CHURCHILL CASH RESERVES TRUST
ANNUAL REPORT
October 16, 1995
Dear Investor:
We are pleased to provide you with the Annual Report for
Churchill Cash Reserves Trust for the fiscal year ended September
30, 1995.
ECONOMIC OUTLOOK
Over the course of this past 12-month period, the Federal
Reserve succeeded in its relentless determination to temper the
pace of business activity in 1994 by raising short-term interest
rates seven times between February 1994 and February 1995. As a
result, the robust growth period of late 1994 - early 1995 was
replaced by a slower yet apparently sustainable growth pattern.
Concurrent with the slower-growth economy has been a very modest
rate of inflation at both the wholesale and consumer levels. The
restrictive Fed monetary policy pursued during 1994 and the
subsequent easing, if successful, will enable the Fed to execute
their desired soft landing of the economy.
MANAGEMENT DISCUSSION
Since the Trust commenced operations over 10 years ago in
July, 1985, PNC Bank, Kentucky, Inc. (formerly Citizens Fidelity
Bank and Trust Co.) had been the Trusts Investment Adviser.
Throughout their tenure, PNC Bank, Kentucky consistently served
the Trust in a highly commendable manner. During their tenure,
they exercised care in the selection of the securities used in
the portfolio in order to assure a high level of safety for investors
principal while also maintaining a highly competitive yield.
For PNC Bank, Kentuckys own business reasons, their
association with the Trust ceased as of July 19, 1995.
The Board of Trustees of Churchill Cash Reserves Trust
thoroughly reviewed a number of highly capable replacement
candidates to serve as the Trusts Investment Adviser. As a
result of this search, the Board is very pleased to announce the
selection of Banc One Investment Advisors Corporation as the
Trusts new Investment Adviser. The new Adviser is a wholly-owned
subsidiary of BANC ONE CORPORATION, one of the largest banking
organizations in the country, with extensive experience in the
area of cash management. The Adviser has an exceptionally fine
reputation as a manager of money market securities, managing over
$30 billion in assets, of which over $5.8 billion are in
short-term assets and $4.8 billion are in money market assets.
The Adviser exercises the highest level of prudence in credit
analysis while generating competitive yield results for investors.
Investors can expect to receive a continuation of the same
highest standards of performance as has been existent with
Churchill Cash Reserves Trust since its inception.
Your continued confidence in and usage of the Trust for your
cash reserves is greatly valued and appreciated.
Sincerely,
/s/Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
<PAGE>
KPMG Peat Marwick LLP
Certified Public Accountants
INDEPENDENT AUDITORS REPORT
To the Board of Trustees and Shareholders of
Churchill Cash Reserves Trust:
We have audited the accompanying statement of assets and
liabilities of Churchill Cash Reserves Trust, including the
statement of investments, as of September 30, 1995, the related
statement of operations for the year then ended, the statements
of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in
the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Trusts
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of September 30, 1995, by correspondence with the
custodian. An audit also includes assessing the accounting
principles used, and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Churchill Cash Reserves Trust
as of September 30, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the
years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then
ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
October 25, 1995
<PAGE>
<TABLE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1995
<C> <S> <C>
FACE
AMOUNT COMMERCIAL PAPER (84.7%) VALUE
Automotive (4.1%)
6,000,000 General Motors Acceptance Corp., 5.770%, 10/02/95 5,999,038
Banking (12.6%)
6,000,000 Barnett Banks, Inc., 5.790%, 10/04/95 5,997,105
6,500,000 Chemical Banking Corp., 5.710%, 11/06/95 6,462,885
6,000,000 Great Western Bank, FSB, 5.770%, 10/10/95 5,991,345
18,451,335
Communications (4.1%)
6,000,000 NYNEX Corp., 5.780%, 10/19/95 5,982,660
Computers (8.9%)
6,500,000 CSC Enterprises, 5.770%, 10/12/95 6,488,540
6,500,000 IBM Credit Corp., 5.700%, 11/17/95 6,451,629
12,940,169
Construction (4.4%)
6,500,000 Caterpillar Financial Services Corp., 5.720%,10/25/95 6,475,213
Electric And Gas Utility (12.4%)
7,500,000 CSW Credit, Inc., 5.750%, 10/16/95 7,482,031
6,020,000 James River Cogeneration Co., 5.740%, 10/26/95 5,996,004
4,600,000 Public Service Electric & Gas Co., 5.780%, 10/23 4,583,752
18,061,787
Finance (17.8%)
7,000,000 ABS Commercial Paper Inc., 5.820%, 10/11/95 6,988,684
7,000,000 Ciesco L.P., 5.700%, 10/06/95 6,994,458
6,000,000 Madison Funding Corp., 5.800%, 10/04/95 5,997,100
6,000,000 Preferred Receivables Funding Corp., 5.730%, 10/16/95 5,985,675
25,965,917
Leasing (8.5%)
6,500,000 International Lease Finance Corp., 5.720%, 10/2 6,477,279
6,000,000 USL Capital Corp., 5.740%, 10/19/95 5,982,780
12,460,059
Natural Resources (4.4%)
6,500,000 Hanson Finance (U.K.) PLC, 5.680%, 11/02/95 6,467,182
Oil (3.4%)
5,000,000 Pemex Capital, Inc., 5.700%, 11/21/95 4,959,625
</TABLE>
3
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
<TABLE>
<C> <S> <C>
Face
Amount COMMERCIAL PAPER (CONTINUE Value
Real Estate (4.1%)
$ 6,000,000 Countrywide Funding Corp., 5.800%, 10/12/95 $ 5,989,367
Total Commercial Paper 123,752,352
REPURCHASE AGREEMENTS (14.4%)
7,002,200 Barclays de Zoete Wedd Securities Inc.,
6.000%, 10/02/95 7,002,200
(Proceeds of $7,005,701 to be received at
maturity)
Collateral: $7,047,000 U.S. Treasury Notes,
6.125%, due 07/31/96 (Collateral
Market Value $7,070,123)
14,000,000 Donaldson, Lufkin & Jenrette Securities
Corp., 6.150%, 10/02/95 14,000,000
(Proceeds of $14,007,175 to be received at
maturity)
Collateral: $14,384,000 U.S. Treasury Bills,
due 11/16/95
(Collateral Market Value $14,321,243)
Total Repurchase Agreements
21,002,200
Floating Rate Demand Note (1.3%)
2,000,000 Bank Of New York, 5.470%, 01/12/96
(RESETS WEEKLY - NEXT RESET 10/04/95) 2,000,000
Total Floating Rate Demand Notes
2,000,000
Total Investments 100.4% (cost
$146,754,552*) 146,754,552
Liabilities in excess of other assets (0.4%)
(624,886)
Net Assets - 100% $146,129,666
(*) Cost for Federal income tax purposes is identical.
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS
Investments at value (cost-$146,754,552) $146,754,552
Interest receivable 32,495
Other assets 17,963
Total assets 146,805,010
LIABILITIES
Dividends payable 621,501
Adviser and Administrator fees payable 36,425
Accrued expenses 17,418
Total liabilities 675,344
NET ASSETS (equivalent to $1.00 per share on
146,129,666 shares outstanding) $146,129,666
Net Assets consist of:
Capital Stock - Authorized an unlimited
number of shares, par value $.01 per share $ 1,461,297
Additional paid-in capital $146,668,369
$146,129,666
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Interest income $10,386,955
Expenses:
Investment Adviser fees (note B ) $466,296
Administrator fees (note B) 425,585
Legal fees 49,804
Custodian fees 47,973
Trustees fees and expenses 43,749
Audit and accounting fees 23,300
Registration fees and dues 8,893
Transfer and shareholder
servicing agent fees 8,624
Shareholders reports and
proxy statements 6,833
Insurance 4,766
Miscellaneous 20,608
1,106,431
Investment Advisory fees
waived (note B) (48,089)
Administration fees waived
(note B) (21,561)
Net expenses 1,036,781
Net investment income $9,350,174
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
Year Ended Year Ended
September September
30, 1995 30, 1994
FROM INVESTMENT ACTIVITIES:
Net investment income $9,350,174 $6,891,934
Dividends to shareholders ($0.0526 and
$0.0319 per share, respectively) (9,350,174) (6,891,934)
Change in net assets derived from
investment activities - -
</TABLE>
FROM TRUST SHARE TRANSACTIONS:
<TABLE>
<S> <C> <C> <C> <C>
SHARES
Year Ended Year Ended
September September
30, 1995 30, 1994
Shares sold 564,447,918 759,187,430 564,447,918 759,187,430
Shares redeemed (605,946,746) (758,836,381) (605,946,746) (758,836,381)
Shares reinvested 2,081 1,034 2,081 1,034
Increase (decrease)
in shares and net
assets derived from
Trust share
transactions (41,496,747) 352,083 (41,496,747) 352,083
Net increase (decrease)
in net assets (41,496,747) 352,083
NET ASSETS:
Beginning of year 187,626,413 187,274,330
End of year $146,129,666 $187,626,413
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
CHURCHILL CASH RESERVES TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Churchill Cash Reserves Trust (the Trust), a diversified,
open-end investment company, was organized on January 4, 1985,
as a Massachusetts business trust and is authorized to issue
an unlimited number of shares. The Trust commenced operations
on July 9, 1985.
The following is a summary of significant accounting
policies followed by the Trust in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles for investment
companies.
(1) Portfolio valuation: The Trusts portfolio securities are
valued by the amortized cost method permitted in accordance
with Rule 2a-7 under the Investment Company Act of 1940 (the
1940 Act), which, after considering accrued interest thereon,
approximates market. Under this method, a portfolio security
is valued at cost adjusted for amortization of premiums and
accretion of discounts. Amortization of premiums and
accretion of discounts are included in interest income.
(2) Securities transactions and related investment income:
Securities transactions are recorded on the trade date.
Realized gains and losses from securities transactions are
reported on the identified cost basis. Interest income is
recorded daily on the accrual basis and is adjusted for
amortization of premiums and accretion of discounts as
discussed in the preceding paragraph.
(3) Federal income taxes: It is the policy of the Trust to qualify
as a regulated investment company by complying with the
provisions of the Internal Revenue Code applicable to certain
investment companies. The Trust intends to make distributions
of income and securities profits sufficient to relieve it from
all, or substantially all, Federal income and excise taxes.
(4) Repurchase agreements: It is the Trusts policy to monitor
closely the creditworthiness of all firms with which it enters
into repurchase agreements, and to take possession of, or
otherwise perfect its security interest in, securities
purchased under agreements to resell. The securities purchased
under agreements to resell are marked to market every business
day so that the value of the collateral is at least equal to
the value of the loan (repurchase agreements being defined as
loans in the 1940 Act), including the accrued interest earned
thereon, plus sufficient additional market value as is
considered necessary to provide a margin of safety.
NOTE B - MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
Under an Investment Advisory Agreement, Banc One Investment
Advisors Corporation (the Adviser) became Adviser to the Trust,
effective July 19, 1995. In this role, the Adviser supervises the
investments and provides various services to the Trust for which
it is entitled to receive a fee which is payable monthly and
computed as of the close of business each day at the annual rate
of 0.33 of 1% of the average daily net assets of the Trust. This
new Investment Advisory Agreement replaced the former Investment
Advisory Agreement with PNC Bank, Kentucky, Inc. Under the prior
agreement, the Adviser was entitled to receive payment at the
annual rate of 0.25 of 1% of the Trusts average daily net assets
for their investment supervision services which also included
maintenance of the Trusts accounting books and records.
8
<PAGE>
CHURCHILL CASH RESERVES TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
The Trust also has an Administration Agreement with its
founder and sponsor, Aquila Management Corporation (the Administrator).
Under this Agreement, the Administrator provides all
administration services, other than those relating to the
management of the Trusts investments. Since July 19, 1995, the
Administrator also undertook maintenance of the Trusts accounting
books and records, which had previously been the responsibility of
the former Adviser. For its services, the Administrator is
entitled to receive a fee which is payable monthly and computed as
of the close of business each day at the annual rate of 0.17 of 1%
of the average daily net assets of the Trust. Prior to July 19,
1995 the fee to which the Administrator was entitled for its
services was 0.25 of 1% of the average daily net assets of the
Trust.
Specific details as to the nature and extent of the services
provided by the Adviser and the Administrator are more fully
defined in the Trusts Propectus and Statement of Additional
Information.
The Adviser and the Administrator each agree that the above
fees shall be reduced, but not below zero, by an amount equal to
its proportionate share (determined on the basis of the respective
fees computed as described above) of the amount, if any, by which
the total expenses of the Trust in any fiscal year, exclusive of
taxes, interest and brokerage fees, shall exceed the lesser of (i)
2.5% of the first $30 million of average net assets of the Trust
plus 2% of the next $70 million of such assets plus 1.5% of its
average annual net assets in excess of $100 million, or (ii) 25%
of the Trusts total annual investment income. No such reduction in
fees was required during the year ended September 30, 1995.
From October 1, 1994 to July 18, 1995, the fees which the
Trust accrued or paid the former Adviser were $366,654. From July 19,
1995 to September 30, 1995, the fees which the Trust accrued or
paid to the Adviser were $99,642, of which $48,089 was voluntarily
waived. During the year ended September 30, 1995, the fees which
the Trust accrued or paid the Administrator were $425,585, of
which $21,561 was voluntarily waived.Under a Distribution
Agreement, Aquila Distributors, Inc. serves as the exclusive
distributor of the Trusts shares. No compensation or fees are paid
by the Trust to Aquila Distributors, Inc. for such share
distribution.
NOTE C - DISTRIBUTIONS:
The Trust declares dividends daily from net investment
income and makes payments monthly in additional shares at the net asset
value per share or in cash, at the shareholders option.
9
<PAGE>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year
<TABLE>
<S> <C> <C> <C> <C> <C>
Year ended September 30,1995
1995 1994 1993 1992 1991
Net Asset Value,
Beginning of
year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment
Operations:
Net investment income 0.0526 0.0319 0.0265 0.0380 0.0636
Net gain (loss) on
securities (both realized
and unrealized) - - - 0.0005 -
Total from Investment
Operations 0.0526 0.0319 0.0265 0.0385 0.0636
Less Distributions:
Dividends from net
investment income (0.0526) (0.0319) (0.0265) (0.0380) (0.0636)
Distributions from
capital gains - - - (0.0005) -
Total Distributions (0.0526) (0.0319) (0.0265) (0.0385) (0.0636)
Net Asset Value, End of
year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return 5.39% 3.24% 2.68% 3.87% 6.54%
Ratios/Supplemental Data
Net Assets, End of Year
(in thousands) $146,130 $187,626 $187,274 $139,633 $222,362
Ratio of Expenses to
Average Net Assets 0.58% 0.60% 0.60% 0.65% 0.60%
Ratio of Net Investment
Income to Average
Net Assets 5.24% 3.17% 2.65% 3.90% 6.36%
For the year ended September 30, 1995, net investment income per
share and the ratios of income and expenses to average net assets
without the Advisers and Administrators voluntary waiver of fees
would have been:
Net investment income $0.0522
Ratio of Expenses to
Average Net Asset 0.62%
Ratio of Net Investment
Income to Average
Net Assets 5.20%
NOTE: Effective July 19, 1995, Banc One Investment Advisors
Corporation became the Trusts Investment Adviser replacing PNC
Bank, Kentucky, Inc.
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Report of the Annual Meeting of Shareholders (unaudited)
The Annual Meeting of Shareholders of the Trust was held on
August 18, 1995. At the meeting, the following matters were
submitted to a shareholder vote* and approved by a unanimous
vote of the Trusts outstanding voting securities: (i) the
election of Lacy B. Herrmann, Thomas A. Christopher, Douglas
Dean, Ann R. Leven, Theodore T. Mason, Anne J. Mills, William
J. Nightingale, and James R. Ramsey as Trustees to hold
office until the next annual meeting of the Trusts
shareholders or until his or her successor is duly elected,
(ii) the ratification of the selection of KPMG Peat Marwick
LLP as the Trusts independent auditors for the fiscal year
ending September 30, 1995, and (iii) the approval of a new
Amended and Restated Investment Advisory Agreement.
___________
* On the record date for this meeting, 183,699,292 shares of
the Trust were outstanding and entitled to vote. The holders
of 183,699,292 shares (100%) entitled to vote were present in
person or by proxy at the meeting.
FEDERAL TAX STATUS OF DIVIDENDS (UNAUDITED)
This information is presented in order to comply with a
requirement of the Internal Revenue Code AND NO CURRENT
ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED.
For the fiscal year ended September 30, 1995, the total
amount of dividends paid by Churchill Cash Reserves Trust was
ordinary dividend income.
Prior to January 31, 1996, shareholders will be mailed IRS
Form 1099-DIV which will contain information on the status of
dividends paid for the 1995 CALENDAR YEAR.
11
<PAGE>
Investment Adviser
BANC ONE INVESTMENT
ADVISORS CORPORATION
774 Park Meadow Road
Columbus, Ohio 43271-0211
Administrator and Founderd
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
Board of Trustees
Lacy B. Herrmann, Chairman
Thomas A. Christopher
Douglas Dean
Ann R. Leven
Theodore T. Mason
Anne J. Mills
William J. Nightingale
James R. Ramsey
Officers
Lacy B. Herrmann, President
Diana P. Herrmann, Vice President
Charles E. Childs, III, Vice President
John M. Herndon, Vice President
Jerry G. McGrew, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
Distributor
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
Transfer and Shareholder Servicing Agent
ADMINISTRATIVE DATA
MANAGEMENT CORP.
581 Main Street
Woodbridge, New Jersey 07095-1198
Custodian
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
Independent Auditors
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus,
which must precede or accompany this report.
<PAGE>
Annual
Report
September 30, 1995
CHURCHILL
CASH RESERVES
TRUST
A cash management investment
(Picture of Horse)
(Picture of Eagle)
One of the
AQUILAsm Group of Funds
