Registration Nos. 2-95767 & 811-4229
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. _______ [ ]
Post-Effective Amendment No. 18 [ X ]
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 19 [ X ]
CHURCHILL CASH RESERVES TRUST
(Exact Name of Registrant as Specified in Charter)
380 Madison Avenue, Suite 2300
New York, New York 10017
(Address of Principal Executive Offices)
(212) 697-6666
(Registrant's Telephone Number)
EDWARD M.W. HINES
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue, 27th Floor
New York, New York 10176
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
[___] immediately upon filing pursuant to paragraph (b)
[_X_] on January 31, 2000 pursuant to paragraph (b)
[___] 60 days after filing pursuant to paragraph (a)(i)
[___] on (date) pursuant to paragraph (a)(i)
[___] 75 days after filing pursuant to paragraph (a)(ii)
[___] on (date) pursuant to paragraph (a)(ii) of Rule 485.
[___] This post-effective amendment designates a new effec-
tive date for a previous post-effective amendment.
<PAGE>
Churchill Cash Reserves Trust
380 Madison Avenue, Suite 2300 * New York, New York 10017
800-228-7496 * 212-697-6666
PROSPECTUS
January 31, 2000
Churchill Cash Reserves Trust is a general purpose
money-market mutual fund which invests in short-term
"money-market" securities.
For purchase, redemption or account inquiries contact
the Trust's Shareholder Servicing Agent:
PFPC Inc. * 400 Bellevue Parkway * Wilmington, DE 19809
Call 800-952-6666 toll free
For general inquiries & yield information
Call 800-228-7496 toll free or 212-697-6666
The Securities and Exchange Commission has not approved or
disapproved the Trust's securities or passed upon the adequacy of
this Prospectus.
Any representation to the contrary is a criminal offense.
<PAGE>
THE TRUST'S OBJECTIVE, INVESTMENT STRATEGIES AND MAIN RISKS
"What is the Trust's objective?"
The objective of the Trust is to achieve as high a level of
current income, stability and liquidity for investors' cash
assets as can be obtained from investing in a diversified
portfolio of short-term "money-market" securities meeting
specific quality standards.
"What are the Trust's investment strategies?"
The Trust seeks to attain this objective by investing in
short-term money-market securities denominated in U.S. dollars
that are of high quality and present minimal credit risks.
Under the current management policies, the Trust invests
only in the following types of obligations:
(1) U.S. government securities or obligations guaranteed
by the U.S. government or its agencies or instrumentalities.
(2) Bank obligations and instruments secured by them.
("Banks" include commercial banks, savings banks and savings and
loan associations.)
(3) Short-term corporate debt known as "commercial
paper."
(4) Corporate debt obligations (for example, bonds and
debentures). Debentures are a form of unsecured corporate debt.
(5) Variable amount master demand notes which are
repayable on not more than 30 days' notice.
(6) Repurchase agreements.
The Trust seeks to maintain a net asset value of $1.00
per share.
In general, not more than 5% of the Trust's net assets
can be invested in the securities of any issuer.
The dollar weighted average maturity of the Trust will be
90 days or less and the Trust may buy only those instruments that
have a remaining maturity of 397 days or less.
Securities the Trust buys must present minimal credit
risks and at the time of purchase be rated in the two highest
rating categories for short-term securities by any two of the
nationally recognized statistical rating organizations
("NRSROs"); if they are unrated, they must be determined by the
Board of Trustees to be of comparable quality. Some securities
may have third-party guarantees to meet these rating
requirements.
Banc One Investment Advisors Corporation (the "Sub-
Adviser") seeks to develop an appropriate portfolio by
considering the differences among securities of different
issuers, yields, maturities and market sectors.
The Trust may change any of its management policies
without shareholder approval.
"What are the main risks of investing in the Trust?"
Although the Trust seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by
investing in the Trust.
Investment in the Trust is not a deposit in Banc One
Corporation, or its bank or non-bank affiliates or in any other
bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Because variable amount master demand notes are direct
lending arrangements between the lender and borrower, it is not
generally contemplated that they will be traded, and there is no
secondary market for them. Variable amount master demand notes
repayable in more than seven days are securities which are not
readily marketable, and fall within the Trust's overall 10%
limitation on securities which are illiquid. These notes are also
subject to credit risk.
Repurchase agreements involve some risk to the Trust if
the other party does not fulfill its obligations under the
agreement.
The value of money-market instruments tends to fall if
prevailing interest rates rise.
Corporate bonds and debentures are subject to interest
rate and credit risks.
Interest rate risk relates to fluctuations in market
value arising from changes in interest rates. If interest rates
rise, the value of debt securities will normally decline. All
fixed-rate debt securities, even the most highly rated, are
subject to interest rate risk. Credit risk relates to the ability
of the particular issuers of the obligations the Trust owns to
make periodic interest payments as scheduled and ultimately repay
principal at maturity.
Investments in foreign banks and foreign branches of
United States banks involve certain risks. Foreign banks and
foreign branches of domestic banks may not be subject to
regulations that meet U.S. standards. Investments in foreign
banks and foreign branches of domestic banks may also be subject
to other risks, including future political and economic
developments, the possible imposition of withholding taxes on
interest income, the seizure or nationalization of foreign
deposits and the establishment of exchange controls or other
restrictions.
<PAGE>
CHURCHILL CASH RESERVES TRUST
RISK/RETURN BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the
risks of investing in Churchill Cash Reserves Trust by showing
changes in the Trust's performance from year to year over a 10-
year period and by showing the Trust's average annual returns for
one, five, ten years and since inception. How the Trust has
performed in the past is not necessarily an indication of how the
Trust will perform in the future.
<TABLE>
<CAPTION>
[Bar Chart]
Annual Total Returns
1990-1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8% 7.97
XXXX
6% XXXX 5.83
XXXX XXXX 5.58 5.23 4.85
4% XXXX XXXX 3.37 3.76 XXXX 4.97 5.19 XXXX XXXX
XXXX XXXX XXXX 2.67 XXXX XXXX XXXX XXXX XXXX XXXX
2% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
0% XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Calendar Years
During the 10-year period shown in the bar chart, the highest
return for a quarter was 1.97% (quarter ended June 30, 1990) and
the lowest return for a quarter was 0.65% (quarter ended June 30,
1993)
</TABLE>
Average Annual Total Return
<TABLE>
<CAPTION>
For the Period Ended
December 31, 1999
Since
1-Year 5-Year 10-Years inception
<S> <C> <C> <C> <C>
Churchill Cash
Reserves Trust 4.85 5.16% 4.92% 5.67%*
<FN>
* From commencement of operations on July 9, 1985.
</FN>
</TABLE>
Please call (800) 228-7496 toll free to obtain the Trust's most
current seven-day yield.
<PAGE>
CHURCHILL CASH RESERVES TRUST
FEES AND EXPENSES OF THE TRUST
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Trust.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases.........................0.00%
(Maximum Deferred Sales Charge (Load).........0.00%
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends
.............................................0.00%
Redemption Fees..............................0.00%
Exchange Fees................................0.00%
Annual Trust Operating Expenses (expenses that are
deducted from the Trust's assets)
Management Fees(1)...........................0.50%
12b-1 Fee (2)................................0.00%
All Other Expenses...........................0.16%
Total Annual Trust Operating Expenses (1)....0.66%
[FN]
(1) As of the date of this Prospectus, the Manager is entitled to
receive an advisory fee from the Trust at the annual rate of 0.50
of 1% of average annual net assets of which 0.08 of 1% is
currently being waived; the Sub-Advisor is entitled to receive a
sub-advisory fee from the Manager at the annual rate of 0.33 of
1% of average annual net assets, of which 0.05 of 1% is currently
being waived. Reflecting this waiver, management fees and total
trust operating expenses are currently 0.42% and 0.60%
respectively. Although the management fee can be terminated at
any time at the option of the Manager, it is expected to continue
for the remainder of the Trust's fiscal year which ends on
September 30, 2000.
</FN>
[FN]
(2) The 12b-1 Plan of the Trust does not involve payments out of
the assets or income of the Trust designed to recognize sales of
shares of the Trust or to pay advertising expenses.
</FN>
Example
This Example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual
funds.
The Example assumes that you invest $10,000 in the Trust for the
time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your
investment has a 5% return each year, you reinvest all dividends
and distributions, and that the Trust's operating expenses remain
the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<C> <C> <C> <C>
$67 $211 $368 $822
</TABLE>
TRUST MANAGEMENT
Management
Aquila Management Corporation, 380 Madison Avenue, Suite
2300, New York, NY 10017 (the "Manager"), is the Trust's
investment adviser under the "Advisory and Administration
Agreement." It has delegated its investment advisory duties,
including portfolio management, to Banc One Investment Advisors
Corporation, the "Sub-Adviser" under a sub-advisory agreement
described below. The Manager is also responsible for
administrative services, including providing for the maintenance
of the headquarters of the Trust, overseeing relationships
between the Trust and the service providers to the Trust, either
keeping the accounting records of the Trust or, at its expense
and responsibility, delegating such duties in whole or in part to
a company satisfactory to the Trust, maintaining the Trust's
books and records and providing other administrative services.
Banc One Investment Advisors Corporation, 1111 Polaris
Parkway, Columbus, Ohio 43240, ("the Sub-Adviser"), provides the
Trust with investment advisory services.
Under the Sub-Advisory Agreement, the Sub-Adviser provides
for investment supervision, including supervising continuously
the investment program of the Trust and the composition of its
portfolio, determining what securities will be purchased or sold
by the Trust, and arranging for the purchase and the sale of
securities held in the portfolio of the Trust; and, at the
Sub-Adviser's expense, for pricing of the Trust's portfolio
daily.
Under the Advisory and Administration Agreement, the Trust
pays the Manager a fee payable monthly and computed on the net
asset value of the Trust as of the close of business each
business day at the annual rate of 0.50 of 1% of such net asset
value.
Information about the Sub-Adviser and the Manager
The Sub-Adviser is a subsidiary of BANC ONE CORPORATION
("BANC ONE"). As of June 30, 1999, the Sub-Adviser had $127
billion of total assets under management, including approximately
$60 billion in managed mutual funds. BANC ONE is a multi-bank
holding company, headquartered in Chicago, with more than 1,900
offices in 33 states. BANC ONE, its affiliated banks and non-bank
subsidiaries had total assets of more than $256 billion.
The Sub-Adviser has advised the Manager that it intends
to resign on about June 30, 2000. At present, affiliates and/or
clients of the Sub-Adviser own almost all of the Trust's shares
and it expected that those shares will be redeemed when the Sub-
Adviser resigns. The Manager is engaged in a search for a
successor sub-adviser. There is no assurance that a successor sub-
adviser can be found or that the Trust's current level of assets
can be maintained.
The Trust's Manager is founder and Manager and/or
administrator to the Aquilasm Group of Funds, which consists of
tax-free municipal bond funds, money-market funds and equity
funds. As of December 31, 1999, these funds had aggregate assets
of approximately $3.0 billion, of which approximately $1.2
billion consisted of assets of money-market funds. The Manager,
which was founded in 1984, is controlled by Mr. Lacy B. Herrmann,
directly, through a trust and through share ownership by his
wife.
NET ASSET VALUE PER SHARE
The Trust's net asset value per share is determined as of
4:00 p.m. New York time on each day that the New York Stock
Exchange and the Custodian are open (a "Business Day") by
dividing the value of the net assets of the Trust (i.e., the
value of the assets less liabilities, exclusive of surplus) by
the total number of shares outstanding.
The net asset value per share will normally remain constant
at $1.00 per share except under extraordinary circumstances. The
net asset value per share is based on a valuation of the Trust's
investments at amortized cost.
The New York Stock Exchange is normally not open on the
following days: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. However, the
Exchange may close on other days as well. In addition, the
Custodian is not open on Veterans Day.
PURCHASES
"How do I purchase shares?"
Opening an Account
To open a new account, you must send a properly completed
application to PFPC Inc. (the "Agent"). The Trust will not honor
redemption of shares purchased by wire payment until a properly
completed application has been received by the Agent. The minimum
initial investment is $1,000. Subsequent investments may be in
any amount.
You can make investments in any of these three ways:
1. By Mail. You can make payment by check, money order,
Federal Reserve Draft or other negotiable bank draft drawn
in United States dollars on a United States commercial or
savings bank or credit union (each of which is a "Financial
Institution"), payable to the order of Churchill Cash
Reserves Trust and mailed to:
PFPC Inc.
Attn: Aquilasm Group of Funds
400 Bellevue Parkway
Wilmington, DE 19809
2. By Wire. You can wire Federal funds (monies credited to a
bank's account with a Federal Reserve Bank) to PNC Bank, NA.
To insure prompt and proper crediting to your account, if
you choose this method of payment, you should first telephone the
Agent (800-952-6666 toll free) and then instruct your bank to
wire funds as indicated below:
PNC BANK, NA
Philadelphia, PA
ABA #0310-0005-3
Account #85-0216-4861
FFC: Churchill Cash Reserves Trust
* Account Name and Number (if an existing account)
* The name in which the investment is to be registered
(if a new account).
Your bank may impose a charge for wiring funds.
3. Through Brokers. If you wish, you may invest in the Trust
by purchasing shares through registered broker-dealers.
The Trust imposes no sales or service charge, although
broker-dealers may make reasonable charges to their customers for
their services. The services to be provided and the fees therefor
are established by each broker-dealer acting independently;
broker-dealers may establish, as to accounts serviced by them,
higher initial or subsequent investment requirements than those
required by the Trust. Broker-dealers are responsible for prompt
transmission of orders placed through them.
Opening an Account Adding to An Account
* Make out a check for * Make out a check for
the investment amount the investment amount
payable to payable to
Churchill Cash Reserves Churchill Cash Reserves
Trust. Trust.
* Complete the application * Fill out the pre-printed
included with the Prospectus, stub attached
indicating the features to the Trust's confirmations.
you wish to authorize. or supply the name(s)
of account owner(s),
the account number and
the name of the Trust.
* Send your check and * Send your check and
completed application completed account infomation
to your dealer or to your dealer or
to the Trust's Agent, PFPC to the Trust's Agent, PFPC
Inc., or Inc., or
* Wire funds as described * Wire funds as described
above above.
Be sure to supply the name(s) of account owner(s), the
account number, and the name of the Trust.
"Can I transfer funds electronically?"
You can have funds transferred electronically, in amounts of
$50 or more, from your Financial Institution if it is a member of
the Automated Clearing House. You may make investments through
two electronic transfer features, "Automatic Investment" and
"Telephone Investment."
* Automatic Investment You can authorize a
pre-determined amount to be regularly transferred from
your account.
* Telephone Investment You can make single
investments of up to $50,000 by telephone instructions
to the Agent.
Before you can transfer funds electronically, the Trust's
Agent must have your completed Application authorizing these
features. If you initially decide not to choose these
conveniences and then later wish to do so, you must complete a
Ready Access Features Form, which is available from the
Distributor or Agent. The Trust may modify or terminate these
investment methods or charge a service fee, upon 30 days' written
notice to shareholders.
When Shares Are Issued and Dividends Are Declared On Them
The Trust issues shares two ways.
First Method - ordinary investments. You will be paid
dividends starting on the day (whether or not a Business Day)
after the first Business Day on which your purchase order has
been received in proper form and funds have become available for
investment. You will be paid a dividend on the day on which your
shares are redeemed.
"When will funds be available so that my order will become
effective under the First Method?"
The Trust must have payment for your purchase available
for investment before 4:00 p.m. New York time on a Business Day
for your order to be effective on that Business Day. Your order
is effective and you will receive the next determined net asset
value per share depending on the method of payment you choose, as
follows.
Payment Method When will an order When will an order
received before received after
4:00 p.m. on a 4:00 p.m. on a
Business Day Business Day
be deemed be deemed
effective? effective?
By wire in
Federal funds or
Federal Reserve
Draft That day Next Business Day
By wire not
in Federal funds 4:00 p.m. on the 4:00 p.m. on the
Business Day Business Day
converted to converted to
Federal funds Federal funds
(normally the (normally the
next Business next Business
Day) Day)
By Check 4:00 p.m. on the 4:00 p.m. on the
Business Day Business Day
converted to converted to
Federal funds Federal funds
(normally (normally
two Business two Business
Days for checks Days for checks
on banks in the on banks in the
Federal Reserve Federal Reserve
System, longer System, longer
for other banks) for other banks)
Automatic
Investment The day you specify;
if it is not a
Business Day, on the
next Business Day
Telephone
Investment That day Next Business Day
All checks are accepted subject to collection at full face
value in United States funds and must be drawn in United States
dollars on a United States bank; if not, shares will not be
issued. (The Agent will convert wires and checks to Federal funds
as your agent.)
Second Method- For broker-dealers or banks which have
requested that this method be used, to which request the Trust
has consented. You will be paid dividends starting on the day on
which your purchase order has been received in proper form and
funds have become available for investment. You will not be paid
a dividend on the day on which your shares are redeemed.
"When will my order be effective under the Second Method?"
Your purchase order is effective and your funds are
invested as follows:
On that day, if
(i) you advise the Agent before 1:00 p.m. New York time on a
Business Day of a dollar amount to be invested; and
(ii) Your payment in Federal funds is received by wire on that
day.
The second investment method is available to prospective
investors in shares of the Trust who wish to use it so that the
dividends on their shares will commence to be declared on the day
the purchase order is effective. Upon written or phone request
the Trust will advise you as to the broker-dealers or banks
through which such purchases may be made.
The Agent will maintain records as to which of your
shares were purchased under each of the two investment methods
set forth above. If you make a redemption request and have
purchased shares under the first or second methods, the Agent
will, unless you otherwise request as to such redemption, redeem
those shares first purchased, regardless of the method under
which they were purchased.
Under each method, shares are issued at the net asset
value per share next determined after the purchase order is
received in proper form. Under each method, the Application must
be properly completed and have been received in proper form by
the Agent; the Trust or the Distributor may also reject any
purchase order. Under each method, Federal funds (see above) must
either be available to the Trust or the payment thereof must be
guaranteed to the Trust so that the Trust can be as fully
invested as practicable.
Transfer on Death Registration
The Trust generally permits "transfer on death" ("TOD")
registration of shares, so that on the death of the shareholder
the shares are transferred to a designated beneficiary or
beneficiaries. Ask the Agent or your broker-dealer for the
Transfer on Death Registration Request Form. With it you will
receive a copy of the TOD Rules of the Aquilasm Group of Funds,
which specify how the registration becomes effective and
operates. By opening a TOD Account, you agree to be bound by the
TOD Rules.
REDEEMING YOUR INVESTMENT
You may redeem some or all of your shares by a request to
the Agent. Shares will be redeemed at the next net asset value
determined after your request has been accepted.
There is no minimum period for investment in the Trust,
except for shares recently purchased by check or by Automatic or
Telephone Investment as discussed below.
A redemption may result in a tax liability for you.
How to Redeem Your Investment
By mail, send instructions to:
PFPC Inc.
Attn: Aquilasm Group of Funds
400 Bellevue Parkway
Wilmington, Delaware 19809
By telephone, call:
800-952-6666
By FAX, send instructions to: 302-791-3055
For liquidity and convenience, the Trust offers expedited
redemption.
Expedited Redemption Methods
(Non-Certificate Shares Only)
You may request expedited redemption for any shares not
issued in certificate form in two ways:
1 By Telephone. The Agent will accept instructions from
anyone by telephone to redeem shares and make payments:
a) to a Financial Institution account you have previously
specified or
b) by check in the amount of $50,000 or less, mailed to the
same name and address (which has been unchanged for the past
30 days) as the account from which you are redeeming. You
may only redeem by check via telephone request once in any
7-day period.
Telephoning the Agent
Whenever you telephone the Agent, please be prepared to
supply:
* account name(s) and number
* name of the caller
* the social security number registered to the
account
* personal identification
Note: Check the accuracy of your confirmation statements
immediately. The Trust, the Agent, and the Distributor are not
responsible for losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed
to verify a caller's identity. The Agent may record calls.
2 By FAX or Mail. You may request redemption payments to a
predesignated Financial Institution account by a letter of
instruction sent to the Agent: PFPC Inc., by FAX at 302-791-3055
or by mail to 400 Bellevue Parkway, Wilmington, DE 19809. The
letter, signed by the registered shareholder(s) (no signature
guarantee is required), must indicate:
* account name(s)
* account number
* amount to be redeemed
* any payment directions
To have redemption proceeds sent directly to a Financial
Institution account, you must complete the Expedited Redemption
section of the Application or a Ready Access Features Form. You
will be required to provide (1) details about your Financial
Institution account, (2) signature guarantees and (3) possible
additional documentation.
The name(s) of the shareholder(s) on the Financial
Institution account must be identical to those on the Trust's
records of your account.
You may change your designated Financial Institution account
at any time by completing and returning a revised Ready Access
Features Form.
3 By Check. The Agent will, upon request, provide you with
forms of drafts ("checks") drawn on PNC Bank, NA (the "Bank").
This feature is not available if your shares are represented by
certificates. These checks represent a further alternative
redemption means and you may make them payable to the order of
anyone in any amount of not less than $100. You will be subject
to the Bank's rules and regulations governing its checking
accounts. If the account is registered in more than one name,
each check must be signed by each account holder exactly as the
names appear on the account registration, unless expressly stated
otherwise on your application.
There is no charge for the maintenance of this special check
writing privilege or for the clearance of any checks.
When such a check is presented to the Bank for payment, a
sufficient number of full and fractional shares in your account
will be redeemed to cover the amount of the check. This check
writing redemption procedure enables you to continue receiving
dividends on those shares equaling the amount being redeemed by
check until such time as the check is actually presented to the
Bank for payment.
Because these checks are paid by redemption of shares in
your account, you should be certain that adequate shares are in
the account to cover the amount of the check. If insufficient
redeemable shares are in the account, the redemption check will
be returned marked "insufficient funds." The fact that redemption
checks are drafts may also permit a bank in which they are
deposited to delay crediting the account in question until that
bank has received payment funds for the redemption check. Note:
You cannot use checks to redeem shares represented by
certificates. If you purchase shares by check, you cannot use
checks to redeem them until 15 days after your purchase.
You may not present checks directly to any branch of the
Bank. This does not affect checks used for the payment of bills
or cashed at other banks. You may not use checks to redeem the
entire balance of your account, since the number of shares in
your account changes daily through dividend payments, which are
automatically reinvested in full and fractional shares. Only
expedited redemption to a predesignated bank account or the
regular redemption method (see below) may be used when closing
your account.
Multiple Redemption Services. You are not limited in choice
of redemption methods but may utilize all available forms.
However, when both redemption to a predesignated Financial
Institution account and check writing are desired, you must so
elect on your application, or by proper completion of a Ready
Access Features Form.
Regular Redemption Method
(Certificate and Non-Certificate Shares)
Certificate Shares. Mail to the Trust's Agent: (1) blank
(unsigned) certificates for the shares to be redeemed, (2)
redemption instructions, and (3) a stock assignment form.
To be in "proper form," items (2) and (3) must be signed by
the registered shareholder(s) exactly as the account is
registered. For a joint account, both shareholder signatures
are necessary.
For your protection, mail certificates separately from
signed redemption instructions. We recommend that
certificates be sent by registered mail, return receipt
requested.
We may require additional documentation for certain types of
shareholders such as corporations, partnerships, trustees or
executors, or if redemption is requested by someone other
than the shareholder of record. The Agent may require
signature guarantees if insufficient documentation is on
file.
We do not require a signature guarantee for redemptions up
to $50,000, payable to the record holder, and sent to the
address of record, except as noted above. In all other
cases, signatures must be guaranteed.
Your signature may be guaranteed by any:
* member of a national securities exchange
* U.S. bank or trust company
* state-chartered savings bank
* federally chartered savings and loan association
* foreign bank having a U.S. correspondent bank; or
* participant in the Securities Transfer Association
Medallion Program ("STAMP"), the Stock Exchanges
Medallion Program ("SEMP") or the New York Stock
Exchange, Inc. Medallion Signature Program ("MSP")
A notary public is not an acceptable signature guarantor.
Non-Certificate Shares. You must use the Regular Redemption
Method if you have not chosen Expedited Redemption to a
predesignated Financial Institution account. To redeem by this
method, send a letter of instruction to the Trust's Agent, which
includes:
* Account name(s)
* Account number
* Dollar amount or number of shares to be redeemed
or a statement that all shares held in the account are
to be redeemed
* Payment instructions (we normally mail redemption
proceeds to your address as registered with the Trust)
* Signature(s) of the registered shareholder(s) and
* Signature guarantee(s), if required, as indicated
above
"When will I receive the proceeds of my redemption?"
Redemption proceeds are normally sent, as shown below, to
your address of record on the next business day following receipt
in proper form of your redemption request. Except as described
below, the Trust will send payments within 7 days.
Redemption Method of Payment Charges
Under $1,000 Check None
$1,000 or more Check or, if and as None
you requested on your
Application or Ready Access
Features Form, wired
or transferred through
the Automated Clearing
House to your Financial
Institution Account
Through a broker
/dealer Check or wire, to your None.
broker/dealer However,
your broker/
may charge a
fee.
Redemption proceeds on shares issued under the second
method will be wired in Federal funds on the date of redemption,
if practicable, or as soon thereafter as practicable,
irrespective of amount. Redemption requests as to such shares may
be made by telephone.
Although the Trust does not currently intend to, it can
charge up to $5.00 per wire redemption, after written notice to
shareholders who have elected this redemption procedure. Upon 30
days' written notice to shareholders the Trust may modify or
terminate the use of the Automated Clearing House to make
redemption payments at any time or charge a service fee, although
no such fee is presently contemplated. If any such changes are
made, the Prospectus will be supplemented to reflect them.
The Trust may delay payment for redemption of shares
recently purchased by check (including certified, cashier's or
official bank check) or by Automatic Investment or Telephone
Investment up to 15 days after purchase; however, payment for
redemption will not be delayed after (i) the check or transfer of
funds has been honored, or (ii) the Agent receives satisfactory
assurance that your Financial Institution will honor the check or
transfer of funds. You can eliminate possible delays by paying
for purchased shares with wired funds or Federal Reserve drafts.
The Trust has the right to postpone payment or suspend
redemption rights during certain periods. These periods may occur
(i) when the New York Stock Exchange is closed for other than
weekends and holidays, (ii) when the Securities and Exchange
Commission (the "SEC") restricts trading on the New York Stock
Exchange, (iii) when the SEC determines an emergency exists which
causes disposal of, or determination of the value of, the
portfolio securities to be unreasonable or impracticable, and
(iv) during such other periods as the SEC may permit.
The Trust can redeem your shares if their value totals less
than $500 as a result of redemptions or failure to meet and
maintain the minimum investment level under an Automatic
Investment Program. Before such a redemption is made, we will
send you a notice giving you 60 days to make additional
investments to bring your account up to the minimum.
Redemption proceeds may be paid in whole or in part
("redemption in kind") by distribution of a Trust's portfolio
securities in conformity with SEC rules. This method would only
be used if the Trustees determine that payments partially or
wholly in cash would be detrimental to the best interests of the
remaining shareholders.
"Is there an Automatic Withdrawal Plan?"
Yes. Under an Automatic Withdrawal Plan you can arrange to
receive a monthly or quarterly check in a stated amount, not less
than $50.
DIVIDENDS AND DISTRIBUTIONS
The Trust will declare all of its net income for dividend
purposes daily as dividends. If you redeem all of your shares,
you will be credited on the redemption payment date with the
amount of all dividends declared for the month through the date
of redemption, or through the day preceding the date of
redemption in the case of shares issued under the "second"
method.
You will receive monthly a summary of your account,
including information as to dividends paid during the month and
the shares credited to your account through reinvestment of
dividends.
Dividends will be taxable to you as ordinary income, even
though reinvested. Statements as to the tax status of your
dividends will be mailed annually.
It is possible but unlikely that the Trust may have realized
long-term capital gains or losses in a year.
Dividends will automatically be reinvested in full and
fractional shares of the Trust at net asset value unless you
elect otherwise.
You may choose to have all or any part of the payments
for dividends paid in cash. You can elect to have the cash
portion of your dividends deposited, without charge, by
electronic funds transfers into your account at a financial
institution, if it is a member of the Automated Clearing House.
You can make any of these elections on the Application,
by a Ready Access Features Form or by a letter to the Agent. Your
election to receive some or all of your dividends in cash will be
effective as of the next payment of dividends after it has been
received in proper form by the Agent. It will continue in effect
until the Agent receives written notification of a change.
All shareholders, whether their dividends are received in
cash or reinvested, will receive a monthly statement indicating
the current status of their account.
If you do not comply with laws requiring you to furnish
taxpayer identification numbers and report dividends, the Trust
may be required to impose backup withholding at a rate of 31%
upon payment of redemptions and dividends.
Distribution Arrangements
Confirmations and Share Certificates
A statement will be mailed to you confirming each purchase
of shares in the Trust. Accounts are rounded to the nearest
1/1000th of a share. The Trust will not issue share certificates
unless you so request from the Agent in writing and declare a
need for such certificates, such as a pledge of shares or an
estate situation. If you have certificates issued, Expedited
Redemption methods described above will not be available and
delay and expense may be incurred if you lose the certificates.
The Trust will not issue certificates for fractional shares or to
shareholders who have elected the checking account or
predesignated bank account methods of withdrawing cash from their
accounts.
The Trust and the Distributor may reject any order for the
purchase of shares. In addition, the offering of shares may be
suspended at any time and resumed at any time thereafter.
Distribution Plan
The Trust has adopted a Distribution Plan under Rule 12b-1
under the 1940 Act.
The Trust's Distribution Plan is solely a "defensive plan"
designed to protect the Trust and its affiliates against certain
conceivable claims relating to Rule 12b-1. The Distribution Plan
does not involve payments out of assets or income of the Trust
designed to recognize sales of shares of the Trust or to pay
advertising expenses.
<PAGE>
<TABLE>
<CAPTION>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The financial highlights table is intended to help you
understand the
Trust's financial performance for the indicated periods of the
Trust's
operations. Certain information reflects financial results for a
single
Trust share. The total returns in the table represent the rate
that an
investor would have earned on an investment in the Trust
(assuming
reinvestment of all dividends and distributions). This
information has
been audited by KPMG LLP, whose report, along with the Trust's
financial
statements, is included in the annual report, is incorporated by
reference
into the SAI and is available upon request.
Year ended September 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment
Operations:
Net investment income 0.0469 0.0513 0.0499 0.0500 0.0526
Total from Investment
Operations 0.0469 0.0513 0.0499 0.0500 0.0526
Less Distributions:
Dividends from net
investment income (0.0469) (0.0513) (0.0499) (0.0500)
(0.0526)
Total Distributions (0.0469) (0.0513) (0.0499) (0.0500)
(0.0526)
Net Asset Value,
End of Year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return (%) 4.79 5.25 5.11 5.12 5.39
Ratios/Supplemental Data
Net Assets, End of
Year ($ thousands) 76,356 103,866 125,392 120,939 146,130
Ratio of Expenses to
Average Net Assets (%) 0.60 0.60 0.60 0.56 0.58
Ratio of Net Investment
Income to Average Net
Assets (%) 4.70 5.13 4.99 5.02 5.24
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 (%) 0.66 0.63 0.66 0.63 0.62
Ratio of Net Investment
Income to Average
Net Assets (%) 4.65 5.10 4.93 4.94 5.20
</TABLE>
Unaudited: The Trust's "current yield" for the seven days ended
September 30, 1999 was 5.10% and its "compounded effective
yield" for that period was 5.23 % Current yield is net income
over a stated seven-day periodannualized, and is shown as a
percentage. Effective yield is calculated similarly, but, when
annualized, the income earned is assumed to be
reinvested, which gives effect to compounding.
<PAGE>
<PAGE>
Application for
Capital Cash Reserve Trust - Original Shares
Please complete steps 1 through 4 and mail to:
PFPC Inc.
400 Bellevue Parkway, Wilmington, DE 19809
Tel.# 1-800-952-6666
STEP 1
A. ACCOUNT REGISTRATION
___Individual Use line 1
___Joint Account* Use lines 1&2
___For a Minor Use line 3
___For Trust, Corporation,
Other Organization or
any Fiduciary capacity
Use line 4
* Joint Accounts will be Joint
Tenants with rights of survivorship
unless otherwise specified.
** Uniform Gifts/Transfers
to Minors Act.
Please type or print name(s) exactly as account is to be
registered
1._______________________________________________________________
______
First Name Middle Initial Last Name Social Security Number
2._______________________________________________________________
______
First Name Middle Initial Last Name Social Security Number
3._______________________________________________________________
______
Custodian's First Name Middle Initial Last Name
Custodian
for_________________________________________________________
Minor's First Name Middle Initial Last Name
Under the________________
UGTMA**_____________________________________
Name of State Minor's Social Security
Number
4._______________________________________________________________
______
_________________________________________________________________
____
(Name of corporation or organization. If a trust, include the
name(s)
of trustees in which account will be registered and the name
and date
of the trust instrument. Account for a pension or profit
sharing plan
or trust may be registered in the name of the plan or trust
itself.)
_________________________________________________________________
_____
Tax I.D. Number Authorized Individual Title
B. MAILING ADDRESS AND TELEPHONE NUMBER
_________________________________________________________________
_____
Street or PO Box City
_________________________________
(____)__________________________
State Zip Daytime Phone Number
Occupation:______________________
Employer:__________________________
Employer's
Address:___________________________________________________
Street Address: City State
Zip
Citizen or resident of: ___ U.S. Other___ ______ Check here ___
if you
are a non-U.S. Citizen or resident and not subject to back-up
withholding (See certification in Step 4, Section B, below.)
C. INVESTMENT DEALER OR BROKER:
(Important - to be completed by Dealer or Broker)
________________________________
_________________________________
Dealer Name Branch Number
________________________________
_________________________________
Street Address Rep.Number/Name
________________________________
(_______)________________________
City State Zip Area Code Telephone
STEP 2
PURCHASES OF SHARES
A. INITIAL INVESTMENT
___ Capital Cash Reserve Trust
1) ___ By Check
2) ___ By Wire
1) By Check: Make check payable to: Capital Cash Reserve Trust
Amount of investment $ ____________ Minimum initial investment
$1,000
OR
2) By Wire*:
$______________________________
From_______________________________
Name of Financial
Institution
_________________________________
_______________________________
Financial Institution Account No. Branch, Street or Box#
On_______________________________
________________________________
(Date) City State Zip
*NOTE: If investing by wiring of funds, instruct your Financial
Institution to wire funds to:
PNC Bank, NA Account of: (Account name and number,
Philadelphia, PA or name in which investment is to
be
ABA #0310-0005-3 registered if new account)
Account #85-0216-4861
For further credit to Churchill Cash Reserves Trust
(A FINANCIAL INSTITUTION IS A COMMERCIAL BANK,
SAVINGS BANK OR CREDIT UNION.)
B. DIVIDENDS
All income dividends are automatically reinvested in additional
shares at
net asset value unless otherwise indicated below.
You can have any portion reinvested, with the balance paid in
cash, by
indicating a percent below:
Dividends are to be:___% Reinvested ___% Paid in cash*
* FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING
OPTIONS:
___Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would
like
you to deposit the dividend.
___ Mail check to my/our address listed in Step 1B.
STEP 3
SPECIAL FEATURES
A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to have amounts
automatically drawn on your Financial Institution account and
invested
in your account. To establish this program, please complete
Step 4,
Sections A & B of this Application.
I/We wish to make regular monthly investments of $______
(minimum $50)
on the ___ 1st day or ___ 16th day of the month (or on the
first
business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED
CHECK)
B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___No
This option provides you with a convenient way to add to your
account
(minimum $50 and maximum $50,000) at any time you wish by
simply
calling the Agent toll-free at 1-800-952-6666. To establish
this
program, please complete Step 4, Sections A & B of this
Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED
CHECK)
C. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)
Application must be received in good order at least 2 weeks
prior to 1st actual liquidation date.
(Check appropriate box)
___ Yes ___No
Please establish an Automatic Withdrawal Plan for this
account,
subject to the terms of the Automatic Withdrawal Plan
Provisions
set forth below. To realize the amount stated below, the Agent
is
authorized to redeem sufficient shares from this account at
the
then current net asset value, in accordance with the terms
below:
Dollar Amount of each withdrawal $____________
beginning_______________
Minimum:$50
Month/Year
Payments to be made: ___ Monthly or ___ Quarterly
Checks should be made payable as indicated below. If check
is
payable to a Financial Institution for your account, indicate
Financial Institution name, address and your account number.
_______________________________________
__________________________
First Name Middle Initial Last Name Financial
Institution Name
_______________________________________
__________________________
Street Financial Institution
Street Address
_______________________________________
__________________________
City State Zip City State
Zip
____________________________________
Financial Institution
Account Number
D. TELEPHONE EXCHANGE
(Check appropriate box)
___ Yes ___ No
This option allows you to effect exchanges among accounts in your
name within the Aquilasm Group of Funds by telephone.
TO MAKE A TELEPHONE EXCHANGE, CALL THE AGENT AT 1-800-952-6666
The Agent is authorized to accept and act upon my/our or any
other
person's telephone instructions to execute the exchange of shares
with
identical shareholder registration in the manner described in the
Prospectus. Except for gross negligence in acting upon such
telephone
instructions to execute an exchange, and subject to the
conditions set
forth herein, I/we understand and agree to hold harmless the
Agent, each
of the Aquilasm Funds, and their respective officers, directors,
trustees,
employees, agents and affiliates against any liability, damage,
expense,
claim or loss, including reasonable costs and attorney's fees,
resulting
from acceptance of, or acting or failure to act upon, this
Authorization.
E. EXPEDITED REDEMPTION
(Check appropriate box)
___Yes ___ No
The proceeds will be deposited to your Financial Institution
account listed.
TO MAKE AN EXPEDITED REDEMPTION, CALL THE AGENT AT 1-800-952-
6666
Cash proceeds in any amount from the redemption of shares will
be
mailed or wired, whenever possible, upon request, if in an amount
of
$1,000 or more to my/our account at a Financial Institution. The
Financial Institution account must be in the same name(s) as this
Trust
account is registered.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
________________________________
___________________________________
Account Registration Financial Institution Account
Number
________________________________
___________________________________
Financial Institution Name Financial Institution
Transit/Routing
Number
________________________________
___________________________________
Street City State
Zip
F. CHECKING ACCOUNT SERVICE
(Check appropriate box)
___ Yes ___ No
Please open a redemption checking account at PNC Bank, NA,
in my (our) name(s) as registered and send me (us) a supply of
checks. I (we) understand that this checking account will be
subject to
the rules and regulations of PNC Bank, NA, pertaining
thereto and as amended from time to time. For joint account:
Check
here whether either owner ___ is authorized, or all owners ___
are
required to sign checks. IF NO BOX IS CHECKED, TWO SIGNATURES
WILL BE
REQUIRED ON JOINT ACCOUNTS.
STEP 4 Section A
DEPOSITOR'S AUTHORIZATION TO HONOR DEBITS
IF YOU SELECTED AUTOMATIC INVESTMENT OR TELEPHONE
INVESTMENT
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.
I/We authorize the Financial Institution listed below to charge
to
my/our account any drafts or debits drawn on my/our account
initiated
by the Agent, PFPC Inc., and to pay such sums in accordance
therewith,
provided my/our account has sufficient funds to cover such drafts
or
debits. I/We further agree that your treatment of such orders
will be
the same as if I/we personally signed or initiated the drafts or
debits.
I/We understand that this authority will remain in effect until
you
receive my/our written instructions to cancel this service. I/We
also
agree that if any such drafts or debits are dishonored, for any
reason,
you shall have no liabilities.
Financial Institution Account
Number______________________________________
Name and Address
where my/our account Name of Financial
Institution____________________
is maintained Street
Address___________________________________
City______________________State_____
Zip_________
Name(s) and
Signature(s) of _______________________________
Depositor(s) as they (Please Print)
appear where account X_______________________________
__________
is registered (Signature)
(Date)
________________________________
(Please Print)
X_______________________________
__________
(Signature)
(Date)
INDEMNIFICATION AGREEMENT
To: Financial Institution Named Above
So that you may comply with your depositor's request, Aquila
Distributors, Inc. (the "Distributor") agrees:
1 Electronic Funds Transfer debit and credit items transmitted
pursuant
to the above authorization shall be subject to the provisions
of the
Operating Rules of the National Automated Clearing House
Association.
2 To indemnify and hold you harmless from any loss you may suffer
in
connection with the execution and issuance of any electronic
debit
in the normal course of business initiated by the Agent
(except any
loss due to your payment of any amount drawn against
insufficient or
uncollected funds), provided that you promptly notify us in
writing
of any claim against you with respect to the same, and further
provided
that you will not settle or pay or agree to settle or pay any
such
claim without the written permission of the Distributor.
3 To indemnify you for any loss including your reasonable costs
and
expenses in the event that you dishonor, with or without cause,
any
such electronic debit.
STEP 4 Section B
SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED
The undersigned warrants that he/she has full authority and is
of
legal age to purchase shares of the Trust and has received and
read
a current Prospectus of the Trust and agrees to its terms.
I/We authorize the Trust and its agents to act upon these
instructions
for the features that have been checked.
I/We acknowledge that in connection with an Automatic
Investment or
Telephone Investment, if my/our account at the Financial
Institution
has insufficient funds, the Trust and its agents may cancel the
purchase
transaction and are authorized to liquidate other shares or
fractions
thereof held in my/our Trust account to make up any deficiency
resulting
from any decline in the net asset value of shares so purchased
and any
dividends paid on those shares. I/We authorize the Trust and
its agents
to correct any transfer error by a debit or credit to my/our
Financial
Institution account and/or Trust account and to charge the
account for
any related charges.
The Trust, the Agent and the Distributor and their trustees,
directors,
employees and agents will not be liable for acting upon
instructions
believed to be genuine, and will not be responsible for any
losses
resulting from unauthorized telephone transactions if the
Agent follows
reasonable procedures designed to verify the identity of the
caller.
The Agent will request some or all of the following
information:
account name and number; name(s) and social security number
registered
to the account and personal identification; the Agent may also
record
calls. Shareholders should verify the accuracy of confirmation
statements immediately upon receipt. Under penalties of
perjury, the
undersigned whose Social Security (Tax I.D.) Number is shown
above
certifies that (i) that number is my correct taxpayer
identification
number and (ii) currently I am not under IRS notification that
I am
subject to backup withholding (line out (ii) if under
notification). If no
such number is shown, the undersigned further certifies, under
penalties
of
perjury, that either (a) no such number has been issued, and a
number
has been or will soon be applied for; if a number is not
provided to
you within sixty days, the undersigned understands that all
payments
(including liquidations) are subject to 31% withholding under
federal
tax law, until a Number is provided and the undersigned may be
subject
to a $50 I.R.S. penalty; or (b) that the undersigned is not a
citizen
or resident of the U.S.and either does not expect to be in the
U.S.
for more than 183 days during each calendar year and does not
conduct a
business in the U.S. which would receive any gain from the
Trust or is
exempt under an income tax treaty.
NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW.
FOR A TRUST, ALL TRUSTEES MUST SIGN.*
______________________________ __________________________
__________
Individual (or Custodian) Joint Registrant, if any
Date
______________________________ __________________________
__________
Corporate Officer, Partner, Title
Date
Trustee, etc.
* For trusts, corporations or associations, this form must be
accompanied
by
proof of authority to sign, such as a certified copy of the
corporate
resolution or a certificate of incumbency under the trust
instrument.
SPECIAL INFORMATION
Certain features (Automatic Investment, Telephone Investment,
Expedited
Redemption and Direct Deposit of Dividends) are effective 15
days after
this form is received in good order by the Trust's Agent.
You may cancel any feature at any time, effective 3 days after
the Agent
receives written notice from you.
Either the Trust or the Agent may cancel any feature, without
prior
notice, if in its judgment your use of any feature involves
unusual
effort or difficulty in the administration of your account.
The Trust reserves the right to alter, amend or terminate any
or all
features or to charge a service fee upon 30 days' written
notice to
shareholders except if additional notice is specifically
required by
the terms of the Prospectus.
BANKING INFORMATION
If your Financial Institution account changes, you must
complete a Ready
Access Features Form which may be obtained from Aquila
Distributors at
1-800-228-7496 and send it to the Agent together with a voided
check or
pre-printed deposit slip from the new account. The new
Financial
Institution change is effective in 15 days after this form is
received in good order by the Trust's Agent.
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
Distributor
Aquila Distributors, Inc.
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
Carroll F. Knicely
Theodore T. Mason
Anne J. Mills
William J. Nightingale
James R. Ramsey
Officers
Lacy B. Herrmann, President
Diana P. Herrmann, Senior Vice President
Charles E. Childs, III, Senior Vice President
John M. Herndon, Vice President and Assistant Secretary
Jerry G. McGrew, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
Transfer and Shareholder Servicing Agent
PFPC Inc.
400 Bellevue Parkway * Wilmington, Delaware 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
Counsel
Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone LLP
551 Fifth Avenue * New York, New York 10176
[Back cover-left column]
This Prospectus concisely states information about the
Trust that you should know before investing. A
Statement of Additional Information about the Trust the
("SAI") has been filed with the Securities and Exchange
Commission. The SAI contains information about the
Trust and its management not included in this
Prospectus. The SAI is incorporated by reference in its
entirety in this Prospectus. Only when you have read
both this Prospectus and the SAI are all material facts
about the Trust available to you.
You can get additional information about the
Trust's investments in the Trust's annual and
semi-annual reports to shareholders. In the Trust's
annual report, you will find a discussion of the market
conditions and investment strategies that significantly
affected the Trust's performance during the last fiscal
year. You can get the SAI and the Trust's annual and
semi-annual reports without charge, upon request by
calling 800-952-6666 (toll free).
In addition, you can review and copy information
about the Trust (including the SAI) at the Public
Reference Room of the SEC in Washington, D.C. You can
get information on the operation of the SEC's public
reference room by calling the SEC at 1-800-SEC-0330.
You can get other information about the Trust at the
SEC's Internet site at http://www.sec.gov. You can get
copies of this information, upon payment of a
duplicating fee, by writing the Public Reference
Section of the SEC, Washington, D.C. 20549-6009.
--------------
The file number under which the Trust is registered with the SEC
under the Investment Company Act of 1940 is 811-4229.
TABLE OF CONTENTS
The Trust's Objective, Investment Strategies and Main Risks
Risk/Return Bar Chart and Performance Table
Fees and Expenses of the Trust
Trust Management
Net Asset Value Per Share
Purchases
Redeeming Your Investment
Dividends and Distributions
Financial Highlights
[Back cover-right column]
Churchill Cash Reserves Trust
One Of The
Aquilasm Group Of Funds
A cash management
investment
PROSPECTUS
--------
To receive a free copy of the Trust's SAI,
annual or semi-annual report, or other information
about the Trust, or to make shareholder inquiries call:
the Trust's Shareholder Servicing Agent at
800-952-6666 toll-free
or you can write to:
PFPC Inc. * 400 Bellevue Parkway * Wilmington, DE 19809
For general inquiries & yield information,
call 800-228-7496 or 212-697-6666.
This Prospectus should be read and retained for future reference
CHURCHILL CASH RESERVES TRUST
380 Madison Avenue
Suite 2300
New York, New York 10017
212-697-6666
STATEMENT OF ADDITIONAL INFORMATION
January 31, 2000
This Statement of Additional Information (the "SAI") is
not a Prospectus. The SAI should be read in conjunction with the
Prospectus (the "Prospectus") dated January 31, 2000 of Churchill
Cash Reserves Trust (the "Trust"). You can obtain the Prospectus
from the Trust's Shareholder Servicing Agent, PFPC Inc., by
writing to: 400 Bellevue Parkway, Wilmington, DE 19809, or by
calling it at the following number:
800-952-6666 toll free
or from Aquila Distributors, Inc., the Trust's Distributor, by
writing to it at 380 Madison Avenue, Suite 2300, New York, New
York 10017; or by calling:
800-228-7496 toll free
FINANCIAL STATEMENTS
The financial statements for the Trust for the year ended Sep
tember 30, 1999, which are contained in the Annual Report for
that fiscal year, are hereby incorporated by reference into the
SAI. Those financial statements have been audited by KPMG LLP,
independent auditors, whose report thereon is incorporated herein
by reference. The Annual Report of the Trust for the fiscal year
ended September 30, 1999 can be obtained without charge by
calling any of the toll-free numbers listed above. The Annual
Report will be delivered with the SAI.
TABLE OF CONTENTS
Trust History 2
Investment Strategies and Risks 2
Trust Policies 4
Management of the Trust 7
Ownership of Securities 13
Investment Advisory and Other Services 13
Brokerage Allocation and Other Practices 20
Capital Stock 21
Purchase, Redemption, and Pricing of Shares 21
Taxation of the Trust 28
Underwriter 28
Performance 29
Appendix A 30
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ADDITIONAL INFORMATION
Trust History
Churchill Cash Reserves Trust is an open-end, diversified
management investment company. It was formed as a Massachusetts
business trust in 1984.
Investment Strategies and Risks
Additional Information About the Trust's Investments
Under the current management policies, the Trust invests
only in the following types of obligations:
(1) U.S. Government Securities: Obligations issued or
guaranteed by the U.S. government or its agencies or
instrumentalities.
(2) Bank Obligations and Instruments Secured by Them:
Bank obligations (i) of U.S. regulated banks having total assets
of at least $1.5 billion, which may be domestic banks, foreign
branches of such banks or U.S. subsidiaries of foreign banks;
(ii) of any foreign bank having total assets equivalent to at
least $1.5 billion; or (iii) that are fully insured as to
principal by the Federal Deposit Insurance Corporation. ("Banks"
include commercial banks, savings banks and savings and loan
associations.)
(3) Commercial Paper: Short-term corporate debt.
(4) Corporate Debt Obligations: Corporate debt
obligations (for example, bonds and debentures). Debentures are a
form of unsecured corporate debt.
(5) Variable Amount Master Demand Notes: Variable amount
master demand notes repayable on not more than 30 days' notice.
These notes permit the investment of fluctuating amounts by the
Trust at varying rates of interest pursuant to direct
arrangements between the Trust, as lender, and the borrower. They
permit daily changes in the amounts borrowed. The Trust has the
right to increase the amount under the note at any time up to the
full amount provided by the note agreement, or to decrease the
amount, and the borrower may prepay up to the full amount of the
note without penalty. Variable amount master demand notes may or
may not be backed by bank letters of credit.
(6) Certain Other Obligations: Obligations other than
those listed in 1 through 5 above only if such other obligations
are guaranteed as to principal and interest by either a bank in
whose obligations the Trust may invest (see 2 above) or a
corporation in whose commercial paper the Trust may invest (see 3
above). If the Trust invests more than 5% of its net assets in
such other obligations, the Prospectus will be supplemented to
describe them.
(7) Repurchase Agreements: The Trust may purchase
securities subject to repurchase agreements with commercial banks
and broker-dealers provided that such securities consist entirely
of U.S. Government securities or securities that, at the time the
repurchase agreement is entered into, are rated in the highest
rating category by two or more nationally recognized statistical
rating organizations ("NRSROs").
(8) When-Issued or Delayed Delivery Securities: The Trust
may buy securities on a when-issued or delayed delivery basis.
The Trust may not enter into when-issued commitments exceeding in
the aggregate 15% of the market value of the Trust's total
assets, less liabilities other than the obligations created by
when-issued commitments. When-issued securities are subject to
market fluctuation and no interest accrues to the Trust until
delivery and payment take place; their value at the delivery date
may be less than the purchase price.
Information on Variable Amount Master Demand Notes
The Trust has the right to increase the amount under the
note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may prepay
up to the full amount of the note without penalty. Because these
notes are direct lending arrangements between the lender and
borrower, it is not generally contemplated that they will be
traded, and there is no secondary market for them. They are
redeemable (and thus repayable by the borrower) at principal
amount, plus accrued interest, at any time on not more than
thirty days' notice. The Trust has no limitations on the amount
of its assets invested in such notes. However, except for those
which are payable at principal amount plus accrued interest
within seven days after demand, such notes are securities which
are not readily marketable, and fall within the Trust's overall
10% limitation on securities with limited liquidity. There is no
limitation on the type of issuer from which these notes will be
purchased; however, all such notes must be Eligible Securities
and in connection with such purchases and on an ongoing basis,
Banc One Investment Advisors Corporation (the "Sub-Adviser") must
determine, pursuant to procedures approved by the Board of
Trustees, that such obligations present minimal credit risks. In
addition, the Adviser will consider the earning power, cash flow
and other liquidity ratios of the issuer, and its ability to pay
principal and interest on demand or on the specified notice, as
the case may be, including a situation in which all holders of
such notes make demand simultaneously. Master demand notes, as
such, are not typically rated by credit rating agencies, and if
not so rated the Trust may invest in them only if at the time of
an investment they are determined to be comparable in quality to
rated issues in which the Trust can invest.
Information On Insured Bank Obligations
The Federal Deposit Insurance Corporation ("FDIC") insures
the deposits of Federally insured banks and savings institutions
(collectively, herein, "banks") up to $100,000. The Trust may
purchase bank obligations which are fully insured as to principal
by the FDIC. To remain fully insured as to principal, these
investments must currently be limited to $100,000 per bank; if
the principal amount and accrued interest together exceed
$100,000 then the excess accrued interest will not be insured.
Insured bank obligations may have limited marketability; unless
the Board of Trustees determines that a readily available market
exists for such obligations, the Trust will invest in them only
within a 10% limit unless such obligations are payable at
principal amount plus accrued interest on demand or within seven
days after demand.
Information about Certain Other Obligations
The Trust may purchase obligations other than those listed
in categories 1 through 5, but only if such other obligations are
guaranteed as to principal and interest by either a bank in whose
obligations the Trust may invest or a corporation in whose
commercial paper the Trust may invest. If any such guarantee is
unconditional and is itself an Eligible Security, the obligation
may be purchased based on the guarantee; if any such guarantee is
not unconditional, purchase of the obligation can only be made if
the underlying obligation is an Eligible Security and meets all
other applicable requirements of Rule 2a-7 (the "Rule") of the
Securities and Exchange Commission. As of the date of this SAI,
the Trust does not own any such obligations and has no present
intention of purchasing any. Such obligations can be any
obligation of any kind so guaranteed, including, for example,
obligations created by "securitizing" various kinds of assets
such as credit card receivables or mortgages. If the Trust
invests in these assets, they will be identified in the Trust's
Prospectus and described in the SAI.
U.S. Government Securities
The Trust may invest in U.S Government Securities (i.e.,
obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities), which include securities issued
by the U.S. Government, such as Treasury Bills (which mature
within one year of the date they are issued) and Treasury Notes
and Bonds (which are issued with longer maturities). All Treasury
securities are backed by the full faith and credit of the United
States.
The Trust may invest in securities of U.S. government
agencies and instrumentalities that issue or guarantee
securities. These include, but are not limited to, the Farmers
Home Administration, Federal Farm Credit System, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Housing Administration, Federal National Mortgage Association,
Financing Corporation, Government National Mortgage Association,
Resolution Funding Corporation, Small Business Administration,
Student Loan Marketing Association and the Tennessee Valley
Authority.
Securities issued or guaranteed by U.S. government
agencies and instrumentalities are not always supported by the
full faith and credit of the United States. Some, such as
securities issued by the Federal Home Loan Banks, are backed by
the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by the Federal
National Mortgage Association, are supported only by the credit
of the instrumentality and not by the Treasury. If the securities
are not backed by the full faith and credit of the United States,
the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to
assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Funds
will invest in government securities, including securities of
agencies and instrumentalities only the Sub-Adviser, acting under
procedures approved by the Board of Trustees, is satisfied that
these obligations present minimal credit risks.
Portfolio Turnover
In general, the Trust will purchase securities with the
expectation of holding them to maturity. However, the Trust may
to some degree engage in short-term trading to attempt to take
advantage of short-term market variations. The Trust may also
sell securities prior to maturity to meet redemptions or as a
result of a revised management evaluation of the issuer. The
Trust will have a high portfolio turnover due to the short
maturities of the securities held, but this should not affect
net asset value or income, as brokerage commissions are not
usually paid on the securities in which the Trust invests. (In
the usual calculation of portfolio turnover, securities of the
type in which the Trust invests are excluded; consequently, the
high turnover which the Trust will have is not comparable to the
turnover of non-money-market investment companies.)
When-Issued and Delayed Delivery Securities
The Trust may purchase securities on a when-issued or
delayed delivery basis. For example, delivery and payment may
take place a month or more after the date of the transaction. The
purchase price and the interest rate payable on the securities
are fixed on the transaction date. At the time the Trust makes
the commitment to purchase securities on a when-issued or delayed
delivery basis, it will record the transaction and thereafter
reflect the value of such securities each day in determining its
net asset value. The Trust will make commitments for such
when-issued transactions only when it has the intention of
actually acquiring the securities. The Trust will maintain and
mark to market every business day a separate account with
portfolio securities in an amount at least equal to such
commitments. On delivery dates for such transactions, the Trust
will meet its obligations from maturities or sales of the
securities held in the separate account and/or from cash flow. If
the Trust chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could, as with
the disposition of any other portfolio obligation, incur a gain
or loss due to market fluctuation.
Diversification and Certain Industry Requirements
The Trust has a rule, under which it cannot buy the
securities of issuers in any one industry if more than 25% of its
total assets would then be invested in securities of issuers of
that industry. In applying this rule to commercial paper issued
by finance subsidiaries or affiliates of operating companies, if
the business of the issuer consists primarily of financing the
activities of the related operating company, the Trust considers
the industry of the issuer to be that of the related operating
company.
Trust Policies
Investment Restrictions
The Trust has a number of policies concerning what it can
and cannot do. Those policies, which are called "fundamental
policies," may not be changed unless the holders of a majority,
as defined in the Investment Company Act of 1940 (the "1940
Act"), of the Trust's outstanding shares vote to change them.
Under the 1940 Act, the vote of the holders of a majority of the
outstanding shares of the Trust means the vote of the holders of
the lesser of (a) 67% or more of the Trust's shares present at a
meeting or represented by proxy if the holders of more than 50%
of its shares are so present or represented, or (b) more than 50%
of its outstanding shares. Those fundamental policies not set
forth in the Prospectus are set forth below.
1. The Trust invests only in certain limited securities.
The Trust cannot buy any voting securities, any commodities
or commodity contracts, any mineral related programs or leases,
any shares of other investment companies or any warrants, puts,
calls or combinations thereof.
The Trust cannot purchase or hold the securities of any issuer
if, to its knowledge, Trustees, Directors or officers of the
Trust, its Adviser or Sub-Adviser, who individually own
beneficially more than 0.5% of the securities of that issuer,
together own in the aggregate more than 5% of such
securities.
The Trust cannot buy real estate or any non-liquid interests
in real estate investment trusts; however, it can buy any
securities which it could otherwise buy even though the issuer
invests in real estate or interests in real estate.
2. Almost all of the Trust's assets must be in established
companies.
Only 5% of the Trust's total assets may be in issuers less
than three years old, that is, which have not been in continuous
operation for at least three years. This includes the operations
of predecessor companies.
3. The Trust does not buy for control.
The Trust cannot invest for the purpose of exercising
control or management of other companies.
4. The Trust does not sell securities it does not own or borrow
from brokers to buy securities.
Thus, it cannot sell short or buy on margin.
5. The Trust is not an underwriter.
The Trust cannot engage in the underwriting of securities,
that is, the selling of securities for others. Also, it cannot
invest in restricted securities. Restricted securities are
securities which cannot freely be sold for legal reasons.
6. The Trust has diversification and certain anti- concentration
requirements.
The Trust cannot buy the securities of any issuer if it
would then own more than 10% of the total value of all of the
issuer's outstanding securities.
The Trust cannot buy the securities (not including U.S.
Government Securities) of any issuer if more than 5% of its total
assets (valued at market value) would then be invested in
securities of that issuer, provided, however that the Trust may
invest not more than 25% of its total assets in the First Tier
Securities (as defined in the Rule) of a single issuer for a
period of up to three business days after the purchase thereof,
and provided, further that the Trust may not make more than one
investment in accordance with the foregoing proviso at any time.
The Trust cannot buy the securities of issuers in any one
industry if more than 25% of its total assets would then be
invested in securities of issuers in that industry; U.S.
Government Securities and those domestic bank obligations and
instruments of domestic banks which the Trust may purchase are
considered as not included in this limit; however, obligations of
foreign banks and of foreign branches of domestic banks are
considered as included in this limit.
7. The Trust can make loans only by lending securities or
entering into repurchase agreements.
The Trust can buy those debt securities which it is
permitted to buy (see "Investment of the Trust's Assets" in the
Prospectus); this is investing, not making a loan. The Trust can
lend its portfolio securities on a collateralized basis up to 10%
of the value of its total assets to specified borrowers
(broker-dealers, banks and certain other financial institutions)
to increase its income and enter into repurchase agreements (see
"Repurchase Agreements" in the Prospectus). The Trust may be
considered as the beneficial owner of the loaned securities in
that any gain or loss in their market price during the loan
inures to the Trust and its shareholders; thus, when the loan is
terminated, the value of the securities may be more or less than
their value at the beginning of the loan.
8. The Trust can borrow in limited amounts for special
purposes.
The Trust can borrow from banks for temporary or emergency
purposes but only up to 10% of its total assets. It can mortgage
or pledge its assets only in connection with such borrowing and
only up to the lesser of the amounts borrowed or 5% of the value
of its total assets. Interest on borrowings would reduce the
Trust's income. The Trust will not borrow to purchase securities
or to increase its income but only to meet redemptions so that it
will not have to sell securities to pay for redemptions. The
Trust will not purchase any securities while it has any
outstanding borrowings which exceed 5% of the value of its
assets. Except in connection with borrowings, the Trust will not
issue senior securities.
Loans of Portfolio Securities
The Trust may, to increase its income, lend its securities
on a short- or long-term basis to broker-dealers, banks or
certain other financial institutions (see below) if (i) the loan
is collateralized in accordance with applicable regulatory
requirements (the "Guidelines") and if (ii) after any loan, the
value of the securities loaned does not exceed 10% of the value
of its total assets. As of the date of this SAI, the Trust does
not foresee lending securities if after any loan the value of
loaned securities exceeds 5% of the value of its total assets.
The financial institutions other than broker-dealers or banks to
which the Trust can lend its securities are limited to
"accredited investors," as that term is defined in Section 2(15)
of the Securities Act of 1933. (In general, such institutions are
insurance companies, investment companies and certain employee
benefit plans.) Under the present Guidelines (which are subject
to change) the loan collateral must, on each business day, at
least equal the value of the loaned securities and must consist
of cash, bank letters of credit or U.S. Government securities. To
be acceptable as collateral, a letter of credit must obligate a
bank to pay amounts demanded by the Trust if the demand meets the
terms of the letter. Such terms and the issuing banks would have
to be satisfactory to the Trust. Any loan might be secured by any
one or more of the three types of collateral. In addition, any
such investment must meet the applicable requirements of the
Rule.
The Trust receives amounts equal to the interest or other
distributions on loaned securities and also receives one or more
of the negotiated loan fees, interest on securities used as
collateral or interest on the securities purchased with such
collateral, either of which types of interest may be shared with
the borrower. The Trust may also pay reasonable finder's,
custodian and administrative fees but only to persons not
affiliated with the Trust. The terms of the Trust's loans will
meet certain tests under the Internal Revenue Code and permit the
Trust to terminate the loan and thus reacquire loaned securities
on five days' notice.
Management of the Trust
The Board of Trustees
The business and affairs of the Trust are managed under
the direction and control of its Board of Trustees. The Board of
Trustees has authority over every aspect of the Trust's
operations, including approval of the advisory and sub-advisory
agreements and their annual renewal, the contracts with all other
service providers and payments under the Trust's Distribution
Plan.
Trustees and Officers
The Trustees and officers of the Trust, their ages, their
affiliations, if any, with Aquila Management Corporation, the
Administrator of the Trust, and Aquila Distributors, Inc., the
Distributor of the Trust, and their principal occupations during
at least the past five years are set forth below. The Trust is
one of the Aquilasm Group of Funds, which consists of fourteen
funds: five money market funds, seven tax-free municipal bond
funds and two equity funds. None of the Trustees or officers of
the Trust is affiliated with the Sub-Adviser. As of January 1,
2000, the Trustees and officers of the Trust owned less than 1%
of its outstanding shares. Mr. Herrmann is an interested person
of the Trust as that term is defined in the Investment Company
Act of 1940 (the "1940 Act") as an officer of the Trust and a
director, officer and shareholder of the Manager and the
Distributor. Ms. Herrmann is an interested person of the Trust as
an officer of the Trust and of the Manager and as a shareholder
of the Distributor. Each is also an interested person as a member
of the immediate family of the other. Mr. Dean is an interested
person as a trustee of a trust that owns shares of the parent
company of the Sub-Adviser.
Lacy B. Herrmann* Chairman Founder and Chairman of
380 Madison Avenue of the the Board of Aquila
New York, New York Board of Management Corporation,
10017 Trustees the sponsoring organization
Age: 70 and Manager or Administrator and/or
Adviser or Sub-Adviser to the
Aquila Money Market Funds, the
Aquila Bond Funds and the Aquila
Equity Funds, and Founder,
Chairman of the Board of Trustees
and (currently or until 1998)
President of each since its
establishment, beginning in 1984;
Director of Aquila Distributors,
Inc., distributor of the above
funds, since 1981 and formerly
Vice President or Secretary, 1981-
1998; President and a Director of
STCM Management Company, Inc.,
sponsor and sub-adviser to CCMT;
Founder and Chairman of several
other money market funds;
Director or Trustee of OCC Cash
Reserves, Inc. and Quest For
Value Accumulation Trust, and
Director or Trustee of
Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Global
Value Fund, Inc. and Oppenheimer
Rochester Group of Funds, each of
which is an open-end investment
company; Trustee of Brown
University, 1990-1996 and
currently Trustee Emeritus;
actively involved for many years
in leadership roles with
university, school and charitable
organizations.
Thomas A. Christopher Trustee Shareholder of Robinson,
Hughes &
459 Martin Luther King Blvd. Christopher, C.P.A.s, P.S.C.,
Danville, Kentucky 40422 since 1977; President of A Good
Age: 53 Place for Fun, Inc., a sports
facility, since 1987; active member of
the American Institute of Certified
Public Accountants; Board of Directors
of the Kentucky Society of CPAs 1991
to 1994; Trustee of Churchill Cash
Reserves Trust (this Trust) since 1985
and of Churchill Tax-Free Fund of
Kentucky since 1992; presently active
in leadership roles with various
civic, community and church
organizations.
Douglas Dean, * Trustee Founder and President of Dean, Dorton &
106 West Vine Street Ford P.S.C., a public accounting
firm,
Suite 600, since 1979; previously employed by,
Lexington, Kentucky 40507 Coopers & Lybrand a public
accounting
Age: 50 firm; member of the American
Institute
of Certified Public Accountants
and Kentucky Society of Certified
Public Accountants; accredited in
business valuation by the
American Institute of Certified
Public Accountants; Trustee of
Trent Equity Fund, an equity
mutual fund, 1992-1994; Trustee
of Churchill Cash Reserves Trust
(this Trust) since 1995 and
Churchill Tax-Free Fund of
Kentucky since 1987; active as an
officer and board member of
various charitable and community
organizations.
Diana P. Herrmann, * Trustee President and Chief
380 Madison Avenue Senior Operating Officer of the
New York, New York Vice Manager/Administrator since
10017 President since 1997, a Director since
Age: 41 1984, Secretary since 1986
and previously its Executive Vice
President, Senior Vice President
or Vice President, 1986-1997;
President of various Aquila Bond
and Money-Market Funds since
1998; Assistant Vice President,
Vice President, Senior Vice
President or Executive Vice
President of Aquila Money-Market,
Bond and Equity Funds since 1986;
Trustee of a number of Aquila
Money-Market, Bond and Equity
Funds since 1995; Trustee of
Reserve Money-Market Funds since
1999 and Reserve Private Equity
Series since 1998; Assistant Vice
President and formerly Loan
Officer of European American
Bank, 1981-1986; daughter of the
Trust's Chairman; Trustee of the
Leopold Schepp Foundation
(academic scholarships) since
1995; actively involved in mutual
fund and trade associations and
in college and other volunteer
organizations.
Carroll F. Knicely Trustee President of Associated
505 Augusta Circle, Publications Inc, Glasgow,
Glasgow, Kentucky 42141 Kentucky; Director and member
Age: 71 of the Executive Board of West
Kentucky
Corporation and Director and
Secretary
-Treasurer of South Gate Plaza,
Inc.
(owner and developer of shopping
centers and commercial real
estate);Director,Vice President
and Treasurer of Knicely and
Knicely, Inc. (owner and
developer of rental properties
and residential real estate);
Trustee of Campbellsville
University, Campbellsville,
Kentucky since 1997; Trustee of
Churchill Cash Reserves Trust
(this Trust) and Churchill Tax-
Free Fund of Kentucky since 1998;
Editor and Publisher of Kentucky
newspaper group, 1957-1990;
Secretary of Commerce of the
Commonwealth of Kentucky, 1983-
1988; Commissioner of Commerce of
the Commonwealth of Kentucky,
1978-1979; currently active in
real estate development,
commercial and residential
subdivision and regional economic
development planning under
Kentucky State government
sponsorship.
Theodore T. Mason* Trustee Executive Director of Louisiana
Power
26 Circle Drive, Partners, LLC since 1999 and of
Hastings-on-Hudson East Wind Power Partners since
1994;
New York 10706 Second Vice President of the
Alumni
Age: 64 Association of SUNY Maritime
College
since 1998 and Director for the
same organization since 1997;
Director of Cogeneration
Development of Willamette
Industries, Inc., a forest
products company, 1991-1993; Vice
President of Corporate
Development of Penntech Papers,
Inc., 1978-1991; Vice President
of Capital Projects for the same
company, 1977-1978; Vice Chairman
of the Board of Trustees of CCMT
since 1981; Trustee and Vice
President, 1976-1981, and
formerly Director of its
predecessor; Director of STCM
Management Company, Inc.; Vice
Chairman of the Board of Trustees
and Trustee of Prime Cash Fund
(which is inactive) since 1982;
Trustee of Short Term Asset
Reserves, 1984-1986 and 1989-
1996, of Hawaiian Tax-Free Trust
and Pacific Capital Cash Assets
Trust since 1984, of Churchill
Cash Reserves Trust (this Trust)
since 1985, of Pacific Capital
Tax-Free Cash Assets Trust and
Pacific Capital U.S. Government
Securities Cash Assets Trust
since 1988 and of Churchill Tax-
Free Fund of Kentucky since 1992;
Trustee of OCC Accumulation Trust
and the OCC Cash Reserves, Inc.
since 1999; President and
Director of Ted Mason Venture
Associates, Inc., a venture
capital consulting firm, 1972-
1980; Advisor to the Commander,
U.S. Maritime Defense Zone
Atlantic, 1984-1988; National
Vice President,
Surface/Subsurface, Naval Reserve
Association, 1985-1987; National
Vice President, Budget and
Finance, for the same
Association, 1983-1985;
Commanding Officer of four Naval
Reserve Units, 1974-1985;
Captain, USNR, 1978-1988.
William J. Nightingale Trustee Chairman and founder
(1975)
1266 East Main Street and Senior Advisor since 1995
Stamford Connecticut 06902 of Nightingale & Associates,
Age: 70 L.L.C., a general management
consulting firm focusing on
interim management, divestitures,
turnaround of troubled companies,
corporate restructuring and
financial advisory services;
President, Chief Executive
Officer and Director of Bali
Company, Inc., a manufacturer of
women's apparel, which became a
subsidiary of Hanes Corporation,
1970-1975; prior to that, Vice
President and Chief Financial
Officer of Hanes Corporation
after being Vice President-
Corporate Development and
Planning of that company, 1968-
1970; formerly Senior Associate
of Booz, Allen & Hamilton,
management consultants, after
having been Marketing Manager
with General Mills, Inc.; Trustee
of Narragansett Insured Tax-Free
Income Fund since 1992 and of
Churchill Cash Reserves Trust
(this Trust) and Churchill Tax-
Free Fund of Kentucky since 1993;
Director of Kasper A.S.L. Ltd.,
an apparel company, since 1997,
of Ring's End, Inc., a building
materials and construction
company, since 1989, and of
Furr's/Bishop's Inc., operator of
a chain of restaurants, since
1998.
James R. Ramsey Trustee Governor's Senior Policy
State Budget Director, Advisor and State Budget
Office of State Director since 1999;
Budget Director, Professor of Economics, of
700 Capitol Avenue University of Louisville
Suite 109 since 1999; Vice Chancellor
Frankfort, KY 40601 for Finance and
Age: 51 Administration of the
University of North Carolina at
Chapel Hill, 1998 to 1999;
Trustee of Churchill Tax-Free
Fund of Kentucky since 1987 and
of Churchill Cash Reserves Trust
(this Trust) since 1995.
Previously Vice President for
Finance and Administration at
Western Kentucky University;
State Budget Director for the
Commonwealth of Kentucky; Chief
State Economist and Executive
Director for the Office of
Financial Management and Economic
Analysis for the Commonwealth of
Kentucky; Adjunct Professor at
the University of Kentucky,
Associate Professor at Loyola
University-New Orleans and
Assistant Professor at Middle
Tennessee State University;
served on numerous civic and
corporate boards; consultant to
Federal, State and local
governments and to private
business.
Charles E. Childs III Senior Vice Senior Vice
President -
380 Madison Avenue President Corporate
development
New York, New York since 1998, formerly Vice
10017 President - Assistant Vice
Age: 42 President and Associate of the
Manager/Administrator since 1987;
Senior Vice President, Vice
President or Assistant Vice
President of the Money-Market
Funds since 1988; Northeastern
University, 1986-1987 (M.B.A.,
1987); Financial Analyst, Unisys
Corporation, 1986; Associate
Analyst at National Economic
Research Associates, Inc. (NERA),
a micro-economic consulting firm,
1979-1985.
John M. Herndon Vice Assistant Secretary of
380 Madison Avenue President, the Aquila Money-Market,
New York, New York Assistant Bond and Equity Funds
10017 Secretary since 1995 and Vice
Age: 60 President of the Aquila
Money-Market
Funds since 1990; Vice President
of the Administrator since 1990;
Investment Services Consultant
and Bank Services Executive of
Wright Investors' Service, a
registered investment adviser,
1983-1989; Member of the American
Finance Association, the Western
Finance Association and the
Society of Quantitative Analysts.
Jerry G. McGrew Senior Vice President of Aquila
5331 Fayette Street President Distributors, Inc. since
Houston, TX 77056 1998, Registered
Age: 55 Principal since 1993, Senior Vice
President, 1997-1998 and Vice
President, 1993-1997; Senior Vice
President of Aquila Rocky
Mountain Equity Fund since 1996;
Senior Vice President of
Churchill Tax-Free Fund of
Kentucky since 1994, and of Tax-
Free Fund of Colorado and Tax-
Free Fund For Utah since 1997;
Vice President of Churchill Cash
Reserves Trust since 1995;
Registered Representative of
J.J.B. Hilliard, W.L. Lyons Inc.,
1983-1987; Account Manager with
IBM Corporation, 1967-1981;
Gubernatorial appointee, Kentucky
Financial Institutions Board,
1993-1997; Chairman, Total
Quality Management for Small
Business, 1990-1994; President of
Elizabethtown/Hardin County,
Kentucky, Chamber of Commerce,
1989-1991; President of
Elizabethtown Country Club, 1983-
1985; Director-at Large, Houston
Alliance for the Mentally Ill
(AMI), since 1998.
Rose F. Marotta Chief Chief Financial Officer
380 Madison Avenue Financial of the Aquila Money-
New York, New York Officer Market, Bond and Equity
10017 Funds since 1991 and
Age: 75 Treasurer, 1981-1991; formerly
Treasurer
of the {Sub-Adviser} since 1984
and of the Distributor since
1985.predecessor of CCMT;
Treasurer and Director of STCM
Management Company, Inc., since
1974; Treasurer of Trinity Liquid
Assets Trust, 1982-1986 and of
Oxford Cash Management Fund, 1982-
1988; Treasurer of InCap
Management Corporation since
1982, of the Manager/
Administrator
Richard F. West Treasurer Treasurer of the
Aquila Money-
380 Madison Avenue Market, Bond and Equity Funds
New York, New York and of Aquila Distributors,
10017 Inc. since 1992; Associate
Director
Age: 64 of Furman Selz Incorporated, 1991-
1992;
Vice President of Scudder,
Stevens & Clark, Inc. and
Treasurer of Scudder
Institutional Funds, 1989-1991;
Vice President of Lazard Freres
Institutional Funds Group,
Treasurer of Lazard Freres Group
of Investment Companies and HT
Insight Funds, Inc., 1986-1988;
Vice President of Lehman
Management Co., Inc. and
Assistant Treasurer of Lehman
Money Market Funds, 1981-1985;
Controller of Seligman Group of
Investment Companies, 1960-1980.
Edward M. W. Hines Secretary Partner of Hollyer Brady
551 Fifth Avenue Smith Troxell Barrett
New York, New York 10176 Rockett Hines & Mone
Age: 60
LLP, attorneys, since 1989 and
counsel,
1987-1989; Secretary of the
Aquila Money-Market, Bond and
Equity Funds since 1982;
Secretary of Trinity Liquid
Assets Trust, 1982-1985 and
Trustee of that Trust, 1985-1986;
Secretary of Oxford Cash
Management Fund, 1982-1988.
Compensation of Trustees
The Trust does not pay fees to Trustees affiliated with
the Administrator or to any of the Trust's officers. During the
fiscal year ended September 30, 1999, the Trust paid $46,431 in
fees and reimbursement of expenses to its other Trustees. The
Trust is one of the 14 funds in the Aquilasm Group of Funds,
which consist of tax-free municipal bond funds, money market
funds and equity funds. The following table lists the
compensation of all Trustees who received compensation from the
Trust and the compensation they received during the Trust's
fiscal year from other funds in the Aquilasm Group of Funds. None
of such Trustees has any pension or retirement benefits from the
Trust or any of the other funds in the Aquila group.
Compensation Number of
from all boards which
Compensation funds in the the Trustee
Name from the Trust Aquila Group now serves
Thomas A. $5,063 $13,809 2
Christopher
Douglas Dean $5,095 $11,595 2
Carroll
Knicely $4,966 $12,114 2
Theodore T. $4,400 $47,158 8
Mason
Anne J. $4,552 $35,475 6
Mills
William J. $4,974 $15,860 3
Nightingale
James R. $5,382 $13,018 2
Ramsey
Ownership of Securities
Of the shares of the Trust outstanding on January 13, 2000, a
nominee of Bank One Trust Co. Strafe & Co., 1111 Polaris Parkway,
Columbus, OH held of record 88,007,331 shares (99.9%). The Trust's
management is not aware of any person, other than those named above,
who beneficially owned 5% or more of its outstanding shares on such
date. On the basis of information received from the record owner, the
Trust's management believes (i) that all of the shares indicated are
held for the benefit of custodial or trust clients; and (ii) that all
of such shares could be considered as "beneficially" owned by the
named shareholders in that they possessed shared voting and/or
investment powers as to such shares.
Investment Advisory and Other Services
Description of the Investment Advisory and Administration Agreement
The Investment Advisory and Administration Agreement provides that
subject to the direction and control of the Board of Trustees of the
Trust, the Manager shall:
(i) supervise continuously the investment program of the Trust and the
composition of its portfolio;
(ii) determine what securities shall be purchased or sold by the
Trust;
(iii) arrange for the purchase and the sale of securities held in the
portfolio of the Trust; and
(iv) at its expense provide for pricing of the Trust's portfolio daily
using a pricing service or other source of pricing information
satisfactory to the Trust and, unless otherwise directed by the Board
of Trustees, provide for pricing of the Trust's portfolio at least
quarterly using another such source satisfactory to the Trust.
The Agreement provides that, subject to the termination provisions
described below, the Manager may at its own expense delegate to a
qualified organization ("Sub-Adviser"), affiliated or not affiliated
with the Manager, any or all of the above duties. Any such delegation
of the duties set forth in (i), (ii) or (iii) above shall be by a
written agreement (the "Sub-Advisory Agreement") approved as provided
in Section 15 of the Investment Company Act of 1940. The Manager has
delegated all of such functions to BOIAC under the Sub-Advisory
Agreement.
The Investment Advisory and Administration Agreement provides that
subject to the direction and control of the Board of Trustees of the
Trust, the Manager shall provide all administrative services to the
Trust other than those relating to its investment portfolio which have
been delegated to a Sub-Adviser of the Trust under a Sub-Advisory
Agreement; as part of such administrative duties, the Manager shall:
(i) provide office space, personnel, facilities and equipment for the
performance of the following functions and for the maintenance of the
headquarters of the Trust;
(ii) oversee all relationships between the Trust and any sub-adviser,
transfer agent, custodian, legal counsel, auditors and principal
underwriter, including the negotiation of agreements in relation
thereto, the supervision and coordination of the performance of such
agreements, and the overseeing of all administrative matters which are
necessary or desirable for the effective operation of the Trust and
for the sale, servicing or redemption of the Trust's shares;
(iii) either keep the accounting records of the Trust, including the
computation of net asset value per share and the dividends (provided
that if there is a Sub-Adviser, daily pricing of the Trust's portfolio
shall be the responsibility of the Sub-Adviser under the Sub-Advisory
Agreement) or, at its expense and responsibility, delegate such
duties in whole or in part to a company satisfactory to the Trust;
(iv) maintain the Trust's books and records, and prepare (or assist
counsel and auditors in the preparation of) all required proxy
statements, reports to the Trust's shareholders and Trustees, reports
to and other filings with the Securities and Exchange Commission and
any other governmental agencies, and tax returns, and oversee the
insurance relationships of the Trust;
(v) prepare, on behalf of the Trust and at the Trust's expense, such
applications and reports as may be necessary to register or maintain
the registration of the Trust and/or its shares under the securities
or "Blue-Sky" laws of all such jurisdictions as may be required from
time to time;
(vi) respond to any inquiries or other communications of shareholders
of the Trust and broker-dealers, or if any such inquiry or
communication is more properly to be responded to by the Trust's
shareholder servicing and transfer agent or distributor, oversee such
shareholder servicing and transfer agent's or distributor's response
thereto.
The Agreement contains provisions relating to compliance of the
investment program, responsibility of the Manager for any investment
program managed by it, allocation of brokerage, and responsibility for
errors that are substantially the same as the corresponding provisions
in the Sub-Advisory Agreement.
The Agreement provides that the Manager shall, at its own expense,
provide office space, facilities, equipment, and personnel for the
performance of its functions thereunder and shall pay all compensation
of Trustees, officers, and employees of the Trust who are affiliated
persons of the Manager.
The Trust shall bear the costs of preparing and setting in type its
prospectuses, statements of additional information and reports to its
shareholders, and the costs of printing or otherwise producing and
distributing those copies of such prospectuses, statements of
additional information and reports as are sent to its shareholders.
All costs and expenses not expressly assumed by the Manager under the
agreement or otherwise by the Manager, administrator or principal
underwriter or by any Sub-Adviser shall be paid by the Trust,
including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses
of its Trustees other than those affiliated with the Manager or such
sub-adviser, administrator or principal underwriter; (v) legal and
audit expenses; (vi) custodian and transfer agent, or shareholder
servicing agent, fees and expenses; (vii) expenses incident to the
issuance of its shares (including issuance on the payment of, or
reinvestment of, dividends); (viii) fees and expenses incident to the
registration under Federal or State securities laws of the Trust or
its shares; (ix) expenses of preparing, printing and mailing reports
and notices and proxy material to shareholders of the Trust; (x) all
other expenses incidental to holding meetings of the Trust's
shareholders; and (xi) such non-recurring expenses as may arise,
including litigation affecting the Trust and the legal obligations for
which the Trust may have to indemnify its officers and Trustees.
Under the Advisory and Administration Agreement, the Trust will pay to
Aquila a fee payable monthly and computed on the net asset value of
the Trust as of the close of business each business day at the annual
rate of 0.50 of 1% of such net asset value.
The Agreement provides that the Sub-Advisory Agreement may provide for
its termination by the Manager upon reasonable notice, provided,
however, that the Manager agrees not to terminate the Sub-Advisory
Agreement except in accordance with such authorization and direction
of the Board of Trustees, if any, as may be in effect from time to
time.
The Agreement provides that it will, unless terminated as hereinafter
provided, continue in effect until the April 30 next preceding the
first anniversary of the effective date of the Advisory Agreement, and
from year to year thereafter, but only so long as such continuance is
specifically approved at least annually (1) by a vote of the Trust's
Board of Trustees, including a vote of a majority of the Trustees who
are not parties to the Agreement or "interested persons" (as defined
in the 1940 Act) of any such party, with votes cast in person at a
meeting called for the purpose of voting on such approval, or (2) by a
vote of the holders of a "majority" (as so defined) of the outstanding
voting securities of the Trust and by such a vote of the Trustees.
The Agreement provides that it may be terminated by the Manager at any
time without penalty upon giving the Trust sixty days' written notice
(which notice may be waived by the Trust) and may be terminated by the
Trust at any time without penalty upon giving the Manager sixty days'
written notice (which notice may be waived by the Manager), provided
that such termination by the Trust shall be directed or approved by a
vote of a majority of its Trustees in office at the time or by a vote
of the holders of a majority (as defined in the 1940 Act) of the
voting securities of the Trust outstanding and entitled to vote. The
specific portions of the Agreement which relate to providing
investment advisory services will automatically terminate in the event
of the assignment (as defined in the 1940 Act) of the Agreement, but
all other provisions relating to providing services other than
investment advisory services will not terminate, provided however,
that upon such an assignment the annual fee payable monthly and
computed on the net asset value of the Trust as of the close of
business each business day shall be reduced to the annual rate of 0.17
of 1% of such net asset value.
Description of the Sub-Advisory Agreement
The Sub-Advisory Agreement provides in general that subject to the
direction and control of the Manager and the Board of Trustees of the
Trust, the Sub-Adviser shall:
(i) supervise continuously the investment program of the Trust and the
composition of its portfolio;
(ii) determine what securities shall be purchased or sold by the
Trust;
(iii) arrange for the purchase and the sale of securities held in the
portfolio of the Trust;
(iv) at its expense provide for pricing of the Trust's portfolio daily
using a pricing service or other source of pricing information
satisfactory to the Trust and, unless otherwise directed by the Board
of Trustees, provide for pricing of the Trust's portfolio at least
quarterly using another such source satisfactory to the Trust; and
(v) consult with the Manager in connection with its duties thereunder.
The Sub-Advisory Agreement provides that any investment program
furnished by the Sub-Adviser shall at all times conform to, and be in
accordance with, any requirements imposed by: (1) the Investment
Company Act of 1940 (the "Act") and any rules or regulations in force
thereunder; (2) any other applicable laws, rules and regulations; (3)
the Declaration of Trust and By-Laws of the Trust as amended from time
to time; (4) any policies and determinations of the Board of Trustees
of the Trust; and (5) the fundamental policies of the Trust, as
reflected in its registration statement under the Act or as amended by
the shareholders of the Trust.
The Sub-Advisory Agreement provides that the Sub-Adviser shall give to
the Manager and to the Trust the benefit of its best judgment and
effort in rendering services thereunder, but the Sub-Adviser shall not
be liable for any loss sustained by reason of the adoption of any
investment policy or the purchase, sale or retention of any security,
whether or not such purchase, sale or retention shall have been based
upon (i) its own investigation and research or (ii) investigation and
research made by any other individual, firm or corporation, if such
purchase, sale or retention shall have been made and such other
individual, firm or corporation shall have been selected in good faith
by the Sub-Adviser. Under the Sub-Advisory Agreement, the Sub-Adviser
will not be liable for any error in judgment or for any loss suffered
by the Trust or its security holders in connection with the matters to
which the Agreement relates, except a loss resulting from wilful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under the Agreement.
The Sub-Advisory Agreement provides that nothing in it shall prevent
the Sub-Adviser or any affiliated person (as defined in the Act) of
the Sub-Adviser from acting as investment adviser or manager for any
other person, firm or corporation and shall not in any way limit or
restrict the Sub-Adviser or any such affiliated person from buying,
selling or trading any securities for its own or their own accounts or
for the accounts of others for whom it or they may be acting,
provided, however, that the Sub-Adviser expressly represents that,
while acting as Sub-Adviser, it will undertake no activities which, in
its judgment, will adversely affect the performance of its obligations
to the Trust under the Agreement. It is agreed that the Sub-Adviser
shall have no responsibility or liability for the accuracy or
completeness of the Trust's Registration Statement under the Act and
the Securities Act of 1933, except for information supplied by the
Sub-Adviser for inclusion therein. The Sub-Adviser shall promptly
inform the Trust as to any information concerning the Sub-Adviser
appropriate for inclusion in such Registration Statement, or as to any
transaction or proposed transaction which might result in an
assignment (as defined in the Act) of the Agreement. To the extent
that the Manager is indemnified under the Trust's Declaration of Trust
with respect to the services provided under the Agreement by the
Sub-Adviser, the Manager agrees to provide the Sub-Adviser the
benefits of such indemnification.
The Sub-Advisory Agreement provides that in connection with its duties
to arrange for the purchase and sale of the Trust's portfolio
securities, the Sub-Adviser shall select such broker-dealers
("dealers") as shall, in the Sub-Adviser's judgment, implement the
policy of the Trust to achieve "best execution," i.e., prompt,
efficient, and reliable execution of orders at the most favorable net
price. The Sub-Adviser shall cause the Trust to deal directly with
the selling or purchasing principal or market maker without incurring
brokerage commissions unless the Sub-Adviser determines that better
price or execution may be obtained by paying such commissions; the
Trust expects that most transactions will be principal transactions at
net prices and that the Trust will incur little or no brokerage costs.
The Trust understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and
that principal transactions placed through dealers include a spread
between the bid and asked prices. In allocating transactions to
dealers, the Sub-Adviser is authorized to consider, in determining
whether a particular dealer will provide best execution, the dealer's
reliability, integrity, financial condition and risk in positioning
the securities involved, as well as the difficulty of the transaction
in question, and thus need not pay the lowest spread or commission
available if the Sub-Adviser determines in good faith that the amount
of commission is reasonable in relation to the value of the brokerage
and research services provided by the dealer, viewed either in terms
of the particular transaction or the Sub-Adviser's overall
responsibilities. If, on the foregoing basis, the transaction in
question could be allocated to two or more dealers, the Sub-Adviser is
authorized, in making such allocation, to consider (i) whether a
dealer has provided research services, as further discussed below; and
(ii) whether a dealer has sold shares of the Trust. Such research may
be in written form or through direct contact with individuals and may
include quotations on portfolio securities and information on
particular issuers and industries, as well as on market, economic, or
institutional activities. The Trust recognizes that no dollar value
can be placed on such research services or on execution services and
that such research services may or may not be useful to the Trust and
may be used for the benefit of the Sub-Adviser or its other clients.
The Sub-Advisory Agreement provides that the Sub-Adviser agrees to
maintain, and to preserve for the periods prescribed, such books and
records with respect to the portfolio transactions of the Trust as are
required by applicable law and regulation, and agrees that all records
which it maintains for the Trust on behalf of the Manager shall be the
property of the Trust and shall be surrendered promptly to the Trust
or the Manager upon request. The Sub-Adviser agrees to furnish to the
Manager and to the Board of Trustees of the Trust such periodic and
special reports as each may reasonably request.
The Sub-Advisory Agreement provides that the Sub-Adviser shall bear
all of the expenses it incurs in fulfilling its obligations under the
Agreement. In particular, but without limiting the generality of the
foregoing: the Sub-Adviser shall furnish the Trust, at the
Sub-Adviser's expense, all office space, facilities, equipment and
clerical personnel necessary for carrying out its duties under the
Agreement. The Sub-Adviser shall supply, or cause to be supplied, to
any investment adviser, administrator or principal underwriter of the
Trust all necessary financial information in connection with such
adviser's, administrator's or principal underwriter's duties under any
agreement between such adviser, administrator or principal underwriter
and the Trust. The Sub-Adviser will also pay all compensation of the
Trust's officers, employees, and Trustees, if any, who are affiliated
persons of the Sub-Adviser.
The Sub-Advisory Agreement provides that the Manager agrees to pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
for all services rendered by the Sub-Adviser as such, a management fee
payable monthly and computed on the net asset value of the Trust as of
the close of business each business day at the annual rate of 0.33 of
1% of such net asset value.
The Sub-Advisory Agreement provides that it shall, unless terminated
as thereinafter provided, continue in effect until the April 30 next
preceding the first anniversary of the effective date of the
Agreement, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (1) by a vote
of the Trust's Board of Trustees, including a vote of a majority of
the Trustees who are not parties to the Agreement or "interested
persons" (as defined in the Act) of any such party, with votes cast in
person at a meeting called for the purpose of voting on such approval,
or (2) by a vote of the holders of a "majority" (as so defined) of the
outstanding voting securities of the Trust and by such a vote of the
Trustees.
The Sub-Advisory Agreement provides that it may be terminated by the
Sub-Adviser at any time without penalty upon giving the Manager and
the Trust sixty days' written notice (which notice may be waived). It
may be terminated by the Manager or the Trust at any time without
penalty upon giving the Sub-Adviser sixty days' written notice (which
notice may be waived by the Sub-Adviser), provided that such
termination by the Trust shall be directed or approved by a vote of a
majority of its Trustees in office at the time or by a vote of the
holders of a majority (as defined in the Act) of the voting securities
of the Trust outstanding and entitled to vote. The Sub-Advisory
Agreement will automatically terminate in the event of its assignment
(as defined in the 1940 Act) or the termination of the Advisory and
Administration Agreement.
Information about the Manager, the Sub-Adviser and the
Distributor
Management Fees
During the fiscal years ended September 30, 1999, 1998 and 1997
the Trust incurred Management fees as follows:
Manager Sub-Adviser
1999 $479,780 (1)
1998 $615,322 (2)
1997 $213,571 (3) $417,092 (4)
(1) $52,894 was waived.
(2) $36,786 was waived.
(3) paid or accrued to the Manager under the administration
agreement then in effect; $27,571 was waived.
(4) paid or accrued to the Sub-Adviser under the former advisory
agreement then in effect; $54,585 was waived.
In addition, during the fiscal years ended 1999 and 1998, the Sub-
Adviser paid to the Manager $123,000 and $48,000, respectively.
Transfer Agent, Custodian and Auditors
The Trust's Shareholder Servicing Agent (transfer agent) is PFPC Inc.,
400 Bellevue Parkway, Wilmington, DE 19809.
The Trust's Custodian is Bank One Trust Company N.A., 100 East Broad
Street, Columbus, Ohio 43271; it receives, holds and delivers the
Trust's portfolio securities (including physical securities,
book-entry securities, and securities in depositories) and money,
performs related accounting functions and issues reports to the Trust.
The Trust pays the Custodian (1) an asset-based annual fee, with a
minimum asset-based annual fee, and (2) a fee for each portfolio
purchase transaction of the Trust. The rates of these fees have been
reviewed by the Board of Trustees of the Trust and are believed to be
comparable to those available from other organizations providing such
services. The Custodian is an affiliate of the Adviser.
The Trust's auditors, KPMG LLP, 345 Park Avenue, New York, New York
10154 perform an annual audit of the Trust's financial statements.
Brokerage Allocation and Other Practices
During the fiscal years ended September 30, 1999, 1998 and
1997, all of the Trust's transactions were principal transactions
and no brokerage commissions were paid. Brokerage allocation and
other practices relating to brokerage are set forth in the
description of the Sub-Advisory Agreement. The Sub-Advisory
Agreement provide that in connection with its duties to arrange
for the purchase and sale of portfolio securities, the Sub-
Adviser shall select such broker-dealers ("dealers") as shall, in
the Adviser's judgment, implement the policy of the Trust to
achieve "best execution," i.e., prompt, efficient and reliable
execution of orders at the most favorable net price. The Sub-
Adviser shall cause the Trust to deal directly with the selling
or purchasing principal or market maker without incurring
brokerage commissions unless the Sub-Adviser determines that
better price or execution may be obtained by paying such
commissions; the Trust expects that most transactions will be
principal transactions at net prices and that the Trust will
incur little or no brokerage costs. The Trust understands that
purchases from underwriters include a commission or concession
paid by the issuer to the underwriter and that principal
transactions placed through dealers include a spread between the
bid and asked prices. In allocating transactions to dealers, the
Sub-Adviser is authorized to consider, in determining whether a
particular dealer will provide best execution, the dealer's
reliability, integrity, financial condition and risk in
positioning the securities involved, as well as the difficulty of
the transaction in question, and thus need not pay the lowest
spread or commission available if the Sub-Adviser determines in
good faith that the amount of commission is reasonable in
relation to the value of the brokerage and research services
provided by the dealer, viewed either in terms of the particular
transaction or the Sub-Adviser's overall responsibilities as to
the accounts as to which it exercises investment discretion. If,
on the foregoing basis, the transaction in question could be
allocated to two or more dealers, the Sub-Adviser is authorized,
in making such allocation, to consider (i) whether a dealer has
provided research services, as further discussed below; and (ii)
whether a dealer has sold shares of the Trust or any other
investment company or companies having the Sub-Adviser as its
investment adviser or having the same sub-adviser, Manager or
principal underwriter as the Trust. Such research may be in
written form or through direct contact with individuals and may
include quotations on portfolio securities and information on
particular issuers and industries, as well as on market, economic
or institutional activities. The Trust recognizes that no dollar
value can be placed on such research services or on execution
services, that such research services may or may not be useful to
the Trust and/or other accounts of the Sub-Adviser and that
research received by such other accounts may or may not be useful
to the Trust.
Limitation of Redemptions in Kind
The Trust has elected to be governed by Rule 18f-1 under the 1940 Act,
pursuant to which the Trust is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1 percent of the net asset value
of the Trust during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, the Trust will
have the option of redeeming the excess in cash or in kind. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage
costs in converting the assets into cash. The method of valuing
securities used to make redemptions in kind will be the same as the
method of valuing portfolio securities described under "Net Asset
Value Per Share" in the Prospectus, and such valuation will be made as
of the same time the redemption price is determined.
Capital Stock
The Trust has one class of shares. Each share represents an equal
proportionate interest in the Trust with each other share. Upon
liquidation of the Trust, shareholders are entitled to share pro-rata
in the net assets of the Trust available for distribution to
shareholders. Shares are fully paid and nonassessable, except as set
forth in the following paragraph; holders of shares have no pre-
emptive or conversion rights. Voting rights of shareholders cannot be
modified other than by shareholder vote.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of a trust such
as the Trust, may, under certain circumstances, be held personally
liable as partners for the obligations of the trust. For shareholder
protection, however, an express disclaimer of shareholder liability
for acts or obligations of the Trust is contained in the Declaration
of Trust, which requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust does, however,
contain an express disclaimer of shareholder liability for acts or
obligations of the Trust. The Declaration of Trust provides for
indemnification out of the Trust's property of any shareholder held
personally liable for the obligations of the Trust. The Declaration of
Trust also provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the Trust and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Trust itself would be unable to meet its
obligations. In the event the Trust had two or more Series, and if any
such Series were to be unable to meet the obligations attributable to
it (which, as is the case with the Trust, is relatively remote), the
other Series would be subject to such obligations, with a
corresponding increase in the risk of the shareholder liability
mentioned in the prior sentence.
The Declaration of Trust further indemnifies the Trustees of the Trust
and provides that they will not be liable for errors of judgment or
mistakes of fact or law; but nothing in the Declaration of Trust
protects a Trustee against any liability to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of his office.
Purchase, Redemption, and Pricing of Shares
Amortized Cost Valuation
The Trust operates under Rule 2a-7 (the "Rule") of the Securities and
Exchange Commission which permits it to value its portfolio on the
basis of amortized cost. The amortized cost method of valuation is
accomplished by valuing a security at its cost and thereafter assuming
a constant amortization rate to maturity of any discount or premium,
and does not reflect the impact of fluctuating interest rates on the
market value of the security. This method does not take into account
unrealized gains or losses.
While the amortized cost method provides certainty in valuation, there
may be periods during which value, as determined by amortized cost, is
higher or lower than the price the Trust would receive if it sold the
instrument. During periods of declining interest rates, the daily
yield on the Trust's shares may tend to be higher than a like
computation made by a fund with identical investments utilizing a
method of valuation based upon market prices and estimates of market
prices for all of its portfolio instruments and changing its dividends
based on these changing prices. The converse would apply in a period
of rising interest rates.
Under the Rule, the Trust's Board of Trustees must establish, and has
established, procedures (the "Procedures") designed to stabilize at
$1.00, to the extent reasonably possible, the Trust's price per share
as computed for the purpose of sales and redemptions. Such procedures
must include review of the Trust's portfolio holdings by the Board of
Trustees at such intervals as it may deem appropriate and at such
intervals as are reasonable in light of current market conditions to
determine whether the Trust's net asset value calculated by using
available market quotations deviates from the per share value based on
amortized cost. "Available market quotations" may include actual
market quotations (valued at the mean between bid and asked prices),
estimates of market value reflecting current market conditions based
on quotations or estimates of market value for individual portfolio
instruments or values obtained from yield data relating to a directly
comparable class of securities published by reputable sources.
Under the Rule, if the extent of any deviation between the net asset
value per share based upon "available market quotations" (see above)
and the net asset value per share based on amortized cost exceeds
$0.005, the Board of Trustees must promptly consider what action, if
any, will be initiated. When the Board of Trustees believes that the
extent of any deviation may result in material dilution or other
unfair results to investors or existing shareholders, it is required
to take such action as it deems appropriate to eliminate or reduce to
the extent reasonably practicable such dilution or unfair results.
Such actions could include the sale of portfolio securities prior to
maturity to realize capital gains or losses or to shorten average
portfolio maturity, withholding dividends or payment of distributions
from capital or capital gains, redemptions of shares in kind, or
establishing a net asset value per share using available market
quotations. The Procedures include changes in the dividends payable by
the Trust under specified conditions, as described below under
"Computation of Daily Dividends." This portion of the Procedures
provides that actions that the Trustees would consider under certain
circumstances can be taken automatically.
Computation of Daily Dividends
Under the Procedures which the Trust's Board of Trustees has adopted
relating to amortized cost valuation, the calculation of the Trust's
daily dividends will change under certain circumstances from that
indicated in the Prospectus. If on any day the deviation between net
asset value determined on an amortized cost basis and that determined
using market quotations is $0.003 or more, the amount of such
deviation will be added to or subtracted from the daily dividend to
the extent necessary to reduce such deviation to within $0.003.
If on any day there is insufficient net income to absorb any such
reduction, the Board of Trustees would be required under the Rule to
consider taking other action if the deviation, after eliminating the
dividend for that day, exceeds $0.005. One of the actions which the
Board of Trustees might take could be the elimination or reduction of
dividends for more than one day.
Automatic Withdrawal Plan
If you own or purchase shares of the Trust having a net asset value of
at least $5,000 you may establish an Automatic Withdrawal Plan under
which you will receive a monthly or quarterly check in a stated
amount, not less than $50. Stock certificates will not be issued for
shares held under an Automatic Withdrawal Plan. All dividends must be
reinvested.
Shares will be redeemed on the last business day of the month as may
be necessary to meet withdrawal payments. Shares acquired with
reinvested dividends will be redeemed first to provide such withdrawal
payments and thereafter other shares will be redeemed to the extent
necessary, and, depending upon the amount withdrawn, your principal
may be depleted.
Redemption of shares for withdrawal purposes may reduce or even
liquidate the account. Monthly or quarterly payments paid to
shareholders may not be considered as a yield or income on investment.
Exchange Privilege
There is an exchange privilege as set forth below among this Trust
and certain tax-free municipal bond funds and equity funds (the "Bond
or Equity Funds") and certain money market funds (together with the
Trust, the "Money-Market Funds"), all of which are sponsored by Aquila
Management Corporation and Aquila Distributors, Inc., and have the
same Manager or Administrator and Distributor as the Trust. All
exchanges are subject to certain conditions described below. As of the
date of the Prospectus, the Aquila Bond or Equity Funds are Aquila
Rocky Mountain Equity Fund, Aquila Cascadia Equity Fund, Hawaiian
Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon,
Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Tax-Free Fund For Utah and Narragansett Insured Tax-Free Income Fund;
the Aquila Money-Market Funds are this Trust, Pacific Capital Cash
Assets Trust (Original Shares), Pacific Capital Tax-Free Cash Assets
Trust (Original Shares), Pacific Capital U.S. Government Securities
Cash Assets Trust (Original Shares) and Capital Cash Management
Trust.
The Aquila Bond and Equity Funds offer Classes of Shares: Class A
Shares ("Front-Payment Shares") and Class C Shares ("Level-Payment
Shares") which can be purchased by anyone and Class Y Shares
("Institutional Class Shares"), which are offered only to institutions
acting for investors in a fiduciary, advisory, agency, custodial or
similar capacity, and are not offered directly to retail customers.
Some Funds also offer Class I Shares ("Financial Intermediary Class
Shares"). The Exchange Privilege has different provisions for
exchanges for each class.
Generally, you can exchange shares of a given class of a Bond or
Equity Fund including the Trust for shares of the same class of any
other Bond or Equity Fund, or for shares of any Money-Market Fund,
without the payment of a sales charge or any other fee, and there is
no limit on the number of exchanges you can make from fund to fund.
However, the following important information should be noted:
(1) Originally Purchased Money-Market Fund Shares. Shares of a
Money-Market Fund (and any shares acquired as a result of reinvestment
of dividends and/or distributions on these shares) acquired directly
in a purchase (or in exchange for Money-Market Fund shares that were
themselves directly purchased), rather than in exchange for shares of
a Bond or Equity Fund, may be exchanged for shares of any class of any
Bond or Equity Fund that the investor is otherwise qualified to
purchase, but the shares received in such an exchange will be subject
to the same sales charge, if any, that they would have been subject to
had they been purchased rather than acquired in exchange for
Money-Market Fund shares. If the shares received in exchange are
shares that would be subject to a CDSC if purchased directly, the
holding period governing the CDSC will run from the date of the
exchange, not from the date of the purchase of Money-Market Fund
shares.
(2) CDSCs Upon Redemptions of Shares Acquired Through Exchanges. If
you exchange shares subject to a CDSC, no CDSC will be imposed at the
time of exchange, but the shares you receive in exchange for them will
be subject to the applicable CDSC if you redeem them before the
requisite holding period (extended, if required) has expired.
If the shares you redeem would have incurred a CDSC if you had not
made any exchanges, then the same CDSC will be imposed upon the
redemption regardless of the exchanges that have taken place since the
original purchase.
(3) Extension of Holding Periods by Owning Money-Market Funds. Any
period of 30 days or more during which Money-Market Fund shares
received on an exchange of CDSC Class A Shares or Class C Shares are
held is not counted in computing the applicable holding period for
CDSC Class A Shares or Class C Shares.
The Trust, as well as the other Money-Market Funds and Bond or Equity
Funds, reserves the right to reject any exchange into its shares, if
shares of the fund into which exchange is desired are not available
for sale in your state of residence. The Trust may also modify or
terminate this exchange privilege at any time. In the case of
termination, the Prospectus will be appropriately supplemented. No
such modification or termination shall take effect on less than 60
days' written notice to shareholders.
All exercises of the exchange privilege are subject to the conditions
that (i) the shares being acquired are available for sale in your
state of residence; and (ii) the aggregate net asset value of the
shares surrendered for exchange are at least equal to the minimum
investment requirements of the investment company whose shares are
being acquired.
To effect an exchange, you must complete a form which is available
from the Distributor, unless you have elected the Telephone Exchange
feature on the Application. The exchange will be effected at the
relative exchange prices of the shares being exchanged next determined
after receipt by the Distributor of a properly completed form or
Telephone Exchange request. The exchange prices will be the respective
net asset values of the shares (unless a sales charge is to be
deducted in connection with an exchange of shares as described above,
in which case the exchange price of shares of the Bond or Equity Fund
will be its public offering price).
An exchange is treated for Federal tax purposes as a redemption and
purchase of shares and may result in the realization of a capital gain
or loss, depending on the cost or other tax basis of the shares
exchanged and the holding period; no representation is made as to the
deductibility of any such loss should such occur.
Dividends paid by the Money-Market Funds are taxable, except to the
extent that dividends paid by Pacific Capital Tax-Free Cash Assets
Trust (a tax-free money-market fund) are exempt from regular Federal
income tax, and to the extent that dividends paid by Pacific Capital
U.S. Government Securities Cash Assets Trust (which invests in U.S.
Government obligations) are exempt from state income taxes. Dividends
paid by Aquila Rocky Mountain Equity Fund and Aquila Cascadia Equity
Fund are taxable. If your state of residence is not the same as that
of the issuers of obligations in which a bond fund or a tax-free
money-market fund invests, the dividends from that fund may be subject
to income tax of the state in which you reside. Accordingly, you
should consult your tax adviser before acquiring shares of such a bond
or equity fund or a tax-free money-market fund under the exchange
privilege arrangement.
If you are considering an exchange into one of the funds listed above,
you should send for and carefully read its Prospectus.
Transfer on Death Registration
Each of the funds in the Aquilasm Group of Funds now permits
registration of its shares in beneficiary form, subject to the
funds' rules governing Transfer on Death ("TOD") registration, if
the investor resides in a state that has adopted the Uniform
Transfer on Death Security Registration Act (a "TOD State"; for
these purposes, Missouri is deemed to be a TOD State). This form
of registration allows you to provide that, on your death, your
shares are to be transferred to the one or more persons (to a
maximum of three) that you specify as beneficiaries. To register
shares of the Trust in TOD form, complete the special TOD
Registration Request Form and review the Rules Governing TOD
Registration; both are available from the Agent. The Rules, which
are subject to amendment upon 60 days' notice to TOD account
owners, contain important information regarding TOD accounts with
the Trust; by opening such an account you agree to be bound by
them, and failure to comply with them may result in your shares'
not being transferred to your designated beneficiaries. If you
open a TOD account with the Trust that is otherwise acceptable
but, for whatever reason, neither the Trust nor the Transfer
Agent receives a properly completed TOD Registration Request Form
from you prior to your death, the Trust reserves the right not to
honor your TOD designation, in which case your account will
become part of your estate.
You are eligible for TOD registration only if, and as long
as, you reside in a TOD State. If you open a TOD account and your
account address indicates that you do not reside in a TOD State,
your TOD registration will be ineffective and the Trust may, in
its discretion, either open the account as a regular (non-TOD)
account or redeem your shares. Such a redemption may result in a
loss to you and may have tax consequences. Similarly, if you open
a TOD account while residing in a TOD State and later move to a
non-TOD State, your TOD registration will no longer be effective.
In both cases, should you die while residing in a non-TOD State
the Trust reserves the right not to honor your TOD designation.
At the date of this SAI, most states are TOD States.
Distribution Plan
The Trust has adopted a Distribution Plan (the "Plan") under Rule
12b-1 ("Rule 12b-1") under the 1940 Act. Rule 12b-1 provides in
substance that an investment company may not engage directly or
indirectly in financing any activity which is primarily intended to
result in the sale of its shares except pursuant to a plan adopted
under Rule 12b-1. The Plan is designed to protect against any claim
involving the Trust that the administration fee and some of the
expenses which the Trust pays or may pay come within the purview of
Rule 12b-1. The Trust believes it is not financing any such activity
and does not consider such fee or any payment enumerated in the Plan
as so financing any such activity. However, it might be claimed that
such fee and some of the expenses the Trust pays come within the
purview of Rule 12b-1. If and to the extent that any payments
(including fees) specifically listed in the Plan are considered to be
primarily intended to result in or are indirect financing of any
activity which is primarily intended to result in the sale of Trust
shares, these payments are authorized under the Plan.
As used in the Plan, "Qualified Recipients" means (i) any principal
underwriter or underwriters of the Trust (other than a principal
underwriter which is an affiliated person, or an affiliated person of
an affiliated person, of the Manager) and (ii) broker-dealers or
others selected by Aquila Management Corporation (the "Manager") with
which it has entered into written agreements ("Related Agreements")
contemplated by Rule 12b-1 and which have rendered assistance (whether
direct, administrative or both) in the distribution and/or retention
of the Trust's shares or servicing shareholder accounts. "Qualified
Holdings" means, as to any Qualified Recipient, all Trust shares
beneficially owned by such Qualified Recipient or by one or more of
customers (brokerage or other) or other contacts and/or its investment
advisory or other clients, if the Qualified Recipient was, in the sole
judgment of the Manager, instrumental in the purchase and/or retention
of such Trust shares and/or in providing administrative assistance in
relation thereto.
The Plan permits the Manager to make payments ("Permitted Payments")
to Qualified Recipients. These Permitted Payments are made by the
Manager and are not reimbursed by the Trust to the Manager. Permitted
Payments may not exceed, for any fiscal year of the Trust (pro-rated
for any fiscal year which is not a full fiscal year), 0.10 of 1% of
the average annual net assets of the Trust. The Manager shall have
sole authority (i) as to the selection of any Qualified Recipient or
Recipients; (ii) not to select any Qualified Recipient; and (iii) to
determine the amount of Permitted Payments, if any, to each Qualified
Recipient, provided that the total Permitted Payments to all Qualified
Recipients do not exceed the amount set forth above. The Manager is
authorized, but not directed, to take into account, in addition to any
other factors deemed relevant by it, the following: (a) the amount of
the Qualified Holdings of the Qualified Recipient; (b) the extent to
which the Qualified Recipient has, at its expense, taken steps in the
shareholder servicing area; and (c) the possibility that the Qualified
Holdings of the Qualified Recipient would be redeemed in the absence
of its selection or continuance as a Qualified Recipient.
Notwithstanding the foregoing two sentences, a majority of the
Independent Trustees (as defined below) may remove any person as a
Qualified Recipient.
The Plan recognizes that, in view of the Permitted Payments and
bearing by the Manager of certain distribution expenses, the profits,
if any, of the Manager are dependent primarily on the administration
fees paid by the Trust to the Manager and that its profits, if any,
would be less, or losses, if any, would be increased due to such
Permitted Payments and the bearing by it of such expenses. If and to
the extent that any such administration fees paid by the Trust might,
in view of the foregoing, be considered as indirectly financing any
activity which is primarily intended to result in the sale of shares
issued by the Trust, the payment of such fees is authorized by the
Plan.
The Plan does not contain any limit as to the source of the assets,
which the Manager may use to make Permitted Payments under the Plan,
and therefore it may use any of its assets for such purpose, whether
or not such assets are derived from the Administration fee.
The Plan also states that if and to the extent that any of the
payments listed below are considered to be "primarily intended to
result in the sale of" shares issued by the Trust within the meaning
of Rule 12b-1, such payments are authorized under the Plan: (i) the
costs of the preparation of all reports and notices to shareholders
and the costs of printing and mailing such reports and notices to
existing shareholders, irrespective of whether such reports or notices
contain or are accompanied by material intended to result in the sale
of shares of the Trust or other funds or other investments; (ii) the
costs of the preparation and setting in type of all prospectuses and
statements of additional information and the costs of printing and
mailing all prospectuses and statements of additional information to
existing shareholders; (iii) the costs of preparation, printing and
mailing of any proxy statements and proxies, irrespective of whether
any such proxy statement includes any item relating to, or directed
toward, the sale of the Trust's shares; (iv) all legal and accounting
fees relating to the preparation of any such reports, prospectuses,
statements of additional information, proxies and proxy statements;
(v) all fees and expenses relating to the registration or
qualification of the Trust and/or its shares under the securities or
"Blue-Sky" laws of any jurisdiction; (vi) all fees under the
Securities Act of 1933 and the 1940 Act, including fees in connection
with any application for exemption relating to or directed toward the
sale of the Trust's shares; (vii) all fees and assessments of the
Investment Company Institute or any successor organization,
irrespective of whether some of its activities are designed to
provide sales assistance; (viii) all costs of the preparation and
mailing of confirmations of shares sold or redeemed or share
certificates, and reports of share balances; and (ix) all costs of
responding to telephone or mail inquiries of investors or prospective
investors. The Plan states that whenever the Manager bears the costs,
not borne by the Trust's Distributor, of printing and distributing all
copies of the Trust's prospectuses, statements of additional
information and reports to shareholders which are not sent to the
Trust's shareholders, or the costs of supplemental sales literature
and advertising, such payments are authorized.
The Plan states that while it is in effect, the selection and
nomination of those Trustees of the Trust who are not "interested
persons" of the Trust shall be committed to the discretion of such
disinterested Trustees but that nothing in the Plan shall prevent the
involvement of others in such selection and nomination if the final
decision on any such selection and nomination is approved by a
majority of such disinterested Trustees.
The Plan states that while it is in effect, the Trust's Manager shall
report at least quarterly to the Trust's Trustees in writing for its
review on the following matters: (i) all Permitted Payments made to
Qualified Recipients, the identity of the Qualified Recipient of each
Payment and the purpose for which the amounts were expended; (ii) all
costs of each item specified in the second preceding paragraph (making
estimates of such costs where necessary or desirable) during the
preceding calendar or fiscal quarter; and (iii) all fees of the Trust
to the Manager paid or accrued during such quarter.
The Plan defines as the Trust's Independent Trustees those Trustees
who are not "interested persons" of the Trust as defined in the 1940
Act and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan. The
Plan, unless terminated as hereinafter provided, continues in effect
from year to year only so long as such continuance is specifically
approved at least annually by the Trust's Trustees and its Independent
Trustees with votes cast in person at a meeting called for the purpose
of voting on such continuance. In voting on the implementation or
continuance of the Plan, those Trustees who vote to approve such
implementation or continuance must conclude that there is a reasonable
likelihood that the Plan will benefit the Trust and its shareholders.
The Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the outstanding voting securities of the
Trust. The Plan may not be amended to increase materially the amount
of payments to be made without shareholder approval, and all
amendments must be approved in the manner set forth above as to
continuance of the Plan.
The Plan states that in the case of a Qualified Recipient which is a
principal underwriter of the Trust the Related Agreement shall be the
agreement contemplated by Section 15(b) of the 1940 Act since each
such agreement must be approved in accordance with, and contain the
provisions required by, Rule 12b-1. The Plan also states that in the
case of Qualified Recipients which are not principal underwriters of
the Trust, the Related Agreements with them shall be approved in
accordance with, and contain the provisions required by, Rule 12b-1.
Under Rule 12b-1, all Related Agreements must be in writing and must
contain specified adoption and continuance requirements, including a
requirement that they terminate automatically on their "assignment,"
as that term is defined in the 1940 Act. The other adoption and
continuance requirements as to Related Agreements are the same as
those described above as to the Plan itself except that: (i) no
shareholder action is required for the approval of Related Agreements,
and (ii) termination by Trustee or shareholder action as there
described may be on not more than 60 days' written notice.
During the Trust's fiscal years ended September 30, 1999, 1998 and
1997 no Qualified Payments were made by the Manager to Qualified
Recipients.
The formula under which the payments described above may be made under
the Plan by the Manager was arrived at by considering a number of
factors. One of such factors is that such payments are designed to
provide incentives for Qualified Recipients (i) in the case of
Qualified Recipients which are principal underwriters, to act as such
and (ii) in the case of all Qualified Recipients, to devote
substantial time, persons and effort to the sale of the shares of the
Trust. Another factor is that such payments by the Manager to
Qualified Recipients provide the only incentive for Qualified
Recipients to do so since there is no sales charge on the sale of the
Trust's shares. Another factor is that the Trust is one of a group of
funds having certain common characteristics. Each such fund (i) is a
money market fund; and (ii) has as its investment adviser a banking
institution or an affiliate which invests assets over which it has
investment authority in money market funds advised by other banking
institutions or affiliates. The marketing of the Trust's shares may be
facilitated since each such institution can, due to these common
characteristics, be fully and currently informed as to the quality of
the investments of and other aspects of the operations of each of the
other funds and if such an investment is otherwise appropriate, can,
although not required to do so, invest assets over which it has
investment authority in one or more of the other funds.
Taxation of the Trust
The Trust qualified during its last fiscal year as a "regulated
investment company" under the Code, and intends to continue to so
qualify. If it does so qualify, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
Underwriter
Aquila Distributors, Inc. acts as the Trust's principal underwriter in
the continuous public offering of the Trust's shares. The Distributor
is not obligated to sell a specific number of shares. Under the
Distribution Agreement, the Distributor is responsible for the payment
of certain printing and distribution costs relating to prospectuses
and reports as well as the costs of supplemental sales literature,
advertising and other promotional activities.
(1) (2) (3) (4) (5)
Name of Net Under- Compensation Brokerage Other
Principal writing on Redemptions Commissions Compen-
Underwriter Discounts and sation
and Repurchases
Commissions
Aquila None None None None
Distributors
Inc.
Performance
From time to time, the Trust may advertise its "current yield" and its
"effective yield" (also referred to as "effective compound yield").
Both yield figures are based on historical earnings and are not
intended to indicate future performance. The current yield of a Trust
refers to the net income generated by an investment in that Trust over
a stated seven-day period. This income is then "annualized". That is,
the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown
as a percentage of the investment. The Trust may also advertise or
quote its effective yield, which is calculated similarly, but, when
annualized, the income earned by an investment in the Trust is assumed
to be reinvested. The effective yield will be slightly higher than the
current yield because of the compounding effect of this assumed
reinvestment.
In addition, the Trust may also compare its performance to other
income-producing securities such as (i) money market funds; (ii)
various bank products, including both those that are insured (e.g.,
deposit obligations) and those that are not (e.g., investment
instruments offered by affiliates of banks); and (iii) U.S. Treasury
Bills or Notes. There are differences between these income-producing
alternatives and the Trust other than their yields, some of which are
summarized below.
The yield of the Trust is not fixed and will fluctuate. In addition,
your investment is not insured and its yield is not guaranteed. There
can be no assurance that the Trust will be able to maintain a stable
net asset value of $1.00 per share. Although the yields of bank money
market deposit accounts and NOW accounts will fluctuate, principal
will not fluctuate and is insured by the Federal Deposit Insurance
Corporation up to $100,000. Bank passbook savings accounts normally
offer a fixed rate of interest, and their principal and interest are
also guaranteed and insured. Bank certificates of deposit offer fixed
or variable rates for a set term. Principal and fixed rates are
guaranteed and insured. There is no fluctuation in principal value.
Withdrawal of these deposits prior to maturity will normally be
subject to a penalty. Investment instruments, such as Repurchase
Agreements and Commercial Paper, offered by affiliates of banks are
not insured by the Federal Deposit Insurance Corporation. In comparing
the yields of one money market fund to another, consideration should
be given to each fund's investment policy, portfolio quality,
portfolio maturity, type of instruments held and operating expenses.
<PAGE>
CHURCHILL CASH RESERVES TRUST
PART C: OTHER INFORMATION
Financial Statements
Included in Part A:
Per Share Income and Capital Changes
Incorporated by reference into Part B:
Report of Independent Certified Public
Accountants
Statement of Assets and Liabilities as of
September 30, 1999
Statement of Operations for the year ended
September 30, 1999
Statement of Changes in Net Assets for the
years ended September 30, 1999 and 1998
Statement of Investments as of September 30, 1999
Notes to Financial Statements
Included in Part C:
Consent of Independent Certified Public
Accountants
ITEM 23 Exhibits:
(a) Supplemental Declaration of Trust Amending
and Restating the Declaration of Trust (ii)
(b) By-laws (iv)
(c) Instruments defining rights of shareholders
The Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional shares
and to divide or combine the shares into a greater or
lesser number of shares without thereby changing the
proportionate beneficial interests in the Trust. Each
share represents an equal proportionate interest in the
Trust with each other share of its class; shares of the
respective classes represent proportionate interests in
the Trust in accordance with their respective net asset
values. Upon liquidation of the Trust, shareholders are
entitled to share pro-rata in the net assets of the
Trust available for distribution to shareholders, in
accordance with the respective net asset values of the
shares of each of the Trust's classes at that time. All
shares are presently divided into four classes;
however, if they deem it advisable and in the best
interests of shareholders, the Board of Trustees of the
Trust may create additional classes of shares, which
may differ from each other as provided in rules and
regulations of the Securities and Exchange Commission
or by exemptive order. The Board of Trustees may, at
its own discretion, create additional series of shares,
each of which may have separate assets and liabilities
(in which case any such series will have a designation
including the word "Series"). See the Additional
Statement for further information about possible
additional series. Shares are fully paid and
non-assessable, except as set forth under the caption
"General Information" in the Additional Statement; the
holders of shares have no pre-emptive or conversion
rights, except that Class C Shares automatically
convert to Class A Shares after being held for six
years.
At any meeting of shareholders, shareholders are
entitled to one vote for each dollar of net asset value
(determined as of the record date for the meeting) per
share held (and proportionate fractional votes for
fractional dollar amounts). Shareholders will vote on
the election of Trustees and on other matters submitted
to the vote of shareholders. Shares vote by classes on
any matter specifically affecting one or more classes,
such as an amendment of an applicable part of the
Distribution Plan. No amendment may be made to the
Declaration of Trust without the affirmative vote of
the holders of a majority of the outstanding shares of
the Trust except that the Trust's Board of Trustees may
change the name of the Trust. The Trust may be
terminated (i) upon the sale of its assets to another
issuer, or (ii) upon liquidation and distribution of
the assets of the Trust, in either case if such action
is approved by the vote of the holders of a majority of
the outstanding shares of the Trust.
(d) (i) Investment Advisory and Administration
Agreement (iv)
(ii) Sub-Advisory Agreement (iv)
(e) Distribution Agreement (v)
(f) Not applicable
(g) (i) Custody Agreement (i)
(h) (ii) Transfer Agency Agreement (ii)
(i) (a)Opinion of Trust's counsel (ii)
(i) (b) Consent of Trust counsel (v)
(j) Not applicable
(k) Not Applicable
(l) Not applicable
(m) (i) Distribution Plan (ii)
(n) Not applicable
(i) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 12 dated November 29, 1995 and
incorporated herein by reference.
(ii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 14 dated January 23, 1997 and
incorporated herein by reference.
(iii) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 15 dated January 27, 1998 and
incorporated herein by reference.
(iv) Filed as an exhibit to Registrant's Post-Effective
Amendment No. 17 dated January 29, 1999 and
incorporated herein by reference.
(v) Filed herewith.
ITEM 24. Persons Controlled By or Under Common Control with
Registrant
None
ITEM 25. Indemnification
Subdivision (c) of Section 12 of Article SEVENTH of
Registrant's Amended and Restated Declaration of Trust,
filed as Exhibit 1 to Registrant's Post-Effective Amendment
No. 14 dated January, 1997 is incorporated herein by
reference. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
Trustees, officers, and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a
Trustee, officer, or controlling person of Registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such Trustee, officer, or controlling person in
connection with the securities being registered, Registrant
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
ITEM 26. Business & Other Connections of Investment Adviser and
Sub-Adviser
The business and other connections of Aquila Management
Corporation, the Trust's Investment Adviser and
Administrator is set forth in the prospectus (Part A); the
business and other connections of Mr. Lacy B. Herrmann, its
controlling shareholder are set forth in the Statement of
Additional Information (Part B). For information as to the
business, profession, vocation, or employment of a
substantial nature of its Directors and officers, reference
is made to the Form ADV filed by it under the Investment
Advisers Act of 1940.
Banc One Investment Advisors Corporation, Registrant's
investment Sub-Adviser, performs investment advisory
services for mutual fund and other clients. For information
as to the business, profession, vocation, or employment of a
substantial nature of its Directors and officers, reference
is made to the Form ADV filed by it under the Investment
Advisers Act of 1940.
ITEM 27. Principal Underwriters
(a) Aquila Distributors, Inc. serves as principal
underwriter to Aquila Rocky Mountain Equity Fund, Aquila
Cascadia Equity Fund, Capital Cash Management Trust,
Churchill Tax-Free Fund of Kentucky, Hawaiian Tax-Free
Trust, Narragansett Insured Tax-Free Income Fund, Pacific
Capital Cash Assets Trust, Pacific Capital Tax-Free Cash
Assets Trust, Pacific Capital U.S. Government Securities
Cash Assets Trust, Tax-Free Fund For Utah, Tax-Free Fund of
Colorado, Tax-Free Trust of Arizona, and Tax-Free Trust of
Oregon, in addition to serving as Registrant's principal
underwriter.
(b) For information about the Directors and officers of
Aquila Distributors, Inc., reference is made to the Form BD
filed by it under the Securities Exchange Act of 1934.
(c) Not applicable.
ITEM 28. Location of Accounts and Records
All such accounts, books, and other documents are maintained
by the Manager, the Sub-Adviser the custodian, and the
transfer agent, whose addresses appear in or on the back
cover pages of the Prospectus and the Statement of
Additional Information.
ITEM 29. Management Services
Not applicable.
ITEM 30. Undertakings
(a) Not applicable.
(b) Not applicable.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
To The Board of Trustees and Shareholders of
Churchill Cash Reserves Trust:
We consent to the use of our report dated November
5,1999,incorporated herein by reference, and to the references to
our firm under the headings "Financial Highlights" in the
Prospectus and " Transfer Agent, Custodian and Auditors" in the
Statement of Additional Information.
/s/KPMG LLP
KPMG LLP
New York, New York
January 24, 2000
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933, and has caused this Amendment
to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 28th day of January, 2000.
CHURCHILL CASH RESERVES TRUST
(Registrant)
/s/ Lacy B. Herrmann
By____________________________
Lacy B. Herrmann, President
and Chairman of the Board
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement or Amendment has been signed
below by the following persons in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
/s/Lacy B. Herrmann 1/28/2000
______________________ President, Chairman of ___________
Lacy B. Herrmann the Board and Trustee
(Principal Executive
Officer)
/s/Thomas A. Christopher 1/28/2000
______________________ Trustee ___________
Thomas A. Christopher
/s/Douglas A. Dean 1/28/2000
______________________ Trustee ___________
Douglas A. Dean
/s/Diana P. Herrmann 1/28/2000
______________________ Trustee ___________
Diana P. Herrmann
/s/Theodore T. Mason 1/28/2000
______________________ Trustee ___________
Theodore T. Mason
/s/Carroll F. Knicely Trustee 1/28/2000
______________________ __________
Carroll F. Knicely
/s/Anne J. Mills 1/28/2000
______________________ Trustee ___________
Anne J. Mills
/s/William J. Nightingale 1/28/2000
______________________ Trustee ___________
William J. Nightingale
/s/James R. Ramsey 1/28/2000
_______________________ Trustee ___________
James R. Ramsey
/s/Rose F. Marotta 1/28/2000
________________________ Chief Financial Officer ___________
Rose F. Marotta (Principal Financial and
Accounting Officer)
<PAGE>
CHURCHILL CASH RESERVES TRUST
EXHIBIT INDEX
Exhibit Number Exhibit Name
(e) Distribution Agreement
(i) (i) Consent of Trust counsel
Correspondence
CHURCHILL CASH RESERVES TRUST
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 28th day of May, 1999 by and
between CHURCHILL CASH RESERVES TRUST (hereinafter called
the "Trust"), and AQUILA DISTRIBUTORS, INC., (hereinafter
called the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust and the Distributor have previously
entered into the Distribution Agreement dated as of
February 10, 1999;
WHEREAS, on April 23, 1999 the Board of Trustees of the
Trust approved a new Distribution Agreement, to go into
effect upon anticipated changes in ownership of the
Distributor; and
WHEREAS, the transfer of shares of the Distributor
effecting such changes in ownership occurred as of the date
hereof; and
WHEREAS, contemporaneously therewith pursuant to an
instrument executed and delivered between the parties, a new
Distribution Agreement went into effect, identical in its
provisions to the Distribution Agreement in effect
immediately prior thereto, except for the date of its
effectiveness; and
WHEREAS, this Agreement is a document explicitly
containing all of the provisions of the new Distribution
Agreement, representing in explicit form the new
Distribution Agreement created thereby;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged,
it is agreed by a between the parties hereto as follows:
b. For purposes of determining the renewal date
of this Agreement under paragraph 9 only, the effective date
of this Agreement shall be considered to be the same as the
effective date of the previously effective Distribution
Agreement.
W I T N E S S E T H :
In consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of
which is hereby acknowledged, it is agreed by and between
the parties hereto as follows:
1. The Distributor agrees to act as principal
underwriter
and exclusive distributor of the shares of the Trust. The
price at which shares of the Trust are issued to the public
by the Distributor shall be as computed and effective as set
forth in the Prospectus and Statement of Additional
Information of the Trust current as of the time of such sale
(collectively, the "Current Prospectus"). The Trust
agrees that it will promptly amend or supplement the Current
Prospectus in connection with any change in any of the
foregoing. The Distributor agrees to bear the costs of
printing and distributing all copies of the Trust's
prospectuses, statements of additional information and
reports to shareholders which are not sent to the Trust's
shareholders, as well as the costs of supplemental sales
literature, advertising and other promotional activities.
The Distributor will, as disbursing agent for the
Administrator, make such payments to
Qualified Recipients, as those terms are defined in the
Trust's Distribution Plan, as the Administrator may
authorize and provide funds for, from time to time.the above
sentence only in cash funds
2. The Trust agrees to issue shares of the Trust,
subject to the provisions of its Declaration of Trust and By-
Laws, to the Distributor as ordered by the Distributor, but
only to the extent that the Distributor shall have received
purchase orders therefor at the times and subject to the
conditions set forth in the Current Prospectus.
Certificates for shares need not be created or delivered by
the Trust in any case in which the purchase is made under
terms not calling for such certificates. Shares issued by
the Trust shall be registered in such name or names and
amounts as the Distributor may request from time to time and
all shares when so paid for and issued shall be fully paid
and nonassessable to the extent set forth in the Current
Prospectus.
3. The Distributor shall act as principal in all
matters relating to promotion of the growth of the Trust and
shall enter into all of its engagements, agreements and
contracts as principal on its own account. The title to
shares of the Trust issued and sold through the Distributor
shall pass directly from the Trust to the dealer or
investor, or shall, if the Distributor so consents, first
pass to the Distributor, as may from time to time be
determined by the Board of Trustees of the Trust.
4. The Trust hereby consents to any arrangements
whereby the Distributor may act as principal underwriter for
other investment companies or as principal underwriter,
sponsor or depositor for unit investment trusts and periodic
payment plan certificates issued thereby, or as investment
adviser, subadviser or administrator to the Trust or other
investment companies or persons. The Trust also consents to
the Distributor carrying on a business as a broker, dealer
and underwriter in securities and to carrying on any other
lawful business.
5. The Trust covenants and agrees that it will not
during the term of this Agreement, without the consent of
the Distributor, offer any shares of the Trust for sale
directly or through any person or corporation other than the
Distributor excepting only (a) the reinvestment of dividends
and/or distributions, or their declaration in shares of the
Trust, in optional form or otherwise; (b) the issuance of
additional shares through stock splits or stock dividends;
(c) sales of shares to another investment or securities
holding company in the process of purchasing all or a
portion of its assets; or (d) in connection with an exchange
of the Trust's shares for shares of another investment
company or securities holding company.
6. The Trust agrees to use its best efforts to register
from time to time under the Securities Act of 1933 adequate
amounts of shares of the Trust for sale by the Distributor
to the public and to register or qualify, or to permit the
Distributor to register or qualify, such shares for offering
to the public in such States or other jurisdictions as may
be designated by the Distributor.
7. The Trust agrees to advise the Distributor of the
net asset value of the Trust's shares as often as computed.
The Trust will also furnish to the Distributor, as soon as
practicable, such information as may reasonably be requested
by the Distributor in order that it may know all of the
facts necessary to sell shares of the Trust.
8. The Distributor is familiar with the Declaration of
Trust and By-Laws of the Trust, each as presently in effect.
Insofar as they are applicable to the Distributor as
principal underwriter of the Trust, it will comply with the
provisions of the Declaration of Trust and By-Laws of the
Trust and with the provisions of all acts administered by
the Securities and Exchange Commission (the "Commission")
and rules thereunder.
9. This amended and restated Agreement shall go into
effect on the date first above written, and shall, unless
terminated as hereinafter provided, continue in effect until
the next December 31, and from year to year thereafter, but
only so long as such continuance is specifically approved at
least annually as provided in the Investment Company Act of
1940 (the "Act"). This Agreement shall automatically
terminate in the event of its assignment (as defined in the
Act) and may be terminated by either party on sixty days
written notice to the other party.
10. The Trust agrees with the Distributor, for the
benefit of the Distributor and each person, if any, who
controls the Distributor within the meaning of Section 15 of
the Securities Act of 1933 (the "Securities Act") and each
and all and any of them, to indemnify and hold harmless the
Distributor and any such controlling person from and against
any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject
under the Securities Act, under any other statute, at common
law or otherwise, and to reimburse the Distributor and such
controlling persons, if any, for any legal or other expenses
(including the cost of any investigation and preparation)
reasonably incurred by them or any of them in connection
with any litigation whether or not resulting in any
liability, insofar as such losses, claims, damages,
liabilities or litigation arise out of, or are based upon,
any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or any
Prospectus, filed with the Commission, or any amendment
thereof or supplement thereto, or which arise out of, or are
based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided,
however, that this indemnity agreement shall not apply to
amounts paid in settlement of any such litigation if such
settlement is effected without the consent of the Trust or
to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any such Registration Statement or Prospectus,
or any amendment thereof or supplement thereto, or arising
out of, or based upon, the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
which statement or omission was made in reliance upon
information furnished in writing to the Trust by the
Distributor for inclusion in any such Registration Statement
or Prospectus or any amendment thereof or supplement
thereto.
The Distributor and each such controlling person
shall, promptly after the complaint shall have been
served upon the Distributor or such controlling
person in respect of which indemnity may be sought
from the Trust on account of its agreement contained
in this paragraph, notify the Trust in writing of the
commencement thereof. The omission of the
Distributor or such controlling person so to notify
the Trust of any such litigation shall relieve the
Trust from any liability which it may have to the
Distributor or such controlling person on account of
the indemnity agreement contained in this paragraph,
but shall not relieve the Trust from any liability
which it may have to the Distributor or controlling
person otherwise than on account of
the indemnity agreement contained in the paragraph.
In case any such litigation shall be brought against
the Distributor or any such controlling person and
notice of the commencement thereof shall have been
given to the Trust, the Trust shall be entitled to
participate in (and, to the extent that it shall
wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by
counsel of good standing and satisfactory to the
Distributor or such controlling person or persons,
defendant or defendants in the litigation. The
indemnity agreement of the Trust contained in this
paragraph shall remain operative and in full force
and effect regardless of any investigation made by or
on behalf of the Distributor or any such controlling
person, and shall survive any delivery of shares of
the Trust. The Trust agrees to notify the
Distributor promptly of the commencement of any
litigation or proceeding against it or any of its
officers or directors of which it may be advised in
connection with the issue and sale of shares of the
Trust.
11. Anything herein to the contrary
notwithstanding, the agreement in paragraph 10,
insofar as it constitutes a basis for reimbursement
by the Trust for liabilities (other than payment by
the Trust of expenses incurred or paid in the
successful defense of any action, suit or proceeding)
arising under the Securities Act, shall not extend to
the extent of any interest therein of any person who
is an underwriter or a partner or controlling person
of an underwriter within the meaning of Section 15 of
the Securities Act or who, at the date of this
Agreement, is a Trustee of the Trust, except to the
extent that an interest of such character shall have
been determined by a court of appropriate
jurisdiction as not against public policy as
expressed in the Securities Act. Unless in the
opinion of counsel for the Trust the matter has been
adjudicated by controlling precedent, the Trust,
will, if a claim for such reimbursement is asserted,
submit to a court of appropriate jurisdiction the
question of whether or not such interest is against
the public policy as expressed in the Securities Act.
12. The Distributor agrees to indemnify and
hold harmless the Trust and its Trustees and such
officers as shall have signed any Registration
Statement filed with the Commission from and against
any and all losses, claims, damages or liabilities,
joint or several, to which the Trust or such Trustees
or officers may become subject under the Securities
Act, under any other statute, at common law or
otherwise, and will reimburse the Trust or such
Trustees or officers for any legal or other expenses
(including the cost of any investigation and
preparation) reasonably incurred by it or them or any
of them in connection with any litigation, whether or
not resulting in any liability, insofar as such
losses, claims, damages, liabilities or litigation
arise out of, or are based upon, any untrue statement
or alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, which
statement or omission was made in reliance upon
information furnished in writing to the Trust by the
Distributor for inclusion in any Registration
Statement or any Prospectus, or any amendment thereof
or supplement thereto. The Distributor shall not be
liable for amounts paid in settlement of any such
litigation if such settlement was effected without
its consent. The Trust and its Trustees and such
officers, defendant or defendants, in any such
litigation shall, promptly after the complaint shall
have been served upon the Trust or any such Trustee
or officer in respect of which indemnity may be
sought from the Distributor on account of its
agreement contained in this paragraph, notify the
Distributor in writing of the commencement thereof.
The omission of the Trust or such Trustee or officer
so to notify the Distributor of any such litigation
shall relieve the Distributor from any liability
which it may have to the Trust or such Trustee or
officer on account of the indemnity agreement
contained in this paragraph, but shall not relieve
the Distributor from any liability which it may have
to the Trust or such Trustee or officer otherwise
than on account of the indemnity agreement contained
in this paragraph. In case any such litigation shall
be brought against the Trust or any such Trustee or
officer and notice of the commencement thereof shall
have been so given to the Distributor, the
Distributor shall be entitled to participate in (and,
to the extent that it shall wish, to direct) the
defense thereof at its own expense, but such defense
shall be conducted by counsel of good standing and
satisfactory to the Trust. The indemnity agreement
of the Distributor contained in this paragraph shall
remain operative and in full force and effect
regardless of any investigation made by or on behalf
of the Trust and shall survive any delivery of shares
of the Trust. The Distributor agrees to notify the
Trust promptly of the commencement of any litigation
or proceeding against it or any of its officers or
directors or against any such controlling person of
which it may be advised, in connection with the issue
and sale of the Trust's shares.
13. Notwithstanding any provision contained in
this Agreement, no party hereto and no person or
persons in control of any party hereto shall be
protected against any liability to the Trust or its
security holders to which they would otherwise be
subject by reason of willful misfeasance, bad faith,
or gross negligence, in the performance of their
duties, or by reason of their reckless disregard of
their obligations and duties under this Agreement.
14. The Trust shall immediately advise the
Distributor (a) when any post-effective amendment to
its Registration Statement or any further amendment
or supplement thereto or any further Registration
Statement or amendment or supplement thereto becomes
effective, (b) of any request by the Commission for
amendments to the Registration Statement or the then
effective Prospectus or for additional information,
(c) of the issuance by the Commission of any stop
order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose, and (d) of the
happening of any event which makes untrue any
material statement made in the Registration Statement
or the Current Prospectus or which in the opinion of
counsel for the Trust requires the making of a change
in the Registration Statement or the Current
Prospectus in order to make the statements therein
not misleading. In case of the happening at any time
of any event which materially affects the Trust or
its securities and which should be set forth in a
supplement to or an amendment of the then effective
Prospectus in order to make the statements therein
not misleading the Trust shall prepare and furnish to
the Distributor such amendment or amendments to the
then effective Prospectus as will correct the
Prospectus so that as corrected it will not contain,
or such supplement or supplements to the then
effective Prospectus which when read in conjunction
with the then effective Prospectus will make the
combined information not contain, any untrue
statement of a material fact or any omission to state
any material fact necessary in order to make the
statements in the then effective Prospectus not
misleading. The Trust shall, if at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, make
every reasonable effort to obtain the prompt lifting
of such order.
15. Except as expressly provided in paragraphs 10
and 12
hereof, the agreements herein set forth have been
made and are made solely for the benefit of the
Trust, the Distributor, and
the persons expressly provided for in paragraphs 10
and 12, their respective heirs, successors, personal
representatives and assigns, and except as so
provided, nothing expressed or mentioned herein is
intended or shall be construed to give any person,
firm or corporation, other than the Trust, the
Distributor, and the persons expressly provided for
in paragraphs 10 and 12, any legal or equitable
right, remedy or claim under or in respect of this
Agreement or any representation, warranty or
agreement herein contained. Except as so provided,
the term "heirs, successors, personal representatives
and assigns" shall not include any purchaser of
shares merely because of such purchase.
16. The Distributor understands that the
obligations of this Agreement are not binding upon
any shareholder of the Trust personally, but bind
only the Trust's property; the Distributor represents
that it has notice of the provisions of the Trust's
Declaration of Trust disclaiming shareholder
liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused
this
Agreement to be executed by their respective duly
authorized officers and their seals to be affixed as
of the day and year first above written.
ATTEST:
_______________________
By:______________________________
ATTEST: AQUILA DISTRIBUTORS,
INC.
_______________________
By:______________________________
HOLLYER BRADY SMITH TROXELL
BARRETT ROCKETT HINES & MONE LLP
551 Fifth Avenue
New York, NY 10176
Tel: (212) 818-1110
FAX: (212) 818-0494
January 28, 2000
To the Trustees of Churchill Cash Reserves Trust
We consent to the incorporation by reference into post-
effective amendment No. 18 under the 1933 Act and No. 19 under
the 1940 Act of our opinion dated January 23, 1997.
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
/s/ W.L.D. Barrett
by__________________________
Partner
