INVESTMENT ADVISER
QUALIVEST CAPITAL MANAGEMENT, INC.
A subsidiary of U.S. Bancorp and its subsidiary,
United States National Bank of Oregon
111 S.W. Fifth Avenue
U.S. Bancorp Tower
Portland, Oregon 97204
ADMINISTRATOR AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
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
Sally Wilson Church, Vice President
Nancy 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
TRANSFER AND SHAREHOLDER
SERVICING AGENT
ADMINISTRATIVE DATA
MANAGEMENT CORP.
581 Main Street
Woodbridge, New Jersey 07095-1198
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus,
which must precede or accompany this report.
SEMI-ANNUAL
REPORT
MARCH 31, 1997
TAX-FREE TRUST OF
OREGON
A TAX-FREE INCOME INVESTMENT
[Logo of Tax-Free Trust of Oregon: Square box with 2 fir trees in front of a
mountain and the sun]
[Logo of Aquila Group of Funds: Eagle's head]
ONE OF THE
AQUILASM GROUP OF FUNDS
<PAGE>
[Logo of Tax-Free Trust of Oregon: Square box with 2 fir trees in front of a
mountain and the sun]
TAX-FREE TRUST OF OREGON
SEMI-ANNUAL REPORT
"THE VALUE OF STEADFASTNESS"
April 21, 1997
Dear Investor:
Most of us have heard, at one time or another, the story of the
tortoise and the hare. With respect to your investment in Tax-Free Trust of
Oregon, this old adage, detailing the virtue of steadfastness, speaks
volumes. If the finish line you are seeking to cross is one of capital
preservation and double tax-free income, then an investment which performs
much like the tortoise just might "win the race."
THE CALL OF THE STOCK MARKET
As I am sure you will agree, recent years have been banner ones for
the stock market. The spectacular price increases experienced have made the
appeal of investing in equity securities extremely powerful and, at times,
almost irresistible.
If it were possible to know in advance just what and when to buy or
sell in order to maximize profit, then constantly switching your investment
vehicle, trying to capture the latest trend, would be uncomplicated.
Unfortunately, "timing" the market, with any degree of consistency,
is nearly impossible. We have generally found that, for the average investor,
switching continuously from one security to another in the management of
his/her investment portfolio tends to be a fruitless, often imprudent,
exercise. With the degree of volatility inherent in the equity markets,
missing an upturn could result in a disastrous loss of invested principal.
PROUD TO BE A TORTOISE
Our various survey results indicate that a substantial number of
investors in Tax-Free Trust of Oregon are retirees or pre-retirees who are
concerned about capital preservation. Accordingly, staying on track with your
investment in the Trust could well prove to be the most appropriate course to
follow. Although equity investments can be rewarding for a portion of one's
capital, it is still critical to keep firmly in mind your overall investment
goal and not get disproportionately distracted by the dazzle of other
investments.
It is no great secret that municipal bonds, such as those in which
the Trust invests, are generally not exciting investments. Unlike stocks,
they do not experience abrupt, dramatic highs. However, it must be kept in
mind that municipal bonds also do not experience the dumbfounding lows of
stocks. Municipal bond funds just plod along from year to year, much like the
tortoise, producing consistent double tax-free results for shareholders.
While being a tortoise may not be as glamorous as being a hare, this
should not represent a cause for concern. The end result is really what
counts - not how you got there, but that you got there at all.
CAPITAL PRESERVATION STRATEGIES
Although capital preservation is not guaranteed, the Trust does take
some very deliberate steps to ensure that there will be minimal volatility in
share price over a reasonable time frame.
<PAGE>
The Trust's basic philosophy is "don't put all your eggs in one
basket." And, when you choose the eggs for that basket, choose only quality
ones.
DIVERSIFICATION is a key stability tool used in the construction of
the Trust's investment portfolio. At March 31, 1997, over 190 separate
municipal issues were represented in the Trust's portfolio. Having such a
breadth of participation helps to ensure against any significant loss of
principal by the Trust in the remote event anything ever did go wrong with a
particular issuer. Such diversification also enables the Trust to participate
in financing many different vital public purpose projects in numerous
communities throughout Oregon, thereby benefitting residents of the entire
state.
We have found from experience that sticking with QUALITY is best in
the long run. Therefore, investments in the Trust are specifically limited to
only the top four credit ratings, or equivalent, of the nine assignable to
municipal securities by nationally-known credit rating services. At March 31,
1997, 97.7% of the portfolio was comprised of the top three credit ratings -
AAA, AA, AND A.
Emphasis is also placed on having a SPREAD OF MATURITIES in the
Trust's investment portfolio. As you probably are aware, short term
maturities tend to have very little price fluctuation, but produce a lesser
rate of return than longer maturity securities. Conversely, long-term
maturities produce a higher return level, but have a much higher price
volatility factor than shorter-term issues since they reflect the risks
associated with the unpredictability of future events and the potential
interest rate changes over the extended life of the municipal bond.
By creating a blend of maturities, ranging from under one year to
over 20 years in length, the Trust attempts to provide you with a
satisfactory level of return without subjecting the share price to excessive
swings as interest rates move up and down. Thus, the current average maturity
of the Trust's portfolio is the relatively intermediate term of 14.5 years.
The Trust's investment portfolio manager, Qualivest Capital
Management, Inc., examines the above elements very carefully when selecting
each individual "egg" for your basket of investments in order to obtain the
most appropriate fit. Such careful attention seeks to provide protection for
shareholders' capital and promote stability.
RECENT DEVELOPMENT
As you may know, U.S. Bancorp, the parent company of Qualivest
Capital Management, Inc. and First Bank National Association ("First Bank")
have announced that they will merge during the summer of 1997. As a result of
the merger, the investment portfolio manager's operations will become part of
First Asset Management, a division of First Bank. At the time of the merger
it is currently anticipated that a new investment advisory agreement with
First Asset Management will have been approved by the Board of Trustees. It
will be presented to the shareholders of the Trust for approval. Based on
discussions between the management of the Trust and First Asset Management,
it is not expected that there will currently be any change in the local
portfolio management of the Trust in Oregon or any change in the overall fees
for advisory and administration services.
TAX-FREE RATE OF RETURN
What many investors sometime forget is that while the level of income
from the Trust may seem unimpressive on the surface, it is DOUBLE TAX-FREE -
free of both regular Federal and State of Oregon income taxes. When the rate
of return achieved by the Trust is converted into a taxable equivalent rate,
the outcome is generally quite an eye-opener.
<PAGE>
The following chart shows the average annualized level of DOUBLE TAX-FREE
income return distributed to shareholders from April 1, 1996 to March 31,
1997, as measured against the maximum public offering price.* It additionally
illustrates the rate of taxable income return one would have had to earn in
order to equate to the DOUBLE TAX-FREE income return generated by the Trust.
[Graphic: Bar Chart with the following information:]
<TABLE>
<CAPTION>
TAX-FREE TRUST OF OREGON'S DOUBLE TAX-FREE DISTRIBUTION
RATE AS COMPARED TO THE TAXABLE EQUIVALENT RATE AN
INVESTOR WOULD HAVE TO EARN AT VARIOUS TAX RATES
Tax Bracket Taxable Equivalent Rate Double Tax-Free Equivalent Rate
<C> <C> <C>
28% 7.71% 5.05%
31% 8.15% 5.05%
36% 8.82% 5.05%
39.6% 9.37% 5.05%
</TABLE>
No matter which Federal income tax bracket applies, you can readily
see that there is quite a difference between the TAXABLE and the DOUBLE
TAX-FREE return levels.
OUR PLEDGE TO YOU
Management of Tax-Free Trust of Oregon values the confidence you have
placed in us. You can be assured that we will steadfastly strive to help you
cross the finish line of your investment goal.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
* The performance shown represents that of Class A shares. Such performance
data quoted represents past performance and is not indicative of future
results. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. The Trust's average annual total return as of
3/31/97 for the past one-year period was 4.78%; for the past five-year period
was 6.17%; for the past ten-year period was 6.55%; and since inception was
7.08%. These returns do not take into consideration the maximum sales charge
of 4%. Returns would be less if the sales charge was applied. As of 3/31/97,
the Trust's 30-day SEC yield was 4.30%.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE TRUST OF OREGON
STATEMENT OF INVESTMENTS
MARCH 31, 1997 (unaudited)
RATING
FACE MOODY'S/ MARKET
AMOUNT STATE OF OREGON GENERAL S&P VALUE
OBLIGATION BONDS (54.6%)
<C> <S> <C> <C>
City of Albany (MBIA
Corporation Insured)
$ 150,000 6.400%, 11/01/1999 Aaa/AAA $ 150,261
460,000 6.500%, 11/01/2000 Aaa/AAA 460,800
2,195,000 6.625%, 11/01/2009 Aaa/AAA 2,197,788
Port of Astoria (MBIA
Corporation Insured)
1,250,000 6.600%, 09/01/2011 Aaa/AAA 1,346,875
410,000 6.200%, 02/01/2004 Aaa/AAA 423,837
City of Beaverton
910,000 5.950%, 04/01/2003 Aa/AA- 954,362
520,000 6.600%, 06/01/2003 NR/AA- 534,950
960,000 6.050%, 04/01/2004 Aa/AA- 1,006,800
560,000 6.600%, 06/01/2004 NR/AA- 576,100
1,020,000 6.150%, 04/01/2005 Aa/AA- 1,069,725
500,000 5.000%, 06/01/2005 Aa/AA- 498,750
1,080,000 6.250%, 04/01/2006 Aa/AA- 1,134,000
Clackamas County School
District #115 (AMBAC
Indemnity Corporation
Insured)
600,000 5.600%, 06/01/2006 Aaa/AAA 622,500
615,000 5.700%, 06/01/2007 Aaa/AAA 639,600
1,000,000 6.150%, 06/01/2014 Aaa/AAA 1,045,000
Clackamas and Washington
County School
District #3J
2,000,000 5.850%, 08/01/2006 A1/AA- 2,092,500
5,000,000 5.875%, 08/01/2009 A1/AA- 5,181,250
1,150,000 5.875%, 10/01/2009 A1/AA- 1,196,000
Clackamas, Multnomah and
Washington County
School District #7J
1,000,000 7.100%, 06/15/2009 Aaa/NR 1,073,750
250,000 7.100%, 06/15/2010 Aaa/NR 268,438
1,500,000 5.700%, 06/15/2010 Aa/NR 1,528,125
Columbia Gorge Community
College District (Financial
Security Assurance Insured)
1,200,000 5.400%, 06/01/2013 Aaa/AAA 1,186,500
<PAGE>
Deschutes and Jefferson
County School District #2J
(MBIA Corporation Insured)
3,700,000 5.600%, 06/01/2009 Aaa/AAA 3,750,875
Hood River County School
District (AMBAC Indemnity
Corporation Insured)
2,000,000 5.650%, 06/01/2008 Aaa/AAA 2,060,000
Jackson County School District
#549C (Financial Security
Assurance Insured)
1,400,000 5.100%, 06/01/2005 Aaa/AAA 1,403,500
1,000,000 5.300%, 06/01/2008 Aaa/AAA 1,002,500
Josephine County School
District #7 (Grants Pass)
(Financial Guaranty Insurance
Corporation Insured)
2,700,000 5.700% 06/01/2013 Aaa/AAA 2,703,375
Jefferson County School
District #509J (Financial
Security Assurance Insured)
1,750,000 5.500%, 06/15/2013 Aaa/AAA 1,732,500
Lane County School District #4J
2,000,000 5.375%, 07/01/2009 Aa/NR 2,002,500
Lane County School District
#52J (Financial Guaranty
Insurance Corporation Insured)
750,000 6.400%, 12/01/2009 Aaa/AAA 812,812
Lincoln County Oregon School
District (Financial Guaranty
Insurance Corporation)
1,245,000 5.250%, 06/15/2009 Aaa/NR 1,215,431
Lincoln County (MBIA
Corporation Insured)
1,000,000 5.375%, 02/01/2010 Aaa/AAA 986,250
Malheur County Jail Bonds
(MBIA Corporation Insured)
1,345,000 6.300%, 12/01/2012 Aaa/AAA 1,429,062
Marion and Clackamas County
Union High School District
#7J (Financial Security
Assurance Insured)
1,340,000 6.000%, 06/01/2013 Aaa/AAA 1,400,300
<PAGE>
Multnomah County
1,000,000 5.200%, 07/01/2005 Aa/NR 1,011,250
1,245,000 5.100%, 10/01/2007 Aa1/NR 1,241,888
1,000,000 5.200%, 10/01/2008 Aa1/NR 997,500
3,100,000 6.000%, 08/01/2012 Aa/A+ 3,158,125
Multnomah County School
District #1
3,225,000 6.500%, 12/15/2000 Aa/A+ 3,238,899
1,180,000 6.600%, 12/15/2001 Aa/A+ 1,185,004
3,725,000 6.800%, 12/15/2004 Aa/A+ 3,740,161
Multnomah County School
District #1J
1,000,000 5.000%, 03/01/2007 Aa/A+ 990,000
Multnomah County School
District #4
1,330,000 5.900%, 01/01/2005 A1/A+ 1,384,864
Multnomah County School
District #40
4,100,000 5.625%, 06/01/2012 NR/AA- 4,125,625
Metropolitan Service District
Refunding (Oregon
Convention Center)
4,320,000 6.250%, 01/01/2013 Aa/AA+ 4,492,800
Oak Lodge Water District
(AMBAC Indemnity
Corporation Insured)
215,000 7.300%, 12/01/2005 Aaa/AAA 247,518
215,000 7.300%, 12/01/2006 Aaa/AAA 246,713
215,000 7.400%, 12/01/2007 Aaa/AAA 247,250
State of Oregon
5,000,000 7.000%, 12/01/2011 Aa/AA 5,293,750
State of Oregon Alternate
Energy Project Series A
1,530,000 4.900%, 01/01/2004 Aa/AA 1,524,262
1,000,000 6.400%, 01/01/2008 Aa/AA 1,032,500
State of Oregon Board of
Higher Education
900,000 6.200%, 10/15/2007 Aa/AA 947,250
3,195,000 6.400%, 10/01/2011 Aa/AA 3,330,788
2,000,000 6.250%, 10/15/2012 Aa/AA 2,095,000
2,150,000 6.500%, 10/01/2017 Aa/AA 2,276,312
2,890,000 6.000%, 10/15/2018 Aa/AA 3,016,438
<PAGE>
State of Oregon Elderly &
Disabled Housing
725,000 6.250%, 08/01/2013 Aa/AA 765,781
State of Oregon Veterans'
Welfare
900,000 11.250%, 04/01/1998 Aa/AA 963,810
505,000 9.000%, 04/01/2008 Aa/AA 606,631
700,000 9.200%, 10/01/2008 Aa/AA 938,875
565,000 8.000%, 11/01/2012 Aa/AA 589,583
7,150,000 6.875%, 12/01/2013 Aa/AA 7,579,000
500,000 6.875%, 12/01/2014 Aa/AA 528,750
1,000,000 7.000%, 12/01/2015 Aa/AA 1,061,250
Polk County School District
#2 (Financial Security
Assurance Insured)
1,000,000 5.400%, 06/01/2012 Aaa/AAA 986,250
Polk, Marion, and Benton
County School District #13J
(Financial Guaranty Insurance
Corporation Insured)
1,000,000 5.500%, 12/01/2008 Aaa/AAA 1,022,500
City of Portland
1,625,000 4.500%, 11/01/2004 Aaa/NR 1,580,312
1,480,000 5.100%, 10/01/2009 Aaa/NR 1,461,500
2,000,000 7.125%, 10/01/2010 Aaa/NR 2,125,000
2,790,000 5.750%, 06/01/2013 Aaa/NR 2,835,338
2,500,000 5.250%, 06/01/2015 Aa/NR 2,412,500
2,000,000 5.600%, 06/01/2015 Aa/NR 1,992,500
Portland Community College
District
3,500,000 6.000%, 07/01/2012 A1/AA 3,596,250
Port of Portland
1,000,000 4.500%, 03/01/2006 Aa/AA+ 955,000
City of Salem
1,000,000 5.875%, 01/01/2007 A1/A+ 1,028,750
Tri-County Metropolitan
Transportation District
6,100,000 6.000%, 07/01/2012 Aa/AA+ 6,298,250
<PAGE>
Tualatin Hills Park and
Recreation District
(MBIA Corporation Insured)
2,970,000 5.750%, 03/01/2012 Aaa/AAA 2,999,700
2,000,000 5.750%, 03/01/2015 Aaa/AAA 2,012,500
Umatilla County Oregon
(Financial Guaranty
Insurance Corporation
Insured)
2,000,000 5.600%, 10/01/2015 Aaa/AAA 1,967,500
Umatilla County School District
#8R (AMBAC Indemnity
Corporation Insured)
700,000 6.100%, 12/01/2012 Aaa/AAA 726,250
Washington County
2,500,000 6.200%, 12/01/2007 Aa/AA 2,631,250
3,110,000 6.000%, 12/01/2013 Aa/AA 3,199,413
Washington County School
District #88J (Financial
Security Assurance Insured)
2,900,000 6.100%, 06/01/2012 Aaa/AAA 3,034,125
Washington and Clackamas
County School District #23J
1,675,000 6.625%, 01/01/2005 NR/NR* 1,760,844
1,000,000 5.650%, 06/01/2015 A1/NR 997,500
720,000 6.625%, 01/01/2008 NR/NR* 756,900
2,000,000 5.400%, 01/01/2010 A1/NR 1,980,000
Washington & Multnomah County
School District #48J
1,175,000 5.500%, 06/01/2006 Aa/AA- 1,217,594
1,440,000 4.500%, 09/01/2006 Aa/AA- 1,504,800
1,130,000 5.600%, 06/01/2007 Aa/AA- 1,173,787
1,000,000 6.150%, 06/01/2008 Aa/AA- 1,040,000
1,415,000 5.700%, 06/01/2008 Aa/AA- 1,469,831
525,000 6.300%, 09/01/2009 Aaa/AAA 558,469
1,440,000 6.000%, 06/01/2011 Aa/AA- 1,377,000
2,010,000 6.500%, 09/01/2011 Aaa/AAA 2,153,212
250,000 5.750%, 09/01/2012 Aaa/AAA 257,813
<PAGE>
Washington & Yamhill County
School District #58J (AMBAC
Indemnity Corporation Insured)
70,000 6.600% 11/01/2004 Aaa/AAA 70,090
80,000 6.600% 11/01/2005 Aaa/AAA 80,094
90,000 6.600% 11/01/2006 Aaa/AAA 90,105
Wolf Creek Highway Water
District
505,000 6.900%, 12/01/2005 NR/AA 527,094
Yamhill County School
District #29J (Financial
Security Assurance Insured)
2,000,000 5.350%, 06/01/2006 Aaa/AAA 2,030,000
500,000 6.100%, 06/01/2011 Aaa/AAA 525,625
Total State of Oregon
General Obligation Bonds 166,980,239
STATE OF OREGON REVENUE
BONDS (43.4%)
AIRPORT REVENUE BONDS (2.5%)
Port of Portland Airport
(Financial Guaranty
Insurance Corporation
Insured)
500,000 5.500%, 07/01/2006 Aaa/AAA 511,250
Port of Portland Airport (MBIA
Corporation Insured)
600,000 6.400%, 07/01/2003 Aaa/AAA 642,750
3,530,000 6.750%, 07/01/2009 Aaa/AAA 3,799,163
2,425,000 6.750%, 07/01/2015 Aaa/AAA 2,606,875
Total Airport Revenue Bonds 7,560,038
CERTIFICATE OF PARTICIPATION
REVENUE BONDS (8.8%)
Oregon State Department Of
Administration Services (AMBAC
Indemnity Corporation Insured)
1,000,000 5.750%, 05/01/2017 Aaa/AAA 993,750
5,805,000 5.500%, 11/01/2020 Aaa/AAA 5,580,056
State of Oregon Certificate of
Participation (AMBAC Indemnity
Corporation Insured)
3,100,000 7.500%, 09/01/2015 Aaa/AAA 3,437,125
<PAGE>
State of Oregon Certificate
of Participation
(MBIA Corporation Insured)
2,150,000 7.050%, 01/15/2006 Aaa/AAA 2,322,000
1,250,000 5.700%, 01/15/2010 Aaa/AAA 1,257,812
2,750,000 6.200%, 11/01/2012 Aaa/AAA 2,860,000
1,150,000 7.200%, 01/15/2015 Aaa/AAA 1,247,750
1,000,000 5.500%, 01/15/2015 Aaa/AAA 967,500
550,000 5.500%, 01/15/2015 Aaa/AAA 532,125
600,000 7.200%, 03/01/2015 Aaa/AAA 647,250
500,000 5.800%, 03/01/2015 Aaa/AAA 500,000
1,000,000 5.800%, 03/01/2015 Aaa/AAA 1,000,000
2,000,000 6.250%, 11/01/2019 Aaa/AAA 2,082,500
Southwestern Oregon Community
College District (AMBAC
Indemnity Corporation Insured)
1,000,000 5.600%, 06/01/2016 Aaa/AAA 991,250
City of Portland Certificate of
Participation
1,100,000 7.250%, 04/01/2008 NR/NR* 1,159,125
Washington County Educational
Services, Certificates of
Participation (MBIA
Corporation Insured)
645,000 5.625%, 06/01/2016 A1/NR 624,037
830,000 5.750%, 06/01/2025 Aaa/AAA 821,700
Total Certificate of
Participation Revenue Bonds 27,023,980
HOSPITAL REVENUE BONDS (4.7%)
Clackamas Hospital Facilities
Authority (Adventist Health
System/West)(MBIA Corporation
Insured)
2,000,000 6.350%, 03/01/2009 Aaa/AAA 2,125,000
Clackamas Hospital Facilities
Authority (Kaiser Permanente)
2,400,000 6.500%, 04/01/2011 Aa3/AA 2,505,000
Clackamas Hospital Facilites
Authority (Sisters
of Providence Hospital)
500,000 6.375%, 10/01/2004 A1/AA- 538,750
<PAGE>
Douglas County Hospital
Facilities Authority (Catholic
Health) (MBIA Corporation
Insured)
535,000 5.600%, 11/15/2005 Aaa/AAA 553,725
Medford Hosptial Facilities
Authority (Rogue Valley Health
Services) (MBIA Corporation
Insured)
500,000 6.800%, 12/01/2011 Aaa/AAA 538,750
1,685,000 6.750%, 12/01/2020 Aaa/AAA 1,794,525
Western Lane County Hospital
Facilities Authority (Sisters
of St. Joseph Hospital)
(MBIA Corporation Insured)
1,000,000 5.625%, 08/01/2007 Aaa/AAA 1,031,250
1,450,000 7.125%, 08/01/2017 Aaa/AAA 1,562,375
3,765,000 5.750%, 08/01/2019 Aaa/AAA 3,741,469
Total Hospital Revenue Bonds 14,390,844
HOUSING, EDUCATIONAL, AND
CULTURAL REVENUE BONDS (8.9%)
Clackamas Community College
District Revenue (MBIA
Corporation Insured)
1,865,000 5.700%, 06/01/2016 Aaa/AAA 1,851,012
State of Oregon Housing
Finance Agency,
1,000,000 6.800%, 07/01/2013 A1/A+ 1,041,250
State of Oregon Housing and
Community Services,
480,000 5.100%, 07/01/2007 Aa/NR 467,400
1,670,000 5.200%, 07/01/2009 Aa/NR 1,640,775
825,000 6.750%, 07/01/2012 Aa/NR 866,250
500,000 6.700%, 07/01/2013 Aa/NR 517,500
490,000 6.350%, 07/01/2014 Aa/NR 502,862
990,000 6.800%, 07/01/2016 Aa/NR 1,037,025
1,895,000 6.750%, 07/01/2016 Aa/NR 1,961,325
3,500,000 6.875%, 07/01/2028 Aa/NR 3,657,500
State of Oregon Housing and
Community Services
(MBIA Corporation Insured),
1,500,000 5.450%, 07/01/2024 Aaa/AAA 1,426,875
<PAGE>
Oregon State Health, Housing,
Educational, and Cultural
Facilities Authority (George
Fox College)(LOC Bank of
America)
1,000,000 5.700%, 03/01/2017 NR/AA- 975,000
State of Oregon Housing,
Educational and Cultural
Facilities Authority (Lewis &
Clark College) (MBIA
Corporation Insured)
1,130,000 7.125%, 07/01/2020 Aaa/AAA 1,234,525
State of Oregon Housing,
Educational and Cultural
Facilities Authority (OMSI),
705,000 5.900%, 07/01/2012 A1/NR 708,525
State of Oregon Housing,
Educational and Cultural
Facilities Authority (Reed
College),
2,145,000 6.750%, 07/01/2021 NR/A+ 2,346,094
Oregon Health Sciences
University Revenue (AMBAC
Indemnity Corporation Insured)
4,500,000 5.250%, 07/01/2015 Aaa/AAA 4,263,750
City of Salem Educational
Facilities (Willamette
University),
1,000,000 6.000%, 04/01/2010 A/NR 1,027,500
1,740,000 6.750%, 04/01/2011 NR/NR* 1,872,675
Total Housing, Educational,
and Cultural Revenue Bonds 27,397,843
TRANSPORTATION REVENUE BONDS
(2.8%)
Port of Morrow,
2,600,000 6.375%, 04/01/2008 Aaa/NR 2,782,000
State of Oregon Department of
Transportation (Light Rail)
(MBIA Corporation Insured),
2,000,000 6.000%, 06/01/2005 Aaa/AAA 2,115,000
Port of St. Helens,
90,000 7.750% 02/01/2006 Baa1/NR 98,438
Tri-County Metropolitan
Transportation District
3,680,000 5.700%, 08/01/2013 A1/AA 3,680,000
Total Transportation
Revenue Bonds 8,675,438
<PAGE>
URBAN RENEWAL REVENUE BONDS
(.6%)
Keiser Urban Renewal Agency,
950,000 5.400%, 07/01/2008 NR/A- 933,375
City of Portland Urban Renewal,
300,000 9.000%, 12/01/2002 A/NR 306,645
City of Wilsonville Urban
Renewal,
500,000 5.850%, 06/01/2004 Baa1/NR 500,310
Total Urban Renewal Revenue
Bonds 1,740,330
UTILITY REVENUE BONDS (3.8%)
Emerald Peoples Utility District
(AMBAC Indemnity Corporation
Insured),
700,000 6.700%, 11/01/2005 Aaa/AAA 754,250
Emerald Peoples Utility
District Electic Systems
(Financial Security Assurance
Insured)
1,000,000 6.750%, 11/01/2016 Aaa/AAA 1,083,750
City of Eugene Electric Utility
610,000 6.650%, 08/01/2009 A1/AA 641,262
660,000 6.650%, 08/01/2010 A1/AA 691,350
1,000,000 6.000%, 08/01/2011 A1/AA 1,017,500
700,000 6.700%, 08/01/2011 A1/AA 730,625
500,000 5.000%, 08/01/2017 A1/AA 450,625
1,400,000 5.800%, 08/01/2019 A1/AA 1,393,000
City of Eugene Trojan Nuclear
Project
3,865,000 5.900%, 09/01/2009 Aa/AA 3,864,961
Northern Wasco County Public
Utility Developement (AMBAC
Indemnity Corporation
Insured),
1,000,000 5.625%, 12/01/2022 Aaa/AAA 978,750
Total Utility Revenue Bonds 11,606,073
WATER AND SEWER REVENUE BONDS
(9.2%)
City of Canby Sewer (Financial
Security Assurance Insured),
500,000 6.250%, 12/01/2017 Aaa/AAA 518,750
<PAGE>
City of Eugene Water,
780,000 6.550%, 08/01/2004 A1/AA- 796,380
365,000 6.600%, 08/01/2005 A1/AA- 372,698
City of Klamath Falls Water
(Financial Security Assurance
Insured),
1,100,000 6.100%, 06/01/2014 Aaa/AAA 1,146,750
City of Oregon City Sewer,
750,000 6.875%, 10/01/2019 NR/NR* 761,250
City of Portland Sewer,
2,150,000 5.100%, 03/01/2007 A1/A+ 2,133,875
1,500,000 6.050%, 06/01/2009 A1/A+ 1,586,250
City of Portland Sewer
(Financial Guaranty
Insurance Corporation
Insured),
2,725,000 6.000%, 10/01/2008 Aaa/AAA 2,871,469
500,000 6.000%, 10/01/2012 Aaa/AAA 518,125
2,855,000 6.250%, 06/01/2015 Aaa/AAA 2,994,181
Portland Water System Revenue
3,000,000 5.500%, 08/01/2014 Aa1/NR 2,977,500
1,440,000 5.500%, 08/01/2015 Aa1/NR 1,420,200
Washington County Unified
Sewer Agency
2,195,000 7.000%, 11/01/2009 Aaa/AAA 2,332,188
Washington County Unified
Sewer Agency (AMBAC Indemnity
Corporation Insured),
1,040,000 6.800%, 11/01/2004 Aaa/AAA 1,099,800
2,120,000 5.900%, 10/01/2006 Aaa/AAA 2,218,050
1,115,000 5.900%, 10/01/2006 Aaa/AAA 1,166,569
2,500,000 6.125%, 10/01/2012 Aaa/AAA 2,612,500
750,000 6.125%, 10/01/2012 Aaa/AAA 783,750
Total Water and Sewer
Revenue Bonds 28,310,285
<PAGE>
OTHER REVENUE BONDS (2.1%)
Baker County Pollution Control
(Ash Grove Cement West
Project) (Small Business
Administration Insured),
355,000 6.200%, 07/01/2004 Aaa/NR 363,445
380,000 6.300%, 07/01/2005 Aaa/NR 389,037
State of Oregon Bond Bank
500,000 6.800%, 01/01/2011 Aaa/NR 530,000
1,000,000 6.700%, 01/01/2011 Aaa/NR 1,057,500
Oregon Economic Development
Commission (Consolidated
Freightways)
1,500,000 7.000%, 04/01/2004 Aa3/BBB 1,506,675
City of Portland
2,465,000 4.650%, 04/01/2004 Aa/NR 2,415,700
Total Other Revenue Bonds 6,262,357
Total State of Oregon
Revenue Bonds 132,967,188
Total State of Oregon 299,947,427
PUERTO RICO
Puerto Rico Housing Finance
Corporation (GNMA
Collateralized)
15,000 7.800% 10/15/2021 Aaa/AAA 15,544
Total Puerto Rico 15,544
Total Municipal Bonds (cost -
$ 290,100,582**) 98.0% 299,962,971
Other assets in excess of
liabilities 2.0 6,141,359
Net Assets 100.0% $306,104,330
<FN>
(*) Any security not rated must be determined by the
Investment Adviser to have sufficient quality to be ranked in the top
four credit ratings if a credit rating were to be assigned by a rating
service.
</FN>
<FN>
(**) Cost for Federal tax purposes is identical.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE TRUST OF OREGON
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31,1997 (UNAUDITED)
<S> <C>
ASSETS
Investments at value (identified cost $290,100,582) $ 299,962,971
Cash 737,547
Interest receivable 5,463,218
Receivable for Trust shares sold 539,294
Other assets 6,227
Total assets 306,709,257
LIABILITIES
Dividends payable 179,255
Payable for Trust shares redeemed 140,563
Distribution fees payable 113,824
Adviser and Administrator fees payable 104,050
Accrued expenses 67,235
Total liabilities 604,927
NET ASSETS $ 306,104,330
Net Assets consist of:
Capital Stock - Authorized an unlimited number of
shares, par value $.01 per share $ 293,332
Additional paid-in capital 295,938,692
Accumulated net gain on investments 9,917
Net unrealized appreciation on investments 9,862,389
$ 306,104,330
CLASS A
Net Assets $ 303,601,102
Capital shares outstanding 29,093,244
Net asset value and redemption price per share $ 10.44
Offering price per share (100/96 of $10.44
adjusted to nearest cent) $ 10.88
CLASS C
Net Assets $ 719,368
Capital shares outstanding 68,980
Net asset value and offering price per share $ 10.43
Redemption price per share (* varies by length of
time shares are held) $ *
CLASS Y
Net Assets $ 1,783,860
Capital shares outstanding 170,981
Net asset value, offering and redemption
price per share $ 10.43
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE TRUST OF OREGON
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
Interest income $8,771,404
Expenses:
Investment Adviser fees (note 3) $304,866
Administrator fees (note 3) 304,866
Distribution fees (note 3) 230,344
Transfer and shareholder servicing agent fees 98,000
Trustees' fees and expenses 45,000
Legal fees 36,000
Shareholders' reports and proxy statements 31,000
Custodian fees (note 7) 18,565
Audit and accounting fees 18,000
Registration fees and dues 10,000
Insurance 3,000
Miscellaneous 25,874
1,125,515
Expenses paid indirectly (note 7) (18,565)
Net expenses 1,106,950
Net investment income 7,664,454
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain from securities
transactions 9,917
Change in unrealized appreciation on
investments (1,237,581)
Net realized and unrealized gain (loss) on
investments (1,227,664)
Net increase in net assets resulting from operations $ 6,436,790
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE TRUST OF OREGON
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
Six Months Ended Year Ended
March 31, September 30,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 7,664,454 $ 15,805,265
Net realized gain from securities
transactions 9,917 455,992
Change in unrealized appreciation
on investments (1,237,581) (2,192,001)
Change in net assets resulting from
operations 6,436,790 14,069,256
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net Investment Income (7,632,045) (15,347,445)
Distributions in excess of net
investment income (120,475) -
Net realized gain on investments (288,202) (677,856)
Class C Shares:
Net investment income (11,121) (3,382)
Distributions in excess of net investment
income (205) -
Net realized gain on investments (528) (425)
Class Y Shares:
Net investment income (21,288) (4,572)
Distributions in excess of net investment
income (318) -
Net realized gain on investments (314) (306)
Change in net assets from distributions (8,074,496) (16,033,986)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 15,512,009 22,749,791
Reinvested dividends and distributions 4,844,525 9,312,627
Cost of shares redeemed (18,289,232) (34,977,054)
Change in net assets from capital share
transactions 2,067,302 (2,914,636)
Change in net assets 429,596 (4,879,366)
NET ASSETS:
Beginning of period 305,674,734 310,554,100
End of period $ 306,104,330 $ 305,674,734
</TABLE>
See accompanying notes to financial statements.
<PAGE>
TAX-FREE TRUST OF OREGON
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Tax-Free Trust of Oregon (the "Trust") is a separate portfolio of the
Cascades Trust. The Cascades Trust (the "Business Trust") is an open-end
investment company, which was organized on October 17, 1985, as a
Massachusetts business trust and is authorized to issue an unlimited number
of shares. The Trust is a non-diversified portfolio which commenced
operations on June 16, 1986 and until April 5, 1996, offered only one class
of shares. On that date, the Trust began offering two additional classes of
shares, Class C and Class Y shares. All shares outstanding prior to that date
were designated as Class A shares and, as was the case since inception, 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. 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 Trust 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.
2. SIGNIFICANT ACCOUNTING POLICIES
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: Municipal securities which have remaining
maturities of more than 60 days are valued each business day based upon
information provided by a nationally prominent independent pricing
service and periodically verified through other pricing services; in the
case of securities for which market quotations are readily available,
securities are valued at the mean of bid and asked quotations and, in
the case of other securities, at fair value determined under procedures
established by and under the general supervision of the Board of
Trustees. Securities which mature in 60 days or less are valued at
amortized cost if their term to maturity at purchase was 60 days or
less, or by amortizing their unrealized appreciation or depreciation on
the 61st day prior to maturity, if their term to maturity at purchase
exceeded 60 days.
In Fiscal 1997, the Trust began amortizing bond premium using the
constant yield method. Accordingly, net unrealized appreciation and
additional paid-in capital have been adjusted by equal amounts at the
beginning of the year. This change had no effect on the Trust's net
asset value or distribution policy and conforms to the amortization
policy followd by the Trust for Federal tax purposes.
<PAGE>
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 premium and accretion of original issue discount.
Market discount is recognized upon disposition of the security.
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) 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.
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 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 Trust are conducted through two separate
management arrangements.
Qualivest Capital Management, Inc. (the "Adviser"), became Investment
Adviser to the Trust in June, 1986. In this role, under an Investment
Advisory Agreement, the Adviser supervises the Trust's investments and
provides various services to the Trust, including maintenance of the Trust's
accounting books and records, for which it 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 0.20 of 1% of the net assets of the Trust. U.S. Bancorp, the
parent company of the Adviser, and First Bank National Association ("First
Bank") have announced that they will merge during the summer of 1997. As a
result of the merger, the Adviser's operations will become part of First
Asset Management, a division of First Bank. At the time of the merger it is
currently anticipated that a new investment advisory agreement with First
Asset Management will have been approved by the Board of Trustees. It will be
presented to the shareholders of the Trust for approval.
The Trust also has an Administration Agreement with Aquila Management
Corporation (the "Administrator"), the Trust's founder and sponsor. Under
this Agreement, the Administrator provides
<PAGE>
all administrative services, other than those relating to the management
of the Trust's investments. These include providing the office of the Trust
and all related services as well as overseeing the activities of all the
various support organizations to the Trust such as the shareholder servicing
agent, custodian, legal counsel, auditors and distributor. For its services,
the Administrator 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 0.20 of
1% of the net assets of the Trust.
Specific details as to the nature and extent of the services provided by
the Adviser and the Administrator are more fully defined in the Trust's
Prospectus and Statement of Additional Information.
The Adviser and the Administrator each agrees that the above fees shall
be reduced, but not below zero, by an amount equal to one-half of the amount,
if any, by which the total expenses of the Trust in any fiscal year,
exclusive of taxes, interest and brokerage fees, shall exceed the lesser of
(i) 2.5% of the first $30 million of average annual net assets of the Trust
plus 2% of the next $70 million of such assets and 1.5% of its average annual
net assets in excess of $100 million, or (ii) 25% of the Trust's total annual
investment income. The payment of the above fees at the end of any month will
be reduced or postponed so that at no time will there be any accrued but
unpaid liability under this expense limitation. No such reduction in fees was
required during the six months ended March 31, 1997.
For the six months ended March 31, 1997, the Trust incurred fees under
the Advisory Agreement and Administration Agreement of $304,866 and $304,866,
respectively.
b) DISTRIBUTION AND SERVICING FEES
The Trust 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 Trust 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 Trust, 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 Trust's shares or servicing of
shareholder accounts. The Trust makes payment of this service fee at the
annual rate of 0.15% of the Trust's average net assets represented by Class A
Shares. For the six months ended March 31, 1997, service fees on Class A
Shares amounted to $227,667, of which the Distributor received $5,879.
Under another part of the Plan, the Trust 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 Trust's Class C shares
or servicing of shareholder accounts. These payments are made at the annual
rate of 0.75% of the Trust's net assets represented by Class C Shares and for
the six months ended March 31, 1997, amounted to $2,008, of which the
Distributor received $2,008.
<PAGE>
In addition, under a Shareholder Services Plan, the Trust 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 Trust's
net assets represented by Class C Shares and for the six months ended March
31, 1997, amounted to $669, of which the Distributor received $669.
Specific details about the Plans 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.
Through agreements between the Distributor and various broker-dealer firms
("dealers"), the Trust's shares are sold primarily through the facilities of
these dealers having offices within Oregon, with the bulk of sales
commissions inuring to such dealers. For the six months ended March 31, 1997,
the Distributor received sales commissions in the amount of $40,435.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended March 31, 1997, purchases of securities and
proceeds from the sales of securities aggregated $6,862,140 and $4,917,010,
respectively.
At March 31, 1997, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted
to $10,722,426 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value amounted to
$860,037 for a net unrealized appreciation of $9,862,389.
5. PORTFOLIO ORIENTATION
Since the Trust invests principally and may invest entirely in double
tax-free municipal obligations of issuers within Oregon, it is subject to
possible risks associated with economic, political, or legal developments or
industrial or regional matters specifically affecting Oregon and whatever
effects these may have upon Oregon issuers' ability to meet their
obligations. Two such developments, Measure 5, a 1990 amendment to the Oregon
Constitution, and Measure 47, a 1996 proposed amendment to the Oregon
Constitution, limit the taxing and spending authority of certain Oregon
governmental entities. Although they may have an adverse effect on the
general financial condition of these entities and may impair the ability of
certain Oregon issuer's to pay interest and principal on their obligations,
experience over the history of such amendments would indicate a low
probability of this happening.
6. DISTRIBUTIONS
The Trust declares dividends daily from net investment income and makes
payments monthly in additional shares at the net asset value per share or in
cash, at the shareholder's option. Net realized capital gains, if any, are
distributed annually.
<PAGE>
The Trust intends to maintain, to the maximum extent possible, the
tax-exempt status of interest payments received from portfolio municipal
securities in order to allow dividends paid to shareholders from net
investment income to be exempt from regular Federal and State of Oregon
income taxes. However, due to differences between financial reporting and
Federal income tax reporting requirements, distributions made by the Trust
may not be the same as the Trust's net investment income, and/or net realized
securities gains. Further, a small portion of the dividends may, under some
circumstances, be subject to ordinary income taxes. Also, annual capital
gains distributions, if any, are taxable.
7. CUSTODIAN FEES
The Trust 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 six months ended
March 31, 1997, the Trust's custodian fees amounted to $18,565, all of which
was offset by such credits. 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 with the custodian.
<PAGE>
8. CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1997 September 30, 1996
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares
sold 1,286,960 $ 13,572,568 2,096,132 $ 22,163,379
Reinvested dividends and
distributions 458,787 4,833,596 882,366 9,306,631
Cost of shares redeemed (1,734,155) (18,289,232) (3,319,853) (34,956,474)
Net change 11,592 116,932 (341,355) (3,486,464)
<CAPTION>
Period Ended
September 30, 1996*
Shares Amount
<S> <C> <C> <C> <C>
CLASS C SHARES:
Proceeds from shares
sold 36,740 387,256 32,006 331,098
Reinvested dividends and
distributions 164 1,726 69 724
Cost of shares redeemed - - - -
Net change 36,904 388,982 32,075 331,822
<CAPTION>
Period Ended
September 30, 1996*
Shares Amount
<S> <C> <C> <C> <C>
Class Y Shares:
Proceeds from shares
sold 147,056 1,552,185 24,548 255,314
Reinvested dividends and
distributions 871 9,203 505 5,272
Cost of shares redeemed - - (2,000) (20,580)
Net change 147,927 1,561,388 23,053 240,006
Total transactions in
Trust shares 196,423 $ 2,067,302 (286,227) $ (2,914,636)
<FN>
* From April 5, 1996 (date of inception) through September 30, 1996.
</FN>
</TABLE>
<PAGE>
TAX-FREE TRUST OF OREGON
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
Class A (1)
Six Months
Ended Year Ended September 30,
March 31, 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.34 $10.55 $10.20 $10.95 $10.48 $10.15
Income from Investment
Operations:
Net investment income 0.27 0.54 0.55 0.56 0.58 0.65
Net gain (loss) on
securities (both
realized and
unrealized) 0.11 (0.05) 0.39 (0.75) 0.50 0.29
Total from Investment
Operations 0.38 0.49 0.94 (0.19) 1.08 0.94
Less Distributions
(note 6):
Dividends from net
investment income (0.27) (0.54) (0.55) (0.56) (0.58) (0.61)
Distributions from
capital gains (0.01) (0.01) (0.04) - (0.03) -
Total Distributions (0.28) (0.55) (0.59) (0.56) (0.61) (0.61)
Net Asset Value, End
of Period $10.44 $10.49 $10.55 $10.20 $10.95 $10.48
Total Return (not
reflecting sales
charge) (%) 2.18# 4.76 9.52 (1.77) 10.64 9.51
Ratios/Supplemental
Data
Net Assets, End of
Period ($
thousands) 303,601 305,096 310,554 316,317 331,018 249,953
Ratio of Expenses
to Average
Net Assets (%) 0.72* 0.72 0.71 0.68 0.66 0.66
Ratio of Net
Investment Income
to Average Net
Assets (%) 5.03* 5.16 5.38 5.28 5.46 5.87
Portfolio Turnover
Rate (%) 2# 10 13 11 8 11
<CAPTION>
Net investment income per share and the ratios of income and expenses to
average net assets without the Adviser's and Administrator's voluntary waiver
of fees and the expense offset in custodian fees for uninvested cash balances
would have been:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income
($) 0.27 0.54 0.55 0.56 0.58 0.65
Ratio of Expenses to
Average Net Assets
(%) 0.74* 0.73 0.73 0.70 0.68 0.66
Ratio of Net Investment
Income to Average Net
Assets (%) 5.01* 5.15 5.37 5.26 5.44 5.87
<FN>
(1) Designated as Class A Shares on April 5, 1996.
</FN>
<FN>
# Not annualized.
</FN>
<FN>
* Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
TAX-FREE TRUST OF OREGON
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
Class C(1) Class Y(1)
Six Months Period(2) Six Months Period(2)
Ended March Ended Sept. Ended March Ended Sept.
31, 1997 30, 1996 31, 1997 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.49 $10.34 $10.49 $10.34
Income from Investment
Operations:
Net investment income 0.22 0.22 0.28 0.27
Net gain (loss) on
securities (both
realized and
unrealized) (0.05) 0.15 (0.05) 0.15
Total from Investment
Operations 0.17 0.37 0.23 0.42
Less Distributions
(note 6):
Dividends from net
investment income (0.22) (0.22) (0.28) (0.27)
Distributions from
capital gains (0.01) - (0.01) -
Total Distributions (0.23) (0.22) (0.29) (0.27)
Net Asset Value, End
of Period $10.43 $10.49 $10.43 $10.49
Total Return (not
reflecting sales
charge) (%) 1.65# 3.61# 2.17# 4.14#
Ratios/Supplemental Data
Net Assets, End of
Period ($
thousands) 719,368 336 1,784 242
Ratio of Expenses to
Average Net Assets
(%) 1.58* 1.56* 0.57* 0.57*
Ratio of Net
Investment Income to
Average Net Assets
(%) 4.15* 4.18* 5.32* 5.36*
Portfolio Turnover
Rate (%) 2# 10# 2# 10#
<CAPTION>
Net investment income per share and the ratios of income and expenses to
average net assets without the Adviser's and Administrator's voluntary waiver
of fees and the expense offset in custodian fees for uninvested cash balances
would have been:
<S> <C> <C> <C> <C>
Net Investment Income
($) 0.22 0.22 0.28 0.27
Ratio of Expenses to
Average Net Assets
(%) 1.59* 1.56# 0.58# 0.58*
Ratio of Net Investment
Income to Average Net
Assets (%) 4.14* 4.17* 5.31* 5.35*
<FN>
(1) New Class of Shares established on April 5, 1996.
</FN>
<FN>
(2) From April 5, 1996 to September 30, 1996.
</FN>
<FN>
# Not annualized.
</FN>
<FN>
* Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
