<PAGE>
ADMINISTRATOR AND SUB-ADVISER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Tucker Hart Adams
Arthur K. Carlson
Diana P. Herrmann
R. Thayne Robson
Cornelius T. Ryan
OFFICERS
Lacy B. Herrmann, President
Barbara S. Walchli, Senior Vice President and Portfolio Manager
James M. McCullough, Senior Vice President
Kimball L. Young, Senior Vice President
Susan A. Cook, Vice President
Alan R. Stockman, Vice President
Emily C. Van Voorhis, Vice President
Jessica L. Wiltshire, 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
PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
INDEPENDENT AUDITORS
KPMG LLP
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus,
which must precede or accompany this report.
SEMI-ANNUAL
REPORT
JUNE 30, 2000
[Logo of Aquila Rocky Mountain Equity Fund: a rectangle with a drawing of two
mountains and the words Aquila Rocky Mountain Equity Fund]
A CAPITAL APPRECIATION INVESTMENT
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILASM GROUP OF FUNDS
</PAGE>
<PAGE>
[Logo of Aquila Rocky Mountain Equity Fund: a rectangle with a drawing of two
mountains and the words Aquila Rocky Mountain Equity Fund]
AQUILA ROCKY MOUNTAIN EQUITY FUND
SEMI-ANNUAL REPORT
"A COMPELLING STORY"
August 18, 2000
Dear Fellow Shareholders:
We are pleased to report to you the results of Aquila Rocky Mountain Equity
Fund as at June 30, 2000. For the six months ended on that date, the Fund's
Class A share price was up 7.16%, without any sales charge. For the same period,
this compares with -0.01% for the Standard & Poor's 500 Index and up 4.02% for
the Russell 2000. Both of these indexes tend to be considered "benchmarks" for
the Fund.
THE STORY FOR THE ROCKY MOUNTAIN REGION CONTINUES TO BE COMPELLING
We continue to be excited about the prospects for the Rocky Mountain region
of our country and the possibility for good capital growth from investments in
companies in the area. Here are some of the things that give us this
encouragement.
* Over the last ten years, five states in the Rocky Mountain Region -
Nevada, Arizona, Idaho, Utah and Colorado - experienced the fastest
growth in population in the United States.
* The character of this population growth is exceptionally high in
talent. The Rocky Mountain region attracts numerous entrepreneurial-
oriented college graduates who choose the area because of its quality
of life.
* The amount of venture capital pouring into the Rocky Mountain region
to finance growing companies has been very high.
* The number of publicly-owned companies continues to rise. At present
there are more than 700 companies in the Rocky Mountain region that
offer investment potential, with this number growing on a continuing
basis.
* The diversity of companies, including those in the high-tech area, in
the Rocky Mountain region is excellent for investment. Moreover,
Colorado and Arizona rank exceptionally high in terms of the number of
technology workers per 1000 overall workers.
* Three Rocky Mountain states - Colorado, Utah, and Arizona - made the
top 10 list of states most prepared for the dynamic characteristics of
the "new economy. "
* Investors can find companies within the Rocky Mountain region growing
at a high rate of earnings growth that are selling at considerably
lower price/earning ratios than exists in various other areas of the
country.
</PAGE>
<PAGE>
THE FUND'S INVESTMENT APPROACH
We continue to seek out companies which possess high growth prospects, but
which are selling at a reasonable value in their price. We call this approach
"growth at a reasonable price." What we would like to see in companies in which
we invest is a:
* high return on invested capital;
* relatively low level of debt;
* demonstrated competitive edge in its specific industry segment;
* high stake in ownership by management; and
* price/earnings ratio lower than or comparable to its projected
earnings growth.
We believe there are a number and variety of companies in the Rocky
Mountain region available for investment by the Fund which fit various of the
above characteristics. Our highly dedicated portfolio manager is kept very busy
ferreting out situations for the Fund. However, we have found that by having an
on-site portfolio manager within the Rocky Mountain region, we can unearth
various exciting companies before they become well-known to Wall Street. This,
we believe, is what gives us a competitive edge in our investment approach.
TOP 10 HOLDINGS
Listed below are the top ten common stock holdings of the Fund at June 30,
2000. As you can appreciate, these holdings will vary in character and amount
over time. However, what we try to do is make sure we have the right kind of
diversified mix to produce higher than average results for shareholders.
<TABLE>
<CAPTION>
PERCENT
COMPANY OF NET ASSETS STATE MARKET SECTOR
</CAPTION>
<S> <C> <C> <C>
Prima Energy 14.2% Colorado Energy
AT&T Liberty Media A 7.1 Colorado Consumer Services
Avert Inc. 6.8 Colorado Technology
Koala Corp. 4.9 Colorado Consumer Cyclicals
Comcast Class A 4.3 Pennsylvania Consumer Services
Montana Power Co. 3.9 Montana Telecommunications
Viad Corp. 3.8 Arizona Business Services
Mity-Lite, Inc. 3.7 Utah Capital Spending
International Game Technology 3.7 Nevada Consumer Services
Media One Group 3.1 Colorado Consumer Services
</TABLE>
At the end of the quarter on June 30, Prima Energy was added to the Russell
2000. As a result, the stock price of this company spiked up dramatically as a
number of index funds bought the stock. This caused the Fund's position in the
stock to grow significantly. Soon afterwards, we reduced the Fund's position in
this stock to a more normal size. Another of our holdings, Myriad Genetics, was
also added to the Russell 2000 in June. We have enjoyed strong performance in
both stocks. We have found that taking positions in good companies before the
larger institutions find them can be very rewarding.
</PAGE>
<PAGE>
APPRECIATION
We appreciate very much the trust you have expressed in the Fund through
your investment. We continue to be enthusiastic about the Rocky Mountain region
of our country and for the growth prospects from investing in the area. We will
continue to do our utmost to merit your continuing confidence.
Sincerely,
Barbara S. Walchli
Senior Vice President and
Portfolio Manager
Lacy B. Herrmann
President and
Chairman, Board of Trustees
</PAGE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
MARKET
SHARES COMMON STOCKS - 90.4% VALUE
BASIC INDUSTRY - 2.0%
2,000 Barrick Gold Corp. $ 36,375
3,000 Building Materials Holding Corp. + 26,438
62,813
BUSINESS SERVICES - 3.8%
4,500 Viad Corporation 122,625
CAPITAL SPENDING - 5.3%
9,000 Mity-Lite, Inc. + 119,250
7,000 Morrison Knudsen Corp. + 50,750
10 Morrison Knudsen Corp. Warrants + 20
170,020
CONSUMER CYCLICALS - 4.9%
11,200 Koala Corp. + 158,200
CONSUMER SERVICES - 24.1%
1,500 Albertson's Inc. 49,875
1,500 Apollo Group, Inc. + 42,000
9,400 AT&T Liberty Media Group Class A+ 227,950
2,000 Coldwater Creek, Inc. 60,250
3,400 Comcast Corp. - Special Class A+ 137,700
1,000 Echostar Communications Corp. Class A+ 33,109
4,500 International Game Technology + 119,250
1,500 Media One Group + 99,738
769,872
ENERGY - 14.2%
8,500 Prima Energy Corp. + 454,750
FINANCIAL - 7.1%
5,850 First Security Corp. 79,341
8,812 First State Bancorp 90,323
4,000 WesterFed Financial Corp. 57,750
227,414
HEALTH CARE - 4.1%
6,000 Interwest Home Medical Inc. + 36,750
300 Myriad Genetics, Inc. + 44,423
4,000 Wild Oats Markets, Inc. + 50,250
131,423
</PAGE>
<PAGE>
REAL ESTATE INVESTMENT TRUST - 1.1%
1,500 Franchise Finance of America $ 34,500
TECHNOLOGY - 12.9%
9,500 Avert Inc. + 217,312
3,000 Gentner Communications Corp. + 42,000
1,000 Microchip Technology Inc. + 58,266
9,000 Navidec Inc. + 79,875
1,000 TenFold Corporation + 16,437
413,890
TELECOMMUNICATIONS - 4.7%
300 Level 3 Communications Inc. + 26,400
3,500 Montana Power Co. 123,594
149,994
UTILITIES - 6.2%
1,500 Idacorp Inc. 48,375
2,700 Kinder Morgan 93,319
3,000 Questar Corp. 58,125
199,819
Total Common Stocks (cost $1,562,521*) 2,895,320
FACE
AMOUNT SHORT-TERM INVESTMENTS - 8.9%
$ 285,000 Churchill Cash Reserves Trust 285,000
Total Short-Term Investments (cost $285,000) 285,000
Total Investments (cost $1,847,521*) 99.3% 3,180,320
Other assets in excess of liabilities 0.7 22,072
Net Assets 100.0% $ 3,202,392
* Cost for Federal tax purposes is identical.
+ Non-income producing security.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
ASSETS
Investments at market value (cost $1,847,521) $ 3,180,320
Receivable for investment securities sold 57,268
Due from Administrator for reimbursement of expenses (note 3) 7,105
Cash 3,446
Dividends and interest receivable 1,772
Other assets 113
Total assets 3,250,024
LIABILITIES
Payable for Fund shares redeemed 43,105
Accrued expenses 2,850
Distribution fees payable 1,677
Total liabilities 47,632
NET ASSETS $ 3,202,392
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share $ 1,497
Additional paid-in capital 1,817,810
Net unrealized appreciation on investments 1,332,799
Undistributed net realized gain on investments 50,286
$ 3,202,392
CLASS A
Net Assets $ 1,894,237
Capital shares outstanding 88,538
Net asset value and redemption price per share $ 21.39
Offering price per share (100/95.75 of $21.39 adjusted to nearest cent) $ 22.34
CLASS C
Net Assets $ 272,030
Capital shares outstanding 13,042
Net asset value and offering price per share $ 20.86
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) $ 20.86*
CLASS Y
Net Assets $ 1,036,125
Capital shares outstanding 48,088
Net asset value, offering and redemption price per share $ 21.55
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 11,586
Interest 4,485
$ 16,071
Expenses:
Investment Adviser fees (note 3) $ 9,496
Administrator fees (note 3) 10,852
Legal fees 14,000
Shareholders' reports 10,000
Audit and accounting fees 7,000
Trustees' fees and expenses 7,000
Registration fees and dues 6,500
Transfer and shareholder servicing agent fees 6,000
Distribution and service fees (note 3) 3,047
Custodian fees 925
Miscellaneous 2,517
77,337
Investment Adviser fees waived (note 3) (9,496)
Administrator fees waived (note 3) (10,852)
Reimbursement of expenses by Administrator (note 3) (37,915)
Expenses paid indirectly (note 6) (925)
Net expenses 18,149
Net investment loss (2,078)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from securities transactions 73,176
Change in unrealized appreciation on investments 138,580
Net realized and unrealized gain on investments 211,756
Net increase in net assets resulting from operations $ 209,678
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment loss $ (2,078) $ (6,202)
Net realized gain from securities transactions 73,176 21,894
Change in unrealized appreciation on investments 138,580 485,535
Change in net assets from operations 209,678 501,227
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 5):
Class A Shares:
Net investment income - -
Net realized gain on investments - (17,492)
Class C Shares:
Net investment income - -
Net realized gain on investments - (2,297)
Class Y Shares:
Net investment income - -
Net realized gain on investments - (11,061)
Change in net assets from distributions - (30,850)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 756,407 159,493
Reinvested dividends and distributions - 23,162
Cost of shares redeemed (232,863) (1,014,679)
Change in net assets from capital share transactions 523,544 (832,024)
Change in net assets 733,222 (361,647)
NET ASSETS:
Beginning of period 2,469,170 2,830,817
End of period $ 3,202,392 $ 2,469,170
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<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 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 April 30, 1998 the Fund established
Class I shares, which are offered and sold only through financial intermediaries
and are not offered directly to retail investors. At June 30, 2000 there were no
Class I shares outstanding. All classes of shares represent interests in the
same portfolio of investments and are identical as to rights and 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 Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
A) PORTFOLIO VALUATION: Securities listed on a national securities exchange or
designated as national market system securities are valued at the last sale
price on such exchanges or market system or, if there has been no sale that
day, at the bid price. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
or at the direction of the Board of Trustees. Short-term investments
maturing in 60 days or less are valued at amortized cost.
B) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Dividend
income is recorded on the ex-dividend date. Interest income is recorded
daily on the accrual basis.
C) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Fund
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
D) ALLOCATION OF EXPENSES: Expenses, other than class-specific expenses, are
allocated daily to each class of shares based on the relative net assets of
each class. Class-specific expenses, which include distribution and service
fees and any other items that are specifically attributed to a particular
class, are charged directly to such class.
</PAGE>
<PAGE>
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:
The Fund has a Sub-Advisory and Administration Agreement with Aquila
Management Corporation (the "Administrator"), the Fund's founder and sponsor.
Under this agreement, the Administrator supervises the investments of the Fund
and the composition of its portfolio, arranges for the purchases and sales of
portfolio securities, and provides for daily pricing of the Fund's portfolio.
Besides its sub-advisory services, it also provides all administrative services.
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 Fund at the following annual rates; 1.50% on the first $15
million; 1.20% on the next $35 million and 0.90 of 1% on the excess over $50
million.
The Administrator agrees that the above fees shall be reduced, but not
below zero, by an amount equal to 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, 2000, the Fund incurred fees under the
Sub-Advisory and Administration Agreement of $9,496 and $10,852, respectively,
which were voluntarily waived. Additionally, during this period the
Administrator voluntarily agreed to reimburse the Fund for other expenses in the
amount of $37,915. Of this amount, $30,810 was paid prior to June 30, 2000 and
the balance of $7,105 was paid in early July 2000.
Specific details as to the nature and extent of the services provided by
the Administrator are more fully defined in the Fund's Prospectus and Statement
of Additional Information.
B) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part of
the Plan, with respect to Class A Shares, the Fund is authorized to make service
fee payments to broker-dealers or others ("Qualified Recipients") selected by
Aquila Distributors, Inc. (the "Distributor"), including, but not limited to,
any principal underwriter of the Fund, with which the Distributor has entered
into written agreements contemplated by the Rule and which have rendered
assistance in the distribution and/or retention of the Fund's shares or
servicing of shareholder accounts. The Fund makes payment of this service fee at
the annual rate of 0.25% of the Fund's average net assets represented by Class A
Shares. For the six months ended June 30, 2000, service fees on Class A Shares
amounted to $1,923, of which the Distributor received $268.
</PAGE>
<PAGE>
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of the Fund's Class C shares or
servicing of shareholder accounts. These payments are made at the annual rate of
0.75% of the Fund's net assets represented by Class C Shares and for the six
months ended June 30, 2000, amounted to $843. 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, 2000, amounted to $281. The total of these payments with
respect to Class C Shares amounted to $1,124, of which the Distributor received
$508.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the exclusive
distributor of the Fund's shares. Through agreements between the Distributor and
various broker-dealer firms ("dealers"), the Fund's shares are sold primarily
through the facilities of these dealers having offices within the general Rocky
Mountain region, with the bulk of sales commissions inuring to such dealers. For
the six months ended June 30, 2000, total commissions on sales of Class AShares
amounted to $9,391, of which the Distributor received $26.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 2000, purchases of securities and
proceeds from the sales of securities (excluding short-term investments)
aggregated $602,481 and $390,548, respectively.
At June 30, 2000, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$1,423,112 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $90,313, for
a net unrealized appreciation of $1,332,799.
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, in cash, or in a combination of both, at the
shareholder's option. Due to differences between financial statement reporting
and Federal income tax reporting requirements, distributions made by the Fund
may not be the same as the Fund's net investmen t income, and/or net realized
securities gains.
</PAGE>
<PAGE>
6. EXPENSES
The Fund has negotiated an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees and other Fund
expenses whenever there are uninvested cash balances. The Statement of
Operations reflects the total expenses before any offset, the amount of offset
and the net expenses. It is the general intention of the Fund to invest, to the
extent practicable, some or all of cash balances in equity securities rather
than leave cash on deposit.
7. PORTFOLIO ORIENTATION
The Fund's investments are primarily invested in the securities of
companies within the eight state Rocky Mountain region and therefore are subject
to economic and other conditions affecting the various states which comprise the
region. Accordingly, the investment performance of the Fund might not be
comparable with that of a broader universe of companies.
8. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 30,898 $ 624,466 8,224 $ 148,753
Reinvested dividends and
distributions - - 563 11,161
Cost of shares redeemed (10,636) (215,939) (52,657) (969,054)
Net change 20,262 408,527 (43,870) (809,140)
CLASS C SHARES:
Proceeds from shares sold 4,426 88,191 500 9,565
Reinvested dividends and
distributions - - 49 940
Cost of shares redeemed (851) (16,924) (875) (15,625)
Net change 3,575 71,267 (326) (5,120)
CLASS Y SHARES:
Proceeds from shares sold 2,183 43,750 61 1,175
Reinvested dividends and
distributions - - 555 11,061
Cost of shares redeemed - - (1,640) (30,000)
Net change 2,183 43,750 (1,024) (17,764)
Total transactions in Fund
shares 26,020 $ 523,544 (45,220) $ (832,024)
</TABLE>
</PAGE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $19.96 $16.76 $17.89 $15.05 $13.13 $11.06
Income from Investment Operations:
Net investment income (loss) (0.02) (0.04) - 0.01 (0.02) (0.07)
Net gain (loss) on securities (both realized
and unrealized) 1.45 3.48 (0.96) 3.44 2.47 2.25
Total from Investment Operations 1.43 3.44 (0.96) 3.45 2.45 2.18
Less Distributions (note 5):
Dividends from net investment income - - (0.01) - - (0.01)
Distributions from capital gains - (0.24) (0.16) (0.61) (0.53) (0.10)
Total Distributions - (0.24) (0.17) (0.61) (0.53) (0.11)
Net Asset Value, End of Period $21.39 $19.96 $16.76 $17.89 $15.05 $13.13
Total Return (not reflecting sales charge) (%) 7.16+ 20.56 (5.31) 23.01 18.68 19.68
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 1,894 1,363 1,880 3,144 2,178 1,737
Ratio of Expenses to Average Net Assets (%) 1.39* 1.55 1.74 1.58 1.55 2.03
Ratio of Net Investment Income (Loss) to
Average Net Assets (%) (0.23)* (0.27) (0.22) (0.03) (0.19) (0.72)
Portfolio Turnover Rate (%) 14.96+ 6.45 19.52 10.39 20.32 15.14
The expense and net investment income ratios without the effect of the
voluntary waiver of fees and the voluntary expense reimbursement were:
Ratio of Expenses to Average Net Assets (%) 5.48* 5.86 4.74 6.48 8.79 10.36
Ratio of Net Investment Income (Loss) to
Average Net Assets (%) (4.33)* (4.59) (3.22) (4.93) (7.43) (9.05)
The expense ratios after giving effect to the waivers, reimbursements and
expense offset for uninvested cash balances were:
Ratio of Expenses to Average Net Assets (%) 1.32* 1.51 1.55 1.50 1.50 1.91
</TABLE>
Note: Effective July 28, 1999, Aquila Management Corporation assumed the role
of investment adviser, replacing KPM Investment Management, Inc.
</PAGE>
<PAGE>
AQUILA ROCKY MOUNTAIN EQUITY FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS Y
SIX MONTHS YEAR ENDED PERIOD SIX MONTHS YEAR ENDED PERIOD
ENDED DECEMBER 31, ENDED ENDED DECEMBER 31, ENDED
6/30/00 1999 1998 1997 12/31/96(1) 6/30/00 1999 1998 1997 12/31/96(1)
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> >C> <C>
Net Asset Value, Beginning of Period $19.53 $16.53 $17.79 $15.07 $14.59 $20.07 $16.82 $17.91 $15.07 $14.59
Income from Investment Operations:
Net investment income (0.09) (0.19) (0.16) (0.11) 0.01 0.01 (0.01) 0.03 0.04 0.01
Net gain on securities (both realized
and unrealized) 1.42 3.43 (0.93) 3.44 1.00 1.47 3.50 (0.95) 3.41 1.00
Total from Investment Operations 1.33 3.24 (1.09) 3.33 1.01 1.48 3.49 (0.92) 3.45 1.01
Less Distributions (note 5):
Dividends from net investment income - - (0.01) - - - - (0.01) - -
Distributions from capital gains - (0.24) (0.16) (0.61) (0.53) - (0.24) (0.16) (0.61) (0.53)
Total Distributions - (0.24) (0.17) (0.61) (0.53) - (0.24) (0.17) (0.61) (0.53)
Net Asset Value, End of Period $20.86 $19.53 $16.53 $17.79 $15.07 $21.55 $20.07 $16.82 $17.91 $15.07
Total Return (not reflecting sales
charge) (%) 6.81+ 19.63 (6.07) 22.18 6.94+ 7.37+ 20.78 (5.08) 22.98 6.94+
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 272 185 162 7 4 1,036 922 789 795 133
Ratio of Expenses to Average Net
Assets (%) 2.13* 2.34 2.53 2.34 1.30* 1.17* 1.33 1.52 1.34 1.30*
Ratio of Net Investment Income (Loss)
to Average Net Assets (%) (0.98)* (1.10) (1.07) (0.78) 0.06* 0.00* (0.09) (0.01) 0.16 0.06*
Portfolio Turnover Rate (%) 14.96+ 6.45 19.52 10.39 20.32+ 14.96+ 6.45 19.52 10.39 20.32+
The expense and net investment income ratios without the effect of the
voluntary waiver of fees and the voluntary expense reimbursement were:
Ratio of Expenses to Average Net
Assets (%) 6.26* 6.59 5.70 7.19 8.54* 5.34* 5.60 4.58 5.34 8.54*
Ratio of Net Investment Income (Loss)
to Average Net Assets (%) (5.11)* (5.35) (4.23) (5.63) (7.18)* (4.17)* (4.36) (3.07) (3.84) (7.18)*
The expense ratios after giving effect to the waivers, reimbursements and
expense offset for uninvested cash balances were:
Ratio of Expenses to Average Net
Assets (%) 2.06* 2.30 2.33 2.26 1.25* 1.10* 1.30 1.32 1.27 1.25*
</TABLE>
(1) For the period May 1, 1996 (commencement of operations)through December
31, 1996.
+ Not annualized.
* Annualized.
Note: Effective July 28, 1999, Aquila Management Corporation assumed the
role of investment adviser, replacing KPM Investment Management, Inc.
See accompanying notes to financial statements.
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