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 811-6186
Aquila Rocky Mountain 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: 12/31/04
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL
REPORT
DECEMBER 31, 2004
[Logo of Aquila Rocky Mountain Equity Fund: a rectangle with a drawing of two
mountains and the words "Aquila Rocky Mountain Equity Fund"]
AN INVESTMENT DESIGNED
FOR GROWTH AT A REASONABLE PRICE
[Logo of the aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILA(SM) GROUP OF FUNDS
[Logo of Aquila Rocky Mountain Equity Fund: a rectangle with a drawing of two
mountains and the words "Aquila Rocky Mountain Equity Fund"]
AQUILA ROCKY MOUNTIAN EQUITY FUND
ANNUAL REPORT
MANAGEMENT DISCUSSION
Aquila Rocky Mountain Equity Fund's Class A shares had a total return of
12.08%, without provision for sales charges but reflecting contractually waived
fund expenses, for the twelve months ended December 31, 2004. This compares to
the S&P 500 with a total return of 10.88% and the Russell 2000 Index with a
total return of 18.44%.
For the five years cumulatively ending December 31, 2004, Aquila Rocky
Mountain Equity Fund's Class A shares, before provision for sales charges, had a
total return of 42.65% compared to -10.98% for the S&P 500 and 38.22% for the
Russell 2000 Index.
We do not have a perfect benchmark or performance comparison for the Fund
since we invest in companies in a specific region. At year-end 2004, 17.0% of
the equity investments in the Fund were in companies with a market
capitalization of over $10 billion (large cap companies), 35.4% of the equity
investments in the Fund were in companies with a market capitalization between
$2 billion and $10 billion (mid-cap) and 37.4% of the equity investments in the
Fund were in companies with market capitalizations between $300 million and $2
billion (small cap). In addition, 10.2% of the equity investments in the Fund
were in companies with market capitalizations below $300 million (micro cap).
We continued to use our growth at a reasonable price (GARP) or core
investment style in 2004. We look for good growth companies that are selling at
what we believe to be a reasonable price relative to their growth rates. For
2004, the Lipper median return for U.S. equity mutual funds that invest in
different sized companies using a core style (multi-cap core) was 11.05%
compared to the 12.08% return, without provision for sales charges, for Aquila
Rocky Mountain Equity Fund (Class A). The five year Lipper average return for
U.S equity mutual funds that invest in a multi-cap core style was 0.38%. This
compares with a five-year average return for Aquila Rocky Mountain Equity Fund
(Class A), without provision for sales charges but reflecting contractually
waived fund expenses, of 7.38%.
At year-end we had holdings of 59 companies in the portfolio across a
number of industries. We work to hold our individual position sizes to around 5%
or less of the portfolio and try to diversify the Fund across industries. We
believe this helps control specific security risk as well as industry risk. Our
largest individual position size on December 31 was Coldwater Creek at 5.59% of
the portfolio.
We continue to work to invest the Fund strategically since we believe that
trading and transaction costs do matter. We prefer to do our own research,
focusing on the two to five year time frame. We continue to look for the best
businesses and management teams in the Rocky Mountain region to invest in for
our shareholders. Portfolio turnover for the last three years has averaged under
5%.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE (CONTINUED)
As you can appreciate, individual securities have different performances
during the course of the year. The five best performers in the Fund during 2004
were from three industries and three states. Coldwater Creek, based in
Sandpoint, Idaho, was up 321.0% for 2004. This retailer, which serves women in
the 45 - 60 age group, is benefiting from new stores to complement its catalogue
operation. Shuffle Master, based in Las Vegas, Nevada rose 104.7%. This company
provides card shuffling systems as well as bingo and poker table systems.
Shuffle Master also is developing a line of intelligent gaming equipment that
has the potential of reducing gaming losses due to card counting and other
irregularities. MGM Mirage was up 93.4% for 2004. Based in Las Vegas, Nevada,
MGM benefited from improving hotel visits and a prospective merger with Mandalay
Resort Group.
The fourth best performer in the portfolio for 2004 was Station Casinos,
which was up 78.5%. Station Casinos is headquartered in Las Vegas and is
benefiting from its consulting business of helping native American groups
design, build and operate casinos. The fifth best performer in the Fund in 2004
was Myriad Genetics, a Salt Lake City, Utah based developmental stage biotech
company. Myriad Genetics was up 75.0% in 2004.
Our three worst performing companies in 2004 were from three different
industries. Intrado, based in Longmont, Colorado declined 44.9% due in part to
uncertainty about government spending. Intrado provides emergency communication
services such as 911 location services, amber alert and emergency notification
services for phone companies and local government. Action Performance, based in
Tempe, Arizona, declined 43.9% in 2004 due to operational problems and a change
in NASCAR sponsorship which obsoleted a lot of inventory. The Board of Directors
has recently voted a new lead director with turnaround experience and hired a
new CFO. NPS Pharmaceutical, based in Salt Lake City, Utah was down 40.4% in
2004. The company encountered several setbacks with new products. It is
interesting that one of our worst performers in 2003, Myriad Genetics, was one
of our best performers in 2004.
We continue to harvest short term trading losses to use to offset capital
gains. During 2004 we had three companies taken over. We were able to use
trading losses to offset the gains from the takeovers. Prima Energy was acquired
by Petro-Canada, Evergreen Resources was acquired by Pioneer Natural Resources
and Atrix Labs was acquired by QLT Inc. Although Unisource (the old Tucson
Electric) was supposed to be taken over by investors, the deal was declined by
Arizona regulators. We are pleased about this since we can continue to
participate in Unisource's solar energy business. In December, it was announced
that Patina Oil and Gas would be acquired by Noble Energy.
During 2004 we had a number of companies with stock splits and stock
dividends. Medicis split their shares two-for-one on January 26th. Shuffle
Master split their shares three-for-two on April 19th and Glacier Bancorp split
their shares five-for-four on May 21st. Knight Transportation split their shares
three-for-two on July 21, Coldwater Creek split their shares three-for-two on
July 26 and Ball Corp. split their shares two-for-one on August 24th. MDC paid a
10% stock dividend on March 4.
While stock splits and dividends are really just an accounting adjustment, they
do reflect price action and often attract investor attention.
Three of our companies undertook corporate restructurings this year.
Liberty Media, based in Englewood, Colorado spun off their international
business as Liberty Media International which we are holding in the Fund.
Phoenix-based Viad Corp spun off its payment service business, MoneyGram
International. MoneyGram is headquartered in Minnesota so we will be reducing
our holdings of MoneyGram. After acquiring Office Max, Boise Cascade sold its
paper and forest product businesses to private investors and relabeled the rest
of the business Office Max. Office Max will be headquartered in Illinois and we
have begun to reduce our holdings of this stock.
During 2005 our focus will continue to be to invest in the best businesses
in the region for the intermediate to longer term. While stocks may encounter
short term resistance from factors such as rising interest rates or currency
fluctuations, we are encouraged by the quality of the businesses that we are
finding. The smaller and mid-size companies we own may also be able to be more
nimble in a maturing economy.
PERFORMANCE REPORT
The graph below illustrates the value of $10,000 invested in Class A
Shares of Aquila Rocky Mountain Equity Fund (the "Fund") for the 10-year period
ended December 31, 2004 as compared with a hypothetical similar-size investment
in the Russell 2000 Stock Index (the "Index") over the same period. The Fund was
originally managed to provide capital appreciation through selection of
equity-oriented securities primarily on a value-basis. It was reoriented to a
growth at a reasonable price style as of July, 1999. The Fund's universe of
companies are primarily within the eight-state Rocky Mountain region.
The performance of each of the other classes is not shown in the graph,
but is included in the table below. It should be noted that the Index does not
include operating expenses nor sales charges but does reflect reinvestment of
dividends. It should also be noted that the Index is nationally-oriented and
consisted, over the period covered by the graph, of an unmanaged group of 2000
equity securities throughout the United States, mostly of companies having
relatively small capitalization. However, the Fund's investment portfolio
consisted over the same period of a significant lesser number of equity
securities primarily of companies domiciled in the eight-state Rocky Mountain
region of our country.
The market prices and behavior of the individual securities in the Fund's
investment portfolio can be affected by local and regional factors which might
well result in variances from the market action of the securities in the Index.
Furthermore, whatever the difference in the performance in the Index versus the
Fund may also be attributed to the lack of application of annual operating
expenses and sales charges to the Index.
Fund's Class A Shares
WITH WITHOUT
RUSSELL 2000 SALES SALES
STOCK INDEX CHARGE CHARGE
10000 9526 10000
12733 11401 11968
14823 13531 14203
18083 16644 17472
17613 15761 16544
21373 19001 19946
20750 18896 19836
21290 20357 21369
16931 17229 18086
24938 24203 25406
29537 27126 28475
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED DECEMBER 31, 2004
----------------------------------------
SINCE
CLASS AND INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS INCEPTION
- ------------------------ ------ ------- -------- ---------
Class A (7/22/94)
With Sales Charge............................... 7.30% 6.45% 10.49% 9.67%
Without Sales Charge............................ 12.08% 7.38% 11.03% 10.18%
Class C (5/1/96)
With CDSC....................................... 10.20% 6.58% N/A 8.44%
Without CDSC.................................... 11.20% 6.58% N/A 8.44%
Class Y (5/1/96)
No Sales Charge................................. 12.36% 7.65% N/A 9.40%
COMPARATIVE INDEX
Russell 2000 Stock Index........................... 18.44% 6.68% 11.43% 11.29% (Class A)
8.97% (Class C&Y)
Total return figures shown for the Fund reflect any change in price and assume
all distributions within the period were invested in additional shares. Returns
for Class A shares are calculated with and without the effect of the initial
4.25% maximum sales charge. Returns for Class C shares are calculated with and
without the effect of the 1% contingent deferred sales charge (CDSC) imposed on
redemptions made within the first 12 months after purchase. Class Y shares are
sold without any sales charge. The rates of return will vary and the principal
value of an investment will fluctuate with market conditions. Shares, if
redeemed, may be worth more or less than their original cost. Past performance
is not predictive of future investment results.
- --------------------------------------------------------------------------------
[Logo of KPMG LLP: four solid rectangles with the letters KPMG in front of them]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Aquila Rocky Mountain Equity Fund:
We have audited the accompanying statement of assets and liabilities of
Aquila Rocky Mountain Equity Fund, including the schedule of investments, as of
December 31, 2004, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of December 31, 2004, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Aquila Rocky Mountain Equity Fund as of December 31, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
KPMG LLP
New York, New York
February 18, 2005
- --------------------------------------------------------------------------------
AQUILA ROCKY MOUNTAIN EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
MARKET
SHARES COMMON STOCKS - 88.0% VALUE
- ------------ ------------------------------------------------------------- ------------
BASIC INDUSTRY - 8.8%
16,000 Allied Waste Industries, Inc.+ .............................. $ 148,480
7,000 Ball Corp. .................................................. 307,860
15,000 Knight Transportation, Inc. ................................. 372,000
5,000 Newmont Mining Corp. ........................................ 222,050
3,500 Phelps Dodge Corp. .......................................... 346,220
8,000 SkyWest, Inc. ............................................... 160,480
------------
1,557,090
------------
BUSINESS SERVICES - 2.6%
12,000 Intrado, Inc. + ............................................. 145,200
7,000 OfficeMax, Inc. ............................................. 219,660
3,000 Viad Corp. .................................................. 85,470
------------
450,330
------------
CAPITAL SPENDING - 3.7%
7,000 Advanced Energy Industries, Inc. + .......................... 63,910
22,000 Mity Enterprises, Inc. + .................................... 328,240
8,000 Mobile Mini, Inc.+ .......................................... 264,320
------------
656,470
------------
CONSUMER CYCLICALS - 2.4%
4,950 M.D.C. Holdings, Inc. ....................................... 427,878
------------
CONSUMER SERVICES - 23.6%
7,000 Action Performance Companies, Inc. .......................... 76,930
4,000 Apollo Group, Inc. (Class A)+ ............................... 322,840
31,000 Coldwater Creek, Inc.+ ...................................... 956,970
3,400 Comcast Corp. (Special Class A)+ ............................ 111,860
11,000 Echostar Communications Corp. (Class A) ..................... 365,750
15,000 International Game Technology ............................... 515,700
25,000 Liberty Media Corp. (Class A)+ .............................. 274,500
1,100 Liberty Media International, Inc. Class A+ .................. 50,853
6,000 MGM MIRAGE+ ................................................. 436,440
8,000 PETsMART, Inc. .............................................. 284,240
7,000 Shuffle Master, Inc. + ...................................... 329,700
8,000 Station Casinos, Inc. ....................................... 437,440
------------
4,163,223
------------
CONSUMER STAPLES - 3.5%
12,000 Albertson's, Inc. ........................................... 286,560
5,000 P.F. Chang's China Bistro, Inc.+ ............................ 281,750
3,000 Rocky Mountain Chocolate Factory, Inc. ...................... 43,950
------------
612,260
------------
MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- ------------ ------------------------------------------------------------- ------------
ENERGY - 2.8%
2,000 Bill Barrett Corp.+ ......................................... $ 63,980
10,000 Headwaters, Inc.+ ........................................... 285,000
4,000 Patina Oil & Gas Corp. ...................................... 150,000
------------
498,980
------------
FINANCIAL - 12.2%
12,000 First State Bancorporation .................................. 441,120
12,500 Glacier Bancorp, Inc. ....................................... 425,500
10,000 Janus Capital Group, Inc. ................................... 168,100
12,000 MoneyGram International, Inc. ............................... 253,680
5,000 Wells Fargo & Company ....................................... 310,750
8,000 Zions Bancorporation ........................................ 544,240
------------
2,143,390
------------
HEALTH CARE - 10.0%
12,000 Medicis Pharmaceutical Corp. (Class A) ...................... 421,320
31,000 Merit Medical Systems, Inc.+ ................................ 473,680
12,000 Myriad Genetics, Inc. + ..................................... 270,120
4,000 NPS Pharmaceuticals, Inc. + ................................. 73,120
1,000 Pharmion Corp.+ ............................................. 42,210
9,000 QLT, Inc.+ .................................................. 144,720
19,000 Sonic Innovations, Inc.+ .................................... 79,230
4,000 Ventana Medical Systems, Inc.+ .............................. 255,960
------------
1,760,360
------------
TECHNOLOGY - 14.1%
3,000 Altiris, Inc. + ............................................. 106,290
12,000 Avnet, Inc.+ ................................................ 218,880
18,000 CIBER, Inc.+ ................................................ 173,520
12,000 First Data Corp. ............................................ 510,480
5,000 Inter-Tel, Inc. ............................................. 136,900
10,000 JDA Software Group, Inc. + .................................. 136,390
22,000 Microchip Technology, Inc. .................................. 584,980
18,000 Micron Technology, Inc.+ .................................... 222,300
16,000 SBS Technologies, Inc.+ ..................................... 223,360
12,000 SpectraLink Corp. ........................................... 170,160
------------
2,483,260
------------
MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- ------------ ------------------------------------------------------------- ------------
UTILITIES - 4.3%
4,000 Kinder Morgan, Inc. ......................................... $ 292,520
3,000 Pinnacle West Capital Corp. ................................. 133,230
5,000 Questar Corp. ............................................... 254,800
3,000 UniSource Energy Corp. ...................................... 72,330
------------
752,880
------------
Total Common Stocks (cost $9,543,535) ..................... 15,506,121
------------
FACE
AMOUNT SHORT-TERM INVESTMENTS - 9.1%
- ------------ -------------------------------------------------------------
$ 800,000 AIM S-T Invest. Co. Prime Port. Inst. Cl. Money Market Fund 800,000
800,000 One Group Prime Money Market Fund ........................... 800,000
------------
Total Short-Term Investments (cost $1,600,000) ......... 1,600,000
------------
Total Investments (cost $11,143,535*) 97.1% 17,106,121
Other assets less liabilities 2.9 508,230
----- ------------
Net Assets 100.0% $ 17,614,351
===== ============
* Cost for Federal tax purposes is identical.
+ Non-income producing security.
Portfolio Distribution (unaudited)
Arizona ........................................... 24.2%
California ........................................ 1.8
Canada ............................................ 0.8
Colorado .......................................... 18.6
Idaho ............................................. 8.6
Illinois .......................................... 1.3
Minnesota ......................................... 1.5
Montana ........................................... 2.5
Nevada ............................................ 10.0
New Mexico ........................................ 3.9
Pennsylvania ...................................... 0.7
Texas ............................................. 1.7
Utah .............................................. 15.1
Short-Term Investments ............................ 9.3
-----
100.0%
=====
See accompanying notes to financial statements.
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2004
ASSETS
Investments at market value (cost $11,143,535) .......................................................... $ 17,106,121
Cash .................................................................................................... 681,140
Receivable for investment securities sold ............................................................... 36,739
Receivable for Fund shares sold ......................................................................... 35,545
Dividends and interest receivable ....................................................................... 7,182
Other assets ............................................................................................ 431
------------
Total assets ......................................................................................... 17,867,158
============
LIABILITIES
Payable for investment securities purchased ............................................................. 193,585
Payable for Fund shares redeemed ........................................................................ 30,505
Distribution and service fees payable ................................................................... 8,996
Accrued expenses ........................................................................................ 19,721
------------
Total liabilities .................................................................................... 252,807
------------
NET ASSETS ................................................................................................. $ 17,614,351
============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share ...................... $ 6,346
Additional paid-in capital .............................................................................. 11,647,835
Net unrealized appreciation on investments (note 4) ..................................................... 5,962,586
Accumulated net realized loss on investments ............................................................ (2,416)
------------
$ 17,614,351
============
CLASS A
Net Assets .............................................................................................. $ 13,718,285
============
Capital shares outstanding .............................................................................. 491,251
============
Net asset value and redemption price per share .......................................................... $ 27.93
============
Offering price per share (100/95.75 of $27.93 adjusted to nearest cent) ................................. $ 29.17
============
CLASS C
Net Assets .............................................................................................. $ 2,234,585
============
Capital shares outstanding .............................................................................. 84,939
============
Net asset value and offering price per share ............................................................ $ 26.31
============
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) ........................................................... $ 26.31*
============
CLASS Y
Net Assets .............................................................................................. $ 1,661,481
============
Capital shares outstanding .............................................................................. 58,410
============
Net asset value, offering and redemption price per share ................................................ $ 28.45
============
See accompanying notes to financial statements.
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2004
INVESTMENT INCOME:
Dividends ...................................................... $ 126,368
Expenses:
Management fee (note 3) ........................................ $ 228,929
Distribution and service fees (note 3) ......................... 49,963
Legal fees ..................................................... 44,179
Trustees' fees and expenses .................................... 23,772
Transfer and shareholder servicing agent fees .................. 23,633
Registration fees and dues ..................................... 17,959
Shareholders' reports .......................................... 16,473
Auditing and tax fees .......................................... 12,830
Custodian fees ................................................. 2,873
Chief compliance officer (note 3) .............................. 1,136
Insurance ...................................................... 775
Miscellaneous .................................................. 28,261
-----------
Total expenses ................................................. 450,783
Management fee waived (note 3) ................................. (202,357)
Expenses paid indirectly (note 5) .............................. (6,255)
-----------
Net expenses ................................................... 242,171
-----------
Net investment loss ............................................ (115,803)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions .......... 245,325
Change in unrealized appreciation on investments ............... 1,671,939
-----------
Net realized and unrealized gain (loss) on investments ......... 1,917,264
-----------
Net change in net assets resulting from operations ............. $ 1,801,461
===========
See accompanying notes to financial statements.
AQUILA ROCKY MOUNTAIN EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------
OPERATIONS:
Net investment loss ......................................... $ (115,803) $ (74,618)
Net realized gain (loss) from securities transactions ....... 245,325 (114,744)
Change in unrealized appreciation on investments ............ 1,671,939 3,577,919
------------ ------------
Change in net assets from operations ..................... 1,801,461 3,388,557
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 8):
Class A Shares:
Net realized gain on investments ............................ -- --
Class C Shares:
Net realized gain on investments ............................ -- --
Class Y Shares:
Net realized gain on investments ............................ -- --
------------ ------------
Change in net assets from distributions .................. -- --
------------ ------------
CAPITAL SHARE TRANSACTIONS (note 7):
Proceeds from shares sold ................................... 4,941,240 5,175,850
Short-term trading redemption fee ........................... 1,476 --
Reinvested dividends and distributions ...................... -- --
Cost of shares redeemed ..................................... (2,709,144) (1,002,631)
------------ ------------
Change in net assets from capital share transactions ..... 2,233,572 4,173,219
------------ ------------
Change in net assets ..................................... 4,035,033 7,561,776
NET ASSETS:
Beginning of period ......................................... 13,579,318 6,017,542
------------ ------------
End of period ............................................... $ 17,614,351 $ 13,579,318
============ ============
See accompanying notes to financial statements.
AQUILA ROCKY MOUNTAIN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Aquila Rocky Mountain Equity Fund (the "Fund"), a diversified, open-end
investment company, was organized on November 3, 1993 as a Massachusetts
business trust and commenced operations on July 22, 1994. The Fund is authorized
to issue an unlimited number of shares and, since its inception to May 1, 1996,
offered only one class of shares. On that date, the Fund began offering two
additional classes of shares, Class C and Class Y shares. All shares outstanding
prior to that date were designated as Class A shares and are sold with a
front-payment sales charge and bear an annual distribution 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. Class C Shares, together with a pro rata portion of all
Class C Shares acquired through reinvestment of dividends or other distributions
paid in additional Class C Shares, automatically convert to Class A Shares after
6 years. The Class Y shares are only offered to institutions acting for an
investor in a fiduciary, advisory, agency, custodian or similar capacity and are
not offered directly to retail investors. Class Y shares are sold at net asset
value without any sales charge, redemption fees, contingent deferred sales
charge or distribution or service fees. On April 30, 1998 the Fund established
Class I shares, which are offered and sold only through financial intermediaries
and are not offered directly to retail investors. As of the report date, there
were no Class I shares outstanding. All classes of shares represent interests in
the same portfolio of investments and are identical as to rights and privileges
but differ with respect to the effect of sales charges, the distribution and/or
service fees borne by each class, expenses specific to each class, voting rights
on matters affecting a single class and the exchange privileges of each class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America for investment companies.
a) PORTFOLIO VALUATION: Securities listed on a national securities exchange
or designated as national market system securities are valued at the last
sale price on such exchanges or market system or, if there has been no
sale that day, at the bid price. Securities for which market quotations
are not readily available are valued at fair value as determined in good
faith by or at the direction of the Board of Trustees. Short-term
investments maturing in 60 days or less are valued at amortized cost.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses
from securities transactions are reported on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded daily on the accrual basis.
c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Fund
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) MULTIPLE CLASS ALLOCATIONS: All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses 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 accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ from
those estimates.
3. FEES AND RELATED PARTY TRANSACTIONS
A) MANAGEMENT ARRANGEMENTS:
The Fund has a Sub-Advisory and Administration Agreement with Aquila
Investment Management LLC (the "Manager"), a wholly-owned subsidiary of Aquila
Management Corporation, the Fund's founder and sponsor. Under this agreement,
the Manager supervises the investments of the Fund and the composition of its
portfolio, arranges for the purchases and sales of portfolio securities, and
provides for daily pricing of the Fund's portfolio. Besides its sub-advisory
services, it also provides all administrative services. This includes providing
the office of the Fund and all related services as well as managing
relationships with all the various support organizations to the Fund such as the
shareholder servicing agent, custodian, legal counsel, auditors and distributor
and additionally maintaining the Fund's accounting books and records. For its
services, the Manager is entitled to receive a fee which is payable monthly and
computed as of the close of business each day on the net assets of the Fund at
the following annual rates; 1.50% on the first $15 million; 1.20% on the next
$35 million and 0.90% on the excess over $50 million.
For the year ended December 31, 2004, the Fund incurred Management fees of
$228,929, of which $202,357 were waived. The Manager has contractually
undertaken to waive fees and/or reimburse Fund expenses during the period
January 1, 2004 through December 31, 2004 so that total Fund expenses would not
exceed 1.50% for Class A Shares, 2.25% for Class C Shares or 1.25% for Class Y
Shares.
Under the October 1, 2004, Compliance Agreement with the Manager, the
Manager is compensated for Chief Compliance Officer related services provided to
enable the Fund to comply with Rule 38a-1 of the Investment Company Act of 1940.
Specific details as to the nature and extent of the services provided by
the Manager are more fully defined in the Fund's Prospectus and Statement of
Additional Information.
b) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part of
the Plan, with respect to Class A Shares, the Fund is authorized to make service
fee payments to broker-dealers or others ("Qualified Recipients") selected by
Aquila Distributors, Inc. (the "Distributor"), including, but not limited to,
any principal underwriter of the Fund, with which the Distributor has entered
into written agreements contemplated by the Rule and which have rendered
assistance in the distribution and/or retention of the Fund's shares or
servicing of shareholder accounts. The Fund makes payment of this service fee at
the annual rate of 0.25% of the Fund's average net assets represented by Class A
Shares. For the year ended December 31, 2004, distribution fees on Class A
Shares amounted to $29,578 of which the Distributor retained $2,806.
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of the Fund's Class C shares or
servicing of shareholder accounts. These payments are made at the annual rate of
0.75% of the Fund's average net assets represented by Class C Shares and for the
year ended December 31, 2004, amounted to $15,289. In addition, under a
Shareholder Services Plan, the Fund is authorized to make service fee payments
with respect to Class C Shares to Qualified Recipients for providing personal
services and/or maintenance of shareholder accounts. These payments are made at
the annual rate of 0.25% of the Fund's average net assets represented by Class C
Shares and for the year ended December 31, 2004, amounted to $5,096. The total
of these payments with respect to Class C Shares amounted to $20,385 of which
the Distributor retained $2,938.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the exclusive
distributor of the Fund's shares. Through agreements between the Distributor and
various broker-dealer firms ("dealers"), the Fund's shares are sold primarily
through the facilities of these dealers having offices within the general Rocky
Mountain region, with the bulk of sales commissions inuring to such dealers. For
the year ended December 31, 2004, total commissions on sales of Class AShares
amounted to $76,636 of which $7,912 was received by the Distributor.
C) OTHER RELATED PARTY TRANSACTIONS:
For the year ended December 31, 2004, the Fund incurred $44,035 of legal
fees allocable to Hollyer Brady Barrett & Hines LLP, counsel to the Fund, for
legal services in conjunction with the Fund's ongoing operations. The Secretary
of the Fund is a Partner of Hollyer Brady Barrett & Hines LLP.
4. PURCHASES AND SALES OF SECURITIES
During the year ended December 31, 2004, purchases of securities and
proceeds from the sales of securities (excluding short-term investments)
aggregated $2,273,647 and $1,128,658, respectively.
At December 31, 2004, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$6,163,493 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $200,907 for
a net unrealized appreciation of $5,962,586.
5. EXPENSES
The Fund has negotiated an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees and other Fund
expenses whenever there are uninvested cash balances. The Statement of
Operations reflects the total expenses before any offset, the amount of offset
and the net expenses. It is the general intention of the Fund to invest, to the
extent practicable, some or all of cash balances in equity securities rather
than leave cash on deposit.
6. PORTFOLIO ORIENTATION
The Fund's investments are primarily invested in the securities of
companies within the eight state Rocky Mountain region consisting of Colorado,
Arizona, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming and therefore are
subject to economic and other conditions affecting the various states which
comprise the region. Accordingly, the investment performance of the Fund might
not be comparable with that of a broader universe of companies.
7. CAPITAL SHARE TRANSACTIONS
a) Transactions in Capital Shares of the Fund were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
CLASS A SHARES:
Proceeds from shares sold .............. 154,717 $ 3,972,093 212,420 $ 4,259,877
Reinvested dividends and
distributions ........................ -- -- -- --
Cost of shares redeemed ................ (78,544) (1,999,023) (36,483) (759,051)
----------- ----------- ----------- -----------
Net change ........................... 76,173 1,973,070 175,937 3,500,826
----------- ----------- ----------- -----------
CLASS C SHARES:
Proceeds from shares sold .............. 32,243 783,083 37,062 786,448
Reinvested dividends and
distributions ........................ -- -- -- --
Cost of shares redeemed ................ (24,862) (605,856) (10,082) (207,947)
----------- ----------- ----------- -----------
Net change ........................... 7,381 177,227 26,980 578,501
----------- ----------- ----------- -----------
CLASS Y SHARES:
Proceeds from shares sold .............. 7,124 186,064 6,061 129,525
Reinvested dividends and
distributions ........................ -- -- -- --
Cost of shares redeemed ................ (4,003) (104,265) (1,841) (35,633)
----------- ----------- ----------- -----------
Net change ........................... 3,121 81,799 4,220 93,892
----------- ----------- ----------- -----------
Total transactions in Fund
shares ................................. 86,675 $ 2,232,096 207,137 $ 4,173,219
=========== =========== =========== ===========
b) SHORT-TERM TRADING REDEMPTION FEE: The Fund and the Distributor may reject
any order for the purchase of shares, on a temporary or permanent basis,
from investors exhibiting a pattern of frequent or short-term trading in
Fund shares. In addition, the Fund imposes a redemption fee of 2.00% of
the shares' redemption value on any redemption of Class A Shares on which
a sales charge is not imposed or of Class Y Shares, if the redemption
occurs within 120 days of purchase. The fee will be paid to the Fund and
is designed to offset the costs to the Fund caused by short-term trading
in Fund shares. The fee will not apply to shares sold under an Automatic
Withdrawal Plan, or sold due to the shareholder's death or disability. For
the year ended December 31, 2004, fees collected did not have a material
effect on the financial highlights.
8. INCOME TAX INFORMATION AND DISTRIBUTIONS
The Fund declares annual distributions to shareholders from net investment
income, if any, and from net realized capital gains, if any. Distributions are
recorded by the Fund on the ex-dividend date and paid in additional shares at
the net asset value per share, in cash, or in a combination of both, at the
shareholder's option. Dividends from net investment income and distributions
from realized gains from investment transactions are determined in accordance
with Federal income tax regulations, which may differ from investment income and
realized gains determined under generally accepted accounting principles. These
"book/tax" differences are either considered temporary or permanent in nature.
To the extent these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes, but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in capital. As of December 31, 2004 due to a net investment loss, Aquila
Rocky Mountain Equity Fund reclassified $115,803 from accumulated undistributed
net investment loss to paid-in capital. Net assets were not affected by these
changes.
At December 31, 2004, the Fund had a capital loss carryover of
approximately $2,072, which expires on December 31, 2011. This carryover is
available to offset future net gains on securities transactions to the extent
provided for in the Internal Revenue Code and it is probable the gain so offset
will not be distributed. In addition, the Fund generated a net post-October
capital loss of $344.
As of December 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Accumulated net realized loss $ (2,416)
Unrealized appreciation 5,962,586
-----------
$ 5,960,170
===========
AQUILA ROCKY MOUNTAIN EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
---------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2004 2003 2002 2001 2000
------- ------- ------- ------ ------
Net asset value, beginning of period ......................... $ 24.92 $ 17.74 $ 20.96 $19.64 $19.96
------- ------- ------- ------ ------
Income (loss) from investment operations:
Net investment income (loss) + ............................ (0.17) (0.16) (0.15) (0.07) (0.03)
Net gain (loss) on securities (both
realized and unrealized) ............................... 3.18 7.34 (3.07) 1.58 (0.09)
------- ------- ------- ------ ------
Total from investment operations .......................... 3.01 7.18 (3.22) 1.51 (0.12)
------- ------- ------- ------ ------
Less distributions (note 8):
Dividends from net investment income ...................... -- -- -- -- --
Distributions from capital gains .......................... -- -- -- (0.19) (0.20)
------- ------- ------- ------ ------
Total distributions ....................................... -- -- -- (0.19) (0.20)
------- ------- ------- ------ ------
Net asset value, end of period ............................... $ 27.93 $ 24.92 $ 17.74 $20.96 $19.64
======= ======= ======= ====== ======
Total return (not reflecting sales charge) ................... 12.08% 40.47% (15.36)% 7.73% (0.55)%
Ratios/supplemental data
Net assets, end of period (in thousands) .................. $13,718 $10,345 $ 4,242 $2,403 $2,109
Ratio of expenses to average net assets ................... 1.54% 1.50% 1.52% 1.60% 1.57%
Ratio of net investment loss to average
net assets ............................................. (0.72)% (0.77)% (0.82)% (0.44)% (0.20)%
Portfolio turnover rate ................................... 8.38% 3.01% 1.81% 28.54% 29.27%
The expense and net investment income ratios without the effect of the waiver of fees and the expense reimbursement were:
Ratio of expenses to average net assets ................... 2.82% 3.25% 4.15% 4.81% 5.57%
Ratio of net investment loss to average
net assets ............................................. (1.99)% (2.51)% (3.45)% (3.66)% (4.20)%
The expense ratios after giving effect to the waivers, reimbursements and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets ................... 1.50% 1.48% 1.50% 1.50% 1.51%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
See accompanying notes to financial statements.
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2004 2003 2002 2001 2000
------- ------- ------- ------- -------
Net asset value, beginning of period ...................... $ 23.66 $ 16.96 $ 20.19 $ 19.07 $ 19.53
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (loss) + ......................... (0.35) (0.30) (0.28) (0.21) (0.17)
Net gain (loss) on securities
(both realized and unrealized) ....................... 3.00 7.00 (2.95) 1.52 (0.09)
------- ------- ------- ------- -------
Total from investment operations ....................... 2.65 6.70 (3.23) 1.31 (0.26)
------- ------- ------- ------- -------
Less distributions (note 8):
Distributions from net investment income ............... -- -- -- -- --
Distributions from capital gains ....................... -- -- -- (0.19) (0.20)
------- ------- ------- ------- -------
Total distributions .................................... -- -- -- (0.19) (0.20)
------- ------- ------- ------- -------
Net asset value, end of period ............................ $ 26.31 $ 23.66 $ 16.96 $ 20.19 $ 19.07
======= ======= ======= ======= =======
Total return (not reflecting sales charge) ................ 11.20% 39.50% (16.00)% 6.91% (1.28)%
Ratios/supplemental data
Net assets, end of period
(in thousands) ....................................... $ 2,235 $ 1,835 $ 858 $ 372 $ 242
Ratio of expenses to average net assets ................ 2.29% 2.26% 2.26% 2.34% 2.29%
Ratio of net investment income (loss)
to average net assets ................................ (1.47)% (1.53)% (1.56)% (1.23)% (0.94)%
Portfolio turnover rate ................................ 8.38% 3.01% 1.81% 28.54% 29.27%
The expense and net investment income ratios without the effect of the waiver of fees and the expense reimbursement were:
Ratio of expenses to average net assets ................ 3.56% 4.02% 4.95% 5.52% 6.32%
Ratio of net investment loss to
average net assets ................................... (2.74)% (3.29)% (4.25)% (4.40)% (4.97)%
The expense ratios after giving effect to the waivers, reimbursements and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets ................ 2.25% 2.24% 2.25% 2.25% 2.23%
CLASS Y
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2004 2003 2002 2001 2000
------- ------- ------- ------- -------
Net asset value, beginning of period ...................... $ 25.32 $ 17.97 $ 21.19 $ 19.81 $ 20.07
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (loss) + ......................... (0.11) (0.10) (0.10) (0.02) 0.03
Net gain (loss) on securities
(both realized and unrealized) ....................... 3.24 7.45 (3.12) .59 (0.09)
------- ------- ------- ------- -------
Total from investment operations ....................... 3.13 7.35 (3.22) 1.57 (0.06)
------- ------- ------- ------- -------
Less distributions (note 8):
Distributions from net investment income ............... -- -- -- -- --
Distributions from capital gains ....................... -- -- -- (0.19) (0.20)
------- ------- ------- ------- -------
Total distributions .................................... -- -- -- (0.19) (0.20)
------- ------- ------- ------- -------
Net asset value, end of period ............................ $ 28.45 $ 25.32 $ 17.97 $ 21.19 $ 19.81
======= ======= ======= ======= =======
Total return (not reflecting sales charge) ................ 12.36% 40.90% (15.20)% 7.97% (0.25)%
Ratios/supplemental data
Net assets, end of period
(in thousands) ....................................... $ 1,661 $ 1,400 $ 918 $ 1,040 $ 962
Ratio of expenses to average net assets ................ 1.29% 1.25% 1.26% 1.35% 1.29%
Ratio of net investment income (loss)
to average net assets ................................ (0.47)% (0.51)% (0.56%) (0.18)% 0.06%
Portfolio turnover rate ................................ 8.38% 3.01% 1.81% 28.54% 29.27%
The expense and net investment income ratios without the effect of the waiver of fees and the expense reimbursement were:
Ratio of expenses to average net assets ................ 2.56% 3.05% 3.87% 4.59% 5.32%
Ratio of net investment loss to
average net assets ................................... (1.75)% (2.32)% (3.16)% (3.42)% (3.96)%
The expense ratios after giving effect to the waivers, reimbursements and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets ... 1.25% 1.23% 1.25% 1.25% 1.23%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED)
As a shareholder of the Fund, you may incur two types of costs: (1)
transaction costs, including front-end sales charges with respect to Class A
shares or contingent deferred sales charges ("CDSC") with respect to Class C
shares; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other Fund expenses. The tables below are intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The tables below are based on an investment of $1,000 invested on July 1,
2004 and held for the six months ended December 31, 2004.
ACTUAL EXPENSES
This table provides information about actual account values and actual
expenses. You may use the information provided in this table, together with the
amount you invested, to estimate the expenses that you paid over the period. To
estimate the expenses you paid on your account, divide your ending account value
by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During the Period".
FOR THE SIX MONTHS ENDED DECEMBER 31, 2004
ACTUAL
TOTAL RETURN BEGINNING ENDING EXPENSES
WITHOUT ACCOUNT ACCOUNT PAID DURING
SALES CHARGES(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
Class A 7.09% $1,000.00 $1,070.90 $ 7.81
- --------------------------------------------------------------------------------
Class C 6.69% $1,000.00 $1,066.90 $11.69
- --------------------------------------------------------------------------------
Class Y 7.24% $1,000.00 $1,072.40 $ 6.51
- --------------------------------------------------------------------------------
(1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE
APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES.
TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE
TOTAL RETURN FOR THE YEAR.
(2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 1.50%, 2.25% AND
1.25% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio and an assumed rate of
return of 5.00% per year before expenses, which is not the Fund's actual return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
the information provided in this table to compare the ongoing costs of investing
in the Fund and other mutual funds. To do so, compare this 5.00% hypothetical
example relating to the Fund with the 5.00% hypothetical examples that appear in
the shareholder reports of other mutual funds.
Please note that the expenses shown in the table below are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
with respect to Class A shares. The example does not reflect the deduction of
contingent deferred sales charges ("CDSC") with respect to Class C shares.
Therefore, the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different mutual funds. In
addition, if these transaction costs were included, your costs would have been
higher.
FOR THE SIX MONTHS ENDED DECEMBER 31, 2004
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD(1)
- --------------------------------------------------------------------------------
Class A 5.00% $1,000.00 $1,017.60 $ 7.61
- --------------------------------------------------------------------------------
Class C 5.00% $1,000.00 $1,013.83 $11.39
- --------------------------------------------------------------------------------
Class Y 5.00% $1,000.00 $1,018.85 $ 6.34
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 1.50%, 2.25% AND
1.25% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING RESULTS (UNAUDITED)
A Special Meeting of Shareholders of Aquila Rocky Mountain Equity Fund (the
"Fund") was held on December 1, 2004. The holders of shares representing 73% of
the total net asset value of the shares entitled to vote were present in person
or by proxy. At the meeting, the following matters were voted upon and approved
by the shareholders (the resulting votes for each matter are presented below).
1. To elect Trustees.
NUMBER OF VOTES
-------------------------
TRUSTEE FOR WITHHELD
------- --- --------
Lacy B. Herrmann 440,043 3,135
Tucker Hart Adams 440,054 3,124
Arthur K. Carlson 440,054 3,124
Gary C. Cornia 439,424 3,754
Grady Gammage, Jr. 440,054 3,124
Diana P. Herrmann 440,043 3,135
Cornelius T. Ryan 439,424 3,754
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila(sm) Group of Funds
produce is automatically sent to you and all other shareholders. Specifically,
you are routinely sent the entire list of portfolio securities of your Fund
twice a year in the semi-annual and annual reports you receive. Additionally, we
prepare, and have available, portfolio listings at the end of each quarter.
Whenever you may be interested in seeing a listing of your Fund's portfolio
other than in your shareholder reports, please check our website
(www.aquilafunds.com) or call us at 1-800-437-1020.
The Fund additionally files a complete list of its portfolio holdings with
the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms
N-Q are available free of charge on the SEC website at www.sec.gov. You may also
review or, for a fee, copy the forms at the SEC's Public Reference Room in
Washington, DC or by calling 800-SEC-0330.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Proxy Voting and Procedures of the Fund are available without charge, upon
request, by calling our toll free number (1-800-437-1020). This information is
also available at http://www.aquilafunds.com/EquityFunds/armef/armefmain.htm or
on the SEC's Web site - www.sec.gov
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
INFORMATION ABOUT
TRUSTEES(1) AND OFFICERS
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX(4) (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
INTERESTED TRUSTEES(5)
Lacy B. Herrmann Founder and Founder and Chairman of the Board, Aquila 12 Director or trustee,
New York, NY Chairman of Management Corporation, the sponsoring Pimco Advisors VIT,
(05/12/29) the Board organization and parent of the Manager or Oppenheimer Quest Value
of Trustees Administrator and/or Adviser or Sub-Adviser Funds Group, Oppenheimer
since 1987 to each fund of the Aquila(sm) Group of Small Cap Value Fund,
Funds,(6) Chairman of the Manager or Oppenheimer Midcap Fund,
Administrator and/or Adviser or Sub-Adviser and Oppenheimer
to each since 2004, and Founder, Chairman of Rochester Group of
the Board of Trustees, Trustee and (currently Funds.
or until 1998) President of each since its
establishment, beginning in 1984, except
Chairman of the Board of Trustees of Hawaiian
Tax-Free Trust, Pacific Capital Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets
Trust and Pacific Capital U.S. Government
Securities Cash Assets Trust through 2003,
Trustee until 2004 and Chairman of the Board,
Emeritus since 2004; Director of the
Distributor since 1981 and formerly Vice
President or Secretary, 1981-1998; Trustee
Emeritus, Brown University and the Hopkins
School; active in university, school and
charitable organizations.
Diana P. Herrmann Trustee since Vice Chair and Chief Executive Officer of 10 None
New York, NY 1997, President Aquila Management Corporation, Founder of the
(02/25/58) since 2002, Aquila(sm) Group of Funds and parent of Aquila
and Vice Chair Investment Management LLC, Manager, since
of the Board 2004, President and Chief Operating Officer
since 2003 since 1997, a Director since 1984, Secretary
since 1986 and previously its Executive Vice
President, Senior Vice President or Vice
President, 1986-1997; Chief Executive
Officer and Vice Chair since 2004 and
President, Chief Operating Officer and
Manager of the Manager since 2003; Vice
Chair, President, Executive Vice President
or Senior Vice President of funds in the
Aquila(sm) Group of Funds since 1986; Director
of the Distributor since 1997; trustee,
Reserve Money-Market Funds, 1999-2000 and
Reserve Private Equity Series, 1998-2000;
Governor, Investment Company Institute
(2004) and head of its Small Funds Committee
since 2004; active in charitable and
volunteer organizations.
NON-INTERESTED TRUSTEES
Tucker Hart Adams Trustee President, The Adams Group, Inc., an 2 Director, Touch
Colorado Springs, CO since 1993 economic consulting firm, since 1989; America, Colorado
(01/11/38) formerly Chief Economist, United Banks of Health Facilities
Colorado; currently or formerly active with Authority and Mortgage
numerous professional and community Analysis Computer
organizations. Corp.
Arthur K. Carlson Trustee Retired; formerly Senior Vice President and 2 Advisory director of
Paradise Valley, AZ since 1993 Manager, Trust Division of the Valley the Renaissance
(01/08/22) National Bank of Arizona; past President, Companies
New York Society of Security Analysts;
member, Phoenix Society of Security
Analysts; former director, Financial
Analysts Federation; director, Northern
Arizona University Foundation; currently or
formerly active with various other
professional and community organizations.
Gary C. Cornia Trustee Director, Romney Institute of Public 4 None
Orem, UT since 2000 Management, Marriott School of Management,
(06/24/48) Brigham Young University, 2004 - present;
Professor, Marriott School of Management,
1980 - present; Past President, the National
Tax Association; Fellow, Lincoln Institute
of Land Policy, 2002-2003; Associate Dean,
Marriott School of Management, Brigham Young
University, 1991-2000; Utah Governor's Tax
Review Committee since 1993.
Grady Gammage, Jr. Trustee Founding partner, Gammage & Burnham, PLC, a 2 Director of Neuberger
Phoenix, AZ since 2004 law firm, Phoenix, Arizona, since 1983; & Berman Equity Funds.
(10/01/51) director, Central Arizona Water Conservation
District, since 1995; director and
Secretary, Arizona State University
Foundation since 1998.
Cornelius T. Ryan Trustee Founder and General Partner, Oxford Ventures 5 None
Westport, CT and since 1996 Partners, a group of investment venture
Sun Valley, ID capital partnerships, since 1981 and Founder
(11/14/31) and General Partner, Oxford Bioscience
Partners, a group of venture capital
partnerships focused on life sciences,
genomics, healthcare information technology
and medical devices, since 1991.
OFFICERS
Charles E. Childs, III Executive Vice Executive Vice President of all funds in the N/A N/A
New York, NY President Aquila(sm) Group of Funds and the Manager
(04/01/57) since 2003 since 2003; Senior Vice President, corporate
development, formerly Vice President,
Assistant Vice President and Associate of
the Manager's parent since 1987; Senior Vice
President, Vice President or Assistant Vice
President of the Aquila Money-Market Funds,
1988-2003.
Marie E. Aro Senior Vice Senior Vice President, Aquila Rocky Mountain N/A N/A
Denver, CO President Equity Fund, and Vice President, Tax-Free
(02/10/55) since 2004 Trust of Arizona, since 2004; Vice
President, INVESCO Funds Group, 1998-2003;
Vice President, Aquila Distributors, Inc.,
1993-1997.
Jerry G. McGrew Senior Vice President of the Distributor since 1998, N/A N/A
New York, NY President Registered Principal since 1993, Senior Vice
(06/18/44) since 1996 President, 1997-1998 and Vice President,
1993-1997; Senior Vice President, Aquila
Rocky Mountain Equity Fund and five Aquila
Bond Funds since 1995; Vice President,
Churchill Cash Reserves Trust, 1995-2001.
James M. McCullough Senior Vice Senior Vice President or Vice President of N/A N/A
Portland, OR President Aquila Rocky Mountain Equity Fund and four
(06/11/45) since 1999 Aquila Bond Funds; Senior Vice President of
the Distributor since 2000; Director of
Fixed Income Institutional Sales, CIBC
Oppenheimer & Co. Inc., Seattle, WA,
1995-1999.
Barbara S. Walchli Senior Vice Senior Vice President and Portfolio Manager N/A N/A
Phoenix, AZ President of Aquila Rocky Mountain Equity Fund since
(09/24/52) since 1999 1999; Fund Co-manager, One Group Large
Company Growth Fund and One Group Income
Equity Fund, Banc One Investment Advisors,
1996-1997; Director of Research, Senior Vice
President, First Interstate Capital
Management, 1995-1996; Investment Committee,
Arizona Community Foundation since 1986;
member, Institute of Chartered Financial
Analysts, Association for Investment
Management and Research and the Phoenix
Society of Financial Analysts; formerly
Senior Analyst, Banc One Investment Advisors
and Director of Research, Valley National
Bank.
Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free Fund For Utah N/A N/A
Salt Lake City, UT President since 2001; Co-founder, Lewis Young
(08/07/46) since 1999 Robertson & Burningham, Inc., a NASD
licensed broker/dealer providing public
finance services to Utah local govern-ments,
1995-2001; Senior Vice President of two
Aquila Bond Funds and Aquila Rocky Mountain
Equity Fund; formerly Senior Vice
President-Public Finance, Kemper Securities
Inc., Salt Lake City, Utah.
Christine L. Neimeth Vice President Vice President of Aquila Rocky Mountain N/A N/A
Portland, OR since 1999 Equity Fund and Tax-Free Trust of Oregon;
(02/10/64) Management Information Systems consultant,
Hillcrest Ski and Sport, 1997; Institutional
Municipal Bond Salesperson, Pacific Crest
Securities, 1996; active in college alumni
and volunteer organizations.
Emily T. Rae Vice President Vice President of Aquila Rocky Mountain N/A N/A
Aurora, CO since 2002 Equity Fund and Tax-Free Fund of Colorado
(03/02/74) since 2002; investment analyst, Colorado
State Bank and Trust, 2001-02; financial
analyst, J.P. Morgan, 2000-01, senior
registered associate, Kirkpatrick Pettis,
1998-2000; registered associate, FBS
Investments (now U.S. Bancorp Piper
Jaffray), 1997-98.
Alan R. Stockman Vice President Senior Vice President, Tax-Free Trust of N/A N/A
Scottsdale, AZ since 1999 Arizona since 2001, Vice President,
(07/31/54) 1999-2001; Vice President, Aquila Rocky
Mountain Equity Fund since 1999; Bank One,
Commercial Client Services representative,
1997-1999; Trader and Financial Consultant,
National Bank of Arizona (Zions Investment
Securities Inc.), Phoenix, Arizona
1996-1997.
M. Kayleen Willis Vice President Vice President, Tax-Free Fund For Utah since N/A N/A
Salt Lake City, UT since 2004 September 2003, Assistant Vice President,
(06/11/63) 2002-2003; Vice President, Aquila Rocky
Mountain Equity Fund, since 2004; various
securities positions: Paine Webber, Inc.,
Salt Lake City, 1999-2002, Dean Witter
Reynolds, Inc., Salt Lake City, 1996-1998.
Robert W. Anderson Chief Chief Compliance Officer of the Fund, the N/A N/A
New York, NY (08/23/40) Compliance Manager and the Distributor since 2004,
Officer since Compliance Officer of the Manager or its
2004 and predecessor and current parent since 1998
Assistant and Assistant Secretary of the Aquila(sm)
Secretary Group of Funds since 2000; Consultant, The
since 2000 Wadsworth Group, 1995-1998.
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila(sm) N/A N/A
New York, NY Officer since Group of Funds since 2003 and Treasurer
(11/06/56) 2003 and since 2000; Controller, Van Eck Global
Treasurer Funds, 1993-2000.
since 2000
Edward M. W. Hines Secretary Partner, Hollyer Brady Barrett & Hines LLP, N/A N/A
New York, NY since 1993 legal counsel to the Fund, since 1989;
(12/16/39) Secretary of the Aquila(sm) Group of Funds.
John M. Herndon Assistant Assistant Secretary of the Aquila(sm) Group N/A N/A
New York, NY Secretary of Funds since 1995 and Vice President of
(12/17/39) since 1995 the three Aquila Money-Market Funds since
1990; Vice President of the Manager or its
predecessor and current parent since 1990.
Lori A. Vindigni Assistant Assistant Treasurer of the Aquila(sm) Group N/A N/A
New York, NY Treasurer of Funds since 2000; Assistant Vice
(11/02/66) since 2000 President of the Manager or its predecessor
and current parent since 1998; Fund
Accountant for the Aquila(sm) Group of
Funds, 1995-1998.
(1) The Fund's Statement of Additional Information includes additional
information about the Trustees and is available, without charge, upon request by
calling 800-437-1020 (toll free).
(2) The mailing address of each Trustee and officer is c/o Aquila Rocky Mountain
Equity Fund, 380 Madison Avenue, New York, NY 10017.
(3) Because the Fund does not hold annual meetings, each Trustee holds office
for an indeterminate term. The term of office of each officer is one year.
(4) Includes certain Aquila-sponsored funds that are dormant and have no public
shareholders.
(5) Mr. Herrmann and Ms. Herrmann are interested persons of the Fund, as that
term is defined in the 1940 Act, as officers of the Fund and through their
affiliations with both the Manager and the Distributor. Each is also an
interested person as a member of the immediate family of the other.
(6) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila Bond Funds";
Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these
11 funds, which do not include the dormant funds described in footnote 4, are
called the "Aquila(sm) Group of Funds."
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PRIVACY NOTICES (UNAUDITED)
AQUILA ROCKY MOUNTAIN EQUITY FUND
OUR PRIVACY POLICY. In providing services to you as an individual who owns or is
considering investing in shares of the Fund we collect certain nonpublic
personal information about you. Our policy is to keep this information strictly
safeguarded and confidential, and to use or disclose it only as necessary to
provide services to you or as otherwise permitted by law. Our privacy policy
applies equally to former shareholders and persons who inquire about a fund.
INFORMATION WE COLLECT. "Nonpublic personal information" is personally
identifiable financial information about you as an individual or your family.
The kinds of nonpublic personal information we have about you may include the
information you provide us on your share purchase application or in telephone
calls or correspondence with us, and information about your fund transactions
and holdings, how you voted your shares and the account where your shares are
held.
INFORMATION WE DISCLOSE. We disclose nonpublic personal information about you to
companies that provide necessary services to us, such as the Fund's transfer
agent, distributor or investment adviser or sub-adviser, as permitted or
required by law, or as authorized by you. Any other use is strictly prohibited.
We do not sell information about you or any of our fund shareholders to anyone.
HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to nonpublic personal
information about you to only those persons who need it to provide services to
you or who are permitted by law to receive it. We maintain physical, electronic
and procedural safeguards to protect the confidentiality of all nonpublic
personal information we have about you.
If you have any questions regarding our Privacy Policy, please contact us at
1-800-437-1020.
AQUILA DISTRIBUTORS, INC.
AQUILA INVESTMENT MANAGEMENT LLC
This Privacy Policy also has been adopted by Aquila Distributors, Inc. and
Aquila Investment Management LLC and applies to all nonpublic information about
you that each of these companies may obtain in connection with services provided
to the Fund or to you as a shareholder of the Fund.
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FOUNDER
AQUILA MANAGEMENT CORPORATION
MANAGER
AQUILA INVESTMENT MANAGEMENT LLC
380 Madison Avenue, Suite 2300
New York, New York 10017
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Tucker Hart Adams
Arthur K. Carlson
Gary C. Cornia
Grady Gammage, Jr.
Diana P. Herrmann
Cornelius T. Ryan
OFFICERS
Diana P. Herrmann, Vice Chair and President
Barbara S. Walchli, Senior Vice President and Portfolio Manager
Marie E. Aro, Senior Vice President
James M. McCullough, Senior Vice President
Kimball L. Young, Senior Vice President
Christine L. Neimeth, Vice President
Emily T. Rae, Vice President
Alan R. Stockman, Vice President
M. Kayleen Willis, Vice President
Joseph P. DiMaggio, Chief Financial Officer
and Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
1111 Polaris Parkway
Columbus, Ohio 43240
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC Inc.
760 Moore Road
King of Prussia, Pennsylvania 19406
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus, which must precede or
accompany this report.
ITEM 2. CODE OF ETHICS.
(a) As of December 31, 2004 (end of reporting period) the
Trust has adopted a code of ethics that applies to the Fund's
principal executive officer(s)and principal financial officer(s)
and persons performing similar functions ("Covered Officers") as
defined in the Aquila Group of Funds Code of Ethics for Principal
Executive and Senior Financial Officers under Section 406 of the
Sarbanes-Oxley Act of 2002.;
(f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of
Ethics that applies to the Trust's principal executive officer(s)
and principal financial officer(s) and persons performing similar
functions is included as an exhibit to its annual report on this
Form N-CSR;
(f)(2) The text of the Fund's Code of Ethics that applies to the
Fund's principal executive officer(s) and principal financial
officer(s) and persons performing similar functions has been
posted on its Internet website which can be found at the Fund's
Internet address at aquilafunds.com.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1)(ii) The Board of Trustees of the Fund has determined that
it does not have at least one audit committee financial expert
serving on its audit committee. The Fund does not have such a
person serving on the audit committee because none of the persons
currently serving as Trustees happens to have the technical
accounting and auditing expertise included in the definition of
"audit committee financial expert" adopted by the Securities
and Exchange Commission in connection with this Form N-CSR, and the
Board has not heretofore deemed it necessary to seek such a person
for election to the Board.
The primary mission of the Board, which is that of oversight over
the operations and affairs of the Fund, confronts the Trustees with
a wide and expanding range of issues and responsibilities. The
Trustees believe that, accordingly, it is essential that the Board's
membership consist of persons with as extensive experience as possible
in fulfilling the duties and responsibilities of mutual fund directors
and audit committee members and, ideally, with extensive experience
and background relating to the economic and financial sectors and
securities in which the Fund invests, including exposure to the
financial and accounting matters commonly encountered with respect
to those sectors and securities. The Board believes that its current
membership satisfies those criteria. It recognizes that it would
also be helpful to have a member with the relatively focused accounting
and auditing expertise reflected in the applicable definition of
"audit committee financial expert," just as additional members with
similarly focused technical expertise in other areas relevant to
the Fund's operations and affairs would also contribute added value.
However, the Board believes that the Fund is better served, and its
assets better employed, by a policy of hiring experts in various
areas, including the specialized area of technical accounting and
auditing matters, if and as the Board identifies the need, rather
than by seeking to expand its numbers by adding technical experts
in the areas constituting its domain of responsibility. The Fund's
Audit Committee Charter explicitly authorizes the Committee to
retain such experts as it deems necessary in fulfilling its duties
under the Charter.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
a) Audit Fees - The aggregate fees billed for professional services
rendered by the principal accountant for the audit of the Registrant's
annual financial statements were $9,680 in 2004 and $8,800 in 2003.
b) Audit Related Fees - There were no amounts billed for audit-related
fees over the past two years.
c) Tax Fees - The Registrant was billed by the principal accountant $6,165
and $5,542 in 2003 and 2004, respectively, for return preparation.
d) All Other Fees - There were no additional fees paid for audit and non-
audit services other than those disclosed in a) thorough c) above.
e)(1) Currently, the audit committee of the Registrant pre-approves audit
services and fees on an engagement-by-engagement basis
e)(2) None of the services described in b) through d) above were approved
by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X, all were pre-approved on an engagement-by-engagement basis.
f) No applicable.
g) There were no non-audit services fees billed by the Registrant's accountant
to the Registrant's investment adviser or distributor over the past two years.
h) 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) (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and
Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002.
(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 ROCKY MOUNTAIN EQUITY FUND
By: /s/ Lacy B. Herrmann
- ---------------------------------
Chair of the Board
February, 2005
By: /s/ Diana P. Herrmann
- ---------------------------------
President
February 28, 2005
By: /s/ Joseph P. DiMaggio
- -----------------------------------
Chief Financial Officer and Treasurer
February 28, 2005
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
- ---------------------------------
Lacy B. Herrmann
Chair of the Board
February 28, 2005
By: /s/ Diana P. Herrmann
- ---------------------------------
Diana P. Herrmann
President
February 28, 2005
By: /s/ Joseph P. DiMaggio
- -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
February 28, 2005
AQUILA ROCKY MOUNTAIN EQUITY FUND
EXHIBIT INDEX
(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) Certification of chief executive officer and chief financial officer
as required by Rule 30a-2(b) of the Investment Company Act of 1940.