ADMINISTRATOR AND SUB-ADVISER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT ADVISER
KPM INVESTMENT MANAGEMENT, INC.
A Mutual of Omaha Company
One Norwest Center
1700 Lincoln Street
Denver, Colorado 80203
and
10250 Regency Circle, Suite 200
Omaha, Nebraska 68114
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Tucker Hart Adams
Arthur K. Carlson
R. Thayne Robson
Cornelius T. Ryan
OFFICERS
Lacy B. Herrmann, President
Jerry G. McGrew, Senior Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
TRANSFER AND SHAREHOLDER SERVICING AGENT
ADMINISTRATIVE DATA
MANAGEMENT CORP.
581 Main Street
Woodbridge, New Jersey 07095-1198
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus,
which must precede or accompany this report.
SEMI-ANNUAL
REPORT
JUNE 30, 1997
(Graphic of Logo: solid rectangle with the words AQUILA, then a drawing of
two mountain peaks, then the words ROCKY MOUNTAIN EQUITY FUND)
A CAPITAL APPRECIATION INVESTMENT
(Graphic of Aquila Group of Funds Logo: an eagle's head)
ONE OF THE
AQUILAsm GROUP OF FUNDS
<PAGE>
(Graphic of Logo: solid rectangle with the words AQUILA, then a drawing of
two mountain peaks, then the words ROCKY MOUNTAIN EQUITY FUND)
AQUILA ROCKY MOUNTAIN EQUITY FUND
SEMI-ANNUAL REPORT
"VALUE ORIENTATION AND THE
LONGER-TERM VIEWPOINT"
August 15, 1997
Dear Investor:
We are pleased to provide you with this Semi-Annual Report for
Aquila Rocky Mountain Equity Fund for the six-month period ended June 30,
1997.
THE ROCKY MOUNTAIN REGION
As you are most likely aware, the Rocky Mountain region -
consisting of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah,
and Wyoming - continues to flourish. Projections for employment and
population growth for this region remain consistently above the national
average. Aquila Rocky Mountain Equity Fund was specifically designed to
allow investors to participate in the dynamic growth possibilities of this
area.
Aquila Rocky Mountain Equity Fund has focused its investments on
growth-oriented companies having a significant business presence in the Rocky
Mountain region of our country. We believe now, as strongly as we did at
inception of the Fund three years ago, that this region will remain an
attractive investment area. Furthermore, we believe that our strategy with
the Fund's investment portfolio is both sound and viable.
THE FUND'S INVESTMENT STRATEGY
A locally-based organization was specifically sought out and
chosen as investment manager in order to take maximum advantage of the
investment opportunities available. Our portfolio manager, located in
Denver, searches for undervalued investment situations and strives to
capitalize on them prior to their discovery by the overall marketplace.
Thus, the Fund's investment approach is basically one in which it invests "in
its own backyard" of the Rocky Mountain region.
Since inception of Aquila Rocky Mountain Equity Fund, the
investment approach taken has been that of being value-oriented in security
selection. The investment manager searches for securities which are
undervalued in relationship to their intrinsic value and projected growth
rate of the company. The key to this approach is to capture upside potential
while at the same time limiting downside risks in price movements to the
maximum extent practicable.
Thus, we search for companies which have a strong presence in
their specific market and which possess upward momentum.
It must be recognized, however, that with this emphasis on
value-oriented investing, it is difficult to put a specific timetable upon
when the market will recognize the full potential inherent in the securities.
Therefore, Aquila Rocky Mountain Equity Fund should not be viewed as a "get
rich quick" vehicle. You should instead look upon your investment as a
longer-term capital appreciation vehicle.
<PAGE>
THE FUND'S RETURN
A primary goal of the Fund is to offer an attractive average
annual return while mitigating price volatility risks along the way.
We would like to point out that many of the value-oriented
securities which comprise the Fund's portfolio have a substantially lower
price earnings ratio when compared to the overall universe of stocks
available.
It is our belief that this lower price earnings ratio better
reflects the value of the underlying companies. This should result in the
Fund's share price being less volatile in a "bear market" than some of the
stocks which possess inflated price earnings ratios.
Aquila Rocky Mountain Equity Fund has produced, in our judgment,
credible ABSOLUTE returns to date. Specifically, the Fund's return on Class
A Shares for the 3-YEAR PERIOD ending July 31, 1997, was at the AVERAGE
ANNUAL RATE OF 13.55%*, including the maximum sales charge. This rate of
return would double one's money in about 5 1/2 years.
When viewing Aquila Rocky Mountain Equity Fund, we tend to liken
the Fund to a solid baseball hitter in the major leagues. Although not a
superstar consistently hitting balls over the fence, it is certainly also not
one to strike out regularly. The Fund does, however, consistently hit
singles, doubles, and triples and, in most circumstances, is an asset to any
team.
Our desire is to avoid having shareholders hold their collective
breaths to see if we are going to "hit one out of the park" or "go down
swinging." Rather, we wish to give you the comfort of knowing that we are
invariably going to "get on base and drive in a run or two."
LONGER-TERM OUTLOOK
We believe that in the longer-term, Aquila Rocky Mountain Equity
Fund will continue to achieve its goal of providing shareholders with
reasonable capital appreciation while attempting to control price volatility
to the maximum extent possible.
YOUR CONFIDENCE IS APPRECIATED
Your investment in Aquila Rocky Mountain Equity Fund is greatly
appreciated. We value your trust and will strive to merit your continued
confidence.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
*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. Returns would have been
less if management fees and expenses had been fully applied.
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (86.9%) MARKET VALUE
<C> <S> <C>
Basic Industry (2.1%)
400 Barrick Gold Corp. $ 8,800
1,500 Cyprus Amax Minerals Co. 36,750
200 Newmont Mining 7,800
53,350
Cable/Communications (8.0%)
1,500 Inter-Tel Inc. + 31,875
2,800 Jones Intercable Inc. Class A + 35,700
300 Jones Intercable Inc. + 3,488
1,500 Liberty Media Group Class A + 35,625
3,000 Tele-Communications Inc. Class A + 44,625
2,000 U.S. West Media Group + 40,500
1,300 United International Holdings, Inc. Class A+ 13,488
205,301
Consumer Cyclical (10.4%)
4,500 BMC West Corp. + 55,125
2,000 Koala Corp. + 32,000
6,000 Mity Lite, Inc. + 83,250
5,000 Viad Corporation 96,250
266,625
Consumer Non-Durable (11.0%)
2,000 American Stores Company 98,750
3,500 Avert Inc. + 28,875
4,000 Dial Corp 62,500
2,800 Franklin Covey Company + 70,875
4,500 Rocky Mountain Chocolate Factory + 20,250
281,250
Energy (14.3%)
4,500 Giant Industries, Inc. 71,156
1,800 KN Energy 75,825
9,600 Prima Energy Corp.+ 163,200
2,278 Union Pacific Resources, Inc. 56,654
366,835
Financial (15.9%)
2,332 Conseco Inc. 86,284
600 Finova Group Inc. 45,900
3,900 First Security Corp. 106,518
4,875 First State Bancorp 82,266
4,161 Westerfed Financial Corp. 85,300
406,268
<PAGE>
Gaming (7.4%)
1,000 American Coin Merchandising + 10,875
1,200 Circus Circus Enterprises Inc.+ 29,550
4,000 International Game Technology 71,000
4,800 Jackpot Enterprises 54,600
900 Mirage Resorts + 22,725
188,750
Healthcare (3.1%)
1,000 Ballard Medical Products 20,063
1,900 Sierra Health Services Inc.+ 59,375
79,438
Technology (1.8%)
3,000 Microtest Inc. + 12,000
5,000 Novell Inc.+ 34,688
46,688
Transportation (4.3%)
1,800 Rural/Metro Corp.+ 52,256
800 Union Pacific 56,400
108,656
Utilities (8-6%)
400 Idaho Power Co. 12,550
2,000 Pinnacle West Capital 60,125
1,800 Public Service Co. Colorado 74,700
1,900 U.S. West Inc. 71,606
218,981
Total Common Stocks (cost $1,721,291) 2,222,142
Short-Term Investments (6.8%)
75,000 The One Group Prime Money Market Fund 75,000
100,000 Churchill Cash Reserves Trust 100,000
Total Short-Term Investments (cost $175,000) 175,000
Total Investments (cost $1,896,291*) 93.7% 2,397,142
Other assets in excess of liabilities 6.3 160,269
Net Assets 100% $2,557,411
<FN>
* Cost for Federal tax purposes is identical.
</FN>
<FN>
+ Non-income producing security.
</FN>
</TABLE>
See accompanying notes to Financial statements.
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (unaudited)
ASSETS
Investments at market value (identified cost - $1,896,291) $2,397,142
Cash 62,721
Due from Administrator for reimbursement of expenses 60,666
Deferred organization expenses (note 2) 22,162
Receivable for fund shares sold 19,147
Dividends and interest receivable 3,007
Total assets 2,564,845
LIABILITIES
Accrued expenses 6,057
Distribution fees payable 1,377
Total liabilities 7,434
NET ASSETS $2,557,411
Net Assets consist of:
Capital Stock-Authorized an unlimited number of shares, par
value $.01 per share $ 1,578
Additional paid-in capital 1,964,197
Undistributed net realized gain on investments 90,785
Net unrealized appreciation on investments 500,851
$2,557,411
CLASS A
Net Assets $2,409,035
Capital shares outstanding 148,675
Net asset value and redemption price per share $ 16.20
Offering price per share (100/95.75 of $16.20 adjusted
to nearest cent) $ 16.92
CLASS C
Net Assets $ 4,506
Capital shares outstanding 279
Net asset value and offering price per share $ 16.17
Redemption price per share (*varies by length of
time shares are held) $ *
CLASS Y
Net Assets $ 143,870
Capital shares outstanding 8,853
Net asset value, offering and redemption price per share $ 16.25
See accompanying notes to financial statements.
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE. 30, 1997 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $13,936
Interest 4,337
$18,273
Expenses:
Investment Adviser fees (note 3) $ 8,041
Administrator fees (note 3) 9,190
Legal fees 12,500
Shareholders' reports and proxy statements 11,000
Transfer and shareholder servicing agent fees 11,000
Trustees' fees and expenses 8,500
Amortization of organization expenses (note 2) 7,387
Registration fees and dues 6,000
Audit and accounting fees 5,000
Distribution and service fees (note 3) 2,719
Custodian fees (note 6) 1,230
Miscellaneous 11,455
94,022
Investment Adviser fees waived (note 3) (8,041)
Administrator fees waived (note 3) (9,190)
Reimbursement of expenses by Administrator (note 3) (58,580)
Expenses paid indirectly (note 6) (1,230)
Net expenses 16,981
Net investment income 1,292
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from securities transactions 70,897
Change in unrealized appreciation on investments 109,777
Net realized and unrealized gain on investments 180,674
Net increase in net assets resulting from operations $ 181,966
See accompanying notes to financial statements.
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
</TABLE>
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June December
30, 1997 31, 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,292 $ (2,749)
Net realized gain from securities transactions 70,897 82,961
Change in unrealized appreciation on investments 109,777 258,491
Change in net assets from operations 181,966 338,703
DISTRIBUTIONS TO SHAREHOLDERS (note 5):
Class A Shares:
Net investment income - -
Net realized gain on investments - (74,547)
Class C Shares:
Net investment income - -
Net realized gain on investments - (143)
Class Y Shares:
Net investment income - -
Net realized gain on investments - (4,537)
Change in net assets from distributions - (79,227)
CAPITAL SHARE TRANSACTIONS (note 7):
Proceeds from shares sold 364,663 705,847
Reinvested dividends and distributions 69 68,103
Cost of shares redeemed (304,960) (454,481)
Change in net assets from capital share
transactions 59,772 319,469
Change in net assets 241,738 578,945
NET ASSETS:
Beginning of period 2,315,673 1,736,728
End of period $2,557,411 $2,315,673
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION
Aquila Rocky Mountain Equity Fund (the "Fund"), a diversified, open-end
investment company, was organized on November 3, 1993 as a Massachusetts
business trust and commenced operations on July 22, 1994. The Fund is
authorized to issue an unlimited number of shares and, since its inception to
May 1, 1996, offered only one class of shares. On that date, the Fund 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 Fund and are
identical as to rights and privileges. They differ only with respect to the
effect of sales charges, the distribution and/or service fees borne by the
respective class, expenses specific to each class, voting rights on matters
affecting a single class and the exchange privileges of each class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: Securities listed on a national securities exchange
or designated as national market system securities are valued at the last
sale price on such exchanges or market system or, if there has been no sale
that day, at the bid price. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
at the direction of the Board of Trustees. Short-term investments maturing in
60 days or less are valued at amortized cost.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Dividend
income is recorded on the ex-dividend date. Interest income is recorded daily
on the accrual basis.
c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of the Internal
Revenue Code applicable to certain investment
<PAGE>
companies, The Fund intends to make distributions of income and securities
profits sufficient to relieve it from all, or substantially all, Federal
income and excise taxes,
d) ORGANIZATION EXPENSES: The Fund's organizational expenses have been
deferred and are being amortized on a straight-line basis over five years.
e) ALLOCATION OF EXPENSES: Expenses, other than class-specific expenses, are
allocated daily to each class of shares based on the relative net assets of
each class. Class-specific expenses, which include distribution and service
fees and any other items that are specifically attributed to a particular
class, are charged directly to such class.
f) USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
Management affairs of the Fund are conducted through two separate
management arrangements.
KPM Investment Management, Inc. (the "Adviser"), a wholly-owned
subsidiary of Kirkpatrick, Pettis, Smith, Polian Inc., serves as Investment
Adviser to the Fund. Kirkpatrick, Pettis is, in turn, a subsidiary of the
nationally oriented Mutual of Omaha Insurance Company. In this role, under
an Investment Advisory Agreement, the Adviser supervises the Fund's
investments and provides various services to the Fund for which it is
entitled to receive a fee which is payable monthly and computed as of the
close of business each day on the net assets of the Fund at the following
annual rates; 0.70 of 1% on the first $15 million; 0.55 of 1% on the next
$35 million and 0.40 of 1% on the excess over $50 million.
The Fund also has a Sub-Advisory and Administration Agreement with Aquila
Management Corporation (the "Administrator"), the Fund's founder and sponsor,
under this agreement, the Administrator provides such advisory services to
the Fund, in addition to those services provided by the Adviser, as the
Administrator deems appropriate. Besides its sub-advisory services, it also
provides all administrative services, other than those relating to the
management of the Fund's investments. This includes providing the office of
the Fund and all related services as well as overseeing the activities of all
the various support organizations to the Fund such as the shareholder
servicing agent, custodian, legal counsel, auditors and distributor and
additionally maintaining the Fund's accounting books and records. For its
services, the Administrator is entitled to receive a fee which is payable
monthly and computed as of the close of business each day on the net assets
of the
<PAGE>
Fund at the following annual rates; 0.80 of 1% on the first $15 million;
0.65 of 1% on the next $35 million and 0.50 of 1% on the excess over $50
million.
Specific details as to the nature and extent of the services provided by
the Adviser and the Administrator are more fully defined in the Fund'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 its pro-rata portion
(determined on the basis of the respective fees computed as described above)
of the amount, if any, by which the total expenses of the Fund in any fiscal
year, exclusive of taxes, interest and brokerage fees, shall exceed the most
restrictive expense limitation imposed upon the Fund in the States in which
shares are then eligible for sale. At the present time none of the States in
which the Fund's shares are sold have any such limitation.
For the six months ended June 30, 1997, the Fund incurred fees under the
Advisory Agreement and Sub-Advisory and Administration Agreement of $8,041
and $9,190, respectively. However, all of these fees were voluntarily waived.
Additionally, the Administrator voluntarily agreed to reimburse the Fund for
other expenses during this period in the amount of $58,580.
b) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the investment Company Act of 1940. Under one part
of the Plan, with respect to Class A Shares, the Fund is authorized to make
service fee payments to broker-dealers or others ("Qualified Recipients")
selected by the Distributor, including, but not limited to, any principal
underwriter of the Fund, with which the Distributor has entered into written
agreements contemplated by the Rule and which have rendered assistance in
the distribution and/or retention of the Fund's shares or servicing of
shareholder accounts. The Fund makes payment of this service fee at the
annual rate of 0.25% of the Fund's average net assets represented by Class A
Shares. For the six months ended June 30, 1997, service fees on Class A
Shares amounted to $2,698, of which the Distributor received $334.
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of the Fund's Class C shares
or servicing of shareholder accounts. These payments are made at the annual
rate of 0.75% of the Fund's net assets represented by Class C Shares and for
the six months ended June 30, 1997, amounted to $16, of which the Distributor
received $16.
In addition, under a Shareholder Services Plan, the Fund is authorized to
make service fee payments with respect to Class C Shares to Qualified
Recipients for providing personal services and/or maintenance of shareholder
accounts. These payments are made at the annual rate of 0.25% of the Fund's
net assets represented by Class C Shares and for the six months ended June
30, 1997, amounted to $5, of which the Distributor received $5.
<PAGE>
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional information.
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Fund's shares.
Through agreements between the Distributor and various broker-dealer firms
("dealers"), the Fund's shares are sold primarily through the facilities of
these dealers having offices within the general Rocky Mountain region, with
the bulk of sales commissions inuring to such dealers. For the six months
ended June 30, 1997, the Distributor received sales commissions in the amount
of $547.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1997, purchases of securities and
proceeds from the sales of securities (excluding short-term investments)
aggregated $120,879 and $180,436, respectively.
At June 30, 1997, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted
to $617,757 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $116,906,
for a net unrealized appreciation of $500,851.
5. DISTRIBUTIONS
The Fund declares annual distributions to shareholders from net
investment income, if any, and from net realized capital gains, if any.
Distributions are recorded by the Fund on the ex-dividend date and paid in
additional shares at the net asset value per share or in cash, at the
shareholder's option. Due to differences between financial reporting and
Federal income tax reporting requirements, distributions made by the Fund
may not be the same as the Fund's net investment income, and/or net realized
securities gains.
6. EXPENSES
The Fund has negotiated an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever
there are uninvested cash balances. During the year ended December 31, 1996,
the Fund's custodian fees amounted to $1,230, all of which were offset by
such credits. It is the general intention of the Fund to invest, to the
extent practicable, some or all of cash balances in income-producing assets
rather than leave cash on deposit with the custodian.
<PAGE>
7. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 23,491 $364,663 39,760 $589,861
Reinvested dividends and
distributions - - 4,233 63,492
Cost of shares redeemed (19,574) (304,960) (31,555) (454,480)
Net change 3,917 59,703 12,438 198,873
<CAPTION>
Period Ended
December 31, 1996
Shares Amount
<S> <C> <C> <C> <C>
CLASS C SHARES:
Proceeds from shares sold - - 269 4,090
Reinvested dividends and
distributions 5 69 5 74
Cost of shares redeemed - - - -
Net change 5 69 274 4,164
<CAPTION>
Period Ended
December 31, 1996
Shares Amount
<S> <C> <C> <C> <C>
CLASS Y SHARES:
Proceeds from shares sold - - 8,551 111,896
Reinvested dividends and
distributions - - 302 4,536
Cost of shares redeemed - - - -
Net change - - 8,853 116,432
Total transactions in Fund
Shares 3,922 $59,772 21,565 $319,469
<FN>
* From May 1,1996 (date of inception) through December 31, 1996.
</FN>
</TABLE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
FINANCIAL HIGHLIGHTS
(unaudited)
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Class A (1)
Six Months Year Ended Year Ended Period Ended
Ended June December December December
30, 1997 31, 1996 31, 1995 31, 1994(2)
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $15.05 $13.13 $11.06 $11.43
Income from Investment
Operations:
Net investment income
(loss) 0.01 (0.02) (0.07) -
Net gain (loss) on
securities (both
realized and
unrealized) 1.14 2.47 2.25 (0.37)
Total from Investment
Operations 1.15 2.45 2.18 (0.37)
Less Distributions (note 5):
Dividends from net
investment income - - (0.01) -
Distributions from capital
gains - (0.53) (0.10) -
Total Distributions - (0.53) (0.11) -
Net Asset Value, End of
Period $16.20 $15.05 $13.13 $11.06
Total Return (not
reflecting sales charge)
(%) 7.64+ 18.68 19.68 (3.24)+
Ratios/Supplemental Data
Net Assets, End of
Period ($ thousands) 2,409 2,178 1,737 530
Ratio of Expenses to
Average Net Assets (%) 1.49* 1.50 1.91 1.19*
Ratio of Net Investment
Income (Loss) to
Average Net Assets (%) .10* (0.14) (0.60) -
Portfolio Turnover Rate
(%) 5.86+ 20.32 15.14 2.95+
Average commission rate
paid(4)($) .0766 .0745 - -
<CAPTION>
Net investment income (loss) per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's voluntary
waiver of fees, the Administrator's voluntary expense reimbursement and the
expense offset in custodian fees for uninvested cash balances would have
been:
<S> <C> <C> <C> <C>
Net Investment
Income (loss) ($) (0.50) (1.05) (1.12) -
Ratio of Expenses to
Average Net Assets
(3)(%) 8.20* 8.84 10.48 18.20*
Ratio of Net Investment
Loss to Average Net
Assets (%) (6.61)* (7.48) (9.17) -
<FN>
(1) Designated as Class A Shares on May 1, 1996.
</FN>
<FN>
(2) From July 22, 1994 (commencement of operations) to December 31, 1994.
</FN>
<FN>
(3) Ratios are based on average net assets of $2,176,548, $1,965,012,
$1,239,752 and $458,768, respectively. In general, as the Fund's net
assets increase, the expense ratio will decrease.
</FN>
<FN>
(4) Represents the average per share broker commission rate paid by the Fund
in connection with the execution of the Fund's portfolio transactions in
equity securities on which commissions were charged. Calculations are for
fiscal years beginning January 1, 1996.
</FN>
<FN>
+ Not annualized.
</FN>
<FN>
* Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
FINANCIAL HIGHLIGHTS (continued)
(unaudited)
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Class C(1) Class Y(1)
Six Months Period Six Months Period
Ended June Ended Dec. Ended June Ended Dec.
30, 1997 31, 1996 30, 1997 31, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $15.07 $14.59 $15.07 $14.59
Income from investment
Operations:
Net investment income (0.05) 0.01 0.03 0.01
Net gain on securities
(both realized and
unrealized) 1.15 1.00 1.15 1.00
Total from Investment
Operations 1.10 1.01 1.18 1.01
Less Distributions (note 5):
Dividends from net
investment income - - - -
Distributions from capital
gains - (0.53) - (0.53)
Total Distributions - (0.53) - (0.53)
Net Asset Value, End of
Period $16.17 $15.07 $16.25 $15.07
Total Return (not
reflecting sales charge)
(%) 7.30+ 6.94+ 7.83+ 6.94+
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 5 4 144 133
Ratio of Expenses to
Average Net Assets (%) 2.27* 1.25* 1.24* 1.25*
Ratio of Net Investment
Income (Loss) to
Average Net Assets (%) (0.66)* 0.11* 0.35* 0.11*
Portfolio Turnover Rate
(%) 5.86+ 20.32+ 5.86+ 20.32+
Average Commission Rate
Paid(2) ($) .0766 .0745 .0766 .0745
<CAPTION>
Net investment income (loss) per share and the ratios of income and expenses
to average net assets without the Adviser's and Administrator's voluntary
waiver of fees, the Administrator's voluntary expense reimbursement and the
expense offset in custodian fees for uninvested cash balances would have
been:
<S> <C> <C> <C> <C>
Net Investment (Loss) ($) (0.56) (0.72) (0.48) (0.72)
Ratio of Expenses to
Average Net Assets (%) 8.97* 8.59* 7.95* 8.59*
Ratio of Net Investment
Loss to Average Net
Assets (%) (7.37)* (7.23)* (6.36)* (7.23)*
<FN>
(1) New Class of Shares established on May 1, 1996.
</FN>
<FN>
(2) Represents the average per share broker commission rate paid by the Fund
in connection with the execution of the Fund's portfolio transactions in
equity securities on which commissions were charged.
</FN>
<FN>
+ Not annualized.
</FN>
<FN>
* Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>