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AQUILA THREE PEAKS HIGH INCOME FUND

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  1. THE AQUILA GROUP OF FUNDS SM AQUILA THREE PEAKS HIGH INCOME FUND

  2. Please Note • Information contained in this document must be preceded or accompanied by a copy of the Fund’s 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 investor’s 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 Fund’s 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.

  3. 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.

  4. Introduction Aquila Investment Management, LLC and Three Peaks Capital Management, LLC create Aquila Three Peaks High Income Fund

  5. 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

  6. Sandy Rufenacht CEO / CIO / PM Todd Telesz Research Analyst Nora Seibert-Dispense Trader / Desk Analyst Kim Collins Chief Compliance Officer Brent Olson Director of Research Assistant PM Ashley Gapuzan Client Services David Battilega Research Analyst Andrew Bauman Research Analyst Three Peaks Capital Management Team

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

  8. Agenda The High Yield Market Today The Case for High Yield Bonds Aquila Three Peaks High Income Fund

  9. Agenda The High Yield Market Today The Case for High Yield Bonds Aquila Three Peaks High Income Fund

  10. 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.

  11. 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

  13. 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

  14. 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. Incremental Return 15.36% vs. 12.85% Incremental Volatility 6.17% vs. 11.57% 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

  17. 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. Incremental Return 8.75% vs. -1.74% Incremental Volatility 8.03% vs. 15.27% 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

  20. 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

  21. The Case for High Yield BondsVolatility of Returns Lehman U.S. Corp. High Yield and S&P 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 S&P 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

  22. Lehman U.S Corp. High Yield Bond Index Growth of $100 Yield on 10-yr. U.S. Treasury 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

  23. 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

  24. 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

  25. 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

  26. The Case for High Yield Bonds Tying It All Together High Yield Spreads High Yield Average Annual Returns High Yield Default Rates Source: JPMorgan North American High Yield Research, 2006 High-Yield Annual Review, 12/06

  27. Coupon interest represented 26% of the 2006 Total Demand for High Yield Bonds 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

  28. 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.

  29. Agenda The High Yield Market Today The Case for High Yield Bonds Aquila Three Peaks High Income Fund

  30. 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

  31. 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

  32. 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

  33. Moderate Aggressive Conservative • Better Known • Seasoned Issuer • Start up • Construction • Yield to Call Aquila Three Peaks High Income FundPortfolio Construction Lower Risk 20% to 50% Core Portfolio 30% to 75% Higher Return 0% to 20%

  34. Three Peaks Capital Management, LLCLessons to live by • Caveat emptor – if you cannot understand the credit, don’t 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 I’s and cross all T’s. Don’t get scooped, get the scoop!!! • 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.

  35. Aquila Three Peaks High Income FundA Time-tested Strategy Aquila Three Peaks High Income Fund and your investment strategy

  36. Aquila Three Peaks High Income Fund December 31, 2007

  37. Largest Holdings Las Vegas Sands 6.375%, ‘15 Direct TV Holdings 8.375%, ‘13 CSC Holdings Inc 7.25%, ‘08 Felcor Lodging LP 7.25%, ‘11 HCA Inc 6.75%, ‘13 Mandalay Resort 7.625%, ‘13 Aramark Corp 8.50%, ‘15 Corrections Corp 7.50%, ‘11 Ball Corp 6.875%, ‘12 GSC Holding Corp 8.00%, ‘12 5.77% 5.38% 3.13% 3.10% 2.90% 2.21% 1.99% 1.93% 1.92% 1.79% Aquila Three Peaks High Income Fund September 30, 2007

  38. 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 investor’s 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.

  39. 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

  40. 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

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

  42. THE AQUILA GROUP OF FUNDS SM AQUILA THREE PEAKS HIGH INCOME FUND