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Filed pursuant to Rule 497(e)
of the Securities and Exchange Act of 1933, as amended
Registration No. 33-46137
CALIFORNIA HOSPITAL AND HEALTH FACILITIES
LIQUID ASSET FUND
SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 1996
Cadre Financial Services, Inc., the current investment adviser (the
"Current Adviser") to the California Hospital and Health Facilities Liquid Asset
Fund (the "Fund"), an investment portfolio of Hospital and Health Facilities
Trust (the "Trust"), and Cadre Securities, Inc. (the "Current Distributor"), an
affiliate of the Current Adviser which serves as distributor of shares of the
Fund, have entered into an agreement pursuant to which the assets of the Current
Adviser and the Current Distributor will be acquired by AMBAC Investment
Management, Inc. ("AIMI") and AMBAC Securities Inc. ("ASI"), respectively (the
"Transaction"). The Transaction, which is subject to various conditions,
including the approval of a new Management and Investment Advisory Agreement
between the Trust and AIMI and a new Distribution Agreement between the Trust
and ASI (collectively, the "New Agreements"), is expected to close on or about
December 2, 1996. If consummated, the Transaction will constitute an
"assignment," as defined by the Investment Company Act of 1940 (the "1940 Act"),
of the existing Management and Investment Advisory Agreement between the Trust
and the Current Adviser and of the existing Distribution Agreement between the
Trust and the Current Distributor (collectively, the "Existing Agreements"), and
will therefore result in the automatic termination of the Existing Agreements in
accordance with their terms, as required by the 1940 Act.
To assure continuity in the investment advisory and distribution services
being provided to the Fund, at a meeting held on October 22, 1996, the Board of
Trustees of the Trust (the "Board"), including a majority of the trustees who
are not "interested persons" of the Trust, as defined by the 1940 Act,
unanimously approved new agreements pursuant to which AIMI would serve as the
investment adviser of the Fund and ASI would serve as distributor of the Fund's
shares, effective upon the closing of the Transaction (the "New Agreements").
These approvals reflect the conclusion of the Board that the New Agreements are
in the best interests of the Fund and its shareholders. Under the New
Agreements, the Fund would receive from AIMI and ASI the same services it now
receives under the Existing Agreements from the Current Adviser and the Current
Distributor, without any change in the fees being paid by the Fund.
The proposed agreement with AIMI (but not the agreement with ASI) is
subject to approval by shareholders of the Fund. In this regard, a meeting of
shareholders of the Fund will be held on November 26, 1996, at which time
shareholders will have the opportunity to vote on the proposed agreement.
AIMI and ASI are subsidiaries of AMBAC Inc. ("AMBAC"), a publicly held
company which is listed on the New York Stock Exchange. Through various
subsidiaries, AMBAC is an insurer of municipal and structured finance
obligations and a provider of investment contracts and interest rate swaps to
states, municipalities, municipal authorities and other entities in connection
with their financings. Since 1995, AIMI has served as the investment adviser of
AMBAC Treasurers Trust, a registered investment company with three investment
portfolios (including two money market funds) and total assets of approximately
$95.4 million as of September 30, 1996. AMBAC, through various subsidiaries,
also manages its own investment portfolios with total assets of approximately $5
billion as of September 30, 1996.
The date of this Supplement is October 23, 1996
