UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4083
Aquila Equity Fund
(Exact name of Registrant as specified in charter)
380 Madison Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
Joseph P. DiMaggio
380 Madison Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 697-6666
Date of fiscal year end: 12/31
Date of reporting period: 6/30/04
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Aquila Equity Fund
Semi-Annual Report
June 30, 2004
AQUILA EQUITY FUND
STATEMENT OF NET ASSETS
JUNE 30, 2004
(UNAUDITED)
ASSETS
Cash and Net Assets - 100.0% $ 1,002
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares
par value $0.01 per share ................................... $ 1
Additional paid-in capital...................................... 119,130
Accumulated net realized loss on investments ................... (118,129)
---------
$ 1,002
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CLASS A
Net Assets ..................................................... $ 1,002
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Capital shares outstanding ..................................... 86.473
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Net asset value and redemption price per share ................. $ 11.59
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Offering price per share
(100/95.75 of $11.59 adjusted to nearest cent) ................ $ 12.10
===========
See accompanying notes to financial statements.
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AQUILA EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
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The Fund had no operations during the period.
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AQUILA EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
The Fund had no operations during the six months ended June 30, 2004 and the
year ended December 31, 2003.
SIX MONTHS ENDED
JUNE 30, 2004 YEAR ENDED
(UNAUDITED) DECEMBER, 31 2003
----------------- -----------------
NET ASSETS:
Beginning of period ............. 1,002 1,002
------------ ------------
End of period ................... $ 1,002 $ 1,002
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See accompanying notes to financial statements.
AQUILA EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note A - Aquila Equity Fund (the "Fund"), is a diversified open-end investment
company organized as a Massachusetts business trust. On September 24, 2003
Aquila Cascadia Equity Fund changed its name to Aquila Equity Fund. The Fund
began its investment operations as a capital appreciation fund on September 9,
1996.
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The Fund is authorized to issue an unlimited number of shares and began
offering Class A, Class C and Class Y shares on August 13, 1996. Class A shares
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 July 31,
2000, the Fund established Class I shares, which are offered and sold only
through financial intermediaries and are not offered directly to retail
investors. 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.
On May 7, 2001, the Board of Trustees approved a change in the Fund's fiscal
year end from March 31st to December 31st.
On June 9, 2002, the Trustees unanimously determined that, in the best interest
of the Fund's shareholders, the Fund should be closed, pending shareholder
approval. On August 15, 2002, shareholders of record as of June 14, 2002 voted
to close the Fund. All of the Fund's shares were redeemed with the exception of
Aquila Management Corporation's holdings in the Fund. Aquila Management
Corporation currently owns 100% of the shares outstanding (which have been
subsequently transferred to its wholly-owned subsidiary, Aquila Investment
Management LLC). Although the Fund is not conducting a public offering of its
shares, it will continue to exist as a Massachusetts Business Trust and maintain
its registration as an investment company.
Note B - Since inception, the Fund has qualified as a regulated investment
company by complying with the provisions of the Internal Revenue Code applicable
to certain investment companies. The Fund made distributions of income and
security profits sufficient to relieve it from all, or substantially all,
Federal income and excise taxes.
AQUILA EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class A
-----------------------------------------
Six Months
Ended Year Ended Dec. 31, Period(1) Year Ended March 31,
June 30, 2004** ------------------- Ended --------------------------------
(unaudited) 2003** 2002 12/31/01 2001 2000 1999
------------- -------- --------- -------- ------ ------ -----
Net asset value, beginning of period ..$11.59 $11.59 $15.07 $15.45 $22.72 $16.46 $16.89
------ ------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss ............... - - (0.21) (0.06) (0.14) (0.10) -
Net gain (loss) on securities
(both realized and unrealized) ..... - - (3.27) (0.06) (6.81) 7.05 (0.43)
----- ----- ------ ------ ------ ------ ------
Total from investment operations .. - - (3.48) (0.12) (6.95) 6.95 (0.43)
----- ------ ------ ------ ------ ------ ------
Less distributions:
Distributions from capital gains .. - - - 0.26) (0.32) (0.69) -
----- ------ ------ ------ ------ ------ ------
Net asset value, end of period ........$11.59 $11.59 $11.59 $15.07 $15.45 $22.72 $16.46
===== ===== ====== ====== ====== ====== ======
Total return (not reflecting
sales charge)....................... - - 0.03)% (0.76)%+ (30.78)% 43.07% (2.55)%
Ratios/supplemental data
Net assets, end of period
(in thousands) .............. $1.00 $1.00 $1.00 $1,561 $1,675 $1,893 $2,119
Ratio of expenses to average
net assets .................. - - 2.63% 1.79%* 1.66% 1.67% 1.92%
Ratio of net investment loss
to average net assets ....... - - (1.57)% (0.69)%* (0.75)% (0.53)% (0.25)%
Portfolio turnover rate ........ - - 15.36% 21.23%+ 28.77% 37.46% 26.62%
The expense and net investment loss ratios without the effect of the Adviser's and Sub-Adviser's voluntary waiver of fees were:
Ratio of expenses to average
net assets .................. - - 3.83% 2.79%* 2.61% 2.44% 2.37%
Ratio of net investment loss to
average net assets ......... - - (2.77) (1.69)%* (1.70)% (1.30)% (0.70)%
The expense ratios after giving effect to the waivers and expense offset for uninvested cash balances were:
Ratio of expenses to average
net assets ................. - - 2.53% 1.60%* 1.63% 1.65% 1.80%
(1) For the period April 1, 2001 through December 31, 2001.
+ Not annualized.
* Annualized
** The Fund had no operations during the period.
See accompanying notes to financial statements.
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Proxy Voting Record. As the Fund is closed, the Fund had no portfolio
securities. Therefore, there were no matters relating to a portfolio security
considered at any shareholder meeting held during the 12 months ended June 30,
2004 with respect to which the Fund was entitled to vote. Applicable regulations
require us to inform you that the foregoing proxy voting information is
available on the SEC website at http://www.sec.gov.
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ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
905: Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940) as of a date within 90 days of the fling of this report, the registrant's
chief financial and executive officers have concluded that the disclosure
controls and procedures of the registrant are appropriately designed to ensure
that information required to be disclosed in the registrant's reports that are
filed under the Securities Exchange Act of 1934 are accumulated and communicated
to registrant's management, including its principal executive officer(s) and
principal financial officer(s), to allow timely decisions regarding required
disclosure and is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms adopted by the Securities and Exchange
Commission.
(b) There have been no significant changes in registrant's internal controls or
in other factors that could significantly affect registrant's internal controls
subsequent to the date of the most recent evaluation, including no significant
deficiencies or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of
1940.
(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AQUILA EQUITY FUND
By: /s/ Lacy B. Herrmann
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Chairman of the Board and President
September 6, 2004
By: /s/ Diana P. Herrmann
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Vice President
September 6, 2004
By: /s/ Joseph P. DiMaggio
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Chief Financial Officer and Treasurer
September 6, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: /s/ Lacy B. Herrmann
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Lacy B. Herrmann
Chairman of the Board and President
September 6, 2004
By: /s/ Diana P. Herrmann
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Diana P. Herrmann
Vice President
September 6, 2004
By: /s/ Joseph P. DiMaggio
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Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 6, 2004