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. 3 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/X/
Amendment No. 3 /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 First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on March 18, 1996 pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has registered an indefinite number of its shares of Beneficial
Interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal
year ended December 31, 1995 was filed on February 29, 1996.
<PAGE>
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
FORM N-1A CAPTION PAGE
1 Cover Page Cover
2 Synopsis 4
3 Condensed Financial Information 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-13
15 Control Persons and Principal Holders
of Securities B-25
16 Investment Advisory and Other Services B-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-35
Items in
Part C of
FORM N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-3
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of
Investment Adviser C-4
29 Principal Underwriters C-4
30 Location of Accounts and Records C-5
31 Management Services C-5
32 Undertakings C-5
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*Omitted since answer is negative or inapplicable.
<PAGE>
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PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
TREASURY PRIME CASH MANAGEMENT FUND
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
PROSPECTUS
March 18, 1996
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 -- March 18, 1996
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 Shares and Service Shares of three separate diversified,
money market series (each, a "Fund"): 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.
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 March 18, 1996, which may be
revised from time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to some investors. It
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. For a free copy, write to the Trust at 3435 Stelzer Road,
Columbus, Ohio 43219-3035, or call 1-800-370-9446.
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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......................... 3
Condensed Financial Information........................ 5
Yield Information...................................... 8
Description of the Funds............................... 8
Risk Factors...................................... 10
Management of the Trust................................ 11
How to Buy Fund Shares................................. 13
How to Redeem Fund Shares.............................. 14
Service Plan........................................... 15
Dividends, Distributions and Taxes..................... 16
General Information.................................... 17
Appendix............................................... A-1
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
CASH MANAGEMENT
FUND
-------------------------
INSTITUTIONAL SERVICE
SHARES SHARES
------------- -------
<S> <C> <C>
Management Fees (after fee waivers)............................... .13% .13%
12b-1 Fees (distribution and servicing)........................... NONE .25%
Other Expenses (after expense reimbursements)..................... .22% .22%
Total Fund Operating Expenses (after fee waivers and expense
reimbursements) 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
SHARES SHARES
------------- -------
<S> <C> <C>
1 YEAR........................................................... $ 4 $ 6
3 YEARS.......................................................... $11 $19
5 YEARS.......................................................... $20 $33
10 YEARS.......................................................... $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)........... .12% .12% .14% .14%
12b-1 Fees (distribution and servicing)....... NONE .25% NONE .25%
Other Expenses (after fee waivers and expense
reimbursements)............................. .23% .23% .21% .21%
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>
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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%.
- --------------------------------------------------------------------------------
<PAGE>
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. The
expenses noted above, without fee waivers or expense reimbursement arrangements,
would have been: Management Fees, .20% for each Fund, Other Expenses, .23% for
the Institutional Shares and .24% for the Service Shares of the Cash Management
Fund, 1.03% for the Insitutional Shares and .29% for the Service Shares of the
Treasury Prime Cash Management Fund, and .22% for the Institutional Shares and
.24% for the Service Shares of the U.S. Government Securities Cash Management
Fund, and Total Fund Operating Expenses, .43% for the Institutional Shares and
.69% for the Service Shares of the Cash Management Fund, 1.23% for the
Institutional Shares and .74% for the Service Shares of the Treasury Prime Cash
Management Fund, and .42% for the Institutional Shares and .69% for the Service
Shares of the U.S. Government Securities Cash Management Fund. In addition, the
Management Fees noted above have been restated to reflect estimated management
fees for the current fiscal year; for the fiscal year ended December 31, 1995,
management fees, after fee waivers, were .11%, .09% and .12% for the Cash
Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund, respectively. 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."
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited 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.
CASH MANAGEMENT FUND(1)
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES SERVICE SHARES
------------------------------------------------------- ----------------------------
SIX-MONTH SIX-MONTH
YEAR ENDED JUNE 30, PERIOD ENDED YEAR ENDED PERIOD ENDED
--------------------------------------- DECEMBER 31, JUNE 30, DECEMBER 31,
1993(2) 1994 1995 1995(3) 1995(4) 1995(3)
-------- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
of period................. $ 1.0000 $ .9999 $ .9993 $ .9994 $ 1.0000 $ .9994
-------- -------- ------------ ------------ ------ ------------
Investment Operations:
Investment income -- net.... .0297 .0333 .0507 .0277 .0245 .0264
Net realized gain (loss) on
investments............... (.0001) (.0006) (.0059) .0002 (.0006) .0002
-------- -------- ------------ ------------ ------ ------------
Total from Investment
Operations............ .0296 .0327 .0448 .0279 .0239 .0266
-------- -------- ------------ ------------ ------ ------------
Distributions:
Dividends from investment
income -- net............. (.0297) (.0333) (.0507) (.0277) (.0245) (.0264)
-------- -------- ------------ ------------ ------ ------------
Increase due to voluntary
capital contribution from
an affiliate of Investment
Adviser................... -- -- .0060 -- -- --
-------- -------- ------------ ------------ ------ ------------
Net asset value, end of
period.................... $ .9999 $ .9993 $ .9994 $ .9996 $ .9994 $ .9996
========== ========== ================ =============== ================ ===============
TOTAL INVESTMENT RETURN......... 3.25%(5) 3.38% 5.19%(6) 2.80%(7) 2.47%(7) 2.68%(7)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets................ .05%(5) .31% .35% .35%(5) .60%(5) .60%(5)
Ratio of net investment
income to average net
assets.................... 3.19%(5) 3.33% 5.11% 5.51%(5) 5.46%(5) 5.25%(5)
Decrease reflected in above
expense ratios due to
undertakings.............. .51%(5) .12% .09% .08%(5) .11%(5) .09%(5)
Net Assets, end of period
(000's omitted)........... $175,713 $243,820 $319,214 $389,127 $ 11,372 $121,750
</TABLE>
- ---------------
(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) Effective July 1, 1995, the Fund changed its fiscal year-end from June 30 to
December 31. The figures presented are from July 1, 1995 through December
31, 1995.
(4) From January 17, 1995 (initial offering date of Service Shares) through June
30, 1995.
(5) Annualized.
(6) Had the Fund not had a capital contribution from an affiliate of the
Investment Adviser during the period, the total investment return would have
been 4.51%.
(7) Not annualized.
<PAGE>
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND(1)
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES SERVICE SHARES
------------------------------------------------- ------------------------------
SEVEN-MONTH SEVEN-MONTH
YEAR ENDED MAY 31, PERIOD ENDED PERIOD ENDED
---------------------------------- DECEMBER 31, YEAR ENDED DECEMBER 31,
1993(2) 1994 1995 1995(3) MAY 31, 1995(4) 1995(3)
-------- -------- -------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period...................... $ 1.0000 $ 1.0000 $ .9999 $ .9989 $1.0000 $ .9989
-------- -------- -------- ------------ ------- ------------
Investment Operations:
Investment income -- net...... .0319 .0302 .0492 .0320 .0199 .0305
--------
Net realized gain (loss) on
investments................. -- (.0001) (.0010) .0001 (.0011) .0001
-------- -------- -------- ------------ ------- ------------
Total from Investment
Operations............. .0319 .0301 .0482 .0321 .0188 .0306
-------- -------- -------- ------------ ------- ------------
Distributions:
Dividends from investment
income -- net............... (.0319) (.0302) (.0492) (.0320) (.0199) (.0305)
-------- -------- -------- ------------ ------- ------------
Net asset value, end of
period...................... $ 1.0000 $ .9999 $ .9989 $ .9990 $ .9989 $ .9990
======== ======== ======== =========== ============= ===========
TOTAL INVESTMENT RETURN........... 3.25%(5) 3.06% 5.03% 3.24%(6) 2.01%(6) 3.09%(6)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.................. .02%(5) .30% .34% .35%(5) .57%(5) .60%(5)
Ratio of net investment income
to average net assets....... 3.10%(5) 3.02% 4.94% 5.46%(5) 5.48%(5) 5.17%(5)
Decrease reflected in above
expense ratios due to
undertakings................ .47%(5) .11% .07% .07%(5) .09%(5) .09%(5)
Net Assets, end of period
(000's omitted)............. $264,527 $413,634 $475,248 $489,395 $16,702 $ 56,000
</TABLE>
- ---------------
(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) Effective June 1, 1995, the Fund changed its fiscal year-end from May 31 to
December 31. The figures presented are from June 1, 1995 through December
31, 1995.
(4) From January 17, 1995 (initial offering date of Service Shares) through May
31, 1995.
(5) Annualized.
(6) Not annualized.
<PAGE>
TREASURY PRIME CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995(1)
-----------------------------------------
INSTITUTIONAL SHARES SERVICE SHARES
-------------------- --------------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................... $ 1.0000 $ 1.0000
-------- --------------
Investment Operations:
Investment income -- net................................. .0399 .0380
-------- --------------
Distributions:
Dividends from investment income-net..................... (.0399) (.0380)
-------- --------------
Net asset value, end of period........................... $ 1.0000 $ 1.0000
================ ============
TOTAL INVESTMENT RETURN....................................... 4.0%(2) 3.86%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. .35%(3) .60%(3)
Ratio of net investment income to average net assets..... 5.16%(3) 4.72%(3)
Decrease reflected in above expense ratios due to
undertakings........................................... .88%(3) .14%(3)
Net Assets, end of period (000's omitted)................ $ 14,008 $130,559
</TABLE>
- ---------------
(1) From March 22, 1995 (commencement of operations) through December 31, 1995.
(2) Not annualized.
(3) Annualized.
<PAGE>
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."
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(TM), N. Palm Beach, Fla. 33408, IBC/Donoghue's
Money Fund Report(R) 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
<PAGE>
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. 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, 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 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 may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"),
Duff & Phelps Credit Rating Co., Fitch Investors Service, L.P. ("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.
- 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; 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 Treasury Prime Cash
Management Fund). In addition, (i) the 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) the 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.
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.
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 registered investment adviser and a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), which in turn is a
wholly-owned subsidiary of First Chicago NBD Corporation, a registered bank
holding company. As of December 31, 1995, FCIMCO provided investment management
services to portfolios containing approximately $ 71 billion in assets. FCIMCO
serves as investment adviser for the Trust pursuant to an Investment Advisory
Agreement dated as of November 30, 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. For the fiscal year
ended December 31, 1995, the Trust, on behalf of each Fund, paid FCIMCO an
investment advisory fee at the effective annual rates of .11%, .09% and .12% of
the respective average daily net assets of the Cash Management Fund, Treasury
Prime Cash Management Fund and U.S. Government Securities Cash Management Fund.
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. For the fiscal year ended December 31, 1995, the Trust, on behalf
of each Fund, paid FCIMCO an administrative fee at the effective annual rates of
.15%, .11% and .15% of the respective average daily net assets of the Cash
Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund. FCIMCO has engaged Concord Holding Corporation,
a wholly-owned subsidiary of The BISYS Group, Inc., located at 3435 Stelzer
Road, Columbus, Ohio 43219-3035 (the "Sub-Administrator"), to assist it in
providing certain administrative services for the 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 $60 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 3435 Stelzer
Road, Columbus, Ohio 43219-3035, 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 $80 billion in assets.
<PAGE>
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 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 reserves the right to offer Fund shares without
regard to the minimum purchase requirements to qualified or non-qualified
employee benefit plans. 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. The Fund does
not issue share certificates. The Trust reserves the right to reject any
purchase order.
Fund shares may be purchased by wire, by telephone or through compatible
computer facilities. All payments should be made in U.S. dollars and, to avoid
fees and delays, should be drawn only on U.S. banks. Investors may telephone
orders for purchases of Fund shares by calling 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 time, for
the Treasury Prime Cash Management Fund and 2:00 p.m., Central 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 time, for the Treasury Prime Cash Management Fund or 2:00
p.m., Central 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 by the Transfer Agent after 12:00 noon, Central time, for the Treasury
Prime Cash Management Fund or 2:00 p.m., Central time, for the Cash Management
Fund and U.S. Government Securities Cash Management Fund, 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 time, for the
Treasury Prime Cash Management Fund or 2:00 p.m., Central 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 time, for the Treasury Prime Cash Management
Fund or 2:00 p.m., Central 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 Funds derived from net investment income, 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.
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.
Management of the Trust believes that each Fund has qualified for the
fiscal year ended December 31, 1995 as a "regulated investment company" under
the Code. Each Fund intends to continue to so qualify if such qualification is
in the best interests of it 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 20, 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.
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. 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 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.
<PAGE>
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- The 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 the Fund will consist only of direct obligations
issued by domestic and foreign entities. The other corporate obligations in
which the Fund 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 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, the Fund 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. The Fund will not invest more than 10% of the value of its net
assets in floating or variable rate demand obligations as to which 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.
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, the Treasury Prime Cash
Management Fund is permitted to borrow money to the extent permitted under the
1940 Act. However, the Fund 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 the Fund's total
assets, the Fund will not make any additional investments.
PRAIRIE INSTITUTIONAL FUNDS
Cash Management Funds
INSTITUTIONAL And SERVICE SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 18, 1996
- ------------------------------------------------------------------------
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, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund (each, a "Fund") of Prairie
Institutional Funds (the "Trust"), dated March 18, 1996, as it may be revised
from time to time. To obtain a copy of the Funds' Prospectus, please write to
the Trust at 3435 Stelzer Road, Columbus, Ohio 43219-3035, 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-9
Management Arrangements................................................. B-11
Purchase of Fund Shares................................................. B-16
Service Plan............................................................ B-16
Redemption of Fund Shares............................................... B-18
Determination of Net Asset Value........................................ B-18
Portfolio Transactions.................................................. B-19
Dividends, Distributions and Taxes...................................... B-20
Yield Information....................................................... B-20
Information About the Trust............................................. B-22
Counsel and Independent Auditors........................................ B-24
Appendix................................................................ B-26
Financial Statements.................................................... B-29
Report of Independent Auditors.......................................... B-50
<PAGE>
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) 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.
The Fund may purchase CDs issued by banks, savings and loan
associations and similar thrift institutions with less than $1 billion in
assets, which are members of the FDIC, provided the Fund purchases any such CD
in a principal amount of not more than $100,000, which amount would be fully
insured by the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC. Interest payments on such a CD are not insured by the
FDIC. The Fund will not own more than one such CD per such issuer.
FOREIGN SECURITIES. (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 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.
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 Investment
Company Act of 1940, as amended (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.
TREASURY PRIME CASH MANAGEMENT FUND ONLY. The Treasury Prime
Cash Management Fund has adopted investment restrictions numbered 1 through 8
below as fundamental policies. These restrictions cannot be changed, as to the
Fund, without approval by the holders of a majority (as defined in the 1940 Act)
of the Fund's outstanding voting shares. Investment restrictions numbered 9
through 13 are not fundamental policies and may be changed by vote of a majority
of the Trust's Trustees at any time.
The Fund may not:
1. Invest in commodities, except that the Fund may purchase
and sell options, forward contracts, futures contracts, including those relating
to indexes, and options on futures contracts or indexes.
2. Purchase, hold or deal in real estate, or oil, gas or
other mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate 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, the 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 the Fund may be deemed an underwriter under the Securities
Act of 1933, as amended, by virtue of disposing of portfolio securities.
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, 10 and 11 may be deemed to give rise to
senior securities.
7. Purchase securities on margin, but the Fund may make margin deposits in
connection with transactions in options, forward contracts, futures contracts,
including those relating to indexes, andoptions on futures contracts or indexes.
8. 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.
9. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it owns
in its portfolio as a shareholder in accordance with its views.
10. 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.
11. Purchase, sell or write puts, calls or combinations
thereof, except as described in the Prospectus and this Statement
of Additional Information.
12. 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.
13. Invest in securities of other investment companies,
except to the extent permitted under the 1940 Act.
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 The Woodward Funds and
the 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
The Woodward Funds and the 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 the
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
MARK A. DILLON, PRESIDENT. An employee of BISYS Fund Services,
which is an affiliate of Concord Holding Corporation, the
Trust's sub-administrator (the "Sub-Administrator"). He is 33
years old and his address is 3435 Stelzer Road, Columbus, Ohio
43219.
ANN E. BERGIN, VICE PRESIDENT. An employee of the Sub-
Administrator and an officer of other investment
companies administered by the Sub-Administrator. She is
35 years old and her address is 125 West 55th Street,
New York, New York 10019.
D'RAY BREWER, VICE PRESIDENT. An employee of BISYS Fund Services,
and an officer of other investment companies administered by
the Sub-Administrator. She is 36 years old and her address is
3435 Stelzer Road, Columbus, Ohio 43219.
MARTIN R. DEAN, TREASURER. An employee of BISYS Fund Services, since
May 1994, and an officer of other investment companies
administered by the Sub-Administrator. Prior thereto, he was a
Senior Manager at KPMG Peat Marwick LLP. He is 32 years old
and his address is 3435 Stelzer Road, Columbus, Ohio 43219.
GEORGE O. MARTINEZ, SECRETARY. Senior Vice President and Director of
Legal and Compliance Services with BISYS Fund Services, since
April 1995, and an officer of other investment companies
administered by the Sub- Administrator. Prior thereto, he was
Vice President and Associate General Counsel with Alliance
Capital Management L.P. He is 36 years old and his address is
3435 Stelzer Road, Columbus, Ohio 43219.
ROBERT L. TUCH, ASSISTANT SECRETARY. An employee of BISYS Fund
Services, since June 1991, and an officer of other investment
companies administered by the Sub- Administrator. From July
1990 to June 1991, he was Vice President and Associate General
Counsel with National Securities Research Corp. Prior thereto,
he was an Attorney with the Securities and Exchange
Commission. He is 44 years old and his address is 3435 Stelzer
Road, Columbus, Ohio 43219.
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 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 ended December 31, 1995 were 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
</TABLE>
Board members and officers of the Trust, as a group, owned
less than 1% of any Fund's shares outstanding on February 27, 1996.
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 November 30, 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. Shareholders approved
the Agreement on November 28, 1995. The Trust's Board, including a majority of
the Board members who are not "interested persons" of any party to the
Agreement, last approved the Agreement at a meeting held on September 19, 1995.
As to each Fund, the Agreement is terminable without penalty, on 60 days'
notice, by the 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 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 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.
Treasury Prime Cash Management Fund only. For the period from
March 22, 1995 (commencement of operations of Treasury Prime Cash Management
Fund) through December 31, 1995, the advisory fee payable by the Treasury Prime
Cash Management Fund amounted to $50,405, which amount was reduced by $27,592
pursuant to an undertaking by FCIMCO, resulting in a net advisory fee paid by
the Treasury Prime Cash Management Fund of $22,813.
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 (the Fund's prior fiscal
year end), 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 fiscal year ended June 30, 1995, the aggregate
management/advisory fee payable by the Cash Management Fund and its predecessor
amounted to $793,104, which amount was reduced by $267,419 pursuant to
undertakings by FNBC and FCIMCO, resulting in an aggregate net
management/advisory fee paid by the Cash Management Fund and its predecessor of
$525,685. For the Cash Management Fund's new fiscal year ended December 31,
1995, the aggregate management/advisory fee payable by the Fund and its
predecessor amounted to $716,956, which amount was reduced by $331,599
pursuant to undertakings by FNBC and FCIMCO, resulting in an aggregate net
management/advisory fee paid by the Cash Management Fund and its predecessor of
$385,357.
First Prairie U.S. Treasury Securities Cash Management) through May 31,
1993 (the Fund's prior fiscal year end), 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. For the fiscal year ended May 31, 1995, the aggregate
management/advisory fee payable by the U.S. Government Securities Cash
Management Fund and its predecessor amounted to $1,388,345, which amount was
reduced by $312,740 pursuant to undertakings by FNBC and FCIMCO, resulting in an
aggregate net management/advisory fee paid by the U.S. Government Securities
Cash Management Fund and its predecessor of $1,075,605. For the U.S. Government
Securities Cash Management Fund's new fiscal year ended December 31, 1995, the
aggregate management/advisory fee payable by the Fund and its predecessor
amounted to $968,761, which amount was reduced by $381,198 pursuant to
undertakings by FNBC and FCIMCO, resulting in an aggregate net
management/advisory fee paid by the U.S. Government Securities Cash Management
Fund and its predecessor of $587,563.
ADMINISTRATION AND SUB-ADMINISTRATION AGREEMENTS. Pursuant to
an Administration Agreement dated as of November 30, 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.
For the period January 17, 1995 (effective date of
Administration Agreement) through December 31, 1995, the Cash Management Fund
and the U.S. Government Cash Management Fund each paid FCIMCO an administrative
fee of $522,730 and $707,131, respectively. For the period March 22, 1995
(commencement of operations of Treasury Prime Cash Management Fund) through
December 31, 1995, the administrative fee payable by the Treasury Prime Cash
Management Fund amounted to $37,804, which amount was reduced by $9,695 pursuant
to an undertaking by FCIMCO, resulting is a net administrative fee paid by the
Treasury Prime Cash Management Fund of $28,109.
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 on a best
efforts basis 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.
For the period January 17, 1995 (effective date of Service
Plan) through December 31, 1995, the Cash Management Fund paid fees under the
Service Plan in the amount of $77,634, of which $77,607 was paid to FCIMCO and
its affiliates and $27 was retained by the Distributor. For the period January
17, 1995 through December 31, 1995, the U.S. Government Securities Cash
Management Fund paid fees under the Service Plan in the amount of $60,969, of
which $60,942 was paid to FCIMCO and its affiliates and $27 was retained by the
Distributor. For the period March 22, 1995 (commencement of operations of
Treasury Prime Cash Management Fund) through December 31, 1995, the Treasury
Prime Cash Management Fund paid fees under the Service Plan in the amount of
$38,530, of which $38,505 was paid to FCIMCO and its affiliates and $25 was
retained by the Distributor.
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 provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold the instrument.
The Board of Trustees has established procedures, as a
particular responsibility within the overall duty of care owed to each Fund's
investors, reasonably designed to stabilize the Fund's price per share as
computed for purposes of purchases and redemptions at $1.00. Such procedures
include review of each Fund's portfolio holdings by the Board of Trustees, at
such intervals as it deems appropriate, to determine whether the Fund's net
asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. In such
review of the portfolio of the 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 the Funds will be
valued at fair value as determined in good faith by the Board of Trustees.
The extent of any deviation between a Fund's net asset value
based upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by the Board of Trustees. If such
deviation exceeds 1/2 of 1%, the Board of Trustees will consider what actions,
if any, will be initiated. In the event the Board of Trustees determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying distributions from
capital or capital gains; redeeming shares in kind; or establishing a net asset
value per share by using available market quotations or market equivalents.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities of each Fund ordinarily are purchased directly from
the issuer or from an underwriter or a market maker for the securities.
Ordinarily, no brokerage commissions are paid by the Fund for such purchases.
Purchases from underwriters of portfolio securities may include a concession
paid by the issuer to the underwriter and the purchase price paid to, and sales
price received from, market makers for the securities may reflect the spread
between the bid and asked price. No brokerage commissions have been paid by 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 December 31, 1995, the yield
and effective yield of each Fund were as follows:
<TABLE>
<CAPTION>
Effective
NAME OF FUND AND CLASS YIELD YIELD
<S> <C> <C>
Cash Management Fund
Institutional Shares 5.43%/5.35%* 5.57%/5.49%*
Service Shares 5.18%/5.09%* 5.31%/5.22%*
Treasury Prime Cash
Management Fund 4.87%/4.81%* 4.98%/4.93%*
Institutional Shares 4.62%/4.56%* 4.72%/4.66%*
Service Shares
U.S. Government Securities
Cash Management Fund
Institutional Shares 5.31%/5.22%* 5.44%/5.36%*
Service Shares 5.06%/4.93%* 5.18%/5.05%*
- ------------------------
* Absent fee waivers.
</TABLE>
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.
The Cash Management Fund, Treasury Prime Cash Management Fund
and U.S. Government Securities Cash Management Fund are rated AAAm or AAAmG, as
the case may be, by S&P and Aaa by Moody's.
From time to time, advertising materials for the Funds may
refer to FNBC's or any of its affiliate's full line of investment products for
the corporate cash market, including sweep services, on-line money market mutual
fund purchases, customized portfolio management, and OASIS, a same-day sweep
product that sweeps funds to an overnight Eurodollar time deposit.
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.
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.
The Trust will send annual and semi-annual financial
statements to all its shareholders.
As of February 29, 1996, the following shareholders owned of
record 5% or more of the indicated Fund's outstanding shares:
Percent of Cash
Management Fund
Institutional
NAME AND ADDRESS SHARES OUTSTANDING
Eagle and Co. 57.6%
c/o American National Bank
Money Market Processing Unit
1 North LaSalle Street, 7th Floor
Chicago, IL 60690
First National Bank of Chicago 29.9%
Corporate Asset Services
Attn: Mutual Funds Manager
One First National Plaza, Ste. 0115
Chicago, IL 60670-0001
First National Bank of Chicago 9.2%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste. 0256, 6th Floor
Chicago, IL 60670-0001
Percent of Cash
Management Fund
Service Shares
NAME AND ADDRESS OUTSTANDING
First National Bank of Chicago 88.6%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
Morand and Co. 11.3%
c/o American National Bank
Mutual Fund Processing Unit
1 North LaSalle Street, 3rd Floor
Chicago, IL 60690
Percent of Treasury
Prime Cash
Management Fund
Institutional
NAME AND ADDRESS SHARES OUTSTANDING
First National Bank of Chicago 51.2%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
First National Bank of Chicago 48.5%
Corporation Asset Services
Attn: Mutual Funds Manager
One First National Plaza, Ste. 0115
Chicago, IL 60670-0001
Percent of Treasury
Prime Cash
Management Fund
Service
NAME AND ADDRESS SHARES OUTSTANDING
First National Bank of Chicago 98.0%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
Percent of U.S.
Government
Securities Cash
Management Fund
Institutional
NAME AND ADDRESS SHARES OUTSTANDING
First National Bank of Chicago 67.7%
Corporate Trust Administration
Attn: Cash Sweep Coordinator
One First National Plaza, Ste 0126
Chicago, IL 60670-0001
First National Bank of Chicago 19.6%
Corporate Asset Services
Attn: Mutual Funds Manager
One First National Plaza, Ste 0115
Chicago, IL 60670-0001
Eagle and Co. 8.7%
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 91.6%
Cash Management Dept.
Attn: Randy Noren
525 West Monroe, Ste 0256, 6th Floor
Chicago, IL 60670-0001
Morand and Co. 8.3%
c/o American National Bank
Mutual Fund Processing Unit
1 North LaSalle Street, 3rd Floor
Chicago, IL 60690
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 10004-2696, 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, bond and
other short- and long-term rating categories assigned by
Standard & Poor's Ratings Group ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), Fitch Investors Service, L.P.
("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"), IBCA
Limited and IBCA Inc. ("IBCA") and Thomson BankWatch, Inc.
("BankWatch"):
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with a
plus sign (+) designation.
The rating Prime-1 (P-1) is the highest commercial paper
rating assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high rates
of return of funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and well
established access to a range of financial markets and assured sources of
alternate liquidity.
The rating Fitch-1 (Highest Grade) is the highest commercial
paper rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment.
The rating Duff-1 is the highest commercial paper rating
assigned by Duff. Paper rated Duff-1 is regarded as having very high certainty
of timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor.
The designation A1 by IBCA indicates that the obligation is
supported by a very strong capacity for timely repayment. Those obligations
rated A1+ are supported by the highest capacity for timely repayment.
The rating TBW-1 is the highest short-term obligation rating
assigned by BankWatch. Obligations rated TBW-1 are regarded as having the
strongest capacity for timely repayment.
Bond and Long-Term Ratings
Bonds rated AAA are considered by S&P to be the highest grade
obligations and possess an extremely strong capacity to pay principal and
interest.
Bonds 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."
Bonds rated AAA by Fitch are judged by Fitch to be strictly
high grade, broadly marketable, suitable for investment by trustees and
fiduciary institutions and liable to but slight market fluctuation other than
through changes in the money rate. The prime feature of an AAA bond is a showing
of earnings several times or many times interest requirements, with such
stability of applicable earnings that safety is beyond reasonable question
whatever changes occur in conditions.
Bonds rated AAA are judged by Duff to be of the highest credit
quality with negligible risk factors; only slightly more than U.S. Treasury
debt.
Obligations rated AAA by IBCA have the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly.
INTERNATIONAL AND U.S. BANK RATINGS
An IBCA bank rating represents IBCA's current assessment of
the strength of the bank and whether such bank would receive support should it
experience difficulties. In its assessment of a bank, IBCA uses a dual rating
system comprised of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks Long- and Short-Term Ratings as used in the corporate ratings
discussed above. Legal Ratings, which range in gradation from 1 through 5,
address the question of whether the bank would receive support provided by
central banks or shareholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of credit risk.
Individual Ratings, which range in gradations from A through E, represent IBCA's
assessment of a bank's economic merits and address the question of how the bank
would be viewed if it were entirely independent and could not rely on support
from state authorities or its owners.
In addition to its ratings of short-term obligations,
BankWatch assigns a rating to each issuer it rates, in gradations of A
through E. BankWatch examines all segments of the organization, including, where
applicable, the holding company, member banks or associations, and other
subsidiaries. In those instances where financial disclosure is incomplete or
untimely, a qualified rating (QR) is assigned to the institution. BankWatch also
assigns, in the case of foreign banks, a country rating which represents an
assessment of the overall political and economic stability of the country in
which the bank is domiciled.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- ----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
DESCRIPTION RATE DATE (000) (NOTE 2(A))
----------- ---- -------- --------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY NOTES--79.6%
Federal Farm Credit Bank Discount
Note................................. 5.59%* 1/19/96 $15,000 $ 14,958,075
Federal Farm Credit Bank Discount
Note................................. 5.48%* 1/22/96 30,000 29,904,100
Federal Farm Credit Bank Discount
Note................................. 5.63%* 1/25/96 20,000 19,924,933
Federal Farm Credit Bank Discount
Note................................. 5.50%* 2/15/96 27,000 26,814,375
Federal Farm Credit Bank Discount
Note................................. 5.47%* 3/11/96 25,000 24,734,097
Federal Home Loan Bank Discount Note.. 5.62%* 1/5/96 20,000 19,987,511
Federal Home Loan Bank Discount Note.. 5.61%* 1/12/96 30,000 29,948,575
Federal Home Loan Bank Discount Note.. 5.60%* 1/19/96 15,000 14,958,000
Federal Home Loan Bank Discount Note.. 5.50%* 2/21/96 30,000 29,766,250
Federal Home Loan Bank Discount Note.. 5.32%* 3/1/96 20,000 19,822,667
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.60%* 1/3/96 35,000 34,989,111
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.61%* 1/4/96 9,000 8,995,793
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.56%* 2/2/96 24,000 23,881,387
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.40%* 2/22/96 25,000 24,805,000
Federal National Mortgage Association
Discount Note........................ 5.52%* 1/29/96 26,000 25,888,373
Federal National Mortgage Association
Discount Note........................ 5.55%* 1/10/96 30,000 29,958,375
Federal National Mortgage Association
Discount Note........................ 5.53%* 1/24/96 25,000 24,911,674
Federal National Mortgage Association
Discount Note........................ 5.50%* 2/9/96 30,000 29,821,250
------------
TOTAL U.S. GOVERNMENT AGENCY NOTES
(AMORTIZED COST $434,069,546)......... 434,069,546
------------
REPURCHASE AGREEMENTS--21.5%
Repurchase agreement with the Sanwa Bank,
dated 12/29/95, with a maturity value
of $100,060,556
(See Footnote A)....................... 5.45% 1/2/96 100,000 100,000,000
Repurchase agreement with the National
Westminster Bank, dated 12/29/95, with a
maturity value of $17,210,798
(See Footnote B)..................... 5.65% 1/2/96 17,200 17,200,000
------------
TOTAL REPURCHASE AGREEMENTS
(AMORTIZED COST $117,200,000)......... 117,200,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST $551,269,546)(A)--
101.1%................................ 551,269,546
Liabilities in excess of other assets--
(1.1)%................................ (5,875,100)
------------
NET ASSETS--100.0%..................... $545,394,446
============
</TABLE>
- --------
Percentages indicated are based on net assets of $545,394,446.
(a)Cost for federal income tax and financial reporting purposes are the same.
*Yield at purchase.
Footnote A: Collateralized by $100,000,000 U.S. Treasury Bills, due 8/22/96
and $4,428,000 U.S. Treasury Bills, due 8/22/96; with an aggregate value of
$101,011,116.
Footnote B: Collateralized by $17,000,000 U.S. Treasury Note,
6.63%, due 3/31/97; with a value of $17,488,962.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- ----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
DESCRIPTION RATE* DATE (000) (NOTE 2(A))
----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--100.7%
U.S. TREASURY BILLS--100.7%
U.S. Treasury Bill................... 5.24% 1/4/96 $14,235 $ 14,228,795
U.S. Treasury Bill................... 5.35% 1/11/96 22,290 22,260,306
U.S. Treasury Bill................... 5.32% 1/18/96 26,680 26,619,493
U.S. Treasury Bill................... 5.35% 1/25/96 11,466 11,425,504
U.S. Treasury Bill................... 5.27% 2/1/96 2,400 2,389,119
U.S. Treasury Bill................... 5.36% 2/8/96 15,940 15,856,931
U.S. Treasury Bill................... 5.33% 2/15/96 13,890 13,798,838
U.S. Treasury Bill................... 5.32% 2/22/96 11,000 10,919,284
U.S. Treasury Bill................... 5.37% 2/29/96 5,000 4,955,996
U.S. Treasury Bill................... 5.32% 3/7/96 15,000 14,853,700
U.S. Treasury Bill................... 5.20% 3/14/96 1,380 1,365,463
U.S. Treasury Bill................... 4.90% 3/21/96 6,000 5,934,667
U.S. Treasury Bill................... 4.94% 4/4/96 920 908,133
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(AMORTIZED COST $145,516,229)........ 145,516,229
------------
TOTAL INVESTMENTS
(AMORTIZED COST $145,516,229)(A)--
100.7%............................... 145,516,229
Liabilities in excess of other
assets--(0.7)%....................... (948,650)
------------
NET ASSETS--100.0%.................... $144,567,579
============
</TABLE>
- --------
Percentages indicated are based on net assets of $144,567,579.
(a)Cost for federal income tax and financial reporting purposes
are the same.
*Yield at purchase.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- ----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
MOODY'S/ PRINCIPAL AMORTIZED
S&P MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2(A))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS--100.2%
COMMERCIAL PAPER--46.6%
BANKING--3.5%
Bayerische Vereinsbank...... A-1+/P-1 5.73% 1/8/96 $18,000 $ 17,979,945
------------
BROKERAGE--7.0%
Morgan Stanley Group,
Inc. ...................... A-1+/P-1 6.00% 1/3/96 18,000 17,994,000
Goldman Sachs & Co.......... A-1+/P-1 5.55% 4/2/96 18,000 17,744,700
------------
35,738,700
------------
CONSUMER GOODS AND SERVICES--
3.9%
Hershey Foods............... A-1+/P-1 5.65% 1/12/96 20,000 19,965,472
------------
FINANCE--21.3%
Barclays Funding............ A-1+/P-1 5.67% 1/19/96 20,000 19,943,300
Ciesco L.P.................. A-1+/P-1 5.70% 1/19/96 $20,000 19,943,000
Corporate Asset Funding Co.,
Inc........................ A-1+/P-1 5.65% 2/9/96 18,000 17,889,825
Dresdener U.S. Finance,
Inc........................ A-1+/P-1 5.69% 1/3/96 15,000 14,995,258
Nestle Capital.............. A-1+/P-1 5.73% 1/12/96 18,000 17,968,485
USAA Capital................ A-1+/P-1 5.64% 2/7/96 18,000 17,895,660
------------
108,635,528
------------
OIL--3.9%
Exxon Imperial.............. A-1+/P-1 5.62% 1/16/96 20,000 19,953,167
------------
TOBACCO--3.5%
Philip Morris Capital
Corp....................... A-1/P-1 5.72% 1/19/96 18,000 17,948,520
------------
TELECOMMUNICATIONS--3.5%
AT&T Corp................... A-1+/P-1 5.40% 3/19/96 18,000 17,783,940
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST
$238,005,272)............... 238,005,272
------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- ----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 1995
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
MOODY'S/ PRINCIPAL AMORTIZED
S&P MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2(A))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
BANKERS ACCEPTANCES--5.1%
Dai-Ichi Kangyo............. A-1/P-1 5.81% 2/23/96 $10,000 $ 9,914,464
Fuji Bank................... A-1/P-1 5.77% 1/3/96 8,000 7,997,436
Fuji Bank................... A-1/P-1 5.77% 1/12/96 3,000 2,994,711
Industrial Bank of Japan.... A-1/P-1 5.81% 2/28/96 5,000 4,953,197
------------
TOTAL BANKERS ACCEPTANCES
(AMORTIZED COST
$25,859,808)................ 25,859,808
------------
CERTIFICATES OF DEPOSIT--
35.0%
U.S. BRANCHES OF FOREIGN
BANKS--35.0%
ABN-AMRO.................... A-1+/P-1 5.78% 2/1/96 18,000 18,000,752
Bank of Montreal............ A-1+/P-1 5.78% 1/17/96 20,000 20,000,240
Banque Nationale de Paris... A-1/P-1 5.75% 2/5/96 18,000 18,000,646
Bayerische Hypotheken-Und
Wechsel Bank............... A-1/P-1 5.68% 3/22/96 19,000 19,000,078
Canadian Imperial Bank of
Commerce................... A-1+/P-1 5.60% 3/12/96 18,000 18,000,000
Commerzbank AG, New York ... A-1+/P-1 5.77% 1/17/96 15,000 15,000,132
Mitsubishi Bank............. A-1+/P-1 5.86% 3/6/96 18,000 18,002,183
National Westminster........ A-1+/P-1 5.78% 1/16/96 15,000 15,000,112
Rabobank.................... A-1+/P-1 5.75% 1/22/96 20,000 20,000,116
Societe Generale, New York.. A-1+/P-1 5.77% 2/5/96 18,000 18,000,330
------------
TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST
$179,004,589)............... 179,004,589
------------
TOTAL INVESTMENTS IN
SECURITIES
(AMORTIZED COST
$442,869,669)............... 442,869,669
------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- ----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 1995
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
DESCRIPTION RATE DATE (000) (NOTE 2(A))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS--13.5%
Repurchase agreement with National
Westminster, dated 12/29/95, with a
maturity value of $8,805,524 (See
Footnote A)........................... 5.65% 1/2/96 $ 8,800 $ 8,800,000
Repurchase agreement with Sanwa Bank,
dated 12/29/95, with a maturity value
of $60,036,333 (See Footnote B)....... 5.45% 1/2/96 60,000 60,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(AMORTIZED COST $68,800,000)........... 68,800,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST $511,669,669)(A)--
100.2% ................................ 511,669,669
Liabilities in excess of other assets--
(0.2%)................................. (792,813)
------------
NET ASSETS--100.0%...................... $510,876,856
============
</TABLE>
- --------
Percentages indicated are based on net assets of $510,876,856.
(a) Cost for federal income tax and financial reporting purposes are the
same.
Footnote A: Collateralized by $8,700,000 U.S. Treasury Note, 6.63%, due
3/31/97; with a value of $9,022,031.
Footnote B: Collateralized by $45,000,000 U.S. Treasury Bills, due 8/22/96
and $16,528,000 U.S. Treasury Note, 6.50%; due 8/15/97; with an aggregate value
of $61,839,987.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- ----------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TREASURY PRIME CASH
SECURITIES CASH CASH MANAGEMENT MANAGEMENT
MANAGEMENT FUND FUND FUND
--------------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at
amortized cost (amortized cost
$434,069,546, $145,516,229 and
$442,869,669 respectively)..... $434,069,546 $145,516,229 $442,869,669
Repurchase agreements (amortized
cost $117,200,000, $0 and
$68,800,000, respectively)..... 117,200,000 -- 68,800,000
Cash............................ -- -- 109,258
Interest receivable............. 25,567 -- 1,185,264
Deferred organization expenses.. 129,663 87,971 140,036
Prepaid expenses and other
assets......................... 28,398 10,875 23,044
------------ ------------ ------------
Total Assets................. 551,453,174 145,615,075 513,127,271
------------ ------------ ------------
LIABILITIES:
Advisory fees payable........... 186,860 15,774 91,725
Administration fees payable..... 78,347 5,228 69,812
Service Plan fees payable
(Service Shares)............... 37,975 37,202 53,567
Bank overdraft.................. 3,618,499 537,469 --
Dividends payable............... 2,046,983 417,391 1,968,881
Accrued expenses................ 90,064 34,432 66,430
------------ ------------ ------------
Total Liabilities............ 6,058,728 1,047,496 2,250,415
------------ ------------ ------------
NET ASSETS....................... $545,394,446 $144,567,579 $510,876,856
============ ============ ============
Net Asset Value, Offering Price
and Redemption Price per Share:
Institutional Shares:
Net Assets..................... $489,394,679 $ 14,008,335 $389,126,965
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized............. 489,865,389 14,008,529 389,280,704
------------ ------------ ------------
Net Asset Value per Share...... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
Service Shares:
Net Assets..................... $ 55,999,767 $130,559,244 $121,749,891
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized............. 56,053,643 130,561,050 121,798,020
------------ ------------ ------------
Net Asset Value per Share...... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest,
at par........................ $ 545,919 $ 144,570 $ 511,079
Additional paid-in capital..... 545,373,112 144,425,009 510,567,644
Accumulated net realized losses
from investment transactions.. (524,585) (2,000) (201,867)
------------ ------------ ------------
NET ASSETS, DECEMBER 31, 1995.... $545,394,446 $144,567,579 $510,876,856
============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- ----------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT TREASURY PRIME CASH CASH
SECURITIES CASH SECURITIES CASH CASH MANAGEMENT MANAGEMENT MANAGEMENT
MANAGEMENT FUND MANAGEMENT FUND FUND FUND FUND
--------------- ------------------ --------------- -------------- ------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FROM JUNE 1, FROM MARCH 22, FROM JULY 1,
1995 THROUGH FOR THE YEAR ENDED 1995 THROUGH 1995 THROUGH FOR THE YEAR ENDED
DECEMBER 31, MAY 31, DECEMBER 31, DECEMBER 31, JUNE 30,
1995(A) 1995 1995(B) 1995(A) 1995
--------------- ------------------ --------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income......... $17,275,666 $25,222,014 $1,364,594 $12,568,427 $15,728,576
----------- ----------- ---------- ----------- -----------
Expenses:
Advisory fees.......... 645,155 1,388,345 50,405 428,914 793,104
Administration fees.... 445,948 280,584 37,804 321,686 212,319
Service Plan fees
(Service Shares)...... 56,289 4,987 38,892 73,857 4,441
Custodian fees and
expenses.............. 81,041 52,283 42,386 68,908 68,943
Registration fees...... 3,430 83,301 3,693 19,428 54,803
Legal and audit fees... 22,812 82,193 18,638 33,180 62,493
Amortization of
organization
expenses.............. 14,413 11,079 12,559 13,095 12,954
Transfer agent fees and
expenses.............. 12,300 12,882 10,560 17,855
Reports to
shareholders.......... 12,838 9,301 19,437 11,592 13,114
Trustees' fees......... 6,670 4,990 625 6,912 4,608
Other expenses......... 21,361 48,122 2,042 13,845 44,768
----------- ----------- ---------- ----------- -----------
1,322,257 1,965,185 239,363 1,001,977 1,289,402
Less: Expense
reimbursements........ (224,593) (312,740) (107,023) (177,520) (267,419)
----------- ----------- ---------- ----------- -----------
1,097,664 1,652,445 132,340 824,457 1,021,983
----------- ----------- ---------- ----------- -----------
NET INVESTMENT
INCOME.............. 16,178,002 23,569,569 1,232,254 11,743,970 14,706,593
----------- ----------- ---------- ----------- -----------
REALIZED GAINS (LOSSES)
ON INVESTMENT
TRANSACTIONS:
Net realized gains
(losses) on investment
transactions.......... 4,517 (482,586) (2,000) (4,009) (1,706,625)
----------- ----------- ---------- ----------- -----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $16,182,519 $23,086,983 $1,230,254 $11,739,961 $12,999,968
=========== =========== ========== =========== ===========
</TABLE>
- --------
(a)Effective June 1, 1995 and July 1, 1995, the Funds changed their fiscal year
ends from May 31 and June 30, respectively, to December 31.
(b)Commencement of operations.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- ----------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995(1) MAY 31, 1995 MAY 31, 1994
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 16,178,002 $ 23,569,569 $ 12,751,537
Net realized gains
(losses) from
investment
transactions.......... 4,517 (482,586) (42,640)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 16,182,519 23,086,983 12,708,897
--------------- --------------- --------------
DIVIDENDS TO
SHAREHOLDERS FROM NET
INVESTMENT INCOME:
Institutional Shares.. (15,014,802) (23,456,426) (12,751,537)
Service Shares........ (1,163,200) (113,143) --
--------------- --------------- --------------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (16,178,002) (23,569,569) (12,751,537)
--------------- --------------- --------------
FUND SHARE TRANSACTIONS
(AT $1.00 PER SHARE):
Net proceeds from
shares sold........... 2,081,961,762 3,284,015,157 4,379,511,392
Dividends reinvested... 785,116 1,824,905 563,903
Cost of shares re-
deemed................ (2,029,306,950) (3,207,041,446) (4,230,925,537)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS
(NOTE 3)............ 53,439,928 78,798,616 149,149,758
--------------- --------------- --------------
TOTAL INCREASE IN
NET ASSETS......... 53,444,445 78,316,030 149,107,118
NET ASSETS:
Beginning of period.... 491,950,001 413,633,971 264,526,853
--------------- --------------- --------------
End of period.......... $ 545,394,446 $ 491,950,001 $ 413,633,971
=============== =============== ==============
</TABLE>
- --------
(1) For the period June 1, 1995 through December 31, 1995.
Effective June 1, 1995, the Fund changed its fiscal year end from May 31 to
December 31.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- ----------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
DECEMBER 31, 1995(A)
--------------------
<S> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income.................................... $ 1,232,254
Net realized losses from investment transactions......... (2,000)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... 1,230,254
-------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares.................................... (497,768)
Service Shares.......................................... (734,486)
-------------
Total Dividends to Shareholders........................ (1,232,254)
-------------
FUND SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Net proceeds from shares sold............................ 393,556,208
Dividends reinvested..................................... 434,305
Cost of shares redeemed.................................. (249,420,934)
-------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS
(NOTE 3).............................................. 144,569,579
-------------
TOTAL INCREASE IN NET ASSETS.......................... 144,567,579
NET ASSETS:
Beginning of period...................................... --
-------------
End of period............................................ $ 144,567,579
=============
</TABLE>
- --------
(a) For the period March 22, 1995 (commencement of operations) through December
31, 1995.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- ----------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995(1) JUNE 30, 1995 JUNE 30, 1994
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 11,743,970 $ 14,706,593 $ 8,493,966
Net realized losses
from investment
transactions.......... (4,009) (1,706,625) (136,023)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 11,739,961 12,999,968 8,357,943
--------------- --------------- --------------
DIVIDENDS TO
SHAREHOLDERS FROM NET
INVESTMENT INCOME:
Institutional Shares.. (10,179,235) (14,606,645) (8,493,966)
Service Shares........ (1,564,735) (99,948) --
--------------- --------------- --------------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (11,743,970) (14,706,593) (8,493,966)
--------------- --------------- --------------
FUND SHARE TRANSACTIONS
(AT $1.00 PER SHARE):
Net proceeds from
shares sold........... 1,257,882,248 1,539,582,005 2,167,517,783
Dividends reinvested... 985,906 1,362,169 654,107
Cost of shares
redeemed.............. (1,078,572,576) (1,454,140,686) (2,099,928,742)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS
(NOTE 3)............ 180,295,578 86,803,488 68,243,148
--------------- --------------- --------------
Increase due to capital
contribution from
affiliate of Investment
Adviser
(Note 4(d))............ -- 1,668,500 --
--------------- --------------- --------------
TOTAL INCREASE IN
NET ASSETS......... 180,291,569 86,765,363 68,107,125
NET ASSETS:
Beginning of period.... 330,585,287 243,819,924 175,712,799
--------------- --------------- --------------
End of period.......... $ 510,876,856 $ 330,585,287 $ 243,819,924
=============== =============== ==============
</TABLE>
- --------
(1)For the period from July 1, 1995 through December 31, 1995. Effective July 1,
1995, the Fund changed its fiscal year end from June 30 to December 31.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- ----------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------
NOTE 1--GENERAL
Prairie Institutional Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, (the "Act") as an open-end management
investment company. At December 31, 1995, the Trust was comprised of four
separate 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, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund (collectively, the "Funds"). As of
December 31, 1995, the Municipal Cash Management Fund had not yet commenced
operations.
The Funds each offer two classes of shares, Institutional Shares and Service
Shares. Institutional Shares and Service Shares are substantially the same
except that Service Shares are subject to fees payable under a Service Plan
adopted pursuant to Rule 12b-1 under the Act (the "Service Plan") at an annual
rate of 0.25% of the average daily net asset value of the outstanding Service
Shares.
At a shareholder meeting of the First Prairie U.S. Treasury Securities Cash
Management Fund (the "Treasury Predecessor Fund") held on December 21, 1994, the
shareholders approved an Agreement and Plan of Exchange pursuant to which the
Treasury Predecessor Fund transferred all of its assets and liabilities to the
U.S. Government Securities Cash Management Fund. In exchange for the assets and
liabilities, the U.S. Government Securities Cash Management Fund issued
Institutional Shares to the shareholders of the Treasury Predecessor Fund 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 Treasury Predecessor Fund received a pro rata distribution of 431,159,110
Institutional Shares of the U.S. Government Securities Cash Management Fund
having a net asset value of $430,731,675.
At a shareholder meeting of First Prairie Cash Management Fund (the
"Predecessor Fund") held on December 21, 1994, the shareholders approved an
Agreement and Plan of Exchange pursuant to which the Predecessor Fund
transferred all of its assets and liabilities to the Cash Management Fund. In
exchange for the assets and liabilities, the Cash Management Fund issued
Institutional Shares to the shareholders of the Predecessor Fund 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
Predecessor Fund received a pro rata distribution of 263,124,343 Institutional
Shares of the Cash Management Fund having a net asset value of $262,954,610.
First Chicago Investment Management Company ("FCIMCO"), a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), serves as each Fund's
investment adviser and administrator. FCIMCO has engaged Concord Holding
Corporation ("Concord"), a wholly-owned subsidiary of The BISYS Group, Inc.
("BISYS"), to serve as the Funds' sub-administrator. Concord Financial Group,
Inc., a wholly-owned subsidiary of BISYS, serves as the principal underwriter
and distributor of each Fund's shares.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. These principles
require management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses for the period. Actual results could
differ from those estimates.
(a) Portfolio Valuation: Investments of the Funds are valued at either
amortized cost, which approximates market value. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity of
the security. In addition, the Funds generally may not (a) purchase any
instrument with a remaining maturity greater than thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a dollar-weighted
average maturity which exceeds 90 days.
(b) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and when appropriate, discounts on
investments, is earned from settlement date and recognized on the accrual basis.
The U.S. Government Securities Cash Management Fund and Cash Management Fund
may enter into repurchase agreements with financial institutions deemed to be
creditworthy by FCIMCO, subject to the seller's agreement to repurchase and the
Fund's agreement to resell such securities at a mutually agreed upon price.
Securities purchased subject to repurchase agreements are deposited with the
Fund's custodian and, pursuant to the terms of the purchase 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
purchase 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: Each Fund's dividends from net investment
income are declared daily and paid monthly. Distributions from net realized
capital gains, if any, are normally declared annually and paid annually, but
each Fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code (the "Code"). To the
extent that net realized capital gains can be offset by capital loss carryovers,
it is the policy of each Fund not to distribute such gains.
(d) Federal income taxes: It is the policy of each Fund to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable sections of
the Code, and to make distributions of taxable income sufficient to relieve it
from all, or substantially all, Federal income taxes. At December 31, 1995, the
U.S. Government Securities Cash Management Fund had unused capital loss
carryovers of approximately $525,000, which are available for Federal income tax
purposes to be applied against future net capital gains, if any, realized
subsequent to December 31, 1995. If not applied, $7,000 of the carryover expires
in 2001, $460,000 expires in 2002 and $58,000 expires in 2003. At December 31,
1995, the Treasury Prime Cash Management Fund had unused capital loss carryovers
of approximately $2,000, which are available for Federal income tax purposes to
be applied against future net capital gains, if any, realized subsequent to
December 31, 1995. If not applied, $2,000 of the carryover expires in 2003. At
December 31, 1995, the Cash Management Fund had unused capital loss carryovers
of approximately $201,000 available for Federal income tax purposes to be
applied against future net capital gains, if any, realized subsequent to
December 31, 1995. The carryover does not include net realized securities losses
from November 1, 1995 through December 31, 1995 which are treated, for Federal
income tax purposes, as arising in fiscal 1996. If not applied, $19,000 of the
carryover expires in 2001, $151,000 expires in 2002 and $31,000 expires in 2003.
(e) Expenses: Expenses directly attributable to a Fund are charged to that
Fund's operations; expenses which are applicable to all Funds are allocated
among them on the basis of relative net assets. Fund expenses directly
attributable to a class of shares are charged to that class; expenses which are
applicable to all classes are allocated among them.
NOTE 3--FUND SHARE TRANSACTIONS
Transactions in shares of the Funds are summarized below (at $1.00 per
share):
<TABLE>
<CAPTION>
TREASURY PRIME
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT
CASH MANAGEMENT FUND FUND
---------------------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD
JUNE 1, 1995 FOR THE YEAR MARCH 22, 1995
THROUGH ENDED MAY 31, THROUGH
DECEMBER 31, ------------------------------ DECEMBER 31,
1995(1) 1995 1994 1995(2)
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares:
Shares issued.......... 1,915,896,446 3,256,766,429 4,379,511,392 206,294,412
Dividends reinvested... 784,723 1,824,654 563,903 433,330
Shares redeemed........ (1,902,575,044) (3,196,512,306) (4,230,925,537) (192,719,213)
-------------- -------------- -------------- ------------
Net increase........... 14,106,125 62,078,777 149,149,758 14,008,529
============== ============== ============== ============
Service Shares:
Shares issued.......... 166,065,316 27,248,728 -- 187,261,796
Dividends reinvested... 393 251 -- 975
Shares redeemed........ (126,731,906) (10,529,140) -- (56,701,721)
-------------- -------------- -------------- ------------
Net increase........... 39,333,803 16,719,839 -- 130,561,050
============== ============== ============== ============
Net increase in Fund.... 53,439,928 78,798,616 149,149,758 144,569,579
============== ============== ============== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CASH MANAGEMENT
FUND
--------------------------------------------
FOR THE
PERIOD
JULY 1, 1995 FOR THE YEAR
THROUGH ENDED MAY 31,
DECEMBER ------------------------------
31, 1995(1) 1995 1994
------------ -------------- --------------
<S> <C> <C> <C>
Institutional Shares:
Shares issued.................... 930,307,164 1,491,127,430 2,167,517,783
Dividends reinvested............. 985,563 1,361,860 654,107
Shares redeemed.................. (861,416,587) (1,417,064,383) (2,099,928,742)
------------ -------------- --------------
Net increase..................... 69,876,140 75,424,907 68,243,148
============ ============== ==============
Service Shares:
Shares issued.................... 327,575,084 48,454,575 --
Dividends reinvested............. 343 309 --
Shares redeemed.................. (217,155,989) (37,076,303) --
------------ -------------- --------------
Net increase..................... 110,419,438 11,378,581 --
============ ============== ==============
Net increase in Fund.............. 180,295,578 86,803,488 68,243,148
============ ============== ==============
</TABLE>
(1) Effective June 1, 1995 and July 1, 1995, the Funds changed their fiscal year
ends from May 31 and June 30, respectively, to December 31.
(2) Commencement of operations.
NOTE 4--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFIILIATES
(a) The Trust has an Investment Advisory Agreement with FCIMCO pursuant to
which FCIMCO has agreed to provide the day-to-day management of each of the
Fund's investments for an advisory fee at an annual rate of 0.20% of each Fund's
average daily net assets.
The Trust has an Administration Agreement with FCIMCO pursuant to which FCIMCO
has agreed to assist in all aspects of each Fund's operations for an
administration fee at an annual rate of 0.15% of each Fund's average daily net
assets. In addition, FCIMCO has engaged Concord to assist in providing certain
administrative services to each Fund 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.
For the period June 1, 1995 through December 31, 1995 for the U.S.
Government Securities Cash Management Fund, the period March 22, 1995
(commencement of operations) through December 31, 1995 for the Treasury Prime
Cash Management Fund and the period July 1, 1995 through December 31, 1995 for
the Cash Management Fund, FCIMCO agreed to limit each Fund's expenses to an
annual amount not to exceed 0.35% of average daily net assets for Institutional
Shares and 0.60% of average daily net assets for Service Shares. As a result,
The U.S. Government Securities Cash Management Fund, Treasury Prime Cash
Management Fund and Cash Management Fund were reimbursed expenses of $224,593,
$107,023 and $177,520, respectively.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- ----------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
- ----------------------------------------------------------------
(b) The Trust has adopted a Service Plan pursuant to Rule 12b-1 under the
Act. Under the terms of the Service Plan, each Fund 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 Fund's Service Shares
and for the provision of certain services to the holders of Service Shares. The
Distributor may make payments to others, including FCIMCO, FNBC and their
affiliates, for the provision of these services. For the period June 1, 1995
through December 31, 1995, the U.S. Government Securities Cash Management Fund
paid fees under the Service Plan in the amount of $56,289. For the period March
22, 1995 (commencement of operations) through December 31, 1995, the Treasury
Prime Cash Management Fund paid fees under the Service Plan in the amount of
$38,892. For the period July 1, 1995 (initial offering of Service Shares)
through December 31, 1995, the Cash Management Fund paid fees under the Service
Plan in the amount of $73,857. Of these amounts, the following was paid to the
Distributor and FCIMCO and its affiliates:
<TABLE>
<CAPTION>
AMOUNT PAID TO
AMOUNT PAID TO FCIMCO
THE DISTRIBUTOR AND ITS AFFILIATES
--------------- ------------------
<S> <C> <C>
U.S. Government Securities Cash Management
Fund...................................... $19 $56,270
Treasury Prime Cash Management Fund........ 25 38,867
Cash Management Fund....................... 16 73,841
</TABLE>
(c) The Fund's pay each Trustee a pro-rata share of the aggregate fixed annual
fee of $25,000 and an attendance fee of $1,000 per meeting for all of the Funds
in the Prairie Family of Funds.
(d) During the year ended June 30, 1995, an affiliate of FCIMCO purchased
securities from the Cash Management Fund at an amount in excess of the
securities' fair market value. The Cash Management Fund recorded a realized loss
on these sales in the amount of $1,668,500 and the Cash Management Fund recorded
an offsetting capital contribution from the affiliate. As a result of varying
treatment for book and tax purposes, the capital contribution was reclassified
from additional paid-in-capital to accumulated net realized losses in the
Statement of Assets and Liabilities.
NOTE 5--MERGER AND SUBSEQUENT EVENT
On December 1, 1995, FCIMCO's ultimate parent company, First Chicago
Corporation, merged with NBD Bancorp, Inc., with the combined company renamed
First Chicago NBD Corporation (FCNBD). FCNBD has now begun the process of
reorganizing their proprietary mutual funds: Prairie Funds, Prairie
Institutional Funds and The Woodward Funds (whose investment adviser is NBD
Bank, a wholly owned subsidiary of NBD Bancorp, Inc., which in turn is a wholly
owned subsidiary of FCNBD).
On February 20, 1996, the Board of Trustees of The Woodward Funds and the
Board of Trustees of Prairie Funds and Prairie Institutional Funds approved
Reorganization Agreements which are subject to shareholder approval. The
expenses incurred in connection with entering into and carrying out provisions
of the Reorganization Agreements, whether or not the transactions contemplated
thereby are consummated, will be paid by FCNBD. The reorganization is intended
to be effected on a tax-free basis, so that none of the Fund's shareholders will
recognize taxable gains or losses as a result of the reorganization.
A proxy statement/prospectus describing the reorganization and the reasons
therefore will be sent to shareholders.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- ----------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED MAY 31, ENDED
DECEMBER 31, ------------------ MAY 31,
1995(1) 1995 1994 1993(2)
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING
OF PERIOD.................. $ 0.9989 $ 0.9999 $ 1.0000 $ 1.0000
-------- -------- -------- --------
Income from investment operations:
Net investment income..... 0.0320 0.0492 0.0302 0.0319
Net realized gains
(losses) from
investments.............. 0.0001 (0.0010) (0.0001) --
-------- -------- -------- --------
Total income from
investment operations... 0.0321 0.0482 0.0301 0.0319
-------- -------- -------- --------
Less dividends:
From net investment
income................... (0.0320) (0.0492) (0.0302) (0.0319)
-------- -------- -------- --------
Net change in net asset val-
ue......................... 0.0001 (0.0010) (0.0001) --
-------- -------- -------- --------
NET ASSET VALUE, END OF PE-
RIOD....................... $ 0.9990 $ 0.9989 $ 0.9999 $ 1.0000
======== ======== ======== ========
TOTAL RETURN................. 3.24%++ 5.03% 3.06% 3.25%+
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets................. 0.35%+ 0.34% 0.30% 0.02%+
Ratio of net investment
income to average net
assets..................... 5.46%+ 4.94% 3.02% 3.10%+
Ratio of expenses to average
net assets*................ 0.42%+ 0.41% 0.41% 0.49%+
Ratio of net investment
income to average net
assets*.................... 5.39%+ 4.87% 2.91% 2.63%+
Net assets, end of period
(000's omitted)............ $489,395 $475,248 $413,634 $264,527
</TABLE>
- --------
(1) For the period June 1, 1995 through December 31, 1995. Effective June
1, 1995, the Fund changed its fiscal year end from May 31 to December 31.
(2) For the period June 2, 1992 (commencement of operations) through May
31, 1993.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- ----------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
DECEMBER 31, MAY 31,
1995(1) 1995(2)
-------------- --------------
<S> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 0.9989 $ 1.0000
-------- --------
Income from investment operations:
Net investment income......................... 0.0305 0.0199
Net realized gains (losses) from investments.. 0.0001 (0.0011)
-------- --------
Total income from investment operations...... 0.0306 0.0188
-------- --------
Less dividends:
From net investment income.................... (0.0305) (0.0199)
-------- --------
Net change in net asset value................... 0.0001 (0.0011)
-------- --------
NET ASSET VALUE, END OF PERIOD.................. $ 0.9990 $ 0.9989
======== ========
TOTAL RETURN..................................... 3.09%++ 2.01%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 0.60%+ 0.57%+
Ratio of net investment income to average net
assets......................................... 5.17%+ 5.48%+
Ratio of expenses to average net assets*........ 0.69%+ 0.66%+
Ratio of net investment income to average net
assets*........................................ 5.08%+ 5.39%+
Net assets, end of period (000's omitted)....... $ 56,000 $ 16,702
</TABLE>
- --------
(1) For the period June 1, 1995 through December 31, 1995. Effective June
1, 1995, the Fund changed its fiscal year end from May 31 to December 31.
(2) For the period January 17, 1995 (initial offering date of Service
Shares) through May 31, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- ----------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED
DECEMBER 31,
1995(1)
--------------
<S> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 1.0000
--------
Income from investment operations:
Net investment income......................................... 0.0399
--------
Less dividends:
From net investment income.................................... (0.0399)
--------
Net change in net asset value................................... --
--------
NET ASSET VALUE, END OF PERIOD.................................. $ 1.0000
========
TOTAL RETURN..................................................... 4.06%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... 0.35%+
Ratio of net investment income to average net assets............ 5.16%+
Ratio of expenses to average net assets*........................ 1.23%+
Ratio of net investment income to average net assets*........... 4.28%+
Net assets, end of period (000's omitted)....................... $ 14,008
</TABLE>
- --------
(1) For the period March 22, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been as
indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- ----------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED
DECEMBER 31,
1995(1)
--------------
<S> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 1.0000
--------
Income from investment operations:
Net investment income......................................... 0.0380
--------
Less dividends:
From net investment income.................................... (0.0380)
--------
Net change in net asset value................................... --
--------
NET ASSET VALUE, END OF PERIOD.................................. $ 1.0000
========
TOTAL RETURN..................................................... 3.86%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... 0.60%+
Ratio of net investment income to average net assets............ 4.72%+
Ratio of expenses to average net assets*........................ 0.74%+
Ratio of net investment income to average net assets*........... 4.58%+
Net assets, end of period (000's omitted)....................... $130,559
</TABLE>
- --------
(1) For the period March 22, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been as
indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- ----------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
FOR THE PERIOD YEAR ENDED FOR THE PERIOD
ENDED JUNE 30, ENDED
DECEMBER 31, ------------------- JUNE 30,
1995(1) 1995 1994 1993(2)
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 0.9994 $ 0.9993 $ 0.9999 $ 1.0000
-------- -------- -------- --------
Income from investment
operations:
Net investment income.... 0.0277 0.0507 0.0333 0.0297
Net realized gains
(losses) from
investments............. 0.0002 (0.0059) (0.0006) (0.0001)
-------- -------- -------- --------
Total income from
investment operations.. 0.0279 0.0448 0.0327 0.0296
-------- -------- -------- --------
Less dividends:
From net investment
income.................. (0.0277) (0.0507) (0.0333) (0.0297)
-------- -------- -------- --------
Increase due to capital
contribution from
affiliate of Investment
Adviser (Note 3(d))....... -- 0.0060 -- --
-------- -------- -------- --------
Net change in net asset
value..................... 0.0002 0.0001 (0.0006) (0.0001)
-------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD.................... $ 0.9996 $ 0.9994 $ 0.9993 $ 0.9999
======== ======== ======== ========
TOTAL RETURN................ 2.80%++ 5.19%* 3.38% 3.25%+
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets........ 0.35%+ 0.35% 0.31% 0.05%+
Ratio of net investment
income to average net
assets.................... 5.51%+ 5.11% 3.33% 3.19%+
Ratio of expenses to
average net assets**...... 0.43%+ 0.44% 0.43% 0.56%+
Ratio of net investment
income to average net
assets**.................. 5.43%+ 5.02% 3.21% 2.68%+
Net assets, end of period
(000's omitted)........... $389,127 $319,214 $243,820 $175,713
</TABLE>
- --------
(1) For the period July 1, 1995 through December 31, 1995. Effective July
1, 1995, the Fund changed its fiscal year end from June 30 to December 31.
(2) For the period July 30, 1992 (commencement of operations) through June
30, 1993.
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been 4.51%
(See Note 4(d) to Financial Statements).
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- ----------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
DECEMBER 31, JUNE 30,
1995(1) 1995(2)
-------------- --------------
<S> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 0.9994 $ 1.0000
-------- --------
Income from investment operations:
Net investment income......................... 0.0264 0.0245
Net realized gains (losses) from investments.. 0.0002 (0.0006)
-------- --------
Total income from investment operations...... 0.0266 0.0239
-------- --------
Less dividends:
From net investment income.................... (0.0264) (0.0245)
-------- --------
Net change in net asset value................... 0.0002 (0.0006)
-------- --------
NET ASSET VALUE, END OF PERIOD.................. $ 0.9996 $ 0.9994
======== ========
TOTAL RETURN..................................... 2.68%++ 2.47%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 0.60%+ 0.60%+
Ratio of net investment income to average net
assets......................................... 5.25%+ 5.46%+
Ratio of expenses to average net assets*........ 0.69%+ 0.71%+
Ratio of net investment income to average net
assets*........................................ 5.16%+ 5.35%+
Net assets, end of period (000's omitted)....... $121,750 $ 11,372
</TABLE>
- --------
(1) For the period July 1, 1995 through December 31, 1995. Effective June
1, 1995, the Fund changed its ficsal year end from June 30 to December 31.
(2) For the period January 17, 1995 (initial offering date of Service
Shares) through June 30, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee waivers and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- ----------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- ----------------------------------------------------------------
PRAIRIE INSTITUTIONAL FUNDS THE BOARD OF TRUSTEES AND
SHAREHOLDERS
We have audited the accompanying statements of asset and liabilities,
including the portfolios of investments, of Prairie Institutional Funds
(comprising, respectively, the U.S. Government Securities Cash Managment,
Treasury Prime Cash Management and Cash Management Funds) (the "Fund") as of
December 31, 1995 and the related statements of operations for the periods then
ended, and the statements of changes in net assets and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the 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 investments owned as of
December 31, 1995 by correspondence with the custodians and others. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the Prairie Institutional Funds at December
31, 1995, the results of their operations for the periods then ended, and the
changes in their net assets and the financial highlights for each of the
indicated periods, in conformity with generally accepted accounting principles.
LOGO
New York, New York
February 22, 1996
<PAGE>
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.
Report of Ernst & Young LLP, Independent
Auditors.
(b) Exhibits:
(1) Amended and Restated Agreement and
Declaration of Trust is incorporated by
reference to Exhibit (1) of Pre-Effective
Amendment No. 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 is incorporated by
reference to Exhibit (6) of Post-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on May 30,
1995.
(8) Custody Agreement is incorporated by
reference to Exhibit (8) of Post-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on May 30,
1995.
(9)(a) Administration Agreement.
(9)(b) Master Sub-Administration Agreement is
incorporated by reference to Exhibit (9)(b)
of Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed
on May 30, 1995.
(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 is incorporated
by reference to Exhibit (16) of Post-
Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed
on May 30, 1995.
(18) Rule 18f-3 Plan is incorporated by
reference to Exhibit (18) of Post-Effective
Amendment No. 1 to the Registration
Statement on Form N-1A, filed on May 30,
1995.
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
(1) (2)
Number of Record
Holders
TITLE OF CLASS AS OF FEBRUARY 27, 1996
-------------- -----------------------
Shares of beneficial interest,
par value $.001 per share
Cash Management Fund
Institutional Shares 12
Service Shares 3
Treasury Prime Cash Management
Fund
Institutional Shares 5
Service Shares 3
U.S. Government Securities Cash
Management Fund
Institutional Shares 8
Service Shares 3
ITEM 27. INDEMNIFICATION
Reference is made to Article EIGHTH of the Registrant's Amended
and Restated Declaration of Trust incorporated by reference to Exhibit 1. The
application of these provisions is limited by Article 10 of the Registrant's
By-Laws incorporated by reference to Exhibit 2 and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a trustee, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.
Reference also is made to the Distribution Agreement
previously filed as Exhibit 6.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
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.
3435 Stelzer Road
Columbus, Ohio 43219-3035
3. BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
4. Primary Funds Service Corp.
100 Financial Park
Franklin, Massachusetts 02038
5. The Bank of New York
90 Washington Street
New York, New York 10286
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes
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 15th day of March, 1996.
PRAIRIE INSTITUTIONAL FUNDS
BY:/S/ MARK A. DILLON*
Mark A. Dillon, President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/S/MARK A. DILLON* President March 15, 1996
- --------------------------
Mark A. Dillon (Principal
Executive Officer)
/S/ MARTIN R. DEAN* Treasurer March 15, 1996
Martin R. Dean (Principal Financial
and Accounting
Officer)
/S/ JOHN P. GOULD* Trustee March 15, 1996
- ---------------------------
John P. Gould
/S/ MARILYN MCCOY* Trustee March 15, 1996
Marilyn McCoy
/S/ RAYMOND D. ODDI* Trustee March 15, 1996
- ---------------------------
Raymond D. Oddi
*By: /S/ ANN E. BERGIN March 15, 1996
----------------------
Ann E. Bergin, As
Attorney-in-fact
</TABLE>
PRAIRIE INSTITUTIONAL FUNDS
Post-Effective Amendment No. 3 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..................................
(9)(a) Administration Agreement.......................................
(11) Consent of Independent Auditors................................
<PAGE>
INVESTMENT ADVISORY AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
November 30, 1995
First Chicago Investment
Management Company
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series, if any, named on Schedule 1 hereto, as
such Schedule may be revised from time to time (each, a
"Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its 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 hereunder. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the
case may be, on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two
or more companies or accounts managed by you which have
available funds for investment, the available securities will be
allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one
or more Series or the size of the position obtainable for or
disposed of by one or more Series.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
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 such person's capacity
as an officer of the Fund. The obligations of this Agreement
shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:/s/ D'Ray Brewer
Accepted:
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:/s/ Terrall J. Janeway
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
Annual Fee
as a
Percentage
of Average
Daily Net Reapproval Reapproval
Name of Series Assets Date Day
<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>
ADMINISTRATION AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
November 30, 1995
First Chicago Investment
Management Company
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund") consisting of the series,
if any, named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ you to act as its
administrator.
In this connection it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect. We have
discussed and concur in your employing on this basis Concord Holding Corporation
(the "Sub-Administrator").
Pursuant to this agreement and subject to the supervision and control of
the Fund's Board, you will assist in supervising all aspects of the Fund's
operations, except investment management of the Series' portfolios. It is
understood that, pursuant to this Agreement, you shall not act and shall not be
required to act as an investment adviser or have any authority to supervise the
investment or reinvestment of the cash, securities or other property comprising
the Series' assets or to determine what securities or other property may be
purchased or sold by the Fund.
You will supply office facilities (which may be in your own
offices), data processing services, clerical, accounting and bookkeeping ser-
vices, 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. its
reckless disregard of its obligations and duties under such agreement.
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of each month a fee
at the rate set forth opposite each Series' name on Schedule 1 hereto. Net
asset value shall be computed on such days and at such time or times as
described in the Fund's then-current Prospectus and Statement of Additional
Information. The fee for the period from the date of the commencement of the
public sale of a Series' shares to the end of the month during which such sale
shall have been commenced shall be pro-rated according to the proportion which
such period bears to the full monthly period, and upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall
be pro-rated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement and will pay all fees of the Sub- Administrator in
connection with its duties in respect of the Series. All other expenses to be
incurred in the operation of the Fund will be borne by the Fund, except to the
extent specifically assumed by you. The expenses to be borne by the Fund
include, without limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid on securities
sold short, brokerage fees and commissions, if any, fees of Board members,
Securities and Exchange Commission fees and state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside auditing
and legal expenses, costs of independent pricing services, costs of maintaining
the Series' existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing stockholders, costs of stockholders'
reports and corporate meetings, and any extraordinary expenses.
The Fund understands that, from time to time hereafter, you may act as
administrator to one or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so acting. In addition,
it is understood that the persons employed by you to assist in the performance
of your duties hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
Neither you nor the Sub-Administrator shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement or the Master Sub- Administration
Agreement relates, except, in the case of you, for a loss resulting from willful
misfeasance, bad faith or gross negligence on your part in the performance of
your duties or from reckless disregard by you of your obligations and duties
under this Agreement and, in the case of the Sub- Administrator, for a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under the Master Sub- Administration Agreement. Any
person, even though also your officer, Board member, partner, employee or agent,
who may be or become an officer, Board member, partner, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as your officer, Board member, partner, employee, or agent or one
under your control or direction even though paid by you.
As to each Series, this Agreement shall continue until the date set forth
opposite such Series' name on Schedule 1 hereto (the "Reapproval Date"), and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Series' outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. As to
each Series, after the Reapproval Date, this Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board or by vote of holders of a
majority of such Series' shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically, as to the relevant Series, in
the event of its assignment (as defined in said Act).
The Fund is agreeing to the provisions of this Agreement that limit the
Sub-Administrator's liability and other provisions relating to the Sub-
Administrator so as to induce the Sub-Administrator to enter into the Master
Sub-Administration Agreement with you and to perform its obligations thereunder.
The Sub-Administrator is expressly made a third party beneficiary of this
Agreement with rights as respects the Fund to the same extent as if it had been
a party hereto.
The Fund recognizes that from time to time your directors, officers and
employees may serve as directors, trustees, partners, officers and employees of
other corporations, business trusts, partnerships or other entities (including
other investment companies) and that such other entities may include the name
"Prairie" as part of their name, and that your corporation or its affiliates may
enter into administration or other agreements with such other entities. If you
cease to act as the Fund's administrator, the Fund agrees that, at your request,
the Fund will take all necessary action to change the name of the Fund to a name
not including "Prairie" in any form or combination of words.
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:
Accepted:
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
By:
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Annual Fee
as a
Percentage
of Average
Daily Net
Name of Fund or Series Assets Reapproval Date Reapproval Day
<S> <C> <C> <C>
Cash Management Fund
Municipal Cash Management Fund .15% December 31, 1997 December 31st
Treasury Prime Cash
Management Fund .15% December 31, 1997 December 31st
U.S. Government Securities
Cash Management Fund .15% December 31, 1997 December 31st
.15% December 31, 1997 December 31st
</TABLE>
<PAGE>
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 on Prairie
Institutional Funds, dated February 22, 1996, in this Registration Statement of
Prairie Institutional Funds (Form N-1A No. 33-56247).
ERNST & YOUNG LLP
New York, New York
March 18, 1996
