PRIME CASH FUND
Supplement to the prospectus dated April 30, 1995
On January 29, 1996, the holders of more than 99% of the
Fund's shares advised the Fund that they intended to redeem their
shares, which will leave the Fund with virtually no assets.
Management of the Fund has concluded that it is not practical at
this time for the Fund to continue operations. The Fund will
terminate operations as soon as practicable, affording each
shareholder the opportunity to close its account.
Effective immediately, the Fund no longer offers shares to the
public.
The date of this supplement is February 1, 1996.
<PAGE>
PRIME CASH FUND
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
PROSPECTUS
April 30, 1995
The Fund's objective is to seek a high level of current
income, liquidity and stability of capital from investing in a
diversified portfolio of short-term money market securities meeting
specific quality standards.
Shares of the Fund may be purchased and redeemed at their next
determined net asset value, which is normally the constant price of
$1.00 per share; (see "Net Asset Value Per Share"). Purchases are
made without any sales charge through Aquila Distributors, Inc.,
which is the exclusive Distributor of the Fund's shares. See "How
to Invest in the Fund" and "How to Redeem Your Investment."
An investment in the Fund is neither insured nor guaranteed by
the U.S. Government. There can be no assurance that the Fund will
be able to maintain a stable net asset value of $1.00 per share.
Shares of the Fund are not deposits in, obligations of or
endorsed by TCW Funds Management, Inc., (the "Adviser"), Trust
Company of the West, any of their affiliates or by any other bank.
Shares of the Fund are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other
agency.
An investment in the Fund involves certain investment risks,
including possible loss of the principal amount invested.
This Prospectus concisely states information about the Fund
that you should know before investing. A Statement of Additional
Information about the Fund dated April 30, 1995 (the "Additional
Statement") has been filed with the Securities and Exchange
Commission and is available without charge upon written request to
Administrative Data Management Corp., the Fund's Shareholder
Servicing Agent, at the address given below, or by calling it at
the telephone number(s) given below. The Additional Statement
contains information about the Fund and its management not included
in the Prospectus. The Additional Statement is incorporated by
reference in its entirety in the Prospectus. Only when you have
read both the Prospectus and the Additional Statement are all facts
about the Fund available to you.
FOR PURCHASE, REDEMPTION OR ACCOUNT INQUIRIES CONTACT
THE FUND'S SHAREHOLDER SERVICING AGENT:
ADMINISTRATIVE DATA MANAGEMENT CORP.
10 WOODBRIDGE CENTER DRIVE, WOODBRIDGE, NJ 07095-1198
800-952-6666 toll free or 908-855-5731
FOR GENERAL INQUIRIES AND YIELD INFORMATION, CALL 800-228-7495 toll
free or 212-697-6666
This Prospectus Should Be Read and Retained for Future Reference
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>
<CAPTION>
PRIME CASH FUND
TABLE OF EXPENSES
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases.................... 0%
Maximum Sales Load Imposed on Reinvested Dividends......... 0%
Deferred Sales Load........................................ 0%
Redemption Fees............................................ 0%
Exchange Fee............................................... 0%
Annual Trust Operating Expenses<F*>
(As a percentage of average net assets)
Investment Advisory Fee After Waiver<F+> ............... 0.24%
12b-1 Fee <F++> ......................................... 0%
Total Other Expenses After Fee Waiver and
Expense Reimbursement<F+> ............................ 0.31%
Admnistration Fee After Waiver<F+> ........... 0.13%
Other Expenses After Expense Reimbursement<F+>. 0.18%
Total Fund Operating Expenses
After Fee Waivers and Expense Reimbursement<F+> ....... 0.55%
<CAPTION>
Example** 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You 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 ................ $6 $18 $31 $69
<FN>
<F*> Based upon amounts incurred during the most recent fiscal
year of the Fund.
</FN>
<FN>
<F+> Absent fee waiver, investment advisory fees would have been
incurred at the rate of 0.25% of average net assets. Also,
absent administration fee waiver, administration fees would
have been incurred at the rate of 0.25% of average net assets
and other expenses would have included those fees. Absent
any fee waiver or expense reimbursement, total Fund operating
expenses for the year would have been incurred at the annual
rate of 0.76%.
</FN>
<FN>
<F++> The 12b-1 Plan of the Fund does not involve payments out of
the assets or income of the Fund designed to recognize sales
of shares of the Fund or to pay advertising expenses.
</FN>
<FN>
<F**> The expense example is based upon an amount at the beginning
of each year which includes the prior year's assumed results.
A year's results consist of an assumed 5% annual return less
expenses at a 0.55% annual rate; the expense ratio was
applied to an assumed average balance (the year's starting
investment plus one-half the year's results). Each column
represents the cumulative expenses so determined for the period
specified.
</FN>
</TABLE>
THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN. THE SECURITIES AND EXCHANGE COMMISSION SPECIFIES
THAT ALL MUTUAL FUNDS USE THE 5% RATE FOR PURPOSES OF PREPARING THE
ABOVE EXAMPLE.
The purpose of the above table is to assist the investor in
understanding the various costs and expenses that an investor in
the Trust will bear directly or indirectly. Although not obligated
to do so, in addition to complying with the requirements of
applicable agreements, those entitled to investment advisory and
administration fees may continue to waive a portion or all of those
fees and may continue to reimburse the Fund for various expenses;
the above table reflects one such possible arrangement and sould
not be understood as a commitment or prediction that any fees, or that
any particular portion of fees, will be waived, or that any particular
expenses will be reimbursed. (See "Management Arrangements" for a
more complete description of the various investment advisory and
administration fees.) Nor should the assumed 5% annual return be
interpreted as a prediction of an actual return, which may be
higher or lower.
<PAGE>
PRIME CASH FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
The following table of Financial Highlights as it relates to the
five years ended December 31, 1994 has been audited by KPMG Peat Marwick
LLP, independent auditors, whose report thereon is included in the Fund's
financial statements contained in its Annual Report, which are
incorporated by reference into the Additional Statement. The information
provided in the table should be read in conjunction with the financial
statements and related notes (*).
<TABLE>
<CAPTION>
Year ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment
Operations:
Net investment income 0.0370 0.0260 0.0327 0.0556 0.0770
Less Distributions:
Dividends from net
investment income (0.0370) (0.0260) (0.0327) (0.0556) (0.0770)
Net Asset Value,
End of Year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return 3.76% 2.63% 3.19% 5.68% 7.96%
Ratios/Supplemental Data
Net Assets, End of
Year (in thousands) $38,406 $67,170 $96,563 $287,597 $376,356
Ratio of Expenses to
Average Net Assets 0.55% 0.61% 0.68% 0.60% 0.58%
Ratio of Net Invest-
ment Income to
Average Net Assets 4.00% 2.60% 3.27% 5.56% 7.70%
<CAPTION>
1989 1988 1987 1986 1985
<C> <C> <C> <C> <C>
$1.0000 $1.0000 $1.0000 $1.0000 $1.0000
0.0865 0.0722 0.0614 0.0631 0.0755
(0.0865) (0.0722) (0.0614) (0.0631) (0.0755)
$1.0000 $1.0000 $1.0000 $1.0000 $1.0000
9.04% 7.28% 6.35% 6.49% 7.87%
$404,953 $306,655 $145,929 $153,069 $159,100
0.58% 0.58% 0.61% 0.60% 0.61%
8.65% 7.22% 6.14% 6.35% 7.55%
<CAPTION>
For the year ended December 31, 1994, net investment income per share and
the ratios of income and expenses to average net assets without the
Adviser's and Administrator's voluntary waiver of fees and the
Administrator's voluntary expense reimbursement would have been:
<S> <C>
Net Investment Income $0.0350
Ratio of Expenses to
Average Net Assets 0.76%
Ratio of Net Investment
Income to Average Net Assets 3.79%
<FN>
<F*> Effective March 1, 1985, Security Pacific National Bank became the
Fund's Adviser, replacing SCNC Corporation. Effective April 1,
1992, TCW Funds Management, Inc. became the Fund's Adviser,
replacing Security Pacific National Bank. On May 31, 1989, Aquila
Management Corporation originally the Fund's Sub-Adviser and
Administrator, became Administrator only. (See "Management
Arrangements")
</FN>
</TABLE>
The Fund's "current yield" for the seven days ended December 31,
1994 was 5.30% and its "compounded effective yield" for that period
was 5.44%; see the Additional Statement for the methods of calculating
these yields.
<PAGE>
INTRODUCTION
The Fund is an open-end diversified investment company
organized in 1982 as a Massachusetts business trust, designed to
suit the cash management needs of individuals, corporations,
institutions and fiduciaries. Cash of investors may be invested in
shares of the Fund as an alternative to idle funds, direct
investments in savings deposits, or short-term debt securities. The
Fund offers the opportunity to keep cash reserves fully invested
and provides you with a professionally managed portfolio of money
market instruments which may be more diversified, higher yielding,
more stable and more liquid than you might be able to obtain on an
individual basis. Through the convenience of a single security
consisting of shares of the Fund, you are also relieved of the
inconvenience of making direct investments, including the
selection, purchasing and handling of securities.
INVESTMENT OF THE FUND'S ASSETS
The objective of the Fund is to achieve as high a level of
current income, liquidity and stability of capital as might be
obtained from investing in a diversified portfolio of short-term
money market securities meeting specific quality standards. There
is no assurance that the Fund will achieve this objective, which is
a fundamental policy of the Fund.
In addition to the requirements of the Fund's management
policies, all obligations and instruments purchased by the Fund
must meet the requirements of Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission under the Investment Company Act
of 1940 (the "1940 Act"). The provisions of the Rule that affect
portfolio management are summarized under "Effect of the Rule on
Portfolio Management," below. In brief, the Rule's provisions for
quality, diversity and maturity require the Fund to limit its
investments to those instruments which TCW Funds Management, Inc.
(the "Adviser") determines (pursuant to procedures approved by the
Board of Trustees) present minimal credit risks, and which, at the
time of purchase, are Eligible Securities. In general, the Rule
defines as Eligible Securities those that at the time of purchase
are rated in the two highest rating categories for short-term
securities by any two of the nationally recognized statistical
rating organizations ("NRSROs") or unrated securities determined by
the Board of Trustees to be of comparable quality. See Appendix A
to the Additional Statement for a description of the NRSROs and the
factors considered by them in determining ratings. Eligible
Securities so rated in the highest rating category (or unrated
securities of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second Tier
Securities." The Rule also requires that the dollar-weighted
average maturity of the Fund's portfolio cannot exceed 90 days and
that the Fund cannot purchase any security having a remaining
maturity in excess of 397 days. The Rule also contains limits on
the percentage of the Fund's assets that can be invested in the
securities of any issuer. See "Effect of the Rule on Portfolio
Management," below.
Management Policies:
The Fund seeks to achieve its investment objective through
investments in the types of instruments described in the management
policies listed below. Under the current management policies, the
Fund invests only in the following types of obligations:
(1) U.S. Government Securities: Obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities; these
obligations are referred to in this Prospectus as "U.S. Government
Securities"; see "Information On U.S. Government Securities" below.
(2) Bank Obligations and Instruments Secured by Them: Bank
obligations that are First Tier Securities including time deposits,
certificates of deposit, bankers' acceptances and other bank (see
below for definition) obligations, and which are (i) obligations of
banks subject to regulation by the U.S. Government having total
assets of at least $1.5 billion, which may be obligations issued by
domestic banks, by foreign branches of such banks or by U.S.
subsidiaries of foreign banks; (ii) obligations of any foreign bank
having total assets equivalent to at least $1.5 billion; or (iii)
obligations ("insured bank obligations") if such obligations are
fully insured as to principal by the Federal Deposit Insurance
Corporation; (see "Information on Insured Bank Obligations" in the
Additional Statement); the Fund may also invest in obligations
secured by any obligations set forth in (i) or (ii) above if such
investment meets the requirements of (6) below. (In this Prospectus
and in the Additional Statement, a bank includes commercial banks,
savings banks and savings and loan associations.)
(3) Commercial Paper Obligations: Commercial paper obligations that
are First Tier Securities; see "Effect of the Rule on Portfolio
Management," below.
(4) Corporate Debt Obligations: Corporate debt obligations (for
example, bonds and debentures) which are First Tier Securities and
which at the time of purchase have a remaining maturity of not more
than 397 days. See "Effect of the Rule on Portfolio Management."
See Appendix A to the Additional Statement for information about
bond ratings.
(5) Variable Amount and Master Demand Notes: Variable amount master
demand notes that are First Tier Securities and which are
redeemable (and thus repayable by the borrower) at principal
amount, plus accrued interest, at any time. Variable amount master
demand notes may or may not be backed by bank letters of credit.
(Because variable amount master demand notes are direct lending
arrangements between the lender and borrower, it is not generally
contemplated that they will be traded, and there is no secondary
market for them; see the Additional Statement for further
information on these notes.) Variable amount master demand notes
repayable in more than seven days are securities which are not
readily marketable, and fall within the Fund's overall 10%
limitation on securities which are illiquid.
(6) Certain Other Obligations: Obligations other than those listed
in 1 through 5 above only if such other obligations are guaranteed
as to principal and interest by either a bank in whose obligations
the Fund may invest (see 2 above) or a corporation in whose
commercial paper the Fund may invest (see 3 above). See "Effect of
the Rule on Portfolio Management." If the Fund invests more than 5%
of its net assets in such other obligations, the Prospectus will be
supplemented to describe them. See the Additional Statement.
(7) Repurchase Agreements: The Fund may purchase securities subject
to repurchase agreements provided that such securities consist
entirely of U.S. Government securities or securities that, at the
time the repurchase agreement is entered into, are rated in the
highest rating category by the requisite NRSROs. Repurchase
agreements may be entered into only with commercial banks or
broker-dealers. Subject to the control of the Board of Trustees,
the Adviser will regularly review the financial strength of all
parties to repurchase agreements with the Fund. See "Information
about Repurchase Agreements," below.
(8) When-Issued or Delayed Delivery Securities: The Fund may buy
securities on a when-issued or delayed delivery basis; the
securities so purchased are subject to market fluctuation and no
interest accrues to the Fund until delivery and payment take place;
their value at the delivery date may be less than the purchase
price. The Fund may not enter into when-issued commitments
exceeding in the aggregate 15% of the market value of the Fund's
total assets, less liabilities other than the obligations created
by when-issued commitments. See the Additional Statement for
further information.
Shareholder approval is not required to change any of the
foregoing management policies.
Additional Management Policy as to Rating
In addition to the foregoing management policies, as a
non-fundamental policy, the Fund will purchase only those issues
that will enable it to achieve and maintain the highest rating for
a mutual fund by at least one NRSRO. There is no assurance that the
Fund will be able to maintain such rating. As a result of this
policy, the number of obligations in which the fund can invest is
reduced and the yield obtained by the Fund on such obligations may
be less than would be the case if this policy were not in force.
Information On U.S. Government Securities
U.S. Government Securities (i.e., obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities) include securities issued by the U.S.
Government, which in turn include Treasury Bills (which mature
within one year of the date they are issued) and Treasury Notes and
Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United
States.
U.S. Government agencies and instrumentalities that issue or
guarantee securities include, but are not limited to, the
Export-Import Bank of the United States, Farmers Home
Administration, Federal Farm Credit System, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Federal Housing
Administration, Federal National Mortgage Association, Government
National Mortgage Association, Small Business Administration,
Student Loan Marketing Association and the Tennessee Valley
Authority.
Securities issued or guaranteed by U.S. Government agencies
and instrumentalities are not always supported by the full faith
and credit of the United States. Some, such as securities issued by
the Federal Home Loan Banks, are backed by the right of the agency
or instrumentality to borrow from the U.S. Treasury. Others, such
as securities issued by the Federal National Mortgage Association,
are supported only by the credit of the instrumentality and not by
the U.S. Treasury. If the securities are not backed by the full
faith and credit of the United States, the owner of the securities
must look principally to the agency issuing the obligation for
repayment and may not be able to assert a claim against the United
States in the event that the agency or instrumentality does not
meet its commitment. The Fund will invest in government securities,
including securities of agencies and instrumentalities, only if the
Adviser (pursuant to procedures approved by the Board of Trustees)
is satisfied that these obligations present minimal credit risks.
See "Effect of the Rule on Portfolio Management," below, for a
discussion of the determination of minimal credit risks in
connection with the purchase of portfolio securities.
Information On Foreign Bank Obligations
Investments, which must be denominated in U.S. dollars, in
foreign banks and foreign branches of United States banks involve
certain risks in addition to those involved with investment in
domestic banks. While domestic banks are required to maintain
certain reserves and are subject to other regulations, such
requirements and regulations may not apply to foreign branches of
domestic banks. Investments in foreign banks and foreign branches
of domestic banks may also be subject to other risks, including
future political and economic developments, the possible imposition
of withholding taxes on interest income, the seizure or
nationalization of foreign deposits and the establishment of
exchange controls or other restrictions.
Repurchase Agreements
Under a repurchase agreement, at the time the Fund purchases
a security, the Fund also resells it to the seller and must deliver
the security (or securities substituted for it) to the seller on an
agreed-upon date in the future. (The securities so resold or
substituted are referred to herein as the "Resold Securities.") The
resale price is in excess of the purchase price in that it reflects
an agreed-upon market interest rate effective for the period of
time during which the Fund's money is invested in the Resold
Securities. The majority of these transactions run from day to day,
and the delivery pursuant to the resale typically will occur within
one to five days of the purchase.
Repurchase agreements can be considered as loans
"collateralized" by the Resold Securities, such agreements being
defined as "loans" in the 1940 Act. The return on such "collateral"
may be more or less than that from the repurchase agreement. The
Resold Securities under any repurchase agreement will be marked to
market every business day so that the value of the "collateral" is
at least equal to the resale price provided in the agreement,
including the accrued interest earned thereon, plus sufficient
additional market value as is considered necessary to provide a
margin of safety. During the term of the repurchase agreement, the
Fund or its custodian either has actual physical possession of the
Resold Securities or, in the case of a security registered in book
entry system, the book entry is maintained in the name of the Fund
or its custodian. The Fund retains an unqualified right to possess
and sell the Resold Securities in the event of a default by the
other party.
In the event of bankruptcy or other default by the other
party, there may be possible delays and expenses in liquidating the
Resold Securities, decline in their value and loss of interest. If
the maturity of the Resold Securities is such that they cannot be
owned by the Fund under the applicable provisions of the Rule they
will have to be sold, which could result in a loss. See "Effect of
the Rule on Portfolio Management."
10% Limitation as to Certain Investments
Due to their possible limited liquidity, the Fund may not make
certain investments if thereafter more than 10% of its net assets
would consist of such investments. The investments included in this
10% limit are (i) repurchase agreements maturing in more than seven
days; (ii) fixed time deposits subject to withdrawal penalties
other than overnight deposits; (iii) restricted securities, i.e.,
securities which cannot freely be sold for legal reasons (which the
Fund does not expect to own); (iv) securities for which market
quotations are not readily available; and (v) insured bank
obligations unless the Board of Trustees determines that a readily
available market exists for such obligations. However, this 10%
limit does not include any obligations payable at principal amount
plus accrued interest on demand or within seven days after demand.
Factors Which May Affect the Value
of the Fund's Investments and Their Yields
The value of the obligations and instruments in which the Fund
invests will fluctuate depending in large part on changes in
prevailing interest rates. If the prevailing interest rates go up
after the Fund buys a security, the value of the security may go
down; if these rates go down, the value of the security may go up.
Changes in value and yield based on changes in prevailing interest
rates may have different effects on short-term obligations than on
long-term obligations. Long-term obligations (which often have
higher yields) may fluctuate in value more than short-term ones.
Portfolio Transactions
The Fund will seek to obtain the best net price and the most
favorable execution of orders. Purchases will be made directly from
issuers or from underwriters, dealers or banks which specialize in
the types of securities invested in by the Fund. As most purchases
made by the Fund are principal transactions at net prices, the Fund
incurs little or no brokerage costs. Purchases from underwriters
will include a commission or concession paid by the issuer to the
underwriter and purchases from dealers may include the spread
between the bid and the asked price. If the execution and price
offered by more than one dealer are comparable, the order may be
allocated to a dealer which has provided research advice, such as
information on particular companies and industries and market,
economic and institutional activity. By allocating transactions to
obtain research services, the Fund enables the Adviser to
supplement its own research and analyses with the views and
information of other securities firms. Such research services,
whether or not useful to the Fund, may be useful to other accounts
managed by the Adviser or its affiliates.
Effect of the Rule on Portfolio Management
As a money market fund, the Fund operates under the Rule,
which allows the Fund to use the "amortized cost" method of valuing
its securities and which contains certain risk limiting provisions,
including requirements as to maturity, quality and diversification
of the Fund's portfolio. Some of the most important aspects of the
Rule are described below.
Under the Rule, the Fund must limit its investments to those
instruments which are denominated in U.S. dollars, which are
determined by the Board of Trustees to present minimal credit
risks, and which, at the time of purchase, are Eligible Securities.
In accordance with the Rule, the Board of Trustees has adopted
investment procedures and has approved investment policies pursuant
to which all investment determinations have been delegated to the
Adviser, under the direction and control of the Board of Trustees,
except for those matters for which the Rule requires Board
determination.
In general, the Rule defines as Eligible Securities those that
at the time of purchase are rated in the two highest rating
categories for short-term securities by any two of the NRSROs, or
if unrated are determined by the Board of Trustees to be of
comparable quality. Eligible Securities so rated in the highest
rating category (and unrated securities determined by the Board of
Trustees to be of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second Tier
Securities." Eligible Securities can in some cases include
securities rated by only one NRSRO and unrated obligations that are
determined by the Board of Trustees to be of comparable quality to
rated securities. A security that was long-term when issued must at
the time of purchase by the Fund have either a short-term rating
such that it is an Eligible Security, be comparable in priority and
security with a rated short-term obligation of the same issuer that
is an Eligible Security or if it has no short-term rating (and does
not have a long-term rating from any NRSRO below the highest
rating) if it is determined by the Board of Trustees to be of
comparable quality to rated securities the Fund could purchase.
Purchase of any security rated by only one NRSRO and purchase of
any unrated security (except U.S. Government Securities) must be
ratified by the Board of Trustees.
The Rule requires (with limited exceptions) that immediately
after purchase of any security, the Fund have invested not more
than 5% of its assets in the securities of any one issuer.
Moreover, the Rule provides that the Fund cannot have more than 5%
of its assets in the aggregate invested in Second Tier Securities,
nor more than the greater of 1% of its assets or $1,000,000
invested in Second Tier Securities of any single issuer. In
general, the Fund does not intend to own Second Tier Securities.
The Rule has specific provisions relating to determinations of the
eligibility of certain types of instruments such as repurchase
agreements and instruments subject to a demand feature. It also has
specific provisions for determining the issuer of a security for
purposes of compliance with the diversification requirements.
Generally, under the Rule, the maturity of an instrument is
considered to be its stated maturity (or in the case of an
instrument called for redemption, the date on which the redemption
payment must be made). There are special rules for determining the
maturity of certain kinds of instruments. The Rule contains
provisions as to the maturity of variable rate and floating rate
instruments. Repurchase agreements and securities loan agreements
are, in general, treated as having a maturity equal to the period
remaining until they can be executed.
The Rule has provisions requiring specific actions whenever
the rating of a portfolio security is downgraded. Generally, these
actions include a prompt reassessment by the Board of Trustees of
the credit risks associated with such a security. In general, the
Rule mandates prompt sale or other disposition, e.g., by exercising
a demand for payment, in certain cases, such as when a security
ceases to be an Eligible Security, no longer presents minimal
credit risks or suffers a financial default.
INVESTMENT RESTRICTIONS
The Fund has a number of policies about what it can and cannot
do. Certain of these policies, identified in the Prospectus and
Additional Statement as "fundamental policies," cannot be changed
unless the holders of a "majority," as defined in the 1940 Act, of
the Fund's outstanding shares vote to change them. (See the
Additional Statement for a definition of such a majority.) All
other policies can be changed from time to time without shareholder
approval. Some of the more important of the Fund's fundamental
policies, not otherwise identified in the Prospectus, are set forth
below; others are listed in the Additional Statement.
1. The Fund has diversification and anti-concentration
requirements.
The Fund cannot buy the securities of any issuer if it would
then own more than 10% of the total value of all of the issuer's
outstanding securities.
The Fund cannot buy the securities (not including U.S.
Government Securities) of any issuer if more than 5% of its total
assets (valued at market value) would then be invested in
securities of that issuer. In addition, the Rule limits investment
in Second Tier Securities to 5% of the Fund's assets in the
aggregate, and to no more than the greater of 1% of the Fund's
assets or $1,000,000 in the securities of any one issuer.
The Fund cannot buy the securities of issuers in any one
industry if more than 25% of its total assets would then be
invested in securities of issuers in that industry (see the
Additional Statement); U.S. Government Securities and those
domestic bank obligations and instruments of domestic banks which
the Fund may purchase (see "Investment of the Fund's Assets") are
considered as not included in this limit; however, obligations of
foreign banks and of foreign branches of domestic banks are
considered as included in this limit.
2. The Fund can make loans only by lending securities or entering
into repurchase agreements.
The Fund can buy those debt securities which it is permitted
to buy (see "Investment of the Fund's Assets"); this is investing,
not making a loan. The Fund can lend its portfolio securities on a
collateralized basis up to 10% of the value of its total assets to
specified borrowers (broker-dealers, banks and certain other
financial institutions) to increase its income (see the Additional
Statement) and enter into repurchase agreements (see "Repurchase
Agreements" above). The Fund may be considered as the beneficial
owner of the loaned securities in that any gain or loss in their
market price during the loan inures to the Fund and its
shareholders; thus, when the loan is terminated, the value of the
securities may be more or less than their value at the beginning of
the loan.
3. The Fund can borrow only in limited amounts for special
purposes.
The Fund can borrow from banks for temporary or emergency
purposes but only up to 10% of its total assets. It can mortgage or
pledge its assets only in connection with such borrowing and only
up to the lesser of the amounts borrowed or 5% of the value of its
total assets. The Fund will not borrow to purchase securities or to
increase its income but only to meet redemptions so that it will
not have to sell securities to pay for redemptions. Interest on
borrowings would reduce the Fund's income. The Fund will not
purchase any securities while it has any outstanding borrowings
which exceed 5% of the value of its total assets. Except in
connection with borrowings, the Fund will not issue senior
securities.
NET ASSET VALUE PER SHARE
The Fund's net asset value per share is determined as of 4:00
p.m. New York time on each day that the New York Stock Exchange is
open by dividing the value of the net assets of the Fund (i.e., the
value of the assets less liabilities, exclusive of surplus) by the
total number of shares outstanding.
The net asset value per share will normally remain constant at
$1.00 per share except under extraordinary circumstances; see the
Additional Statement for a discussion of the extraordinary
circumstances which could result in a change in this fixed share
value. The net asset value per share is based on a valuation of the
Fund's investments at amortized cost; see the Additional Statement.
HOW TO INVEST IN THE FUND
The Fund's shares are sold on a continuous basis at the net
asset value next determined after an order is entered and deemed
effective. There is no sales charge. The minimum initial investment
is $1,000. Subsequent investments may be in any amount. Aquila
Distributors, Inc. (the "Distributor") is the exclusive Distributor
of the Fund's shares. The Distributor sells shares only for
purchase orders received.
Opening an Account
To open a new account, you must send a properly completed
Application to Administrative Data Management Corp. (the "Agent").
Redemption of shares purchased by wire payment will not be honored
until a properly completed Application has been received by the
Agent.
Initial investments may be made in any of these three ways:
1. By Mail. Payment may be made by check, money order, Federal
Reserve Draft, or other negotiable bank draft drawn in United
States dollars on a United States commercial or savings bank
or credit union (each which is a "Financial Institution")
payable to the order of Prime Cash Fund mailed to:
Prime Cash Fund
Administrative Data Management Corp.,
Shareholder Servicing Agent
Attn: Aquilasm Group of Funds
10 Woodbridge Center Drive
Woodbridge, NJ 07095-1198
2. By Wire. Payment may be wired in Federal funds (monies
credited to a bank's account with a Federal Reserve Bank) to
Bank One Trust Company, N.A., which serves as the Custodian of
the assets of the Fund.
To insure prompt and proper crediting to your account, if you
choose this method of payment you should first telephone the Fund's
Agent (800-952-6666 toll free or 908-855-5731) and then instruct
your bank to wire funds to:
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Prime Cash Fund A/C 6801358700
Account Name and Number (if an existing account)
The name in which the investment is to be registered (if a new
account)
Your bank may impose a charge for wiring funds.
3. Through Brokers. You may invest in the Fund by purchasing
shares through registered broker-dealers.
There is no sales or service charge imposed by the Fund on
purchase of shares, although broker-dealers may make reasonable
charges to their customers for their services. The services to be
provided and the fees therefor are established by each
broker-dealer acting independently; broker-dealers may also
determine to establish, as to accounts serviced by them, higher
initial or subsequent investment requirements than those required
by the Fund. Broker-dealers are responsible for prompt transmission
of orders placed through them.
Additional Investments
You may make additional investments in any amount after an
account has been established by mailing directly to the Agent a
check, money order or other negotiable bank draft made payable to
Prime Cash Fund, or by wiring funds as described above. In each
case you should indicate your name and account number to insure
prompt and proper crediting of your account. The pre-printed stub
attached to the Fund's confirmations is provided as a convenient
identification method to accompany additional investments made by
mail. You may also make subsequent investments of $50 or more using
electronic funds transfers from your demand account at a Financial
Institution if it is a member of the Automated Clearing House and
if the Agent has received a completed Application designating this
feature, or, after your account has been opened, a Ready Access
Features form available from the Distributor or the Agent. A
pre-determined amount can be regularly transferred for investment
("Automatic Investment") or single investments can be made upon
receipt by the Agent of telephone instructions from anyone
("Telephone Investment"). The maximum amount of each Telephone
Investment is $50,000. Upon 30 days' written notice to
shareholders, the Fund may modify or terminate these investment
methods at any time or charge a service fee, although no such fee
is currently contemplated.
When Shares Are Issued
and Dividends Are Declared On Them
There are three methods as to when shares are issued. Under
each method, shares are issued at the net asset value per share
next determined after the purchase order is effective, as discussed
below. Under each method, the Application must be properly
completed and have been received and accepted by the Agent; the
Fund or the Distributor may also reject any purchase order. Under
each method, Federal funds (see above) must either be available to
the Fund or the payment thereof must be guaranteed to the Fund so
that the Fund can be as fully invested as practicable.
The first method under which shares are issued involves
ordinary investments. Under this method, payments transmitted by
wire in Federal funds and payments made by Federal Reserve Draft
received by the Custodian prior to 4:00 p.m. New York time on any
day on which the New York Stock Exchange is open will be invested
(i.e., the purchase order will be effective) at the net asset value
per share determined as of 4:00 p.m. on that day; if either such
type of payment is received after that time, the purchase order
will be effective as of 4:00 p.m. on the next day that the exchange
is open. Wire payments not in Federal funds will normally be
converted into Federal funds on the next day such exchange is open
and the purchase order will be effective as of 4:00 p.m. on such
next day. Payments transmitted by check will normally be converted
to Federal funds by the Agent, as your agent, within two business
days for checks drawn on a member bank of the Federal Reserve
System, and longer for most other checks, and the purchase orders
will be effective as of 4:00 p.m. on that day if the exchange is
open and otherwise at 4:00 p.m. on the next day the exchange is
open after such conversion. All checks are accepted subject to
collection at full face value in United States funds and must be
drawn in United States dollars on a United States bank; if not,
shares will not be issued. Purchases by Automatic Investment and
Telephone Investment will be executed on the first day on which
that exchange is open occurring on or after the date an order is
considered received by the Agent at the net asset value determined
on that day. In the case of Automatic Investment the order will be
executed on the date you specified for investment at the price
determined on that day, unless it is not a day on which that
exchange is open, in which case the order will be executed at the
net asset value determined on the next day on which that exchange
is open. In the case of Telephone Investment the order will be
filled at the next determined net asset value, which for orders
placed after the time for determining the net asset value of the
Fund's shares for any day will be the price determined on the
following day on which the exchange is open. Dividends on shares
issued under this first investment method are declared starting on
the day (whether or not a business day) after the purchase order is
effective and are declared on the day on which the shares are
redeemed.
The second method under which shares are issued involves a
bank or broker-dealer making special arrangements with the Fund
under which (i) either (a) payment is made in Federal funds or by
check in New York Clearing House funds delivered to the Agent prior
to 5:00 p.m. New York time or (b) the Agent is advised prior to
that time of a dollar amount to be invested; (ii) the Agent is
advised prior to that time of the form of registration of the
shares to be issued; (iii) the bank or broker-dealer will, prior to
noon New York time on the next business day, wire Federal funds to
the Custodian (but in the case of prior payment by check under
(i)(a) above only if the check is not converted into Federal funds
in the normal course on the next business day); and (iv)
arrangements satisfactory to the Fund are made between it and the
bank or broker-dealer under which if Federal funds are not so
received by the Custodian, the Fund is reimbursed for any costs or
loss of income arising out of such non-receipt. New York Clearing
House funds are funds represented by a check drawn on a bank which
is a member of the New York Clearing House. Under this second
method, the purchase order is effective on the day the check or the
advice is received under (i) above. Dividends on shares issued
under this second method are declared starting on the day (whether
or not a business day) after the purchase order is effective and
are declared on the day on which such shares are redeemed.
The third method under which shares are issued involves
broker-dealers or banks which have requested that this method be
used, to which request the Fund has consented. Under this third
method (i) the Agent must be advised prior to noon New York time on
any business day of a dollar amount to be invested; and (ii)
Federal funds must be wired to the Custodian on that day; under
this method, the purchase order is effective on that day. Dividends
on shares issued under this third investment method are declared
beginning on that day but not on the day such shares are redeemed.
This third investment method is available to prospective
investors in Fund shares who wish to use it so that the dividends
on their shares will commence to be declared on the day the
purchase order is effective. Upon written or phone request to the
Fund by such a prospective investor, the Fund will advise as to the
broker-dealers or banks through which such purchases may be made.
Confirmations and Share Certificates
All purchases of shares will be confirmed and credited to you
in an account maintained for you by the Agent in full and
fractional shares of the Fund (rounded to the nearest 1/1000th of
a share). Share certificates will not be issued unless you so
request from the Agent in writing and declare a need for such
certificates, such as a pledge of shares or an estate situation. If
certificates are issued at your request, Expedited Redemption
Methods described below will not be available and delay and expense
may be incurred if you lose the certificates. No certificates will
be issued for fractional shares or to shareholders who have elected
the checking account or predesignated bank account methods of
withdrawing cash from their accounts. (See "How to Redeem Your
Investment" below.)
The Fund and the Distributor reserve the right to reject any
order for the purchase of shares. In addition, the offering of
shares may be suspended at any time and resumed at any time
thereafter.
Distribution Plan
The Fund has adopted a Distribution Plan under Rule 12b-1
("Rule 12b-1") under the 1940 Act. No payments are made by the Fund
under the Plan. Rule 12b-1 provides in substance that an investment
company may not engage directly or indirectly in financing any
activity which is primarily intended to result in the sale of its
shares except pursuant to a plan adopted under that rule. One part
of the Distribution Plan is designed to protect against any claim
against or involving the Fund that some of the expenses which the
Fund pays or may pay come within the purview of Rule 12b-1. Another
part of the Distribution Plan authorizes the Administrator and/or
the Adviser, not the Fund, to make certain payments not exceeding
0.10 of 1% of the average annual net assets of the Fund to certain
Qualified Recipients (as defined in the Distribution Plan) which
have rendered assistance in the distribution and/or retention of
the Fund's shares. See the Additional Statement for further
information.
The Fund's Distribution Plan is solely a defensive plan
designed to protect the Fund and its affiliates against any claim
described above. The Distribution Plan does not involve payments
out of assets or income of the Fund designed to recognize sales of
shares of the Fund or to pay advertising expenses.
HOW TO REDEEM YOUR INVESTMENT
The Fund provides day-to-day liquidity. You may redeem all or
any part of your shares at any time at the net asset value next
determined after acceptance of your redemption request at the
Agent. Redemptions can be made by the various methods described
below. Except for shares recently purchased by check as discussed
below, there is no minimum time period for any investment in the
Fund. There are no redemption fees or withdrawal penalties. If you
purchase shares of the Fund through broker-dealers, banks and other
financial institutions which serve as shareholders of record you
must redeem through those institutions, which are responsible for
prompt transmission of redemption requests. In all other cases, you
may redeem directly, but a completed purchase Application must have
been received by the Agent before redemption requests can be
honored. A redemption may result in a taxable transaction to you,
but only if there has been a change in the net asset value per
share, which will occur only under extraordinary circumstances.
For your convenience the Fund offers expedited redemption to
provide you with a high level of liquidity for your investment.
Expedited Redemption Methods
(Non-Certificate Shares)
You have the flexibility of three expedited methods of
initiating redemptions. These are available as to shares not
represented by certificates.
1. By Telephone. The Agent will accept instructions by
telephone from anyone to redeem shares and make payments to a
Financial Institution account you have predesignated. See
"Redemption Payments," below for payment methods. Your name
and your account number must be supplied.
To redeem an investment by this method, telephone:
800-952-6666 toll-free or 908-855-5731
Note: The Fund, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed to
verify the identity of the caller. The Agent will request some or
all of the following information: account name and number; name(s)
and social security number registered to the account and personal
identification; the Agent may also record calls. Shareholders
should verify the accuracy of confirmation statements immediately
upon receipt.
2. By FAX or Mail. You may also request redemption payments
to a predesignated Financial Institution account by sending a
letter of instruction to: Administrative Data Management
Corp., Attn: Aquilasm Group of Funds, by Fax to 908-855-5730
or by mail at 10 Woodbridge Center Drive, Woodbridge, NJ
07095-1198, indicating account number, amount to be redeemed,
and any payment directions, signed by the registered
holder(s). Signature guarantees are not required. See
"Redemption Payments," below for payment methods.
If you wish to use the above procedures you should so elect on
the Expedited Redemption section of the Application or Ready Access
Features Form and provide the required information concerning the
Financial Institution account number. The Financial Institution
account must be in the exclusive name(s) of the shareholder(s) as
registered with the Fund. You may change the designated Financial
Institution account at any time by completing and returning the
Ready Access Features Form. For protection of your assets, this
form requires signature guarantees and possible additional
documentation.
3. By Check. The Agent will, upon request, provide you with
forms of drafts ("checks") drawn on the Custodian. This
feature is not available if your shares are represented by
certificates. These checks represent a further alternative
redemption means and you may make them payable to the order of
anyone in any amount of not less than $500. If you wish to use
this check writing redemption procedure, you should notify the
Agent or so indicate on the Application. You will be issued
special checks to be drawn against the Custodian for this
purpose. You will be subject to the Custodian's rules and
regulations governing its checking accounts. If the account is
registered in more than one name, each check must be signed by
each account holder exactly as the names appear on the account
registration, unless expressly stated otherwise on your
Application.
There is no charge to the shareholder for the maintenance of
this special check writing privilege or for the clearance of any
checks.
When such a check is presented to the Custodian for payment,
a sufficient number of full and fractional shares in your account
will be redeemed to cover the amount of the check. This check
writing redemption procedure enables you to continue receiving
dividends on those shares equaling the amount being redeemed by
check until such time as the check is actually presented to the
Custodian for payment.
As these checks are redemption drafts relating to Fund shares,
you should be certain that adequate shares for which certificates
have not been issued and which were not recently purchased by check
are in the account to cover the amount of the check. See
"Redemption Payments" below for more details as to special problems
as to Fund shares recently purchased by check. If insufficient
redeemable shares are in the account, the redemption check will be
returned marked "insufficient funds." The fact that redemption
checks are drafts may also permit a bank in which they are
deposited to delay crediting the account in question until that
bank has received payment funds for the redemption check.
Checks may not be directly presented to any branch of the
Custodian. This does not affect checks used for the payment of
bills or cashed at other banks. You may not use checks to close
your account, since the number of shares in an account changes
daily through dividend payments which are automatically reinvested
in full and fractional shares. Consequently, you may not present a
check directly to the Custodian and request redemption for all or
substantially all shares held in your account. Only expedited
redemption to a predesignated bank account or the regular
redemption method (see below) may be used when closing your
account.
Multiple Redemption Services. You are not limited in choice of
redemption methods but may utilize all available forms. However,
when both redemption to a predesignated bank account and check
writing are desired, you must so elect on your Application, or by
proper completion of a Ready Access Features Form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
1. Certificate Shares. Certificates in blank (unsigned)
representing shares to be redeemed should be sent to: the
Fund's Shareholder Servicing Agent, Administrative Data
Management Corp., Attn: Aquilasm Group of Funds, 10 Woodbridge
Center Drive, Woodbridge, NJ 07095-1198, with payment
instructions. A stock assignment form signed by the registered
shareholder(s) exactly as the account is registered must also
be sent to the Shareholder Servicing Agent.
For your own protection, certificates and signed redemption
documentation should be sent separately if mailed.
For the redemption request to be in "proper form," the
signature or signatures must be the same as in the registration of
the account. In a joint account, the signatures of both
shareholders are necessary. Additional documentation may be
required where shares are held by a corporation, a partnership,
trustee or executor, or if redemption is requested by other than
the shareholder of record. If redemption proceeds of less than
$25,000 are payable to the record holder and are to be sent to the
record address, no signature guarantee is required. In all other
cases, signatures must be guaranteed by a member of a national
securities exchange, a U.S. bank or trust company, a
state-chartered savings bank, a federally chartered savings and
loan association, a foreign bank having a U.S. correspondent bank,
a participant in the Securities Transfer Association Medallion
Program (STAMP), The Stock Exchanges Medallion Program (SEMP) or
The New York Stock Exchange, Inc. Medallion Signature Program
(MSP). A notary public is not an acceptable signature guarantor.
2. Non-Certificate Shares. If you own non-certificate shares
registered on the books of the Fund and you have not elected
check writing redemption or Expedited Redemption to a
predesignated Financial Institution account, you must use the
Regular Redemption Method. Under this redemption method, you
should send a letter of instruction to: Administrative Data
Management Corp., Attn: Aquilasm Group of Funds, 10 Woodbridge
Center Drive, Woodbridge, NJ 07095-1198, containing:
Account Number;
Dollar amount or number of shares to be redeemed or a
statement that all shares held in the account are to be
redeemed;
Payment instructions (normally redemption proceeds will
be mailed to the shareholder's address as registered with
the Fund);
Signature(s) of the registered shareholder(s); and
Signature guarantee(s), if required, as indicated above.
Redemption Payments
For redemptions of shares other than by checks you have
written, redemption payments will ordinarily be mailed to you at
your address of record. If you so request and the amount of your
redemption proceeds is $1,000 or more, the proceeds will, wherever
possible, be wired or transferred through the facilities of the
Automated Clearing House to the Financial Institution account
specified in the Expedited Redemption section of your Application
or Ready Access Features form. The Fund may impose a charge, not
exceeding $5.00 per wire redemption, after written notice to
shareholders who have elected this redemption procedure. The Fund
has no present intention of making this charge. Upon 30 days'
written notice to shareholders, the Fund may modify or terminate
the use of the Automated Clearing House to make redemption payments
at any time or charge a service fee, although no such fee is
currently contemplated. If you use a dealer to arrange for a
redemption, you may be required to pay the dealer for this service.
Redemption proceeds on shares issued under the third method
under which shares are issued (see "When Shares Are Issued and
Dividends Are Declared on Them" under "How to Invest in the Fund")
will be wired in Federal funds on the date of redemption, if
practicable, and, if not practicable, as soon thereafter as
practicable, irrespective of amount. Redemption requests as to such
shares may be made by telephone.
Except as indicated above, the Fund will normally make payment
for all shares redeemed on the next business day following receipt
of request. Except as set forth below, in no event will payment be
made more than seven days after receipt of a redemption request
made in compliance with one of the redemption methods specified
above. However, the right of redemption may be suspended or the
date of payment postponed (i) during periods when the New York
Stock Exchange is closed for other than weekends and holidays or
when trading on such exchange is restricted as determined by the
Securities and Exchange Commission by rule or regulation; (ii)
during periods in which an emergency, as determined by the
Securities and Exchange Commission, exists which causes disposal
of, or valuation of the net asset value of, the portfolio
securities to be unreasonable or impracticable; or (iii) for such
other periods as the Securities and Exchange Commission may permit.
Payment for redemption by any method (including redemption by
check) of shares recently purchased by check (irrespective of
whether the check is a regular check or a certified, cashier's or
official bank check) or by Automatic Investment or Telephone
Investment may be delayed up to 15 days or until (i) the purchase
check or Automatic Investment or Telephone Investment has been
honored or (ii) the Agent has received assurances by telephone or
in writing from the bank on which the purchase check was drawn or
from which the funds for Automatic Investment or Telephone
Investment were transferred, satisfactory to the Agent and the
Fund, that the purchase check or Automatic Investment or Telephone
Investment will be honored. Shares so purchased within the prior 15
days will not be redeemed under the check writing redemption
procedure and a shareholder must not write a check if (i) it will
be presented to the Custodian for payment within 15 days of a
purchase of shares by check and (ii) the redemption check would
cause the redemption of some or all of those shares. Possible
delays in payment of redemption proceeds can be eliminated by using
wire payments or Federal Reserve drafts to pay for purchases.
If the Board of Trustees determines that it would be
detrimental to the best interests of the remaining shareholders of
the Fund to make payment wholly or partly in cash, the Fund may pay
the redemption price in whole or in part by the distribution in
kind of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. See the Additional Statement for details.
The Fund has the right to compel the redemption of shares held
in any account if the aggregate net asset value of such shares is
less than $500 due to shareholder redemptions. If the Board of
Trustees elects to do this, shareholders who are affected will
receive prior written notice and will be permitted 60 days to bring
their accounts up to the minimum before this redemption is
processed.
AUTOMATIC WITHDRAWAL PLAN
If you own or purchase shares of the Fund having a net asset
value of at least $5,000 you may establish an Automatic Withdrawal
Plan under which you will receive a monthly or quarterly check in
a stated amount, not less than $50. If such a plan is established,
all dividends and distributions must be reinvested in your
shareholder account. See the Automatic Withdrawal Plan provisions
of the Application included in this Prospectus, the Additional
Statement under "Automatic Withdrawal Plan" and "Dividend and Tax
Information" below.
MANAGEMENT ARRANGEMENTS
The Board of Trustees
The business and affairs of the Fund are managed under the
direction and control of its Board of Trustees. The Additional
Statement lists the Fund's Trustees and officers and provides
further information about them.
The Advisory Agreement
TCW Funds Management, Inc. (the "Adviser"), 865 South Figueroa
Street, Los Angeles, California 90017 supervises the investment
program of the Fund and the composition of its portfolio pursuant
to an investment advisory agreement (the "Advisory Agreement").
Under the Advisory Agreement, the Adviser pays all
compensation of those officers and employees of the Fund and of
those Trustees, if any, who are affiliated with the Adviser. Under
the Advisory Agreement, the Fund bears the cost of preparing and
setting in type its prospectuses, statements of additional
information, and reports to shareholders and the costs of printing
or otherwise producing and distributing those copies of such
prospectuses, statements of additional information and reports as
are sent to its shareholders. Under the Advisory Agreement, all
costs and expenses not expressly assumed by the Adviser or by the
Administrator under the Administration Agreement or by the Fund's
principal underwriter are paid by the Fund. The Advisory Agreement
lists examples of such expenses borne by the Fund, the major
categories of such expenses being: legal and audit expenses,
custodian and transfer agent, or shareholder servicing agent fees
and expenses, stock issuance and redemption costs, certain printing
costs, registration costs of the Fund and its shares under Federal
and State securities laws, interest, taxes, and non-recurring
expenses, including litigation.
Under the Advisory Agreement, the Fund pays a fee payable
monthly and computed on the net asset value of the Fund as of the
close of business each business day at the annual rate of 0.25 of
1% of the Fund's net assets for the first $300 million of such
assets, and at the annual rate of 0.35 of 1% of such assets over
$300 million. (However, the total fees which the Fund pays remain
at the annual rate of 0.50 of 1% of such net assets, since the
Administrator also receives a fee at the annual rate of 0.25 of 1%
of the Fund's net assets for the first $300 million of such assets,
and at the annual rate of 0.15 of 1% of such assets over $300
million from the Fund under the Administration Agreement; see
below.) The Adviser and/or the Administrator may, in order to
attempt to achieve a competitive yield on the shares of the Fund,
each waive all or part of either fee.
The Adviser agrees that the above fee shall be reduced, but
not below zero, by an amount equal to its pro-rata portion (based
on the aggregate fees of the Adviser and the Administrator) of the
amount, if any, by which the total expenses of the Fund in any
fiscal year, exclusive of taxes, interest and brokerage fees,
exceed the lesser of (i) 2.5% of the first $30 million of average
annual net assets of the Fund plus 2% of the next $70 million of
such assets plus 1.5% of its average annual net assets in excess of
$100 million, or (ii) 25% of the Fund's total annual investment
income.
The Advisory Agreement contains provisions as to the
allocation of the portfolio transactions of the Fund; see the
Additional Statement. Under these provisions, the Adviser is
authorized to consider sales of the Fund's shares in making this
allocation.
The Administration Agreement
Under an Administration Agreement (the "Administration
Agreement"), Aquila Management Corporation as Administrator, at its
own expense, provides office space, personnel, facilities and
equipment for the performance of its functions thereunder and as is
necessary in connection with the maintenance of the headquarters of
the Fund and pays all compensation of the Fund's Trustees, officers
and employees who are affiliated persons of the Administrator.
Under the Administration Agreement, subject to the control of
the Fund's Board of Trustees, the Administrator provides all
administrative services to the Fund other than those relating to
its investment portfolio and the maintenance of its accounting
books and records. Such administrative services include but are not
limited to maintaining books and records (other than accounting
books and records) of the Fund, and overseeing all relationships
between the Fund and its transfer agent, custodian, legal counsel,
auditors and principal underwriter, including the negotiation of
agreements in relation thereto, the supervision and coordination of
the performance of such agreements, and the overseeing of all
administrative matters which are necessary or desirable for
effective operation of the Fund and for the sale, servicing or
redemption of the Fund's shares. See the Additional Statement for
a further description of functions listed in the Administration
Agreement as part of such duties.
Under the Administration Agreement, the Fund pays a fee
payable monthly and computed on the net asset value of the Fund at
the end of each business day at the annual rate of 0.25 of 1% of
such net assets for the first $300 million of net assets and at the
annual rate of 0.15 of 1% on net assets above $300 million. The
Administrator has agreed that the above fee shall be reduced, but
not below zero, by an amount equal to its pro-rata portion (based
on the aggregate fees of the Adviser and the Administrator) of the
amount, if any, by which the total expenses of the Fund in any
fiscal year, exclusive of taxes, interest and brokerage fees,
exceed the lesser of (i) 2.5% of the first $30 million of average
annual net assets of the Fund plus 2% of the next $70 million of
such assets plus 1.5% of its average annual net assets in excess of
$100 million, or (ii) 25% of the Fund's total annual investment
income.
Information as to the Adviser,
the Administrator and the Distributor
The Adviser is a wholly-owned subsidiary of The TCW Group,
Inc., whose direct and indirect subsidiaries, including Trust
Company of the West and TCW Asset Management Company, provide a
variety of trust, investment management and investment advisory
services. Robert A. Day, who is Chairman of the Board of Directors
of the Adviser, may be deemed to be a control person of the Adviser
by reason of the aggregate ownership by Mr. Day and his family of
more than 25% of the outstanding voting stock of the Adviser's
parent corporation. As of December 31, 1994, the Adviser and its
affiliated companies had approximately $48 billion under management
or committed for management.
The Fund's Administrator is administrator to the Aquilasm
Group of Funds, which consists of tax-free municipal bond funds and
money market funds. As of March 31, 1995, these funds had aggregate
assets of approximately $2.8 billion, of which over $900 million
consisted of assets of money market funds. The Administrator, which
was founded in 1984, is controlled by Mr. Lacy B. Herrmann
(directly, through a trust and through share ownership by his
wife).
The fees which the Fund has paid or which have been accrued
for the year ended December 31, 1994 to the Adviser and to the
Administrator were each $167,963 of which $4,550 and $85,120,
respectively were waived. In addition the Administrator reimbursed
Fund expenses of $51,501.
The Distributor currently handles the distribution of the
shares of fourteen funds (six money market funds, seven tax-free
municipal bond funds and an equity fund) including the Fund. Under
the Distribution Agreement, the Distributor is responsible for the
payment of certain printing and distribution costs relating to
prospectuses and reports as well as the costs of supplemental sales
literature, advertising and other promotional activities.
At the date of this Prospectus, there is a proposed
transaction whereby all of the shares of the Distributor, which are
currently owned by Mr. Herrmann, will be owned by certain directors
and/or officers of the Administrator and/or the Distributor
including Mr. Herrmann.
DIVIDEND AND TAX INFORMATION
All of the Fund's net income for dividend purposes (see below)
will be declared daily as dividends; see "When Shares Are Issued
and Dividends Are Declared on Them" under "How to Invest in the
Fund" for information as to when dividends are declared. Dividends
are paid within a week before or after the end of each month and
invested in additional shares at net asset value on the payable
date, or, at your election, paid in cash by check. This election
may be made in the Application or by subsequent written notice to
the Agent. When you redeem all of your shares you will be credited
on the redemption payment date with the amount of all dividends
declared for the month through the date of redemption, or through
the day preceding the date of redemption in the case of shares on
which income dividends were declared on the same day on which the
shares were issued.
You will receive monthly a summary of your account, including
information as to dividends paid during the month and the shares
credited to your account through reinvestment of dividends. Such a
summary may be provided directly by the Fund or by a Qualified
Recipient as a part of the shareholder services it has undertaken
to provide under a related agreement. (See "Distribution Plan"
above and the Additional Statement.)
Daily dividends will be calculated as follows: the net income
for dividend purposes will be calculated immediately prior to the
calculation of net asset value and will include accrued interest
and original issue and market discount earned since the last
valuation, less the estimated expenses of the Fund and amortized
original issue and market premium for the period. However, the
calculation of the dividend could change under certain
circumstances under the procedures adopted by the Board of Trustees
relating to "amortized cost" valuation; see the Additional
Statement.
Dividends so paid will be taxable to you as ordinary income,
even though reinvested, unless the net income, computed as above,
exceeds "earnings and profits," as determined for tax purposes;
this could occur because net income as so determined will include
certain unrealized appreciation and discount which is not included
for tax purposes. If dividends exceed your ratable share of
"earnings and profits," the excess will reduce the cost or other
tax basis for your shares; any reduction which would otherwise
result in a negative basis will cause the basis to be reduced to
zero, with any remaining amount being taxed as capital gain. The
dividends paid by the Fund will not be eligible for the 70%
dividends received deduction for corporations. Statements as to the
tax status of your dividends will be mailed annually.
It is possible but unlikely that the Fund may have realized
long-term capital gains or losses in a year. If it has any net
long-term gains realized through October 31st of a year, it will
pay a capital gains distribution after that date. It may also pay
a supplemental distribution after the end of its fiscal year. Any
capital gains distribution will be taxed at the same rate as
ordinary income, except that for individuals, trusts and estates
the maximum tax rate on capital gains distributions is 28% even if
the applicable rate on ordinary income for such taxpayers is higher
than 28%.
The Fund will be required to withhold, subject to certain
exemptions, at a rate of 31% on dividends paid or credited to you
and on redemption proceeds, if you have not filed with the Fund a
correct Taxpayer Identification Number, certified when required.
The Fund, during its last fiscal year, qualified and intends
to continue to qualify under subchapter M of the Internal Revenue
Code; if so qualified it will not be liable for Federal income
taxes on amounts distributed by it.
EXCHANGE PRIVILEGE
There is an exchange privilege as set forth below among this
Fund and certain tax-free municipal bond funds and an equity fund
(the "Bond or Equity Funds") and certain money market funds (the
"Money-Market Funds"), all of which are in the Aquilasm Group of
Funds and have the same Administrator and Distributor as the Fund.
All exchanges are subject to certain conditions described below. As
of the date of this Prospectus, the Aquila Bond or Equity Funds are
Aquila Rocky Mountain Equity Fund, Hawaiian Tax-Free Trust,
Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund
of Colorado, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund For
Utah and Narragansett Insured Tax-Free Income Fund; the Aquila
Money-Market Funds are this Fund, Capital Cash Management Trust,
Pacific Capital Cash Assets Trust (Original Shares), Pacific
Capital Tax-Free Cash Assets Trust (Original Shares) and Pacific
Capital U.S. Treasuries Cash Assets Trust (Original Shares).
Under the exchange privilege, once any applicable sales charge
has been paid on shares of any Bond or Equity Fund, those shares
(and any shares acquired as a result of reinvestment of dividends
and/or distributions) may be exchanged any number of times between
Money-Market Funds and Bond or Equity Funds without the payment of
any additional sales charge.
The "Eligible Shares" of any Bond or Equity Fund are those
shares which were (a) acquired by direct purchase with payment of
any applicable sales charge, or which were received in exchange for
shares of another Bond or Equity Fund on which any applicable sales
charge was paid; (b) acquired by exchange for shares of a
Money-Market Fund with payment of the applicable sales charge; (c)
acquired in one or more exchanges between shares of a Money-Market
Fund and a Bond or Equity Fund so long as the shares of the Bond or
Equity Fund were originally purchased as set forth in (a) or (b);
or (d) acquired as a result of reinvestment of dividends and/or
distributions on otherwise Eligible Shares.
If you own Eligible Shares of any Bond or Equity Fund, you may
exchange them for shares of any Money-Market Fund or the shares of
any other Bond or Equity Fund without payment of any sales charge.
If you own shares of a Money-Market Fund which you have
acquired by exchange for Eligible Shares of any Bond or Equity
Fund, you may exchange these shares, and any shares acquired as a
result of reinvestment of dividends and/or distributions on these
shares, for shares of any Bond or Equity Fund without payment of
any sales charge.
Shares of a Money-Market Fund may be exchanged for shares of
another Money-Market Fund or of a Bond or Equity Fund; however, if
the shares of a Money-Market Fund were not acquired by exchange of
Eligible Shares of a Bond or Equity Fund or of shares of a
Money-Market Fund acquired in such an exchange, they may be
exchanged for shares of a Bond or Equity Fund only upon payment of
the applicable sales charge. The shares of the Bond or Equity Fund
so acquired are then Eligible Shares.
This Fund, as well as the other Money-Market Funds and Bond or
Equity Funds, reserves the right to reject any exchange into its
shares, if shares of the fund into which exchange is desired are
not available for sale in your state of residence. The Fund may
also modify or terminate this exchange privilege at any time. In
the case of termination, this Prospectus will be appropriately
supplemented. No such modification or termination shall take effect
on less than 60 days' written notice to shareholders.
All exercises of the exchange privilege are subject to the
conditions that (i) the shares being acquired are available for
sale in your state of residence; and (ii) the aggregate net asset
value of the shares surrendered for exchange are at least equal to
the minimum investment requirements of the investment company whose
shares are being acquired.
To effect an exchange, you must complete a form which is
available from the Distributor unless you have elected the
Telephone Exchange feature on the Application. The exchange will be
effected at the relative exchange prices of the shares being
exchanged next determined after receipt by the Distributor of a
properly completed form or Telephone Exchange request. The exchange
prices will be the respective net asset values of the shares,
unless a sales charge is to be deducted in connection with an
exchange of shares of a Money-Market Fund for shares of a Bond or
Equity Fund as described above, in which case the exchange price of
shares of the Bond or Equity Fund will be its public offering
price. Prices for exchanges are determined in the same manner as
for purchases of the Fund's shares. (See "How to Invest in the
Fund.")
An exchange is treated for Federal tax purposes as a
redemption and purchase of shares and may result in the realization
of a capital gain or loss, depending on the cost or other tax basis
of the shares exchanged and the holding period (see the Additional
Statement); no representation is made as to the deductibility of
any such loss should such occur.
Dividends paid by the Money-Market Funds are taxable, except
to the extent that dividends paid by Pacific Capital Tax-Free Cash
Assets Trust (a tax-free Money-Market Fund) are exempt from regular
Federal income tax, and to the extent that dividends paid by
Pacific Capital U.S. Treasuries Cash Assets Trust (which invests in
U.S. Treasury obligations) are exempt from state income taxes. If
your state of residence is not the same as that of the issuers of
obligations in which a Bond or Equity Fund or a tax-free
Money-Market Fund invests, the dividends from that fund may be
subject to income tax of the state in which you reside.
Accordingly, you should consult your tax adviser before acquiring
shares of such a Bond or Equity Fund or a tax-free Money-Market
Fund under the exchange privilege arrangement.
If you are considering an exchange into one of the funds
listed above, you should send for and carefully read its
Prospectus.
GENERAL INFORMATION
Description of Shares
The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares and to divide or
combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in
the Fund. Each share represents an equal proportionate interest in
the Fund with each other share. Upon liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets of
the Fund available for distribution to shareholders. All shares are
presently of the same class; however, if they deem it advisable and
in the best interests of shareholders, the Board of Trustees of the
Fund may create additional classes of shares which may differ from
each other only as to dividends (subject to rules and regulations
of the Securities and Exchange Commission or by exemptive order) or
the Board of Trustees may, at its own discretion, create additional
series of shares, each of which may have separate assets and
liabilities (in which case, any such series will have a designation
including the word "Series"). See the Additional Statement for
further information about possible additional series. Shares are
fully paid and non-assessable, except as set forth under the
caption "General Information" in the Additional Statement; the
holders of shares have no pre-emptive or conversion rights.
Of the outstanding shares of the Fund on April 20, 1995, PNC
Bank, 17th and Chestnut Streets, Philadelphia, Pennsylvania held
through three nominees 97,770,547 shares (99.9%). The Fund's
management is not aware of any person, other than those named
above, who beneficially owned 5% or more of its outstanding shares
on such date. On the basis of information received from the record
owners listed above, the Fund's management believes (i) that all of
the shares indicated are held for the benefit of custodial or trust
clients; and (ii) that all of such shares could be considered as
"beneficially" owned by the named shareholders in that they
possessed shared voting and/or investment powers as to such shares.
Voting Rights
Shareholders are entitled to one vote for each full share held
(and fractional votes for fractional shares held) and will vote on
the election of Trustees and on other matters submitted to the vote
of shareholders. No amendment may be made to the Declaration of
Trust without the affirmative vote of the holders of a majority of
the outstanding shares of the Fund. The Fund may be terminated (i)
upon the sale of its assets to another issuer, or (ii) upon
liquidation and distribution of the assets of the Fund, in either
case if such action is approved by the vote of the holders of a
majority of the outstanding shares of the Fund. If not so
terminated, the Fund will continue indefinitely.
<PAGE>
Application for Prime Cash Fund
Please complete steps 1 through 4 and mail to:
ADM, Attn: AquilaSM Group of Funds
10 Woodbridge Center Drive, Woodbridge, NJ 07095-1198
1-800-952-6666
STEP 1 ACCOUNT REGISTRATION
___Individual Use line 1
___Joint Account Use lines 1&2
___For a Minor Use line 3
___For Trust, Corporation,
Other Organization or
any Fiduciary capacity
Use line 4
* Joint Accounts will be Joint
Tenants with rights of survivorship
unless otherwise specified.
**Uniformed Gifts/Transfers to Minors
Act.
Please type or print name exactly as account is to be registered
1._____________________________________________________________________
First Name Middle Initial Last Name Social Security Number
2._____________________________________________________________________
First Name Middle Initial Last Name Social Security Number
3._____________________________________________________________________
Custodians First Name Middle Initial Last Name
Custodian for_________________________________________________________
Minors First Name Middle Initial Last Name
Under the________________ UGTMA**_____________________________________
Name of State Minors Social Security Number
4._____________________________________________________________________
_____________________________________________________________________
(Name of Corporation or Organization. If a Trust, include the name(s)
of Trustees in which account will be registered and the name and date
of the Trust Instrument. Account for a Pension or Profit Sharing Plan
or Trust may be registered in the name of the Plan or Trust itself.)
______________________________________________________________________
Tax I.D. Number Authorized Individual Title
B. MAILING ADDRESS AND TELEPHONE NUMBER
______________________________________________________________________
Street or PO Box City
_________________________________ (____)__________________________
State Zip Daytime Phone Number
Occupation:______________________ Employer:_______________________
Employers Address:___________________________________________________
Street Address: City State Zip
Citizen or resident of: ___ U.S. Other___ ______ Check here ___ if you
are a non-U.S. Citizen or resident and not subject to back-up withholding
(See certification in Step 4, Section B, below.)
C. INVESTMENT DEALER OR BROKER:
(Important - to be completed
by Dealer or Broker)
________________________________ _________________________________
Dealer Name Branch Number
________________________________ _________________________________
Street Address Rep.Number/Name
________________________________ (_______)________________________
City State Zip Area Code Telephone
STEP 2 PURCHASES OF SHARES
A. INITIAL INVESTMENT
1) ___ By Check
2) ___ By Wire
1) By Check: Make check payable to: PRIME CASH FUND
Amount of investment $ _________ Minimum initial investment $1,000
2) By Wire: OR
$_________________________ From_______________________________
Name of Financial Institution
________________________ ______________________________
Financial Institution Account No. Branch, Street or Box#
On________________________ ___________________________________
(Date) City State Zip
*NOTE: If investing by wiring of funds, instruct your
Financial Institution to wire funds to:
Bank One, Columbus Account of: (Account name and number,
ABA No. 044000037 or name in which investment is to be
CR A/C 04-01787 registered if new account)
For further credit to Prime Cash Fund A/C 6801373500
(A FINANCIAL INSTITUTION IS A COMMERCIAL BANK, SAVINGS
BANK OR CREDIT UNION.)
B. DIVIDENDS
ALL INCOME DIVIDENDS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL SHARES
AT NET ASSET VALUE UNLESS OTHERWISE INDICATED BELOW.
Dividends are to be:___ Reinvested or ___Paid in cash*
* FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING OPTIONS:
___Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would like you to
deposit the dividend.
___ Mail check to my/our address listed in Step 1.
STEP 3 SPECIAL FEATURES
A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to have amounts
automatically drawn on your Financial Institution account and invested
in your account. To establish this program, please complete Step 4,
Sections A & B of this Application.
I/We wish to make regular monthly investments of $________ (minimum
$50) on the ___ 1st day or ___ 16th day of the month (or on the first
business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to add to your account
(minimum $50 and maximum $50,000) at any time you wish by simply
calling ADMINISTRATIVE DATA MANAGEMENT CORP. (THE AGENT) toll-free at
1-800-952-6666. To establish this program, please complete Step4,
Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
C. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)
Application must be received
in good order at least 2 weeks
prior to 1st actual liquidation
date.
(Check appropriate box)
___ Yes ___No
Please establish an Automatic Withdrawal Plan for this account,
subject to the terms of the Automatic Withdrawal Plan Provisions
set forth below. To realize the amount stated below, the Agent
is authorized to redeem sufficient shares from this account at the
then current Net Asset Value, in accordance with the terms below:
Dollar Amount of each withdrawal $_______ beginning_____________
Minimum:$50 Month/Year
Payments to be made: ___ Monthly or ___ Quarterly
Checks should be made payable as indicated below. If check is
payable to a Financial Institution for your account, indicate
Financial Institution name, address and your account number.
______________________________________ ____________________________
First Name Middle Initial Last Name Financial Institution Name
______________________________________ ____________________________
Street Financial Institution Street
______________________________________ _____________________________
City State Zip City State Zip
_____________________________
Financial Institution Account Number
D. TELEPHONE EXCHANGE
(Check appropriate box)
___ Yes ___ No
This option allows you to effect
exchanges among accounts in your
name within the AquilaSM Group of
Funds by telephone.
TO MAKE A TELEPHONE EXCHANGE, CALL
THE AGENT AT 1-800-952-6666
The Agent is authorized to accept and act upon my/our or any other
persons telephone instructions to execute the exchange of shares with
identical shareholder registration in the manner described in the
Prospectus. Except for gross negligence in acting upon such telephone
instructions to execute an exchange, and subject to the conditions set
forth herein, I/we understand and agree to hold harmless the Agent, each
of the Aquila Funds and their respective officers, directors,trustees,
employees, agents and affiliates against any liability, damage, expense,
claim or loss, including reasonable costs and attorneys fees, resulting
from acceptance of, or acting or failure to act upon, this Authorization.
E. EXPEDITED REDEMPTION
(Check appropriate box)
___Yes ___ No
The proceeds will be deposited
to your Financial Institution
account listed.
TO MAKE AN EXPEDITED REDEMPTION,
CALL THE AGENT AT 1-800-952-6666
Cash proceeds in any amount from the redemption of shares will be
mailed or wired, whenever possible, upon request, if in an amount of
$1,000 or more to my/our account at a Financial Institution. The
Financial Institution account must be in the same name(s) as this Fund
account is registered.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK).
_________________________ ___________________________________
Account Registration Financial Institution AccountNumber
__________________________ __________________________________________
Financial Institution Name Financial Institution Transit/Routing Number
________________________________ ___________________________________
Street City State Zip
F. CHECKING ACCOUNT SERVICE
(Check appropriate box)
___ Yes ___ No
Please open a redemption checking account at Bank One Trust Company,
N.A., in my (our) name(s) as registered and send me (us) a supply of
checks. I (we) understand that this checking account will be subject
to the rules and regulations of Bank One Trust Company, N.A.,
pertaining thereto and as amended from time to time. For joint
account: Check here whether either owner ___ is authorized, or all
owners ___ are required to sign checks. IF NO BOX IS CHECKED, TWO
SIGNATURES WILL BE REQUIRED ON JOINT ACCOUNTS.
<PAGE>
STEP 4 Section A DEPOSITORS AUTHORIZATION TO HONOR DEBITS
IF YOU SELECTED AUTOMATIC INVESTMENT OR TELEPHONE INVESTMENT
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.
I/We authorize the Financial Institution listed below to charge to my/our
account any drafts or debits drawn on my/our account initiated by the
Agent, Administrative Data Management Corp., and to pay such sums in
accordance therewith, provided my/our account has sufficient funds to
cover such drafts or debits. I/We further agree that your treatment of
such orders will be the same as if I/we personally signed or initiated
the drafts or debits.
I/We understand that this authority will remain in effect until you
receive my/our written instructions to cancel this service. I/We also
agree that if any such drafts or debits are dishonored, for any reason,
you shall have no liabilities.
Financial Institution Account
Number______________________________________
Name and Address
where my/our account Name of Financial Institution__________________
is maintained Street Address_________________________________
City______________________State_____
Zip_________
Name(s) and
Signature(s)of ________________________________
Depositor(s) as they (Please Print)
appear where account X_______________________________ __________
is registered (Signature) (Date)
________________________________
(Please Print)
X_______________________________ __________
(Signature) (Date)
INDEMNIFICATION AGREEMENT
To: Financial Institution Named Above
So that you may comply with your depositors request, Aquila Distributors,
Inc. (the Distributor) agrees:
1 Electronic Funds Transfer debit and credit items transmitted pursuant
to the above authorization shall be subject to the provisions of the
Operating Rules of the National Automated Clearing House Association.
2 To indemnify and hold you harmless from any loss you may suffer in
connection with the execution and issuance of any electronic debit in
the normal course of business initiated by the Agent (except any loss
due to your payment of any amount drawn against insufficient or
uncollected funds), provided that you promptly notify us in writing of
any claim against you with respect to the same, and further provided
that you will not settle or pay or agree to settle or pay any such
claim without the written permission of the Distributor.
3 To indemnify you for any loss including your reasonable costs and
expenses in the event that you dishonor, with or without cause, any
such electronic debit.
<PAGE>
STEP 4 Section B SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED
. The undersigned warrants that he/she has full authority and is of legal
age to purchase shares of the Fund and has received and read a current
Prospectus of the Fund and agrees to its terms.
. I/We authorize the Fund and its agents to act upon these instructions
for the features that have been checked.
. I/We acknowledge that in connection with an Autoamatic Investment or
Telephone Investment, if my/our account at the Financial Institution
has insufficient funds, the Fund and its agents may cancel the purchase
transaction and are authorized to liquidate other shares or fractions
thereof held in my/our Fund account to make up any deficiency resulting
from any decline in the net asset value of shares so purchased and any
dividends paid on those shares. I/We authorize the Fund and its agents
to correct any transfer error by a debit or credit to my/our Financial
Institution account and/or Fund account and to charge the account for
any related charges.
. The Fund, the Agent and the Distributor and their Trustees, directors,
employees and agents will not be liable for acting upon instructions
believed to be genuine, and will not be responsible for any losses
resulting from unauthorized telephone transactions if the Agent follows
reasonable procedures designed to verify the identity of the caller.
The Agent will request some or all of the following information:
account name and number; name(s) and social security number registered
to the account and personal identification; the Agent may also record
calls. Shareholders should verify the accuracy of confirmation
statements immediately upon receipt. Under penalties of perjury, the
undersigned whose Social Security (Tax I.D.) Number is shown above
certifies (i) that Number is my correct taxpayer identification number
and (ii) currently I am not under IRS notification that I am subject
to backup withholding (line out (ii) if under notification). If no such
Number is shown, the undersigned further certifies, under penalties of
perjury, that either (a) no such Number has been issued, and a Number
has been or will soon be applied for; if a Number is not provided to
you within sixty days, the undersigned understands that all payments
(including liquidations) are subject to 31% withholding under federal
tax law, until a Number is provided and the undersigned may be subject
to a $50 I.R.S. penalty; or (b) that the undersigned is not a citizen
or resident of the U.S.; and either does not expect to be in the U.S.
for more than 183 days during each calendar year and does not conduct
a business in the U.S. which would receive any gain from the Fund, or
is exempt under an income tax treaty.
NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW. FOR A TRUST,
ALL TRUSTEES MUST SIGN.*
________________________________ ________________________ _________
Individual (or Custodian) Joint Registrant, if any Date
________________________________________ ___________________ ________
Corporate Officer, Partner, Trustee, etc. Title Date
* For Fund, Corporations or Associations, this form must be accompanied
by proof of authority to sign, such as a certified copy of the
corporate resolution or a certificate of incumbency under the trust
instrument.
SPECIAL INFORMATION
. Certain features (Automatic Investment, Telephone Investment, Expedited
Redemption and Direct Deposit of Dividends) are effective 15 days after
this form is received in good order by the Fund's Agent.
. You may cancel any feature at any time, effective 3 days after the
Agent receives written notice from you.
. Either the Fund or the Agent may cancel any feature, without prior
notice, if in its judgment your use of any feature involves unusual
effort or difficulty in the administration of your account.
. The Fund reserves the right to alter, amend or terminate any or all
features or to charge a service fee upon 30 days written notice to
shareholders except if additional notice is specifically required by
the terms of the Prospectus.
BANKING INFORMATION
. If your Financial Institution account changes, you must complete a
Ready Access features form which may be obtained from Aquila
Distributors at 1-800-228-7496 and send it to the Agent together with
a "voided" check or pre-printed deposit slip from the new account. The
new Financial Institution change is effective in 15 days after this
form is received in good order by the Fund's Agent.
<PAGE>
Investment Adviser
TCW FUNDS MANAGEMENT, INC.
865 South Figueroa Street
Los Angeles, California 90017
Administrator
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
Distributor
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
Board of Trustees
Lacy B. Herrmann, Chairman
Theodore T. Mason, Vice Chairman
Herbert S. Beggs
Paul Y. Clinton
Walter M. Keenan
Cornelius T. Ryan
Officers
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
John W. Cody, Vice President
John M. Herndon, Vice President
and Assistant Secretary
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
Patricia A. Craven, Assistant Secretary
Transfer and Shareholder Servicing Agent
ADMINISTRATIVE DATA MANAGEMENT CORP.
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095-1198
Custodian
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
Independent Auditors
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Counsel
HOLLYER, BRADY, SMITH, TROXELL,
BARRETT, ROCKETT, HINES & MONE
551 Fifth Avenue
New York, New York 10176
TABLE OF CONTENTS
Table of Expenses.......................2
Financial Highlights....................3
Introduction............................4
Investment Of The Fund's Assets.........4
Investment Restrictions.................9
Net Asset Value Per Share..............10
How To Invest In The Fund..............10
How To Redeem Your Investment..........13
Automatic Withdrawal Plan..............17
Management Arrangements................17
Dividend And Tax Information...........19
Exchange Privilege.....................20
General Information....................22
Application
PRIME CASH FUND
A cash
management
investment
[LOGO]
PROSPECTUS
[LOGO]
One Of The
AQUILAsm Group of Funds
