INVESTMENT ADVISER
BANC ONE INVESTMENT
ADVISORS CORPORATION
774 Park Meadow Road
Columbus, Ohio 43271-0211
ADMINISTRATOR AND FOUNDER
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
Diana P. Herrmann
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.
ANNUAL
REPORT
SEPTEMBER 30, 1996
CHURCHILL
CASH RESERVES
TRUST
A CASH MANAGEMENT INVESTMENT
[Logo of Churchill Cash Reserves Trust: Pegasus Horse]
[Logo of Aquila Group of Funds: Eagle Head]
One of the
AQUILAsm Group of Funds
<PAGE>
CHURCHILL CASH RESERVES TRUST
ANNUAL REPORT
October 28, 1996
Dear Investor:
This past July marked the anniversary of Churchill Cash Reserves
Trust's 11th year of continuous operations. Since 1985, the Trust has
provided investors with a high level of current income, liquidity and safety
of principal under varying market conditions by investing in a diversified
portfolio of money-market securities which meet specific high-quality
standards and possess minimal credit risk. We are most proud of the fact
that, over the years, the Trust has been able to meet this stated objective
while never compromising from its high-quality standards.
As the Trust's new fiscal year begins, we are pleased to provide
you with the Annual Report for the fiscal year ended September 30, 1996.
ECONOMIC DISCUSSION
The U.S. economy grew in excess of a 3.0% annual rate over the
first half of this year, however, recently-released government statistics
suggest that final demand for goods and services decelerated sharply during
the summer months. There was sufficient evidence of the economy's slowdown
in conjunction with excellent behavior of prices and well-contained increases
in wages prior to the Federal Reserve Board meeting in September that allowed
the Federal Reserve to hold short-term interest rates unchanged. The Fed last
changed interest rates in January, easing the Federal Fund's rate 25 basis
points to 5.25%. With a slowing economy and only modest increase in
inflationary pressures, we expect monetary policy to remain on hold for the
foreseeable future.
MANAGEMENT DISCUSSION
Since taking over as the Trust's Investment Adviser in July 1995,
Banc One Investment Advisors, has acted with a high level of prudence in
examining the creditworthiness and marketability of all issuers of securities
utilized in the Trust's investment portfolio. Investors in the Trust can
take comfort in knowing that those securities in the Trust's portfolio will
be chosen on the basis of possessing high quality and minimal credit risk in
order to ensure maximum safety for investors' cash reserves. While the Trust
will always strive for a high level of return upon the cash reserves placed
with it by investors, you can rest assured that no undue risk will be taken
just to achieve some additional measure of yield.
During the fiscal year just ended, the Trust continued to provide
competitive returns to alternative short-term investment opportunities
without wavering from its stated investment objective. As of September 30,
1996, the Trust's seven-day yield was 4.97%.
All those associated with Churchill Cash Reserves Trust are
grateful for the confidence you have shown through your investment in the
Trust.
You can be assured that we will do everything possible to
continue to merit this trust and confidence.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
<PAGE>
KPMG Peat Marwicl 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, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1996, by correspondence with the custodia
n. 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, 1996, 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
November 1, 1996
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1996
FACE
AMOUNT COMMERCIAL PAPER (66.7%) VALUE
<C> <S> <C>
Art Auction (3.3%)
$ 4,000,000 Sotheby's Inc., 5.42%, 10/15/96 $ 3,991,569
Automotive (8.3%)
5,000,000 American Honda Finance Corp.,
5.53%, 10/07/96 4,995,392
5,000,000 Mitsubishi Motors Credit of
America Inc., 5.41%, 11/05/96 4,973,701
9,969,093
Banking (6.5%)
5,000,000 HSBC Americas Inc., 5.42%,10/30/96 4,978,169
3,000,000 Monte Dei Paschi Di Siena, 5.41%,
02/19/97 2,936,433
7,914,602
Chemicals (4.1%)
5,000,000 Azko Nobel, Inc., 5.45%, 10/18/96 4,987,132
Computers (3.3%)
4,000,000 CSC Enterprises, 5.47%, 10/24/96 3,986,021
Consumer Goods and Services (4.1%)
5,000,000 Whirlpool Financial Corp., 5.33%,
11/06/96 4,973,350
Electric and Gas Utility (16.5%)
5,000,000 Cogentrix of Richmond, Inc., 5.50%,
10/22/96 4,983,958
5,000,000 CSW Credit, Inc., 5.33%, 10/07/96 4,995,558
5,000,000 National Rural Utilities Cooperative
Finance Corp., 5.27%, 10/24/96 4,983,165
5,000,000 Southwest Gas Corp., 5.40%, 11/04/96 4,974,500
19,937,181
Finance (4.1%)
5,000,000 Old Line Funding Corp., 5.40%, 10/16/96# 4,988,750
Industrial Goods and Services (4.1%)
5,000,000 Hosokawa Micron International Inc.,
5.43%, 11/27/96 4,957,013
Oil (4.1%)
5,000,000 Petroleo Brasileiro S.A.- Petrobras,
5.345%, 11/18/96 4,964,367
Real Estate (8.3%)
5,000,000 Countrywide Funding Corp., 5.34%,
10/01/96 5,000,000
5,000,000 SRD Finance Inc., 5.45%, 10/24/96 4,982,590
9,982,590
Total Commercial Paper 80,651,668
<PAGE>
CORPORATE NOTES (8.3%)
5,000,000 Abbey National Treasury Services PLC,
5.08%, 02/27/97 4,999,634
5,000,000 Merrill Lynch & Co. Inc., 5.58%,
03/14/97 5,000,000
Total Corporate Notes 9,999,634
U.S. TREASURY SECURITIES (2.4%)
3,000,000 U.S. Treasury Bills, 4.98%, 03/06/97 2,935,264
Total U.S. Treasury Securities 2,935,264
REPURCHASE AGREEMENTS (22.9%)
27,773,000 Aubrey G.Lanston & Co., 5.70%, 10/01/96 27,773,000
(Proceeds of $ 27,777,397 to be
received at maturity)
Collateral: $ 28,543,000 U.S.Treasury
Notes, 5.125%, due 02/28/96
(Collateral Market Value $ 28,336,000)
Total Repurchase Agreements 27,773,000
Total Investments -100.3%
(Cost-$121,359,566*) 121,359,566
Liabilities in excess of other
assets - (.3%) (420,873)
Net Assets - 100% $ 120,938,693
<FN>
(*) Cost for Federal income tax purposes is identical.
</FN>
<FN>
# Pursuant to Rule 144A, resale is restricted to qualified institutional
buyers.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
<S> <C>
ASSETS
Investments at value (cost - $121,359,566) $121,359,566
Cash 457
Interest receivable 133,938
Other assets 10,415
Total assets 121,504,376
LIABILITIES
Dividends payable 505,008
Adviser and Administrator fees payable 44,167
Accrued expenses 16,508
Total liabilities 565,683
NET ASSETS (equivalent to $1.00 per share on 120,938,693
shares outstanding) $120,938,693
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 1,209,387
Additional paid-in capital 119,729,306
$120,938,693
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 8,796,892
Expenses:
Investment Adviser fees (note B) $ 521,359
Administrator fees (note B) 267,924
Legal fees 63,828
Trustees' fees and expenses 55,724
Audit and accounting fees 28,050
Registration fees and dues 12,453
Custodian fees (note D) 12,018
Shareholders' reports and proxy statements 8,139
Transfer and shareholder servicing agent fees 4,960
Insurance 3,336
Miscellaneous 23,699
1,001,490
Investment Advisory fees waived (note B) (77,712)
Administration fees waived (note B) (39,771)
Expenses paid indirectly (note D) (4,297)
Net expenses 879,710
Net investment income $ 7,917,182
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30,
1996 1995
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income $ 7,917,182 $ 9,350,174
Dividends to shareholders ($0.0500 and
$0.0526 per share, respectively) (7,917,182) (9,350,174)
Change in net assets derived from
investment activities - -
<CAPTION>
FROM CAPITAL SHARE TRANSACTIONS:
SHARES
Year Ended September 30,
1996 1995
<S> <C> <C> <C> <C>
Proceeds from shares
sold 584,601,557 564,447,918 584,601,557 564,447,918
Reinvested dividends 627,248 2,081 627,248 2,081
Cost of shares
redeemed (610,419,778) (605,946,746) (610,419,778) (605,946,746)
Change in net assets
from capital share
transactions (25,190,973) (41,496,747) (25,190,973) (41,496,747)
Change in net assets (25,190,973) (41,496,747)
NET ASSETS:
Beginning of period 146,129,666 187,626,413
End of period $120,938,693 $146,129,666
</TABLE>
See accompanying notes to financial statements.
<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 Trust's portfolio securities are valued by
the amortized cost method permitted in accordance with Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"), which,
after considering accrued interest thereon, approximates market.
Under this method, a portfolio security is valued at cost adjusted
for amortization of premiums and accretion of discounts.
Amortization of premiums and accretion of discounts are included in
interest income.
(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 Trust's policy to monitor closely
the creditworthiness of all firms with which it enters into
repurchase agreements, and to take possession of, or otherwise
perfect its security interest in, securities purchased under
agreements to resell. The securities purchased under agreements to
resell are marked to market every business day so that the value of
the "collateral" is at least equal to the value of the "loan"
(repurchase agreements being defined as "loans" in the 1940 Act),
including the accrued interest earned thereon, plus sufficient
additional market value as is considered necessary to provide a
margin of safety.
(5) USE OF ESTIMATES: The preparation of financial statements, in
conformity with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
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.
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 Trust's investments. 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.
Specific details as to the nature and extent of the services provided by
the Adviser and the Administrator are more fully defined in the Trust's
Prospectus 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 Trust's total
annual investment income. No such reduction in fees was required during the
year ended September 30, 1996.
For the year ended September 30, 1996, the Trust incurred fees under the
Advisory Agreement and Administration Agreement of $521,359 and $267,924,
respectively, of which the Adviser and Administrator voluntarily waived
$77,712 and $39,771, respectively.
Under a Distribution Agreement, Aquila Distributors, Inc. serves as the
exclusive distributor of the Trust's 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 shareholder's option.
NOTE D - CUSTODIAN FEES:
The Trust has negotiated an expense offset arrangement with its
custodian, Banc One Trust Company, N.A., an affiliate of the Adviser, wherein
it receives credit toward the reduction of custodian fees whenever there are
uninvested cash balances. During the year ended September 30, 1996, the
Trust's custodian fees amounted to $12,018, of which $4,297 was offset by
such credits. The Trust could have invested its cash balances in an
income-producing asset if it has not agreed to a reduction in fees under the
expense offset arrangement with the custodian.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment
Operations:
Net investment income 0.0500 0.0526 0.0319 0.0265 0.0380
Net gain (loss) on
securities (both
realized and
unrealized) - - - - 0.0005
Total from Investment
Operations 0.0500 0.0526 0.0319 0.0265 0.0385
Less Distributions:
Dividends from net
investment income (0.0500) (0.0526) (0.0319) (0.0265) (0.0380)
Distributions from
capital gains - - - - (0.0005)
Total Distributions (0.0500) (0.0526) (0.0319) (0.0265) (0.0385)
Net Asset Value, End
of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return 5.12% 5.39% 3.24% 2.68% 3.87%
Ratios/Supplemental Data
Net Assets, End of
Period (in
thousands) $120,939 $146,130 $187,626 $187,274 $139,633
Ratio of Expenses to
Average Net Assets 0.56% 0.58% 0.60% 0.60% 0.65%
Ratio of Net Investment
Income to Average
Net Assets 5.02% 5.24% 3.17% 2.65% 3.90%
<CAPTION>
For the years ended September 30, 1996 and 1995, net investment income per
share and the ratios of income and expenses to average net assets without
the Adviser's and Administrator's voluntary waiver of fees and the expense
offset in custodian fees for uninvested cash balances, would have been:
<S> <C> <C>
Net investment income $0.0493 $0.0522
Ratio of Expenses to
Average Net Assets 0.63% 0.62%
Ratio of Net Investment
Income to Average Net
Assets 4.94% 5.20%
</TABLE>
NOTE: Effective July 19, 1995, Banc One Investment Advisors Corporation
became the Trust's Investment Adviser replacing PNC Bank, Kentucky, Inc.
See accompanying notes to financial statements.
<PAGE>
REPORT OF THE ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
The Annual Meeting of Shareholders of Churchill Cash Reserves Trust
(the "Trust") was held on March 29, 1996.* At the meeting, the following
matters were submitted to a shareholder vote and approved:
(i) the election of Lacy B. Herrmann, Thomas A. Christopher, Douglas
Dean, Diana P. Herrmann, 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 Trust's
shareholders or until his or her successor is duly elected (each
Trustee received at least 204,789,891 affirmative votes
(99.999%); no more than 1,739 votes were withheld for any Trustee
(0.001%)),
(ii) the ratification of the selection of KPMG Peat Marwick LLP as
the Trust's independent auditors for the fiscal year ending
September 30, 1996 (votes for: 204,791,630 (100.0%); votes against:
0.0 (0.0 %); abstentions: 0.0 (0.0%); broker non-votes: 0.0
(0.0%)), and
(iii) the approval of proposed modifications of the Trust's policies
regarding investment in restricted securities (votes for:
204,789,891 (99.999%); votes against: 0.0 (0.0%); abstentions:
1,739 (0.001%)).
___________
* On the record date for this meeting, 204,791,630 shares of the Trust were
outstanding and entitled to vote. The holders of 204,791,630 shares (100.0%)
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, 1996, the total amount of
dividends paid by Churchill Cash Reserves Trust was ordinary dividend income.
Prior to January 31, 1997, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of dividends paid for the 1996
CALENDAR YEAR.
