<PAGE>
MANAGER AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
BANC ONE INVESTMENT
ADVISORS CORPORATION
1111 Polaris Parkway
Columbus, Ohio 43240
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Thomas A. Christopher
Douglas Dean
Diana P. Herrmann
Carroll F. Knicely
Theodore T. Mason
Anne J. Mills
William J. Nightingale
James R. Ramsey
OFFICERS
Lacy B. Herrmann, President
Charles E. Childs, III, Senior Vice President
Diana P. Herrmann, Senior Vice President
John M. Herndon, Vice President
Jerry G. McGrew, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC INC.
400 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG LLP
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus
which must precede or accompany this report.
ANNUAL
REPORT
SEPTEMBER 30, 2000
[Logo of the Churchill Cash Reserves Trust: a standing pegasus]
CHURCHILL
CASH RESERVES
TRUST
A CASH MANAGEMENT INVESTMENT
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILASM GROUP OF FUNDS
</PAGE>
<PAGE>
[Logo of the Churchill Cash Reserves Trust: a standing pegasus]
CHURCHILL CASH RESERVES TRUST
ANNUAL REPORT
November 10, 2000
Dear Investor:
We are pleased to provide you with the Annual Report for Churchill Cash
Reserves Trust for the fiscal year ended September 30, 2000.
The Trust continued to meet its objectives of providing high current
income, stability and liquidity for investors' cash reserves through investments
in taxable money market securities.
The economic climate and the Federal Reserve's monetary policy once again
had an impact on the short-term debt markets during the Trust's current report
period.
Since our last correspondence six months ago, the Federal Reserve Board
(the "Fed") raised the Federal Funds rate from 6.00% to 6.50%. The Fed usually
adjusts the rate by 0.25%, but at the May 16th meeting, the Fed raised the rate
by 0.50% in an effort to squelch inflation pressures before they take root in
the economy. The Fed's action resulted from higher equity and real estate
prices, increased wages and tight labor markets, which helped spur consumer
spending during the reporting period. The booming economy also contributed to a
continued downtrend in the national unemployment rate, which reached 3.9% at the
end of September. The Fed is concerned that with a strong economy and low
unemployment, inflation would worsen as the increased stress on labor markets
would potentially put additional upward pressure on wages and ultimately prices.
We believe the Fed's rate hikes have had the desired effect and that the
economy should begin to slow over the next several months without slipping into
a recession. The slower growth should keep inflation in check, allowing the Fed
to maintain a neutral monetary policy for the rest of the year.
As mentioned in previous report letters, yields on money market funds like
the Trust, move in concert with rate policies pursued by the Federal Reserve. As
of September 30, 2000, the Trust's average seven-day yield was 6.05% compared to
4.90% for the seven-day period ended September 30, 1999.
We very much value you as a shareholder and appreciate the confidence you
have shown in Churchill Cash Reserves Trust.
Sincerely,
/s/ Lacy B. Herrmann
----------------
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
</PAGE>
<PAGE>
[Logo of KPMG LLP: four solid rectangles with the letters KPMG in front of them]
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
Churchill Cash Reserves Trust:
We have audited the accompanying statement of assets and liabilities of
Churchill Cash Reserves Trust, including the statement of investments, as of
September 30, 2000, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of September 30, 2000, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Churchill Cash Reserves Trust as of September 30, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ KPMG LLP
------------
New York, New York
October 20, 2000
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT COMMERCIAL PAPER - 63.9% VALUE
</CAPTION>
<S> <S> <C> <C>
ASSET-BACKED ARBITRAGE - 13.0%
$ 3,000,000 Bavaria Universal Funding Co., 6.53%, 10/19/00 + $ 2,990,205
3,000,000 Greyhawk Funding LLC., 6.54%, 10/17/00 + 2,991,280
3,000,000 Intrepid Funding Master Trust, 6.56%, 10/11/00 + 2,994,533
8,976,018
BANKING - 4.3%
3,000,000 Banco Santander, Puerto Rico, 6.54%, 10/18/00 2,990,735
COMMERCIAL LOANS- 21.6%
3,000,000 Asset Portfolios Funding Corp., 6.54%, 10/11/00 + 2,994,550
3,000,000 Brahms Funding Corp., 6.60%, 10/04/00 + 2,998,350
3,000,000 Lone Star Funding LLC., 6.53%, 11/17/00 + 2,974,425
3,000,000 Moat Funding LLC., 6.54%, 10/16/00 + 2,991,825
3,000,000 Special Purpose Accounts Receivable Coop. Corp.,
6.55%, 11/06/00 + 2,980,350
14,939,500
CONSTRUCTION - 3.3%
2,286,000 Cemex SA de CV, 6.65%, 10/10/00 2,282,200
LOC: Bayerische Hypo-und Vereinsbank AG
CREDIT CARD - 8.7%
3,000,000 Citibank Credit Card, 6.56%, 10/20/00 + 2,989,612
3,000,000 Montauk Funding Corp., 6.52%, 10/24/00 + 2,987,503
5,977,115
TRADE / TERM RECEIVABLES - 13.0%
3,000,000 Concord Minutemen Capital Company LLC., 6.57%, 10/05/00 + 2,997,810
3,000,000 Sheffield Receivables Corp., 6.53%, 10/03/00 + 2,998,912
3,000,000 Tannehill Capital, 6.53%, 10/13/00 + 2,993,470
8,990,192
Total Commercial Paper: 44,155,760
CORPORATE NOTES - 5.8%
4,000,000 AT&T Capital Corp., 7.500%, 11/15/00 4,006,265
GTD: CIT Group Inc.
</PAGE>
<PAGE>
MARKET
SHARES U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 14.4% VALUE
$ 10,000,000 Federal Home Loan Banks, 6.250%, 10/02/00 $ 9,998,264
REPURCHASE AGREEMENT - 16.2%
11,180,000 Goldman, Sachs & Co., 6.65%, 10/02/00 11,180,000
(Proceeds of $11,186,196 to be received at maturity)
Collateral: $ 1,636,922 Federal Home Loan Mortgage Corp.,
7.000%, due 08/01/14,
$ 11,745,711 Federal Home Loan Mortgage Corp., 6.500%,
due 12/01/28,
$ 1,000 Federal Home Loan Mortgage Corp., 7.000%,
due 07/01/29,
(collateral market value $11,180,240)
Total Investments (cost $69,340,289*) 100.3% 69,340,289
Liabilities in excess of other assets (0.3) (197,401)
Net Assets 100.0% $ 69,142,888
</TABLE>
* Cost for Federal tax purposes is identical.
+ Pursuant to Rule 144A, resale is restricted to qualified
institutional buyers.
See accompanying notes to financial statements
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $69,340,289) $ 69,340,289
Interest receivable 117,446
Cash 53,145
Other assets 4,719
Total assets 69,515,599
LIABILITIES
Dividends payable 323,477
Accrued expenses 30,735
Management fee payable 18,499
Total liabilities 372,711
NET ASSETS (equivalent to $1.00 per share on 69,131,921 shares outstanding) $ 69,142,888
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 691,319
Additional paid-in capital 68,445,915
Undistributed net investment income 5,654
$ 69,142,888
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
<TABLE>
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 4,557,978
Expenses:
Management fee (note 2) $ 368,767
Trustees' fees and expenses 45,890
Legal fees 28,337
Audit and accounting fees 21,300
Transfer and shareholder servicing agent fees 10,776
Shareholders' reports 9,177
Custodian fees 9,055
Insurance 3,279
Registration fees and dues 3,217
Miscellaneous 10,306
510,104
Management fee waived (note 2) (65,667)
Expenses paid indirectly (note 4) (1,917)
Net expenses 442,520
Net investment income 4,115,458
Net realized gain from securities transactions 1,906
Net increase in net assets resulting from operations $ 4,117,364
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
2000 1999
</CAPTION>
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income $ 4,115,458 $ 4,512,161
Dividends to shareholders from net investment income
($0.0561 and $0.0469 per share, respectively) (4,115,458) (4,512,161)
Net realized gain from securities transactions 1,906 1,002
Change in net assets derived from investment activities 1,906 1,002
FROM CAPITAL SHARE TRANSACTIONS:
SHARES
YEAR ENDED SEPTEMBER 30,
2000 1999
Proceeds from shares sold 140,789,242 227,485,121 140,789,242 227,485,121
Reinvested dividends 52 558 52 558
Cost of shares redeemed (148,004,235) (254,997,252) (148,004,235) (254,997,252)
Change in net assets from
capital share transactions (7,214,941) (27,511,573) (7,214,941) (27,511,573)
Change in net assets (7,213,035) (27,510,571)
NET ASSETS:
Beginning of period 76,355,923 103,866,494
End of period $ 69,142,888 $ 76,355,923
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Churchill Cash Reserves Trust (the "Trust"), a diversified, open-end
investment company, was organized on January 4, 1985, as a Massachusetts
business trust and is authorized to issue an unlimited number of shares. The
Trust commenced operations on July 9, 1985.
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: The Trust's portfolio securities are valued by the
amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), which, after considering
accrued interest thereon, approximates market. Under this method, a
portfolio security is valued at cost adjusted for amortization of premiums
and accretion of discounts. Amortization of premiums and accretion of
discounts are included in interest income.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Interest
income is recorded daily on the accrual basis and is adjusted for
amortization of premiums and accretion of discounts as discussed in the
preceding paragraph.
c) FEDERAL INCOME TAXES: It is the policy of the Trust to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Trust
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) REPURCHASE AGREEMENTS: It is the Trust's policy to monitor closely the
creditworthiness of all firms with which it enters into repurchase
agreements, and to take possession of, or otherwise perfect its security
interest in, securities purchased under agreements to resell. The
securities purchased under agreements to resell are marked to market every
business day in order to compare the value of the collateral to the amount
of the "loan" (repurchase agreements being defined as "loans" in the 1940
Act), including the accrued interest earned thereon. If the value of the
collateral is less than 102% of the loan plus the accrued interest thereon,
additional collateral is required from the borrower.
e) USE OF ESTIMATES: The preparation of financial statements, in conformity
with generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
</PAGE>
<PAGE>
2. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Aquila Management Corporation (the "Manager"), the Trust's founder and
sponsor, serves as the Manager for the Trust under an Advisory and
Administration Agreement with the Trust. The portfolio management of the Trust
has been delegated to a Sub-Adviser as described below. Under the Advisory and
Administration Agreement, the Manager provides all administrative services to
the Trust, other than those relating to the day-to-day portfolio management. The
Manager's services include providing the office of the Trust and all related
services as well as overseeing the activities of the Sub-Adviser and all the
various support organizations to theTrust such as the shareholder servicing
agent, custodian, legal counsel, auditors and distributor and additionally
maintaining the Trust's accounting books and records. For its services, the
Manager is entitled to receive a fee which is payable monthly and computed as of
the close of business each day at the annual rate of 0.50 of 1% on the Trust's
net assets.
Banc One Investment Advisors Corporation (the "Sub-Adviser") serves as the
Investment Sub-Adviser for the Trust under a Sub-Advisory Agreement between the
Manager and the Sub-Adviser. Under this agreement, the Sub-Adviser continuously
provides, subject to oversight of the Manager and the Board of Trustees of the
Trust, the investment program of the Trust and the composition of its portfolio,
arranges for the purchases and sales of portfolio securities, and provides for
daily pricing of the Trust's portfolio. For its services, the Sub-Adviser is
entitled to receive a fee from the Manager which is payable monthly and computed
as of the close of business each day at the annual rate of 0.33 of 1% on the
Trust's net assets.
For the year ended September 30, 2000, the Trust incurred fees for advisory
and administrative services of $368,767 of which $65,667 was voluntarily waived.
Specific details as to the nature and extent of the services provided by the
Manager and the Sub-Adviser are more fully defined in the Trust's Prospectus and
Statement of Additional Information.
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Trust's shares. No
compensation or fees are paid by the Trust to the Distributor for such share
distribution.
3. DISTRIBUTIONS
The Trust declares dividends daily from net investment income and makes
payments monthly in additional shares at the net asset value per share, in cash,
or in a combination of both, at the shareholder's option.
4. EXPENSES
The Trust has negotiated an expense offset arrangement with its custodian,
Bank One Trust Company, N.A., an affiliate of the Sub-Adviser, wherein it
receives credit toward the reduction of custodian fees and other Trust expenses
whenever there are uninvested cash balances. The Statement of Operations
reflects the total expenses before any offset, the amount of offset and the net
expenses. It is the general intention of the Trust to invest, to the extent
practicable, some or all of cash balances in income-prod ucing assets rather
than leave cash on deposit.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from Investment Operations:
Net investment income 0.0561 0.0469 0.0513 0.0499 0.0500
Total from Investment Operations 0.0561 0.0469 0.0513 0.0499 0.0500
Less Distributions:
Dividends from net investment income (0.0561) (0.0469) (0.0513) (0.0499) (0.0500)
Total Distributions (0.0561) (0.0469) (0.0513) (0.0499) (0.0500)
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return (%) 5.75 4.79 5.25 5.11 5.12
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 69,143 76,356 103,866 125,392 120,939
Ratio of Expenses to Average Net Assets (%) 0.60 0.60 0.60 0.60 0.56
Ratio of Net Investment Income to
Average Net Assets (%) 5.58 4.70 5.13 4.99 5.02
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 (%) 0.69 0.66 0.63 0.66 0.63
Ratio of Net Investment Income to
Average Net Assets (%) 5.49 4.65 5.10 4.93 4.94
</TABLE>
Note: Banc One Investment Advisors Corporation served as the Trust's Investment
Adviser until June 5, 1998, when, pursuant to new management
arrangements, it was appointed as the Trust's Investment Sub-Adviser.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
FEDERAL TAX STATUS OF DIVIDENDS (UNAUDITED)
This information is presented in order to comply with a requirement of the
Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF THE SHAREHOLDERS IS
REQUIRED.
For the fiscal year ended September 30, 2000, the total amount of dividends
paid by Churchill Cash Reserves Trust was ordinary dividend income.
Prior to January 31, 2001, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of dividends paid for the 2000
CALENDAR YEAR.
</PAGE>
