each of the years indicated therein. These financial
statements and
financial highlights are the responsibility of the Fund's
management. Our
responsibility is to express an opinion on these financial
statements and
financial highlights based on our audits.
We conducted our 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
securities owned as of May 31, 1994 by correspondence with the
custodian 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 First Prairie U.S. Treasury Securities Cash
Management at May 31,
1994, the results of its operations for the year then ended, the
changes in
its net assets for each of the two years in the period then
ended, and the
financial highlights for each of the indicated years, in
conformity with
generally accepted accounting principles.
(Ernst & Young Signature Logo)
New York, New York
June 30, 1994
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
PART C
OTHER INFORMATION
Item 15. Indemnification.
The response to this item is incorporated by reference
to
Item 27 of Part C of the Registrant's Registration Statement on
Form
N-1A as filed on October 28, 1994.
Item 16. Exhibits - All references are to the Registrant's
Registration Statement on Form N-1A, filed on October
28,
1994 (File No. 33-_____) (the "Registration Statement")
unless otherwise noted.
(1) Registrant's Agreement and Declaration of Trust
are
incorporated by reference to Exhibit (1) to the
Registration Statement.
(2) Registrant's By-Laws are incorporated by reference
to
Exhibit (2) to the Registration Statement.
(3) Not Applicable.
<F15> (4) Form of Agreement and Plan of Exchange.
<F15> Filed herewith as Exhibit A to the Joint Proxy
Statement/Prospectus.
(5) Not Applicable.
(6) Registrant's Management Agreement is incorporated
by
reference to Exhibit(5) to the Registration
Statement.
(7) Registrant's Distribution Agreement is
incorporated by
reference to Exhibit (6) of the Registration
Statement.
(8) Not Applicable.
(9) Registrant's Custody Agreement is incorporated by
reference to Exhibit (8) to the Registration
Statement.
(10) Registrant's Service Plan, entered into pursuant
to
Rule 12b-1 under the Investment Company Act of
1940,
as amended, is incorporated by reference to
Exhibit 15
to the Registration Statement.
<F16>(11) Opinion and consent of Stroock & Stroock &
Lavan
regarding legality of issuance of shares and other
matters.
<F16>To be filed by Amendment.
(12) Opinion and consent of Stroock & Stroock & Lavan
regarding tax matters.
(13) Not Applicable.
(14) Consents of Independent Accountants.
(15) Not Applicable.
<F17> (16) Powers of Attorney.
<F17> Incorporated by reference to the signature page hereto.
(17) Form of Proxy.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any
public
reoffering of the securities registered through the use
of
a prospectus which is a part of this registration
statement
by any person or party who is deemed to be an
underwriter
within the meaning of Rule 145(c) of the Securities Act
of
1933, as amended, the reoffering prospectus will
contain
the information called for by the applicable
registration
form for reofferings by persons who may be deemed
underwriters, in addition to the information called for
by
the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed
as a
part of an amendment to the registration statement and
will
not be used until the amendment is effective, and that,
in
determining any liability under the Securities Act of
1933,
as amended, each post-effective amendment shall be
deemed
to be a new registration statement for the securities
offered therein, and the offering of the securities at
that
time shall be deemed to be the initial bona fide
offering
of them.
SIGNATURES
As required by the Securities Act of 1933, this
Registration Statement has been signed on behalf of the
Registrant,
in the City of Chicago, State of Illinois, on the 28th day of
October, 1994.
PRAIRIE INSTITUTIONAL FUNDS
(Registrant)
By:/s/Joseph F. Kissel
Joseph F. Kissel, President
Each person whose signature appears below on this
Registration Statement hereby constitutes and appoints Joseph F.
Kissel, Richard A. Fabietti, Martin G. Flanigan, James W.
Bernaiche,
Ann E. Bergin and Steven A. Smith, and each of them, with full
power
to act without the other, his true and lawful attorney-in-fact
and
agent, with full power of substitution and resubstitution, for
him
and in his name, place and stead, in any and all capacities
(until
revoked in writing) to sign any and all amendments to this
Registration Statement (including post-effective amendments and
amendments thereto), and to file the same, with all exhibits
thereto,
and other documents in connection therewith, with the Securities
and
Exchange Commission, granting unto said attorneys-in-fact and
agents,
and each of them, full power and authority to do and perform each
and
every act and thing ratifying and confirming all that said
attorneys-
in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of
1933,
this Registration Statement has been signed below by the
following
persons in the capacities and on the dates indicated.
/s/Joseph F. Kissel President (Principal October 28, 1994
Joseph F. Kissel Executive Officer)
/s/Richard A. Fabietti Treasurer (Principal October 28, 1994
Richard A. Fabietti Financial and
Accounting Officer)
/s/John P. Gould Trustee October 28, 1994
John P. Gould
/s/Marilyn McCoy Trustee October 28, 1994
Marilyn McCoy
/s/Raymond D. Oddi Trustee October 28, 1994
Raymond D. Oddi
PRAIRIE INSTITUTIONAL FUNDS
Registration Statement on Form N-14 under
the Securities Act of 1933
EXHIBITS
INDEX TO EXHIBITS
Page
(12) Tax Opinion (including consent) of
Stroock & Stroock & Lavan . . . . . . . .
October 28, 1994
First Prairie Cash Management
Three First National Plaza
Chicago, Illinois 60670
Prairie Institutional Funds
Three First National Plaza
Chicago, Illinois 60670
Re: Registration Statement on Form N-14
(Registration No. 33- )
Ladies and Gentlemen:
You have requested our opinion as to certain Federal income tax
consequences of the reorganization contemplated by the Agreement
and Plan of Exchange, substantially in the form included as
Exhibit
A to the Registration Statement on Form N-14 of Prairie
Institutional Funds (Reg. No. 33-_____) (the "Registration
Statement"), between First Prairie Cash Management, a
Massachusetts
business trust (the "Existing Fund"), and Cash Management Series
(the "Series"), a series of Prairie Institutional Funds, a
Massachusetts business trust (the "Trust"). You have advised us
that the Existing Fund has qualified and will qualify as a
"regulated investment company" within the meaning of Subchapter M
of Chapter 1 of the Internal Revenue Code of 1986, as amended
(the
"Code"), for each of its taxable years ending on or before or
including the Closing Date. You have further advised us that the
Series intends to meet the requirements for qualification and
treatment as a regulated investment company within the meaning of
Subchapter M of Chapter 1 of the Code for the taxable year in
which
the Exchange will occur and for each of its taxable years
thereafter.
In rendering this opinion, we have examined the Agreement and
Plan
of Exchange, Registration Statement, the Agreement and
Declaration
of Trust of the Existing Fund dated September 12, 1990, the
Agreement and Declaration of Trust of the Trust dated October 20,
1994, the Prospectus and Statement of Additional Information of
each of the Existing Fund and the Series, incorporated by
reference
in the Registration Statement, and such other documents as we
have
deemed necessary or relevant for the purpose of this opinion. In
issuing our opinion, we have relied upon the representation of
the
Existing Fund that its Agreement and Declaration of Trust is the
document pursuant to which it has operated to date and that it
has
operated in accordance with all laws applicable to such entity
and
the statements and representations made herein and in the
Registration Statement. We also have relied upon the
representation of the Trust that its Agreement and Declaration of
Trust is the document pursuant to which it has operated to date
and
will operate following the reorganization and that it has
operated
and will operate following the reorganization in accordance with
all laws applicable to such entity and the statements and
representations made herein and in the Registration Statement.
As
to various questions of fact material to this opinion, where
relevant facts were not independently established by us, we have
relied upon statements of, and written information provided by,
representatives of both the Existing Fund and the Trust. We have
also examined such matters of law as we have deemed necessary or
appropriate for the purpose of this opinion. We note that our
opinion is based on our examination of such law, our review of
the
documents described above, the statements and representations
referred to above and in the Registration Statement and the
Agreement and Plan of Exchange, the provisions of the Code, the
regulations, published rulings and announcements thereunder, and
the judicial interpretations thereof currently in effect. Any
change in applicable law or any of the facts and circumstances
described in the Registration Statement, or inaccuracy of any
statements or representations on which we have relied, may affect
the continuing validity of our opinion.
Capitalized terms not defined herein have the respective meanings
given such terms in the Agreement and Plan of Exchange.
Based on the foregoing, it is our opinion that for Federal income
tax purposes:
(a) The transfer of all or substantially all of the
Existing
Fund's assets in exchange for Series Shares and the assumption by
the Series of certain identified liabilities of the Existing Fund
will constitute a "reorganization" within the meaning of Section
368(a)(1)(F) of the Code;
(b) No gain or loss will be recognized by the Series upon
the
receipt of the assets of the Existing Fund solely in exchange for
Series Shares and the assumption by the Series of certain
identified liabilities of the Existing Fund;
(c) No gain or loss will be recognized by the Existing Fund
upon the transfer of the Existing Fund's assets to the Series in
exchange for Series Shares and the assumption by the Series of
certain identified liabilities of the Existing Fund or upon the
distribution of the Series Shares to Existing Fund Shareholders
in
exchange for their shares of the Existing Fund;
(d) No gain or loss will be recognized by the Existing Fund
Shareholders upon the exchange of their Existing Fund shares for
Series Shares;
(e) The aggregate tax basis for the Series Shares received
by
each of the Existing Fund Shareholders pursuant to the
reorganization will be the same as the aggregate tax basis of the
Existing Fund shares held by such shareholder immediately prior
to
the reorganization, and the holding period of the Series Shares
to
be received by each Existing Fund Shareholder will include the
period during which the Existing Fund shares exchanged therefor
were held by such shareholder (provided the Existing Fund shares
were held as capital assets on the date of the reorganization);
and
(f) The tax basis of the Existing Fund assets acquired by
the
Series will be the same as the tax basis of such assets to the
Existing Fund immediately prior to the reorganization, and the
holding period of the assets of the Existing Fund in the hands of
the Series will include the period during which those assets were
held by the Existing Fund.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Proxy
Statement/Prospectus included in the Registration Statement, and
to
the filing of this opinion as an exhibit to any Registration
Statement, and to the filing of this opinion as an exhibit to any
application made by or on behalf of the Trust or any distributor
or
dealer in connection with the registration and qualification of
the
Trust or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules
and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
<PAGE>
October 28, 1994
First Prairie U.S. Treasury Securities
Cash Management
Three First National Plaza
Chicago, Illinois 60670
Prairie Institutional Funds
Three First National Plaza
Chicago, Illinois 60670
Re: Registration Statement on Form N-14
(Registration No. 33- )
Ladies and Gentlemen:
You have requested our opinion as to certain Federal income tax
consequences of the reorganization contemplated by the Agreement
and Plan of Exchange, substantially in the form included as
Exhibit
A to the Registration Statement on Form N-14 of Prairie
Institutional Funds (Reg. No. 33-_____) (the "Registration
Statement"), between First Prairie U.S Treasury Securities Cash
Management, a Massachusetts business trust (the "Existing Fund"),
and U.S. Government Securities Cash Management Series (the
"Series"), a series of Prairie Institutional Funds, a
Massachusetts
business trust (the "Trust"). You have advised us that the
Existing Fund has qualified and will qualify as a "regulated
investment company" within the meaning of Subchapter M of Chapter
1
of the Internal Revenue Code of 1986, as amended (the "Code"),
for
each of its taxable years ending on or before or including the
Closing Date. You have further advised us that the Series
intends
to meet the requirements for qualification and treatment as a
regulated investment company within the meaning of Subchapter M
of
Chapter 1 of the Code for the taxable year in which the Exchange
will occur and for each of its taxable years thereafter.
In rendering this opinion, we have examined the Agreement and
Plan
of Exchange, Registration Statement, the Agreement and
Declaration
of Trust of the Existing Fund dated September 12, 1990, the
Agreement and Declaration of Trust of the Trust dated October 20,
1994, the Prospectus and Statement of Additional Information of
each of the Existing Fund and the Series, incorporated by
reference
in the Registration Statement, and such other documents as we
have
deemed necessary or relevant for the purpose of this opinion. In
issuing our opinion, we have relied upon the representation of
the
Existing Fund that its Agreement and Declaration of Trust is the
document pursuant to which it has operated to date and that it
has
operated in accordance with all laws applicable to such entity
and
the statements and representations made herein and in the
Registration Statement. We also have relied upon the
representation of the Trust that its Agreement and Declaration of
Trust is the document pursuant to which it has operated to date
and
will operate following the reorganization and that it has
operated
and will operate following the reorganization in accordance with
all laws applicable to such entity and the statements and
representations made herein and in the Registration Statement.
As
to various questions of fact material to this opinion, where
relevant facts were not independently established by us, we have
relied upon statements of, and written information provided by,
representatives of both the Existing Fund and the Trust. We have
also examined such matters of law as we have deemed necessary or
appropriate for the purpose of this opinion. We note that our
opinion is based on our examination of such law, our review of
the
documents described above, the statements and representations
referred to above and in the Registration Statement and the
Agreement and Plan of Exchange, the provisions of the Code, the
regulations, published rulings and announcements thereunder, and
the judicial interpretations thereof currently in effect. Any
change in applicable law or any of the facts and circumstances
described in the Registration Statement, or inaccuracy of any
statements or representations on which we have relied, may affect
the continuing validity of our opinion.
Capitalized terms not defined herein have the respective meanings
given such terms in the Agreement and Plan of Exchange.
Based on the foregoing, it is our opinion that for Federal income
tax purposes:
(a) The transfer of all or substantially all of the
Existing
Fund's assets in exchange for Series Shares and the assumption by
the Series of certain identified liabilities of the Existing Fund
will constitute a "reorganization" within the meaning of Section
368(a)(1)(F) of the Code;
(b) No gain or loss will be recognized by the Series upon
the
receipt of the assets of the Existing Fund solely in exchange for
Series Shares and the assumption by the Series of certain
identified liabilities of the Existing Fund;
(c) No gain or loss will be recognized by the Existing Fund
upon the transfer of the Existing Fund's assets to the Series in
exchange for Series Shares and the assumption by the Series of
certain identified liabilities of the Existing Fund or upon the
distribution of the Series Shares to Existing Fund Shareholders
in
exchange for their shares of the Existing Fund;
(d) No gain or loss will be recognized by the Existing Fund
Shareholders upon the exchange of their Existing Fund shares for
Series Shares;
(e) The aggregate tax basis for the Series Shares received
by
each of the Existing Fund Shareholders pursuant to the
reorganization will be the same as the aggregate tax basis of the
Existing Fund shares held by such shareholder immediately prior
to
the reorganization, and the holding period of the Series Shares
to
be received by each Existing Fund Shareholder will include the
period during which the Existing Fund shares exchanged therefor
were held by such shareholder (provided the Existing Fund shares
were held as capital assets on the date of the reorganization);
and
(f) The tax basis of the Existing Fund assets acquired by
the
Series will be the same as the tax basis of such assets to the
Existing Fund immediately prior to the reorganization, and the
holding period of the assets of the Existing Fund in the hands of
the Series will include the period during which those assets were
held by the Existing Fund.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Proxy
Statement/Prospectus included in the Registration Statement, and
to
the filing of this opinion as an exhibit to any Registration
Statement, and to the filing of this opinion as an exhibit to any
application made by or on behalf of the Trust or any distributor
or
dealer in connection with the registration and qualification of
the
Trust or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules
and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
