Registration Nos. 33-56247
811-07235
===============================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. _____ / /
Post-Effective Amendment No. 1 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No. 1 /X/
(Check appropriate box or boxes)
PRAIRIE INSTITUTIONAL FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670 60670
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 732-
4231
Bradford M. Markham, Esq.
c/o The First National Bank of Chicago
Three First National Plaza
Chicago, Illinois 60670
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
It is proposed that this filing will become effective
(check appropriate box)
X immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph
(a)(ii)
____ on (date) pursuant to paragraph (a)(ii) of Rule
485.
If appropriate, check the following box:
____ this post-effective amendment designates a new
effective date for a previously filed post-
effective amendment.
Registrant has registered an indefinite number of its shares of
Beneficial Interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for its fiscal year ending
December 31, 1995 will be filed on or about February 28, 1996.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Page Cover
2 Synopsis 4
3 Condensed Financial Information 6
4 General Description of Registrant 10, 26
5 Management of the Fund 17
5(a) Management's Discussion of Fund's *
Performance
6 Capital Stock and Other Securities 26
7 Purchase of Securities Being Offered 19
8 Redemption or Repurchase 21
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-12
15 Control Persons and Principal Holders
of Securities B-25
16 Investment Advisory and Other ServicesB-15
17 Brokerage Allocation B-23
Items in
Part B of
Form N-1A Caption Page
18 Capital Stock and Other Securities B-25
19 Purchase, Redemption and Pricing of
Securities Being Offered B-19
20 Tax Status *
21 Underwriters B-1
22 Calculations of Performance Data B-24
23 Financial Statements B-33
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-2
26 Number of Holders of Securities C-2
27 Indemnification C-3
28 Business and Other Connections of
Investment Adviser C-3
29 Principal Underwriters C-4
30 Location of Accounts and Records C-4
31 Management Services C-4
32 Undertakings C-4
- ---------
*Omitted since answer is negative or inapplicable.
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
MUNICIPAL CASH MANAGEMENT FUND
TREASURY PRIME CASH MANAGEMENT FUND
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
PROSPECTUS
May 30, 1995
PLEASE READ CAREFULLY: Mutual fund shares are not bank
deposits, are not insured by the Federal Deposit Insurance
Corporation, and are not obligations of or guaranteed by The
First National Bank of Chicago, any of its affiliates or any
other bank. Mutual fund shares involve investment risks,
including the possible loss of the principal amount invested.
First Chicago Investment Management Company acts as investment
adviser and administrator of the funds in the Prairie Family of
Funds for which it is compensated as set forth in the relevant
prospectus.
First Chicago Investment Management Company
INVESTMENT ADVISER AND ADMINISTRATOR
Concord Financial Group, Inc.
DISTRIBUTOR
PROSPECTUS BEGINS ON PAGE ONE
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
PROSPECTUS = May 30, 1995
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 Shares bear certain costs pursuant to a Service
Plan adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940.
First Chicago Investment Management Company ("FCIMCO"
or the "Investment Adviser") serves as each Fund's investment
adviser and administrator.
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 FUND 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.
The Statement of Additional Information, dated May 30,
1995, 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 125
West 55th Street, New York, New York 10019, or call
1-800-370-9446.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Annual Fund Operating Expenses . . . . . . . . . . . . . . .
Condensed Financial Information. . . . . . . . . . . . . . .
Yield Information. . . . . . . . . . . . . . . . . . . . . .
Description of the Funds . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . .
Management of the Trust. . . . . . . . . . . . . . . . . . .
How to Buy Fund Shares . . . . . . . . . . . . . . . . . . .
How to Redeem Fund Shares. . . . . . . . . . . . . . . . . .
Service Plan . . . . . . . . . . . . . . . . . . . . . . . .
Dividends, Distributions and Taxes . . . . . . . . . . . . .
General Information. . . . . . . . . . . . . . . . . . . . .
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . .
<TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<CAPTION>
Cash Management Municipal Cash
Fund Management Fund
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees (after fee waivers) .09% .09% .20% .20%
12b-1 Fees (distribution and servicing) None .25% None .25%
Other Expenses. . . . . .26% .26% .15% .15%
Total Fund Operating Expenses
(after fee waivers) . .35% .60% .35% .60%
</TABLE>
EXAMPLE:
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
1 YEAR . . . . . . . . $ 4 $ 6 $ 4 $ 6
3 YEARS. . . . . . . . $11 $19 $11 $19
5 YEARS. . . . . . . . $20 $33 $20 $33
10 YEARS. . . . . . . . $44 $75 $44 $75
</TABLE>
<TABLE>
<CAPTION>
U.S. Government
Treasury Prime Cash Securities Cash
Management Fund Management Fund
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees (after fee waivers) .00% .00% .12% .12%
12b-1 Fees (distribution and servicing) None .25% None .25%
Other Expenses (after fee waivers
and expense reimbursements) .35% .35% .23% .23%
Total Fund Operating Expenses (after fee
waivers and expense reimbursements) .35% .60% .35% .60%
</TABLE>
EXAMPLE:
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
1 YEAR . . . . . . . . $ 4 $ 6 $ 4 $ 6
3 YEARS. . . . . . . . $11 $19 $11 $19
5 YEARS. . . . . . . . $20 $33 $20 $33
10 YEARS. . . . . . . . $44 $75 $44 $75
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLES SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE
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. FCIMCO 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 investment
advisory and administration fees, exceed .35% and .60% of the
value of the average net assets of the Institutional Shares and
the Service Shares, respectively, for the fiscal year, the Trust
may deduct from the payment to be made to FCIMCO under the
Investment Advisory or Administration Agreements, or FCIMCO 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." The expenses noted above,
without fee waivers or expense reimbursement arrangements, would
have been:
<TABLE>
<CAPTION>
Cash Management Municipal Cash
Fund Management Fund
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees. . . . . . . . . . .20% .20% .20% .20%
12b-1 Fees (distribution and servicing) None .25% None .25%
Other Expenses . . . . . . . . . . .26% .26% .15% .15%
Total Fund Operating Expenses .46% .71% .35% .60%
</TABLE>
<TABLE>
<CAPTION>
U.S. Government
Treasury Prime Cash Securities Cash
Management Fund Management Fund
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees. . . . . . . . . . .20% .20% .20% .20%
12b-1 Fees (distribution and servicing) None .25% None .25%
Other Expenses . . . . . . . . . . 1.13% 1.13% .23% .23%
Total Fund Operating Expenses 1.33% 1.58% .43% .68%
</TABLE>
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been
audited (except where noted) by Ernst & Young LLP, each Fund's
independent auditors, whose reports thereon appear in the
Statement of Additional Information. Further financial data and
related notes are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance
data, total investment return, ratios to average net assets and
other supplemental data for Institutional Shares and Service
Shares of the Cash Management Fund, U.S. Government Securities
Cash Management Fund and Treasury Prime Cash Management Fund for
the periods indicated. This information has been derived from
information provided in the Fund's financial statements. No
financial data is available for the Municipal Cash Management
Fund, which had not commenced operations as of the date of this
prospectus.
<TABLE>
CASH MANAGEMENT FUND (1)
<CAPTION>
INSTITUTIONAL SHARES SERVICE SHARES
YEAR ENDED JUNE 30, 10-MONTH
PERIOD ENDED PERIOD ENDED
APRIL 30, 1995 APRIL 30, 1995
1993(2) 1994 (UNAUDITED)(3) (UNAUDITED)(4)
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year . . . . . . . . . $ 1.0000 $.9999 $.9993 $1.0000
INVESTMENT OPERATIONS:
Investment income - net. . . . . . . . . . . . . . . .0297 .0333 .0412 .0154
Net realized (loss) on investments . . . . . . . . . (.0001) (.0006) (.0059) (.0006)
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . . .0296 .0327 .0353 .0148
DISTRIBUTIONS:
Dividends from investment income-net (.0297) (.0333) (.0412) (.0154)
Increase due to voluntary capital
contribution from Investment Adviser -- -- .0060 --
Net asset value, end of year . . . . . . . . . . . . $ .9999 $.9993 $.9994 $.9994
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . 3.25%(5) 3.38% 4.20%(6)(7) 1.55%(7)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .05%(5) .31% .35%(5) .60%(5)
Ratio of net investment income to
average net assets . . . . . . . . . . . . . . . . 3.19%(5) 3.33% 4.94%(5) 5.47%(5)
Decrease reflected in above expense
ratios due to undertakings . . . . . . . . . . . . .51%(5) .12% .09%(5) .11%(5)
Net Assets, end of year (000's omitted) $175,713 $243,820 $317,004 $1,595
________________
(1) On January 17, 1995, all of the assets and liabilities of First Prairie Cash Management were transferred to the Cash
Management Fund in exchange for Institutional Shares of the Cash Management Fund. The financial data provided above prior
to such date is for First Prairie Cash Management.
(2) From July 30, 1992 (commencement of operations) to June 30, 1993.
(3) From July 1, 1994 through April 30, 1995.
(4) From January 17, 1995 (initial offering date of Service Shares) through April 30, 1995.
(5) Annualized.
(6) Had the Fund not had a capital contribution from the Investment Adviser during the period, the total investment return
would have been lower.
(7) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND (1)
INSTITUTIONAL SHARES SERVICE SHARES
11-MONTH
PERIOD ENDED PERIOD ENDED
YEAR ENDED MAY 31, APRIL 30, 1995 APRIL 30, 1995
PER SHARE DATA: 1993(2) 1994 (UNAUDITED)(3) (UNAUDITED)(4)
<S> <C> <C> <C> <C>
Net asset value, beginning of year............. $1.0000 $1.0000 $.9999 $1.0000
INVESTMENT OPERATIONS:
Investment income--net......................... .0319 .0302 .0440 .0153
Net realized (loss) on investments............. -- (.0001) (.0009) (.0010)
TOTAL FROM INVESTMENT OPERATIONS......... .0319 .0301 .0431 .0143
DISTRIBUTIONS:
Dividends from investment income--net.......... (.0319) (.0302) (.0440) (.0153)
Net asset value, end of year................... $1.0000 $.9999 $.9990 $.9990
TOTAL INVESTMENT RETURN............................ 3.25%(5) 3.06% 4.52%(6) 1.54%(6)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........ .02%(5) .30% .35%(5) .60%(5)
Ratio of net investment income to
average net assets............................. 3.10%(5) 3.02% 4.85%(5) 5.43%(5)
Decrease reflected in above expense
ratios due to undertakings.................. .47%(5) .11% .06%(5) .08%(5)
Net Assets, end of year (000's omitted)........ $264,527 $413,634 $504,850 $10,232
(1) On January 17, 1995, all of the assets and liabilities of First Prairie U.S. Treasury Securities Cash Management were
transferred to the U.S. Government Securities Cash Management Fund in exchange for Institutional Shares of the U.S.
Government Securities Cash Management Fund. The financial data provided above prior to such date is for First Prairie
U.S. Treasury Securities Cash Management.
(2) From June 2, 1992 (commencement of operations) to May 31, 1993.
(3) From June 1, 1994 through April 30, 1995.
(4) From January 17, 1995 (initial offering date of Service Shares) through April 30, 1995.
(5) Annualized.
(6) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
TREASURY PRIME CASH MANAGEMENT FUND
PERIOD ENDED APRIL 30, 1995
(UNAUDITED)(1)
INSTITUTIONAL SHARES SERVICE SHARES
PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning
of year. . . . . . . . . . . . . . . . . . . . . . $1.0000 $1.0000
INVESTMENT OPERATIONS:
Investment income - net. . . . . . . . . . . . . . . .0058 .0055
Net realized (loss) on
investments. . . . . . . . . . . . . . . . . . . . (.0001) (.0001)
TOTAL FROM INVESTMENT
OPERATIONS . . . . . . . . . . . . . . . . . . . .0057 .0054
DISTRIBUTIONS:
Dividends from investment
income-net . . . . . . . . . . . . . . . . . . . . (.0058) (.0055)
Net asset value, end of
year . . . . . . . . . . . . . . . $.9999 $.9999
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . .58%(2) .55%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets . . . . . . . . . . . . . . . . . . . . .35%(3) .60%(3)
Ratio of net investment income to
average net assets . . . . . . . . . . . . . . . . 5.31%(3) 5.01%(3)
Decrease reflected in above
expense ratios due to
undertakings . . . . . . . . . . . . . . . . . . . .98%(3) .98%(3)
Net Assets, end of year
(000's omitted). . . . . . . . . . . . . . . . . . $13,010 $553
(1) From March 22, 1995 (commencement of operations) through April 30, 1995.
(2) Not annualized.
(3) Annualized.
</TABLE>
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 the Service Class should be expected to be lower
than that of the Institutional Class. 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
ReportR and other industry publications.
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 the Service Class. The
fee is payable to the Distributor for advertising, marketing and
distributing Service Shares and for ongoing personal services to
the holders of Service Shares relating to 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 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 the Service Class will
cause such Class to have a higher expense ratio and to pay lower
dividends than the Institutional Class.
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 & Phelps Credit Rating Co.,
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 Investment Adviser 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 and guaranteed as to principal and 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 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, which currently limits borrowing to no more than
33-1/3% of the value of the Fund's total assets; (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 "Appendix = Investment
Practices = Illiquid Securities" and "Investment Objective and
Management Policies = Investment Restrictions" in the Statement
of Additional Information.
RISK FACTORS
See also the Appendix beginning on page A-1.
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 Investment Adviser will
consider, on an ongoing basis, a number of factors including the
likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
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
Investment Adviser. 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
INVESTMENT ADVISER AND ADMINISTRATOR
First Chicago Investment Management Company,
located
at Three First National Plaza, Chicago, Illinois 60670, is each
Fund's investment adviser and administrator. FCIMCO is a newly-
formed, registered investment adviser and a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), which
in turn is a wholly-owned subsidiary of First Chicago
Corporation, a registered bank holding company, FNBC 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, 1995, FNBC was one of the largest
commercial banks in the United States and the largest in the
mid-western United States in terms of assets ($72.3 billion) and
deposits ($32.2 billion). As of March 31, 1995, FCIMCO provided
investment management services to portfolios containing
approximately $26 billion in assets. FCIMCO serves as
investment adviser for the Trust pursuant to an Investment
Advisory Agreement dated as of January 1, 1995. Prior to
January 1, 1995, FNBC served as each Fund's investment adviser
and administrator. Under the Investment Advisory Agreement,
FCIMCO provides the day-to-day management of each Fund's
investments, subject to the overall authority of the Trust's
Board of Trustees and in conformity with Massachusetts law and
the stated policies of the Trust. FCIMCO 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. FCIMCO has advised the Trust that in making its
investment decisions FCIMCO does not obtain or use material
inside information in its or any of its affiliate's possession.
Under the terms of the Investment Advisory
Agreement
with the Trust, the Trust has agreed to pay FCIMCO a monthly
advisory fee at the annual rate of .20 of 1% of the value of
each Fund's average daily net assets.
FCIMCO serves as the Trust's administrator
pursuant to
an Administration Agreement with the Trust. Under the
Administration Agreement, FCIMCO generally assists in all
aspects of the Trust's operations, other than providing
investment advice, subject to the overall authority of the
Trust's Board in accordance with Massachusetts law. Under the
terms of the Administration Agreement, the Trust has agreed to
pay FCIMCO a monthly administration fee at the annual rate of
.15 of 1% of the value of each Fund's average daily net assets.
FCIMCO has engaged Concord Holding Corporation, a wholly-owned
subsidiary of The BISYS Group, Inc., located at 125 West 55th
Street, New York, New York 10019 (the "Sub-Administrator"), to
assist it in providing certain administrative services for the
Trust pursuant to a Master Sub-Administration Agreement between
FCIMCO and the Sub-Administrator. The Sub-Administrator
currently provides administrative services or sub-administrative
services to other investment companies with over $35 billion in
assets. FCIMCO, from its own funds, will pay the Sub-
Administrator for the Sub-Administrator's services.
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 Sub-Administrator, was organized to distribute shares of
mutual funds to institutional and retail investors. The
Distributor distributes the shares of other investment companies
with over $21 billion in assets.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN
Primary Funds Service Corp., 100 Financial Park,
Franklin, Massachusetts 02038, is the Trust's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Transfer
Agent is jointly owned by a subsidiary of the Sub-Administrator
and Putnam Investments, Inc. The Bank of New York,
90 Washington Street, New York, New York 10286, 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 FCIMCO. 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 FCIMCO, 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 or Class are charged against the assets of
that Fund or Class, respectively; 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.
FCIMCO 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 investment advisory and administration fees, exceed .35% and
.60% of the value of the average net assets of the Institutional
Class and the Service Class, respectively, for the fiscal year,
the Trust may deduct from the payment to be made to FCIMCO under
the Investment Advisory or Administration Agreements, or FCIMCO
will bear, such excess expense.
HOW TO BUY FUND SHARES
Each Fund is designed for institutional investors,
including banks (such as FNBC), 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 1-800-370-9446. For
instructions concerning purchases and to determine whether their
computer facilities are compatible with the Trust's, investors
should call 1-800-370-9446.
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.
Net asset value per share is determined as of
12:00
noon, Central Standard time, for the Municipal Cash Management
Fund and Treasury Prime Cash Management Fund and 2:00 p.m.,
Central Standard time, for the Cash Management Fund and U.S.
Government Securities Cash Management Fund, on each Fund
business day (which, as used herein, shall include 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 12:00 noon, Central Standard time, for the
Municipal Cash Management Fund and Treasury Prime Cash
Management Fund or 2:00 p.m., Central Standard time, for the
Cash Management Fund and U.S. Government Securities Cash
Management Fund, by the Transfer Agent will receive the dividend
declared that day. Investors whose payments are received in or
converted into Federal Funds after 12:00 noon, Central Standard
time, for the Municipal Cash Management Fund and Treasury Prime
Cash Management Fund or 2:00 p.m., Central Standard time, for
the Cash Management Fund and U.S. Government Securities Cash
Management Fund, 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").
HOW TO REDEEM FUND SHARES
An investor may redeem all or any portion of the
shares in the investor's account on any Fund business day at the
net asset value next determined after a redemption request in
proper form is received by the Transfer Agent. Therefore,
redemptions will be effected on the same day the redemption
order is received only if such order is received prior to
12:00 noon, Central Standard time, for the Municipal Cash
Management Fund and Treasury Prime Cash Management Fund or
2:00 p.m., Central Standard time, for the Cash Management Fund
and U.S. Government Securities Cash Management Fund, on any Fund
business day. Shares that are redeemed earn dividends up to and
including the day prior to the day the redemption is effected.
The proceeds of a redemption will be paid in Federal Funds
ordinarily on the Fund business day the redemption is effected,
but in any event within seven days. Payment for redemption
requests received before 12:00 noon, Central Standard time, for
the Municipal Cash Management Fund and Treasury Prime Cash
Management Fund or 2:00 p.m., Central Standard time, for the
Cash Management Fund and U.S. Government Securities Cash
Management Fund, ordinarily is made in Federal Funds wired to
the redeeming shareholder on the same Fund business day.
Payment for redeemed shares for which a redemption order is
received after such time on a Fund business day is made in
Federal Funds wired to the redeeming shareholder on the next
Fund business day following redemption. To allow the Investment
Adviser to manage the Funds' portfolios more effectively,
investors are urged to make redemption requests as early in the
day as possible. In making redemption requests, the names of
the registered shareholders and their account numbers must be
supplied. Although each Fund generally retains the right to pay
the redemption price of its shares in kind with securities
(instead of cash), the Trust has filed an election under
Rule 18f-1 under the 1940 Act committing to pay in cash all
redemptions by a shareholder of record up to the amounts
specified in such rule (in most cases approximately $250,000).
A wire redemption may be requested by telephone or
wire to Primary Funds Service Corp., P.O. Box 9743, Boston,
Massachusetts 02109. For telephone redemptions, please call
1-800-370-9446.
An investor may redeem shares by telephone if the
investor has checked the appropriate box on the Account
Application. By selecting a telephone redemption 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.
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
1-800-370-9446 to determine whether their computer facilities
are compatible and to receive instructions for redeeming shares
in this manner.
The right of any investor to receive payments with
respect to any redemption may be suspended or the payment of the
redemption proceeds postponed during any period in which the New
York Stock Exchange is closed (other than weekends or holidays)
or trading on such Exchange is restricted or, to the extent
otherwise permitted by the 1940 Act, if an emergency exists.
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 the Service Class. 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. FCIMCO, FNBC and
their 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 Fund business 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 the Institutional
Class or the Service Class 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 the Service Class. 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.
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 19, 1994, and commenced operations on
January 17, 1995. 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.
On January 17, 1995, all of the assets and liabilities
of First Prairie Cash Management and First Prairie U.S. Treasury
Securities Cash Management were transferred to the Cash
Management Fund and U.S. Government Securities Cash Management
Fund, respectively, in exchange for Institutional Shares
pursuant to a proposal approved by shareholders of each such
First Prairie fund on December 30, 1994.
To date, the Board of Trustees has authorized the
creation of four separate portfolios of shares. 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.
<PAGE>
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, except the Treasury Prime Cash
Management Fund, 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
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.
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. Pursuant to an order obtained from the
Securities and Exchange Commission, each Fund also is permitted
to enter into overnight repurchase agreements with FNBC or an
affiliate of FNBC subject to the terms and conditions of such
order.
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 Investment
Adviser determines that at the time of investment the
obligations are of comparable quality to the other obligations
in which the Fund may invest. The Investment Adviser, on behalf
of the Fund will consider on an ongoing basis the credit
worthiness 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 Investment Adviser, 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. As to these securities, a
Fund is subject to a risk that should such Fund desire to sell
them when a ready buyer is not available at a price the Fund
deems representative of their value, the value of such Fund's
net assets could be adversely affected.
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.<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
Cash Management Funds
INSTITUTIONAL And SERVICE SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 30, 1995
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 May 30, 1995,
as it may be revised from time to time. To obtain a copy of the
Funds' Prospectus, please write to the Trust at 125 West 55th
Street, New York, New York 10019, or call toll free 1-800-370-
9446.
First Chicago Investment Management Company (the
"Investment Adviser" or "FCIMCO") serves as each Fund's
investment adviser and administrator.
Concord Financial Group, Inc. (the "Distributor") is
the distributor of the Funds' shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . .B-2
Management of the Trust. . . . . . . . . . . . .B-12
Management Arrangements. . . . . . . . . . . . .B-15
Purchase of Fund Shares. . . . . . . . . . . . .B-19
Service Plan . . . . . . . . . . . . . . . . . .B-20
Redemption of Fund Shares. . . . . . . . . . . .B-21
Determination of Net Asset Value . . . . . . . .B-21
Portfolio Transactions . . . . . . . . . . . . .B-23
Dividends, Distributions and Taxes . . . . . . .B-23
Yield Information. . . . . . . . . . . . . . . .B-24
Information About the Trust. . . . . . . . . . .B-25
Counsel and Independent Auditors . . . . . . . .B-27
Appendix . . . . . . . . . . . . . . . . . . . .B-28
Financial Statements . . . . . . . . . . . . . .B-33
Reports of Independent Auditors. . . . . . . . .B-36
INVESTMENT OBJECTIVE AND MANAGEMENT
POLICIES
The following information supplements and should be
read in conjunction with the sections in the Funds' Prospectus
entitled "Description of the Funds" and "Appendix."
Portfolio Securities and Investment Practices
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 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. 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 Investment Adviser 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.
Repurchase Agreements. (Cash Management Fund,
Municipal Cash Management Fund and U.S. Government Securities
Cash Management Fund) The Trust's custodian or subcustodian
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 that
enters 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 of the type 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 the resale price. The
Investment Adviser will monitor on an ongoing basis the value of
the collateral to assure that it always equals or exceeds the
repurchase price. Each of these Funds will consider on an
ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
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 Investment Adviser reasonably expects (i)
based upon its assessment of current and historical interest
rate trends, that prevailing short-term tax exempt rates will
not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender option to terminate
the tender option would not occur prior to the time of the next
tender opportunity. At the time of each tender opportunity, the
Fund will exercise the tender option with respect to any tender
option bonds unless the Investment Adviser reasonably expects,
(x) based upon its assessment of current and historical interest
rate trends, that prevailing short-term tax exempt rates will
not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment, and
(y) that the circumstances which might entitle the grantor of a
tender option to terminate the tender option would not occur
prior to the time of the next tender opportunity. The Municipal
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 Investment Adviser becomes aware that any
portfolio security not so highly rated or any unrated security
has been given a rating by any rating organization below the
rating organization's second highest rating category, the
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 Investment Adviser'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 Investment Adviser will also evaluate these
securities and the creditworthiness of the issuers of such
securities.
Illiquid Securities. If a substantial market of
qualified institutional buyers develops pursuant to Rule 144A
under the Securities Act of 1933, as amended, for certain
restricted 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 Investment Adviser to
monitor carefully each Fund's investments in such securities
with particular regard to trading activity, availability of
reliable price information and other relevant information. To
the extent that, for a period of time, qualified institutional
buyers cease purchasing restricted securities pursuant to Rule
144A, a Fund's investing in such securities may have the effect
of increasing the level of illiquidity in its investment
portfolio during such period.
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 under-
writer 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
information as to their principal business occupations during at
least the last five years, are shown below.
Trustees of the Trust
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.
Dean Gould also serves as Director of Harpor
Capital
Advisors. Mr. Gould is also a Board member of
three
other funds in the Prairie Family of Funds. He is
55
years old and 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. Mrs. McCoy is a member of the
Chicago Economics Club. Mrs. McCoy is also a
Board
member of three other funds in the Prairie Family
of
Funds. She is 46 years old and 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 of Baxter International, Inc., a company
engaged in the production of medical care
products.
He also is a member of the Illinois Society of
Certified Public Accountants. Mr. Oddi is also a
Board member of three other funds in the Prairie
Family of Funds. He is 66 years old and his
address
is 1181 Loch Lane, Lake Forest, Illinois 60045.
For so long as the 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
JOSEPH F. KISSEL, President. Executive Vice President of
Concord Holding Corporation, the Trust's sub-
administrator (the "Sub-Administrator"), and an
officer of other investment companies administered
by
the Sub-Administrator. He is 47 years old and his
address is 125 West 55th Street, New York, New
York
10019.
ANN E. BERGIN, Vice President. Senior Vice President of the
Sub-Administrator and an officer of other
investment
companies administered by the Sub-Administrator.
She
is 35 years old and her address is 125 West 55th
Street, New York, New York 10019.
STEPHEN A. SMITH, Vice President. Senior Vice President of the
Distributor, and an officer of other investment
companies distributed by the Distributor. He is
41
years old and his address is 125 West 55th Street,
New
York, New York 10019.
RICHARD A. FABIETTI, Treasurer. Senior Vice President and
Treasurer of the Sub-Administrator and the
Distributor, and an officer of other investment
companies administered by the Sub-Administrator.
He
is 36 years old and his address is 125 West 55th
Street, New York, New York 10019.
MARTIN G. FLANIGAN, Assistant Treasurer. Mutual Funds
Accounting Manager of the Sub-Administrator, and
an
officer of other investment companies administered
by
the Sub-Administrator. He is 31 years old and his
address is 125 West 55th Street, New York, New
York
10019.
GEORGE O. MARTINEZ, Secretary. Senior Vice President and
Director of Legal and Compliance Services with
BISYS
Fund Services, since April 1995. Prior thereto,
he
was Vice President and Associate General Counsel
with
Alliance Capital Management L.P. He is 36 years
old
and his address is 1900 E. Dublin-Granville Road,
Columbus, Ohio 43229.
LINDA MAHON, Assistant Secretary. Vice President of the Sub-
Administrator and Distributor, since January 1994.
Ms. Mahon is also an officer of other investment
companies administered by the Sub-Administrator.
From
1991 to 1994, she was Corporate Secretary of J. &
W.
Seligman & Co. Incorporated. From 1989 to 1991,
she
was Vice President of Paribas Asset Management,
Inc.
She is 40 years old and her address is 125 West
55th
Street, New York, New York 10019.
ROBERT L. TUCH, Assistant Secretary. Since June 1991, an
employee of The Winsbury Company, which is an
affiliate of the Sub-Administrator. From July
1990 to
June 1991, he was Vice President and Associate
General
Counsel with National Securities Research Corp.
Prior
thereto, he was an Attorney with the Securities
and
Exchange Commission. He is 44 years old and his
address is 1900 E. Dublin-Granville Road,
Columbus,
Ohio 43229.
The Trust pays its Trustees its allocable share of
the
aggregate of a fixed fee of $25,000 per annum and a per meeting
fee of $1,000 for all funds in the Prairie Family of Funds. The
estimated aggregate amount of compensation payable to each
Trustee by the Trust and all other funds in the Prairie Family
of Funds for which such person is a Board member for the fiscal
year ending December 31, 1995 are as follows:
<TABLE>
<CAPTION>
(3) (5)
Pension or Total
Retirement (4) Compensation
(2) Benefits Estimated From Fund and
(1) Aggregate Accrued as Part Annual Fund Complex
Name of Board Compensation of Fund's Benefits Upon Paid to Board
Member from Fund* Expenses Retirement Member
<S> <C> <C> <C> <C>
John P. Gould $5,295 None None $30,000
Marilyn McCoy $5,295 None None $30,000
Raymond D. Oddi $5,295 None None $30,000
______________________
* Amount does not include reimbursed expenses for attending Board meeting, which are estimated to be approximately $350 for all
Trustees as a group.
</TABLE>
Board members and officers of the Trust, as a
group, owned less than 1% of any Fund's shares outstanding on
May 1, 1995.
MANAGEMENT ARRANGEMENTS
The following information supplements and should
be
read in conjunction with the section in the Funds' Prospectus
entitled "Management of the Trust."
Investment Advisory Agreement. FCIMCO provides
investment advisory services pursuant to the Investment Advisory
Agreement (the "Agreement") dated as of January 1, 1995, 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 FCIMCO, 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 FCIMCO. The Agreement will terminate automatically,
as to the relevant Fund, in the event of its assignment (as
defined in the 1940 Act).
FCIMCO is responsible for investment decisions for
each Fund in accordance with the stated policies of such Fund,
subject to the approval of the Trust's Board of Trustees. All
purchases and sales are reported for the Trustees' review at the
meeting subsequent to such transactions.
The following persons are officers and/or
directors of
FCIMCO: J. Stephen Baine, Chairman of the Board of Directors,
Chief Executive Officer and President; Alan F. Delp, William G.
Jurgensen, Joseph M. Thomas and David J. Vitale, Directors;
Terrall J. Janeway, Treasurer, Chief Financial and Accounting
Officer and Managing Director; Bradford M. Markham, Secretary
and Chief Legal Officer; and Richard A. Davies, Deborah L.
Edwards, Marco Hanig, David R. Kling and Stephen P. Manus,
Managing Directors.
As compensation for FCIMCO's investment advisory
services to the Trust, the Trust has agreed to pay FCIMCO a
monthly advisory fee at the annual rate of .20 of 1% of the
value of each Fund's average daily net assets.
Cash Management Fund and U.S. Government
Securities
Cash Management Fund only. Prior to January 17, 1995, The First
National Bank of Chicago ("FNBC") provided management services
to First Prairie Cash Management and First Prairie U.S. Treasury
Securities Cash Management (the predecessor funds to the Cash
Management Fund and U.S. Government Securities Cash Management
Fund, respectively) pursuant to separate management agreements
with each such fund and engaged The Dreyfus Corporation
("Dreyfus") to provide administrative services to the funds. As
compensation for FNBC's services, First Prairie Cash Management
and First Prairie U.S. Treasury Securities Cash Management each
agreed to pay FNBC a monthly management fee at the annual rate
of .35 of 1% of the value of the fund's average daily net
assets. The fees payable to Dreyfus for its services were paid
by FNBC.
For the period July 30, 1992 (commencement of
operations of First Prairie Cash Management) through June 30,
1993, no management fee was paid by First Prairie Cash
Management pursuant to an undertaking by FNBC. For the fiscal
year ended June 30, 1994, the management fee payable by First
Prairie Cash Management amounted to $892,114, which amount was
reduced by $304,836 pursuant to an undertaking by FNBC,
resulting in a net management fee paid by First Prairie Cash
Management of $587,278.
For the period June 2, 1992 (commencement of
operations of First Prairie U.S. Treasury Securities Cash
Management) through May 31, 1993, no management fee was paid by
First Prairie U.S. Treasury Securities Cash Management pursuant
to an undertaking by FNBC. For the fiscal year ended May 31,
1994, the management fee payable by First Prairie U.S. Treasury
Cash Management amounted to $1,478,021, which amount was reduced
by $477,943 pursuant to an undertaking by FNBC, resulting in a
net management fee paid by First Prairie U.S. Treasury Cash
Management of $1,000,078.
Administration and Sub-Administration Agreements.
Pursuant to an Administration Agreement dated as of January 1,
1995 with the Trust, FCIMCO assists in all aspects of the
Trust's operations, other than providing investment advice,
subject to the overall authority of the Trust's Board in
accordance with Massachusetts law. As compensation for FCIMCO's
administrative services to the Trust, the Trust has agreed to
pay FCIMCO a monthly administrative fee at the annual rate of
.15 of 1% of the value of each Fund's average daily net assets.
FCIMCO has engaged the Sub-Administrator to assist it in
providing certain administrative services to the Trust.
Pursuant to its agreement with FCIMCO (the "Sub-Administration
Agreement"), the Sub-Administrator assists FCIMCO in furnishing
the Trust clerical help, data processing, bookkeeping, internal
auditing and legal services and certain other services required
by the Trust, preparing reports to the Funds' shareholders, tax
returns, reports to and filings with the Securities and Exchange
Commission and state Blue Sky authorities, calculating the net
asset value of each Fund's shares and generally in providing for
all aspects of the Trust's operation, other than providing
investment advice. The fees payable to the Sub-Administrator
for its services are paid by FCIMCO.
The Trust has agreed that neither FCIMCO nor the
Sub-
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 each agreement with FCIMCO
or the Sub-Administration Agreement relates, except for a loss
resulting from wilful misfeasance, bad faith or gross negligence
on the part of FCIMCO in the performance of its obligations or
from reckless disregard by it of its obligations and duties
under the Agreement or Administration Agreement or on the part
of the Sub-Administrator in the performance of its obligations
or from reckless disregard by it of its obligations and duties
under the Sub-Administration Agreement. The Sub-Administration
Agreement contains a similar provision whereby FCIMCO has agreed
to limit the Sub-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 FCIMCO. 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 FCIMCO,
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, the Service Class of each Fund is subject to an annual
distribution and service fee. See "Service Plan." Expenses
attributable to a particular Fund or Class are charged against
the assets of that Fund or Class, respectively; other expenses
of the Trust are allocated among the Funds on the basis
determined by the Board of Trustees, including, but not limited
to, proportionately in relation to the net assets of each Fund.
FCIMCO 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 investment advisory and administration fees, exceed .35% and
.60% of the value of the average net assets of the Institutional
Class and the Service Class, respectively, for the fiscal year,
the Trust may deduct from the payment to be made to FCIMCO under
the Agreement or Administration Agreement, or FCIMCO 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 investment advisory
fee, exceed the expense limitation of any state having
jurisdiction over the Fund, the Trust may deduct from the
payment to be made to FCIMCO under the Agreement, or FCIMCO will
bear, such excess expense to the extent required by state law.
Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a
monthly basis.
The aggregate of the fees payable to FCIMCO is not
subject to reduction as the value of 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. Primary Fund Services Corp.,
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 October 28, 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 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 pro-
vides 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 equiva-
lents and $1.00 per share based on amortized cost will be ex-
amined 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 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
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 FCIMCO 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 FCIMCO
in advising other funds or accounts it advises and, conversely,
research services furnished to FCIMCO by brokers in connection
with other funds or accounts FCIMCO advises may be used by
FCIMCO in advising the Fund. Although it is not possible to
place a dollar value on these services, it is the opinion of
FCIMCO that the receipt and study of such services should not
reduce FCIMCO's overall research expenses.
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 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.
For the seven-day period ended April 30, 1995, the
yield and effective yield of each Fund, except the Municipal
Cash Management Fund which had not commenced operations as of
date of this Statement of Additional Information, were as
follows:
<TABLE>
<CAPTION>
Name of Fund and Class Yield Effective
Yield
<S> <C> <C>
Cash Management Fund
Institutional Shares 5.72% 5.48%
Service Shares 5.88% 5.62%
Treasury Prime Cash Management Fund
Institutional Shares 5.20% 5.34%
Service Shares 4.95% 5.07%
U.S. Government Securities Cash
Management Fund
Institutional Shares 5.74% 5.90%
Service Shares 5.49% 5.64%
</TABLE>
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.
As of May 22, 1995, the following shareholders
beneficially owned, directly or indirectly, 5% or more of the
indicated Fund's outstanding shares:
<TABLE>
<CAPTION>
Percent of Cash
Management Fund
Institutional
Name and Address Shares Outstanding
<S> <C>
Eagle and Co. 52.6%
c/o American National Bank
Money Market Processing Unit
1 North LaSalle Street, 7th Floor
Chicago, IL 60690
First National Bank of Chicago 26.3%
Corporate Asset Services
Attn: Mutual Funds Manager
One First National Plaza, Ste. 0115
Chicago, IL 60670-0001
First National Bank of Chicago 9.1%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste. 0256, 6th Floor
Chicago, IL 60670-0001
Morand and Co. 8.4%
c/o American National Bank
1 North LaSalle Street, 7th Floor
Chicago, IL 60690
Percent of Cash
Management Fund
Service Shares
Name and Address Outstanding
First National Bank of Chicago 92.0%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
Percent of Treasury
Prime Cash
Management Fund
Institutional
Name and Address Shares Outstanding
First National Bank of Chicago 95.3%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
Percent of Treasury
Prime Cash
Management Fund
Service Shares
Name and Address Outstanding
First National Bank of Chicago 95.9%
Corporate Trust Administration
Attn: Cash Sweep Coordinator
One First National Plaza, Ste 0126
Chicago, IL 60670-0001
Name and Address Percent of U.S.
Government
Securities Cash
Management Fund
Institutional
Name and Address Shares Outstanding
First National Bank of Chicago 58.6%
Corporate Trust Administration
Attn: Cash Sweep Coordinator
One First National Plaza, Ste 0126
Chicago, IL 60670-0001
First National Bank of Chicago 25.5%
Corporate Asset Services
Attn: Mutual Funds Manager
One First National Plaza, Ste 0115
Chicago, IL 60670-0001
First National Bank of Chicago 5.5%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
Eagle and Co. 5.0%
c/o American National Bank
Money Market Processing Unit
1 North LaSalle St., 7th Floor
Chicago, IL 60690
Percent of U.S.
Government
Securities Cash
Management Fund
Service Shares
Name and Address Outstanding
First National Bank of Chicago 99.1%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
</TABLE>
A shareholder who beneficially owns, directly or
indirectly, more than 25% of a Fund's voting securities may be
deemed a "control person" (as defined in the 1940 Act) of the
Fund.
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.
<PAGE>
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 & Phelps Credit Rating Co. ("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.
<PAGE>
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.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
<CAPTION>
Prairie Institutional Funds
Statement of Assets and Liabilities
November 16, 1994
Treasury U.S. Government
Municipal Prime Securities
Cash Cash Cash Cash
Management Management Management Management
ASSETS Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Cash. . . . . . . . . . . . . . . . . $ 12,501 $ 37,499 $ 37,499 $ 12,501
Deferred organization costs 31,250 31,250 31,250 31,250
Total Assets . . . . . . . . . . . 43,751 68,749 68,749 43,751
LIABILITIES
Organization costs payable 31,250 31,250 31,250 31,250
NET ASSETS . . . . . . . . . . . . . . . . . $ 12,501 $ 37,499 $ 37,499 $ 12,501
Shares Outstanding ($0.001 par value,
unlimited number of shares authorized,
issued at $1.00 per share):
Institutional Shares. . . . . . . . . 1 24,999 24,999 1
Service Shares. . . . . . . . . . . . 12,500 12,500 12,500 12,500
Total Shares Outstanding . . . . . . . . . . 12,501 37,499 37,499 12,501
Net Asset Value, Offering Price and
Redemption Price per Share . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00
Composition of Net Assets:
Shares of beneficial interest, at par $ 13 $ 37 $ 37 $ 13
Additional paid-in capital 12,488 37,462 37,462 12,488
Net Assets, November 16, 1994. . . . . . . . $ 12,501 $ 37,499 $ 37,499 $ 12,501
</TABLE>
See notes to financial statements.
PRAIRIE INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 16, 1994
NOTE 1 - GENERAL
Prairie Institutional Funds (the "Trust") was organized as a
Massachusetts business trust on October 19, 1994. The Trust
consists of four portfolios; Cash Management Fund, Municipal
Cash Management Fund, Treasury Prime Cash Management Fund and
U.S. Government Securities Cash Management Fund (collectively,
the "Funds").
The First National Bank of Chicago ("First Chicago") serves as
investment adviser to the Trust. Concord Financial Group, Inc.
(the "Distributor"), a wholly-owned subsidiary of Concord
Holding Corporation ("Concord"), serves as each Fund's
distributor.
The Funds each offer two classes of shares--Institutional Shares
and Service Shares. Institutional Shares and Service Shares are
essentially the same except that Service Shares bear the fees
that are payable under a Service Plan (the "Service Plan"),
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, at an annual rate of 0.25% of the average daily net
assets of the outstanding Service Shares.
The Funds have had no operations other than the sale to Concord
of 12,501 shares of the Cash Management Fund for $12,501, 37,499
shares of the Municipal Cash Management Fund for $37,499, 37,499
shares of the Treasury Prime Cash Management Fund for $37,499
and 12,501 shares of the U.S. Government Securities Cash
Management Fund for $12,501.
Organization costs incurred in connection with the organization
and initial registration of the Funds will be paid initially by
Concord and reimbursed by the Funds. Such organizational costs
have been deferred and will be amortized ratably over a period
of sixty months from the commencement of operations.
NOTE 2 - AGREEMENTS
The Trust has an Investment Advisory Agreement with First
Chicago. Pursuant to the terms of the Investment Advisory
Agreement, First Chicago is responsible for the purchases and
sales of each Fund's portfolio securities. For its advisory
services, First Chicago is entitled to a fee, accrued daily and
paid monthly, at an annual rate of 0.20% of each Fund's average
daily net assets. The Trust also has an Administration
Agreement with First Chicago, pursuant to which it has agreed to
pay First Chicago 0.15% of each Fund's average daily net assets.
First Chicago has entered into a Master Sub-Administration
Agreement with Concord. Pursuant to the terms of this
agreement, Concord has agreed to assist in providing certain
administrative services for the Trust. For its services,
Concord will receive a fee from First Chicago.
The Distributor has entered into a Distribution Agreement with
the Trust. The Distributor does not receive a fee under the
Distribution Agreement.
Under the Service Plan with respect to the Funds' Service
Shares, each Fund pays the Distributor for advertising,
marketing and distributing such Fund's Service Shares and for
providing certain services to the holders of Service Shares at
an annual rate of 0.25% of the average net assets of the
outstanding Service Shares. Under the Service Plan, the
Distributor may make payments to other service organizations in
respect of the provision of these services to their clients who
are the beneficial owners of Service Shares. Such service
organizations may include First Chicago, Concord and their
affiliates.
First Chicago has voluntarily agreed to waive a portion of its
fees to the extent that the ordinary operating expenses
(excluding fees incurred under the Service Plan) of any Fund
exceeds 0.35% and 0.65% of the average daily net assets of such
Fund's Institutional Shares and Service Shares, respectively.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Trustees
Prairie Institutional Funds
We have audited the accompanying statement of assets and liabil-
ities of each portfolio of Prairie Institutional Funds as of
November 16, 1994. This statement of assets and liabilities is
the responsibility of the Fund's management. Our responsibility
is to express an opinion on this statement of assets and
liabilities based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
this statement of assets and liabilities is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement
of assets and liabilities. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall statement of
assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred
to above presents fairly, in all material respects, the
financial position of each portfolio of Prairie Institutional
Funds at November 16, 1994, in conformity with generally
accepted accounting principles.
Ernst & Young
LLP
New York, New York
November 16, 1994
<PAGE>
<TABLE>
FIRST PRAIRIE CASH MANAGEMENT
STATEMENT OF INVESTMENTS
JUNE 30, 1994
<CAPTION>
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT-11.9% AMOUNT VALUE
<S> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST PRAIRIE CASH MANAGEMENT
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1994
PRINCIPAL
SHORT-TERM BANK NOTES - 4.1% AMOUNT VALUE
<S> <C> <C>
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% $ 2,819,924
</TABLE>
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>
<TABLE>
<CAPTION>
FIRST PRAIRIE CASH MANAGEMENT
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1994
ASSETS:
<S> <C> <C>
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 /
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
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST PRAIRIE CASH MANAGEMENT
STATEMENT OF CHANGES IN NET ASSETS JUNE 30, 1994
YEAR ENDED JUNE 30,
1993* 1994
<S> <C> <C>
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.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
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,
1993(1) 1994
PER SHARE DATA:
<S> <C> <C>
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.
</TABLE>
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 INCOMES 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 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. 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 TO 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.
Ernst & Young LLP
New York, New York
August 3, 1994
<PAGE>
<TABLE>
<CAPTION>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
STATEMENT OF INVESTMENTS MAY 31, 1994
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS--75.6% PURCHASE AMOUNT VALUE
- --------------------------------------------------------------- ------------ ------------- -------------
<S> <C> <C> <C>
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.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
- --------------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1994
<S> <C> <C>
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 / 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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST PRAIRIE U.S. TREASURY SECURITIES CASH MANAGEMENT
- -------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
----------------------------------
OPERATIONS: 1993* 1994
---------------- ----------------
<S> <C> <C>
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.
</TABLE>
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for
a share of beneficial interest outstand-
ing, total investment return, ratios to average net assets and
other supplemental data for each year indi-
cated. 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 expenses 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>
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
New York, New York
June 30, 1994
<PAGE>
Prairie Institutional Funds
Cash Management Fund
<TABLE>
<CAPTION>
Portfolio of Investments
April 30, 1995 (Unaudited)
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS - 98.5%
Commercial Paper - 48.6%
Banking - 9.4%
Barclays U.S. Funding Corp. A-l-/P-l 5.94% 6/15/1995 $ 10,000 $ 9,925,750
Canadian Imperial Holdings A-1-/P-1 5.99% 5/15/1995 10,000 9,976,706
Toronto Dominion Holdings A-1-/P-1 6.14% 5/03/1995 10,000 9,996,589
29,899,045
Brokerage - 3.1%
Morgan Stanley Group, Inc. A-l-/P-1 5.98% 6/19/1995 10,000 9,918,605
Chemicals - 3.1%
Du Pont Corp. A-l-/P-1 5.99% 6/27/1995 10,000 9,905,158
Communications Equipment and
Services - 3.1%
AT&T Corp. A-l-/P-1 6.12% 5/05/1995 10,000 9,993,200
Finance - 22.1%
Asset Securitization
Cooperative Corp. A-l-/P-l 5.98% 6/13/1995 9,000 8,935,715
Barton Capital Corp. A-l-/P-l 6.08% 6/28/1995 6,360 6,297,700
Enterprise Funding Corp. A-l-/P-l 6.06% 6/06/1995 10,000 9,939,400
Greenwich Asset Funding, Inc. A-l-/P-l 6.10% 7/06/1995 10,000 9,888,167
Kubota Finance U.S.A., Inc. A-l-/P-l 6.06% 5/16/1995 10,000 9,974,750
New Center Asset Trust A-l-/P-l 6.13% 5/03/1995 10,000 9,996,594
Ryobi Finance Corp. A-l-/P-l 6.00% 5/16/1995 7,400 7,381,500
Triple-A One Plus Funding A-l-/P-l 6.05% 6/01/1995 8,000 7,958,322
70,372,148
Manufacturing - 1.6%
Hanson Finance UK PLC A-l-/P-l 6.08% 7/06/1995 5,000 4,944,267
Real Estate Development - 3.1%
SRD Finance, Inc. A-l-/P-l 6.03% 5/11/1995 10,000 9,983,250
Travel Services - 3.1%
Accor SA A-l-/P-l 6.07% 5/23/1995 10,000 9,962,906
Total Commercial Paper
(amortized cost $154,978,579) 154,978,579
Certificates of Deposit - 25.1%
U.S. Branches of Foreign Banks - 25.1%
ABN-Amro Bank, N.V. Chicago A-l-/P-l 6.12% 5/16/1995 10,000 10,000,016
Bayerische Landesbank A-l-/P-l 6.17% 7/05/1995 10,000 10,000,711
Commerzbank A-l-/P-l 6.31% 5/12/1995 10,000 10,000,060
Industrial Bank of Japan Ltd.,
New York A-l-/P-l 6.18% 7/31/1995 10,000 10,000,743
Mitsubishi Bank Ltd.,
New York A-l-/P-1 6.05% 6/20/1995 10,000 10,000,000
See Notes to Financial Statements.
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
National Westminster Bank PLC A-l-/P-1 6.35% 5/19/1995 $ 10,000 $ 10,001,110
Royal Bank of Canada* A-l-/P-1 6.18% 10/16/1995 10,000 10,000,438
Societe Generale, New York A-l-/P-l 6.30% 5/02/1995 10,000 10,000,008
Total Certificates of Deposit
(amortized cost $80,003,086) 80,003,086
U.S. Government Agency Notes - 7.9%
Student Loan Marketing
Association* Aaa/NR
(amortized cost $25,000,000) 4.95% 6/08/1995 25,000 25,000,000
Bankers Acceptance - 4.1%
Dai-Ichi Kangyo Bank Ltd.,
New York A-l-/P-l 6.16% 5/30/1995 4,300 4,278,662
Fuji Bank Ltd., New York A-l-/P-l 6.28% 5/31/1995 3,000 2,984,300
Sakura Bank Ltd., Seattle A-l-/P-l 6.18% 5/01/1995 5,900 5,900,000
Total Bankers Acceptance
(amortized cost $13,162,962) 13,162,962
Corporate Notes - 3.1%
Brokerage - 3.1%
Merrill Lynch & Co. Inc.*
(amortized cost $10,000,000) A-l-/P-l 5.99% 6/07/1995 10,000 10,000,000
Total Investment in Securities
(amortized cost $283,144,627) 283,144,627
Repurchase Agreements - 9.7%
Repurchase agreement with
Barclays Bank,
dated 4/28/1995, with a
maturity value of
$10,705,305
(See Footnote A) 5.95% 5/01/1995 10,700 10,700,000
Repurchase agreement with
National Westminster Bank,
dated 4/28/1995, with a
maturity value of
$20,009,883
(See Footnote B) 5.93% 5/01/1995 20,000 20,000,000
Total Repurchase Agreements
(amortized cost $30,700,000) 30,700,000
Total Investments
(amortized cost $313,844,627) - 98.5% 313,844,627
Other assets in excess of liabilities - 1.5% 4,753,886
TOTAL NET ASSETS - 100.0% $318,598,513
Note: S&P and Moody's ratings have been used for consistency. May be rated by other services as well.
Variable rate security. Interest rates are stated as of April 30,1995. Maturity date
reflects the later of the next interest rate change date or the next put date.
Illiquid securities.
Footnote A Collateralized by $10,208,000 U.S. Treasury Bond, 5.95%, due 5/15/1995; with a value of
$10,817,377.
Footnote B Collateralized by $20,000,000 U.S. Treasury Note, 5.93%, due 2/29/1996; with a value of
$20,434,240.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Prairie Institutional Funds
U.S. Government Securities Cash Management Fund
Portfolio of Investments
April 30,1995 (Unaudited)
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS - 100.5%
U.S. Government Agency Notes - 61.8%
Federal Farm Credit Bank, Discount Note 6.04% *6/16/1995 15,000 $ 14,885,958
Federal Farm Credit Bank, Discount Note 5.98% *5/04/1995 10,000 9,995,067
Federal Home Loan Bank, Discount Note 6.04% *6/19/1995 30,000 29,757,042
Federal Home Loan Bank, Discount Note 5.98% *7/11/1995 10,000 9,883,639
Federal Home Loan Bank, Discount Note 5.94% *7/20/1995 22,125 21,836,883
Federal Home Loan Mortgage Corp.,
Discount Note 6.09% *5/03/1995 20,000 19,993,256
Federal Home Loan Mortgage Corp.,
Discount Note 6.03% *6/19/1995 10,000 9,919,014
Federal Home Loan Mortgage Corp.,
Discount Note 6.02% *5/17/1995 19,380 19,328,837
Federal Home Loan Mortgage Corp.,
Discount Note 6.02% *5/19/1995 20,150 20,090,255
Federal Home Loan Mortgage Corp.,
Discount Note 6.00% *6/09/1995 10,427 10,360,015
Federal Home Loan Mortgage Corp.,
Discount Note 5.97% *5/02/1995 20,000 19,996,711
Federal Home Loan Mortgage Corp.,
Discount Note 5.99% *7/12/1995 20,000 19,763,600
Federal National Mortgage Association,
Discount Note 6.04% *5/12/1995 30,000 29,945,458
Federal National Mortgage Association,
Discount Note 6.10% *8/24/1995 18,800 18,442,069
Federal National Mortgage Association,
Discount Note 5.99% *7/14/1995 25,000 24,696,805
Federal National Mortgage Association,
Discount Note 5.97% *7/26/1995 20,000 19,718,589
Federal National Mortgage Association,
Discount Note 5.96% *7/24/1995 20,000 19,726,067
Total U.S. Government Agency Notes
(amortized cost $318,339,265) 318,339,265
Repurchase Agreements - 38.7%
Repurchase agreement with Barclays Bank,
dated 4/28/1995, with a maturity value
of $14,207,041 (See Footnote A) 5.95% 5/01/1995 14,200 14,200,000
Repurchase agreement with National
Westminster Bank, dated 4/28/1995,
with a maturity value of $95,046,946
(See Footnote B) 5.93% 5/01/1995 95,000 95,000,000
Repurchase agreement with Fuji Bank,
dated 4/28/1995, with a maturity value
of $90,044,400 (See Footnote C) 5.92% 5/01/1995 90,000 90,000,000
Total Repurchase Agreements
(amortized cost $199,200,000) 199,200,000
Total Investments
(amortized cost $517,539,265) - 100.5% $517,539,265
Liabilities in excess of other assets - (0.5%) (2,458,006)
TOTAL NET ASSETS - 100.0% $515,081,259
Note: S&P and Moody's ratings have been used for consistency. May be rated by other services as well.
*Yield at purchase.
See Notes to Financial Statements.
Footnotes to Repurchase Agreements:
Footnote A Collateralized by $13,550,000 U.S. Treasury Bond, due 5/15/1995; with a value of $14,345,331.
Footnote B Collateralized by $95,890,000 U.S. Treasury Notes with maturities ranging from 12/31/1998
through 2/15/2001; with an aggregate value of $96,959,919.
Footnote C Collateralized by $85,670,000 U.S. Treasury Notes with maturities ranging from 12/31/1999
through 2/15/2000; with an aggregate value of $91,879,678.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Treasury Prime Cash Management Fund
Portfolio of Investments
April 30,1995 (Unaudited)
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 100.7%
U.S. Treasury Bills - 100.7%
U.S. Treasury Bill 5.71% 5/11/1995 $ 1,275 $ 1,272,990
U.S. Treasury Bill 5.65% 5/18/1995 847 844,748
U.S. Treasury Bill 5.56% 6/01/1995 3,200 3,184,762
U.S. Treasury Bill 5.55% 6/15/1995 3,400 3,376,625
U.S. Treasury Bill 5.50% 6/08/1995 5,000 4,971,310
Total Investments
(amortized cost $13,650,435) - 100.7% 13,650,435
Liabilities in excess of other assets - (0.7%) (87,836)
TOTAL NET ASSETS - 100.0% $13,562,599
* Discount yield.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Prairie Institutional Funds
Statement of Assets and Liabilities
April 30,1995 (Unaudited)
Cash
Cash U.S. Government Treasury Prime
Management Securities Cash Cash Management
Fund Management Fund Fund
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(amortized cost $283,144,627, $318,339,265 $ 283,144,627 $ 318,339,265 $ 13,650,435
and $13,650,435, respectively)
Repurchase Agreements, at value
(amortized cost $30,700,000, $199,200,000
and $0, respectively) 30,700,000 199,200,000 -
Receivable for investment securities sold 6,303,670 - -
Receivable from adviser - - 13,295
Interest receivable 1,401,981 98,194 -
Deferred organization costs and prepaid expenses 112,615 121,639 62,879
Total Assets 321,662,893 517,759,098 13,726,609
LIABILITIES:
Advisory fees payable 86,647 217,377 -
Administration fees payable 56,976 91,739 866
12b-1 fees payable (Service Shares) 45 2,363 17
Bank overdraft 97,035 105,108 35,415
Dividends payable 1,433,928 2,129,128 68,535
Payable for investment
securities purchased 1,319,535 - -
Accrued legal fees 14,672 25,336 320
Accrued Trustees' fees 520 520 200
Other accrued expenses 55,022 106,268 58,657
Total Liabilities 3,064,380 2,677,839 164,010
NET ASSETS $ 318,598,513 $ 515,081,259 $ 13,562,599
Shares Outstanding (no par value, unlimited number of shares authorized)
Institutional Shares 317,200,762 505,372,644 13,010,510
Service Shares 1,595,609 10,242,276 552,992
Total Shares Outstanding 318,796,371 515,614,920 13,563,502
Net Asset Value, Offering Price and
Redemption Price per Share $ 1.00 $1.00 $ 1.00
COMPOSITION OF NET ASSETS:
Paid-in capital $ 318,796,371 $ 515,614,920 $ 13,563,502
Accumulated net realized losses (197,858) (533,661) (903)
NET ASSETS, April 30,1995 $ 318,598,513 $ 515,081,259 $ 13,562,599
See Notes to Financial Statements.
Prairie Institutional Funds
Statement of Operations
For the period ended April 30,1995 (Unaudited)
Cash U.S. Government Treasury Prime
Management Securities Cash Cash Management
Fund (1) Management Fund (2) Fund (3)
INVESTMENT INCOME:
Interest Income $ 12,254,435 $ 22,575,626 $ 108,129
Expenses:
Advisory fees 678,287 1,300,324 3,822
Administration fees 126,206 214,569 2,866
12B-1 fees (Service Shares) 45 2,363 17
Custodian fees
and expenses 50,810 69,854 6,113
Registration fees 37,741 70,124 955
Legal fees 27,851 37,443 320
Audit fees 21,832 35,978 4,360
Transfer agent fees and expenses 14,317 7,392 2,320
Reports to shareholders 10,125 7,781 2,600
Trustees' fees 4,303 4,835 200
Miscellaneous expenses 55,287 39,940 1,987
1,026,804 1,790,603 25,560
Less: Fee waivers and
expense reimbursements (206,478) (274,965) (18,894)
820,326 1,515,638 6,666
Net Investment Income 11,434,109 21,059,988 101,463
REALIZED LOSS ON INVESTMENTS:
Net realized loss
on investments (1,706,625) (487,145) (903)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $9,727,484 $ 20,572,843 $ 100,560
(1) For the period July 1,1994 through April 30,1995. Includes Service Shares for the period
January 17,1995 (initial offering date of Service Shares) through April 30,1995
(2) For the period June 1,1994 through April 30,1995. Includes Service Shares for the period
January 17,1995 (initial offering date of Service Shares) through April 30,1995.
(3) For the period March 22,1995 (commencement of operations) through April 30,1995.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Statement of Changes in Net Assets
Cash Management Fund
For the period ended
April 30,1995(1) For the year ended
[Unaudited] June 30,1994
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income $ 11,434,109 $ 8,493,966
Net realized loss on investments (1,706,625) (136,023)
Net Increase In Net Assets Resulting From Operations 9,727,464 8,357,943
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (11,432,887) (8,493,966)
Service Shares (1,222) -
Total Dividends to Shareholders from
Net Investment Income (11,434,109) (8,493,966)
FUND SHARE TRANSACTIONS (at $1.00 per Share):
Net proceeds from shares sold:
Institutional Shares 1,125,650,616 2,167,517,783
Service Shares 1,595,469
Dividends reinvested:
Institutional Shares 942,130 654,107
Service Shares 140 -
cost of shares redeemed:
Institutional Shares (1,053,371,641) (2,099,928,742)
Service Shares - -
Net Increase In Net Assets From Fund Shares Transactions 74,816,714 68,243,146
Increase due to capital contribution from
investment adviser (Note 4) 1,668,500 -
Total Increase in Net Assets 74,778,589 68,107,125
Net Assets:
Beginning of period 243,819,924 175,712,799
End of period $ 318,598,513 $ 243,819,924
(1) For the period July 1,1994 through April 30,1995. Includes Service Shares for the period
January 17,1995 (initial offering date of Service Shares) through April 30,1995
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Prairie Institutional Funds
Statement of Changes in Net Assets
U.S. Government Securities Cash Management Fund
For the period ended
April 30,1995(1) For the year ended
[Unaudited] May 31,1994
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income $ 21,059,988 $ 12,751,537
Net realized loss on investments (487,145) (42,640)
Net Increase In Net Assets
Resulting From Operations 20,572,843 12,708,897
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (21,006,957) (12,751,537)
Service Shares (53,031) - _
Total Dividends to Shareholders from
Net Investment Income (21,059,988) (12,751,537)
FUND SHARE TRANSACTIONS (at $1.00 per Share):
Net proceeds from shares sold:
Institutional Shares 3,038,532,256 4,379,511,392
Service Shares 17,024,835 -
Dividends reinvested:
Institutional Shares 1,593,272 563,903
Service Shares 139 -
Cost of shares redeemed:
Institutional Shares (2,948,433,371) (4,230,925,537)
Service Shares (6,782,698) _
Net Increase In Net Assets
From Fund Shares Transactions 101,934,433 149,149,758
Total Increase in Net Assets 101,447,288 149,107,118
Net Assets:
Beginning of period 413,633,971 264,526,853
End of period $ 515,081,259 $ 413,633,971
(1) For the period June 1,1994 through April 30,1995. Includes Service Shares for the period
January 17,1995 (initial offering date of Service Shares) through April 30,1995.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Statement of Changes in Net Assets (unaudited)
Treasury Prime
Cash Management Fund
For the period ended
April 30,1995(1)
<S> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income $ 101,463
Net realized loss on investments (903)
Net Increase In Net Assets Resulting From Operations 100,560
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (98,003)
Service Shares (3,460)
Total Dividends to Shareholders from Net Investment Income (101,463)
FUND SHARE TRANSACTIONS (at $1.00 per Share):
Net proceeds from shares sold:
Institutional Shares 29,314,728
Service Shares 543,891
Dividends reinvested:
Institutional Shares 26,977
Service Shares 21
Cost of shares redeemed:
Institutional Shares (16,356,194)
Service Shares (3,420)
Net Increase In Net Assets From Fund Shares Transactions 13,526,003
Total Increase in Net Assets 13,525,100
Net Assets:
Beginning of period 37,499
End of period $ 13,562,599
(1) For the period March 22,1995 (commencement of operations) through April 30,1995.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Financial Highlights
Contained below is per share operating performance data for a share of beneficial interest
outstanding, total investment returns, ratios to average net assets and other supplemental data for each
period indicated. This information has been derived from information provided in the Fund's financial
statements.
Cash Management Fund
For the period ended
April 30,1995(2) For the year ended For the period ended
(Unaudited) June 30,1994 June 30,1993(1)
<S> <C> <C> <C>
PER SHARE DATA:
Institutional Shares:
Net asset value per share, beginning of period $ 1.00 $1.00 $ 1.00
Income from Investment Operations:
Net investment income 0.0412 0.0333 0.0297
Net realized loss on investments (0.0059) (0.0006) (0.0001)
Total from Investment Operations 0.0353 0.0327 0.0296
Less dividends from net investment income (0.0412) (0.0333) (0.0297)
Increase due to voluntary capital contribution from
investment adviser (Note 4) 0.0060 ____ _______
Net change in net asset value per share 0.0001 (0.0006) (0.0001)
Net asset value per share, end of period $ 1.00 $1.00 $ 1.00
TOTAL INVESTMENT RETURN (4) 4.20% 3.38% 3.25%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 0.35% (3) 0.31% 0.05% (3)
Ratio of net investment income to average net assets 4.94% (3) 3.33% 3.19% (3)
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements 0.09% (3) 0.12% 0.51% (3)
Net Assets, end of year (000's Omitted) $ 317,004 $ 243,820 $ 175,713
(1) For the period July 30,1992 (commencement of operations) through June 30,1993.
(2) For the period July 1,1994 through April 30,1995.
(3) Annualized.
(4) Total return figures provided are not annualized and do not include the effect of the voluntary
capital contribution from the investment adviser (see Note 4 to Financial Statements).
Without this capital contribution, the total return would have been lower.
</TABLE>
See Notes to Financial Statements.
Prairie Institutional Funds
Financial Highlights (Unaudited)
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
period indicated. This information has been derived from
information provided in the Fund's financial
statements.
<TABLE>
<CAPTION>
Cash Management Fund
For the period ended
April 30, 1995(1)
<S> <C>
PER SHARE DATA:
Service Shares:
Net asset value per share, beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0154
Net realized loss on investments (0.0006)
Total from Investment Operations 0.0148
Less dividends from net investment income (0.0154)
Net change in net asset value per share (0.0006)
Net asset value per share, end of period $ 1.00
TOTAL INVESTMENT RETURN 1.55% (2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 0.60% (3)
Ratio of net investment income to average net assets 5.47% (3)
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements 0.11% (3)
Net Assets, end of year (000's Omitted) $ 1,595
(1) For the period January 17,1995 (initial offering date of Service Shares) through April 30,1995.
(2) Not annualized.
(3) Annualized.
</TABLE>
See Notes to Financial Statements.
Prairie Institutional Funds
Financial Highlights
Contained below is per share operating performance data
for a share of beneficial interest
outstanding, total investment returns, ratios to average net
assets and other supplemental data for each
period indicated. This information has been derived from
information provided in the Fund's financial
statements.
<TABLE>
U.S. Government Securities Cash Management Fund
For the period ended
April 30,1995(2) For the year ended For the period ended
(Unaudited) May 31, 1994 May 31, 1993 (1)
<S> <C> <C> <C>
PER SHARE DATA:
Institutional Shares:
Net asset value per share, beginning of period $ 1.00 $1.00 $ 1.00
Income from Investment Operations:
Net investment income 0.0440 0.0302 0.0319
Net realized loss on investments (0.0009) (0.0001) ______
Total from Investment Operations 0.0431 0.0301 0.0319
Less dividends from net investment income (0.0440) (0.0302) (0.0319)
Net change in net asset value per share (0.0009) (0.0001) ____
Net asset value per share, end of period $ 1.00 $1.00 $ 1.00
TOTAL INVESTMENT RETURN 4.52% (4) 3.06% 3.25% (4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 0.35% (3) 0.30% 0.02% (3)
Ratio of net investment income to average net assets 4.85% (3) 3.02% 3.10% (3)
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements 0.06% (3) 0.11% 0.47% (3)
Net Assets, end of year (000's Omitted) $ 504,850 $ 413,634 $ 264,527
(1) For the period June 2,1992 (commencement of operations) through May 31,1993.
(2) For the period June 1,1994 through April 30,1995.
(3) Annualized.
(4) Not annualized.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Financial Highlights (unaudited)
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
period indicated. This information has been derived from information provided in the Fund's financial
statements.
U.S. Government Securities
Cash Management Fund
For the period ended
April 30,1995 (1)
<S> <C>
PER SHARE DATA:
Service Shares:
Net asset value per share, beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0153
Net realized loss on investments (0.0010)
Total from Investment Operations 0.0143
Less dividends from net investment income (0.0153)
Net change in net asset value per share (0.0010)
Net asset value per share, end of period $ 1.00
TOTAL INVESTMENT RETURN 1.54% (3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 0.60% (2)
Ratio of net investment income to average net assets 5.43% (2)
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements 0.08% (2)
Net Assets, end of year (000's Omitted) $ 10,232
(1) For the period January 17,1995 (commencement of operations) through April 30,1995.
(2) Annualized.
(3) Not annualized.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Financial Highlights (Unaudited)
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
period indicated. This information has been derived from information provided in the Fund's financial
statements.
Treasury Prime
Cash Management Fund
For the period ended
April 30,1995(1)
<S> <C>
PER SHARE DATA:
Institutional Shares:
Net asset value per share, beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0058
Net realized loss on investments (0.0001)
Total from Investment Operations 0.0057
Less dividends from net investment income (0.0058)
Net change in net asset value per share (0.0001)
Net asset value per share, end of period $ 1.00
TOTAL INVESTMENT RETURN 0.58% (2)
Ratio of expenses to average net assets 0.35% (3)
Ratio of net investment income to average net assets 5.31% (3)
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements 0.98% (3)
Net Assets, end of year (000's Omitted) $ 13,010
(1) For the period March 22,1995 (commencement of operations) through April 30,1995.
(2) Not Annualized.
(3) Annualized.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
Prairie Institutional Funds
Financial Highlights (Unaudited)
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
period indicated. This information has been derived from information provided in the Fund's financial
statements.
Treasury Prime
Cash Management Fund
For the period ended
April 30, 1995 (1)
<S> <C>
PER SHARE DATA:
Service Shares:
Net asset value per share, beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0055
Net realized loss on investments (0.0001)
Total from Investment Operations 0.0054
Less dividends from net investment income (0.0055)
Net change in net asset value per share (0.0001)
Net asset value per share, end of period $ 1.00
TOTAL INVESTMENT RETURN 0.55% (2)
RATIO/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 0.60% (3)
Ratio of net investment income to average net assets 5.01% (3)
Decrease reflected in above expense ratios due to
fee waivers and expense reimbursements 0.98% (3)
Net Assets, end of year (000's Omitted) $ 553
(1) For the period March 22,1995 (commencement of operations) through April 30,1995.
(3) Not Annualized.
(3) Annualized.
</TABLE>
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
Notes to Financial Statements (Unaudited)
Note 1 - General
Prairie Institutional Funds (the "Fund") is registered under the
Investment Company Act of 1940 (the
"Act") as an open-end management investment company. At April
30, 1995, the Fund was comprised
of four investment portfolios as follows: Cash Management Fund,
Municipal Cash Management Fund,
Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund. The
accompanying financial statements relate only to the Cash
Management Fund, U.S. Government
Securities Cash Management Fund and Treasury Prime Cash
Management Fund (collectively, the
"Portfolios").
At a shareholder meeting of the First Prairie Cash Management
Fund and the First Prairie U.S.
Treasury Securities Cash Management Fund held on December 21,
1994, the shareholders approved
an Agreement and Plan of Exchange pursuant to which each of these
funds transferred all of their
assets and liabilities to the Cash Management Fund and the U.S.
Government Securities Cash
Management Fund, respectively. In exchange for the assets and
liabilities, each Portfolio issued
Institutional Shares to the shareholders of the respective funds
equal in value to shares held by such
shareholders immediately prior to the exchange. This exchange
took place on January 17, 1995 at which
time the shareholders of the First Prairie Cash Management Fund
received 263,124,343 Institutional
Shares of the Cash Management Fund having a net asset value of
$262,954,610 while the shareholders
of the First Prairie U.S. Treasury Securities Cash Management
Fund received 431,159,110 Institutional
Shares of the U.S. Government Securities Cash Management Fund
having a net asset value of
$430,731,675.
In addition to the above described transaction, a new investment
adviser, administrator and distributor
were appointed by the Board of Trustees effective January 17,
1995. On that date, First Chicago
Investment Management Company ("FCIMCO"), a wholly-owned
subsidiary of The First National
Bank of Chicago ("First Chicago") was named investment adviser
and administrator to the Fund.
Prior to January 17, 1995, First Chicago served as investment
adviser and The Dreyfus Corporation
("Dreyfus") served as administrator. In addition, on January 17,
1995, Concord Financial Group, Inc.
(the "Distributor"), a wholly-owned subsidiary of Concord Holding
Corporation ("Concord"), was
named principal underwriter and distributor of the Fund's shares.
For the period July 1, 1994 through
August 24, 1994, Dreyfus Service Corporation (the "former
Distributor"), a wholly-owned subsidiary
of Dreyfus, acted as principal underwriter and distributor of the
Fund's shares. Effective August 24,
1994, Dreyfus became a direct subsidiary of Mellon Bank, N.A. As
such, effective August 24, 1994,
Premier Mutual Fund Services, Inc. ("Premier"), a wholly-owned
subsidiary of Institutional
Administration Services, Inc., whose parent company is Boston
Institutional Group, Inc., became and
served as principal underwriter and distributor of the Fund's
shares through January 16, 1995.
The Portfolios each offer two classes of shares -- Institutional
Shares and Service Shares. Institutional
Shares and Service Shares are substantially the same except that
Service Shares bear the fees payable
under a Service Plan adopted pursuant to Rule 12b-1 under the Act
at an annual rate of 0.25% of the
average daily net assets of the outstanding Service Shares.
Note 2 - Significant Accounting Policies
It is the policy of each Portfolio to maintain a continuous net
asset value per share of $1.00; each
Portfolio 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 each
Portfolio'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 each
Portfolio 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 each Portfolio
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 each
Portfolio not to distribute such gain.
(d) Federal income taxes: It is the policy of each Portfolio to
continue to qualify as a regulated
investment company, if such qualification is in the best interest
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 Cash Management Fund and the U.S. Government Securities Fund
have unused capital loss
carryovers of approximately $19,000 and $7,000, respectively,
available for Federal income tax purposes
to be applied against future net securities profits, if any
realized subsequent to June 30, 1994 for the
Cash Management Fund and May 31, 1994 for the U.S. Government
Securities Fund. These carryovers
do not include net realized securities losses from November 1,
1993 through June 30, 1994 for the Cash
Management Fund and from November 1, 1993 through May 31, 1994
for the U.S. Government
Securities Fund which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not
applied, these carryover expires in fiscal 2002.
At April 30, 1995, the cost of each Portfolio's investments for
Federal income tax purposes was
substantially the same as the cost for financial reporting
purposes (see Portfolio of Investments).
Note 3 - Management Fee and Other Transactions With Affiliates
(a) The Fund has an Investment Advisory Agreement with FCIMCO
pursuant to which FCIMCO has
agreed to provide the day-to-day management of each of the
Portfolio's investments at an annual rate
of 0.20% of each Portfolio's average daily net assets.
The Fund has an Administration Agreement with FCIMCO pursuant to
which FCIMCO has agreed to
assist in all aspects of each Portfolio's operations at an annual
rate of 0.15% of each Portfolio's
average daily net assets. In addition, FCIMCO has engaged
Concord to assist in providing certain
administrative services to each Portfolio pursuant to a Master
Sub-Administration Agreement between
FCIMCO and Concord. FCIMCO has agreed to pay Concord a fee from
its own administration fee on a monthly basis.
During the period January 17, 1995 through April 30, 1995, FCIMCO
agreed to limit each Portfolio's
expenses to an annual amount not to exceed 0.35% (excluding fees
paid under the Service Plan). In
order that each Portfolio meet this limitation, FCIMCO waived
advisory fees of $93,522, $123,716, and
$3,822 for the Cash Management Fund, U.S. Government Securities
Cash Management Fund and Treasury Prime Cash
Management Fund, respectively, FCIMCO waived administration fees
of $1,778 for the Treasury Prime
Cash Management Fund and FCIMCO reimbursed expenses of $13,294
for the Treasury Prime Cash Management Fund.
During the period June 1, 1994 through January 17, 1995 for the
U.S. Government Securities Fund and
for the period July 1, 1994 through January 17, 1995 for the Cash
Management Fund, the Fund had a
management agreement ("Agreement") with First Chicago pursuant to
which the Portfolios agreed to
pay management fees which were computed daily and paid monthly at
the annual rate of .35% of the
average daily net assets of each Portfolio. During the same
period, First Chicago had engaged Dreyfus
to assist in providing certain administrative services for the
Fund pursuant to a Master Administration
Agreement between First Chicago and Dreyfus. Pursuant to its
agreement with Dreyfus, First Chicago
had agreed to pay Dreyfus a monthly fee at the annual rate of
.05% of the average daily net assets of each Portfolio.
First Chicago had undertaken from June 1, 1994 through January
17, 1995 for the U.S. Government
Securities Fund and for the period July 1, 1994 through January
17, 1995 for the Cash Management
Fund to reduce the management fee paid by and reimburse such
excess expenses of the Portfolios, to
the extent that the Portfolio's aggregate expenses exceeded 0.35%
of that Portfolios' average daily net
assets. The reduction in management fee, pursuant to the
undertakings, amounted to $151,249 and
$112,956, respectively, for the periods indicated above.
(b) The Fund has adopted a Service Plan (the "Plan") pursuant to
Rule 12b-1 under the Act. Under
the terms of the Plan, each Portfolio pays the Distributor an
annual fee of 0.25% of the average daily
net assets of the outstanding Service Shares for advertising,
marketing and distributing each Portfolio's
Service Shares. For the period January 17, 1995 (initial
offering of Service Shares) through April 30,
1995, the Cash Management Fund, U.S. Government Securities Cash
Management Fund and Treasury
Prime Cash Management Fund each paid fees under the Plan in the
amounts of $45, $2,363 and $17,
respectively. of these amounts, the following was retained by
the Distributor, and affiliates of FCIMCO:
Amount paid to Amount paid to
the Distributor affiliates of FCIMCO
Cash Management Fund $9 $36
U.S. Government Securities
Cash Management Fund 9 2,354
Treasury Prime Cash
Management Fund 9 8
(b) Certain officers and trustees of the Fund are "affiliated
persons," as defined in the Act, of
FCIMCO, First Chicago and Concord. Each trustee who is not an
"affiliated person" receives an
annual fee of $25,000 and an attendance fee of $1,000 per
meeting.
Note 4 - Transactions with Affiliates
During the period ended April 30, 1995, First Chicago voluntarily
contributed capital to the Cash
Management Fund in the amount of approximately $1.7 million.
First Chicago received no shares of
beneficial interest or other consideration in exchange for this
contribution which increased net asset
value. For tax purposes, these capital contributions were
applied against the realized losses for the
period ended April 30, 1995. Accordingly, such amounts have been
reclassified from additional paid-in
capital against net realized losses in the Statement of Assets
and Liabilities.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information.
Included in Part B of the Registration Statement:
Statements of Investments.
Statements of Assets and Liabilities.
Statements of Operations.
Statements of Changes in Net Assets.
Notes to Financial Statements.
Reports of Ernst & Young LLP, Independent
Auditors.
(b) Exhibits:
(1) Amended and Restated Agreement and
Declaration of Trust is incorporated by
reference to Exhibit (1) of Pre-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on November
21, 1994.
(2) By-Laws are incorporated by reference to
Exhibit (2) of Pre-Effective Amendment No.
1 to the Registration Statement on Form
N-1A, filed on November 21, 1994.
(5) Investment Advisory Agreement.
(6) Distribution Agreement.
(8) Custody Agreement.
(9)(a)Administration Agreement.
(9)(b)Master Sub-Administration Agreement.
(10) Opinion (including consent) of Stroock &
Stroock & Lavan is incorporated by
reference to Exhibit (10) of
Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed
on November 21, 1994.
(11) Consent of Independent Auditors.
(15) Service Plan is incorporated by reference
to Exhibit (15) of Pre-Effective Amendment
No. 1 to the Registration Statement on Form
N-1A, filed on November 21, 1994.
(16) Yield Computation Schedule.
(17) Financial Data Schedule
(18) Rule 18f-3 Plan.
Other Exhibit:
Secretary's Certificate is incorporated by
reference to Other Exhibit of
Pre-Effective Amendment No. 1
to the Registration Statement on Form
N-1A, filed on November 21, 1994.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
(1) (2)
Number of Record
Holders
Title of Class as of May 22, 1995
<S> <C>
Shares of beneficial interest,
par value $.001 per share
Cash Management Fund
Institutional Shares 15
Service Shares 2
Municipal Cash Management Fund
Institutional Shares 1
Service Shares 1
Treasury Prime Cash Management
Fund
Institutional Shares 6
Service Shares 3
U.S. Government Securities Cash
Management Fund
Institutional Shares 11
Service Shares 2
</TABLE>
Item 27. Indemnification
Reference is made to Article EIGHTH of the Registrant's
Amended and Restated Declaration of Trust incorporated by
reference to Exhibit 1. The application of these provisions is
limited by Article 10 of the Registrant's By-Laws incorporated
by
reference to Exhibit 2 and by the following undertaking set
forth in the rules promulgated by the Securities and Exchange
Commission:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may
be permitted to trustees, officers and
controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion
of the Securities and Exchange Commission such
indemnification is against public policy as
expressed in such Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities
(other than the payment by the registrant of
expenses incurred or paid by a trustee, officer
or controlling person of the registrant in the
successful defense of any action, suit or
proceeding) is asserted by such trustee, officer
or controlling person in connection with the
securities being registered, the registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question whether such indemnification by it is
against public policy as expressed in such Act
and will be governed by the final adjudication
of such issue.
Reference also is made to the Distribution Agreement
filed as Exhibit 6 hereto.
Item 28. Business and Other Connections of Investment Adviser
Registrant is fulfilling the requirement of this Item
28 to provide a list of the officers and directors of First
Chicago Investment Management Company (the "Investment
Adviser"), together with information as to any other business,
profession,
vocation or employment of a substantial nature engaged in by the
Investment Adviser or those of its officers and directors during
the past two years, by incorporating by reference the
information contained in the Form ADV filed with the SEC
pursuant to the Investment Advisers Act of 1940 by the
Investment Adviser (SEC File No. 801-47947).
Item 29. Principal Underwriters
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as
principal underwriter or exclusive distributor:
The Infinity Mutual Funds, Inc.
Pacific Horizon Funds, Inc.
Prairie Funds
Prairie Municipal Bond Fund, Inc.
Prairie Intermediate Bond Fund
(b) The information required by this Item 29(b)
regarding each director or officer of Concord Financial Group,
Inc. is incorporated by reference to Schedule A of Form BD filed
by Concord Financial Group, Inc. pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-37601).
Item 30. Location of Accounts and Records
1. First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670
2. Concord Financial Group, Inc.
125 West 55th Street
11th Floor
New York, New York 10019
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Registrant hereby undertakes
to call a meeting of shareholders for the purpose of
voting upon the question of removal of a trustee or trustees
when requested in writing to do so by the holders of at least
10% of the Registrant's outstanding shares of
beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that
it meets all of the requirements for effectiveness of this
Post-Effective Amendment to the Registration Statement pursuant
to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be
signed
on its behalf by the undersigned, thereunto duly authorized, in
this City of New York, and State of New York, on the 30th day of
May, 1995.
PRAIRIE INSTITUTIONAL FUNDS
BY:/s/ Joseph F. Kissel*
Joseph F. Kissel, President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by
the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/Joseph F. Kissel* President May 30, 1995
Joseph F. Kissel (Principal
Executive Officer)
/s/ Richard A. Fabietti* Treasurer May 30, 1995
Richard A. Fabietti (Principal Financial
and Accounting
Officer)
/s/ John P. Gould* Trustee May 30, 1995
John P. Gould
/s/ Marilyn McCoy* Trustee May 30, 1995
Marilyn McCoy
/s/ Raymond D. Oddi* Trustee May 30, 1995
Raymond D. Oddi
*By: /s/ Ann E. Bergin May 30, 1995
Ann E. Bergin, As
Attorney-in-fact
</TABLE>
PRAIRIE INSTITUTIONAL FUNDS
Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
EXHIBITS
INDEX TO EXHIBITS
Page
(5) Investment Advisory Agreement
(6) Distribution Agreement
(8) Custody Agreement
(9)(a) Administration Agreement
(9)(b) Master Sub-Administration Agreement
(11) Consent of Independent Auditors
(16) Yield Computation Schedule
(17) Financial Data Schedule
(18) Rule 18f-3 Plan
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
January 1, 1995
First Chicago Investment
Management Company
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series, if any, named on Schedule 1 hereto, as
such Schedule may be revised from time to time (each, a
"Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in
accordance
with the limitations specified in its charter documents and in
its Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from
time to time may be approved by the Fund's Board. The Fund
desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons
may be officers or employees who are employed by both you and
the
Fund. The compensation of such person or persons shall be paid
by you and no obligation may be incurred on the Fund's behalf in
any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Series' assets. You
will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or
contemplate
purchasing, as the Fund may reasonably request. The Fund wishes
to be informed of important developments materially affecting
any
Series' portfolio and shall expect you, on your own initiative,
to furnish to the Fund from time to time such information as you
may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees
as an inducement to your undertaking the same that you shall not
be liable hereunder for any error of judgment or mistake of law
or for any loss suffered by one or more Series, provided that
nothing herein shall be deemed to protect or purport to protect
you against any liability to the Fund or a Series or to its
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the rate set forth opposite each Series'
name
on Schedule 1 hereto. Net asset value shall be computed on such
days and at such time or times as described in the Fund's then-
current Prospectus and Statement of Additional Information. The
fee for the period from the date of the commencement of the
public sale of a Series' shares to the end of the month during
which such sale shall have been commenced shall be pro-rated
according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement
before
the end of any month, the fee for such part of a month shall be
pro-rated according to the proportion which such period bears to
the full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to you, the
value of each Series' net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if
any,
fees of Board members, Securities and Exchange Commission fees
and state Blue Sky qualification fees, advisory fees, charges of
custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing
services, costs of maintaining the Series' existence, costs
attributable to investor services (including, without
limitation,
telephone and personnel expenses), costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and
any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
expenses of a Series (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over such Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such
excess
expense to the extent required by state law. Your obligation
pursuant hereto will be limited to the amount of your fees here-
under. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed
accounts, and the Fund has no objection to your so acting,
provided that when the purchase or sale of securities of the
same
issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds
for investment, the available securities will be allocated in a
manner believed by you to be equitable to each company or
account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by one or more
Series
or the size of the position obtainable for or disposed of by one
or more Series.
In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder
will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection
with the matters to which this Agreement relates, except for a
loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also your officer, director,
partner, employee or agent, who may be or become an officer,
Board member, employee or agent of the Fund, shall be deemed,
when rendering services to the Fund or acting on any business of
the Fund, to be rendering such services to or acting solely for
the Fund and not as your officer, director, partner, employee or
agent or one under your control or direction even though paid by
you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1
hereto (the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company
Act of 1940, as amended) of such Series' outstanding voting
securities, provided that in either event its continuance also
is
approved by a majority of the Fund's Board members who are not
"interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this
Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Board or by vote of holders of a majority of such
Series' shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in
said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations,
business trusts, partnerships or other entities (including other
investment companies) and that such other entities may include
the name "Prairie" as part of their name, and that your
corporation or its affiliates may enter into investment advisory
or other agreements with such other entities. If you cease to
act as the Fund's investment adviser, the Fund agrees that, at
your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Prairie" in any
form or combination of words.
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:__________________________
Accepted:
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:______________________________
<TABLE>
<CAPTION>
SCHEDULE 1
Annual Fee
as a
Percentage
of Average
Daily Net Reapproval Reapproval
Name of Fund or Series Assets Date Date
<S> <C> <C> <C>
Cash Management Fund .20% December 31, 1996 December 31st
Municipal Cash Management Fund .20% December 31, 1996 December 31st
Treasury Prime Cash Management
Fund .20% December 31, 1996 December 31st
U.S. Government Securities
Cash Management Fund .20% December 31, 1996 December 31st
</TABLE>
<PAGE>
Exhibit 6
DISTRIBUTION AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
March 29, 1995
Concord Financial Group, Inc.
125 West 55th Street
11th Floor
New York, New York 10019
Dear Sirs:
This is to confirm that, in consideration of the
agreements
hereinafter contained, the above-named investment company (the
"Fund") has agreed that you shall
be, for the period of this agreement, the distributor of (a)
shares of each series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to
time (each, a "Series") or (b) if no Series are set forth on
such Exhibit, shares of
the Fund. For purposes of this agreement the term "Shares"
shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect
under the Securities Act of 1933, as amended, and will transmit
promptly any orders received by you for purchase or redemption
of Shares to the Transfer and Dividend
Disbursing Agent for the Fund of which the Fund has notified you
in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing
agreements with securities dealers, financial institutions and
other industry
professionals, such as investment advisers, accountants and
estate planning firms, and
in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and
regulations made or adopted pursuant to the Investment Company
Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association
registered under the Securities Exchange Act of 1934, as
amended.
1.4 Whenever in their judgment such action is warranted
by market, economic or political conditions, or by abnormal
circumstances of any kind, the Fund's
officers may decline to accept any orders for, or make any sales
of, any Shares until
such time as they deem it advisable to accept such orders and to
make such sales and
the Fund shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue
and transfer of
Shares and for supplying information, prices and other data to
be furnished by the
Fund hereunder, and all expenses in connection with the
preparation and printing of
the Fund's prospectuses and statements of additional information
for regulatory
purposes and for distribution to shareholders; provided,
however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents and
to furnish any and all information and otherwise to take all
actions which may be reasonably
necessary in the discretion of the Fund's officers in connection
with the qualification of Shares for sale in such states as you
may designate to the Fund and
the Fund may approve, and the Fund agrees to pay all expenses
which may be incurred in
connection with such qualification. You shall pay all expenses
connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise
specifically provided in this agreement, all other expenses
incurred by you in
connection with the sale of Shares as contemplated in this
agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any
relevant Series and the Shares as you may reasonably request,
all of which shall be
signed by one or more of the Fund's duly authorized officers;
and the Fund warrants
that the statements contained in any such information, when so
signed by the Fund's
officers, shall be true and correct. The Fund also shall
furnish you upon request
with: (a) semi-annual reports and annual audited reports of the
Fund's books and
accounts made by independent public accountants regularly
retained by the Fund,
(b) quarterly earnings statements prepared by the Fund, (c) a
monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly
balance sheets as soon as practicable after the end of each
month, and (e) from time
to time such additional information regarding the Fund's
financial condition as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the
Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment
Company Act of 1940, as amended, with respect to the Shares have
been carefully prepared in conformity with
the requirements of said Acts and rules and regulations of the
Securities and Exchange
Commission thereunder. As used in this agreement the terms
"registration statement"
and "prospectus" shall mean any registration statement and
prospectus, including the
statement of additional information incorporated by reference
therein, filed with the
Securities and Exchange Commission and any amendments and
supplements thereto which at
any time shall have been filed with said Commission. The Fund
represents and warrants
to you that any registration statement and prospectus, when such
registration statement becomes effective, will contain all
statements required to be stated therein
in conformity with said Acts and the rules and regulations of
said Commission; that
all statements of fact contained in any such registration
statement and prospectus
will be true and correct when such registration statement
becomes effective; and that
neither any registration statement nor any prospectus when such
registration statement
becomes effective will include an untrue statement of a material
fact or omit to state
a material fact required to be stated therein or necessary to
make the statements
therein not misleading. The Fund may but shall not be obligated
to propose from time
to time such amendment or amendments to any registration
statement and such supplement
or supplements to any prospectus as, in the light of future
developments, may, in the
opinion of the Fund's counsel, be necessary or advisable. If
the Fund shall not
propose such amendment or amendments and/or supplement or
supplements within fifteen
days after receipt by the Fund of a written request from you to
do so, you may, at
your option, terminate this agreement or decline to make offers
of the Fund's
securities until such amendments are made. The Fund shall not
file any amendment to
any registration statement or supplement to any prospectus
without giving you
reasonable notice thereof in advance; provided, however, that
nothing contained in
this agreement shall in any way limit the Fund's right to file
at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever
character, as the Fund may deem advisable, such right being in
all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the
form furnished to you from time to time, in connection with the
sale of Shares. The Fund
agrees to indemnify, defend and hold you, your several officers
and directors, and any
person who controls you within the meaning of Section 15 of the
Securities Act of
1933, as amended, free and harmless from and against any and all
claims, demands,
liabilities and expenses (including the cost of investigating or
defending such
claims, demands or liabilities and any counsel fees incurred in
connection therewith)
which you, your officers and directors, or any such controlling
person, may incur
under the Securities Act of 1933, as amended, or under common
law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a
material fact contained in any registration statement or any
prospectus or arising out
of or based upon any omission, or alleged omission, to state a
material fact required
to be stated in either any registration statement or any
prospectus or necessary to
make the statements in either thereof not misleading; provided,
however, that the
Fund's agreement to indemnify you, your officers or directors,
and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement
or omission or alleged
omission made in any registration statement or prospectus in
reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use
in the preparation thereof. The Fund's agreement to indemnify
you, your officers and
directors, and any such controlling person, as aforesaid, is
expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or
directors, or any such controlling person, such notification to
be given by letter or
by telegram addressed to the Fund at its address set forth above
within ten days after
the summons or other first legal process shall have been served.
The failure so to
notify the Fund of any such action shall not relieve the Fund
from any liability which
the Fund may have to the person against whom such action is
brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in
this paragraph 1.9.
The Fund will be entitled to assume the defense of any suit
brought to enforce any
such claim, demand or liability, but, in such case, such defense
shall be conducted by
counsel of good standing chosen by the Fund and approved by you.
In the event the Fund elects to assume the defense of any such
suit and retain counsel of good standing
approved by you, the defendant or defendants in such suit shall
bear the fees and
expenses of any additional counsel retained by any of them; but
in case the Fund does
not elect to assume the defense of any such suit, or in case you
do not approve of
counsel chosen by the Fund, the Fund will reimburse you, your
officers and directors,
or the controlling person or persons named as defendant or
defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's
indemnification agreement contained in this paragraph 1.9 and
the Fund's representations and warranties in this agreement
shall remain operative and in full
force and effect regardless of any investigation made by or on
behalf of you, your
officers and directors, or any controlling person, and shall
survive the delivery of
any Shares. This agreement of indemnity will inure exclusively
to your benefit, to
the benefit of your several officers and directors, and their
respective estates, and
to the benefit of any controlling persons and their successors.
The Fund agrees promptly to notify you of the commencement of
any litigation or proceedings against
the Fund or any of its officers or Board members in connection
with the issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its
several officers and Board members, and any person who controls
the Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and
harmless from and
against any and all claims, demands, liabilities and expenses
(including the cost of
investigating or defending such claims, demands or liabilities
and any counsel fees
incurred in connection therewith) which the Fund, its officers
or Board members, or
any such controlling person, may incur under the Securities Act
of 1933, as amended,
or under common law or otherwise, but only to the extent that
such liability or
expense incurred by the Fund, its officers or Board members, or
such controlling
person resulting from such claims or demands, shall arise out of
or be based upon any
untrue, or alleged untrue, statement of a material fact
contained in information
furnished in writing by you to the Fund specifically for use in
the Fund's registration statement and used in the answers to any
of the items of the registration
statement or in the corresponding statements made in the
prospectus, or shall arise
out of or be based upon any omission, or alleged omission, to
state a material fact in
connection with such information furnished in writing by you to
the Fund and required
to be stated in such answers or necessary to make such
information not misleading.
Your agreement to indemnify the Fund, its officers and Board
members, and any such
controlling person, as aforesaid, is expressly conditioned upon
your being notified of
any action brought against the Fund, its officers or Board
members, or any such
controlling person, such notification to be given by letter or
telegram addressed to
you at your address set forth above within ten days after the
summons or other first
legal process shall have been served. You shall have the right
to control the defense
of such action, with counsel of your own choosing, satisfactory
to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in
any other event the Fund, its officers or Board members, or such
controlling person
shall each have the right to participate in the defense or
preparation of the defense
of any such action. The failure so to notify you of any such
action shall not relieve
you from any liability which you may have to the Fund, its
officers or Board members,
or to such controlling person by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity
agreement contained in this paragraph 1.10. This agreement of
indemnity will inure exclusively to the Fund's benefit, to the
benefit of the Fund's officers and Board
members, and their respective estates, and to the benefit of any
controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or
proceedings against you or any of your officers or directors in
connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as
the effectiveness of
the registration statement then in effect or any necessary
amendments thereto shall be
suspended under any of the provisions of the Securities Act of
1933, as amended, or if
and so long as a current prospectus as required by Section 10 of
said Act, as amended,
is not on file with the Securities and Exchange Commission;
provided, however, that
nothing contained in this paragraph 1.11 shall in any way
restrict or have an
application to or bearing upon the Fund's obligation to
repurchase any Shares from any
shareholder in accordance with the provisions of the Fund's
prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement or
prospectus then in effect or for additional information;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
effectiveness of the registration statement or prospectus then
in
effect or the initiation of any proceeding for that purpose;
(c) of the happening of any event which makes untrue any
statement of a material fact made in the registration
statement or prospectus then in effect or which requires the
making of a change in such registration statement or prospectus
in order to make the statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission
with respect to any amendments to any registration statement or
prospectus which may from time to time be filed with the
Securities and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of
such Shares as set forth in the Fund's then-current prospectus.
The offering price,
if not an exact multiple of one cent, shall be adjusted to the
nearest cent. In
addition, Shares of any class of the Fund offered for sale by
you
may be subject to a
contingent deferred sales charge as set forth in the Fund's
then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge
in respect of the Shares. Any payments to dealers shall be
governed by a separate
agreement between you and such dealer and the Fund's
then-current
prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date")
set forth on Exhibit A hereto (and, if the Fund has Series, a
separate Reapproval Date
shall be specified on Exhibit A for each Series), and thereafter
shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day")
of each year set forth on Exhibit A hereto, provided such
continuance is specifically
approved at least annually by (i) the Fund's Board or (ii) vote
of a majority (as
defined in the Investment Company Act of 1940) of the Shares of
the Fund or the
relevant Series, as the case may be, provided that in either
event its continuance
also is approved by a majority of the Board members who are not
"interested persons"
(as defined in said Act) of any party to this agreement, by vote
cast in person at a
meeting called for the purpose of voting on such approval. This
agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of
the Fund's or, as to any relevant Series, such Series'
outstanding voting securities
or by the Fund's Board as to the Fund or the relevant Series, as
the case may be.
This agreement is terminable by you, upon 270 days' notice,
effective on or after the
fifth anniversary of the date hereof. This agreement also will
terminate automatically, as to the Fund or relevant Series, as
the case may be, in the event of its assignment (as defined in
said Act).
4. Exclusivity
The Fund acknowledges that the persons employed by you to
assist in the performance of your duties under this agreement
may not devote their full time to
such service and nothing contained in this agreement shall be
deemed to limit or
restrict your or any of your affiliates' right to engage in and
devote time and
attention to other businesses or to render services of whatever
kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his capacity as an
officer of the Fund. The
obligations of this agreement shall only be binding upon the
assets and property of
the Fund and shall not be binding upon any Board member, officer
or shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:
Accepted:
CONCORD FINANCIAL GROUP, INC.
By:________________________
EXHIBIT A
<TABLE>
<CAPTION>
Name of Fund or Series Reapproval Date Reapproval Day
<S> <C> <C>
Prairie Institutional Funds:
Cash Management Fund December 31, 1996 December 31st
Municipal Cash Management Fund December 31, 1996 December 31st
Treasury Prime Cash
Management Fund December 31, 1996 December 31st
U.S. Government Securities
Cash Management Fund December 31, 1996 December 31st
</TABLE>
<PAGE>
Exhibit 8
CUSTODY AGREEMENT
Custody Agreement made as of January 17, 1995 between
PRAIRIE INSTITUTIONAL FUNDS, a business trust organized and
existing under the laws of the
Commonwealth of Massachusetts, having its principal office and
place of business at 125 West
55th Street, New York, New York 10019 (hereinafter called the
"Fund"), and THE BANK OF NEW
YORK, a New York corporation authorized to do a banking
business, having its principal
office and place of business at 110 Washington Street, New York,
New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the
Controller or any other person, whether or not any such person
is an Officer or employee of
the Fund, duly authorized by the Fund's Board to give Oral
Instructions and Written
Instructions on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
2. "Available Balance" shall mean for any given day during a
calendar year the aggregate amount of Federal Funds held in the
Fund's custody account(s) at The Bank
of New York, or its successors, as of the close of such day or,
if such day is not a
business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party such
party's making a general assignment, arrangement or composition
with or for the benefit of its creditors, or instituting or
having instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or the entry of an
order for relief under the Federal bankruptcy law or any other
relief under any bankruptcy
or insolvency law or other similar law affecting creditors'
rights, or if a petition is
presented for the winding up or liquidation of the party or a
resolution is passed for its
winding up or liquidation, or it seeks, or becomes subject to,
the appointment of an
administrator, receiver, trustee, custodian or other similar
official for it or for all or
substantially all of its assets or its taking any action in
furtherance of, or indicating
its consent to approval of, or acquiescence in, any of the
foregoing.
4. "Book-Entry System" shall mean the Federal Reserve/
Treasury book-entry system for United States and Federal agency
securities, its successor or successors and its nominee or
nominees.
5. "Call Option" shall mean an exchange traded option with
respect to
Securities other than Stock Index Options, Futures Contracts and
Futures Contract Options
entitling the holder, upon timely exercise and payment of the
exercise price, as specified
therein, to purchase from the writer thereof the specified
underlying Securities.
6. "Certificate" shall mean any notice, instruction, or
other instrument
in writing, authorized or required by this Agreement to be given
to the Custodian, which is
actually received by the Custodian and signed on behalf of the
Fund by any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-dealer
which is a
clearing member under the rules of O.C.C. and a member of a
national securities exchange
qualified to act as a custodian for an investment company, or
any
broker-dealer reasonably
believed by the Custodian to be such a clearing member.
8. "Collateral Account" shall mean a segregated account so
denominated
and pledged to the Custodian as security for, and in
consideration of, the Custodian's
issuance of (a) any Put Option guarantee letter or similar
document described in paragraph 8
of Article V herein, or (b) any receipt described in Article V
or VIII herein.
9. "Consumer Price Index" shall mean the U.S. Consumer
Price Index, all
items and all urban consumers, U.S. city average 1982-84 equals
100, as first published
without seasonal adjustment by the Bureau of Labor Statistics,
the Department of Labor,
without regard to subsequent revisions or corrections by such
Bureau.
10. "Covered Call Option" shall mean an
exchange traded option entitling
the holder, upon timely exercise and payment of the exercise
price, as specified therein, to
purchase from the writer thereof the specified Securities
(excluding Futures Contracts)
which are owned by the writer thereof and subject to appropriate
restrictions.
11. "Depository" shall mean The
Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange
Commission, its successor or
successors and its nominee or nominees, provided the Custodian
has received a certified copy
of a resolution of the Fund's Board specifically approving
deposits in DTC. The term
"Depository" shall further mean and include any other person
authorized to act as a
depository under the Investment Company Act of 1940, as amended,
its successor or successors
and its nominee or nominees, specifically identified in a
certified copy of a resolution of
the Fund's Board specifically approving deposits therein by the
Custodian.
12. "Federal Funds" shall mean immediately available
same day funds.
13. "Federal Funds Rate" shall mean, for any day, the
Federal Funds
(Effective) interest rate so denominated as published in Federal
Reserve Statistical Release
H.15 (519) and applicable to such day and each succeeding day
which is not a business day.
14. "Financial Futures Contract" shall mean the firm
commitment to buy or
sell fixed income securities, including, without limitation,
U.S. Treasury Bills, U.S.
Treasury Notes, U.S. Treasury Bonds, domestic bank certificates
of deposit, and Eurodollar
certificates of deposit, during a specified month at an agreed
upon price.
15. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
16. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
17. "Margin Account" shall mean a segregated account in
the name of a
broker, dealer, futures commission merchant or Clearing Member,
or in the name of the Fund
for the benefit of a broker, dealer, futures commission merchant
or Clearing Member, or
otherwise, in accordance with an agreement between the Fund, the
Custodian and a broker,
dealer, futures commission merchant or Clearing Member (a
"Margin Account Agreement"),
separate and distinct from the custody account, in which certain
Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in
connection with such
transactions as the Fund may from time to time determine.
Securities held in the Book-Entry
System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a
Margin Account upon the Custodian's effecting an appropriate
entry on its books and records.
18. "Merger" shall mean with respect to a party, the
consolidation or
amalgamation with, merger into, or transfer of all or
substantially all of such party's
assets to, another entity, where such party is not the surviving
entity.
19. "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to
principal and interest by the
government of the United States or agencies or instrumentalities
thereof, commercial paper,
certificates of deposit and bankers' acceptances, repurchase and
reverse repurchase
agreements with respect to the same and bank time deposits,
where the purchase and sale of
such securities ordinarily requires settlement in Federal funds
on the same date as such purchase or sale.
20. "O.C.C." shall mean Options Clearing Corporation,
a clearing agency
registered under Section 17A of the Securities Exchange Act of
1934, its successor or successors, and its nominee or nominees.
21. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly
authorized by the Fund's Board to
execute any Certificate, instruction, notice or other instrument
on behalf of the Fund and
listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be
received by the Custodian from time to time.
22. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
23. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the
Custodian to be an Authorized Person.
24. "Prospectus" shall mean the last
Fund prospectus actually received
by the Custodian from the Fund with respect to which the Fund
has indicated a registration
statement under the Federal Securities Act of 1933 has become
effective, including the
statement of additional information incorporated by reference
therein.
25. "Put Option" shall mean an exchange
traded option with respect to
Securities other than Stock Index Options, Futures Contracts,
and Futures Contract Options
entitling the holder, upon timely exercise and tender of the
specified underlying
Securities, to sell such Securities to the writer thereof for
the exercise price.
26. "Reverse Repurchase Agreement" shall
mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such
Securities at a described or
specified date and price.
27. "Security" shall be deemed to
include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index
Options, Stock Index Futures
Contracts, Stock Index Futures Contract Options, Financial
Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments
or rights having characteristics similar to common stocks,
preferred stocks, debt
obligations issued by state or municipal governments and by
public authorities (including,
without limitation, general obligation bonds, revenue bonds and
industrial bonds and
industrial development bonds), bonds, debentures, notes,
mortgages or other obligations, and
any certificates, receipts, warrants or other instruments
representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or
representing any other rights or
interest therein, or any property or assets.
28. "Segregated Security Account" shall
mean an account maintained under
the terms of this Agreement as a segregated account, by
recordation or otherwise, within the
custody account in which certain Securities and/or other assets
of the Fund shall be
deposited and withdrawn from time to time in accordance with
Certificates received by the
Custodian in connection with such transactions as the Fund may
from time to time determine.
29. "Series" shall mean (i) the
Series of the Fund specified on Appendix
D hereto, or, where the context requires each such Series, or
(ii) if no Series are set forth on such Appendix, the Fund.
30. "Shares" shall mean the shares of
beneficial interest of any Series
of the Fund, each of which is allocated to a particular Series.
31. "Stock Index Futures Contract" shall
mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of
an amount of cash equal to a
specified dollar amount times the difference between the value
of a particular stock index
at the close of the last business day of the contract and the
price at which the futures contract is originally struck.
32. "Stock Index Option" shall mean an
exchange traded option entitling
the holder, upon timely exercise, to receive an amount of cash
determined by reference to
the difference between the exercise price and the value of the
index on the date of exercise.
33. "Written Instructions" shall mean
written communications actually
received by the Custodian from an Authorized Person or from a
person reasonably believed by
the Custodian to be an Authorized Person by telex or any other
such system whereby the
receiver of such communications is able to verify by codes or
otherwise with a reasonable
degree of certainty the authenticity of the sender of such
communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and
appoints the Custodian as custodian of
the Securities and moneys at any time owned by the Fund during
the period of this Agreement.
2. The Custodian hereby accepts
appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in
paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to
the Custodian all Securities
and all moneys owned by any Series, including cash received for
the issuance of such Series'
shares, at any time during the period of this Agreement and
shall specify the Series, if
any, to which the same are to be specifically allocated. The
Custodian will not be
responsible for such Securities and such moneys until actually
received by it. The
Custodian will be entitled to reverse any credits made on a
Series' behalf where such
credits have been previously made and moneys are not finally
collected. The Fund shall
deliver to the Custodian a certified resolution of the Fund's
Board approving, authorizing
and instructing the Custodian on a continuous and on-going basis
to deposit in the Book-Entry System all Securities eligible for
deposit therein and to utilize the Book-Entry
System to the extent possible in connection with its performance
hereunder, including,
without limitation, in connection with settlements of purchases
and sales of Securities,
loans of Securities, and deliveries and returns of Securities
collateral. Prior to a
deposit of Securities of a Series in the Depository, the Fund
shall deliver to the Custodian
a certified resolution of the Fund's Board approving,
authorizing and instructing the
Custodian on a continuous and on-going basis until instructed to
the contrary by a
Certificate actually received by the Custodian to deposit in the
Depository all Securities
eligible for deposit therein and to utilize the Depository to
the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and
returns of Securities collateral. Securities and moneys of such
Series deposited in either
the Book-Entry System or the Depository will be represented in
accounts which include only
assets held by the Custodian for customers, including, but not
limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity.
Prior to the Custodian's
accepting, utilizing and acting with respect to Clearing Member
confirmations for Options
and transactions in Options as provided in this Agreement, the
Custodian shall have received
a certified resolution of the Fund's Board approving,
authorizing
and instructing the
Custodian on a continuous and on-going basis, until instructed
to the contrary by a
Certificate actually received by the Custodian, to accept,
utilize and act in accordance
with such confirmations as provided in this Agreement.
2. The Custodian shall credit to a
separate account in the name of the
Fund for each Series all moneys received by it for the account
of the Fund, with respect to
such Series. Money credited to the separate account for a
Series shall be disbursed by the Custodian only:
(a) In payment for Securities purchased,
as provided in Article IV hereof;
(b) In payment of dividends or
distributions, as provided in Article XI hereof;
(c) In payment of original issue or
other taxes, as provided in Article XII hereof;
(d) In payment for Shares redeemed by
it, as provided in Article XII hereof;
(e) Pursuant to Certificates setting
forth the name and address of the
person to whom the payment is to be made, the Series account
from which payment is to be
made and the purpose for which payment is to be made; or
(f) In payment of the fees and in
reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XV hereof.
3. Promptly after the close of business
on each day, the Custodian shall
furnish the Fund with confirmations and a summary of all
transfers to or from the account of
each Series during said day. Where Securities are transferred
to the account of a Series,
the Custodian shall also by book-entry or otherwise identify as
belonging to such Series a
quantity of Securities in a fungible bulk of Securities
registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account
on
the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall
furnish the Fund with a detailed statement of the Securities and
moneys held for each Series under this Agreement.
4. Except as otherwise provided in
paragraph 7 of this Article and in
Article VIII, all Securities held for a Series, which are issued
or issuable only in bearer
form, except such Securities as are held in the Book-Entry
System, shall be held by the
Custodian in that form; all other Securities held for a Series
may be registered in the name
of such Series, in the name of any duly appointed registered
nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the
Book-Entry System or the
Depository or their successor or successors, or their nominee or
nominees. The Fund agrees
to furnish to the Custodian appropriate instruments to enable
the Custodian to hold or
deliver in proper form for transfer, or to register in the name
of its registered nominee or
in the name of the Book-Entry System or the Depository, any
Securities which it may hold for
the account of a Series and which may from time to time be
registered in the name of such
Series. The Custodian shall hold all such Securities which are
not held in the Book-Entry
System or in the Depository in a separate account in the name of
such Series physically
segregated at all times from those of any other person or
persons.
5. Except as otherwise provided in this
Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of
the Book-Entry System or the Depository with respect to
Securities therein deposited, shall
with respect to all Securities held for each Series in
accordance
with this Agreement:
(a) Collect all income due or payable
and, in any event, if the Custodian
receives a written notice from the Fund specifying that an
amount of income should have been
received by the Custodian within the last 90 days, the Custodian
will provide a conditional
payment of income within 60 days from the date the Custodian
received such notice, unless
the Custodian reasonably concludes that such income was not due
or payable to the Fund,
provided that the Custodian may reverse any such conditional
payment upon its reasonably
concluding that all or any portion of such income was not due or
payable, and provided
further that the Custodian shall not be liable for failing to
collect on a timely basis the
full amount of income due or payable in respect of a "floating
rate instrument" or "variable
rate instrument" (as such terms are defined under Rule 2a-7
under
the Investment Company Act
of 1940, as amended) if it has acted in good faith, without
negligence or willful misconduct.
(b) Present for payment and collect the
amount payable upon such
Securities which are called, but only if either (i) the
Custodian
receives a written notice
of such call, or (ii) notice of such call appears in one or more
of the publications listed
in Appendix C annexed hereto, which may be amended at any time
by the Custodian upon five business days' prior notification to
the Fund;
(c) Present for payment and collect the
amount payable upon all Securities which may mature;
(d) Surrender Securities in temporary
form for definitive Securities;
(e) Execute, as Custodian, any necessary
declarations or certificates of
ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing
authority now or hereafter in effect; and
(f) Hold directly, or through the
Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of
each Series all rights and
similar securities issued with respect to any Securities held by
the Custodian hereunder.
6. Upon receipt of a Certificate and not
otherwise, the Custodian, directly or through the use of the
Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons
as may be designated in such
Certificate proxies, consents, authorizations, and any other
instruments whereby the
authority of the Fund as owner of any Securities may be
exercised;
(b) Deliver any Securities held for the
Series in exchange for other
Securities or cash issued or paid in connection with the
liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the
Series to any protective
committee, reorganization committee or other person in
connection
with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation,
and receive and hold under the terms of this Agreement such
certificates of deposit, interim
receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(d) Make such transfers or exchanges of
the assets of the Series and take
such other steps as shall be stated in said order to be for the
purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the
amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which
may be called as specified in the Certificate.
7. Notwithstanding any provision
elsewhere contained herein, the
Custodian shall not be required to obtain possession of any
instrument or certificate
representing any Futures Contract, Option or Futures Contract
Option until after it shall
have determined, or shall have received a Certificate from the
Fund stating, that any such
instruments or certificates are available. The Fund shall
deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument
or certificate. Prior to such availability, the Custodian shall
comply with Section 17(f)
of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options
or Futures Contract Options
by making payments or deliveries specified in Certificates
received by the Custodian in
connection with any such purchase, sale, writing, settlement or
closing out upon its receipt
from a broker, dealer or futures commission merchant of a
statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers,
or futures commission merchants with respect to such Futures
Contracts, Options or Futures
Contract Options, as the case may be, confirming that such
Security is held by such broker,
dealer or futures commission merchant, in book-entry form or
otherwise, in the name of the
Custodian (or any nominee of the Custodian) as custodian for the
Fund, provided, however,
that payments to or deliveries from the Margin Account shall be
made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever
any such instruments or
certificates are available, the Custodian shall, notwithstanding
any provision in this
Agreement to the contrary, make payment for any Futures
Contract,
Option or Futures Contract
Option for which such instruments or such certificates are
available only against the
delivery to the Custodian of such instrument or such
certificate,
and deliver any Futures
Contract, Option or Futures Contract Option for which such
instruments or such certificates
are available only against receipt by the Custodian of payment
therefor. Any such
instrument or certificate delivered to the Custodian shall be
held by the Custodian
hereunder in accordance with, and subject to, the provisions of
this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS, FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of
Securities by the Fund, other than a
purchase of any Option, Futures Contract, Futures Contract
Option
or Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i) with
respect to each purchase of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to
each purchase of Money Market Securities, a Certificate, Oral
Instructions or Written
Instructions, specifying with respect to each such purchase:
(a)
the Series to which the
Securities purchased are to be specifically allocated; (b) the
name of the issuer and the
title of the Securities; (c) the number of shares or the
principal amount purchased and
accrued interest, if any; (d) the date of purchase and
settlement; (e) the purchase price
per unit; (f) the total amount payable upon such purchase; (g)
the name of the person from
whom or the broker through whom the purchase was made, and the
name of the clearing broker,
if any; and (h) the name of the broker to which payment is to be
made. The Custodian shall,
upon receipt of Securities purchased by or for such Series, pay
out of the moneys held for
the account of such Series the total amount payable to the
person
from whom, or the broker
through whom, the purchase was made, provided that the same
conforms to the total amount
payable as set forth in such Certificate, Oral Instructions or
Written Instructions.
2. Promptly after each sale of
Securities by the Fund, other than a sale
of any Option, Futures Contract, Futures Contract Option or
Reverse Repurchase Agreement,
the Fund shall deliver to the Custodian (i) with respect to each
sale of Securities which
are not Money Market Securities, a Certificate, and (ii) with
respect to each sale of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with
respect to each such sale: (a) the Series to which such
Securities sold were specifically
allocated; (b) the name of the issuer and the title of the
Security; (c) the number of
shares or principal amount sold, and accrued interest, if any;
(d) the date of sale; (e) the
sale price per unit; (f) the total amount payable to such Series
upon such sale; (g) the
name of the broker through whom or the person to whom the sale
was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom
the Securities are to be
delivered. The Custodian shall deliver the Securities upon
receipt of the total amount
payable to the Fund for the account of such Series upon such
sale, provided that the same
conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or
Written Instructions. Subject to the foregoing, the Custodian
may accept payment in such
form as shall be satisfactory to it, and may deliver Securities
and arrange for payment in
accordance with the customs prevailing among dealers in
Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any
Option by the Fund, the Fund shall
deliver to the Custodian a Certificate specifying with respect
to
each Option purchased:
(a) the Series to which the Option purchased is to be
specifically allocated; (b) the type
of Option (put or call); (c) the name of the issuer and the
title
and number of shares
subject to such Option or, in the case of a Stock Index Option,
the stock index to which
such Option relates and the number of Stock Index Options
purchased; (d) the expiration
date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount
payable by the Fund for the account of such Series in connection
with such purchase; (h) the
name of the Clearing Member through which such Option was
purchased; and (i) the name of the
broker to whom payment is to be made. The Custodian shall pay,
upon receipt of a Clearing
Member's statement confirming the purchase of such Option held
by
such Clearing Member for
the account of the Custodian (or any duly appointed and
registered nominee of the Custodian)
as custodian for the Fund, out of moneys held for the account of
such Series, the total
amount payable upon such purchase to the Clearing Member through
whom the purchase was made,
provided that the same conforms to the total amount payable as
set forth in such Certificate.
2. Promptly after the sale of any Option
purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a
Certificate specifying with respect to each such sale: (a) the
Series to which the Option
sold was specifically allocated; (b) the type of Option (put or
call); (c) the name of the
issuer and the title and number of shares subject to such Option
or, in the case of a Stock
Index Option, the stock index to which such Option relates and
the number of Stock Index
Options sold; (d) the date of sale; (e) the sale price; (f) the
date of settlement; (g) the
total amount payable to the Fund for the account of such Series
upon such sale; and (h) the
name of the Clearing Member through which the sale was made.
The Custodian shall consent to
the delivery of the Option sold by the Clearing Member which
previously supplied the
confirmation described in preceding paragraph 1 of this Article
with respect to such Option
against payment to the Custodian of the total amount payable to
the Fund for the account of
such Series, provided that the same conforms to the total amount
payable as set forth in such Certificate.
3. Promptly after the exercise by the
Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a
Certificate specifying with respect to such Call Option: (a)
the Series to which the Call
Option exercised was specifically allocated; (b) the name of the
issuer and the title and
number of shares subject to the Call Option; (c) the expiration
date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f)
the total amount to be paid
by the Fund for the account of such Series upon such exercise;
and (g) the name of the
Clearing Member through which such Call Option was exercised.
The Custodian shall, upon
receipt of the Securities underlying the Call Option which was
exercised, pay out of the
moneys held for the account of such Series the total amount
payable to the Clearing Member
through whom the Call Option was exercised, provided that the
same conforms to the total
amount payable as set forth in such Certificate.
4. Promptly after the exercise by the
Fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a
Certificate specifying with respect to such Put Option: (a) the
Series to which the Put
Option exercised was specifically allocated; (b) the name of the
issuer and the title and
number of shares subject to the Put Option; (c) the expiration
date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f)
the total amount to be paid
to the Fund for the account of such Series upon such exercise;
and (g) the name of the
Clearing Member through which such Put Option was exercised.
The Custodian shall, upon
receipt of the amount payable upon the exercise of the Put
Option, deliver or direct the
Depository to deliver the Securities, provided the same conforms
to the amount payable to
the Fund for the account of such Series as set forth in such
Certificate.
5. Promptly after the exercise by the
Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the
Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series
to which the Stock Index Option exercised was specifically
allocated; (b) the type of Stock
Index Option (put or call); (c) the number of Options being
exercised; (d) the stock index
to which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total
amount to be received by the Fund for the account of such Series
in connection with such
exercise; and (h) the Clearing Member from which such payment is
to be received.
6. Whenever the Fund writes a Covered
Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Covered Call
Option: (a) the Series to which the Covered Call Option written
is to be specifically
allocated; (b) the name of the issuer and the title and number
of shares for which the
Covered Call Option was written and which underlie the same; (c)
the expiration date;
(d) the exercise price; (e) the premium to be received by the
Fund for the account of such
Series; (f) the date such Covered Call Option was written; and
(g) the name of the Clearing
Member through which the premium is to be received. The
Custodian shall deliver or cause to
be delivered, in exchange for receipt of the premium specified
in the Certificate with
respect to such Covered Call Option, such receipts as are
required in accordance with the
customs prevailing among Clearing Members dealing in Covered
Call Options and shall impose,
or direct the Depository to impose, upon the underlying
Securities specified in the
Certificate such restrictions as may be required by such
receipts. Notwithstanding the
foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any
time to refuse to issue any receipts for Securities in the
possession of the Custodian and
not deposited with the Depository underlying a Covered Call
Option.
7. Whenever a Covered Call Option
written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the
Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to
deliver, the Securities subject to such Covered Call Option and
specifying: (a) the Series
to which the Covered Call Option exercised was specifically
allocated; (b) the name of the
issuer and the title and number of shares subject to the Covered
Call Option; (c) the
Clearing Member to whom the underlying Securities are to be
delivered; and (d) the total
amount payable to the Fund for the account of such Series upon
such delivery. Upon the
return and/or cancellation of any receipts delivered pursuant to
paragraph 6 of this
Article, the Custodian shall deliver, or direct the Depository
to
deliver, the underlying
Securities as specified in the Certificate for the amount to be
received as set forth in such Certificate.
8. Whenever the Fund writes a Put
Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to such
Put Option: (a) the Series
to which the Put Option written is to be specifically allocated;
(b) the name of the issuer
and the title and number of shares for which the Put Option is
written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e)
the premium to be received by
the Fund for the account of such Series; (f) the date such Put
Option is written; (g) the
name of the Clearing Member through which the premium is to be
received and to whom a Put
Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and
kind of Securities, if any, to be deposited in the Segregated
Security Account; and (i) the
amount of cash and/or the amount and kind of Securities to be
deposited into the Collateral
Account. The Custodian shall, after making the deposits into
the
Collateral Account
specified in the Certificate, issue a Put Option guarantee
letter
substantially in the form
utilized by the Custodian on the date hereof, and deliver the
same to the Clearing Member
specified in the Certificate against receipt of the premium
specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no
obligation to issue any Put
Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
Whenever a Put Option written by the
Fund and described in the
preceding paragraph is exercised, the Fund shall promptly
deliver
to the Custodian a
Certificate specifying: (a) the Series to which the Put Option
exercised was specifically
allocated; (b) the name of the issuer and title and number of
shares subject to the Put
Option; (c) the Clearing Member from which the underlying
Securities are to be received;
(d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or
the amount and kind of Securities to be withdrawn from the
Collateral Account; and (f) the
amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the
Segregated Security Account. Upon the return and/or
cancellation
of any Put Option
guarantee letter or similar document issued by the Custodian in
connection with such Put
Option, the Custodian shall pay out of the moneys held for the
account of such Series the
total amount payable to the Clearing Member specified in the
Certificate as set forth in
such Certificate, and shall make the withdrawals specified in
such Certificate.
10. Whenever the Fund writes a Stock
Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Stock Index
Option: (a) the Series to which the Stock Index Option written
is to be specifically
allocated; (b) whether such Stock Index Option is a put or a
call; (c) the number of Options
written; (d) the stock index to which such Option relates; (e)
the expiration date; (f) the
exercise price; (g) the Clearing Member through which such
Option
was written; (h) the
premium to be received by the Fund for the account of such
Series; (i) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited
in the Segregated Security
Account; (j) the amount of cash and/or the amount and kind of
Securities, if any, to be
deposited in the Collateral Account; and (k) the amount of cash
and/or the amount and kind
of Securities, if any, to be deposited in a Margin Account, and
the name in which such
account is to be or has been established. The Custodian shall,
upon receipt of the premium
specified in the Certificate, make the deposits, if any, into
the
Segregated Security
Account specified in the Certificate, and either (1) deliver
such
receipts, if any, which
the Custodian has specifically agreed to issue, which are in
accordance with the customs
prevailing among Clearing Members in Stock Index Options and
make
the deposits into the
Collateral Account specified in the Certificate, or (2) make the
deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option
written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the
Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series
to which the Stock Index Option exercised was specifically
allocated; (b) such information
as may be necessary to identify the Stock Index Option being
exercised; (c) the Clearing
Member through which such Stock Index Option is being exercised;
(d) the total amount
payable upon such exercise, and whether such amount is to be
paid
by or to the Fund for the
account of such Series; (e) the amount of cash and/or amount and
kind of Securities, if any,
to be withdrawn from the Margin Account; and (f) the amount of
cash and/or amount and kind
of Securities, if any, to be withdrawn from the Segregated
Security Account and the amount
of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the
Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the
preceding paragraph of this Article, the Custodian shall pay to
the Clearing Member
specified in the Certificate the total amount payable, if any,
as
specified therein.
12. Whenever the Fund purchases any
Option identical to a previously
written Option described in paragraphs 6, 8 or 10 of this
Article
in a transaction expressly
designated as a "Closing Purchase Transaction" in order to
liquidate its position as a
writer of an Option, the Fund shall promptly deliver to the
Custodian a Certificate
specifying with respect to the Option being purchased: (a) the
Series to which the Option
purchased is to be specifically allocated; (b) that the
transaction is a Closing Purchase
Transaction; (c) the name of the issuer and the title and number
of shares subject to the
Option, or, in the case of a Stock Index Option, the stock index
to which such Option
relates and the number of Options held; (d) the exercise price;
(e) the premium to be paid
by the Fund for the account of such Series; (f) the expiration
date; (g) the type of Option
(put or call); (h) the date of such purchase; (i) the name of
the
Clearing Member to which
the premium is to be paid; and (j) the amount of cash and/or the
amount and kind of
Securities, if any, to be withdrawn from the Collateral Account,
a specified Margin Account
or the Segregated Security Account. Upon the Custodian's
payment
of the premium and the
return and/or cancellation of any receipt issued pursuant to
paragraphs 6, 8 or 10 of this
Article with respect to the Option being liquidated through the
Closing Purchase
Transaction, the Custodian shall remove, or direct the
Depository
to remove, the previously
imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration or exercise of,
or consummation of a Closing
Purchase Transaction with respect to, any Option purchased or
written by the Fund and
described in this Article, the Custodian shall delete such
Option
from the statements
delivered to the Fund for the account of a Series pursuant to
paragraph 3 of Article III
herein, and upon the return and/or cancellation of any receipts
issued by the Custodian,
shall make such withdrawals from the Collateral Account, the
Margin Account and/or the
Segregated Security Account as may be specified in a Certificate
received in connection with
such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a
Futures Contract, the Fund shall
deliver to the Custodian a Certificate specifying with respect
to
such Futures Contract (or
with respect to any number of identical Futures Contract(s)):
(a) the Series to which the
Futures Contract entered into is to be specifically allocated;
(b) the category of Futures
Contract (the name of the underlying stock index or financial
instrument); (c) the number of
identical Futures Contracts entered into; (d) the delivery or
settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were)
entered into and the maturity
date; (f) whether the Fund is buying (going long) or selling
(going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind
of
Securities, if any, to be
deposited in the Segregated Security Account; (h) the name of
the
broker, dealer or futures
commission merchant through which the Futures Contract was
entered into; and (i) the amount
of fee or commission, if any, to be paid and the name of the
broker, dealer or futures
commission merchant to whom such amount is to be paid. The
Custodian shall make the
deposits, if any, to the Margin Account in accordance with the
terms and conditions of the
Margin Account Agreement. The Custodian shall make payment of
the fee or commission, if
any, specified in the Certificate and deposit in the Segregated
Security Account the amount
of cash and/or the amount and kind of Securities specified in
said Certificate.
2. (a) Any variation margin payment or
similar payment required to be
made by the Fund for the account of a Series to a broker, dealer
or futures commission
merchant with respect to an outstanding Futures Contract shall
be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
(b) Any variation margin payment or
similar payment from a broker,
dealer or futures commission merchant to the Fund with respect
to an outstanding Futures
Contract shall be received and dealt with by the Custodian in
accordance with the terms and
conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by
the Custodian hereunder is
retained by the Fund until delivery or settlement is made on
such Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying: (a)
the Series to which the
Futures Contract retained is to be specifically allocated; (b)
the Futures Contract; (c)
with respect to a Stock Index Futures Contract, the total cash
settlement amount to be paid
or received, and with respect to a Financial Futures Contract,
the Securities and/or amount
of cash to be delivered or received; (d) the broker, dealer or
futures commission merchant
to or from which payment or delivery is to be made or received;
and (e) the amount of cash
and/or Securities to be withdrawn from the Segregated Security
Account. The Custodian shall
make the payment or delivery specified in the Certificate and
delete such Futures Contract
from the statements delivered to the Fund pursuant to paragraph
3 of Article III herein.
4. Whenever the Fund shall enter into a
Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall
deliver to the Custodian a
Certificate specifying: (a) the Series to which the offsetting
Futures Contract is to be
specifically allocated; (b) the items of information required in
a Certificate described in
paragraph 1 of this Article, and (c) the Futures Contract being
offset. The Custodian shall
make payment of the fee or commission, if any, specified in the
Certificate and delete the
Futures Contract being offset from the statements delivered to
the Fund for the account of
such Series pursuant to paragraph 3 of Article III herein, and
make such withdrawals from
the Segregated Security Account as may be specified in such
Certificate. The withdrawals,
if any, to be made from the Margin Account shall be made by the
Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any
Futures Contract Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such
Futures Contract Option: (a) the Series to which the Futures
Contract Option purchased is
to be specifically allocated; (b) the type of Futures Contract
Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the
Futures Contract underlying the Futures Contract Option
purchased; (d) the expiration date;
(e) the exercise price; (f) the dates of purchase and
settlement;
(g) the amount of premium
to be paid by the Fund for the account of such Series upon such
purchase; (h) the name of
the broker or futures commission merchant through which such
option was purchased; and (i)
the name of the broker or futures commission merchant to whom
payment is to be made. The
Custodian shall pay the total amount to be paid upon such
purchase to the broker or futures
commission merchant through whom the purchase was made, provided
that the same conforms to the amount set forth in such
Certificate.
2. Promptly after the sale of any
Futures Contract Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall promptly
deliver to the Custodian a
Certificate specifying with respect to each such sale: (a) the
Series to which the Futures
Contract Option sold was specifically allocated; (b) the type of
Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be
necessary to identify the Futures Contract underlying the
Futures
Contract Option; (d) the
date of sale; (e) the sale price; (f) the date of settlement;
(g)
the total amount payable
to the Fund for the account of such Series upon such sale; and
(h) the name of the broker or
futures commission merchant through which the sale was made.
The
Custodian shall consent to
the cancellation of the Futures Contract Option being closed
against payment to the
Custodian of the total amount payable to the Fund for the
account
of such Series, provided
the same conforms to the total amount payable as set forth in
such Certificate.
3. Whenever a Futures Contract Option
purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a
Certificate specifying: (a) the Series to which the Futures
Contract Option exercised was
specifically allocated; (b) the particular Futures Contract
Option (put or call) being
exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures
commission merchant through which
the Futures Contract Option is exercised; (f) the net total
amount, if any, payable by the
Fund; (g) the amount, if any, to be received by the Fund for the
account of such Series; and
(h) the amount of cash and/or the amount and kind of Securities
to be deposited in the
Segregated Security Account. The Custodian shall make the
payments, if any, and the
deposits, if any, into the Segregated Security Account as
specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made
by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
4. Whenever the Fund writes a Futures
Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Futures
Contract Option: (a) the Series to which the Futures Contract
Option written is to be
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type
of Futures Contract and such other information as may be
necessary to identify the Futures
Contract underlying the Futures Contract Option; (d) the
expiration date; (e) the exercise
price; (f) the premium to be received by the Fund for the
account
of such Series; the
name of the broker or futures commission merchant through which
the premium is to be
received; and (h) the amount of cash and/or the amount and kind
of Securities, if any, to be
deposited in the Segregated Security Account. The Custodian
shall, upon receipt of the
premium specified in the Certificate, make the deposits into the
Segregated Security
Account, if any, as specified in the Certificate. The deposits,
if any, to be made to the
Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option
written by the Fund which is a call
is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying:
(a) the Series to which the Futures Contract Option exercised
was
specifically allocated;
(b) the particular Futures Contract Option exercised; (c) the
type of Futures Contract
underlying the Futures Contract Option; (d) the name of the
broker or futures commission
merchant through which such Futures Contract Option was
exercised; (e) the net total amount,
if any, payable to the Fund for the account of such Series upon
such exercise; (f) the net
total amount, if any, payable by the Fund for the account of
such
Series upon such exercise;
and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the
Segregated Security Account. The Custodian shall, upon its
receipt of the net total amount
payable to the Fund for the account of such Series, if any,
specified in such Certificate
make the payments, if any, and the deposits, if any, into the
Segregated Security Account as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall
be made by the Custodian in accordance with the terms and
conditions of the Margin Account
Agreement.
6. Whenever a Futures Contract Option
which is written by the Fund and
which is a Put Option is exercised, the Fund shall promptly
deliver to the Custodian a
Certificate specifying: (a) the Series to which the Futures
Contract Option exercised was
specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type
of Futures Contract underlying such Futures Contract Option; (d)
the name of the broker or
futures commission merchant through which such Futures Contract
Option is exercised; (e) the
net total amount, if any, payable to the Fund for the account of
such Series upon such
exercise; (f) the net total amount, if any, payable by the Fund
for the account of such
Series upon such exercise; and (g) the amount and kind of
Securities and/or cash to be
withdrawn from or deposited in the Segregated Security Account,
if any. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund for the account of such
Series, if any, specified in the Certificate, make the payments,
if any, and the deposits,
if any, into the Segregated Security Account as specified in the
Certificate. The deposits
to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any
Futures Contract Option identical to a
previously written Futures Contract Option described in this
Article in order to liquidate
its position as a writer of such Futures Contract Option, the
Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to the
Futures Contract Option being
purchased: (a) the Series to which the Futures Contract Option
purchased is to be
specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of
Futures Contract and such other information as may be necessary
to identify the Futures
Contract underlying the Futures Contract Option; (d) the
exercise
price; (e) the premium to
be paid by the Fund for the account of such Series; (f) the
expiration date; (g) the name of
the broker or futures commission merchant to which the premium
is
to be paid; and (h) the
amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the
Segregated Security Account. The Custodian shall effect the
withdrawals from the Segregated
Security Account specified in the Certificate. The withdrawals,
if any, to be made from the
Margin Account shall be made by the Custodian in accordance with
the terms and conditions of
the Margin Account Agreement.
8. Upon the expiration or exercise of,
or consummation of a closing
transaction with respect to, any Futures Contract Option written
or purchased by the Fund
and described in this Article, the Custodian shall (a) delete
such Futures Contract Option
from the statements delivered to the Fund pursuant to paragraph
3
of Article III herein, and
(b) make such withdrawals from, and/or, in the case of an
exercise, such deposits into, the
Segregated Security Account as may be specified in a
Certificate.
The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the
Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the
Fund through the exercise of a
Futures Contract Option described in this Article shall be
subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the
Fund shall deliver to the Custodian
a Certificate specifying: (a) the Series to which the short
sale
is to be specifically
allocated; (b) the name of the issuer and the title of the
Security; (c) the number of
shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of
the sale and settlement; (e) the sale price per unit; (f) the
total amount credited to the
Fund for the account of such Series upon such sales, if any; (g)
the amount of cash and/or
the amount and kind of Securities, if any, which are to be
deposited in a Margin Account and
the name in which such Margin Account has been or is to be
established; (h) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in a Segregated
Security Account; and (i) the name of the broker through which
such short sale was made.
The Custodian shall upon its receipt of a statement from such
broker confirming such sale
and that the total amount credited to the Fund upon such sale,
if
any, as specified in the
Certificate is held by such broker for the account of the
Custodian (or any nominee of the
Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin
Account and the Segregated Security Account specified in the
Certificate.
2. In connection with the closing-out
of
any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to each such
closing-out: (a) the Series to which the short sale being
closed-out was specifically
allocated; (b) the name of the issuer and the title of the
Security; (c) the number of
shares or the principal amount, and accrued interest or
dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the
dates of the closing-out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund
for the account of such Series upon such closing-out; (g) the
net
total amount payable to
the broker upon such closing-out; (h) the amount of cash and the
amount and kind of
Securities to be withdrawn, if any, from the Margin Account; (i)
the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from
the Segregated Security
Account; and (j) the name of the broker through which the Fund
is
effecting such closing-out. The Custodian shall, upon receipt
of
the net total amount payable to the Fund for the
account of such Series upon such closing-out and the return
and/or cancellation of the
receipts, if any, issued by the custodian with respect to the
short sale being closed-out,
pay out of the moneys held for the account of the Series to the
broker the net total amount
payable to the broker, and make the withdrawals from the Margin
Account and the Segregated
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund, on behalf
of
a Series, enters into a Reverse
Repurchase Agreement with respect to Securities and money held
by
the Custodian hereunder,
the Fund shall deliver to the Custodian a Certificate or in the
event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate,
Oral Instructions or Written
Instructions specifying: (a) the Series to which the Reverse
Repurchase Agreement is to be
specifically allocated; (b) the total amount payable to the Fund
for the account of such
Series in connection with such Reverse Repurchase Agreement; (c)
the broker or dealer
through or with which the Reverse Repurchase Agreement is
entered; (d) the amount and kind
of Securities to be delivered by the Fund to such broker or
dealer; (e) the date of such
Reverse Repurchase Agreement; and (f) the amount of cash and/or
the amount and kind of
Securities, if any, to be deposited in a Segregated Security
Account in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt
of the total amount payable
to the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the
delivery to the broker or dealer, and the deposits, if any, to
the Segregated Security
Account, specified in such Certificate, Oral Instructions or
Written Instructions.
2. Upon the termination of a Reverse
Repurchase Agreement described in
paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event
such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral
Instructions or Written Instructions to the Custodian
specifying:
(a) the Series to which
the Reverse Repurchase Agreement terminated was specifically
allocated; (b) the Reverse
Repurchase Agreement being terminated; (c) the total amount
payable by the Fund for the
account of such Series in connection with such termination; (d)
the amount and kind of
Securities to be received by the Fund for the account of such
Series in connection with such
termination; (e) the date of termination; (f) the name of the
broker or dealer with or
through which the Reverse Repurchase Agreement is to be
terminated; and (g) the amount of
cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security
Account. The Custodian shall, upon receipt of the amount and
kind of Securities to be
received by the Fund specified in the Certificate, Oral
Instructions or Written
Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from
the Segregated Security Account, specified in such Certificate,
Oral Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to
time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in
a
Certificate received by
the Custodian. Such Certificate shall specify the amount of
cash
and/or the amount and kind
of Securities to be deposited in, or withdrawn from, the
Segregated Security Account. In
the event that the Fund fails to specify in a Certificate the
designated Series, the name of
the issuer, the title and the number of shares or the principal
amount of any particular
Securities to be deposited by the Custodian into, or withdrawn
from, a Segregated Securities
Account, the Custodian shall be under no obligation to make any
such deposit or withdrawal
and shall so notify the Fund.
2. The Custodian shall make deliveries
or payments from a Margin Account
to the broker, dealer, futures commission merchant or Clearing
Member in whose name, or for
whose benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as
payments or distributions with
respect to Securities deposited in any Margin Account shall be
dealt with in accordance with
the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a
continuing
lien and security interest in
and to any property at any time held by the Custodian in any
Collateral Account described
herein. In accordance with applicable law, the Custodian may
enforce its lien and realize
on any such property whenever the Custodian has made payment or
delivery pursuant to any Put
Option guarantee letter or similar document or any receipt
issued
hereunder by the
Custodian. In the event the Custodian should realize on any
such
property net proceeds
which are less than the Custodian's obligations under any Put
Option guarantee letter or
similar document or any receipt, such deficiency shall be a debt
owed the Custodian by the
Fund within the scope of Article XIII herein.
5. On each business day, the Custodian
shall furnish the Fund with
respect to each Series a statement with respect to each Margin
Account in which money or
Securities are held specifying as of the close of business on
the
previous business day:
(a) the name of the Margin Account; (b) the amount and kind of
Securities held therein; and
(c) the amount of money held therein. The Custodian shall make
available upon request to
any broker, dealer or futures commission merchant specified in
the name of a Margin Account
a copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business
on each business day in which
cash and/or Securities are maintained in a Collateral Account,
the Custodian shall furnish
the Fund with a Statement with respect to such Collateral
Account
specifying the amount of
cash and/or the amount and kind of Securities held therein. No
later than the close of
business next succeeding the delivery to the Fund of such
statement, the Fund shall furnish
to the Custodian a Certificate or Written Instructions
specifying
the then market value of
the securities described in such statement. In the event such
then market value is
indicated to be less than the Custodian's obligation with
respect
to any outstanding Put
Option, guarantee letter or similar document, the Fund shall
promptly specify in a
Certificate the additional cash and/or Securities to be
deposited
in such Collateral Account
to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall
furnish to the Custodian a copy of the
resolution of the Fund's Board, certified by the Secretary or
any
Assistant Secretary,
either (i) setting forth the date of the declaration of a
dividend or distribution, the date
of payment thereof, the record date as of which shareholders
entitled to payment shall be
determined, the amount payable per share to the shareholders of
record as of that date and
the total amount payable to the Dividend Agent of the Fund on
the
payment date, or (ii)
authorizing the declaration of dividends and distributions on a
daily basis and authorizing
the Custodian to rely on Oral Instructions, Written Instructions
or a Certificate setting
forth the date of the declaration of such dividend or
distribution, the date of payment
thereof, the record date as of which shareholders entitled to
payment shall be determined,
the amount payable per share to the shareholders of record as of
that date and the total
amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in
such resolution, Oral Instructions,
Written Instructions or Certificate, as the case may be, the
Custodian shall pay out of the
moneys held for the account of the Series the total amount
payable to the Dividend Agent of
the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any
Series' Shares, the Fund shall
deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of such money from the
Transfer Agent, the Custodian
shall credit such money to the account of such Series.
3. Upon issuance of any Series' Shares
in accordance with the foregoing
provisions of this Article, the Custodian shall pay, out of the
money held for the account
of such Series, all original issue or other taxes required to be
paid by the Fund for the
account of such Series in connection with such issuance upon the
receipt of a Certificate
specifying the amount to be paid.
4. Except as provided hereinafter,
whenever the Fund shall hereafter
redeem any Series' Shares, the Fund shall furnish to the
Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent
of an advice setting forth the
number of a Series' Shares received by the Transfer Agent for
redemption and that such
Shares are valid and in good form for redemption, the Custodian
shall make payment to the
Transfer Agent out of the moneys held for the account of such
Series of the total amount
specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
6. Notwithstanding the above provisions
regarding the redemption of any
of Series' Shares, whenever a Series' Shares are redeemed
pursuant to any check redemption
privilege which may from time to time be offered by the Fund,
the
Custodian, unless
otherwise instructed by a Certificate, shall, upon receipt of an
advice from the Fund or its
agent setting forth that the redemption is in good form for
redemption in accordance with
the check redemption procedure, honor the check presented as
part
of such check redemption
privilege out of the money held in the account of the Fund for
such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole
discretion advance funds on behalf
of a Series which results in an overdraft because the moneys
held
by the Custodian for the
account of such Series shall be insufficient to pay the total
amount payable upon a purchase
of Securities as set forth in a Certificate or Oral Instructions
issued pursuant to Article
IV, or which results in an overdraft in the account for such
Series for some other reason,
or if a Series is for any other reason indebted to the Custodian
(except a borrowing for
investment or for temporary or emergency purposes using
Securities as collateral pursuant to
a separate agreement and subject to the provisions of paragraph
2
of this Article XIII),
such overdraft or indebtedness shall be deemed to be a loan made
by the Custodian to such
Series payable on demand and shall bear interest from the date
incurred at a rate per annum
(based on a 360-day year for the actual number of days involved)
equal to the Federal Funds
Rate plus l/2%, such rate to be adjusted on the effective date
of
any change in such Federal
Funds Rate but in no event to be less than 6% per annum, except
that any overdraft resulting
from an error by the Custodian shall bear no interest. Any such
overdraft or indebtedness
shall be reduced by an amount equal to the total of all amounts
due such Series which have
not been collected by the Custodian on behalf of such Series
when
due because of the failure
of the Custodian to make timely demand or presentment for
payment. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien
and
security interest in and
to any property at any time held by it for the benefit of such
Series or in which such
Series may have an interest which is then in the Custodian's
possession or control or in
possession or control of any third party acting in the
Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to
charge any such overdraft
or indebtedness together with interest due thereon against any
balance of account standing
to such Series' credit on the Custodian's books. For purposes
of
this Section 1 of
Article XIII, "overdraft" shall mean a negative Available
Balance.
2. The Fund will cause to be delivered
to the Custodian by any bank
(including, if the borrowing is pursuant to a separate
agreement,
the Custodian) from which
it borrows money for investment or for temporary or emergency
purposes using Securities in a
Series' portfolio as collateral for such borrowings, a notice or
undertaking in the form
currently employed by any such bank setting forth the amount
which such bank will loan to
the Fund against delivery of a stated amount of collateral. The
Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to each
such borrowing: (a) the
Series to which the borrowing relates; (b) the name of the bank;
(c) the amount and terms of
the borrowing, which may be set forth by incorporating by
reference an attached promissory
note, duly endorsed by the Fund, or other loan agreement; (d)
the
time and date, if known,
on which the loan is to be entered into; (e) the date on which
the loan becomes due and
payable; (f) the total amount payable to the Fund for the
account
of such Series on the
borrowing date; (g) the market value of Securities to be
delivered as collateral for such
loan, including the name of the issuer, the title and the number
of shares or the principal
amount of any particular Securities; and (h) a statement
specifying whether such loan is for
investment purposes or for temporary or emergency purposes and
that such loan is in
conformance with the Investment Company Act of 1940, as amended,
and the Fund's prospectus.
The Custodian shall deliver on the borrowing date specified in a
Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank of
the total amount of the loan payable, provided that the same
conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending
bank, keep such collateral in its possession, but such
collateral
shall be subject to all
rights therein given the lending bank by virtue of any
promissory
note or loan agreement.
The Custodian shall deliver such Securities as additional
collateral as may be specified in
a Certificate to collateralize further any transaction described
in this paragraph. The
Fund shall cause all Securities released from collateral status
to be returned directly to
the Custodian, and the Custodian shall receive from time to time
such return of collateral
as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the
Series, the name of the issuer, the title and number of shares
or
the principal amount of
any particular Securities to be delivered as collateral by the
Custodian, the Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the
terms
of its organization documents
and as disclosed in its most recent and currently effective
prospectus to lend the portfolio
Securities of a Series, within 24 hours after each loan of
portfolio Securities the Fund
shall deliver or cause to be delivered to the Custodian a
Certificate specifying with
respect to each such loan: (a) the Series to which the
Securities to be loaned are
specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the
number of shares or the principal amount loaned; (d) the date of
loan and delivery; (e) the
total amount to be delivered to the Custodian against the loan
of
the Securities, including
the amount of cash collateral and the premium, if any,
separately
identified; and (f) the
name of the broker, dealer or financial institution to which the
loan was made. The
Custodian shall deliver the Securities thus designated to the
broker, dealer or financial
institution to which the loan was made upon receipt of the total
amount designated as to be
delivered against the loan of Securities. The Custodian may
accept payment in connection
with a delivery otherwise than through the Book-Entry System or
Depository only in the form
of a certified or bank cashier's check payable to the order of
the Fund or the Custodian
drawn on New York Clearing House funds and may deliver
Securities
in accordance with the
customs prevailing among dealers in securities.
2. Promptly after each termination of
the loan of Securities by the Fund,
the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying
with respect to each such loan termination and return of
Securities: (a) the Series to
which the Securities to be returned are specifically allocated;
(b) the name of the issuer
and the title of the Securities to be returned; (c) the number
of
shares or the principal
amount to be returned; (d) the date of termination; (e) the
total
amount to be delivered by
the Custodian (including the cash collateral for such Securities
minus any offsetting
credits as described in said Certificate); and (f) the name of
the broker, dealer or
financial institution from which the Securities will be
returned.
The Custodian shall
receive all Securities returned from the broker, dealer, or
financial institution to which
such Securities were loaned and upon receipt thereof shall pay,
out of the moneys held for
the account of the Series specified in the Certificate, the
total
amount payable upon such
return of Securities as set forth in the Certificate.
ARTICLE XV
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed
to
employ, as sub-custodian for each Series' Foreign Securities (as
such term is defined in paragraph (c)(1)
of Rule 17f-5 under the Investment Company Act of 1940, as
amended) and other assets, the
foreign banking institutions and foreign securities depositories
and clearing agencies
designated on Schedule I hereto ("Foreign Sub-Custodians") to
carry out their respective
responsibilities in accordance with the terms of the
sub-custodian agreement between each
such Foreign Sub-Custodian and the Custodian, copies of which
have been previously delivered
to the Fund and receipt of which is hereby acknowledged (each
such agreement, a "Foreign
Sub-Custodian Agreement"). Upon receipt of a Certificate,
together with a certified
resolution substantially in the form attached as Exhibit E of
the
Fund's Board, the Fund may
designate any additional foreign sub-custodian with which the
Custodian has an agreement for
such entity to act as the Custodian's agent, as its
sub-custodian
and any such additional
foreign sub-custodian shall be deemed added to Schedule I. Upon
receipt of a Certificate
from the Fund, the Custodian shall cease the employment of any
one or more Foreign Sub-Custodians for maintaining custody of
the
Fund's assets and such Foreign Sub-Custodian shall
be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian
Agreement shall be substantially in the
form previously delivered to the Fund and will not be amended in
a way that materially
adversely affects a Series without the Fund's prior written
consent.
3. The Custodian shall identify on
its books as belonging to each
Series of the Fund the Foreign Securities of such Series held by
each Foreign Sub-Custodian.
At the election of the Fund, it shall be entitled to be
subrogated to the rights of the
Custodian with respect to any claims by the Fund or any Series
against a Foreign Sub-Custodian as a consequence of any loss,
damage, cost, expense, liability or claim sustained
or incurred by the Fund or any Series if and to the extent that
the Fund or such Series has
not been made whole for any such loss, damage, cost, expense,
liability or claim.
4. Upon request of the Fund, the
Custodian will, consistent with the
terms of the applicable Foreign Sub-Custodian Agreement, use
reasonable efforts to arrange
for the independent accountants of the Fund to be afforded
access
to the books and records
of any Foreign Sub-Custodian insofar as such books and records
relate to the performance of
such Foreign Sub-Custodian under its agreement with the
Custodian
on behalf of the Fund.
5. The Custodian will supply to the
Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other
assets of each Series held by
Foreign Sub-Custodians, including, but not limited to, an
identification of entities having
possession of each Series' Foreign Securities and other assets,
and advices or notifications
of any transfers of Foreign Securities to or from each custodial
account maintained by a
Foreign Sub-Custodian for the Custodian on behalf of the Series.
6. The Custodian shall furnish
annually to the Fund, as mutually agreed
upon, information concerning the Foreign Sub-Custodians employed
by the Custodian. Such
information shall be similar in kind and scope to that furnished
to the Fund in connection
with the Fund's initial approval of such Foreign Sub-Custodians
and, in any event, shall
include information pertaining to (i) the Foreign Custodians'
financial strength, general
reputation and standing in the countries in which they are
located and their ability to
provide the custodial services required, and (ii) whether the
Foreign Sub-Custodians would
provide a level of safeguards for safekeeping and custody of
securities not materially
different form those prevailing in the United States. The
Custodian shall monitor the
general operating performance of each Foreign Sub-Custodian, and
at least annually obtain
and review the annual financial report published by such Foreign
Sub-Custodian to determine
that it meets the financial criteria of an "Eligible Foreign
Custodian" under Rule 17f-5(c)(2)(i) or (ii). The Custodian
will
promptly inform the Fund in the event that the
Custodian learns that a Foreign Sub-Custodian no longer
satisfies
the financial criteria of
an "Eligible Foreign Custodian" under such Rule. The Custodian
agrees that it will use
reasonable care in monitoring compliance by each Foreign
Sub-Custodian with the terms of the
relevant Foreign Sub-Custodian Agreement and that if it learns
of
any breach of such Foreign
Sub-Custodian Agreement believed by the Custodian to have a
material adverse effect on the
Fund or any Series it will promptly notify the Fund of such
breach. The Custodian also
agrees to use reasonable and diligent efforts to enforce its
rights under the relevant
Foreign Sub-Custodian Agreement.
7. The Custodian shall transmit
promptly to the Fund all notices,
reports or other written information received pertaining to the
Fund's Foreign Securities,
including without limitation, notices of corporate action,
proxies and proxy solicitation
materials.
8. Notwithstanding any provision of
this Agreement to the contrary,
settlement and payment for securities received for the account
of
any Series and delivery of
securities maintained for the account of such Series may be
effected in accordance with the
customary or established securities trading or securities
processing practices and
procedures in the jurisdiction or market in which the
transaction
occurs, including, without
limitation, delivery of securities to the purchaser thereof or
to
a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the
expectation of receiving
later payment for such securities from such purchaser or dealer.
9. Notwithstanding any other
provision in this Agreement to the
contrary, with respect to any losses or damages arising out of
or
relating to any actions or
omissions of any Foreign Sub-Custodian the sole responsibility
and liability of the
Custodian shall be to take appropriate action at the Fund's
expense to recover such loss or
damage from the Foreign Sub-Custodian. It is expressly
understood and agreed that the
Custodian's sole responsibility and liability shall be limited
to
amounts so recovered from
the Foreign Sub-Custodian. It is agreed that the Fund shall be
entitled to amounts
recovered by the Custodian under indemnities afforded the
Custodian under the Foreign Sub-
Custodian Agreements to the extent the same relate to losses,
damages, costs, judgments or
expenses incurred by the Fund and within the scope of such
indemnities.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or
as
provided in Article XV, neither
the Custodian nor its nominee shall be liable for any loss or
damage, including counsel
fees, resulting from its action or omission to act or otherwise,
either hereunder or under
any Margin Account Agreement, except for any such loss or damage
arising out of its own
negligence or willful misconduct. The Custodian may, with
respect to questions of law
arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and
opinion of counsel to the Fund or of its own counsel, at the
expense of the Fund, and shall
be fully protected with respect to anything done or omitted by
it
in good faith in
conformity with such advice or opinion. The Custodian shall be
liable to the Fund for any
loss or damage resulting from the use of the Book-Entry System
or
any Depository arising by
reason of any negligence, misfeasance or willful misconduct on
the part of the Custodian or
any of its employees or agents.
2. Without limiting the generality of
the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable
for:
(a) The validity of the issue of any
Securities purchased, sold or
written by or for the Fund, the legality of the purchase, sale
or
writing thereof, or the
propriety of the amount paid or received therefor;
(b) The legality of the issue or sale
of
any of the Fund's Shares, or the
sufficiency of the amount to be received therefor;
(c) The legality of the redemption of
any of the Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or
payment of any dividend by the Fund;
(e) The legality of any borrowing by
the
Fund using Securities as collateral;
(f) The legality of any loan of
portfolio Securities pursuant to Article
XIV of this Agreement, nor shall the Custodian be under any duty
or obligation to see to it
that any cash collateral delivered to it by a broker, dealer or
financial institution or
held by it at any time as a result of such loan of portfolio
Securities of the Fund is
adequate collateral for the Fund against any loss it might
sustain as a result of such loan.
The Custodian specifically, but not by way of limitation, shall
not be under any duty or
obligation periodically to check or notify the Fund that the
amount of such cash collateral
held by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation
shall be the sole responsibility of the Fund. In addition, the
Custodian shall be under no
duty or obligation to see that any broker, dealer or financial
institution to which
portfolio Securities of the Fund are lent pursuant to Article
XIV
of this Agreement makes
payment to it of any dividends or interest which are payable to
or for the account of the
applicable Series of the Fund during the period of such loan or
at the termination of such
loan, provided, however, that the Custodian shall promptly
notify
the Fund in the event that
such dividends or interest are not paid and received when due;
or
(g) The sufficiency or value of any
amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or
Collateral Account in connection
with transactions by the Fund. In addition, the Custodian shall
be under no duty or
obligation to see that any broker, dealer, futures commission
merchant or Clearing Member
makes payment to the Fund of any variation margin payment or
similar payment which the Fund
may be entitled to receive from such broker, dealer, futures
commission merchant or Clearing
Member, to see that any payment received by the Custodian from
any broker, dealer, futures
commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to
notify the Fund of the Custodian's receipt or non-receipt of any
such payment; provided
however that the Custodian, upon the Fund's written request,
shall, as Custodian, demand
from any broker, dealer, futures commission merchant or Clearing
Member identified by the
Fund the payment of any variation margin payment or similar
payment that the Fund asserts it
is entitled to receive pursuant to the terms of a Margin Account
Agreement or otherwise from
such broker, dealer, futures commission merchant or Clearing
Member.
The Custodian shall not be liable for,
or considered to be the
Custodian of, any money, whether or not represented by any
check,
draft or other instrument
for the payment of money, received by it on behalf of the Fund
until the Custodian actually
receives and collects such money directly or by the final
crediting of the account
representing the Fund's interest at the Book-Entry System or the
Depository.
4. The Custodian shall have no
responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange,
offers, tenders, interest rate
changes or similar matters relating to Securities held in the
Depository, unless the
Custodian shall have actually received timely notice from the
Depository. In no event shall
the Custodian have any responsibility or liability for the
failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount
payable upon Securities deposited in the Depository which may
mature or be redeemed,
retired, called or otherwise become payable. However, upon
receipt of a Certificate from
the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make
a claim against the Depository on behalf of the Fund, except
that
the Custodian shall not be
under any obligation to appear in, prosecute or defend any
action, suit or proceeding in
respect to any Securities held by the Depository which in its
opinion may involve it in
expense or liability, unless indemnity satisfactory to it
against
all expense and liability
be furnished as often as may be required.
5. The Custodian shall not be under any
duty or obligation to take action
to effect collection of any amount due to the Fund from the
Transfer Agent of the Fund nor
to take any action to effect payment or distribution by the
Transfer Agent of the Fund of
any amount paid by the Custodian to the Transfer Agent of the
Fund in accordance with this
Agreement.
6. The Custodian shall not be under any
duty or obligation to take action
to effect collection of any amount, if the Securities upon which
such amount is payable are
in default, or if payment is refused after due demand or
presentation, unless and until (i)
it shall be directed to take such action by a Certificate and
(ii) it shall be assured to
its satisfaction of reimbursement of its costs and expenses in
connection with any such
action.
7. The Custodian shall not be under any
duty or obligation to ascertain
whether any Securities at any time delivered to or held by it
for
the account of the Fund
are such as properly may be held by the Fund under the
provisions
of its organization
documents.
8. The Custodian shall be entitled to
receive and the Fund agrees to pay
to the Custodian all reasonable out-of-pocket expenses and such
compensation and fees as are
specified on Schedule A hereto. The Custodian shall not deem
amounts payable in respect of
foreign custodial services to be out-of-pocket expenses, it
being
the parties' intention
that all fees for such services shall be as set forth on
Schedule
B hereto and shall be
provided for the term of this Agreement without any automatic or
unilateral increase. The
Custodian may charge such compensation and any expenses incurred
by the Custodian in the
performance of its duties pursuant to such agreement against any
money held by it for the
account of the Fund. The Custodian shall also be entitled to
charge against any money held
by it for the account of the Fund the amount of any loss,
damage,
liability or expense,
including counsel fees, for which it shall be entitled to
reimbursement under the provisions
of this Agreement. The expenses which the Custodian may charge
against the account of the
Fund include, but are not limited to, the expenses of
Sub-Custodians and foreign branches of
the Custodian incurred in settling outside of New York City
transactions involving the
purchase and sale of Securities of the Fund.
9. The Custodian shall be entitled to
rely upon any Certificate, notice
or other instrument in writing received by the Custodian and
reasonably believed by the
Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral
Instructions and any Written Instructions actually received by
the Custodian pursuant to
Article IV or XI hereof. The Fund agrees to forward to the
Custodian a Certificate or
facsimile thereof, confirming such Oral Instructions or Written
Instructions in such manner
so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand
delivery, telex or otherwise, by the close of business of the
same day that such Oral
Instructions or Written Instructions are given to the Custodian.
The Fund agrees that the
fact that such confirming instructions are not received by the
Custodian shall in no way
affect the validity of the transactions or enforceability of the
transactions hereby
authorized by the Fund. The Fund agrees that the Custodian
shall
incur no liability to the
Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such
transactions, provided such instructions reasonably appear to
have been received from an
Authorized Person.
10. The Custodian shall be entitled to
rely upon any instrument,
instruction or notice received by the Custodian and reasonably
believed by the Custodian to
be given in accordance with the terms and conditions of any
Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to
inquire into, and shall not be liable for, the accuracy of any
statements or representations
contained in any such instrument or other notice including,
without limitation, any
specification of any amount to be paid to a broker, dealer,
futures commission merchant or Clearing Member.
11. The books and records pertaining to
the Fund which are in the
possession of the Custodian shall be the property of the Fund.
Such books and records shall
be prepared and maintained as required by the Investment Company
Act of 1940, as amended,
and other applicable securities laws and rules and regulations.
The Fund, or the Fund's
authorized representatives, shall have access to such books and
records during the
Custodian's normal business hours. Upon the reasonable request
of the Fund, copies of any
such books and records shall be provided by the Custodian to the
Fund or the Fund's
authorized representative at the Fund's expense.
12. The Custodian shall provide the
Fund
with any report obtained by the
Custodian on the system of internal accounting control of the
Book-Entry System or the
Depository, or O.C.C., and with such reports on its own systems
of internal accounting
control as the Fund may reasonably request from time to time.
13. The Fund agrees to indemnify the
Custodian against and save the
Custodian harmless from all liability, claims, losses and
demands
whatsoever, including
attorney's fees, howsoever arising or incurred because of or in
connection with the
Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article XII as part
of any check redemption privilege program of the Fund, except
for
any such liability, claim,
loss and demand arising out of the Custodian's own negligence or
willful misconduct.
14. Subject to the foregoing provisions
of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to
such Securities, and
arrange for payments to be made and received by the Custodian in
accordance with the customs
prevailing from time to time among brokers or dealers in such
Securities.
15. The Custodian shall have no duties
or responsibilities whatsoever
except such duties and responsibilities as are specifically set
forth in this Agreement, and
no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XVII
TERMINATION
1. (a) Any termination may be
effected only by the terminating party
giving to the other party a notice in writing specifying the
date
of such termination, which
shall be not less than two hundred seventy (270) days after the
date of giving of such
notice.
(b) The Fund may at any time
terminate this Agreement if the
Custodian has materially breached its obligations under this
Agreement and such breach has
remained uncured for a period of thirty days after the
Custodian's receipt from the Fund of
written notice specifying such breach.
(c) Either party, immediately
upon written notice to the other
party, may terminate this Agreement upon the Merger or
Bankruptcy
of the other party.
In the event notice of termination is
given by the Fund, it shall be
accompanied by a copy of a resolution of the Fund's Board,
certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and
designating a successor
custodian or custodians, each of which shall be a bank or trust
company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In
the event notice of
termination is given by the Custodian, the Fund shall, on or
before the termination date,
deliver to the Custodian a copy of a resolution of its Board,
certified by the Secretary or
any Assistant Secretary, designating a successor custodian or
custodians. In the absence of
such designation by the Fund, the Custodian may designate a
successor custodian which shall
be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and
undivided profits. Upon the date set forth in such notice, this
Agreement shall terminate
and the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian,
on that date deliver directly to the successor custodian all
Securities and moneys then
owned by the Fund and held by it as Custodian, after deducting
all fees, expenses and other
amounts for the payment or reimbursement of which it shall then
be entitled.
2. If a successor custodian is not
designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund
shall, upon the date
specified in the notice of termination of this Agreement and
upon
the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which
cannot be delivered to the Fund) and moneys then owned by the
Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all
duties and responsibilities
pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System, in any Depository or
by
a Clearing Member which cannot be delivered to the
Fund, to hold such Securities hereunder in accordance with this
Agreement.
ARTICLE XVIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
setting forth the names
of the present Authorized Persons. The Fund agrees to furnish
to
the Custodian a new
Certificate in similar form in the event that any such present
Authorized Person ceases to
be an Authorized Person or in the event that other or additional
Authorized Persons are
elected or appointed. Until such new Certificate shall be
received, the Custodian shall be
fully protected in acting under the provisions of this Agreement
upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the
last delivered Certificate.
2. Annexed hereto as Appendix B is a
Certificate signed by two of the
present Officers of the Fund setting forth the names of the
present Officers of the Fund.
The Fund agrees to furnish to the Custodian a new Certificate in
similar form in the event
any such present Officer ceases to be an Officer of the Fund, or
in the event that other or
additional Officers are elected or appointed. Until such new
Certificate shall be received,
the Custodian shall be fully protected in acting under the
provisions of this Agreement upon
the signatures of the Officers as set forth in the last
delivered
Certificate.
3. Any notice or other instrument in
writing, authorized or required by
this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 110
Washington Street, 13th Floor,
New York, New York 10286, or at such other place as the
Custodian
may from time to time
designate in writing.
4. Any notice or other instrument in
writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently
given if addressed to the Fund
and mailed or delivered to it at its offices at 125 West 55th
Street, New York, New York
10019, or at such other place as the Fund may from time to time
designate in writing.
5. This Agreement may not be amended or
modified in any manner except by
a written agreement executed by both parties with the same
formality as this Agreement and
approved by a resolution of the Fund's Board.
6. This Agreement shall extend to and
shall be binding upon the parties
hereto, and their respective successors and assigns; provided,
however, that this Agreement
shall not be assignable by the Fund without the written consent
of the Custodian, or by the
Custodian without the written consent of the Fund, authorized or
approved by a resolution of
its Board.
7. This Agreement shall be construed in
accordance with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall,
together, constitute only one instrument.
9. This Agreement has been executed on
behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of
the Fund. The obligations
of this Agreement shall only be binding upon the assets and
property of the Fund and shall
not be binding upon any Board member, officer or shareholder of
the Fund individually.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be
executed by their respective Officers, thereunto duly
authorized,
as of the day and year
first above written.
PRAIRIE INSTITUTIONAL FUNDS
By:
Attest:
THE BANK OF NEW YORK
By:
Attest:
Appendix A
AUTHORIZED SIGNATORIES
Primary Funds Service Corp.
Putnam Investor Services, Inc.
Putnam Fiduciary Trust Company
Cathy Alessi
Maryellen Cartwright
Joy Daoulaband
Donna Gorman
Timothy Griesmer
Maureen Hansen
Shari MacGray
Julie Malloy
Michelle Stuckey
Concord Financial Group, Inc.
Alex Bogaenko
Emanuel Bratton
Karen Collins
Marlea Durand
Carol Hartmann
Lester Lay
Wendy Mui
Joy Young
First Chicago Investment Management Company
Mary Engen
Steve Haldi
Frank Hemeter
Terrall Janeway
Mark Quinn
Appendix B
The undersigned Officers of the Fund do hereby certify
that
the following individuals,
whose specimen signatures are on file with The Bank of New York,
have been duly elected or
appointed by the Fund's Board to the position set forth opposite
their names and have qualified therefor:
Name Position
Joseph F. Kissel President
Ann E. Bergin Vice President
Stephen A. Smith Vice President
Richard A. Fabietti Treasurer
Martin G. Flanigan Assistant Treasurer
Domenick Pugliese Secretary
Anne E. Bergin, Domenick Pugliese,
Vice President Secretary
Appendix C
The following are designated publications for purposes of
paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
The New York Times
Standard & Poor's Called Bond Record
The Wall Street Journal
Appendix D
Name of Series
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
Schedule A
The fees payable to the Custodian with
respect to securities held in domestic custody are annexed
hereto.
<TABLE>
<CAPTION>
SCHEDULE 1
Annual Fee
as a
Percentage
of Average
Daily Net Reapproval Reapproval
Name of Fund or Series Assets Date Date
<S> <C> <C> <C>
Cash Management Fund .15% December 31, 1996 December 31st
Municipal Cash Management Fund .15% December 31, 1996 December 31st
Treasury Prime Cash Management
Fund .15% December 31, 1996 December 31st
U.S. Government Securities
Cash Management Fund .15% December 31, 1996 December 31st
</TABLE>
DOMESTIC CUSTODIAN FEE SCHEDULE
CONCORD FINANCIAL GROUP, INC.
FOR
PRAIRIE FUND FAMILY
PER PORTFOLIO/PER ANNUM
Safekeeping/Income Collection/All Reporting, DTC-ID Affirmations
2 basis points per annum on the first $50MM of each
portfolio's net assets.
1 basis point on the next $250MM.
1/2 of a basis point on the excess.
Security Transaction Charges/Paydowns
$10 DTC/FRB/PTC
$20 Physicals, options, and futures
$40 Euro Dollar C/Ds
Miscellaneous Transaction Charges
$ 8 Federal Reserve wires not related to securities
transactions, and official check requests for payment of
Fund expenses.
Earnings Credit on Balances/Interest on Overdrafts
We will provide an earnings credit to each Fund on 100% of the
daily available balance in the domestic custodian account after
reduction for Federal Reserve requirements, computed at the 90-
day T-bill rate on the day of the balance.
Overdrafts, excluding bank errors, will cause a reduction of the
earnings credit computed at 1% above the Federal Funds rate on
the day of the overdraft.
FDIC charges shall be assessed on the ledger balance as of the
last business day of the quarter computed at the rate assessed
by the FDIC. The charges shall be netted against the earnings
credits or overdraft charges.
Credits and debits will be accumulated daily and offset monthly
against the Bank's domestic custodian fees. To the extent a net
debit is accumulated, each Fund will be billed for the expense.
To the extent a net earnings credit is generated, such excess
credit can be carried forward to the next succeeding month.
However, no earnings credit will be carried forward after year-
end.
<PAGE>
DOMESTIC CUSTODIAN FEE SCHEDULE
CONCORD FINANCIAL GROUP, INC.
FOR
PRAIRIE FUND FAMILY
PER PORTFOLIO/PER ANNUM
Additional Charges
These charges traditionally include, but are not limited to,
Federal Reserve charges for security transactions, postage and
insurance on physical transfer items, etc.
Billing Cycle
The above fees are billed monthly.
Concord Financial Group, Inc. The Bank of New York
Approved by:_________________ Submitted by:_______________
Ira R. Rosner
Vice President
Title:________________________
Date:____________________ Date:__________________
<PAGE>
FUND ACCOUNTING AND PORTFOLIO PRICING FEE SCHEDULE
CONCORD FINANCIAL GROUP, INC.
FOR
PRAIRIE FUND FAMILY
Fund Accounting and Portfolio Pricing
$35,000 per annum, per portfolio
Additional Charges
The cost of obtaining prices for daily security evaluations and
mark to market quotations for money market funds will be in
addition to the stated fees.
Multiple Class Charges
$300 per month for each additional class, per portfolio.
Billing Cycle
The above fees will be billed on a monthly basis.
Concord Financial Group, Inc. The Bank of New York
Approved by:_________________ Submitted by:_______________
Ira R. Rosner
Vice President
Title:________________________
Date:____________________ Date:__________________
<PAGE>
SCHEDULE B
The fees payable to the Custodian with respect to
securities held in foreign custody are annexed hereto.
<PAGE>
THE BANK OF NEW YORK
GLOBAL CUSTODY FEE SCHEDULE
17f-5 QUALIFIED SUB-CUSTODIANS
PRAIRIE FUNDS
<TABLE>
<CAPTION>
COUNTRIES GLOBAL
SAFEKEEPING FEE Transaction Fee
(in basis points) (U.S. Dollars)
<S> <C> <C>
Argentina 34.50 90
Australia 4.00 70
Austria 6.00 85
Bangladesh 50.00 185
Belgium (reg. bds) 2.50 85
Belgium (equities and Coupon bonds) 4.00 85
Brazil 55.00 85
Canada 2.00 17
Chile 80.00 100
China 31.00 60
Colombia 75.00 125
Czech Republic 23.00 50
Denmark 3.50 105
Euromarket 3.00 15
Finland 12.50 70
France 5.00 85
Germany 2.00 35
Greece 37.50 165
Hong Kong 11.00 90
Hungary 50.00 150
India 55.00 175
Indonesia 13.50 140
Ireland 3.50 50
Israel 75.00 55
Italy 9.00 60
Japan (bonds) 4.00 10
Japan (equities) 3.00 10
Luxembourg 8.00 80
Malaysia 15.00 140
Mexico (bonds) 8.00 70
Mexico (equities) 15.00 70
Netherlands 6.00 12
New Zealand 3.50 85
Norway 2.00 85
Pakistan 40.00 165
Peru 75.00 190
Philippines 14.50 140
Poland 60.00 165
Portugal 31.00 240
Singapore 15.00 135
South Africa 1.50 35
South Korea 13.00 25
Spain 6.00 30
Sri Lanka 20.00 70
Sweden 3.00 60
Switzerland 3.50 125
Taiwan 17.00 135
Thailand 15.00 85
Turkey 30.00 100
United Kingdom 3.00 35
United Kingdom (gilts) 4.00 55
Uruguay 55.00 85
Venezuela 41.50 75
* Fee expressed in basis points per annum is calculated
based upon month end market value.
</TABLE>
Minimum fee for use of our global network $500 per month, per
portfolio
Minimum charges imposed by Agent Banks/Local Administrators
Chile - USD 5,000 per annum.
Colombia - USD 600 per month.
Additional Charges
Charges incurred by The Bank of New York for local taxes, stamp
duties or other local duties and assessments, stock exchange
fees, postage and insurance for shipping, extraordinary
telecommunication fees or other unusual expenses which are
unique to a country in which our client is investing will be in
addition to the stated fees.
Exhibit 9(a)
ADMINISTRATION AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
January 1, 1995
First Chicago Investment
Management Company
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series, if any, named on Schedule 1 hereto, as
such Schedule may be revised
from time to time (each, a "Series"), herewith confirms its
agreement with you as follows:
The Fund desires to employ its capital by
investing and reinvesting
the same in investments of the type and in accordance with the
limitations specified in its charter documents and in its
Prospectus and Statement of
Additional Information as from time to time in effect, copies of
which have been or will be submitted to you, and in such manner
and to such extent as from
time to time may be approved by the Fund's Board. The Fund
desires to employ you to act as its administrator.
In this connection it is understood that from
time to time you will
employ or associate with itself such person or persons as you
may believe to be
particularly fitted to assist it in the performance of this
Agreement. Such
person or persons may be officers or employees who are employed
by both you and
the Fund. The compensation of such person or persons shall be
paid by you and
no obligation may be incurred on the Fund's behalf in any such
respect. We
have discussed and concur in your employing on
this basis Concord Holding Corporation (the
"Sub-Administrator").
Pursuant to this agreement and subject to the
supervision and
control of the Fund's Board, you will assist in supervising all
aspects of the
Fund's operations, except investment management of the Series'
portfolios. It
is understood that, pursuant to this Agreement, you shall not
act and shall not
be required to act as an investment adviser or have any
authority to supervise
the investment or reinvestment of the cash, securities or other
property
comprising the Series' assets or to determine what securities or
other property may be purchased or sold by the Fund.
You will supply office facilities (which may be
in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and
administrative services, and stationery and office supplies;
prepare reports to each Series' stockholders, tax returns,
reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate
the net asset value of each Series' shares; and generally assist
in all aspects of the Fund's operations.
You shall exercise your best judgment in
rendering the services to
be provided to the Fund hereunder and the Fund agrees as an
inducement to your
undertaking the same that neither you nor the Sub-Administrator
shall be liable
hereunder for any error of judgment or mistake of law or for any
loss suffered
by one or more Series, provided that nothing herein shall be
deemed to protect
or purport to protect you or the Sub-Administrator against any
liability to the
Fund or a Series or to its security holders to which you would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard
of your obligations and duties hereunder, or to which the
Sub-Administrator
would otherwise be subject by reason of willful misfeasance, bad
faith or gross
negligence in the performance of its duties under the agreement
by which you
engage it (the "Master Sub-Administration Agreement"), or by
reason of its
reckless disregard of its obligations and duties under such
agreement.
In consideration of the services rendered
pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee
at the rate set forth opposite each Series' name on Schedule 1
hereto. Net
asset value shall be computed on such days and at such time or
times as
described in the Fund's then-current Prospectus and Statement of
Additional
Information. The fee for the period from the date of the
commencement of the
public sale of a Series' shares to the end of the month during
which such sale
shall have been commenced shall be pro-rated according to the
proportion which
such period bears to the full monthly period, and upon any
termination of this
Agreement before the end of any month, the fee for such part of
a month shall
be pro-rated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to
you, the value of each Series' net assets shall be computed in
the manner specified in the Fund's
charter documents for the computation of the value of each
Series' net assets.
You will bear all expenses in connection with the performance
of your services under this Agreement and will pay all fees of
the Sub-Administrator in connection with its duties in respect
of the Series. All
other expenses to be incurred in the operation of the Fund will
be borne by the
Fund, except to the extent specifically assumed by you. The
expenses to be
borne by the Fund include, without limitation, the following:
organizational
costs, taxes, interest, loan commitment fees, interest and
distributions paid
on securities sold short, brokerage fees and commissions, if
any, fees of Board
members, Securities and Exchange Commission fees and state Blue
Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend
disbursing agents' fees, certain insurance premiums, industry
association fees,
outside auditing and legal expenses, costs of independent
pricing services,
costs of maintaining the Series' existence, costs attributable
to investor
services (including, without limitation, telephone and personnel
expenses), costs of preparing and printing prospectuses and
statements of additional
information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and
corporate meetings, and any extraordinary expenses.
The Fund understands that, from time to time
hereafter, you may act
as administrator to one or more other investment companies and
fiduciary or
other managed accounts, and the Fund has no objection to your so
acting. In
addition, it is understood that the persons employed by you to
assist in the
performance of your duties hereunder will not devote their full
time to such
service and nothing contained herein shall be deemed to limit or
restrict your
right or the right of any of your affiliates to engage in and
devote time and
attention to other businesses or to render services of whatever
kind or nature.
Neither you nor the Sub-Administrator shall be
liable for any error
of judgment or mistake of law or for any loss suffered by the
Fund in connection with the matters to which this Agreement or
the Master Sub-Administration Agreement relates, except, in the
case of you, for a loss
resulting from willful misfeasance, bad faith or gross
negligence on your part
in the performance of your duties or from reckless disregard by
you of your obligations and duties under this Agreement and, in
the case of the Sub-Administrator, for a loss resulting from
willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or
from reckless
disregard by it of its obligations and duties under the Master
Sub-Administration Agreement. Any person, even though also your
officer, Board
member, partner, employee or agent, who may be or become an
officer, Board
member, partner, employee or agent of the Fund, shall be deemed,
when rendering
services to the Fund or acting on any business of the Fund, to
be rendering
such services to or acting solely for the Fund and not as your
officer, Board
member, partner, employee, or agent or one under your control or
direction even though paid by you.
As to each Series, this Agreement shall continue until the
date set
forth opposite such Series' name on Schedule 1 hereto (the
"Reapproved Date"),
and thereafter shall continue automatically for successive
annual
periods ending on the day of each year set forth opposite the
Series' name on Schedule
1 hereto (the "Reapproval Day"), provided such continuance is
specifically
approved at least annually by (i) the Fund's Board or (ii) vote
of a majority
(as defined in the Investment Company Act of 1940, as amended)
of such Series'
outstanding voting securities, provided that in either event its
continuance
also is approved by a majority of the Fund's Board members who
are not "interested persons" (as defined in said Act) of any
party to this Agreement,
by vote cast in person at a meeting called for the purpose of
voting on such
approval. As to each Series, after the Reapproval Date, this
Agreement is
terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote
of holders of a majority of such Series' shares or, upon not
less than 90 days' notice, by you. This Agreement also will
terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in
said Act).
The Fund is agreeing to the provisions of this
Agreement that limit
the Sub-Administrator's liability and other provisions relating
to the Sub-Administrator so as to induce the Sub-Administrator
to enter into the Master
Sub-Administration Agreement with you and to perform its
obligations
thereunder. The Sub-Administrator is expressly made a third
party beneficiary
of this Agreement with rights as respects the Fund to the same
extent as if it had been a party hereto.
The Fund recognizes that from time to time your
directors, officers
and employees may serve as directors, trustees, partners,
officers and
employees of other corporations, business trusts, partnerships
or other entities (including other investment companies) and
that such other entities
may include the name "Prairie" as part of their name, and that
your corporation
or its affiliates may enter into administration or other
agreements with such
other entities. If you cease to act as the Fund's
administrator, the Fund
agrees that, at your request, the Fund will take all necessary
action to change
the name of the Fund to a name not including "Prairie" in any
form or combination of words.
This Agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his capacity as an
officer of the Fund. The
obligations of this Agreement shall only be binding upon the
assets and
property of the Fund and shall not be binding upon any Board
member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the
enclosed copy hereof.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:
Accepted:
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:
<PAGE>
Exhibit 9(b)
MASTER SUB-ADMINISTRATION AGREEMENT
This Master Sub-Administration
Agreement is made as of this 31st day of January 1995 between
FIRST CHICAGO INVESTMENT MANAGEMENT COMPANY, a Delaware
corporation, with a principal place
of business at Three First National Plaza, Chicago, Illinois
60670 (herein called the "FCIMCO"), and CONCORD HOLDING
CORPORATION, a Delaware corporation
with a principal place of business at 125 West 55th Street New
York, NY 10019 (herein called "Concord").
WHEREAS, FCIMCO serves as
investment adviser and administrator to the Prairie Funds,
Prairie Institutional Funds, Prairie Intermediate Bond Fund,
Prairie Municipal Bond
Fund, First Prairie Money Market Fund, First Prairie Municipal
Money Market Fund and First Prairie Diversified Asset Fund
(individually each a "Fund" and
collectively, the "Funds"), each an open-end, management
investment company registered under the Investment Company Act of
1940, as amended, and consisting
of the investment portfolios set forth on Schedule I hereto, as
such Schedule may be revised from time to time (individually,
each a "Portfolio" and collectively, the "Portfolios"); and
WHEREAS, pursuant to the terms of
an administration agreement between FCIMCO and each Fund
(collectively the
"Administration Agreement"), FCIMCO may employ Concord to assist
it in performing its obligations under the Administration
Agreement; and
WHEREAS, each Fund offers for
sale shares of beneficial interest of its Portfolio(s), with or
without par value as may be determined from time to time by each
Fund's Board of Trustees (herein collectively called "Shares");
and
WHEREAS, pursuant to a Distribution Agreement (collectively the
"Distribution Agreement") between each
Fund and Concord Financial Group, Inc. ("CFG"), each Fund has
retained CFG as its distributor to provide for the sale and
distribution of the Shares; and
WHEREAS, FCIMCO desires to employ
Concord to assist it in performing its obligations pursuant to
the Administration Agreement as more fully described herein, and
Concord is willing
to render such services under the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration
of the foregoing, and for other good and valuable consideration,
the sufficiency and receipt whereof are hereby acknowledged, the
parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
FCIMCO has delivered to Concord
copies of each of the following documents and will deliver to it
all future amendments and supplements thereto, if any:
(a) The Funds'
Declarations of Trust and all amendments thereto (each such
Declaration of Trust, as presently in effect and as it shall from
time to time be amended
(herein called collectively the "Declaration of Trust");
(b) The by-laws of each Fund, if any (such by-laws
as presently in effect and as they shall
from time to time be amended, herein called the "By-Laws");
(c) Resolutions of the Board of Trustees of each
Fund authorizing the execution and delivery of
this Agreement;
(d) Each Fund's most recent Registration Statement
under the Securities Act of 1933, as amended
(the "1933 Act"), and/or the Investment Company Act of 1940, as
amended (the
"1940 Act"), on Form N-1A, Form N-14 or other applicable form, as
filed with
the Securities and Exchange Commission (the "Commission")
relating to the Shares and any amendment thereto;
(e) Notification of registration of each Fund under
the 1940 Act on Form N-8A as filed with the
Commission; and
(f) Prospectuses and statements of additional
information of each Fund with respect to each of
the Portfolios (such prospectuses and statements of additional
information, as
presently in effect and as they shall from time to time be
amended and
supplemented, herein called individually the "Prospectus" and
collectively the "Prospectuses").
(g) The Administration Agreement.
II. SUB-ADMINISTRATION SERVICES
1. Engagement as Sub-Administrator. FCIMCO hereby engages
Concord to serve as Sub-Administrator
for each of the Portfolios, and Concord hereby accepts such
appointment, under the terms and conditions set forth herein.
FCIMCO understands and agrees that
Concord currently acts and will in the future continue to act as
administrator or sub-administrator of various investment
companies which may be unaffiliated
with the Funds and as fiduciary of other managed accounts. In
addition, it is understood that the persons employed by Concord
to assist in the performance of
its duties hereunder will not devote their full time to such
services and may
in fact devote a substantial portion of their time in the
performance of duties
relating to Concord's provision of services to other investment
companies or fiduciary accounts and nothing herein shall be
deemed to limit or restrict the
right of Concord, its affiliates, and their respective employees
to engage in and devote time and attention to other businesses or
to render services of
whatever kind or nature to Concord's other clients.
2. Services and Duties.
(a) As Sub-Administrator, and subject to the
supervision and control of FCIMCO,
Concord will provide those facilities, equipment, statistical and
research
data, clerical services, internal compliance services relating to
legal matters
(and personnel to carry out such administrative services) as are
specifically
described in paragraph (b) of this paragraph 2 below. FCIMCO
represents and
warrants to Concord that the Administration Agreement sets forth
all of its
duties and obligations to the Funds as administrator and that it
has entered
into no other agreements or understandings with the Funds with
respect to the
matters set forth therein. Concord represents that the services
to be
performed by it pursuant to this Agreement are all the
administrative services
necessary to permit FCIMCO to discharge fully its obligations to
each Fund
under the Administration Agreement (collectively the "Necessary
Services").
Concord agrees to amend this Agreement to add any additional
services legally
necessary in order for FCIMCO to perform its obligations under
the
Administration Agreement, and such additional services shall be
included as
Necessary Services and shall be provided at no additional cost.
FCIMCO
understands and agrees that from time to time Concord may develop
and/or
provide to third parties services which may be different from, or
in addition
to, the Necessary Services. Concord is not obligated to provide
FCIMCO or the
Funds with any services which are not Necessary Services without
further
agreement as to services and additional cost. Concord represents
that it has
sufficient personnel and experience to perform the services to be
performed by
it hereunder, and agrees to perform such services in accordance
with industry standards for mutual fund administrators.
(b) Concord shall provide the following services
teach Fund and its Portfolios.
(i) Advertising and Sales Literature Support
1. Review and approve for all applicable Securities and
Exchange Commission, NASD (defined below) and all state
compliance requirements all advertising and sales material
prepared by the Fund or its distributor. It is understood
and agreed that Concord shall not be responsible for the
truth or accuracy of any statements contained in material which
was not prepared by Concord.
2. File all advertising and sales material with the National
Association of Securities Dealers, Inc. (NASD).
3. Maintain and update the Fund's advertising and sales
literature files.
4. Update advertising logs for all Portfolios.
5. Retain final copies of advertising and sales materials
for the Fund's files.
6. Respond to all NASD or other regulator comments and provide
any necessary contact person for interface with NASD/other
regulator.
(ii) Fund Officers
1. Provide officers to the Fund
(iii) Fund Compliance
1. Maintain files of all Board and shareholder meeting
materials.
2. Prepare quarterly Board meeting responsibility chart.
3. Maintain annual filing calendar and follow up with
responsible parties.
4. Review, as requested, investment adviser's reports to be
submitted to the Board pursuant to applicable Fund procedures.
5. Monitor compliance by the Fund with various conditions imposed
by exemptive orders relating to multiple classes of shares.
6. Quarterly review of securities transactions by persons
designated as access persons by the investment adviser for
purposes of determining compliance with Fund's Code of
Ethics.
7. Review monthly Prospectus compliance reports prepared by the
investment adviser.
8. Negotiate D&O/E&O insurance matters and annual renewals on
behalf of the Fund.
9. Monitor fidelity bond coverage for the Fund.
10. Maintain insurance files for the Fund.
11. Review Prospectuses, as prepared by counsel to the Fund.
12. Peview periodic supplements to Prospectuses, as prepared by
counsel to the Fund.
13. Prepare operating manual for the Fund.
14. Prepare Board agendas and Board books.
15. Review material and reports prepared by Fund auditors, and
material prepared by counsel to the Fund which is submitted
to Concord.
(iv) Blue Sky
1. Register the Shares with
appropriate state blue sky
authorities.
2. Work with counsel to the Fund to
address comments during the
registration process.
3. Obtain all sales permits required
by relevant state authorities in
order to permit the sale of
Shares in the state.
4. Amend and renew sales permits
obtained pursuant to paragraph
2(b)(iv)(3) as may be required
from time to time.
5. Monitor the sale of Shares in
individual states on a daily
basis.
6. File all registration statements,
Prospectuses, proxy statements,
Rule 24f-2 Notices and other Fund
reports and documents as required
by states' law.
7. Maintain Fund blue sky calendars.
8. Respond to all blue sky audit and
examination issues.
(v) Corporate Counsel
1. Provide support for
administrative functions
described in paragraph (b)(i)
above.
2. Review Fund distribution
agreements.
3. Review Fund administration
agreements.
4. Review Prospectuses, amendments,
and proxy statements prepared by
counsel to the Fund.
5. Provide, as needed, support to
blue sky compliance, i.e., assist
in responding to comment letters,
on Fund compliance and as
requested by project managers.
6. Maintain files of Prospectuses,
Fund contracts, Fund proxies and
other similar Fund documents.
7. Attend Board and Shareholder
Meetings, as requested by the
Fund or FCIMCO.
8. Prepare resolutions for Board
Meetings.
9. Prepare and run shareholder
meetings.
10. Prepare and maintain corporate
records of the Fund (minute book,
etc.)
11. Assist in preparing for and
complying with any regulatory
examinations of or involving the
Fund.
(vi) Fund Accounting
A. Treasurer
1. Perform the functions of Fund
Treasurer.
B. Accounts Payable Functions
2. Review invoices directed to the
Fund and authorize payments as
appropriate.
3. Prepare and file form 1099-MISC
for Fund expense payments,
including Trustees' fees.
C. Oversight Functions: Oversight
of required books and records for
the Fund, as maintained by Bank
of New York (BONY), or its
successor, and oversight and
maintenance of any required books
and records for the Fund as
required by Rule 31(a)-1 of the
1940 Act which are not maintained
by BONY.
4. Daily review of net asset value
and dividend calculations.
5. Review of daily ledgers and trial
balances.
6. Review of monthly closing
packages and related reports.
7. Daily net asset value calculation
for all Portfolios.
8. Compliance with Fund and
investment adviser policies on
valuing (pricing) all Fund
assets.
D. Reporting Functions:
9. Calculate dividends, as required
(daily for money market funds,
etc.).
10. Calculate fee-based expenses,
such as advisory fees,
administration fees and 12b-1
fees.
11. Monitor expense accruals for
adequacy, and make adjustments as
needed.
l2. Prepare the following financial
reports, as required:
*Annual report to shareholders
*Semi-annual report to shareholders
*Quarterly reports to Board of Trustees
*Monthly portfolios of investments
13. Prepare or assist in preparation
of the following regulatory
filings:
*Form N-SAR (prepare)
*Form N-1A (assist)
*Proxy materials (assist)
14. Prepare IRS Qualification Tests.
*Income diversification
*Asset diversification
15. Prepare or oversee the
preparation of the following
performance calculations:
*Total return
*SEC yield
*Distribution yield
*Total return at varying sales charges
16. Respond to surveys from industry
publications including, but not
limited to Lipper, Donoghues,
Moringstar, Dalbar, Investment
Company Institute, Standard &
Poor's
17. Prepare (or assist Fund auditors
in preparing) and file tax
returns, including, but not
limited to: Form 1120-RIC, state
and local filings, excise tax
returns.
18. Identify and track book-tax
differences, including, but not
limited to: taxability of
dividends, income by state,
income by source (US Treasury,
Govt Agency, etc.), dividends
received, deduction information,
Alternative Minimum Tax
information.
(vii) Operations
A. Administration
1. Assist with management/implementation of DDA
Sweep.
2. Coordinate use of outside vendors
by Fund.
3. Provide a designated project
manager for routine ongoing
projects.
4. Coordinate the printing and
distribution of Prospectuses,
annual and semi-annual reports.
B. Systems
5. If specifically agreed between
Concord and FCIMCO from time to
time, research and analysis on
specific technical and systems
needs of FCIMCO and the Fund.
Such research and analysis may
include, feasibility studies, the
creation of systems
specifications and implementation
plans, design and testing, and
support in implementation. In
addition to the compensation paid
to Concord under paragraph 5
hereof, such support shall be
billed at a rate of $1,500 per
day plus expenses for systems
support personnel.
(viii) Relationship Manager
1. Provide a designated individual
to serve as a primary contact for
FCIMCO and the Fund on matters
relating to this Agreement.
(ix) Consultative Service
1. Provide limited internal asset
gathering consulting through the
relationship manager, as
supported by the project manager.
2. Provide internal sale and
educational support relating to
DDA sweep.
(c) In performing
its duties herein, Concord warrants that it will act in
conformity with the
Declaration of Trust, By-Laws, and Prospectuses and in accordance
with the
instructions and directions of FCIMCO and the Board of Trustees
of each Fund
and agrees and warrants that it will conform to and comply with
the
requirements of the 1940 Act and all other applicable federal or
state laws and regulations.
(d) Where Concord
is required to review or approve any document, it shall maintain
a record of its approval.
3. Subcontractors. It is understood that Concord may
from time to time employ or
associate with itself such person or persons ("Subcontractors")
as Concord may believe to be particularly fitted to assist in the
performance of this
Agreement; provided, however, that the compensation of such
Subcontractors
shall be paid by Concord and that Concord shall be as fully
responsible to the
Funds and FCIMCO for the acts and omissions of any Subcontractor
as it is for its own acts and omissions.
4. Expenses Assumed as Sub-Administrator. Except as
otherwise set forth in this paragraph
4, Concord shall pay all expenses incurred by it in performing
its services and
duties as described herein, including the cost of providing
office facilities,
equipment and personnel related to such services and duties.
Other expenses
incurred in the operation of each Fund and the Portfolios (other
than those
borne by the Funds' investment adviser or administrator)
including taxes,
interest, brokerage fees and commissions, if any, fees of
Trustees who are not
officers, directors, partner, employees or holders of 5 percent
or more of the
outstanding voting securities of the Funds' investment adviser or
Concord or
any of their affiliates, Securities and Exchange Commission fees
and state blue
sky registration or qualification fees, advisory fees, charges of
custodians,
transfer and dividend disbursing agents' fees, fund accounting
agents' fees,
fidelity bond and Directors and officers' errors and omissions
insurance
premiums, outside auditing and legal expenses, costs of
maintaining corporate
existence, costs attributable to shareholder services, including
without
limitation telephone and personnel expenses, costs of preparing
and printing
prospectuses for regulatory purposes and for distribution to
existing
shareholders, costs of shareholders' reports and each Fund's
meetings and any
extraordinary expenses will be borne by the respective Fund. The
parties
hereto further acknowledge and agree that nothing in this
paragraph 4 shall be
deemed to impose any obligation on Concord to pay any expenses
not incurred by
it or to pay any expenses incurred by it on behalf of any Fund
not directly
associated with Concord's provision of sub-administration
services as described herein.
6. During normal business hours, Concord shall allow
FCIMCO, its auditors, the Funds and the
Funds' auditors, and the Commission, the Comptroller of the
Currency and other
appropriate regulators reasonable access to all data, records,
information and
personnel relating to Concord's services under this Agreement.
III. CONFIDENTIALITY
Concord will treat as
confidential and as proprietary information all records and other
information
of each Fund and the Portfolios and their prior or present
shareholders or
those persons or entities who respond to CFG's inquiries
concerning investment
in each Fund, and except as provided below, will not use such
records and
information for any purpose other than performance of its
responsibilities and
duties hereunder, or the performance of its responsibilities and
duties with
regard to any other Portfolio which may be added to any Fund in
the future.
Any other use by Concord of the information and records referred
to above of a
Fund may be made only after prior notification to and approval in
writing by
that Fund. The Parties hereto acknowledge and agree that,
notwithstanding
anything in the foregoing to the contrary, Concord may release
the information
described above, upon prior notice to FCIMCO and the Fund, if (i)
on the
written advice of its counsel its failure to release such
information would
expose it to civil or criminal contempt proceedings for failure
to release such
information, or (ii) such release is required by law.
IV. LIMITATION OF LIABILITY, SURVIVAL; INDEMNIFICATION
1. Concord shall not be liable
for any error of judgment or mistake of law or for any loss
suffered by the
FCIMCO or the Funds in connection with the matters to which this
Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or gross
negligence on its part in the performance of its duties or from
its reckless
disregard of its obligations and duties under this Agreement.
Any person, even
though also an officer, director, partner, employee or agent of
Concord, who
may be or become an officer, director, employee or agent of any
Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the
Fund (other than services or business in connection with
Concord's duties hereunder) to be rendering such services to or acting solely
for
the Fund and not as an officer, director, partner, employee or agent or one
under the control or direction of Concord even though paid by Concord.
2. Concord
hereby indemnifies FCIMCO against, and agrees to hold it harmless
from any and all damage, loss, liability and expense (including,
without limitation,
reasonable expenses of investigation and reasonable attorneys'
fees and
expenses) in connection with any action, suit or proceeding
brought against
FCIMCO or any of its affiliates, incurred or suffered by FCIMCO
or any of its
affiliates arising out of or resulting from Concord's willful
misfeasance, bad
faith or gross negligence in the performance of its duties under
this Agreement
or from its reckless disregard of its obligations and duties
under this Agreement.
3. FCIMCO hereby
indemnifies Concord against and agrees to hold it harmless from
any and all
damage, loss, liability and expense (including, without
limitation, reasonable
expenses of investigation and reasonable attorneys' fees and
expenses) (collectively "Damages") in connection with any action,
suit or proceeding
brought against Concord and/or any of its affiliates, incurred or
suffered by
Concord or any of its affiliates arising out of or resulting from
FCIMCO's
willful misfeasance, bad faith or gross negligence in the
performance of its
duties as Investment Adviser and Administrator of any Fund or
from its reckless
disregard of its obligations and duties to any Fund except that
FCIMCO shall
not indemnify Concord or its affiliates for Damages arising out
of or resulting
from services, obligations and duties undertaken by Concord as
provided in this Agreement.
4. The party
seeking indemnification under this Article IV (the "Indemnified
Party") agrees to give prompt notice to the party from whom
indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any
suit, action or proceeding in respect of which Indemnifying Party
may be liable
under this Article IV. The Indemnifying Party may, and at the
request of the
Indemnified Party shall, participate in and control the defense
of any such
suit, action or proceeding at its own expense. The Indemnifying
Party shall
not be liable under this Article IV for any settlement effected
without its consent of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder.
5. The liability
and obligations of either party hereto arising pursuant to the
provisions of
this ARTICLE IV shall survive the termination of this Agreement.
V. DURATION AND TERMINATION
1. This Agreement shall become effective as of the date first above
written and shall continue until February 1, 1998. Thereafter, if not
terminated,
this Agreement shall continue automatically as to a particular Portfolio for
successive terms
of one year. Other than an "assignment" of this Agreement by
Concord to The
BISYS Group, Inc. or an affiliate thereof ("BISYS") this
Agreement will
automatically and immediately terminate in the event of its
"assignment." As
used in this Agreement, the term "assignment" shall have the same
meaning as
such term has in the 1940 Act. If this Agreement is assigned to
BISYS then the
term "Concord" shall refer to BISYS which shall assume all
duties, obligations and
responsibilities of Concord hereunder. FCIMCO may terminate this
contract in the event Concord is declared insolvent, bankrupt, or
an assignment is made for the benefit of its creditors.
2. Anything in
this Agreement to the contrary notwithstanding:
(a) On or after
February 1, 1997 FCIMCO may terminate this Agreement by three
months prior written notice to Concord provided that:
(i) as of the
termination date provided in such
notice ("Early Termination Date")
all or substantially all of
Concord's duties and
responsibilities under this
Agreement will be performed by
FCIMCO or another direct or
indirect subsidiary of First
Chicago Corporation and
(ii) as of the
Early Termination Date FCIMCO
shall pay Concord a termination
fee equal to four times the fee
payable to Concord pursuant to
Article II, paragraph 5 of this
Agreement for the month which
immediately proceeds the month in
which the Early Termination Date
occurs.
(b) On or after February 1, 1998, in addition to the
method of termination by FCIMCO provided
in paragraph 2(a) immediately above, including the requirements
of paragraphs 2(a)(i) and 2(a)(ii), either party hereto may
terminate this Agreement by six
months prior written to the other party hereto.
(c) FCIMCO shall have the right to terminate this
Agreement upon 45 days written notice if
Concord materially breaches this Agreement. A material breach
means the failure to perform the terms of this Agreement, whether
in one act or omission
or a series of acts or omissions, whether or not related, which
(i) results or
reasonably could be expected to result in loss or damage,
including expenses,
to FCIMCO and/or the Funds exceeding $50,000 in the aggregate,
(ii) results in
the institution of civil or criminal proceedings by the
Commission or other
regulator, other than a regular audit or examination, (iii)
constitutes
negligence, bad faith or willful misconduct, (iv) constitutes a
violation of
any law, rule or regulation applicable to the Funds, FCIMCO or
Concord or any
of its affiliates as to which Concord was required to comply
under the terms of
the Agreement where the consequences of such violation could
reasonably be
expected to result in the institution of civil or criminal
proceedings by the
Commission or other governmental authorities against the Funds or
FCIMCO or any
of its affiliates, or (v) evidences a quantifiable and material
decline in the
overall quality of services, provided that Concord shall have the
right to cure
the breach set forth in this clause (v) within 30 days after a
written notice
setting forth in detail the nature of the breach, has been
delivered to
Concord; provided Concord shall have the right to cure a breach
set forth in
this clause (v) if and only if no more than two other
quantifiable and material
breaches under this clause (v) have occurred within the 12 months
prior to the
delivery of such notice of the breach of this clause (v). In
addition, FCIMCO
shall have the right to terminate this Agreement upon 45 days
written notice if
Concord or its affiliates provide or propose to provide mutual
fund
administration or distribution services similar to the Necessary
Services to
one or more investment companies whose investment adviser is (i)
Stien, Roe and
Farnham or one of its affiliates or (ii) a bank or affiliate
thereof, other
than FCIMCO or Bank of America Illinois, having its principal
place of business
in the Chicago metropolitan area; provided, however, that the
foregoing
termination right shall not apply in the following two
circumstances: (i)
Concord or its affiliates may provide fund administration or
distribution
services similar to the Necessary Services to one or more
investment companies
whose investment adviser is a bank, or affiliate thereof, having
a principal
place of business in the Chicago metropolitan area (a "Chicago
Bank Advised
Fund") provided that such bank or affiliate has, since the date
of this
Agreement, merged with, been acquired by, or is otherwise
affiliated with,
another bank which acts as investment adviser to an investment
company for
which Concord or its affiliates currently acts as administrator,
sub-administrator or distributor, and (ii) Concord or its
affiliates may
provide one or more of the Necessary Services, and may provide
fund accounting
and transfer agency services, to Chicago Bank-Advised Funds and
other
unaffiliated third parties, provided that Concord or an affiliate
of Concord is
not named as administrator or sub-administrator or any other
title which may
reflect or imply that Concord is providing the totality of
Necessary Services to such Chicago Bank-Advised Funds.
3. In the event of the termination of this
Agreement, Concord shall use its best efforts to
assist in the transfer of its responsibilities hereunder to
FCIMCO or any
successor administrator or sub-administrator and Concord without
compensation
shall remain responsible, which responsibility shall survive
termination of
this Agreement, for all regulatory filings, tax returns and other
reports which relate to periods which concluded prior to the
termination.
VI. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement
may be changed, waived, discharged or terminated, except by an
instrument in writing signed by both parties hereto.
VII. NOTICES
Notices of any kind to be given
to FCIMCO hereunder by Concord shall be in writing and shall be
duly given if mailed, faxed or delivered to FCIMCO, Three First
National Plaza, Suite 0334,
Chicago, Illinois 60670, Attention: Marco Hanig or such other
address or to
such individual as shall be so specified in writing by FCIMCO to
Concord. Notices of any kind to be given to Concord hereunder by
FCIMCO shall be in
writing and shall be duly given if mailed, faxed or delivered to
Concord at 125
West 55th Street, New York New York 10019, Attention: Richard E.
Stierwalt,
Chief Executive Officer, or at such other address or to such
individual as Concord shall specify in writing to FCIMCO.
VIII. MISCELLANEOUS
1. Construction. The captions in this Agreement are
included for convenience of reference only and in no way define
or limit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement
shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder
of this Agreement shall not be affected thereby. Subject to the
provisions of
Article V hereof, this Agreement shall be binding upon and shall
inure to the
benefit of the parties hereto and their respective successors and
shall be
governed by Illinois law; provided, however, that nothing herein
shall be
construed in a manner inconsistent with the 1940 Act or any rule
or regulation of the Commission thereunder.
IN WITNESS WHEREOF, the parties
hereto have caused this instrument to be executed by their
officers designated
below as of the day and year first above written.
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:________________________
President
CONCORD HOLDING CORPORATION
By:__________
<PAGE>
SCHEDULE I
PRAIRIE FUNDS:
Bond Fund
Equity Income Fund
Growth Fund
Intermediate Municipal Bond Fund
International Bond Fund
International Equity Fund
Managed Assets Fund
Managed Assets Income Fund
Money Market Fund
Municipal Money Market Fund
Special Opportunities Fund
U.S. Government Money Market Fund
Municipal Bond Fund
Intermediate Bond Fund
PRAIRIE INSTITUTIONAL FUNDS:
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
FIRST PRAIRIE:
First Prairie Diversified Assets Fund
First Prairie Money Market Funds
Money Market Series
Government Series
First Prairie Municipal Money
Market Fund
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under
the captions "Condensed Financial Information" in the Prospectus
and "Counsel
and Independent Auditors" in the Statement of Additional
Information and to the
use of our reports in this Registration Statement (Form N-1A No.
33-56247) of Prairie Institutional Funds.
ERNST & YOUNG LLP
New York, New York
May 30, 1995
<PAGE>
Exhibit 16
Prairie Institutional Funds
Calculation of Yields on Money Market Funds
As of April 30, 1995
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Dividend Rates - Institutional Shares
Date Cash Municipal Treasury Prime U.S. Govt.
Management Cash Cash Securities
Fund Management Management Cash Management
Fund Fund Fund
<S> <C> <C> <C> <C>
30-Apr-95 $0.000157 $0.000000 $.0.000145 $0.000157
29-Apr-95 $0.000157 $0.000000 $.0.000145 $0.000157
28-Apr-95 $0.000157 $0.000000 $.0.000145 $0.000157
27-Apr-95 $0.000157 $0.000000 $.0.000137 $0.000157
26-Apr-95 $0.000156 $0.000000 $.0.000144 $0.000158
25-Apr-95 $0.000157 $0.000000 $.0.000148 $0.000157
24-Apr-95 $0.000156 $0.000000 $.0.000134 $0.000157
Total Dividends for
7 Day Period . $0.001097 $0.000000 $0.000998 $0.001100
Divided by: Number
of Days in Period 7 7 7 7
Multiplied by: Number
of Days in Year. . 365 365 365 365
Divided by: Offering
Price per Share. $1.00 $1.00 $1.00 $.100
7 Day Yield 5.72% 0.00% 5.20% 5.74%
7 Day Yield 5.72% 0.00% 5.20% 5.74%
Divided by: Number of 7
Day Periods in Year 52.142857 52.142857 52.142857 52.142857
Plus 1 1 1 1 1
1.001097 1 1.000998 1.0011
Raised to the Power of
the Number of 7 Day
Periods in a Year. . 52.142857 52.142857 52.142857 52.142857
1.058835 1.000000 1.053389 1.059001
Effective 7 Day Yield 5.88% 0.00% 5.34% 5.90%
</TABLE>
Prairie Institutional Funds
Calculation of Yields on Money Market Funds
As of April 30, 1995
<TABLE>
Dividend Rates - Service Shares
Date Cash Management Municipal Cash Treasury Prime U.S. Govt.
Fund Management Fund Cash Management Securities Cash
Fund Management Fund
<S> <C> <C> <C> <C>
30-Apr-95 $0.000150 $0.000000 $0.000138 $0.000150
29-Apr-95 0.000150 0.000000 0.000138 0.000150
28-Apr-95 0.000150 0.000000 0.000138 0.000150
27-Apr-95 0.000150 0.000000 0.000130 0.000151
26-Apr-95 0.000150 0.000000 0.000137 0.000150
25-Apr-95 0.000150 0.000000 0.000142 0.000151
24-Apr-95 0.000150 0.000000 0.000126 0.000150
Total Dividends for 7 Day
Period. . . . . . $0.001050 $0.000000 $0.000949 $0.001052
Divided by: Number
of Days in Period 7 7 7 7
Multiplied by: Number of
Days in Year 365 365 365 365
Divided by:
Offering Price per Share $1.00 $1.00 $1.00 $1.00
7 Day Yield 5.48% 0.00% 4.95% 5.49%
7 Day Yield 5.48% 0.00% 4.95% 5.49%
Divided by:
Number of 7 Day
Periods in Year 52.142857 52.142857 52.142857 52.142857
Plus 1 1 1 1 1
1.00105 1 1.000949 1.001052
Raised to the Power of the
Number of 7 Day Periods in
a Year. . . . . . 52.142857 52.142857 52.142857 52.142857
1.056246 1.000000 1.050704 1.056356
Effective 7 Day Yield 5.62% 0.00% 5.07% 5.64%
</TABLE>
<PAGE>
Exhibit 18
PRAIRIE INSTITUTIONAL FUNDS
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"),
requires that the Board of an investment company desiring to
offer multiple classes pursuant to said Rule
adopt a plan setting forth the separate arrangement and expense
allocation of each class, and any related
conversion features or exchange privileges.
The Board, including a majority of the
non-interested Board members, of each of the
investment companies, or series thereof, listed on Schedule A
attached hereto (each, a "Fund") which
desires to offer multiple classes has determined that the
following plan is in the best interests of each class
individually and the Fund as a whole:
10. Class Designation: Fund shares shall be
divided into Institutional Shares and
Service Shares.
11. Differences in Services: The services
offered to shareholders of each Class shall
be substantially the same, except for certain services provided
to the Service Shares pursuant to a Service
Plan.
12. Differences in Distribution
Arrangements:
Institutional Shares and Service
Shares shall be offered at net asset value to institutional
investors, including banks, acting for themselves or
in a fiduciary, advisory, agency, custodial or similar capacity,
public agencies and municipalities. Neither
Class shall be subject to any front-end or contingent sales
charges.
Service Shares shall be subject to an annual
distribution and service fee at the rate of
.25% of the value of the average daily net assets of the Service
Class pursuant to a Service Plan adopted in
accordance with Rule 12b-1 under the 1940 Act.
13. Expense Allocation. The following
expenses shall be allocated, to the extent
practicable, on a Class-by-Class basis: (a) fees under the
Service Plan; (b) printing and postage expenses
related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to
current shareholders of a specific Class; (c) Securities and
Exchange Commission and Blue Sky registration
fees incurred by a specific Class; (d) fees and expenses of an
administration that are identified and
approved by the Fund's Board as being attributable to a specific
Class; (e) the expense of administrative
personnel and services as required to support the shareholders
of
a specific Class; (f) litigation or other
legal expenses relating solely to a specific Class; (g) transfer
agent fees identified by the Fund's transfer
agent as being attributable to a specific Class; and (h) Board
members' fees incurred as a result of issues
relating to a specific Class.
Dated: March 29, 1995
<PAGE>
SCHEDULE A
Prairie Institutional Funds:
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> U.S.GOVERNMENT SECURITIES CASH MANAGEMENT FUND
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> MAY-31-1994 MAY-31-1994
<PERIOD-END> APR-30-1995 APR-30-1995
<INVESTMENTS-AT-COST> 517,539,265 0
<INVESTMENTS-AT-VALUE> 517,539,265 0
<RECEIVABLES> 98,194 0
<ASSETS-OTHER> 121,639 0
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 517,759,098 0
<PAYABLE-FOR-SECURITIES> 0 0
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 2,677,839 0
<TOTAL-LIABILITIES> 2,677,839 0
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 515,614,920 0
<SHARES-COMMON-STOCK> 515,614,920 0
<SHARES-COMMON-PRIOR> 413,680,487 0
<ACCUMULATED-NII-CURRENT> 0 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> (533,661) 0
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 0 0
<NET-ASSETS> 515,081,259 0
<DIVIDEND-INCOME> 0 0
<INTEREST-INCOME> 22,575,626 0
<OTHER-INCOME> 0 0
<EXPENSES-NET> 1,515,638 0
<NET-INVESTMENT-INCOME> 21,059,988 0
<REALIZED-GAINS-CURRENT> (487,145) 0
<APPREC-INCREASE-CURRENT> 0 0
<NET-CHANGE-FROM-OPS> 20,572,843 0
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 21,059,988 0
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 3,055,557,091 0
<NUMBER-OF-SHARES-REDEEMED> 2,955,216,069 0
<SHARES-REINVESTED> 1,593,411 0
<NET-CHANGE-IN-ASSETS> 101,447,288 0
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> (46,516) 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 1,300,324 0
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 1,790,603 0
<AVERAGE-NET-ASSETS> 500,032,769 3,349,154
<PER-SHARE-NAV-BEGIN> 1.00 1.00
<PER-SHARE-NII> 0.044 0.015
<PER-SHARE-GAIN-APPREC> (0.001) (0.001)
<PER-SHARE-DIVIDEND> 0.044 0.015
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 1.00 1.00
<EXPENSE-RATIO> 0.35 0.60
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
<SERIES>
[NUMBER] 2
<NAME> TREASURY PRIME CASH MANAGEMENT FUND
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> APR-30-1995 APR-30-1995
[INVESTMENTS-AT-COST] 13,650,435 0
[INVESTMENTS-AT-VALUE] 13,650,435 0
[RECEIVABLES] 13,295 0
[ASSETS-OTHER] 62,879 0
[OTHER-ITEMS-ASSETS] 0 0
[TOTAL-ASSETS] 13,562,599 0
[PAYABLE-FOR-SECURITIES] 0 0
[SENIOR-LONG-TERM-DEBT] 0 0
[OTHER-ITEMS-LIABILITIES] 164,010 0
[TOTAL-LIABILITIES] 164,010 0
[SENIOR-EQUITY] 0 0
[PAID-IN-CAPITAL-COMMON] 13,563,502 0
[SHARES-COMMON-STOCK] 13,563,502 0
[SHARES-COMMON-PRIOR] 0 0
[ACCUMULATED-NII-CURRENT] 0 0
[OVERDISTRIBUTION-NII] 0 0
[ACCUMULATED-NET-GAINS] 0 0
[OVERDISTRIBUTION-GAINS] 0 0
[ACCUM-APPREC-OR-DEPREC] 0 0
[NET-ASSETS] 13,562,599 0
[DIVIDEND-INCOME] 0 0
[INTEREST-INCOME] 108,129 0
[OTHER-INCOME] 0 0
[EXPENSES-NET] 6,666 0
[NET-INVESTMENT-INCOME] 101,463 0
[REALIZED-GAINS-CURRENT] (90.3) 0
[APPREC-INCREASE-CURRENT] 0 0
[NET-CHANGE-FROM-OPS] 100,560 0
[EQUALIZATION] 0 0
[DISTRIBUTIONS-OF-INCOME] 101,463 0
[DISTRIBUTIONS-OF-GAINS] 0 0
[DISTRIBUTIONS-OTHER] 0 0
[NUMBER-OF-SHARES-SOLD] 29,858,619 0
[NUMBER-OF-SHARES-REDEEMED] 16,359,614 0
[SHARES-REINVESTED] 26,998 0
[NET-CHANGE-IN-ASSETS] 13,525,100 0
[ACCUMULATED-NII-PRIOR] 0 0
[ACCUMULATED-GAINS-PRIOR] 0 0
[OVERDISTRIB-NII-PRIOR] 0 0
[OVERDIST-NET-GAINS-PRIOR] 0 0
[GROSS-ADVISORY-FEES] 3,822 0
[INTEREST-EXPENSE] 0 0
[GROSS-EXPENSE] 25,560 0
[AVERAGE-NET-ASSETS] 17,346,574 90,636
[PER-SHARE-NAV-BEGIN] 1.00 1.00
[PER-SHARE-NII] 0.006 0.006
[PER-SHARE-GAIN-APPREC] (0.000) (0.000)
[PER-SHARE-DIVIDEND] 0.006 0.006
[PER-SHARE-DISTRIBUTIONS] 0 0
[RETURNS-OF-CAPITAL] 0 0
[PER-SHARE-NAV-END] 1.00 1.00
[EXPENSE-RATIO] 0.35 0.60
[AVG-DEBT-OUTSTANDING] 0 0
[AVG-DEBT-PER-SHARE] 0 0
[NET-CHANGE-IN-ASSETS] 0 0
[ACCUMULATED-NII-PRIOR] 0 0
[ACCUMULATED-GAINS-PRIOR] 0 0
[OVERDISTRIB-NII-PRIOR] 0 0
[OVERDIST-NET-GAINS-PRIOR] 0 0
[GROSS-ADVISORY-FEES] 0 0
[INTEREST-EXPENSE] 0 0
[GROSS-EXPENSE] 0 0
[PER-SHARE-NAV-BEGIN] 1.00 0
[AVG-DEBT-OUTSTANDING] 0 0
[AVG-DEBT-PER-SHARE] 0 0
<SERIES>
[NUMBER] 3
<NAME> CASH MANAGEMENT FUND
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1994 JUN-30-1994
<PERIOD-END> APR-30-1995 APR-30-1995
[INVESTMENTS-AT-COST] 313,844,627 0
[INVESTMENTS-AT-VALUE] 313,844,627 0
[RECEIVABLES] 7,705,651 0
[ASSETS-OTHER] 112,615 0
[OTHER-ITEMS-ASSETS] 0 0
[TOTAL-ASSETS] 321,622,893 0
[PAYABLE-FOR-SECURITIES] 1,319,535 0
[SENIOR-LONG-TERM-DEBT] 1,744,845 0
[OTHER-ITEMS-LIABILITIES] 0 0
[TOTAL-LIABILITIES] 3,064,380 0
[SENIOR-EQUITY] 0 0
[PAID-IN-CAPITAL-COMMON] 318,796,371 0
[SHARES-COMMON-STOCK] 318,796,371 0
[SHARES-COMMON-PRIOR] 243,979,657 0
[ACCUMULATED-NII-CURRENT] 0 0
[OVERDISTRIBUTION-NII] 0 0
[ACCUMULATED-NET-GAINS] (197,858) 0
[OVERDISTRIBUTION-GAINS] 0 0
[ACCUM-APPREC-OR-DEPREC] 0 0
[NET-ASSETS] 318,598,513 0
[DIVIDEND-INCOME] 0 0
[INTEREST-INCOME] 12,254,435 0
[OTHER-INCOME] 0 0
[EXPENSES-NET] 820,326 0
[NET-INVESTMENT-INCOME] 11,434,109 0
[REALIZED-GAINS-CURRENT] (1,706,625) 0
[APPREC-INCREASE-CURRENT] 0 0
[NET-CHANGE-FROM-OPS] 4,727,484 0
[EQUALIZATION] 0 0
[DISTRIBUTIONS-OF-INCOME] 11,434,109 0
[DISTRIBUTIONS-OF-GAINS] 0 0
[DISTRIBUTIONS-OTHER] 0 0
[NUMBER-OF-SHARES-SOLD] 1,127,246,085 0
[NUMBER-OF-SHARES-REDEEMED] 1,053,371,641 0
[SHARES-REINVESTED] 942,270 0
[NET-CHANGE-IN-ASSETS] 74,778,589 0
[ACCUMULATED-NII-PRIOR] 0 0
[ACCUMULATED-GAINS-PRIOR] (159,733) 0
[OVERDISTRIB-NII-PRIOR] 0 0
[OVERDIST-NET-GAINS-PRIOR] 0 0
[GROSS-ADVISORY-FEES] 678,287 0
[INTEREST-EXPENSE] 0 0
[GROSS-EXPENSE] 1,026,804 0
[AVERAGE-NET-ASSETS] 295,139,356 63,255
[PER-SHARE-NAV-BEGIN] 1.00 1.00
[PER-SHARE-NII] 0.041 0.015
[PER-SHARE-GAIN-APPREC] (0.006) (0.001)
[PER-SHARE-DIVIDEND] 0.041 0.015
[PER-SHARE-DISTRIBUTIONS] 0 0
[RETURNS-OF-CAPITAL] 0 0
[PER-SHARE-NAV-END] 1.00 1.00
[EXPENSE-RATIO] 0.35 0.60
[AVG-DEBT-OUTSTANDING] 0 0
[AVG-DEBT-PER-SHARE] 0 0
[NET-CHANGE-IN-ASSETS] 0 0
[ACCUMULATED-NII-PRIOR] 0 0
[ACCUMULATED-GAINS-PRIOR] 0 0
[OVERDISTRIB-NII-PRIOR] 0 0
[OVERDIST-NET-GAINS-PRIOR] 0 0
[GROSS-ADVISORY-FEES] 0 0
[INTEREST-EXPENSE] 0 0
[GROSS-EXPENSE] 0 0
[PER-SHARE-NAV-BEGIN] 1.00 0
[AVG-DEBT-OUTSTANDING] 0 0
[AVG-DEBT-PER-SHARE] 0 0
</TABLE>
