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.
SEMI-ANNUAL
REPORT
MARCH 31, 1996
CHURCHILL
CASH RESERVES
TRUST
A CASH MANAGEMENT INVESTMENT
(LOGO OF CHURCHILL CASH RESERVES TRUST: STANDING PEGASUS)
(LOGO OF AQUILA GROUP OF FUNDS: EAGLE HEAD)
ONE OF THE
AQUILASM GROUP OF FUNDS
<PAGE>
(LOGO OF CHURCHILL CASH RESERVES TRUST: STANDING PEGASUS)
CHURCHILL CASH RESERVES TRUST
SEMI-ANNUAL REPORT
May 10, 1996
Dear Investor:
We are pleased to provide you with the Semi-Annual Report for Churchill
Cash Reserves Trust for the six-month period ended March 31, 1996.
Of most importance, we note that the economic climate and the Federal
Reserve's monetary policy continued to play a vital role in the short-term
debt markets during the first six months of the Trust's current report
period.
Looking back over the last three months of 1995, we witnessed a
relatively stagnant U.S. economy which grew less than 1%. During this
period, consumers were hesitant to spend, heavily laden with personal debt
and ever mindful of uncertainty in the job market as businesses continued to
trim payrolls. In an effort to keep the economy from falling into a
recession, the Federal Reserve eased short-term interest rates during the
final quarter of 1995. And, as most recent as January, the Fed took out a
monetary insurance policy in the form of an additional cut in rates and
implied at the time that it was prepared to do more if needed.
However, the economic climate appears to have changed during the first
three months of 1996 as the economy has shown signs of renewed vigor. As
such, the financial markets have become roiled, fearful that a stronger
economy will give way to yet higher levels of inflation down the road. As a
result, both short and long-term interest rates have increased to higher
levels at the end of this current report period while the Fed has withheld
from initiating further interest rate cuts.
At March 31, 1996, the end of this semi-annual report period, the
Trust's seven-day yield was 4.64% and total net assets were $165,356,356.
As you may recall from our previous report, the Trust's Board of
Trustees was very pleased to announce the selection of Banc One Investment
Advisors as the Trust's new Investment Adviser. Banc One, with $7.5 billion
of short-term assets under management, brings forth their extensive
experience in the area of cash management. You can rest assured that the
Investment Adviser will examine with great diligence the marketability and
creditworthiness of each security in the Trust's portfolio. Both the
Investment Adviser and management believe that there is absolutely no
substitute for the strict adherence to investments of high quality which
possess minimal credit risk in order to maintain safety of your cash
reserves.
All associated with Churchill Cash Reserves Trust want to thank you for
your continued support and confidence. You can be assured that every attempt
will be made over the future to produce as high a return as possible within
market conditions, but without sacrificing protection of principal. We look
forward to serving your cash management needs during the remainder of 1996
and for many years to come.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
FACE
AMOUNT VALUE
<C> <S> <C>
COMMERCIAL PAPER (76.7%)
Automotive (4.8%)
$ 8,000,000 American Honda Finance Corp., 5.38%,
04/30/96 $ 7,965,329
Banking (10.3%)
8,000,000 Barnett Banks, Inc., 5.25%, 04/01/96 8,000,000
9,000,000 Great Western Bank, FSB, 5.21%, 04/19/96 8,976,555
16,976,555
Brokerage (8.4%)
9,000,000 Bear Stearns Co. Inc., 5.10%, 05/17/96 8,941,350
5,000,000 Lehman Brothers Holdings Inc., 5.31%,
09/17/96 4,875,363
13,816,713
Chemicals (4.8%)
8,000,000 Akzo Nobel, Inc., 5.28%, 06/25/96 7,900,267
Computers (10.3%)
9,000,000 CSC Enterprises, 5.32%, 04/24/96 8,969,410
8,000,000 IBM Corp., 5.24%, 04/04/96 7,996,507
16,965,917
Consumer Goods and Services (9.1%)
8,000,000 Duracell, Inc., 5.38%, 05/03/96 7,961,742
7,100,000 Tambrands, Inc., 5.37%, 05/01/96 7,068,228
15,029,970
Electric and Gas Utility (10.2%)
7,900,000 CSW Credit, Inc., 5.25%, 04/17/96 7,881,567
9,000,000 Southwest Gas Corp., 5.19%, 04/08/96 8,990,917
16,872,484
Leasing (5.4%)
9,000,000 Dean Witter, Discover & Co., 5.13%,
04/17/96 8,979,480
Office Equipment (5.4%)
9,000,000 Xerox Corp., 5.20%, 04/10/96 8,988,300
Oil (3.2%)
5,296,000 Pemex Capital, Inc., 5.27%, 04/02/96 5,295,225
Real Estate (4.8%)
8,000,000 Countrywide Funding Corp., 5.46%,
05/15/96 7,946,612
Total Commercial Paper 126,736,852
CORPORATE NOTES (6.1%)
5,000,000 Abbey National Treasury Services PLC,
5.08%, 02/27/97 4,999,184
5,000,000 Merrill Lynch & Co. Inc., 5.58%, 03/14/97 5,000,000
Total Corporate Notes 9,999,184
U.S. TREASURY SECURITIES (1.7%)
3,000,000 U.S. Treasury Bills, 4.98%, 03/06/97 2,859,324
Total U.S. Treasury Securities 2,859,324
REPURCHASE AGREEMENTS (16.0%)
26,513,000 JP Morgan Securities Inc., 5.40%, 04/01/96 26,513,000
(Proceeds of $ 26,524,931 to be received
at maturity)
Collateral: $ 27,146,000 U.S. Treasury
Notes, due 04/18/96
(Collateral Market Value $ 27,067,000)
Total Repurchase Agreements 26,513,000
Total Investments - 100.5%
(cost $166,108,360*) 166,108,360
Liabilities in excess of other
assets - (0.5%) (752,004)
Net Assets - 100% $165,356,356
<FN>
(*) Cost for Federal income tax purposes is identical.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
<S> <C>
ASSETS
Investments at value (cost - $166,108,360) $166,108,360
Interest receivable 24,632
Other assets 12,717
Total assets 166,145,709
LIABILITIES
Dividends payable 696,315
Adviser and Administrator fees payable 74,875
Accrued expenses 18,163
Total liabilities 789,353
NET ASSETS (equivalent to $1.00 per share on 165,356,356
shares outstanding) $165,356,356
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 1,653,564
Additional paid-in capital 163,702,792
$165,356,356
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 5,178,021
Expenses:
Investment Adviser fees (note B) $ 302,692
Administrator fees (note B) 155,632
Trustees' fees and expenses 26,000
Legal fees 20,000
Audit and accounting fees 14,600
Registration fees and dues 9,000
Shareholders' reports and proxy
statements 7,000
Custodian fees (note D) 6,640
Transfer and shareholder servicing
agent fees 5,000
Insurance 3,500
Miscellaneous 15,010
565,074
Investment Advisory fees waived
(note B) (54,305)
Administration fees waived (note B) (28,067)
Expenses paid indirectly (note D) (140)
Net expenses 482,562
Net investment income $ 4,695,459
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS YEAR ENDED
ENDED MARCH SEPTEMBER
31, 1996 30, 1995
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income $ 4,695,459 $ 9,350,174
Dividends to shareholders ($0.0258 and $0.0526
per share, respectively) (4,695,459) (9,350,174)
Change in net assets derived from investment
activities - -
<CAPTION>
FROM TRUST SHARE TRANSACTIONS:
SHARES
SIX MONTHS YEAR ENDED
ENDED MARCH SEPTEMBER 30,
31, 1996 30, 1995
<S> <C> <C> <C> <C>
Shares sold 369,793,359 564,447,918 369,793,359 564,447,918
Shares reinvested 326,985 2,081 326,985 2,081
Shares redeemed (350,893,654) (605,946,746) (350,893,654) (605,946,746)
Increase (decrease)
in shares and net
assets derived
from Trust share
transactions 19,226,690 (41,496,747) 19,226,690 (41,496,747)
Net increase
(decrease) in
net assets 19,226,690 (41,496,747)
NET ASSETS:
Beginning of
period 146,129,666 187,626,413
End of period $165,356,356 $146,129,666
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CHURCHILL CASH RESERVES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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
six months ended March 31, 1996.
For the six months ended March 31, 1996, the Trust incurred fees under
the Advisory Agreement and Administration Agreement of $302,692 and $155,632,
respectively, of which the Adviser and Administrator voluntarily waived
$54,305 and $28,067, 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 six months ended March 31, 1996, the
Trust's custodian fees amounted to $6,640, of which $140 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
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED MARCH YEAR ENDED SEPTEMBER 30,
31, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment
Operations:
Net investment income 0.0258 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 0.0258 0.0526 0.0319 0.0265 0.0385 0.0636
Less Distributions:
Dividends from net
investment income (0.0258) (0.0526) (0.0319) (0.0265) (0.0380) (0.0636)
Distributions from
capital gains - - - - (0.0005) -
Total Distributions (0.0258) (0.0526) (0.0319) (0.0265) (0.0385) (0.0636)
Net Asset Value, End
of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return 2.60%# 5.39% 3.24% 2.68% 3.87% 6.54%
Ratios/Supplemental Data
Net Assets, End of
Period in thousands) $165,356 $146,130 $187,626 $187,274 $139,633 $222,362
Ratio of Expenses to
Average Net Assets 0.53%* 0.58% 0.60% 0.60% 0.65% 0.60%
Ratio of Net Invest-
ment Income to
Average Net Assets 5.14%* 5.24% 3.17% 2.65% 3.90% 6.36%
<CAPTION>
For the six months ended March 31, 1996 and the year ended September 30,
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 would have been:
<S> <C> <C>
Net investment
income $0.0254 $0.0522
Ratio of Expenses to
Average Net Assets 0.62%* 0.62%
Ratio of Net Investment
Income to Average Net
Assets 5.05%* 5.20%
<FN>
+Not annualized
</FN>
<FN>
*Annualized
</FN>
</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.
