SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 []
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 19 [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 []
Amendment No. 21 [ ]
(Check appropriate box or boxes.)
COMMONWEALTH CASH RESERVE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
P.O. BOX 1192
RICHMOND, VIRGINA 23209-1192
(Address of Principal Executive Offices) (Zip Code)
1-800-338-3383
Registrant's Telephone Number, including Area Code
JEFFREY A. LAINE
38 COHASSET LANE
CHERRY HILL, NEW JERSEY 08003
(Name and Address of Agent for Service)
COPY TO:
BARBARA L. FAVA
PUBLIC FINANCIAL MANAGEMENT, INC.
2101 NORTH FRONT ST., BLDG. 3, SUITE 200
HARRISBURG, PA 17110
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective
(check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on August 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
COMMONWEALTH CASH RESERVE FUND, INC.
Cross Reference Sheet
(Pursuant to Rule 495)
N-1A Item No. Location
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses and
Financial Highlights
Item 3. Condensed Financial Information Fund Expenses and
Financial Highlights
Item 4. General Description of Registrant The Fund; Investment
Objectives and Policies;
General Information
Item 5. Management of the Fund Management
Item 6. Capital Stock and other Securities General Information;
Dividend and Tax
Information
Item 7. Purchase of Securities Being Offered How to Invest in the
Fund; Net Asset Value
Item 8. Redemption or Repurchase How to Redeem Investments
Item 9. Pending Legal Proceedings Not Applicable
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History General Information
Item 13. Investment Objectives and Policies Investment Policies
Item 14. Management of the Fund Additional Information
as to Management
Arrangements
Item 15. Control Persons and Principal Principal Holders
Holders of Securities of Securities
Item 16. Investment Advisory and Other Services Additional Information
as to Management
Arrangements
Item 17. Brokerage Allocation Investment Policies
Item 18. Capital Stock and Other Securities General Information
Item 19. Purchase, Redemption and Pricing of Amortized Cost
Securities Being Offered Valuation
Item 20. Tax Status Dividends and Tax
Information*
Item 21. Underwriters Distribution Plan
Item 22. Calculation of Yield Quotations of Yield Information
Money Market Funds Market Funds
Item 23. Financial Statements Financial Information
Part C OTHER INFORMATION
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration
Statement.
* Included under referenced caption in the Prospectus
COMMONWEALTH CASH RESERVE FUND, INC.
COMMONWEALTH CASH RESERVE FUND, INC.
Prospectus August 1, 1999
P.O. Box 1192
Richmond, Virginia 23209-1192
1-800-338-3383
The Commonwealth Cash Reserve Fund (the "Fund") is a money market fund. The
Fund is designed and managed to suit the special cash management needs of
institutions, such as municipalities, other governmental entities,
universities, hospitals and not-for-profit organizations.
Public Financial Management, Inc. ("PFM") serves as the Fund's investment
advisor and administrator.
An investment in the fund is not insured or guaranteed by the federal deposit
insurance corporation or any other government agency.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
[small, side by side graphics:
stock certificate on table with eyeglasses and pen, labelled "fund
description."
pen-in-hand, writing on a check without visable figures, labelled "becoming
an investor."
three people around the end of a table, with stack of papers,
labelled"financial data."]
1
Commonwealth Cash Reserve Fund, Inc.
Prospectus
[small graphic:
three men with chart,labelled "a fund for institutional
investors."]
TABLE OF CONTENTS
Section Page
Risk and Return Summary 3
Principal Investment Strategies 3
Principal Risks 3
Performance and Expenses 4
Investment Objectives and Policies 6
Portfolio Management 6
Permitted Investments 6
Special Information About Municipal
Cash Management 7
Year 2000 7
Valuation 8
Management of the Fund 8
Investment Advisory and Administrative
Arrangements 8
Distributor and Other Service Providers 9
How to Purchase and Redeem Shares of the Fund 10
Dividends, Tax and Related Information 14
Financial Highlights 16
COMMONWEALTH
CASH RESERVE FUND
Investment Advisor
Public Financial Management, Inc.
Governor's Plaza North
2101 North Front Street
Building 3, Suite 200
Harrisburg, Pennsylvania 17110
Distributor
Commonwealth Financial Group, Inc.
38 Cohasset Lane
Cherry Hill, New Jersey 08003
Custodian
Wachovia Bank, N.A.
1021 East Cary Street
P.O. Box 27602
Richmond, Virginia 27602
Administrator and Transfer Agent
Public Financial Management, Inc.
Governor's Plaza North
2101 North Front Street
Building 3, Suite 200
Harrisburg, Pennsylvania 17110
Independent Auditors
Ernst & Young LLP
Two Commerce Square, Suite 4000
2001 Market Street
Philadelphia, Pennsylvania 19103
Co-Counsel
McGuire Woods Battle & Boothe LLP
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Laura Anne Corsell, Esq.
7307 Elbow Lane
Philadelphia, Pennsylvania 19119
2
RISK AND RETURN SUMMARY
Investment Objective and Principal Investment Strategies
Commonwealth Cash Reserve Fund (the "Fund") is a money market fund. The Fund
seeks to provide its shareholders with as high current income as is consistent
with stability, safety of principal and liquidity and to maintain a stable net
asset value of $1.00 per share. To do so, the Fund maintains a dollar-
weighted average portfolio maturity of 90 days or less and invests only in
securities that have remaining maturities of thirteen months or less.
The Fund invests exclusively in high-quality, short-term money market
instruments. These instruments include:
* Unconditional Obligations of the United States Government or it's agencies
* High quality debt obligations of U.S. Companies
* Obligations of Financial Institutions
* Municipal Obligations
Except for obligations of the U.S. Government or municipalities, all securities
purchased by the Fund -- or the companies that issue securities purchased by
the Fund -- must be rated of high quality by Standard & Poor's Corporation
("S&P") and by Moody's Investor Services, Inc. ("Moody's). In addition, all
instruments acquired by the Fund are instruments in which municipalities and
other government entities organized under the laws of the Commonwealth of
Virginia are permitted to invest.
PRINCIPAL RISKS
Notwithstanding the high-quality securities in which the Fund exclusively
invests, an investment in a money market fund such as the Fund is subject
to certain basic risks.
One of these is related to interest rates -- the chance that
falling short-term interest rates will cause the Fund's income to decline.
A second is "management risk" -- the possibility that securities selected by
the Fund's investment adviser will cause the Fund to underperform other
money market funds.
Finally, the Fund is subject to "credit risks" -- the risk that the issuer of
a security held by the Fund will fail to pay interest and principal in a
timely manner. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the Fund.
3
PERFORMANCE
The following information illustrates how the Fund's performance has varied
over time. The bar chart depicts the change in performance from year to
year. The table below the bar chart illustrates the Fund's average annual
return for the periods indicated. Keep in mind that the information below
is calculated on a calendar year basis. Corresponding information set forth
in the Financial Highlights portion of this Prospectus is calculated based
on the Fund's fiscal year.
<TABLE>
1989 1990 1991 1992 1993 1994<F1>1995 1996 1997 1998
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.06% 7.92% 5.48% 3.22% 2.58% 3.69% 6.06% 5.46% 5.61% 5.57%
<FN>
<F1> For approximately two months during 1994 there were no shareholders in
the fund.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
(as of the calendar year ended Past Past Past
December 31, 1998) One Year Five Years Ten Years
<S> <C> <C> <C>
Commonwealth Cash Reserve Fund 5.57% 5.28% 5.47%
</TABLE>
The Fund's return for the three month period ended June 30, 1999 is 1.20%.
High quarter 2.32%
Low quarter 0.61%
4
FUND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. It is based upon gross expenses, without taking
into account any fees that may have been waived by the Fund's investment
advisor or other service providers.
Management Fees (1) 0.17%
12b-1 Fees (2) 0.02%
Other Expenses 0.06%
Total Fund Operating Expenses (3) 0.25%
(1) Management fees include both the advisory and administration fees payable
to PFM. PFM may, in its sole discretion, waive all or a portion of these fees
in any year. During the year ended March 31, 1999, PFM waived fees equal to
approximately .10% of the Fund's average daily net assets. After giving
effect to this fee waiver, the Management Fees paid by the Fund during the
period shown were 0.07%.
(2) Expenses associated with the Distribution of the Fund's shares include
a fixed fee payable to the Fund's Distributor and certain expenses, incurred
by the Distributor and for which the Distributor is reimbursed by the Fund.
Under the Fund's 12b-1 Plan of Distribution, distribution related expenses
paid by the Fund may not exceed .25% of the Fund's average daily net assets.
Figures shown in the table above do not reflect certain voluntary fee waivers.
After giving effect to such waivers, 12b-1 fees would be .02%.
(3) The Total Fund Operating Expenses in the table above do not reflect
voluntary waivers for the fiscal year ended March 31, 1999. Taking such fee
waivers into account, the ratio of expenses to average daily net assets
would be 0.15%.
EXPENSE EXAMPLE
This example allows you compare the cost of investing in the Fund to the
cost of investing in other mutual funds. It is based on the following
assumptions: $10,000 initial investment; 5% total return on your
investment each year; Fund operating expenses remain as shown in the table
above throughout the period; and redemption at the end of each time period.
1 year $ 26
3 years $ 80
5 years $141
10 years $318
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
5
INVESTMENT OBJECTIVES AND POLICIES
The objective of the Fund is to provide its shareholders with as high current
income as is consistent with stability, safety of principal and liquidity.
This objective may not be changed without the approval of the Fund's
outstanding voting securities.
To achieve its investment objective, the Fund is permitted to purchase the
instruments described in this Prospectus. The Fund will invest only when
PFM is satisfied that the credit risk presented by any investment is
minimal. Detailed information about the Fund's investment policies is
included in the Statement of Additional Information.
Obligations of the United States Government. These are U.S. Treasury bills,
notes and bonds, and securities unconditionally guaranteed as to payment of
principal and interest by the United States or any agency of the United
States. Examples of agencies of the United States include the Federal
National Mortgage Association, Federal Home Loan Banks, Federal Farm Credit
System, and Government National Mortgage Association.
Commercial Paper. The Fund will invest only in commercial paper of
corporations organized under the laws of the United States or any state
thereof, including paper issued by banks and bank holding companies, with
a maturity of 270 days or less. All commercial paper purchased by
the Fund will be rated both Prime-1 by Moody's and A-1 by S&P. The Fund
will not invest more than 35% of its total assets in commercial paper and
not more than 5% of its assets will be invested in the commercial
paper of any one corporation.
Corporate Notes and Bonds. The Fund is authorized to invest in bonds,
notes and other evidences of indebtedness or obligations issued by
corporations organized under the laws of the United States or any state.
All corporate debt obligations purchased by the Fund will be rated at
least Aa by Moody's and have a rating of at least AA by S&P. The Fund may
purchase variable and floating rate instruments.
Obligations of Banks. The Fund may purchase bankers' acceptances and
certificates of deposit. Bankers acceptances are time drafts or bills of
exchange created to finance trade goods and "accepted" by either a domestic
bank or a foreign bank with an agency domiciled in the United States.
Certificates of deposit are securities evidencing deposits in domestic banks
and domestic offices of foreign banks.
Bank obligations will be considered for purchase by the Fund only if the
securities are rated at least A-1 by S&P and P-1 by Moody's in the case of
securities with maturities of one year or less. A rating of at least AA by
S&P and Aa by Moody's will be required before any bank obligation
with a remaining maturity of over one year will be considered for purchase
by the Fund. The Fund will not invest in any bank obligation with more
than thirteen months remaining until maturity.
Municipal Obligations. The Fund may invest in the stocks, bonds, notes and
other evidences of indebtedness of municipal entities including any state of
the United States or any city, county, town or district situated in any one
6
of the states of the United States upon which there is no default. See
"Investment Policies" in Statement of Additional Information for a discussion
of additional criteria that municipal obligations must meet to be eligible
for investment by the Fund.
Repurchase Agreements. The Fund may enter into collateralized repurchase
agreements. Repurchase agreements are transactions in which a Fund
purchases securities and simultaneously commits to resell those securities
to the seller at an agreed-upon price on an agreed-upon future date. The
repurchase price reflects a market rate of interest and is collateralized
by cash or securities.
If the seller of the securities underlying a repurchase agreement fails to
pay the agreed resale price on the agreed delivery date, the Fund may incur
costs in disposing of the collateral and may experience losses if there is
any delay in its ability to do so.
SPECIAL INFORMATION ABOUT CASH MANAGEMENT FOR MUNICIPALITIES AND INSTITUTIONS
Although suitable for a range of institutional investors, the Fund's
investment objectives and strategies are consistent with the special cash
management needs of municipalities, other governmental agencies and
political subdivisions (collectively, "governmental units") that,
like the Fund, are located in Virginia. Accordingly, the Fund invests only
in those instruments in which governmental units are permitted to invest
directly under Sections 2.1-327 through 2.1-329 of the Code of Virginia.
Particularly when combined with the specialized cash management features
available through the Fund, an investment in the Fund is also suitable
for institutions, such as universities, hospitals, and not-for-profit
organizations that must manage investments conservatively so as to assure
the ability to meet changing cash flow needs. These features include the
ability, without charge, to establish multiple accounts, the availability of
detailed individual account information on request, assistance in complying
with specialized accounting and recordkeeping required under certain
provisions of the Internal Revenue Code, such as the U.S. Code's arbitrage
rebate provisions. PFM will also assist the Fund's shareholders in making
calculations and reports required to comply with such provisions.
YEAR 2000
As the year 2000 approaches, an issue has emerged regarding how existing
microprocessors, computer hardware and computer software programs and
operating systems can accomodate this date value. Failure of systems could
affect net asset values, portfolio yields, shareholder services and the
processing of transactions. The Fund has taken steps that it believes are
reasonably designed to address the potential failure of systems used by the
Fund and its third party providers, including the custodians, due to the Year
2000 issues. The Fund has identified the systems which it has assessed as
mission critical, and is obtaining readiness disclosure statements from
vendors, significant counter-parties, suppliers and other service providers.
Testing of the mission critical systems was completed during the second
quarter of 1999. Additionally, the Fund is in the process of developing a
contingency plan which it expects to complete by the end of the third
quarter of 1999.
7
The Fund does not expect that the financial condition or results of operations
of the Fund will be significantly affected by the costs of converting systems.
However, because of the ultimately unpredictable consequences of the Year 2000
issue, the Year 2000 could have a material impact on the operations of the
Fund.
VALUATION
The Fund values its portfolio based on the amortized cost method of
valuation in accordance with rules adopted by the Securities and Exchange
Commission ("SEC"). Under this method, the Fund's shares are normally valued
at $1.00 per share. The amortized cost method permits the Fund to establish
the value of each security held in the Fund's portfolio based on its cost
to the Fund and to assume a constant amortization rate to maturity of
any discount or premium. Accordingly, this valuation method does not
reflect the impact of fluctuating interest rates on the market value of
the security. Using this method, the Fund determines the net asset value
of its portfolio as of 12:00 noon, Eastern Time, Monday through Friday
exclusive of federal holidays, except Good Friday (a "Business Day").
The Fund's net asset value per share -- the price at which shares of the
Fund are purchased and redeemed -- is determined by dividing the value of
the net assets of the Fund by the total number of shares outstanding.
MANAGEMENT OF THE FUND
The Fund's Board of Directors has overall responsibility for the business
and affairs of the Fund. The Board of Directors has engaged various
financial organizations to provide, among other things, day-to-day
management services. These organizations are described below. In addition,
the Board of Directors has appointed an Advisory Board. Members of the
Advisory Board will not and may not be Directors or officers of the Fund
but may be employees of shareholders of the Fund. The function of the
Advisory Board is to consult with and advise the Board of Directors as to
investments and any other matters relating to the business of the Fund.
The Advisory Board does not have the authority to bind the Fund. The
Statement of Additional Information sets forth the identity and other
information about the Fund's Board of Directors and members of the Advisory
Board.
Investment Advisory and Administration Arrangements.
PFM, the principal offices of which are located at Governor's Plaza North,
2101 North Front Street, Suite 200, Harrisburg, PA 17110, serves as the
Fund's investment advisor. Pursuant to the terms of its advisory agreement
with the Fund, ("Advisory Agreement"), PFM is registered as an investment
advisor under the Investment Advisors Act of 1940, and has acted as financial
advisor and/or investment advisor to more than 1,000 cities, townships,
boroughs, counties, school districts and authorities in 35 states,
providing its clients with financial, investment advisory, and cash
management services. As of January 1, 1999, PFM had more than
$9.3 billion in funds under management. PFM is also investment manager for
the Pennsylvania Local Government Investment Trust, the New Jersey
Asset & Rebate Management Program, the California Asset Management
Program, and the Massachusetts Health and Educational Facilities Authority
Short-Term Assets Reserve Fund, a state-wide investment pool for health
and educational institutions.
8
Under the Advisory Agreement, PFM is responsible for providing a continuous
investment program and computing net asset value for the Fund. All expenses
incurred by PFM in connection with the provision of such services to the
Fund will be paid by PFM other than the cost of securities (including
brokerage commissions, if any) purchased by the Fund.
As compensation for its services under the Advisory Agreement, PFM is
entitled to receive an annual fee, which is accrued daily and payable
monthly, at the rate of .12 of 1% of the Fund's average
daily net assets. During the fiscal year ended March 31, 1999, PFM received
advisory fees equal to .07% of the average net assets of the Fund. This fee
reflects the waiver of a portion of the management fee. PFM is not required
to continue to waive fees and can terminate this voluntary waiver at any time.
PFM also serves as the Fund's administrator under an administration agreement
dated November 21, 1999 (the "Administration Agreement").
Under the Administration Agreement, PFM provides all necessary administrative
services, other than those relating to the Fund's investment portfolio and
the maintenance of its accounting books and records. Specifically, the
Administration Agreement requires PFM to provide office space and facilities,
equipment and personnel necessary for the operation of the Fund, (including
the payment of all compensation of those of the Fund's Directors, officers
and employees who are affiliated persons of PFM); PFM oversees the
preparation of tax returns, reports to shareholders and Directors of the
Fund, and filings with the SEC and state "Blue Sky" authorities;
and coordinates the activities of the Fund's various service providers.
As compensation for its services under the Administration Agreement, PFM is
entitled to a fee, accrued daily and payable monthly, at the annual rate of
.05% of average daily net assets. For the fiscal year ended March 31,
1999, PFM waived its fees and received no compensation under the
Administration Agreement. All other expenses not expressly assumed by PFM
under its agreements with the Fund are paid by the Fund, including, among
other things, legal and audit expenses, fees and expenses of the Custodian,
share issuance and redemption costs and expenses of the Fund and its shares
under federal and state securities laws, and interest, taxes and other
non-recurring expenses, including litigation. The Fund bears the cost of the
preparation and setting in type of its prospectuses and reports to
shareholders and the costs of printing and distributing those copies of
such prospectuses and reports sent to shareholders.
Distributor and Other Service Providers
Shares in the Fund are offered on a continuous basis through Commonwealth
Financial Group, Inc. ("Distributor"), the Fund's Distributor, pursuant to
a separate Distribution Agreement with the Fund. Jeffrey A. Laine,
President and a Director of the Fund, is the President and sole shareholder
of the Distributor. The Fund has adopted an Amended and Restated
Distribution Plan (the "Plan") entered into pursuant to Rule 12b-1 of the
Investment Company Act of 1940 (the "Rule"). Under the Plan, the Fund may
pay of up to .25% of its average daily net assets each year to the
Fund's Distributor and/or to broker dealers and shareholder servicing
agents who provide assistance in the distribution and retention of
Fund shares. For the fiscal year ended March 31, 1999, the Fund paid
$26,700, after waivers, in approved distribution expenses. See the
Statement of Additional Information for further information.
9
Custodian and Transfer Agent
All funds and securities are deposited with Wachovia Bank, N.A., as
Custodian. PFM serves as the Fund's Transfer Agent under a Transfer
Agency Agreement dated March 15, 1994. PFM is entitled to
reimbursement of its out-of-pocket expenses incurred under the Transfer
Agency Agreement but is not entitled to fees for services under that
Agreement except as expressly agreed to by the Fund. During the fiscal
year ended March 31, 1999, PFM received no reimbursement for its expenses.
HOW TO PURCHASE AND REDEEM SHARES OF THE FUND
Purchases
The Fund's shares are offered on a continuous basis at the Net
Asset Value next determined after an order is entered and deemed effective
on the basis described below under "When Shares Are Purchased and Dividends
Declared and Paid." There is no sales charge. Subsequent investments may
be made in any amount. Shares may be purchased through the Transfer Agent
or the Distributor. Shares of the Fund are available to institutions, such
as municipalities, other governmental entities, universities, hospitals and
not-for-profit organizations ("Investors").
Opening Account(s)
A properly completed application (the "Application")
must be sent to the Transfer Agent at 2101 N. Front Street, Building 3,
Suite 200, Harrisburg, PA 17110 upon opening a new account. A properly
completed Application must be received by the Fund before a redemption
request will be honored.
Initial investments may be made in either of two convenient ways:
1. By Mail. Payment may be made by check, money order, Federal Reserve
draft, or negotiable bank draft payable to the order of the Fund for your
account and mailed to:
Wachovia Bank, N.A.
Attn: Commonwealth Cash Reserve Fund
1021 East Cary Street
P.O. Box 26587
Richmond, VA 23261
2. By Wire. Payment may be wired in Federal Funds (money credited to a bank
account with a Federal Reserve Bank) to the Fund's Custodian . To insure
prompt and proper crediting to its account, an Investor choosing to place
money in the Fund by wire should telephone the Transfer Agent in advance at
1-800-338-3383. The Investor should instruct its bank to wire funds to:
Wachovia Bank
Richmond, Virginia
ABA# 051000253
for credit to Commonwealth Cash Reserve Fund
Account No. 7911623867
10
Account Name and Number: The name in which the Investor wishes the Fund to
carry the investment.
Additional Investments
Additional investments may be made in any amount after an account has been
established by simply mailing directly to the Custodian (at the address
indicated above under "By Mail") a check, money order or negotiable bank
draft, made payable to the Fund, or by wiring funds (to the address
indicated above under "By Wire") after calling the Transfer Agent in
advance, as described above. In each case, the Investor should indicate
its name and the account number to insure prompt and proper crediting of
the account.
When Shares Are Purchased and Dividends Declared and Paid
The Fund seeks to be as fully invested as possible at all times to achieve
high income. As the Fund will be investing in instruments which normally
require same day payment in Federal Funds, the Fund has adopted certain
procedures for the convenience of the Investor and to insure that the Fund
has investable funds available to it.
Payments which are "accepted" before 12:00 noon, Eastern Time, on any
Business Day and which are received in or converted to Federal Funds on
that Business Day will be invested in shares (i.e., the purchase order will
be effective) at the Net Asset Value per share calculated on that day.
Payments which are "accepted" after 12:00 noon, Eastern Time on any Business
Day will be invested in shares at the Net Asset Value per share as of the
next Business Day. In order for the purchase order to be accepted, the Fund
must have received an acknowledged notification (written or verbal) and
completed registration forms and payment in Federal Funds. Wire payments not
in Federal Funds will normally be converted into Federal Funds on the
Business Day after receipt of the wire by the Custodian. Payments
transmitted by check will normally be converted to Federal Funds within
one day after receipt by the Custodian. 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. Dividends are declared
starting on the day the purchase order is effective and are not declared on
the day on which the shares are redeemed. All dividends will be invested
in additional shares of the Fund unless specific instructions are received
to pay dividends in cash.
Confirmations
All purchases of shares will be confirmed and credited to the Investor in
an account maintained by the Fund in full and fractional shares
of the Fund (rounded to the nearest 1/1000 of a share). Share certificates
will not be issued. The Fund reserves the right to reject any order for
purchase of shares. In addition, the offering of shares may be suspended
at any time (although this is not expected to occur) and resumed at any time
thereafter.
11
Redemptions
The Fund provides day to day liquidity on any Business Day. Investors may
withdraw their investment, in whole or in part, on any Business Day after
receipt by the Fund in proper form (i.e., use of one of the redemption
methods described below) of a redemption request. Except for shares
recently purchased by check, as discussed below, there is no minimum time
period for any investment in the Fund. There are no redemption fees or
withdrawal penalties. A completed Application must have been received by
the Fund before redemption requests of any kind will be honored.
Convenient Redemption Methods
An Investor has the flexibility of three redemption methods for easy and
convenient access to the Fund. Under the first two methods, for security
reasons, cash proceeds from redemptions are sent by the Fund only to the
predesignated bank account(s) of the Investor. Such payments will be wired
to the Investor's predesignated bank account in accordance with the
Investor's instructions.
1. By Mail. Redemptions may be requested by a letter of instruction signed
by an authorized signatory or signatories of the Investor, from the Investor
indicating the account number, amount to be redeemed, and payment directions
sent to:
Commonwealth Cash Reserve Fund, Inc.
c/o Public Financial Management, Transfer Agent
Governor's Plaza North
2101 North Front Street
Building 3, Suite 200
Harrisburg, PA 17110
The mailed redemption should contain the following information:
* Account Number.
* Dollar amount or number of shares to be redeemed or a statement that all
of the shares are to be redeemed. Payment instructions (redemption proceeds
will be wired to an Investor's bank account designated by the Investor in
the Application and specified in the redemption request).
* Authorized signatures of the Investor.
2. By Telephone. The Fund will accept telephone requests for redemption
for payment to predesignated bank accounts. Such requests must be made by
an authorized person. The account number and amount to be redeemed must be
supplied by the Investor. To redeem by telephone call:
1-800-338-3383
If the telephone call is received prior to 12:00 noon, Eastern Time, funds
will be wired to the Investor's designated account on that same Business
Day. Requests received after 12:00 noon will be proc-
12
essed on the next day that Net Asset Value is determined. Funds will remain
invested in the Fund until the day that they are wired. The commercial bank
account information supplied to the Fund must be in the exclusive name of the
Investor. The Investor may at any time change or add designated bank accounts
by completing and returning a form available from the Fund.
3. By Redemption Check. The Custodian will provide each Investor, upon
request and without charge, with a book of redemption checks. An Investor
wishing to use this redemption check procedure should notify the Fund or so
indicate on the Application and will thereupon be issued redemption checks
for this purpose. Redemption checks may be signed only by those authorized
on the Application.
The Investor will be subject to applicable rules and regulations, but there
is no charge to the Investor for the maintenance of this redemption check
writing privilege or for the clearance of any redemption checks. An
Investor may have a redemption checking privilege for each separate account.
When a redemption check is presented to the Custodian for payment, the
Transfer Agent will cause the Fund to redeem a sufficient number of full and
fractional shares in the Investor's account to cover the amount of the
redemption check. The redemption check procedure enables the Investor to
continue receiving dividends on those shares which are equal to the amount
being redeemed by the redemption check until such time that the redemption
check is presented to the Custodian for payment.
An Investor should be certain that adequate Fund shares (which were not
recently purchased by check) are in the account to cover the redemption
check. See "Redemption Procedures" below for special requirements as to
Fund shares recently purchased by check. If insufficient redeemable shares
are in the account, the redemption check will be returned marked
"insufficient funds." Redemption checks may not be used to close an
account. This privilege may be modified or terminated at any time by the
Fund or the Custodian upon notice to shareholders.
Redemption Procedures
Redemption of shares will occur at the next determined Net Asset Value
following the receipt of a request for redemption in proper form by the
Fund. If received before 12:00 noon, a redemption request will normally be
processed on the day it is received and except as set forth below, no more
than seven days after a proper request for redemption is received.
Redemption requests for shares purchased by a check (irrespective of
whether the check is a regular check, cashier's or official bank check)
within the prior fifteen days will be processed as stated above; however,
payment of redemption proceeds relating to shares purchased by check within
15 days of the date on which the redemption request was received may be
delayed by the Fund until a determination is made that the check given in
purchase has cleared, which may be up to fifteen days. Possible delays in
redemptions can be eliminated by using wire payments in Federal Funds or
Federal Reserve Drafts to pay for purchases.
If the Board of Directors of the Fund determines that it would be detrimental
to the best interest of the remaining Investors to make payment wholly in
cash, the Fund may pay the redemption price from the portfolio of the Fund,
in lieu of cash, in conformity with the rules of the Securities and Exchange
13
Commission. It should be noted that the management of the Fund considers
the prospect highly remote that the Fund would redeem shares using this
"in kind" provision.
DIVIDEND, TAX AND RELATED INFORMATION
Dividends
All of the Fund's net income will be declared daily as dividends. All
dividends declared are accrued throughout the month and are paid
monthly, normally on the first business day of the following month (and
always as of such day) in additional shares at the Net Asset Value
(ordinarily $1.00 per share). All dividends will be invested in additional
shares of the Fund unless specific instructions are received to pay dividends
in cash. Each shareholder will receive, on a monthly basis, a summary of
his account(s), including information on dividends declared during the month
and the shares credited to the account(s) through reinvestment of dividends.
A shareholder who redeems all his shares receives on the next dividend payment
date the amount of all dividends declared for the month to the date of
redemption.
Daily dividends will be calculated as follows: the net income for dividend
purposes will be calculated immediately prior to the calculation of the Net
Asset Value and will include accrued interest and original issue and market
discount earned since the last evaluation, plus or minus any realized gains
or losses (which are not included in the Fund's yield), less the estimated
expenses of the Fund and amortized original issue and market premium for the
period. Under this dividend policy, the daily dividend declared on the
Fund's shares may fluctuate.
Taxes
The Fund has qualified and expects to remain qualified under
Subchapter M of the Internal Revenue Code ("Code"). If the Fund so
qualifies, it will not pay federal income taxes on earnings it distributes.
If the Fund has any net long-term capital gains it intends to pay a capital
gains distribution in accordance with the timing requirements imposed by
the Code.
Dividends of net investment income and distributions of net realized capital
gains (except to the extent reduced by capital losses to the shareholder)
are taxable to shareholders (except tax-exempt shareholders) whether they
are received in cash or reinvested in shares of the Fund. Shareholders
will be notified annually as to the federal tax status of dividends or
distributions paid. Redemptions of Fund shares may result in taxable gain
to the redeeming shareholder if the redemption proceeds exceed the
shareholder's adjusted basis for the redeemed shares.
Federal income tax law requires the Fund to withhold tax at a rate of 20%
from dividends and redemptions (including exchanges) that occur with
respect to shareholder accounts if the shareholder has not properly
furnished a certified correct taxpayer identification number and has
not certified that withholding does not apply.
The foregoing summarizes certain federal tax considerations relating
to taxation of the Fund and its shareholders. The summary does not discuss
all aspects of federal income taxation that may be rele-
14
vant to a particular shareholder based upon the shareholder's particular
investment circumstances or to certain types of shareholders subject to
special treatment under the federal income tax laws. It does not discuss
any aspect of state, local or foreign tax laws. Prospective shareholders
should consult their tax advisors with respect to the effects of investment
in the Fund on them.
Reports to Shareholders; Independent Auditors
Shareholders will receive annual reports containing financial statements
audited by independent auditors and semi-annual reports containing
unaudited statements. In addition, the Fund provides for each Investor
account (including multiple accounts): confirmations of all investment
or redemption transactions, individual monthly account statements, and
individual account information on request.
Ernst & Young LLP, located at Two Commerce Square, Suite 4000,
2001 Market Street, Philadelphia, Pennsylvania 19103, currently serves
as the Fund's independent auditors.
HISTORY OF THE FUND
The Fund was incorporated in the Commonwealth of Virginia on December 8, 1986
and is classified as an open-end, "no load," diversified, registered
investment company. "Open-end" means that the Fund is continuously
available for investment or redemption. "No load" means that there is no
sales charge at any time for either purchases or redemptions of Fund shares
(although the Fund has a distribution plan). "Diversified" means that the
Fund meets certain diversification requirements set forth in the Investment
Company Act of 1940. "Registered" means that it is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940
and must conform with various organizational and operational standards.
15
Financial Highlights <F1>
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represents the rate that an investor would have earned on an investment in
the Fund. The financial highlights for year ended March 31, 1999 and the
financial highlights for the years through March 31, 1998 have been audited
by Ernst & Young LLP and PricewaterhouseCoopers LLP, respectively, whose
reports, along with the Fund's financial statements, are incorporated by
reference in the Statement of Additional Information, which is available
upon request.
<TABLE>
<CAPTION>
Fiscal Year Ending March 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE $1.000 $1.000 $1.000 $1.000 $1.000
BEGINNING OF THE YEAR
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.053 0.055 0.053 0.058 0.049
Total From Investment
Operations 0.053 0.055 0.053 0.058 0.049
See note below
DISTRIBUTIONS
Net Investment Income (0.053) (0.055) (0.053) (0.058) (0.049)
Total Distributions (0.053) (0.055) (0.053) (0.058) (0.049)
NET ASSET VALUE, $1.000 $1.000 $1.000 $1.000 $1.000
END OF YEAR
Total Return 5.40% 5.68% 5.43% 5.90% 5.01%
Ratios/Supplemental Data
Net Assets (in thousands) $113,731 $120,359 $116,183 $102,614 $130,940
Ratio of Expenses to
Average Net Assets <F2> 0.15% 0.15% 0.15% 0.15% 0.15%
Ratio of Net Investment
Income to Average Net
Assets <F2> 5.28% 5.54% 5.31% 5.78% 4.91%
<FN>
<F1>PFM has served as the investment advisor to the Fund since March 15, 1994.
Prior to March 15, 1994, Jefferson National Bank served as the investment
advisor to the Fund from April 1, 1993. Prior to April 1, 1993 Dominion
Trust Company served as the investment advisor to the Fund.
<F2>Certain fees were voluntarily waived in fiscal years ended March 31, 1999,
1998, 1997, 1996 and 1995. If these fees had not been waived,
the ratio of expenses to average net assets would have been .25%, .25%,
.28%, .29%, and .29%, respectively, and the ratio of net
investment income to average net assets would have been 5.18%, 5.44%,
5.18%, 5.64%, and 4.77%, respectively, for the fiscal years
ended March 31, 1999, 1998, 1997, 1996, and 1995.
</FN>
</TABLE>
16
Application to Open an Account
Commonwealth Cash Reserve Fund, Inc.
c/o Public Financial Management, Inc., Transfer Agent
Governor's Plaza North
2101 North Front Street
Building 3, Suite 200
Harrisburg, PA 17110
Dated: ________________, 19 ____
The undersigned investor hereby applies for shares of Commonwealth Cash Reserve
Fund, Inc. (the "Fund").
By execution of this form, which may be in confirmation of verbal information
already given, the Investor represents and warrants that the Investor has the
full power and authority to make investments, that the assets being invested
are not subject to any restrictions under an indenture or other agreement that
prohibits investment in the Fund, and that the funds invested are of a type
authorized for this investment as described in the Prospectus. The persons
signing on behalf of an investor warrant that they are authorized to make
investments on behalf of the Investor. All persons signing represent that they
have received and read the Fund's current prospectus. the investor appoints
Public Financial management, Inc. as Transfer Agent to record the receipt of
dividends and distributions and arrange for automatic reinvestment, and appoints
Wachovia Bank, N.A. as Custodian, to hold all instruments and money owned by the
investor in the Fund and to receive interest and other income thereon.
The establishment of this account is subject to acceptance by the Fund and is
subject to the conditions under "How To Invest in The Fund" and "How To Redeem
The Investment" and other provisions contained in the Prospectus.
________________________
Authorized Signature
________________________
Title
For Account Service and Redemption: Call 1-800-338-3383
17
Shareholder Information
Legal Name
Street Address
City State Zip
Primary Contact Name Title
Phone Number Fax Number
Secondary Contact Name Title
Phone Number Fax Number
Send Account Statements and Confirms to:
Street Address
City State Zip
Send Duplicate Account Statements to:
Street Address
City State Zip
Deposit Information
Method of Investment:
Check Enclosed. Make check payable to: Commonwealth Cash Reserve Fund, Inc.
Wired Funds. Wire funds to: Wachovia Bank
Richmond, Virginia
ABA #051000253
For credit to Commonwealth Cash Reserve Fund
Account Number 7911623867
Initial Deposit Amount
Name of Bank Wiring Funds
Bank Address
18
Taxpayer Identification Number (TIN)
If the information required by this section is not provided, Backup Withholding
of 20% of taxable dividends, capital gains distributions and proceeds of
redemptions and exchanges will be imposed under federal tax regulations.
Enter your TIN (Social Security number of individuals
or employer I.D. number of entities, including
corporations, partnerships, estates and trusts):
Check all applicable boxes: I have not been notified by the IRS that
I am currently subject to Backup
Withholding.
I am an exempt recipient.
I am neither a citizen nor a resident of
the United States.
Signature Authorization
Public Financial Management, Inc. is hereby authorized to act as agent for the
recorded owner of the shares in effecting purchases and redemptions of shares
and is authorized to recognize the signature(s) below in payment of funds
resulting from such redemptions on behalf of the recorded owner of such shares,
including redemptions, if any, made by Redemption Check. Public Financial
Management, Inc. shall be liable only for its own negligence and not for the
default or negligence of its correspondents, or for losses in transit.
Under penalties of perjury, I (we) certify that the information provided in
the TIN section of this application is true, correct and complete.
I (we) certify to my (our) capacity to act in behalf of the entity named above,
to invest, and if applicable, to open a checking account based on shares of
the Fund.
Name (Please print) Title Signature
Name (Please print) Title Signature
Name (Please print) Title Signature
Name (Please print) Title Signature
Number of signatures required for
redemption requests
Name of Investor, Trustee or other Fiduciary
Signature of Applicant Date
19
Withdrawal Instructions
Check Redemption. Please establish a Redemption Checking Account at
Wachovia National Bank and send us a supply of Redemption Checks. We
understand this checking account will be subject to the rules and regulations
of Wachovia Bank pertaining thereto, as amended from time to time, except that
there will be no service fees or other charges imposed on the Investor.
We understand that checks may only be signed by those persons authorized
on this Application.
Wire Transfer to Predesignated Banks. Redemption by wire transfer is
requested. Wachovia Bank is authorized to honor telephonic or written
instructions without signature guarantees from any person for redemption
of any or all Fund shares so long as redemption proceeds are transmitted
to one of the accounts identified below.
Bank Name Bank's ABA
Routing Number
Bank
Address
Title of Account at Bank (Must be the
same as that in which the Fund shares
are recorded
Account Number
Bank Name Bank's ABA
Routing Number
Bank
Address
Title of Account at Bank (Must be the
same as that in which the Fund shares
are recorded
Account Number
Bank Name Bank's ABA
Routing Number
Bank
Address
Title of Account at Bank (Must be the
same as that in which the Fund shares
are recorded
Account Number
20
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21
(THIS PAGE INTENTIONALLY LEFT BLANK)
22
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23
[BACK COVER]
Commonwealth
Cash Reserve Fund
FOR MORE INFORMATION
Additional information about the Fund's investments is available in the Fund's
semi-annual and annual reports to shareholders. The Fund's annual report
contains a discussion of the market conditions and investment strategies
that affected the Fund's performance over the past year.
You may want to read the Statement of Additional Information ("SAI") for more
information on the Fund and the securities it invests in. The SAI is
incorporated into this prospectus by reference, which means that it is
legally considered to be part of this prospectus.
You can get free copies of the semi-annual and annual reports and the SAI,
request other information and get answers to your questions by calling
the Fund at 800-338-3383 or by writing to Commonwealth Cash Reserve fund,
Inc. P.O. Box 1192, Richmond, VA 23209-1192.
To invest or make additional deposits in the Fund, to redeem shares, or for
yield information or general account inquires, contact the Fund's Transfer
Agent at 800-338-3383.
To request new account applications or to invest in the Fund, please contact
the Fund's Distributor, Commonwealth Financial Group, Inc. at (856) 751-5220.
Text-only versions of all fund documents can be viewed online or downloaded
from the SEC's website at www.sec.gov. You can also obtain copies by
visiting the SEC's Public Reference Room in Washington, DC, calling (800)
SEC-0330, or by sending your request and the appropriate fee to the SEC's
public reference section, Washington DC 20549-6009.
The Fund's Investment Company Act File number is 811-4933.
Commonwealth Cash Reserve Fund, Inc.
Prospectus
