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PROSPECTUS April 30, 1996
CALIFORNIA HOSPITAL AND HEALTH FACILITIES
LIQUID ASSET FUND
The California Hospital and Health Facilities Liquid Asset Fund (the
"Fund") is an investment portfolio of the Hospital and Health Facilities Trust
(the "Trust"), which is an open-end, diversified management investment company.
The Fund operates as a money market mutual fund, with the goal to provide as
high a level of current income as is consistent with the preservation of capital
and liquidity. Investment in the Fund is limited to investors who are either a
hospital, health system, health facility, medical group, health insuring
organization, or other health care institution, provider or payor.
Participants may invest or redeem shares at any time without charge or
penalty. Free and unlimited checkwriting redemption privileges are available to
Participants.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
This Prospectus sets forth concisely information about the Fund that a
person should know before investing. It should be read and retained for future
reference. Additional information about the Fund, contained in the Statement of
Additional Information dated April 30, 1996, has been filed with the Securities
and Exchange Commission and is incorporated by reference into this Prospectus.
For a free copy, write to the address or call the telephone number listed under
"General Information" in this Prospectus.
TABLE OF CONTENTS
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EXPENSE SUMMARY........................................................................ 2
FINANCIAL HIGHLIGHTS................................................................... 3
THE TRUST; ELIGIBLE PARTICIPANTS....................................................... 3
DESCRIPTION OF THE FUND................................................................ 3
HOW TO INVEST IN THE FUND.............................................................. 6
REDEMPTIONS............................................................................ 7
SHAREHOLDER SERVICES................................................................... 8
MANAGEMENT OF THE FUND................................................................. 8
YIELD INFORMATION...................................................................... 10
DISTRIBUTIONS AND TAXES................................................................ 10
GENERAL INFORMATION.................................................................... 11
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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.
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EXPENSE SUMMARY
The purpose of the following table is to assist you in understanding the
various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
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Management Fees (After Reimbursement)(1).............................................. -0-
Other Expenses (After Reimbursement)(2)............................................... .27%
Total Fund Operating Expenses (After Reimbursement)(3)................................ .27%
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(1) Management fees are payable at an annual rate of .40% for the first
$250,000,000 of the average daily net assets, .3675% of the next
$250,000,000 of such assets, and .3350% of such assets in excess of
$500,000,000. Subject to revision or termination upon 90 days' notice to
the Fund, Cadre Financial Services, Inc. ("Cadre Financial") has agreed not
to impose all or a portion of its management fee and to take other action,
to the extent necessary, to maintain the annualized expenses at not more
than .85% of average net assets of the Fund. While annualized expenses
during fiscal year 1995 were less than .85% of the Fund's average net
assets, Cadre Financial voluntarily waived its management fee. If the
management fee had not been waived, Total Fund Operating Expenses would
have been .67% of average net assets, and the total expenses that an
investor would pay on a $1,000 investment, assuming a 5% annual return and
redemption after one, three, five and ten years, would be $6.86, $21.64,
$37.97 and $86.70, respectively.
(2) Other Expenses include custodian, legal, audit, reimbursement of
organizational expenses, insurance and trustee expenses paid to
non-interested parties. See "Management of the Fund -- Trust Expenses."
(3) Based on the level of total Fund operating expenses listed above, total
expenses would be:
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EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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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.............. $2.76 $8.72 $15.30 $34.94
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE
FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%. IT ALSO ASSUMES ANNUAL OPERATING EXPENSES ARE AT .27% OF
AVERAGE DAILY NET ASSETS, THE ACTUAL EXPENSE LEVEL DURING FISCAL YEAR 1995. IF
MANAGEMENT FEES AT AN ANNUAL RATE OF .40% HAD NOT BEEN WAIVED, ANNUAL OPERATING
EXPENSES WOULD HAVE BEEN .67% OF AVERAGE DAILY NET ASSETS. DURING THE PERIOD
JANUARY 1, 1996 THROUGH FEBRUARY 15, 1996, MANAGEMENT FEES OF .20% WERE CHARGED,
FROM FEBRUARY 16, 1996 THROUGH MARCH 18, 1996 MANAGEMENT FEES OF .30% WERE
CHARGED AND ON MARCH 19, 1996 MANAGEMENT FEES WERE INCREASED TO .40% OF AVERAGE
DAILY ASSETS.
Management fees are payable to Cadre Financial Services, Inc. ("Cadre
Financial") for managing the Fund's investments and business affairs and
distributing its shares. Cadre Financial has agreed to reimburse the Fund if and
to the extent that total operating expenses (including the management and
distribution fees, but excluding interest, taxes, and extraordinary expenses)
exceed an annual rate of .85% of the Fund's average daily net assets. Please
refer to footnote (1) above and "Management of the Fund" for further
information.
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FINANCIAL HIGHLIGHTS
The financial information in the table below for the year ended December
31, 1995 has been audited by Price Waterhouse LLP, independent auditors, whose
report thereon is included in the Statement of Additional Information, and for
the years ended December 31, 1993 and December 31, 1994, and for the period
November 1, 1992 (commencement of operations) through December 31, 1992 has been
audited by KPMG Peat Marwick LLP, independent auditors.
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YEAR ENDED DECEMBER 31,
--------------------------------- PERIOD ENDED
1995 1994 1993 DECEMBER 31, 1992
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PER SHARE DATA:
Net asset value, beginning of period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income................... 0.058 0.042 0.030 0.006
Less: Distributions..................... (0.058) (0.042) (0.030) (0.006)
------- ------- ------- -----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= =============
Total Return............................ 5.83% 4.11% 3.06% 0.54%*
RATIO TO AVERAGE NET ASSETS (ANNUALIZED
BASIS):
Expenses, before reimbursement/waiver... 0.67% 1.24% 1.58% 3.40%
Expenses, net of reimbursement/waiver... 0.27% 0.26% 0.19% 0.00%
Net investment income, before
reimbursement/waiver.................. 6.05% 3.24% 1.61% (0.04%)
Net investment income, net of
reimbursement/waiver.................. 5.78% 4.22% 3.00% 3.36%
Net Assets at end of period (in
thousands)............................ $41,864 $20,540 $ 8,914 $ 5,128
======= ======= ======= =============
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* Unannualized.
THE TRUST; ELIGIBLE PARTICIPANTS
The Hospital and Health Facilities Trust (the "Trust") is a California
trust established by the Hospital Council of Northern and Central California.
The Fund is an investment portfolio of the Trust. Only hospitals, health
systems, health facilities, medical groups, health insuring organizations, and
other health care institutions, providers or payors are eligible to invest in
the Fund.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE. The objective of the Fund is to provide as high a
level of current income as is consistent with the preservation of capital and
liquidity. There can be no assurance that the Fund's investment objective will
be achieved. Securities in which the Fund will invest will be of high quality
and may not earn as high a level of current income as long-term or lower quality
securities which generally have less liquidity, greater market risk and more
fluctuation in market value.
MANAGEMENT POLICIES. To achieve its goal, the Fund invests in short-term
money market instruments, consisting exclusively of securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, time
deposits and certificates of deposit, bankers' acceptances, repurchase
agreements and high grade corporate obligations, including commercial paper,
corporate bonds, and notes with remaining maturities of 13 months or less.
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing its securities pursuant to Rule 2a-7 under the Investment
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Company Act of 1940, certain requirements of which are summarized in the
following paragraphs. There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share. The Board of Trustees will
review the Fund's holdings to determine whether the net asset value calculated
by using available market quotations deviates from $1.00 per share. See
"Determination of Net Asset Value" in the Fund's Statement of Additional
Information.
The Fund is required to maintain a dollar-weighted average portfolio
maturity of 90 days or less and purchase only instruments having remaining
maturities of 13 months or less. It will invest only in U.S. dollar denominated
securities which present minimal credit risks, as determined in accordance with
procedures established by the Board of Trustees, and which are high-quality
securities. To be considered high quality, a security must be issued or
guaranteed by the U.S. Government or one of its agencies or instrumentalities;
or be rated in one of the two highest rating categories for debt obligations by
at least two nationally recognized statistical rating organizations (or one
rating organization if the instrument was rated by only one such organization);
or, if unrated, be of comparable quality as determined in accordance with
procedures established by the Board of Trustees. No assets may be invested in
securities rated only in the second highest such rating category or, if unrated,
only of comparable quality. The nationally recognized statistical rating
organizations currently rating instruments of the type the Fund may purchase are
Moody's Investors Service, Inc., Standard & Poor's Corporation, Duff and Phelps,
Inc., and Fitch Investors Services, Inc. Their rating criteria are described in
the Appendix to the Fund's Statement of Additional Information.
In addition, the Fund will not invest more than 5% of its total assets in
the securities (including the securities collateralizing a repurchase agreement)
of, or subject to puts issued by, a single issuer, except that (i) the Fund may
invest more than 5% of its total assets in a single issuer for a period of up to
three business days in certain limited circumstances, (ii) the Fund may invest
in obligations issued or guaranteed by the U.S. government or one of its
agencies or instrumentalities without any such limitation, and (iii) the
limitation with respect to puts does not apply to unconditional puts if no more
than 10% of the Fund's total assets is invested in securities issued or
guaranteed by the issuer of the unconditional put. As to each security, these
percentages are measured at the time the Fund purchases the security. For
further information regarding the amortized cost method of valuing securities,
see "Determination of Net Asset Value" in the Fund's Statement of Additional
Information.
PORTFOLIO SECURITIES.
U.S. Government Securities. U.S. government securities are obligations of,
or are guaranteed by, the U.S. government, its agencies or instrumentalities.
These include bills, certificates of indebtedness, notes and bonds issued by the
U.S. Treasury or by agencies or instrumentalities of the U.S. government. Some
U.S. government securities, such as Treasury bills and bonds, are supported by
the full faith and credit of the U.S. Treasury; others are supported by the
right of the issuer to borrow from the U.S. Treasury; others, such as those of
the Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. government to purchase the agency's obligations; and
others, such as those of the Student Loan Marketing Association and the Federal
Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality. While the U.S. government provides financial support to U.S.
government sponsored agencies or instrumentalities, no assurance can be given
that it will always do so since it is not an obligation by law. The Fund will
invest in such securities only when the Fund is satisfied that the credit risk
with respect to the issuer is minimal. Also, U.S. government obligations and
guaranteed obligations will have fluctuating market values.
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Time Deposits. Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time (in no event longer than
seven days) at a stated interest rate.
Certificates of Deposit. Certificates of deposit are certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time.
Bankers' Acceptances. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligations both of the bank and of the drawer to
pay the face amount of the instrument upon maturity.
Repurchase Agreements. Repurchase agreements involve the acquisition by
the Fund of an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Fund to resell, the instrument at a fixed price.
The Fund's custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase agreement.
Repurchase agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Fund will enter into repurchase
agreements only with domestic banks with total assets in excess of one billion
dollars or primary government securities dealers reporting to the Federal
Reserve Bank of New York, with respect to securities of the type in which the
Fund may invest, and will require that additional securities be deposited with
it if the value of the securities purchased should decrease below resale price.
Cadre Financial will monitor on a daily basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. Certain costs may
be incurred by the Fund in connection with the sale of the securities if the
seller does not repurchase them in accordance with the repurchase agreement. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the securities, realization on the securities by the Fund may be delayed or
limited. Cadre Financial will consider on an ongoing basis and in accordance
with guidelines established by the Board of Trustees the creditworthiness of the
institutions with which the Fund enters into repurchase agreements.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Fund may consist of direct obligations issued by domestic and
foreign entities.
Corporate Bonds. Corporate bonds and medium term notes are normally
unsecured debt obligations of the issuer with original terms to maturity in
excess of one year. However, the Fund will not purchase any such corporate
obligations which have a remaining maturity in excess of 13 months. The Fund
will not invest in floating or variable rate demand obligations or in securities
that are not readily marketable.
Lending of Securities. Security loan transactions involve the lending of
securities to a broker-dealer or institutional investor for its use in
connection with short sales, arbitrages, or other securities transactions. Loans
of securities will be made in strictest conformity with applicable federal and
state rules and regulations. Since there may be delays in recovery of loaned
securities or even a loss of rights in collateral supplied should the borrower
fail financially, loans will be made only to firms deemed by Cadre Financial to
be of good standing and will not be made unless, in the judgment of Cadre
Financial, the consideration to be earned from such loans would justify the
risk.
CERTAIN FUNDAMENTAL POLICIES. The Fund (i) will not borrow money in an
amount that exceeds 33 1/3% of the value of the Fund's total assets (including
the amount borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is made, but
within such limit will borrow from banks only for temporary or emergency (not
leveraging or investment) purposes or by engaging in reverse repurchase
agreements (and when borrowings exceed 5% of the value of the Fund's
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assets, the Fund will not make any additional investments); (ii) will not pledge
its assets in an amount which exceeds 33 1/3% of the value of its total assets,
and within such limit will pledge assets only to secure borrowings for temporary
or emergency purposes; (iii) will not invest more than 10% of its total assets
in repurchase agreements not entitling the holder to payment of principal and
interest within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market; (iv) except in the case of securities issued or guaranteed by
the U.S. Government, will not invest more than 5% of its total assets in the
securities of any one issuer; (v) will not lend any security or make any other
loan if, as a result, more than 33 1/3% of the Fund's total assets would be lent
to other parties, except (a) through the purchase of a portion of an issue of
debt securities in accordance with its investment objective, policies and
limitations, or (b) by engaging in repurchase agreements with respect to
portfolio securities; and (vi) under normal conditions, may invest more than 25%
of its total assets in obligations issued by domestic banks, and may invest up
to 25% of its total assets in the securities of issuers in a single industry,
provided that there is no limitation on the purchase of obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. This
paragraph describes certain fundamental policies of the Fund which cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares. See
"Investment Objective and Management Policies" in the Statement of Additional
Information for other fundamental policies of the Fund.
The Fund attempts to increase yields by trading to take advantage of
short-term market variations. This policy is expected to result in high
portfolio turnover but should not adversely affect the Fund since the Fund
usually does not pay brokerage commissions when it purchases short-term debt
obligations. The value of the portfolio securities held by the Fund will vary
inversely to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold, might
be sold at a price less than its purchase cost. Similarly, if interest rates
have declined from the time a security was purchased, such security, if sold,
might be sold at a price greater than its purchase cost. In either instance, if
the security was purchased at face value and held to maturity, no gain or loss
would be realized.
RISK FACTORS. The Fund's portfolio will be affected by general changes in
interest rates which will result in increases or decreases in the value of the
securities held by the Fund. The market value of the securities in the Fund's
portfolio can be expected to vary inversely to changes in prevailing interest
rates. Investors also should recognize that, in periods of declining interest
rates, the Fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the Fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net new
money to the Fund from the continuous sale of its shares will likely be invested
in portfolio instruments producing lower yields than the balance of its
portfolio, thereby reducing the Fund's current yield. In periods of rising
interest rates, the opposite can be expected to occur. In addition, securities
in which the Fund may invest may not yield as high a level of current income as
might be achieved by investing in securities with less liquidity and safety and
longer maturities. The risks associated with lending portfolio securities, as
with other extensions of credit, consist of possible loss of rights in the
collateral should the borrower fail financially. To the extent the Fund invests
in obligations of foreign entities, there may be additional risks including
future unfavorable political and economic developments, possible withholding
taxes or other governmental restrictions which might adversely affect payment of
principal or interest. Also, less public information may be available about
foreign entities.
HOW TO INVEST IN THE FUND
ELIGIBILITY FOR PARTICIPATION. Only hospitals, health systems, health
facilities, medical groups, health insuring organizations, or other health care
institutions, providers or payors are eligible to invest in the Fund.
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INVESTING IN THE FUND. An initial investment in the Fund must be preceded
or accompanied by a properly completed registration form. A properly completed
registration form must be on file when making a redemption from an account.
Registrations should be forwarded to:
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, New York 11779
Participants may make an investment into their Fund account by the
following two methods:
- Wire Transfer -- Participants will begin earning on their investment the
same day by calling the Fund's toll-free number 1-800-221-4524, EXT 2, by
12:00 noon New York Time provided the Fund's custodian bank receives the
wire transfer through the Federal Reserve Wire System prior to its close
that day.
- Depository Transfer Check (DTC) or Automated Clearing House Credits
(ACH) -- Participants will begin earning on their investment the following
day by calling the Custodian's toll-free number 1-800-245-6524 by 5:00
p.m. New York Time, and requesting an investment through the use of a DTC
or ACH instrument.
No minimum investment is required for wire transfers, DTC's or ACH's.
Participants making investments by use of an ACH or DTC may not redeem such
investments for a period of five business days following the deposit. If a
participant desires earlier withdrawal privileges, the Fund recommends use of
the Federal Reserve Wire System.
REDEMPTIONS
GENERAL. Participants may request redemption of shares at any time.
Redemption requests should be transmitted to Cadre Financial Services, Inc., 905
Marconi Avenue, Ronkonkoma, New York 11779. When a request is received in proper
form, the Fund will redeem the shares at the next determined net asset value.
Written redemption requests must be signed by an authorized person noted on the
registration form.
Redemption proceeds of $10,000 or more will be wired to any member bank of
the Federal Reserve System, for deposit in a Participant's account, in
accordance with the redemption request. Amounts under $10,000 will be paid by
check.
CHECK REDEMPTION PRIVILEGE. Participants may use the Fund's unlimited
checkwriting services by filling out Form B (Checkwriting Authorization Form)
and signing the two custodian bank signature cards. Participants may issue
checks in any dollar amount. Checks will be honored only if they are properly
signed by a person authorized on the signature card. There is a charge for
stop-payments or if the Fund cannot honor a redemption check due to insufficient
funds or other valid reasons. Checkwriting privileges may be modified or
terminated at any time by the Fund.
REDEMPTION BY WIRE OR TELEPHONE. Shares may be redeemed by wire or
telephone as long as the person requesting such withdrawal has been authorized
on the registration form. Wire or telephone requests will be honored the same
day as long as the Fund is notified by 12:00 noon New York Time (earnings stop
the same day). The redemption proceeds will be wired to the participant's
authorized bank account, so long as the amount is $10,000 or more. If less, a
check will be issued in payment of the redemption. No charge is imposed for
wiring redemption proceeds.
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In order to assure that a person requesting a share redemption by telephone
is authorized by a participant, the Fund will wire redemption proceeds only to
bank accounts previously specified by the participant on its registration form.
If the Fund fails to follow these confirmation procedures, it could be liable
for losses due to unauthorized or fraudulent telephone redemption instructions.
REDEMPTION BY AUTOMATED CLEARING HOUSE (ACH). Shares may be redeemed by
use of an ACH as long as the person requesting the ACH debit is authorized on
the registration form. A participant may call the Fund's toll-free number
1-800-221-4524, EXT 2, by 5:00 p.m. New York Time, and request an ACH
withdrawal. Such withdrawal will become effective the following business day and
will be in the Participant's designated bank account in "collected funds."
Earnings on the participant's account continue the day the withdrawal request is
initiated but stop the next business day. There is no minimum amount required on
an ACH redemption.
SHAREHOLDER SERVICES
Participants may open as many accounts with the Fund as they desire. Each
account may utilize the Fund's unlimited checkwriting services.
Participants may call the Fund's toll-free number 1-800-221-4524, EXT 2,
prior to 12:00 noon New York Time any business day to make an internal transfer
between their different Fund accounts the same day. (Earnings stop accruing in
the account the withdrawal is made from and start in the account receiving such
transfer.) Participants may call up to 5:00 p.m. New York Time to make an
internal transfer for the following business day. (Earnings continue to accrue
until the transfer takes place.)
Participants will receive a daily confirmation reflecting an opening
balance, activity and closing balance each day their account has activity. A
monthly statement will be sent to each participant within ten days after the end
of each month reflecting an opening share balance, all transactions for the
month and a closing share balance. In addition, the statement will reflect the
earnings for the month (also year-to-date) and capital gains for the year.
Participants will receive the Fund's unaudited financial statements within
40 days after the end of each calendar quarter. Once a year, participants will
receive the Fund's audited annual financial statements.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES. The Board of Trustees of the Trust is responsible for
the supervision of the management of the business and affairs of the Trust. The
Board of Trustees will perform duties and undertake responsibilities similar to
those of a board of directors of a corporation.
MANAGER AND INVESTMENT ADVISER. Cadre Financial Services, Inc., located at
905 Marconi Avenue, Ronkonkoma, New York 11779, serves as the Fund's investment
adviser and manager. Subject to the direction of the Board of Trustees, it is
responsible for the overall management of the Trust's business and investment
affairs under the terms of a Management and Investment Advisory Agreement. Cadre
Financial has been instrumental in the establishment and operation of
collective, short-term investment programs for a number of local governmental
and municipal entities. None of those programs are registered under the
Investment Company Act of 1940. As of December 31, 1995, Cadre Financial and its
affiliates managed or administered approximately $5.1 billion in assets for more
than 2,500 institutional investors.
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Cadre Financial will be paid fees monthly for its services as investment
adviser and manager calculated as a percentage of the Fund's average daily net
assets. Such fees are payable at an annual rate of .40% for the first
$250,000,000 of such assets, .3675% of the next $250,000,000, and .3350% of such
assets in excess of $500,000,000.
Subject to revision or termination upon 90 days' notice to the Fund, Cadre
Financial has agreed not to impose all or a portion of its management fee and to
take other action, to the extent necessary, to maintain the Fund's aggregate
operating expenses (excluding interest, taxes, and extraordinary expenses) at an
annual rate of not more than .85% of the average daily net assets for any fiscal
year. This has the effect of lowering the overall expense ratio of the Fund and
increasing the yield to the participants at the time such amounts are
reimbursed. The Fund will not pay Cadre Financial at a later time for any
operating expenses which have been previously reimbursed.
Pursuant to a California regulation, Cadre Financial has agreed to
reimburse the Fund if and to the extent that the Fund's aggregate annual
expenses, including the management fee but generally excluding interest, taxes,
brokerage commissions and certain extraordinary expenses, are in excess of
specified percentages of the average daily net assets of the Fund for its fiscal
year. The limitation is currently at an annual rate of 2.5% of the first $30
million of average net assets, 2% of the next $70 million of average net assets
and 1.5% of the assets in excess of that amount.
TRANSFER AGENT AND DISTRIBUTOR. Cadre Securities, Inc. ("Cadre
Securities"), an affiliate of Cadre Financial is the Fund's transfer and
dividend disbursing agent and distributor. Its principal business address is 905
Marconi Avenue, Ronkonkoma, New York, 11779.
CUSTODIAN. Mellon Bank, N.A., 3 Mellon Bank Center, Pittsburgh, PA
15259-0001, is the Fund's custodian. The custodian takes no part in determining
the investment policies of the Fund or in deciding which securities are
purchased or sold by the Fund.
CONSULTANTS. Cadre Financial has entered into a Consulting Agreement with
SharePlus, Inc., formerly known as Hospital Council of Northern and Central
California Shared Services, Inc. ("SharePlus"). SharePlus is an affiliate of the
Hospital Council of Northern and Central California, which established the
Trust. It will provide management consulting, but not distribution or investment
advisory, services to Cadre Financial. Cadre Financial will pay SharePlus a
monthly consulting fee at an annual rate of .10% of the Fund's average daily net
assets for the first $250,000,000, .0925% of the next $250,000,000, and .0850%
of such assets in excess of $500,000,000. The Fund is not obligated to pay these
fees. No consulting fees were paid through the period ended December 31, 1995.
SharePlus has the right to retain health care industry associations and
other persons to assist it in providing consulting services under the Consulting
Agreement, and may, in its discretion, pay, or direct Cadre Financial to pay, to
any such retained person a portion of the fees otherwise payable to SharePlus
under the Consulting Agreement. SharePlus has entered into such an arrangement
with the California Association of Health Facilities.
TRUST EXPENSES. Pursuant to the Management and Investment Advisory
Agreement, Cadre Financial will pay all of the costs and expenses incurred to
provide to the Fund the management and investment advisory services, including
the expense of all employees and office space and facilities necessary to
provide such services and all brokerage fees and commissions. The Fund will pay
expenses not assumed by Cadre Financial, including insurance, interest and
taxes, expenses of those Trustees who are not "interested persons" of Cadre
Financial or the Trust, legal and audit expenses and custodial fees.
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<PAGE> 10
Cadre Financial paid all of the Fund's organizational expenses. The Fund is
making ratable reimbursement payments to Cadre Financial during the period
commencing February 8, 1995 and ending July 31, 1997.
YIELD INFORMATION
From time to time, the Fund advertises its yield and effective yield. Both
yield figures are based on historical earnings and are not intended to indicate
future performance. It can be expected that these yields will fluctuate
substantially. The yield of the Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period will be stated in
the advertisement). 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 effective yield is calculated similarly, but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment. The Fund's yield and effective yield may reflect
absorbed expenses pursuant to any undertaking that may be in effect.
Yield information is useful in reviewing the Fund's performance, but
because yields will fluctuate, under certain conditions such information may not
provide a basis for comparison with domestic bank deposits, other investments
which pay a fixed yield for a stated period of time, or other investment
companies which may use a different method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., IBC/Donoghue's Money Fund Report and other industry
publications.
DISTRIBUTIONS AND TAXES
DIVIDENDS. The Fund declares dividends from net investment income daily
and pays such dividends monthly. The Fund intends to distribute substantially
all of its net investment income and capital gains, if any, to Participants
within each calendar year as well as on a fiscal year basis.
Dividends from the Fund will not normally qualify for the
dividends-received deduction available to corporations, since the Fund's income
is primarily derived from interest income and short-term capital gains.
Depending upon state law, a portion of the dividends attributable to interest
income derived from U.S. Government securities may be exempt from state and
local taxation. The Fund will provide information on the portion, if any, that
qualifies for this exemption.
CAPITAL GAIN DISTRIBUTIONS. The Fund may distribute short-term capital
gains once a year or more often as necessary to maintain its net asset value at
$1.00 per share or to comply with distribution requirements under federal tax
law. The Fund does not anticipate earning long-term capital gains on securities
held in its Portfolio.
FEDERAL TAXES. Dividends derived from net investment income and short-term
capital gains are taxable as ordinary income. Distributions are taxable when
paid, except that distributions declared in December and paid in January are
taxable as if paid on December 31, whether investors receive distributions in
cash or reinvest them in additional shares. The Fund will send investors an IRS
Form 1099-DIV by January 31 of each year showing their taxable distributions for
the prior calendar year.
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TAX STATUS OF THE FUND. The Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the Code), so that the Fund will not be liable for federal income or
excise taxes on net investment income or capital gains to the extent that these
are distributed to shareholders in accordance with applicable provisions of the
Code.
OTHER TAX INFORMATION. The information above is only a summary of some of
the federal tax consequences generally affecting the Fund and its participants
and no attempt has been made to discuss the participants' tax consequences. In
addition to federal taxes, participants may be subject to state or local taxes
on their investment. Participants should consult their tax advisers.
When participants sign their registration form, they will be asked to
certify that their Social Security or Taxpayer Identification Number is correct
and that they are not subject to back-up withholding for failing to report
income to the IRS. If participants do not comply with IRS regulations, the IRS
can require the Fund to withhold 20% of distributions from their account.
GENERAL INFORMATION
The Trust was organized as a California trust under a Declaration of Trust
dated February 12, 1992 and commenced operations on November 1, 1992. The
Declaration of Trust permits the Board of Trustees to issue an unlimited number
of full and fractional shares and to create an unlimited number of investment
portfolios ("Portfolio") which may issue shares. The Fund does not intend to
issue share certificates. The Fund is the initial Portfolio of the Trust.
Each share is entitled to one vote (and fractional shares are entitled to
proportionate fractional votes) on all matters submitted for a vote of
shareholders. Shares have equal voting rights, except that shares of a
particular Portfolio are entitled to vote on matters affecting only that
Portfolio when required by the Investment Company Act of 1940 or the matter
affects an interest of less than all Portfolios. Shares do not have cumulative
voting rights.
Unless otherwise required by the Investment Company Act of 1940, ordinarily
it will not be necessary for the Fund to hold annual meetings of shareholders.
As a result, Fund shareholders may not consider each year the election of
Trustees or the appointment of auditors. However, pursuant to the Declaration of
Trust, the holders of at least 10% of the shares outstanding and entitled to
vote may require the Trustees to initiate a vote of shareholders as to any
matter with regard to which shareholders have a right to vote, including a
meeting for the purpose of removing the Trustees. The Trustees will call a
meeting of shareholders for the purpose of electing Trustees if, at any time,
less than a majority of the Trustees holding office at the time had been elected
by shareholders.
Cadre Financial maintains a record of share ownership and sends investors
confirmations and statements of account. Shareholder inquires may be made by
writing to the Fund at 905 Marconi Avenue, Ronkonkoma, New York 11779, or by
calling 1-800-221-4524, EXT 2.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
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MANAGER AND INVESTMENT ADVISER
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, New York 11779
TRANSFER AGENT AND DISTRIBUTOR
Cadre Securities, Inc.
905 Marconi Avenue
Ronkonkoma, New York 11779
CUSTODIAN
Mellon Bank N.A.
3 Mellon Bank Center
Pittsburgh, PA 15259-0001
CONSULTANTS
SharePlus, Inc.
7901 Stoneridge Dr., Suite 500
Pleasanton, CA 94588
California Association of
Health Facilities
1251 Beacon Boulevard
West Sacramento, CA 95691
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
100 Jericho Quadrangle
Jericho, New York 11753
LEGAL COUNSEL
Davis Wright Tremaine
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
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PROSPECTUS
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APRIL 30, 1996
CALIFORNIA HOSPITAL AND
HEALTH FACILITIES
LIQUID ASSET FUND
(800) 221 - 4524
LOGO
