<PAGE>
MANAGER AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
BANC ONE INVESTMENT
ADVISORS CORPORATION
1111 Polaris Parkway
Columbus, Ohio 43240
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Thomas A. Christopher
Douglas Dean
Diana P. Herrmann
Carroll F. Knicely
Theodore T. Mason
Anne J. Mills
William J. Nightingale
James R. Ramsey
OFFICERS
Lacy B. Herrmann, President
Charles E. Childs, III, Senior Vice President
Diana P. Herrmann, Senior 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
PFPC INC.
400 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG 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, 1999
CHURCHILL
CASH RESERVES
TRUST
A CASH MANAGEMENT INVESTMENT
[Logo of Churchill Cash Reserves Trust: Pegasus Horse]
[Logo of Aquila Group of Funds: Eagle's head in an oval]
ONE OF THE
AQUILAsm GROUP OF FUNDS
</PAGE>
<PAGE>
[Logo of Churchill Cash Reserves Trust: Pegasus Horse]
CHURCHILL CASH RESERVES TRUST
SEMI-ANNUAL REPORT
May 15, 1999
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, 1999.
The economy continued to grow at a solid pace during the current report
period, primarily due to strong consumer spending and the Federal Reserve's
accommodative monetary policy stance. The American economy has been defying
predictions of a slowdown for several years; it grew at a robust 6.1% during the
fourth calendar quarter of 1998 followed by a surprisingly strong 4.5% in the
first quarter of this year. Employment growth also remained strong during the
period and the unemployment rate remained consistently under 4.5%.
Notwithstanding this impressive employment outlook and the economy's torrid
growth, the current low level of inflation we have experienced over the past
several years continues. The low level of inflation helped pave the way for the
Federal Reserve's decision to lower interest rates toward the end of 1998.
A key event during this Semi-Annual Report period was the economic turmoil
in Southeast Asia, Russia, Japan and Latin America. Although this helped keep
inflation in check, as the weak currencies of those countries allowed them to
export goods to the U.S. at low dollar prices, many financial institutions
curtailed their lending, creating a "credit crunch."
Keeping a watchful eye on events, the Federal Reserve began to lower the
Federal Funds rate target three times by 0.25 of 1% to 4.75%, in an effort to
stimulate growth. The Fed's move was aimed at providing liquidity to the
financial system and therefore make it easier for major corporations to obtain
favorable lending from banks.
The Trust's carefully selected portfolio is continuously managed by its
Sub-Adviser, Banc One Investment Advisors Corporation. Both the Sub-Adviser and
management believe that there is absolutely no substitute for the strict
adherence to investments of high quality which possess minimum credit risk in
order to maintain safety for your cash reserves. You can rest assured that the
Sub-Adviser will examine with great diligence the marketability and
creditworthiness of each security in the Trust's portfolio.
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 to produce as high a rate of return as possible within market
conditions, but without sacrificing protection of principal.
Sincerely,
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT COMMERCIAL PAPER - 47.25% VALUE
- -------------- ---------------------------------------------------------------- -----------------
</CAPTION>
AUTOMOTIVE - 5.34%
<S> <C> <C>
$ 5,000,000 Ford Motor Credit Corp., 4.85%, 04/02/99 $ 4,999,326
----------------
AUTO LOANS/CREDIT CARDS/HOME EQUITY LOANS - 5.34%
5,000,000 Citibank Capital Markets LLC, 4.89%, 04/05/99 + 4,997,283
----------------
BANKING - 10.56%
5,000,000 Den Danske Corp., 4.84%, 06/04/99 4,957,022
5,000,000 Unifunding Inc., 4.74%, 07/21/99 4,926,925
----------------
9,883,947
----------------
COMMERCIAL LOANS - 5.28%
5,000,000 Moat Funding LLC, 4.83%, 06/29/99 + 4,940,296
----------------
CONSTRUCTION - 4.80%
4,500,000 Cemex SA de CV, 4.92%, 04/08/99 4,495,695
----------------
Letter of Credit: Credit Suisse
ELECTRIC AND GAS UTILITY - 10.60%
5,000,000 AES Hawaii Inc., 4.86%, 04/15/99 4,990,550
Letter of Credit: Bank of America
5,000,000 AES Shady Point, 4.77%, 07/22/99 4,925,722
----------------
Letter of Credit: Nationsbank 9,916,272
----------------
REAL ESTATE - 5.33%
5,000,000 Countrywide Home Loans, 4.90%, 04/13/99 4,991,833
----------------
Total Commercial Paper 44,224,652
----------------
CERTIFICATES OF DEPOSIT - 7.48%
1,000,000 Bayerische Hypo-und Vereinsbank AG,
5.01%, 02/07/00 999,670
2,000,000 Bayerische Landesbank GZ, 5.12%, 03/21/00 1,998,974
1,000,000 Den Danske Bank, 5.04%, 02/09/00 999,834
1,000,000 Deutsche Bank AG, 5.70%, 06/07/99 999,895
2,000,000 National Westminster Bank PLC,
NY Branch, 5.70%, 04/16/99 1,999,965
----------------
Total Certificates of Deposit 6,998,338
----------------
CORPORATE NOTES - 11.01%
5,000,000 Restructured Asset Class with Enhanced
Returns, Variable Rate Note,
+ 4.93%, 08/13/99 5,000,000
Guaranteed by Caisse des Depots
et Consignations
</PAGE>
<PAGE>
5,300,000 Syndicated Loan Funding Trust, Variable
Rate Note, 5.19%, 02/15/00 + 5,300,000
----------------
Total Corporate Notes 10,300,000
----------------
MEDIUM TERM NOTES - 19.25%
2,000,000 Abbey National Treasury Services PLC,
5.72%, 06/11/99 1,999,702
5,000,000 Bear Stearns Company, Variable Rate Note,
4.90%, 05/14/99 5,000,000
4,500,000 Lehman Brothers Holdings Inc., 6.05%,
04/28/00 4,520,461
5,000,000 Liberty Lighthouse US., Variable Rate Note,
5.00%, 11/15/99 + 4,997,860
1,500,000 Sigma Finance Inc., 5.41%, 03/13/00 + 1,500,000
----------------
Total Medium Term Notes 18,018,023
----------------
FUNDING AGREEMENTS - 10.69%
5,000,000 First Allmerica Financial Life, Variable Rate
Note, 5.09%, 09/21/99 5,000,000
5,000,000 General American Life Insurance Co.,
Variable Rate Note, 5.14%, 07/23/99 5,000,000
----------------
Total Funding Agreements 10,000,000
----------------
REPURCHASE AGREEMENTS - 4.31%
4,035,000 Westdeutsche Landesbank GZ, 4.92%,
04/01/99 4,035,000
----------------
(Proceeds of $4,035,551 to be received
at maturity)
Collateral: $3,839,000 U.S. Treasury Bonds,
7.25%, due 05/15/16
(collateral market value $4,422,946)
Total Repurchase Agreements 4,035,000
----------------
Total Investments (cost $93,576,013*) 99.99% 93,576,013
Other assets in excess of liabilities .01 12,746
------ ----------------
Net Assets 100.0% $ 93,588,759
====== ================
</TABLE>
* Cost for Federal tax purposes is identical.
+ Pursuant to Rule 144A, resale is restricted to qualified
institutional buyers.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999 (UNAUDITED)
<TABLE>
ASSETS
<S> <C>
Investments at value (cost $93,576,013) $ 93,576,013
Cash 320
Interest receivable 436,646
Other assets 5,912
-------------
Total assets 94,018,891
-------------
LIABILITIES
Dividends payable 371,586
Management fee payable 37,760
Accrued expenses 20,786
-------------
Total liabilities 430,132
-------------
NET ASSETS (equivalent to $1.00 per share on 93,579,256
shares outstanding) $ 93,588,759
=============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 935,793
Additional paid-in capital 92,648,776
Undistributed net investment income 4,190
-------------
$ 93,588,759
=============
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest Income $ 2,969,463
Expenses:
Management fee (note 2) $ 277,375
Trustees' fees and expenses 25,000
Legal fees 16,000
Audit and accounting fees 11,000
Transfer and shareholder servicing agent fees 7,500
Shareholders' reports 7,000
Custodian fees 5,000
Registration fees and dues 3,500
Insurance 2,000
Miscellaneous 2,550
------------
356,925
Management fee waived (note 2) (25,404)
Expenses paid indirectly (note 4) (240)
-------------
Net expenses 331,281
------------
Net investment income 2,638,182
Net realized gain from securities transactions 1,444
------------
Net increase in net assets resulting from operations $ 2,639,626
============
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, SEPTEMBER 30,
1999 1998
------------ ------------
</CAPTION>
FROM INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income $ 2,638,182 $ 6,313,930
Dividends to shareholders from net
investment income ($0.0238 and
$0.0513 per share, respectively) (2,638,182) (6,313,930)
Net realized gain from securities
transactions 1,444 8,059
------------ ------------
Change in net assets derived from
investment activities 1,444 8,059
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
<CAPTION>
SHARES
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, SEPTEMBER 30,
1999 1998
------------ ------------
</CAPTION>
<S> <C> <C> <C> <C>
Proceeds from shares sold 149,672,371 329,102,190 149,672,371 329,102,190
Reinvested dividends 441 611 441 611
Cost of shares redeemed (159,951,991) (350,636,409) (159,951,991) (350,636,409)
------------ ------------ ------------ ------------
Change in net assets from
capital share transactions (10,279,179) (21,533,608) (10,279,179) (21,533,608)
============ ============ ------------ ------------
Change in net assets (10,277,735) (21,525,549)
NET ASSETS:
Beginning of period 103,866,494 125,392,043
------------ ------------
End of period $ 93,588,759 $103,866,494
============ ============
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. 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.
a) 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.
b) 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.
c) 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.
d) 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.
e) 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 and disclosure of contingent 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.
2. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Aquila Management Corporation (the "Manager"), the Trust's founder and
sponsor, serves as the Manager for the Trust under an Advisory and
Administration Agreement with the Trust. The portfolio management of the Trust
</PAGE>
<PAGE>
has been delegated to a Sub-Adviser as described below. Under the Advisory and
Administration Agreement, the Manager provides all administrative services to
the Trust, other than those relating to the day-to-day portfolio management. The
Manager's services include providing the office of the Trust and all related
services as well as overseeing the activities of the Sub-Adviser and all the
various support organizations to theTrust such as the shareholder servicing
agent, custodian, legal counsel, auditors and distributor and additionally
maintaining the Trust's accounting books and records. For its services, the
Manager 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 0.50 of 1% on the Trust's
net assets.
Banc One Investment Advisors Corporation (the "Sub-Adviser") serves as the
Investment Sub-Adviser for the Trust under a Sub-Advisory Agreement between the
Manager and the Sub-Adviser. Under this agreement, the Sub-Adviser continuously
provides, subject to oversight of the Manager and the Board of Trustees of the
Trust, the investment program of the Trust and the composition of its portfolio,
arranges for the purchases and sales of portfolio securities, and provides for
daily pricing of the Trust's portfolio. For its services, the Sub-Adviser is
entitled to receive a fee from the Manager which is payable monthly and computed
as of the close of business each day at the annual rate of 0.33 of 1% on the
Trust's net assets.
For the six months ended March 31, 1999, the Trust incurred fees for
advisory and administrative services of $277,375 of which $25,404 was
voluntarily waived. Specific details as to the nature and extent of the services
provided by the Manager and the Sub-Adviser are more fully defined in the
Trust's Prospectus and Statement of Additional Information.
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Trust's shares.
No compensation or fees are paid by the Trust to the Distributor for such
share distribution.
3. 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.
4. EXPENSES
The Trust has negotiated an expense offset arrangement with its custodian,
Bank One Trust Company, N.A., an affiliate of the Adviser, wherein it receives
credit toward the reduction of custodian fees and other Trust expenses whenever
there are uninvested cash balances. The Statement of Operations reflects the
total expenses before any offset, the amount of offset and the net expenses. 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.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<CAPTION>
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED --------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- -------
</CAPTION>
<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 0.0238 0.0513 0.0499 0.0500 0.0526 0.0319
Net gain (loss) on securities (both
realized and unrealized) - - - - - -
------- ------- ------- ------- ------- -------
Total from Investment Operations 0.0238 0.0513 0.0499 0.0500 0.0526 0.0319
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income (0.0238) (0.0513) (0.0499) (0.0500) (0.0526) (0.0319)
Distributions from capital gains - - - - - -
------- ------- ------- ------- ------- -------
Total Distributions (0.0238) (0.0513) (0.0499) (0.0500) (0.0526) (0.0319)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total Return (%) 2.40+ 5.25 5.11 5.12 5.39 3.24
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 93,589 103,866 125,392 120,939 146,130 187,626
Ratio of Expenses to Average Net
Assets (%) 0.60* 0.60 0.60 0.56 0.58 0.60
Ratio of Net Investment Income to
Average Net Assets (%) 4.78* 5.13 4.99 5.02 5.24 3.17
The expense and net investment income ratios without the effect of the Manager's
voluntary waiver of a portion of fees were:
Ratio of Expenses to Average Net
Assets (%) 0.65* 0.63 0.66 0.63 0.62 0.60
Ratio of Net Investment Income to
Average Net Assets (%) 4.73* 5.10 4.93 4.94 5.20 3.17
</TABLE>
+ Not annualized.
* Annualized.
Note: Effective July 19, 1995, Banc One Investment Advisors Corporation became
the Trust's Investment Adviser replacing PNC Bank, Kentucky, Inc. and
effective on June 5,1998, pursuant to new management arrangements, was
appointed as the Trust's Investment Sub-Adviser.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
PREPARING FOR YEAR 2000 (UNAUDITED)
The Trustees and officers of the Trust have been monitoring issues
involving preparedness for the turn of the century for some time in an effort to
minimize any potential impact upon the Trust and its shareholders. Our officers
have focussed significant time and effort in order that the various computerized
functions that could affect the Trust at the beginning of the year 2000 are
ready.
The Trust is highly reliant on certain mission-critical suppliers'
services. Each supplier of these services has provided the Trust's officers with
assurances that it is actively addressing potential problems relating to the
year 2000. The officers, in turn, are monitoring and will continue to monitor
the progress of its suppliers.
As you can well understand, we cannot directly control our supplier
operations. We assure you, however, that we recognize a responsibility to inform
our shareholders if in the future we become aware of any developments which
would lead us to believe that the Trust will be significantly affected by year
2000 problems.
We will continue to keep you up-to-date through future communications.
</PAGE>
