-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HCsa/RS4j5f5J7hlwlKCJ13JA3XMkjQ2gJqQf8/DyaKlBpMsw05kodpnsBOdTbL2 BZoTHivI0y5CC9FAerKERA== 0000791049-98-000007.txt : 19980528 0000791049-98-000007.hdr.sgml : 19980528 ACCESSION NUMBER: 0000791049-98-000007 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980527 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASCADES TRUST CENTRAL INDEX KEY: 0000791049 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136868231 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04626 FILM NUMBER: 98632126 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE STE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVENUE STREET 2: # 2300 CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: TAX FREE TRUST OF OREGON DATE OF NAME CHANGE: 19890810 N-30D 1 INVESTMENT ADVISER-ADMINISTRATOR AND FOUNDER AQUILA MANAGEMENT CORPORATION 380 Madison Avenue, Suite 2300 New York, New York 10017 SUB-ADVISER FIRST ASSET MANAGEMENT a division of First Bank National Association, a subsidiary of U.S. Bancorp 111 S.W. Fifth Avenue U.S. Bancorp Tower Portland, Oregon 97204 BOARD OF TRUSTEES Lacy B. Herrmann, Chairman Vernon R. Alden Warren C. Coloney David B. Frohnmayer James A. Gardner Diana P. Herrmann Raymond H. Lung Richard C. Ross OFFICERS Lacy B. Herrmann, President Sue McCarthy-Jones, Senior Vice President Nancy Kayani, Vice President Christine L. Neimeth, Vice President Rose F. Marotta, Chief Financial Officer Richard F. West, Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC Inc. 400 Bellevue Parkway Wilmington, Delaware 19809 CUSTODIAN BANK ONE TRUST COMPANY, N.A. 100 East Broad Street Columbus, Ohio 43271 INDEPENDENT AUDITORS KPMG PEAT MARWICK LLP 345 Park Avenue New York, New York 10154 Further information is contained in the Prospectus, which must precede or accompany this report. SEMI-ANNUAL REPORT MARCH 31, 1998 TAX-FREE TRUST OF OREGON A tax-free income investment (logo of Tax-Free Trust of Oregon: Square box with 2 fir trees in front of a mountain and the sun) One of the AQUILAsm Group of Funds (logo of Tax-Free Trust of Oregon: Square box with 2 fir trees in front of a mountain and the sun) SERVING OREGON INVESTORS FOR OVER A DECADE TAX-FREE TRUST OF OREGON SEMI-ANNUAL REPORT "QUALITY FOSTERS PEACE OF MIND" April 30, 1998 Dear Investor: Recently, there has been a lot of news about the Far East and the problems that a number of countries in that area are experiencing. These problems have included some failures of major financial corporations in Japan, South Korea, Indonesia, Hong Kong, and various other countries. Also, there have been major deterioration changes in the currencies of these countries as they relate to U.S. dollars. It is hard to believe the magnitude of recent currency depreciation that has taken place in various countries vs. the U.S. dollar. The currency deteriorations against the U.S. dollar have ranged from 10% to well over 70% with various countries around the world. While we may have some problems in our own country, these are very substantially less than those of other countries. What has occurred as a result of the problems of these countries is a flight to quality. In comparison to various economies and currencies of the Far East, as well as other countries in the world, the U.S. economy, securities markets and currency stand out as a beacon of quality. Quality has also been one of the trademarks of Tax-Free Trust of Oregon from the inception of the Trust. It has been our strong belief that you can sleep much better at night by having high quality issues in the fund in which you invest. Indeed, presently, the portfolio of Tax-Free Trust of Oregon consists of 48.77% of tax-exempt securities having a AAA rating, and 45.17% of securities having a AA rating. Thus, 93.94% of the Trust's overall portfolio is rated as AA or AAA. These are the two highest quality securities you can possibly own. Just as important for you to know, in the portfolio management of the Trust separate credit analysis is done by the portfolio adviser to confirm that such top-quality assessment of the individual securities is justified. In other words, we do not merely rely upon the judgment of rating agencies, but rather independently verify the credit quality of each security. Why do we structure the portfolio this way? Primarily, so that you can feel comfortable with your investment in Tax-Free Trust of Oregon in terms of knowing that that portion of your savings possesses a high level of capital preservation. PATTERN OF PRICING OF SHARE VALUE When you look at the pricing of share value of Tax-Free Trust of Oregon, you will note that it presents a high level of share price consistency. This is in stark contrast to the currency deterioration and volatility of currency and securities markets that is taking place around the world. The chart below shows you that consistency for every year since the Trust began. SHARE NET ASSET VALUE BAR CHART
IN DOLLARS 6/16/86 9.6 3/31/87 10.12 3/31/88 9.56 3/31/89 9.61 3/31/90 9.76 3/31/91 9.93 3/31/92 10.19 3/31/93 10.7 3/31/94 10.35 3/31/95 10.37 3/31/96 10.5 3/31/97 10.44 3/31/98 10.74
OTHER STEPS TAKEN TO PROTECT YOUR MONEY As we have pointed out in previous reports to you, we have also consistently sought to diversify the holdings of municipal bonds in the portfolio so that no one segment could hurt the overall value of your money in the remote event a problem occurred. As a result, it is worth pointing out that the portfolio of securities presently consists of 199 issues spread over a variety of categories throughout various communities in Oregon. This diversification is illustrated in the accompanying pie chart. PORTFOLIO DIVERSIFICATION BY PROJECT Veterans Welfare 3.90% Education 34.94% General Obligations 10.42% Housing 4.29% Utilities 4.57% Transportation 5.54% Convention Center 1.4% Water/Sewer 10.96% Hospitals 5.99% Other Revenue 10.85% Airports 2.35% Correctional Facilities 3.18% Park and Recreational 1.61%
PORTFOLIO DISTRIBUTION BY MATURITY (IN YEARS) 0-5 2.02% 6-10 16.40% 11-15 37.46% 16-20 29.30% Over 20 Years 14.82%
We also ensure that the maturity of the portfolio is spread out over various time periods, as is indicated in the accompanying pie chart, with the average portfolio maturity being 14.7 years and duration to call of 4.7 years. Altogether then, when you consider the quality, diversification, and maturity of the portfolio, what we have consistently tried to do for you is to provide you with the means by which you can have "peace of mind" with your investment in Tax-Free Trust of Oregon. Working In Your Interest You can be assured that all those associated with the management of your investment will consistently work in your investment interest. We very much value you as a shareholder and appreciate the confidence you have shown in Tax-Free Trust of Oregon. Sincerely /s/ Lacy B. Herrmann Lacy B. Herrmann President and Chairman of the Board of Trustees TAX-FREE TRUST OF OREGON STATEMENT OF INVESTMENTS MARCH 31, 1998 (UNAUDITED)
Rating FACE MOODY'S/ AMOUNT STATE OF OREGON GENERAL OBLIGATION BONDS - 53.7% S&P VALUE City of Albany (MBIA Corporation Insured) $ 150,000 6.400%, 11/01/1999 Aaa/AAA$ 150,320 460,000 6.500%, 11/01/2000 Aaa/AAA 460,975 2,195,000 6.625%, 11/01/2009 Aaa/AAA 2,199,346 City of Beaverton 910,000 5.950%, 04/01/2003 Aa/AA- 968,012 520,000 6.600%, 06/01/2003 NR/AA- 522,470 960,000 6.050%, 04/01/2004 Aa/AA- 1,023,600 560,000 6.600%, 06/01/2004 NR/AA- 562,660 1,020,000 6.150%, 04/01/2005 Aa/AA- 1,088,850 1,080,000 6.250%, 04/01/2006 Aa/AA- 1,152,900 Clackamas County School District #115 (AMBAC Indemnity Corporation Insured) 600,000 5.600%, 06/01/2006 Aaa/AAA 648,000 615,000 5.700%, 06/01/2007 Aaa/AAA 666,506 1,000,000 6.150%, 06/01/2014 Aaa/AAA 1,092,500 Clackamas and Washington County School District #3J 2,000,000 5.850%, 08/01/2006 A1/AA- 2,137,500 1,150,000 5.875%, 10/01/2009 A1/AA- 1,237,687 Clackamas, Multnomah and Washington County School District #7J 1,000,000 7.100%, 06/15/2009 Aaa/NR 1,066,250 250,000 7.100%, 06/15/2010 Aaa/NR 266,562 1,500,000 5.700%, 06/15/2010 Aa/NR 1,586,250 Columbia Gorge Community College District (Financial Security Assurance Insured) 1,200,000 5.400%, 06/01/2013 Aaa/AAA 1,236,000 Deschutes and Jefferson County School District #2J (MBIA Corporation Insured) 3,700,000 5.600%, 06/01/2009 Aaa/AAA 3,871,125 Hood River County School District (AMBAC Indemnity Corporation Insured) 2,000,000 5.650%, 06/01/2008 Aaa/AAA 2,120,000 Jackson County School District #549C (Financial Security Assurance Insured) 1,400,000 5.100%, 06/01/2005 Aaa/AAA 1,471,750 1,000,000 5.300%, 06/01/2008 Aaa/AAA 1,051,250 Jefferson County School District #509J (Financial Security Assurance Insured) $1,750,000 5.500%, 06/15/2013 Aaa/AAA 1,830,937 Josephine County School District #7 (Grants Pass) (Financial Guaranty Insurance Corporation) 2,700,000 5.700%, 06/01/2013 Aaa/AAA 2,865,375 Lane County School District #4J 2,000,000 5.375%, 07/01/2009 Aa/NR 2,067,500 1,000,000 5.375%, 07/01/2013 Aa/NR 1,028,750 Lane County School District #52J (Financial Guaranty Insurance Corporation Insured) 750,000 6.400%, 12/01/2009 Aaa/AAA 850,312 Lincoln County Oregon School District (Financial Guaranty Insurance Corporation) 1,245,000 5.250%, 06/15/2012 Aaa/AAA 1,302,581 Lincoln County (MBIA Corporation Insured) 1,000,000 5.375%, 02/01/2010 Aaa/AAA 1,028,750 Malheur County Jail Bonds (MBIA Corporation Insured) 1,345,000 6.300%, 12/01/2012 Aaa/AAA 1,491,269 Marion and Clackamas County Union High School District #7J (Financial Security Assurance Insured) 1,000,000 7.000%, 06/01/2010 Aaa/AAA 1,155,000 1,340,000 6.000%, 06/01/2013 Aaa/AAA 1,455,575 Metropolitan Oregon Open Space Program 2,340,000 5.250%, 09/01/2013 Aa/AA+ 2,410,200 Metropolitan Service District Refunding (Oregon Convention Center) 4,320,000 6.250%, 01/01/2013 Aaa/AAA 4,546,800 Multnomah County 1,245,000 5.100%, 10/01/2007 Aa1/NR 1,294,800 1,000,000 5.200%, 10/01/2008 Aa1/NR 1,040,000 Multnomah County Drainage District #1 Assesment Bond (MBIA Corporation Insured) 1,000,000 5.250%, 07/01/2017 Aaa/AAA 1,018,750 Multnomah County School District #1 3,225,000 6.500%, 12/15/2000 Aa/A+ 3,242,447 Multnomah County School District #1 (continued) $1,180,000 6.600%, 12/15/2001 Aa/A+ 1,186,856 3,725,000 6.800%, 12/15/2004 Aa/A+ 3,745,897 Multnomah County School District #4 1,330,000 5.900%, 01/01/2005 A1/A+ 1,409,800 Multnomah County School District #40 5,100,000 5.625%, 06/01/2012 NR/AA- 5,393,250 Northern Oregon Correctional (AMBAC Indemnity Corporation Insured) 2,000,000 5.400%, 09/15/2016 Aaa/AAA 2,067,500 Oak Lodge Water District (AMBAC Indemnity Corporation Insured) 215,000 7.300%, 12/01/2005 Aaa/AAA 253,163 215,000 7.300%, 12/01/2006 Aaa/AAA 252,356 215,000 7.400%, 12/01/2007 Aaa/AAA 253,162 State of Oregon 5,000,000 7.000%, 12/01/2011 Aa2/AA 5,204,350 State of Oregon Alternate Energy Project Series A 1,000,000 6.400%, 01/01/2008 Aa2/AA 1,018,310 State of Oregon Board of Higher Education 900,000 6.200%, 10/15/2007 Aa2/AA 964,125 3,195,000 6.400%, 10/01/2011 Aa2/AA 3,390,694 2,000,000 6.250%, 10/15/2012 Aa2/AA 2,157,500 2,150,000 6.500%, 10/01/2017 Aa2/AA 2,305,875 2,890,000 6.000%, 10/15/2018 Aa2/AA 3,085,075 1,655,000 5.600%, 08/01/2023 Aa2/AA 1,714,994 1,500,000 5.600%, 08/01/2023 Aa2/AA 1,554,375 6,300,000 6.000%, 08/01/2026 Aa2/AA 6,827,625 State of Oregon Elderly & Disabled Housing 725,000 6.250%, 08/01/2013 Aa2/AA 789,344 State of Oregon Veterans' Welfare 900,000 11.250%, 04/01/1998 Aa/AA 900,000 505,000 9.000%, 04/01/2008 Aa2/AA 607,894 700,000 9.200%, 10/01/2008 Aa/AA 966,875 7,150,000 6.875%, 12/01/2013 Aa/AA 7,422,987 500,000 6.875%, 12/01/2014 Aa2/AA 519,090 1,000,000 7.000%, 12/01/2015 Aa/AA 1,042,150 1,200,000 5.200% 10/01/2018 Aa2/AA 1,201,500 Polk County School District #2 (Financial Security Assurance Insured) $1,000,000 5.400%, 06/01/2012 Aaa/AAA 1,032,500 Polk, Marion, and Benton County School District #13J (Financial Guaranty Insurance Corporation Insured) 1,000,000 5.500%, 12/01/2008 Aaa/AAA 1,067,500 City of Portland 1,625,000 4.500%, 11/01/2004 Aaa/NR 1,639,219 1,480,000 5.100%, 10/01/2009 Aaa/NR 1,518,850 1,000,000 7.125%, 10/01/2010 Aaa/NR 1,037,010 2,790,000 5.750%, 06/01/2013 Aaa/NR 2,953,912 2,000,000 5.600%, 06/01/2015 Aa/NR 2,105,000 2,320,000 5.250%, 06/01/2015 Aa/NR 2,386,700 Portland Community College District 3,500,000 6.000%, 07/01/2012 A1/AA 3,749,375 Port of Portland 1,000,000 4.500%, 03/01/2006 Aa/AA+ 1,010,000 City of Salem 1,000,000 5.875%, 01/01/2007 A1/A+ 1,041,250 Tri-County Metropolitan Transportation District 6,100,000 6.000%, 07/01/2012 Aa/AA+ 6,496,500 Tualatin Hills Park and Recreation District (MBIA Corporation Insured) 2,970,000 5.750%, 03/01/2012 Aaa/AAA 3,144,488 2,000,000 5.750%, 03/01/2015 Aaa/AAA 2,110,000 Umatilla County Oregon (Financial Guaranty Insurance Corporation Insured) 2,000,000 5.600%, 10/01/2015 Aaa/AAA 2,090,000 Umatilla County School District #8R (AMBAC Indemnity Corporation Insured) 700,000 6.100%, 12/01/2012 Aaa/AAA 776,125 3,000,000 5.050%, 06/15/2022 Aaa/AAA 2,977,500 Washington County 2,500,000 6.200%, 12/01/2007 Aa/AA 2,665,625 3,110,000 6.000%, 12/01/2013 Aa/AA 3,421,000 Washington County School District #88J (Financial Security Assurance Insured) $2,900,000 6.100%, 06/01/2012 Aaa/AAA 3,161,000 Washington and Clackamas County School District #23J 1,675,000 6.625%, 01/01/2005 NR/NR* 1,750,375 1,000,000 5.650%, 06/01/2015 A1/NR 1,048,750 720,000 6.625%, 01/01/2008 NR/NR* 752,400 2,000,000 5.400%, 01/01/2010 A1/NR 2,072,500 Washington & Multnomah County School District #48J 1,175,000 5.500%, 06/01/2006 Aa/AA- 1,257,250 700,000 4.500%, 09/01/2006 Aa/AA- 705,250 1,130,000 5.600%, 06/01/2007 Aa/AA- 1,211,925 1,000,000 6.150%, 06/01/2008 Aa/AA- 1,043,750 1,415,000 5.700%, 06/01/2008 Aa/AA- 1,522,894 525,000 6.300%, 09/01/2009 Aaa/AAA 562,406 1,440,000 6.000%, 06/01/2011 Aa/AA- 1,544,400 2,010,000 6.500%, 09/01/2001 Aaa/AAA 2,165,775 Washington & Yamhill County School District #58J (AMBAC Indemnity Corporation Insured) 70,000 6.600%, 11/01/2004 Aaa/AAA 70,141 80,000 6.600%, 11/01/2005 Aaa/AAA 80,154 90,000 6.600%, 11/01/2006 Aaa/AAA 90,166 Wolf Creek Highway Water District 505,000 6.900%, 12/01/2005 NR/AA 515,757 Yamhill County School District #29J (Financial Security Assurance Insured) 2,000,000 5.350%, 06/01/2006 Aaa/AAA 2,110,000 500,000 6.100%, 06/01/2011 Aaa/AAA 546,250 Total State of Oregon General Obligation Bonds 176,878,003 STATE OF OREGON REVENUE BONDS - 44.9% Airport Revenue Bonds - 2.3% Port of Portland Airport (Financial Guaranty Insurance Corporation Insured) 500,000 5.500%, 07/01/2006 Aaa/AAA 525,625 Port of Portland Airport (MBIA Corporation Insured) 600,000 6.400%, 07/01/2003 Aaa/AAA 645,750 3,530,000 6.750%, 07/01/2009 Aaa/AAA 3,830,050 2,425,000 6.750%, 07/01/2015 Aaa/AAA 2,634,156 Total Airport Revenue Bonds 7,635,581 Certificate of Participation Revenue Bonds - 10.8% Multnomah County Certificate of Participation 1,000,000 5.200%, 07/01/2005 Aa/NR 1,041,250 3,100,000 6.000%, 08/01/2012 Aa/A 3,351,875 State of Oregon Certificate of Participation (AMBAC Indemnity Corporation Insured) 2,100,000 7.500%, 09/01/2015 Aaa/AAA 2,307,375 Oregon State Department Of Administration Services (AMBAC Indemnity Corporation Insured) 1,000,000 5.750%, 05/01/2017 Aaa/AAA 1,068,750 950,000 5.000%, 11/01/2019 Aaa/AAA 927,438 5,805,000 5.500%, 11/01/2020 Aaa/AAA 6,022,688 1,500,000 5.800%, 05/01/2024 Aaa/AAA 1,605,000 State of Oregon Certificate of Participation (MBIA Corporation Insured) 2,150,000 7.050%, 01/15/2006 Aaa/AAA 2,305,875 1,250,000 5.700%, 01/15/2010 Aaa/AAA 1,309,375 2,750,000 6.200%, 11/01/2012 Aaa/AAA 3,011,250 1,150,000 7.200%, 01/15/2015 Aaa/AAA 1,236,250 1,000,000 5.500%, 01/15/2015 Aaa/AAA 1,025,000 550,000 5.500%, 01/15/2015 Aaa/AAA 563,750 500,000 5.800%, 03/01/2015 Aaa/AAA 520,000 600,000 7.200%, 03/01/2015 Aaa/AAA 642,000 1,000,000 5.800%, 03/01/2015 Aaa/AAA 1,040,000 1,450,000 5.375%, 11/01/2016 Aaa/AAA 1,491,687 2,000,000 6.250%, 11/01/2019 Aaa/AAA 2,195,000 Southwestern Oregon Community College District (AMBAC Indemnity Corporation Insured) 1,000,000 5.600%, 06/01/2016 Aaa/AAA 1,041,250 City of Portland Certificate of Participation 1,100,000 7.250%, 04/01/2008 NR/NR* 1,137,235 Washington County Educational Services, Certificates of Participation 645,000 5.625%, 06/01/2016 A1/NR 665,963 830,000 5.750%, 06/01/2025 Aaa/AAA 866,312 Total Certificate of Participation Revenue Bonds 35,375,323 Hospital Revenue Bonds - 4.5% Clackamas Hospital Facilities Authority (Adventist Health System/West) (MBIA Corporation Insured) 2,000,000 6.350%, 03/01/2009 Aaa/AAA 2,170,000 Clackamas Hospital Facilites Authority (Kaiser Permanente) 2,400,000 6.500%, 04/01/2011 Aa3/AA 2,574,000 Clackamas Hospital Facilites Authority (Sisters of Providence Hospital) 500,000 6.375%, 10/01/2004 A1/AA- 548,125 Douglas County Hospital Facilities Authority (Catholic Health) (MBIA Corporation Insured) 535,000 5.600%, 11/15/2005 Aaa/AAA 576,462 Medford Hospital Facilities Authority Rogue Valley (Health Services) (MBIA Corporation Insured) 500,000 6.800%, 12/01/2011 Aaa/AAA 541,250 1,685,000 6.750%, 12/01/2020 Aaa/AAA 1,813,481 Western Lane County Hospital Facilities Authority (Sisters of St. Joseph Hospital) (MBIA Corporation Insured) 1,000,000 5.625%, 08/01/2007 Aaa/AAA 1,076,250 1,450,000 7.125%, 08/01/2017 Aaa/AAA 1,540,625 3,765,000 5.750%, 08/01/2019 Aaa/AAA 4,023,844 Total Hospital Revenue Bonds 14,864,037 Housing, Educational, and Cultural Revenue Bonds - 8.6% Clackamas Community College District Revenue (MBIA Corporation Insured) 1,865,000 5.700%, 06/01/2016 Aaa/AAA 1,958,250 State of Oregon Housing Finance Agency, 1,000,000 6.800%, 07/01/2013 A1/A+ 1,061,250 State of Oregon Housing and Community Services, 1,670,000 5.200%, 07/01/2009 Aa/NR 1,718,013 705,000 5.900%, 07/01/2012 Aa/NR 749,062 755,000 6.750%, 07/01/2012 Aa/NR 810,681 500,000 6.700%, 07/01/2013 Aa/NR 528,750 465,000 6.350%, 07/01/2014 Aa/NR 496,387 1,420,000 6.750%, 07/01/2016 Aa/NR 1,499,875 905,000 6.800%, 07/01/2016 Aa/NR 969,481 3,500,000 6.875%, 07/01/2028 Aa/NR 3,745,000 State of Oregon Housing and Community Services, (MBIA Corporation Insured) 1,500,000 5.450%, 07/01/2024 Aaa/AAA 1,531,875 State of Oregon Housing, Educational and Cultural Facilities Authority (George Fox University) (LOC: Bank of America) 1,000,000 5.700%, 03/01/2017 A1/AA- 1,047,500 State of Oregon Housing, Educational and Cultural Facilities Authority (Lewis & Clark College) (MBIA Corporation Insured) 1,130,000 7.125%, 07/01/2020 Aaa/AAA 1,227,463 State of Oregon Housing, Educational and Cultural Facilities Authority (Reed College), 2,145,000 6.750%, 07/01/2021 NR/A+ 2,354,137 Oregon Health Sciences University Revenue (AMBAC Indemnity Corporation Insured) 4,500,000 5.250%, 07/15/2015 Aaa/AAA 4,584,375 City of Salem Educational Facilities (Willamette University), 1,000,000 6.000%, 04/01/2010 A/NR 1,070,000 1,740,000 6.750%, 04/01/2011 NR/NR* 1,870,500 Yamhill County Educational Services (AMBAC Indemnity Corporation Insurance) 1,000,000 5.150%, 07/01/2019 NR/AAA 1,003,750 Total Housing, Educational, and Cultural Revenue Bonds 28,226,349 Transportation Revenue Bonds - 3.2% Port of Morrow, 2,600,000 6.375%, 04/01/2008 Aaa/NR 2,811,250 State of Oregon Department of Transportation (Light Rail) (MBIA Corporation Insured), 2,000,000 6.000%, 06/01/2005 Aaa/AAA 2,207,500 1,500,000 6.100%, 06/01/2007 Aaa/AAA 1,659,375 Port St. Helens, 85,000 7.750%, 02/01/2006 A3/NR 93,394 Tri-County Metropolitan Transportation District 3,680,000 5.700%, 08/01/2013 A1/AA 3,790,400 Total Transportation Revenue Bonds 10,561,919 Urban Renewal Revenue Bonds - .2% City of Portland Urban Renewal, 300,000 9.000%, 12/01/2002 A/NR 305,565 City of Wilsonville Urban Renewal, 500,000 5.850%, 06/01/2004 Baa1/NR 500,975 Total Urban Renewal Revenue Bonds 806,540 Utility Revenue Bonds - 4.5% Emerald Peoples Utility District (AMBAC Indemnity Corporation Insured), 700,000 6.700%, 11/01/2005 Aaa/AAA 752,500 Emerald Peoples Utility District Electic Systems (Financial Security Assurance Insured) 1,000,000 6.750%, 11/01/2016 Aaa/AAA 1,088,750 City of Eugene Electric Utility (Financial Security Assurance Insured) 1,700,000 5.000%, 08/01/2018 Aaa/AAA 1,678,750 1,200,000 5.050%, 08/01/2022 Aaa/AAA 1,183,500 City of Eugene Electric Utility 610,000 6.650%, 08/01/2009 A1/AA 658,038 660,000 6.650%, 08/01/2010 A1/AA 711,975 1,000,000 6.000%, 08/01/2011 A1/AA 1,052,500 700,000 6.700%, 08/01/2011 A1/AA 756,000 500,000 5.000%, 08/01/2017 A1/AA 489,375 1,400,000 5.800%, 08/01/2019 A1/AA 1,529,500 City of Eugene Trojan Nuclear Project 3,865,000 5.900%, 09/01/2009 Aa1/AA- 3,875,899 Northern Wasco County Public Utility Development (AMBAC Indemnity Corporation Insured), 1,000,000 5.625%, 12/01/2022 Aaa/AAA 1,042,500 Total Utility Revenue Bonds 14,819,287 Water and Sewer Revenue Bonds - 9.6% City of Canby Sewer (Financial Security Assurance Insured), 500,000 6.250%, 12/01/2017 Aaa/AAA 543,750 City of Klamath Falls Water (Financial Security Assurance Insured), 1,100,000 6.100%, 06/01/2014 Aaa/AAA 1,197,625 City of Oregon City Sewer, 750,000 6.875%, 10/01/2019 NR/NR* 878,438 City of Portland Sewer 1,500,000 6.050%, 06/01/2009 A1/A+ 1,655,625 City of Portland Sewer, (MBIA Corporation Insured) 2,500,000 5.250%, 06/01/2016 Aaa/AAA 2,521,875 City of Portland Sewer (Financial Guaranty Insurance Corporation Insured), 2,725,000 6.000%, 10/01/2008 Aaa/AAA 2,980,469 500,000 6.000%, 10/01/2012 Aaa/AAA 545,625 1,000,000 5.000%, 06/01/2014 Aaa/AAA 998,750 2,000,000 5.000%, 06/01/2015 Aaa/AAA 1,985,000 2,855,000 6.250%, 06/01/2015 Aaa/AAA 3,190,463 Portland Water System Revenue 3,000,000 5.550%, 08/01/2014 Aa1/NR 3,116,250 1,440,000 5.550%, 08/01/2015 Aa1/NR 1,492,200 800,000 5.900%, 10/01/2006 Aaa/AAA 877,000 Washington County Unified Sewer Agency (AMBAC Indemnity Corporation Insured), 1,040,000 6.800%, 11/01/2004 Aaa/AAA 1,086,800 2,120,000 5.900%, 10/01/2006 Aaa/AAA 2,324,050 315,000 5.900%, 10/01/2006 Aaa/AAA 342,169 2,195,000 7.000%, 11/01/2009 Aaa/AAA 2,302,006 Washington County Unified Sewer Agency (continued) 2,500,000 6.125%, 10/01/2012 Aaa/AAA 2,771,875 750,000 6.125%, 10/01/2012 Aaa/AAA 831,563 Total Water and Sewer Revenue Bonds 31,641,533 Other Revenue Bonds - 1.2% Baker County Pollution Control (Ash Grove Cement West Project) (Small Business Administration Insured), 355,000 6.200%, 07/01/2004 Aaa/NR 360,669 380,000 6.300%, 07/01/2005 Aaa/NR 386,065 State of Oregon Bond Bank 500,000 6.800%, 01/01/2011 Aaa/NR 521,345 Oregon Economic Development Commission (Consolidated Freightways) 1,500,000 7.000%, 04/01/2004 Aa2/BBB- 1,500,510 Multnomah County School District #1J, Special Obligations 1,000,000 5.000%, 03/01/2007 Aa/A+ 1,026,250 Total Other Revenue Bonds 3,794,839 Total State of Oregon Revenue Bonds 147,725,408 PUERTO RICO Puerto Rico Housing Finance Corporation (GNMA Collateralized) 15,000 7.800%, 10/15/2021 Aaa/AAA 15,432 Total Puerto Rico 15,432 Total Municipal Bonds (cost $306,304,671**) 98.6% 324,618,843 Other assets in excess of liabilities 1.4 4,544,760 Net Assets 100.0% $329,163,603 (*) Any security not rated has been determined by the Investment Adviser to have sufficient quality to be ranked in the top four credit ratings if a credit rating were to be assigned by a rating service. (**) Cost for Federal tax purposes is identical.
See accompanying notes to financial statements. TAX-FREE TRUST OF OREGON STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1998 (UNAUDITED) ASSETS Investments at value (identified cost $306,304,671) $324,618,843 Cash 372,127 Interest receivable 5,653,137 Receivable for Trust shares sold 399,337 Other assets 5,433 Total assets 331,048,877 LIABILITIES Payable for investment securities purchased 1,202,253 Payable for Trust shares redeemed 124,277 Dividends payable 202,619 Distribution fees payable 120,490 Management fees payable 111,514 Accrued expenses 124,121 Total liabilities 1,885,274 NET ASSETS $329,163,603 Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $.01 per share $ 306,525 Additional paid-in capital 310,347,810 Accumulated net realized gain on investments 195,096 Net unrealized appreciation on investments 18,314,172 $329,163,603 CLASS A Net Assets $319,416,829 Capital shares outstanding 29,744,367 Net asset value and redemption price per share $ 10.74 Offering price per share (100/96 of $10.74 adjusted to nearest cent) $ 11.19 CLASS C Net Assets $ 1,062,730 Capital shares outstanding 99,028 Net asset value and offering price per share $ 10.73 Redemption price per share (*generally, a charge of 1% is imposed on the proceeds of shares redeemed during the first 12 months after purchase.) $ 10.73* CLASS Y Net Assets $ 8,684,044 Capital shares outstanding 809,072 Net asset value, offering and redemption price per share $ 10.73
TAX-FREE TRUST OF OREGON STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) INVESTMENT INCOME: Interest income $ 8,972,439 Expenses: Management fees (note 3) $ 645,957 Distribution and service fees (note 3) 240,995 Transfer and shareholder servicing agent fees 101,000 Legal fees 40,000 Trustees' fees and expenses 37,000 Shareholders' reports and proxy statements 33,000 Audit and accounting fees 14,000 Custodian fees 12,000 Registration fees and dues 11,000 Insurance 5,000 Miscellaneous 7,481 1,147,433 Expenses paid indirectly (note 7) (12,000) Net expenses 1,135,433 Net investment income 7,837,006 Realized and unrealized gain on investments: Net realized gain from securities transactions 577,877 Change in unrealized appreciation on investments 1,495,364 Net realized and unrealized gain on investments 2,073,241 Net increase in net assets resulting from operations $ 9,910,247
See accompanying notes to financial statements. TAX-FREE TRUST OF OREGON STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
Six Months Ended Year Ended March 31, 1998 Sept. 30, 1997 OPERATIONS: Net investment income $ 7,837,006 $ 15,494,091 Net realized gain from securities transactions 577,877 394,005 Change in unrealized appreciation on investments 1,495,364 5,718,838 Change in net assets resulting from operations 9,910,247 21,606,934 DISTRIBUTIONS TO SHAREHOLDERS (note 6): Class A Shares: Net investment income (7,805,354) (15,480,977) Net realized gain on investments (222,521) (387,996) Class C Shares: Net investment income (18,152) (27,150) Net realized gain on investments (571) (997) Class Y Shares: Net investment income (168,450) (87,359) Net realized gain on investments (4,740) (5,012) Change in net assets from distributions (8,219,788) (15,989,491) CAPITAL SHARE TRANSACTIONS (note 8): Proceeds from shares sold 20,344,706 33,347,126 Reinvested dividends and distributions 5,009,981 9,592,553 Cost of shares redeemed (14,717,557) (37,395,842) Change in net assets from capital share transactions 10,637,130 5,543,837 Change in net assets 12,327,589 11,161,280 NET ASSETS: Beginning of period 316,836,014 305,674,734 End of period $329,163,603 $ 316,836,014
See accompanying notes to financial statements. TAX-FREE TRUST OF OREGON NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 1. ORGANIZATION Tax-Free Trust of Oregon (the "Trust") is a separate portfolio of The Cascades Trust. The Cascades Trust (the "Business Trust") is an open-end investment company, which was organized on October 17, 1985, as a Massachusetts business trust and is authorized to issue an unlimited number of shares. The Trust is a non-diversified portfolio which commenced operations on June 16, 1986 and until April 5, 1996, offered only one class of shares. On that date, the Trust began offering two additional classes of shares, Class C and Class Y shares. All shares outstanding prior to that date were designated as Class A shares and, as was the case since inception, are sold with a front-payment sales charge and bear an annual service fee. Class C shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. The Class Y shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodian or similar capacity. They are not available to individual retail investors. Class Y shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. 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 customers. At March 31, 1998 there were no Class I shares outstanding. All classes of shares represent interests in the same portfolio of investments in the Trust and are identical as to rights and privileges. They differ only with respect to the effect of sales charges, the distribution and/or service fees borne by the respective class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles for investment companies. a) Portfolio valuation: Municipal securities which have remaining maturities of more than 60 days are valued 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. In Fiscal 1997, the Trust began amortizing bond premium using the constant yield method. Accordingly, net unrealized appreciation and additional paid-in capital have been adjusted by equal amounts at the beginning of the year. This change had no effect on the Trust's net asset value or distribution policy and conforms to the amortization policy followed by the Trust for Federal tax purposes. b) Securities transactions and related investment income: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premium and accretion of original issue discount. Market discount is recognized upon disposition of the security. c) Federal income taxes: It is the policy of the Trust to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. The Trust intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. d) Allocation of expenses: Expenses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class. Class-specific expenses, which include distribution and service fees and any other items that are specifically attributed to a particular class, are charged directly to such class. e) Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 3. FEES AND RELATED PARTY TRANSACTIONS (a) Management Arrangements: 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 any 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. On October 31, 1997, the Management arrangements described above were approved by the Trust's shareholders and went into effect. From inception of the Trust to that date, Aquila Management Corporation had served as sub-adviser, and then administrator, and U.S. Bank National Association and its predecessors in interest had served as investment adviser, pursuant to agreements with the Trust for total fees at an annual rate of 0.40 of 1% of the Trust's net assets, the same fee as under the new arrangements. For the six months ended March 31, 1998, the Trust incurred fees for advisory and administrative services of $645,957. 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, 1998, service fees on Class A Shares amounted to $236,588, of which the Distributor received $6,971. 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, 1998, amounted to $3,305. 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, 1998, amounted to $1,102. The total of these payments made with respect to Class C Shares amounted to $4,407, of which the Distributor received $2,043. 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, 1998, the Distributor received sales commissions of $89,946. 4. PURCHASES AND SALES OF SECURITIES During the six months ended March 31, 1998, purchases of securities and proceeds from the sales of securities aggregated $21,383,655 and $10,134,691, respectively. At March 31, 1998, aggregate gross unrealized appreciation for all securities in which there is an excess of market value over tax cost amounted to $18,333,724 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over market value amounted to $19,552 for a net unrealized appreciation of $18,314,172. 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 they may have an adverse effect on the general financial condition of these entities and may impair the ability of certain Oregon issuer's to pay interest and principal on their obligations, experience over the history of such amendments would indicate a low probability of this happening. 6. DISTRIBUTIONS The Trust declares dividends daily from net investment income and makes payments monthly in additional shares at the net asset value per share or in cash, at the shareholder's option. Net realized capital gains, if any, are distributed annually. 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 ordinary income taxes. Also, annual capital gains distributions, if any, are taxable. 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 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. 8. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Trust were as follows:
Six Months Ended Year Ended March 31, 1998 September 30, 1997 Shares Amount Shares Amount CLASS A SHARES: Proceeds from shares sold 1,427,266 $ 15,328,559 2,755,147 $ 29,089,742 Reinvested dividends and distributions 460,257 4,945,528 903,248 9,535,675 Cost of shares redeemed (1,352,919) (14,525,555) (3,530,285) (37,291,993) Net change 534,604 5,748,532 128,110 1,333,424 CLASS C SHARES: Proceeds from shares sold 23,615 254,438 42,838 451,359 Reinvested dividends and distributions 424 4,557 538 5,679 Cost of shares redeemed (2) (22) (459) (4,904) Net change 24,037 258,973 42,917 452,134 CLASS Y SHARES: Proceeds from shares sold 443,879 4,761,709 359,104 3,806,025 Reinvested dividends and distributions 5,572 59,896 4,836 51,199 Cost of shares redeemed (17,909) (191,980) (9,464) (98,945) Net change 431,542 4,629,625 354,476 3,758,279 Total transactions in Trust shares 990,183 $10,637,130) 525,503 $5,543,837
TAX-FREE TRUST OF OREGON FINANCIAL HIGHLIGHTS (unaudited) For a share outstanding throughout each period
Class A(1) Six Months Ended Year ended September 30, March 31, 1998 1997 1996 1995 1994 1993 Net Asset Value, Beginning of Period $10.68 $10.49 $10.55 $10.20 $10.95 $10.48 Income from Investment Operations: Net investment income 0.26 0.53 0.54 0.55 0.56 0.58 Net gain (loss) on securities (both realized and unrealized) 0.08 0.21 (0.05) 0.39 (0.75) 0.50 Total from Investment Operations 0.34 0.74 0.49 0.94 (0.19) 1.08 Less Distributions (note 6): Dividends from net investment income (0.27) (0.54) (0.54) (0.55) (0.56) (0.58) Distributions from capital gains (0.01) (0.01) (0.01) (0.04) - (0.03) Total Distributions (0.28) (0.55) (0.55) (0.59) (0.56) (0.61) Net Asset Value, End of Period $10.74 $10.68 $10.49 $10.55 $10.20 $10.95 Total Return (not reflecting sales charge)(%) 3.14+ 7.21 4.76 9.52 (1.77) 10.60 Ratios/Supplemental Data Net Assets, End of Period ($ millions) 319 312 305 311 316 331 Ratio of Expenses to Average Net Assets (%) 0.70* 0.72 0.72 0.71 0.68 0.66 Ratio of Net Investment Income to Average Net Assets (%) 4.86* 5.02 5.16 5.38 5.28 5.46 Portfolio Turnover Rate (%) 3 5 10 13 11 8 Net investment income per share and the ratios of income and expenses to average net assets without the expense offset in custodian fees for uninvested cash balances would have been: Net Investment Income ($) 0.26 0.53 0.54 0.55 0.56 0.58 Ratio of Expenses to Average Net Assets (%) 0.70* 0.73 0.73 0.73 0.70 0.68 Ratio of Net Investment Income to Average Net Assets (%) 4.86* 5.01 5.15 5.37 5.26 5.44 (1) Designated as Class A Shares on April 5, 1996. + Not annualized. * Annualized.
For a share outstanding throughout each period
Class C(1) Class Y(1) Six Months Year Period(2) Six Months Year Period(2) Ended March Ended Sept. Ended Sept. Ended March Ended Sept. Ended Sept. 31, 1998 30, 1997 30, 1996 31, 1998 30, 1997 30, 1996 Net Asset Value, Beginning of Period $10.67 $10.49 $10.34 $10.68 $10.49 $10.34 Income from Investment Operations: Net investment income 0.25 0.43 0.22 0.27 0.54 0.27 Net gain (loss) on securities (both realized and unrealized) 0.07 0.21 0.15 0.06 0.21 0.15 Total from Investment Operations 0.32 0.64 0.37 0.33 0.75 0.42 Less Distributions (note 6): Dividends from net investment income (0.25) (0.45) (0.22) (0.27) (0.55) (0.27) Distributions from capital gains (0.01) (0.01) - (0.01) (0.01) - Total Distributions (0.26) (0.46) (0.22) (0.28) (0.56) (0.27) Net Asset Value, End of Period $10.73 $10.67 $10.49 $10.73 $10.68 $10.49 Total Return (not reflecting sales charge)(%) 2.71+ 6.20 3.61+ 3.13+ 7.37 4.14+ Ratios/Supplemental Data Net Assets, End of Period ($ thousands) 1,063 800 336 8,684 4,031 242 Ratio of Expenses to Average Net Assets (%) 1.52* 1.57 1.56* 0.55* 0.57 0.57* Ratio of Net Investment Income to Average Net Assets (%) 4.03* 4.15 4.18* 4.95* 5.22 5.36* Portfolio Turnover Rate (%) 3+ 5 10+ 3+ 5 10+ Net investment income per share and the ratios of income and expenses to average net assets without the expense offset in custodian fees for uninvested cash balances would have been: Net Investment Income ($) 0.25 0.44 0.22 0.27 0.54 0.27 Ratio of Expenses to Average Net Assets (%) 1.53* 1.58 1.56+ 0.55* 0.58 0.58* Ratio of Net Investment Income to Average Net Assets (%) 4.02* 4.14 4.17* 4.95* 5.21 5.35* (1) New Class of Shares established on April 5, 1996. (2) From April 5, 1996 to September 30, 1996. + Not annualized. * Annualized.
Report on the Special Meeting of Shareholders (unaudited) A Special Meeting of Shareholders of Tax-Free Trust of Oregon was held on October 31, 1997.* At the meeting, the following matters were submitted to a shareholder vote and approved: (i) the approval of a proposed Interim Investment Advisory Agreement with First Bank National Association (votes for: 222,760,812.46 (90.57%); votes against: 4,296,431.24 (1.75%); abstentions: 18,881,862.96 (7.68%); broker non-votes: 0.00 (0.00%)), (ii) the approval of a proposed Investment Advisory and Administration Agreement with Aquila Management Corp. (votes for: 223,111,178.61 (90.72%); votes against: 4,231,613.89 (1.72%); abstentions: 18,596,292.80 (7.56%); broker non-votes: 21.36 (0.00%)), and (iii) the approval of a proposed Sub-Advisory Agreement between First Bank National Association and Aquila Management Corporation (votes for: 221,268,261.97 (89.97%); votes against: 4,559,536.25 (1.85%); abstentions: 20,111,308.48 (8.18%); broker non-votes: 0.00 (0.00%)). _______________________________________ * On the record date for the Special Meeting, the holders of 29,208,930.35 Class A Shares, 74,384.78 Class C Shares, and 339,809.28 Class Y Shares were outstanding and entitled to vote representing a total net asset value of $316,964,033.12. The holders of shares entitled to vote representing a total net asset value of $245,939,106.66 (77.59%) were present in person or by proxy at the meeting. -----END PRIVACY-ENHANCED MESSAGE-----