N-30D 1 orsemi.txt TFTO 3/31/01 SEMI ANNUAL REPORT 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 Joseph P. DiMaggio, Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC INC. 400 Bellevue Parkway Wilmington, Delaware 19809 CUSTODIAN BANK ONE TRUST COMPANY, N.A. 100 East Broad Street Columbus, Ohio 43271 INDEPENDENT AUDITORS KPMG LLP 757 Third Avenue New York, New York 10017 Further information is contained in the Prospectus, which must precede or accompany this report. SEMI-ANNUAL REPORT MARCH 31, 2001 TAX-FREE TRUST OF OREGON A TAX-FREE INCOME INVESTMENT [Logo of Tax-Free Trust of Oregon: a square containing a line drawing of mountains with two pine trees in front] [Logo of the Aquila Group of Funds: an eagle's head] ONE OF THE AQUILASM GROUP OF FUNDS [Logo of Tax-Free Trust of Oregon: a square containing a line drawing of mountains with two pine trees in front] SERVING OREGON INVESTORS FOR OVER A DECADE TAX-FREE TRUST OF OREGON SEMI-ANNUAL REPORT "A GREAT HAVEN FROM THE VOLATILE SECURITIES MARKET" April 27, 2001 Dear Fellow Shareholders: It is always nice to have a Semi-Annual Report in which you can brag about the positive returns produced by the Trust. For Tax-Free Trust of Oregon, the last six months was just such a period. The year 2000 and the first three months of this calendar year proved to many people that no longer can one expect returns on investments to average 20% a year - such as had previously been the case for several years with the stock market. In fact, unless one was very lucky, they ended up the year having lost money in stocks, rather than ending up on the plus side. Tax-Free Trust of Oregon, on the other hand, did produce a positive return for those who were shareholders in the Trust during the past six months - from October 1, 2000 to March 31, 2001 - as well as for the entire year - from January 1 through December 31, 2000. Not only did investors in the Trust receive tax-free income on a monthly basis from the Trust, but they also benefited from a rise in the share value from $10.28 on October 1, 2000 to $10.63 on March 31, 2001. FOR ALL SHAREHOLDERS, THE PERFORMANCE OF TAX-FREE TRUST OF OREGON WAS A GREAT HAVEN FROM THE VOLATILE SECURITIES MARKETS. As we have explained to you in the past, interest rate changes by the Federal Reserve Board (the "Fed") affect the Trust's share price and ultimate total return. There have been some years in which interest rate changes by the Fed affected the share value of the Trust so that it produced a positive total return. Then, there have been times when the interest rate changes by the Fed produced a total return that was more on the negative side. As we are sure you are aware, during most of the year 2000, the upward bias of interest rates produced by actions of the Fed slowed the economic progress of our country from its previous sizzling rate. Near the end of the year, however, the market foresaw the potential for a downward movement in rates. This anticipated downward trend pushed the share value of the Trust up. And, this it exactly what happened in between October 1, 2000 and March 31, 2001 as a result of actions by the Fed. The Fed saw signs of the U.S. economy coming to a screeching halt as compared with the earlier dynamic growth prospects. Therefore, the Fed decreased rates twice in January by 0.5 of 1% for a total of decline of 1%, and then just recently by another 0.5 of 1% on April 18th. YOUR TRUST'S COMPOSITION As you can appreciate, it is impossible to second-guess exactly what interest rates will do. More specifically, it is almost impossible to guess what the Fed will do to help speed up or slow down the economic activity of our country. Consequently, we have always taken the approach of having a variety of bonds with differing maturities and rates within the Trust's overall portfolio composition. This tends to produce a blend of returns that we can pass on to our shareholders in the form of monthly tax-free dividends. Also, we consistently ensure that the Trust is comprised of high-quality securities. There are nine separate credit ratings for municipal bonds, however, we limit the Trust's holdings to the ONLY THE TOP FOUR CREDIT RATINGS - AAA, AA, A AND Baa. The average of the credit ratings for the Trust is in actuality AA. Indeed, we strive to never have a situation in which any municipal bonds in the Trust's portfolio would cause us problems. Having a high quality orientation for the Trust avoids problems. What we want to ensure, to the best of our ability, is that you can always "sleep well at night" through your ownership of Tax-Free Trust of Oregon. Furthermore, we have adopted the additional safety measure of having the Trust's portfolio well diversified in terms of both the kinds of projects in which we invest as well as the geographic distribution of these projects throughout Oregon. All these are just another way that we have taken to manage the stability of the Trust's portfolio and its share value while producing the kind of tax-free income return that we want to see for our shareholders. THE MERITS OF ASSET ALLOCATION The securities markets conditions that were experienced in the past year and a quarter vividly illustrate the volatility that can occur with equity investments. They also illustrate the merits of asset allocation. Management of the Trust cannot second-guess the right kind of asset allocation that any specific individual investor in the Trust should have. That is really a very personal decision, based upon many factors, such as income, age, time horizon, and risk tolerance. What we can say to you, however, is that having a portion of one's assets invested in fixed income securities can tend to be a major factor of comfort for any investor. This is particularly the case when the stock markets experience high volatility and significant declines - such as has been the case over the last year or so. HAPPINESS IS... ...having a POSITIVE RETURN for shareholders in Tax-Free Trust of Oregon compared to investors who are crying about their dismal results in the stock market. APPRECIATION Your continued support of the Trust through your investment is greatly appreciated. We will constantly do what is necessary to merit the confidence you have placed in us. Sincerely, /s/ Diana P. Herrmann /s/ Lacy B. Herrmann ----------------------- --------------------- Diana P. Herrmann Lacy B. Herrmann President Chairman, Board of Trustees TAX-FREE TRUST OF OREGON STATEMENT OF INVESTMENTS MARCH 31, 2001 (UNAUDITED)
RATING FACE MOODY'S/ AMOUNT STATE OF OREGON GENERAL OBLIGATION BONDS - 50.7% S&P VALUE ----------- ----------------------------------------------------- --------- ------------ City of Beaverton $ 910,000 5.950%, 04/01/2003 ...................................... Aa3/AA $ 932,077 960,000 6.050%, 04/01/2004 ...................................... Aa3/AA 982,618 1,020,000 6.150%, 04/01/2005 ...................................... Aa3/AA 1,044,511 1,080,000 6.250%, 04/01/2006 ...................................... Aa3/AA 1,106,255 Bend Oregon Transportation Highway Systems (MBIA Corporation Insured) 1,135,000 5.300%, 9/1/2017 ........................................ Aaa/NR 1,167,631 Blue Mountain Hospital District (AMBAC Indemnity Corporation Insured) 1,000,000 5.000%, 02/01/2021 ...................................... Aaa/AAA 987,500 Chemeketa Oregon Community College District (Financial Guaranty Insurance Corporation Insured) 1,385,000 5.500%, 06/01/2014 ...................................... Aaa/AAA 1,514,844 Clackamas County Oregon School District #62 (Oregon City) (State School Bond Guaranty Program) 2,000,000 5.500%, 06/15/2020 ...................................... Aa2/AA 2,082,500 Clackamas County School District #86 (Canby) (State School Bond Guaranty Program) 3,535,000 5.250%, 06/15/2020 ...................................... Aa2/AA 3,583,606 Clackamas County Oregon School District #108 (Estacada) (Financial Security Assurance Insured) 1,295,000 5.375%, 06/15/2017 ...................................... Aaa/AAA 1,341,944 2,000,000 5.000%, 06/15/2025 ...................................... Aaa/AAA 1,965,000 Clackamas County School District #115 (AMBAC Indemnity Corporation Insured) 615,000 5.700%, 06/01/2007 ...................................... Aaa/AAA 665,738 1,000,000 6.150%, 06/01/2014 ...................................... Aaa/AAA 1,095,000 Clackamas, Multnomah and Washington County School District #7J 1,500,000 5.700%, 06/15/2010 ...................................... Aa2/NR 1,565,625 Clackamas/Washington County Oregon School District #3J (Financial Guaranty Insurance Corporation Insured) 1,620,000 5.000%, 06/01/2017 ...................................... Aaa/AAA 1,626,075 Clackamas and Washington County School District #3J $ 1,150,000 5.875%, 10/01/2009 ...................................... A1/A+ $ 1,188,812 Columbia County Oregon School District #502 (Financial Guaranty Insurance Corporation Insured) 2,070,000 zero coupon, 06/01/2015 ................................. Aaa/AAA 1,032,412 Deschutes County Oregon Admin. School District #1 1,500,000 5.000%, 12/01/2017 ...................................... A1/A 1,496,250 Deschutes and Jefferson County School District #2J (MBIA Corporation Insured) 3,700,000 5.600%, 06/01/2009 ...................................... Aaa/AAA 3,871,125 Douglas County Oregon School District #4 (Roseburg) (State School Bond Guaranty Program) 1,075,000 5.125%, 12/15/2017 ...................................... Aa2/NR 1,092,469 Douglas County School District #116 (Winston-Dillard) (State School Bond Guaranty Program) 1,020,000 5.625%, 06/15/2020 ...................................... NR/AA 1,064,625 Eugene Oregon (Parks & Open Space) 1,465,000 5.250%, 02/01/2018 ...................................... Aa2/NR 1,492,469 1,555,000 5.250%, 02/01/2019 ...................................... Aa2/NR 1,578,325 Hood River County School District (AMBAC Indemnity Corporation Insured) 2,000,000 5.650%, 06/01/2008 ...................................... Aaa/AAA 2,095,000 Jackson County School District #549C (Financial Security Assurance Insured) 1,000,000 5.300%, 06/01/2008 ...................................... Aaa/AAA 1,048,750 Jackson County Oregon School District #9 (Eagle Point) (State School Bond Guaranty Program) 1,660,000 5.000%, 06/15/2021 ...................................... Aa2/NR 1,628,875 Josephine County Oregon Unified School District (Three Rivers) (Financial Security Assurance Insured) 1,780,000 5.250%, 06/15/2018 ...................................... Aaa/NR 1,817,825 Josephine County School District #7 (Grants Pass) (Financial Guaranty Insurance Corporation Insured) 2,700,000 5.700%, 06/01/2013 ...................................... Aaa/AAA 2,868,750 Lane County School District #4J $ 2,000,000 5.375%, 07/01/2009 ...................................... Aa3/NR $ 2,050,000 Lane County Oregon School District #040 (Creswell) (State School Bond Guaranty Program) 1,430,000 5.375%, 06/15/2020 ...................................... NR/AA 1,469,325 Lane County School District #52J (Financial Guaranty Insurance Corporation Insured) 750,000 6.400%, 12/01/2009 ...................................... Aaa/AAA 836,250 Lane and Douglas County School District 97J (Siuslaw) (State School Bond Guaranty Program) 1,000,000 5.400%, 06/15/2019 ...................................... Aa2/NR 1,028,750 Lincoln County (MBIA Corporation Insured) 1,000,000 5.375%, 02/01/2010 ...................................... Aaa/AAA 1,022,500 Lincoln County Oregon School District (Financial Guaranty Insurance Corporation Insured) 1,245,000 5.250%, 06/15/2012 ...................................... Aaa/AAA 1,318,144 Linn County Oregon School District #7 (Harrisburg) (State School Bond Guaranty Program) 1,660,000 5.500%, 06/15/2019 ...................................... NR/AA 1,720,175 Malheur County Jail Bonds (MBIA Corporation Insured) 1,345,000 6.300%, 12/01/2012 ...................................... Aaa/AAA 1,461,006 Marion and Clackamas County Union High School District #7J (Financial Security Assurance Insured) 1,340,000 6.000%, 06/01/2013 ...................................... Aaa/AAA 1,450,550 Metropolitan Service District Refunding (Oregon Convention Center) 4,320,000 6.250%, 01/01/2013 ...................................... Aa2/AA+ 4,338,576 Multnomah County School District #7 (Reynolds) (State School Bond Guaranty Program) 2,000,000 5.125%, 6/15/2019 ....................................... Aa2/AA 2,017,500 Multnomah County School District #40 5,100,000 5.625%, 06/01/2012 ...................................... NR/AA- 5,304,000 Northern Oregon Correctional (AMBAC Indemnity Corporation Insured) 1,195,000 5.400%, 09/15/2016 ...................................... Aaa/AAA 1,232,344 Oak Lodge Water District (AMBAC Indemnity Corporation Insured) $ 215,000 7.300%, 12/01/2005 ...................................... Aaa/AAA $ 241,069 215,000 7.300%, 12/01/2006 ...................................... Aaa/AAA 240,531 215,000 7.400%, 12/01/2007 ...................................... Aaa/AAA 239,994 Southwestern Oregon College (MBIA Corporation Insured) 1,120,000 6.000%, 06/01/2025 ...................................... Aaa/AAA 1,206,800 State of Oregon Board of Higher Education 900,000 6.200%, 10/15/2007 ...................................... Aa2/AA 931,500 3,195,000 6.400%, 10/01/2011 ...................................... Aa2/AA 3,231,615 2,000,000 6.250%, 10/15/2012 ...................................... Aa2/AA 2,060,000 2,150,000 6.500%, 10/01/2017 ...................................... Aa2/AA 2,173,586 2,890,000 6.000%, 10/15/2018 ...................................... Aa2/AA 2,962,250 1,000,000 4.875%, 08/01/2019 ...................................... Aa2/AA 977,500 2,560,000 5.500%, 08/01/2021 ...................................... Aa2/AA 2,640,000 8,000,000 5.000%, 08/01/2022 ...................................... Aa2/AA 7,820,000 1,655,000 5.600%, 08/01/2023 ...................................... Aa2/AA 1,710,856 1,500,000 5.600%, 08/01/2023 ...................................... Aa2/AA 1,550,625 6,300,000 6.000%, 08/01/2026 ...................................... Aa2/AA 7,063,875 State of Oregon Elderly & Disabled Housing 725,000 6.250%, 08/01/2013 ...................................... Aa2/AA 756,719 State of Oregon Veterans' Welfare 505,000 9.000%, 04/01/2008 ...................................... Aa2/AA 554,869 700,000 9.200%, 10/01/2008 ...................................... Aa2/AA 927,500 1,180,000 5.200%, 10/01/2018 ...................................... Aa2/AA 1,199,175 Polk County School District #2 (Financial Security Assurance Insured) 1,000,000 5.400%, 06/01/2012 ...................................... Aaa/AAA 1,031,250 Polk, Marion, and Benton County School District #13J (Financial Guaranty Insurance Corporation Insured) 1,000,000 5.500%, 12/01/2008 ...................................... Aaa/AAA 1,058,750 City of Portland 1,480,000 5.100%, 10/01/2009 ...................................... Aaa/NR 1,507,750 2,790,000 5.750%, 06/01/2013 ...................................... Aaa/NR 2,922,525 2,000,000 5.600%, 06/01/2015 ...................................... Aa2/NR 2,075,000 425,000 5.250%, 06/01/2015 ...................................... Aa2/NR 432,438 1,120,000 5.125%, 06/01/2018 ...................................... Aaa/NR 1,134,000 Portland, Oregon $ 2,975,000 zero coupon, 06/01/2015 ................................. Aa2/NR $ 1,472,625 Portland Community College District 1,000,000 6.000%, 07/01/2012 ...................................... Aa3/AA 1,032,500 Salem-Keizer Oregon School District #24 (Financial Security Assurance Insured) 1,000,000 4.875%, 06/01/2014 ...................................... Aaa/AAA 1,010,000 Tri-County Metropolitan Transportation District 4,600,000 6.000%, 07/01/2012 ...................................... Aaa/AAA 4,801,250 Tualatin Hills Park and Recreation District (MBIA Corporation Insured) 2,470,000 5.750%, 03/01/2012 ...................................... Aaa/AAA 2,658,337 2,000,000 5.750%, 03/01/2015 ...................................... Aaa/AAA 2,147,500 Umatilla County Oregon (Financial Guaranty Insurance Corporation Insured) 2,000,000 5.600%, 10/01/2015 ...................................... Aaa/AAA 2,082,500 Umatilla County School District #6R (AMBAC Indemnity Corporation Insured) 2,675,000 5.050%, 06/15/2022 ...................................... Aaa/NR 2,654,937 Umatilla County School District #8R (AMBAC Indemnity Corporation Insured) 700,000 6.100%, 12/01/2012 ...................................... Aaa/AAA 761,250 Wasco County Oregon School District #12 (Financial Security Assurance Insured) 1,135,000 6.000%, 06/15/2015 ...................................... Aaa/AAA 1,262,687 Washington and Clackamas County School District #23J 2,000,000 5.400%, 01/01/2010 ...................................... Aa3/NR 2,075,000 1,000,000 5.650%, 06/01/2015 ...................................... Aa3/NR 1,038,750 Washington County 2,500,000 6.200%, 12/01/2007 ...................................... Aa1/AA 2,540,125 3,110,000 6.000%, 12/01/2013 ...................................... Aa1/AA 3,366,575 Washington County School District #15 (Forest Grove) (Financial Security Assurance Insured) 2,000,000 5.000%, 06/15/2021 ...................................... Aaa/NR 1,967,500 Washington County School District #88JT (Financial Security Assurance Insured) $ 585,000 6.100%, 06/01/2012 ...................................... Aaa/AAA $ 625,950 2,315,000 6.100%, 06/01/2012 ...................................... Aaa/AAA 2,532,031 2,055,000 5.125%, 06/15/2012 ...................................... Aaa/NR 2,170,594 2,385,000 4.650%, 06/15/2016 ...................................... Aaa/NR 2,319,412 Washington & Multnomah County School District #48J 1,175,000 5.500%, 06/01/2006 ...................................... Aa2/AA- 1,232,281 1,130,000 5.600%, 06/01/2007 ...................................... Aa2/AA- 1,183,675 1,000,000 6.150%, 06/01/2008 ...................................... Aa2/AA- 1,003,750 1,415,000 5.700%, 06/01/2008 ...................................... Aa2/AA- 1,482,212 1,440,000 6.000%, 06/01/2011 ...................................... Aa2/AA- 1,515,600 Washington & Multnomah County School District #48J (Financial Guaranty Insurance Corporation Insured) 2,500,000 5.375%, 06/01/2019 ...................................... Aaa/AAA 2,559,375 Washington Multnomah & Yamhill County School District #1J 1,295,000 5.250%, 06/01/2013 ...................................... Aa3/NR 1,348,419 Washington & Yamhill County School District #58J (AMBAC Indemnity Corporation Insured) 70,000 6.600%, 11/01/2004 ...................................... Aaa/AAA 70,160 80,000 6.600%, 11/01/2005 ...................................... Aaa/AAA 80,182 90,000 6.600%, 11/01/2006 ...................................... Aaa/AAA 90,205 Yamhill County School District #29J (Financial Security Assurance Insured) 2,000,000 5.350%, 06/01/2006 ...................................... Aaa/AAA 2,095,000 ------------ Total State of Oregon General Obligation Bonds .......... 169,016,290 ------------ STATE OF OREGON REVENUE BONDS - 48.0% -------------------------------------------------------------- Airport Revenue Bonds - 1.1% -------------------------------------------------------------- Port of Portland Airport (AMBAC Indemnity Corporation Insured) 3,000,000 5.500%, 07/01/2024 ...................................... Aaa/AAA 3,097,500 Port of Portland Airport (Financial Guaranty Insurance Corporation Insured) 500,000 5.500%, 07/01/2006 ...................................... Aaa/AAA 512,180 ------------ Total Airport Revenue Bonds ............................. 3,609,680 ------------ Certificates of Participation Revenue Bonds - 10.5% -------------------------------------------------------------- Marion County (MBIA Corporation Insured) $ 1,000,000 5.000%, 06/01/2023 ...................................... Aaa/AAA $ 992,500 Multnomah County 1,000,000 5.200%, 07/01/2005 ...................................... Aa3/NR 1,041,250 3,100,000 6.000%, 08/01/2012 ...................................... Aa/A 3,239,500 Oregon State Department of Administration Services (AMBAC Indemnity Corporation Insured) 2,000,000 4.875%, 05/01/2018 ...................................... Aaa/AAA 1,980,000 950,000 5.000%, 11/01/2019 ...................................... Aaa/AAA 952,375 1,500,000 5.800%, 05/01/2024 ...................................... Aaa/AAA 1,665,000 2,500,000 5.000%, 05/01/2024 ...................................... Aaa/AAA 2,471,875 3,500,000 6.000%, 05/01/2026 ...................................... Aaa/AAA 3,793,125 Oregon State Department of Administration Services (Financial Security Assurance Insured) 2,000,000 5.750%, 04/01/2014 ...................................... Aaa/AAA 2,167,500 Oregon State Department of Administration Services (MBIA Corporation Insured) 1,480,000 5.375%, 11/01/2016 ...................................... Aaa/AAA 1,524,400 4,250,000 5.500%, 11/01/2020 ...................................... Aaa/AAA 4,345,625 State of Oregon (MBIA Corporation Insured) 1,250,000 5.700%, 01/15/2010 ...................................... Aaa/AAA 1,285,938 2,750,000 6.200%, 11/01/2012 ...................................... Aaa/AAA 2,901,250 1,000,000 5.500%, 01/15/2015 ...................................... Aaa/AAA 1,016,250 550,000 5.500%, 01/15/2015 ...................................... Aaa/AAA 558,938 500,000 5.800%, 03/01/2015 ...................................... Aaa/AAA 513,125 1,000,000 5.800%, 03/01/2015 ...................................... Aaa/AAA 1,026,250 2,000,000 6.250%, 11/01/2019 ...................................... Aaa/AAA 2,112,500 Washington County Educational Services 645,000 5.625%, 06/01/2016 ...................................... A1/NR 663,544 Washington County Educational Services (MBIA Corporation Insured) 830,000 5.750%, 06/01/2025 ...................................... Aaa/AAA 853,862 ------------ Total Certificate of Participation Revenue Bonds ........ 35,104,807 Hospital Revenue Bonds - 7.2% -------------------------------------------------------------- Clackamas Hospital Facilities Authority (Adventist Health System/West) (MBIA Corporation Insured) $ 2,000,000 6.350%, 03/01/2009 ...................................... Aaa/AAA $ 2,079,320 Clackamas Hospital Facilities Authority (Legacy Health System) 2,000,000 5.250%, 02/15/2017 ...................................... NR/AA 2,022,500 2,980,000 5.250%, 02/15/2018 ...................................... NR/AA 2,998,625 Clackamas Hospital Facilities Authority (Legacy Health System) (MBIA Corporation Insured) 2,650,000 4.750%, 02/15/2011 ...................................... Aaa/AAA 2,709,625 Clackamas County Oregon Hospital Facilities Authority (Mary's Woods) 3,450,000 6.625%, 05/15/2029 ...................................... NR/NR* 3,471,562 Clackamas Hospital Facilities Authority (Sisters of Providence Hospital) 500,000 6.375%, 10/01/2004 ...................................... A1/AA- 519,700 Douglas County Hospital Facilities Authority (Catholic Health) (MBIA Corporation Insured) 535,000 5.600%, 11/15/2005 ...................................... Aaa/AAA 575,125 Medford Hospital Authority (Asante Health Systems) (MBIA Corporation Insured) 1,000,000 5.000%, 08/15/2018 ...................................... Aaa/AAA 995,000 2,000,000 5.125%, 08/15/2028 ...................................... Aaa/AAA 1,972,500 Salem Oregon Hospital Facilities Authority 1,750,000 5.000%, 08/15/2018 ...................................... NR/AA- 1,719,375 Western Lane County Hospital Facilities Authority (Sisters of St. Joseph Hospital) (MBIA Corporation Insured) 1,000,000 5.625%, 08/01/2007 ...................................... Aaa/AAA 1,070,000 3,765,000 5.750%, 08/01/2019 ...................................... Aaa/AAA 3,896,775 ------------ Total Hospital Revenue Bonds ............................ 24,030,107 ------------ Housing, Educational, and Cultural Revenue Bonds - 9.3% -------------------------------------------------------------- Clackamas Community College District (MBIA Corporation Insured) 1,865,000 5.700%, 06/01/2016 ...................................... Aaa/AAA 2,032,850 Multnomah County Oregon Educational Facility (University of Portland) $ 1,000,000 6.000%, 04/01/2020 ...................................... NR/BBB+ $ 1,016,250 Portland Oregon Housing Authority 4,890,000 5.100%, 01/01/2027 ...................................... NR/A 4,676,063 State of Oregon Housing and Community Services 675,000 5.900%, 07/01/2012 ...................................... Aa2/NR 721,406 500,000 6.700%, 07/01/2013 ...................................... Aa2/NR 511,620 380,000 6.350%, 07/01/2014 ...................................... Aa2/NR 401,375 1,990,000 6.050%, 07/01/2020 ...................................... Aa2/NR 2,091,988 1,000,000 6.000%, 07/01/2020 ...................................... Aa2/NR 1,048,750 1,995,000 5.400%, 07/01/2027 ...................................... Aa2/NR 2,034,900 2,925,000 6.875%, 07/01/2028 ...................................... Aa2/NR 3,031,031 State of Oregon Housing and Community Services (MBIA Corporation Insured) 1,500,000 5.450%, 07/01/2024 ...................................... Aaa/AAA 1,516,875 State of Oregon Housing Finance Authority 1,000,000 6.800%, 07/01/2013 ...................................... AA2/A+ 1,023,530 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- 1,037,500 Oregon Health Sciences University (MBIA Corporation Insured) 4,500,000 5.250%, 07/01/2015 ...................................... Aaa/AAA 4,646,250 8,935,000 zero coupon, 07/01/2021 ................................. Aaa/AAA 3,082,575 City of Salem Educational Facilities (Willamette University) 1,000,000 6.000%, 04/01/2010 ...................................... A2/NR 1,057,500 Yamhill County Educational Services (AMBAC Indemnity Corporation Insurance) 1,000,000 5.150%, 07/01/2019 ...................................... NR/AAA 1,010,000 ------------ Total Housing, Educational, and Cultural Revenue Bonds ....................................... 30,940,463 ------------ Transportation Revenue Bonds - 3.4% -------------------------------------------------------------- State of Oregon Department of Transportation (Light Rail) (MBIA Corporation Insured) $ 2,000,000 6.000%, 06/01/2005 ...................................... Aaa/AAA $ 2,175,000 Oregon State Department Transportation Highway 2,555,000 5.375%, 11/15/2018 ...................................... Aa1/AA+ 2,634,844 Port St. Helens, Oregon Pollution 75,000 7.750%, 02/01/2006 ...................................... A3/NR 77,402 Tri-County Metropolitan Transportation District 3,685,000 5.700%, 08/01/2013 ...................................... Aa3/AA+ 3,786,337 2,500,000 5.400%, 06/01/2019 ...................................... NR/AA 2,550,000 ------------ Total Transportation Revenue Bonds ...................... 11,223,583 ------------ Urban Renewal Revenue Bonds - 2.0% -------------------------------------------------------------- Clackamas County Oregon, Tax Allocation 1,000,000 6.500%, 05/01/2020 ...................................... NR/NR* 1,000,140 Portland Oregon Airport Way Renewal & Redevelopment (AMBAC Indemnity Corporation Insured) 1,640,000 6.000%, 06/15/2014 ...................................... Aaa/NR 1,840,900 1,665,000 5.750%, 06/15/2020 ...................................... Aaa/NR 1,771,144 Portland Oregon Urban Renewal Tax Allocation (AMBAC Indemnity Corporation Insured) 2,000,000 5.450%, 06/15/2019 ...................................... AAA/NR 2,072,500 ------------ Total Urban Renewal Revenue Bonds ....................... 6,684,684 ------------ Utility Revenue Bonds - 3.3% -------------------------------------------------------------- City of Eugene Electric Utility (Financial Security Assurance Insured) 1,600,000 5.000%, 08/01/2018 ...................................... Aaa/AAA 1,608,000 1,340,000 5.050%, 08/01/2022 ...................................... Aaa/AAA 1,336,650 City of Eugene Electric Utility (MBIA Corporation Insured) 640,000 4.850%, 08/01/2013 ...................................... Aaa/AAA 641,293 1,200,000 5.000%, 08/01/2023 ...................................... Aaa/AAA 1,191,000 City of Eugene Electric Utility 1,000,000 6.000%, 08/01/2011 ...................................... A1/AA 1,023,750 500,000 5.000%, 08/01/2017 ...................................... A1/AA 500,625 1,400,000 5.800%, 08/01/2019 ...................................... A1/AA 1,508,500 City of Eugene Trojan Nuclear Project $ 2,310,000 5.900%, 09/01/2009 ...................................... Aa1/AA- $ 2,314,389 Northern Wasco County Public Utility Development (Financial Security Assurance Insured) 1,000,000 5.625%, 12/01/2022 ...................................... Aaa/AAA 1,020,000 ------------ Total Utility Revenue Bonds ............................. 11,144,207 ------------ Water and Sewer Revenue Bonds - 10.2% -------------------------------------------------------------- City of Klamath Falls Water (Financial Security Assurance Insured) 1,100,000 6.100%, 06/01/2014 ...................................... Aaa/AAA 1,161,875 City of Klamath Wastewater (AMBAC Indemnity Corporation Insured) 1,545,000 5.650%, 06/01/2020 ...................................... Aaa/AAA 1,612,594 Lebanon Oregon Wastewater (Financial Security Assurance Insured) 1,000,000 5.700%, 03/01/2020 ...................................... Aaa/AAA 1,050,000 City of Portland Sewer (MBIA Corporation Insured) 2,500,000 5.250%, 06/01/2016 ...................................... Aaa/AAA 2,553,125 City of Portland Sewer (Financial Guaranty Insurance Corporation Insured) 500,000 6.000%, 10/01/2012 ...................................... Aaa/AAA 530,000 2,355,000 6.250%, 06/01/2015 ...................................... Aaa/AAA 2,566,950 2,500,000 5.750%, 08/01/2019 ...................................... Aaa/AAA 2,656,250 Portland Water System 1,440,000 5.500%, 08/01/2015 ...................................... Aa1/NR 1,476,000 7,420,000 5.500%, 08/01/2019 ...................................... Aa1/NR 7,753,900 1,185,000 5.500%, 08/01/2020 ...................................... Aa1/NR 1,226,475 Salem Oregon Water & Sewer (Financial Security Assurance Insured) 1,970,000 5.375%, 06/01/2016 ...................................... Aaa/AAA 2,051,262 3,025,000 5.500%, 06/01/2020 ...................................... Aaa/AAA 3,138,437 Washington County Unified Sewer Agency (AMBAC Indemnity Corporation Insured) 2,120,000 5.900%, 10/01/2006 ...................................... Aaa/AAA 2,284,300 315,000 5.900%, 10/01/2006 ...................................... Aaa/AAA 337,050 2,500,000 6.125%, 10/01/2012 ...................................... Aaa/AAA 2,712,500 750,000 6.125%, 10/01/2012 ...................................... Aaa/AAA 813,750 ------------ Total Water and Sewer Revenue Bonds ..................... 33,924,468 ------------ 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 $ 356,952 380,000 6.300%, 07/01/2005 ...................................... Aaa/NR 382,124 Multnomah County School District #1J, Special Obligations 1,000,000 5.000%, 03/01/2007 ...................................... A1/A 1,018,750 Oregon Economic Development Commission (Consolidated Freightways) 1,500,000 7.000%, 04/01/2004 ...................................... A2/A- 1,500,000 ------------ Total Other Revenue Bonds ............................... 3,257,826 ------------ Total State of Oregon Revenue Bonds ..................... 159,919,825 ------------ Total Municipal Bonds (cost $314,717,228**) ............... 98.7% 328,936,115 Other assets less liabilities ............................. 1.3 4,183,345 ------ ------------ Net Assets ................................................ 100.0% $333,119,460 ====== ============
(*) 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. LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance Corp. See accompanying notes to financial statements. TAX-FREE TRUST OF OREGON STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2001 (UNAUDITED)
ASSETS Investments at value (cost $314,717,228) ................................................ $328,936,115 Cash .................................................................................... 1,353,129 Interest receivable ..................................................................... 5,151,516 Receivable for Trust shares sold ........................................................ 310,582 Receivable for investment securities sold ............................................... 10,000 Other assets ............................................................................ 3,653 ------------ Total assets ......................................................................... 335,764,995 ------------ LIABILITIES Payable for investment securities purchased ............................................. 1,822,330 Dividends payable ....................................................................... 369,899 Distribution fees payable ............................................................... 129,979 Management fees payable ................................................................. 116,310 Payable for Trust shares redeemed ....................................................... 101,558 Accrued expenses ........................................................................ 105,459 ------------ Total liabilities .................................................................... 2,645,535 ------------ NET ASSETS ................................................................................. $333,119,460 ============ Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $.01 per share ...... $ 313,310 Additional paid-in capital .............................................................. 318,404,427 Net unrealized appreciation on investments (note 4) ..................................... 14,218,887 Accumulated net realized gain on investments ............................................ 131,485 Undistributed net investment income ..................................................... 51,351 ------------ $333,119,460 ============ CLASS A Net Assets .............................................................................. $301,547,196 ============ Capital shares outstanding .............................................................. 28,359,464 ============ Net asset value and redemption price per share .......................................... $ 10.63 ============ Offering price per share (100/96 of $10.63 adjusted to nearest cent) .................... $ 11.07 ============ CLASS C Net Assets .............................................................................. $ 8,800,425 ============ Capital shares outstanding .............................................................. 828,417 ============ Net asset value and offering price per share ............................................ $ 10.62 ============ 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) ........................................... $ 10.62* ============ CLASS Y Net Assets .............................................................................. $ 22,771,839 ============ Capital shares outstanding .............................................................. 2,143,113 ============ Net asset value, offering and redemption price per share ................................ $ 10.63 ============
See accompanying notes to financial statements. TAX-FREE TRUST OF OREGON STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
INVESTMENT INCOME: Interest income .......................................... $ 8,806,727 Expenses: Management fees (note 3) ................................. $ 648,795 Distribution and service fees (note 3) ................... 255,209 Transfer and shareholder servicing agent fees ............ 101,920 Trustees' fees and expenses .............................. 47,004 Legal fees ............................................... 35,679 Shareholders' reports .................................... 30,986 Custodian fees ........................................... 18,598 Audit and accounting fees ................................ 12,375 Registration fees and dues ............................... 8,275 Insurance ................................................ 7,487 Miscellaneous ............................................ 23,021 ----------- 1,189,349 Expenses paid indirectly (note 7) ........................ (44,870) ----------- Net expenses ............................................. 1,144,479 ----------- Net investment income .................................... 7,662,248 REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from securities transactions ........... 133,887 Change in unrealized appreciation on investments ......... 10,676,105 ----------- Net realized and unrealized gain on investments .......... 10,809,992 ----------- Net increase in net assets resulting from operations ..... $18,472,240 -----------
See accompanying notes to financial statements. TAX-FREE TRUST OF OREGON STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MARCH 31, 2001 YEAR ENDED (UNAUDITED) SEPTEMBER 31, 2000 ---------------- ------------------ OPERATIONS: Net investment income ............................................ $ 7,662,248 $ 15,638,874 Net realized gain from securities transactions ................... 133,887 250,646 Change in unrealized appreciation on investments ................. 10,676,105 (83,191) ------------- ------------- Change in net assets resulting from operations ................ 18,472,240 15,806,329 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6): Class A Shares: Net investment income ............................................ (6,996,533) (14,487,015) Net realized gain on investments ................................. (198,559) -- Class C Shares: Net investment income ............................................ (127,930) (178,038) Net realized gain on investments ................................. (4,451) -- Class Y Shares: Net investment income ............................................ (533,862) (967,824) Net realized gain on investments ................................. (15,146) -- ------------- ------------- Change in net assets from distributions ....................... (7,876,481) (15,632,877) ------------- ------------- CAPITAL SHARE TRANSACTIONS (NOTE 8): Proceeds from shares sold ........................................ 21,166,039 38,408,984 Reinvested dividends and distributions ........................... 4,493,725 8,815,451 Cost of shares redeemed .......................................... (18,819,144) (60,461,271) ------------- ------------- Change in net assets from capital share transactions .......... 6,840,620 (13,236,836) ------------- ------------- Change in net assets .......................................... 17,436,379 (13,063,384) NET ASSETS: Beginning of period .............................................. 315,683,081 328,746,465 ------------- ------------- End of period .................................................... $ 333,119,460 $ 315,683,081 ============= =============
See accompanying notes to financial statements. 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, 2001 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 accounting principles generally accepted in the United States of America 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. 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. 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. 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, 2001, service fees on Class A Shares amounted to $221,866, of which the Distributor received $8,005. 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, 2001, amounted to $25,007. 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, 2001, amounted to $8,336. The total of these payments made with respect to Class C Shares amounted to $33,343, of which the Distributor received $22,748. Specific details about the Plans are more fully defined in the Trust's Prospectus and Statement of Additional Information. 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, 2001, total commissions on sales of Class A Shares amounted to $419,081, of which the Distributor received $255,425. 4. PURCHASES AND SALES OF SECURITIES During the six months ended March 31, 2001, purchases of securities and proceeds from the sales of securities aggregated $22,959,959 and $17,105,780, respectively. At March 31, 2001, aggregate gross unrealized appreciation for all securities in which there is an excess of market value over tax cost amounted to $14,520,592, and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over market value amounted to $301,705, for a net unrealized appreciation of $14,218,887. 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. 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:
SIX MONTHS ENDED YEAR ENDED MARCH 31, 2001 SEPTEMBER 30, 2000 -------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ CLASS A SHARES: Proceeds from shares sold ........... 1,375,398 $ 14,528,490 2,347,715 $ 3,841,878 Reinvested dividends and distributions .................... 414,860 4,364,803 847,730 8,614,888 Cost of shares redeemed ............. (1,561,258) (16,405,664) (5,114,553) (51,870,848) ---------- ------------ ---------- ------------ Net change ....................... 229,000 2,487,629 (1,919,108) (19,414,082) ---------- ------------ ---------- ------------ CLASS C SHARES: Proceeds from shares sold ........... 318,334 3,365,666 395,539 4,011,650 Reinvested dividends and distributions .................... 8,543 89,793 10,858 110,158 Cost of shares redeemed ............. (66,790) (698,894) (130,442) (1,323,388) ---------- ------------ ---------- ------------ Net change ....................... 260,087 2,756,565 275,955 2,798,420 ---------- ------------ ---------- ------------ CLASS Y SHARES: Proceeds from shares sold ........... 311,332 3,271,883 1,040,793 10,555,456 Reinvested dividends and distributions .................... 3,725 39,129 8,911 90,405 Cost of shares redeemed ............. (163,282) (1,714,586) (718,437) (7,267,035) ---------- ------------ ---------- ------------ Net change ....................... 151,775 1,596,426 331,267 3,378,826 ---------- ------------ ---------- ------------ Total transactions in Trust shares .............................. 640,862 $ 6,840,620 (1,311,886) $(13,236,836) ========== ============ =========== =============
TAX-FREE TRUST OF OREGON FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
CLASS A ----------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 3/31/01 --------------------------------------------------- (UNAUDITED) 2000 1999 1998 1997 1996 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period ................ $10.29 $10.27 $10.86 $10.68 $10.49 $10.55 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income ............................ 0.25 0.50 0.50 0.53 0.53 0.54 Net gain (loss) on securities (both realized and unrealized) ...................... 0.34 0.02 (0.56) 0.19 0.21 (0.05) ------- ------- ------- ------- ------- ------- Total from investment operations ................. 0.59 0.52 (0.06) 0.72 0.74 0.49 ------- ------- ------- ------- ------- ------- Less distributions (note 6): Dividends from net investment income ............. (0.24) (0.50) (0.51) (0.53) (0.54) (0.54) Distributions from capital gains ................. (0.01) -- (0.02) (0.01) (0.01) (0.01) ------- ------- ------- ------- ------- ------- Total distributions .............................. (0.25) (0.50) (0.53) (0.54) (0.55) (0.55) ------- ------- ------- ------- ------- ------- Net asset value, end of period ...................... $10.63 $10.29 $10.27 $10.86 $10.68 $10.49 ======= ======= ======= ======= ======= ======= Total return (not reflecting sales charge) .......... 5.83%+ 5.26% (0.62)% 6.90% 7.21% 4.76% Ratios/supplemental data Net assets, end of period (in millions) .......... $302 $289 $309 $322 $312 $305 Ratio of expenses to average net assets .......... 0.73%* 0.71% 0.71% 0.71% 0.73% 0.73% Ratio of net investment income to average net assets ............................ 4.70%* 4.93% 4.70% 4.83% 5.01% 5.15% Portfolio turnover rate .......................... 5%+ 20% 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 .......... 0.70%* 0.70% 0.68% 0.69% 0.72% 0.72%
---------- + Not annualized. * Annualized See accompanying notes to financial statements. For a share outstanding throughout each period
CLASS C(1) ------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, PERIOD(1) 3/31/01 ------------------------------------- ENDED (UNAUDITED) 2000 1999 1998 1997 9/30/96 ----------- ------ ------ ------ ------ --------- Net asset value, beginning of period ................... $10.28 $10.27 $10.85 $10.67 $10.49 $10.34 ------ ------ ------ ------ ------ ------ Income (loss) from investment operations: Net investment income ............................... 0.20 0.41 0.41 0.43 0.43 0.22 Net gain (loss) on securities (both realized and unrealized) ......................... 0.35 0.02 (0.55) 0.20 0.21 0.15 ------ ------ ------ ------ ------ ------ Total from investment operations .................... 0.55 0.43 (0.14) 0.63 0.64 0.37 ------ ------ ------ ------ ------ ------ Less distributions (note 6): Dividends from net investment income ................ (0.20) (0.42) (0.42) (0.44) (0.45) (0.22) Distributions from capital gains .................... (0.01) -- (0.02) (0.01) (0.01) -- ------ ------ ------ ------ ------ ------ Total distributions ................................. (0.21) (0.42) (0.44) (0.45) (0.46) (0.22) ------ ------ ------ ------ ------ ------ Net asset value, end of period ......................... $10.62 $10.28 $10.27 $10.85 $10.67 $10.49 ====== ====== ====== ====== ====== ====== Total return (not reflecting sales charge) ............. 5.38%+ 4.27% (1.38)% 6.00% 6.20% 3.61%+ Ratios/supplemental data Net assets, end of period (in millions) ............. $8.8 $5.8 $3.0 $1.2 $0.8 $0.3 Ratio of expenses to average net assets ............. 1.57%* 1.55% 1.56% 1.56% 1.58% 1.56%* Ratio of net investment income to average net assets ............................... 3.82%* 4.03% 3.84% 3.98% 4.14% 4.17%* Portfolio turnover rate ............................. 5%+ 20% 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 ............. 1.55%* 1.54% 1.53% 1.54% 1.57% 1.56%*
CLASS Y(1) ------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, PERIOD(1) 3/31/01 --------------------------------------- ENDED (UNAUDITED) 2000 1999 1998 1997 9/30/96 ----------- ------ ------ ------ ------ --------- Net asset value, beginning of period ................... $10.28 $10.27 $10.85 $10.68 $10.49 $10.34 ------ ------ ------ ------ ------ ------ Income (loss) from investment operations: Net investment income ............................... 0.26 0.52 0.52 0.54 0.54 0.27 Net gain (loss) on securities (both realized and unrealized) ......................... 1.35 0.01 (0.56) 0.19 0.21 0.15 ------ ------ ------ ------ ------ ------ Total from investment operations .................... 0.61 0.53 (0.04) 0.73 0.75 0.42 ------ ------ ------ ------ ------ ------ Less distributions (note 6): Dividends from net investment income ................ (0.25) (0.52) (0.52) (0.55) (0.55) (0.27) Distributions from capital gains .................... (0.01) -- (0.02) (0.01) (0.01) -- ------ ------ ------ ------ ------ ------ Total distributions ................................. (0.26) (0.52) (0.54) (0.56) (0.56) (0.27) ------ ------ ------ ------ ------ ------ Net asset value, end of period ......................... $10.63 $10.28 $10.27 $10.85 $10.68 $10.49 ====== ====== ====== ====== ====== ====== Total return (not reflecting sales charge) ............. 6.01%+ 5.32% (0.39)% 6.96% 7.37% 4.14%+ Ratios/supplemental data Net assets, end of period (in millions) ............. $22.8 $20.5 $17.0 $10.7 $4.0 $0.2 Ratio of expenses to average net assets ............. 0.58%* 0.56% 0.56% 0.55% 0.58% 0.58%* Ratio of net investment income to average net assets ............................... 4.85%* 5.08% 4.86% 4.95% 5.21% 5.35%* Portfolio turnover rate ............................. 5%+ 20% 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 ............. 0.55%* 0.54% 0.53% 0.53% 0.57% 0.57%*
---------- (1) From April 5, 1996 to September 30, 1996. + Not annualized. * Annualized. See accompanying notes to financial statements. ADJOURNED SESSION OF SHAREHOLDER MEETING RESULTS (UNAUDITED) The adjourned session of the Annual Meeting of Shareholders of Tax-Free Trust of Oregon (the "Trust") was held on May 31, 2000. The holders of shares representing 69% of the total net asset value of the shares entitled to vote were present in person or by proxy. At the meeting, the following matter was voted upon and approved by the shareholders (the resulting votes for the matter are presented below). 1. To act upon a proposal to change the fundamental policies of the Trust to allow the use of additional nationally recognized statistical rating organizations. NUMBER OF VOTES: FOR AGAINST ABSTAIN --- ------- ------- 14,235,673 273,471 1,118,880