ADMINISTRATOR
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT ADVISER
STCM MANAGEMENT COMPANY, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
TRUSTEES
Lacy B. Herrmann, Chairman
Theodore T. Mason, Vice Chairman
Paul Y. Clinton
Diana P. Herrmann
Anne J. Mills
Cornelius T. Ryan
OFFICERS
Lacy B. Herrmann, President
Charles E. Childs, III, Senior Vice President
Diana P. Herrmann, Vice President
John M. Herndon, Vice President & Assistant Secretary
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
Patricia A. Craven, Assistant Secretary
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus,
which must precede or accompany this report.
ANNUAL
REPORT
JUNE 30, 1998
A CASH MANAGEMENT INVESTMENT
(CAPITAL CASH MANAGEMENT TRUST LOGO)
(PYRAMID Stability, Liquidity, Yield)
ONE OF THE AQUILA GROUP OF FUNDS
<PAGE>
CAPITAL CASH MANAGEMENT TRUST
ANNUAL REPORT
(AQUILA EAGLE LOGO)
August 7, 1998
Dear Investor:
We are pleased to provide you with the Annual Report for Capital
Cash Management Trust for the fiscal year ended June 30, 1998.
The current period was marked by increasing volatility in the
world financial markets. Most significant was the impact of the Asian
financial crisis, which caused currency values around the world to plunge and
sent financial markets into turmoil. It is hard to believe the magnitude of
the currency depreciation that has taken place in various countries versus
the U.S. dollar. The currency deterioration against the U.S. dollar has
ranged from 10% to well over 70% with various countries around the world. The
impact of the Asian crisis on the continued U.S. economic expansion remains a
factor that can not be ignored. Thirty percent of U.S. exports go to Asia
and, now after the currency devaluations, consumers in that region have
significantly less in the way of purchasing power. As a result, some U.S.
firms could find demand for their exports weakening while at the same time
cheaper goods coming from Asia should force U.S. competitors to lower their
prices. With fewer U.S. exports and greater imports, the Federal Reserve is
hoping the economy will slow on its own from its torrid pace and that the
current low level of inflation we have experienced over the past several
years will continue.
The lack of monetary action policy by the Fed during the Asian
financial crisis kept short-term interest rates relatively stable during the
Trust's fiscal year ended June 30, 1998. As mentioned in previous report
letters, yields on money market funds, like the Trust, move in concert with
rate policies pursued by the Federal Reserve. At June 30, 1998, the seven-day
yield of the Trust was 5.25% compared to 4.97% for the seven-day period ended
June 30, 1997.
When the financial markets do become roiled, you can take
considerable comfort in the fact that safety of the principal value of your
investment in the Trust and ready liquidity have always been, and continue to
be, two of the main goals in the management of investors' assets in Capital
Cash Management Trust.
The Trust's Investment Adviser, STCM Management Company, Inc.,
continues to act with a high level of prudence in examining the
creditworthiness and marketability of all issuers of securities utilized in
the Trust's investment portfolio. Investors in the Trust can take comfort in
knowing that those securities in the Trust's portfolio will be chosen on the
basis of possessing high quality and minimal credit risk in order to ensure
maximum safety for investors' cash reserves.
Your use of Capital Cash Management Trust is greatly appreciated.
You can be assured that every effort will be expended by all associated with
the Trust to merit your continued confidence.
Sincerely,
/s/ Lacy B. Herrmann /s/ Charles E. Childs, III
Lacy B. Herrmann Charles E. Childs, III
President and Chairman Senior Vice President and
of the Board of Trustees Portfolio Manager
<PAGE>
(KPMG Peat Marwick LLP LOGO)
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
Capital Cash Management Trust:
We have audited the accompanying statement of assets and
liabilities of Capital Cash Management Trust, including the statement of
investments, as of June 30, 1998, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1998, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Capital Cash Management Trust as of June 30, 1998, the results of
its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
August 7, 1998
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CAPITAL CASH MANAGEMENT TRUST
STATEMENT OF INVESTMENTS
JUNE 30, 1998
<TABLE>
<C> <S> <C>
FACE
AMOUNT COMMERCIAL PAPER - 21.9% VALUE
Automotive - 4.6%
$74,000 Ford Motor Credit Corp., 5.50%, 07/24/98 $ 73,740
Finance - 9.3%
75,000 American General Finance Corp., 5.50%, 08/03/98 74,622
75,000 Norwest Financial Inc., 5.51%, 07/06/98 74,942
149,564
Insurance - 3.7%
60,000 Prudential Funding Corp., 5.53%, 07/07/98 59,945
Travel & Leisure Services - 4.3%
70,000 American Express Credit Corp., 5.52%, 07/28/98 69,710
Total Commercial Paper 352,959
U.S. Government Agency Discount Notes - 80.0%
50,000 Federal Farm Credit Bank, 5.36%, 07/13/98 49,911
100,000 Federal Home Loan Bank, 5.40%, 07/01/98 100,000
70,000 Federal Home Loan Mortgage Corporation,
5.60%, 07/01/98 70,000
85,000 Federal Home Loan Mortgage Corporation,
5.39%, 07/01/98 85,000
25,000 Federal Home Loan Mortgage Corporation,
5.41%, 07/02/98 24,996
45,000 Federal Home Loan Mortgage Corporation,
5.41%, 07/02/98 44,993
87,000 Federal Home Loan Mortgage Corporation,
5.42%, 07/07/98 86,921
25,000 Federal Home Loan Mortgage Corporation,
5.42%, 07/09/98 24,970
50,000 Federal Home Loan Mortgage Corporation,
5.44%, 07/09/98 49,939
80,000 Federal Home Loan Mortgage Corporation,
5.42%, 07/10/98 79,892
85,000 Federal Home Loan Mortgage Corporation,
5.44%, 07/21/98 84,743
70,000 Federal Home Loan Mortgage Corporation,
5.44%, 07/22/98 69,778
55,000 Federal Home Loan Mortgage Corporation,
5.44%, 07/23/98 54,817
75,000 Federal Home Loan Mortgage Corporation,
5.47%, 07/30/98 74,670
50,000 Federal Home Loan Mortgage Corporation,
5.42%, 07/31/98 49,774
55,000 Federal Home Loan Mortgage Corporation,
5.48%, 08/26/98 54,531
<PAGE>
87,000 Federal National Mortgage Association,
5.42%, 07/15/98 86,817
40,000 Federal National Mortgage Association,
5.42%, 07/16/98 39,910
55,000 Federal National Mortgage Association,
5.50%, 07/20/98 54,840
65,000 Federal National Mortgage Association,
5.44%, 08/03/98 64,676
40,000 Federal National Mortgage Association,
5.43%, 08/04/98 39,795
Total U.S. Government Agency Discount Notes 1,290,973
Total Investments (cost $1,643,932*) 101.9% 1,643,932
Liabilities in excess of other assets (1.9) (31,163)
Net Assets 100.0% $1,612,769
<FN> (*)Cost for Federal tax purposes is identical. </FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CAPITAL CASH MANAGEMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments at value (cost $1,643,932) $1,643,932
Cash 2,223
Other assets 3,429
Total assets 1,649,584
LIABILITIES
Accrued expenses 29,793
Dividends payable 7,022
Total liabilities 36,815
NET ASSETS (equivalent to $1.00 per
share on 1,612,769
shares outstanding) $1,612,769
Net Assets consist of:
Capital Stock - Authorized an
unlimited number of
shares, par value $.01 per share $ 16,128
Additional paid-in capital 1,596,641
$1,612,769
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest Income $90,809
Expenses:
Investment Adviser fees (note 2) $3,238
Administrator fees (note 2) 2,429
Legal fees 16,891
Audit and accounting fees 15,871
Trustees' fees and expenses 12,562
Transfer and shareholder servicing agent fees 11,512
Shareholders' reports and proxy statements 10,304
Registration fees and dues 4,879
Custodian fees (note 4) 4,508
Miscellaneous 1,019
83,213
Investment Advisory fees waived (note 2) (3,238)
Administration fees waived (note 2) (2,429)
Reimbursement of expenses by Administrator (note 2) (70,998)
Expenses paid indirectly (note 4) (71)
Net expenses 6,477
Net investment income $84,332
</TABLE>
See accompanying notes to financial statements
<PAGE>
CAPITAL CASH MANAGEMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1998 1997
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income $ 84,332 $ 83,783
Dividends to shareholders ($0.0521 and $0.0489
per share, respectively) (84,332) (83,783)
Change in net assets derived from investment
activities - -
FROM CAPITAL SHARE TRANSACTIONS:
<CAPTION>
SHARES
YEAR ENDED JUNE 30,
1998 1997
<S> <C> <C> <C> <C>
Proceeds from shares sold 1,888,398 1,446,854 1,888,398 1,446,854
Reinvested dividends 81,780 83,694 81,780 83,694
Cost of shares redeemed (1,792,565) (1,860,327) (1,792,565) (1,860,327)
Change in net assets from
capital share transactions 177,613 (329,779) 177,613 (329,779)
Change in net assets 177,613 (329,779)
NET ASSETS:
Beginning of period 1,435,156 1,764,935
End of period $1,612,769 $1,435,156
</TABLE>
See accompanying notes to financial statements
<PAGE>
CAPITAL CASH MANAGEMENT TRUST
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Capital Cash Management Trust (the "Trust") is a Massachusetts
business trust established on August 20, 1976 as a successor to the
money-market fund, the STCM Corporation, which commenced operations on July
8, 1974.
The following is a summary of significant accounting policies
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a)PORTFOLIO VALUATION: The Trust's portfolio securities are valued
by the amortized cost method permitted in accordance with Rule 2a-7 under
the Investment Company Act of 1940 (the "1940 Act"), which, after
considering accrued interest thereon, approximates market. Under this
method, a portfolio security is valued at cost adjusted for amortization
of premiums and accretion of discounts. Amortization of premiums and
accretion of discounts are included in interest income.
b)SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses
from securities transactions are reported on the identified cost basis.
Interest income is recorded daily on the accrual basis and is adjusted for
amortization of premiums and accretion of discounts as discussed in the
preceding paragraph.
c)FEDERAL INCOME TAXES: It is the policy of the Trust to qualify as
a regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The
Trust intends to make distributions of income and securities profits
sufficient to relieve it from all, or substantially all, Federal income
and excise taxes.
d)REPURCHASE AGREEMENTS: It is the Trust's policy to monitor closely the
creditworthiness of all firms with which it enters into repurchase
agreements, and to take possession of, or otherwise perfect its security
interest in, securities purchased under agreements to resell. The
securities purchased under agreements to resell are marked to market every
business day so that the value of the "collateral" is at least equal to
the value of the "loan" (repurchase agreements being defined as "loans"
in the 1940 Act), including the accrued interest earned thereon, plus
sufficient additional market value as is considered necessary to provide a
margin of safety.
e)USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increases
and decreases in net assets from operations during the reporting period.
Actual results could differ from those estimates.
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
STCM Management Company, Inc. (the "Adviser") became Investment
Adviser to the Trust in February, 1992. In this role, under an Investment
Advisory Agreement, the Adviser supervises the
<PAGE>
Trust's investments and provides various services for which it receives a
fee which is payable monthly and computed on the net assets of the Trust at
the annual rate of 0.20% of the Trust's average daily net assets. The Trust
also has an Administration Agreement with Aquila Management Corporation (the
"Administrator") to provide all administrative services to the Trust other
than those relating to the investment portfolio and the accounting records.
The Administrator receives a fee for such services which is payable monthly
and computed on the net assets of the Trust at the annual rate of 0.15% of
the Trust's average daily net assets. Details regarding the services provided
by the Adviser and the Administrator are provided in the Trust's Prospectus
and Statement of Additional Information.
The Adviser and the Administrator each has agreed that the above
fees shall be reduced, but not below zero, by an amount equal to its
proportionate share (determined on the basis of the respective fees computed
as described above) of the amount, if any, by which the total expenses of the
Trust in any fiscal year, exclusive of taxes, interest, and brokerage fees,
shall exceed the lesser of (i) 1.5% of the first $30 million of average
annual net assets of the Trust plus 1% of its average annual net assets in
excess of $30 million, or (ii) 25% of the Trust's total annual investment
income. No such reduction in fees was required during the year ended June 30,
1998 inasmuch as the Adviser and the Administrator voluntarily waived their
entire fees in the amount of $3,238 and $2,429, respectively. In addition, in
order to comply with this expense limitation, the Administrator reimbursed
expenses in the amount of $54,773. Also, the Administrator has undertaken to
waive fees or reimburse the Trust to the extent that annual expenses exceed
0.60 of 1% of average net assets in any fiscal year and therefore reimbursed
expenses in the amount of $12,988. Further, the Administrator voluntarily
reimbursed additional expenses of $3,237. For the year ended June 30, 1998,
these expense reimbursements amounted to $70,998, all of which were paid
prior to that date.
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Trust's shares. No
compensation or fees are paid to the Distributor for such share distribution.
3. DISTRIBUTIONS
The Trust declares dividends daily from net investment income and
makes payment monthly in additional shares at the net asset value per share
or in cash, at the shareholder's option.
4. CUSTODIAN FEES
The Trust has negotiated an expense offset arrangement with its
custodian wherein it receives credit toward the reduction of custodian fees
whenever there are uninvested cash balances. During the year ended June 30,
1998, the Trust's custodian fees amounted to $4,508, of which $71 was offset
by such credits. It is the general intention of the Trust to invest, to the
extent practicable, some or all of cash balances in income-producing assets
rather than leave cash on deposit with the custodian.
<PAGE>
CAPITAL CASH MANAGEMENT TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEAR ENDED JUNE 30,
1998 1997 1996 1995 1994
Net Asset Value,
Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment
Operations:
Net investment income 0.0521 0.0489 0.0518 0.0497 0.0309
Less Distributions:
Dividends from net
investment income (0.0521) (0.0489) (0.0518) (0.0497) (0.0309)
Net Asset Value, End of
Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return 5.33% 5.00% 5.29% 5.09% 3.14%
Ratios/Supplemental Data
Net Assets, End of Period
(in thousands) $1,613 $1,435 $1,765 $1,660 $1,713
Ratio of Expenses to
Average Net Assets 0.40% 0.40% 0.40% 0.40% 0.28%
Ratio of Net Investment
Income to Average Net
Assets 5.21% 4.89% 5.17% 5.00% 3.08%
Net investment income (loss) per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's voluntary
waiver of fees, the Administrator's expense reimbursement and the expense
offset in custodian fees for uninvested cash balances would have been:
Net investment income
(loss) $0.0047 ($0.0119) ($0.0018) $0.0038 ($0.0137)
Ratio of Expenses to
Average Net Assets 5.14% 6.49% 5.75% 5.02% 4.73%
Ratio of Net Investment
Income (loss) to Average
Net Assets 0.47% (1.19%) (0.18%) 0.38% (1.37%)
See accompanying notes to financial statements.
<PAGE>
SHAREHOLDER MEETING RESULTS (UNAUDITED)
A Special Meeting of Shareholders of Capital Cash Management Trust (the
"Trust") was held on December 10, 1997. The holders of shares representing
61% of the total net asset value of the shares entitled to vote were present
in person or by proxy. At the meeting, the following matters were voted upon
and approved by the shareholders (the resulting votes for each matter are
presented below).
1. To approve an amendment to the Trust's Declaration of Trust to
authorize creation of classes of shares.
Number of Votes:
FOR AGAINST ABSTAIN BROKER NON-VOTES
923,485.85 8,781.78 17,308.94 0.00
2. To approve modifications of the Trust's policies regarding investment
of more than 5% of the Trust's assets in the securities of a single
issuer.
Number of Votes:
FOR AGAINST ABSTAIN BROKER NON-VOTES
872,858.61 13,749.25 62,968.71 0.00
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
This information is presented in order to comply with a requirement of
the Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF SHAREHOLDERS
IS REQUIRED.
For the fiscal year ended June 30, 1998, the total amount of dividends
paid by Capital Cash Management Trust was ordinary dividend income.
Prior to January 31, 1998, shareholders were mailed IRS Form 1099-DIV
which contained information on the status of distributions paid for the 1997
CALENDAR YEAR.
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