<PAGE>
SEMI-ANNUAL
REPORT
MARCH 31, 2000
TAX-FREE TRUST OF
OREGON
A TAX-FREE INCOME INVESTMENT
ONE OF THE
AQUILAsm GROUP OF FUNDS
MANAGER AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
U.S. Bank National Association
111 S.W. Fifth Avenue
U.S. Bancorp Tower
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
Diana P. Herrmann, President
James M. McCullough, Senior 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.
</PAGE>
<PAGE>
SERVING OREGON INVESTORS FOR OVER A DECADE
TAX-FREE TRUST OF OREGON
SEMI-ANNUAL REPORT
"WE TAKE SPECIAL CARE TO ENSURE YOUR SAFETY"
May 3, 2000
Dear Fellow Shareholders:
In this topsy-turvy, highly unstable world of the "new economy" and
the "old economy" stock market, we think it is prudent and essential for all
investors to consider investments that have substantially less volatility. We
believe Tax-Free Trust of Oregon fits into this more stable category.
LESS VOLATILITY - MORE STABILITY
Every now and then, we come across something that triggers a special
point worth considering. This happened to us on a recent trip on United
Airlines. When a pre-flight announcement was made that stated, "WE TAKE SPECIAL
CARE TO ENSURE YOUR SAFETY," that remark brought home to us a point that we
practice on a continuous basis with Tax-Free Trust of Oregon.
We know from our surveys that many of the shareholders of Tax-Free
Trust of Oregon are already retired, or are looking forward to retiring. We
consider these shareholders to be a very special group of people. We work very
hard to make sure that we are addressing their needs.
We know that once one is no longer in the work force, it is
essential that very careful attention be paid to whatever financial resources
one has. It is necessary to ensure that these resources really are available
when needed. Just as important, these financial resources must be counted on to
produce the kind of return, on a consistent basis, that our shareholders need.
SAFETY
SAFETY with municipal securities is a very important factor.
Management of your Trust pays considerable attention to this. Just like the
United Airlines announcement, "WE TAKE SPECIAL CARE TO ENSURE YOUR SAFETY,"
management wants to make sure that this is the case with all the municipal
securities in the Trust.
As you probably know, municipal securities have various credit
ratings, from the highest to the lowest quality. These ratings attempt to
measure the kind of safety and trustworthiness that the securities represent.
With Tax-Free Trust of Oregon, we specifically limit the credit ratings to those
within the TOP FOUR grades - AAA, AA, A, AND BAA.
This world in which we live is changing extremely rapidly. As a
consequence, we feel it is important for your safety that we ensure that the
majority of securities in the Trust's portfolio are within the TOP TWO credit
grades - AAA AND AA - for your safety. Through our portfolio management, we very
carefully monitor the characteristics of each and every type of investment in
the portfolio. We do not want, or expect, "surprises" from any of the securities
that are in the portfolio of the Trust.
Recently, the marketplace for municipal securities has made it such
that the difference in yield for a AAA or AA credit rating versus a Baa credit
rating is relatively little. Therefore, our approach is to go with the very
best. Obviously, if one can buy securities which provide the very top ratings
without paying any significant premium for them, we prefer to go in that
direction.
We want you to know, that at the report date of March 31, 2000, the
combination of AAA and AA securities amounted to over 93% of the total assets in
the portfolio of your Trust.
In this way, we feel that "WE TAKE SPECIAL CARE TO ENSURE YOUR
SAFETY."
</PAGE>
<PAGE>
MATURITY OF TAX-FREE MUNICIPAL BONDS
Another factor that we feel is important in building quality for
your investment is the maturity structure of the municipal bonds in the
portfolio.
As we have explained to you in the past, longer-term maturity bonds-
20 - 30 years - will usually produce a higher return than shorter-term
maturity bonds - 5 - 10 years. However, such longer-term maturity bonds also
have a higher degree of price volatility.
Therefore, we have structured the average maturity of Tax-Free Trust
of Oregon to be at a somewhat intermediate average maturity level - currently
12.8 years. This average maturity level is produced by using a "laddered"
approach to the selection of bonds in terms of their maturity. We have a variety
of shorter-term bonds, and a variety of longer-term bonds. However, the overall
average of these maturities run at an intermediate level. In this way, we can
capture a substantial amount of the possible income level available from the
bonds, without exposing the portfolio to an undue level of volatility.
Our goal is to maintain a reasonably high level of STABILITY for the
share net asset value of the Trust. At the same time, we want the Trust to
produce the kind of tax-free return that people want to see from their
investment.
This maturity structuring is another strategy that we use in
building quality, safety, and stability into your investment in Tax-Free Trust
of Oregon.
DIVERSIFICATION
As a further measure to ensure your investment's safety, the Trust
intentionally diversifies the municipal bond holdings as much as possible.
As you will note, in reviewing the portfolio, the Trust provides
funds necessary to build the airports, fire stations, schools, hospitals, and
various other infrastructure needs of the state. In this way, Tax-Free Trust of
Oregon gains the advantage generated by diversification through the financing of
different projects while at the same time helping to build the kind of projects
that make for a better life style for all the residents of Oregon.
RELIABILITY OF PAYMENTS
We also recognize that a high proportion of our shareholders depend
upon the monthly income from the tax-free cash produced by Tax-Free Trust of
Oregon. Shareholders want to know that the income from the Trust is there when
the time comes to pay various bills.
Then, too, with those shareholders who reinvest their dividends,
they want to gain the compounding effect of the dividends through these income
payments.
Altogether, the quality character of the portfolio ensures that this
income reliability is the case.
To the best of our ability, we want to make sure that the monthly
payments add up to a satisfactory level of income that you can be SURE will be
there when you need it.
YOUR CONFIDENCE IS APPRECIATED
As always, we again wish to express our appreciation for the
confidence you have shown by your investment in Tax-Free Trust of Oregon. We can
assure you that "WE TAKE SPECIAL CARE TO ENSURE YOUR SAFETY" and that we will
continually do our best to merit your level of trust.
Sincerely,
Diana P. Herrmann
President
Lacy B. Herrmann
Chairman, Board of Trustees
</PAGE>
<PAGE>
TAX-FREE TRUST OF OREGON
STATEMENT OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT STATE OF OREGON GENERAL OBLIGATION BONDS - 49.6% S&P VALUE
</CAPTION>
<S> <C> <C> <C> <C> <C>
City of Beaverton
$ 910,000 5.950%, 04/01/2003 Aa3/AA $ 930,475
960,000 6.050%, 04/01/2004 Aa3/AA 981,600
1,020,000 6.150%, 04/01/2005 Aa3/AA 1,044,225
1,080,000 6.250%, 04/01/2006 Aa3/AA 1,108,350
Chemeketa Oregon Comm Coll D (Financial
Guaranty Insurance Corporation Insured)
1,385,000 5.500%, 06/01/2014 Aaa/AAA 1,409,237
Clackamas County School District #115 (AMBAC
Indemnity Corporation Insured)
615,000 5.700%, 06/01/2007 Aaa/AAA 644,213
1,000,000 6.150%, 06/01/2014 Aaa/AAA 1,065,000
Clackamas County School District #12 (Financial
Guaranty Insurance Corporation Insured)
4,000,000 4.800%, 06/01/2018 Aaa/AAA 3,555,000
Clackamas/Washington County Oregon School
District #3J (Financial Guaranty Insurance
Corporation Insured)
1,620,000 5.000%, 06/01/2017 Aaa/AAA 1,514,700
Clackamas and Washington County School
District #3J
1,150,000 5.875%, 10/01/2009 A1/A+ 1,181,625
Clackamas, Multnomah and Washington County
School District #7J
250,000 7.100%, 06/15/2010 Aaa/NR 251,428
1,500,000 5.700%, 06/15/2010 Aa2/NR 1,533,750
Deschutes and Jefferson County School District #2J
(MBIA Corporation Insured)
3,700,000 5.600%, 06/01/2009 Aaa/AAA 3,755,500
Eugene Oregon (Parks & Open Space)
1,465,000 5.250%, 02/01/2018 Aa2/NR 1,400,906
1,555,000 5.250%, 02/01/2019 Aa2/NR 1,485,025
Hood River County School District (AMBAC
Indemnity Corporation Insured)
2,000,000 5.650%, 06/01/2008 Aaa/AAA 2,045,000
Jackson County School District #5, Ashland
(Financial Security Assurance Insured)
1,000,000 5.100%, 06/01/2005 Aaa/AAA 1,011,250
</PAGE>
<PAGE>
Jackson County School District #549C, (Financial
Security Assurance Insured)
1,000,000 5.300%, 06/01/2008 Aaa/AAA 1,012,500
Jefferson County School District #509J (Financial
Security Assurance Insured)
1,750,000 5.500%, 06/15/2013 Aaa/AAA 1,765,313
Josephine County School District #7 (Grants Pass)
(Financial Guaranty Insurance Corporation)
2,700,000 5.700%, 06/01/2013 Aaa/AAA 2,760,750
Lane County School District #4J
2,000,000 5.375%, 07/01/2009 Aa3/NR 2,015,000
1,000,000 5.375%, 07/01/2013 Aa3/NR 1,001,250
Lane County School District #52J (Financial
Guaranty Insurance Corporation Insured)
750,000 6.400%, 12/01/2009 Aaa/AAA 805,313
Lane and Douglas County School District 97J (Siuslaw)
(State School Bond Guarantee Program)
1,000,000 5.400%, 06/15/2019 Aa2/NR 977,500
Lincoln County Oregon School District
(Financial Guaranty Insurance Corporation)
1,245,000 5.250%, 06/15/2012 Aaa/AAA 1,246,556
Lincoln County (MBIA Corporation Insured)
1,000,000 5.375%, 02/01/2010 Aaa/AAA 1,006,250
Malheur County Jail Bonds (MBIA Corporation
Insured)
1,345,000 6.300%, 12/01/2012 Aaa/AAA 1,413,931
Marion and Clackamas County Union High School
District #7J (Financial Security Assurance Insured)
1,000,000 7.000%, 06/01/2010 Aaa/AAA 1,088,750
1,340,000 6.000%, 06/01/2013 Aaa/AAA 1,408,675
Metropolitan Service District Refunding
(Oregon Convention Center)
4,320,000 6.250%, 01/01/2013 Aa2/AA+ 4,390,200
Multnomah County School District #4
1,330,000 5.900%, 01/01/2005 A1/A+ 1,354,938
Multnomah County School District #40
5,100,000 5.625%, 06/01/2012 NR/AA- 5,182,875
</PAGE>
<PAGE>
Northern Oregon Correctional (AMBAC Indemnity
Corporation Insured)
1,000,000 5.400%, 09/15/2016 Aaa/AAA 988,750
Oak Lodge Water District (AMBAC Indemnity
Corporation Insured)
215,000 7.300%, 12/01/2005 Aaa/AAA 236,231
215,000 7.300%, 12/01/2006 Aaa/AAA 235,694
215,000 7.400%, 12/01/2007 Aaa/AAA 235,963
Puerto Rico Commonwealth Infrastructure
(MBIA Corporation Insured)
1,500,000 4.875%, 07/01/2023 Aaa/AAA 1,342,500
State of Oregon Board of Higher Education
900,000 6.200%, 10/15/2007 Aa2/AA 928,125
3,195,000 6.400%, 10/01/2011 Aa2/AA 3,258,900
2,000,000 6.250%, 10/15/2012 Aa2/AA 2,052,500
2,150,000 6.500%, 10/01/2017 Aa2/AA 2,187,625
2,890,000 6.000%, 10/15/2018 Aa2/AA 2,922,513
5,000,000 4.875%, 08/01/2019 Aa2/AA 4,475,000
2,560,000 5.500%, 08/01/2021 Aa2/AA 2,502,400
8,000,000 5.000%, 08/01/2022 Aa2/AA 7,190,000
1,500,000 5.000%, 08/01/2022 Aa2/AA 1,348,125
1,655,000 5.600%, 08/01/2023 Aa2/AA 1,634,313
1,500,000 5.600%, 08/01/2023 Aa2/AA 1,481,250
6,300,000 6.000%, 08/01/2026 Aa2/AA 6,733,125
State of Oregon Elderly & Disabled Housing
725,000 6.250%, 08/01/2013 Aa2/AA 754,906
State of Oregon Veterans' Welfare
505,000 9.000%, 04/01/2008 Aa2/AA 563,706
700,000 9.200%, 10/01/2008 Aa2/AA 896,875
1,200,000 5.200%, 10/01/2018 Aa2/AA 1,147,500
Polk County School District #2
(Financial Security Assurance Insured)
1,000,000 5.400%, 06/01/2012 Aaa/AAA 1,007,500
Polk, Marion, and Benton County School District #13J
(Financial Guaranty Insurance Corporation Insured)
1,000,000 5.500%, 12/01/2008 Aaa/AAA 1,026,250
</PAGE>
<PAGE>
City of Portland
1,480,000 5.100%, 10/01/2009 Aaa/NR 1,483,700
2,790,000 5.750%, 06/01/2013 Aaa/NR 2,856,263
2,000,000 5.600%, 06/01/2015 Aa2/NR 2,010,000
1,345,000 5.250%, 06/01/2015 Aa2/NR 1,311,375
1,120,000 5.125%, 06/01/2018 Aaa/NR 1,062,600
Portland Community College District
3,500,000 6.000%, 07/01/2012 Aa3/AA 3,591,875
Salem-Keizer Oregon School District #24,
(Financial Security Assurance Insured)
2,000,000 4.875%, 06/01/2014 Aaa/AAA 1,870,000
Tri-County Metropolitan Transportation District
6,100,000 6.000%, 07/01/2012 Aaa/AAA 6,321,125
Tualatin Hills Park and Recreation District
(MBIA Corporation Insured)
2,470,000 5.750%, 03/01/2012 Aaa/AAA 2,562,625
2,000,000 5.750%, 03/01/2015 Aaa/AAA 2,070,000
Umatilla County Oregon (Financial Guaranty
Insurance Corporation Insured)
2,000,000 5.600%, 10/01/2015 Aaa/AAA 2,015,000
Umatilla County School District #8R
(AMBAC Indemnity Corporation Insured)
700,000 6.100%, 12/01/2012 Aaa/AAA 735,875
Umatilla County School District #6R
(AMBAC Indemnity Corporation Insured)
2,675,000 5.050%, 06/15/2022 Aaa/A 2,400,813
Washington County
2,500,000 6.200%, 12/01/2007 Aa1/AA 2,559,375
1,625,000 5.000%, 12/01/2011 Aa1/AA 1,602,656
3,110,000 6.000%, 12/01/2013 Aa1/AA 3,249,950
Washington County School District #88JT
(Financial Security Assurance Insured)
585,000 6.100%, 06/01/2012 Aaa/AAA 606,938
2,315,000 6.100%, 06/01/2012 Aaa/AAA 2,442,325
2,055,000 5.125%, 06/15/2012 Aaa/NR 2,034,450
Washington and Clackamas County School
District #23J
2,000,000 5.400%, 01/01/2010 A1/NR 2,015,000
1,000,000 5.650%, 06/01/2015 A1/NR 1,006,250
</PAGE>
<PAGE>
Washington & Multnomah County School
District #48J
1,175,000 5.500%, 06/01/2006 Aa2/AA- 1,198,500
1,130,000 5.600%, 06/01/2007 Aa2/AA- 1,154,013
1,000,000 6.150%, 06/01/2008 Aa2/AA- 1,002,150
1,415,000 5.700%, 06/01/2008 Aa2/AA- 1,448,606
525,000 6.300%, 09/01/2009 Aaa/AAA 537,463
1,440,000 6.000%, 06/01/2011 Aa2/AA- 1,485,000
2,010,000 6.500%, 09/01/2011 Aaa/AAA 2,062,763
Washington & Multnomah County School
District #48J (Financial Guaranty Insurance
Corporation Insured)
2,500,000 5.375%, 06/01/2019 Aaa/AAA 2,415,625
Washington & Yamhill County School District #58J
(AMBAC Indemnity Corporation Insured)
70,000 6.600%, 11/01/2004 Aaa/AAA 70,085
80,000 6.600%, 11/01/2005 Aaa/AAA 80,113
90,000 6.600%, 11/01/2006 Aaa/AAA 90,122
Yamhill County School District #29J
(Financial Security Assurance Insured)
2,000,000 5.350%, 06/01/2006 Aaa/AAA 2,032,500
Total State of Oregon General Obligation Bonds 156,881,971
STATE OF OREGON REVENUE BONDS - 48.7%
AIRPORT REVENUE BONDS - 3.3%
Port of Portland Airport (Financial Guaranty
Insurance Corporation Insured)
500,000 5.500%, 07/01/2006 Aaa/AAA 511,875
Port of Portland Airport (MBIA Corporation Insured)
600,000 6.400%, 07/01/2003 NR/AAA 619,500
3,530,000 6.750%, 07/01/2009 NR/AAA 3,657,963
2,425,000 6.750%, 07/01/2015 NR/AAA 2,512,906
2,000,000 5.500%, 07/01/2024 Aaa/AAA 1,945,000
1,295,000 5.000%, 07/01/2028 Aaa/AAA 1,147,694
Total Airport Revenue Bonds 10,394,938
</PAGE>
<PAGE>
CERTIFICATE OF PARTICIPATION REVENUE BONDS - 11.1%
Marion County Certificate of Participation
(MBIA Corporation Insured)
1,000,000 5.000%, 06/01/2023 Aaa/AAA 896,250
Multnomah County Certificate of Participation
1,000,000 5.200%, 07/01/2005 Aa3/NR 1,012,500
3,100,000 6.000%, 08/01/2012 Aa/A 3,212,375
Oregon State Department Of Administration
Services (AMBAC Indemnity Corporation Insured)
2,000,000 4.875%, 05/01/2018 Aaa/AAA 1,805,000
950,000 5.000%, 11/01/2019 Aaa/AAA 871,625
1,500,000 5.800%, 05/01/2024 Aaa/AAA 1,582,500
2,500,000 5.000%, 05/01/2024 Aaa/AAA 2,234,375
3,500,000 6.000%, 05/01/2026 Aaa/AAA 3,591,875
Oregon State Department Of Administration
Services (MBIA Corporation Insured)
1,480,000 5.375%, 11/01/2016 Aaa/AAA 1,463,350
5,805,000 5.500%, 11/01/2020 Aaa/AAA 5,667,131
Oregon State Department Of Administration
Services (Financial Security Assurance Insured)
2,000,000 5.750%, 04/01/2014 Aaa/AAA 2,052,500
State of Oregon Certificate of Participation
(MBIA Corporation Insured)
1,250,000 5.700%, 01/15/2010 Aaa/AAA 1,271,875
2,750,000 6.200%, 11/01/2012 Aaa/AAA 2,870,312
1,000,000 5.500%, 01/15/2015 Aaa/AAA 1,003,750
550,000 5.500%, 01/15/2015 Aaa/AAA 552,063
500,000 5.800%, 03/01/2015 Aaa/AAA 506,875
1,000,000 5.800%, 03/01/2015 Aaa/AAA 1,013,750
2,000,000 6.250%, 11/01/2019 Aaa/AAA 2,090,000
Washington County Educational Services,
Certificates of Participation
645,000 5.625%, 06/01/2016 A1/NR 647,419
</PAGE>
<PAGE>
Washington County Educational Services,
Certificates of Participation, (MBIA Corporation
Insured)
830,000 5.750%, 06/01/2025 Aaa/AAA 827,925
Total Certificate of Participation Revenue Bonds 35,173,450
HOSPITAL REVENUE BONDS - 7.3%
Clackamas Hospital Facilities Authority (Adventist
Health System/West) (MBIA Corporation Insured)
2,000,000 6.350%, 03/01/2009 Aaa/AAA 2,082,500
Clackamas Hospital Facilities Authority (Sisters of
Providence Hospital)
500,000 6.375%, 10/01/2004 A1/AA- 521,875
Clackamas Hospital Facilities Authority (Legacy
Health System)
2,000,000 5.250%, 02/15/2017 NR/AA 1,870,000
2,980,000 5.250%, 02/15/2018 NR/AA 2,767,675
Clackamas Hospital Facilities Authority (Legacy
Health System) (MBIA Corporation Insured)
2,650,000 4.750%, 02/15/2011 Aaa/AAA 2,477,750
Clackamas County Oregon Hospital Facilities
Authority (Mary's Woods)
3,250,000 6.625%, 05/15/2029 NR/NR* 3,002,188
Douglas County Hospital Facilities Authority
(Catholic Health) (MBIA Corporation Insured)
535,000 5.600%, 11/15/2005 Aaa/AAA 551,719
Medford Hospital Authority (Asante Health Systems)
(MBIA Corporation Insured)
1,000,000 5.000%, 08/15/2018 Aaa/AAA 907,500
3,000,000 5.125%, 08/15/2028 Aaa/AAA 2,662,500
Salem Oregon Hospital Facilites Authority
1,750,000 5.000%, 08/15/2018 NR/AA- 1,555,313
</PAGE>
<PAGE>
Western Lane County Hospital Facilities Authority
(Sisters of St. Joseph Hospital) (MBIA Corporation
Insured)
1,000,000 5.625%, 08/01/2007 Aaa/AAA 1,036,250
3,765,000 5.750%, 08/01/2019 Aaa/AAA 3,774,412
Total Hospital Revenue Bonds 23,209,682
HOUSING, EDUCATIONAL, AND CULTURAL REVENUE
BONDS - 10.3%
Clackamas Community College District Revenue
(MBIA Corporation Insured)
1,865,000 5.700%, 06/01/2016 Aaa/AAA 1,939,600
Portland Oregon Housing Authority
4,140,000 5.100%, 01/01/2027 NR/A 3,612,150
State of Oregon Housing Finance Agency
1,000,000 6.800%, 07/01/2013 AA2/A+ 1,031,250
State of Oregon Housing and Community Services,
1,670,000 5.200%, 07/01/2009 Aa2/NR 1,670,000
695,000 5.900%, 07/01/2012 Aa2/NR 713,244
15,000 6.750%, 07/01/2012 Aa2/NR 15,637
500,000 6.700%, 07/01/2013 Aa2/NR 516,875
405,000 6.350%, 07/01/2014 Aa2/NR 418,163
30,000 6.800%, 07/01/2016 Aa2/NR 31,238
2,000,000 6.050%, 07/01/2020 Aa2/NR 2,035,000
2,000,000 5.400%, 07/01/2027 Aa2/NR 1,865,000
3,500,000 6.875%, 07/01/2028 Aa2/NR 3,626,875
State of Oregon Housing and Community Services,
(MBIA Corporation Insured)
1,500,000 5.450%, 07/01/2024 Aaa/AAA 1,417,500
State of Oregon Housing, Educational and Cultural
Facilities Authority (George Fox University)
(LOC: Bank of America)
1,000,000 5.700%, 03/01/2017 NR/AA- 982,500
State of Oregon Housing, Educational and Cultural
Facilities Authority (Reed College),
2,145,000 6.750%, 07/01/2021 NR/A+ 2,241,525
</PAGE>
<PAGE>
Oregon Health Sciences University Revenue
(MBIA Corporation Insured)
4,500,000 5.250%, 07/01/2015 Aaa/AAA 4,393,125
8,600,000 0.000%, 07/01/2021 (zero coupon) Aaa/AAA 2,504,750
City of Salem Educational Facilities (Willamette
University),
1,000,000 6.000%, 04/01/2010 A2/NR 1,030,000
1,740,000 6.750%, 04/01/2011 NR/NR* 1,779,132
Yamhill County Educational Services (AMBAC
Indemnity Corporation Insurance)
1,000,000 5.150%, 07/01/2019 NR/AAA 931,250
Total Housing, Educational, and Cultural
Revenue Bonds 32,754,814
TRANSPORTATION REVENUE BONDS - 4.0%
Port of Morrow,
2,600,000 6.375%, 04/01/2008 Aaa/NR 2,678,000
State of Oregon Department of Transportation
(LightRail) (MBIA Corporation Insured),
2,000,000 6.000%, 06/01/2005 Aaa/AAA 2,107,500
1,500,000 6.100%, 06/01/2007 Aaa/AAA 1,588,125
Port St. Helens, Oregon Pollution
75,000 7.750%, 02/01/2006 A3/NR 78,844
Tri-County Metropolitan Transportation District
3,680,000 5.700%, 08/01/2013 Aa3/AA+ 3,735,200
2,500,000 5.400%, 06/01/2019 NR/AA 2,365,625
Total Transportation Revenue Bonds 12,553,294
URBAN RENEWAL REVENUE BONDS - 0.1%
City of Portland Urban Renewal,
300,000 9.000%, 12/01/2002 A/NR 302,169
Total Urban Renewal Revenue Bonds 302,169
UTILITY REVENUE BONDS - 5.0%
Emerald Peoples Utility District (AMBAC Indemnity
Corporation Insured),
700,000 6.700%, 11/01/2005 Aaa/AAA 717,199
</PAGE>
<PAGE>
Emerald Peoples Utility District Electic Systems
(Financial Security Assurance Insured)
1,000,000 6.750%, 11/01/2016 Aaa/AAA 1,032,500
City of Eugene Electric Utility (Financial Security
Assurance Insured)
1,700,000 5.000%, 08/01/2018 Aaa/AAA 1,564,000
1,340,000 5.050%, 08/01/2022 Aaa/AAA 1,209,350
City of Eugene Electric Utility (MBIA Corporation
Insured)
640,000 4.850%, 08/01/2013 Aaa/AAA 600,800
1,200,000 5.000%, 08/01/2023 Aaa/AAA 1,077,000
City of Eugene Electric Utility
610,000 6.650%, 08/01/2009 A1/AA 626,012
660,000 6.650%, 08/01/2010 A1/AA 677,325
1,000,000 6.000%, 08/01/2011 A1/AA 1,018,750
700,000 6.700%, 08/01/2011 A1/AA 719,250
500,000 5.000%, 08/01/2017 A1/AA 458,125
1,400,000 5.800%, 08/01/2019 A1/AA 1,459,500
City of Eugene Trojan Nuclear Project
3,600,000 5.900%, 09/01/2009 Aa1/AA- 3,635,100
Northern Wasco County Public Utility Development
(AMBAC Indemnity Corporation Insured),
1,000,000 5.625%, 12/01/2022 Aaa/AAA 978,750
Total Utility Revenue Bonds 15,773,661
WATER AND SEWER REVENUE BONDS - 6.6%
City of Klamath Falls Water (Financial Security
Assurance Insured),
1,100,000 6.100%, 06/01/2014 Aaa/AAA 1,138,500
City of Portland Sewer, (MBIA Corporation Insured)
2,000,000 4.500%, 06/01/2015 Aaa/AAA 1,775,000
2,500,000 5.250%, 06/01/2016 Aaa/AAA 2,425,000
</PAGE>
<PAGE>
City of Portland Sewer (Financial Guaranty
Insurance Corporation Insured),
500,000 6.000%, 10/01/2012 Aaa/AAA 523,750
1,185,000 5.000%, 06/01/2015 Aaa/AAA 1,136,119
2,355,000 6.250%, 06/01/2015 Aaa/AAA 2,496,300
Lebanon Oregon Wastewater Revenue
(Financial Security Assurance Insured)
1,000,000 5.700%, 03/01/2020 Aaa/AAA 1,007,500
Portland Water System Revenue
3,000,000 5.500%, 08/01/2014 Aa1/NR 3,022,500
1,440,000 5.500%, 08/01/2015 Aa1/NR 1,450,800
Washington County Unified Sewer Agency
(AMBAC Indemnity Corporation Insured),
2,120,000 5.900%, 10/01/2006 Aaa/AAA 2,210,100
315,000 5.900%, 10/01/2006 Aaa/AAA 327,994
2,500,000 6.125%, 10/01/2012 Aaa/AAA 2,628,125
750,000 6.125%, 10/01/2012 Aaa/AAA 788,437
Total Water and Sewer Revenue Bonds 20,930,125
OTHER REVENUE BONDS - 1.0%
Baker County Pollution Control (Ash Grove Cement
West Project) (Small Business Administration
Insured),
355,000 6.200%, 07/01/2004 Aaa/NR 356,374
380,000 6.300%, 07/01/2005 Aaa/NR 381,569
Oregon Economic Development Commission
(Consolidated Freightways)
1,500,000 7.000%, 04/01/2004 A2/A- 1,518,015
Multnomah County School District #1J,
Special Obligations
1,000,000 5.000%, 03/01/2007 A1/A 997,500
Total Other Revenue Bonds 3,253,458
Total State of Oregon Revenue Bonds 154,345,591
</PAGE>
<PAGE>
PUERTO RICO (0.6%)
Puerto Rico Commonwealth Infrastructure, (AMBAC
Indemnity Corp. Insured)
2,100,000 5.000%, 07/01/2028 Aaa/AAA 1,874,250
Total Puerto Rico 1,874,250
Total Municipal Bonds (cost $312,187,204**) 98.9% 313,101,812
Other assets in excess of liabilities 1.1 3,577,875
Net Assets 100.0% $ 316,679,687
</TABLE>
(*) Any security not rated has been determined by
the Investment Sub-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.
(**) Cost for Federal tax purposes is identical.
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Co.
FSA - Financial Security Assurance
MBIA - Municipal Bond Investors Assurance Corp.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE TRUST OF OREGON
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $312,187,204) $ 313,101,812
Interest receivable 5,385,170
Receivable for investment securities sold 40,455
Other assets 3,362
Total assets 318,530,799
LIABILITIES
Payable for Trust shares redeemed 764,764
Dividends payable 489,314
Cash overdraft 275,558
Distribution fees payable 121,727
Management fees payable 113,927
Accrued expenses 85,822
Total liabilities 1,851,112
NET ASSETS $ 316,679,687
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share 310,319
Additional paid-in capital 314,817,173
Net unrealized appreciation on investments 914,608
Undistributed net investment income 224,878
Accumulated net realized gain on investments 412,709
$ 316,679,687
CLASS A
Net Assets $ 292,757,440
Capital shares outstanding 28,686,170
Net asset value and redemption price per share $ 10.21
Offering price per share (100/96 of $10.21 adjusted to nearest cent) $ 10.64
CLASS C
Net Assets $ 4,502,975
Capital shares outstanding 441,635
Net asset value and offering price per share $ 10.20
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) $ 10.20*
CLASS Y
Net Assets $ 19,419,272
Capital shares outstanding 1,904,128
Net asset value, offering and redemption price per share $ 10.20
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE TRUST OF OREGON
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 9,148,214
Expenses:
Management fees (note 3) $ 644,487
Distribution and service fees (note 3) 243,197
Transfer and shareholder servicing agent fees 93,000
Trustees' fees and expenses 48,000
Legal fees 32,000
Shareholders' reports and proxy statements 30,000
Custodian fees 14,000
Audit and accounting fees 11,000
Registration fees and dues 10,000
Insurance 7,000
Miscellaneous 17,543
1,150,227
Expenses paid indirectly (note 7) (27,000)
Net expenses 1,123,227
Net investment income 8,024,987
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from securities transactions 447,603
Change in unrealized appreciation on investments (2,711,365)
Net realized and unrealized loss on investments (2,263,762)
Net increase in net assets resulting from operations $ 5,761,225
</TABLE>
See accompanying notes to financial statements.
</PAGE>
TAX-FREE TRUST OF OREGON
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPT. 30, 1999
</CAPTION>
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 8,024,987 $ 15,888,152
Net realized gain from securities transactions 447,603 389,398
Change in unrealized appreciation on investments (2,711,365) (18,253,687)
Change in net assets resulting from operations 5,761,225 (1,976,137)
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income (7,467,883) (15,357,860)
Net realized gain on investments - (603,490)
Class C Shares:
Net investment income (74,536) (82,349)
Net realized gain on investments - (2,451)
Class Y Shares:
Net investment income (477,798) (607,653)
Net realized gain on investments - (20,435)
Change in net assets from distributions (8,020,217) (16,674,238)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 23,311,609 42,624,580
Reinvested dividends and distributions 4,463,115 9,912,125
Cost of shares redeemed (37,582,510) (39,440,132)
Change in net assets from capital share transactions (9,807,786) 13,096,573
Change in net assets (12,066,778) (5,553,802)
NET ASSETS:
Beginning of period 328,746,465 334,300,267
End of period $ 316,679,687 $ 328,746,465
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<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 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
January 31, 1998 the Trust established Class I shares, which are offered and
sold only through financial intermediaries and are not offered directly to
retail investors. At March 31, 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 privileges 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 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 at fair value 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.
</PAGE>
<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 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:
Aquila Management Corporation (the "Manager"), the Trust's founder and
sponsor, serves as the Manager for the Trust under an Advisory and
Administration Agreement with the Trust. The portfolio management of the Trust
has been delegated to a sub-adviser as described below. Under the Advisory and
Administrative Agreement, the Manager provides all administrative services to
the Trust, other than those relating to the day-to-day portfolio management. The
Manager's services include providing the office of the Trust and all related
services as well as overseeing the activities of the sub-adviser and all the
various support organizations to the Trust such as the shareholder servicing
agent, custodian, legal counsel, auditors and distributor and additionally
maintaining the Trust's accounting books and records. For its services, the
Manager is entitled to receive a fee which is payable monthly and computed as of
the close of business each day at the annual rate of 0.40 of 1% on the Trust's
net assets.
</PAGE>
<PAGE>
U.S. Bank National Association (the "Sub-Adviser"), serves as the
Investment Sub-Adviser for the Trust under a Sub-Advisory Agreement between the
Manager and the Sub-Adviser. Under this agreement, the Sub-Adviser continuously
provides, subject to oversight of the Manager and the Board of Trustees of the
Trust, the investment program of the Trust and the composition of its portfolio,
arranges for the purchases and sales of portfolio securities, and provides for
daily pricing of the Trust's portfolio. For its services, the Sub-Adviser is
entitled to receive a fee from the Manager which is payable monthly and computed
as of the close of business each day at the annual rate of 0.18 of 1% on the
Trust's net assets.
For the six months ended March 31, 2000, the Trust incurred fees for
advisory and administrative services of $644,487.
Specific details as to the nature and extent of the services provided
by the Manager and the Sub-Adviser are more fully defined in the Trust's
Prospectus and Statement of Additional Information.
b) DISTRIBUTION AND SERVICE 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 Aquila Distributors, Inc. (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, 2000, service fees on Class A
Shares amounted to $224,991, of which the Distributor received $7,691.
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, 2000, amounted to $13,654. 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, 2000, amounted to $4,552. The
total of these payments made with respect to Class C Shares amounted to $18,206,
of which the Distributor received $5,370.
Specific details about the Plans are more fully defined in the Trust's
Prospectus and Statement of Additional Information.
</PAGE>
<PAGE>
Under a Distribution Agreement, 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, 2000, total commissions on sales of Class A Shares
amounted to $378,614, of which the Distributor received $75,304.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended March 31, 2000, purchases of securities
and proceeds from the sales of securities aggregated $22,666,266 and
$30,054,051, respectively.
At March 31, 2000, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$6,548,918, and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $5,634,310,
for a net unrealized appreciation of $914,608.
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,
as well as Measures 47 and 50, limit the taxing and spending authority of
certain Oregon governmental entities. Although these amendments could have an
adverse effect on the general financial condition of certain municipal entities
that would 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, in
cash, or in a combination of both, at the shareholder's option. Net realized
capital gains, if any, are distributed annually and are taxable.
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 statement 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 taxes at ordinary income and/or capital gain rates.
</PAGE>
<PAGE>
7. EXPENSES
The Trust has negotiated an expense offset arrangement with its
custodian, wherein it receives credit toward the reduction of custodian fees and
other Trust expenses whenever there are uninvested cash balances.The Statement
of Operations reflects the total expenses before any offset, the amount of
offset and the net expenses. It is the general intention of the Trust to invest,
to the extent practicable, some or all of cash balances in income-producing
assets rather than leave cash on deposit.
8. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Trust were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 1,315,888 $ 13,301,229 3,077,787 $ 32,804,150
Reinvested dividends and
distributions 433,285 4,381,743 912,832 9,714,231
Cost of shares redeemed (3,112,576) (31,480,684) (3,633,583) (38,503,659)
Net change (1,363,403) (13,797,712) 357,036 4,014,722
CLASS C SHARES:
Proceeds from shares sold 215,053 2,166,390 211,679 2,254,086
Reinvested dividends and
distributions 4,017 40,271 4,179 44,213
Cost of shares redeemed (69,811) (703,022) (30,354) (317,699)
Net change 149,259 1,503,639 185,504 1,980,600
CLASS Y SHARES:
Proceeds from shares sold 774,436 7,843,990 721,432 7,566,344
Reinvested dividends and
distributions 4,076 41,101 14,352 153,681
Cost of shares redeemed (534,456) (5,398,804) (58,206) (618,774)
Net change 244,056 2,486,287 677,578 7,101,251
Total transactions in Trust
shares (970,088) $ (9,807,786) 1,220,118 $ 13,096,573
</TABLE>
</PAGE>
<PAGE>
TAX-FREE TRUST OF OREGON
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/00 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.27 $10.86 $10.68 $10.49 $10.55 $10.20
Income from Investment Operations:
Net investment income 0.25 0.50 0.53 0.53 0.54 0.55
Net gain (loss) on securities (both
realized and unrealized) (0.06) (0.56) 0.19 0.21 (0.05) 0.39
Total from Investment Operations 0.19 (0.06) 0.72 0.74 0.49 0.94
Less Distributions (note 6):
Dividends from net investment income (0.25) (0.51) (0.53) (0.54) (0.54) (0.55)
Distributions from capital gains - (0.02) (0.01) (0.01) (0.01) (0.04)
Total Distributions (0.25) (0.53) (0.54) (0.55) (0.55) (0.59)
Net Asset Value, End of Period $10.21 $10.27 $10.86 $10.68 $10.49 $10.55
Total Return (not reflecting sales charge)(%) 1.94+ (0.62) 6.90 7.21 4.76 9.52
Ratios/Supplemental Data
Net Assets, End of Period ($ millions) 293 309 322 312 305 311
Ratio of Expenses to Average Net
Assets (%) 0.72* 0.71 0.71 0.73 0.73 0.73
Ratio of Net Investment Income to
Average Net Assets (%) 5.02* 4.70 4.83 5.01 5.15 5.37
Portfolio Turnover Rate (%) 7+ 16 7 5 10 13
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of Expenses to Average Net
Assets (%) 0.70* 0.68 0.69 0.72 0.72 0.71
</TABLE>
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE TRUST OF OREGON
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C(1) CLASS Y(1)
SIX MONTHS YEAR ENDED PERIOD(1) SIX MONTHS YEAR ENDED PERIOD(1)
ENDED SEPTEMBER 30, ENDED ENDED SEPTEMBER 30, ENDED
3/31/00 1999 1998 1997 9/30/96 3/31/00 1999 1998 1997 9/30/96
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.27 $10.85 $10.67 $10.49 $10.34 $10.27 $10.85 $10.68 $10.49 $10.34
Income from Investment Operations:
Net investment income 0.21 0.41 0.43 0.43 0.22 0.26 0.52 0.54 0.54 0.27
Net gain (loss) on securities (both
realized and unrealized) (0.07) (0.55) 0.20 0.21 0.15 (0.07) (0.56) 0.19 0.21 0.15
Total from Investment Operations 0.14 (0.14) 0.63 0.64 0.37 0.19 (0.04) 0.73 0.75 0.42
Less Distributions (note 6):
Dividends from net investment income (0.21) (0.42) (0.44) (0.45) (0.22) (0.26) (0.52) (0.55) (0.55) (0.27)
Distributions from capital gains - (0.02) (0.01) (0.01) - - (0.02) (0.01) (0.01) -
Total Distributions (0.21) (0.44) (0.45) (0.46) (0.22) (0.26) (0.54) (0.56) (0.56) (0.27)
Net Asset Value, End of Period $10.20 $10.27 $10.85 $10.67 $10.49 $10.20 $10.27 $10.85 $10.68 $10.49
Total Return (not reflecting sales charge) (%) 1.40+ (1.38) 6.00 6.20 3.61+ 1.89+ (0.39) 6.96 7.37 4.14+
Ratios/Supplemental Data
Net Assets, End of Period ($ millions) 4.5 3.0 1.2 .8 .3 19.4 17.0 10.7 4.0 .2
Ratio of Expenses to Average Net
Assets (%) 1.58* 1.56 1.56 1.58 1.56* 0.57* 0.56 0.55 0.58 0.58*
Ratio of Net Investment Income to
Average Net Assets (%) 4.14* 3.84 3.98 4.14 4.17* 5.18* 4.86 4.95 5.21 5.35*
Portfolio Turnover Rate (%) 7+ 16 7 5 10+ 7+ 16 7 5 10+
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of Expenses to Average
Net Assets (%) 1.56* 1.53 1.54 1.57 1.56* 0.55* 0.53 0.53 0.57 0.57*
</TABLE>
(1) From April 5, 1996 to September 30, 1996.
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
