-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jp4rqhMxmOwqUfB4YjlBI2Psp+4vuep0x9h0DH5s3TVMgbSPIaqUfQ3Rqfd/C2f9 6AdvxUgv4lMAekBUfAKi0g== 0000749748-96-000001.txt : 19960123 0000749748-96-000001.hdr.sgml : 19960123 ACCESSION NUMBER: 0000749748-96-000001 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960322 FILED AS OF DATE: 19960122 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASH ASSETS TRUST CENTRAL INDEX KEY: 0000749748 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136844974 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-04066 FILM NUMBER: 96505805 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE #300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVENUE STREET 2: #2300 CITY: NEW YORK STATE: NY ZIP: 10017 PRE 14A 1 Preliminary Copy IMPORTANT NOTICE PLEASE READ IMMEDIATELY PACIFIC CAPITAL CASH ASSETS TRUST 380 Madison Avenue, Suite 2300, New York, N.Y. 10017 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD on March 22, 1996 TO OUR SHAREHOLDERS: The purpose of this Notice is to advise you that an Annual Meeting of the Shareholders of Pacific Capital Cash Assets Trust (the "Trust") will be held: Place: (a) at the offices of the Trust 380 Madison Avenue Suite 2300 New York, NY 10017 Time: (b) on March 22, 1996 at 10:00 a.m., local time; Purposes: (c) for the following purposes: (i) to elect eleven Trustees; each Trustee elected will hold office until the next annual meeting of the Trust's shareholders or until his or her successor is duly elected; (ii) to ratify (that is, to approve) or reject the selection of KPMG Peat Marwick LLP as the Trust's independent auditors for the fiscal year ending March 31, 1996 (Proposal No. 1); PLEASE NOTE: If you do not expect to attend the Meeting, you are requested to indicate voting instructions on the enclosed proxy and to date, sign and return it in the accompanying stamped envelope. To avoid unnecessary expense to the Trust, your cooperation is requested in mailing in your proxy no matter how large or small your holding may be. (iii) to act upon a proposed amended and restated Investment Advisory Agreement to permit the Trust to pay fees to Trustees who are Directors of the Adviser (Proposal No. 2); and (iv) to act upon any other matters which may properly come before the Meeting at the scheduled time and place or any adjourned meeting or meetings. Who Can Vote What Shares: (d) To vote at the Meeting, you must have been a shareholder of the Trust's Original Share Class or the Trust's Service Share Class on the Trust's records at the close of business on January 5, 1996 (the "record date"). Also, the number of shares held by you according to such records at the close of business on the record date determines the number of shares you may vote at the Meeting (or any adjourned meeting or meetings). By Order of the Board of Trustees, EDWARD M. W. HINES Secretary February ***, 1996 (ii) PACIFIC CAPITAL CASH ASSETS TRUST 380 Madison Avenue, Suite 2300, New York, New York 10017 PROXY STATEMENT The Annual Meeting of the Shareholders of Pacific Capital Cash Assets Trust will consider a Proposal of vital importance to the Trust, in addition to election of Trustees and approval of the Trust's auditors: * Action on an amended and restated Investment Advisory Agreement which will provide for payment to Trustees who are Directors of the Adviser; See Proposal No. 2. The Board of Trustees believes that this proposal is in the best interest of the Trust and its shareholders. Please read the proxy statement and then indicate your vote on the enclosed proxy card as soon as possible. INTRODUCTION The purpose of the Notice (the first two pages of this document) is to advise you of the time, place and purposes of an Annual Meeting of the Shareholders of Pacific Capital Cash Assets Trust (the "Trust"). The purpose of this proxy statement (all the rest of this document) is to give you information on which you may base your decisions as to the choices, if any, you make on the enclosed proxy card. A copy of the Trust's most recent annual report and most recent semi-annual report will be sent to you without charge upon written request to the Trust's Distributor, Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by calling 800-***** toll-free or 212-697-6666. The Trust's organizer and administrator (the "Administrator") is Aquila Management Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The Trust's principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017. Hawaiian Trust Company, Limited, Financial Plaza of the Pacific, P.O. Box 3170 Honolulu, Hawaii 96802 serves as the Trust's Investment Adviser. This Notice and Proxy Statement are first being mailed on or about February ***, 1996. Cash Assets Trust, a Massachusetts business trust is a professionally managed, open-end investment company consisting of three separate funds or portfolios: Pacific Capital Cash Assets Trust ("CAT"), Pacific Capital Tax-Free Cash Assets Trust ("TFCAT") and Pacific Capital U.S. Treasuries Cash Assets Trust ("USTCAT"). In this Proxy Statement the "Business Trust" means Cash Assets Trust, the business trust, the "Funds" means the three portfolios of the Business Trust and the "Trust" means the Portfolio, Pacific Capital Cash Assets Trust. There are two classes of shares of each of the Funds: "Service Shares" and "Original Shares." The enclosed proxy card authorizes the persons named (or their substitutes) to vote your shares; the Trust calls these persons the "proxy holders." As to the election of Trustees you may authorize the proxy holders to vote your shares for the entire slate indicated below by marking the appropriate box on the proxy card or by merely signing and returning your proxy card with no instructions. Or, you may withhold the authority of the proxy holders to vote on the election of Trustees by marking the appropriate box. Also, you may withhold that authority as to any particular nominee by striking a line through the nominee's name on the proxy card. As to the other matters listed on the proxy card, you may direct the proxy holders to vote your shares on those proposals by checking the appropriate box "For" or "Against" or instruct them not to vote your shares on a proposal by checking the "Abstain" box. If you return your signed proxy card and do not check any box on a proposal, the proxy holders will vote your shares for that proposal. Shares held by brokers in "street name" and not voted or marked as abstentions will not be counted for purposes of determining a quorum. You may end the power of the proxy holders to vote your shares after you have signed and returned your proxy card and before the power is used by (i) so notifying the Trust in writing; (ii) signing a new and different proxy card (if the Trust receives it before the old one is used); or (iii) voting your shares in person or by your duly appointed agent at the meeting. The Trust is sending you this Notice and Proxy Statement in connection with the solicitation by its Trustees of proxy cards ("proxies") to be used at the Annual Meeting to be held at the time and place and for the purposes indicated in the Notice or any adjourned meeting or meetings. The Trust pays the costs of the solicitation. Proxies are being solicited by the use of the mails; they may also be solicited by telephone, facsimile and personal interviews. Brokerage firms, banks and others may be requested to forward this Notice and Proxy Statement to beneficial owners of the Trust's shares so that these owners may authorize the voting of these shares. The Trust will pay these firms for their out-of-pocket expenses for doing so. Each shareholder of the Business Trust on the record date is entitled to one (1) vote for each dollar (and a proportionate fractional vote for each fraction of a dollar) of net asset value (determined as of the record date) represented by full and fractional shares held on the record date. The meeting will act upon certain matters that affect the Business Trust as a whole: the election of Trustees, the action on the selection of auditors (Proposal No. 1). On matters that affect the Business Trust as a whole, all shareholders of the Business Trust, including the shareholders both classes of the Trust and both classes of the other two Portfolios, are entitled to vote at the meeting. With respect to Proposal No. 2, a matter that affects only the Trust, only shareholders of both classes of the Trust are entitled to vote and the shareholders of the other two portfolios are not entitled to vote. On January 5, 1996 the total number of shares outstanding for the Business Trust as a whole, and for each of the three Funds, was as set forth in the table on Exhibit A to this Proxy Statement. Also listed on Exhibit A are the names and addresses of the holders as of that date of more than 5% of the outstanding shares of the Business Trust and of each Fund. Shareholdings are in the names of the holders listed, unless stated to be in the name of a nominee. ELECTION OF TRUSTEES At the Meeting, eleven Trustees are to be elected. Whenever it is stated in this Proxy Statement that a matter is to be acted on at the Meeting, this means the Meeting held at the scheduled time or any adjourned meeting or meetings. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can instruct the proxy holders as to the voting of your shares as to the election of Trustees. Each of the nominees is presently a Trustee and was previously elected by the shareholders. Messrs. Gushman, Hong, Okata and Stender were elected by the shareholders on March 31, 1993. Each of the other nominees has been a Trustee since the beginning of the Trust's operations in 1984, except for Mr. Carlson, who was originally elected a Trustee at a meeting of the Board of Trustees held on October 19, 1987, Mr. Alden, who was originally elected at a meeting of the Board of Trustees held on June 12, 1989 and Mr. Philpotts, who was originally elected at a meeting of the Board of Trustees held June 6, 1992. Mrs. Thelma Chen-Hoon Zen, a founding Trustee, has advised the Trust that she will not be a candidate for reelection because of health reasons. On the record date the officers and Trustees of the Trust held as a group less than 1% of the outstanding voting shares of the Business Trust or the Trust. Each of the Trust's Trustees and officers holds the same position with all of the Funds, the Trust and the two other series of the Business Trust. Each of the Trust's Trustees is also a Trustee of Hawaiian Tax-Free Trust, a municipal bond mutual fund having the same Adviser and Administrator as the Trust. The beneficial ownership of shares indicated below includes voting and investment control unless otherwise indicated. Shares are given to the nearest full share. In the information below, the Trust's Administrator, Aquila Management Corporation, is referred to as the "Administrator," the Trust's Distributor, Aquila Distributors, Inc., is referred to as the "Distributor" and Hawaiian Trust Company, Limited is referred to by that name or as the "Adviser." Mr. Herrmann is an interested person of the Trust, as that term is defined in the Investment Company Act of 1940 (the "1940 Act"), as an officer of the Trust and as a Director, officer and shareholder of Aquila Distributors, Inc. (the "Distributor"). Mr. Philpotts is an interested person of the Trust as a shareholder of the Adviser's corporate parent. They are so designated by an asterisk. Lacy B. Herrmann*, President and Chairman of the Board of Trustees, Age: 66, Shares Owned: None Founder of the Trust and President and a Director of the Administrator since 1984; Founder, President and Chairman of the Board of Trustees of Prime Cash Fund since 1982, of Short Term Asset Reserves since 1984, of Churchill Cash Reserves Trust since 1985 and of Cascades Cash Fund, 1989-1994, all of which are money market funds to which the Administrator is administrator and which together with the Funds are referred to as the "Money Funds"; Founder, President and Chairman of the Board of Trustees of Hawaiian Tax-Free Trust since 1984, of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado since 1987 and of Tax-Free Fund For Utah and Narragansett Insured Tax- Free Income Fund since 1992, all of which are tax-free municipal bond funds, and an equity fund, Aquila Rocky Mountain Equity Fund since 1993, to all of which the Administrator is administrator and which are referred to as the "Bond and Equity Funds"; Chairman and President, Chief Executive Officer (Chairman of the Board of Trustees and/or President) and Trustee of Capital Cash Management Trust ("CCMT"), since 1981 and Founder and executive officer (since 1974) of CCMT and its predecessor; Vice President, a Director and Secretary since 1981 (formerly Treasurer) of the Distributor, which is distributor (i.e., principal underwriter) for the Money Funds and the Bond and Equity Funds; President and a Director of STCM Management Company, Inc., Adviser to CCMT; Chairman, President and a Director since 1984 of InCap Management Corporation, formerly sub-adviser and administrator of Prime Cash Fund and Short Term Asset Reserves; Director or Trustee of the various Quest for Value Funds, a group of stock, bond and money market mutual funds, since 1983; Director of Saratoga Advantage Trust, a group of mutual funds, since 1994; Trustee of Brown University since 1990; actively involved for many years in leadership roles with university, school and charitable organizations. Vernon R. Alden, Trustee, Age: 72, Shares Owned: None Director of Augat Inc., a manufacturing corporation, since 1979, Colgate Palmolive Company since 1974, Digital Equipment Corporation, a computer manufacturing corporation, since 1959, Intermet Corporation, an independent foundry, since 1986, and Sonesta International Hotels Corporation since 1978; Chairman of the Board and Executive Committee of The Boston Company, Inc., a financial services company, 1969-1978; Trustee of Tax-Free Trust of Oregon since 1988, of Hawaiian Tax-Free Trust, of Cascades Cash Fund, 1989-1994 and of Narragansett Insured Tax-Free Income Fund since 1992; Associate Dean and member of the faculty of Harvard University Graduate School of Business Administration, 1951-1962; member of the faculty and Program Director of Harvard Business School - University of Hawaii Advanced Management Program, summer of 1959 and 1960; President of Ohio University, 1962-1969; Chairman of The Japan Society of Boston, Inc., and member of several Japan-related advisory councils; Chairman of the Massachusetts Business Development Council and the Massachusetts Foreign Business Council, 1978-1983; Trustee of the Boston Symphony Orchestra since 1975; Chairman of the Massachusetts Council on the Arts and Humanities, 1972-1984; Member of the Board of Fellows of Brown University, 1969-1986; Trustee and member of the Executive Committee, Plymouth Plantation; trustee of various other cultural and educational organizations; Honorary Consul General of the Royal Kingdom of Thailand. Arthur K. Carlson, Trustee, Age: 73, Shares Owned: None Retired; Senior Vice President and Manager of the Trust Division of The Valley National Bank of Arizona, 1977-1987; Trustee of Tax-Free Fund of Colorado, Hawaiian Tax-Free Trust and Tax-Free Trust of Arizona since 1987 and of Aquila Rocky Mountain Equity Fund since 1993; previously Vice President of Investment Research at Citibank, New York City, and prior to that Vice President and Director of Investment Research of Irving Trust Company, New York City; past President of The New York Society of Security Analysts and currently a member of the Phoenix Society of Financial Analysts; formerly Director of the Financial Analysts Federation; past Chairman of the Board and, currently, Director of Mercy Healthcare of Arizona, Phoenix, Arizona since 1990; Director of Northern Arizona University Foundation since 1990; present or formerly an officer and/or director of various other community and professional organizations. William M. Cole, Trustee, Age: 64, Shares Owned: None President of Cole International, Inc., financial and shipping consultants, since 1974; President of Cole Associates, shopping center and real estate developers, 1974-1976; President of Seatrain Lines, Inc., 1970-1974; former General Partner of Jones & Thompson, international shipping brokers; Trustee of Hawaiian Tax-Free Trust since 1985, of Tax-Free Fund of Colorado since 1987; Chairman of Cole Group, a financial consulting and real estate firm, since 1985. Thomas W. Courtney, C.F.A., Trustee, Age: 62, Shares Owned: None President of Courtney Associates, Inc., a venture capital firm, since 1988; General Partner of Trivest Venture Fund, 1983-1988; President of Investment Counseling, Federated Investors, Inc., 1975-1982; President of Boston Company Institutional Investors, Inc., 1970-1975; Director of several privately owned corporations; formerly a Director of the Financial Analysts Federation; Trustee of Hawaiian Tax-Free Trust since 1984, of Tax-Free Trust of Arizona since 1986; Director or Trustee of the various Quest for Value Funds, a group of stock, bond and money market mutual funds, since 1983. Richard W. Gushman, II, Trustee, Age: 49, Shares Owned: None President and Chief Executive Officer of OKOA, INC., a private Hawaii corporation involved in real estate; adviser to RAMPAC, Inc., a wholly owned subsidiary of the Bank of Hawaii, involved with commercial real estate finance; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Board of Aloha United Way; member of the Board of Trustees of the Mari- Med Foundation, Downtown Improvement Association, Boys and Girls Club of Honolulu. Stanley W. Hong, Trustee, Age: 59, Shares Owned: None Business consultant since 1994; Senior Vice President of McCormack Properties, Ltd., 1993-1994; President and Chief Executive of the Hawaii Visitors Bureau, 1984-1993; Vice President, General Counsel and Corporate Secretary at TheoDavies & Co., Ltd., a multiple business company, 1973-1984; formerly Legislative Assistant to U.S. Senator Hiram L. Fong; member of the Boards of Directors of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of Nature Conservancy of Hawaii since 1990; Regent of Chaminade University of Honolulu since 1990. Theodore T. Mason, Trustee, Age: 60, Shares Owned: None Managing Director of EastWind Power Partners, Ltd. since 1994; Director of Cogeneration Development of Willamette Industries, Inc., a forest products company, 1991-1993; Vice President of Corporate Development of Penntech Papers, Inc., 1978-1991; Vice President of Capital Projects for the same company, 1977-1978; Vice Chairman of the Board of Trustees of CCMT since 1981; Trustee and Vice President, 1976-1981, and formerly Director of its predecessor; Director of STCM Management Company, Inc.; Vice Chairman of the Board of Trustees and Trustee of Prime Cash Fund since 1982; Trustee of Short Term Asset Reserves, 1984-1986 and since 1989, of Hawaiian Tax-Free Trust since 1984, of Churchill Cash Reserves Trust since 1985 and of Churchill Tax-Free Fund of Kentucky since 1992; Vice President and Trustee of Oxford Cash Management Fund, 1983-1989; Vice President of Trinity Liquid Assets Trust, 1983-1985; President and Director of Ted Mason Venture Associates, Inc., a venture capital consulting firm, 1972-1980; Advisor to the Commander, U.S. Maritime Defense Zone Atlantic, 1984-1988; National Vice President, Surface/Subsurface, Naval Reserve Association, 1985-1987; National Vice President, Budget and Finance, for the same Association, 1983-1985; Commanding Officer of four Naval Reserve Units, 1974-1985; Captain, USNR, 1978-1988. Russell K. Okata, Trustee, Age: 51, Shares Owned: None Executive Director, Hawaii Government Employees Association AFSCME Local 152, AFL-CIO; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Royal State Insurance Group since 1988; Trustee of several charitable organizations. Douglas Philpotts*, Trustee, Age: 64, Shares Owned: None Retired; Director of Hawaiian Trust Company, Limited since 1986, Chairman of the Board, 1992-1994 and President, 1986-1992; Director of Victoria Ward, Limited; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of the Strong Foundation; present or former director or trustee of a number of civic and charitable organizations in Hawaii. Oswald K. Stender, Trustee, Age: 64, Shares Owned: None Trustee of the Bernice Pauahi Bishop Estate since 1990; Director of Hawaiian Electric Industries, Inc., a public utility holding company, since 1993; Senior Advisor to the Trustees of The Estate of James Campbell, 1987-1989 and Chief Executive Officer, 1976- 1988; Director of several housing and real estate associations; Director, member or trustee of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Board Member, KBPS Public Radio Foundation. William C. Wallace, Vice President, Age: 60 Vice President of Capital Cash Management Trust since 1984; Senior Vice President of Hawaiian Tax-Free Trust since 1985 and Vice President, 1984-1985; Senior Vice President of Tax-Free Trust of Arizona since 1989 and Vice President, 1986-1988; Vice President of Tax-Free Trust of Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado since 1987 and of Narragansett Insured Tax-Free Income Fund since 1992; Secretary and Director of STCM Management Company, Inc. since 1974; President of the Distributor since 1995 and formerly Vice President of the Distributor, 1986-1992; Member of the Panel of Arbitrators, American Arbitration Association, since 1978; Assistant Vice President, American Stock Exchange, Market Development Division, and Director of Marketing, American Gold Coin Exchange, a subsidiary of the American Stock Exchange, 1976- 1984. Diana P. Herrmann, Vice President, Age: 37 Senior Vice President and Secretary and formerly Vice President of the Administrator since 1986 and Director since 1984; Trustee of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since 1994 and of Churchill Tax-Free Fund of Kentucky since 1995; Vice President of InCap Management Corporation since 1986 and Director since 1983; Vice President and formerly Assistant Vice President of the Money Funds since 1986; Assistant Vice President of Oxford Cash Management Fund, 1986-1988; Assistant Vice President and formerly Loan Officer of European American Bank, 1981-1986; daughter of the Trust/Fund's President; Trustee of the Leopold Schepp Foundation (academic scholarships) since 1995; actively involved in mutual fund and trade associations and in college and other volunteer organizations. Charles E. Childs, III, Vice President, Age: 38 Vice President - Administration and formerly Assistant Vice President and Associate of the Administrator since 1987; Vice President or Assistant Vice President of the Money Funds since 1988; Northeastern University, 1986-1987 (M.B.A., 1987); Financial Analyst, Unisys Corporation, 1986; Associate Analyst at National Economic Research Associates, Inc. (NERA), a micro- economic consulting firm, 1979-1985. John M. Herndon, Vice President, Age: 56 Assistant Secretary of the Money Funds and the Bond and Equity Funds since 1995; Vice President of the Money Funds since 1990; Vice President of the Administrator since 1990; Investment Services Consultant and Bank Services Executive of Wright Investors' Service, a registered investment adviser, 1983-1989; Member of the American Finance Association, the Western Finance Association and the Society of Quantitative Analysts. Sherri Foster, Assistant Vice President, Age: 45 Senior Vice President of Hawaiian Tax-Free Trust since 1993, Vice President, 1988-1992 and Assistant Vice President, 1985-1988; Registered Representative of the Distributor since 1985; Realtor- Associate of Sherrian Bender Realty, successor to John Wilson Enterprises, 1983-1994; Executive Secretary of the Hyatt Regency, Maui, 1981-1983. Rose F. Marotta, Chief Financial Officer, Age: 71 Chief Financial Officer of the Money Funds and the Bond and Equity Funds since 1991; Treasurer of the Money Funds and the Bond and Equity Funds, 1981-1991; formerly Treasurer of the predecessor of CCMT; Treasurer and Director of STCM Management Company, Inc., since 1974; Treasurer of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash Management Fund, 1982-1988; Treasurer of InCap Management Corporation since 1982, of the Administrator since 1984 and of the Distributor since 1985. Richard F. West, Treasurer, Age: 60 Treasurer of the Money Funds and the Bond and Equity Funds and of Aquila Distributors, Inc. since 1992; Associate Director of Furman Selz Incorporated, 1991-1992; Vice President of Scudder, Stevens & Clark, Inc. and Treasurer of Scudder Institutional Funds, 1989-1991; Vice President of Lazard Freres Institutional Funds Group, Treasurer of Lazard Freres Group of Investment Companies and HT Insight Funds, Inc., 1986-1988; Vice President of Lehman Management Co., Inc. and Assistant Treasurer of Lehman Money Market Funds, 1981-1985; Controller of Seligman Group of Investment Companies, 1960-1980. Edward M. W. Hines, Secretary, Age: 56 Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary of the Money Funds and the Bond and Equity Funds since 1982; Secretary of Trinity Liquid Assets Trust, 1982-1985 and Trustee of that Trust, 1985-1986; Secretary of Oxford Cash Management Fund, 1982-1988. Patricia A. Craven, Assistant Secretary & Compliance Officer, Age: 29 Assistant Secretary of the Money Funds and the Bond and Equity Funds since 1995; Counsel to the Administrator and the Distributor since 1995; formerly a Legal Associate for Oppenheimer Management Corporation, 1993-1995. Compensation of Trustees The Funds do not pay fees to Trustees affiliated with the Administrator or Adviser or to any of the Fund's officers. During the fiscal year ended March 31, 1995, the Cash Fund, the Tax-Free Fund and the Treasuries Fund paid, respectively $85,532, $39,285 and $24,393, in compensation and reimbursement of expenses to its other Trustees. The Funds are among the 14 funds in the Aquilasm Group of Funds, which consist of tax-free municipal bond funds, money market funds 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 Aquilasm 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.
Compensation Compensation Compensation Name from CAT from TFCAT form USTCAT Vernon R. $6,967 $4,009 $2,211 Alden Arthur K. $6,985 $3,031 $1,833 Carlson William M. $6,979 $3,210 $1,941 Cole Thomas W. $7,380 $3,402 $1,825 Courtney Richard W. $6,250 $3,000 $1,750 Gushman Stanley W. $6,250 $3,000 $1,750 Hong Theodore T. $7,085 $3,096 $1,835 Mason Russell K. $7,029 $3,542 $1,770 Okata Douglas $152 $465 $10 Philpotts Oswald K. $6,000 $3,000 $1,750 Stender Compensation Number of Aquila Group from all funds boards on which the in the Aquila Trustee serves Group of Funds Name Vernon R. $33,591 7 Alden Arthur K. $34,705 7 Carlson William M. $27,842 5 Cole Thomas W. $27,036 5 Courtney Richard W. $19,050 4 Gushman Stanley W. $20,258 4 Hong Theodore T. $40,290 8 Mason Russell K. $19,492 4 Okata Douglas $1,876 4 Philpotts Oswald K. $17,250 4 Stender
The Trust's Administrator is administrator to the Aquilasm Group of Funds, which consists of tax-free municipal bond funds, money market funds and an equity fund. As of September 30, 1995, these funds had aggregate assets of approximately $2.6 billion, of which approximately $1.9 billion consisted of assets of tax-free municipal bond funds. The Administrator, which was founded in 1984, is controlled by Mr. Lacy B. Herrmann (directly, through a trust and through share ownership by his wife). See the Additional Statement for information on Mr. Herrmann. For the fiscal year ended March 31, 1995, the Trust, TFCAT and USTCAT paid or accrued to the Adviser fees of $1,515,705, $412,599 and $215,004, respectively, and paid or accrued to the Administrator fees of $624,649, $156,612 and $89,228, respectively under the Advisory and Administration Agreements. For USTCAT, the Adviser waived $30,974 and the Administrator waived $10,325 of such fees. The Distributor currently handles the distribution of the shares of fourteen funds (six money market funds, seven tax-free municipal bond funds and an equity fund) including the Trust. 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. All of the shares of the Distributor are owned by Mr. Herrmann. At the date of this proxy statement, there is a proposed transaction whereby all of the shares of the Distributor, which are currently owned by Mr. Herrmann, will be owned by certain directors and/or officers of the Administrator and/or the Distributor including Mr. Herrmann. In anticipation of this transaction, the Board of Trustees, including a majority of the independent Trustees, has approved a new Distribution Agreement for the Trust with no material change from the currently effective Distribution Agreement. Other Information on Trustees The Trustees have appointed an Audit Committee consisting of all of the Trustees (the "Independent Trustees") who are not "interested persons," as that term is defined in the 1940 Act. The Committee (i) recommends to the Board of Trustees what firm of independent auditors will be selected by the Board of Trustees (subject to shareholder ratification); (ii) reviews the methods, scope and result of audits and the fees charged; and (iii) reviews the adequacy of the Trust's internal accounting procedures and controls. The Committee held two meetings during the Trust's last fiscal year. The Board of Trustees does not have a nominating committee. During the Trust's last fiscal year, the Board of Trustees held five meetings. Except for Mrs. Zen who was absent for medical reasons, all Trustees were present for at least 75% of the total number of Board meetings and Audit Committee Meetings (if such Trustee was a member of that Committee). RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS (Proposal No. 1) KPMG Peat Marwick LLP, which is currently serving as the Trust's auditors, has been selected by the Trust's Board of Trustees, including a majority of the Independent Trustees, as the Trust's independent auditors for the fiscal year ending March 31, 1996. Such selection is submitted to the shareholders for ratification or rejection. The firm has no direct or indirect financial interest in the Trust, the Trust's Adviser or the Trust's Administrator. It is expected that representatives of the firm not will be present at the meeting but will be available should any matter arise requiring their presence. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT WHICH WILL PROVIDE FOR PAYMENT OF FEES TO TRUSTEES WHO ARE DIRECTORS OF THE ADVISER (Proposal No. 2) Background and Reasons for the Proposal Since the Trust's inception, Hawaiian Trust Company, Limited (the "Adviser") has supervised the investment program of the Trust and the composition of its portfolio. The services of the Adviser are rendered under an Investment Advisory Agreement (the "Current Advisory Agreement"), approved by the shareholders of the Trust on January 6, 1995. which went into effect on September 5, 1995, upon determination by the Board of Trustees that certain changes in the arrangements for fund accounting contemplated by the agreement were satisfactory. The Current Advisory Agreement replaced an advisory agreement with the Adviser then in effect which had the same terms except for the such accounting arrangements. The change in the Current Advisory Agreement being proposed will allow the Trust to pay compensation to certain Trustees who are affiliated with the Adviser at the same rate that it pays to its other Trustees. Under the Current Advisory Agreement, the Trust pays no compensation to any of such Trustees and the payment of their compensation, if any, is the responsibility of the Adviser. Mr. Douglas Philpotts is the only Trustee who would be affected by the change. Mr. Philpotts is currently a Director of the Adviser. He retired as Chairman of its Board in 1994. He receives no compensation from the Adviser for being a Trustee of the Trust. The Trust considers that in view of his long association with the Adviser, Mr. Philpotts makes a valuable contribution to the Board of Trustees and that it is appropriate that he be compensated for his services at the same rate as the Trust's other Trustees. If Mr. Philpotts had been compensated at the same rate as the other Trustees during the Trust's last fiscal year, he would have been paid $6,396 During the Trust's last fiscal year, its total expenses of operations were $2,523,351. Payment of Trustee's fees to Mr. Philpotts would have increased overall expenses of operations by 0.0015 of 1%. No portion of the payment to Mr. Philpotts will be paid to the Adviser and payment of these fees by the Trust will not result in reduction of any amounts payable, or costs to be borne by the Adviser under the Advisory Agreement. An advisory agreement incorporating the proposed new arrangements (the "New Advisory Agreement") was approved on October 27, 1995, in accordance with the 1940 Act by a vote in- person of a majority of the Trustees, including all of the Trustees who are not parties to the Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any such party (the "Independent Trustees"), at a called and held for the purpose of voting on the New Advisory Agreement. Description of the Advisory Agreement and the Proposed Changes to it Except where necessary to distinguish the Current Advisory Agreement from the New Advisory Agreement, both agreements are referred to as the Advisory Agreement. The Advisory Agreement of the Trust provides, subject to the control of the Board of Trustees, for investment supervision by the Adviser. The Adviser furnishes information as to the Trust's portfolio securities to any provider of fund accounting services to the Trust; monitors records of the Trust as to the Trust's portfolio, including prices, maintained by such provider of such services; and supplies at its expense, 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. The Advisory Agreement states that the Adviser shall, at its expense, provide to the Trust all office space and facilities, equipment and clerical personnel necessary for the carrying out of the Adviser's duties under the Advisory Agreement. Under the Current Advisory Agreement, the Adviser pays all compensation of those officers and employees of the Trust and of those Trustees, if any, who are affiliated with the Adviser. Under the New Advisory Agreement, this provision would be modified to provide 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. Under the Advisory Agreement, the Trust 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 the Advisory Agreement, all costs and expenses not expressly assumed by the Adviser or by the Administrator under the Trust's Administration Agreement or by the Trust's principal underwriter are paid by the Trust. The Advisory Agreement lists examples of such expenses borne by the Trust, 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 Trust and its shares under Federal and State securities laws, interest, taxes, and non-recurring expenses, including litigation. Under the Advisory Agreement, the Trust pays a 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 0.33 of 1% of such net assets up to $325 million, and on net assets above that amount at an annual rate of 0.43 of 1% of such net assets. However, the total fees which the Trust pays are at the annual rate of 0.50 of 1% of such net assets, since the Administrator also receives a fee from the Trust. The Administration Agreement as discussed below. The Adviser and/or Administrator may, in order to attempt to achieve a competitive yield on the shares of the Trust, each waive all or part of either fee. The Adviser agrees that its fee 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 the Trust 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 the Trust 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 Trust's total annual investment income. The New Advisory Agreement will go into effect upon approval of the Trust's shareholders and will continue until the June 30, next preceding the second anniversary of such approval, that is until June 30, 1997, and from year to year thereafter, but only so long as such continuance is specifically approved in accordance with the 1940 Act; under the 1940 Act such continuance must be approved annually by the vote of the Board of Trustees including a majority of the Trust's Independent Trustees cast in person at a meeting called for the purpose of such approval, or by the vote of a majority of the Trust's Independent Trustees and the vote of the holders of a majority (as defined in the 1940 Act) of the Trust's shares. The Advisory Agreement may not be amended except by such a vote of the Trustees and shareholders. The Advisory Agreement may be terminated by the Adviser at any time without penalty upon giving the Trust sixty days' written notice, and may be terminated by the Trust at any time without penalty upon giving the Adviser sixty days' written notice, provided that such termination by the Trust 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; it automatically terminates in the event of its assignment (as defined in the agreement). The 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. The Trust 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 Trust's Registration Statement under the Securities Act of 1933 and the 1940 Act except for the information supplied by the Adviser for inclusion therein. The Advisory Agreement contains the following provisions as to the Trust's portfolio transactions. 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, acting as agent for the Trust, 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 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 (i) whether a dealer has provided research services, as further discussed below; and (ii) whether a dealer has sold shares of the Trust or any other investment company or companies having the Adviser as its investment adviser or having the same sub-adviser, Administrator or principal underwriter as the Trust. 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 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. During the Trust's fiscal year ended March 31, 1995, all of its transactions were principal transactions and no brokerage commissions were paid. Information about the Adviser The Adviser, a Hawaii corporation organized in 1898, is the largest trust company in the state of Hawaii in terms of assets under administration. As of July 1, 1995, the Adviser had over $11 billion of clients' assets under administration. The Adviser is not authorized to, and does not, carry on a banking business. The Adviser is a wholly-owned subsidiary of Bank of Hawaii, all of whose shares are owned by Bancorp Hawaii, Inc. ("Bancorp") and Bank of Hawaii's directors (each of whom owns qualifying shares as required by Hawaii law). The address of Bank of Hawaii and Bancorp is 130 Merchant Street, Honolulu, Hawaii 96813. Bancorp 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. Bancorp files annual and periodic reports with the Securities and Exchange Commission which are available for public inspection. The principal executive officer of the Adviser is Walter J. Laskey, President and a director of the Adviser; his address is 130 Merchant Street, Honolulu, Hawaii 96813. The other directors of the Adviser (each of whom has the same address, except as indicated) are Douglas Philpotts, H. Howard Stephenson, retired Chairman and Chief Executive Officer of Bancorp and of Bank of Hawaii, Lawrence M. Johnson, Chairman and Chief Executive Officer of Bancorp and of Bank of Hawaii, William E. Aull, retired President and Chief Executive Officer of Hawaiian Trust Company, Limited, 187 Dowsett Avenue, Honolulu, Hawaii 96817, Herbert M. Richards, President and Manager of Kahua Ranch, Ltd. and K. Tim Yee, President of The Queen Emma Foundation, 615 Piikoi Street, Suite 701, Honolulu, Hawaii, 96814. The Adviser, the Administrator and the Distributor have entered into non-binding principles of cooperation, with the approval of the Board of Trustees, relating to various matters including an agreement to consult with each other with respect to suggested nominations to the Board of Trustees, recognizing that ultimate selection of nominees as "Independent Trustees" within the meaning of the Trust's Distribution Plan is to be made by the Independent Trustees. In addition, the Trust has entered into separate agreements with the Adviser, the Administrator and the Distributor under which the service providers have respectively agreed not to serve in the same capacities for any mutual fund with the same objectives as the Trust under the circumstances described in these agreements. The Adviser acts in the same capacity for the following other investment companies with similar objectives. Their approximate net assets as of January 5, 1996, were as follows: TFCAT, approximately $151 million and USTCAT, approximately $81 million. The Adviser is currently paid a fee by each of TFCAT and USTCAT at the annual rate of 0.27 of 1% of their net assets up to $95 million and $60 million, respectively, and at a rate of 0.33 of 1% over those amounts. The Administrator is currently paid a fee by each of TFCAT and USTCAT at the annual rate of 0.13 of 1% of their net assets up to $95 million and $60 million, respectively, and at a rate of 0.07 of 1% over those amounts. The shareholders of the other two Funds of the Business Trust, TFCAT and USTCAT, are also being asked to approve the same change in the advisory agreement each has with the Adviser. Action Requested THE BOARD OF TRUSTEES RECOMMENDS THAT PROPOSAL NO. 2, THE PROPOSED NEW ADVISORY AGREEMENT, BE APPROVED. Vote Required The favorable vote of the holders of a majority (as defined in the 1940 Act) of the outstanding shares of the Trust, is required for the approval of this Proposal No. 2. Under the 1940 Act, the vote of the holders of a majority of the outstanding shares of the Trust means the vote of the holders of the lesser of (a) 67% or more of the shares of the Trust present at the Meeting or represented by proxy if the holders of more than 50% of such shares are so present or represented, or (b) more than 50% of the outstanding shares of the Trust. If the required votes are not obtained at the Meeting or any adjourned meeting or meetings, the Board of Trustees will consider appropriate action, which could include calling another special meeting of shareholders. RECEIPT OF SHAREHOLDER PROPOSALS Under the proxy rules of the Securities and Exchange Commission, shareholder proposals meeting tests contained in those rules may, under certain conditions, be included in the Trust's proxy statement and proxy card for a particular annual meeting. One of these conditions relates to the timely receipt by the Trust of any such proposal. Under these rules, proposals submitted for inclusion in the proxy material for the Trust's next annual meeting after the meeting to which this Proxy Statement relates must be received by the Trust not less than 120 days before the anniversary of the date stated in this Proxy Statement for the first mailing of this Proxy Statement. The date for such submission could change, depending on the scheduled date for the next annual meeting; if so, the Trust will so advise you. The fact that the Trust receives a shareholder proposal in a timely manner does not insure its inclusion in the Trust's proxy material, since there are other requirements in the proxy rules relating to such inclusion. OTHER BUSINESS The Trust does not know of any other matter which will come up for action at the Meeting. If any other matter or matters properly come up for action at the Meeting, including any adjournment of the Meeting, the proxy holders will vote the shares which the proxy cards entitle them to vote in accordance with their judgment on such matter or matters. That is, by signing and returning your proxy card, you give the proxy holders discretionary authority as to any such matter or matters.
EXHIBIT A TOTAL NUMBER OF SHARES OUTSTANDING TOGETHER WITH THE HOLDINGS OF SHAREHOLDERS WITH MORE THAN 5% OF THE OUTSTANDING SHARES OF THE BUSINESS TRUST AS A WHOLE AND OF EACH OF ITS THREE PORTFOLIOS AS OF JANUARY 5, 1996 ============ Pacific Capital Business Trust: Cash Assets Trust Shares owned Shares owned and % of and % of Name and Address total shares total shares Hawaiian Trust Company, Limited, Financial Plaza of the Pacific, Honolulu, 286,057,920 151,472,568 Hawaii (50.6%) (45.4%) Mercantile Bank, N.A., P.O. Box 387 St. Louis, 208,424,312 159,758,611 Missouri (36.9%) (47.9%) BHC Securities Inc., 2005 Market St., Philadelphia, 59,103,534 21,615,745 Pennsylvania (10.5%) (6.5%) First Fidelity Bank, N.A., 765 Broad St., Newark, 15,547,174 None New Jersey * TOTAL SHARES OUTSTANDING 565,525,279 333,566,618 Pacific Capital Pacific Capital Tax-Free Cash U.S. Treasuries Assets Trust: Cash Assets Trust Shares owned Shares owned and % of and % of Name and Address total shares total shares Hawaiian Trust Company, Limited Financial Plaza of the Pacific Honolulu, 74,588,075 59,997,276 Hawaii (49.3%) (74.5%) Mercantile Bank, N.A., P.O. Box 387 St. Louis, 38,575,401 10,090,300 Missouri (25.5%) (12.5%) BHC Securities, Inc., 2005 Market St., Philadelphia, 18,743,894 10,401,226 Pennsylvania (12.4%) (12.9%) First Fidelity Bank, N.A., 765 Broad St., Newark, 15,547,174 none New Jersey (10.3%) TOTAL SHARES OUTSTANDING 151,390,124 80,568,537 * N/A -- Less than 5% of the portfolio
Preliminary Copy PACIFIC CAPITAL CASH ASSETS TRUST PROXY FOR SHAREHOLDERS MEETING MARCH 22, 1996 PROXY SOLICITED ON BEHALF OF THE TRUSTEES The undersigned shareholder of PACIFIC CAPITAL CASH ASSETS TRUST (the "Trust") does hereby appoint LACY B. HERRMANN and EDWARD M. W. HINES, or either of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of Cash Assets Trust, of which the Trust is a portfolio, to be held on March 22, 1996 at the offices of the Trust, 380 Madison Avenue, New York, NY 10017 at 10:00 a.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed below. Please mark your proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR THE PROPOSALS LISTED BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS INDICATED. As to any other matter said attorneys shall vote in accordance with their best judgment. Election of Trustees---. __ [__] FOR all nominees listed below __ [__] VOTE WITHHELD for all nominees listed below (Instructions: To withhold authority to vote for any one or more of the nominees, strike a line through the name of that nominee or the names of such nominees in the list below.) LACY B. HERRMANN; VERNON R. ALDEN; ARTHUR K. CARLSON; WILLIAM M. COLE; THOMAS W. COURTNEY; RICHARD W. GUSHMAN, II; STANLEY W. HONG; THEODORE T. MASON; RUSSELL K. OKATA; DOUGLAS PHILPOTTS; OSWALD K. STENDER; Ratification of selection of KPMG Peat Marwick LLP as independent auditors __ __ __ (Proposal No. 1) FOR [__] AGAINST [__] ABSTAIN [__] Action on new advisory agreement to authorize payment of fees to Trustees who are Directors of the Adviser; __ __ __ (Proposal No. 2) FOR [__] AGAINST [__] ABSTAIN [__] Dated: ____________ ______, 1996 Month Day __________________________________ SIGNATURE(S) __________________________________ SIGNATURE(S) PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing as a custodian, attorney, executor, administrator, trustee, guardian, etc., please sign your full title as such. Joint owners should each sign. Preliminary Copy IMPORTANT NOTICE PLEASE READ IMMEDIATELY PACIFIC CAPITAL U.S. TREASURIES CASH ASSETS TRUST 380 Madison Avenue, Suite 2300, New York, N.Y. 10017 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD on March 22, 1996 TO OUR SHAREHOLDERS: The purpose of this Notice is to advise you that an Annual Meeting of the Shareholders of Pacific Capital U.S Treasuries Cash Assets Trust (the "Trust") will be held: Place: (a) at the offices of the Trust 380 Madison Avenue Suite 2300 New York, NY 10017 Time: (b) on March 22, 1996 at 10:00 a.m., local time; Purposes: (c) for the following purposes: (i) to elect eleven Trustees; each Trustee elected will hold office until the next annual meeting of the Trust's shareholders or until his or her successor is duly elected; (ii) to ratify (that is, to approve) or reject the selection of KPMG Peat Marwick LLP as the Trust's independent auditors for the fiscal year ending March 31, 1996 (Proposal No. 1); PLEASE NOTE: If you do not expect to attend the Meeting, you are requested to indicate voting instructions on the enclosed proxy and to date, sign and return it in the accompanying stamped envelope. To avoid unnecessary expense to the Trust, your cooperation is requested in mailing in your proxy no matter how large or small your holding may be. (iii) to act upon a proposed amended and restated Investment Advisory Agreement to permit the Trust to pay fees to Trustees who are Directors of the Adviser (Proposal No. 2); and (iv) to act upon any other matters which may properly come before the Meeting at the scheduled time and place or any adjourned meeting or meetings. Who Can Vote What Shares: (d) To vote at the Meeting, you must have been a shareholder of the Trust's Original Share Class or the Trust's Service Share Class on the Trust's records at the close of business on January 5, 1996 (the "record date"). Also, the number of shares held by you according to such records at the close of business on the record date determines the number of shares you may vote at the Meeting (or any adjourned meeting or meetings). By Order of the Board of Trustees, EDWARD M. W. HINES Secretary February ***, 1996 (ii) PACIFIC CAPITAL U.S.TREASURIES CASH ASSETS TRUST 380 Madison Avenue, Suite 2300, New York, New York 10017 PROXY STATEMENT The Annual Meeting of the Shareholders of Pacific Capital U.S. Treasuries Cash Assets Trust will consider a Proposal of vital importance to the Trust, in addition to election of Trustees and approval of the Trust's auditors: * Action on an amended and restated Investment Advisory Agreement which will provide for payment to Trustees who are Directors of the Adviser; See Proposal No. 2. The Board of Trustees believes that this proposal is in the best interest of the Trust and its shareholders. Please read the proxy statement and then indicate your vote on the enclosed proxy card as soon as possible. INTRODUCTION The purpose of the Notice (the first two pages of this document) is to advise you of the time, place and purposes of an Annual Meeting of the Shareholders of Pacific Capital U.S. Treasuries Cash Assets Trust (the "Trust"). The purpose of this proxy statement (all the rest of this document) is to give you information on which you may base your decisions as to the choices, if any, you make on the enclosed proxy card. A copy of the Trust's most recent annual report and most recent semi-annual report will be sent to you without charge upon written request to the Trust's Distributor, Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by calling 800-***** toll-free or 212-697-6666. The Trust's organizer and administrator (the "Administrator") is Aquila Management Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The Trust's principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017. Hawaiian Trust Company, Limited, Financial Plaza of the Pacific, P.O. Box 3170 Honolulu, Hawaii 96802 serves as the Trust's Investment Adviser. This Notice and Proxy Statement are first being mailed on or about February ***, 1996. Cash Assets Trust, a Massachusetts business trust is a professionally managed, open-end investment company consisting of three separate portfolios: Pacific Capital Cash Assets Trust ("CAT"), Pacific Capital Tax-Free Cash Assets Trust ("TFCAT") and Pacific Capital U.S. Treasuries Cash Assets Trust ("USTCAT"). In this Proxy Statement the "Business Trust" means Cash Assets Trust, the business trust, the "Funds" means the three portfolios of the Business Trust and the "Trust" means the Portfolio, Pacific Capital U.S. Treasuries Cash Assets Trust. There are two classes of shares of each of the Funds: "Service Shares" and "Original Shares." The enclosed proxy card authorizes the persons named (or their substitutes) to vote your shares; the Trust calls these persons the "proxy holders." As to the election of Trustees you may authorize the proxy holders to vote your shares for the entire slate indicated below by marking the appropriate box on the proxy card or by merely signing and returning your proxy card with no instructions. Or, you may withhold the authority of the proxy holders to vote on the election of Trustees by marking the appropriate box. Also, you may withhold that authority as to any particular nominee by striking a line through the nominee's name on the proxy card. As to the other matters listed on the proxy card, you may direct the proxy holders to vote your shares on those proposals by checking the appropriate box "For" or "Against" or instruct them not to vote your shares on a proposal by checking the "Abstain" box. If you return your signed proxy card and do not check any box on a proposal, the proxy holders will vote your shares for that proposal. Shares held by brokers in "street name" and not voted or marked as abstentions will not be counted for purposes of determining a quorum. You may end the power of the proxy holders to vote your shares after you have signed and returned your proxy card and before the power is used by (i) so notifying the Trust in writing; (ii) signing a new and different proxy card (if the Trust receives it before the old one is used); or (iii) voting your shares in person or by your duly appointed agent at the meeting. The Trust is sending you this Notice and Proxy Statement in connection with the solicitation by its Trustees of proxy cards ("proxies") to be used at the Annual Meeting to be held at the time and place and for the purposes indicated in the Notice or any adjourned meeting or meetings. The Trust pays the costs of the solicitation. Proxies are being solicited by the use of the mails; they may also be solicited by telephone, facsimile and personal interviews. Brokerage firms, banks and others may be requested to forward this Notice and Proxy Statement to beneficial owners of the Trust's shares so that these owners may authorize the voting of these shares. The Trust will pay these firms for their out-of-pocket expenses for doing so. Each shareholder of the Business Trust on the record date is entitled to one (1) vote for each dollar (and a proportionate fractional vote for each fraction of a dollar) of net asset value (determined as of the record date) represented by full and fractional shares held on the record date. The meeting will act upon certain matters that affect the Business Trust as a whole: the election of Trustees, the action on the selection of auditors (Proposal No. 1). On matters that affect the Business Trust as a whole, all shareholders of the Business Trust, including the shareholders both classes of the Trust and both classes of the other two portfolios, are entitled to vote at the meeting. With respect to Proposal No. 2, a matter that affects only the Trust, only shareholders of both classes of the Trust are entitled to vote and the shareholders of the other two portfolios are not entitled to vote. On January 5, 1996 the total number of shares outstanding for the Business Trust as a whole, and for each of the three Funds, was as set forth in the table on Exhibit A to this Proxy Statement. Also listed on Exhibit A are the names and addresses of the holders as of that date of more than 5% of the outstanding shares of the Business Trust and of each Fund. Shareholdings are in the names of the holders listed, unless stated to be in the name of a nominee. ELECTION OF TRUSTEES At the Meeting, eleven Trustees are to be elected. Whenever it is stated in this Proxy Statement that a matter is to be acted on at the Meeting, this means the Meeting held at the scheduled time or any adjourned meeting or meetings. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can instruct the proxy holders as to the voting of your shares as to the election of Trustees. Each of the nominees is presently a Trustee and was previously elected by the shareholders. Messrs. Gushman, Hong, Okata and Stender were elected by the shareholders on March 31, 1993. Each of the other nominees has been a Trustee since the beginning of the Business Trust's operations in 1984, except for Mr. Carlson, who was originally elected a Trustee at a meeting of the Board of Trustees held on October 19, 1987, Mr. Alden, who was originally elected at a meeting of the Board of Trustees held on June 12, 1989 and Mr. Philpotts, who was originally elected at a meeting of the Board of Trustees held June 6, 1992. Mrs. Thelma Chen-Hoon Zen, a founding Trustee, has advised the Trust that she will not be a candidate for reelection because of health reasons. On the record date the officers and Trustees of the Trust held as a group less than 1% of the outstanding voting shares of the Business Trust or the Trust. Each of the Trust's Trustees and officers holds the same position with all of the Funds, the Trust and the two other series of the Business Trust. Each of the Trust's Trustees is also a Trustee of Hawaiian Tax-Free Trust, a municipal bond mutual fund having the same Adviser and Administrator as the Trust. The beneficial ownership of shares indicated below includes voting and investment control unless otherwise indicated. Shares are given to the nearest full share. In the information below, the Trust's Administrator, Aquila Management Corporation, is referred to as the "Administrator," the Trust's Distributor, Aquila Distributors, Inc., is referred to as the "Distributor" and Hawaiian Trust Company, Limited is referred to by that name or as the "Adviser." Mr. Herrmann is an interested person of the Trust, as that term is defined in the Investment Company Act of 1940 (the "1940 Act"), as an officer of the Trust and as a Director, officer and shareholder of Aquila Distributors, Inc. (the "Distributor"). Mr. Philpotts is an interested person of the Trust as a shareholder of the Adviser's corporate parent. They are so designated by an asterisk. Lacy B. Herrmann*, President and Chairman of the Board of Trustees, Age: 66, Shares Owned: None Founder of the Trust and President and a Director of the Administrator since 1984; Founder, President and Chairman of the Board of Trustees of Prime Cash Fund since 1982, of Short Term Asset Reserves since 1984, of Churchill Cash Reserves Trust since 1985 and of Cascades Cash Fund, 1989-1994, all of which are money market funds to which the Administrator is administrator and which together with the Funds are referred to as the "Money Funds"; Founder, President and Chairman of the Board of Trustees of Hawaiian Tax-Free Trust since 1984, of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado since 1987 and of Tax-Free Fund For Utah and Narragansett Insured Tax- Free Income Fund since 1992, all of which are tax-free municipal bond funds, and an equity fund, Aquila Rocky Mountain Equity Fund since 1993, to all of which the Administrator is administrator and which are referred to as the "Bond and Equity Funds"; Chairman and President, Chief Executive Officer (Chairman of the Board of Trustees and/or President) and Trustee of Capital Cash Management Trust ("CCMT"), since 1981 and Founder and executive officer (since 1974) of CCMT and its predecessor; Vice President, a Director and Secretary since 1981 (formerly Treasurer) of the Distributor, which is distributor (i.e., principal underwriter) for the Money Funds and the Bond and Equity Funds; President and a Director of STCM Management Company, Inc., Adviser to CCMT; Chairman, President and a Director since 1984 of InCap Management Corporation, formerly sub-adviser and administrator of Prime Cash Fund and Short Term Asset Reserves; Director or Trustee of the various Quest for Value Funds, a group of stock, bond and money market mutual funds, since 1983; Director of Saratoga Advantage Trust, a group of mutual funds, since 1994; Trustee of Brown University since 1990; actively involved for many years in leadership roles with university, school and charitable organizations. Vernon R. Alden, Trustee, Age: 72, Shares Owned: None Director of Augat Inc., a manufacturing corporation, since 1979, Colgate Palmolive Company since 1974, Digital Equipment Corporation, a computer manufacturing corporation, since 1959, Intermet Corporation, an independent foundry, since 1986, and Sonesta International Hotels Corporation since 1978; Chairman of the Board and Executive Committee of The Boston Company, Inc., a financial services company, 1969-1978; Trustee of Tax-Free Trust of Oregon since 1988, of Hawaiian Tax-Free Trust, of Cascades Cash Fund, 1989-1994 and of Narragansett Insured Tax-Free Income Fund since 1992; Associate Dean and member of the faculty of Harvard University Graduate School of Business Administration, 1951-1962; member of the faculty and Program Director of Harvard Business School - University of Hawaii Advanced Management Program, summer of 1959 and 1960; President of Ohio University, 1962-1969; Chairman of The Japan Society of Boston, Inc., and member of several Japan-related advisory councils; Chairman of the Massachusetts Business Development Council and the Massachusetts Foreign Business Council, 1978-1983; Trustee of the Boston Symphony Orchestra since 1975; Chairman of the Massachusetts Council on the Arts and Humanities, 1972-1984; Member of the Board of Fellows of Brown University, 1969-1986; Trustee and member of the Executive Committee, Plymouth Plantation; trustee of various other cultural and educational organizations; Honorary Consul General of the Royal Kingdom of Thailand. Arthur K. Carlson, Trustee, Age: 73, Shares Owned: None Retired; Senior Vice President and Manager of the Trust Division of The Valley National Bank of Arizona, 1977-1987; Trustee of Tax-Free Fund of Colorado, Hawaiian Tax-Free Trust and Tax-Free Trust of Arizona since 1987 and of Aquila Rocky Mountain Equity Fund since 1993; previously Vice President of Investment Research at Citibank, New York City, and prior to that Vice President and Director of Investment Research of Irving Trust Company, New York City; past President of The New York Society of Security Analysts and currently a member of the Phoenix Society of Financial Analysts; formerly Director of the Financial Analysts Federation; past Chairman of the Board and, currently, Director of Mercy Healthcare of Arizona, Phoenix, Arizona since 1990; Director of Northern Arizona University Foundation since 1990; present or formerly an officer and/or director of various other community and professional organizations. William M. Cole, Trustee, Age: 64, Shares Owned: None President of Cole International, Inc., financial and shipping consultants, since 1974; President of Cole Associates, shopping center and real estate developers, 1974-1976; President of Seatrain Lines, Inc., 1970-1974; former General Partner of Jones & Thompson, international shipping brokers; Trustee of Hawaiian Tax-Free Trust since 1985, of Tax-Free Fund of Colorado since 1987; Chairman of Cole Group, a financial consulting and real estate firm, since 1985. Thomas W. Courtney, C.F.A., Trustee, Age: 62, Shares Owned: None President of Courtney Associates, Inc., a venture capital firm, since 1988; General Partner of Trivest Venture Fund, 1983-1988; President of Investment Counseling, Federated Investors, Inc., 1975-1982; President of Boston Company Institutional Investors, Inc., 1970-1975; Director of several privately owned corporations; formerly a Director of the Financial Analysts Federation; Trustee of Hawaiian Tax-Free Trust since 1984, of Tax-Free Trust of Arizona since 1986; Director or Trustee of the various Quest for Value Funds, a group of stock, bond and money market mutual funds, since 1983. Richard W. Gushman, II, Trustee, Age: 49, Shares Owned: None President and Chief Executive Officer of OKOA, INC., a private Hawaii corporation involved in real estate; adviser to RAMPAC, Inc., a wholly owned subsidiary of the Bank of Hawaii, involved with commercial real estate finance; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Board of Aloha United Way; member of the Board of Trustees of the Mari- Med Foundation, Downtown Improvement Association, Boys and Girls Club of Honolulu. Stanley W. Hong, Trustee, Age: 59, Shares Owned: None Business consultant since 1994; Senior Vice President of McCormack Properties, Ltd., 1993-1994; President and Chief Executive of the Hawaii Visitors Bureau, 1984-1993; Vice President, General Counsel and Corporate Secretary at TheoDavies & Co., Ltd., a multiple business company, 1973-1984; formerly Legislative Assistant to U.S. Senator Hiram L. Fong; member of the Boards of Directors of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of Nature Conservancy of Hawaii since 1990; Regent of Chaminade University of Honolulu since 1990. Theodore T. Mason, Trustee, Age: 60, Shares Owned: None Managing Director of EastWind Power Partners, Ltd. since 1994; Director of Cogeneration Development of Willamette Industries, Inc., a forest products company, 1991-1993; Vice President of Corporate Development of Penntech Papers, Inc., 1978-1991; Vice President of Capital Projects for the same company, 1977-1978; Vice Chairman of the Board of Trustees of CCMT since 1981; Trustee and Vice President, 1976-1981, and formerly Director of its predecessor; Director of STCM Management Company, Inc.; Vice Chairman of the Board of Trustees and Trustee of Prime Cash Fund since 1982; Trustee of Short Term Asset Reserves, 1984-1986 and since 1989, of Hawaiian Tax-Free Trust since 1984, of Churchill Cash Reserves Trust since 1985 and of Churchill Tax-Free Fund of Kentucky since 1992; Vice President and Trustee of Oxford Cash Management Fund, 1983-1989; Vice President of Trinity Liquid Assets Trust, 1983-1985; President and Director of Ted Mason Venture Associates, Inc., a venture capital consulting firm, 1972-1980; Advisor to the Commander, U.S. Maritime Defense Zone Atlantic, 1984-1988; National Vice President, Surface/Subsurface, Naval Reserve Association, 1985-1987; National Vice President, Budget and Finance, for the same Association, 1983-1985; Commanding Officer of four Naval Reserve Units, 1974-1985; Captain, USNR, 1978-1988. Russell K. Okata, Trustee, Age: 51, Shares Owned: None Executive Director, Hawaii Government Employees Association AFSCME Local 152, AFL-CIO; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Royal State Insurance Group since 1988; Trustee of several charitable organizations. Douglas Philpotts*, Trustee, Age: 64, Shares Owned: None Retired; Director of Hawaiian Trust Company, Limited since 1986, Chairman of the Board, 1992-1994 and President, 1986-1992; Director of Victoria Ward, Limited; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of the Strong Foundation; present or former director or trustee of a number of civic and charitable organizations in Hawaii. Oswald K. Stender, Trustee, Age: 64, Shares Owned: None Trustee of the Bernice Pauahi Bishop Estate since 1990; Director of Hawaiian Electric Industries, Inc., a public utility holding company, since 1993; Senior Advisor to the Trustees of The Estate of James Campbell, 1987-1989 and Chief Executive Officer, 1976- 1988; Director of several housing and real estate associations; Director, member or trustee of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Board Member, KBPS Public Radio Foundation. William C. Wallace, Vice President, Age: 60 Vice President of Capital Cash Management Trust since 1984; Senior Vice President of Hawaiian Tax-Free Trust since 1985 and Vice President, 1984-1985; Senior Vice President of Tax-Free Trust of Arizona since 1989 and Vice President, 1986-1988; Vice President of Tax-Free Trust of Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado since 1987 and of Narragansett Insured Tax-Free Income Fund since 1992; Secretary and Director of STCM Management Company, Inc. since 1974; President of the Distributor since 1995 and formerly Vice President of the Distributor, 1986-1992; Member of the Panel of Arbitrators, American Arbitration Association, since 1978; Assistant Vice President, American Stock Exchange, Market Development Division, and Director of Marketing, American Gold Coin Exchange, a subsidiary of the American Stock Exchange, 1976- 1984. Diana P. Herrmann, Vice President, Age: 37 Senior Vice President and Secretary and formerly Vice President of the Administrator since 1986 and Director since 1984; Trustee of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since 1994 and of Churchill Tax-Free Fund of Kentucky since 1995; Vice President of InCap Management Corporation since 1986 and Director since 1983; Vice President and formerly Assistant Vice President of the Money Funds since 1986; Assistant Vice President of Oxford Cash Management Fund, 1986-1988; Assistant Vice President and formerly Loan Officer of European American Bank, 1981-1986; daughter of the Trust/Fund's President; Trustee of the Leopold Schepp Foundation (academic scholarships) since 1995; actively involved in mutual fund and trade associations and in college and other volunteer organizations. Charles E. Childs, III, Vice President, Age: 38 Vice President - Administration and formerly Assistant Vice President and Associate of the Administrator since 1987; Vice President or Assistant Vice President of the Money Funds since 1988; Northeastern University, 1986-1987 (M.B.A., 1987); Financial Analyst, Unisys Corporation, 1986; Associate Analyst at National Economic Research Associates, Inc. (NERA), a micro- economic consulting firm, 1979-1985. John M. Herndon, Vice President, Age: 56 Assistant Secretary of the Money Funds and the Bond and Equity Funds since 1995; Vice President of the Money Funds since 1990; Vice President of the Administrator since 1990; Investment Services Consultant and Bank Services Executive of Wright Investors' Service, a registered investment adviser, 1983-1989; Member of the American Finance Association, the Western Finance Association and the Society of Quantitative Analysts. Sherri Foster, Assistant Vice President, Age: 45 Senior Vice President of Hawaiian Tax-Free Trust since 1993, Vice President, 1988-1992 and Assistant Vice President, 1985-1988; Registered Representative of the Distributor since 1985; Realtor- Associate of Sherrian Bender Realty, successor to John Wilson Enterprises, 1983-1994; Executive Secretary of the Hyatt Regency, Maui, 1981-1983. Rose F. Marotta, Chief Financial Officer, Age: 71 Chief Financial Officer of the Money Funds and the Bond and Equity Funds since 1991; Treasurer of the Money Funds and the Bond and Equity Funds, 1981-1991; formerly Treasurer of the predecessor of CCMT; Treasurer and Director of STCM Management Company, Inc., since 1974; Treasurer of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash Management Fund, 1982-1988; Treasurer of InCap Management Corporation since 1982, of the Administrator since 1984 and of the Distributor since 1985. Richard F. West, Treasurer, Age: 60 Treasurer of the Money Funds and the Bond and Equity Funds and of Aquila Distributors, Inc. since 1992; Associate Director of Furman Selz Incorporated, 1991-1992; Vice President of Scudder, Stevens & Clark, Inc. and Treasurer of Scudder Institutional Funds, 1989-1991; Vice President of Lazard Freres Institutional Funds Group, Treasurer of Lazard Freres Group of Investment Companies and HT Insight Funds, Inc., 1986-1988; Vice President of Lehman Management Co., Inc. and Assistant Treasurer of Lehman Money Market Funds, 1981-1985; Controller of Seligman Group of Investment Companies, 1960-1980. Edward M. W. Hines, Secretary, Age: 56 Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary of the Money Funds and the Bond and Equity Funds since 1982; Secretary of Trinity Liquid Assets Trust, 1982-1985 and Trustee of that Trust, 1985-1986; Secretary of Oxford Cash Management Fund, 1982-1988. Patricia A. Craven, Assistant Secretary & Compliance Officer, Age: 29 Assistant Secretary of the Money Funds and the Bond and Equity Funds since 1995; Counsel to the Administrator and the Distributor since 1995; formerly a Legal Associate for Oppenheimer Management Corporation, 1993-1995. Compensation of Trustees The Funds do not pay fees to Trustees affiliated with the Administrator or Adviser or to any of the Fund's officers. During the fiscal year ended March 31, 1995, the Cash Fund, the Tax-Free Fund and the Treasuries Fund paid, respectively $85,532, $39,285 and $24,393, in compensation and reimbursement of expenses to its other Trustees. The Funds are among the 14 funds in the Aquilasm Group of Funds, which consist of tax-free municipal bond funds, money market funds 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 Aquilasm 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
Compensation Compensation Compensation Name from CAT from TFCAT from USTCAT Vernon R. $6,967 $4,009 $2,211 Alden Arthur K. $6,985 $3,031 $1,833 Carlson William M. $6,979 $3,210 $1,941 Cole Thomas W. $7,380 $3,402 $1,825 Courtney Richard W. $6,250 $3,000 $1,750 Gushman Stanley W. $6,250 $3,000 $1,750 Hong Theodore T. $7,085 $3,096 $1,835 Mason Russell K. $7,029 $3,542 $1,770 Okata Douglas $152 $465 $10 Philpotts Oswald K. $6,000 $3,000 $1,750 Stender Compensation Number of Aquila Group from all funds boards on which the in the Aquila Trustee serves Group of Funds Name Vernon R. $33,591 7 Alden Arthur K. $34,705 7 Carlson William M. $27,842 5 Cole Thomas W. $27,036 5 Courtney Richard W. $19,050 4 Gushman Stanley W. $20,258 4 Hong Theodore T. $40,290 8 Mason Russell K. $19,492 4 Okata Douglas $1,876 4 Philpotts Oswald K. $17,250 4 Stender
The Trust's Administrator is administrator to the Aquilasm Group of Funds, which consists of tax-free municipal bond funds, money market funds and an equity fund. As of September 30, 1995, these funds had aggregate assets of approximately $2.6 billion, of which approximately $1.9 billion consisted of assets of tax-free municipal bond funds. The Administrator, which was founded in 1984, is controlled by Mr. Lacy B. Herrmann (directly, through a trust and through share ownership by his wife). See the Additional Statement for information on Mr. Herrmann. For the fiscal year ended March 31, 1995, CAT, TFCAT and the Trust paid or accrued to the Adviser fees of $1,515,705, $412,599 and $215,004, respectively, and paid or accrued to the Administrator fees of $624,649, $156,612 and $89,228, respectively under the Advisory and Administration Agreements. For the Trust, the Adviser waived $30,974 and the Administrator waived $10,325 of such fees. The Distributor currently handles the distribution of the shares of fourteen funds (six money market funds, seven tax-free municipal bond funds and an equity fund) including the Trust. 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. All of the shares of the Distributor are owned by Mr. Herrmann. At the date of this proxy statement, there is a proposed transaction whereby all of the shares of the Distributor, which are currently owned by Mr. Herrmann, will be owned by certain directors and/or officers of the Administrator and/or the Distributor including Mr. Herrmann. In anticipation of this transaction, the Board of Trustees, including a majority of the independent Trustees, has approved a new Distribution Agreement for the Trust with no material change from the currently effective Distribution Agreement. Other Information on Trustees The Trustees have appointed an Audit Committee consisting of all of the Trustees (the "Independent Trustees") who are not "interested persons," as that term is defined in the 1940 Act. The Committee (i) recommends to the Board of Trustees what firm of independent auditors will be selected by the Board of Trustees (subject to shareholder ratification); (ii) reviews the methods, scope and result of audits and the fees charged; and (iii) reviews the adequacy of the Trust's internal accounting procedures and controls. The Committee held two meetings during the Trust's last fiscal year. The Board of Trustees does not have a nominating committee. During the Trust's last fiscal year, the Board of Trustees held five meetings. Except for Mrs. Zen who was absent for medical reasons, all Trustees were present for at least 75% of the total number of Board meetings and Audit Committee Meetings (if such Trustee was a member of that Committee). RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS (Proposal No. 1) KPMG Peat Marwick LLP, which is currently serving as the Trust's auditors, has been selected by the Trust's Board of Trustees, including a majority of the Independent Trustees, as the Trust's independent auditors for the fiscal year ending March 31, 1996. Such selection is submitted to the shareholders for ratification or rejection. The firm has no direct or indirect financial interest in the Trust, the Trust's Adviser or the Trust's Administrator. It is expected that representatives of the firm not will be present at the meeting but will be available should any matter arise requiring their presence. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT WHICH WILL PROVIDE FOR PAYMENT OF FEES TO TRUSTEES WHO ARE DIRECTORS OF THE ADVISER (Proposal No. 2) Background and Reasons for the Proposal Since the Trust's inception, Hawaiian Trust Company, Limited (the "Adviser") has supervised the investment program of the Trust and the composition of its portfolio. The services of the Adviser are rendered under an Investment Advisory Agreement (the "Current Advisory Agreement"), approved by the shareholders of the Trust on January 6, 1995. which went into effect on September 5, 1995, upon determination by the Board of Trustees that certain changes in the arrangements for fund accounting contemplated by the agreement were satisfactory. The Current Advisory Agreement replaced an advisory agreement with the Adviser then in effect which had the same terms except for the such accounting arrangements. The change in the Current Advisory Agreement being proposed will allow the Trust to pay compensation to certain Trustees who are affiliated with the Adviser at the same rate that it pays to its other Trustees. Under the Current Advisory Agreement, the Trust pays no compensation to any of such Trustees and their payment of their compensation, if any, is the responsibility of the Adviser. Mr. Douglas Philpotts is the only Trustee who would be affected by the change. Mr. Philpotts is currently a Director of the Adviser. He retired as Chairman of its Board in 1994. He receives no compensation from the Adviser for being a Trustee of the Trust. The Trust considers that in view of his long association with the Adviser and his knowledge of Hawaii, Mr. Philpotts makes a valuable contribution to the Board of Trustees and that it is appropriate that he be compensated for his services at the same rate as the Trust's other Trustees. If Mr. Philpotts had been compensated at the same rate as the other Trustees during the Trust's last fiscal year, he would have been paid $3,132 During the Trust's last fiscal year, its total expenses of operations were $775,773. Payment of Trustee's fees to Mr. Philpotts would have increased overall expenses of operations by 0.0022 of 1%. No portion of the payment to Mr. Philpotts will be paid to the Adviser and payment of these fees by the Trust will not result in reduction of any amounts payable, or costs to be borne by the Adviser under the Advisory Agreement. The New Advisory Agreement was approved on October 27, 1995, in accordance with the 1940 Act, by a vote in-person of a majority of the Trustees, including all of the Trustees who are not parties to the Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any such party (the "Independent Trustees"), at a meeting called and held for the purpose of voting on the New Advisory Agreement. Description of the Advisory Agreement and the Proposed Changes to it Except where necessary to distinguish the Current Advisory Agreement from the New Advisory Agreement, both agreements are referred to as the Advisory Agreement. The Advisory Agreement of the Trust provides, subject to the control of the Board of Trustees, for investment supervision by the Adviser. The Adviser furnishes information as to the Trust's portfolio securities to any provider of fund accounting services to the Trust; monitors records of the Trust as to the Trust's portfolio, including prices, maintained by such provider of such services; and supplies at its expense, 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. The Advisory Agreement states that the Adviser shall, at its expense, provide to the Trust all office space and facilities, equipment and clerical personnel necessary for the carrying out of the Adviser's duties under the Advisory Agreement. Under the Current Advisory Agreement, the Adviser pays all compensation of those officers and employees of the Trust and of those Trustees, if any, who are affiliated with the Adviser. Under the New Advisory Agreement, this provision would be modified to provide 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. Under the Advisory Agreement, the Trust 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 the Advisory Agreement, all costs and expenses not expressly assumed by the Adviser or by the Administrator under the Trust's Administration Agreement or by the Trust's principal underwriter are paid by the Trust. The Advisory Agreement lists examples of such expenses borne by the Trust, 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 Trust and its shares under Federal and State securities laws, interest, taxes, and non-recurring expenses, including litigation. Under the Advisory Agreement, the Trust pays a fee, payable monthly and computed on the net asset value of the Fund as of the close of business each business day, at the annual rate of 0.27 of 1% of such net assets up to $60 million, and on net assets above that amount at an annual rate of 0.33 of 1% of such net assets. However, the total fees which the Trust pays are at the annual rate of 0.40 of 1% of such net assets, since the Administrator also receives a fee from the Trust the Administration Agreement as discussed below. The Adviser and/or Administrator may, in order to attempt to achieve a competitive yield on the shares of the Trust, each waive all or part of either fee. The Adviser agrees that its fee 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 the Trust 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 the Trust 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 Trust's total annual investment income. The New Advisory Agreement will go into effect upon approval of the Trust's shareholders and will continue until the June 30, next preceding the second anniversary of such approval, that is until June 30, 1997, and from year to year thereafter, but only so long as such continuance is specifically approved in accordance with the 1940 Act; under the 1940 Act such continuance must be approved annually by the vote of the Board of Trustees including a majority of the Trust's Independent Trustees cast in person at a meeting called for the purpose of such approval, or by the vote of a majority of the Trust's Independent Trustees and the vote of the holders of a majority (as defined in the 1940 Act) of the Trust's shares. The Advisory Agreement may not be amended except by such a vote of the Trustees and shareholders. The Advisory Agreement may be terminated by the Adviser at any time without penalty upon giving the Trust sixty days' written notice, and may be terminated by the Trust at any time without penalty upon giving the Adviser sixty days' written notice, provided that such termination by the Trust 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; it automatically terminates in the event of its assignment (as defined in the agreement). The 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. The Trust 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 Trust's Registration Statement under the Securities Act of 1933 and the 1940 Act except for the information supplied by the Adviser for inclusion therein. The Advisory Agreement contains the following provisions as to the Trust's portfolio transactions. 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, acting as agent for the Trust, 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 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 (i) whether a dealer has provided research services, as further discussed below; and (ii) whether a dealer has sold shares of the Trust or any other investment company or companies having the Adviser as its investment adviser or having the same sub-adviser, Administrator or principal underwriter as the Trust. 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 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. During the Trust's fiscal year ended March 31, 1995, all of its transactions were principal transactions and no brokerage commissions were paid. Information about the Adviser The Adviser, a Hawaii corporation organized in 1898, is the largest trust company in the state of Hawaii in terms of assets under administration. As of July 1, 1995, the Adviser had over $11 billion of clients' assets under administration. The Adviser is not authorized to, and does not, carry on a banking business. The Adviser is a wholly-owned subsidiary of Bank of Hawaii, all of whose shares are owned by Bancorp Hawaii, Inc. ("Bancorp") and Bank of Hawaii's directors (each of whom owns qualifying shares as required by Hawaii law). The address of Bank of Hawaii and Bancorp is 130 Merchant Street, Honolulu, Hawaii 96813. Bancorp 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. Bancorp files annual and periodic reports with the Securities and Exchange Commission which are available for public inspection. The principal executive officer of the Adviser is Walter J. Laskey, President and a director of the Adviser; his address is 130 Merchant Street, Honolulu, Hawaii 96813. The other directors of the Adviser (each of whom has the same address, except as indicated) are Douglas Philpotts, H. Howard Stephenson, retired Chairman and Chief Executive Officer of Bancorp and of Bank of Hawaii, Lawrence M. Johnson, Chairman and Chief Executive Officer of Bancorp and of Bank of Hawaii, William E. Aull, retired President and Chief Executive Officer of Hawaiian Trust Company, Limited, 187 Dowsett Avenue, Honolulu, Hawaii 96817, Herbert M. Richards, President and Manager of Kahua Ranch, Ltd. and K. Tim Yee, President of The Queen Emma Foundation, 615 Piikoi Street, Suite 701, Honolulu, Hawaii, 96814. The Adviser, the Administrator and the Distributor have entered into non-binding principles of cooperation, with the approval of the Board of Trustees, relating to various matters including an agreement to consult with each other with respect to suggested nominations to the Board of Trustees, recognizing that ultimate selection of nominees as "Independent Trustees" within the meaning of the Trust's Distribution Plan is to be made by the Independent Trustees. In addition, the Trust has entered into separate agreements with the Adviser, the Administrator and the Distributor under which the service providers have respectively agreed not to serve in the same capacities for any mutual fund with the same objectives as the Trust under the circumstances described in these agreements. The Adviser acts in the same capacity for the following other investment companies with similar objectives. Their approximate net assets as of January 5, 1996, were as follows: CAT, approximately $334 million and TFCAT, approximately $151 million. The Adviser is currently paid a fee by each of CAT and TFCAT at the annual rate of 0.33 of 1% and 0.27 of 1% of their net assets up to $325 million and $95 million, respectively, and at a rate of 0.43 and 0.33 of 1% over those amounts. The Administrator is currently paid a fee by each of CAT and TFCAT at the annual rate of 0.17 of 1% and 0.13 of 1% of their net assets up to $325 million and $95 million, respectively, and at a rate of 0.07 of 1% over those amounts. The shareholders of the other two Funds of the Business Trust, CAT and TFCAT are also being asked to approve the same change in the advisory agreement each has with the Adviser. Action Requested THE BOARD OF TRUSTEES RECOMMENDS THAT PROPOSAL NO. 2, THE PROPOSED NEW ADVISORY AGREEMENT, BE APPROVED. Vote Required The favorable vote of the holders of a majority (as defined in the 1940 Act) of the outstanding shares of the Trust, is required for the approval of this Proposal No. 2. Under the 1940 Act, the vote of the holders of a majority of the outstanding shares of the Trust means the vote of the holders of the lesser of (a) 67% or more of the shares of the Trust present at the Meeting or represented by proxy if the holders of more than 50% of such shares are so present or represented, or (b) more than 50% of the outstanding shares of the Trust. If the required votes are not obtained at the Meeting or any adjourned meeting or meetings, the Board of Trustees will consider appropriate action, which could include calling another special meeting of shareholders. RECEIPT OF SHAREHOLDER PROPOSALS Under the proxy rules of the Securities and Exchange Commission, shareholder proposals meeting tests contained in those rules may, under certain conditions, be included in the Trust's proxy statement and proxy card for a particular annual meeting. One of these conditions relates to the timely receipt by the Trust of any such proposal. Under these rules, proposals submitted for inclusion in the proxy material for the Trust's next annual meeting after the meeting to which this Proxy Statement relates must be received by the Trust not less than 120 days before the anniversary of the date stated in this Proxy Statement for the first mailing of this Proxy Statement. The date for such submission could change, depending on the scheduled date for the next annual meeting; if so, the Trust will so advise you. The fact that the Trust receives a shareholder proposal in a timely manner does not insure its inclusion in the Trust's proxy material, since there are other requirements in the proxy rules relating to such inclusion. OTHER BUSINESS The Trust does not know of any other matter which will come up for action at the Meeting. If any other matter or matters properly come up for action at the Meeting, including any adjournment of the Meeting, the proxy holders will vote the shares which the proxy cards entitle them to vote in accordance with their judgment on such matter or matters. That is, by signing and returning your proxy card, you give the proxy holders discretionary authority as to any such matter or matters.
EXHIBIT A TOTAL NUMBER OF SHARES OUTSTANDING TOGETHER WITH THE HOLDINGS OF SHAREHOLDERS WITH MORE THAN 5% OF THE OUTSTANDING SHARES OF THE BUSINESS TRUST AS A WHOLE AND OF EACH OF ITS THREE PORTFOLIOS AS OF JANUARY 5, 1996 ============ Pacific Capital Business Trust: Cash Assets Trust Shares owned Shares owned and % of and % of Name and Address total shares total shares Hawaiian Trust Company, Limited, Financial Plaza of the Pacific, Honolulu, 286,057,920 151,472,568 Hawaii (50.6%) (45.4%) Mercantile Bank, N.A., P.O. Box 387 St. Louis, 208,424,312 159,758,611 Missouri (36.9%) (47.9%) BHC Securities Inc., 2005 Market St., Philadelphia, 59,103,534 21,615,745 Pennsylvania (10.5%) (6.5%) First Fidelity Bank, N.A., 765 Broad St., Newark, 15,547,174 None New Jersey * TOTAL SHARES OUTSTANDING 565,525,279 333,566,618 Pacific Capital Pacific Capital Tax-Free Cash U.S. Treasuries Assets Trust: Cash Assets Trust Shares owned Shares owned and % of and % of Name and Address total shares total shares Hawaiian Trust Company, Limited Financial Plaza of the Pacific Honolulu, 74,588,075 59,997,276 Hawaii (49.3%) (74.5%) Mercantile Bank, N.A., P.O. Box 387 St. Louis, 38,575,401 10,090,300 Missouri (25.5%) (12.5%) BHC Securities, Inc., 2005 Market St., Philadelphia, 18,743,894 10,401,226 Pennsylvania (12.4%) (12.9%) First Fidelity Bank, N.A., 765 Broad St., Newark, 15,547,174 none New Jersey (10.3%) TOTAL SHARES OUTSTANDING 151,390,124 80,568,537 * N/A -- Less than 5% of the portfolio
Preliminary Copy PACIFIC CAPITAL U.S. TREASURIES CASH ASSETS TRUST PROXY FOR SHAREHOLDERS MEETING MARCH 22, 1996 PROXY SOLICITED ON BEHALF OF THE TRUSTEES The undersigned shareholder of U.S.TREASURIES CASH ASSETS TRUST (the "Trust") does hereby appoint LACY B. HERRMANN and EDWARD M. W. HINES, or either of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of Cash Assets Trust, of which the Trust is a portfolio, to be held on March 22, 1996 at the offices of the Trust, 380 Madison Avenue, New York, NY 10017 at 10:00 a.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed below. Please mark your proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR THE PROPOSALS LISTED BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS INDICATED. As to any other matter said attorneys shall vote in accordance with their best judgment. Election of Trustees---. __ [__] FOR all nominees listed below __ [__] VOTE WITHHELD for all nominees listed below (Instructions: To withhold authority to vote for any one or more of the nominees, strike a line through the name of that nominee or the names of such nominees in the list below.) LACY B. HERRMANN; VERNON R. ALDEN; ARTHUR K. CARLSON; WILLIAM M. COLE; THOMAS W. COURTNEY; RICHARD W. GUSHMAN, II; STANLEY W. HONG; THEODORE T. MASON; RUSSELL K. OKATA; DOUGLAS PHILPOTTS; OSWALD K. STENDER; Ratification of selection of KPMG Peat Marwick LLP as independent auditors __ __ __ (Proposal No. 1) FOR [__] AGAINST [__] ABSTAIN [__] Action on new advisory agreement to authorize payment of fees to Trustees who are Directors of the Adviser; __ __ __ (Proposal No. 2) FOR [__] AGAINST [__] ABSTAIN [__] Dated: ____________ ______, 1996 Month Day __________________________________ SIGNATURE(S) __________________________________ SIGNATURE(S) PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing as a custodian, attorney, executor, administrator, trustee, guardian, etc., please sign your full title as such. Joint owners should each sign. Preliminary Copy IMPORTANT NOTICE PLEASE READ IMMEDIATELY PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST 380 Madison Avenue, Suite 2300, New York, N.Y. 10017 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD on March 22, 1996 TO OUR SHAREHOLDERS: The purpose of this Notice is to advise you that an Annual Meeting of the Shareholders of Pacific Capital Tax-Free Cash Assets Trust (the "Trust") will be held: Place: (a) at the offices of the Trust 380 Madison Avenue Suite 2300 New York, NY 10017 Time: (b) on March 22, 1996 at 10:00 a.m., local time; Purposes: (c) for the following purposes: (i) to elect eleven Trustees; each Trustee elected will hold office until the next annual meeting of the Trust's shareholders or until his or her successor is duly elected; (ii) to ratify (that is, to approve) or reject the selection of KPMG Peat Marwick LLP as the Trust's independent auditors for the fiscal year ending March 31, 1996 (Proposal No. 1); PLEASE NOTE: If you do not expect to attend the Meeting, you are requested to indicate voting instructions on the enclosed proxy and to date, sign and return it in the accompanying stamped envelope. To avoid unnecessary expense to the Trust, your cooperation is requested in mailing in your proxy no matter how large or small your holding may be. (iii) to act upon a proposed amended and restated Investment Advisory Agreement to permit the Trust to pay fees to Trustees who are Directors of the Adviser (Proposal No. 2); and (iv) to act upon any other matters which may properly come before the Meeting at the scheduled time and place or any adjourned meeting or meetings. Who Can Vote What Shares: (d) To vote at the Meeting, you must have been a shareholder of the Trust's Original Share Class or the Trust's Service Share Class on the Trust's records at the close of business on January 5, 1996 (the "record date"). Also, the number of shares held by you according to such records at the close of business on the record date determines the number of shares you may vote at the Meeting (or any adjourned meeting or meetings). By Order of the Board of Trustees, EDWARD M. W. HINES Secretary February ***, 1996 (ii) PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST 380 Madison Avenue, Suite 2300, New York, New York 10017 PROXY STATEMENT The Annual Meeting of the Shareholders of Pacific Capital Tax-Free Cash Assets Trust will consider a Proposal of vital importance to the Trust, in addition to election of Trustees and approval of the Trust's auditors: * Action on an amended and restated Investment Advisory Agreement which will provide for payment to Trustees who are Directors of the Adviser; See Proposal No. 2. The Board of Trustees believes that this proposal is in the best interest of the Trust and its shareholders. Please read the proxy statement and then indicate your vote on the enclosed proxy card as soon as possible. INTRODUCTION The purpose of the Notice (the first two pages of this document) is to advise you of the time, place and purposes of an Annual Meeting of the Shareholders of Pacific Capital Tax-Free Cash Assets Trust (the "Trust"). The purpose of this proxy statement (all the rest of this document) is to give you information on which you may base your decisions as to the choices, if any, you make on the enclosed proxy card. A copy of the Trust's most recent annual report and most recent semi-annual report will be sent to you without charge upon written request to the Trust's Distributor, Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by calling 800-***** toll-free or 212-697-6666. The Trust's organizer and administrator (the "Administrator") is Aquila Management Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The Trust's principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017. Hawaiian Trust Company, Limited, Financial Plaza of the Pacific, P.O. Box 3170 Honolulu, Hawaii 96802 serves as the Trust's Investment Adviser. This Notice and Proxy Statement are first being mailed on or about February ***, 1996. Cash Assets Trust, a Massachusetts business trust that has (the "Trust") is a professionally managed, open-end investment company consisting of three separate funds: Pacific Capital Cash Assets Trust ("CAT"), Pacific Capital Tax-Free Cash Assets Trust ("TFCAT") and Pacific Capital U.S. Treasuries Cash Assets Trust ("USTCAT"). In this Proxy Statement the "Business Trust" means Cash Assets Trust, the business trust, the "Funds" means the three portfolios of the Business Trust and the "Trust" means the Portfolio, Pacific Capital Tax-Free Cash Assets Trust. There are two classes of shares of each of the Funds: "Service Shares" and "Original Shares." The enclosed proxy card authorizes the persons named (or their substitutes) to vote your shares; the Trust calls these persons the "proxy holders." As to the election of Trustees you may authorize the proxy holders to vote your shares for the entire slate indicated below by marking the appropriate box on the proxy card or by merely signing and returning your proxy card with no instructions. Or, you may withhold the authority of the proxy holders to vote on the election of Trustees by marking the appropriate box. Also, you may withhold that authority as to any particular nominee by striking a line through the nominee's name on the proxy card. As to the other matters listed on the proxy card, you may direct the proxy holders to vote your shares on those proposals by checking the appropriate box "For" or "Against" or instruct them not to vote your shares on a proposal by checking the "Abstain" box. If you return your signed proxy card and do not check any box on a proposal, the proxy holders will vote your shares for that proposal. Shares held by brokers in "street name" and not voted or marked as abstentions will not be counted for purposes of determining a quorum. You may end the power of the proxy holders to vote your shares after you have signed and returned your proxy card and before the power is used by (i) so notifying the Trust in writing; (ii) signing a new and different proxy card (if the Trust receives it before the old one is used); or (iii) voting your shares in person or by your duly appointed agent at the meeting. The Trust is sending you this Notice and Proxy Statement in connection with the solicitation by its Trustees of proxy cards ("proxies") to be used at the Annual Meeting to be held at the time and place and for the purposes indicated in the Notice or any adjourned meeting or meetings. The Trust pays the costs of the solicitation. Proxies are being solicited by the use of the mails; they may also be solicited by telephone, facsimile and personal interviews. Brokerage firms, banks and others may be requested to forward this Notice and Proxy Statement to beneficial owners of the Trust's shares so that these owners may authorize the voting of these shares. The Trust will pay these firms for their out-of-pocket expenses for doing so. Each shareholder of the Business Trust on the record date is entitled to one (1) vote for each dollar (and a proportionate fractional vote for each fraction of a dollar) of net asset value (determined as of the record date) represented by full and fractional shares held on the record date. The meeting will act upon certain matters that affect the Business Trust as a whole: the election of Trustees, the action on the selection of auditors (Proposal No. 1). On matters that affect the Business Trust as a whole, all shareholders of the Business Trust, including the shareholders both classes of the Trust and both classes of the other two portfolios, are entitled to vote at the meeting. With respect to Proposal No. 2, a matter that affects only the Trust, only shareholders of both classes of the Trust are entitled to vote and the shareholders of the other two portfolios are not entitled to vote. On January 5, 1996 the total number of shares outstanding for the Business Trust as a whole, and for each of its three Funds, was as set forth in the table on Exhibit A to this Proxy Statement. Also listed on Exhibit A are the names and addresses of the holders as of that date of more than 5% of the outstanding shares of the Business Trust and of each Fund. Shareholdings are in the names of the holders listed, unless stated to be in the name of a nominee. ELECTION OF TRUSTEES At the Meeting, eleven Trustees are to be elected. Whenever it is stated in this Proxy Statement that a matter is to be acted on at the Meeting, this means the Meeting held at the scheduled time or any adjourned meeting or meetings. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can instruct the proxy holders as to the voting of your shares as to the election of Trustees. Each of the nominees is presently a Trustee and was previously elected by the shareholders. Messrs. Gushman, Hong, Okata and Stender were elected by the shareholders on March 31, 1993. Each of the other nominees has been a Trustee since the beginning of the Business Trust's operations in 1984, except for Mr. Carlson, who was originally elected a Trustee at a meeting of the Board of Trustees held on October 19, 1987, Mr. Alden, who was originally elected at a meeting of the Board of Trustees held on June 12, 1989 and Mr. Philpotts, who was originally elected at a meeting of the Board of Trustees held June 6, 1992. Mrs. Thelma Chen-Hoon Zen, a founding Trustee, has advised the Trust that she will not be a candidate for reelection because of health reasons. On the record date the officers and Trustees of the Trust held as a group less than 1% of the outstanding voting shares of the Business Trust or the Trust. Each of the Trust's Trustees and officers holds the same position with all of the Funds, the Trust and the two other series of the Business Trust. Each of the Trust's Trustees is also a Trustee of Hawaiian Tax-Free Trust, a municipal bond mutual fund having the same Adviser and Administrator as the Trust. The beneficial ownership of shares indicated below includes voting and investment control unless otherwise indicated. Shares are given to the nearest full share. In the information below, the Trust's Administrator, Aquila Management Corporation, is referred to as the "Administrator," the Trust's Distributor, Aquila Distributors, Inc., is referred to as the "Distributor" and Hawaiian Trust Company, Limited is referred to by that name or as the "Adviser." Mr. Herrmann is an interested person of the Trust, as that term is defined in the Investment Company Act of 1940 (the "1940 Act"), as an officer of the Trust and as a Director, officer and shareholder of Aquila Distributors, Inc. (the "Distributor"). Mr. Philpotts is an interested person of the Trust as a shareholder of the Adviser's corporate parent. They are so designated by an asterisk. Lacy B. Herrmann*, President and Chairman of the Board of Trustees, Age: 66, Shares Owned: None Founder of the Trust and President and a Director of the Administrator since 1984; Founder, President and Chairman of the Board of Trustees of Prime Cash Fund since 1982, of Short Term Asset Reserves since 1984, of Churchill Cash Reserves Trust since 1985 and of Cascades Cash Fund, 1989-1994, all of which are money market funds to which the Administrator is administrator and which together with the Funds are referred to as the "Money Funds"; Founder, President and Chairman of the Board of Trustees of Hawaiian Tax-Free Trust since 1984, of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado since 1987 and of Tax-Free Fund For Utah and Narragansett Insured Tax- Free Income Fund since 1992, all of which are tax-free municipal bond funds, and an equity fund, Aquila Rocky Mountain Equity Fund since 1993, to all of which the Administrator is administrator and which are referred to as the "Bond and Equity Funds"; Chairman and President, Chief Executive Officer (Chairman of the Board of Trustees and/or President) and Trustee of Capital Cash Management Trust ("CCMT"), since 1981 and Founder and executive officer (since 1974) of CCMT and its predecessor; Vice President, a Director and Secretary since 1981 (formerly Treasurer) of the Distributor, which is distributor (i.e., principal underwriter) for the Money Funds and the Bond and Equity Funds; President and a Director of STCM Management Company, Inc., Adviser to CCMT; Chairman, President and a Director since 1984 of InCap Management Corporation, formerly sub-adviser and administrator of Prime Cash Fund and Short Term Asset Reserves; Director or Trustee of the various Quest for Value Funds, a group of stock, bond and money market mutual funds, since 1983; Director of Saratoga Advantage Trust, a group of mutual funds, since 1994; Trustee of Brown University since 1990; actively involved for many years in leadership roles with university, school and charitable organizations. Vernon R. Alden, Trustee, Age: 72, Shares Owned: None Director of Augat Inc., a manufacturing corporation, since 1979, Colgate Palmolive Company since 1974, Digital Equipment Corporation, a computer manufacturing corporation, since 1959, Intermet Corporation, an independent foundry, since 1986, and Sonesta International Hotels Corporation since 1978; Chairman of the Board and Executive Committee of The Boston Company, Inc., a financial services company, 1969-1978; Trustee of Tax-Free Trust of Oregon since 1988, of Hawaiian Tax-Free Trust, of Cascades Cash Fund, 1989-1994 and of Narragansett Insured Tax-Free Income Fund since 1992; Associate Dean and member of the faculty of Harvard University Graduate School of Business Administration, 1951-1962; member of the faculty and Program Director of Harvard Business School - University of Hawaii Advanced Management Program, summer of 1959 and 1960; President of Ohio University, 1962-1969; Chairman of The Japan Society of Boston, Inc., and member of several Japan-related advisory councils; Chairman of the Massachusetts Business Development Council and the Massachusetts Foreign Business Council, 1978-1983; Trustee of the Boston Symphony Orchestra since 1975; Chairman of the Massachusetts Council on the Arts and Humanities, 1972-1984; Member of the Board of Fellows of Brown University, 1969-1986; Trustee and member of the Executive Committee, Plymouth Plantation; trustee of various other cultural and educational organizations; Honorary Consul General of the Royal Kingdom of Thailand. Arthur K. Carlson, Trustee, Age: 73, Shares Owned: None Retired; Senior Vice President and Manager of the Trust Division of The Valley National Bank of Arizona, 1977-1987; Trustee of Tax-Free Fund of Colorado, Hawaiian Tax-Free Trust and Tax-Free Trust of Arizona since 1987 and of Aquila Rocky Mountain Equity Fund since 1993; previously Vice President of Investment Research at Citibank, New York City, and prior to that Vice President and Director of Investment Research of Irving Trust Company, New York City; past President of The New York Society of Security Analysts and currently a member of the Phoenix Society of Financial Analysts; formerly Director of the Financial Analysts Federation; past Chairman of the Board and, currently, Director of Mercy Healthcare of Arizona, Phoenix, Arizona since 1990; Director of Northern Arizona University Foundation since 1990; present or formerly an officer and/or director of various other community and professional organizations. William M. Cole, Trustee, Age: 64, Shares Owned: None President of Cole International, Inc., financial and shipping consultants, since 1974; President of Cole Associates, shopping center and real estate developers, 1974-1976; President of Seatrain Lines, Inc., 1970-1974; former General Partner of Jones & Thompson, international shipping brokers; Trustee of Hawaiian Tax-Free Trust since 1985, of Tax-Free Fund of Colorado since 1987; Chairman of Cole Group, a financial consulting and real estate firm, since 1985. Thomas W. Courtney, C.F.A., Trustee, Age: 62, Shares Owned: None President of Courtney Associates, Inc., a venture capital firm, since 1988; General Partner of Trivest Venture Fund, 1983-1988; President of Investment Counseling, Federated Investors, Inc., 1975-1982; President of Boston Company Institutional Investors, Inc., 1970-1975; Director of several privately owned corporations; formerly a Director of the Financial Analysts Federation; Trustee of Hawaiian Tax-Free Trust since 1984, of Tax-Free Trust of Arizona since 1986; Director or Trustee of the various Quest for Value Funds, a group of stock, bond and money market mutual funds, since 1983. Richard W. Gushman, II, Trustee, Age: 49, Shares Owned: None President and Chief Executive Officer of OKOA, INC., a private Hawaii corporation involved in real estate; adviser to RAMPAC, Inc., a wholly owned subsidiary of the Bank of Hawaii, involved with commercial real estate finance; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Board of Aloha United Way; member of the Board of Trustees of the Mari- Med Foundation, Downtown Improvement Association, Boys and Girls Club of Honolulu. Stanley W. Hong, Trustee, Age: 59, Shares Owned: None Business consultant since 1994; Senior Vice President of McCormack Properties, Ltd., 1993-1994; President and Chief Executive of the Hawaii Visitors Bureau, 1984-1993; Vice President, General Counsel and Corporate Secretary at TheoDavies & Co., Ltd., a multiple business company, 1973-1984; formerly Legislative Assistant to U.S. Senator Hiram L. Fong; member of the Boards of Directors of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of Nature Conservancy of Hawaii since 1990; Regent of Chaminade University of Honolulu since 1990. Theodore T. Mason, Trustee, Age: 60, Shares Owned: None Managing Director of EastWind Power Partners, Ltd. since 1994; Director of Cogeneration Development of Willamette Industries, Inc., a forest products company, 1991-1993; Vice President of Corporate Development of Penntech Papers, Inc., 1978-1991; Vice President of Capital Projects for the same company, 1977-1978; Vice Chairman of the Board of Trustees of CCMT since 1981; Trustee and Vice President, 1976-1981, and formerly Director of its predecessor; Director of STCM Management Company, Inc.; Vice Chairman of the Board of Trustees and Trustee of Prime Cash Fund since 1982; Trustee of Short Term Asset Reserves, 1984-1986 and since 1989, of Hawaiian Tax-Free Trust since 1984, of Churchill Cash Reserves Trust since 1985 and of Churchill Tax-Free Fund of Kentucky since 1992; Vice President and Trustee of Oxford Cash Management Fund, 1983-1989; Vice President of Trinity Liquid Assets Trust, 1983-1985; President and Director of Ted Mason Venture Associates, Inc., a venture capital consulting firm, 1972-1980; Advisor to the Commander, U.S. Maritime Defense Zone Atlantic, 1984-1988; National Vice President, Surface/Subsurface, Naval Reserve Association, 1985-1987; National Vice President, Budget and Finance, for the same Association, 1983-1985; Commanding Officer of four Naval Reserve Units, 1974-1985; Captain, USNR, 1978-1988. Russell K. Okata, Trustee, Age: 51, Shares Owned: None Executive Director, Hawaii Government Employees Association AFSCME Local 152, AFL-CIO; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Royal State Insurance Group since 1988; Trustee of several charitable organizations. Douglas Philpotts*, Trustee, Age: 64, Shares Owned: None Retired; Director of Hawaiian Trust Company, Limited since 1986, Chairman of the Board, 1992-1994 and President, 1986-1992; Director of Victoria Ward, Limited; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of the Strong Foundation; present or former director or trustee of a number of civic and charitable organizations in Hawaii. Oswald K. Stender, Trustee, Age: 64, Shares Owned: None Trustee of the Bernice Pauahi Bishop Estate since 1990; Director of Hawaiian Electric Industries, Inc., a public utility holding company, since 1993; Senior Advisor to the Trustees of The Estate of James Campbell, 1987-1989 and Chief Executive Officer, 1976- 1988; Director of several housing and real estate associations; Director, member or trustee of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Board Member, KBPS Public Radio Foundation. William C. Wallace, Vice President, Age: 60 Vice President of Capital Cash Management Trust since 1984; Senior Vice President of Hawaiian Tax-Free Trust since 1985 and Vice President, 1984-1985; Senior Vice President of Tax-Free Trust of Arizona since 1989 and Vice President, 1986-1988; Vice President of Tax-Free Trust of Oregon since 1986, of Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado since 1987 and of Narragansett Insured Tax-Free Income Fund since 1992; Secretary and Director of STCM Management Company, Inc. since 1974; President of the Distributor since 1995 and formerly Vice President of the Distributor, 1986-1992; Member of the Panel of Arbitrators, American Arbitration Association, since 1978; Assistant Vice President, American Stock Exchange, Market Development Division, and Director of Marketing, American Gold Coin Exchange, a subsidiary of the American Stock Exchange, 1976- 1984. Diana P. Herrmann, Vice President, Age: 37 Senior Vice President and Secretary and formerly Vice President of the Administrator since 1986 and Director since 1984; Trustee of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since 1994 and of Churchill Tax-Free Fund of Kentucky since 1995; Vice President of InCap Management Corporation since 1986 and Director since 1983; Vice President and formerly Assistant Vice President of the Money Funds since 1986; Assistant Vice President of Oxford Cash Management Fund, 1986-1988; Assistant Vice President and formerly Loan Officer of European American Bank, 1981-1986; daughter of the Trust/Fund's President; Trustee of the Leopold Schepp Foundation (academic scholarships) since 1995; actively involved in mutual fund and trade associations and in college and other volunteer organizations. Charles E. Childs, III, Vice President, Age: 38 Vice President - Administration and formerly Assistant Vice President and Associate of the Administrator since 1987; Vice President or Assistant Vice President of the Money Funds since 1988; Northeastern University, 1986-1987 (M.B.A., 1987); Financial Analyst, Unisys Corporation, 1986; Associate Analyst at National Economic Research Associates, Inc. (NERA), a micro- economic consulting firm, 1979-1985. John M. Herndon, Vice President, Age: 56 Assistant Secretary of the Money Funds and the Bond and Equity Funds since 1995; Vice President of the Money Funds since 1990; Vice President of the Administrator since 1990; Investment Services Consultant and Bank Services Executive of Wright Investors' Service, a registered investment adviser, 1983-1989; Member of the American Finance Association, the Western Finance Association and the Society of Quantitative Analysts. Sherri Foster, Assistant Vice President, Age: 45 Senior Vice President of Hawaiian Tax-Free Trust since 1993, Vice President, 1988-1992 and Assistant Vice President, 1985-1988; Registered Representative of the Distributor since 1985; Realtor- Associate of Sherrian Bender Realty, successor to John Wilson Enterprises, 1983-1994; Executive Secretary of the Hyatt Regency, Maui, 1981-1983. Rose F. Marotta, Chief Financial Officer, Age: 71 Chief Financial Officer of the Money Funds and the Bond and Equity Funds since 1991; Treasurer of the Money Funds and the Bond and Equity Funds, 1981-1991; formerly Treasurer of the predecessor of CCMT; Treasurer and Director of STCM Management Company, Inc., since 1974; Treasurer of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash Management Fund, 1982-1988; Treasurer of InCap Management Corporation since 1982, of the Administrator since 1984 and of the Distributor since 1985. Richard F. West, Treasurer, Age: 60 Treasurer of the Money Funds and the Bond and Equity Funds and of Aquila Distributors, Inc. since 1992; Associate Director of Furman Selz Incorporated, 1991-1992; Vice President of Scudder, Stevens & Clark, Inc. and Treasurer of Scudder Institutional Funds, 1989-1991; Vice President of Lazard Freres Institutional Funds Group, Treasurer of Lazard Freres Group of Investment Companies and HT Insight Funds, Inc., 1986-1988; Vice President of Lehman Management Co., Inc. and Assistant Treasurer of Lehman Money Market Funds, 1981-1985; Controller of Seligman Group of Investment Companies, 1960-1980. Edward M. W. Hines, Secretary, Age: 56 Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary of the Money Funds and the Bond and Equity Funds since 1982; Secretary of Trinity Liquid Assets Trust, 1982-1985 and Trustee of that Trust, 1985-1986; Secretary of Oxford Cash Management Fund, 1982-1988. Patricia A. Craven, Assistant Secretary & Compliance Officer, Age: 29 Assistant Secretary of the Money Funds and the Bond and Equity Funds since 1995; Counsel to the Administrator and the Distributor since 1995; formerly a Legal Associate for Oppenheimer Management Corporation, 1993-1995. Compensation of Trustees The Funds do not pay fees to Trustees affiliated with the Administrator or Adviser or to any of the Fund's officers. During the fiscal year ended March 31, 1995, the Cash Fund, the Tax-Free Fund and the Treasuries Fund paid, respectively $85,532, $39,285 and $24,393, in compensation and reimbursement of expenses to its other Trustees. The Funds are among the 14 funds in the Aquilasm Group of Funds, which consist of tax-free municipal bond funds, money market funds 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 Aquilasm 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
Compensation Compensation Compensation Name from CAT from TFCAT from USTCAT Vernon R. $6,967 $4,009 $2,211 Alden Arthur K. $6,985 $3,031 $1,833 Carlson William M. $6,979 $3,210 $1,941 Cole Thomas W. $7,380 $3,402 $1,825 Courtney Richard W. $6,250 $3,000 $1,750 Gushman Stanley W. $6,250 $3,000 $1,750 Hong Theodore T. $7,085 $3,096 $1,835 Mason Russell K. $7,029 $3,542 $1,770 Okata Douglas $152 $465 $10 Philpotts Oswald K. $6,000 $3,000 $1,750 Stender Compensation Number of Aquila Group from all funds boards on which the in the Aquila Trustee serves Group of Funds Name Vernon R. $33,591 7 Alden Arthur K. $34,705 7 Carlson William M. $27,842 5 Cole Thomas W. $27,036 5 Courtney Richard W. $19,050 4 Gushman Stanley W. $20,258 4 Hong Theodore T. $40,290 8 Mason Russell K. $19,492 4 Okata Douglas $1,876 4 Philpotts Oswald K. $17,250 4 Stender
The Trust's Administrator is administrator to the Aquilasm Group of Funds, which consists of tax-free municipal bond funds, money market funds and an equity fund. As of September 30, 1995, these funds had aggregate assets of approximately $2.6 billion, of which approximately $1.9 billion consisted of assets of tax-free municipal bond funds. The Administrator, which was founded in 1984, is controlled by Mr. Lacy B. Herrmann (directly, through a trust and through share ownership by his wife). See the Additional Statement for information on Mr. Herrmann. For the fiscal year ended March 31, 1995, the CAT, the Trust and USTCAT paid or accrued to the Adviser fees of $1,515,705, $412,599 and $215,004, respectively, and paid or accrued to the Administrator fees of $624,649, $156,612 and $89,228, respectively under the Advisory and Administration Agreements. For USTCAT, the Adviser waived $30,974 and the Administrator waived $10,325 of such fees. The Distributor currently handles the distribution of the shares of fourteen funds (six money market funds, seven tax-free municipal bond funds and an equity fund) including the Trust. 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. All of the shares of the Distributor are owned by Mr. Herrmann. At the date of this proxy statement, there is a proposed transaction whereby all of the shares of the Distributor, which are currently owned by Mr. Herrmann, will be owned by certain directors and/or officers of the Administrator and/or the Distributor including Mr. Herrmann. In anticipation of this transaction, the Board of Trustees, including a majority of the independent Trustees, has approved a new Distribution Agreement for the Trust with no material change from the currently effective Distribution Agreement. Other Information on Trustees The Trustees have appointed an Audit Committee consisting of all of the Trustees (the "Independent Trustees") who are not "interested persons," as that term is defined in the 1940 Act. The Committee (i) recommends to the Board of Trustees what firm of independent auditors will be selected by the Board of Trustees (subject to shareholder ratification); (ii) reviews the methods, scope and result of audits and the fees charged; and (iii) reviews the adequacy of the Trust's internal accounting procedures and controls. The Committee held two meetings during the Trust's last fiscal year. The Board of Trustees does not have a nominating committee. During the Trust's last fiscal year, the Board of Trustees held five meetings. Except for Mrs. Zen who was absent for medical reasons, all Trustees were present for at least 75% of the total number of Board meetings and Audit Committee Meetings (if such Trustee was a member of that Committee). RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS (Proposal No. 1) KPMG Peat Marwick LLP, which is currently serving as the Trust's auditors, has been selected by the Trust's Board of Trustees, including a majority of the Independent Trustees, as the Trust's independent auditors for the fiscal year ending March 31, 1996. Such selection is submitted to the shareholders for ratification or rejection. The firm has no direct or indirect financial interest in the Trust, the Trust's Adviser or the Trust's Administrator. It is expected that representatives of the firm not will be present at the meeting but will be available should any matter arise requiring their presence. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT WHICH WILL PROVIDE FOR PAYMENT OF FEES TO TRUSTEES WHO ARE DIRECTORS OF THE ADVISER (Proposal No. 2) Background and Reasons for the Proposal Since the Trust's inception, Hawaiian Trust Company, Limited (the "Adviser") has supervised the investment program of the Trust and the composition of its portfolio. The services of the Adviser are rendered under an Investment Advisory Agreement (the "Current Advisory Agreement"), approved by the shareholders of the Trust on January 6, 1995. which went into effect on September 5, 1995, upon determination by the Board of Trustees that certain changes in the arrangements for fund accounting contemplated by the agreement were satisfactory. The Current Advisory Agreement replaced an advisory agreement with the Adviser then in effect which had the same terms except for the such accounting arrangements. The change in the Current Advisory Agreement being proposed will allow the Trust to pay compensation to certain Trustees who are affiliated with the Adviser at the same rate that it pays to its other Trustees. Under the Current Advisory Agreement, the Trust pays no compensation to any of such Trustees and payment of their compensation, if any, is the responsibility of the Adviser. Mr. Douglas Philpotts is the only Trustee who would be affected by the change. Mr. Philpotts is currently a Director of the Adviser. He retired as Chairman of its Board in 1994. He receives no compensation from the Adviser for being a Trustee of the Trust. The Trust considers that in view of his long association with the Adviser and his knowledge of Hawaii, Mr. Philpotts makes a valuable contribution to the Board of Trustees and that it is appropriate that he be compensated for his services at the same rate as the Trust's other Trustees. If Mr. Philpotts had been compensated at the same rate as the other Trustees during the Trust's last fiscal year, he would have been paid $2,072. During the Trust's last fiscal year, its total expenses of operations were $410,605. Payment of Trustees fees to Mr. Philpotts would have increased overall expenses of operations by 0.0027 of 1%. No portion of the payment to Mr. Philpotts will be paid to the Adviser and payment of these fees by the Trust will not result in reduction of any amounts payable, or costs to be borne by the Adviser under the Advisory Agreement. An advisory agreement incorporating the proposed new arrangements (the "New Advisory Agreement") was approved on October 27, 1995, in accordance with the 1940 Act by a vote in person of a majority of the Trustees, including all of the Trustees who are not parties to the Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any such party (the "Independent Trustees"), at a meeting called and held for the purpose of voting on the New Advisory Agreement. Description of the Advisory Agreement and the Proposed Changes to it Except where necessary to distinguish the current Advisory Agreement from the New Advisory Agreement, both agreements are referred to as the Advisory Agreement. The Advisory Agreement of the Trust provides, subject to the control of the Board of Trustees, for investment supervision by the Adviser. The Adviser furnishes information as to the Trust's portfolio securities to any provider of fund accounting services to the Trust; monitors records of the Trust as to the Trust's portfolio, including prices, maintained by such provider of such services; and supplies at its expense, 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. The Advisory Agreement states that the Adviser shall, at its expense, provide to the Trust all office space and facilities, equipment and clerical personnel necessary for the carrying out of the Adviser's duties under the Advisory Agreement. Under the Current Advisory Agreement, the Adviser pays all compensation of those officers and employees of the Trust and of those Trustees, if any, who are affiliated with the Adviser. Under the New Advisory Agreement, this provision would be modified to provide 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. Under the Advisory Agreement, the Trust 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 the Advisory Agreement, all costs and expenses not expressly assumed by the Adviser or by the Administrator under the Trust's Administration Agreement or by the Trust's principal underwriter are paid by the Trust. The Advisory Agreement lists examples of such expenses borne by the Trust, 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 Trust and its shares under Federal and State securities laws, interest, taxes, and non-recurring expenses, including litigation. Under the Advisory Agreement, the Trust pays a fee, payable monthly and computed on the net asset value of the Fund as of the close of business each business day, at the annual rate of 0.27 of 1% of such net assets up to $95 million, and on net assets above that amount at an annual rate of 0.33 of 1% of such net assets. However, the total fees which the Trust pays are at the annual rate of 0.40 of 1% of such net assets, since the Administrator also receives a fee from the Trust the Administration Agreement as discussed below. The Adviser and/or Administrator may, in order to attempt to achieve a competitive yield on the shares of the Trust, each waive all or part of either fee. The Adviser agrees that its fee 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 the Trust 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 the Trust 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 Trust's total annual investment income. The New Advisory Agreement will go into effect upon approval of the Trust's shareholders and will continue until the June 30, next preceding the second anniversary of such approval, that is until June 30, 1997, and from year to year thereafter, but only so long as such continuance is specifically approved in accordance with the 1940 Act; under the 1940 Act such continuance must be approved annually by the vote of the Board of Trustees including a majority of the Trust's Independent Trustees cast in person at a meeting called for the purpose of such approval, or by the vote of a majority of the Trust's Independent Trustees and the vote of the holders of a majority (as defined in the 1940 Act) of the Trust's shares. The Advisory Agreement may not be amended except by such a vote of the Trustees and shareholders. The Advisory Agreement may be terminated by the Adviser at any time without penalty upon giving the Trust sixty days' written notice, and may be terminated by the Trust at any time without penalty upon giving the Adviser sixty days' written notice, provided that such termination by the Trust 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; it automatically terminates in the event of its assignment (as defined in the agreement). The 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. The Trust 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 Trust's Registration Statement under the Securities Act of 1933 and the 1940 Act except for the information supplied by the Adviser for inclusion therein. The Advisory Agreement contains the following provisions as to the Trust's portfolio transactions. 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, acting as agent for the Trust, 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 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 (i) whether a dealer has provided research services, as further discussed below; and (ii) whether a dealer has sold shares of the Trust or any other investment company or companies having the Adviser as its investment adviser or having the same sub-adviser, Administrator or principal underwriter as the Trust. 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 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. During the Trust's fiscal year ended March 31, 1995, all of its transactions were principal transactions and no brokerage commissions were paid. Information about the Adviser The Adviser, a Hawaii corporation organized in 1898, is the largest trust company in the state of Hawaii in terms of assets under administration. As of July 1, 1995, the Adviser had over $11 billion of clients' assets under administration. The Adviser is not authorized to, and does not, carry on a banking business. The Adviser is a wholly-owned subsidiary of Bank of Hawaii, all of whose shares are owned by Bancorp Hawaii, Inc. ("Bancorp") and Bank of Hawaii's directors (each of whom owns qualifying shares as required by Hawaii law). The address of Bank of Hawaii and Bancorp is 130 Merchant Street, Honolulu, Hawaii 96813. Bancorp 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. Bancorp files annual and periodic reports with the Securities and Exchange Commission which are available for public inspection. The principal executive officer of the Adviser is Walter J. Laskey, President and a director of the Adviser; his address is 130 Merchant Street, Honolulu, Hawaii 96813. The other directors of the Adviser (each of whom has the same address, except as indicated) are Douglas Philpotts, H. Howard Stephenson, retired Chairman and Chief Executive Officer of Bancorp and of Bank of Hawaii, Lawrence M. Johnson, Chairman and Chief Executive Officer of Bancorp and of Bank of Hawaii, William E. Aull, retired President and Chief Executive Officer of Hawaiian Trust Company, Limited, 187 Dowsett Avenue, Honolulu, Hawaii 96817, Herbert M. Richards, President and Manager of Kahua Ranch, Ltd. and K. Tim Yee, President of The Queen Emma Foundation, 615 Piikoi Street, Suite 701, Honolulu, Hawaii, 96814. The Adviser, the Administrator and the Distributor have entered into non-binding principles of cooperation, with the approval of the Board of Trustees, relating to various matters including an agreement to consult with each other with respect to suggested nominations to the Board of Trustees, recognizing that ultimate selection of nominees as "Independent Trustees" within the meaning of the Trust's Distribution Plan is to be made by the Independent Trustees. In addition, the Trust has entered into separate agreements with the Adviser, the Administrator and the Distributor under which the service providers have respectively agreed not to serve in the same capacities for any mutual fund with the same objectives as the Trust under the circumstances described in these agreements. The Adviser acts in the same capacity for the following other investment companies with similar objectives. Their approximate net assets as of January 5, 1996, were as follows: CAT, approximately $334 million and USTCAT, approximately $81 million. The Adviser is currently paid a fee by each of CAT and USTCAT at the annual rate of 0.33 of 1% and 0.27 of 1% of their net assets up to $325 million and $60 million, respectively, and at a rate of 0.43 and 0.33 of 1% over those amounts. The Administrator is currently paid a fee by each of CAT and USTCAT at the annual rate of 0.17 of 1% and 0.13 of 1% of their net assets up to $325 million and $60 million, respectively, and at a rate of 0.07 of 1% over those amounts. The shareholders of the other two series of the Business Trust, CAT and USTCAT are also being asked to approve the same change in the advisory agreement each has with the Adviser. Action Requested THE BOARD OF TRUSTEES RECOMMENDS THAT PROPOSAL NO. 2, THE PROPOSED NEW ADVISORY AGREEMENT, BE APPROVED. Vote Required The favorable vote of the holders of a majority (as defined in the 1940 Act) of the outstanding shares of the Trust, is required for the approval of this Proposal No. 2. Under the 1940 Act, the vote of the holders of a majority of the outstanding shares of the Trust means the vote of the holders of the lesser of (a) 67% or more of the shares of the Trust present at the Meeting or represented by proxy if the holders of more than 50% of such shares are so present or represented, or (b) more than 50% of the outstanding shares of the Trust. If the required votes are not obtained at the Meeting or any adjourned meeting or meetings, the Board of Trustees will consider appropriate action, which could include calling another special meeting of shareholders. RECEIPT OF SHAREHOLDER PROPOSALS Under the proxy rules of the Securities and Exchange Commission, shareholder proposals meeting tests contained in those rules may, under certain conditions, be included in the Trust's proxy statement and proxy card for a particular annual meeting. One of these conditions relates to the timely receipt by the Trust of any such proposal. Under these rules, proposals submitted for inclusion in the proxy material for the Trust's next annual meeting after the meeting to which this Proxy Statement relates must be received by the Trust not less than 120 days before the anniversary of the date stated in this Proxy Statement for the first mailing of this Proxy Statement. The date for such submission could change, depending on the scheduled date for the next annual meeting; if so, the Trust will so advise you. The fact that the Trust receives a shareholder proposal in a timely manner does not insure its inclusion in the Trust's proxy material, since there are other requirements in the proxy rules relating to such inclusion. OTHER BUSINESS The Trust does not know of any other matter which will come up for action at the Meeting. If any other matter or matters properly come up for action at the Meeting, including any adjournment of the Meeting, the proxy holders will vote the shares which the proxy cards entitle them to vote in accordance with their judgment on such matter or matters. That is, by signing and returning your proxy card, you give the proxy holders discretionary authority as to any such matter or matters.
EXHIBIT A TOTAL NUMBER OF SHARES OUTSTANDING TOGETHER WITH THE HOLDINGS OF SHAREHOLDERS WITH MORE THAN 5% OF THE OUTSTANDING SHARES OF THE BUSINESS TRUST AS A WHOLE AND OF EACH OF ITS THREE PORTFOLIOS AS OF JANUARY 5, 1996 ============ Pacific Capital Business Trust: Cash Assets Trust Shares owned Shares owned and % of and % of Name and Address total shares total shares Hawaiian Trust Company, Limited, Financial Plaza of the Pacific, Honolulu, 286,057,920 151,472,568 Hawaii (50.6%) (45.4%) Mercantile Bank, N.A., P.O. Box 387 St. Louis, 208,424,312 159,758,611 Missouri (36.9%) (47.9%) BHC Securities Inc., 2005 Market St., Philadelphia, 59,103,534 21,615,745 Pennsylvania (10.5%) (6.5%) First Fidelity Bank, N.A., 765 Broad St., Newark, 15,547,174 None New Jersey * TOTAL SHARES OUTSTANDING 565,525,279 333,566,618 Pacific Capital Pacific Capital Tax-Free Cash U.S. Treasuries Assets Trust: Cash Assets Trust Shares owned Shares owned and % of and % of Name and Address total shares total shares Hawaiian Trust Company, Limited Financial Plaza of the Pacific Honolulu, 74,588,075 59,997,276 Hawaii (49.3%) (74.5%) Mercantile Bank, N.A., P.O. Box 387 St. Louis, 38,575,401 10,090,300 Missouri (25.5%) (12.5%) BHC Securities, Inc., 2005 Market St., Philadelphia, 18,743,894 10,401,226 Pennsylvania (12.4%) (12.9%) First Fidelity Bank, N.A., 765 Broad St., Newark, 15,547,174 none New Jersey (10.3%) TOTAL SHARES OUTSTANDING 151,390,124 80,568,537 * N/A -- Less than 5% of the portfolio
Preliminary Copy PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST PROXY FOR SHAREHOLDERS MEETING MARCH 22, 1996 PROXY SOLICITED ON BEHALF OF THE TRUSTEES The undersigned shareholder of TAX-FREE CASH ASSETS TRUST (the "Trust") does hereby appoint LACY B. HERRMANN and EDWARD M. W. HINES, or either of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of Cash Assets Trust, of which the Trust is a portfolio, to be held on March 22, 1996 at the offices of the Trust, 380 Madison Avenue, New York, NY 10017 at 10:00 a.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed below. Please mark your proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR THE PROPOSALS LISTED BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS INDICATED. As to any other matter said attorneys shall vote in accordance with their best judgment. Election of Trustees---. __ [__] FOR all nominees listed below __ [__] VOTE WITHHELD for all nominees listed below (Instructions: To withhold authority to vote for any one or more of the nominees, strike a line through the name of that nominee or the names of such nominees in the list below.) LACY B. HERRMANN; VERNON R. ALDEN; ARTHUR K. CARLSON; WILLIAM M. COLE; THOMAS W. COURTNEY; RICHARD W. GUSHMAN, II; STANLEY W. HONG; THEODORE T. MASON; RUSSELL K. OKATA; DOUGLAS PHILPOTTS; OSWALD K. STENDER; Ratification of selection of KPMG Peat Marwick LLP as independent auditors __ __ __ (Proposal No. 1) FOR [__] AGAINST [__] ABSTAIN [__] Action on new advisory agreement to authorize payment of fees to Trustees who are Directors of the Adviser; __ __ __ (Proposal No. 2) FOR [__] AGAINST [__] ABSTAIN [__] Dated: ____________ ______, 1996 Month Day __________________________________ SIGNATURE(S) __________________________________ SIGNATURE(S) PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing as a custodian, attorney, executor, administrator, trustee, guardian, etc., please sign your full title as such. Joint owners should each sign. -----END PRIVACY-ENHANCED MESSAGE-----