<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.
SEMI-ANNUAL
REPORT
MARCH 31, 2000
CHURCHILL
CASH RESERVES
TRUST
A CASH MANAGEMENT INVESTMENT
[Logo of Churchill Cash Reserves Trust: a standing Pegasus]
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILASM GROUP OF FUNDS
</PAGE>
<PAGE>
[Logo of Churchill Cash Reserves Trust: a standing Pegasus]
CHURCHILL CASH RESERVES TRUST
SEMI-ANNUAL REPORT
May 12, 2000
Dear Investor:
We are pleased to provide you with the Semi-Annual Report for Churchill
Cash Reserves Trust for the fiscal year ended March 31, 2000.
Since our last report letter to shareholders in the fall of 1999, the
Federal Reserve voted to raise short-term interest rates from 5.25% to 6.00%.
The Fed's action resulted from strong global and domestic economic conditions
and the implied threat of a rising level of inflation. 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.
The Fed is determined to keep inflation under control and higher interest
rates should eventually slow economic growth.
Led by a surge in consumer spending that was fueled by high employment and
rising incomes, the U.S. economy grew 4.2% during 1999. Notwithstanding the
economy's torrid growth and the impressive employment outlook, the low level of
inflation during 1999 advanced at a rate slightly higher than the previous two
years, but less than the average inflation rate for the 1990s. So far this year,
the economy also remains exceptionally strong (now in the ninth year of record
uninterrupted expansion) while inflation, although higher, remains under
control.
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
a result, the Trust's yield has followed a similar pattern. As of March 31,
2000, the Trust's average seven-day yield was 5.49% compared to 4.90% for the
seven-day period ending September 30, 1999. As of the date of this report
letter, the Trust's seven-day yield is now 5.59%.
With the possibility of further interest rate increases in the offing, the
Trust's portfolio is well positioned to continually attract higher and
competitive rates of return. Looking forward, we are optimistic that Churchill
Cash Reserves Trust will continue to provide investors attractive yields
compared to alternative money market investments. Through alertness to market
opportunities, the Trust can produce a highly competitive return for its
investors without compromising safety.
We wish to thank you for the continued support and confidence you have
placed in Churchill Cash Reserves Trust. You can be assured that all those
associated with the management of the Trust will consistently work in the
interest of your investment.
Sincerely,
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
</PAGE>
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CHURCHILL CASH RESERVES TRUST
STATEMENT OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT COMMERCIAL PAPER - 62.7% VALUE
</CAPTION>
<S> <C> <C> <C>
ASSET-BACKED ARBITRAGE - 11.3%
$ 3,000,000 Beta Finance Inc., 5.980%, 07/14/00 + $ 2,949,170
3,000,000 Forrestal Funding MA, 5.960%, 05/24/00 + 2,974,670
GTD: Bank of America
2,250,000 MPF Two Limited 6.020%, 05/30/00 + 2,228,554
8,152,394
BANKING - 9.4%
2,750,000 Banco Santander, Puerto Rico, 5.940%, 04/12/00 2,745,916
4,000,000 Hong Kong Bank of Canada, 5.920%, 04/05/00 + 3,998,684
GTD: HSBC Holdings PLC
6,744,600
COMMERCIAL LOANS - 17.9%
4,000,000 Atlantis One Funding Corp., 5.850%, 04/05/00 + 3,998,700
3,000,000 Aquinas Funding LLC, 5.890%, 04/27/00 + 2,988,220
4,000,000 Greenwich Funding Corp., 5.970%, 07/03/00 + 3,939,637
2,000,000 Moat Funding LLC, 5.900%, 04/03/00 + 2,000,000
12,926,557
CONSTRUCTION - 2.8%
2,000,000 Cemex SA de CV, 6.050%, 04/24/00 1,992,942
LOC: Bayerische Hypo-Und Vereinsbank AG
OIL & GAS EXPLORATION - 4.1%
3,000,000 Pemex Capital Inc., 5.950%, 06/01/00 2,970,746
LOC: Barclays Bank PLC
TRADE/TERM RECEIVABLES - 17.2%
3,000,000 Concord Minutemen Capital Company LLC, 5.900%, 04/11/00 + 2,996,067
3,000,000 Kitty Hawk Funding Corp., 5.950%, 06/01/00 + 2,970,746
3,500,000 Lexington Parker Capital Co. LLC, 6.060%, 05/22/00 + 3,471,131
3,000,000 Windmill Funding Corp., 5.900%, 04/28/00 + 2,987,708
12,425,652
Total Commercial Paper: 45,212,891
CERTIFICATES OF DEPOSIT - 4.2%
3,000,000 Allfirst Bank, 6.350%, 09/29/00 2,997,613
</PAGE>
<PAGE>
CORPORATE NOTES - 10.4%
4,000,000 AT&T Capital Corp., 7.500%, 11/15/00 4,031,465
GTD: CIT Group Inc.
3,500,000 Strategic Money Market Trust 1999-A, 6.230%, 09/13/00 3,500,000
GTD: Guaranty Trust
Total Corporate Notes 7,531,465
MEDIUM TERM NOTES - 14.2%
1,000,000 Bear Stearns Companies Inc., 5.320%, 05/19/00 1,000,000
1,000,000 Beta Finance Inc., 5.750%, 07/24/00 + 1,000,000
4,500,000 Lehman Brothers Holdings Inc., 6.050%, 04/28/00 4,501,301
3,700,000 Liberty Lighthouse US Capital Co LLC, 6.356%, 09/25/00 + 3,700,000
Total Medium Term Notes: 10,201,301
REPURCHASE AGREEMENT - 8.7%
6,301,000 Goldman, Sachs & Co., 6.200%, 04/03/00 6,301,000
(Proceeds of $6,304,256 to be received at maturity)
Collateral: $6,743,295 Federal Home Loan Mortgage Corp.,
Pool# N30636, 7.000%, due 01/01/30
(collateral market value $6,490,030)
Total Investments (cost $72,244,270*) 100.2% 72,244,270
Liabilities in excess of other assets (0.2) (147,402)
Net Assets 100.0% $ 72,096,868
</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>
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CHURCHILL CASH RESERVES TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $72,244,270) $ 72,244,270
Cash 937
Interest receivable 273,401
Other assets 5,623
Total assets 72,524,231
LIABILITIES
Dividends payable 376,090
Management fee payable 28,353
Accrued expenses 22,920
Total liabilities 427,363
NET ASSETS (equivalent to $1.00 per share on 72,087,700 shares outstanding) $ 72,096,868
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 720,877
Additional paid-in capital 71,375,991
$ 72,096,868
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 2,390,721
Expenses:
Management fee (note 2) $ 202,377
Trustees' fees and expenses 23,000
Legal fees 16,000
Audit and accounting fees 10,000
Transfer and shareholder servicing agent fees 6,000
Shareholders' reports 5,000
Custodian fees 4,000
Registration fees and dues 3,000
Insurance 2,000
Miscellaneous 4,720
276,097
Management fee waived (note 2) (33,245)
Net expenses 242,852
Net investment income 2,147,869
Net realized gain from securities transactions 108
Net increase in net assets resulting from operations $ 2,147,977
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
</CAPTION>
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income $ 2,147,869 $ 4,512,161
Dividends to shareholders from net investment income
($0.0265 and $0.0469 per share, respectively) (2,147,869) (4,512,161)
Net realized gain from securities transactions 108 1,002
Change in net assets derived from investment activities 108 1,002
FROM CAPITAL SHARE TRANSACTIONS:
SHARES
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
Proceeds from shares sold 75,246,876 227,485,121 75,246,876 227,485,121
Reinvested dividends 20 558 20 558
Cost of shares redeemed (79,506,059) (254,997,252) (79,506,059) (254,997,252)
Change in net assets from
capital share transactions (4,259,163) (27,511,573) (4,259,163) (27,511,573)
Change in net assets (4,259,055) (27,510,571)
NET ASSETS:
Beginning of period 76,355,923 103,866,494
End of period $ 72,096,868 $ 76,355,923
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Churchill Cash Reserves Trust (the "Trust"), a diversified, open-end
investment company, was organized on January 4, 1985, as a Massachusetts
business trust and is authorized to issue an unlimited number of shares. The
Trust commenced operations on July 9, 1985.
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: The Trust's portfolio securities are valued by the
amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), which, after considering
accrued interest thereon, approximates market. Under this method, a
portfolio security is valued at cost adjusted for amortization of premiums
and accretion of discounts. Amortization of premiums and accretion of
discounts are included in interest income.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Interest
income is recorded daily on the accrual basis and is adjusted for
amortization of premiums and accretion of discounts as discussed in the
preceding paragraph.
c) FEDERAL INCOME TAXES: It is the policy of the Trust to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Trust
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) REPURCHASE AGREEMENTS: It is the Trust's policy to monitor closely the
creditworthiness of all firms with which it enters into repurchase
agreements, and to take possession of, or otherwise perfect its security
interest in, securities purchased under agreements to resell. The
securities purchased under agreements to resell are marked to market every
business day 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.
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
</PAGE>
<PAGE>
Administration Agreement, the Manager provides all administrative services to
the Trust, other than those relating to the day-to-day portfolio management. The
Manager's services include providing the office of the Trust and all related
services as well as overseeing the activities of the Sub-Adviser and all the
various support organizations to theTrust such as the shareholder servicing
agent, custodian, legal counsel, auditors and distributor and additionally
maintaining the Trust's accounting books and records. For its services, the
Manager is entitled to receive a fee which is payable monthly and computed as of
the close of business each day at the annual rate of 0.50 of 1% on the Trust's
net assets.
Banc One Investment Advisors Corporation (the "Sub-Adviser") serves as the
Investment Sub-Adviser for the Trust under a Sub-Advisory Agreement between the
Manager and the Sub-Adviser. Under this agreement, the Sub-Adviser continuously
provides, subject to oversight of the Manager and the Board of Trustees of the
Trust, the investment program of the Trust and the composition of its portfolio,
arranges for the purchases and sales of portfolio securities, and provides for
daily pricing of the Trust's portfolio. For its services, the Sub-Adviser is
entitled to receive a fee from the Manager which is payable monthly and computed
as of the close of business each day at the annual rate of 0.33 of 1% on the
Trust's net assets.
For the six months ended March 31, 2000, the Trust incurred fees for
advisory and administrative services of $202,377 of which $33,245 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 Adviser, wherein it receives
credit toward the reduction of custodian fees and other Trust expenses whenever
there are uninvested cash balances. The Statement of Operations reflects the
total expenses before any offset, the amount of offset and the net expenses. It
is the general intention of the Trust to invest, to the extent practicable, some
or all of cash balances in income-producing assets rather than leave cash on
deposit.
</PAGE>
<PAGE>
CHURCHILL CASH RESERVES TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/00 1999 1998 1997 1996 1995
</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 $1.0000
Income from Investment Operations:
Net investment income 0.0265 0.0469 0.0513 0.0499 0.0500 0.0526
Total from Investment Operations 0.0265 0.0469 0.0513 0.0499 0.0500 0.0526
Less Distributions:
Dividends from net investment income (0.0265) (0.0469) (0.0513) (0.0499) (0.0500) (0.0526)
Total Distributions (0.0265) (0.0469) (0.0513) (0.0499) (0.0500) (0.0526)
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Total Return (%) 2.68+ 4.79 5.25 5.11 5.12 5.39
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 72,097 76,356 103,866 125,392 120,939 146,130
Ratio of Expenses to Average Net
Assets (%) 0.60* 0.60 0.60 0.60 0.56 0.58
Ratio of Net Investment Income to
Average Net Assets (%) 5.35* 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 (%) 0.69* 0.66 0.63 0.66 0.63 0.62
Ratio of Net Investment Income to
Average Net Assets (%) 5.26* 4.65 5.10 4.93 4.94 5.20
</TABLE>
+ Not annualized.
* Annualized.
Note: Effective July 19, 1995, Banc One Investment Advisors Corporation became
the Trust's Investment Adviser replacing PNC Bank, Kentucky, Inc. and
effective on June 5, 1998, pursuant to new management arrangements, was
appointed as the Trust's Investment Sub-Adviser.
See accompanying notes to financial statements.
</PAGE>
