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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
AND
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 1996
Cadre Financial Services, Inc., the former investment adviser ("Former
Adviser") to the California Hospital and Health Facilities Liquid Asset Fund
("Fund"), an investment portfolio of Hospital and Health Facilities Trust
("Trust"), and Cadre Securities, Inc. ("Former Distributor"), an affiliate of
the Former Adviser, entered into an agreement pursuant to which certain of the
assets of the Former Adviser were acquired by AMBAC Investment Management, Inc.
("AIMI") on December 31, 1996, and certain of the assets of the Former
Distributor will be acquired by AMBAC Securities, Inc. ("ASI") in the near
future. AIMI's acquisition of the Former Advisor's assets constituted an
"assignment," as defined by the Investment Company Act of 1940 ("1940 Act"), of
the Fund's Management and Investment Advisory Agreement with the Former
Adviser, and therefore resulted in the automatic termination of that Agreement
in accordance with its terms, as required by the 1940 Act. When ASI acquires
the Former Distributor's assets there will also be an "assignment" and
termination of the Distribution Agreement with the Former Advisor. It is
expected that AIMI will be renamed Cadre Financial Services, Inc. and that ASI
will be renamed Cadre Securities, Inc.
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 ("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 termination of the agreements with the Former
Advisor and the Former Distributor (the "New Agreements"). The new agreement
with AIMI to serve as investment adviser was approved by shareholders of the
Fund on November 26, 1996. The Board's approval reflects its conclusion that
the New Agreements are in the best interests of the Fund and its shareholders.
Under the New Agreements, the Fund now receives from AIMI, and the Fund will
receive from ASI, the same services it previously received from the Former
Adviser and the Former Distributor, without any change in the fees being paid
by the Fund.
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 December 31, 1996
