Each of the municipal bond funds offered in the Aquila Group of Funds adheres to an investment strategy focused on investment grade bonds as a means of managing credit risk, and an intermediate average portfolio maturity as a means of managing interest rate risk. In keeping with our emphasis on high-quality holdings, the seven state-specific municipal bond funds offered by Aquila have no Puerto Rico holdings, whereas Morningstar has reported that over 20% of US Bond Funds had roughly an $11.3 billion total exposure to Puerto Rico debt as of 3/31/15; down from two-thirds of funds having exposure a year ago.
On Monday June 29th, Puerto Rico’s Governor Alejandro Garcia Padilla announced that the territory’s approximately $73 billion in municipal debt is unpayable and called for concessions from creditors. Moody’s downgraded Puerto Rico’s general obligation debt into junk territory with a negative outlook on July 1, 2015, which was the seventh downgrade in five years.
On the Aquila Group of Funds website, you will find information regarding the investment strategies and full portfolio holdings of each state-specific municipal bond fund. The investment objectives, risks, charges, expenses, and other information will be found in the Fund prospectus. Information on the Fund holdings will be found in the Fact Sheet, Annual and Semi-Annual reports, and the Portfolio Holdings report. We encourage you to review this information, and to visit the web site frequently for updates on each fund, and our perspectives on the markets.