Registration Nos. 2-92164 and 811-4066
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[ X ]
Pre-Effective Amendment No. _______ [ ]
Post-Effective Amendment No. 21 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ X ]
Amendment No. 20 [ X ]
CASH ASSETS TRUST
(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)
[_X_] on (July 31, 1997 pursuant to paragraph (b)
[___] 60 days after filing pursuant to paragraph (a)(i)
[___] on (date) pursuant to paragraph (a)(i)
[___] 75 days after filing pursuant to paragraph (a)(ii)
[___] on (date) pursuant to paragraph (a)(ii) of Rule 485.
[___] This post-effective amendment designates a new effec-
tive date for a previous post-effective amendment.
Registrant hereby declares, pursuant to Section (a)(1) of Rule
24f-2 under the Investment Company Act of 1940, that Registrant
has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to that Section and that the Rule
24f-2 Notice for Registrant's fiscal year ended March 31, 1997
was filed in May, 1997.
<PAGE>
CASH ASSETS TRUST
Original and Service Classes
CROSS REFERENCE SHEET
Part A of
Form N-1A
Item No. Prospectus Caption(s)
1..............Cover Page
2..............Table of Expenses
3..............Financial Highlights
4..............Introduction; Investment of the Trust's
Assets; Investment Restrictions; General
Information
5..............Management Arrangements
5A.............*
6..............General Information; Dividend and Tax
Information
7..............Net Asset Value per Share; How to Invest in
the Trust; Exchange Privilege
8..............How to Redeem Your Investment; Automatic
Withdrawal Plan; Exchange Privilege
9..............*
Part B of
Form N-1A Statement of Additional Information
Item No. or Prospectus Caption(s)
10.............Cover Page
11.............Cover Page
12.............*
13.............Investment of the Trust's Assets; Investment
Restrictions; Loans of Portfolio
Securities
14.............Trustees and Officers
15.............General Information (Prospectus caption)
16.............Additional Information as to Management
Arrangements; General Information
17.............Investment of the Trust's Assets (Prospectus
caption)
18.............General Information
19.............Limitation of Redemptions in Kind; Amortized
Cost Valuation; Computation of Daily
Dividends; Automatic Withdrawal Plan
20.............*
21.............How to Invest in the Trust (Prospectus
caption); Distribution Plan; General
Information
22.............Yield Information; Financial Highlights
(Prospectus caption)
*Not applicable or negative answer
<PAGE>
The Pacific Capital Funds
of
Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, New York 10017
800-CATS-4-YOU (800-228-7496)
212-697-6666
Original Shares
Prospectus
July 31, 1997
Cash Assets Trust (the "Trust") is a professionally managed,
open-end investment company consisting of three separate funds:
Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash
Assets Trust and Pacific Capital U.S. Treasuries Cash Assets
Trust (each a "Fund" and collectively, the "Funds").
There are two classes of shares of each of the Funds:
"Original Shares" and "Service Shares"; see "General Information
- -Description of Classes." Only Original Shares are offered by
this Prospectus. Original shares of the Funds may be purchased
and redeemed at their next determined net asset value, which is
normally the constant price of $1.00 per share; see "Net Asset
Value Per Share." Purchases are made without any sales charge
through Aquila Distributors, Inc., which is the exclusive
Distributor of the Funds' shares. Only certain persons are
eligible to purchase Original Shares. See "How to Invest in the
Funds" and "How to Redeem Your Investment."
This Prospectus concisely states information about the
three Funds that you should know before investing in Original
Shares. A Statement of Additional Information about the Funds
dated July 31, 1997 (the "Additional Statement") has been filed
with the Securities and Exchange Commission and is available
without charge upon written request to Administrative Data
Management Corp., the Funds' transfer agent, at the address given
below, or by calling the telephone number(s) given below. The
Additional Statement contains information about the three Funds
and their management not included in the Prospectus. The
Additional Statement is incorporated by reference in its entirety
in this Prospectus. Only when you have read both the Prospectus
and the Additional Statement are all the material facts about the
Funds available to you.
AN INVESTMENT IN ANY OF THE FUNDS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
THE FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS IN, OBLIGATIONS OF OR
GUARANTEED OR ENDORSED BY HAWAIIAN TRUST COMPANY, LIMITED (THE
"ADVISER"), BANK OF HAWAII OR ITS BANK OR NON-BANK AFFILIATES OR
BY ANY OTHER BANK. SHARES OF THE FUNDS ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY OR
GOVERNMENT SPONSORED AGENCY OF THE FEDERAL GOVERNMENT OR ANY
STATE.
AN INVESTMENT IN ANY OF THE FUNDS INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
For Purchase, Redemption or Account inquiries contact
the Funds' Shareholder Servicing Agent:
Administrative Data Management Corp.
581 Main Street, Woodbridge, NJ 07095-1198
Call 800-255-2287 toll free or 732-855-5731
For General Inquiries & Yield Information,
Call 800-228-7496 toll free or 212-697-6666
This Prospectus Should Be Read and Retained For Future Reference
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
HIGHLIGHTS
For your convenience, important matters pertaining solely to
a single Fund are displayed in a distinctive manner below;
however, to obtain all information about that Fund, you must read
the entire Prospectus.
The Pacific Capital Funds of Cash Assets Trust are these
three separate money-market funds:
Pacific Capital Cash Assets Trust (the "Cash Fund") is a
general purpose money market mutual fund which invests in
short-term "money market" securities which meet specific quality,
maturity and diversification standards.
Pacific Capital Tax-Free Cash Assets Trust (the "Tax-Free
Fund") is a tax-exempt money market mutual fund which invests in
short-term tax-exempt "money market" securities.
Pacific Capital U.S. Treasuries Cash Assets Trust (the
"Treasuries Fund") is a money market mutual fund which invests
exclusively in short-term direct obligations of the United
States Treasury with remaining maturities of one year or less,
and certain repurchase agreements secured by U.S. Treasury
obligations.
All investments must meet specific quality, maturity and
diversification standards. (See "Investment of the Funds'
Assets.")
Initial Investment - You may open your account in any Fund
with any purchase of $1,000 or more. There is no sales charge. An
Application is in the back of the Prospectus. (See "How to Invest
in the Funds.")
Additional Investments - There is no minimum on additional
investments and they can be made at any time.
Monthly Income - The securities in which the Funds invest
earn interest which is declared daily as dividends. Dividends are
paid monthly on or about the last day of each month. At your
choice, dividends are paid by check mailed to you, directly
deposited into your financial institution account or
automatically reinvested without sales charge in additional
Original Shares. (See "Dividend and Tax Information.")
Many Different Issues - Even a small investment in any Fund
allows an investor to have the advantages of a portfolio which
consists of a large number of issues. (See "Investment of the
Funds' Assets.")
Exchanges - You may exchange Original Shares of any Fund
into other money market funds and certain bond and equity funds.
(See "Exchange Privileges.")
Portfolio Management - Hawaiian Trust Company, Limited
(the "Adviser") serves as the Funds' Investment Adviser,
providing experienced professional management of each Fund's
investments. It is a subsidiary of Bank of Hawaii, was founded in
1898 and is the oldest and largest trust company in Hawaii,
administering approximately $12 billion in client assets. The
Cash Fund pays monthly fees to the Adviser and to the
Administrator at a total rate of 0.50 of 1% of average annual net
assets. The Tax-Free Fund and the Treasuries Fund each pay
monthly fees to the Adviser and to the Administrator at a total
rate of 0.40 of 1% of average annual net assets. On September 31,
1997, the Adviser will become Pacific Century Trust, a division
of the Bank of Hawaii. (See "Table of Expenses" and "Management
Arrangements.")
Investment Quality -The Cash Fund invests in commercial
paper obligations, U.S. government securities, bank obligations
and instruments secured by them, corporate debt obligations, and
certain other obligations.
The Tax-Free Fund invests in municipal obligations which
earn interest which is exempt from regular Federal income taxes
and a significant portion of those obligations earn interest
which is also exempt from regular State of Hawaii income taxes.
Dividends paid by the Tax-Free Fund are free of both such taxes
to the same extent. It is, however, possible that in certain
circumstances, the Federal alternative minimum tax may apply (see
"Dividend and Tax Information"). Under certain circumstances, the
Tax-Free Fund may invest a portion of its assets in taxable
obligations.
The Treasuries Fund invests only in U.S. Government
securities and certain repurchase agreements secured by U.S.
Treasury obligations.
All of the investments of the Funds must be determined by
the Adviser under an applicable rule of the Securities and
Exchange Commission to be "Eligible Securities" and to present
minimal credit risks. (See "Investment of the Funds' Assets" and
"Effect of the Rule on Portfolio Management" thereunder.)
Constant Share Value - Each Fund's net asset value per share
is determined on a daily basis and is normally constant at $1.00
per share except under extraordinary circumstances. (See "Factors
Which May Affect the Value of the Funds' Investments and Their
Yields.")
Risk Factors - There can be no assurance that any of the
Funds will be able to maintain a stable net asset value of $1.00
per share. (See "Factors Which May Affect the Value of the Funds'
Investments and Their Yields.") In addition, there may be risks
as to obligations which the Cash Fund and Tax-Free Fund may
purchase such as variable amount master demand notes (see
"Variable Amount Master Demand Notes" in the Prospectus and
Additional Statement), and as to repurchase agreements, in which
all Funds may invest (see "Repurchase Agreements" in the
Prospectus). The Tax-Free Fund's assets, being significantly
invested in Hawaiian issues, are subject to economic and other
conditions affecting Hawaii. (See "Risks and Special
Considerations Regarding Investment in Hawaii Obligations.")
Moreover, the Tax-Free Fund is classified as a "non-diversified"
investment company, because it may choose to invest in the
obligations of a relatively limited number of issuers. (See
"Diversity under the 1940 Act" under "General Information.")
Liquidity - Redemptions - You may redeem any amount of your
Original Share account in any Fund on any business day by
telephone, fax or mail request by using the Funds' Expedited
Redemption procedure, with proceeds being sent to a predesignated
financial institution. If the amount of your redemption proceeds
is $1,000 or more, the proceeds will, wherever possible, be wired
or transferred through the facilities of the Automated Clearing
House; otherwise they will be mailed. You may also write checks
for any purpose in amounts of $500 or more. There are no
penalties or redemption fees. See "How to Redeem Your Investment"
for these and other redemption methods.
Statements and Reports - For each Fund in which you invest,
you will receive statements of your Original Share account
monthly as well as each time you add to your account or take
money out. Additionally, you will receive a Semi-Annual Report
and an audited Annual Report.
<PAGE>
<TABLE>
<CAPTION>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST - ORIGINAL SHARES
TABLE OF EXPENSES
Cash Tax-Free Treasuries
Shareholder Transaction Expenses Fund Fund Fund
<S> <C> <C> <C>
Maximum Sales Charge
Imposed on Purchases................ 0% 0% 0%
Maximum Sales Charge
Imposed on Reinvested Dividends..... 0% 0% 0%
Deferred Sales Charge................ 0% 0% 0%
Redemption Fees...................... 0% 0% 0%
Exchange Fee......................... 0% 0% 0%
Annual Fund Operating Expenses*
(as a percentage of average net assets)
Investment Advisory Fee.............. 0.35% 0.29% 0.30%
12b-1 Fees**......................... 0% 0% 0%
All Other Expenses................... 0.25% 0.26% 0.26%
Administration Fee................. 0.15% 0.11% 0.10%
Other Expenses ................... 0.10% 0.15% 0.16%
Total Fund Operating Expenses........ 0.60% 0.55% 0.56%
Example+
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period
<CAPTION>
Cash Tax-Free Treasuries
Time Period Fund Fund Fund
<S> <C> <C> <C>
1 year................. $ 6 $ 6 $ 6
3 years................ $19 $18 $18
5 years................ $33 $31 $31
10 year................ $75 $69 $70
<FN>
*Based upon amounts incurred during the most recent fiscal year
of each Fund.
The respective rates for the investment advisory fee and the
administration fee shown in the table represent the effective
rates, taking into consideration the breakpoint in net assets
used in the calculation of fees. For the portion of net assets
above and below each breakpoint, the aggregate rate of fees is the
same but is allocated differently to the Adviser and the Administrator
so that Total Fund Operating Expenses shown remains unchanged.
(See "Management Arrangements".)
Other expenses for the Treasuries Fund do not reflect a 0.01% expense
offset in custodian fees received for uninvested cash balances.
Reflecting this offset, other expenses, all other expenses, and total
Fund operating expenses would have been 0.15%, 0.25% and 0.55%, respectively.
</FN>
<FN>
** No payments designed to recognize sales of shares or to pay
advertising expenses out of the assets or income of any Fund are
permitted under the 12b(1) Plans for Original Shares. The Plans
authorize certain payments for such purposes to be made by the
Administrator, not any of the Funds. See "Distribution Plan."
</FN>
<FN>
+ The expense example is based upon an amount at the beginning of
each year which includes the prior year's assumed results. A year's
results consist of an assumed 5% annual return less operating expenses
as shown above; the expense ratio was applied to an assumed average
balance (the year's starting investment plus one-half the year's
results). Each column represents the cumulative expenses so
determined for the period specified.
</FN>
</TABLE>
THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN. THE SECURITIES AND EXCHANGE COMMISSION SPECIFIES THAT
ALL MUTUAL FUNDS USE THE 5% RATE FOR PURPOSES OF PREPARING THE
ABOVE EXAMPLE.
The purpose of the above table is to assist the investor in
understanding the various costs and expenses that an investor in
Original Shares of each Fund will bear directly or indirectly.
(See "Management Arrangements" for a more complete description of
the various investment advisory and administration fees.)
<PAGE>
[CAPTION]
<TABLE>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
ORIGINAL SHARES
CASH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table of Financial Highlights as it relates to
the five years ended March 31, 1997 for the Original Shares of the
Cash Fund has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon is included in the Funds' financial
statements contained in its Annual Report, which are incorporated
by reference into the Additional Statement. The information
provided in the table should be read in conjunction with the
financial statements and related notes. On March 23, 1990,
Aquila Management Corporation, originally the Funds' Sub-Adviser
and Administrator, became Administrator only.
Year Ended March 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period............. $1.00 $1.00 $1.00 $1.00
Income from
Investment Operations:
Net investment income........... 0.05 0.05 0.04 0.03
Less distributions:
Dividends from net
investment income.............. (0.05) (0.05) (0.04) (0.03)
Net Asset Value, End
of Period....................... $1.00 $1.00 $1.00 $1.00
Total Return (%)................. 4.88 5.32 4.40 2.74
Ratios/Supplemental
Net Assets,
End of Period (in thousands)($). 421,365 308,667 486,655 407,088
Ratio of Expenses to Average
Net Assets (%)................... 0.60 0.60 0.59 0.59
Average Net Assets (%)............ 4.79 5.24 4.40 2.71
For the years 1997 and 1996, net investment income per share and the ratios of
income and expenses to average net assets without the expense offset
in custodian fees for uninvested cash balances would have been:
Net investment income($)........... 0.05 0.05
Ratio of Expenses to Average
Net Assets (%).................... 0.60 0.61
Ratio of Net Investment Income
to Average Net Assets (%)......... 4.78 5.23
<CAPTION>
1993 1992 1991 1990 1989 1988
<C> <C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00
0.03 0.05 0.07 0.08 0.08 0.07
(0.03) (0.05) (0.07) (0.08) (0.08) (0.07)
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00
3.15% 5.20% 7.73% 8.84% 7.95% 6.74%
267,968 275,684 367,308 382,726 247,880 195,246
0.61% 0.61% 0.60% 0.58% 0.57% 0.58%
3.13% 3.13% 5.19% 7.51% 8.47% 7.74%
The Trust's "current yield" for the seven days ended March 31,
1997 was 4.91% and its "compounded effective yield" for that period
was 5.03%; see the Additional Statement for the method of calculating
these yields.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
ORIGINAL SHARES
TAX-FREE FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table of Financial Highlights as it relates to
the five years ended March 31, 1996 for the Original Shares of the
Tax-Free Fund has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon is included in the Funds' financial
statements contained in its Annual Report, which are incorporated
by reference into the Additional Statement. The information
provided in the table should be read in conjunction with the
financial statements and related notes. On March 23, 1990,
Aquila Management Corporation, originally the Funds' Sub-Adviser
and Administrator, became Administrator only.
Year Ended March 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period............. $1.00 $1.00 $1.00 $1.00
Income from
Investment Operations:
Net investment income........... 0.03 0.03 0.03 0.02
Less distributions:
Dividends from net
investment income.............. (0.03) (0.03) (0.03) (0.02)
Net Asset Value, End
of Period....................... $1.00 $1.00 $1.00 $1.00
Total Return (%)................. 3.00 3.37 2.74 2.02
Ratios/Supplemental
Data Net Assets,
End of Period (in thousands)($) 90,995 125,178 138,335 113,893
Ratio of Expenses to Average
Net Assets(%).................. 0.55 0.54 0.55 0.56
Ratio of Net Investment Income to
Average Net Assets(%).......... 2.97 3.32 2.74 1.99
Net investment income per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's
voluntary waiver of fees and for the years 1997 and 1996, without the
expense offset in custodian fees for uninvested cash balances would
have been:
Net investment income($)......... 0.03 0.03 0.03 0.02
Ratio of Expenses to Average
Net Assets(%)................... 0.55 0.54 0.55 0.58
Ratio of Net Investment Income
to Average Net Assets(%)........ 2.97 3.32 2.74 1.97
<CAPTION>
1993 1992 1991 1990**
<C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00
0.02 0.04 0.05 0.06
(0.02) (0.04) (0.05) (0.06)
$1.00 $1.00 $1.00 $1.00
2.52% 3.91% 5.55% 6.07%+
$69,252 $99,955 $85,751 $70,937
0.54% 0.42% 0.32% 0.26%*
2.52% 3.89% 5.44% 5.94%*
0.02 0.04 0.05 0.06
0.59% 0.56% 0.55% 0.56%*
2.47% 3.75% 5.21% 5.64%*
<FN>
**For the period from April 4, 1989 (commencement of operations)
to March 31, 1990.
</FN>
<FN>
+Not annualized.
</FN>
<FN>
*Annualized.
</FN>
The Trust's "current yield" for the seven days ended March 31,
1997 was 2.94% and its "compounded effective yield" for that period
was 2.98%; see the Additional Statement for the method of calculating
these yields.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
ORIGINAL SHARES
TREASURIES FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table of Financial Highlights as it relates to
the five years ended March 31, 1997 for the Original Shares of the
Treasuries Fund has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon is included in the Funds' financial
statements contained in its Annual Report, which are incorporated
by reference into the Additional Statement. The information
provided in the table should be read in conjunction with the
financial statements and related notes. On March 23, 1990,
Aquila Management Corporation, originally the Funds' Sub-Adviser
and Administrator, became Administrator only.
Year Ended March 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period............ $1.00 $1.00 $1.00 $1.00
Income from
Investment Operations:
Net investment income.......... 0.05 0.05 0.04 0.03
Less distributions:
Dividends from net
investment income............. (0.05) (0.05) (0.04) (0.03)
Net Asset Value, End
of Period..................... $1.00 $1.00 $1.00 $1.00
Total Return (%)............... 4.76 5.20 4.20 2.59
Ratios/Supplemental Data
Net Assets,End of
Period (in thousands)($)...... 65,706 74,306 64,034 91,742
Ratio of Expenses to Average
Net Assets (%)................ 0.55 0.54 0.54 0.52
Ration of Net Investment Income
to Average Net Assets (%)..... 4.66 5.07 4.04 2.58
Net investment income per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's
voluntary waiver of fees and for the years 1997 and 1996, without the
expense offset in custodian fees for uninvested cash balances would
have been:
Net investment income($)......... 0.05 0.05 0.04 0.03
Ratio of Expenses to Average
Net Assets (%).................. 0.56 0.63 0.59 0.52
Ratio of Net Investment Income
to Average Net Assets(%)........ 4.65 4.98 3.99 2.58
<CAPTION>
1993 1992 1991 1990**
<C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00
0.03 0.05 0.07 0.08
(0.03) (0.05) (0.07) (0.08)
$1.00 $1.00 $1.00 $1.00
2.90 5.20 7.56 8.50+
26,131 40,349 40,550 11,233
0.61 0.34 0.23 0.33*
2.96 5.28 7.10 8.19*
0.03 0.05 0.07 0.08
0.66 0.60 0.63 0.73*
2.90 5.01 7.05 7.79*
<FN>
**For the period from April 4, 1989 (commencement of operations)
to March 31, 1990.
</FN>
<FN>
+Not annualized.
</FN>
<FN>
*Annualized.
</FN>
The Trust's "current yield" for the seven days ended March 31,
1997 was 4.79% and its "compounded effective yield" for that period
was 4.90%; see the Additional Statement for the method of calculating
these yields.
</TABLE>
<PAGE>
INTRODUCTION
Cash Assets Trust (the "Trust") is a professionally
managed, open-end investment company formed in 1984 as a
Massachusetts business trust. The Trust consists of three
separate funds: Pacific Capital Cash Assets Trust, (the "Cash
Fund"), Pacific Capital Tax-Free Cash Assets Trust (the "Tax-Free
Fund"), and Pacific Capital U.S. Treasuries Cash Assets Trust
(the "Treasuries Fund").
Cash of investors may be invested in shares of each Fund as
an alternative to idle funds, direct investments in savings
deposits or short-term debt securities. Each Fund offers the
opportunity to keep cash reserves fully invested and provides you
with a professionally managed portfolio of money market
instruments which may be more diversified, higher yielding, more
stable and more liquid than you might be able to obtain on an
individual basis. Through the convenience of an investment in
shares of a Fund, you are also relieved of the inconvenience of
making multiple direct investments, including the selection,
purchasing and handling of various securities.
INVESTMENT OF THE FUNDS' ASSETS
Each Fund's investment objective is as follows:
The investment objective of the Cash Fund is to achieve a
high level of current income, stability and liquidity for
investors' cash assets by investing in a diversified portfolio of
short-term "money market" securities meeting specific quality
standards.
The investment objective of the Tax-Free Fund is to provide
safety of principal while achieving as high a level as possible
of liquidity and of current income exempt from Federal and Hawaii
income taxes. It seeks to attain this objective by investing
primarily in municipal obligations, which have remaining
maturities not exceeding one year, of Hawaii issuers or, if
obligations of the desired quality, maturity and interest rate
are not available, in similar obligations of non-Hawaii issuers.
The investment objective of the Treasuries Fund is to
provide safety of principal while achieving as high a level as
possible of liquidity and of current income. It seeks to attain
this objective by investing exclusively in short-term direct
obligations of the United States Treasury with remaining
maturities of one year or less, and certain repurchase agreements
secured by U.S. Treasury obligations.
There is no assurance that any Fund will achieve its
objective, which is a fundamental policy of the Fund.
In addition to the requirements of the Funds' management
policies, all obligations and instruments purchased by any Fund
must meet the requirements of Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act"). The provisions of the Rule that
affect portfolio management are summarized under "Effect of the
Rule on Portfolio Management," below. In brief, the Rule's
provisions for quality, diversity and maturity require each Fund
to limit its investments to those instruments which Hawaiian
Trust Company, Limited, the Funds' investment adviser (the
"Adviser"), determines (pursuant to procedures approved by the
Board of Trustees) present minimal credit risks and which at the
time of purchase are Eligible Securities. In general, the Rule
defines as Eligible Securities those that at the time of purchase
are rated in the two highest rating categories for short-term
securities by any two of the nationally recognized statistical
rating organizations ("NRSROs") or unrated securities determined
by the Board of Trustees to be of comparable quality. See
Appendix A to the Additional Statement for a description of the
NRSROs and the factors considered by them in determining ratings.
Eligible Securities so rated in the highest rating category (or
unrated securities of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second
Tier Securities." The Rule also requires that the dollar-weighted
average maturity of each Fund's portfolio cannot exceed 90 days
and that each Fund cannot purchase any security having a
remaining maturity in excess of 397 days. The Rule also contains
limits on the percentage of each Fund's assets that can be
invested in the securities of any issuer. See "Effect of the Rule
on Portfolio Management," below.
Management Policies: Each Fund seeks to achieve its
investment objective through investments in the types of
instruments described in the management policies listed below.
Except for policies designated as fundamental, shareholder
approval is not required to change any of the foregoing
management policies.
THE CASH FUND AND ITS INVESTMENTS
Management Policies of the Cash Fund
Under current management policies, the Cash Fund invests
only in the following types of obligations:
(1) U.S. Government Securities: Obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities; these obligations are referred to in this
Prospectus as "U.S. Government Securities"; see "Information On
U.S. Government Securities" below.
(2) Bank Obligations and Instruments Secured by Them: Bank
obligations that are First Tier Securities including time
deposits, certificates of deposit, bankers' acceptances and other
bank (see below for definition) obligations, and which are (i)
obligations of banks subject to regulation by the U.S. Government
having total assets of at least $1.5 billion, which may be
obligations issued by domestic banks, by foreign branches of such
banks or by U.S. subsidiaries of foreign banks; (ii) obligations
of any foreign bank having total assets equivalent to at least
$1.5 billion; or (iii) obligations ("insured bank obligations")
if such obligations are fully insured as to principal by the
Federal Deposit Insurance Corporation (see "Information on
Insured Bank Obligations" in the Additional Statement); the Cash
Fund may also invest in obligations secured by any obligations
set forth in (i) or (ii) above if such investment meets the
requirements of (6) below. (In this Prospectus and in the
Additional Statement, a bank includes commercial banks, savings
banks and savings and loan associations.)
(3) Commercial Paper Obligations: Commercial paper
obligations that are First Tier Securities; see "Effect of the
Rule on Portfolio Management," below.
(4) Corporate Debt Obligations: Corporate debt obligations
(for example, bonds and debentures) which are First Tier
Securities and which at the time of purchase have a remaining
maturity of not more than 397 days. See "Effect of the Rule on
Portfolio Management." See Appendix A to the Additional Statement
for information about bond ratings.
(5) Variable Amount Master Demand Notes: Variable amount
master demand notes that are First Tier Securities and which are
redeemable (and thus repayable by the borrower) at principal
amount, plus accrued interest, at any time on not more than
thirty days' notice. Variable amount master demand notes may or
may not be backed by bank letters of credit. (Because variable
amount master demand notes are direct lending arrangements
between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for
them; see the Additional Statement for further information on
these notes.) Variable amount master demand notes repayable in
more than seven days are securities which are not readily
marketable, and fall within the Cash Fund's overall 10%
limitation on securities which are illiquid. (See the Additional
Statement.)
(6) Certain Other Obligations: Obligations other than those
listed in 1 through 5 above if such other obligations are
guaranteed as to principal and interest by either a bank in whose
obligations the Cash Fund may invest (see 2 above) or a
corporation in whose commercial paper the Cash Fund may invest
(see 3 above). See "Effect of the Rule on Portfolio Management."
If the Cash Fund invests more than 5% of its net assets in such
other obligations, the Prospectus will be supplemented to
describe them. See the Additional Statement.
(7) Repurchase Agreements: The Cash Fund may purchase
securities subject to repurchase agreements provided that such
securities consist entirely of U.S. Government Securities or
securities that, at the time the repurchase agreement is entered
into, are rated in the highest rating category by the requisite
NRSROs. Repurchase agreements may be entered into only with
commercial banks or broker-dealers. Subject to the control of the
Board of Trustees, the Adviser will regularly review the
financial strength of all parties to repurchase agreements with
the Cash Fund. (See "Repurchase Agreements" under the caption
"Matters Applicable to All Funds" below.)
(8) When-Issued or Delayed Delivery Securities: The Cash
Fund may buy securities on a when-issued or delayed delivery
basis; the securities so purchased are subject to market
fluctuation and no interest accrues to the Cash Fund until
delivery and payment take place; their value at the delivery date
may be less than the purchase price. The Cash Fund may enter into
when-issued commitments exceeding in the aggregate 15% of the
market value of its total assets, less liabilities other than the
obligations created by when-issued commitments. See the
Additional Statement for further information.
Information On U.S. Government Securities
U.S. Government Securities (i.e., obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities) include securities issued by the U.S.
Government, which in turn include Treasury Bills (which mature
within one year of the date they are issued) and Treasury Notes
and Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United
States.
U.S. Government agencies and instrumentalities that issue or
guarantee securities include, but are not limited to, the 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 U.S. Treasury.
Others, such as securities issued by the Federal National
Mortgage Association, are supported only by the credit of the
instrumentality and not by the U.S. Treasury. If the securities
are not backed by the full faith and credit of the United States,
the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to
assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Cash
Fund will invest in government securities, including securities
of agencies and instrumentalities, only if the Adviser (pursuant
to procedures approved by the Board of Trustees) is satisfied
that these obligations present minimal credit risks. See "Effect
of the Rule on Portfolio Management" below for a discussion of
the determination of minimal credit risks in connection with the
purchase of portfolio securities.
Information On Foreign Bank Obligations
Investments, which must be denominated in U.S. dollars, in
foreign banks and foreign branches of United States banks involve
certain risks in addition to those involved with investment in
domestic banks. While domestic banks are required to maintain
certain reserves and are subject to other regulations, such
requirements and regulations may not apply to foreign branches of
domestic banks. Investments in foreign banks and foreign branches
of domestic banks may also be subject to other risks, including
future political and economic developments, the possible
imposition of withholding taxes on interest income, the seizure
or nationalization of foreign deposits and the establishment of
exchange controls or other restrictions.
Investment Restrictions of the Cash Fund
The following restrictions on the Cash Fund's investments
are fundamental policies and cannot be changed without approval
of the shareholders of the Cash Fund.
1. The Cash Fund has diversification and anti-concentration
requirements.
The Cash 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 Cash Fund cannot buy the securities (not including U.S.
Government Securities) of any issuer if more than 5% of its total
assets (valued at market value) would then be invested in
securities of that issuer. In addition, the Rule limits
investment in Second Tier Securities to 5% of the Cash Fund's
assets in the aggregate, and to no more than the greater of 1% of
the Cash Fund's assets or $1,000,000 in the securities of any one
issuer.
The Cash Fund cannot buy the securities of issuers in any
one industry if more than 25% of its total assets would then be
invested in securities of issuers in that industry (see the
Additional Statement); U.S. Government Securities and those
domestic bank obligations and instruments of domestic banks which
the Cash Fund may purchase (see "Investment of the Funds'
Assets") are considered as not included in this limit; however,
obligations of foreign banks and of foreign branches of domestic
banks are considered as included in this limit.
2. The Cash Fund can make loans only by lending securities
or entering into repurchase agreements.
The Cash Fund can buy those debt securities which it is
permitted to buy (see "Investment of the Funds' Assets"); this is
investing, not making a loan. The Cash Fund can lend its
portfolio securities on a collateralized basis up to 10% of the
value of its total assets to specified borrowers (broker-dealers,
banks and certain other financial institutions) to increase its
income (see the Additional Statement) and enter into repurchase
agreements (see "Repurchase Agreements" above). The Cash 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 Cash Fund and its shareholders; thus, when the loan
is terminated, the value of the securities may be more or less
than their value at the beginning of the loan.
3. The Cash Fund can borrow only in limited amounts for
special purposes.
The Cash 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. Interest on borrowings would
reduce the Cash Fund's income. The Cash Fund will not purchase
any securities while it has any outstanding borrowings which
exceed 5% of the value of its assets. Except in connection with
borrowings, the Cash Fund will not issue senior securities.
THE TAX-FREE FUND AND ITS INVESTMENTS
Management Policies of the Tax-Free Fund
The Tax-Free Fund invests primarily in Municipal Obligations
(as defined below). Under current management policies, it invests
only in Municipal Obligations and in shares of investment
companies with money market portfolios consisting only of
Municipal Obligations, except for certain temporary investments
in taxable obligations described below ("Taxable Obligations").
Information about the Tax-Free Fund's Municipal Obligations
As used in this Prospectus and the Additional Statement, the
term "Municipal Obligations" means obligations with maturities of
397 days or less paying interest which, in the opinion of bond
counsel or other appropriate counsel, is exempt from regular
Federal income taxes. "Hawaiian Obligations" are Municipal
Obligations, including those of certain non-Hawaii issuers,
paying interest which, in the opinion of bond counsel or other
appropriate counsel, is also exempt from Hawaii state income
taxes. The non-Hawaiian bonds or other obligations the interest
on which is exempt from Hawaii state income tax under present law
are the bonds or other obligations issued by or under the
authority of Guam, the Northern Mariana Islands, Puerto Rico and
the Virgin Islands. If Hawaiian Obligations of the desired
quality, maturity and interest rate are not available, the
Tax-Free Fund will invest in other Municipal Obligations.
Although the portion of dividends of the Tax-Free Fund paid
from interest on Hawaiian Obligations will be free of Hawaii
state income tax, that paid from interest on other Municipal
Obligations will not. Since it is not possible to predict the
extent to which suitable Hawaiian Obligations will be available
for investment, the Tax-Free Fund has no investment restriction
limiting the proportion of its portfolio which it may invest in
other Municipal Obligations. See "Dividend and Tax Information."
Although exempt from regular Federal income tax, interest
paid on certain types of Municipal Obligations, and dividends
which the Tax-Free Fund might pay from this interest, are
preference items as to the Federal alternative minimum tax. As a
fundamental policy, at least 80% of the Tax-Free Fund's net
assets will be invested in Municipal Obligations the income paid
upon which will not be subject to the alternative minimum tax;
accordingly, the Tax-Free Fund can invest the rest of its assets
in obligations which are subject to the Federal alternative
minimum tax. The Tax-Free Fund may refrain entirely from
purchasing these types of Municipal Obligations. For further
information, see "Dividend and Tax Information."
Municipal Obligations are debt obligations issued by or on
behalf of states, cities, municipalities and other public
authorities. Such obligations include:
Municipal Bonds
Municipal bonds generally have a maturity at the time of
issuance of up to 30 years. The Tax-Free Fund can invest in
municipal bonds which are Eligible Securities and which at the
time of purchase have a remaining maturity of not more than 397
days. See "Effect of the Rule on Portfolio Management." See
Appendix A to the Additional Statement for information about bond
ratings.
Municipal Notes
Municipal notes generally have maturities at the time of
issuance of three years or less. The Tax-Free Fund's investments
in municipal notes are limited to notes which at the time of
purchase have a remaining maturity of not more than 397 days and
which are Eligible Securities. See "Effect of the Rule on
Portfolio Management." See Appendix A to the Additional Statement
for information about bond ratings. These notes are generally
issued in anticipation of the receipt of tax funds, of the
proceeds of bond placements or of other revenues. The ability of
an issuer to make payments is therefore dependent on these tax
receipts, proceeds from bond sales or other revenues, as the case
may be.
Municipal Commercial Paper
Municipal commercial paper is a debt obligation with a
stated maturity of 397 days or less that is issued to finance
seasonal working capital needs or as short-term financing in
anticipation of longer-term debt. The Tax-Free Fund may invest in
municipal commercial paper obligations that are Eligible
Securities; see "Effect of the Rule on Portfolio Management,"
below.
Other Information About Municipal Obligations
From time to time the Tax-Free Fund may invest 25% or more
of its assets in Municipal Obligations that are related in such a
way that an economic, business or political development or change
affecting one of these obligations would also affect the other
obligations, for example, Municipal Obligations the interest on
which is paid from revenues of similar type projects or Municipal
Obligations whose issuers are located in the same state.
The taxable market is a broader and more liquid market with
a greater number of investors, issuers and market makers than the
market for Municipal Obligations. The more limited marketability
of Municipal Obligations may make it difficult in certain
circumstances to dispose of large investments advantageously. In
general, Municipal Obligations are also subject to credit risks
such as the loss of credit ratings or possible default. In
addition, certain Municipal Obligations might lose tax-exempt
status in the event of a change in the tax laws.
Information about the Temporary Taxable Investments the Tax-Free
Fund May Make
The Tax-Free Fund may invest the proceeds of the sale of
shares or the sale of Municipal Obligations in Taxable
Obligations pending investment in Municipal Obligations. The
Tax-Free Fund may also enter into repurchase agreements as to
Taxable Obligations. (See "Repurchase Agreements" below.) As a
fundamental policy, under normal market conditions the Tax-Free
Fund may not purchase Taxable Obligations if thereafter more than
20% of its net assets would consist of such obligations or cash,
except for temporary defensive purposes, i.e., in anticipation of
a decline or possible decline in the value of Municipal
Obligations. Purchase of Taxable Obligations is subject to
certain specific diversification tests under the Rule. See
"Effect of the Rule on Portfolio Management," below.
Under current management policies the Taxable Obligations
which the Tax-Free Fund may purchase are obligations maturing in
397 days or less from the date of purchase by the Tax-Free Fund
and which are:
Obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities ("U.S. Government
Obligations"); see the Additional Statement for further
information; commercial paper obligations that are First Tier
Securities; see "Effect of the Rule on Portfolio Management,"
below; and bank obligations that are First Tier Securities
including time deposits, certificates of deposit, bankers'
acceptances and other bank (see below for definition)
obligations, and which are (i) obligations of banks subject to
regulation by the U.S. Government having total assets of at least
$1.5 billion, which may be obligations issued by domestic banks,
by foreign branches of such banks or by U.S. subsidiaries of
foreign banks; or (ii) obligations ("insured bank obligations")
that are fully insured as to principal by the Federal Deposit
Insurance Corporation (see "Information on Insured Bank
Obligations" in the Additional Statement). (In this Prospectus
and in the Additional Statement, the term bank includes
commercial banks, savings banks and savings and loan
associations.)
Floating and Variable Rate Instruments
Certain of the obligations that the Tax-Free Fund may
purchase have a floating or variable rate of interest. These
obligations bear interest at rates that are not fixed, but vary
with changes in specified market rates or indices, such as the
Prime Rate, or at specified intervals. Certain of these
obligations may carry a demand feature that would permit the
holder to tender them back to the issuer at par value prior to
maturity. The Tax-Free Fund may invest in floating and variable
rate obligations even if they carry stated maturities in excess
of 397 days, if under the provisions of the Rule for determining
the maturity, the maturity of the instrument so determined is
less than 397 days. See "Effect of the Rule on Portfolio
Management," below. The Tax-Free Fund will limit its purchases of
floating and variable rate obligations to those which at the time
of purchase are Eligible Securities. On an ongoing basis, the
Adviser will monitor the ability of an issuer of a demand
instrument to pay principal and interest on demand. The Tax-Free
Fund's right to obtain payment at par on a demand instrument
could be affected by events occurring between the date the
Tax-Free Fund elects to demand payment and the date payment is
due that may affect the ability of the issuer of the instrument
to make payment when due, except when such demand instrument
permits same day settlement. To facilitate settlement, these same
day demand instruments may be held in book entry form at a bank
other than the Tax-Free Fund's custodian subject to a
sub-custodial agreement approved by the Tax-Free Fund between
that bank and the Tax-Free Fund's custodian.
To the extent that floating and variable rate instruments
without demand features are not readily marketable, they will be
subject to the investment restriction that the Tax-Free Fund may
not invest an amount equal to more than 10% of the current value
of its net assets in securities that are illiquid.
Certain Put Rights
The Tax-Free Fund may enter into put transactions with
commercial banks with respect to obligations held in its
portfolio. The Tax-Free Fund does not intend to enter into put
transactions with broker-dealers, and in no event would it do so,
except as permitted under the 1940 Act.
The right of the Tax-Free Fund to exercise a put is
unconditional and unqualified. A put is not transferable by the
Tax-Free Fund, although the Tax-Free Fund may sell the underlying
securities to a third party at any time. If necessary and
advisable, the Tax-Free Fund may pay for certain puts either
separately in cash or by paying a higher price for portfolio
securities that are acquired subject to such a put (thus reducing
the yield to maturity otherwise available for the same
securities).
The Tax-Free Fund may enter into puts with banks or
broker-dealers that, in the opinion of the Adviser, present
minimal credit risks. The ability of the Tax-Free Fund to
exercise a put will depend on the ability of the bank or
broker-dealer to pay for the underlying securities at the time
the put is exercised. In the event that a bank or broker-dealer
should default on its obligation to repurchase an underlying
security, the Tax-Free Fund might be unable to recover all or a
portion of any loss sustained from having to sell the security
elsewhere.
The Tax-Free Fund may enter into certain puts solely to
maintain liquidity and will not exercise its rights thereunder
for trading purposes. The puts will be only for periods
substantially less than the life of the underlying security. The
acquisition of a put will not affect the valuation by the
Tax-Free Fund of the underlying security. The actual put will be
valued at zero in determining net asset value. Where the Tax-Free
Fund pays directly or indirectly for a put, its cost will be
reflected as an unrealized loss for the period during which the
put is held by the Tax-Free Fund and will be reflected in
realized gain or loss when the put is exercised or expires. If
the value of the underlying security increases, the potential for
unrealized or realized gain is reduced by the cost of the put.
The maturity of a Municipal Obligation purchased by the Tax-Free
Fund will not be considered shortened by any such put to which
the obligation is subject.
The Rule has a number of provisions affecting puts. With
respect to 75% of the total assets of the Tax-Free Fund, the 5%
diversification requirement is applicable. (See "Effect of the
Rule on Portfolio Management.")
When-Issued Securities
The Tax-Free Fund may purchase Municipal Obligations on a
when-issued basis, in which case delivery and payment normally
take place within 45 days after the date of the commitment to
purchase. The Tax-Free Fund will only make commitments to
purchase Municipal Obligations on a when-issued basis with the
intention of actually acquiring the securities, but may sell them
before the settlement date if it is deemed advisable. Any gains
realized in such sales would produce taxable income. The
when-issued securities are subject to market fluctuation and no
income accrues to the purchaser prior to issuance. The payment
obligation and the interest rate that will be received on the
securities are each fixed at the time the purchaser enters into
the commitment. For purposes of determining the Tax-Free Fund's
weighted-average maturity, the maturity of a when-issued security
is calculated from its commitment date. Purchasing municipal
securities on a when-issued basis is a form of leverage and can
involve a risk that the yields available in the market when the
delivery takes place may actually be higher than those obtained
in the transaction itself, in which case there could be an
unrealized loss in the value of the investment at the time of
delivery.
The Tax-Free Fund will establish a segregated account with
its Custodian in which it will maintain liquid assets in an
amount at least equal in value to the Tax-Free Fund's commitments
to purchase when-issued securities. If the value of these assets
declines, the Tax-Free Fund will place additional liquid assets
in the account on a daily basis so that the value of the assets
in the account is equal to the amount of such commitments.
Repurchase Agreements
The Tax-Free Fund may purchase securities subject to
repurchase agreements provided that such securities are listed
above under "The Tax-Free Fund And Its Investments"; it is the
Tax-Free Fund's current policy to use for repurchase agreements
only collateral that consists entirely of U.S. Government
securities or securities that, at the time the repurchase
agreement is entered into, are rated in the highest rating
category by the requisite NRSROs. (See "Effect of the Rule on
Portfolio Management.") Repurchase agreements may be entered into
only with commercial banks or broker-dealers. The Adviser, under
the supervision of the Board of Trustees, will regularly review
the financial strength of all parties to repurchase agreements
with the Tax-Free Fund. (See "Repurchase Agreements" under the
caption "Matters Applicable to All The Funds" below.)
Loans of Portfolio Securities
The Tax-Free Fund can lend its portfolio securities on a
collateralized basis up to 10% of the value of its total assets
to specified borrowers (brokers, dealers and certain financial
institutions) to increase its income (see the Additional
Statement) and enter into repurchase agreements (see "Repurchase
Agreements" above). The Tax-Free 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 Tax-Free
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.
Shares of Investment Companies
The Tax-Free Fund may purchase shares of investment
companies with money market portfolios consisting only of
Municipal Obligations if such investment companies meet the
requirements of the Rule (see "Effect of the Rule on Portfolio
Management" below). It will not purchase shares of an investment
company which imposes a sales or redemption charge of any sort;
however, an investment company in which the Tax-Free Fund invests
may have a distribution plan under which it may pay for
distribution expenses or services. The Tax-Free Fund will
purchase shares only of investment companies with high-quality
portfolios, which the Adviser, pursuant to procedures approved by
the Board of Trustees, determines present minimal credit risks.
Such investments will ordinarily be made to provide additional
liquidity and at the same time to earn higher yields than are
usually associated with the overnight or short-term obligations
in which the Tax-Free Fund might otherwise invest for this
purpose. While higher yields than those of alternative
investments may be obtainable, these yields will reflect
management fees and operating and distribution expenses of the
investment companies and will result in duplication of management
fees with respect to assets of the Tax-Free Fund so invested. The
Tax-Free Fund may not invest in the shares of investment
companies if immediately thereafter it has invested more than 10%
of the value of its total assets in such companies or more than
5% of the value of its total assets in any one such company; it
may not invest in such a company if immediately thereafter it
owns more than 3% of the total outstanding voting stock of such a
company.
Other Information About the Tax-Free Fund and its Investments
To the extent the ratings given by the NRSROs may change as
a result of changes in such organizations or their rating
systems, but not as a result of the downgrading of any security
held by the Tax-Free Fund or any issuer the securities of which
are held by the Tax-Free Fund, it will attempt to use comparable
ratings as standards for investments in accordance with the
investment policies contained in this Prospectus and in the
Additional Statement. The ratings of the NRSROs are more fully
described in the Appendix to the Additional Statement.
The Tax-Free Fund is a non-diversified investment company
under the 1940 Act. See "Diversity under the 1940 Act" under
"General Information" below.
Risk Factors and Special Considerations Regarding Investment in
Hawaiian Obligations
The following is a discussion of the general factors that
might influence the ability of Hawaiian issuers to repay
principal and interest when due on the Hawaiian Obligations
contained in the portfolio of the Tax-Free Fund. Such information
is derived from sources that are generally available to investors
and is believed by the Tax-Free Fund to be accurate, but has not
been independently verified and may not be complete.
As of the date of this Prospectus, economic data
available indicate that the real Gross State Product growth for
1996 was 1.0%, slightly lower than the 1.3% that was projected in
1995. Although total employment continues to contract, it is
anticipated that most downsizing has been completed, and that
there will be minor job growth of 0.0-0.5% in 1997. Although some
local companies have left the State, other substantial
organizations have indicated interest in new Hawaiian operations.
The State of Hawaii Convention Center is nearing completion with
a projected opening date in mid-1998.
Local economic sources expect that the deflationary
trend, apparent in 1995, has continued through 1996. Retailers
have kept retail prices down and the Honolulu Consumer Price
Index is projected to remain at the current 2.2% annual rate.
Rents have dropped as more rental inventory builds up and
property valuations remain soft, both in the residential and
commercial sectors. State tax credits for hotel renovations will
provide incentives to modernize and improve competitiveness while
providing a stimulus to the construction industry.
In 1996, tourism, the State's principal industry,
increased by 3.6% over 1995 to 6.8 million visitors for the year.
Eastbound visitors accounted for the majority of the increase,
attributable in part to the introduction of direct flights to
Kona from Japan. Trends indicate that tourism as the State's
major export industry, will continue to improve in 1997.
Uncertainties regarding sovereignty and privatization of
government contracts will be outstanding issues that will have
significant impact over the long term for the State. Limited
revenue growth and the need to reduce expenditures will continue
to be of paramount concern for the State government. The Hawaii
legislature recently approved a $1 billion capital improvement
program to stimulate the economy through construction spending.
The attendant accelerated issuance of debt to fund the program at
a time when revenue growth has remained stagnant prompted
Standard & Poor's to downgrade the State's General Obligation
debt from AA to A+. Moody's rates the State's debt as AA3, which
is at the lowest end of the AA range.
Investment Restrictions of the Tax-Free Fund
The following restrictions on the Tax-Free Fund's
investments are fundamental policies and cannot be changed
without approval of the shareholders of the Tax-Free Fund.
1. The Tax-Free Fund has diversification and
anti-concentration requirements.
The Tax-Free Fund cannot buy the securities of issuers in
any one industry if more than 25% of its total assets would then
be of issuers in that industry; Municipal Obligations, U.S.
Government Obligations and those bank obligations and instruments
of domestic banks which the Fund may purchase (see "Investment of
the Fund's Assets") are considered as not included in this limit,
except that the Fund will consider that a non-governmental user
of facilities financed by industrial development bonds is an
issuer in an industry.
2. The Tax-Free Fund can make loans only by lending
securities or entering into repurchase agreements.
The Tax-Free Fund can buy those debt securities which it is
permitted to buy (see "Investment of the Funds' Assets"); this is
investing, not making a loan. The Tax-Free Fund can lend its
portfolio securities (see "Loans of Portfolio Securities" above)
and enter into repurchase agreements (See "Repurchase Agreements"
above).
3. The Tax-Free Fund can borrow only in limited amounts for
special purposes.
The Tax-Free 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. Interest on borrowings would
reduce the Fund's income. The Tax-Free Fund will not purchase any
securities while it has any outstanding borrowings which exceed
5% of the value of its total assets.
THE TREASURIES FUND AND ITS INVESTMENTS
Management Policies of the Treasuries Fund
The Treasuries Fund invests only in short-term direct
obligations of the United States Treasury with remaining
maturities of one year or less, and certain repurchase agreements
secured by U.S. Treasury obligations. The Treasuries Fund will
not invest in other obligations issued or guaranteed by agencies
or instrumentalities of the United States Government. Shares of
the Treasuries Fund are not guaranteed or insured by the United
States Government.
U. S. Treasury Obligations
The U.S. Treasury issues various types of marketable
securities, consisting of bills, notes, bonds, and certificates of
indebtedness, which are all direct obligations of the U.S.
Government backed by its "full faith and credit" and which differ
primarily in the length of their maturity. U.S. Treasury bills,
which have a maturity of up to one year, are the most frequently
issued marketable U.S. Government security. The Fund may also
invest in separately traded principal and interest components of
securities issued by the United States Treasury. The principal and
interest components of selected securities are traded independently
under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS"). Under the STRIPS program, the
principal and interest components are individually numbered and
separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts
independently.
The investment by the Treasuries Fund in such short-term
direct obligations of the U.S. Treasury may result in a lower yield
than a policy of investing in other types of instruments, and
therefore the yield of the Treasuries Fund may be lower, for
example, than the yield of another of the Trust's portfolios, the
Cash Fund, which invests in taxable money market obligations of a
broader range of issuers.
Repurchase Agreements
The Treasuries Fund may purchase securities subject to
repurchase agreements provided that such securities are obligations
of the U.S. Treasury. Repurchase agreements may be entered into
only with commercial banks or broker-dealers. Subject to the
control of the Board of Trustees, the Adviser will regularly review
the financial strength of all parties to repurchase agreements with
the Treasuries Fund. (See "Repurchase Agreements" under the caption
"Matters Applicable to All The Funds" below.)
Other Information about the Treasuries Fund's Investments
Additional Management Policy as to Rating. In addition to
the foregoing management policies, as a non-fundamental policy, the
Treasuries Fund will purchase only those issues that will enable it
to achieve and maintain the highest rating for a mutual fund by two
NRSROs. There is no assurance that it will be able to maintain such
rating. As a result of this policy, the range of obligations in
which the Treasuries Fund can invest is reduced and the yield
obtained on such obligations may be less than would be the case if
this policy were not in force.
Investment Restrictions of the Treasuries Fund
The following restrictions on the Treasuries Fund's
investments are fundamental policies and cannot be changed without
approval of the shareholders of the Treasuries Fund.
1. The Treasuries Fund can make loans only by lending
securities or entering into repurchase agreements.
The Treasuries Fund can buy those debt securities which it is
permitted to buy (see "Investment of the Funds' Assets"); this is
investing, not making a loan. The Treasuries Fund can lend its
portfolio securities on a collateralized basis up to 10% of the
value of its total assets to specified borrowers (broker-dealers,
banks and certain other financial institutions) to increase its
income (see the Additional Statement) and enter into repurchase
agreements (see "Repurchase Agreements" above). The Treasuries 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 Treasuries 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.
2. The Treasuries Fund can borrow only in limited amounts for
special purposes.
The Treasuries 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. Interest on borrowings would
reduce the Treasuries Fund's income. The Treasuries Fund will not
purchase any securities while it has any outstanding borrowings
which exceed 5% of the value of its assets. Except in connection
with borrowings, the Treasuries Fund will not issue senior
securities.
Portfolio Matters Applicable to All Funds
(In the material below, the text in bold does not apply to
the Treasuries Fund.)
Repurchase Agreements
Under a repurchase agreement, at the time a Fund purchases a
security, the Fund also resells it to the seller and must deliver
the security (or securities substituted for it) to the seller on an
agreed-upon date in the future. (The securities so resold or
substituted are referred to herein as the "Resold Securities.") The
resale price is in excess of the purchase price in that it reflects
an agreed-upon market interest rate effective for the period of
time during which the Fund's money is invested in the Resold
Securities. The majority of these transactions run from day to day,
and the delivery pursuant to the resale typically will occur within
one to five days of the purchase.
Repurchase agreements can be considered as loans
"collateralized" by the Resold Securities, such agreements being
defined as "loans" in the 1940 Act. The return on such "collateral"
may be more or less than that from the repurchase agreement. The
Resold Securities under any repurchase agreement will be marked to
market every business day so that the value of the "collateral" is
at least equal to the resale price provided in the agreement,
including the accrued interest earned thereon, plus sufficient
additional market value as is considered necessary to provide a
margin of safety. During the term of the repurchase agreement, the
Fund or its custodian or sub-custodian either has actual physical
possession of the Resold Securities or, in the case of a security
registered in a book entry system, the book entry is maintained in
the name of the Fund or its custodian. The Fund retains an
unqualified right to possess and sell the Resold Securities in the
event of a default by the other party.
In the event of bankruptcy or other default by the other
party, there may be possible delays and expenses in liquidating the
Resold Securities, decline in their value and loss of interest. If
the maturity of the Resold Securities is such that they cannot be
owned by the Fund under the applicable provisions of the Rule they
will have to be sold, which could result in a loss. See "Effect of
the Rule on Portfolio Management."
Limitation of 10% As To Certain Investments
Due to their possible limited liquidity, no Fund may make
certain investments if thereafter more than 10% of its net assets
would consist of such investments. The investments included in this
10% limit are (i) repurchase agreements maturing in more than
seven days; (ii) fixed time deposits subject to withdrawal
penalties other than overnight deposits; (iii) restricted
securities, i.e., securities which cannot freely be sold for legal
reasons (which the Funds do not expect to own); (iv) securities for
which market quotations are not readily available; and (v) insured
bank obligations unless the Board of Trustees determines that a
readily available market exists for such obligations. However,
this 10% limit does not include any obligations payable at
principal amount plus accrued interest on demand or within seven
days after demand.
Factors Which May Affect the Value of the Funds' Investments and
Their Yields
The value of the obligations and instruments in which the
Funds invest will fluctuate depending in large part on changes in
prevailing interest rates. If the prevailing interest rates go up
after a Fund buys a security, the value of the security may go
down; if these rates go down, the value of the security may go up.
Changes in value and yield based on changes in prevailing interest
rates may have different effects on short-term obligations than on
long-term obligations. Long-term obligations (which often have
higher yields) may fluctuate in value more than short-term ones.
Portfolio Transactions
Each Fund will seek to obtain the best net price and the most
favorable execution of orders. Purchases will be made directly from
issuers or from underwriters, dealers or banks which specialize in
the types of securities invested in by the Fund. As most purchases
made by the Funds are principal transactions at net prices, the
Funds incur little or no brokerage costs. Purchases from
underwriters will include a commission or concession paid by the
issuer to the underwriter and purchases from dealers may include
the spread between the bid and the asked price. If the execution
and price offered by more than one dealer are comparable, the order
may be allocated to a dealer which has provided research advice,
such as information on particular companies and industries and
market, economic and institutional activity. By allocating
transactions to obtain research services, the Funds enable the
Adviser to supplement its own research and analyses with the views
and information of other securities firms. Such research services,
whether or not useful to the Funds, may be useful to other accounts
managed by the Adviser or its affiliates.
Effect of the Rule on Portfolio Management
Under "Investment of the Funds' Assets" above immediately
following the investment objectives of the Funds, there is a brief
description of Rule 2a-7 (the "Rule") of the Securities and
Exchange Commission under the 1940 Act.
As money market funds, the Funds operate under the Rule, which
allows the Funds to use the "amortized cost" method of valuing
their securities and which contains certain risk limiting
provisions, including requirements as to maturity, quality and
diversification of each Fund's portfolio. Some of the most
important aspects of the Rule are described below.
Under the Rule, each Fund must limit its investments to those
instruments which are denominated in U.S. dollars, which are
determined by the Board of Trustees to present minimal credit
risks, and which, at the time of purchase, are Eligible Securities.
In accordance with the Rule, the Board of Trustees has adopted
investment procedures and has approved investment policies pursuant
to which all investment determinations have been delegated to the
Adviser, under the direction and control of the Board of Trustees,
except for those matters for which the Rule requires Board
determination.
In general, the Rule defines as Eligible Securities those that
at the time of purchase are rated in the two highest rating
categories for short-term securities by any two of the NRSROs or,
if unrated, are determined by the Board of Trustees to be of
comparable quality. Eligible Securities so rated in the highest
rating category (and unrated securities determined by the Board of
Trustees to be of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second Tier
Securities." Eligible Securities can in some cases include
securities rated by only one NRSRO and unrated obligations that are
determined by the Board of Trustees to be of comparable quality to
rated securities. A security that was long-term when issued must,
at the time of purchase by a Fund, either have a short-term rating
such that it is an Eligible Security or be comparable in priority
and security to a rated short-term obligation of the same issuer
that is an Eligible Security or, if the issuer has no short-term
rating (and does not have a long-term rating from any NRSRO below
the highest rating), be determined by the Board of Trustees to be
of comparable quality to rated securities the Fund could purchase.
Purchase of any security rated by only one NRSRO and purchase of
any unrated security (except U.S. Government Securities) must be
ratified by the Board of Trustees; in the case of the Tax-Free
Fund, this requirement applies only to taxable securities.
As to the Cash Fund and the taxable securities of the Tax-Free
Fund, the Rule requires (with limited exceptions) that immediately
after purchase of any security, a Fund have invested not more than
5% of its assets in the securities of any one issuer, and provides
that a Fund cannot have more than 5% of its assets in the aggregate
invested in Second Tier Securities, nor more than the greater of 1%
of its assets or $1,000,000 invested in Second Tier Securities of
any single issuer. (In general, the Tax-Free Fund does not intend
to own Second Tier Securities.) The Rule has specific provisions
relating to determinations of the eligibility of certain types of
instruments such as repurchase agreements and instruments subject
to a demand feature. It also has specific provisions for
determining the issuer of a security for purposes of compliance
with the diversification requirements.
Generally, under the Rule, the maturity of an instrument is
considered to be its stated maturity (or in the case of an
instrument called for redemption, the date on which the redemption
payment must be made). There are special rules for determining the
maturity of certain kinds of instruments. The Rule contains
provisions as to the maturity of variable rate and floating rate
instruments. Repurchase agreements and securities loan agreements
are, in general, treated as having a maturity equal to the period
remaining until they can be executed.
The Rule has provisions requiring specific actions whenever
the rating of a portfolio security is downgraded. Generally, these
actions include a prompt reassessment by the Board of Trustees of
the credit risks associated with such a security. In general, the
Rule mandates prompt sale or other disposition, e.g., by exercising
a demand for payment, in certain cases, such as when a security
ceases to be an Eligible Security, no longer presents minimal
credit risks or suffers a financial default.
Fundamental Policies
Each Fund has a number of policies about what it can and
cannot do. Certain of these policies, identified in the Prospectus
and Additional Statement as "fundamental policies," cannot be
changed unless the holders of a "majority," as defined in the 1940
Act, of the Fund's outstanding shares vote to change them. (See the
Additional Statement for a definition of such a majority.) All
other policies can be changed from time to time without shareholder
approval. Some of the more important of each Fund's fundamental
policies, not otherwise identified in the Prospectus, are described
above; others are listed in the Additional Statement.
NET ASSET VALUE PER SHARE
The net asset value per share for each class of each Funds'
shares 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 allocable to each
class of each Fund (i.e., the value of the assets less liabilities,
exclusive of surplus)by the total number of shares of each class of
each Fund outstanding.
The net asset value per share will normally remain constant
at $1.00 per share except under extraordinary circumstances; see
the Additional Statement for a discussion of the extraordinary
circumstances which could result in a change in this fixed share
value. The net asset value per share is based on a valuation of the
each Fund's investments at amortized cost; see the Additional
Statement.
The New York Stock Exchange is normally not open on the
following days: New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. However, that Exchange may
close on other days. In addition, the Custodian is not open on
Columbus Day and Veterans Day.
HOW TO INVEST IN THE FUNDS
Each Fund's Original Shares are sold on a continuous basis at
the net asset value next determined after an order is entered and
deemed effective. There is no sales charge. The minimum initial
investment is $1,000 in the shares of a Fund. Subsequent
investments may be in any amount. Aquila Distributors, Inc. (the
"Distributor") is the exclusive Distributor of the Funds' shares.
The Distributor sells shares only for purchase orders received.
Original Shares are sold solely to (1) financial institutions for
their own account or for the investment of funds for which they act
in a fiduciary, agency, investment advisory or custodial capacity;
(2) persons entitled to exchange into such shares under the Fund's
exchange privilege; and (3) shareholders of record on January 20,
1995, the date on which the Funds first offered two classes of
shares.
Opening an Account
To open a new Original Shares account, you must send a
properly completed Application to Administrative Data Management
Corp. (the "Agent"). Redemption of Original Shares purchased by
wire payment will not be honored until a properly completed
Application has been received by the Agent.
Initial investments in Original Shares may be made in any of
these three ways:
1. By Mail. Payment may be made by check, money order, Federal
Reserve Draft or other negotiable bank draft drawn in United States
dollars on a United States commercial or savings bank or credit
union (each of which is a "Financial Institution") payable to the
order of Pacific Capital Cash Assets Trust, Pacific Capital
Tax-Free Cash Assets Trust or Pacific Capital U.S. Treasuries Cash
Assets Trust, as the case may be, and mailed to:
(Specify the name of the Fund)
Administrative Data Management Corp.,
Shareholder Servicing Agent
Attn: Aquilasm Group of Funds
581 Main Street
Woodbridge, NJ 07095-1198
2. By Wire. Payment may be wired in Federal funds (monies
credited to a bank's account with a Federal Reserve Bank) to Bank
One Trust Company, N.A., (the "Custodian") which serves as the
custodian of the assets of the Funds.
To insure prompt and proper crediting to your account, if
you choose this method of payment you should first telephone the
Agent (800-255-2287 toll free or 732-855-5731) and then instruct
your bank to wire funds as indicated below for the appropriate
Fund:
the Cash Fund
Bank One, Columbus
ABA No. 044000037
CR A/C 04-0178
For further credit to
Pacific Capital Cash Assets Trust
(Original Shares) A/C 6801358400
the Tax-Free Fund
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Pacific Capital Tax-Free
Cash Assets Trust (Original Shares)
A/C 6801358500
the Treasuries Fund
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Pacific Capital U.S. Treasuries
Cash Assets Trust (Original Shares)
A/C 6801358600
In addition, add:
Account Name and Number (if an existing account) or 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 a Fund by
purchasing Original Shares through registered broker-dealers.
There is no sales or service charge imposed by any Fund on
purchases of Original Shares, although broker-dealers may make
reasonable charges to their customers for their services. The
services to be provided and the fees therefor are established by
each broker-dealer acting independently; broker-dealers may also
determine to establish, as to accounts serviced by them, higher
initial or subsequent investment requirements than those required
by the Funds. Broker-dealers are responsible for prompt
transmission of orders placed through them.
Additional Investments
You may make additional investments in Original Shares in
any amount after an account has been established by mailing
directly to the Agent a check, money order or other negotiable
bank draft made payable to the Fund, or by wiring funds as
described above. In each case you should indicate your name and
account number to insure prompt and proper crediting of your
account. The pre-printed stub attached to each Fund's
confirmations is provided as a convenient identification method
to accompany additional investments made by mail. You may also
make subsequent investments of $50 or more using electronic funds
transfers from your demand account at a Financial Institution if
it is a member of the Automated Clearing House and if the Agent
has received a completed Application designating this feature,
or, after your account has been opened, a Ready Access Features
form available from the Distributor or the Agent. A
pre-determined amount can be regularly transferred for investment
("Automatic Investment") or single investments can be made upon
receipt by the Agent of telephone instructions from anyone
("Telephone Investment"). The maximum amount of each Telephone
Investment is $50,000. Upon 30 days' written notice to
shareholders, the Funds may modify or terminate these investment
methods at any time or charge a service fee, although no such fee
is currently contemplated.
When Shares Are Issued and Dividends Are Declared On Them
There are three methods as to when Original Shares are
issued. Under each method, shares are issued at the net asset
value per share next determined after the purchase order is
effective, as discussed below. Under each method, the Application
must be properly completed and have been received and accepted by
the Agent; each Fund or the Distributor may also reject any
purchase order for shares of that Fund. Under each method,
Federal funds (see above) must either be available to the Fund in
question or the payment thereof must be guaranteed to the Fund so
that the Fund can be as fully invested as practicable.
The first method under which Original Shares are issued
involves ordinary investments. Under this method, payments
transmitted by wire in Federal funds and payments made by Federal
Reserve Draft received by the Custodian prior to 4:00 p.m. New
York time on any Business Day will be invested (i.e., the
purchase order will be effective) at the net asset value per
Original Share determined as of 4:00 p.m. on that day; if either
such type of payment is received after that time, the purchase
order will be effective as of 4:00 p.m. on the next Business Day.
Wire payments not in Federal funds will normally be converted
into Federal funds on the next Business Day and the purchase
order will be effective as of 4:00 p.m. on such next day.
Payments transmitted by check will normally be converted to
Federal funds by the Agent, as your agent, within two Business
Days for checks drawn on a member bank of the Federal Reserve
System, and longer for most other checks, and the purchase orders
will be effective as of 4:00 p.m. on that day, if it is a
Business Day, and otherwise at 4:00 p.m. on the next Business Day
after such conversion. All checks are accepted subject to
collection at full face value in United States funds and must be
drawn in United States dollars on a United States bank; if not,
shares will not be issued. Purchases by Automatic Investment and
Telephone Investment will be executed on the first Business Day
occurring on or after the date an order is considered received by
the Agent at the net asset value determined on that day. In the
case of Automatic Investment the order will be executed on the
date you specified for investment at the price determined on that
day, unless it is not a Business Day, in which case the order
will be executed at the net asset value determined on the next
Business Day. In the case of Telephone Investment the order will
be filled at the next determined net asset value, which for
orders placed after the time for determining the net asset value
of any Fund's shares for any Business Day will be the price
determined on the following Business Day. Dividends on shares
issued under this first investment method are declared starting
on the day (whether or not a Business Day) after the purchase
order is effective and are declared on the day on which the
shares are redeemed.
The second method under which Original Shares are issued
involves a bank or broker-dealer making special arrangements with
the Funds under which (i) either (a) payment is made in Federal
funds or by check in New York Clearing House funds delivered to
the Agent prior to 5:00 p.m. New York time or (b) the Agent is
advised prior to that time of a dollar amount to be invested;
(ii) the Agent is advised prior to that time of the form of
registration of the shares to be issued; (iii) the bank or
broker-dealer will prior to noon New York time on the next
Business Day wire Federal funds to the Custodian (but in the case
of prior payment by check under (i)(a) above only if the check is
not converted into Federal funds in the normal course on the next
Business Day); and (iv) arrangements satisfactory to the Funds
are made between it and the bank or broker-dealer under which if
Federal funds are not so received by the Custodian, the Fund is
reimbursed for any costs or loss of income arising out of such
non-receipt. New York Clearing House funds are funds represented
by a check drawn on a bank which is a member of the New York
Clearing House. Under this second method, the purchase order is
effective on the day the check or the advice is received under
(i) above. Dividends on shares issued under this second method
are declared starting on the day (whether or not a Business Day)
after the purchase order is effective and are declared on the day
on which such shares are redeemed.
The third method under which Original Shares are issued
involves broker-dealers or banks which have requested that this
method be used, to which request the Funds have consented. Under
this third method (i) the Agent must be advised prior to noon New
York time on any Business Day of a dollar amount to be invested;
and (ii) Federal funds must be wired to the Custodian on that
day; under this method, the purchase order is effective on that
day. Dividends on shares issued under this third investment
method are declared beginning on that day but not on the day such
shares are redeemed.
This third investment method is available to prospective
investors in Original Shares who wish to use it so that the
dividends on their shares will commence to be declared on the day
the purchase order is effective. Upon written or phone request to
a Fund by such a prospective investor, the Fund will advise as to
the broker-dealers or banks through which such purchases may be
made.
Confirmations and Share Certificates
All purchases of Original Shares will be confirmed and
credited to you in an account maintained for you by the Agent in
full and fractional shares of the Fund being purchased (rounded
to the nearest 1/1000th of a share). Share certificates will not
be issued unless you so request from the Agent in writing and
declare a need for such certificates, such as a pledge of shares
or an estate situation. If certificates are issued at your
request, Expedited Redemption Methods described below will not be
available and delay and expense may be incurred if you lose the
certificates. No certificates will be issued for fractional
shares or to shareholders who have elected the checking account
or predesignated bank account methods of withdrawing cash from
their accounts. (See "How to Redeem Your Investment" below.)
The Funds and the Distributor reserve the right to reject
any order for the purchase of Original Shares. In addition, the
offering of shares may be suspended at any time and resumed at
any time thereafter.
Distribution Plan
Each Fund has adopted a Distribution 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 that rule. One section of the first part of the
Distribution Plan of each Fund is designed to protect against any
claim against or involving the Fund that some of the expenses
which the Fund pays or may pay come within the purview of Rule
12b-1. Another section of the first part of the Distribution Plan
authorizes Aquila Management Corporation (the "Administrator"),
not the Fund, to make certain payments to certain Qualified
Recipients (as defined in the Distribution Plan) which have
rendered assistance in the distribution and/or retention of the
Funds' shares. For the Cash Fund, these payments may not exceed
0.15 of 1% of the average annual net assets of the Fund for a
fiscal year; for the Tax-Free Fund and the Treasuries Fund, the
rate is 0.10 of 1%.
The second part of the Distribution Plan of each Fund,
discussed more fully below under "General Information
- -Description of Classes," provides for payment by the Fund of
fees to certain financial institutions with respect to Service
Shares (not to Original Shares, to which this Prospectus
relates). These fees are treated as expenses allocable
specifically to the Service Shares class and are therefore borne
only by that class.
See the Additional Statement for further information about
the Distribution Plan.
With the exception of its provisions relating specifically
to Service Shares, each Fund's Distribution Plan is solely a
defensive plan designed to protect that Fund and its affiliates
against any claim described above. The Distribution Plan does not
involve payments, out of assets or income allocated to Original
Shares, designed to recognize sales of shares of any Fund or to
pay advertising expenses.
HOW TO REDEEM YOUR INVESTMENT
Each Fund provides day-to-day liquidity. You may redeem all
or any part of your Original Shares at any time at the net asset
value next determined after acceptance of your redemption request
at the Agent. Redemptions can be made by the various methods
described below. Except for shares recently purchased by check as
discussed below, there is no minimum time period for any
investment in any Fund. There are no redemption fees or
withdrawal penalties. If you purchase Original Shares of any Fund
through broker-dealers, banks and other financial institutions
which serve as shareholders of record you must redeem through
those institutions, which are responsible for prompt transmission
of redemption requests. In all other cases, you may redeem
directly, but a completed purchase Application must have been
received by the Agent before redemption requests can be honored.
A redemption may result in a taxable transaction to you, but only
if there has been a change in the net asset value per share,
which will occur only under extraordinary circumstances.
For your convenience each Fund offers expedited redemption
to provide you with a high level of liquidity for your
investment.
Expedited Redemption Methods (Non-Certificate Shares)
You have the flexibility of three expedited methods of
initiating redemptions. These are available as to Original Shares
not represented by certificates.
1. By Telephone. The Agent will accept instructions by
telephone from anyone to redeem Original Shares and make payments
to a Financial Institution account you have predesignated. See
"Redemption Payments" below for payment methods. Your name and
your account number must be supplied.
To redeem an investment in Original Shares by this method,
telephone:
800-255-2287 toll free or 732-855-5731
Note: The Funds, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed
to verify the identity of the caller. The Agent will request some
or all of the following information: account name and number;
name(s) and social security number registered to the account and
personal identification; the Agent may also record calls.
Shareholders should verify the accuracy of confirmation
statements immediately upon receipt.
2. By FAX or Mail. You may also request redemption
payments to a predesignated Financial Institution account by a
letter of instruction sent to: Administrative Data Management
Corp., Attn: Aquilasm Group of Funds, by FAX at 732-855-5730 or
by mail at 581 Main Street, Woodbridge, NJ 07095-1198, indicating
Fund name, account number, amount to be redeemed and any payment
directions, signed by the registered holder(s). Signature
guarantees are not required. See "Redemption Payments" below for
payment methods.
If you wish to have redemption proceeds sent to a
Financial Institution Account, you should so elect on the
Expedited Redemption section of the Application or the Ready
Access Features form and provide the required information
concerning your Financial Institution account number. The
Financial Institution account must be in the exclusive name(s) of
the shareholder(s) as registered with the Fund(s). You may change
the designated Financial Institution account at any time by
completing and returning a Ready Access Features form. For
protection of your assets, this form requires signature
guarantees and possible additional documentation.
3. By Check. The Agent will, upon request, provide you with
forms of drafts ("checks") drawn on the Custodian. This feature
is not available if your shares are represented by certificates.
These checks represent a further alternative redemption means and
you may make them payable to the order of anyone in any amount of
not less than $500. If you wish to use this check writing
redemption procedure you should notify the Agent or so indicate
on your Application. You will be issued special checks to be
drawn against the Custodian for this purpose. You will be subject
to the Custodian's rules and regulations governing its checking
accounts. If the account is registered in more than one name,
each check must be signed by each account holder exactly as the
names appear on the account registration, unless expressly stated
otherwise on your Application.
There is no charge for the maintenance of this special check
writing privilege or for the clearance of any checks.
When such a check is presented to the Custodian for
payment, a sufficient number of full and fractional shares of
that Fund in your account will be redeemed to cover the amount of
the check. This check writing redemption procedure enables you to
continue receiving dividends on those shares equaling the amount
being redeemed by check until such time as the check is actually
presented to the Custodian for payment.
As these checks are redemption drafts relating to Original
Shares, you should be certain that adequate shares for which
certificates have not been issued and which were not recently
purchased by check are in the account to cover the amount of the
check. See "Redemption Payments" below for more details as to
special problems as to Original Shares recently purchased by
check. If insufficient redeemable shares are in the account, the
redemption check will be returned marked "insufficient funds."
The fact that redemption checks are drafts may also permit a bank
in which they are deposited to delay crediting the account in
question until that bank has received payment funds for the
redemption check.
Checks may not be directly presented to any branch of the
Custodian. This does not affect checks used for the payment of
bills or cashed at other banks. You may not use checks to close
your account, since the number of shares in your account changes
daily through dividend payments which are automatically
reinvested in full and fractional shares. Consequently, you may
not present a check directly to the Custodian and request
redemption for all or substantially all Original Shares held in
your account. Only expedited redemption to a predesignated bank
account or the regular redemption method (see below) may be used
when closing your account.
Multiple Redemption Services. You are not limited in choice
of redemption methods but may utilize all available forms.
However, when both redemption to a predesignated bank account and
check writing are desired, you must so elect on the Application,
or by proper completion of a Ready Access Features form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
1. Certificate Shares. Certificates in blank (unsigned)
representing Original Shares to be redeemed should be sent to the
Funds' Shareholder Servicing Agent: Administrative Data
Management Corp., Attn: Aquilasm Group of Funds, 581 Main Street,
Woodbridge, NJ 07095-1198, with payment instructions. A stock
assignment form signed by the registered shareholder(s) exactly
as the account is registered must also be sent to the Shareholder
Servicing Agent.
For your own protection, it is essential that certificates
be mailed separately from signed redemption documentation.
Because of possible mail problems, it is also recommended that
certificates be sent by registered mail, return receipt
requested.
For the redemption request to be in "proper form," the
signature or signatures must be the same as in the registration
of the account. In a joint account, the signatures of both
shareholders are necessary. Additional documentation may be
required where shares are held by a corporation, partnership,
trustee or executor, or if redemption is requested by other than
the shareholder of record. If redemption proceeds of less than
$50,000 are payable to the record holder and are to be sent to
the record address, no signature guarantee is required.In all
other cases, signatures must be guaranteed by a member of a
national securities exchange, a U.S. bank or trust company, a
state-chartered savings bank, a federally chartered savings and
loan association, a foreign bank having a U.S. correspondent
bank, a participant in the Securities Transfer Association
Medallion Program (STAMP), the Stock Exchanges Medallion Program
(SEMP) or the New York Stock Exchange, Inc. Medallion Signature
Program (MSP). A notary public is not an acceptable signature
guarantor.
2. Non-Certificate Shares. If you own non-certificate
Original Shares registered on the books of a Fund, and you have
not elected Expedited Redemption to a predesignated Financial
Institution account, you must use the Regular Redemption Method.
Under this redemption method you should send a letter of
instruction to: Administrative Data Management Corp., Attn:
Aquilasm Group of Funds, 581 Main Street, Woodbridge, NJ
07095-1198, containing:
Fund Name;
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 (normally redemption proceeds will
be mailed to your address as registered with the
Funds);
Signature(s) of the registered shareholder(s); and
Signature guarantee(s), if required, as indicated
above.
Redemption Payments
For redemptions of Original Shares other than by checks
you have written, redemption payments will ordinarily be mailed
to you at your address of record. If you so request and the
amount of your redemption proceeds is $1,000 or more, the
proceeds will, wherever possible, be wired or transferred through
the facilities of the Automated Clearing House to the Financial
Institution account specified in the Expedited Redemption section
of your Application or Ready Access Features form. Any Fund may
impose a charge, not exceeding $5.00 per wire redemption, after
written notice to shareholders who have elected this redemption
procedure. No Fund has any present intention of making this
charge. Upon 30 days' written notice to shareholders, any Fund
may modify or terminate the use of the Automated Clearing House
to make redemption payments at any time or charge a service fee,
although no such fee is currently contemplated. If any such
changes are made, the Prospectus will be supplemented to reflect
them. If you use a broker or dealer to arrange for a redemption,
you may be charged a fee for this service.
Redemption proceeds on Original Shares issued under the
third method under which shares are issued (see "When Shares Are
Issued and Dividends Are Declared on Them" under "How to Invest
in the Funds") will be wired in Federal funds on the date of
redemption, if practicable, and, if not practicable, as soon
thereafter as practicable, irrespective of amount. Redemption
requests as to such shares may be made by telephone.
Except as indicated above, each Fund will normally make
payment for all Original Shares redeemed on the next Business Day
following receipt of request. Except as set forth below, in no
event will payment be made more than seven days after receipt of
a redemption request made in compliance with one of the
redemption methods specified above. However, the right of
redemption may be suspended or the date of payment postponed (i)
during periods when the New York Stock Exchange is closed for
other than weekends and holidays or when trading on such exchange
is restricted as determined by the Securities and Exchange
Commission by rule or regulation; (ii) during periods in which an
emergency, as determined by the Securities and Exchange
Commission, exists which causes disposal of, or valuation of the
net asset value of, the portfolio securities of the Fund to be
unreasonable or impracticable; or (iii) for such other periods as
the Securities and Exchange Commission may permit. Payment for
redemption by any method (including redemption by check) of
Original Shares recently purchased by check (irrespective of
whether the check is a regular check or a certified, cashier's or
official bank check) or by Automatic Investment or Telephone
Investment may be delayed up to 15 days or until (i) the purchase
check or Automatic Investment or Telephone Investment has been
honored or (ii) the Agent has received assurances by telephone or
in writing from the bank on which the purchase check was drawn or
from which the funds for Automatic Investment or Telephone
Investment were transferred, satisfactory to the Agent and the
Fund, that the purchase check or Automatic Investment or
Telephone Investment will be honored. Original Shares so
purchased within the prior 15 days will not be redeemed under the
check writing redemption procedure and a shareholder must not
write a check if (i) it will be presented to the Custodian for
payment within 15 days of a purchase of Original Shares by check
and (ii) the redemption check would cause the redemption of some
or all of those shares. Possible delays in payment of redemption
proceeds can be eliminated by using wire payments or Federal
Reserve drafts to pay for purchases.
If the Board of Trustees determines that it would be
detrimental to the best interests of the remaining shareholders
of any Fund to make payment wholly or partly in cash, that Fund
may pay the redemption price in whole or in part by the
distribution in kind of securities from the portfolio of the
Fund, in lieu of cash, in conformity with applicable rules of the
Securities and Exchange Commission. See the Additional Statement
for details.
Each Fund has the right to compel the redemption of shares
held in any account if the aggregate net asset value of such
shares is less than $500 due to shareholder redemptions. If the
Board of Trustees elects to do this, shareholders who are
affected will receive prior written notice and will be permitted
60 days to bring their accounts up to the minimum before this
redemption is processed.
AUTOMATIC WITHDRAWAL PLAN
If you own or purchase Original Shares of a Fund having a
net asset value of at least $5,000 you may establish an Automatic
Withdrawal Plan under which you will receive a monthly or
quarterly check in a stated amount, not less than $50. If such a
plan is established, all dividends and distributions must be
reinvested in your shareholder's account. See the Automatic
Withdrawal Plan provisions of the Application included in the
Prospectus, the Additional Statement under "Automatic Withdrawal
Plan" and "Dividend and Tax Information" below.
MANAGEMENT ARRANGEMENTS
The Board of Trustees
The business and affairs of each Fund are managed under the
direction and control of its Board of Trustees. The Additional
Statement lists the Funds' Trustees and officers and provides
further information about them.
The Advisory Agreements
Hawaiian Trust Company, Limited (the "Adviser") supervises
the investment program of each Fund and the composition of its
portfolio.
The services of the Adviser to each Fund are rendered under
an Investment Advisory Agreement between that Fund and the
Adviser (together, the "Advisory Agreements") which were approved
by each Fund's shareholders on March 22, 1996. The new Advisory
Agreements have the same provisions as the agreements previously
in effect, except that under the new agreements the Funds are
permitted to pay regular fees to Trustees who are affiliated with
the Adviser solely by reason of membership on its Board of
Directors.
The Advisory Agreements of the Funds provide, subject to
the control of the Board of Trustees, for investment supervision
by the Adviser. Under the Advisory Agreements, the Adviser will
furnish information as to the Fund's portfolio securities to any
provider of fund accounting services to each Fund; will monitor
records of each Fund as to the Fund's portfolio, including
prices, maintained by such provider of such services; and will
supply at its expense, monthly or more frequently as may be
necessary, pricing of each Fund's portfolio based on available
market quotations using a pricing service or other source of
pricing information satisfactory to that Fund. Each Advisory
Agreement states that the Adviser shall, at its expense, provide
to the Fund all office space and facilities, equipment and
clerical personnel necessary for the carrying out of the
Adviser's duties under the Advisory Agreement.
Under each Advisory Agreement, the Adviser pays all
compensation of those officers and employees of the Fund and of
those Trustees, if any, who are affiliated with the Adviser,
provided, however that if any Trustee is an affiliate of the
Adviser solely by reason of being a member of its Board of
Directors, the Trust may pay compensation to such Trustee, but at
a rate no greater than the rate it pays to its other Trustees.
Under the Advisory Agreements, each Fund bears the cost of
preparing and setting in type its prospectuses, statements of
additional information, and reports to its shareholders and the
costs of printing or otherwise producing and distributing those
copies of such prospectuses, statements of additional information
and reports as are sent to its shareholders. Under each Advisory
Agreement, all costs and expenses not expressly assumed by the
Adviser or by the Administrator under the Fund's Administration
Agreement or by the Fund's principal underwriter are paid by the
Fund. The Advisory Agreements list examples of such expenses
borne by the Funds, the major categories of such expenses being:
legal and audit expenses, custodian and transfer agent, or
shareholder servicing agent, fees and expenses, stock issuance
and redemption costs, certain printing costs, registration costs
of the Funds and their shares under Federal and State securities
laws, interest, taxes, and non-recurring expenses, including
litigation.
Under the Advisory Agreements, each Fund pays a fee payable
monthly and computed on the net asset value of the Fund as of the
close of business each business day. For the Cash Fund, the fee
is payable at the annual rate of 0.33 of 1% of such net assets up
to $325 million, and on net assets above that amount at an annual
rate of 0.43 of 1% of such net assets; for each of the Tax-Free
Fund and the Treasuries Fund, the annual rate is 0.27 of 1% of
such net assets up to a stated amount of net assets and 0.33 of
1% on net assets above that amount. (The amount for the Tax-Free
Fund is $95 million and for the Treasuries Fund the amount is $60
million.) However, the total fees which the Funds pay are at the
annual rate of 0.50 of 1% of such net assets for the Cash Fund
and 0.40 of 1% for the other Funds, since the Administrator also
receives a fee from each of the other Funds under the applicable
Administration Agreement as discussed below. The Adviser and/or
Administrator may, in order to attempt to achieve a competitive
yield on the shares of a Fund, each waive all or part of either
fee.
The Adviser agrees in each case that its fee shall be
reduced, but not below zero, by an amount equal to the pro-rata
portion (based upon the aggregate fees of the Adviser and the
Administrator) of the amount, if any, by which the total expenses
of the Fund in any fiscal year, exclusive of taxes, interest and
brokerage fees, shall exceed the lesser of (i) 2.5% of the first
$30 million of average annual net assets of the Fund plus 2% of
the next $70 million of such assets and 1.5% of its average
annual net assets in excess of $100 million, or (ii) 25% of the
Fund's total annual investment income.
The Advisory Agreements contain provisions as to the
allocation of the portfolio transactions of each Fund; see the
Additional Statement. Under these provisions, the Adviser is
authorized to consider sales of the Fund's shares in making this
allocation.
The Administration Agreements
Under Administration Agreements with each Fund (the
"Administration Agreements"), Aquila Management Corporation as
Administrator, at its own expense, provides office space,
personnel, facilities and equipment for the performance of its
functions thereunder and as is necessary in connection with the
maintenance of the headquarters of the Fund and pays all
compensation of the Fund's Trustees, officers and employees who
are affiliated persons of the Administrator. The Administration
Agreements went into effect November 1, 1993.
Under the Administration Agreements, subject to the control
of the Funds' Board of Trustees, the Administrator provides all
administrative services to each Fund other than those relating to
its investment portfolio and the maintenance of its accounting
books and records. Such administrative services include but are
not limited to maintaining books and records (other than
accounting books and records) of the Funds, and overseeing all
relationships between the Funds and their 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
Funds and for the sale, servicing or redemption of the Funds'
shares. See the Additional Statement for a further description of
functions listed in the Administration Agreements as part of such
duties.
Under each Administration Agreement, the Fund pays a fee
payable monthly and computed on the net asset value of the Fund
at the end of each business day. For the Cash Fund, the fee is
payable at the annual rate of 0.17 of 1% of such net assets up to
$325 million, and on net assets above that amount at an annual
rate of 0.07 of 1% of such net assets; for each of the Tax-Free
Fund and the Treasuries Fund, the annual rate is 0.13 of 1% of
such net assets up to a stated amount of net assets and 0.07 of
1% on net assets above that amount. (The amount for the Tax-Free
Fund is $95 million and for the Treasuries Fund the amount is $60
million.) The Administrator has agreed in each case that its fee
shall be reduced, but not below zero, by an amount equal to its
pro-rata portion (based upon the aggregate fees of the Adviser
and the Administrator) of the amount, if any, by which the total
expenses of the Fund in any fiscal year, exclusive of taxes,
interest, and brokerage fees, shall exceed the lesser of (i) 2.5%
of the first $30 million of average annual net assets of the Fund
plus 2% of the next $70 million of such assets and 1.5% of its
average annual net assets in excess of $100 million, or (ii) 25%
of the Fund's total annual investment income.
Information about the Adviser, the Administrator and the
Distributor
The Adviser, a Hawaii corporation organized in 1898, is
the largest trust company in the State of Hawaii in terms of
assets under administration. As of March 31, 1997, the Adviser
had over $12 billion of clients' assets under administration. The
Adviser is not authorized to, and does not, carry on a banking
business. The Adviser is a wholly-owned subsidiary of Bank of
Hawaii, all of whose shares are owned by Bancorp Hawaii, Inc.
("Bancorp") and Bank of Hawaii's directors (each of whom owns
qualifying shares as required by Hawaii law). Bancorp is a bank
holding company registered under the Bank Holding Company Act of
1956, as amended, and its common stock is registered under the
Securities Exchange Act of 1934 and is listed and traded on the
New York Stock Exchange. Bancorp files annual and periodic
reports with the Securities and Exchange Commission which are
available for public inspection. See the Additional Statement as
to the legality, under the Federal banking laws, of the Adviser's
acting as the Funds' investment adviser. On September 30, 1997,
the Adviser will become Pacific Century Trust, a division of the
Bank of Hawaii.
The Funds' Administrator is founder of, and administrator
to, the Aquilasm Group of Funds, which consists of tax-free
municipal bond funds, two equity funds and money market funds. As
of June 30, 1997, these funds had aggregate assets of
approximately $2.6 billion, of which approximately $720 million
consisted of assets of money market funds. The Administrator,
which was founded in 1984, is controlled by Mr. Lacy B. Herrmann
(directly, through a trust and through share ownership by his
wife). See the Additional Statement for information on Mr.
Herrmann and these arrangements.
For each Fund's fiscal year ended March 31, 1997, the
Cash Fund, the Tax-Free Fund and the Treasuries Fund paid or
accrued to the Adviser fees of $1,424,936, $410,547 and $379,291
respectively, and paid or accrued to the Administrator fees of
$609,175, $156,130 and $124,062, respectively under the Advisory
and Administration Agreements.
The Distributor currently handles the distribution of the
shares of fourteen funds (five money market funds, seven tax-free
municipal bond funds and two equity funds), including the Funds.
Under Distribution Agreements with the Funds, the Distributor is
responsible for the payment of certain printing and distribution
costs relating to prospectuses and reports as well as the costs
of supplemental sales literature, advertising and other
promotional activities.
At the date of this Prospectus, there is a proposed
transaction whereby all of the shares of the Distributor, which
are currently owned 75% by Mr. Herrmann and 25% by Diana P.
Herrmann, will be owned by certain directors and/or officers of
the Administrator and/or the Distributor, including Mr.
Herrmann.
DIVIDEND AND TAX INFORMATION
All of the Funds' net income for dividend purposes (see
below) will be declared daily as dividends; see "When Shares Are
Issued and Dividends Are Declared on Them" under "How to Invest
in the Funds" for information as to when dividends on Original
Shares are declared. Dividends are paid within a week before or
after the end of each month and invested in additional shares at
net asset value on the payable date, or, at your election, paid
in cash by check. This election may be made in the Application or
by subsequent written notice to the Agent. You may also elect to
have dividends deposited without charge by electronic funds
transfers into an account at a Financial Institution which is a
member of the Automated Clearing House by completing a Ready
Access Features form. If you redeem all of your Original Shares
you will be credited on the redemption payment date with the
amount of all dividends declared for the month through the date
of redemption, or through the day preceding the date of
redemption in the case of shares on which income dividends were
declared on the same day on which the shares were issued.
You will receive monthly a summary of your account,
including information as to dividends paid during the month and
the shares credited to the account through reinvestment of
dividends.
Daily dividends for a Fund will be calculated as follows:
the net income for dividend purposes will be calculated
immediately prior to the calculation of net asset value and will
include accrued interest and original issue and market discount
earned since the last valuation, less the estimated expenses of
the Fund (including expenses allocable to each particular class
of shares) and amortized original issue and market premium for
the period. However, the calculation of the dividend could change
under certain circumstances under the procedures adopted by the
Board of Trustees relating to "amortized cost" valuation; see the
Additional Statement.
Dividends paid by each Fund with respect to Original Shares
and Service Shares will be calculated in the same manner, at the
same time, on the same day, and will be in the same amount except
that any class expenses (including payments made by Service
Shares under the Distribution Plan) will be borne exclusively by
that class. Dividends on Original Shares are expected generally
to be higher than those on Service Shares because expenses
allocated to Service Shares will generally be higher.
Dividends so paid will be taxable to shareholders as
ordinary income (except as described in "Tax Information
Concerning the Tax-Free Fund" below), even though reinvested,
unless the net income, computed as above, exceeds "earnings and
profits," as determined for tax purposes; this could occur
because net income as so determined will include certain
unrealized appreciation and discount which is not included for
tax purposes. If dividends exceed a shareholder's ratable share
of "earnings and profits," the excess will reduce the cost or
other tax basis for his or her shares; any reduction which would
otherwise result in a negative basis will cause the basis to be
reduced to zero, with any remaining amount being taxed as capital
gain. The dividends paid by the Funds will not be eligible for
the 70% dividends received deduction for corporations. Statements
as to the tax status of each investor's dividends will be mailed
annually.
It is possible but unlikely that a Fund may have realized
long-term capital gains or losses in a year. If it has any net
long-term gains realized through October 31st of a year, it will
pay a capital gains distribution after that date. It may also pay
a supplemental distribution after the end of its fiscal year. Any
capital gains distribution will be taxed at the same rate as
ordinary income, except that for individuals, trusts and estates
the maximum tax rate on capital gains distributions is 28% even
if the applicable rate on ordinary income for such taxpayers is
higher than 28%.
Each Fund will be required to withhold, subject to certain
exemptions, at a rate of 31% on dividends paid or credited to
shareholders and on redemption proceeds, if a correct Taxpayer
Identification Number, certified when required, is not on file
with it.
Each Fund, during its last fiscal year, qualified and
intends to continue to qualify under subchapter M of the Internal
Revenue Code; if so qualified it will not be liable for Federal
income taxes on amounts distributed by the Fund.
Tax Information Concerning the Tax-Free Fund
The Tax-Free Fund seeks to pay "exempt-interest
dividends." In the case of the Tax-Free Fund, these are dividends
derived from net income received by the Tax-Free Fund on its
Municipal Obligations, provided that, as the Tax-Free Fund
intends, at least 50% of the value of its assets is invested in
tax-exempt obligations. Such dividends are exempt from regular
Federal income tax. Classification of dividends as
exempt-interest or non-exempt-interest is made by one designated
percentage applied uniformly to all income dividends made during
the Tax-Free Fund's tax year. Such designation will normally be
made in the first month after the end of each of the Tax-Free
Fund's fiscal years as to income dividends paid in the prior
year. The percentage of income designated as tax-exempt for any
particular dividend may be different from the percentage of the
Tax-Free Fund's income that was tax-exempt during the period
covered by the dividend.
A shareholder receiving a dividend from net interest income
earned by the Tax-Free Fund from one or more of (i) Taxable
Obligations and (ii) income from repurchase agreements and
securities loans, treats the dividend as a receipt of ordinary
income in the computation of the shareholder's gross income
regardless of whether it is reinvested in Tax-Free Fund shares;
such dividends and capital gains distributions are not included
in exempt-interest dividends.
Under the Code, interest on loans to purchase or carry
shares of the Tax-Free Fund may not be deducted for Federal tax
purposes unless the Tax-Free Fund realizes taxable income, in
which case interest would be deductible in proportion to the
Tax-Free Fund's taxable income. In addition, under rules used by
the Internal Revenue Service for determining when borrowed funds
are deemed used for the purpose of purchasing or carrying
particular assets, the purchase of shares of the Tax-Free Fund
may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the
purchase of shares. Moreover, the receipt of tax-exempt dividends
from the Tax-Free Fund by an individual shareholder may result in
some portion of the social security payments or railroad
retirement benefits received by the shareholder or the
shareholder's spouse being included in taxable income.
Furthermore, persons who are "substantial users" (or persons
related thereto) of facilities financed by industrial development
bonds or private activity bonds should consult their own tax
advisers before purchasing shares.
While interest from all Municipal Obligations is tax-exempt
under the Code for purposes of computing the regular tax,
interest from so-called private activity bonds issued after
August 7, 1986 constitutes a tax preference for both individuals
and corporations and thus will enter into a computation of the
alternative minimum tax. Whether or not that computation will
result in a tax will depend on the entire content of the
taxpayer's return. The Tax-Free Fund will not invest in the types
of Municipal Obligations which would give rise to interest that
would be subject to alternative minimum taxation if more than 20%
of its assets would be so invested, and may refrain from
investing in that type of Municipal Obligation completely. The
20% limit is a fundamental policy of the Tax-Free Fund.
Corporations receiving exempt-interest dividends from the
Tax-Free Fund are subject to additional provisions applying the
alternative minimum tax.
Hawaiian Tax Information
The Tax-Free Fund, and dividends and distributions made
by the Tax-Free Fund to Hawaii residents, will generally be
treated for Hawaii income tax purposes in the same manner as they
are treated under the Code for Federal income tax purposes. Under
Hawaii law, however, interest derived from obligations of states
(and their political subdivisions) other than Hawaii will not be
exempt from Hawaii income taxation. (Interest derived from bonds
or obligations issued by or under the authority of the following
is exempt from Hawaii income taxation: Guam, Northern Mariana
Islands, Puerto Rico, and the Virgin Islands.) For the calendar
years 1996, 1995 and 1994, the percentage of the Tax-Free Fund's
dividends exempt from State of Hawaii income taxes was 41.3%,
34.8% and 38.9%, respectively, which should not be considered
predictive of future results.
Interest on Hawaiian Obligations, tax-exempt obligations of
states other than Hawaii and their political subdivisions, and
obligations of the United States or its possessions is not exempt
from the Hawaii Franchise Tax. This tax applies to banks,
building and loan associations, financial service loan companies,
financial corporations, and small business investment companies.
Persons or entities who are not Hawaii residents should not
be subject to Hawaii income taxation on dividends and
distributions made by the Tax-Free Fund but may be subject to
other state and local taxes.
Hawaiian Tax Information Concerning the Treasuries Fund
The Director of Taxation of Hawaii has stated to the
Treasuries Fund that dividends paid by a regulated investment
company from interest it receives on United States Government
obligations will be exempt from State of Hawaii income tax. For
the calendar years 1996, 1995 and 1994, the percentage of the
Treasuries Fund's dividends exempt from State of Hawaii income
taxes was 71.5%, 82.6% and 85.6%, respectively, which should not
be considered predictive of future results. Dividends paid from
other types of interest (including interest on U.S. Treasury
repurchase transactions), and capital gains distributions, if
any, will be taxable.
EXCHANGE PRIVILEGES
There are two exchange privileges available to holders of
Original Shares of the Funds: the Pacific Capital Exchange
Privilege and the Aquilasm Group Exchange Privilege.
Pacific Capital Exchange Privilege
Shareholders may exchange their Original Shares in any
Fund for Institutional Class shares of any of the existing or
future funds (series) of Pacific Capital Funds, each of which
represents a different portfolio. As of the date of this
Prospectus, the existing funds are Growth Stock Fund, Growth and
Income Fund, New Asia Growth Fund Diversified Fixed Income Fund,
Tax Free Securities Fund, Tax Free Short Intermediate Securities
Fund, U.S. Treasuries Securities Fund and Short Intermediate U.S.
Treasury Securities Fund. Each of these funds is referred to in
the Prospectus as a "Pacific Capital Fund" and collectively they
are referred to as the "Pacific Capital Funds" or the "Pacific
Capital Exchange Group." The Adviser acts as investment adviser
for the Pacific Capital Funds. All exchanges are subject to
certain conditions described below.
Aquilasm Group Exchange Privilege
Shareholders may exchange their Original Shares of any
Fund into certain related tax-free municipal bond funds and two
equity funds (the "Aquila Bond and Equity Funds") and money
market funds (the "Aquila Money Market Funds"), all of which (the
"Aquila Exchange Group") are sponsored by Aquila Management
Corporation and Aquila Distributors, Inc., and have the same
Administrator and Distributor as the Funds. All exchanges are
subject to certain conditions described below. As of the date of
this Prospectus, the Aquila Bond and Equity Funds are Hawaiian
Tax-Free Trust, Tax-Free Trust of Oregon, Tax-Free Trust of
Arizona, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of
Kentucky, Tax-Free Fund For Utah, Narragansett Insured Tax-Free
Income Fund, Aquila Rocky Mountain Equity Fund and Aquila
Cascadia Equity Fund; the Aquila Money Market Funds are the
Funds, Capital Cash Management Trust and Churchill Cash Reserves
Trust. (With respect to exchanges of Original Shares of any Fund
into shares of any other Fund, only exchanges for Original Shares
of those funds are permitted.)
Terms and conditions of both Exchange Privileges
The Institutional Class shares of each Pacific Capital Fund
have an exchange privilege which allows further exchanges among
the Institutional Class shares of each other Pacific Capital Fund
at relative net asset values. The Institutional Class shares of
each Pacific Capital Fund also have another exchange privilege
with certain funds in the Aquila Exchange Group under which their
shares and Original Shares of Funds may be exchanged, also
without payment of an additional sales charge.
The funds in the Aquila Exchange Group also have exchange
privileges, as described below. Under the exchange privileges of
both Exchange Groups, once any applicable sales charge has been
paid with respect to exchangeable shares of a fund in one of the
Exchange Groups, those shares (and any shares acquired as a
result of reinvestment of dividends and/or distributions) may be
exchanged any number of times among the other funds of the same
Exchange Group without the payment of any additional sales
charge. An exchange between the two Exchange Groups will,
however, result in the applicable sales charge if the shares of
the fund being acquired in the exchange carry a sales charge,
unless the shares being exchanged are the Eligible Shares (see
below) of that Exchange Group.
The "Pacific Capital Eligible Shares" of any Pacific Capital
Fund are those Institutional shares which were (a) acquired by
direct purchase with payment of any applicable sales charge, or
which were received in exchange for shares of another Pacific
Capital Fund on which any applicable sales charge was paid; (b)
acquired with payment of any applicable sales charge by exchange
for Original Shares of any Fund; (c) acquired in one or more
exchanges between Original Shares of the Funds and shares of the
Pacific Capital Funds so long as the Pacific Capital Fund shares
were originally purchased as set forth in (a) or (b); or (d)
acquired as a result of reinvestment of dividends and/or
distributions on otherwise Pacific Capital Eligible Shares.
If you own Pacific Capital Eligible Shares of any Fund, you
may exchange them for shares of any Pacific Capital Fund or any
Aquila Money Market Fund without payment of any sales charge. The
shares received will continue to be Pacific Capital Eligible
shares. You may also exchange them for the shares of any Aquila
Bond or Equity Fund, but only upon payment of the appropriate
sales charges.
The Aquila Group Exchange Privilege
Each of the Aquila Bond and Equity Funds offers three
Classes of Shares: Class A Shares ("Front-Payment Shares") and
Class C Shares ("Level-Payment Shares") which can be purchased by
anyone and Class Y Shares ("Institutional Class Shares"), which
are offered only to institutions acting for investors in a
fiduciary, advisory, agency, custodial or similar capacity, and
are not offered directly to retail customers. The Aquila Group
Exchange Privilege has different provisions for exchanges for
each class.
Class A Shares Exchange Privilege
Under the Aquila Class A Shares exchange privilege, once any
applicable sales charge has been paid on Class A Shares of any
Aquila Bond and Equity Fund, those shares (and any shares
acquired as a result of reinvestment of dividends and/or
distributions) may be exchanged any number of times between
Aquila Money-Market Funds and Bond or Equity Funds without the
payment of any additional sales charge.
CDSC Class A Shares of an Aquila Bond or Equity Fund, which
are issued in purchases of $1 Million or more and when certain
special dealer arrangements are in effect, can be exchanged for
CDSC Class A Shares of a Bond or Equity Fund or into an Aquila
Money-Market Fund. The CDSC Class A Shares will not be subject to
a contingent deferred sales charge at the time of exchange, but
the contingent deferred sales charge will be payable upon a
redemption which occurs before the expiration of the applicable
holding period of the CDSC Class A Shares or any shares of an
Aquila Money-Market Fund received on exchange for the CDSC Class
A Shares. (The contingent deferred sales charge does not apply to
any shares acquired as a result of reinvestment of dividends
and/or distributions.) For purposes of computing the time period
for the applicable contingent deferred sales charge, the length
of time of ownership of CDSC Class A Shares will be determined by
the time of original purchase and not by the time of the
exchange. Any period of 30 days or more during which Aquila
Money-Market shares received in exchange for CDSC Class A Shares
are held is not counted in computing the period of ownership of
CDSC Class A Shares.
Class C Shares Exchange Privilege
Under the Class C Shares exchange privilege, Class C Shares
(and any shares acquired as a result of reinvestment of dividends
and/or distributions) may be exchanged any number of times for
shares of Aquila Money-Market Funds and for Class C Shares of the
Aquila Bond or Equity Funds. Class C Shares will not be subject
to a contingent deferred sales charge at the time of exchange,
but the contingent deferred sales charge will be payable upon a
redemption which occurs before the expiration of the applicable
holding period of the Class C Shares or any shares of an Aquila
Money-Market Fund received in exchange for the Class C Shares.
(The contingent deferred sales charge does not apply to any
shares acquired as a result of reinvestment of dividends and/or
distributions.) For purposes of computing the time period for the
applicable contingent deferred sales charge or for the conversion
of Class C Shares into Class A Shares, the length of time of
ownership of Class C shares will be determined by the time of
original purchase and not by the time of the exchange. Any period
of 30 days or more during which Aquila Money-Market shares
received in exchange for Class C Shares are held is not counted
in computing the period of ownership of Class C Shares.
The Class Y Exchange Privilege
Class Y Shares of an Aquila Bond or Equity Fund may be
exchanged only for Class Y Shares of another Aquila Bond or
Equity Funds or for shares of an Aquila Money-Market Fund. Under
the Class Y exchange privilege, once Class Y Shares of any Bond
or Equity Fund have been purchased, those shares (and any shares
acquired as a result of reinvestment of dividends and/or
distributions) may be exchanged any number of times for shares of
Aquila Money-Market Funds and Class Y Shares of the Aquila Bond
or Equity Funds without the payment of any sales charge. Shares
of an Aquila Money-Market Fund not acquired in exchange for Class
Y Eligible Shares of a Bond or Equity Fund can be exchanged for
Class Y Shares of a Bond or Equity Fund only by persons eligible
to make an initial purchase of Class Y Shares.
Eligible Shares
The "Class A Eligible Shares" of any Aquila Bond or Equity
Fund are those Class A Shares which were (a) acquired by direct
purchase with payment of any applicable sales charge, or which
were received in exchange for shares of another Aquila Bond or
Equity Fund on which any applicable sales charge was paid; (b)
acquired by exchange for shares of an Aquila Money-Market Fund
with payment of the applicable sales charge; (c) acquired in one
or more exchanges between Aquila Money-Market Funds and the
Aquila Bond and Equity Funds so long as shares of a Bond or
Equity Fund were originally purchased as set forth in (a) or (b);
(d) acquired on conversion of Class C Shares or (e) acquired as a
result of reinvestment of dividends and/or distributions on
otherwise Class A Eligible Shares.
The "CDSC Class A Eligible Shares" of any Aquila Bond or
Equity Fund are those CDSC Class A Shares which were (a) acquired
by direct purchase in the amount of $1 million or more without a
sales charge or in certain purchases when special dealer
arrangements are in effect or which were received in exchange for
CDSC Class A Shares of another Aquila Bond or Equity Fund
acquired under the same conditions; (b) acquired by exchange for
shares of an Aquila Money-Market Fund under the same conditions;
(c) acquired in one or more exchanges between the Aquila
Money-Market Funds and the Aquila Bond and Equity Funds so long
as shares of a Bond or Equity Fund were originally purchased as
set forth in (a) or (b); or (d) acquired as a result of
reinvestment of dividends and/or distributions on otherwise CDSC
Class A Eligible Shares.
The "Class C Eligible Shares" of any Bond or Equity Fund are
those shares which were (a) acquired by direct purchase or by
exchange from an Aquila Money-Market Fund, or were received in
exchange for Class C Shares of another Aquila Bond or Equity
Fund; or (b) acquired as a result of reinvestment of dividends
and/or distributions on otherwise Class C Eligible Shares.
The "Class Y Eligible Shares" of any Aquila Bond or Equity
Fund are those shares which were (a) acquired by direct purchase,
by exchange from an Aquila Money-Market Fund, or which were
received in exchange for Class Y Shares of another Bond or Equity
Fund; or (b) acquired as a result of reinvestment of dividends
and/or distributions on otherwise Class Y Eligible Shares. Shares
of an Aquila Money-Market Fund not acquired in exchange for Class
Y Eligible Shares of a Bond or Equity Fund can be exchanged for
Class Y Shares of a Bond or Equity Fund only by persons eligible
to make an initial purchase of Class Y Shares.
If you own Class A, CDSC Class A or Class C Eligible Shares
of any Bond or Equity Fund, you may exchange them for shares of
any Aquila Money Market Fund or the Class A, CDSC Class A or
Class C Shares, respectively, of any other Bond or Equity Fund
without payment of any sales charge or CDSC. The shares received
will continue to be Class A, CDSC Class A or Class C Eligible
shares.
If you own Class Y Shares of any Bond or Equity Fund or
shares of any Aquila Money Market Fund received in exchange for
Class Y Shares of a Bond or Equity Fund you may exchange them for
shares of any Aquila Money Market Fund or the Class Y Shares of
any other Bond or Equity Fund without payment of any sales charge
or CDSC. The shares received will continue to be Class Y Eligible
shares.
If you own shares of an Aquila Money-Market Fund which you
have acquired by exchange for Class A Eligible Shares of any
Aquila Bond or Equity Fund, you may exchange these shares, and
any shares acquired as a result of reinvestment of dividends
and/or distributions on these shares, for Class A Shares of any
Aquila Bond or Equity Fund without payment of any sales charge.
If you own shares of an Aquila Money-Market Fund which you
have acquired by exchange for CDSC Class A Eligible Shares of any
Bond or Equity Fund, you may exchange these shares, and any
shares acquired as a result of reinvestment of dividends and/or
distributions on these shares, for CDSC Class A shares of any
Bond or Equity Fund but you will be required to pay the
applicable contingent deferred sales charge if you redeem such
shares before you have held CDSC Class A Shares for four years.
You will also be required to pay the applicable contingent
deferred sales charge if you redeem such shares of an Aquila
Money-Market Fund before you have held CDSC Class A Shares for
four years. The running of the four-year period is suspended
during the period you hold shares of an Aquila Money-Market Fund
received in exchange for CDSC Class A Shares.
If you own shares of an Aquila Money-Market Fund which you
have acquired by exchange for Class C Eligible Shares of any Bond
or Equity Fund, you may exchange these shares, and any shares
acquired as a result of reinvestment of dividends and/or
distributions on these shares, for Class C Shares of any Bond or
Equity Fund, but you will be required to pay the applicable
contingent deferred sales charge if you redeem such Class C
shares before you have held Class C Shares for 12 months. You
will also be required to pay the applicable contingent deferred
sales charge if you redeem such shares of an Aquila Money-Market
Fund before you have held Class C Shares for 12 months. The
running of the 12-month CDSC period and the six-year conversion
period for Class C Shares is suspended during the period you hold
shares of an Aquila Money-Market Fund received in exchange for
Class C Shares.
Shares of an Aquila Money-Market Fund may be exchanged for
shares of another Aquila Money-Market Fund or for Class A Shares,
CDSC Class A Shares or Class C Shares of an Aquila Bond or Equity
Fund, and, for eligible purchasers, for Class Y Shares; however,
if the shares of an Aquila Money-Market Fund were not acquired by
exchange of Eligible Shares of a Bond or Equity Fund or of shares
of an Aquila Money-Market Fund acquired in such an exchange, they
may be exchanged for Class A Shares of a Bond or Equity Fund only
upon payment of the applicable sales charge. Shares of an Aquila
Money-Market Fund not acquired in exchange for Class Y Eligible
Shares of a Bond or Equity Fund can be exchanged for Class Y
Shares of a Bond or Equity Fund only by persons eligible to make
an initial purchase of Class Y Shares.
If you own Original Shares of a Fund that are neither
Pacific Capital Eligible Shares nor Aquila Eligible Shares, you
may exchange them for shares of any Aquila Money Market Fund
without payment of any sales charge. The shares received will
continue not to be Eligible shares. You may also exchange them
for the shares of any Pacific Capital Fund or Aquila Bond or
Equity Fund, but only upon payment of the appropriate sales
charge, if any.
To effect an exchange, you must complete a form which is
available from the Distributor, unless you have elected the
Telephone Exchange feature on the Application. The exchange will
be effected at the relative exchange prices of the shares being
exchanged next determined after receipt by the Distributor of a
properly completed form or Telephone Exchange request. The
exchange prices will be the respective net asset values of the
shares (unless a sales charge is to be deducted in connection
with an exchange of shares as described above, in which case the
exchange price of shares of the Pacific Capital Fund or Aquila
Bond or Equity Fund will be its public offering price).
Dividends paid by the Aquila Money Market Funds are
taxable, except to the extent that dividends paid by the Tax-Free
Fund (which invests in tax-free municipal obligations) are exempt
from regular Federal income tax and Hawaiian income tax, and to
the extent that dividends paid by the Treasuries Fund (which
invests in U.S. Treasury obligations) are exempt from state
income taxes. Dividends paid by the Aquila Rocky Mountain Equity
Fund and Aquila Cascadia Equity Fund are taxable. If your state
of residence is not the same as that of the issuers of
obligations in which a tax-free municipal bond fund or a tax-free
money market fund invests, the dividends from that fund may be
subject to income tax of the state in which you reside.
Accordingly, you should consult your tax adviser before acquiring
shares of such a fund under the exchange privilege
arrangement.
An exchange is treated for Federal tax purposes as a
redemption and purchase of shares and may result in the
realization of a capital gain or loss, depending on the cost or
other tax basis of the shares exchanged and the holding period
(see the Additional Statement); no representation is made as to
the deductibility of any such loss that may occur.
If you are considering an exchange into one of the funds
listed above, you should send for and carefully read its
Prospectus.
GENERAL INFORMATION
Description of Shares
The Trust issues three series of shares, each series
constituting the shares of a Fund. Each series has separate
assets and liabilities and is comprised of two classes of shares:
Original Shares and Service Shares; only Original Shares of the
Funds are offered by this Prospectus. 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 Trust. Each share
represents an equal proportionate interest in a Fund. Income,
direct liabilities and direct operating expenses of each series
will be allocated directly to each series, and general
liabilities and expenses, if any, of the Trust will be allocated
among the series in a manner acceptable to the Board of Trustees.
Certain expenses of a series specifically allocable to a
particular class will be borne by that class; the expense of the
series not so allocated will be allocated among the classes in a
manner acceptable to the Board of Trustees and in accordance with
any applicable exemptive order or Rule of the SEC. Upon
liquidation of a series, shareholders of each class of the series
are entitled to share pro-rata (subject to liabilities, if any,
allocated specifically to that class) in the net assets of that
series available for distribution to shareholders and upon
liquidation of the Trust, the respective series are entitled to
share proportionately in the assets available to the Trust after
allocation to the various series. If they deem it advisable and
in the best interests of shareholders, the Board of Trustees of
the Trust may create additional classes of shares (subject to
rules and regulations of the Securities and Exchange Commission
or by exemptive order) or the Board of Trustees may, at its own
discretion, create additional series of shares, each of which may
have separate assets and liabilities (in which case any such
series will have a designation including the word "Series"). See
the Additional Statement for further information about possible
additional classes or series. Shares are fully paid and
non-assessable, except as set forth under the caption "General
Information" in the Additional Statement; the holders of shares
have no pre-emptive or conversion rights.
Voting Rights
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) represented by the shares 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. 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
Trust. The Trust may be terminated (i) upon the sale of its
assets to another issuer, or (ii) upon liquidation and
distribution of the assets of the Trust, in either case if such
action is approved by the vote of the holders of a majority of
the outstanding shares of each series. If not so terminated, the
Trust will continue indefinitely. Rule 18f-2 under the Investment
Company Act of 1940 provides that matters submitted to
shareholders be approved by a majority of the outstanding voting
securities of each series, unless it is clear that the interests
of each series in the matter are identical or the matter does not
affect a series. However, the rule exempts the selection of
accountants and the election of Trustees from the separate voting
requirement. Classes do not vote separately except that, as to
matters exclusively affecting one class (such as the adoption or
amendment of class-specific provisions of the Distribution Plan),
only shares of that class are entitled to vote.
The ownership of more than 5% of the outstanding shares
of each Fund on July 3, 1997, was as follows:
The Cash Fund: Of the Cash Fund's Original Shares,
Hawaiian Trust Company, Limited, Financial Plaza of the Pacific,
Honolulu, Hawaii held of record 262,271,692 shares (67.1%) and
Mercantile Bank, N.A., P.O. Box 387, St. Louis, Missouri held of
record 124,685,412 shares (31.9%). Of the Cash Fund's Service
Shares, BHC Securities, Inc., 2005 Market Street, Philadelphia,
PA held of record 80,978,718 shares (99.9%).
The Tax-Free Fund: Of the Tax-Free Fund's Original
Shares, Hawaiian Trust Company, Limited, Financial Plaza of the
Pacific, Honolulu, Hawaii held of record 64,370,267 shares
(89.6%); Of the Tax-Free Fund's Service Shares, BHC Securities,
Inc., 2005 Market Street, Philadelphia, PA held of record
23,482,786 shares (99.9%).
The Treasuries Fund: Of the Treasuries Fund's Original
Shares, Hawaiian Trust Company, Limited, Financial Plaza of the
Pacific, Honolulu, Hawaii held of record 61,294,917 shares
(88.6%); Mercantile Bank, N.A., P.O. Box 387, St. Louis, Missouri
held of record 6,488,434 shares (9.4%). Of the Treasuries Fund's
Service Shares, BHC Securities, Inc., 2005 Market Street,
Philadelphia, PA held of record 87,516,811 shares (99.9%).
The Funds' management is not aware of any person, other than
those named above, who beneficially owned 5% or more of either
class of a Fund's outstanding shares on such date. On the basis
of information received from the record owners listed above, the
Funds' management believes (i) that all of the Original Shares
indicated are held for the benefit of custodial or trust clients;
and (ii) that all of such shares could be considered as
"beneficially" owned by the named shareholders in that they
possessed shared voting and/or investment powers as to such
shares. The Service Shares indicated above are held for the
benefit of customers.
Description of Classes
As stated above, each Fund has two classes of shares:
Original Shares, which are offered by this Prospectus, and
Service Shares. Potential investors in Original Shares may also
be eligible to purchase Service Shares, which are offered in a
separate prospectus that may be obtained by contacting the
transfer agent of the Funds at the address or telephone number(s)
given on the front cover of this Prospectus.
Original Shares include all currently outstanding shares of
the Funds that were issued prior to January 20, 1995, the date on
which the capital structure of the Funds was changed to include
two classes rather than one. Original Shares are sold solely to
(1) financial institutions for their own account or for the
investment of funds for which they act in a fiduciary, agency,
investment advisory or custodial capacity; (2) persons entitled
to exchange into such shares under the Funds' exchange privilege;
and (3) shareholders of record on January 20, 1995, the date on
which the Funds first offered two classes of shares.
Under each Fund's Distribution Plan, the Fund pays certain
fees to "Service Organizations," that are borne only by the
Services Shares; no payments under the Distribution Plan are
borne by Original Shares. For this reason, dividends on the two
classes generally will differ. In addition, certain other
expenses directly attributable to a particular class of shares
may be allocated, in the discretion of the Board of Trustees,
solely to that class; such action would also differentially
affect dividends on the two classes.
A financial institution that holds Original Shares of a Fund
on behalf its clients receives no compensation from the Fund for
any services it provides in connection with those shares,
although it may receive compensation from its clients and/or from
the Administrator out of the Administrator's own resources.
Accordingly, any compensation that a financial institution may
receive for services provided in connection with Original Shares
may be expected to differ both as to source and amount from that
received in connection with Service Shares.
Diversity under the 1940 Act; IRS Compliance
The Tax-Free Fund is classified as a "non-diversified"
investment company under the 1940 Act and the Cash Fund and the
Treasuries Fund are classified as "diversified" investment
companies under the 1940 Act. Each Fund intends to continue to
qualify as a "regulated investment company" under the Internal
Revenue Code (the "Code"). One of the tests for such
qualification under the Code is, in general, that at the end of
each fiscal quarter of the Fund, at least 50% of its assets must
consist of (i) cash; and (ii) securities which, as to any one
issuer, do not exceed 5% of the value of the Fund's assets. As
"diversified" investment companies under the 1940 Act, the Cash
Fund and the Treasuries Fund must both meet the same test as to
75% of their respective assets. The Tax-Free Fund may therefore
not have as much diversification among securities, and thus
diversification of risk, as if it had made the election to
register as a "diversified" investment company under the 1940
Act. In general, the more a Fund invests in the securities of
specific issuers, the more it is exposed to risks associated with
investments in those issuers.
<PAGE>
[LOGO] Application for
The Pacific Capital Funds of Cash Assets Trust - Original Shares
Please complete steps 1 through 4 and mail to:
ADM, Attn: Aquilasm Group of Funds
581 Main Street, Woodbridge, NJ 07095-1198
1-800-255-2287
STEP 1
A. ACCOUNT REGISTRATION
___Individual Use line 1
___Joint Account* Use lines 1&2
___For a Minor Use line 3
___For Trust, Corporation,
Other Organization or
any Fiduciary capacity
Use line 4
* Joint Accounts will be Joint
Tenants with rights of survivorship
unless otherwise specified.
** Uniformed Gifts/Transfers
to Minors Act.
Please type or print name exactly as account is to be registered
1._____________________________________________________________________
First Name Middle Initial Last Name Social Security Number
2._____________________________________________________________________
First Name Middle Initial Last Name Social Security Number
3._____________________________________________________________________
Custodian's First Name Middle Initial Last Name
Custodian for_________________________________________________________
Minor's First Name Middle Initial Last Name
Under the________________ UGTMA**_____________________________________
Name of State Minor's Social Security Number
4._____________________________________________________________________
_____________________________________________________________________
(Name of Corporation or Organization. If a Trust, include the name(s)
of Trustees in which account will be registered and the name and date
of the Trust Instrument. Account for a Pension or Profit Sharing Plan
or Trust may be registered in the name of the Plan or Trust itself.)
______________________________________________________________________
Tax I.D. Number Authorized Individual Title
B. MAILING ADDRESS AND TELEPHONE NUMBER
______________________________________________________________________
Street or PO Box City
_________________________________ (____)__________________________
State Zip Daytime Phone Number
Occupation:______________________ Employer:__________________________
Employer's Address:___________________________________________________
Street Address: City State Zip
Citizen or resident of: ___ U.S. Other___ ______ Check here ___ if you
are a non-U.S. Citizen or resident and not subject to back-up
withholding (See certification in Step 4, Section B, below.)
C. INVESTMENT DEALER OR BROKER:
(Important - to be completed by Dealer or Broker)
________________________________ _________________________________
Dealer Name Branch Number
________________________________ _________________________________
Street Address Rep.Number/Name
________________________________ (_______)________________________
City State Zip Area Code Telephone
STEP 2
PURCHASES OF SHARES
A. INITIAL INVESTMENT
___ Pacific Capital Cash Assets Trust (61V)
___ Pacific Capital Tax-Free Cash Assets Trust (71V)
___ Pacific Capital U.S. Treasuries Cash Assets Trust (64V)
1) ___ By Check
2) ___ By Wire
1) By Check: Make check payable to either: Pacific Capital
Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust,
or Pacific Capital U.S. Treasuries Cash Assets Trust
Amount of investment $ ____________ Minimum initial investment $1,000
OR
2) By Wire*:
$______________________________ From_______________________________
Name of Financial Institution
_________________________________ _______________________________
Financial Institution Account No. Branch, Street or Box#
On_______________________________ ________________________________
(Date) City State Zip
* NOTE: To insure prompt and proper crediting to your account, if you
choose this method of payment you should first telephone the Agent
(800-255-2287 toll free or 732-855-5731) and then instruct your
Financial Institution to wire funds as indicated below for the
appropriate Fund:
Wire Instructions:
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to (specify the Fund you are investing in)
Pacific Capital Cash Assets Trust (Original Shares) A/C 6801358400
Pacific Capital Tax-Free Cash Assets Trust (Original Shares)
A/C 6801358500
Pacific Capital U.S. Treasuries Cash Assets Trust (Original Shares)
A/C 6801358600
Please include account name(s) and number (if an existing account) or the
name(s) in which the investment is to be registered (if a new account).
(A FINANCIAL INSTITUTION IS A COMMERCIAL BANK,
SAVINGS BANK OR CREDIT UNION.)
B. DIVIDENDS
ALL INCOME DIVIDENDS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL SHARES
AT NET ASSET VALUE UNLESS OTHERWISE INDICATED BELOW.
Dividends are to be:___ Reinvested or ___Paid in cash*
* FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING OPTIONS:
___Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would like
you to deposit the dividend.
___ Mail check to my/our address listed in Step 1.
STEP 3
SPECIAL FEATURES
A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to have amounts
automatically drawn on your Financial Institution account and invested
in your account. To establish this program, please complete Step 4,
Sections A & B of this Application.
I/We wish to make regular monthly investments of $______ (minimum $50)
on the ___ 1st day or ___ 16th day of the month (or on the first
business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to add to your account
(minimum $50 and maximum $50,000) at any time you wish by simply
calling the Agent toll-free at 1-800-255-2287. To establish this
program, please complete Step 4, Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
C. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)
Application must be received in good order at least 2 weeks
prior to 1st actual liquidation date.
(Check appropriate box)
___ Yes ___No
Please establish an Automatic Withdrawal Plan for this account,
subject to the terms of the Automatic Withdrawal Plan Provisions
set forth below. To realize the amount stated below, the Agent is
authorized to redeem sufficient shares from this account at the
then current Net Asset Value, in accordance with the terms below:
Dollar Amount of each withdrawal $____________ beginning_______________
Minimum:$50 Month/Year
Payments to be made: ___ Monthly or ___ Quarterly
Checks should be made payable as indicated below. If check is
payable to a Financial Institution for your account, indicate
Financial Institution name, address and your account number.
_______________________________________ __________________________
First Name Middle Initial Last Name Financial Institution Name
_______________________________________ __________________________
Street Financial Institution
Street Address
_______________________________________ __________________________
City State Zip City State Zip
____________________________________
Financial Institution Account Number
D. TELEPHONE EXCHANGE
(Check appropriate box)
___ Yes ___ No
This option allows you to effect exchanges among accounts in your
name within the AquilaSM Group of Funds by telephone.
TO MAKE A TELEPHONE EXCHANGE, CALL THE AGENT AT 1-800-255-2287
The Agent is authorized to accept and act upon my/our or any other
person's telephone instructions to execute the exchange of shares with
identical shareholder registration in the manner described in the
Prospectus. Except for gross negligence in acting upon such telephone
instructions to execute an exchange, and subject to the conditions set
forth herein, I/we understand and agree to hold harmless the Agent, each of
the Aquila Funds and Pacific Capital Funds, and their respective
officers, directors, trustees, employees, agents and affiliates against
any liability, damage, expense, claim or loss, including reasonable costs and
attorney's fees, resulting from acceptance of, or acting or failure
to act upon, this Authorization.
E. EXPEDITED REDEMPTION
(Check appropriate box)
___Yes ___ No
The proceeds will be deposited to your Financial Institution
account listed.
TO MAKE AN EXPEDITED REDEMPTION, CALL THE AGENT AT 1-800-255-2287
Cash proceeds in any amount from the redemption of shares will be
mailed or wired, whenever possible, upon request, if in an amount of
$1,000 or more to my/our account at a Financial Institution. The
Financial Institution account must be in the same name(s) as this Trust
account is registered.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
________________________________ ___________________________________
Account Registration Financial Institution Account Number
________________________________ ___________________________________
Financial Institution Name Financial Institution Transit/Routing
Number
________________________________ ___________________________________
Street City State Zip
F. CHECKING ACCOUNT SERVICE
(Check appropriate box)
___ Yes ___ No
Please open a redemption checking account at Bank One Trust Company,
N.A., in my (our) name(s) as registered and send me (us) a supply of
checks. I (we) understand that this checking account will be subject to
the rules and regulations of Bank One Trust Company, N.A., pertaining
thereto and as amended from time to time. For joint account: Check
here whether either owner ___ is authorized, or all owners ___ are
required to sign checks. IF NO BOX IS CHECKED, TWO SIGNATURES WILL BE
REQUIRED ON JOINT ACCOUNTS.
STEP 4 Section A
DEPOSITORS AUTHORIZATION TO HONOR DEBITS
IF YOU SELECTED AUTOMATIC INVESTMENT OR TELEPHONE INVESTMENT
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.
I/We authorize the Financial Institution listed below to charge to
my/our account any drafts or debits drawn on my/our account initiated
by the Agent, Administrative Data Management Corp., and to pay such
sums in accordance therewith, provided my/our account has sufficient
funds to cover such drafts or debits. I/We further agree that your
treatment of such orders will be the same as if I/we personally signed
or initiated the drafts or debits.
I/We understand that this authority will remain in effect until you
receive my/our written instructions to cancel this service. I/We also
agree that if any such drafts or debits are dishonored, for any reason,
you shall have no liabilities.
Financial Institution Account Number______________________________________
Name and Address
where my/our account Name of Financial Institution____________________
is maintained Street Address___________________________________
City______________________State_____ Zip_________
Name(s) and
Signature(s) of _______________________________
Depositor(s) as they (Please Print)
appear where account X_______________________________ __________
is registered (Signature) (Date)
________________________________
(Please Print)
X_______________________________ __________
(Signature) (Date)
INDEMNIFICATION AGREEMENT
To: Financial Institution Named Above
So that you may comply with your depositor's request, Aquila Distributors,
Inc. (the "Distributor") agrees:
1 Electronic Funds Transfer debit and credit items transmitted pursuant
to the above authorization shall be subject to the provisions of the
Operating Rules of the National Automated Clearing House Association.
2 To indemnify and hold you harmless from any loss you may suffer in
connection with the execution and issuance of any electronic debit
in the normal course of business initiated by the Agent (except any
loss due to your payment of any amount drawn against insufficient or
uncollected funds), provided that you promptly notify us in writing
of any claim against you with respect to the same, and further provided
that you will not settle or pay or agree to settle or pay any such
claim without the written permission of the Distributor.
3 To indemnify you for any loss including your reasonable costs and
expenses in the event that you dishonor, with or without cause, any
such electronic debit.
STEP 4 Section B
SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED
The undersigned warrants that he/she has full authority and is of legal
age to purchase shares of the Trust and has received and read a current
Prospectus of the Trust and agrees to its terms.
I/We authorize the Trust and its agents to act upon these instructions
for the features that have been checked.
I/We acknowledge that in connection with an Automatic Investment or
Telephone Investment, if my/our account at the Financial Institution
has insufficient funds, the Trust and its agents may cancel the purchase
transaction and are authorized to liquidate other shares or fractions
thereof held in my/our Trust account to make up any deficiency resulting
from any decline in the net asset value of shares so purchased and any
dividends paid on those shares. I/We authorize the Trust and its agents
to correct any transfer error by a debit or credit to my/our Financial
Institution account and/or Trust account and to charge the account for
any related charges.
The Trust, the Agent and the Distributor and their Trustees, directors,
employees and agents will not be liable for acting upon instructions
believed to be genuine, and will not be responsible for any losses
resulting from unauthorized telephone transactions if the Agent follows
reasonable procedures designed to verify the identity of the caller.
The Agent will request some or all of the following information:
account name and number; name(s) and social security number registered
to the account and personal identification; the Agent may also record
calls. Shareholders should verify the accuracy of confirmation
statements immediately upon receipt. Under penalties of perjury, the
undersigned whose Social Security (Tax I.D.) Number is shown above
certifies (i) that Number is my correct taxpayer identification number
and (ii) currently I am not under IRS notification that I am subject to
backup withholding (line out (ii) if under notification). If no such
Number is shown, the undersigned further certifies, under penalties of
perjury, that either (a) no such Number has been issued, and a Number
has been or will soon be applied for; if a Number is not provided to
you within sixty days, the undersigned understands that all payments
(including liquidations) are subject to 31% withholding under federal
tax law, until a Number is provided and the undersigned may be subject
to a $50 I.R.S. penalty; or (b) that the undersigned is not a citizen
or resident of the U.S.; and either does not expect to be in the U.S.
for more than 183 days during each calendar year and does not conduct a
business in the U.S. which would receive any gain from the Trust, or is
exempt under an income tax treaty.
NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW.
FOR A TRUST, ALL TRUSTEES MUST SIGN.*
______________________________ __________________________ __________
Individual (or Custodian) Joint Registrant, if any Date
______________________________ __________________________ __________
Corporate Officer, Partner, Title Date
Trustee, etc.
* For Trust, Corporations or Associations, this form must be accompanied by
proof of authority to sign, such as a certified copy of the corporate
resolution or a certificate of incumbency under the trust instrument.
SPECIAL INFORMATION
Certain features (Automatic Investment, Telephone Investment, Expedited
Redemption and Direct Deposit of Dividends) are effective 15 days after this
form is received in good order by the Trust's Agent.
You may cancel any feature at any time, effective 3 days after the Agent
receives written notice from you.
Either the Trust or the Agent may cancel any feature, without prior
notice, if in its judgment your use of any feature involves unusual
effort or difficulty in the administration of your account.
The Trust reserves the right to alter, amend or terminate any or all
features or to charge a service fee upon 30 days' written notice to
shareholders except if additional notice is specifically required by
the terms of the Prospectus.
BANKING INFORMATION
If your Financial Institution account changes, you must complete a Ready
Access features form which may be obtained from Aquila Distributors at
1-800-228-7496 and send it to the Agent together with a "voided" check or
pre-printed deposit slip from the new account. The new Financial
Institution change is effective in 15 days after this form is
received in good order by the Trust's Agent.
<PAGE>
INVESTMENT ADVISER
Hawaiian Trust Company, Limited
(after September 30, 1997)
Pacific Century Trust
a division of
Bank of Hawaii
111 South King Street
Honolulu, Hawaii 96813
ADMINISTRATOR
Aquila Management Corporation
380 Madison Avenue, Suite 2300
New York, New York 10017
TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Arthur K. Carlson
William M. Cole
Thomas W. Courtney
Richard W. Gushman, II
Stanley W. Hong
Theodore T. Mason
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
OFFICERS
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
Sherri Foster, Assistant Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017
TRANSFER AND SHAREHOLDER SERVICING AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198
CUSTODIAN
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
COUNSEL
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
TABLE OF CONTENTS
Highlights
Table of Expenses
Financial Highlights
Introduction
Investment Of The Funds' Assets
The Cash Fund And Its Investments
The Tax-Free Fund And Its Investments
The Treasuries Fund And Its Investments
Net Asset Value Per Share
How To Invest In The Funds
How To Redeem Your Investment
Automatic Withdrawal Plan
Management Arrangements
Dividend And Tax Information
Exchange Privileges
General Information
Application
The Pacific Capital Funds
of
Cash Assets Trust
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
A cash management
investment
[LOGO]
PROSPECTUS
Original Shares
<PAGE>
The Pacific Capital Funds
of
Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, New York 10017
800-CATS-4-YOU (800-228-7496)
212-697-6666
Service Shares Prospectus
July 31, 1997
Cash Assets Trust (the "Trust") is a professionally managed,
open-end investment company consisting of three separate funds:
Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash
Assets Trust and Pacific Capital U.S. Treasuries Cash Assets
Trust (each a "Fund" and collectively, the "Funds").
There are two classes of shares of each of the Funds:
"Service Shares" and "Original Shares"; see "General Information
- -Description of Classes." Only Service Shares are offered by this
Prospectus. Service shares of the Funds may be purchased and
redeemed at their next determined net asset value, which is
normally the constant price of $1.00 per share; see "Net Asset
Value Per Share." Purchases are made without any sales charge
through Aquila Distributors, Inc., which is the exclusive
Distributor of the Funds' shares. Although Service Shares are
offered principally to customers of banks and other institutions
that typically are compensated by service or distribution fees
paid by the mutual funds sold to their customers, they are also
available to the general public. See "How to Invest in the Funds"
and "How to Redeem Your Investment."
This Prospectus concisely states information about the
three Funds that you should know before investing in Service
Shares. A Statement of Additional Information about the Funds
dated July 31, 1997 (the "Additional Statement") has been filed
with the Securities and Exchange Commission and is available
without charge upon written request to Administrative Data
Management Corp., the Funds' transfer agent, at the address given
below, or by calling the telephone number(s) given below. The
Additional Statement contains information about the three Funds
and their management not included in the Prospectus. The
Additional Statement is incorporated by reference in its entirety
in this Prospectus. Only when you have read both the Prospectus
and the Additional Statement are all the material facts about the
Funds available to you.
AN INVESTMENT IN ANY OF THE FUNDS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
THE FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS IN, OBLIGATIONS OF OR
GUARANTEED OR ENDORSED BY HAWAIIAN TRUST COMPANY, LIMITED (THE
"ADVISER"), BANK OF HAWAII OR ITS BANK OR NON-BANK AFFILIATES OR
BY ANY OTHER BANK. SHARES OF THE FUNDS ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY OR
GOVERNMENT SPONSORED AGENCY OF THE FEDERAL GOVERNMENT OR ANY
STATE.
AN INVESTMENT IN ANY OF THE FUNDS INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
For Purchase, Redemption or Account inquiries contact
the Funds' Shareholder Servicing Agent: Administrative Data
Management Corp. 581 Main Street, Woodbridge, NJ 07095-1198
Call 800-255-2287 toll free or 732-855-5731
For General Inquiries & Yield Information,
Call 800-228-7496 toll free or 212-697-6666
This Prospectus Should Be Read and Retained For Future Reference
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
HIGHLIGHTS
For your convenience, important matters pertaining solely
to a single Fund are displayed in a distinctive manner below;
however, to obtain all information about that Fund, you must read
the entire Prospectus.
The Pacific Capital Funds of Cash Assets Trust are these
three separate money-market funds:
Pacific Capital Cash Assets Trust (the "Cash Fund") is a
general purpose money market mutual fund which invests in
short-term "money market" securities which meet specific quality,
maturity and diversification standards.
Pacific Capital Tax-Free Cash Assets Trust (the "Tax-Free
Fund") is a tax-exempt money market mutual fund which invests in
short-term tax-exempt "money market" securities.
Pacific Capital U.S. Treasuries Cash Assets Trust (the
"Treasuries Fund") is a money market mutual fund which invests
exclusively in short-term direct obligations of the United States
Treasury with remaining maturities of one year or less, and
certain repurchase agreements secured by U.S. Treasury
obligations.
All investments must meet specific quality, maturity and
diversification standards. (See "Investment of the Funds'
Assets.")
Initial Investment - You may open your account in any Fund
with any purchase of $1,000 or more. There is no sales charge. An
Application is in the back of the Prospectus. (See "How to Invest
in the Funds.")
Additional Investments - There is no minimum on additional
investments and they can be made at any time.
Monthly Income - The securities in which the Funds invest
earn interest which is declared daily as dividends. Dividends are
paid monthly on or about the last day of each month. At your
choice, dividends are paid by check mailed to you, directly
deposited into your financial institution account or
automatically reinvested without sales charge in additional
Service Shares. (See "Dividend and Tax Information.")
Many Different Issues - Even a small investment in any Fund
allows an investor to have the advantages of a portfolio which
consists of a large number of issues. (See "Investment of the
Funds' Assets.")
Exchanges - You may exchange Service Shares of any Fund into
other money market funds and certain bond and equity funds. (See
"Exchange Privileges.")
Portfolio Management - Hawaiian Trust Company, Limited
(the "Adviser") serves as the Funds' Investment Adviser,
providing experienced professional management of each Fund's
investments. It is a subsidiary of Bank of Hawaii, was founded in
1898 and is the oldest and largest trust company in Hawaii,
administering approximately $12 billion in client assets. The
Cash Fund pays monthly fees to the Adviser and to the
Administrator at a total rate of 0.50 of 1% of average annual net
assets. The Tax-Free Fund and the Treasuries Fund each pay
monthly fees to the Adviser and to the Administrator at a total
rate of 0.40 of 1% of average annual net assets. On September 30,
1997, the Adviser will become Pacific Century Trust, a division
of Bank of Hawaii. (See "Table of Expenses" and "Management
Arrangements.")
Investment Quality - The Cash Fund invests in commercial
paper obligations, U.S. government securities, bank obligations
and instruments secured by them, corporate debt obligations, and
certain other obligations.
The Tax-Free Fund invests in municipal obligations which
earn interest which is exempt from regular Federal income taxes
and a significant portion of those obligations earn interest
which is also exempt from regular State of Hawaii income taxes.
Dividends paid by the Tax-Free Fund are free of both such taxes
to the same extent. It is, however, possible that in certain
circumstances, the Federal alternative minimum tax may apply (see
"Dividend and Tax Information"). Under certain circumstances, the
Tax-Free Fund may invest a portion of its assets in taxable
obligations.
The Treasuries Fund invests only in U.S. Government
securities and certain repurchase agreements secured by U.S.
Treasury obligations.
All of the investments of the Funds must be determined by
the Adviser under an applicable rule of the Securities and
Exchange Commission to be "Eligible Securities" and to present
minimal credit risks. (See "Investment of the Funds' Assets" and
"Effect of the Rule on Portfolio Management" thereunder.)
Constant Share Value - Each Fund's net asset value per share
is determined on a daily basis and is normally constant at $1.00
per share except under extraordinary circumstances. (See "Factors
Which May Affect the Value of the Funds' Investments and Their
Yields.")
Risk Factors - There can be no assurance that any of the
Funds will be able to maintain a stable net asset value of $1.00
per share. (See "Factors Which May Affect the Value of the Funds'
Investments and Their Yields.") In addition, there may be risks
as to obligations which the Cash Fund and Tax-Free Fund may
purchase such as variable amount master demand notes (see
"Variable Amount Master Demand Notes" in the Prospectus and
Additional Statement) and as to repurchase agreements, in which
all Funds may invest (see "Repurchase Agreements" in the
Prospectus). The Tax-Free Fund's assets, being significantly
invested in Hawaiian issues, are subject to economic and other
conditions affecting Hawaii. (See "Risks and Special
Considerations Regarding Investment in Hawaiian Obligations.")
Moreover, the Tax-Free Fund is classified as a "non-diversified"
investment company, because it may choose to invest in the
obligations of a relatively limited number of issuers. (See
"Diversity under the 1940 Act" under "General Information.")
Liquidity - Redemptions - If you invest directly in any
Fund rather than through a broker-dealer, bank or other financial
intermediary, you may redeem any amount of Service Shares on any
business day by telephone, FAX or mail request by using the
Funds' Expedited Redemption procedure, with proceeds being sent
to a predesignated financial institution. If the amount of your
redemption proceeds is $1,000 or more, the proceeds will,
wherever possible, be wired or transferred through the facilities
of the Automated Clearing House; otherwise they will be mailed.
You may also write checks for any purpose in amounts of $500 or
more. There are no penalties or redemption fees. See "How to
Redeem Your Investment" for these and other redemption methods.
If a financial intermediary is the record holder of your Service
Shares you must redeem those shares through the intermediary, and
the foregoing redemption methods will not apply.
Statements and Reports - For each Fund in which you invest,
you will receive statements of your Service Share account monthly
as well as each time you add to your account or take money out.
Additionally, you will receive a Semi-Annual Report and an
audited Annual Report.
<PAGE>
<TABLE>
<CAPTION>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST - SERVICE SHARES
TABLE OF EXPENSES
Cash Tax-Free Treasuries
Shareholder Transaction Expenses Fund Fund Fund
<S> <C> <C> <C>
Maximum Sales Charge
Imposed on Purchases........... 0% 0% 0%
Maximum Sales Charge
Imposed on Reinvested Dividends 0% 0% 0%
Deferred Sales Charge........... 0% 0% 0%
Redemption Fees................. 0% 0% 0%
Exchange Fee.................... 0% 0% 0%
Annual Fund Operating Expenses*
(as a percentage of average net assets)
Investment Advisory Fee........ 0.35% 0.29% 0.30%
12b-1 Fees..................... 0.25% 0.25% 0.25%
All Other Expenses............. 0.25% 0.26% 0.25%
Administration Fee.......... 0.15% 0.11% 0.10%
Other Expenses.............. 0.10% 0.15% 0.15%
Total Fund Operating Expense...s 0.85% 0.80% 0.80%
Example+
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period
<CAPTION>
Cash Tax-Free Treasuries
Time Period Fund Fund Fund
<S> <C> <C> <C>
1 year $ 9 $ 8 $ 8
3 years $ 27 $26 $26
5 years $ 47 $44 $44
10 years $105 $99 $99
<FN>
*Based upon amounts incurred during the most recent fiscal year of
each Fund.
The respective rates for the investment advisory fee and the
administration fee shown in the table represent the effective rates,
taking into consideration the breakpoint in net assets used in the
calculation of fees. For the portion of net assets above and below
each break point, the aggregate rate of fees is the same but is
allocated differently to the Adviser and the Administrator so that
Total Fund Operating Expenses shown remains unchanged. (See
"Management Arrangements".)
Other expenses for the Treasuries Fund do not reflect a 0.01% expense
offset in custodian fees received for uninvested cash balances.
Reflecting this offset, other expenses, all other expenses, and total
Fund operating expenses would have been 0.14%, 0.24%, and 0.79%.
</FN>
<FN>
+The expense example is based upon an amount at the beginning of each
year which includes the prior year's assumed results. A year's results
consist of an assumed 5% annual return less operating expenses as shown
above; the expense ratio was applied to an assumed average balance
(the year's starting investment plus one-half the year's results). Each
column represents the cumulative expenses so determined for the period
specified.
</FN>
</TABLE>
THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN. THE SECURITIES AND EXCHANGE COMMISSION SPECIFIES THAT
ALL MUTUAL FUNDS USE THE 5% RATE FOR PURPOSES OF PREPARING THE ABOVE
EXAMPLE.
The purpose of the above table is to assist the investor in
understanding the various costs and expenses that an investor in
Service Shares of each Fund will bear directly or indirectly.
(See "Management Arrangements" for a more complete description of
the various investment advisory and administration fees.)
<PAGE>
<TABLE>
<CAPTION>
THE PACIFIC CAPITAL FUNDS
OF
CASH ASSETS TRUST
SERVICE SHARES
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table of Financial Highlights has been audited
by KPMG Peat Marwick LLP, independent auditors, whose report thereon
is included in the Funds' financial statements contained in their Annual
Report, which are incorporated by reference into the Additional Statement.
The information provided in the table should be read in conjunction
with the financial statements and related notes.
CASH FUND
Year Year Period
Ended Ended Ended
March 31,1997 March 31,1996 March 31,1995**
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period............ $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income.......... 0.05 0.05 0.01
Less Distributions:
Dividends from net investment
income......................... (0.05) (0.05) (0.01)
Net Asset Value, End of Period.. $1.00 $1.00 $1.00
Total Return (%)................ 4.62 5.06 0.85+
Ratios/Supplemental Data
Net Assets, End of Period
(in thousands) ($)............ 65,763 32,856 3,501
Ratio of Expenses to Average
Net Assets(%)................. 0.85 0.86 0.83*
Ratio of Net Investment Income
to Average Net Assets (%)..... 4.53 4.84 5.26*
Net investment income per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's
voluntary waiver of fees, and for the years 1997 and 1996, without the
offset in custodian fees for invested cash balances, would have been
Net Investment Income(%)........ 0.05 0.05 0.01
Ratio of Expenses to Average
Net Assets(%).................. 0.85 0.86 0.83*
Ratio of Net Investment Income
to Average Net Assets(%)....... 4.53 4.84 5.26*
<CAPTION>
TAX-FREE FUND
Year Year Period
Ended Ended Ended
March 31, 1997 March 31, 1996 March 31, 1995**
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period.............. $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income............ 0.03 0.03 0.01
Less Distributions:
Dividends from net investment
income........................... (0.03) (0.03) (0.01)
Net Asset Value, End of Period.... $1.00 $1.00 $1.0
Total Return (%).................. 2.75 3.11 0.52+
Ratios/Supplemental Data
Net Assets, End of Period
(in thousands)($)............... 25,516 17,609 1,378
Ratio of Expenses to Average
Net Assets(%)................... 0.80 0.80 0.77*
Ratio of Net Investment Income
to Average Net Assets........... 2.70 2.97 3.22*
Net investment income per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's
voluntary waiver of fees, and for the years 1997 and 1996, without the offset
in custodian fees for invested cash balances, would have been
Net Investment Income($).......... 0.03 0.03 0.01
Ratio of Expenses to Average
Net Assets(%).................... 0.80 0.80 0.77*
Ratio of Net Investment Income
to Average Net Assets(%)......... 2.70 2.97 3.22*
<CAPTION>
TREASURIES FUND
Year Year Period
Ended Ended Ended
March 31, 1997 March 31, 1996 March 31, 1995*
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period............... $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income............. 0.04 0.05 0.01
Less Distributions:
Dividends from net investment
income............................ (0.04) (0.05) (0.01)
Net Asset Value, End of Period..... $1.0 $1.00 $1.00
Total Return(%).................... 4.50 4.94 0.94+
Ratios/Supplemental Data
Net Assets, End of Period
(in thousands) ($)............... 83,424 11,806 506
Ratio of Expenses to Average
Net Assets(%).................... 0.79 0.79 0.85*
Ratio of Net Investment Income
to Average Net Assets(%)......... 4.43 4.68 5.09*
Net investment income per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's
voluntary waiver of fees, and for the years 1997 and 1996, without the
offset in custodian fees for invested cash balances, would have been
Net Investment Income............. 0.04 0.05 0.01
Ratio of Expenses to Average
Net Assets....................... 0.80 0.88 0.98*
Ratio of Net Investment Income
to Average Net Assets............ 4.42 4.60 4.96*
<FN>
** For the period from February 1, 1995 (commencement of operations)
to March 31, 1995.
</FN>
<FN>
+ Not annualized.
</FN>
<FN>
* Annualized.
</FN>
<CAPTION>
The "current yield" and "compounded yield" for the seven-day
period ended March 31, 1996 for each Fund was:
CURRENT YIELD COMPOUNDED YIELD
<S> <C> <C>
Cash Fund ........................ 4.65% 4.76%
Tax-Free Fund .................... 2.69% 2.73%
Treasuries Fund .................. 4.54% 4.64%
</TABLE>
<PAGE>
INTRODUCTION
Cash Assets Trust (the "Trust") is a professionally
managed, open-end investment company formed in 1984 as a
Massachusetts business trust. The Trust consists of three
separate funds: Pacific Capital Cash Assets Trust, (the "Cash
Fund"), Pacific Capital Tax-Free Cash Assets Trust (the "Tax-Free
Fund"), and Pacific Capital U.S. Treasuries Cash Assets Trust
(the "Treasuries Fund").
Cash of investors may be invested in shares of each Fund
as an alternative to idle funds, direct investments in savings
deposits or short-term debt securities. Each Fund offers the
opportunity to keep cash reserves fully invested and provides you
with a professionally managed portfolio of money market
instruments which may be more diversified, higher yielding, more
stable and more liquid than you might be able to obtain on an
individual basis. Through the convenience of an investment in
shares of a Fund, you are also relieved of the inconvenience of
making multiple direct investments, including the selection,
purchasing and handling of various securities.
INVESTMENT OF THE FUNDS' ASSETS
Each Fund's investment objective is as follows:
The investment objective of the Cash Fund is to achieve a
high level of current income, stability and liquidity for
investors' cash assets by investing in a diversified portfolio of
short-term "money market" securities meeting specific quality
standards.
The investment objective of the Tax-Free Fund is to provide
safety of principal while achieving as high a level as possible
of liquidity and of current income exempt from Federal and Hawaii
income taxes. It seeks to attain this objective by investing
primarily in municipal obligations, which have remaining
maturities not exceeding one year, of Hawaii issuers or, if
obligations of the desired quality, maturity and interest rate
are not available, in similar obligations of non-Hawaii issuers.
The investment objective of the Treasuries Fund is to
provide safety of principal while achieving as high a level as
possible of liquidity and of current income. It seeks to attain
this objective by investing exclusively in short-term direct
obligations of the United States Treasury with remaining
maturities of one year or less, and certain repurchase agreements
secured by U.S. Treasury obligations.
There is no assurance that any Fund will achieve its
objective, which is a fundamental policy of the Fund.
In addition to the requirements of the Funds' management
policies, all obligations and instruments purchased by any Fund
must meet the requirements of Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act"). The provisions of the Rule that
affect portfolio management are summarized under "Effect of the
Rule on Portfolio Management," below. In brief, the Rule's
provisions for quality, diversity and maturity require each Fund
to limit its investments to those instruments which Hawaiian
Trust Company, Limited, the Funds' investment adviser (the
"Adviser"), determines (pursuant to procedures approved by the
Board of Trustees) present minimal credit risks and which at the
time of purchase are Eligible Securities. In general, the Rule
defines as Eligible Securities those that at the time of purchase
are rated in the two highest rating categories for short-term
securities by any two of the nationally recognized statistical
rating organizations ("NRSROs") or unrated securities determined
by the Board of Trustees to be of comparable quality. See
Appendix A to the Additional Statement for a description of the
NRSROs and the factors considered by them in determining ratings.
Eligible Securities so rated in the highest rating category (or
unrated securities of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second
Tier Securities." The Rule also requires that the dollar-weighted
average maturity of each Fund's portfolio cannot exceed 90 days
and that each Fund cannot purchase any security having a
remaining maturity in excess of 397 days. The Rule also contains
limits on the percentage of each Fund's assets that can be
invested in the securities of any issuer. See "Effect of the Rule
on Portfolio Management," below.
Management Policies: Each Fund seeks to achieve its
investment objective through investments in the types of
instruments described in the management policies listed below.
Except for policies designated as fundamental, shareholder
approval is not required to change any of the foregoing
management policies.
THE CASH FUND AND ITS INVESTMENTS
Management Policies of the Cash Fund
Under current management policies, the Cash Fund invests
only in the following types of obligations:
(1) U.S. Government Securities: Obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities; these obligations are referred to in this
Prospectus as "U.S. Government Securities"; see "Information On
U.S. Government Securities" below.
(2) Bank Obligations and Instruments Secured by Them: Bank
obligations that are First Tier Securities including time
deposits, certificates of deposit, bankers' acceptances and other
bank (see below for definition) obligations, and which are (i)
obligations of banks subject to regulation by the U.S. Government
having total assets of at least $1.5 billion, which may be
obligations issued by domestic banks, by foreign branches of such
banks or by U.S. subsidiaries of foreign banks; (ii) obligations
of any foreign bank having total assets equivalent to at least
$1.5 billion; or (iii) obligations ("insured bank obligations")
if such obligations are fully insured as to principal by the
Federal Deposit Insurance Corporation; (see "Information on
Insured Bank Obligations" in the Additional Statement); the Cash
Fund may also invest in obligations secured by any obligations
set forth in (i) or (ii) above if such investment meets the
requirements of (6) below. (In this Prospectus and in the
Additional Statement, a bank includes commercial banks, savings
banks and savings and loan associations.)
(3) Commercial Paper Obligations: Commercial paper
obligations that are First Tier Securities; see "Effect of the
Rule on Portfolio Management," below.
(4) Corporate Debt Obligations: Corporate debt obligations
(for example, bonds and debentures) which are First Tier
Securities and which at the time of purchase have a remaining
maturity of not more than 397 days. See "Effect of the Rule on
Portfolio Management." See Appendix A to the Additional Statement
for information about bond ratings.
(5) Variable Amount Master Demand Notes: Variable amount
master demand notes that are First Tier Securities and which are
redeemable (and thus repayable by the borrower) at principal
amount, plus accrued interest, at any time on not more than
thirty days' notice. Variable amount master demand notes may or
may not be backed by bank letters of credit. (Because variable
amount master demand notes are direct lending arrangements
between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for
them; see the Additional Statement for further information on
these notes.) Variable amount master demand notes repayable in
more than seven days are securities which are not readily
marketable, and fall within the Cash Fund's overall 10%
limitation on securities which are illiquid. (See the Additional
Statement.)
(6) Certain Other Obligations: Obligations other than those
listed in 1 through 5 above if such other obligations are
guaranteed as to principal and interest by either a bank in whose
obligations the Cash Fund may invest (see 2 above) or a
corporation in whose commercial paper the Cash Fund may invest
(see 3 above). See "Effect of the Rule on Portfolio Management."
If the Cash Fund invests more than 5% of its net assets in such
other obligations, the Prospectus will be supplemented to
describe them. See the Additional Statement.
(7) Repurchase Agreements: The Cash Fund may purchase
securities subject to repurchase agreements provided that such
securities consist entirely of U.S. Government Securities or
securities that, at the time the repurchase agreement is entered
into, are rated in the highest rating category by the requisite
NRSROs. Repurchase agreements may be entered into only with
commercial banks or broker-dealers. Subject to the control of the
Board of Trustees, the Adviser will regularly review the
financial strength of all parties to repurchase agreements with
the Cash Fund. (See "Repurchase Agreements" under the caption
"Matters Applicable to All Funds" below.)
(8) When-Issued or Delayed Delivery Securities: The Cash
Fund may buy securities on a when-issued or delayed delivery
basis; the securities so purchased are subject to market
fluctuation and no interest accrues to the Cash Fund until
delivery and payment take place; their value at the delivery date
may be less than the purchase price. The Cash Fund may enter into
when-issued commitments exceeding in the aggregate 15% of the
market value of its total assets, less liabilities other than the
obligations created by when-issued commitments. See the
Additional Statement for further information.
Information On U.S. Government Securities
U.S. Government Securities (i.e., obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities) include securities issued by the U.S.
Government, which in turn include Treasury Bills (which mature
within one year of the date they are issued) and Treasury Notes
and Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United
States.
U.S. Government agencies and instrumentalities that issue or
guarantee securities include, but are not limited to, the 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 U.S. Treasury.
Others, such as securities issued by the Federal National
Mortgage Association, are supported only by the credit of the
instrumentality and not by the U.S. Treasury. If the securities
are not backed by the full faith and credit of the United States,
the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to
assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Cash
Fund will invest in government securities, including securities
of agencies and instrumentalities, only if the Adviser (pursuant
to procedures approved by the Board of Trustees) is satisfied
that these obligations present minimal credit risks. See "Effect
of the Rule on Portfolio Management" below for a discussion of
the determination of minimal credit risks in connection with the
purchase of portfolio securities.
Information On Foreign Bank Obligations
Investments, which must be denominated in U.S. dollars, in
foreign banks and foreign branches of United States banks involve
certain risks in addition to those involved with investment in
domestic banks. While domestic banks are required to maintain
certain reserves and are subject to other regulations, such
requirements and regulations may not apply to foreign branches of
domestic banks. Investments in foreign banks and foreign branches
of domestic banks may also be subject to other risks, including
future political and economic developments, the possible
imposition of withholding taxes on interest income, the seizure
or nationalization of foreign deposits and the establishment of
exchange controls or other restrictions.
Investment Restrictions of the Cash Fund
The following restrictions on the Cash Fund's investments
are fundamental policies and cannot be changed without approval
of the shareholders of the Cash Fund.
1. The Cash Fund has diversification and anti-concentration
requirements.
The Cash 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 Cash Fund cannot buy the securities (not including U.S.
Government Securities) of any issuer if more than 5% of its total
assets (valued at market value) would then be invested in
securities of that issuer. In addition, the Rule limits
investment in Second Tier Securities to 5% of the Cash Fund's
assets in the aggregate, and to no more than the greater of 1% of
the Cash Fund's assets or $1,000,000 in the securities of any one
issuer.
The Cash Fund cannot buy the securities of issuers in any
one industry if more than 25% of its total assets would then be
invested in securities of issuers in that industry (see the
Additional Statement); U.S. Government Securities and those
domestic bank obligations and instruments of domestic banks which
the Cash Fund may purchase (see "Investment of the Funds'
Assets") are considered as not included in this limit; however,
obligations of foreign banks and of foreign branches of domestic
banks are considered as included in this limit.
2. The Cash Fund can make loans only by lending securities
or entering into repurchase agreements.
The Cash Fund can buy those debt securities which it is
permitted to buy (see "Investment of the Funds' Assets"); this is
investing, not making a loan. The Cash Fund can lend its
portfolio securities on a collateralized basis up to 10% of the
value of its total assets to specified borrowers (broker-dealers,
banks and certain other financial institutions) to increase its
income (see the Additional Statement) and enter into repurchase
agreements (see "Repurchase Agreements" above). The Cash 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 Cash Fund and its shareholders; thus, when the loan
is terminated, the value of the securities may be more or less
than their value at the beginning of the loan.
3. The Cash Fund can borrow only in limited amounts for
special purposes.
The Cash 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. Interest on borrowings would
reduce the Cash Fund's income. The Cash Fund will not purchase
any securities while it has any outstanding borrowings which
exceed 5% of the value of its assets. Except in connection with
borrowings, the Cash Fund will not issue senior securities.
THE TAX-FREE FUND AND ITS INVESTMENTS
Management Policies of the Tax-Free Fund
The Tax-Free Fund invests primarily in Municipal Obligations
(as defined below). Under current management policies, it invests
only in Municipal Obligations and in shares of investment
companies with money market portfolios consisting only of
Municipal Obligations, except for certain temporary investments
in taxable obligations described below ("Taxable Obligations").
Information about the Tax-Free Fund's Municipal Obligations
As used in this Prospectus and the Additional Statement, the
term "Municipal Obligations" means obligations with maturities of
397 days or less paying interest which, in the opinion of bond
counsel or other appropriate counsel, is exempt from regular
Federal income taxes. "Hawaiian Obligations" are Municipal
Obligations, including those of certain non-Hawaii issuers,
paying interest which, in the opinion of bond counsel or other
appropriate counsel, is also exempt from Hawaii state income
taxes. The non-Hawaiian bonds or other obligations the interest
on which is exempt from Hawaii state income tax under present law
are the bonds or other obligations issued by or under the
authority of Guam, the Northern Mariana Islands, Puerto Rico and
the Virgin Islands. If Hawaiian Obligations of the desired
quality, maturity and interest rate are not available, the
Tax-Free Fund will invest in other Municipal Obligations.
Although the portion of dividends of the Tax-Free Fund paid
from interest on Hawaiian Obligations will be free of Hawaii
state income tax, that paid from interest on other Municipal
Obligations will not. Since it is not possible to predict the
extent to which suitable Hawaiian Obligations will be available
for investment, the Tax-Free Fund has no investment restriction
limiting the proportion of its portfolio which it may invest in
other Municipal Obligations. See "Dividend and Tax Information."
Although exempt from regular Federal income tax, interest
paid on certain types of Municipal Obligations, and dividends
which the Tax-Free Fund might pay from this interest, are
preference items as to the Federal alternative minimum tax. As a
fundamental policy, at least 80% of the Tax-Free Fund's net
assets will be invested in Municipal Obligations the income paid
upon which will not be subject to the alternative minimum tax;
accordingly, the Tax-Free Fund can invest the rest of its assets
in obligations which are subject to the Federal alternative
minimum tax. The Tax-Free Fund may refrain entirely from
purchasing these types of Municipal Obligations. For further
information, see "Dividend and Tax Information."
Municipal Obligations are debt obligations issued by or on
behalf of states, cities, municipalities and other public
authorities. Such obligations include:
Municipal Bonds
Municipal bonds generally have a maturity at the time of
issuance of up to 30 years. The Tax-Free Fund can invest in
municipal bonds which are Eligible Securities and which at the
time of purchase have a remaining maturity of not more than 397
days. See "Effect of the Rule on Portfolio Management." See
Appendix A to the Additional Statement for information about bond
ratings.
Municipal Notes
Municipal notes generally have maturities at the time of
issuance of three years or less. The Tax-Free Fund's investments
in municipal notes are limited to notes which at the time of
purchase have a remaining maturity of not more than 397 days and
which are Eligible Securities. See "Effect of the Rule on
Portfolio Management." See Appendix A to the Additional Statement
for information about bond ratings. These notes are generally
issued in anticipation of the receipt of tax funds, of the
proceeds of bond placements or of other revenues. The ability of
an issuer to make payments is therefore dependent on these tax
receipts, proceeds from bond sales or other revenues, as the case
may be.
Municipal Commercial Paper
Municipal commercial paper is a debt obligation with a
stated maturity of 397 days or less that is issued to finance
seasonal working capital needs or as short-term financing in
anticipation of longer-term debt. The Tax-Free Fund may invest in
municipal commercial paper obligations that are Eligible
Securities; see "Effect of the Rule on Portfolio Management,"
below.
Other Information About Municipal Obligations
From time to time the Tax-Free Fund may invest 25% or more
of its assets in Municipal Obligations that are related in such a
way that an economic, business or political development or change
affecting one of these obligations would also affect the other
obligations, for example, Municipal Obligations the interest on
which is paid from revenues of similar type projects or Municipal
Obligations whose issuers are located in the same state.
The taxable market is a broader and more liquid market with
a greater number of investors, issuers and market makers than the
market for Municipal Obligations. The more limited marketability
of Municipal Obligations may make it difficult in certain
circumstances to dispose of large investments advantageously. In
general, Municipal Obligations are also subject to credit risks
such as the loss of credit ratings or possible default. In
addition, certain Municipal Obligations might lose tax-exempt
status in the event of a change in the tax laws.
Information about the Temporary Taxable Investments the Tax-Free
Fund May Make
The Tax-Free Fund may invest the proceeds of the sale of
shares or the sale of Municipal Obligations in Taxable
Obligations pending investment in Municipal Obligations. The
Tax-Free Fund may also enter into repurchase agreements as to
Taxable Obligations. (See "Repurchase Agreements" below.) As a
fundamental policy, under normal market conditions the Tax-Free
Fund may not purchase Taxable Obligations if thereafter more than
20% of its net assets would consist of such obligations or cash,
except for temporary defensive purposes, i.e., in anticipation of
a decline or possible decline in the value of Municipal
Obligations. Purchase of Taxable Obligations is subject to
certain specific diversification tests under the Rule. See
"Effect of the Rule on Portfolio Management," below.
Under current management policies the Taxable Obligations
which the Tax-Free Fund may purchase are obligations maturing in
397 days or less from the date of purchase by the Tax-Free Fund
and which are:
Obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities ("U.S. Government
Obligations"); see the Additional Statement for further
information; commercial paper obligations that are First Tier
Securities; see "Effect of the Rule on Portfolio Management,"
below; and bank obligations that are First Tier Securities
including time deposits, certificates of deposit, bankers'
acceptances and other bank (see below for definition)
obligations, and which are (i) obligations of banks subject to
regulation by the U.S. Government having total assets of at least
$1.5 billion, which may be obligations issued by domestic banks,
by foreign branches of such banks or by U.S. subsidiaries of
foreign banks; or (ii) obligations ("insured bank obligations")
that are fully insured as to principal by the Federal Deposit
Insurance Corporation (see "Information on Insured Bank
Obligations" in the Additional Statement). (In this Prospectus
and in the Additional Statement, the term bank includes
commercial banks, savings banks and savings and loan
associations.)
Floating and Variable Rate Instruments
Certain of the obligations that the Tax-Free Fund may
purchase have a floating or variable rate of interest. These
obligations bear interest at rates that are not fixed, but vary
with changes in specified market rates or indices, such as the
Prime Rate, or at specified intervals. Certain of these
obligations may carry a demand feature that would permit the
holder to tender them back to the issuer at par value prior to
maturity. The Tax-Free Fund may invest in floating and variable
rate obligations even if they carry stated maturities in excess
of 397 days, if under the provisions of the Rule for determining
the maturity, the maturity of the instrument so determined is
less than 397 days. See "Effect of the Rule on Portfolio
Management," below. The Tax-Free Fund will limit its purchases of
floating and variable rate obligations to those which at the time
of purchase are Eligible Securities. On an ongoing basis, the
Adviser will monitor the ability of an issuer of a demand
instrument to pay principal and interest on demand. The Tax-Free
Fund's right to obtain payment at par on a demand instrument
could be affected by events occurring between the date the
Tax-Free Fund elects to demand payment and the date payment is
due that may affect the ability of the issuer of the instrument
to make payment when due, except when such demand instrument
permits same day settlement. To facilitate settlement, these same
day demand instruments may be held in book entry form at a bank
other than the Tax-Free Fund's custodian subject to a
sub-custodial agreement approved by the Tax-Free Fund between
that bank and the Tax-Free Fund's custodian.
To the extent that floating and variable rate instruments
without demand features are not readily marketable, they will be
subject to the investment restriction that the Tax-Free Fund may
not invest an amount equal to more than 10% of the current value
of its net assets in securities that are illiquid.
Certain Put Rights
The Tax-Free Fund may enter into put transactions with
commercial banks with respect to obligations held in its
portfolio. The Tax-Free Fund does not intend to enter into put
transactions with broker-dealers, and in no event would it do so,
except as permitted under the 1940 Act.
The right of the Tax-Free Fund to exercise a put is
unconditional and unqualified. A put is not transferable by the
Tax-Free Fund, although the Tax-Free Fund may sell the underlying
securities to a third party at any time. If necessary and
advisable, the Tax-Free Fund may pay for certain puts either
separately in cash or by paying a higher price for portfolio
securities that are acquired subject to such a put (thus reducing
the yield to maturity otherwise available for the same
securities).
The Tax-Free Fund may enter into puts with banks or
broker-dealers that, in the opinion of the Adviser, present
minimal credit risks. The ability of the Tax-Free Fund to
exercise a put will depend on the ability of the bank or
broker-dealer to pay for the underlying securities at the time
the put is exercised. In the event that a bank or broker-dealer
should default on its obligation to repurchase an underlying
security, the Tax-Free Fund might be unable to recover all or a
portion of any loss sustained from having to sell the security
elsewhere.
The Tax-Free Fund may enter into certain puts solely to
maintain liquidity and will not exercise its rights thereunder
for trading purposes. The puts will be only for periods
substantially less than the life of the underlying security. The
acquisition of a put will not affect the valuation by the
Tax-Free Fund of the underlying security. The actual put will be
valued at zero in determining net asset value. Where the Tax-Free
Fund pays directly or indirectly for a put, its cost will be
reflected as an unrealized loss for the period during which the
put is held by the Tax-Free Fund and will be reflected in
realized gain or loss when the put is exercised or expires. If
the value of the underlying security increases, the potential for
unrealized or realized gain is reduced by the cost of the put.
The maturity of a Municipal Obligation purchased by the Tax-Free
Fund will not be considered shortened by any such put to which
the obligation is subject.
The Rule has a number of provisions affecting puts. With
respect to 75% of the total assets of the Tax-Free Fund, the 5%
diversification requirement is applicable. (See "Effect of the
Rule on Portfolio Management.")
When-Issued Securities
The Tax-Free Fund may purchase Municipal Obligations on a
when-issued basis, in which case delivery and payment normally
take place within 45 days after the date of the commitment to
purchase. The Tax-Free Fund will only make commitments to
purchase Municipal Obligations on a when-issued basis with the
intention of actually acquiring the securities, but may sell them
before the settlement date if it is deemed advisable. Any gains
realized in such sales would produce taxable income. The
when-issued securities are subject to market fluctuation and no
income accrues to the purchaser prior to issuance. The payment
obligation and the interest rate that will be received on the
securities are each fixed at the time the purchaser enters into
the commitment. For purposes of determining the Tax-Free Fund's
weighted-average maturity, the maturity of a when-issued security
is calculated from its commitment date. Purchasing municipal
securities on a when-issued basis is a form of leverage and can
involve a risk that the yields available in the market when the
delivery takes place may actually be higher than those obtained
in the transaction itself, in which case there could be an
unrealized loss in the value of the investment at the time of
delivery.
The Tax-Free Fund will establish a segregated account with
its Custodian in which it will maintain liquid assets in an
amount at least equal in value to the Tax-Free Fund's commitments
to purchase when-issued securities. If the value of these assets
declines, the Tax-Free Fund will place additional liquid assets
in the account on a daily basis so that the value of the assets
in the account is equal to the amount of such commitments.
Repurchase Agreements
The Tax-Free Fund may purchase securities subject to
repurchase agreements provided that such securities are listed
above under "The Tax-Free Fund And Its Investments"; it is the
Tax-Free Fund's current policy to use for repurchase agreements
only collateral that consists entirely of U.S. Government
securities or securities that, at the time the repurchase
agreement is entered into, are rated in the highest rating
category by the requisite NRSROs. (See "Effect of the Rule on
Portfolio Management.") Repurchase agreements may be entered into
only with commercial banks or broker-dealers. The Adviser, under
the supervision of the Board of Trustees, will regularly review
the financial strength of all parties to repurchase agreements
with the Tax-Free Fund. (See "Repurchase Agreements" under the
caption "Matters Applicable to All The Funds" below.)
Loans of Portfolio Securities
The Tax-Free Fund can lend its portfolio securities on a
collateralized basis up to 10% of the value of its total assets
to specified borrowers (brokers, dealers and certain financial
institutions) to increase its income (see the Additional
Statement) and enter into repurchase agreements (see "Repurchase
Agreements" above). The Tax-Free 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 Tax-Free
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.
Shares of Investment Companies
The Tax-Free Fund may purchase shares of investment
companies with money market portfolios consisting only of
Municipal Obligations if such investment companies meet the
requirements of the Rule (see "Effect of the Rule on Portfolio
Management" below). It will not purchase shares of an investment
company which imposes a sales or redemption charge of any sort;
however, an investment company in which the Tax-Free Fund invests
may have a distribution plan under which it may pay for
distribution expenses or services. The Tax-Free Fund will
purchase shares only of investment companies with high-quality
portfolios, which the Adviser, pursuant to procedures approved by
the Board of Trustees, determines present minimal credit risks.
Such investments will ordinarily be made to provide additional
liquidity and at the same time to earn higher yields than are
usually associated with the overnight or short-term obligations
in which the Tax-Free Fund might otherwise invest for this
purpose. While higher yields than those of alternative
investments may be obtainable, these yields will reflect
management fees and operating and distribution expenses of the
investment companies and will result in duplication of management
fees with respect to assets of the Tax-Free Fund so invested. The
Tax-Free Fund may not invest in the shares of investment
companies if immediately thereafter it has invested more than 10%
of the value of its total assets in such companies or more than
5% of the value of its total assets in any one such company; it
may not invest in such a company if immediately thereafter it
owns more than 3% of the total outstanding voting stock of such a
company.
Other Information About the Tax-Free Fund and its Investments
To the extent the ratings given by the NRSROs may change as
a result of changes in such organizations or their rating
systems, but not as a result of the downgrading of any security
held by the Tax-Free Fund or any issuer the securities of which
are held by the Tax-Free Fund, it will attempt to use comparable
ratings as standards for investments in accordance with the
investment policies contained in this Prospectus and in the
Additional Statement. The ratings of the NRSROs are more fully
described in the Appendix to the Additional Statement.
The Tax-Free Fund is a non-diversified investment company
under the 1940 Act. See "Diversity under the 1940 Act" under
"General Information" below.
Risk Factors and Special Considerations
Regarding Investment in Hawaiian Obligations
The following is a discussion of the general factors that
might influence the ability of Hawaiian issuers to repay
principal and interest when due on the Hawaiian Obligations
contained in the portfolio of the Tax-Free Fund. Such information
is derived from sources that are generally available to investors
and is believed by the Tax-Free Fund to be accurate, but has not
been independently verified and may not be complete.
As of the date of this Prospectus, economic data
available indicate that the real Gross State Product growth for
1996 was 1.0%, slightly lower than the 1.3% that was projected in
1995. Although total employment continues to contract, it is
anticipated that most downsizing has been completed, and that
there will be minor job growth of 0.0-0.5% in 1997. Although some
local companies have left the State, other substantial
organizations have indicated interest in new Hawaiian operations.
The State of Hawaii Convention Center is nearing completion with
a projected opening date in mid-1998.
Local economic sources expect that the deflationary
trend, apparent in 1995, has continued through 1996. Retailers
have kept retail prices down and the Honolulu Consumer Price
Index is projected to remain at the current 2.2% annual rate.
Rents have dropped as more rental inventory builds up and
property valuations remain soft, both in the residential and
commercial sectors. State tax credits for hotel renovations will
provide incentives to modernize and improve competitiveness while
providing a stimulus to the construction industry.
In 1996, tourism, the State's principal industry,
increased by 3.6% over 1995 to 6.8 million visitors for the year.
Eastbound visitors accounted for the majority of the increase,
attributable in part to the introduction of direct flights to
Kona from Japan. Trends indicate that tourism as the State's
major export industry, will continue to improve in 1997.
Uncertainties regarding sovereignty and privatization of
government contracts will be outstanding issues that will have
significant impact over the long term for the State. Limited
revenue growth and the need to reduce expenditures will continue
to be of paramount concern for the State government. The Hawaii
legislature recently approved a $1 billion capital improvement
program to stimulate the economy through construction spending.
The attendant accelerated issuance of debt to fund the program at
a time when revenue growth has remained stagnant prompted
Standard & Poor's to downgrade the State's General Obligation
debt from AA to A+. Moody's rates the State's debt as AA3, which
is at the lowest end of the AA range.
Investment Restrictions of the Tax-Free Fund
The following restrictions on the Tax-Free Fund's
investments are fundamental policies and cannot be changed
without approval of the shareholders of the Tax-Free Fund.
1. The Tax-Free Fund has diversification and
anti-concentration requirements.
The Tax-Free Fund cannot buy the securities of issuers in
any one industry if more than 25% of its total assets would then
be of issuers in that industry; Municipal Obligations, U.S.
Government Obligations and those bank obligations and instruments
of domestic banks which the Fund may purchase (see "Investment of
the Fund's Assets") are considered as not included in this limit,
except that the Fund will consider that a non-governmental user
of facilities financed by industrial development bonds is an
issuer in an industry.
2. The Tax-Free Fund can make loans only by lending
securities or entering into repurchase agreements.
The Tax-Free Fund can buy those debt securities which it is
permitted to buy (see "Investment of the Funds' Assets"); this is
investing, not making a loan. The Tax-Free Fund can lend its
portfolio securities (see "Loans of Portfolio Securities" above)
and enter into repurchase agreements (See "Repurchase Agreements"
above).
3. The Tax-Free Fund can borrow only in limited amounts for
special purposes.
The Tax-Free 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. Interest on borrowings would
reduce the Fund's income. The Tax-Free Fund will not purchase any
securities while it has any outstanding borrowings which exceed
5% of the value of its total assets.
THE TREASURIES FUND AND ITS INVESTMENTS
Management Policies of the Treasuries Fund
The Treasuries Fund invests only in short-term direct
obligations of the United States Treasury with remaining
maturities of one year or less, and certain repurchase agreements
secured by U.S. Treasury obligations. The Treasuries Fund will
not invest in other obligations issued or guaranteed by agencies
or instrumentalities of the United States Government. Shares of
the Treasuries Fund are not guaranteed or insured by the United
States Government.
U. S. Treasury Obligations
The U.S. Treasury issues various types of marketable
securities, consisting of bills, notes, bonds, and certificates
of indebtedness, which are all direct obligations of the U.S.
Government backed by its "full faith and credit" and which differ
primarily in the length of their maturity. U.S. Treasury bills,
which have a maturity of up to one year, are the most frequently
issued marketable U.S. Government security. The Fund may also
invest in separately traded principal and interest components of
securities issued by the United States Treasury. The principal
and interest components of selected securities are traded
independently under the Separate Trading of Registered Interest
and Principal of Securities program ("STRIPS"). Under the STRIPS
program, the principal and interest components are individually
numbered and separately issued by the U.S. Treasury at the
request of depository financial institutions, which then trade
the component parts independently.
The investment by the Treasuries Fund in such short-term
direct obligations of the U.S. Treasury may result in a lower
yield than a policy of investing in other types of instruments,
and therefore the yield of the Treasuries Fund may be lower, for
example, than the yield of another of the Trust's portfolios, the
Cash Fund, which invests in taxable money market obligations of a
broader range of issuers.
Repurchase Agreements
The Treasuries Fund may purchase securities subject to
repurchase agreements provided that such securities are
obligations of the U.S. Treasury. Repurchase agreements may be
entered into only with commercial banks or broker-dealers.
Subject to the control of the Board of Trustees, the Adviser will
regularly review the financial strength of all parties to
repurchase agreements with the Treasuries Fund. (See "Repurchase
Agreements" under the caption "Matters Applicable to All The
Funds" below.)
Other Information about the Treasuries Fund's Investments
Additional Management Policy as to Rating. In addition to
the foregoing management policies, as a non-fundamental policy,
the Treasuries Fund will purchase only those issues that will
enable it to achieve and maintain the highest rating for a mutual
fund by two NRSROs. There is no assurance that it will be able to
maintain such rating. As a result of this policy, the range of
obligations in which the Treasuries Fund can invest is reduced
and the yield obtained on such obligations may be less than would
be the case if this policy were not in force.
Investment Restrictions of the Treasuries Fund
The following restrictions on the Treasuries Fund's
investments are fundamental policies and cannot be changed
without approval of the shareholders of the Treasuries Fund.
1. The Treasuries Fund can make loans only by lending
securities or entering into repurchase agreements.
The Treasuries Fund can buy those debt securities which it
is permitted to buy (see "Investment of the Funds' Assets"); this
is investing, not making a loan. The Treasuries Fund can lend its
portfolio securities on a collateralized basis up to 10% of the
value of its total assets to specified borrowers (broker-dealers,
banks and certain other financial institutions) to increase its
income (see the Additional Statement) and enter into repurchase
agreements (see "Repurchase Agreements" above). The Treasuries
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 Treasuries 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.
2. The Treasuries Fund can borrow only in limited amounts
for special purposes.
The Treasuries 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. Interest on borrowings would
reduce the Treasuries Fund's income. The Treasuries Fund will not
purchase any securities while it has any outstanding borrowings
which exceed 5% of the value of its assets. Except in connection
with borrowings, the Treasuries Fund will not issue senior
securities.
Portfolio Matters Applicable to All Funds
(In the material below, the text in bold does not apply to
the Treasuries Fund.)
Repurchase Agreements
Under a repurchase agreement, at the time a Fund purchases a
security, the Fund also resells it to the seller and must deliver
the security (or securities substituted for it) to the seller on
an agreed-upon date in the future. (The securities so resold or
substituted are referred to herein as the "Resold Securities.")
The resale price is in excess of the purchase price in that it
reflects an agreed-upon market interest rate effective for the
period of time during which the Fund's money is invested in the
Resold Securities. The majority of these transactions run from
day to day, and the delivery pursuant to the resale typically
will occur within one to five days of the purchase.
Repurchase agreements can be considered as loans
"collateralized" by the Resold Securities, such agreements being
defined as "loans" in the 1940 Act. The return on such
"collateral" may be more or less than that from the repurchase
agreement. The Resold Securities under any repurchase agreement
will be marked to market every business day so that the value of
the "collateral" is at least equal to the resale price provided
in the agreement, including the accrued interest earned thereon,
plus sufficient additional market value as is considered
necessary to provide a margin of safety. During the term of the
repurchase agreement, the Fund or its custodian or sub-custodian
either has actual physical possession of the Resold Securities
or, in the case of a security registered in a book entry system,
the book entry is maintained in the name of the Fund or its
custodian. The Fund retains an unqualified right to possess and
sell the Resold Securities in the event of a default by the other
party.
In the event of bankruptcy or other default by the other
party, there may be possible delays and expenses in liquidating
the Resold Securities, decline in their value and loss of
interest. If the maturity of the Resold Securities is such that
they cannot be owned by the Fund under the applicable provisions
of the Rule they will have to be sold, which could result in a
loss. See "Effect of the Rule on Portfolio Management."
Limitation of 10% As To Certain Investments
Due to their possible limited liquidity, no Fund may make
certain investments if thereafter more than 10% of its net assets
would consist of such investments. The investments included in
this 10% limit are (i) repurchase agreements maturing in more
than seven days; (ii) fixed time deposits subject to withdrawal
penalties other than overnight deposits; (iii) restricted
securities, i.e., securities which cannot freely be sold for
legal reasons (which the Funds do not expect to own); (iv)
securities for which market quotations are not readily available;
and (v) insured bank obligations unless the Board of Trustees
determines that a readily available market exists for such
obligations. However, this 10% limit does not include any
obligations payable at principal amount plus accrued interest on
demand or within seven days after demand.
Factors Which May Affect the Value
of the Funds' Investments and Their Yields
The value of the obligations and instruments in which the
Funds invest will fluctuate depending in large part on changes in
prevailing interest rates. If the prevailing interest rates go up
after a Fund buys a security, the value of the security may go
down; if these rates go down, the value of the security may go
up. Changes in value and yield based on changes in prevailing
interest rates may have different effects on short-term
obligations than on long-term obligations. Long-term obligations
(which often have higher yields) may fluctuate in value more than
short-term ones.
Portfolio Transactions
Each Fund will seek to obtain the best net price and the
most favorable execution of orders. Purchases will be made
directly from issuers or from underwriters, dealers or banks
which specialize in the types of securities invested in by the
Fund. As most purchases made by the Funds are principal
transactions at net prices, the Funds incur little or no
brokerage costs. Purchases from underwriters will include a
commission or concession paid by the issuer to the underwriter
and purchases from dealers may include the spread between the bid
and the asked price. If the execution and price offered by more
than one dealer are comparable, the order may be allocated to a
dealer which has provided research advice, such as information on
particular companies and industries and market, economic and
institutional activity. By allocating transactions to obtain
research services, the Funds enable the Adviser to supplement its
own research and analyses with the views and information of other
securities firms. Such research services, whether or not useful
to the Funds, may be useful to other accounts managed by the
Adviser or its affiliates.
Effect of the Rule on Portfolio Management
Under "Investment of the Funds' Assets" above immediately
following the investment objectives of the Funds, there is a
brief description of Rule 2a-7 (the "Rule") of the Securities and
Exchange Commission under the 1940 Act.
As money market funds, the Funds operate under the Rule,
which allows the Funds to use the "amortized cost" method of
valuing their securities and which contains certain risk limiting
provisions, including requirements as to maturity, quality and
diversification of each Fund's portfolio. Some of the most
important aspects of the Rule are described below.
Under the Rule, each Fund must limit its investments to
those instruments which are denominated in U.S. dollars, which
are determined by the Board of Trustees to present minimal credit
risks, and which, at the time of purchase, are Eligible
Securities. In accordance with the Rule, the Board of Trustees
has adopted investment procedures and has approved investment
policies pursuant to which all investment determinations have
been delegated to the Adviser, under the direction and control of
the Board of Trustees, except for those matters for which the
Rule requires Board determination.
In general, the Rule defines as Eligible Securities those
that at the time of purchase are rated in the two highest rating
categories for short-term securities by any two of the NRSROs or,
if unrated, are determined by the Board of Trustees to be of
comparable quality. Eligible Securities so rated in the highest
rating category (and unrated securities determined by the Board
of Trustees to be of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second
Tier Securities." Eligible Securities can in some cases include
securities rated by only one NRSRO and unrated obligations that
are determined by the Board of Trustees to be of comparable
quality to rated securities. A security that was long-term when
issued must, at the time of purchase by a Fund, either have a
short-term rating such that it is an Eligible Security or be
comparable in priority and security to a rated short-term
obligation of the same issuer that is an Eligible Security or, if
the issuer has no short-term rating (and does not have a
long-term rating from any NRSRO below the highest rating), be
determined by the Board of Trustees to be of comparable quality
to rated securities the Fund could purchase. Purchase of any
security rated by only one NRSRO and purchase of any unrated
security (except U.S. Government Securities) must be ratified by
the Board of Trustees; in the case of the Tax-Free Fund, this
requirement applies only to taxable securities.
As to the Cash Fund and the taxable securities of the
Tax-Free Fund, the Rule requires (with limited exceptions) that
immediately after purchase of any security, a Fund have invested
not more than 5% of its assets in the securities of any one
issuer, and provides that a Fund cannot have more than 5% of its
assets in the aggregate invested in Second Tier Securities, nor
more than the greater of 1% of its assets or $1,000,000 invested
in Second Tier Securities of any single issuer. (In general, the
Tax-Free Fund does not intend to own Second Tier Securities.) The
Rule has specific provisions relating to determinations of the
eligibility of certain types of instruments such as repurchase
agreements and instruments subject to a demand feature. It also
has specific provisions for determining the issuer of a security
for purposes of compliance with the diversification requirements.
Generally, under the Rule, the maturity of an instrument is
considered to be its stated maturity (or in the case of an
instrument called for redemption, the date on which the
redemption payment must be made). There are special rules for
determining the maturity of certain kinds of instruments. The
Rule contains provisions as to the maturity of variable rate and
floating rate instruments. Repurchase agreements and securities
loan agreements are, in general, treated as having a maturity
equal to the period remaining until they can be executed.
The Rule has provisions requiring specific actions whenever
the rating of a portfolio security is downgraded. Generally,
these actions include a prompt reassessment by the Board of
Trustees of the credit risks associated with such a security. In
general, the Rule mandates prompt sale or other disposition,
e.g., by exercising a demand for payment, in certain cases, such
as when a security ceases to be an Eligible Security, no longer
presents minimal credit risks or suffers a financial default.
Fundamental Policies
Each Fund has a number of policies about what it can and
cannot do. Certain of these policies, identified in the
Prospectus and Additional Statement as "fundamental policies,"
cannot be changed unless the holders of a "majority," as defined
in the 1940 Act, of the Fund's outstanding shares vote to change
them. (See the Additional Statement for a definition of such a
majority.) All other policies can be changed from time to time
without shareholder approval. Some of the more important of each
Fund's fundamental policies, not otherwise identified in the
Prospectus, are described above; others are listed in the
Additional Statement.
NET ASSET VALUE PER SHARE
The net asset value per share for each class of each
Funds' shares 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
allocable to each class of each Fund (i.e., the value of the
assets less liabilities, exclusive of surplus)by the total number
of shares of each class of each Fund outstanding.
The net asset value per share will normally remain
constant at $1.00 per share except under extraordinary
circumstances; see the Additional Statement for a discussion of
the extraordinary circumstances which could result in a change in
this fixed share value. The net asset value per share is based on
a valuation of each Fund's investments at amortized cost; see the
Additional Statement.
The New York Stock Exchange is normally not open on the
following days: New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. However, that
Exchange may close on other days. In addition, the Custodian is
not open on Columbus Day and Veterans Day.
HOW TO INVEST IN THE FUNDS
Each Fund's Service Shares are sold on a continuous basis
at the net asset value next determined after an order is entered
and deemed effective. There is no sales charge. The minimum
initial investment is $1,000 in the Service Shares of a Fund.
Subsequent investments may be in any amount. Aquila Distributors,
Inc. (the "Distributor") is the exclusive Distributor of the
Funds' shares. The Distributor sells shares only for purchase
orders received.
Opening an Account
To open a new Service Shares account directly with any Fund,
you must send a properly completed Application to Administrative
Data Management Corp. (the "Agent"). Redemption of Service Shares
purchased directly by wire payment will not be honored until a
properly completed Application has been received by the Agent.
Initial investments in Service Shares may be made in any of
these three ways:
1. By Mail. Payment may be made by check, money order,
Federal Reserve Draft or other negotiable bank draft drawn in
United States dollars on a United States commercial or savings
bank or credit union (each of which is a "Financial Institution")
payable to the order of Pacific Capital Cash Assets Trust,
Pacific Capital Tax-Free Cash Assets Trust or Pacific Capital
U.S. Treasuries Cash Assets Trust, as the case may be, and mailed
to:
(Specify the name of the Fund)
Administrative Data Management Corp.,
Shareholder Servicing Agent
Attn: Aquilasm Group of Funds
581 Main Street
Woodbridge, NJ 07095-1198
2. By Wire. Payment may be wired in Federal funds (monies
credited to a bank's account with a Federal Reserve Bank) to Bank
One Trust Company, N.A., (the "Custodian") which serves as the
custodian of the assets of the Funds.
To insure prompt and proper crediting to your account, if
you choose this method of payment you should first telephone the
Agent (800-255-2287 toll free or 732-855-5731) and then instruct
your bank to wire funds as indicated below for the appropriate
Fund:
the Cash Fund
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Pacific Capital Cash Assets Trust
(Service Shares) A/C 6801358400
the Tax-Free Fund
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Pacific Capital Tax-Free
Cash Assets Trust (Service Shares)
A/C 6801358500
the Treasuries Fund
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Pacific Capital U.S. Treasuries
Cash Assets Trust (Service Shares)
A/C 6801358600
In addition, add:
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 a Fund by
purchasing Service Shares through registered broker-dealers.
There is no sales or service charge imposed by any Fund on
purchases of Service Shares, although financial intermediaries
may make reasonable charges to their customers for their
services. The services to be provided and the fees therefor are
established by each financial intermediary acting independently;
financial intermediaries may also determine to establish, as to
accounts serviced by them, higher initial or subsequent
investment requirements than those required by the Funds.
Financial intermediaries are responsible for prompt transmission
of orders placed through them.
The Bank of Hawaii, the parent of the Adviser, offers an
arrangement whereby its customers may invest in Service Shares of
any Fund by establishing a "sweep account" with the Bank, which
connects an FDIC-insured Bank of Hawaii checking account with a
brokerage account provided through Bancorp Investment Group, a
subsidiary of the Bank of Hawaii. When money is transferred out
of your checking account for investment in any of the Funds, it
is no longer covered by FDIC insurance. Other banks or
broker-dealers may offer a similar facility for automatic
investment of account balances in Service Shares of the Funds.
Because of the special arrangements for automated purchases and
redemptions of Service Shares that sweep accounts involve,
certain options or other features described in this Prospectus
(such as alternative purchase and redemption procedures, dividend
and distribution arrangements or share certificates) may not be
available to persons investing through such accounts. Investments
through a sweep account are governed by the terms and conditions
of the account (including fees and expenses associated with the
account), which are typically set forth in agreements and
accompanying disclosure statements used to establish the account.
You should review copies of these materials before investing in a
Fund through a sweep account.
Additional Investments
If you invest in a Fund directly, rather than through a
financial intermediary, you may make additional investments in
Service Shares in any amount after an account has been
established by mailing directly to the Agent a check, money order
or other negotiable bank draft made payable to the Fund, or by
wiring funds as described above. In each case you should indicate
your name and account number to insure prompt and proper
crediting of your account. The pre-printed stub attached to each
Fund's confirmations is provided as a convenient identification
method to accompany additional investments made by mail. You may
also make subsequent investments of $50 or more using electronic
funds transfers from your demand account at a Financial
Institution if it is a member of the Automated Clearing House and
if the Agent has received a completed Application designating
this feature, or, after your account has been opened, a Ready
Access Features form available from the Distributor or the Agent.
A pre-determined amount can be regularly transferred for
investment ("Automatic Investment") or single investments can be
made upon receipt by the Agent of telephone instructions from
anyone ("Telephone Investment"). The maximum amount of each
Telephone Investment is $50,000. Upon 30 days' written notice to
shareholders, the Funds may modify or terminate these investment
methods at any time or charge a service fee, although no such fee
is currently contemplated.
If you make additional investments in Service Shares through
an account with a financial intermediary, the procedures for such
investments will be those provided in connection with the account
rather than the foregoing.
When Shares Are Issued and Dividends Are Declared On Them
There are three methods as to when Service Shares are
issued. Under each method, shares are issued at the net asset
value per share next determined after the purchase order is
effective, as discussed below. Under each method, the Application
must be properly completed and have been received and accepted by
the Agent; each Fund or the Distributor may also reject any
purchase order for shares of that Fund. Under each method,
Federal funds (see above) must either be available to the Fund in
question or the payment thereof must be guaranteed to the Fund so
that the Fund can be as fully invested as practicable.
The first method under which Service Shares are issued
involves ordinary investments. Under this method, payments
transmitted by wire in Federal funds and payments made by Federal
Reserve Draft received by the Custodian prior to 4:00 p.m. New
York time on any Business Day will be invested (i.e., the
purchase order will be effective) at the net asset value per
Service Share determined as of 4:00 p.m. on that day; if either
such type of payment is received after that time, the purchase
order will be effective as of 4:00 p.m. on the next Business Day.
Wire payments not in Federal funds will normally be converted
into Federal funds on the next Business Day and the purchase
order will be effective as of 4:00 p.m. on such next day.
Payments transmitted by check will normally be converted to
Federal funds by the Agent, as your agent, within two Business
Days for checks drawn on a member bank of the Federal Reserve
System, and longer for most other checks, and the purchase orders
will be effective as of 4:00 p.m. on that day, if it is a
Business Day, and otherwise at 4:00 p.m. on the next Business Day
after such conversion. All checks are accepted subject to
collection at full face value in United States funds and must be
drawn in United States dollars on a United States bank; if not,
shares will not be issued. Purchases by Automatic Investment and
Telephone Investment will be executed on the first Business Day
occurring on or after the date an order is considered received by
the Agent at the net asset value determined on that day. In the
case of Automatic Investment the order will be executed on the
date you specified for investment at the price determined on that
day, unless it is not a Business Day, in which case the order
will be executed at the net asset value determined on the next
Business Day. In the case of Telephone Investment the order will
be filled at the next determined net asset value, which for
orders placed after the time for determining the net asset value
of any Fund's shares for any Business Day will be the price
determined on the following Business Day. Dividends on shares
issued under this first investment method are declared starting
on the day (whether or not a Business Day) after the purchase
order is effective and are declared on the day on which the
shares are redeemed.
The second method under which Service Shares are issued
involves a bank or broker-dealer making special arrangements with
the Funds under which (i) either (a) payment is made in Federal
funds or by check in New York Clearing House funds delivered to
the Agent prior to 5:00 p.m. New York time or (b) the Agent is
advised prior to that time of a dollar amount to be invested;
(ii) the Agent is advised prior to that time of the form of
registration of the shares to be issued; (iii) the bank or
broker-dealer will prior to noon New York time on the next
Business Day wire Federal funds to the Custodian (but in the case
of prior payment by check under (i)(a) above only if the check is
not converted into Federal funds in the normal course on the next
Business Day); and (iv) arrangements satisfactory to the Funds
are made between it and the bank or broker-dealer under which if
Federal funds are not so received by the Custodian, the Fund is
reimbursed for any costs or loss of income arising out of such
non-receipt. New York Clearing House funds are funds represented
by a check drawn on a bank which is a member of the New York
Clearing House. Under this second method, the purchase order is
effective on the day the check or the advice is received under
(i) above. Dividends on shares issued under this second method
are declared starting on the day (whether or not a Business Day)
after the purchase order is effective and are declared on the day
on which such shares are redeemed.
The third method under which Service Shares are issued
involves broker-dealers or banks which have requested that this
method be used, to which request the Funds have consented. Under
this third method (i) the Agent must be advised prior to noon New
York time on any Business Day of a dollar amount to be invested;
and (ii) Federal funds must be wired to the Custodian on that
day; under this method, the purchase order is effective on that
day. Dividends on shares issued under this third investment
method are declared beginning on that day but not on the day such
shares are redeemed.
This third investment method is available to prospective
investors in Service Shares who wish to use it so that the
dividends on their shares will commence to be declared on the day
the purchase order is effective. Upon written or phone request to
a Fund by such a prospective investor, the Fund will advise as to
the broker-dealers or banks through which such purchases may be
made.
Confirmations and Share Certificates
If you invest in a Fund directly, rather than through a
financial intermediary, all purchases of Service Shares will be
confirmed and credited to you in an account maintained for you by
the Agent in full and fractional shares of the Fund being
purchased (rounded to the nearest 1/1000th of a share). Share
certificates will not be issued unless you so request from the
Agent in writing and declare a need for such certificates, such
as a pledge of shares or an estate situation. If certificates are
issued at your request, Expedited Redemption Methods described
below will not be available and delay and expense may be incurred
if you lose the certificates. No certificates will be issued for
fractional shares or to shareholders who have elected the
checking account or predesignated bank account methods of
withdrawing cash from their accounts. (See "How to Redeem Your
Investment" below.) Share certificates may not be available to
investors who purchase Service Shares through an account with a
financial intermediary.
The Funds and the Distributor reserve the right to reject
any order for the purchase of Service Shares. In addition, the
offering of shares may be suspended at any time and resumed at
any time thereafter.
Distribution Plan
Each Fund has adopted a Distribution 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 that rule. One section of the first part of the
Distribution Plan of each Fund is designed to protect against any
claim against or involving the Fund that some of the expenses
which the Fund pays or may pay come within the purview of Rule
12b-1. Another section of the first part of the Distribution Plan
authorizes Aquila Management Corporation (the "Administrator"),
not the Fund, to make certain payments to certain Qualified
Recipients (as defined in the Distribution Plan) which have
rendered assistance in the distribution and/or retention of the
Funds' shares. For the Cash Fund, these payments may not exceed
0.15 of 1% of the average annual net assets of the Fund for a
fiscal year; for the Tax-Free Fund and the Treasuries Fund, the
rate is 0.10 of 1%.
The second part of each Distribution Plan provides for
payments by the Fund out of its assets to "Designated Payees,"
which are broker-dealers, other financial institutions and
service providers which have entered into appropriate agreements
with the Distributor and which have rendered assistance in the
distribution and/or retention of the Funds' Service Shares or in
the servicing of Service Share accounts. The total payments under
this part of each Distribution Plan may not exceed 0.25 of 1% of
the average annual assets of the Fund represented by Service
Shares. Subject to this limitation and to the overall direction
and oversight of the Board of Trustees, the Distributor is
authorized to determine the amounts paid to each Designated
Payee, taking into account, among other factors, the Designated
Payee's "Qualified Holdings" i.e., the number of Service Shares
beneficially owned by the Designated Payee or its customers or
clients, whether the Designated Payee was instrumental in the
purchase and/or retention of, or provides administrative or other
services in connection with, such shares.
A Designated Payee may, consistent with its agreement with
the Distributor, pass on a portion of the payments it receives
under the Distribution Plan to other financial institutions or
service organizations that also render assistance in the
distribution, retention and/or servicing of Service Shares. The
Bank of Hawaii and Bancorp Investment Group, "affiliated
persons," as defined in the 1940 Act, of the Adviser, are among
those who, indirectly through one or more Designated Payees, will
receive payments authorized by the Plan in consideration of their
services in connection with investments in Service Shares by
their customers.
Because payments by each Fund under this part of its
Distribution Plan relate to sales and services in connection
solely with Service Shares, they are borne only by that class of
shares. Accordingly, dividends on Service Shares generally will
differ from those paid on Original Shares; see "Dividend and Tax
Information."
If you purchase Service Shares directly from the Fund, some
or all of the services offered by recipients of payments under
the Distribution Plan may not be available to you.
A financial institution that holds Original Shares of any
Fund on behalf of its clients receives no compensation from such
Fund for any services it provides in connection with those
shares, although it may receive compensation from its clients
and/or from the Administrator out of the Administrator's own
resources. Accordingly, any compensation that a financial
institution may receive for services provided in connection with
Original Shares may be expected to differ both as to source and
amount from that received in connection with Service Shares.
See the Additional Statement for further information about
the Distribution Plan.
HOW TO REDEEM YOUR INVESTMENT
Each Fund provides day-to-day liquidity. You may redeem all
or any part of your Service Shares at any time at the net asset
value next determined after acceptance of your redemption request
at the Agent. Redemptions can be made by the various methods
described below. Except for shares recently purchased by check as
discussed below, there is no minimum time period for any
investment in any Fund. There are no redemption fees or
withdrawal penalties. If you purchase Service Shares of any Fund
through broker-dealers, banks and other financial institutions
which serve as shareholders of record you must redeem through
those institutions, which are responsible for prompt transmission
of redemption requests. In all other cases, you may redeem
directly, but a completed purchase Application must have been
received by the Agent before redemption requests can be honored.
A redemption may result in a taxable transaction to you, but only
if there has been a change in the net asset value per share,
which will occur only under extraordinary circumstances.
For your convenience each Fund offers expedited redemption
to provide you with a high level of liquidity for your
investment.
Expedited Redemption Methods
(Non-Certificate Shares)
You have the flexibility of three expedited methods of
initiating redemptions. These are available as to Service Shares
not represented by certificates.
1. By Telephone. The Agent will accept instructions by
telephone from anyone to redeem Service Shares and make payments
to a Financial Institution account you have predesignated. See
"Redemption Payments" below for payment methods. Your name and
your account number must be supplied.
To redeem an investment in Service Shares by this method,
telephone:
800-255-2287 toll free or 732-855-5731
Note: The Funds, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed
to verify the identity of the caller. The Agent will request some
or all of the following information: account name and number;
name(s) and social security number registered to the account and
personal identification; the Agent may also record calls.
Shareholders should verify the accuracy of confirmation
statements immediately upon receipt.
2. By FAX or Mail. You may also request redemption
payments to a predesignated Financial Institution account by a
letter of instruction sent to: Administrative Data Management
Corp., Attn: Aquilasm Group of Funds, by FAX at 732-855-5730 or
by mail at 581 Main Street, Woodbridge, NJ 07095-1198, indicating
Fund name, account number, amount to be redeemed and any payment
directions, and signed by the registered holder(s). Signature
guarantees are not required. See "Redemption Payments" below for
payment methods.
If you wish to have redemption proceeds sent to a
Financial Institution Account, you should so elect on the
Expedited Redemption section of the Application or the Ready
Access Features form and provide the required information
concerning the Financial Institution account number. The
Financial Institution account must be in the exclusive name(s) of
the shareholder(s) as registered with the Fund(s). You may change
the designated Financial Institution account at any time by
completing and returning a Ready Access Features form. For
protection of your assets, this form requires signature
guarantees and possible additional documentation.
3. By Check. The Agent will, upon request, provide you with
forms of drafts ("checks") drawn on the Custodian. This feature
is not available if your shares are represented by certificates.
These checks represent a further alternative redemption means and
you may make them payable to the order of anyone in any amount of
not less than $500. If you wish to use this check writing
redemption procedure you should notify the Agent or so indicate
on your Application. You will be issued special checks to be
drawn against the Custodian for this purpose. You will be subject
to the Custodian's rules and regulations governing its checking
accounts. If the account is registered in more than one name,
each check must be signed by each account holder exactly as the
names appear on the account registration, unless expressly stated
otherwise on your Application.
There is no charge to you for the maintenance of this
special check writing privilege or for the clearance of any
checks.
When such a check is presented to the Custodian for
payment, a sufficient number of full and fractional shares of
that Fund in your account will be redeemed to cover the amount of
the check. This check writing redemption procedure enables you to
continue receiving dividends on those shares equaling the amount
being redeemed by check until such time as the check is actually
presented to the Custodian for payment.
As these checks are redemption drafts relating to Service
Shares, you should be certain that adequate shares for which
certificates have not been issued and which were not recently
purchased by check are in the account to cover the amount of the
check. See "Redemption Payments" below for more details as to
special problems as to Service Shares recently purchased by check
. If insufficient redeemable shares are in the account, the
redemption check will be returned marked "insufficient funds."
The fact that redemption checks are drafts may also permit a bank
in which they are deposited to delay crediting the account in
question until that bank has received payment funds for the
redemption check.
Checks may not be directly presented to any branch of the
Custodian. This does not affect checks used for the payment of
bills or cashed at other banks. You may not use checks to close
your account, since the number of shares in your account changes
daily through dividend payments which are automatically
reinvested in full and fractional shares. Consequently, you may
not present a check directly to the Custodian and request
redemption for all or substantially all Service Shares held in
your account. Only expedited redemption to a predesignated bank
account or the regular redemption method (see below) may be used
when closing your account.
Multiple Redemption Services. You are not limited in choice
of redemption methods but may utilize all available forms.
However, when both redemption to a predesignated bank account and
check writing are desired, you must so elect on the Application,
or by proper completion of a Ready Access Features form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
1. Certificate Shares. Certificates in blank (unsigned)
representing Service Shares to be redeemed should be sent to the
Funds' Shareholder Servicing Agent: Administrative Data
Management Corp., Attn: Aquilasm Group of Funds, 581 Main Street,
Woodbridge, NJ 07095-1198, with payment instructions. A stock
assignment form signed by the registered shareholder(s) exactly
as the account is registered must also be sent to the Shareholder
Servicing Agent.
For your own protection, it is essential that
certificates be mailed separately from signed redemption
documentation. Because of possible mail problems, it is also
recommended that certificates be sent by registered mail, return
receipt requested.
For the redemption request to be in "proper form," the
signature or signatures must be the same as in the registration
of the account. In a joint account, the signatures of both
shareholders are necessary. Additional documentation may be
required where shares are held by a corporation, partnership,
trustee or executor, or if redemption is requested by other than
the shareholder of record. If redemption proceeds of less than
$50,000 are payable to the record holder and are to be sent to
the record address, no signature guarantee is required.In all
other cases, signatures must be guaranteed by a member of a
national securities exchange, a U.S. bank or trust company, a
state-chartered savings bank, a federally chartered savings and
loan association, a foreign bank having a U.S. correspondent
bank, a participant in the Securities Transfer Association
Medallion Program (STAMP), the Stock Exchanges Medallion Program
(SEMP) or the New York Stock Exchange, Inc. Medallion Signature
Program (MSP). A notary public is not an acceptable signature
guarantor.
2. Non-Certificate Shares. If you own non-certificate
Service Shares registered on the books of a Fund, and you have
not elected Expedited Redemption to a predesignated Financial
Institution account, you must use the Regular Redemption Method.
Under this redemption method you should send a letter of
instruction to: Administrative Data Management Corp., Attn:
Aquilasm Group of Funds, 581 Main Street, Woodbridge, NJ
07095-1198, containing:
Fund Name;
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 (normally redemption proceeds will
be mailed to your address as registered with the
Funds);
Signature(s) of the registered shareholder(s); and
Signature guarantee(s), if required, as indicated
above.
Redemption Payments
For redemptions of Service Shares other than by checks
you have written, redemption payments will ordinarily be mailed
to you at your address of record. If you so request and the
amount of your redemption proceeds is $1,000 or more, the
proceeds will, wherever possible, be wired or transferred through
the facilities of the Automated Clearing House to the Financial
Institution account specified in the Expedited Redemption section
of your Application or Ready Access Features form. Any Fund may
impose a charge, not exceeding $5.00 per wire redemption, after
written notice to shareholders who have elected this redemption
procedure. No Fund has any present intention of making this
charge. Upon 30 days' written notice to shareholders, any Fund
may modify or terminate the use of the Automated Clearing House
to make redemption payments at any time or charge a service fee,
although no such fee is currently contemplated. If any such
changes are made, the Prospectus will be supplemented to reflect
them. If you use a broker or dealer to arrange for a redemption,
you may be charged a fee for this service.
Redemption proceeds on Service Shares issued under the third
method under which shares are issued (see "When Shares Are Issued
and Dividends Are Declared on Them" under "How to Invest in the
Funds") will be wired in Federal funds on the date of redemption,
if practicable, and, if not practicable, as soon thereafter as
practicable, irrespective of amount. Redemption requests as to
such shares may be made by telephone.
Except as indicated above, each Fund will normally make
payment for all Service Shares redeemed on the next Business Day
following receipt of request. Except as set forth below, in no
event will payment be made more than seven days after receipt of
a redemption request made in compliance with one of the
redemption methods specified above. However, the right of
redemption may be suspended or the date of payment postponed (i)
during periods when the New York Stock Exchange is closed for
other than weekends and holidays or when trading on such exchange
is restricted as determined by the Securities and Exchange
Commission by rule or regulation; (ii) during periods in which an
emergency, as determined by the Securities and Exchange
Commission, exists which causes disposal of, or valuation of the
net asset value of, the portfolio securities of the Fund to be
unreasonable or impracticable; or (iii) for such other periods as
the Securities and Exchange Commission may permit. Payment for
redemption by any method (including redemption by check) of
Service Shares recently purchased by check (irrespective of
whether the check is a regular check or a certified, cashier's or
official bank check) or by Automatic Investment or Telephone
Investment may be delayed up to 15 days or until (i) the purchase
check or Automatic Investment or Telephone Investment has been
honored or (ii) the Agent has received assurances by telephone or
in writing from the bank on which the purchase check was drawn or
from which the funds for Automatic Investment or Telephone
Investment were transferred, satisfactory to the Agent and the
Fund, that the purchase check or Automatic Investment or
Telephone Investment will be honored. Service Shares so purchased
within the prior 15 days will not be redeemed under the check
writing redemption procedure and a shareholder must not write a
check if (i) it will be presented to the Custodian for payment
within 15 days of a purchase of Service Shares by check and (ii)
the redemption check would cause the redemption of some or all of
those shares. Possible delays in payment of redemption proceeds
can be eliminated by using wire payments or Federal Reserve
drafts to pay for purchases.
If the Board of Trustees determines that it would be
detrimental to the best interests of the remaining shareholders
of any Fund to make payment wholly or partly in cash, that Fund
may pay the redemption price in whole or in part by the
distribution in kind of securities from the portfolio of the
Fund, in lieu of cash, in conformity with applicable rules of the
Securities and Exchange Commission. See the Additional Statement
for details.
Each Fund has the right to compel the redemption of shares
held in any account if the aggregate net asset value of such
shares is less than $500 due to shareholder redemptions. If the
Board of Trustees elects to do this, shareholders who are
affected will receive prior written notice and will be permitted
60 days to bring their accounts up to the minimum before this
redemption is processed.
AUTOMATIC WITHDRAWAL PLAN
If you own or purchase Service Shares of any Fund having
a net asset value of at least $5,000 and these shares have been
purchased directly rather than through a financial intermediary,
you may establish an Automatic Withdrawal Plan under which you
will receive a monthly or quarterly check in a stated amount, not
less than $50. If such a plan is established, all dividends and
distributions must be reinvested in your shareholder's account.
See the Automatic Withdrawal Plan provisions of the Application
included in the Prospectus, the Additional Statement under
"Automatic Withdrawal Plan" and "Dividend and Tax Information"
below.
MANAGEMENT ARRANGEMENTS
The Board of Trustees
The business and affairs of each Fund are managed under the
direction and control of its Board of Trustees. The Additional
Statement lists the Funds' Trustees and officers and provides
further information about them.
The Advisory Agreements
Hawaiian Trust Company, Limited (the "Adviser") supervises
the investment program of each Fund and the composition of its
portfolio.
The services of the Adviser to each Fund are rendered under
an Investment Advisory Agreement between that Fund and the
Adviser (together, the "Advisory Agreements") which were approved
by each Fund's shareholders on March 22, 1996. The new Advisory
Agreements have the same provisions as the agreements previously
in effect, except that under the new agreements the Funds are
permitted to pay regular fees to Trustees who are affiliated with
the Adviser solely by reason of membership on its Board of
Directors.
The Advisory Agreements of the Funds provide, subject to
the control of the Board of Trustees, for investment supervision
by the Adviser. Under the Advisory Agreements, the Adviser will
furnish information as to the Fund's portfolio securities to any
provider of fund accounting services to each Fund; will monitor
records of each Fund as to the Fund's portfolio, including
prices, maintained by such provider of such services; and will
supply at its expense, monthly or more frequently as may be
necessary, pricing of each Fund's portfolio based on available
market quotations using a pricing service or other source of
pricing information satisfactory to that Fund. Each Advisory
Agreement states that the Adviser shall, at its expense, provide
to the Fund all office space and facilities, equipment and
clerical personnel necessary for the carrying out of the
Adviser's duties under the Advisory Agreement.
Under each Advisory Agreement, the Adviser pays all
compensation of those officers and employees of the Fund and of
those Trustees, if any, who are affiliated with the Adviser
provided, however that if any Trustee is an affiliate of the
Adviser solely by reason of being a member of its Board of
Directors, the Trust may pay compensation to such Trustee, but at
a rate no greater than the rate it pays to its other Trustees.
Under the Advisory Agreements, each Fund bears the cost of
preparing and setting in type its prospectuses, statements of
additional information, and reports to its shareholders and the
costs of printing or otherwise producing and distributing those
copies of such prospectuses, statements of additional information
and reports as are sent to its shareholders. Under each Advisory
Agreement, all costs and expenses not expressly assumed by the
Adviser or by the Administrator under the Fund's Administration
Agreement or by the Fund's principal underwriter are paid by the
Fund. The Advisory Agreements list examples of such expenses
borne by the Funds, the major categories of such expenses being:
legal and audit expenses, custodian and transfer agent, or
shareholder servicing agent fees and expenses, stock issuance and
redemption costs, certain printing costs, registration costs of
the Funds and their shares under Federal and State securities
laws, interest, taxes, and non-recurring expenses, including
litigation.
Under the Advisory Agreements, each Fund pays a fee payable
monthly and computed on the net asset value of the Fund as of the
close of business each business day. For the Cash Fund, the fee
is payable at the annual rate of 0.33 of 1% of such net assets up
to $325 million, and on net assets above that amount at an annual
rate of 0.43 of 1% of such net assets; for each of the Tax-Free
Fund and the Treasuries Fund, the annual rate is 0.27 of 1% of
such net assets up to a stated amount of net assets and 0.33 of
1% on net assets above that amount. (The amount for the Tax-Free
Fund is $95 million and for the Treasuries Fund the amount is $60
million.) However, the total fees which the Funds pay are at the
annual rate of 0.50 of 1% of such net assets for the Cash Fund
and 0.40 of 1% for the other Funds, since the Administrator also
receives a fee from each of the other Funds under the applicable
Administration Agreement as discussed below. The Adviser and/or
Administrator may, in order to attempt to achieve a competitive
yield on the shares of a Fund, each waive all or part of either
fee.
The Adviser agrees in each case that its fee shall be
reduced, but not below zero, by an amount equal to the pro-rata
portion (based upon the aggregate fees of the Adviser and the
Administrator) of the amount, if any, by which the total expenses
of the Fund in any fiscal year, exclusive of taxes, interest and
brokerage fees, shall exceed the lesser of (i) 2.5% of the first
$30 million of average annual net assets of the Fund plus 2% of
the next $70 million of such assets and 1.5% of its average
annual net assets in excess of $100 million, or (ii) 25% of the
Fund's total annual investment income.
The Advisory Agreements contain provisions as to the
allocation of the portfolio transactions of each Fund; see the
Additional Statement. Under these provisions, the Adviser is
authorized to consider sales of the Fund's shares in making this
allocation.
The Administration Agreements
Under Administration Agreements with each Fund (the
"Administration Agreements"), Aquila Management Corporation as
Administrator, at its own expense, provides office space,
personnel, facilities and equipment for the performance of its
functions thereunder and as is necessary in connection with the
maintenance of the headquarters of the Fund and pays all
compensation of the Fund's Trustees, officers and employees who
are affiliated persons of the Administrator. The Administration
Agreements went into effect November 1, 1993.
Under the Administration Agreements, subject to the control
of the Funds' Board of Trustees, the Administrator provides all
administrative services to each Fund other than those relating to
its investment portfolio and the maintenance of its accounting
books and records. Such administrative services include but are
not limited to maintaining books and records (other than
accounting books and records) of the Funds, and overseeing all
relationships between the Funds and their 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
Funds and for the sale, servicing or redemption of the Funds'
shares. See the Additional Statement for a further description of
functions listed in the Administration Agreements as part of such
duties.
Under each Administration Agreement, the Fund pays a fee
payable monthly and computed on the net asset value of the Fund
at the end of each business day. For the Cash Fund, the fee is
payable at the annual rate of 0.17 of 1% of such net assets up to
$325 million, and on net assets above that amount at an annual
rate of 0.07 of 1% of such net assets; for each of the Tax-Free
Fund and the Treasuries Fund, the annual rate is 0.13 of 1% of
such net assets up to a stated amount of net assets and 0.07 of
1% on net assets above that amount. (The amount for the Tax-Free
Fund is $95 million and for the Treasuries Fund the amount is $60
million.) The Administrator has agreed in each case that its fee
shall be reduced, but not below zero, by an amount equal to its
pro-rata portion (based upon the aggregate fees of the Adviser
and the Administrator) of the amount, if any, by which the total
expenses of the Fund in any fiscal year, exclusive of taxes,
interest, and brokerage fees, shall exceed the lesser of (i) 2.5%
of the first $30 million of average annual net assets of the Fund
plus 2% of the next $70 million of such assets and 1.5% of its
average annual net assets in excess of $100 million, or (ii) 25%
of the Fund's total annual investment income.
Information about the Adviser,
the Administrator and the Distributor
The Adviser, a Hawaii corporation organized in 1898, is
the largest trust company in the State of Hawaii in terms of
assets under administration. As of March 31, 1997, the Adviser
had over $12 billion of clients' assets under administration. The
Adviser is not authorized to, and does not, carry on a banking
business. The Adviser is a wholly-owned subsidiary of Bank of
Hawaii, all of whose shares are owned by Bancorp Hawaii, Inc.
("Bancorp") and Bank of Hawaii's directors (each of whom owns
qualifying shares as required by Hawaii law). Bancorp is a bank
holding company registered under the Bank Holding Company Act of
1956, as amended, and its common stock is registered under the
Securities Exchange Act of 1934 and is listed and traded on the
New York Stock Exchange. Bancorp files annual and periodic
reports with the Securities and Exchange Commission which are
available for public inspection. See the Additional Statement as
to the legality, under the Federal banking laws, of the Adviser's
acting as the Funds' investment adviser. On September 30, 1997,
the Adviser will become Pacific Century Trust, a division of Bank
of Hawaii.
The Funds' Administrator is founder of, and administrator
to, the Aquilasm Group of Funds, which consists of tax-free
municipal bond funds, two equity funds and money market funds. As
of June 30, 1997, these funds had aggregate assets of
approximately $2.6 billion, of which approximately $720 million
consisted of assets of money market funds. The Administrator,
which was founded in 1984, is controlled by Mr. Lacy B. Herrmann
(directly, through a trust and through share ownership by his
wife). See the Additional Statement for information on Mr.
Herrmann and these arrangements.
For each Fund's fiscal year ended March 31, 1997, the
Cash Fund, the Tax-Free Fund and the Treasuries Fund paid or
accrued to the Adviser fees of $1,424,936, $410,547 and $379,291
respectively, and paid or accrued to the Administrator fees of
$609,175, $156,130 and $124,062, respectively under the Advisory
and Administration Agreements.
The Distributor currently handles the distribution of the
shares of fourteen funds (five money market funds, seven tax-free
municipal bond funds and two equity funds), including the Funds.
Under Distribution Agreements with the Funds, the Distributor is
responsible for the payment of certain printing and distribution
costs relating to prospectuses and reports as well as the costs
of supplemental sales literature, advertising and other
promotional activities.
At the date of this Prospectus, there is a proposed
transaction whereby all of the shares of the Distributor, which
are currently owned 75% by Mr. Herrmann and 25% by Diana P.
Herrmann, will be owned by certain directors and/or officers of
the Administrator and/or the Distributor, including Mr.
Herrmann.
DIVIDEND AND TAX INFORMATION
All of the Funds' net income for dividend purposes (see
below) will be declared daily as dividends; see "When Shares Are
Issued and Dividends Are Declared on Them" under "How to Invest
in the Funds" for information as to when dividends on Service
Shares are declared. Dividends are paid within a week before or
after the end of each month and invested in additional shares at
net asset value on the payable date, or, at your election, paid
in cash by check. This election may be made in the Application or
by subsequent written notice to the Agent. You may also elect to
have dividends deposited without charge by electronic funds
transfers into an account at a Financial Institution which is a
member of the Automated Clearing House by completing a Ready
Access Features form. If you redeem all of your Service Shares
you will be credited on the redemption payment date with the
amount of all dividends declared for the month through the date
of redemption, or through the day preceding the date of
redemption in the case of shares on which income dividends were
declared on the same day on which the shares were issued.
You will receive monthly a summary of your account,
including information as to dividends paid during the month and
the shares credited to the account through reinvestment of
dividends.
Daily dividends for a Fund will be calculated as follows:
the net income for dividend purposes will be calculated
immediately prior to the calculation of net asset value and will
include accrued interest and original issue and market discount
earned since the last valuation, less the estimated expenses of
the Fund (including expenses allocable to each particular class
of shares) and amortized original issue and market premium for
the period. However, the calculation of the dividend could change
under certain circumstances under the procedures adopted by the
Board of Trustees relating to "amortized cost" valuation; see the
Additional Statement.
Dividends paid by each Fund with respect to Service Shares
and Original Shares will be calculated in the same manner, at the
same time, on the same day, and will be in the same amount except
that any class expenses (including payments made by Service
Shares under the Distribution Plan) will be borne exclusively by
that class. Dividends on Original Shares are expected generally
to be higher than those on Service Shares because expenses
allocated to Service Shares will generally be higher.
Dividends so paid will be taxable to shareholders as
ordinary income (except as described in "Tax Information
Concerning the Tax-Free Fund" below), even though reinvested,
unless the net income, computed as above, exceeds "earnings and
profits," as determined for tax purposes; this could occur
because net income as so determined will include certain
unrealized appreciation and discount which is not included for
tax purposes. If dividends exceed a shareholder's ratable share
of "earnings and profits," the excess will reduce the cost or
other tax basis for his or her shares; any reduction which would
otherwise result in a negative basis will cause the basis to be
reduced to zero, with any remaining amount being taxed as capital
gain. The dividends paid by the Funds will not be eligible for
the 70% dividends received deduction for corporations. Statements
as to the tax status of each investor's dividends will be mailed
annually.
It is possible but unlikely that a Fund may have realized
long-term capital gains or losses in a year. If it has any net
long-term gains realized through October 31st of a year, it will
pay a capital gains distribution after that date. It may also pay
a supplemental distribution after the end of its fiscal year. Any
capital gains distribution will be taxed at the same rate as
ordinary income, except that for individuals, trusts and estates
the maximum tax rate on capital gains distributions is 28% even
if the applicable rate on ordinary income for such taxpayers is
higher than 28%.
Each Fund will be required to withhold, subject to certain
exemptions, at a rate of 31% on dividends paid or credited to
shareholders and on redemption proceeds, if a correct Taxpayer
Identification Number, certified when required, is not on file
with it.
Each Fund, during its last fiscal year, qualified and
intends to continue to qualify under subchapter M of the Internal
Revenue Code; if so qualified it will not be liable for Federal
income taxes on amounts distributed by the Fund.
Tax Information Concerning the Tax-Free Fund
The Tax-Free Fund seeks to pay "exempt-interest
dividends." In the case of the Tax-Free Fund, these are dividends
derived from net income received by the Tax-Free Fund on its
Municipal Obligations, provided that, as the Tax-Free Fund
intends, at least 50% of the value of its assets is invested in
tax-exempt obligations. Such dividends are exempt from regular
Federal income tax. Classification of dividends as
exempt-interest or non-exempt-interest is made by one designated
percentage applied uniformly to all income dividends made during
the Tax-Free Fund's tax year. Such designation will normally be
made in the first month after the end of each of the Tax-Free
Fund's fiscal years as to income dividends paid in the prior
year. The percentage of income designated as tax-exempt for any
particular dividend may be different from the percentage of the
Tax-Free Fund's income that was tax-exempt during the period
covered by the dividend.
A shareholder receiving a dividend from net interest income
earned by the Tax-Free Fund from one or more of (i) Taxable
Obligations and (ii) income from repurchase agreements and
securities loans, treats the dividend as a receipt of ordinary
income in the computation of the shareholder's gross income
regardless of whether it is reinvested in Tax-Free Fund shares;
such dividends and capital gains distributions are not included
in exempt-interest dividends.
Under the Code, interest on loans to purchase or carry
shares of the Tax-Free Fund may not be deducted for Federal tax
purposes, unless the Tax-Free Fund realizes taxable income, in
which case interest would be deductible in proportion to the
Tax-Free Fund's taxable income. In addition, under rules used by
the Internal Revenue Service for determining when borrowed funds
are deemed used for the purpose of purchasing or carrying
particular assets, the purchase of shares of the Tax-Free Fund
may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the
purchase of shares. Moreover, the receipt of tax-exempt dividends
from the Tax-Free Fund by an individual shareholder may result in
some portion of the social security payments or railroad
retirement benefits received by the shareholder or the
shareholder's spouse being included in taxable income.
Furthermore, persons who are "substantial users" (or persons
related thereto) of facilities financed by industrial development
bonds or private activity bonds should consult their own tax
advisers before purchasing shares.
While interest from all Municipal Obligations is tax-exempt
under the Code for purposes of computing the regular tax,
interest from so-called private activity bonds issued after
August 7, 1986 constitutes a tax preference for both individuals
and corporations and thus will enter into a computation of the
alternative minimum tax. Whether or not that computation will
result in a tax will depend on the entire content of the
taxpayer's return. The Tax-Free Fund will not invest in the types
of Municipal Obligations which would give rise to interest that
would be subject to alternative minimum taxation if more than 20%
of its assets would be so invested, and may refrain from
investing in that type of Municipal Obligation completely. The
20% limit is a fundamental policy of the Tax-Free Fund.
Corporations receiving exempt-interest dividends from the
Tax-Free Fund are subject to additional provisions applying the
alternative minimum tax.
Hawaiian Tax Information
The Tax-Free Fund, and dividends and distributions made
by the Tax-Free Fund to Hawaii residents, will generally be
treated for Hawaii income tax purposes in the same manner as they
are treated under the Code for Federal income tax purposes. Under
Hawaii law, however, interest derived from obligations of states
(and their political subdivisions) other than Hawaii will not be
exempt from Hawaii income taxation. (Interest derived from bonds
or obligations issued by or under the authority of the following
is exempt from Hawaii income taxation: Guam, Northern Mariana
Islands, Puerto Rico, and the Virgin Islands.) For the calendar
years 1996, 1995 and 1994, the percentage of the Tax-Free Fund's
dividends exempt from State of Hawaii income taxes was 41.3%,
34.8% and 38.9%, respectively, which should not be considered
predictive of future results.
Interest on Hawaiian Obligations, tax-exempt obligations of
states other than Hawaii and their political subdivisions, and
obligations of the United States or its possessions is not exempt
from the Hawaii Franchise Tax. This tax applies to banks,
building and loan associations, financial service loan companies,
financial corporations, and small business investment companies.
Persons or entities who are not Hawaii residents should not
be subject to Hawaii income taxation on dividends and
distributions made by the Tax-Free Fund but may be subject to
other state and local taxes.
Hawaiian Tax Information Concerning the Treasuries Fund
The Director of Taxation of Hawaii has stated to the
Treasuries Fund that dividends paid by a regulated investment
company from interest it receives on United States Government
obligations will be exempt from State of Hawaii income tax. For
the calendar years 1996, 1995 and 1994, the percentage of the
Treasuries Fund's dividends exempt from State of Hawaii income
taxes was 71.5%, 82.6% and 85.6%, respectively, which should not
be considered predictive of future results. Dividends paid from
other types of interest (including interest on U.S. Treasury
repurchase transactions), and capital gains distributions, if
any, will be taxable.
EXCHANGE PRIVILEGES
You may exchange Service Shares in any Fund for Retail
Class shares of any of the existing or future funds (series) of
Pacific Capital Funds, each of which represents a different
portfolio. The Adviser also acts as Investment Adviser to these
funds. As of the date of this Prospectus, the existing funds are
Growth Stock Fund, Growth and Income Fund, New Asia Growth Fund,
Diversified Fixed Income Fund, Tax Free Securities Fund, Tax Free
Short Intermediate Securities Fund, U.S. Treasuries Securities
Fund and Short Intermediate U.S. Treasury Securities Fund. Each
of these funds is referred to in the Prospectus as a "Pacific
Capital Fund" and collectively they are referred to as the
"Pacific Capital Funds" or the "Pacific Capital Exchange
Group."
Shareholders of any Fund may also exchange their Service
Shares for Service Shares of any other Fund, all of which are
series of the Business Trust and as such, have the same
Administrator, Distributor and Adviser. They are collectively
called the "Funds."
All exchanges are subject to certain conditions described
below.
Terms and conditions of the Exchange Privilege
The Retail Class shares of each Pacific Capital Fund have an
exchange privilege which allows further exchanges for Retail
Class shares of each other Pacific Capital Fund at relative net
asset values without the payment of additional sales charges.
Under the exchange privileges of the Pacific Capital
Exchange Group, once any applicable sales charge has been paid
with respect to exchangeable shares of a fund in the Pacific
Capital Exchange Group, those shares (and any shares acquired as
a result of reinvestment of dividends and/or distributions) may
be exchanged any number of times among the other funds of the
Pacific Capital Exchange Group without the payment of any
additional sales charge.
The "Pacific Capital Eligible Shares" of any Pacific Capital
Fund are those Retail Shares which were (a) acquired by direct
purchase with payment of any applicable sales charge, or which
were received in exchange for shares of another Pacific Capital
Fund on which any applicable sales charge was paid; (b) acquired
with payment of any applicable sales charge by exchange for
Service Shares of a Fund; (c) acquired in one or more exchanges
between Service Shares of Funds and Retail Shares of Pacific
Capital Funds so long as the Pacific Capital Fund shares were
acquired as set forth in (a) or (b); or (d) acquired as a result
of reinvestment of dividends and/or distributions on otherwise
Pacific Capital Eligible Shares. "Pacific Capital Eligible
Shares" of a Fund are those Service Shares which were acquired
(a) by exchange for other Pacific Capital Eligible Shares or (b)
as a result of reinvestment of dividends and/or distributions of
otherwise Pacific Capital Eligible Shares.
If you own Pacific Capital Eligible Shares of a Fund, you
may exchange them for shares of any Pacific Capital Fund without
payment of any sales charge. The shares received will continue to
be Pacific Capital Eligible shares.
If you own Service Shares of any of the Funds that are not
Pacific Capital Eligible Shares, you may exchange them for
Service Shares of any other Fund without payment of any sales
charge. The shares received will continue not to be Pacific
Capital Eligible shares. You may also exchange them for the
Retail Shares of any Pacific Capital Fund, but only upon payment
of the appropriate sales charge.
Each of the Funds, as well as the Pacific Capital Funds,
reserves the right to reject any exchange into its shares, if the
shares of the fund into which exchange is desired are not
available for sale in the shareholder's state of residence, and
to modify or terminate this exchange privilege at any time; in
the case of termination, this Prospectus will be appropriately
supplemented. No such modification or termination shall take
effect on less than 60 days' written notice to shareholders.
All exercises of an exchange privilege are subject to the
conditions that (i) the shares being acquired are available for
sale in your state of residence; (ii) the aggregate net asset
value of the shares surrendered for exchange are at least equal
to the minimum investment requirements of the investment company
whose shares are being acquired; and (iii) you maintain the
respective minimum account balances, if any, in each fund in
which you own shares.
To effect an exchange, you must complete a form which is
available from the Distributor, unless you have elected the
Telephone Exchange feature on the Application. The exchange will
be effected at the relative exchange prices of the shares being
exchanged next determined after receipt by the Distributor of a
properly completed form or Telephone Exchange request. The
exchange prices will be the respective net asset values of the
shares (unless a sales charge is to be deducted in connection
with an exchange of shares of a Fund which are not Pacific
Capital Eligible Shares for shares of a Pacific Capital Fund as
described above, in which case the exchange price of shares of
the Pacific Capital Fund will be its public offering price).
Prices for exchanges are determined in the same manner as for
purchases of shares.
Dividends paid by the Funds are taxable, except to the
extent that dividends paid by the Tax-Free Fund (which invests in
tax-free municipal obligations) are exempt from regular Federal
income tax and Hawaiian income tax, and to the extent that
dividends paid by the Treasuries Fund (which invests in U.S.
Treasury obligations) are exempt from state income taxes. If your
state of residence is not the same as that of the issuers of
obligations in which a the Tax-Free Fund invests, the dividends
from that fund may be subject to income tax of the state in which
you reside. Accordingly, you should consult your tax adviser
before acquiring shares of a such a fund under the exchange
privilege arrangement.
An exchange is treated for Federal tax purposes as a
redemption and purchase of shares and may result in the
realization of a capital gain or loss, depending on the cost or
other tax basis of the shares exchanged and the holding period
(see the Additional Statement); no representation is made as to
the deductibility of any such loss that may occur.
If you are considering an exchange into one of the funds
listed above, you should send for and carefully read its
Prospectus.
GENERAL INFORMATION
Description of Shares
The Trust issues three series of shares, each series
constituting the shares of a Fund. Each series has separate
assets and liabilities and is comprised of two classes of shares:
Original Shares and Service Shares; only Service Shares of the
Funds are offered by this Prospectus. 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 Trust. Each share
represents an equal proportionate interest in a Fund. Income,
direct liabilities and direct operating expenses of each series
will be allocated directly to each series, and general
liabilities and expenses, if any, of the Trust will be allocated
among the series in a manner acceptable to the Board of Trustees.
Certain expenses of a series specifically allocable to a
particular class will be borne by that class; the expense of the
series not so allocated will be allocated among the classes in a
manner acceptable to the Board of Trustees and in accordance with
any applicable exemptive order or Rule of the SEC. Upon
liquidation of a series, shareholders of each class of the series
are entitled to share pro-rata (subject to liabilities, if any,
allocated specifically to that class) in the net assets of that
series available for distribution to shareholders and upon
liquidation of the Trust, the respective series are entitled to
share proportionately in the assets available to the Trust after
allocation to the various series. If they deem it advisable and
in the best interests of shareholders, the Board of Trustees of
the Trust may create additional classes of shares (subject to
rules and regulations of the Securities and Exchange Commission
or by exemptive order) or the Board of Trustees may, at its own
discretion, create additional series of shares, each of which may
have separate assets and liabilities (in which case any such
series will have a designation including the word "Series"). See
the Additional Statement for further information about possible
additional classes or series. Shares are fully paid and
non-assessable, except as set forth under the caption "General
Information" in the Additional Statement; the holders of shares
have no pre-emptive or conversion rights.
The ownership of more than 5% of the outstanding shares
of each Fund on July 3, 1997, was as follows:
The Cash Fund: Of the Cash Fund's Original Shares,
Hawaiian Trust Company, Limited, Financial Plaza of the Pacific,
Honolulu, Hawaii held of record 262,271,692 shares (67.1%) and
Mercantile Bank, N.A., P.O. Box 387, St. Louis, Missouri held of
record 124,685,412 shares (31.9%). Of the Cash Fund's Service
Shares, BHC Securities, Inc., 2005 Market Street, Philadelphia,
PA held of record 80,978,718 shares (99.9%).
The Tax-Free Fund: Of the Tax-Free Fund's Original
Shares, Hawaiian Trust Company, Limited, Financial Plaza of the
Pacific, Honolulu, Hawaii held of record 64,370,267 shares
(89.6%); Of the Tax-Free Fund's Service Shares, BHC Securities,
Inc., 2005 Market Street, Philadelphia, PA held of record
23,482,786 shares (99.9%).
The Treasuries Fund: Of the Treasuries Fund's Original
Shares, Hawaiian Trust Company, Limited, Financial Plaza of the
Pacific, Honolulu, Hawaii held of record 61,294,917 shares
(88.6%); Mercantile Bank, N.A., P.O. Box 387, St. Louis, Missouri
held of record 6,488,434 shares (9.4%). Of the Treasuries Fund's
Service Shares, BHC Securities, Inc., 2005 Market Street,
Philadelphia, PA held of record 87,516,811 shares (99.9%).
The Funds' management is not aware of any person, other than
those named above, who beneficially owned 5% or more of either
class of a Fund's outstanding shares on such date. On the basis
of information received from the record owners listed above, the
Funds' management believes (i) that all of the Original Shares
indicated are held for the benefit of custodial or trust clients;
and (ii) that all of such shares could be considered as
"beneficially" owned by the named shareholders in that they
possessed shared voting and/or investment powers as to such
shares. The Service Shares indicated above are held for the
benefit of customers.
Voting Rights
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) represented by the shares 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. 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
Trust. The Trust may be terminated (i) upon the sale of its
assets to another issuer, or (ii) upon liquidation and
distribution of the assets of the Trust, in either case if such
action is approved by the vote of the holders of a majority of
the outstanding shares of each series. If not so terminated, the
Trust will continue indefinitely. Rule 18f-2 under the Investment
Company Act of 1940 provides that matters submitted to
shareholders be approved by a majority of the outstanding voting
securities of each series, unless it is clear that the interests
of each series in the matter are identical or the matter does not
affect a series. However, the rule exempts the selection of
accountants and the election of Trustees from the separate voting
requirement. Classes do not vote separately except that, as to
matters exclusively affecting one class (such as the adoption or
amendment of class-specific provisions of the Distribution Plan),
only shares of that class are entitled to vote.
Description of Classes
As stated above, each of the Funds of Cash Assets Trust has
two classes of shares: Service Shares, which are offered by this
Prospectus, and Original Shares. Potential investors in Service
Shares may also be eligible to purchase Original Shares, which
are offered in a separate prospectus that may be obtained by
contacting the transfer agent of the Funds at the address or
telephone number(s) given on the front cover of this Prospectus.
Original Shares are sold solely to (1) financial institutions for
their own account or for the investment of funds for which they
act in a fiduciary, agency, investment advisory or custodial
capacity; (2) persons entitled to exchange into such shares under
the Fund's exchange privilege; and (3) shareholders of record on
January 20, 1995, the date on which the Funds first offered two
classes of shares.
Diversity under the 1940 Act; IRS Compliance
The Tax-Free Fund is classified as a "non-diversified"
investment company under the 1940 Act and the Cash Fund and the
Treasuries Fund are classified as "diversified" investment
companies under the 1940 Act. Each Fund intends to continue to
qualify as a "regulated investment company" under the Internal
Revenue Code (the "Code"). One of the tests for such
qualification under the Code is, in general, that at the end of
each fiscal quarter of the Fund, at least 50% of its assets must
consist of (i) cash; and (ii) securities which, as to any one
issuer, do not exceed 5% of the value of the Fund's assets. As
"diversified" investment companies under the 1940 Act, the Cash
Fund and the Treasuries Fund must both meet the same test as to
75% of their respective assets. The Tax-Free Fund may therefore
not have as much diversification among securities, and thus
diversification of risk, as if it had made the election to
register as a "diversified" investment company under the 1940
Act. In general, the more a Fund invests in the securities of
specific issuers, the more it is exposed to risks associated with
investments in those issuers.
<PAGE>
[LOGO] Application for
The Pacific Capital Funds of Cash Assets Trust - Service Shares
Please complete steps 1 through 4 and mail to:
ADM, Attn: Aquilasm Group of Funds
581 Main Street, Woodbridge, NJ 07095-1198
1-800-255-2287
STEP 1
A. ACCOUNT REGISTRATION
___Individual Use line 1
___Joint Account* Use lines 1&2
___For a Minor Use line 3
___For Trust, Corporation,
Other Organization or
any Fiduciary capacity
Use line 4
* Joint Accounts will be Joint
Tenants with rights of survivorship
unless otherwise specified.
** Uniformed Gifts/Transfers
to Minors Act.
Please type or print name exactly as account is to be registered
1._____________________________________________________________________
First Name Middle Initial Last Name Social Security Number
2._____________________________________________________________________
First Name Middle Initial Last Name Social Security Number
3._____________________________________________________________________
Custodian's First Name Middle Initial Last Name
Custodian for_________________________________________________________
Minor's First Name Middle Initial Last Name
Under the________________ UGTMA**_____________________________________
Name of State Minor's Social Security Number
4._____________________________________________________________________
_____________________________________________________________________
(Name of Corporation or Organization. If a Trust, include the name(s)
of Trustees in which account will be registered and the name and date
of the Trust Instrument. Account for a Pension or Profit Sharing Plan
or Trust may be registered in the name of the Plan or Trust itself.)
______________________________________________________________________
Tax I.D. Number Authorized Individual Title
B. MAILING ADDRESS AND TELEPHONE NUMBER
______________________________________________________________________
Street or PO Box City
_________________________________ (____)__________________________
State Zip Daytime Phone Number
Occupation:______________________ Employer:__________________________
Employer's Address:___________________________________________________
Street Address: City State Zip
Citizen or resident of: ___ U.S. Other___ ______ Check here ___ if you
are a non-U.S. Citizen or resident and not subject to back-up
withholding (See certification in Step 4, Section B, below.)
C. INVESTMENT DEALER OR BROKER:
(Important - to be completed by Dealer or Broker)
________________________________ _________________________________
Dealer Name Branch Number
________________________________ _________________________________
Street Address Rep.Number/Name
________________________________ (_______)________________________
City State Zip Area Code Telephone
STEP 2
PURCHASES OF SHARES
A. INITIAL INVESTMENT
___ Pacific Capital Cash Assets Trust (7AV)
___ Pacific Capital Tax-Free Cash Assets Trust (7CV)
___ Pacific Capital U.S. Treasuries Cash Assets Trust (7BV)
1) ___ By Check
2) ___ By Wire
1) By Check: Make check payable to either: Pacific Capital
Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust,
or Pacific Capital U.S. Treasuries Cash Assets Trust
Amount of investment $ ____________ Minimum initial investment $1,000
OR
2) By Wire*:
$______________________________ From_______________________________
Name of Financial Institution
_________________________________ _______________________________
Financial Institution Account No. Branch, Street or Box#
On_______________________________ ________________________________
(Date) City State Zip
* NOTE: To insure prompt and proper crediting to your account, if you
choose this method of payment you should first telephone the Agent
(800-255-2287 toll free or 732-855-5731) and then instruct your
Financial Institution to wire funds as indicated below for the
appropriate Fund:
Wire Instructions:
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to (specify the Fund you are investing in)
Pacific Capital Cash Assets Trust (Original Shares) A/C 6801358400
Pacific Capital Tax-Free Cash Assets Trust (Original Shares)
A/C 6801358500
Pacific Capital U.S. Treasuries Cash Assets Trust (Original Shares)
A/C 6801358600
Please include account name(s) and number (if an existing account) or the
name(s) in which the investment is to be registered (if a new account).
(A FINANCIAL INSTITUTION IS A COMMERCIAL BANK,
SAVINGS BANK OR CREDIT UNION.)
B. DIVIDENDS
ALL INCOME DIVIDENDS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL SHARES
AT NET ASSET VALUE UNLESS OTHERWISE INDICATED BELOW.
Dividends are to be:___ Reinvested or ___Paid in cash*
* FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING OPTIONS:
___Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would like
you to deposit the dividend.
___ Mail check to my/our address listed in Step 1.
STEP 3
SPECIAL FEATURES
A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to have amounts
automatically drawn on your Financial Institution account and invested
in your account. To establish this program, please complete Step 4,
Sections A & B of this Application.
I/We wish to make regular monthly investments of $______ (minimum $50)
on the ___ 1st day or ___ 16th day of the month (or on the first
business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to add to your account
(minimum $50 and maximum $50,000) at any time you wish by simply
calling the Agent toll-free at 1-800-255-2287. To establish this
program, please complete Step 4, Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
C. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)
Application must be received in good order at least 2 weeks
prior to 1st actual liquidation date.
(Check appropriate box)
___ Yes ___No
Please establish an Automatic Withdrawal Plan for this account,
subject to the terms of the Automatic Withdrawal Plan Provisions
set forth below. To realize the amount stated below, the Agent is
authorized to redeem sufficient shares from this account at the
then current Net Asset Value, in accordance with the terms below:
Dollar Amount of each withdrawal $____________ beginning_______________
Minimum:$50 Month/Year
Payments to be made: ___ Monthly or ___ Quarterly
Checks should be made payable as indicated below. If check is
payable to a Financial Institution for your account, indicate
Financial Institution name, address and your account number.
_______________________________________ __________________________
First Name Middle Initial Last Name Financial Institution Name
_______________________________________ __________________________
Street Financial Institution
Street Address
_______________________________________ __________________________
City State Zip City State Zip
____________________________________
Financial Institution Account Number
D. TELEPHONE EXCHANGE
(Check appropriate box)
___ Yes ___ No
This option allows you to effect exchanges among accounts in your
name within the Business Trust and Pacific Capital Funds by telephone.
TO MAKE A TELEPHONE EXCHANGE, CALL THE AGENT AT 1-800-255-2287
The Agent is authorized to accept and act upon my/our or any other
person's telephone instructions to execute the exchange of shares with
identical shareholder registration in the manner described in the
Prospectus. Except for gross negligence in acting upon such telephone
instructions to execute an exchange, and subject to the conditions set
forth herein, I/we understand and agree to hold harmless the Agent, each
of the Aquila Funds and Pacific Capital Funds, and their respective
officers, directors, trustees, employees, agents and affiliates against
any liability, damage, expense, claim or loss, including reasonable costs
and attorney's fees, resulting from acceptance of, or acting or failure
to act upon, this Authorization.
E. EXPEDITED REDEMPTION
(Check appropriate box)
___Yes ___ No
The proceeds will be deposited to your Financial Institution
account listed.
TO MAKE AN EXPEDITED REDEMPTION, CALL THE AGENT AT 1-800-255-2287
Cash proceeds in any amount from the redemption of shares will be
mailed or wired, whenever possible, upon request, if in an amount of
$1,000 or more to my/our account at a Financial Institution. The
Financial Institution account must be in the same name(s) as this Trust
account is registered.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
________________________________ ___________________________________
Account Registration Financial Institution Account Number
________________________________ ___________________________________
Financial Institution Name Financial Institution Transit/Routing
Number
________________________________ ___________________________________
Street City State Zip
F. CHECKING ACCOUNT SERVICE
(Check appropriate box)
___ Yes ___ No
Please open a redemption checking account at Bank One Trust Company,
N.A., in my (our) name(s) as registered and send me (us) a supply of
checks. I (we) understand that this checking account will be subject to
the rules and regulations of Bank One Trust Company, N.A., pertaining
thereto and as amended from time to time. For joint account: Check
here whether either owner ___ is authorized, or all owners ___ are
required to sign checks. IF NO BOX IS CHECKED, TWO SIGNATURES WILL BE
REQUIRED ON JOINT ACCOUNTS.
STEP 4 Section A
DEPOSITORS AUTHORIZATION TO HONOR DEBITS
IF YOU SELECTED AUTOMATIC INVESTMENT OR TELEPHONE INVESTMENT
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.
I/We authorize the Financial Institution listed below to charge to
my/our account any drafts or debits drawn on my/our account initiated
by the Agent, Administrative Data Management Corp., and to pay such
sums in accordance therewith, provided my/our account has sufficient
funds to cover such drafts or debits. I/We further agree that your
treatment of such orders will be the same as if I/we personally signed
or initiated the drafts or debits.
I/We understand that this authority will remain in effect until you
receive my/our written instructions to cancel this service. I/We also
agree that if any such drafts or debits are dishonored, for any reason,
you shall have no liabilities.
Financial Institution Account Number______________________________________
Name and Address
where my/our account Name of Financial Institution____________________
is maintained Street Address___________________________________
City______________________State_____ Zip_________
Name(s) and
Signature(s) of _______________________________
Depositor(s) as they (Please Print)
appear where account X_______________________________ __________
is registered (Signature) (Date)
________________________________
(Please Print)
X_______________________________ __________
(Signature) (Date)
INDEMNIFICATION AGREEMENT
To: Financial Institution Named Above
So that you may comply with your depositor's request, Aquila Distributors,
Inc. (the "Distributor") agrees:
1 Electronic Funds Transfer debit and credit items transmitted pursuant
to the above authorization shall be subject to the provisions of the
Operating Rules of the National Automated Clearing House Association.
2 To indemnify and hold you harmless from any loss you may suffer in
connection with the execution and issuance of any electronic debit
in the normal course of business initiated by the Agent (except any
loss due to your payment of any amount drawn against insufficient or
uncollected funds), provided that you promptly notify us in writing
of any claim against you with respect to the same, and further provided
that you will not settle or pay or agree to settle or pay any such
claim without the written permission of the Distributor.
3 To indemnify you for any loss including your reasonable costs and
expenses in the event that you dishonor, with or without cause, any
such electronic debit.
STEP 4 Section B
SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED
The undersigned warrants that he/she has full authority and is of legal
age to purchase shares of the Trust and has received and read a current
Prospectus of the Trust and agrees to its terms.
I/We authorize the Trust and its agents to act upon these instructions
for the features that have been checked.
I/We acknowledge that in connection with an Automatic Investment or
Telephone Investment, if my/our account at the Financial Institution
has insufficient funds, the Trust and its agents may cancel the purchase
transaction and are authorized to liquidate other shares or fractions
thereof held in my/our Trust account to make up any deficiency resulting
from any decline in the net asset value of shares so purchased and any
dividends paid on those shares. I/We authorize the Trust and its agents
to correct any transfer error by a debit or credit to my/our Financial
Institution account and/or Trust account and to charge the account for
any related charges.
The Trust, the Agent and the Distributor and their Trustees, directors,
employees and agents will not be liable for acting upon instructions
believed to be genuine, and will not be responsible for any losses
resulting from unauthorized telephone transactions if the Agent follows
reasonable procedures designed to verify the identity of the caller.
The Agent will request some or all of the following information:
account name and number; name(s) and social security number registered
to the account and personal identification; the Agent may also record
calls. Shareholders should verify the accuracy of confirmation
statements immediately upon receipt. Under penalties of perjury, the
undersigned whose Social Security (Tax I.D.) Number is shown above
certifies (i) that Number is my correct taxpayer identification number
and (ii) currently I am not under IRS notification that I am subject to
backup withholding (line out (ii) if under notification). If no such
Number is shown, the undersigned further certifies, under penalties of
perjury, that either (a) no such Number has been issued, and a Number
has been or will soon be applied for; if a Number is not provided to
you within sixty days, the undersigned understands that all payments
(including liquidations) are subject to 31% withholding under federal
tax law, until a Number is provided and the undersigned may be subject
to a $50 I.R.S. penalty; or (b) that the undersigned is not a citizen
or resident of the U.S.; and either does not expect to be in the U.S.
for more than 183 days during each calendar year and does not conduct a
business in the U.S. which would receive any gain from the Trust, or is
exempt under an income tax treaty.
NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW.
FOR A TRUST, ALL TRUSTEES MUST SIGN.*
______________________________ __________________________ __________
Individual (or Custodian) Joint Registrant, if any Date
______________________________ __________________________ __________
Corporate Officer, Partner, Title Date
Trustee, etc.
* For Trust, Corporations or Associations, this form must be accompanied
by proof of authority to sign, such as a certified copy of the corporate
resolution or a certificate of incumbency under the trust instrument.
SPECIAL INFORMATION
Certain features (Automatic Investment, Telephone Investment, Expedited
Redemption and Direct Deposit of Dividends) are effective 15 days after
this form is received in good order by the Trust's Agent.
You may cancel any feature at any time, effective 3 days after the Agent
receives written notice from you.
Either the Trust or the Agent may cancel any feature, without prior
notice, if in its judgment your use of any feature involves unusual
effort or difficulty in the administration of your account.
The Trust reserves the right to alter, amend or terminate any or all
features or to charge a service fee upon 30 days' written notice to
shareholders except if additional notice is specifically required by
the terms of the Prospectus.
BANKING INFORMATION
If your Financial Institution account changes, you must complete a Ready
Access features form which may be obtained from Aquila Distributors at
1-800-228-7496 and send it to the Agent together with a "voided" check or
pre-printed deposit slip from the new account. The new Financial
Institution change is effective in 15 days after this form is
received in good order by the Trust's Agent.
<PAGE>
INVESTMENT ADVISER
Hawaiian Trust Company, Limited
(after September 30, 1997)
Pacific Century Trust
a division of
Bank of Hawaii
111 South King Street
Honolulu, Hawaii 96813
ADMINISTRATOR
Aquila Management Corporation
380 Madison Avenue, Suite 2300
New York, New York 10017
TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Arthur K. Carlson
William M. Cole
Thomas W. Courtney
Richard W. Gushman, II
Stanley W. Hong
Theodore T. Mason
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
OFFICERS
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
Sherri Foster, Assistant Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017
TRANSFER AND SHAREHOLDER SERVICING AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198
CUSTODIAN
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
COUNSEL
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
TABLE OF CONTENTS
Highlights
Table of Expenses
Financial Highlights
Introduction
Investment Of The Funds' Assets
The Cash Fund And Its Investments
The Tax-Free Fund And Its Investments
The Treasuries Fund And Its Investments
Net Asset Value Per Share
How To Invest In The Funds
How To Redeem Your Investment
Automatic Withdrawal Plan
Management Arrangements
Dividend And Tax Information
Exchange Privileges
General Information
Application
The Pacific Capital Funds
of
Cash Assets Trust
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Service Shares
<PAGE>
The Pacific Capital Funds
of
CASH ASSETS TRUST
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, New York 10017
212-697-6666
800-CATS-4-YOU (800-228-7496)
Statement of Additional Information July 31, 1997
This Statement of Additional Information (the "Additional
Statement") is not a Prospectus. It relates to Cash Assets Trust
(the "Trust") which has three separate funds, Pacific Capital
Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and
Pacific Capital U.S. Treasuries Cash Assets Trust. There are two
Prospectuses for these funds dated July 31, 1997, each of which
pertains to a single class -- the Original Class or the Service
Class -- of shares of the Funds. References in the Additional
Statement to "the Prospectus" may be regarded as applying to
either of these Prospectuses, each of which addresses the
indicated topic. The Additional Statement should be read in
conjunction with the Prospectus for the class of shares in which
you are considering investing. Either or both Prospectuses may be
obtained from the Fund's shareholder servicing agent,
Administrative Data Management Corp., by writing to it at: 581
Main Street, Woodbridge, NJ 07095-1198, or by calling the
following numbers:
800-255-2287 toll free or 732-855-5731
or from Aquila Distributors, Inc., the Fund's Distributor, by
writing to it at 380 Madison Avenue, Suite 2300, New York, New
York 10017; or by calling:
800-228-7496 toll free or 212-697-6666
The Annual Report of the Funds for the fiscal year ended
March 31, 1997 will be delivered with the Additional
Statement.
TABLE OF CONTENTS
Investment of the Trust's Assets . . . . . . . . . . . . . . . .3
Yield Information . . . . . . . . . . . . . . . . . . . . . . .8
Investment Restrictions . . . . . . . . . . . . . . . . . . . .9
Loans of Portfolio Securities . . . . . . . . . . . . . . . . 10
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . 10
Limitation of Redemptions in Kind . . . . . . . . . . . . . . 16
Trustees and Officers . . . . . . . . . . . . . . . . . . . . 16
Additional Information as to Management Arrangements . . . . . 23
Amortized Cost Valuation . . . . . . . . . . . . . . . . . . . 27
Computation of Daily Dividends . . . . . . . . . . . . . . . . 28
Automatic Withdrawal Plan . . . . . . . . . . . . . . . . . . 28
General Information . . . . . . . . . . . . . . . . . . . . . 29
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . 31
<PAGE>
INVESTMENT OF THE TRUST'S ASSETS
The Pacific Capital Funds of Cash Assets Trust are Pacific
Capital Cash Assets Trust (the "Cash Fund"), Pacific Capital
Tax-Free Cash Assets Trust (the "Tax-Free Fund") and Pacific
Capital U.S. Treasuries Cash Assets Trust (the "Treasuries
Fund"). They are collectively referred to as the "Funds." Each
Prospectus contains information as to the purchase and redemption
of one class of the Funds' shares. The investment objective and
policies of each Fund are described in the Prospectus, which
refers to the investments and investment methods described below.
Information on Variable Amount Master Demand Notes
The Cash Fund may buy variable amount master demand notes.
The nature and terms of these obligations are as follows. They
permit the investment of fluctuating amounts by the Fund at
varying rates of interest pursuant to direct arrangements between
the Fund, as lender, and the borrower. They permit daily changes
in the amounts borrowed. The Cash 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. Except for those notes which are
payable at principal amount plus accrued interest within seven
days after demand, such notes fall within the Fund's overall 10%
limitation on securities with possible limited liquidity. There
is no limitation on the type of issuer from which these notes
will be purchased; however, all such notes must be First Tier
Securities and in connection with such purchases and on an
ongoing basis, Hawaiian Trust Company, Limited (the "Adviser")
will consider the earning power, cash flow and other liquidity
ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of
such notes make demand simultaneously. Master demand notes as
such are not typically rated by credit rating agencies and if not
so rated the Fund may, under its minimum rating standards, invest
in them only if at the time of an investment they are determined
to be comparable in quality to rated issues in which the Fund can
invest.
Information On Insured Bank Obligations
The Federal Deposit Insurance Corporation ("FDIC") insures
the deposits of Federally insured banks and, effective August 9,
1989, savings institutions (collectively herein, "banks") up to
$100,000. On that date the FDIC assumed the insurance functions
of the Federal Savings and Loan Insurance Corporation, which was
abolished. The Cash 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
Cash Fund and the Tax-Free Fund will invest in them only within
the 10% limit of each Fund mentioned in the Prospectus unless
such obligations are payable at principal amount plus accrued
interest on demand or within seven days after demand.
Information about Certain Other Obligations
The Cash Fund may purchase obligations other than those
listed in categories 1 through 5 under "The Cash Fund and its
Investments," in the Prospectus, but only if such other
obligations are guaranteed as to principal and interest by either
a bank in whose obligations the Cash Fund may invest or a
corporation in whose commercial paper it may invest. If any such
guarantee is unconditional and is itself an Eligible Security,
the obligation may be purchased based on the guarantee; if any
such guarantee is not unconditional, purchase of the obligation
can only be made if the underlying obligation is an Eligible
Security and meets all other applicable requirements of Rule 2a-7
(the "Rule") of the Securities and Exchange Commission. See
"Effect of the Rule on Portfolio Management" in the Prospectus.
As of the date of the Additional Statement the Cash 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 Cash Fund invests in these
assets, they will be identified in the Prospectuses and described
in the Additional Statement.
Additional Information Regarding Municipal Obligations
Which The Tax-Free Fund May Purchase
Municipal Notes
The Tax-Free Fund may invest in municipal notes. Municipal
notes include, but are not limited to, tax anticipation notes
("TANs"), bond anticipation notes ("BANs"), revenue anticipation
notes ("RANs"), and construction loan notes. Notes sold as
interim financing in anticipation of collection of taxes, a bond
sale or receipt of other revenues are usually general obligations
of the issuer.
TANs. An uncertainty in a municipal issuer's capacity to
raise taxes as a result of such things as a decline in its tax
base or a rise in delinquencies could adversely affect the
issuer's ability to meet its obligations on outstanding TANs.
Furthermore, some municipal issuers mix various tax proceeds into
a general fund that is used to meet obligations other than those
of the outstanding TANs. Use of such a general fund to meet
various obligations could affect the likelihood of making
payments on TANs.
BANs. The ability of a municipal issuer to meet its
obligations on its BANs is primarily dependent on the issuer's
adequate access to the longer term municipal bond market and the
likelihood that the proceeds of such bond sales will be used to
pay the principal of, and interest on, BANs.
RANs. A decline in the receipt of certain revenues, such as
anticipated revenues from another level of government, could
adversely affect an issuer's ability to meet its obligations on
outstanding RANs. In addition, the possibility that the revenues
would, when received, be used to meet other obligations could
affect the ability of the issuer to pay the principal of, and
interest on, RANs.
Municipal Bonds
The two principal classifications of municipal bonds are
"general obligation" bonds and "revenue" bonds. General
obligation bonds are secured by the issuer's pledge of its full
faith, credit and unlimited taxing power for the payment of
principal and interest. Revenue bonds are payable only from the
revenues derived from a particular facility or class of
facilities or projects or, in a few cases, from the proceeds of a
special excise or other tax, but are not supported by the
issuer's power to levy unlimited general taxes. There are, of
course, variations in the security of municipal bonds, both
within a particular classification and between classifications,
depending on numerous factors. The yields of municipal bonds
depend on, among other things, general financial conditions,
general conditions of the municipal bond market, size of a
particular offering, the maturity of the obligation and rating of
the issue.
Other Information
Since the Tax-Free Fund may invest in industrial development
bonds or private activity bonds, the Tax-Free Fund may not be an
appropriate investment for entities which are "substantial users"
of facilities financed by those industrial development bonds or
private activity bonds or for investors who are "related persons"
of such users. Generally, an individual will not be a "related
person" under the Internal Revenue Code unless such investor or
his or her immediate family (spouse, brothers, sisters and lineal
descendants) own directly or indirectly in the aggregate more
than 50 percent of the equity of a corporation or is a partner of
a partnership which is a "substantial user" of a facility
financed from the proceeds of "industrial development bonds" or
"private activity bonds". A "substantial user" of such facilities
is defined generally as a "non-exempt person who regularly uses a
part of [a] facility" financed from the proceeds of industrial
development bonds or private activity bonds.
As indicated in the Prospectus, under the Tax Reform Act of
1986, there are certain Municipal Obligations the interest on
which is subject to the Federal alternative minimum tax on
individuals. While the Tax-Free Fund may purchase these
obligations, it may, on the other hand, refrain from purchasing
them due to this tax consequence. Also, as indicated in the
Prospectus, the Tax-Free Fund will not purchase Municipal
Obligations the interest on which is not exempt from regular
Federal income taxes. The foregoing may narrow the number of
Municipal Obligations available to the Tax-Free Fund.
Ratings
The ratings assigned by the nationally recognized
statistical rating organizations ("NRSROs") represent their
opinions of the quality of the debt securities which they
undertake to rate. Ratings are general and not absolute standards
of quality; consequently, obligations with the same maturity,
stated interest rate and rating may have different yields, while
obligations of the same maturity and stated interest rate with
different ratings may have the same yield. See Appendix A to this
Additional Statement for further information about the ratings of
the NRSROs as to the various rated Municipal Obligations and
Taxable Obligations which the Tax-Free Fund may purchase.
U.S. Government Securities
All of the Funds 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. These types of U.S. Government securities are
the only type in which the Treasuries Fund invests.
The Cash Fund and the Tax-Free 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 Cash
Fund and the Tax-Free Fund will invest in government securities,
including securities of agencies and instrumentalities only if
Hawaiian Trust Company, Limited (the "Adviser"), acting under
procedures approved by the Board of Trustees, is satisfied that
these obligations present minimal credit risks.
Turnover
In general, the Funds will purchase securities with the
expectation of holding them to maturity. However, the Funds may
to some degree engage in short-term trading to attempt to take
advantage of short-term market variations. The Funds may also
sell securities prior to maturity to meet redemptions or as a
result of a revised management evaluation of the issuer. The
Funds 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 Funds invest. (In the usual
calculation of portfolio turnover, securities of the type in
which the Funds invests are excluded; consequently, the high
turnover which the Funds will have is not comparable to the
turnover of non-money -market investment companies.)
When-Issued and Delayed Delivery Securities
The Cash Fund and the Tax-Free 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 that either Fund makes a 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 Cash
Fund and the Tax-Free Fund will make commitments for such
when-issued transactions only when they have the intention of
actually acquiring the securities. The Cash Fund and the Tax-Free
Fund will each maintain with the Custodian and mark to market
every business day a separate account with portfolio securities
in an amount at least equal to such commitments. On delivery
dates for such transactions, the Cash Fund and the Tax-Free Fund
will each meet their obligations from maturities or sales of the
securities held in the separate account and/or from cash flow. If
the Cash Fund or the Tax-Free Fund chooses to dispose of any
right to acquire a when-issued security prior to its acquisition,
they could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation.
Neither the Cash Fund nor the Tax-Free Fund may enter into
when-issued commitments exceeding in the aggregate 15% of the
market value of their respective total assets, less liabilities
other than the obligations created by when-issued commitments.
Diversification and Certain Industry Requirements
The Cash Fund has a rule, set forth in the Prospectus, under
which it cannot buy the securities of issuers in any one industry
if more than 25% of its total assets would then be invested in
securities of issuers of that industry. In applying this rule to
commercial paper issued by finance subsidiaries or affiliates of
operating companies, if the business of the issuer consists
primarily of financing the activities of the related operating
company, the Fund considers the industry of the issuer to be that
of the related operating company.
YIELD INFORMATION
There are two methods by which the yields for any Fund's two
classes of shares for a specified period of time are calculated.
The first method, which results in an amount referred to as
the "current yield," assumes an account containing exactly one
share of the class at the beginning of the period. (The net asset
value of this share will be $1.00 except under extraordinary
circumstances.) The net change in the value of the account during
the period is then determined by subtracting this beginning value
from the value of the account at the end of the period; however,
excluded from the calculation are capital changes, i.e., realized
gains and losses from the sale of securities and unrealized
appreciation and depreciation.
This net change in the account value is then divided by the
value of the account at the beginning of the period (i.e.,
normally $1.00 as discussed above) and the resulting figure
(referred to as the "base period return") is then annualized by
multiplying it by 365 and dividing it by the number of days in
the period; the result is the "current yield." Normally a
seven-day period will be used in determining yields (both the
current and the effective yield discussed below) in published or
mailed advertisements.
The second method results in an amount referred to as the
"compounded effective yield." This represents an annualization of
the current yield with dividends reinvested daily. This
compounded effective yield for a seven-day period would be
computed by compounding the unannualized base period return by
adding one to the base period return, raising the sum to a power
equal to 365 divided by 7, and subtracting 1 from the result.
Since calculations of both kinds of yields do not take into
consideration any realized or unrealized gains or losses on any
Fund's portfolio securities which may have an effect on
dividends, the dividends declared during a period may not be the
same on an annualized basis as either kind of yield for that
period.
Yield information may be useful to investors in reviewing a
Fund's performance. However, a number of factors should be taken
into account before using yield information as a basis for
comparison with alternative investments. An investment in any
Fund is not insured and its yields are not guaranteed. They
normally will fluctuate on a daily basis. The yields for any
given past period are not an indication or representation by any
Fund of future yields or rates of return on its shares and,
therefore, they cannot be compared to yields on savings accounts
or other investment alternatives which often provide a guaranteed
fixed yield for a stated period of time, and may be insured by a
government agency. 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.
Because a given class of a Fund's shares may bear certain
expenses allocated only to that class, it is expected that
yields, which are affected in part by expenses, will differ as
between the two classes of any Fund's shares. See "Dividend and
Tax Information" in the Prospectus.
INVESTMENT RESTRICTIONS
Each 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 Trust's outstanding shares vote to change them.
Under the 1940 Act, the vote of the holders of a majority of the
outstanding shares of a Fund means the vote of the holders of the
lesser of (a) 67% or more of the Fund's shares present at a
meeting or represented by proxy if the holders of more than 50%
of its shares are so present or represented, or (b) more than 50%
of its outstanding shares. Those fundamental policies not set
forth in the Prospectus are set forth below.
1. The Funds invest only in certain limited securities.
The Funds 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, except that the Tax-Free Fund may
purchase Municipal Obligations with put rights in order to
maintain liquidity and may purchase shares of other investment
companies.
The Cash Fund and the Tax-Free Fund cannot purchase or hold
the securities of any issuer if, to their knowledge, Trustees,
Directors or officers of the either or their 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 Cash Fund and the Tax-Free Fund cannot buy real estate
or any non-liquid interests in real estate investment trusts;
however, they can buy any securities which they could otherwise
buy even though the issuer invests in real estate or interests in
real estate.
2. Almost all of the Cash Fund's assets must be in established
companies.
Only 5% of the Cash 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 Funds do not buy for control.
The Funds cannot invest for the purpose of exercising
control or management of other companies. This restriction is not
applicable to the Treasuries Fund.
4. The Funds do not sell securities they do not own or borrow
from brokers to buy securities.
Thus, they cannot sell short or buy on margin.
5. The Funds are not an underwriters.
The Funds cannot engage in the underwriting of securities,
that is, the selling of securities for others. Also, they cannot
invest in restricted securities. Restricted securities are
securities which cannot freely be sold for legal reasons.
LOANS OF PORTFOLIO SECURITIES
Any Fund may, to increase its income, lend its securities on
a short- or long-term basis to broker-dealers, banks or certain
other financial institutions (see below) if (i) the loan is
collateralized in accordance with applicable regulatory
requirements (the "Guidelines") and if (ii) after any loan, the
value of the securities loaned does not exceed 10% of the value
of its total assets. As of the date of this Additional Statement,
none of the Funds 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 a Fund can lend its securities
are limited to "accredited investors," as that term is defined in
Section 2(15) of the Securities Act of 1933. (In general, such
institutions are insurance companies, investment companies and
certain employee benefit plans.) Under the present Guidelines
(which are subject to change) the loan collateral must, on each
business day, at least equal the value of the loaned securities
and must consist of cash, bank letters of credit or U.S.
Government securities. To be acceptable as collateral, a letter
of credit must obligate a bank to pay amounts demanded by the
Fund if the demand meets the terms of the letter. Such terms and
the issuing banks would have to be satisfactory to the Fund. Any
loan might be secured by any one or more of the three types of
collateral. In addition, any such investment must meet the
applicable requirements of the Rule. See "Effect of the Rule on
Portfolio Management" in the Prospectus.
A 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. A Fund may also pay reasonable finder's, custodian
and administrative fees but only to persons not affiliated with
the Fund. The terms of each Fund's loans will meet certain tests
under the Internal Revenue Code and permit the Fund to terminate
the loan and thus reacquire loaned securities on five days'
notice.
DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan under Rule 12b-1
("Rule 12b-1") under the 1940 Act, which have substantially the
same terms. In the following material the "Plan" means the Plan
of any of the Funds. 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 in two parts.
The Plan states that while it is in effect, the selection
and nomination of those Trustees of any Fund who are not
"interested persons" of the Fund shall be committed to the
discretion of such disinterested Trustees but that nothing in the
Plan shall prevent the involvement of others in such selection
and nomination if the final decision on any such selection and
nomination is approved by a majority of such disinterested
Trustees.
Part I of the Plan
Part I of the Plan is designed to protect against any claim
involving the Fund that the administration fee and some of the
expenses which the Fund pays or may pay come within the purview
of Rule 12b-1. No Fund considers such fee or any payment
enumerated in Part I of the Plan as so financing any such
activity. However, it might be claimed that such fee and some of
the expenses a Fund pays come within the purview of Rule 12b-1.
If and to the extent that any payments (including fees)
specifically listed in Part I of 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 a
Fund's shares, these payments are authorized under the Plan.
As used in Part I of the Plan, "Qualified Recipients" means
(i) any principal underwriter or underwriters of a Fund (other
than a principal underwriter which is an affiliated person, or an
affiliated person of an affiliated person, of the Administrator)
and (ii) broker-dealers or others selected by Aquila Management
Corporation (the "Administrator") with which it or a Fund has
entered into written agreements ("Plan Agreements") and which
have rendered assistance (whether direct, administrative or both)
in the distribution and/or retention of a Fund's shares or
servicing shareholder accounts. "Qualified Holdings" means, as to
any Qualified Recipient, all Fund shares beneficially owned by
such Qualified Recipient or by one or more customers (brokerage
or other) or other contacts and/or its investment advisory or
other clients, if the Qualified Recipient was, in the sole
judgment of the Administrator, instrumental in the purchase
and/or retention of such Fund shares and/or in providing
administrative assistance in relation thereto.
The Plan permits the Administrator to make payments
("Administrator's Permitted Payments") to Qualified Recipients.
These Administrator's Permitted Payments are made by the
Administrator and are not reimbursed by the Fund to the
Administrator. Permitted Payments may not exceed, for any fiscal
year of a Fund (pro-rated for any fiscal year which is not a full
fiscal year), in the case of the Cash Fund, 0.15 of 1% of the
average annual net assets of the Fund, and in the case of the
Tax-Free Fund and the Treasuries Fund 0.10 of 1% of their
respective average annual net assets. The Administrator shall
have sole authority (i) as to the selection of any Qualified
Recipient or Recipients; (ii) not to select any Qualified
Recipient; and (iii) to determine the amount of Administrator's
Permitted Payments, if any, to each Qualified Recipient, provided
that the total Administrator's Permitted Payments to all
Qualified Recipients do not exceed the amount set forth above.
The Administrator is authorized, but not directed, to take into
account, in addition to any other factors deemed relevant by it,
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 whenever the
Administrator bears the costs, not borne by a Fund's Distributor,
of printing and distributing all copies of the Fund's
prospectuses, statements of additional information and reports to
shareholders which are not sent to the Fund's shareholders, or
the costs of supplemental sales literature and advertising, such
payments are authorized.
Part I of the Plan recognizes that, in view of the
Administrator's Permitted Payments and bearing by the
Administrator of certain distribution expenses, the profits, if
any, of the Administrator are dependent primarily on the
administration fees paid by the Fund to the Administrator and
that its profits, if any, would be less, or losses, if any, would
be increased due to such Administrator's Permitted Payments and
the bearing by it of such expenses. If and to the extent that any
such administration 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 by
Part I of the Plan.
Part I of the Plan also 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 of all prospectuses and
statements of additional information and the costs of printing
and mailing 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 registration or 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.
Part I of the Plan states that while Part I is in effect,
the Fund's Administrator shall report at least quarterly to the
Fund's Trustees in writing for its review on the following
matters: (i) all Administrator's Permitted Payments made to
Qualified Recipients, the identity of the Qualified Recipient of
each Payment and the purpose for which the amounts were expended;
(ii) all costs of each item specified in the second preceding
paragraph (making estimates of such costs where necessary or
desirable) during the preceding calendar or fiscal quarter; and
(iii) all fees of the Fund to the Administrator paid or accrued
during such quarter.
Part I of the Plan defines as the Fund's Independent
Trustees those Trustees who are not "interested persons" of the
Fund as defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of the Plan or in
any agreements related to the Plan. Part I of 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 its Independent
Trustees with votes cast in person at a meeting called for the
purpose of voting on such continuance. In voting on the
implementation or continuance of Part I of the Plan, those
Trustees who vote to approve such implementation or continuance
must conclude that there is a reasonable likelihood that Part I
of the Plan will benefit the Fund and its shareholders. Part I of
the Plan may be terminated at any time by vote of a majority of
the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the outstanding voting
securities of the Fund. Part I of the Plan may not be amended to
increase materially the amount of payments to be made without
shareholder approval, and all amendments must be approved in the
manner set forth above as to continuance of Part I of the Plan.
Part I of the Plan states that in the case of a Qualified
Recipient which is a principal underwriter of the Fund the Plan
Agreement shall be the agreement contemplated by Section 15(b) of
the 1940 Act since each such agreement must be approved in
accordance with, and contain the provisions required by, Rule
12b-1. The Plan also states that in the case of Qualified
Recipients which are not principal underwriters of the Fund, the
Plan Agreements with them shall be the agreements with the
Administrator with respect to payments under Part I of the Plan.
Under Rule 12b-1, all agreements related to implementation
of a plan must be in writing and must contain specified adoption
and continuance requirements, including a requirement that they
terminate automatically on their "assignment," as that term is
defined in the 1940 Act. The other adoption and continuance
requirements as to such agreements are the same as those
described above as to Part I of the Plan itself except that: (i)
no shareholder action is required for the approval of such
agreements, and (ii) termination by Trustee or shareholder action
as there described may be on not more than 60 days' written
notice. The Plan Agreement between the Fund and the Administrator
is governed by the foregoing requirements.
During the Funds' fiscal year ended March 31, 1997 only
immaterial Administrator's Permitted Payments (under $1,000) were
made by the Administrator to Qualified Recipients.
The formula under which the payments described above may be
made under Part I of the Plan by the Administrator 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
may provide the only incentive for Qualified Recipients to do so;
there is no sales charge on the sale of the Fund's shares and,
although Part II of the Plan, as discussed below, permits certain
payments by the Fund to persons providing distribution and/or
shareholder service assistance, those payments are permitted only
in connection with one of the Fund's two classes of shares.
Another factor is that the Fund is one of a group of 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 invests assets over which it
has investment authority in money market 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.
Part II of the Plan
Part II of the Plan authorizes payment of certain
distribution or service fees by the Fund in connection with
Service Shares of the Fund.
As used in Part II of the Plan, "Designated Payees" means
(i) any principal underwriter or underwriters of the Fund and
(ii) broker-dealers or others selected by Aquila Distributors,
Inc. (the "Distributor") with which it or the Fund has entered
into written agreements ("Distributor's Plan Agreements") and
which have rendered assistance (whether direct, administrative or
both) in the distribution and/or retention of shares of the
specified class or servicing shareholder accounts with respect to
those shares. "Qualified Holdings" means, as to any Designated
Payee, all Service Shares beneficially owned by such Designated
Payee or by one or more customers (brokerage or other) or other
contacts and/or its investment advisory or other clients, if the
Designated Payee was, in the sole judgment of the Distributor,
instrumental in the purchase and/or retention of such shares
and/or in providing administrative assistance in relation
thereto.
Part II of the Plan permits the Fund to make payments
("Fund's Permitted Payments") to Designated Payees. These Fund's
Permitted Payments are made by the Fund directly or through the
Distributor and may not exceed, for any fiscal year of the Fund
(pro-rated for any fiscal year which is not a full fiscal year),
0.25 of 1% of the average annual net assets of the Fund
represented by to the Service Shares class of Fund shares. Such
payments are to be made out of the Fund assets allocable to
Service Shares. The Distributor shall have sole authority (i) as
to the selection of any Designated Payee or Payees; (ii) not to
select any Designated Payee; and (iii) to determine the amount of
Fund's Permitted Payments, if any, to each Designated Payee,
provided that the total Fund's Permitted Payments to all
Designated Payees do not exceed the amount set forth above. The
Distributor is authorized, but not directed, to take into
account, in addition to any other factors deemed relevant by it,
the following: (a) the amount of the Qualified Holdings of the
Designated Payee; (b) the extent to which the Designated Payee
has, at its expense, taken steps in the shareholder servicing
area; and (c) the possibility that the Qualified Holdings of the
Designated Payee would be redeemed in the absence of its
selection or continuance as a Designated Payee. Notwithstanding
the foregoing two sentences, a majority of the Independent
Trustees (as defined below) may remove any person as a Designated
Payee.
Part II of the Plan states that while Part II is in effect,
the Distributor shall report at least quarterly to the Fund's
Trustees in writing for its review on the following matters: (i)
all Fund's Permitted Payments made to Designated Payees, the
identity of the Designated Payee of each Payment and the purpose
for which the amounts were expended; and (ii) all fees of the
Fund to the Distributor, sub-adviser or Administrator paid or
accrued during such quarter.
Part II of 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 its Independent Trustees with votes cast
in person at a meeting called for the purpose of voting on such
continuance. In voting on the implementation or continuance of
Part II of the Plan, those Trustees who vote to approve such
implementation or continuance must conclude that there is a
reasonable likelihood that Part II of the Plan will benefit the
Fund and its shareholders. Part II of the Plan may be terminated
at any time by vote of a majority of the Independent Trustees or
by the vote of the holders of a "majority" (as defined in the
1940 Act) of the outstanding voting securities of the Service
Shares class. Part II of the Plan may not be amended to increase
materially the amount of payments to be made without shareholder
approval, and all amendments must be approved in the manner set
forth above as to continuance of Part II of the Plan.
Part II of the Plan states that in the case of a Designated
Payee, which is a principal underwriter of the Fund, the
Distributor's Plan Agreement shall be the agreement contemplated
by Section 15(b) of the 1940 Act since each such agreement must
be approved in accordance with, and contain the provisions
required by, Rule 12b-1. The Plan also states that in the case of
Designated Payees which are not principal underwriters of the
Fund, the Distributor's Plan Agreements with them shall be the
agreements with the Distributor with respect to payments under
Part II of the Plan.
During the fiscal year ended March 31, 1997, the
following payments were made by each of the Funds to Designated
Payees: Cash Fund, $125,694; Tax-Free Fund, $50,847; Treasuries
Fund, $141,496.
LIMITATION OF REDEMPTIONS IN KIND
The Fund has elected to be governed by Rule 18f-1 under the
1940 Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1 percent
of the net asset value of the Fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed
such limitation, the Fund will have the option of redeeming the
excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting
the assets into cash. The method of valuing securities used to
make redemptions in kind will be the same as the method of
valuing portfolio securities described under "Net Asset Value
Per Share" in the Prospectus, and such valuation will be made as
of the same time the redemption price is determined.
TRUSTEES AND OFFICERS
The Trustees and officers of the Funds, their affiliations,
if any, with the Adviser or Distributor and their principal
occupations during at least the past five years are set forth
below. Each of the Trustees and officers of the Funds holds the
same position with all of the Funds. Each of the Trustees of the
Funds is also a Trustee of Hawaiian Tax-Free Trust, a tax-free
municipal bond fund which has the same Adviser and Administrator
as the Funds. Mr. Herrmann is an interested person of each of the
Funds, as that term is defined in the 1940 Act, as an officer of
the Funds, as a Director and officer of Aquila Distributors, Inc.
(the "Distributor") and as a shareholder of the Distributor. Mr.
Philpotts is an interested person as a director of the Adviser.
They are so designated by an asterisk. As of the date of this
Additional Statement, the Trustees and officers of the Funds
owned less than 1% of the outstanding shares of any of them.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, 380 Madison Avenue, New York, New York 10017
Founder, President and Chairman of the Board of Aquila
Management Corporation since 1984, the sponsoring organization
and Administrator and/or Adviser or Sub-Adviser to the following
open-end investment companies, and Founder, Chairman of the Board
of Trustees, and President of each: Churchill Cash Reserves Trust
since 1985, a money market fund, which together with Capital Cash
Management Trust ("CCMT") and the three Funds of this Trust are
called the Aquila Money-Market Funds; and Hawaiian Tax-Free Trust
since 1984; Tax-Free Trust of Arizona since 1986; Tax-Free Trust
of Oregon since 1986; Tax-Free Fund of Colorado since 1987;
Churchill Tax-Free Fund of Kentucky since 1987; Tax-Free Fund For
Utah since 1992; and Narragansett Insured Tax-Free Income Fund
since 1992; each of which is a tax-free municipal bond fund, and
two equity funds, Aquila Rocky Mountain Equity Fund since 1993
and Aquila Cascadia Equity Fund, since 1996, which, together are
called the Aquila Bond and Equity Funds; Vice President,
Director, Secretary and formerly Treasurer of Aquila
Distributors, Inc. since 1981, distributor of the above funds;
President and Chairman of the Board of Trustees of CCMT, a money
market fund since 1981, and an Officer and Trustee/Director of
its predecessors since 1974; Chairman of the Board of Trustees
and President of Prime Cash Fund (which is inactive), since 1982
and of Short Term Asset Reserves 1984-1996; President and a
Director of STCM Management Company, Inc., sponsor and
sub-adviser to CCMT; Chairman, President, and a Director since
1984, of InCap Management Corporation, formerly sub-adviser and
administrator of Prime Cash Fund and Short Term Asset Reserves,
and Founder and Chairman of several other money market funds;
Director or Trustee of OCC Cash Reserves, Inc., Oppenheimer Quest
Global Value Fund, Inc., Oppenheimer Quest Value Fund, Inc., and
Trustee of Quest For Value Accumulation Trust, The Saratoga
Advantage Trust, and of the Rochester Group of Funds, each of
which is an open-end investment company; Trustee of Brown
University, 1990-1996 and currently Trustee Emeritus; actively
involved for many years in leadership roles with university,
school and charitable organizations.
Vernon R. Alden, Trustee, 420 Boylston Street, Suite 403, Boston,
Massachusetts 02116
Director of Colgate Palmolive Company since 1974, Digital
Equipment Corporation, a computer manufacturing corporation,
since 1959, Intermet Corporation, an independent foundry, since
1986, and Sonesta International Hotels Corporation since 1978;
Chairman of the Board and Executive Committee of The Boston
Company, Inc., a financial services company, 1969-1978; Trustee
of Tax-Free Trust of Oregon since 1988, of Hawaiian Tax-Free
Trust since 1989, of Cascades Cash Fund, 1989-1994, of
Narragansett Insured Tax-Free Income Fund since 1992, and of
Aquila Cascadia Equity Fund since 1996; Associate Dean and member
of the faculty of Harvard University Graduate School of Business
Administration, 1951-1962; member of the faculty and Program
Director of Harvard Business School - University of Hawaii
Advanced Management Program, summer of 1959 and 1960; President
of Ohio University, 1962-1969; Chairman of The Japan Society of
Boston, Inc., and member of several Japan-related advisory
councils; Chairman of the Massachusetts Business Development
Council and the Massachusetts Foreign Business Council,
1978-1983; Trustee of the Boston Symphony Orchestra since 1975;
Chairman of the Massachusetts Council on the Arts and Humanities,
1972-1984; Member of the Board of Fellows of Brown University,
1969-1986; Trustee and member of the Executive Committee, Plimoth
Plantation; trustee of various other cultural and educational
organizations; Honorary Consul General of the Royal Kingdom of
Thailand.
Arthur K. Carlson, Trustee, 8702 North Via La Serena, Paradise
Valley, Arizona 85253
Retired; Advisory Director of the Renaissance Companies
(design and construction companies of commercial, industrial and
upscale residential properties) since 1996; Senior Vice President
and Manager of the Trust Division of The Valley National Bank of
Arizona, 1977-1987; Trustee of Tax-Free Fund of Colorado,
Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona since 1987 and
of Aquila Rocky Mountain Equity Fund since 1993; previously Vice
President of Investment Research at Citibank, New York City, and
prior to that Vice President and Director of Investment Research
of Irving Trust Company, New York City; past President of The New
York Society of Security Analysts and currently a member of the
Phoenix Society of Financial Analysts; formerly Director of the
Financial Analysts Federation; past Chairman of the Board and,
currently, Director of Mercy Healthcare of Arizona, Phoenix,
Arizona since 1990; Director of Northern Arizona University
Foundation since 1990; present or formerly an officer and/or
director of various other community and professional
organizations.
William M. Cole, Trustee, 852 Ramapo Way, Westfield, New Jersey
07090
President of Cole International, Inc., financial and shipping
consultants, since 1974; President of Cole Associates, shopping
center and real estate developers, 1974-1976; President of
Seatrain Lines, Inc., 1970-1974; former General Partner of Jones
& Thompson, international shipping brokers; Trustee of Hawaiian
Tax-Free Trust since 1985, of Tax-Free Fund of Colorado since
1987. Chairman of Cole Group, a financial consulting and real
estate firm, since 1985.
Thomas W. Courtney, C.F.A., Trustee, P.O. Box 8186, Naples,
Florida 33941
President of Courtney Associates, Inc., a venture capital firm,
since 1988; General Partner of Trivest Venture Fund, 1983-1988;
President of Federated Investment Counseling Inc., 1975-1982;
President of Boston Company Institutional Investors, Inc.,
1970-1975; formerly a Director of the Financial Analysts
Federation; Trustee of Hawaiian Tax-Free Trust since 1984 and of
Tax-Free Trust of Arizona since 1986; Director or Trustee of OCC
Cash Reserves, Inc., Oppenheimer Quest Global Value Fund, Inc.,
Oppenheimer Quest Value Fund, Inc., and Trustee of Quest For
Value Accumulation Trust and of the Rochester Group of Funds,
each of which is an open-end investment company.
Richard W. Gushman, II, Trustee, 700 Bishop Street, Suite 200,
Honolulu, Hawaii 96813
President and Chief Executive Officer of OKOA, INC., a private
Hawaii corporation involved in real estate; adviser to RAMPAC,
Inc., a wholly owned subsidiary of the Bank of Hawaii, involved
with commercial real estate finance; Trustee of Hawaiian Tax-Free
Trust since 1992; Trustee of Pacific Capital Funds, which include
bond and stock funds, since 1993. Member of the Boards of Aloha
United Way, Downtown Improvement Association, Boys and Girls Club
of Honolulu and Oceanic Cablevision, Inc.
Stanley W. Hong, Trustee, 4976 Poola Street, Honolulu, Hawaii
96821
President and Chief Executive Officer of The Chamber of
Commerce of Hawaii since 1996; Business consultant since 1994;
Senior Vice President of McCormack Properties, Ltd., 1993-1994;
President and Chief Executive of the Hawaii Visitors Bureau,
1984-1993; Vice President, General Counsel and Corporate
Secretary at TheoDavies & Co., Ltd., a multiple business
company, 1973-1984; formerly Legislative Assistant to U.S.
Senator Hiram L. Fong; member of the Boards of Directors of
several community organizations; Trustee of Hawaiian Tax-Free
Trust since 1992; Trustee of Pacific Capital Funds, which
includes bond and stock funds, since 1993; Director of Capital
Investment of Hawaii, Inc. since 1995 (Real Estate and Wholesale
Bakery); Director, Central Pacific Bank since 1995; Trustee of
Nature Conservancy of Hawaii since 1990; Regent of Chaminade
University of Honolulu since 1990.
Theodore T. Mason, Trustee, 26 Circle Drive, Hastings-on-Hudson,
New York 10706
Managing Director of EastWind Power Partners, Ltd. since 1994;
Director of Alumni Association, SUNY Maritime College 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 CCMT since 1981;
Trustee and Vice President, 1976-1981, and formerly Director of
its predecessor; Director of STCM Management Company, Inc.; Vice
Chairman of the Board of Trustees and Trustee of Prime Cash Fund
(which is inactive) since 1982; Trustee of Short Term Asset
Reserves, 1984-1986 and 1989-1996, of Hawaiian Tax-Free Trust, of
Churchill Cash Reserves Trust since 1985 and of Churchill
Tax-Free Fund of Kentucky since 1992; Vice President and Trustee
of Oxford Cash Management Fund, 1983-1989; Vice President of
Trinity Liquid Assets Trust, 1983-1985; President and Director of
Ted Mason Venture Associates, Inc., a venture capital consulting
firm, 1972-1980; Advisor to the Commander, U.S. Maritime Defense
Zone Atlantic, 1984-1988; National Vice President,
Surface/Subsurface, Naval Reserve Association, 1985-1987;
National Vice President, Budget and Finance, for the same
Association, 1983-1985; Commanding Officer of four Naval Reserve
Units, 1974-1985; Captain, USNR, 1978-1988.
Russell K. Okata, Trustee, 888 Mililani Street, Suite 601,
Honolulu, Hawaii 96813-298
Executive Director, Hawaii Government Employees Association
AFSCME Local 152, AFL-CIO; Trustee of Hawaiian Tax-Free Trust
since 1992; Trustee of Pacific Capital Funds, which includes bond
and stock funds, since 1993; Chairman of the Royal State
Insurance Group since 1988; Trustee of several charitable
organizations.
Douglas Philpotts, Trustee, Financial Plaza of the Pacific, P.O.
Box 3170, Honolulu, Hawaii, 96802
Retired; Director of Hawaiian Trust Company, Limited since 1986,
Chairman of the Board, 1992-1994 and President, 1986-1992;
Director of Victoria Ward, Limited; Trustee of Hawaiian Tax-Free
Trust since 1992; Trustee of Pacific Capital Funds, which
includes bond and stock funds, since 1993; Trustee of the Strong
Foundation; present or former director or trustee of a number of
civic and charitable organizations in Hawaii.
Oswald K. Stender, Trustee, P.O. Box 3466, Honolulu, Hawaii 96801
Trustee of the Bernice Pauahi Bishop Estate since 1990; Director
of Hawaiian Electric Industries, Inc., a public utility holding
company, since 1993; Senior Advisor to the Trustees of The Estate
of James Campbell, 1987-1989 and Chief Executive Officer,
1976-1988; Director of several housing and real estate
associations; Director, member or trustee of several community
organizations; Trustee of Hawaiian Tax-Free Trust since 1992;
Trustee of Pacific Capital Funds, which includes bond and stock
funds, since 1993.
William C. Wallace, Vice President, 380 Madison Avenue, New York,
New York 10017
Vice President of Capital Cash Management Trust and Pacific
Capital Cash Assets Trust since 1984; Senior Vice President of
Hawaiian Tax-Free Trust since 1985 and Vice President, 1984-1985;
Senior Vice President of Tax-Free Trust of Arizona since 1989 and
Vice President, 1986-1988; Vice President of Tax-Free Trust of
Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and
Tax-Free Fund of Colorado since 1987, of Narragansett Insured
Tax-Free Income Fund since 1992; Secretary and Director of STCM
Management Company, Inc. since 1974; President of the Distributor
since 1995 and formerly Vice President of the Distributor,
1986-1992; Member of the Panel of Arbitrators, American
Arbitration Association, since 1978; Assistant Vice President,
American Stock Exchange, Market Development Division, and
Director of Marketing, American Gold Coin Exchange, a subsidiary
of the American Stock Exchange, 1976-1984.
Diana P. Herrmann, Senior Vice President, 380 Madison Avenue, New
York, New York 10017
Trustee of Tax-Free Trust of Arizona and Tax-Free Trust of
Oregon since 1994, of Churchill Tax-Free Fund of Kentucky and
Churchill Cash Reserves Trust since 1995, of Aquila Cascadia
Equity Fund since 1996 and of Aquila Rocky Mountain Equity Fund
and Tax-Free Fund for Utah since 1997; President and Chief
Operating Officer of the Administrator since 1997; Senior Vice
President and Secretary, formerly Vice President of the
Administrator since 1986 and Director since 1984; Senior Vice
President or Vice President and formerly Assistant Vice President
of the Aquila Money-Market Funds since 1986; Vice President of
the Aquila Bond and Equity Funds since 1997; Vice President of
InCap Management Corporation since 1986 and Director since 1983;
Assistant Vice President of Oxford Cash Management Fund,
1986-1988; Assistant Vice President and formerly Loan Officer of
European American Bank, 1981-1986; daughter of the Trust's
President; Trustee of the Leopold Schepp Foundation (academic
scholarships) since 1995; actively involved in mutual fund and
trade associations and in college and other volunteer
organizations.
Charles E. Childs, III, Vice President, 380 Madison Avenue, New
York, New York 10017
Vice President - Administration and formerly Assistant Vice
President and Associate of the Administrator since 1987; Vice
President or Assistant Vice President of the Money Funds since
1988; Northeastern University, 1986-1987 (M.B.A., 1987);
Financial Analyst, Unisys Corporation, 1986; Associate Analyst at
National Economic Research Associates, Inc. (NERA), a
micro-economic consulting firm, 1979-1985.
John M. Herndon, Vice President and Assistant Secretary, 380
Madison Avenue, New York, New York 10017
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995 and Vice President of the
Aquila Money-Market Funds since 1990; Vice President of the
Administrator since 1990;Investment Services Consultant and Bank
Services Executive of Wright Investors' Service, a registered
investment adviser, 1983-1989; Member of the American Finance
Association, the Western Finance Association and the Society of
Quantitative Analysts.
Sherri Foster, Assistant Vice President, 100 Ridge Road, Suite
1813-15, Lahaina, Hawaii 96761
Senior Vice President of Hawaiian Tax-Free Trust since 1993,
Vice President, 1988-1992 and Assistant Vice President;Registered
Representative of the Distributor since 1985; Realtor-Associate
of Sherrian Bender Realty, successor to John Wilson Enterprises,
1983-1994; Executive Secretary of the Hyatt Regency, Maui,
1981-1983.
Rose F. Marotta, Chief Financial Officer, 380 Madison Avenue, New
York, New York 10017
Chief Financial Officer of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1991 and Treasurer, 1981-1991;
formerly Treasurer of the predecessor of CCMT; Treasurer and
Director of STCM Management Company, Inc., since 1974; Treasurer
of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash
Management Fund, 1982-1988; Treasurer of InCap Management
Corporation since 1982, of the Administrator since 1984 and of
the Distributor since 1985.
Richard F. West, Treasurer, 380 Madison Avenue, New York, New
York 10017
Treasurer of the Aquila Money-Market Funds and the Aquila Bond
and Equity Funds and of Aquila Distributors, Inc. since 1992;
Associate Director of Furman Selz Incorporated, 1991-1992; Vice
President of Scudder, Stevens & Clark, Inc. and Treasurer of
Scudder Institutional Funds, 1989-1991; Vice President of Lazard
Freres Institutional Funds Group, Treasurer of Lazard Freres
Group of Investment Companies and HT Insight Funds, Inc.,
1986-1988; Vice President of Lehman Management Co., Inc. and
Assistant Treasurer of Lehman Money Market Funds, 1981-1985;
Controller of Seligman Group of Investment Companies, 1960-1980.
Edward M. W. Hines, Secretary, 551 Fifth Avenue, New York, New
York 10176
Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines &
Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary
of the Aquila Money-Market Funds and the Aquila Bond and Equity
Funds since 1982; Secretary of Trinity Liquid Assets Trust,
1982-1985 and Trustee of that Trust, 1985-1986; Secretary of
Oxford Cash Management Fund, 1982-1988.
Patricia A. Craven, Assistant Secretary & Compliance Officer, 380
Madison Avenue, New York, New York 10017
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995; Counsel to the
Administrator and the Distributor since 1995; formerly a Legal
Associate for Oppenheimer Management Corporation, 1993-1995.
Compensation of Trustees
The Funds do not pay fees to Trustees affiliated with the
Administrator or Adviser or to any of the Fund's officers. During
the fiscal year ended March 31, 1997, the Cash Fund, the Tax-Free
Fund and the Treasuries Fund paid, respectively $118,326,
$55,904 and $45,189, in compensation and reimbursement of
expenses to its other Trustees. The Funds are among the 14 funds
in the Aquilasm Group of Funds, which consists of tax-free
municipal bond funds, money market funds and two equity funds.
The following tables list the compensation of all Trustees who
received compensation from the Funds, the compensation each
received during each Fund's fiscal year from all funds in the
Aquilasm Group of Funds and the number of such funds. None of
such Trustees has any pension or retirement benefits from the
Fund or any of the other funds in the Aquila group.
<TABLE>
<CAPTION>
Compensation Compensation Compensation
Name from CAT from TFCAT from USTCAT
<S> <C> <C> <C>
Vernon R. $11,787 $5,535 $4,785
Alden
Arthur K. $10,690 $5,293 $4,384
Carlson
William M. $11,651 $5,956 $5,105
Cole
Thomas W. $11,858 $5,226 $4,321
Courtney
Richard W. $11,161 $5,617 $4,621
Gushman
Stanley W. $10,533 $5,203 $4,313
Hong
Theodore T. $11,989 $5,474 $4,568
Mason
Russell K. $9,105 $6,357 $4,534
Okata
Douglas $9,469 $4,349 $4,753
Philpotts
Oswald K. $10,472 $5,337 $4,440
Stender
<CAPTION>
Compensation from Number of Aquila Group
from all funds in boards on which the
Name the Aquila Group Trustee serves
<S> <C> <C>
Vernon R. $50,245 7
Alden
Arthur K. $57,927 7
Carlson
William M. $47,251 5
Cole
Thomas W. $48,628 5
Courtney
Richard W. $37,050 4
Gushman
Stanley W. $34,956 4
Hong
Theodore T. $52,780 8
Mason
Russell K. $34,102 4
Okata
Douglas $32,752 4
Philpotts
Oswald K. $34,750 4
Stender
</TABLE>
ADDITIONAL INFORMATION AS TO MANAGEMENT ARRANGEMENTS
Additional Information as to the Advisory Agreements
The Investment Advisory Agreement (the "Advisory Agreement")
between each of the Funds and Hawaiian Trust Company, Limited
(the "Adviser") contains the provisions described below, in
addition to those described in the Prospectus.
Each Advisory Agreement may be terminated by the Adviser at
any time without penalty upon giving the Fund sixty days' written
notice, and may be terminated by the Fund at any time without
penalty upon giving the Adviser sixty days' written notice,
provided that such termination by the Fund shall be directed or
approved by the vote of a majority of all its Trustees in office
at the time or by the vote of the holders of a majority (as
defined in the 1940 Act) of its voting securities at the time
outstanding and entitled to vote; it automatically terminates in
the event of its assignment (as so defined).
The expense limitation referred to in the Prospectus, if in
effect, is implemented monthly so that at no time is there any
unpaid liability under the limitation, subject to readjustment
during the year.
Each Advisory Agreement provides that in the absence of
willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations thereunder, the Adviser is not
liable for any loss sustained by the adoption of any investment
policy or the purchase, sale or retention of any security and
permits the Adviser to act as investment adviser for any other
person, firm or corporation. Each Fund agrees to indemnify the
Adviser to the full extent permitted under the Business Trust's
Declaration of Trust.
The Advisory Agreement states that it is agreed that the
Adviser shall have no responsibility or liability for the
accuracy or completeness of the Fund's Registration Statement
under the Securities Act of 1933 and the 1940 Act, except for the
information supplied by the Adviser for inclusion therein.
Each Advisory Agreement contains the following provisions as
to the Fund's portfolio transactions. In connection with its
duties to arrange for the purchase and sale of the Fund's
portfolio securities, the Adviser shall select such
broker-dealers ("dealers") as shall, in the Adviser's judgment,
implement the policy of the Fund to achieve "best execution,"
i.e., prompt, efficient and reliable execution of orders at the
most favorable net price. The Adviser shall cause the Fund to
deal directly with the selling or purchasing principal or market
maker without incurring brokerage commissions unless the Adviser
determines that better price or execution may be obtained by
paying such commissions; the Fund expects that most transactions
will be principal transactions at net prices and that the Fund
will incur little or no brokerage costs. The Fund understands
that purchases from underwriters include a commission or
concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread
between the bid and asked prices. In allocating transactions to
dealers, the Adviser is authorized to consider, in determining
whether a particular dealer will provide best execution, the
dealer's reliability, integrity, financial condition and risk in
positioning the securities involved, as well as the difficulty of
the transaction in question, and thus need not pay the lowest
spread or commission available if the Adviser determines in good
faith that the amount of commission is reasonable in relation to
the value of the brokerage and research services provided by the
dealer, viewed either in terms of the particular transaction or
the Adviser's overall responsibilities as to the accounts as to
which it exercises investment discretion. If, on the foregoing
basis, the transaction in question could be allocated to two or
more dealers, the Adviser is authorized, in making such
allocation, to consider (i) whether a dealer has provided
research services, as further discussed below; and (ii) whether a
dealer has sold shares of the Fund or any other investment
company or companies having the Adviser as its investment adviser
or having the same sub-adviser, Administrator or principal
underwriter as the Fund. Such research may be in written form or
through direct contact with individuals and may include
quotations on portfolio securities and information on particular
issuers and industries, as well as on market, economic or
institutional activities. The Fund recognizes that no dollar
value can be placed on such research services or on execution
services, that such research services may or may not be useful to
the Fund and/or other accounts of the Adviser and that research
received by such other accounts may or may not be useful to the
Fund.
The Adviser has advised the Funds that it is a subsidiary
of Bank of Hawaii, and after September 30, 1997, will be a
division of the Bank of Hawaii, which is a state-chartered bank.
The Adviser has advised the Funds that it is not at the date of
the Additional Statement, and after September 30, 1997, will not
be, prohibited under current Federal banking laws from performing
the services for the Funds required by the Advisory Agreements.
The Adviser recognizes however, that future changes in federal or
state statutes and regulations relating to the permissible
activities of bank and bank holding companies, including their
bank and non-bank subsidiaries, as well as future judicial or
administrative decisions and interpretations of present and
future statutes and regulations, might prevent the Adviser from
continuing to serve as the investment adviser to the Funds.
During each Fund's fiscal year ended March 31, 1997, all
of its transactions were principal transactions and no brokerage
commissions were paid.
For each Fund's fiscal year ended March 31, 1997, the
Cash Fund, the Tax-Free Fund and the Treasuries Fund paid or
accrued to the Adviser fees of $1,424,936, $410,547 and $379,291
respectively, and paid or accrued to the Administrator fees of
$609,175, $156,130 and $124,062, respectively under the Advisory
and Administration Agreements.
For each Fund's fiscal year ended March 31, 1996, The Cash
Fund, the Tax-Free Fund and the Treasuries Fund paid or accrued
to the Adviser fees of $1,353,593, $394,009 and $210,982
respectively, and paid or accrued to the Administrator fees of
$597,533, $152,543 and $88,287, respectively under the Advisory
and Administration Agreements. For the Treasury Fund, the Adviser
waived $44,372 and the Administrator waived $14,790 of such fees.
For the fiscal year ended March 31, 1995, the Cash Fund, the
Tax-Free Fund and the Treasuries Fund paid or accrued to the
Adviser fees of $1,515,705, $412,599 and $215,004, respectively,
and paid or accrued to the Administrator fees of $624,649,
$156,612 and $89,228, respectively under the Advisory and
Administration Agreements. For the Treasury Fund, the Adviser
waived $30,974 and the Administrator waived $10,325 of such fees.
Additional Information as to the Administration Agreement
The Administration Agreement (the "Administration
Agreement") between Aquila Management Corporation, as
Administrator, and each Fund contains the provisions described
below in addition to those described in the Prospectus.
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 each Fund pays its own legal and audit expenses, to the
extent that the Fund's counsel and accountants prepare or assist
in the preparation of prospectuses, proxy statements and reports
to shareholders, the costs of such preparation or assistance are
paid by the Fund.
The Administration Agreement may be terminated at any time
without penalty by the Administrator upon sixty days' written
notice to the Fund and the Adviser; it may be terminated by the
Fund at any time without penalty upon giving the Administrator
sixty days' written notice, provided that such termination by the
Fund shall be directed or approved by a vote of a majority of the
Trustees in office at the time, including a majority of the
Trustees who are not interested persons of the Fund. In either
case the notice provision may be waived.
The expense limitation referred to in the Prospectus, if in
effect, is implemented monthly so that at no time is there any
unpaid liability under the limitation, subject to readjustment
during the year.
The Administration Agreement provides that the Administrator
shall not be liable for any error in judgement or for any loss
suffered by the Fund in connection with the matters to which the
Administration Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence of the
Administrator in the performance of its duties, or from reckless
disregard by it of its obligations and duties under the
Administration Agreement. The Fund agrees to indemnify the
Administrator to the full extent permitted by the Declaration of
Trust.
(References to the Fund in "ADDITIONAL INFORMATION AS TO
MANAGEMENT ARRANGEMENTS" refer to the Business Trust where the
documents being described so specify.)
AMORTIZED COST VALUATION
Each Fund operates under the Rule (Rule 2a-7 under the 1940
Act) 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, each 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 price per share for each of each Fund's two classes
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 per
share 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 each 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 per share of a given
class 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
for that class 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 any 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 your account. Monthly or quarterly payments paid
to you may not be considered as a yield or income on investment.
GENERAL INFORMATION
Net Asset Value Per Share
As indicated in the Prospectus, the net asset value per
share for each class of each Fund's shares will be determined on
each day that the New York Stock Exchange is open. That Exchange
annually announces the days on which it will not be open; the
most recent announcement indicates that it will not open on the
following days: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. However, that Exchange may close on days not
included in that announcement.
Voting by Series of Shares
Shares of each Series of the Business Trust created by the
Board of Trustees are entitled to vote as a Series only to the
extent permitted by the 1940 Act (see below) or as permitted by
the Board of Trustees. Income and operating expenses are
allocated among Series in a manner acceptable to the Board of
Trustees.
Under Rule 18f-2 under the 1940 Act, as to any investment
company which has two or more series outstanding, on any matter
required to be submitted to shareholder vote, such matter is not
deemed to have been effectively acted upon unless approved by the
holders of a majority (as defined in that Rule) of the voting
securities of each series affected by the matter. Such separate
voting requirements do not apply to the election of Trustees or
the ratification of the selection of accountants. Rule 18f-2
contains special provisions for cases in which an advisory
contract is approved by one or more, but not all, series. A
change in investment policy may go into effect as to one or more
series whose holders so approve the change even though the
required vote is not obtained as to the holders of the other
affected series.
Shareholder and Trustee Indemnification
The Business Trust is an entity of the type commonly known
as a Massachusetts business trust. Under Massachusetts law,
shareholders of a trust such as the Business Trust may, under
certain circumstances, be held personally liable as partners for
the obligations of the trust. However, for the protection of
shareholders, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of
the Business Trust and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or
executed by any Fund or the Trustees. The Declaration of Trust
provides for indemnification out of the Business Trust's property
of any shareholder held personally liable for the obligations of
the Business Trust. The Declaration of Trust also provides that
the Business Trust shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of
the Business Trust 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 Business Trust itself would be unable
to meet its obligations. If any series or class is unable to meet
the obligations attributable to it (which, in the case of the
Business Trust, is a remote possibility), other series or classes
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
out of the assets of each 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.
Custodian and Auditors
Each Fund's Custodian, Bank One Trust Company, N.A., is
responsible for holding the Fund's assets.
The Trust's auditors, KPMG Peat Marwick LLP, perform an
annual audit of each Fund's financial statements.
Financial Statements
The financial statements of each of the Funds for the
fiscal year ended March 31, 1997, which are contained in the
Annual Report of The Pacific Capital Funds of Cash Assets Trust
for that fiscal year, are incorporated by reference into the
Additional Statement. The financial statements of the Funds for
that fiscal year have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon is incorporated herein
by reference.
<PAGE>
APPENDIX A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS
Bond Ratings
At the date of this Additional Statement there are six
organizations considered as Nationally Recognized Statistical
Rating Organizations ("NRSROs") for purposes of Rule 15c3-1 under
the Securities Exchange Act of 1934. Their names, a brief summary
of their respective rating systems, some of the factors
considered by each of them in issuing ratings and their
individual procedures are described below.
STANDARD AND POOR'S CORPORATION
Commercial paper consists of unsecured promissory notes
issued to raise short-term funds. An S&P commercial paper rating
is a current assessment of the likelihood of timely payment of
debt having an original maturity of no more than 365 days. S&P's
commercial paper ratings are graded into several categories from
"A-1" for the highest-quality obligations (which can also have a
plus (+) sign designation) to "D" for the lowest. The two highest
categories are:
A-1: This highest category indicates the degree of safety
regarding timely payment is strong. Those issues determined
to possess extremely strong safety characteristics are
denoted with a plus (+) sign.
A-2: Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high for issues designated A-1.
An S&P corporate debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific
obligation. The ratings are based, in varying degrees, on the
following considerations:
1) Likelihood of default -- capacity and willingness of the
obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the
obligations;
2) Nature of and provisions of the obligation; and
3) Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization, or
other arrangement under the laws of bankruptcy and other
laws affecting creditors' rights.
The two highest categories are:
AAA: Capacity to pay interest and repay principal is
extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the highest
rated issues only in a degree.
MOODY'S INVESTORS SERVICE
Moody's short-term debt ratings are opinions of the ability
of issuers to repay punctually senior debt obligations which have
an original maturity not exceeding one year. Obligations relying
upon support mechanisms such as letters of credit and bonds of
indemnity are excluded unless explicitly rated. The two highest
categories are:
Prime-1: Issuers rated P-1 have a superior ability for
repayment of senior short-term debt obligations, evidenced
by the following characteristics:
* Leading market positions in well-established
industries.
* High rates of return on funds employed.
* Conservative capital structure with moderate reliance
on debt and ample asset protection.
* Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
* Well-established access to a range of markets and
assured sources of alternative liquidity.
Prime-2: Issuers rated P-2 have a strong ability for
repayment of senior short-term debt obligations, evidenced
by the above-mentioned characteristics, but to a lesser
degree. Earnings trends and coverage ratios, while sound,
may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity
is maintained.
Corporate bonds rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by large or exceptionally stable margin and principal
is secure. Corporate bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds. Aa bonds
are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risk appear
somewhat greater than the Aaa securities.
DUFF & PHELPS, INC.
The ratings apply to all obligations with maturities of
under one year, including commercial paper, the unsecured portion
of certificates of deposit, unsecured bank loans, master notes,
bankers' acceptances, irrevocable letters of credit and current
maturities of long-term debt. The two highest categories are:
D-1+: Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or
access to alternative sources of funds is outstanding and
safety is just below risk-free U.S. Treasury short-term
obligations.
D-1: Very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental
protection factors. Risk factors are minor.
D-1 -: High certainty of timely payment. Liquidity factors
are strong and supported by good fundamental protection
factors. Risk factors are very small.
D-2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are very small.
Long-term debt rated AAA represents the highest credit
quality. The risk factors are negligible, being only slightly
more than for risk-free U.S. Treasury debt. Debt rated AA
represents high credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.
IBCA
In determining the creditworthiness of financial
institutions, IBCA assigns ratings within the following
categories: Legal, Individual, Short and Long Term. A legal
rating deals solely with the question of whether an institution
would receive support if it ran into difficulties and not whether
it is "good" or "bad". An individual rating looks purely at the
strength of a financial institution without receiving any
support. Short and long-term ratings assess the borrowing
capabilities and the capacity for timely repayment of debt
obligations. A short-term rating relates to debt which has a
maturity of less than one year, while a long- term rating applies
to a instrument of longer duration. The legal ratings are:
1: A bank for which there is a clear legal guarantee on the
part of its home state to provide any necessary support or a
bank of such importance both internationally and
domestically that support from the state would be
forthcoming, if necessary.
2: A bank for which there is no legal obligation on the part
of its sovereign entity to provide support but for which
state support would be forthcoming, for example, because of
its importance to the total economy or its historic
relationship with the government.
The individual ratings are:
A: A bank with a strong balance sheet, favorable credit
profile and a consistent record of above average
profitability.
B: A bank with a sound credit profile and without
significant problems. The bank's performance has generally
been in line with or better than that of its peers.
The short-term ratings are:
A-1+: Obligations supported by the highest capacity for
timely repayment.
A-1: Obligations supported by a very strong capacity for
timely repayment.
A-2: Obligations supported by a very strong capacity for
timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial
conditions.
The long-term ratings are:
AAA: Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of
principal and interest is substantial, such that adverse
changes in business, economic or financial conditions are
unlikely to increase investment risk.
AA: Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal
and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment
risk albeit not significantly.
Thomson BankWatch, Inc. (TBW)
The TBW short-term ratings apply to commercial paper, other
senior short-term obligations and deposit obligations of the
entities to which the rating has been assigned. TBW's two highest
short-term ratings are:
TBW-1: Indicates a very high degree of likelihood that
principal and interest will paid on a timely basis.
TBW-2: While the degree of safety regarding timely repayment
of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
The TBW long-term rating specifically assess the likelihood
of an untimely repayment of principal or interest over the term
to maturity of the rated instrument. TBW's two highest long-term
ratings are:
AAA: Indicates ability to repay principal and interest on a
timely basis is very strong.
AA: Indicates a superior ability to repay principal and
interest on a timely basis with limited incremental risk
versus issues rated in the highest category.
Fitch Investors Service, Inc.
The Fitch short-term ratings apply to debt obligations that
are payable on demand which include commercial paper,
certificates of deposit, medium-term notes and municipal and
investment notes. Short-term ratings places greater emphasis
than long-term ratings on the existence of liquidity necessary to
meet the issuer's obligations in a timely manner. Fitch short-
term ratings are:
F-1+: Issues assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1: Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than issues
rated "F-1+".
The Fitch long-term rating represents their assessment of
the issuer's ability to meet the obligations of a specific debt
issue or class of debt in a timely manner. The rating takes into
consideration special features of the issue, its relationship to
other obligations of the issuer, the current and prospective
financial and operating performance of the issuer and any
guarantor, as well as the economic and political environment that
might affect the issuer's future financial strength and credit
quality. The Fitch long-term rating are:
AAA: Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally
strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest
and repay principal is very strong.
DESCRIPTION OF MUNICIPAL BOND AND COMMERCIAL PAPER RATINGS
Municipal Bond Ratings
Standard & Poor's. A Standard & Poor's municipal obligation
rating is a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. This assessment
may take into consideration obligors such as guarantors, insurers
or lessees.
The debt rating is not a recommendation to purchase, sell or
hold a security, inasmuch as it does not comment as to market
price or suitability for a particular investor.
The ratings are based on current information furnished by
the issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform an audit
in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and
repayment of principal in accordance with the terms of
the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization
or other arrangement under the laws of bankruptcy and
other laws affecting creditors rights.
AAA Debt rated "AAA" has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay
principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the
highest rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest
and repay principal although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in
higher rated categories.
BBB Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas
it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category
than in higher rated categories.
Plus (+) or Minus (:): The ratings from "AA" to "B" may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
Provisional Ratings: The letter "p" indicates that the
rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the debt
being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of
default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and
risk.
Standard & Poor's ratings for municipal note issues are
designated SP in order to help investors distinguish more clearly
the credit quality of notes as compared to bonds. Notes bearing
the designation SP-1 are deemed very strong or to have strong
capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a
plus (+) designation. Notes bearing the designation SP-2 are
deemed to have a satisfactory capacity to pay principal and
interest.
Moody's Investors Service. A brief description of the
applicable Moody's Investors Service rating symbols and their
meanings follows:
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge".
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.
Aa Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other
elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to
principal and interest are considered adequate, but
elements may be present which suggest a susceptibility
to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium
grade obligations; i.e., they are neither highly
protected nor poorly secured. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.
Bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are
designated by the symbols Aa1, A1, Baa1, Ba1 and B1.
Moody's Short Term Loan Ratings - There are four rating
categories for short-term obligations, all of which define an
investment grade situation. These are designated Moody's
Investment Grade as MIG 1 through MIG 4. In the case of variable
rate demand obligations (VRDOs), two ratings are assigned; one
representing an evaluation of the degree of risk associated with
scheduled principal and interest payments, and the other
representing an evaluation of the degree of risk associated with
the demand feature. The short-term rating assigned to the demand
feature of VRDOs is designated as VMIG. When no rating is applied
to the long or short-term aspect of a VRDO, it will be designated
NR. Issues or the features associated with MIG or VMIG ratings
are identified by date of issue, date of maturity or maturities
or rating expiration date and description to distinguish each
rating from other ratings. Each rating designation is unique
with no implication as to any other similar issue of the same
obligor. MIG ratings terminate at the retirement of the
obligation while VMIG rating expiration will be a function of
each issuer's specific structural or credit features.
MIG1/VMIG1 This designation denotes best quality. There
is present strong protection by established
cash flows, superior liquidity support or
demonstrated broad-based access to the market
for refinancing.
MIG2/VMIG2 This designation denotes high quality.
Margins of protection are ample although not
so large as in the preceding group.
MIG3/VMIG3 This designation denotes favorable quality.
All security elements are accounted for but
there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow
protection may be narrow and market access
for refinancing is likely to be less well
established.
MIG4/VMIG4 This designation denotes adequate quality.
Protection commonly regarded as required of
an investment security is present and
although not distinctly or predominantly
speculative, there is specific risk.
Commercial Paper Ratings
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations. Moody's
employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of
rated issuers: Prime 1 -- Highest Quality; Prime 2 -- Higher
Quality; Prime 3 -- High Quality.
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment. Ratings are
graded into four categories, ranging from "A" for the highest
quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as
having the greatest capacity for timely payment. Issues in this
category are designed with the numbers 1, 2 and 3 to indicate the
relative degree of safety. The designation A-1 indicates that
the degree of safety regarding timely payment is either
overwhelming or very strong. A "+" designation is applied to
those issues rated "A-1" which possess safety characteristics.
Capacity for timely payment on issues with the designation A-2 is
strong. However, the relative degree of safety is not as high as
for issues designated A-1. Issues carrying the designation A-3
have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
<PAGE>
INVESTMENT ADVISER
Hawaiian Trust Company, Limited
(after September 30, 1997)
Pacific Century Trust
a division of
Bank of Hawaii
111 South King Street
Honolulu, Hawaii 96813
ADMINISTRATOR
Aquila Management Corporation
380 Madison Avenue, Suite 2300
New York, New York 10017
TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Arthur K. Carlson
William M. Cole
Thomas W. Courtney
Richard W. Gushman, II
Stanley W. Hong
Theodore T. Mason
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
OFFICERS
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
Sherri Foster, Assistant Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017
TRANSFER AND SHAREHOLDER SERVICING AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198
CUSTODIAN
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
COUNSEL
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
The Pacific Capital Funds
of
Cash Assets Trust
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
A cash management
investment
[LOGO]
STATEMENT OF
ADDITIONAL INFORMATION
<PAGE>
CASH ASSETS TRUST
PART C: OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements of the Pacific Capital Funds
of Cash Assets Trust:
Included in Part A:
Financial Highlights of
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Incorporated by reference into Part B:
Report of Independent Auditors
Statement of Assets and Liabilities as of
March 31, 1997:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Statement of Operations for the Year Ended
March 31, 1997:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Statement of Changes in Net Assets for the
Years Ended March 31, 1997 and 1996:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Statement of Investments as of March 31, 1997:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Notes to Financial Statements:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
Included in Part C:
Consent of Independent Auditors
(b) Exhibits:
(1) Amended and Restated Declaration of Trust (ii)
(2) By-laws (ii)
(3) Not applicable
(4) (a) Specimen share certificate for Pacific
Capital Cash Assets Trust Series,
Original Shares (ii)
(b) Specimen share certificate for Pacific
Capital Cash Assets Trust Series,
Service Shares Class (ii)
(c) Specimen share certificate for Pacific
Capital Tax-Free Cash Assets Trust
Series, Original Shares (ii)
(d) Specimen share certificate for Pacific
Capital Tax-Free Cash Assets Trust
Series, Service Shares (ii)
(e) Specimen share certificate for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series, Original Shares (ii)
(f) Specimen share certificate for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series, Service Shares (ii)
(5) (a) Investment Advisory Agreement for Pacific
Capital Cash Assets Trust Series (i)
(b) Investment Advisory Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series (i)
(c) Investment Advisory Agreement for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series (i)
(6) (a) Distribution Agreement for Pacific Capital
Cash Assets Trust Series (ii)
(b) Distribution Agreement for Pacific Capital
Tax-Free Cash Assets Trust Series (ii)
(c) Distribution Agreement for Pacific Capital
U.S. Treasuries Cash Assets Trust
Series (ii)
(d) Distribution Assistance Agreement for All
Series (ii)
(e) Distribution Assistant Agreement for All
Series with BHC Securities, Inc. (ii)
(7) Not applicable
(8) (a) Custody Agreement for All Series (ii)
(9) (a) Transfer Agency Agreement for All
Series (ii)
(b) Administration Agreement for Pacific
Capital Cash Assets Trust Series (ii)
(c) Administration Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series (ii)
(d) Administration Agreement for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series (ii)
(e) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific Capital
Cash Assets Trust Series (ii)
(f) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital Cash Assets Trust Series
(ii)
(g) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital Cash Assets Trust Series
(ii)
(h) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific Capital
Tax-Free Cash Assets Trust Series
(ii)
(i) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital Tax-Free Cash Assets Trust
Series (ii)
(j) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital Tax-Free Cash Assets Trust
Series (ii)
(k) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series (ii)
(l) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series (ii)
(m) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series (ii)
(10) (a) Opinion and consent of counsel
to the Trust (ii)
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15) (a) Distribution Plan for Pacific Capital Cash
Assets Trust Series (ii)
(b) Distribution Plan for Pacific Capital
Tax-Free Cash Assets Trust Series (ii)
(c) Distribution Plan for Pacific Capital U.S.
Treasuries Cash Assets Trust Series (ii)
(16) Not applicable
(17) (a) Principles of Cooperation for All Series (ii)
(b) Information Sharing Agreement (ii)
(c) Financial Data Schedules (ii)
(18) Plan pursuant to Rule 18f-3 under the
1940 Act (i)
(i) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 20 dated May 25, 1996 and
incorporated herein by reference.
(ii) Filed herewith.
ITEM 25. Persons Controlled By or Under Common Control
with Registrant
None
ITEM 26. Number of Holders of Securities
As of May 23, 1996, the number of record holders of the
Registrant's securities in each of its portfolios was as
follows:
Pacific Capital Cash Assets Trust
Original Shares 29
Service Shares 4
Pacific Capital Tax-Free Cash Assets Trust
Original Shares 78
Service Shares 3
Pacific Capital U.S. Treasuries Cash Assets Trust
Original Shares 14
Service Shares 2
ITEM 27. Indemnification
Subdivision (c) of Section 12 of Article SEVENTH of
Registrant's Amended and Restated Declaration of
Trust, filed as Exhibit 1 herewith, 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, unenforce-
able. In the event that a claim for indemnifica-
tion against such liabilities (other than the pay-
ment by Registrant of expenses incurred or paid by
a Trustee, officer, or controlling person of Regis-
trant in the successful defense of any action,
suit, or proceeding) is asserted by such Trustee,
officer, or controlling person in connection with
the securities being registered, Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against pub-
lic policy as expressed in the Act and will be go-
verned by the final adjudication of such issue.
ITEM 28. Business and Other Connections of Investment
Adviser
Hawaiian Trust Company, Limited, Registrant's in-
vestment adviser, is a trust company. Hawaiian
Trust Company, Limited is a subsidiary of Bank of
Hawaii. Bank of Hawaii is a state-chartered bank.
Bank of Hawaii is a subsidiary of Bancorp Hawaii,
Inc. Bancorp Hawaii, Inc. is a bank holding com-
pany.
ITEM 29. Principal Underwriters
(a) Aquila Distributors, Inc. serves as principal un-
derwriter to Aquila Rocky Mountain Equity Fund,
Capital Cash Management Trust, Churchill Cash Re-
serves Trust, Churchill Tax-Free Fund of Kentucky,
Hawaiian Tax-Free Trust, Narragansett Insured Tax-
Free Income Fund, Prime Cash Fund, Short Term Asset
Reserves, Tax-Free Fund for Utah, Tax-Free Fund of
Colorado, Tax-Free Trust of Arizona, and Tax-Free
Trust of Oregon, in addition to serving as the Re-
gistrant's principal underwriter.
(b) For information about the Directors and officers
of Aquila Distributors, Inc., reference is made to
the Form BD filed by it under the Securities Ex-
change Act of 1934.
(c) Not applicable.
ITEM 30. Location of Accounts and Records
All such accounts, books, and other documents are
maintained by the adviser, the administrator, the
custodian, and the transfer agent, whose addresses
appear on the back cover pages of the Prospectuses
and Statements of Additional Information of the
three Portfolios of the Trust.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(a) Not applicable.
(b) Not applicable.
<PAGE>
KPMG Peat Marwick LLP
345 Park Avenue
New York, NY 10154
Consent of Independent Auditors
To The Shareholders and Board of Trustees
The Pacific Capital Funds of Cash Assets Trust:
We consent to the use of our report, dated May 9, 1997
incorporated herein by reference, and to the reference to our
firm under the headings "Financial Highlights" in the Prospectus
and "Custodian and Auditors" and "Financial Statements" in the
Statement of Additional Information.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
New York, New York
July 25, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933, and has caused this Amendment
to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 28th day of July, 1997.
CASH ASSETS TRUST
(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 7/28/97
______________________ President, Chairman of ___________
Lacy B. Herrmann the Board and Trustee
(Principal Executive
Officer)
/s/Vernon R. Alden 7/28/97
______________________ Trustee ___________
Vernon R. Alden
/s/Arthur K. Carlson 7/28/97
______________________ Trustee ___________
Arthur K. Carlson
/s/William M. Cole 7/28/97
______________________ Trustee ___________
William M. Cole
/s/Thomas W. Courtney 7/28/97
______________________ Trustee ___________
Thomas W. Courtney
/s/Richard W. Gushman, II 7/28/97
______________________ Trustee ___________
Richard W. Gushman, II
/s/Stanley W. Hong 7/28/97
______________________ Trustee ___________
Stanley W. Hong
/s/Theodore T. Mason 7/28/97
______________________ Trustee ___________
Theodore T. Mason
/s/Russell K. Okata 7/28/97
______________________ Trustee ___________
Russell K. Okata
/s/Douglas Philpotts 7/28/97
_______________________ Trustee ___________
Douglas Philpotts
/s/Oswald K. Stender 7/28/97
_______________________ Trustee ___________
Oswald K. Stender
/s/Rose F. Marotta 7/28/97
_______________________ Chief Financial Officer ___________
Rose F. Marotta (Principal Financial and
Accounting Officer)
<PAGE>
CASH ASSETS TRUST
EXHIBIT INDEX
Exhibit Exhibit
Number Name
(1) Amended and Restated Declaration of Trust
(2) By-laws
(4) (a) Specimen share certificate for Pacific
Capital Cash Assets Trust Series,
Original Shares
(b) Specimen share certificate for Pacific
Capital Cash Assets Trust Series,
Service Shares Class
(c) Specimen share certificate for Pacific
Capital Tax-Free Cash Assets Trust
Series, Original Shares
(d) Specimen share certificate for Pacific
Capital Tax-Free Cash Assets Trust
Series, Service Shares
(e) Specimen share certificate for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series, Original Shares
(f) Specimen share certificate for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series, Service Shares
(6) (a) Distribution Agreement for Pacific Capital
Cash Assets Trust Series
(b) Distribution Agreement for Pacific Capital
Tax-Free Cash Assets Trust Series
(c) Distribution Agreement for Pacific Capital
U.S. Treasuries Cash Assets Trust Series
(d) Distribution Assistance Agreement for All
Series
(e) Distribution Assistant Agreement for All
Series with BHC Securities, Inc.
(8) (a) Custody Agreement for All Series
(9) (a) Transfer Agency Agreement for All Series
(b) Administration Agreement for Pacific
Capital Cash Assets Trust Series
(c) Administration Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series
(d) Administration Agreement for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series
(e) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific Capital
Cash Assets Trust Series
(f) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital Cash Assets Trust Series
(g) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital Cash Assets Trust Series
(h) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific Capital
Tax-Free Cash Assets Trust Series
(i) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital Tax-Free Cash Assets Trust Series
(j) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital Tax-Free Cash Assets Trust Series
(k) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series
(l) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series
(m) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital U.S. Treasuries Cash Assets
Trust Series
(10) (a) Opinion and consent of counsel to the Trust
(15) (a) Distribution Plan for Pacific Capital Cash
Assets Trust Series
(b) Distribution Plan for Pacific Capital
Tax-Free Cash Assets Trust Series
(c) Distribution Plan for Pacific Capital U.S.
Treasuries Cash Assets Trust Series
(17) (a) Principles of Cooperation for All Series
(b) Information Sharing Agreement
(c) Financial Data Schedules
Correspondence
Cash Assets Trust
SUPPLEMENTAL DECLARATION OF TRUST
AMENDING AND RESTATING THE DECLARATION OF TRUST
SUPPLEMENTAL DECLARATION OF TRUST made January 12, 1995
to the DECLARATION OF TRUST (the "Present Declaration of Trust")
of Cash Assets Trust (the "Trust").
WHEREAS, paragraph 12 of Article EIGHTH of the Present
Declaration of Trust permits the Trustees of the Trust to amend
or otherwise supplement the Present Declaration of Trust by
making a Supplemental Declaration of Trust, if authorized by vote
of the Trustees and the Shareholders; and
WHEREAS, the making of this Supplemental Declaration of
Trust was duly authorized by the Trustees on September 26, 1994
and by the shareholders on January 6, 1995, such approval having
been by the vote of the holders of a majority of the shares
issued, outstanding and entitled to vote; and
WHEREAS, the officer of the Trust executing this
Supplemental Declaration of Trust has been authorized and
directed to do so by the Trustees of the Trust and the
shareholders of the Trust on behalf of the Trustees and the
Trust;
NOW, THEREFORE, the Present Declaration of Trust is amended
and restated so that the Declaration of Trust of the Trust
(hereinafter referred to as the "Declaration of Trust") shall
read in its entirety as follows:
<PAGE>
WHEREAS, the Trustees desire to establish a trust fund under
the laws of the Commonwealth of Massachusetts, for the investment
and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and
property contributed to the trust fund hereunder shall be held
and managed under this Declaration of Trust IN TRUST as herein
set forth below.
FIRST: This Trust shall be known as Cash Assets Trust.
SECOND: Whenever used herein, unless otherwise required by
the context or specifically provided:
1. All terms used in this Declaration of Trust which are
defined in the 1940 Act shall have the meanings given to them in
the 1940 Act.
2. The "Trust" refers to Cash Assets Trust.
3. "Shareholder" means a record owner of Shares of the
Trust.
4. The "Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their
successor or successors for the time being in office as such
trustees.
5. "Shares" means the units of interest into which the
beneficial interest in the Trust shall be divided from time to
time and includes fractions of Shares as well as whole Shares.
6. The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
7. "Commission" means the Securities and Exchange
Commission.
8. "Board" or "Board of Trustees" means the Board of
Trustees of the Trust.
THIRD: The purpose or purposes for which the Trust is
formed and the business or objects to be transacted, carried on
and promoted by it are as follows:
1. To hold, invest and reinvest its funds, and in
connection therewith to hold part or all of its funds in cash,
and to purchase or otherwise acquire, hold for investment or
otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize
upon, securities (which term "securities" shall for the purposes
of this Declaration of Trust, without limitation of the
generality thereof, be deemed to include any stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests
therein, or in any property or assets) created or issued by any
issuer (which term "issuer" shall for the purposes of this
Declaration of Trust, without limitation of the generality
thereof be deemed to include any persons, firms, associations,
corporations, syndicates, combinations, organizations,
governments, or subdivisions thereof); and to exercise, as owner
or holder of any securities, all rights, powers and privileges in
respect thereof; and to do any and all acts and things for the
preservations, protection, improvement and enhancement in value
of any or all such securities.
2. To borrow money and pledge assets in connection with
any of the objects or purposes of the Trust, and to issue notes
or other obligations evidencing such borrowings, to the extent
permitted by the 1940 Act and by the Trust's fundamental
investment policies under the 1940 Act.
3. To issue and sell its Shares in such amounts and on
such terms and conditions, for such purposes and for such amount
or kind of consideration (including without limitation thereto,
securities) now or hereafter permitted by the laws of the
Commonwealth of Massachusetts and by this Declaration of Trust,
as the Trustees may determine.
4. To purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or
consent of the Shareholders of the Trust) its Shares, in any
manner and to the extent now or hereafter permitted by the laws
of Commonwealth of Massachusetts and by this Declaration of
Trust.
5. To conduct its business in all its branches at one or
more offices in the Commonwealth of Massachusetts and elsewhere
in any part of the world, without restriction or limit as to
extent.
6. To carry out all or any of the foregoing objects and
purposes as principal or agent, and alone or with associates or,
to the extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts, as a member of, or as the owner or
holder of any stock of, or share of interest in, any issuer, and
in connection therewith to make or enter into such deeds or
contracts with any issuers and to do such acts and things and to
exercise such powers, as a natural person could lawfully make,
enter into, do or exercise.
7. To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of all or any of the
foregoing purposes or objects.
The foregoing objects and purposes shall, except as
otherwise expressly provided, be in no way limited or restricted
by reference to, or inference from, the terms of any other clause
of this or any other Articles of this Declaration of Trust, and
shall each be regarded as independent and construed as powers as
well as objects and purposes, and the enumeration of specific
purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the
general powers of the Trust now or hereafter conferred by the
laws of the Commonwealth of Massachusetts, nor shall the
expression of one thing be deemed to exclude another, though it
be of like nature, not expressed; provided, however, that the
Trust shall not carry on any business, or exercise any powers, in
any state, territory, district or country except to the extent
that the same may lawfully be carried on or exercised under the
laws thereof.
FOURTH: The beneficial interest in the Trust shall at all
times be divided into an unlimited number of transferable Shares,
each such Share having a par value of one cent per Share, each of
which shall represent an equal proportionate interest in the
Trust with each other Share outstanding, none having priority or
preference over another, subject to the further provisions of
this Article FOURTH. The Trustees may from time to time divide
or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the
Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a
Share or multiple thereof.
Subject to the further provisions of Article FOURTH, the
Board of Trustees may, without obtaining any authorization or
vote of the shareholders of any series or class of Shares,
classify unissued Shares into one or more additional series and
classes which shall, together with the issued Shares of
beneficial interest of the Trust, have such designations as the
Board may determine (but which shall in the case of a series
include the word "Series" and in the case of a class include the
word "Class"). Subject to the distinctions permitted among
classes of the same series established by the Board of Trustees
consistent with the requirements of the 1940 Act and any rule,
regulation or order of the Commission, each Share of a series of
the Trust shall represent an equal interest in the net assets of
the series, and each holder of Shares of a series shall be
entitled to receive such holder's pro-rata share of distributions
of income and capital gains, if any, made with respect to such
series. Upon redemption of the shares of any series, the
applicable shareholder shall be paid solely out of funds and
property of such series of the Trust.
All references to Shares in this Declaration of Trust shall
be deemed to be to Shares of any or all series or classes
thereof, as the context may require.
Series and classes shall, subject to any applicable rule,
regulation or order of the Commission or other applicable law or
regulation, have the characteristics set forth in (a) through and
including (h) below.
(a) All consideration received by the Trust for the
issue or sale of Shares of each such series, together with all
income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to the series of Shares with respect to which such assets,
payments, or funds were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled
upon the books of account of the Trust. Such assets, income,
earnings, profits and proceeds thereof, and any asset derived
from any reinvestment of such proceeds, in whatever form the same
may be, are herein referred to as "assets belonging to" such
series.
(b) Dividends or distributions on Shares of any such
series, whether payable in Shares or cash, shall be paid only out
of earnings, surplus or other assets belonging to such series.
(c) In the event of the liquidation or dissolution of
the Trust, Shareholders of each such series shall be entitled to
receive, as a series, out of the assets of the Trust available
for distribution to Shareholders, but other than general assets
not belonging to any particular series, the assets belonging to
such series; and the assets so distributable to the Shareholders
of any such series shall be distributed among such Shareholders
in proportion to the number of shares of such series held by them
and recorded on the books of the Trust. In the event that there
are any general assets not belonging to any particular series of
Shares and available for distribution, such distribution shall be
made to the holders of Shares of all series in proportion to the
asset value of the Shares.
(d) The assets belonging to any such series of Shares
shall be charged with the liabilities in respect to such series
and shall be charged with their share of the general liabilities
of the Trust, in proportion to the asset value of the respective
series. The determination of the Board of Trustees shall be
conclusive as to the amount of liabilities, including accrued
expenses and reserves, and as to the allocation of the same as to
a given series, and as to whether the same, or general assets of
the Trust, are allocable to one or more series. The liabilities
so allocated to a series are herein referred to as "liabilities
belonging to" such series.
(e) The Board of Trustees may without the requirement
of Shareholder approval, classify Shares of any series or divide
the Shares of any series into classes, each class having such
different dividend, liquidation, voting and other rights as the
Trustees may determine, and may establish and designate the
specific classes of Shares of each series. The fact that a
series shall have initially been established and designated
without any specific establishment or designation of classes
(i.e., that all Shares of such series are initially of a single
class), or that a series shall have more than one established and
designated class, shall not limit the authority of the Trustees
to establish and designate separate classes, or one or more
further classes, of said series without approval of the holders
of the initial class thereof, or previously established and
designated class or classes thereof, provided that the
establishment and designation of such further separate classes
would not adversely affect the rights of the holders of the
initial or previously established and designated class or
classes.
(f) At all meetings of Shareholders, each shareholder
of each share of each such series or class of the Trust shall be
entitled to one vote for each dollar of net asset value
represented by such Share, determined as provided in the then
current Prospectus of such series or class, as of the record date
for such meeting, irrespective of series or class, standing in
his name on the books of the Trust, except that where a vote of
the holders of the Shares of any series or class, or of more than
one series or class, voting by series or class, is required by
the 1940 Act, any rule, regulation or order of the Commission or
other applicable law or regulation as to any proposal, only the
holders of such series or series, or class or classes, voting by
series or class, shall be entitled to vote upon such proposal and
the holders of any other series or class or classes shall not be
entitled to vote thereon. Any fractional Share, if any such
fractional Shares are outstanding, shall carry proportionately
all the rights of a whole Share, including the right to vote and
the right to receive dividends. There shall be no cumulative
voting rights with respect to any Shares or series or class of
Shares of the Trust.
(g) The provisions of Article FIFTH relating to voting
shall apply when the Trust has only one series or class of Shares
outstanding or when the Trust has more than one series or class
of Shares outstanding but which differ only as to their dividend
rights. Otherwise, the provisions of Article FIFTH shall be
subject to the provisions of this Article FOURTH.
(h) When the Trust has more than one series or class
of Shares outstanding: (i) the redemption rights provided to the
holders of the Trust's Shares shall be deemed to apply only to
the assets belonging to the series or class of Shares in
question; and (ii) the net asset value per Share computation as
provided for in Article SEVENTH shall be applied as if each such
series or class of Shares were the Trust as referred to in such
computation, but with its assets limited to the assets belonging
to such series or class and its liabilities limited to the
liabilities belonging to such series or class.
(i) The ownership of Shares shall be recorded in the
books of the Trust or a transfer agent. The Trustees may make
such rules as they consider appropriate for the transfer of
Shares and similar matters. The record books of the Trust or any
transfer agent, as the case may be, shall be conclusive as to who
are the holders of Shares and as to the number of Shares held
from time to time by each.
(j) The Trustees shall accept investments in the Trust
from such persons and on such terms as they may from time to time
authorize.
(k) Shareholders shall have no pre-emptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust or the Trustees.
(l) The dividends payable to Shareholders shall,
subject to any applicable rule, regulation or order of the
Commission or other applicable law or regulation, be determined
by the Board and need not be individually declared but may be
declared and paid in accordance with a formula adopted by the
Board.
FIFTH: The following provisions are hereby adopted with
respect to voting Shares of the Trust and certain other rights:
1. The Shareholders shall have power to vote (i) for
the election of Trustees, (ii) with respect to the amendment
of this Declaration of Trust, (iii) to the same extent as
the shareholders of a Massachusetts business corporation, as
to whether or not a court action, proceeding or claim should
be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (iv) with
respect to such additional matters relating to the Trust as
may be required by the 1940 Act or authorized by law, by
this Declaration of Trust, or the By-Laws of the Trust or
any registration statement of the Trust with the Commission
or any State, or as the Trustees may consider desirable.
2. At all meetings of Shareholders each Shareholder
shall be entitled to one vote for each dollar of net asset
value for each Share (determined in the manner described in
the current Prospectus or Prospectuses, if more than one
class or series is outstanding) standing in his name on the
books of the Trust on the date, fixed in accordance with the
By-Laws, for determination of Shareholders entitled to vote
at such meeting except (if so determined by the Board of
Trustees) for Shares redeemed prior to the meeting. Any
fractional Share shall carry proportionately all the rights
of a whole Share, including the right to vote and the right
to receive dividends. The presence in person or by proxy of
the holders of Shares outstanding and entitled to vote
thereat representing one-third of the net asset value of the
Trust as so determined shall constitute a quorum at any
meeting of the Shareholders. If at any meeting of the
Shareholders there shall be less than a quorum present, the
Shareholders present at such meeting may, without further
notice, adjourn the same from time to time until a quorum
shall attend, but no business shall be transacted at any
such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
3. Each Shareholder, upon request to the Trust in
proper form determined by the Trust, shall be entitled to
require the Trust to redeem all or any part of the Shares
standing in the name of such Shareholder. The method of
computing such net asset value, the time at which such net
asset value shall be computed and the time within which the
Trust shall make payment therefor, shall be determined as
hereinafter provided in Article SEVENTH of this Declaration
of Trust. Notwithstanding the foregoing, the Trustees, when
permitted or required to do so by the 1940 Act, may suspend
the right of the Shareholders to require the Trust to redeem
Shares.
4. No Shareholder shall, as such holder, have any
right to purchase or subscribe for any security of the Trust
which it may issue or sell, other than such right, if any,
as the Trustees, in their discretion, may determine.
5. All persons who shall acquire Shares shall acquire
the same subject to the provisions of this Declaration of
Trust.
SIXTH: Each Trustee shall hold office until the annual
meeting of Shareholders next succeeding his election or until his
successor is duly elected and qualifies. The persons who shall
act as Trustees until the first annual meeting or until their
successors are duly chosen and qualify were the initial Trustees
who executed the Declaration of Trust or any counterpart thereof.
However, the By-Laws of the Trust may fix the number of
Trustees at a number greater than that of the number of initial
Trustees and may authorize the Trustees, by the vote of a
majority of the entire number of Trustees, to increase or
decrease the number of Trustees fixed by this Declaration of
Trust or by the By-Laws within limits specified in the By-Laws,
provided that in no case shall the number of Trustees be less
than three, and to fill the vacancies created by any such
increase in the number of Trustees. Unless otherwise provided by
the By-Laws of the Trust, the Trustees need not be Shareholders.
SEVENTH: The following provisions are hereby adopted for
the purpose of defining, limiting and regulating the powers of
the Trust and of the Trustees and Shareholders.
1. As soon as any Trustee is duly elected by the
Shareholders or the Trustees and shall have accepted this
trust, the Trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee
hereunder.
2. The death, declination, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them
shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this
Declaration of Trust.
3. The assets of the Trust shall be held separate and
apart from any assets now or hereafter held in any capacity
other than as Trustee hereunder by the Trustees or any
successor Trustees. All of the assets of the Trust shall at
all times be considered as vested in the Trustees. Except
as provided in this Declaration of Trust, no Shareholder
shall have, as such holder of beneficial interest in the
Trust, any authority, power or right whatsoever to transact
business for or on behalf of the Trust, or on behalf of the
Trustees, in connection with the property or assets of the
Trust, or in any part thereof, except the rights to receive
the income and distributable amounts arising therefrom as
set forth herein.
4. The Trustees in all instances shall act as
principals, and are and shall be free from the control of
the Shareholders. The Trustees shall have full power and
authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider
necessary or appropriate in connection with the management
of the Trust. The Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to
Trust investments, but shall have full authority and power
to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the
purposes of this Trust. Subject to any applicable
limitation in this Declaration of Trust or in the By-Laws of
the Trust, the Trustees shall have power and authority:
(a) to adopt By-laws not inconsistent with this
Declaration of Trust providing for the conduct of the
business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint
and terminate such officers as they consider appropriate
with or without cause;
(c) to employ a bank or trust company as
custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the
By-Laws;
(d) to retain a transfer agent and Shareholder
servicing agent, or both;
(e) to provide for the distribution of Shares
either through a principal underwriter or the Trust itself
or both;
(f) to set record dates in the manner provided
for in the By-Laws of the Trust;
(g) to delegate such authority as they consider
desirable to any officers of the Trust and to any agent,
custodian or underwriter;
(h) to vote or give assent, or exercise any
rights of ownership, with respect to stock or other
securities or property held in Trust hereunder; and to
execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of
securities held in trust hereunder;
(j) to hold any security or property in a form
not indicating any trust, whether in bearer, unregistered or
other negotiable form; or either in its own name or in the
name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual
practice of Massachusetts business trusts or investment
companies;
(k) to consent to or participate in any plan for
the reorganization, consolidation or merger of any
corporation or concern, any security of which is held in the
Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to
any security held in the Trust;
(l) to compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy including, but not limited to, claims for taxes;
(m) to make, in the manner provided in the By-
Laws, distributions of income and of capital gains to
Shareholders;
(n) to borrow money to the extent and in the
manner permitted by the 1940 Act and the Trust's fundamental
policy thereunder as to borrowing; and
(o) to enter into investment advisory or
management contracts, subject to the 1940 Act, with any one
or more corporations, partnerships, trusts, associations or
other persons; if the other party or parties to any such
contract are authorized to enter into securities
transactions on behalf of the Trust, such transactions shall
be deemed to have been authorized by all of the Trustees.
5. No one dealing with the Trustees shall be under
any obligation to make any inquiry concerning the authority
of the Trustees, or to see to the application of any
payments made or property transferred by the Trustees or
upon their order.
6. (a) The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time
personally agree to pay by way of subscription to any Shares
or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the
Trustees relating to the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and
its assets (but the omission of such a recitation shall not
operate to bind any Shareholder).
(b) Except as otherwise provided in this
Declaration of Trust or the By-Laws, whenever this
Declaration of Trust calls for or permits any action to be
taken by the Trustees hereunder, such action shall mean that
taken by the Board of Trustees by vote of the majority of a
quorum of Trustees as set forth from time to time in the By-
Laws of the Trust or as required pursuant to the provisions
of the 1940 Act and the rules and regulations promulgated
thereunder.
(c) The Trustees shall possess and exercise any
and all such additional powers as are reasonably implied
from the powers herein contained such as may be necessary or
convenient in the conduct of any business or enterprise of
the Trust, to do and perform anything necessary, suitable,
or proper for the accomplishment of any of the purposes, or
the attainment of any one or more of the objects, herein
enumerated, or which shall at any time appear conducive to
or expedient for the protection or benefit of the Trust, and
to do and perform all other acts or things necessary or
incidental to the purposes herein before set forth, or that
may be deemed necessary by the Trustees.
(d) The Trustees shall have the power to
determine conclusively whether any moneys, securities, or
other properties of the Trust property are, for the purposes
of this Trust, to be considered as capital or income and in
what manner any expenses or disbursements are to be borne as
between capital and income whether or not in the absence of
this provision such moneys, securities, or other properties
would be regarded as capital or income and whether or not in
the absence of this provision such expenses or disbursements
would ordinarily be charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees
into classes and prescribe the tenure of office of the
several classes, but no class shall be elected for a period
shorter than that from the time of the election following
the division into classes until the next annual meeting and
thereafter for a period shorter than the interval between
annual meetings or for a period longer than five years, and
the term of office of at least one class shall expire each
year.
8. The Shareholders shall have the right to inspect
the records, documents, accounts and books of the Trust,
subject to reasonable regulations of the Trustees, not
contrary to Massachusetts law, as to whether and to what
extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any Trustee, or any officer elected or appointed
by the Trustees or by any committee of the Trustees or by
the Shareholders or otherwise, may be removed at any time,
with or without cause, in such lawful manner as may be
provided in the By-Laws of the Trust.
10. If the By-Laws so provide, the Trustees shall have
power to hold their meetings, to have an office or offices
and, subject to the provisions of the laws of the
Commonwealth of Massachusetts, to keep the books of the
Trust outside of said Commonwealth at such places as may
from time to time be designated by them.
11. Securities held by the Trust shall be voted in
person or by proxy by the President or a Vice-President, or
such officer or officers of the Trust as the Trustees shall
designate for the purpose, or by a proxy or proxies
thereunto duly authorized by the Trustees, except as
otherwise ordered by vote of the holders of a majority of
the Shares outstanding and entitled to vote in respect
thereto.
12. (a) Subject to the provisions of the 1940 Act,
any Trustee, officer or employee, individually, or any
partnership of which any Trustee, officer or employee may be
a member, or any corporation or association of which any
Trustee, officer or employee may be an officer, director,
trustee, employee or stockholder, may be a party to, or may
be pecuniarily or otherwise interested in, any contract or
transaction of the Trust, and in the absence of fraud no
contract or other transaction shall be thereby affected or
invalidated; provided that in case a Trustee, or a
partnership, corporation or association of which a Trustee
is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed
or shall have been known to the Trustees or a majority
thereof; and any Trustee who is so interested, or who is
also a director, officer, trustee, employee or stockholder
of such other corporation or association or a member of such
partnership which is so interested, may be counted in
determining the existence of a quorum at any meeting of the
Trustees which shall authorize any such contract or
transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he
were not such director, officer, trustee, employee or
stockholder of such other trust or corporation or
association or a member of a partnership so interested.
(b) Specifically, but without limitation of the
foregoing, the Trust may enter into a management, investment
advisory, sub-advisory, administration or underwriting
contract and other contracts with, and may otherwise do
business with any manager, investment adviser, sub-adviser,
or administrator for the Trust, or principal underwriter of
the Shares of the Trust, or any subsidiary or affiliate of
any such manager, investment adviser, sub-adviser or
administrator and/or principal underwriter and may permit
any such firm or corporation to enter into any contracts or
other arrangements with any other firm or corporation
relating to the Trust notwithstanding that the Board of
Trustees of the Trust may be composed in part of partners,
directors, officers or employees of any such firm or
corporation, and officers of the Trust may have been or may
be or become partners, directors, officers or employees of
any such firm or corporation, and in the absence of fraud
the Trust and any such firm or corporation may deal freely
with each other, and no such contract or transaction between
the Trust and any such firm or corporation shall be
invalidated or in any wise affected thereby, nor shall any
Trustee or officer of the Trust be liable to the Trust or to
any Shareholder or creditor thereof or to any other person
for any loss incurred by it or him solely because of the
existence of any such contract or transaction; provided that
nothing herein shall protect any Trustee or officer of the
Trust against any liability to the Trust or to its security
holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
(c) (1) As used in this paragraph the following
terms shall have the meanings set forth below:
(i) the term "indemnitee" shall mean any
present or former Trustee, officer or
employee of the Trust, any present or former
Trustee or officer of another trust or
corporation whose securities are or were
owned by the Trust or of which the Trust is
or was a creditor and who served or serves in
such capacity at the request of the Trust,
any present or former investment adviser,
sub-adviser, administrator or principal
underwriter of the Trust and the heirs,
executors, administrators, successors and
assigns of any of the foregoing; however,
whenever conduct by an indemnitee is referred
to, the conduct shall be that of the original
indemnitee rather than that of the heir,
executor, administrator, successor or
assignee;
(ii) the term "covered proceeding" shall
mean any threatened, pending or completed
action, suit or proceeding, whether civil,
criminal, administrative or investigative, to
which an indemnitee is or was a party or is
threatened to be made a party by reason of
the fact or facts under which he or it is an
indemnitee as defined above;
(iii) the term "disabling conduct" shall
mean willful misfeasance, bad faith, gross
negligence or reckless disregard of the
duties involved in the conduct of the office
in question;
(iv) the term "covered expenses" shall mean
expenses (including attorney's fees),
judgments, fines and amounts paid in
settlement actually and reasonably incurred
by an indemnitee in connection with a covered
proceeding; and
(v) the term "adjudication of liability"
shall mean, as to any covered proceeding and
as to any indemnitee, an adverse
determination as to the indemnitee whether by
judgment, order, settlement, conviction or
upon a plea of nolo contendere or its
equivalent.
(d) The Trust shall not indemnify any indemnitee
for any covered expenses in any covered proceeding if there
has been an adjudication of liability against such
indemnitee expressly based on a finding of disabling
conduct.
(e) Except as set forth in (d) above, the Trust
shall indemnify any indemnitee for covered expenses in any
covered proceeding, whether or not there is an adjudication
of liability as to such indemnitee, if a determination has
been made that the indemnitee was not liable by reason of
disabling conduct by (i) a final decision of the court or
other body before which the covered proceeding was brought;
or (ii) in the absence of such decision, a reasonable
determination, based on a review of the facts, by either (a)
the vote of a majority of a quorum of Trustees who are
neither "interested persons," as defined in the 1940 Act nor
parties to the covered proceeding or (b) an independent
legal counsel in a written opinion; provided that such
Trustees or counsel, in reaching such determination, may but
need not presume the absence of disabling conduct on the
part of the indemnitee by reason of the manner in which the
covered proceeding was terminated.
(f) Covered expenses incurred by an indemnitee in
connection with a covered proceeding shall be advanced by
the Trust to an indemnitee prior to the final disposition of
a covered proceeding upon the request of the indemnitee for
such advance and the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately
determined that the indemnitee is entitled to
indemnification thereunder, but only if one or more of the
following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be
insured against losses arising out of any lawful advances;
or (iii) there shall have been a determination, based on a
review of the readily available facts (as opposed to a full
trial-type inquiry) that there is a reason to believe that
the indemnitee ultimately will be found entitled to
indemnification by either independent legal counsel in a
written opinion or by the vote of a majority of a quorum of
trustees who are neither "interested persons" as defined in
the 1940 Act nor parties to the covered proceeding.
(g) Nothing herein shall be deemed to affect the
right of the Trust and/or any indemnitee to acquire and pay
for any insurance covering any or all indemnitees to the
extent permitted by the 1940 Act or to affect any other
indemnification rights to which any indemnitee may be
entitled to the extent permitted by the 1940 Act.
13. For purposes of the computation of net asset
value, as in this Declaration of Trust referred to, the
following rules shall apply:
(a) The net asset value of each Share of the
Trust tendered to the Trust for redemption shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the tender of such share;
(b) The net asset value of each Share of the
Trust for the purpose of the issue of such shares shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the receipt of an order to purchase
such shares;
(c) The net asset value of each Share of the
Trust, as of time of valuation on any day, shall be the
quotient obtained by dividing the value, as at such time, of
the net assets of the Trust (i.e., the value of the assets
of the Trust less its liabilities exclusive of its surplus)
by the total number of Shares outstanding at such time. The
assets and liabilities of the Trust shall be determined in
accordance with generally accepted accounting principles;
provided, however, that in determining the liabilities of
the Trust there shall be included such reserves for taxes or
contingent liabilities as may be authorized or approved by
the Trustees, and provided further that in determining the
value of the assets of the Trust for the purpose of
obtaining the net asset value, each security listed on the
New York Stock Exchange shall be valued on the basis of the
closing sale at the time of valuation on the business day as
of which such value is being determined; if there be no sale
on such day, then the security shall be valued on the basis
of the mean between closing bid and asked prices on such
day; if no bid and asked prices are quoted for such day,
then the security shall be valued by such method as the
Trustees shall deem in good faith to reflect its fair market
value; securities not listed on the New York Stock Exchange
shall be valued in like manner on the basis of quotations on
any other stock exchange which the Trustees may from time to
time approve for that purpose; readily marketable securities
traded in the over-the-counter market shall be valued at the
mean between their bid and asked prices, or, if the Trustees
shall so determine, at their bid prices; and all other
assets of the Trust and all securities as to which the Trust
might be considered an "underwriter" (as that term is used
in the Securities Act of 1933), whether or not such
securities are listed or traded in the over-the-counter
market, shall be valued by such method as they shall deem in
good faith to reflect their fair market value. In
connection with the accrual of any fee or refund payable to
or by an investment adviser of the Trust, the amount of
which accrual is not definitely determinable as of any time
at which the net asset value of each Share of the Trust is
being determined due to the contingent nature of such fee or
refund, the Trustees are authorized to establish from time
to time formulae for such accrual, on the basis of the
contingencies in question to the date of such determination,
or on such other basis as the Trustees may establish.
(1) Shares to be issued shall be deemed to
be outstanding as of the time of the determination
of the net asset value per share applicable to
such issuance and the net price thereof shall be
deemed to be an asset of the Trust;
(2) Shares to be redeemed by the Trust shall
be deemed to be outstanding until the time of the
determination of the net asset value applicable to
such redemption and thereupon and until paid the
redemption price thereof shall be deemed to be a
liability of the Trust; and
(3) Shares voluntarily purchased or
contracted to be purchased by the Trust pursuant
to the provisions of paragraph 13(d) of this
Article SEVENTH shall be deemed to be outstanding
until whichever is the later of (i) the time of
the making of such purchase or contract of
purchase, and (ii) the time as of which the
purchase price is determined, and thereupon and
until paid, the purchase price thereof shall be
deemed to be a liability of the Trust.
(d) The net asset value of each Share of the
Trust, as of any time other than the close of business on
the New York Stock Exchange of any day, may be determined by
applying to the net asset value as of the close of business
on that Exchange on the preceding business day, computed as
provided in this Article SEVENTH, such adjustments as are
authorized by or pursuant to the direction of the Trustees
and designed reasonably to reflect any material changes in
the market value of securities and other assets held and any
other material changes in the assets or liabilities of the
Trust and in the number of its outstanding Shares which
shall have taken place since the close of business on such
preceding business day.
(e) In addition to the foregoing, the Trustees
are empowered, in their absolute discretion, to establish
other bases or times, or both, for determining the net asset
value of each Share of the Trust in accordance with the 1940
Act and to authorize the voluntary purchase by the Trust,
either directly or through an agent, of Shares of the Trust
upon such terms and conditions and for such consideration as
the Trustees shall deem advisable in accordance with any
such provision, rule or regulation.
(f) Payment of the net asset value of Shares of
the Trust properly surrendered to it for redemption shall be
made by the Trust within seven days after tender of such
Shares to the Trust for such purpose plus any period of time
during which the right of the holders of the shares of the
Trust to require the Trust to redeem such shares has been
suspended. Any such payment may be made in portfolio
securities of the Trust and/or in cash, as the Trustees
shall deem advisable, and no Shareholder shall have a right,
other than as determined by the Trustees, to have his Shares
redeemed in kind.
EIGHTH:
1. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of
his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other
general successor) shall be entitled out of the Trust estate
to be held harmless from and indemnified against all loss
and expense arising from such liability. This Trust shall,
upon request by the Shareholder, assume the defense of any
claim made against any Shareholder for any act or obligation
of the Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and
not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust's
officers or any Shareholder. All persons extending credit
to, contracting with or having any claim against the Trust
or the Trustees shall look only to the assets of the Trust
for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their
agents, whether past, present or future, shall be personally
liable therefor. Nothing in this Declaration of Trust shall
protect a Trustee against any liability to which such
Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the
office of Trustee hereunder.
3. The exercise by the Trustees of their powers and
discretion hereunder in good faith and with reasonable care
under the circumstances then prevailing, shall be binding
upon everyone interested. Subject to the provisions of
paragraph 2 of this Article EIGHTH, the Trustees shall not
be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts
with respect to the meaning and operations of this
Declaration of Trust, and subject to the provisions of
paragraph 2 of this Article EIGHTH, shall be under no
liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any
surety if a bond is required.
4. This Trust shall continue without limitation of
time but subject to the provisions of sub-sections (a), (b)
and (c) of this paragraph 4.
(a) The Trustees, with the favorable vote of the
holders of more than 50% of the outstanding Shares entitled
to vote and if the Trust has outstanding shares of more
than one series or class, such vote shall be in accordance
with the provisions of Article FIFTH section (2), may sell
and convey the assets of the Trust (which sale may be
subject to the retention of assets for the payment of
liabilities and expenses) to another issuer for a
consideration which may be or include securities of such
issuer. Upon making provision for the payment of
liabilities, by assumption by such issuer or otherwise, the
Trustees shall distribute the remaining proceeds ratably
among the holders of the Shares of the Trust then
outstanding.
(b) The Trustees, with the favorable vote of the
holders of more than 50% of the outstanding Shares entitled
to vote, and if the Trust has outstanding shares of more
than one series or class, such vote shall be in accordance
with the provisions of Article FIFTH section (2), may at any
time sell and convert into money all the assets of the
Trust. Upon making provision for the payment of all
outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust, the Trustees shall
distribute the remaining assets of the Trust ratably among
the holders of the outstanding Shares.
(c) Upon completion of the distribution of the
remaining proceeds or the remaining assets as provided in
sub-sections (a) and (b), the Trust shall terminate and the
Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and
interest of all parties shall be cancelled and discharged.
5. The original or a copy of this instrument and of
each declaration of trust supplemental hereto shall be kept
at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each
supplemental declaration of trust shall be filed with the
Massachusetts Secretary of State, as well as any other
governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not
any such supplemental declarations of trust have been made
and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such
supplemental declaration of trust. In this instrument or in
any such supplemental declaration of trust, references to
this instrument, and all expressions like "herein," "hereof"
and "hereunder" shall be deemed to refer to this instrument
as amended or affected by any such supplemental declaration
of trust. This instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
6. The trust set forth in this instrument is created
under and is to be governed by and construed and
administered according to the laws of the Commonwealth of
Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
7. The Board of Trustees is empowered to cause the
redemption of the Shares held in any account if the
aggregate net asset value of such Shares (taken at cost or
value, as determined by the Board) has been reduced by a
Shareholder to $500 or less upon such notice to the
Shareholders in question, with such permission to increase
the investment in question and upon such other terms and
conditions as may be fixed by the Board of Trustees in
accordance with the 1940 Act.
8. In the event that any person advances the
organizational expenses of the Trust, such advances shall
become an obligation of the Trust subject to such terms and
conditions as may be fixed by, and on a date fixed by, or
determined in accordance with criteria fixed by the Board of
Trustees, to be amortized over a period or periods to be
fixed by the Board.
9. Whenever any action is taken under this
Declaration of Trust under any authorization to take action
which is permitted by the 1940 Act, such action shall be
deemed to have been properly taken if such action is in
accordance with the construction of the 1940 Act then in
effect as expressed in "no action" letters of the staff of
the Commission or any release, rule, regulation or order
under the 1940 Act or any decision of a court of competent
jurisdiction, notwithstanding that any of the foregoing
shall later be found to be invalid or otherwise reversed or
modified by any of the foregoing.
10. Any action which may be taken by the Board of
Trustees under this Declaration of Trust or its By-Laws may
be taken by the description thereof in the then effective
prospectus relating to the Shares under the Securities Act
of 1933 or in any proxy statement of the Trust rather than
by formal resolution of the Board.
11. Whenever under this Declaration of Trust, the
Board of Trustees is permitted or required to place a value
on assets of the Trust, such action may be delegated by the
Board, and/or determined in accordance with a formula
determined by the Board, to the extent permitted by the 1940
Act.
12. If authorized by vote of the Trustees and the
favorable vote of the holders of more than 50% of the
outstanding Shares entitled to vote, or by any larger vote
which may be required by applicable law in any particular
case, and if the Trust has outstanding shares of more than
one series or class, such vote shall be in accordance with
the provisions of Article FIFTH section (2), the Trustees
shall amend or otherwise supplement this instrument, by
making a declaration of trust supplemental hereto, which
thereafter shall form a part hereof; any such Supplemental
Declaration of Trust may be executed by and on behalf of the
Trust and the Trustees by any officer or officers of the
Trust.
13. The address of the Trust is
380 Madison Avenue
Suite 2300
New York, NY 10017
IN WITNESS WHEREOF, the undersigned have executed
this Supplemental Declaration of Trust on behalf of the Trust and
the Trustees as of the date first above written.
CASH ASSETS TRUST
______________________________
Lacy B. Herrmann
President, Chairman of the
Board of Trustees and Trustee
Attest:
______________________________
Secretary
THE UNDERSIGNED, President, Chairman of the Board of
Trustees and Trustee of Cash Assets Trust who executed on behalf
of said Trust and its Trustees the foregoing Supplemental
Declaration of Trust, hereby acknowledges, in the name and on
behalf of said Trust and its Trustees, the foregoing Supplemental
Declaration of Trust to be the act of said Trust and its Trustees
and further certifies that to the best of his information,
knowledge and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material
respects, under penalties of perjury.
________________________________
Lacy B. Herrmann
Dated: June 22, 1996
CASH ASSETS TRUST
BY-LAWS
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the
Shareholders (which term as used herein shall, together with all
other terms defined in the Declaration of Trust, have the same
meaning as in the Declaration of Trust) shall be held at the
principal office of the Trust or at such other place as may from
time to time be designated by the Board of Trustees and stated in
the notice of meeting.
Section 1A. Shareholder Voting. At any meeting of
Shareholders, Shareholders are entitled to one (1) vote for each
dollar of net asset value (determined as of the record date for
the meeting) per Share held (and fractional votes for fractional
dollar amounts.)
Section 2. Annual Meeting. The annual meeting of the
Shareholders of the Trust shall be held on such date and at such
time as may be determined by the Board of Trustees and as shall
be designated in the notice of meeting for the purpose of
electing Trustees until the next annual meeting and for the
transaction of such other business as may properly be brought
before the meeting.
Section 3. Special or Extraordinary Meetings. Special or
extraordinary meetings of Shareholders for any purpose or
purposes may be called by the Chairman of the Board of Trustees,
if any, or by the President or by the Board of Trustees and shall
be called by the Secretary upon receipt of the request in writing
signed by holders of Shares representing not less than one third
of the votes eligible to be cast thereat. Such request shall
state the purpose or purposes of the proposed meeting.
Section 4. Notice of Meetings of Shareholders. Not less
than ten days' and not more than ninety days' written or printed
notice of every meeting of Shareholders, stating the time and
place thereof (and the general nature of the business proposed to
be transacted at any special or extraordinary meeting), shall be
given to each Shareholder entitled to vote thereat by leaving the
same with him or at his residence or usual place of business or
by mailing it, postage prepaid and addressed to him at his
address as it appears upon the books of the Trust.
No notice of the time, place or purpose of any meeting of
Shareholders need be given to any Shareholder who attends in
person or by proxy or to any Shareholder who, in writing executed
and filed with the records of the meeting, either before or after
the holding thereof, waives such notice.
Section 5. Record Dates. The Board of Trustees may fix, in
advance, a date, not exceeding ninety days and not less than ten
days preceding the date of any meeting of Shareholders, and not
exceeding ninety days preceding any dividend payment date or any
date for the allotment of rights, as a record date for the
determination of the Shareholders entitled to receive such
dividends or rights, as the case may be; and only Shareholders of
record on such date shall be entitled to notice of and to vote at
such meeting or to receive such dividends or rights, as the case
may be.
Section 6. Quorum, Adjournment of Meetings. The presence
in person or by proxy of the holders of record of outstanding
Shares of the Trust representing at least one-third of the votes
eligible to be cast thereat shall constitute a quorum at all
meetings of Shareholders. If at any meeting of the Shareholders
there shall be less than a quorum present, the Shareholders
present at such meeting may, without further notice, adjourn the
same from time to time until a quorum shall attend, but no
business shall be transacted at any such adjourned meeting except
such as might have been lawfully transacted had the meeting not
been adjourned.
Section 7. Voting and Inspectors. At all meetings of
Shareholders every Shareholder of record entitled to vote thereat
shall be entitled to vote at such meeting either in person or by
proxy appointed by instrument in writing subscribed by such
Shareholder or his duly authorized attorney-in-fact.
All elections of Trustees shall be had by a plurality of the
votes cast and all questions shall be decided by a majority of
the votes cast, in each case at a duly constituted meeting,
except as otherwise provided in the Declaration of Trust or in
these By-Laws or by specific statutory provision superseding the
restrictions and limitations contained in the Declaration of
Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior
thereto may, or, if they have not so acted, the Chairman of the
meeting may, and upon the request of the holders of the
outstanding Shares of the Trust representing 10% of its net asset
value entitled to vote at such election shall, appoint two
inspectors of election who shall first subscribe an oath or
affirmation to execute faithfully the duties of inspectors at
such election with strict impartiality and according to the best
of their ability, and shall after the election make a certificate
of the result of the vote taken. No candidate for the office of
Trustee shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election or matter, and such vote shall be taken
upon the request of the holders of the outstanding Shares of the
Trust representing 10% of its net asset value entitled to vote on
such election or matter.
Section 8. Conduct of Shareholders' Meetings. The meetings
of the Shareholders shall be presided over by the Chairman of the
Board of Trustees, if any, or if he shall not be present, by the
President, or if he shall not be present, by a Vice-President, or
if neither the Chairman of the Board of Trustees, the President
nor any Vice-President is present, by a chairman to be elected at
the meeting. The Secretary of the Trust, if present, shall act
as Secretary of such meetings, or if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an
Assistant Secretary is present, then the meeting shall elect its
secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At
every meeting of the Shareholders, all proxies shall be received
and taken in charge of and all ballots shall be received and
canvassed by the secretary of the meeting, who shall decide all
questions touching the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in
Section 7, in which event such inspectors of election shall
decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and
property of the Trust shall be conducted and managed by a Board
of Trustees consisting of the number of initial Trustees, which
number may be increased or decreased as provided in Section 2 of
this Article. Each Trustee shall, except as otherwise provided
herein, hold office until the annual meeting of Shareholders of
the Trust next succeeding his election or until his successor is
duly elected and qualifies. Trustees need not be Shareholders.
Section 2. Increase or Decrease in Number of Trustees;
Removal. The Board of Trustees, by the vote of a majority of the
entire Board, may increase the number of Trustees to a number not
exceeding fifteen, and may elect Trustees to fill the vacancies
created by any such increase in the number of Trustees until the
next annual meeting or until their successors are duly elected
and qualify; the Board of Trustees, by the vote of a majority of
the entire Board, may likewise decrease the number of Trustees to
a number not less than two but the tenure of office of any
Trustee shall not be affected by any such decrease. Vacancies
occurring other than by reason of any such increase shall be
filled as provided for a Massachusetts business corporation. In
the event that after proxy material has been printed for a
meeting of Shareholders at which Trustees are to be elected any
one or more management nominees dies or becomes incapacitated,
the authorized number of Trustees shall be automatically reduced
by the number of such nominees, unless the Board of Trustees
prior to the meeting shall otherwise determine. Any Trustee at
any time may be removed either with or without cause by
resolution duly adopted by the affirmative votes of the holders
of the majority of the Shares of the Trust present in person or
by proxy at any meeting of Shareholders at which such vote may be
taken, provided that a quorum is present, or by such larger vote
as may be required by Massachusetts law. Any Trustee at any time
may be removed for cause by resolution duly adopted at any
meeting of the Board of Trustees provided that notice thereof is
contained in the notice of such meeting and that such resolution
is adopted by the vote of at least two thirds of the Trustees
whose removal is not proposed. As used herein, "for cause" shall
mean any cause which under Massachusetts law would permit the
removal of a Trustee of a business trust.
Section 3. Place of Meeting. The Trustees may hold their
meetings, have one or more offices, and keep the books of the
Trust outside Massachusetts, at any office or offices of the
Trust or at any other place as they may from time to time by
resolution determine, or, in the case of meetings, as they may
from time to time by resolution determine or as shall be
specified or fixed in the respective notices or waivers of notice
thereof.
Section 4. Regular Meetings. Regular meetings of the Board
of Trustees shall be held at such time and on such notice, if
any, as the Trustees may from time to time determine.
The annual meeting of the Board of Trustees shall be held as
soon as practicable after the annual meeting of the Shareholders
for the election of Trustees.
Section 5. Special Meetings. Special meetings of the Board
of Trustees may be held from time to time upon call of the
Chairman of the Board of Trustees, if any, the President or two
or more of the Trustees, by oral or telegraphic or written notice
duly served on or sent or mailed to each Trustee not less than
one day before such meeting. No notice need be given to any
Trustee who attends in person or to any Trustee who, in writing
executed and filed with the records of the meeting either before
or after the holding thereof, waives such notice. Such notice or
waiver of notice need not state the purpose or purposes of such
meeting.
Section 6. Quorum. One-third of the Trustees then in
office shall constitute a quorum for the transaction of business,
provided that a quorum shall in no case be less than two
Trustees. If at any meeting of the Board there shall be less
than a quorum present (in person or by open telephone line, to
the extent permitted by the l940 Act), a majority of those
present may adjourn the meeting from time to time until a quorum
shall have been obtained. The act of the majority of the
Trustees present at any meeting at which there is a quorum shall
be the act of the Board, except as may be otherwise specifically
provided by statute, by the Declaration of Trust or by these
By-Laws.
Section 7. Committees. The Board of Trustees, by the
affirmative vote of a majority of the entire Board, may appoint
one or more committees which shall in each case consist of such
number of members (not less than two) and shall have and may
exercise such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee
may determine its action, and fix the time and place of its
meetings, unless the Board of Trustees shall otherwise provide.
The Board of Trustees shall have power at any time to change the
members and powers of any such committee, to fill vacancies, and
to discharge any such committee.
Section 8. Informal Action by and Telephone Meetings of
Trustees and Committees. Any action required or permitted to be
taken at any meeting of the Board of Trustees or any committee
thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such
committee, as the case may be. Trustees or members of a
committee of the Board of Trustees may participate in a meeting
by means of a conference telephone or similar communications
equipment; such participation shall, except as otherwise required
by the 1940 Act, have the same effect as presence in person.
Section 9. Compensation of Trustees. Trustees shall be
entitled to receive such compensation from the Trust for their
services as may from time to time be voted by the Board of
Trustees.
Section 10. Dividends. Dividends or distributions payable
on the Shares may, but need not be, declared by specific
resolution of the Board as to each dividend or distribution; in
lieu of such specific resolutions, the Board may, by general
resolution, determine the method of computation thereof, the
method of determining the Shareholders to which they are payable
and the methods of determining whether and to which Shareholders
they are to be paid in cash or in additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of
the Trust shall be chosen by the Board of Trustees as soon as may
be practicable after the annual meeting of the Shareholders.
These may include a Chairman of the Board of Trustees, and shall
include a President, one or more Vice-Presidents (the number
thereof to be determined by the Board of Trustees), a Secretary
and a Treasurer. The Chairman of the Board of Trustees, if any,
and the President may, but need not be, selected from among the
Trustees. The Board of Trustees may also in its discretion
appoint Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and
perform such duties as the Board may determine. The Board of
Trustees may fill any vacancy which may occur in any office. Any
two offices, except those of President and Vice-President, may be
held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity,
if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all
officers shall be one year and until their respective successors
are chosen and qualify; however, any officer may be removed from
office at any time with or without cause by the vote of a
majority of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Trust
shall have such powers and duties as generally pertain to their
respective offices, as well as such powers and duties as may from
time to time be conferred by the Board of Trustees.
ARTICLE IV
SHARES
Section 1. Certificates of Shares. Each Shareholder of
the Trust may be issued a certificate or certificates for his
Shares in such form as the Board of Trustees may from time to
time prescribe, but only if and to the extent and on the
conditions prescribed by the Board.
Section 2. Transfer of Shares. Shares shall be
transferable on the books of the Trust by the holder thereof in
person or by his duly authorized attorney or legal
representative, upon surrender and cancellation of certificates,
if any, for the same number of Shares, duly endorsed or
accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the
Trust or its agent may reasonably require; in the case of Shares
not represented by certificates, the same or similar requirements
may be imposed by the Board of Trustees.
Section 3. Stock Ledgers. The stock ledgers of the Trust,
containing the name and address of the Shareholders and the
number of Shares held by them respectively, shall be kept at the
principal offices of the Trust or, if the Trust employs a
transfer agent, at the offices of the transfer agent of the
Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The
Board of Trustees may determine the conditions upon which a new
certificate may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may, in their
discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety to the Trust
and the transfer agent, if any, to indemnify it and such
transfer agent against any and all loss or claims which may arise
by reason of the issue of a new certificate in the place of the
one so lost, stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the
Trust, in such form and bearing such inscriptions as it may
determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board of
Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added to
or repealed by the Shareholders or by majority vote of the entire
Board of Trustees, but any such alteration, amendment, addition
or repeal of the By-Laws by action of the Board of Trustees may
be altered or repealed by the Shareholders.
PACIFIC CAPITAL
CASH ASSETS TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within
7-1/2" x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
ORIGINAL SHARES of PACIFIC CAPITAL
CASH ASSETS TRUST
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed.
This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration
of Trust of the Trust to all of which the holder by acceptance
hereof assents. This certificate is not valid until countersigned
by the Transfer Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary President
(at lower right, printed vertically)
Countersigned:
Administrative Data Management Corp.
Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -................Custodian.......................
(Cust) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]________________________________________________
(Please print or typewrite name and address
of assignee)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER
THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint
tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in box to left of signature(s))
Signatures must be guaranteed by a commercial bank or a member firm
of a domestic stock exchange.
(text printed vertically to right)
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular, without alteration or enlargement or any change
whatever.
PACIFIC CAPITAL
CASH ASSETS TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within
7-1/2" x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
SERVICE SHARES of PACIFIC CAPITAL
CASH ASSETS TRUST
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed.
This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration
of Trust of the Trust to all of which the holder by acceptance
hereof assents. This certificate is not valid until countersigned
by the Transfer Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary President
(at lower right, printed vertically)
Countersigned:
Administrative Data Management Corp.
Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -................Custodian.......................
(Cust) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]________________________________________________
(Please print or typewrite name and address
of assignee)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER
THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint
tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in box to left of signature(s))
Signatures must be guaranteed by a commercial bank or a member firm
of a domestic stock exchange.
(text printed vertically to right)
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular, without alteration or enlargement or any change
whatever.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within
7-1/2" x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
ORIGINAL SHARES of PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed.
This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration
of Trust of the Trust to all of which the holder by acceptance
hereof assents. This certificate is not valid until countersigned
by the Transfer Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary President
(at lower right, printed vertically)
Countersigned:
Administrative Data Management Corp.
Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -................Custodian.......................
(Cust) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]________________________________________________
(Please print or typewrite name and address
of assignee)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER
THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint
tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in box to left of signature(s))
Signatures must be guaranteed by a commercial bank or a member firm
of a domestic stock exchange.
(text printed vertically to right)
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular, without alteration or enlargement or any change
whatever.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within
7-1/2" x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
SERVICE SHARES of PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed.
This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration
of Trust of the Trust to all of which the holder by acceptance
hereof assents. This certificate is not valid until countersigned
by the Transfer Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary President
(at lower right, printed vertically)
Countersigned:
Administrative Data Management Corp.
Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -................Custodian.......................
(Cust) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]________________________________________________
(Please print or typewrite name and address
of assignee)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER
THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint
tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in box to left of signature(s))
Signatures must be guaranteed by a commercial bank or a member firm
of a domestic stock exchange.
(text printed vertically to right)
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular, without alteration or enlargement or any change
whatever.
PACIFIC CAPITAL
U.S. TREASURIES CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within
7-1/2" x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
ORIGINAL SHARES of PACIFIC CAPITAL
U.S. TREASURIES CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed.
This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration
of Trust of the Trust to all of which the holder by acceptance
hereof assents. This certificate is not valid until countersigned
by the Transfer Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary President
(at lower right, printed vertically)
Countersigned:
Administrative Data Management Corp.
Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -................Custodian.......................
(Cust) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]________________________________________________
(Please print or typewrite name and address
of assignee)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER
THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint
tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in box to left of signature(s))
Signatures must be guaranteed by a commercial bank or a member firm
of a domestic stock exchange.
(text printed vertically to right)
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular, without alteration or enlargement or any change
whatever.
PACIFIC CAPITAL
U.S. TREASURIES CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within
7-1/2" x 11-1/2" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below right oval) SEE REVERSE FOR CERTAIN DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
SERVICE SHARES of PACIFIC CAPITAL
U.S. TREASURIES CASH ASSETS TRUST
A PORTFOLIO OF
CASH ASSETS TRUST
(hereinafter called the "Trust"), transferable on the books of the
Trust by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed.
This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration
of Trust of the Trust to all of which the holder by acceptance
hereof assents. This certificate is not valid until countersigned
by the Transfer Agent.
WITNESS the seal of the Trust and the signatures of its duly
authorized officers or facsimiles thereof.
Dated:
______________________ _____________________
Secretary President
(at lower right, printed vertically)
Countersigned:
Administrative Data Management Corp.
Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 11-1/2"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -................Custodian.......................
(Cust) (Minor)
under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE
_______________
[ (box for SS#) ]
[_______________]________________________________________________
(Please print or typewrite name and address
of assignee)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________SHARES
OF THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
___________________________________________ ATTORNEY TO TRANSFER
THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
Dated_________________ Signed____________________________
____________________________
(Both must sign if joint
tenancy)
Signature(s)
guaranteed________________________
Firm or Bank
by
__________________________________
Officer
(text printed in box to left of signature(s))
Signatures must be guaranteed by a commercial bank or a member firm
of a domestic stock exchange.
(text printed vertically to right)
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular, without alteration or enlargement or any change
whatever.
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 23rd day of March,
1990, by and between Cash Assets Trust (hereinafter called
the "Business Trust"), and Aquila Distributors, Inc.
(hereinafter called the "Distributor").
W I T N E S S E T H :
WHEREAS, the Business Trust and the Distributor
have previously entered into a Distribution Agreement with
respect to a portfolio of the Business Trust entitled Cash
Assets Trust (the "Trust"; and
WHEREAS, the Business Trust and the Distributor
now wish to amend and restate their agreement as herein set
forth, (referred to hereafter as "this Agreement");
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged,
it is agreed by and between the parties hereto as follows:
1. The Distributor agrees to act as principal
underwriter and exclusive distributor of the shares of the
Trust. The price at which shares of the Trust are issued to
the public by the Distributor shall be as computed and
effective as set forth in the Prospectus and Statement of
Additional Information of the Trust current as of the time
of such sale (collectively, the "Current Prospectus"). The
Distributor will, as disbursing agent for the Administrator,
make such payments to Qualified Recipients, as those terms
are defined in the Trust's Distribution Plan, as the
Administrator may authorize and provide funds for, from time
to time.
2. The Business Trust agrees to issue shares of
the Trust, subject to the provisions of its Declaration of
Trust and By-Laws, to the Distributor as ordered by the
Distributor, but only to the extent that the Distributor
shall have received purchase orders therefor at the times
and subject to the conditions set forth in the Current
Prospectus. Certificates for shares need not be created or
delivered by the Business Trust in any case in which the
purchase is made under terms not calling for such
certificates. Shares issued by the Business Trust shall be
registered in such name or names and amounts as the
Distributor may request from time to time and all shares
when so paid for and issued shall be fully paid and non-
assessable to the extent set forth in the Current
Prospectus.
3. The Distributor shall act as principal in all
matters relating to promotion of the growth of the Trust and
shall enter into all of its engagements, agreements and
contracts as principal on its own account. The title to
shares of the Trust issued and sold through the Distributor
shall pass directly from the Business Trust to the dealer or
investor, or shall, if the Distributor so consents, first
pass to the Distributor, as may from time to time be
determined by the Board of Trustees of the Business Trust.
4. The Business Trust hereby consents to any
arrangements whereby the Distributor may act as principal
underwriter for other investment companies or as principal
underwriter, sponsor or depositor for unit investment trusts
and periodic payment plan certificates issued thereby, or as
investment adviser, sub-adviser or administrator to the
Business Trust or other investment companies or persons.
The Business Trust also consents to the Distributor carrying
on a business as a broker, dealer and underwriter in
securities and to carrying on any other lawful business.
5. The Business Trust covenants and agrees that
it will not during the term of this Agreement, without the
consent of the Distributor, offer any shares of the Trust
for sale directly or through any person or corporation other
than the Distributor excepting only (a) the reinvestment of
dividends and/or distributions, or their declaration in
shares of the Trust, in optional form or otherwise; (b) the
issuance of additional shares through stock splits or stock
dividends; (c) sales of shares to another investment or
securities holding company in the process of purchasing all
or a portion of its assets; or (d) in connection with an
exchange of the Trust's shares for shares of another
investment company or securities holding company.
6. The Business Trust agrees to use its best
efforts to register from time to time under the Securities
Act of 1933 adequate amounts of shares of the Trust for sale
by the Distributor to the public and to register or qualify,
or to permit the Distributor to register or qualify, such
shares for offering to the public in such States or other
jurisdictions as may be designated by the Distributor.
7. The Business Trust agrees to advise the
Distributor of the net asset value of the Trust's shares as
often as computed. The Business Trust will also furnish to
the Distributor, as soon as practicable, such information as
may reasonably be requested by the Distributor in order that
it may know all of the facts necessary to sell shares of the
Trust.
8. The Distributor is familiar with the
Declaration of Trust and By-Laws of the Business Trust, each
as presently in effect. Insofar as they are applicable to
the Distributor as principal underwriter of the Business
Trust, it will comply with the provisions of the Declaration
of Trust and By-Laws of the Business Trust and with the
provisions of all acts administered by the Securities and
Exchange Commission (the "Commission") and rules thereunder.
9. This amended and restated Agreement shall go
into effect on the date first above written, and shall,
unless terminated as hereinafter provided, continue in
effect until the June 30 which next precedes the second
anniversary of the effective date of this Agreement, and
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually as
provided in the Investment Company Act of 1940 (the "Act").
This Agreement shall automatically terminate in the event of
its assignment (as defined in the Act) and may be terminated
by either party on sixty days written notice to the other
party.
10. The Business Trust agrees with the
Distributor, for the benefit of the Distributor and each
person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act of 1933 (the
"Securities Act") and each and all and any of them, to
indemnify and hold harmless the Distributor and any such
controlling person from and against any and all losses,
claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Securities
Act, under any other statute, at common law or otherwise,
and to reimburse the Distributor and such controlling
persons, if any, for any legal or other expenses (including
the cost of any investigation and preparation) reasonably
incurred by them or any of them in connection with any
litigation whether or not resulting in any liability,
insofar as such losses, claims, damages, liabilities or
litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement or any Prospectus,
filed with the Commission, or any amendment thereof or
supplement thereto, or which arise out of, or are based upon
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that
this indemnity agreement shall not apply to amounts paid in
settlement of any such litigation if such settlement is
effected without the consent of the Business Trust or to any
such losses, claims, damages, liabilities or litigation
arising out of, or based upon, any untrue statement or
alleged untrue statement of a material fact contained in any
such Registration Statement or Prospectus, or any amendment
thereof or supplement thereto, or arising out of, or based
upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, which statement
or omission was made in reliance upon information furnished
in writing to the Business Trust by the Distributor for
inclusion in any such Registration Statement or Prospectus
or any amendment thereof or supplement thereto. The
Distributor and each such controlling person shall, promptly
after the complaint shall have been served upon the
Distributor or such controlling person in respect of which
indemnity may be sought from the Business Trust on account
of its agreement contained in this paragraph, notify the
Business Trust in writing of the commencement thereof. The
omission of the Distributor or such controlling person so to
notify the Business Trust of any such litigation shall
relieve the Business Trust from any liability which it may
have to the Distributor or such controlling person on
account of the indemnity agreement contained in this
paragraph, but shall not relieve the Business Trust from any
liability which it may have to the Distributor or
controlling person otherwise than on account of the
indemnity agreement contained in the paragraph. In case any
such litigation shall be brought against the Distributor or
any such controlling person and notice of the commencement
thereof shall have been given to the Business Trust, the
Business Trust shall be entitled to participate in (and, to
the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be
conducted by counsel of good standing and satisfactory to
the Distributor or such controlling person or persons,
defendant or defendants in the litigation. The indemnity
agreement of the Business Trust contained in this paragraph
shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the
Distributor or any such controlling person, and shall
survive any delivery of shares of the Trust. The Business
Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceeding against it or
any of its officers or directors of which it may be advised
in connection with the issue and sale of shares of the
Trust.
11. Anything herein to the contrary
notwithstanding, the agreement in paragraph 10, insofar as
it constitutes a basis for reimbursement by the Business
Trust for liabilities (other than payment by the Business
Trust of expenses incurred or paid in the successful defense
of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any
interest therein of any person who is an underwriter or a
partner or controlling person of an underwriter within the
meaning of Section 15 of the Securities Act or who, at the
date of this Agreement, is a Trustee of the Business Trust,
except to the extent that an interest of such character
shall have been determined by a court of appropriate
jurisdiction as not against public policy as expressed in
the Securities Act. Unless in the opinion of counsel for
the Business Trust the matter has been adjudicated by
controlling precedent, the Business Trust, will, if a claim
for such reimbursement is asserted, submit to a court of
appropriate jurisdiction the question of whether or not such
interest is against the public policy as expressed in the
Securities Act.
12. The Distributor agrees to indemnify and hold
harmless the Business Trust and its Trustees and such
officers as shall have signed any Registration Statement
filed with the Commission from and against any and all
losses, claims, damages or liabilities, joint or several, to
which the Business Trust or such Trustees or officers may
become subject under the Securities Act, under any other
statute, at common law or otherwise, and will reimburse the
Business Trust or such Trustees or officers for any legal or
other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of
them in connection with any litigation, whether or not
resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are
based upon, any untrue statement or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
which statement or omission was made in reliance upon
information furnished in writing to the Business Trust by
the Distributor for inclusion in any Registration Statement
or any Prospectus, or any amendment thereof or supplement
thereto. The Distributor shall not be liable for amounts
paid in settlement of any such litigation if such settlement
was effected without its consent. The Business Trust and
its Trustees and such officers, defendant or defendants, in
any such litigation shall, promptly after the complaint
shall have been served upon the Business Trust or any such
Trustee or officer in respect of which indemnity may be
sought from the Distributor on account of its agreement
contained in this paragraph, notify the Distributor in
writing of the commencement thereof. The omission of the
Business Trust or such Trustee or officer so to notify the
Distributor of any such litigation shall relieve the
Distributor from any liability which it may have to the
Business Trust or such Trustee or officer on account of the
indemnity agreement contained in this paragraph, but shall
not relieve the Distributor from any liability which it may
have to the Business Trust or such Trustee or officer
otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation
shall be brought against the Business Trust or any such
Trustee or officer and notice of the commencement thereof
shall have been so given to the Distributor, the Distributor
shall be entitled to participate in (and, to the extent that
it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of
good standing and satisfactory to the Business Trust. The
indemnity agreement of the Distributor contained in this
paragraph shall remain operative and in full force and
effect regardless of any investigation made by or on behalf
of the Business Trust and shall survive any delivery of
shares of the Trust. The Distributor agrees to notify the
Business Trust promptly of the commencement of any
litigation or proceeding against it or any of its officers
or directors or against any such controlling person of which
it may be advised, in connection with the issue and sale of
the Trust's shares.
13. Notwithstanding any provision contained in
this Agreement, no party hereto and no person or persons in
control of any party hereto shall be protected against any
liability to the Business Trust or its security holders to
which they would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the
performance of their duties, or by reason of their reckless
disregard of their obligations and duties under this
Agreement.
14. The Business Trust shall immediately advise
the Distributor (a) when any post-effective amendment to its
Registration Statement or any further amendment or
supplement thereto or any further Registration Statement or
amendment or supplement thereto becomes effective, (b) of
any request by the Commission for amendments to the
Registration Statement or the then effective Prospectus or
for additional information, (c) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement, or the initiation of any
proceedings for that purpose, and (d) of the happening of
any event which makes untrue any material statement made in
the Registration Statement or the Current Prospectus or
which in the opinion of counsel for the Business Trust
requires the making of a change in the Registration
Statement or the Current Prospectus in order to make the
statements therein not misleading. In case of the happening
at any time of any event which materially affects the Trust
or its securities and which should be set forth in a
supplement to or an amendment of the then effective
Prospectus in order to make the statements therein not
misleading the Business Trust shall prepare and furnish to
the Distributor such amendment or amendments to the then
effective Prospectus as will correct the Prospectus so that
as corrected it will not contain, or such supplement or
supplements to the then effective Prospectus which when read
in conjunction with the then effective Prospectus will make
the combined information not contain, any untrue statement
of a material fact or any omission to state any material
fact necessary in order to make the statements in the then
effective Prospectus not misleading. The Business Trust
shall, if at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration
Statement, make every reasonable effort to obtain the prompt
lifting of such order.
15. Except as expressly provided in paragraphs 10
and 12 hereof, the agreements herein set forth have been
made and are made solely for the benefit of the Business
Trust, the Distributor, and the persons expressly provided
for in paragraphs 10 and 12, their respective heirs,
successors, personal representatives and assigns, and except
as so provided, nothing expressed or mentioned herein is
intended or shall be construed to give any person, firm or
corporation, other than the Business Trust, the Distributor,
and the persons expressly provided for in paragraphs 10 and
12, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any representation, warranty
or agreement herein contained. Except as so provided, the
term "heirs, successors, personal representatives and
assigns" shall not include any purchaser of shares merely
because of such purchase.
16. The Distributor understands that the
obligations of this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the
Business Trust's property; the Distributor represents that
it has notice of the provisions of the Business Trust's
Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective duly
authorized officers and their seals to be affixed as of the
day and year first above written.
<PAGE>
Cash Assets Trust
By:________________________________
ATTEST:
__________________________
Aquila Distributors, Inc.
By:________________________________
ATTEST:
__________________________
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 23rd day of March,
1990, by and between Cash Assets Trust (hereinafter called
the "Business Trust"), and Aquila Distributors, Inc.
(hereinafter called the "Distributor").
W I T N E S S E T H :
WHEREAS, the Business Trust and the Distributor
have previously entered into a Distribution Agreement with
respect to a portfolio of the Business Trust entitled Tax-
Free Cash Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Distributor
now wish to amend and restate their agreement as herein set
forth, (referred to hereafter as "this Agreement");
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged,
it is agreed by and between the parties hereto as follows:
1. The Distributor agrees to act as principal
underwriter and exclusive distributor of the shares of the
Trust. The price at which shares of the Trust are issued to
the public by the Distributor shall be as computed and
effective as set forth in the Prospectus and Statement of
Additional Information of the Trust current as of the time
of such sale (collectively, the "Current Prospectus"). The
Distributor agrees to bear the costs of printing and
distributing all copies of the Trust's prospectuses,
statements of additional information and reports to
shareholders which are not sent to the Trust's shareholders,
as well as the costs of supplemental sales literature,
advertising and other promotional activities. The
Distributor will, as disbursing agent for the Administrator,
make such payments to Qualified Recipients, as those terms
are defined in the Trust's Distribution Plan, as the
Administrator may authorize and provide funds for, from time
to time.
2. The Business Trust agrees to issue shares of
the Trust, subject to the provisions of its Declaration of
Trust and By-Laws, to the Distributor as ordered by the
Distributor, but only to the extent that the Distributor
shall have received purchase orders therefor at the times
and subject to the conditions set forth in the Current
Prospectus. Certificates for shares need not be created or
delivered by the Business Trust in any case in which the
purchase is made under terms not calling for such
certificates. Shares issued by the Business Trust shall be
registered in such name or names and amounts as the
Distributor may request from time to time and all shares
when so paid for and issued shall be fully paid and non-
assessable to the extent set forth in the Current
Prospectus.
3. The Distributor shall act as principal in all
matters relating to promotion of the growth of the Trust and
shall enter into all of its engagements, agreements and
contracts as principal on its own account. The title to
shares of the Trust issued and sold through the Distributor
shall pass directly from the Business Trust to the dealer or
investor, or shall, if the Distributor so consents, first
pass to the Distributor, as may from time to time be
determined by the Board of Trustees of the Business Trust.
4. The Business Trust hereby consents to any
arrangements whereby the Distributor may act as principal
underwriter for other investment companies or as principal
underwriter, sponsor or depositor for unit investment trusts
and periodic payment plan certificates issued thereby, or as
investment adviser, sub-adviser or administrator to the
Business Trust or other investment companies or persons.
The Business Trust also consents to the Distributor carrying
on a business as a broker, dealer and underwriter in
securities and to carrying on any other lawful business.
5. The Business Trust covenants and agrees that
it will not during the term of this Agreement, without the
consent of the Distributor, offer any shares of the Trust
for sale directly or through any person or corporation other
than the Distributor excepting only (a) the reinvestment of
dividends and/or distributions, or their declaration in
shares of the Trust, in optional form or otherwise; (b) the
issuance of additional shares through stock splits or stock
dividends; (c) sales of shares to another investment or
securities holding company in the process of purchasing all
or a portion of its assets; or (d) in connection with an
exchange of the Trust's shares for shares of another
investment company or securities holding company.
6. The Business Trust agrees to use its best
efforts to register from time to time under the Securities
Act of 1933 adequate amounts of shares of the Trust for sale
by the Distributor to the public and to register or qualify,
or to permit the Distributor to register or qualify, such
shares for offering to the public in such States or other
jurisdictions as may be designated by the Distributor.
7. The Business Trust agrees to advise the
Distributor of the net asset value of the Trust's shares as
often as computed. The Business Trust will also furnish to
the Distributor, as soon as practicable, such information as
may reasonably be requested by the Distributor in order that
it may know all of the facts necessary to sell shares of the
Trust.
8. The Distributor is familiar with the
Declaration of Trust and By-Laws of the Business Trust, each
as presently in effect. Insofar as they are applicable to
the Distributor as principal underwriter of the Business
Trust, it will comply with the provisions of the Declaration
of Trust and By-Laws of the Business Trust and with the
provisions of all acts administered by the Securities and
Exchange Commission (the "Commission") and rules thereunder.
9. This amended and restated Agreement shall go
into effect on the date first above written, and shall,
unless terminated as hereinafter provided, continue in
effect until the June 30 which next precedes the second
anniversary of the effective date of this Agreement, and
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually as
provided in the Investment Company Act of 1940 (the "Act").
This Agreement shall automatically terminate in the event of
its assignment (as defined in the Act) and may be terminated
by either party on sixty days written notice to the other
party.
10. The Business Trust agrees with the
Distributor, for the benefit of the Distributor and each
person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act of 1933 (the
"Securities Act") and each and all and any of them, to
indemnify and hold harmless the Distributor and any such
controlling person from and against any and all losses,
claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Securities
Act, under any other statute, at common law or otherwise,
and to reimburse the Distributor and such controlling
persons, if any, for any legal or other expenses (including
the cost of any investigation and preparation) reasonably
incurred by them or any of them in connection with any
litigation whether or not resulting in any liability,
insofar as such losses, claims, damages, liabilities or
litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement or any Prospectus,
filed with the Commission, or any amendment thereof or
supplement thereto, or which arise out of, or are based upon
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that
this indemnity agreement shall not apply to amounts paid in
settlement of any such litigation if such settlement is
effected without the consent of the Business Trust or to any
such losses, claims, damages, liabilities or litigation
arising out of, or based upon, any untrue statement or
alleged untrue statement of a material fact contained in any
such Registration Statement or Prospectus, or any amendment
thereof or supplement thereto, or arising out of, or based
upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, which statement
or omission was made in reliance upon information furnished
in writing to the Business Trust by the Distributor for
inclusion in any such Registration Statement or Prospectus
or any amendment thereof or supplement thereto. The
Distributor and each such controlling person shall, promptly
after the complaint shall have been served upon the
Distributor or such controlling person in respect of which
indemnity may be sought from the Business Trust on account
of its agreement contained in this paragraph, notify the
Business Trust in writing of the commencement thereof. The
omission of the Distributor or such controlling person so to
notify the Business Trust of any such litigation shall
relieve the Business Trust from any liability which it may
have to the Distributor or such controlling person on
account of the indemnity agreement contained in this
paragraph, but shall not relieve the Business Trust from any
liability which it may have to the Distributor or
controlling person otherwise than on account of the
indemnity agreement contained in the paragraph. In case any
such litigation shall be brought against the Distributor or
any such controlling person and notice of the commencement
thereof shall have been given to the Business Trust, the
Business Trust shall be entitled to participate in (and, to
the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be
conducted by counsel of good standing and satisfactory to
the Distributor or such controlling person or persons,
defendant or defendants in the litigation. The indemnity
agreement of the Business Trust contained in this paragraph
shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the
Distributor or any such controlling person, and shall
survive any delivery of shares of the Trust. The Business
Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceeding against it or
any of its officers or directors of which it may be advised
in connection with the issue and sale of shares of the
Trust.
11. Anything herein to the contrary
notwithstanding, the agreement in paragraph 10, insofar as
it constitutes a basis for reimbursement by the Business
Trust for liabilities (other than payment by the Business
Trust of expenses incurred or paid in the successful defense
of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any
interest therein of any person who is an underwriter or a
partner or controlling person of an underwriter within the
meaning of Section 15 of the Securities Act or who, at the
date of this Agreement, is a Trustee of the Business Trust,
except to the extent that an interest of such character
shall have been determined by a court of appropriate
jurisdiction as not against public policy as expressed in
the Securities Act. Unless in the opinion of counsel for
the Business Trust the matter has been adjudicated by
controlling precedent, the Business Trust, will, if a claim
for such reimbursement is asserted, submit to a court of
appropriate jurisdiction the question of whether or not such
interest is against the public policy as expressed in the
Securities Act.
12. The Distributor agrees to indemnify and hold
harmless the Business Trust and its Trustees and such
officers as shall have signed any Registration Statement
filed with the Commission from and against any and all
losses, claims, damages or liabilities, joint or several, to
which the Business Trust or such Trustees or officers may
become subject under the Securities Act, under any other
statute, at common law or otherwise, and will reimburse the
Business Trust or such Trustees or officers for any legal or
other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of
them in connection with any litigation, whether or not
resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are
based upon, any untrue statement or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
which statement or omission was made in reliance upon
information furnished in writing to the Business Trust by
the Distributor for inclusion in any Registration Statement
or any Prospectus, or any amendment thereof or supplement
thereto. The Distributor shall not be liable for amounts
paid in settlement of any such litigation if such settlement
was effected without its consent. The Business Trust and
its Trustees and such officers, defendant or defendants, in
any such litigation shall, promptly after the complaint
shall have been served upon the Business Trust or any such
Trustee or officer in respect of which indemnity may be
sought from the Distributor on account of its agreement
contained in this paragraph, notify the Distributor in
writing of the commencement thereof. The omission of the
Business Trust or such Trustee or officer so to notify the
Distributor of any such litigation shall relieve the
Distributor from any liability which it may have to the
Business Trust or such Trustee or officer on account of the
indemnity agreement contained in this paragraph, but shall
not relieve the Distributor from any liability which it may
have to the Business Trust or such Trustee or officer
otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation
shall be brought against the Business Trust or any such
Trustee or officer and notice of the commencement thereof
shall have been so given to the Distributor, the Distributor
shall be entitled to participate in (and, to the extent that
it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of
good standing and satisfactory to the Business Trust. The
indemnity agreement of the Distributor contained in this
paragraph shall remain operative and in full force and
effect regardless of any investigation made by or on behalf
of the Business Trust and shall survive any delivery of
shares of the Trust. The Distributor agrees to notify the
Business Trust promptly of the commencement of any
litigation or proceeding against it or any of its officers
or directors or against any such controlling person of which
it may be advised, in connection with the issue and sale of
the Trust's shares.
13. Notwithstanding any provision contained in
this Agreement, no party hereto and no person or persons in
control of any party hereto shall be protected against any
liability to the Business Trust or its security holders to
which they would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the
performance of their duties, or by reason of their reckless
disregard of their obligations and duties under this
Agreement.
14. The Business Trust shall immediately advise
the Distributor (a) when any post-effective amendment to its
Registration Statement or any further amendment or
supplement thereto or any further Registration Statement or
amendment or supplement thereto becomes effective, (b) of
any request by the Commission for amendments to the
Registration Statement or the then effective Prospectus or
for additional information, (c) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement, or the initiation of any
proceedings for that purpose, and (d) of the happening of
any event which makes untrue any material statement made in
the Registration Statement or the Current Prospectus or
which in the opinion of counsel for the Business Trust
requires the making of a change in the Registration
Statement or the Current Prospectus in order to make the
statements therein not misleading. In case of the happening
at any time of any event which materially affects the Trust
or its securities and which should be set forth in a
supplement to or an amendment of the then effective
Prospectus in order to make the statements therein not
misleading the Business Trust shall prepare and furnish to
the Distributor such amendment or amendments to the then
effective Prospectus as will correct the Prospectus so that
as corrected it will not contain, or such supplement or
supplements to the then effective Prospectus which when read
in conjunction with the then effective Prospectus will make
the combined information not contain, any untrue statement
of a material fact or any omission to state any material
fact necessary in order to make the statements in the then
effective Prospectus not misleading. The Business Trust
shall, if at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration
Statement, make every reasonable effort to obtain the prompt
lifting of such order.
15. Except as expressly provided in paragraphs 10
and 12 hereof, the agreements herein set forth have been
made and are made solely for the benefit of the Business
Trust, the Distributor, and the persons expressly provided
for in paragraphs 10 and 12, their respective heirs,
successors, personal representatives and assigns, and except
as so provided, nothing expressed or mentioned herein is
intended or shall be construed to give any person, firm or
corporation, other than the Business Trust, the Distributor,
and the persons expressly provided for in paragraphs 10 and
12, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any representation, warranty
or agreement herein contained. Except as so provided, the
term "heirs, successors, personal representatives and
assigns" shall not include any purchaser of shares merely
because of such purchase.
16. The Distributor understands that the
obligations of this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the
Business Trust's property; the Distributor represents that
it has notice of the provisions of the Business Trust's
Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective duly
authorized officers and their seals to be affixed as of the
day and year first above written.
Cash Assets Trust
By:________________________________
ATTEST:
__________________________
Aquila Distributors, Inc.
By:________________________________
ATTEST:
__________________________
U.S. TREASURIES CASH ASSETS TRUST
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 23rd day of March,
1990, by and between Cash Assets Trust (hereinafter called
the "Business Trust"), and Aquila Distributors, Inc.
(hereinafter called the "Distributor").
W I T N E S S E T H :
WHEREAS, the Business Trust and the Distributor
have previously entered into a Distribution Agreement with
respect to a portfolio of the Business Trust entitled U. S.
Treasuries Cash Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Distributor
now wish to amend and restate their agreement as herein set
forth (referred to hereafter as "this Agreement");
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged,
it is agreed by and between the parties hereto as follows:
1. The Distributor agrees to act as principal
underwriter and exclusive distributor of the shares of the
Trust. The price at which shares of the Trust are issued to
the public by the Distributor shall be as computed and
effective as set forth in the Prospectus and Statement of
Additional Information of the Trust current as of the time
of such sale (collectively, the "Current Prospectus"). The
Distributor agrees to bear the costs of printing and
distributing all copies of the Trust's prospectuses,
statements of additional information and reports to
shareholders which are not sent to the Trust's shareholders,
as well as the costs of supplemental sales literature,
advertising and other promotional activities. The
Distributor will, as disbursing agent for the Administrator,
make such payments to Qualified Recipients, as those terms
are defined in the Trust's Distribution Plan, as the
Administrator may authorize and provide funds for, from time
to time.
2. The Business Trust agrees to issue shares of
the Trust, subject to the provisions of its Declaration of
Trust and By-Laws, to the Distributor as ordered by the
Distributor, but only to the extent that the Distributor
shall have received purchase orders therefor at the times
and subject to the conditions set forth in the Current
Prospectus. Certificates for shares need not be created or
delivered by the Business Trust in any case in which the
purchase is made under terms not calling for such
certificates. Shares issued by the Business Trust shall be
registered in such name or names and amounts as the
Distributor may request from time to time and all shares
when so paid for and issued shall be fully paid and non-
assessable to the extent set forth in the Current
Prospectus.
3. The Distributor shall act as principal in all
matters relating to promotion of the growth of the Trust and
shall enter into all of its engagements, agreements and
contracts as principal on its own account. The title to
shares of the Trust issued and sold through the Distributor
shall pass directly from the Business Trust to the dealer or
investor, or shall, if the Distributor so consents, first
pass to the Distributor, as may from time to time be
determined by the Board of Trustees of the Business Trust.
4. The Business Trust hereby consents to any
arrangements whereby the Distributor may act as principal
underwriter for other investment companies or as principal
underwriter, sponsor or depositor for unit investment trusts
and periodic payment plan certificates issued thereby, or as
investment adviser, sub-adviser or administrator to the
Business Trust or other investment companies or persons.
The Business Trust also consents to the Distributor carrying
on a business as a broker, dealer and underwriter in
securities and to carrying on any other lawful business.
5. The Business Trust covenants and agrees that
it will not during the term of this Agreement, without the
consent of the Distributor, offer any shares of the Trust
for sale directly or through any person or corporation other
than the Distributor excepting only (a) the reinvestment of
dividends and/or distributions, or their declaration in
shares of the Trust, in optional form or otherwise; (b) the
issuance of additional shares through stock splits or stock
dividends; (c) sales of shares to another investment or
securities holding company in the process of purchasing all
or a portion of its assets; or (d) in connection with an
exchange of the Trust's shares for shares of another
investment company or securities holding company.
6. The Business Trust agrees to use its best
efforts to register from time to time under the Securities
Act of 1933 adequate amounts of shares of the Trust for sale
by the Distributor to the public and to register or qualify,
or to permit the Distributor to register or qualify, such
shares for offering to the public in such States or other
jurisdictions as may be designated by the Distributor.
7. The Business Trust agrees to advise the
Distributor of the net asset value of the Trust's shares as
often as computed. The Business Trust will also furnish to
the Distributor, as soon as practicable, such information as
may reasonably be requested by the Distributor in order that
it may know all of the facts necessary to sell shares of the
Trust.
8. The Distributor is familiar with the
Declaration of Trust and By-Laws of the Business Trust, each
as presently in effect. Insofar as they are applicable to
the Distributor as principal underwriter of the Business
Trust, it will comply with the provisions of the Declaration
of Trust and By-Laws of the Business Trust and with the
provisions of all acts administered by the Securities and
Exchange Commission (the "Commission") and rules thereunder.
9. This amended and restated Agreement shall go
into effect on the date first above written, and shall,
unless terminated as hereinafter provided, continue in
effect until the June 30 which next precedes the second
anniversary of the effective date of this Agreement, and
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually as
provided in the Investment Company Act of 1940 (the "Act").
This Agreement shall automatically terminate in the event of
its assignment (as defined in the Act) and may be terminated
by either party on sixty days written notice to the other
party.
10. The Business Trust agrees with the
Distributor, for the benefit of the Distributor and each
person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act of 1933 (the
"Securities Act") and each and all and any of them, to
indemnify and hold harmless the Distributor and any such
controlling person from and against any and all losses,
claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Securities
Act, under any other statute, at common law or otherwise,
and to reimburse the Distributor and such controlling
persons, if any, for any legal or other expenses (including
the cost of any investigation and preparation) reasonably
incurred by them or any of them in connection with any
litigation whether or not resulting in any liability,
insofar as such losses, claims, damages, liabilities or
litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement or any Prospectus,
filed with the Commission, or any amendment thereof or
supplement thereto, or which arise out of, or are based upon
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that
this indemnity agreement shall not apply to amounts paid in
settlement of any such litigation if such settlement is
effected without the consent of the Business Trust or to any
such losses, claims, damages, liabilities or litigation
arising out of, or based upon, any untrue statement or
alleged untrue statement of a material fact contained in any
such Registration Statement or Prospectus, or any amendment
thereof or supplement thereto, or arising out of, or based
upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, which statement
or omission was made in reliance upon information furnished
in writing to the Business Trust by the Distributor for
inclusion in any such Registration Statement or Prospectus
or any amendment thereof or supplement thereto. The
Distributor and each such controlling person shall, promptly
after the complaint shall have been served upon the
Distributor or such controlling person in respect of which
indemnity may be sought from the Business Trust on account
of its agreement contained in this paragraph, notify the
Business Trust in writing of the commencement thereof. The
omission of the Distributor or such controlling person so to
notify the Business Trust of any such litigation shall
relieve the Business Trust from any liability which it may
have to the Distributor or such controlling person on
account of the indemnity agreement contained in this
paragraph, but shall not relieve the Business Trust from any
liability which it may have to the Distributor or
controlling person otherwise than on account of the
indemnity agreement contained in the paragraph. In case any
such litigation shall be brought against the Distributor or
any such controlling person and notice of the commencement
thereof shall have been given to the Business Trust, the
Business Trust shall be entitled to participate in (and, to
the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be
conducted by counsel of good standing and satisfactory to
the Distributor or such controlling person or persons,
defendant or defendants in the litigation. The indemnity
agreement of the Business Trust contained in this paragraph
shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the
Distributor or any such controlling person, and shall
survive any delivery of shares of the Trust. The Business
Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceeding against it or
any of its officers or directors of which it may be advised
in connection with the issue and sale of shares of the
Trust.
11. Anything herein to the contrary
notwithstanding, the agreement in paragraph 10, insofar as
it constitutes a basis for reimbursement by the Business
Trust for liabilities (other than payment by the Business
Trust of expenses incurred or paid in the successful defense
of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any
interest therein of any person who is an underwriter or a
partner or controlling person of an underwriter within the
meaning of Section 15 of the Securities Act or who, at the
date of this Agreement, is a Trustee of the Business Trust,
except to the extent that an interest of such character
shall have been determined by a court of appropriate
jurisdiction as not against public policy as expressed in
the Securities Act. Unless in the opinion of counsel for
the Business Trust the matter has been adjudicated by
controlling precedent, the Business Trust, will, if a claim
for such reimbursement is asserted, submit to a court of
appropriate jurisdiction the question of whether or not such
interest is against the public policy as expressed in the
Securities Act.
12. The Distributor agrees to indemnify and hold
harmless the Business Trust and its Trustees and such
officers as shall have signed any Registration Statement
filed with the Commission from and against any and all
losses, claims, damages or liabilities, joint or several, to
which the Business Trust or such Trustees or officers may
become subject under the Securities Act, under any other
statute, at common law or otherwise, and will reimburse the
Business Trust or such Trustees or officers for any legal or
other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of
them in connection with any litigation, whether or not
resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are
based upon, any untrue statement or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
which statement or omission was made in reliance upon
information furnished in writing to the Business Trust by
the Distributor for inclusion in any Registration Statement
or any Prospectus, or any amendment thereof or supplement
thereto. The Distributor shall not be liable for amounts
paid in settlement of any such litigation if such settlement
was effected without its consent. The Business Trust and
its Trustees and such officers, defendant or defendants, in
any such litigation shall, promptly after the complaint
shall have been served upon the Business Trust or any such
Trustee or officer in respect of which indemnity may be
sought from the Distributor on account of its agreement
contained in this paragraph, notify the Distributor in
writing of the commencement thereof. The omission of the
Business Trust or such Trustee or officer so to notify the
Distributor of any such litigation shall relieve the
Distributor from any liability which it may have to the
Business Trust or such Trustee or officer on account of the
indemnity agreement contained in this paragraph, but shall
not relieve the Distributor from any liability which it may
have to the Business Trust or such Trustee or officer
otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation
shall be brought against the Business Trust or any such
Trustee or officer and notice of the commencement thereof
shall have been so given to the Distributor, the Distributor
shall be entitled to participate in (and, to the extent that
it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of
good standing and satisfactory to the Business Trust. The
indemnity agreement of the Distributor contained in this
paragraph shall remain operative and in full force and
effect regardless of any investigation made by or on behalf
of the Business Trust and shall survive any delivery of
shares of the Trust. The Distributor agrees to notify the
Business Trust promptly of the commencement of any
litigation or proceeding against it or any of its officers
or directors or against any such controlling person of which
it may be advised, in connection with the issue and sale of
the Trust's shares.
13. Notwithstanding any provision contained in
this Agreement, no party hereto and no person or persons in
control of any party hereto shall be protected against any
liability to the Business Trust or its security holders to
which they would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the
performance of their duties, or by reason of their reckless
disregard of their obligations and duties under this
Agreement.
14. The Business Trust shall immediately advise
the Distributor (a) when any post-effective amendment to its
Registration Statement or any further amendment or
supplement thereto or any further Registration Statement or
amendment or supplement thereto becomes effective, (b) of
any request by the Commission for amendments to the
Registration Statement or the then effective Prospectus or
for additional information, (c) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement, or the initiation of any
proceedings for that purpose, and (d) of the happening of
any event which makes untrue any material statement made in
the Registration Statement or the Current Prospectus or
which in the opinion of counsel for the Business Trust
requires the making of a change in the Registration
Statement or the Current Prospectus in order to make the
statements therein not misleading. In case of the happening
at any time of any event which materially affects the Trust
or its securities and which should be set forth in a
supplement to or an amendment of the then effective
Prospectus in order to make the statements therein not
misleading the Business Trust shall prepare and furnish to
the Distributor such amendment or amendments to the then
effective Prospectus as will correct the Prospectus so that
as corrected it will not contain, or such supplement or
supplements to the then effective Prospectus which when read
in conjunction with the then effective Prospectus will make
the combined information not contain, any untrue statement
of a material fact or any omission to state any material
fact necessary in order to make the statements in the then
effective Prospectus not misleading. The Business Trust
shall, if at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration
Statement, make every reasonable effort to obtain the prompt
lifting of such order.
15. Except as expressly provided in paragraphs 10
and 12 hereof, the agreements herein set forth have been
made and are made solely for the benefit of the Business
Trust, the Distributor, and the persons expressly provided
for in paragraphs 10 and 12, their respective heirs,
successors, personal representatives and assigns, and except
as so provided, nothing expressed or mentioned herein is
intended or shall be construed to give any person, firm or
corporation, other than the Business Trust, the Distributor,
and the persons expressly provided for in paragraphs 10 and
12, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any representation, warranty
or agreement herein contained. Except as so provided, the
term "heirs, successors, personal representatives and
assigns" shall not include any purchaser of shares merely
because of such purchase.
16. The Distributor understands that the
obligations of this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the
Business Trust's property; the Distributor represents that
it has notice of the provisions of the Business Trust's
Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective duly
authorized officers and their seals to be affixed as of the
day and year first above written.
Cash Assets Trust
By:________________________________
ATTEST:
__________________________
Aquila Distributors, Inc.
By:________________________________
ATTEST:
__________________________
CASH ASSETS TRUST
(all portfolios of Trust)
DISTRIBUTION ASSISTANCE AGREEMENT
FROM:
__________________________________
__________________________________
__________________________________
TO: Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, N.Y. 10017
Gentlemen:
We understand that Cash Assets Trust (the "Trust"), for which
Aquila Distributors, Inc. ("you" or the "Distributor") acts as
Distributor, has adopted plans (the "Distribution Plans") pursuant
to Rule 12b-1 under the Investment Company Act of 1940 as amended
(the "Act"), for making distribution assistance payments
("Permitted Payments") to selected brokers and other persons
("Qualified Recipients") providing distribution assistance
regarding all portfolios to the Trust. We have been furnished a
copy of such Distribution Plans and understand that this letter is
a "Related Agreement" as defined in such Plans and that all defined
terms in this letter have the same meaning as in such Plans.
We desire to enter into an Agreement with you for the sale and
distribution of shares of the Trust. Upon acceptance of this
Agreement by you, we understand that we may offer and sell shares
of the Trust, solely at the request of our customers, subject,
however, to all of the terms and conditions hereof and to your
right to suspend or terminate the sale of such shares.
1. We understand that the shares of the Trust will be offered and
sold at the net asset value in effect when the order for such
shares is confirmed and accepted on behalf of the Trust by you,
that all purchase requests and applications submitted by us are
subject to acceptance or rejection in the discretion of you, the
Trust, or the Distributor, and if accepted, each purchase will be
deemed to have been consummated at the principal office of the
Trust.
2. We certify that we are members of the National Association of
Securities Dealers, Inc. (the "NASD") and agree to maintain
membership in the NASD, or in the alternative, that we are foreign
brokers not eligible for membership in the NASD. In either case, we
agree to abide by all the rules and regulations of the NASD which
are binding upon underwriters and brokers in the distribution of
the securities of open-end investment companies, including without
limitation, Section 26 Article III of the Rules of Fair Practice.
We further agree to comply with all applicable Federal and State
laws and regulations. We agree that we shall not offer or sell
shares of the Trust in any jurisdiction where they have not been
registered or qualified, unless the laws and regulations of a
jurisdiction make such registration or qualification unnecessary.
3. We shall offer and sell the shares of the Trust only in
accordance with the terms and conditions of the Trust's then
current Prospectuses and Statements of Additional Information, and
we shall make no representations not included in said Prospectuses
and Statements of Additional Information or in any authorized
supplemental material supplied by you. We shall have no obligation
to solicit purchases or otherwise sell or promote the sale of Trust
shares, and all such transactions in which we engage will be solely
at the order of our customers. We agree to be responsible for the
proper instruction and training of all sales personnel employed by
us, in order that the shares will be offered in accordance with the
terms and conditions of this Agreement and all applicable laws and
regulations. We agree to hold you harmless and indemnify you if we,
or any of our sales representatives, violate any law, regulation,
or provision of this Agreement, which results in liability to you;
and if you determine to refund any amount paid by any investor by
reason of any such violation on our part, we shall return to you
any Permitted Payments previously paid by you to us with respect to
the transaction for which the refund is made. All expenses which we
incur in connection with our activities under this Agreement will
be borne by us.
4. We understand and agree, subject to change by you as provided in
paragraph 5, that we shall (a) maintain and service "Qualified
Accounts" which are Trust accounts as to which we have rendered
distribution assistance, (b) centralize the purchases and sales of
Trust shares to permit bulk wires and other expedited processing,
(c) assist the Trust in soliciting proxies, and (d) be paid
pursuant to the attached written Notice given under paragraph 5. We
also agree to provide Qualified Accounts other shareholder
services, including but not limited to answering customer inquiries
regarding account status and history, and the manner in which
purchases and redemptions of shares of the Trust may be effected;
assisting shareholders in designating and changing dividend
options, account designations and addresses; providing necessary
personnel and facilities to establish and maintain shareholder
accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds;
transmitting and receiving funds in connection with customer orders
to purchase or redeem shares; verifying and guaranteeing
shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts;
furnishing (either alone or together with other reports sent to a
shareholder by such person) monthly and year-end statements and
confirmations of purchases and redemptions; transmitting, on behalf
of the Trust, proxy statements, annual reports, updating
prospectuses and other communications from the Trust to its
shareholders; receiving, tabulating, and transmitting to the Trust
proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and providing such other related
services as you, the Administrator, or a shareholder may request
from time to time.
5. We understand that, although the Permitted Payments cannot
exceed the limits specified in any Distribution Plans of the Trust,
the amount of such payments up to such limit, the frequency and
timing of such payments, the terms of any right to sell in a
territory, and any other terms, conditions, or qualifications for
us to receive such payments are subject to change by you from time
to time, upon at least 30 days' written notice. Any orders placed
after the effective date of such change shall be subject to the
rates in effect at the time of receipt of the payment by the Trust.
Such 30-day period may be waived at your sole option in the event
such change increases the Permitted Payments due us. We understand
that you may pay the Permitted Payments yourself or pay them
through a paying agent.
6. Payments for shares will be made to the Trust and will be
received by the Trust promptly after the acceptance of our orders.
If any payment is not received by the Trust, we understand that you
and the Trust reserve the right, without notice, forthwith to
cancel the transaction, or, at its option, to sell the shares
ordered by us back to the Trust, in which latter case we may be
held responsible for any loss, including loss of profit, suffered
by you or the Trust resulting from our failure to make the payments
aforesaid.
7. Your obligations to us under this Agreement are subject to all
provisions of any Distribution Agreements which you have entered
into or may enter into. We understand and agree that in performing
our services covered by this Agreement we are acting as principal,
and you are in no way responsible for the manner of our performance
or for any of our acts or omissions in connection therewith.
Nothing in this Agreement or in the Distribution Plans shall be
construed to constitute us or any of our agents, employees, or
representatives as the agents, partners, or employees of you, the
Trust, or the Administrator.
8. We shall provide you with any documentation which the Federal
and state securities laws and regulations may from time to time
require as a prerequisite to the payment of distribution assistance
payments. We shall bear the clerical costs of providing such
documentation, and shall be responsible for the accuracy of such
documentation.
9. This Agreement is not assignable or transferable, except that
you may transfer or assign this Agreement to any successor firm or
corporation which becomes Distributor of the Trust.
10. This Agreement may be terminated at any time without penalty by
a vote of a majority of the independent Trustees of the Trust or by
a vote of a majority of the outstanding voting shares of the Trust,
on at least 30 days' written notice to us at our principal place of
business. We, on at least 30 days' written notice addressed to you
at your principal place of business, may terminate this Agreement.
You may also terminate this Agreement for cause on violation by us
of any provision of this Agreement, said termination to become
effective on the date of mailing notice to us of such termination.
Without limiting the generality of the foregoing, any provision
hereof to the contrary notwithstanding, our expulsion from the NASD
will automatically terminate this Agreement without notice; our
suspension from the NASD or violation of applicable Federal or
State laws or regulations will terminate this Agreement effective
upon date of mailing notice to us of such termination. Your failure
to terminate for any cause will not constitute a waiver of your
right to terminate at a later date for any such cause.
11. This Agreement will become effective on the date when it is
executed and dated by you below. This Agreement and all rights and
obligations of the parties hereunder will be governed by and
construed under the laws of the State of New York.
____________________________________________________
(name of firm)
____________________________________________________
By:
____________________________________________________
(name and title of officer)
____________________________________________________
(telephone number)
Accepted:
Aquila Distributors, Inc.
By: ____________________________
________________________________
(name and title of officer)
Dated: ________________, 19_____
<PAGE>
CASH ASSETS TRUST
NOTICE TO FIRMS PROVIDING DISTRIBUTION ASSISTANCE
PURSUANT TO PARAGRAPH 5 OF DISTRIBUTION ASSISTANCE AGREEMENT
Subject to the limits of the Distribution Plans of the Trust,
distribution assistance payments to any firm will be at the annual
rate of ten basis points (0.10%), will be payable quarterly, and
will be based on the average net asset value of a firm's Qualified
Accounts in any given calendar quarter. Each distribution
assistance payment will be mailed by the 15th day of the month
following the end of each calendar quarter.
Date of this Notice: June 8, 1990
[DRAFT 11/15/94]
[BHC Securities, Inc. letterhead]
[Date], 199[]
Aquila Distributors, Inc.
380 Madison Avenue
New York, N.Y. 10017
DISTRIBUTION ASSISTANCE AGREEMENT
Gentlemen:
We understand that [Name of Portfolio] (the "Trust"), a
series of Cash Assets Trust, a Massachusetts business trust (the
"Business Trust"), for which you act as principle underwriter, has
amended its plan (as amended, the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "Act"),
to provide for the making of distribution assistance payments by
the Trust to selected brokers and other persons providing
distribution assistance with respect to the "Service Class" of
shares of the Trust ("Service Shares"). We have been furnished a
copy of the Plan and understand that this letter may be deemed to
be a "Distributor's Plan Agreement" as defined in the Plan. Except
as otherwise indicated, all capitalized terms in this letter have
the same meaning as in the Plan.
We intend to act as clearing broker for the Bank of
Hawaii and Bancorp Investment Group with respect to their Qualified
Holdings of Service Shares and may in the future wish to act in
such role for other financial institutions. Accordingly, we desire
to enter into a general agreement with you concerning the sale of
Service Shares and the provision of services to holders of those
shares. Upon acceptance of this Agreement by you, we understand
that we may offer and sell Service Shares, solely at the request of
our customers, subject, however, to all of the terms and conditions
hereof and to your right to suspend or terminate the sale of such
shares.
1. We understand that the Service Shares will be sold at
the net asset value next determined after the order for such shares
is confirmed and accepted on behalf of the Trust by you, that all
purchase requests and applications submitted by us are subject to
acceptance or rejection in the discretion of you or the Trust, and,
if accepted, each purchase will be deemed to have been consummated
at the principal office of the Trust.
2. We certify that we are members of the National
Association of Securities Dealers, Inc. (the "NASD") and agree to
maintain membership in the NASD. We agree to abide by all the rules
and regulations of the NASD which are binding upon underwriters and
brokers in the distribution of securities of open-end investment
companies, including without limitation Section 26 of Article III
of the Rules of Fair Practice. We further agree to comply with all
applicable Federal and state laws and regulations. We agree that we
shall not offer or sell Service Shares in any jurisdiction where
they have not been registered or qualified, unless the laws and
regulations of a jurisdiction make such registration or
qualification unnecessary.
3. We shall offer and sell the Service Shares only in
accordance with the terms and conditions of the Trust's then
current Prospectus and Statement of Additional Information, and we
shall make no representations not included in those documents or in
any authorized supplemental material supplied by you. We shall have
no obligation to solicit purchases or otherwise sell or promote the
sale of Trust shares, and all such transactions in which we engage
will be solely at the order of our customers. We agree to be
responsible for the proper instruction and training of all sales
personnel employed by us, in order that the shares will be offered
in accordance with the terms and conditions of this Agreement and
all applicable laws and regulations. We agree to hold you harmless
and indemnify you if we or any of our sales representatives violate
any law, regulation or provision of this Agreement and such
violation results in liability to you; and if you determine to
refund any amount paid by any investor by reason of any such
violation on our part, we shall return to you any assistance
payments previously paid by you to us with respect to the
transaction for which the refund is made. All expenses which we
incur in connection with our activities under this Agreement will
be borne by us.
4. We agree, subject to change by you as provided in
paragraph 5, that we shall (a) maintain and service accounts with
respect to Qualified Holdings ("Qualified Accounts"), (b)
centralize the purchases and sales of Service Shares to permit bulk
wires and other expedited processing, (c) assist the Trust in
soliciting proxies, and (d) be paid pursuant to paragraph 5. We
also agree to provide Qualified Accounts with other shareholder
services, which may include but are not limited to answering
customer inquiries regarding account status and history, and the
manner in which purchases and redemptions of Service Shares may be
effected; assisting shareholders in designating and changing
dividend options, account designations and addresses; providing
necessary personnel and facilities to establish and maintain
shareholder accounts and records; assisting in processing purchase
and redemption transactions; arranging for the wiring of funds;
transmitting and receiving funds in connection with customer orders
to purchase or redeem shares; verifying and guaranteeing
shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts;
furnishing (either alone or together with other reports sent to a
shareholder by such person) monthly and year-end statements and
confirmations of purchases and redemptions; transmitting, on behalf
of the Trust, proxy statements, annual reports, updating
prospectuses and other communications from the Trust to its
shareholders; receiving, tabulating and transmitting to the Trust
proxies executed by shareholders with respect to meetings of the
shareholders of the Trust; and providing such other related
services as may reasonably be requested from time to time.
5. You shall appoint us a Designated Payee under the
Plan. You shall make Trust's Permitted Payments to us pursuant to
the Plan at the rate and on the terms specified in such written
notice as you may provide to us. It is understood that we shall
reallow a portion of such Trust's Permitted Payments to each of the
Bank of Hawaii and Bancorp Investment Group with respect to
Qualified Holdings of theirs for which we have acted as clearing
broker. We understand that, although the Trust's Permitted Payments
cannot exceed the applicable limit specified in the Plan, the
amount of such payments up to such limit, the frequency and timing
of such payments, the terms of any right to sell in a territory,
and other terms, conditions or qualifications for us to receive
such payments are subject to change by you from time to time, upon
at least 30 days' written notice. Any orders placed after the
effective date of such change shall be subject to the rates in
effect at the time of receipt of payment by the Trust. Such 30-day
period may be waived at your sole option in the event such change
increases the assistance payments to us. We understand that you may
pay the Trust's Permitted Payments yourself or pay them through a
paying agent.
6. Payments for Service Shares will be made to the Trust
and will be received by the Trust promptly after the acceptance of
our orders. If any payment is not received by the Trust, we
understand that the Trust and you reserve the right, without
notice, forthwith to cancel the transaction, or, at its or your
option, to sell the shares ordered by us back to the Trust, in
which latter case we may be held responsible for any loss,
including loss of profit, suffered by the Trust or you resulting
from our failure to make payment for the shares.
7. Your obligations to us under this Agreement are
subject to all provisions of any Distribution Agreement which you
have entered into or may enter into. We agree that in performing
our services covered by this Agreement we are acting solely as
agent for our customer, and you are in no way responsible for the
manner of our performance or for any of our acts or omissions in
connection therewith. Nothing in this Agreement or in the Plan
shall be construed to constitute us or any of our agents,
employees, or representatives as the agents, partners or employees
of you or the Trust.
8. We shall provide you with any documentation which the
Federal and state securities laws and regulations may from time to
time require as a prerequisite to the payment of assistance
payments or which you may reasonably require in order to perform
your duties under the Plan. We shall bear the clerical costs of
providing such documentation, and shall be responsible for the
accuracy of such documentation.
9. This Agreement is not assignable or transferable,
except that you may transfer or assign this Agreement to any
successor firm or corporation which becomes principal underwriter
of the Trust.
10. This Agreement may be terminated by either party
without penalty on at least 30 days' written notice to the other
party at its principal place of business. You may also terminate
this Agreement for cause on violation by us of any provisions of
this Agreement, said termination to become effective on the date of
mailing notice to us of such termination. Without limiting the
generality of the foregoing, any provision hereof to the contrary
notwithstanding, our expulsion from the NASD will automatically
terminate this Agreement without notice; our suspension from the
NASD or violation of applicable Federal or state laws or
regulations will terminate this Agreement effective upon the date
of mailing notice to us of such termination. Your failure to
terminate for any cause will not constitute a waiver of your right
to terminate at a later date for any such cause.
11. This Agreement become will effective on the date when
it is executed and dated by you below.
12. This Agreement and all rights and obligations of the
parties hereunder will be governed by and construed under the laws
of the State of New York.
BHC SECURITIES, INC.
By: ___________________________
___________________________
(name/title of officer)
Accepted:
AQUILA DISTRIBUTORS, INC.
By: ___________________________
___________________________
(name/title of officer)
Dated:__________________________
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of March 30, 1995, by and between
CASH ASSETS TRUST, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), and BANK ONE TRUST
COMPANY, N.A., a banking company organized under the laws of the
United States (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that Securities and cash of the
Trust be held and administered by the Custodian pursuant to this
Agreement; and
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements
herein made, the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1.1 "Authorized Person" means any Officer or other person
duly authorized by resolution of the Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Trust and
named in Exhibit B hereto or in such resolutions of the Board of
Trustees, certified by an Officer, as may be received by the
Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to
time serving under the Trust's Declaration of Trust, dated October
2, 1984, as from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry
system as provided in Subpart O of Treasury Circular No. 300, 31
CFR 306, in Subpart B of 31 CFR Part 350, or in such book-entry
regulations of federal agencies as are substantially in the form of
such Subpart O.
1.4 "Business Day" shall mean any day recognized as a
settlement day by The New York Stock Exchange, Inc. and any other
day for which the Fund computes the net asset value of the Fund.
1.5 "Fund" shall mean any of the individual investment
portfolios of the Trust, including any additional portfolios
hereafter created, as each are or will be identified in Exhibit A
hereto; provided, however, that in the event that the Trust
consists of only one such portfolio, "Fund" shall refer to the
Trust.
1.6 "NASD" shall mean The National Association of Securities
Dealers, Inc.
1.7 "Officer" shall mean the President, any Senior Vice
President, Vice President or Assistant Vice President, the
Secretary, any Assistant Secretary, the Chief Financial Officer,
the Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally
transmitted to and accepted by the Custodian because such
instructions are: (i) reasonably believed by the Custodian to have
been given by an Authorized Person, (ii) recorded and kept among
the records of the Custodian made in the ordinary course of
business and (iii) orally confirmed by the Custodian. The Trust
shall cause all Oral Instructions to be confirmed by Written
Instructions. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a
transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral
Instructions vary from the Written Instructions which purport to
confirm them, the Custodian shall notify the Trust of such variance
but such Oral Instructions will govern unless the Custodian has not
yet acted.
1.9 "Custody Account" shall mean any account in the name of
a Fund, which is provided for in Section 3.2 below, or of the
Trust.
1.10 "Proper Instructions" shall mean Oral Instructions or
Written Instructions. Proper Instructions may be continuing
Written Instructions when deemed appropriate by both parties.
1.11 "Securities Depository" shall mean The Participants Trust
Company or The Depository Trust Company and (provided that the
Custodian shall have received a copy of a resolution of the Board
of Trustees, certified by an Officer, specifically approving the
use of such clearing agency as a depository for the Trust) any
other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of
1934 (the "1934 Act"), which acts as a system for the central
handling of Securities where all Securities of any particular class
or series of an issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the Securities.
1.12 "Securities" shall include, without limitation, common
and preferred stocks, bonds, call options, put options, debentures,
notes, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities, other money market instruments or other
obligations, and any certificates, receipts, warrants or other
instruments or documents representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that
the Custodian has the facilities to clear and to service.
1.13 "Shares" shall mean the units of beneficial interest
issued by the Trust.
1.14 "Written Instructions" shall mean (i) written
communications actually received by the Custodian and signed by one
or more persons as the Board of Trustees shall have from time to
time authorized, or (ii) communications by telex or any other such
system from a person or persons reasonably believed by the
Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or
any other similar electronic instruction system acceptable to the
Custodian and approved by resolutions of the Board of Trustees, a
copy of which, certified by an Officer, shall have been delivered
to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints
the Custodian as custodian of all Securities and cash owned by or
in the possession of the Trust at any time during the period of
this Agreement, provided that such Securities or cash at all times
shall be and remain the property of the Trust.
2.2 Acceptance. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held
by the Custodian for the account of the Fund, except Securities
maintained in a Securities Depository or Book-Entry System, shall
be physically segregated from other Securities and non-cash
property in the possession of the Custodian and shall be identified
as subject to this Agreement.
3.2 Custody Account. The Custodian shall open and maintain
in its trust department a custody account in the name of each Fund,
subject only to draft or order of the Custodian, in which the
Custodian shall enter and carry all Securities, cash and other
assets of the Fund which are delivered to it.
3.3 Appointment of Agents. Subject to the continuing
approval of the Board of Trustees, the Custodian may appoint, and
at any time remove, any domestic bank or trust company, and is
qualified to act as a custodian under the 1940 Act, as sub-
custodian to hold Securities and cash of the Funds and to carry out
such other provisions of this Agreement as it may determine, and
may also open and maintain one or more banking accounts with such
a bank or trust company (any such accounts to be in the name of the
Custodian and subject only to its draft or order), provided,
however, that the appointment of any such agent shall not relieve
the Custodian of any of its obligations or liabilities under this
Agreement.
3.4 Delivery of Assets to Custodian. The Fund shall deliver,
or cause to be delivered, to the Custodian all of the Fund's
Securities, cash and other assets, including (a) all payments of
income, payments of principal and capital distributions received by
the Fund with respect to such Securities, cash or other assets
owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time
during such period, of Shares. The Custodian shall not be
responsible for such Securities, cash or other assets until
actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The
Custodian may deposit and/or maintain Securities of the Funds in a
Securities Depository or in a Book-Entry System, subject to the
following provisions:
(a) Prior to a deposit of Securities of the Funds in any
Securities Depository or Book-Entry System, the Fund
shall deliver to the Custodian a resolution of the Board
of Trustees, certified by an Officer, authorizing and
instructing the Custodian on an on-going basis to deposit
in such Securities Depository or Book-Entry System all
Securities eligible for deposit therein and to make use
of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and
returns of collateral consisting of Securities.
(b) Securities of a Fund kept in a Book-Entry System or
Securities Depository shall be kept in an account
("Depository Account") of the Custodian in such Book-
Entry System or Securities Depository which includes only
assets held by the Custodian as a fiduciary, custodian or
otherwise for customers.
(c) The records of the Custodian and the Custodian's account
on the books of the Book-Entry System and Securities
Depository as the case may be, with respect to Securities
of a Fund maintained in a Book-Entry System or Securities
Depository shall, by book-entry or otherwise, identify
such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian
shall pay for such Securities upon (i) receipt of advice
from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository
Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for
the account of the Fund. If Securities sold by the Fund
are held in a Book-Entry System or Securities Depository,
the Custodian shall transfer such Securities upon (i)
receipt of advice from the Book-Entry System or
Securities depository that payment for such Securities
has been transferred to the Depository Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Fund.
(e) Upon request, the Custodian shall provide the Fund with
copies of any report (obtained by the Custodian from a
Book-Entry System or Securities Depository in which
Securities of the Fund is kept) on the internal
accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or
Securities Depository.
(f) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the
Trust for any loss or damage to the Trust resulting (i)
from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful
misconduct on the part of the Custodian or any sub-
custodian appointed pursuant to Section 3.3 above or any
of its or their employees, or (ii) from failure of the
Custodian or any such sub-custodian to enforce
effectively such rights as it may have against a Book-
Entry System or Securities Depository. At its election,
the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person for
any loss or damage to the Funds arising from the use of
such Book-Entry System or Securities Depository, if and
to the extent that the Custodian has been made whole for
any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall disburse moneys
from a Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only
(i) in the case of Securities (other than options on
Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or any
sub-custodian appointed pursuant to Section 3.3 above) of
such Securities registered as provided in Section 3.9
below in proper form for transfer, or if the purchase of
such Securities is effected through a Book-Entry System
or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the
case of options on Securities, against delivery to the
Custodian (or such sub-custodian) of such receipts as are
required by the customs prevailing among dealers in such
options; (iii) in the case of futures contracts and
options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title
thereto in favor of the Trust or any nominee referred to
in Section 3.9 below; and (iv) in the case of repurchase
or reverse repurchase agreements entered into between the
Trust and a bank which is a member of the Federal Reserve
System or between the Trust and a primary dealer in U.S.
Government securities, against delivery of the purchased
Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System
or Securities Depository for the account of the Fund with
such Securities;
(b) In connection with the conversion, exchange or surrender,
as set forth in Section 3.7(f) below, of Securities owned
by the Fund;
(c) For the payment of any dividends or capital gain
distributions declared by the Fund;
(d) In payment of the redemption price of Shares as provided
in Section 5.1 below;
(e) For the payment of any expense or liability incurred by
the Trust, including but not limited to the following
payments for the account of a Fund: interest; taxes;
administration, investment management, investment
advisory, accounting, auditing, transfer agent,
custodian, trustee and legal fees; and other operating
expenses of a Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or
treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with rules of The Options
Clearing Corporation and of any registered national
securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in
connection with transactions by the Trust;
(g) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Trust;
(h) For the funding of any uncertificated time deposit or
other interest-bearing account with any banking
institution (including the Custodian), which deposit or
account has a term of one year or less; and
(i) For any other proper purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a
resolution of the Board of Trustees, certified by an
Officer, specifying the amount and purpose of such
payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such
payment is to be made.
3.7 Delivery of Securities from Fund Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall release and
deliver Securities from a Custody Account but only in the following
cases:
(a) Upon the sale of Securities for the account of a Fund but
only against receipt of payment therefor in cash, by
certified or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry
System or Securities Depository, in accordance with the
provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with
tender or other similar offers for Securities of a Fund;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into
the name of the Trust, the Custodian or any sub-custodian
appointed pursuant to Section 3.3 above, or of any
nominee or nominees of any of the foregoing, or (ii) for
exchange for a different number of certificates or other
evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the issuer of such Securities, or
pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities
in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the
new Securities and cash, if any, are to be delivered to
the Custodian;
(g) Upon receipt of payment therefor pursuant to any
repurchase or reverse repurchase agreement entered into
by a Fund;
(h) In the case of warrants, rights or similar Securities,
upon the exercise thereof, provided that, in any such
case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(i) For delivery in connection with any loans of Securities
of a Fund, but only against receipt of such collateral as
the Trust shall have specified to the Custodian in Proper
Instructions;
(j) For delivery as security in connection with any
borrowings by the Trust on behalf of a Fund requiring a
pledge of assets by such Fund, but only against receipt
by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization
of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with the rules of The
Options Clearing Corporation and of any registered
national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Trust
on behalf of a Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of a Fund, the
Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits
in connection with transactions by the Trust on behalf of
a Fund; or
(n) For any other proper corporate purposes, but only upon
receipt, in addition to Proper Instructions, of a copy of
a resolution of the Board of Trustees, certified by an
Officer, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless
otherwise instructed by the Trust, the Custodian shall with respect
to all Securities held for a Fund;
(a) Subject to Section 7.4 below, collect on a timely basis
all income and other payments to which the Trust is
entitled either by law or pursuant to custom in the
securities business;
(b) Present for payment and, subject to Section 7.4 below,
collect on a timely basis the amount payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Trust, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary
form for Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax
laws or the laws or regulations of any other taxing
authority now or hereafter in effect, and prepare and
submit reports to the Internal Revenue Service ("IRS")
and to the Trust at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of
the Fund.
3.9 Registration and Transfer of Securities. All Securities
held for a Fund that are issued or issuable only in bearer form
shall be held by the Custodian in that form, provided that any such
Securities shall be held in a Book-Entry System for the account of
the Trust on behalf of a Fund, if eligible therefor. All other
Securities held for a Fund may be registered in the name of the
Trust on behalf of such Fund, the Custodian, or any sub-custodian
appointed pursuant to Section 3.3 above, or in the name of any
nominee of any of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof; provided,
however, that such Securities are held specifically for the account
of the Trust on behalf of a Fund. The Trust shall furnish to the
Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name
of any of the nominees hereinabove referred to or in the name of a
Book-Entry System or Securities Depository, any Securities
registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund,
complete and accurate records with respect to Securities, cash or
other property held for the Trust, including (i) journals or other
records of original entry containing an itemized daily record in
detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical
possession, (C) monies and Securities borrowed and monies and
Securities loaned (together with a record of the collateral
therefor and substitutions of such collateral), (D) dividends and
interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related
thereto. The Custodian shall keep such other books and records of
the Trust as the Trust shall reasonably request, or as may be
required by the 1940 Act, including, but not limited to Section 31
and Rule 31a-1 and 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian
shall (i) be maintained in a form acceptable to the Trust and in
compliance with rules and regulations of the Securities and
Exchange Commission, (ii) be the property of the Trust and at all
times during the regular business hours of the Custodian be made
available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be
maintained by Rule 31a-1 under the 1940 Act, be preserved for the
periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish
the Trust with a daily activity statement by Fund and a summary of
all transfers to or from the Custody Account on the day following
such transfers. At least monthly and from time to time, the
Custodian shall furnish the Trust with a detailed statement, by
Fund, of the Securities and moneys held for the Trust under this
Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide
the Trust with such reports, as the Trust may reasonably request
from time to time, on the internal accounting controls and
procedures for safeguarding Securities, which are employed by the
Custodian or any sub-custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. The Custodian shall cause
all proxies, if any, relating to Securities which are not
registered in the name of a Fund, to be promptly executed by the
registered holder of such Securities, without indication of the
manner in which such proxies are to be voted, and shall include all
other proxy materials, if any, promptly deliver to the Trust such
proxies, all proxy soliciting materials, and all notices to the
holders of such Securities.
3.14 Information on Corporate Actions. The Custodian will
promptly notify the Trust of corporate actions, limited to those
Securities registered in nominee name and to those Securities held
at a Depository or sub-Custodian acting as agent for the Custodian.
The Custodian will be responsible only if the notice of such
corporate actions is published by the Financial Card Service, J.J.
Kenny's Munibase System, Depository Trust Reorganization Notices,
Xcitek Inc., Standard & Poor's Called Bond Listing or The Wall
Street Journal or received by first class mail from the agent. For
market announcements not yet received and distributed by the
Custodian's services, the Trust will inform its custody
representative with appropriate instructions. The Custodian will,
upon receipt of the Trusts's response within the required deadline,
effect such action for receipt or payment for the Trust. For those
responses received after the deadline, the Custodian will effect
such action for receipt or payment, subject to the limitations of
the agent(s) effecting such actions. The Custodian will promptly
notify the Trust for put options only if the notice is received by
first class mail from the agent. The Trust will provide or cause
to be provided to the Custodian with all relevant information
contained in the prospectus for any security which has unique
put/option provisions and provide the Custodian with specific
tender instructions at least ten business days prior to the
beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for the Trust, Written Instructions shall be delivered
to the Custodian, specifying (a) the Fund making the purchase, (b)
the name of the issuer or writer of such Securities, and the title
or other description thereof, (c) the number of shares, principal
amount (and accrued interest, if any) or other units purchased, (d)
the date of purchase and settlement, (e) the purchase price per
unit, (f) the total amount payable upon such purchase, and (g) the
name of the person to whom such amount is payable. The Custodian
shall upon receipt of such Securities purchased by a Fund pay out
of the moneys held for the account of such Fund the total amount
specified in such Written Instructions to the person named therein.
The Custodian shall not be under any obligation to pay out moneys
to cover the cost of a purchase of Securities for a Fund, if in the
relevant Custody Account there is insufficient cash available to
the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of
Securities for a Fund is made by the Custodian in advance of
receipt for the account of the Fund of the Securities purchased but
in the absence of specific Written or Oral Instructions to so pay
in advance, the Custodian shall be liable to the Fund for such
Securities to the same extent as if the Securities had been
received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of
Securities by a Fund, Written Instructions shall be delivered to
the Custodian, specifying (a) the Fund making the purchase, (b) the
name of the issuer or writer of such Securities, and the title or
other description thereof, (c) the number of shares, principal
amount (and accrued interest, if any), or other units sold, (d) the
date of sale and settlement (e) the sale price per unit, (f) the
total amount payable upon such sale, and (g) the person to whom
such Securities are to be delivered. Upon receipt of the total
amount payable to the Trust as specified in such Written
Instructions, the Custodian shall deliver such Securities to the
person specified in such Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in
Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3
above or any other provision of this Agreement, the Custodian, when
instructed to deliver Securities against payment, shall be
entitled, if so directed in Written Instructions and if in
accordance with generally accepted market practice, to deliver such
Securities prior to actual receipt of final payment therefor. In
any such case, the Trust shall bear the risk that final payment for
such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person
to whom they were delivered, and the Custodian shall have no
liability for any of the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion
and from time to time, the Custodian may credit the relevant
Custody Account, prior to actual receipt of final payment thereof,
with (i) proceeds from the sale of Securities which it has been
instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Trust, and (iii)
income from cash, Securities or other assets of the Trust. Any
such credit shall be conditional upon actual receipt by the
Custodian of final payment and may be reversed if final payment is
not actually received in full. The Custodian may, in its sole
discretion and from time to time, permit the Trust to use funds so
credited to its Custody Account in anticipation of actual receipt
of final payment. Any such funds shall be repayable immediately
upon demand made by the Custodian at any time prior to the actual
receipt of all final payments in anticipation of which funds were
credited to the Custody Account.
4.6 Advances by Custodian for Settlement. If the Custodian
should, in its sole discretion, advance funds to the Trust to
facilitate the settlement of transactions on behalf of a Fund in
its Custody Account, then such advance shall be repayable
immediately upon demand made by the Custodian and shall bear
interest from the date incurred at a rate per annum (based on a
360-day year from the actual number of days involved) equal to 1%
over the Federal Funds rate in effect from time to time as
announced by The Wall Street Journal under the section entitled
Money Rates, or any successor title, such rate to be adjusted on
the effective date of any changes in such rate.
ARTICLE V
REDEMPTION OF TRUST SHARES
5.1 Transfer of Funds. From such funds as may be available
for the purpose in the relevant Custody Account, and upon receipt
of Proper Instructions specifying that the funds are required to
redeem Shares of a Fund, the Custodian shall wire each amount
specified in such Proper Instructions to or through such bank as
the Trust may designate with respect to such amount in such Proper
Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not
be under any obligation to effect payment or distribution by any
bank designated in Proper Instructions given pursuant to Section
5.1 above of any amount paid by the Custodian to such bank in
accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of and in conformity with Proper Instructions,
the Custodian shall establish and maintain a segregated account or
accounts for and on behalf of each Fund, into and from which
account or accounts may be transferred cash and/or Securities,
including Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Trust,
(b) for purposes of segregating cash or Securities in
connection with securities options purchased or written
by a Fund or in connection with financial futures
contracts (or options thereon) purchased or sold by a
Fund,
(c) which constitute collateral for loans of Securities made
by a Fund,
(d) for purposes of compliance by the Trust with requirements
under the 1940 Act for the maintenance of segregated
accounts by registered investment companies in connection
with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees,
certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the
exercise of reasonable care in carrying out its obligations under
this Agreement, and shall be without liability to the Trust for any
loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim unless such loss, damages, cost,
expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any sub-custodian
appointed pursuant to Section 3.3 above. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. The Custodian shall
promptly notify the Trust of any action taken or omitted by the
Custodian pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain whether the Trust
is in compliance with the 1940 Act, the regulations thereunder, the
provisions of the Trust's charter documents or by-laws, or its
investment objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be
liable for, or considered to be custodian of, any cash belonging to
the Trust or any money represented by a check, draft or other
instrument for the payment of money, until the Custodian or its
agents actually receive such cash or collect on such instrument.
7.3 No Responsibility for title, etc. So long as and to the
extent that it is in the exercise of reasonable care, the Custodian
shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received or delivered by
it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. The Custodian shall not
be required to enforce collection, by legal means or otherwise, of
any money or property due and payable with respect to Securities
held for the Trust if such Securities are in default or payment is
not made after due demand or presentation. The Custodian shall
inform the Trust promptly of any such default or failure to make
payment.
7.5 Reliance Upon Documents and Instructions. The Custodian
shall be entitled to rely upon any certificate, notice or other
instrument in writing received by it and reasonably believed by it
to be genuine. The Custodian shall be entitled to rely upon any
Oral Instructions and/or any Written Instructions actually received
by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties
or obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
7.7 Cooperation. The Custodian shall cooperate with and
supply necessary information to the entity or entities appointed by
the Trust to keep the books of account of the Trust and/or compute
the value of the assets of the Trust. The Custodian shall take all
such reasonable actions as the Trust may from time to time request
to enable the Trust to obtain, from year to year, favorable
opinions from the Trust's independent accountants with respect to
the Custodian's activities hereunder in connection with (a) the
preparation of the Trust's filings on Form N-1A and Form N-SAR and
any other reports required by the Securities and Exchange
Commission, and (b) the fulfillment by the Trust of any other
requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold
harmless the Custodian and any sub-custodian appointed pursuant to
Section 3.3 above, and any nominee of the Custodian or of such sub-
custodian from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the
Securities Act of 1933, the 1934 Act, the 1940 Act, and any state
or foreign securities and/or banking laws) or claim arising
directly or indirectly (a) from the fact that Securities are
registered in the name of any such nominee, or (b) from any action
or inaction by the Custodian or such sub-custodian (i) at the
request or direction of or in reliance on the advice of the Trust,
or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any sub-
custody agreement with a sub-custodian appointed pursuant to
Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement,
provided that neither the Custodian nor any such sub-custodian
shall be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from the
Custodian's or such sub-custodian's negligence, bad faith or
willful misconduct.
8.2 Indemnity to be Provided. If the Trust requests the
Custodian to take any action with respect to Securities, which may,
in the opinion of the Custodian, result in the Custodian or its
nominee becoming liable for the payment of money or incurring
liability of some other form, the Custodian shall not be required
to take such action until the Trust shall have provided indemnity
therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any
failure or delay in performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or
military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its
reasonable control as may cause interruption, loss or malfunction
of utility, transportation, computer (hardware or software) or
telephone communication service; accidents; labor disputes, acts of
civil or military authority; governmental actions; or inability to
obtain labor, material, equipment or transportation; provided,
however, that the Custodian in the event of a failure or delay
shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective
as of the date first set forth above and shall continue in full
force and effect until terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than ninety (90) days after the date of the giving of such notice.
If a successor custodian shall have been appointed by the Board of
Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of
termination (a) deliver directly to the successor custodian all
Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Trust and held by
the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or
for the benefit of the Trust at the successor custodian, provided
that the Trust shall have paid to the Custodian all fees, expenses
and other amounts to the payment or reimbursement of which it shall
then be entitled. Upon such delivery and transfer, the Custodian
shall be relieved of all obligations under this Agreement. The
Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities in the State of Ohio or upon
the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of
termination specified pursuant to Section 10.1 above, then the
Custodian shall have the right to deliver to a bank or trust
company of its own selection, which is (a) a "Bank" as defined in
the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not
less than $25 million, and (c) is doing business in New York, New
York, all Securities, cash and other property held by the Custodian
under this Agreement and to transfer to an account of or for the
Trust at such bank or trust company all Securities of the Trust
held in a Book-Entry System or Securities Depository. Upon such
delivery and transfer, such bank or trust company shall be the
successor custodian under this Agreement and the Custodian shall be
relieved of all obligations under this Agreement. If, after
reasonable inquiry, the Custodian cannot find a successor custodian
as contemplated in this Section 10.3, then the Custodian shall have
the right to deliver to the Trust all Securities and cash then
owned by the Trust and to transfer any Securities held in a Book-
Entry System or Securities Depository to an account of or for the
Trust. Thereafter, the Trust shall be deemed to be its own
custodian with respect to the Trust and the Custodian shall be
relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon
from time to time by the Trust and the Custodian. The fees and
other charges in effect on the date hereof and applicable to the
Funds are set forth in Exhibit C attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Trust is a business trust organized under the laws of the
Commonwealth of Massachusetts and under a Declaration of Trust, to
which reference is hereby made a copy of which is on file at the
office of the Secretary of State of Massachusetts as required by
law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of the Trust entered into in the name of
the Trust or on behalf thereof by any of the Trustees, officers,
employees or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of the Trust or the Funds
personally, but bind only the assets of the Trust, and all persons
dealing with any of the Funds of the Trust must look solely to the
assets of the Trust belonging to such Fund for the enforcement of
any claims against the Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given to a party
hereunder shall be in writing and shall be sent or delivered to the
party at the address set forth after its name herein below:
To the Trust:
CASH ASSETS TRUST
380 Madison Avenue
New York, NY 10017
Attn: Mr. Richard F. West, Treasurer and Mr.
William Killeen, Senior Operations
Officer
Telephone: (212)-697-6666
Facsimile: (212)-687-5373
To the Custodian:
BANK ONE TRUST COMPANY, N.A.,
100 East Broad Street
Columbus, OH 43271-0187
Attention: Mr. Robert F. Schultz, Senior Trust
Officer
Telephone: (614)-248-5445
Facsimile: (614)-248-2554
or at such other address as either party shall have provided to the
other by notice given in accordance with this Article XIII.
Writing shall include transmission by or through teletype,
facsimile, central processing unit connection, on-line terminal and
magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
14.2 No Waiver. No failure by either party hereto to exercise
and no delay by such party in exercising, any right hereunder shall
operate as a waiver thereof. The exercise by either party hereto
of any right hereunder shall not preclude the exercise of any other
right, and the remedies provided herein are cumulative and not
exclusive of any remedies provided at law or in equity.
14.3 Amendments. This Agreement cannot be changed orally and
no amendment to this Agreement shall be effective unless evidenced
by an instrument in writing executed by the parties hereto.
14.4 Counterparts. This Agreement may be executed in one or
more counterparts, and by the parties hereto on separate
counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
14.5 Severability. If any provision of this Agreement shall
be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.
14.6 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party hereto without
the written consent of the other party hereto.
14.7 Headings. The headings of sections in this Agreement are
for convenience of reference only and shall not affect the meaning
or construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its
behalf by its representatives thereunto duly authorized, all as of
the day and year first above written.
ATTEST: CASH ASSETS TRUST
/s/Patricia A. Craven /s/Lacy B. Herrmann
_____________________ By: ______________________
Assistant Secretary President
ATTEST: BANK ONE TRUST COMPANY, N.A.
/s/Beth Hayes By: /s/Robert F. Schultz
____________________ ________________________
Senior Trust Officer
<PAGE>
EXHIBIT A
Name of Fund (if different from Date Added (if
the Trust different from
date of original
Custody Agreement
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Treasuries Cash Assets Trust
<PAGE>
EXHIBIT B
I, Richard F. West, Treasurer, and I, Patricia Craven, Assistant
Secretary, of CASH ASSETS TRUST, a Massachusetts business trust
(the "Trust"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Trust in conformity with the Trust's Declaration of
Trust and By-Laws to give Oral Instructions and Certificate on
behalf of the Trust, and the signatures set forth opposite their
respective names are their true and correct signatures:
NAME SIGNATURE
/s/Lacy B. Herrmann
Lacy B. Herrmann _____________________________
Rose F. Marotta _____________________________
/s/Richard F. West
Richard F. West _____________________________
/s/William C. Wallace
William C. Wallace _____________________________
/s/Diana P. Herrmann
Diana P. Herrmann _____________________________
/s/Charles E. Childs III
Charles E. Childs III _____________________________
/s/John M. Herndon
John M. Herndon _____________________________
/s/William Killeen
William Killeen _____________________________
/s/Patricia A. Craven
Patricia A. Craven _____________________________
/s/Richard F. West /s/Patricia A. Craven
________________________ _____________________________
Richard F. West, Patricia A. Craven,
Treasurer Assistant Secretary
<PAGE>
EXHIBIT C
Compensation of Custodian - Equity Fund/Money Market Funds
Whereas Article XI of the Custody Agreement between Cash Assets
Trust and Bank One Trust Company, N.A. stipulates that the
compensation of Custodian shall be agreed upon by the Trust and
Custodian, the following is hereby agreed:
The compensation of the Custodian shall be computed according to
the following schedule:
I. Activity Fee:
A. $5.00 per book entry security transaction.
For the purpose of this agreement, a "transaction "
includes, but is not limited to, a purchase sale,
maturity, redemption, tender, exchange, deposit,
withdrawal, and collateral movement of a security.
B. $28.00 per ineligible security transaction.
C. $10.00 per principal paydown on amortized issues.
II. Other Activity Fees:
A. $5.00 per wire.
B. $2.00 per outgoing check from custody account.
III. Overdraft Charges:
As described in Section 4.6 of the Custody Agreement,
overdraft charges will be at 100 basis points above the
Fed Funds rate.
An earnings credit using the most recent 90-day T-bill auction rate
applied to 90% of each day's positive collected balance will reduce
custody, FDIC and other fees as allowed by law. For each month
that the charges exceed the earnings credit, the deficiency shall
be paid to Custodian. For each month that the earnings credit
exceeds the charges, the Custodian shall carry such surplus credits
forward to subsequent month(s) and calendar year(s) until utilized.
Custodian is to be reimbursed for out of pocket expenses deemed to
be exceptional.
The above fee schedule will remain in effect until March 31, 1998
and thereafter unless changed.
As stated by the Custodian in bidding to provide custody services
to the Trust, if at any time the Trust is not completely satisfied
with the Custodian's service levels, the Custodian will cease to
charge custody fees until its responsiveness and accuracy meet the
requirements of the Trust.
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made this 9th day of February, 1989, by and
between Cash Assets Trust, an unincorporated business trust
organized under the laws of Massachusetts (the "Trust"), and
Administrative Data Management Corp., a corporation organized and
existing under the laws of the State of New York ("ADM").
R E C I T A L S
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of
1940, as amended (the "1940 Act") with three series of shares (the
"Shares"); being Shares of Cash Assets Trust, the original series
of the Trust, currently being offered, and Shares of Tax-Free Cash
Assets Trust and U.S. Treasuries Cash Assets Trust, two series of
the Trust about to be offered (each such series being referred to
herein as a "Fund"); and
WHEREAS, the Trust and each of the Funds desire to retain ADM
to serve as each Fund's transfer agent, registrar and dividend
disbursing agent, ADM is willing to furnish such services, and each
Fund and ADM desire to set forth the terms and conditions on which
ADM will provide such services for that Fund;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto
as follows (when used below, the "Fund" shall refer to the Trust or
each Fund, as appropriate):
1. Appointment. The Fund hereby appoints ADM to serve as
transfer agent, registrar and dividend disbursing agent for the
Fund, for the period and on the terms set forth in this Agreement.
ADM accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided for in
Paragraph 15 of this Agreement.
2. Delivery of Documents. (a) The Fund has furnished ADM
with copies properly certified or authenticated of each of the
following:
(i) Resolutions of the Fund's Board of Trustees
authorizing the execution of this Agreement;
(ii) Appendix B identifying and containing the signatures
of the Fund's officers and other persons authorized to sign Written
Instructions and give Oral Instructions, each as hereinafter
defined, on behalf of the Fund;
(iii) The Fund's Declaration of Trust filed with the
Secretary of State of the Commonwealth of Massachusetts and all
amendments thereto (such Declaration of Trust, as presently in
effect and as it shall from time to time be amended, is herein
called the "Declaration");
(iv) The Fund's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time
be amended, are herein called the "By-Laws");
(v) The Fund's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") and under
the 1940 Act as filed with the Securities and Exchange Commission
("SEC") and all amendments thereto;
(vi) The Fund's most recent prospectus and statement of
additional information (such prospectus and statement of additional
information, as from time to time in effect and all amendments and
supplements thereto are herein called the "Prospectus").
(b) ADM has furnished the Fund with copies properly
certified or authenticated its Registration Statement on Form TA-1
under the Securities Exchange Act of 1934, as amended and all
annual or other public reports filed with the SEC as may be
requested by the Fund.
(c) Each party from time to time will furnish the other
with copies, properly certified or authenticated, of all amendments
or supplements to the foregoing, if any. Neither party is
obligated hereby to provide the other with otherwise confidential
information.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the
term "Authorized Person" means the Fund's officers and other
persons duly authorized by the Board of Trustees of the Fund to
give Oral and Written Instructions on behalf of the Fund and listed
on the Certificate annexed hereto as Appendix B or any amendment
thereto as may be received by ADM from time to time.
(b) "Oral Instructions". As used in this Agreement, the
term "Oral Instructions" means verbal instructions actually
received by ADM from an Authorized Person or from a person
reasonably believed by ADM to be an Authorized Person. The Fund
agrees to deliver to ADM Written Instructions confirming Oral
Instructions.
(c) "Written Instructions". As used in this Agreement,
the term "Written Instructions" means written instructions
delivered by mail, telegram, cable, telex or facsimile sending
device, and received by ADM and signed by an Authorized Person or
reasonably believed by ADM to have been signed by or authorized by
an Authorized Person unless otherwise required by a resolution of
the Board of Trustees furnished to ADM pursuant to Section 2(a)
hereof.
4. Instructions Consistent with Declaration, etc.
(a) Unless otherwise provided in this Agreement, ADM
shall act only upon Oral or Written Instructions. Although ADM may
take cognizance of the provisions of the Declaration and By-Laws of
the Fund, the Fund's Prospectus and the laws, rules and regulations
applicable to the Fund, ADM may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent
with any provisions of such Declaration or By-Laws, the Fund's
Prospectus or with any laws, rules or regulations applicable to the
Fund or any vote, resolution or proceeding of the Shareholders, or
of the Board of Trustees, or of any committee thereof.
(b) ADM shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by ADM
pursuant to this Agreement and shall have no liability for any
action which it takes or omits in accordance with such Oral
Instructions or Written Instructions, whether received from
personnel of the Fund, its investment adviser, its administrator,
or otherwise. The Fund agrees to forward to ADM Written
Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by ADM, whether by hand delivery,
telex, facsimile sending device or otherwise, as promptly as
practicable after Oral Instructions are given to ADM. The Fund
agrees that the fact that such confirming Written Instructions are
not received by ADM shall in no way affect the validity of the
actions or transactions or enforceability of the actions or
transactions authorized by the Fund by giving Oral Instructions.
5. Transactions Not Requiring Instructions.
(a) In the absence of contrary Written Instructions, ADM
is authorized to take and to the extent set forth in the Activities
List shall take the following actions:
(i) issuance, transfer and redemption of Shares;
(ii) opening, maintenance, servicing and closing of
accounts of Shareholders or prospective Shareholders;
(iii) acting as agent of the Fund, in connection
with plan accounts, upon the terms and subject to the conditions
contained in the application relating to the plan account in
question;
(iv) causing the reinvestment in Shareholders'
accounts of dividends and distributions declared upon shares;
(v) transferring the investment of an investor
into, or from, the shares of other open-end investment companies,
if and to the extent permitted by the Prospectus;
(vi) processing redemptions;
(vii) examining and approving legal transfers;
(viii) furnishing to Shareholders confirmations
of transactions relating to their Shares;
(ix) preparing and mailing to the Internal Revenue
Service and all payees all information returns and payee statements
required under the Internal Revenue Code in respect to the Fund's
dividends and distributions and taking all other necessary actions
in connection with the dividend and other withholding requirements
of that Code;
(x) mailing to Shareholders annual and semi-annual
reports prepared by or on behalf of the Fund, and mailing new
Prospectuses upon their issue to shareholders.
(xi) preparation and sending such other information
from the Fund records held by ADM as may be reasonably requested by
the Fund;
(xii) preparation and sending to the Fund such
affidavits of mailing and certifications as are reasonably
requested by an officer of the Fund;
(xiii) transferring stock certificates
representing shares for other stock certificates representing such
shares;
(xiv) replacing allegedly lost, stolen or
destroyed stock certificates with or without surety bonds; and
(xv) maintaining such books and records relating to
transactions effected by ADM as are required by the 1940 Act, or by
any other applicable provisions of law, to be maintained by the
Fund or its transfer agent with respect to such transactions, and
preserving, or causing to be preserved, any such books and records
for such periods as may be required by any such law, rule or
regulation.
(b) ADM agrees to act as Proxy Agent in connection with
the holding of annual or special meetings of Shareholders, mailing
to Shareholders notices, proxies and proxy statements in connection
with the holding of such meetings, receiving and tabulating votes
cast by proxy and communicating to the Fund the results of such
tabulation accompanied by appropriate certificates, and preparing
and furnishing to the Fund certified lists of Shareholders as of
such date, and in such form and containing such information as may
be required by the Fund to comply with any applicable provisions of
law or its Declaration and/or By-Laws relating to such meetings.
ADM shall be reimbursed for out-of-pocket expenses in performing
such services, such as the costs of forms, envelopes and postage.
ADM at its cost with the consent of the Fund may employ another
firm to perform all or some of the functions required by this
subsection. The Fund shall pay such additional charges as the
parties may agree upon for the services of the Transfer Agent in
connection with special meetings of shareholders of the Fund in
excess of one such meeting held in any fiscal year of the Fund.
(c) ADM shall furnish to the Fund such information and
at such intervals as the Fund may reasonably request for the Fund
to comply with the normal registration and/or the normal reporting
requirements of the SEC, Blue Sky authorities or other regulatory
agencies. All such information shall be materially correct and
complete based upon information supplied to ADM.
(d) ADM shall, in addition to the services herein
itemized, if so requested by the Fund and for such additional fees
as the Fund and ADM may from time to time agree, perform and do all
other acts and services that are customarily performed and done by
transfer agents, dividend disbursing agents and shareholder
servicing agents of open-end mutual funds such as the Fund,
provided that normally occurring improvements in the services of
such agents will be provided without initial capital cost to the
Fund and at service fees which are competitive with those
prevailing in the industry.
(e) The parties hereto agree that without prejudice to
any other provisions of this Agreement, the functions of ADM and
the Fund under this Agreement will be substantially performed in
accordance with the Activities List set out in Appendix A to this
Agreement. Such activities List as amended from time to time is an
integral part of this Agreement. In the event that the provisions
of this Agreement are in conflict with or are inconsistent with
those set forth in such Activity List the provisions of the
Activities List shall govern.
(f) ADM agrees to provide to the Fund upon request such
information as may reasonably be required to enable the Fund to
reconcile the number of outstanding shares of the Fund between
ADM's records and the account books of the Fund.
6. Authorized Shares. The Fund hereby represents that the
Declaration authorizes the Board of Trustees to issue an unlimited
number of shares.
7. Dividends and Distributions. The Fund shall furnish ADM
with the amount of each daily dividend and with appropriate
evidence of action by the Fund's Board of Trustees authorizing the
daily declaration of dividends and distributions in respect of
Shares as described in the then current Prospectus. Upon
declaration of each dividend other than daily dividends, each
capital gain distribution or other distribution by the Board of
Trustees of the Fund, the Fund shall promptly notify ADM of the
date of such declaration, the amount payable per share, the record
date for determining the shareholders entitled to payment, the
payment date, and the reinvestment date and price which is to be
used to purchase shares for reinvestment, all sufficiently in
advance to permit ADM to process properly such dividend or capital
gain distribution or other distribution in a timely and orderly
manner.
Sufficiently in advance of each payment date to permit ADM to
have federal funds available to it for the payment thereof, the
Fund will transfer, or cause the Custodian to transfer, to ADM in
its capacity as dividend disbursing agent, at First Financial
Savings Bank, S.L.A. or at such bank or other financial institution
as ADM with the consent of the Fund shall select, which may but
need not be an affiliate of ADM, the total amount of the dividend
or distribution currently payable. After deducting any amount
reasonably believed by ADM to be required to be withheld by any
applicable tax laws, rules and regulations or other applicable
laws, rules and regulations, based upon information available to
it, ADM shall, as agent for each Shareholder and in accordance with
the provisions of the Fund's Declaration and then current
Prospectus, invest dividends in Shares in the manner described in
the Prospectus or pay them in cash.
ADM shall prepare, file with the Internal Revenue Service, and
address and mail to shareholders such returns and information
relating to dividends and distributions paid by the Fund as are
required to be so prepared, filed and mailed by applicable laws,
rules and regulations, or such substitute form of notice as may
from time to time be permitted or required by the Internal Revenue
Service. The Fund shall promptly provide ADM with the information
necessary to prepare such returns and information, all sufficiently
in advance to permit ADM to prepare properly and mail such returns
and information in a timely and orderly manner. On behalf of the
Fund, ADM shall pay on a timely basis to the appropriate Federal
authorities any taxes withheld on dividends and distributions paid
by the Fund.
8. Notification of ADM: The Fund shall promptly notify ADM
of the closing net asset value per share and the offering price per
share each day there are any transaction in shares of the Fund, but
in any event not later than sixty (60) minutes after the closing of
the New York Stock Exchange (if the Fund is not a money market
Fund) or before 1:00 p.m. New York Time (if the Fund is a money
market Fund.) In the event ADM is not so notified, it may assume
that the price is unchanged from the prior price.
9. Communications with Shareholders.
(a) Communications to Shareholders. The Fund shall
prepare, print and provide ADM with sufficient quantities of all
communications by the Fund to its shareholders all sufficiently in
advance to permit ADM to properly address and mail in a timely and
orderly manner all communications by the Fund to its Shareholders,
including reports to Shareholders, dividend and distribution
notices and proxy material for its meetings of Shareholders. ADM
agrees to mail all such material to shareholders of the Fund in a
timely manner. ADM or a firm employed by ADM will at ADM'S cost and
expense receive and tabulate the proxy cards for the meetings of
the Fund's Shareholders.
(b) Correspondence. ADM will answer such correspondence
from Shareholders, securities brokers and others relating to its
duties hereunder and such other correspondence as may from time to
time be mutually agreed upon between ADM and the Fund.
10. Records. ADM shall keep the records described on the
Activities List, including but not limited to the following:
(a) accounts for each Shareholder showing the following
information:
(i) name, address and United States Tax
Identification or Social Security number;
(ii) number of Shares held and number of Shares for
which certificates, if any, have been issued, including certificate
numbers and denominations;
(iii) historical information regarding the
account of each Shareholder, including dividends and distributions
paid and the date and the price, if applicable, for all
transactions in a Shareholder's account;
(iv) any stop or restraining order placed against a
Shareholder's account;
(v) any correspondence relating to the current
maintenance of a Shareholder's account;
(vi) information with respect to withholdings in the
case of a foreign account; and
(vii) information with respect to withholding in
the case of an account subject to backup withholding;
(ix) any information required in order for ADM to
perform any calculations contemplated or required by this
Agreement.
(b) If agreed between the Fund and ADM, subaccounts may
be maintained for each Shareholder requesting such services in
connection with shares held by such Shareholder for separate
accounts containing the same information for each subaccount as
required by subparagraph (a) above.
The books and records pertaining to the Fund which
are in the possession of ADM shall be the property of the Fund.
Such books and records shall be prepared and maintained as required
by the 1940 Act and other applicable securities laws and rules and
regulations in effect from time to time. ADM will, if so requested
by the counsel to the Fund, modify the manner in which such books
and records are prepared and maintained so as to comply with the
reasonable opinion of such counsel as to such laws and rules. The
Fund, or the Fund's authorized representatives, shall have access
to such books and records at all times during ADM's normal business
hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by ADM to the Fund or the
Fund's authorized representative at the Fund's expense.
11. Reports and Other Information.
Upon reasonable request of the Fund, provided that the
cost or effort required therefor are, singly or in the aggregate,
not unduly burdensome or expensive to it, ADM will promptly
transmit to the Fund, at no additional cost to the Fund, (a)
documents and information in the possession of ADM and not
otherwise available necessary to enable it and its affiliates to
comply with the requirements of the Internal Revenue Service, the
SEC, the National Association of Securities Dealers, Inc., state
blue sky authorities, and any other regulatory bodies having
jurisdiction; (b) documents and information in the possession of
ADM necessary to enable the Fund to conduct annual and special
meetings of its shareholder; and (c) such other information,
including shareholder lists and statistical information concerning
accounts as may be agreed upon from time to time between the Fund
and ADM.
12. Cooperation with Accountants. ADM shall cooperate with
the Fund's independent public accountants and shall take all
reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made
available on a timely basis to such accountants for the expression
of their unqualified opinion, including but not limited to the
opinion included in the Fund's annual report to Shareholders and on
Form N-SAR, or similar form.
13. Confidentiality. ADM agrees on behalf of itself and its
employees to treat confidentially all confidential records and
other confidential information relative to the Fund and its prior,
present or potential shareholders and relative to the Fund's
Distributor and its prior, present or potential customers. ADM
will under normal circumstances not divulge any such confidential
records or information to anyone other than the shareholder,
dealer, Fund or other person, firm, corporation or other entity
which ADM reasonably believes is entitled to such records or
information except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where ADM may be exposed to civil
or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
ADM shall not be considered to have breached this provision if
it, in good faith, has provided information or documents to an
individual, firm, corporation or other entity (governmental or
otherwise) which it reasonably believes is entitled to such
information or documents; provided that it shall, with respect to
any non-routine governmental investigation or inquiry, first
provide notice thereof to the Fund.
14. Equipment Failures. ADM shall maintain adequate and
reliable computer and other equipment necessary or appropriate to
carry out its obligations under this Agreement. In the event of
computer or other equipment failures at its own facilities beyond
ADM's reasonable control, ADM shall, at its expense, take
reasonable steps to minimize service interruptions. The foregoing
obligation of ADM shall not extend to computer terminals owned or
maintained by others, located outside of premises maintained by
ADM. ADM represents that it has presently in effect backup and
emergency systems described on Appendix C hereto. ADM will
maintain such arrangements or equivalent while this Agreement is in
force unless ADM notifies the Fund to the contrary and establishes
to the satisfaction of the Fund that industry standards no longer
require such arrangements.
15. Compensation. As compensation for the services rendered
by ADM during the term of this Agreement, ADM shall be entitled to
receive such reimbursement for out-of-pocket expenses and such
compensation is specified on Appendix D attached hereto or as may
from time to time be otherwise agreed on in writing between the
parties.
16. Responsibility of ADM. In the performance of its duties
hereunder, ADM shall be obligated to exercise care and diligence
and to act in good faith and to use its best efforts within
reasonable limits to insure the accuracy and completeness of all
services performed under this Agreement.
ADM and the affiliates and agents of ADM shall not be
responsible for or liable for any taxes, assessments, penalties,
fines or other governmental charges of whatever description which
may be levied or assessed on any basis whatsoever in connection
with withholding of amounts, verifying or providing taxpayer
identification numbers or otherwise under applicable tax laws and
preparing and filing of tax forms, excepting only for taxes
assessed on the basis of its compensation hereunder, provided that
ADM exercises the care and diligence required by this Agreement,
and in the case of its responsibilities for backup withholding,
verifying or providing taxpayer identification numbers or
otherwise, as to any shareholder from whom such withholding is
required, it withholds the necessary amount and attempts with
reasonable frequency, but no less often than once a calendar
quarter, to obtain the necessary information from the shareholder
until withholding is no longer required.
ADM and the affiliates and agents of ADM shall not be
responsible or liable for the actions, inactions, or any losses or
damages caused by any such actions or inactions of any agents,
brokers or others who are specifically selected by the Fund in
writing.
17. Release. ADM understands that the obligations of this
Agreement are not binding upon any Shareholder of the Fund
personally, but bind only the Fund's property; ADM represents that
it has notice of the provisions of the Fund's Declaration
disclaiming Shareholder liability for acts or obligations of the
Fund.
The Fund understands that the obligations of this
Agreement are not binding upon the parent corporation of ADM or any
affiliates or subsidiaries of ADM and that the Fund, its Directors,
Trustees, Officers, Shareholders and others shall look only to the
separate assets of ADM.
18. Right to Receive Advice. (a) Advice of Fund. If ADM
shall be in doubt as to any action to be taken or omitted by it, it
may request, and shall receive, from the Fund directions or advice,
including Oral or Written Instructions where appropriate.
(b) Advice of Counsel. If ADM shall be in doubt as to
any question of law involved in any action to be taken or omitted
by ADM, it may request advice without cost to itself from counsel
of its own choosing (who may be counsel for the Adviser, the Fund
or ADM, at the option of ADM).
(c) Conflicting Advice. In case of conflict between
directions, advice or Oral or Written Instructions received by ADM
pursuant to subparagraph (a) of this paragraph and advice received
by ADM pursuant to subparagraph (b) of this paragraph, ADM shall be
entitled to rely on and follow the advice received pursuant to the
latter provision alone.
(d) Protection of ADM. ADM shall be fully protected in
any action or inaction which it takes in reliance on the provisions
of the Fund's Prospectus, procedures established between ADM and
the Fund, or in reliance on any directions, advice or Oral or
Written Instructions received pursuant to subparagraph (a) or (b)
of this paragraph which ADM, after receipt of any such directions,
advice or Oral or Written Instructions, in good faith believes to
be consistent with such directions, advice or Oral or Written
Instructions, as the case may be. However, nothing in this
paragraph shall be construed as imposing upon ADM any obligation
(i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions,
advice or Oral or Written Instructions when received, unless, under
the terms of another provision of this Agreement, the same is a
condition to ADM's properly taking or omitting to take such action.
19. Compliance with Governmental Rules and Regulations.
ADM shall have no responsibility for insuring that the
contents of each Prospectus of the Fund complies with all
applicable requirements of the 1933 Act, the 1940 Act, and any
laws, rules and regulations of governmental authorities having
jurisdiction, except that ADM shall cause a senior officer of ADM,
who shall be its General Counsel unless otherwise agreed upon, or
his designee to provide such information and represents and
warrants that all information so furnished by it for specific use
in any such Prospectus will be correct and complete in all material
respects.
20. Records From Others: ADM, its affiliates and agents
shall have no responsibility or liability for the accuracy or
completeness of any documents, records, or information maintained
or provided by or reasonably believed by ADM to have been
maintained or provided by any prior transfer agent, any shareholder
or dealer, or by the Fund or anyone on behalf of the Fund and the
Fund hereby specifically agrees that ADM, its affiliates and agents
may rely on and will be fully protected in so relying on the
completeness and accuracy of all such documents, records and
information; provided, that ADM will inform the Fund of material
errors coming to its attention in the course of the performance of
its duties hereunder.
ADM, its affiliates and agents may conclusively rely on, and
will be fully protected in relying on, the authenticity and
accuracy of any documents or communications, whether oral, written
or facsimile, it receives from the Fund or which ADM, its
affiliates or agents reasonably believes are from the Fund,
provided these are received from Authorized Persons in accordance
with this Agreement. This provision will apply to, among other
things, the daily public offering and net asset value prices for
Fund shares; instructions from the Fund concerning dividends and
other distributions; and other matters relating to the Fund and its
shareholders.
21. Responsibilities of the Fund: The Fund and the Agents of
the Fund hereby acknowledge and agree that ADM, its affiliates and
its agents are responsible only for those functions and duties set
forth in this Agreement and unless so set forth are not responsible
for any of the following which are to be handled by the Fund:
(a) creating or maintaining any records on behalf of the Fund
or others required by any federal or state law, or
regulation or rule of any agency thereof or any self-
regulatory authority except (i) those relating to
shareholder account information set forth in Rule 31a-
1(b)(2)(iv) promulgated under the 1940 Act or equivalent
regulation applicable from time to time; and (ii) such
additional records as may reasonably be requested from
time to time by the Fund which are customarily maintained
by transfer agents to mutual funds, and which ADM by use
of its best efforts may provide at minimal cost and
inconvenience to it; with respect to these records ADM
agrees that they: (i) are the property of the Fund; (ii)
will be maintained by ADM for the period prescribed in
Rule 31a-2 or equivalent regulation; (iii) will be made
available, upon request to the Fund and the SEC; and (iv)
will be surrendered promptly upon the request of the
Fund;
(b) determining the legality of any sale, exchange, issuance
or redemption of any shares of the Fund;
(c) determining the legality of any communications, oral or
written, which is sent or provided by ADM, its affiliates
or its agents on behalf of the Fund;
(d) complying with any federal or state laws or the
regulations or rules of any agency thereof or of any
self-regulatory authority except those specifically
applicable to ADM as a transfer agent;
(e) filing any documents on behalf of the Fund or any one
else with any federal or state government or with any
agency thereof or of any self-regulatory authority except
ADM will file with the Internal Revenue Service copies of
1099 Div, 1099R and 1099B Forms sent to shareholders of
the Fund and forms relating to withholding and non-
resident alien withholding;
(f) monitoring the activities of the Fund or any one else or
their compliance with applicable law, rules and
regulations or with the provisions of the Fund's
Prospectus, of Fund, By-Laws or other governing
instruments; or
(g) compliance of the Fund or others with applicable federal
and state laws, regulations and rules of any agency
thereof, or of any self-regulatory authority pertaining
to the registration of the Fund or of shares of the Fund
or the legality of their sale although ADM will, in order
to provide the Fund with assistance in complying with
normal Blue Sky requirements, upon the reasonable request
of the Fund provide the Fund with a report generated from
the information readily available to ADM detailing the
amount of shares of the Fund purchased and redeemed and
the states of residence of the shareholders purchasing or
redeeming such shares.
22. Information and Documents: (a) The Fund shall promptly
provide ADM with the current Prospectus for the Fund, the Annual
and Semi-Annual Reports to shareholders of the Fund, Proxy
Statement and other Fund material, all in sufficient quantities and
sufficiently in advance to permit ADM to provide them to
shareholders of the Fund in a timely and orderly fashion.
(b) To the extent necessary or appropriate to enable ADM to
carry out its responsibilities under this Agreement, the Fund shall
(i) promptly notify ADM of all material events which
affect the Fund or any affiliate of the Fund;
(ii) promptly notify ADM of any suits or other
proceedings threatened or actually instituted
against the Fund or any affiliate of the Fund by
the federal government, any state government, or
any agency thereof (including but not limited to
the SEC, the Securities Commission of any state) or
by the National Association of Securities Dealers,
Inc., or any other self-regulatory authority;
(iii) promptly notify ADM of any consent order, stop
orders or similar orders affecting the Fund or any
affiliate of the Fund issued by the federal
government, any state government, or any agency
thereof (including but not limited to the SEC, the
Securities Commission of any state) or by the
National Association of Securities Dealers, Inc. or
any other self-regulatory authority;
(iv) promptly provide ADM, with copies of the audited
Annual Financial Statements for each affiliate of
the Fund which is an Investment Advisor, Investment
Sub-Advisor, Distributor or Administrator of the
Fund;
(v) promptly provide ADM, upon request, with copies of
any filings made by the Fund or any affiliate of
the Fund which is an Investment Advisor, Investment
Sub-Advisor, Distributor or Administrator of the
Fund with the federal government or any state
government or any agency thereof or with any self-
regulatory authority; and
(vi) promptly provide ADM, upon request, with copies of
any documents relating to items (ii) and (iii)
above.
(vii) discuss with ADM changes in the description of ADM
and the services which ADM provides to shareholders
contained in the Prospectus of the Fund at the time
of filing any amendments to the registration
statement of the Fund involving any such change.
ADM shall use its best efforts to assure the
accuracy and completeness of all material
information furnished by it for inclusion in any
such document.
23. Indemnification. Neither party nor any of its nominees
shall be indemnified against any liability to the other party (or
any expenses incident to such liability) arising solely out of (a)
such party's or such nominee's own willful misfeasance, bad faith
or gross negligence or reckless disregard of its duties in
connection with the performance of any duties, obligations or
responsibilities provided for in this Agreement or (b) such party's
or such nominee's own negligent failure to perform its duties
expressly provided for in this Agreement or otherwise agreed to in
writing.
24. Liability. (a) ADM shall be responsible for the
performance of its obligations under this Agreement notwithstanding
the delegation of some or all of such obligations to others in
accordance with the terms of this Agreement.
(b) ADM shall not be responsible for loss, liability cost
or expense arising out of occurrences beyond its control caused by
fire, flood, power failure, unanticipated equipment failure, acts
of God, or war or civil insurrection; provided, however, that it
shall have contingency planning for equipment or electrical failure
and such other contingencies as provided in this Agreement.
25. Insurance. ADM shall maintain fidelity, errors and
omissions and other insurance coverage in amounts and on terms and
conditions as set forth in information provided to the Fund from
time to time.
26. Advancement of Monies: Nothing in this Agreement shall
require ADM or any affiliate or agent of ADM to pay any monies
prior to its receipt of federal funds for such payment or for ADM
or any of its affiliates or agents to incur or assume any liability
for the payment of any such monies prior to its receipt of federal
funds for such payment.
27. Exclusivity. It is expressly understood and agreed that
the services to be rendered by ADM to the Fund under the provisions
of this Transfer Agency Agreement are not deemed to be exclusive
and ADM shall be free to render similar or different services to
others.
28. Further Actions. Each party agrees to perform such
further acts and execute such further documents as are reasonably
necessary to effectuate the purposes hereof.
29. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the
party against which enforcement of such change or waiver is sought.
30. Assignment. This Agreement and the performance hereunder
may not be assigned by ADM without the Fund's written consent. Not
withstanding the previous sentence, ADM may, without the Fund's
consent, assign the performance of all or a portion of its
responsibilities and duties hereunder to an affiliate of ADM,
provided that the Fund shall incur no additional cost or expense in
connection therewith.
31. Declaration and Termination. This Agreement shall
continue until termination by the Fund on sixty (60) days' written
notice or by ADM on ninety (90) days' written notice.
32. Notices. All notices and other communications, including
Written Instructions (collectively referred to as "Notice" or
"Notices" in this paragraph), hereunder shall be in writing or by
confirming telegram, cable, telex or facsimile sending device.
Notices shall be addressed;
(a) if to ADM at:
Administrative Data Management Corp.
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attn: Ms. Anne Condon, Vice President
or to such other address as ADM shall instruct the Fund, in
writing, from time to time;
(b) if to the Fund at:
___________________________
200 Park Avenue, Suite 4515
New York, New York 10017
Attention: President
or to such other address as the Fund shall instruct ADM, in
writing, from time to time; or
(c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication.
33. Miscellaneous. This Agreement embodies the entire
agreement and understanding between the parties hereto, and
supersedes all prior agreements and understandings relating to the
subject matter hereof, provided that the parties hereto may embody
in one or more separate documents their agreement, if any, with
respect to Oral Instructions. The captions in this Agreement are
included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a
contract made in New York and governed by New York law. If any
provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. None of the provisions
contained in this Agreement shall be deemed waived or modified
because of a previous failure of a party to insist upon strict
performance thereof. This Agreement shall be binding and shall
inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below
on the day and year first above written.
CASH ASSETS TRUST
/s/Kenneth L. MacRitchie /s/Lacy B. Herrmann
Attest:By:______________________ By:______________________
Kenneth L. MacRitchie, Lacy B. Herrmann,
Assistant Secretary President
ADMINISTRATIVE DATA
MANAGEMENT CORP.
/s/Andrew J. Donohue /s/Glenn O. Head
Attest:By:____________________ By:_____________________
Name: Andrew J. Donohue Name: Glenn O. Head
Title: Secretary & General Title: Chairman
Counsel
<PAGE>
APPENDIX A
ACTIVITIES LIST
It is understood that the Fund, its Custodian, and other
persons, firms, corporations or other entities performing services
for or on behalf of the Fund shall provide ADM and the Fund with
such services, information, or other assistance as may be necessary
or appropriate to permit the Transfer Agent to properly perform the
services hereunder.
A. SHAREHOLDER ACCOUNTING SERVICES
1. General Scope
All terms used herein shall be as defined in the attached
Agreement (the "Agreement") except that ADM is referred
to as the "Transfer Agent." In accordance with the terms
of the Agreement the Transfer Agent will provide a
comprehensive Shareholder accounting service generally
consistent with that provided to other investment
companies, including:
a. dividend accounting;
b. arrangement for wire receipt and payout of
Shareholder funds;
c. to the extent that it is reasonably within the
control of, or can be reasonably arranged without
additional cost by, the Transfer Agent, the rapid
and efficient transfer of investment monies between
various accounts;
d. to the extent that it is reasonably within the
control of, or can reasonably be arranged without
additional cost by, the Transfer Agent, the
effective and controlled processing of expedited
redemptions and exchanges by telegraphic and
telephonic means.
2. Computer Accounting and Record Keeping
The Transfer Agent will perform daily maintenance and
routine file update.
The Transfer Agent will perform a dividend credit run as
required in order to credit all existing Shareholder
accounts with each daily dividend, monthly dividend,
capital gain distribution or other distribution. The
Transfer Agent will establish new and adjust or close
existing Shareholder accounts if necessary on or as of
each business day.
The Transfer Agent will take reasonable precautions for
safeguarding of all Shareholder accounts during these
computer runs.
The Transfer Agent will provide continuous proof to the
outstanding Shares maintained by the Fund on a daily
basis, and off-line availability of all file data
pertaining to Shareholder accounts.
The Transfer Agent will to the extent technically
feasible create and maintain the ability to liquidate and
back out dividends reinvested in accounts which are
subsequently liquidated by or on behalf of the Fund due
to nonreceipt of funds, improper registration, or other
sufficient reason.
3. Establishing and Servicing Accounts
The Transfer agent will, as set forth in the Fund's
Prospectus, or substantially in conformity with
procedures established by or on behalf of the Fund,
accept instructions from investors to open new accounts
and perform such functions consistent with opening a new
account:
a. Accept applications in proper form sent directly to
the Fund or its Custodian when they are properly
delivered to the Transfer Agent;
b. Accept applications in proper form sent directly to
it when they are received by the Transfer Agent;
c. Transfer Shares accompanied by apparent proper
instructions;
d. Audit and verify payment items for apparent
compliance with the requirements established by the
Fund, e.g. minimum investment amount, apparent
proper endorsements on third party checks or drafts
if the Fund elects to accept such third party
checks or drafts, and other particulars as
prescribed in the prospectus. The Fund will
provide the Transfer Agent, from time to time, with
names and taxpayer identification numbers of
individuals entitled to purchase shares at a
reduced offering price as described in the
prospectus;
e. Review existing accounts to determine whether there
are any other existing accounts with the same
registration; process W-9 or similar forms received
by the Transfer Agent; and compare upon receipt of
a computer tape from the Internal Revenue Service
taxpayer identification numbers contained in such
tape against those maintained by the Transfer Agent
for the Fund.
f. Assign account numbers as necessary and, where
appropriate, indicate the account number on
applications;
g. Review payment items to determine whether the
payee, original or by endorsement, on such payment
items corresponds to the registration of the
account to which it is to be credited (permitted
exceptions include ADM or the Fund specified as the
payee when accompanied by a valid account number or
all necessary documents to establish a new account
or such other exceptions as the Transfer Agent and
the Fund shall agree);
h. Upon opening incoming mail, record the date and
approximate time of day all checks were received;
i. Produce microfilm record of all incoming checks and
other documentation on filmstrips or other
microfilm retrieval method so as to be retrievable
and reproducible upon request;
j. Process address changes and acknowledge such
changes to previous address of record;
k. Answer inquiries from Shareholders or other
individuals, corporations, or other entity who
appear to be the Shareholder, dealer or otherwise
entitled to receive information as to account
information;
l. Open new accounts per telephone instructions
received from a prospective Shareholder, his dealer
or his fiduciary pending receipt of funds
transmitted by bank wire or other means; forward a
new account application to the prospective
investor; and issue a confirmation, including
duplicates where requested, when funds are
received by the Transfer Agent or the Fund's
Custodian; under normal circumstances the new
account application bearing the Shareholder account
number assigned must be completed by or appear to
have been completed by the Shareholder and received
by the Transfer Agent before any redemption orders
are accepted and processed for that account.
m. Prepare confirmations in such form as may be agreed
between the Fund and the Transfer Agent from time
to time for all "Open Accounts" after each non-
dividend transaction in a Shareholder's account
which affects the share balance; mailing
confirmations to the Shareholder as such changes
occur;
n. Process on a daily basis if necessary or
appropriate routine transactions such as:
(1) Deposit or withdrawal of Shares from
Shareholders' accounts;
(2) Changes of address;
(3) Miscellaneous changes;
(4) Stop-transfers;
(5) Instructions relating to the remittance or
reinstatement of Dividends and other
distributions;
o. Incorporate in the Shareholder accounting software
and procedures the necessary flags, audits, and
tests reasonably designed to assure that the
various provisions and requirements specified
elsewhere in this Agreement to be performed by the
Transfer Agent will be substantially satisfied.
B. TRANSFER AGENT SERVICES
In accordance with the Agreement, and in particular Section
5(d) thereof, the Transfer Agent will perform the functions
normally performed by the Transfer Agent for other investment
companies of a similar type. Such functions shall include but
not necessarily be limited to:
1. Processing
a. Keep such records in the form and manner as the
Transfer Agent may deem advisable but not
inconsistent with the rules and regulations of
appropriate governmental authorities applicable to
the Transfer Agent or as may otherwise be agreed
from time to time in writing between the Fund and
the Transfer Agent;
b. Process transfers as requested by Shareholders or
persons, firms, corporations or other entities the
Transfer Agent reasonably believes to be the
Shareholder or authorized to act on behalf of the
Shareholder including obtaining and reviewing
papers and all other documents necessary to satisfy
transfer requirements; the Fund will, upon request
of the Transfer Agent, advise the Transfer Agent of
the transfer requirements of the Fund, and the
Transfer Agent will be fully protected by the Fund
if it is following such transfer requirements;
c. Process initial and subsequent investments from
Shareholders;
d. On a semi-monthly or other basis acceptable to the
Transfer Agent and the Fund initiate, accept and
process pre-authorized checks or, when available,
electronic funds transfers drawn against
Shareholders' checking accounts;
e. Process and record redemption of Shares to satisfy
ordinary redemptions and Plan account;
f. Proportionally allocate dividends, which are
provided to the Transfer Agent by the Fund in gross
dollar amount, to the benefit of the Fund
Shareholders entitled to receive them. The
procedure used must show that the amounts allocated
daily substantially balance to the gross dollar
amount provided by the Fund to the Transfer Agent.
Until otherwise specified by the Fund, dividends
shall be in accordance with the following: Three-
day accrual on Monday for the previous weekend;
Two-day accrual on the first business day following
a holiday or Four-day accrual if the holiday
immediately precedes or follows a weekend;
compatibility with the Merrill Lynch Automatic
Investment of Dividends System, and the issuance of
all reports incidental thereto provided the Fund's
method of operation is so compatible.
2. Custody and Control of Shares and Certificates:
Certificates will not be issued except on Shareholder
request but shares will be credited to the Shareholder's
account in non-certificate form. The Transfer Agent will
examine certificates surrendered for transfer or
redemption, or requests for transfer or redemption of
shares not represented by certificates, for apparent
genuineness or alterations; pass upon the apparent
validity thereof including endorsements, signature
guarantees and (if applicable) tax stamps or waivers,
provided that the Transfer Agent shall not be required to
compare any such endorsements against other records it
maintains except in accordance with written procedures
agreed upon between it and the Fund. The Transfer Agent
will also:
a. Countersign all certificates;
b. Prepare, mail, or deliver certificates for original
issue, subsequent investments, exchanges, or
transfers upon request from the Shareholder or one
reasonably believed to be the Shareholder;
c. Prepare, mail, or deliver certificates for Shares
previously held in non-certificate form;
d. Deposit certificate Shares;
e. Cancel surrendered certificates;
f. Establish and maintain safeguards for cancelled and
uncancelled certificates;
g. Establish and maintain a system to monitor stop-
transfers;
h. Replace lost certificates.
C. SUBSCRIPTION AGENT SERVICES:
The Transfer Agent will act as Subscription Agent for the
Fund. In addition to subscription functions described
elsewhere in this Agreement, the Transfer Agent will:
1. Maintain a Subscription Account for the Fund. This
account shall be established and operated so as to
satisfy the following criteria:
a. The account shall be established by the Transfer
Agent for the benefit of the Fund in accordance
with the terms of the Agreement;
b. The account shall be provided at no additional cost
except as may otherwise be stated in Appendix D of
the Agreement;
c. The account shall serve as the sole depository for
subscription monies intended for the purchase of
Fund Shares until such funds are transferred to the
Custody Account;
d. The Transfer Agent shall be prepared to receive and
efficiently process incoming cash, checks, Federal
Reserve Drafts and bank wire transfers of funds;
e. Withdrawals from the account shall be for the
purpose of transferring funds into the Custody
Account or, where appropriate, the crediting or
payment of commission or dealer's commissions;
withdrawals are also permitted to accommodate net
settlements with the Custodian;
f. No dividend or redemption or any other payments
shall be made to Fund Shareholders from the
Subscription Account;
g. The Transfer Agent will cashier all items presented
in payment as expeditiously as possible.
2. In connection with managing the Subscription Account, the
Transfer Agent will exercise all possible care in
satisfying operational requirements in each of the
following critical areas:
a. Validation Receipt of Good Subscription Funds
Procedures and criteria are to be established by
the Transfer Agent and approved by the Fund for the
purpose of providing assurance that good
(collected) funds were received from Shareholders
prior to paying out any redemption proceeds (under
a Plan account or as a result of one or more
specific redemption requests). Such procedures are
to deal with:
(1) Screening subscriptions to prevent:
-forgery, fraud, improper endorsement or other
unauthorized use particularly when accepting third
party funds;
-maintenance of accounts in names other than proper
form; funds received where the legal existence or
legal capacity of the subscriber is in doubt shall
be employed in a temporary investment status until
a proper account is established to which prior
income will be credited, or until the funds are
returned upon determination that no subscriber of
legal existence and capacity exits.
(2) Establishing and maintaining procedures
reasonably designed to assure the clearance and
collection of checks which are otherwise properly
drawn.
In this regard, the Transfer Agent with the
approval of the Fund will:
-Establish for all parts of the United States the
normal number of days required for check clearance
and return notice of uncollectability;
-Establish redemption amount and clearing time
criteria which together place an automatic stop on
issuance of certificates, if any, and upon
redemption payments until the Transfer Agent
reasonably believes that good subscription funds
were received.
In general, the redemption of a subscription
payment received in the form of a check, draft or
similar instrument shall not be made until the
Transfer Agent has determined, by telephone call to
the drawee bank or otherwise, that the deposit has
cleared the drawee bank or until fifteen (15)
calendar days after the receipt of such
subscription payment, in order to permit the
orderly clearing thereof.
-Provide a means to record and promptly retrieve
the status of a subscription received (which may
include days remaining before redemptions
permitted, name of bank, or other similar
information as may be agreed upon.)
Shareholder checks returned for insufficient funds or
other reasons will be promptly processed for liquidation
on or after the date of receipt or notification to the
effect that a check is being returned. Returned checks
will be cleared promptly and processed through a Returned
Check Account in conjunction with the following actions:
(1) Place a freeze on the account to prevent redemption
of the amount of such returned check or such lesser
amount as is in the affected account;
(2) Determine how many shares are to be liquidated due
to the investment attributable to such returned
check;
(3) Calculate and back out accrued dividends, if any,
attributable to such investment;
(4) Process the liquidation for the appropriate amount;
(5) Mail the Shareholder confirmation of the
liquidation and the check with a letter of
explanation;
(6) Allocate the accrued dividends, if any, which were
attributable to such investment, as the Fund shall
direct which will normally be to the remaining
Shareholder accounts as of the next month-end
dividend run;
(7) Take reasonable steps to recover commissions or
dealer concessions applicable to such returned
check, although the Distributor shall be ultimately
responsible therefor.
b. Establish Procedures to Process Effectively Bank
Wire Transfers
Establish and maintain procedures reasonably
designed by the Transfer Agent and approved by the
Fund to maintain positive control over movements of
incoming money by bank wire so as to:
(1) Accept requests (WATS and local calls) for bank
wire instructions, record account information and
client telephone number, assign as appropriate a
wire control number, establish Shareholder pending
file, and if appropriate alert the bank wire
department;
(2) Advise the Fund of pending bank wire receipts at
selected cutoff times during the course of each
business day so as to facilitate full investment of
Fund assets;
(3) Confirm to the Fund actual bank wire receipts at
selected cutoff times during the course of each
business day;
(4) Close out pending Shareholder files if bank wire
receipts are not received as of the date agreed
upon;
(5) Open new or credit existing Shareholder account in
accordance with the provisions of the current
prospectus upon receipt of bank wire funds;
(6) Take appropriate action to secure from Shareholders
who invest by bank wire the necessary written
applications and redemption authorizations.
D. DIVIDEND DISBURSING AND REDEMPTION AGENT SERVICES
In performance of the Dividend Disbursing and Redemption Agent
functions, the Transfer Agent will provide the Fund with
regular checks (or electronic funds transfer if available, at
the Shareholder's option) and carry out the following
functional activities:
1. Dividends
a. The Fund shall advise the Transfer Agent of
dividend amounts which shall then be applied as
described in the Prospectus or as directed by the
Fund, or its officers or Trustees;
b. Confirmation of dividend reinvestments shall be
mailed to Shareholders after each reinvestment.
c. Additional dividend information, if provided by the
Fund to the Transfer Agent shall then be provided
to Shareholders upon written request.
2. Redemption Procedures
The Transfer Agent with the approval of the Fund shall
establish procedures reasonably designed to insure that
redemption requirements established by the Transfer Agent
and agreed to by the Fund have been met, including the
receipt and examination of stock certificates,
endorsements, signature guarantees and obtaining any
needed papers or documents, including properly completed
Application, where lacking. More specifically:
a. The Transfer Agent will accept redemption requests
in written, telegraphic or telephonic form provided
the necessary instructions and authorizations are
reasonably believed by the Transfer Agent to be in
good form. Generally, telephonic redemption
requests will be repeated for confirmation to the
person making the request, and upon voice
confirmation by such person, will be recorded in a
log kept for that purpose.
b. Requests for the redemption of shares not
represented by certificates received and without
signature guarantees will be honored only if:
(1) the applicable portion of the Application has been
completed and the proceeds are forwarded to the
previously designated bank account, address, or
other destination identified on the Application;
(2) Expedited Redemption Authorization instructions
filed at any time other than upon the original
opening of a Shareholder's account are filed on an
appropriate form and bear or reasonably appear to
bear a signature guarantee;
(3) Shareholder accounts in the name of joint tenants
shall generally be handled on the basis of jointly
signed instructions and signature guarantees (where
applicable) for any payments.
c. The Transfer Agent will provide a means to record,
call up, and display on Cathode Ray tube or
otherwise an appropriate symbol or other indication
that redemption authorization instructions are on
file and appear to be in proper form.
d. All redemption requests will be promptly reviewed
to insure:
(1) that there are sufficient shares available in the
Shareholder's account;
(2) the applicable subscription check has not been
returned to ADM or its agent and the applicable
period of days has expired before using the funds
for redemption (see above);
(3) that no redemptions in accounts represented in
whole or in part by certificates are effected
without cancellation of an adequate number of
certificate shares, if necessary.
(4) that no signature guarantees shall be acceptable
unless they reasonably appear to have been provided
by a commercial bank or by a brokerage firm which
is a member of the New York, American, Midwest, or
Pacific Stock Exchanges, except as otherwise stated
in the Prospectus or in instructions received from
the Fund.
e. Certificate acceptance and replacement:
(1) Accept for redemption, certificates received for
redemptions accompanied by what reasonably appears
to be Shareholder's instructions.
(2) Furnish to the Shareholder, after with the policies
and procedures established by the Fund and the
Transfer Agent proper investigation and receipt of
necessary documentation for protection of the Fund,
replacement certificates and dividend and
redemption checks alleged to have been lost,
stolen, destroyed, or not received.
3. Dividend Account
The Transfer Agent will maintain a Dividend Account for
the Fund. This account shall be established and operated so as to
satisfy the following criteria:
1. This account shall be used to disburse cash in
payment of dividends, capital gain distributions and
returns of capital.
2. This account shall be operated in the same manner as
the Redemption Account (see below) except as otherwise
required by the purpose for which it shall be used; it
may, at the election of the Transfer Agent, be operated
as a combined account with the Redemption Account (see
below).
4. Redemption Account
The Transfer Agent will maintain a Redemption Account for
the Fund. This account shall generally be established
and operated so as to satisfy the following criteria.
1. All withdrawals from the account shall be for the
exclusive purpose of making payments to Fund
Shareholders. These payments are to be made only to
satisfy automatic or other account liquidation payment
requirements.
2. No deposits or subscription receipts shall be made
directly in the Redemption Account.
3. The Transfer Agent will advise the Fund at various
mutually established times during each business day as to
the total demand for valid payments to be honored that
day or the following day. Valid payments consist of
liquidations of shares for which funds are payable in
cash or check to shareholders, whether initiated by
check, wire, letter, automatic distribution plan,
determination of the Fund or otherwise. The notification
of demand for payments shall only include valid demands
for payment which are actually in hand, such that the
Fund need not fund the Redemption Account with any more
funds than are actually required. The Fund agrees to
fund, or cause the Custodian to fund, the Redemption
Account sufficiently to cover all demands for payment
which are currently valid or will become valid the
following business day. The Fund and the Transfer Agent
agree that a goal of this procedure is to allow for the
maximum employment of Fund Assets while still adequately
funding the Redemption Account. The Transfer Agent and
its affiliates shall not be required to honor any demand
for payment for which previously collected funds have not
been received from the Custodian or other Agent of the
Fund.
4. The Transfer Agent with the approval of the Fund will
develop specific procedures reasonably designed to
protect against:
(a) raising of dollar amounts or any other alteration
of instruments representing redemption payments;
(b) fraudulent or forged endorsements;
(c) other improper use of a redemption item which could
result in the Fund or its Shareholders being
defrauded.
Such procedures shall take into account the type of
accounts involved, the sums involved and the cost
effectiveness of such procedures.
5. Employ due diligence in servicing redemption requests as
promptly as possible.
E. EXCHANGE AGENT SERVICES
The Transfer Agent will provide services as required to
implement the exchange privileges described from time to time
in the prospectus of the Fund. The Transfer Agent will
install and utilize a telephonic system that is designed to
afford the Shareholder the opportunity to exchange Shares
among eligible Funds and that will record the telephone
request for such exchange. It is understood that the Transfer
Agent is only able to effect exchanges among funds for which
the Transfer Agent has entered into an agreement similar to
this Agreement for provision of Transfer Agency services.
F. PROXY AGENT SERVICES
The Transfer Agent agrees to act as Proxy Agent in connection
with the holding of annual or special meetings of
Shareholders, mailing to Shareholders notice, proxies and
proxy statements in connection with the holding of such
meetings, receiving and tabulating votes cast by proxy and
communicating to the Fund the results of such tabulation
accompanied by appropriate certificates, and preparing and
communicating to the Fund certified lists of Shareholders as
of such date, and in such form and containing such information
as may be required by the Fund to comply with any applicable
provisions relating to such meetings. The Transfer Agent may
at its expense employ another firm to provide all or a portion
of such services.
I. Reports to be provided by Transfer Agent:
A. Daily
1. Payment Journals
2. Transfers
3. Non-Certificate Redemption Journal
4. Original Issue Non-Certificate Shares
5. Clerical Journal
6. New Account Journal
7. Closed Account Journal
B. Monthly
1. Sales By State and Dividends Reinvested
2. Withdrawals and Dividends Paid in Cash List
3. Record of Out-of-Pocket Costs Incurred
C. Annual Reports
Provide Fund Management upon request with all
reports reasonably required to conduct an annual
review of Transfer Agency functions relating to the
Fund, including but not limited to performance,
volume, error ratios, costs and other matters
relating to the Fund. The Transfer Agent shall
also provide to the Fund general information
concerning its operations which might be believed
to affect adversely the future services to the
Fund.
D. Periodic Marketing Reports - Provided these reports
are readily available from existing information and
can be produced without unreasonable effort or
expense by the Transfer Agent, including, e.g.,
1. Geographic Distribution Data
2. Size of Holdings Data
II. Other Services
The Transfer Agent will provide the following additional
services:
A. Security
1. Design and maintain security procedures reasonably
designed to guard against the possible theft and/or
use by others of the names and addresses of Fund
Shareholders.
2. Periodic duplication of all records
(computer/microfilm/hardcopy/copy) at a frequency
and in a detail reasonably designed to assure
protection of Shareholder record information in the
event of a disaster to the Transfer Agent's
facilities, including:
(a) significant voltage drop;
(b) power blackout;
(c) major destruction of the Transfer Agent's
central facilities.
3. The Transfer Agent will maintain equipment
reasonably designed or represented to assure an
uninterrupted power supply of at least 10 minutes
at the offices of the Transfer Agent to allow for
orderly shut down of hardware in the event of a
power outage; periodic back-up of tapes to be
stored at an offsite facility of the Transfer
Agent's choosing; and will provide redundancy
capacity in accordance with the Agreement.
B. Statements
1. Provide for up to two extra lines of print on
Shareholder statements which may be employed by the
Fund to advise Shareholders of such information as
yield or other explanatory account information.
The Fund will advise the Transfer Agent of such
information sufficiently in advance to permit it to
properly insert such information in a timely and
orderly manner.
2. Provide a combined dividend check and statement to
Shareholders electing cash distributions.
C. Processing Routine Shareholder Inquiries
1. Receive, control, research, and promptly reply to
all routine Shareholder and other inquiries whether
received by written or telephonic means which
pertain to a Shareholder's account.
2. Exercise due care to protect confidential
information in responding to inquiries.
3. Request ATT or such other telephone company as may
be appropriate to provide, at the Distributor's
expense, for a dedicated transmission line between
Aquila Distributors, 380 Madison Avenue, New York
and Transfer Agent, Woodbridge, N.J. for inquiry
via a dedicated or P.C. terminal.
4. Provide if possible for continuity of present 800
telephone numbers for existing funds and adequate
personnel for live telephone response generally
until 7:00 PM, New York time on normal business
days. It is mutually understood that continuity of
the 800 numbers is dependant on cooperation from
the prior transfer agent and appropriate telephone
companies.
5. Provide for the automated tracking of all
Shareholder/Dealer telephone inquiries with on line
update status.
D. Other Mailings
1. Mailing services include addressing, enclosing, and
mailing quarterly reports, semi-annual reports,
annual reports, prospectuses and notices to all
accounts will be provided. To the extent the
Transfer Agent utilizes the services of another
firm to accomplish this for any First Investors
Fund, it shall be permitted to do so for the Fund,
at the Transfer Agent's expense.
2. All routine mailings to Shareholder/Dealers will,
where appropriate, utilize pre-sorted zip codes.
3. All month-end reinvestment statements, with any
month-end dividend check attached, will generally
be mailed to Shareholders, with duplicates to
dealer and representative, by the fourth business
day of the next month.
4. Commission checks and statements will generally be
mailed to brokerage firms on at least a weekly
basis for direct investments of prior weeks.
E. Other Services
1. Refer all Shareholder, dealer or governmental
inquiries of a policy or non-routine nature to the
Fund.
2. Provide an Account Officer to serve as the primary
point of contact between the Fund and the Transfer
Agent. The Transfer Agent will exercise due care
in assigning an individual who is both conversant
with standard investment company practices and of
sufficient stature to deal quickly and efficiently
with problems peculiar to placing a new investment
company on line.
F. Messenger Service
Provide messenger pick-up and delivery as necessary but
no less frequently than once daily between the Fund's
offices provided they are located within the borough of
Manhattan and the offices of the Transfer Agent.
<PAGE>
Exhibit 1
The Fund and the Transfer Agent anticipate that the following
activities should be incorporated into and become a part of
Appendix A as they become effective:
1. Installation of the National Security Clearing
Corporation, Fund/SERV system which shall be
operational no later than June 30, 1989.
2. The Transfer Agent will make a best effort to
provide networking capabilities with tape
transmission to dealers when and as required by
market competitiveness.
3. The Transfer Agent will work with the Distributor
to define criteria for an Audio Response system and
arrange for the implementation of such a system on
a timely basis.
<PAGE>
CASH ASSETS TRUST
APPENDIX B
Signatures
On the date of the Agreement and thereafter until further
notice, the following persons shall be Authorized Persons as
defined therein:
/s/Lacy B. Herrmann
Lacy B Herrmann _____________________
Chairman of the Board of Trustees Lacy B. Herrmann
/s/William C. Wallace
William C. Wallace _____________________
Vice President William C. Wallace
/s/Robert P. Sanchez
Robert P. Sanchez _____________________
Vice President Robert P. Sanchez
/s/Rose F. Marotta
Rose F. Marotta _____________________
Treasurer Rose F. Marotta
/s/Kenneth L. MacRitchie
Kenneth L. MacRitchie _____________________
Assistant Secretary Kenneth L. MacRitchie
/s/William K. Killeen
William K. Killeen _____________________
William K. Killeen
/s/Diana P. Herrmann
Diana P. Herrmann _____________________
Vice President Diana P. Herrmann
/s/Charles E. Childs III
Charles E. Childs, III _____________________
Assistant Vice President Charles E. Childs, III
/s/Stephen J. Caridi
Stephen J. Caridi ______________________
Stephen J. Caridi
/s/Brian R. Katzman
Brian R. Katzman ______________________
Brian R. Katzman
/s/Sandra J. Hermida
Sandra J. Hermida ______________________
Sandra J. Hermida
<PAGE>
APPENDIX C
Backup Arrangement
ADM currently has in effect a redundancy arrangement with
Comdisco Disaster Recovery Services, Inc. The agreement with
Comdisco provides that in the event of a data processing systems
disaster at ADM's facilities in Woodbridge, New Jersey, ADM may use
equipment available at Comdisco's facilities for routine and other
processing. The agreement with Comdisco also provides for
dedicated time on Comdisco's data processing equipment each year to
allow ADM to test the redundancy system.
<PAGE>
APPENDIX D
Compensation
In accordance with the provisions of Section 15 of the
attached Agreement, the Fund shall pay ADM the monthly amount of
$1.25 for each account in the Fund open at any time during the
month. The minimum amount of compensation for each month shall be
$500.00.
In addition to the above charges, the Fund shall pay or
reimburse ADM for out-of pocket expenses, including but not limited
to: postage; forms relating to the Fund or shareholders of the
Fund; envelopes; paper; bank charges; costs relating to the
production of special reports for the Fund, its distributor, or
otherwise; and similar expenses. The Fund will also reimburse ADM
for counsel fees in accordance with the Agreement.
<PAGE>
Exhibit 1 to Appendix D
February 7, 1989
Aquila Distributors, Inc.
200 Park Avenue, Suite 4515
New York, New York 10017
Attn: Mr. William Killeen
Dear Mr. Killeen
Below please find a listing of the revised business checking fees
that will be applied to the Aquila accounts. This list supercedes
the listing included in my letter of February 1, 1989.
Account maintenance $15.00
Currency shipments (per $1000) .20
Currency shipments (per shipment) 1.50
Coin orders (per order) 2.00
Checks cleared .05
Check deposits .50
Deposited items .07
Coin and currency deposits .50
Returned deposited items 7.50
Returned checks 15.00
Incoming wire transfers 5.00
Outgoing wire transfers 5.00
Bond redemptions 10.00
Facsimilies / Photocopies 3.00
Stop payment orders 10.00
Tax deposits 10.00
Very truly yours,
/s/Marc S. Milgram
Marc S. Milgram
Vice President and Treasurer
MSM/hs
copies to: Kathryn S. Head
Gina Walling
Anne Condon
Randy Pagan
Greg Miller
Jay G. Baris, Esq.
Romelle Holmgren
Edward M.W. Hines, Esq.
CASH ASSETS TRUST
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
THIS AGREEMENT, made November 1, 1993 by and between Cash
Assets Trust (the "Business Trust"), a Massachusetts business
trust, 380 Madison Avenue, Suite 2300, New York, New York 10017,
and Aquila Management Corporation (the "Administrator"), a New
York corporation, 380 Madison Avenue, Suite 2300, New York, New
York 10017,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Administrator have
previously entered into an Amended and Restated Administration
Agreement with respect to a portfolio of the Business Trust
entitled Cash Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Administrator now wish
to amend and restate their agreement as herein set forth,
referred to hereafter as "this Agreement"; and
WHEREAS, Hawaiian Trust Company, Limited (the "Adviser"), in
addition to acting as investment adviser to each portfolio of the
Business Trust and to Hawaiian Tax-Free Trust, has become
investment adviser to each series (a "New Fund") of another open-
end investment company registered under the Investment Company
Act of 1940 (the "Act"), the shares of which are readily
exchangeable into shares of the Trust; and
WHEREAS, the parties intend that this Agreement shall become
effective at 12:01 a.m. on the business day after the day on
which at least one of the New Funds, with exchangeability with
shares of the Trust, commences operations and achieves an asset
size of at least $5 million (the "Effective Date"); and
WHEREAS, this Agreement has been approved by the Board of
Trustees of the Trust;
NOW THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. In General.
The Administrator shall perform (at its own expense) the
functions set forth more fully herein for the Trust and for the
investment adviser for the Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to
the Trust and to Each Other.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of
the Business Trust, the Administrator shall provide all
administrative services to the Trust other than those services
relating to the investment portfolios of the Trust and the
maintenance of its accounting books and records; as part of such
duties, the Administrator shall:
(i) provide office space, personnel, facilities and
equipment for the performance of the following functions and
for the maintenance of the headquarters of the Trust;
(ii) oversee all relationships between the Trust and its
transfer agent, custodian, legal counsel, auditors and
principal underwriter, including the negotiation 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 the effective operation of the Trust and
for the sale, servicing or redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and
other factual information and advice regarding economic
factors and trends, but shall not generally furnish advice
or make recommendations regarding the purchase or sale of
securities;
(iv) maintain the Trust's books and records (other than
accounting books and records), and prepare (or assist
counsel and auditors in the preparation of) all required
proxy statements, reports to the Trust's shareholders and
Trustees, reports to and other filings with the Securities
and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of
the Trust;
(v) prepare, on behalf of the Trust and at the Trust's
expense, such applications and reports as may be necessary
to register or maintain the registration of the Trust and/or
its shares under the securities or "Blue-Sky" laws of all
such jurisdictions as may be required from time to time;
(vi) respond to any inquiries or other communications of
shareholders of the Trust and broker-dealers, or if any such
inquiry or communication is more properly to be responded to
by the Trust's shareholder servicing and transfer agent or
distributor, oversee such shareholder servicing and transfer
agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this
section shall at all times conform to, and be in accordance with,
any requirements imposed by: (1) the Act and any rules or
regulations in force thereunder; (2) any other applicable laws,
rules and regulations; (3) the Declaration of Trust and By-Laws
of the Business Trust as amended and restated from time to time;
(4) any policies and determinations of the Board of Trustees of
the Business Trust; and (5) the fundamental policies of the
Trust, as reflected in its registration statement under the Act,
or as amended by the shareholders of the Trust.
(c) The Administrator assumes no responsibility under this
agreement other than to render the services called for hereunder,
and specifically assumes no responsibilities for investment
advice or the investment or reinvestment of the Trust's assets.
(d) The Administrator shall not be liable for any error in
judgment or for any loss suffered by the Trust in connection with
the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall prevent the
Administrator or any officer thereof from acting as investment
adviser, sub-adviser, administrator or manager for any other
person, firm, or corporation, and shall not in any way limit or
restrict the Administrator or any of its officers, stockholders
or employees from buying, selling or trading any securities for
its own or their own accounts or for the accounts of others from
whom it or they may be acting, provided, however, that the
Administrator expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under
this Agreement. The Business Trust shall indemnify the
Administrator to the full extent permitted by the Business
Trust's Declaration of Trust.
3. Allocation of Expenses.
The Administrator shall, at its own expense, provide office
space, facilities, equipment, and personnel for the performance
of its functions hereunder and will pay all compensation of
Trustees, officers, and employees of the Trust who are affiliated
persons of the Administrator.
4. Compensation of the Administrator.
(a) The Business Trust agrees to pay the Administrator,
and the Administrator agrees to accept as full compensation for
all services rendered by the Administrator as such, a management
fee payable monthly and computed on the net asset value of the
Trust as of the close of business each business day at the annual
rate of 0.17 of 1% of such net asset value on net asets of up to
$325 million and on net assets above that amount at an annual
rate of 0.07 of 1% of such net assets.
(b) The Administrator agrees that the fee under (a)
above shall be reduced, but not below zero, by an amount equal to
its pro-rata portion (hereafter described) of the amount, if any,
by which the total expenses of the Trust in any fiscal year,
exclusive of taxes, interest and brokerage fees, shall exceed the
lesser of (i) 2.5% of the first $30 million of average annual net
assets of the Trust plus 2% of the next $70 million of such net
assets of the Trust plus 1.5% of its average annual net assets in
excess of $100 million, or (ii) 25% of the Trust's total annual
investment income. The payment of the fee under (a) above at the
end of any month will be reduced or postponed so that at no time
will there be any accrued but unpaid liability under this expense
limitation, subject to readjustment during the year. The pro
rata portion, as between the Administrator and Adviser, is based
on the aggregate of the fee of the Adviser and the fee of the
Administrator (exclusive of amounts paid or to be paid out for
the applicable period pursuant to the Trust's Distribution Plan).
5. Duration and Termination.
(a) This Agreement shall become effective upon the Effective
Date, after approval by a vote of a majority of the Trustees who
are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, with votes cast in person
at a meeting called for the purpose of voting on such approval
and shall, unless terminated as hereinafter provided, continue in
effect until the June 30 next preceding the first anniversary of
the effective date of this Agreement, and from year to year
thereafter.
(b) This Agreement may be terminated by the Administrator at
any time without penalty upon giving the Adviser and the Business
Trust sixty days' written notice (which notice may be waived by
them) and may be terminated by the Business Trust at any time
without penalty upon giving the Administrator sixty days' written
notice (which notice may be waived by the Administrator) provided
that such termination by the Business Trust shall be directed or
approved by a vote of a majority of its Trustees in office at the
time, including a majority of the Trustees who are not interested
persons (as defined in the Act) of the Business Trust.
6. Disclaimer of Shareholder Liability
The Administrator understands that the obligations of this
Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Administrator
represents that it has notice of the provisions of the Business
Trust's Declaration of Trust disclaiming shareholder liability
for acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized officers and
their seals to be hereunto affixed, all as of the day and year
first above written.
ATTEST: Cash Assets Trust
________________________ By:_______________________________
Assistant Secretary Vice President
ATTEST: Aquila Management Corporation
_______________________ By:_____________________________
Treasurer and Asst. Secy. President and Chairman
TAX-FREE CASH ASSETS TRUST
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
THIS AGREEMENT, made November 1, 1993 by and between Cash
Assets Trust (the "Business Trust"), a Massachusetts business
trust, 380 Madison Avenue, Suite 2300, New York, New York 10017,
and Aquila Management Corporation (the "Administrator"), a New
York corporation, 380 Madison Avenue, Suite 2300, New York, New
York 10017,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Administrator have
previously entered into an Amended and Restated Administration
Agreement with respect to a portfolio of the Business Trust
entitled Tax-Free Cash Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Administrator now wish
to amend and restate their agreement as herein set forth,
referred to hereafter as "this Agreement"; and
WHEREAS, Hawaiian Trust Company, Limited (the "Adviser"), in
addition to acting as investment adviser to each portfolio of the
Business Trust and to Hawaiian Tax-Free Trust, has become
investment adviser to each series (a "New Fund") of another open-
end investment company registered under the Investment Company
Act of 1940 (the "Act"), the shares of which are readily
exchangeable into shares of the Trust; and
WHEREAS, the parties intend that this Agreement shall become
effective at 12:01 a.m. on the business day after the day on
which at least one of the New Funds, with exchangeability with
shares of the Trust, commences operations and achieves an asset
size of at least $5 million (the "Effective Date"); and
WHEREAS, this Agreement has been approved by the Board of
Trustees of the Trust;
NOW THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. In General.
The Administrator shall perform (at its own expense) the
functions set forth more fully herein for the Trust and for the
investment adviser for the Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to
the Trust and to Each Other.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of
the Business Trust, the Administrator shall provide all
administrative services to the Trust other than those services
relating to the investment portfolios of the Trust and the
maintenance of its accounting books and records; as part of such
duties, the Administrator shall:
(i) provide office space, personnel, facilities and
equipment for the performance of the following functions and
for the maintenance of the headquarters of the Trust;
(ii) oversee all relationships between the Trust and its
transfer agent, custodian, legal counsel, auditors and
principal underwriter, including the negotiation 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 the effective operation of the Trust and
for the sale, servicing or redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and
other factual information and advice regarding economic
factors and trends, but shall not generally furnish advice
or make recommendations regarding the purchase or sale of
securities;
(iv) maintain the Trust's books and records (other than
accounting books and records), and prepare (or assist
counsel and auditors in the preparation of) all required
proxy statements, reports to the Trust's shareholders and
Trustees, reports to and other filings with the Securities
and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of
the Trust;
(v) prepare, on behalf of the Trust and at the Trust's
expense, such applications and reports as may be necessary
to register or maintain the registration of the Trust and/or
its shares under the securities or "Blue-Sky" laws of all
such jurisdictions as may be required from time to time;
(vi) respond to any inquiries or other communications of
shareholders of the Trust and broker-dealers, or if any such
inquiry or communication is more properly to be responded to
by the Trust's shareholder servicing and transfer agent or
distributor, oversee such shareholder servicing and transfer
agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this
section shall at all times conform to, and be in accordance with,
any requirements imposed by: (1) the Act and any rules or
regulations in force thereunder; (2) any other applicable laws,
rules and regulations; (3) the Declaration of Trust and By-Laws
of the Business Trust as amended and restated from time to time;
(4) any policies and determinations of the Board of Trustees of
the Business Trust; and (5) the fundamental policies of the
Trust, as reflected in its registration statement under the Act,
or as amended by the shareholders of the Trust.
(c) The Administrator assumes no responsibility under this
agreement other than to render the services called for hereunder,
and specifically assumes no responsibilities for investment
advice or the investment or reinvestment of the Trust's assets.
(d) The Administrator shall not be liable for any error in
judgment or for any loss suffered by the Trust in connection with
the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall prevent the
Administrator or any officer thereof from acting as investment
adviser, sub-adviser, administrator or manager for any other
person, firm, or corporation, and shall not in any way limit or
restrict the Administrator or any of its officers, stockholders
or employees from buying, selling or trading any securities for
its own or their own accounts or for the accounts of others from
whom it or they may be acting, provided, however, that the
Administrator expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under
this Agreement. The Business Trust shall indemnify the
Administrator to the full extent permitted by the Business
Trust's Declaration of Trust.
3. Allocation of Expenses.
The Administrator shall, at its own expense, provide office
space, facilities, equipment, and personnel for the performance
of its functions hereunder and will pay all compensation of
Trustees, officers, and employees of the Trust who are affiliated
persons of the Administrator.
4. Compensation of the Administrator.
(a) The Business Trust agrees to pay the Administrator,
and the Administrator agrees to accept as full compensation for
all services rendered by the Administrator as such, a management
fee payable monthly and computed on the net asset value of the
Trust as of the close of business each business day at the annual
rate of 0.13 of 1% of such net asset value on net asets of up to
$95 million and on net assets above that amount at an annual rate
of 0.07 of 1% of such net assets.
(b) The Administrator agrees that the fee under (a)
above shall be reduced, but not below zero, by an amount equal to
its pro-rata portion (hereafter described) of the amount, if any,
by which the total expenses of the Trust in any fiscal year,
exclusive of taxes, interest and brokerage fees, shall exceed the
lesser of (i) 2.5% of the first $30 million of average annual net
assets of the Trust plus 2% of the next $70 million of such net
assets of the Trust plus 1.5% of its average annual net assets in
excess of $100 million, or (ii) 25% of the Trust's total annual
investment income. The payment of the fee under (a) above at the
end of any month will be reduced or postponed so that at no time
will there be any accrued but unpaid liability under this expense
limitation, subject to readjustment during the year. The pro
rata portion, as between the Administrator and Adviser, is based
on the aggregate of the fee of the Adviser and the fee of the
Administrator (exclusive of amounts paid or to be paid out for
the applicable period pursuant to the Trust's Distribution Plan).
5. Duration and Termination.
(a) This Agreement shall become effective upon the Effective
Date, after approval by a vote of a majority of the Trustees who
are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, with votes cast in person
at a meeting called for the purpose of voting on such approval
and shall, unless terminated as hereinafter provided, continue in
effect until the June 30 next preceding the first anniversary of
the effective date of this Agreement, and from year to year
thereafter.
(b) This Agreement may be terminated by the Administrator at
any time without penalty upon giving the Adviser and the Business
Trust sixty days' written notice (which notice may be waived by
them) and may be terminated by the Business Trust at any time
without penalty upon giving the Administrator sixty days' written
notice (which notice may be waived by the Administrator) provided
that such termination by the Business Trust shall be directed or
approved by a vote of a majority of its Trustees in office at the
time, including a majority of the Trustees who are not interested
persons (as defined in the Act) of the Business Trust.
6. Disclaimer of Shareholder Liability
The Administrator understands that the obligations of this
Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Administrator
represents that it has notice of the provisions of the Business
Trust's Declaration of Trust disclaiming shareholder liability
for acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized officers and
their seals to be hereunto affixed, all as of the day and year
first above written.
ATTEST: Tax-Free Cash Assets Trust
________________________ By:_____________________________
Assistant Secretary Vice President
ATTEST: Aquila Management Corporation
_______________________ By:_____________________________
Treasurer and Asst. Secy. President and Chairman
U.S TREASURIES CASH ASSETS TRUST
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
THIS AGREEMENT, made November 1, 1993 by and between Cash
Assets Trust (the "Business Trust"), a Massachusetts business
trust, 380 Madison Avenue, Suite 2300, New York, New York 10017,
and Aquila Management Corporation (the "Administrator"), a New
York corporation, 380 Madison Avenue, Suite 2300, New York, New
York 10017,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Administrator have
previously entered into an Amended and Restated Administration
Agreement with respect to a portfolio of the Business Trust
entitled U.S. Treasuries Cash Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Administrator now wish
to amend and restate their agreement as herein set forth,
referred to hereafter as "this Agreement"; and
WHEREAS, Hawaiian Trust Company, Limited (the "Adviser"), in
addition to acting as investment adviser to each portfolio of the
Business Trust and to Hawaiian Tax-Free Trust, has become
investment adviser to each series (a "New Fund") of another open-
end investment company registered under the Investment Company
Act of 1940 (the "Act"), the shares of which are readily
exchangeable into shares of the Trust; and
WHEREAS, the parties intend that this Agreement shall become
effective at 12:01 a.m. on the business day after the day on
which at least one of the New Funds, with exchangeability with
shares of the Trust, commences operations and achieves an asset
size of at least $5 million (the "Effective Date"); and
WHEREAS, this Agreement has been approved by the Board of
Trustees of the Trust;
NOW THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. In General.
The Administrator shall perform (at its own expense) the
functions set forth more fully herein for the Trust and for the
investment adviser for the Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to
the Trust and to Each Other.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of
the Business Trust, the Administrator shall provide all
administrative services to the Trust other than those services
relating to the investment portfolios of the Trust and the
maintenance of its accounting books and records; as part of such
duties, the Administrator shall:
(i) provide office space, personnel, facilities and
equipment for the performance of the following functions and
for the maintenance of the headquarters of the Trust;
(ii) oversee all relationships between the Trust and its
transfer agent, custodian, legal counsel, auditors and
principal underwriter, including the negotiation 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 the effective operation of the Trust and
for the sale, servicing or redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and
other factual information and advice regarding economic
factors and trends, but shall not generally furnish advice
or make recommendations regarding the purchase or sale of
securities;
(iv) maintain the Trust's books and records (other than
accounting books and records), and prepare (or assist
counsel and auditors in the preparation of) all required
proxy statements, reports to the Trust's shareholders and
Trustees, reports to and other filings with the Securities
and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of
the Trust;
(v) prepare, on behalf of the Trust and at the Trust's
expense, such applications and reports as may be necessary
to register or maintain the registration of the Trust and/or
its shares under the securities or "Blue-Sky" laws of all
such jurisdictions as may be required from time to time;
(vi) respond to any inquiries or other communications of
shareholders of the Trust and broker-dealers, or if any such
inquiry or communication is more properly to be responded to
by the Trust's shareholder servicing and transfer agent or
distributor, oversee such shareholder servicing and transfer
agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this
section shall at all times conform to, and be in accordance with,
any requirements imposed by: (1) the Act and any rules or
regulations in force thereunder; (2) any other applicable laws,
rules and regulations; (3) the Declaration of Trust and By-Laws
of the Business Trust as amended and restated from time to time;
(4) any policies and determinations of the Board of Trustees of
the Business Trust; and (5) the fundamental policies of the
Trust, as reflected in its registration statement under the Act,
or as amended by the shareholders of the Trust.
(c) The Administrator assumes no responsibility under this
agreement other than to render the services called for hereunder,
and specifically assumes no responsibilities for investment
advice or the investment or reinvestment of the Trust's assets.
(d) The Administrator shall not be liable for any error in
judgment or for any loss suffered by the Trust in connection with
the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall prevent the
Administrator or any officer thereof from acting as investment
adviser, sub-adviser, administrator or manager for any other
person, firm, or corporation, and shall not in any way limit or
restrict the Administrator or any of its officers, stockholders
or employees from buying, selling or trading any securities for
its own or their own accounts or for the accounts of others from
whom it or they may be acting, provided, however, that the
Administrator expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under
this Agreement. The Business Trust shall indemnify the
Administrator to the full extent permitted by the Business
Trust's Declaration of Trust.
3. Allocation of Expenses.
The Administrator shall, at its own expense, provide office
space, facilities, equipment, and personnel for the performance
of its functions hereunder and will pay all compensation of
Trustees, officers, and employees of the Trust who are affiliated
persons of the Administrator.
4. Compensation of the Administrator.
(a) The Business Trust agrees to pay the Administrator,
and the Administrator agrees to accept as full compensation for
all services rendered by the Administrator as such, a management
fee payable monthly and computed on the net asset value of the
Trust as of the close of business each business day at the annual
rate of 0.13 of 1% of such net asset value on net asets of up to
$60 million and on net assets above that amount at an annual rate
of 0.07 of 1% of such net assets.
(b) The Administrator agrees that the fee under (a)
above shall be reduced, but not below zero, by an amount equal to
its pro-rata portion (hereafter described) of the amount, if any,
by which the total expenses of the Trust in any fiscal year,
exclusive of taxes, interest and brokerage fees, shall exceed the
lesser of (i) 2.5% of the first $30 million of average annual net
assets of the Trust plus 2% of the next $70 million of such net
assets of the Trust plus 1.5% of its average annual net assets in
excess of $100 million, or (ii) 25% of the Trust's total annual
investment income. The payment of the fee under (a) above at the
end of any month will be reduced or postponed so that at no time
will there be any accrued but unpaid liability under this expense
limitation, subject to readjustment during the year. The pro
rata portion, as between the Administrator and Adviser, is based
on the aggregate of the fee of the Adviser and the fee of the
Administrator (exclusive of amounts paid or to be paid out for
the applicable period pursuant to the Trust's Distribution Plan).
5. Duration and Termination.
(a) This Agreement shall become effective upon the Effective
Date, after approval by a vote of a majority of the Trustees who
are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, with votes cast in person
at a meeting called for the purpose of voting on such approval
and shall, unless terminated as hereinafter provided, continue in
effect until the June 30 next preceding the first anniversary of
the effective date of this Agreement, and from year to year
thereafter.
(b) This Agreement may be terminated by the Administrator at
any time without penalty upon giving the Adviser and the Business
Trust sixty days' written notice (which notice may be waived by
them) and may be terminated by the Business Trust at any time
without penalty upon giving the Administrator sixty days' written
notice (which notice may be waived by the Administrator) provided
that such termination by the Business Trust shall be directed or
approved by a vote of a majority of its Trustees in office at the
time, including a majority of the Trustees who are not interested
persons (as defined in the Act) of the Business Trust.
6. Disclaimer of Shareholder Liability
The Administrator understands that the obligations of this
Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Administrator
represents that it has notice of the provisions of the Business
Trust's Declaration of Trust disclaiming shareholder liability
for acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized officers and
their seals to be hereunto affixed, all as of the day and year
first above written.
ATTEST: U.S. Treasuries Cash Assets Trust
________________________ By:_____________________________
Assistant Secretary Vice President
ATTEST: Aquila Management Corporation
_______________________ By:_____________________________
Treasurer and Asst. Secy. President and Chairman
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Aquila Distributors Corporation
("Aquila"), a corporation organized under the laws of New
York with offices in New York, New York,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, also named Cash Assets Trust (the "Series"), invests
in a portfolio of money-market securities and holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act;
2) Aquila serves and has served since 1984 as
Distributor of the Series pursuant to a written
distribution agreement (the "Distribution Agreement");
3) Aquila in its capacity as Distributor of the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies such as the Trust, and, although not
directly involved in management of the portfolio of the
Series or the administration of the Series, Aquila has by
reason of its association with the Series been informed of
valuable and sensitive information concerning such
portfolio management and administration;
4) The Trust and Aquila have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the Distribution
Agreement or related to the subject matter covered thereby,
but in furtherance of the relationship contemplated by the
Distribution Agreement;
5) The Trust and Aquila have agreed that in the best
interests of shareholders of the Series, the information
which Aquila has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as Aquila provides such services to
the Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and
may in the future rely on the covenants of Aquila contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the
Distribution Agreement at any time upon sixty days' notice
and in its annual determinations as to whether or not the
Trust will renew the Distribution Agreement, although this
Agreement does not in any way restrict the free exercise of
the right of the Trust, and its Board of Trustees, in
connection with such determinations to make such decisions
and to take into account such matters as the Board of
Trustees believes appropriate;
7) Aquila is controlled by Lacy B. Herrmann, all
direct and indirect parents, subsidiaries and affiliates of
Aquila and all corporations controlled by Mr. Herrmann, now
or in the future, being referred to herein as the "Aquila
Affiliates";
8) Hawaiian Trust Company, Limited ("HTCo"), a trust
company organized under the laws of the State of Hawaii
with principal offices in Honolulu, Hawaii, serves as
investment adviser for the Trust pursuant to a written
advisory agreement with respect to the Trust, HTCo being a
subsidiary of Bank of Hawaii and an indirect subsidiary of
Bancorp Hawaii, Inc., a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, all
direct and indirect parents, subsidiaries and affiliates of
HTCo, now or in the future, being referred to herein as the
"HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty. Neither
Aquila nor any Aquila Affiliate shall serve as investment
adviser, administrator, sponsor, promoter, or principal
underwriter of any investment company that competes
directly with the Trust and has as its investment adviser a
company with its principal office in the State of Hawaii,
nor shall they provide services directly or indirectly in
the capacities here specified to, or receive fees for such
services from, any investment company which holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act
and has as its investment adviser a company with its
principal office in the State of Hawaii; provided, however,
that Aquila or any Aquila Affiliate may provide services
directly or indirectly in the capacities listed herein to,
or receive fees for such services from, any investment
company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon Aquila so long as it
provides services to the Trust, and for a period of two
years thereafter; provided, however, that:
a. such obligations shall not bind Aquila
if the Board of Trustees of the Trust terminates or does
not renew the Distribution Agreement absent a good faith
determination that Aquila has failed to perform its
responsibilities under the Distribution Agreement by reason
of willful misfeasance, bad faith or gross negligence or
that Aquila has recklessly disregarded its obligations and
duties under the Distribution Agreement; and
b. Aquila shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if by reason of the unavailability of
exchangeability between the Series and any investment
company advised by HTCo or an HTCo affiliate, HTCo has
terminated its obligation to the Series under the agreement
of even date herewith between the Series and HTCo
contemplating obligations on the part of HTCo of a kind
similar to those of Aquila contained in this Agreement.
3. Application of Agreement. The obligations
under this Agreement shall apply to Aquila and all Aquila
Affiliates and Aquila shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Diana P. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to Aquila, addressed to:
Lacy B. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Diana P. Herrmann
Vice President
AQUILA DISTRIBUTORS CORPORATION
by_______________________________
Lacy B. Herrmann,
Vice President
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Aquila Management Corporation
("Aquila"), a corporation organized under the laws of New
York with offices in New York, New York,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, also named Cash Assets Trust (the "Series"), invests
in a portfolio of money-market securities and holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act;
2) Aquila serves and has served since 1984 as
Administrator of the Series pursuant to a written
administration agreement (the "Administration Agreement");
3) Aquila in its capacity as Administrator of the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies such as the Trust, and, although not
directly involved in management of the portfolio of the
Series or the marketing or distribution of shares of the
Series, Aquila has by reason of its association with the
Series been informed of valuable and sensitive information
concerning such portfolio management, marketing and
distribution;
4) The Trust and Aquila have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the
Administration Agreement or related to the subject matter
covered thereby, but in furtherance of the relationship
contemplated by the Administration Agreement;
5) The Trust and Aquila have agreed that in the best
interests of shareholders of the Series, the information
which Aquila has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as Aquila provides such services to
the Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and
may in the future rely on the covenants of Aquila contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the
Administation Agreement at any time upon sixty days' notice
and in its annual determinations as to whether or not the
Trust will renew the Administation Agreement, although this
Agreement does not in any way restrict the free exercise of
the right of the Trust, and its Board of Trustees, in
connection with such determinations to make such decisions
and to take into account such matters as the Board of
Trustees believes appropriate;
7) Aquila is controlled by Lacy B. Herrmann, all
direct and indirect parents, subsidiaries and affiliates of
Aquila and all corporations controlled by Mr. Herrmann, now
or in the future, being referred to herein as the "Aquila
Affiliates";
8) Hawaiian Trust Company, Limited ("HTCo"), a trust
company organized under the laws of the State of Hawaii
with principal offices in Honolulu, Hawaii, serves as
investment adviser for the Trust pursuant to a written
advisory agreement with respect to the Trust, HTCo being a
subsidiary of Bank of Hawaii and an indirect subsidiary of
Bancorp Hawaii, Inc., a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, all
direct and indirect parents, subsidiaries and affiliates of
HTCo, now or in the future, being referred to herein as the
"HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty. Neither
Aquila nor any Aquila Affiliate shall serve as investment
adviser, administrator, sponsor, promoter, or principal
underwriter of any investment company that competes
directly with the Trust and has as its investment adviser a
company with its principal office in the State of Hawaii,
nor shall they provide services directly or indirectly in
the capacities here specified to, or receive fees for such
services from, any investment company which holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act
and has as its investment adviser a company with its
principal office in the State of Hawaii; provided, however,
that Aquila or any Aquila Affiliate may provide services
directly or indirectly in the capacities listed herein to,
or receive fees for such services from, any investment
company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon Aquila so long as it
provides services to the Trust, and for a period of two
years thereafter; provided, however, that:
a. such obligations shall not bind Aquila
if the Board of Trustees of the Trust terminates the
Administration Agreement absent a good faith determination
that Aquila has failed to perform its responsibilities
under the Administration Agreement by reason of willful
misfeasance, bad faith or gross negligence or that Aquila
has recklessly disregarded its obligations and duties under
the Administration Agreement; and
b. Aquila shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if by reason of the unavailability of
exchangeability between the Series and any investment
company advised by HTCo or an HTCo affiliate, HTCo has
terminated its obligation to the Series under the agreement
of even date herewith between the Series and HTCo
contemplating obligations on the part of HTCo of a kind
similar to those of Aquila contained in this Agreement.
3. Application of Agreement. The obligations
under this Agreement shall apply to Aquila and all Aquila
Affiliates and Aquila shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Diana P. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to Aquila, addressed to:
Lacy B. Herrmann, President
380 Madison Avenue
Suite 2300
New York, NY 10017;
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Diana P. Herrmann
Vice President
AQUILA MANAGEMENT CORPORATION
by_______________________________
Lacy B. Herrmann,
President
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Hawaiian Trust Company, Limited
("HTCo"), a trust company organized under the laws of
Hawaii with principal offices in Honolulu, Hawaii,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, also named Cash Assets Trust (the "Series"), invests
in a portfolio of money-market securities and holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act;
2) HTCo serves and has served since 1984 as
investment adviser for the Series pursuant to a written
advisory agreement (the "Advisory Agreement"), which in
accordance with a provision of the 1940 Act is terminable
upon 60 days' notice by the Trust;
3) HTCo in its capacity as investment adviser to the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies, and although not involved in
administration of the Series or the marketing or
distribution of shares of the Series, HTCo has by reason of
its association with the Series been informed of valuable
and sensitive information concerning such administration,
marketing and distribution;
4) The Trust and HTCo have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the Advisory
Agreement or related to the subject matter covered thereby,
but in furtherance of the relationship contemplated by the
Advisory Agreement;
5) The Trust and HTCo have agreed that in the best
interests of shareholders of the Series, the information
which HTCo has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as HTCo provides such services to the
Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and may
in the future rely on the covenants of HTCo contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the Advisory
Agreement at any time upon sixty days' notice and in its
annual determinations as to whether or not the Trust will
renew the Advisory Agreement, although this Agreement does
not in any way restrict the free exercise of the right of
the Trust, and its Board of Trustees, in connection with
such determinations to make such decisions and to take into
account such matters as the Board of Trustees believes
appropriate;
7) HTCo is a subsidiary of Bank of Hawaii and an
indirect subsidiary of Bancorp Hawaii, Inc., a bank holding
company registered under the Bank Holding Company Act of
1956, as amended, all direct and indirect parents,
subsidiaries and affiliates of HTCo, now or in the future,
being referred to herein as the "HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty.
Neither HTCo nor any HTCo Affiliate shall serve as
investment adviser, administrator, sponsor, promoter, or
principal underwriter of any investment company that
competes directly with the Trust and shall not provide
services directly or indirectly in the capacities here
specified to, or receive fees for such services from, any
investment company which holds itself out as a "money-
market fund" under Rule 2a-7 promulgated by the Securities
and Exchange Commission under the 1940 Act; provided,
however, that HTCo or any HTCo Affiliate may provide
services directly or indirectly in the capacities listed
herein to, or receive fees for such services from, any
investment company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon HTCo so long as it provides
services to the Trust, and for a period of two years
thereafter; provided, however, that:
a. such obligations shall not bind HTCo if
the Board of Trustees of the Trust terminates or does not
renew the Advisory Agreement absent a good faith
determination that HTCo has failed to perform its
responsibilities under the Advisory Agreement by reason of
willful misfeasance, bad faith or gross negligence or that
HTCo has recklessly disregarded its obligations and duties
under the Advisory Agreement; and
b. HTCo shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if the Series, after receiving sufficient
opportunity and cooperation, does not operate in a manner
which permits ready exchange with any investment company
the investment adviser of which is HTCo or an HTCo
Affiliate (an "HTCo Fund"). In order that the Series shall
receive sufficient opportunity and cooperation to institute
exchangeability,
(1) HTCo shall notify the Series that
HTCo wishes such exchangeability;
(2) HTCo and the HTCo Fund, its
officers, adviser, administrator, shareholder servicing
agent, counsel and other service providers shall cooperate
in providing the Series such information, instituting such
procedures, making such disclosure and otherwise doing such
acts and things as shall in the reasonable opinion of the
Series be necessary or appropriate to enable
exchangeability to be implemented and continued; and
(3) the Series shall have at least 120
days, and such additional period as may be required to
obtain exemptive relief from the Securities and Exchange
Commission if necessary in the opinion of counsel for that
Series, to implement exchangeability in the manner
contemplated hereby.
3. Application of Agreement. The obligations
under this Agreement shall apply to HTCo and all HTCo
Affiliates and HTCo shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Lacy B. Herrmann, President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to HTCo, addressed to:
Douglas Philpotts, Chairman
Hawaiian Trust Company, Limited
Financial Plaza of the Pacific
Box 3170
Honolulu, HI 96802
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Lacy B. Herrmann,
Chairman and President
HAWAIIAN TRUST COMPANY, LIMITED
by_______________________________
Douglas Philpotts,
Chairman
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by and
between Cash Assets Trust (the "Trust"), a Massachusetts business
trust with principal offices in New York, New York and Aquila
Distributors Corporation ("Aquila"), a corporation organized
under the laws of New York with offices in New York, New York,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment Company Act
of 1940 (the "1940 Act") and a series of the Trust, named Tax-
Free Cash Assets Trust (the "Series"), invests in a portfolio of
money-market securities and holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act;
2) Aquila serves and has served since 1984 as Distributor
of the Series pursuant to a written distribution agreement (the
"Distribution Agreement");
3) Aquila in its capacity as Distributor of the Series has,
in the course of performing its obligations to the Series and its
activities in the best interests of the shareholders of the
Series, acquired valuable and sensitive information as to the
operation and management of investment companies such as the
Trust, and, although not directly involved in management of the
portfolio of the Series or the administration of the Series,
Aquila has by reason of its association with the Series been
informed of valuable and sensitive information concerning such
portfolio management and administration;
4) The Trust and Aquila have agreed upon certain additional
arrangements set forth herein that would be beneficial to the
Series, not as a part of the Distribution Agreement or related to
the subject matter covered thereby, but in furtherance of the
relationship contemplated by the Distribution Agreement;
5) The Trust and Aquila have agreed that in the best
interests of shareholders of the Series, the information which
Aquila has obtained in its capacity of provider of services to
the Series should, as provided herein, continue to be applied
solely on behalf of the Series and its shareholders so long as
Aquila provides such services to the Series and for a reasonable
period thereafter;
6) The parties recognize that the Trust relies and may in
the future rely on the covenants of Aquila contained herein in
the Trust's continuing determinations to refrain from the
exercise of its right to terminate the Distribution Agreement at
any time upon sixty days' notice and in its annual determinations
as to whether or not the Trust will renew the Distribution
Agreement, although this Agreement does not in any way restrict
the free exercise of the right of the Trust, and its Board of
Trustees, in connection with such determinations to make such
decisions and to take into account such matters as the Board of
Trustees believes appropriate;
7) Aquila is controlled by Lacy B. Herrmann, all direct and
indirect parents, subsidiaries and affiliates of Aquila and all
corporations controlled by Mr. Herrmann, now or in the future,
being referred to herein as the "Aquila Affiliates";
8) Hawaiian Trust Company, Limited ("HTCo"), a trust
company organized under the laws of the State of Hawaii with
principal offices in Honolulu, Hawaii, serves as investment
adviser for the Trust pursuant to a written advisory agreement
with respect to the Trust, HTCo being a subsidiary of Bank of
Hawaii and an indirect subsidiary of Bancorp Hawaii, Inc., a bank
holding company registered under the Bank Holding Company Act of
1956, as amended, all direct and indirect parents, subsidiaries
and affiliates of HTCo, now or in the future, being referred to
herein as the "HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and the
mutual promises contained herein, the parties hereto agree as
follows:
1. Obligation as to Undivided Loyalty. Neither Aquila
nor any Aquila Affiliate shall serve as investment adviser,
administrator, sponsor, promoter, or principal underwriter of any
investment company that competes directly with the Trust and has
as its investment adviser a company with its principal office in
the State of Hawaii, nor shall they provide services directly or
indirectly in the capacities here specified to, or receive fees
for such services from, any investment company which holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by the
Securities and Exchange Commission under the 1940 Act and has as
its investment adviser a company with its principal office in the
State of Hawaii; provided, however, that Aquila or any Aquila
Affiliate may provide services directly or indirectly in the
capacities listed herein to, or receive fees for such services
from, any investment company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially of
assets previously held in a common or collective trust fund
(other than an investment company created after the date hereof
which holds itself out as a "money-market fund" under Rule 2a-7
promulgated by the Securities and Exchange Commission under the
1940 Act) managed by HTCo or any HTCo Affiliate; or
c. if HTCo or the HTCo Affiliate became a provider
of services to such investment company upon and solely by reason
of the fact that a person, firm or corporation that provides such
investment company services in any of the capacities listed
herein has been directly or indirectly acquired by, or merged
with, HTCo or an HTCo Affiliate, as long as such investment
company does not operate in a manner that permits ready exchange
with an investment company the investment adviser of which is
HTCo or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon Aquila so long as it provides
services to the Trust, and for a period of two years thereafter;
provided, however, that:
a. such obligations shall not bind Aquila if the
Board of Trustees of the Trust terminates or does not renew the
Distribution Agreement absent a good faith determination that
Aquila has failed to perform its responsibilities under the
Distribution Agreement by reason of willful misfeasance, bad
faith or gross negligence or that Aquila has recklessly
disregarded its obligations and duties under the Distribution
Agreement; and
b. Aquila shall have the right to terminate its
obligation under this Agreement upon at least 30 days' written
notice if by reason of the unavailability of exchangeability
between the Series and any investment company advised by HTCo or
an HTCo affiliate, HTCo has terminated its obligation to the
Series under the agreement of even date herewith between the
Series and HTCo contemplating obligations on the part of HTCo of
a kind similar to those of Aquila contained in this Agreement.
3. Application of Agreement. The obligations under
this Agreement shall apply to Aquila and all Aquila Affiliates
and Aquila shall not provide services or receive compensation,
directly or indirectly, in a manner prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement shall
be construed in accordance with and governed by the laws
applicable to contracts made in, and to be performed within, the
State of New York. This Agreement shall be enforced by
proceedings in a federal or state court located in the State and
County of New York or in the State of Hawaii, and the parties
hereby submit to personal jurisdiction of such courts for
purposes of such proceedings only. The parties recognize that
remedies at law may be inadequate, that any breach of this
Agreement may cause irreparable harm and that money damages may
be difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this Agreement and
temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided herein, any
written notice or other written communication required or
permitted to be given under this Agreement shall be delivered or
sent by United States registered mail, postage prepaid, and,
if to the Trust, addressed to:
Diana P. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to Aquila, addressed to:
Lacy B. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
unless another address is substituted by notice delivered or sent
as provided herein. Any such notice shall be deemed given when
received.
6. Headings. Headings are used for reference purposes
only and shall not be deemed a part of this Agreement.
7. Entire Agreement. This Agreement embodies the
entire agreement of the parties with respect to the subject
matter hereof, and supersedes all previous negotiations,
representations and agreements with respect thereto.
8. Waiver. Except where specific time limits are
herein provided, no delay on the part of any party hereto in
exercising any power or right hereunder nor any single or partial
exercise thereof nor the exercise of any other power of right
shall operate as a waiver thereof. No waiver shall be
enforceable against any party hereto unless in writing, signed by
the party against whom such waiver is claimed, and shall be
limited solely to the one event. The rights, remedies and
benefits herein expressly specified are cumulative and not
exclusive of any rights, remedies or benefits which the parties
hereto may otherwise have.
9. Separability. If any provision of this Agreement
shall contravene or be invalid under the laws of any state,
country or jurisdiction in which this Agreement shall be
performed or enforced, then such contravention or invalidity
shall not invalidate the entire Agreement. Such provision shall
be deemed to be modified to the extent necessary to render it
valid and enforceable, or if no such modification will render it
valid and enforceable, then the Agreement shall be constructed as
if not containing the provision held to be invalid, and the
rights and obligations of the parties shall be construed and
enforced accordingly.
10. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same Agreement.
11. Amendment. This Agreement cannot be changed or
modified orally, but only by an agreement in writing signed by
the party against whom enforcement of any change or modification
is sought.
12. Persons Bound. This Agreement shall be binding
upon and shall inure to the benefit of the undersigned parties
and their respective successors and permitted assigns. No
assignment shall be made by any party without the prior written
consent of the other party hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed and delivered on its behalf as of the
date first written above.
CASH ASSETS TRUST
by_______________________________
Diana P. Herrmann
Vice President
AQUILA DISTRIBUTORS CORPORATION
by________________________________
Lacy B. Herrmann,
Vice President
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class thereof,
managed by HTCo or any HTCo Affiliate, except to the extent that
it holds itself out as a "money-market fund" under Rule 2a-7
promulgated by the Securities and Exchange Commission under the
1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Aquila Management Corporation
("Aquila"), a corporation organized under the laws of New
York with offices in New York, New York,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, named Tax-Free Cash Assets Trust (the "Series"),
invests in a portfolio of money-market securities and holds
itself out as a "money-market fund" under Rule 2a-7
promulgated by the Securities and Exchange Commission under
the 1940 Act;
2) Aquila serves and has served since 1984 as
Administrator of the Series pursuant to a written
administration agreement (the "Administration Agreement");
3) Aquila in its capacity as Administrator of the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies such as the Trust, and, although not
directly involved in management of the portfolio of the
Series or the marketing or distribution of shares of the
Series, Aquila has by reason of its association with the
Series been informed of valuable and sensitive information
concerning such portfolio management, marketing and
distribution;
4) The Trust and Aquila have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the
Administration Agreement or related to the subject matter
covered thereby, but in furtherance of the relationship
contemplated by the Administration Agreement;
5) The Trust and Aquila have agreed that in the best
interests of shareholders of the Series, the information
which Aquila has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as Aquila provides such services to
the Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and
may in the future rely on the covenants of Aquila contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the
Administration Agreement at any time upon sixty days'
notice and in its annual determinations as to whether or
not the Trust will renew the Administration Agreement,
although this Agreement does not in any way restrict the
free exercise of the right of the Trust, and its Board of
Trustees, in connection with such determinations to make
such decisions and to take into account such matters as the
Board of Trustees believes appropriate;
7) Aquila is controlled by Lacy B. Herrmann, all
direct and indirect parents, subsidiaries and affiliates of
Aquila and all corporations controlled by Mr. Herrmann, now
or in the future, being referred to herein as the "Aquila
Affiliates";
8) Hawaiian Trust Company, Limited ("HTCo"), a trust
company organized under the laws of the State of Hawaii
with principal offices in Honolulu, Hawaii, serves as
investment adviser for the Trust pursuant to a written
advisory agreement with respect to the Trust, HTCo being a
subsidiary of Bank of Hawaii and an indirect subsidiary of
Bancorp Hawaii, Inc., a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, all
direct and indirect parents, subsidiaries and affiliates of
HTCo, now or in the future, being referred to herein as the
"HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty. Neither
Aquila nor any Aquila Affiliate shall serve as investment
adviser, administrator, sponsor, promoter, or principal
underwriter of any investment company that competes
directly with the Trust and has as its investment adviser a
company with its principal office in the State of Hawaii,
nor shall they provide services directly or indirectly in
the capacities here specified to, or receive fees for such
services from, any investment company which holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act
and has as its investment adviser a company with its
principal office in the State of Hawaii; provided, however,
that Aquila or any Aquila Affiliate may provide services
directly or indirectly in the capacities listed herein to,
or receive fees for such services from, any investment
company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon Aquila so long as it
provides services to the Trust, and for a period of two
years thereafter; provided, however, that:
a. such obligations shall not bind Aquila
if the Board of Trustees of the Trust terminates the
Administration Agreement absent a good faith determination
that Aquila has failed to perform its responsibilities
under the Administration Agreement by reason of willful
misfeasance, bad faith or gross negligence or that Aquila
has recklessly disregarded its obligations and duties under
the Administration Agreement; and
b. Aquila shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if by reason of the unavailability of
exchangeability between the Series and any investment
company advised by HTCo or an HTCo affiliate, HTCo has
terminated its obligation to the Series under the agreement
of even date herewith between the Series and HTCo
contemplating obligations on the part of HTCo of a kind
similar to those of Aquila contained in this Agreement.
3. Application of Agreement. The obligations
under this Agreement shall apply to Aquila and all Aquila
Affiliates and Aquila shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Diana P. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to Aquila, addressed to:
Lacy B. Herrmann, President
380 Madison Avenue
Suite 2300
New York, NY 10017;
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Diana P. Herrmann
Vice President
AQUILA MANAGEMENT CORPORATION
by_______________________________
Lacy B. Herrmann,
President
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Hawaiian Trust Company, Limited
("HTCo"), a trust company organized under the laws of
Hawaii with principal offices in Honolulu, Hawaii,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, named Tax-Free Cash Assets Trust (the "Series"),
invests in a portfolio of money-market securities and holds
itself out as a "money-market fund" under Rule 2a-7
promulgated by the Securities and Exchange Commission under
the 1940 Act;
2) HTCo serves and has served since 1984 as
investment adviser for the Series pursuant to a written
advisory agreement (the "Advisory Agreement"), which in
accordance with a provision of the 1940 Act is terminable
upon 60 days' notice by the Trust;
3) HTCo in its capacity as investment adviser to the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies, and although not involved in
administration of the Series or the marketing or
distribution of shares of the Series, HTCo has by reason of
its association with the Series been informed of valuable
and sensitive information concerning such administration,
marketing and distribution;
4) The Trust and HTCo have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the Advisory
Agreement or related to the subject matter covered thereby,
but in furtherance of the relationship contemplated by the
Advisory Agreement;
5) The Trust and HTCo have agreed that in the best
interests of shareholders of the Series, the information
which HTCo has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as HTCo provides such services to the
Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and may
in the future rely on the covenants of HTCo contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the Advisory
Agreement at any time upon sixty days' notice and in its
annual determinations as to whether or not the Trust will
renew the Advisory Agreement, although this Agreement does
not in any way restrict the free exercise of the right of
the Trust, and its Board of Trustees, in connection with
such determinations to make such decisions and to take into
account such matters as the Board of Trustees believes
appropriate;
7) HTCo is a subsidiary of Bank of Hawaii and an
indirect subsidiary of Bancorp Hawaii, Inc., a bank holding
company registered under the Bank Holding Company Act of
1956, as amended, all direct and indirect parents,
subsidiaries and affiliates of HTCo, now or in the future,
being referred to herein as the "HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty.
Neither HTCo nor any HTCo Affiliate shall serve as
investment adviser, administrator, sponsor, promoter, or
principal underwriter of any investment company that
competes directly with the Trust and shall not provide
services directly or indirectly in the capacities here
specified to, or receive fees for such services from, any
investment company which holds itself out as a "money-
market fund" under Rule 2a-7 promulgated by the Securities
and Exchange Commission under the 1940 Act; provided,
however, that HTCo or any HTCo Affiliate may provide
services directly or indirectly in the capacities listed
herein to, or receive fees for such services from, any
investment company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon HTCo so long as it provides
services to the Trust, and for a period of two years
thereafter; provided, however, that:
a. such obligations shall not bind HTCo if
the Board of Trustees of the Trust terminates or does not
renew the Advisory Agreement absent a good faith
determination that HTCo has failed to perform its
responsibilities under the Advisory Agreement by reason of
willful misfeasance, bad faith or gross negligence or that
HTCo has recklessly disregarded its obligations and duties
under the Advisory Agreement; and
b. HTCo shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if the Series, after receiving sufficient
opportunity and cooperation, does not operate in a manner
which permits ready exchange with any investment company
the investment adviser of which is HTCo or an HTCo
Affiliate (an "HTCo Fund"). In order that the Series shall
receive sufficient opportunity and cooperation to institute
exchangeability,
(1) HTCo shall notify the Series that
HTCo wishes such exchangeability;
(2) HTCo and the HTCo Fund, its
officers, adviser, administrator, shareholder servicing
agent, counsel and other service providers shall cooperate
in providing the Series such information, instituting such
procedures, making such disclosure and otherwise doing such
acts and things as shall in the reasonable opinion of the
Series be necessary or appropriate to enable
exchangeability to be implemented and continued; and
(3) the Series shall have at least 120
days, and such additional period as may be required to
obtain exemptive relief from the Securities and Exchange
Commission if necessary in the opinion of counsel for that
Series, to implement exchangeability in the manner
contemplated hereby.
3. Application of Agreement. The obligations
under this Agreement shall apply to HTCo and all HTCo
Affiliates and HTCo shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Lacy B. Herrmann, President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to HTCo, addressed to:
Douglas Philpotts, Chairman
Hawaiian Trust Company, Limited
Financial Plaza of the Pacific
Box 3170
Honolulu, HI 96802
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Lacy B. Herrmann,
Chairman and President
HAWAIIAN TRUST COMPANY, LIMITED
by_______________________________
Douglas Philpotts,
Chairman
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Aquila Distributors Corporation
("Aquila"), a corporation organized under the laws of New
York with offices in New York, New York,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, named U. S. Treasuries Cash Assets Trust (the
"Series"), invests in a portfolio of money-market
securities and holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act;
2) Aquila serves and has served since 1984 as
Distributor of the Series pursuant to a written
distribution agreement (the "Distribution Agreement");
3) Aquila in its capacity as Distributor of the Series
has, in the course of performing its obligations to the
Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies such as the Trust, and, although not
directly involved in management of the portfolio of the
Series or the administration of the Series, Aquila has by
reason of its association with the Series been informed of
valuable and sensitive information concerning such
portfolio management and administration;
4) The Trust and Aquila have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the Distribution
Agreement or related to the subject matter covered thereby,
but in furtherance of the relationship contemplated by the
Distribution Agreement;
5) The Trust and Aquila have agreed that in the best
interests of shareholders of the Series, the information
which Aquila has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as Aquila provides such services to
the Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and
may in the future rely on the covenants of Aquila contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the
Distribution Agreement at any time upon sixty days' notice
and in its annual determinations as to whether or not the
Trust will renew the Distribution Agreement, although this
Agreement does not in any way restrict the free exercise of
the right of the Trust, and its Board of Trustees, in
connection with such determinations to make such decisions
and to take into account such matters as the Board of
Trustees believes appropriate;
7) Aquila is controlled by Lacy B. Herrmann, all
direct and indirect parents, subsidiaries and affiliates of
Aquila and all corporations controlled by Mr. Herrmann, now
or in the future, being referred to herein as the "Aquila
Affiliates";
8) Hawaiian Trust Company, Limited ("HTCo"), a trust
company organized under the laws of the State of Hawaii
with principal offices in Honolulu, Hawaii, serves as
investment adviser for the Trust pursuant to a written
advisory agreement with respect to the Trust, HTCo being a
subsidiary of Bank of Hawaii and an indirect subsidiary of
Bancorp Hawaii, Inc., a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, all
direct and indirect parents, subsidiaries and affiliates of
HTCo, now or in the future, being referred to herein as the
"HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty. Neither
Aquila nor any Aquila Affiliate shall serve as investment
adviser, administrator, sponsor, promoter, or principal
underwriter of any investment company that competes
directly with the Trust and has as its investment adviser a
company with its principal office in the State of Hawaii,
nor shall they provide services directly or indirectly in
the capacities here specified to, or receive fees for such
services from, any investment company which holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act
and has as its investment adviser a company with its
principal office in the State of Hawaii; provided, however,
that Aquila or any Aquila Affiliate may provide services
directly or indirectly in the capacities listed herein to,
or receive fees for such services from, any investment
company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon Aquila so long as it
provides services to the Trust, and for a period of two
years thereafter; provided, however, that:
a. such obligations shall not bind Aquila
if the Board of Trustees of the Trust terminates or does
not renew the Distribution Agreement absent a good faith
determination that Aquila has failed to perform its
responsibilities under the Distribution Agreement by reason
of willful misfeasance, bad faith or gross negligence or
that Aquila has recklessly disregarded its obligations and
duties under the Distribution Agreement; and
b. Aquila shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if by reason of the unavailability of
exchangeability between the Series and any investment
company advised by HTCo or an HTCo affiliate, HTCo has
terminated its obligation to the Series under the agreement
of even date herewith between the Series and HTCo
contemplating obligations on the part of HTCo of a kind
similar to those of Aquila contained in this Agreement.
3. Application of Agreement. The obligations
under this Agreement shall apply to Aquila and all Aquila
Affiliates and Aquila shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Diana P. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to Aquila, addressed to:
Lacy B. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
[balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Diana P. Herrmann
Vice President
AQUILA DISTRIBUTORS CORPORATION
by_______________________________
Lacy B. Herrmann,
Vice President
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Aquila Management Corporation
("Aquila"), a corporation organized under the laws of New
York with offices in New York, New York,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, named U. S. Treasuries Cash Assets Trust (the
"Series"), invests in a portfolio of money-market
securities and holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act;
2) Aquila serves and has served since 1984 as
Administrator of the Series pursuant to a written
administration agreement (the "Administration Agreement");
3) Aquila in its capacity as Administrator of the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies such as the Trust, and, although not
directly involved in management of the portfolio of the
Series or the marketing or distribution of shares of the
Series, Aquila has by reason of its association with the
Series been informed of valuable and sensitive information
concerning such portfolio management, marketing and
distribution;
4) The Trust and Aquila have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the
Administration Agreement or related to the subject matter
covered thereby, but in furtherance of the relationship
contemplated by the Administration Agreement;
5) The Trust and Aquila have agreed that in the best
interests of shareholders of the Series, the information
which Aquila has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as Aquila provides such services to
the Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and
may in the future rely on the covenants of Aquila contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the
Administration Agreement at any time upon sixty days'
notice and in its annual determinations as to whether or
not the Trust will renew the Administration Agreement,
although this Agreement does not in any way restrict the
free exercise of the right of the Trust, and its Board of
Trustees, in connection with such determinations to make
such decisions and to take into account such matters as the
Board of Trustees believes appropriate;
7) Aquila is controlled by Lacy B. Herrmann, all
direct and indirect parents, subsidiaries and affiliates of
Aquila and all corporations controlled by Mr. Herrmann, now
or in the future, being referred to herein as the "Aquila
Affiliates";
8) Hawaiian Trust Company, Limited ("HTCo"), a trust
company organized under the laws of the State of Hawaii
with principal offices in Honolulu, Hawaii, serves as
investment adviser for the Trust pursuant to a written
advisory agreement with respect to the Trust, HTCo being a
subsidiary of Bank of Hawaii and an indirect subsidiary of
Bancorp Hawaii, Inc., a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, all
direct and indirect parents, subsidiaries and affiliates of
HTCo, now or in the future, being referred to herein as the
"HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty. Neither
Aquila nor any Aquila Affiliate shall serve as investment
adviser, administrator, sponsor, promoter, or principal
underwriter of any investment company that competes
directly with the Trust and has as its investment adviser a
company with its principal office in the State of Hawaii,
nor shall they provide services directly or indirectly in
the capacities here specified to, or receive fees for such
services from, any investment company which holds itself
out as a "money-market fund" under Rule 2a-7 promulgated by
the Securities and Exchange Commission under the 1940 Act
and has as its investment adviser a company with its
principal office in the State of Hawaii; provided, however,
that Aquila or any Aquila Affiliate may provide services
directly or indirectly in the capacities listed herein to,
or receive fees for such services from, any investment
company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon Aquila so long as it
provides services to the Trust, and for a period of two
years thereafter; provided, however, that:
a. such obligations shall not bind Aquila
if the Board of Trustees of the Trust terminates the
Administration Agreement absent a good faith determination
that Aquila has failed to perform its responsibilities
under the Administration Agreement by reason of willful
misfeasance, bad faith or gross negligence or that Aquila
has recklessly disregarded its obligations and duties under
the Administration Agreement; and
b. Aquila shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if by reason of the unavailability of
exchangeability between the Series and any investment
company advised by HTCo or an HTCo affiliate, HTCo has
terminated its obligation to the Series under the agreement
of even date herewith between the Series and HTCo
contemplating obligations on the part of HTCo of a kind
similar to those of Aquila contained in this Agreement.
3. Application of Agreement. The obligations
under this Agreement shall apply to Aquila and all Aquila
Affiliates and Aquila shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Diana P. Herrmann, Vice President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to Aquila, addressed to:
Lacy B. Herrmann, President
380 Madison Avenue
Suite 2300
New York, NY 10017;
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be
changed or modified orally, but only by an agreement in
writing signed by the party against whom enforcement of any
change or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Diana P. Herrmann
Vice President
AQUILA MANAGEMENT CORPORATION
by_______________________________
Lacy B. Herrmann,
President
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
This Agreement, made the day of December, 1992, by
and between Cash Assets Trust (the "Trust"), a
Massachusetts business trust with principal offices in New
York, New York and Hawaiian Trust Company, Limited
("HTCo"), a trust company organized under the laws of
Hawaii with principal offices in Honolulu, Hawaii,
W I T N E S S E T H:
PREMISES:
1) The Trust is registered under the Investment
Company Act of 1940 (the "1940 Act") and a series of the
Trust, named U. S. Treasuries Cash Assets Trust (the
"Series"), invests in a portfolio of money-market
securities and holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act;
2) HTCo serves and has served since 1984 as
investment adviser for the Series pursuant to a written
advisory agreement (the "Advisory Agreement"), which in
accordance with a provision of the 1940 Act is terminable
upon 60 days' notice by the Trust;
3) HTCo in its capacity as investment adviser to the
Series has, in the course of performing its obligations to
the Series and its activities in the best interests of the
shareholders of the Series, acquired valuable and sensitive
information as to the operation and management of
investment companies, and although not involved in
administration of the Series or the marketing or
distribution of shares of the Series, HTCo has by reason of
its association with the Series been informed of valuable
and sensitive information concerning such administration,
marketing and distribution;
4) The Trust and HTCo have agreed upon certain
additional arrangements set forth herein that would be
beneficial to the Series, not as a part of the Advisory
Agreement or related to the subject matter covered thereby,
but in furtherance of the relationship contemplated by the
Advisory Agreement;
5) The Trust and HTCo have agreed that in the best
interests of shareholders of the Series, the information
which HTCo has obtained in its capacity of provider of
services to the Series should, as provided herein, continue
to be applied solely on behalf of the Series and its
shareholders so long as HTCo provides such services to the
Series and for a reasonable period thereafter;
6) The parties recognize that the Trust relies and
may in the future rely on the covenants of HTCo contained
herein in the Trust's continuing determinations to refrain
from the exercise of its right to terminate the Advisory
Agreement at any time upon sixty days' notice and in its
annual determinations as to whether or not the Trust will
renew the Advisory Agreement, although this Agreement does
not in any way restrict the free exercise of the right of
the Trust, and its Board of Trustees, in connection with
such determinations to make such decisions and to take into
account such matters as the Board of Trustees believes
appropriate;
7) HTCo is a subsidiary of Bank of Hawaii and an
indirect subsidiary of Bancorp Hawaii, Inc., a bank holding
company registered under the Bank Holding Company Act of
1956, as amended, all direct and indirect parents,
subsidiaries and affiliates of HTCo, now or in the future,
being referred to herein as the "HTCo Affiliates";
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein, the parties hereto
agree as follows:
1. Obligation as to Undivided Loyalty.
Neither HTCo nor any HTCo Affiliate shall serve as
investment adviser, administrator, sponsor, promoter, or
principal underwriter of any investment company that
competes directly with the Trust and shall not provide
services directly or indirectly in the capacities here
specified to, or receive fees for such services from, any
investment company which holds itself out as a "money-
market fund" under Rule 2a-7 promulgated by the Securities
and Exchange Commission under the 1940 Act; provided,
however, that HTCo or any HTCo Affiliate may provide
services directly or indirectly in the capacities listed
herein to, or receive fees for such services from, any
investment company
a. listed on Schedule A hereto; or
b. the portfolio of which consists initially
of assets previously held in a common or collective trust
fund (other than an investment company created after the
date hereof which holds itself out as a "money-market fund"
under Rule 2a-7 promulgated by the Securities and Exchange
Commission under the 1940 Act) managed by HTCo or any HTCo
Affiliate; or
c. if HTCo or the HTCo Affiliate became a
provider of services to such investment company upon and
solely by reason of the fact that a person, firm or
corporation that provides such investment company services
in any of the capacities listed herein has been directly or
indirectly acquired by, or merged with, HTCo or an HTCo
Affiliate, as long as such investment company does not
operate in a manner that permits ready exchange with an
investment company the investment adviser of which is HTCo
or an HTCo Affiliate.
2. Duration. The obligations specified in this
Agreement shall be binding upon HTCo so long as it provides
services to the Trust, and for a period of two years
thereafter; provided, however, that:
a. such obligations shall not bind HTCo if
the Board of Trustees of the Trust terminates or does not
renew the Advisory Agreement absent a good faith
determination that HTCo has failed to perform its
responsibilities under the Advisory Agreement by reason of
willful misfeasance, bad faith or gross negligence or that
HTCo has recklessly disregarded its obligations and duties
under the Advisory Agreement; and
b. HTCo shall have the right to terminate
its obligation under this Agreement upon at least 30 days'
written notice if the Series, after receiving sufficient
opportunity and cooperation, does not operate in a manner
which permits ready exchange with any investment company
the investment adviser of which is HTCo or an HTCo
Affiliate (an "HTCo Fund"). In order that the Series shall
receive sufficient opportunity and cooperation to institute
exchangeability,
(1) HTCo shall notify the Series that
HTCo wishes such exchangeability;
(2) HTCo and the HTCo Fund, its
officers, adviser, administrator, shareholder servicing
agent, counsel and other service providers shall cooperate
in providing the Series such information, instituting such
procedures, making such disclosure and otherwise doing such
acts and things as shall in the reasonable opinion of the
Series be necessary or appropriate to enable
exchangeability to be implemented and continued; and
(3) the Series shall have at least 120
days, and such additional period as may be required to
obtain exemptive relief from the Securities and Exchange
Commission if necessary in the opinion of counsel for that
Series, to implement exchangeability in the manner
contemplated hereby.
3. Application of Agreement. The obligations
under this Agreement shall apply to HTCo and all HTCo
Affiliates and HTCo shall not provide services or receive
compensation, directly or indirectly, in a manner
prohibited by this Agreement.
4. Applicable Law; Enforcement. This Agreement
shall be construed in accordance with and governed by the
laws applicable to contracts made in, and to be performed
within, the State of New York. This Agreement shall be
enforced by proceedings in a federal or state court located
in the State and County of New York or in the State of
Hawaii, and the parties hereby submit to personal
jurisdiction of such courts for purposes of such
proceedings only. The parties recognize that remedies at
law may be inadequate, that any breach of this Agreement
may cause irreparable harm and that money damages may be
difficult or impossible to calculate; therefore the parties
shall have the right to such equitable relief as may be
appropriate, including specific performance of this
Agreement and temporary and/or permanent injunctive relief.
5. Notices. Except as otherwise provided
herein, any written notice or other written communication
required or permitted to be given under this Agreement
shall be delivered or sent by United States registered
mail, postage prepaid, and, if to the Trust, addressed to:
Lacy B. Herrmann, President
380 Madison Avenue
Suite 2300
New York, NY 10017;
if to HTCo, addressed to:
Douglas Philpotts, Chairman
Hawaiian Trust Company, Limited
Financial Plaza of the Pacific
Box 3170
Honolulu, HI 96802
unless another address is substituted by notice delivered
or sent as provided herein. Any such notice shall be
deemed given when received.
6. Headings. Headings are used for reference
purposes only and shall not be deemed a part of this
Agreement.
7. Entire Agreement. This Agreement embodies
the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiations, representations and agreements with respect
thereto.
8. Waiver. Except where specific time limits
are herein provided, no delay on the part of any party
hereto in exercising any power or right hereunder nor any
single or partial exercise thereof nor the exercise of any
other power of right shall operate as a waiver thereof. No
waiver shall be enforceable against any party hereto unless
in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event. The
rights, remedies and benefits herein expressly specified
are cumulative and not exclusive of any rights, remedies or
benefits which the parties hereto may otherwise have.
9. Separability. If any provision of this
Agreement shall contravene or be invalid under the laws of
any state, country or jurisdiction in which this Agreement
shall be performed or enforced, then such contravention or
invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent
necessary to render it valid and enforceable, or if no such
modification will render it valid and enforceable, then the
Agreement shall be constructed as if not containing the
provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
10. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
shall constitute one and the same Agreement.
11. Amendment. This Agreement cannot be changed
or modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any change
or modification is sought.
12. Persons Bound. This Agreement shall be
binding upon and shall inure to the benefit of the
undersigned parties and their respective successors and
permitted assigns. No assignment shall be made by any
party without the prior written consent of the other party
hereto.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed and delivered on its behalf
as of the date first written above.
CASH ASSETS TRUST
by_______________________________
Lacy B. Herrmann,
Chairman and President
HAWAIIAN TRUST COMPANY, LIMITED
by_______________________________
Douglas Philpotts,
Chairman
<PAGE>
SCHEDULE A
Hawaiian Tax-Free Trust
Cash Assets Trust
Tax-Free Cash Assets Trust
U.S. Treasuries Cash Assets Trust
Pacific Capital Funds Trust, and any series or class
thereof, managed by HTCo or any HTCo Affiliate, except to
the extent that it holds itself out as a "money-market
fund" under Rule 2a-7 promulgated by the Securities and
Exchange Commission under the 1940 Act.
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
551 Fifth Avenue
New York, NY 10176
Tel: (212) 818-1110
FAX: (212) 818-0494
e-mail: [email protected]
July 28, 1997
Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, New York 10017
Ladies and Gentlemen:
You have requested that we render an opinion to Cash Assets
Trust (the "Trust") with respect post-effective amendment No. 21
(the "Amendment") to the Registration Statement of the Trust
under the Securities Act of 1933 and No. 20 under the Investment
Company Act of 1940 regarding the "Originakl Shares" and Service
Shares of each of the three portfolios of the Trust.
We have examined originals or copies, identified to our
satisfaction as being true copies, of those corporate records of
the Trust, certificates of public officials, and other documents
and matters as we have deemed necessary for the purpose of this
opinion. We have assumed without independent verification the
authenticity of the documents submitted to us as originals and
the conformity to the original documents of all documents
submitted to us as copies.
Upon the basis of the foregoing and in reliance upon such
other matters as we deem relevant under the circumstances, it is
our opinion that the Original Shares and Service Shares of each
of the three portfolios of the Trust as described in the
Amendment, when issued and paid for in accordance with the terms
set forth in the prospectus and statement of additional
information each portfolio of the Trust forming a part of its
then effective Registration Statement as heretofore, hereby and
hereafter amended, will be duly issued, fully-paid and non-
assessable to the extent set forth therein.
This letter is furnished to you pursuant to your request and
to the requirements imposed upon you under the 1933 Act and 1940
Act and is intended solely for your use for the purpose of
completing the filing of the Amendment with the Commission. This
letter may not be used for any other purpose or furnished to or
relied upon by any other persons, or included in any filing made
with any other regulatory authority, without our prior written
consent.
We hereby consent to the filing of this opinion with the
Amendment.
Very truly yours,
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
/s/ W. L. D. Barrett
By:_________________________________
W. L. D. Barrett
Dated: June 11, 1995
Pacific Capital Cash Assets Trust
DISTRIBUTION PLAN
1. The Plan This Distribution Plan (the "Plan") is the written
plan, contemplated by Rule 12b-1 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), of Pacific
Capital Cash Assets Trust (the "Trust"), the original portfolio
of Cash Assets Trust, a Massachusetts business trust (the
"Business Trust"). Part I of the Plan applies to all classes of
shares of the Trust and Part II of the Plan applies solely to the
Service Shares class.
2. Disinterested Trustees. While the Plan is in effect, the
selection and nomination of those Trustees of the Business Trust
who are not "interested persons" of the Business Trust shall be
committed to the discretion of such disinterested Trustees.
Nothing herein shall prevent the involvement of others in such
selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such
disinterested Trustees.
Part I
Defensive Provisions
3. Definitions for Part I. As used in this Part I of the Plan,
"Qualified Recipients" shall mean broker-dealers or others
selected by the Trust's sub-adviser, administrator or principal
underwriter, including but not limited to any principal
underwriter of the Trust, with which the Trust, the sub-adviser
or the administrator has entered into written agreements ("Plan
Agreements") and which have rendered assistance (whether direct,
administrative, or both) in the distribution and/or retention of
the Trust's shares or servicing of shareholder accounts.
"Qualified Holdings" shall mean, as to any Qualified Recipient,
all Trust 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 sole judgment of
the sub-adviser or administrator, instrumental in the purchase
and/or retention of such Trust shares and/or in providing
administrative assistance in relation thereto.
4. Certain Payments Permitted. The sub-adviser or administrator
may make payments ("Administrator's Permitted Payments") to
Qualified Recipients, which Administrator's Permitted Payments
shall be made by the sub-adviser or administrator, directly, or
through the Distributor or shareholder servicing agent as
disbursing agent, and shall not be the subject of reimbursement
by the Trust to the sub-adviser or administrator, which may not
exceed, for any fiscal year of the Trust (pro-rated for any
fiscal year which is not a full fiscal year) 0.15 of 1% of the
average annual net assets of the Trust. The sub-adviser or
administrator shall have sole authority (i) as to the selection
of any Qualified Recipient or Recipients; (ii) not to select any
Qualified Recipient; and (iii) as to the amount of
Administrator's Permitted Payments, if any, to each Qualified
Recipient provided that the total Administrator's Permitted
Payments to all Qualified Recipients do not exceed the amount set
forth above. The sub-adviser or administrator is authorized, but
not directed, to take into account, in addition to any other
factors deemed relevant by it, the following: (a) the amount of
the Qualified Holdings of the Qualified Recipient; (b) the extent
to which the Qualified Recipient has, at its expense, taken steps
in the shareholder servicing area; and (c) the possibility that
the Qualified Holdings of the Qualified Recipient would be
redeemed in the absence of its selection or continuance as a
Qualified Recipient. Notwithstanding the foregoing two
sentences, a majority of the Independent Trustees (as defined
below) may remove any person as a Qualified Recipient.
Whenever the sub-adviser or administrator bears the costs,
not borne by the Trust's Distributor, of printing and
distributing all copies of the Trust's prospectuses, statements
of additional information and reports to shareholders which are
not sent to the Trust's shareholders, or the costs of
supplemental sales literature and advertising, such payments are
authorized.
It is recognized that, in view of the Administrator's
Permitted Payments and bearing by the sub-adviser or
administrator of certain distribution expenses, the profits, if
any, of the sub-adviser or administrator are dependent primarily
on the administration fees paid by the Trust to the sub-adviser
or administrator and that its profits, if any, would be less, or
losses, if any, would be increased due to such Administrator's
Permitted Payments and the bearing by it of such expenses. If
and to the extent that any such administration fees paid by the
Trust might, in view of the foregoing, be considered as
indirectly financing any activity which is primarily intended to
result in the sale of Trust shares, the payment of such fees is
authorized by the Plan.
5. Certain Trust Payments Authorized. If and to the extent that
any of the payments listed below are considered to be "primarily
intended to result in the sale of" Trust shares within the
meaning of the Rule, 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 Trust shares, shares of other
funds, or other investments; (ii) the costs of the preparation
and setting in type of all prospectuses and statements of
additional information and the costs of printing, and mailing of
all prospectuses and statements of additional information to
existing shareholders; (iii) the costs of the preparation,
printing, and mailing of all proxy statements and proxies,
irrespective of whether any such proxy statement includes any
item relating to, or directed toward, the sale of the Trust'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 registration or qualification
of the Trust 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 Trust'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.
6. Reports. While Part I of the Plan is in effect, the Trust's
sub-adviser or administrator shall report at least quarterly to
the Business Trust's Trustees in writing for their review on the
following matters: (i) all Administrator's Permitted Payments
made under Section 4 of 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 5
of the Plan (making estimates of such costs where necessary or
desirable) during the preceding calendar or fiscal quarter; and
(iii) all fees of the Trust to the sub-adviser or administrator
paid or accrued during such quarter.
7. Effectiveness, Continuation, Termination, and Amendment. Part
I of the Plan originally went into effect when it was approved
(i) by a vote of the Trustees of the Business Trust and of those
Trustees (the "Independent Trustees") who, at the time of such
vote, were not "interested persons" as defined in the 1940 Act of
the Business Trust and had no direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan, with votes cast in person at a meeting
called for the purpose of voting on the Plan; and (ii) by a vote
of holders of at least a "majority" (as so defined) of the
outstanding voting securities of the Trust. Part I of the Plan
has continued, and will, unless terminated as hereinafter
provided, continue in effect, until the June 30 next succeeding
such effectiveness, and from year to year thereafter only so long
as such continuance is specifically approved at least annually by
the Business Trust's Trustees and its Independent Trustees with
votes cast in person at a meeting called for the purpose of
voting on such continuance. Part I of 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 Trust. The
Plan may not be amended to increase materially the amount of
payments to be made without shareholder approval as set forth in
(ii) above, and all amendments must be approved in the manner set
forth in (i) above.
8. Plan Agreements. In the case of a Qualified Recipient which
is a principal underwriter of the Trust, the Plan Agreement shall
be the agreement contemplated by Section 15(b) of the 1940 Act
since each such agreement must be approved in accordance with,
and contain the provisions required by, the Rule. In the case of
Qualified Recipients which are not principal underwriters of the
Trust, the Plan Agreements with them shall be their agreements
with the sub-adviser or administrator with respect to payments
under Part I of the Plan.
Part II
Payments Involving Trust Assets Allocated to Service Shares
9. Applicability. Part II of the Plan applies only to the
Service Shares class of shares of the Trust (regardless of
whether such class is so designated or is redesignated by some
other name).
10. Definitions for Part II. Terms defined in Part I of the
Plan shall have the same meanings in this Part II, except as
otherwise defined in Part II. As used in this Part II,
"Designated Payees" shall mean broker-dealers or others selected
by the Trust's principal underwriter, Aquila Distributors, Inc.
(the "Distributor"), including but not limited to any principal
underwriter of the Trust, with which the Distributor or the Trust
has entered into written agreements ("Distributor's Plan
Agreements") and which have rendered assistance (whether direct,
administrative, or both) in the distribution and/or retention of
the Trust's shares or servicing of shareholder accounts.
"Qualified Holdings" shall mean, as to any Designated Payee, all
Trust shares beneficially owned by such Designated Payee, or
beneficially owned by its brokerage customers, other customers,
other contacts, investment advisory clients, or other clients, if
the Designated Payee was, in the sole judgment of the
Distributor, instrumental in the purchase and/or retention of
such Trust shares and/or in providing administrative assistance
or other services in relation thereto.
11. Certain Payments Permitted. Subject to the direction and
control of the Board of Trustees of the Trust, the Trust may make
payments ("Trust's Permitted Payments") to Designated Payees,
which Trust's Permitted Payments may be made directly, or through
the Distributor or shareholder servicing agent as disbursing
agent, which may not exceed, for any fiscal year of the Trust (as
adjusted for any part or parts of a fiscal year during which
payments under the Plan are not accruable or for any fiscal year
which is not a full fiscal year) .25 of 1% of the average annual
net assets of the Trust represented by the Service Shares class
of shares. Such payments shall be made only out of the Trust
assets allocable to the Service Shares. The Distributor shall
have sole authority (i) as to the selection of any Designated
Payee or Payees; (ii) not to select any Designated Payee; and
(iii) as to the amount of Trust's Permitted Payments, if any, to
each Designated Payee provided that the total Trust's Permitted
Payments to all Designated Payees do not exceed the amount set
forth above. The Distributor is authorized, but not directed, to
take into account, in addition to any other factors deemed
relevant by it, the following: (a) the amount of the Qualified
Holdings of the Designated Payee; (b) the extent to which the
Designated Payee has, at its expense, taken steps in the
shareholder servicing area, including without limitation, any or
all of the following activities: answering customer inquiries
regarding account status and history, and the manner in which
purchases and redemptions of shares of the Trust may be effected;
assisting shareholders in designating and changing dividend
options, account designations and addresses; providing necessary
personnel and facilities to establish and maintain shareholder
accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds;
transmitting and receiving funds in connection with customer
orders to purchase or redeem shares; verifying and guaranteeing
shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts;
furnishing (either alone or together with other reports sent to a
shareholder by such person) monthly and year end statements and
confirmations of purchases and redemptions; transmitting, on
behalf of the Trust, proxy statements, annual reports, updating
prospectuses and other communications from the Trust to its
shareholders; receiving tabulating and transmitting to the Trust
proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and providing such other related
services as the Distributor or a shareholder may request from
time to time; and (c) the possibility that the Qualified Holdings
of the Designated Payee would be redeemed in the absence of its
selection or continuance as a Designated Payee. Notwithstanding
the foregoing two sentences, a majority of the Independent
Trustees (as defined below) may remove any person as a Designated
Payee.
12. Reports. While this Part II is in effect, the Distributor
shall report at least quarterly to the Business Trust's Trustees
in writing for their review on the following matters: (i) all
Trust's Permitted Payments made under Section 11 of the Plan, the
identity of the Designated Payee of each payment, and the
purposes for which the amounts were expended; and (ii) all fees
of the Trust to the Distributor, sub-adviser or administrator
paid or accrued during such quarter. In addition, if any such
Designated Payee is an affiliated person, as that term is defined
in the Act, of the Trust, the Adviser, the Administrator or the
Distributor, such person shall agree to furnish to the
Distributor for transmission to the Board of Trustees of the
Trust an accounting, in form and detail satisfactory to the Board
of Trustees, to enable the Board of Trustees to make the
determinations of the fairness of the compensation paid to such
affiliated person, not less often than annually.
13. Effectiveness, Continuation, Termination and Amendment.
This Part II originally went into effect when it was approved (i)
by a vote of Trustees, including the Independent Trustees, with
votes cast in person at a meeting called for the purpose of
voting on Part II of the Plan; and (ii) by a vote of holders of
at least a "majority" (as so defined) of the outstanding voting
securities of the Service Shares class. This Part II has
continued, and will, unless terminated as hereinafter provided,
continue in effect, until June 30 of each year only so long as
such continuance is specifically approved at least annually by
the Business Trust's Trustees and its Independent Trustees with
votes cast in person at a meeting called for the purpose of
voting on such continuance. This Part II 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 Trust to
which this Part II applies. This Part II may not be amended to
increase materially the amount of payments to be made without
shareholder approval of the class or classes of shares affected
by this Part II as set forth in (ii) above, and all amendments
must be approved in the manner set forth in (i) above.
14. Distributor's Plan Agreements. In the case of a Designated
Payee which is a principal underwriter of the Trust, the
Distributor's Plan Agreement shall be the agreement contemplated
by Section 15(b) of the 1940 Act since each such agreement must
be approved in accordance with, and contain the provisions
required by, the Rule. In the case of Designated Payees which
are not principal underwriters of the Trust, the Distributor's
Plan Agreements with them shall be their agreements with the
Distributor with respect to payments under the Plan.
15. Additional Terms and Conditions. This Part II shall also be
subject to all applicable terms and conditions of any order or
rule of the Securities and Exchange Commission governing the
creation and maintenance by the Trust of any class of shares to
which this Part II applies.
Dated: June 11, 1995
Pacific Capital Tax-Free Cash Assets Trust
DISTRIBUTION PLAN
1. The Plan This Distribution Plan (the "Plan") is the written
plan, contemplated by Rule 12b-1 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), of Pacific
Capital Tax-Free Cash Assets Trust (the "Trust"), a portfolio of
Cash Assets Trust, a Massachusetts business trust (the "Business
Trust"). Part I of the Plan applies to all classes of shares of
the Trust and Part II of the Plan applies solely to the Service
Shares class.
2. Disinterested Trustees. While the Plan is in effect, the
selection and nomination of those Trustees of the Business Trust
who are not "interested persons" of the Business Trust shall be
committed to the discretion of such disinterested Trustees.
Nothing herein shall prevent the involvement of others in such
selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such
disinterested Trustees.
Part I
Defensive Provisions
3. Definitions for Part I. As used in this Part I of the Plan,
"Qualified Recipients" shall mean broker-dealers or others
selected by the Trust's sub-adviser, administrator or principal
underwriter, including but not limited to any principal
underwriter of the Trust, with which the Trust, the sub-adviser
or the administrator has entered into written agreements ("Plan
Agreements") and which have rendered assistance (whether direct,
administrative, or both) in the distribution and/or retention of
the Trust's shares or servicing of shareholder accounts.
"Qualified Holdings" shall mean, as to any Qualified Recipient,
all Trust 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 sole judgment of
the sub-adviser or administrator, instrumental in the purchase
and/or retention of such Trust shares and/or in providing
administrative assistance in relation thereto.
4. Certain Payments Permitted. The sub-adviser or administrator
may make payments ("Administrator's Permitted Payments") to
Qualified Recipients, which Administrator's Permitted Payments
shall be made by the sub-adviser or administrator, directly, or
through the Distributor or shareholder servicing agent as
disbursing agent, and shall not be the subject of reimbursement
by the Trust to the sub-adviser or administrator, which may not
exceed, for any fiscal year of the Trust (pro-rated for any
fiscal year which is not a full fiscal year) 0.10 of 1% of the
average annual net assets of the Trust. The sub-adviser or
administrator shall have sole authority (i) as to the selection
of any Qualified Recipient or Recipients; (ii) not to select any
Qualified Recipient; and (iii) as to the amount of
Administrator's Permitted Payments, if any, to each Qualified
Recipient provided that the total Administrator's Permitted
Payments to all Qualified Recipients do not exceed the amount set
forth above. The sub-adviser or administrator is authorized, but
not directed, to take into account, in addition to any other
factors deemed relevant by it, the following: (a) the amount of
the Qualified Holdings of the Qualified Recipient; (b) the extent
to which the Qualified Recipient has, at its expense, taken steps
in the shareholder servicing area; and (c) the possibility that
the Qualified Holdings of the Qualified Recipient would be
redeemed in the absence of its selection or continuance as a
Qualified Recipient. Notwithstanding the foregoing two
sentences, a majority of the Independent Trustees (as defined
below) may remove any person as a Qualified Recipient.
Whenever the sub-adviser or administrator bears the costs,
not borne by the Trust's Distributor, of printing and
distributing all copies of the Trust's prospectuses, statements
of additional information and reports to shareholders which are
not sent to the Trust's shareholders, or the costs of
supplemental sales literature and advertising, such payments are
authorized.
It is recognized that, in view of the Administrator's
Permitted Payments and bearing by the sub-adviser or
administrator of certain distribution expenses, the profits, if
any, of the sub-adviser or administrator are dependent primarily
on the administration fees paid by the Trust to the sub-adviser
or administrator and that its profits, if any, would be less, or
losses, if any, would be increased due to such Administrator's
Permitted Payments and the bearing by it of such expenses. If
and to the extent that any such administration fees paid by the
Trust might, in view of the foregoing, be considered as
indirectly financing any activity which is primarily intended to
result in the sale of Trust shares, the payment of such fees is
authorized by the Plan.
5. Certain Trust Payments Authorized. If and to the extent that
any of the payments listed below are considered to be "primarily
intended to result in the sale of" Trust shares within the
meaning of the Rule, 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 Trust shares, shares of other
funds, or other investments; (ii) the costs of the preparation
and setting in type of all prospectuses and statements of
additional information and the costs of printing, and mailing of
all prospectuses and statements of additional information to
existing shareholders; (iii) the costs of the preparation,
printing, and mailing of all proxy statements and proxies,
irrespective of whether any such proxy statement includes any
item relating to, or directed toward, the sale of the Trust'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 registration or qualification
of the Trust 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 Trust'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.
6. Reports. While Part I of the Plan is in effect, the Trust's
sub-adviser or administrator shall report at least quarterly to
the Business Trust's Trustees in writing for their review on the
following matters: (i) all Administrator's Permitted Payments
made under Section 4 of 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 5
of the Plan (making estimates of such costs where necessary or
desirable) during the preceding calendar or fiscal quarter; and
(iii) all fees of the Trust to the sub-adviser or administrator
paid or accrued during such quarter.
7. Effectiveness, Continuation, Termination, and Amendment. Part
I of the Plan originally went into effect when it was approved
(i) by a vote of the Trustees of the Business Trust and of those
Trustees (the "Independent Trustees") who, at the time of such
vote, were not "interested persons" as defined in the 1940 Act of
the Business Trust and had no direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan, with votes cast in person at a meeting
called for the purpose of voting on the Plan; and (ii) by a vote
of holders of at least a "majority" (as so defined) of the
outstanding voting securities of the Trust. Part I of the Plan
has continued, and will, unless terminated as hereinafter
provided, continue in effect, until the June 30 next succeeding
such effectiveness, and from year to year thereafter only so long
as such continuance is specifically approved at least annually by
the Business Trust's Trustees and its Independent Trustees with
votes cast in person at a meeting called for the purpose of
voting on such continuance. Part I of 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 Trust. The
Plan may not be amended to increase materially the amount of
payments to be made without shareholder approval as set forth in
(ii) above, and all amendments must be approved in the manner set
forth in (i) above.
8. Plan Agreements. In the case of a Qualified Recipient which
is a principal underwriter of the Trust, the Plan Agreement shall
be the agreement contemplated by Section 15(b) of the 1940 Act
since each such agreement must be approved in accordance with,
and contain the provisions required by, the Rule. In the case of
Qualified Recipients which are not principal underwriters of the
Trust, the Plan Agreements with them shall be their agreements
with the sub-adviser or administrator with respect to payments
under Part I of the Plan.
Part II
Payments Involving Trust Assets Allocated to Service Shares
9. Applicability. Part II of the Plan applies only to the
Service Shares class of shares of the Trust (regardless of
whether such class is so designated or is redesignated by some
other name).
10. Definitions for Part II. Terms defined in Part I of the
Plan shall have the same meanings in this Part II, except as
otherwise defined in Part II. As used in this Part II,
"Designated Payees" shall mean broker-dealers or others selected
by the Trust's principal underwriter, Aquila Distributors, Inc.
(the "Distributor"), including but not limited to any principal
underwriter of the Trust, with which the Distributor or the Trust
has entered into written agreements ("Distributor's Plan
Agreements") and which have rendered assistance (whether direct,
administrative, or both) in the distribution and/or retention of
the Trust's shares or servicing of shareholder accounts.
"Qualified Holdings" shall mean, as to any Designated Payee, all
Trust shares beneficially owned by such Designated Payee, or
beneficially owned by its brokerage customers, other customers,
other contacts, investment advisory clients, or other clients, if
the Designated Payee was, in the sole judgment of the
Distributor, instrumental in the purchase and/or retention of
such Trust shares and/or in providing administrative assistance
or other services in relation thereto.
11. Certain Payments Permitted. Subject to the direction and
control of the Board of Trustees of the Trust, the Trust may make
payments ("Trust's Permitted Payments") to Designated Payees,
which Trust's Permitted Payments may be made directly, or through
the Distributor or shareholder servicing agent as disbursing
agent, which may not exceed, for any fiscal year of the Trust (as
adjusted for any part or parts of a fiscal year during which
payments under the Plan are not accruable or for any fiscal year
which is not a full fiscal year) .25 of 1% of the average annual
net assets of the Trust represented by the Service Shares class
of shares. Such payments shall be made only out of the Trust
assets allocable to the Service Shares. The Distributor shall
have sole authority (i) as to the selection of any Designated
Payee or Payees; (ii) not to select any Designated Payee; and
(iii) as to the amount of Trust's Permitted Payments, if any, to
each Designated Payee provided that the total Trust's Permitted
Payments to all Designated Payees do not exceed the amount set
forth above. The Distributor is authorized, but not directed, to
take into account, in addition to any other factors deemed
relevant by it, the following: (a) the amount of the Qualified
Holdings of the Designated Payee; (b) the extent to which the
Designated Payee has, at its expense, taken steps in the
shareholder servicing area, including without limitation, any or
all of the following activities: answering customer inquiries
regarding account status and history, and the manner in which
purchases and redemptions of shares of the Trust may be effected;
assisting shareholders in designating and changing dividend
options, account designations and addresses; providing necessary
personnel and facilities to establish and maintain shareholder
accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds;
transmitting and receiving funds in connection with customer
orders to purchase or redeem shares; verifying and guaranteeing
shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts;
furnishing (either alone or together with other reports sent to a
shareholder by such person) monthly and year end statements and
confirmations of purchases and redemptions; transmitting, on
behalf of the Trust, proxy statements, annual reports, updating
prospectuses and other communications from the Trust to its
shareholders; receiving tabulating and transmitting to the Trust
proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and providing such other related
services as the Distributor or a shareholder may request from
time to time; and (c) the possibility that the Qualified Holdings
of the Designated Payee would be redeemed in the absence of its
selection or continuance as a Designated Payee. Notwithstanding
the foregoing two sentences, a majority of the Independent
Trustees (as defined below) may remove any person as a Designated
Payee.
12. Reports. While this Part II is in effect, the Distributor
shall report at least quarterly to the Business Trust's Trustees
in writing for their review on the following matters: (i) all
Trust's Permitted Payments made under Section 11 of the Plan, the
identity of the Designated Payee of each payment, and the
purposes for which the amounts were expended; and (ii) all fees
of the Trust to the Distributor, sub-adviser or administrator
paid or accrued during such quarter. In addition, if any such
Designated Payee is an affiliated person, as that term is defined
in the Act, of the Trust, the Adviser, the Administrator or the
Distributor, such person shall agree to furnish to the
Distributor for transmission to the Board of Trustees of the
Trust an accounting, in form and detail satisfactory to the Board
of Trustees, to enable the Board of Trustees to make the
determinations of the fairness of the compensation paid to such
affiliated person, not less often than annually.
13. Effectiveness, Continuation, Termination and Amendment.
This Part II originally went into effect when it was approved (i)
by a vote of Trustees, including the Independent Trustees, with
votes cast in person at a meeting called for the purpose of
voting on Part II of the Plan; and (ii) by a vote of holders of
at least a "majority" (as so defined) of the outstanding voting
securities of the Service Shares class. This Part II has
continued, and will, unless terminated as hereinafter provided,
continue in effect, until June 30 of each year only so long as
such continuance is specifically approved at least annually by
the Business Trust's Trustees and its Independent Trustees with
votes cast in person at a meeting called for the purpose of
voting on such continuance. This Part II 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 Trust to
which this Part II applies. This Part II may not be amended to
increase materially the amount of payments to be made without
shareholder approval of the class or classes of shares affected
by this Part II as set forth in (ii) above, and all amendments
must be approved in the manner set forth in (i) above.
14. Distributor's Plan Agreements. In the case of a Designated
Payee which is a principal underwriter of the Trust, the
Distributor's Plan Agreement shall be the agreement contemplated
by Section 15(b) of the 1940 Act since each such agreement must
be approved in accordance with, and contain the provisions
required by, the Rule. In the case of Designated Payees which
are not principal underwriters of the Trust, the Distributor's
Plan Agreements with them shall be their agreements with the
Distributor with respect to payments under the Plan.
15. Additional Terms and Conditions. This Part II shall also be
subject to all applicable terms and conditions of any order or
rule of the Securities and Exchange Commission governing the
creation and maintenance by the Trust of any class of shares to
which this Part II applies.
Dated: June 11, 1995
Pacific Capital U.S. Treasuries Cash Assets Trust
DISTRIBUTION PLAN
1. The Plan This Distribution Plan (the "Plan") is the written
plan, contemplated by Rule 12b-1 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), of Pacific
Capital Cash Assets Trust (the "Trust"), the original portfolio
of Cash Assets Trust, a Massachusetts business trust (the
"Business Trust"). Part I of the Plan applies to all classes of
shares of the Trust and Part II of the Plan applies solely to the
Service Shares class.
2. Disinterested Trustees. While the Plan is in effect, the
selection and nomination of those Trustees of the Business Trust
who are not "interested persons" of the Business Trust shall be
committed to the discretion of such disinterested Trustees.
Nothing herein shall prevent the involvement of others in such
selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such
disinterested Trustees.
Part I
Defensive Provisions
3. Definitions for Part I. As used in this Part I of the Plan,
"Qualified Recipients" shall mean broker-dealers or others
selected by the Trust's sub-adviser, administrator or principal
underwriter, including but not limited to any principal
underwriter of the Trust, with which the Trust, the sub-adviser
or the administrator has entered into written agreements ("Plan
Agreements") and which have rendered assistance (whether direct,
administrative, or both) in the distribution and/or retention of
the Trust's shares or servicing of shareholder accounts.
"Qualified Holdings" shall mean, as to any Qualified Recipient,
all Trust 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 sole judgment of
the sub-adviser or administrator, instrumental in the purchase
and/or retention of such Trust shares and/or in providing
administrative assistance in relation thereto.
4. Certain Payments Permitted. The sub-adviser or administrator
may make payments ("Administrator's Permitted Payments") to
Qualified Recipients, which Administrator's Permitted Payments
shall be made by the sub-adviser or administrator, directly, or
through the Distributor or shareholder servicing agent as
disbursing agent, and shall not be the subject of reimbursement
by the Trust to the sub-adviser or administrator, which may not
exceed, for any fiscal year of the Trust (pro-rated for any
fiscal year which is not a full fiscal year) 0.10 of 1% of the
average annual net assets of the Trust. The sub-adviser or
administrator shall have sole authority (i) as to the selection
of any Qualified Recipient or Recipients; (ii) not to select any
Qualified Recipient; and (iii) as to the amount of
Administrator's Permitted Payments, if any, to each Qualified
Recipient provided that the total Administrator's Permitted
Payments to all Qualified Recipients do not exceed the amount set
forth above. The sub-adviser or administrator is authorized, but
not directed, to take into account, in addition to any other
factors deemed relevant by it, the following: (a) the amount of
the Qualified Holdings of the Qualified Recipient; (b) the extent
to which the Qualified Recipient has, at its expense, taken steps
in the shareholder servicing area; and (c) the possibility that
the Qualified Holdings of the Qualified Recipient would be
redeemed in the absence of its selection or continuance as a
Qualified Recipient. Notwithstanding the foregoing two
sentences, a majority of the Independent Trustees (as defined
below) may remove any person as a Qualified Recipient.
Whenever the sub-adviser or administrator bears the costs,
not borne by the Trust's Distributor, of printing and
distributing all copies of the Trust's prospectuses, statements
of additional information and reports to shareholders which are
not sent to the Trust's shareholders, or the costs of
supplemental sales literature and advertising, such payments are
authorized.
It is recognized that, in view of the Administrator's
Permitted Payments and bearing by the sub-adviser or
administrator of certain distribution expenses, the profits, if
any, of the sub-adviser or administrator are dependent primarily
on the administration fees paid by the Trust to the sub-adviser
or administrator and that its profits, if any, would be less, or
losses, if any, would be increased due to such Administrator's
Permitted Payments and the bearing by it of such expenses. If
and to the extent that any such administration fees paid by the
Trust might, in view of the foregoing, be considered as
indirectly financing any activity which is primarily intended to
result in the sale of Trust shares, the payment of such fees is
authorized by the Plan.
5. Certain Trust Payments Authorized. If and to the extent that
any of the payments listed below are considered to be "primarily
intended to result in the sale of" Trust shares within the
meaning of the Rule, 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 Trust shares, shares of other
funds, or other investments; (ii) the costs of the preparation
and setting in type of all prospectuses and statements of
additional information and the costs of printing, and mailing of
all prospectuses and statements of additional information to
existing shareholders; (iii) the costs of the preparation,
printing, and mailing of all proxy statements and proxies,
irrespective of whether any such proxy statement includes any
item relating to, or directed toward, the sale of the Trust'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 registration or qualification
of the Trust 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 Trust'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.
6. Reports. While Part I of the Plan is in effect, the Trust's
sub-adviser or administrator shall report at least quarterly to
the Business Trust's Trustees in writing for their review on the
following matters: (i) all Administrator's Permitted Payments
made under Section 4 of 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 5
of the Plan (making estimates of such costs where necessary or
desirable) during the preceding calendar or fiscal quarter; and
(iii) all fees of the Trust to the sub-adviser or administrator
paid or accrued during such quarter.
7. Effectiveness, Continuation, Termination, and Amendment. Part
I of the Plan originally went into effect when it was approved
(i) by a vote of the Trustees of the Business Trust and of those
Trustees (the "Independent Trustees") who, at the time of such
vote, were not "interested persons" as defined in the 1940 Act of
the Business Trust and had no direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan, with votes cast in person at a meeting
called for the purpose of voting on the Plan; and (ii) by a vote
of holders of at least a "majority" (as so defined) of the
outstanding voting securities of the Trust. Part I of the Plan
has continued, and will, unless terminated as hereinafter
provided, continue in effect, until the June 30 next succeeding
such effectiveness, and from year to year thereafter only so long
as such continuance is specifically approved at least annually by
the Business Trust's Trustees and its Independent Trustees with
votes cast in person at a meeting called for the purpose of
voting on such continuance. Part I of 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 Trust. The
Plan may not be amended to increase materially the amount of
payments to be made without shareholder approval as set forth in
(ii) above, and all amendments must be approved in the manner set
forth in (i) above.
8. Plan Agreements. In the case of a Qualified Recipient which
is a principal underwriter of the Trust, the Plan Agreement shall
be the agreement contemplated by Section 15(b) of the 1940 Act
since each such agreement must be approved in accordance with,
and contain the provisions required by, the Rule. In the case of
Qualified Recipients which are not principal underwriters of the
Trust, the Plan Agreements with them shall be their agreements
with the sub-adviser or administrator with respect to payments
under Part I of the Plan.
Part II
Payments Involving Trust Assets Allocated to Service Shares
9. Applicability. Part II of the Plan applies only to the
Service Shares class of shares of the Trust (regardless of
whether such class is so designated or is redesignated by some
other name).
10. Definitions for Part II. Terms defined in Part I of the
Plan shall have the same meanings in this Part II, except as
otherwise defined in Part II. As used in this Part II,
"Designated Payees" shall mean broker-dealers or others selected
by the Trust's principal underwriter, Aquila Distributors, Inc.
(the "Distributor"), including but not limited to any principal
underwriter of the Trust, with which the Distributor or the Trust
has entered into written agreements ("Distributor's Plan
Agreements") and which have rendered assistance (whether direct,
administrative, or both) in the distribution and/or retention of
the Trust's shares or servicing of shareholder accounts.
"Qualified Holdings" shall mean, as to any Designated Payee, all
Trust shares beneficially owned by such Designated Payee, or
beneficially owned by its brokerage customers, other customers,
other contacts, investment advisory clients, or other clients, if
the Designated Payee was, in the sole judgment of the
Distributor, instrumental in the purchase and/or retention of
such Trust shares and/or in providing administrative assistance
or other services in relation thereto.
11. Certain Payments Permitted. Subject to the direction and
control of the Board of Trustees of the Trust, the Trust may make
payments ("Trust's Permitted Payments") to Designated Payees,
which Trust's Permitted Payments may be made directly, or through
the Distributor or shareholder servicing agent as disbursing
agent, which may not exceed, for any fiscal year of the Trust (as
adjusted for any part or parts of a fiscal year during which
payments under the Plan are not accruable or for any fiscal year
which is not a full fiscal year) .25 of 1% of the average annual
net assets of the Trust represented by the Service Shares class
of shares. Such payments shall be made only out of the Trust
assets allocable to the Service Shares. The Distributor shall
have sole authority (i) as to the selection of any Designated
Payee or Payees; (ii) not to select any Designated Payee; and
(iii) as to the amount of Trust's Permitted Payments, if any, to
each Designated Payee provided that the total Trust's Permitted
Payments to all Designated Payees do not exceed the amount set
forth above. The Distributor is authorized, but not directed, to
take into account, in addition to any other factors deemed
relevant by it, the following: (a) the amount of the Qualified
Holdings of the Designated Payee; (b) the extent to which the
Designated Payee has, at its expense, taken steps in the
shareholder servicing area, including without limitation, any or
all of the following activities: answering customer inquiries
regarding account status and history, and the manner in which
purchases and redemptions of shares of the Trust may be effected;
assisting shareholders in designating and changing dividend
options, account designations and addresses; providing necessary
personnel and facilities to establish and maintain shareholder
accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds;
transmitting and receiving funds in connection with customer
orders to purchase or redeem shares; verifying and guaranteeing
shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts;
furnishing (either alone or together with other reports sent to a
shareholder by such person) monthly and year end statements and
confirmations of purchases and redemptions; transmitting, on
behalf of the Trust, proxy statements, annual reports, updating
prospectuses and other communications from the Trust to its
shareholders; receiving tabulating and transmitting to the Trust
proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and providing such other related
services as the Distributor or a shareholder may request from
time to time; and (c) the possibility that the Qualified Holdings
of the Designated Payee would be redeemed in the absence of its
selection or continuance as a Designated Payee. Notwithstanding
the foregoing two sentences, a majority of the Independent
Trustees (as defined below) may remove any person as a Designated
Payee.
12. Reports. While this Part II is in effect, the Distributor
shall report at least quarterly to the Business Trust's Trustees
in writing for their review on the following matters: (i) all
Trust's Permitted Payments made under Section 11 of the Plan, the
identity of the Designated Payee of each payment, and the
purposes for which the amounts were expended; and (ii) all fees
of the Trust to the Distributor, sub-adviser or administrator
paid or accrued during such quarter. In addition, if any such
Designated Payee is an affiliated person, as that term is defined
in the Act, of the Trust, the Adviser, the Administrator or the
Distributor, such person shall agree to furnish to the
Distributor for transmission to the Board of Trustees of the
Trust an accounting, in form and detail satisfactory to the Board
of Trustees, to enable the Board of Trustees to make the
determinations of the fairness of the compensation paid to such
affiliated person, not less often than annually.
13. Effectiveness, Continuation, Termination and Amendment.
This Part II originally went into effect when it was approved (i)
by a vote of Trustees, including the Independent Trustees, with
votes cast in person at a meeting called for the purpose of
voting on Part II of the Plan; and (ii) by a vote of holders of
at least a "majority" (as so defined) of the outstanding voting
securities of the Service Shares class. This Part II has
continued, and will, unless terminated as hereinafter provided,
continue in effect, until June 30 of each year only so long as
such continuance is specifically approved at least annually by
the Business Trust's Trustees and its Independent Trustees with
votes cast in person at a meeting called for the purpose of
voting on such continuance. This Part II 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 Trust to
which this Part II applies. This Part II may not be amended to
increase materially the amount of payments to be made without
shareholder approval of the class or classes of shares affected
by this Part II as set forth in (ii) above, and all amendments
must be approved in the manner set forth in (i) above.
14. Distributor's Plan Agreements. In the case of a Designated
Payee which is a principal underwriter of the Trust, the
Distributor's Plan Agreement shall be the agreement contemplated
by Section 15(b) of the 1940 Act since each such agreement must
be approved in accordance with, and contain the provisions
required by, the Rule. In the case of Designated Payees which
are not principal underwriters of the Trust, the Distributor's
Plan Agreements with them shall be their agreements with the
Distributor with respect to payments under the Plan.
15. Additional Terms and Conditions. This Part II shall also be
subject to all applicable terms and conditions of any order or
rule of the Securities and Exchange Commission governing the
creation and maintenance by the Trust of any class of shares to
which this Part II applies.
PRINCIPLES OF COOPERATION
Hawaiian Tax-Free Trust (the "Bond Fund") is a
tax-exempt bond fund registered under the Investment
Company Act of 1940 (the "1940 Act"). Each of Cash Assets
Trust, Tax-Free Cash Assets Trust and U.S. Treasuries Cash
Assets Trust is a series (singly and collectively, the
"Series"), of the Cash Assets Trust (the "Money Fund"),
which is a money-market fund which is also registered under
the 1940 Act.
Hawaiian Trust Company, Limited ("HTCo") serves as
Investment Adviser for the Bond Fund and for each Series
pursuant to a written advisory agreement with respect to
the Bond Fund or that Series. Aquila Management
Corporation serves as Administrator pursuant to a written
administration agreement with respect to the Bond Fund and
for each Series. Aquila Distributors, Inc. serves as
principal underwriter pursuant to a written distribution
agreement with respect to the Bond Fund and each Series.
Aquila Management Corporation and Aquila Distributors, Inc.
are referred to herein collectively as "Aquila."
The Bond Fund and the Money Fund, and any other
investment company registered under the 1940 Act which may
in the future be served by both HTCo and Aquila as
Investment Adviser and as Administrator and principal
underwriter, respectively, are referred to herein as the
"Trusts."
Since 1984, HTCo and Aquila have worked together
effectively and harmoniously to provide a high level of
service to the Bond Fund and the Series, and as a result of
their combined efforts, the Bond Fund and the Series have
achieved substantial size and have evolved effective
operating practices and procedures. HTCo and Aquila now
wish to address certain matters of concern to each of them
as set forth below. By addressing these matters the
parties desire to promote their continued joint efforts in
the best interests of the Trusts and the shareholders of
the Trusts in a spirit of good will.
The Board of Trustees of the Trusts are fully familiar
with the relevant background and have encouraged the
discussions between the parties which have led to the
formulation of these principles. They have also reviewed
this document and have requested that in the interests of
the shareholders of the Trusts, HTCo and Aquila subscribe
to these principles in order to promote continued and
effective performance on behalf of the Trusts.
The parties consider that providing a contractual
basis for the observance of the principles here enumerated
is impractical, in view of constantly changing
circumstances and the possibility of unforeseen
developments. Accordingly, this document is not intended to
be, and is not, a contract, and no legally enforceable
rights or remedies are intended to be, and are not, created
hereby. Instead, the parties consider that they may best
address the matters with which they are concerned by
setting forth a set of principles as to which they agree
for their future guidance.
Application of all of the principles stated below is
subject to matters of law applicable to the parties and the
Trusts; these include the 1940 Act, the Rules promulgated
thereunder, decisions of the Securities and Exchange
Commission and interpretations of its staff, the fiduciary
and other duties of the parties and the exercise by the
Board of Trustees of the Trusts and the majority of
Trustees who are not interested persons of the Trusts of
their responsibilities as required by law, and the receipt
of necessary shareholder approval if required by the 1940
Act.
Subject to the foregoing, the parties intend to be
guided by the following principles:
I. Mutual Cooperation
The parties shall endeavor to work together in an
harmonious manner, to communicate differences of
opinion quickly and to work together to resolve any
divergence of viewpoint so as to operate in the best
interest of the Trusts and their shareholders.
II. Continuance of Contractual Relations
A. HTCo will take no action nor will it initiate,
suggest or encourage any action to remove Aquila
as Administrator or Distributor of any Trust.
B. Aquila will take no action nor will it initiate,
suggest or encourage any action to remove HTCo as
Investment Adviser of any Trust.
C. Each of HTCo and Aquila will endeavor to see to
it that the other is continued as Investment
Adviser or Administrator and Distributor to each
Trust, as the case may be, on terms at least as
favorable to the other party as on the date
hereof.
III. Continuation of Board Structure.
A. The parties shall consult with each other as to
candidates for election as Trustee to be
recommended or proposed by either of them, and if
a candidate is not approved by one party, such
person shall not be recommended by the other
party for election to the Board of Trustees,
provided that the proposing party may recommend
or propose any candidate to replace a Trustee
originally proposed by that party where the size
of the Board is not changed
1. For purposes of the Boards both of Hawaiian Tax-Free
Trust and of Cash Assets Trust, at the conclusion of the
September, 1992 Annual Meeting of Shareholders of Hawaiian
Tax-Free Trust, those Trustees first elected to the Board
of Hawaiian Tax-Free Trust after January 1, 1992 shall be
considered as having been proposed by HTCo and the Trustees
elected prior to that date shall be considered as having
been proposed by Aquila.
B. Any proposed Trustee who will take a place on the
Board previously occupied by a person originally
proposed by Aquila whose principal residence is
in the State of Hawaii shall have a principal
residence which is also in the State of Hawaii.
C. Neither party shall propose that the Board be
reduced in size.
IV. Continuation of Asset Growth.
Each Party shall endeavor to maintain and increase the
assets of each Trust.
V. Modification by Agreement.
Nothing shall prevent the parties from suggesting to
each other modifications of these principles, or from
changing their application or establishing exceptions
by written agreement from time to time.
By subscribing to this set of principles, the parties
acknowledge that they intend to observe the guidelines here
set forth.
December , 1992
HAWAIIAN TRUST COMPANY, LIMITED
by_______________________________
Douglas Philpotts,
Chairman
AQUILA MANAGEMENT CORPORATION
by_______________________________
Lacy B. Herrmann,
President
AQUILA DISTRIBUTORS, INC.
by________________________________
Lacy B. Herrmann,
Secretary
Form of Information Sharing Agreement
[Letterhead of counterparty]
[Date], 199[]
Aquila Distributors, Inc.
380 Madison Avenue
New York, NY 10017
INFORMATION SHARING AGREEMENT
Gentlemen:
We understand that you have entered into a Distribution
Assistance Agreement with [ ] (the "Service Provider"),
a "Designated Payee" for purposes of Part II of the Distribution
Plan of Pacific Capital [ ] Cash Assets Trust (the "Trust"), a
series of Cash Assets Trust (the "Business Trust"). The Agreement
contemplates payment to the Service Provider of distribution and
service fees out of the assets of the Trust pursuant to Part II of
the Plan and contemplates further that the Service Provider may
reallow a portion of such fees to us in consideration of our
assistance in the distribution and servicing of Service Shares of
the Trust.
We further understand that, because we are an "affiliated
person" (as defined in the Investment Company Act of 1940) of the
investment adviser to the Trust, it is important that the Board of
Trustees of the Business Trust be provided with timely and adequate
information concerning our indirect receipt of payments made under
the Plan and the activities for which we are compensated by such
payments.
Accordingly, we hereby undertake that, so long as we
receive, directly or indirectly, any payments pursuant to Part II
of the Plan, we shall, not less than annually and more frequently
if reasonably requested, furnish to you for transmission to the
Board of Trustees of the Trust an accounting, in form and detail
satisfactory to the Board, to enable the Board to make
determinations of the fairness of the compensation paid to us.
Very truly yours,
[Affiliate]
By:________________________________
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT DATED MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BE REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000749748
<NAME> PACIFIC CAPITAL US TREASURIES CASH ASSETS TRUST - ORIGINAL
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT DATED MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000749748
<NAME> PACIFIC CAPITAL U.S. TREASURIES CASH ASSETS TRUST - SERVICE
<S> <C>
<PERIOD-TYPE> 12-MOS
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</TABLE>
