Aquila Cascadia Equity Fund
Semi-Annual Report
November 20, 1996
Dear Investor:
Even though Aquila Cascadia Equity Fund just commenced its investment
operations on September 9, we are sending you a report for the period ended
September 30, 1996. The Fund has a fiscal year-end of March 31st.
As you are aware, the Fund's investment's will be primarily focused
upon the seven state area - Oregon, Washington, Idaho, Utah, Nevada, Alaska
and Hawaii - which comprise the region we term "Cascadia".
Our research shows that there is a sizable universe of companies
within the Cascadia region which offer a broad range of investment
diversification.
The Fund intends to seek out there those soundly managed,
growth-oriented companies within the Cascadia region which possess good
underlying value and which we believe are attractively priced in the market
place at the time of acquisition.
The Cascadia region possesses, in our judgement, very strong economic
growth prospects and opportunities for good investment capital appreciation
over time.
We value your investment in the Fund and assure you that every effort
will be made to warrant your continued confidence.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
<PAGE>
<TABLE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF INVESTMENTS
September 30, 1996 (Unaudited)
Market
Shares Common Stocks Value
<C> <S> <C>
Aerospace/Defense - 1.4%
270 Boeing Co. $ 25,515
Automotive - 3.2%
1,070 Paccar Inc. 58,583
Beverages - 1.0%
875 Redhook Ale Brewery Inc.+ 19,031
Building Materials - 2.0%
1,040 BMC West Corp.+ 14,430
1,200 TJ International Inc. 21,900
36,330
Computer Products and Services - 11.3%
335 Hewlett-Packard Co. 16,331
1,250 In Focus Systems Inc.+ 17,969
480 Iomega Corp.+ 11,640
630 Intel Corp. 60,126
1,210 Micron Electronics Inc.+ 24,956
350 Microsoft Corp.+ 46,156
1,485 Novell Inc.+ 16,335
1,305 Sequent Computer Systems+ 16,965
210,478
Consumer Products and Services - 13.2%
580 Albertsons Inc. 24,433
655 American Stores Co. 26,200
1,300 Fred Meyer Inc.+ 43,062
1,185 Hollywood Entertainment + 24,293
550 Nike Inc. Class B 66,825
755 Nordstrom Inc. 28,690
1,540 Price Costco Inc. 31,570
245,073
Electronics - 6.0%
400 Electro Scientific Industries + 7,400
495 Fluke Corp. 18,253
405 Lattice Semiconductor 11,694
1,280 Mentor Graphics Corp. 11,360
440 Merix Corp. 8,470
950 Micron Technology Inc. 28,975
410 Tektronix Inc. 16,759
400 Triquint Semiconductor + 9,300
112,211
<PAGE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF INVESTMENTS (continued)
<C> <S> <C>
Financial Services - 12.0%
700 First Hawaiian Inc. $ 21,700
910 Interwest Bancorp Inc. 26,845
450 National Bancorp of Alaska. 28,575
1,500 Safeco Corp. 52,500
910 US Bancorp. 35,945
945 Washington Federal Inc. 22,326
920 Washington Mutual Inc. 34,270
222,161
Healthcare - 2.8%
450 Advanced Technology Labs + 14,400
1,115 Sierra Health Services Inc.+ 38,328
52,728
Hospital Management - 1.0%
1,950 Community Psychiatric Centers + 18,281
Household Products - 0.9%
750 Paragon Trade Brands Inc.+ 17,530
Leisure Time - 5.2%
800 Circus Circus Enterprises Inc.+ 28,300
440 MGM Grand Inc.+ 18,590
1,465 Mirage Resorts Inc.+ 37,541
965 Ride Inc.+ 11,821
96,252
Machinery - 1.4%
800 Cascade Corp. 9,600
770 Esterline Technology Corp.+ 16,651
26,251
Medical Products - 6.3%
1,175 Ballard Medical Products 22,913
1,315 OEC-Medical Systems Inc.+ 16,438
1,000 Physio Control International Corp.+ 25,250
1,115 Research Medical Inc.+ 19,373
780 Spacelabs Medical Inc.+ 16,770
1,415 Utah Medical Products Inc.+ 16,273
117,017
<PAGE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF INVESTMENTS (continued)
<S> <C> <S>
Metal Processing and Mining - 3.0%
240 Freeport McMoran Inc. $ 7,500
350 Oregon Metallurgical Corp.+ 11,375
560 Oregon Steel Mills Inc. 8,610
770 Pegasus Gold Inc.+ 7,796
690 Schnitzer Steel Industries Inc. 20,010
55,291
Natural Gas - 7.7%
805 Apache Corp. 23,949
275 Atlantic Richfield Co. 35,063
1,000 Questar 35,375
1,270 Univar Corp. 24,447
1,110 Valero Energy Corp. 24,281
143,115
Paper And Related Products - 5.2%
265 Boise Cascade Corp. 9,010
370 Louisiana-Pacific Corp. 8,418
540 Pope & Talbot Inc. 8,303
765 Weyerhaeuser Co. 35,286
550 Williamette Industries 36,025
97,042
Pharmaceuticals - 0.9%
920 Sonus Pharmaceutical+ 17,480
Railroad - 0.8%
1,210 Greenbrier Companies Inc. 13,915
Specialized Services - 0.8%
795 Franklin Quest Co.+ 14,906
Transportation - 3.4%
1,155 Alaska Air Group Inc.+ 24,688
3,390 Reno Air Inc.+ 28,391
640 Skywest Inc. 9,120
62,199
Utilities - 7.1%
750 Hawaiian Electric Industries 25,594
1,600 Nevada Power Co. 32,600
2,350 Pacificorp 48,468
1,110 Puget Sound Power & Lighting 24,975
131,637
<PAGE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF INVESTMENTS (continued)
<S> <C>
Total Common Stocks (96.6%) (Cost $1,756,384*) $ 1,793,026
Other assets in excess of liabilities (3.4%) 63,368
Net Assets (100%) $ 1,856,394
<FN>
* Cost for Federal income tax purposes is identical.
</FN>
<FN>
+ Non-income producing security.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996 (unaudited)
<S> <C>
ASSETS
Investments at market value (identified cost - $1,756,384) $ 1,793,026
Receivable for Fund shares sold 803,014
Deferred organization expenses (note A) 96,150
Due for reimbursement of expenses 8,989
Dividends receivable 563
Total assets 2,701,742
LIABILITIES
Payment for investment securities purchased 745,386
Accrued expenses 99,962
Total liabilities 845,348
NET ASSETS $ 1,856,394
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 1,505
Additional paid-in capital 1,818,474
Accumulated net loss on investments (227)
Net unrealized appreciation on investments 36,642
$ 1,856,394
CLASS A
Net Assets $ 230,232
Capital shares outstanding 18,670
Net asset value and redemption price per share $ 12.33
Offering price per share (100/95.75 of $12.33 adjusted
to nearest cent) $ 12.88
CLASS C
Net Assets $ 12,794
Capital shares outstanding 1,038
Net asset value and offering price per share $ 12.33
Redemption price per share (* varies by length of
time shares are held) $ *
CLASS Y
Net Assets $ 1,613,368
Capital shares outstanding 130,838
Net asset value, offering and redemption price per share $ 12.33
See accompanying notes to financial statements.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD AUGUST 13, 1996 (commencement of operations)
THROUGH SEPTEMBER 30, 1996 (unaudited)
<S> <C> <C>
Investment Income:
Dividends $ 563
Expenses:
Advisory and Administrative fees (note B) $ 758
Sub-Advisory fees (note B) 663
Legal fees 3,182
Amortization of organization expenses (note A) 2,700
Transfer and shareholder servicing agent fees 1,697
Registration fees and dues 1,697
Custodian fees (note E) 1,621
Shareholders' reports and proxy statements 1,273
Trustees' fees and expenses 1,273
Audit and accounting fees 1,060
Distribution fees (note B) 71
Miscellaneous 1,060
17,055
Advisory and Administrative fees waived (note B) (758)
Sub-Advisory fees waived (note B) (663)
Reimbursement of expenses (note B) (13,989)
Expenses paid indirectly (note E) (1,082)
Net expenses 563
Net investment income 0
Realized and unrealized gain on investments:
Net realized loss from securities transactions (227)
Unrealized appreciation on investments 36,642
Net realized and unrealized gain on investments 36,415
Net increase in net assets resulting from operations $ 36,415
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS (unaudited)
FOR THE PERIOD AUGUST 13, 1996 (commencement of operations)
THROUGH SEPTEMBER 30, 1996
<S> <C>
OPERATIONS:
Net realized loss from securities transactions $ (227)
Unrealized appreciation on investments 36,642
Change in net assets from operations 36,415
DISTRIBUTIONS TO SHAREHOLDERS (note D):
Class A Shares:
Net investment income ---
Net realized gain on investments ---
Class C Shares:
Net investment income ---
Net realized gain on investments ---
Class Y Shares:
Net investment income ---
Net realized gain on investments ---
Change in net assets from distributions ---
CAPITAL SHARE TRANSACTIONS (note F):
Proceeds from shares sold 3,084,505
Reinvested dividends and distributions ---
Cost of shares redeemed (1,264,526)
Change in net assets from capital share
transactions 1,819,979
Change in net assets 1,855,393
NET ASSETS:
Beginning of period 1,001
End of period $ 1,856,394
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AQUILA CASCADIA EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Note A - Summary of Significant Accounting Policies:
Aquila Cascadia Equity Fund (the "Fund"), is a diversified open-end
investment company organized as a Massachusetts business trust. The Fund
began its current investment operations as a capital appreciation fund on
September 9, 1996.
The Fund is authorized to issue an unlimited number of shares and began
offering Class A, Class C and Class Y shares on August 13, 1996. Its Class A
shares are sold with a front-payment sales charge and bear an annual service
fee. Its Class C shares are sold with a level-payment sales charge with no
payment at time of purchase but level service and distribution fees from date
of purchase through a period of six years thereafter. A contingent
deferred sales charge is assessed to any Class C shareholder who redeems
shares of this Class within one year from the date of purchase. The Class Y
shares are only offered to institutions acting for an investor in a
fiduciary, advisory, agency, custodian or similar capacity. They are not
available to individual retail investors. Class Y shares are sold at net
asset value without any sales charge, redemption fees, contingent deferred
sales charge or distribution or service fees. All classes of shares
represent interests in the same portfolio of investments in the Fund and
are identical as to rights and privileges. They differ only with respect
to the effect of sales charges, the distribution and/or service fees borne
by the respective class, expenses specific to each class, voting rights on
matters affecting a single class and the exchange privileges of each class.
The Fund was originally organized in 1982 as a money market fund under
the name Short Term Asset Reserves and operated from that date until 1993
when it ceased operating as such type of fund. In 1996, the Fund changed its
investment objective to a capital appreciation equity fund and adopted its
present name. Accordingly, financial statements for the periods prior to
August 13, 1996, the date the Fund commenced its present operations as an
equity fund, are not included in this report.
The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles for investment
companies.
(1) Portfolio valuation: Securities listed on a national securities exchange or
designated as national market system securities are valued at the last
sale price on such exchanges or market system or, if there has been no
sale that day, at the bid price. Securities for which market quotations
are not readily available are valued at fair value as determined in
good faith by or at the direction of the Board of Trustees. Short-term
investments maturing in 60 days or less are valued at amortized cost.
(2) Securities transactions and related investment income: Securities
transactions are recorded on the trade date. Realized gains and losses
from securities transactions are reported on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded daily on the accrual basis.
(3) Federal income taxes: It is the policy of the Fund to qualify as
a regulated investment company by complying with the provisions
of the Internal Revenue Code applicable to certain
<PAGE>
AQUILA CASCADIA EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
investment companies. The Fund intends to make distributions of income
and securities profits sufficient to relieve it from all, or
substantially all, Federal income and excise taxes.
(4) Organization expenses: The Fund's organizational expenses have been
deferred and are being amortized on a straight-line basis over five
years.
(5) Allocation of expenses: Expenses, other than class-specific expenses,
are allocated daily to each class of shares based on the relative net
assets of each class. Class-specific expenses, which include
distribution and service fees and any other items that are
specifically attributed to a particular class, are charged directly
to such class.
(6) Use of estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
Note B - Management Arrangements and Fees and Other Transactions with
Affiliates:
Management affairs of the Fund are conducted through two separate
management arrangements.
Aquila Management Corporation, founder of the Fund, serves as Adviser
and Administrator (the "Adviser") for the Fund under an Advisory and
Administration Agreement. Under this agreement, the Adviser provides such
advisory services to the Fund, in addition to those services provided by the
Sub-Adviser, as the Adviser deems appropriate. Besides its advisory
services, it also provides all administrative services, other than those
relating to its investment portfolio handled by the Sub-Adviser. This
includes overseeing the activities of all the various support organizations
to the Fund such as the shareholder servicing agent, custodian, legal
counsel, auditors and distributor and additionally maintaining the Fund's
accounting books and records. For its services, the Adviser is entitled to
receive a fee which is payable monthly and computed as of the close of
business each day on the net assets of the Fund at the following annual
rates; 0.80 of 1% on the first $15 million; 0.65 of 1% on the next $35
million and 0.50 of 1% on the excess over $50 million.
The Fund also has an Investment Sub-Advisory Agreement with Ferguson,
Wellman, Rudd, Purdy & Van Winkle, Inc. (the "Sub-Adviser"). Under this
agreement, the Sub-Adviser supervises the investment program of the Fund and
the composition of its portfolio, and provides for daily pricing of the
Fund's portfolio. For its services, the Sub-Adviser is entitled to receive
a fee which is payable monthly and computed as of the close of business each
day on the net assets of the Fund at the following annual rates; 0.70 of 1%
on the first $15 million; 0.55 of 1% on the next $35 million and 0.40 of 1%
on the excess over $50 million.
Specific details as to the nature and extent of the services provided
by the Adviser and the Sub-Adviser are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
From commencement of its current investment operations through
September 30, 1996, the Fund incurred fees under the Advisory and
Administration Agreement and Sub-Advisory Agreement
<PAGE>
AQUILA CASCADIA EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
of $758 and $663, respectively. However, all of these fees were voluntarily
waived. Additionally, other direct operating expenses during this period of
$13,989 are being voluntarily reimbursed.
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Fund's shares.
Through agreements between the Distributor and various broker-dealer firms
("dealers"), the Fund's shares are sold primarily through the facilities
of these dealers having offices within the Fund's general investment
region, with the bulk of sales commissions inuring to such dealers. From
commencement through September 30, 1996, the Distributor received sales
commissions in the amount of $551.
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part
of the Plan, with respect to Class A Shares, the Fund is authorized to make
service fee payments to broker-dealers or others ("Qualified Recipients")
selected by the Distributor, including, but not limited to, any principal
underwriter of the Fund, with which the Distributor has entered into written
agreements contemplated by the Rule and which have rendered assistance in
the distribution and/or retention of the Fund's shares or servicing of
shareholder accounts. The Fund makes payment of this service fee at the
annual rate of 0.25% of the Fund's average net assets represented by Class A
Shares. From commencement through September 30, 1996, service fees on
Class A Shares amounted to $56, of which the Distributor received $56.
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of the Fund's Class C shares
or servicing of shareholder accounts. These payments are made at the annual
rate of 0.75% of the Fund's net assets represented by Class C Shares
and for the period from commencement through September 30, 1996, amounted to
$11, of which the Distributor received $11.
In addition, under a Shareholder Services Plan, the Fund is authorized
to make service fee payments with respect to Class C Shares to Qualified
Recipients for providing personal services and/or maintenance of shareholder
accounts. These payments are made at the annual rate of 0.25% of the Fund's
net assets represented by Class C Shares and for the period from
commencement through September 30, 1996, amounted to $4, of which the
Distributor received $4.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Note C - Purchases and Sales of Securities:
From commencement through September 30, 1996, purchases of securities
and proceeds from the sales of securities aggregated $1,764,967 and $8,365,
respectively.
At September 30, 1996, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost
amounted to $61,932 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value
amounted to $25,290, for a net unrealized appreciation of $36,642.
<PAGE>
AQUILA CASCADIA EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
Note D - Distributions:
The Fund anticipates that, to the extent necessary, income generated by
its investment portfolio will be used primarily to offset the Fund's
operating expenses. Whatever income that accrues above the level of the
Fund's operating expenses will be distributed annually to shareholders. Net
realized capital gains, if any, will be distributed annually to shareholders.
Distributions are recorded by the Fund on the ex-dividend date and paid to
shareholders in additional shares at the net asset value per share or in
cash, at the shareholder's option. Due to differences between financial
reporting and Federal income tax reporting requirements, distributions made
by the Fund may not be the same as the Fund's net investment income, and/or
net realized securities gains.
Note E - Custodian Fees:
The Fund has negotiated an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever
there are uninvested cash balances. During the period from commencement
through September 30, 1996, the Fund's custodian fees amounted to $1,621,
of which $1,082 was offset by such credits. It is the general intention of
the Fund to invest, to the extent practicable, some or all of cash
balances in income-producing assets rather than leave cash on deposit with
the custodian.
Note F - Capital Share Transactions:
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
Period Ended
September 30, 1996*
Shares Amount
<S> <C> <C>
Class A Shares:
Proceeds from shares sold. . . . . . 19,128 $ 229,942
Reinvested dividends and distributions --- ---
Cost of shares redeemed. . . . . . . (458) (5,500)
Net change. . . . . . . . . . . . 18,670 224,442
Class C Shares:
Proceeds from shares sold. . . . . . 1,038 12,450
Reinvested dividends and
distributions. . . . . . . . . . . --- ---
Cost of shares redeemed. . . . . . . --- ---
Net change . . . . . . . . . . . . 1,038 12,450
Class Y Shares:
Proceeds from shares sold. . . . . . 234,640 2,842,113
Reinvested dividends and
distributions . . . . . . . . . . --- ---
Cost of shares redeemed. . . . . . .(103,802) (1,259,026)
Net change. . . . . . . . . . . 130,838 1,583,087
Total transactions in Fund shares. . 150,546 $ 1,819,979
<FN>
* For the period from August 13, 1996 (commencement of operations) through
September 30, 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AQUILA CASCADIA EQUITY FUND
FINANCIAL HIGHLIGHTS
(unaudited)
For a share outstanding throughout the period
Period Ended September 30, 1996*
Class A Class C Class Y
<S> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . $ 12.00 $ 12.00 $ 12.00
Income from Investment Operations:
Net investment income. . . . . . . . . . . . --- --- ---
Net gain on securities (both realized
and unrealized). . . . . . . . . . . . . . 0.33 0.33 0.33
Total from Investment Operations . . . . . . 0.33 0.33 0.33
Less Distributions (note D):
Dividends from net investment income . . . . --- --- ---
Distributions from capital gains . . . . . . --- --- ---
Total Distributions. . . . . . . . . . . . . --- --- ---
Net Asset Value, End of Period . . . . . . . $ 12.33 $ 12.33 $ 12.33
Total Return (not reflecting sales
charge) (%). . . . . . . . . . . . . . . . 2.75** 2.75** 2.75**
Ratios+/Supplemental Data
Net Assets, End of Period ($ thousands). . . 230 13 1,613
Ratio of Expenses to Average Net Assets (%). 0.00 0.00 0.00
Ratio of Net Investment Income to
Average Net Assets (%) . . . . . . . . . . 0.00 0.00 0.00
Portfolio Turnover Rate (%). . . . . . . . . 0.47 0.47 0.47
Net investment income per share and the ratios
of income and expenses to average net assets
without the Adviser's and Sub-Adviser's
voluntary waiver of fees, the voluntary expense
reimbursement and the expense offset in
custodian fees for uninvested cash balances would
have been:
Net Investment Income ($). . . . . . . . . . --- --- ---
Ratio of Expenses to
Average Net Assets (%) . . . . . . . . . . 0.05 0.04 0.05
Ratio of Net Investment Income to
Average Net Assets (%) . . . . . . . . . . (0.05) (0.04) (0.05)
<FN>
* From August 13, 1996 (commencement of operations) through September 30,
1996.
</FN>
<FN>
** Not annualized.
</FN>
<FN>
+ Ratios have not been annualized due to the relatively short time period
that the Fund has been in existence.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVISER AND ADMINISTRATOR
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
KPM INVESTMENT MANAGEMENT, INC.
Ferguson, Wellman, Rudd, Purdy & Van Winkle, Inc.
888 SW Fifth Avenue, Suite 1200
Portland, OR 97204-2026
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Warren C. Coloney
James A. Gardner
Diana P. Herrmann
Ann R. Leven
Raymond H. Lung
Richard C. Ross
OFFICERS
Lacy B. Herrmann, President
W. Dennis Cheroutes, Senior Vice President
Sally Wilson Church, Vice President
Nancy L. Kayani, 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
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
TRANSFER AND SHAREHOLDER SERVICING AGENT
ADMINISTRATIVE DATA
MANAGEMENT CORP.
581 Main Street
Woodbridge, New Jersey 07095-1198
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Further iformation is contained in the Prospectus,
which must precede or accompany this report.
<PAGE>
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1996
AQUILA CASCADIA EQUITY FUND
{picture of a waterfall and a compass}
ONE OF THE AQUILAsm GROUP OF FUNDS
