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ADMINISTRATOR
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT ADVISER
STCM MANAGEMENT CORPORATION, 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
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 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, 1999
(Logo of CCMT: triangle which contains a wave pattern in the left half and
a grain of wheat in the right half. Beneath this triangle are three
words: stability * liquidity * yield)
CAPITAL CASH
MANAGEMENT TRUST
A CASH MANAGEMENT INVESTMENT
(Logo of the Aquila Group of Funds: an eagle's head)
ONE OF THE
AQUILAsm GROUP OF FUNDS
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(Logo of CCMT: triangle which contains a wave pattern in the left half and
a grain of wheat in the right half. Beneath this triangle are three
words: stability * liquidity * yield)
CAPITAL CASH MANAGEMENT TRUST
ANNUAL REPORT
August 5, 1999
Dear Investor:
We are pleased to provide you with the Annual Report for Capital Cash
Management Trust for the fiscal year ended June 30, 1999.
The economic climate and the Federal Reserve's monetary policy once
again had an impact on the short-term debt markets during the Trust's current
report period.
Throughout the report period, U.S. consumers provided support for the
global economy. Spending by consumers continued to set records and American
households on average spent nearly every dollar of income they earned. Led
by a surge in consumer spending that was fueled by high employment and rising
incomes, the U.S. economy grew at an annualized rate of 4.9% during the
second half of 1998 followed by a 3.3% annualized rate during the first half
of 1999. Notwithstanding the economy's torrid growth and the impressive
employment outlook, the current low level of inflation - less than 2% -
continued at the rate we have experienced over the past several years.
A key event during this Annual Report period was the economic turmoil
in Southeast Asia, Russia, Japan and Latin America. The difficulties
experienced in these areas resulted in weak currencies which helped keep U.S.
inflation in check.
Keeping a watchful eye on world events, the Federal Reserve responded
with a three-step interest rate reduction during the Trust's fiscal year. The
federal funds rate was lowered 0.75 of 1% from 5.50% to 4.75%. The Fed's
move was to maintain the momentum of the U.S. economy by providing liquidity
to the global financial system.
However, this spring, the Federal Reserve became concerned that the
U.S. economy might be growing too rapidly. Such rate of growth coupled, with
low unemployment, could lead to higher levels of inflation. This primarily
would result in increased stress on labor markets and would potentially put
additional upward pressure on wages and ultimately prices. In testimony
before the Joint Economic Committee of Congress, Federal Reserve Chairman
Alan Greenspan, noted that the financial markets had recovered from last
fall's near paralysis that caused the Fed to cut the federal fund's rate by
0.75 of 1%. He further testified that unless something slows down the
economy, a rise in inflation is nearly inevitable. Indeed, on June 30, 1999,
the Fed voted to raise short-term interest rates 0.25 of 1% to 5.00% and we
would not be surprised if further rate hikes may be in the offing.
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As mentioned in previous report letters, yields on money market
funds, like the Trust, move in concert with interest rate policies pursued by
the Federal Reserve. As an example, at June 30, 1999, the seven-day yield of
the Trust was 4.53% compared to 5.25% for the seven-day period ended June 30,
1998. As of the date of this Annual Report letter, the seven-day yield has
risen to 4.73%.
The Trust's Investment Adviser, STCM Management Company, Inc.,
continues to act with a high level of prudence. The Adviser very carefully
examines 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 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,
Lacy B. Herrmann
Chairman, Board of Trustees
Charles E. Childs, III
Senior Vice President and
Portfolio Manager
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(Logo of KPMG LLP: Four black rectangles with the letters KPMG in front)
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, 1999, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the 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, 1999, 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, 1999, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
- --------------
New York, New York
July 27, 1999
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CAPITAL CASH MANAGEMENT TRUST
STATEMENT OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT COMMERCIAL PAPER - 22.4% VALUE
</CAPTION>
<S> <C>
AUTOMOTIVE - 9.2% <C> <C>
$ 75,000 Ford Motor Credit Corp., 5.01%, 07/29/99 $ 74,708
75,000 General Motors Acceptance Corp., 4.97%, 07/30/99 74,700
149,408
Finance - 4.6%
75,000 Norwest Financial Inc., 4.86%, 07/06/99 74,949
Insurance - 4.3%
70,000 Prudential Funding Corp., 5.06%, 07/26/99 69,754
Travel & Leisure Services - 4.3%
70,000 American Express Credit Corp., 4.84%, 07/09/99 69,925
Total Commercial Paper 364,036
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 78.4%
Federal Farm Credit Bank,
155,000 4.50%, 07/01/99 155,000
77,000 4.71%, 07/08/99 76,929
50,000 5.01%, 08/05/99 49,756
Federal Home Loan Mortgage Corporation,
100,000 4.80%, 07/12/99 99,853
90,000 4.85%, 07/13/99 89,855
75,000 4.83%, 07/14/99 74,869
60,000 4.83%, 07/19/99 59,855
Federal National Mortgage Association,
70,000 4.77%, 07/07/99 69,944
100,000 4.83%, 07/16/99 99,799
75,000 4.88%, 07/20/99 74,808
78,000 4.81%, 07/22/99 77,781
50,000 5.01%, 08/09/99 49,729
64,000 4.83%, 09/10/99 63,390
Student Loan Marketing Association,
225,000 4.55%, 07/01/99 225,000
Total U.S. Government Agency Discount Notes 1,266,568
Total Investments (cost $1,630,604*) 100.8% 1,630,604
Liabilities in excess of other assets (0.8) (14,301)
Net Assets 100.0% $ 1,616,303
(*) Cost for Federal tax purposes is identical.
See accompanying notes to financial statements.
</TABLE>
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CAPITAL CASH MANAGEMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
<TABLE>
ASSETS
<S> <C> <C>
Investments at value (cost $1,630,604) $ 1,630,604
Cash 32
Due from Administrator for reimbursement of expenses 2,230
Other assets 2,485
Total assets 1,635,351
LIABILITIES
Accrued expenses 12,138
Dividends payable 6,910
Total liabilities 19,048
NET ASSETS (equivalent to $1.00 per share on 1,616,303 shares outstanding) $ 1,616,303
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share $ 16,163
Additional paid-in capital 1,600,140
$ 1,616,303
See accompanying notes to financial statements.
</TABLE>
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CAPITAL CASH MANAGEMENT TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 86,293
Expenses:
Investment Adviser fees (note 2) $ 3,370
Administrator fees (note 2) 2,527
Trustees' fees and expenses 11,376
Legal fees 8,767
Audit and accounting fees 8,550
Shareholders' reports 8,094
Registration fees and dues 8,028
Transfer and shareholder servicing agent fees 4,359
Custodian fees 2,648
Miscellaneous 1,405
59,124
Investment Advisory fees waived (note 2) (3,370)
Administration fees waived (note 2) (2,527)
Reimbursement of expenses by Administrator (note 2) (46,397)
Expenses paid indirectly (note 4) (91)
Net expenses 6,739
Net investment income $ 79,554
See accompanying notes to financial statements.
</TABLE>
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CAPITAL CASH MANAGEMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30,
1999 1998
FROM INVESTMENT ACTIVITIES:
Net investment income $ 79,554 $ 84,332
Dividends to shareholders ($0.0473 and $0.0521 per share,
respectively) (79,554) (84,332)
Change in net assets derived from investment activities - -
FROM CAPITAL SHARE TRANSACTIONS:
SHARES
YEAR ENDED JUNE 30,
1999 1998
Proceeds from shares sold 1,785,654 1,888,398 1,785,654 1,888,398
Reinvested dividends 79,007 81,780 79,007 81,780
Cost of shares redeemed (1,861,127) (1,792,565) (1,861,127) (1,792,565)
Change in net assets from
capital share transactions 3,534 177,613 3,534 177,613
Change in net assets 3,534 177,613
NET ASSETS:
Beginning of period 1,612,769 1,435,156
End of period $ 1,616,303 $ 1,612,769
</TABLE>
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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 in order to compare the value of the
collateral to the amount of the loan (repurchase agreements being
defined as "loans" in the 1940 Act), including the accrued interest
earned thereon. If the value of the collateral is less than 102% of
the loan plus the accrued interest thereon, additional collateral is
required from the borrower.
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") is the Investment
Adviser to the Trust. In this role, under an Investment Advisory Agreement,
the Adviser supervises the Trust's investments and provides various services
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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,
1999 inasmuch as the Adviser and the Administrator voluntarily waived their
entire fees in the amount of $3,370 and $2,527, respectively. In addition, in
order to comply with this expense limitation, the Administrator reimbursed
expenses in the amount of $31,563. 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 an additional amount of $11,474. Further, the Administrator
voluntarily reimbursed additional expenses of $3,360. For the year ended June
30, 1999, these expense reimbursements amounted to $46,397. Of this amount,
$44,167 was paid prior to June 30, 1999 and the balance was paid in early
July 1999.
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. EXPENSES
The Trust has negotiated an expense offset arrangement with its
custodian wherein it receives credit toward the reduction of custodian fees
and other Trust expenses whenever there are uninvested cash balances. The
Statement of Operations reflects the total expenses before any offset, the
amount of offset and the net expenses. 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.
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CAPITAL CASH MANAGEMENT TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment Operations:
Net investment income 0.0473 0.0521 0.0489 0.0518 0.0497
Less Distributions:
Dividends from net investment income (0.0473) (0.0521) (0.0489) (0.0518) (0.0497)
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return (%) 4.84 5.33 5.00 5.29 5.09
Ratios/Supplemental Data
Net Assets, End of Period ($ in thousands) 1,616 1,613 1,435 1,765 1,660
Ratio of Expenses to Average Net Assets (%) 0.41 0.40 0.41 0.41 0.42
Ratio of Net Investment Income to Average Net
Assets (%) 4.72 5.21 4.88 5.16 4.98
The expense and net investment income ratios without the effect of the
Adviser's and Administrator's voluntary waiver of fees and the
Administrator's expense reimbursement were:
Ratio of Expenses to Average Net Assets (%) 3.51 5.14 6.48 5.74 5.00
Ratio of Net Investment Income (Loss) to Average
Net Assets (%) 1.62 0.47 (1.19) (0.17) (0.40)
The expense ratios after giving effect to the waivers, reimbursements and
expense offset for uninvested cash balances were:
Ratio of Expenses to Average Net Assets (%) 0.40 0.40 0.40 0.40 0.40
See accompanying notes to financial statements.
</TABLE>
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PREPARING FOR YEAR 2000 (UNAUDITED)
The Trustees and officers of the Trust have been monitoring
issues involving preparedness for the turn of the century for some time in an
effort to minimize or eliminate any potential impact upon the Trust and its
shareholders. Our officers have focussed significant time and effort in order
that the various computerized functions that could affect the Trust are ready
by the beginning of the year 2000.
The Trust is highly reliant on certain mission-critical
suppliers' services. Each supplier of these services has provided the Trust's
officers with assurances that it is actively addressing potential problems
relating to the year 2000. The officers, in turn, are monitoring and will
continue to monitor the progress of its suppliers.
The Trust has NOT incurred, nor is anticipated to incur, any
costs related to Y2K. All such costs are being incurred by the respective
vendors.
As you can well understand, we cannot directly control our
supplier operations. We assure you, however, that we recognize a
responsibility to inform our shareholders if in the future we become aware of
any developments which would lead us to believe that the Trust will be
significantly affected by year 2000 problems.
We will continue to keep you up-to-date through future
communications.
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
THE SHAREHOLDERS IS REQUIRED.
For the fiscal year ended June 30, 1999, the total amount of
dividends paid by Capital Cash Management Trust was ordinary dividend income.
Prior to January 31, 1999, shareholders were mailed IRS Form
1099-DIV which contained information on the status of distributions paid for
the 1998 CALENDAR YEAR.
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