AQUILA THREE PEAKS HIGH INCOME FUND

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AQUILA THREE PEAKS HIGH INCOME FUND
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Please Note

• Information contained in this document must be
  preceded or accompanied by a copy of the Funds
  current prospectus.
• The Fund is not a financial institution, deposit
  or other obligation, is not backed by any
  financial institution guarantee, is not backed by
  FDIC or other deposit insurance, and is subject
  to investment risks, including the possible loss
  of the principal amount invested.
• Past Performance is not predictive of future
  investment results. Performance data quoted
  represents past performance investment return
  and principal value of an investment will
  fluctuate with market conditions so that an
  investors shares, when redeemed, may be worth
  more or less than their original cost. Fund
  performance as of the most recent month end is
  available from Aquila Distributors Inc.,
  800-437-1020 or www.aquilafunds.com.
• The Fund invests in a variety of fixed-income
  securities. A basic risk of these securities is
  that their value will fall if interest rates
  rise. Since the value of a fixed-income portfolio
  will generally decrease when interest rates rise,
  the Fund's net asset value (NAV) will likewise
  decrease. Another basic risk associated with the
  Fund is credit or default risk, which is the risk
  that an issuer will be unable to make principal
  and interest payments when due.
• It is anticipated that the Funds portfolio will
  typically include a high proportion, perhaps even
  100, of high-yield/high-risk securities rated
  below investment grade. High-yield bonds
  generally have a greater credit risk than other
  types of fixed-income securities and may be
  especially sensitive to economic changes,
  political changes, or adverse developments
  specific to the company that issued the bond.
  Because of these factors, the performance and NAV
  of the Fund may vary significantly, depending
  upon its holdings of high-yield/high risk bonds.

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Please Note

• Currently, the majority of the Management fees
  are being voluntarily waived. Results, where
  shown, would have been lower if the full fees or
  expenses were applied. The maximum sales charge
  for the Class A shares of the Fund is 4.00. The
  Class C share have no sales charge, but do have a
  Contingent Deferred Sales Charge of 1.00 on
  redemptions within 12 months of purchase.
• Portfolio holdings information is not necessarily
  representative of the entire portfolio. Holdings
  and composition of holdings are subject to
  change.

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Introduction

• Aquila Investment Management, LLC
• and
• Three Peaks Capital Management, LLC
• create
• Aquila Three Peaks High Income Fund

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Aquila Three Peaks High Income Portfolio
Manager Sandy Rufenacht

• Fund Manager since inception, June, 2006
• Founded Three Peaks Capital Management, LLC in
  July 2003
• Dedicated focus on specialty fixed-income
  disciplines
• Highly disciplined approach with emphasis on
  maintaining a stable NAV
• Managed Janus High-Yield Bond Fund, Janus
  Short-Term Bond Fund, separate accounts and
  sub-advised portfolios for Janus Capital Group
  Inc. from January 1996 through July 2003
• 18 years professional investment experience
• University of Northern Colorado, B.A., Business

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Three Peaks Capital Management Team
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Investment Strategy

• Produce a high level of current income with a
  focus on protecting the NAV (Net Asset Value).

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Agenda

• The High Yield Market Today
• The Case for High Yield Bonds
• Aquila Three Peaks High Income Fund

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Agenda

• The High Yield Market Today
• The Case for High Yield Bonds
• Aquila Three Peaks High Income Fund

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The High Yield Market Today Growth Financed in
the High Yield Market
Bonds which represent the largest Fund holdings,
will be presented in an upcoming slide.
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The High Yield Market Today High Yield Bond
Investors
Investors by segment 2006
45.3
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
12
Agenda

• The High Yield Market Today
• The Case for High Yield Bonds
• Aquila Three Peaks High Income Fund

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The Case for High Yield BondsVolatility and
Return of Fixed Income Securities
Use High Yield to Manage Portfolio Risk and Return
JP Morgan data for 5 years ending 10-31-05
Investment-grade bond data from 1991 through 2004
is measured by the Merrill Lynch Corporate Master
Index in 2005 it is measured by the JPMorgan
JULI Investment-Grade Index. High Yield bond
data is measured by the JPMorgan Global High
Yield Index. It is not possible to invest
directly in an index. Index performance is not
illustrative of the performance of the Fund. The
Fund commenced operations on June 1, 2006, and
does not have performance or volatility history
during the period illustrated.
Source JPMorgan North American High Yield
Research, 2005 High-Yield Annual Review, 12/05
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The Case for High Yield BondsVolatility and
Return of Fixed Income Securities
Use High Yield to Manage Portfolio Risk and Return
JP Morgan data for 5 years ending 10-31-06
Investment-grade bond data from 1991 through 2004
is measured by the Merrill Lynch Corporate Master
Index in 2005 it is measured by the JPMorgan
JULI Investment-Grade Index. High Yield bond
data is measured by the JPMorgan Global High
Yield Index. It is not possible to invest
directly in an index. Index performance is not
illustrative of the performance of the Fund. The
Fund commenced operations on June 1, 2006, and
does not have performance or volatility history
during the period illustrated.
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
15
The Case for High Yield BondsVolatility and
Return of Fixed Income Securities
Use High Yield to Manage Portfolio Risk and Return
10-31-05 vs. 10-31-06
Investment-grade bond data from 1991 through 2004
is measured by the Merrill Lynch Corporate Master
Index in 2005 it is measured by the JPMorgan
JULI Investment-Grade Index. High Yield bond
data is measured by the JPMorgan Global High
Yield Index. It is not possible to invest
directly in an index. Index performance is not
illustrative of the performance of the Fund. The
Fund commenced operations on June 1, 2006, and
does not have performance or volatility history
during the period illustrated.
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
16
The Case for High Yield BondsVolatility and
Return of Various Asset Classes
3 year Volatility (Risk) / Return data
JP Morgan data for 3 years ending 10-31-05
Index performance is not illustrative of the
performance of the Fund. The Fund commenced
operations on June 1, 2006, and does not have
performance or volatility history during the
period illustrated.
Source JPMorgan North American High Yield
Research, 2005 High-Yield Annual Review, 12/05
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The Case for High Yield BondsVolatility and
Return of Various Asset Classes
3 year Volatility (Risk) / Return data
JP Morgan data for 3 years ending 10-31-06
Incremental Return 9.01 vs. 11.44
Incremental Volatility 3.69 vs. 7.34
Index performance is not illustrative of the
performance of the Fund. The Fund commenced
operations on June 1, 2006, and does not have
performance or volatility history during the
period illustrated.
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
18
The Case for High Yield BondsVolatility and
Return of Various Asset Classes
5 year Volatility (Risk) / Return data
JP Morgan data for 5 years ending 10-31-05
Index performance is not illustrative of the
performance of the Fund. The Fund commenced
operations on June 1, 2006, and does not have
performance or volatility history during the
period illustrated.
Source JPMorgan North American High Yield
Research, 2005 High-Yield Annual Review, 12/05
19
The Case for High Yield BondsVolatility and
Return of Various Asset Classes
5 year Volatility (Risk) / Return data
JP Morgan data for 5 years ending 10-31-06
Incremental Return 10.87 vs. 7.26
Incremental Volatility 5.46 vs. 12.78
Index performance is not illustrative of the
performance of the Fund. The Fund commenced
operations on June 1, 2006, and does not have
performance or volatility history during the
period illustrated.
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield BondsVolatility and
Return of Various Asset Classes
10 year Volatility (Risk) / Return data
JP Morgan data for 10 years ending 10-31-06
Incremental Return 6.89 vs. 8.64
Incremental Volatility 6.54 vs. 15.52
Index performance is not illustrative of the
performance of the Fund. The Fund commenced
operations on June 1, 2006, and does not have
performance or volatility history during the
period illustrated.
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield BondsVolatility of
Returns
Lehman U.S. Corp. High Yield and SP 500 Growth
of 100
Value
Jan. 1987 to Dec. 2006
This chart illustrates a hypothetical investment
of 100 in the Lehman U.S. Corporate High Yield
Index and the SP 500 Index. It is not possible
to invest directly in an index. The hypothetical
illustration does not include the fees and
expenses associated with an actual investment
if such fees and expenses were included, the
returns would be lower. Index performance is not
illustrative of the performance of the Fund. The
Fund commenced operations on June 1, 2006, and
does not have performance or volatility history
during the period illustrated.
Source Lehman Brothers, Yahoo Finance
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The Case for High Yield BondsThe Impact of
Shifting Interest Rates
High Yield Index Return vs. 10-yr U.S. Treasury
Yield
Index performance is not illustrative of the
performance of the Fund. The Fund commenced
operations on June 1, 2006, and does not have
performance or volatility history during the
period illustrated.
Source Lehman Brothers, Yahoo Finance
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The Case for High Yield BondsPerformance through
Economic Cycles
Average Total Return 1987 2006 9.70 Golden
Age of High Yield 1991 1998 15.46 Average
Return
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield Bonds Default Rate Near
Cyclical Low
Long term Average 4.74
Average 1/93 to 6/99 2.36
Jan. 98 1.20
Dec. 06 0.84
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield BondsYield Spread Near
Cyclical Low
Long Term Average 548 bps
Dec 06 317 bps
Average 1/93 to 6/99 421 bps
Feb 97 304 bps
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield Bonds Tying It All
Together
High Yield Spreads
High Yield Default Rates
High Yield Average Annual Returns
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield BondsComponents of High
Yield Market Growth
Source JPMorgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06
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The Case for High Yield BondsGrowth of the High
Yield Market
Global US Dollar-Denominated Issues
Source JP Morgan North American High Yield
Research, 2006 High-Yield Annual Review, 12/06.
Note 2006 data as of December 14th
The information in this graph has been obtained
from, and is based on, sources that Aquila
Distributors, Inc. believes to be reliable.
Aquila Distributors, Inc. does not guarantee its
accuracy. This analysis is for informational
purposes only and is not intended as investment
advice. The high yield securities represented in
this graph will not match and are not intended to
be representative of securities held or to be
held in Aquila Three Peaks High Income Fund.
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Agenda

• The High Yield Market Today
• The Case for High Yield Bonds
• Aquila Three Peaks High Income Fund

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Aquila Three Peaks High Income FundManagement
Focus To Minimize Risk

• Relentless Research and Analysis
• Typically visit every company in the portfolio
• Internal financial model developed on all credits
• Income Statement
• Balance Sheet
• Cash Flow Analysis
• Diversified 25 different industries
• Generally, no more than a 5 position in any one
  name typically 1.5 or less
• Minimize duration risk

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Aquila Three Peaks High Income FundSell
Discipline

• We may sell a security based on these factors
• Fundamental analysis proves incorrect
• Bond price is higher than justified
• Spread too tight relative to the risk
• More downside risk vs. upside, given price/yield
  of bond
• Deterioration of communication with management
• Company visit is not allowed

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Aquila Three Peaks High Income FundBuy Discipline

• We may buy a security based on these factors
• Our understanding of industry fundamentals
• Our belief that the company is a leader within
  the industry
• Our belief that the management team is
  exceptional
• Management team owns stock preferably 10 or
  more
• Earnings are reasonably predictable
• Company is aggressively seeking deleveraging
  opportunities
• Free cash flow exceeds amortization schedule
• Financial model is critical
• Bond represents reasonable value on a relative
  basis
• Positive events ratings upgrade, buyout, tender
  offer

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Aquila Three Peaks High Income FundPortfolio
Construction
Higher Return 0 to 20
Core Portfolio 30 to 75
Lower Risk 20 to 50
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Three Peaks Capital Management, LLCLessons to
live by

• Sell first, ask questions later.
• Excess issuance relative to size is a problem,
  unless the issuer finances hard assets,
  consolidates debt, or buys back commercial paper
  or bank loans.
• Growth companies are often not bondholder
  friendly.
• Covenants count.
• Transparency remains a very critical part of
  assessing credit value. Regular detailed filings
  help, but an open door policy with credit
  analysts goes a long way to establish confidence.
• Liquidity first.
• Boring is good for bond holders. Rich or tight
  bonds can outperform as long as blowups are
  avoided.
• Dig deep to uncover future blowup candidates.
  Avoiding the blowups is more important than
  hitting the home runs.

• Caveat emptor if you cannot understand the
  credit, dont own it.
• Be suspicious of all companies who have done
  large mergers, particularly those where one
  company uses the cash flow from an established
  company to fund growth. Be leery of spin-offs.
• Avoid dividend paying debt deals.
• Assets count.
• Invest only in those sectors that have
  traditionally been able to support leverage.
• Understand who is borrowing, why they are
  borrowing, when they will pay off the loan and
  what bondholders will get in the event of an
  unforeseen default.
• Dot all Is and cross all Ts. Dont get
  scooped, get the scoop!!!

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Aquila Three Peaks High Income FundA Time-tested
Strategy

• Aquila Three Peaks High Income Fund
• and your investment strategy

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Aquila Three Peaks High Income Fund
December 31, 2007
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Aquila Three Peaks High Income Fund
September 30, 2007
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Aquila Three Peaks High Income Fund
December 31, 2007
Performance data is based on past performance and
does not guarantee future results. Current
performance may be higher or lower. Data current
to the most recent month end is available
800-437-1020 or www.aquilafunds.com. The
investment return and principal value of an
investment will fluctuate so that an investors
shares, when redeemed, may be worth more or less
than their original cost. Total return
calculations include changes in share price and
reinvestment of dividends and capital gain
distributions in a hypothetical investment for
the period shown. Class A shares have a maximum
sales charge of 4.00 Class C shares have no
initial sales charge, but a 1.00 contingent
deferred sales charge applies to Class C shares
redeemed within 12 months of purchase. Class Y
shares have no initial and no contingent deferred
sales charge and are available only through
certain financial institutions. Other classes of
shares are offered and their performance will
vary due to differences in sales charges and
fees. Management has contractually undertaken to
waive fees and/or reimburse Fund Expenses through
December 31, 2007. Returns would have been less
if full management fees and expenses were applied.
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Aquila Three Peaks High Income Fund

• Risk / Return Benefit of Low Correlation
• Extensive Research Risk Management
• Sell Discipline
• 18 Years of Investment Industry Experience
• ____________________________________
• Class A Shares ATPAX
• Class C Shares ATPCX
• Class Y Shares ATPYX
• Class I Shares ATIPX
• www.aquilafunds.com
• 800-437-1020

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AQUILA INVESTMENT MANAGEMENT LLC

• EXPERTISE IN NICHE MARKETS
• DEDICATED TO PROVIDING SUPERIOR SERVICE
• High Yield Corporate Bond Fund
• AQUILA THREE PEAKS HIGH INCOME FUND
• Single-State Municipal Bond Funds
• ARIZONA, COLORADO, HAWAII, KENTUCKY, OREGON,
  RHODE ISLAND, UTAH
• Equity Fund
• AQUILA ROCKY MOUNTAIN EQUITY FUND
• CLASS A, C, Y and I SHARES

Before investing in any of the Aquila Group of
FundsSM, carefully read about and consider the
investment objectives, risks, charges, expenses
and other information found in the Fund
prospectus. Obtain a prospectus from your
financial professional or contact AQUILA GROUP
OF FUNDSSM 800-437-1020 www.aquilafunds.com
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Conclusion

• Supporting your Success
• Dedicated Management Team
• Exceptional Marketing and Service Team
• Highly Motivated Teamwork

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AQUILA THREE PEAKS HIGH INCOME FUND