INVESTMENT ADVISER
BANC ONE INVESTMENT
ADVISORS CORPORATION
1111 Polaris Parkway
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, 1997
CHURCHILL
CASH RESERVES
TRUST
A CASH MANAGEMENT INVESTMENT
[Logo of Churchill Cash Reserves Trust: Standing Pegasus]
[Logo of Aquila Group of Funds: Eagle's Head]
ONE OF THE
AQUILASM GROUP OF FUNDS
<PAGE>
[Logo of Churchill Cash Reserves Trust: Standing Pegasus]
CHURCHILL CASH RESERVES TRUST
SEMI-ANNUAL REPORT
April 30, 1997
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, 1997.
The economic climate and the Federal Reserve's monetary policy once
again had an impact on the short-term debt markets during the first six
months of the Trust's current report period.
The Federal Reserve voted on March 25th to raise short-term interest
rates for the first time in more than two years. The central bank took one of
the smallest steps it could, raising the more important of the two short-term
rates it controls - the Federal funds target rate for overnight loans between
banks by - 25 basis points, to 5.50%. In doing so, the Federal Reserve was
trying to keep the economy from growing so fast that it generates wage and
price pressures strong enough to threaten the nation's six-year economic
expansion.
Indeed, forecasts of economic growth are being revised upward as
business activity and consumer spending continue to expand at a strong pace -
a pace which started late last year and continues unabated into 1997. The
Federal Reserve is concerned that with a strong economy and low unemployment,
inflation would worsen as the increased stress on labor markets would
potentially put additional upward pressure on wages and ultimately prices.
As mentioned in previous report letters, yields on money market
funds, like the Trust, move in concert with rate policies pursued by the
Federal Reserve. At March 31, 1997, the seven-day yield of the Trust was
4.98%. And, as of this writing, the seven-day yield has increased to 5.06%.
Looking forward, we are optimistic that the Trust will continue to
provide investors attractive yields compared to alternative money market
investments. With the possibility of further interest rate increases in the
offing, the Trust's investment portfolio is well positioned to continually
attract higher and competitive rates of return. Through alertness to market
opportunities, the Trust can produce a highly competitive return for its
investors without compromising safety.
We wish to thank you for the continued support and confidence you
have placed in Churchill Cash Reserves Trust. We look forward to serving your
cash management needs during the rest of 1997 and for many years to come.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COMMERCIAL PAPER (80.0%) VALUE
<C> <S> <C>
Automotive (12.4%)
$5,000,000 American Honda Finance Corp., 5.37%, 04/29/97 $4,979,117
5,000,000 General Motors Acceptance Corp., 5.42%, 07/22/97 4,915,689
5,000,000 Mitsubishi Motor Credit of America Inc., 5.41%,
04/07/97 4,995,492
14,890,298
Banking (8.1%)
5,000,000 Banco Rio de la Plata S.A., 5.36%, 10/31/97, 4,841,433
Letter of Credit: Bayerische Vereinsbank
5,000,000 Bankers Trust New York Corp., 5.42%, 07/15/97 4,920,959
9,762,392
Electronics (4.1%)
5,000,000 Hitachi Credit America Corp., 5.42%, 05/30/97 4,955,627
Electric and Gas Utility (12.4%)
5,000,000 AES Shady Point Inc., 5.47%, 04/18/97, 4,987,085
Letter of Credit: Bank of Tokyo-Mitsubishi
5,000,000 Cogentrix of Richmond, Inc., 5.50%, 04/18/97, 4,987,014
Letter of Credit: Banque Paribas
5,000,000 CSW Credit, Inc., 5.65%, 04/14/97 4,989,799
14,963,898
Finance (26.5%)
6,000,000 ACE Overseas Corp., 5.31%, 05/19/97# 5,957,520
6,000,000 Banner Receivables Corp., 5.41%, 04/22/97# 5,981,065
5,000,000 Broadway Capital Corp., 5.38%, 05/09/97# 4,971,605
5,046,000 Gotham Funding Corp., 5.44%, 04/16/97# 5,034,562
5,000,000 Kitty Hawk Funding Corp., 5.52%, 06/16/97# 4,941,733
5,000,000 Old Line Funding Corp., 5.40%, 04/04/97# 4,997,750
31,884,235
Healthcare (4.1%)
5,000,000 Columbia/HCA Healthcare Corp., 5.50%, 04/11/97 4,992,361
Oil (4.1%)
5,000,000 Petroleo Brasileiro S.A.- Petrobras, 5.32%,
04/02/97, 4,999,261
Letter of Credit: Barclays Bank PLC
<PAGE>
Real Estate (8.3%)
5,000,000 75 State Street Capital Corp., 5.45%,
04/17/97, 4,987,889
Letter of Credit: Banque Paribas
5,000,000 SRD Finance, 5.40%, 04/10/97, 4,993,250
Letter of Credit: Sumitomo Bank 9,981,139
Total Commercial Paper 96,429,211
MEDIUM TERM NOTES (8.3%)
5,000,000 Bear Stearns Companies Inc., 5.73%, 03/01/98 5,000,000
5,000,000 IBM Credit Corporation, 5.75%, 01/20/98 4,998,921
9,998,921
CERTIFICATES OF DEPOSIT (5.0%)
6,000,000 Societe Generale NY Branch, 5.92%, 09/17/97 6,007,754
Total Certificates of Deposit 6,007,754
CORPORATE NOTES (4.3%)
5,130,000 Lehman Brothers Holdings, 8.38%, 04/01/97 5,130,000
Total Corporate Notes 5,130,000
REPURCHASE AGREEMENTS (2.5%)
2,974,000 Aubrey G. Lanston & Co., 6.45%, 04/01/97 2,974,000
(Proceeds of $2,974,533 to be received at
maturity)
Collateral: $3,112,000 U.S.Treasury Bills,
due 09/11/97
(Collateral Market Value $3,036,000)
Total Repurchase Agreements 2,974,000
Total Investments (cost-$120,539,886*) 100.1% 120,539,886
Liabilities in excess of other assets (.1) (117,021)
Net Assets 100% $120,422,865
<FN>
* Cost for Federal 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>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value (cost - $120,539,886) $120,539,886
Cash 636
Interest receivable 443,808
Other assets 10,415
Total assets 120,994,745
LIABILITIES
Dividends payable 520,028
Adviser and Administrator fees payable 44,710
Accrued expenses 7,142
Total liabilities 571,880
NET ASSETS (equivalent to $1.00 per share on
120,422,865 shares outstanding) $120,422,865
Net Assets consist of:
Capital Stock - Authorized an unlimited number
of shares, par value $.01 per share $ 1,204,229
Additional paid-in capital 119,218,636
$120,422,865
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,408,818
Expenses:
Investment Adviser fees (note B) $ 205,797
Administrator fees (note B) 105,542
Trustees' fees and expenses 26,000
Legal fees 23,000
Audit and accounting fees 15,000
Shareholders' reports and proxy statements 9,000
Registration fees and dues 6,500
Transfer and shareholder servicing
agent fees 6,000
Custodian fees (note D) 3,668
Insurance 2,000
Miscellaneous 18,200
420,707
Investment Advisory fees waived (note B) (31,288)
Administration fees waived (note B) (15,644)
Expenses paid indirectly (note D) (168)
Net expenses 373,607
Net investment income $ 3,035,211
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED MARCH SEPTEMBER
31, 1997 30, 1996
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income 3,035,211 $ 7,917,182
Dividends to shareholders ($0.0243 and
$0.0500 per share, respectively (3,035,211) (7,917,182)
Change in net assets derived from
investment activities - -
<CAPTION>
FROM CAPITAL SHARE TRANSACTIONS:
SHARES
SIX MONTHS YEAR ENDED
ENDED MARCH SEPTEMBER
31, 1997 30,1996
<S> <C> <C> <C> <C>
Proceeds from shares
sold 182,290,288 584,601,557 182,290,288 584,601,557
Reinvested dividends 16 627,248 16 627,248
Cost of shares
redeemed (182,806,132) (610,419,778) (182,806,132) (610,419,778)
Change in net assets
from capital share
transactions (515,828) (25,190,973) (515,828) (25,190,973)
Change in net assets (515,828) (25,190,973)
NET ASSETS:
Beginning of period 120,938,693 146,129,666
End of period $ 120,422,865 $ 120,938,693
</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.
<PAGE>
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, 1997.
For the six months ended March 31, 1997, the Trust incurred fees under
the Advisory Agreement and Administration Agreement of $205,797 and $105,542,
respectively, of which the Adviser and Administrator voluntarily waived
$31,288 and $15,644, 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.
<PAGE>
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, 1997, the
Trust's custodian fees amounted to $3,668, of which $168 was offset by such
credits. It is the general intention of the Trust to invest, to the extent
practicable, some or all of cash balances in income-producing assets rather
than leave cash on deposit with the custodian.
<PAGE>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
SIX MONTHS
ENDED MARCH YEAR ENDED SEPTEMBER 30,
31, 1997 1996 1995 1994 1993 1992
<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 0.0243 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 0.0243 0.0500 0.0526 0.0319 0.0265 0.0385
Less Distributions:
Dividends from net
investment income (0.0243) (0.0500) (0.0526) (0.0319) (0.0265) (0.0380)
Distributions from
capital gains - - - - - (0.0005)
Total Distributions (0.0243) (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 $1.0000
Total Return 2.46%# 5.12% 5.39% 3.24% 2.68% 3.87%
Ratios/Supplemental Data
Net Assets, End of
Period (in
thousands) $120,423 $120,939 $146,130 $187,626 $187,274 $139,633
Ratio of Expenses to
Average Net Assets 0.60%* 0.56% 0.58% 0.60% 0.60% 0.65%
Ratio of Net
Investment Income to
Average Net Assets 4.87%* 5.02% 5.24% 3.17% 2.65% 3.90%
<CAPTION>
For the six months ended March 31, 1997 and 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> <C>
Net investment income $0.0239 $0.0493 $0.0522
Ratio of Expenses to
Average Net Assets 0.68%* 0.63% 0.62%
Ratio of Net
Investment Income to
Average Net Assets 4.80%* 4.94% 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.
