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: 12/31/05
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL
REPORT
DECEMBER 31, 2005
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM]
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 BOULDERS
WITH THE SUN RISING BEHIND THEM]
SERVING UTAH INVESTORS FOR MORE THAN A DECADE
TAX-FREE FUND FOR UTAH
"THE BENEFITS OF TAX-FREE INVESTING"
February, 2006
Dear Fellow Shareholder:
As the name of your fund clearly states, Tax-Free Fund For Utah is
tax-free* - free from Utah state and regular Federal income taxes.
This tax-free status serves many purposes. It obviously provides you, and
our other shareholders, with tax-free income. But, it also provides
municipalities with an attractive motivator to help them raise revenue.
Additionally, the projects funded by these tax-free securities enhance the
quality of life for all community residents.
Many individuals pay as much as 30% to 40% of their income in Federal and
state taxes. Obviously, if you have to pay that much in taxes, it significantly
reduces what you get to keep in your pocket.
BENEFITS TO INVESTORS
As an investor seeking tax-free income, do you have to forego higher
yields? Not necessarily.
[BAR CHART]
Hypothetical Tax-Free Yield 3%
Hypothetical Taxable Equivalent Yield 5.0%
Hypothetical Tax-Free Yield 4%
Hypothetical Taxable Equivalent Yield 6.7%
Hypothetical Tax-Free Yield 5%
Hypothetical Taxable Equivalent Yield 8.4%
This chart assumes a 35% federal and 7% state tax-rate and is
for illustration purposes only; it does not represent past or
future performance of any investment.
The chart above shows that you would have to earn significantly more from
a taxable investment in order to be equal to what you get to keep from a
tax-free investment.
As you can clearly see from the chart, you would have to earn 6.7% on a
taxable investment in order to equal the tax-free level of 4%.
Keep this illustration in mind the next time you examine the yield that
Tax-Free Fund For Utah offers you. You will find that a 3%, 4% or 5% tax-free
yield looks considerably more attractive to you when you consider the
implications of taxes.
NOT A PART OF THE SEMI-ANNUAL REPORT
BENEFITS TO MUNICIPALITIES
As you are most likely aware, states, counties, cities, towns, and other
forms of municipalities issue tax-free bonds to raise monies. These issues
generally take two forms - general obligation securities and revenue securities.
General obligation municipal securities are primarily those securities
used to finance the general needs of such municipalities. General obligation
securities are secured by the tax-raising power of the specific municipality in
terms of its ability to pay interest and repay principal on a timely basis.
Thus, these securities are considered to be "backed by the full faith and
credit" of the issuer.
Revenue securities are issued to finance specific projects, such as a
hospital or airport. In this instance, the municipal issuer pledges the
operating revenues derived from the specific project to pay the interest and
repay the principal when due.
In many cases, smaller municipalities would have difficulty selling these
securities to the marketplace were it not for the added attractiveness of
tax-free status.
BENEFITS TO QUALITY OF LIFE
The benefit you may not have considered - when you made your investment in
the Fund - was that in the process of having the Fund provide you with tax-free
income, it also provides help to a variety of others within your community and
Utah. This is a benefit in which you can take real pride.
Municipal bonds, such as those in which Tax-Free Fund For Utah invests,
are the primary way infrastructure is financed. Infrastructure is a relatively
obscure word that by itself doesn't mean much to most people. But, when you
translate the word "infrastructure" into projects such as schools, roads,
bridges, water facilities, pollution control, airports, hospitals, and fire and
police stations, then you are speaking in terms that people more easily
understand.
As the economy of Utah grows, new and additional municipal projects are
needed for the benefit of the citizens of Utah and the various communities
throughout the state. In essence, your money invested in the Fund helps pay for
that new school, road, airport, etc. that you and your neighbors now enjoy. So,
as an investor in Tax-Free Fund For Utah, you can take pride in knowing that you
are playing a vital role and a very real part in enhancing the quality of life
for your family, friends, neighbors and future generations of Utahns.
SUMMARY
So the next time that you receive your statement from Tax-Free Fund For
Utah, remember that the benefits that are reaped from your investment are more
than just what is evident on that piece of paper.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
President Chair of the Board of Trustees
* For certain investors, some dividends may be subject to Federal and State
taxes, including the Alternative Minimum Tax.
NOT A PART OF THE SEMI-ANNUAL REPORT
TAX-FREE FUND FOR UTAH
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
(UNAUDITED)
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (21.7%) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
CITY, COUNTY AND STATE (9.1%)
Anderson, Indiana San District
$ 505,000 4.600%, 07/15/23 AMBAC Insured ............................... Aaa/AAA $ 514,630
Brian Head, Utah
405,000 6.500%, 03/15/24 ............................................. NR/NR* 452,158
Cedar City, Utah Special Improvement
District Assessment
235,000 5.050%, 09/01/10 ............................................. NR/NR* 240,955
215,000 5.200%, 09/01/11 ............................................. NR/NR* 223,299
Cedar Park, Texas
835,000 4.500%, 02/15/22 MBIA Insured ................................ Aaa/AAA 842,882
Clearfield City, Utah
2,095,000 5.125%, 02/01/18 MBIA Insured (pre-refunded) ................. Aaa/AAA 2,171,782
Coral Canyon, Utah Special Service District
580,000 5.700%, 07/15/18 ............................................. NR/NR* 596,837
Dawson County, Texas Hospital District
555,000 4.375%, 02/15/24 AMBAC Insured ............................... NR/AAA 543,750
Draper, Utah
370,000 4.500%, 02/01/18 AMBAC Insured ............................... Aaa/NR 379,250
Hurricane, Utah
240,000 5.400%, 11/01/09 Radian Insured .............................. NR/AA 254,494
Laredo, Texas
300,000 4.250%, 08/15/21 AMBAC Insured ............................... Aaa/AAA 295,611
Mckinney, Texas
1,700,000 4.500%, 08/15/23 XLCA Insured ................................ Aaa/AAA 1,713,141
Mesquite, Texas
510,000 4.625%, 02/15/22 FSA Insured ................................. Aaa/AAA 521,980
Nevada State
965,000 4.500%, 08/01/21 FSA Insured ................................. Aaa/AAA 982,331
St. George, Utah
100,000 5.375%, 08/01/21 FGIC Insured (pre-refunded) ................. Aaa/AAA 104,179
Salt Lake City, Utah
120,000 5.750%, 06/15/17 (pre-refunded) .............................. Aaa/NR 131,435
San Antonio, Texas
125,000 4.750%, 02/01/24 FSA Insured ................................. Aaa/AAA 128,089
Spokane County, Washington
420,000 4.500%, 12/01/23 MBIA Insured ................................ Aaa/AAA 424,200
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
CITY, COUNTY AND STATE (CONTINUED)
Waco, Texas
$ 2,560,000 4.500%, 02/01/24 MBIA Insured ................................ Aaa/AAA $ 2,576,896
Washington County, Utah
1,250,000 5.000%, 10/01/22 MBIA Insured ................................ Aaa/NR 1,314,825
Washington State
3,315,000 4.500%, 01/01/22 MBIA Insured ................................ Aaa/AAA 3,345,995
705,000 4.500%, 07/01/23 FSA Insured ................................. Aaa/AAA 706,473
-------------
Total City, County and State 18,465,192
-------------
SCHOOL DISTRICT (12.6%)
Alpine, Utah School District
375,000 5.000%, 03/15/12 (pre-refunded) .............................. Aaa/NR 403,395
Carbon County, Utah School District
800,000 5.000%, 06/15/21 ............................................. Aaa/NR 837,976
Dallas, Texas Independent School District
2,500,000 5.000%, 08/15/29 ............................................. Aaa/AAA 2,606,425
Davis County, Utah School District
575,000 5.000%, 06/01/15 (pre-refunded) .............................. Aaa/NR 619,051
250,000 5.100%, 06/01/16 (pre-refunded) .............................. Aaa/NR 271,275
675,000 5.150%, 06/01/17 (pre-refunded) .............................. Aaa/NR 734,353
Dripping Springs, Texas
725,000 4.375%, 08/15/22 ............................................. Aaa/AAA 725,747
Eagle Mountain & Saginaw, Texas Independent
School District
300,000 4.750%, 08/15/21 ............................................. Aaa/AAA 309,807
525,000 4.750%, 08/15/23 ............................................. Aaa/AAA 541,328
Frisco, Texas Independent School District
1,260,000 5.000%, 07/15/26 ............................................. Aaa/NR 1,321,475
Iron County, Utah School District
1,375,000 4.000%, 01/15/18 ............................................. Aaa/AAA 1,354,334
2,115,000 4.000%, 01/15/20 ............................................. Aaa/AAA 2,057,345
La Feria, Texas Independent School District
210,000 4.400%, 02/15/24 ............................................. Aaa/NR 208,954
Lancaster, Texas School District
300,000 4.375%, 02/15/22 ............................................. Aaa/AAA 298,785
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
SCHOOL DISTRICT (CONTINUED)
Lindale, Texas Independent School District
$ 690,000 4.250%, 02/15/21 ............................................. NR/AAA $ 680,133
1,000,000 4.250%, 02/15/22 ............................................. NR/AAA 981,650
445,000 4.375%, 02/15/23 ............................................. NR/AAA 441,013
200,000 4.500%, 02/15/24 ............................................. NR/AAA 201,554
Navasota, Texas Independent School District
475,000 5.000%, 08/15/23 FGIC Insured ................................ Aaa/NR 501,496
Nebo, Utah School District
440,000 5.500%, 07/01/11 (pre-refunded) .............................. Aaa/AAA 477,783
North Summit County, Utah School District
760,000 5.000%, 02/01/23 ............................................. Aaa/NR 807,302
800,000 5.000%, 02/01/24 ............................................. Aaa/NR 846,240
Prosper, Texas Independent School District
395,000 4.125%, 08/15/21 ............................................. NR/AAA 383,679
Salt Lake City, Utah School District
265,000 5.000%, 03/01/21 (pre-refunded) .............................. Aaa/NR 285,916
Spring, Texas Independent School District
300,000 4.750%, 08/15/23 ............................................. Aaa/AAA 308,670
Tooele County, Utah School District
670,000 4.000%, 06/01/20 ............................................. Aaa/AAA 642,992
Washington County, Utah
440,000 5.000%, 10/01/18 XLCA Insured ................................ Aaa/NR 469,480
465,000 5.000%, 10/01/19 XLCA Insured ................................ Aaa/NR 495,802
490,000 5.000%, 10/01/20 XLCA Insured ................................ Aaa/NR 520,978
510,000 5.000%, 10/01/21 XLCA Insured ................................ Aaa/NR 541,085
535,000 5.000%, 10/01/22 XLCA Insured ................................ Aaa/NR 565,602
565,000 5.000%, 10/01/23 XLCA Insured ................................ Aaa/NR 596,047
320,000 5.000%, 10/01/24 XLCA Insured ................................ Aaa/NR 336,630
Weber County, Utah School District
750,000 5.000%, 06/15/18 ............................................. Aaa/NR 792,360
825,000 5.000%, 06/15/20 ............................................. Aaa/NR 879,285
Weber County, Utah School District Series B
1,485,000 5.000%, 06/15/21 ............................................. Aaa/NR 1,555,493
-------------
Total School District 25,601,440
-------------
Total General Obligation Bonds 44,066,632
-------------
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (77.0%) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
EDUCATION (14.2%)
Carmel, Indiana 2002 School Building Corp.
$ 1,235,000 4.300%, 01/15/23 FSA Insured ................................. NR/AAA $ 1,208,695
1,525,000 4.300%, 07/15/23 FSA Insured ................................. NR/AAA 1,491,892
Clinton Prairie, Indiana Community School Building
675,000 4.625%, 01/15/19 FGIC Insured ................................ NR/AAA 697,329
Florida State Board Education Public Education
210,000 4.500%, 06/01/25 FSA Insured ................................. NR/AAA 212,890
Laredo, Texas Independent School District Public
Facility Corp.
190,000 5.000%, 08/01/24 AMBAC Insured ............................... Aaa/AAA 198,339
Raven Hills, Texas Higher Education
Housing & Education Revenue
215,000 5.000%, 06/01/26 AMBAC Insured ............................... Aaa/NR 221,867
St. Joseph County, Indiana Educational
Facilities Revenue
100,000 5.000%, 03/01/27 ............................................. Aaa/NR 101,771
Salt Lake County, Utah Westminster College Project
115,000 5.050%, 10/01/10 ............................................. NR/BBB 119,254
100,000 5.500%, 10/01/19 ............................................. NR/BBB 103,785
1,200,000 5.000%, 10/01/22 ............................................. NR/BBB 1,217,472
1,250,000 5.000%, 10/01/25 ............................................. NR/BBB 1,263,363
1,000,000 5.750%, 10/01/27 ............................................. NR/BBB 1,038,720
Southern Utah University Revenue
375,000 6.300%, 06/01/16 ............................................. NR/NR* 383,141
Texas State College Student Loan Revenue
100,000 5.000%, 08/01/22 AMT ......................................... Aa1/AA 102,445
Texas State University System Financing Revenue
655,000 4.375%, 03/15/23 FSA Insured ................................. Aaa/AAA 649,878
Tyler, Texas Independent School District
325,000 5.000%, 02/15/26 FSA Insured ................................. Aaa/AAA 341,734
University of Nevada University Revenues
190,000 4.500%, 07/01/24 MBIA Insured ................................ Aaa/AAA 192,272
University of Utah Revenue Refunding
(Biology Research Facilities)
200,000 5.500%, 04/01/11 MBIA Insured (pre-refunded) ................. Aaa/AAA 203,044
University of Utah University Revenues
575,000 5.000%, 04/01/18 MBIA Insured ................................ Aaa/AAA 615,802
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
EDUCATION (CONTINUED)
Utah County, Utah School Facility Revenue
$ 1,440,000 6.500%, 12/01/25 ............................................. NR/NR* $ 1,440,115
Utah State Board Regents Auxiliary & Campus Facility
1,000,000 4.125%, 04/01/20 MBIA Insured ................................ Aaa/AAA 975,210
Utah State Board Regents Dixie State College
115,000 5.500%, 05/01/13 MBIA Insured ................................ Aaa/AAA 126,432
120,000 5.500%, 05/01/14 MBIA Insured ................................ Aaa/AAA 132,142
130,000 5.500%, 05/01/15 MBIA Insured ................................ Aaa/AAA 143,539
400,000 5.100%, 05/01/21 MBIA Insured ................................ Aaa/AAA 420,692
Utah State Board Regents Office Facility Revenue
450,000 5.050%, 02/01/20 MBIA Insured ................................ Aaa/AAA 471,528
360,000 5.125%, 02/01/22 MBIA Insured ................................ Aaa/AAA 378,857
Utah State Board Regents Revenue
2,885,000 4.500%, 08/01/18 MBIA Insured ................................ Aaa/AAA 2,945,700
Utah State Board Regents Revenue Salt Lake
Community College
1,260,000 5.500%, 06/01/16 FSA Insured ................................. Aaa/AAA 1,365,008
Utah State Board Regents Revenue University Utah
1,045,000 5.000%, 04/01/23 MBIA Insured ................................ Aaa/AAA 1,103,489
Utah State Board Regents Revenue University
Utah-Auxiliary & Campus Revenue
1,015,000 5.000%, 04/01/20 MBIA Insured (pre-refunded) ................. Aaa/AAA 1,061,781
Utah State Board Regents Revenue University Utah
Hospital Revenue
2,030,000 5.500%, 08/01/17 MBIA Insured (pre-refunded) ................. Aaa/AAA 2,231,701
905,000 5.000%, 05/01/19 AMBAC Insured ............................... Aaa/AAA 956,024
3,595,000 5.000%, 08/01/19 MBIA Insured ................................ Aaa/AAA 3,754,618
Weber State University, Utah Revenue
100,000 5.250%, 04/01/24 FSA Insured ................................. NR/AAA 105,403
Weber State University, Utah Revenue Student
Facilities System Series A
300,000 5.100%, 04/01/16 ............................................. NR/AA 319,446
425,000 5.250%, 04/01/19 ............................................. NR/AA 456,255
-------------
Total Education 28,751,633
-------------
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
HEALTHCARE (2.1%)
Harris County, Texas Health Facility Development Corp.
$ 145,000 5.000%, 11/15/28 AMBAC Insured ............................... NR/AAA $ 148,252
Lee Memorial Health System, Florida Hospital Revenue
450,000 4.250%, 04/01/22 MBIA Insured ................................ Aaa/AAA 443,741
Murray City, Utah Hospital Revenue
595,000 5.000%, 05/15/22 MBIA Insured ................................ Aaa/AAA 603,009
Salt Lake County, Utah Hospital Revenue -
IHC Hospitals, Inc.
500,000 5.500%, 05/15/13 AMBAC Insured ............................... Aaa/AAA 543,165
Tarrant County, Texas Health Facilities Revenue
230,000 5.000%, 02/15/26 MBIA Insured ................................ Aaa/AAA 234,933
Utah County, Utah Hospital Revenue,
IHC Health Services
1,935,000 5.250%, 08/15/21 MBIA Insured ETM ............................ Aaa/AAA 1,995,662
Utah State Board Regents Revenue University
Utah Hospital Revenue
310,000 5.000%, 08/01/21 MBIA Insured ................................ Aaa/AAA 322,822
-------------
Total Healthcare 4,291,584
-------------
HOUSING (4.0%)
Indiana State Housing Finance Authority Single Family
245,000 4.850%, 07/01/22 AMT ......................................... Aaa/NR 248,815
Provo City, Utah Housing Authority
500,000 5.800%, 07/20/22 GNMA Collateralized ......................... Aaa/NR 517,230
Snohomish County, Washington Housing
Authority Revenue
225,000 5.000%, 09/01/13 AMT ......................................... NR/NR* 224,984
185,000 5.000%, 09/01/14 AMT ......................................... NR/NR* 184,345
145,000 5.100%, 09/01/15 AMT ......................................... NR/NR* 144,990
Utah Housing Corporation Single Family Housing
280,000 4.000%, 07/01/11 AMT ......................................... Aaa/AAA 279,042
65,000 5.250%, 07/01/23 AMT ......................................... Aa2/AA 65,831
Utah Housing Corporation Single Family Mortgage
235,000 4.000%, 07/01/11 AMT ......................................... Aaa/AAA 235,562
50,000 5.150%, 07/01/23 AMT ......................................... Aaa/AAA 50,392
1,340,000 5.000%, 07/01/25 AMT ......................................... Aa3/AA- 1,364,267
900,000 5.100%, 01/01/26 AMT ......................................... Aa3/AA- 911,952
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
HOUSING (CONTINUED)
Utah State Housing Agency Housing Revenue
$ 140,000 5.650%, 07/01/27 AMT ......................................... Aa2/AA $ 144,456
Utah State Housing Corporation Single Family
Housing Revenue
1,425,000 5.125%, 07/01/24 AMT ......................................... Aa3/AA- 1,442,000
Utah State Housing Finance Agency
10,000 6.350%, 07/01/11 Mezzanine Series G-1 ........................ AAA/NR 10,037
10,000 6.350%, 07/01/12 AMBAC Insured AMT ........................... Aaa/AAA 10,000
5,000 6.150%, 07/01/16 Senior Issue A-1 ............................ Aaa/AAA 5,106
140,000 5.650%, 07/01/16 Series 1994C ................................ Aaa/AAA 142,299
55,000 5.400%, 07/01/16 AMT ......................................... Aa2/AA 55,673
85,000 6.000%, 07/01/17 AMT ......................................... Aaa/AA 86,875
845,000 5.500%, 07/01/18 AMT ......................................... Aa3/AA- 874,330
105,000 5.300%, 07/01/18 AMT ......................................... Aaa/AAA 109,432
100,000 5.000%, 07/01/18 AMT ......................................... Aaa/AAA 101,565
195,000 5.400%, 07/01/20 AMT ......................................... Aa2/AA 199,701
400,000 5.600%, 07/01/23 AMT ......................................... Aa2/AA 408,552
120,000 5.700%, 07/01/26 MBIA Insured ................................ Aaa/AAA 120,448
Wyoming Community Development Authority
Housing Revenue
120,000 5.000%, 12/01/22 ............................................. Aa1/AA+ 123,522
-------------
Total Housing 8,061,406
-------------
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (0.6%)
Sandy City, Utah Industrial Development, H Shirley
Wright Project, Refunding Bonds, LOC Olympus Bank
250,000 6.125%, 08/01/16 ............................................. NR/AAA 250,605
Utah County Environmental Improvement Revenue
935,000 5.050%, 11/01/17 ............................................. Baa1/BBB+ 985,135
-------------
Total Industrial Development & Pollution Control 1,235,740
-------------
LEASE (5.7%)
Celebration Community Development District, Florida
290,000 5.000%, 05/01/22 MBIA Insured ................................ Aaa/AAA 305,973
Draper, Utah Municipal Building Authority
355,000 5.000%, 11/15/20 AMBAC Insured ............................... Aaa/NR 378,902
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
LEASE (CONTINUED)
Marion County, Indiana Convention & Recreational
Facilities Authority Revenue
$ 390,000 5.000%, 06/01/27 MBIA Insured ................................ Aaa/AAA $ 399,411
Murray City, Utah Municipal Building Revenue
520,000 5.050%, 12/01/15 AMBAC Insured ............................... Aaa/NR 552,100
Salt Lake County, Utah Municipal Building Authority,
Lease Revenue
320,000 5.400%, 10/15/19 AMBAC Insured (pre-refunded) ................ Aaa/AAA 345,901
3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) ................ Aaa/AAA 4,239,651
Utah County, Utah Municipal Building Authority,
Lease Revenue
120,000 5.500%, 11/01/16 AMBAC Insured ............................... Aaa/NR 132,204
240,000 5.500%, 11/01/17 AMBAC Insured ............................... Aaa/NR 264,408
Utah State Building Ownership Authority
1,350,000 5.250%, 05/15/20 FSA Insured (pre-refunded) .................. Aaa/AAA 1,409,900
1,080,000 5.000%, 05/15/25 ............................................. Aa1/AA+ 1,139,551
Washington County - St. George, Utah Interlocal
Agency Revenue
1,000,000 5.125%, 12/01/17 AMBAC Insured ............................... NR/AAA 1,041,480
100,000 5.125%, 12/01/22 AMBAC Insured ............................... NR/AAA 103,790
West Bountiful, Utah Courthouse Revenue
410,000 5.000%, 05/01/19 ............................................. NR/A- 436,281
West Valley City, Utah
865,000 5.000%, 08/01/21 AMBAC Insured ............................... Aaa/AAA 906,382
-------------
Total Lease 11,655,934
-------------
TAX REVENUE (25.1%)
Bay County, Florida Sales Tax Revenue
175,000 4.750%, 09/01/23 FSA Insured ................................. Aaa/NR 178,162
Bluffdale City, Utah Series 2004
295,000 6.000%, 12/01/13 ............................................. NR/NR* 297,749
310,000 6.000%, 12/01/14 ............................................. NR/NR* 312,957
330,000 6.000%, 12/01/15 ............................................. NR/NR* 330,551
350,000 6.000%, 12/01/16 ............................................. NR/NR* 350,585
370,000 6.000%, 12/01/17 ............................................. NR/NR* 370,651
395,000 6.000%, 12/01/18 ............................................. NR/NR* 395,731
420,000 6.000%, 12/01/19 ............................................. NR/NR* 420,815
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
TAX REVENUE (CONTINUED)
Bluffdale, Utah Sales Tax Revenue
$ 2,045,000 5.500%, 08/01/23 ............................................. NR/NR* $ 2,125,021
Bountiful, Utah Special Improvement District
Special Assessment Revenue
203,000 5.000%, 06/01/14 ............................................. NR/NR* 203,014
213,000 5.150%, 06/01/15 ............................................. NR/NR* 213,089
224,000 5.300%, 06/01/16 ............................................. NR/NR* 224,056
236,000 5.500%, 06/01/17 ............................................. NR/NR* 236,160
249,000 5.650%, 06/01/18 ............................................. NR/NR* 249,229
Brian Head, Utah Special Service Improvement
District Revenue
290,000 5.350%, 11/01/12 ............................................. NR/NR* 299,396
Cache County, Utah Sales Tax Revenue
500,000 5.000%, 12/15/14 FGIC Insured ................................ Aaa/AAA 535,050
670,000 5.000%, 12/15/16 FGIC Insured ................................ Aaa/AAA 712,766
600,000 5.000%, 12/15/17 FGIC Insured ................................ Aaa/AAA 635,310
510,000 5.000%, 12/15/18 FGIC Insured ................................ Aaa/AAA 537,484
830,000 5.000%, 12/15/19 FGIC Insured ................................ Aaa/AAA 874,729
Clark County, Nevada Improvement District Revenue
250,000 5.000%, 08/01/16 ............................................. NR/NR* 253,450
Clearfield, Utah Sales Tax Revenue
590,000 5.000%, 07/01/18 FGIC Insured ................................ Aaa/AAA 626,285
620,000 5.000%, 07/01/19 FGIC Insured ................................ Aaa/AAA 655,669
650,000 5.000%, 07/01/20 FGIC Insured ................................ Aaa/AAA 685,250
Coral Canyon, Utah Special Service District
110,000 5.000%, 07/15/13 ............................................. NR/NR* 114,117
250,000 5.500%, 07/15/18 ............................................. NR/NR* 259,025
Davis County, Utah Sales Tax Revenue
1,470,000 5.150%, 10/01/18 AMBAC Insured ............................... NR/AAA 1,572,665
Fishers, Indiana Redevelopment Authority
Lease Revenue
175,000 4.500%, 07/15/20 AMBAC Insured ............................... Aaa/AAA 178,696
Henderson, Nevada Local Improvement
District Revenue
300,000 5.000%, 09/01/14 ............................................. NR/NR* 307,608
300,000 5.000%, 09/01/15 ............................................. NR/NR* 305,970
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
TAX REVENUE (CONTINUED)
Jordanelle, Utah Special Service District
$ 186,000 5.000%, 11/15/14 ............................................. NR/NR* $ 188,161
196,000 5.100%, 11/15/15 ............................................. NR/NR* 198,587
206,000 5.200%, 11/15/16 ............................................. NR/NR* 208,276
216,000 5.300%, 11/15/17 ............................................. NR/NR* 218,439
228,000 5.400%, 11/15/18 ............................................. NR/NR* 230,631
240,000 5.500%, 11/15/19 ............................................. NR/NR* 242,827
253,000 5.600%, 11/15/20 ............................................. NR/NR* 255,841
268,000 5.700%, 11/15/21 ............................................. NR/NR* 270,932
283,000 5.800%, 11/15/22 ............................................. NR/NR* 286,090
299,000 6.000%, 11/15/23 ............................................. NR/NR* 302,175
Jordanelle, Utah Special Service Improvement District
320,000 8.000%, 10/01/11 ............................................. NR/NR* 330,464
Lehi, Utah Sales Tax
610,000 5.000%, 06/01/21 FSA Insured ................................. Aaa/AAA 647,344
790,000 5.000%, 06/01/24 FSA Insured ................................. Aaa/AAA 831,483
Mesquite New Special Improvement District, Nevada
185,000 4.600%, 08/01/11 ............................................. NR/NR* 184,715
195,000 4.750%, 08/01/12 ............................................. NR/NR* 194,809
230,000 4.900%, 08/01/13 ............................................. NR/NR* 229,689
140,000 5.250%, 08/01/17 ............................................. NR/NR* 139,551
315,000 5.350%, 08/01/19 ............................................. NR/NR* 313,573
135,000 5.400%, 08/01/20 ............................................. NR/NR* 134,361
500,000 5.500%, 08/01/25 ............................................. NR/NR* 496,660
Mountain Regional Water District, Utah Special
Assessment Revenue
1,870,000 7.000%, 12/01/18 ............................................. NR/NR* 1,944,763
Mountain Regional Water, Utah Special Service District
2,000,000 5.000%, 12/15/20 MBIA Insured ................................ Aaa/AAA 2,114,000
North Ogden, Utah Sales Tax Revenue
195,000 5.000%, 11/01/24 XLCA Insured ................................ Aaa/AAA 204,485
Plainfield Independent Redevelopment Authority, Indiana
500,000 4.250%, 08/01/18 CIFG Insured ................................ Aaa/NR 497,580
1,070,000 4.375%, 08/01/20 CIFG Insured ................................ Aaa/NR 1,067,111
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
TAX REVENUE (CONTINUED)
Salt Lake City, Utah Sales Tax Revenue
$ 490,000 5.250%, 02/01/12 ............................................. NR/AAA $ 533,733
265,000 5.250%, 02/01/13 ............................................. NR/AAA 287,448
1,320,000 5.250%, 02/01/15 ............................................. NR/AAA 1,421,402
100,000 5.250%, 02/01/17 ............................................. NR/AAA 107,066
Salt Lake County, Utah Sales Tax Revenue
955,000 5.000%, 02/01/21 ............................................. NR/AAA 1,017,304
1,725,000 5.000%, 08/01/21 ............................................. NR/AAA 1,842,611
1,005,000 5.000%, 02/01/22 ............................................. NR/AAA 1,068,225
1,060,000 5.000%, 02/01/23 ............................................. NR/AAA 1,123,388
1,115,000 5.000%, 02/01/24 ............................................. NR/AAA 1,182,547
Sandy City, Utah Sales Tax Revenue
520,000 5.000%, 09/15/18 AMBAC Insured ............................... NR/AAA 547,435
605,000 5.000%, 09/15/20 AMBAC Insured ............................... NR/AAA 634,754
South Jordan, Utah Municipal Building
Authority Revenue
290,000 5.375%,10/01/20 AMBAC Insured ................................ NR/AAA 314,044
South Jordan, Utah Sales Tax
570,000 5.000%, 08/15/15 AMBAC Insured ............................... Aaa/AAA 602,182
South Jordan, Utah Special Assignment
1,000,000 6.875%, 11/01/17 ............................................. NR/NR* 1,024,760
South Weber City, Utah
525,000 5.000%, 01/15/24 MBIA Insured ................................ Aaa/AAA 550,447
Springville, Utah Special Improvement District Revenue
400,000 5.500%, 1/15/2017 ............................................ NR/NR* 400,504
423,000 5.650%, 1/15/2018 ............................................ NR/NR* 423,533
446,000 5.800%, 1/15/2019 ............................................ NR/NR* 446,562
472,000 5.900%, 1/15/2020 ............................................ NR/NR* 472,595
500,000 6.000%, 1/15/2021 ............................................ NR/NR* 500,630
Utah Water Finance Agency Revenue
775,000 5.100%, 07/01/18 AMBAC Insured ............................... Aaa/NR 818,764
510,000 5.000%, 07/01/18 AMBAC Insured ............................... Aaa/NR 539,677
260,000 5.000%, 06/01/19 MBIA Insured ................................ Aaa/AAA 266,799
685,000 5.000%, 07/01/19 AMBAC Insured ............................... Aaa/NR 724,408
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
TAX REVENUE (CONTINUED)
Wasatch County, Utah Building Authority
$ 130,000 5.000%, 10/01/15 ............................................. A3/NR $ 136,189
135,000 5.000%, 10/01/16 ............................................. A3/NR 140,885
Wasatch County, Utah Sales Tax Revenue
205,000 5.000%, 12/01/16 AMBAC Insured ............................... Aaa/AAA 218,020
210,000 5.000%, 12/01/17 AMBAC Insured ............................... Aaa/AAA 222,295
225,000 5.000%, 12/01/18 AMBAC Insured ............................... Aaa/AAA 237,202
Washington City, Utah Sales Tax Revenue
680,000 5.250%, 11/15/17 AMBAC Insured ............................... Aaa/AAA 738,249
Washoe County, Nevada Tax Revenue
210,000 5.000%, 12/01/23 MBIA Insured ................................ Aaa/AAA 216,688
Weber County Utah Sales Tax Revenue
385,000 5.000%, 07/01/23 AMBAC Insured ............................... Aaa/NR 404,866
West Valley City, Utah Redevelopment Agency Revenue
1,625,000 5.000%, 03/01/21 ............................................. NR/A- 1,687,790
320,000 5.000%, 03/01/22 ............................................. NR/A- 331,635
350,000 5.000%, 03/01/23 ............................................. NR/A- 361,666
1,000,000 5.000%, 03/01/24 ............................................. NR/A- 1,030,310
West Valley City, Utah Sales Tax Revenue
800,000 5.500%, 07/15/17 MBIA Insured ................................ Aaa/AAA 863,912
250,000 5.000%, 07/15/20 AMBAC Insured ............................... Aaa/AAA 262,770
180,000 5.000%, 07/15/21 MBIA Insured ................................ Aaa/AAA 187,848
Woodland Hills, Utah Special Assessment Revenue
18,000 5.500%, 08/01/09 ............................................. NR/NR* 18,243
221,000 5.500%, 08/01/10 ............................................. NR/NR* 225,097
233,000 5.500%, 08/01/11 ............................................. NR/NR* 239,850
246,000 5.500%, 08/01/12 ............................................. NR/NR* 254,059
261,000 5.500%, 08/01/13 ............................................. NR/NR* 270,631
-------------
Total Tax Revenue 51,092,810
-------------
TRANSPORTATION (4.2%)
Florida State Turnpike Authority Turnpike Revenue
500,000 4.500%, 07/01/22 MBIA Insured Aaa/AAA 510,615
Port of Seattle, Washington Revenue
100,000 5.100%, 04/01/24 AMT FGIC Insured Aaa/AAA 101,781
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
TRANSPORTATION (CONTINUED)
Utah Transit Authority Sales Tax &
Transportation Revenue
$ 1,000,000 5.400%, 12/15/16 FSA Insured ................................. NR/AAA $ 1,049,570
100,000 5.000%, 06/15/21 FSA Insured ................................. Aaa/AAA 105,327
3,300,000 4.125%, 06/15/21 FSA Insured ................................. Aaa/AAA 3,253,569
3,450,000 4.125%, 06/15/22 FSA Insured ................................. Aaa/AAA 3,379,275
100,000 5.000%, 06/15/25 FSA Insured ................................. Aaa/AAA 104,101
-------------
Total Transportation 8,504,238
-------------
UTILITY (11.2%)
Eagle Mountain, Utah Gas & Electric Revenue
1,385,000 4.250%, 06/01/20 Radian Insured .............................. NR/AA 1,347,106
1,440,000 5.000%, 06/01/21 Radian Insured .............................. Aa3/AA 1,494,662
1,515,000 5.000%, 06/01/22 Radian Insured .............................. NR/AA 1,567,798
Indianapolis, Indiana Gas Utility Revenue
290,000 5.000%, 08/15/24 AMBAC Insured ............................... Aaa/AAA 295,237
Intermountain Power Agency Utilities Light &
Power Service, Utah
450,000 5.000%, 07/01/12 MBIA Insured ETM ............................ Aaa/AAA 454,311
1,470,000 5.250%, 07/01/15 MBIA Insured ................................ Aaa/AAA 1,546,808
90,000 5.000%, 07/01/16 ............................................. A1/A+ 92,471
675,000 5.000%, 07/01/18 FSA Insured ................................. Aaa/AAA 716,958
1,380,000 5.000%, 07/01/19 MBIA Insured ................................ Aaa/AAA 1,433,309
2,450,000 5.000%, 07/01/21 ............................................. A1/A+ 2,502,822
550,000 5.000%, 07/01/23 FSA Insured ................................. Aaa/AAA 561,726
Lower Colorado River Authority, Texas Revenue
175,000 5.000%, 05/15/26 FSA Insured ................................. Aaa/AAA 182,759
Manti City, Utah Electric System Revenue
603,000 5.750%, 02/01/17 ............................................. NR/NR* 626,366
Murray City, Utah Utility Electric Revenue
400,000 5.625%, 06/01/18 AMBAC Insured ............................... Aaa/NR 434,132
1,340,000 5.000%, 06/01/25 AMBAC Insured ............................... Aaa/NR 1,409,399
St. George, Utah Electric Revenue
1,910,000 4.500%, 06/01/20 FSA Insured ................................. Aaa/NR 1,945,144
Salem, Utah Electric Revenue
125,000 5.300%, 11/01/07 ............................................. NR/NR* 126,919
130,000 5.350%, 11/01/08 ............................................. NR/NR* 133,792
140,000 5.400%, 11/01/09 ............................................. NR/NR* 144,817
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
UTILITY (CONTINUED)
Seattle, Washington Municipal Light & Power Revenue
$ 1,360,000 4.500%, 08/01/19 FSA Insured ................................. Aaa/AAA $ 1,393,021
Southern Utah Valley Power System Revenue
210,000 5.250%, 09/15/13 MBIA Insured ................................ NR/AAA 228,875
225,000 5.250%, 09/15/14 MBIA Insured ................................ NR/AAA 245,639
235,000 5.250%, 09/15/15 MBIA Insured ................................ NR/AAA 255,830
185,000 5.125%, 09/15/21 MBIA Insured ................................ NR/AAA 196,104
Springville, Utah Electric Revenue
550,000 5.600%, 03/01/09 ............................................. Baa1/NR 572,501
Utah Assessed Municipal Power System Revenue
790,000 5.250%, 12/01/09 ............................................. NR/A- 827,091
1,000,000 5.000%, 04/01/21 FSA Insured ................................. Aaa/AAA 1,051,980
Washington, Utah Electric Revenue
985,000 5.000%, 09/01/21 XLCA Insured ................................ Aaa/NR 1,040,909
-------------
Total Utility 22,828,486
-------------
WATER AND SEWER (9.9%)
Ashley Valley, Utah
140,000 9.500%, 01/01/08 AMBAC Insured ............................... Aaa/AAA 145,873
Eagle Mountain, Utah Water and Sewer
750,000 5.800%, 11/15/16 ACA Insured ................................. NR/A 793,763
Granger and Hunter, Utah Improvement District
Water and Sewer
350,000 5.000%, 03/01/18 FSA Insured (pre-refunded) .................. Aaa/NR 362,415
Jordan Valley Water Conservancy District, Utah
715,000 4.375%, 10/01/18 AMBAC Insured ............................... Aaa/AAA 723,165
Mesquite, Texas Waterworks & Sewer Revenue
225,000 4.500%, 03/01/24 FSA Insured ................................. Aaa/AAA 225,292
Murray City, Utah Sewer and Water Revenue
465,000 5.000%, 10/01/17 AMBAC Insured ............................... Aaa/NR 495,020
390,000 5.000%, 10/01/18 AMBAC Insured ............................... Aaa/NR 413,318
440,000 5.000%, 10/01/19 AMBAC Insured ............................... Aaa/NR 466,004
North Davis County, Utah Sewer District
1,330,000 5.375%, 03/01/18 AMBAC Insured (pre-refunded) ................ Aaa/NR 1,462,322
1,350,000 5.000%, 03/01/21 AMBAC Insured ............................... Aaa/NR 1,427,679
150,000 5.125%, 03/01/22 AMBAC Insured (pre-refunded) ................ Aaa/NR 162,867
Orem, Utah Water & Storm Sewer Revenue
1,720,000 4.500%, 07/15/17 MBIA Insured ................................ Aaa/AAA 1,769,691
RATING
FACE MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ -------------------------------------------------------------- -------- -------------
WATER AND SEWER (CONTINUED)
Riverton, Utah Water Revenue
$ 100,000 5.350%, 09/01/15 FGIC Insured (pre-refunded) ................. Aaa/NR $ 108,237
Salt Lake City, Utah Metropolitan Water Revenue
1,200,000 5.375%, 07/01/24 AMBAC Insured (pre-refunded) ................ Aaa/AAA 1,279,380
125,000 5.375%, 07/01/29 AMBAC Insured (pre-refunded) ................ Aaa/AAA 133,269
Salt Lake City, Utah Water and Sewer Revenue
675,000 5.000%, 02/01/19 FSA Insured ................................. Aaa/AAA 716,371
845,000 5.000%, 02/01/20 FSA Insured ................................. Aaa/AAA 893,816
Salt Lake & Sandy, Utah Water District
1,000,000 5.000%, 07/01/20 AMBAC Insured ............................... Aaa/NR 1,060,290
South Valley Water Reclamation Facility, Utah
710,000 4.375%, 08/15/18 ............................................. NR/AAA 718,030
Spanish Fork City, Utah Water Revenue
195,000 5.500%, 06/01/17 FSA Insured ................................. Aaa/NR 213,451
55,000 5.500%, 06/01/17 FSA Insured (pre-refunded) .................. Aaa/NR 60,928
Upper Trinity Regional Water District, Texas
205,000 4.500%, 08/01/20 AMBAC Insured ............................... Aaa/AAA 207,761
Utah Water Finance Agency Revenue
100,000 5.000%, 06/01/14 MBIA Insured ................................ Aaa/AAA 103,686
200,000 5.250%, 07/01/16 AMBAC Insured ............................... Aaa/NR 216,418
250,000 5.375%, 09/01/17 AMBAC Insured ............................... Aaa/NR 273,843
310,000 5.000%, 10/01/17 AMBAC Insured ............................... Aaa/NR 327,760
750,000 5.250%, 10/01/18 AMBAC Insured ............................... Aaa/NR 814,073
465,000 5.000%, 10/01/20 AMBAC Insured ............................... Aaa/NR 487,999
830,000 4.500%, 10/01/22 AMBAC Insured ............................... Aaa/NR 839,338
100,000 5.125%, 07/01/23 AMBAC Insured ............................... Aaa/NR 105,322
285,000 5.300%, 10/01/23 MBIA Insured (pre-refunded) ................. Aaa/AAA 299,948
870,000 4.500%, 10/01/23 AMBAC Insured ............................... Aaa/NR 877,151
450,000 5.400%, 10/01/24 AMBAC Insured (pre-refunded) ................ Aaa/AAA 482,144
250,000 5.500%, 10/01/29 AMBAC Insured (pre-refunded) ................ Aaa/AAA 268,727
Weber-Box Elder, Utah Conservation District Water Revenue
200,000 6.450%, 11/01/14 (pre-refunded) .............................. Baa3/NR 225,298
200,000 6.500%, 11/01/19 (pre-refunded) .............................. Baa3/NR 225,736
335,000 6.900%, 11/01/20 (pre-refunded) .............................. Baa3/NR 383,994
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 $ 303,555
-------------
Total Water and Sewer 20,073,934
-------------
Total Revenue Bonds 156,495,765
-------------
Total Investments (cost $162,234,383**) ...................... 98.7% 200,562,397
Other assets less liabilities ................................ 1.3 2,561,223
------- -------------
Net Assets ................................................... 100.0% $ 203,123,620
======= =============
PERCENT OF
PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO
------------------------------------------------------------------ ----------
Aaa of Moody's or AAA of S&P ..................................... 75.8%
Aa of Moody's or AA of S&P ....................................... 6.1
A of Moody's or S&P .............................................. 4.1
Baa of Moody's or BBB of S&P ..................................... 2.6
Not rated* ....................................................... 11.4
-------
100.0%
=======
* 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.
PORTFOLIO ABBREVIATIONS:
------------------------
ACA - American Capital Assurance Financial Guaranty Corp.
AMBAC - American Municipal Bond
Assurance Corp.
AMT - Alternative Minimum Tax
CIFG - CDC IXIS Financial Guaranty
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
DECEMBER 31, 2005
(UNAUDITED)
ASSETS
Investments at value (cost $197,057,492) ........................................... $ 200,562,397
Interest receivable ................................................................ 3,116,255
Receivable for investment securities sold .......................................... 815,000
Receivable for Fund shares sold .................................................... 244,958
Other assets ....................................................................... 6,804
-------------
Total assets ....................................................................... 204,745,414
-------------
LIABILITIES
Cash overdraft ..................................................................... 705,738
Payable for Fund shares redeemed ................................................... 466,227
Dividends payable .................................................................. 290,354
Distribution and service fees payable .............................................. 97,586
Management fees payable ............................................................ 30,718
Accrued expenses ................................................................... 31,171
-------------
Total liabilities .................................................................. 1,621,794
-------------
NET ASSETS ............................................................................. $ 203,123,620
=============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 200,912
Additional paid-in capital ......................................................... 202,344,129
Net unrealized appreciation on investments (note 4) ................................ 3,504,905
Accumulated net realized loss on investments ....................................... (2,591,003)
Distributions in excess of net investment income ................................... (335,323)
-------------
$ 203,123,620
=============
CLASS A
Net Assets ......................................................................... $ 137,751,773
=============
Capital shares outstanding ......................................................... 13,631,406
=============
Net asset value and redemption price per share ..................................... $ 10.11
=============
Offering price per share (100/96 of $10.11 adjusted to nearest cent) ............... $ 10.53
=============
CLASS C
Net Assets ......................................................................... $ 32,057,902
=============
Capital shares outstanding ......................................................... 3,173,477
=============
Net asset value and offering price per share ....................................... $ 10.10
=============
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) ...................................... $ 10.10*
=============
CLASS Y
Net Assets ......................................................................... $ 33,313,945
=============
Capital shares outstanding ......................................................... 3,286,931
=============
Net asset value, offering and redemption price per share ........................... $ 10.14
=============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED)
INVESTMENT INCOME:
Interest income ............................................................... $ 4,298,404
Expenses:
Management fee (note 3) ....................................................... $ 479,507
Distribution and service fees (note 3) ........................................ 283,953
Legal fees (note 3) ........................................................... 56,956
Trustees' fees and expenses (note 8) .......................................... 49,757
Transfer and shareholder servicing agent fees ................................. 45,760
Custodian fees ................................................................ 32,367
Fund accounting fees .......................................................... 29,661
Shareholders' reports and proxy statements .................................... 16,248
Auditing and tax fees ......................................................... 10,846
Registration fees and dues .................................................... 10,058
Insurance ..................................................................... 5,466
Chief compliance officer (note 3) ............................................. 2,291
Miscellaneous ................................................................. 14,714
------------
Total expenses ................................................................ 1,037,584
Management fee waived (note 3) ................................................ (306,884)
Expenses paid indirectly (note 6) ............................................. (41,276)
------------
Net expenses .................................................................. 689,424
------------
Net investment income ......................................................... 3,608,980
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions ......................... 149,546
Change in unrealized appreciation on investments .............................. (2,832,933)
------------
Net realized and unrealized gain (loss) on investments ........................ (2,683,387)
------------
Net increase in net assets resulting from operations ................................ $ 925,593
============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
----------------- -------------
OPERATIONS:
Net investment income ....................................... $ 3,608,980 $ 5,597,480
Net realized gain (loss) from securities transactions ....... 149,546 339,699
Change in unrealized appreciation on investments ............ (2,832,933) 4,737,661
------------- -------------
Change in net assets from operations ...................... 925,593 10,674,840
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 10):
Class A Shares:
Net investment income ....................................... (2,735,693) (4,664,445)
Class C Shares:
Net investment income ....................................... (492,503) (844,820)
Class Y Shares:
Net investment income ....................................... (598,937) (481,279)
------------- -------------
Change in net assets from distributions ................... (3,827,133) (5,990,544)
------------- -------------
CAPITAL SHARE TRANSACTIONS (note 7):
Proceeds from shares sold ................................... 51,533,137 61,124,699
Reinvested dividends and distributions ...................... 2,344,001 3,507,838
Cost of shares redeemed ..................................... (19,451,609) (22,013,872)
------------- -------------
Change in net assets from capital share transactions ...... 34,425,529 42,618,665
------------- -------------
Change in net assets ...................................... 31,523,989 47,302,961
NET ASSETS:
Beginning of period ........................................... 171,599,631 124,296,670
------------- -------------
End of period* ................................................ $ 203,123,620 $ 171,599,631
============= =============
* Includes distributions in excess of net investment income of: $ (335,323) $ (117,170)
============= =============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
(UNAUDITED)
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 in good
faith 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 six months ended December 31, 2005, the Fund incurred management
fees of $479,507 of which $306,884 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 six months ended December 31, 2005,
distribution fees on Class A Shares amounted to $133,871, of which the
Distributor retained $2,039.
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
six months ended December 31, 2005, amounted to $112,562. 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 six months ended December 31, 2005 amounted to $37,521. The
total of these payments with respect to Class C Shares amounted to $150,083, of
which the Distributor retained $26,664.
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 six months ended
December 31, 2005, total commissions on sales of Class A Shares amounted to
$288,089, of which the Distributor received $24,084.
c) OTHER RELATED PARTY TRANSACTIONS:
For the six months ended December 31, 2005, the Fund incurred $56,099 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 that firm.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 2005, purchases of securities and
proceeds from the sales of securities aggregated $42,252,484 and $7,365,128,
respectively.
At December 31, 2005, the aggregate tax cost for all securities was
$197,018,177. At Dececember 31, 2005, the aggregate gross unrealized
appreciation for all securities in which there is an excess of market value over
tax cost amounted to $3,984,866 and aggregate gross unrealized depreciation for
all securities in which there is an excess of tax cost over market value
amounted to $440,646, for a net unrealized appreciation of $3,544,220.
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 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 December 31,
2005, the Fund had 80% 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:
SIX MONTHS ENDED
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
CLASS A SHARES:
Proceeds from shares sold 1,966,551 $ 19,928,051 3,901,386 $ 39,687,818
Reinvested distributions 171,273 1,734,525 277,575 2,823,980
Cost of shares redeemed . (793,209) (8,002,058) (1,384,213) (14,072,096)
------------ ------------ ------------ ------------
Net change ............ 1,344,615 13,660,518 2,794,748 28,439,702
------------ ------------ ------------ ------------
CLASS C SHARES:
Proceeds from shares sold 637,118 6,449,876 825,234 8,390,613
Reinvested distributions 29,091 294,451 48,338 491,581
Cost of shares redeemed . (181,314) (1,835,646) (401,020) (4,069,806)
------------ ------------ ------------ ------------
Net change ............ 484,895 4,908,681 472,552 4,812,388
------------ ------------ ------------ ------------
CLASS Y SHARES:
Proceeds from shares sold 2,462,364 25,155,210 1,275,070 13,046,268
Reinvested distributions 31,081 315,025 18,832 192,277
Cost of shares redeemed . (948,795) (9,613,905) (380,156) (3,871,970)
------------ ------------ ------------ ------------
Net change ............ 1,544,650 15,856,330 913,746 9,366,575
------------ ------------ ------------ ------------
Total transactions in Fund
shares .................. 3,374,160 $ 34,425,529 4,181,046 $ 42,618,665
============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES
At December 31, 2005 there were 5 Trustees, one of which is affiliated
with the Manager and is not paid any fees. The total amount of Trustees' service
and attendance fees paid during the six months ended December 31, 2005 was
$40,833, 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 six months
ended December 31, 2005, such meeting-related expenses amounted to $8,924.
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.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
12/31/05 --------------------------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ........... $ 10.26 $ 9.91 $ 10.31 $ 9.85 $ 9.65 $ 9.35
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ...................... 0.20+ 0.41+ 0.43++ 0.44+ 0.46+ 0.48+
Net gain (loss) on securities (both realized
and unrealized) ......................... (0.14) 0.38 (0.37) 0.48 0.22 0.32
-------- -------- -------- -------- -------- --------
Total from investment operations ........... 0.06 0.79 0.06 0.92 0.68 0.80
-------- -------- -------- -------- -------- --------
Less distributions (note 10):
Dividends from net investment income ....... (0.21) (0.44) (0.46) (0.46) (0.48) (0.50)
Distributions from capital gains ........... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions ........................ (0.21) (0.44) (0.46) (0.46) (0.48) (0.50)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 10.11 $ 10.26 $ 9.91 $ 10.31 $ 9.85 $ 9.65
======== ======== ======== ======== ======== ========
Total return (not reflecting sales charge) ..... 0.59%* 8.06% 0.54% 9.55% 7.22% 8.72%
Ratios/supplemental data
Net assets, end of period (in thousands) ... $137,752 $126,091 $ 94,103 $ 85,329 $ 55,957 $ 34,321
Ratio of expenses to average net assets .... 0.67%** 0.59% 0.48% 0.43% 0.46% 0.48%
Ratio of net investment income to average
net assets .............................. 3.81%** 3.98% 4.19% 4.31% 4.65% 4.95%
Portfolio turnover rate .................... 7.33%* 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:
Ratio of expenses to average net assets .... 0.94%** 0.97% 0.94% 1.02% 1.00% 1.11%
Ratio of net investment income to average
net assets .............................. 3.54%** 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 .... 0.62%** 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.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period
CLASS C
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
12/31/05 -------------------------------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 10.26 $ 9.91 $ 10.30 $ 9.85 $ 9.64 $ 9.35
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income .................. 0.16+ 0.32+ 0.34++ 0.34+ 0.37+ 0.38+
Net gain (loss) on securities (both
realized and unrealized) ............ (0.15) 0.38 (0.36) 0.48 0.23 (0.31)
------- ------- ------- ------- ------- -------
Total from investment operations ........... 0.01 0.70 (0.02) 0.82 0.60 0.69
------- ------- ------- ------- ------- -------
Less distributions (note 10):
Dividends from net investment income ... (0.17) (0.35) (0.37) (0.37) (0.39) (0.40)
Distributions from capital gains ....... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions .................... (0.17) (0.35) (0.37) (0.37) (0.39) (0.40)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............. $ 10.10 $ 10.26 $ 9.91 $ 10.30 $ 9.85 $ 9.64
======= ======= ======= ======= ======= =======
Total return (not reflecting sales charge) . 0.00%* 7.20% (0.16)% 8.48% 7.86% 7.52%
Ratios/supplemental data
Net assets, end of period (in thousands) $32,058 $27,581 $21,961 $16,420 $ 6,694 $ 1,874
Ratio of expenses to average net assets 1.46%** 1.39% 1.27% 1.31% 1.84% 1.47%
Ratio of net investment income to
average net assets .................. 3.01%** 3.18% 3.38% 3.39% 3.72% 3.93%
Portfolio turnover rate ................ 7.33%* 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:
Ratio of expenses to average net assets 1.74%** 1.77% 1.74% 1.81% 1.78% 1.89%
Ratio of net investment income to
average net assets .................. 2.73%** 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 1.42%** 1.36% 1.27% 1.30% 1.28% 1.39%
CLASS Y
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
12/31/05 ------------------------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 10.29 $ 9.94 $ 10.34 $ 9.89 $ 9.68 $ 9.36
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income .................. 0.21+ 0.42+ 0.44++ 0.42+ 0.50+ 0.49+
Net gain (loss) on securities (both
realized and unrealized) ............ (0.14) 0.39 (0.36) 0.50 0.20 0.34
------- ------- ------- ------- ------- -------
Total from investment operations ........... 0.07 0.81 0.08 0.92 0.70 0.83
------- ------- ------- ------- ------- -------
Less distributions (note 10):
Dividends from net investment income ... (0.22) (0.46) (0.48) (0.47) (0.49) (0.51)
Distributions from capital gains ....... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions .................... (0.22) (0.46) (0.48) (0.47) (0.49) (0.51)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............. $ 10.14 $ 10.29 $ 9.94 $ 10.34 $ 9.89 $ 9.68
======= ======= ======= ======= ======= =======
Total return (not reflecting sales charge) . 0.69%* 8.27% 0.76% 9.55% 7.41% 9.05%
Ratios/supplemental data
Net assets, end of period (in thousands) $33,314 $17,928 $ 8,233 $ 883 $ 30 $ 5
Ratio of expenses to average net assets 0.46%** 0.39% 0.28% 0.30% 0.36% 0.42%
Ratio of net investment income to
average net assets .................. 4.01%** 4.15% 4.41% 4.17% 4.75% 4.83%
Portfolio turnover rate ................ 7.33%* 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:
Ratio of expenses to average net assets 0.74%** 0.77% 0.74% 0.78% 0.80% 0.64%
Ratio of net investment income to
average net assets .................. 3.73%** 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 0.42%** 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.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED)
As a shareholder of the Fund, you may incur two types of costs: (1)
transaction costs, including front-end sales charges with respect to Class A
shares or contingent deferred sales charges ("CDSC") with respect to Class C
shares; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other Fund expenses. The tables below are intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The tables below are based on an investment of $1,000 invested on July 1,
2005 and held for the six months ended December 31, 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 DECEMBER 31, 2005
ACTUAL
TOTAL RETURN BEGINNING ENDING EXPENSES
WITHOUT ACCOUNT ACCOUNT PAID DURING
SALES CHARGES(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
Class A 0.59% $1,000.00 $1,005.90 $ 3.13
- --------------------------------------------------------------------------------
Class C 0.00% $1,000.00 $1,000.00 $ 7.16
- --------------------------------------------------------------------------------
Class Y 0.69% $1,000.00 $1,006.90 $ 2.12
- --------------------------------------------------------------------------------
(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 0.62%, 1.42% AND
0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (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 Fund's actual return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
the information provided in this table to compare the ongoing costs of investing
in the Fund and other mutual funds. To do so, compare this 5.00% hypothetical
example relating to the Fund with the 5.00% hypothetical examples that appear in
the shareholder reports of other mutual funds.
Please note that the expenses shown in the table below are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
with respect to Class A shares. The example does not reflect the deduction of
contingent deferred sales charges ("CDSC") with respect to Class C shares.
Therefore, the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different mutual funds. In
addition, if these transaction costs were included, your costs would have been
higher.
For The Six Months Ended December 31, 2005
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD(1)
- -------------------------------------------------------------------------------
Class A 5.00% $1,000.00 $1,022.05 $3.16
- -------------------------------------------------------------------------------
Class C 5.00% $1,000.00 $1,018.05 $7.22
- -------------------------------------------------------------------------------
Class Y 5.00% $1,000.00 $1,023.09 $2.14
- -------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.62%, 1.42% AND
0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Tax-Free Fund For Utah (the "Fund") was
held on September 24, 2005. The holders of shares representing 81% of the total
net asset value of the shares entitled to vote were present in person or by
proxy. At the meeting, the following matters were voted upon and approved by the
shareholders (the resulting votes are presented below).
1. To elect Trustees.
DOLLAR AMOUNT OF VOTES
----------------------------------
TRUSTEE FOR WITHHELD
------- --- --------
Gary C. Cornia $137,194,397 $ 790,636
Diana P. Herrmann $137,623,177 $ 361,845
Lyle W. Hillyard $137,187,031 $ 798,001
John C. Lucking $137,744,464 $ 240,569
Anne J. Mills $137,615,413 $ 369,620
- --------------------------------------------------------------------------------
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
http://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 http://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.
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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.
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ADDITIONAL INFORMATION (UNAUDITED)
TAX-FREE FUND FOR UTAH (THE "FUND"):
Renewal of the Advisory and Administration Agreement
Renewal until December 31, 2006 of the Advisory and Administration
Agreement (the "Advisory Agreement") between the Fund and the Manager was
approved by the Board of Trustees and the independent Trustees in December,
2005. At a meeting called and held for that purpose at which a majority of the
independent Trustees were present in person, the following materials were
considered:
o Copies of the agreements to be renewed;
o A term sheet describing the material terms of the agreements;
o The Annual Report of the Fund for the year ended June 30, 2005;
o A report, prepared by the Manager and provided to the Trustees in
advance of the meeting for the Trustees review, containing data
about the performance of the Fund, data about its fees, expenses and
purchases and redemptions together with comparisons of such data
with similar data about other comparable funds, as well as data as
to the profitability of the Manager; and
o Quarterly materials reviewed at prior meetings on the Fund's
performance, operations, portfolio and compliance.
The Trustees reviewed materials relevant to, and considered, the factors
set forth below, and as to each agreement reached the conclusions described.
THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE MANAGER.
The Manager has provided local management of the Fund's portfolio,
employing Mr. Thomas S. Albright and Mr. Kimball Young as co-portfolio managers
for the Fund. It had also provided facilities for credit analysis of the Fund's
portfolio securities. Mr. Young, based in Salt Lake City, has extensive
municipal bond underwriting experience and has provided local information
regarding specific holdings in the Fund's portfolio. Mr. Albright has over 25
years of investment management experience. The portfolio managers have also been
available to and have met with the brokerage and financial planner community and
with investors and prospective investors to provide them with information
generally about the Fund's portfolio, with which to assess the Fund as an
investment vehicle for residents of Utah in light of prevailing interest rates
and local economic conditions.
The Board considered that the Manager had provided all services the Board
deemed necessary or appropriate, including the specific services that the Board
has determined are required for the Fund, given that its purpose is to provide
shareholders with as high a level of current income exempt from Utah state and
regular Federal income taxes as is consistent with preservation of capital.
The Board considered that the Manager had established and maintained a
strong culture of ethical conduct and regulatory compliance, and had not been
subject to the kinds of regulatory and legal difficulties recently affecting a
significant number of other investment advisers.
The Board concluded that a commendable quality of services was provided
and that the Fund would be well served if they continued. Evaluation of this
factor weighed in favor of renewal of the Advisory Agreement.
THE INVESTMENT PERFORMANCE OF THE FUND AND THE MANAGER.
The Board determined it appropriate to consider the Fund's performance.
For the one, five and ten-year periods ended September 30, 2005 the Fund's
average annual rate of return for Class A Shares was 3.79%, 6.23% and 5.46%,
respectively. Performance for the other classes was similar.
The Board reviewed each aspect of the Fund's performance and compared its
performance with that of its competitors, national averages and benchmark index.
It was noted that the materials provided by the Manager indicated that the Fund
had investment performance that exceeded or was comparable to that of its peers
for one-, five- and ten-year periods, with lower rates of return explained by
the Fund's generally higher-quality portfolio and generally shorter average
maturities. The Board considered these results to be consistent with the
purposes of the Fund.
The Board concluded that the performance of the Fund, in light of market
conditions, was satisfactory. Evaluation of this factor indicated to the
Trustees that renewal of the Advisory Agreement would be appropriate.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
MANAGER AND ITS AFFILIATES AND FROM THE RELATIONSHIP WITH THE FUND.
The information provided in connection with renewal contained expense data
for the Fund and its competitors as well as data for all single-state tax-free
municipal bond funds nationwide, including data for all such front-end load
funds of a comparable asset size. The materials also showed the profitability to
the Manager of its services to the Fund. The Board noted that the Manager was
currently waiving a portion of its fees and had been since the Fund's inception.
For the year ended June 30, 2005, the Fund incurred management fees of $720,074
of which $585,160 was voluntarily waived. Additionally, it was noted that the
Manager had contractually undertaken to waive fees and/or reimburse Fund
expenses during the period July 1, 2005 through June 30, 2006 so that total Fund
expenses would not exceed 0.86 of 1% for Class A Shares, 1.55 of 1% for Class C
Shares and 0.66 of 1% for Class Y Shares. The Manager had indicated that it
intended to continue waiving fees as necessary in order that the Fund would
remain competitive.
The Board compared the expense and fee data with respect to the Fund to
similar data about other funds that it found to be relevant. The Board concluded
that the expenses of the Fund and the fees paid were similar to and were
reasonable as compared to those being paid by single-state tax-free municipal
bond funds nationwide, and by the Fund's competitors.
The Board considered that the foregoing indicated the appropriateness of
the costs of the services to the Fund, which was being well managed as indicated
by the factors considered previously.
The Board further concluded that the profitability to the Manager and the
Distributor did not argue against approval of the fees to be paid under the
Advisory Agreement.
THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUND GROWS.
Data provided to the Trustees showed that the Fund's asset size had been
increasing in recent years. The Trustees also noted that the materials indicated
that the Fund's fees were already lower than those of its peers, including those
with breakpoints. Additionally, the Trustees noted that the Manager was
currently waiving a substantial portion of its fees. Evaluation of these factors
indicated to the Board that the Advisory Agreement should be renewed without
addition of breakpoints at this time.
BENEFITS DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES FROM THE
RELATIONSHIPS WITH THE FUND.
The Board observed that, as is generally true of most fund complexes, the
Manager and its affiliates, by providing services to a number of funds or other
investment clients including the Fund, were able to spread costs as they would
otherwise be unable to do. The Board noted that while that produces efficiencies
and increased profitability for the Manager and its affiliates, it also makes
their services available to the Fund at favorable levels of quality and cost
which are more advantageous to the Fund than would otherwise have been possible.
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FOUNDERS
Lacy B. Herrmann, Chairman Emeritus
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
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.
101 Sabin Street
Pawtuckett, RI 02860
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Tait, Weller & Baker LLP
1818 Market Street, Suite 2400
Philadelphia, PA 19103
Further information is contained in the Prospectus, which must precede or
accompany this report.
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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) Not applicable.
(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
- - - ---------------------------------
President and Trustee
March 9, 2006
By: /s/ Joseph P. DiMaggio
- - - -----------------------------------
Chief Financial Officer and Treasurer
March 9, 2006
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
President and Trustee
March 9, 2006
By: /s/ Joseph P. DiMaggio
- - - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
March 9, 2006
TAX-FREE FUND FOR UTAH
EXHIBIT INDEX
(a) (2) Certifications of principal executive officer
and principal financial officer as required by Rule 30a-2(a)
under the Investment Company Act of 1940.
(b) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.