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 811-6239
Tax-Free Fund for Utah
(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: 6/30
Date of reporting period: 6/30/05
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL
REPORT
JUNE 30, 2005
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BULDERS WITH
THE SUN RISING BEHIND THEM] (SM)
TAX-FREE FUND FOR
UTAH
A TAX-FREE INCOME INVESTMENT
[LOGO OF THE AQUILA
GROUP OF FUNDS: ONE OF THE
AN EAGLE'S HEAD] AQUILA(SM) GROUP OF FUNDS
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BULDERS WITH
THE SUN RISING BEHIND THEM] (SM)
SERVING UTAH INVESTORS FOR MORE THAN A DECADE
TAX-FREE FUND FOR UTAH
"DON'T WAIT UNTIL TOMORROW"
August, 2005
Dear Fellow Shareholder:
Are there things that you wish that you had done today? Yesterday? 10
years ago? We are all guilty of sometimes putting off to tomorrow things we
really should do today. However, when it comes to investing for one's retirement
and future needs, any delay can prove to be extremely costly.
LIFE EXPECTANCY
As you probably know, continuing advances in medicine and a renewed focus
on healthier life styles have contributed to life expectancy in the United
States reaching an all-time high. The average American can now expect to live
77.6 years. It probably won't surprise you to learn that this increase is in
keeping with historical trends. U.S. life expectancies have risen an average of
2/10th of a year, each and every year since 1990.
AN OPTIMISTIC, YET REALISTIC APPROACH
While it is certainly always hoped for, and may be fully expected, that
plans will come to fruition in exactly the manner anticipated, it is always best
to also have a realistic approach to most future dealings - especially when it
comes to investing and one's retirement planning.
INADEQUACY OF SOCIAL SECURITY -- Coupled with a population that is living
longer is a society which is reproducing less. This is creating a phenomenon
known as "global aging." It is anticipated that before too long, the number of
retired persons will outweigh the number of individuals in the workforce. This
situation may well wreak havoc with the Social Security system.
While we may not realize the full impact of global aging in our lifetimes,
it does bring to light that perhaps it may not be wise to rely solely on Social
Security for one's retirement needs. Many financial experts suggest that one
should plan to have 75% - 80% of their current income available at retirement so
that they can maintain their current standard of living. For many people, Social
Security alone will not even come close to providing this suggested percentage,
if it truly is an accurate estimate.
PRECARIOUSNESS OF PENSION PLANS -- When you read about such industry
leaders as Bethlehem Steel, United Airlines, Enron and WorldCom having
significant financial problems, it reminds us all that our corporate pension
plans may not be 100% safe. Therefore, relying solely upon income from corporate
pension plans for retirement may also not necessarily be a wise thing to do.
INFLATION -- With so much uncertainty in this world today, going back to
the olden days of "placing your savings under your mattress for safe-keeping"
might not seem like such a bad idea. However, while this method is better than
not saving at all, it does not take into consideration the effect of an often
overlooked risk factor - inflation. A dollar placed safely under one's mattress
today may still be there in a few years. But, it is unlikely that it will still
have the same purchasing power that it does today. The dollar may still look and
feel the same as it did when it was first tucked away. But, in actuality,
inflation will most likely take a bite out of its purchasing power. In other
words, it will no longer have the same "bang for the buck."
As you probably are aware, the Consumer Price Index (CPI) measures the
average price of a 'basket' of goods and services at regular intervals. It
should come as no surprise to you that the cost for that basket of goods and
services continues to rise year after year. In fact, as you will note from the
chart below, in the past 20 years, the CPI has come very close to doubling.
YEAR CPI
---- ---
1985 $105.5
1990 $127.4
1995 $150.3
2000 $168.8
2005 $190.7
As you can see, each dollar buys substantially less each year. So, while
one may have enough money to cover their living expenses right at the moment, it
is also important to ask oneself if you will be able to say the same thing 10,
20 or more years from now.
PLAN AHEAD AND DIVERSIFY
Unfortunately, many of us probably know a retired person who has been
forced back to work in order to keep up with their living expenses. And, we may
know someone who has had to adopt a diminished life style in order to keep their
expenses under control.
Our best advice for everyone in order to avoid these types of situations
is to:
1) sit down with a financial professional and develop a sound financial
plan;
2) start saving as early as possible;
3) have a diversified portfolio of investments; and
4) have a diversified pool of resources to rely upon for your
retirement, not depending solely on Social Security or a pension
plan.
No matter where you choose to place your cash reserves - in Tax-Free Fund
For Utah or elsewhere - don't wait until tomorrow to prepare for your future. If
you haven't already done so, start a savings plan today that will, hopefully,
enable you to reach your goals.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
President Founder
NOT A PART OF THE ANNUAL REPORT
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BULDERS WITH
THE SUN RISING BEHIND THEM] (SM)
SERVING UTAH INVESTORS FOR MORE THAN A DECADE
TAX-FREE FUND FOR UTAH
ANNUAL REPORT
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
Over the past twelve months, we have certainly seen our share of memorable
world events andThe national economy has recently not been as predictable as in
past years. While the Federal Reserve aggressively continues its mandate to keep
inflation under control while ensuring that the economy doesn't slip into a
recession, short-term interest rates continue to rise as long-term rates (ten
years and longer) fall to near-record lows. We have been witness to a myriad of
economic events that delight and confound us all! On the one hand, we are
heartened by the surprisingly low inflation rates, recently expanding industrial
production, and retail sales. On the other hand, we are paying more at the gas
pump than we have in a number of years.
As we head toward the end of 2005, it is widely believed that the Federal
Reserve will raise short-term rate targets even higher. The most recently
announced unemployment report covering the month ended May 31, 2005, indicates a
rate of 5.0%, the lowest since September 2001. Other measures of economic
progress, such as retail sales (up 1.7% for June 2005), housing starts
(approaching historical highs), and industrial production (up 0.9% for June
2005) are also pointing to a reasonably sustainable recovery. Historically, as
we have seen progress on the economic front, there has been the fear that a
higher level of inflation will rear its ugly head. However, recent increases in
both the Producer Price Index ("PPI") and the Consumer Price Index ("CPI") have
been modest, with both indices unchanged for the month of June. For the year
ended June 30, 2005, the CPI is up 2.5%, in spite of record oil prices. The
Gross Domestic Product is currently on an annual growth pace of 3.25% through
the second quarter of 2005.
The Class A share of Tax-Free Fund For Utah experienced a rise in net
asset value per share of 3.53% for the 12-month period ended June 30, 2005. The
Fund's Class A share value was $9.91 on July 1, 2004 and $10.26 on June 30,
2005. A typical AA-rated general obligation with a 15-year maturity has fallen
in yield from 4.59% to 4.05% over that same period.
Equity performance for the 12 months ended June 30, 2005 was relatively
mixed. The Dow Jones Industrial Average was up 0.65%; the S&P 500 Index was up
6.32%; and the NASDAQ Composite Index was up 1.10% - all showing rather
lackluster performance versus their respective previous 12 month performance.
Historically, as the economy has grown, commodity prices and interest
rates have begun to rise. While these increases have been modest to date, we
continue to monitor any changes and position Tax-Free Fund For Utah's portfolio
accordingly. To address the concerns raised by an increase in the overall level
of interest rates, we take great care in the selection of the individual
MANAGEMENT DISCUSSION OF FUND PERFORMANCE (CONTINUED)
bonds purchased for the Fund. We will seek to continue to add high quality,
intermediate maturity Utah municipal bonds that best meet our demanding
standards.
The investment objective of Tax-Free Fund For Utah is to provide as high a
level of double tax-exempt current income as is consistent with the preservation
of capital. We believe this objective continues to be successfully addressed by
our adherence to a discipline of solid fundamental, conservative portfolio
management ideals. As of the fiscal year ended June 30, 2005, the Fund continued
to maintain an average quality rating of "AA", with over 76% of the portfolio
rated "AAA". The Fund's laddered maturity structure helps us manage price
volatility. At June 30, 2005, the portfolio had an average life of approximately
13.5 years and a modified duration of 5.37 years. We seek to maintain a
well-diversified portfolio, which consisted of 276 different issues at year end,
of which 100% were in Utah and reciprocal states (based on current Utah tax
laws).
With the national and local economies showing improvement, we will remain
vigilant and do whatever is necessary as we strive to continue to meet the
Fund's investment objective. We will seek to "stay the course" and manage the
portfolio by taking advantage of opportunities in the Utah marketplace that are
consistent with the high standards of your Fund.
PERFORMANCE REPORT
The following graph illustrates the value of $10,000 invested in the Class
A shares of Tax-Free Fund For Utah for the 10-year period ended June 30, 2005 as
compared with the Lehman Brothers Quality Intermediate Municipal Bond Index and
the Consumer Price Index (a cost of living index). 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 Lehman Index does not include any operating expenses
nor sales charges and being nationally oriented, does not reflect state specific
bond market performance.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL]
CPI TFTA no sales TFTA w sales Lehman
6/95 10000 10000 9600 10000
6/96 10275 10472 10055 10556
6/97 10511 11338 10887 11278
6/98 10689 12209 11723 12061
6/99 10898 12446 11950 12427
6/00 11305 12716 12209 12928
6/01 11672 13827 13276 14070
6/02 11797 14700 14115 15048
6/03 12046 16007 15370 16225
6/04 12439 15855 15224 16281
6/05 12754 16994 16317 17158
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 2005
-------------------------------------------
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
------ ------- -------- ---------
Class A (7/24/92)
With Sales Charge ............. 3.77% 5.90% 5.42% 5.54%
Without Sales Charge .......... 8.06 6.76 5.85 5.87
Class C (5/21/96)
With CDSC ..................... 6.17 5.83 n/a 4.79
Without CDSC .................. 7.20 5.83 n/a 4.79
Class Y (5/21/96)
No Sales Charge ............... 8.27 6.96 n/a 6.00
Lehman Index .................... 5.39 5.83 5.55 5.68* (Class A)
5.36** (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%
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. A portion of each
class's income may be subject to federal and state income taxes and/or the
federal alternative minimum tax. Past performance is not predictive of future
investment results.
* From commencement of operations on 7/24/92.
** From commencement of operations on 5/21/96.
- --------------------------------------------------------------------------------
[LOGO OF KPMG LLP: FOUR SOLID
RECTANGLES WITH THE LETTERS KPMG
IN FRONT]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Tax-Free Fund For Utah:
We have audited the accompanying statement of assets and liabilities of
Tax-Free Fund For Utah, including the schedule of investments, as of June 30,
2005, and 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 June 30, 2005, by
correspondence with the custodian and brokers, or by other appropriate auditing
procedures where replies from brokers were not received. 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
Tax-Free Fund For Utah as of June 30, 2005, and 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.
/s/ KPMG LLP
New York, New York
August 12, 2005
- --------------------------------------------------------------------------------
TAX-FREE FUND FOR UTAH
SCHEDULE OF INVESTMENTS
JUNE 30, 2005
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (21.4%) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
CITY, COUNTY AND STATE (10.8%)
American Fork City, Utah
$ 610,000 5.000%, 12/01/14 FGIC Insured (pre-refunded) ........... Aaa/NR $ 642,415
645,000 5.000%, 12/01/15 FGIC Insured (pre-refunded) ........... Aaa/NR 679,275
Anderson, Indiana San. District
505,000 4.600%, 07/15/23 AMBAC Insured ......................... Aaa/AAA 522,342
Brian Head, Utah
530,000 5.000%, 08/01/19 XLCA Insured .......................... Aaa/NR 575,850
405,000 6.500%, 03/15/24 ....................................... NR/NR* 477,098
Cedar City, Utah Special Improvement
District Assessment
235,000 5.050%, 09/01/10 ....................................... NR/NR* 244,045
215,000 5.200%, 09/01/11 ....................................... NR/NR* 225,825
Clearfield City, Utah
2,095,000 5.125%, 02/01/18 MBIA Insured (pre-refunded) ........... Aaa/AAA 2,217,034
Coral Canyon, Utah Special Service District
580,000 5.700%, 07/15/18 ....................................... NR/NR* 602,400
Hurricane, Utah
295,000 5.400%, 11/01/09 Radian Insured ........................ NR/AA 319,240
Mckinney, Texas
1,700,000 4.500%, 08/15/23 XLCA Insured .......................... Aaa/AAA 1,733,167
Mesquite, Texas
510,000 4.625%, 02/15/22 FSA Insured ........................... Aaa/AAA 524,530
Nevada State
965,000 4.500%, 08/01/21 FSA Insured ........................... Aaa/AAA 998,650
St. George, Utah
100,000 5.375%, 08/01/21 FGIC Insured (pre-refunded) ........... Aaa/AAA 106,293
Salt Lake City, Utah
120,000 5.750%, 06/15/17 (pre-refunded) ........................ Aaa/NR 134,990
San Antonio, Texas
125,000 4.750%, 02/01/24 FSA Insured ........................... Aaa/AAA 129,006
Spokane County, Washington
420,000 4.500%, 12/01/23 MBIA Insured .......................... Aaa/AAA 430,941
Waco, Texas
2,560,000 4.500%, 02/01/24 MBIA Insured .......................... Aaa/AAA 2,592,717
Washington County, Utah
1,250,000 5.000%, 10/01/22 MBIA Insured .......................... Aaa/NR 1,340,775
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
CITY, COUNTY AND STATE (CONTINUED)
Washington State
$ 3,315,000 4.500%, 01/01/22 MBIA Insured .......................... Aaa/AAA $ 3,387,731
605,000 4.500%, 07/01/23 FSA Insured ........................... Aaa/AAA 609,029
-------------
Total City, County and State 18,493,353
-------------
SCHOOL DISTRICT (10.6%)
Alpine, Utah School District
375,000 5.000%, 03/15/12 (pre-refunded) ........................ Aaa/NR 413,509
Carbon County, Utah School District
800,000 5.000%, 06/15/21 ....................................... Aaa/NR 849,304
Dallas, Texas Independent School District
2,500,000 5.000%, 08/15/29 ....................................... Aaa/AAA 2,655,800
Davis County, Utah School District
575,000 5.000%, 06/01/15 (pre-refunded) ........................ Aaa/NR 634,478
250,000 5.100%, 06/01/16 (pre-refunded) ........................ Aaa/NR 278,875
675,000 5.150%, 06/01/17 (pre-refunded) ........................ Aaa/NR 755,035
Eagle Mountain & Saginaw, Texas Independent
School District
525,000 4.750%, 08/15/23 ....................................... Aaa/AAA 545,926
Frisco, Texas Independent School District
1,260,000 5.000%, 07/15/26 ....................................... Aaa/NR 1,342,858
Navasota, Texas Independent School District
475,000 5.000%, 08/15/23 FGIC Insured .......................... Aaa/NR 508,692
Nebo, Utah School District
440,000 5.500%, 07/01/11 (pre-refunded) ........................ Aaa/AAA 490,371
North Summit County, Utah School District
760,000 5.000%, 02/01/23 ....................................... Aaa/NR 818,512
800,000 5.000%, 02/01/24 ....................................... Aaa/NR 857,184
Rich County, Utah School District
120,000 5.500%, 12/15/09 ....................................... NR/NR* 121,361
100,000 5.600%, 12/15/10 ....................................... NR/NR* 100,915
Salt Lake City, Utah School District
265,000 5.000%, 03/01/21 (pre-refunded) ........................ Aaa/NR 293,034
Tooele County, Utah School District
670,000 4.000%, 06/01/20 ....................................... Aaa/AAA 657,431
Washington County, Utah
440,000 5.000%, 10/01/18 XLCA Insured .......................... Aaa/NR 480,779
465,000 5.000%, 10/01/19 XLCA Insured .......................... Aaa/NR 507,720
490,000 5.000%, 10/01/20 XLCA Insured .......................... Aaa/NR 533,022
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
SCHOOL DISTRICT (CONTINUED)
Washington County, Utah (continued)
$ 510,000 5.000%, 10/01/21 XLCA Insured .......................... Aaa/NR $ 553,131
535,000 5.000%, 10/01/22 XLCA Insured .......................... Aaa/NR 578,517
565,000 5.000%, 10/01/23 XLCA Insured .......................... Aaa/NR 609,143
320,000 5.000%, 10/01/24 XLCA Insured .......................... Aaa/NR 343,722
Weber County, Utah School District
750,000 5.000%, 06/15/18 ....................................... Aaa/NR 806,115
825,000 5.000%, 06/15/20 ....................................... Aaa/NR 894,655
Weber County, Utah School District Series B
1,485,000 5.000%, 06/15/21 ....................................... Aaa/NR 1,576,521
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Total School District 18,206,610
-------------
Total General Obligation Bonds 36,699,963
-------------
REVENUE BONDS (76.8%)
EDUCATION (13.8%)
Clinton Prairie, Indiana Community School Building
675,000 4.625%, 01/15/19 FGIC Insured .......................... NR/AAA 712,982
Florida State Board Education Public Education
210,000 4.500%, 06/01/25 FSA Insured ........................... NR/AAA 215,567
Laredo, Texas Independent School District
Public Facility Corp.
190,000 5.000%, 08/01/24 AMBAC Insured ......................... Aaa/AAA 199,831
Raven Hills, Texas Higher Education Housing
& Education Revenue
215,000 5.000%, 06/01/26 AMBAC Insured ......................... Aaa/NR 225,045
St. Joseph County, Indiana Educational
Facilities Revenue
100,000 5.000%, 03/01/27 ....................................... Aaa/NR 102,412
Salt Lake County, Utah Westminster College Project
115,000 5.050%, 10/01/10 ....................................... NR/BBB 121,688
100,000 5.500%, 10/01/19 ....................................... NR/BBB 104,706
1,200,000 5.000%, 10/01/22 ....................................... NR/BBB 1,233,816
1,250,000 5.000%, 10/01/25 ....................................... NR/BBB 1,276,025
1,000,000 5.750%, 10/01/27 ....................................... NR/BBB 1,045,500
Southern Utah University Revenue
375,000 6.300%, 06/01/16 ....................................... NR/NR* 386,243
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
EDUCATION (CONTINUED)
Texas State College Student Loan Revenue
$ 100,000 5.000%, 08/01/22 AMT ................................... Aa1/AA $ 103,463
Tyler, Texas Independent School District
325,000 5.000%, 02/15/26 FSA Insured ........................... Aaa/AAA 347,490
University of Nevada University Revenues
190,000 4.500%, 07/01/24 MBIA Insured .......................... Aaa/AAA 195,375
University of Utah Revenue Refunding
(Biology Research Facilities)
200,000 5.500%, 04/01/11 MBIA Insured (pre-refunded) ........... Aaa/AAA 206,186
Utah State Board Regents Dixie State College
115,000 5.500%, 05/01/1/13 MBIA Insured ........................ Aaa/AAA 129,733
120,000 5.500%, 05/01/1/14 MBIA Insured ........................ Aaa/AAA 135,373
130,000 5.500%, 05/01/1/15 MBIA Insured ........................ Aaa/AAA 147,077
400,000 5.100%, 05/01/1/21 MBIA Insured ........................ Aaa/AAA 428,476
Utah State Board Regents Office Facility Revenue
450,000 5.050%, 02/01/20 MBIA Insured .......................... Aaa/AAA 480,263
360,000 5.125%, 02/01/22 MBIA Insured .......................... Aaa/AAA 385,117
Utah State Board Regents Revenue
2,885,000 4.500%, 08/01/18 MBIA Insured++ ........................ Aaa/AAA 3,015,690
Utah State Board Regents Revenue University of Utah
1,045,000 5.000%, 04/01/23 MBIA Insured .......................... Aaa/AAA 1,128,527
Utah State Board Regents Salt Lake
Community College
1,260,000 5.500%, 06/01/16 FSA Insured ........................... Aaa/AAA 1,396,130
Utah State Board Regents University Utah-Auxiliary
& Campus Revenue
895,000 5.250%, 04/01/12 MBIA Insured .......................... Aaa/AAA 957,435
1,015,000 5.000%, 04/01/20 MBIA Insured (pre-refunded) ........... Aaa/AAA 1,056,006
Utah State Board Regents University of Utah
Hospital Revenue
2,030,000 5.500%, 08/01/17 MBIA Insured (pre-refunded) ........... Aaa/AAA 2,290,429
905,000 5.000%, 05/01/19 AMBAC Insured ......................... Aaa/AAA 976,549
3,595,000 5.000%, 08/01/19 MBIA Insured .......................... Aaa/AAA 3,822,779
Weber State University, Utah Revenue
100,000 5.250%, 04/01/24 FSA Insured ........................... NR/AAA 107,060
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
EDUCATION (CONTINUED)
Weber State University, Utah Revenue Student
Facilities System Series A
$ 300,000 5.100%, 04/01/16 ....................................... NR/AA $ 326,142
425,000 5.250%, 04/01/19 ....................................... NR/AA 464,580
-------------
Total Education 23,723,695
-------------
HEALTHCARE (2.2%)
Harris County, Texas Health Facility Development Corp.
145,000 5.000%, 11/15/28 AMBAC Insured ......................... NR/AAA 150,226
Murray City, Utah Hospital Revenue
595,000 5.000%, 05/15/22 MBIA Insured .......................... Aaa/AAA 607,263
Salt Lake County, Utah Hospital Revenue -
IHC Hospitals, Inc.
500,000 5.500%, 05/15/13 AMBAC Insured ......................... Aaa/AAA 555,205
Tarrant County, Texas Health Facilities Revenue
230,000 5.000%, 02/15/26 MBIA Insured .......................... Aaa/AAA 236,842
Utah County, Utah Hospital Revenue,
IHC Health Services
1,935,000 5.250%, 08/15/21 MBIA Insured ETM ...................... Aaa/AAA 2,017,934
Utah State Board Regents Revenue University of
Utah Hospital Revenue
310,000 5.000%, 08/01/21 MBIA Insured .......................... Aaa/AAA 328,262
-------------
Total Healthcare 3,895,732
-------------
HOUSING (3.9%)
Indiana State Housing Finance Authority Single Family
290,000 4.850%, 07/01/22 AMT ................................... Aaa/NR 296,963
Provo City, Utah Housing Authority
500,000 5.800%, 07/20/22 GNMA Collateralized ................... Aaa/NR 521,050
Utah Housing Corporation Single Family Housing
280,000 4.000%, 07/01/11 AMT ................................... Aaa/AAA 281,184
65,000 5.250%, 07/01/23 AMT ................................... Aa2/AA 66,396
Utah Housing Corporation Single Family Mortgage
315,000 5.150%, 07/01/23 AMT ................................... Aaa/AAA 320,503
945,000 5.100%, 01/01/26 AMT ................................... Aa3/AA- 966,385
Utah State Housing Agency Housing Revenue
145,000 5.650%, 07/01/27 AMT ................................... Aa2/AA 150,887
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
HOUSING (CONTINUED)
Utah State Housing Corporation Single Family
Housing Revenue
$ 1,475,000 5.125%, 07/01/24 AMT ................................... Aa3/AA- $ 1,506,609
Utah State Housing Finance Agency
5,000 6.600%, 07/01/11 Series E-1 ............................ NR/AA 5,000
15,000 6.350%, 07/01/11 Mezzanine Series G-1 .................. AAA/NR 15,052
10,000 6.350%, 07/01/12 AMBAC Insured AMT .................... Aaa/AAA 10,036
10,000 6.150%, 07/01/16 Senior Issue A-1 ...................... Aaa/AAA 10,250
170,000 5.650%, 07/01/16 Series 1994C .......................... Aaa/AAA 174,819
65,000 5.400%, 07/01/16 AMT ................................... Aa2/AA 66,250
110,000 6.000%, 07/01/17 AMT ................................... Aaa/AA 113,057
890,000 5.500%, 07/01/18 AMT ................................... Aa3/AA- 930,157
130,000 5.300%, 07/01/18 AMT ................................... Aaa/AAA 136,700
115,000 5.000%, 07/01/18 AMT ................................... Aaa/AAA 117,748
260,000 5.400%, 07/01/20 AMT ................................... Aa2/AA 268,606
415,000 5.600%, 07/01/23 AMT ................................... Aa2/AA 427,720
145,000 5.700%, 07/01/26 MBIA Insured .......................... Aaa/AAA 145,634
Wyoming Community Development Authority
Housing Revenue
120,000 5.000%, 12/01/22 ....................................... Aa1/AA+ 124,733
-------------
Total Housing 6,655,739
-------------
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (0.4%)
Sandy City, Utah Industrial Development, H Shirley
Wright Project, Refunding Bonds, LOC Olympus Bank
250,000 6.125%, 08/01/16 ....................................... NR/AAA 250,642
Utah County Environmental Improvement Revenue
435,000 5.050%, 11/01/17 ....................................... Baa1/BBB+ 465,085
-------------
Total Industrial Development & Pollution Control 715,727
-------------
LEASE (6.8%)
Celebration Community Development District, Florida
290,000 5.000%, 05/01/22 MBIA Insured .......................... Aaa/AAA 310,613
Marion County, Indiana Convention & Recreational
Facilities Authority Revenue
390,000 5.000%, 06/01/27 MBIA Insured .......................... Aaa/AAA 402,207
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
LEASE (CONTINUED)
Murray City, Utah Municipal Building Revenue
$ 520,000 5.050%, 12/01/15 AMBAC Insured ......................... Aaa/NR $ 563,997
Salt Lake County, Utah Municipal Building
Authority, Lease Revenue
100,000 5.400%, 10/01/19 (pre-refunded) ........................ Aa1/AA+ 109,143
320,000 5.400%, 10/15/19 AMBAC Insured (pre-refunded) .......... Aaa/AAA 353,674
3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) .......... Aaa/AAA 4,349,475
Utah County, Utah Municipal Building
Authority, Lease Revenue
120,000 5.500%, 11/01/16 AMBAC Insured ......................... Aaa/NR 133,135
240,000 5.500%, 11/01/17 AMBAC Insured ......................... Aaa/NR 265,841
Utah State Building Ownership Authority
1,350,000 5.250%, 05/15/20 FSA Insured (pre-refunded) ............ Aaa/AAA 1,441,733
1,080,000 5.000%, 05/15/25 ....................................... Aa1/AA+ 1,156,507
Washington County - St. George, Utah Interlocal
Agency Revenue
1,000,000 5.125%, 12/01/17 AMBAC Insured ......................... NR/AAA 1,056,510
100,000 5.125%, 12/01/22 AMBAC Insured ......................... NR/AAA 105,365
West Bountiful, Utah Courthouse Revenue
410,000 5.000%, 05/01/19 ....................................... NR/A- 447,704
West Valley City, Utah
865,000 5.000%, 08/01/21 AMBAC Insured ......................... Aaa/AAA 923,275
-------------
Total Lease 11,619,179
-------------
TAX REVENUE (26.9%)
Bay County, Florida Sales Tax Revenue
175,000 4.750%, 09/01/23 FSA Insured ........................... Aaa/NR 179,630
Bluffdale City, Utah Series 2004
295,000 6.000%, 12/01/13 ....................................... NR/NR* 295,286
310,000 6.000%, 12/01/14 ....................................... NR/NR* 310,301
330,000 6.000%, 12/01/15 ....................................... NR/NR* 330,386
350,000 6.000%, 12/01/16 ....................................... NR/NR* 350,410
370,000 6.000%, 12/01/17 ....................................... NR/NR* 370,433
395,000 6.000%, 12/01/18 ....................................... NR/NR* 395,494
420,000 6.000%, 12/01/19 ....................................... NR/NR* 420,525
Bluffdale, Utah Sales Tax Revenue
2,110,000 5.500%, 08/01/23 ....................................... NR/NR* 2,151,609
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
Bountiful, Utah Special Improvement District
Special Assessment Revenue
$ 203,000 5.000%, 06/01/14 ....................................... NR/NR* $ 203,126
213,000 5.150%, 06/01/15 ....................................... NR/NR* 213,198
224,000 5.300%, 06/01/16 ....................................... NR/NR* 224,172
236,000 5.500%, 06/01/17 ....................................... NR/NR* 236,271
249,000 5.650%, 06/01/18 ....................................... NR/NR* 249,354
Brian Head, Utah Special Service Improvement
District Revenue
410,000 5.350%, 11/01/12 ....................................... NR/NR* 421,800
Cache County, Utah Sales Tax Revenue
500,000 5.000%, 12/15/14 FGIC Insured .......................... Aaa/AAA 547,725
670,000 5.000%, 12/15/16 FGIC Insured .......................... Aaa/AAA 729,831
600,000 5.000%, 12/15/17 FGIC Insured .......................... Aaa/AAA 649,512
510,000 5.000%, 12/15/18 FGIC Insured .......................... Aaa/AAA 548,653
830,000 5.000%, 12/15/19 FGIC Insured .......................... Aaa/AAA 892,906
Clearfield, Utah Sales Tax Revenue
590,000 5.000%, 07/01/18 FGIC Insured .......................... Aaa/AAA 640,062
620,000 5.000%, 07/01/19 FGIC Insured .......................... Aaa/AAA 669,947
650,000 5.000%, 07/01/20 FGIC Insured .......................... Aaa/AAA 699,582
Coral Canyon, Utah Special Service District
110,000 5.000%, 07/15/13 ....................................... NR/NR* 115,331
250,000 5.500%, 07/15/18 ....................................... NR/NR* 261,708
Davis County, Utah Sales Tax Revenue
1,470,000 5.150%, 10/01/18 AMBAC Insured ......................... NR/AAA 1,609,400
Jordanelle, Utah Special Service District
186,000 5.000%, 11/15/14 ....................................... NR/NR* 189,322
196,000 5.100%, 11/15/15 ....................................... NR/NR* 199,800
206,000 5.200%, 11/15/16 ....................................... NR/NR* 209,473
216,000 5.300%, 11/15/17 ....................................... NR/NR* 219,635
228,000 5.400%, 11/15/18 ....................................... NR/NR* 231,969
240,000 5.500%, 11/15/19 ....................................... NR/NR* 244,171
253,000 5.600%, 11/15/20 ....................................... NR/NR* 257,230
268,000 5.700%, 11/15/21 ....................................... NR/NR* 272,390
283,000 5.800%, 11/15/22 ....................................... NR/NR* 287,627
299,000 6.000%, 11/15/23 ....................................... NR/NR* 303,868
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
Jordanelle, Utah Special Service Improvement District
$ 360,000 8.000%, 10/01/11 ....................................... NR/NR* $ 381,463
Lehi, Utah Sales Tax
610,000 5.000%, 06/01/21 FSA Insured ........................... Aaa/AAA 661,472
790,000 5.000%, 06/01/24 FSA Insured ........................... Aaa/AAA 848,658
Mountain Regional Water District, Utah Special
Assessment Revenue
1,935,000 7.000%, 12/01/18 ....................................... NR/NR* 1,998,410
Mountain Regional Water, Utah Special Service District
2,000,000 5.000%, 12/15/20 MBIA Insured .......................... Aaa/AAA 2,159,900
North Ogden, Utah Sales Tax Revenue
195,000 5.000%, 11/01/24 XLCA Insured .......................... Aaa/AAA 208,781
Orem, Utah Special Assessment Revenue
96,000 5.000%, 08/01/15 ....................................... NR/NR* 96,024
101,000 5.150%, 08/01/16 ....................................... NR/NR* 101,022
106,000 5.300%, 08/01/17 ....................................... NR/NR* 106,025
112,000 5.500%, 08/01/18 ....................................... NR/NR* 112,036
118,000 5.650%, 08/01/19 ....................................... NR/NR* 118,041
Pleasant Grove City, Utah Sales Tax Revenue
410,000 5.250%, 12/01/17 MBIA Insured .......................... Aaa/AAA 455,859
Salt Lake City, Utah Sales Tax Revenue
490,000 5.250%, 02/01/12 ....................................... NR/AAA 546,007
265,000 5.250%, 02/01/13 ....................................... NR/AAA 293,803
1,320,000 5.250%, 02/01/15 ....................................... NR/AAA 1,452,871
100,000 5.250%, 02/01/17 ....................................... NR/AAA 109,329
Salt Lake County, Utah Sales Tax Revenue
955,000 5.000%, 02/01/21 XLCA Insured .......................... NR/AAA 1,039,002
1,005,000 5.000%, 02/01/22 XLCA Insured .......................... NR/AAA 1,092,566
1,060,000 5.000%, 02/01/23 XLCA Insured .......................... NR/AAA 1,147,068
1,115,000 5.000%, 02/01/24 XLCA Insured .......................... NR/AAA 1,201,981
Sandy City, Utah Sales Tax Revenue
520,000 5.000%, 09/15/18 AMBAC Insured ......................... NR/AAA 558,579
605,000 5.000%, 09/15/20 AMBAC Insured ......................... NR/AAA 647,132
South Jordan, Utah Municipal Building Authority Revenue
290,000 5.375%,10/01/20 AMBAC Insured .......................... NR/AAA 320,186
South Jordan, Utah Sales Tax
570,000 5.000%, 08/15/15 AMBAC Insured ......................... Aaa/AAA 614,682
South Jordan, Utah Special Assignment
1,000,000 6.875%, 11/01/17 ....................................... NR/NR* 1,031,900
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
South Weber City, Utah
$ 525,000 5.000%, 01/15/24 MBIA Insured .......................... Aaa/AAA $ 561,430
Utah Water Finance Agency Revenue
775,000 5.100%, 07/01/18 AMBAC Insured ......................... Aaa/NR 835,318
510,000 5.000%, 07/01/18 AMBAC Insured ......................... Aaa/NR 551,448
260,000 5.000%, 06/01/19 MBIA Insured .......................... Aaa/AAA 270,158
685,000 5.000%, 07/01/19 AMBAC Insured ......................... Aaa/NR 740,184
Wasatch County, Utah Building Authority
130,000 5.000%, 10/01/15 ....................................... A3/NR 139,321
135,000 5.000%, 10/01/16 ....................................... A3/NR 144,092
Wasatch County, Utah Sales Tax Revenue
205,000 5.000%, 12/01/16 AMBAC Insured ......................... Aaa/AAA 223,220
210,000 5.000%, 12/01/17 AMBAC Insured ......................... Aaa/AAA 227,247
225,000 5.000%, 12/01/18 AMBAC Insured ......................... Aaa/AAA 242,122
Washington City, Utah Sales Tax Revenue
680,000 5.250%, 11/15/17 AMBAC Insured ......................... Aaa/AAA 756,704
Washoe County, Nevada Tax Revenue
210,000 5.000%, 12/01/23 MBIA Insured .......................... Aaa/AAA 220,153
Weber County Utah Sales Tax Revenue
385,000 5.000%, 07/01/23 AMBAC Insured ......................... Aaa/NR 413,001
West Valley City, Utah Redevelopment Agency Revenue
1,625,000 5.000%, 03/01/21 ....................................... NR/A- 1,715,318
320,000 5.000%, 03/01/22 ....................................... NR/A- 336,237
350,000 5.000%, 03/01/23 ....................................... NR/A- 366,072
1,000,000 5.000%, 03/01/24 ....................................... NR/A- 1,041,920
West Valley City, Utah Sales Tax Revenue ...............
800,000 5.500%, 07/15/17 MBIA Insured .......................... Aaa/AAA 883,488
250,000 5.000%, 07/15/20 AMBAC Insured ......................... Aaa/AAA 267,865
180,000 5.000%, 07/15/21 MBIA Insured .......................... Aaa/AAA 191,034
1,400,000 6.000%, 03/01/24 (pre-refunded) ........................ NR/A- 1,487,052
Woodland Hills, Utah Special Assessment Revenue
93,000 5.500%, 08/01/09 ....................................... NR/NR* 95,135
221,000 5.500%, 08/01/10 ....................................... NR/NR* 227,780
233,000 5.500%, 08/01/11 ....................................... NR/NR* 242,362
246,000 5.500%, 08/01/12 ....................................... NR/NR* 256,512
261,000 5.500%, 08/01/13 ....................................... NR/NR* 273,450
-------------
Total Tax Revenue 46,143,557
-------------
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
TRANSPORTATION (0.8%)
Port of Seattle, Washington Revenue
$ 100,000 5.100%, 04/01/24 AMT FGIC Insured ...................... Aaa/AAA $ 102,569
Utah Transit Authority Sales Tax &
Transportation Revenue
1,000,000 5.400%, 12/15/16 FSA Insured ........................... NR/AAA 1,066,360
100,000 5.000%, 06/15/21 FSA Insured ........................... Aaa/AAA 107,378
100,000 5.000%, 06/15/25 FSA Insured ........................... Aaa/AAA 105,983
-------------
Total Transportation 1,382,290
-------------
UTILITY (10.7%)
Indianapolis, Indiana Gas Utility Revenue
290,000 5.000%, 08/15/24 AMBAC Insured ......................... Aaa/AAA 302,957
Intermountain Power Agency Utilities
Light & Power Service, Utah
450,000 5.000%, 07/01/12 MBIA Insured ETM ...................... Aaa/AAA 456,102
1,470,000 5.250%, 07/01/15 MBIA Insured .......................... Aaa/AAA 1,576,369
90,000 5.000%, 07/01/16 ....................................... A1/A+ 93,144
425,000 5.000%, 07/01/18 FSA Insured ........................... Aaa/AAA 461,367
1,380,000 5.000%, 07/01/19 MBIA Insured .......................... Aaa/AAA 1,454,161
2,450,000 5.000%, 07/01/21 ....................................... A1/A+ 2,523,231
445,000 5.000%, 07/01/23 FSA Insured ........................... Aaa/AAA 458,341
Lower Colorado River Authority, Texas Revenue
175,000 5.000%, 05/15/26 FSA Insured ........................... Aaa/AAA 186,489
Manti City, Utah Electric System Revenue
603,000 5.750%, 02/01/17 ....................................... NR/NR* 633,120
Murray City, Utah Utility Electric Revenue
400,000 5.625%, 06/01/18 AMBAC Insured ......................... Aaa/NR 443,164
1,340,000 5.000%, 06/01/25 AMBAC Insured ......................... Aaa/NR 1,438,450
St. George, Utah Electric Revenue
1,910,000 4.500%, 06/01/20 FSA Insured ........................... Aaa/NR 1,984,223
Salem, Utah Electric Revenue
125,000 5.300%, 11/01/07 ....................................... NR/NR* 128,977
130,000 5.350%, 11/01/08 ....................................... NR/NR* 136,097
140,000 5.400%, 11/01/09 ....................................... NR/NR* 147,696
Seattle, Washington Municipal Light & Power Revenue
1,360,000 4.500%, 08/01/19 FSA Insured ........................... Aaa/AAA 1,420,738
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
UTILITY (CONTINUED)
Southern Utah Valley Power System Revenue
$ 210,000 5.250%, 09/15/13 MBIA Insured .......................... NR/AAA $ 234,874
225,000 5.250%, 09/15/14 MBIA Insured .......................... NR/AAA 251,651
235,000 5.250%, 09/15/15 MBIA Insured .......................... NR/AAA 262,041
185,000 5.125%, 09/15/21 MBIA Insured .......................... NR/AAA 199,563
Springville, Utah Electric Revenue
550,000 5.600%, 03/01/09 ....................................... Baa1/NR 582,285
Utah Assessed Municipal Power System Revenue
790,000 5.250%, 12/01/09 ....................................... NR/A- 844,265
1,000,000 5.000%, 04/01/21 FSA Insured ........................... Aaa/AAA 1,072,790
Washington, Utah Electric Revenue
985,000 5.000%, 09/01/21 XLCA Insured .......................... Aaa/NR 1,063,741
-------------
Total Utility 18,355,836
-------------
WATER AND SEWER (11.3%)
Ashley Valley, Utah
230,000 9.500%, 01/01/08 AMBAC Insured ......................... Aaa/AAA 247,583
Eagle Mountain, Utah Water and Sewer
750,000 5.800%, 11/15/16 ACA Insured ........................... NR/A 810,750
Granger and Hunter, Utah Improvement District
Water and Sewer
350,000 5.000%, 03/01/18 FSA Insured (pre-refunded) ............ Aaa/NR 369,908
Mesquite, Texas Waterworks & Sewer Revenue
225,000 4.500%, 03/01/24 FSA Insured ........................... Aaa/AAA 228,863
Murray City, Utah Sewer and Water Revenue
465,000 5.000%, 10/01/17 AMBAC Insured ......................... Aaa/NR 506,864
390,000 5.000%, 10/01/18 AMBAC Insured ......................... Aaa/NR 422,522
440,000 5.000%, 10/01/19 AMBAC Insured ......................... Aaa/NR 476,366
North Davis County, Utah Sewer District
1,330,000 5.375%, 03/01/18 AMBAC Insured (pre-refunded) .......... Aaa/NR 1,500,346
1,350,000 5.000%, 03/01/21 AMBAC Insured ......................... Aaa/NR 1,458,108
150,000 5.125%, 03/01/22 AMBAC Insured (pre-refunded) .......... Aaa/NR 166,983
Orem, Utah Water & Storm Sewer Revenue
1,720,000 4.500%, 07/15/17 MBIA Insured .......................... Aaa/AAA 1,815,168
Riverton, Utah Water Revenue
100,000 5.350%, 09/01/15 FGIC Insured (pre-refunded) ........... Aaa/NR 110,937
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
WATER AND SEWER (CONTINUED)
Salt Lake City, Utah Metropolitan Water Revenue
$ 1,200,000 5.375%, 07/01/24 AMBAC Insured (pre-refunded) .......... Aaa/AAA $ 1,311,036
125,000 5.375%, 07/01/29 AMBAC Insured (pre-refunded) .......... Aaa/AAA 136,566
Salt Lake City, Utah Water and Sewer Revenue
500,000 5.750%, 02/01/13 AMBAC Insured (pre-refunded) ......... Aaa/AAA 501,160
675,000 5.000%, 02/01/19 FSA Insured ........................... Aaa/AAA 732,726
845,000 5.000%, 02/01/20 FSA Insured ........................... Aaa/AAA 913,411
Salt Lake & Sandy, Utah Water District
1,000,000 5.000%, 07/01/20 AMBAC Insured ......................... Aaa/NR 1,084,280
Spanish Fork City, Utah Water Revenue
195,000 5.500%, 06/01/17 FSA Insured ........................... Aaa/NR 218,472
55,000 5.500%, 06/01/17 FSA Insured (pre-refunded) ............ Aaa/NR 62,704
Upper Trinity Regional Water District, Texas
205,000 4.500%, 08/01/20 AMBAC Insured ......................... Aaa/AAA 211,624
Utah Water Finance Agency Revenue
100,000 5.000%, 06/01/14 MBIA Insured .......................... Aaa/AAA 105,290
200,000 5.250%, 07/01/16 AMBAC Insured ......................... Aaa/NR 221,656
250,000 5.375%, 09/01/17 AMBAC Insured ......................... Aaa/NR 280,723
310,000 5.000%, 10/01/17 AMBAC Insured ......................... Aaa/NR 334,952
500,000 5.250%, 10/01/18 AMBAC Insured ......................... Aaa/NR 554,805
465,000 5.000%, 10/01/20 AMBAC Insured ......................... Aaa/NR 497,555
830,000 4.500%, 10/01/22 AMBAC Insured ......................... Aaa/NR 855,041
100,000 5.125%, 07/01/23 AMBAC Insured ......................... Aaa/NR 107,112
285,000 5.300%, 10/01/23 MBIA Insured (pre-refunded) ........... Aaa/AAA 306,794
870,000 4.500%, 10/01/23 AMBAC Insured ......................... Aaa/NR 893,429
450,000 5.400%, 10/01/24 AMBAC Insured (pre-refunded) .......... Aaa/AAA 493,016
250,000 5.500%, 10/01/29 AMBAC Insured (pre-refunded) .......... Aaa/AAA 274,885
Weber-Box Elder, Utah Conservation District
Water Revenue
200,000 6.450%, 11/01/14 (pre-refunded) ........................ Baa3/NR 231,976
200,000 6.500%, 11/01/19 (pre-refunded) ........................ Baa3/NR 232,462
335,000 6.900%, 11/01/20 (pre-refunded) ........................ Baa3/NR 395,886
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ---------------- -------------------------------------------------------- --------- -------------
WATER AND SEWER (CONTINUED)
White City, Utah Water Improvement
$ 300,000 5.90%, 02/01/22 AMBAC Insured (pre-refunded) ........... Aaa/AAA $ 308,544
-------------
Total Water and Sewer 19,380,503
-------------
Total Revenue Bonds 131,872,258
-------------
Total Investments (cost $162,234,383**) ................ 98.2% 168,572,221
Other assets less liabilities 1.8 3,027,410
----- -------------
Net Assets 100.0% $ 171,599,631
===== =============
Portfolio Distribution by Quality Rating (unaudited)
Highest rating(1) .......................................... 76.4%
Second highest rating(2) ................................... 4.1
Third highest rating(3) .................................... 5.9
Fourth highest rating(4) ................................... 3.4
Not rated* ................................................. 10.2
-----
100.0%
=====
(1) Aaa of Moody's or AAA of S&P.
(2) Aa of Moody's or AA of S&P.
(3) A of Moody's or S&P.
(4) Baa of Moody's or BBB of S&P.
* Any security not rated (NR) by either credit
rating service must be determined by the Manager
to have sufficient quality to be ranked in the top
four ratings if a credit rating were to be
assigned by a rating service.
** See note 4.
+ Security pledged as collateral for the Fund's when
- issued commitments.
++ Security traded on a "when-issued" basis.
PORTFOLIO ABBREVIATIONS:
------------------------
ACA - American Capital Assurance Financial Guaranty Corp.
AMBAC - American Municipal Bond Assurance Corp.
AMT- Alternative Minimum Tax
ETM- Escrowed to Maturity
FGIC- Financial Guaranty Insurance Co.
FSA- Financial Security Assurance
GNMA- Government National Mortgage Association
LOC- Letter of Credit
MBIA- Municipal Bond Investors Assurance
NR- Not Rated
XLCA- XL Capital Assurance
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005
ASSETS
Investments at value (cost $162,234,383) ........................................... $ 168,572,221
Cash ............................................................................... 2,589,500
Interest receivable ................................................................ 2,528,895
Receivable for Fund shares sold .................................................... 953,333
Receivable for investment securities sold .......................................... 400,000
Other assets ....................................................................... 2,864
-------------
Total assets ....................................................................... 175,046,813
-------------
LIABILITIES
Payable for investment securities purchased ........................................ 2,955,279
Dividends payable .................................................................. 155,729
Payable for Fund shares redeemed ................................................... 148,324
Distribution and service fees payable .............................................. 85,793
Management fees payable ............................................................ 24,772
Accrued expenses ................................................................... 77,285
-------------
Total liabilities .................................................................. 3,447,182
-------------
NET ASSETS ............................................................................. $ 171,599,631
=============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 167,170
Additional paid-in capital ......................................................... 167,952,342
Net unrealized appreciation on investments (note 4) ................................ 6,337,838
Accumulated net realized loss on investments ....................................... (2,740,549)
Distributions in excess of net investment income ................................... (117,170)
-------------
$ 171,599,631
=============
CLASS A
Net Assets ......................................................................... $ 126,091,449
=============
Capital shares outstanding ......................................................... 12,286,791
=============
Net asset value and redemption price per share ..................................... $ 10.26
=============
Offering price per share (100/96 of $10.26 adjusted to nearest cent) ............... $ 10.69
=============
CLASS C
Net Assets ......................................................................... $ 27,580,578
=============
Capital shares outstanding ......................................................... 2,688,582
=============
Net asset value and offering price per share ....................................... $ 10.26
=============
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) ...................................... $ 10.26*
=============
CLASS Y
Net Assets ......................................................................... $ 17,927,604
=============
Capital shares outstanding ......................................................... 1,741,641
=============
Net asset value, offering and redemption price per share ........................... $ 10.29
=============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2005
INVESTMENT INCOME:
Interest income ............................................ $ 6,581,831
Expenses:
Management fee (note 3) .................................... $ 720,074
Distribution and service fees (note 3) ..................... 460,389
Transfer and shareholder servicing agent fees .............. 92,319
Fund accounting fees ....................................... 66,178
Legal fees (note 3) ........................................ 57,754
Trustees' fees and expenses (note 8) ....................... 56,802
Shareholders' reports and proxy statements ................. 49,568
Custodian fees ............................................. 36,268
Auditing and tax fees ...................................... 24,850
Registration fees and dues ................................. 11,868
Insurance .................................................. 8,353
Chief compliance officer (note 3) .......................... 3,399
Miscellaneous .............................................. 17,957
Total expenses ............................................. 1,605,779
-------------
Management fee waived (note 3) ............................. (585,160)
Expenses paid indirectly (note 6) .......................... (36,268)
-------------
Net expenses ............................................... 984,351
-------------
Net investment income ...................................... 5,597,480
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions ...... 339,699
Change in unrealized appreciation on investments ........... 4,737,661
-------------
Net realized and unrealized gain (loss) on investments ..... 5,077,360
-------------
Net increase in net assets resulting from operations ............. $ 10,674,840
=============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2005 JUNE 30, 2004
------------- -------------
OPERATIONS:
Net investment income ......................................... $ 5,597,480 $ 4,722,829
Net realized gain (loss) from securities transactions ......... 339,699 (365,387)
Change in unrealized appreciation on investments .............. 4,737,661 (3,968,215)
Change in net assets from operations ....................... 10,674,840 389,227
DISTRIBUTIONS TO SHAREHOLDERS (note 10):
Class A Shares:
Net investment income ......................................... (4,664,445) (4,242,881)
Class C Shares:
Net investment income ......................................... (844,820) (733,873)
Class Y Shares:
Net investment income ......................................... (481,279) (83,837)
------------- -------------
Change in net assets from distributions .................... (5,990,544) (5,060,591)
------------- -------------
CAPITAL SHARE TRANSACTIONS (note 7):
Proceeds from shares sold ..................................... 61,124,699 57,964,198
Reinvested dividends and distributions ........................ 3,507,838 2,768,847
Cost of shares redeemed ....................................... (22,013,872) (34,397,531)
------------- -------------
Change in net assets from capital share transactions ....... 42,618,665 26,335,514
------------- -------------
Change in net assets ....................................... 47,302,961 21,664,150
NET ASSETS:
Beginning of period ........................................... 124,296,670 102,632,520
------------- -------------
End of period* ................................................ $ 171,599,631 $ 124,296,670
============= =============
* Includes distributions in excess of net investment income of: $ (117,170) $ (108,192)
============= =============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
1. ORGANIZATION
Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end
investment company, was organized on December 12, 1990 as a Massachusetts
business trust and commenced operations on July 24, 1992. The Fund is authorized
to issue an unlimited number of shares and, since its inception to May 21, 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 and 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 October 31, 1997, 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: Municipal securities which have remaining maturities
of more than 60 days are valued each business day based upon information
provided by a nationally prominent independent pricing service and
periodically verified through other pricing services. In the case of
securities for which market quotations are readily available, securities
are valued by the pricing service at the mean of bid and asked quotations.
If market quotations or a valuation from the pricing service is not
readily available, the security is valued at fair value determined under
procedures established by and under the general supervision of the Board
of Trustees. Securities which mature in 60 days or less are valued at
amortized cost if their term to maturity at purchase
is 60 days or less, or by amortizing their unrealized appreciation or
depreciation on the 61st day prior to maturity, if their term to maturity
at purchase exceeds 60 days.
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.
Interest income is recorded daily on the accrual basis and is adjusted for
amortization of premium and accretion of original issue and market
discount.
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:
Aquila Investment Management LLC (the "Manager"), a wholly-owned
subsidiary of Aquila Management Corporation, the Fund's founder and sponsor,
serves as the Manager for the Fund under an Advisory and Administration
Agreement with the Fund. Under the Advisory and Administration Agreement, the
Manager provides all investment management and administrative services to the
Fund. The Manager's services include 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, fund accounting agent, auditors and distributor. 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 at the annual rate of 0.50 of 1%
on the Fund's average net assets.
For the year ended June 30, 2005, the Fund incurred management fees of
$720,074 of which $585,160 was voluntarily waived. Such waivers are voluntary
and can be terminated in the future at the Manager's discretion. However, the
Manager has indicated that it intends to continue waiving fees as necessary in
order that the Fund will remain competitive.
Under a 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, as amended. Under
one part of the Plan, with respect to Class A Shares, the Fund is authorized to
make distribution 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 0.20% of the Fund's average net assets
represented by Class A Shares. For the year ended June 30, 2005, distribution
fees on Class A Shares amounted to $217,992, of which the Distributor retained
$4,043.
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 June 30, 2005, amounted to $181,798. 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 June 30, 2005 amounted to $60,599. The total of these payments
with respect to Class C Shares amounted to $242,397, of which the Distributor
retained $42,707.
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 Utah, with the
bulk of sales commissions inuring to such dealers. For the year ended June 30,
2005, total commissions on sales of Class A Shares amounted to $858,772, of
which the Distributor received $77,829.
c) OTHER RELATED PARTY TRANSACTIONS:
For the year ended June 30, 2005, the Fund incurred $56,393 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 June 30, 2005, purchases of securities and proceeds
from the sales of securities aggregated $55,157,265 and $12,326,310,
respectively.
At June 30, 2005, the aggregate tax cost for all securities was
$162,195,824. At June 30, 2005, the aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
amounted to $6,396,312 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value amounted to
$19,914, for a net unrealized appreciation of $6,376,398.
5. PORTFOLIO ORIENTATION
Since the Fund invests principally and may invest entirely in double
tax-free municipal obligations of issuers within Utah, it is subject to possible
risks associated with economic, political, or legal developments or industrial
or regional matters specifically affecting Utah and whatever effects these may
have upon Utah issuers' ability to meet their obligations.
The Fund is also permitted to invest in tax-free municipal obligations of
issuers in other states and U.S. territories meeting comparable quality
standards and providing income which is exempt from both regular Federal and
Utah income taxes. The general policy of the Fund is to invest in such
securities only when comparable securities of Utah issuers are not available in
the market. At June 30, 2005, the Fund had 85% of its net assets invested in
State of Utah municipal issues.
6. 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
income-producing assets rather than leave cash on deposit.
7. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2005 JUNE 30, 2004
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
CLASS A SHARES:
Proceeds from shares sold 3,901,386 $ 39,687,818 3,786,483 $ 38,300,080
Reinvested distributions 277,575 2,823,980 227,183 2,293,880
Cost of shares redeemed . (1,384,213) (14,072,096) (2,800,659) (28,028,537)
------------ ------------ ------------ ------------
Net change ........... 2,794,748 28,439,702 1,213,007 12,565,423
------------ ------------ ------------ ------------
CLASS C SHARES:
Proceeds from shares sold 825,234 8,390,613 1,087,383 11,056,567
Reinvested distributions 48,338 491,581 42,247 426,325
Cost of shares redeemed . (401,020) (4,069,806) (507,597) (5,107,857)
------------ ------------ ------------ ------------
Net change ........... 472,552 4,812,388 622,033 6,375,035
------------ ------------ ------------ ------------
CLASS Y SHARES:
Proceeds from shares sold 1,275,070 13,046,268 864,901 8,607,551
Reinvested distributions 18,832 192,277 4,819 48,642
Cost of shares redeemed . (380,156) (3,871,970) (127,200) (1,261,137)
------------ ------------ ------------ ------------
Net change ........... 913,746 9,366,575 742,520 7,395,056
------------ ------------ ------------ ------------
Total transactions in Fund
shares .................. 4,181,046 $ 42,618,665 2,577,560 $ 26,335,514
============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES
At June 30, 2005 there were 7 Trustees, two of which are affiliated with
the Manager and are not paid any fees. The total amount of Trustees' service and
attendance fees paid during the year ended June 30, 2005 was $44,400, to cover
carrying out their responsibilities and attendance at regularly scheduled
quarterly Board Meetings and meetings of the Independent Trustees held prior to
each quarterly Board Meeting. When additional or special meetings are held, the
meeting fees are paid to those Trustees in attendance. Trustees are reimbursed
for their expenses such as travel, accommodations, and meals incurred in
connection with attendance at Board
Meetings and the Annual Meeting of Shareholders. For the fiscal year ended June
30, 2005, such meeting-related expenses amounted to $12,402.
9. SECURITIES TRADED ON A WHEN-ISSUED BASIS
The Fund may purchase or sell securities on a when-issued basis.
When-issued transactions arise when securities are purchased or sold by the Fund
with payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. Beginning on the date the Fund enters into a
when-issued transaction, cash or other liquid securities are segregated in an
amount equal to or greater than the amount of the when-issued transaction. These
transactions are subject to market fluctuations and their current value is
determined in the same manner as for other securities.
10. INCOME TAX INFORMATION AND DISTRIBUTIONS
The Fund declares dividends daily from net investment income and makes
payments monthly in additional shares at the net asset value per share, in cash,
or in a combination of both, at the shareholder's option. Net realized capital
gains, if any, are distributed annually and are taxable.
The Fund intends to maintain, to the maximum extent possible, the
tax-exempt status of interest payments received from portfolio municipal
securities in order to allow dividends paid to shareholders from net investment
income to be exempt from regular Federal and State of Utah income taxes.
However, due to differences between financial statement reporting and Federal
income tax reporting requirements, distributions made by the Fund may not be the
same as the Fund's net investment income, and/or net realized securities gains.
In this regard, the Fund credited distributions in excess of net investment
income in the amount of $384,086 and debited additional paid-in capital in the
amount of $384,086 at June 30, 2005. This adjustment had no impact on the Fund's
aggregate net assets at June 30, 2005. Further, a small portion of the dividends
may, under some circumstances, be subject to taxes at ordinary income rates. For
certain shareholders some dividend income may, under some circumstances, be
subject to the alternative minimum tax.
At June 30, 2005, the Fund had a capital loss carryover of $2,740,548 of
which $11,866 expires on June 30, 2008, $2,459,398 expires on June 30, 2009,
$15,469 expires on June 30, 2011, and $253,815 expires on June 30, 2012. This
carryover is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code. To the
extent that this loss is used to offset future realized capital gains, it is
probable that the gains so offset will not be distributed.
The tax character of distributions:
YEAR ENDED JUNE 30,
2005 2004
---------- ----------
Net tax-exempt income $5,604,701 $4,758,187
Ordinary income 385,843 302,404
---------- ----------
$5,990,544 $5,060,591
========== ==========
As of June 30, 2005, the components of distributable earnings on a tax
basis were as follows:
Accumulated net realized loss $(2,740,549)
Unrealized appreciation 6,376,398
-----------
$ 3,635,849
===========
At June 30, 2005, the difference between book basis and tax basis
unrealized appreciation was attributable primarily to the treatment of accretion
of discounts and amortization of premiums.
11. CHANGE IN PRINCIPAL ACCOUNTANTS
KPMG LLP was previously the principal accountants for the Tax-Free Fund
For Utah (the "Fund"). On July 27, 2005 KPMG LLP declined to stand for
reelection and Tait, Weller and Baker was engaged as the principal accountants
to audit the Fund's financial statements for the fiscal year of 2006. The
decision was made by the Audit Committee of the Board of Trustees.
The audit reports of KPMG LLP on the Fund's financial statements as of and
for the years ended June 30, 2005 and 2004 did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.
In connection with the audits of the two fiscal years ended June 30, 2005
and 2004 and the subsequent interim period through August 12, 2005, there were
no reportable events or disagreements with KPMG LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to the satisfaction of KPMG LLP
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreements.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
----------------------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ........... $ 9.91 $ 10.31 $ 9.85 $ 9.65 $ 9.35
----------- ----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income ...................... 0.41+ 0.43++ 0.44+ 0.46+ 0.48+
Net gain (loss) on securities (both realized
and unrealized) ......................... 0.38 (0.37) 0.48 0.22 0.32
----------- ----------- ----------- ----------- -----------
Total from investment operations ........... 0.79 0.06 0.92 0.68 0.80
----------- ----------- ----------- ----------- -----------
Less distributions (note 10):
Dividends from net investment income ....... (0.44) (0.46) (0.46) (0.48) (0.50)
Distributions from capital gains ........... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions ........................ (0.44) (0.46) (0.46) (0.48) (0.50)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ................. $ 10.26 $ 9.91 $ 10.31 $ 9.85 $ 9.65
=========== =========== =========== =========== ===========
Total return (not reflecting sales charge) ..... 8.06% 0.54% 9.55% 7.22% 8.72%
Ratios/supplemental data
Net assets, end of period (in thousands) ... $ 126,091 $ 94,103 $ 85,329 $ 55,957 $ 34,321
Ratio of expenses to average net assets .... 0.59% 0.48% 0.43% 0.46% 0.48%
Ratio of net investment income to average
net assets .............................. 3.98% 4.19% 4.31% 4.65% 4.95%
Portfolio turnover rate .................... 8.68% 15.98% 6.43% 27.42% 44.17%
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and
the voluntary expense reimbursement were (note 3):
Ratio of expenses to average net assets .... 0.97% 0.94% 1.02% 1.00% 1.11%
Ratio of net investment income to average
net assets .............................. 3.60% 3.73% 3.72% 4.11% 4.32%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 0.56% 0.47% 0.42% 0.40% 0.39%
- ----------
Note: Effective August 1, 2001, Aquila Management Corporation became the Fund's
Investment Adviser replacing Zions First National Bank which was the
sub-adviser. Effective January 1, 2004, Aquila Management Corporation,
founder of the Fund, assigned its Advisory and Administration Agreement to
its wholly-owned subsidiary, Aquila Investment Management LLC.
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amount calculated using the daily average shares method.
See accompanying notes to financial statements.
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
--------------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period ....... $ 9.91 $ 10.30 $ 9.85 $ 9.64 $ 9.35
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income .................. 0.32+ 0.34++ 0.34+ 0.37+ 0.38+
Net gain (loss) on securities (both
realized and unrealized) ............ 0.38 (0.36) 0.48 0.23 0.31
---------- ---------- ---------- ---------- ----------
Total from investment operations ........... 0.70 (0.02) 0.82 0.60 0.69
---------- ---------- ---------- ---------- ----------
Less distributions (note 10):
Dividends from net investment income ... (0.35) (0.37) (0.37) (0.39) (0.40)
Distributions from capital gains ........... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions .................... (0.35) (0.37) (0.37) (0.39) (0.40)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ............. $ 10.26 $ 9.91 $ 10.30 $ 9.85 $ 9.64
========== ========== ========== ========== ==========
Total return (not reflecting sales charge) . 7.20% (0.16)% 8.48% 6.36% 7.52%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 27,581 $ 21,961 $ 16,420 $ 6,694 $ 1,874
Ratio of expenses to average net assets 1.39% 1.27% 1.31% 1.34% 1.47%
Ratio of net investment income to
average net assets .................. 3.18% 3.38% 3.39% 3.72% 3.93%
Portfolio turnover rate ................ 8.68% 15.98% 6.43% 27.42% 44.17%
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management
fee and the voluntary expense reimbursement were (note 3):
Ratio of expenses to average net assets 1.77% 1.74% 1.81% 1.78% 1.89%
Ratio of net investment income to
average net assets .................. 2.80% 2.93% 2.89% 3.28% 3.51%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 1.36% 1.27% 1.30% 1.28% 1.39%
CLASS Y
--------------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period ....... $ 9.94 $ 10.34 $ 9.89 $ 9.68 $ 9.36
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income .................. 0.42+ 0.44++ 0.42+ 0.50+ 0.49+
Net gain (loss) on securities (both
realized and unrealized) ............ 0.39 (0.36) 0.50 0.20 0.34
---------- ---------- ---------- ---------- ----------
Total from investment operations ........... 0.81 0.08 0.92 0.70 0.83
---------- ---------- ---------- ---------- ----------
Less distributions (note 10):
Dividends from net investment income ... (0.46) (0.48) (0.47) (0.49) (0.51)
Distributions from capital gains ........... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions .................... (0.46) (0.48) (0.47) (0.49) (0.51)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ............. $ 10.29 $ 9.94 $ 10.34 $ 9.89 $ 9.68
========== ========== ========== ========== ==========
Total return (not reflecting sales charge) . 8.27% 0.76% 9.55% 7.41% 9.05%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 17,928 $ 8,233 $ 883 $ 30 $ 5
Ratio of expenses to average net assets 0.39% 0.28% 0.30% 0.36% 0.42%
Ratio of net investment income to
average net assets .................. 4.15% 4.41% 4.17% 4.75% 4.83%
Portfolio turnover rate ................ 8.68% 15.98% 6.43% 27.42% 44.17%
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management
fee and the voluntary expense reimbursement were (note 3):
Ratio of expenses to average net assets 0.77% 0.74% 0.78% 0.80% 0.64%
Ratio of net investment income to
average net assets .................. 3.78% 3.95% 3.70% 4.31% 4.62%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 0.37% 0.27% 0.29% 0.30% 0.36%
- ----------
Note: Effective August 1, 2001, Aquila Management Corporation became the Fund's
Investment Adviser replacing Zions First National Bank which was the
sub-adviser. Effective January 1, 2004, Aquila Management Corporation,
founder of the Fund, assigned its Advisory and Administration Agreement to
its wholly-owned subsidiary, Aquila Investment Management LLC.
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amount calculated using the daily average shares method.
See accompanying notes to financial statements.
ADDITIONAL INFORMATION (UNAUDITED)
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 Trustee Founder and Chairman of the Board, Aquila 8 Director or trustee, Pimco
New York, NY since 1992 Management Corporation, the sponsoring Advisors VIT, Oppenheimer Quest
(05/12/29) and Chairman of the organization and parent of the Manager or Value Funds Group, Oppenheimer
Board of Trustees, Administrator and/or Adviser or Small Cap Value Fund,
1992-2005 Sub-Adviser to each fund of the Aquilasm Oppenheimer Midcap Fund, and
Group of Funds(6); Chairman of the Oppenheimer Rochester Group of
Manager or Administrator and/or Adviser Funds.
or Sub-Adviser to each since 2004;
Founder, Chairman Emeritus and Trustee of
Aquila Rocky Mountain Equity Fund,
Tax-Free Fund For Utah, Narragansett
Insured Tax-Free Income Fund and Tax-Free
Trust of Arizona; Founder and Chairman
Emeritus of Hawaiian Tax-Free Trust,
Pacific Capital Cash Assets Trust,
Pacific Capital Tax-Free Cash Assets
Trust, Pacific Capital U.S. Government
Securities Cash Assets Trust, Tax-Free
Fund of Colorado, Churchill Tax-Free Fund
of Kentucky and Tax-Free Trust of Oregon;
previously Chairman and a Trustee of each
fund in the Aquilasm Group of Funds since
its establishment until 2004 or 2005;
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.
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.)
- ----------------- ---------- ------------------- ---------- ---------------------
Diana P. Herrmann Trustee Vice Chair and Chief Executive Officer of 10 None
New York, NY since 1997 Aquila Management Corporation, Founder of
(02/25/58) and President the Aquilasm Group of Funds and parent of
since 1998 Aquila Investment Management LLC, Manager
since 2004, President and Chief Operating
Officer 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 Aquilasm 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
Gary C. Cornia Chair of the Board Director, Romney Institute of Public 4 None
Orem, UT of Trustees Management, Marriott School of
(06/24/48) since 2005 Management, Brigham Young University,
and Trustee 2004 - present; Professor, Marriott
since 1993 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.
William L. Ensign Trustee Planning and Architectural Consultant; 2 None
Annapolis, MD since 1992 Acting Architect, United States Capitol
(12/14/28) 1995-1997; formerly Assistant Architect;
former trustee of various cultural
organizations.
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.)
- ----------------- ---------- ------------------- ---------- ---------------------
Lyle W. Hillyard Trustee President of the law firm of Hillyard, 1 None
Logan, UT since 2003 Anderson & Olsen, Logan, Utah, since
(09/25/40) 1967; member of Utah Senate, 1985 to
present, in the following positions:
President, 2000, Senate Majority Leader,
1999-2000, Assistant Majority Whip,
1995-1998; served as Chairman of the
following Senate Committees: Tax and
Revenue, Senate Judiciary Standing, Joint
Executive Appropriations, and Senate
Rules; also Appropriations Subcommittees
for Higher Education and for Public
Education.
John C. Lucking Trustee President, Econ-Linc, an economic 3 Director, Sanu Resources
Phoenix, AZ since 2004 consulting firm, since 1995; formerly
(05/20/43) Consulting Economist, Bank One Arizona
and Chief Economist, Valley National
Bank; member, Arizona's Joint Legislative
Budget Committee Economic Advisory Panel
and the Western Blue Chip Economic
Forecast Panel; Board, Northern Arizona
University Foundation since 1997; member,
various historical, civic and economic
associations..
Anne J. Mills Trustee President, Loring Consulting Company 4 None
Castle Rock, CO since 1994 since 2001; Vice President for Business
(12/23/38) Affairs, Ottawa University, 1992-2001;
IBM Corporation, 1965-1991; Budget Review
Officer, the American Baptist
Churches/USA, 1994-1997; director, the
American Baptist Foundation; Trustee,
Ottawa University; and Trustee Emerita,
Brown University.
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.)
- ----------------- ---------- ------------------- ---------- ---------------------
Charles E. Executive Vice Executive Vice President of all funds in N/A N/A
Childs, III President the Aquilasm Group of Funds and the
New York, NY since 2003 Manager and the Manager's parent since
(04/01/57) 2003; formerly Senior Vice President,
corporate development, 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.
Jerry G. McGrew Senior Vice President of the Distributor since 1998, N/A N/A
New York, NY President Registered Principal since 1993, Senior
(06/18/44) since 1997 Vice 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.
Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free Fund For N/A N/A
Salt Lake City, UT President Utah since 2001; Co-founder, Lewis Young
(08/07/46) since 1998 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.
Thomas S. Albright Senior Vice Senior Vice President and Portfolio N/A N/A
Louisville, KY President Manager, Churchill Tax-Free Fund of
(07/26/52) since 2003 Kentucky since July 2000; Senior Vice
and Vice President, Tax-Free Fund For Utah since
President, 2003, Vice President, 2001-2003 and
2001-2003 co-portfolio manager since 2001; Vice
President and backup portfolio manager,
Tax-Free Trust of Arizona, since 2004;
Vice President and Portfolio Manager,
Banc One Investment Advisors, Inc.,
1994-2000.
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.)
- ----------------- ---------- ------------------- ---------- ---------------------
Mary Kayleen Willis Vice President Vice President, Tax-Free Fund For Utah N/A N/A
Salt Lake City, UT since 2003 since September 2003, Assistant Vice
(06/11/63) and Assistant President, 2002-2003; Vice President,
Vice President, Aquila Rocky Mountain Equity Fund, since
2002-2003 2004; various securities positions: Paine
Webber, Inc., Salt Lake City, 1999-2002,
Dean Witter Reynolds, Inc., Salt Lake
City, 1996-1998.
Stephen J. Caridi Assistant Vice Vice President of the Distributor since N/A N/A
New York, NY President 1995; Vice President, Hawaiian Tax-Free
(05/06/61) since 1993 Trust since 1998; Senior Vice President,
Narragansett Insured Tax-Free Income Fund
since 1998, Vice President, 1996-1997;
Senior Vice President, Tax-Free Fund of
Colorado since 2004; Assistant Vice
President, Tax-Free Fund For Utah since
1993.
Robert W. Anderson Chief Chief Compliance Officer of the Fund, the N/A N/A
New York, NY Compliance Manager and the Distributor since 2004,
(08/23/40) Officer since Compliance Officer of the Manager or its
2004 and predecessor and current parent since 1998
Assistant and Assistant Secretary of the Aquilasm
Secretary Group of Funds since 2000; Consultant,
since 2000 The Wadsworth Group, 1995-1998.
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquilasm N/A N/A
New York, NY Officer Group of Funds since 2003 and Treasurer
(11/06/56) since 2003 since 2000; Controller, Van Eck Global
and Treasurer Funds, 1993-2000.
since 2000
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.)
- ----------------- ---------- ------------------- ---------- ---------------------
Edward M. W. Hines Secretary Partner, Hollyer Brady Barrett & Hines N/A N/A
New York, NY since 1992 LLP, legal counsel to the Fund, since
(12/16/39) 1989; Secretary of the Aquilasm Group of
Funds.
John M. Herndon Assistant Assistant Secretary of the Aquilasm 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 Aquilasm 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 Aquilasm
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 Tax-Free Fund For
Utah, 380 Madison Avenue, New York, NY 10017.
(3) Each Trustee holds office until the next annual meeting of shareholders or
until his or her successor is elected and qualifies. 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 is an interested person of the Fund as that term is defined
in the 1940 Act as an officer of the Fund and a director, officer and
shareholder of the Manager and as a shareholder and director of the
Distributor. Ms. Herrmann is an interested person of the Fund as an
officer of the Fund, as a director, officer and shareholder of the Manager
and as a shareholder and director of 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 "Aquilasm Group of
Funds.
- --------------------------------------------------------------------------------
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 January
1, 2005 and held for the six months ended June 30, 2005.
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 JUNE 30, 2005
ACTUAL
TOTAL RETURN BEGINNING ENDING EXPENSES
WITHOUT ACCOUNT ACCOUNT PAID DURING
SALES CHARGES(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
Class A 2.82% $1,000.00 $1,028.20 $3.05
- --------------------------------------------------------------------------------
Class C 2.42% $1,000.00 $1,024.20 $7.04
- --------------------------------------------------------------------------------
Class Y 2.92% $1,000.00 $1,029.20 $2.06
- --------------------------------------------------------------------------------
(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 0.61%, 1.41% AND
0.41% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 181/365 (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 Trust'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 Trust and other mutual funds. To do so, compare this 5.00%
hypothetical example relating to the Trust 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
the applicable sales charges or 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 SEPTEMBER 30, 2004
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD(1)
- --------------------------------------------------------------------------------
Class A 5.00% $1,000.00 $1,021.45 $3.59
- --------------------------------------------------------------------------------
Class C 5.00% $1,000.00 $1,017.20 $7.87
- --------------------------------------------------------------------------------
Class Y 5.00% $1,000.00 $1,022.20 $2.83
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.71%, 1.56% AND
0.56% FOR THE TRUST'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 183/366 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquilasm 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 RECORD (UNAUDITED)
The Fund does not invest in equity securities. Accordingly, there were no
matters relating to a portfolio security considered at any shareholder meeting
held during the 12 months ended June 30, 2005 with respect to which the Fund was
entitled to vote. Applicable regulations require us to inform you that the
foregoing proxy voting information is available on the SEC website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
This information is presented in order to comply with a requirement of the
Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF SHAREHOLDERS IS
REQUIRED.
For the fiscal year ended June 30, 2005, $5,604,701 of dividends paid by
Tax-Free Fund For Utah, constituting 93.53% of total dividends paid during the
fiscal year ended June 30, 2005, were exempt-interest dividends, and the balance
was ordinary dividend income.
Prior to January 31, 2005, shareholders were mailed IRS Form 1099-DIV
which contained information on the status of distributions paid for the 2004
CALENDAR YEAR.
Prior to January 31, 2006, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of distributions paid for the 2005
CALENDAR YEAR.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIVACY NOTICE (UNAUDITED)
TAX-FREE FUND FOR UTAH
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, 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.
- --------------------------------------------------------------------------------
(THIS PAGE INTENTIONALLY LEFT BLANK)
FOUNDER
AQUILA MANAGEMENT CORPORATION
MANAGER
AQUILA investment MANAGEMENT LLC
380 Madison Avenue, Suite 2300
New York, New York 10017
BOARD OF TRUSTEES
Gary C. Cornia, Chair
Lacy B. Herrmann
William L. Ensign
Diana P. Herrmann
Lyle W. Hillyard
John C. Lucking
Anne J. Mills
OFFICERS
Diana P. Herrmann, President
Jerry G. McGrew, Senior Vice President
Kimball L. Young, Senior Vice President and Co-Portfolio Manager
Thomas S. Albright, Senior Vice President and Co-Portfolio Manager
M. Kayleen Willis, Vice President
Robert W. Anderson, Chief Compliance Officer
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
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus, which must precede or
accompany this report.
ITEM 2. CODE OF ETHICS.
(a) As of June 30, 2005 (the end of the 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" recently 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 each of the last two
fiscal years for professional services rendered by the principal
accountant for the audit of the Registrant's annual financial statements
or services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements were $17,000 in 2005
and $15,450 in 2004.
b) Audit Related Fees - There were no amounts billed for audit-related
fees over the past two years other than stated above.
c) Tax Fees - The Registrant was billed by the principal accountant
$7.755 and $8,392 in 2005 and 2004, respectively, for tax return
preparation, tax compliance and tax planning.
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.
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.
TAX-FREE FUND FOR UTAH
By: /s/ Diana P. Herrmann
- - ---------------------------------
Vice Chair, President and Trustee
September 9,2005
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Chief Financial Officer and Treasurer
September 9, 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/ Diana P. Herrmann
- - ---------------------------------
Diana P. Herrmann
Vice Chair, President and Trustee
September 9, 2005
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 9, 2005
TAX-FREE FUND FOR UTAH
EXHIBIT INDEX
(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) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.