<PAGE>
ADVISER AND ADMINISTRATOR
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
FERGUSON, WELLMAN, RUDD,
PURDY & VAN WINKLE, INC.
888 SW Fifth Avenue, Suite 1200
Portland, Oregon 97204
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
David B. Frohnmayer
James A. Gardner
Diana P. Herrmann
Sterling K. Jenson
Raymond H. Lung
John W. Mitchell
Richard C. Ross
Ralph R. Shaw
OFFICERS
Lacy B. Herrmann, President
James M. McCullough, Senior Vice President
Kimball L. Young, Senior Vice President
Sherri Foster, Vice President
Diana P. Herrmann, Vice President
Kerry A. Lemert, Vice President
Christine L. Neimeth, 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, Delaware 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
SEPTEMBER 30, 2000
AQUILA
CASCADIA
EQUITY FUND
[Graphic: Small picture of an antique pocketwatch in front of a larger picture
of a cascading waterfall]
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILASM GROUP OF FUNDS
</PAGE>
<PAGE>
[Graphic: Small picture of an antique pocketwatch in front of a larger picture
of a cascading waterfall]
AQUILA CASCADIA EQUITY FUND
SEMI-ANNUAL REPORT
November 20, 2000
Dear Fellow Shareholder:
We are enclosing the Semi-Annual Report for Aquila Cascadia Equity Fund for
the six-month period from March 31, 2000 through September 30, 2000.
The stock market over this past six-month period was highly volatile. Upon
some occasions, the share value of the Fund was up compared to that on March 31,
and upon other occasions it was down. Based upon where the market was on
September 30th, the total return value of Class A shares of the Fund showed a
decline for the six-month period of 12.15%. This return does not reflect any
sales charge. Since September 30th, there has been a rebound in the share value
as the market has also shown an upward movement.
We wish to emphasize that the fundamental characteristics of the companies
in our portfolio do not possess any basic changes. However, the stock prices do
reflect psychological characteristics of investors in general. Indeed, the
Fund's share price in most instances parallels various "benchmark" indices of
the market during this period.
THE STORY FOR THE CASCADIA REGION CONTINUES TO BE COMPELLING
We continue to be excited about the prospects for the seven states -
Oregon, Washington, Idaho, Utah, Nevada, Alaska and Hawaii - within the Cascadia
region of our country in terms of the possibility for good capital growth from
investments in companies within the various states. This is despite the present
stock market volatility which continues to be inherent.
Our country has experienced significant economic growth over the last 10
years. We believe it will continue to do so, to various extents, over the
foreseeable future. Indeed, we believe, that there will be times when the rate
of growth increases and other times when it decreases. But, we do not, at the
present time, forecast any major downturn.
The Cascadia region is home to both excellent companies as well as highly
competent employees. The quality of life available to people living in the area
is a major factor in terms of the caliber of the people in the Cascadia region.
As we have mentioned in previous reports, if the Cascadia region was broken
out into a separate country, it would have one of the highest Gross Domestic
Products ("GDP") in the world. In fact, the region's gross economy would rank it
between the 11th or 12th largest in the whole world, slightly behind the total
economy produced by Canada and greater than that of Mexico.
Of equal importance to you as an investor, we have the opportunity to
invest in this dynamic area without the problems of currency exchange,
accounting differences, language barriers or other cultural aspects which
represent some of the detracting characteristics which one finds when investing
in various countries throughout the world.
</PAGE>
<PAGE>
THE FUND'S INVESTMENT APPROACH
We continue to seek out companies which possess high growth prospects, but
which we feel are selling at a reasonable valuation. Essentially, we call this
approach "growth at a reasonable price." What we would like to see in companies
in which we invest is a:
* relatively high growth earnings, with strong prospects for sustaining
this trend,
* high return on invested capital,
* relatively low level of debt,
* demonstrated competitive edge in its specific industry segment,
* high stake in ownership by management, and
* price/earnings ratio lower than or comparable to its projected
earnings growth.
We believe that there are a number and variety of companies in the Cascadia
region available for investment by the Fund which fit various of the above
characteristics.
Our on-site portfolio manager is kept very busy ferreting out new
situations for the Fund, as well as overseeing ones in which we are already
invested. We have found that, in many instances, we can unearth various exciting
companies which are national and international in orientation, but also lesser
known others which possess capital appreciation potential before these companies
become well known to Wall Street. This, we believe, is what gives us a
competitive edge in our investment approach.
THE FUND'S KEY INVESTMENTS
As at September 30, 2000, the Fund's key investments and the location of
these investments were as follows:
[Graphic of a pie chart with the following information:]
PORTFOLIO DISTRIBUTION BY MARKET SECTOR
Technology 33%
Transportation 1%
Utilities 5%
Basic Materials 6%
Capital Goods 6%
Communication Services 6%
Consumer Cyclicals 9%
Consumer Staples 7%
Energy 6%
Finance 8%
Healthcare 13%
[Graphic of a pie chart with the following information:]
PORTFOLIO DISTRIBUTION BY STATE
Hawaii 2%
Idaho 9%
Nevada 2%
Oregon 23%
Washington 40%
Utah 4%
Other 20%
</PAGE>
<PAGE>
We also believe it will be of interest to you to know the top 10 holdings
of the Fund as at September 30, 2000. While the individual holdings of the Fund
and those that make up these top 10 will vary over time, there is a commonality
in their selection. This common denominator is that of securities which possess
"growth at a reasonable price," at the time of purchase. As mentioned, we are
also specifically interested in identifying strong management teams who possess
ownership positions in their companies' stock.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
PERCENT
COMPANY OF NET ASSETS STATE MARKET SECTOR
</CAPTION>
<S> <C> <C> <C>
Immunex 5.5% Washington Healthcare
Triquint Semiconductor 4.4% Oregon Technology
Intel 4.2% California Technology
Starbucks Coffee 4.1% Washington Consumer Staples
Costco Wholesale Corp. 4.0% Washington Consumer Cyclicals
Lattice Semiconductor 3.7% Oregon Technology
Microsoft 3.6% Washington Technology
Boeing 3.5% Washington Capital Goods
Micron Technology 3.1% Idaho Technology
Corixa Corp. 3.0% Washington Healthcare
</TABLE>
INVESTMENT PHILOSOPHY
We remain committed to our investment philosophy and disciplines. It is our
desire to purchase and hold securities of companies within the Cascadia region
of our country which will provide attractive long-term capital appreciation for
our shareholders.
YOUR CONFIDENCE IS APPRECIATED
Your investment in Aquila Cascadia Equity Fund is greatly appreciated. We
value your trust and will continue to do our best to merit your confidence.
Sincerely,
/s/ Lacy B. Herrmann
---------------------
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
In keeping with industry standards, total return figures indicated above do not
include sales charges, but do reflect reinvestment of dividends and capital
gains, if any. Different classes of shares are offered and their performance
will vary because of differences in sales charges and fees paid by shareholders
investing in different classes. The performance shown represents that of Class A
shares, adjusted to reflect the absence of sales charges, which is currently a
maximum amount of 4.25% for this Class. A portion of management fees is being
waived. Returns would be less if sales charges and management fees were fully
applied. Share net asset value and investment return fluctuate so that an
investor may receive more or less than original investment upon redemption. The
prospectus of the Fund, which contains more complete information, including
management fees and expenses and which discusses the special risk considerations
of the geographic concentration strategy of the Fund, should, of course, be
carefully reviewed before investing.
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCKS - 97.8% VALUE
</CAPTION>
<S> <C> <C> <C>
BASIC MATERIALS - 5.4%
PAPER & FOREST PRODUCTS - 5.4%
10,750 Boise Cascade Corp. $ 285,547
22,250 Longview Fibre Co. 267,000
20,000 Louisiana Pacific 183,750
5,000 Weyerhaeuser Co. 201,875
938,172
CAPITAL GOODS - 6.2%
AEROSPACE/DEFENSE - 3.5%
9,600 Boeing 604,800
ELECTRICAL EQUIPMENT - 1.1%
5,200 Electro Scientific Industries+ 182,650
TRUCKS & PARTS - 1.6%
7,630 PACCAR Inc. 282,787
COMMUNICATION SERVICES - 6.0%
TELECOM - CELLULAR - 0.9%
4,300 Western Wireless Communications+ 153,187
TELECOM - WIRELESS - 0.9%
12,300 Metro One Telecommunications + 155,287
TELEPHONE - 4.2%
14,800 Nextlink Communications 520,775
4,392 Verizon Communications 212,737
733,512
CONSUMER CYCLICALS - 8.5%
FOOTWEAR - 2.3%
9,900 Nike Inc. Class B 396,619
</PAGE>
<PAGE>
RETAIL - GENERAL MERCHANDISE/SPECIALTY - 6.2%
6,500 Amazon.com+ $ 249,844
20,000 Costco Wholesale Corp.+ 698,750
16,800 Hollywood Entertainment Corp. + 124,950
1,073,544
CONSUMER STAPLES - 7.3%
RESTAURANTS - 4.1%
17,900 Starbucks Corporation + 717,119
RETAIL-FOOD CHAINS - 3.2%
7,300 Albertsons Inc. 153,300
17,816 Kroger Co. + 401,973
555,273
ENERGY - 5.4%
DRILLING - 1.8%
6,250 Noble Drilling Corp. + 314,062
OIL - DOMESTIC - 3.6%
8,774 BP Amoco PLC 465,022
3,000 Texaco Inc. 157,500
622,522
FINANCE - 7.8%
BANKS - MAJOR REGIONAL - 5.7%
14,600 Banc West Corp. 283,788
15,000 Columbia Bancorp 101,250
16,900 U.S. Bancorp 384,475
4,200 Zions Banc 214,791
984,304
SAVINGS & LOAN - 2.1%
9,375 Washington Mutual Inc. 373,242
</PAGE>
<PAGE>
HEALTHCARE - 12.9%
BIOTECH - 11.3%
10,500 Corixa Corp. + $ 527,625
5,500 Icos Corporation + 297,687
22,000 Immunex Corp. + 957,000
2,000 Myriad Genetics Inc.+ 172,000
1,954,312
DRUGS-MAJOR - 1.6%
5,000 NPS Pharmaceuticals+ 282,813
TECHNOLOGY - 32.5%
COMPUTER HARDWARE & SOFTWARE SERVICES - 10.3%
4,690 Hewlett-Packard Co. 454,930
8,200 InFocus Corp.+ 434,600
10,435 Microsoft Corp.+ 628,709
7,000 Webtrends Corp.+ 261,625
1,779,864
ELECTRONICS - 19.8%
17,720 Intel Corp. 736,488
12,000 Lattice Semiconductor + 645,000
20,700 Mentor Graphics Corp. + 487,744
11,600 Micron Technology Inc. + 533,600
3,500 Tektronix Inc. 268,844
21,200 Triquint Semiconductor + 772,475
3,444,151
INTERNET SOFTWARE - 2.4%
4,250 Go2net Inc. + 230,629
4,800 Realnetworks Inc. + 190,800
421,429
</PAGE>
<PAGE>
TRANSPORTATION - 1.2%
AIR FREIGHT/AIRLINES - 1.2%
6,800 Airborne Freight Corporation $ 69,275
6,150 Alaska Air Group Inc.+ 147,600
216,875
UTILITIES - 4.6%
NATURAL GAS - 4.6%
16,300 Southwest Gas Corporation 341,281
10,900 Williams Companies Inc. 460,525
801,806
Total Common Stocks (cost $12,043,754*) 97.8% 16,988,330
Other assets in excess of liabilities 2.2 373,443
Net Assets 100.0% $ 17,361,773
</TABLE>
* Cost for Federal tax purposes is identical.
+ Non-income producing security.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
ASSETS
Investments at market value (cost $12,043,754) $ 16,988,330
Cash 344,772
Deferred organization expenses (note 2) 17,996
Receivable for Fund shares sold 8,342
Dividends receivable 5,801
Other assets 15,000
Total assets 17,380,241
LIABILITIES
Distribution fees payable 6,928
Accrued expenses 5,840
Management fees payable 5,700
Total liabilities 18,468
NET ASSETS $ 17,361,773
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares
par value $.01 per share $ 8,675
Additional paid-in capital 11,128,902
Net unrealized appreciation on investments 4,944,576
Accumulated net realized gain on investments 1,279,620
$ 17,361,773
CLASS A
Net Assets $ 2,001,610
Capital shares outstanding 100,278
Net asset value and redemption price per share $ 19.96
Offering price per share (100/95.75 of $19.96 adjusted to nearest cent) $ 20.85
CLASS C
Net Assets $ 2,226,063
Capital shares outstanding 114,735
Net asset value and offering price per share $ 19.40
Redemption price per share (*a charge of 1% is imposed on the redemption
proceeds of the shares, or on the original price, whichever is lower,
if redeemed during the first 12 months after purchase) $ 19.40*
CLASS Y
Net Assets $ 13,134,100
Capital shares outstanding 652,521
Net asset value, offering and redemption price per share $ 20.13
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 66,964
Expenses:
Advisory and Administrative fees (note 3) $ 68,153
Sub-Advisory fees (note 3) 59,399
Legal fees 17,500
Shareholders' reports 14,000
Distribution and service fees (note 3) 12,814
Amortization of organization expenses (note 2) 9,860
Trustees' fees and expenses 9,000
Transfer and shareholder servicing agent fees 8,000
Registration fees 7,500
Audit and accounting fees 7,000
Custodian fees 1,000
Miscellaneous 2,226
216,452
Advisory and Administrative fees waived (note 3) (42,540)
Sub-Advisory fees waived (note 3) (33,786)
Expenses paid indirectly (note 6) (1,000)
Net expenses 139,126
Net investment loss (72,162)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from securities transactions 1,001,839
Change in unrealized appreciation on investments (3,210,352)
Net realized and unrealized loss on investments (2,208,513)
Net decrease in net assets resulting from operations $ (2,280,675)
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
</CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment loss $ (72,162) $ (67,755)
Net realized gain from securities transactions 1,001,839 1,233,868
Change in unrealized appreciation on investments (3,210,352) 5,038,882
Change in net assets from operations (2,280,675) 6,204,995
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 5):
Class A Shares:
Net investment income - -
Net realized gain on investments - (81,288)
Class C Shares:
Net investment income - -
Net realized gain on investments - (58,813)
Class Y Shares:
Net investment income - -
Net realized gain on investments - (504,879)
Change in net assets from distributions - (644,980)
CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold 1,168,208 626,528
Reinvested dividends and distributions - 450,542
Cost of shares redeemed (100,946) (3,778,681)
Change in net assets from capital share transactions 1,067,262 (2,701,611)
Change in net assets (1,213,413) 2,858,404
NET ASSETS:
Beginning of period 18,575,186 15,716,782
End of period $ 17,361,773 $ 18,575,186
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
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. Class A shares
are sold with a front-payment sales charge and bear an annual service fee. 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 of 1% 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 and are not offered directly to 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. On July 31,
2000 the Fund established Class I shares, which are offered and sold only
through financial intermediaries and are not offered directly to retail
investors. At September 30, 2000 there were no Class I shares outstanding. All
classes of shares represent interests in the same portfolio of investments and
are identical as to rights and privil eges but differ with respect to the effect
of sales charges, the distribution and/or service fees borne by each class,
expenses specific to each class, voting rights on matters affecting a single
class and the exchange privileges of each class.
2. SIGNIFICANT ACCOUNTING POLICIES
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.
a) 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.
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. Dividend
income is recorded on the ex-dividend date. Interest income is recorded
daily on the accrual basis.
c) 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 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.
d) ORGANIZATION EXPENSES: The Fund's organizational expenses have been
deferred and are being amortized on a straight-line basis over five years.
e) 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.
</PAGE>
<PAGE>
f) 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.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
Management affairs of the Fund are conducted through two separate
management arrangements.
Aquila Management Corporation, the Fund's founder and sponsor, 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 the
Fund's investment portfolio handled by the Sub-Adviser. This includes providing
the office of the Fund and all related services as well as 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 above $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 above
$50 million.
For the six months ended September 30, 2000, the Fund incurred fees under
the Advisory and Administration Agreement and Sub-Advisory Agreement of $68,153
and $59,399, respectively, of which amounts $42,540 and $33,786, respectively,
were voluntarily waived.
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.
b) DISTRIBUTION AND SERVICE FEES:
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
Aquila Distributors, Inc. (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. For the six months ended September 30, 2000, service fees on Class A
Shares amounted to $2,382, of which the Distributor received $203.
</PAGE>
<PAGE>
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 six
months ended September 30, 2000, amounted to $7,824. 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 six months ended September 30, 2000, amounted to $2,608. The total
of these payments with respect to Class C Shares amounted to $10,432, of which
the Distributor received $3,815.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, 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.
For the six months ended September 30, 2000, total commissions on sales of Class
A Shares amounted to $5,939, of which the Distributor received $15.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended September 30, 2000, purchases of securities and
proceeds from the sales of securities aggregated $1,947,186 and $1,262,186,
respectively.
At September 30, 2000, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$5,998,629 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $1,054,053,
for a net unrealized appreciation of $4,944,576.
5. 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 and are taxable.
</PAGE>
<PAGE>
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, in cash, or
in a combination of both, at the shareholder's option. Due to differences
between financial statement 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.
6. EXPENSES
The Fund has negotiated an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees and other Fund
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 Fund to invest, to the
extent practicable, some or all of cash balances in equity securities rather
than leave cash on deposit.
7. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 19,429 $ 388,259 14,162 $ 269,760
Reinvested dividends and
distributions - - 1,580 29,989
Cost of shares redeemed (2,474) (50,214) (61,180) (1,277,766)
Net change 16,955 338,045 (45,438) (978,017)
CLASS C SHARES:
Proceeds from shares sold 21,947 436,997 14,162 267,567
Reinvested dividends and
distributions - - 185 3,437
Cost of shares redeemed (147) (3,024) (7,534) (136,326)
Net change 21,800 433,973 6,813 134,678
CLASS Y SHARES:
Proceeds from shares sold 16,185 342,952 4,406 89,201
Reinvested dividends and
distributions - - 21,827 417,116
Cost of shares redeemed (2,274) (47,708) (125,100) (2,364,589)
Net change 13,911 295,244 (98,867) (1,858,272)
Total transactions in Fund
shares 52,666 $ 1,067,262 (137,492) $ (2,701,611)
</TABLE>
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A CLASS C
SIX MONTHS PERIOD(1) SIX MONTHS PERIOD(1)
ENDED YEAR ENDED MARCH 31, ENDED ENDED YEAR ENDED MARCH 31, ENDED
9/30/00 2000 1999 1998 3/31/97 9/30/00 2000 1999 1998 3/31/97
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.72 $16.46 $16.89 $12.95 $12.00 $22.18 $16.21 $16.76 $12.95 $12.00
Income from Investment Operations:
Net investment loss (0.10) (0.10) - - - (0.17) (0.24) - - -
Net gain (loss) on securities
(both realized and unrealized) (2.66) 7.05 (0.43) 3.94 0.95 (2.61) 6.90 (0.55) 3.81 0.95
Total from Investment Operations (2.76) 6.95 (0.43) 3.94 0.95 (2.78) 6.66 (0.55) 3.81 0.95
Less Distributions (note 5):
Dividends from net investment
income - - - - - - - - - -
Distributions from capital gains - (0.69) - - - - (0.69) - - -
Total Distributions - (0.69) - - - - (0.69) - - -
Net Asset Value, End of Period $19.96 $22.72 $16.46 $16.89 $12.95 $19.40 $22.18 $16.21 $16.76 $12.95
Total Return (not reflecting sales
charge) (%) (12.15)+ 43.07 (2.55) 30.42 7.92+ (12.53)+ 41.94 (3.28) 29.42 7.92+
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 2,002 1,893 2,119 2,709 1,615 2,226 2,061 1,396 968 350
Ratio of Expenses to Average
Net Assets (%) 1.56* 1.67 1.92 1.77 1.34* 2.18* 2.42 2.65 2.53 1.38*
Ratio of Net Investment Loss
to Average Net Assets (%) (0.85)* (0.53) (0.25) (0.18) (0.16)* (1.49)* (1.30) (1.00) (0.96) (0.16)*
Portfolio Turnover Rate (%) 7.41+ 37.46 26.62 29.38 3.53+ 7.41+ 37.46 26.62 29.38 3.53+
The expense and net investment loss ratios without the effect of the
Adviser's and Sub-Adviser's voluntary waiver of fees and the Adviser's
voluntary expense reimbursement were:
Ratio of Expenses to Average
Net Assets (%) 2.35* 2.44 2.37 2.76 4.63* 2.95* 3.20 3.09 3.53 5.39*
Ratio of Net Investment Loss to
Average Net Assets (%) (1.65)* (1.30) (0.70) (1.17) (3.45)* (2.26)* (2.08) (1.44) (1.96) (4.17)*
The expense ratios after giving effect to the waivers, expense reimbursement,
and expense offset for uninvested cash balances were:
Ratio of Expenses to Average
Net Assets (%) 1.55* 1.65 1.80 1.75 1.18* 2.17* 2.40 2.54 2.51 1.22*
</TABLE>
(1) For the period August 13, 1996 (commencement of operations) through March
31, 1997.
+ Not annualized.
* Annualized.
</PAGE>
<PAGE>
AQUILA CASCADIA EQUITY FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS Y
SIX MONTHS PERIOD(1)
ENDED YEAR ENDED MARCH 31, ENDED
9/30/00 2000 1999 1998 3/31/97
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.89 $16.55 $16.94 $12.96 $12.00
Income from Investment Operations:
Net investment loss (0.07) (0.05) - - -
Net gain (loss) on securities (both realized and unrealized) (2.69) 7.08 (0.39) 3.98 0.96
Total from Investment Operations (2.76) 7.03 (0.39) 3.98 0.96
Less Distributions (note 5):
Dividends from net investment income - - - - -
Distributions from capital gains - (0.69) - - -
Total Distributions - (0.69) - - -
Net Asset Value, End of Period $20.13 $22.89 $16.55 $16.94 $12.96
Total Return (not reflecting sales charge) (%) (12.06)+ 43.32 (2.30) 30.71 8.00+
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 13,134 14,621 12,202 12,649 7,393
Ratio of Expenses to Average Net Assets (%) 1.41* 1.42 1.66 1.52 1.40*
Ratio of Net Investment Gain (Loss) to Average Net Assets (%) (0.67)* (0.28) - 0.07 (0.16)*
Portfolio Turnover Rate (%) 7.41+ 37.46 26.62 29.38 3.53+
The expense and net investment loss ratios without the effect of the
Adviser's and Sub-Adviser's voluntary waiver of fees and the Adviser's
voluntary expense reimbursement were:
Ratio of Expenses to Average Net Assets (%) 2.24* 2.20 2.11 2.51 4.38*
Ratio of Net Investment Loss to Average Net Assets (%) (1.50)* (1.06) (0.45) (0.92) (3.14)*
The expense ratios after giving effect to the waivers, expense reimbursement,
and expense offset for uninvested cash balances were:
Ratio of Expenses to Average Net Assets (%) 1.40* 1.40 1.55 1.50 1.24*
</TABLE>
(1) For the period August 13, 1996 (commencement of operations) through March
31, 1997.
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Aquila Cascadia Equity Fund (the
"Fund") was held on May 8, 2000. The holders of shares representing 51% of the
total net asset value of the shares entitled to vote were present in person or
by proxy. At the meeting, the following matter was voted upon and approved by
the shareholders (the resulting votes for the matter is presented below).
1. To elect Trustees.
NUMBER OF VOTES:
TRUSTEE FOR WITHHELD
Lacy B. Herrmann 419,084 347
Vernon R. Alden 419,084 347
David B. Frohnmayer 419,084 347
James A. Gardner 419,084 347
Diana P. Herrmann 419,084 347
Sterling K. Jenson 419,084 347
Raymond H. Lung 419,084 347
John W. Mitchell 419,084 347
Richard C. Ross 419,084 347
Ralph R. Shaw 419,084 347
</PAGE>
