0000749748-08-000006.txt : 20120814
0000749748-08-000006.hdr.sgml : 20120814
20080530094202
ACCESSION NUMBER: 0000749748-08-000006
CONFORMED SUBMISSION TYPE: 485APOS
PUBLIC DOCUMENT COUNT: 8
FILED AS OF DATE: 20080530
DATE AS OF CHANGE: 20090713
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CASH ASSETS TRUST
CENTRAL INDEX KEY: 0000749748
IRS NUMBER: 136844974
STATE OF INCORPORATION: MA
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 485APOS
SEC ACT: 1933 Act
SEC FILE NUMBER: 002-92164
FILM NUMBER: 08868574
BUSINESS ADDRESS:
STREET 1: 380 MADISON AVE
STREET 2: SUITE 2300
CITY: NEW YORK
STATE: NY
ZIP: 10017
BUSINESS PHONE: 2126976666
MAIL ADDRESS:
STREET 1: 380 MADISON AVENUE
STREET 2: SUITE 2300
CITY: NEW YORK
STATE: NY
ZIP: 10017
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CASH ASSETS TRUST
CENTRAL INDEX KEY: 0000749748
IRS NUMBER: 136844974
STATE OF INCORPORATION: MA
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 485APOS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-04066
FILM NUMBER: 08868575
BUSINESS ADDRESS:
STREET 1: 380 MADISON AVE
STREET 2: SUITE 2300
CITY: NEW YORK
STATE: NY
ZIP: 10017
BUSINESS PHONE: 2126976666
MAIL ADDRESS:
STREET 1: 380 MADISON AVENUE
STREET 2: SUITE 2300
CITY: NEW YORK
STATE: NY
ZIP: 10017
0000749748
S000006652
Pacific Capital Cash Assets Trust
C000018146
Pacific Capital Cash Assets Trust Original Shares
CATXX
C000018147
Pacific Capital Cash Assets Trust Service Shares
CASXX
0000749748
S000006653
Padific Capital Tax-Free Cash Assets Trust
C000018148
Pacific Capital Tax-Free Cash Assets Trust Original Shares
TFCXX
C000018149
Pacific Capital Tax-Free Cash Assets Trust Service Shares
TFAXX
0000749748
S000006654
Pacific Capital U.S. Government Securities Cash Assets Trust
C000018150
Pacific Capital U.S.Government Securities Cash Assets Trust Original Shares
USCXX
C000018151
Pacific Capital U.S. Government Securities Cash Assets Trust Service Shares
UCSXX
485APOS
1
pcata08.txt
N-1A PARTS A, B AND C
Registration Nos. 2-92164 and 811-4066
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. _______ [ ]
Post-Effective Amendment No. 33 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ X ]
Amendment No. 32 [ X ]
CASH ASSETS TRUST
(Exact Name of Registrant as Specified in Charter)
380 Madison Avenue, Suite 2300
New York, New York 10017
(Address of Principal Executive Offices)
(212) 697-6666 (Registrant's Telephone Number)
EDWARD M.W. HINES
Butzel Long, a professional corporation
380 Madison Avenue
New York, New York 10017
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
---
[___] immediately upon filing pursuant to paragraph (b)
[___] on (date) pursuant to paragraph (b)
[___] 60 days after filing pursuant to paragraph(a)(i)
[_X_] on July 31, 2008 pursuant to paragraph (a)(i)
[___] 75 days after filing pursuant to paragraph (a)(ii)
[___] on (date) pursuant to paragraph (a)(ii) of Rule 485.
[___] This post-effective amendment designates a new effective
date for a previous post-effective amendment.
Pacific
Capital Funds(R)
of
Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, NY 10017
800-CATS-4-YOU (800-228-7496)
212-697-6666
Original Shares
Prospectus July 31, 2008
Cash Assets Trust consists of three separate portfolios: Pacific
Capital Cash Assets Trust (the "Cash Fund") is a general purpose money-market
mutual fund which invests in short-term "money-market" securities. Pacific
Capital Tax-Free Cash Assets Trust (the "Tax-Free Fund") is a tax-exempt
money-market mutual fund which invests in short-term tax-exempt "money-market"
securities. Pacific Capital U.S. Government Securities Cash Assets Trust (the
"Government Securities Fund") is a money-market mutual fund which invests in
short-term direct obligations of the United States Treasury, in other
obligations issued or guaranteed by agencies or instrumentalities of the United
States Government and in certain repurchase agreements secured by U.S.
government securities. The Cash Fund, the Tax-Free Fund and the Government
Securities Fund are collectively referred to as the "Funds."
For purchase, redemption or account inquiries contact the Funds'
Shareholder Servicing Agent:
PFPC Inc.
101 Sabin Street
Pawtucket, RI 02860-1427
800-255-2287 toll-free
For general inquiries & yield information
800-228-7496 toll-free or 212-697-6666
The Securities and Exchange Commission has not approved or disapproved the
Trust's securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
TABLE OF CONTENTS
The Cash Fund: Objective, Investment
Strategies, Main Risks..................................
Risk/Return Bar Chart and Performance Table ....
Fees and Expenses of the Fund...................
The Tax-Free Fund: Objective, Investment
Strategies, Main Risks..................................
Risk/Return Bar Chart and Performance Table ....
Fees and Expenses of the Fund...................
The Government Securities Fund:
Objective, Investment Strategies,
Main Risks..............................................
Risk/Return Bar Chart and Performance Table ....
Fees and Expenses of the Fund...................
Management of the Funds..................................
Net Asset Value per Share................................
Purchases ...............................................
Redeeming Your Investment................................
Distribution Arrangements................................
Dividends................................................
Tax Information..........................................
Financial Highlights.....................................
The Cash Fund: Objective, Investment Strategies, Main Risks
"What is the Cash Fund's objective?"
The objective of the Cash Fund, which is a fundamental policy, is to
achieve a high level of current income, stability and liquidity for investors'
cash assets by investing in a diversified portfolio of short-term "money-market"
securities meeting specific quality standards.
"What are the Cash Fund's investment strategies?"
The Cash Fund seeks to attain this objective by investing in short-term
money-market securities denominated in U.S. dollars that are of high quality and
present minimal credit risks.
Under the current management policies, the Cash Fund invests only in
the following types of obligations:
(1) Obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
(2) Bank obligations and instruments secured by them. ("Banks" include
commercial banks, savings banks and savings and loan associations and include
foreign banks and foreign branches of United States banks.)
(3) Short-term corporate debt known as "commercial paper."
(4) Corporate debt obligations (for example, bonds and debentures). Debentures
are a form of unsecured corporate debt.
(5) Variable amount master demand notes which are repayable on not more than 30
days' notice.
(6) Repurchase agreements.
(7) Shares of investment companies with money-market portfolios.
The Cash Fund seeks to maintain a net asset value of $1.00 per share.
In general, not more than 5% of the Cash Fund's net assets can be
invested in the securities of any issuer.
The dollar weighted average maturity of the Cash Fund will be 90 days
or less and the Cash Fund may buy only those instruments that have a remaining
maturity of 397 days or less.
Securities the Cash Fund buys must present minimal credit risks and at
the time of purchase be rated in the two highest rating categories for
short-term securities by any two of the nationally recognized statistical rating
organizations ("NRSROs") or, if unrated, be determined by the Board of Trustees
to be of comparable quality. Some securities may have third-party guarantees to
meet these rating requirements.
Asset Management Group of Bank of Hawaii (the "Adviser") seeks to
develop an appropriate portfolio by considering the differences among securities
of different issuers, yields, maturities and market sectors.
The Cash Fund may change any of its management policies without
shareholder approval.
"What are the main risks of investing in the Cash Fund?"
Although the Cash Fund seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose money by investing in the Cash Fund.
Investment in the Cash Fund is not a deposit in, nor endorsed or
guaranteed by, any bank, and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Because variable amount master demand notes are direct lending
arrangements between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for them. Variable
amount master demand notes repayable in more than seven days are securities
which are not readily marketable, and fall within the Cash Fund's overall 10%
limitation on securities which are illiquid. These notes are also subject to
credit risk.
Repurchase agreements involve some risk to the Cash Fund if the other
party does not fulfill its obligations under the agreement.
The value of money-market instruments tends to fall if prevailing
interest rates rise.
Corporate bonds and debentures are subject to interest rate and credit
risks.
There are two types of risk associated with the Cash Fund: interest
rate risk and credit risk.
*Interest rate risk relates to fluctuations in market value arising
from changes in interest rates. If interest rates rise, the value of debt
securities will normally decline. All fixed-rate debt securities, even the most
highly rated, are subject to interest rate risk.
*Credit risk relates to the ability of the particular issuers of the
obligations the Cash Fund owns to make periodic interest payments as scheduled
and ultimately repay principal at maturity.
Investments in foreign banks and foreign branches of United States
banks involve certain risks. Foreign banks and foreign branches of domestic
banks may not be subject to regulations that meet U.S. standards. Investments in
foreign banks and foreign branches of domestic banks may also be subject to
other risks, including future political and economic developments, the possible
imposition of withholding taxes on interest income, the seizure or
nationalization of foreign deposits and the establishment of exchange controls
or other restrictions.
Cash Fund
Risk/Return Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in the Cash Fund's Original Shares by showing changes in the
performance of the Cash Fund's Original Shares from year to year over a 10-year
period and by showing the Cash Fund's average annual returns for the designated
periods. How the Cash Fund has performed in the past is not necessarily an
indication of how the Cash Fund will perform in the future.
[Bar Chart]
Annual Total Returns (Original Shares)
1998-2007
10%
8%
5.96
6% 5.06 XXXX
XXXX 4.64 XXXX 4.53 4.72
4% XXXX XXXX XXXX 3.48 XXXX XXXX
XXXX XXXX XXXX XXXX XXXX XXXX
2% XXXX XXXX XXXX XXXX 1.42 2.70 XXXX XXXX
XXXX XXXX XXXX XXXX XXXX 0.95 1.10 XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Calendar Years
During the 10-year period shown in the bar chart, the highest return for a
quarter was 1.54% (quarter ended December 31, 2000) and the lowest return for a
quarter was 0.22% (quarter ended September 30, 2003).
The year-to-date (from January 1, 2008 to June 30, 2008) total return was _____%
Average Annual Total Return
For the period ended 1 Year 5 Years 10 Years
December 31, 2007
Pacific Capital Cash 4.72% 2.79% 3.44%
Assets Trust - Original
Shares
Please call (800) 228-7496 toll-free to obtain the Cash Fund's most current
seven-day yield.
Cash Fund
Fees and Expenses of the Fund
(Original Shares)
This table describes the fees and expenses that you may pay if you buy and hold
Original Shares of the Cash Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases.........................0.00%
Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends......................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Fund Operating Expenses (expenses that are
deducted from the Cash Fund's assets)
Investment Advisory Fee.......................0.35%
Distribution and/or Service (12b-1) Fee.......0.00%
All Other Expenses:
Administration Fee.......................0.15%
Other Expenses(1)........................0.07%
Total All Other Expenses(1).....................0.22%
Total Annual Fund Operating Expenses(1)..........0.57%
(1) Does not reflect an offset in Cash Fund expenses received in the year ended
March 31, 2008 for uninvested cash balances. Reflecting this offset for that
year, total annual Cash Fund operating expenses were 0.56% for Original Shares.
Example
This Example is intended to help you compare the cost of investing in Original
Shares of the Cash Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Original Shares of the Cash Fund
for the time periods indicated regardless of whether you redeem your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year, that you reinvest all dividends and distributions, and that
the Cash Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
$58 $183 $318 $714
The Tax-Free Fund: Objective, Investment Strategies, Main Risks
"What is the Tax-Free Fund's objective?"
The objective of the Tax-Free Fund, which is a fundamental policy, is
to provide safety of principal while achieving as high a level as possible of
liquidity and of current income exempt from Federal and Hawaii income taxes.
"What are the Tax-Free Fund's investment strategies?"
The Tax-Free Fund seeks to attain this objective by investing in
municipal obligations of Hawaiian issuers to the extent that obligations of the
desired quality, maturity and interest rate are available; otherwise by
investing in similar obligations of non-Hawaii issuers. These obligations must
have remaining maturities not exceeding 397 days, must be of high quality and
must present minimal credit risks. At least 80% of the Tax-Free Fund's assets
must be invested in Municipal Obligations (as defined below).
Under the current management policies, the Tax-Free Fund invests only
in the following types of obligations:
Municipal Obligations
As used in this Prospectus, the term "Municipal Obligations" means
obligations with maturities of 397 days or less paying interest which, in the
opinion of bond counsel or other appropriate counsel, is exempt from regular
Federal income taxes. "Hawaiian Obligations" are Municipal Obligations,
including those of Guam, the Northern Mariana Islands, Puerto Rico and the
Virgin Islands, paying interest which, in the opinion of bond counsel or other
appropriate counsel, is also exempt from Hawaii state income taxes.
Although the portion of dividends of the Tax-Free Fund paid from
interest on Hawaiian Obligations will be free of Hawaii state income tax, that
paid from interest on other Municipal Obligations will not. Since it is not
possible to predict the extent to which suitable Hawaiian Obligations will be
available for investment, the Tax-Free Fund has no investment restriction
limiting the proportion of its portfolio which it may invest in other Municipal
Obligations.
Although exempt from regular Federal income tax, interest paid on
certain types of Municipal Obligations, and dividends which the Tax-Free Fund
might pay from this interest, are preference items as to the Federal alternative
minimum tax. As a fundamental policy, at least 80% of the Tax-Free Fund's net
assets will be invested in Municipal Obligations the income paid upon which will
not be subject to the alternative minimum tax; accordingly, the Tax-Free Fund
can invest the rest of its assets in obligations which are subject to the
Federal alternative minimum tax. The Tax-Free Fund may refrain entirely from
purchasing these types of Municipal Obligations.
Municipal Obligations are debt obligations issued by or on behalf of
states, cities, municipalities and other public authorities. Such obligations
include:
Municipal Bonds
Municipal bonds generally have a maturity at the time of issuance of up
to 30 years. The Tax-Free Fund can purchase only those with a remaining maturity
of 13 months or less.
Municipal Notes
Municipal notes generally have maturities at the time of issuance of
three years or less. These notes are generally issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements or of other revenues.
The ability of an issuer to make payments is therefore dependent on these tax
receipts, proceeds from bond sales or other revenues, as the case may be.
Municipal Commercial Paper
Municipal commercial paper is a debt obligation with a stated maturity
of 397 days or less that is issued to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term debt.
Concentration
From time to time the Tax-Free Fund may invest 25% or more of its
assets in Municipal Obligations that are related in such a way that an economic,
business or political development or change affecting one of these obligations
would also affect the other obligations, for example, Municipal Obligations the
interest on which is paid from revenues of similar type projects or Municipal
Obligations whose issuers are located in the same state.
Other Investment Strategies
The Tax-Free Fund may purchase shares of investment companies with
money-market portfolios consisting only of Municipal Obligations.
Subject to authorization by the Board of Trustees, which is
anticipated, the Tax-Free Fund may invest in "tender option bonds," which are
floating or variable rate demand instruments paying interest at the prevailing
short-term tax-exempt rate, synthetically created in the secondary market by
their sponsors by coupling, in each case, a municipal bond with an option to
tender the bond at par.
The Tax-Free Fund seeks to maintain a net asset value of $1.00 per
share.
The dollar weighted average maturity of the Tax-Free Fund will be 90
days or less and the Tax-Free Fund may buy only those instruments that have a
remaining maturity of 397 days or less.
Securities the Tax-Free Fund buys must present minimal credit risks and
at the time of purchase be rated in the two highest rating categories for
short-term securities by any two of the NRSROs or, if they are unrated, be
determined by the Board of Trustees to be of comparable quality. Some securities
may have third-party guarantees to meet these rating requirements.
The Adviser seeks to develop an appropriate portfolio by considering
the differences among securities of different issuers, yields, maturities and
market sectors.
The Tax-Free Fund may change any of its management policies without
shareholder approval.
"What are the main risks of investing in the Tax-Free Fund?"
Although the Tax-Free Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Tax-Free Fund.
Hawaiian Obligations
The Tax-Free Fund's assets, being primarily Hawaiian issues, are
subject to economic and other conditions affecting Hawaii. Adverse local events,
such as a downturn in the Hawaiian economy, could affect the value of the
Tax-Free Fund's portfolio.
The following is a discussion of the general factors that might
influence the overall U.S. economy and the ability of Hawaiian issuers to repay
principal and interest when due on Hawaiian Obligations that the Trust owns. The
Trust has derived this information from sources that are generally available to
investors and believes it to be accurate, but it has not been independently
verified and it may not be complete.
TO BE UPDATED AS APPROPRIATE BY AMENDMENT
The US economy began to decelerate in 2006, ending the year with fourth
quarter GDP expanding at a 2.5 percent rate of growth in real GDP. Approximately
the same growth rate is likely during 2007, down from growth rates closer to 3
percent or 3.5 percent during the mid-2000s. A sharp decline in residential
investment-contracting at nearly 20 percent, in annualized terms, during second
half 2006-was the principal source of deceleration last year. During 2007
housing is expected to stabilize, with housing starts down to an annual pace of
1.4 to 1.5 million units, off from the 2.2 million unit peak at the end of 2005.
Balancing the housing recession has been double-digit growth in US exports,
around 10 percent in real terms, and resilience in personal consumption
expenditure. Exports comprise roughly twice the GDP share of residential
investment, and go a long way to sustaining the economy's momentum. A weaker
dollar and strong macroeconomic fundamentals overseas should keep US net exports
increasing in 2007. With consumption comprising 70 percent of GDP, concerns
about contagion from the housing decline are worrisome. Either adverse effects
of falling home prices, or a consumer pullback related to mortgage lending
worries, could impair consumption. The Adviser's expectation is that these
pressures may shave a percentage point or two off consumption growth, but even
at 2-3 percent its contribution to GDP growth will be neutral at worst in 2007.
Federal Reserve monetary policy is expected to keep short-term interest rates
high to pre-empt higher inflation, through most of 2007. Though US Treasury bond
yields are currently inverted relative to the overnight Fed Funds rate target at
5.25%, those bond yields embody the market's expectation of eventually lower
short-term interest rates, probably towards the end of 2007.
Hawaii had outperformed the mainland economy for several years ending
in 2006, but now and for the next several years Hawaii's growth rate will
probably fall short of the nation's. Although the US is experiencing full
employment with 4.5 percent unemployment and around 2.5 percent inflation-enough
to keep the Fed's monetary policy vigilant-Hawaii's unemployment/inflation mix
is even more potent. Recently, Hawaii's 2.0-2.5 percent monthly unemployment
rates have reflected an ultra-tight labor market and potential untoward wage
pressures. Honolulu's 5.9 percent inflation in 2006 is the flip side of an
overheated local economy. The economy's nominal growth rate was strong at 6
percent, but most of that was eaten up by inflation, leaving just a small real
growth rate. While the Honolulu CPI is expected to exhibit disinflation to maybe
4 percent in 2007, that will still be high relative to the US urban average.
Consequently, its effect on income growth is likely to lead to real economic
expansion of no more than 2 percent in the islands during 2007. Housing is also
in decline in Hawaii, as it is across the country, although nonresidential
construction makes up for some of the decline. Tourism seems to have hit a
plateau: after peaking at record levels in 2005, visitor counts, while remaining
at peak arrival numbers, have failed to trend higher and, adjusted for
inflation, visitor spending has been declining at a 2-3 percent rate. With the
housing boom ended, and the lift from tourism suspended, after years of record
growth, Hawaii's economy should expect slower growth for the next few years.
Other Main Risks
Investment in the Tax-Free Fund is not a deposit in, nor endorsed or
guaranteed by, any bank, and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
The Tax-Free Fund's right to obtain payment at par on a demand
instrument could be affected by events occurring between the date the Tax-Free
Fund elects to demand payment and the date payment is due that may affect the
ability of the issuer of the instrument to make payment when due, except when
such demand instrument permits same day settlement. To facilitate settlement,
these same day demand instruments may be held in book entry form at a bank other
than the Tax-Free Fund's custodian subject to a sub-custodial agreement approved
by the Tax-Free Fund between that bank and the Tax-Free Fund's custodian. Such
obligations are also subject to credit risk.
Repurchase agreements involve some risk to the Tax-Free Fund if the
other party does not fulfill its obligations under the agreement.
Tender option bonds are subject to credit risk and to the risk that
circumstances may arise in which the tender option terminates.
The value of money-market instruments tends to fall if prevailing
interest rates rise.
The taxable market is a broader and more liquid market with a greater
number of investors, issuers and market makers than the market for Municipal
Obligations. The more limited marketability of Municipal Obligations may make it
difficult in certain circumstances to dispose of large investments
advantageously. In general, Municipal Obligations are also subject to credit
risks such as the loss of credit ratings or possible default. In addition,
certain Municipal Obligations might lose tax-exempt status in the event of a
change in the tax laws.
Tax-Free Fund
Risk/Return Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in the Tax-Free Fund's Original Shares by showing changes in the
performance of the Tax-Free Fund's Original Shares from year to year over a
10-year period and by showing the Tax-Free Fund's average annual returns for the
designated periods. How the Tax-Free Fund has performed in the past is not
necessarily an indication of how the Tax-Free Fund will perform in the future.
[Bar Chart]
Annual Total Returns (Original Shares)
1998-2007
10%
8%
6%
4% 3.64
3.00 2.79 XXXX 2.46 2.95 3.14
2% XXXX XXXX XXXX XXXX 1.19 1.94 XXXX XXXX
XXXX XXXX XXXX XXXX XXXX 0.88 0.99 XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Calendar Years
During the 10-year period shown in the bar chart, the highest return for a
quarter was 0.95% (quarter ended December 31, 2000) and the lowest return for a
quarter was 0.19% (quarter ended September 30, 2003).
The year-to-date (from January 1, 2008 to June 30, 2008) total return was
_____%.
Average Annual Total Return
For the period ended 1 Year 5 Years 10 Years
December 31, 2007
Pacific Capital Tax- 3.14% 1.97 2.29
Free Cash Assets
Trust - Original
Shares
Please call (800) 228-7496 toll-free to obtain the Tax-Free Fund's most current
seven-day yield.
Tax-Free Fund
Fees and Expenses of the Fund
(Original Shares)
This table describes the fees and expenses that you may pay if you buy and hold
Original Shares of the Tax-Free Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases........................0.00%
Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends......................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Fund Operating Expenses (expenses that are
deducted from the Tax-Free Fund's assets)
Investment Advisory Fee........................0.31%
Distribution and/or Service (12b-1) Fee........0.00%
Other:
Administration Fee......................0.09%
Other Expenses..........................0.07%
Total.........................................0.16%
Total Annual Fund Operating Expenses. .........0.47%
Example
This Example is intended to help you compare the cost of investing in Original
Shares of the Tax-Free Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Original Shares of the Tax-Free
Fund for the time periods indicated regardless of whether you redeem your shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year, that you reinvest all dividends and distributions, and that
the Tax-Free Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
$48 $151 $263 $591
The Government Securities Fund: Objective, Investment Strategies, Main Risks
"What is the Government Securities Fund's objective?"
The objective of the Government Securities Fund, which is a fundamental
policy, is to provide safety of principal while achieving as high a level as
possible of liquidity and of current income.
"What are the Government Securities Fund's investment strategies?"
The Government Securities Fund seeks to attain this objective by
investing only in short-term direct obligations of the United States Treasury,
in other obligations issued or guaranteed by agencies or instrumentalities of
the United States Government (with remaining maturities of one year or less), in
shares of investment companies with money-market portfolios which invest only in
U.S. government securities and in certain repurchase agreements secured by U.S.
government securities.
Under the current management policies, the Government Securities Fund
invests only in the following types of obligations:
U. S. Treasury Obligations
The U.S. Treasury issues various types of marketable securities,
consisting of bills, notes, bonds, and certificates of indebtedness, which are
all direct obligations of the U.S. government backed by its "full faith and
credit" and which differ primarily in the length of their maturity. The Fund may
also invest in separately traded principal and interest components of securities
issued by the United States Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS"). Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
These instruments may experience more market volatility than regular treasury
securities.
Other U.S. Government Securities
U.S. government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Farmers Home Administration,
Federal Farm Credit System, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Housing Administration, Federal National Mortgage
Association, Financing Corporation, Government National Mortgage Association,
Resolution Funding Corporation, Small Business Administration, Student Loan
Marketing Association and Tennessee Valley Authority.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the U.S.
Treasury. Others, such as securities issued by the Federal National Mortgage
Association, are supported only by the credit of the instrumentality and not by
the U.S. Treasury. If the securities are not backed by the full faith and credit
of the United States, the owner of the securities must look principally to the
agency issuing the obligation for repayment and may not be able to assert a
claim against the United States in the event that the agency or instrumentality
does not meet its commitment. The Government Securities Fund will invest in
government securities, including securities of agencies and instrumentalities,
only if the Adviser (pursuant to procedures approved by the Board of Trustees)
is satisfied that these obligations present minimal credit risks.
Investment Companies
The Government Securities Fund may purchase shares of investment
companies with money-market portfolios consisting only of U.S. Government
securities.
Repurchase Agreements
The Government Securities Fund may purchase securities subject to
repurchase agreements provided that such securities are U.S. government
securities. Repurchase agreements may be entered into only with commercial banks
or broker/dealers. Subject to the control of the Board of Trustees, the Adviser
will regularly review the financial strength of all parties to repurchase
agreements with the Government Securities Fund.
The Government Securities Fund seeks to maintain a net asset value of
$1.00 per share.
The dollar weighted average maturity of the Government Securities Fund
will be 90 days or less and the Government Securities Fund may buy only those
instruments that have a remaining maturity of 397 days or less.
Securities the Government Securities Fund buys must present minimal
credit risks and at the time of purchase be rated in the two highest rating
categories for short-term securities by any two of the NRSROs or, if they are
unrated, be determined by the Board of Trustees to be of comparable quality.
Some securities may have third-party guarantees to meet these rating
requirements.
The Adviser seeks to develop an appropriate portfolio by considering
the differences among securities of different issuers, yields, maturities and
market sectors.
The Government Securities Fund will purchase only those issues that it
believes will enable it to achieve and maintain the highest rating for a mutual
fund by two NRSROs. There is no assurance that it will be able to maintain such
rating. As a result of this policy, the range of obligations in which the
Government Securities Fund can invest is reduced and the yield obtained on such
obligations may be less than would be the case if this policy were not in force.
The Government Securities Fund may change any of its management
policies without shareholder approval.
"What are the main risks of investing in the Government Securities Fund?"
Although the Government Securities Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the Government Securities Fund.
Investment in the Government Securities Fund is not a deposit in, nor
endorsed or guaranteed by, any bank, and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Repurchase agreements involve some risk to the Government Securities
Fund if the other party does not fulfill its obligations under the agreement.
The value of money-market instruments tends to fall if prevailing
interest rates rise.
Government Securities Fund
Risk/Return Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in the Government Securities Fund's Original Shares by showing changes
in the performance of the Government Securities Fund's Original Shares from year
to year over a 10-year period and by showing the Government Securities Fund's
average annual returns for the designated periods. How the Government Securities
Fund has performed in the past is not necessarily an indication of how the
Government Securities Fund will perform in the future.
[Bar Chart]
Annual Total Returns (Original Shares)
1998-2007
10%
8%
6% 5.90
4.96 4.58 XXXX 4.59 4.73
4% XXXX XXXX XXXX XXXX XXXX
XXXX XXXX XXXX 3.69 2.74 XXXX XXXX
2% XXXX XXXX XXXX XXXX 1.43 XXXX XXXX XXXX
XXXX XXXX XXXX XXXX XXXX 1.00 1.16 XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Calendar Years
During the 10-year period shown in the bar chart, the highest return for a
quarter was 1.52% (quarter ended December 31, 2000) and the lowest return for a
quarter was 0.23% (quarter ended June 30, 2004).
The year-to-date (from January 1, 2008 to June 30, 2008) total return was
______%.
Average Annual Total Return
1 Year 5 Years 10 Years
For the period ended
December 31, 2007
Pacific Capital U.S.
Government Securities
Cash Assets Trust -
Original Shares 4.73 2.83 3.46
Please call (800) 228-7496 toll-free to obtain the Government Securities
Fund's most current seven-day yield.
Government Securities Fund
Fees and Expenses of the Fund
(Original Shares)
This table describes the fees and expenses that you may pay if you buy and hold
Original Shares of the Government Securities Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases.........................0.00%
Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends......................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Fund Operating Expenses (expenses that are
deducted from the Government Securities Fund's
assets)
Investment Advisory Fee........................0.33%
Distribution and/or Service (12b-1) Fee........0.00%
Other:
Administration Fee.....................0.07%
Other Expenses.........................0.03%
Total.........................................0.10%
Total Annual Fund Operating Expenses. .........0.43%
Example
This Example is intended to help you compare the cost of investing in Original
Shares of the Government Securities Fund with the cost of investing in other
mutual funds.
The Example assumes that you invest $10,000 in Original Shares of the Government
Securities Fund for the time periods indicated regardless of whether you redeem
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year, that you reinvest all dividends and
distributions, and that the Government Securities Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 year 3 years 5 years 10 years
$44 $138 $241 $542
Management of the Funds
"How are the Funds managed?"
Asset Management Group of Bank of Hawaii, Financial Plaza of the
Pacific, P.O. Box 3170, Honolulu, HI 96802, the Adviser, is the investment
adviser for each of the Funds. Aquila Investment Management LLC, 380 Madison
Avenue, Suite 2300, New York, NY 10017, the Administrator, is responsible for
administrative services, including providing for the maintenance of the
headquarters of the Funds, overseeing relationships between the Funds and the
service providers to the Funds, maintaining the Funds' books and records and
providing other administrative services.
Under the Advisory Agreements, the Adviser provides for investment
supervision, including supervising continuously the investment program of each
Fund and the composition of its portfolio; determining what securities will be
purchased or sold by each Fund; arranging for the purchase and the sale of
securities held in the portfolio of each Fund; and, at the Adviser's expense,
providing for pricing of each Fund's portfolio daily.
During the fiscal year ended March 31, 2008, each Fund paid a fee,
payable monthly and computed on the net asset value of the Fund as of the close
of business each business day, to the Adviser under the Advisory Agreement and
to the Administrator under the Administration Agreement as follows:
Current Advisory and Administration Fees
(Percent)
-------------------- ----------------- -------------- --------------------- ---------------
Fund Asset Level Advisory Administration Total
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Cash Fund $0 - $325 0.33% 0.17% 0.50%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $325 0.43% 0.07% 0.50%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Tax-Free Fund $0 - $95 Million 0.27% 0.13% 0.40%
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $95 0.33% 0.07% 0.40%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
U.S. Government $0 - $60 Million 0.27% 0.13% 0.40%
Fund
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $60 0.33% 0.07% 0.40%
Million
-------------------- ----------------- -------------- --------------------- ---------------
The agreements with both the Adviser and the Administrator contained a
provision that the management fees shall be reduced, but not below zero, by an
amount equal to the pro-rata portion (based upon the aggregate fees of the
Adviser and the Administrator) of the amount, if any, by which the total
expenses of each fund in any fiscal year, exclusive of taxes, interest and
brokerage fees, shall exceed the lesser of (i) 2.5% of the first $30 million of
average annual net assets of such fund plus 2% of the next $70 million of such
assets and 1.5% of its average annual net assets in excess of $100 million, or
(ii) 25% of the Fund's total annual investment income.
On July 16, 2008, the shareholders approved new advisory agreements for
each Fund. The Trustees had previously approved new administration agreements
for each Fund, all of which went into effect on July 16, 2008. The new
agreements eliminate the fee limitations described above and adopt the
management fees set forth in the following table:
Proposed Advisory and Administration Fees
(Percent)
-------------------- ----------------- -------------- --------------------- ---------------
Fund Asset Level Advisory Administration Total
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Cash Fund $0 - $400 0.397% 0.103% 0.50%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $400 0.364% 0.086% 0.45%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Tax-Free Fund $0 - $300 0.318% 0.082% 0.40%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $300 0.285% 0.065% 0.35%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
U.S. Government $0 - $1,900 0.328% 0.072% 0.40%
Fund Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $1,900 0.295% 0.055% 0.35%
Million
-------------------- ----------------- -------------- --------------------- ---------------
A discussion regarding the Trustees' basis for approving the annual
renewal of the Investment Advisory Agreements is available in the Trust's
semi-annual report to shareholders dated September 30, 2007. The Trustees' basis
for approving the New Investment Advisory Agreements is discussed in the proxy
statement for the shareholders' meetings held July 16, 2008 and will also be
discussed in the Trust's semi-annual report to shareholders dated September 30,
2008.
Information about the Adviser and the Administrator
The Adviser is a division of Bank of Hawaii, all of whose shares are
owned by Bank of Hawaii Corporation ("BOH Corp."). BOH Corp. is a bank holding
company registered under the Bank Holding Company Act of 1956, as amended, and
its common stock is registered under the Securities Exchange Act of 1934 and is
listed and traded on the New York Stock Exchange. BOH Corp. files annual and
periodic reports with the Securities and Exchange Commission which are available
for public inspection.
The Funds' Administrator is a wholly-owned subsidiary of Aquila
Management Corporation ("AMC"), founder of each fund in the Aquila Group of
Funds, which consists of three money-market funds, seven tax-free municipal bond
funds, a high income corporate bond fund and an equity fund. As of June 30,
2008, these funds had aggregate assets of approximately $____ billion, of which
approximately $____ billion consisted of assets of the money-market funds. AMC's
address is the same as that of the Administrator. AMC, which was founded in
1984, is currently controlled by Mr. Lacy B. Herrmann and his wife, Mrs.
Elizabeth B. Herrmann, directly and through certain trusts. It is anticipated
that these arrangements will change.
Net Asset Value per Share
The net asset value of the shares of each of the Funds' classes of
shares is determined as of 4:00 p.m., New York time, on each day that the New
York Stock Exchange and the Custodian are open (a "business day"), by dividing
the value of the Fund's net assets (which means the value of the assets less
liabilities) allocable to the class by the total number of shares of such class
outstanding at the time. The price at which a purchase or redemption of shares
is effected is based on the net asset value next calculated after your purchase
or redemption order is received in proper form.
The net asset value per share will normally remain constant at $1.00
per share except under extraordinary circumstances. The net asset value per
share is based on a valuation of the Fund's investments at amortized cost.
The New York Stock Exchange annually announces the days on which it
will not be open. The most recent announcement indicates that it will not be
open on the following days: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. However, the Exchange may close on days not
included in that announcement. In addition, the Custodian is not open on
Columbus Day and Veterans Day.
Purchases
Opening an Account
To open a new Original Shares account, you must send a properly
completed New Account Application to PFPC Inc. (the "Agent"). The Funds will not
honor redemption of shares purchased by wire payment until a properly completed
New Account Application has been received by the Agent. The minimum initial
investment is $1,000.
Subsequent investments may be in any amount.
Original Shares are offered solely to (1) financial institutions for
the investment of funds for their own account or acting for investors in a
fiduciary, agency, investment advisory or custodial capacity; (2) persons
entitled to exchange into Original Shares under the exchange privileges of the
Funds; (3) Trustees and officers of funds in the Aquila Group of Funds; (4)
officers and employees of the Adviser, the Administrator and the Distributor,
Aquila Distributors, Inc., and (5) shareholders owning shares of any of the
Funds of record on January 20, 1995, the date on which the Funds first offered
two classes of shares.
You can make direct investments in Original Shares in any of these
three ways:
1. By Mail. You can make payment by check, money order, Federal Reserve
draft or other negotiable bank draft drawn in United States dollars on a United
States commercial or savings bank or credit union (each of which is a "Financial
Institution") payable to the order of Pacific Capital Cash Assets Trust, Pacific
Capital Tax-Free Cash Assets Trust or Pacific Capital U.S. Government Securities
Cash Assets Trust, as the case may be, and mailed to:
(Specify the name of the Fund)
Regular Mail Address:
PFPC Inc.
c/o Aquila Group of Funds
P.O. Box 9823
Providence, RI 02940-8023
Overnight Mail Address:
PFPC Inc.
c/o Aquila Group of Funds
101 Sabin Street
Pawtucket, RI 02860-1247
2. By Wire. You can wire Federal Funds (monies credited to a bank's
account with a Federal Reserve Bank) to PNC Bank, NA.
To insure prompt and proper crediting to your account, if you choose
this method of payment, you should first telephone the Agent (800-255-2287
toll-free) and then instruct your bank to wire funds to:
PNC BANK, NA
Philadelphia, PA
ABA No. 0310-0005-3
Account No. 85-0242-8425
Your bank's wire instructions should indicate the appropriate Fund as follows:
the Cash Fund:
FFC: Pacific Capital Cash Assets Trust - Original Shares
the Tax-Free Fund:
FFC: Pacific Capital Tax-Free Cash Assets Trust - Original Shares
the Government Securities Fund:
FFC: Pacific Capital U.S. Government Securities Cash Assets Trust -
Original Shares
In addition you should supply:
* Account name and number (if an existing account).
* The name in which the investment is to be registered (if a new
account).
Your bank may impose a charge for wiring funds.
3. Through Brokers. If you wish, you may invest in the Funds by purchasing
shares through registered broker/dealers.
The Funds impose no sales or service charge, although broker/dealers
may make charges to their customers for their services. The services to be
provided and the fees therefor are established by each broker/dealer acting
independently; broker/dealers may establish, as to accounts serviced by them,
higher initial or subsequent investment requirements than those required by the
Funds. Broker/dealers are responsible for prompt transmission of orders placed
through them.
Opening An Account Adding to an Account
*Make out a check for the investment amount payable to the *Make out a check for the investment amount payable to
appropriate Fund. the appropriate Fund.
*Complete a New Account Application, which is available *Fill out the pre-printed stub attached to each Fund's
with the Prospectus or upon request, indicating the confirmations or supply the name(s) of account
features you wish to authorize. owner(s), the account number and the name of the Fund.
*Send your check and account information to your dealer
*Send your check and completed New Account Application to or to the Funds' Agent, PFPC Inc., or
your dealer or to the Funds' Agent, PFPC Inc., or
*Wire funds as described above.
*Wire funds as described above.
Be sure to supply the name(s) of account owner(s), the account number
and the name of the Fund.
"Can I transfer funds electronically?"
You can have funds transferred electronically, in amounts of $50 or
more, from your Financial Institution if it is a member of the Automated
Clearing House. You may make investments through two electronic transfer
features, "Automatic Investment" and "Telephone Investment."
* Automatic Investment: You can authorize a pre-determined amount to be
regularly transferred from your account.
* Telephone Investment: You can make single investments of up to
$50,000 by telephone instructions to the Agent.
Before you can transfer funds electronically, the Funds' Agent
must have your completed New Account Application authorizing these features. If
you initially decide not to choose these conveniences and then later wish to do
so, you must complete a Ready Access Features Form which is available from the
Distributor or the Agent, or if your account is set up so that your broker or
dealer makes these sorts of changes, request your broker or dealer to make them.
The Funds may modify or terminate these investment methods or charge a service
fee, upon 30 days' written notice to shareholders.
"In which states can I buy shares of the Funds?"
On the date of this Prospectus, Original Shares are available only in:
TO BE UPDATED
Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia,
Hawaii, Illinois, Kentucky, New Jersey, New York, Oregon, Pennsylvania, Rhode
Island, South Carolina, Utah, Virginia, Washington, Wisconsin and Guam.
"When are shares issued and dividends declared on them?"
The Funds issue shares two ways.
First Method - ordinary investments. You will be paid dividends
starting on the day (whether or not a Business Day) after the first Business Day
on which your purchase order has been received in proper form and funds have
become available for investment. You will be paid a dividend on the day on which
your shares are redeemed.
"When will my order become effective under the First Method?"
The Funds must have payment for your purchase available for investment
before 4:00 p.m. New York time on a Business Day for your order to be effective
on that Business Day. Your order is effective and you will receive the next
determined net asset value per share depending on the method of payment you
choose, as follows:
When will an order received before When will an order received after
4:00 p.m. on a Business Day be 4:00 p.m. on a Business Day be
Payment Method. deemed effective? deemed effective?
By wire in Federal Funds or Federal That day. Next Business Day.
Reserve Draft.
By wire not in Federal Funds. 4:00 p.m. on the Business Day 4:00 p.m. on the Business Day
converted to Federal Funds (normally converted to Federal Funds (normally
the next Business Day). the next Business Day).
By Check. 4:00 p.m. on the Business Day 4:00 p.m. on the Business Day
converted to Federal Funds (normally converted to Federal Funds (normally
two Business Days for checks on two Business Days for checks on
banks in the Federal Reserve System, banks in the Federal Reserve System,
longer for other banks). longer for other banks).
Automatic Investment. The day you specify; if it is not a
Business Day, on the next Business
Day.
Telephone Investment. That day. Next Business Day.
All checks are accepted subject to collection at full face value in
United States funds and must be drawn in United States dollars on a United
States bank; if not, shares will not be issued. (The Agent will convert wires
and checks to Federal Funds as your agent.)
Second Method - For broker/dealers or banks which have requested that
this method be used, to which request a Fund has consented. You will be paid
dividends starting on the day on which your purchase order has been received in
proper form and funds have become available for investment. You will not be paid
a dividend on the day on which your shares are redeemed.
"When will my order be effective under the Second Method?"
Your purchase order is effective and your funds are deemed available
for investment on that day if
(i) You advise the Agent before 3:30 p.m. New York time on a Business
Day of a dollar amount to be invested in the Cash Fund or Government Securities
Fund and prior to noon of a dollar amount to be invested in the Tax-Free Fund;
and
(ii) Your payment in Federal Funds is received by wire on that day.
The second investment method is available to prospective investors in
shares of a Fund who wish to use it so that the dividends on their shares will
commence to be declared on the day the purchase order is effective. Upon written
or phone request the Funds will advise you as to the broker/dealers or banks
through which such purchases may be made.
The Agent will maintain records as to which of your shares were
purchased under each of the two investment methods set forth above. If you make
a redemption request and have purchased shares under both methods, the Agent
will, unless you request otherwise, redeem those shares first purchased,
regardless of the method under which they were purchased.
Under each method, shares are issued at the net asset value per share
next determined after the purchase order is received in proper form. Under each
method, the New Account Application must be properly completed and have been
received and accepted by the Agent; the Funds or the Distributor may also reject
any purchase order. Under each method, Federal Funds (see above) must either be
available to the Funds or the payment thereof must be guaranteed to the Funds so
that the Funds can be as fully invested as practicable.
Transfer on Death ("TOD") Registration
The Funds generally permit "transfer on death" ("TOD") registration of
shares purchased directly, so that on the death of the shareholder the shares
are transferred to a designated beneficiary or beneficiaries. Ask the Agent or
your broker/dealer for the Transfer on Death Registration Request Form. With it
you will receive a copy of the TOD Rules of the Aquila Group of Funds, which
specify how the registration becomes effective and operates. By opening a TOD
Account, you agree to be bound by the TOD Rules.
Redeeming Your Investment
You may redeem some or all of your shares by a request to the Agent.
Shares will be redeemed at the next net asset value determined after your
request has been received in proper form.
There is no minimum period for investment in the Funds, except for
shares recently purchased by check or by Automatic or Telephone Investment as
discussed below.
If you purchased Original Shares of any Fund through broker/dealers,
banks and other financial institutions which serve as shareholders of record you
must redeem through those institutions, which are responsible for prompt
transmission of redemption requests.
How to Redeem Your Investment
By mail, send instructions to:
PFPC Inc.
c/o Aquila Group of Funds
P.O. Box 9823 Providence, RI 02940-8023
By telephone, call:
800-255-2287 toll-free
By FAX, send instructions to: 508-599-1838
For liquidity and convenience, the Funds offer expedited redemption.
Expedited Redemption Methods
(Non-Certificate Shares Only)
You may request expedited redemption for any shares not issued in
certificate form in three ways:
1. By Telephone. The Agent will take instructions from anyone by
telephone to redeem shares and make payments:
a) to a Financial Institution account you have previously
specified; or
b) by check in the amount of $50,000 or less, mailed to the
name and address on the account from which you are redeeming, provided that
neither the name nor the address has changed during the prior 30 days. You may
only redeem by check via telephone request once in any seven-day period.
Telephoning the Agent
Whenever you telephone the Agent, please be prepared to
supply:
account name(s) and number
name of the caller
the social security number(s) registered to the account
personal identification.
Note: Check the accuracy of your confirmation statements immediately
upon receipt. The Funds, the Agent, and the Distributor are not responsible for
losses resulting from unauthorized telephone transactions if the Agent follows
reasonable procedures designed to verify a caller's identity. The Agent may
record calls.
2. By FAX or Mail. You may request redemption payments to a
predesignated Financial Institution account by a letter of instruction sent to
the Agent, PFPC Inc., by FAX at 508-599-1838 or by mail to P.O. Box 9823,
Providence, RI 02940-8023. The letter, signed by the registered shareholder(s)
(no signature guarantee is required), must indicate:
account name(s)
account number
amount to be redeemed
any payment directions
To have redemption proceeds sent directly to a Financial Institution
account, you must complete the Expedited Redemption section of the New Account
Application or a Ready Access Features Form. You will be required to provide (1)
details about your Financial Institution account, (2) signature guarantees and
(3) possible additional documentation.
The name(s) of the shareholder(s) on the Financial Institution account
must be identical to the name(s) on the Funds' records of your account.
You may change your designated Financial Institution account at any
time by completing and returning a revised Ready Access Features Form.
3. By Check. The Agent will, upon request, provide you with forms of
drafts ("checks") drawn on PNC Bank, NA (the "Bank"). This feature is not
available if your shares are represented by certificates. These checks
represent a further alternative redemption means and you may make them payable
to the order of anyone in any amount of not less than $100. You will be subject
to the Bank's rules and regulations governing its checking accounts. If the
account is registered in more than one name, each check must be signed by each
account holder exactly as the names appear on the account registration, unless
expressly stated otherwise on your New Account Application.
There is no charge for the maintenance of this special check writing
privilege or for the clearance of any checks.
When such a check is presented to the Bank for payment, a sufficient
number of full and fractional shares in your account will be redeemed to cover
the amount of the check. This check writing redemption procedure enables you to
continue receiving dividends on those shares equaling the amount being redeemed
by check until such time as the check is actually presented to the Bank for
payment.
Because these checks are paid by redemption of shares in your account,
you should be certain that adequate shares are in the account to cover the
amount of the check. If insufficient redeemable shares are in the account, the
redemption check will be returned marked "insufficient funds." The fact that
redemption checks are drafts may also permit a bank in which they are deposited
to delay crediting the account in question until that bank has received payment
funds for the redemption check. Note: You cannot use checks to redeem shares
represented by certificates. If you purchase shares by check, you cannot use
checks to redeem them until 15 days after your purchase.
You may not present checks directly to any branch of the Bank. This
does not affect checks used for the payment of bills or cashed at other banks.
You may not use checks to redeem the entire balance of your account, since the
number of shares in your account changes daily through dividend payments which
are automatically reinvested in full and fractional shares. Only expedited
redemption to a predesignated bank account or the regular redemption method (see
below) may be used when closing your account.
Multiple Redemption Services. You are not limited in choice of
redemption methods but may utilize all available forms. However, when both
redemption to a predesignated Financial Institution account and check writing
are desired, you must so elect on your New Account Application, or by proper
completion of a Ready Access Features Form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
Certificate Shares. Mail to the Funds' Agent: (1) blank (unsigned)
certificates for Original Shares to be redeemed, (2) redemption instructions and
(3) a stock assignment form.
To be in "proper form," items (2) and (3) above must be signed by the
registered shareholder(s) exactly as the account is registered. For a joint
account, both shareholder signatures are necessary.
For your protection, mail certificates separately from signed
redemption instructions. We recommend that certificates be sent by registered
mail, return receipt requested.
We may require additional documentation for certain types of
shareholders, such as corporations, partnerships, trustees or executors, or if
redemption is requested by someone other than the shareholder of record.
Signature_Guarantees. If sufficient documentation is on file, we do not
require a signature guarantee for redemptions of certificate or
non-certificate shares up to $50,000, payable to the record holder, and sent
to the address of record. In all other cases, signatures must be guaranteed.
Your signature may be guaranteed by any:
member of a national securities exchange
U.S. bank or trust company
state-chartered savings bank
federally chartered savings and loan association
foreign bank having a U.S. correspondent bank; or
participant in the Securities Transfer Association Medallion
Program ("STAMP"), the Stock Exchanges Medallion Program ("SEMP")
or the New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
A notary public is not an acceptable signature guarantor.
Non-Certificate Shares. You must use the Regular Redemption Method if
you have not chosen Expedited Redemption. To redeem by this method, send a
letter of instruction to the Funds' Agent, which includes:
account name(s)
account number
dollar amount or number of shares to be redeemed or a statement that
all shares held in the account are to be redeemed
payment instructions (we normally mail redemption proceeds to your
address as registered with a Fund)
signature(s) of the registered shareholder(s) and
signature guarantee(s), if required, as indicated above after
"Certificate Shares."
"When will I receive the proceeds of my redemption?"
Redemption proceeds are normally sent on the next business day
following receipt of your redemption request in proper form. Except as described
below, payments will normally be sent to your address of record within seven
days.
Redemption Method of Payment Charges
Under $1,000. Check. None.
$1,000 or more. Check, or wired or transferred None.
through the Automated Clearing House to
your Financial Institution account, if
you so requested on your New Account
Application or Ready Access Features
Form.
Through a broker/dealer. Check or wire, to your broker/dealer. None. However, your broker/dealer
may charge a fee.
Although the Funds do not currently intend to, any Fund may impose a
charge, up to $5.00 per wire redemption, after written notice to shareholders
who have elected this redemption procedure. Upon 30 days' written notice to
shareholders, any Fund may modify or terminate the use of the Automated Clearing
House to make redemption payments at any time or charge a service fee, although
no such fee is presently contemplated. If any such changes are made, the
Prospectus will be supplemented to reflect them. If you use a broker or dealer
to arrange for a redemption, you may be charged a fee for this service.
The Funds may delay payment for redemption of shares recently purchased
by check (including certified, cashier's or official bank check), Automatic
Investment or Telephone Investment for up to 15 days after purchase; however,
payment for redemption will not be delayed after (i) the check or transfer of
funds has been honored, or (ii) the Agent receives satisfactory assurance that
your Financial Institution will honor the check or transfer of funds. You can
eliminate possible delays by paying for purchased shares with wired funds or
Federal Reserve drafts.
The Funds have the right to postpone payment or suspend redemption
rights during certain periods. These periods may occur (i) when the New York
Stock Exchange is closed for other than weekends and holidays, (ii) when the
Securities and Exchange Commission (the "SEC") restricts trading on the New York
Stock Exchange, (iii) when the SEC determines that an emergency exists which
causes disposal of, or determination of the value of, portfolio securities to be
unreasonable or impracticable, and (iv) during such other periods as the SEC may
permit.
Any Fund can redeem your shares if their value totals less than $500 as
a result of redemptions or failure to meet and maintain the minimum investment
level under an Automatic Investment Program. Before such a redemption is made,
we will send you a notice giving you 60 days to make additional investments to
bring your account up to the minimum.
Redemption proceeds may be paid in whole or in part by distribution of
a Fund's portfolio securities ("redemption in kind") in conformity with SEC
rules. This method will only be used if the Board of Trustees determines that
payments partially or wholly in cash would be detrimental to the best interests
of the remaining shareholders.
"Is there an Automatic Withdrawal Plan?"
An Automatic Withdrawal Plan allows you to arrange to receive a monthly
or quarterly check in a stated amount, not less than $50.
Distribution Arrangements
Confirmations and Share Certificates
A statement will be mailed to you confirming each purchase or
redemption of shares in a Fund. Accounts are rounded to the nearest 1/1000th of
a share. The Funds will not issue share certificates unless you so request from
the Agent in writing and declare a need for such certificates, such as a pledge
of shares or an estate situation. If you have certificates issued, Expedited
Redemption Methods described above will not be available and delay and expense
may be incurred if you lose the certificates. The Funds will not issue
certificates for fractional shares or to shareholders who have elected the
checking account or predesignated bank account methods of withdrawing cash from
their accounts.
The Funds and the Distributor may reject any order for the purchase of
shares. In addition, the offering of shares may be suspended at any time and
resumed at any time thereafter.
Distribution Plan
Each Fund has adopted a Distribution Plan under Rule 12b-1 ("Rule 12b-1")
under the 1940 Act. Rule 12b-1 provides in substance that an investment company
may not engage directly or indirectly in financing any activity which is
primarily intended to result in the sale of its shares except pursuant to a plan
adopted under that rule. One section of the first part of the Distribution Plan
of each Fund is designed to protect against any claim against or involving the
Fund that some of the expenses which the Fund pays or may pay come within the
purview of Rule 12b-1. Another section of the first part of the Distribution
Plan authorizes the Administrator, not the Fund, to make certain payments to
certain Qualified Recipients (as defined in the Distribution Plan) which have
rendered assistance in the distribution and/or retention of the Funds' shares.
For the Cash Fund, these payments may not exceed 0.15 of 1% of the average
annual net assets of the Fund for a fiscal year; for the Tax-Free Fund and the
Government Securities Fund, the rate is 0.10 of 1%.
Each Distribution Plan has other provisions that relate to payments in
connection with each Fund's Service Shares Class. None of such payments are made
from assets represented by Original Shares of any Fund.
Exchange Privilege
Generally, you can exchange Original Shares of the Funds into the
tax-free municipal bond funds, the high-income corporate bond fund and the
equity fund (the "Aquila Bond or Equity Funds") and the Aquila Money-Market
Funds in the Aquila Group of Funds (collectively, the "Aquila Funds"). The
shares acquired in the exchange are subject to the same sales charge, if any,
that they would have been subject to had they been purchased rather than
acquired in exchange.
Because excessive trading can be harmful to the Funds and their other
shareholders, the right is reserved to revise or terminate the exchange
privilege, to limit the number of exchanges or to reject any exchange if (i) the
Funds or any of the other Aquila Funds believe that they would be harmed or be
unable to invest effectively or (ii) they receive or anticipate receiving
simultaneous orders that may significantly affect the Funds or any other Aquila
Fund.
Dividends
The Funds will declare all of their net income for dividend purposes
daily as dividends. If you redeem all of your shares, you will be credited on
the redemption payment date with the amount of all dividends declared for the
month through the date of redemption, or through the day preceding the date of
redemption in the case of shares issued under the "second" method.
You will receive monthly a summary of your account, including
information as to dividends paid during the month and the shares credited to
your account through reinvestment of dividends.
Dividends paid by each Fund with respect to Service Shares (the Fund's
other class of shares) and Original Shares will be calculated in the same
manner, at the same time, on the same day, and will be in the same amount except
that any class expenses (including any payments made by Service Shares under the
Distribution Plan) will be borne exclusively by that class. Dividends on
Original Shares are expected generally to be higher than those on Service Shares
because expenses allocated to Service Shares will generally be higher.
Dividends will be taxable to you as ordinary income (except as
described in "Tax Information Concerning the Tax-Free Fund" below), even though
reinvested. Statements as to the tax status of your dividends will be mailed
annually.
It is possible but unlikely that a Fund may have realized long-term
capital gains or losses in a year.
Dividends of each Fund will automatically be reinvested in full and
fractional shares of the same class at net asset value unless you elect
otherwise.
You may choose to have all or any part of the payments for dividends or
distributions paid in cash. You can elect to have the cash portion of your
dividends and distributions deposited, without charge, by electronic funds
transfers into your account at a financial institution, if it is a member of the
Automated Clearing House.
You can make any of these elections on the New Account Application, by
a Ready Access Features Form or by a letter to the Agent. Your election to
receive some or all of your dividends and distributions in cash will be
effective as of the next payment of dividends after it has been received in
proper form by the Agent. It will continue in effect until the Agent receives
written notification of a change.
Whether your dividends and distributions are paid in cash or
reinvested, you will receive a monthly statement indicating the current status
of your investment account.
If you do not comply with laws requiring you to furnish taxpayer
identification numbers and report dividends, the Funds may be required to impose
backup withholding at a rate of 28% upon payment of redemptions and dividends.
The Funds reserve the right to change the dividend and distribution
payment option on your account to "reinvest" if mail sent to the address on your
account is returned by the post office as "undeliverable" and you have elected
to have your account dividends and/or distributions paid in cash. In such event,
the Funds would then purchase additional shares of the Funds with any dividend
or distribution payments that are "undeliverable". In order to change the option
back to "cash", you would need to send the Agent written instructions as
described above.
Tax Information
Tax Information Concerning the Tax-Free Fund
The Tax-Free Fund seeks to pay "exempt-interest dividends." These are
dividends derived from net income received by the Tax-Free Fund on its
Municipal Obligations. Such dividends are exempt from regular Federal income
tax. The Fund will allocate exempt-interest dividends by applying one
designated percentage to all income dividends it declares during its tax year.
It will normally make this designation in the first month following its fiscal
year end for dividends paid in the prior year.
Some portion of the Tax-Free Fund's distributions may be taxable. A
shareholder receiving a dividend, for example, from net interest income earned
by the Tax-Free Fund from one or more of (i) Taxable Obligations and (ii) income
from repurchase agreements and securities loans treats the dividend as a receipt
of ordinary income in the computation of the shareholder's gross income
regardless of whether it is reinvested in Tax-Free Fund shares; such dividends,
in addition to capital gains distributions, are not included in exempt-interest
dividends. Although exempt-interest dividends are not subject to regular Federal
income tax, each taxpayer must report the total amount of tax-exempt interest
(including exempt-interest dividends from the Tax-Free Fund) received or
acquired during the year. Exempt-interest dividends are taken into account in
determining the taxable portion of any Social Security or Railroad Retirement
benefit you or your spouse receives.
Under the Internal Revenue Code, interest on loans incurred by
shareholders to enable them to purchase or carry shares of the Tax-Free Fund may
not be deducted for regular Federal tax purposes. In addition, under rules used
by the Internal Revenue Service for determining when borrowed funds are deemed
used for the purpose of purchasing or carrying particular assets, the purchase
of shares of the Tax-Free Fund may be considered to have been made with borrowed
funds even though the borrowed funds are not directly traceable to the purchase
of shares.
If you, or someone related to you, is a "substantial user" of
facilities financed by industrial development or private activity bonds, you
should consult your own tax adviser before purchasing shares of the Tax-Free
Fund.
Interest from all Municipal Obligations is tax-exempt for purposes of
computing the shareholder's regular Federal tax. However, interest from
so-called private activity bonds issued after August 7, 1986, constitutes a tax
preference for both individuals and corporations and thus will enter into a
computation of the alternative minimum tax ("AMT"). Whether or not that
computation will result in a tax will depend on the entire content of your
return. The Tax-Free Fund will not invest more than 20% of its assets in the
types of Municipal Obligations that pay interest subject to AMT. The 20% limit
is a fundamental policy of the Tax-Free Fund; it cannot be changed without
shareholder approval. An adjustment required by the Internal Revenue Code will
tend to make it more likely that corporate shareholders will be subject to AMT.
They should consult their tax advisers.
Hawaiian Tax Information
Dividends and distributions made by the Tax-Free Fund to Hawaii
residents may be treated for Hawaii income tax purposes in the same manner as
they are treated under the Internal Revenue Code for Federal income tax
purposes. Under Hawaii law, however, interest derived from obligations of states
(and their political subdivisions) other than Hawaii will not be exempt from
Hawaii income taxation. (Interest derived from bonds or obligations issued by or
under the authority of the following is exempt from Hawaii income taxation:
Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands.) For the
calendar years 2007, 2006 and 2005, the percentage of the Tax-Free Fund's
dividends exempt from State of Hawaii income taxes was 30.69%, 25.68% and 21.09%
respectively, which should not be considered predictive of future results.
Interest on Hawaiian Obligations, tax-exempt obligations of states
other than Hawaii and their political subdivisions, and obligations of the
United States or its possessions is not exempt from the Hawaii Franchise Tax.
This tax applies to banks (other than a national banking association), building
and loan associations, financial services loan companies, financial
corporations, and small business investment companies, trust companies, mortgage
loan companies, financial holding companies, development companies, and
subsidiaries, located or doing business in Hawaii.
Persons or entities who are not Hawaii residents should not be subject
to Hawaii income taxation on dividends and distributions made by the Tax-Free
Fund but may be subject to other state and local taxes.
Shareholders of the Fund should consult their tax advisers about other
state and local tax consequences of their investment in the Fund.
Hawaiian Tax Information Concerning the Government Securities Fund
The Director of Taxation of Hawaii has stated to the Government
Securities Fund that dividends paid by a regulated investment company from
interest it receives on United States Government obligations will be exempt from
State of Hawaii income tax. For the calendar years 2007, 2006 and 2005, the
percentage of the Government Securities Fund's dividends exempt from State of
Hawaii income taxes was 99.93%, 99.85% and 99.56% respectively, which should not
be considered predictive of future results. Dividends paid from other types of
interest (including interest on U.S. Treasury repurchase transactions), and
capital gains distributions, if any, will be taxable.
Pacific Capital
Cash Assets Trust
Original Shares
Financial Highlights
(For a Share Outstanding Throughout Each Period)
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in Original Shares of the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Tait, Weller
& Baker LLP (independent registered public accounting firm), whose report, along
with the Fund's financial statements, is included in the annual report, is
incorporated by reference into the SAI and is available upon request.
PACIFIC CAPITAL
CASH ASSETS TRUST
ORIGINAL SHARES - TO BE UPDATED
----------------------------------------------------------------
Year Ended March 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ ................ 0.05 0.03 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income .. (0.05) (0.03) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ............................ 4.75% 3.20% 1.36% 0.90% 1.35%
Ratios/supplemental data
Net assets, end of period (in millions) $ 287 $ 286 $ 366 $ 287 $ 361
Ratio of expenses to average net assets 0.57% 0.58% 0.37% 0.21% 0.36%
Ratio of net investment income to
average net assets .................. 4.65% 3.09% 1.39% 0.90% 1.34%
The expense and net investment income ratios without the effect of the Adviser's
and Administrator's contractual caps on fees were:
Ratio of expenses to average net assets ++ ++ 0.57% 0.57% 0.58%
Ratio of net investment income to
average net assets .................. ++ ++ 1.19% 0.54% 1.12%
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of expenses to average net assets 0.57% 0.58% 0.37%* 0.21%* 0.36%*
----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ No reduction in the Adviser's and the Administrator's fees was required
during the period.
* Net of contractual caps on fees.
Pacific Capital
Tax-Free Cash Assets Trust
Original Shares
Financial Highlights
(For a Share Outstanding Throughout Each Period)
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in Original Shares of the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Tait, Weller
& Baker LLP (independent registered public accounting firm), whose report, along
with the Fund's financial statements, is included in the annual report, is
incorporated by reference into the SAI and is available upon request.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
ORIGINAL SHARES - TO BE UPDATED
Year Ended March 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ ................. . 0.03 0.02 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... . (0.03) (0.02) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ............................ 3.09% 2.21% 1.16% 0.84% 1.15%
Ratios/supplemental data
Net assets, end of period (in millions) $ 171 $ 133 $ 134 $ 99 $ 130
Ratio of expenses to average net assets 0.50% 0.50% 0.29% 0.17% 0.28%
Ratio of net investment income to
average net assets .................. 3.04% 2.20% 1.17% 0.84% 1.13%
The expense and net investment income ratios without the effect of the Adviser's
and Administrator's contractual caps on fees were:
Ratio of expenses to average net assets ++ ++ 0.49% 0.52% 0.50%
Ratio of net investment income to
average net assets .................. ++ ++ 0.96% 0.50% 0.90%
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of expenses to average net assets . . 0.49% 0.50% 0.28%* 0.17%* 0.27%*
----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ No reduction in the Adviser's and the Administrator's fees was required
during the period.
* Net of contractual caps on fees.
Pacific Capital
U. S. Government Securities Cash Assets
Trust
Original Shares
Financial Highlights
(For a Share Outstanding Throughout Each Period)
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in Original Shares of the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Tait, Weller
& Baker LLP (independent registered public accounting firm), whose report, along
with the Fund's financial statements, is included in the annual report, is
incorporated by reference into the SAI and is available upon request.
PACIFIC CAPITAL
U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST
ORIGINAL SHARES - TO BE UPDATED
ORIGINAL SHARES
----------------------------------------------------------------
Year Ended March 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ ................ 0.05 0.03 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income .. (0.05) (0.03) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ............................ 4.80% 3.25% 1.41% 0.96% 1.34%
Ratios/supplemental data
Net assets, end of period (in millions) $ 685 $ 429 $ 354 $ 263 $ 270
Ratio of expenses to average net assets 0.44% 0.45% 0.27% 0.11% 0.25%
Ratio of net investment income to
average net assets .................. 4.72% 3.25% 1.42% 0.96% 1.34%
The expense and net investment income ratios without the effect of the Adviser's
and Administrator's contractual caps on fees were:
Ratio of expenses to average net assets ++ ++ 0.45% 0.46% 0.46%
Ratio of net investment income to
average net assets .................. ++ ++ 1.24% 0.62% 1.12%
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of expenses to average net assets 0.44% 0.45% 0.27%* 0.11%* 0.24%*
----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ No reduction in the Adviser's and the Administrator's fees was required
during the period.
* Net of contractual caps on fees.
[Inside Back Cover]
Investment Adviser
Asset Management Group of
Bank of Hawaii
P.O. Box 3170 Honolulu, Hawaii 96802
Administrator
Aquila Investment Management LLC
380 Madison Avenue, Suite 2300
New York, New York 10017
Trustees
Theodore T. Mason, Chair
Diana P. Herrmann, Vice Chair
Thomas W. Courtney
Stanley W. Hong
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
Chairman Emeritus and Founder
Lacy B. Herrmann
Officers
Diana P. Herrmann, President
Charles E. Childs, III, Executive Vice President
Sherri Foster, Vice President
Robert W. Anderson, Chief Compliance Officer
Joseph P. DiMaggio, Chief Financial Officer and Treasurer
Edward M.W. Hines, Secretary
Distributor
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017
Transfer And Shareholder Servicing Agent
PFPC Inc.
101 Sabin Street
Pawtucket, Rhode Island 02860
Custodian
JPMorgan Chase Bank, N.A.
1111 Polaris Parkway
Columbus, Ohio 43240
Independent Registered Public Accounting Firm
Tait, Weller & Baker LLP
1818 Market Street
Suite 2400
Philadelphia, Pennsylvania 19103
Counsel
Butzel Long a professional corporation
380 Madison Avenue
New York, New York 10017
Back Cover
This Prospectus concisely states information about the Funds that you
should know before investing. A Statement of Additional Information about the
Funds (the "SAI") has been filed with the Securities and Exchange Commission.
The SAI contains information about the Funds and their management not included
in this Prospectus. The SAI is incorporated by reference in its entirety in this
Prospectus and is therefore legally a part of this Prospectus. Only when you
have read both this Prospectus and the SAI are all material facts about the
Funds available to you.
You can get additional information about the Funds' investments in the
Funds' annual and semi-annual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during their last
fiscal year. You can get the SAI and the Funds' annual and semi-annual reports
without charge, upon request, by calling 800-255-2287 (toll-free) or by visiting
the Funds' website at www.aquilafunds.com.
In addition, you can review and copy information about the Funds
(including the SAI) at the Public Reference Room of the SEC in Washington, D.C.
Information on the operation of the Public Reference Room is available by
calling 202-942-8090. Reports and other information about the Funds are also
available on the EDGAR Database at the SEC's Internet site at
http://www.sec.gov. Copies of this information can be obtained, for a
duplicating fee, by E-mail request to publicinfo@sec.gov or by writing to the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
The file number under which the Trust is registered with the SEC under the
Investment Company Act of 1940 is 811-4066
Pacific
Capital Funds(R)
of
Cash Assets Trust
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Government Securities Cash Assets Trust
A cash management
investment
[LOGO]
PROSPECTUS
Original Shares
To make shareholder account inquiries, call the Funds' Shareholder
Servicing Agent at:
800-255-2287 toll-free
or you can write to
PFPC Inc.
101 Sabin Street
Pawtucket, RI 02860-1427
Ticker Symbol CUSIP #
PCCAT CATXX 14754H101
PCTFCAT TFCXX 14754H309
PCUSGSCAT USCXX 14754H200
This Prospectus should be read and retained for future reference.
Pacific
Capital Funds(R)
of
Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, NY 10017
800-CATS-4-YOU (800-228-7496)
212-697-6666
Service Shares
Prospectus July 31, 2008
Cash Assets Trust consists of three separate portfolios: Pacific
Capital Cash Assets Trust (the "Cash Fund") is a general purpose money-market
mutual fund which invests in short-term "money-market" securities. Pacific
Capital Tax-Free Cash Assets Trust (the "Tax-Free Fund") is a tax-exempt
money-market mutual fund which invests in short-term tax-exempt "money-market"
securities. Pacific Capital U.S. Government Securities Cash Assets Trust (the
"Government Securities Fund") is a money-market mutual fund which invests in
short-term direct obligations of the United States Treasury, in other
obligations issued or guaranteed by agencies or instrumentalities of the United
States Government and in certain repurchase agreements secured by U.S.
government securities. The Cash Fund, the Tax-Free Fund and the Government
Securities Fund are collectively referred to as the "Funds."
For purchase, redemption or account inquiries contact the Funds'
Shareholder Servicing Agent:
PFPC Inc.
101 Sabin Street
Pawtucket, RI 02860-1427
800-255-2287 toll-free
For general inquiries & yield information
800-228-7496 toll-free or 212-697-6666
The Securities and Exchange Commission has not approved or disapproved the
Trust's securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
TABLE OF CONTENTS
The Cash Fund: Objective, Investment Strategies,
Main Risks...........................................
Risk/Return Bar Chart and Performance Table .........
Fees and Expenses of the Fund........................
The Tax-Free Fund: Objective, Investment Strategies,
Main Risks...........................................
Risk/Return Bar Chart and Performance Table .........
Fees and Expenses of the Fund........................
The Government Securities Fund: Objective,
Investment Strategies, Main Risks....................
Risk/Return Bar Chart and Performance Table .........
Fees and Expenses of the Fund........................
Management of the Funds..............................
Net Asset Value per Share............................
Purchases ...........................................
Redeeming Your Investment............................
Distribution Arrangements............................
Dividends............................................
Tax Information......................................
Financial Highlights.................................
The Cash Fund: Objective, Investment Strategies, Main Risks
"What is the Cash Fund's objective?"
The objective of the Cash Fund, which is a fundamental policy, is to
achieve a high level of current income, stability and liquidity for investors'
cash assets by investing in a diversified portfolio of short-term "money-market"
securities meeting specific quality standards.
"What are the Cash Fund's investment strategies?"
The Cash Fund seeks to attain this objective by investing in short-term
money-market securities denominated in U.S. dollars that are of high quality and
present minimal credit risks.
Under the current management policies, the Cash Fund invests only in
the following types of obligations:
(1) Obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
(2) Bank obligations and instruments secured by them. ("Banks" include
commercial banks, savings banks and savings and loan associations and include
foreign banks and foreign branches of United States banks.)
(3) Short-term corporate debt known as "commercial paper."
(4) Corporate debt obligations (for example, bonds and debentures). Debentures
are a form of unsecured corporate debt.
(5) Variable amount master demand notes which are repayable on not more than 30
days' notice.
(6) Repurchase agreements.
(7) Shares of investment companies with money-market portfolios.
The Cash Fund seeks to maintain a net asset value of $1.00 per share.
In general, not more than 5% of the Cash Fund's net assets can be
invested in the securities of any issuer.
The dollar weighted average maturity of the Cash Fund will be 90 days
or less and the Cash Fund may buy only those instruments that have a remaining
maturity of 397 days or less.
Securities the Cash Fund buys must present minimal credit risks and at
the time of purchase be rated in the two highest rating categories for
short-term securities by any two of the nationally recognized statistical rating
organizations ("NRSROs") or, if unrated, be determined by the Board of Trustees
to be of comparable quality. Some securities may have third-party guarantees to
meet these rating requirements.
Asset Management Group of Bank of Hawaii (the "Adviser") seeks to
develop an appropriate portfolio by considering the differences among securities
of different issuers, yields, maturities and market sectors.
The Cash Fund may change any of its management policies without
shareholder approval.
"What are the main risks of investing in the Cash Fund?"
Although the Cash Fund seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose money by investing in the Cash Fund.
Investment in the Cash Fund is not a deposit in, nor endorsed or
guaranteed by, any bank, and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Because variable amount master demand notes are direct lending
arrangements between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for them. Variable
amount master demand notes repayable in more than seven days are securities
which are not readily marketable, and fall within the Cash Fund's overall 10%
limitation on securities which are illiquid. These notes are also subject to
credit risk.
Repurchase agreements involve some risk to the Cash Fund if the other
party does not fulfill its obligations under the agreement.
The value of money-market instruments tends to fall if prevailing
interest rates rise.
Corporate bonds and debentures are subject to interest rate and credit
risks.
There are two types of risk associated with the Cash Fund: interest
rate risk and credit risk.
*Interest rate risk relates to fluctuations in market value
arising from changes in interest rates. If interest rates rise, the value of
debt securities will normally decline. All fixed-rate debt securities, even the
most highly rated, are subject to interest rate risk.
*Credit risk relates to the ability of the particular issuers
of the obligations the Cash Fund owns to make periodic interest payments as
scheduled and ultimately repay principal at maturity.
Investments in foreign banks and foreign branches of United States
banks involve certain risks. Foreign banks and foreign branches of domestic
banks may not be subject to regulations that meet U.S. standards. Investments in
foreign banks and foreign branches of domestic banks may also be subject to
other risks, including future political and economic developments, the possible
imposition of withholding taxes on interest income, the seizure or
nationalization of foreign deposits and the establishment of exchange controls
or other restrictions.
Cash Fund
Risk/Return Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in the Cash Fund's Service Shares by showing changes in the
performance of the Cash Fund's Service Shares from year to year over a 10-year
period and by showing the Cash Fund's average annual returns for the designated
periods. How the Cash Fund has performed in the past is not necessarily an
indication of how the Cash Fund will perform in the future.
[Bar Chart]
Annual Total Returns
(Service Shares)
1998-2007
10%
8%
6% 5.69
4.80 XXXX
4% XXXX 4.38 XXXX 4.27 4.46
XXXX XXXX XXXX 3.22 XXXX XXXX
2% XXXX XXXX XXXX XXXX 2.44 XXXX XXXX
XXXX XXXX XXXX XXXX 1.17 0.69 0.85 XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Calendar Years
During the 10-year period shown in the bar chart, the highest return for a
quarter was 1.48% (quarter ended December 31, 2000) and the lowest return for a
quarter was 0.15% (quarter ended September 30, 2003).
The year-to-date (from January 1, 2008 to June 30, 2008) total return was
_____%.
Average Annual Total Return
For the period ended
December 31, 2007 1 Year 5 Years 10 Years
Pacific Capital Cash 4.46% 2.53% 3.18%
Assets Trust -
Service Shares
Please call (800) 228-7496 toll-free to obtain the Cash Fund's most current
seven-day yield.
Cash Fund
Fees and Expenses of the Fund
(Service Shares)
This table describes the fees and expenses that you may pay if you buy and hold
Service Shares of the Cash Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases.........................0.00%
Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends......................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Fund Operating Expenses (expenses that are
deducted from the Cash Fund's assets)
Investment Advisory Fee........................0.35%
Distribution (12b-1) Fee.......................0.25%
Other:
Administration Fee......................0.15%
Other Expenses(1).......................0.07%
Total(1).........................................0.22%
Total Annual Fund Operating Expenses(1)...........0.82%
(1) Does not reflect an offset in Cash Fund expenses received in the year ended
March 31, 2008 for uninvested cash balances. Reflecting this offset for that
year, total annual Cash Fund operating expenses were 0.81% for Service Shares.
Example
This Example is intended to help you compare the cost of investing in the
Service Shares of the Cash Fund with the cost of investing in other mutual
funds.
The Example assumes that you invest $10,000 in Service Shares of the Cash Fund
for the time periods indicated regardless of whether you redeem your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year, that you reinvest all dividends and distributions, and that
the Cash Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
$84 $262 $455 $1,014
The Tax-Free Fund: Objective, Investment Strategies, Main Risks
"What is the Tax-Free Fund's objective?"
The objective of the Tax-Free Fund, which is a fundamental policy, is
to provide safety of principal while achieving as high a level as possible of
liquidity and of current income exempt from Federal and Hawaii income taxes.
"What are the Tax-Free Fund's investment strategies?"
The Tax-Free Fund seeks to attain this objective by investing in
municipal obligations of Hawaiian issuers to the extent that obligations of the
desired quality, maturity and interest rate are available; otherwise by
investing in similar obligations of non-Hawaii issuers. These obligations must
have remaining maturities not exceeding 397 days, must be of high quality and
must present minimal credit risks. At least 80% of the Tax-Free Fund's assets
must be invested in Municipal Obligations (as defined below).
Under the current management policies, the Tax-Free Fund invests only
in the following types of obligations:
Municipal Obligations
As used in this Prospectus, the term "Municipal Obligations" means
obligations with maturities of 397 days or less paying interest which, in the
opinion of bond counsel or other appropriate counsel, is exempt from regular
Federal income taxes. "Hawaiian Obligations" are Municipal Obligations,
including those of Guam, the Northern Mariana Islands, Puerto Rico and the
Virgin Islands, paying interest which, in the opinion of bond counsel or other
appropriate counsel, is also exempt from Hawaii state income taxes.
Although the portion of dividends of the Tax-Free Fund paid from
interest on Hawaiian Obligations will be free of Hawaii state income tax, that
paid from interest on other Municipal Obligations will not. Since it is not
possible to predict the extent to which suitable Hawaiian Obligations will be
available for investment, the Tax-Free Fund has no investment restriction
limiting the proportion of its portfolio which it may invest in other Municipal
Obligations.
Although exempt from regular Federal income tax, interest paid on
certain types of Municipal Obligations, and dividends which the Tax-Free Fund
might pay from this interest, are preference items as to the Federal alternative
minimum tax. As a fundamental policy, at least 80% of the Tax-Free Fund's net
assets will be invested in Municipal Obligations the income paid upon which will
not be subject to the alternative minimum tax; accordingly, the Tax-Free Fund
can invest the rest of its assets in obligations which are subject to the
Federal alternative minimum tax. The Tax-Free Fund may refrain entirely from
purchasing these types of Municipal Obligations.
Municipal Obligations are debt obligations issued by or on behalf of
states, cities, municipalities and other public authorities. Such obligations
include:
Municipal Bonds
Municipal bonds generally have a maturity at the time of issuance of up
to 30 years. The Tax-Free Fund can purchase only those with a remaining maturity
of 13 months or less.
Municipal Notes
Municipal notes generally have maturities at the time of issuance of
three years or less. These notes are generally issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements or of other revenues.
The ability of an issuer to make payments is therefore dependent on these tax
receipts, proceeds from bond sales or other revenues, as the case may be.
Municipal Commercial Paper
Municipal commercial paper is a debt obligation with a stated maturity
of 397 days or less that is issued to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term debt.
Concentration
From time to time the Tax-Free Fund may invest 25% or more of its
assets in Municipal Obligations that are related in such a way that an economic,
business or political development or change affecting one of these obligations
would also affect the other obligations, for example, Municipal Obligations the
interest on which is paid from revenues of similar type projects or Municipal
Obligations whose issuers are located in the same state.
Other Investment Strategies
The Tax-Free Fund may purchase shares of investment companies with
money-market portfolios consisting only of Municipal Obligations.
Subject to authorization by the Board of Trustees, which is
anticipated, the Tax-Free Fund may invest in "tender option bonds," which are
floating or variable rate demand instruments paying interest at the prevailing
short-term tax-exempt rate, synthetically created in the secondary market by
their sponsors by coupling, in each case, a municipal bond with an option to
tender the bond at par.
The Tax-Free Fund seeks to maintain a net asset value of $1.00 per
share.
The dollar weighted average maturity of the Tax-Free Fund will be 90
days or less and the Tax-Free Fund may buy only those instruments that have a
remaining maturity of 397 days or less.
Securities the Tax-Free Fund buys must present minimal credit risks and
at the time of purchase be rated in the two highest rating categories for
short-term securities by any two of the NRSROs or, if they are unrated, be
determined by the Board of Trustees to be of comparable quality. Some securities
may have third-party guarantees to meet these rating requirements.
The Adviser seeks to develop an appropriate portfolio by considering
the differences among securities of different issuers, yields, maturities and
market sectors.
The Tax-Free Fund may change any of its management policies without
shareholder approval.
"What are the main risks of investing in the Tax-Free Fund?"
Although the Tax-Free Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Tax-Free Fund.
Hawaiian Obligations
The Tax-Free Fund's assets, being primarily Hawaiian issues, are
subject to economic and other conditions affecting Hawaii. Adverse local events,
such as a downturn in the Hawaiian economy, could affect the value of the
Tax-Free Fund's portfolio.
The following is a discussion of the general factors that might
influence the overall U.S. economy and the ability of Hawaiian issuers to repay
principal and interest when due on Hawaiian Obligations that the Trust owns. The
Trust has derived this information from sources that are generally available to
investors and believes it to be accurate, but it has not been independently
verified and it may not be complete.
TO BE UPDATED AS APPROPRIATE BY AMENDMENT
The US economy began to decelerate in 2006, ending the year with fourth
quarter GDP expanding at a 2.5 percent rate of growth in real GDP. Approximately
the same growth rate is likely during 2007, down from growth rates closer to 3
percent or 3.5 percent during the mid-2000s. A sharp decline in residential
investment-contracting at nearly 20 percent, in annualized terms, during second
half 2006-was the principal source of deceleration last year. During 2007
housing is expected to stabilize, with housing starts down to an annual pace of
1.4 to 1.5 million units, off from the 2.2 million unit peak at the end of 2005.
Balancing the housing recession has been double-digit growth in US exports,
around 10 percent in real terms, and resilience in personal consumption
expenditure. Exports comprise roughly twice the GDP share of residential
investment, and go a long way to sustaining the economy's momentum. A weaker
dollar and strong macroeconomic fundamentals overseas should keep US net exports
increasing in 2007. With consumption comprising 70 percent of GDP, concerns
about contagion from the housing decline are worrisome. Either adverse effects
of falling home prices, or a consumer pullback related to mortgage lending
worries, could impair consumption. The Adviser's expectation is that these
pressures may shave a percentage point or two off consumption growth, but even
at 2-3 percent its contribution to GDP growth will be neutral at worst in 2007.
Federal Reserve monetary policy is expected to keep short-term interest rates
high to pre-empt higher inflation, through most of 2007. Though US Treasury bond
yields are currently inverted relative to the overnight Fed Funds rate target at
5.25%, those bond yields embody the market's expectation of eventually lower
short-term interest rates, probably towards the end of 2007.
Hawaii had outperformed the mainland economy for several years ending
in 2006, but now and for the next several years Hawaii's growth rate will
probably fall short of the nation's. Although the US is experiencing full
employment with 4.5 percent unemployment and around 2.5 percent inflation-enough
to keep the Fed's monetary policy vigilant-Hawaii's unemployment/inflation mix
is even more potent. Recently, Hawaii's 2.0-2.5 percent monthly unemployment
rates have reflected an ultra-tight labor market and potential untoward wage
pressures. Honolulu's 5.9 percent inflation in 2006 is the flip side of an
overheated local economy. The economy's nominal growth rate was strong at 6
percent, but most of that was eaten up by inflation, leaving just a small real
growth rate. While the Honolulu CPI is expected to exhibit disinflation to maybe
4 percent in 2007, that will still be high relative to the US urban average.
Consequently, its effect on income growth is likely to lead to real economic
expansion of no more than 2 percent in the islands during 2007. Housing is also
in decline in Hawaii, as it is across the country, although nonresidential
construction makes up for some of the decline. Tourism seems to have hit a
plateau: after peaking at record levels in 2005, visitor counts, while remaining
at peak arrival numbers, have failed to trend higher and, adjusted for
inflation, visitor spending has been declining at a 2-3 percent rate. With the
housing boom ended, and the lift from tourism suspended, after years of record
growth, Hawaii's economy should expect slower growth for the next few years.
Other Main Risks
Investment in the Tax-Free Fund is not a deposit in, nor endorsed or
guaranteed by, any bank, and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
The Tax-Free Fund's right to obtain payment at par on a demand
instrument could be affected by events occurring between the date the Tax-Free
Fund elects to demand payment and the date payment is due that may affect the
ability of the issuer of the instrument to make payment when due, except when
such demand instrument permits same day settlement. To facilitate settlement,
these same day demand instruments may be held in book entry form at a bank other
than the Tax-Free Fund's custodian subject to a sub-custodial agreement approved
by the Tax-Free Fund between that bank and the Tax-Free Fund's custodian. Such
obligations are also subject to credit risk.
Repurchase agreements involve some risk to the Tax-Free Fund if the
other party does not fulfill its obligations under the agreement.
Tender option bonds are subject to credit risk and to the risk that
circumstances may arise in which the tender option terminates.
The value of money-market instruments tends to fall if prevailing
interest rates rise.
The taxable market is a broader and more liquid market with a greater
number of investors, issuers and market makers than the market for Municipal
Obligations. The more limited marketability of Municipal Obligations may make it
difficult in certain circumstances to dispose of large investments
advantageously. In general, Municipal Obligations are also subject to credit
risks such as the loss of credit ratings or possible default. In addition,
certain Municipal Obligations might lose tax-exempt status in the event of a
change in the tax laws.
Tax-Free Fund
Risk/Return Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in the Tax-Free Fund's Service Shares by showing changes in the
performance of the Tax-Free Fund's Service Shares from year to year over a
10-year period and by showing the Tax-Free Fund's average annual returns for the
designated periods. How the Tax-Free Fund has performed in the past is not
necessarily an indication of how the Tax-Free Fund will perform in the future.
[Bar Chart]
Annual Total Returns
(Service Shares)
1998-2007
10%
8%
6%
4%
2.74 2.54 3.38 2.70 2.88
2% XXXX XXXX XXXX 2.21 1.69 XXXX XXXX
XXXX XXXX XXXX XXXX 0.94 0.62 0.74 XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Calendar Years
During the 10-year period shown in the bar chart, the highest return for a
quarter was 0.89% (quarter ended December 31, 2000) and the lowest return for a
quarter was 0.12% (quarter ended September 30, 2003).
The year-to-date (from January 1, 2008 to June 30, 2008) total return was
_____%.
Average Annual Total Return
For the period 1 Year 5 Years 10 Years
ended December 31, 2007
Pacific Capital Tax-
Free Cash Assets Trust -
Service Shares 2.88% 1.72% 2.04%
Please call (800) 228-7496 toll-free to obtain the Tax-Free Fund's most current
seven-day yield.
Tax-Free Fund
Fees and Expenses of the Fund
(Service Shares)
This table describes the fees and expenses that you may pay if you buy and hold
Service Shares of the Tax-Free Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases.........................0.00%
Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends .....................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Fund Operating Expenses (expenses that are
deducted from the Tax-Free Fund's assets)
Investment Advisory Fee......................0.31%
Distribution (12b-1) Fee.....................0.25%
Other:
Administration Fee.....................0.09%
Other Expenses.........................0.07%
Total.......................................0.16%
Total Annual Fund Operating Expenses.........0.72%
Example
This Example is intended to help you compare the cost of investing in Service
Shares of the Tax-Free Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Service Shares of the Tax-Free
Fund for the time periods indicated regardless of whether you redeem your shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year, that you reinvest all dividends and distributions, and that
the Tax-Free Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
$74 $230 $401 $894
The Government Securities Fund:
Objective, Investment Strategies, Main Risks
"What is the Government Securities Fund's objective?"
The objective of the Government Securities Fund, which is a fundamental
policy, is to provide safety of principal while achieving as high a level as
possible of liquidity and of current income.
"What are the Government Securities Fund's investment strategies?"
The Government Securities Fund seeks to attain this objective by
investing only in short-term direct obligations of the United States Treasury,
in other obligations issued or guaranteed by agencies or instrumentalities of
the United States Government (with remaining maturities of one year or less), in
shares of investment companies with money-market portfolios which invest only in
U.S. government securities and in certain repurchase agreements secured by U.S.
government securities.
Under the current management policies, the Government Securities Fund
invests only in the following types of obligations:
U. S. Treasury Obligations
The U.S. Treasury issues various types of marketable securities,
consisting of bills, notes, bonds, and certificates of indebtedness, which are
all direct obligations of the U.S. government backed by its "full faith and
credit" and which differ primarily in the length of their maturity. The Fund may
also invest in separately traded principal and interest components of securities
issued by the United States Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS"). Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
These instruments may experience more market volatility than regular treasury
securities.
Other U.S. Government Securities
U.S. government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Farmers Home Administration,
Federal Farm Credit System, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Housing Administration, Federal National Mortgage
Association, Financing Corporation, Government National Mortgage Association,
Resolution Funding Corporation, Small Business Administration, Student Loan
Marketing Association and Tennessee Valley Authority.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the U.S.
Treasury. Others, such as securities issued by the Federal National Mortgage
Association, are supported only by the credit of the instrumentality and not by
the U.S. Treasury. If the securities are not backed by the full faith and credit
of the United States, the owner of the securities must look principally to the
agency issuing the obligation for repayment and may not be able to assert a
claim against the United States in the event that the agency or instrumentality
does not meet its commitment. The Government Securities Fund will invest in
government securities, including securities of agencies and instrumentalities,
only if the Adviser (pursuant to procedures approved by the Board of Trustees)
is satisfied that these obligations present minimal credit risks.
Investment Companies
The Government Securities Fund may purchase shares of investment
companies with money-market portfolios consisting only of U.S. Government
securities.
Repurchase Agreements
The Government Securities Fund may purchase securities subject to
repurchase agreements provided that such securities are U.S. government
securities. Repurchase agreements may be entered into only with commercial banks
or broker/dealers. Subject to the control of the Board of Trustees, the Adviser
will regularly review the financial strength of all parties to repurchase
agreements with the Government Securities Fund.
The Government Securities Fund seeks to maintain a net asset value of
$1.00 per share.
The dollar weighted average maturity of the Government Securities Fund
will be 90 days or less and the Government Securities Fund may buy only those
instruments that have a remaining maturity of 397 days or less.
Securities the Government Securities Fund buys must present minimal
credit risks and at the time of purchase be rated in the two highest rating
categories for short-term securities by any two of the NRSROs or, if they are
unrated, be determined by the Board of Trustees to be of comparable quality.
Some securities may have third-party guarantees to meet these rating
requirements.
The Adviser seeks to develop an appropriate portfolio by considering
the differences among securities of different issuers, yields, maturities and
market sectors.
The Government Securities Fund will purchase only those issues that it
believes will enable it to achieve and maintain the highest rating for a mutual
fund by two NRSROs. There is no assurance that it will be able to maintain such
rating. As a result of this policy, the range of obligations in which the
Government Securities Fund can invest is reduced and the yield obtained on such
obligations may be less than would be the case if this policy were not in force.
The Government Securities Fund may change any of its management
policies without shareholder approval.
"What are the main risks of investing in the Government Securities Fund?"
Although the Government Securities Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the Government Securities Fund.
Investment in the Government Securities Fund is not a deposit in, nor
endorsed or guaranteed by, any bank, and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Repurchase agreements involve some risk to the Government Securities
Fund if the other party does not fulfill its obligations under the agreement.
The value of money-market instruments tends to fall if prevailing
interest rates rise.
Government Securities Fund
Risk/Return Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in the Government Securities Fund's Service Shares by showing changes
in the performance of the Government Securities Fund's Service Shares from year
to year over a 10-year period and by showing the Government Securities Fund's
average annual returns for the designated periods. How the Government Securities
Fund has performed in the past is not necessarily an indication of how the
Government Securities Fund will perform in the future.
[Bar Chart]
Annual Total Returns
(Service Shares)
1998-2007
10%
8%
6% 5.63
4.70 XXXX
4% XXXX 4.32 XXXX 4.33 4.47
XXXX XXXX XXXX 3.43 XXXX XXXX
2% XXXX XXXX XXXX XXXX 2.48 XXXX XXXX
XXXX XXXX XXXX XXXX 1.18 0.75 0.91 XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Calendar Years
During the 10-year period shown in the bar chart, the highest return for a
quarter was 1.46% (quarter ended December 31, 2000) and the lowest return for a
quarter was 0.17% (quarter ended June 30, 2004).
The year-to-date (from January 1, 2008 to June 30, 2008) total return was
_____%.
Average Annual Total Return
For the period ended 1 Year 5 Years 10 Years
December 31, 2007
Pacific Capital U.S. 4.47% 2.58% 3.21%
Government Securities
Cash Assets Trust -
Service Shares
Please call (800) 228-7496 toll-free to obtain the Government Securities Fund's
most current seven-day yield.
Government Securities Fund
Fees and Expenses of the Fund
(Service Shares)
This table describes the fees and expenses that you may pay if you buy and hold
Service Shares of the Government Securities Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases.........................0.00%
Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends......................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Fund Operating Expenses (expenses that are deducted from the Government
Securities Fund's assets)
Investment Advisory Fee......................0.33%
Distribution (12b-1) Fee.....................0.25%
Other:
Administration Fee....................0.07%
Other Expenses........................0.03%
Total Expenses..............................0.10%
Total Annual Fund Operating Expenses.........0.68%
Example
This Example is intended to help you compare the cost of investing in Service
Shares of the Government Securities Fund with the cost of investing in other
mutual funds.
The Example assumes that you invest $10,000 in Service Shares of the Government
Securities Fund for the time periods indicated regardless of whether you redeem
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year, that you reinvest all dividends and
distributions, and that the Government Securities Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 year 3 years 5 years 10 years
$69 $218 $379 $847
Management of the Funds
"How are the Funds managed?"
Asset Management Group of Bank of Hawaii, Financial Plaza of the
Pacific, P.O. Box 3170, Honolulu, HI 96802, the Adviser, is the investment
adviser for each of the Funds. Aquila Investment Management LLC, 380 Madison
Avenue, Suite 2300, New York, NY 10017, the Administrator, is responsible for
administrative services, including providing for the maintenance of the
headquarters of the Funds, overseeing relationships between the Funds and the
service providers to the Funds, maintaining the Funds' books and records and
providing other administrative services.
Under the Advisory Agreements, the Adviser provides for investment
supervision, including supervising continuously the investment program of each
Fund and the composition of its portfolio; determining what securities will be
purchased or sold by each Fund; arranging for the purchase and the sale of
securities held in the portfolio of each Fund; and, at the Adviser's expense,
providing for pricing of each Fund's portfolio daily.
During the fiscal year ended March 31, 2008, each Fund paid a fee,
payable monthly and computed on the net asset value of the Fund as of the close
of business each business day, to the Adviser under the Advisory Agreement and
to the Administrator under the Administration Agreement as follows:
Current Advisory and Administration Fees
(Percent)
-------------------- ----------------- -------------- --------------------- ---------------
Fund Asset Level Advisory Administration Total
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Cash Fund $0 - $325 0.33% 0.17% 0.50%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $325 0.43% 0.07% 0.50%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Tax-Free Fund $0 - $95 Million 0.27% 0.13% 0.40%
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $95 0.33% 0.07% 0.40%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
U.S. Government $0 - $60 Million 0.27% 0.13% 0.40%
Fund
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $60 0.33% 0.07% 0.40%
Million
-------------------- ----------------- -------------- --------------------- ---------------
The agreements with both the Adviser and the Administrator contained a
provision that the management fees shall be reduced, but not below zero, by an
amount equal to the pro-rata portion (based upon the aggregate fees of the
Adviser and the Administrator) of the amount, if any, by which the total
expenses of each fund in any fiscal year, exclusive of taxes, interest and
brokerage fees, shall exceed the lesser of (i) 2.5% of the first $30 million of
average annual net assets of such fund plus 2% of the next $70 million of such
assets and 1.5% of its average annual net assets in excess of $100 million, or
(ii) 25% of the Fund's total annual investment income.
On July 16, 2008, the shareholders approved new advisory agreements for
each Fund. The Trustees had previously approved new administration agreements
for each Fund, all of which went into effect on July 16, 2008. The new
agreements eliminate the fee limitations described above and adopt the
management fees set forth in the following table:
Proposed Advisory and Administration Fees
(Percent)
-------------------- ----------------- -------------- --------------------- ---------------
Fund Asset Level Advisory Administration Total
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Cash Fund $0 - $400 0.397% 0.103% 0.50%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $400 0.364% 0.086% 0.45%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Tax-Free Fund $0 - $300 0.318% 0.082% 0.40%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $300 0.285% 0.065% 0.35%
Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
U.S. Government $0 - $1,900 0.328% 0.072% 0.40%
Fund Million
-------------------- ----------------- -------------- --------------------- ---------------
-------------------- ----------------- -------------- --------------------- ---------------
Above $1,900 0.295% 0.055% 0.35%
Million
-------------------- ----------------- -------------- --------------------- ---------------
A discussion regarding the Trustees' basis for approving the annual
renewal of the Investment Advisory Agreements is available in the Trust's
semi-annual report to shareholders dated September 30, 2007. The Trustees' basis
for approving the New Investment Advisory Agreements is discussed in the proxy
statement for the shareholders' meetings held July 16, 2008 and will also be
discussed in the Trust's semi-annual report to shareholders dated September 30,
2008.
Information about the Adviser and the Administrator
The Adviser is a division of Bank of Hawaii, all of whose shares are
owned by Bank of Hawaii Corporation ("BOH Corp."). BOH Corp. is a bank holding
company registered under the Bank Holding Company Act of 1956, as amended, and
its common stock is registered under the Securities Exchange Act of 1934 and is
listed and traded on the New York Stock Exchange. BOH Corp. files annual and
periodic reports with the Securities and Exchange Commission which are available
for public inspection.
The Funds' Administrator is a wholly-owned subsidiary of Aquila
Management Corporation ("AMC"), founder of each fund in the Aquila Group of
Funds, which consists of three money-market funds, seven tax-free municipal bond
funds, a high income corporate bond fund and an equity fund. As of June 30,
2008, these funds had aggregate assets of approximately $____ billion, of which
approximately $____ billion consisted of assets of the money-market funds. AMC's
address is the same as that of the Administrator. AMC, which was founded in
1984, is currently controlled by Mr. Lacy B. Herrmann and his wife, Mrs.
Elizabeth B. Herrmann, directly and through certain trusts. It is anticipated
that these arrangements will change.
Net Asset Value Per Share
The net asset value of the shares of each of the Funds' classes of
shares is determined as of 4:00 p.m., New York time, on each day that the New
York Stock Exchange and the Custodian are open (a "business day"), by dividing
the value of the Fund's net assets (which means the value of the assets less
liabilities) allocable to the class by the total number of shares of such class
outstanding at the time. The price at which a purchase or redemption of shares
is effected is based on the net asset value next calculated after your purchase
or redemption order is received in proper form.
The net asset value per share will normally remain constant at $1.00
per share except under extraordinary circumstances. The net asset value per
share is based on a valuation of the Fund's investments at amortized cost.
The New York Stock Exchange annually announces the days on which it
will not be open. The most recent announcement indicates that it will not be
open on the following days: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. However, the Exchange may close on days not
included in that announcement. In addition, the Custodian is not open on
Columbus Day and Veterans Day.
Purchases
Opening an Account
To open a new Service Shares account directly with any Fund, you must
send a properly completed New Account Application to PFPC Inc. (the "Agent").
The Funds will not honor redemption of shares purchased by wire payment until a
properly completed New Account Application has been received by the Agent. The
minimum initial investment is $1,000. Subsequent investments may be in any
amount.
You can make direct investments in Service Shares in any of these three
ways:
1. By Mail. You can make payment by check, money order, Federal Reserve
draft or other negotiable bank draft drawn in United States dollars on a United
States commercial or savings bank or credit union (each of which is a "Financial
Institution") payable to the order of Pacific Capital Cash Assets Trust, Pacific
Capital Tax-Free Cash Assets Trust or Pacific Capital U.S. Government Securities
Cash Assets Trust, as the case may be, and mailed to:
(Specify the name of the Fund)
Regular Mail Address:
PFPC Inc.
c/o Aquila Group of Funds
P.O. Box 9823
Providence, RI 02940-8023
Overnight Mail Address:
PFPC Inc.
c/o Aquila Group of Funds
101 Sabin Street
Pawtucket, RI 02860-1247
2. By Wire. You can wire Federal Funds (monies credited to a bank's
account with a Federal Reserve Bank) to PNC Bank, NA.
To insure prompt and proper crediting to your account, if you choose
this method of payment, you should first telephone the Agent (800-255-2287
toll-free) and then instruct your bank to wire funds to:
PNC BANK, NA
Philadelphia, PA
ABA No. 0310-0005-3
Account No. 85-0242-8425
Your bank's wire instructions should indicate the appropriate Fund as follows:
The Cash Fund:
FFC: Pacific Capital Cash Assets Trust - Service Shares
The Tax-Free Fund:
FFC: Pacific Capital Tax-Free Cash Assets Trust - Service Shares
The Government Securities Fund:
FFC: Pacific Capital U.S. Government Securities Cash Assets Trust -
Service Shares
In addition you should supply:
* Account name and number (if an existing account)
* The name in which the investment is to be registered (if a new
account).
Your bank may impose a charge for wiring funds.
3. Through Brokers. If you wish, you may invest in the Funds by purchasing
shares through registered broker/dealers.
The Funds impose no sales or service charge on purchases of Service
Shares, although financial intermediaries may make charges to their customers
for their services. The services to be provided and the fees therefor are
established by each financial intermediary acting independently; financial
intermediaries may also determine to establish, as to accounts serviced by them,
higher initial or subsequent investment requirements than those required by the
Funds. Financial intermediaries are responsible for prompt transmission of
orders placed through them.
Banks may offer an arrangement whereby their customers may invest in
Service Shares of any Fund by establishing a "sweep account" with them. A sweep
account connects an FDIC-insured checking account with an account with the
Funds. When money is transferred out of a checking account for investment in any
of the Funds, it is no longer covered by FDIC insurance. Because of the special
arrangements for automated purchases and redemptions of Service Shares that
sweep accounts involve, certain options or other features described in this
Prospectus (such as alternative purchase and redemption procedures, dividend and
distribution arrangements or share certificates) may not be available to persons
investing through such accounts. Investments through a sweep account are
governed by the terms and conditions of the account (including fees and expenses
associated with the account), which are typically set forth in agreements and
accompanying disclosure statements used to establish the account. You should
review copies of these materials before investing in a Fund through a sweep
account.
If you are not investing through a financial intermediary, you should
follow these instructions:
Opening An Account Adding to an Account
*Make out a check for the investment amount payable to the *Make out a check for the investment amount payable to
appropriate Fund. the appropriate Fund.
*Complete a New Account Application, which is available *Fill out the pre-printed stub attached to each Fund's
with the Prospectus or upon request, indicating the confirmations or supply the name(s) of account
features you wish to authorize. owner(s), the account number and the name of the Fund.
*Send your check and account information to your dealer
*Send your check and completed New Account Application to or to the Funds' Agent, PFPC Inc., or
your dealer or to the Funds' Agent, PFPC Inc., or
*Wire funds as described above.
*Wire funds as described above.
Be sure to supply the name(s) of account owner(s), the account number and the name of the Fund.
If you make additional investments in Service Shares through an account
with a financial intermediary, you will follow the procedures of the financial
intermediary, rather than the foregoing.
"Can I transfer funds electronically?"
You can have funds transferred electronically, in amounts of $50 or
more, from your Financial Institution if it is a member of the Automated
Clearing House. You may make investments through two electronic transfer
features, "Automatic Investment" and "Telephone Investment."
* Automatic Investment: You can authorize a pre-determined amount to be
regularly transferred from your account.
* Telephone Investment: You can make single investments of up to
$50,000 by telephone instructions to the Agent.
Before you can transfer funds electronically, the Funds' Agent must
have your completed New Account Application authorizing these features. If you
initially decide not to choose these conveniences and then later wish to do so,
you must complete a Ready Access Features Form which is available from the
Distributor, Aquila Distributors, Inc., or the Agent, or if your account is set
up so that your broker or dealer makes these sorts of changes, request your
broker or dealer to make them. The Funds may modify or terminate these
investment methods or charge a service fee, upon 30 days' written notice to
shareholders.
If you make additional investments in Service Shares through an account
with a financial intermediary, the procedures for such investments will be those
provided in connection with the account rather than the foregoing.
"In which states can I buy shares of the Funds?"
On the date of this Prospectus, Service Shares are available only in:
TO BE UPDATED
Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia,
Hawaii, Illinois, New York, Oregon, Pennsylvania, Rhode Island, South Carolina,
Virginia, Washington, Wisconsin and Guam.
"When are shares issued and dividends declared on them?"
The Funds issue shares two ways.
First Method - ordinary investments. You will be paid dividends
starting on the day (whether or not a Business Day) after the first Business Day
on which your purchase order has been received in proper form and funds have
become available for investment. You will be paid a dividend on the day on which
your shares are redeemed.
"When will my order become effective under the First Method?"
The Funds must have payment for your purchase available for investment
before 4:00 p.m. New York time on a Business Day for your order to be effective
on that Business Day. Your order is effective and you will receive the next
determined net asset value per share depending on the method of payment you
choose, as follows:
When will an order received before When will an order received after
4:00 p.m. on a Business Day be 4:00 p.m. on a Business Day be
Payment Method deemed effective? deemed effective?
By wire in Federal Funds or Federal That day. Next Business Day.
Reserve Draft.
By wire not in Federal Funds. 4:00 p.m. on the Business Day 4:00 p.m. on the Business Day
converted to Federal Funds (normally converted to Federal Funds (normally
the next Business Day). the next Business Day).
By Check. 4:00 p.m. on the Business Day 4:00 p.m. on the Business Day
converted to Federal Funds (normally converted to Federal Funds (normally
two Business Days for checks on two Business Days for checks on
banks in the Federal Reserve System, banks in the Federal Reserve System,
longer for other banks). longer for other banks).
Automatic Investment. The day you specify; if it is not a
Business Day, on the next Business
Day.
Telephone Investment. That day. Next Business Day.
All checks are accepted subject to collection at full face value in
United States funds and must be drawn in United States dollars on a United
States bank; if not, shares will not be issued. (The Agent will convert wires
and checks to Federal Funds as your agent.)
Second Method - For broker/dealers or banks which have requested that
this method be used, to which request a Fund has consented. You will be paid
dividends starting on the day on which your purchase order has been received in
proper form and funds have become available for investment. You will not be paid
a dividend on the day on which your shares are redeemed.
"When will my order be effective under the Second Method?"
Your purchase order is effective and your funds are deemed available
for investment on that day if
(i) You advise the Agent before 3:30 p.m. New York time on a Business
Day of a dollar amount to be invested in the Cash Fund or Government Securities
Fund and prior to noon of a dollar amount to be invested in the Tax-Free Fund;
and
(ii) Your payment in Federal Funds is received by wire on that day.
The second investment method is available to prospective investors in
shares of a Fund who wish to use it so that the dividends on their shares will
commence to be declared on the day the purchase order is effective. Upon written
or phone request the Funds will advise you as to the broker/dealers or banks
through which such purchases may be made.
The Agent will maintain records as to which of your shares were
purchased under each of the two investment methods set forth above. If you make
a redemption request and have purchased shares under both methods, the Agent
will, unless you request otherwise, redeem those shares first purchased,
regardless of the method under which they were purchased.
Under each method, shares are issued at the net asset value per share
next determined after the purchase order is received in proper form. Under each
method, the New Account Application must be properly completed and have been
received and accepted by the Agent; the Funds or the Distributor may also reject
any purchase order. Under each method, Federal Funds (see above) must either be
available to the Funds or the payment thereof must be guaranteed to the Funds so
that the Funds can be as fully invested as practicable.
Transfer on Death ("TOD") Registration
The Funds generally permit "transfer on death" ("TOD") registration of
shares purchased directly, so that on the death of the shareholder the shares
are transferred to a designated beneficiary or beneficiaries. Ask the Agent or
your broker/dealer for the Transfer on Death Registration Request Form. With it
you will receive a copy of the TOD Rules of the Aquila Group of Funds, which
specify how the registration becomes effective and operates. By opening a TOD
Account, you agree to be bound by the TOD Rules. TOD registration may not be
available if you invest through a financial intermediary.
Redeeming Your Investment
You may redeem some or all of your shares by a request to the Agent.
Shares will be redeemed at the next net asset value determined after your
request has been received in proper form.
There is no minimum period for investment in the Funds, except for
shares recently purchased by check or by Automatic or Telephone Investment as
discussed below.
If you purchased Service Shares of any Fund through broker/dealers,
banks and other financial institutions which serve as shareholders of record you
must redeem through those institutions, which are responsible for prompt
transmission of redemption requests.
How to Redeem Your Investment
By mail, send instructions to: By telephone, call: By FAX, send instructions to:
PFPC Inc. 800-255-2287 toll-free 508-599-1838
c/o Aquila Group of Fundssm
P.O. Box 9823
Providence, RI 02940-8023
For liquidity and convenience, the Funds offer expedited redemption.
Expedited Redemption Methods
(Non-Certificate Shares Only)
You may request expedited redemption for any shares not issued in
certificate form in three ways:
1. By Telephone. The Agent will take instructions from anyone by
telephone to redeem shares and make payments:
a) to a Financial Institution account you have previously
specified; or
b) by check in the amount of $50,000 or less, mailed to the
name and address on the account from which you are redeeming, provided that
neither the name nor the address has changed during the prior 30 days. You may
only redeem by check via telephone request once in any seven-day period.
Telephoning the Agent
Whenever you telephone the Agent, please be prepared to
supply:
account name(s) and number
name of the caller
the social security number(s) registered to the account
personal identification.
Note: Check the accuracy of your confirmation statements immediately
upon receipt. The Funds, the Agent, and the Distributor are not responsible for
losses resulting from unauthorized telephone transactions if the Agent follows
reasonable procedures designed to verify a caller's identity. The Agent may
record calls.
2. By FAX or Mail. You may request redemption payments to a
predesignated Financial Institution account by a letter of instruction sent to
the Agent, PFPC Inc., by FAX at 508-599-1838 or by mail to P.O. Box 9823,
Providence, RI 02940-8023. The letter, signed by the registered shareholder(s)
(no signature guarantee is required), must indicate:
account name(s)
account number
amount to be redeemed
any payment directions
To have redemption proceeds sent directly to a Financial Institution
account, you must complete the Expedited Redemption section of the New Account
Application or a Ready Access Features Form. You will be required to provide (1)
details about your Financial Institution account, (2) signature guarantees and
(3) possible additional documentation.
The name(s) of the shareholder(s) on the Financial Institution account
must be identical to the name(s) on the Funds' records of your account.
You may change your designated Financial Institution account at any
time by completing and returning a revised Ready Access Features Form.
3. By Check. The Agent will, upon request, provide you with forms of
drafts ("checks") drawn on PNC Bank, NA (the "Bank"). This feature is not
available if your shares are represented by certificates. These checks represent
a further alternative redemption means and you may make them payable to the
order of anyone in any amount of not less than $100. You will be subject to the
Bank's rules and regulations governing its checking accounts. If the account is
registered in more than one name, each check must be signed by each account
holder exactly as the names appear on the account registration, unless expressly
stated otherwise on your New Account Application.
There is no charge for the maintenance of this special check writing
privilege or for the clearance of any checks.
When such a check is presented to the Bank for payment, a sufficient
number of full and fractional shares in your account will be redeemed to cover
the amount of the check. This check writing redemption procedure enables you to
continue receiving dividends on those shares equaling the amount being redeemed
by check until such time as the check is actually presented to the Bank for
payment.
Because these checks are paid by redemption of shares in your account,
you should be certain that adequate shares are in the account to cover the
amount of the check. If insufficient redeemable shares are in the account, the
redemption check will be returned marked "insufficient funds." The fact that
redemption checks are drafts may also permit a bank in which they are deposited
to delay crediting the account in question until that bank has received payment
funds for the redemption check. Note: You cannot use checks to redeem shares
represented by certificates. If you purchase shares by check, you cannot use
checks to redeem them until 15 days after your purchase.
You may not present checks directly to any branch of the Bank. This
does not affect checks used for the payment of bills or cashed at other banks.
You may not use checks to redeem the entire balance of your account, since the
number of shares in your account changes daily through dividend payments which
are automatically reinvested in full and fractional shares. Only expedited
redemption to a predesignated bank account or the regular redemption method (see
below) may be used when closing your account.
Multiple Redemption Services. You are not limited in choice of
redemption methods but may utilize all available forms. However, when both
redemption to a predesignated Financial Institution account and check writing
are desired, you must so elect on your New Account Application, or by proper
completion of a Ready Access Features Form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
Certificate Shares. Mail to the Funds' Agent: (1) blank (unsigned)
certificates for Service Shares to be redeemed, (2) redemption instructions, and
(3) a stock assignment form.
To be in "proper form," items (2) and (3) above must be signed by the
registered shareholder(s) exactly as the account is registered. For a joint
account, both shareholder signatures are necessary.
For your protection, mail certificates separately from signed
redemption instructions. We recommend that certificates be sent by registered
mail, return receipt requested.
We may require additional documentation for certain types of
shareholders, such as corporations, partnerships, trustees or executors, or if
redemption is requested by someone other than the shareholder of record.
Signature_Guarantees. If sufficient documentation is on file, we do not
require a signature guarantee for redemptions of certificate or
non-certificate shares up to $50,000, payable to the record holder, and sent
to the address of record. In all other cases, signatures must be guaranteed.
Your signature may be guaranteed by any:
member of a national securities exchange
U.S. bank or trust company
state-chartered savings bank
federally chartered savings and loan association
foreign bank having a U.S. correspondent bank; or
participant in the Securities Transfer Association Medallion
Program ("STAMP"), the Stock Exchanges Medallion Program ("SEMP")
or the New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
A notary public is not an acceptable signature guarantor.
Non-Certificate Shares. You must use the Regular Redemption Method if
you have not chosen Expedited Redemption. To redeem by this method, send a
letter of instruction to the Funds' Agent, which includes:
account name(s)
account number
dollar amount or number of shares to be redeemed or a statement
that all shares held in the account are to be redeemed
payment instructions (we normally mail redemption proceeds to your
address as registered with a Fund)
signature(s) of the registered shareholder(s) and
signature guarantee(s), if required, as indicated above after
"Certificate Shares."
"When will I receive the proceeds of my redemption?"
Redemption proceeds are normally sent on the next business day
following receipt of your redemption request in proper form. Except as described
below, payments will normally be sent to your address of record within seven
days.
Redemption Method of Payment Charges
Under $1,000. Check. None.
$1,000 or more. Check, or wired or transferred None.
through the Automated Clearing House
to your Financial Institution
account if you so requested on your
New Account Application or Ready
Access Features Form.
Through a broker/dealer. Check or wire, to your broker/dealer. None. However, your broker/dealer
may charge a fee.
Although the Funds do not currently intend to, any Fund may impose a
charge, up to $5.00 per wire redemption, after written notice to shareholders
who have elected this redemption procedure. Upon 30 days' written notice to
shareholders, any Fund may modify or terminate the use of the Automated Clearing
House to make redemption payments at any time or charge a service fee, although
no such fee is presently contemplated. If any such changes are made, the
Prospectus will be supplemented to reflect them. If you use a broker or dealer
to arrange for a redemption, you may be charged a fee for this service.
The Funds may delay payment for redemption of shares recently purchased
by check (including certified, cashier's or official bank check), Automatic
Investment or Telephone Investment for up to 15 days after purchase; however,
payment for redemption will not be delayed after (i) the check or transfer of
funds has been honored, or (ii) the Agent receives satisfactory assurance that
your Financial Institution will honor the check or transfer of funds. You can
eliminate possible delays by paying for purchased shares with wired funds or
Federal Reserve drafts.
The Funds have the right to postpone payment or suspend redemption
rights during certain periods. These periods may occur (i) when the New York
Stock Exchange is closed for other than weekends and holidays, (ii) when the
Securities and Exchange Commission (the "SEC") restricts trading on the New York
Stock Exchange, (iii) when the SEC determines that an emergency exists which
causes disposal of, or determination of the value of, portfolio securities to be
unreasonable or impracticable, and (iv) during such other periods as the SEC may
permit.
Any Fund can redeem your shares if their value totals less than $500 as
a result of redemptions or failure to meet and maintain the minimum investment
level under an Automatic Investment Program. Before such a redemption is made,
we will send you a notice giving you 60 days to make additional investments to
bring your account up to the minimum.
Redemption proceeds may be paid in whole or in part by distribution of
a Fund's portfolio securities ("redemption in kind") in conformity with SEC
rules. This method will only be used if the Board of Trustees determines that
payments partially or wholly in cash would be detrimental to the best interests
of the remaining shareholders.
"Is there an Automatic Withdrawal Plan?"
An Automatic Withdrawal Plan, which is available only for shares
purchased directly and not for shares purchased through a financial
intermediary, allows you to arrange to receive a monthly or quarterly check in a
stated amount, not less than $50.
Distribution Arrangements
Confirmations and Share Certificates
If you invest in a Fund directly, rather than through a financial
intermediary, all purchases and redemptions of Service Shares will be confirmed
and credited to you in an account maintained for you by the Agent in full and
fractional shares of the Fund being purchased (rounded to the nearest 1/1000th
of a share). Share certificates will not be issued unless you so request from
the Agent in writing and declare a need for such certificates, such as a pledge
of shares or an estate situation. If certificates are issued at your request,
Expedited Redemption Methods described above will not be available and delay and
expense may be incurred if you lose the certificates. The Funds will not issue
certificates for fractional shares or to shareholders who have elected the
checking account or predesignated bank account methods of withdrawing cash from
their accounts. Share certificates may not be available to investors who
purchase Service Shares through an account with a financial intermediary.
The Funds and the Distributor may reject any order for the purchase of
shares. In addition, the offering of shares may be suspended at any time and
resumed at any time thereafter.
Distribution Plan
Each Fund has adopted a Distribution Plan under Rule 12b-1 ("Rule
12b-1") under the 1940 Act. Rule 12b-1 provides in substance that an investment
company may not engage directly or indirectly in financing any activity which is
primarily intended to result in the sale of its shares except pursuant to a plan
adopted under that rule. One section of the first part of the Distribution Plan
of each Fund is designed to protect against any claim against or involving the
Fund that some of the expenses which the Fund pays or may pay come within the
purview of Rule 12b-1. Another section of the first part of the Distribution
Plan authorizes the Administrator, not the Fund, to make certain payments to
certain Qualified Recipients (as defined in the Distribution Plan) which have
rendered assistance in the distribution and/or retention of the Funds' shares.
For the Cash Fund, these payments may not exceed 0.15 of 1% of the average
annual net assets of the Fund for a fiscal year; for the Tax-Free Fund and the
Government Securities Fund, the rate is 0.10 of 1%.
The second part of each Distribution Plan provides for payments by each
Fund out of its assets to broker/dealers, other financial institutions and
service providers which have entered into appropriate agreements with the
Distributor. The total payments under this part of each Distribution Plan may
not exceed 0.25 of 1% of the average annual assets of that Fund represented by
its Service Shares. A recipient of such payments may pass on a portion of the
payments it receives to other financial institutions or service organizations.
Payments are made only from those Fund assets represented by Service Shares.
Because these distribution fees are paid out of each Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment.
Dividends
The Funds will declare all of their net income for dividend purposes
daily as dividends. If you redeem all of your shares, you will be credited on
the redemption payment date with the amount of all dividends declared for the
month through the date of redemption, or through the day preceding the date of
redemption in the case of shares issued under the "second" method.
You will receive monthly a summary of your account, including
information as to dividends paid during the month and the shares credited to
your account through reinvestment of dividends.
Dividends paid by each Fund with respect to Service Shares and Original
Shares (the Fund's other class of shares) will be calculated in the same manner,
at the same time, on the same day, and will be in the same amount except that
any class expenses (including payments made by Service Shares under the
Distribution Plan) will be borne exclusively by that class. Dividends on
Original Shares are expected generally to be higher than those on Service Shares
because expenses allocated to Service Shares will generally be higher.
Dividends will be taxable to you as ordinary income (except as
described in "Tax Information Concerning the Tax-Free Fund" below), even though
reinvested. Statements as to the tax status of your dividends will be mailed
annually.
It is possible but unlikely that a Fund may have realized long-term
capital gains or losses in a year.
Dividends of each Fund will automatically be reinvested in full and
fractional shares of the same class at net asset value unless you elect
otherwise.
You may choose to have all or any part of the payments for dividends or
distributions paid in cash. You can elect to have the cash portion of your
dividends and distributions deposited, without charge, by electronic funds
transfers into your account at a financial institution, if it is a member of the
Automated Clearing House.
You can make any of these elections on the New Account Application, by
a Ready Access Features Form or by a letter to the Agent. Your election to
receive some or all of your dividends and distributions in cash will be
effective as of the next payment of dividends after it has been received in
proper form by the Agent. It will continue in effect until the Agent receives
written notification of a change.
Whether your dividends and distributions are paid in cash or
reinvested, you will receive a monthly statement indicating the current status
of your investment account.
If you do not comply with laws requiring you to furnish taxpayer
identification numbers and report dividends, the Funds may be required to impose
backup withholding at a rate of 28% upon payment of redemptions and dividends.
The Funds reserve the right to change the dividend and distribution
payment option on your account to "reinvest" if mail sent to the address on your
account is returned by the post office as "undeliverable" and you have elected
to have your account dividends and/or distributions paid in cash. In such event,
the Funds would then purchase additional shares of the Funds with any dividend
or distribution payments that are "undeliverable". In order to change the option
back to "cash", you would need to send the Agent written instructions as
described above.
Tax Information
Tax Information Concerning the Tax-Free Fund
The Tax-Free Fund seeks to pay "exempt-interest dividends."
These are dividends derived from net income received by the Tax-Free Fund on
its Municipal Obligations. Such dividends are exempt from regular Federal
income tax. The Fund will allocate exempt-interest dividends by applying one
designated percentage to all income dividends it declares during its tax year.
It will normally make this designation in the first month following its fiscal
year end for dividends paid in the prior year.
Some portion of the Tax-Free Fund's distributions may be taxable. A
shareholder receiving a dividend, for example, from net interest income earned
by the Tax-Free Fund from one or more of (i) Taxable Obligations and (ii) income
from repurchase agreements and securities loans treats the dividend as a receipt
of ordinary income in the computation of the shareholder's gross income
regardless of whether it is reinvested in Tax-Free Fund shares; such dividends,
in addition to capital gains distributions, are not included in exempt-interest
dividends. Although exempt-interest dividends are not subject to regular Federal
income tax, each taxpayer must report the total amount of tax-exempt interest
(including exempt-interest dividends from the Tax-Free Fund) received or
acquired during the year. Exempt-interest dividends are taken into account in
determining the taxable portion of any Social Security or Railroad Retirement
benefit you or your spouse receives.
Under the Internal Revenue Code, interest on loans incurred by
shareholders to enable them to purchase or carry shares of the Tax-Free Fund may
not be deducted for regular Federal tax purposes. In addition, under rules used
by the Internal Revenue Service for determining when borrowed funds are deemed
used for the purpose of purchasing or carrying particular assets, the purchase
of shares of the Tax-Free Fund may be considered to have been made with borrowed
funds even though the borrowed funds are not directly traceable to the purchase
of shares.
If you, or someone related to you, is a "substantial user" of
facilities financed by industrial development or private activity bonds, you
should consult your own tax adviser before purchasing shares of the Tax-Free
Fund.
Interest from all Municipal Obligations is tax-exempt for purposes of
computing the shareholder's regular Federal tax. However, interest from
so-called private activity bonds issued after August 7, 1986, constitutes a tax
preference for both individuals and corporations and thus will enter into a
computation of the alternative minimum tax ("AMT"). Whether or not that
computation will result in a tax will depend on the entire content of your
return. The Tax-Free Fund will not invest more than 20% of its assets in the
types of Municipal Obligations that pay interest subject to AMT. The 20% limit
is a fundamental policy of the Tax-Free Fund; it cannot be changed without
shareholder approval. An adjustment required by the Internal Revenue Code will
tend to make it more likely that corporate shareholders will be subject to AMT.
They should consult their tax advisers.
Hawaiian Tax Information
Dividends and distributions made by the Tax-Free Fund to Hawaii
residents may be treated for Hawaii income tax purposes in the same manner as
they are treated under the Internal Revenue Code for Federal income tax
purposes. Under Hawaii law, however, interest derived from obligations of states
(and their political subdivisions) other than Hawaii will not be exempt from
Hawaii income taxation. (Interest derived from bonds or obligations issued by or
under the authority of the following is exempt from Hawaii income taxation:
Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands.) For the
calendar years 2007, 2006 and 2005, the percentage of the Tax-Free Fund's
dividends exempt from State of Hawaii income taxes was 30.69%, 25.68% and 21.09%
respectively, which should not be considered predictive of future results.
Interest on Hawaiian Obligations, tax-exempt obligations of states
other than Hawaii and their political subdivisions, and obligations of the
United States or its possessions is not exempt from the Hawaii Franchise Tax.
This tax applies to banks (other than a national banking association), building
and loan associations, financial services loan companies, financial
corporations, and small business investment companies, trust companies, mortgage
loan companies, financial holding companies, development companies, and
subsidiaries, located or doing business in Hawaii.
Persons or entities who are not Hawaii residents should not be subject
to Hawaii income taxation on dividends and distributions made by the Tax-Free
Fund but may be subject to other state and local taxes.
Shareholders of the Fund should consult their tax advisers about other
state and local tax consequences of their investment in the Fund.
Hawaiian Tax Information Concerning the Government Securities Fund
The Director of Taxation of Hawaii has stated to the Government
Securities Fund that dividends paid by a regulated investment company from
interest it receives on United States Government obligations will be exempt from
State of Hawaii income tax. For the calendar years 2007, 2006 and 2005, the
percentage of the Government Securities Fund's dividends exempt from State of
Hawaii income taxes was 99.93%, 99.85% and 99.56% respectively, which should not
be considered predictive of future results. Dividends paid from other types of
interest (including interest on U.S. Treasury repurchase transactions), and
capital gains distributions, if any, will be taxable.
Pacific Capital
Cash Assets Trust
Service Shares
Financial Highlights
(For a Share Outstanding Throughout Each Period)
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in Service Shares of the Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by Tait, Weller & Baker
LLP (independent registered public accounting firm), whose report, along with
the Fund's financial statements, is included in the annual report, is
incorporated by reference into the SAI and is available upon request.
TO BE UPDATED
Year Ended March 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ ................ 0.04 0.03 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income .. (0.04) (0.03) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ............................ 4.49% 2.94% 1.11% 0.65% 1.09%
Ratios/supplemental data
Net assets, end of period (in millions) $ 166 $ 169 $ 166 $ 119 $ 123
Ratio of expenses to average net assets 0.82% 0.83% 0.61% 0.46% 0.61%
Ratio of net investment income to
average net assets .................. 4.40% 2.91% 1.12% 0.65% 1.10%
The expense and net investment income ratios without the effect of the Adviser's
and Administrator's contractual caps on fees were:
Ratio of expenses to average net assets ++ ++ 0.81% 0.82% 0.83%
Ratio of net investment income to
average net assets .................. ++ ++ 0.91% 0.29% 0.88%
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of expenses to average net assets 0.82% 0.83% 0.61%* 0.46%* 0.61%*
----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ No reduction in the Adviser's and the Administrator's fees was required
during the period.
* Net of contractual caps on fees.
Pacific Capital
Tax-Free Cash Assets Trust
Service Shares
Financial Highlights
(For a Share Outstanding Throughout Each Period)
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in Service Shares of the Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by Tait, Weller & Baker
LLP (independent registered public accounting firm), whose report, along with
the Fund's financial statements, is included in the annual report, is
incorporated by reference into the SAI and is available upon request.
TO BE UPDATED
Year Ended March 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ ................. . 0.03 0.02 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... . (0.03) (0.02) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ............................ 2.83% 1.96% 0.90% 0.59% 0.90%
Ratios/supplemental data
Net assets, end of period (in millions) $ 88 $ 93 $ 72 $ 50 $ 56
Ratio of expenses to average net assets 0.75% 0.75% 0.53% 0.42% 0.53%
Ratio of net investment income to
average net assets .................. 2.78% 1.94% 0.92% 0.59% 0.89%
The expense and net investment income ratios without the effect of the Adviser's
and Administrator's contractual caps on fees were:
Ratio of expenses to average net assets ++ ++ 0.75% 0.77% 0.76%
Ratio of net investment income to
average net assets .................. ++ ++ 0.71% 0.25% 0.66%
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of expenses to average net assets . . 0.75% 0.75% 0.53%* 0.42%* 0.52%*
----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ No reduction in the Adviser's and the Administrator's fees was required
during the period.
* Net of Contractual caps on fees.
Pacific Capital
U. S. Government Securities Cash Assets Trust
Service Shares
Financial Highlights
(For a Share Outstanding Throughout Each Period)
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in Service Shares of the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Tait, Weller & Baker LLP
(independent registered public accounting firm), whose report, along with the
Fund's financial statements, is included in the annual report, is incorporated
by reference into the SAI and is available upon request.
TO BE UPDATED
Year Ended March 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ ................ 0.04 0.03 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income .. (0.04) (0.03) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ............................ 4.54% 3.00% 1.16% 0.71% 1.09%
Ratios/supplemental data
Net assets, end of period (in millions) $ 1,079 $ 887 $ 578 $ 575 $ 448
Ratio of expenses to average net assets 0.69% 0.70% 0.52% 0.36% 0.49%
Ratio of net investment income to
average net assets .................. 4.46% 3.02% 1.16% 0.71% 1.08%
The expense and net investment income ratios without the effect of the Adviser's
and Administrator's contractual caps on fees were:
Ratio of expenses to average net assets ++ ++ 0.70% 0.71% 0.71%
Ratio of net investment income to
average net assets .................. ++ ++ 0.98% 0.36% 0.86%
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of expenses to average net assets 0.69% 0.70% 0.52%* 0.36%* 0.49%*
----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ No reduction in the Adviser's and the Administrator's fees was required
during the period.
* Net of contractual caps on fees.
[Inside Back Cover]
Investment Adviser
Asset Management Group of
Bank of Hawaii
P.O. Box 3170 Honolulu, Hawaii 96802
Administrator
Aquila Investment Management LLC
380 Madison Avenue, Suite 2300
New York, New York 10017
Trustees
Theodore T. Mason, Chair
Diana P. Herrmann, Vice Chair
Thomas W. Courtney
Stanley W. Hong
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
Chairman Emeritus and Founder
Lacy B. Herrmann
Officers
Diana P. Herrmann, President
Charles E. Childs, III, Executive Vice President
Sherri Foster, Vice President
Robert W. Anderson, Chief Compliance Officer
Joseph P. DiMaggio, Chief Financial Officer and Treasurer
Edward M.W. Hines, Secretary
Distributor
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017
Transfer And Shareholder Servicing Agent
PFPC Inc.
101 Sabin Street
Pawtucket, Rhode Island 02860
Custodian
JPMorgan Chase Bank, N.A.
1111 Polaris Parkway
Columbus, Ohio 43240
Independent Registered Public Accounting Firm
Tait, Weller & Baker LLP
1818 Market Street
Suite 2400
Philadelphia, Pennsylvania 19103
Counsel
Butzel Long, a professional corporation
380 Madison Avenue
New York, New York 10017
This Prospectus concisely states information about the Funds that you should
know before investing. A Statement of Additional Information about the Funds
(the "SAI") has been filed with the Securities and Exchange Commission. The SAI
contains information about the Funds and their management not included in this
Prospectus. The SAI is incorporated by reference in its entirety in this
Prospectus and is therefore legally a part of this Prospectus. Only when you
have read both this Prospectus and the SAI are all material facts about the
Funds available to you.
You can get additional information about the Funds' investments in the
Funds' annual and semi-annual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during their last
fiscal year. You can get the SAI and the Funds' annual and semi-annual reports
without charge, upon request, by calling 800-255-2287 (toll-free) or by visiting
the Funds' website at www.aquilafunds.com.
In addition, you can review and copy information about the Funds
(including the SAI) at the Public Reference Room of the SEC in Washington, D.C.
Information on the operation of the Public Reference Room is available by
calling 202-942-8090. Reports and other information about the Funds are also
available on the EDGAR Database at the SEC's Internet site at
http://www.sec.gov. Copies of this information can be obtained, for a
duplicating fee, by E-mail request to publicinfo@sec.gov or by writing to the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
The file number under which the Trust is registered with the SEC under the
Investment Company Act of 1940 is 811-4066
Pacific
Capital Funds(R)
of
Cash Assets Trust
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Government Securities Cash Assets Trust
A cash management
investment
[LOGO]
PROSPECTUS
Service Shares
To make shareholder account inquiries, call the Funds' Shareholder
Servicing Agent at:
800-255-2287 toll-free
or you can write to
PFPC Inc.
101 Sabin Street
Pawtucket, RI 02860-1427
Ticker Symbol CUSIP #
PCCAT CASXX 14754H408
PCTFCAT TFAXX 14754H507
PCUSGSCAT UCSXX 14754H606
This Prospectus should be read and retained for future reference
Pacific
Capital Funds(R)
of
CASH ASSETS TRUST
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Government Securities Cash Assets Trust
380 Madison Avenue, Suite 2300
New York, NY 10017
212-697-6666
800-CATS-4-YOU (800-228-7496)
Statement of Additional Information July 31, 2008
This Statement of Additional Information (the "SAI") is not a
Prospectus. It relates to Cash Assets Trust (the "Trust") which has three
separate funds, Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash
Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust
(each a "Fund" and collectively, the "Funds"). There are two Prospectuses for
the Funds dated July 31, 2008: one for Original Class Shares ("Original
Shares"), the other for Service Class Shares ("Service Shares") of the Funds.
References in this SAI to "the Prospectus" refer to either of these
Prospectuses. The SAI should be read in conjunction with the Prospectus for the
class of shares in which you are considering investing.
Prospectuses may be obtained from the Fund's Distributor,
Aquila Distributors, Inc.,
380 Madison Avenue, Suite 2300
New York, NY 10017
800-228-7496 toll-free
or 212-697-6666
Financial Statements
The financial statements for each Fund for the year ended March 31,
2008, which are contained in the Annual Report for that fiscal year, are hereby
incorporated by reference into this SAI. Those financial statements have been
audited by Tait, Weller & Baker LLP, the Trust's independent registered public
accounting firm, whose report thereon is incorporated herein by reference. The
Annual Report of each Fund can be obtained without charge by calling the
toll-free number listed above. The Annual Report will be delivered with the SAI.
TABLE OF CONTENTS
Trust History................................................................._
Investment Strategies and Risks..............................................._
Policies of the Funds........................................................._
Management of the Funds......................................................__
Ownership of Securities......................................................__
Investment Advisory and Other Services.......................................__
Brokerage Allocation and Other Practices.....................................__
Capital Stock................................................................__
Purchase, Redemption, and Pricing of Shares..................................__
Exchange Privileges..........................................................__
Taxation of the Trust........................................................__
Underwriter..................................................................__
Appendix A...................................................................__
CASH ASSETS TRUST
STATEMENT OF ADDITIONAL INFORMATION
Trust History
Cash Assets Trust (the "Trust") is a Massachusetts business trust. It
is an open-end, non-diversified management investment company formed in 1984.
The Trust consists of three separate funds: Pacific Capital Cash Assets Trust
(the "Cash Fund"), Pacific Capital Tax-Free Cash Assets Trust (the "Tax-Free
Fund") and Pacific Capital U.S. Government Securities Cash Assets Trust (the
"Government Securities Fund"). They are collectively referred to as the "Funds."
Until April 1, 1998, the Government Securities Fund was called the Treasuries
Fund.
Investment Strategies and Risks
The investment objective and policies of each Fund are described in the
Prospectuses, which refer to the investments and investment methods described
below.
Additional Information About the Cash Fund's Investments
Under the current management policies, the Cash Fund invests only in
the following types of obligations:
(1) U.S. Government Securities: Obligations issued or guaranteed by the
U.S. government or its agencies or instrumentalities.
(2) Bank Obligations and Instruments Secured by Them: Bank obligations
(i) of U.S. regulated banks having total assets of at least $1.5 billion, which
may be domestic banks, foreign branches of such banks or U.S. subsidiaries of
foreign banks; (ii) of any foreign bank having total assets equivalent to at
least $1.5 billion; or (iii) that are fully insured as to principal by the
Federal Deposit Insurance Corporation. ("Banks" includes commercial banks,
savings banks and savings and loan associations.)
(3) Commercial Paper: Short-term corporate debt.
(4) Corporate Debt Obligations: Debt obligations issued by corporations
(for example, bonds and debentures). Debentures are a form of unsecured debt
issued by corporations.
(5) Variable Amount Master Demand Notes: Variable amount master demand
notes repayable on not more than 30 days' notice. These notes permit the
investment of fluctuating amounts by the Cash Fund at varying rates of interest
pursuant to direct arrangements between the Cash Fund, as lender, and the
borrower. They permit daily changes in the amounts borrowed. The Cash Fund has
the right to increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty. Variable
amount master demand notes may or may not be backed by bank letters of credit.
(6) Certain Other Obligations: Obligations other than those listed in 1
through 5 above only if such other obligations are guaranteed as to principal
and interest by either a bank in whose obligations the Cash Fund may invest (see
2 above) or a corporation in whose commercial paper the Cash Fund may invest
(see 3 above). If the Cash Fund invests more than 5% of its net assets in such
other obligations, the Prospectus will be supplemented to describe them.
(7) Repurchase Agreements: The Cash Fund may purchase securities
subject to repurchase agreements with commercial banks and broker-dealers
provided that such securities consist entirely of U.S. Government securities or
securities that, at the time the repurchase agreement is entered into, are rated
in the highest rating category by two or more nationally recognized statistical
rating organizations ("NRSROs").
(8) When-Issued or Delayed Delivery Securities: The Cash Fund may buy
securities on a when-issued or delayed delivery basis. The Cash Fund may not
enter into when-issued commitments exceeding in the aggregate 15% of the market
value of the Cash Fund's total assets, less liabilities other than the
obligations created by when-issued commitments. When-issued securities are
subject to market fluctuation and no interest accrues to the Cash Fund until
delivery and payment take place; their value at the delivery date may be less
than the purchase price.
(9) The Cash Fund may purchase shares of investment companies with
money-market portfolios.
Further Information About Variable Amount Master Demand Notes
Because variable amount master demand notes are direct lending
arrangements between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for them. They are
redeemable (and thus repayable by the borrower) at principal amount, plus
accrued interest, at any time on not more than thirty days' notice. Except for
those notes which are payable at principal amount plus accrued interest within
seven days after demand, such notes fall within the SEC's overall 10% limitation
on securities with possible limited liquidity. There is no limitation on the
type of issuer from which these notes will be purchased; however, all such notes
must be "First Tier Securities" (as defined in Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act")) and in connection with such purchases and
on an ongoing basis, Asset Management Group of the Bank of Hawaii (the
"Adviser") will consider the earning power, cash flow and other liquidity ratios
of the issuer, and its ability to pay principal and interest on demand,
including a situation in which all holders of such notes make demand
simultaneously. Master demand notes as such are not typically rated by credit
rating agencies and if not so rated the Fund may, under its minimum rating
standards, invest in them only if at the time of an investment they are
determined to be comparable in quality to rated issues in which the Fund can
invest.
Information About Insured Bank Obligations
The Federal Deposit Insurance Corporation ("FDIC") insures the deposits
of Federally insured banks and savings institutions (collectively herein,
"banks") up to $100,000. The Cash Fund may purchase bank obligations which are
fully insured as to principal by the FDIC. To remain fully insured as to
principal, these investments must currently be limited to $100,000 per bank; if
the principal amount and accrued interest together exceed $100,000 then the
excess accrued interest will not be insured. Insured bank obligations may have
limited marketability; unless such obligations are payable at principal amount
plus accrued interest on demand or within seven days after demand, or the Board
of Trustees determines that a readily available market exists for such
obligations, the Cash Fund and the Tax-Free Fund will invest in them only within
a 10% limit for each Fund.
Information about Certain Other Obligations
The Cash Fund may purchase obligations other than those listed in the
Prospectus, but only if such other obligations are guaranteed as to principal
and interest by either a bank in whose obligations the Cash Fund may invest or a
corporation in whose commercial paper it may invest. If any such guarantee is
unconditional and is itself an "Eligible Security" (as defined in Rule 2a-7),
the obligation may be purchased based on the guarantee; if any such guarantee is
not unconditional, purchase of the obligation can only be made if the underlying
obligation is an "Eligible Security" and meets all other applicable requirements
of Rule 2a-7. As of the date of the SAI the Cash Fund does not own any such
obligations and has no present intention of purchasing any. Such obligations can
be any obligation of any kind so guaranteed, including, for example, obligations
created by "securitizing" various kinds of assets such as credit card
receivables or mortgages. If the Cash Fund invests in these assets, they will be
identified in the Prospectus and described in the SAI.
Additional Information Regarding Municipal Obligations
Which The Tax-Free Fund May Purchase
Municipal Notes
The Tax-Free Fund may invest in municipal notes. Municipal notes
include, but are not limited to, tax anticipation notes ("TANs"), bond
anticipation notes ("BANs"), revenue anticipation notes ("RANs"), and
construction loan notes. Notes sold as interim financing in anticipation of
collection of taxes, a bond sale or receipt of other revenues are usually
general obligations of the issuer.
TANs. An uncertainty in a municipal issuer's capacity to raise taxes as
a result of such things as a decline in its tax base or a rise in delinquencies
could adversely affect the issuer's ability to meet its obligations on
outstanding TANs. Furthermore, some municipal issuers mix various tax proceeds
into a general fund that is used to meet obligations other than those of the
outstanding TANs. Use of such a general fund to meet various obligations could
affect the likelihood of making payments on TANs.
BANs. The ability of a municipal issuer to meet its obligations on its
BANs is primarily dependent on the issuer's adequate access to the longer term
municipal bond market and the likelihood that the proceeds of such bond sales
will be used to pay the principal of, and interest on, BANs.
RANs. A decline in the receipt of certain revenues, such as anticipated
revenues from another level of government, could adversely affect an issuer's
ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.
Municipal Bonds
The two principal classifications of municipal bonds are "general
obligation" bonds and "revenue" bonds. General obligation bonds are secured by
the issuer's pledge of its full faith, credit and unlimited taxing power for the
payment of principal and interest. Revenue or special tax bonds are payable only
from the revenues derived from a particular facility or class of facilities or
projects or, in a few cases, from the proceeds of a special excise or other tax,
but are not supported by the issuer's power to levy unlimited general taxes.
There are, of course, variations in the security of municipal bonds, both within
a particular classification and between classifications, depending on numerous
factors. The yields of municipal bonds depend on, among other things, general
financial conditions, general conditions of the municipal bond market, the size
of a particular offering, the maturity of the obligation and the rating of the
issue.
Other Information
Since the Tax-Free Fund may invest in industrial development bonds or
private activity bonds, the Tax-Free Fund may not be an appropriate investment
for entities which are "substantial users" of facilities financed by those
industrial development bonds or private activity bonds or for investors who are
"related persons" of such users. Generally, an individual will not be a "related
person" under the Internal Revenue Code unless such investor or his or her
immediate family (spouse, brothers, sisters and lineal descendants) own directly
or indirectly in the aggregate more than 50 percent of the equity of a
corporation or is a partner of a partnership which is a "substantial user" of a
facility financed from the proceeds of "industrial development bonds" or
"private activity bonds". A "substantial user" of such facilities is defined
generally as a "non-exempt person who regularly uses a part of [a] facility"
financed from the proceeds of industrial development bonds or private activity
bonds.
Under the Tax Reform Act of 1986, there are certain Municipal
Obligations the interest on which is subject to the Federal alternative minimum
tax on individuals. While the Tax-Free Fund may purchase these obligations, it
may, on the other hand, refrain from purchasing them due to this tax
consequence. Also the Tax-Free Fund will not purchase Municipal Obligations the
interest on which is not exempt from regular Federal income taxes. The foregoing
may narrow the number of Municipal Obligations available to the Tax-Free Fund.
The Tax-Free Fund may enter into puts with banks or broker-dealers
that, in the opinion of the Adviser, present minimal credit risks. The ability
of the Tax-Free Fund to exercise a put will depend on the ability of the bank or
broker-dealer to pay for the underlying securities at the time the put is
exercised. In the event that a bank or broker-dealer should default on its
obligation to purchase an underlying security, the Tax-Free Fund might be unable
to recover all or a portion of any loss sustained from having to sell the
security elsewhere.
The Tax-Free Fund may enter into certain puts solely to maintain
liquidity and will not exercise its rights thereunder for trading purposes. The
puts will be only for periods substantially less than the life of the underlying
security. The acquisition of a put will not affect the valuation by the Tax-Free
Fund of the underlying security. The actual put will be valued at zero in
determining net asset value. Where the Tax-Free Fund pays directly or indirectly
for a put, its cost will be reflected as an unrealized loss for the period
during which the put is held by the Tax-Free Fund and will be reflected in
realized gain or loss when the put is exercised or expires. If the value of the
underlying security increases, the potential for unrealized or realized gain is
reduced by the cost of the put. The maturity of a Municipal Obligation purchased
by the Tax-Free Fund will not be considered shortened by any such put to which
the obligation is subject.
Additional Information About Other Investments The Tax-Free Fund Can Make
Temporary Taxable Investments
The Tax-Free Fund may invest the proceeds of the sale of shares or the
sale of Municipal Obligations in Taxable Obligations pending investment in
Municipal Obligations. The Tax-Free Fund may also enter into repurchase
agreements as to Taxable Obligations.
As a fundamental policy, under normal market conditions the Tax-Free
Fund may not purchase Taxable Obligations if thereafter more than 20% of its net
assets would consist of such obligations or cash, except for temporary defensive
purposes, i.e., in anticipation of a decline or possible decline in the value of
Municipal Obligations.
Under current management policies the Taxable Obligations which the
Tax-Free Fund may purchase are:
Obligations issued or guaranteed by the U.S. government or its agencies
or instrumentalities; commercial paper obligations and bank obligations (i) of
U.S. regulated banks having total assets of at least $1.5 billion, which may be
domestic banks, foreign branches of such banks or U.S. subsidiaries of foreign
banks; or (ii) that are fully insured as to principal by the Federal Deposit
Insurance Corporation. "Bank" includes commercial banks, savings banks and
savings and loan associations.
Floating and Variable Rate Instruments
The Tax-Free Fund may purchase obligations with a floating or variable
rate of interest. These obligations bear interest at rates that are not fixed,
but vary with changes in specified market rates or indices, such as the prime
rate, or at specified intervals. Certain of these obligations may carry a demand
feature that would permit the Tax-Free Fund to tender them back to the issuer at
par value prior to maturity. The Adviser will monitor the ability of an issuer
of a demand instrument to pay principal and interest on demand.
To the extent that floating and variable rate instruments without
demand features are not readily marketable, they will be subject to the
regulatory restriction that a money-market fund may not invest an amount equal
to more than 10% of the current value of its net assets in securities that are
illiquid.
Tender Option Bonds
A tender option bond, also known as a synthetic floating or variable
rate security, is created by a sponsor's depositing a long-term municipal bond
in a trust, which then issues a custodial receipt to an investor, such as the
Tax-Free Fund, evidencing an ownership interest in the bond. The sponsor
provides an option to the investor to tender the bond at par, and, in return for
the option, receives the difference between the interest paid by the long-term
municipal bond and that paid at the prevailing short-term tax-exempt rate to the
investor. Tender option bonds are typically structured so that, under certain
circumstances (e.g., default on, or downgrading of, the underlying bond or loss
of its tax-exempt status), the tender option may terminate, with the result that
the investor becomes the holder of a long-term municipal bond. In light of this
risk, the Adviser will monitor the credit quality of the underlying bond and
other relevant circumstances.
Certain Put Rights
The Tax-Free Fund may enter into put transactions with commercial banks
with respect to obligations held in its portfolio.
The right of the Tax-Free Fund to exercise a put is unconditional and
unqualified. A put is not transferable by the Tax-Free Fund, although the
Tax-Free Fund may sell the underlying securities to a third party at any time.
If necessary and advisable, the Tax-Free Fund may pay for certain puts either
separately in cash or by paying a higher price for portfolio securities that are
acquired subject to such a put (thus reducing the yield to maturity otherwise
available for the same securities).
Repurchase Agreements
The Tax-Free Fund may purchase securities subject to repurchase
agreements provided that such securities are otherwise eligible for purchase by
the Fund; it is the Tax-Free Fund's current policy to use for repurchase
agreements only collateral that consists entirely of U.S. Government securities
or securities that, at the time the repurchase agreement is entered into, are
rated in the highest rating category by the requisite NRSROs. Repurchase
agreements may be entered into only with commercial banks or broker-dealers.
Loans of Portfolio Securities
The Tax-Free Fund can lend its portfolio securities on a collateralized
basis up to 10% of the value of its total assets to specified borrowers
(brokers, dealers and certain financial institutions) to increase its income.
The Tax-Free Fund may be considered as the beneficial owner of the loaned
securities in that any gain or loss in their market price during the loan inures
to the Tax-Free Fund and its shareholders; thus, when the loan is terminated,
the value of the securities may be more or less than their value at the
beginning of the loan.
Shares of Investment Companies
The Tax-Free Fund may purchase shares of investment companies with
money market portfolios consisting only of Municipal Obligations.
Ratings
The ratings assigned by the nationally recognized statistical rating
organizations ("NRSROs") represent their opinions of the quality of the debt
securities which they undertake to rate. Ratings are general and not absolute
standards of quality; consequently, obligations with the same maturity, stated
interest rate and rating may have different yields, while obligations of the
same maturity and stated interest rate with different ratings may have the same
yield. See Appendix A to this SAI for further information about the ratings of
the NRSROs as to the various rated Municipal Obligations and Taxable Obligations
which the Tax-Free Fund may purchase.
U.S. Government Securities
All of the Funds may invest in U.S Government securities (i.e.,
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities), which include securities issued by the U.S. Government, such
as Treasury Bills (which mature within one year of the date they are issued) and
Treasury Notes and Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United States.
The Funds may invest in securities of U.S. government agencies and
instrumentalities that issue or guarantee securities. These include, but are not
limited to, the Farmers Home Administration, Federal Farm Credit System, Federal
Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Housing
Administration, Federal National Mortgage Association, Financing Corporation,
Government National Mortgage Association, Resolution Funding Corporation, Small
Business Administration, Student Loan Marketing Association and Tennessee Valley
Authority.
The Government Securities Fund may purchase shares of investment
companies with money-market portfolios which consist only of U.S. government
securities.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by the Federal National Mortgage
Association, are supported only by the credit of the instrumentality and not by
the Treasury. If the securities are not backed by the full faith and credit of
the United States, the owner of the securities must look principally to the
agency issuing the obligation for repayment and may not be able to assert a
claim against the United States in the event that the agency or instrumentality
does not meet its commitment. The Funds will invest in government securities,
including securities of agencies and instrumentalities, only if the Adviser,
acting under procedures approved by the Board of Trustees, is satisfied that
these obligations present minimal credit risks.
Turnover
In general, the Funds will purchase securities with the expectation of
holding them to maturity. However, the Funds may to some degree engage in
short-term trading to attempt to take advantage of short-term market variations.
The Funds may also sell securities prior to maturity to meet redemptions or as a
result of a revised management evaluation of the issuer. The Funds will have a
high portfolio turnover due to the short maturities of the securities held, but
this should not affect net asset value or income, as brokerage commissions are
not usually paid on the securities in which the Funds invest. (In the usual
calculation of portfolio turnover, securities of the type in which the Funds
invests are excluded; consequently, the high turnover which the Funds will have
is not comparable to the turnover of non-money-market investment companies.)
When-Issued and Delayed Delivery Securities
The Cash Fund and the Tax-Free Fund may purchase securities on a
when-issued or delayed delivery basis. For example, delivery and payment may
take place a month or more after the date of the transaction. The purchase price
and the interest rate payable on the securities are fixed on the transaction
date. At the time that either Fund makes a commitment to purchase securities on
a when-issued or delayed delivery basis, it will record the transaction and
thereafter reflect the value of such securities each day in determining its net
asset value. The Cash Fund and the Tax-Free Fund will make commitments for such
when-issued transactions only when they have the intention of actually acquiring
the securities, but may sell them before the settlement date if it is deemed
advisable. Any gains realized in such sales would produce taxable income. No
income accrues to the purchaser prior to issuance. Purchasing securities on a
when-issued basis is a form of leverage and can involve a risk that the yields
available in the market when the delivery takes place may actually be higher
than those obtained in the transaction itself, in which case there could be an
unrealized loss in the value of the investment at the time of delivery. The Cash
Fund and the Tax-Free Fund will each maintain with the Custodian and mark to
market every business day a separate account with portfolio securities in an
amount at least equal to such commitments. On delivery dates for such
transactions, the Cash Fund and the Tax-Free Fund will each meet their
obligations from maturities or sales of the securities held in the separate
account and/or from cash flow. If the Cash Fund or the Tax-Free Fund chooses to
dispose of any right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio obligation, incur a
gain or loss due to market fluctuation. Neither the Cash Fund nor the Tax-Free
Fund may enter into when-issued commitments exceeding in the aggregate 15% of
the market value of its total assets, less liabilities other than the
obligations created by when-issued commitments.
Shares of Investment Companies
The Funds will not purchase shares of an investment company which imposes a
sales or redemption charge of any sort; however, an investment company in which
any Fund invests may have a distribution plan under which it may pay for
distribution expenses or services. The Funds will purchase shares only of
investment companies with high-quality portfolios which the Adviser, pursuant to
procedures approved by the Board of Trustees, determines present minimal credit
risks. Such investments will ordinarily be made to provide additional liquidity
and at the same time to earn higher yields than are usually associated with the
overnight or short-term obligations in which a Fund might otherwise invest for
this purpose. While higher yields than those of alternative investments may be
obtainable, these yields will reflect management fees and operating and
distribution expenses of the investment companies and will result in duplication
of management fees with respect to assets of any Fund so invested. A Fund may
not invest in the shares of an investment company if immediately thereafter it
has invested more than 10% of the value of its total assets in such companies or
more than 5% of the value of its total assets in any one such company; it may
not invest in such a company if immediately thereafter it owns more than 3% of
the total outstanding voting stock of such a company.
Diversification and Certain Industry Requirements
The Cash Fund has a rule under which it cannot buy the securities of
issuers in any one industry if more than 25% of its total assets would then be
invested in securities of issuers of that industry. In applying this rule to
commercial paper issued by finance subsidiaries or affiliates of operating
companies, if the business of the issuer consists primarily of financing the
activities of the related operating company, the Fund considers the industry of
the issuer to be that of the related operating company.
Policies of the Funds
Investment Restrictions
Each Fund has a number of policies concerning what it can and cannot
do. Those policies, which are called "fundamental policies," may not be changed
unless the holders of a majority, as defined in the 1940 Act, of the outstanding
shares of that Fund vote to change them. Under the 1940 Act, the vote of the
holders of a majority of the outstanding shares of a Fund means the vote of the
holders of the lesser of (a) 67% or more of the dollar value of the Fund's
shares present at a meeting or represented by proxy if the holders of more than
50% of the dollar value of its shares are so present or represented, or (b) more
than 50% of the dollar value of its outstanding shares. Those fundamental
policies not set forth in the Prospectus are set forth below.
Investment Restrictions of the Cash Fund
The following restrictions on the Cash Fund's investments are
fundamental policies and cannot be changed without approval of the shareholders
of the Cash Fund.
1. The Cash Fund has diversification and anti-concentration
requirements.
The Cash Fund cannot buy the securities of any issuer if it would then
own more than 10% of the total value of all of the issuer's outstanding
securities.
The Cash Fund cannot buy the securities (not including U.S. Government
Securities) of any issuer if more than 5% of its total assets (valued at market
value) would then be invested in securities of that issuer. In addition, Rule
2a-7 limits investment in "Second Tier" Securities to 5% of the Cash Fund's
assets in the aggregate, and to no more than the greater of 1% of the Cash
Fund's assets or $1,000,000 in the securities of any one issuer.
The Cash Fund cannot buy the securities of issuers in any one industry
if more than 25% of its total assets would then be invested in securities of
issuers in that industry; U.S. Government securities and those domestic bank
obligations and instruments of domestic banks which the Cash Fund may purchase
are considered as not included in this limit; however, obligations of foreign
banks and of foreign branches of domestic banks are considered as included in
this limit.
2. The Cash Fund can make loans only by lending securities or entering
into repurchase agreements.
The Cash Fund can buy those debt securities which it is permitted to
buy; this is investing, not making a loan. The Cash Fund can lend its portfolio
securities on a collateralized basis up to 10% of the value of its total assets
to specified borrowers (broker-dealers, banks and certain other financial
institutions) to increase its income and enter into repurchase agreements. The
Cash Fund may be considered as the beneficial owner of the loaned securities in
that any gain or loss in their market price during the loan inures to the Cash
Fund and its shareholders; thus, when the loan is terminated, the value of the
securities may be more or less than their value at the beginning of the loan.
3. The Cash Fund can borrow only in limited amounts for special
purposes.
The Cash Fund can borrow from banks for temporary or emergency purposes
but only up to 10% of its total assets. It can mortgage or pledge its assets
only in connection with such borrowing and only up to the lesser of the amounts
borrowed or 5% of the value of its total assets. Interest on borrowings would
reduce the Cash Fund's income. The Cash Fund will not purchase any securities
while it has any outstanding borrowings which exceed 5% of the value of its
assets.
4. Almost all of the Cash Fund's assets must be in established
companies.
Only 5% of the Cash Fund's total assets may be in issuers less than
three years old, that is, which have not been in continuous operation for at
least three years. This includes the operations of predecessor companies.
Except in connection with borrowings, the Cash Fund will not issue
senior securities.
Investment Restrictions of the Tax-Free Fund
The following restrictions on the Tax-Free Fund's investments are
fundamental policies and cannot be changed without approval of the shareholders
of the Tax-Free Fund.
1. The Tax-Free Fund has anti-concentration requirements.
The Tax-Free Fund cannot buy the securities of issuers in any one
industry if more than 25% of its total assets would then be of issuers in that
industry; Municipal Obligations, U.S. Government obligations and those bank
obligations and instruments of domestic banks which the Fund may purchase are
considered as not included in this limit, except that the Fund will consider
that a non-governmental user of facilities financed by industrial development
bonds is an issuer in an industry.
2. The Tax-Free Fund can make loans only by lending securities or
entering into repurchase agreements.
The Tax-Free Fund can buy those debt securities which it is permitted
to buy; this is investing, not making a loan. The Tax-Free Fund can lend its
portfolio securities and enter into repurchase agreements.
3. The Tax-Free Fund can borrow only in limited amounts for special
purposes.
The Tax-Free Fund can borrow from banks for temporary or emergency
purposes but only up to 10% of its total assets. It can mortgage or pledge its
assets only in connection with such borrowing and only up to the lesser of the
amounts borrowed or 5% of the value of its total assets. Interest on borrowings
would reduce the Fund's income. The Tax-Free Fund will not purchase any
securities while it has any outstanding borrowings which exceed 5% of the value
of its total assets.
Except in connection with borrowings, the Tax-Free Fund will not issue
senior securities.
Investment Restrictions of the Government Securities Fund
The following restrictions on the Government Securities Fund's
investments are fundamental policies and cannot be changed without approval of
the shareholders of the Government Securities Fund.
1. The Government Securities Fund can make loans only by lending
securities or entering into repurchase agreements.
The Government Securities Fund can buy those debt securities which it
is permitted to buy; this is investing, not making a loan. The Government
Securities Fund can lend its portfolio securities on a collateralized basis up
to 10% of the value of its total assets to specified borrowers (broker-dealers,
banks and certain other financial institutions) to increase its income and enter
into repurchase agreements. The Government Securities Fund may be considered as
the beneficial owner of the loaned securities in that any gain or loss in their
market price during the loan inures to the Government Securities Fund and its
shareholders; thus, when the loan is terminated, the value of the securities may
be more or less than their value at the beginning of the loan.
2. The Government Securities Fund can borrow only in limited amounts
for special purposes.
The Government Securities Fund can borrow from banks for temporary or
emergency purposes but only up to 10% of its total assets. It can mortgage or
pledge its assets only in connection with such borrowing and only up to the
lesser of the amounts borrowed or 5% of the value of its total assets. Interest
on borrowings would reduce the Government Securities Fund's income. The
Government Securities Fund will not purchase any securities while it has any
outstanding borrowings which exceed 5% of the value of its assets.
Except in connection with borrowings, the Government Securities Fund
will not issue senior securities.
Restrictions Applicable to all of the Funds
1. The Funds invest only in certain limited securities.
The Funds cannot buy any voting securities, any commodities or
commodity contracts, any mineral related programs or leases, or any warrants,
puts, calls or combinations thereof, except that the Tax-Free Fund may purchase
Municipal Obligations with put rights in order to maintain liquidity.
The Cash Fund and the Tax-Free Fund cannot purchase or hold the
securities of any issuer if, to their knowledge, any Trustee, Director or
officer of the Fund or its Adviser individually owns beneficially more than 0.5%
of the securities of that issuer and all such Trustees, Directors and officers
together own in the aggregate more than 5% of such securities.
The Cash Fund and the Tax-Free Fund cannot buy real estate or any
non-liquid interests in real estate investment trusts; however, they can buy any
securities which they could otherwise buy even though the issuer invests in real
estate or interests in real estate.
2. The Funds do not buy for control.
The Funds cannot invest for the purpose of exercising control or
management of other companies. This restriction is not applicable to the
Government Securities Fund.
3. The Funds do not sell securities they do not own or borrow from
brokers to buy securities.
Thus, they cannot sell short or buy on margin.
4. The Funds are not underwriters.
The Funds cannot engage in the underwriting of securities, that is, the
selling of securities for others. Also, they cannot invest in restricted
securities. Restricted securities are securities which cannot freely be sold for
legal reasons.
Management of the Funds
The Board of Trustees
The business and affairs of each Fund are managed under the direction
and control of its Board of Trustees. The Board of Trustees has authority over
every aspect of the Fund's operations, including approval of the advisory
agreements and their annual renewal, the contracts with all other service
providers and payments under the Fund's Distribution Plan and Shareholder
Services Plan. The Trust has an Audit Committee, consisting of all of the
Trustees who are "independent" and are not "interested persons" of the Trust.
The Committee determines what independent registered public accounting firm will
be selected by the Board of Trustees, reviews the methods, scope and result of
audits and the fees charged, and reviews the adequacy of the Trust's internal
accounting procedures and controls. The Audit Committee had four meetings during
the last fiscal year.
The Trust has a Nominating Committee, consisting of all of the
non-interested Trustees. The Nominating Committee held one meeting during the
last fiscal year. The committee will consider nominees recommended by the
shareholders who may send recommendations to the committee in care of the
Administrator at 380 Madison Avenue, New York, NY 10017.
Trustees and Officers
The following material includes information about each Trustee and
officer and the Chairman Emeritus of the Trust:
Number of
Portfolios in Other Directorships
Positions Held Fund Held by Trustee
with Trust and Complex(4) (The position held is a
Name, Address(1)(2) Length of Principal Occupation(s) Overseen by directorship unless
and Date of Birth Service(3) During Past 5 Years Trustee indicated otherwise.)
----------------- ------- ------------------- ------- ---------------------
Interested
Trustee (5)
Diana P. Herrmann Vice Chair of Vice Chair and Chief Executive 12 ICI Mutual Insurance
New York, NY the Board of Officer of Aquila Management Company
(02/25/58) Trustees since Corporation, Founder of the
2003, President Aquila Group of Funds(6) and
since 1998 and parent of Aquila Investment
Trustee since Management LLC, Administrator
2004 since 2004, President and Chief
Operating Officer since 1997, a
Director since 1984, Secretary since
1986 and previously its Executive
Vice President, Senior Vice President
or Vice President, 1986-1997; Chief
Executive Officer and Vice Chair
since 2004 and President, Chief
Operating Officer and Manager of the
Administrator since 2003; Chair, Vice
Chair, President, Executive Vice
President or Senior Vice President of
funds in the Aquila Group of Funds
since 1986; Director of the
Distributor since 1997; trustee,
Reserve Money-Market Funds, 1999-2000
and Reserve Private Equity Series,
1998-2000; Governor, Investment
Company Institute (a trade
organization for the U.S. fund
industry dedicated to protecting
shareholder interests and educating
the public about investing) and head
of its Small Funds Committee since
2004; active in charitable and
volunteer organizations.
Non-interested
Trustees
Theodore T. Mason Chair of the Executive Director, East Wind 8 Trustee, Premier VIT.
New York, NY Board of Power Partners LTD since 1994
(11/24/35) Trustees since and Louisiana Power Partners,
2004 and 1999-2003; Treasurer, Fort
Trustee since Schuyler Maritime Alumni
1984 Association, Inc., successor to
Alumni Association of SUNY
Maritime College, since 2004
(President, 2002-2003, First
Vice President, 2000-2001,
Second Vice President,
1998-2000) and director of the
same organization since 1997;
Director, STCM Management
Company, Inc., 1973-2004; twice
national officer of Naval
Reserve Association, Commanding
Officer of four naval reserve
units and Captain, USNR (Ret);
director, The Navy League of
the United States New York
Council since 2002; trustee,
The Maritime Industry Museum at
Fort Schuyler, 2000-2004; and
Fort Schuyler Maritime
Foundation, Inc., successor to
the Maritime College at Fort
Schuyler Foundation, Inc.,
since 2000.
Thomas W. Courtney Trustee President, Courtney Associates, 5 Chairman of the Board of
Sewickley, PA since 1984 Inc., a venture capital firm, Oppenheimer Quest Value
(08/17/33) since 1988. Funds Group, Oppenheimer
Small Cap Value Fund,
Oppenheimer Midcap Fund,
and Oppenheimer
Rochester Group of
Funds; Chairman of the
Board of Premier VIT.
Stanley W. Hong Trustee since President, Waste Management of 4 Trustee, Pacific Capital
Honolulu, HI 1993 Hawaii, Inc. and Corporate Vice Funds(R), which includes
(04/05/36) President - Hawaii Area for 12 bond and stock funds;
Waste Management, Inc., First Insurance Co. of
2001-2005; Trustee, The King Hawaii, Ltd., Lanihau
William Charles Lunalilo Trust Properties, Ltd., The
Estate since 2001; President Westye Group - West
and Chief Executive Officer, (Hawaii), Inc., Heald
The Chamber of Commerce of Education LLC.
Hawaii, 1996-2001; Director PBS -
Hawaii Foundation since 1998; Regent,
Chaminade University of Honolulu
since 1991; Trustee, the Nature
Conservancy of Hawaii since 1998;
Trustee, Child and Family Service
since 2005; Director, The East West
Center Foundation since 2006; St.
Louis School since 2007; and a
director of other corporate and
community organizations.
Russell K. Okata Trustee since Executive Director, Hawaii 5 Trustee, Pacific Capital
Honolulu, HI 1993 Government Employees Funds(R), which includes
(03/22/44) Association AFSCME Local 152, 12 bond and stock funds;
AFL-CIO 1981-2007; Chairman, Royal State
International Vice President, Group (insurance).
American Federation of State, County
and Municipal Employees, AFL-CIO
1981-2007; director of various civic
and charitable organizations.
Douglas Philpotts Trustee since Retired; formerly director, 4 Trustee, Pacific Capital
Honolulu, HI 1992 Chairman of the Board and Funds(R), which includes
(11/21/31) President of Hawaiian Trust 12 bond and stock funds.
Company, Limited, a predecessor of
The Asset Management Group of Bank of
Hawaii; present or former director of
various Hawaii-based civic and
charitable organizations.
Oswald K. Stender Trustee since Director, Hawaiian Electric 4 Trustee, Pacific Capital
Honolulu, HI 1993 Industries, Inc., a public Funds(R), which includes
(10/08/31) utility holding company, 12 bond and stock funds;
1993-2004; trustee, the Bernice director, Grace Pacific
Pauahi Bishop Estate 1990-1999; Corporation, an asphalt
trustee, Office of Hawaiian paving company, ACE
Affairs and a member or trustee Trucking Inc. and
of several community Hawaiian Telecom, a
organizations. telephone company
(communications).
Other Individuals
Chairman Emeritus(7)
Lacy B. Herrmann Founder and Founder and Chairman of the N/A N/A
New York, NY Chairman Board, Aquila Management
(05/12/29) Emeritus since Corporation, the sponsoring
2004, Trustee, organization and parent of the
1984-2004, and Manager or Administrator and/or
Chairman of the Adviser or Sub-Adviser to each
Board of fund of the Aquila Group of
Trustees, Funds; Chairman of the Manager
1984-2003 or Administrator and/or Adviser
or Sub-Adviser to each since
2004; Founder and Chairman
Emeritus of each fund in the
Aquila Group of Funds;
previously Chairman and a
Trustee of each fund in the
Aquila Group of Funds since its
establishment until 2004 or
2005; Director of the
Distributor since 1981 and
formerly Vice President or
Secretary, 1981-1998; Trustee
Emeritus, Brown University and
the Hopkins School; active in
university, school and
charitable organizations.
Officers
Charles E. Executive Vice Executive Vice President of all N/A N/A
Childs, III President since funds in the Aquila Group of
New York, NY 2003 Funds and the Administrator and
(04/01/57) the Administrator's parent
since 2003; formerly Senior Vice
President, corporate development,
Vice President, Assistant Vice
President and Associate of the
Administrator's parent since 1987;
Senior Vice President, Vice President
or Assistant Vice President of the
Aquila Money-Market Funds, 1988-2003.
Sherri Foster Vice President Senior Vice President, Hawaiian N/A N/A
Lahaina, HI since 1997 Tax-Free Trust since 1993 and
(07/27/50) formerly Vice President or
Assistant Vice President; Vice
President since 1997 and formerly
Assistant Vice President of the three
Aquila Money-Market Funds; Vice
President, Aquila Rocky Mountain
Equity Fund since 2006; Registered
Representative of the Distributor
since 1985.
John M. Herndon Vice President Assistant Secretary of the N/A N/A
New York, NY (12/17/39) since 1990 and Aquila Group of Funds since
Assistant 1995 and Vice President of the
Secretary since three Aquila Money-Market Funds
1995 since 1990; Vice President of
the Administrator or its
predecessor and current parent
since 1990.
Robert W. Anderson Chief Chief Compliance Officer of the N/A N/A
New York, NY Compliance Trust and each of the other
(08/23/40) Officer since funds in the Aquila Group of
2004 and Funds, the Administrator and
Assistant the Distributor since 2004,
Secretary Compliance Officer of the
since 2000 Administrator or its
predecessor and current parent
1998-2004; Assistant Secretary
of the Aquila Group of Funds
since 2000.
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the N/A N/A
New York, NY Officer since Aquila Group of Funds since 2003
(11/06/56) 2003 and and Treasurer since 2000.
Treasurer since
2000
Edward M. W. Hines Secretary since Shareholder of Butzel Long, a N/A N/A
New York, NY 1984 professional corporation,
(12/16/39) counsel to the Trust, since
2007; Partner of Hollyer Brady
Barrett & Hines LLP, its predecessor
as counsel, 1989-2007; Secretary of
the Aquila Group of Funds.
Lori A. Vindigni Assistant Assistant Treasurer of the N/A N/A
New York, NY Treasurer since Aquila Group of Funds since
(11/02/66) 2000 2000; Assistant Vice President
of the Administrator or its
predecessor and current parent since
1998; Fund Accountant for the Aquila
Group of Funds, 1995-1998.
(1)From time to time Bank of Hawaii may enter into normal investment management,
commercial banking and lending arrangements with one or more of the Trustees of
the Trust and their affiliates. The Asset Management Group of Bank of Hawaii is
the Trust's investment adviser.
(2) The mailing address of each Trustee and officer is c/o Pacific Capital
Funds(R) of Cash Assets Trust, 380 Madison Avenue, Suite 2300, New York, NY
10017.
(3) Because the Trust does not hold normally annual meetings, each Trustee holds
office for an indeterminate term. The term of office of each officer is one
year.
(4) Includes certain Aquila-sponsored funds that are dormant and have no public
shareholders.
(5) Ms. Herrmann is an interested person of the Trust as an officer of the
Trust, as a director, officer and shareholder of the Administrator's corporate
parent, as an officer and Manager of the Administrator, and as a shareholder and
director of the Distributor. Ms. Herrmann is the daughter of Lacy B. Herrmann,
the Founder and Chairman Emeritus of the Trust.
(6) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila Bond Funds";
Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks High
Income Fund is a high income corporate bond fund; considered together, these 12
funds, which do not include the dormant funds described in footnote 4, are
called the "Aquila Group of Funds."
(7) The Chairman Emeritus may attend Board meetings but has no voting power.
Securities Holdings of the Trustees
(as of 12/31/07)
Name of Trustee Dollar Range of
Ownership in Pacific Aggregate Dollar Range of Ownership
Capital Funds(R) of in Aquila Group of Funds (1)
Cash Assets Trust (1)
Interested Trustee
Diana P. Herrmann D E
Non-interested Trustees
Theodore T. Mason A D
Thomas W. Courtney A C
Stanley W. Hong A C
Russell K. Okata A D
Douglas Philpotts B C
Oswald K. Stender B C
(1) A. None
B. $1-$10,000
C. $10,001-$50,000
D. $50,001-$100,000
E. over $100,000
None of the non-interested Trustees or their immediate family members
holds of record or beneficially any securities of the Adviser or the
Distributor.
Trustee Compensation
The Funds do not pay fees to Trustees affiliated with the Administrator
or Adviser or to any of the Funds' officers. During the fiscal year ended March
31, 2008, the Cash Fund, the Tax-Free Fund and the Government Securities Fund
paid, respectively, $98,491, $67,112 and $222,686 in compensation and
reimbursement of expenses to the Trustees. The Funds are among the twelve funds
in the Aquila Group of Funds, which consist of three money-market funds, seven
tax-free municipal bond funds, a high-income corporate bond fund and an equity
fund. The following tables list the compensation of all Trustees who received
compensation from the Funds, the compensation each received during each Fund's
fiscal year from all funds in the Aquila Group of Funds and the number of such
funds. None of such Trustees has any pension or retirement benefits from the
Fund or any of the other funds in the Aquila Group of Funds.
Compensation
Compensation from Compensation from from the Government
Name the Cash Fund the Tax-Free Fund Securities Fund
Theodore T. Mason $16,789 $12,461 $31,533
Thomas W. Courtney $14,240 $9,468 $30,492
Stanley W. Hong $13,428 $9,100 $28,172
Russell K. Okata $13,428 $9,100 $28,172
Douglas Philpotts $13,428 $9,100 $28,172
Oswald K. Stender $13,428 $9,100 $28,172
Compensation Number of
from all funds boards on which
in the Aquila the Trustee
Name Group of Funds now serves*
Theodore T. Mason $134,500 8
Thomas W. Courtney $96,500 5
Stanley W. Hong $69,000 4
Russell K. Okata $79,333 5
Douglas Philpotts $69,000 4
Oswald Stender $69,000 4
o Messrs. Hong, Okata, Philpotts and Stender are also trustees of the 12
funds in the Pacific Capital Funds(R) for which the Adviser is also
investment adviser. For the same period, these funds paid Trustee Hong
$39,000, Trustee Okata $44,000, Trustee Philpotts $41,500 and Trustee
Stender $39,000.
Ownership of Securities
TO BE UPDATED
On _______, 2008 the following holders held 5% or more of a class of
shares of the Funds:
Name and address
of the holder of
record Number of shares Percent of class
The Cash Fund: Original Shares
Bank of Hawaii
P. O. Box 1930
Honolulu, HI 96805 283,206,176 92.03%
The Cash Fund: Service Shares
Bank of Hawaii
P.O. Box 1930
Honolulu, HI 96805 92,360,833 64.07%
National Financial Services Corp.
For Exclusive Benefit of its Customers
200 Liberty Street
New York, NY 10281 51,786,634 35.93%
The Tax-Free Fund: Original Shares
Bank of Hawaii
P.O. Box 1930
Honolulu, HI 96805-1930 162,753,973 98.14%
The Tax-Free Fund: Service Shares
Bank of Hawaii
P.O. Box 1930
Honolulu, HI 96805-1930 59,749,115 89.90%
National Financial Services Corp.
For Exclusive Benefit of its Customers
200 Liberty Street
New York, NY 10281 6,596,428 9.92%
The Government Securities Fund: Original Shares
Bank of Hawaii
P.O. Box 1930
Honolulu, HI 96805-1930 730,720,282 99.19%
The Government Securities Fund: Service Shares
Bank of Hawaii
P.O. Box 1930
Honolulu, HI 96805-1930 1,051,367,196 92.41%
The Funds' management is not aware of any person, other than those
named above, who beneficially owned 5% or more of either class of a Fund's
outstanding shares on such date. On the basis of information received from the
record owners listed above, the Funds' management believes (i) that all of the
Original Shares indicated are held for the benefit of custodial or trust
clients; and (ii) that all of such shares could be considered as "beneficially"
owned by the named shareholders in that they possessed shared voting and/or
investment powers as to such shares. The Service Shares indicated above are held
for the benefit of customers.
Management Ownership
As of the date of this SAI, all of the Trustees and officers of the
Trust as a group owned less than 1% of its outstanding shares.
Investment Advisory and Other Services
Asset Management Group of the Bank of Hawaii (formerly Pacific Century
Trust) supervises the investment program of each Fund and the composition of its
portfolio. On September 30, 1997, the operations of Hawaiian Trust Company,
Ltd., formerly a subsidiary of the Bank of Hawaii, became a division of the Bank
of Hawaii and assumed the name Pacific Century Trust.
The services of the Adviser to each Fund are rendered under an
Investment Advisory Agreement between that Fund and the Adviser (together, the
"Advisory Agreements") which was most recently approved by the Fund's
shareholders on July 16, 2008.
The Advisory Agreements of the Funds provide, subject to the control of
the Board of Trustees, for investment supervision by the Adviser. Under each
Advisory Agreement, the Adviser will furnish information as to the Fund's
portfolio securities to any provider of fund accounting services to each Fund;
will monitor records of each Fund as to the Fund's portfolio, including prices,
maintained by such provider of such services; and will supply at its expense,
monthly or more frequently as may be necessary, pricing of each Fund's portfolio
based on available market quotations using a pricing service or other source of
pricing information satisfactory to that Fund. Each Advisory Agreement states
that the Adviser shall, at its expense, provide to the Fund all office space and
facilities, equipment and clerical personnel necessary for the carrying out of
the Adviser's duties under the Advisory Agreement.
Under each Advisory Agreement, the Adviser pays all compensation of
those officers and employees of the Fund and of those Trustees, if any, who are
affiliated with the Adviser, provided, however, that if any Trustee is an
affiliate of the Adviser solely by reason of being a member of its Board of
Directors, the Funds may pay compensation to such Trustee, but at a rate no
greater than the rate they pay to the other Trustees. Under the Advisory
Agreements, each Fund bears the cost of preparing and setting in type its
prospectuses, statements of additional information, and reports to its
shareholders and the costs of printing or otherwise producing and distributing
those copies of such prospectuses, statements of additional information and
reports as are sent to its shareholders. Under each Advisory Agreement, all
costs and expenses not expressly assumed by the Adviser or by the Administrator
under the Fund's Administration Agreement or by the Fund's principal underwriter
are paid by the Fund. The Advisory Agreements list examples of such expenses
borne by the Funds, the major categories of such expenses being: legal and audit
expenses, custodian and transfer agent, or shareholder servicing agent, fees and
expenses, stock issuance and redemption costs, certain printing costs,
registration costs of the Funds and their shares under Federal and State
securities laws, interest, taxes, and non-recurring expenses, including
litigation.
Each Advisory Agreement may be terminated by the Adviser at any time
without penalty upon giving the Fund sixty days' written notice, and may be
terminated by the Fund at any time without penalty upon giving the Adviser sixty
days' written notice, provided that such termination by the Fund shall be
directed or approved by the vote of a majority of all its Trustees in office at
the time or by the vote of the holders of a majority (as defined in the 1940
Act) of its voting securities at the time outstanding and entitled to vote; each
agreement automatically terminates in the event of its assignment (as so
defined).
Each Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Adviser is not liable for any loss sustained by the
adoption of any investment policy or the purchase, sale or retention of any
security and permits the Adviser to act as investment adviser for any other
person, firm or corporation. Each Fund agrees to indemnify the Adviser to the
full extent permitted under the Trust's Declaration of Trust.
The Advisory Agreement states that it is agreed that the Adviser shall
have no responsibility or liability for the accuracy or completeness of the
Fund's Registration Statement under the Securities Act of 1933 and the 1940 Act,
except for the information supplied by the Adviser for inclusion therein.
Each Advisory Agreement contains the provisions set forth below under
"Brokerage Allocation and Other Practices."
The Administration Agreements
Under Administration Agreements with each Fund (the "Administration
Agreements"), Aquila Investment Management LLC as Administrator, at its own
expense, provides office space, personnel, facilities and equipment for the
performance of its functions thereunder and as is necessary in connection with
the maintenance of the headquarters of the Fund and pays all compensation of the
Fund's Trustees, officers and employees who are affiliated persons of the
Administrator. The Administration Agreements went into effect July 16, 2008.
Under the Administration Agreements, subject to the control of the
Funds' Board of Trustees, the Administrator provides all administrative services
to each Fund other than those relating to its investment portfolio and the
maintenance of its accounting books and records. Such administrative services
include but are not limited to maintaining books and records (other than
accounting books and records) of the Funds, and overseeing all relationships
between the Funds and their transfer agent, custodian, legal counsel, auditors
and principal underwriter, including the negotiation of agreements in relation
thereto, the supervision and coordination of the performance of such agreements,
and the overseeing of all administrative matters which are necessary or
desirable for effective operation of the Funds and for the sale, servicing or
redemption of the Funds' shares.
Advisory and Administration Fees
During the three fiscal years ended March 31, 2008, 2007, and 2006 the Funds
paid the following fees:
To the Adviser:
Tax-Free Government
Cash Fund Fund Securities Fund
2008 $1,531,627 $808,526 $6,120,103
2007 $1,728,112 $658,852 $4,470,519
2006 $1,745,002 $649,291 $3,504,214
To the Administrator:
Tax-Free Government
Cash Fund Fund Securities Fund
2008 $627,241 $240,599 $1,341,856
2007 $659,224 $208,845 $ 991,924
2006 $661,973 $206,817 $ 786,951
Transfer Agent, Custodian and Independent Registered Public Accounting Firm
The Funds' Shareholder Servicing Agent (transfer agent) is PFPC Inc.,
101 Sabin Street, Pawtucket, RI 02860-1427.
Each Fund's Custodian is JPMorgan Chase Bank, N.A., 1111 Polaris
Parkway, Columbus, OH 43240; it receives, holds and delivers the Funds'
portfolio securities (including physical securities, book-entry securities, and
securities in depositories) and money, performs related accounting functions and
issues reports to the Funds.
The Funds' independent registered public accounting firm, Tait, Weller
& Baker LLP ("TWB"), 1818 Market Street, Suite 2400, Philadelphia, Pennsylvania
19103, performs an annual audit of the Funds' financial statements.
Brokerage Allocation and Other Practices
During the fiscal years ended March 31, 2008, 2007 and 2006 all of the
Funds' transactions were principal transactions and no brokerage commissions
were paid. The following provisions regarding brokerage allocation and other
practices relating to purchases and sales of the Funds' securities are contained
in each Fund's Advisory Agreement.
Each Advisory Agreement provides that in connection with its duties to
arrange for the purchase and sale of the Fund's portfolio securities, the
Adviser shall select such broker-dealers ("dealers") as shall, in the Adviser's
judgment, implement the policy of the Fund to achieve "best execution," i.e.,
prompt, efficient and reliable execution of orders at the most favorable net
price. The Adviser shall cause the Fund to deal directly with the selling or
purchasing principal or market maker without incurring brokerage commissions
unless the Adviser determines that better price or execution may be obtained by
paying such commissions; the Fund expects that most transactions will be
principal transactions at net prices and that the Fund will incur little or no
brokerage costs. The Fund understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread between the bid
and asked prices. In allocating transactions to dealers, the Adviser is
authorized to consider, in determining whether a particular dealer will provide
best execution, the dealer's reliability, integrity, financial condition and
risk in positioning the securities involved, as well as the difficulty of the
transaction in question, and thus need not pay the lowest spread or commission
available if the Adviser determines in good faith that the amount of commission
is reasonable in relation to the value of the brokerage and research services
provided by the dealer, viewed either in terms of the particular transaction or
the Adviser's overall responsibilities as to the accounts as to which it
exercises investment discretion. If, on the foregoing basis, the transaction in
question could be allocated to two or more dealers, the Adviser is authorized,
in making such allocation, to consider whether a dealer has provided research
services. Such research may be in written form or through direct contact with
individuals and may include quotations on portfolio securities and information
on particular issuers and industries, as well as on market, economic or
institutional activities. The Fund recognizes that no dollar value can be placed
on such research services or on execution services, that such research services
may or may not be useful to the Fund and/or other accounts of the Adviser and
that research received by such other accounts may or may not be useful to the
Fund.
Limitation of Redemptions in Kind
Each Fund has elected to be governed by Rule 18f-1 under the 1940 Act,
pursuant to which the Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1 percent of the net asset value of the Fund during
any 90-day period for any one shareholder. Should redemptions by any shareholder
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in kind. If shares are redeemed in kind, the redeeming shareholder might
incur brokerage costs in converting the assets into cash. The method of valuing
securities used to make redemptions in kind will be the same as the method of
valuing portfolio securities described under "Net Asset Value Per Share" in the
Prospectus, and such valuation will be made as of the same time the redemption
price is determined.
Capital Stock
Description of Shares
The Trust issues three series of shares, each series constituting the
shares of a Fund. Each series has separate assets and liabilities and is
comprised of two classes of shares: Original Shares and Service Shares. The
Declaration of Trust permits the Trustees to issue an unlimited number of full
and fractional shares and to divide or combine the shares into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interests in the Trust. Each share represents an equal proportionate interest in
a Fund. Income, direct liabilities and direct operating expenses of each series
will be allocated directly to such series, and general liabilities and expenses,
if any, of the Trust will be allocated among the series in a manner acceptable
to the Board of Trustees. Certain expenses of a series specifically allocable to
a particular class will be borne by that class; the expense of the series not so
allocated will be allocated among the classes in a manner acceptable to the
Board of Trustees and in accordance with any applicable exemptive order or rule
of the SEC. Upon liquidation of a series, shareholders of each class of the
series are entitled to share pro-rata (subject to liabilities, if any, allocated
specifically to that class) in the net assets of that series available for
distribution to shareholders and upon liquidation of the Trust, the respective
series are entitled to share proportionately in the assets available to the
Trust after allocation to the various series. If they deem it advisable and in
the best interests of shareholders, the Board of Trustees of the Trust may
create additional classes of shares (subject to rules and regulations of the
Securities and Exchange Commission or by exemptive order) or the Board of
Trustees may, at its own discretion, create additional series of shares, each of
which may have separate assets and liabilities (in which case any such series
will have a designation including the word "Series"). Shares are fully paid and
non-assessable, except as set forth below with respect to potential liability of
shareholders of a Massachusetts business trust; the holders of shares have no
pre-emptive or conversion rights.
Voting Rights
At any meeting of shareholders, shareholders are entitled to one vote
for each dollar of net asset value (determined as of the record date for the
meeting) represented by the shares held (and proportionate fractional votes for
fractional dollar amounts). Shareholders will vote on the election of Trustees
and on other matters submitted to the vote of shareholders. No amendment may be
made to the Declaration of Trust without the affirmative vote of the holders of
a majority of the outstanding shares of the Trust. The Trust may be terminated
(i) upon the sale of its assets to another issuer, or (ii) upon liquidation and
distribution of the assets of the Trust, in either case if such action is
approved by the vote of the holders of a majority of the outstanding shares of
each series. If not so terminated, the Trust will continue indefinitely. Rule
18f-2 under the 1940 Act provides that matters submitted to shareholders be
approved by a majority of the outstanding voting securities of each series,
unless it is clear that the interests of each series in the matter are identical
or the matter does not affect a series. However, the rule exempts the selection
of accountants and the election of Trustees from the separate voting
requirement. Classes do not vote separately except that, as to matters
exclusively affecting one class (such as the adoption or amendment of
class-specific provisions of the Distribution Plan), only shares of that class
are entitled to vote.
Each Fund has two classes of shares:
Original Shares: Original Shares are offered solely to (1) financial
institutions for the investment of funds for their own account or for which they
act in a fiduciary, agency, investment advisory or custodial capacity; (2)
persons entitled to exchange into Original Shares under the exchange privileges
of the Trust; (3) Trustees and officers of funds in the Aquila Group of Funds;
(4) officers and employees of the Adviser, Administrator and Distributor and (5)
shareholders owning shares of the Trust of record on January 20, 1995, the date
on which the Funds first offered two classes of shares.
Service Shares: Service Shares are offered to anyone. There are no
sales charges or redemption fees. Service Shares of each Fund are subject to a
Distribution (12b-1) fee of 0.25 of 1% of the average annual assets of the Fund
represented by Service Shares.
The Trust is an entity of the type commonly known as a Massachusetts
business trust. Under Massachusetts law, shareholders of a trust such as the
Trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, for the protection of shareholders,
the Declaration of Trust contains an express disclaimer of shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
any Fund or the Trustees. The Declaration of Trust provides for indemnification
out of the Trust's property of any shareholder held personally liable for the
obligations of the Trust. The Declaration of Trust also provides that the Trust
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote circumstances in which
the Trust itself would be unable to meet its obligations. If any series or class
is unable to meet the obligations attributable to it (which, in the case of the
Trust, is a remote possibility), other series or classes would be subject to
such obligations with a corresponding increase in the risk of the shareholder
liability mentioned in the prior sentence.
The Declaration of Trust further indemnifies the Trustees out of the
assets of each Fund and provides that they will not be liable for errors of
judgment or mistakes of fact or law; but nothing in the Declaration of Trust
protects a Trustee against any liability to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Purchase, Redemption, and Pricing of Shares
Amortized Cost Valuation
The Funds operate under Rule 2a-7 (the "Rule") of the Securities and
Exchange Commission which permits them to value their portfolios on the basis of
amortized cost. The amortized cost method of valuation is accomplished by
valuing a security at its cost and thereafter assuming a constant amortization
rate to maturity of any discount or premium, and does not reflect the impact of
fluctuating interest rates on the market value of the security. This method does
not take into account unrealized gains or losses.
While the amortized cost method provides certainty in valuation, there
may be periods during which value, as determined by amortized cost, is higher or
lower than the price a Fund would receive if it sold the instrument. During
periods of declining interest rates, the daily yield on a Fund's shares may tend
to be higher than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and estimates of market
prices for all of its portfolio instruments and changing its dividends based on
these changing prices. The converse would apply in a period of rising interest
rates.
Under the Rule, each Fund's Board of Trustees must establish, and has
established, procedures (the "Procedures") designed to stabilize at $1.00, to
the extent reasonably possible, the Fund's price per share as computed for the
purpose of sales and redemptions. Such procedures must include review of the
Fund's portfolio holdings by the Board of Trustees at such intervals as it may
deem appropriate and at such intervals as are reasonable in light of current
market conditions to determine whether the Fund's net asset value calculated by
using available market quotations deviates from the $1.00 price per share based
on amortized cost. "Available market quotations" may include actual market
quotations (valued at the mean between bid and asked prices), estimates of
market value reflecting current market conditions based on quotations or
estimates of market value for individual portfolio instruments or values
obtained from yield data relating to a directly comparable class of securities
published by reputable sources.
Under the Rule, if the extent of any deviation between the net asset
value per share based upon "available market quotations" (see above) and the
Fund's price per share based on amortized cost exceeds $0.005, the Board of
Trustees must promptly consider what action, if any, will be initiated. When the
Board of Trustees believes that the extent of any deviation may result in
material dilution or other unfair results to investors or existing shareholders,
it is required to take such action as it deems appropriate to eliminate or
reduce to the extent reasonably practicable such dilution or unfair results.
Such actions could include the sale of portfolio securities prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends or payment of distributions from capital or capital gains,
redemptions of shares in kind, or establishing a price per share using available
market quotations. The Procedures contemplate changes in the dividends payable
by the each Fund under specified conditions, as described below under
"Computation of Daily Dividends." This portion of the Procedures provides that
actions that the Trustees would consider under certain circumstances can be
taken automatically.
Computation of Daily Dividends
Under the Procedures that each Fund's Board of Trustees has adopted
relating to amortized cost valuation, the calculation of each Fund's daily
dividends will change under certain circumstances from that indicated in the
Prospectus. If on any day the deviation between the price pre share determined
on an amortized cost basis and the net asset value determined using market
quotations is $0.003 or more, the amount of such deviation will be added to or
subtracted from the daily dividend to the extent necessary to reduce such
deviation to within $0.003.
If on any day there is insufficient net income to absorb any such
reduction, the Board of Trustees would be required under the Rule to consider
taking other action if the deviation, after eliminating the dividend for that
day, exceeds $0.005. One of the actions which the Board of Trustees might take
could be the elimination or reduction of dividends for more than one day.
Automatic Withdrawal Plan
If you own or purchase shares of a Fund having a net asset value of at
least $5,000 you may establish an Automatic Withdrawal Plan under which you will
receive a monthly or quarterly check in a stated amount, not less than $50.
Stock certificates will not be issued for shares held under an Automatic
Withdrawal Plan. All dividends must be reinvested.
Shares will be redeemed on the last business day of the month as may be
necessary to meet withdrawal payments. Shares acquired with reinvested dividends
will be redeemed first to provide such withdrawal payments and thereafter other
shares will be redeemed to the extent necessary, and, depending upon the amount
withdrawn, your principal may be depleted.
Redemption of shares for withdrawal purposes may reduce or even
liquidate the account. Monthly or quarterly payments paid to shareholders may
not be considered as a yield or income on investment.
Exchange Privileges
Original Shares
There are two exchange privileges available to holders of Original
Shares of the Funds: the Pacific Capital Exchange Privilege and the Aquila
Group of Funds Exchange Privilege.
Pacific Capital Exchange Privilege
Shareholders may exchange their Original Shares in any Fund for
Institutional Class shares of any of the existing or future funds (series) of
Pacific Capital Funds(R), each of which represents a different portfolio. As of
the date of this SAI, the existing funds are Growth Stock Fund, Growth and
Income Fund, New Asia Growth Fund, Diversified Fixed Income Fund, Tax Free
Securities Fund, Tax Free Short Intermediate Securities Fund, U.S. Treasuries
Securities Fund and Short Intermediate U.S. Treasury Securities Fund. Each of
these funds is referred to as a "Pacific Capital Fund" and collectively they are
referred to as the " Pacific Capital Funds(R) or the "Pacific Capital Exchange
Group." The Adviser acts as investment adviser for the Pacific Capital Funds(R).
All exchanges are subject to certain conditions described below.
Aquila Group of Funds Exchange Privilege
Shareholders may exchange their Original Shares of any Fund into
certain related tax-free municipal bond funds, the high-income corporate bond
fund and an equity fund (the "Aquila Bond and Equity Funds") and money-market
funds (the "Aquila Money-Market Funds"), all of which (the "Aquila Exchange
Group") are sponsored by Aquila Investment Management LLC and Aquila
Distributors, Inc., and have the same Administrator and Distributor as the
Funds. All exchanges are subject to certain conditions described below. As of
the date of this SAI, the Aquila Bond and Equity Funds are Hawaiian Tax-Free
Trust, Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Tax-Free Fund of
Colorado, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund For Utah,
Narragansett Insured Tax-Free Income Fund, Aquila Rocky Mountain Equity Fund and
Aquila Three Peaks High Income Fund; the Aquila Money-Market Funds are the
Funds. (With respect to exchanges of Original Shares of any Fund into shares of
any other Fund, only exchanges for Original Shares of those funds are
permitted.)
Because excessive trading in shares of the Funds can be harmful to the
Funds and their other shareholders, the right is reserved to revise or terminate
the exchange privilege, to limit the number of exchanges or to reject any
exchange if (i) the Funds or any of the other Aquila Funds believe that they
would be harmed or be unable to invest effectively or (ii) they receive or
anticipate receiving simultaneous orders that may significantly affect the Funds
or any other Aquila Fund.
Terms and Conditions of Both Exchange Privileges for Original Shares
The Institutional Class shares of each Pacific Capital Fund have an
exchange privilege which allows further exchanges among the Institutional Class
shares of each other Pacific Capital Fund at relative net asset values. The
Institutional Class shares of each Pacific Capital Fund also have another
exchange privilege with certain funds in the Aquila Exchange Group under which
their shares and Original Shares of Funds may be exchanged, also without payment
of an additional sales charge.
The funds in the Aquila Exchange Group also have exchange privileges,
as described below. Under the exchange privileges of both Exchange Groups, once
any applicable sales charge has been paid with respect to exchangeable shares of
a fund in one of the Exchange Groups, those shares (and any shares acquired as a
result of reinvestment of dividends and/or distributions) may be exchanged any
number of times among the other funds of the same Exchange Group without the
payment of any additional sales charge. An exchange between the two Exchange
Groups will, however, result in the applicable sales charge if the shares of the
fund being acquired in the exchange carry a sales charge, unless the shares
being exchanged are the Eligible Shares (see below) of that Exchange Group.
The "Pacific Capital Eligible Shares" of any Pacific Capital Fund are
those Institutional shares which were (a) acquired by direct purchase with
payment of any applicable sales charge, or which were received in exchange for
shares of another Pacific Capital Fund on which any applicable sales charge was
paid; (b) acquired with payment of any applicable sales charge by exchange for
Original Shares of any Fund; (c) acquired in one or more exchanges between
Original Shares of the Funds and shares of the Pacific Capital FUNDS(R) so long
as the Pacific Capital Fund shares were originally purchased as set forth in (a)
or (b); or (d) acquired as a result of reinvestment of dividends and/or
distributions on Pacific Capital Eligible Shares.
If you own Pacific Capital Eligible Shares of any Fund, you may
exchange them for shares of any Pacific Capital Fund or any Aquila Money-Market
Fund without payment of any sales charge. The shares received will continue to
be Pacific Capital Eligible shares. You may also exchange them for the shares of
any Aquila Bond or Equity Fund, but only upon payment of the appropriate sales
charges.
The Aquila Group Exchange Privilege
The Aquila Bond and Equity Funds offer classes of Shares: Class A
Shares ("Front-Payment Shares") and Class C Shares ("Level-Payment Shares"),
which can be purchased by anyone, and Class Y Shares ("Institutional Class
Shares"), which are offered only to institutions acting for investors in a
fiduciary, advisory, agency, custodial or similar capacity, and are not offered
directly to retail customers. Some funds also offer Financial Intermediary Class
Shares ("Class I Shares"). The Exchange Privilege has different provisions for
each class.
(1) Originally purchased Money-Market Fund shares. Shares of a
Money-Market Fund (and any shares acquired as a result of reinvestment of
dividends and/or distributions on these shares) acquired directly in a purchase
(or in exchange for Money-Market Fund shares that were themselves directly
purchased), rather than in exchange for shares of a Bond or Equity Fund, may be
exchanged for shares of any class of any Bond or Equity Fund that the investor
is otherwise qualified to purchase, but the shares received in such an exchange
will be subject to the same sales charge, if any, that they would have been
subject to had they been purchased rather than acquired in exchange for
Money-Market Fund shares. If the shares received in exchange are shares that
would be subject to a contingent deferred sales charge ("CDSC") if purchased
directly, the holding period governing the CDSC will run from the date of the
exchange, not from the date of the purchase of Money-Market Fund shares.
(2) CDSCs upon redemptions of shares acquired through exchanges. If you
exchange shares of the following categories, no CDSC will be imposed at the time
of exchange, but the shares you receive in exchange for them will be subject to
the applicable CDSC if you redeem them before the requisite holding period
(extended, if required) has expired:
- CDSC Class A Shares;
- Class C Shares: and
- Shares of a Money-Market Fund that were received in exchange for
CDSC Class A Shares or Class C Shares.
If the shares you redeem would have incurred a CDSC if you had not made
any exchanges, then the same CDSC will be imposed upon the redemption regardless
of the exchanges that have taken place since the original purchase.
(3) Extension of Holding Periods by owning Money-Market Funds. Any
period of 30 days or more during which Money-Market Fund shares received on an
exchange of CDSC Class A Shares or Class C Shares are held is not counted in
computing the applicable holding period for CDSC Class A Shares or Class C
Shares.
Each Fund, as well as the Bond and Equity Funds, reserves the right to
reject any exchange into its shares, if shares of the fund into which exchange
is desired are not available for sale in your state of residence. The Funds may
also modify or terminate this exchange privilege at any time. In the case of
termination, the Prospectus will be appropriately supplemented. No such
modification or termination shall take effect on less than 60 days' written
notice to shareholders.
Exchange Privilege for Service Shares:
You may exchange Service Shares in any Fund for Retail Class shares of
any of the existing or future funds (series) of the Pacific Capital Exchange
Group (see "Exchange Privilege for Original Shares" above).
Shareholders of any Fund may also exchange their Service Shares for
Service Shares of any other Fund, all of which are series of the Trust and as
such, have the same Administrator, Distributor and Adviser. They are
collectively called the "Funds."
All exchanges are subject to certain conditions described below.
Terms and Conditions of the Service Shares Exchange Privilege
The Retail Class shares of each Pacific Capital Fund have an exchange
privilege which allows further exchanges for Retail Class shares of each other
Pacific Capital Fund at relative net asset values without the payment of
additional sales charges.
Under the exchange privileges of the Pacific Capital Exchange Group,
once any applicable sales charge has been paid with respect to exchangeable
shares of a fund in the Pacific Capital Exchange Group, those shares (and any
shares acquired as a result of reinvestment of dividends and/or distributions)
may be exchanged any number of times among the other funds of the Pacific
Capital Exchange Group without the payment of any additional sales charge.
The "Pacific Capital Eligible Shares" of any Pacific Capital Fund are
those Retail Shares which were (a) acquired by direct purchase with payment of
any applicable sales charge, or which were received in exchange for shares of
another Pacific Capital Fund on which any applicable sales charge was paid; (b)
acquired with payment of any applicable sales charge by exchange for Service
Shares of a Fund; (c) acquired in one or more exchanges between Service Shares
of Funds and Retail Shares of Pacific Capital Funds(R) so long as the Pacific
Capital Fund shares were acquired as set forth in (a) or (b); or (d) acquired as
a result of reinvestment of dividends and/or distributions on Pacific Capital
Eligible Shares. "Pacific Capital Eligible Shares" of a Fund are those Service
Shares which were acquired (a) by exchange for other Pacific Capital Eligible
Shares or (b) as a result of reinvestment of dividends and/or distributions of
otherwise Pacific Capital Eligible Shares.
If you own Pacific Capital Eligible Shares of a Fund, you may exchange
them for shares of any Pacific Capital Fund without payment of any sales charge.
The shares received will continue to be Pacific Capital Eligible shares.
If you own Service Shares of any of the Funds that are not Pacific
Capital Eligible Shares, you may exchange them for Service Shares of any other
Fund without payment of any sales charge. The shares received will continue not
to be Pacific Capital Eligible shares. You may also exchange them for the Retail
Shares of any Pacific Capital Fund, but only upon payment of the appropriate
sales charge.
Each of the Funds, as well as the Pacific Capital Funds(R), reserves
the right to reject any exchange into its shares, if the shares of the fund into
which exchange is desired are not available for sale in the shareholder's state
of residence, and to modify or terminate this exchange privilege at any time; in
the case of termination, the Prospectus will be appropriately supplemented. No
such modification or termination shall take effect on less than 60 days' written
notice to shareholders.
Provisions Applicable to All Exchanges of Original Shares and Service Shares
All exercises of an exchange privilege are subject to the conditions
that (i) the shares being acquired are available for sale in your state of
residence; and (ii) the aggregate net asset value of the shares surrendered for
exchange is at least equal to the applicable minimum investment requirement of
the investment company whose shares are being acquired.
To effect an exchange, you must complete a form which is available from
the Distributor, unless you have elected the Telephone Exchange feature on the
Application. The exchange will be effected at the relative exchange prices of
the shares being exchanged next determined after receipt by the Distributor of a
properly completed form or Telephone Exchange request. The exchange prices will
be the respective net asset values of the shares (unless a sales charge is to be
deducted in connection with an exchange of shares as described above, in which
case the exchange price of shares of the Pacific Capital Fund or Aquila Bond or
Equity Fund will be its public offering price).
Dividends paid by the Aquila Money-Market Funds are taxable, except to
the extent that dividends paid by the Tax-Free Fund (which invests in tax-free
municipal obligations) are exempt from regular Federal income tax and Hawaiian
income tax, and to the extent that dividends paid by the Government Securities
Fund (which invests in U.S. government obligations) are exempt from state income
taxes. Dividends paid by the Aquila Rocky Mountain Equity Fund and the Aquila
Three Peaks High Income Fund are taxable. If your state of residence is not the
same as that of the issuers of obligations in which a tax-free municipal bond
fund or a tax-free money market-fund invests, the dividends from that fund may
be subject to income tax of the state in which you reside. Accordingly, you
should consult your tax adviser before acquiring shares of such a fund under the
exchange privilege arrangement.
An exchange is treated for Federal tax purposes as a redemption and
purchase of shares and may result in the realization of a capital gain or loss,
depending on the cost or other tax basis of the shares exchanged and the holding
period; no representation is made as to the deductibility of any such loss that
may occur.
If you are considering an exchange into one of the funds listed above,
you should send for and carefully read its Prospectus.
Transfer on Death Registration
Each of the funds in the Aquila Group of Funds now generally permits
registration of its shares in beneficiary form, subject to the funds' rules
governing Transfer on Death ("TOD") registration, if the investor resides in a
state that has adopted the Uniform Transfer on Death Security Registration Act
(a "TOD State"; for these purposes, Missouri is deemed to be a TOD State). This
form of registration allows you to provide that, on your death, your shares are
to be transferred to the one or more persons that you specify as beneficiaries.
To register shares of a Fund in TOD form, complete the special TOD Registration
Request Form and review the Rules Governing TOD Registration; both are available
from the Agent. The Rules, which are subject to amendment upon 60 days' notice
to TOD account owners, contain important information regarding TOD accounts with
a Fund; by opening such an account you agree to be bound by them, and failure to
comply with them may result in your shares' not being transferred to your
designated beneficiaries. If you open a TOD account with a Fund that is
otherwise acceptable but, for whatever reason, neither the Fund nor the Transfer
Agent receives a properly completed TOD Registration Request Form from you prior
to your death, the Fund reserves the right not to honor your TOD designation, in
which case your account will become part of your estate.
You are eligible for TOD registration only if, and as long as, you
reside in a TOD State. If you open a TOD account and your account address
indicates that you do not reside in a TOD State, your TOD registration will be
ineffective and the Fund may, in its discretion, either open the account as a
regular (non-TOD) account or redeem your shares. Such a redemption may result in
a loss to you and may have tax consequences. Similarly, if you open a TOD
account while residing in a TOD State and later move to a non-TOD State, your
TOD registration will no longer be effective. In both cases, should you die
while residing in a non-TOD State the Fund reserves the right not to honor your
TOD designation. At the date of this SAI, most states are TOD States.
Distribution Plan
Each Fund has adopted a Distribution Plan under Rule 12b-1 ("Rule
12b-1") under the 1940 Act; all of the plans have substantially the same terms.
In the following material the "Plan" means the Plan of any of the Funds. Rule
12b-1 provides in substance that an investment company may not engage directly
or indirectly in financing any activity which is primarily intended to result in
the sale of its shares except pursuant to a plan adopted under Rule 12b-1. The
Plan is in two parts.
The Plan states that while it is in effect, the selection and
nomination of those Trustees of any Fund who are not "interested persons" of the
Fund shall be committed to the discretion of such disinterested Trustees but
that nothing in the Plan shall prevent the involvement of others in such
selection and nomination if the final decision on any such selection and
nomination is approved by a majority of such disinterested Trustees.
Part I of the Plan
Part I of the Plan is designed to protect against any claim involving
the Fund that the administration fee and some of the expenses which the Fund
pays or may pay come within the purview of Rule 12b-1. No Fund considers such
fee or any payment enumerated in Part I of the Plan as so financing any such
activity. However, it might be claimed that such fee and some of the expenses a
Fund pays come within the purview of Rule 12b-1. If and to the extent that any
payments (including fees) specifically listed in Part I of the Plan are
considered to be primarily intended to result in or are indirect financing of
any activity which is primarily intended to result in the sale of a Fund's
shares, these payments are authorized under the Plan.
As used in Part I of the Plan, "Qualified Recipients" means (i) any
principal underwriter or underwriters of a Fund (other than a principal
underwriter which is an affiliated person, or an affiliated person of an
affiliated person, of the Administrator) and (ii) broker-dealers or others
selected by Aquila Investment Management LLC (the "Administrator") with which it
or a Fund has entered into written agreements ("Plan Agreements") and which have
rendered assistance (whether direct, administrative or both) in the distribution
and/or retention of a Fund's shares or servicing shareholder accounts.
"Qualified Holdings" means, as to any Qualified Recipient, all Fund shares
beneficially owned by such Qualified Recipient or by one or more customers
(brokerage or other) or other contacts and/or its investment advisory or other
clients, if the Qualified Recipient was, in the sole judgment of the
Administrator, instrumental in the purchase and/or retention of such Fund shares
and/or in providing administrative assistance in relation thereto.
The Plan permits the Administrator to make payments ("Administrator's
Permitted Payments") to Qualified Recipients. These Administrator's Permitted
Payments are made by the Administrator and are not reimbursed by the Fund to the
Administrator. Permitted Payments may not exceed, for any fiscal year of a Fund
(pro-rated for any fiscal year which is not a full fiscal year), in the case of
the Cash Fund, 0.15 of 1% of the average annual net assets of the Fund, and in
the case of the Tax-Free Fund and the Government Securities Fund 0.10 of 1% of
their respective average annual net assets. The Administrator shall have sole
authority (i) as to the selection of any Qualified Recipient or Recipients; (ii)
not to select any Qualified Recipient; and (iii) to determine the amount of
Administrator's Permitted Payments, if any, to each Qualified Recipient,
provided that the total Administrator's Permitted Payments to all Qualified
Recipients do not exceed the amount set forth above. The Administrator is
authorized, but not directed, to take into account, in addition to any other
factors deemed relevant by it, the following: (a) the amount of the Qualified
Holdings of the Qualified Recipient; (b) the extent to which the Qualified
Recipient has, at its expense, taken steps in the shareholder servicing area;
and (c) the possibility that the Qualified Holdings of the Qualified Recipient
would be redeemed in the absence of its selection or continuance as a Qualified
Recipient. Notwithstanding the foregoing two sentences, a majority of the
Independent Trustees (as defined below) may remove any person as a Qualified
Recipient. The Plan states that whenever the Administrator bears the costs, not
borne by a Fund's Distributor, of printing and distributing all copies of the
Fund's prospectuses, statements of additional information and reports to
shareholders which are not sent to the Fund's shareholders, or the costs of
supplemental sales literature and advertising, such payments are authorized.
Part I of the Plan recognizes that, in view of the Administrator's
Permitted Payments and bearing by the Administrator of certain distribution
expenses, the profits, if any, of the Administrator are dependent primarily on
the administration fees paid by the Fund to the Administrator and that its
profits, if any, would be less, or losses, if any, would be increased due to
such Administrator's Permitted Payments and the bearing by it of such expenses.
If and to the extent that any such administration fees paid by the Fund might,
in view of the foregoing, be considered as indirectly financing any activity
which is primarily intended to result in the sale of shares issued by the Fund,
the payment of such fees is authorized by Part I of the Plan.
Part I of the Plan also states that if and to the extent that any of
the payments by the Fund listed below are considered to be "primarily intended
to result in the sale of" shares issued by the Fund within the meaning of Rule
12b-1, such payments are authorized under the Plan: (i) the costs of the
preparation of all reports and notices to shareholders and the costs of printing
and mailing such reports and notices to existing shareholders, irrespective of
whether such reports or notices contain or are accompanied by material intended
to result in the sale of shares of the Fund or other funds or other investments;
(ii) the costs of the preparation and setting in type of all prospectuses and
statements of additional information and the costs of printing and mailing all
prospectuses and statements of additional information to existing shareholders;
(iii) the costs of preparation, printing and mailing of any proxy statements and
proxies, irrespective of whether any such proxy statement includes any item
relating to, or directed toward, the sale of the Fund's shares; (iv) all legal
and accounting fees relating to the preparation of any such reports,
prospectuses, statements of additional information, proxies and proxy
statements; (v) all fees and expenses relating to the registration or
qualification of the Fund and/or its shares under the securities or "Blue-Sky"
laws of any jurisdiction; (vi) all fees under the Securities Act of 1933 and the
1940 Act, including fees in connection with any application for exemption
relating to or directed toward the sale of the Fund's shares; (vii) all fees and
assessments of the Investment Company Institute or any successor organization,
irrespective of whether some of its activities are designed to provide sales
assistance; (viii) all costs of the preparation and mailing of confirmations of
shares sold or redeemed or share certificates, and reports of share balances;
and (ix) all costs of responding to telephone or mail inquiries of investors or
prospective investors.
Part I of the Plan states that while Part I is in effect, the Fund's
Administrator shall report at least quarterly to the Fund's Trustees in writing
for its review on the following matters: (i) all Administrator's Permitted
Payments made to Qualified Recipients, the identity of the Qualified Recipient
of each Payment and the purpose for which the amounts were expended; (ii) all
costs of each item specified in the second preceding paragraph (making estimates
of such costs where necessary or desirable) during the preceding calendar or
fiscal quarter; and (iii) all fees of the Fund to the Administrator paid or
accrued during such quarter.
Part I of the Plan defines as the Fund's Independent Trustees those
Trustees who are not "interested persons" of the Fund as defined in the 1940 Act
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan. Part I of the Plan, unless
terminated as hereinafter provided, continues in effect from year to year only
so long as such continuance is specifically approved at least annually by the
Fund's Trustees and its Independent Trustees with votes cast in person at a
meeting called for the purpose of voting on such continuance. In voting on the
implementation or continuance of Part I of the Plan, those Trustees who vote to
approve such implementation or continuance must conclude that there is a
reasonable likelihood that Part I of the Plan will benefit the Fund and its
shareholders. Part I of the Plan may be terminated at any time by vote of a
majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the outstanding voting securities of
the Fund. Part I of the Plan may not be amended to increase materially the
amount of payments to be made without shareholder approval, and all amendments
must be approved in the manner set forth above as to continuance of Part I of
the Plan.
Part I of the Plan states that in the case of a Qualified Recipient
which is a principal underwriter of the Fund the Plan Agreement shall be the
agreement contemplated by Section 15(b) of the 1940 Act since each such
agreement must be approved in accordance with, and contain the provisions
required by, Rule 12b-1. The Plan also states that in the case of Qualified
Recipients which are not principal underwriters of the Fund, the Plan Agreements
with them shall be the agreements with the Administrator with respect to
payments under Part I of the Plan.
Under Rule 12b-1, all agreements related to implementation of a plan
must be in writing and must contain specified adoption and continuance
requirements, including a requirement that they terminate automatically on their
"assignment," as that term is defined in the 1940 Act. The other adoption and
continuance requirements as to such agreements are the same as those described
above as to Part I of the Plan itself except that: (i) no shareholder action is
required for the approval of such agreements, and (ii) termination by Trustee or
shareholder action as there described may be on not more than 60 days' written
notice. The Plan Agreement between the Fund and the Administrator is governed by
the foregoing requirements.
During the Funds' fiscal year ended March 31, 2008 no or nominal
Administrator's Permitted Payments (under $1,000) were made by the Administrator
to Qualified Recipients.
The formula under which the payments described above may be made under
Part I of the Plan by the Administrator was arrived at by considering a number
of factors. One of such factors is that such payments are designed to provide
incentives for Qualified Recipients (i) in the case of Qualified Recipients
which are principal underwriters, to act as such and (ii) in the case of all
Qualified Recipients, to devote substantial time, persons and effort to the sale
of the shares of the Fund. Another factor is that such payments by the
Administrator to Qualified Recipients may provide the only incentive for
Qualified Recipients to do so; there is no sales charge on the sale of the
Fund's shares and, although Part II of the Plan, as discussed below, permits
certain payments by the Fund to persons providing distribution and/or
shareholder service assistance, those payments are permitted only in connection
with one of the Fund's two classes of shares. Another factor is that the Fund is
one of a group of funds having certain common characteristics. Each such fund
(i) is a money-market fund; and (ii) has as its investment adviser a banking
institution or an affiliate which invests assets over which it has investment
authority in money-market funds advised by other banking institutions or
affiliates. The marketing of the Fund's shares may be facilitated since each
such institution can, due to these common characteristics, be fully and
currently informed as to the quality of the investments of and other aspects of
the operations of each of the other funds and if such an investment is otherwise
appropriate, can, although not required to do so, invest assets over which it
has investment authority in one or more of the other funds.
Part II of the Plan
Part II of the Plan authorizes payment of certain distribution or
service fees by the Fund in connection with Service Shares of the Fund.
As used in Part II of the Plan, "Designated Payees" means (i) any
principal underwriter or underwriters of the Fund and (ii) broker-dealers or
others selected by Aquila Distributors, Inc. (the "Distributor") with which it
or the Fund has entered into written agreements ("Distributor's Plan
Agreements") and which have rendered assistance (whether direct, administrative
or both) in the distribution and/or retention of shares of the specified class
or servicing shareholder accounts with respect to those shares. "Qualified
Holdings" means, as to any Designated Payee, all Service Shares beneficially
owned by such Designated Payee or by one or more customers (brokerage or other)
or other contacts and/or its investment advisory or other clients, if the
Designated Payee was, in the sole judgment of the Distributor, instrumental in
the purchase and/or retention of such shares and/or in providing administrative
assistance in relation thereto.
Part II of the Plan permits the Fund to make payments ("Fund's
Permitted Payments") to Designated Payees. These Fund's Permitted Payments are
made by the Fund directly or through the Distributor and may not exceed, for any
fiscal year of the Fund (pro-rated for any fiscal year which is not a full
fiscal year), 0.25 of 1% of the average annual net assets of the Fund
represented by the Service Shares class of Fund shares. Such payments are to be
made out of the Fund assets allocable to Service Shares. The Distributor shall
have sole authority (i) as to the selection of any Designated Payee or Payees;
(ii) not to select any Designated Payee; and (iii) to determine the amount of
Fund's Permitted Payments, if any, to each Designated Payee, provided that the
total Fund's Permitted Payments to all Designated Payees do not exceed the
amount set forth above. The Distributor is authorized, but not directed, to take
into account, in addition to any other factors deemed relevant by it, the
following: (a) the amount of the Qualified Holdings of the Designated Payee; (b)
the extent to which the Designated Payee has, at its expense, taken steps in the
shareholder servicing area; and (c) the possibility that the Qualified Holdings
of the Designated Payee would be redeemed in the absence of its selection or
continuance as a Designated Payee. Notwithstanding the foregoing two sentences,
a majority of the Independent Trustees (as defined below) may remove any person
as a Designated Payee.
Part II of the Plan states that while Part II is in effect, the
Distributor shall report at least quarterly to the Fund's Trustees in writing
for its review on the following matters: (i) all Fund's Permitted Payments made
to Designated Payees, the identity of the Designated Payee of each Payment and
the purpose for which the amounts were expended; and (ii) all fees of the Fund
to the Distributor, Adviser or Administrator paid or accrued during such
quarter.
Part II of the Plan, unless terminated as hereinafter provided,
continues in effect from year to year only so long as such continuance is
specifically approved at least annually by the Fund's Trustees and its
Independent Trustees with votes cast in person at a meeting called for the
purpose of voting on such continuance. In voting on the implementation or
continuance of Part II of the Plan, those Trustees who vote to approve such
implementation or continuance must conclude that there is a reasonable
likelihood that Part II of the Plan will benefit the Fund and its shareholders.
Part II of the Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the outstanding voting securities of the Service Shares
class. Part II of the Plan may not be amended to increase materially the amount
of payments to be made without shareholder approval, and all amendments must be
approved in the manner set forth above as to continuance of Part II of the Plan.
Part II of the Plan states that in the case of a Designated Payee which
is a principal underwriter of the Fund, the Distributor's Plan Agreement shall
be the agreement contemplated by Section 15(b) of the 1940 Act since each such
agreement must be approved in accordance with, and contain the provisions
required by, Rule 12b-1. The Plan also states that in the case of Designated
Payees which are not principal underwriters of the Fund, the Distributor's Plan
Agreements with them shall be the agreements with the Distributor with respect
to payments under Part II of the Plan.
During the three fiscal years ended March 31, 2008, 2007 and 2006 the
following payments were made by each of the Funds under Part II of their
respective Plans to Designated Payees. All such payments were for compensation.
The Bank of Hawaii and a subsidiary, Bankoh Investment Services, Inc., are among
those who receive payments authorized by Part II of the Plans.
Cash Fund Tax-Free Fund Government Securities Fund
2008 $350,675 $174,056 $2,737,670
2007 $447,519 $196,556 $2,228,626
2006 $417,067 $219,710 $1,740,241
Taxation of the Trust
Each Fund, during its last fiscal year, qualified and intends to
continue to qualify under subchapter M of the Internal Revenue Code; if so
qualified it will not be liable for Federal income taxes on amounts distributed
by the Fund.
Underwriter
Aquila Distributors, Inc. acts as each Fund's principal underwriter in
the continuous public offering of each Fund's shares. The Distributor is not
obligated to sell a specific number of shares. Under the Distribution Agreement,
the Distributor is responsible for the payment of certain printing and
distribution costs relating to prospectuses and reports as well as the costs of
supplemental sales literature, advertising and other promotional activities.
Net Under-
writing Compensation
Name of Discounts on Redemp-
Principal and tions and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
Aquila
Distributors
Inc. None None None None
The Distributor currently handles the distribution of the shares of
twelve funds (three money-market funds, seven tax-free municipal bond funds, a
high-income corporate bond fund and an equity fund), including the Funds.
The shares of the Distributor are owned 24% by Diana P. Herrmann, 74%
by Mr. Herrmann and other members of his immediate family and the balance by
current employees of Aquila Management Corporation.
APPENDIX A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS
Bond Ratings
At the date of this Additional Statement there are four organizations
considered as Nationally Recognized Statistical Rating Organizations ("NRSROs")
for purposes of Rule 15c3-1 under the Securities Exchange Act of 1934. Their
names, a brief summary of their respective rating systems, some of the factors
considered by each of them in issuing ratings and their individual procedures
are described below.
STANDARD & POOR'S CORPORATION
Commercial paper consists of unsecured promissory notes issued to raise
short-term funds. An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. S&P's commercial paper ratings are graded into several categories from
"A-1" for the highest-quality obligations (which can also have a plus (+) sign
designation) to "D" for the lowest. The two highest categories are:
A-1: This highest category indicates the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high for issues
designated A-1.
An S&P corporate debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. The
ratings are based, in varying degrees, on the following considerations:
1) Likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligations;
2) Nature of and provisions of the obligation; and
3) Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
The two highest categories are:
AAA: Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a degree.
MOODY'S INVESTORS SERVICE
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as letters
of credit and bonds of indemnity are excluded unless explicitly rated. The two
highest categories are:
Prime-1: Issuers rated P-1 have a superior ability for repayment of senior
short-term debt obligations, evidenced by the following characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capital structure with moderate reliance on debt and ample
asset protection.
o Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of markets and assured sources of
alternative liquidity.
Prime-2: Issuers rated P-2 have a strong ability for repayment of senior
short-term debt obligations, evidenced by the above-mentioned
characteristics, but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.
Corporate bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by large or exceptionally stable margin
and principal is secure. Corporate bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. Aa bonds are rated lower than the best
bonds because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risk appear somewhat greater
than the Aaa securities.
DOMINION BOND RATING SERVICE LIMITED ("DBRS")
DBRS Bond and Long Term Debt Rating Scale. Long term debt ratings are meant
to give an indication of the risk that the borrower will not fulfill its full
obligations in a timely manner with respect to both interest and principal
commitments.
AAA Bonds rated AAA are of the highest credit quality, with exceptionally
strong protection for the timely repayment of principal and interest.
AA Bonds rated AA are of superior credit quality, and protection of interest
and principal is considered high.
A Bonds rated A are of satisfactory credit quality. Protection of interest
and principal is still substantial, but the degree of strength is less than
with AA rated entities.
BBB Bonds rated BBB are of adequate credit quality.
BB Bonds rated BB are defined to be speculative, where the degree of
protection afforded interest and principal is uncertain, particularly
during periods of economic recession.
B Bonds rated B are highly speculative and there is a reasonably high level
of uncertainty which exists as to the ability of the entity to pay interest
and principal on a continuing basis in the future, especially in periods of
economic recession or industry adversity.
DBRS Commercial Paper and Short Term Debt Rating Scale. Commercial paper
ratings are meant to give an indication of the risk that the borrower will not
fulfill its obligations in a timely manner. All three DBRS rating categories for
short term debt use "high," "middle" or "low" as subset grades to designate the
relative standing of the credit within a particular rating category.
R-1 (high) Short term debt rated R-1 (high) is of the highest credit quality,
and indicates an entity which possesses unquestioned ability to repay
current liabilities as they fall due.
R-1 (middle) Short term debt rated R-1 (middle) is of superior credit quality
and, in most cases, ratings in this category differ from R-1 (high) credits
to only a small degree.
R-1 (low) Short term debt rated R-1 (low) is of satisfactory credit quality.
the overall strength and outlook for key liquidity, debt and profitability
ratios is not normally as favorable as with higher rating categories, but
these considerations are still respectable.
R-2 (high), Short term debt rated R-2 is of adequate credit quality and within
the three subset grades, R-2 (middle), debt protection ranges from having
reasonable ability for timely repayment to a level R-2 (low) which is
considered only just adequate.
R-3 (high), Short term debt rated R-3 is speculative, and within the three
subset grades, the capacity R-3 (middle), for timely payment ranges from
mildly speculative to doubtful. R-3 (low)
FITCH INVESTORS SERVICE, INC.
The Fitch short-term ratings apply to debt obligations that are payable on
demand which include commercial paper, certificates of deposit, medium-term
notes and municipal and investment notes. Short-term ratings places greater
emphasis than long-term ratings on the existence of liquidity necessary to meet
the issuer's obligations in a timely manner. Fitch short-term ratings are:
F-1+: Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
F-1: Issues assigned this rating reflect an assurance of timely payment
only slightly less in degree than issues rated "F-1+".
The Fitch long-term rating represents their assessment of the issuer's
ability to meet the obligations of a specific debt issue or class of debt in a
timely manner. The rating takes into consideration special features of the
issue, its relationship to other obligations of the issuer, the current and
prospective financial and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality. The Fitch long-term rating are:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong.
DESCRIPTION OF MUNICIPAL BOND AND COMMERCIAL PAPER RATINGS
Municipal Bond Ratings
Standard & Poor's. A Standard & Poor's municipal obligation rating is a
current assessment of the creditworthiness of an obligor with respect to a
specific obligation. This assessment may take into consideration obligors such
as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default - capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors rights.
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the debt being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
Standard & Poor's ratings for municipal note issues are designated SP in
order to help investors distinguish more clearly the credit quality of notes as
compared to bonds. Notes bearing the designation SP-1 are deemed very strong or
to have strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation. Notes bearing the designation SP-2 are deemed to have a
satisfactory capacity to pay principal and interest.
Moody's Investors Service. A brief description of the applicable Moody's
Investors Service rating symbols and their meanings follows:
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds in the Aa, A, Baa, Ba and B groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1, A1, Baa1, Ba1
and B1.
Moody's Short Term Loan Ratings - There are three rating categories for
short-term obligations, all of which define an investment grade situation. These
are designated as Moody's Investment Grade MIG 1 through MIG 3. In the case of
variable rate demand obligations (VRDOs), two ratings are assigned; one
representing an evaluation of the degree of risk associated with scheduled
principal and interest payments, and the other representing an evaluation of the
degree of risk associated with the demand feature. The short-term rating
assigned to the demand feature of VRDOs is designated as VMIG. When no rating is
applied to the long or short-term aspect of a VRDO, it will be designated NR.
Issues or the features associated with MIG or VMIG ratings are identified by
date of issue, date of maturity or maturities or rating expiration date and
description to distinguish each rating from other ratings. Each rating
designation is unique with no implication as to any other similar issue of the
same obligor. MIG ratings terminate at the retirement of the obligation while
VMIG rating expiration will be a function of each issuer's specific structural
or credit features.
MIG1/VMIG1 This designation denotes superior credit quality. Excellent
protection is afforded by established cash flows, highly reliable liquidity
support or demonstrated broad-based access to the market for refinancing.
MIG2/VMIG2 This designation denotes strong credit quality. Margins of
protection are ample, although not as large as in the preceding group.
MIG3/VMIG3 This designation denotes acceptable credit quality. Liquidity
and cash flow protection may be narrow, and market access for refinancing is
likely to be less well established.
Commercial Paper Ratings
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1 -- Highest Quality; Prime 2 --
Higher Quality; Prime 3 -- High Quality.
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment. Ratings are graded into four categories, ranging
from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the greatest
capacity for timely payment. Issues in this category are designed with the
numbers 1, 2 and 3 to indicate the relative degree of safety. The designation
A-1 indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. A "+" designation is applied to those issues rated
"A-1" which possess safety characteristics. Capacity for timely payment on
issues with the designation A-2 is strong. However, the relative degree of
safety is not as high as for issues designated A-1. Issues carrying the
designation A-3 have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
CASH ASSETS TRUST
PART C: OTHER INFORMATION
Financial Statements
Financial Statements of the Pacific Capital Funds
of Cash Assets Trust:
Included in Part A:
Financial Highlights of
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Government
Securities Cash Assets Trust
Incorporated by reference into Part B:
Report of Independent Registered
Public Accounting Firm
Statement of Assets and Liabilities as of March 31, 2008:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Government
Securities Cash Assets Trust
Statement of Operations for the Year Ended March 31, 2008:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Government
Securities Cash Assets Trust
Statement of Changes in Net Assets for the Years Ended March 31, 2008
and 2004:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Government
Securities Cash Assets Trust
Statement of Investments as of March 31, 2008:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-Free Cash Assets Trust
Pacific Capital U.S. Government
Securities Cash Assets Trust
Notes to Financial Statements:
Pacific Capital Cash Assets Trust
Pacific Capital Tax-free Cash Assets Trust
Pacific Capital U.S. Government
Securities Cash Assets Trust
Included in Part C:
ITEM 23 Exhibits:
(a) Amended and Restated Declaration of Trust (ii)
(b) By-laws (xii)
(c) Instruments defining rights of shareholders
The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares and to divide or combine the shares into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interests in the Trust. Each share represents an equal proportionate
interest in the Trust with each other share of its class; shares of the
respective classes represent proportionate interests in the Trust in accordance
with their respective net asset values. Upon liquidation of the Trust,
shareholders are entitled to share pro-rata in the net assets of the Trust
available for distribution to shareholders, in accordance with the respective
net asset values of the shares of each of the Trust's classes at that time. All
shares are presently divided into four classes; however, if they deem it
advisable and in the best interests of shareholders, the Board of Trustees of
the Trust may create additional classes of shares, which may differ from each
other as provided in rules and regulations of the Securities and Exchange
Commission or by exemptive order. The Board of Trustees may, at its own
discretion, create additional series of shares, each of which may have separate
assets and liabilities (in which case any such series will have a designation
including the word "Series"). See the Additional Statement for further
information about possible additional series. Shares are fully paid and
non-assessable, except as set forth under the caption "General Information" in
the Additional Statement.
At any meeting of shareholders, shareholders are entitled to one vote
for each dollar of net asset value (determined as of the record date for the
meeting) per share held (and proportionate fractional votes for fractional
dollar amounts). Shareholders will vote on the election of Trustees and on other
matters submitted to the vote of shareholders. Shares vote by classes on any
matter specifically affecting one or more classes, such as an amendment of an
applicable part of the Distribution Plan. No amendment may be made to the
Declaration of Trust without the affirmative vote of the holders of a majority
of the outstanding shares of the Trust except that the Trust's Board of Trustees
may change the name of the Trust. The Trust may be terminated (i) upon the sale
of its assets to another issuer, or (ii) upon liquidation and distribution of
the assets of the Trust, in either case if such action is approved by the vote
of the holders of a majority of the outstanding shares of the Trust.
(d) (1) Current Investment Advisory Agreement for Pacific
Capital Cash Assets Trust Series (i)
(1) (i) Proposed Investment Advisory Agreement for Pacific
Capital Cash Assets Trust Series (xiii)
(1) (a) Amendment of Advisory Agreement for Pacific Capital
Cash Assets Trust Series (xi)
(2) Current Investment Advisory Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series (i)
(2) (i) Proposed Investment Advisory Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series (xiii)
(2) (a) Amendment of Advisory Agreement for Pacific Capital
Tax-Free Cash Assets Trust Series (xi)
(3) Current Investment Advisory Agreement for Pacific
Capital U.S. Government
Securities Cash Assets Trust Series (i)
(3) (i) Proposed Investment Advisory Agreement for Pacific
Capital U.S. Government
Securities Cash Assets Trust Series (xiii)
(3) (a) Amendment of Advisory Agreement for Pacific Capital
U.S. Government Securities Cash Assets Trust Series (xi)
(e) (1) Distribution Agreement for Pacific Capital
Cash Assets Trust Series (iv)
(2) Anti-Money Laundering Amendment to Distribution
Agreement for Pacific Capital Cash Assets
Trust Series (viii)
(3) Distribution Agreement for Pacific Capital
Tax-Free Cash Assets Trust Series (iv)
(4) Anti-Money Laundering Amendment to Distribution
Agreement for Pacific Capital Tax-Free Cash
Assets Trust Series (viii)
(5) Distribution Agreement for Pacific Capital
U.S. Government Securities Cash Assets Trust
Series (iv)
(6) Anti-Money Laundering Amendment to Distribution
Agreement for Pacific Capital U.S. Government
Securities Cash Assets Trust Series (viii)
(7) Distribution Assistance Agreement for All
Series (ii)
(8) Distribution Assistant Agreement for All
Series with BHC Securities, Inc. (ii)
(f) Not applicable
(g) Custody Agreement for All Series (ii)
(h) (1) Transfer Agency Agreement for All
Series (iii)
(2) Anti-Money Laundering Amendment to
Transfer Agency Agreement (viii)
(3) Customer Identification Services
Amendment to Transfer Agency
Agreement (ix)
(4) Current Administration Agreement for Pacific
Capital Cash Assets Trust Series (ii)
(4) (i) Proposed Administration Agreement for Pacific
Capital Cash Assets Trust Series (xiii)
(4) (a) Assignment and Assumption of Administration
Agreement for Pacific Capital Cash Assets
Trust Series (ix)
(5) Current Administration Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series (ii)
(5) (i) Proposed Administration Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series (xiii)
(5) (a) Assignment and Assumption of Administration
Agreement for Pacific Capital Tax-Free Cash
Assets Trust Series (ix)
(6) Current Administration Agreement for Pacific
Capital U.S. Government Securities Cash Assets
Trust Series (ii)
(6) (i) Proposed Administration Agreement for Pacific
Capital U.S. Government Securities Cash Assets
Trust Series (xiii)
(6) (a) Assignment and Assumption of Administration
Agreement for Pacific Capital U.S. Government
Securities Cash Assets Trust Series (ix)
(7) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific Capital
Cash Assets Trust Series (ii)
(8) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital Cash Assets Trust Series
(ii)
(9) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital Cash Assets Trust Series
(ii)
(10) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific Capital
Tax-Free Cash Assets Trust Series
(ii)
(11) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital Tax-Free Cash Assets Trust
Series (ii)
(12) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital Tax-Free Cash Assets Trust
Series (ii)
(13) Agreement between the Trust and Aquila
Distributors, Inc. for Pacific
Capital U.S. Government Securities Cash
Assets Trust Series (ii)
(14) Agreement between the Trust and Aquila
Management Corporation for Pacific
Capital U.S. Government Securities Cash
Assets Trust Series (ii)
(15) Agreement between the Trust and Hawaiian
Trust Company, Limited for Pacific
Capital U.S. Government Securities Cash
Assets Trust Series (ii)
(16) Principles of Cooperation for All Series (ii)
(i) Consent of Trust Counsel (to be filed by amendment)
(j) Consent of Independent Registered Public
Accounting Firm (to be filed by amendment)
(k) Not applicable
(l) Not applicable
(m) (1) Distribution Plan for Pacific Capital
Cash Assets Trust Series (ii)
(2) Distribution Plan for Pacific Capital
Tax-Free Cash Assets Trust Series (ii)
(3) Distribution Plan for Pacific Capital U.S.
Government Securities Cash Assets Trust Series (ii)
(n) Plan pursuant to Rule 18f-3 under the
1940 Act (vii)
(o) Reserved
(p) Codes of Ethics
(1) (a) Pacific Capital Cash Assets
Trust Series (xii)
(1) (b) Pacific Capital Tax-Free Cash Assets
Trust Series (xii)
(1) (c) Pacific Capital U.S. Government Securities
Cash Assets Trust Series (xii)
(2) The Adviser (xii)
(3) The Distributor (xii)
(i) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 20 dated May 25, 1996 and
incorporated herein by reference.
(ii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 21 dated July 27, 1997 and
incorporated herein by reference.
(iii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 22 dated May 27, 1998 and
incorporated herein by reference.
(iv) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 24 dated July 27, 1999 and
incorporated herein by reference.
(v) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 25 dated July 31, 2000 and
incorporated herein by reference.
(vi) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 26 dated July 26, 2001 and
incorporated herein by reference.
(vii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 27 dated July 29, 2002 and
incorporated herein by reference.
(viii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 28 dated July 29, 2003 and
incorporated herein by reference.
(ix) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 29 dated July 29, 2004 and
incorporated herein by reference.
(x) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 30 dated July 29, 2005 and
incorporated herein by reference.
(xi) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 31 dated July 27, 2006 and
incorporated herein by reference.
(xii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 32 dated July 30, 2007 and
incorporated herein by reference.
(xiii) Filed herewith.
ITEM 24. Persons Controlled By or Under Common Control
with Registrant
None
ITEM 25. Indemnification
Subdivision (c) of Section 12 of Article SEVENTH of Registrant's
Amended and Restated Declaration of Trust, filed as Exhibit 1 herewith,
is incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers, and controlling
persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in that Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer, or controlling person of
Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such Trustee, officer, or controlling person
in connection with the securities being registered, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 26. Business and Other Connections of Investment
Adviser
Asset Management Group of Bank of Hawaii, Registrant's investment
adviser, is a division of Bank of Hawaii. Bank of Hawaii is a
state-chartered bank. Bank of Hawaii is a subsidiary of Bank of Hawaii
Corporation, formerly Pacific Century Financial Corporation. Bank of
Hawaii Corporation is a bank holding company.
ITEM 27. Principal Underwriters
(a) Aquila Distributors, Inc. serves as principal underwriter to Aquila
Rocky Mountain Equity Fund, Aquila Three Peaks High Income Fund,
Churchill Tax-Free Fund of Kentucky, Hawaiian Tax-Free Trust,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund for Utah,
Tax-Free Fund of Colorado, Tax-Free Trust of Arizona, and Tax-Free
Trust of Oregon, in addition to serving as the Registrant's principal
underwriter.
(b) For information about the Directors and officers of Aquila
Distributors, Inc., reference is made to the Form BD filed by it under
the Securities Exchange Act of 1934.
(c) Not applicable.
ITEM 28. Location of Accounts and Records
All such accounts, books, and other documents are maintained by the
adviser, the administrator, the custodian, and the transfer agent,
whose addresses appear on the back cover pages of the Prospectuses and
Statements of Additional Information of the three Portfolios of the
Trust.
ITEM 29. Management Services
Not applicable.
ITEM 30. Undertakings
(a) Not applicable.
(b) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York and State of New York, on the 30th day
of May, 2008.
CASH ASSETS TRUST
(Registrant)
By /s/ Diana P. Herrmann
-----------------------------
Diana P. Herrmann, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed below by the following
persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ Diana P. Herrmann
_____________________ Trustee and 5/30/08
Diana P. Herrmann President __________
/s/Thomas W. Courtney 5/30/08
______________________ Trustee ___________
Thomas W. Courtney
/s/Stanley W. Hong 5/30/08
______________________ Trustee ___________
Stanley W. Hong
/s/ Theodore T. Mason
______________________ Chair of the 5/30/08
Theodore T. Mason Board ___________
/s/Russell K. Okata 5/30/08
______________________ Trustee ___________
Russell K. Okata
/s/Douglas Philpotts 5/30/08
_______________________ Trustee ___________
Douglas Philpotts
/s/Oswald K. Stender 5/30/08
_______________________ Trustee ___________
Oswald K. Stender
/s/Joseph P. DiMaggio 5/30/08
_______________________ Chief Financial Officer __________
Joseph P. DiMaggio and Treasurer
CASH ASSETS TRUST
Exhibit List
Exhibit Exhibit
Number Description
(i) Consent of Trust Counsel (to be filed by Amendment)
(g) Consent of Independent Registered Public
Accounting Firm (to be filed by Amendment)
(d) (1) (i) Proposed Investment Advisory Agreement for Pacific
Capital Cash Assets Trust Series
(d) (2) (i) Proposed Investment Advisory Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series
(d) (3) (i) Proposed Investment Advisory Agreement for Pacific
Capital U.S. Government Securities Cash Assets Trust Series
(h) (4) (i) Proposed Administration Agreement for Pacific
Capital Cash Assets Trust Series
(h) (5) (i) Proposed Administration Agreement for Pacific
Capital Tax-Free Cash Assets Trust
Series
(h) (6) (i) Proposed Administration Agreement for Pacific
Capital U.S. Government Securities Cash Assets
Trust Series (ii)
EX-99.D
3
pcata08catiaa.txt
PROPOSED CAT INVESTMENT ADVISORY AGREEMENT
PACIFIC CAPITAL CASH ASSETS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made as of [ ], 2008 by and between Cash Assets Trust
(the "Business Trust"), a Massachusetts business trust, 380 Madison Avenue,
Suite 2300, New York, NY 10017, and Asset Management Group of Bank of Hawaii
(the "Adviser"), Financial Plaza of the Pacific, P.O. Box 3170, Honolulu, Hawaii
96802,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Adviser have previously entered
into an Amended and Restated Investment Advisory Agreement with respect to a
portfolio of the Business Trust entitled Pacific Capital Cash Assets Trust (the
"Trust"); and
WHEREAS, the Business Trust and the Adviser now wish to enter into a
new agreement as herein set forth, referred to hereafter as "this Agreement";
and
WHEREAS, this Agreement has been approved by the Board of Trustees of
the Business Trust at a meeting held on May 31, 2008 and in addition has been
approved by the holders of a "majority" of the outstanding voting securities of
the Trust, as defined in the Investment Company Act of 1940 (the "Act"), at a
meeting held on [ ], 2008;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
managerial investment adviser to the Trust with respect to the investment of the
Trust's assets, and to supervise and arrange the purchase of securities for and
the sale of securities held in the portfolio of the Trust.
2. Duties and Obligations of the Adviser With Respect To
Investment of the Assets of the Trust
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the Business
Trust, the Adviser shall:
(i) Supervise continuously the investment program of the Trust and
the composition of its portfolio;
(ii) Determine what securities shall be purchased or sold by the
Trust;
(iii) Arrange for the purchase and the sale of securities held in
the portfolio of the Trust; and
(iv) Furnish information as to such securities to any provider of
fund accounting services to the Trust; monitor records of the
Trust as to the portfolio, including prices, maintained by
such provider of such services; and supply, monthly or more
frequently as may be necessary, pricing of the Trust's
portfolio based on available market quotations using a pricing
service or other source of pricing information satisfactory to
the Trust.
(b) Any investment program furnished by the Adviser under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by: (1) the Act and any rules or regulations in force thereunder; (2)
any other applicable laws, rules and regulations; (3) the Declaration of Trust
and By-Laws of the Business Trust as amended from time to time; (4) any policies
and determinations of the Board of Trustees of the Business Trust; and (5) the
fundamental policies of the Trust, as reflected in its registration statement
under the Act or as amended by the shareholders of the Trust.
(c) The Adviser shall give the Trust the benefit of its best judgment and
effort in rendering services hereunder, but the Adviser shall not be liable for
any loss sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon (i) its own investigation and research
or (ii) investigation and research made by any other individual, firm or
corporation, if such purchase, sale or retention shall have been made and such
other individual, firm or corporation shall have been selected in good faith by
the Adviser. Nothing herein contained shall, however, be construed to protect
the Adviser against any liability to the Trust or its security holders by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(d) Nothing in this Agreement shall prevent the Adviser or any affiliated
person (as defined in the Act) of the Adviser from acting as investment adviser
or manager for any other person, firm or corporation and shall not in any way
limit or restrict the Adviser or any such affiliated person from buying, selling
or trading any securities for its own or their own accounts or for the accounts
of others for whom it or they may be acting, provided, however, that the Adviser
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Trust
under this Agreement. It is agreed that the Adviser shall have no responsibility
or liability for the accuracy or completeness of the Business Trust's
Registration Statement under the Act and the Securities Act of 1933, except for
information supplied by the Adviser for inclusion therein. The Adviser shall
promptly inform the Business Trust as to any information concerning the Adviser
appropriate for inclusion in such Registration Statement, or as to any
transaction or proposed transaction which might result in an assignment of the
Agreement. The Business Trust agrees to indemnify the Adviser to the full extent
permitted by the Business Trust's Declaration of Trust.
(e) In connection with its duties to arrange for the purchase and sale
of the Trust's portfolio securities, the Adviser shall select such
broker-dealers ("dealers") as shall, in the Adviser's judgment, implement the
policy of the Trust to achieve "best execution," i.e., prompt, efficient, and
reliable execution of orders at the most favorable net price. The Adviser shall
cause the Trust to deal directly with the selling or purchasing principal or
market maker without incurring brokerage commissions unless the Adviser
determines that better price or execution may be obtained by paying such
commissions; the Trust expects that most transactions will be principal
transactions at net prices and that the Trust will incur little or no brokerage
costs. The Business Trust understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread between the bid
and asked prices. In allocating transactions to dealers, the Adviser is
authorized to consider, in determining whether a particular dealer will provide
best execution, the dealer's reliability, integrity, financial condition and
risk in positioning the securities involved, as well as the difficulty of the
transaction in question, and thus need not pay the lowest spread or commission
available if the Adviser determines in good faith that the amount of commission
is reasonable in relation to the value of the brokerage and research services
provided by the dealer, viewed either in terms of the particular transaction or
the Adviser's overall responsibilities as to the accounts as to which it
exercises investment discretion. If, on the foregoing basis, the transaction in
question could be allocated to two or more dealers, the Adviser is authorized,
in making such allocation, to consider whether a dealer has provided research
services, as further discussed below. Such research may be in written form or
through direct contact with individuals and may include quotations on portfolio
securities and information on particular issuers and industries, as well as on
market, economic, or institutional activities. The Business Trust recognizes
that no dollar value can be placed on such research services or on execution
services, that such research services may or may not be useful to the Trust
and/or other accounts of the Adviser, and that research received by such other
accounts may or may not be useful to the Trust.
3. Allocation of Expenses
The Adviser agrees that it will furnish the Trust, at the Adviser's
expense, all office space, facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser agrees
that it will supply, or cause to be supplied, to any sub-adviser, administrator
or principal underwriter of the Trust all necessary financial information in
connection with such sub-adviser's, administrator's or principal underwriter's
duties under any agreement between such sub-adviser, administrator or principal
underwriter and the Business Trust. The Adviser will also pay all compensation
of the Trust's officers, employees, and Trustees, if any, who are affiliated
persons of the Adviser, provided that if any Trustee is an affiliate of the
Adviser solely by reason of being a member of its Board of Directors, the Trust
may pay compensation to such Trustee, but at a rate no greater than the rate it
pays to its other Trustees. The Trust agrees to bear the costs of preparing and
setting in type its prospectuses, statements of additional information and
reports to its shareholders, and the costs of printing or otherwise producing
and distributing those copies of such prospectuses, statements of additional
information and reports as are sent to its shareholders. All costs and expenses
not expressly assumed by the Adviser under this Agreement or by such
sub-adviser, administrator or principal underwriter shall be paid by the Trust,
including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation of its Trustees other
than those affiliated with the Adviser or such sub-adviser, administrator or
principal underwriter and expenses of all of its Trustees; (v) legal and audit
expenses; (vi) custodian and transfer agent, or shareholder servicing agent,
fees and expenses; (vii) expenses incident to the issuance of its shares
(including issuance on the payment of, or reinvestment of, dividends); (viii)
fees and expenses incident to the registration under Federal or State securities
laws of the Trust or its shares; (ix) expenses of preparing, printing and
mailing reports and notices and proxy material to shareholders of the Trust; (x)
all other expenses incidental to holding meetings of the Trust's shareholders;
and (xi) such non-recurring expenses as may arise, including litigation
affecting the Trust and the legal obligations for which the Business Trust may
have to indemnify its officers and Trustees.
4. Compensation of the Adviser
The Business Trust agrees to pay the Adviser, and the Adviser agrees to accept
as full compensation for all services rendered by the Adviser as such, a
management fee payable monthly and computed on the net asset value of the Trust
as of the close of business each business day at the annual rate of 0.397 of 1%
of such net asset value on net assets of up to $400 million and on net assets
above that amount at an annual rate of 0.364 of 1% of such net assets.
5. Duration and Termination
(a) This Amended and Restated Investment Advisory Agreement shall become
effective upon the date first written above following approval by the
shareholders of the Trust and shall, unless terminated as hereinafter provided,
continue in effect until the June 30 next preceding the first anniversary of the
effective date of this Agreement, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually (1) by a
vote of the Business Trust's Board of Trustees, including a vote of a majority
of the Trustees who are not parties to this Agreement or "interested persons"
(as defined in the Act) of any such party, with votes cast in person at a
meeting called for the purpose of voting on such approval, or (2) by a vote of
the holders of a "majority" (as so defined) of the outstanding voting securities
of the Trust and by such a vote of the Trustees.
(b) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Business Trust sixty days' written notice (which notice
may be waived by the Business Trust) and may be terminated by the Business Trust
at any time without penalty upon giving the Adviser sixty days' written notice
(which notice may be waived by the Adviser), provided that such termination by
the Business Trust shall be directed or approved by a vote of a majority of its
Trustees in office at the time or by a vote of the holders of a majority (as
defined in the Act) of the voting securities of the Trust outstanding and
entitled to vote. This Agreement shall automatically terminate in the event of
its assignment (as defined in the Act).
6. Disclaimer of Shareholder Liability
The Adviser understands that the obligations of this Agreement are not
binding upon any shareholder of the Trust personally, but bind only the Business
Trust's property; the Adviser represents that it has notice of the provisions of
the Business Trust's Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Trust.
7. Notices of Meetings
The Business Trust agrees that notice of each meeting of the Board of
Trustees of the Business Trust will be sent to the Adviser and that the Business
Trust will make appropriate arrangements for the attendance (as persons present
by invitation) of such person or persons as the Adviser may designate.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
ATTEST: Cash Assets Trust
________________________ By:___________________________________
Asset Management Group
ATTEST: of Bank of Hawaii
________________________ By:___________________________________
EX-99.D
4
pcata08tfcatiaa.txt
PROPOSED TFCAT INVESTMENT ADVISORY AGREEMENT
PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made as of [ ], 2008 by and between Cash Assets Trust
(the "Business Trust"), a Massachusetts business trust, 380 Madison Avenue,
Suite 2300, New York, NY 10017, and Asset Management Group of Bank of Hawaii
(the "Adviser"), Financial Plaza of the Pacific, P.O. Box 3170, Honolulu, Hawaii
96802,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Adviser have previously entered
into an Amended and Restated Investment Advisory Agreement with respect to a
portfolio of the Business Trust entitled Pacific Capital Tax-Free Cash Assets
Trust (the "Trust"); and
WHEREAS, the Business Trust and the Adviser now wish to enter into a
new agreement as herein set forth, referred to hereafter as "this Agreement";
and
WHEREAS, this Agreement has been approved by the Board of Trustees of
the Business Trust at a meeting held on May 31, 2008 and in addition has been
approved by the holders of a "majority" of the outstanding voting securities of
the Trust, as defined in the Investment Company Act of 1940 (the "Act"), at a
meeting held on [ ], 2008;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
managerial investment adviser to the Trust with respect to the investment of the
Trust's assets, and to supervise and arrange the purchase of securities for and
the sale of securities held in the portfolio of the Trust.
2. Duties and Obligations of the Adviser With Respect To
Investment of the Assets of the Trust
(a) Subject to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Business Trust, the
Adviser shall:
(i) Supervise continuously the investment program of the Trust and
the composition of its portfolio;
(ii) Determine what securities shall be purchased or sold by the
Trust;
(iii) Arrange for the purchase and the sale of securities held in
the portfolio of the Trust; and
(iv) Furnish information as to such securities to any provider of
fund accounting services to the Trust; monitor records of the
Trust as to the portfolio, including prices, maintained by
such provider of such services; and supply, monthly or more
frequently as may be necessary, pricing of the Trust's
portfolio based on available market quotations using a pricing
service or other source of pricing information satisfactory to
the Trust.
(b) Any investment program furnished by the Adviser under this
section shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the Act and any rules or regulations in force
thereunder; (2) any other applicable laws, rules and regulations; (3) the
Declaration of Trust and By-Laws of the Business Trust as amended from time to
time; (4) any policies and determinations of the Board of Trustees of the
Business Trust; and (5) the fundamental policies of the Trust, as reflected in
its registration statement under the Act or as amended by the shareholders of
the Trust.
(c) The Adviser shall give the Trust the benefit of its best
judgment and effort in rendering services hereunder, but the Adviser shall not
be liable for any loss sustained by reason of the adoption of any investment
policy or the purchase, sale or retention of any security, whether or not such
purchase, sale or retention shall have been based upon (i) its own investigation
and research or (ii) investigation and research made by any other individual,
firm or corporation, if such purchase, sale or retention shall have been made
and such other individual, firm or corporation shall have been selected in good
faith by the Adviser. Nothing herein contained shall, however, be construed to
protect the Adviser against any liability to the Trust or its security holders
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(d) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the Act) of the Adviser from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way limit or restrict the Adviser or any such affiliated person
from buying, selling or trading any securities for its own or their own accounts
or for the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the performance of its
obligations to the Trust under this Agreement. It is agreed that the Adviser
shall have no responsibility or liability for the accuracy or completeness of
the Business Trust's Registration Statement under the Act and the Securities Act
of 1933, except for information supplied by the Adviser for inclusion therein.
The Adviser shall promptly inform the Business Trust as to any information
concerning the Adviser appropriate for inclusion in such Registration Statement,
or as to any transaction or proposed transaction which might result in an
assignment of the Agreement. The Business Trust agrees to indemnify the Adviser
to the full extent permitted by the Business Trust's Declaration of Trust.
(e) In connection with its duties to arrange for the purchase and sale
of the Trust's portfolio securities, the Adviser shall select such
broker-dealers ("dealers") as shall, in the Adviser's judgment, implement the
policy of the Trust to achieve "best execution," i.e., prompt, efficient, and
reliable execution of orders at the most favorable net price. The Adviser shall
cause the Trust to deal directly with the selling or purchasing principal or
market maker without incurring brokerage commissions unless the Adviser
determines that better price or execution may be obtained by paying such
commissions; the Trust expects that most transactions will be principal
transactions at net prices and that the Trust will incur little or no brokerage
costs. The Business Trust understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread between the bid
and asked prices. In allocating transactions to dealers, the Adviser is
authorized to consider, in determining whether a particular dealer will provide
best execution, the dealer's reliability, integrity, financial condition and
risk in positioning the securities involved, as well as the difficulty of the
transaction in question, and thus need not pay the lowest spread or commission
available if the Adviser determines in good faith that the amount of commission
is reasonable in relation to the value of the brokerage and research services
provided by the dealer, viewed either in terms of the particular transaction or
the Adviser's overall responsibilities as to the accounts as to which it
exercises investment discretion. If, on the foregoing basis, the transaction in
question could be allocated to two or more dealers, the Adviser is authorized,
in making such allocation, to consider whether a dealer has provided research
services, as further discussed below. Such research may be in written form or
through direct contact with individuals and may include quotations on portfolio
securities and information on particular issuers and industries, as well as on
market, economic, or institutional activities. The Business Trust recognizes
that no dollar value can be placed on such research services or on execution
services, that such research services may or may not be useful to the Trust
and/or other accounts of the Adviser, and that research received by such other
accounts may or may not be useful to the Trust.
3. Allocation of Expenses
The Adviser agrees that it will furnish the Trust, at the Adviser's
expense, all office space, facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser agrees
that it will supply, or cause to be supplied, to any sub-adviser, administrator
or principal underwriter of the Trust all necessary financial information in
connection with such sub-adviser's, administrator's or principal underwriter's
duties under any agreement between such sub-adviser, administrator or principal
underwriter and the Business Trust. The Adviser will also pay all compensation
of the Trust's officers, employees, and Trustees, if any, who are affiliated
persons of the Adviser, provided that if any Trustee is an affiliate of the
Adviser solely by reason of being a member of its Board of Directors, the Trust
may pay compensation to such Trustee, but at a rate no greater than the rate it
pays to its other Trustees. The Trust agrees to bear the costs of preparing and
setting in type its prospectuses, statements of additional information and
reports to its shareholders, and the costs of printing or otherwise producing
and distributing those copies of such prospectuses, statements of additional
information and reports as are sent to its shareholders. All costs and expenses
not expressly assumed by the Adviser under this Agreement or by such
sub-adviser, administrator or principal underwriter shall be paid by the Trust,
including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation of its Trustees other
than those affiliated with the Adviser or such sub-adviser, administrator or
principal underwriter and expenses of all of its Trustees; (v) legal and audit
expenses; (vi) custodian and transfer agent, or shareholder servicing agent,
fees and expenses; (vii) expenses incident to the issuance of its shares
(including issuance on the payment of, or reinvestment of, dividends); (viii)
fees and expenses incident to the registration under Federal or State securities
laws of the Trust or its shares; (ix) expenses of preparing, printing and
mailing reports and notices and proxy material to shareholders of the Trust; (x)
all other expenses incidental to holding meetings of the Trust's shareholders;
and (xi) such non-recurring expenses as may arise, including litigation
affecting the Trust and the legal obligations for which the Business Trust may
have to indemnify its officers and Trustees.
4. Compensation of the Adviser
The Business Trust agrees to pay the Adviser, and the Adviser
agrees to accept as full compensation for all services rendered by the Adviser
as such, a management fee payable monthly and computed on the net asset value of
the Trust as of the close of business each business day at the annual rate of
0.318 of 1% of such net asset value on net assets of up to $300 million and on
net assets above that amount at an annual rate of 0.285 of 1% of such net
assets.
5. Duration and Termination
(a) This Amended and Restated Investment Advisory Agreement
shall become effective upon the date first written above following approval by
the shareholders of the Trust and shall, unless terminated as hereinafter
provided, continue in effect until the June 30 next preceding the first
anniversary of the effective date of this Agreement, and from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (1) by a vote of the Business Trust's Board of Trustees,
including a vote of a majority of the Trustees who are not parties to this
Agreement or "interested persons" (as defined in the Act) of any such party,
with votes cast in person at a meeting called for the purpose of voting on such
approval, or (2) by a vote of the holders of a "majority" (as so defined) of the
outstanding voting securities of the Trust and by such a vote of the Trustees.
(b) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Business Trust sixty days' written notice (which notice
may be waived by the Business Trust) and may be terminated by the Business Trust
at any time without penalty upon giving the Adviser sixty days' written notice
(which notice may be waived by the Adviser), provided that such termination by
the Business Trust shall be directed or approved by a vote of a majority of its
Trustees in office at the time or by a vote of the holders of a majority (as
defined in the Act) of the voting securities of the Trust outstanding and
entitled to vote. This Agreement shall automatically terminate in the event of
its assignment (as defined in the Act).
6. Disclaimer of Shareholder Liability
The Adviser understands that the obligations of this Agreement
are not binding upon any shareholder of the Trust personally, but bind only the
Business Trust's property; the Adviser represents that it has notice of the
provisions of the Business Trust's Declaration of Trust disclaiming shareholder
liability for acts or obligations of the Trust.
7. Notices of Meetings
The Business Trust agrees that notice of each meeting of the
Board of Trustees of the Business Trust will be sent to the Adviser and that the
Business Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly authorized officers and their
seals to be hereunto affixed, all as of the day and year first above written.
ATTEST: Cash Assets Trust
________________________ By:___________________________________
Asset Management Group
ATTEST: of Bank of Hawaii
________________________ By:___________________________________
EX-99.D
5
pcata08usgcatiaa.txt
PROPOSED USGCAT INVESTMENT ADVISORY AGREEMENT
PACIFIC CAPITAL U.S. GOVERNMENT SECURITIES
CASH ASSETS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made as of [ ], 2008 by and between Cash Assets Trust
(the "Business Trust"), a Massachusetts business trust, 380 Madison Avenue,
Suite 2300, New York, NY 10017, and Asset Management Group of Bank of Hawaii
(the "Adviser"), Financial Plaza of the Pacific, P.O. Box 3170, Honolulu, Hawaii
96802,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Adviser have previously entered into an
Amended and Restated Investment Advisory Agreement with respect to a portfolio
of the Business Trust entitled Pacific Capital U.S. Governement Securities Cash
Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Adviser now wish to enter into a
new agreement as herein set forth, referred to hereafter as "this Agreement";
and
WHEREAS, this Agreement has been approved by the Board of Trustees of
the Business Trust at a meeting held on May 31, 2008 and in addition has been
approved by the holders of a "majority" of the outstanding voting securities of
the Trust, as defined in the Investment Company Act of 1940 (the "Act"), at a
meeting held on [ ], 2008;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
managerial investment adviser to the Trust with respect to the investment of the
Trust's assets, and to supervise and arrange the purchase of securities for and
the sale of securities held in the portfolio of the Trust.
2. Duties and Obligations of the Adviser With Respect To
Investment of the Assets of the Trust
(a) Subject to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Business Trust, the
Adviser shall:
(i) Supervise continuously the investment program of the Trust and
the composition of its portfolio;
(ii) Determine what securities shall be purchased or sold by the
Trust;
(iii) Arrange for the purchase and the sale of securities held in
the portfolio of the Trust; and
(iv) Furnish information as to such securities to any provider of
fund accounting services to the Trust; monitor records of the
Trust as to the portfolio, including prices, maintained by
such provider of such services; and supply, monthly or more
frequently as may be necessary, pricing of the Trust's
portfolio based on available market quotations using a pricing
service or other source of pricing information satisfactory to
the Trust.
(b) Any investment program furnished by the Adviser under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by: (1) the Act and any rules or regulations in force thereunder; (2)
any other applicable laws, rules and regulations; (3) the Declaration of Trust
and By-Laws of the Business Trust as amended from time to time; (4) any policies
and determinations of the Board of Trustees of the Business Trust; and (5) the
fundamental policies of the Trust, as reflected in its registration statement
under the Act or as amended by the shareholders of the Trust.
(c) The Adviser shall give the Trust the benefit of its best judgment and
effort in rendering services hereunder, but the Adviser shall not be liable for
any loss sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon (i) its own investigation and research
or (ii) investigation and research made by any other individual, firm or
corporation, if such purchase, sale or retention shall have been made and such
other individual, firm or corporation shall have been selected in good faith by
the Adviser. Nothing herein contained shall, however, be construed to protect
the Adviser against any liability to the Trust or its security holders by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(d) Nothing in this Agreement shall prevent the Adviser or any affiliated
person (as defined in the Act) of the Adviser from acting as investment adviser
or manager for any other person, firm or corporation and shall not in any way
limit or restrict the Adviser or any such affiliated person from buying, selling
or trading any securities for its own or their own accounts or for the accounts
of others for whom it or they may be acting, provided, however, that the Adviser
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Trust
under this Agreement. It is agreed that the Adviser shall have no responsibility
or liability for the accuracy or completeness of the Business Trust's
Registration Statement under the Act and the Securities Act of 1933, except for
information supplied by the Adviser for inclusion therein. The Adviser shall
promptly inform the Business Trust as to any information concerning the Adviser
appropriate for inclusion in such Registration Statement, or as to any
transaction or proposed transaction which might result in an assignment of the
Agreement. The Business Trust agrees to indemnify the Adviser to the full extent
permitted by the Business Trust's Declaration of Trust.
(e) In connection with its duties to arrange for the purchase and sale
of the Trust's portfolio securities, the Adviser shall select such
broker-dealers ("dealers") as shall, in the Adviser's judgment, implement the
policy of the Trust to achieve "best execution," i.e., prompt, efficient, and
reliable execution of orders at the most favorable net price. The Adviser shall
cause the Trust to deal directly with the selling or purchasing principal or
market maker without incurring brokerage commissions unless the Adviser
determines that better price or execution may be obtained by paying such
commissions; the Trust expects that most transactions will be principal
transactions at net prices and that the Trust will incur little or no brokerage
costs. The Business Trust understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread between the bid
and asked prices. In allocating transactions to dealers, the Adviser is
authorized to consider, in determining whether a particular dealer will provide
best execution, the dealer's reliability, integrity, financial condition and
risk in positioning the securities involved, as well as the difficulty of the
transaction in question, and thus need not pay the lowest spread or commission
available if the Adviser determines in good faith that the amount of commission
is reasonable in relation to the value of the brokerage and research services
provided by the dealer, viewed either in terms of the particular transaction or
the Adviser's overall responsibilities as to the accounts as to which it
exercises investment discretion. If, on the foregoing basis, the transaction in
question could be allocated to two or more dealers, the Adviser is authorized,
in making such allocation, to consider whether a dealer has provided research
services, as further discussed below. Such research may be in written form or
through direct contact with individuals and may include quotations on portfolio
securities and information on particular issuers and industries, as well as on
market, economic, or institutional activities. The Business Trust recognizes
that no dollar value can be placed on such research services or on execution
services, that such research services may or may not be useful to the Trust
and/or other accounts of the Adviser, and that research received by such other
accounts may or may not be useful to the Trust.
3. Allocation of Expenses
The Adviser agrees that it will furnish the Trust, at the Adviser's
expense, all office space, facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser agrees
that it will supply, or cause to be supplied, to any sub-adviser, administrator
or principal underwriter of the Trust all necessary financial information in
connection with such sub-adviser's, administrator's or principal underwriter's
duties under any agreement between such sub-adviser, administrator or principal
underwriter and the Business Trust. The Adviser will also pay all compensation
of the Trust's officers, employees, and Trustees, if any, who are affiliated
persons of the Adviser, provided that if any Trustee is an affiliate of the
Adviser solely by reason of being a member of its Board of Directors, the Trust
may pay compensation to such Trustee, but at a rate no greater than the rate it
pays to its other Trustees. The Trust agrees to bear the costs of preparing and
setting in type its prospectuses, statements of additional information and
reports to its shareholders, and the costs of printing or otherwise producing
and distributing those copies of such prospectuses, statements of additional
information and reports as are sent to its shareholders. All costs and expenses
not expressly assumed by the Adviser under this Agreement or by such
sub-adviser, administrator or principal underwriter shall be paid by the Trust,
including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation of its Trustees other
than those affiliated with the Adviser or such sub-adviser, administrator or
principal underwriter and expenses of all of its Trustees; (v) legal and audit
expenses; (vi) custodian and transfer agent, or shareholder servicing agent,
fees and expenses; (vii) expenses incident to the issuance of its shares
(including issuance on the payment of, or reinvestment of, dividends); (viii)
fees and expenses incident to the registration under Federal or State securities
laws of the Trust or its shares; (ix) expenses of preparing, printing and
mailing reports and notices and proxy material to shareholders of the Trust; (x)
all other expenses incidental to holding meetings of the Trust's shareholders;
and (xi) such non-recurring expenses as may arise, including litigation
affecting the Trust and the legal obligations for which the Business Trust may
have to indemnify its officers and Trustees.
4. Compensation of the Adviser
The Business Trust agrees to pay the Adviser, and the Adviser agrees to
accept as full compensation for all services rendered by the Adviser as such, a
management fee payable monthly and computed on the net asset value of the Trust
as of the close of business each business day at the annual rate of 0.328 of 1%
of such net asset value on net assets of up to $1,900 million and on net assets
above that amount at an annual rate of 0.295 of 1% of such net assets.
5. Duration and Termination
(a) This Amended and Restated Investment Advisory Agreement shall become
effective upon the date first written above following approval by the
shareholders of the Trust and shall, unless terminated as hereinafter provided,
continue in effect until the June 30 next preceding the first anniversary of the
effective date of this Agreement, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually (1) by a
vote of the Business Trust's Board of Trustees, including a vote of a majority
of the Trustees who are not parties to this Agreement or "interested persons"
(as defined in the Act) of any such party, with votes cast in person at a
meeting called for the purpose of voting on such approval, or (2) by a vote of
the holders of a "majority" (as so defined) of the outstanding voting securities
of the Trust and by such a vote of the Trustees.
(b) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Business Trust sixty days' written notice (which notice
may be waived by the Business Trust) and may be terminated by the Business Trust
at any time without penalty upon giving the Adviser sixty days' written notice
(which notice may be waived by the Adviser), provided that such termination by
the Business Trust shall be directed or approved by a vote of a majority of its
Trustees in office at the time or by a vote of the holders of a majority (as
defined in the Act) of the voting securities of the Trust outstanding and
entitled to vote. This Agreement shall automatically terminate in the event of
its assignment (as defined in the Act).
6. Disclaimer of Shareholder Liability
The Adviser understands that the obligations of this Agreement are not
binding upon any shareholder of the Trust personally, but bind only the Business
Trust's property; the Adviser represents that it has notice of the provisions of
the Business Trust's Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Trust.
7. Notices of Meetings
The Business Trust agrees that notice of each meeting of the
Board of Trustees of the Business Trust will be sent to the Adviser and that the
Business Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly authorized officers and their
seals to be hereunto affixed, all as of the day and year first above written.
ATTEST: Cash Assets Trust
________________________ By:___________________________________
Asset Management Group
ATTEST: of Bank of Hawaii
________________________ By:___________________________________
EX-99.D
6
catadm.txt
PROPOSED CAT ADMINISTRATION AGREEMENT
PACIFIC CAPITAL CASH ASSETS TRUST
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
THIS AGREEMENT, made _________, 2008 by and between Cash Assets Trust (the
"Business Trust"), a Massachusetts business trust, 380 Madison Avenue, Suite
2300, New York, New York 10017, and Aquila Investment Management LLC (the
"Administrator"), a Delaware limited liability company, 380 Madison Avenue,
Suite 2300, New York, New York 10017,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Administrator have previously
entered into an Amended and Restated Administration Agreement with respect to a
portfolio of the Business Trust entitled Cash Assets Trust (the "Trust"); and
WHEREAS, the Business Trust and the Administrator now wish to amend and
restate their agreement as herein set forth, referred to hereafter as "this
Agreement"; and
WHEREAS, Hawaiian Trust Company, Limited (the "Adviser"), in addition to
acting as investment adviser to each portfolio of the Business Trust and to
Hawaiian Tax-Free Trust, has become investment adviser to each series (a "New
Fund") of another open-end investment company registered under the Investment
Company Act of 1940 (the "Act"), the shares of which are readily exchangeable
into shares of the Trust; and
WHEREAS, this Agreement has been approved by the Board of Trustees of the
Trust;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General.
The Administrator shall perform (at its own expense) the functions set
forth more fully herein for the Trust and for the investment adviser for the
Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to the Trust and to
Each Other.
(a) Subject to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Business Trust, the
Administrator shall provide all administrative services to the Trust other than
those services relating to the investment portfolios of the Trust and the
maintenance of its accounting books and records; as part of such duties, the
Administrator shall:
(i) provide office space, personnel, facilities and equipment for the
performance of the following functions and for the maintenance of the
headquarters of the Trust;
(ii) oversee all relationships between the Trust and its transfer agent,
custodian, legal counsel, auditors and principal underwriter, including
the negotiation of agreements in relation thereto, the supervision and
coordination of the performance of such agreements, and the overseeing
of all administrative matters which are necessary or desirable for the
effective operation of the Trust and for the sale, servicing or
redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and other factual
information and advice regarding economic factors and trends, but shall
not generally furnish advice or make recommendations regarding the
purchase or sale of securities;
(iv) maintain the Trust's books and records (other than accounting books and
records), and prepare (or assist counsel and auditors in the
preparation of) all required proxy statements, reports to the Trust's
shareholders and Trustees, reports to and other filings with the
Securities and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of the Trust;
(v) prepare, on behalf of the Trust and at the Trust's expense, such
applications and reports as may be necessary to register or maintain
the registration of the Trust and/or its shares under the securities or
"Blue-Sky" laws of all such jurisdictions as may be required from time
to time;
(vi) respond to any inquiries or other communications of shareholders of the
Trust and broker-dealers, or if any such inquiry or communication is
more properly to be responded to by the Trust's shareholder servicing
and transfer agent or distributor, oversee such shareholder servicing
and transfer agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this section shall
at all times conform to, and be in accordance with, any requirements imposed by:
(1) the Act and any rules or regulations in force thereunder; (2) any other
applicable laws, rules and regulations; (3) the Declaration of Trust and By-Laws
of the Business Trust as amended and restated from time to time; (4) any
policies and determinations of the Board of Trustees of the Business Trust; and
(5) the fundamental policies of the Trust, as reflected in its registration
statement under the Act, or as amended by the shareholders of the Trust.
(c) The Administrator assumes no responsibility under this agreement other
than to render the services called for hereunder, and specifically assumes no
responsibilities for investment advice or the investment or reinvestment of the
Trust's assets.
(d) The Administrator shall not be liable for any error in judgment or for
any loss suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from wilful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Administrator or any
officer thereof from acting as investment adviser, sub-adviser, administrator or
manager for any other person, firm, or corporation, and shall not in any way
limit or restrict the Administrator or any of its officers, stockholders or
employees from buying, selling or trading any securities for its own or their
own accounts or for the accounts of others from whom it or they may be acting,
provided, however, that the Administrator expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under this Agreement.
The Business Trust shall indemnify the Administrator to the full extent
permitted by the Business Trust's Declaration of Trust.
3. Allocation of Expenses.
The Administrator shall, at its own expense, provide office space,
facilities, equipment, and personnel for the performance of its functions
hereunder and will pay all compensation of Trustees, officers, and employees of
the Trust who are affiliated persons of the Administrator.
4. Compensation of the Administrator.
(a) The Business Trust agrees to pay the Administrator, and the
Administrator agrees to accept as full compensation for all services rendered by
the Administrator as such, a management fee payable monthly and computed on the
net asset value of the Trust as of the close of business each business day at
the annual rate of 0.103 of 1% of such net asset value on net assets of up to
$400 million and on net assets above that amount at an annual rate of 0.086 of
1% of such net assets.
5. Duration and Termination.
(a) This Agreement shall become effective upon the date first above
written, after approval by a vote of a majority of the Trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party, with votes cast in person at a meeting called for the purpose of
voting on such approval and shall, unless terminated as hereinafter provided,
continue in effect until the June 30 next preceding the first anniversary of the
effective date of this Agreement, and from year to year thereafter.
(b) This Agreement may be terminated by the Administrator at any time
without penalty upon giving the Adviser and the Business Trust sixty days'
written notice (which notice may be waived by them) and may be terminated by the
Business Trust at any time without penalty upon giving the Administrator sixty
days' written notice (which notice may be waived by the Administrator) provided
that such termination by the Business Trust shall be directed or approved by a
vote of a majority of its Trustees in office at the time, including a majority
of the Trustees who are not interested persons (as defined in the Act) of the
Business Trust.
6. Disclaimer of Shareholder Liability
The Administrator understands that the obligations of this Agreement are not
binding upon any shareholder of the Trust personally, but bind only the Trust's
property; the Administrator represents that it has notice of the provisions of
the Business Trust's Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
ATTEST: Cash Assets Trust
________________________ By:___________________________________
Assistant Secretary Vice President
ATTEST: Aquila Investment Management LLC
_______________________ By:___________________________________
Treasurer and Asst. Secy. President and Chairman
EX-99.D
7
tfcatadm.txt
PROPOSED TFCAT ADMINISTRATION AGREEMENT
PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
THIS AGREEMENT, made _________, 2008 by and between Cash Assets Trust (the
"Business Trust"), a Massachusetts business trust, 380 Madison Avenue, Suite
2300, New York, New York 10017, and Aquila Investment Management LLC (the
"Administrator"), a Delaware limited liability company, 380 Madison Avenue,
Suite 2300, New York, New York 10017,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Administrator have previously entered
into an Amended and Restated Administration Agreement with respect to a
portfolio of the Business Trust entitled Tax-Free Cash Assets Trust (the
"Trust"); and
WHEREAS, the Business Trust and the Administrator now wish to amend and
restate their agreement as herein set forth, referred to hereafter as "this
Agreement"; and
WHEREAS, Hawaiian Trust Company, Limited (the "Adviser"), in addition to
acting as investment adviser to each portfolio of the Business Trust and to
Hawaiian Tax-Free Trust, has become investment adviser to each series (a "New
Fund") of another open-end investment company registered under the Investment
Company Act of 1940 (the "Act"), the shares of which are readily exchangeable
into shares of the Trust; and
WHEREAS, this Agreement has been approved by the Board of Trustees of the
Trust;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General.
The Administrator shall perform (at its own expense) the functions set
forth more fully herein for the Trust and for the investment adviser for the
Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to the Trust and to
Each Other.
(a) Subject to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Business Trust, the
Administrator shall provide all administrative services to the Trust other than
those services relating to the investment portfolios of the Trust and the
maintenance of its accounting books and records; as part of such duties, the
Administrator shall:
(i) provide office space, personnel, facilities and equipment for the
performance of the following functions and for the maintenance of the
headquarters of the Trust;
(ii) oversee all relationships between the Trust and its transfer agent,
custodian, legal counsel, auditors and principal underwriter, including
the negotiation of agreements in relation thereto, the supervision and
coordination of the performance of such agreements, and the overseeing
of all administrative matters which are necessary or desirable for the
effective operation of the Trust and for the sale, servicing or
redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and other factual
information and advice regarding economic factors and trends, but shall
not generally furnish advice or make recommendations regarding the
purchase or sale of securities;
(iv) maintain the Trust's books and records (other than accounting books and
records), and prepare (or assist counsel and auditors in the
preparation of) all required proxy statements, reports to the Trust's
shareholders and Trustees, reports to and other filings with the
Securities and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of the Trust;
(v) prepare, on behalf of the Trust and at the Trust's expense, such
applications and reports as may be necessary to register or maintain
the registration of the Trust and/or its shares under the securities or
"Blue-Sky" laws of all such jurisdictions as may be required from time
to time;
(vi) respond to any inquiries or other communications of shareholders of the
Trust and broker-dealers, or if any such inquiry or communication is
more properly to be responded to by the Trust's shareholder servicing
and transfer agent or distributor, oversee such shareholder servicing
and transfer agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this section shall
at all times conform to, and be in accordance with, any requirements imposed by:
(1) the Act and any rules or regulations in force thereunder; (2) any other
applicable laws, rules and regulations; (3) the Declaration of Trust and By-Laws
of the Business Trust as amended and restated from time to time; (4) any
policies and determinations of the Board of Trustees of the Business Trust; and
(5) the fundamental policies of the Trust, as reflected in its registration
statement under the Act, or as amended by the shareholders of the Trust.
(c) The Administrator assumes no responsibility under this agreement other
than to render the services called for hereunder, and specifically assumes no
responsibilities for investment advice or the investment or reinvestment of the
Trust's assets.
(d) The Administrator shall not be liable for any error in judgment or for
any loss suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from wilful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Administrator or any
officer thereof from acting as investment adviser, sub-adviser, administrator or
manager for any other person, firm, or corporation, and shall not in any way
limit or restrict the Administrator or any of its officers, stockholders or
employees from buying, selling or trading any securities for its own or their
own accounts or for the accounts of others from whom it or they may be acting,
provided, however, that the Administrator expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under this Agreement.
The Business Trust shall indemnify the Administrator to the full extent
permitted by the Business Trust's Declaration of Trust.
3. Allocation of Expenses.
The Administrator shall, at its own expense, provide office space,
facilities, equipment, and personnel for the performance of its functions
hereunder and will pay all compensation of Trustees, officers, and employees of
the Trust who are affiliated persons of the Administrator.
4. Compensation of the Administrator.
(a) The Business Trust agrees to pay the Administrator, and the
Administrator agrees to accept as full compensation for all services rendered by
the Administrator as such, a management fee payable monthly and computed on the
net asset value of the Trust as of the close of business each business day at
the annual rate of 0.082 of 1% of such net asset value on net assets of up to
$300 million and on net assets above that amount at an annual rate of 0.065 of
1% of such net assets.
5. Duration and Termination.
(a) This Agreement shall become effective upon the date first above
written, after approval by a vote of a majority of the Trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party, with votes cast in person at a meeting called for the purpose of
voting on such approval and shall, unless terminated as hereinafter provided,
continue in effect until the June 30 next preceding the first anniversary of the
effective date of this Agreement, and from year to year thereafter.
(b) This Agreement may be terminated by the Administrator at any time
without penalty upon giving the Adviser and the Business Trust sixty days'
written notice (which notice may be waived by them) and may be terminated by the
Business Trust at any time without penalty upon giving the Administrator sixty
days' written notice (which notice may be waived by the Administrator) provided
that such termination by the Business Trust shall be directed or approved by a
vote of a majority of its Trustees in office at the time, including a majority
of the Trustees who are not interested persons (as defined in the Act) of the
Business Trust.
6. Disclaimer of Shareholder Liability
The Administrator understands that the obligations of this Agreement are not
binding upon any shareholder of the Trust personally, but bind only the Trust's
property; the Administrator represents that it has notice of the provisions of
the Business Trust's Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
ATTEST: Tax-Free Cash Assets Trust
________________________ By:___________________________________
Assistant Secretary Vice President
ATTEST: Aquila Investment Management LLC
_______________________ By:___________________________________
Treasurer and Asst. Secy. President and Chairman
EX-99.D
8
uscatadm.txt
PROPOSED USGCAT ADMINISTRATION AGREEMENT
PACIFIC CAPITAL U.S GOVERNMENT SECURITIES CASH ASSETS TRUST
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
THIS AGREEMENT, made _________, 2008 by and between Cash Assets Trust (the
"Business Trust"), a Massachusetts business trust, 380 Madison Avenue, Suite
2300, New York, New York 10017, and Aquila Investment Management LLC (the
"Administrator"), a Delaware limited liability company, 380 Madison Avenue,
Suite 2300, New York, New York 10017,
W I T N E S S E T H :
WHEREAS, the Business Trust and the Administrator have previously
entered into an Amended and Restated Administration Agreement with respect to a
portfolio of the Business Trust entitled U.S. Government Securities Cash Assets
Trust (the "Trust"); and
WHEREAS, the Business Trust and the Administrator now wish to
amend and restate their agreement as herein set forth, referred to hereafter as
"this Agreement"; and
WHEREAS, Hawaiian Trust Company, Limited (the "Adviser"), in addition to
acting as investment adviser to each portfolio of the Business Trust and to
Hawaiian Tax-Free Trust, has become investment adviser to each series (a "New
Fund") of another open-end investment company registered under the Investment
Company Act of 1940 (the "Act"), the shares of which are readily exchangeable
into shares of the Trust; and
WHEREAS, this Agreement has been approved by the Board of Trustees of the
Trust;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General.
The Administrator shall perform (at its own expense) the functions set
forth more fully herein for the Trust and for the investment adviser for the
Trust (the "Adviser").
2. Duties and Obligations of the Adviser and Administrator to the Trust and to
Each Other.
(a) Subject to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Business Trust, the
Administrator shall provide all administrative services to the Trust other than
those services relating to the investment portfolios of the Trust and the
maintenance of its accounting books and records; as part of such duties, the
Administrator shall:
(i) provide office space, personnel, facilities and equipment for the
performance of the following functions and for the maintenance of the
headquarters of the Trust;
(ii) oversee all relationships between the Trust and its transfer agent,
custodian, legal counsel, auditors and principal underwriter, including
the negotiation of agreements in relation thereto, the supervision and
coordination of the performance of such agreements, and the overseeing
of all administrative matters which are necessary or desirable for the
effective operation of the Trust and for the sale, servicing or
redemption of the Trust's shares;
(iii) provide to the Adviser and the Trust statistical and other factual
information and advice regarding economic factors and trends, but shall
not generally furnish advice or make recommendations regarding the
purchase or sale of securities;
(iv) maintain the Trust's books and records (other than accounting books and
records), and prepare (or assist counsel and auditors in the
preparation of) all required proxy statements, reports to the Trust's
shareholders and Trustees, reports to and other filings with the
Securities and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of the Trust;
(v) prepare, on behalf of the Trust and at the Trust's expense, such
applications and reports as may be necessary to register or maintain
the registration of the Trust and/or its shares under the securities or
"Blue-Sky" laws of all such jurisdictions as may be required from time
to time;
(vi) respond to any inquiries or other communications of shareholders of the
Trust and broker-dealers, or if any such inquiry or communication is
more properly to be responded to by the Trust's shareholder servicing
and transfer agent or distributor, oversee such shareholder servicing
and transfer agent's or distributor's response thereto.
(b) Any activities performed by the Administrator under this section shall
at all times conform to, and be in accordance with, any requirements imposed by:
(1) the Act and any rules or regulations in force thereunder; (2) any other
applicable laws, rules and regulations; (3) the Declaration of Trust and By-Laws
of the Business Trust as amended and restated from time to time; (4) any
policies and determinations of the Board of Trustees of the Business Trust; and
(5) the fundamental policies of the Trust, as reflected in its registration
statement under the Act, or as amended by the shareholders of the Trust.
(c) The Administrator assumes no responsibility under this agreement other
than to render the services called for hereunder, and specifically assumes no
responsibilities for investment advice or the investment or reinvestment of the
Trust's assets.
(d) The Administrator shall not be liable for any error in judgment or for
any loss suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from wilful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Administrator or any
officer thereof from acting as investment adviser, sub-adviser, administrator or
manager for any other person, firm, or corporation, and shall not in any way
limit or restrict the Administrator or any of its officers, stockholders or
employees from buying, selling or trading any securities for its own or their
own accounts or for the accounts of others from whom it or they may be acting,
provided, however, that the Administrator expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Adviser or the Trust under this Agreement.
The Business Trust shall indemnify the Administrator to the full extent
permitted by the Business Trust's Declaration of Trust.
3. Allocation of Expenses.
The Administrator shall, at its own expense, provide office space,
facilities, equipment, and personnel for the performance of its functions
hereunder and will pay all compensation of Trustees, officers, and employees of
the Trust who are affiliated persons of the Administrator.
4. Compensation of the Administrator.
(a) The Business Trust agrees to pay the Administrator, and the
Administrator agrees to accept as full compensation for all services rendered by
the Administrator as such, a management fee payable monthly and computed on the
net asset value of the Trust as of the close of business each business day at
the annual rate of 0.072 of 1% of such net asset value on net assets of up to
$1,900 million and on net assets above that amount at an annual rate of 0.055 of
1% of such net assets.
5. Duration and Termination.
(a) This Agreement shall become effective upon the date first above
written, after approval by a vote of a majority of the Trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party, with votes cast in person at a meeting called for the purpose of
voting on such approval and shall, unless terminated as hereinafter provided,
continue in effect until the June 30 next preceding the first anniversary of the
effective date of this Agreement, and from year to year thereafter.
(b) This Agreement may be terminated by the Administrator at any time
without penalty upon giving the Adviser and the Business Trust sixty days'
written notice (which notice may be waived by them) and may be terminated by the
Business Trust at any time without penalty upon giving the Administrator sixty
days' written notice (which notice may be waived by the Administrator) provided
that such termination by the Business Trust shall be directed or approved by a
vote of a majority of its Trustees in office at the time, including a majority
of the Trustees who are not interested persons (as defined in the Act) of the
Business Trust.
6. Disclaimer of Shareholder Liability
The Administrator understands that the obligations of this Agreement are not
binding upon any shareholder of the Trust personally, but bind only the Trust's
property; the Administrator represents that it has notice of the provisions of
the Business Trust's Declaration of Trust disclaiming shareholder liability for
acts or obligations of the Business Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
ATTEST: U.S. Government Securities Cash Assets Trust
_____________________ By:___________________________________
Assistant Secretary Vice President
ATTEST: Aquila Investment Management LLC
_____________________ By:___________________________________
Treasurer and Asst. Secy. President and Chairman
COVER
9
filename9.txt
BUTZEL LONG, a professional corporation
380 Madison Avenue,
22nd Floor
New York, NY 10017
Tel: (212) 818-1110
FAX: (212) 818-0494
e-mail: barrett@butzel.com
May 30, 2008
BY EDGAR
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Cash Assets Trust
File Nos. 2-92164 and 811-4066
Dear Sirs:
On behalf of the three portfolios of Cash Assets Trust (the "Funds") I
enclose for filing with the Commission, pursuant to Rule 485(a) under the
Securities Act of 1933 (the "1933 Act") and pursuant to the Investment Company
Act of 1940 (the "1940 Act"), the following documents:
In accordance with Rule 472(b) under the 1933 Act and Rule 8b-11 under
the 1940 Act, the text on Form N-1A of Post-Effective Amendment No. 33
to the Registration Statement of the Funds under the 1933 Act and
Amendment No. 32 to the Registration Statement of the Funds under the
1940 Act, marked to show changes.
Pursuant to Rule 485(a) it is proposed that this amendment will become
effective on July 31, 2008.
This filing is being made under Rule 485(a) because the Funds have
filed a joint proxy statement for shareholder meetings to be held July 16, 2008.
In addition to routine items, election of Trustees and approval of independent
registered public accounting firm, the meeting will consider approval of new
Advisory Agreements which will include new fee rates and breakpoints which
differ from those in the current advisory agreements and which will eliminate
current fee limitations, all of which changes operate in conjunction with
related changes in the administration agreements of the respective Funds. If the
meeting should not approve the new agreements, the Funds will file an amendment
under Rule 485(b) because the existing advisory agreements will continue in
effect. The terms of the new agreements are otherwise substantially identical to
those of the existing agreements.
The staff is advised that other than disclosures relating to the
foregoing, this filing contains only routine annual updates. Selective review
would accordingly be appropriate.
The staff is advised that not all of the financial material required
was available at the time of this filing. It is our intention to file a
superseding amendment under Rule 485(b) when such material becomes available to
become effective July 31, 2008.
Please provide comments to me or to my partner Robert Jones at the
above telephone number, 212-818-1110.
Very truly yours,
/s/ William L.D. Barrett
William L. D. Barrett