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. 20 [ 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.
<PAGE>
PRIME CASH FUND
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
Part A
The investment objectives and policies and general method of
operations of the Fund 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.
THE FUND'S OBJECTIVE, INVESTMENT STRATEGIES AND MAIN RISKS
"What is the Fund's Objective?"
The objective of the Fund is to achieve as high a level
of current income, stability and liquidity for investors' cash
assets as can be obtained from investing in a diversified portfolio
of short-term "money-market" securities meeting specific quality
standards.
"What does the Fund invest in?"
The Fund invests in money-market securities that are highly
rated by nationally recognized statistical rating organizations,
present minimal credit risks and are of short duration.
"What are the main risks of investing in the Fund?"
There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
No bank credit support Investment in the Fund is not a
deposit in any bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental
agency.
INVESTMENT OF THE FUND'S ASSETS
"Is The Fund Right For Me?"
The Fund is designed to suit the cash management needs of
individuals, corporations, institutions and fiduciaries.
"What Securities Does the Fund Invest In?"
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; we refer to these obligations as "U.S.
Government Securities."
(2) Bank Obligations and Instruments Secured by Them: Bank
obligations including time deposits, certificates of deposit,
bankers' acceptances and other bank 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. 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. ("banks" include commercial banks,
savings banks and savings and loan associations.)
(3) Commercial Paper: Short-term corporate debt.
(4) Corporate Debt Obligations: Corporate debt obligations
(for example, bonds and debentures) which at the time of purchase
have a remaining maturity of not more than 397 days.
(5) Variable Amount Master Demand Notes: Variable amount
master demand notes that are redeemable (and thus repayable by
the borrower) at principal amount, plus accrued interest, at any
time on not more than thirty days' notice. 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. 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). If the
Fund invests more than 5% of its net assets in such other
obligations, the Prospectus will be supplemented to describe
them.
(7) Repurchase Agreements: The Fund may purchase securities
subject to repurchase agreements with commercial banks and
broker-dealers 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. 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.
Shareholder approval is not required to change any of the
foregoing management policies.
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"). In brief, the Rule's provisions for
quality, diversity and maturity require the Fund to limit its
investments to those instruments which 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. 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.
Additional Risks
Year 2000 Like other financial and business organizations,
the Fund could be adversely affected if computer systems the Fund
relies on do not properly process date-related information and
data involving the year 2000 and after. The Administrator is
taking steps that it believes are reasonable to address this
problem in its own computer systems and to obtain assurances that
steps are being taken by the other major service providers to the
Fund to achieve comparable results. Certain vendors have advised
the Administrator that they are currently compliant. The three
mission critical vendors -- the shareholder servicing agent, the
custodian and the fund accounting agent -- as well as other
support organizations, advised the Administrator in 1998 that
they were actively working on necessary changes. These three
vendors anticipated readiness by December 1998 and so informed
the Sub-Adviser. However, they did not achieve that objective and
have advised the Sub-Adviser that they expect to be ready during
the first half of 1999. The Administrator has also requested the
Fund's portfolio manager to attempt to evaluate the potential
impact of this problem on the issuers of securities in which the
Fund invests. At this time there can be no assurance that the
target dates will be met or that these steps will be sufficient
to avoid any adverse impact on the Fund.
FUND MANAGEMENT
Management
Aquila Management Corporation, 380 Madison Avenue, Suite
2300, New York, NY 10017 (the "Administrator"), is the Fund's
Administrator under the "Administration Agreement."
Under the Administration Agreement, the Fund would pay the
Administrator a fee payable monthly and computed on the net asset
value of the Fund as of the close of business each business day
at the annual rate of 0.25 of 1% of such net asset value. Since
it ceased operations, all such fees have been waived.
Information about the Administrator
The Fund's Administrator is founder and administrator to the
Aquilasm Group of Funds, which consists of tax-free municipal
bond funds, money-market funds and equity funds. As of December
31, 1998, these funds had aggregate assets of approximately $3.2
billion, of which approximately $1.2 billion 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.
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 and the Custodian are open (a "Business Day") 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. The
net asset value per share is based on a valuation of the Fund's
investments at amortized cost.
The New York Stock Exchange is normally not open on the
following days: New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. However, the
Exchange may close on other days as well. In addition, the
Custodian is not open on Veterans Day.
HOW TO INVEST IN THE FUND
The following is for information only; shares are not
currently being offered for sale to the public.
PURCHASES
"How Do I Purchase Shares?"
Opening an Account
To open a new account, you must send a properly completed
Application to PFPC Inc., (the "Agent"). The Fund will not honor
redemption of shares purchased by wire payment until a properly
completed Application has been received by the Agent. The minimum
initial investment is $1,000. Subsequent investments may be in
any amount.
You can make investments in any of these three ways:
1. By Mail. You can make payment by check, money order,
Federal Reserve Draft or other negotiable bank draft drawn
in United States dollars on a United States commercial or
savings bank or credit union (each of which is a "Financial
Institution") payable to the order of Prime Cash Fund and
mailed to:
PFPC Inc.
Attn: Aquilasm Group of Funds
400 Bellevue Parkway
Wilmington, DE 19809
2. Through Brokers. If you wish, you may invest in the Fund
by purchasing shares through registered broker-dealers.
The Fund imposes no sales or service charge, 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 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.
Opening an Account Adding to An Account
* Make out a check for * Make out a check for
the investment amount the investment amount
payable to payable to
"Prime Cash Fund" "Prime Cash Fund"
* Complete the Application * Fill out the pre-printed
included with the Prospectus, stub attached
indicating the features to the Fund's confirmations.
you wish to authorize. Or, supply the name(s)
of account owner(s),
the account number and
the name of the Fund
* Send your check and * Send your check and
completed application completed application
to your dealer or to your dealer or
to the Fund's Agent, PFPC to the Fund's Agent, PFPC
Inc., or Inc., or
* Wire funds as described above. * Wire funds as described
above.
Be sure to supply the name(s) of account owner(s), the account
number, the name of the Fund.
"Can I Transfer Funds Electronically?"
You can have funds transferred electronically, in amounts of
$50 or more from your Financial Institution if it is a member of
the Automated Clearing House. You may make investments through
two electronic transfer features, "Automatic Investment" and
"Telephone Investment."
* Automatic Investment You can authorize a pre-determined
amount to be regularly transferred from your account.
* Telephone Investment You can make single investments of up
to $50,000 to be made by telephone instructions to the
Agent.
Before you can transfer funds electronically, the Fund's
Agent must have your completed Application authorizing these
features. If you initially decide not to choose these
conveniences and then later wish to do so, you must complete a
Ready Access Features Form which is available from the
Distributor or Agent. The Fund may modify or terminate these
investment methods or charge a service fee, upon 30 day's written
notice to shareholders.
When Shares Are Issued and Dividends Are Declared On Them
The Fund issues shares three ways.
First Method - ordinary investments. Dividends on shares
issued under the first 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.
Your purchase order is effective and your funds are invested
as follows:
1) Payments by wire in Federal funds or by Federal
Reserve Draft prior to 4:00 p.m. New York time on any
Business Day - on that day;
2) Such payments received after 4:00 p.m. New York time - on
the next Business Day;
3) Wire payments not in Federal funds - as of 4:00 p.m. on
the Business Day when converted to Federal funds (normally
the next day);
4) Payments by check - as of 4:00 p.m. on the Business Day
when converted to Federal funds (within two Business Days
for checks drawn on a member bank of the Federal Reserve
System, and longer for most other checks);
5) Automatic Investment - on the day you specified unless it
is not a Business Day in which case the order will be
executed at the net asset value determined on the next
Business Day;
6) Telephone Investment made prior to 4:00 p.m. New York
time on any Business Day - on that day;
7) Telephone Investment made after 4:00 p.m. New York time -
on the next Business Day;
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.
Second Method - Banks or broker-dealers making special
arrangements with the Fund. Dividends on shares issued under the
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.
Your purchase order is effective and your funds are invested
as follows:
1) Payment 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 on a Business Day - on that day;
2) On any Business Day if (i) the Agent is advised prior to
5:00 p.m. New York 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 (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, 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.
Third Method Broker-dealers or banks which have requested
that this method be used, to which request the Fund has
consented. Dividends on shares issued under this third investment
method are declared beginning on that day but not on the day such
shares are redeemed.
Your purchase order is effective and your funds are invested
as follows:
If (i) the Agent has been advised prior to noon New York
time on a Business Day of a dollar amount to be invested;
and (ii) Federal funds are received by wire on that day - on
that day.
The 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.
The Agent will maintain records as to which of your shares
were purchased under each of the three investment methods set
forth above. If you make a redemption request and have purchased
shares under methods (1) and/or (2) and other shares under method
(3), the Agent will, unless you otherwise request as to such
redemption, redeem those shares first purchased, regardless of
the method under which they were purchased.
Under each method, shares are issued at the net asset value
per share next determined after the purchase order is effective,
as described above. 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.
REDEEMING YOUR INVESTMENT
You may redeem some or all of your shares by a request to
the Agent. Shares will be redeemed at the next net asset value
determined after your request has been accepted.
There is no minimum period for investment in the Fund,
except for shares recently purchased by check or by Automatic or
Telephone Investment as discussed below.
A redemption may result in a tax liability for you.
How to Redeem Your Investment
By mail, send instructions to:
PFPC Inc.
Attn: Aquilasm Group of Funds
400 Bellevue Parkway
Wilmington, Delaware 19809
By telephone, call:
800-952-6666
By FAX, send instructions to: 302-791-3055
For liquidity and convenience, the Fund offers expedited
redemption.
Expedited Redemption Methods
(Non-Certificate Shares Only)
You may request expedited redemption for any shares not
issued in certificate form in two ways:
1 By Telephone. The Agent will accept instructions from
anyone by telephone to redeem shares and make payments:
a) to a Financial Institution account you
have previously specified or
b) by check in the amount of $50,000 or less,
mailed to the same name and address (which
has been unchanged for the past 30 days) as
the account from which you are redeeming.
You may only redeem by check via telephone
request once in any 7-day period.
Telephoning the Agent
Whenever you telephone the Agent, please be prepared to
supply:
account name(s) and number
name of the caller
the social security number registered to the account
personal identification
Note: Check the accuracy of your confirmation statements
immediately. The Fund and Agent are not responsible for
losses resulting from unauthorized telephone transactions if
the Agent follows reasonable procedures designed to verify a
caller's identity. The Agent may record calls.
2 By FAX or Mail. You may request redemption payments to a
predesignated Financial Institution account by a letter of
instruction sent to the Agent: PFPC Inc., by FAX at 302-791-3055
or by mail to 400 Bellevue Parkway, Wilmington, DE 19809. The
letter, signed by the registered shareholder(s) (no signature
guarantee is required), must indicate:
account name(s),
account number,
amount to be redeemed,
any payment directions.
To have redemption proceeds sent directly to a Financial
Institution Account, you must complete the Expedited Redemption
section of the Application or a Ready Access Features Form. You
will be required to provide (1) details about your Financial
Institution account, (2) signature guarantees and (3) possible
additional documentation.
The name(s) of the shareholder(s) on the Financial
Institution account must be identical to those on the Fund's
records of your account.
You may change your designated Financial Institution account
at any time by completing and returning a revised Ready Access
Features Form.
3. By Check. The Agent will, upon request, provide you with
forms of drafts ("checks") drawn on PNC Bank, NA (the
"Bank"). 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 $100. You will be subject to the Bank'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 for the maintenance of this special check
writing privilege or for the clearance of any checks.
When such a check is presented to the Bank 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
Bank 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 "When Will I Receive the Proceeds of My Redemption?"
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
Bank. 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 your 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 Bank 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 Financial
Institution account and check writing are desired, you must so
elect on your Application, or by proper completion of a Ready
Access Features Form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
Certificate Shares. Mail to the Fund's Agent: (1) blank
(unsigned) certificates for Class A Shares to be redeemed, (2)
redemption instructions, and (3) a stock assignment form.
To be in "proper form," items (2) and (3) must be signed by
the registered shareholder(s) exactly as the account is
registered. For a joint account, both shareholder signatures
are necessary.
For your protection, mail certificates separately from
signed redemption instructions. We recommend that
certificates be sent by registered mail, return receipt
requested.
We may require additional documentation for certain types of
shareholders such as corporations, partnerships, trustees or
executors, or if redemption is requested by someone other
than the shareholder of record. The Agent may require
signature guarantees if insufficient documentation is on
file.
We do not require a signature guarantee for redemptions up
to $50,000, payable to the record holder, and sent to the
address of record, except as noted above. In all other
cases, signatures must be guaranteed.
Your signature may be guaranteed by any:
member of a national securities exchange
U.S. bank or trust company
state-chartered savings bank
federally chartered savings and loan association
foreign bank having a U.S. correspondent bank; or
participant in the Securities Transfer Association
Medallion Program ("STAMP") 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.
Non-Certificate Shares. You must use the Regular Redemption
Method if you have not chosen Expedited Redemption to a
predesignated Financial Institution account. To redeem by
this method, send a letter of instruction to the Fund's
Agent, which includes:
Account name(s)
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 (we normally mail redemption
proceeds to your address as registered with the Fund)
Signature(s) of the registered shareholder(s) and
Signature guarantee(s), if required, as indicated
above.
"When Will I Receive the Proceeds of My Redemption?"
Redemption proceeds are normally sent, as shown below, to
your address of record on the next business day following
acceptance of your redemption request. Except as described
below, the Fund will send payments within 7 days after acceptance
of your redemption request.
Redemption Method of Payment Charges
Under $1,000 Check None
$1,000 or more Check or, if and as None
you requested on your
Application or Ready Access
Features Form, wired
or transferred through
the Automated Clearing
House to your Financial
Institution Account.
Through a broker
/dealer Check or wire, to your None.
broker/dealer. However,
your
broker/dealer
may charge a
fee.
Although the Fund does not currently intend to, it can
charge up to $5.00 per wire redemption, after written notice to
shareholders who have elected this redemption procedure. Upon 30
days' written notice to shareholders the Fund may modify or
terminate the use of the Automated Clearing House to make
redemption payments at any time or charge a service fee, although
no such fee is presently contemplated. If any such changes are
made, the Prospectus will be supplemented to reflect them.
The Fund may delay redemption of shares recently purchased
by check (including certified, cashier's or official bank check)
or by Automatic Investment or Telephone Investment up to 15 days
after purchase; however, redemption will not be delayed after (i)
the check or transfer of funds has been honored, or (ii) the
Agent receives satisfactory assurance that your Financial
Institution will honor the check or transfer of funds. You can
eliminate possible delays by paying for purchased shares with
wired funds or Federal Reserve drafts.
The Fund has the right to postpone payment or suspend
redemption rights during certain periods. These periods may
occur (i) when the Exchange is closed for other than weekends and
holidays, (ii) when the Securities and Exchange Commission (the
"SEC") restricts trading on the Exchange, (iii) when the SEC
determines an emergency exists which causes disposal of, or
determination of, the portfolio securities to be unreasonable or
impracticable, and (iv) during such other periods as the SEC may
permit.
The Fund can redeem your shares if their value totals less
than $500 as a result of redemptions or failure to meet and
maintain the minimum investment level under an Automatic
Investment Program. Before such a redemption is made, we will
send you a notice giving you 60 days to make additional
investments to bring your account up to the minimum.
Redemption proceeds may be paid in whole or in part by
distribution of the Fund's portfolio securities in conformity
with SEC rules. This method would only be used if Trustees
determine that partial or whole cash payments would be
detrimental to the best interests of the remaining shareholders.
Automatic Withdrawal Plan
You may establish an Automatic Withdrawal Plan if you own or
purchase shares of the Fund having a net asset value of at least
$5,000. Under the Plan:
* You will receive a monthly or quarterly check in a stated
amount of not less than $50.
* All dividends and distributions must be reinvested in your
account.
* Redemptions of shares to make payments will give rise to a
gain or loss for tax purposes. See the Automatic Withdrawal
Plan provisions on the Application included with this
Prospectus.
Restrictions
You may not maintain an Automatic Withdrawal Plan while
simultaneously making regular purchases. Purchases of additional
shares concurrent with withdrawals are disadvantageous due to the
payment of sales charges when purchases are made. While an
occasional lump sum investment may be made, such investment
should normally equal at least the lesser of three times the
annual withdrawal or $5,000.
Dividends and Distributions
The Fund will declare all of its net income for dividend
purposes daily as dividends. 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. You can make this election in
the Application or by subsequent written notice to the Agent. You
may also elect to have dividends deposited without charge by
electronic funds transfers into an account at a Financial
Institution which is a member of the Automated Clearing House by
completing a Ready Access Features Form. If 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 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.
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.
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.
The Fund will be required to withhold, subject to certain
exemptions, 31% of dividends paid or credited to you and
redemption proceeds, if you have not filed with the Fund a
correct Taxpayer Identification Number, certified when required.
Distribution Arrangements
Confirmations and Share Certificates
A statement will be mailed to you confirming each purchase
of shares in the Fund. Accounts are rounded to the nearest
1/1000th of a share. The Fund will not issue share certificates
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 you have certificates issued, Expedited
Redemption Methods described below will not be available and
delay and expense may be incurred if you lose the certificates.
The Fund will not issue certificates for fractional shares or to
shareholders who have elected the checking account or
predesignated bank account methods of withdrawing cash from their
accounts.
The Fund may 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'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.
<PAGE>
PRIME CASH FUND
380 Madison Avenue, Suite 2300 New York, New York 10017
212-697-6666
Part B
This Statement of Additional Information (the "Additional
Statement") is not a Prospectus. You can obtain the Prospectus
from the Fund's Shareholder Servicing Agent, PFPC Inc., 400
Bellevue Parkway, Wilmington, DE 19809, or by calling it at the
following numbers:
800-952-6666 toll free
The financial statements for the Fund for the year ended
December 31, 1998, 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 LLP, independent auditors, whose report thereon
is incorporated herein by reference. The Annual Report of the
Fund for the fiscal year ended can be obtained without charge by
calling any of the toll-free numbers listed above. The Annual
Report will be delivered with the Additional Statement.
This Part B is referred to herein as the "Additional
Statement."
Fund History
Prime Cash Fund is an open-end diversified investment
company organized in 1982 as a Massachusetts business trust
Investment Strategies and Risks
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. They are redeemable (and thus repayable by the borrower) at
principal amount, plus accrued interest, at any time on not more
than thirty days' notice. The Fund has no limitations on the
amount of its assets invested in such notes. However, except for
those which are payable at principal amount plus accrued interest
within seven days after demand, such notes are securities which
are not readily marketable, and fall within the Fund's overall
10% limitation on securities with limited liquidity. There is no
limitation on the type of issuer from which these notes will be
purchased; however, all such notes must be Eligible Securities
and in connection with such purchases and on an ongoing basis,
Banc One Investment Advisors Corporation (the "Adviser") must
determine, pursuant to procedures approved by the Board of
Trustees, that such obligations present minimal credit risks. In
addition, 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 or on the specified notice, as
the case may be, 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 the
Prospectus 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
the Prospectus, 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 Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission. See "Effect of the Rule on
Portfolio Management" in the Prospectus. As of the date of this
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
Prospectus 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 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.
Diversification and Certain Industry Requirements
The Fund has a rule 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.
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.
6. 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.
7. 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.
8. 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.
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.
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 Administrator 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; Mr. Mason is an interested
person of the Fund as an officer of the Fund. They are so
designated by an asterisk. As of March 25, 1999, all of the
Trustees and officers as a group owned less than 1% of the Fund's
outstanding shares. Aquila Distributors, Inc. is referred to as
the Distributor.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, 380 Madison Avenue, New York, New York 10017
Founder and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Manager or
Administrator and/or Adviser or Sub-Adviser to the following
open-end investment companies, and Founder, Chairman of the Board
of Trustees and (currently or until 1998) President of each since
its establishment, beginning in 1984: Pacific Capital Cash Assets
Trust, Churchill Cash Reserves Trust, Pacific Capital U.S.
Government Securities Cash Asset Trust, Pacific Capital Tax-Free
Cash Assets Trust, each of which is a money market fund, and
together with Capital Cash Management Trust ("CCMT") are called
the Aquila Money-Market Funds; Hawaiian Tax-Free Trust, Tax-Free
Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of
Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett
Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund and which together are
called Aquila Bond Funds; and Aquila Cascadia Equity Fund and
Aquila Rocky Mountain Equity Fund, which together are called
Aquila Equity Funds; currently President of Aquila Cascadia
Equity Fund, Aquila Rocky Mountain Equity Fund, Churchill Cash
Reserves Trust, Churchill Tax-Free Fund of Kentucky and Tax-Free
Fund of Colorado; 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; Vice President
and Director, and formerly Secretary, of Aquila Distributors,
Inc., distributor of the above funds, since 1981; Chairman of the
Board of Trustees and President of Prime Cash Fund (which is
inactive)[this Fund], since 1982 and 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 [this Fund] and
Short Term Asset Reserves, and Founder and Chairman of several
other money market funds; Director or Trustee of OCC Cash
Reserves, Inc. and Quest For Value Accumulation Trust, and
Director or Trustee of Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest Global Value Fund, Inc. and Oppenheimer
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,* Trustee, 26 Circle Drive, Hastings-on-Hudson,
New York 10706
Managing Director of EastWind Power Partners, Ltd. since 1994;
Second Vice President, Alumni Association, SUNY Maritime College
1998; Director for the same organization, 1997; 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.; Vice
Chairman of the Board of Trustees and Trustee of Prime Cash Fund
(which is inactive)[this Fund] since 1982; 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. Government
Securities 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, 39 Blossom Avenue, Osterville, MA 02655
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, of
Narragansett Insured Tax-Free Income Fund since 1996 and of Prime
Cash Fund (which is inactive)[this Fund], since 1993; 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
President and Chief Operating Officer of the Administrator since
1997, a Director since 1984, Secretary since 1986 and previously
its Executive Vice President, Senior Vice President or Vice
President, 1986-1997; President of various Aquila Bond Funds
since 1998; Assistant Vice President, Vice President, Senior Vice
President or Executive Vice President of Aquila Money-Market,
Bond and Equity Funds since 1986; Trustee of a number of Aquila
Money-Market, Bond and Equity Funds since 1995; Trustee of
Reserve Money-Market Funds since 1999 and Reserve Private Equity
Series since 1998; Assistant Vice President and formerly Loan
Officer of European American Bank, 1981-1986; daughter of the
Fund's Chairman; 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
Senior Vice President - Corporate development since 1998,
formerly Vice President - Administration, Assistant Vice
President and Associate of the Administrator since 1987; Senior
Vice President, Vice President or Assistant Vice President of the
Money-Market 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, Assistant Secretary, Vice President, 380 Madison
Avenue, New York, New York 10017
Assistant Secretary of the Aquila Money-Market, 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, 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, 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, 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.
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, 1998, the Fund accrued no
compensation or reimbursement of expenses to its other Trustees.
None of such Trustees has any pension or retirement benefits from
the Fund or any of the other funds in the Aquila group.
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.
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 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 Fund paid or accrued no fees to the Administrator for
the years ended December 31, 1998 or 1997. 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.
Ownership of Securities
On March 27, 1998, the Administrator held of record 1001 of
the Fund's shares, all of the shares then outstanding.
Transfer Agent, Custodian and Auditors
The Fund's does not offer shares and has no transfer agent.
The Fund's Custodian is Bank One Trust Company N.A., 100
East Broad Street, Columbus, Ohio 43271; it receives, holds and
delivers the Fund's portfolio securities (including physical
securities, book-entry securities, and securities in
depositories) and money, performs related accounting functions
and issues reports to the Fund. The Fund pays no fees to the
Custodian at present.
The Fund's auditors, KPMG LLP, 345 Park Avenue, New York,
New York 10154 perform an annual audit of the Fund's financial
statements.
Brokerage Allocation and Other Practices
During the fiscal years ended December 31, 1998, 1997 the
Fund has no portfolio transactions. During the fiscal year ended
December 31, 1996, 1996, all of the Fund's transactions were
principal transactions and no brokerage commissions were paid.
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 the Prospectus, and such valuation will be made as of
the same time the redemption price is determined.
Capital Stock
The Fund has one class of shares. 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. Shares are fully paid and nonassessable, except
as set forth in the following paragraph; holders of shares have
no pre-emptive or conversion rights. Voting rights of
shareholders cannot be modified other than by shareholder vote.
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. For shareholder protection, however, an
express disclaimer of shareholder liability for acts or
obligations of the Fund is contained in the Declaration of Trust,
which 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 does, however,
contain an express disclaimer of shareholder liability for acts
or obligations of the Fund. 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 the Fund
had two or more Series, and if any such Series were to be unable
to meet the obligations attributable to it (which, as is the case
with the Fund, is relatively remote), the other Series would be
subject to such obligations, with a corresponding increase in the
risk of the shareholder liability mentioned in the prior
sentence.
The Declaration of Trust further indemnifies the Trustees of
the Fund 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.
Purchase, Redemption, and Pricing of Shares
Amortized Cost Valuation
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 has established, 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
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 the Prospectus. 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
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. 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 the account. Monthly or quarterly payments paid to
shareholders may not be considered as a yield or income on
investment.
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 years ended December 31, 1998, 1997
and 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.
Taxation of the Fund
The Fund qualified during its last fiscal year as a
"regulated investment company" under the Code, and intends to
continue to so qualify. If it does so qualify, it will not be
liable for Federal income taxes on amounts paid by it as
dividends and distributions.
Underwriter
The Fund does not currently offer shares and has no
underwriting agreement.
<PAGE>
PRIME CASH FUND
PART C: OTHER INFORMATION
ITEM 23. Exhibits
(a) Supplemental Declaration of Trust (ii)
(b) By-laws (ii)
(c) Instruments defining rights of shareholders
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 of its class; shares of the
respective classes represent proportionate interests in
the Fund in accordance with their respective net asset
values. Upon liquidation of the Fund, shareholders are
entitled to share pro-rata in the net assets of the
Fund available for distribution to shareholders, in
accordance with the respective net asset values of the
shares of each of the Fund's classes at that time. All
shares are presently divided into four classes;
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 as provided in rules and
regulations of the Securities and Exchange Commission
or by exemptive order. The Board of Trustees may, at
its own discretion, create additional series of shares,
each of which may have separate assets and liabilities
(in which case any such series will have a designation
including the word "Series"). (See the Additional
Statement for further information about possible
additional series.) Shares are fully paid and non-
assessable, except as set forth under the caption
"General Information" in the Additional Statement; the
holders of shares have no pre-emptive or conversion
rights, except that Class C Shares automatically
convert to Class A Shares after being held for six
years.
At any meeting of shareholders, shareholders are
entitled to one vote for each dollar of net asset value
(determined as of the record date for the meeting) per
share held (and proportionate fractional votes for
fractional dollar amounts). Shareholders will vote on
the election of Trustees and on other matters submitted
to the vote of shareholders. Shares vote by classes on
any matter specifically affecting one or more classes,
such as an amendment of an applicable part of the
Distribution Plan. 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, except that the Fund's Board of Trustees may
change the name 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.
(d) Not Applicable
(e) Not applicable
(f) Not applicable
(g) Custody Agreement (ii)
(h) (a) Not Applicable
(9) (b) Administration Agreement (ii)
(i) Opinion and consent of counsel to the Fund
regarding share issuance (ii)
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m) Distribution Plan (ii)
(n) Financial Data Schedule (iii)
(i) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 17 dated April 30, 1996 and incorporated
herein by reference.
(ii) Filed as an exhibit to Registrant's Amendment No. 18 dated
April 17, 1997 to its Registration Statement under the Investment
Company Act of 1940 and incorporated herein by reference.
(iii) Filed herewith.
ITEM 24. Persons Controlled By Or Under Common Control With
Registrant
None
ITEM 25. Indemnification
Subdivision (c) of Section 12 of Article SEVENTH of
Registrant's Supplemental Declaration of Trust Amending and
Restating the Declaration of Trust, filed as Exhibit 1 to
Registrant's Post-Effective Amendment No. 15 dated March 28,
1996, is incorporated 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, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred
or paid by a Trustee, officer, or controlling person of
Registrant in the successful defense of any action,suit, or
proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being
registered, 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
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
ITEM 26. Business and Other Connections of the Administrator
The business and other connections of Aquila Management
Corporation, the Fund's Administrator is set forth in the
prospectus (Part A); the business and other connections of
Mr. Lacy B. Herrmann, its controlling shareholder are set
forth in the Statement of Additional Information (Part B).
For information as to the business, profession, vocation, or
employment of a substantial nature of its Directors and
officers, reference is made to the Form ADV filed by it
under the Investment Advisers Act of 1940.
ITEM 27. Principal Underwriters
None, currently.
ITEM 28. Location of Accounts and Records
All such accounts, books, and other documents are maintained
by the administrator, Aquila Management Corporation, 380
Madison Avenue, Suite 2300, New York, NY 10017 and the
custodian, Bank One Trust Company N.A., 100 East Broad
Street, Columbus, Ohio 43271.
ITEM 29. Management Services
Not applicable.
ITEM 30. Undertakings
(a) Not applicable.
(b) Not applicable.
<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 25th day of March, 1999.
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 3/25/99
______________________ President, Chairman of ___________
Lacy B. Herrmann the Board and Trustee
(Principal Executive Officer)
/s/Theodore T. Mason 3/25/99
______________________ Trustee ___________
Theodore T. Mason
/s/Paul Y. Clinton 3/25/99
______________________ Trustee ___________
Paul Y. Clinton
/s/Rose F. Marotta 3/25/99
______________________ Chief Financial Officer ___________
Rose F. Marotta (Principal Financial and
Accounting Officer
<PAGE>
PRIME CASH FUND
EXHIBIT INDEX
Number Name
(n) Financial Data Schedule
Correspondence
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
This schedule contains summary financial information extracted from
the
Registrant's Annual Report dated December 31, 1998 and is qualified
in its
entirety by reference to such financial statements.
<CIK> 0000707800
<NAME> PRIME CASH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,001
<TOTAL-ASSETS> 1,001
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,001
<SHARES-COMMON-STOCK> 1,001
<SHARES-COMMON-PRIOR> 1,001
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,001
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 00
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1,001
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
