File Nos. 2-79722 and 811-3578
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ X ]
Amendment No. 17 [ X ]
PRIME CASH FUND
(Exact Name of Registrant as Specified in Charter)
380 Madison Avenue, Suite 2300
New York, New York 10017
(Address of Principal Executive Offices)
(212) 697-6666
(Registrant's Telephone Number)
EDWARD M.W. HINES
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue, 27th Floor
New York, New York 10176
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
___
[___] immediately upon filing pursuant to paragraph (b)
[_ _] on (date) pursuant to paragraph (b)
[___] 60 days after filing pursuant to paragraph (a)(i)
[___] on (date) pursuant to paragraph (a)(i)
[___] 75 days after filing pursuant to paragraph (a)(ii)
[___] on (date) pursuant to paragraph (a)(ii) of Rule 485.
[___] This post-effective amendment designates a new effec-
tive date for a previous post-effective amendment.
Registrant hereby declares, pursuant to Section (a)(1) of Rule
24f-2 under the Investment Company Act of 1940, that Registrant
has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to that Section and that the Rule
24f-2 Notice for the Registrant's fiscal year ended December 31,
1996 was filed in February 1997.
<PAGE>
PRIME CASH FUND
CROSS REFERENCE SHEET
Part A of
Form N-1A
Item No. Prospectus Caption(s)
1..............*
2..............*
3..............*
4..............Introduction; Investment of the Trust's
Assets; Investment Restrictions; General
Information
5..............Management Arrangements
5A.............*
6..............General Information; Dividend and Tax
Information
7..............Net Asset Value per Share; How to Invest in
the Trust; Exchange Privilege
8..............How to Redeem Your Investment; Automatic
Withdrawal Plan; Exchange Privilege
9..............*
Part B of
Form N-1A Statement of Additional Information
Item No. or Prospectus Caption(s)
10.............*
11.............*
12.............*
13.............Investment of the Trust's Assets; Investment
Restrictions; Loans of Portfolio
Securities
14.............Trustees and Officers
15.............General Information (Prospectus caption)
16.............Additional Information as to Management
Arrangements; General Information
17.............Investment of the Trust's Assets (Prospectus
caption)
18.............General Information
19.............Limitation of Redemptions in Kind; Amortized
Cost Valuation; Computation of Daily
Dividends; Automatic Withdrawal Plan
20.............*
21.............How to Invest in the Trust (Prospectus
caption); Distribution Plan; General
Information
22.............Yield Information; Per Share Income and
Capital Changes
*Not applicable or negative answer
<PAGE>
PRIME CASH FUND
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
Part A
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.
Its investment objectives and policies and general method of
operations have been those of a "money market fund" since its
inception. Since February, 1996, however, the Fund has had only
nominal assets, has conducted no operations and has not offered
its shares to the public. When it resumes operations, the Fund
may chose to invest in other types of securities and if so the
fundamental and management policies set forth herein will be
changed by appropriate action of the Board of Trustees and
shareholders and will be reflected in an appropriate amendment to
its registration statement.
The following material represents the Fund's responses to
the applicable items of Form N1-A if it resumes operations as a
money-market fund.
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 Part B 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 Part A 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 Part B); 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 Part A and in the Part B, 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 Part B 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 Part B 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
Part A will be supplemented to describe them. See the Part B.
(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 Part B
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 Part A
and Part B 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 Part B
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 Part A, are set forth below; others
are listed in the Part B.
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 Part
B); 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 Part B) 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 Part B 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 Part B.
HOW TO INVEST IN THE FUND
For Information only; shares are not currently being offered
for sale to the public.
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
payable to the order of Prime Cash Fund mailed to:
Prime Cash Fund
Administrative Data Management Corp.,
Transfer 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, you
should 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,
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.
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. 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. 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 Part B 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
For Information only; shares are not currently being offered
for sale to the public.
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 payment
to a predesignated commercial bank account. 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. Requests for redemption payments to
a predesignated commercial bank account may also be
made by a 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 your Application and
provide the required information concerning your commercial bank
account number. The bank account must be in the exclusive name(s)
of the shareholder(s) as registered with the Fund. You may change
the designated bank account at any time by completing and
returning a form available from the Fund. 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 subsequent written notification to the Agent with
signatures guaranteed, if required (see below).
Regular Redemption Method
(Certificate and Non-Certificate Shares)
1. Certificate Shares. Certificates in blank (unsigned)
representing shares to be redeemed should be sent to:
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 Agent.
For your 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 bank 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 other than by checks you have written,
payment will ordinarily be mailed to you at your address of
record. Upon your request, redemption proceeds will also be wired
to a predesignated bank, wherever possible, if in the amount of
$1,000 or more. The Fund may impose a charge, not exceeding $5.00
per wire redemption, after written notice to investors who have
elected this redemption procedure. The Fund has no present
intention of making this charge.
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) may be delayed up to 15 days or until (i) the
purchase check 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, satisfactory to the Agent and the Fund,
that the purchase check 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 share purchase 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 Part B 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
Part A, the Part B 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 Part B lists
the Fund's Trustees and officers and provides further information
about them.
The Advisory Agreement
Since February 1, 1996, the Administrator has been acting as
interim adviser for the Fund. As such the Administrator keeps the
accounting books and records of the Fund and computes its daily
net asset value and dividends. The Administrator acts as interim
adviser on a basis not exceeding its cost. Prior to Febrary 1,
1996, TCW Funds Management, Inc. (the "Former Adviser"), 865
South Figueroa Street, Los Angeles, California 90017 supervised
the investment program of the Fund and the composition of its
portfolio pursuant to an investment advisory agreement (the
"Former Advisory Agreement"). The Former Adviser acted as such
from March 1, 1962 through February 1, 1996.
All arrangements with a new investment adviser will be
subject to approval of a new investment advisory agreement by the
Board of Trustees and will be submitted for approval by the
shareholders of the Fund as required by the 1940 Act.
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 Part B 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.
During the period when the Fund is not conducting operations
and has only nominal assets it is anticipated that all fees
accrued to the Administrator will be waived.
Information as to the Adviser,
the Administrator and the Distributor
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 December 31, 1996, these funds had
aggregate assets of approximately $2.7 billion, of which over
$800 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, 1996 to the former Adviser and to
the Administrator were each $5,481, of which $1,108 and $3,295,
respectively were waived. In addition the Administrator
reimbursed Fund expenses of $2,188.
The Distributor currently handles the distribution of the
shares of 14 funds (five money market funds, seven tax-free
municipal bond funds and two equity funds) not 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 Part A, 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
For Information only; shares are not currently being offered
for sale to the public.
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 Part B.)
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 Part
B.
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.
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 Part B 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 Part B; the
holders of shares have no pre-emptive or conversion rights.
On March 27, 1997, the Administrator held of record 1001 of
the Fund's shares, all of the shares then outstanding.
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>
PRIME CASH FUND
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
Part B
This Part B is referred to herein as the "Additional
Statement."
INVESTMENT OF THE FUND'S ASSETS
The Fund is not conducting any operations or currently
offering its shares for sale. See "Introduction" in Part A. Its
assets consist entirely of cash.
Information on Variable Amount Master Demand Notes
The Fund may buy variable amount master demand notes. The
nature and terms of these obligations are as follows. They permit
the investment of fluctuating amounts by the Fund at varying
rates of interest pursuant to direct arrangements between the
Fund, as lender, and the borrower. They permit daily changes in
the amounts borrowed. The Fund has the right to increase the
amount under the note at any time up to the full amount provided
by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without
penalty. Because these 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, although they are redeemable (and thus immediately
repayable by the borrower) at principal amount, plus accrued
interest, at any time. The Fund has no limitations on the amount
of its assets invested in these notes. There is no limitation on
the type of issuer from which these notes will be purchased;
however, all such notes must be First Tier Securities and in
connection with such purchases and on an ongoing basis, the
"Adviser, pursuant to procedures approved by the Board of
Trustees, must determine that such obligations present minimal
credit risks. In connection with such purchases and on an ongoing
basis, the Adviser will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay
principal and interest on demand, including a situation in which
all holders of such notes make demand simultaneously. Master
Demand Notes, as such, are not typically rated by credit rating
agencies, and if not so rated the Fund may invest in them only if
at the time of an investment they are determined to be comparable
in quality to rated issues in which the Fund can invest.
Information On Insured Bank Obligations
The Federal Deposit Insurance Corporation ("FDIC") insures
the deposits of Federally insured banks, and effective August 9,
1989, savings institutions (collectively herein, "banks") up to
$100,000. On that date the FDIC assumed the insurance functions
of the Federal Savings and Loan Insurance Corporation, which was
abolished. The Fund may purchase bank obligations which are fully
insured as to principal by the FDIC. To remain fully insured as
to principal, these investments must currently be limited to
$100,000 per bank; if the principal amount and accrued interest
together exceed $100,000 then the excess accrued interest will
not be insured. Insured bank obligations may have limited
marketability; unless the Board of Trustees determines that a
readily available market exists for such obligations, the Fund
will invest in them only within the 10% limit mentioned in Part A
unless such obligations are payable at principal amount plus
accrued interest on demand or within seven days after demand.
Information about Certain Other Obligations
The Fund may purchase obligations other than those listed in
categories 1 through 5 under "Investment of the Fund's Assets,"
in Part A, but only if such other obligations are guaranteed as
to principal and interest by either a bank in whose obligations
the Fund may invest or a corporation in whose commercial paper
the Fund may invest. If any such guarantee is unconditional and
is itself an Eligible Security, the obligation may be purchased
based on the guarantee; if any such guarantee is not
unconditional, purchase of the obligation can only be made if the
underlying obligation is an Eligible Security and meets all other
applicable requirements of the Rule. See "Effect of the Rule on
Portfolio Management" in Part A. As of the date of the Additional
Statement the Fund does not own any such obligations and has no
present intention of purchasing any. Such obligations can be any
obligation of any kind so guaranteed, including, for example,
obligations created by "securitizing" various kinds of assets
such as credit card receivables or mortgages. If the Fund invests
in these assets, they will be identified in the Fund's Part A;
and described in the Additional Statement.
Turnover
In general, the Fund will purchase securities with the
expectation of holding them to maturity. However, the Fund may to
some degree engage in short-term trading to attempt to take
advantage of short-term market variations. The Fund may also sell
securities prior to maturity to meet redemptions or as a result
of a revised management evaluation of the issuer. The Fund will
have a high portfolio turnover due to the short maturities of the
securities held, but this should not affect net asset value or
income, as brokerage commissions are not usually paid on the
securities in which the Fund invests. (In the usual calculation
of portfolio turnover, securities of the type in which the Fund
invests are excluded; consequently, the high turnover which the
Fund will have is not comparable to the turnover of
non-money-market investment companies.)
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed
delivery basis. For example, delivery and payment may take place
a month or more after the date of the transaction. The purchase
price and the interest rate payable on the securities are fixed
on the transaction date. At the time the Fund makes the
commitment to purchase securities on a when-issued or delayed
delivery basis, it will record the transaction and thereafter
reflect the value of such securities each day in determining its
net asset value. The Fund will make commitments for such
when-issued transactions only when it has the intention of
actually acquiring the securities. The Fund will maintain with
the Custodian and mark to market every business day a separate
account with portfolio securities in an amount at least equal to
such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities or sales of the
securities held in the separate account and/or from cash flow. If
the Fund chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the
disposition of any other portfolio obligation, incur a gain or
loss due to market fluctuation. 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.
Diversification and Certain Industry Requirements
The Fund has a rule, set forth in Part A, under which it
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 of that industry. In applying this rule to commercial
paper issued by finance subsidiaries or affiliates of operating
companies, if the business of the issuer consists primarily of
financing the activities of the related operating company, the
Fund considers the industry of the issuer to be that of the
related operating company.
YIELD INFORMATION
From time to time, the Fund may advertise its "current
yield" and its "effective yield" (also referred to as "effective
compound yield"). Both yield figures are based on historical
earnings and are not intended to indicate future performance. The
current yield of a Fund refers to the net income generated by an
investment in that Fund over a stated seven-day period. This
income is then "annualized". That is, the amount of income
generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a
percentage of the investment. The Fund may also advertise or
quote its effective yield, which is calculated similarly, but,
when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The effective yield will be slightly
higher than the current yield because of the compounding effect
of this assumed reinvestment.
In addition, the Fund may also compare its performance to
other income-producing securities such as (i) money market funds;
(ii) various bank products, including both those that are insured
(e.g., deposit obligations) and those that are not (e.g.,
investment instruments offered by affiliates of banks); and (iii)
U.S. Treasury Bills or Notes. There are differences between these
income-producing alternatives and the Fund other than their
yields, some of which are summarized below.
The yield of the Fund is not fixed and will fluctuate. In
addition, your investment is not insured and its yield is not
guaranteed. There can be no assurance that the Fund will be able
to maintain a stable net asset value of $1.00 per share. Although
the yields of bank money market deposit accounts and NOW accounts
will fluctuate, principal will not fluctuate and is insured by
the Federal Deposit Insurance Corporation up to $100,000. Bank
passbook savings accounts normally offer a fixed rate of
interest, and their principal and interest are also guaranteed
and insured. Bank certificates of deposit offer fixed or variable
rates for a set term. Principal and fixed rates are guaranteed
and insured. There is no fluctuation in principal value.
Withdrawal of these deposits prior to maturity will normally be
subject to a penalty. Investment instruments, such as Repurchase
Agreements and Commercial Paper, offered by affiliates of banks
are not insured by the Federal Deposit Insurance Corporation. In
comparing the yields of one money market fund to another,
consideration should be given to each fund's investment policy,
portfolio quality, portfolio maturity, type of instruments held
and operating expenses.
INVESTMENT RESTRICTIONS
The Fund has a number of policies concerning what it can and
cannot do. Those policies, which are called "fundamental
policies" may not be changed unless the holders of a majority, as
defined in the Investment Company Act of 1940 (the "1940 Act"),
of the Fund's outstanding shares vote to change them. Under the
1940 Act, the vote of the holders of a majority of the
outstanding shares of the Fund means the vote of the holders of
the lesser of (a) 67% or more of the Fund's shares present at a
meeting or represented by proxy if the holders of more than 50%
of its shares are so present or represented, or (b) more than 50%
of its outstanding shares. Those fundamental policies not set
forth in Part A are set forth below.
1. The Fund invests only in certain limited securities.
The Fund cannot buy any voting securities, any commodities
or commodity contracts, any mineral related programs or leases,
any shares of other investment companies or any warrants, puts,
calls or combinations thereof.
The Fund cannot purchase or hold the securities of any
issuer if, to its knowledge, Trustees, Directors or officers of
the Fund or its Adviser individually owning beneficially more
than 0.5% of the securities of that issuer together own in the
aggregate more than 5% of such securities.
The Fund cannot buy real estate or any non-liquid interests
in real estate investment trusts; however, it can buy any
securities which it could otherwise buy even though the issuer
invests in real estate or interests in real estate.
2. Almost all of the Fund's assets must be in established
companies.
Only 5% of the Fund's total assets may be in issuers less
than three years old, that is, which have not been in continuous
operation for at least three years. This includes the operations
of predecessor companies.
3. The Fund does not buy for control.
The Fund cannot invest for the purpose of exercising control
or management of other companies.
4. The Fund does not sell securities it does not own or borrow
from brokers to buy securities.
Thus, it cannot sell short or buy on margin.
5. The Fund is not an underwriter.
The Fund cannot engage in the underwriting of securities,
that is, the selling of securities for others. Also, it cannot
invest in restricted securities. Restricted securities are
securities which cannot freely be sold for legal reasons.
LOANS OF PORTFOLIO SECURITIES
The Fund may, to increase its income, lend its securities on
a short- or long-term basis to broker-dealers, banks or certain
other financial institutions (see below) if (i) the loan is
collateralized in accordance with applicable regulatory
requirements (the "Guidelines") and if (ii) after any loan, the
value of the securities loaned does not exceed 10% of the value
of its total assets. As of the date of this Additional Statement,
the Fund does not foresee lending securities if after any loan
the value of loaned securities exceeds 5% of the value of its
total assets. The financial institutions other than
broker-dealers or banks to which the Fund can lend its securities
are limited to "accredited investors," as that term is defined in
Section 2(15) of the Securities Act of 1933. (In general, such
institutions are insurance companies, investment companies and
certain employee benefit plans.) Under the present Guidelines
(which are subject to change) the loan collateral must, on each
business day, at least equal the value of the loaned securities
and must consist of cash, bank letters of credit or U.S.
Government securities. To be acceptable as collateral, a letter
of credit must obligate a bank to pay amounts demanded by the
Fund if the demand meets the terms of the letter. Such terms and
the issuing banks would have to be satisfactory to the Fund. Any
loan might be secured by any one or more of the three types of
collateral. In addition, any such investment must meet the
applicable requirements of the Rule. See "Effect of the Rule on
Portfolio Management" in Part A.
The Fund receives amounts equal to the interest or other
distributions on loaned securities and also receives one or more
of the negotiated loan fees, interest on securities used as
collateral or interest on the securities purchased with such
collateral, either of which types of interest may be shared with
the borrower. The Fund may also pay reasonable finder's,
custodian and administrative fees but only to persons not
affiliated with the Fund. The terms of the Fund's loans will meet
certain tests under the Internal Revenue Code and permit the Fund
to terminate the loan and thus reacquire loaned securities on
five days' notice.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") under
Rule 12b-1 ("Rule 12b-1") under the 1940 Act. 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 Rule 12b-1.
The Plan is designed to protect against any claim involving
the Fund that some of the expenses which the Fund pays or may pay
come within the purview of Rule 12b-1. The Fund believes that it
is not financing any such activity and does not consider any
payment enumerated in the Plan as so financing any such activity.
However, it might be claimed that some of the expenses the Fund
pays come within the purview of Rule 12b-1. If and to the extent
that any payments (including fees) as specifically listed in the
Plan are considered to be primarily intended to result in or are
indirect financing of any activity which is primarily intended to
result in the sale of Fund shares, these payments are authorized
under the Plan.
As used in the Plan, "Qualified Recipients" means
broker-dealers or others selected by the Fund's Adviser and/or
Administrator, including but not limited to any principal
underwriter of the Fund (other than a principal underwriter which
is an affiliated person, or an affiliated person of an affiliated
person, of the administrator) with which the administrator has
entered into written agreements ("Related Agreements")
contemplated by the Rule and which have rendered assistance
(whether direct, administrative, or both) in the distribution
and/or retention of the Fund's shares or servicing of shareholder
accounts. As used in the Plan, "Administrator" includes any
sub-adviser which may in the future be retained by the Fund and
which performs the functions now being performed by the
Administrator.
"Qualified Holdings" means, as to any Qualified Recipient,
all Fund shares beneficially owned by such Qualified Recipient,
or beneficially owned by its brokerage customers, other
customers, other contacts, investment advisory clients, or other
clients, if the Qualified Recipient was, in the judgment of the
Adviser and/or Administrator instrumental in the purchase and/or
retention of such Fund shares and/or in providing administrative
assistance in relation thereto.
Under the Plan, the Adviser and/or the Administrator, but
not the Fund itself, is authorized to make payments ("Permitted
Payments") to Qualified Recipients. Permitted Payments can be
made by the Adviser and/or Administrator, directly or through the
Distributor as disbursing agent, and shall not be the subject of
reimbursement by the Fund to the Adviser or Administrator.
Permitted Payments may not exceed 0.10 of 1% of the average
annual net assets of the Fund for any full fiscal year of the
Fund during which the Plan is in effect. If the plan is not in
effect for the whole of any fiscal year the amount of Permitted
Payments shall be pro-rated for such part or parts of that fiscal
year during which the Plan is in effect, and shall also be
pro-rated for any fiscal year which is not a full fiscal year.
Under the Plan the Adviser and/or Administrator have
authority (i) as to the selection of any Qualified Recipient or
Recipients; (ii) not to select any Qualified Recipient; and (iii)
the amount of Permitted Payments, if any, to each Qualified
Recipient provided that the total Permitted Payments to all
Qualified Recipients do not exceed the amount set forth above.
The Adviser and Administrator will consult with each other as to
persons appropriate to be or become Qualified Recipients and the
amounts of Permitted Payments to be made to these Qualified
Recipients.
The Adviser and/or Administrator are authorized under the
Plan, but not directed, to take into account, in addition to any
other factors deemed relevant by them, the following: (a) the
amount of the Qualified Holdings of the Qualified Recipient; (b)
the extent to which the Qualified Recipient has, at its expense,
taken steps in the shareholder servicing area; and (c) the
possibility that the Qualified Holdings of the Qualified
Recipient would be redeemed in the absence of its selection or
continuance as a Qualified Recipient. Notwithstanding the
foregoing two sentences, a majority of the Independent Trustees
(as defined below) may remove any person as a Qualified
Recipient.
The Plan states that, in view of the foregoing payments by
the Administrator and/or the Adviser and the bearing by them of
certain distribution expenses, it is recognized that the profits,
if any, of the Administrator or Adviser are dependent primarily
on the administration fees paid by the Fund to the Administrator
and the advisory fees paid by the Fund to the Adviser and that
their profits, if any, would be less or losses, if any, would be
increased due to such payments and expenses. If and to the extent
that any such fees paid by the Fund might, in view of the
foregoing, be considered as indirectly financing any activity
which is primarily intended to result in the sale of shares
issued by the Fund, the payment of such fees is authorized. In
taking any action contemplated by Section 15 of the 1940 Act as
to any contract with the Adviser to which the Fund is a party,
the Fund's Trustees, including its Trustees who are not
"interested persons" as defined in the 1940 Act, shall, in acting
on the terms of any such contract apply the "fiduciary duty"
standard contained in Section 36(b) of the 1940 Act.
The Plan states that if and to the extent that any of the
payments listed below are considered to be "primarily intended to
result in the sale of shares" issued by the Fund within the
meaning of Rule 12b-1, such payments are authorized under the
Plan: (i) the costs of the preparation of all reports and notices
to shareholders and the costs of printing and mailing such
reports and notices to existing shareholders, irrespective of
whether such reports or notices contain or are accompanied by
material intended to result in the sale of shares of the Fund or
other funds or other investments; (ii) the costs of the
preparation and setting in type, printing and mailing of all
prospectuses and statements of additional information to existing
shareholders; (iii) the costs of preparation, printing and
mailing of any proxy statements and proxies, irrespective of
whether any such proxy statement includes any item relating to,
or directed toward, the sale of the Fund's shares; (iv) all legal
and accounting fees relating to the preparation of any such
reports, prospectuses, statements of additional information,
proxies and proxy statements; (v) all fees and expenses relating
to the qualification of the Fund and/or its shares under the
securities or "Blue-Sky" laws of any jurisdiction; (vi) all fees
under the Securities Act of 1933 and the 1940 Act, including fees
in connection with any application for exemption relating to or
directed toward the sale of the Fund's shares; (vii) all fees and
assessments of the Investment Company Institute or any successor
organization, irrespective of whether some of its activities are
designed to provide sales assistance; (viii) all costs of the
preparation and mailing of confirmations of shares sold or
redeemed or share certificates, and reports of share balances;
and (ix) all costs of responding to telephone or mail inquiries
of investors or prospective investors.
The Plan states that while it is in effect, the Fund's
Adviser and Administrator shall report at least quarterly to the
Fund's Trustees in writing for their review on the following
matters: (i) all Permitted Payments made under the Plan, the
identity of the Qualified Recipient of each Payment, and the
purposes for which the amounts were expended; (ii) all costs of
each item specified in Section 4 of the Plan (making estimates of
such costs where necessary or desirable) during the preceding
calendar or fiscal quarter; and (iii) all fees paid or accrued by
the Fund to the Adviser or Administrator during such quarter.
While the Plan is in effect, the selection and nomination of
those Trustees of the Fund who are not "interested persons" of
the Fund is committed to the discretion of such disinterested
Trustees. This does not prevent the involvement of others in such
selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such
disinterested Trustees.
The Plan, unless terminated as hereinafter provided,
continues in effect from year to year only so long as such
continuance is specifically approved at least annually by the
Fund's Trustees and of those Trustees (the "Independent
Trustees") who are not "interested persons" (as defined in the
1940 Act) of the Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan, cast in person at a meeting called for the
purpose of voting on the Plan. In voting on the implementation or
continuance of the Plan, those Trustees who vote to approve such
implementation or continuance must conclude that there is a
reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the
holders of a "majority" (as defined in the 1940 Act) of the
outstanding voting securities of the Fund. The Plan may not be
amended to increase materially the amount of payments to be made
without such a shareholder vote, and all amendments must be
approved by a vote of the Trustees of the Fund and of the
Independent Trustees, with votes cast in person at a meeting
called for the purpose of voting on the Plan.
During the Fund's fiscal year ended December 31, 1996, no
Qualified Payments were made to Qualified Recipients.
The formula under which the payments described above may be
made under the Plan was arrived at by considering a number of
factors. One of such factors is that such payments are designed
to provide incentives for Qualified Recipients (i) in the case of
Qualified Recipients which are principal underwriters, to act as
such and (ii) in the case of all Qualified Recipients, to devote
substantial time, persons and effort to the sale of the shares of
the Fund. Another factor is that such payments by the
Administrator to Qualified Recipients provide the only incentive
for Qualified Recipients to do so since there is no sales charge
on the sale of the Fund's shares. Another factor is that the Fund
is one of several funds having certain common characteristics.
Each such fund (i) is a money-market fund; and (ii) has as its
investment adviser a banking institution or an affiliate which
does not invest assets over which it has investment authority in
any money-market fund which it advises, but for this purpose uses
such funds advised by other banking institutions or affiliates.
The marketing of the Fund's shares may be facilitated since each
such institution can, due to these common characteristics, be
fully and currently informed as to the quality of the investments
of and other aspects of the operations of each of the other funds
and if such an investment is otherwise appropriate, can, although
not required to do so, invest assets over which it has investment
authority in one or more of the other funds.
LIMITATION OF REDEMPTIONS IN KIND
The Fund has elected to be governed by Rule 18f-1 under the
1940 Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1 percent
of the net asset value of the Fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed
such limitation, the Fund will have the option of redeeming the
excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting
the assets into cash. The method of valuing securities used to
make redemptions in kind will be the same as the method of
valuing portfolio securities described under "Net Asset Value Per
Share" in Part A, and such valuation will be made as of the same
time the redemption price is determined.
TRUSTEES AND OFFICERS
The Trustees and officers of the Fund, their affiliations,
if any, with the Adviser or the Distributor and their principal
occupations during at least the past five years are set forth
below. Mr. Herrmann is an "interested person" of the Fund as that
term is defined in the 1940 Act as an officer of the Fund and as
a Director, officer and shareholder of the Distributor; Mr. Mason
is an interested person of the Fund as an officer of the Fund.
They are so designated by an asterisk. As of April 1, 1996, all
of the Trustees and officers as a group owned less than 1% of the
Fund's outstanding shares.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, 380 Madison Avenue, New York, New York 10017
Founder, President and Chairman of the Board of Aquila Management
Corporation since 1984, the sponsoring organization and
Administrator and/or Adviser or Sub-Adviser to the following
open-end investment companies, and Founder, Chairman of the Board
of Trustees, and President of each: Pacific Capital Cash Assets
Trust since 1984; Churchill Cash Reserves Trust since 1985;
Pacific Capital U.S. Treasuries Cash Assets Trust since 1988;
Pacific Capital Tax-Free Cash Assets Trust since 1988; each of
which is a money market fund, and together with Capital Cash
Management Trust ("CCMT") are called the Aquila Money-Market
Funds; and Hawaiian Tax-Free Trust since 1984; Tax-Free Trust of
Arizona since 1986; Tax-Free Trust of Oregon since 1986; Tax-Free
Fund of Colorado since 1987; Churchill Tax-Free Fund of Kentucky
since 1987; Tax-Free Fund For Utah since 1992; and Narragansett
Insured Tax-Free Income Fund since 1992; each of which is a tax-
free municipal bond fund, and two equity funds, Aquila Rocky
Mountain Equity Fund since 1993 and Aquila Cascadia Equity Fund,
since 1996, which are called the Aquila Bond and Equity Funds;
Vice President, Director, Secretary and formerly Treasurer of
Aquila Distributors, Inc. since 1981, distributor of the above
funds; President and Chairman of the Board of Trustees of CCMT, a
money market fund since 1981, and an Officer and Trustee/Director
of its predecessors since 1974; Chairman of the Board of Trustees
and President of Short Term Asset Reserves 1984-1996; President
and a Director of STCM Management Company, Inc., sponsor and sub-
adviser to CCMT; Chairman, President, and a Director since 1984,
of InCap Management Corporation, formerly sub-adviser and
administrator of Prime Cash Fund and Short Term Asset Reserves,
and Founder and Chairman of several other money market funds;
Director or Trustee of OCC Cash Reserves, Inc., Oppenheimer Quest
Global Value Fund, Inc., Oppenheimer Quest Value Fund, Inc., and
Trustee of Quest For Value Accumulation Trust, The Saratoga
Advantage Trust, and of the Rochester Group of Funds, each of
which is an open-end investment company; Trustee of Brown
University, 1990-1996 and currently Trustee Emeritus; actively
involved for many years in leadership roles with university,
school and charitable organizations.
Theodore T. Mason, Vice Chairman and Trustee, 26 Circle Drive,
Hastings-on-Hudson, New York 10706
Managing Director of EastWind Power Partners, Ltd. since 1994;
Director of Cogeneration Development of Willamette Industries,
Inc., a forest products company, 1991-1993; Vice President of
Corporate Development of Penntech Papers, Inc., 1978-1991; Vice
President of Capital Projects for the same company, 1977-1978;
Vice Chairman of the Board of Trustees of CCMT since 1981;
Trustee and Vice President, 1976-1981, and formerly Director of
its predecessor; Director of STCM Management Company, Inc.;
Trustee of Short Term Asset Reserves, 1984-1986 and 1989-1996, of
Hawaiian Tax-Free Trust and Pacific Capital Cash Assets Trust
since 1984, of Churchill Cash Reserves Trust since 1985, of
Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital
U.S. Treasuries Cash Assets Trust since 1988 and of Churchill
Tax-Free Fund of Kentucky since 1992; Vice President and Trustee
of Oxford Cash Management Fund, 1983-1989; Vice President of
Trinity Liquid Assets Trust, 1983-1985; President and Director of
Ted Mason Venture Associates, Inc., a venture capital consulting
firm, 1972-1980; Advisor to the Commander, U.S. Maritime Defense
Zone Atlantic, 1984-1988; National Vice President,
Surface/Subsurface, Naval Reserve Association, 1985-1987;
National Vice President, Budget and Finance, for the same
Association, 1983-1985; Commanding Officer of four Naval Reserve
Units, 1974-1985; Captain, USNR, 1978-1988.
Paul Y. Clinton, Trustee, 946 Morris Avenue, Bryn Mawr,
Pennsylvania 19010
Principal of Clinton Management Associates, a financial and
venture capital consulting firm; formerly Director of External
Affairs of Kravco Corporation, a national real estate owner and
developer, 1984-1995; formerly President of Essex Management
Corporation, a management and financial consulting company, 1979-
1983; Trustee of Capital Cash Management Trust since 1979 and of
Narragansett Insured Tax-Free Income Fund since 1996; Trustee of
Short Term Asset Reserves 1984-1996; general partner of Capital
Growth Fund, a venture capital partnership, 1979-1982; President
of Geneve Corp., a venture capital fund, 1970-1978; formerly
Chairman of Woodland Capital Corp., a small business investment
company; formerly Vice President, W.R. Grace & Co; Director or
Trustee of OCC Cash Reserves, Inc., Oppenheimer Quest Global
Value Fund, Inc., Oppenheimer Quest Value Fund, Inc., and Trustee
of Quest For Value Accumulation Trust, and of the Rochester Group
of Funds, each of which is an open-end investment company.
Diana P. Herrmann, Vice President, 380 Madison Avenue, New York,
New York 10017
Senior Vice President and Secretary and formerly Vice President
of the Administrator since 1986 and Director since 1984; Trustee
of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since
1994, of Churchill Tax-Free Fund of Kentucky and Churchill Cash
Reserves Trust since 1995 and of Aquila Cascadia Equity Fund
since 1996; Vice President of InCap Management Corporation since
1986 and Director since 1983; Senior Vice President or Vice
President and formerly Assistant Vice President of the Money
Funds since 1986; Vice-President of Cascades Cash Fund, 1989-
1994, and of Short Term Asset Management Fund, 1986-1988;
Assistant Vice President of Oxford Cash Management Fund, 1986-
1988; Assistant Vice President and formerly Loan Officer of
European American Bank, 1981-1986; daughter of the Fund's
President; Trustee of the Leopold Schepp Foundation (academic
scholarships) since 1995; actively involved in mutual fund and
trade associations and in college and other volunteer
organizations.
Charles E. Childs, III, Vice President, 380 Madison Avenue, New
York, New York 10017
Vice President - Administration and formerly Assistant Vice
President and Associate of the Administrator since 1987; Vice
President or Assistant Vice President of the Money Funds since
1988; Northeastern University, 1986-1987 (M.B.A., 1987);
Financial Analyst, Unisys Corporation, 1986; Associate Analyst at
National Economic Research Associates, Inc. (NERA), a micro-
economic consulting firm, 1979-1985.
John M. Herndon, Vice President and Assistant Secretary, 380
Madison Avenue, New York, New York 10017
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995 and Vice President of the
Aquila Money-Market Funds since 1990; Vice President of the
Administrator since 1990; Investment Services Consultant and Bank
Services Executive of Wright Investors' Service, a registered
investment adviser, 1983-1989; Member of the American Finance
Association, the Western Finance Association and the Society of
Quantitative Analysts.
Rose F. Marotta, Chief Financial Officer, 380 Madison Avenue, New
York, New York 10017
Chief Financial Officer of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1991 and Treasurer, 1981-1991;
formerly Treasurer of the predecessor of CCMT; Treasurer and
Director of STCM Management Company, Inc., since 1974; Treasurer
of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash
Management Fund, 1982-1988; Treasurer of InCap Management
Corporation since 1982, of the Administrator since 1984 and of
the Distributor since 1985.
Richard F. West, Treasurer, 380 Madison Avenue, New York, New
York 10017
Treasurer of the Aquila Money-Market Funds and the Aquila Bond
and Equity Funds and of Aquila Distributors, Inc. since 1992;
Associate Director of Furman Selz Incorporated, 1991-1992; Vice
President of Scudder, Stevens & Clark, Inc. and Treasurer of
Scudder Institutional Funds, 1989-1991; Vice President of Lazard
Freres Institutional Funds Group, Treasurer of Lazard Freres
Group of Investment Companies and HT Insight Funds, Inc., 1986-
1988; Vice President of Lehman Management Co., Inc. and Assistant
Treasurer of Lehman Money Market Funds, 1981-1985; Controller of
Seligman Group of Investment Companies, 1960-1980.
Edward M. W. Hines, Secretary, 551 Fifth Avenue, New York, New
York 10176
Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines &
Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary
of the Aquila Money-Market Funds and the Aquila Bond and Equity
Funds since 1982; Secretary of Trinity Liquid Assets Trust, 1982-
1985 and Trustee of that Trust, 1985-1986; Secretary of Oxford
Cash Management Fund, 1982-1988.
Patricia A. Craven, Assistant Secretary & Compliance Officer, 380
Madison Avenue, New York, New York 10017
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995; Counsel to the
Administrator and the Distributor since 1995; formerly a Legal
Associate for Oppenheimer Management Corporation, 1993-1995.
Compensation of Trustees
The Fund does not pay fees to Trustees affiliated with the
Administrator or Adviser or to any of the Fund's officers. During
the fiscal year ended December 31, 1996, the Fund accrued no
compensation or reimbursement of expenses to its other Trustees.
During the year 1996 the Fund was one of the 14 funds in the
Aquilasm Group of Funds,which currently consist of tax-free
municipal bond funds, money market funds and two equity funds.
The following table lists the compensation of all Trustees who
received compensation from the Fund accrued in 1995 but paid in
1996, the compensation each received during the Fund's fiscal
year from all funds in the Aquilasm Group of Funds and the number
of such funds. None of such Trustees has any pension or
retirement benefits from the Fund or any of the other funds in
the Aquila group.
<TABLE>
<CAPTION>
Compensation Number of
from all boards on
Compensation funds in the which the
from the Aquilasm Trustee
Name Fund Group serves
<S> <C> <C> <C>
Herbert S.
Beggs $2,250 $2,250 1
Paul Y.
Clinton $1,750 $6,529 3
Walter M.
Keenan $1,250 $1,250 1
Theodore T.
Mason $1,250 $47,551 8
Cornelius
T. Ryan $1,250 $4,000 3
</TABLE>
ADDITIONAL INFORMATION AS TO MANAGEMENT ARRANGEMENTS
Additional Information as to the Administration Agreement
The Administration Agreement between Aquila Management
Corporation, as Administrator, and the Fund (the "Administration
Agreement") contains the provisions described below in addition
to those described in Part A.
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 (see below for
discussion); as part of such duties, the Administrator (i)
provides office space, personnel, facilities and equipment for
the performance of the following functions and for the
maintenance of the Fund's headquarters; (ii) oversees 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; (iii) provides to
the Adviser and to the Fund statistical and other factual
information and advice regarding economic factors and trends, but
does not generally furnish advice or make recommendations
regarding the purchase or sale of securities; (iv) maintains the
Fund's books and records (other than accounting books and
records), and prepares (or assists counsel and auditors in the
preparation of) all required proxy statements, reports to
shareholders and Trustees, reports to and other filings with the
Securities and Exchange Commission and any other governmental
agencies, and tax returns, and oversees the Fund's insurance
relationships; (v) prepares, on the Fund's behalf and at its
expense, such applications and reports as may be necessary to
register or maintain its registration or that of its shares under
the securities or "Blue-Sky" laws of all such jurisdictions as
may be required from time to time; and (vi) responds to any
inquiries or other communications from shareholders and
broker-dealers, or if any such inquiry or communication is more
properly to be responded to by the Fund's shareholder servicing
and transfer agent or distributor, oversees such shareholder
servicing and transfer agent's or distributor's response thereto.
Since the Fund pays its own legal and audit expenses, to the
extent that the Fund's counsel and accountants prepare or assist
in the preparation of prospectuses, proxy statements and reports
to shareholders, the costs of such preparation or assistance are
paid by the Fund.
The Administration Agreement may be terminated at any time
without penalty by the Administrator upon sixty days' written
notice to the Fund and the Adviser; it may be terminated by the
Fund at any time without penalty upon giving the Administrator
sixty days' written notice, provided that such termination by the
Fund shall be directed or approved by a vote of a majority of the
Trustees in office at the time, including a majority of the
Trustees who are not interested persons of the Fund. In either
case the notice provision may be waived.
The expense limitation referred to in Part A, if in effect,
is implemented monthly so that at no time is there any unpaid
liability under the limitation subject, to readjustment during
the year.
The Administration Agreement provides that the Administrator
shall not be liable for any error in judgement or for any loss
suffered by the Fund in connection with the matters to which the
Administration Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence of the
Administrator in the performance of its duties, or from reckless
disregard by it of its obligations and duties under the
Administration Agreement. The Fund agrees to indemnify the
Administrator to the full extent permitted by the Declaration of
Trust.
The fees which the Fund has paid or which have been accrued
for the year ended December 31, 1996 to the former Adviser and to
the Administrator were each $5,481, of which $1,108 and $3,295,
respectively were waived. In addition the Administrator
reimbursed Fund expenses of $2,188.
For the year ended December 31, 1995, the Fund paid or
accrued $173,614 to the former Adviser of which $12,315 was
waived. For the year ended December 31, 1994, the Fund paid or
accrued to the Adviser fees of $167,963 of which $4,550 was
waived.
AMORTIZED COST VALUATION
The following provisions are for information only and are
applicable only if the Fund operates as a money market fund. At
the present time the Fund is not conducting any operations.
The Fund operates under Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission which permits it to value its
portfolio on the basis of amortized cost. The amortized cost
method of valuation is accomplished by valuing a security at its
cost and thereafter assuming a constant amortization rate to
maturity of any discount or premium, and does not reflect the
impact of fluctuating interest rates on the market value of the
security. This method does not take into account unrealized gains
or losses.
While the amortized cost method provides certainty in
valuation, there may be periods during which value, as determined
by amortized cost, is higher or lower than the price the Fund
would receive if it sold the instrument. During periods of
declining interest rates, the daily yield on the Fund's shares
may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its
portfolio instruments and changing its dividends based on these
changing prices. The converse would apply in a period of rising
interest rates.
Under the Rule, the Fund's Board of Trustees must establish,
and if the Fund resumes operations as a money market fund will re
establish procedures (the "Procedures") designed to stabilize at
$1.00, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions. Such
procedures must include review of the Fund's portfolio holdings
by the Board of Trustees at such intervals as it may deem
appropriate and at such intervals as are reasonable in light of
current market conditions to determine whether the Fund's net
asset value calculated by using available market quotations
deviates from the per share value based on amortized cost.
"Available market quotations" may include actual market
quotations (valued at the mean between bid and asked prices),
estimates of market value reflecting current market conditions
based on quotations or estimates of market value for individual
portfolio instruments or values obtained from yield data relating
to a directly comparable class of securities published by
reputable sources.
Under the Rule, if the extent of any deviation between the
net asset value per share based upon "available market
quotations" (see above) and the net asset value per share based
on amortized cost exceeds $0.005, the Board of Trustees must
promptly consider what action, if any, will be initiated. When
the Board of Trustees believes that the extent of any deviation
may result in material dilution or other unfair results to
investors or existing shareholders, it is required to take such
action as it deems appropriate to eliminate or reduce to the
extent reasonably practicable such dilution or unfair results.
Such actions could include the sale of portfolio securities prior
to maturity to realize capital gains or losses or to shorten
average portfolio maturity, withholding dividends or payment of
distributions from capital or capital gains, redemptions of
shares in kind, or establishing a net asset value per share using
available market quotations.
The Procedures include changes in the dividends payable by
the Fund under specified conditions, as described below under
"Computation of Daily Dividends." This portion of the Procedures
provides that actions that the Trustees would consider under
certain circumstances can be taken automatically.
COMPUTATION OF DAILY DIVIDENDS
The following provisions are for information only and are
applicable only if the Fund operates as a money market fund.
Under the Procedures which the Fund's Board of Trustees has
adopted relating to amortized cost valuation, the calculation of
the Fund's daily dividends will change under certain
circumstances from that indicated in Part A. If on any day the
deviation between net asset value determined on an amortized cost
basis and that determined using market quotations is $0.003 or
more, the amount of such deviation will be added to or subtracted
from the daily dividend to the extent necessary to reduce such
deviation to within $0.003.
If on any day there is insufficient net income to absorb any
such reduction, the Board of Trustees would be required under the
Rule to consider taking other action if the deviation, after
eliminating the dividend for that day, exceeds $0.005. One of the
actions which the Board of Trustees might take could be the
elimination or reduction of dividends for more than one day.
AUTOMATIC WITHDRAWAL PLAN
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 you own or purchase shares of the Fund
having a net asset value of at least $5,000. Stock certificates
will not be issued for shares held under an Automatic Withdrawal
Plan. All dividends must be reinvested.
Shares will be redeemed on the last business day of the
month as may be necessary to meet withdrawal payments. Shares
acquired with reinvested dividends will be redeemed first to
provide such withdrawal payments and thereafter other shares will
be redeemed to the extent necessary, and, depending upon the
amount withdrawn, your principal may be depleted.
Redemption of shares for withdrawal purposes may reduce or
even liquidate your account. Monthly or quarterly payments paid
to shareholders may not be considered as a yield or income on
investment.
GENERAL INFORMATION
Net Asset Value Per Share
As indicated in Part A, the net asset value per share of the
Fund's shares will be determined on each day that the New York
Stock Exchange is open. That Exchange annually announces the days
on which it will not be open; the most recent announcement
indicates that it will not open on the following days: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. However, that
Exchange may close on days not included in that announcement.
Voting by Series of Shares
If additional series (as discussed in Part A) were created
by the Board of Trustees, shares of each such Series would be
entitled to vote as a Series only to the extent permitted by the
1940 Act (see below) or as permitted by the Board of Trustees.
Income and operating expenses would be allocated among two or
more series in a manner acceptable to the Board of Trustees.
Under Rule 18f-2 under the 1940 Act, any matter required to
be submitted to shareholders vote is not deemed to have been
effectively acted upon unless approved by the holders of a
majority (as defined in that Rule) of the voting securities of
each series affected by the matter. Such separate voting
requirements do not apply to the election of Trustees or the
ratification of the selection of accountants. Rule 18f-2 contains
special provisions for cases in which an advisory contract is
approved by one or more, but not all, series. A change in
investment policy may go into effect as to one or more series
whose holders so approve the change even though the required vote
is not obtained as to the holders of other affected series.
Shareholder and Trustee Indemnification
The Fund is an entity of the type commonly known as a
Massachusetts business trust. Under Massachusetts law,
shareholders of a trust such as the Fund may, under certain
circumstances, be held personally liable as partners for the
obligations of the trust. However, for the protection of
shareholders, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed
by the Fund or the Trustees. The Declaration of Trust provides
for indemnification out of the Fund's property of any shareholder
held personally liable for the obligations of the Fund. The
Declaration of Trust also provides that the Fund shall, upon
request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
the relatively remote circumstances in which the Fund itself
would be unable to meet its obligations. In the event that the
Fund had two or more series and any such series of shares were to
be unable to meet the obligations attributable to it (which, as
in the case of the Fund, is relatively remote), any other series
would be subject to such obligations with corresponding increase
in the risk of the shareholder liability mentioned in the prior
sentence.
The Declaration of Trust further indemnifies the Trustees
and provides that they will not be liable for errors of judgment
or mistakes of fact or law; but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in
the conduct of his office.
Custodian and Auditors
The Fund's Custodian, Bank One Trust Company, N.A., is
responsible for holding the Fund's assets.
The Fund's auditors, KPMG Peat Marwick LLP, perform an
annual audit of the Fund's financial statements.
The financial statements for the Fund for the year ended
December 31, 1996, which are contained in the Annual Report for
that fiscal year, are hereby incorporated by reference into the
Additional Statement. Those financial statements have been
audited by KPMG Peat Marwick LLP, independent auditors, whose
report thereon is incorporated herein by reference.
<PAGE>
PRIME CASH FUND
PART C: OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
Incorporated by reference into Part B:
Financial Highlights
Report of Independent Certified Public
Accountants
Statement of Investments as of
December 31, 1996
Statement of Assets and Liabilities as of
December 31, 1996
Statement of Operations for the year
ended December 31, 1996
Statement of Changes in Net Assets for the
years ended December 31, 1996 and 1995
Notes to Financial Statements
Included in Part C:
Consent of Independent Certified Public
Accountants
(b) Exhibits:
(1) Supplemental Declaration of Trust (ii)
(2) By-laws (ii)
(3) Not applicable
(4) Specimen share certificate (ii)
(5) Not Applicable (ii)
(6) Not applicable
(7) Not applicable
(8) Custody Agreement (ii)
(9) (a) Transfer Agency Agreement (ii)
(9) (b) Administration Agreement (ii)
(10) Opinion and consent of counsel to the Fund
regarding share issuance (ii)
(11) Not applicable
(12) Not applicable
(13) Not Applicable
(14) Not applicable
(15) Distribution Plan (ii)
(17) Financial Data Schedule (ii)
(i) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 17 dated April 30, 1996 and incorporated
herein by reference.
(ii) Filed herewith.
ITEM 25. Persons Controlled By Or Under Common Control with
Registrant
Registrant's shares are 100% owned by Aquila Ma-
nagement Corporation. Aquila Management Corpora-
tion (the Trust's Administrator) and Aquila Distri-
butors, Inc. (the Trust's Distributor) are under
the common control of Mr. Lacy B. Herrmann (the
Trust's President and Chairman).
ITEM 26. Number of Holders of Securities
As of March 27, 1997, Registrant had 1 holder
of record of its shares.
ITEM 27. Indemnification
Subdivision (c) of Section 12 of Article SEVENTH of
Registrant's Supplemental Declaration of Trust,
filed as Exhibit 1 herewith is incorpora-
ted herein by reference.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted
to Trustees, officers, and controlling persons of
Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in that Act and is, therefore, unenfor-
ceable. In the event that a claim for indemnifica-
tion against such liabilities (other than the pay-
ment by Registrant of expenses incurred or paid by
a Trustee, officer, or controlling person of Regis-
trant in the successful defense of any action,
suit, or proceeding) is asserted by such Trustee,
officer, or controlling person in connection with
the securities being registered, Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against pub-
lic policy as expressed in the Act and will be go-
verned by the final adjudication of such issue.
ITEM 28. Business and Other Connections of Investment
Adviser
Not applicable
ITEM 29. Principal Underwriters
a. Aquila Distributors, Inc. serves as principal
underwriter to Aquila Rocky Mountain Equity Fund,
Capital Cash Management Trust, Churchill Cash Reserves
Trust, Churchill Tax-Free Fund of Kentucky, Hawaiian
Tax-Free Trust, Narragansett Insured Tax-Free Income
Fund, Pacific Capital Cash Assets Trust, Pacific
Capital Tax-Free Cash Assets Trust, Pacific Capital
U.S. Treasuries Cash Assets Trust, Short Term Asset
Reserves, Tax-Free Fund For Utah, Tax-Free Fund of
Colorado, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, in addition to serving as the Registrant's
principal underwriter, if the Registrant makes a public
offering.
(b) For information about the Directors and officers of
Aquila Distributors, Inc., reference is made to the
Form BD filed by it under the Securities Exchange
Act of 1934.
(c) Not applicable.
ITEM 30. Location of Accounts and Records
All such accounts, books, and other documents are
maintained by the adviser, the administrator, the
custodian, and the transfer agent, whose addresses
appear on the back cover pages of the Prospectus
and Statement of Additional Information.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(a) Not applicable.
(b) Not applicable.
<PAGE>
Consent of Independent Auditors
To The Shareholders and Board of Trustees
Prime Cash Fund:
We consent to the use of our report, dated January 13, 1997
incorporated herein by reference and to the reference to our firm
under the heading "Custodian and Auditors" in the Statement of
Additional Information.
New York, New York KPMG Peat Marwick LLP
April 14, 1997 /s/KPMG Peat Marwick LLP
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that
it meets all the requirements for effectiveness of this Amendment
to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933, and has caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 17th day of April, 1997.
PRIME CASH FUND
(Registrant)
/s/Lacy B. Herrmann
By____________________________
Lacy B. Herrmann, President
and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed below by the
following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/Lacy B. Herrmann 4/17/97
______________________ President, Chairman of ___________
Lacy B. Herrmann the Board and Trustee
(Principal Executive
Officer)
/s/Theodore T. Mason 4/17/97
______________________ Trustee ___________
Theodore T. Mason
/s/Paul Y. Clinton 4/17/97
______________________ Trustee ___________
Paul Y. Clinton
/s/Rose F. Marotta 4/17/97
______________________ Chief Financial Officer ___________
Rose F. Marotta (Principal Financial and
Accounting Officer
<PAGE>
PRIME CASH FUND
EXHIBIT INDEX
Exhibit Exhibit Page
Number Name Number
1 Supplemental Declaration of Trust
2 By-laws
4 Specimen share certificate
8 Custody Agreement
9 (a) Transfer Agency Agreement
9 (b) Administration Agreement
10 Opinion and consent of counsel to the Fund
regarding share issuance
15 Distribution Plan
17 Financial Data Schedule
Correspondence
Prime Cash Fund
SUPPLEMENTAL DECLARATION OF TRUST
AMENDING AND RESTATING THE DECLARATION OF TRUST
SUPPLEMENTAL DECLARATION OF TRUST made May 31, 1989 to the
DECLARATION OF TRUST (the "Present Declaration of Trust") of
Prime Cash Fund (the "Trust").
WHEREAS, paragraph 12 of Article EIGHTH of the Present
Declaration of Trust permits the Trustees of the Trust to amend
or otherwise supplement the Present Declaration of Trust by
making a Supplemental Declaration of Trust, if authorized by vote
of the Trustees and the Shareholders; and
WHEREAS, the making of this Supplemental Declaration of
Trust was duly authorized by the Trustees on March 11, 1989 and
by the shareholders on May 31, 1989, such approval having been by
the vote of the holders of a majority of the shares issued,
outstanding and entitled to vote; and
WHEREAS, the officer of the Trust executing this
Supplemental Declaration of Trust has been authorized and
directed to do so by the Trustees of the Trust and the
shareholders of the Trust on behalf of the Trustees and the
Trust;
NOW, THEREFORE, the Present Declaration of Trust is amended
and restated so that the Declaration of Trust of the Trust
(hereinafter referred to as the "Declaration of Trust") shall
read in its entirety as follows:
<PAGE>
WHEREAS, the Trustees desire to establish a trust fund under
the laws of the Commonwealth of Massachusetts, for the investment
and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and
property contributed to the trust fund hereunder shall be held
and managed under this Declaration of Trust IN TRUST as herein
set forth below.
FIRST: This Trust shall be known as Prime Cash Fund.
SECOND: Whenever used herein, unless otherwise required by
the context or specifically provided:
1. All terms used in this Declaration of Trust which are
defined in the 1940 Act shall have the meanings given to them in
the 1940 Act.
2. The "Trust" refers to Prime Cash Fund.
3. "Shareholder" means a record owner of Shares of the
Trust.
4. The "Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their
successor or successors for the time being in office as such
trustees.
5. "Shares" means the equal proportionate units of interest
into which the beneficial interest in the Trust shall be divided
from time to time and includes fractions of Shares as well as
whole Shares.
6. The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
7. "Commission" means the Securities and Exchange
Commission.
8. "Board" or "Board of Trustees" means the Board of
Trustees of the Trust.
THIRD: The purpose or purposes for which the Trust is
formed and the business or objects to be transacted, carried on
and promoted by it are as follows:
1. To hold, invest and reinvest its funds, and in
connection therewith to hold part or all of its funds in cash,
and to purchase or otherwise acquire, hold for investment or
otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize
upon, securities (which term "securities" shall for the purposes
of this Declaration of Trust, without limitation of the
generality thereof, be deemed to include any stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests
therein, or in any property or assets) created or issued by any
issuer (which term "issuer" shall for the purposes of this
Declaration of Trust, without limitation of the generality
thereof be deemed to include any persons, firms, associations,
corporations, syndicates, combinations, organizations,
governments, or subdivisions thereof); and to exercise, as owner
or holder of any securities, all rights, powers and privileges in
respect thereof; and to do any and all acts and things for the
preservations, protection, improvement and enhancement in value
of any or all such securities.
2. To borrow money and pledge assets in connection with
any of the objects or purposes of the Trust, and to issue notes
or other obligations evidencing such borrowings, to the extent
permitted by the 1940 Act and by the Trust's fundamental
investment policies under the 1940 Act.
3. To issue and sell its Shares in such amounts and on
such terms and conditions, for such purposes and for such amount
or kind of consideration (including without limitation thereto,
securities) now or hereafter permitted by the laws of the the
Commonwealth of Massachusetts and by this Declaration of Trust,
as the Trustees may determine.
4. To purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or
consent of the Shareholders of the Trust) its Shares, in any
manner and to the extent now or hereafter permitted by the laws
of Commonwealth of Massachusetts and by this Declaration of
Trust.
5. To conduct its business in all its branches at one or
more offices in the Commonwealth of Massachusetts and elsewhere
in any part of the world, without restriction or limit as to
extent.
6. To carry out all or any of the foregoing objects and
purposes as principal or agent, and alone or with associates or,
to the extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts, as a member of, or as the owner or
holder of any stock of, or share of interest in, any issuer, and
in connection therewith to make or enter into such deeds or
contracts with any issuers and to do such acts and things and to
exercise such powers, as a natural person could lawfully make,
enter into, do or exercise.
7. To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of all or any of the
foregoing purposes or objects.
The foregoing objects and purposes shall, except as
otherwise expressly provided, be in no way limited or restricted
by reference to, or inference from, the terms of any other clause
of this or any other Articles of this Declaration of Trust, and
shall each be regarded as independent and construed as powers as
well as objects and purposes, and the enumeration of specific
purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the
general powers of the Trust now or hereafter conferred by the
laws of the Commonwealth of Massachusetts, nor shall the
expression of one thing be deemed to exclude another, though it
be of like nature, not expressed; provided, however, that the
Trust shall not carry on any business, or exercise any powers, in
any state, territory, district or country except to the extent
that the same may lawfully be carried on or exercised under the
laws thereof.
FOURTH: The beneficial interest in the Trust shall at all
times be divided into an unlimited number of transferable Shares,
each such Share having a par value of one cent per Share, each of
which shall represent an equal proportionate interest in the
Trust with each other Share outstanding, none having priority or
preference over another. The Trustees may from time to time
divide or combine the Shares into a greater or lesser number
without thereby changing the proportionate beneficial interests
in the Trust. Contributions to the Trust may be accepted for,
and Shares shall be redeemed as, whole Shares and/or 1/1,000ths
of a Share or multiple thereof. The Board of Trustees of the
Trust may classify unissued Shares into one or more additional
classes which shall, together with the issued Shares of
beneficial interest of the Trust, have such designations as the
Board shall determine, and which shall be treated for all
purposes other than as to dividends as if all Shares were Shares
of one class. The dividends payable to the holders of each such
class shall, subject to any applicable rule, regulation or order
of the Commission or other applicable law or regulation, be
determined by the Board and need not be individually declared but
may be declared and paid in accordance with a formula adopted by
the Board. The Board of Trustees of the Trust may in the
alternative classify unissued Shares into one or more additional
classes which shall, together with the issued Shares of
beneficial interest of the Trust, have such designations as the
Board may determine (but which shall include the word "Series")
and shall, subject to any applicable rule, regulation or order of
the Commission or other applicable law or regulation, have the
characteristics set forth in (a) through and including (g) below.
(a) All consideration received by the Trust for the
issue or sale of Shares of each such class, together with all
income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to the class of Shares with respect to which such assets,
payments, or funds were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled
upon the books of account of the Trust. Such assets, income,
earnings, profits and proceeds thereof, any asset derived from
any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets belonging to" such class.
(b) Dividends or distributions on Shares of any such
class, whether payable in Shares or cash, shall be paid only out
of earnings, surplus or other assets belonging to such class.
(c) In the event of the liquidation or dissolution of
the Trust, Shareholders of each such class shall be entitled to
receive, as a class, out of the assets of the Trust available for
distribution to Shareholders, but other than general assets not
belonging to any particular class, the assets belonging to such
class; and the assets so distributable to the Shareholders of any
such class shall be distributed among such Shareholders in
proportion to the number of shares of such class held by them and
recorded on the books of the Trust. In the event that there are
any general assets not belonging to any particular class of
Shares and available for distribution, such distribution shall be
made to the holders of Shares of all classes in proportion to the
asset value of the respective classes.
(d) The assets belonging to any such class of Shares
shall be charged with the liabilities in respect to such class
and shall be charged with their share of the general liabilities
of the Trust, in proportion to the asset value of the respective
classes. The determination of the Board of Trustees shall be
conclusive as to the amount of liabilities, including accrued
expenses and reserves, and as to the allocation of the same as to
a given class, and as to whether the same, or general assets of
the Trust, are allocable to one or more classes. The liabilities
so allocated to a class are herein referred to as "liabilities
belonging to" such class.
(e) At all meetings of Shareholders, each shareholder
of each Share of each such class of the Trust shall be entitled
to one vote for each Share, irrespective of the class, standing
in his name on the books of the Trust, except that where a vote
of the holders of the Shares of any class, or of more than one
class, voting by class, is required by the 1940 Act and/or the
Commonwealth of Massachusetts law as to any proposal, only the
holders of such class or classes, voting by class, shall be
entitled to vote upon such proposal and the holders of any other
class or classes shall not be entitled to vote thereon. Any
fractional Share, if any such fractional Shares are outstanding,
shall carry proportionately all the rights of a whole Share,
including the right to vote and the right to receive dividends.
There shall be no cumulative voting rights with respect to any
Shares or class of Shares of the Trust.
(f) The provisions of Article FIFTH relating to voting
shall apply when the Trust has only one class of Shares
outstanding or when the Trust has more than one class of Shares
outstanding but which differ only as to their dividend rights.
(g) When the Trust has more than one class of Shares
outstanding having separate assets and liabilities: (i) the
redemption rights provided to the holders of the Trust's Shares
shall be deemed to apply only to the assets belonging to the
class of Shares in question; and (ii) the net asset value per
Share computation as provided for in Article SEVENTH shall be
applied as if each such class of Shares were the Trust as
referred to in such computation, but with its assets limited to
the assets belonging to such class and its liabilities limited to
the liabilities belonging to such class.
(h) The ownership of Shares shall be recorded in the
books of the Trust or a transfer agent. The Trustees may make
such rules as they consider appropriate for the transfer of
Shares and similar matters. The record books of the Trust or any
transfer agent, as the case may be, shall be conclusive as to who
are the holders of Shares and as to the number of Shares held
from time to time by each.
(i) The Trustees shall accept investments in the Trust
from such persons and on such terms as they may from time to time
authorize.
(j) Shareholders shall have no pre-emptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust or the Trustees.
FIFTH: The following provisions are hereby adopted with
respect to voting Shares of the Trust and certain other rights:
1. The Shareholders shall have power to vote (i) for
the election of Trustees, (ii) with respect to the amendment
of this Declaration of Trust, (iii) to the same extent as
the shareholders of a Massachusetts business corporation, as
to whether or not a court action, proceeding or claim should
be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (iv) with
respect to such additional matters relating to the Trust as
may be required by the 1940 Act or authorized by law, by
this Declaration of Trust, or the By-Laws of the Trust or
any registration statement of the Trust with the Commission
or any State, or as the Trustees may consider desirable.
2. At all meetings of Shareholders each Shareholder
shall be entitled to one vote for each Share standing in his
name on the books of the Trust on the date, fixed in
accordance with the By-Laws, for determination of
Shareholders entitled to vote at such meeting except (if so
determined by the Board of Trustees) for Shares redeemed
prior to the meeting. Any fractional Share shall carry
proportionately all the rights of a whole Share, including
the right to vote and the right to receive dividends. The
presence in person or by proxy of the holders of one-third
of the Shares outstanding and entitled to vote thereat shall
constitute a quorum at any meeting of the Shareholders. If
at any meeting of the Shareholders there shall be less than
a quorum present, the Shareholders present at such meeting
may, without further notice, adjourn the same from time to
time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as
might have been lawfully transacted had the meeting not been
adjourned.
3. Each Shareholder, upon request to the Trust in
proper form determined by the Trust, shall be entitled to
require the Trust to redeem all or any part of the Shares
standing in the name of such Shareholder. The method of
computing such net asset value, the time at which such net
asset value shall be computed and the time within which the
Trust shall make payment therefor, shall be determined as
hereinafter provided in Article SEVENTH of this Declaration
of Trust. Notwithstanding the foregoing, the Trustees, when
permitted or required to do so by the 1940 Act, may suspend
the right of the Shareholders to require the Trust to redeem
Shares.
4. No Shareholder shall, as such holder, have any
right to purchase or subscribe for any security of the Trust
which it may issue or sell, other than such right, if any,
as the Trustees, in their discretion, may determine.
5. All persons who shall acquire Shares shall acquire
the same subject to the provisions of this Declaration of
Trust.
SIXTH: Each Trustee shall hold office until the annual
meeting of Shareholders next succeeding his election or until his
successor is duly elected and qualifies. The persons who shall
act as Trustees until the first annual meeting or until their
successors are duly chosen and qualify were the initial Trustees
who executed the Declaration of Trust or any counterpart thereof.
However, the By-Laws of the Trust may fix the number of
Trustees at a number greater than that of the number of initial
Trustees and may authorize the Trustees, by the vote of a
majority of the entire number of Trustees, to increase or
decrease the number of Trustees fixed by this Declaration of
Trust or by the By-Laws within limits specified in the By-Laws,
provided that in no case shall the number of Trustees be less
than three, and to fill the vacancies created by any such
increase in the number of Trustees. Unless otherwise provided by
the By-Laws of the Trust, the Trustees need not be Shareholders.
SEVENTH: The following provisions are hereby adopted for
the purpose of defining, limiting and regulating the powers of
the Trust and of the Trustees and Shareholders.
1. As soon as any Trustee is duly elected by the
Shareholders or the Trustees and shall have accepted this
trust, the Trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee
hereunder.
2. The death, declination, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them
shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this
Declaration of Trust.
3. The assets of the Trust shall be held separate and
apart from any assets now or hereafter held in any capacity
other than as Trustee hereunder by the Trustees or any
successor Trustees. All of the assets of the Trust shall at
all times be considered as vested in the Trustees. Except
as provided in this Declaration of Trust, no Shareholder
shall have, as such holder of beneficial interest in the
Trust, any authority, power or right whatsoever to transact
business for or on behalf of the Trust, or on behalf of the
Trustees, in connection with the property or assets of the
Trust, or in any part thereof, except the rights to receive
the income and distributable amounts arising therefrom as
set forth herein.
4. The Trustees in all instances shall act as
principals, and are and shall be free from the control of
the Shareholders. The Trustees shall have full power and
authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider
necessary or appropriate in connection with the management
of the Trust. The Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to
Trust investments, but shall have full authority and power
to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the
purposes of this Trust. Subject to any applicable
limitation in this Declaration of Trust or in the By-Laws
of the Trust, the Trustees shall have power and authority:
(a) to adopt By-laws not inconsistent with this
Declaration of Trust providing for the conduct of the
business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint
and terminate such officers as they consider appropriate
with or without cause;
(c) to employ a bank or trust company as
custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the
By-Laws;
(d) to retain a transfer agent and Shareholder
servicing agent, or both;
(e) to provide for the distribution of Shares
either through a principal underwriter or the Trust itself
or both;
(f) to set record dates in the manner provided
for in the By-Laws of the Trust;
(g) to delegate such authority as they consider
desirable to any officers of the Trust and to any agent,
custodian or underwriter;
(h) to vote or give assent, or exercise any
rights of ownership, with respect to stock or other
securities or property held in Trust hereunder; and to
execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of
securities held in trust hereunder;
(j) to hold any security or property in a form
not indicating any trust, whether in bearer, unregistered or
other negotiable form; or either in its own name or in the
name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual
practice of Massachusetts business trusts or investment
companies;
(k) to consent to or participate in any plan for
the reorganization, consolidation or merger of any
corporation or concern, any security of which is held in the
Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to
any security held in the Trust;
(l) to compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy including, but not limited to, claims for taxes;
(m) to make, in the manner provided in the By-
Laws, distributions of income and of capital gains to
Shareholders;
(n) to borrow money to the extent and in the
manner permitted by the 1940 Act and the Trust's fundamental
policy thereunder as to borrowing; and
(o) to enter into investment advisory or
management contracts, subject to the 1940 Act, with any one
or more corporations, partnerships, trusts, associations or
other persons; if the other party or parties to any such
contract are authorized to enter into securities
transactions on behalf of the Trust, such transactions shall
be deemed to have been authorized by all of the Trustees.
5. No one dealing with the Trustees shall be under
any obligation to make any inquiry concerning the authority
of the Trustees, or to see to the application of any
payments made or property transferred by the Trustees or
upon their order.
6. (a) The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time
personally agree to pay by way of subscription to any Shares
or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the
Trustees relating to the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and
its assets (but the omission of such a recitation shall not
operate to bind any Shareholder).
(b) Except as otherwise provided in this
Declaration of Trust or the By-Laws, whenever this
Declaration of Trust calls for or permits any action to be
taken by the Trustees hereunder, such action shall mean that
taken by the Board of Trustees by vote of the majority of a
quorum of Trustees as set forth from time to time in the By-
Laws of the Trust or as required pursuant to the provisions
of the 1940 Act and the rules and regulations promulgated
thereunder.
(c) The Trustees shall possess and exercise any
and all such additional powers as are reasonably implied
from the powers herein contained such as may be necessary or
convenient in the conduct of any business or enterprise of
the Trust, to do and perform anything necessary, suitable,
or proper for the accomplishment of any of the purposes, or
the attainment of any one or more of the objects, herein
enumerated, or which shall at any time appear conducive to
or expedient for the protection or benefit of the Trust, and
to do and perform all other acts or things necessary or
incidental to the purposes herein before set forth, or that
may be deemed necessary by the Trustees.
(d) The Trustees shall have the power to
determine conclusively whether any moneys, securities, or
other properties of the Trust property are, for the purposes
of this Trust, to be considered as capital or income and in
what manner any expenses or disbursements are to be borne as
between capital and income whether or not in the absence of
this provision such moneys, securities, or other properties
would be regarded as capital or income and whether or not in
the absence of this provision such expenses or disbursements
would ordinarily be charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees
into classes and prescribe the tenure of office of the
several classes, but no class shall be elected for a period
shorter than that from the time of the election following
the division into classes until the next annual meeting and
thereafter for a period shorter than the interval between
annual meetings or for a period longer than five years, and
the term of office of at least one class shall expire each
year.
8. The Shareholders shall have the right to inspect
the records, documents, accounts and books of the Trust,
subject to reasonable regulations of the Trustees, not
contrary to Massachusetts law, as to whether and to what
extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any Trustee, or any officer elected or appointed
by the Trustees or by any committee of the Trustees or by
the Shareholders or otherwise, may be removed at any time,
with or without cause, in such lawful manner as may be
provided in the By-Laws of the Trust.
10. If the By-Laws so provide, the Trustees shall have
power to hold their meetings, to have an office or offices
and, subject to the provisions of the laws of the
Commonwealth of Massachusetts, to keep the books of the
Trust outside of said Commonwealth at such places as may
from time to time be designated by them.
11. Securities held by the Trust shall be voted in
person or by proxy by the President or a Vice-President, or
such officer or officers of the Trust as the Trustees shall
designate for the purpose, or by a proxy or proxies
thereunto duly authorized by the Trustees, except as
otherwise ordered by vote of the holders of a majority of
the Shares outstanding and entitled to vote in respect
thereto.
12. (a) Subject to the provisions of the 1940 Act,
any Trustee, officer or employee, individually, or any
partnership of which any Trustee, officer or employee may be
a member, or any corporation or association of which any
Trustee, officer or employee may be an officer, director,
trustee, employee or stockholder, may be a party to, or may
be pecuniarily or otherwise interested in, any contract or
transaction of the Trust, and in the absence of fraud no
contract or other transaction shall be thereby affected or
invalidated; provided that in case a Trustee, or a
partnership, corporation or association of which a Trustee
is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed
or shall have been known to the Trustees or a majority
thereof; and any Trustee who is so interested, or who is
also a director, officer, trustee, employee or stockholder
of such other corporation or association or a member of such
partnership which is so interested, may be counted in
determining the existence of a quorum at any meeting of the
Trustees which shall authorize any such contract or
transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he
were not such director, officer, trustee, employee or
stockholder of such other trust or corporation or
association or a member of a partnership so interested.
(b) Specifically, but without limitation of the
foregoing, the Trust may enter into a management, investment
advisory, sub-advisory, administration or underwriting
contract and other contracts with, and may otherwise do
business with any manager, investment adviser, sub-adviser
or administrator for the Trust, or principal underwriter of
the Shares of the Trust, or any subsidiary or affiliate of
any such manager, investment adviser, sub-adviser or
administrator and/or principal underwriter and may permit
any such firm or corporation to enter into any contracts or
other arrangements with any other firm or corporation
relating to the Trust notwithstanding that the Board of
Trustees of the Trust may be composed in part of partners,
directors, officers or employees of any such firm or
corporation, and officers of the Trust may have been or may
be or become partners, directors, officers or employees of
any such firm or corporation, and in the absence of fraud
the Trust and any such firm or corporation may deal freely
with each other, and no such contract or transaction between
the Trust and any such firm or corporation shall be
invalidated or in any wise affected thereby, nor shall any
Trustee or officer of the Trust be liable to the Trust or to
any Shareholder or creditor thereof or to any other person
for any loss incurred by it or him solely because of the
existence of any such contract or transaction; provided that
nothing herein shall protect any Trustee or officer of the
Trust against any liability to the Trust or to its security
holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
(c) (1) As used in this paragraph the following
terms shall have the meanings set forth below:
(i) the term "indemnitee" shall mean any
present or former Trustee, officer or
employee of the Trust, any present or former
Trustee or officer of another trust or
corporation whose securities are or were
owned by the Trust or of which the Trust is
or was a creditor and who served or serves in
such capacity at the request of the Trust,
any present or former investment adviser,
sub-adviser, administrator or principal
underwriter of the Trust and the heirs,
executors, administrators, successors and
assigns of any of the foregoing; however,
whenever conduct by an indemnitee is referred
to, the conduct shall be that of the original
indemnitee rather than that of the heir,
executor, administrator, successor or
assignee;
(ii) the term "covered proceeding" shall
mean any threatened, pending or completed
action, suit or proceeding, whether civil,
criminal, administrative or investigative, to
which an indemnitee is or was a party or is
threatened to be made a party by reason of
the fact or facts under which he or it is an
indemnitee as defined above;
(iii) the term "disabling conduct" shall
mean willful misfeasance, bad faith, gross
negligence or reckless disregard of the
duties involved in the conduct of the office
in question;
(iv) the term "covered expenses" shall mean
expenses (including attorney's fees),
judgments, fines and amounts paid in
settlement actually and reasonably incurred
by an indemnitee in connection with a covered
proceeding; and
(v) the term "adjudication of liability"
shall mean, as to any covered proceeding and
as to any indemnitee, an adverse
determination as to the indemnitee whether by
judgment, order, settlement, conviction or
upon a plea of nolo contendere or its
equivalent.
(d) The Trust shall not indemnify any indemnitee
for any covered expenses in any covered proceeding if there
has been an adjudication of liability against such
indemnitee expressly based on a finding of disabling
conduct.
(e) Except as set forth in (d) above, the Trust
shall indemnify any indemnitee for covered expenses in any
covered proceeding, whether or not there is an adjudication
of liability as to such indemnitee, if a determination has
been made that the indemnitee was not liable by reason of
disabling conduct by (i) a final decision of the court or
other body before which the covered proceeding was brought;
or (ii) in the absence of such decision, a reasonable
determination, based on a review of the facts, by either (a)
the vote of a majority of a quorum of Trustees who are
neither "interested persons," as defined in the 1940 Act nor
parties to the covered proceeding or (b) an independent
legal counsel in a written opinion; provided that such
Trustees or counsel, in reaching such determination, may but
need not presume the absence of disabling conduct on the
part of the indemnitee by reason of the manner in which the
covered proceeding was terminated.
(f) Covered expenses incurred by an indemnitee in
connection with a covered proceeding shall be advanced by
the Trust to an indemnitee prior to the final disposition of
a covered proceeding upon the request of the indemnitee for
such advance and the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately
determined that the indemnitee is entitled to
indemnification thereunder, but only if one or more of the
following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be
insured against losses arising out of any lawful advances;
or (iii) there shall have been a determination, based on a
review of the readily available facts (as opposed to a full
trial-type inquiry) that there is a reason to believe that
the indemnitee ultimately will be found entitled to
indemnification by either independent legal counsel in a
written opinion or by the vote of a majority of a quorum of
trustees who are neither "interested persons" as defined in
the 1940 Act nor parties to the covered proceeding.
(g) Nothing herein shall be deemed to affect the
right of the Trust and/or any indemnitee to acquire and pay
for any insurance covering any or all indemnitees to the
extent permitted by the 1940 Act or to affect any other
indemnification rights to which any indemnitee may be
entitled to the extent permitted by the 1940 Act.
13. For purposes of the computation of net asset
value, as in this Declaration of Trust referred to, the
following rules shall apply:
(a) The net asset value of each Share of the
Trust tendered to the Trust for redemption shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the tender of such share;
(b) The net asset value of each Share of the
Trust for the purpose of the issue of such shares shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the receipt of an order to purchase
such shares;
(c) The net asset value of each Share of the
Trust, as of time of valuation on any day, shall be the
quotient obtained by dividing the value, as at such time, of
the net assets of the Trust (i.e., the value of the assets
of the Trust less its liabilities exclusive of its surplus)
by the total number of Shares outstanding at such time. The
assets and liabilities of the Trust shall be determined in
accordance with generally accepted accounting principles;
provided, however, that in determining the liabilities of
the Trust there shall be included such reserves for taxes or
contingent liabilities as may be authorized or approved by
the Trustees, and provided further that in determining the
value of the assets of the Trust for the purpose of
obtaining the net asset value, each security listed on the
New York Stock Exchange shall be valued on the basis of the
closing sale at the time of valuation on the business day as
of which such value is being determined; if there be no sale
on such day, then the security shall be valued on the basis
of the mean between closing bid and asked prices on such
day; if no bid and asked prices are quoted for such day,
then the security shall be valued by such method as the
Trustees shall deem in good faith to reflect its fair market
value; securities not listed on the New York Stock Exchange
shall be valued in like manner on the basis of quotations on
any other stock exchange which the Trustees may from time to
time approve for that purpose; readily marketable securities
traded in the over-the-counter market shall be valued at the
mean between their bid and asked prices, or, if the Trustees
shall so determine, at their bid prices; and all other
assets of the Trust and all securities as to which the Trust
might be considered an "underwriter" (as that term is used
in the Securities Act of 1933), whether or not such
securities are listed or traded in the over-the-counter
market, shall be valued by such method as they shall deem in
good faith to reflect their fair market value. In
connection with the accrual of any fee or refund payable to
or by an investment adviser of the Trust, the amount of
which accrual is not definitely determinable as of any time
at which the net asset value of each Share of the Trust is
being determined due to the contingent nature of such fee or
refund, the Trustees are authorized to establish from time
to time formulae for such accrual, on the basis of the
contingencies in question to the date of such determination,
or on such other basis as the Trustees may establish.
(1) Shares to be issued shall be deemed to
be outstanding as of the time of the determination
of the net asset value per share applicable to
such issuance and the net price thereof shall be
deemed to be an asset of the Trust;
(2) Shares to be redeemed by the Trust shall
be deemed to be outstanding until the time of the
determination of the net asset value applicable to
such redemption and thereupon and until paid the
redemption price thereof shall be deemed to be a
liability of the Trust; and
(3) Shares voluntarily purchased or
contracted to be purchased by the Trust pursuant
to the provisions of paragraph 13(d) of this
Article SEVENTH shall be deemed to be outstanding
until whichever is the later of (i) the time of
the making of such purchase or contract of
purchase, and (ii) the time as of which the
purchase price is determined, and thereupon and
until paid, the purchase price thereof shall be
deemed to be a liability of the Trust.
(d) The net asset value of each Share of the
Trust, as of any time other than the close of business on
the New York Stock Exchange of any day, may be determined by
applying to the net asset value as of the close of business
on that Exchange on the preceding business day, computed as
provided in this Article SEVENTH, such adjustments as are
authorized by or pursuant to the direction of the Trustees
and designed reasonably to reflect any material changes in
the market value of securities and other assets held and any
other material changes in the assets or liabilities of the
Trust and in the number of its outstanding Shares which
shall have taken place since the close of business on such
preceding business day.
(e) In addition to the foregoing, the Trustees
are empowered, in their absolute discretion, to establish
other bases or times, or both, for determining the net asset
value of each Share of the Trust in accordance with the 1940
Act and to authorize the voluntary purchase by the Trust,
either directly or through an agent, of Shares of the Trust
upon such terms and conditions and for such consideration as
the Trustees shall deem advisable in accordance with any
such provision, rule or regulation.
(f) Payment of the net asset value of Shares of
the Trust properly surrendered to it for redemption shall be
made by the Trust within seven days after tender of such
Shares to the Trust for such purpose plus any period of time
during which the right of the holders of the shares of the
Trust to require the Trust to redeem such shares has been
suspended. Any such payment may be made in portfolio
securities of the Trust and/or in cash, as the Trustees
shall deem advisable, and no Shareholder shall have a right,
other than as determined by the Trustees, to have his Shares
redeemed in kind.
EIGHTH:
1. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of
his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other
general successor) shall be entitled out of the Trust estate
to be held harmless from and indemnified against all loss
and expense arising from such liability. This Trust shall,
upon request by the Shareholder, assume the defense of any
claim made against any Shareholder for any act or obligation
of the Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and
not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust's
officers or any Shareholder. All persons extending credit
to, contracting with or having any claim against the Trust
or the Trustees shall look only to the assets of the Trust
for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their
agents, whether past, present or future, shall be personally
liable therefor. Nothing in this Declaration of Trust
shall protect a Trustee against any liability to which such
Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the
office of Trustee hereunder.
3. The exercise by the Trustees of their powers and
discretion hereunder in good faith and with reasonable care
under the circumstances then prevailing, shall be binding
upon everyone interested. Subject to the provisions of
paragraph 2 of this Article EIGHTH, the Trustees shall not
be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts
with respect to the meaning and operations of this
Declaration of Trust, and subject to the provisions of
paragraph 2 of this Article EIGHTH, shall be under no
liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any
surety if a bond is required.
4. This Trust shall continue without limitation of
time but subject to the provisions of sub-sections (a), (b)
and (c) of this paragraph 4.
(a) The Trustees, with the favorable vote of the
holders of more than 50% of the outstanding Shares entitled
to vote, may sell and convey the assets of the Trust (which
sale may be subject to the retention of assets for the
payment of liabilities and expenses) to another issuer for a
consideration which may be or include securities of such
issuer. Upon making provision for the payment of
liabilities, by assumption by such issuer or otherwise, the
Trustees shall distribute the remaining proceeds ratably
among the holders of the Shares of the Trust then
outstanding.
(b) The Trustees, with the favorable vote of the
holders of more than 50% of the outstanding Shares entitled
to vote, may at any time sell and convert into money all the
assets of the Trust. Upon making provision for the payment
of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust, the Trustees shall
distribute the remaining assets of the Trust ratably among
the holders of the outstanding Shares.
(c) Upon completion of the distribution of the
remaining proceeds or the remaining assets as provided in
sub-sections (a) and (b), the Trust shall terminate and the
Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and
interest of all parties shall be cancelled and discharged.
5. The original or a copy of this instrument and of
each declaration of trust supplemental hereto shall be kept
at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each
supplemental declaration of trust shall be filed with the
Massachusetts Secretary of State, as well as any other
governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not
any such supplemental declarations of trust have been made
and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such
supplemental declaration of trust. In this instrument or in
any such supplemental declaration of trust, references to
this instrument, and all expressions like "herein," "hereof"
and "hereunder" shall be deemed to refer to this instrument
as amended or affected by any such supplemental declaration
of trust. This instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
6. The trust set forth in this instrument is created
under and is to be governed by and construed and
administered according to the laws of the Commonwealth of
Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
7. The Board of Trustees is empowered to cause the
redemption of the Shares held in any account if the
aggregate net asset value of such Shares (taken at cost or
value, as determined by the Board) has been reduced by a
Shareholder to $500 or less upon such notice to the
Shareholders in question, with such permission to increase
the investment in question and upon such other terms and
conditions as may be fixed by the Board of Trustees in
accordance with the 1940 Act.
8. In the event that any person advances the
organizational expenses of the Trust, such advances shall
become an obligation of the Trust subject to such terms and
conditions as may be fixed by, and on a date fixed by, or
determined in accordance with criteria fixed by the Board of
Trustees, to be amortized over a period or periods to be
fixed by the Board.
9. Whenever any action is taken under this
Declaration of Trust under any authorization to take action
which is permitted by the 1940 Act, such action shall be
deemed to have been properly taken if such action is in
accordance with the construction of the 1940 Act then in
effect as expressed in "no action" letters of the staff of
the Commission or any release, rule, regulation or order
under the 1940 Act or any decision of a court of competent
jurisdiction, notwithstanding that any of the foregoing
shall later be found to be invalid or otherwise reversed or
modified by any of the foregoing.
10. Any action which may be taken by the Board of
Trustees under this Declaration of Trust or its By-Laws may
be taken by the description thereof in the then effective
prospectus relating to the Shares under the Securities Act
of 1933 or in any proxy statement of the Trust rather than
by formal resolution of the Board.
11. Whenever under this Declaration of Trust, the
Board of Trustees is permitted or required to place a value
on assets of the Trust, such action may be delegated by the
Board, and/or determined in accordance with a formula
determined by the Board, to the extent permitted by the 1940
Act.
12. If authorized by vote of the Trustees and the
favorable vote of the holders of more than 50% of the
outstanding Shares entitled to vote, or by any larger vote
which may be required by applicable law in any particular
case, the Trustees shall amend or otherwise supplement this
instrument, by making a declaration of trust supplemental
hereto, which thereafter shall form a part hereof; any such
Supplemental Declaration of Trust may be executed by and on
behalf of the Trust and the Trustees by any officer or
officers of the Trust.
IN WITNESS WHEREOF, the undersigned have
executed this Supplemental Declaration of Trust on behalf of
the Trust and the Trustees as of the date first above
written.
Prime Cash Fund
______________________________
LACY B HERRMANN
President, Chairman of the
Board of Trustees and Trustee
Attest:
______________________________
Edward M. W. Hines
Secretary
THE UNDERSIGNED, President, Chairman of the Board of
Trustees and Trustee of Prime Cash Fund who executed on behalf of
said Trust and its Trustees the foregoing Supplemental
Declaration of Trust, hereby acknowledges, in the name and on
behalf of said Trust and its Trustees, the foregoing Supplemental
Declaration of Trust to be the act of said Trust and its Trustees
and further certifies that to the best of his information,
knowledge and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material
respects, under penalties of perjury.
________________________________
Lacy B. Herrmann
PRIME CASH FUND
BY-LAWS
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the
Shareholders (which term as used herein shall, together with all
other terms defined in the Declaration of Trust, have the same
meaning as in the Declaration of Trust) shall be held at the
principal office of the Trust or at such other place as may from
time to time be designated by the Board of Trustees and stated in
the notice of meeting.
Section 2. Annual Meeting. The annual meeting of the
Shareholders of the Trust shall be held on such date and at such
time as may be determined by the Board of Trustees and as shall
be designated in the notice of meeting for the purpose of
electing Trustees for the ensuing year and for the transaction of
such other business as may properly be brought before the
meeting.
Section 3. Special or Extraordinary Meetings. Special or
extraordinary meetings of the Shareholders for any purpose or
purposes may be called by the Chairman of the Board of Trustees,
if any, or by the President or by the Board of Trustees and shall
be called by the Secretary upon receipt of the request in writing
signed by Shareholders holding not less than one-third in amount
of the entire number of Shares issued and outstanding and
entitled to vote thereat. Such request shall state the purpose
or purposes of the proposed meeting.
Section 4. Notice of Meetings of Stockholders. Not less
than ten days' and not more than ninety days' written or printed
notice of every meeting of Shareholders, stating the time and
place thereof (and the general nature of the business proposed to
be transacted at any special or extraordinary meeting), shall be
given to each Shareholder entitled to vote thereat by leaving the
same with him or at his residence or usual place of business or
by mailing it, postage prepaid and addressed to him at his
address as it appears upon the books of the Trust.
No notice of the time, place or purpose of any meeting of
Shareholders need be given to any Shareholder who attends in
person or by proxy or to any Shareholder who, in writing executed
and filed with the records of the meeting, either before or after
the holding thereof, waives such notice.
Section 5. Record Dates. The Board of Trustees may fix, in
advance, a date, not exceeding ninety days and not less than ten
days preceding the date of any meeting of Shareholders, and not
exceeding ninety days preceding any dividend payment date or any
date for the allotment of rights, as a record date for the
determination of the Shareholders entitled to receive such
dividends or rights, as the case may be; and only Shareholders of
record on such date shall be entitled to notice of and to vote at
such meeting or to receive such dividends or rights, as the case
may be.
Section 6. Quorum, Adjournment of Meetings. The presence
in person or by proxy of the holders of record of one-third of
the Shares of the Trust issued and outstanding and entitled to
vote thereat, shall constitute a quorum at all meetings of the
Shareholders. If at any meeting of the Shareholders there shall
be less than a quorum present, the Shareholders present at such
meeting may, without further notice, adjourn the same from time
to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might
have been lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of
Shareholders every Shareholder of record entitled to vote thereat
shall be entitled to vote at such meeting either in person or by
proxy appointed by instrument in writing subscribed by such
Shareholder or his duly authorized attorney-in-fact.
All elections of Trustees shall be had by a plurality of the
votes cast and all questions shall be decided by a majority of
the votes cast, in each case at a duly constituted meeting,
except as otherwise provided in the Declaration of Trust or in
these By-Laws or by specific statutory provision superseding the
restrictions and limitations contained in the Declaration of
Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior
thereto may, or, if they have not so acted, the Chairman of the
meeting may, and upon the request of the holders of ten percent
(10%) of the Shares entitled to vote at such election shall,
appoint two inspectors of election who shall first subscribe an
oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and
according to the best of their ability, and shall after the
election make a certificate of the result of the vote taken. No
candidate for the office of Trustee shall be appointed such
Inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election or matter, and such vote shall be taken
upon the request of the holders of ten percent (10%) of the
Shares entitled to vote on such election or matter.
Section 8. Conduct of Shareholders' Meetings. The meetings
of the Shareholders shall be presided over by the Chairman of the
Board of Trustees, if any, or if he shall not be present, by the
President, or if he shall not be present, by a Vice-President, or
if neither the Chairman of the Board of Trustees, the President
nor any Vice-President is present, by a chairman to be elected at
the meeting. The Secretary of the Trust, if present, shall act
as Secretary of such meetings, or if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an
Assistant Secretary is present, then the meeting shall elect its
secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc.
At every meeting of the Shareholders, all proxies shall be
received and taken in charge of and all ballots shall be received
and canvassed by the secretary of the meeting, who shall decide
all questions touching the qualification of voters, the validity
of the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in
Section 7, in which event such inspectors of election shall
decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and
property of the Trust shall be conducted and managed by a Board
of Trustees consisting of the number of initial Trustees, which
number may be increased or decreased as provided in Section 2 of
this Article. Each Trustee shall, except as otherwise provided
herein, hold office until the annual meeting of Shareholders of
the Trust next succeeding his election or until his successor is
duly elected and qualifies. Trustees need not be Shareholders.
Section 2. Increase or Decrease in Number of Trustees;
Removal. The Board of Trustees, by the vote of a majority of the
entire Board, may increase the number of Trustees to a number not
exceeding fifteen, and may elect Trustees to fill the vacancies
created by any such increase in the number of Trustees until the
next annual meeting or until their successors are duly elected
and qualify; the Board of Trustees, by the vote of a majority of
the entire Board, may likewise decrease the number of Trustees to
a number not less than three but the tenure of office of any
Trustee shall not be affected by any such decrease. Vacancies
occurring other than by reason of any such increase shall be
filled as provided for a Massachusetts business corporation. In
the event that after proxy material has been printed for a
meeting of Shareholders at which Trustees are to be elected any
one or more management nominees dies or becomes incapacitated,
the authorized number of Trustees shall be automatically reduced
by the number of such nominees, unless the Board of Trustees
prior to the meeting shall otherwise determine. Any Trustee at
any time may be removed either with or without cause by
resolution duly adopted by the affirmative votes of the holders
of the majority of the Shares of the Trust present in person or
by proxy at any meeting of Shareholders at which such vote may be
taken, provided that a quorum is present, or by such larger vote
as may be required by Massachusetts law. Any Trustee at any time
may be removed for cause by resolution duly adopted at any
meeting of the Board of Trustees provided that notice thereof is
contained in the notice of such meeting and that such resolution
is adopted by the vote of at least two thirds of the Trustees
whose removal is not proposed. As used herein, "for cause" shall
mean any cause which under Massachusetts law would permit the
removal of a Trustee of a business trust.
Section 3. Place of Meeting. The Trustees may hold their
meetings, have one or more offices, and keep the books of the
Trust outside Massachusetts, at any office or offices of the
Trust or at any other place as they may from time to time by
resolution determine, or, in the case of meetings, as they may
from time to time by resolution determine or as shall be
specified or fixed in the respective notices or waivers of notice
thereof.
Section 4. Regular Meetings. Regular meetings of the Board
of Trustees shall be held at such time and on such notice, if
any, as the Trustees may from time to time determine.
The annual meeting of the Board of Trustees shall be held as
soon as practicable after the annual meeting of the Shareholders
for the election of Trustees.
Section 5. Special Meetings. Special meetings of the Board
of Trustees may be held from time to time upon call of the
Chairman of the Board of Trustees, if any, the President or two
or more of the Trustees, by oral or telegraphic or written notice
duly served on or sent or mailed to each Trustee not less than
one day before such meeting. No notice need be given to any
Trustee who attends in person or to any Trustee who, in writing
executed and filed with the records of the meeting either before
or after the holding thereof, waives such notice. Such notice or
waiver of notice need not state the purpose or purposes of such
meeting.
Section 6. Quorum. One-third of the Trustees then in
office shall constitute a quorum for the transaction of business,
provided that a quorum shall in no case be less than two
Trustees. If at any meeting of the Board there shall be less
than a quorum present (in person or by open telephone line, to
the extent permitted by the l940 Act), a majority of those
present may adjourn the meeting from time to time until a quorum
shall have been obtained. The act of the majority of the
Trustees present at any meeting at which there is a quorum shall
be the act of the Board, except as may be otherwise specifically
provided by statute, by the Declaration of Trust or by these
By-Laws.
Section 7. Executive Committee. The Board of Trustees may,
by the affirmative vote of a majority of the entire Board, elect
from the Trustees an Executive Committee to consist of such
number of Trustees as the Board may from time to time determine.
The Board of Trustees by such affirmative vote shall have power
at any time to change the members of such Committee and may fill
vacancies in the Committee by election from the Trustees. When
the Board of Trustees is not in session, the Executive Committee
shall have and may exercise any or all of the powers of the Board
of Trustees in the management of the business and affairs of the
Trust (including the power to authorize the seal of the Trust to
be affixed to all papers which may require it) except as provided
by law and except the power to increase or decrease the size of,
or fill vacancies on the Board. The Executive Committee may fix
its own rules of procedure, and may meet, when and as provided by
such rules or by resolution of the Board of Trustees, but in
every case the presence of a majority shall be necessary to
constitute a quorum. In the absence of any member of the
Executive Committee the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of
the Board of Trustees to act in the place of such absent member.
Section 8. Other Committees. The Board of Trustees, by the
affirmative vote of a majority of the entire Board, may appoint
other committees which shall in each case consist of such number
of members (not less than two) and shall have and may exercise
such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee
may determine its action, and fix the time and place of its
meetings, unless the Board of Trustees shall otherwise provide.
The Board of Trustees shall have power at any time to change the
members and powers of any such committee, to fill vacancies, and
to discharge any such committee.
Section 9. Informal Action by and Telephone Meetings of
Trustees and Committees. Any action required or permitted to be
taken at any meeting of the Board of Trustees or any committee
thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such
committee, as the case may be. Trustees or members of a
committee of the Board of Trustees may participate in a meeting
by means of a conference telephone or similar communications
equipment; such participation shall, except as otherwise required
by the 1940 Act, have the same effect as presence in person.
Section 10. Compensation of Trustees. Trustees shall be
entitled to receive such compensation from the Trust for their
services as may from time to time be voted by the Board of
Trustees.
Section 11. Dividends. Dividends or distributions payable
on the Shares may, but need not be, declared by specific
resolution of the Board as to each dividend or distribution; in
lieu of such specific resolutions, the Board may, by general
resolution, determine the method of computation thereof, the
method of determining the Shareholders to which they are payable
and the methods of determining whether and to which Shareholders
they are to be paid in cash or in additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of
the Trust shall be chosen by the Board of Trustees as soon as may
be practicable after the annual meeting of the Shareholders.
These may include a Chairman of the Board of Trustees, and shall
include a President, one or more Vice-Presidents (the number
thereof to be determined by the Board of Trustees), a Secretary
and a Treasurer. The Chairman of the Board of Trustees, if any,
and the President shall be selected from among the Trustees. The
Board of Trustees may also in its discretion appoint Assistant
Secretaries, Assistant Treasurers, and other officers, agents and
employees, who shall have such authority and perform such duties
as the Board or the Executive Committee may determine. The Board
of Trustees may fill any vacancy which may occur in any office.
Any two offices, except those of President and Vice-President,
may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity,
if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all
officers shall be one year and until their respective successors
are chosen and qualify; however, any officer may be removed from
office at any time with or without cause by the vote of a
majority of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Trust
shall have such powers and duties as generally pertain to their
respective offices, as well as such powers and duties as may from
time to time be conferred by the Board of Trustees or the
Executive Committee.
ARTICLE IV
SHARES
Section 1. Certificates of Shares. Each Shareholder of the
Trust may be issued a certificate or certificates for his Shares
in such form as the Board of Trustees may from time to time
prescribe, but only if and to the extent and on the conditions
prescribed by the Board.
Section 2. Transfer of Shares. Shares shall be
transferable on the books of the Trust by the holder thereof in
person or by his duly authorized attorney or legal
representative, upon surrender and cancellation of certificates,
if any, for the same number of Shares, duly endorsed or
accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the Trust
or its agent may reasonably require; in the case of shares not
represented by certificates, the same or similar requirements may
be imposed by the Board of Trustees.
Section 3. Stock Ledgers. The stock ledgers of the Trust,
containing the name and address of the Shareholders and the
number of shares held by them respectively, shall be kept at the
principal offices of the Trust or, if the Trust employs a
transfer agent, at the offices of the transfer agent of the
Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The
Board of Trustees may determine the conditions upon which a new
certificate may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may, in their
discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety to the Trust
and the transfer agent, if any, to indemnify it and such transfer
agent against any and all loss or claims which may arise by
reason of the issue of a new certificate in the place of the one
so lost, stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the
Trust, in such form and bearing such inscriptions as it may
determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board of
Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added to
or repealed by the Shareholders or by majority vote of the entire
Board of Trustees, but any such alteration, amendment, addition
or repeal of the By-Laws by action of the Board of Trustees may
be altered or repealed by the Shareholders.
PRIME CASH FUND
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within 7-1/2"
x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at left) is the owner of
SHARES without par value of
PRIME CASH FUND
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This
Certificate and the shares represented hereby are issued and shall be
held subject to all of the provisions of the Declaration of Trust of
the Trust to all of which the holder by acceptance hereof assents.
This certificate is not valid until countersigned by the Transfer
Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary Chairman
(at lower right, printed vertically)
Countersigned:
THE FIRST JERSEY NATIONAL BANK
(JERSEY CITY, N.J.) Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - ................Custodian.......................
(Cust.) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND TRANSFER
UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]____________________________________________________
(Please print or typewrite name and address
of assignee)
_____________________________________________________________________
_____________________________________________________________________
______________________________________________________________ SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER THE
SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL POWER OF
SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in Signatures must be guaranteed by a
box to left of commercial bank or a member firm of a
signature(s)) domestic stock exchange.
(text printed NOTICE: the signature to this assignment
vertically to right) must correspond with the name as written
upon the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of March 30, 1995, by and between
PRIME CASH FUND, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), and BANK ONE TRUST
COMPANY, N.A., a banking company organized under the laws of the
United States (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that Securities and cash of the
Trust be held and administered by the Custodian pursuant to this
Agreement; and
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements
herein made, the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1.1 "Authorized Person" means any Officer or other person
duly authorized by resolution of the Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Trust and
named in Exhibit B hereto or in such resolutions of the Board of
Trustees, certified by an Officer, as may be received by the
Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to
time serving under the Trust's Declaration of Trust, dated
September 8, 1982, as from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry
system as provided in Subpart O of Treasury Circular No. 300, 31
CFR 306, in Subpart B of 31 CFR Part 350, or in such book-entry
regulations of federal agencies as are substantially in the form of
such Subpart O.
1.4 "Business Day" shall mean any day recognized as a
settlement day by The New York Stock Exchange, Inc. and any other
day for which the Fund computes the net asset value of the Fund.
1.5 "Fund" shall mean any of the individual investment
portfolios of the Trust, including any additional portfolios
hereafter created, as each are or will be identified in Exhibit A
hereto; provided, however, that in the event that the Trust
consists of only one such portfolio, "Fund" shall refer to the
Trust.
1.6 "NASD" shall mean The National Association of Securities
Dealers, Inc.
1.7 "Officer" shall mean the President, any Senior Vice
President, Vice President or Assistant Vice President, the
Secretary, any Assistant Secretary, the Chief Financial Officer,
the Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally
transmitted to and accepted by the Custodian because such
instructions are: (i) reasonably believed by the Custodian to have
been given by an Authorized Person, (ii) recorded and kept among
the records of the Custodian made in the ordinary course of
business and (iii) orally confirmed by the Custodian. The Trust
shall cause all Oral Instructions to be confirmed by Written
Instructions. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a
transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral
Instructions vary from the Written Instructions which purport to
confirm them, the Custodian shall notify the Trust of such variance
but such Oral Instructions will govern unless the Custodian has not
yet acted.
1.9 "Custody Account" shall mean any account in the name of
a Fund, which is provided for in Section 3.2 below, or of the
Trust.
1.10 "Proper Instructions" shall mean Oral Instructions or
Written Instructions. Proper Instructions may be continuing
Written Instructions when deemed appropriate by both parties.
1.11 "Securities Depository" shall mean The Participants Trust
Company or The Depository Trust Company and (provided that the
Custodian shall have received a copy of a resolution of the Board
of Trustees, certified by an Officer, specifically approving the
use of such clearing agency as a depository for the Trust) any
other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of
1934 (the "1934 Act"), which acts as a system for the central
handling of Securities where all Securities of any particular class
or series of an issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the Securities.
1.12 "Securities" shall include, without limitation, common
and preferred stocks, bonds, call options, put options, debentures,
notes, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities, other money market instruments or other
obligations, and any certificates, receipts, warrants or other
instruments or documents representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that
the Custodian has the facilities to clear and to service.
1.13 "Shares" shall mean the units of beneficial interest
issued by the Trust.
1.14 "Written Instructions" shall mean (i) written
communications actually received by the Custodian and signed by one
or more persons as the Board of Trustees shall have from time to
time authorized, or (ii) communications by telex or any other such
system from a person or persons reasonably believed by the
Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or
any other similar electronic instruction system acceptable to the
Custodian and approved by resolutions of the Board of Trustees, a
copy of which, certified by an Officer, shall have been delivered
to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints
the Custodian as custodian of all Securities and cash owned by or
in the possession of the Trust at any time during the period of
this Agreement, provided that such Securities or cash at all times
shall be and remain the property of the Trust.
2.2 Acceptance. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held
by the Custodian for the account of the Fund, except Securities
maintained in a Securities Depository or Book-Entry System, shall
be physically segregated from other Securities and non-cash
property in the possession of the Custodian and shall be identified
as subject to this Agreement.
3.2 Custody Account. The Custodian shall open and maintain
in its trust department a custody account in the name of each Fund,
subject only to draft or order of the Custodian, in which the
Custodian shall enter and carry all Securities, cash and other
assets of the Fund which are delivered to it.
3.3 Appointment of Agents. Subject to the continuing
approval of the Board of Trustees, the Custodian may appoint, and
at any time remove, any domestic bank or trust company, and is
qualified to act as a custodian under the 1940 Act, as sub-
custodian to hold Securities and cash of the Funds and to carry out
such other provisions of this Agreement as it may determine, and
may also open and maintain one or more banking accounts with such
a bank or trust company (any such accounts to be in the name of the
Custodian and subject only to its draft or order), provided,
however, that the appointment of any such agent shall not relieve
the Custodian of any of its obligations or liabilities under this
Agreement.
3.4 Delivery of Assets to Custodian. The Fund shall deliver,
or cause to be delivered, to the Custodian all of the Fund's
Securities, cash and other assets, including (a) all payments of
income, payments of principal and capital distributions received by
the Fund with respect to such Securities, cash or other assets
owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time
during such period, of Shares. The Custodian shall not be
responsible for such Securities, cash or other assets until
actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The
Custodian may deposit and/or maintain Securities of the Funds in a
Securities Depository or in a Book-Entry System, subject to the
following provisions:
(a) Prior to a deposit of Securities of the Funds in any
Securities Depository or Book-Entry System, the Fund
shall deliver to the Custodian a resolution of the Board
of Trustees, certified by an Officer, authorizing and
instructing the Custodian on an on-going basis to deposit
in such Securities Depository or Book-Entry System all
Securities eligible for deposit therein and to make use
of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and
returns of collateral consisting of Securities.
(b) Securities of a Fund kept in a Book-Entry System or
Securities Depository shall be kept in an account
("Depository Account") of the Custodian in such Book-
Entry System or Securities Depository which includes only
assets held by the Custodian as a fiduciary, custodian or
otherwise for customers.
(c) The records of the Custodian and the Custodian's account
on the books of the Book-Entry System and Securities
Depository as the case may be, with respect to Securities
of a Fund maintained in a Book-Entry System or Securities
Depository shall, by book-entry or otherwise, identify
such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian
shall pay for such Securities upon (i) receipt of advice
from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository
Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for
the account of the Fund. If Securities sold by the Fund
are held in a Book-Entry System or Securities Depository,
the Custodian shall transfer such Securities upon (i)
receipt of advice from the Book-Entry System or
Securities depository that payment for such Securities
has been transferred to the Depository Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Fund.
(e) Upon request, the Custodian shall provide the Fund with
copies of any report (obtained by the Custodian from a
Book-Entry System or Securities Depository in which
Securities of the Fund is kept) on the internal
accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or
Securities Depository.
(f) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the
Trust for any loss or damage to the Trust resulting (i)
from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful
misconduct on the part of the Custodian or any sub-
custodian appointed pursuant to Section 3.3 above or any
of its or their employees, or (ii) from failure of the
Custodian or any such sub-custodian to enforce
effectively such rights as it may have against a Book-
Entry System or Securities Depository. At its election,
the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person for
any loss or damage to the Funds arising from the use of
such Book-Entry System or Securities Depository, if and
to the extent that the Custodian has been made whole for
any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall disburse moneys
from a Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only
(i) in the case of Securities (other than options on
Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or any
sub-custodian appointed pursuant to Section 3.3 above) of
such Securities registered as provided in Section 3.9
below in proper form for transfer, or if the purchase of
such Securities is effected through a Book-Entry System
or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the
case of options on Securities, against delivery to the
Custodian (or such sub-custodian) of such receipts as are
required by the customs prevailing among dealers in such
options; (iii) in the case of futures contracts and
options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title
thereto in favor of the Trust or any nominee referred to
in Section 3.9 below; and (iv) in the case of repurchase
or reverse repurchase agreements entered into between the
Trust and a bank which is a member of the Federal Reserve
System or between the Trust and a primary dealer in U.S.
Government securities, against delivery of the purchased
Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System
or Securities Depository for the account of the Fund with
such Securities;
(b) In connection with the conversion, exchange or surrender,
as set forth in Section 3.7(f) below, of Securities owned
by the Fund;
(c) For the payment of any dividends or capital gain
distributions declared by the Fund;
(d) In payment of the redemption price of Shares as provided
in Section 5.1 below;
(e) For the payment of any expense or liability incurred by
the Trust, including but not limited to the following
payments for the account of a Fund: interest; taxes;
administration, investment management, investment
advisory, accounting, auditing, transfer agent,
custodian, trustee and legal fees; and other operating
expenses of a Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or
treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with rules of The Options
Clearing Corporation and of any registered national
securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in
connection with transactions by the Trust;
(g) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Trust;
(h) For the funding of any uncertificated time deposit or
other interest-bearing account with any banking
institution (including the Custodian), which deposit or
account has a term of one year or less; and
(i) For any other proper purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a
resolution of the Board of Trustees, certified by an
Officer, specifying the amount and purpose of such
payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such
payment is to be made.
3.7 Delivery of Securities from Fund Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall release and
deliver Securities from a Custody Account but only in the following
cases:
(a) Upon the sale of Securities for the account of a Fund but
only against receipt of payment therefor in cash, by
certified or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry
System or Securities Depository, in accordance with the
provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with
tender or other similar offers for Securities of a Fund;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into
the name of the Trust, the Custodian or any sub-custodian
appointed pursuant to Section 3.3 above, or of any
nominee or nominees of any of the foregoing, or (ii) for
exchange for a different number of certificates or other
evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the issuer of such Securities, or
pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities
in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the
new Securities and cash, if any, are to be delivered to
the Custodian;
(g) Upon receipt of payment therefor pursuant to any
repurchase or reverse repurchase agreement entered into
by a Fund;
(h) In the case of warrants, rights or similar Securities,
upon the exercise thereof, provided that, in any such
case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(i) For delivery in connection with any loans of Securities
of a Fund, but only against receipt of such collateral as
the Trust shall have specified to the Custodian in Proper
Instructions;
(j) For delivery as security in connection with any
borrowings by the Trust on behalf of a Fund requiring a
pledge of assets by such Fund, but only against receipt
by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization
of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with the rules of The
Options Clearing Corporation and of any registered
national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Trust
on behalf of a Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of a Fund, the
Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits
in connection with transactions by the Trust on behalf of
a Fund; or
(n) For any other proper corporate purposes, but only upon
receipt, in addition to Proper Instructions, of a copy of
a resolution of the Board of Trustees, certified by an
Officer, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless
otherwise instructed by the Trust, the Custodian shall with respect
to all Securities held for a Fund;
(a) Subject to Section 7.4 below, collect on a timely basis
all income and other payments to which the Trust is
entitled either by law or pursuant to custom in the
securities business;
(b) Present for payment and, subject to Section 7.4 below,
collect on a timely basis the amount payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Trust, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary
form for Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax
laws or the laws or regulations of any other taxing
authority now or hereafter in effect, and prepare and
submit reports to the Internal Revenue Service ("IRS")
and to the Trust at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of
the Fund.
3.9 Registration and Transfer of Securities. All Securities
held for a Fund that are issued or issuable only in bearer form
shall be held by the Custodian in that form, provided that any such
Securities shall be held in a Book-Entry System for the account of
the Trust on behalf of a Fund, if eligible therefor. All other
Securities held for a Fund may be registered in the name of the
Trust on behalf of such Fund, the Custodian, or any sub-custodian
appointed pursuant to Section 3.3 above, or in the name of any
nominee of any of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof; provided,
however, that such Securities are held specifically for the account
of the Trust on behalf of a Fund. The Trust shall furnish to the
Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name
of any of the nominees hereinabove referred to or in the name of a
Book-Entry System or Securities Depository, any Securities
registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund,
complete and accurate records with respect to Securities, cash or
other property held for the Trust, including (i) journals or other
records of original entry containing an itemized daily record in
detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical
possession, (C) monies and Securities borrowed and monies and
Securities loaned (together with a record of the collateral
therefor and substitutions of such collateral), (D) dividends and
interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related
thereto. The Custodian shall keep such other books and records of
the Trust as the Trust shall reasonably request, or as may be
required by the 1940 Act, including, but not limited to Section 31
and Rule 31a-1 and 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian
shall (i) be maintained in a form acceptable to the Trust and in
compliance with rules and regulations of the Securities and
Exchange Commission, (ii) be the property of the Trust and at all
times during the regular business hours of the Custodian be made
available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be
maintained by Rule 31a-1 under the 1940 Act, be preserved for the
periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish
the Trust with a daily activity statement by Fund and a summary of
all transfers to or from the Custody Account on the day following
such transfers. At least monthly and from time to time, the
Custodian shall furnish the Trust with a detailed statement, by
Fund, of the Securities and moneys held for the Trust under this
Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide
the Trust with such reports, as the Trust may reasonably request
from time to time, on the internal accounting controls and
procedures for safeguarding Securities, which are employed by the
Custodian or any sub-custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. The Custodian shall cause
all proxies, if any, relating to Securities which are not
registered in the name of a Fund, to be promptly executed by the
registered holder of such Securities, without indication of the
manner in which such proxies are to be voted, and shall include all
other proxy materials, if any, promptly deliver to the Trust such
proxies, all proxy soliciting materials, and all notices to the
holders of such Securities.
3.14 Information on Corporate Actions. The Custodian will
promptly notify the Trust of corporate actions, limited to those
Securities registered in nominee name and to those Securities held
at a Depository or sub-Custodian acting as agent for the Custodian.
The Custodian will be responsible only if the notice of such
corporate actions is published by the Financial Card Service, J.J.
Kenny's Munibase System, Depository Trust Reorganization Notices,
Xcitek Inc., Standard & Poor's Called Bond Listing or The Wall
Street Journal or received by first class mail from the agent. For
market announcements not yet received and distributed by the
Custodian's services, the Trust will inform its custody
representative with appropriate instructions. The Custodian will,
upon receipt of the Trusts's response within the required deadline,
effect such action for receipt or payment for the Trust. For those
responses received after the deadline, the Custodian will effect
such action for receipt or payment, subject to the limitations of
the agent(s) effecting such actions. The Custodian will promptly
notify the Trust for put options only if the notice is received by
first class mail from the agent. The Trust will provide or cause
to be provided to the Custodian with all relevant information
contained in the prospectus for any security which has unique
put/option provisions and provide the Custodian with specific
tender instructions at least ten business days prior to the
beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for the Trust, Written Instructions shall be delivered
to the Custodian, specifying (a) the Fund making the purchase, (b)
the name of the issuer or writer of such Securities, and the title
or other description thereof, (c) the number of shares, principal
amount (and accrued interest, if any) or other units purchased, (d)
the date of purchase and settlement, (e) the purchase price per
unit, (f) the total amount payable upon such purchase, and (g) the
name of the person to whom such amount is payable. The Custodian
shall upon receipt of such Securities purchased by a Fund pay out
of the moneys held for the account of such Fund the total amount
specified in such Written Instructions to the person named therein.
The Custodian shall not be under any obligation to pay out moneys
to cover the cost of a purchase of Securities for a Fund, if in the
relevant Custody Account there is insufficient cash available to
the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of
Securities for a Fund is made by the Custodian in advance of
receipt for the account of the Fund of the Securities purchased but
in the absence of specific Written or Oral Instructions to so pay
in advance, the Custodian shall be liable to the Fund for such
Securities to the same extent as if the Securities had been
received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of
Securities by a Fund, Written Instructions shall be delivered to
the Custodian, specifying (a) the Fund making the purchase, (b) the
name of the issuer or writer of such Securities, and the title or
other description thereof, (c) the number of shares, principal
amount (and accrued interest, if any), or other units sold, (d) the
date of sale and settlement (e) the sale price per unit, (f) the
total amount payable upon such sale, and (g) the person to whom
such Securities are to be delivered. Upon receipt of the total
amount payable to the Trust as specified in such Written
Instructions, the Custodian shall deliver such Securities to the
person specified in such Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in
Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3
above or any other provision of this Agreement, the Custodian, when
instructed to deliver Securities against payment, shall be
entitled, if so directed in Written Instructions and if in
accordance with generally accepted market practice, to deliver such
Securities prior to actual receipt of final payment therefor. In
any such case, the Trust shall bear the risk that final payment for
such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person
to whom they were delivered, and the Custodian shall have no
liability for any of the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion
and from time to time, the Custodian may credit the relevant
Custody Account, prior to actual receipt of final payment thereof,
with (i) proceeds from the sale of Securities which it has been
instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Trust, and (iii)
income from cash, Securities or other assets of the Trust. Any
such credit shall be conditional upon actual receipt by the
Custodian of final payment and may be reversed if final payment is
not actually received in full. The Custodian may, in its sole
discretion and from time to time, permit the Trust to use funds so
credited to its Custody Account in anticipation of actual receipt
of final payment. Any such funds shall be repayable immediately
upon demand made by the Custodian at any time prior to the actual
receipt of all final payments in anticipation of which funds were
credited to the Custody Account.
4.6 Advances by Custodian for Settlement. If the Custodian
should, in its sole discretion, advance funds to the Trust to
facilitate the settlement of transactions on behalf of a Fund in
its Custody Account, then such advance shall be repayable
immediately upon demand made by the Custodian and shall bear
interest from the date incurred at a rate per annum (based on a
360-day year from the actual number of days involved) equal to 1%
over the Federal Funds rate in effect from time to time as
announced by The Wall Street Journal under the section entitled
Money Rates, or any successor title, such rate to be adjusted on
the effective date of any changes in such rate.
ARTICLE V
REDEMPTION OF TRUST SHARES
5.1 Transfer of Funds. From such funds as may be available
for the purpose in the relevant Custody Account, and upon receipt
of Proper Instructions specifying that the funds are required to
redeem Shares of a Fund, the Custodian shall wire each amount
specified in such Proper Instructions to or through such bank as
the Trust may designate with respect to such amount in such Proper
Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not
be under any obligation to effect payment or distribution by any
bank designated in Proper Instructions given pursuant to Section
5.1 above of any amount paid by the Custodian to such bank in
accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of and in conformity with Proper Instructions,
the Custodian shall establish and maintain a segregated account or
accounts for and on behalf of each Fund, into and from which
account or accounts may be transferred cash and/or Securities,
including Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Trust,
(b) for purposes of segregating cash or Securities in
connection with securities options purchased or written
by a Fund or in connection with financial futures
contracts (or options thereon) purchased or sold by a
Fund,
(c) which constitute collateral for loans of Securities made
by a Fund,
(d) for purposes of compliance by the Trust with requirements
under the 1940 Act for the maintenance of segregated
accounts by registered investment companies in connection
with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees,
certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the
exercise of reasonable care in carrying out its obligations under
this Agreement, and shall be without liability to the Trust for any
loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim unless such loss, damages, cost,
expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any sub-custodian
appointed pursuant to Section 3.3 above. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. The Custodian shall
promptly notify the Trust of any action taken or omitted by the
Custodian pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain whether the Trust
is in compliance with the 1940 Act, the regulations thereunder, the
provisions of the Trust's charter documents or by-laws, or its
investment objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be
liable for, or considered to be custodian of, any cash belonging to
the Trust or any money represented by a check, draft or other
instrument for the payment of money, until the Custodian or its
agents actually receive such cash or collect on such instrument.
7.3 No Responsibility for title, etc. So long as and to the
extent that it is in the exercise of reasonable care, the Custodian
shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received or delivered by
it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. The Custodian shall not
be required to enforce collection, by legal means or otherwise, of
any money or property due and payable with respect to Securities
held for the Trust if such Securities are in default or payment is
not made after due demand or presentation. The Custodian shall
inform the Trust promptly of any such default or failure to make
payment.
7.5 Reliance Upon Documents and Instructions. The Custodian
shall be entitled to rely upon any certificate, notice or other
instrument in writing received by it and reasonably believed by it
to be genuine. The Custodian shall be entitled to rely upon any
Oral Instructions and/or any Written Instructions actually received
by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties
or obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
7.7 Cooperation. The Custodian shall cooperate with and
supply necessary information to the entity or entities appointed by
the Trust to keep the books of account of the Trust and/or compute
the value of the assets of the Trust. The Custodian shall take all
such reasonable actions as the Trust may from time to time request
to enable the Trust to obtain, from year to year, favorable
opinions from the Trust's independent accountants with respect to
the Custodian's activities hereunder in connection with (a) the
preparation of the Trust's filings on Form N-1A and Form N-SAR and
any other reports required by the Securities and Exchange
Commission, and (b) the fulfillment by the Trust of any other
requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold
harmless the Custodian and any sub-custodian appointed pursuant to
Section 3.3 above, and any nominee of the Custodian or of such sub-
custodian from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the
Securities Act of 1933, the 1934 Act, the 1940 Act, and any state
or foreign securities and/or banking laws) or claim arising
directly or indirectly (a) from the fact that Securities are
registered in the name of any such nominee, or (b) from any action
or inaction by the Custodian or such sub-custodian (i) at the
request or direction of or in reliance on the advice of the Trust,
or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any sub-
custody agreement with a sub-custodian appointed pursuant to
Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement,
provided that neither the Custodian nor any such sub-custodian
shall be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from the
Custodian's or such sub-custodian's negligence, bad faith or
willful misconduct.
8.2 Indemnity to be Provided. If the Trust requests the
Custodian to take any action with respect to Securities, which may,
in the opinion of the Custodian, result in the Custodian or its
nominee becoming liable for the payment of money or incurring
liability of some other form, the Custodian shall not be required
to take such action until the Trust shall have provided indemnity
therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any
failure or delay in performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or
military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its
reasonable control as may cause interruption, loss or malfunction
of utility, transportation, computer (hardware or software) or
telephone communication service; accidents; labor disputes, acts of
civil or military authority; governmental actions; or inability to
obtain labor, material, equipment or transportation; provided,
however, that the Custodian in the event of a failure or delay
shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective
as of the date first set forth above and shall continue in full
force and effect until terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than ninety (90) days after the date of the giving of such notice.
If a successor custodian shall have been appointed by the Board of
Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of
termination (a) deliver directly to the successor custodian all
Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Trust and held by
the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or
for the benefit of the Trust at the successor custodian, provided
that the Trust shall have paid to the Custodian all fees, expenses
and other amounts to the payment or reimbursement of which it shall
then be entitled. Upon such delivery and transfer, the Custodian
shall be relieved of all obligations under this Agreement. The
Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities in the State of Ohio or upon
the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of
termination specified pursuant to Section 10.1 above, then the
Custodian shall have the right to deliver to a bank or trust
company of its own selection, which is (a) a "Bank" as defined in
the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not
less than $25 million, and (c) is doing business in New York, New
York, all Securities, cash and other property held by the Custodian
under this Agreement and to transfer to an account of or for the
Trust at such bank or trust company all Securities of the Trust
held in a Book-Entry System or Securities Depository. Upon such
delivery and transfer, such bank or trust company shall be the
successor custodian under this Agreement and the Custodian shall be
relieved of all obligations under this Agreement. If, after
reasonable inquiry, the Custodian cannot find a successor custodian
as contemplated in this Section 10.3, then the Custodian shall have
the right to deliver to the Trust all Securities and cash then
owned by the Trust and to transfer any Securities held in a Book-
Entry System or Securities Depository to an account of or for the
Trust. Thereafter, the Trust shall be deemed to be its own
custodian with respect to the Trust and the Custodian shall be
relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon
from time to time by the Trust and the Custodian. The fees and
other charges in effect on the date hereof and applicable to the
Funds are set forth in Exhibit C attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Trust is a business trust organized under the laws of the
Commonwealth of Massachusetts and under a Declaration of Trust, to
which reference is hereby made a copy of which is on file at the
office of the Secretary of State of Massachusetts as required by
law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of the Trust entered into in the name of
the Trust or on behalf thereof by any of the Trustees, officers,
employees or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of the Trust or the Funds
personally, but bind only the assets of the Trust, and all persons
dealing with any of the Funds of the Trust must look solely to the
assets of the Trust belonging to such Fund for the enforcement of
any claims against the Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given to a party
hereunder shall be in writing and shall be sent or delivered to the
party at the address set forth after its name herein below:
To the Trust:
PRIME CASH FUND
380 Madison Avenue
New York, NY 10017
Attn: Mr. Richard F. West, Treasurer and Mr.
William Killeen, Senior Operations
Officer
Telephone: (212)-697-6666
Facsimile: (212)-687-5373
To the Custodian:
BANK ONE TRUST COMPANY, N.A.,
100 East Broad Street
Columbus, OH 43271-0187
Attention: Mr. Robert F. Schultz, Senior Trust
Officer
Telephone: (614)-248-5445
Facsimile: (614)-248-2554
or at such other address as either party shall have provided to the
other by notice given in accordance with this Article XIII.
Writing shall include transmission by or through teletype,
facsimile, central processing unit connection, on-line terminal and
magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
14.2 No Waiver. No failure by either party hereto to exercise
and no delay by such party in exercising, any right hereunder shall
operate as a waiver thereof. The exercise by either party hereto
of any right hereunder shall not preclude the exercise of any other
right, and the remedies provided herein are cumulative and not
exclusive of any remedies provided at law or in equity.
14.3 Amendments. This Agreement cannot be changed orally and
no amendment to this Agreement shall be effective unless evidenced
by an instrument in writing executed by the parties hereto.
14.4 Counterparts. This Agreement may be executed in one or
more counterparts, and by the parties hereto on separate
counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
14.5 Severability. If any provision of this Agreement shall
be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.
14.6 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party hereto without
the written consent of the other party hereto.
14.7 Headings. The headings of sections in this Agreement are
for convenience of reference only and shall not affect the meaning
or construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its
behalf by its representatives thereunto duly authorized, all as of
the day and year first above written.
ATTEST: PRIME CASH FUND
/s/Patricia A. Craven /s/Lacy B. Herrmann
_____________________ By: _____________________
Assistant Secretary President
ATTEST: BANK ONE TRUST COMPANY, N.A.
/s/Beth Hayes /s/Robert F. Schultz
______________________ By: _______________________
Senior Trust Officer
<PAGE>
EXHIBIT A
Name of Fund (if different from Date Added (if
the Trust different from
date of original
Custody Agreement
<PAGE>
EXHIBIT B
I, Richard F. West, Treasurer, and I, Patricia Craven, Assistant
Secretary, of PRIME CASH FUND, a Massachusetts business trust (the
"Fund"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of
Trust and By-Laws to give Oral Instructions and Certificate on
behalf of the Fund, and the signatures set forth opposite their
respective names are their true and correct signatures:
NAME SIGNATURE
/s/Lacy B. Herrmann
Lacy B. Herrmann _____________________________
Rose F. Marotta _____________________________
/s/Richard F. West
Richard F. West _____________________________
/s/William C. Wallace
William C. Wallace _____________________________
/s/Diana P. Herrmann
Diana P. Herrmann _____________________________
/s/Charles E. Childs III
Charles E. Childs III _____________________________
/s/John M. Herndon
John M. Herndon _____________________________
/s/William Killeen
William Killeen _____________________________
/s/Patricia A. Craven
Patricia A. Craven _____________________________
/s/Richard F. West /s/Patricia A. Craven
________________________ ____________________
Richard F. West, Patricia A. Craven,
Treasurer Assistant Secretary
<PAGE>
EXHIBIT C
Compensation of Custodian - Equity Fund/Money Market Funds
Whereas Article XI of the Custody Agreement between Prime Cash Fund
and Bank One Trust Company, N.A. stipulates that the compensation
of Custodian shall be agreed upon by the Trust and Custodian, the
following is hereby agreed:
The compensation of the Custodian shall be computed according to
the following schedule:
I. Activity Fee:
A. $5.00 per book entry security transaction.
For the purpose of this agreement, a "transaction "
includes, but is not limited to, a purchase sale,
maturity, redemption, tender, exchange, deposit,
withdrawal, and collateral movement of a security.
B. $28.00 per ineligible security transaction.
C. $10.00 per principal paydown on amortized issues.
II. Other Activity Fees:
A. $5.00 per wire.
B. $2.00 per outgoing check from custody account.
III. Overdraft Charges:
As described in Section 4.6 of the Custody Agreement,
overdraft charges will be at 100 basis points above the
Fed Funds rate.
An earnings credit using the most recent 90-day T-bill auction rate
applied to 90% of each day's positive collected balance will reduce
custody, FDIC and other fees as allowed by law. For each month
that the charges exceed the earnings credit, the deficiency shall
be paid to Custodian. For each month that the earnings credit
exceeds the charges, the Custodian shall carry such surplus credits
forward to subsequent month(s) and calendar year(s) until utilized.
Custodian is to be reimbursed for out of pocket expenses deemed to
be exceptional.
The above fee schedule will remain in effect until March 31, 1998
and thereafter unless changed.
As stated by the Custodian in bidding to provide custody services
to the Fund, if at any time the Fund is not completely satisfied
with the Custodian's service levels, the Custodian will cease to
charge custody fees until its responsiveness and accuracy meet the
requirements of the Fund.
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made this 9th day of February, 1989, by and
between Prime Cash Fund, an unincorporated business trust organized
under the laws of Massachusetts (the "Fund"), and Administrative
Data Management Corp., a corporation organized and existing under
the laws of the State of New York ("ADM").
R E C I T A L S
WHEREAS, the Fund is registered as an open-end, non-
diversified, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") currently offering
one class of shares (the "Shares"); and
WHEREAS, the Fund desires to retain ADM to serve as the Fund's
transfer agent, registrar and dividend disbursing agent, and ADM is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto
as follows:
1. Appointment. The Fund hereby appoints ADM to serve as
transfer agent, registrar and dividend disbursing agent for the
Fund, for the period and on the terms set forth in this Agreement.
ADM accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided for in
Paragraph 15 of this Agreement.
2. Delivery of Documents. (a) The Fund has furnished ADM
with copies properly certified or authenticated of each of the
following:
(i) Resolutions of the Fund's Board of Trustees
authorizing the execution of this Agreement;
(ii) Appendix B identifying and containing the signatures
of the Fund's officers and other persons authorized to sign Written
Instructions and give Oral Instructions, each as hereinafter
defined, on behalf of the Fund;
(iii) The Fund's Declaration of Trust filed with the
Secretary of State of the Commonwealth of Massachusetts and all
amendments thereto (such Declaration of Trust, as presently in
effect and as it shall from time to time be amended, is herein
called the "Declaration");
(iv) The Fund's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time
be amended, are herein called the "By-Laws");
(v) The Fund's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") and under
the 1940 Act as filed with the Securities and Exchange Commission
("SEC") and all amendments thereto;
(vi) The Fund's most recent prospectus and statement of
additional information (such prospectus and statement of additional
information, as from time to time in effect and all amendments and
supplements thereto are herein called the "Prospectus").
(b) ADM has furnished the Fund with copies properly
certified or authenticated its Registration Statement on Form TA-1
under the Securities Exchange Act of 1934, as amended and all
annual or other public reports filed with the SEC as may be
requested by the Fund.
(c) Each party from time to time will furnish the other
with copies, properly certified or authenticated, of all amendments
or supplements to the foregoing, if any. Neither party is
obligated hereby to provide the other with otherwise confidential
information.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the
term "Authorized Person" means the Fund's officers and other
persons duly authorized by the Board of Trustees of the Fund to
give Oral and Written Instructions on behalf of the Fund and listed
on the Certificate annexed hereto as Appendix B or any amendment
thereto as may be received by ADM from time to time.
(b) "Oral Instructions". As used in this Agreement, the
term "Oral Instructions" means verbal instructions actually
received by ADM from an Authorized Person or from a person
reasonably believed by ADM to be an Authorized Person. The Fund
agrees to deliver to ADM Written Instructions confirming Oral
Instructions.
(c) "Written Instructions". As used in this Agreement,
the term "Written Instructions" means written instructions
delivered by mail, telegram, cable, telex or facsimile sending
device, and received by ADM and signed by an Authorized Person or
reasonably believed by ADM to have been signed by or authorized by
an Authorized Person unless otherwise required by a resolution of
the Board of Trustees furnished to ADM pursuant to Section 2(a)
hereof.
4. Instructions Consistent with Declaration, etc.
(a) Unless otherwise provided in this Agreement, ADM
shall act only upon Oral or Written Instructions. Although ADM may
take cognizance of the provisions of the Declaration and By-Laws of
the Fund, the Fund's Prospectus and the laws, rules and regulations
applicable to the Fund, ADM may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent
with any provisions of such Declaration or By-Laws, the Fund's
Prospectus or with any laws, rules or regulations applicable to the
Fund or any vote, resolution or proceeding of the Shareholders, or
of the Board of Trustees, or of any committee thereof.
(b) ADM shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by ADM
pursuant to this Agreement and shall have no liability for any
action which it takes or omits in accordance with such Oral
Instructions or Written Instructions, whether received from
personnel of the Fund, its investment adviser, its administrator,
or otherwise. The Fund agrees to forward to ADM Written
Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by ADM, whether by hand delivery,
telex, facsimile sending device or otherwise, as promptly as
practicable after Oral Instructions are given to ADM. The Fund
agrees that the fact that such confirming Written Instructions are
not received by ADM shall in no way affect the validity of the
actions or transactions or enforceability of the actions or
transactions authorized by the Fund by giving Oral Instructions.
5. Transactions Not Requiring Instructions.
(a) In the absence of contrary Written Instructions, ADM
is authorized to take and to the extent set forth in the Activities
List shall take the following actions:
(i) issuance, transfer and
redemption of Shares;
(ii) opening, maintenance, servicing
and closing of accounts of Shareholders or prospective
Shareholders;
(iii) acting as agent of the Fund, in
connection with plan accounts, upon the terms and subject to the
conditions contained in the application relating to the plan
account in question;
(iv) causing the reinvestment in
Shareholders' accounts of dividends and distributions declared upon
shares;
(v) transferring the investment of
an investor into, or from, the shares of other open-end investment
companies, if and to the extent permitted by the Prospectus;
(vi) processing redemptions;
(vii) examining and approving legal
transfers;
(viii) furnishing to Shareholders
confirmations of transactions relating to their Shares;
(ix) preparing and mailing to the
Internal Revenue Service and all payees all information returns and
payee statements required under the Internal Revenue Code in
respect to the Fund's dividends and distributions and taking all
other necessary actions in connection with the dividend and other
withholding requirements of that Code;
(x) mailing to Shareholders annual
and semi-annual reports prepared by or on behalf of the Fund, and
mailing new Prospectuses upon their issue to shareholders.
(xi) preparation and sending such
other information from the Fund records held by ADM as may be
reasonably requested by the Fund;
(xii) preparation and sending to the
Fund such affidavits of mailing and certifications as are
reasonably requested by an officer of the Fund;
(xiii) transferring stock certificates
representing shares for other stock certificates representing such
shares;
(xiv) replacing allegedly lost, stolen
or destroyed stock certificates with or without surety bonds; and
(xv) maintaining such books and
records relating to transactions effected by ADM as are required by
the 1940 Act, or by any other applicable provisions of law, to be
maintained by the Fund or its transfer agent with respect to such
transactions, and preserving, or causing to be preserved, any such
books and records for such periods as may be required by any such
law, rule or regulation.
(b) ADM agrees to act as Proxy Agent in connection with
the holding of annual or special meetings of Shareholders, mailing
to Shareholders notices, proxies and proxy statements in connection
with the holding of such meetings, receiving and tabulating votes
cast by proxy and communicating to the Fund the results of such
tabulation accompanied by appropriate certificates, and preparing
and furnishing to the Fund certified lists of Shareholders as of
such date, and in such form and containing such information as may
be required by the Fund to comply with any applicable provisions of
law or its Declaration and/or By-Laws relating to such meetings.
ADM shall be reimbursed for out-of-pocket expenses in performing
such services, such as the costs of forms, envelopes and postage.
ADM at its cost with the consent of the Fund may employ another
firm to perform all or some of the functions required by this
subsection. The Fund shall pay such additional charges as the
parties may agree upon for the services of the Transfer Agent in
connection with special meetings of shareholders of the Fund in
excess of one such meeting held in any fiscal year of the Fund.
(c) ADM shall furnish to the Fund such information and
at such intervals as the Fund may reasonably request for the Fund
to comply with the normal registration and/or the normal reporting
requirements of the SEC, Blue Sky authorities or other regulatory
agencies. All such information shall be materially correct and
complete based upon information supplied to ADM.
(d) ADM shall, in addition to the services herein
itemized, if so requested by the Fund and for such additional fees
as the Fund and ADM may from time to time agree, perform and do all
other acts and services that are customarily performed and done by
transfer agents, dividend disbursing agents and shareholder
servicing agents of open-end mutual funds such as the Fund,
provided that normally occurring improvements in the services of
such agents will be provided without initial capital cost to the
Fund and at service fees which are competitive with those
prevailing in the industry.
(e) The parties hereto agree that without prejudice to
any other provisions of this Agreement, the functions of ADM and
the Fund under this Agreement will be substantially performed in
accordance with the Activities List set out in Appendix A to this
Agreement. Such activities List as amended from time to time is an
integral part of this Agreement. In the event that the provisions
of this Agreement are in conflict with or are inconsistent with
those set forth in such Activity List the provisions of the
Activities List shall govern.
(f) ADM agrees to provide to the Fund upon request such
information as may reasonably be required to enable the Fund to
reconcile the number of outstanding shares of the Fund between
ADM's records and the account books of the Fund.
6. Authorized Shares. The Fund hereby represents that the
Declaration authorizes the Board of Trustees to issue an unlimited
number of shares.
7. Dividends and Distributions. The Fund shall furnish ADM
with the amount of each daily dividend and with appropriate
evidence of action by the Fund's Board of Trustees authorizing the
daily declaration of dividends and distributions in respect of
Shares as described in the then current Prospectus. Upon
declaration of each dividend other than daily dividends, each
capital gain distribution or other distribution by the Board of
Trustees of the Fund, the Fund shall promptly notify ADM of the
date of such declaration, the amount payable per share, the record
date for determining the shareholders entitled to payment, the
payment date, and the reinvestment date and price which is to be
used to purchase shares for reinvestment, all sufficiently in
advance to permit ADM to process properly such dividend or capital
gain distribution or other distribution in a timely and orderly
manner.
Sufficiently in advance of each payment date to permit ADM to
have federal funds available to it for the payment thereof, the
Fund will transfer, or cause the Custodian to transfer, to ADM in
its capacity as dividend disbursing agent, at First Financial
Savings Bank, S.L.A. or at such bank or other financial institution
as ADM with the consent of the Fund shall select, which may but
need not be an affiliate of ADM, the total amount of the dividend
or distribution currently payable. After deducting any amount
reasonably believed by ADM to be required to be withheld by any
applicable tax laws, rules and regulations or other applicable
laws, rules and regulations, based upon information available to
it, ADM shall, as agent for each Shareholder and in accordance with
the provisions of the Fund's Declaration and then current
Prospectus, invest dividends in Shares in the manner described in
the Prospectus or pay them in cash.
ADM shall prepare, file with the Internal Revenue Service, and
address and mail to shareholders such returns and information
relating to dividends and distributions paid by the Fund as are
required to be so prepared, filed and mailed by applicable laws,
rules and regulations, or such substitute form of notice as may
from time to time be permitted or required by the Internal Revenue
Service. The Fund shall promptly provide ADM with the information
necessary to prepare such returns and information, all sufficiently
in advance to permit ADM to prepare properly and mail such returns
and information in a timely and orderly manner. On behalf of the
Fund, ADM shall pay on a timely basis to the appropriate Federal
authorities any taxes withheld on dividends and distributions paid
by the Fund.
8. Notification of ADM: The Fund shall promptly notify ADM
of the closing net asset value per share and the offering price per
share each day there are any transaction in shares of the Fund, but
in any event not later than sixty (60) minutes after the closing of
the New York Stock Exchange (if the Fund is not a money market
Fund) or before 1:00 p.m. New York Time (if the Fund is a money
market Fund.) In the event ADM is not so notified, it may assume
that the price is unchanged from the prior price.
9. Communications with Shareholders.
(a) Communications to Shareholders. The Fund shall
prepare, print and provide ADM with sufficient quantities of all
communications by the Fund to its shareholders all sufficiently in
advance to permit ADM to properly address and mail in a timely and
orderly manner all communications by the Fund to its Shareholders,
including reports to Shareholders, dividend and distribution
notices and proxy material for its meetings of Shareholders. ADM
agrees to mail all such material to shareholders of the Fund in a
timely manner. ADM or a firm employed by ADM will at ADM'S cost and
expense receive and tabulate the proxy cards for the meetings of
the Fund's Shareholders.
(b) Correspondence. ADM will answer such correspondence
from Shareholders, securities brokers and others relating to its
duties hereunder and such other correspondence as may from time to
time be mutually agreed upon between ADM and the Fund.
10. Records. ADM shall keep the records described on the
Activities List, including but not limited to the following:
(a) accounts for each Shareholder showing the following
information:
(i) name, address and United States
Tax Identification or Social Security number;
(ii) number of Shares held and number
of Shares for which certificates, if any, have been issued,
including certificate numbers and denominations;
(iii) historical information regarding
the account of each Shareholder, including dividends and
distributions paid and the date and the price, if applicable, for
all transactions in a Shareholder's account;
(iv) any stop or restraining order
placed against a Shareholder's account;
(v) any correspondence relating to
the current maintenance of a Shareholder's account;
(vi) information with respect to
withholdings in the case of a foreign account; and
(vii) information with respect to
withholding in the case of an account subject to backup
withholding;
(ix) any information required in
order for ADM to perform any calculations contemplated or required
by this Agreement.
(b) If agreed between the Fund and ADM, subaccounts may
be maintained for each Shareholder requesting such services in
connection with shares held by such Shareholder for separate
accounts containing the same information for each subaccount as
required by subparagraph (a) above.
The books and records pertaining to the Fund which
are in the possession of ADM shall be the property of the Fund.
Such books and records shall be prepared and maintained as required
by the 1940 Act and other applicable securities laws and rules and
regulations in effect from time to time. ADM will, if so requested
by the counsel to the Fund, modify the manner in which such books
and records are prepared and maintained so as to comply with the
reasonable opinion of such counsel as to such laws and rules. The
Fund, or the Fund's authorized representatives, shall have access
to such books and records at all times during ADM's normal business
hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by ADM to the Fund or the
Fund's authorized representative at the Fund's expense.
11. Reports and Other Information.
Upon reasonable request of the Fund, provided that the
cost or effort required therefor are, singly or in the aggregate,
not unduly burdensome or expensive to it, ADM will promptly
transmit to the Fund, at no additional cost to the Fund, (a)
documents and information in the possession of ADM and not
otherwise available necessary to enable it and its affiliates to
comply with the requirements of the Internal Revenue Service, the
SEC, the National Association of Securities Dealers, Inc., state
blue sky authorities, and any other regulatory bodies having
jurisdiction; (b) documents and information in the possession of
ADM necessary to enable the Fund to conduct annual and special
meetings of its shareholder; and (c) such other information,
including shareholder lists and statistical information concerning
accounts as may be agreed upon from time to time between the Fund
and ADM.
12. Cooperation with Accountants. ADM shall cooperate with
the Fund's independent public accountants and shall take all
reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made
available on a timely basis to such accountants for the expression
of their unqualified opinion, including but not limited to the
opinion included in the Fund's annual report to Shareholders and on
Form N-SAR, or similar form.
13. Confidentiality. ADM agrees on behalf of itself and its
employees to treat confidentially all confidential records and
other confidential information relative to the Fund and its prior,
present or potential shareholders and relative to the Fund's
Distributor and its prior, present or potential customers. ADM
will under normal circumstances not divulge any such confidential
records or information to anyone other than the shareholder,
dealer, Fund or other person, firm, corporation or other entity
which ADM reasonably believes is entitled to such records or
information except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where ADM may be exposed to civil
or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
ADM shall not be considered to have breached this provision if
it, in good faith, has provided information or documents to an
individual, firm, corporation or other entity (governmental or
otherwise) which it reasonably believes is entitled to such
information or documents; provided that it shall, with respect to
any non-routine governmental investigation or inquiry, first
provide notice thereof to the Fund.
14. Equipment Failures. ADM shall maintain adequate and
reliable computer and other equipment necessary or appropriate to
carry out its obligations under this Agreement. In the event of
computer or other equipment failures at its own facilities beyond
ADM's reasonable control, ADM shall, at its expense, take
reasonable steps to minimize service interruptions. The foregoing
obligation of ADM shall not extend to computer terminals owned or
maintained by others, located outside of premises maintained by
ADM. ADM represents that it has presently in effect backup and
emergency systems described on Appendix C hereto. ADM will
maintain such arrangements or equivalent while this Agreement is in
force unless ADM notifies the Fund to the contrary and establishes
to the satisfaction of the Fund that industry standards no longer
require such arrangements.
15. Compensation. As compensation for the services rendered
by ADM during the term of this Agreement, ADM shall be entitled to
receive such reimbursement for out-of-pocket expenses and such
compensation is specified on Appendix D attached hereto or as may
from time to time be otherwise agreed on in writing between the
parties.
16. Responsibility of ADM. In the performance of its duties
hereunder, ADM shall be obligated to exercise care and diligence
and to act in good faith and to use its best efforts within
reasonable limits to insure the accuracy and completeness of all
services performed under this Agreement.
ADM and the affiliates and agents of ADM shall not be
responsible for or liable for any taxes, assessments, penalties,
fines or other governmental charges of whatever description which
may be levied or assessed on any basis whatsoever in connection
with withholding of amounts, verifying or providing taxpayer
identification numbers or otherwise under applicable tax laws and
preparing and filing of tax forms, excepting only for taxes
assessed on the basis of its compensation hereunder, provided that
ADM exercises the care and diligence required by this Agreement,
and in the case of its responsibilities for backup withholding,
verifying or providing taxpayer identification numbers or
otherwise, as to any shareholder from whom such withholding is
required, it withholds the necessary amount and attempts with
reasonable frequency, but no less often than once a calendar
quarter, to obtain the necessary information from the shareholder
until withholding is no longer required.
ADM and the affiliates and agents of ADM shall not be
responsible or liable for the actions, inactions, or any losses or
damages caused by any such actions or inactions of any agents,
brokers or others who are specifically selected by the Fund in
writing.
17. Release. ADM understands that the obligations of this
Agreement are not binding upon any Shareholder of the Fund
personally, but bind only the Fund's property; ADM represents that
it has notice of the provisions of the Fund's Declaration
disclaiming Shareholder liability for acts or obligations of the
Fund.
The Fund understands that the obligations of this
Agreement are not binding upon the parent corporation of ADM or any
affiliates or subsidiaries of ADM and that the Fund, its Directors,
Trustees, Officers, Shareholders and others shall look only to the
separate assets of ADM.
18. Right to Receive Advice. (a) Advice of Fund. If ADM
shall be in doubt as to any action to be taken or omitted by it, it
may request, and shall receive, from the Fund directions or advice,
including Oral or Written Instructions where appropriate.
(b) Advice of Counsel. If ADM shall be in doubt as to
any question of law involved in any action to be taken or omitted
by ADM, it may request advice without cost to itself from counsel
of its own choosing (who may be counsel for the Adviser, the Fund
or ADM, at the option of ADM).
(c) Conflicting Advice. In case of conflict between
directions, advice or Oral or Written Instructions received by ADM
pursuant to subparagraph (a) of this paragraph and advice received
by ADM pursuant to subparagraph (b) of this paragraph, ADM shall be
entitled to rely on and follow the advice received pursuant to the
latter provision alone.
(d) Protection of ADM. ADM shall be fully protected in
any action or inaction which it takes in reliance on the provisions
of the Fund's Prospectus, procedures established between ADM and
the Fund, or in reliance on any directions, advice or Oral or
Written Instructions received pursuant to subparagraph (a) or (b)
of this paragraph which ADM, after receipt of any such directions,
advice or Oral or Written Instructions, in good faith believes to
be consistent with such directions, advice or Oral or Written
Instructions, as the case may be. However, nothing in this
paragraph shall be construed as imposing upon ADM any obligation
(i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions,
advice or Oral or Written Instructions when received, unless, under
the terms of another provision of this Agreement, the same is a
condition to ADM's properly taking or omitting to take such action.
19. Compliance with Governmental Rules and Regulations.
ADM shall have no responsibility for insuring that the
contents of each Prospectus of the Fund complies with all
applicable requirements of the 1933 Act, the 1940 Act, and any
laws, rules and regulations of governmental authorities having
jurisdiction, except that ADM shall cause a senior officer of ADM,
who shall be its General Counsel unless otherwise agreed upon, or
his designee to provide such information and represents and
warrants that all information so furnished by it for specific use
in any such Prospectus will be correct and complete in all material
respects.
20. Records From Others: ADM, its affiliates and agents
shall have no responsibility or liability for the accuracy or
completeness of any documents, records, or information maintained
or provided by or reasonably believed by ADM to have been
maintained or provided by any prior transfer agent, any shareholder
or dealer, or by the Fund or anyone on behalf of the Fund and the
Fund hereby specifically agrees that ADM, its affiliates and agents
may rely on and will be fully protected in so relying on the
completeness and accuracy of all such documents, records and
information; provided, that ADM will inform the Fund of material
errors coming to its attention in the course of the performance of
its duties hereunder.
ADM, its affiliates and agents may conclusively rely on, and
will be fully protected in relying on, the authenticity and
accuracy of any documents or communications, whether oral, written
or facsimile, it receives from the Fund or which ADM, its
affiliates or agents reasonably believes are from the Fund,
provided these are received from Authorized Persons in accordance
with this Agreement. This provision will apply to, among other
things, the daily public offering and net asset value prices for
Fund shares; instructions from the Fund concerning dividends and
other distributions; and other matters relating to the Fund and its
shareholders.
21. Responsibilities of the Fund: The Fund and the Agents of
the Fund hereby acknowledge and agree that ADM, its affiliates and
its agents are responsible only for those functions and duties set
forth in this Agreement and unless so set forth are not responsible
for any of the following which are to be handled by the Fund:
(a) creating or maintaining any records on behalf of the Fund
or others required by any federal or state law, or
regulation or rule of any agency thereof or any self-
regulatory authority except (i) those relating to
shareholder account information set forth in Rule 31a-
1(b)(2)(iv) promulgated under the 1940 Act or equivalent
regulation applicable from time to time; and (ii) such
additional records as may reasonably be requested from
time to time by the Fund which are customarily maintained
by transfer agents to mutual funds, and which ADM by use
of its best efforts may provide at minimal cost and
inconvenience to it; with respect to these records ADM
agrees that they: (i) are the property of the Fund; (ii)
will be maintained by ADM for the period prescribed in
Rule 31a-2 or equivalent regulation; (iii) will be made
available, upon request to the Fund and the SEC; and (iv)
will be surrendered promptly upon the request of the
Fund;
(b) determining the legality of any sale, exchange, issuance
or redemption of any shares of the Fund;
(c) determining the legality of any communications, oral or
written, which is sent or provided by ADM, its affiliates
or its agents on behalf of the Fund;
(d) complying with any federal or state laws or the
regulations or rules of any agency thereof or of any
self-regulatory authority except those specifically
applicable to ADM as a transfer agent;
(e) filing any documents on behalf of the Fund or any one
else with any federal or state government or with any
agency thereof or of any self-regulatory authority except
ADM will file with the Internal Revenue Service copies of
1099 Div, 1099R and 1099B Forms sent to shareholders of
the Fund and forms relating to withholding and non-
resident alien withholding;
(f) monitoring the activities of the Fund or any one else or
their compliance with applicable law, rules and
regulations or with the provisions of the Fund's
Prospectus, of Trust, By-Laws or other governing
instruments; or
(g) compliance of the Fund or others with applicable federal
and state laws, regulations and rules of any agency
thereof, or of any self-regulatory authority pertaining
to the registration of the Fund or of shares of the Fund
or the legality of their sale although ADM will, in order
to provide the Fund with assistance in complying with
normal Blue Sky requirements, upon the reasonable request
of the Fund provide the Fund with a report generated from
the information readily available to ADM detailing the
amount of shares of the Fund purchased and redeemed and
the states of residence of the shareholders purchasing or
redeeming such shares.
22. Information and Documents: (a) The Fund shall promptly
provide ADM with the current Prospectus for the Fund, the Annual
and Semi-Annual Reports to shareholders of the Fund, Proxy
Statement and other Fund material, all in sufficient quantities and
sufficiently in advance to permit ADM to provide them to
shareholders of the Fund in a timely and orderly fashion.
(b) To the extent necessary or appropriate to enable ADM to
carry out its responsibilities under this Agreement, the Fund shall
(i) promptly notify ADM of all material events which
affect the Fund or any affiliate of the Fund;
(ii) promptly notify ADM of any suits or other
proceedings threatened or actually instituted
against the Fund or any affiliate of the Fund by the
federal government, any state government, or any
agency thereof (including but not limited to the
SEC, the Securities Commission of any state) or by
the National Association of Securities Dealers,
Inc., or any other self-regulatory authority;
(iii) promptly notify ADM of any consent order, stop
orders or similar orders affecting the Fund or any
affiliate of the Fund issued by the federal
government, any state government, or any agency
thereof (including but not limited to the SEC, the
Securities Commission of any state) or by the
National Association of Securities Dealers, Inc. or
any other self-regulatory authority;
(iv) promptly provide ADM, with copies of the audited
Annual Financial Statements for each affiliate of
the Fund which is an Investment Advisor, Investment
Sub-Advisor, Distributor or Administrator of the
Fund;
(v) promptly provide ADM, upon request, with copies of
any filings made by the Fund or any affiliate of the
Fund which is an Investment Advisor, Investment Sub-
Advisor, Distributor or Administrator of the Fund
with the federal government or any state government
or any agency thereof or with any self-regulatory
authority; and
(vi) promptly provide ADM, upon request, with copies of
any documents relating to items (ii) and (iii)
above.
(vii) discuss with ADM changes in the description of ADM
and the services which ADM provides to shareholders
contained in the Prospectus of the Fund at the time
of filing any amendments to the registration
statement of the Fund involving any such change.
ADM shall use its best efforts to assure the
accuracy and completeness of all material
information furnished by it for inclusion in any
such document.
23. Indemnification. Neither party nor any of its nominees
shall be indemnified against any liability to the other party (or
any expenses incident to such liability) arising solely out of (a)
such party's or such nominee's own willful misfeasance, bad faith
or gross negligence or reckless disregard of its duties in
connection with the performance of any duties, obligations or
responsibilities provided for in this Agreement or (b) such party's
or such nominee's own negligent failure to perform its duties
expressly provided for in this Agreement or otherwise agreed to in
writing.
24. Liability. (a) ADM shall be responsible for the
performance of its obligations under this Agreement notwithstanding
the delegation of some or all of such obligations to others in
accordance with the terms of this Agreement.
(b) ADM shall not be responsible for loss, liability cost
or expense arising out of occurrences beyond its control caused by
fire, flood, power failure, unanticipated equipment failure, acts
of God, or war or civil insurrection; provided, however, that it
shall have contingency planning for equipment or electrical failure
and such other contingencies as provided in this Agreement.
25. Insurance. ADM shall maintain fidelity, errors and
omissions and other insurance coverage in amounts and on terms and
conditions as set forth in information provided to the Fund from
time to time.
26. Advancement of Monies: Nothing in this Agreement shall
require ADM or any affiliate or agent of ADM to pay any monies
prior to its receipt of federal funds for such payment or for ADM
or any of its affiliates or agents to incur or assume any liability
for the payment of any such monies prior to its receipt of federal
funds for such payment.
27. Exclusivity. It is expressly understood and agreed that
the services to be rendered by ADM to the Fund under the provisions
of this Transfer Agency Agreement are not deemed to be exclusive
and ADM shall be free to render similar or different services to
others.
28. Further Actions. Each party agrees to perform such
further acts and execute such further documents as are reasonably
necessary to effectuate the purposes hereof.
29. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the
party against which enforcement of such change or waiver is sought.
30. Assignment. This Agreement and the performance hereunder
may not be assigned by ADM without the Fund's written consent. Not
withstanding the previous sentence, ADM may, without the Fund's
consent, assign the performance of all or a portion of its
responsibilities and duties hereunder to an affiliate of ADM,
provided that the Fund shall incur no additional cost or expense in
connection therewith.
31. Declaration and Termination. This Agreement shall
continue until termination by the Fund on sixty (60) days' written
notice or by ADM on ninety (90) days' written notice.
32. Notices. All notices and other communications, including
Written Instructions (collectively referred to as "Notice" or
"Notices" in this paragraph), hereunder shall be in writing or by
confirming telegram, cable, telex or facsimile sending device.
Notices shall be addressed;
(a) if to ADM at:
Administrative Data Management Corp.
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attn: Ms. Anne Condon, Vice President
or to such other address as ADM shall instruct the Fund, in
writing, from time to time;
(b) if to the Fund at:
___________________________
200 Park Avenue, Suite 4515
New York, New York 10017
Attention: President
or to such other address as the Fund shall instruct ADM, in
writing, from time to time; or
(c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication.
33. Miscellaneous. This Agreement embodies the entire
agreement and understanding between the parties hereto, and
supersedes all prior agreements and understandings relating to the
subject matter hereof, provided that the parties hereto may embody
in one or more separate documents their agreement, if any, with
respect to Oral Instructions. The captions in this Agreement are
included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a
contract made in New York and governed by New York law. If any
provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. None of the provisions
contained in this Agreement shall be deemed waived or modified
because of a previous failure of a party to insist upon strict
performance thereof. This Agreement shall be binding and shall
inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below
on the day and year first above written.
PRIME CASH FUND
/s/Kenneth L. MacRitchie /s/Lacy B. Herrmann
Attest:By: ______________________ By:______________________
Kenneth L. MacRitchie, Lacy B. Herrmann,
Assistant Secretary President
ADMINISTRATIVE DATA
MANAGEMENT CORP.
/s/Andrew J. Donohue /s/Glenn O. Head
Attest:By: ______________________ By:_______________________
Name: Andrew J. Donohue Name: Glenn O. Head
Title: Secretary & General Title: Chairman
Counsel
<PAGE>
APPENDIX A
ACTIVITIES LIST
It is understood that the Fund, its Custodian, and other
persons, firms, corporations or other entities performing services
for or on behalf of the Fund shall provide ADM and the Fund with
such services, information, or other assistance as may be necessary
or appropriate to permit the Transfer Agent to properly perform the
services hereunder.
A. SHAREHOLDER ACCOUNTING SERVICES
1. General Scope
All terms used herein shall be as defined in the attached
Agreement (the "Agreement") except that ADM is referred
to as the "Transfer Agent." In accordance with the terms
of the Agreement the Transfer Agent will provide a
comprehensive Shareholder accounting service generally
consistent with that provided to other investment
companies, including:
a. dividend accounting;
b. arrangement for wire receipt and payout of
Shareholder funds;
c. to the extent that it is reasonably within the
control of, or can be reasonably arranged without
additional cost by, the Transfer Agent, the rapid
and efficient transfer of investment monies between
various accounts;
d. to the extent that it is reasonably within the
control of, or can reasonably be arranged without
additional cost by, the Transfer Agent, the
effective and controlled processing of expedited
redemptions and exchanges by telegraphic and
telephonic means.
2. Computer Accounting and Record Keeping
The Transfer Agent will perform daily maintenance and
routine file update.
The Transfer Agent will perform a dividend credit run as
required in order to credit all existing Shareholder
accounts with each daily dividend, monthly dividend,
capital gain distribution or other distribution. The
Transfer Agent will establish new and adjust or close
existing Shareholder accounts if necessary on or as of
each business day.
The Transfer Agent will take reasonable precautions for
safeguarding of all Shareholder accounts during these
computer runs.
The Transfer Agent will provide continuous proof to the
outstanding Shares maintained by the Fund on a daily
basis, and off-line availability of all file data
pertaining to Shareholder accounts.
The Transfer Agent will to the extent technically
feasible create and maintain the ability to liquidate and
back out dividends reinvested in accounts which are
subsequently liquidated by or on behalf of the Fund due
to nonreceipt of funds, improper registration, or other
sufficient reason.
3. Establishing and Servicing Accounts
The Transfer agent will, as set forth in the Fund's
Prospectus, or substantially in conformity with
procedures established by or on behalf of the Fund,
accept instructions from investors to open new accounts
and perform such functions consistent with opening a new
account:
a. Accept applications in proper form sent directly to
the Fund or its Custodian when they are properly
delivered to the Transfer Agent;
b. Accept applications in proper form sent directly to
it when they are received by the Transfer Agent;
c. Transfer Shares accompanied by apparent proper
instructions;
d. Audit and verify payment items for apparent
compliance with the requirements established by the
Fund, e.g. minimum investment amount, apparent
proper endorsements on third party checks or drafts
if the Fund elects to accept such third party checks
or drafts, and other particulars as prescribed in
the prospectus. The Fund will provide the Transfer
Agent, from time to time, with names and taxpayer
identification numbers of individuals entitled to
purchase shares at a reduced offering price as
described in the prospectus;
e. Review existing accounts to determine whether there
are any other existing accounts with the same
registration; process W-9 or similar forms received
by the Transfer Agent; and compare upon receipt of
a computer tape from the Internal Revenue Service
taxpayer identification numbers contained in such
tape against those maintained by the Transfer Agent
for the Fund.
f. Assign account numbers as necessary and, where
appropriate, indicate the account number on
applications;
g. Review payment items to determine whether the payee,
original or by endorsement, on such payment items
corresponds to the registration of the account to
which it is to be credited (permitted exceptions
include ADM or the Fund specified as the payee when
accompanied by a valid account number or all
necessary documents to establish a new account or
such other exceptions as the Transfer Agent and the
Fund shall agree);
h. Upon opening incoming mail, record the date and
approximate time of day all checks were received;
i. Produce microfilm record of all incoming checks and
other documentation on filmstrips or other microfilm
retrieval method so as to be retrievable and
reproducible upon request;
j. Process address changes and acknowledge such changes
to previous address of record;
k. Answer inquiries from Shareholders or other
individuals, corporations, or other entity who
appear to be the Shareholder, dealer or otherwise
entitled to receive information as to account
information;
l. Open new accounts per telephone instructions
received from a prospective Shareholder, his dealer
or his fiduciary pending receipt of funds
transmitted by bank wire or other means; forward a
new account application to the prospective investor;
and issue a confirmation, including duplicates where
requested, when funds are received by the Transfer
Agent or the Fund's Custodian; under normal
circumstances the new account application bearing
the Shareholder account number assigned must be
completed by or appear to have been completed by the
Shareholder and received by the Transfer Agent
before any redemption orders are accepted and
processed for that account.
m. Prepare confirmations in such form as may be agreed
between the Fund and the Transfer Agent from time to
time for all "Open Accounts" after each non-dividend
transaction in a Shareholder's account which affects
the share balance; mailing confirmations to the
Shareholder as such changes occur;
n. Process on a daily basis if necessary or appropriate
routine transactions such as:
(1) Deposit or withdrawal of Shares from
Shareholders' accounts;
(2) Changes of address;
(3) Miscellaneous changes;
(4) Stop-transfers;
(5) Instructions relating to the remittance or
reinstatement of Dividends and other
distributions;
o. Incorporate in the Shareholder accounting software
and procedures the necessary flags, audits, and
tests reasonably designed to assure that the various
provisions and requirements specified elsewhere in
this Agreement to be performed by the Transfer Agent
will be substantially satisfied.
B. TRANSFER AGENT SERVICES
In accordance with the Agreement, and in particular Section
5(d) thereof, the Transfer Agent will perform the functions
normally performed by the Transfer Agent for other investment
companies of a similar type. Such functions shall include but
not necessarily be limited to:
1. Processing
a. Keep such records in the form and manner as the
Transfer Agent may deem advisable but not
inconsistent with the rules and regulations of
appropriate governmental authorities applicable to
the Transfer Agent or as may otherwise be agreed
from time to time in writing between the Fund and
the Transfer Agent;
b. Process transfers as requested by Shareholders or
persons, firms, corporations or other entities the
Transfer Agent reasonably believes to be the
Shareholder or authorized to act on behalf of the
Shareholder including obtaining and reviewing papers
and all other documents necessary to satisfy
transfer requirements; the Fund will, upon request
of the Transfer Agent, advise the Transfer Agent of
the transfer requirements of the Fund, and the
Transfer Agent will be fully protected by the Fund
if it is following such transfer requirements;
c. Process initial and subsequent investments from
Shareholders;
d. On a semi-monthly or other basis acceptable to the
Transfer Agent and the Fund initiate, accept and
process pre-authorized checks or, when available,
electronic funds transfers drawn against
Shareholders' checking accounts;
e. Process and record redemption of Shares to satisfy
ordinary redemptions and Plan account;
f. Proportionally allocate dividends, which are
provided to the Transfer Agent by the Fund in gross
dollar amount, to the benefit of the Fund
Shareholders entitled to receive them. The
procedure used must show that the amounts allocated
daily substantially balance to the gross dollar
amount provided by the Fund to the Transfer Agent.
Until otherwise specified by the Fund, dividends
shall be in accordance with the following: Three-
day accrual on Monday for the previous weekend; Two-
day accrual on the first business day following a
holiday or Four-day accrual if the holiday
immediately precedes or follows a weekend;
compatibility with the Merrill Lynch Automatic
Investment of Dividends System, and the issuance of
all reports incidental thereto provided the Fund's
method of operation is so compatible.
2. Custody and Control of Shares and Certificates:
Certificates will not be issued except on Shareholder
request but shares will be credited to the Shareholder's
account in non-certificate form. The Transfer Agent will
examine certificates surrendered for transfer or
redemption, or requests for transfer or redemption of
shares not represented by certificates, for apparent
genuineness or alterations; pass upon the apparent
validity thereof including endorsements, signature
guarantees and (if applicable) tax stamps or waivers,
provided that the Transfer Agent shall not be required to
compare any such endorsements against other records it
maintains except in accordance with written procedures
agreed upon between it and the Fund. The Transfer Agent
will also:
a. Countersign all certificates;
b. Prepare, mail, or deliver certificates for original
issue, subsequent investments, exchanges, or
transfers upon request from the Shareholder or one
reasonably believed to be the Shareholder;
c. Prepare, mail, or deliver certificates for Shares
previously held in non-certificate form;
d. Deposit certificate Shares;
e. Cancel surrendered certificates;
f. Establish and maintain safeguards for cancelled and
uncancelled certificates;
g. Establish and maintain a system to monitor stop-
transfers;
h. Replace lost certificates.
C. SUBSCRIPTION AGENT SERVICES:
The Transfer Agent will act as Subscription Agent for the
Fund. In addition to subscription functions described
elsewhere in this Agreement, the Transfer Agent will:
1. Maintain a Subscription Account for the Fund. This
account shall be established and operated so as to
satisfy the following criteria:
a. The account shall be established by the Transfer
Agent for the benefit of the Fund in accordance with
the terms of the Agreement;
b. The account shall be provided at no additional cost
except as may otherwise be stated in Appendix D of
the Agreement;
c. The account shall serve as the sole depository for
subscription monies intended for the purchase of
Fund Shares until such funds are transferred to the
Custody Account;
d. The Transfer Agent shall be prepared to receive and
efficiently process incoming cash, checks, Federal
Reserve Drafts and bank wire transfers of funds;
e. Withdrawals from the account shall be for the
purpose of transferring funds into the Custody
Account or, where appropriate, the crediting or
payment of commission or dealer's commissions;
withdrawals are also permitted to accommodate net
settlements with the Custodian;
f. No dividend or redemption or any other payments
shall be made to Fund Shareholders from the
Subscription Account;
g. The Transfer Agent will cashier all items presented
in payment as expeditiously as possible.
2. In connection with managing the Subscription Account, the
Transfer Agent will exercise all possible care in
satisfying operational requirements in each of the
following critical areas:
a. Validation Receipt of Good Subscription Funds
Procedures and criteria are to be established by the
Transfer Agent and approved by the Fund for the
purpose of providing assurance that good (collected)
funds were received from Shareholders prior to
paying out any redemption proceeds (under a Plan
account or as a result of one or more specific
redemption requests). Such procedures are to deal
with:
(1) Screening subscriptions to prevent:
-forgery, fraud, improper endorsement or other
unauthorized use particularly when accepting third
party funds;
-maintenance of accounts in names other than proper
form; funds received where the legal existence or
legal capacity of the subscriber is in doubt shall
be employed in a temporary investment status until
a proper account is established to which prior
income will be credited, or until the funds are
returned upon determination that no subscriber of
legal existence and capacity exits.
(2) Establishing and maintaining procedures
reasonably designed to assure the clearance and
collection of checks which are otherwise properly
drawn.
In this regard, the Transfer Agent with the approval
of the Fund will:
-Establish for all parts of the United States the
normal number of days required for check clearance
and return notice of uncollectability;
-Establish redemption amount and clearing time
criteria which together place an automatic stop on
issuance of certificates, if any, and upon
redemption payments until the Transfer Agent
reasonably believes that good subscription funds
were received.
In general, the redemption of a subscription payment
received in the form of a check, draft or similar
instrument shall not be made until the Transfer
Agent has determined, by telephone call to the
drawee bank or otherwise, that the deposit has
cleared the drawee bank or until fifteen (15)
calendar days after the receipt of such subscription
payment, in order to permit the orderly clearing
thereof.
-Provide a means to record and promptly retrieve the
status of a subscription received (which may include
days remaining before redemptions permitted, name of
bank, or other similar information as may be agreed
upon.)
Shareholder checks returned for insufficient funds or
other reasons will be promptly processed for liquidation
on or after the date of receipt or notification to the
effect that a check is being returned. Returned checks
will be cleared promptly and processed through a Returned
Check Account in conjunction with the following actions:
(1) Place a freeze on the account to prevent redemption
of the amount of such returned check or such lesser
amount as is in the affected account;
(2) Determine how many shares are to be liquidated due
to the investment attributable to such returned
check;
(3) Calculate and back out accrued dividends, if any,
attributable to such investment;
(4) Process the liquidation for the appropriate amount;
(5) Mail the Shareholder confirmation of the liquidation
and the check with a letter of explanation;
(6) Allocate the accrued dividends, if any, which were
attributable to such investment, as the Fund shall
direct which will normally be to the remaining
Shareholder accounts as of the next month-end
dividend run;
(7) Take reasonable steps to recover commissions or
dealer concessions applicable to such returned
check, although the Distributor shall be ultimately
responsible therefor.
b. Establish Procedures to Process Effectively Bank
Wire Transfers
Establish and maintain procedures reasonably
designed by the Transfer Agent and approved by the
Fund to maintain positive control over movements of
incoming money by bank wire so as to:
(1) Accept requests (WATS and local calls) for bank wire
instructions, record account information and client
telephone number, assign as appropriate a wire
control number, establish Shareholder pending file,
and if appropriate alert the bank wire department;
(2) Advise the Fund of pending bank wire receipts at
selected cutoff times during the course of each
business day so as to facilitate full investment of
Fund assets;
(3) Confirm to the Fund actual bank wire receipts at
selected cutoff times during the course of each
business day;
(4) Close out pending Shareholder files if bank wire
receipts are not received as of the date agreed
upon;
(5) Open new or credit existing Shareholder account in
accordance with the provisions of the current
prospectus upon receipt of bank wire funds;
(6) Take appropriate action to secure from Shareholders
who invest by bank wire the necessary written
applications and redemption authorizations.
D. DIVIDEND DISBURSING AND REDEMPTION AGENT SERVICES
In performance of the Dividend Disbursing and Redemption Agent
functions, the Transfer Agent will provide the Fund with
regular checks (or electronic funds transfer if available, at
the Shareholder's option) and carry out the following
functional activities:
1. Dividends
a. The Fund shall advise the Transfer Agent of dividend
amounts which shall then be applied as described in
the Prospectus or as directed by the Fund, or its
officers or Trustees;
b. Confirmation of dividend reinvestments shall be
mailed to Shareholders after each reinvestment.
c. Additional dividend information, if provided by the
Fund to the Transfer Agent shall then be provided to
Shareholders upon written request.
2. Redemption Procedures
The Transfer Agent with the approval of the Fund shall
establish procedures reasonably designed to insure that
redemption requirements established by the Transfer Agent
and agreed to by the Fund have been met, including the
receipt and examination of stock certificates,
endorsements, signature guarantees and obtaining any
needed papers or documents, including properly completed
Application, where lacking. More specifically:
a. The Transfer Agent will accept redemption requests
in written, telegraphic or telephonic form provided
the necessary instructions and authorizations are
reasonably believed by the Transfer Agent to be in
good form. Generally, telephonic redemption
requests will be repeated for confirmation to the
person making the request, and upon voice
confirmation by such person, will be recorded in a
log kept for that purpose.
b. Requests for the redemption of shares not
represented by certificates received and without
signature guarantees will be honored only if:
(1) the applicable portion of the Application has been
completed and the proceeds are forwarded to the
previously designated bank account, address, or
other destination identified on the Application;
(2) Expedited Redemption Authorization instructions
filed at any time other than upon the original
opening of a Shareholder's account are filed on an
appropriate form and bear or reasonably appear to
bear a signature guarantee;
(3) Shareholder accounts in the name of joint tenants
shall generally be handled on the basis of jointly
signed instructions and signature guarantees (where
applicable) for any payments.
c. The Transfer Agent will provide a means to record,
call up, and display on Cathode Ray tube or
otherwise an appropriate symbol or other indication
that redemption authorization instructions are on
file and appear to be in proper form.
d. All redemption requests will be promptly reviewed to
insure:
(1) that there are sufficient shares available in the
Shareholder's account;
(2) the applicable subscription check has not been
returned to ADM or its agent and the applicable
period of days has expired before using the funds
for redemption (see above);
(3) that no redemptions in accounts represented in whole
or in part by certificates are effected without
cancellation of an adequate number of certificate
shares, if necessary.
(4) that no signature guarantees shall be acceptable
unless they reasonably appear to have been provided
by a commercial bank or by a brokerage firm which is
a member of the New York, American, Midwest, or
Pacific Stock Exchanges, except as otherwise stated
in the Prospectus or in instructions received from
the Fund.
e. Certificate acceptance and replacement:
(1) Accept for redemption, certificates received for
redemptions accompanied by what reasonably appears
to be Shareholder's instructions.
(2) Furnish to the Shareholder, after with the policies
and procedures established by the Fund and the
Transfer Agent proper investigation and receipt of
necessary documentation for protection of the Fund,
replacement certificates and dividend and redemption
checks alleged to have been lost, stolen, destroyed,
or not received.
3. Dividend Account
The Transfer Agent will maintain a Dividend Account for
the Fund. This account shall be established and operated so as to
satisfy the following criteria:
1. This account shall be used to disburse cash in
payment of dividends, capital gain distributions and
returns of capital.
2. This account shall be operated in the same manner as
the Redemption Account (see below) except as otherwise
required by the purpose for which it shall be used; it
may, at the election of the Transfer Agent, be operated
as a combined account with the Redemption Account (see
below).
4. Redemption Account
The Transfer Agent will maintain a Redemption Account for
the Fund. This account shall generally be established
and operated so as to satisfy the following criteria.
1. All withdrawals from the account shall be for the
exclusive purpose of making payments to Fund
Shareholders. These payments are to be made only to
satisfy automatic or other account liquidation
payment requirements.
2. No deposits or subscription receipts shall be made
directly in the Redemption Account.
3. The Transfer Agent will advise the Fund at various
mutually established times during each business day
as to the total demand for valid payments to be
honored that day or the following day. Valid
payments consist of liquidations of shares for which
funds are payable in cash or check to shareholders,
whether initiated by check, wire, letter, automatic
distribution plan, determination of the Fund or
otherwise. The notification of demand for payments
shall only include valid demands for payment which
are actually in hand, such that the Fund need not
fund the Redemption Account with any more funds than
are actually required. The Fund agrees to fund, or
cause the Custodian to fund, the Redemption Account
sufficiently to cover all demands for payment which
are currently valid or will become valid the
following business day. The Fund and the Transfer
Agent agree that a goal of this procedure is to
allow for the maximum employment of Fund Assets
while still adequately funding the Redemption
Account. The Transfer Agent and its affiliates
shall not be required to honor any demand for
payment for which previously collected funds have
not been received from the Custodian or other Agent
of the Fund.
4. The Transfer Agent with the approval of the Fund
will develop specific procedures reasonably designed
to protect against:
(a) raising of dollar amounts or any other alteration of
instruments representing redemption payments;
(b) fraudulent or forged endorsements;
(c) other improper use of a redemption item which could
result in the Fund or its Shareholders being
defrauded.
Such procedures shall take into account the type of
accounts involved, the sums involved and the cost
effectiveness of such procedures.
5. Employ due diligence in servicing redemption requests as
promptly as possible.
E. EXCHANGE AGENT SERVICES
The Transfer Agent will provide services as required to
implement the exchange privileges described from time to time
in the prospectus of the Fund. The Transfer Agent will
install and utilize a telephonic system that is designed to
afford the Shareholder the opportunity to exchange Shares
among eligible Funds and that will record the telephone
request for such exchange. It is understood that the Transfer
Agent is only able to effect exchanges among funds for which
the Transfer Agent has entered into an agreement similar to
this Agreement for provision of Transfer Agency services.
F. PROXY AGENT SERVICES
The Transfer Agent agrees to act as Proxy Agent in connection
with the holding of annual or special meetings of
Shareholders, mailing to Shareholders notice, proxies and
proxy statements in connection with the holding of such
meetings, receiving and tabulating votes cast by proxy and
communicating to the Fund the results of such tabulation
accompanied by appropriate certificates, and preparing and
communicating to the Fund certified lists of Shareholders as
of such date, and in such form and containing such information
as may be required by the Fund to comply with any applicable
provisions relating to such meetings. The Transfer Agent may
at its expense employ another firm to provide all or a portion
of such services.
I. Reports to be provided by Transfer Agent:
A. Daily
1. Payment Journals
2. Transfers
3. Non-Certificate Redemption Journal
4. Original Issue Non-Certificate Shares
5. Clerical Journal
6. New Account Journal
7. Closed Account Journal
B. Monthly
1. Sales By State and Dividends Reinvested
2. Withdrawals and Dividends Paid in Cash List
3. Record of Out-of-Pocket Costs Incurred
C. Annual Reports
Provide Fund Management upon request with all
reports reasonably required to conduct an annual
review of Transfer Agency functions relating to the
Fund, including but not limited to performance,
volume, error ratios, costs and other matters
relating to the Fund. The Transfer Agent shall also
provide to the Fund general information concerning
its operations which might be believed to affect
adversely the future services to the Fund.
D. Periodic Marketing Reports - Provided these reports
are readily available from existing information and
can be produced without unreasonable effort or
expense by the Transfer Agent, including, e.g.,
1. Geographic Distribution Data
2. Size of Holdings Data
II. Other Services
The Transfer Agent will provide the following additional
services:
A. Security
1. Design and maintain security procedures reasonably
designed to guard against the possible theft and/or
use by others of the names and addresses of Fund
Shareholders.
2. Periodic duplication of all records
(computer/microfilm/hardcopy/copy) at a frequency
and in a detail reasonably designed to assure
protection of Shareholder record information in the
event of a disaster to the Transfer Agent's
facilities, including:
(a) significant voltage drop;
(b) power blackout;
(c) major destruction of the Transfer Agent's
central facilities.
3. The Transfer Agent will maintain equipment
reasonably designed or represented to assure an
uninterrupted power supply of at least 10 minutes at
the offices of the Transfer Agent to allow for
orderly shut down of hardware in the event of a
power outage; periodic back-up of tapes to be stored
at an offsite facility of the Transfer Agent's
choosing; and will provide redundancy capacity in
accordance with the Agreement.
B. Statements
1. Provide for up to two extra lines of print on
Shareholder statements which may be employed by the
Fund to advise Shareholders of such information as
yield or other explanatory account information. The
Fund will advise the Transfer Agent of such
information sufficiently in advance to permit it to
properly insert such information in a timely and
orderly manner.
2. Provide a combined dividend check and statement to
Shareholders electing cash distributions.
C. Processing Routine Shareholder Inquiries
1. Receive, control, research, and promptly reply to
all routine Shareholder and other inquiries whether
received by written or telephonic means which
pertain to a Shareholder's account.
2. Exercise due care to protect confidential
information in responding to inquiries.
3. Request ATT or such other telephone company as may
be appropriate to provide, at the Distributor's
expense, for a dedicated transmission line between
Aquila Distributors, 200 Park Avenue, New York and
Transfer Agent, Woodbridge, N.J. for inquiry via a
dedicated or P.C. terminal.
4. Provide if possible for continuity of present 800
telephone numbers for existing funds and adequate
personnel for live telephone response generally
until 7:00 PM, New York time on normal business
days. It is mutually understood that continuity of
the 800 numbers is dependant on cooperation from the
prior transfer agent and appropriate telephone
companies.
5. Provide for the automated tracking of all
Shareholder/Dealer telephone inquiries with on line
update status.
D. Other Mailings
1. Mailing services include addressing, enclosing, and
mailing quarterly reports, semi-annual reports,
annual reports, prospectuses and notices to all
accounts will be provided. To the extent the
Transfer Agent utilizes the services of another firm
to accomplish this for any First Investors Fund, it
shall be permitted to do so for the Fund, at the
Transfer Agent's expense.
2. All routine mailings to Shareholder/Dealers will,
where appropriate, utilize pre-sorted zip codes.
3. All month-end reinvestment statements, with any
month-end dividend check attached, will generally be
mailed to Shareholders, with duplicates to dealer
and representative, by the fourth business day of
the next month.
4. Commission checks and statements will generally be
mailed to brokerage firms on at least a weekly basis
for direct investments of prior weeks.
E. Other Services
1. Refer all Shareholder, dealer or governmental
inquiries of a policy or non-routine nature to the
Fund.
2. Provide an Account Officer to serve as the primary
point of contact between the Fund and the Transfer
Agent. The Transfer Agent will exercise due care in
assigning an individual who is both conversant with
standard investment company practices and of
sufficient stature to deal quickly and efficiently
with problems peculiar to placing a new investment
company on line.
F. Messenger Service
Provide messenger pick-up and delivery as necessary but
no less frequently than once daily between the Fund's
offices provided they are located within the borough of
Manhattan and the offices of the Transfer Agent.
<PAGE>
Exhibit 1
The Fund and the Transfer Agent anticipate that the following
activities should be incorporated into and become a part of
Appendix A as they become effective:
1. Installation of the National Security Clearing
Corporation, Fund/SERV system which shall be
operational no later than June 30, 1989.
2. The Transfer Agent will make a best effort to
provide networking capabilities with tape
transmission to dealers when and as required by
market competitiveness.
3. The Transfer Agent will work with the Distributor to
define criteria for an Audio Response system and
arrange for the implementation of such a system on
a timely basis.
<PAGE>
PRIME CASH FUND
APPENDIX B
Signatures
On the date of the Agreement and thereafter until further
notice, the following persons shall be Authorized Persons as
defined therein:
/s/Lacy B. Herrmann
Lacy B Herrmann _____________________
Chairman of the Board of Trustees Lacy B. Herrmann
/s/William C. Wallace
William C. Wallace _____________________
Vice President William C. Wallace
/s/Robert P. Sanchez
Robert P. Sanchez _____________________
Senior Vice President Robert P. Sanchez
/s/Rose F. Marotta
Rose F. Marotta _____________________
Treasurer Rose F. Marotta
/s/Kenneth L. MacRitchie
Kenneth L. MacRitchie _____________________
Assistant Secretary Kenneth L. MacRitchie
/s/William K. Killeen
William K. Killeen _____________________
William K. Killeen
/s/Diana P. Herrmann
Diana P. Herrmann _____________________
Vice President Diana P. Herrmann
/s/Charles E. Childs III
Charles E. Childs III ______________________
Assistant Vice President Charles E. Childs III
/s/Stephen J. Caridi
Stephen J. Caridi ______________________
Stephen J. Caridi
/s/Brian R. Katzman
Brian R. Katzman ______________________
Brian R. Katzman
/s/Sandra J. Hermida
Sandra J. Hermida ______________________
Sandra J. Hermida
<PAGE>
APPENDIX C
Backup Arrangement
ADM currently has in effect a redundancy arrangement with
Comdisco Disaster Recovery Services, Inc. The agreement with
Comdisco provides that in the event of a data processing systems
disaster at ADM's facilities in Woodbridge, New Jersey, ADM may use
equipment available at Comdisco's facilities for routine and other
processing. The agreement with Comdisco also provides for
dedicated time on Comdisco's data processing equipment each year to
allow ADM to test the redundancy system.
<PAGE>
APPENDIX D
Compensation
In accordance with the provisions of Section 15 of the
attached Agreement, the Fund shall pay ADM the monthly amount of
$1.25 for each account in the Fund open at any time during the
month. The minimum amount of compensation for each month shall be
$208.33.
In addition to the above charges, the Fund shall pay or
reimburse ADM for out-of pocket expenses, including but not limited
to: postage; forms relating to the Fund or shareholders of the
Fund; envelopes; paper; bank charges; costs relating to the
production of special reports for the Fund, its distributor, or
otherwise; and similar expenses. The Fund will also reimburse ADM
for counsel fees in accordance with the Agreement.
ADMINISTRATION AGREEMENT
THIS AGREEMENT, made December 16, 1992, by and between PRIME
CASH FUND (the "Trust"), a Massachusetts business trust, 380
Madison Avenue, Suite 2300, New York, New York 10017, and Aquila
Management Corporation (the "Administrator"), a New York
corporation, 380 Madison Avenue, Suite 2300, New York, New York
10017.
W I T N E S S E T H
In consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree
as follows:
1. In General.
The Administrator agrees to perform (at its own expense) the
functions set forth more fully herein for the Trust and for the
investment adviser for the Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to
the Trust and to Each Other.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of
the Trust, the Administrator shall provide all administrative
services to the Trust other than those services relating to the
investment portfolios of the Trust and the maintenance of its
accounting books and records; as part of such duties, the
Administrator shall:
(i) provide office space, personnel, facilities, and
equipment for the performance of the following functions and
for the maintenance of the headquarters of the Trust;
(ii) oversee all relationships between the Trust and its
transfer agent, custodian, legal counsel, auditors and
principal underwriter, including the negotiation, subject to
the approval of the Board of Trustees, 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 to
the effective operation of the Trust and the sale,
servicing, or redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and
other factual information and advice regarding economic
factors and trends, but shall not generally furnish advice
or make recommendations regarding the purchase or sale of
securities;
(iv) maintain the Trust's books and records (other than
accounting books and records), and prepare (or assist
counsel and auditors in the preparation of) all required
proxy statements, reports to the Trust's shareholders and
Trustees, reports to and other filings with the Securities
and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of
the Trust;
(v) prepare, on behalf of the Trust, such applications and
reports as may be necessary to register or maintain the
registration of the Trust and/or its shares under the
securities or "Blue-Sky" laws of all such jurisdictions as
may be required from time to time;
(vi) respond to any inquiries or other communications of
shareholders of the Trust and broker-dealers, or if any such
inquiry or communication is more properly to be responded to
by the Trust's shareholder servicing and transfer agent or
distributor, oversee such shareholder servicing and transfer
agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this
section shall at all times conform to, and be in accordance with,
any requirements imposed by: (1) the Investment Company Act of
1940 (the "1940 Act") and any rules or regulations in force
thereunder; (2) any other applicable laws, rules, and
regulations; (3) the Declaration of Trust and By-Laws of the
Trust as amended and restated from time to time; (4) any policies
and determinations of the Board of Trustees of the Trust; and (5)
the fundamental policies of the Trust, as reflected in its
registration statement under the 1940 Act, or as amended by the
shareholders of the Trust.
(c) The Administrator assumes no responsibility under this
agreement other than to render the services called for hereunder,
and specifically assumes no responsibilities for investment
advice or the investment or reinvestment of the Trust's assets.
(d) The Administrator shall not be liable for any error in
judgement or for any loss suffered by the Trust in connection
with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall prevent the
Administrator or any officer thereof from acting as investment
adviser, sub-adviser, administrator or manager for any other
person, firm, or corporation, and shall not in any way limit or
restrict the Administrator or any of its officers, stockholders,
or employees from buying, selling, or trading any securities for
its own or their own accounts, or for the accounts of others from
whom it or they may be acting, provided, however, that the
Administrator expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under
this Agreement. The Trust agrees to indemnify the Administrator
to the full extent permitted by the Trust's Declaration of Trust
and the 1940 Act.
3. Allocation of Expenses.
The Administrator agrees that it will, at its own expense,
provide office space, facilities, equipment, and personnel for
the performance of its functions hereunder and will pay all
compensation of Trustees, officers, and employees of the Trust
who are affiliated persons of the Administrator.
4. Compensation of the Administrator.
(a) The Trust agrees to pay the Administrator and the
Administrator agrees to accept as full compensation for all
services rendered by the Administrator as such, a fee payable
monthly and computed on the net asset value of the Trust as of
the close of business each business day at the annual rate of .25
of 1% of such net asset value, for the first $300 million of such
net assets and .15 of 1% of such net asset value over $300
million.
(b) The Administrator agrees that the above fee shall be
reduced, but not below zero, by an amount equal to its pro-rata
portion (based upon the aggregate fees of the Adviser and the
Administrator) of the amount, if any, by which the total expenses
of the Trust in any fiscal year, exclusive of taxes, interest,
and brokerage fees, shall exceed the lesser of (i) 2.5% of the
first $30 million of average annual net assets of the Trust plus
2% of the next $70 million of such assets and 1.5% of its average
annual net assets in excess of $100 million, or (ii) 25% of the
Trust's total annual investment income. The payment of the above
fee at the end of every month will be reduced or postponed so
that at no time will there be any accrued but unpaid liability
under this expense limitation, subject to readjustment during the
year.
5. Duration and Termination.
(a) This Agreement shall become effective as of the date
first written above (which shall be the date of approval of
related agreements by the shareholders of the fund), after
approval by a vote of a majority of the Trustees who are not
parties to this Agreement or "interested persons" (as defined in
the 1940 Act) of any such party, with votes cast in person at a
meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated by the Administrator at
any time without penalty upon giving the Adviser and the Trust
sixty days' written notice (which notice may be waived by them)
and may be terminated by the Trust at any time without penalty
upon giving the Administrator sixty days' written notice (which
notice may be waived by the Administrator) provided that such
termination by the Trust shall be directed or approved by a vote
of a majority of its Trustees in office at the time, including a
majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust. However, the
Administrator agrees that it will not exercise its termination
rights for at least two years from the effective date of this
Agreement except for regulatory reasons.
(c) The Administrator understands that the obligations of
this Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Administrator
represents that it has notice of the provisions of the Trust's
Declaration of Trust disclaiming shareholder liability for acts
or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly authorized
officers and their seals to be hereunto affixed, all as of the
day and year first above written.
ATTEST: PRIME CASH FUND
________________________ By:___________________________________
Assistant Secretary Vice President
ATTEST: AQUILA MANAGEMENT CORPORATION
_______________________ By:___________________________________
Treasurer and Asst. Secy. President and Chairman
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
551 Fifth Avenue
New York, NY 10176
Tel: (212) 818-1110
FAX: (212) 818-0494
e-mail: [email protected]
April 16, 1997
Prime Cash Fund
380 Madison Avenue, Suite 2300
New York, New York 10017
Ladies and Gentlemen:
You have requested that we render an opinion to Prime Cash
Fund (the "Fund"), Amendment No. 15 under the Investment Company
Act of 1940 (the "1940 Act") which you propose to file with the
Securities and Exchange Commission (the "Commission").
We have examined originals or copies, identified to our
satisfaction as being true copies, of those corporate records of
the Fund, certificates of public officials, and other documents
and matters as we have deemed necessary for the purpose of this
opinion. We have assumed without independent verification the
authenticity of the documents submitted to us as originals and
the conformity to the original documents of all documents
submitted to us as copies.
Upon the basis of the foregoing and in reliance upon such
other matters as we deem relevant under the circumstances, it is
our opinion that the shares of the Fund as described in the
Amendment, when issued and paid for in accordance with the terms
set forth in the prospectus and statement of additional
information of the Fund forming a part of its then effective
Registration Statement as heretofore, herewith and hereafter
amended, will be duly issued, fully-paid and non-assessable to
the extent set forth therein.
This letter is furnished to you pursuant to your request and
to the requirements imposed upon you under the 1933 Act and 1940
Act and is intended solely for your use for the purpose of
completing the filing of the Amendment with the Commission. This
letter may not be used for any other purpose or furnished to or
relied upon by any other persons, or included in any filing made
with any other regulatory authority, without our prior written
consent.
We hereby consent to the filing of this opinion with the
Amendment.
Very truly yours,
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
/s/ W. L. D. Barrett
By:_________________________________
W. L. D. Barrett
Dated: July 28, 1992
PRIME CASH FUND
AMENDED AND RESTATED DISTRIBUTION PLAN
1. The Plan. This Plan, adopted January 17, 1983, amended and
restated May 31, 1989 and further amended and restated July 28,
1992 (the "Plan") is the written plan contemplated by Rule 12b-1
(the "Rule") under the Investment Company Act of 1940 (the "1940
Act") of PRIME CASH FUND (the "Fund").
2. Definitions. As used in this Plan, "Qualified Recipients"
means broker-dealers or others selected by the Fund's Adviser
and/or Administrator, including but not limited to any principal
underwriter of the Fund (other than a principal underwriter which
is an affiliated person, or an affiliated person of an affiliated
person, of the administrator) with which the Administrator has
entered into written agreements ("Related Agreements")
contemplated by the Rule and which have rendered assistance
(whether direct, administrative, or both) in the distribution
and/or retention of the Fund's shares or servicing of shareholder
accounts. As used in this Plan, "Administrator" includes any sub-
adviser which may in the future be retained by the Fund and which
performs the functions now being performed by the Administrator.
"Qualified Holdings" means, as to any Qualified Recipient,
all Fund shares beneficially owned by such Qualified Recipient,
or beneficially owned by its brokerage customers, other
customers, other contacts, investment advisory clients, or other
clients, if the Qualified Recipient was, in the judgment of the
Adviser and/or Administrator instrumental in the purchase and/or
retention of such Fund shares and/or in providing administrative
assistance in relation thereto.
3. Certain Payments Permitted. Under this Plan, the Adviser
and/or the Administrator, but not the Fund itself, are authorized
to make payments ("Permitted Payments") to Qualified Recipients.
Permitted Payments can be made by the Adviser and/or
Administrator, directly or through the Distributor as disbursing
agent, and shall not be the subject of reimbursement by the Fund
to the Adviser or Administrator. Permitted Payments may not
exceed .10 of 1% of the average annual net assets of the Fund for
any full fiscal year of the Fund during which the portion of this
Plan which authorizes such payments is in effect. If that portion
of this Plan is not in effect for the whole of any fiscal year
the amount of Permitted Payments shall be pro-rated for such part
or parts of that fiscal year during which it was in effect, and
shall also be pro-rated for any fiscal year which is not a full
fiscal year. The Adviser and/or Administrator will have
authority (i) as to the selection of any Qualified Recipient or
Recipients; (ii) not to select any Qualified Recipient; and (iii)
the amount of Permitted Payments, if any, to each Qualified
Recipient provided that the total Permitted Payments to all
Qualified Recipients do not exceed the amount set forth above.
The Adviser and Administrator will consult with each other as to
persons appropriate to be or become Qualified Recipients and the
amounts of Permitted Payments to be made to these Qualified
Recipients.
The Adviser and/or Administrator are authorized under this
Plan, but not directed, to take into account, in addition to any
other factors deemed relevant by them, the following: (a) the
amount of the Qualified Holdings of the Qualified Recipient; (b)
the extent to which the Qualified Recipient has, at its expense,
taken steps in the shareholder servicing area; and (c) the
possibility that the Qualified Holdings of the Qualified
Recipient would be redeemed in the absence of its selection or
continuance as a Qualified Recipient. Notwithstanding the
foregoing two sentences, a majority of the Independent Trustees
(as defined below) may remove any person as a Qualified
Recipient.
Whenever the sub-adviser or administrator bears the costs,
not borne by the Fund's Distributor, of printing and distributing
all copies of the Fund's prospectuses, statements of additional
information and reports to shareholders which are not sent to the
Fund's shareholders, or the costs of supplemental sales
literature and advertising, such payments are authorized.
In view of the foregoing payments by the Administrator
and/or the Adviser and the bearing by them of certain
distribution expenses, it is recognized that the profits, if any,
of the Administrator or Adviser are dependent primarily on the
administration fees paid by the Fund to the Administrator and the
advisory fees paid by the Fund to the Adviser and that their
profits, if any, would be less or losses, if any, would be
increased due to such payments and expenses. If and to the extent
that any such fees paid by the Fund might, in view of the
foregoing, be considered as indirectly financing any activity
which is primarily intended to result in the sale of shares
issued by the Fund, the payment of such fees is authorized. In
taking any action contemplated by Section 15 of the 1940 Act as
to any contract with the Adviser to which the Fund is a party,
the Fund's Trustees, including its Trustees who are not
"interested persons" as defined in the 1940 Act, shall, in acting
on the terms of any such contract apply the "fiduciary duty"
standard contained in Section 36(b) of the 1940 Act.
4. Certain Payments Authorized. If and to the extent that any
of the payments listed below are considered to be "primarily
intended to result in the sale of" shares issued by the Fund
within the meaning of the Rule, such payments are authorized
under this Plan: (i) the costs of the preparation of all reports
and notices to shareholders and the costs of printing and mailing
such reports and notices to existing shareholders, irrespective
of whether such reports or notices contain or are accompanied by
material intended to result in the sale of shares of the Fund or
other funds or other investments; (ii) the costs of the
preparation, printing and mailing of all prospectuses and
statements of additional information to existing shareholders;
(iii) the costs of preparation, printing and mailing of any proxy
statements and proxies, irrespective of whether any such proxy
statement includes any item relating to, or directed toward, the
sale of the Fund's shares; (iv) all legal and accounting fees
relating to the preparation of any such reports, prospectuses,
statements of additional information, proxies and proxy
statements; (v) all fees and expenses relating to the
qualification of the Fund and/or its shares under the securities
or "Blue-Sky" laws of any jurisdiction; (vi) all fees under the
Securities Act of 1933 and the 1940 Act, including fees in
connection with any application for exemption relating to or
directed toward the sale of the Fund's shares; (vii) all fees and
assessments of the Investment Company Institute or any successor
organization, irrespective of whether some of its activities are
designed to provide sales assistance; (viii) all costs of the
preparation and mailing of confirmations of shares sold or
redeemed or share certificates, and reports of share balances;
and (ix) all costs of responding to telephone or mail inquiries
of investors.
5. Disinterested Trustees. While this Plan is in effect, the
selection and nomination of those Trustees of the Fund who are
not "interested persons" of the Fund shall be committed to the
discretion of such disinterested Trustees. Nothing herein shall
prevent the involvement of others in such selection and
nomination if the final decision on any such selection and
nomination is approved by a majority of such disinterested
Trustees.
6. Reports. While this Plan is in effect, the Fund's Adviser and
Administrator shall report at least quarterly to the Fund's
Trustees in writing for their review on the following matters:
(i) all Permitted Payments made under the Amended Distribution
Plan, the identity of the Qualified Recipient of each Payment,
and the purposes for which the amounts were expended; (ii) all
costs of each item specified in Section 4 of the Amended
Distribution Plan (making estimates of such costs where necessary
or desirable) during the preceding calendar or fiscal quarter;
and (iii) all fees of the Fund to the Adviser or Administrator
paid or accrued during such quarter.
7. Effectiveness, Continuation, Termination and Amendment.
This Plan shall go into effect when it has been approved (i) by a
vote of the Trustees of the Fund and of those Trustees (the
"Independent Trustees") who are not "interested persons" as
defined in the 1940 Act of the Fund and have no direct or
indirect financial interest in the operation of this Plan or in
any agreements related to this Plan, cast in person at a meeting
called for the purpose of voting on this Plan; and (ii) by a vote
of holders of at least a "majority" (as so defined) of the
outstanding voting securities of the Fund. This Plan shall be
submitted to the shareholders of the Fund for approval or
disapproval at the first shareholders' meeting after the Fund
commences the sale of its shares. This Plan shall, unless
terminated as hereinafter provided, continue in effect from year
to year after such shareholder approval only so long as such
continuance is specifically approved at least annually by the
Fund's Trustees and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such continuance.
This Plan may be terminated at any time by vote of a majority of
the Independent Trustees or by the vote of the holders of a
"majority" (as defined above) of the outstanding voting
securities of the Fund. This Plan may not be amended to increase
materially the amount of payments to be made without shareholder
approval as set forth in (ii) above, and all amendments must be
approved in the manner set forth in (i) above.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000707800
<NAME> PRIME CASH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 32,359
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<SHARES-COMMON-STOCK> 1001
<SHARES-COMMON-PRIOR> 30,008,644
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 124,066
<OTHER-INCOME> 0
<EXPENSES-NET> 8,746
<NET-INVESTMENT-INCOME> 115,320
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 115,320
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 1000
<NUMBER-OF-SHARES-REDEEMED> 30,010,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (38,404,502)
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 4,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,476
<AVERAGE-NET-ASSETS> 26,675,071
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .004
<PER-SHARE-GAIN-APPREC> 0
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<PER-SHARE-DISTRIBUTIONS> .004
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
