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: 06/30/06
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL
REPORT
JUNE 30, 2006
[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
"BUILT TO RIDE THE WAVES"
August, 2006
Dear Fellow Shareholder:
As you are no doubt aware, the financial markets have certainly had their
fair share of crests and troughs recently ? one day the markets are up, and the
next day, they are down. Riding these waves is not always easy for investors.
The management of Tax-Free Fund For Utah understands investors'
apprehension when it comes to fluctuations with your hard-earned investment
monies. And, this concern is especially pertinent as it relates to saving for
and funding your retirement.
With this very real and inevitable concern in mind, Tax-Free Fund For Utah
has endeavored to structure the Fund to "ride the waves" with the least upset to
investors as possible. How do we go about seeking to accomplish this?
INVESTMENT QUALITY
No matter what quality rating exists with a security, it will still be
subject to market fluctuations. However, our experience has been that
top-quality ratings do not fluctuate as much as lower quality ratings.
Furthermore, when they do fluctuate, they tend to fluctuate less and return to
their base market price at a quicker rate than lower-grade securities.
In accordance with the Fund's prospectus, Tax-Free Fund For Utah can only
purchase investment-grade securities ? those within the top four credit quality
ratings - AAA, AA, A and Baa. In point of practice, however, we have
consistently sought to have the bulk of the portfolio securities invested within
the top two grades ? AAA and AA. On June 30, 2006, 83.0% of the portfolio
consisted of AAA and AA rated securities.
INTERMEDIATE MATURITY
As we have emphasized in the past, long-term bonds tend to produce a
higher return than short-term bonds. However, such longer maturity bonds also
tend to experience a higher degree of volatility in their price.
Tax-Free Fund For Utah balances out longer-term maturities by having a
portion of the Fund's investments in shorter-term maturities. Through utilizing
a blend of maturities ? both shorter-term and longer-term ? Tax-Free Fund For
Utah attempts to provide a satisfactory level of return without subjecting the
share price to excessive swings as interest rates increase and decrease. We feel
that this focus on keeping the average of maturities relatively intermediate in
term takes the best that each investment has to offer ? gaining stability from
the shorter-term maturities and higher yields from the longer-term maturities.
NOT A PART OF THE ANNUAL REPORT
DIVERSIFICATION OF THE PORTFOLIO
To the maximum extent possible, Tax-Free Fund For Utah strives to invest
in as many projects as possible throughout the state. The portfolio might be
comprised of a school district bond in Salt Lake City, a transportation bond in
Ogden and a housing bond in St. George. In this way, we strive to ensure that no
one project, type of project, or area of the State can have any significant
adverse influence upon your investment in the Fund.
TAX-FREE INCOME
No matter what return Tax-Free Fund For Utah provides, it must be
remembered 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 an example, you would have to earn 6.6%* 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.
SUMMARY
The Fund uses this combination of quality, maturity, and diversification
as it seeks to provide you with as high a level of tax-free income as is
consistent with preservation of capital.
As we are sure you are aware, there is no way to take ALL the waves out of
investing. But, you can rest assured that Tax-Free Fund For Utah continually
strives to do its very best to make sure your ride is as smooth as possible.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
President Founder and Chairman Emeritus
* For illustration purposes only - assumes a 35% Federal and 7% state tax-rate.
This does not represent past or future performance of any investment.
NOT A PART OF THE ANNUAL REPORT
[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
ANNUAL REPORT
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The Federal Reserve (the "Fed") has raised the target for the overnight
federal funds rate at each of the past 17 consecutive Open Market Committee
meetings. It has risen from a low of 1.00% to 5.25% currently. This upward shift
in rates, however, has been much more pronounced in short and intermediate-term
maturities than in the longer end of the yield curve. The Fed's goal of
containing inflation by not allowing the national economy to overheat may be
paying off ? finally. Both the Consumer Price Index-CPI and the Producer Price
Index-PPI have been reasonably well contained, when factoring out food and
energy costs. Recent comments from new Fed Chairman Paul Bernanke hint at the
possibility that further rate hikes will depend more on economic growth as
opposed to inflation. With the economy "cooling down", especially the housing
market, perhaps rates are approaching their peak. The jury is still out, but we
remain hopeful!
We have been witness to a number of national and international events that
affect both our spirit and the economy: London terrorist threat, the ongoing
conflicts in Iraq and Afghanistan, renewed battling in Israel and Lebanon,
provocative rocket test firings by North Korea, continued rhetoric with Iran
regarding their nuclear ambitions, cleanup and rebuilding of our Gulf Coast
after a season of devastating hurricanes and accompanying disasters, and paying
record prices at the gas pump.
As we head into the second half of 2006, it is likely that the Federal
Reserve is at or near the end of short-term rate increases. The unemployment
rate of 4.6% matches the lowest rate reported since July 2001. Other measures of
economic progress - retail sales, housing starts, and industrial production are
all off their highs of the past 12 months ? clear signs of a moderating economy.
Historically, as we see slowing on the economic front, inflation will also show
signs of easing. While this cycle is a bit different because of hurricane damage
and world events affecting gasoline prices, it is likely that we will see the
economy grow at an estimated 3.50% annual rate.
The Class A shares of Tax-Free Fund For Utah experienced a decline in
share value (Net Asset Value) of 3.80% for the 12-month period ending June 30,
2006. The share value of the Fund was $10.26 on July 1, 2005 and $9.87 on June
30, 2006. A typical AA-rated general obligation bond with a 15 year maturity
rose in yield from 4.06% to 4.51% over the 12-month period ended June 30, 2006.
Equity returns for the 12 months ended June 30, 2006 were positive: the
Dow Jones Industrial Average was up 11.09%; the S & P 500 Index was up 8.63%;
and the NASDAQ Composite Index was up 6.48%. The Class A shares of Tax-Free Fund
For Utah had a total rate of return of 0.28% for the 12 months ended June 30th.
Historically, as the economy has grown, commodity prices and interest
rates begin to rise. We continue to monitor any changes and position Tax-Free
Fund For Utah's portfolio accordingly. To address the concerns raised by an
increase in the overall level of interest rates, we take great care in
MANAGEMENT DISCUSSION OF FUND PERFORMANCE (CONTINUED)
the selection of the individual bonds purchased for the Fund. We will seek to
continue to add high quality, intermediate maturity Utah municipal bonds that
best meet our demanding standards.
The investment objective of Tax-Free Fund For Utah is to provide as high a
level of double tax-exempt current income as is consistent with the preservation
of capital. We believe this objective continues to be successfully addressed by
our adherence to a discipline of solid fundamental, conservative portfolio
management ideals. The Fund continues to maintain an average quality rating of
"AA", with over 74% of the portfolio rated "AAA". The Fund's laddered maturity
structure helps us manage price volatility. The portfolio has an average life of
approximately 13.3 years and a modified duration of 6.87 years. We seek to
maintain a well-diversified portfolio, which currently consists of 350 different
issues, of which 100% are exempt from Utah State and regular Federal income
taxes.
With the national and local economies continuing to show improvement, we
will remain vigilant and do whatever is necessary as we strive to continue to
meet the Fund's investment objective. We will endeavor to "stay the course" and
manage the portfolio by taking advantage of opportunities in the marketplace
that are consistent with the high standards of the Fund.
PERFORMANCE REPORT
The following graph illustrates the value of $10,000 invested in the Class
A shares of Tax-Free Fund For Utah for the 10-year period ended June 30, 2006 as
compared with the Lehman Brothers Quality Intermediate Municipal Bond Index and
the Consumer Price Index (a cost of living index). The performance of each of
the other classes is not shown in the graph but is included in the table below.
It should be noted that the Lehman Index does not include any operating expenses
nor sales charges and being nationally oriented, does not reflect state specific
bond market performance.
[Graphic of a line chart with the following information:]
Lehman Brothers
Cost of Fund Class A Shares Fund Class A Shares Quality Intermediate
Living Index no sales charge with sales charge Municipal Bond Index
6/96 $10,000 $10,000 $ 9,600 $10,000
6/97 10,230 10,797 10,360 10,684
6/98 10,402 11,676 11,205 11,426
6/99 10,606 11,768 11,293 11,772
6/00 11,002 11,831 11,353 12,247
6/01 11,359 12,931 12,408 13,329
6/02 11,481 13,834 13,275 14,256
6/03 11,723 15,229 14,614 15,371
6/04 12,106 15,206 14,592 15,424
6/05 12,412 16,467 15,802 16,254
6/06 12,948 16,527 15,860 16,309
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 2006
--------------------------------------
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
------ ------- -------- ---------
Class A (7/24/92)
With Sales Charge ....... -3.76% 4.21% 4.72% 5.15%
Without Sales Charge .... 0.28 5.06 5.15 5.46
Class C (5/21/96)
With CDSC ............... -1.51 4.20 4.20 4.25
Without CDSC ............ -0.52 4.20 4.20 4.25
Class Y (5/21/96)
No Sales Charge ......... 0.49 5.23 5.41 5.39
Lehman Index ............... 0.34 4.12 5.01 5.29* (Class A)
4.86** (Class C&Y)
Total return figures shown for the Fund reflect any change in price and assume
all distributions within the period were invested in additional shares. Returns
for Class A shares are calculated with and without the effect of the initial 4%
maximum sales charge. Returns for Class C shares are calculated with and without
the effect of the 1% contingent deferred sales charge (CDSC), imposed on
redemptions made within the first 12 months after purchase. Class Y shares are
sold without any sales charge. The rates of return will vary and the principal
value of an investment will fluctuate with market conditions. Shares, if
redeemed, may be worth more or less than their original cost. A portion of each
class's income may be subject to federal and state income taxes and/or the
federal alternative minimum tax. Past performance is not predictive of future
investment results.
* From commencement of operations on 7/24/92.
** From commencement of operations on 5/21/96.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Tax-Free Fund For Utah:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Tax-Free Fund For Utah as of June 30,
2006 and the related statement of operations, changes in net assets, and the
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended June 30, 2005 and the financial highlights for each of the
years in the four year period ended June 30, 2005 have been audited by other
auditors, whose report dated August 12, 2005 expressed an unqualified opinion on
such financial statement and financial highlights.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform an audit of the
Fund's internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 2006, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Tax-Free Fund For Utah as of June 30, 2006, the results of its operations, the
changes in its net assets and the financial highlights for the year then ended,
in conformity with accounting principles generally accepted in the United States
of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
August 11, 2006
- --------------------------------------------------------------------------------
TAX-FREE FUND FOR UTAH
SCHEDULE OF INVESTMENTS
JUNE 30, 2006
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (21.2%) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
CITY, COUNTY AND STATE (8.6%)
Anderson, Indiana San District
$ 505,000 4.600%, 07/15/23 AMBAC Insured ........................ Aaa/AAA $ 503,813
Brian Head, Utah
405,000 6.500%, 03/15/24 ...................................... NR/NR* 439,255
Cedar City, Utah Special Improvement
District Assessment
235,000 5.050%, 09/01/10 ...................................... NR/NR* 237,702
215,000 5.200%, 09/01/11 ...................................... NR/NR* 219,954
Cedar Park, Texas
835,000 4.500%, 02/15/22 MBIA Insured++ ....................... Aaa/AAA 817,540
Clearfield City, Utah
2,095,000 5.125%, 02/01/18 MBIA Insured (pre-refunded) .......... Aaa/AAA 2,157,620
Coral Canyon, Utah Special Service District
140,000 4.850%, 07/15/17 ...................................... NR/NR* 140,108
580,000 5.700%, 07/15/18 ...................................... NR/NR* 588,242
Dawson County, Texas Hospital District
555,000 4.375%, 02/15/24 AMBAC Insured ........................ NR/AAA 528,421
Draper, Utah
370,000 4.500%, 02/01/18 AMBAC Insured ........................ Aaa/NR 368,997
Hurricane, Utah
240,000 5.400%, 11/01/09 Radian Insured ....................... NR/AA 248,671
Laredo, Texas
300,000 4.250%, 08/15/21 AMBAC Insured ........................ Aaa/AAA 283,080
500,000 4.500%, 02/15/24 AMBAC Insured ........................ Aaa/AAA 483,435
Mckinney, Texas
1,700,000 4.500%, 08/15/23 XLCA Insured ......................... Aaa/AAA 1,648,592
Mesquite, Texas
510,000 4.625%, 02/15/22 FSA Insured .......................... Aaa/AAA 506,338
Nevada State
965,000 4.500%, 08/01/21 FSA Insured .......................... Aaa/AAA 953,526
Salt Lake City, Utah
120,000 5.750%, 06/15/17 (pre-refunded) ....................... Aaa/NR 127,991
San Antonio, Texas
125,000 4.750%, 02/01/24 FSA Insured .......................... Aaa/AAA 125,486
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
CITY, COUNTY AND STATE (CONTINUED)
Spokane County, Washington
$ 420,000 4.500%, 12/01/23 MBIA Insured ......................... Aaa/AAA $ 412,524
Waco, Texas
2,560,000 4.500%, 02/01/24 MBIA Insured ......................... Aaa/AAA 2,490,189
Washington County, Utah
1,250,000 5.000%, 10/01/22 MBIA Insured ......................... Aaa/NR 1,287,688
Washington State
3,315,000 4.500%, 01/01/22 MBIA Insured ......................... Aaa/AAA 3,256,921
705,000 4.500%, 07/01/23 FSA Insured .......................... Aaa/AAA 688,623
-------------
Total City, County and State 18,514,716
-------------
SCHOOL DISTRICT (12.6%)
Alpine, Utah School District
375,000 5.000%, 03/15/12 (pre-refunded) ....................... Aaa/NR 393,300
Carbon County, Utah School District
800,000 5.000%, 06/15/21 ...................................... Aaa/NR 823,592
Dallas, Texas Independent School District
2,500,000 5.000%, 08/15/29 ...................................... Aaa/AAA 2,546,575
Davis County, Utah School District
575,000 5.000%, 06/01/15 (pre-refunded) ....................... Aaa/NR 604,095
250,000 5.100%, 06/01/16 (pre-refunded) ....................... Aaa/NR 264,592
675,000 5.150%, 06/01/17 (pre-refunded) ....................... Aaa/NR 716,155
Dripping Springs, Texas
725,000 4.375%, 08/15/22 ...................................... Aaa/AAA 694,441
Eagle Mountain & Saginaw, Texas Independent
School District
300,000 4.750%, 08/15/21 ...................................... Aaa/AAA 303,081
525,000 4.750%, 08/15/23 ...................................... Aaa/AAA 528,449
Frisco, Texas Independent School District
1,260,000 5.000%, 07/15/26 ...................................... Aaa/NR 1,288,388
Galena Park, Texas Independent School District
295,000 4.625%, 08/15/25 ...................................... Aaa/NR 288,215
Iron County, Utah School District
1,375,000 4.000%, 01/15/18 ...................................... Aaa/AAA 1,298,921
2,115,000 4.000%, 01/15/20 ...................................... Aaa/AAA 1,963,566
1,260,000 5.000%, 01/15/21 ...................................... Aaa/NR 1,317,292
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
SCHOOL DISTRICT (CONTINUED)
La Feria, Texas Independent School District
$ 210,000 4.400%, 02/15/24 ...................................... Aaa/NR $ 201,772
Lancaster, Texas School District
300,000 4.375%, 02/15/22 ...................................... Aaa/AAA 288,006
Lindale, Texas Independent School District
440,000 4.250%, 02/15/21 ...................................... NR/AAA 415,906
1,000,000 4.250%, 02/15/22 ...................................... NR/AAA 939,660
445,000 4.375%, 02/15/23 ...................................... NR/AAA 425,464
200,000 4.500%, 02/15/24 ...................................... NR/AAA 194,536
Navasota, Texas Independent School District
475,000 5.000%, 08/15/23 FGIC Insured ......................... Aaa/NR 488,039
Nebo, Utah School District
440,000 5.500%, 07/01/11 (pre-refunded) ....................... Aaa/AAA 465,590
North Summit County, Utah School District
760,000 5.000%, 02/01/23 ...................................... Aaa/NR 789,625
800,000 5.000%, 02/01/24 ...................................... Aaa/NR 828,984
Prosper, Texas Independent School District
395,000 4.125%, 08/15/21 ...................................... NR/AAA 367,532
Salt Lake City, Utah School District
265,000 5.000%, 03/01/21 (pre-refunded) ....................... Aaa/NR 278,549
Spring, Texas Independent School District
300,000 4.750%, 08/15/23 ...................................... Aaa/AAA 301,605
Tooele County, Utah School District
670,000 4.000%, 06/01/20 ...................................... Aaa/AAA 616,360
Van, Texas Independent School District
750,000 4.875%, 02/15/26+ ..................................... Aaa/AAA 752,122
Washington County, Utah
440,000 5.000%, 10/01/18 XLCA Insured ......................... Aaa/NR 457,120
465,000 5.000%, 10/01/19 XLCA Insured ......................... Aaa/NR 482,442
490,000 5.000%, 10/01/20 XLCA Insured ......................... Aaa/NR 507,356
510,000 5.000%, 10/01/21 XLCA Insured ......................... Aaa/NR 527,707
535,000 5.000%, 10/01/22 XLCA Insured ......................... Aaa/NR 551,719
565,000 5.000%, 10/01/23 XLCA Insured ......................... Aaa/NR 580,312
320,000 5.000%, 10/01/24 XLCA Insured ......................... Aaa/NR 328,230
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
SCHOOL DISTRICT (CONTINUED)
Washoe County, Nevada School District
$ 200,000 4.625%, 06/01/23 FGIC Insured ......................... Aaa/AAA $ 199,410
Weber County, Utah School District
750,000 5.000%, 06/15/18 ...................................... Aaa/NR 785,025
825,000 5.000%, 06/15/20 ...................................... Aaa/NR 871,481
Weber County, Utah School District Series B
1,485,000 5.000%, 06/15/21 ...................................... Aaa/NR 1,554,350
-------------
Total School District 27,229,564
-------------
Total General Obligation Bonds 45,744,280
-------------
REVENUE BONDS (76.7%)
AIRPORT (1.2%)
Clark County, Nevada Passenger Facility Charge
255,000 4.750%, 07/01/22 MBIA Insured AMT ..................... Aaa/AAA 255,548
Hillsborough County, Florida Aviation Authority
2,185,000 5.250%, 10/01/23 MBIA Insured AMT ..................... Aaa/AAA 2,252,429
-------------
Total Airport 2,507,977
-------------
COUNTY (0.5%)
Davis County, Utah Lease Revenue DMV Project
78,000 5.400%, 11/01/17 ...................................... NR/NR* 77,995
83,000 5.450%, 11/01/18 ...................................... NR/NR* 82,990
87,000 5.500%, 11/01/19 ...................................... NR/NR* 86,990
92,000 5.550%, 11/01/20 ...................................... NR/NR* 91,990
97,000 5.600%, 11/01/21 ...................................... NR/NR* 96,986
103,000 5.650%, 11/01/22 ...................................... NR/NR* 102,988
108,000 5.700%, 11/01/23 ...................................... NR/NR* 107,986
115,000 5.700%, 11/01/24 ...................................... NR/NR* 114,986
121,000 5.750%, 11/01/25 ...................................... NR/NR* 120,985
128,000 5.750%, 11/01/26 ...................................... NR/NR* 127,942
-------------
Total County 1,011,838
-------------
EDUCATION (14.2%)
Carmel, Indiana 2002 School Building Corp.
1,235,000 4.300%, 01/15/23 FSA Insured .......................... NR/AAA 1,156,516
1,525,000 4.300%, 07/15/23 FSA Insured .......................... NR/AAA 1,426,622
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
EDUCATION (CONTINUED)
Clinton Prairie, Indiana Community School Building
$ 675,000 4.625%, 01/15/19 FGIC Insured ......................... NR/AAA $ 681,196
Florida State Board Education Public Education
210,000 4.500%, 06/01/25 FSA Insured .......................... NR/AAA 206,577
Laredo, Texas Independent School District Public
Facility Corp.
190,000 5.000%, 08/01/24 AMBAC Insured ........................ Aaa/AAA 194,689
Nevada System Higher Education Certificates
of Participation
1,000,000 5.000%, 07/01/25 AMBAC Insured ........................ NR/AAA 1,027,370
Raven Hills, Texas Higher Education Housing &
Education Revenue
215,000 5.000%, 06/01/26 AMBAC Insured ........................ Aaa/NR 224,965
Salt Lake County, Utah Westminster College Project
115,000 5.050%, 10/01/10 ...................................... NR/BBB 116,742
100,000 5.500%, 10/01/19 ...................................... NR/BBB 102,454
1,200,000 5.000%, 10/01/22 ...................................... NR/BBB 1,180,260
1,250,000 5.000%, 10/01/25 ...................................... NR/BBB 1,224,200
1,000,000 5.750%, 10/01/27 ...................................... NR/BBB 1,027,050
Texas State College Student Loan Revenue
100,000 5.000%, 08/01/22 AMT .................................. Aa1/AA 101,207
Texas State University System Financing Revenue
655,000 4.375%, 03/15/23 FSA Insured .......................... Aaa/AAA 626,868
Tyler, Texas Independent School District
325,000 5.000%, 02/15/26 FSA Insured .......................... Aaa/AAA 332,748
University of Nevada University Revenues
190,000 4.500%, 07/01/24 MBIA Insured ......................... Aaa/AAA 186,778
University of Utah University Revenues
770,000 5.000%, 04/01/18 MBIA Insured ......................... Aaa/AAA 802,024
Utah County, Utah School Facility Revenue
1,440,000 6.500%, 12/01/25 ...................................... NR/NR* 1,413,475
Utah State Board Regents Auxiliary & Campus Facility
1,000,000 4.125%, 04/01/20 MBIA Insured ......................... Aaa/AAA 929,250
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
EDUCATION (CONTINUED)
Utah State Board Regents Dixie State College
$ 115,000 5.500%, 05/01/13 MBIA Insured ......................... Aaa/AAA $ 123,130
120,000 5.500%, 05/01/14 MBIA Insured ......................... Aaa/AAA 128,741
130,000 5.500%, 05/01/15 MBIA Insured ......................... Aaa/AAA 139,957
400,000 5.100%, 05/01/21 MBIA Insured ......................... Aaa/AAA 412,348
Utah State Board Regents Lease Revenue
410,000 4.500%, 05/01/20 AMBAC Insured ........................ Aaa/AAA 405,404
425,000 4.500%, 05/01/21 AMBAC Insured ........................ Aaa/AAA 419,097
450,000 4.625%, 05/01/22 AMBAC Insured ........................ Aaa/AAA 448,222
120,000 4.650%, 05/01/23 AMBAC Insured ........................ Aaa/AAA 119,300
Utah State Board Regents Office Facility Revenue
450,000 5.050%, 02/01/20 MBIA Insured ......................... Aaa/AAA 462,060
360,000 5.125%, 02/01/22 MBIA Insured ......................... Aaa/AAA 371,678
Utah State Board Regents Revenue
2,885,000 4.500%, 08/01/18 MBIA Insured ......................... Aaa/AAA 2,863,680
500,000 5.000%, 05/01/26 ...................................... Aa/AAA 512,050
250,000 5.250%, 04/01/24 MBIA Insured ......................... Aaa/AAA 262,118
Utah State Board Regents Revenue Salt Lake
Community College
1,260,000 5.500%, 06/01/16 FSA Insured .......................... Aaa/AAA 1,330,132
Utah State Board Regents Revenue University Utah
1,045,000 5.000%, 04/01/23 MBIA Insured ......................... Aaa/AAA 1,073,205
Utah State Board Regents Revenue University Utah-
Auxiliary & Campus Revenue
1,015,000 5.000%, 04/01/20 MBIA Insured (pre-refunded) .......... Aaa/AAA 1,045,074
Utah State Board Regents Revenue University Utah
Hospital Revenue
2,030,000 5.500%, 08/01/17 MBIA Insured (pre-refunded) .......... Aaa/AAA 2,173,216
905,000 5.000%, 05/01/19 AMBAC Insured ........................ Aaa/AAA 933,408
3,595,000 5.000%, 08/01/19 MBIA Insured ......................... Aaa/AAA 3,682,107
Weber State University, Utah Revenue
100,000 5.250%, 04/01/24 FSA Insured .......................... NR/AAA 103,457
Weber State University, Utah Revenue Student
Facilities System Series A
300,000 5.100%, 04/01/16 ...................................... NR/AA 312,267
425,000 5.250%, 04/01/19 ...................................... NR/AA 446,773
-------------
Total Education 30,728,415
-------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
HEALTHCARE (1.0%)
Harris County, Texas Health Facility Development Corp.
$ 145,000 5.000%, 11/15/28 AMBAC Insured ........................ NR/AAA $ 146,119
Lee Memorial Health System, Florida Hospital Revenue
450,000 4.250%, 04/01/22 MBIA Insured ......................... Aaa/AAA 422,523
Murray City, Utah Hospital Revenue
595,000 5.000%, 05/15/22 MBIA Insured ......................... Aaa/AAA 598,493
Salt Lake County, Utah Hospital Revenue -
IHC Hospitals, Inc.
500,000 5.500%, 05/15/13 AMBAC Insured ........................ Aaa/AAA 529,640
Tarrant County, Texas Health Facilities Revenue
230,000 5.000%, 02/15/26 MBIA Insured ......................... Aaa/AAA 232,102
Utah State Board Regents Revenue University Utah
Hospital Revenue
310,000 5.000%, 08/01/21 MBIA Insured ......................... Aaa/AAA 317,087
-------------
Total Healthcare 2,245,964
-------------
HOUSING (8.2%)
Henderson, Nevada Local Improvement District
150,000 5.000%, 09/01/15 ...................................... NR/NR* 149,663
200,000 5.000%, 09/01/16 ...................................... NR/NR* 199,672
200,000 5.050%, 09/01/17 ...................................... NR/NR* 199,650
200,000 5.100%, 09/01/18 ...................................... NR/NR* 199,628
Indiana Housing & Community Development Authority
1,500,000 4.900%, 07/01/26 AMT .................................. Aaa/NR 1,481,730
Indiana State Housing Finance Authority Single Family
245,000 4.850%, 07/01/22 AMT .................................. Aaa/NR 246,051
Indianapolis, Indiana Multi-Family
500,000 4.850%, 01/01/21 AMT .................................. Aaa/NR 498,245
Miami-Dade County, Florida Housing Finance Authority
535,000 5.000%, 11/01/23 FSA Insured AMT ...................... NR/AAA 540,414
Provo City, Utah Housing Authority
500,000 5.800%, 07/20/22 GNMA Collateralized .................. Aaa/NR 512,125
Snohomish County, Washington Housing Authority
185,000 4.875%, 09/01/12 AMT .................................. NR/NR* 181,857
225,000 5.000%, 09/01/13 AMT .................................. NR/NR* 221,402
185,000 5.000%, 09/01/14 AMT .................................. NR/NR* 181,232
145,000 5.100%, 09/01/15 AMT .................................. NR/NR* 142,290
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
HOUSING (CONTINUED)
South Dakota Housing Development Authority
$ 1,250,000 4.900%, 05/01/26 AMT .................................. Aa1/AAA $ 1,242,863
Utah Housing Corporation Single Family Housing
270,000 4.000%, 07/01/11 AMT .................................. Aaa/AAA 264,649
60,000 5.250%, 07/01/23 AMT .................................. Aa2/AA 60,269
Utah Housing Corporation Single Family Mortgage
235,000 4.000%, 07/01/11 AMT .................................. Aaa/AAA 232,253
335,000 4.600%, 07/01/15 AMT+ ................................. Aaa/AAA 334,266
240,000 4.650%, 07/01/16 AMT+ ................................. Aaa/AAA 239,429
50,000 5.150%, 07/01/23 AMT .................................. Aaa/AAA 49,536
250,000 4.875%, 07/01/23 AMT .................................. Aa3/AA- 249,568
1,310,000 5.000%, 07/01/25 AMT .................................. Aa3/AA- 1,318,423
880,000 5.100%, 01/01/26 AMT .................................. Aa3/AA- 881,223
850,000 5.000%, 07/01/31 AMT .................................. Aa2/AA 836,885
Utah State Housing Agency Housing Revenue
140,000 5.650%, 07/01/27 AMT .................................. Aa2/AA 142,919
Utah State Housing Corporation Single Family
Housing Revenue
1,380,000 5.125%, 07/01/24 AMT .................................. Aa3/AA- 1,394,393
Utah State Housing Finance Agency
5,000 6.350%, 07/01/11 Mezzanine Series G-1 ................. AAA/NR 5,021
255,000 5.700%, 07/01/15 AMT .................................. Aa3/AA- 262,410
130,000 5.650%, 07/01/16 Series 1994C ......................... Aaa/AAA 131,102
50,000 5.400%, 07/01/16 AMT .................................. Aa2/AA 50,178
75,000 6.000%, 07/01/17 AMT .................................. Aaa/AA 76,016
795,000 5.500%, 07/01/18 AMT .................................. Aa3/AA- 812,681
90,000 5.300%, 07/01/18 AMT .................................. Aaa/AAA 92,541
100,000 5.000%, 07/01/18 AMT .................................. Aaa/AAA 100,573
170,000 5.400%, 07/01/20 AMT .................................. Aa2/AA 172,008
375,000 5.600%, 07/01/23 AMT .................................. Aa2/AA 378,694
105,000 5.700%, 07/01/26 MBIA Insured ......................... Aaa/AAA 105,443
Washington State Housing Finance Commission
2,290,000 4.800%, 12/01/21 AMT .................................. Aaa/NR 2,269,253
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
HOUSING (CONTINUED)
Wyoming Community Development Authority
Housing Revenue
$ 150,000 4.600%, 12/01/12 AMT .................................. Aa1/AA+ $ 150,996
580,000 4.700%, 06/01/17 AMT .................................. Aa1/AA+ 578,016
520,000 4.700%, 12/01/17 AMT .................................. Aa1/AA+ 518,159
120,000 5.000%, 12/01/22 ...................................... Aa1/AA+ 121,898
-------------
Total Housing ......................................... 17,825,624
-------------
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 250,352
Utah County Environmental Improvement Revenue
935,000 5.050%, 11/01/17 ...................................... Baa1/BBB+ 972,353
-------------
Total Industrial Development & Pollution Control ...... 1,222,705
-------------
LEASE (6.8%)
Celebration Community Development District, Florida
290,000 5.000%, 05/01/22 MBIA Insured ......................... Aaa/AAA 299,103
Draper, Utah Municipal Building Authority
355,000 5.000%, 11/15/20 AMBAC Insured ........................ Aaa/NR 368,142
Marion County, Indiana Convention & Recreational
Facilities Authority
390,000 5.000%, 06/01/27 MBIA Insured ......................... Aaa/AAA 393,003
Murray City, Utah Municipal Building Authority
520,000 5.050%, 12/01/15 AMBAC Insured ........................ Aaa/NR 540,129
Salt Lake County, Utah Municipal Building Authority
320,000 5.400%, 10/15/19 AMBAC Insured (pre-refunded) ......... Aaa/AAA 337,523
3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) + ....... Aaa/AAA 4,129,866
Utah County, Utah Municipal Building Authority
120,000 5.500%, 11/01/16 AMBAC Insured ........................ Aaa/NR 128,838
240,000 5.500%, 11/01/17 AMBAC Insured ........................ Aaa/NR 257,676
Utah State Building Ownership Authority
465,000 5.000%, 05/15/21 ...................................... Aa1/AA+ 482,572
1,755,000 5.250%, 05/15/23 ...................................... Aa1/AA+ 1,838,854
510,000 5.000%, 05/15/23 ...................................... Aa1/AA+ 527,223
1,845,000 5.250%, 05/15/24 ...................................... Aa1/AA+ 1,930,663
1,080,000 5.000%, 05/15/25 ...................................... Aa1/AA+ 1,110,316
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
LEASE (CONTINUED)
Washington County - St. George, Utah Interlocal
Agency Revenue
$ 1,000,000 5.125%, 12/01/17 AMBAC Insured ........................ NR/AAA $ 1,028,350
100,000 5.125%, 12/01/22 AMBAC Insured ........................ NR/AAA 102,614
West Bountiful, Utah Courthouse Revenue
410,000 5.000%, 05/01/19 ...................................... NR/A- 421,718
West Valley City, Utah
865,000 5.000%, 08/01/21 AMBAC Insured ........................ Aaa/AAA 888,182
-------------
Total Lease ........................................... 14,784,772
-------------
TAX REVENUE (22.5%)
Bay County, Florida Sales Tax Revenue
175,000 4.750%, 09/01/23 FSA Insured .......................... Aaa/NR 176,109
Bluffdale City, Utah Series 2004
295,000 6.000%, 12/01/13 ...................................... NR/NR* 292,897
310,000 6.000%, 12/01/14 ...................................... NR/NR* 307,563
330,000 6.000%, 12/01/15 ...................................... NR/NR* 328,574
350,000 6.000%, 12/01/16 ...................................... NR/NR* 348,638
370,000 6.000%, 12/01/17 ...................................... NR/NR* 368,768
395,000 6.000%, 12/01/18 ...................................... NR/NR* 393,949
420,000 6.000%, 12/01/19 ...................................... NR/NR* 419,206
Bluffdale, Utah Sales Tax Revenue
2,045,000 5.500%, 08/01/23 ...................................... NR/NR* 2,089,867
Bountiful, Utah Special Improvement District Special
Assessment Revenue
203,000 5.000%, 06/01/14 ...................................... NR/NR* 200,128
213,000 5.150%, 06/01/15 ...................................... NR/NR* 211,043
224,000 5.300%, 06/01/16 ...................................... NR/NR* 221,274
236,000 5.500%, 06/01/17 ...................................... NR/NR* 235,030
249,000 5.650%, 06/01/18 ...................................... NR/NR* 248,980
Brian Head, Utah Special Service Improvement
District Revenue
330,000 5.350%, 11/01/12 ...................................... NR/NR* 338,055
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
Cache County, Utah Sales Tax Revenue
$ 670,000 5.000%, 12/15/16 FGIC Insured ......................... Aaa/AAA $ 696,512
600,000 5.000%, 12/15/17 FGIC Insured ......................... Aaa/AAA 621,006
510,000 5.000%, 12/15/18 FGIC Insured ......................... Aaa/AAA 525,545
855,000 5.000%, 12/15/19 FGIC Insured ......................... Aaa/AAA 880,582
Clark County, Nevada Improvement District Revenue
250,000 5.000%, 08/01/16 ...................................... NR/NR* 247,072
Clearfield, Utah Sales Tax Revenue
590,000 5.000%, 07/01/18 FGIC Insured ......................... Aaa/AAA 611,446
620,000 5.000%, 07/01/19 FGIC Insured ......................... Aaa/AAA 639,902
650,000 5.000%, 07/01/20 FGIC Insured ......................... Aaa/AAA 669,292
Coral Canyon, Utah Special Service District
110,000 5.000%, 07/15/13 ...................................... NR/NR* 111,576
250,000 5.500%, 07/15/18 ...................................... NR/NR* 254,805
Davis County, Utah Sales Tax Revenue
1,470,000 5.150%, 10/01/18 AMBAC Insured ........................ NR/AAA 1,532,710
Fishers, Indiana Redevelopment Authority
Lease Revenue
175,000 4.500%, 07/15/20 AMBAC Insured ........................ Aaa/AAA 175,311
Henderson, Nevada Local Improvement District Revenue
100,000 4.500%, 09/01/12 ...................................... NR/NR* 98,674
300,000 5.000%, 09/01/14 ...................................... NR/NR* 301,977
300,000 5.000%, 09/01/15 ...................................... NR/NR* 299,979
Jordanelle, Utah Special Service District
186,000 5.000%, 11/15/14 ...................................... NR/NR* 186,727
196,000 5.100%, 11/15/15 ...................................... NR/NR* 197,025
206,000 5.200%, 11/15/16 ...................................... NR/NR* 206,756
216,000 5.300%, 11/15/17 ...................................... NR/NR* 216,838
228,000 5.400%, 11/15/18 ...................................... NR/NR* 228,935
240,000 5.500%, 11/15/19 ...................................... NR/NR* 241,034
253,000 5.600%, 11/15/20 ...................................... NR/NR* 254,032
268,000 5.700%, 11/15/21 ...................................... NR/NR* 269,091
283,000 5.800%, 11/15/22 ...................................... NR/NR* 284,149
299,000 6.000%, 11/15/23 ...................................... NR/NR* 300,145
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
Jordanelle, Utah Special Service Improvement District
$ 320,000 8.000%, 10/01/11 ...................................... NR/NR* $ 326,864
Lehi, Utah Sales Tax
610,000 5.000%, 06/01/21 FSA Insured .......................... Aaa/AAA 631,710
790,000 5.000%, 06/01/24 FSA Insured .......................... Aaa/AAA 811,235
Mesquite, Nevada New Special Improvement District
185,000 4.600%, 08/01/11 ...................................... NR/NR* 182,521
195,000 4.750%, 08/01/12 ...................................... NR/NR* 191,798
230,000 4.900%, 08/01/13 ...................................... NR/NR* 226,072
140,000 5.250%, 08/01/17 ...................................... NR/NR* 136,702
315,000 5.350%, 08/01/19 ...................................... NR/NR* 306,419
135,000 5.400%, 08/01/20 ...................................... NR/NR* 131,277
500,000 5.500%, 08/01/25 ...................................... NR/NR* 483,590
Mountain Regional Water District, Utah Special
Assessment Revenue
1,800,000 7.000%, 12/01/18 ...................................... NR/NR* 1,850,094
Mountain Regional Water, Utah Special Service District
2,000,000 5.000%, 12/15/20 MBIA Insured ......................... Aaa/AAA 2,062,580
North Ogden, Utah Sales Tax Revenue
195,000 5.000%, 11/01/24 XLCA Insured ......................... Aaa/AAA 199,382
Plainfield, Indiana Independent Redevelopment
Authority
1,070,000 4.375%, 08/01/20 CIFG Insured ......................... Aaa/NR 1,026,376
Salt Lake City, Utah Sales Tax Revenue
265,000 5.250%, 02/01/13 ...................................... NR/AAA 280,571
1,320,000 5.250%, 02/01/15 ...................................... NR/AAA 1,387,478
100,000 5.250%, 02/01/17 ...................................... NR/AAA 104,859
Salt Lake County, Utah Sales Tax Revenue
955,000 5.000%, 02/01/21 ...................................... NR/AAA 990,679
1,725,000 5.000%, 08/01/21 ...................................... NR/AAA 1,792,499
1,005,000 5.000%, 02/01/22 ...................................... NR/AAA 1,040,376
1,060,000 5.000%, 02/01/23 ...................................... NR/AAA 1,095,786
1,115,000 5.000%, 02/01/24 ...................................... NR/AAA 1,155,051
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
Sandy City, Utah Sales Tax Revenue
$ 520,000 5.000%, 09/15/18 AMBAC Insured ........................ NR/AAA $ 535,579
605,000 5.000%, 09/15/20 AMBAC Insured ........................ NR/AAA 621,147
South Jordan, Utah Sales Tax
570,000 5.000%, 08/15/15 AMBAC Insured ........................ Aaa/AAA 589,682
South Jordan, Utah Special Assignment
1,000,000 6.875%, 11/01/17 ...................................... NR/NR* 1,014,330
South Weber City, Utah
525,000 5.000%, 01/15/24 MBIA Insured ......................... Aaa/AAA 537,553
Springville, Utah Special Improvement District Revenue
400,000 5.500%, 1/15/2017 ..................................... NR/NR* 396,216
423,000 5.650%, 1/15/2018 ..................................... NR/NR* 418,762
446,000 5.800%, 1/15/2019 ..................................... NR/NR* 441,304
472,000 5.900%, 1/15/2020 ..................................... NR/NR* 467,228
500,000 6.000%, 1/15/2021 ..................................... NR/NR* 495,215
Utah Water Finance Agency Revenue
775,000 5.100%, 07/01/18 AMBAC Insured ........................ Aaa/NR 801,211
510,000 5.000%, 07/01/18 AMBAC Insured ........................ Aaa/NR 526,988
260,000 5.000%, 06/01/19 MBIA Insured ......................... Aaa/AAA 263,708
685,000 5.000%, 07/01/19 AMBAC Insured ........................ Aaa/NR 706,989
Wasatch County, Utah Building Authority
130,000 5.000%, 10/01/15 ...................................... A3/NR 132,679
135,000 5.000%, 10/01/16 ...................................... A3/NR 137,284
Wasatch County, Utah Sales Tax Revenue
205,000 5.000%, 12/01/16 AMBAC Insured ........................ Aaa/AAA 213,065
210,000 5.000%, 12/01/17 AMBAC Insured ........................ Aaa/AAA 217,310
225,000 5.000%, 12/01/18 AMBAC Insured ........................ Aaa/AAA 231,946
Washington City, Utah Sales Tax Revenue
680,000 5.250%, 11/15/17 AMBAC Insured++ ...................... Aaa/AAA 719,460
Washoe County, Nevada Tax Revenue
210,000 5.000%, 12/01/23 MBIA Insured ......................... Aaa/AAA 213,650
Weber County, Utah Sales Tax Revenue
385,000 5.000%, 07/01/23 AMBAC Insured ........................ Aaa/NR 395,268
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
TAX REVENUE (CONTINUED)
West Valley City, Utah Redevelopment Agency
Revenue
$ 1,625,000 5.000%, 03/01/21 ...................................... NR/A- $ 1,645,394
320,000 5.000%, 03/01/22 ...................................... NR/A- 323,338
350,000 5.000%, 03/01/23 ...................................... NR/A- 353,161
1,000,000 5.000%, 03/01/24 ...................................... NR/A- 1,007,620
West Valley City, Utah Sales Tax Revenue
800,000 5.500%, 07/15/17 MBIA Insured ......................... Aaa/AAA 841,856
250,000 5.000%, 07/15/20 AMBAC Insured ........................ Aaa/AAA 257,195
340,000 5.000%, 07/15/21 MBIA Insured ......................... Aaa/AAA 348,486
Woodland Hills, Utah Special Assessment Revenue
18,000 5.500%, 08/01/09 ...................................... NR/NR* 18,050
221,000 5.500%, 08/01/10 ...................................... NR/NR* 222,269
233,000 5.500%, 08/01/11 ...................................... NR/NR* 236,486
246,000 5.500%, 08/01/12 ...................................... NR/NR* 249,660
261,000 5.500%, 08/01/13 ...................................... NR/NR* 265,881
-------------
Total Tax Revenue ..................................... 48,491,091
-------------
TRANSPORTATION (4.1%)
Florida State Turnpike Authority Turnpike Revenue
500,000 4.500%, 07/01/22 MBIA Insured ......................... Aaa/AAA 497,740
Port of Seattle, Washington Revenue
100,000 5.100%, 04/01/24 AMT FGIC Insured ..................... Aaa/AAA 100,917
Utah Transit Authority Sales Tax & Transportation
Revenue
1,000,000 5.400%, 12/15/16 FSA Insured .......................... NR/AAA 1,032,970
100,000 5.000%, 06/15/21 FSA Insured .......................... Aaa/AAA 103,331
3,300,000 4.125%, 06/15/21 FSA Insured .......................... Aaa/AAA 3,109,722
3,450,000 4.125%, 06/15/22 FSA Insured .......................... Aaa/AAA 3,234,341
590,000 5.000%, 06/15/24 FSA Insured .......................... Aaa/AAA 607,317
100,000 5.000%, 06/15/25 FSA Insured .......................... Aaa/AAA 102,879
-------------
Total Transportation .................................. 8,789,217
-------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
UTILITY (9.3%)
Alaska Industrial Development & Export
Authority Revenue
$ 400,000 4.625%, 12/01/16 AMBAC Insured AMT .................... NR/AAA $ 399,164
Eagle Mountain, Utah Gas & Electric
1,385,000 4.250%, 06/01/20 Radian Insured ....................... NR/AA 1,284,865
1,440,000 5.000%, 06/01/21 Radian Insured ....................... Aa3/AA 1,457,482
1,515,000 5.000%, 06/01/22 Radian Insured ....................... NR/AA 1,529,014
Garland, Texas Water & Sewer
440,000 4.500%, 03/01/21 AMBAC Insured ........................ NR/AAA 431,644
Indianapolis, Indiana Gas Utility
290,000 5.000%, 08/15/24 AMBAC Insured ........................ Aaa/AAA 292,639
Intermountain Power Agency Utilities Light &
Power Service, Utah
450,000 5.000%, 07/01/12 MBIA Insured ETM ..................... Aaa/AAA 452,461
1,470,000 5.250%, 07/01/15 MBIA Insured ......................... Aaa/AAA 1,520,039
775,000 5.000%, 07/01/18 FSA Insured .......................... Aaa/AAA 803,644
1,380,000 5.000%, 07/01/19 MBIA Insured ......................... Aaa/AAA 1,409,463
Lower Colorado River Authority, Texas
175,000 5.000%, 05/15/26 FSA Insured .......................... Aaa/AAA 178,986
Manti City, Utah Electric System Revenue
603,000 5.750%, 02/01/17 ...................................... NR/NR* 620,692
Murray City, Utah Utility Electric Revenue
400,000 5.625%, 06/01/18 AMBAC Insured ........................ Aaa/NR 424,820
1,340,000 5.000%, 06/01/25 AMBAC Insured ........................ Aaa/NR 1,376,019
St. George, Utah Electric Revenue
1,910,000 4.500%, 06/01/20 FSA Insured .......................... Aaa/NR 1,888,532
Salem, Utah Electric Revenue
125,000 5.300%, 11/01/07 ...................................... NR/NR* 125,734
130,000 5.350%, 11/01/08 ...................................... NR/NR* 131,799
140,000 5.400%, 11/01/09 ...................................... NR/NR* 142,068
Seattle, Washington Municipal Light & Power
1,360,000 4.500%, 08/01/19 FSA Insured .......................... Aaa/AAA 1,357,294
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
UTILITY (CONTINUED)
Southern Utah Valley Power System
$ 210,000 5.250%, 09/15/13 MBIA Insured ......................... NR/AAA $ 222,839
225,000 5.250%, 09/15/14 MBIA Insured ......................... NR/AAA 239,263
235,000 5.250%, 09/15/15 MBIA Insured ......................... NR/AAA 249,499
185,000 5.125%, 09/15/21 MBIA Insured ......................... NR/AAA 191,986
Springville, Utah Electric Revenue
550,000 5.600%, 03/01/09 ...................................... Baa1/NR 562,584
Utah Assessed Municipal Power System
790,000 5.250%, 12/01/09 ...................................... NR/A- 809,466
1,000,000 5.000%, 04/01/21 FSA Insured .......................... Aaa/AAA 1,029,290
Washington, Utah Electric Revenue
985,000 5.000%, 09/01/21 XLCA Insured ......................... Aaa/NR 1,015,525
-------------
Total Utility ......................................... 20,146,811
-------------
WATER AND SEWER (8.3%)
Ashley Valley, Utah
140,000 9.500%, 01/01/08 AMBAC Insured ........................ Aaa/AAA 145,646
Eagle Mountain, Utah Water and Sewer
750,000 5.800%, 11/15/16 ACA Insured .......................... NR/A 782,220
Granger and Hunter, Utah Improvement District
Water and Sewer
350,000 5.000%, 03/01/18 FSA Insured (pre-refunded) ........... Aaa/NR 356,762
Jordan Valley, Utah Water Conservancy District
715,000 4.375%, 10/01/18 AMBAC Insured ........................ Aaa/AAA 701,343
Mesquite, Texas Waterworks & Sewer
225,000 4.500%, 03/01/24 FSA Insured .......................... Aaa/AAA 217,532
Murray City, Utah Sewer and Water
465,000 5.000%, 10/01/17 AMBAC Insured ........................ Aaa/NR 482,977
390,000 5.000%, 10/01/18 AMBAC Insured ........................ Aaa/NR 403,365
440,000 5.000%, 10/01/19 AMBAC Insured ........................ Aaa/NR 454,529
North Davis County, Utah Sewer District
1,350,000 5.000%, 03/01/21 AMBAC Insured ........................ Aaa/NR 1,394,091
150,000 5.125%, 03/01/22 AMBAC Insured (pre-refunded) ......... Aaa/NR 158,610
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
WATER AND SEWER (CONTINUED)
Orem, Utah Water & Storm Sewer Revenue
$ 1,720,000 4.500%, 07/15/17 MBIA Insured ......................... Aaa/AAA $ 1,722,511
Riverton, Utah Water Revenue
100,000 5.350%, 09/01/15 FGIC Insured (pre-refunded) .......... Aaa/NR 105,465
Salt Lake City, Utah Metropolitan Water Revenue
1,200,000 5.375%, 07/01/24 AMBAC Insured (pre-refunded) ......... Aaa/AAA 1,249,776
125,000 5.375%, 07/01/29 AMBAC Insured (pre-refunded) ......... Aaa/AAA 130,185
Salt Lake City, Utah Water and Sewer Revenue
675,000 5.000%, 02/01/19 FSA Insured .......................... Aaa/AAA 698,179
845,000 5.000%, 02/01/20 FSA Insured .......................... Aaa/AAA 871,820
Salt Lake & Sandy, Utah Water District
1,000,000 5.000%, 07/01/20 AMBAC Insured ........................ Aaa/NR 1,033,230
South Valley, Utah Water Reclamation Facility
710,000 4.375%, 08/15/18 ...................................... NR/AAA 696,560
Spanish Fork City, Utah Water Revenue
195,000 5.500%, 06/01/17 FSA Insured .......................... Aaa/NR 208,437
55,000 5.500%, 06/01/17 FSA Insured (pre-refunded) ........... Aaa/NR 59,357
Upper Trinity Regional Water District, Texas
205,000 4.500%, 08/01/20 AMBAC Insured ........................ Aaa/AAA 201,636
Utah Water Finance Agency Revenue
100,000 5.000%, 06/01/14 MBIA Insured ......................... Aaa/AAA 102,216
200,000 5.250%, 07/01/16 AMBAC Insured ........................ Aaa/NR 211,446
250,000 5.375%, 09/01/17 AMBAC Insured ........................ Aaa/NR 266,858
310,000 5.000%, 10/01/17 AMBAC Insured ........................ Aaa/NR 320,540
750,000 5.250%, 10/01/18 AMBAC Insured ........................ Aaa/NR 794,873
465,000 5.000%, 10/01/20 AMBAC Insured ........................ Aaa/NR 477,490
830,000 4.500%, 10/01/22 AMBAC Insured ........................ Aaa/NR 814,936
100,000 5.125%, 07/01/23 AMBAC Insured ........................ Aaa/NR 103,194
285,000 5.300%, 10/01/23 MBIA Insured (pre-refunded) .......... Aaa/AAA 294,188
870,000 4.500%, 10/01/23 AMBAC Insured ........................ Aaa/NR 849,546
450,000 5.400%, 10/01/24 AMBAC Insured (pre-refunded) ......... Aaa/AAA 470,448
250,000 5.500%, 10/01/29 AMBAC Insured (pre-refunded) ......... Aaa/AAA 262,113
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- ------------ ------------------------------------------------------- --------- -------------
WATER AND SEWER (CONTINUED)
Weber-Box Elder, Utah Conservation District
Water Revenue
$ 200,000 6.450%, 11/01/14 (pre-refunded) ....................... Baa3/NR $ 219,164
200,000 6.500%, 11/01/19 (pre-refunded) ....................... Baa3/NR 219,556
335,000 6.900%, 11/01/20 (pre-refunded) ....................... Baa3/NR 373,023
-------------
Total Water and Sewer ................................. 17,853,822
-------------
Total Revenue Bonds ................................... 165,608,236
-------------
Total Investments (cost $212,712,353**) ............... 97.9% 211,352,516
Other assets less liabilities ......................... 2.1 4,456,829
------ -------------
Net Assets ............................................ 100.0% $ 215,809,345
====== =============
PERCENT OF
PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO
---------------------------------------------------- ---------
Aaa of Moody's or AAA of S&P ............................... 73.9%
Aa of Moody's or AA of S&P ................................. 9.1
A of Moody's or S&P ........................................ 2.7
Baa of Moody's or BBB of S&P ............................... 2.8
Not rated* ................................................. 11.5
------
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.
+ Security traded on a "when-issued" basis.
++ These securities are pledged as collateral for the Fund's
when-issued commitments.
PORTFOLIO ABBREVIATIONS:
------------------------
ACA - American Capital Assurance Financial Guaranty Corp.
AMBAC - American Municipal Bond Assurance Corp.
AMT - Alternative Minimum Tax
CIFG - CIFG Assurance North America, Inc.
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
TAX-FREE FUND FOR UTAH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006
ASSETS
Investments at value (cost $212,712,353) ......................................... $ 211,352,516
Cash ............................................................................. 2,842,475
Interest receivable .............................................................. 3,104,973
Receivable for investment securities sold ........................................ 305,000
Receivable for Fund shares sold .................................................. 281,091
Other assets ..................................................................... 34,265
-------------
Total assets ..................................................................... 217,920,320
-------------
LIABILITIES
Payable for investment securities purchased ........................................ 1,321,371
Payable for Fund shares redeemed ................................................... 474,837
Dividends payable .................................................................. 161,869
Distribution and service fees payable .............................................. 103,703
Management fees payable ............................................................ 35,456
Accrued expenses ................................................................... 13,739
-------------
Total liabilities .................................................................. 2,110,975
-------------
NET ASSETS ............................................................................ $ 215,809,345
=============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 218,469
Additional paid-in capital ......................................................... 219,461,435
Net unrealized depreciation on investments (note 4) ................................ (1,359,837)
Accumulated net realized loss on investments ....................................... (2,391,121)
Distributions in excess of net investment income ................................... (119,601)
-------------
$ 215,809,345
=============
CLASS A
Net Assets ......................................................................... $ 142,227,430
=============
Capital shares outstanding ......................................................... 14,405,730
=============
Net asset value and redemption price per share ..................................... $ 9.87
=============
Offering price per share (100/96 of $9.87 adjusted to nearest cent) ................ $ 10.28
=============
CLASS C
Net Assets ......................................................................... $ 33,790,806
=============
Capital shares outstanding ......................................................... 3,423,742
=============
Net asset value and offering price per share ....................................... $ 9.87
=============
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) ...................................... $ 9.87*
=============
CLASS Y
Net Assets ......................................................................... $ 39,791,109
=============
Capital shares outstanding ......................................................... 4,017,395
=============
Net asset value, offering and redemption price per share ........................... $ 9.90
=============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
JUNE 30, 2006
INVESTMENT INCOME:
Interest income ...................................... $ 9,068,592
Expenses:
Management fee (note 3) .............................. $ 998,167
Distribution and service fees (note 3) ............... 586,376
Trustees' fees and expenses (note 8) ................. 119,751
Transfer and shareholder servicing agent fees ........ 106,492
Legal fees (note 3) .................................. 76,252
Fund accounting fees ................................. 47,353
Shareholders' reports and proxy statements ........... 41,832
Registration fees and dues ........................... 26,035
Auditing and tax fees ................................ 17,000
Custodian fees ....................................... 14,956
Insurance ............................................ 10,850
Chief compliance officer (note 3) .................... 5,044
Miscellaneous ........................................ 41,146
-----------
Total expenses ....................................... 2,091,254
Management fee waived (note 3) ....................... (625,501)
Expenses paid indirectly (note 6) .................... (57,953)
-----------
Net expenses ......................................... 1,407,800
------------
Net investment income ................................ 7,660,792
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions 349,428
Change in unrealized appreciation on investments ..... (7,697,675)
-----------
Net realized and unrealized gain (loss) on investments (7,348,247)
------------
Net increase in net assets resulting from operations ...... $ 312,545
============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
June 30, 2006 June 30, 2005
------------- -------------
OPERATIONS:
Net investment income ....................................... $ 7,660,792 $ 5,597,480
Net realized gain (loss) from securities transactions ....... 349,428 339,699
Change in unrealized appreciation on investments ............ (7,697,675) 4,737,661
------------- -------------
Change in net assets from operations ..................... 312,545 10,674,840
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10):
Class A Shares:
Net investment income ....................................... (5,675,675) (4,664,445)
Class C Shares:
Net investment income ....................................... (1,052,465) (844,820)
Class Y Shares:
Net investment income ....................................... (1,389,390) (481,279)
------------- -------------
Change in net assets from distributions .................. (8,117,530) (5,990,544)
------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold ................................... 90,295,939 61,124,699
Reinvested dividends and distributions ...................... 5,246,203 3,507,838
Cost of shares redeemed ..................................... (43,527,443) (22,013,872)
------------- -------------
Change in net assets from capital share transactions ..... 52,014,699 42,618,665
------------- -------------
Change in net assets ..................................... 44,209,714 47,302,961
NET ASSETS:
Beginning of period ........................................... 171,599,631 124,296,670
End of period* ................................................ $ 215,809,345 $ 171,599,631
============= =============
* Includes distributions in excess of net investment income of: $ (119,601) $ (117,170)
============= =============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
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.
f) NEW ACCOUNTING PRONOUNCEMENT: On July 13, 2006, the Financial Accounting
Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting
for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for
how uncertain tax positions should be recognized, measured, presented and
disclosed in the financial statements. FIN 48 requires the evaluation of
tax positions taken or expected to be taken in the course of preparing the
Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more-likely-than-not threshold would
be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and
is to be applied to all open tax years as of the effective date.
Management believes that the adoption of FIN 48 will have no impact on the
financial statements of the Fund.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
Aquila Investment Management LLC (the "Manager"), a wholly-owned
subsidiary of Aquila Management Corporation, the Fund's founder and sponsor,
serves as the Manager for the Fund under an Advisory and
Administration Agreement with the Fund. Under the Advisory and Administration
Agreement, the Manager provides all investment management and administrative
services to the Fund. The Manager's services include providing the office of the
Fund and all related services as well as managing relationships with all the
various support organizations to the Fund such as the shareholder servicing
agent, custodian, legal counsel, fund accounting agent, auditors and
distributor. For its services, the Manager is entitled to receive a fee which is
payable monthly and computed as of the close of business each day at the annual
rate of 0.50 of 1% on the Fund's average net assets.
For the year ended June 30, 2006, the Fund incurred management fees of
$998,167 of which $625,501 was waived. The Manger has 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% for
Class A Shares, 1.55% for Class C Shares or 0.66% for Class Y Shares.
Under a Compliance Agreement with the Manager, the Manager is compensated
for Chief Compliance Officer related services provided to enable the Fund to
comply with Rule 38a-1 of the Investment Company Act of 1940.
Specific details as to the nature and extent of the services provided by
the Manager are more fully defined in the Fund's Prospectus and Statement of
Additional Information.
b) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended. Under
one part of the Plan, with respect to Class A Shares, the Fund is authorized to
make distribution fee payments to broker-dealers or others ("Qualified
Recipients") selected by Aquila Distributors, Inc. (the "Distributor")
including, but not limited to, any principal underwriter of the Fund, with which
the Distributor has entered into written agreements contemplated by the Rule and
which have rendered assistance in the distribution and/or retention of the
Fund's shares or servicing of shareholder accounts. The Fund makes payment of
this service fee at the annual rate of 0.20% of the Fund's average net assets
represented by Class A Shares. For the year ended June 30, 2006, distribution
fees on Class A Shares amounted to $272,953, of which the Distributor retained
$4,277.
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of the Fund's Class C shares or
servicing of shareholder accounts. These payments are made at the annual rate of
0.75% of the Fund's average net assets represented by Class C Shares and for the
year ended June 30, 2006, amounted to $235,067. In addition, under a Shareholder
Services Plan, the Fund is authorized to make service fee payments with respect
to Class C Shares to Qualified Recipients for providing personal services and/or
maintenance of shareholder accounts. These payments are made at the annual rate
of 0.25% of the Fund's average net assets represented by Class
C Shares and for the year ended June 30, 2006 amounted to $78,356. The total of
these payments with respect to Class C Shares amounted to $313,423, of which the
Distributor retained $56,018.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the exclusive
distributor of the Fund's shares. Through agreements between the Distributor and
various broker-dealer firms ("dealers"), the Fund's shares are sold primarily
through the facilities of these dealers having offices within Utah, with the
bulk of sales commissions inuring to such dealers. For the year ended June 30,
2006, total commissions on sales of Class AShares amounted to $581,296, of which
the Distributor received $48,990.
c) OTHER RELATED PARTY TRANSACTIONS:
For the year ended June 30, 2006, the Fund incurred $74,904 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 at that firm.
4. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 2006, purchases of securities and proceeds
from the sales of securities aggregated $69,450,135 and $18,874,920,
respectively.
At June 30, 2006, the aggregate tax cost for all securities was
$212,670,085. At June 30, 2006, the aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
amounted to $1,836,030 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value amounted to
$3,153,599, for a net unrealized depreciation of $1,317,569.
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
meeting comparable quality standards of issuers in certain states that do not
tax the interest on obligations of Utah issuers and that provide income which is
exempt from both regular Federal and Utah income taxes. At June 30, 2006, the
Fund had 78% 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, its cash balances in income-producing assets rather than
leave cash uninvested.
7. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
Year Ended Year Ended
June 30, 2006 June 30, 2005
----------------------------- -----------------------------
Shares Amount Shares Amount
------ ------ ------ ------
CLASS A SHARES:
Proceeds from shares sold 3,497,622 $ 35,254,242 3,901,386 $ 39,687,818
Reinvested distributions 369,013 3,717,136 277,575 2,823,980
Cost of shares redeemed . (1,747,696) (17,557,375) (1,384,213) (14,072,096)
------------ ------------ ------------ ------------
Net change ........... 2,118,939 21,414,003 2,794,748 28,439,702
------------ ------------ ------------ ------------
CLASS C SHARES:
Proceeds from shares sold 1,195,649 12,049,190 825,234 8,390,613
Reinvested distributions 63,534 639,693 48,338 491,581
Cost of shares redeemed . (524,023) (5,274,452) (401,020) (4,069,806)
------------ ------------ ------------ ------------
Net change ........... 735,160 7,414,431 472,552 4,812,388
------------ ------------ ------------ ------------
CLASS Y SHARES:
Proceeds from shares sold 4,237,512 42,992,507 1,275,070 13,046,268
Reinvested distributions 88,225 889,374 18,832 192,277
Cost of shares redeemed . (2,049,983) (20,695,616) (380,156) (3,871,970)
------------ ------------ ------------ ------------
Net change ........... 2,275,754 23,186,265 913,746 9,366,575
------------ ------------ ------------ ------------
Total transactions in Fund
shares .................. 5,129,853 $ 52,014,699 4,181,046 $ 42,618,665
============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES
At June 30, 2006 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 year ended June 30, 2006 was $81,000, 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 year ended June 30, 2006, such meeting-related expenses
amounted to $38,751.
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 $454,307 and debited additional paid-in capital in the
amount of $454,307 at June 30, 2006. This adjustment had no impact on the Fund's
aggregate net assets at June 30, 2006. 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, 2006, the Fund had a capital loss carryover of $2,391,120 of
which $2,121,836 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,
2006 2005
---------- ----------
Net tax-exempt income $7,658,064 $5,604,701
Ordinary income 459,466 385,843
---------- ----------
$8,117,530 $5,990,544
========== ==========
As of June 30, 2006, the components of distributable earnings on a tax
basis were as follows:
Accumulated net realized loss $(2,391,121)
Unrealized depreciation (1,317,569)
-----------
$(3,708,690)
===========
At June 30, 2006, 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
------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------------------------
2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period .......... $ 10.26 $ 9.91 $ 10.31 $ 9.85 $ 9.65
----------- ----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income ...................... 0.40+ 0.41+ 0.43++ 0.44+ 0.46+
Net gain (loss) on securities (both realized
and unrealized) ......................... (0.37) 0.38 (0.37) 0.48 0.22
----------- ----------- ----------- ----------- -----------
Total from investment operations ........... 0.03 0.79 0.06 0.92 0.68
----------- ----------- ----------- ----------- -----------
Less distributions (note 10):
Dividends from net investment income ....... (0.42) (0.44) (0.46) (0.46) (0.48)
Distributions from capital gains ........... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions ........................ (0.42) (0.44) (0.46) (0.46) (0.48)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ................ $ 9.87 $ 10.26 $ 9.91 $ 10.31 $ 9.85
=========== =========== =========== =========== ===========
Total return (not reflecting sales charge) .... 0.28% 8.06% 0.54% 9.55% 7.22%
Ratios/supplemental data
Net assets, end of period (in thousands) ... $ 142,227 $ 126,091 $ 94,103 $ 85,329 $ 55,957
Ratio of expenses to average net assets .... 0.64% 0.59% 0.48% 0.43% 0.46%
Ratio of net investment income to average
net assets .............................. 3.90% 3.98% 4.19% 4.31% 4.65%
Portfolio turnover rate .................... 9.61% 8.68% 15.98% 6.43% 27.42%
The expense and net investment income ratios without the effect of the waiver of a portion of the management fee and the expense
reimbursement were (note 3):
Ratio of expenses to average net assets .... 0.93% 0.97% 0.94% 1.02% 1.00%
Ratio of net investment income to average
net assets .............................. 3.61% 3.60% 3.73% 3.72% 4.11%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were (note 3):
Ratio of expenses to average net assets .... 0.61% 0.56% 0.47% 0.42% 0.40%
Note: Effective January 1, 2004, Aquila Management Corporation, founder of the
Fund, assigned its Advisory and Administration Agreement to its wholly-owned
subsidiary, Aquila Investment Management LLC.
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amount calculated using the daily average shares method.
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS (continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class C
-------------------------------------------------------------------------
Year Ended June 30,
-------------------------------------------------------------------------
2006 2005 2004 2003 2002
-------- -------- -------- -------- --------
Net asset value, beginning of period ...... $ 10.26 $ 9.91 $ 10.30 $ 9.85 $ 9.64
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income .................. 0.32+ 0.32+ 0.34++ 0.34+ 0.37+
Net gain (loss) on securities (both
realized and unrealized) ........... (0.37) 0.38 (0.36) 0.48 0.23
-------- -------- -------- -------- --------
Total from investment operations .......... (0.05) 0.70 (0.02) 0.82 0.60
-------- -------- -------- -------- --------
Less distributions (note 10):
Dividends from net investment income ... (0.34) (0.35) (0.37) (0.37) (0.39)
Distributions from capital gains ....... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions .................... (0.34) (0.35) (0.37) (0.37) (0.39)
-------- -------- -------- -------- --------
Net asset value, end of period ............ $ 9.87 $ 10.26 $ 9.91 $ 10.30 $ 9.85
======== ======== ======== ======== ========
Total return (not reflecting sales charge) (0.52)% 7.20% (0.16)% 8.48% 7.86%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 33,791 $ 27,581 $ 21,961 $ 16,420 $ 6,694
Ratio of expenses to average net assets 1.44% 1.39% 1.27% 1.31% 1.84%
Ratio of net investment income to
average net assets .................. 3.10% 3.18% 3.38% 3.39% 3.72%
Portfolio turnover rate ................ 9.61% 8.68% 15.98% 6.43% 27.42%
The expense and net investment income ratios without the effect of the waiver of a portion of the management fee and the expens
reimbursement were (note 3):
Ratio of expenses to average net assets 1.72% 1.77% 1.74% 1.81% 1.78%
Ratio of net investment income to
average net assets .................. 2.81% 2.80% 2.93% 2.89% 3.28%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were (note
Ratio of expenses to average net assets 1.41% 1.36% 1.27% 1.30% 1.28%
Class Y
----------------------------------------------------------------------
Year Ended June 30,
----------------------------------------------------------------------
2006 2005 2004 2003 2002
-------- -------- -------- -------- --------
Net asset value, beginning of period ...... $ 10.29 $ 9.94 $ 10.34 $ 9.89 $ 9.68
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income .................. 0.42+ 0.42+ 0.44++ 0.42+ 0.50+
Net gain (loss) on securities (both
realized and unrealized) ........... (0.37) 0.39 (0.36) 0.50 0.20
-------- -------- -------- -------- --------
Total from investment operations .......... 0.05 0.81 0.08 0.92 0.70
-------- -------- -------- -------- --------
Less distributions (note 10):
Dividends from net investment income ... (0.44) (0.46) (0.48) (0.47) (0.49)
Distributions from capital gains ....... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions .................... (0.44) (0.46) (0.48) (0.47) (0.49)
-------- -------- -------- -------- --------
Net asset value, end of period ............ $ 9.90 $ 10.29 $ 9.94 $ 10.34 $ 9.89
======== ======== ======== ======== ========
Total return (not reflecting sales charge) 0.49% 8.27% 0.76% 9.55% 7.41%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 39,791 $ 17,928 $ 8,233 $ 883 $ 30
Ratio of expenses to average net assets 0.44% 0.39% 0.28% 0.30% 0.36%
Ratio of net investment income to
average net assets .................. 4.10% 4.15% 4.41% 4.17% 4.75%
Portfolio turnover rate ................ 9.61% 8.68% 15.98% 6.43% 27.42%
The expense and net investment income ratios without the effect of the waiver of a portion of the management fee and the expens
reimbursement were (note 3):
Ratio of expenses to average net assets 0.72% 0.77% 0.74% 0.78% 0.80%
Ratio of net investment income to
average net assets .................. 3.82% 3.78% 3.95% 3.70% 4.31%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were (note
Ratio of expenses to average net assets 0.41% 0.37% 0.27% 0.29% 0.30%
Note: Effective January 1, 2004, Aquila Management Corporation, founder of the
Fund, assigned its Advisory and Administration Agreement to its wholly-owned
subsidiary, Aquila Investment Management LLC.
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amount calculated using the daily average shares method.
See accompanying notes to financial statements.
Additional Information (unaudited)
Trustees(1)
and Officers
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
INTERESTED TRUSTEES(4)
Diana P. Herrmann Trustee since 1997 Vice Chair and Chief Executive Officer 12 ICI Mutual Insurance
New York, NY and President since of Aquila Management Corporation, Company
(02/25/58) 1998 Founder of the Aquila Group of Funds(SM)
(5) and parent of Aquila Investment
Management LLC, Manager since 2004,
President and Chief Operating Officer
since 1997, a Director since 1984,
Secretary since 1986 and previously its
Executive Vice President, Senior Vice
President or Vice President, 1986-1997;
Chief Executive Officer and Vice Chair
since 2004 and President, Chief
Operating Officer and Manager of the
Manager since 2003; Chair, Vice Chair,
President, Executive Vice President or
Senior Vice President of funds in the
Aquila Group of Funds(SM) since 1986;
Director of the Distributor since 1997;
trustee, Reserve Money-Market Funds,
1999-2000 and Reserve Private Equity
Series, 1998-2000; Governor, Investment
Company Institute and head of its Small
Funds Committee since 2004; active in
charitable and volunteer organizations.
NON-INTERESTED TRUSTEES
Gary C. Cornia Chair of the Board Director, Romney Institute of Public 4 None
Orem, UT of Trustees since Management, Marriott School of
(06/24/48) 2005 and Trustee Management, Brigham Young University,
since 1993 2004 - present; Professor, Marriott
School of Management, 1980 - present;
Past President, the National Tax
Association; Fellow, Lincoln Institute
of Land Policy, 2002-2003; Associate
Dean, Marriott School of Management,
Brigham Young University, 1991-2000;
Utah Governor's Tax Review Committee
since 1993.
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
Thomas A. Trustee since 2006 Vice President of Robinson, Hughes & 3 None
Christopher(6) Christopher, C.P.A.s, P.S.C., since
Danville, KY 1977; President, A Good Place for Fun,
(12/19/47) Inc., a sports facility, since 1987;
currently or formerly active with
various professional and community
organizations.
Lyle W. Hillyard Trustee since 2003 President of the law firm of Hillyard, 2 None
Logan, UT Anderson & Olsen, Logan, Utah, since
(09/25/40) 1967; member of Utah Senate, 1985 to
present, in the following positions:
President, 2000, Senate Majority Leader,
1999-2000, Assistant Majority Whip,
1995-1998; served as Chairman of the
following Senate Committees: Tax and
Revenue, Senate Judiciary Standing,
Joint Executive Appropriations, and
Senate Rules; also serves on the
Appropriations Subcommittees for Higher
Education and for Public Education.
John C. Lucking Trustee since 2004 President, Econ-Linc, an economic 3 Director, Sanu
Phoenix, AZ consulting firm, since 1995; formerly Resources
(05/20/43) Consulting Economist, Bank One Arizona
and Chief Economist, Valley National
Bank; member, Arizona's Joint
Legislative Budget Committee Economic
Advisory Panel and the Western Blue Chip
Economic Forecast Panel; Board, Northern
Arizona University Foundation since
1997; member, various historical, civic
and economic associations.
Anne J. Mills Trustee since 1994 President, Loring Consulting Company 4 None
Castle Rock, CO since 2001; Vice President for Business
(12/23/38) Affairs, Ottawa University, 1992-2001;
IBM Corporation, 1965-1991; Budget
Review Officer, the American Baptist
Churches/USA, 1994-1997; director, the
American Baptist Foundation; Trustee,
Ottawa University; and Trustee Emerita,
Brown University.
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
OTHER INDIVIDUALS
Lacy B. Herrmann Founder, Chairman Founder and Chairman of the Board, N/A N/A
New York, NY Emeritus(7) since Aquila Management Corporation, the
(05/12/29) 2005 and Chairman of sponsoring organization and parent of
the Board of the Manager or Administrator and/or
Trustees, 1992-2005 Adviser or Sub-Adviser to each fund of
the Aquila Group of Funds(SM); Chairman of
the Manager or Administrator and/or
Adviser or Sub-Adviser to each since
2004; Founder and Chairman Emeritus of
each fund in the Aquila Group of
Funds(SM); previously Chairman and a
Trustee of each fund in the Aquila Group
of Funds(SM) since its establishment until
2004 or 2005; Director of the
Distributor since 1981 and formerly Vice
President or Secretary, 1981-1998;
Trustee Emeritus, Brown University and
the Hopkins School; active in
university, school and charitable
organizations.
Tucker Hart Adams(6) Consultant President, The Adams Group, Inc., an 2 Director, Colorado
Colorado Springs, CO economic consulting firm, since 1989; Health Facilities
(01/11/38) formerly Chief Economist, United Banks Authority and
of Colorado; currently or formerly Mortgage Analysis
active with numerous professional and Computer Corp.
community organizations.
OFFICERS
Charles E. Childs, III Executive Vice Executive Vice President of all funds in N/A N/A
New York, NY President since 2003 the Aquila Group of Funds(SM) and the
(04/01/57) Manager and the Manager's parent since
2003; formerly Senior Vice President,
corporate development, Vice President,
Assistant Vice President and Associate
of the Manager's parent since 1987;
Senior Vice President, Vice President or
Assistant Vice President of the Aquila
Money-Market Funds, 1988-2003.
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
Jerry G. McGrew Senior Vice President of the Distributor since 1998, N/A N/A
New York, NY President since 1997 Registered Principal since 1993, Senior
(06/18/44) Vice President, 1997-1998 and Vice
President, 1993-1997; Senior Vice
President, Aquila Rocky Mountain Equity
Fund and five Aquila Municipal Bond
Funds since 1995; Vice President,
Churchill Cash Reserves Trust,
1995-2001.
Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free Fund For N/A N/A
Salt Lake City, UT President since 1997 Utah since 2001; Co-founder, Lewis Young
(08/07/46) Robertson & Burningham, Inc., a NASD
licensed broker/dealer providing public
finance services to Utah local
govern-ments, 1995-2001; Senior Vice
President of two Aquila Bond Funds and
Aquila Rocky Mountain Equity Fund;
formerly Senior Vice President-Public
Finance, Kemper Securities Inc., Salt
Lake City, Utah.
Thomas S. Albright Senior Vice Senior Vice President and Portfolio N/A N/A
Louisville, KY President since 2003 Manager, Churchill Tax-Free Fund of
(07/26/52) and Vice President, Kentucky since July 2000; Senior Vice
2001-2003 President, Tax-Free Fund For Utah since
2003, Vice President, 2001-2003 and
co-portfolio manager since 2001; Vice
President and backup portfolio manager,
Tax-Free Trust of Arizona, since 2004;
Vice President and Portfolio Manager,
Banc One Investment Advisors, Inc.,
1994-2000.
Mary Kayleen Willis Vice President since Vice President, Tax-Free Fund For Utah N/A N/A
Salt Lake City, UT 2003 and Assistant since September 2003, Assistant Vice
(06/11/63) Vice President, President, 2002-2003; Vice President,
2002-2003 Aquila Rocky Mountain Equity Fund, since
2004; various securities positions:
Paine Webber, Inc., Salt Lake City,
1999-2002, Dean Witter Reynolds, Inc.,
Salt Lake City, 1996-1998.
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
Robert W. Anderson Chief Compliance Chief Compliance Officer of the Fund and N/A N/A
New York, NY Officer since 2004 each of the other funds in the Aquila
(08/23/40) and Assistant Group of Funds(SM), the Manager and the
Secretary since 2000 Distributor since 2004, Compliance
Officer of the Manager or its
predecessor and current parent
1998-2004; Assistant Secretary of the
Aquila Group of Funds(SM) since 2000.
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila N/A N/A
New York, NY Officer since 2003 Group of Funds(SM) since 2003 and
(11/06/56) and Treasurer since Treasurer since 2000.
2000
Edward M. W. Hines Secretary since 1992 Partner, Hollyer Brady Barrett & Hines N/A N/A
New York, NY LLP, legal counsel to the Fund, since
(12/16/39) 1989; Secretary of the Aquila Group of
Funds(SM).
John M. Herndon Assistant Secretary Assistant Secretary of the Aquila Group N/A N/A
New York, NY since 1995 of Funds(SM) since 1995 and Vice President
(12/17/39) of the three Aquila Money-Market Funds
since 1990; Vice President of the
Manager or its predecessor and current
parent since 1990.
Lori A. Vindigni Assistant Treasurer Assistant Treasurer of the Aquila Group N/A N/A
New York, NY since 2000 of Funds(SM) since 2000; Assistant Vice
(11/02/66) President of the Manager or its
predecessor and current parent since
1998; Fund Accountant for the Aquila
Group of Funds(SM), 1995-1998.
- ----------
(1) The Fund's Statement of Additional Information includes additional
information about the Trustees and is available, without charge, upon request by
calling 800-437-1020 (toll-free) or by visiting the EDGAR Database at the SEC's
internet site at www.sec.gov.
(2) The mailing address of each Trustee and officer is c/o Tax-Free Fund For
Utah, 380 Madison Avenue, New York, NY 10017.
(3) Each Trustee holds office until the next annual meeting of shareholders or
until his or her successor is elected and qualifies. The term of office of each
officer is one year.
(4) Ms. Herrmann is an interested person of the Fund as an officer of the Fund,
as a director, officer and shareholder of the Manager's corporate parent, as an
officer and Manager of the Manager, and as a shareholder and director of the
Distributor.
(5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila Municipal Bond
Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks
High Income Fund is a high income corporate bond fund; considered together,
these 12 funds are called the "Aquila Group of Funds(SM)."
(6) As of July 1, 2006.
(7) The Chairman Emeritus may attend Board meetings but has no voting power.
- --------------------------------------------------------------------------------
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 table below is 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 table below is based on an investment of $1,000 invested on January 1,
2006 and held for the six months ended June 30, 2006.
ACTUAL EXPENSES
This table provides information about actual account values and actual
expenses. You may use the information provided in this table, together with the
amount you invested, to estimate the expenses that you paid over the period. To
estimate the expenses you paid on your account, divide your ending account value
by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During the Period".
FOR THE SIX MONTHS ENDED JUNE 30, 2006
Actual
Total Return Beginning Ending Expenses
Without Account Account Paid During
Sales Charges(1) Value Value the Period(2)
- --------------------------------------------------------------------------------
Class A (0.31)% $1,000.00 $996.90 $2.97
- --------------------------------------------------------------------------------
Class C (0.60)% $1,000.00 $994.00 $6.92
- --------------------------------------------------------------------------------
Class Y (0.20)% $1,000.00 $998.00 $1.98
- --------------------------------------------------------------------------------
(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 0.60%, 1.40% AND
0.40% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 181/365 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio and an assumed rate of
return of 5.00% per year before expenses, which is not the 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 JUNE 30, 2006
Hypothetical
Annualized Beginning Ending Expenses
Total Account Account Paid During
Return Value Value the Period(1)
- --------------------------------------------------------------------------------
Class A 5.00% $1,000.00 $1,021.82 $3.01
- --------------------------------------------------------------------------------
Class C 5.00% $1,000.00 $1,017.85 $7.00
- --------------------------------------------------------------------------------
Class Y 5.00% $1,000.00 $1,022.81 $2.01
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.60%, 1.40% AND
0.40% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 181/365 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila Group of Funds(SM)
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2006 with respect to which the Fund was
entitled to vote. Applicable regulations require us to inform you that the
foregoing proxy voting information is available on the SEC website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
This information is presented in order to comply with a requirement of the
Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF SHAREHOLDERS IS
REQUIRED.
For the fiscal year ended June 30, 2006, $7,658,064 of dividends paid by
Tax-Free Fund For Utah, constituting 94.34% of total dividends paid during the
fiscal year ended June 30, 2006, were exempt-interest dividends, and the balance
was ordinary dividend income.
Prior to January 31, 2006, shareholders were mailed IRS Form 1099-DIV
which contained information on the status of distributions paid for the 2005
CALENDAR YEAR.
Prior to January 31, 2007, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of distributions paid for the 2006
CALENDAR YEAR.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIVACY NOTICE (UNAUDITED)
TAX-FREE FUND FOR UTAH
OUR PRIVACY POLICY. In providing services to you as an individual who owns or is
considering investing in shares of the Fund, we collect certain non-public
personal information about you. Our policy is to keep this information strictly
safeguarded and confidential, and to use or disclose it only as necessary to
provide services to you or as otherwise permitted by law. Our privacy policy
applies equally to former shareholders and persons who inquire about a fund.
INFORMATION WE COLLECT. "Non-public personal information" is personally
identifiable financial information about you as an individual or your family.
The kinds of non-public personal information we have about you may include the
information you provide us on your share purchase application or in telephone
calls or correspondence with us, and information about your fund transactions
and holdings, how you voted your shares and the account where your shares are
held.
INFORMATION WE DISCLOSE. We disclose non-public personal information about you
to companies that provide necessary services to us, such as the Fund's transfer
agent, distributor, investment adviser or sub-adviser, as permitted or required
by law, or as authorized by you. Any other use is strictly prohibited. We do not
sell information about you or any of our fund shareholders to anyone.
NON-CALIFORNIA RESIDENTS: We also may disclose some of this information to
another fund in the Aquila Group of Funds(SM) (or its service providers) under
joint marketing agreements that permit the funds to use the information only to
provide you with information about other funds in the Aquila Group of Funds(SM)
or new services we are offering that may be of interest to you.
CALIFORNIA RESIDENTS ONLY: In addition, unless you "opt-out" of the following
disclosures using the form that is being mailed to you under separate cover, we
may disclose some of this information to another fund in the Aquila Group of
Funds(SM) (or its sevice providers) under joint marketing agreements that permit
the funds to use the information only to provide you with information about
other funds in the Aquila Group of Funds(SM) or new services we are offering
that may be of interest to you.
HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to non-public personal
information about you to only those persons who need it to provide services to
you or who are permitted by law to receive it. We maintain physical, electronic
and procedural safeguards to protect the confidentiality of all non-public
personal information we have about you.
If you have any questions regarding our Privacy Policy, please contact us at
1-800-437-1020.
AQUILA DISTRIBUTORS, INC.
AQUILA INVESTMENT MANAGEMENT LLC
This Privacy Policy also has been adopted by Aquila Distributors, Inc. and
Aquila Investment Management LLC and applies to all non-public information about
you that each of these companies may obtain in connection with services provided
to the Fund or to you as a shareholder of the Fund.
- --------------------------------------------------------------------------------
(THIS PAGE INTENTIONALLY LEFT BLANK)
(THIS PAGE INTENTIONALLY LEFT BLANK)
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
Thomas A. Christopher
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.
(a) As of June 30, 2006 (the end of the reporting period) the
Trust has adopted a code of ethics that applies to the Fund's
principal executive officer(s)and principal financial officer(s)
and persons performing similar functions ("Covered Officers") as
defined in the Aquila Group of Funds Code of Ethics for Principal
Executive and Senior Financial Officers under Section 406 of the
Sarbanes-Oxley Act of 2002.;
(f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of
Ethics that applies to the Trust's principal executive officer(s)
and principal financial officer(s) and persons performing similar
functions is included as an exhibit to its annual report on this
Form N-CSR;
(f)(2) The text of the Fund's Code of Ethics that applies to the
Fund's principal executive officer(s) and principal financial
officer(s) and persons performing similar functions has been
posted on its Internet website which can be found at the Fund's
Internet address at aquilafunds.com.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1)(ii) The Board of Trustees of the Fund has determined that
it does not have at least one audit committee financial expert
serving on its audit committee. The Fund does not have such a
person serving on the audit committee because none of the persons
currently serving as Trustees happens to have the technical
accounting and auditing expertise included in the definition of
"audit committee financial expert" recently adopted by the Securities
and Exchange Commission in connection with this Form N-CSR, and the
Board has not heretofore deemed it necessary to seek such a person
for election to the Board.
The primary mission of the Board, which is that of oversight over
the operations and affairs of the Fund, confronts the Trustees with
a wide and expanding range of issues and responsibilities. The
Trustees believe that, accordingly, it is essential that the Board's
membership consist of persons with as extensive experience as possible
in fulfilling the duties and responsibilities of mutual fund directors
and audit committee members and, ideally, with extensive experience
and background relating to the economic and financial sectors and
securities in which the Fund invests, including exposure to the
financial and accounting matters commonly encountered with respect
to those sectors and securities. The Board believes that its current
membership satisfies those criteria. It recognizes that it would
also be helpful to have a member with the relatively focused accounting
and auditing expertise reflected in the applicable definition of
"audit committee financial expert," just as additional members with
similarly focused technical expertise in other areas relevant to
the Fund's operations and affairs would also contribute added value.
However, the Board believes that the Fund is better served, and its
assets better employed, by a policy of hiring experts in various
the specialized area of technical accounting and
auditing matters, if and as the Board identifies the need, rather
than by seeking to expand its numbers by adding technical experts
in the areas constituting its domain of responsibility. The Fund's
Audit Committee Charter explicitly authorizes the Committee to
retain such experts as it deems necessary in fulfilling its duties
under the Charter.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
a) Audit Fees - The aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal
accountant for the audit of the Registrant's annual financial statements
or services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements were $14,000 in 2006
and $17,500 in 2005.
b) Audit Related Fees - There were no amounts billed for audit-related
fees over the past two years other than stated above.
c) Tax Fees - The Registrant was billed by the principal accountant
$3,000 and $7,755 in 2006 and 2005, respectively, for tax return
preparation, tax compliance and tax planning.
d) All Other Fees - There were no additional fees paid for audit and non-
audit services other than those disclosed in a) thorough c) above.
e)(1) Currently, the audit committee of the Registrant pre-approves audit
services and fees on an engagement-by-engagement basis.
e)(2) None of the services described in b) through d) above were approved
by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X, all were pre-approved on an engagement-by-engagement basis.
f) No applicable.
g) There were no non-audit services fees billed by the Registrant's accountant
to the Registrant's investment adviser or distributor over the past two years.
h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940) as of a date within 90 days of the fling of this report, the registrant's
chief financial and executive officers have concluded that the disclosure
controls and procedures of the registrant are appropriately designed to ensure
that information required to be disclosed in the registrant's reports that are
filed under the Securities Exchange Act of 1934 are accumulated and communicated
to registrant's management, including its principal executive officer(s) and
principal financial officer(s), to allow timely decisions regarding required
disclosure and is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms adopted by the Securities and Exchange
Commission.
(b) There have been no significant changes in registrant's internal controls or
in other factors that could significantly affect registrant's internal controls
subsequent to the date of the most recent evaluation, including no significant
deficiencies or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and
Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act
of 2002.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of
1940.
(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the registrant has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TAX-FREE FUND FOR UTAH
By: /s/ Diana P. Herrmann
- - - ---------------------------------
President and Trustee
September 7, 2006
By: /s/ Joseph P. DiMaggio
- - - -----------------------------------
Chief Financial Officer and Treasurer
September 7, 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
September 7, 2006
By: /s/ Joseph P. DiMaggio
- - - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 7, 2006
TAX-FREE FUND FOR UTAH
EXHIBIT INDEX
(a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and
Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act
of 2002.
(a) (2) Certifications of principal executive officer
and principal financial officer as required by Rule 30a-2(a)
under the Investment Company Act of 1940.
(b) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.