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. 21 [ 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 are the Fund's investment strategies?"
The Fund seeks to attain this objective by investing in
short-term money-market securities denominated in U.S. dollars
that are of high quality and present minimal credit risks.
Under the current management policies, the Fund invests
only in the following types of obligations:
(1) U.S. government securities or obligations guaranteed
by the U.S. government or its agencies or instrumentalities.
(2) Bank obligations and instruments secured by them.
("Banks" include commercial banks, savings banks and savings and
loan associations.)
(3) Short-term corporate debt known as "commercial
paper."
(4) Corporate debt obligations (for example, bonds and
debentures). Debentures are a form of unsecured corporate
debt.
(5) Variable amount master demand notes which are
repayable on not more than 30 days' notice.
(6) Repurchase agreements.
The Fund seeks to maintain a net asset value of $1.00 per
share.
In general, not more than 5% of the Fund's net assets can
be invested in the securities of any issuer.
The dollar weighted average maturity of the Fund will be
90 days or less and the Fund may buy only those instruments that
have a remaining maturity of 397 days or less.
Securities the Fund buys must present minimal credit
risks and at the time of purchase be rated in the two highest
rating categories for short-term securities by any two of the
nationally recognized statistical rating organizations
("NRSROs"); if they are unrated, they must be determined by the
Board of Trustees to be of comparable quality. Some securities
may have third-party guarantees to meet these rating
requirements.
Banc One Investment Advisors Corporation (the "Sub-
Adviser") seeks to develop an appropriate portfolio by
considering the differences among securities of different
issuers, yields, maturities and market sectors.
The Trust may change any of its management policies
without shareholder approval.
"What are the main risks of investing in the Trust?"
Although the Trust seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by
investing in the Trust.
Investment in the Trust is not a deposit in Banc One
Corporation, or its bank or non-bank affiliates or in any other
bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
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 Trust's overall 10%
limitation on securities which are illiquid. These notes are also
subject to credit risk.
Repurchase agreements involve some risk to the Trust if
the other party does not fulfill its obligations under the
agreement.
The value of money-market instruments tends to fall if
prevailing interest rates rise.
Corporate bonds and debentures are subject to interest
rate and credit risks.
Interest rate risk relates to fluctuations in market
value arising from changes in interest rates. If interest rates
rise, the value of debt securities will normally decline. All
fixed-rate debt securities, even the most highly rated, are
subject to interest rate risk. Credit risk relates to the ability
of the particular issuers of the obligations the Trust owns to
make periodic interest payments as scheduled and ultimately repay
principal at maturity.
Investments in foreign banks and foreign branches of
United States banks involve certain risks. Foreign banks and
foreign branches of domestic banks may not be subject to
regulations that meet U.S. standards. Investments in foreign
banks and foreign branches of domestic banks may also be subject
to other risks, including future political and economic
developments, the possible imposition of withholding taxes on
interest income, the seizure or nationalization of foreign
deposits and the establishment of exchange controls or other
restrictions.
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, 1999, these funds had aggregate assets of approximately $3.0
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, Jr. 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. By Wire. You can wire Federal funds (monies credited to a
bank's account with a Federal Reserve Bank) to PNC Bank, NA.
To insure prompt and proper crediting to your account, if
you choose this method of payment, you should first telephone the
Agent (800-952-6666 toll free) and then instruct your bank to
wire funds as indicated below:
PNC BANK, NA
Philadelphia, PA
ABA #
Account #
FFC: Prime Cash Fund
* Account Name and Number (if an existing account)
* The name in which the investment is to be registered
(if a new account).
Your bank may impose a charge for wiring funds.
3. Through Brokers. 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 account information
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 two ways.
First Method - ordinary investments. You will be paid
dividends starting on the day (whether or not a Business Day)
after the first Business Day on which your purchase order has
been received in proper form and funds have become available for
investment. You will be paid a dividend on the day on which your
shares are redeemed.
"When will funds be available so that my order will become
effective under the First Method?"
The Fund must have payment for your purchase available
for investment before 4:00 p.m. New York time on a Business Day
for your order to be effective on that Business Day. Your order
is effective and you will receive the next determined net asset
value per share depending on the method of payment you choose, as
follows.
Payment Method When will an order When will an order
received before received after
4:00 p.m. on a 4:00 p.m. on a
Business Day Business Day
be deemed be deemed
effective? effective?
By wire in
Federal funds or
Federal Reserve
Draft That day Next Business Day
By wire not
in Federal funds 4:00 p.m. on the 4:00 p.m. on the
Business Day Business Day
converted to converted to
Federal funds Federal funds
(normally the (normally the
next Business next Business
Day) Day)
By Check 4:00 p.m. on the 4:00 p.m. on the
Business Day Business Day
converted to converted to
Federal funds Federal funds
(normally (normally
two Business two Business
Days for checks Days for checks
on banks in the on banks in the
Federal Reserve Federal Reserve
System, longer System, longer
for other banks) for other banks)
Automatic
Investment The day you specify;
if it is not a
Business Day, on the
next Business Day
Telephone
Investment That day 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. (The Agent will convert wires and checks to Federal
funds as your agent.)
Second Method- For broker-dealers or banks which have
requested that this method be used, to which request the Fund has
consented. You will be paid dividends starting on the day on
which your purchase order has been received in proper form and
funds have become available for investment. You will not be paid
a dividend on the day on which your shares are redeemed.
"When will my order be effective under the Second Method?"
Your purchase order is effective and your funds are
invested as follows:
On that day, if
(i) you advise the Agent before 1:00 p.m. New York
time on a Business Day of a dollar amount to be
invested; and
(ii) Your payment in Federal funds is received by
wire on that day.
The second investment method is available to prospective
investors in shares of the Fund 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
the Fund will advise you 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 two investment methods
set forth above. If you make a redemption request and have
purchased shares under the first or second methods, 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
received in proper form. Under each method, the Application must
be properly completed and have been received in proper form 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.
Transfer on Death Registration("TOD")
The Fund generally permits "transfer on death" ("TOD")
registration of shares, so that on the death of the shareholder
the shares are transferred to a designated beneficiary or
beneficiaries. Ask the Agent or your broker-dealer for the
Transfer on Death Registration Request Form. With it you will
receive a copy of the TOD Rules of the Aquilasm Group of Funds,
which specify how the registration becomes effective and
operates. By opening a TOD Account, you agree to be bound by the
TOD Rules.
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 received in proper form.
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.
Because these checks are paid by redemption of shares in
your account, you should be certain that adequate shares are in
the account to cover the amount of the 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. Note:
You cannot use checks to redeem shares represented by
certificates. If you purchase shares by check, you cannot use
checks to redeem them until 15 days after your purchase.
You may not present checks directly 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 redeem the
entire balance of your account, since the number of shares in
your account changes daily through dividend payments, which are
automatically reinvested in full and fractional shares. 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"), the Stock
Exchanges Medallion Program ("SEMP") or the New York
Stock Exchange, Inc. Medallion Signature Program
("MSP")
A notary public is not an acceptable signature guarantor.
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 receipt
in proper form of your redemption request. Except as described
below, the Fund will send payments within 7 days.
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 payment for 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, payment for
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 New York Stock Exchange is closed for other
than weekends and holidays, (ii) when the Securities and Exchange
Commission (the "SEC") restricts trading on the New York Stock
Exchange, (iii) when the SEC determines an emergency exists which
causes disposal of, or determination of the value 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 the Trustees
determine that payments partially or wholly in cash would be
detrimental to the best interests of the remaining
shareholders.
"Is there an Automatic Withdrawal Plan?"
Yes. Under an Automatic Withdrawal Plan you can arrange
to receive a monthly or quarterly check in a stated amount, not
less than $50.
Dividends and Distributions
The Fund will declare all of its net income for dividend
purposes daily as dividends. 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 issued under the "second"
method.
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.
Dividends will be taxable to you as ordinary income, even
though reinvested. 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.
Dividends will automatically be reinvested in full and
fractional shares of the Fund at net asset value unless you elect
otherwise.
You may choose to have all or any part of the payments
for dividends paid in cash. You can elect to have the cash
portion of your dividends deposited, without charge, by
electronic funds transfers into your account at a financial
institution, if it is a member of the Automated Clearing House.
You can make any of these elections on the Application,
by a Ready Access Features Form or by a letter to the Agent. Your
election to receive some or all of your dividends in cash will be
effective as of the next payment of dividends after it has been
received in proper form by the Agent. It will continue in effect
until the Agent receives written notification of a change.
All shareholders, whether their dividends are received in
cash or reinvested, will receive a monthly statement indicating
the current status of their account.
If you do not comply with laws requiring you to furnish
taxpayer identification numbers and report dividends, the Fund
may be required to impose backup withholding at a rate of 31%
upon payment of redemptions and dividends.
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 has adopted a Distribution Plan under Rule 12b-1
under the 1940 Act.
The Fund's Distribution Plan is solely a "defensive plan"
designed to protect the Fund and its affiliates against certain
conceivable claims relating to Rule 12b-1. 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 "SAI") is not
a Prospectus. This SAI should be read in conjunction with the
Prospectus of Prime Cash Fund. You can obtain the Prospectus from
the Fund's Shareholder Servicing Agent, PFPC Inc., by writing to
400 Bellevue Parkway, Wilmington, DE 19809, or by calling it at
the following number:
800-952-6666 toll free
FINANCIAL STATEMENTS
The financial statements for the Fund for the year ended
December 31, 1999, which are contained in the Annual Report for
that fiscal year, are hereby incorporated by reference into the
SAI. 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 December 31, 1999 can be obtained without charge by calling
the toll-free number listed above. The Annual Report will be
delivered with the SAI.
Fund History
Prime Cash Fund is an open-end diversified management
investment company organized in 1982 as a Massachusetts business
trust.
Investment Strategies and Risks
Additional Information About the Fund's Investments
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.
(2) Bank Obligations and Instruments Secured by Them:
Bank obligations (i) of U.S. regulated banks having total assets
of at least $1.5 billion, which may be domestic banks, foreign
branches of such banks or U.S. subsidiaries of foreign banks;
(ii) of any foreign bank having total assets equivalent to at
least $1.5 billion; or (iii) that are fully insured as to
principal by the Federal Deposit Insurance Corporation. ("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). Debentures are a
form of unsecured corporate debt.
(5) Variable Amount Master Demand Notes: Variable amount
master demand notes repayable on not more than 30 days' notice.
These notes 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. Variable amount master demand notes may or may
not be backed by bank letters of credit.
(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 two or more nationally recognized statistical
rating organizations ("NRSROs").
(8) When-Issued or Delayed Delivery Securities: The Fund
may buy securities on a when-issued or delayed delivery basis.
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. When-issued securities 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.
Information on Variable Amount Master Demand Notes
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 "Sub-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 savings institutions
(collectively, herein, "banks") up to $100,000. 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 a 10% limit 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, 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. As of the date of this SAI,
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 SAI.
U.S. Government Securities
The Fund may invest in U.S Government Securities (i.e.,
obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities), which include securities issued
by the U.S. Government, such as Treasury Bills (which mature
within one year of the date they are issued) and Treasury Notes
and Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United
States.
The Fund may invest in securities of U.S. government
agencies and instrumentalities that issue or guarantee
securities. These include, but are not limited to, the Farmers
Home Administration, Federal Farm Credit System, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Housing Administration, Federal National Mortgage Association,
Financing Corporation, Government National Mortgage Association,
Resolution Funding Corporation, Small Business Administration,
Student Loan Marketing Association and the Tennessee Valley
Authority.
Securities issued or guaranteed by U.S. government
agencies and instrumentalities are not always supported by the
full faith and credit of the United States. Some, such as
securities issued by the Federal Home Loan Banks, are backed by
the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by the Federal
National Mortgage Association, are supported only by the credit
of the instrumentality and not by the Treasury. If the securities
are not backed by the full faith and credit of the United States,
the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to
assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Funds
will invest in government securities, including securities of
agencies and instrumentalities only the Sub-Adviser, acting under
procedures approved by the Board of Trustees, is satisfied that
these obligations present minimal credit risks.
Portfolio 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.
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. The fundamental policies of the Fund
are as follows.
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, provided, however, that the Fund may
invest not more than 25% of its total assets in the "First Tier
Securities" (as defined in Rule 2a-7 under the 1940 Act) of a
single issuer for a period of up to three business days after the
purchase thereof, and provided further that the Fund may not make
more than one investment in accordance with the foregoing proviso
at any time.
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; U.S.
Government Securities and those domestic bank obligations and
instruments of domestic banks which the Fund may purchase 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; 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 and enter into repurchase agreements. 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 SAI, 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 Rule 2a-
7 under the 1940 Act.
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.
MANAGEMENT OF THE FUND
The Board of Trustees
The business and affairs of the Fund are managed under the
direction and control of its Board of Trustees. The Board of
Trustees has authority over every aspect of the Fund's
operations, including approval of the advisory agreement and its
annual renewal, the contracts with all other service providers
and payments under the Fund's Distribution Plan.
Trustees and Officers
The Trustees and officers of the Fund, their ages, their
affiliations, if any, with Aquila Management Corporation, the
Administrator of the Fund, and their principal occupations during
at least the past five years are set forth below. As of March 25,
2000, the Trustees and officers as a group owned less than 1% of
the Fund's outstanding shares. 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. Aquila Distributors, Inc. is referred to as the
Distributor.
<TABLE>
<CAPTION>
Name, Position Business Experience
with the Fund, Address,
Age
<S> <C> <C>
Lacy B. Herrmann* Founder and Chairman of the Aquila
President and Management Corporation, the sponsoring
Chairman of the organization and Manager or
Administrator
Board of Trustees and/or Adviser or Sub-Adviser to the
380 Madison Avenue Aquila Money-Market Funds, the Aquila
Bond
New York, New York Funds and the Aquila Equity Funds,
10017 and founder, Chairman of the Board
Age: 70 of Trustees and (currently or until
1998)
President of each since its
establishment, beginning in 1984;
Director of Aquila Distributors, Inc.,
distributor of the above funds, since
1981 and formerly Vice President or
Secretary, 1981-1998; President and a
Director of STCM Management Company,
Inc., sponsor and sub-adviser to
Capital Cash Management Trust; 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* Executive Director of Louisiana
Trustee Power Partners, LLC since 1999
26 Circle Drive, and of East Wind Power Partners
Hastings-on-Hudson, since 1994; First Vice President
New York 10706 of the Alumni Association of SUNY
Age: 64 Maritime College(Second Vice President,
1998-2000) and Director of the same
organization since 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 Capital Cash
Management Trust 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; Trustee
of OCC Accumulation Trust and the OCC
Cash Reserves, Inc. since 1999;
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 Principal of Clinton Management
Trustee Associates, a financial and venture
39 Blossom Avenue capital consulting firm; formerly
Osterville, MA Director of External Affairs
Age: 69 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), 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., a series of
Quest Funds and Trustee of Quest For
Value Accumulation Trust, and of the
Rochester Group of Funds, each of which
is an open-end investment company; and
of the Oppenheimer Funds Inc. Mid-Cap
Fund.
Diana P. Herrmann, President and Chief Operating Officer of
Vice President the Manager since 1997, a
380 Madison Avenue Director since 1984, Secretary since
1986
New York, New York and previously its Executive Vice
10017 President, Senior Vice President or
Age: 42 Vice President, 1986-1997; President of
Various Aquila Bond and Money-Market
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, 1999-2000 and of
Reserve Private Equity Series, 1998-
2000; 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 Senior Vice President -
Vice President Corporate development
380 Madison Avenue since 1998, formerly Vice
New York, New York President - Assistant Vice
10017 President and Associate of the
Age: 43 Manager/Administrator since 1987;
Senior Vice President, Vice President
or AssistantVice 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 of the Aquila Money-
Vice President and Market, Bond and Equity Funds since 1995
Assistant Secretary and Vice President of the Aquila Money-
380 Madison Avenue Market Funds since 1990; Vice President
of
New York, New York the Administrator since 1990 ; Investment
10017 Services Consultant and Bank Services
Age: 60 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 of the Aquila
Chief Financial Officer Money-Market, Bond and Equity Funds
380 Madison Avenue since 1991 and Treasurer, 1981-1991;
New York, New York formerly Treasurer of the predecessor of
10017 Capital Cash Management Trust; Treasurer
Age: 75 and Director of STCM Management Company,
Inc., since 1974; Treasurer of InCap
Management Corporation since 1982, of
the Administrator since 1984 and of the
Distributor, 1985-2000.
Richard F. West Treasurer of the Aquila Money-Market,
Treasurer Bond and Equity Funds and of Aquila
380 Madison Avenue Distributors, Inc. since 1992;
New York, New York Associate Director of Furman Selz
10017 Incorporated, 1991-1992; Vice
Age: 64 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 Partner of Hollyer Brady Smith Troxell
Secretary Barrett Rockett Hines & Mone LLP,
551 Fifth Avenue attorneys, since 1989 and counsel,
New York, New York 1987-1989; Secretary of the Aquila
10176 Money-Market, Bond and Equity Funds since
Age: 60 1982; Secretary of Trinity Liquid
Assets Trust, 1982-1985 and Trustee of
that Trust, 1985-1986; Secretary of
Oxford Cash Management Fund, 1982-1988.
</TABLE>
Compensation of Trustees
The Fund does not pay fees to Trustees affiliated with the
Administrator or to any of the Fund's officers. During the fiscal
year ended December 31, 1999, 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.
Ownership of Securities
On April 26, 2000, the Administrator held of record 1001 of
the Fund's shares, all of the shares then outstanding.
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, 1999, 1998 or 1997.
Transfer Agent, Custodian and Auditors
The Fund 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, 757 Third Avenue, New
York, New York 10017, perform an annual audit of the Fund's
financial statements.
Brokerage Allocation and Other Practices
During the fiscal years ended December 31,1999, 1998 and
1997 the Fund had no portfolio transactions.
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.
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.
Transfer on Death Registration("TOD")
Each of the funds in the Aquilasm Group of Funds now permits
registration of its shares in beneficiary form, subject to the
funds' rules governing Transfer on Death ("TOD") registration, if
the investor resides in a state that has adopted the Uniform
Transfer on Death Security Registration Act (a "TOD State"; for
these purposes, Missouri is deemed to be a TOD State). This form
of registration allows you to provide that, on your death, your
shares are to be transferred to the one or more persons that you
specify as beneficiaries. To register shares of the Fund in TOD
form, complete the special TOD Registration Request Form and
review the Rules Governing TOD Registration; both are available
from the Agent. The Rules, which are subject to amendment upon 60
days' notice to TOD account owners, contain important information
regarding TOD accounts with the Fund; by opening such an account
you agree to be bound by them, and failure to comply with them
may result in your shares' not being transferred to your
designated beneficiaries. If you open a TOD account with the Fund
that is otherwise acceptable but, for whatever reason, neither
the Fund nor the Transfer Agent receives a properly completed TOD
Registration Request Form from you prior to your death, the Fund
reserves the right not to honor your TOD designation, in which
case your account will become part of your estate.
You are eligible for TOD registration only if, and as long
as, you reside in a TOD State. If you open a TOD account and your
account address indicates that you do not reside in a TOD State,
your TOD registration will be ineffective and the Fund may, in
its discretion, either open the account as a regular (non-TOD)
account or redeem your shares. Such a redemption may result in a
loss to you and may have tax consequences. Similarly, if you open
a TOD account while residing in a TOD State and later move to a
non-TOD State, your TOD registration will no longer be effective.
In both cases, should you die while residing in a non-TOD State
the Fund reserves the right not to honor your TOD designation. At
the date of this SAI, most states are TOD States.
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, 1999, 1998
and 1997, 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.
PERFORMANCE
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.
<PAGE>
PRIME CASH FUND
PART C: OTHER INFORMATION
ITEM 23. Exhibits
(a) Supplemental Declaration of Trust (i)
(b) By-laws (i)
(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"). Shares are fully paid and
non-assessable, except as set forth under the caption
"General Information" in the SAI; 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 (i)
(h) Administration Agreement (i)
(i) (1) Opinion of counsel to the Fund (i)
(2) Consent of Counsel to the Fund (ii)
(j) Independent Auditors' Consent
(k) Not applicable
(l) Not applicable
(m) Distribution Plan (i)
(n) Not applicable
(i) 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.
(ii) 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 Investment Company Act of
1940, the Registrant 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 28th day of April , 2000.
PRIME CASH FUND
(Registrant)
/s/Lacy B. Herrmann
By____________________________
Lacy B. Herrmann, President
and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed below by
the following persons in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
/s/Lacy B. Herrmann 4/28/00
______________________ President, Chairman of
___________
Lacy B. Herrmann the Board and Trustee
(Principal Executive Officer)
/s/Theodore T. Mason 4/28/00
______________________ Trustee
___________
Theodore T. Mason
______________________ Trustee
___________
Paul Y. Clinton
/s/Rose F. Marotta 4/28/00
______________________ Chief Financial Officer
___________
Rose F. Marotta (Principal Financial and
Accounting Officer
<PAGE>
Prime Cash Fund
EXHIBIT INDEX
Number Name
(i)(2) Consent of Fund counsel
(j) Independent Auditors' Consent
Correspondence
<PAGE>
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
551 Fifth Avenue
New York, NY 10176
Tel: (212) 818-1110
FAX: (212 818-0494
April 26, 2000
To the Trustees of Prime Cash Fund
We consent to the incorporation by reference into Amendment
No. 21 under the 1940 Act of our opinion dated April 16,
1997.
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
By: /s/ W.L.D. Barrett
Partner
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Independent Auditors Consent
To The Board of Trustees and Shareholders of
Prime Cash Fund:
We consent to the use of our report dated February 22, 2000
incorporated herein by references to our firm under the headings
"Financial Highlights" in the Prospectus and "Financial
Statements" and "Transfer Agent, Custodian and Auditors" in the
Statement of Additional Information.
New York, New York KPMG Peat Marwick LLP
April 24, 2000 /s/KPMG Peat Marwick LLP
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