Registration Nos. 2-95767 & 811-4229
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. 14 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ X ]
Amendment No. 14 [ X ]
CHURCHILL CASH RESERVES 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 January 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 September 30, 1996 was filed in November 1996.
<PAGE>
CHURCHILL CASH RESERVES TRUST
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 As-
sets; Investment Restrictions; General In-
formation
5..............Management Arrangements
5A.............*
6..............General Information; Dividend and Tax Infor-
mation
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
16.............Additional Information as to Management Ar-
rangements; 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 Divi-
dends; Automatic Withdrawal Plan
20.............*
21.............How to Invest in the Trust (Prospectus cap-
tion); Distribution Plan; General Informa-
tion
22.............Yield Information; Financial Highlights (Pro-
spectus caption)
*Not applicable or negative answer
<PAGE>
CHURCHILL CASH RESERVES TRUST
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
PROSPECTUS
January 31, 1997
The Trust's objective is to provide safety of principal for
the cash reserves of investors while achieving as high a level of
current income and liquidity as possible. It seeks to obtain this
objective through investments in a diversified portfolio of money
market securities meeting specific high quality standards and
having short maturities.
Shares of the Trust 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 Trust's shares. See "How to Invest in the Trust" and "How to
Redeem Your Investment."
AN INVESTMENT IN THE TRUST IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE TRUST
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
SHARES OF THE TRUST ARE NOT DEPOSITS IN, OBLIGATIONS OF OR
GUARANTEED OR ENDORSED BY BANC ONE CORPORATION OR ITS BANK OR
NON-BANK AFFILIATES OR BY ANY OTHER BANK. SHARES OF THE TRUST 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 THE TRUST INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
The Prospectus concisely states information about the
Trust that you should know before investing. A Statement of
Additional Information about the Trust dated January 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
Trust's Shareholder Servicing Agent, at the address given below,
or by calling the telephone number(s) given below. The Additional
Statement contains information about the Trust and its management
not included in the Prospectus. The Additional Statement is
incorporated by reference in its entirety in the Prospectus. Only
when you have read both the Prospectus and the Additional
Statement are all the material facts about the Trust available to
you.
FOR PURCHASE, REDEMPTION OR ACCOUNT INQUIRIES CONTACT THE TRUST'S
SHAREHOLDER SERVICING AGENT:
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 MAIN STREET, WOODBRIDGE, NJ 07095-1198
Call 800-952-6666 toll-free or 908-855-5731
FOR GENERAL INQUIRIES AND YIELD INFORMATION, CALL 212-697-6666
This Prospectus Should Be Read and Retained For Future Reference
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
TABLE OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<S>
<C>
Maximum Sales Charge Imposed at Time of Purchase
0%
Maximum Sales Charge Imposed on Reinvested Dividends
0%
Maximum Deferred Sales Charge
0%
Redemption Fees
0%
Exchange Fee
0%
ANNUAL TRUST OPERATING EXPENSES(*)
(as a percentage of average net assets)
<S>
<C>
Investment Advisory Fee After Waiver (+)
0.28%
12b-1 Fee (++)
0%
Total Other Expenses After Fee Waiver (+)
0.28%
Administration Fee After Waiver (+)
0.15%
Other Expenses
0.13%
Total Trust Operating Expenses After Fee Waivers (+)
0.56%
Example(**) 1 year 3 years 5 years
10 years
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period $6 $18 $31
$70
<FN>
(*) Based upon amounts incurred during the most recent fiscal year
of
the Trust.
</FN>
<FN>
(+) Absent fee waiver, investment advisory fees would have been
incurred at
the rate of 0.33% of average net assets. Also, absent
administration fee
waiver, administration fees would have been incurred at the rate of
0.17%
of average net assets and other expenses would have included those
fees.
Absent any fee waiver, total Trust operating expenses for the year
would
have been incurred at the annual rate of 0.63%.
</FN>
<FN>
(++) The 12b-1 Plan of the Trust does not involve payments out of
the assets
or income of the Trust designed to recognize sales of shares of the
Trust or
to pay advertising expenses.
</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 expenses at a 0.56%
annual rate;
the expense ratio was applied to an assumed average balance (the
year's
starting investment plus one-half the year's results). Each column
represents
the cumulative expenses so determined for the period specified.
</FN>
</TABLE>
THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR
FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
THE SECURITIES AND EXCHANGE COMMISSION SPECIFIES THAT ALL MUTUAL
FUNDS USE
THE 5% RATE FOR PURPOSES OF PREPARING THE ABOVE EXAMPLE.
The purpose of the above table is to assist the investor in
understanding
the various costs and expenses that an investor in the Trust will
bear
directly or indirectly. (See "Management Arrangements" for a more
complete
description of the various investment advisory and administration
fees.)
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table of Financial Highlights as it relates to
the five
years ended September 30, 1996 has been audited by KPMG Peat
Marwick LLP,
independent auditors, whose report thereon is included in the
Trust's
financial statements contained in its Annual Report, which are
incorporated by
reference into the Additional Statement. The information provided
in the table
should be read in conjunction with the financial statements and
related notes.
Effective July 19, 1995, Banc One Investment Advisors Corporation
became the
Trust's Investment Adviser, replacing PNC Bank, Kentucky, Inc.
Year ended September 30,
1996 1995 1994 1993
1992
<S> <C> <C> <C> <C>
<C>
Net Asset Value,
Beginning of Year $1.0000 $1.0000 $1.0000 $1.0000
$1.0000
Income from Investment
Operations:
Net investment income 0.0500 0.0526 0.0319 0.0265
0.0380
Net gain on securities
(both realized and
unrealized) -- -- -- --
0.0005
Total from Investment
Operations 0.0500 0.0526 0.0319 0.0265
0.0385
Less Distributions:
Dividends from net
investment income (0.0500) (0.0526) (0.0319) (0.0265)
(0.0380)
Distributions from
capital gains -- -- -- --
(0.0005)
Total Distributions (0.0500) (0.0526) (0.0319) (0.0265)
(0.0385)
Net Asset Value,
End of Year $1.0000 $1.0000 $1.0000 $1.0000
$1.0000
Total Return 5.12% 5.39% 3.24% 2.68%
3.87%
Ratios/Supplemental Data
Net Assets, End of
Year (in thousands) $120,939 $146,130 $187,626
$187,274 $139,633
Ratio of Expenses to
Average Net Assets 0.56% 0.58% 0.60% 0.60%
0.65%
Ratio of Net Investment
Income to Average Net
Assets 5.02% 5.24% 3.17% 2.65%
3.90%
For the years ended September 30, 1996 and 1995, net investment
income per
share and the ratios of income and expenses to average net assets
without
the Adviser's and Administrator's voluntary waiver of fees and the
expense
offset in custodian fees for uninvested cash balances would have
been:
Net Investment Income $0.0493 $0.0522
Ratio of Expenses to
Average Net Assets 0.63% 0.62%
Ratio of Net Investment
Income to Average
Net Assets 4.94% 5.20%
<CAPTION>
1991 1990 1989 1988 1987
<C> <C> <C> <C> <C>
$1.0000 $1.0000 $1.0000 $1.0000
$1.0000
0.0636 0.0790 0.0865 0.0686 0.0504
-- -- -- -- --
0.0636 0.0790 0.0865 0.0686 0.0504
(0.0636) (0.0790) (0.0865) 0.0686 0.0504
-- -- -- -- --
(0.0636) (0.0790) (0.0865) 0.0686 0.0504
$1.0000 $1.0000 $1.0000 $1.0000
$1.0000
6.54% 8.17% 9.02% 7.07% 6.06%
$222,362 $238,634 $288,357 $213,938
$199,292
0.60% 0.58% 0.58% 0.59% 0.61%
6.36% 7.90% 8.65% 6.84% 5.97%
</TABLE>
The Trust's "current yield" (unaudited) for the seven days
ended
September 30, 1996 was 4.97% and its "compounded effective yield"
(unaudited)
for that period was 5.09%; see the Additional Statement for the
methods of
calculating these yields.
<PAGE>
INTRODUCTION
The Trust is an open-end diversified investment company
organized in January 1985, as a Massachusetts business trust,
designed to suit the cash management needs of individuals,
corporations, institutions and fiduciaries.
Cash of investors may be invested in shares of the Trust as
an alternative to idle funds, direct investments in savings
deposits or short-term debt securities. The Trust offers the
opportunity to keep cash reserves fully invested and provides you
with a professionally managed portfolio of money market
instruments which may be more diversified, higher yielding, more
stable and more liquid than you might be able to obtain on an
individual basis. Through the convenience of a single security
consisting of shares of the Trust, you are also relieved of the
inconvenience of making direct investments, including the
selection, purchasing and handling of securities. Shares of the
Trust are not deposits in, obligations of or guaranteed or
endorsed by Banc One Investment Advisors Corporation (the
"Adviser"), Banc One Corporation or its bank or non-bank
affiliates or by any other bank. Shares of the Trust 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.
INVESTMENT OF THE TRUST'S ASSETS
The objective of the Trust is to achieve as high a level of
current income, stability and liquidity for investors' cash
assets as can be obtained from investing in a diversified
portfolio of short-term "money market" securities meeting
specific quality standards. There is no assurance that the Trust
will achieve this objective, which is a fundamental policy of the
Trust.
In addition to the requirements of the Trust's management
policies, all obligations and instruments purchased by the Trust
must meet the requirements of Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act"). The provisions of the Rule that
affect portfolio management are summarized under "Effect of the
Rule on Portfolio Management," below. In brief, the Rule's
provisions for quality, diversity and maturity require the Trust
to limit its investments to those instruments which the Adviser
determines (pursuant to procedures approved by the Board of
Trustees) present minimal credit risks, and which at the time of
purchase are Eligible Securities. In general, the Rule defines as
Eligible Securities those that at the time of purchase are rated
in the two highest rating categories for short-term securities by
any two of the nationally recognized statistical rating
organizations ("NRSROs") or unrated securities determined by the
Board of Trustees to be of comparable quality. See Appendix A to
the Additional Statement for a description of the NRSROs and the
factors considered by them in determining ratings. Eligible
Securities so rated in the highest rating category (or unrated
securities of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second
Tier Securities." The Rule also requires that the dollar-weighted
average maturity of the Trust's portfolio cannot exceed 90 days
and that the Trust cannot purchase any security having a
remaining maturity in excess of 397 days. The Rule also contains
limits on the percentage of the Trust's assets that can be
invested in the securities of any issuer. See "Effect of the Rule
on Portfolio Management," below.
Management Policies:
The Trust seeks to achieve its investment objective through
investments in the types of instruments described in the
management policies listed below. Under the current management
policies, the Trust 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 the
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 Trust
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 the Prospectus and in the
Additional Statement, a bank includes commercial banks, savings
banks and savings and loan associations.)
(3) Commercial Paper Obligations: Commercial paper
obligations that are First Tier Securities; see "Effect of the
Rule on Portfolio Management," below.
(4) Corporate Debt Obligations: Corporate debt obligations
(for example, bonds and debentures) which are First Tier
Securities and which at the time of purchase have a remaining
maturity of not more than 397 days; See "Effect of the Rule on
Portfolio Management." See Appendix A to the Additional Statement
for information about bond ratings.
(5) Variable Amount and Master Demand Notes: Variable amount
master demand notes that are First Tier Securities and which are
redeemable (and thus repayable by the borrower) at principal
amount, plus accrued interest, at any time 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 that seven days are securities which are not readily
marketable, and fall within the Trust's overall 10% limitation on
securities which are illiquid.
(6) Certain Other Obligations: Obligations other than those
listed in 1 through 5 above only if such other obligations are
guaranteed as to principal and interest by either a bank in whose
obligations the Trust may invest (see 2 above) or a corporation
in whose commercial paper the Trust may invest (see 3 above). See
"Effect of the Rule on Portfolio Management." If the Trust
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 Trust 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 Trust.
See "Information about Repurchase Agreements," below.
(8) When-Issued or Delayed Delivery Securities: The Trust
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 Trust until delivery and payment take
place; their value at the delivery date may be less than the
purchase price. The Trust may not enter into when-issued
commitments exceeding in the aggregate 15% of the market value of
the Trust's total assets, less liabilities other than the
obligations created by when-issued commitments. See the
Additional Statement for further information.
Shareholder approval is not required to change any of the
foregoing management policies.
Information On U.S. Government Securities
U.S. Government Securities (i.e., obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities) include securities issued by the U.S.
Government, which in turn include Treasury Bills (which mature
within one year of the date they are issued) and Treasury Notes
and Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United
States.
U.S. Government agencies and instrumentalities that issue or
guarantee securities include, but are not limited to, the
Export-Import Bank of the United States, Farmers Home
Administration, Federal Farm Credit System, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Federal Housing
Administration, Federal National Mortgage Association, 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 Trust
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.
Information about Repurchase Agreements
Under a repurchase agreement, at the time the Trust
purchases a security, the Trust 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 Trust'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 Trust or its custodian either has
actual physical possession of the Resold Securities or, in the
case of a security registered in book entry system, the book
entry is maintained in the name of the Trust or its custodian.
The Trust 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 Trust 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 to 10% As To Certain Investments
Due to their possible limited liquidity, the Trust may
not make certain investments if thereafter more than 10% of its
net assets would consist of such investments. The investments
included in this 10% limit are (i) repurchase agreements maturing
in more than seven days; (ii) fixed time deposits subject to
withdrawal penalties other than overnight deposits; (iii)
securities which are not readily marketable and (iv) insured bank
obligations unless the Board of Trustees determines that a
readily available market exists for such obligations. Also
included in this 10% limit are restricted securities,i.e.,
securities which cannot freely be sold for legal reasons, that
have not been determined by the Trust to be liquid. Restricted
securities that may be determined to be liquid include securities
eligible for resale pursuant to Rule 144A under the Securities
Act of 1933, as amended and privately placed commercial paper
that has a readily available market. The Board of Trustees has
delegated to the Adviser the responsibility for determining and
monitoring the Trust's investment in restricted securities,
subject to supervision, including periodic review, by the Board
of Trustees. The Trust does not expect to make an investment in
restricted securities that will result in ore than 25% of the net
assets of the Trust being invested in restricted securities. 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 Trust's Investments and Their Yields
The value of the obligations and instruments in which the
Trust invests will fluctuate depending in large part on changes
in prevailing interest rates. If the prevailing interest rates go
up after the Trust buys a security, the value of the security may
go down; if these rates go down, the value of the security may go
up. Changes in value and yield based on changes in prevailing
interest rates may have different effects on short-term
obligations than on long-term obligations. Long-term obligations
(which often have higher yields) may fluctuate in value more than
short-term ones.
Portfolio Transactions
The Trust 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
Trust. As most purchases made by the Trust are principal
transactions at net prices, the Trust incurs little or no
brokerage costs. Purchases from underwriters will include a
commission or concession paid by the issuer to the underwriter
and purchases from dealers may include the spread between the bid
and the asked price. If the execution and price offered by more
than one dealer are comparable, the order may be allocated to a
dealer which has provided research advice, such as information on
particular companies and industries and market, economic and
institutional activity. By allocating transactions to obtain
research services, the Trust enables the Adviser to supplement
its own research and analyses with the views and information of
other securities firms. Such research services, whether or not
useful to the Trust, may be useful to other accounts managed by
the Adviser or its affiliates.
Effect of the Rule on Portfolio Management
As a money market fund, the Trust operates under the Rule,
which allows the Trust to use the "amortized cost" method of
valuing its securities and which contains certain risk limiting
provisions, including requirements as to maturity, quality and
diversification of the Trust's portfolio. Some of the most
important aspects of the Rule are described below.
Under the Rule, the Trust must limit its investments to
those instruments which are denominated in U.S. dollars, which
are determined by the Board of Trustees to present minimal credit
risks, and which, at the time of purchase, are Eligible
Securities. In accordance with the Rule, the Board of Trustees
has adopted investment procedures and has approved investment
policies pursuant to which all investment determinations have
been delegated to the Adviser, under the direction and control of
the Board of Trustees, except for those matters for which the
Rule requires Board determination.
In general, the Rule defines as Eligible Securities those
that at the time of purchase are rated in the two highest rating
categories for short-term securities by any two of the NRSROs, or
if unrated are determined by the Board of Trustees to be of
comparable quality. Eligible Securities so rated in the highest
rating category (and unrated securities determined by the Board
of Trustees to be of comparable quality) are called "First Tier
Securities"; all other Eligible Securities are called "Second
Tier Securities." Eligible Securities can in some cases include
securities rated by only one NRSRO and unrated obligations that
are determined by the Board of Trustees to be of comparable
quality to rated securities. A security that was long-term when
issued must at the time of purchase by the Trust have either a
short-term rating such that it is an Eligible Security, be
comparable in priority and security with a rated short-term
obligation of the same issuer that is an Eligible Security or if
it has no short-term rating (and does not have a long-term rating
from any NRSRO below the highest rating) if it is determined by
the Board of Trustees to be of comparable quality to rated
securities the Trust could purchase. Purchase of any security
rated by only one NRSRO and purchase of any unrated security
(except U.S. Government Securities) must be ratified by the Board
of Trustees.
The Rule requires (with limited exceptions) that immediately
after purchase of any security the Trust have invested not more
than 5% of its assets in the securities of any one issuer.
Moreover, the Rule provides that the Trust 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 Trust does not intend to own Second Tier
Securities. The Rule has specific provisions relating to
determinations of the eligibility of certain types of instruments
such as repurchase agreements and instruments subject to a demand
feature. It also has specific provisions for determining the
issuer of a security for purposes of compliance with the
diversification requirements.
Generally, under the Rule, the maturity of an instrument is
considered to be its stated maturity (or in the case of an
instrument called for redemption, the date on which the
redemption payment must be made). There are special rules for
determining the maturity of certain kinds of instruments. The
Rule contains provisions as to the maturity of variable rate and
floating rate instruments. Repurchase agreements and securities
loan agreements are, in general, treated as having a maturity
equal to the period remaining until they can be executed.
The Rule has provisions requiring specific actions whenever
the rating of a portfolio security is downgraded. Generally,
these actions include a prompt reassessment by the Board of
Trustees of the credit risks associated with such a security. In
general, the Rule mandates prompt sale or other disposition,
e.g., by exercising a demand for payment, in certain cases, such
as when a security ceases to be an Eligible Security, no longer
presents minimal credit risks or suffers a financial default.
INVESTMENT RESTRICTIONS
The Trust 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 Trust's outstanding shares vote to change
them. (See the Additional Statement for a definition of such a
majority.) All other policies can be changed from time to time
without shareholder approval. Some of the more important of the
Trust's fundamental policies, not otherwise identified in the
Prospectus are set forth below; others are listed in the
Additional Statement.
1. The Trust has diversification and certain
anti-concentration requirements.
The Trust 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 Trust 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 Trust's assets
in the aggregate, and to no more than the greater of 1% of the
Trust's assets or $1,000,000 in the securities of any one issuer.
The Trust 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 Trust may purchase (see "Investment of the Trust's Assets")
are considered as not included in this limit; however,
obligations of foreign banks and of foreign branches of domestic
banks are considered as included in this limit.
2. The Trust can make loans only by lending securities or
entering into repurchase agreements.
The Trust can buy those debt securities which it is
permitted to buy (see "Investment of the Trust's Assets"); this
is investing, not making a loan. The Trust 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 Trust 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 Trust 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 Trust can borrow in limited amounts for special
purposes.
The Trust 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
Trust's income. The Trust will not borrow to purchase securities
or to increase its income but only to meet redemptions so that it
will not have to sell securities to pay for redemptions. The
Trust 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 Trust will not
issue senior securities.
NET ASSET VALUE PER SHARE
The Trust's net asset value per share is determined as of
4:00 p.m. New York time on each day that the New York Stock
Exchange and the Custodian are open (a "Business Day") by
dividing the value of the net assets of the Trust (i.e., the
value of the assets less liabilities, exclusive of surplus) by
the total number of shares outstanding.
The net asset value per share will normally remain constant
at $1.00 per share except under extraordinary circumstances; see
the Additional Statement for a discussion of the extraordinary
circumstances which could result in a change in this fixed share
value. The net asset value per share is based on a valuation of
the Trust'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, 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 Martin Luther King Day,
Columbus Day and Veterans Day.
HOW TO INVEST IN THE TRUST
The Trust's shares are sold on a continuous basis at the net
asset value next determined after an order is entered and deemed
effective. There is no sales charge. The minimum initial
investment is $1,000. Subsequent investments may be in any
amount. Aquila Distributors, Inc. (the "Distributor") is the
exclusive Distributor of the Trust's shares. The Distributor
sells shares only for purchase orders received.
Opening an Account
To open a new account, you must send a properly completed
Application to Administrative Data Management Corp. (the
"Agent"). Redemption of shares purchased by wire payment will not
be honored until a properly completed Application has been
received by the Agent.
Initial investments may be made in any of these three ways:
1. By Mail. Payment may be made by check, money order,
Federal Reserve Draft or other negotiable bank draft drawn
in United States dollars on a United States commercial or
savings bank or credit union (each of which is a "Financial
Institution") payable to the order of Churchill Cash
Reserves Trust and mailed to:
Administrative Data Management Corp.
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 custodian of the Trust's assets.
To insure prompt and proper crediting to your account, if
you choose this method of payment, you should first telephone the
Agent (800-952-6666 toll free or 908-855-5731) and then instruct
your bank to wire funds to:
Bank One, Columbus
ABA No. 044000037
CR A/C 04-01787
For further credit to
Churchill Cash Reserves Trust
A/C 6801373500
Account Name and Number (if an existing account)
The name in which the investment is to be registered (if a
new account).
Your bank may impose a charge for wiring funds.
3. Through Brokers. If you wish, you may invest in the Trust
by purchasing shares through registered broker-dealers.
There is no sales or service charge imposed by the Trust,
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 Trust.
Broker-dealers are responsible for prompt transmission of orders
placed through them.
Additional Investments
You may make additional investments in shares of the Trust
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 Churchill Cash Reserves Trust, 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
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 Trust may modify or terminate these investment
methods at any time or charge a service fee, although no such fee
is currently contemplated.
When Shares Are Issued and
Dividends Are Declared On Them
There are three methods as to when shares are issued. Under
each method, shares are issued at the net asset value per share
next determined after the purchase order is effective, as
discussed below. Under each method, the Application must be
properly completed and have been received and accepted by the
Agent; the Trust or the Distributor may also reject any purchase
order. Under each method, Federal funds (see above) must either
be available to the Trust or the payment thereof must be
guaranteed to the Trust so that the Trust can be as fully
invested as practicable.
The first method under which shares are issued involves
ordinary investments. Under this method, payments transmitted by
wire in Federal funds and payments made by Federal Reserve Draft
received by the Custodian prior to 4:00 p.m. New York time on any
Business Day will be invested (i.e., the purchase order will be
effective) at the net asset value per share determined as of 4:00
p.m. on that day; if either such type of payment is received
after that time, the purchase order will be effective as of 4:00
p.m. on the next 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 the Trust's shares
for any 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 shares are issued involves a
bank or broker-dealer making special arrangements with the Trust
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 Trust are made between it
and the bank or broker-dealer under which if Federal funds are
not so received by the Custodian, the Trust is reimbursed for any
costs or loss of income arising out of such non-receipt. New York
Clearing House funds are funds represented by a check drawn on a
bank which is a member of the New York Clearing House. Under this
second method, the purchase order is effective on the day the
check or the advice is received under (i) above. Dividends on
shares issued under this second method are declared starting on
the day (whether or not a Business Day) after the purchase order
is effective and are declared on the day on which such shares are
redeemed.
The third method under which shares are issued involves
broker-dealers or banks which have requested that this method be
used to which request the Trust has consented. Under this third
method (i) the Agent must be advised prior to 1:00 p.m. 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 Trust shares who wish to use it so that the
dividends on their shares will commence to be declared on the day
the purchase order is effective. Upon written or phone request to
the Trust by such a prospective investor, the Trust will advise
as to the broker-dealers or banks through which such purchases
may be made.
Confirmations and Share Certificates
All purchases of shares will be confirmed and credited to
you in an account maintained for you by the Agent in full and
fractional shares of the Trust (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.
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 Trust and the Distributor reserve the right to reject
any order for the purchase of shares. In addition, the offering
of shares may be suspended at any time and resumed at any time
thereafter.
Distribution Plan
The Trust has adopted a Distribution Plan under Rule 12b-1
("Rule 12b-1") under the 1940 Act. No payments are made by the
Trust under the Plan. Rule 12b-1 provides in substance that an
investment company may not engage directly or indirectly in
financing any activity which is primarily intended to result in
the sale of its shares except pursuant to a plan adopted under
that rule. One part of the Distribution Plan is designed to
protect against any claim against or involving the Trust that
some of the expenses which the Trust pays or may pay come within
the purview of Rule 12b-1. Another part of the Distribution Plan
authorizes Aquila Management Corporation (the "Administrator"),
not the Trust, to make payments in connection with the sale of
the Trust's shares provided such payments do not exceed in total
in any of the Trust's fiscal years 0.10 of 1% of its average
annual net assets; see the Additional Statement for further
information.
The Trust's Distribution Plan is solely a defensive plan
designed to protect the Trust and its affiliates against any
claim described above. The Distribution Plan does not involve
payments out of assets or income of the Trust designed to
recognize sales of shares of the Trust or to pay advertising
expenses.
HOW TO REDEEM YOUR INVESTMENT
The Trust provides day-to-day liquidity. You may redeem all
or any part of your shares at any time at the net asset value
next determined after acceptance of your redemption request at
the Agent. Redemptions can be made by the various methods
described below. Except for shares recently purchased by check as
discussed below, there is no minimum time period for any
investment in the Trust. There are no redemption fees or
withdrawal penalties. If you purchase shares of the Trust through
broker-dealers, banks and other financial institutions which
serve as shareholders of record you must redeem through those
institutions, which are responsible for prompt transmission of
redemption requests. In all other cases, you may redeem directly,
but a completed purchase Application must have been received by
the Agent before redemption requests can be honored. A redemption
may result in a taxable transaction to you, but only if there has
been a change in the net asset value per share, which will occur
only under extraordinary circumstances.
For your convenience the Trust offers expedited redemption
to provide you with a high level of liquidity for your
investment.
Expedited Redemption Methods
(Non-Certificate Shares)
You have the flexibility of three expedited methods of
initiating redemptions. These are available as to shares not
represented by certificates.
1. By Telephone. The Agent will accept instructions by
telephone from anyone to redeem shares and make payments to
a Financial Institution account you have predesignated. See
"Redemption Payments," below for payment methods. Your name
and your account number must be supplied.
To redeem an investment by this method, telephone:
800-952-6666 toll free or 908-855-5731
Note: The Trust, the Agent, and the Distributor will not be
responsible for any losses resulting for 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. You
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 908-855-5730
or by mail at 581 Main Street, Woodbridge, NJ 07095-1198
indicating account number, amount to be redeemed, and any
payment directions, signed by the registered holder(s).
Signature guarantees are not required. See "Redemption
Payments," below for payment methods.
If you wish to use the above procedures you should so elect
on the Expedited Redemption section of the Application or Ready
Access Features form and provide the required information
concerning the Financial Institution account number. The
Financial Institution account must be in the exclusive name(s) of
the shareholder(s) as registered with the Trust. 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 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 shares of
the Trust, 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 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 shares held in your
account. Only expedited redemption to a predesignated bank
account or the regular redemption method (see below) may be used
when closing your account.
Multiple Redemption Services. You are not limited in choice
of redemption methods but may utilize all available forms.
However, when both redemption to a predesignated Financial
Institution account and check writing are desired, you must so
elect on your Application, or by proper completion of a Ready
Access Features form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
1. Certificate Shares. Certificates in blank (unsigned)
representing shares to be redeemed should be sent to: the
Trust's 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 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, a 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 shares
registered on the books of the Trust, 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:
Account Name(s);
Account Number;
Dollar amount or number of shares to be redeemed or
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
Trust);
Signature(s) of the registered shareholder(s); and
Signature guarantee(s), if required, as indicated
above.
Redemption Payments
For redemptions other than by checks you have written,
redemption payments will ordinarily be mailed to you at your
address of record. If you so request and the amount of your
redemption proceeds is $1,000 or more, the proceeds will,
wherever possible, be wired or transferred through the facilities
of the Automated Clearing House to the Financial Institution
account specified in the Expedited Redemption section of your
Application or Ready Access Features form. The Trust may impose a
charge, not exceeding $5.00 per wire redemption, after written
notice to shareholders who have elected this redemption
procedure. The Trust has no present intention of making this
charge. Upon 30 days' written notice to shareholders, the Trust
may modify or terminate the use of the Automated Clearing House
to make redemption payments at any time or charge a service fee,
although no such fee is presently contemplated. If any such
changes are made, the Prospectus will be supplemented to reflect
them. If you use a broker or dealer to arrange for a redemption,
you may be required to pay the dealer for this service.
Redemption proceeds on shares issued under the third method
under which shares are issued (see "When Shares Are Issued and
Dividends Are Declared on Them" under "How to Invest in the
Trust") will be wired in Federal funds on the date of redemption,
if practicable, and, if not practicable, as soon thereafter as
practicable, irrespective of amount. Redemption requests as to
such shares may be made by telephone.
Except as indicated above, the Trust will normally make
payment for all shares redeemed on the next business day
following receipt of request. Except as set forth below, in no
event will payment be made more than seven days after receipt of
a redemption request made in compliance with one of the
redemption methods specified above. However, the right of
redemption may be suspended or the date of payment postponed (i)
during periods when the New York Stock Exchange is closed for
other than weekends and holidays or when trading on such exchange
is restricted as determined by the Securities and Exchange
Commission by rule or regulation; (ii) during periods in which an
emergency, as determined by the Securities and Exchange
Commission, exists which causes disposal of, or valuation of the
net asset value of, the portfolio securities to be unreasonable
or impracticable; or (iii) for such other periods as the
Securities and Exchange Commission may permit. Payment for
redemption by any method (including redemption by check) of
shares recently purchased by check (irrespective of whether the
check is a regular check or a certified, cashier's or official
bank check) or by Automatic Investment or Telephone Investment
may be delayed up to 15 days or until (i) the purchase check or
Automatic Investment or Telephone Investment has been honored or
(ii) the Agent has received assurances by telephone or in writing
from the bank on which the purchase check was drawn or from which
the funds for Automatic Investment or Telephone Investment were
transferred, satisfactory to the Agent and the Trust, that the
purchase check or Automatic Investment or Telephone Investment
will be honored. Shares so purchased within the prior 15 days
will not be redeemed under the check writing redemption procedure
and a shareholder must not write a check if (i) it will be
presented to the Custodian for payment within 15 days of a share
purchase by check and (ii) the redemption check would cause the
redemption of some or all of those shares. Possible delays in
payment of redemption proceeds can be eliminated by using wire
payments or Federal Reserve drafts to pay for purchases.
If the Board of Trustees determines that it would be
detrimental to the best interests of the remaining shareholders
of the Trust to make payment wholly or partly in cash, the Trust
may pay the redemption price in whole or in part by the
distribution in kind of securities from the portfolio of the
Trust, in lieu of cash, in conformity with applicable rules of
the Securities and Exchange Commission. See the Additional
Statement for details.
The Trust has the right to compel the redemption of shares
held in any account if the aggregate net asset value of such
shares is less than $500 due to shareholder redemptions. If the
Board of Trustees elects to do this, shareholders who are
affected will receive prior written notice and will be permitted
60 days to bring their accounts up to the minimum before this
redemption is processed.
AUTOMATIC WITHDRAWAL PLAN
If you own or purchase shares of the Trust 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 the Trust are managed under the
direction and control of its Board of Trustees. The Additional
Statement lists the Trust's Trustees and officers and provides
further information about them.
The Advisory Agreement
Banc One Investment Advisors Corporation (the "Adviser")
supervises the investment program of the Trust and the
composition of its portfolio.
The services of the Adviser are rendered under an Investment
Advisory Agreement (the "Advisory Agreement") which became
effective on July 19, 1995 upon the termination of the Trust's
former advisory agreement with PNC Bank, Kentucky. The Advisory
Agreement provides, subject to the control of the Board of
Trustees, for investment supervision, arranging for the purchase
and the sale of securities held in the portfolio of the Trust and
furnishing information as to such securities to any provider of
fund accounting services to the Trust, monitoring records of the
Trust as to the portfolio, including prices, maintained by such
provider of such services; and supplying monthly or more
frequently as may be necessary, pricing of the Trust's portfolio
based on available market quotations using a pricing service or
other source of pricing information satisfactory to the Trust.
The Advisory Agreement states that the Adviser shall, at its
expense, provide to the Trust all office space and facilities,
equipment and clerical personnel necessary for the carrying out
of the Adviser's duties under the Advisory Agreement.
Under the Advisory Agreement, the Adviser pays all
compensation of those officers and employees of the Trust and of
those Trustees, if any, who are affiliated with the Adviser.
Under the Advisory Agreement, the Trust 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 the Advisory
Agreement, all costs and expenses not expressly assumed by the
Adviser or by the Administrator under the Administration
Agreement or by the Trust's principal underwriter are paid by the
Trust. The Advisory Agreement lists examples of such expenses
borne by the Trust, 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 Trust and its shares under Federal and State securities laws,
interest, taxes and non-recurring expenses, including litigation.
Under the Advisory Agreement, the Trust pays a fee payable
monthly and computed on the net asset value of the Trust as of
the close of business each business day at the annual rate of
0.33 of 1% of such net assets. (However, the total fees which the
Trust pays are at the annual rate of 0.50 of 1% of such net
assets, since the Administrator also receives a fee from the
Trust under the Administration Agreement; see below.)
The Adviser agrees that the above fee 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 Advisory Agreement contains provisions as to the
allocation of the portfolio transactions of the Trust; see the
Additional Statement. Under these provisions, the Adviser is
authorized to consider sales of the Trust's shares in making this
allocation.
The Administration Agreement
Under an Administration Agreement (the "Administration
Agreement"), Aquila Management Corporation as Administrator, at
its own expense, provides office space, personnel, facilities and
equipment for the performance of its functions thereunder and as
is necessary in connection with the maintenance of the
headquarters of the Trust and pays all compensation of the
Trust's Trustees, officers and employees who are affiliated
persons of the Administrator.
Under the Administration Agreement, subject to the control
of the Trust's Board of Trustees, the Administrator provides all
administrative services to the Trust other than those relating to
its investment portfolio. Such administrative services include
but are not limited to either keeping the accounting records of
the Trust, including the computation of net asset value per share
and the dividends (provided that pricing of the Trust's portfolio
shall be the responsibility of the Adviser under the Advisory
Agreement) or, at its expense and responsibility, delegating such
duties in whole or in part to a company satisfactory to the
Trust, maintaining the Trust's other books and records and
overseeing the 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 effective operation of the
Trust and for the sale, servicing or redemption of the Trust's
shares. See the Additional Statement for a further description of
functions listed in the Administration Agreement as part of such
duties.
Under the Administration Agreement, the Trust pays a fee
payable monthly and computed on the net asset value of the Trust
at the end of each business day at the annual rate of 0.17 of 1%
of such net asset value. The Administrator has agreed that this
fee 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 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).
Information as to the Adviser,
the Administrator and the Distributor
The Adviser is a wholly-owned subsidiary of BANC ONE
CORPORATION, Columbus, Ohio. BANC ONE CORPORATION is one of the
largest U.S. banking organization based on assets. The Adviser
also advises the One Group Family of Mutual Funds with $9.4
billion in assets. The Adviser is currently responsible for
management of over $30 billion in assets, of which over $5.8
billion are short-term assets and $4.8 billion are money market
assets. Certain Bank One affiliates of the Adviser use the Trust
as an alternative money market fund for temporary cash
investments of clients. Substantial funds are invested in the
Trust from such sources. An affiliate of the Adviser, Bank One
Trust Company, N.A., acts as custodian for the Trust. See the
Additional Statement as to the legality, under the Glass-Steagall
Act, of the Adviser's acting as the Trust's investment
adviser.
The Trust's Administrator is administrator to the
Aquilasm Group of Funds which consists of tax-free municipal bond
funds, money market funds and two equity funds. As of September
30, 1996, these funds had aggregate assets of approximately $2.6
billion, of which approximately $700 million consisted of assets
of the money-market funds. The Administrator is controlled by Mr.
Lacy B. Herrmann, through share ownership directly, through a
trust and by his wife. See the Additional Statement for
information on Mr. Herrmann.
For the fiscal year ended September 30, 1996, the fees
payable to the Adviser under the Advisory Agreement were $521,359
of which $77,712 was voluntarily waived. During the same period,
fees payable to the Administrator under the Administration
Agreement were $267,924 of which $39,771 was voluntarily
waived.
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 Trust.
Under the Distribution Agreement, the Distributor is responsible
for the payment of certain printing and distribution costs
relating to prospectuses and reports as well as the costs of
supplemental sales literature, advertising and other promotional
activities. All of the shares of the Distributor are owned by Mr.
Herrmann.
At the date of the Prospectus, there is a proposed
transaction whereby all of the shares of the Distributor, which
are currently owned by Mr. Herrmann, will be owned by certain
officers and directors of the Distributor and Administrator,
including Mr. Herrmann.
DIVIDEND AND TAX INFORMATION
All of the Trust's net income for dividend purposes (see
below) will be declared daily as dividends; see "When Shares Are
Issued and Dividends Are Declared on Them" under "How to Invest
in the Trust" for information as to when dividends are declared.
Dividends are paid within a week before or after the end of each
month and invested in additional shares at net asset value on the
payable date, or, at your election, paid in cash by check. This
election may be made in the Application or by subsequent written
notice to the Agent. You may also elect to have dividends
deposited without charge by electronic funds transfers into an
account at a Financial Institution which is a member of the
Automated Clearing House by completing a Ready Access Features
form. If you redeem all of your shares, you will be credited on
the redemption payment date with the amount of all dividends
declared for the month through the date of redemption, or through
the day preceding the date of redemption in the case of shares on
which income dividends were declared on the same day on which the
shares were issued.
You will receive monthly a summary of your account,
including information as to dividends paid during the month and
the shares credited to your account through reinvestment of
dividends.
Daily dividends will be calculated as follows: the net
income for dividend purposes will be calculated immediately prior
to the calculation of net asset value and will include accrued
interest and original issue and market discount earned since the
last valuation, less the estimated expenses of the Trust and
amortized original issue and market premium for the period.
However, the calculation of the dividend could change under
certain circumstances under the procedures adopted by the Board
of Trustees relating to "amortized cost" valuation; see the
Additional Statement.
Dividends so paid will be taxable to you as ordinary income,
even though reinvested, unless the net income, computed as above,
exceeds "earnings and profits," as determined for tax purposes;
this could occur because net income as so determined will include
certain unrealized appreciation and discount which is not
included for tax purposes. If dividends exceed your ratable share
of "earnings and profits," the excess will reduce the cost or
other tax basis for your shares; any reduction which would
otherwise result in a negative basis will cause the basis to be
reduced to zero, with any remaining amount being taxed as capital
gain. The dividends paid by the Trust will not be eligible for
the 70% dividends received deduction for corporations. Statements
as to the tax status of your dividends will be mailed annually.
It is possible but unlikely that the Trust may have realized
long-term capital gains or losses in a year. If it has any net
long-term gains realized through October 31st of a year, it will
pay a capital gains distribution after that date. It may also pay
a supplemental distribution after the end of its fiscal year. Any
capital gains distribution will be taxed at the same rate as
ordinary income, except that for individuals, trusts and estates
the maximum tax rate on capital gains distributions is 28% even
if the applicable rate on ordinary income for such taxpayers is
higher than 28%.
The Trust will be required to withhold, subject to certain
exemptions, at a rate of 31% on dividends paid or credited to you
and on redemption proceeds, if you have not filed with the Trust
a correct Taxpayer Identification Number, certified when
required.
The Trust, during its last fiscal year, qualified and
intends to continue to qualify under subchapter M of the Internal
Revenue Code; if so qualified it will not be liable for Federal
income taxes on amounts distributed by it.
EXCHANGE PRIVILEGE
There is an exchange privilege as set forth below among
this Trust and certain tax-free municipal bond funds and two
equity funds (the "Bond or Equity Funds") and certain money
market funds (the "Money-Market Funds"), all of which are in the
Aquilasm Group of Funds and have the same Administrator and
Distributor as the Trust. All exchanges are subject to certain
conditions described below. As of the date of the Prospectus, the
Aquila Bond or Equity Funds are Aquila Rocky Mountain Equity
Fund, Aquila Cascadia Equity Fund, Hawaiian Tax-Free Trust,
Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free
Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Tax-Free
Fund For Utah and Narragansett Insured Tax-Free Income Fund; the
Aquila Money-Market Funds are this Trust, Capital Cash Management
Trust, Pacific Capital Cash Assets Trust (Original Shares),
Pacific Capital Tax-Free Cash Assets Trust (Original Shares) and
Pacific Capital U.S. Treasuries Cash Assets Trust (Original
Shares).
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 Exchange
Privilege has different provisions for exchanges for each
class.
Class A Shares Exchange Privilege
Under the Class A Shares exchange privilege, once any
applicable sales charge has been paid on Class A Shares of any
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 Money-Market Funds and Bond
or Equity Funds without the payment of any additional sales
charge.
CDSC Class A Shares of an 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 a
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 a
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 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 Money-Market Funds and for Class C Shares of
the 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 a
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 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 Shares Exchange Privilege
Class Y Shares of an Bond or Equity Fund may be exchanged
only for Class Y Shares of another Bond or Equity Funds or for
shares of a 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 Money-Market Funds
and Class Y Shares of the Bond or Equity Funds without the
payment of any sales charge. Shares of a 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 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 Bond or Equity
Fund on which any applicable sales charge was paid; (b) acquired
by exchange for shares of a Money-Market Fund with payment of the
applicable sales charge; (c) acquired in one or more exchanges
between Money-Market Funds and the 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 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 Bond or Equity Fund acquired under
the same conditions; (b) acquired by exchange for shares of a
Money-Market Fund under the same conditions; (c) acquired in one
or more exchanges between the Money-Market Funds and the 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 a Money-Market Fund, or were received in exchange
for Class C Shares of another 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 Bond or Equity Fund
are those shares which were (a) acquired by direct purchase, by
exchange from a 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 a
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 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 Money Market Fund received in exchange for Class Y
Shares of a Bond or Equity Fund you may exchange them for shares
of any 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 a Money-Market Fund which you have
acquired by exchange for 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 Class A Shares of any Bond or
Equity Fund without payment of any sales charge.
If you own shares of a Money-Market Fund which you have
acquired by exchange for 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 a 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 a Money-Market Fund received in exchange for
CDSC Class A Shares.
If you own shares of a 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 a 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
a Money-Market Fund received in exchange for Class C Shares.
Shares of a Money-Market Fund may be exchanged for shares of
another Money-Market Fund or for Class A Shares, CDSC Class A
Shares or Class C Shares of an Bond or Equity Fund, and, for
eligible purchasers, for Class Y Shares; however, if the shares
of a Money-Market Fund were not acquired by exchange of Eligible
Shares of a Bond or Equity Fund or of shares of a Money-Market
Fund acquired in such an exchange, they may be exchanged for
Class A Shares of a Bond or Equity Fund only upon payment of the
applicable sales charge. Shares of a 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.
The Trust, as well as the other Money-Market Funds and Bond
or Equity Funds, reserves the right to reject any exchange into
its shares, if shares of the fund into which exchange is desired
are not available for sale in your state of residence. The Trust
may also modify or terminate this exchange privilege at any time.
In the case of termination, the Prospectus will be appropriately
supplemented. No such modification or termination shall take
effect on less than 60 days' written notice to shareholders.
All exercises of the exchange privilege are subject to the
conditions that (i) the shares being acquired are available for
sale in your state of residence; and (ii) the aggregate net asset
value of the shares surrendered for exchange are at least equal
to the minimum investment requirements of the investment company
whose shares are being acquired.
To effect an exchange, you must complete a form which is
available from the Distributor, unless you have elected the
Telephone Exchange feature on the Application. The exchange will
be effected at the relative exchange prices of the shares being
exchanged next determined after receipt by the Distributor of a
properly completed form or Telephone Exchange request. The
exchange prices will be the respective net asset values of the
shares (unless a sales charge is to be deducted in connection
with an exchange of shares as described above, in which case the
exchange price of shares of the Bond or Equity Fund will be its
public offering price).
An exchange is treated for Federal tax purposes as a
redemption and purchase of shares and may result in the
realization of a capital gain or loss, depending on the cost or
other tax basis of the shares exchanged and the holding period
(see the Additional Statement); no representation is made as to
the deductibility of any such loss should such occur.
Dividends paid by the Money-Market Funds are taxable,
except to the extent that dividends paid by Pacific Capital
Tax-Free Cash Assets Trust (a tax-free Money-Market Fund) are
exempt from regular Federal income tax, and to the extent that
dividends paid by Pacific Capital U.S. Treasuries Cash Assets
Trust (which invests in U.S. Treasury obligations) are exempt
from state income taxes. Dividends paid by 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 Bond or Equity Fund or a tax-free
money-market fund invests, the dividends from that fund may be
subject to income tax of the state in which you reside.
Accordingly, you should consult your tax adviser before acquiring
shares of such a Bond or Equity Fund or a tax-free money-market
fund under the exchange privilege arrangement.
If you are considering an exchange into one of the funds
listed above, you should send for and carefully read its
Prospectus.
GENERAL INFORMATION
Description of Shares
The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares and to divide or
combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests
in the Trust. Each share represents an equal proportionate
interest in the Trust with each other share. Upon liquidation of
the Trust, shareholders are entitled to share pro-rata in the net
assets of the Trust available for distribution to shareholders.
All shares are presently of the same class; however, if they deem
it advisable and in the best interests of shareholders, the Board
of Trustees of the Trust may create additional classes of shares
which may differ from each other only as to dividends (subject to
rules and regulations of the Securities and Exchange Commission
or by exemptive order) or the Board of Trustees may, at its own
discretion, create additional series of shares, each of which
will have separate assets and liabilities (in which case any such
series would have a designation including the word "Series"). See
the Additional Statement for further information about possible
additional series. Shares are fully paid and non-assessable
except as set forth under the caption "General Information" in
the Additional Statement; the holders of shares have no
pre-emptive or conversion rights.
Voting Rights
Shareholders are entitled to one vote for each full share
held (and fractional votes for fractional shares held) and will
vote on the election of Trustees and on other matters submitted
to the vote of shareholders. No amendment may be made to the
Declaration of Trust without the affirmative vote of the holders
of a majority of the outstanding shares of the 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
the Trust. If not so terminated, the Trust will continue
indefinitely.
<PAGE>
APPLICATION FOR CHURCHILL CASH RESERVES TRUST
Please complete steps 1 through 4 and mail to:
ADM, Attn: Aquilasm Group of Funds
581 Main Street, Woodbridge, NJ 07095-1198
1-800-952-6666
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
1) ___ By Check
2) ___ By Wire
1) By Check: Make check payable to: CHURCHILL CASH RESERVES TRUST
Amount of investment $ ________________ Minimum initial
investment $1,000
2) By Wire: OR
$_________________________________ From
_______________________________
Name of Financial
Institution
_________________________________
_________________________________
Financial Institution Account No. Branch, Street or Box#
On_______________________________
___________________________________
(Date) City State Zip
*NOTE: If investing by wiring of funds, instruct your
Financial
Institution to wire funds to:
Bank One, Columbus Account of: (Account name and
number,
ABA No. 044000037 or name in which investment is to
be
CR A/C 04-01787 registered if new account)
For further credit to Churchill Cash Reserves Trust A/C 6801373500
(A FINANCIAL INSTITUTION IS A COMMERCIAL BANK, SAVINGS
BANK OR CREDIT UNION.)
B. DIVIDENDS
ALL INCOME DIVIDENDS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL
SHARES
AT NET ASSET VALUE UNLESS OTHERWISE INDICATED BELOW.
Dividends are to be:___ Reinvested or ___Paid in cash*
* FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING
OPTIONS:
___Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would like
you to
deposit the dividend.
___ Mail check to my/our address listed in Step 1.
STEP 3
SPECIAL FEATURES
A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to have amounts
automatically drawn on your Financial Institution account and
invested
in your account. To establish this program, please complete Step
4,
Sections A & B of this Application.
I/We wish to make regular monthly investments of $________
(minimum $50)
on the ___ 1st day or ___ 16th day of the month (or on the first
business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to add to your
account
(minimum $50 and maximum $50,000) at any time you wish by simply
calling
ADMINISTRATIVE DATA MANAGEMENT CORP. (THE "AGENT") toll-free at
1-800-952-6666. To establish this program, please complete
Step4,
Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
C. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)
Application must be received
in good order at least 2 weeks
prior to 1st actual liquidation
date.
(Check appropriate box)
___ Yes ___No
Please establish an Automatic Withdrawal Plan for this account,
subject
to the terms of the Automatic Withdrawal Plan Provisions set
forth below.
To realize the amount stated below, the Agent is authorized to
redeem
sufficient shares from this account at the then current Net
Asset Value,
in accordance with the terms below:
Dollar Amount of each withdrawal $____________
beginning_______________
Minimum: $50
Month/Year
Payments to be made: ___ Monthly or ___ Quarterly
Checks should be made payable as indicated below. If check is
payable to a Financial Institution for your account, indicate
Financial
Institution name, address and your account number.
______________________________________
____________________________
First Name Middle Initial Last Name Financial Institution
Name
______________________________________
____________________________
Street Financial Institution
Street
______________________________________
_____________________________
City State Zip City State Zip
_____________________________
Financial Institution
Account Number
D. TELEPHONE EXCHANGE
(Check appropriate box)
___ Yes ___ No
This option allows you to effect
exchanges among accounts in your
name within the Aquilasm Group of
Funds by telephone.
TO MAKE A TELEPHONE EXCHANGE, CALL
THE AGENT AT 1-800-952-6666
The Agent is authorized to accept and act upon my/our or any
other
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 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 1-800-952-6666
Cash proceeds in any amount from the redemption of shares will
be
mailed or wired, whenever possible, upon request, if in an amount
of
$1,000 or more to my/our account at a Financial Institution. The
Financial Institution account must be in the same name(s) as this
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 DEPOSITOR'S 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 Autoamatic 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, Trustee, etc. Title
Date
* 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>
[CCRT Prospectus back cover]
Investment Adviser
BANC ONE INVESTMENT ADVISORS CORPORATION
774 Park Meadow Road
Columbus, Ohio 43271-0211
Administrator
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
Distributor
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
Trustees
Lacy B. Herrmann, Chairman
Thomas A. Christopher
Douglas Dean
Diana P. Herrmann
Ann R. Leven
Theodore T. Mason
Anne J. Mills
William J. Nightingale
James R. Ramsey
Officers
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
John M. Herndon, Vice President and Assistant Secretary
Jerry G. McGrew, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
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
Table of Contents....................
Financial Highlights.................
Introduction.........................
Investment of the Trust's Assets.....
Investment Restrictions..............
Net Asset Value Per Share...........
How to Invest In The Trust..........
How to Redeem Your Investment.......
Automatic Withdrawal Plan...........
Management Arrangements.............
Dividend And Tax Information........
Exchange Privilege..................
General Information.................
Application
CHURCHILL CASH
RESERVES TRUST
A cash
management
investment
[LOGO OF HORSE]
PROSPECTUS
[LOGO OF EAGLE]
One of the
Aquilasm Group of Funds
<PAGE>
CHURCHILL CASH RESERVES TRUST
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
STATEMENT OF ADDITIONAL INFORMATION
January 31, 1997
This Statement of Additional Information (the "Additional
Statement") is not a Prospectus. The Additional Statement should
be read in conjunction with the Prospectus (the "Prospectus")
dated January 31, 1997, of Churchill Cash Reserves Trust (the
"Trust") which may be obtained from the Trust's Shareholder
Servicing Agent, Administrative Data Management Corp., by writing
to it at: 581 Main Street, Woodbridge, NJ 07095-1104 or by
calling it at the following numbers:
800-952-6666 toll free or 908-855-5731
or from Aquila Distributors, Inc., the Trust's Distributor, by
writing to it at 380 Madison Avenue, Suite 2300, New York, New
York 10017; or by calling:
212-697-6666
The Annual Report of the Trust for the fiscal year ended
September 30, 1996 will be delivered with the Additional
Statement.
TABLE OF CONTENTS
Investment of the Trust's Assets . . . . . . . . . . . . . . . 2
Performance Information . . . . . . . . . . . . . . . . . . . 4
Investment Restrictions . . . . . . . . . . . . . . . . . . . 5
Loans of Portfolio Securities . . . . . . . . . . . . . . . . 6
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . 6
Limitation of Redemptions in Kind . . . . . . . . . . . . . . 10
Trustees and Officers . . . . . . . . . . . . . . . . . . . . 10
Additional Information as to Management Arrangements . . . . . 16
Amortized Cost Valuation . . . . . . . . . . . . . . . . . . . 20
Computation of Daily Dividends . . . . . . . . . . . . . . . . 21
Automatic Withdrawal Plan . . . . . . . . . . . . . . . . . . 21
General Information . . . . . . . . . . . . . . . . . . . . . 22
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . 24
<PAGE>
INVESTMENT OF THE TRUST'S ASSETS
The Prospectus contains information as to the purchase and
redemption of the Trust's shares. The investment objective and
policies of the Trust are also described in the Prospectus, which
refers to the investments and investment methods described below.
Information on Variable Amount Master Demand Notes
The Trust 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 Trust at varying
rates of interest pursuant to direct arrangements between the
Trust, as lender, and the borrower. They permit daily changes in
the amounts borrowed. The Trust has the right to increase the
amount under the note at any time up to the full amount provided
by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without
penalty. Because these notes are direct lending arrangements
between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for
them. They are redeemable (and thus repayable by the borrower) at
principal amount, plus accrued interest, at any time on not more
than thirty days' notice. The Trust has no limitations on the
amount of its assets invested in such notes. However, except for
those which are payable at principal amount plus accrued interest
within seven days after demand, such notes are securities which
are not readily marketable, and fall within the Trust's overall
10% limitation on securities with limited liquidity. There is no
limitation on the type of issuer from which these notes will be
purchased; however, all such notes must be Eligible Securities
and in connection with such purchases and on an ongoing basis,
Banc One Investment Advisors Corporation (the "Adviser") must
determine, pursuant to procedures approved by the Board of
Trustees, that such obligations present minimal credit risks. In
addition, the Adviser will consider the earning power, cash flow
and other liquidity ratios of the issuer, and its ability to pay
principal and interest on demand or on the specified notice, as
the case may be, including a situation in which all holders of
such notes make demand simultaneously. Master demand notes, as
such, are not typically rated by credit rating agencies, and if
not so rated the Trust may invest in them only if at the time of
an investment they are determined to be comparable in quality to
rated issues in which the Trust 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 Trust 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
Trust will invest in them only within the 10% limit mentioned in
the Prospectus unless such obligations are payable at principal
amount plus accrued interest on demand or within seven days after
demand.
Information about Certain Other Obligations
The Trust may purchase obligations other than those
listed in categories 1 through 5 under "Investment of the Trust's
Assets," in the Prospectus, but only if such other obligations
are guaranteed as to principal and interest by either a bank in
whose obligations the Trust may invest or a corporation in whose
commercial paper the Trust may invest. If any such guarantee is
unconditional and is itself an Eligible Security, the obligation
may be purchased based on the guarantee; if any such guarantee is
not unconditional, purchase of the obligation can only be made if
the underlying obligation is an Eligible Security and meets all
other applicable requirements of Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission. See "Effect of the Rule on
Portfolio Management" in the Prospectus. As of the date of this
Additional Statement, the Trust 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 Trust
invests in these assets, they will be identified in the Trust's
Prospectus; and described in the Additional Statement.
Turnover
In general, the Trust will purchase securities with the
expectation of holding them to maturity. However, the Trust may
to some degree engage in short-term trading to attempt to take
advantage of short-term market variations. The Trust may also
sell securities prior to maturity to meet redemptions or as a
result of a revised management evaluation of the issuer. The
Trust 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 Trust invests. (In the usual
calculation of portfolio turnover, securities of the type in
which the Trust invests are excluded; consequently, the high
turnover which the Trust will have is not comparable to the
turnover of non-money-market investment companies.)
When-Issued and Delayed Delivery Securities
The Trust may purchase securities on a when-issued or
delayed delivery basis. For example, delivery and payment may
take place a month or more after the date of the transaction. The
purchase price and the interest rate payable on the securities
are fixed on the transaction date. At the time the Trust makes
the commitment to purchase securities on a when-issued or delayed
delivery basis, it will record the transaction and thereafter
reflect the value of such securities each day in determining its
net asset value. The Trust will make commitments for such
when-issued transactions only when it has the intention of
actually acquiring the securities. The Trust will maintain with
the Custodian and mark to market every business day a separate
account with portfolio securities in an amount at least equal to
such commitments. On delivery dates for such transactions, the
Trust will meet its obligations from maturities or sales of the
securities held in the separate account and/or from cash flow. If
the Trust chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could, as with
the disposition of any other portfolio obligation, incur a gain
or loss due to market fluctuation.
Diversification and Certain Industry Requirements
The Trust 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 Trust considers the industry of the issuer to be
that of the related operating company.
PERFORMANCE INFORMATION
From time to time, the Trust may advertise its "current
yield" and its "effective yield" (also referred to as "effective
compound yield"). Both yield figures are based on historical
earnings and are not intended to indicate future performance. The
current yield of a Trust refers to the net income generated by an
investment in that Trust over a stated seven-day period. This
income is then "annualized". That is, the amount of income
generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a
percentage of the investment. The Trust may also advertise or
quote its effective yield, which is calculated similarly, but,
when annualized, the income earned by an investment in the Trust
is assumed to be reinvested. The effective yield will be slightly
higher than the current yield because of the compounding effect
of this assumed reinvestment.
In addition, the Trust may also compare its performance
to other income-producing securities such as (i) money market
funds; (ii) various bank products, including both those that are
insured (e.g., deposit obligations) and those that are not (e.g.,
investment instruments offered by affiliates of banks); and (iii)
U.S. Treasury Bills or Notes. There are differences between these
income-producing alternatives and the Trust other than their
yields, some of which are summarized below.
The yield of the Trust is not fixed and will fluctuate.
In addition, your investment is not insured and its yield is not
guaranteed. There can be no assurance that the Trust will be able
to maintain a stable net asset value of $1.00 per share. Although
the yields of bank money market deposit accounts and NOW accounts
will fluctuate, principal will not fluctuate and is insured by
the Federal Deposit Insurance Corporation up to $100,000. Bank
passbook savings accounts normally offer a fixed rate of
interest, and their principal and interest are also guaranteed
and insured. Bank certificates of deposit offer fixed or variable
rates for a set term. Principal and fixed rates are guaranteed
and insured. There is no fluctuation in principal value.
Withdrawal of these deposits prior to maturity will normally be
subject to a penalty. Investment instruments, such as Repurchase
Agreements and Commercial Paper, offered by affiliates of banks
are not insured by the Federal Deposit Insurance Corporation. In
comparing the yields of one money market fund to another,
consideration should be given to each fund's investment policy,
portfolio quality, portfolio maturity, type of instruments held
and operating expenses.
INVESTMENT RESTRICTIONS
The Trust 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 the Trust means the vote of the holders of
the lesser of (a) 67% or more of the Trust'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 Trust invests only in certain limited securities.
The Trust cannot buy any voting securities, any commodities
or commodity contracts, any mineral related programs or leases,
any shares of other investment companies or any warrants, puts,
calls or combinations thereof.
The Trust cannot purchase or hold the securities of any
issuer if, to its knowledge, Trustees, Directors or officers of
the Trust or its Adviser individually owning beneficially more
than 0.5% of the securities of that issuer together own in the
aggregate more than 5% of such securities.
The Trust cannot buy real estate or any non-liquid interests
in real estate investment trusts; however, it can buy any
securities which it could otherwise buy even though the issuer
invests in real estate or interests in real estate.
2. Almost all of the Trust's assets must be in established
companies.
Only 5% of the Trust'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 Trust does not buy for control.
The Trust cannot invest for the purpose of exercising
control or management of other companies.
4. The Trust does not sell securities it does not own or borrow
from brokers to buy securities.
Thus, it cannot sell short or buy on margin.
5. The Trust is not an underwriter.
The Trust cannot engage in the underwriting of securities,
that is, the selling of securities for others. Also, it cannot
invest in restricted securities. Restricted securities are
securities which cannot freely be sold for legal reasons.
LOANS OF PORTFOLIO SECURITIES
The Trust may, to increase its income, lend its securities
on a short- or long-term basis to broker-dealers, banks or
certain other financial institutions (see below) if (i) the loan
is collateralized in accordance with applicable regulatory
requirements (the "Guidelines") and if (ii) after any loan, the
value of the securities loaned does not exceed 10% of the value
of its total assets. As of the date of this Additional Statement,
the Trust does not foresee lending securities if after any loan
the value of loaned securities exceeds 5% of the value of its
total assets. The financial institutions other than
broker-dealers or banks to which the Trust 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 Trust if the demand meets the terms of
the letter. Such terms and the issuing banks would have to be
satisfactory to the Trust. 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.
The Trust receives amounts equal to the interest or other
distributions on loaned securities and also receives one or more
of the negotiated loan fees, interest on securities used as
collateral or interest on the securities purchased with such
collateral, either of which types of interest may be shared with
the borrower. The Trust may also pay reasonable finder's,
custodian and administrative fees but only to persons not
affiliated with the Trust. The terms of the Trust's loans will
meet certain tests under the Internal Revenue Code and permit the
Trust to terminate the loan and thus reacquire loaned securities
on five days' notice.
DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan (the "Plan") under
Rule 12b-1 ("Rule 12b-1") under the 1940 Act (the "1940 Act").
Rule 12b-1 provides in substance that an investment company may
not engage directly or indirectly in financing any activity which
is primarily intended to result in the sale of its shares except
pursuant to a plan adopted under Rule 12b-1. The Plan is designed
to protect against any claim involving the Trust that the
administration fee and some of the expenses which the Trust pays
or may pay come within the purview of Rule 12b-1. The Trust
believes it is not financing any such activity and does not
consider such fee or any payment enumerated in the Plan as so
financing any such activity. However, it might be claimed that
such fee and some of the expenses the Trust pays come within the
purview of Rule 12b-1. If and to the extent that any payments
(including fees) specifically listed in the Plan are considered
to be primarily intended to result in or are indirect financing
of any activity which is primarily intended to result in the sale
of Trust shares, these payments are authorized under the Plan.
As used in the Plan, "Qualified Recipients" means (i) any
principal underwriter or underwriters of the Trust (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 has entered into
written agreements ("Related Agreements") contemplated by Rule
12b-1 and which have rendered assistance (whether direct,
administrative or both) in the distribution and/or retention of
the Trust's shares or servicing shareholder accounts. "Qualified
Holdings" means, as to any Qualified Recipient, all Trust shares
beneficially owned by such Qualified Recipient or by one or more
of 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 Trust shares and/or in
providing administrative assistance in relation thereto.
The Plan permits the Administrator to make payments
("Permitted Payments") to Qualified Recipients. These Permitted
Payments are made by the Administrator and are not reimbursed by
the Trust to the Administrator. Permitted Payments 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 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 Permitted
Payments, if any, to each Qualified Recipient, provided that the
total Permitted Payments to all Qualified Recipients do not
exceed the amount set forth above. The 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 recognizes that, in view of the 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 Trust to the
Administrator and that its profits, if any, would be less, or
losses, if any, would be increased due to such 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 shares
issued by the Trust, the payment of such fees is authorized by
the Plan.
The Plan does not contain any limit as to the source of the
assets which the Administrator may use to make Permitted Payments
under the Plan and therefore it may use any of its assets for
such purpose, whether or not such assets are derived from the
Administration fee.
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 Trust
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 Trust 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 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 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 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 or
prospective investors. The Plan states that whenever the
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.
The Plan states that while it is in effect, the selection
and nomination of those Trustees of the Trust who are not
"interested persons" of the Trust 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.
The Plan states that while it is in effect, the Trust's
Administrator shall report at least quarterly to the Trust's
Trustees in writing for its review on the following matters: (i)
all 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 Trust to
the Administrator paid or accrued during such quarter.
The Plan defines as the Trust's Independent Trustees those
Trustees who are not "interested persons" of the Trust 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. 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 Trust'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
the Plan, those Trustees who vote to approve such implementation
or continuance must conclude that there is a reasonable
likelihood that the Plan will benefit the Trust and its
shareholders. 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 Trust. 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 the Plan.
The Plan states that in the case of a Qualified Recipient
which is a principal underwriter of the Trust the Related
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 Trust, the
Related Agreements with them shall be approved in accordance
with, and contain the provisions required by, Rule 12b-1.
Under Rule 12b-1, all Related Agreements 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 Related
Agreements are the same as those described above as to the Plan
itself except that: (i) no shareholder action is required for the
approval of Related Agreements, and (ii) termination by Trustee
or shareholder action as there described may be on not more than
60 days' written notice.
During the Trust's fiscal year ended September 30, 1996,
no Qualified Payments were made by the Administrator to Qualified
Recipients.
The formula under which the payments described above may be
made under 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 Trust. Another factor is
that such payments by the Administrator to Qualified Recipients
provide the only incentive for Qualified Recipients to do so
since there is no sales charge on the sale of the Trust's shares.
Another factor is that the Trust 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
Trust's shares may be facilitated since each such institution
can, due to these common characteristics, be fully and currently
informed as to the quality of the investments of and other
aspects of the operations of each of the other funds and if such
an investment is otherwise appropriate, can, although not
required to do so, invest assets over which it has investment
authority in one or more of the other funds.
LIMITATION OF REDEMPTIONS IN KIND
The Trust has elected to be governed by Rule 18f-1 under the
1940 Act, pursuant to which the Trust 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 Trust during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed
such limitation, the Trust 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 Trust, their
affiliations, if any, with Aquila Management Corporation, the
Administrator of the Trust, and Aquila Distributors, Inc., the
Distributor of the Trust, and their principal occupations during
at least the past five years are set forth below. The Trust is
one of the Aquilasm Group of Funds, which consists of fourteen
funds, six money market funds, seven tax-free municipal bond
funds and two equity funds. None of the Trustees or officers of
the Trust is affiliated with the Adviser. As of January 1, 1997,
the Trustees and officers of the Trust owned less than 1% of its
outstanding shares. Mr. Herrmann is an interested person of the
Trust as that term is defined in the Investment Company Act of
1940 (the "1940 Act") as an officer of the Trust and a Director,
officer and shareholder of the Distributor. Ms. Herrmann is an
interested person as a member of his immediate family. Ms. Leven
is an interested person as a beneficiary of a trust that owns
shares of the parent company of the Adviser. They are so
designated by an asterisk.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, 380 Madison Avenue, New York, New York 10017
Founder, President and Chairman of the Board of Aquila
Management Corporation since 1984, the sponsoring organization
and Administrator and/or Adviser or Sub-Adviser to the following
open-end investment companies, and Founder, Chairman of the Board
of Trustees, and President of each: Pacific Capital Cash Assets
Trust since 1984; Pacific Capital U.S. Treasuries Cash Assets
Trust since 1988; Pacific Capital Tax-Free Cash Assets Trust
since 1988; each of which is a money market fund, and together
with Capital Cash Management Trust ("CCMT") and 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 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.
Thomas A. Christopher, Trustee, 459 West Green Street, Danville,
Kentucky 40422
Shareholder of Robinson, Hughes & Christopher, C.P.A.s,
P.S.C., since 1977; President of A Good Place for Fun, Inc., a
sports facility, since 1987; active member of the American
Institute of Certified Public Accountants; Board of Directors of
the Kentucky Society of CPAs, 1991 to 1994; Trustee of Churchill
Tax-Free Fund of Kentucky since 1992; presently active in
leadership roles with various civic, community and church
organizations.
Douglas Dean, Trustee, 106 West Vine Street, Suite 600,
Lexington, Kentucky 40507
Founder and President of Dean, Dorton & Ford P.S.C., a public
accounting firm, since 1979; previously Staff Accountant, Tax
Supervisor and Tax Manager with Coopers & Lybrand, a public
accounting firm; Trustee of Trent Equity Fund, an equity mutual
fund, 1992-1994; Trustee of Churchill Tax-Free Fund of Kentucky
since 1987; Active as an officer and board member of various
charitable and community organizations.
Diana P. Herrmann*, Vice President and Trustee, 380 Madison
Avenue, New York, New York 10017
Senior Vice President and Secretary and formerly Vice
President of the Administrator since 1986 and Director since
1984; Trustee of Tax-Free Trust of Arizona and Tax-Free Trust of
Oregon since 1994, of Churchill Tax-Free Fund of Kentucky since
1995 and of Aquila Cascadia Equity Fund since 1996; Vice
President of InCap Management Corporation since 1986 and Director
since 1983; Senior Vice President or Vice President and formerly
Assistant Vice President of the Money Funds since 1986;
Vice-President of Prime Cash Fund (which is inactive), since
1986, of Cascades Cash Fund 1989-1994, and of Short Term Asset
Management Fund, 1986-1988; Assistant Vice President of Oxford
Cash Management Fund, 1986-1988; Assistant Vice President and
formerly Loan Officer of European American Bank, 1981-1986;
daughter of the 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.
Ann R. Leven*,Trustee, 785 Park Avenue, Apartment 20A, New York,
NY 10021
Treasurer of the National Gallery of Art, Washington, D.C.,
since 1994, Deputy Treasurer, 1990-1994; Treasurer of the
Smithsonian Institution, Washington, D.C., 1984-1990; President
of ARL Associates, strategic consultants, since 1983; Vice
President/Senior Corporate Planning Officer of The Chase
Manhattan Bank, N.A., 1979-1983; Treasurer of The Metropolitan
Museum of Art, 1972-1979; Trustee of Short Term Asset Reserves,
1984-1993, of Tax-Free Trust of Oregon since 1986, of Churchill
Tax-Free Fund of Kentucky since 1987 , of Cascades Cash Fund,
1989-1994, and of Aquila Cascadia Equity Fund since 1996; Trustee
of Oxford Cash Management Fund, 1987-1988; Director of the
Delaware Group of mutual funds since 1989; Adjunct Professor at
Columbia University Graduate School of Business Administration
since 1975; Trustee of the American Red Cross Endowment Fund,
1985-1990; Member of the Visiting Committee of Harvard Business
School, 1979-1985; Member of the Board of Overseers of The Amos
Tuck School, Dartmouth College, 1978-1984; Staff Director of the
Presidential Task Force on the Arts and Humanities, 1981;
Director of Alliance Capital Reserves Fund, a money market fund,
1978-1979.
Theodore T. Mason, Trustee, 26 Circle Drive, Hastings-on-Hudson,
New York 10706
Managing Director of EastWind Power Partners, Ltd. since 1994;
Director of Cogeneration Development of Willamette Industries,
Inc., a forest products company, 1991-1993; Vice President of
Corporate Development of Penntech Papers, Inc., 1978-1991; Vice
President of Capital Projects for the same company, 1977-1978;
Vice Chairman of the Board of Trustees of CCMT since 1981;
Trustee and Vice President, 1976-1981, and formerly Director of
its predecessor; Director of STCM Management Company, Inc.; 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 and
Pacific Capital Cash Assets Trust since 1984, of Pacific Capital
Tax-Free Cash Assets Trust and Pacific Capital U.S. Treasuries
Cash Assets Trust since 1988 and of Churchill Tax-Free Fund of
Kentucky since 1992; Vice President and Trustee of Oxford Cash
Management Fund, 1983-1989; Vice President of Trinity Liquid
Assets Trust, 1983-1985; President and Director of Ted Mason
Venture Associates, Inc., a venture capital consulting firm,
1972-1980; Advisor to the Commander, U.S. Maritime Defense Zone
Atlantic, 1984-1988; National Vice President, Surface/Subsurface,
Naval Reserve Association, 1985-1987; National Vice President,
Budget and Finance, for the same Association, 1983-1985;
Commanding Officer of four Naval Reserve Units, 1974-1985;
Captain, USNR, 1978-1988.
Anne J. Mills, Trustee, 167 Glengarry Place, Castle Pines
Village, Castle Rock, Colorado 80104
Vice President for Business Affairs of Ottawa University since
1992; Director of Customer Fulfillment, U.S. Marketing and
Services Group, IBM Corporation, 1990-1991; Director of Business
Requirements of that Group, 1988-1990; Director of Phase
Management of that Group, 1985-1988; Budget Review Officer of the
American Baptist Churches/USA since 1994; Director of the
American Baptist Foundation since 1985; Trustee of Brown
University; Trustee of Tax-Free Trust of Arizona since 1986, of
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado
and Capital Cash Management Trust since 1987 and of Tax-Free Fund
For Utah since 1994.
William J. Nightingale, Trustee, 1266 East Main Street, Stamford
Connecticut 06902
Chairman and founder (1975) and Senior Advisor since 1995 of
Nightingale & Associates, Inc., a general management consulting
firm focusing on interim management, divestitures, turnaround of
troubled companies, corporate restructuring and financial
advisory services; President, Chief Executive Officer and
Director of Bali Company, Inc., a manufacturer of women's
apparel, which became a subsidiary of Hanes Corporation,
1970-1975; prior to that, Vice President and Chief Financial
Officer of Hanes Corporation after being Vice President-Corporate
Development and Planning of that company, 1968-1970; formerly
Senior Associate of Booz, Allen & Hamilton, management
consultants, after having been Marketing Manager with General
Mills, Inc.; Trustee of Narragansett Insured Tax-Free Income Fund
since 1992 and of Churchill Tax-Free Fund of Kentucky since 1993;
Director of Yale International, Inc. (various industrial
manufacturing companies); Glasstech Inc. (glass bending equipment
and engineering) and Ring's End, Inc. (retail lumber and building
supply chain).
James R. Ramsey, Trustee, 109 Wetherby Building, Western Kentucky
University, Bowling Green, Kentucky 42101
Vice President for Finance and Administration, and Professor of
Economics, Western Kentucky University; Trustee of Churchill
Tax-Free Fund of Kentucky since 1987; Chief State Economist and
Executive Director of the Office for Financial Management and
Economic Analysis of the Commonwealth of Kentucky, 1981-1992;
Adjunct Professor of the University of Kentucky; Assistant Dean
and Director of Public Administration of Loyola University in New
Orleans, Louisiana, 1978-1981; Assistant Professor of Public
Finance and Administration of Loyola University, 1977-1981;
Assistant Professor of Economics, Middle Tennessee State
University, 1975-1977; published numerous articles, monographs
and working papers on economics and fiscal management.
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.
Jerry G. McGrew, Vice President, P.O. Box 662, Radcliff, Kentucky
40159
Senior Vice President of Churchill Tax-Free Fund of Kentucky
since 1994, Vice President since 1987; Vice President of Tax-Free
Fund For Utah since 1992; Registered Principal since 1993; Vice
President of Aquila Distributors, Inc. since 1993; Registered
Representative of J.J.B. Hilliard, W.L. Lyons Inc., 1983-1987;
Account Manager with IBM Corporation, 1967-1981; Gubernatorial
appointee, Kentucky Financial Institutions Board, since 1993;
Chairman, Total Quality Management for Small Business, 1990-1994;
President of Elizabethtown/Hardin County, Kentucky, Chamber of
Commerce, 1989-1991; President of Elizabethtown Country Club,
1983-1985.
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 Trust does not pay fees to Trustees affiliated with
the Administrator or to any of the Trust's officers. During the
fiscal year ended September 30, 1996, the Trust paid $55,724 in
fees and reimbursement of expenses to its other Trustees. The
Trust is one of the 14 funds in the Aquilasm Group of Funds,
which consist of tax-free municipal bond funds, money market
funds and two equity funds. The following table lists the
compensation of all Trustees who received compensation from the
Trust and the compensation they received during the Trust's
fiscal year from other funds in the Aquilasm Group of Funds. None
of such Trustees has any pension or retirement benefits from the
Trust or any of the other funds in the Aquila group.
<TABLE>
<CAPTION>
Compensation Number of
from all boards
Compensation funds in the which the
Name from the Trust Aquila Group Trustee now
serves
<S> <C> <C> <C>
Thomas A. $5,451 $12,001 2
Christopher
Douglas Dean $4,800 $13,332 2
Ann R. $5,100 $19,000 4
Leven
Theodore T. $5,087 $48,182 8
Mason
Anne J. $5,508 $30,066 6
Mills
William J. $5,592 $12,203 3
Nightingale
James R. $5,331 $19,000 2
Ramsey
</TABLE>
ADDITIONAL INFORMATION AS TO MANAGEMENT ARRANGEMENTS
Additional Information as to the Advisory Agreement
The Investment Advisory Agreement (the "Advisory Agreement")
between the Trust and the Adviser contains the provisions
described below, in addition to those described in the
Prospectus. The Advisory Agreement became effective on July 19,
1995. Prior to that date, PNC Bank, Kentucky, Inc. acted as the
Trust's investment adviser under a former advisory agreement that
terminated on that date.
The Advisory Agreement may be terminated by the Adviser at
any time without penalty upon giving the Trust sixty days'
written notice, and may be terminated by the Trust at any time
without penalty upon giving the Adviser sixty days' written
notice, provided that such termination by the Trust 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.
The 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. The Trust agrees to indemnify the
Adviser to the full extent permitted under the 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 Trust's Registration Statement
under the Securities Act of 1933 and the 1940 Act except for the
information supplied by the Adviser for inclusion therein.
The Advisory Agreement contains the following provisions as
to the Trust's portfolio transactions. In connection with its
duties to arrange for the purchase and sale of the Trust's
portfolio securities, the Adviser shall select such
broker-dealers ("dealers") as shall, in the Adviser's judgment,
implement the policy of the Trust to achieve "best execution,"
i.e., prompt, efficient and reliable execution of orders at the
most favorable net price. The Adviser shall cause the Trust 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 Trust expects that most transactions
will be principal transactions at net prices and that the Trust
will incur little or no brokerage costs. The Trust 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 Trust 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 Trust. 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 Trust 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 Trust and/or other accounts of the Adviser and that research
received by such other accounts may or may not be useful to the
Trust.
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment
Company Institute v. Camp that the federal statute commonly
referred to as the Glass-Steagall Act prohibits a national bank
from operating a fund for the collective investment of managing
agency accounts. Subsequently, the Board of Governors of the
Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such
decision: (a) forbid a bank holding company registered under the
Federal Bank Holding Company Act of 1956 (the "Holding Company
Act") or any non-bank affiliate thereof from sponsoring,
organizing, or controlling a registered, open-end investment
company continuously engaged in the issuance of its Shares, but
(b) do not prohibit such a holding company or affiliate from
acting as investment adviser, transfer agent, and custodian to
such an investment company. In 1981, the United States Supreme
Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its
authority under the Holding Company Act when it adopted its
regulation and interpretation authorizing bank holding companies
and their non-bank affiliates to act as investment advisers to
registered closed-end investment companies. In the Board of
Governors case, the Supreme Court also stated that if a national
bank complied with the restrictions imposed by the Board in its
regulation and interpretation authorizing bank holding companies
and their non-bank affiliates to act as investment advisers to
investment companies, a national bank performing investment
advisory services for an investment company would not violate the
Glass-Steagall Act. In addition, state securities laws on this
issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law.
In the Investment Advisory Agreement with the Trust, the
Adviser has represented to the Trust that it possesses the legal
authority to perform the investment advisory services
contemplated by the agreement and described in the Prospectus and
the Additional Statement without violation of applicable statutes
and regulations. Future changes in either federal or state
statutes and regulations relating to the permissible activities
of banks or bank holding companies and the subsidiaries or
affiliates of those entities, as well as further judicial or
administrative decisions or interpretations of present and future
statutes and regulations, could prevent or restrict the Adviser
from continuing to perform such services for the Trust. Depending
upon the nature of any changes in the services which could be
provided by the Adviser, the Board of Trustees of the Trust would
review the Trust's relationship with the Adviser and consider
taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative
action prohibit or restrict the proposed activities of BANC ONE
CORPORATION subsidiary banks or their correspondent banks in
connection with customer purchases of shares of the Trust, these
banks might be required to alter materially or discontinue the
services offered by them to customers. It is not anticipated,
however, that any change in the Trust's method of operations
would affect its net asset value per share or result in financial
losses to any customer.
Additional Information as to the Administration Agreement
The Administration Agreement between Aquila Management
Corporation, as Administrator, and the Trust (the "Administration
Agreement") contains the provisions described below in addition
to those described in the Prospectus.
Subject to the control of the Trust's Board of Trustees, the
Administrator provides all administrative services to the Trust
other than those relating to its investment portfolio; 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 Trust's
headquarters; (ii) oversees 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
effective operation of the Trust and for the sale, servicing or
redemption of the Trust's shares; (iii) provides to the Adviser
and to the Trust 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) either keeps the accounting
records of the Trust, including the computation of net asset
value per share and the dividends (provided that pricing of the
Trust's portfolio is the responsibility of the Adviser under the
Advisory Agreement) or, at its expense and responsibility,
delegates such duties in whole or in part to a company
satisfactory to the Trust, maintains the Trust's other 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 Trust's insurance
relationships; (v) prepares, on the Trust'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 Trust's shareholder servicing
and transfer agent or distributor, oversees such shareholder
servicing and transfer agent's or distributor's response thereto.
Since the Trust pays its own legal and audit expenses, to the
extent that the Trust'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 Trust.
The Administration Agreement may be terminated at any time
without penalty by the Administrator upon sixty days' written
notice to the Trust and the Adviser; it may be terminated by the
Trust at any time without penalty upon giving the Administrator
sixty days' written notice, provided that such termination by the
Trust 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 Trust. 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 Trust 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 Trust agrees to indemnify the
Administrator to the full extent permitted by the Declaration of
Trust.
For the fiscal year ended September 30, 1996, the fees
payable to the Adviser under the Advisory Agreement were $521,359
of which $77,712 was voluntarily waived. During the same period,
fees payable to the Administrator under the Administration
Agreement were $267,924 of which $39,771 was voluntarily waived.
For the fiscal year ended September 30, 1995, the fees payable to
the Trust's former adviser under an advisory agreement in effect
until July 19, 1995 were $366,654 and fees payable to the Adviser
under the Advisory Agreement thereafter were $99,642 of which
$49,089 was voluntarily waived. During the same period, fees
payable to the Administrator under a former administration
agreement in effect until July 19, 1995 were $366,654 and under
the Administration Agreement in effect thereafter were $58,931 of
which $21,561 was waived. For the fiscal year ended September 30,
1994 the fees payable to the former adviser under the former
advisory agreement then in effect and to the Administrator under
the former administration agreement then in effect, were, each,
$543,130.
AMORTIZED COST VALUATION
The Trust operates under Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission which permits it to value its
portfolio on the basis of amortized cost. The amortized cost
method of valuation is accomplished by valuing a security at its
cost and thereafter assuming a constant amortization rate to
maturity of any discount or premium, and does not reflect the
impact of fluctuating interest rates on the market value of the
security. This method does not take into account unrealized gains
or losses.
While the amortized cost method provides certainty in
valuation, there may be periods during which value, as determined
by amortized cost, is higher or lower than the price the Trust
would receive if it sold the instrument. During periods of
declining interest rates, the daily yield on the Trust's shares
may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its
portfolio instruments and changing its dividends based on these
changing prices. The converse would apply in a period of rising
interest rates.
Under the Rule, the Trust's Board of Trustees must
establish, and has established, procedures (the "Procedures")
designed to stabilize at $1.00, to the extent reasonably
possible, the Trust's price per share as computed for the purpose
of sales and redemptions. Such procedures must include review of
the Trust'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 Trust's net asset value calculated by using available
market quotations deviates from the per share value based on
amortized cost. "Available market quotations" may include actual
market quotations (valued at the mean between bid and asked
prices), estimates of market value reflecting current market
conditions based on quotations or estimates of market value for
individual portfolio instruments or values obtained from yield
data relating to a directly comparable class of securities
published by reputable sources.
Under the Rule, if the extent of any deviation between the
net asset value per share based upon "available market
quotations" (see above) and the net asset value per share based
on amortized cost exceeds $0.005, the Board of Trustees must
promptly consider what action, if any, will be initiated. When
the Board of Trustees believes that the extent of any deviation
may result in material dilution or other unfair results to
investors or existing shareholders, it is required to take such
action as it deems appropriate to eliminate or reduce to the
extent reasonably practicable such dilution or unfair results.
Such actions could include the sale of portfolio securities prior
to maturity to realize capital gains or losses or to shorten
average portfolio maturity, withholding dividends or payment of
distributions from capital or capital gains, redemptions of
shares in kind, or establishing a net asset value per share using
available market quotations. The Procedures include changes in
the dividends payable by the Trust under specified conditions, as
described below under "Computation of Daily Dividends." This
portion of the Procedures provides that actions that the Trustees
would consider under certain circumstances can be taken
automatically.
COMPUTATION OF DAILY DIVIDENDS
Under the Procedures which the Trust's Board of Trustees has
adopted relating to amortized cost valuation, the calculation of
the Trust's daily dividends will change under certain
circumstances from that indicated in the Prospectus. If on any
day the deviation between net asset value determined on an
amortized cost basis and that determined using market quotations
is $0.003 or more, the amount of such deviation will be added to
or subtracted from the daily dividend to the extent necessary to
reduce such deviation to within $0.003.
If on any day there is insufficient net income to absorb any
such reduction, the Board of Trustees would be required under the
Rule to consider taking other action if the deviation, after
eliminating the dividend for that day, exceeds $0.005. One of the
actions which the Board of Trustees might take could be the
elimination or reduction of dividends for more than one day.
AUTOMATIC WITHDRAWAL PLAN
If you own or purchase shares of the Trust having a net
asset value of at least $5,000 you may establish an Automatic
Withdrawal Plan under which you will receive a monthly or
quarterly check in a stated amount, not less than $50. Stock
certificates will not be issued for shares held under an
Automatic Withdrawal Plan. All dividends must be reinvested.
Shares will be redeemed on the last business day of the
month as may be necessary to meet withdrawal payments. Shares
acquired with reinvested dividends will be redeemed first to
provide such withdrawal payments and thereafter other shares will
be redeemed to the extent necessary, and, depending upon the
amount withdrawn, your principal may be depleted.
Redemption of shares for withdrawal purposes may reduce or
even liquidate the account. Monthly or quarterly payments paid to
shareholders may not be considered as a yield or income on
investment.
GENERAL INFORMATION
Net Asset Value Per Share
As indicated in the Prospectus, the net asset value per
share of the Trust'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 be 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.
Possible Additional Series
If additional Series (as discussed in the Prospectus) were
created by the Board of Trustees, shares of each such Series
would be entitled to vote as a Series only to the extent
permitted by the 1940 Act (see below) or as permitted by the
Board of Trustees. Income and operating expenses would be
allocated fairly among two or more 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 as to 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 other affected
Series.
Indemnification of Shareholders and Trustees
The Trust is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law,
shareholders of a trust such as the Trust, may, under certain
circumstances, be held personally liable as partners for the
obligations of the trust. For shareholder protection, however, an
express disclaimer of shareholder liability for acts or
obligations of the Trust is contained in the Declaration of
Trust, which requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or
executed by the Trust or the Trustees. The Declaration of Trust
does, however, contain an express disclaimer of shareholder
liability for acts or obligations of the Trust. The Declaration
of Trust provides for indemnification out of the Trust's property
of any shareholder held personally liable for the obligations of
the Trust. The Declaration of Trust also provides that the Trust
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the 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 Trust
itself would be unable to meet its obligations. In the event the
Trust had two or more Series, and if any such Series were to be
unable to meet the obligations attributable to it (which, as is
the case with the Trust, is relatively remote), the other Series
would be subject to such obligations, with a corresponding
increase in the risk of the shareholder liability mentioned in
the prior sentence.
The Declaration of Trust further indemnifies the Trustees of
the Trust 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.
Ownership of Securities
Of the shares of the Trust outstanding on January 1,
1997, a nominee of Bank One Trust Co., 235 West Schrock Road,
Westerville, OH held of record 148,099,231 shares (99.9%). The
Trust's management is not aware of any person, other than those
named above, who beneficially owned 5% or more of its outstanding
shares on such date. On the basis of information received from
the record owners listed above, the Trust's management believes
(i) that all of the shares indicated are held for the benefit of
custodial or trust clients; and (ii) that all of such shares
could be considered as "beneficially" owned by the named
shareholders in that they possessed shared voting and/or
investment powers as to such shares.
Custodian and Auditors
The Trust's Custodian is Bank One Trust Company N.A.; it
receives, holds and delivers the Trust's portfolio securities
(including physical securities, book-entry securities, and
securities in depositories) and money, performs related
accounting functions and issues reports to the Trust. The Trust
pays the Custodian (1) an asset-based annual fee, with a minimum
asset-based annual fee, and (2) a fee for each portfolio purchase
transaction of the Trust. The rates of these fees have been
reviewed by the Board of Trustees of the Trust and are believed
to be comparable to those available from other organizations
providing such services. The Custodian is an affiliate of the
Adviser.
The Trust's auditors, KPMG Peat Marwick LLP, perform an
annual audit of the Trust's financial statements.
Financial Statements
The financial statements for the Trust for the fiscal
year ended September 30, 1996, which are contained in the Annual
Report for that fiscal year, are hereby incorporated by reference
into the Additional Statement. Those financial statements have
been audited by KPMG Peat Marwick LLP, independent auditors,
whose report thereon is incorporated herein by reference.
<PAGE>
APPENDIX A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS
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.
<PAGE>
[CCRT SAI back cover]
Investment Adviser
BANC ONE INVESTMENT ADVISORS CORPORATION
774 Park Meadow Road
Columbus, Ohio 43271-0211
Administrator
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
Distributor
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
Trustees
Lacy B. Herrmann, Chairman
Thomas A. Christopher
Douglas Dean
Diana P. Herrmann
Ann R. Leven
Theodore T. Mason
Anne J. Mills
William J. Nightingale
James R. Ramsey
Officers
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
John M. Herndon, Vice President and Assistant Secretary
Jerry G. McGrew, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
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
CHURCHILL CASH
RESERVES TRUST
A cash
management
investment
[LOGO OF HORSE]
STATEMENT OF
ADDITIONAL
INFORMATION
[LOGO OF EAGLE]
One of the
Aquilasm Group of Funds
<PAGE>
CHURCHILL CASH RESERVES TRUST
PART C: OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Per Share Income and Capital Changes
Incorporated by reference into Part B:
Report of Independent Certified Public
Accountants
Statement of Assets and Liabilities as of
September 30, 1996
Statement of Operations for the year ended
September 30, 1996
Statement of Changes in Net Assets for the
years ended September 30, 1995 and 1995
Statement of Investments as of September
30, 1996
Notes to Financial Statements
Included in Part C:
Consent of Independent Certified Public
Accountants
(b) Exhibits:
(1) Amended and Restated Declaration of Trust (ii)
(2) By-laws (ii)
(3) Not applicable
(4) Specimen share certificate (ii)
(5) Investment Advisory Agreement (i)
(6) Distribution Agreement (ii)
(7) Not applicable
(8) Custody Agreement (i)
(9) (a) Transfer Agency Agreement (ii)
(b) Administration Agreement (i)
(10) Opinion and consent of Trust's counsel (ii)
(11) Not Applicable
(12) Not applicable
(13) Not Applicable
(14) Not applicable
(15) Distribution Plan (ii)
(17) Financial Data Schedule (ii)
(i) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 12 dated November 29, 1995 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 January 13, 1997, Registrant had 2 holders
of record of its shares.
ITEM 27. Indemnification
Subdivision (c) of Section 12 of Article SEVENTH of
Registrant's Amended and Restated Declaration of Trust,
filed as Exhibit 1 to Registrant's Post- Effective Amendment
No. 14 dated Janaury, 1997 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,
Registranthas been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
pay- ment by Registrant of expenses incurred or paid by a
Trustee, officer, or controlling person of Registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such Trustee, officer, or controlling person in
connection with the securities being registered, Registrant
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed
in the Act and will be go- verned by the final adjudication
of such issue.
ITEM 28. Business & Other Connections of Investment Adviser
Banc One Investment Advisors Corporation, Regis-
trant's investment adviser, performs investment ad-
visory services for mutual fund and other clients.
For information as to the business, profession, vo-
cation, or employment of a substantial nature of
its Directors and officers, reference is made to
the Form ADV filed by it under the Investment Advi-
sers Act of 1940.
ITEM 29. Principal Underwriters
(a) Aquila Distributors, Inc. serves as principal
underwriter to Aquila Rocky Mountain Equity Fund, Aquila
Cascadia Equity Fund, Capital Cash Management Trust,
Churchill Tax-Free Fund of Kentucky, Hawaiian Tax-Free
Trust, Narragansett Insured Tax-Free Income Fund, Pacific
Capital Cash Assets Trust, Pacific Capital Tax-Free Cash
Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, 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 Registrant'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 Exchange
Act of 1934.
(c) Not applicable.
ITEM 30. Location of Accounts and Records
All such accounts, books, and other documents are
maintained by the adviser, the administrator, the
custodian, and the transfer agent, whose addresses
appear on the back cover pages of the Prospectus
and Statement of Additional Information.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(a) Not applicable.
(b) Not applicable.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
To The Shareholders and Board of Trustees
Churchill Cash Reserves Trust:
We consent to the use of our report dated November 1, 1996,
incorporated herein by reference, and to the references to our
firm under the headings "Financial Highlights" in the Prospectus
and "Custodian and Auditors" and "Financial Statements" in the
Statement of Additional Information.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
January 22, 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 23rd day of January,
1997.
CHURCHILL CASH RESERVES 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 1/23/97
______________________ President, Chairman of ___________
Lacy B. Herrmann the Board and Trustee
(Principal Executive
Officer)
/s/Thomas A. Christopher 1/23/97
______________________ Trustee ___________
Thomas A. Christopher
/s/Douglas A. Dean 1/23/97
______________________ Trustee ___________
Douglas A. Dean
/s/Ann R. Leven 1/23/97
______________________ Trustee ___________
Ann R. Leven
/s/Theodore T. Mason 1/23/97
______________________ Trustee ___________
Theodore T. Mason
/s/Diana P. Herrmann 1/23/97
______________________ Trustee ___________
Diana P. Herrmann
/s/Anne J. Mills 1/23/97
______________________ Trustee ___________
Anne J. Mills
/s/William J. Nightingale 1/23/97
______________________ Trustee ___________
William J. Nightingale
/s/James R. Ramsey 1/23/97
_______________________ Trustee ___________
James R. Ramsey
/s/Rose F. Marotta 1/23/97
________________________ Chief Financial Officer ___________
Rose F. Marotta (Principal Financial and
Accounting Officer)
<PAGE>
CHURCHILL CASH RESERVES TRUST
EXHIBIT INDEX
Exhibit Number Exhibit Name Page Number
(1) Amended and Restated
Declaration of Trust
(2) By-laws
(4) Specimen share certificate
(6) Distribution Agreement
(9) (a) Transfer Agency Agreement
(10) Opinion and consent of
Trust's counsel
(15) Distribution Plan
(17) Financial Data Schedule
Correspondence
CHURCHILL CASH RESERVES TRUST
SUPPLEMENTAL DECLARATION OF TRUST
AMENDING AND RESTATING THE DECLARATION OF TRUST
SUPPLEMENTAL DECLARATION OF TRUST made September 29, 1989 to
the DECLARATION OF TRUST (the "Present Declaration of Trust") of
CHURCHILL CASH RESERVES 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 March 13, 1989 and
by the shareholders on September 29, 1989, such approval having
been by the vote of the holders of a majority of the shares
issued, outstanding and entitled to vote; and
WHEREAS, the officer of the Trust executing this
Supplemental Declaration of Trust has been authorized and
directed to do so by the Trustees of the Trust and the
shareholders of the Trust on behalf of the Trustees and the
Trust;
NOW, THEREFORE, the Present Declaration of Trust is amended
and restated so that the Declaration of Trust of the Trust
(hereinafter referred to as the "Declaration of Trust") shall
read in its entirety as follows:
<PAGE>
WHEREAS, the Trustees desire to establish a trust fund under
the laws of the Commonwealth of Massachusetts, for the investment
and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and
property contributed to the trust fund hereunder shall be held
and managed under this Declaration of Trust IN TRUST as herein
set forth below.
FIRST: This Trust shall be known as CHURCHILL CASH RESERVES
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 CHURCHILL CASH RESERVES 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 equal proportionate units of interest
into which the beneficial interest in the Trust shall be divided
from time to time and includes fractions of Shares as well as
whole Shares.
6. The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
7. "Commission" means the Securities and Exchange
Commission.
8. "Board" or "Board of Trustees" means the Board of
Trustees of the Trust.
THIRD: The purpose or purposes for which the Trust is
formed and the business or objects to be transacted, carried on
and promoted by it are as follows:
1. To hold, invest and reinvest its funds, and in
connection therewith to hold part or all of its funds in cash,
and to purchase or otherwise acquire, hold for investment or
otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize
upon, securities (which term "securities" shall for the purposes
of this Declaration of Trust, without limitation of the
generality thereof, be deemed to include any stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests
therein, or in any property or assets) created or issued by any
issuer (which term "issuer" shall for the purposes of this
Declaration of Trust, without limitation of the generality
thereof be deemed to include any persons, firms, associations,
corporations, syndicates, combinations, organizations,
governments, or subdivisions thereof); and to exercise, as owner
or holder of any securities, all rights, powers and privileges in
respect thereof; and to do any and all acts and things for the
preservations, protection, improvement and enhancement in value
of any or all such securities.
2. To borrow money and pledge assets in connection with
any of the objects or purposes of the Trust, and to issue notes
or other obligations evidencing such borrowings, to the extent
permitted by the 1940 Act and by the Trust's fundamental
investment policies under the 1940 Act.
3. To issue and sell its Shares in such amounts and on
such terms and conditions, for such purposes and for such amount
or kind of consideration (including without limitation thereto,
securities) now or hereafter permitted by the laws of the the
Commonwealth of Massachusetts and by this Declaration of Trust,
as the Trustees may determine.
4. To purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or
consent of the Shareholders of the Trust) its Shares, in any
manner and to the extent now or hereafter permitted by the laws
of Commonwealth of Massachusetts and by this Declaration of
Trust.
5. To conduct its business in all its branches at one or
more offices in the Commonwealth of Massachusetts and elsewhere
in any part of the world, without restriction or limit as to
extent.
6. To carry out all or any of the foregoing objects and
purposes as principal or agent, and alone or with associates or,
to the extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts, as a member of, or as the owner or
holder of any stock of, or share of interest in, any issuer, and
in connection therewith to make or enter into such deeds or
contracts with any issuers and to do such acts and things and to
exercise such powers, as a natural person could lawfully make,
enter into, do or exercise.
7. To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of all or any of the
foregoing purposes or objects.
The foregoing objects and purposes shall, except as
otherwise expressly provided, be in no way limited or restricted
by reference to, or inference from, the terms of any other clause
of this or any other Articles of this Declaration of Trust, and
shall each be regarded as independent and construed as powers as
well as objects and purposes, and the enumeration of specific
purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the
general powers of the Trust now or hereafter conferred by the
laws of the Commonwealth of Massachusetts, nor shall the
expression of one thing be deemed to exclude another, though it
be of like nature, not expressed; provided, however, that the
Trust shall not carry on any business, or exercise any powers, in
any state, territory, district or country except to the extent
that the same may lawfully be carried on or exercised under the
laws thereof.
FOURTH: The beneficial interest in the Trust shall at all
times be divided into an unlimited number of transferable Shares,
each such Share having a par value of one cent per Share, each of
which shall represent an equal proportionate interest in the
Trust with each other Share outstanding, none having priority or
preference over another. The Trustees may from time to time
divide or combine the Shares into a greater or lesser number
without thereby changing the proportionate beneficial interests
in the Trust. Contributions to the Trust may be accepted for,
and Shares shall be redeemed as, whole Shares and/or 1/1,000ths
of a Share or multiple thereof. The Board of Trustees of the
Trust may classify unissued Shares into one or more additional
classes which shall, together with the issued Shares of
beneficial interest of the Trust, have such designations as the
Board shall determine, and which shall be treated for all
purposes other than as to dividends as if all Shares were Shares
of one class. The dividends payable to the holders of each such
class shall, subject to any applicable rule, regulation or order
of the Commission or other applicable law or regulation, be
determined by the Board and need not be individually declared but
may be declared and paid in accordance with a formula adopted by
the Board. The Board of Trustees of the Trust may in the
alternative classify unissued Shares into one or more additional
classes which shall, together with the issued Shares of
beneficial interest of the Trust, have such designations as the
Board may determine (but which shall include the word "Series")
and shall, subject to any applicable rule, regulation or order of
the Commission or other applicable law or regulation, have the
characteristics set forth in (a) through and including (g) below.
(a) All consideration received by the Trust for the
issue or sale of Shares of each such class, together with all
income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to the class of Shares with respect to which such assets,
payments, or funds were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled
upon the books of account of the Trust. Such assets, income,
earnings, profits and proceeds thereof, any asset derived from
any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets belonging to" such class.
(b) Dividends or distributions on Shares of any such
class, whether payable in Shares or cash, shall be paid only out
of earnings, surplus or other assets belonging to such class.
(c) In the event of the liquidation or dissolution of
the Trust, Shareholders of each such class shall be entitled to
receive, as a class, out of the assets of the Trust available for
distribution to Shareholders, but other than general assets not
belonging to any particular class, the assets belonging to such
class; and the assets so distributable to the Shareholders of any
such class shall be distributed among such Shareholders in
proportion to the number of shares of such class held by them and
recorded on the books of the Trust. In the event that there are
any general assets not belonging to any particular class of
Shares and available for distribution, such distribution shall be
made to the holders of Shares of all classes in proportion to the
asset value of the respective classes.
(d) The assets belonging to any such class of Shares
shall be charged with the liabilities in respect to such class
and shall be charged with their share of the general liabilities
of the Trust, in proportion to the asset value of the respective
classes. The determination of the Board of Trustees shall be
conclusive as to the amount of liabilities, including accrued
expenses and reserves, and as to the allocation of the same as to
a given class, and as to whether the same, or general assets of
the Trust, are allocable to one or more classes. The liabilities
so allocated to a class are herein referred to as "liabilities
belonging to" such class.
(e) At all meetings of Shareholders, each shareholder
of each Share of each such class of the Trust shall be entitled
to one vote for each Share, irrespective of the class, standing
in his name on the books of the Trust, except that where a vote
of the holders of the Shares of any class, or of more than one
class, voting by class, is required by the 1940 Act and/or the
Commonwealth of Massachusetts law as to any proposal, only the
holders of such class or classes, voting by class, shall be
entitled to vote upon such proposal and the holders of any other
class or classes shall not be entitled to vote thereon. Any
fractional Share, if any such fractional Shares are outstanding,
shall carry proportionately all the rights of a whole Share,
including the right to vote and the right to receive dividends.
There shall be no cumulative voting rights with respect to any
Shares or class of Shares of the Trust.
(f) The provisions of Article FIFTH relating to voting
shall apply when the Trust has only one class of Shares
outstanding or when the Trust has more than one class of Shares
outstanding but which differ only as to their dividend rights.
(g) When the Trust has more than one class of Shares
outstanding having separate assets and liabilities: (i) the
redemption rights provided to the holders of the Trust's Shares
shall be deemed to apply only to the assets belonging to the
class of Shares in question; and (ii) the net asset value per
Share computation as provided for in Article SEVENTH shall be
applied as if each such class of Shares were the Trust as
referred to in such computation, but with its assets limited to
the assets belonging to such class and its liabilities limited to
the liabilities belonging to such class.
(h) The ownership of Shares shall be recorded in the
books of the Trust or a transfer agent. The Trustees may make
such rules as they consider appropriate for the transfer of
Shares and similar matters. The record books of the Trust or any
transfer agent, as the case may be, shall be conclusive as to who
are the holders of Shares and as to the number of Shares held
from time to time by each.
(i) The Trustees shall accept investments in the Trust
from such persons and on such terms as they may from time to time
authorize.
(j) Shareholders shall have no pre-emptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust or the Trustees.
FIFTH: The following provisions are hereby adopted with
respect to voting Shares of the Trust and certain other rights:
1. The Shareholders shall have power to vote (i) for
the election of Trustees, (ii) with respect to the amendment
of this Declaration of Trust, (iii) to the same extent as
the shareholders of a Massachusetts business corporation, as
to whether or not a court action, proceeding or claim should
be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (iv) with
respect to such additional matters relating to the Trust as
may be required by the 1940 Act or authorized by law, by
this Declaration of Trust, or the By-Laws of the Trust or
any registration statement of the Trust with the Commission
or any State, or as the Trustees may consider desirable.
2. At all meetings of Shareholders each Shareholder
shall be entitled to one vote for each Share standing in his
name on the books of the Trust on the date, fixed in
accordance with the By-Laws, for determination of
Shareholders entitled to vote at such meeting except (if so
determined by the Board of Trustees) for Shares redeemed
prior to the meeting. Any fractional Share shall carry
proportionately all the rights of a whole Share, including
the right to vote and the right to receive dividends. The
presence in person or by proxy of the holders of one-third
of the Shares outstanding and entitled to vote thereat shall
constitute a quorum at any meeting of the Shareholders. If
at any meeting of the Shareholders there shall be less than
a quorum present, the Shareholders present at such meeting
may, without further notice, adjourn the same from time to
time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as
might have been lawfully transacted had the meeting not been
adjourned.
3. Each Shareholder, upon request to the Trust in
proper form determined by the Trust, shall be entitled to
require the Trust to redeem all or any part of the Shares
standing in the name of such Shareholder. The method of
computing such net asset value, the time at which such net
asset value shall be computed and the time within which the
Trust shall make payment therefor, shall be determined as
hereinafter provided in Article SEVENTH of this Declaration
of Trust. Notwithstanding the foregoing, the Trustees, when
permitted or required to do so by the 1940 Act, may suspend
the right of the Shareholders to require the Trust to redeem
Shares.
4. No Shareholder shall, as such holder, have any
right to purchase or subscribe for any security of the Trust
which it may issue or sell, other than such right, if any,
as the Trustees, in their discretion, may determine.
5. All persons who shall acquire Shares shall acquire
the same subject to the provisions of this Declaration of
Trust.
SIXTH: Each Trustee shall hold office until the annual
meeting of Shareholders next succeeding his election or until his
successor is duly elected and qualifies. The persons who shall
act as Trustees until the first annual meeting or until their
successors are duly chosen and qualify were the initial Trustees
who executed the Declaration of Trust or any counterpart thereof.
However, the By-Laws of the Trust may fix the number of
Trustees at a number greater than that of the number of initial
Trustees and may authorize the Trustees, by the vote of a
majority of the entire number of Trustees, to increase or
decrease the number of Trustees fixed by this Declaration of
Trust or by the By-Laws within limits specified in the By-Laws,
provided that in no case shall the number of Trustees be less
than three, and to fill the vacancies created by any such
increase in the number of Trustees. Unless otherwise provided by
the By-Laws of the Trust, the Trustees need not be Shareholders.
SEVENTH: The following provisions are hereby adopted for
the purpose of defining, limiting and regulating the powers of
the Trust and of the Trustees and Shareholders.
1. As soon as any Trustee is duly elected by the
Shareholders or the Trustees and shall have accepted this
trust, the Trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee
hereunder.
2. The death, declination, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them
shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this
Declaration of Trust.
3. The assets of the Trust shall be held separate and
apart from any assets now or hereafter held in any capacity
other than as Trustee hereunder by the Trustees or any
successor Trustees. All of the assets of the Trust shall at
all times be considered as vested in the Trustees. Except
as provided in this Declaration of Trust, no Shareholder
shall have, as such holder of beneficial interest in the
Trust, any authority, power or right whatsoever to transact
business for or on behalf of the Trust, or on behalf of the
Trustees, in connection with the property or assets of the
Trust, or in any part thereof, except the rights to receive
the income and distributable amounts arising therefrom as
set forth herein.
4. The Trustees in all instances shall act as
principals, and are and shall be free from the control of
the Shareholders. The Trustees shall have full power and
authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider
necessary or appropriate in connection with the management
of the Trust. The Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to
Trust investments, but shall have full authority and power
to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the
purposes of this Trust. Subject to any applicable
limitation in this Declaration of Trust or in the By-Laws
of the Trust, the Trustees shall have power and authority:
(a) to adopt By-laws not inconsistent with this
Declaration of Trust providing for the conduct of the
business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint
and terminate such officers as they consider appropriate
with or without cause;
(c) to employ a bank or trust company as
custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the
By-Laws;
(d) to retain a transfer agent and Shareholder
servicing agent, or both;
(e) to provide for the distribution of Shares
either through a principal underwriter or the Trust itself
or both;
(f) to set record dates in the manner provided
for in the By-Laws of the Trust;
(g) to delegate such authority as they consider
desirable to any officers of the Trust and to any agent,
custodian or underwriter;
(h) to vote or give assent, or exercise any
rights of ownership, with respect to stock or other
securities or property held in Trust hereunder; and to
execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of
securities held in trust hereunder;
(j) to hold any security or property in a form
not indicating any trust, whether in bearer, unregistered or
other negotiable form; or either in its own name or in the
name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual
practice of Massachusetts business trusts or investment
companies;
(k) to consent to or participate in any plan for
the reorganization, consolidation or merger of any
corporation or concern, any security of which is held in the
Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to
any security held in the Trust;
(l) to compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy including, but not limited to, claims for taxes;
(m) to make, in the manner provided in the By-
Laws, distributions of income and of capital gains to
Shareholders;
(n) to borrow money to the extent and in the
manner permitted by the 1940 Act and the Trust's fundamental
policy thereunder as to borrowing; and
(o) to enter into investment advisory or
management contracts, subject to the 1940 Act, with any one
or more corporations, partnerships, trusts, associations or
other persons; if the other party or parties to any such
contract are authorized to enter into securities
transactions on behalf of the Trust, such transactions shall
be deemed to have been authorized by all of the Trustees.
5. No one dealing with the Trustees shall be under
any obligation to make any inquiry concerning the authority
of the Trustees, or to see to the application of any
payments made or property transferred by the Trustees or
upon their order.
6. (a) The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time
personally agree to pay by way of subscription to any Shares
or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the
Trustees relating to the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and
its assets (but the omission of such a recitation shall not
operate to bind any Shareholder).
(b) Except as otherwise provided in this
Declaration of Trust or the By-Laws, whenever this
Declaration of Trust calls for or permits any action to be
taken by the Trustees hereunder, such action shall mean that
taken by the Board of Trustees by vote of the majority of a
quorum of Trustees as set forth from time to time in the By-
Laws of the Trust or as required pursuant to the provisions
of the 1940 Act and the rules and regulations promulgated
thereunder.
(c) The Trustees shall possess and exercise any
and all such additional powers as are reasonably implied
from the powers herein contained such as may be necessary or
convenient in the conduct of any business or enterprise of
the Trust, to do and perform anything necessary, suitable,
or proper for the accomplishment of any of the purposes, or
the attainment of any one or more of the objects, herein
enumerated, or which shall at any time appear conducive to
or expedient for the protection or benefit of the Trust, and
to do and perform all other acts or things necessary or
incidental to the purposes herein before set forth, or that
may be deemed necessary by the Trustees.
(d) The Trustees shall have the power to
determine conclusively whether any moneys, securities, or
other properties of the Trust property are, for the purposes
of this Trust, to be considered as capital or income and in
what manner any expenses or disbursements are to be borne as
between capital and income whether or not in the absence of
this provision such moneys, securities, or other properties
would be regarded as capital or income and whether or not in
the absence of this provision such expenses or disbursements
would ordinarily be charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees
into classes and prescribe the tenure of office of the
several classes, but no class shall be elected for a period
shorter than that from the time of the election following
the division into classes until the next annual meeting and
thereafter for a period shorter than the interval between
annual meetings or for a period longer than five years, and
the term of office of at least one class shall expire each
year.
8. The Shareholders shall have the right to inspect
the records, documents, accounts and books of the Trust,
subject to reasonable regulations of the Trustees, not
contrary to Massachusetts law, as to whether and to what
extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any Trustee, or any officer elected or appointed
by the Trustees or by any committee of the Trustees or by
the Shareholders or otherwise, may be removed at any time,
with or without cause, in such lawful manner as may be
provided in the By-Laws of the Trust.
10. If the By-Laws so provide, the Trustees shall have
power to hold their meetings, to have an office or offices
and, subject to the provisions of the laws of the
Commonwealth of Massachusetts, to keep the books of the
Trust outside of said Commonwealth at such places as may
from time to time be designated by them.
11. Securities held by the Trust shall be voted in
person or by proxy by the President or a Vice-President, or
such officer or officers of the Trust as the Trustees shall
designate for the purpose, or by a proxy or proxies
thereunto duly authorized by the Trustees, except as
otherwise ordered by vote of the holders of a majority of
the Shares outstanding and entitled to vote in respect
thereto.
12. (a) Subject to the provisions of the 1940 Act,
any Trustee, officer or employee, individually, or any
partnership of which any Trustee, officer or employee may be
a member, or any corporation or association of which any
Trustee, officer or employee may be an officer, director,
trustee, employee or stockholder, may be a party to, or may
be pecuniarily or otherwise interested in, any contract or
transaction of the Trust, and in the absence of fraud no
contract or other transaction shall be thereby affected or
invalidated; provided that in case a Trustee, or a
partnership, corporation or association of which a Trustee
is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed
or shall have been known to the Trustees or a majority
thereof; and any Trustee who is so interested, or who is
also a director, officer, trustee, employee or stockholder
of such other corporation or association or a member of such
partnership which is so interested, may be counted in
determining the existence of a quorum at any meeting of the
Trustees which shall authorize any such contract or
transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he
were not such director, officer, trustee, employee or
stockholder of such other trust or corporation or
association or a member of a partnership so interested.
(b) Specifically, but without limitation of the
foregoing, the Trust may enter into a management, investment
advisory, sub-advisory, administration or underwriting
contract and other contracts with, and may otherwise do
business with any manager, investment adviser, sub-adviser,
or administrator for the Trust, or principal underwriter of
the Shares of the Trust, or any subsidiary or affiliate of
any such manager, investment adviser, sub-adviser or
administrator and/or principal underwriter and may permit
any such firm or corporation to enter into any contracts or
other arrangements with any other firm or corporation
relating to the Trust notwithstanding that the Board of
Trustees of the Trust may be composed in part of partners,
directors, officers or employees of any such firm or
corporation, and officers of the Trust may have been or may
be or become partners, directors, officers or employees of
any such firm or corporation, and in the absence of fraud
the Trust and any such firm or corporation may deal freely
with each other, and no such contract or transaction between
the Trust and any such firm or corporation shall be
invalidated or in any wise affected thereby, nor shall any
Trustee or officer of the Trust be liable to the Trust or to
any Shareholder or creditor thereof or to any other person
for any loss incurred by it or him solely because of the
existence of any such contract or transaction; provided that
nothing herein shall protect any Trustee or officer of the
Trust against any liability to the Trust or to its security
holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
(c) (1) As used in this paragraph the following
terms shall have the meanings set forth below:
(i) the term "indemnitee" shall mean any
present or former Trustee, officer or
employee of the Trust, any present or former
Trustee or officer of another trust or
corporation whose securities are or were
owned by the Trust or of which the Trust is
or was a creditor and who served or serves in
such capacity at the request of the Trust,
any present or former investment adviser,
sub-adviser, administrator or principal
underwriter of the Trust and the heirs,
executors, administrators, successors and
assigns of any of the foregoing; however,
whenever conduct by an indemnitee is referred
to, the conduct shall be that of the original
indemnitee rather than that of the heir,
executor, administrator, successor or
assignee;
(ii) the term "covered proceeding" shall
mean any threatened, pending or completed
action, suit or proceeding, whether civil,
criminal, administrative or investigative, to
which an indemnitee is or was a party or is
threatened to be made a party by reason of
the fact or facts under which he or it is an
indemnitee as defined above;
(iii) the term "disabling conduct" shall
mean willful misfeasance, bad faith, gross
negligence or reckless disregard of the
duties involved in the conduct of the office
in question;
(iv) the term "covered expenses" shall mean
expenses (including attorney's fees),
judgments, fines and amounts paid in
settlement actually and reasonably incurred
by an indemnitee in connection with a covered
proceeding; and
(v) the term "adjudication of liability"
shall mean, as to any covered proceeding and
as to any indemnitee, an adverse
determination as to the indemnitee whether by
judgment, order, settlement, conviction or
upon a plea of nolo contendere or its
equivalent.
(d) The Trust shall not indemnify any indemnitee
for any covered expenses in any covered proceeding if there
has been an adjudication of liability against such
indemnitee expressly based on a finding of disabling
conduct.
(e) Except as set forth in (d) above, the Trust
shall indemnify any indemnitee for covered expenses in any
covered proceeding, whether or not there is an adjudication
of liability as to such indemnitee, if a determination has
been made that the indemnitee was not liable by reason of
disabling conduct by (i) a final decision of the court or
other body before which the covered proceeding was brought;
or (ii) in the absence of such decision, a reasonable
determination, based on a review of the facts, by either (a)
the vote of a majority of a quorum of Trustees who are
neither "interested persons," as defined in the 1940 Act nor
parties to the covered proceeding or (b) an independent
legal counsel in a written opinion; provided that such
Trustees or counsel, in reaching such determination, may but
need not presume the absence of disabling conduct on the
part of the indemnitee by reason of the manner in which the
covered proceeding was terminated.
(f) Covered expenses incurred by an indemnitee in
connection with a covered proceeding shall be advanced by
the Trust to an indemnitee prior to the final disposition of
a covered proceeding upon the request of the indemnitee for
such advance and the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately
determined that the indemnitee is entitled to
indemnification thereunder, but only if one or more of the
following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be
insured against losses arising out of any lawful advances;
or (iii) there shall have been a determination, based on a
review of the readily available facts (as opposed to a full
trial-type inquiry) that there is a reason to believe that
the indemnitee ultimately will be found entitled to
indemnification by either independent legal counsel in a
written opinion or by the vote of a majority of a quorum of
trustees who are neither "interested persons" as defined in
the 1940 Act nor parties to the covered proceeding.
(g) Nothing herein shall be deemed to affect the
right of the Trust and/or any indemnitee to acquire and pay
for any insurance covering any or all indemnitees to the
extent permitted by the 1940 Act or to affect any other
indemnification rights to which any indemnitee may be
entitled to the extent permitted by the 1940 Act.
13. For purposes of the computation of net asset
value, as in this Declaration of Trust referred to, the
following rules shall apply:
(a) The net asset value of each Share of the
Trust tendered to the Trust for redemption shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the tender of such share;
(b) The net asset value of each Share of the
Trust for the purpose of the issue of such shares shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the receipt of an order to purchase
such shares;
(c) The net asset value of each Share of the
Trust, as of time of valuation on any day, shall be the
quotient obtained by dividing the value, as at such time, of
the net assets of the Trust (i.e., the value of the assets
of the Trust less its liabilities exclusive of its surplus)
by the total number of Shares outstanding at such time. The
assets and liabilities of the Trust shall be determined in
accordance with generally accepted accounting principles;
provided, however, that in determining the liabilities of
the Trust there shall be included such reserves for taxes or
contingent liabilities as may be authorized or approved by
the Trustees, and provided further that in determining the
value of the assets of the Trust for the purpose of
obtaining the net asset value, each security listed on the
New York Stock Exchange shall be valued on the basis of the
closing sale at the time of valuation on the business day as
of which such value is being determined; if there be no sale
on such day, then the security shall be valued on the basis
of the mean between closing bid and asked prices on such
day; if no bid and asked prices are quoted for such day,
then the security shall be valued by such method as the
Trustees shall deem in good faith to reflect its fair market
value; securities not listed on the New York Stock Exchange
shall be valued in like manner on the basis of quotations on
any other stock exchange which the Trustees may from time to
time approve for that purpose; readily marketable securities
traded in the over-the-counter market shall be valued at the
mean between their bid and asked prices, or, if the Trustees
shall so determine, at their bid prices; and all other
assets of the Trust and all securities as to which the Trust
might be considered an "underwriter" (as that term is used
in the Securities Act of 1933), whether or not such
securities are listed or traded in the over-the-counter
market, shall be valued by such method as they shall deem in
good faith to reflect their fair market value. In
connection with the accrual of any fee or refund payable to
or by an investment adviser of the Trust, the amount of
which accrual is not definitely determinable as of any time
at which the net asset value of each Share of the Trust is
being determined due to the contingent nature of such fee or
refund, the Trustees are authorized to establish from time
to time formulae for such accrual, on the basis of the
contingencies in question to the date of such determination,
or on such other basis as the Trustees may establish.
(1) Shares to be issued shall be deemed to
be outstanding as of the time of the determination
of the net asset value per share applicable to
such issuance and the net price thereof shall be
deemed to be an asset of the Trust;
(2) Shares to be redeemed by the Trust shall
be deemed to be outstanding until the time of the
determination of the net asset value applicable to
such redemption and thereupon and until paid the
redemption price thereof shall be deemed to be a
liability of the Trust; and
(3) Shares voluntarily purchased or
contracted to be purchased by the Trust pursuant
to the provisions of paragraph 13(d) of this
Article SEVENTH shall be deemed to be outstanding
until whichever is the later of (i) the time of
the making of such purchase or contract of
purchase, and (ii) the time as of which the
purchase price is determined, and thereupon and
until paid, the purchase price thereof shall be
deemed to be a liability of the Trust.
(d) The net asset value of each Share of the
Trust, as of any time other than the close of business on
the New York Stock Exchange of any day, may be determined by
applying to the net asset value as of the close of business
on that Exchange on the preceding business day, computed as
provided in this Article SEVENTH, such adjustments as are
authorized by or pursuant to the direction of the Trustees
and designed reasonably to reflect any material changes in
the market value of securities and other assets held and any
other material changes in the assets or liabilities of the
Trust and in the number of its outstanding Shares which
shall have taken place since the close of business on such
preceding business day.
(e) In addition to the foregoing, the Trustees
are empowered, in their absolute discretion, to establish
other bases or times, or both, for determining the net asset
value of each Share of the Trust in accordance with the 1940
Act and to authorize the voluntary purchase by the Trust,
either directly or through an agent, of Shares of the Trust
upon such terms and conditions and for such consideration as
the Trustees shall deem advisable in accordance with any
such provision, rule or regulation.
(f) Payment of the net asset value of Shares of
the Trust properly surrendered to it for redemption shall be
made by the Trust within seven days after tender of such
Shares to the Trust for such purpose plus any period of time
during which the right of the holders of the shares of the
Trust to require the Trust to redeem such shares has been
suspended. Any such payment may be made in portfolio
securities of the Trust and/or in cash, as the Trustees
shall deem advisable, and no Shareholder shall have a right,
other than as determined by the Trustees, to have his Shares
redeemed in kind.
EIGHTH:
1. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of
his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other
general successor) shall be entitled out of the Trust estate
to be held harmless from and indemnified against all loss
and expense arising from such liability. This Trust shall,
upon request by the Shareholder, assume the defense of any
claim made against any Shareholder for any act or obligation
of the Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and
not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust's
officers or any Shareholder. All persons extending credit
to, contracting with or having any claim against the Trust
or the Trustees shall look only to the assets of the Trust
for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their
agents, whether past, present or future, shall be personally
liable therefor. Nothing in this Declaration of Trust
shall protect a Trustee against any liability to which such
Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the
office of Trustee hereunder.
3. The exercise by the Trustees of their powers and
discretion hereunder in good faith and with reasonable care
under the circumstances then prevailing, shall be binding
upon everyone interested. Subject to the provisions of
paragraph 2 of this Article EIGHTH, the Trustees shall not
be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts
with respect to the meaning and operations of this
Declaration of Trust, and subject to the provisions of
paragraph 2 of this Article EIGHTH, shall be under no
liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any
surety if a bond is required.
4. This Trust shall continue without limitation of
time but subject to the provisions of sub-sections (a), (b)
and (c) of this paragraph 4.
(a) The Trustees, with the favorable vote of the
holders of more than 50% of the outstanding Shares entitled
to vote, may sell and convey the assets of the Trust (which
sale may be subject to the retention of assets for the
payment of liabilities and expenses) to another issuer for a
consideration which may be or include securities of such
issuer. Upon making provision for the payment of
liabilities, by assumption by such issuer or otherwise, the
Trustees shall distribute the remaining proceeds ratably
among the holders of the Shares of the Trust then
outstanding.
(b) The Trustees, with the favorable vote of the
holders of more than 50% of the outstanding Shares entitled
to vote, may at any time sell and convert into money all the
assets of the Trust. Upon making provision for the payment
of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust, the Trustees shall
distribute the remaining assets of the Trust ratably among
the holders of the outstanding Shares.
(c) Upon completion of the distribution of the
remaining proceeds or the remaining assets as provided in
sub-sections (a) and (b), the Trust shall terminate and the
Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and
interest of all parties shall be cancelled and discharged.
5. The original or a copy of this instrument and of
each declaration of trust supplemental hereto shall be kept
at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each
supplemental declaration of trust shall be filed with the
Massachusetts Secretary of State, as well as any other
governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not
any such supplemental declarations of trust have been made
and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such
supplemental declaration of trust. In this instrument or in
any such supplemental declaration of trust, references to
this instrument, and all expressions like "herein," "hereof"
and "hereunder" shall be deemed to refer to this instrument
as amended or affected by any such supplemental declaration
of trust. This instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
6. The trust set forth in this instrument is created
under and is to be governed by and construed and
administered according to the laws of the Commonwealth of
Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
7. The Board of Trustees is empowered to cause the
redemption of the Shares held in any account if the
aggregate net asset value of such Shares (taken at cost or
value, as determined by the Board) has been reduced by a
Shareholder to $500 or less upon such notice to the
Shareholders in question, with such permission to increase
the investment in question and upon such other terms and
conditions as may be fixed by the Board of Trustees in
accordance with the 1940 Act.
8. In the event that any person advances the
organizational expenses of the Trust, such advances shall
become an obligation of the Trust subject to such terms and
conditions as may be fixed by, and on a date fixed by, or
determined in accordance with criteria fixed by the Board of
Trustees, to be amortized over a period or periods to be
fixed by the Board.
9. Whenever any action is taken under this
Declaration of Trust under any authorization to take action
which is permitted by the 1940 Act, such action shall be
deemed to have been properly taken if such action is in
accordance with the construction of the 1940 Act then in
effect as expressed in "no action" letters of the staff of
the Commission or any release, rule, regulation or order
under the 1940 Act or any decision of a court of competent
jurisdiction, notwithstanding that any of the foregoing
shall later be found to be invalid or otherwise reversed or
modified by any of the foregoing.
10. Any action which may be taken by the Board of
Trustees under this Declaration of Trust or its By-Laws may
be taken by the description thereof in the then effective
prospectus relating to the Shares under the Securities Act
of 1933 or in any proxy statement of the Trust rather than
by formal resolution of the Board.
11. Whenever under this Declaration of Trust, the
Board of Trustees is permitted or required to place a value
on assets of the Trust, such action may be delegated by the
Board, and/or determined in accordance with a formula
determined by the Board, to the extent permitted by the 1940
Act.
12. If authorized by vote of the Trustees and the
favorable vote of the holders of more than 50% of the
outstanding Shares entitled to vote, or by any larger vote
which may be required by applicable law in any particular
case, the Trustees shall amend or otherwise supplement this
instrument, by making a declaration of trust supplemental
hereto, which thereafter shall form a part hereof; any such
Supplemental Declaration of Trust may be executed by and on
behalf of the Trust and the Trustees by any officer or
officers of the Trust.
IN WITNESS WHEREOF, the undersigned have
executed this Supplemental Declaration of Trust on behalf of
the Trust and the Trustees as of the date first above
written.
CHURCHILL CASH RESERVES TRUST
______________________________
LACY B HERRMANN
President, Chairman of the
Board of Trustees and Trustee
Attest:
______________________________
Edward M. W. Hines
Secretary
THE UNDERSIGNED, President, Chairman of the Board of
Trustees and Trustee of CHURCHILL CASH RESERVES 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: April 26, 1996
CHURCHILL CASH RESERVES 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 2. Annual Meeting. The annual meeting of the
Shareholders of the Trust shall be held on such date and at such
time as may be determined by the Board of Trustees and as shall be
designated in the notice of meeting for the purpose of electing
Trustees for the ensuing year and for the transaction of such other
business as may properly be brought before the meeting.
Section 3. Special or Extraordinary Meetings. Special or
extraordinary meetings of 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 one-third of the
Shares of the Trust issued and outstanding and entitled to vote
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 ten per cent
(10%) of the Shares entitled to vote at such election shall appoint
two inspectors of election who shall first subscribe an oath or
affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of
their ability, and shall after the election make a certificate of
the result of the vote taken. No candidate for the office of
Trustee shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to
be taken upon any election or matter, and such vote shall be taken
upon the request of the holders of ten per cent (10%) of the Shares
entitled to vote on such election or matter.
Section 8. Conduct of Shareholders' Meetings. The
meetings of the Shareholders shall be presided over by the Chairman
of the Board of Trustees, if any, or if he shall not be present, by
the President, or if he shall not be present, by a Vice-President,
or if neither the Chairman of the Board of Trustees, the President
nor any Vice-President is present, by a chairman to be elected at
the meeting. The Secretary of the Trust, if present, shall act as
Secretary of such meetings, or if he is not present, an Assistant
Secretary shall so act; if neither the Secretary nor an Assistant
Secretary is present, then the meeting shall elect its secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc.
At every meeting of the Shareholders, all proxies shall be received
and taken in charge of and all ballots shall be received and
canvassed by the secretary of the meeting, who shall decide all
questions touching the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in
Section 7, in which event such inspectors of election shall decide
all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and
property of the Trust shall be conducted and managed by a Board of
Trustees consisting of the number of initial Trustees, which number
may be increased or decreased as provided in Section 2 of this
Article. Each Trustee shall, except as otherwise provided herein,
hold office until the annual meeting of Shareholders of the Trust
next succeeding his election or until his successor is duly elected
and qualifies. Trustees need not be Shareholders.
Section 2. Increase or Decrease in Number of Trustees;
Removal. The Board of Trustees, by the vote of a majority of the
entire Board, may increase the number of Trustees to a number not
exceeding fifteen, and may elect Trustees to fill the vacancies
created by any such increase in the number of Trustees until the
next annual meeting or until their successors are duly elected and
qualify; the Board of Trustees, by the vote of a majority of the
entire Board, may likewise decrease the number of Trustees to a
number not less than 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 1940 Act), a majority of those present may adjourn
the meeting from time to time until a quorum shall have been
obtained. The act of the majority of the Trustees present at any
meeting at which there is a quorum shall be the act of the Board,
except as may be otherwise specifically provided by statute, by the
Declaration of Trust or by these By-Laws.
Section 7. Executive Committee. The Board of Trustees
may, by the affirmative vote of a majority of the entire Board,
elect from the Trustees an Executive Committee to consist of such
number of Trustees as the Board may from time to time determine.
The Board of Trustees by such affirmative vote shall have power at
any time to change the members of such Committee and may fill
vacancies in the Committee by election from the Trustees. When the
Board of Trustees is not in session, the Executive Committee shall
have and may exercise any or all of the powers of the Board of
Trustees in the management of the business and affairs of the Trust
(including the power to authorize the seal of the Trust to be
affixed to all papers which may require it) except as provided by
law and except the power to increase or decrease the size of, or
fill vacancies on the Board. The Executive Committee may fix its
own rules of procedure, and may meet, when and as provided by such
rules or by resolution of the Board of Trustees, but in every case
the presence of a majority shall be necessary to constitute a
quorum. In the absence of any member of the Executive Committee
the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Trustees
to act in the place of such absent member.
Section 8. Other Committees. The Board of Trustees, by
the affirmative vote of a majority of the entire Board, may appoint
other committees which shall in each case consist of such number of
members (not less than two) and shall have and may exercise such
powers as the Board may determine in the resolution appointing
them. A majority of all members of any such committee may
determine its action, and fix the time and place of its meetings,
unless the Board of Trustees shall otherwise provide. The Board of
Trustees shall have power at any time to change the members and
powers of any such committee, to fill vacancies, and to discharge
any such committee.
Section 9. Informal Action by and Telephone Meetings of
Trustees and Committees. Any action required or permitted to be
taken at any meeting of the Board of Trustees or any committee
thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such
committee, as the case may be. Trustees or members of a committee
of the Board of Trustees may participate in a meeting by means of
a conference telephone or similar communications equipment; such
participation shall, except as otherwise required by the 1940 Act,
have the same effect as presence in person.
Section 10. Compensation of Trustees. Trustees shall be
entitled to receive such compensation from the Trust for their
services as may from time to time be voted by the Board of
Trustees.
Section 11. Dividends. Dividends or distributions
payable on the Shares may, but need not be, declared by specific
resolution of the Board as to each dividend or distribution; in
lieu of such specific resolutions, the Board may, by general
resolution, determine the method of computation thereof, the method
of determining the Shareholders to which they are payable and the
methods of determining whether and to which Shareholders they are
to be paid in cash or in additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of
the Trust shall be chosen by the Board of Trustees as soon as may
be practicable after the annual meeting of the Shareholders. These
may include a Chairman of the Board of Trustees, and shall include
a President, one or more Vice-Presidents (the number thereof to be
determined by the Board of Trustees), a Secretary and a Treasurer.
The Chairman of the Board of Trustees, if any, and the President
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 or the Executive Committee may determine. The Board of
Trustees may fill any vacancy which may occur in any office. Any
two offices, except those of President and Vice-President, may be
held by the same person, but no officer shall execute, acknowledge
or verify any instrument in more than one capacity, if such
instrument is required by law or these By-Laws to be executed,
acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all
officers shall be one year and until their respective successors
are chosen and qualify; however, any officer may be removed from
office at any time with or without cause by the vote of a majority
of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Trust
shall have such powers and duties as generally pertain to their
respective offices, as well as such powers and duties as may from
time to time be conferred by the Board of Trustees or the Executive
Committee.
ARTICLE IV
SHARES
Section 1. Certificates of Shares. Each Shareholder of
the Trust may be issued a certificate or certificates for his
Shares in such form as the Board of Trustees may from time to time
prescribe, but only if and to the extent and on the conditions
prescribed by the Board.
Section 2. Transfer of Shares. Shares shall be
transferable on the books of the Trust by the holder thereof in
person or by his duly authorized attorney or legal representative,
upon surrender and cancellation of certificates, if any, for the
same number of Shares, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the
authenticity of the signature as the Trust or its agent may
reasonably require; in the case of Shares not represented by
certificates, the same or similar requirements may be imposed by
the Board of Trustees.
Section 3. Stock Ledgers. The stock ledgers of the
Trust, containing the name and address of the Shareholders and the
number of Shares held by them respectively, shall be kept at the
principal offices of the Trust or, if the Trust employs a transfer
agent, at the offices of the transfer agent of the Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The
Board of Trustees may determine the conditions upon which a new
certificate may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may, in their
discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety to the Trust
and the transfer agent, if any, to indemnify it and such transfer
agent against any and all loss or claims which may arise by reason
of the issue of a new certificate in the place of the one so lost,
stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of
the Trust, in such form and bearing such inscriptions as it may
determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board
of Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added
to or repealed by the Shareholders or by majority vote of the
entire Board of Trustees, but any such alteration, amendment,
addition or repeal of the By-Laws by action of the Board of
Trustees may be altered or repealed by the Shareholders.
CASH RESERVES TRUST
A MASSACHUSETTS BUSINESS TRUST
I. FRONT OF CERTIFICATE (all text and other matter lies within 6-1/4" x
10-1/4" decorative border, 1/2" wide)
(upper right) oval with heading: SHARES
(upper left) oval with heading: NUMBER
(below trust name to right)
SEE REVERSE SIDE FOR CERTAIN
DEFINITIONS
(at left) THIS CERTIFIES THAT (at right) is the owner of
SHARES without par value of
CASH RESERVES 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:
(at left of seal) (at right of seal)
______________________ _____________________
Secretary President
(at right center, printed vertically)
Countersigned:
PROVIDENT FINANCIAL PROCESSING CORPORATION
(Wilmington, Del.) Transfer Agent,
By
____________________________
Authorized Signature.
II. BACK OF CERTIFICATE (text reads from top to bottom of 10-1/4"
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
__________________________________________________________________________
__________________________________________________________________________
___________________________________________________________________ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE
AND APPOINT ______________________________________ ATTORNEY TO TRANSFER THE
SAID SHARES ON THE BOOKS OF THE WITHIN NAMED TRUST WITH FULL POWER OF
SUBSTITUTION IN THE PREMISES.
Dated _____________________19_____
________________________________
In the presence of
__________________________________
(text printed NOTICE: the signature to this assignment
vertically to right must correspond with the name as written
of above paragraph) 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 29th day of September,
1989, by and between CHURCHILL CASH RESERVES TRUST
(hereinafter called the "Trust"), and AQUILA DISTRIBUTORS,
INC. (hereinafter called the "Distributor").
W I T N E S S E T H :
WHEREAS, the Trust and the Distributor have
previously entered into a Distribution Agreement; and
WHEREAS, the 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 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 Trust in any case in which the purchase is
made under terms not calling for such certificates. Shares
issued by the 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 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 Trust.
4. The 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 Trust or other
investment companies or persons. The 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 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 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 Trust agrees to advise the Distributor of
the net asset value of the Trust's shares as often as
computed. The 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 Trust, each as
presently in effect. Insofar as they are applicable to the
Distributor as principal underwriter of the Trust, it will
comply with the provisions of the Declaration of Trust and
By-Laws of the 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 December 31 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 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 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 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 Trust on account
of its agreement contained in this paragraph, notify the
Trust in writing of the commencement thereof. The omission
of the Distributor or such controlling person so to notify
the Trust of any such litigation shall relieve the 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 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 Trust, the
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 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 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 Trust for
liabilities (other than payment by the 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 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 Trust the matter has been
adjudicated by controlling precedent, the 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 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 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 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 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 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 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 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 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 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 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 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 Trust and shall
survive any delivery of shares of the Trust. The
Distributor agrees to notify the 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 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 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 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 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 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 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 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
Trust's property; the Distributor represents that it has
notice of the provisions of the Trust's Declaration of Trust
disclaiming shareholder liability for acts or obligations of
the Trust.
IN WITNESS WHEREOF, the parties hereto have caused
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.
CHURCHILL CASH RESERVES TRUST
By:________________________________
ATTEST:
__________________________
AQUILA DISTRIBUTORS, INC.
By:________________________________
ATTEST:
__________________________
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made this 26 day of February, 1991, by and
between CHURCHILL CASH RESERVES 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") currently offering one class of
shares (the "Shares"); and
WHEREAS, the Trust desires to retain ADM to serve as the
Trust's transfer agent, registrar and dividend disbursing agent,
and ADM is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto
as follows:
1. Appointment. The Trust hereby appoints ADM to serve as
transfer agent, registrar and dividend disbursing agent for the
Trust, 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 Trust has furnished ADM
with copies properly certified or authenticated of each of the
following:
(i) Resolutions of the Trust's Board of Trustees
authorizing the execution of this Agreement;
(ii) Appendix B identifying and containing the signatures
of the Trust's officers and other persons authorized to sign
Written Instructions and give Oral Instructions, each as
hereinafter defined, on behalf of the Trust;
(iii) The Trust'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 Trust'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 Trust'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 Trust'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 Trust 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 Trust.
(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 Trust's officers and other
persons duly authorized by the Board of Trustees of the Trust to
give Oral and Written Instructions on behalf of the Trust 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 Trust
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 Trust, the Trust's Prospectus and the laws, rules and
regulations applicable to the Trust, 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 Trust's Prospectus or with any laws, rules or regulations
applicable to the Trust 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 Trust, its investment adviser, its administrator,
or otherwise. The Trust 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 Trust
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 Trust 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 Trust, 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 Trust'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 Trust, and
mailing new Prospectuses upon their issue to shareholders.
(xi) preparation and sending such
other information from the Trust records held by ADM as may be
reasonably requested by the Trust;
(xii) preparation and sending to the
Trust such affidavits of mailing and certifications as are
reasonably requested by an officer of the Trust;
(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 Trust 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 Trust the results of such
tabulation accompanied by appropriate certificates, and preparing
and furnishing to the Trust certified lists of Shareholders as of
such date, and in such form and containing such information as may
be required by the Trust 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 Trust may employ another
firm to perform all or some of the functions required by this
subsection. The Trust 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 Trust in
excess of one such meeting held in any fiscal year of the Trust.
(c) ADM shall furnish to the Trust such information and
at such intervals as the Trust may reasonably request for the Trust
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 Trust and for such additional fees
as the Trust 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 Trust,
provided that normally occurring improvements in the services of
such agents will be provided without initial capital cost to the
Trust 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 Trust 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 Trust upon request such
information as may reasonably be required to enable the Trust to
reconcile the number of outstanding shares of the Trust between
ADM's records and the account books of the Trust.
6. Authorized Shares. The Trust hereby represents that the
Declaration authorizes the Board of Trustees to issue an unlimited
number of shares.
7. Dividends and Distributions. The Trust shall furnish ADM
with the amount of each daily dividend and with appropriate
evidence of action by the Trust'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 Trust, the Trust 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
Trust 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 Trust 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 Trust'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 Trust 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 Trust 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
Trust, ADM shall pay on a timely basis to the appropriate Federal
authorities any taxes withheld on dividends and distributions paid
by the Trust.
8. Notification of ADM: The Trust 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 Trust,
but in any event not later than sixty (60) minutes after the
closing of the New York Stock Exchange (if the Trust is not a money
market Trust) or before 1:00 p.m. New York Time (if the Trust is a
money market Trust.) 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 Trust shall
prepare, print and provide ADM with sufficient quantities of all
communications by the Trust 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 Trust 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 Trust 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 Trust'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 Trust.
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 Trust 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 Trust which
are in the possession of ADM shall be the property of the Trust.
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 Trust, 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
Trust, or the Trust'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 Trust, copies of any
such books and records shall be provided by ADM to the Trust or the
Trust's authorized representative at the Trust's expense.
11. Reports and Other Information.
Upon reasonable request of the Trust, 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 Trust, at no additional cost to the Trust, (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 Trust 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 Trust
and ADM.
12. Cooperation with Accountants. ADM shall cooperate with
the Trust'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 Trust'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 Trust and its prior,
present or potential shareholders and relative to the Trust'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, Trust 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 Trust, 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 Trust.
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 Trust.
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 Trust to the contrary and establishes
to the satisfaction of the Trust 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 Trust in
writing.
17. Release. ADM understands that the obligations of this
Agreement are not binding upon any Shareholder of the Trust
personally, but bind only the Trust's property; ADM represents that
it has notice of the provisions of the Trust's Declaration
disclaiming Shareholder liability for acts or obligations of the
Trust.
The Trust 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 Trust, its
Directors, Trustees, Officers, Shareholders and others shall look
only to the separate assets of ADM.
18. Right to Receive Advice. (a) Advice of Trust. 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 Trust 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 Trust
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 Trust's Prospectus, procedures established between ADM and
the Trust, 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 Trust 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 Trust or anyone on behalf of the Trust and the
Trust 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 Trust 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 Trust or which ADM, its
affiliates or agents reasonably believes are from the Trust,
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
Trust shares; instructions from the Trust concerning dividends and
other distributions; and other matters relating to the Trust and
its shareholders.
21. Responsibilities of the Trust: The Trust and the Agents
of the Trust 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
Trust:
(a) creating or maintaining any records on behalf of the
Trust 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 Trust 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
Trust; (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 Trust and the
SEC; and (iv) will be surrendered promptly upon the
request of the Trust;
(b) determining the legality of any sale, exchange, issuance
or redemption of any shares of the Trust;
(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 Trust;
(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 Trust 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 Trust and forms relating to withholding and non-
resident alien withholding;
(f) monitoring the activities of the Trust or any one else or
their compliance with applicable law, rules and
regulations or with the provisions of the Trust's
Prospectus, of Trust, By-Laws or other governing
instruments; or
(g) compliance of the Trust 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 Trust or of shares of the
Trust or the legality of their sale although ADM will, in
order to provide the Trust with assistance in complying
with normal Blue Sky requirements, upon the reasonable
request of the Trust provide the Trust with a report
generated from the information readily available to ADM
detailing the amount of shares of the Trust purchased and
redeemed and the states of residence of the shareholders
purchasing or redeeming such shares.
22. Information and Documents: (a) The Trust shall promptly
provide ADM with the current Prospectus for the Trust, the Annual
and Semi-Annual Reports to shareholders of the Trust, Proxy
Statement and other Trust material, all in sufficient quantities
and sufficiently in advance to permit ADM to provide them to
shareholders of the Trust 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 Trust
shall
(i) promptly notify ADM of all material events which
affect the Trust or any affiliate of the Trust;
(ii) promptly notify ADM of any suits or other
proceedings threatened or actually instituted
against the Trust or any affiliate of the Trust 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 Trust or any
affiliate of the Trust 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 Trust which is an Investment Advisor, Investment
Sub-Advisor, Distributor or Administrator of the
Trust;
(v) promptly provide ADM, upon request, with copies of
any filings made by the Trust or any affiliate of
the Trust which is an Investment Advisor, Investment
Sub-Advisor, Distributor or Administrator of the
Trust 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 Trust at the time
of filing any amendments to the registration
statement of the Trust 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 Trust 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 Trust 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 Trust's written consent.
Not withstanding the previous sentence, ADM may, without the
Trust's consent, assign the performance of all or a portion of its
responsibilities and duties hereunder to an affiliate of ADM,
provided that the Trust shall incur no additional cost or expense
in connection therewith.
31. Declaration and Termination. This Agreement shall
continue until termination by the Trust 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 07095-1198
Attn: Ms. Anne Condon, Vice President
or to such other address as ADM shall instruct the Trust, in
writing, from time to time;
(b) if to the Trust at:
___________________________
380 Park Avenue, Suite 2300
New York, New York 10017
Attention: President
or to such other address as the Trust 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.
/s/Kenneth L. MacRitchie /s/Lacy B. Herrmann
Attest: ______________________ By:______________________
Kenneth L. MacRitchie, Lacy B. Herrmann,
Assistant Secretary President
ADMINISTRATIVE DATA
MANAGEMENT CORP.
Attest: ______________________ By:_______________________
Susan E. Bryant Glenn O. Head
General Counsel 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 Trust 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>
APPENDIX B
CHURCHILL CASH RESERVES TRUST
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/Diana P. Herrmann
Diana P. Herrmann _____________________
Vice President Diana P. Herrmann
/s/Charles E. Childs III
Charles E. Childs, III _____________________
Vice President Charles E. Childs, III
/s/John M. Herndon
John M. Herndon _____________________
Vice President John M. Herndon
/s/Rose F. Marotta
Rose F. Marotta _____________________
Treasurer Rose F. Marotta
/s/Thomas M. Reynolds
Thomas M. Reynolds _____________________
Assistant Treasurer Thomas M. Reynolds
/s/Kenneth L. MacRitchie
Kenneth L. MacRitchie _____________________
Assistant Secretary Kenneth L. MacRitchie
<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.
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]
January 23, 1997
Churchill Cash Reserves Trust
380 Madison Avenue, Suite 2300
New York, New York 10017
Ladies and Gentlemen:
You have requested that we render an opinion to Churchill
Cash Reserves Trust (the "Trust") with respect post-effective
amendment No. 14 (the "Amendment") to the Registration Statement
of the Trust under the Securities Act of 1933 (the "1933 Act")
and No. 14 under the Investment Company Act of 1940 (the "1940
Act") which you propose to file with the Securities and Exchange
Commission (the "Commission").
We have examined originals or copies, identified to our
satisfaction as being true copies, of those corporate records of
the 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 shares 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 of the Trust forming a part of its then effective
Registration Statement as heretofore, herewith and hereafter
amended, will be duly issued, fully-paid and non-assessable to
the extent set forth therein.
This letter is furnished to you pursuant to your request and
to the requirements imposed upon you under the 1933 Act and 1940
Act and is intended solely for your use for the purpose of
completing the filing of the Amendment with the Commission. This
letter may not be used for any other purpose or furnished to or
relied upon by any other persons, or included in any filing made
with any other regulatory authority, without our prior written
consent.
We hereby consent to the filing of this opinion with the
Amendment.
Very truly yours,
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
/s/ W.L.D. Barrett
By:_________________________________
W. L. D. Barrett
Dated: September 30, 1993
CHURCHILL CASH RESERVES TRUST
DISTRIBUTION PLAN
1. The Plan The 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 CHURCHILL CASH RESERVES TRUST (the
"Trust").
2. Definitions. As used in this Plan, "Qualified Recipients"
shall mean broker-dealers or others selected by the Trust's sub-
adviser or administrator, including but not limited to any
principal underwriter of the Trust (other than a principal
underwriter which is an affiliated person, or an affiliated
person of an affiliated person, of the sub-adviser or
administrator) with which the sub-adviser or administrator has
entered into written agreements ("Related Agreements")
contemplated by the Rule and which have rendered assistance
(whether direct, administrative, or both) in the distribution
and/or retention of the 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.
3. Certain Payments Permitted. The sub-adviser or administrator
may make payments ("Permitted Payments") to Qualified Recipients,
which Permitted Payments shall be made by the sub-adviser or
administrator, directly, or through the Distributor 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) .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) the amount of Permitted Payments, if any, to each Qualified
Recipient provided that the total Permitted Payments to all
Qualified Recipients do not exceed the amount set forth above.
The 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 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 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 this Plan.
4. 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 this
Plan: (i) the costs of the preparation of all reports and notices
to shareholders and the costs of printing and mailing such
reports and notices to existing shareholders, irrespective of
whether such reports or notices contain or are accompanied by
material intended to result in the sale of 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.
5. Disinterested Trustees. While this Plan is in effect, the
selection and nomination of those Trustees of the Trust who are
not "interested persons" of the 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.
6. Reports. While this Plan is in effect, the Trust's sub-
adviser or administrator shall report at least quarterly to the
Trust's Trustees in writing for their review on the following
matters: (i) all Permitted Payments made under Section 3 of this
Plan, the identity of the Qualified Recipient of each Payment,
and the purposes for which the amounts were expended; (ii) all
costs of each item specified in Section 4 of this 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. This
Plan originally went into effect when it was approved (i) by a
vote of the Trustees of the 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 Trust and
had no direct or indirect financial interest in the operation of
this Plan or in any agreements related to this Plan, with votes
cast in person at a meeting called for the purpose of voting on
this Plan; and (ii) by a vote of holders of at least a "majority"
(as so defined) of the outstanding voting securities of the
Trust. This Plan has continued, and will, unless terminated as
hereinafter provided, continue in effect, until the December 31
next succeeding such effectiveness, and from year to year
thereafter only so long as such continuance is specifically
approved at least annually by the 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 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. This Plan may not be amended to
increase materially the amount of payments to be made without
shareholder approval as set forth in (ii) above, and all
amendments must be approved in the manner set forth in (i) above.
8. Related Agreements. In the case of a Qualified Recipient
which is a principal underwriter of the Trust, the related
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 related agreements with
them shall be approved in accordance with, and contain the
provisions required by, the Rule.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000763534
<NAME> CHURCHILL CASH RESERVES TRUST
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 121,359,566
<INVESTMENTS-AT-VALUE> 121,359,566
<RECEIVABLES> 133,938
<ASSETS-OTHER> 10,872
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121,504,376
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 565,683
<TOTAL-LIABILITIES> 565,683
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 120,938,693
<SHARES-COMMON-STOCK> 120,938,693
<SHARES-COMMON-PRIOR> 146,129,666
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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<EXPENSES-NET> 879,710
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,917,182
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,917,182)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 584,601,557
<NUMBER-OF-SHARES-REDEEMED> (610,419,778)
<SHARES-REINVESTED> 627,248
<NET-CHANGE-IN-ASSETS> (25,190,973)
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 521,359
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,001,490
<AVERAGE-NET-ASSETS> 157,733,926
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
