UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6239
Tax-Free Fund for Utah
(Exact name of Registrant as specified in charter)
380 Madison Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
Joseph P. DiMaggio
380 Madison Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 697-6666
Date of fiscal year end: 6/30
Date of reporting period: 12/31/07
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL
REPORT
DECEMBER 31, 2007
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](R)
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 GROUP OF FUNDS(R)
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BOULDERS
WITH THE SUN RISING BEHIND THEM](R)
SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS
TAX-FREE FUND FOR UTAH
"HOW YOUR FUND IS COPING
WITH THE CURRENT MARKET SITUATION"
February, 2008
Dear Fellow Shareholder:
As you are well aware, our country has been going through a credit crunch
that began last year, particularly in August, 2007. This credit situation and
liquidity crisis have continued to worsen in various forms since that time which
has also led to a weakening in the U.S. dollar.
While things have continued to be quite messy in the securities market
despite the actions of the Federal Reserve to lower interest rates, we feel it
is important for you to know that we are doing everything possible to ensure
that your investment in Tax-Free Fund For Utah does not have any problems.
By design, Tax-Free Fund For Utah contains a large percentage of
securities - approximately 80% as of 12/31/07 - which, due to the addition of
insurance bought by issuers or otherwise, are credit rated as A or higher. You
should be aware, however, that when purchasing securities for the Fund's
portfolio, we always look to the UNDERLYING CREDIT QUALITY of the issues. Even
without insurance and other credit enhancements, your Fund's portfolio managers
have confirmed that the underlying credit quality of the Fund's portfolio
holdings is approximately 73.5% A-rated or higher. Additionally, the average
maturity of the securities in the Fund's portfolio is intermediate in nature.
Thus, with a portfolio of high quality and intermediate maturity securities, the
Fund's share value has remained reasonably stable. We strongly believe that when
things get tough in the securities markets, that's when a portfolio of high
quality investments pays off.
You can be assured that we will seek to continue operating the Fund and
maintaining its portfolio in your best interest. As we have emphasized to you
since the founding of Tax-Free Fund For Utah, the Trustees and management team
of your Fund fully realize that it is YOUR money, invested in YOUR Fund,
invested in projects throughout YOUR communities and state. Not only are YOUR
investments in the Fund being handled as well as we can in terms of its
portfolio construction, but your Fund is also helping to fund hundreds of vital
municipal projects throughout Utah.
Because it is YOUR Fund, we try to ensure that all shareholders always
have the chance to know what is going on with their investment. Furthermore, we
want shareholders to have the chance to ask any questions of the management
team, to ease any concern they might have. Thus, to provide you with
face-to-face access to your management team, we always hold IN-STATE Annual
Meetings of Shareholders.
NOT A PART OF THE SEMI-ANNUAL REPORT
One question asked during a recent shareholder meeting of another fund in
the Aquila Group of Funds that we think you might find of interest concerned the
cost of running the fund. This question gives us an opportunity to emphasize
that the total annualized expense ratio of Tax-Free Fund For Utah Class A shares
is 0.62% (as you will note in the enclosed Semi-Annual Report). Or, put another
way, the total annual operating cost is only 0.62 of 1%. With the average
expense ratio of similar type funds being 0.83%, we believe that Tax-Free Fund
For Utah is doing a good job of controlling costs.
We appreciate your loyalty to Tax-Free Fund For Utah. We will do
everything we can to merit your continued trust.
Sincerely,
[PHOTO OMITTED]
/s/ Lacy B. Herrmann /s/ Diana P. Herrmann
Lacy B. Herrmann Diana P. Herrmann
Founder and Chairman Emeritus President
For certain investors, some dividends of your Trust may be subject to Federal
and State taxes, including the Alternative Minimum Tax.
NOT A PART OF THE SEMI-ANNUAL REPORT
TAX-FREE FUND FOR UTAH
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007 (UNAUDITED)
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (23.5%) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
CITY, COUNTY AND STATE (10.6%)
Alamo, Texas Community College District
$ 595,000 4.375%, 02/15/25 MBIA Insured ........................... Aaa/AAA $ 591,079
Anderson, Indiana San District
505,000 4.600%, 07/15/23 AMBAC Insured .......................... Aaa/AAA 516,135
Brian Head, Utah
405,000 6.500%, 03/15/24 ........................................ NR/NR* 433,561
Cedar City, Utah Special Improvement District
Assessment
235,000 5.050%, 09/01/10 ........................................ NR/NR* 236,201
215,000 5.200%, 09/01/11 ........................................ NR/NR* 216,692
Cedar Park, Texas
835,000 4.500%, 02/15/22 MBIA Insured ........................... Aaa/AAA 847,901
Coral Canyon, Utah Special Service District
140,000 4.850%, 07/15/17 ........................................ NR/NR* 129,879
580,000 5.700%, 07/15/18 ........................................ NR/NR* 575,464
Dawson County, Texas Hospital District
555,000 4.375%, 02/15/24 AMBAC Insured .......................... NR/AAA 550,854
Denton County, Texas
700,000 4.500%, 07/15/24 MBIA Insured ........................... Aaa/AAA 707,119
400,000 4.500%, 07/15/25 MBIA Insured ........................... Aaa/AAA 401,772
Denton County, Texas Public Improvement
1,500,000 4.250%, 07/15/27 MBIA Insured ........................... Aaa/AAA 1,440,285
Harris County, Texas Unlimited Tax
300,000 4.500%, 10/01/23 ........................................ Aa1/AA+ 300,447
Harris County, Texas Utility District #268
905,000 4.375%, 09/01/27 Radian Insured ......................... Aa3/AA 809,441
Hurricane, Utah
125,000 5.400%, 11/01/09 Radian Insured ......................... NR/AA 128,710
King County, Washington Unlimited Tax
1,000,000 4.500%, 12/01/25 FSA Insured ............................ Aaa/AAA 1,009,530
Laredo, Texas
300,000 4.250%, 08/15/21 AMBAC Insured .......................... Aaa/AAA 301,929
500,000 4.500%, 02/15/24 AMBAC Insured .......................... Aaa/AAA 504,830
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
CITY, COUNTY AND STATE (CONTINUED)
McKinney, Texas
$ 1,700,000 4.500%, 08/15/23 XLCA Insured ........................... Aaa/AAA $ 1,713,022
1,375,000 5.000%, 08/15/24 XLCA Insured ........................... Aaa/AAA 1,450,886
695,000 4.375%, 08/15/25 MBIA Insured ........................... Aaa/AAA 690,330
Mesquite, Texas
510,000 4.625%, 02/15/22 FSA Insured ............................ Aaa/AAA 524,453
San Antonio, Texas
125,000 4.750%, 02/01/24 FSA Insured ............................ Aaa/AAA 127,880
San Patricio County, Texas
450,000 4.600%, 04/01/25 AMBAC Insured .......................... Aaa/NR 455,207
Texas State
415,000 4.500%, 08/01/22 ........................................ Aa1/AA 419,818
Waco, Texas
2,560,000 4.500%, 02/01/24 MBIA Insured ........................... Aaa/AAA 2,578,406
Washington County, Utah
1,250,000 5.000%, 10/01/22 MBIA Insured ........................... Aaa/NR 1,300,138
Washington State
3,315,000 4.500%, 01/01/22 MBIA Insured ........................... Aaa/AAA 3,363,664
705,000 4.500%, 07/01/23 FSA Insured ............................ Aaa/AAA 705,606
Williamson County, Texas
460,000 4.500%, 02/15/26 FSA Insured ............................ Aaa/AAA 460,911
----------------
Total City, County and State ............................ 23,492,150
----------------
SCHOOL DISTRICT (12.9%)
Borger, Texas Independent School District
400,000 4.500%, 02/15/24 ........................................ NR/AAA 404,320
500,000 4.500%, 02/15/25 ........................................ NR/AAA 502,340
Canutillo, Texas Independent School District
500,000 4.500%, 08/15/25 ........................................ NR/AAA 502,460
Clint, Texas
265,000 4.250%, 02/15/28 ........................................ NR/AAA 252,903
Dallas, Texas Independent School District
2,500,000 5.000%, 08/15/29 ........................................ Aaa/AAA 2,595,325
Davis County, Utah School District
675,000 5.150%, 06/01/17 (pre-refunded) ......................... Aaa/NR 727,549
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
SCHOOL DISTRICT (CONTINUED)
Dripping Springs, Texas
$ 725,000 4.375%, 08/15/22 ........................................ Aaa/AAA $ 733,903
Eagle Mountain & Saginaw, Texas Independent
School District
300,000 4.750%, 08/15/21 ........................................ Aaa/AAA 312,630
525,000 4.750%, 08/15/23 ........................................ Aaa/AAA 542,593
Freemont County, Wyoming School District #14
355,000 4.500%, 06/15/26 ........................................ NR/BBB 345,443
Frisco, Texas Independent School District
1,260,000 5.000%, 07/15/26 ........................................ Aaa/NR 1,311,925
Galena Park, Texas Independent School District
295,000 4.625%, 08/15/25 ........................................ Aaa/NR 298,015
Harrisburg, South Dakota Independent School
District No. 41-2
1,370,000 4.500%, 01/15/24 FSA Insured ............................ Aaa/NR 1,375,686
Iron County, Utah School District
1,260,000 5.000%, 01/15/21 ........................................ Aaa/NR 1,349,372
Jacksboro, Texas Independent School District
815,000 4.700%, 02/15/23 ........................................ NR/AAA 842,376
La Feria, Texas Independent School District
210,000 4.400%, 02/15/24 ........................................ Aaa/NR 210,118
Lancaster, Texas School District
300,000 4.375%, 02/15/22 ........................................ Aaa/AAA 303,003
Lindale, Texas Independent School District
440,000 4.250%, 02/15/21 ........................................ NR/AAA 442,671
1,000,000 4.250%, 02/15/22 ........................................ NR/AAA 1,002,400
445,000 4.375%, 02/15/23 ........................................ NR/AAA 447,550
Lovejoy, Texas Independent School District
200,000 4.500%, 02/15/24 ........................................ Aaa/AAA 201,814
Muleshoe, Texas Independent School District
380,000 4.500%, 02/15/22 ........................................ NR/AAA 380,027
250,000 4.500%, 02/15/23 ........................................ NR/AAA 249,998
200,000 4.500%, 02/15/24 ........................................ NR/AAA 199,996
220,000 4.500%, 02/15/25 ........................................ NR/AAA 219,985
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
SCHOOL DISTRICT (CONTINUED)
Navasota, Texas Independent School District
$ 475,000 5.000%, 08/15/23 FGIC Insured ........................... Aaa/NR $ 497,282
North Summit County, Utah School District
760,000 5.000%, 02/01/23 ........................................ Aaa/NR 802,636
800,000 5.000%, 02/01/24 ........................................ Aaa/NR 841,104
Prosper, Texas Independent School District
395,000 4.125%, 08/15/21 ........................................ NR/AAA 393,965
Southern, Texas Independent School District
910,000 4.500%, 02/01/26 ........................................ Aaa/AAA 911,802
Spring, Texas Independent School District
300,000 4.750%, 08/15/23 ........................................ Aaa/AAA 308,466
1,400,000 4.500%, 08/15/27 ........................................ Aaa/AAA 1,398,124
Tooele County, Utah School District
670,000 4.000%, 06/01/20 ........................................ Aaa/AAA 659,669
Van, Texas Independent School District
750,000 4.875%, 02/15/26 ........................................ Aaa/AAA 781,050
Washington County, Utah
440,000 5.000%, 10/01/18 XLCA Insured ........................... Aaa/NR 466,550
465,000 5.000%, 10/01/19 XLCA Insured ........................... Aaa/NR 491,933
490,000 5.000%, 10/01/20 XLCA Insured ........................... Aaa/NR 518,381
510,000 5.000%, 10/01/21 XLCA Insured ........................... Aaa/NR 537,688
535,000 5.000%, 10/01/22 XLCA Insured ........................... Aaa/NR 561,151
565,000 5.000%, 10/01/23 XLCA Insured ........................... Aaa/NR 589,917
320,000 5.000%, 10/01/24 XLCA Insured ........................... Aaa/NR 333,347
Washoe County, Nevada School District
200,000 4.625%, 06/01/23 FGIC Insured ........................... Aaa/AAA 203,196
Waxahachie, Texas Independent School District
605,000 4.400%, 08/15/26 ........................................ Aaa/NR 599,658
630,000 4.400%, 08/15/27 ........................................ Aaa/NR 616,997
Weber County, Utah School District
750,000 5.000%, 06/15/18 ........................................ Aaa/NR 794,723
Yakima County, Washington School District #208
750,000 4.500%, 12/01/23 FSA Insured ............................ Aaa/NR 751,650
----------------
Total School District ................................... 28,813,691
----------------
Total General Obligation Bonds .......................... 52,305,841
----------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (74.2%) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
AIRPORT (1.9%)
Clark County, Nevada Passenger Facility Charge
$ 255,000 4.750%, 07/01/22 MBIA Insured AMT ....................... Aaa/AAA $ 256,487
Hillsborough County, Florida Aviation Authority
2,185,000 5.250%, 10/01/23 MBIA Insured AMT ....................... Aaa/AAA 2,249,130
Miami-Dade County, Florida Aviation Revenue
1,675,000 5.000%, 10/01/28 Series C MBIA Insured AMT .............. Aaa/AAA 1,666,307
----------------
Total Airport ........................................... 4,171,924
----------------
COUNTY (0.4%)
Davis County, Utah Lease Revenue DMV Project
78,000 5.400%, 11/01/17 ........................................ NR/NR* 76,023
83,000 5.450%, 11/01/18 ........................................ NR/NR* 80,786
87,000 5.500%, 11/01/19 ........................................ NR/NR* 84,059
92,000 5.550%, 11/01/20 ........................................ NR/NR* 88,563
97,000 5.600%, 11/01/21 ........................................ NR/NR* 92,705
103,000 5.650%, 11/01/22 ........................................ NR/NR* 98,412
108,000 5.700%, 11/01/23 ........................................ NR/NR* 103,202
115,000 5.700%, 11/01/24 ........................................ NR/NR* 109,958
121,000 5.750%, 11/01/25 ........................................ NR/NR* 115,289
128,000 5.750%, 11/01/26 ........................................ NR/NR* 121,327
----------------
Total County ............................................ 970,324
----------------
EDUCATION (15.4%)
Broward County, Florida School Board COP
1,680,000 4.500%, 07/01/23 Series A FGIC Insured .................. Aaa/AAA 1,670,726
Carmel, Indiana 2002 School Building Corp.
1,235,000 4.300%, 01/15/23 FSA Insured ............................ NR/AAA 1,233,629
1,525,000 4.300%, 07/15/23 FSA Insured ............................ NR/AAA 1,523,262
Florida State Board of Education Public Education
210,000 4.500%, 06/01/25 FSA Insured ............................ Aaa/AAA 210,911
Hillsborough County, Florida School Board COP
560,000 4.250%, 07/01/26 MBIA Insured ........................... Aaa/AAA 521,998
Laredo, Texas Independent School District Public
Facility Corp.
190,000 5.000%, 08/01/24 AMBAC Insured .......................... Aaa/AAA 195,882
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
EDUCATION (CONTINUED)
Nevada System Higher Education COP
$ 1,000,000 5.000%, 07/01/25 AMBAC Insured .......................... Aaa/AAA $ 1,046,230
Salt Lake County, Utah Westminster College Project
435,000 4.750%, 10/01/21 ........................................ NR/BBB 414,394
1,200,000 5.000%, 10/01/22 ........................................ NR/BBB 1,174,200
1,250,000 5.000%, 10/01/25 ........................................ NR/BBB 1,181,213
2,025,000 5.125%, 10/01/28 ........................................ NR/BBB 1,916,480
Texas State College Student Loan Revenue
100,000 5.000%, 08/01/22 AMT .................................... Aa1/AA 101,857
Texas State University System Financing Revenue
655,000 4.375%, 03/15/23 FSA Insured ............................ Aaa/AAA 651,011
Tyler, Texas Independent School District
325,000 5.000%, 02/15/26 FSA Insured ............................ Aaa/AAA 339,407
University of Nevada (University Revenues)
190,000 4.500%, 07/01/24 MBIA Insured ........................... Aaa/AAA 190,637
University of Utah COP
3,170,000 4.350%, 12/01/26 AMBAC Insured .......................... Aaa/AAA 3,121,689
University of Utah (University Revenues)
770,000 5.000%, 04/01/18 MBIA Insured ........................... Aaa/AAA 819,942
Utah County, Utah Charter School Revenue
Lakeview Academy
315,000 5.350%, 07/15/17 Series A ............................... NR/NR* 303,833
Utah County, Utah Charter School Revenue
Lincoln Academy
450,000 5.450%, 06/15/17 Series A ............................... NR/NR* 442,499
Utah County, Utah Charter School Revenue
Renaissance Academy
340,000 5.350%, 07/15/17 Series A ............................... NR/NR* 329,392
Utah County, Utah School Facility
1,360,000 6.500%, 12/01/25 ........................................ NR/NR* 1,322,110
Utah State Board of Regents Auxiliary & Campus
Facility
1,000,000 4.125%, 04/01/20 MBIA Insured ........................... Aaa/AAA 984,360
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
EDUCATION (CONTINUED)
Utah State Board of Regents Dixie State College
$ 120,000 5.500%, 05/01/14 MBIA Insured ........................... Aaa/AAA $ 130,856
130,000 5.500%, 05/01/15 MBIA Insured ........................... Aaa/AAA 141,761
400,000 5.100%, 05/01/21 MBIA Insured ........................... Aaa/AAA 429,784
Utah State Board of Regents Lease Revenue
410,000 4.500%, 05/01/20 AMBAC Insured .......................... Aaa/AAA 421,738
425,000 4.500%, 05/01/21 AMBAC Insured .......................... Aaa/AAA 435,060
450,000 4.625%, 05/01/22 AMBAC Insured .......................... Aaa/AAA 462,339
120,000 4.650%, 05/01/23 AMBAC Insured .......................... Aaa/AAA 122,990
Utah State Board of Regents Office Facility Revenue
450,000 5.050%, 02/01/20 MBIA Insured ........................... Aaa/AAA 467,078
360,000 5.125%, 02/01/22 MBIA Insured ........................... Aaa/AAA 373,982
Utah State Board of Regents
1,885,000 4.500%, 08/01/18 MBIA Insured ........................... Aaa/AAA 1,943,529
1,045,000 5.000%, 04/01/23 MBIA Insured ........................... Aaa/AAA 1,092,683
500,000 5.000%, 05/01/26 ........................................ Aa/AAA 550,320
Utah State Charter School Finance Authority
Channing Hall Academy
500,000 5.750%, 07/15/22 Series A ............................... NR/NR* 484,215
Utah State Charter School Finance Authority Fast
Forward Academy
3,127,000 6.500%, 11/15/37 144A ................................... NR/NR* 3,042,446
Utah State Charter School Finance Authority
Ronald Wilson Reagan Academy
1,250,000 5.750%, 02/15/22 Series A ............................... NR/NR* 1,214,650
Utah State Charter School Finance Authority
Summit Academy
750,000 5.125%, 06/15/17 ........................................ NR/BBB- 745,823
Weber State University, Utah
1,825,000 4.400%, 04/01/27 FSA Insured ............................ NR/AAA 1,813,174
Weber State University, Utah Student Facilities System
300,000 5.100%, 04/01/16 Series A ............................... NR/AA 320,373
425,000 5.250%, 04/01/19 Series A ............................... NR/AA 456,093
----------------
Total Education ......................................... 34,344,556
----------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
HEALTHCARE (0.1%)
Harris County, Texas Health Facility Development
Corp.
$ 145,000 5.000%, 11/15/28 AMBAC Insured .......................... NR/AAA $ 146,959
----------------
Total Healthcare ........................................ 146,959
----------------
HOSPITAL (0.6%)
Murray City, Utah Hospital Revenue
1,000,000 5.000%, 05/15/22 MBIA Insured ........................... Aaa/AAA 1,004,120
Weber State University, Utah Human Services, COP
430,000 5.050%, 01/15/17 AMBAC Insured .......................... Aaa/AAA 433,896
----------------
Total Hospital .......................................... 1,438,016
----------------
HOUSING (12.3%)
Alaska Housing Finance Corp. Housing Revenue
1,000,000 4.700%, 06/01/27 AMT .................................... Aa2/AA 939,570
Alaska State Local Housing Authority Revenue
500,000 5.125%, 06/01/27 Series A2 AMT .......................... Aaa/AAA 496,695
Florida Housing Finance Corp. Revenue
435,000 4.750%, 01/01/16 AMT .................................... Aa2/AA 440,772
790,000 5.000%, 07/01/21 AMT .................................... Aa2/AA 779,098
1,610,000 4.550%, 07/01/22 AMT .................................... Aa1/AA 1,509,278
Henderson, Nevada Local Improvement District
150,000 5.000%, 09/01/15 ........................................ NR/NR* 139,145
200,000 5.000%, 09/01/16 ........................................ NR/NR* 182,710
200,000 5.050%, 09/01/17 ........................................ NR/NR* 181,424
200,000 5.100%, 09/01/18 ........................................ NR/NR* 179,972
Indiana Housing & Community Development
Authority
1,465,000 4.900%, 07/01/26 AMT .................................... Aaa/NR 1,438,777
Indiana State Housing Finance Authority Single
Family
245,000 4.850%, 07/01/22 AMT .................................... Aaa/NR 239,759
Indianapolis, Indiana Multi-Family
500,000 4.850%, 01/01/21 AMT .................................... Aaa/NR 491,490
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
HOUSING (CONTINUED)
Miami-Dade County, Florida Housing Finance Authority
$ 535,000 5.000%, 11/01/23 FSA Insured AMT ........................ NR/AAA $ 533,224
Nevada Housing Multi-Family LOC US Bank
1,000,000 4.750%, 04/01/39 AMT .................................... NR/AA 963,010
Orange County, Florida Housing Finance Authority
160,000 5.150%, 03/01/22 ........................................ Aaa/NR 161,093
Seattle, Washington Housing Authority
730,000 4.400%, 11/01/21 AMT .................................... NR/AAA 689,843
Snohomish County, Washington Housing Authority
150,000 4.750%, 09/01/10 AMT .................................... NR/NR* 149,325
185,000 4.875%, 09/01/12 AMT .................................... NR/NR* 183,056
225,000 5.000%, 09/01/13 AMT .................................... NR/NR* 222,912
185,000 5.000%, 09/01/14 AMT .................................... NR/NR* 182,519
145,000 5.100%, 09/01/15 AMT .................................... NR/NR* 143,363
South Dakota Housing Development Authority
1,250,000 4.900%, 05/01/26 AMT .................................... Aa1/AAA 1,226,213
Texas State Housing Revenue
2,075,000 4.800%, 09/01/20 AMT .................................... Aaa/AAA 2,028,686
495,000 4.800%, 09/01/27 AMT .................................... Aa1/AAA 475,482
Utah Housing Corporation Single Family Housing
25,000 5.250%, 07/01/23 AMT .................................... Aa2/AA 25,120
640,000 5.000%, 01/01/32 AMT .................................... Aa2/AA 626,861
Utah Housing Corporation Single Family Mortgage
330,000 4.600%, 07/01/15 AMT .................................... Aaa/AAA 334,729
235,000 4.650%, 07/01/16 AMT .................................... Aaa/AAA 237,515
230,000 4.875%, 07/01/23 AMT .................................... Aa3/AA- 222,589
1,130,000 5.000%, 07/01/25 AMT .................................... Aa3/AA- 1,124,779
695,000 5.100%, 01/01/26 AMT .................................... Aa3/AA- 697,106
915,000 5.000%, 07/01/31 AMT .................................... Aa2/AA 889,133
Utah State Housing Agency Housing Revenue
125,000 5.650%, 07/01/27 AMT .................................... Aa2/AA 127,101
Utah State Housing Corporation Single Family
Housing Revenue
1,460,000 5.125%, 07/01/24 AMT .................................... Aa3/AA- 1,468,614
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
HOUSING (CONTINUED)
Utah State Housing Finance Agency
$ 170,000 5.700%, 07/01/15 AMT .................................... Aa3/AA- $ 171,515
100,000 5.650%, 07/01/16 Series 1994C ........................... Aaa/AAA 100,563
40,000 5.400%, 07/01/16 AMT .................................... Aa2/AA 40,313
30,000 6.000%, 07/01/17 AMT .................................... Aaa/AAA 30,157
640,000 5.500%, 07/01/18 AMT .................................... Aa3/AA- 670,317
45,000 5.300%, 07/01/18 AMT .................................... Aaa/AAA 46,074
85,000 5.000%, 07/01/18 AMT .................................... Aaa/AAA 85,456
95,000 5.400%, 07/01/20 AMT .................................... Aa2/AA 95,919
140,000 5.600%, 07/01/23 AMT .................................... Aa2/AA 141,247
65,000 5.700%, 07/01/26 MBIA Insured ........................... Aaa/AAA 65,130
Washington State Housing Finance Commission
2,290,000 4.800%, 12/01/21 AMT .................................... Aaa/NR 2,244,383
Wyoming Community Development Authority
Housing Revenue
150,000 4.600%, 12/01/12 AMT .................................... Aa1/AA+ 151,604
225,000 4.350%, 12/01/16 AMT .................................... Aa1/AA+ 222,701
580,000 4.700%, 06/01/17 AMT .................................... Aa1/AA+ 583,985
520,000 4.700%, 12/01/17 AMT .................................... Aa1/AA+ 523,572
2,000,000 5.000%, 12/01/22 Series 10 AMT .......................... Aa1/AA+ 1,995,740
120,000 5.000%, 12/01/22 ........................................ Aa1/AA+ 121,488
415,000 5.150%, 06/01/23 AMT .................................... Aa1/AA+ 415,369
----------------
Total Housing ........................................... 27,436,496
----------------
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 250,613
Utah County Environmental Improvement Revenue
935,000 5.050%, 11/01/17 ........................................ Baa1/BBB+ 971,016
----------------
Total Industrial Development & Pollution Control ........ 1,221,629
----------------
LEASE (9.7%)
Celebration Community Development District, Florida
290,000 5.000%, 05/01/22 MBIA Insured ........................... Aaa/AAA 302,496
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
LEASE (CONTINUED)
Clark County, Nevada Improvement District Revenue
$ 735,000 5.125%, 12/01/19 ........................................ NR/NR* $ 679,610
Clark County, Nevada Improvement District Special
Local Improvement #128 (Summerlin)
500,000 5.000%, 02/01/21 Series A ............................... NR/NR* 443,060
Marion County, Indiana Convention & Recreational
Facilities Authority
390,000 5.000%, 06/01/27 MBIA Insured ........................... Aaa/AAA 394,692
Murray City, Utah Municipal Building Authority
520,000 5.050%, 12/01/15 AMBAC Insured .......................... Aaa/NR 555,854
New Albany, Indiana Development Authority
500,000 4.250%, 02/01/22 ........................................ NR/A- 481,270
Poinciana West, Florida Community Development
District Special Assessment Revenue
1,000,000 5.875%, 05/01/22 ........................................ NR/NR* 958,360
Port Saint Lucie, Florida Special Assessment
Revenue Southwest Annexation District 1-B
500,000 5.000%, 07/01/27 MBIA Insured ........................... Aaa/AAA 506,410
Red River, Texas Higher Education TCU Project
1,000,000 4.375%, 03/15/25 ........................................ Aa3/NR 978,050
Salt Lake County, Utah Municipal Building
Authority
3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) ........... Aaa/AAA 4,181,218
South Dakota State Building Authority Revenue
500,000 4.500%, 06/01/24 FGIC Insured ........................... NR/AAA 500,360
Spanish Fork, Utah Charter School
2,000,000 5.550%, 11/15/21 ........................................ NR/NR* 1,919,560
Tolomato Community, Florida Development District
Special Assessment Revenue
1,000,000 6.450%, 05/01/23 ........................................ NR/NR* 957,720
Utah County, Utah Municipal Building Authority
120,000 5.500%, 11/01/16 AMBAC Insured .......................... Aaa/NR 130,037
240,000 5.500%, 11/01/17 AMBAC Insured .......................... Aaa/NR 260,074
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
LEASE (CONTINUED)
Utah State Building Ownership Authority
$ 465,000 5.000%, 05/15/21 ........................................ Aa1/AA+ $ 496,053
1,755,000 5.250%, 05/15/23 ........................................ Aa1/AA+ 1,864,933
510,000 5.000%, 05/15/23 ........................................ Aa1/AA+ 539,606
1,845,000 5.250%, 05/15/24 ........................................ Aa1/AA+ 1,954,224
1,080,000 5.000%, 05/15/25 ........................................ Aa1/AA+ 1,126,526
West Bountiful, Utah Courthouse Revenue
410,000 5.000%, 05/01/19 ........................................ NR/A- 440,828
West Valley City, Utah Municipal Building Authority
Lease Revenue Refunding
1,890,000 4.375%, 08/01/26 Series A FGIC Insured .................. Aaa/AAA 1,855,734
----------------
Total Lease ............................................. 21,526,675
----------------
TAX REVENUE (15.6%)
Bay County, Florida Sales Tax Revenue
175,000 4.750%, 09/01/23 FSA Insured ............................ Aaa/NR 176,461
Bluffdale, Utah Sales Tax Revenue
1,900,000 5.500%, 08/01/23 (pre-refunded) ......................... NR/NR* 1,927,284
Bountiful, Utah Special Improvement District Special
Assessment Revenue
203,000 5.000%, 06/01/14 ........................................ NR/NR* 196,612
213,000 5.150%, 06/01/15 ........................................ NR/NR* 206,989
224,000 5.300%, 06/01/16 ........................................ NR/NR* 216,328
236,000 5.500%, 06/01/17 ........................................ NR/NR* 228,913
249,000 5.650%, 06/01/18 ........................................ NR/NR* 242,499
Cache County, Utah Sales Tax Revenue
855,000 5.000%, 12/15/19 FGIC Insured ........................... Aaa/AAA 923,263
Clark County, Nevada Improvement District
250,000 5.000%, 08/01/16 ........................................ NR/NR* 233,738
Coral Canyon, Utah Special Service District
110,000 5.000%, 07/15/13 ........................................ NR/NR* 107,235
250,000 5.500%, 07/15/18 ........................................ NR/NR* 244,145
Henderson, Nevada Local Improvement District
100,000 4.500%, 09/01/12 ........................................ NR/NR* 93,627
300,000 5.000%, 09/01/14 ........................................ NR/NR* 279,492
300,000 5.000%, 09/01/15 ........................................ NR/NR* 275,880
280,000 5.000%, 03/01/16 ........................................ NR/NR* 257,032
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
TAX REVENUE (CONTINUED)
Holladay, Utah Redevelopment Agency
$ 3,000,000 4.900%, 12/30/20 ........................................ NR/NR* $ 2,801,670
Jordanelle, Utah Special Service District
186,000 5.000%, 11/15/14 ........................................ NR/NR* 183,969
196,000 5.100%, 11/15/15 ........................................ NR/NR* 194,736
206,000 5.200%, 11/15/16 ........................................ NR/NR* 203,256
216,000 5.300%, 11/15/17 ........................................ NR/NR* 212,892
228,000 5.400%, 11/15/18 ........................................ NR/NR* 225,038
240,000 5.500%, 11/15/19 ........................................ NR/NR* 235,478
253,000 5.600%, 11/15/20 ........................................ NR/NR* 247,318
268,000 5.700%, 11/15/21 ........................................ NR/NR* 260,483
283,000 5.800%, 11/15/22 ........................................ NR/NR* 275,025
299,000 6.000%, 11/15/23 ........................................ NR/NR* 290,640
Jordanelle, Utah Special Service Improvement District
230,000 8.000%, 10/01/11 ........................................ NR/NR* 234,600
La Verkin, Utah Sales and Franchise Tax Revenue
571,000 5.100%, 07/15/27 ........................................ NR/NR* 537,345
Lehi, Utah Sales Tax
790,000 5.000%, 06/01/24 FSA Insured ............................ Aaa/AAA 827,414
Mesquite, Nevada New Special Improvement District
240,000 5.300%, 08/01/11 ........................................ NR/NR* 235,937
185,000 4.600%, 08/01/11 ........................................ NR/NR* 180,473
195,000 4.750%, 08/01/12 ........................................ NR/NR* 188,460
230,000 4.900%, 08/01/13 ........................................ NR/NR* 221,626
140,000 5.250%, 08/01/17 ........................................ NR/NR* 132,234
315,000 5.350%, 08/01/19 ........................................ NR/NR* 293,838
135,000 5.400%, 08/01/20 ........................................ NR/NR* 125,434
500,000 5.500%, 08/01/25 ........................................ NR/NR* 455,845
Mountain Regional Water District, Utah Special
Assessment
1,735,000 7.000%, 12/01/18 ........................................ NR/NR* 1,748,620
Mountain Regional Water, Utah Special Service District
2,000,000 5.000%, 12/15/20 MBIA Insured ........................... Aaa/AAA 2,101,640
North Ogden, Utah Sales Tax Revenue
195,000 5.000%, 11/01/24 XLCA Insured ........................... Aaa/AAA 203,691
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
TAX REVENUE (CONTINUED)
Payson City Utah Sales Tax Revenue
$ 445,000 5.000%, 08/01/21 FSA Insured ............................ NR/AAA $ 473,364
Salt Lake City, Utah Sales Tax
265,000 5.250%, 02/01/13 ........................................ NR/AAA 284,440
Salt Lake County, Utah Sales Tax
955,000 5.000%, 02/01/21 ........................................ NR/AAA 1,013,312
1,005,000 5.000%, 02/01/22 ........................................ NR/AAA 1,062,556
1,060,000 5.000%, 02/01/23 ........................................ NR/AAA 1,116,710
1,115,000 5.000%, 02/01/24 ........................................ NR/AAA 1,170,460
Sandy City, Utah Sales Tax
520,000 5.000%, 09/15/18 AMBAC Insured .......................... Aaa/AAA 543,624
605,000 5.000%, 09/15/20 AMBAC Insured .......................... Aaa/AAA 631,166
South Jordan, Utah Sales Tax
570,000 5.000%, 08/15/15 AMBAC Insured .......................... Aaa/AAA 605,534
South Weber City, Utah
525,000 5.000%, 01/15/24 MBIA Insured ........................... Aaa/AAA 546,032
Springville, Utah Special Assessment Revenue
400,000 5.500%, 01/15/17 ........................................ NR/NR* 386,472
457,000 5.650%, 01/15/18 ........................................ NR/NR* 441,064
483,000 5.800%, 01/15/19 ........................................ NR/NR* 462,516
510,000 5.900%, 01/15/20 ........................................ NR/NR* 486,759
540,000 6.000%, 01/15/21 ........................................ NR/NR* 512,411
Utah Water Finance Agency
510,000 5.000%, 07/01/18 AMBAC Insured .......................... Aaa/NR 536,974
685,000 5.000%, 07/01/19 AMBAC Insured .......................... Aaa/NR 720,887
Wasatch County, Utah Building Authority
130,000 5.000%, 10/01/15 ........................................ A3/NR 136,466
135,000 5.000%, 10/01/16 ........................................ A3/NR 140,941
Wasatch County, Utah Sales Tax
205,000 5.000%, 12/01/16 AMBAC Insured .......................... Aaa/AAA 216,761
210,000 5.000%, 12/01/17 AMBAC Insured .......................... Aaa/AAA 220,796
225,000 5.000%, 12/01/18 AMBAC Insured .......................... Aaa/AAA 235,645
Washington City, Utah Sales Tax
680,000 5.250%, 11/15/17 AMBAC Insured .......................... Aaa/AAA 731,734
Weber County, Utah Sales Tax
385,000 5.000%, 07/01/23 AMBAC Insured .......................... Aaa/NR 401,116
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
TAX REVENUE (CONTINUED)
West Valley City, Utah Redevelopment Agency
$ 1,625,000 5.000%, 03/01/21 ........................................ NR/A- $ 1,689,285
320,000 5.000%, 03/01/22 ........................................ NR/A- 330,470
350,000 5.000%, 03/01/23 ........................................ NR/A- 360,157
1,000,000 5.000%, 03/01/24 ........................................ NR/A- 1,022,260
----------------
Total Tax Revenue ....................................... 34,707,072
----------------
TRANSPORTATION (4.1%)
Alaska State International Airport Revenue
110,000 5.000%, 10/01/24 AMBAC Insured AMT ...................... Aaa/AAA 111,073
Florida State Turnpike Authority Turnpike Revenue
500,000 4.500%, 07/01/22 MBIA Insured ........................... Aaa/AAA 508,730
Miami-Dade County, Florida Aviation Revenue
445,000 5.000%, 10/01/24 FGIC Insured AMT ....................... Aaa/AAA 447,568
Port of Seattle, Washington Revenue
785,000 5.100%, 04/01/24 AMT FGIC Insured ....................... Aaa/AAA 787,088
Utah Transit Authority Sales Tax & Transportation
Revenue
3,300,000 4.125%, 06/15/21 FSA Insured ............................ Aaa/AAA 3,303,267
3,450,000 4.125%, 06/15/22 FSA Insured ............................ Aaa/AAA 3,396,422
590,000 5.000%, 06/15/24 FSA Insured ............................ Aaa/AAA 637,106
----------------
Total Transportation .................................... 9,191,254
----------------
UTILITY (10.0%)
Alaska Industrial Development & Export Authority
400,000 4.625%, 12/01/16 AMBAC Insured AMT ...................... NR/AAA 407,356
Cowlitz County, Washington Public Utility District
Electric Revenue
1,000,000 4.500%, 09/01/26 MBIA Insured ........................... Aaa/AAA 991,220
Eagle Mountain, Utah Gas & Electric
1,385,000 4.250%, 06/01/20 Radian Insured ......................... Aa3/AA 1,312,745
1,440,000 5.000%, 06/01/21 Radian Insured ......................... Aa3/AA 1,459,512
1,515,000 5.000%, 06/01/22 Radian Insured ......................... Aa3/AA 1,529,877
Garland, Texas Water & Sewer
440,000 4.500%, 03/01/21 AMBAC Insured .......................... Aaa/AAA 446,838
Indianapolis, Indiana Gas Utility
290,000 5.000%, 08/15/24 AMBAC Insured .......................... Aaa/AAA 291,343
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
UTILITY (CONTINUED)
Intermountain Power Agency Utilities Light &
Power Service, Utah
$ 1,380,000 5.000%, 07/01/19 MBIA Insured ........................... Aaa/AAA $ 1,421,704
Manti City, Utah Electric System Revenue
603,000 5.750%, 02/01/17 ........................................ NR/NR* 617,171
Murray City, Utah Utility Electric Revenue
1,340,000 5.000%, 06/01/25 AMBAC Insured .......................... Aaa/NR 1,401,171
Rockport, Indiana Pollution Control Revenue
Indiana Michigan Power Company Project
1,500,000 4.625%, 06/01/25 Series A FGIC Insured .................. Aaa/AAA 1,493,730
St. George, Utah Electric Revenue
1,910,000 4.500%, 06/01/20 FSA Insured ............................ Aaa/NR 1,965,715
Salem, Utah Electric Revenue
130,000 5.350%, 11/01/08 ........................................ NR/NR* 131,466
140,000 5.400%, 11/01/09 ........................................ NR/NR* 142,864
Santa Clara Utah Storm Drain Revenue
877,000 5.100%, 09/15/26 ........................................ NR/NR* 858,320
Seattle, Washington Municipal Light & Power
1,360,000 4.500%, 08/01/19 FSA Insured ............................ Aaa/AAA 1,399,726
Southern Utah Valley Power System
210,000 5.250%, 09/15/13 MBIA Insured ........................... Aaa/AAA 225,968
225,000 5.250%, 09/15/14 MBIA Insured ........................... Aaa/AAA 242,312
235,000 5.250%, 09/15/15 MBIA Insured ........................... Aaa/AAA 252,343
185,000 5.125%, 09/15/21 MBIA Insured ........................... Aaa/AAA 193,821
Springville, Utah Electric Revenue
550,000 5.600%, 03/01/09 ........................................ Baa1/NR 560,142
Tacoma, Washington Solid Waste Utility Revenue
1,000,000 5.000%, 12/01/23 XLCA Insured ........................... Aaa/AAA 1,048,290
Utah Assessed Municipal Power System
790,000 5.250%, 12/01/09 ........................................ NR/A- 811,306
1,000,000 5.000%, 04/01/21 FSA Insured ............................ Aaa/AAA 1,048,250
Utah Water Finance Agency Revenue
1,000,000 4.500%, 10/01/28 AMBAC Insured .......................... Aaa/NR 995,930
Washington, Utah Electric Revenue
985,000 5.000%, 09/01/21 XLCA Insured ........................... Aaa/NR 1,038,495
----------------
Total Utility ........................................... 22,287,615
----------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- -------- ----------------
WATER AND SEWER (3.5%)
Ashley Valley, Utah
$ 40,000 9.500%, 01/01/08 AMBAC Insured .......................... Aaa/AAA $ 40,000
Eagle Mountain, Utah Water and Sewer
750,000 5.800%, 11/15/16 ACA Insured ............................ NR/A 808,703
690,000 4.750%, 11/15/25 MBIA Insured ........................... Aaa/AAA 704,690
Jacksonville, Florida Water and Sewer
System Revenue
250,000 4.625%, 10/01/22 ........................................ Aa3/AA- 250,170
Mesquite, Texas Waterworks & Sewer
225,000 4.500%, 03/01/24 FSA Insured ............................ Aaa/AAA 226,312
Murray City, Utah Sewer and Water
440,000 5.000%, 10/01/19 AMBAC Insured .......................... Aaa/NR 463,038
Pleasant Grove, Utah Water Revenue
450,000 4.300%, 12/01/20 MBIA Insured ........................... Aaa/AAA 448,218
Smithfield, Utah Water Revenue
90,000 4.750%, 06/01/17 ........................................ NR/NR* 87,534
94,000 4.800%, 06/01/18 ........................................ NR/NR* 90,929
99,000 4.850%, 06/01/19 ........................................ NR/NR* 94,972
103,000 4.900%, 06/01/20 ........................................ NR/NR* 98,381
108,000 5.000%, 06/01/21 ........................................ NR/NR* 103,404
114,000 5.050%, 06/01/22 ........................................ NR/NR* 109,044
120,000 5.100%, 06/01/23 ........................................ NR/NR* 113,974
126,000 5.150%, 06/01/24 ........................................ NR/NR* 119,700
132,000 5.200%, 06/01/25 ........................................ NR/NR* 125,185
139,000 5.250%, 06/01/26 ........................................ NR/NR* 131,615
Upper Trinity Regional Water District, Texas
205,000 4.500%, 08/01/20 AMBAC Insured .......................... Aaa/AAA 209,205
Utah Water Finance Agency Revenue
200,000 5.250%, 07/01/16 AMBAC Insured .......................... Aaa/NR 213,916
310,000 5.000%, 10/01/17 AMBAC Insured .......................... Aaa/NR 326,672
105,000 5.000%, 10/01/20 AMBAC Insured (unrefunded) ............. Aaa/NR 109,258
830,000 4.500%, 10/01/22 AMBAC Insured .......................... Aaa/NR 841,736
100,000 5.125%, 07/01/23 AMBAC Insured .......................... Aaa/NR 104,291
870,000 4.500%, 10/01/23 AMBAC Insured .......................... Aaa/NR 879,057
250,000 5.500%, 10/01/29 AMBAC Insured (pre-refunded) ........... Aaa/AAA 260,560
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 $ 217,696
200,000 6.500%, 11/01/19 (pre-refunded) ......................... Baa3/NR 217,964
335,000 6.900%, 11/01/20 (pre-refunded) ......................... Baa3/NR 368,681
.......................................................................... ----------------
Total Water and Sewer ................................... 7,764,905
----------------
Total Revenue Bonds ..................................... 165,207,425
----------------
Total Investments (cost $217,316,685-note 4) ............ 97.7% 217,513,266
Other assets less liabilities ........................... 2.3 5,177,896
----- ----------------
Net Assets .............................................. 100.0% $ 222,691,162
===== ================
PERCENT OF
PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO
---------------------------------------------------- ---------
Aaa of Moody's or AAA of S&P ............................ 63.8%
Aa of Moody's or AA of S&P .............................. 13.3
A of Moody's or S&P ..................................... 2.9
Baa of Moody's or BBB of S&P ............................ 3.7
Not rated* .............................................. 16.3
------
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.
PORTFOLIO ABBREVIATIONS:
ACA - American Capital Assurance Financial Guaranty Corp.
AMBAC - American Municipal Bond Assurance Corp.
AMT - Alternative Minimum Tax
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Co.
FSA - Financial Security Assurance
LOC - Letter of Credit
MBIA - Municipal Bond Investors Assurance
NR - Not Rated
XLCA - XL Capital Assurance
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2007 (UNAUDITED)
ASSETS
Investments at value (cost $217,316,685) ......................................... $ 217,513,266
Cash ............................................................................. 1,043,085
Interest receivable .............................................................. 3,059,952
Receivable for Fund shares sold .................................................. 1,113,579
Receivable for investment securities sold ........................................ 660,000
Other assets ..................................................................... 12,788
-------------
Total assets ..................................................................... 223,402,670
-------------
LIABILITIES
Dividends payable .................................................................. 261,866
Payable for Fund shares redeemed ................................................... 234,934
Distribution and service fees payable .............................................. 50,441
Management fees payable ............................................................ 37,862
Accrued expenses ................................................................... 126,405
-------------
Total liabilities .................................................................. 711,508
-------------
NET ASSETS ............................................................................ $ 222,691,162
=============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 223,198
Additional paid-in capital ......................................................... 223,820,700
Net unrealized appreciation on investments (note 4) ................................ 196,581
Accumulated net realized loss on investments ....................................... (1,410,300)
Distributions in excess of net investment income ................................... (139,017)
-------------
$ 222,691,162
=============
CLASS A
Net Assets ......................................................................... $ 151,714,063
=============
Capital shares outstanding ......................................................... 15,214,493
=============
Net asset value and redemption price per share ..................................... $ 9.97
=============
Offering price per share (100/96 of $9.97 adjusted to nearest cent) ................ $ 10.39
=============
CLASS C
Net Assets ......................................................................... $ 29,159,314
=============
Capital shares outstanding ......................................................... 2,925,177
=============
Net asset value and offering price per share ....................................... $ 9.97
=============
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) ...................................... $ 9.97*
=============
CLASS Y
Net Assets ......................................................................... $ 41,817,785
=============
Capital shares outstanding ......................................................... 4,180,085
=============
Net asset value, offering and redemption price per share ........................... $ 10.00
=============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED)
INVESTMENT INCOME:
Interest income ................................................... $ 5,241,884
Expenses:
Management fee (note 3) ........................................... $ 562,626
Distribution and service fees (note 3) ............................ 301,594
Transfer and shareholder servicing agent fees ..................... 72,381
Trustees' fees and expenses (note 8) .............................. 49,842
Legal fees (note 3) ............................................... 42,080
Shareholders' reports and proxy statements ........................ 30,717
Custodian fees .................................................... 14,779
Fund accounting fees .............................................. 13,163
Registration fees and dues ........................................ 10,554
Auditing and tax fees ............................................. 8,596
Insurance ......................................................... 5,166
Chief compliance officer (note 3) ................................. 2,291
Miscellaneous ..................................................... 18,182
------------
Total expenses .................................................... 1,131,971
Management fee waived (note 3) .................................... (337,577)
Expenses paid indirectly (note 6) ................................. (17,080)
------------
Net expenses ...................................................... 777,314
------------
Net investment income ............................................. 4,464,570
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions ............. 294,133
Change in unrealized depreciation on investments .................. 1,245,438
------------
Net realized and unrealized gain (loss) on investments ............ 1,539,571
------------
Net increase in net assets resulting from operations ................... $ 6,004,141
============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
DECEMBER 31, 2007 YEAR ENDED
(UNAUDITED) JUNE 30, 2007
OPERATIONS:
Net investment income ....................................... $ 4,464,570 $ 8,511,537
Net realized gain (loss) from securities transactions ....... 294,133 686,688
Change in unrealized depreciation on investments ............ 1,245,438 310,980
------------- -------------
Change in net assets from operations ...................... 6,004,141 9,509,205
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10):
Class A Shares:
Net investment income ....................................... (3,150,608) (5,969,997)
Class C Shares:
Net investment income ....................................... (512,952) (1,072,516)
Class Y Shares:
Net investment income ....................................... (974,805) (1,896,685)
------------- -------------
Change in net assets from distributions ................... (4,638,365) (8,939,198)
------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold ................................... 22,161,100 55,169,672
Reinvested dividends and distributions ...................... 2,793,214 5,565,179
Cost of shares redeemed ..................................... (30,552,054) (50,191,077)
------------- -------------
Change in net assets from capital share transactions ...... (5,597,740) 10,543,774
------------- -------------
Change in net assets ...................................... (4,231,964) 11,113,781
NET ASSETS:
Beginning of period ........................................... 226,923,126 215,809,345
------------- -------------
End of period* ................................................ $ 222,691,162 $ 226,923,126
============= =============
* Includes distributions in excess of net investment income and
undistributed net investment income, respectively, of: ...... $ (139,017) $ 34,778
============= =============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 (UNAUDITED)
1. ORGANIZATION
Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end
investment company, was organized on December 12, 1990 as a Massachusetts
business trust and commenced operations on July 24, 1992. The Fund is authorized
to issue an unlimited number of shares and, since its inception to May 21, 1996,
offered only one class of shares. On that date, the Fund began offering two
additional classes of shares, Class C and Class Y Shares. All shares outstanding
prior to that date were designated as Class A Shares and are sold with a
front-payment sales charge and bear an annual distribution fee. Class C Shares
are sold with a level-payment sales charge with no payment at time of purchase
but level service and distribution fees from date of purchase through a period
of six years thereafter. A contingent deferred sales charge of 1% is assessed to
any Class C shareholder who redeems shares of this Class within one year from
the date of purchase. Class C Shares, together with a pro-rata portion of all
Class C Shares acquired through reinvestment of dividends and other
distributions paid in additional Class C Shares, automatically convert to Class
A Shares after 6 years. The Class Y Shares are only offered to institutions
acting for an investor in a fiduciary, advisory, agency, custodian or similar
capacity and are not offered directly to retail investors. Class Y Shares are
sold at net asset value without any sales charge, redemption fees, contingent
deferred sales charge or distribution or service fees. On October 31, 1997, the
Fund established Class I Shares which are offered and sold only through
financial intermediaries and are not offered directly to retail investors. As of
the report date, there were no Class I Shares outstanding. All classes of shares
represent interests in the same portfolio of investments and are identical as to
rights and privileges but differ with respect to the effect of sales charges,
the distribution and/or service fees borne by each class, expenses specific to
each class, voting rights on matters affecting a single class and the exchange
privileges of each class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America for investment companies.
a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities
of more than 60 days are valued each business day based upon information
provided by a nationally prominent independent pricing service and
periodically verified through other pricing services. In the case of
securities for which market quotations are readily available, securities
are valued by the pricing service at the mean of bid and asked quotations.
If market quotations or a valuation from the pricing service is not
readily available, the security is valued at fair value determined in good
faith under procedures established by and under the general supervision of
the Board of Trustees. Securities which mature in 60 days or less are
valued at amortized cost if their term to maturity at purchase is 60 days
or less, or by amortizing their unrealized appreciation or depreciation on
the 61st day prior to maturity, if their term to maturity at purchase
exceeds 60 days.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses
from securities transactions are reported on the identified cost basis.
Interest income is recorded daily on the accrual basis and is adjusted for
amortization of premium and accretion of original issue and market
discount.
c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Fund
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) MULTIPLE CLASS ALLOCATIONS: All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based on the relative net assets
of each class. Class-specific expenses, which include distribution and
service fees and any other items that are specifically attributed to a
particular class, are charged directly to such class.
e) USE OF ESTIMATES: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ from
those estimates.
f) ACCOUNTING PRONOUNCEMENTS: In July 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. FIN 48 was
effective for the Fund on December 31, 2007 and there were no uncertain
tax positions to be reflected in the Fund's financial statements.
In September 2006, FASB issued FASB Statement No. 157, "Fair Value
Measurement" ("SFAS 157"), which defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair
value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. The Fund
believes adoption of SFAS 157 will have no material impact on the Fund's
financial statements.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
Aquila Investment Management LLC (the "Manager"), a wholly-owned
subsidiary of Aquila Management Corporation, the Fund's founder and sponsor,
serves as the Manager for the Fund under an Advisory and Administration
Agreement with the Fund. Under the Advisory and Administration Agreement, the
Manager provides all investment management and administrative services to the
Fund. The Manager's services include providing the office of the Fund and all
related services as well as managing relationships with all the various support
organizations to the Fund such as the shareholder servicing agent, custodian,
legal counsel, fund accounting agent, auditors and distributor. For its
services, the Manager is entitled to receive a fee which is payable monthly and
computed as of the close of business each day at the annual rate of 0.50 of 1%
on the Fund's average net assets.
For the six months ended December 31, 2007, the Fund incurred management
fees of $562,626 of which $337,577 was waived. The Manager has contractually
undertaken to waive fees and/or reimburse Fund expenses during the period July
1, 2007 through June 30, 2008 so that total Fund expenses would not exceed 0.85%
for Class A Shares, 1.65% for Class C Shares or 0.65% 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 six months ended December 31, 2007,
distribution fees on Class A Shares amounted to $150,362, of which the
Distributor retained $3,192.
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of
the Fund's Class C shares or servicing of shareholder accounts. These payments
are made at the annual rate of 0.75% of the Fund's average net assets
represented by Class C Shares and for the six months ended December 31, 2007,
amounted to $113,424. In addition, under a Shareholder Services Plan, the Fund
is authorized to make service fee payments with respect to Class C Shares to
Qualified Recipients for providing personal services and/or maintenance of
shareholder accounts. These payments are made at the annual rate of 0.25% of the
Fund's average net assets represented by Class C Shares and for the six months
ended December 31, 2007 amounted to $37,808. The total of these payments with
respect to Class C Shares amounted to $151,232, of which the Distributor
retained $31,992.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the exclusive
distributor of the Fund's shares. Through agreements between the Distributor and
various broker-dealer firms ("dealers"), the Fund's shares are sold primarily
through the facilities of these dealers having offices within Utah, with the
bulk of sales commissions inuring to such dealers. For the six months ended
December 31, 2007, total commissions on sales of Class A Shares amounted to
$205,946, of which the Distributor received $19,770.
c) OTHER RELATED PARTY TRANSACTIONS:
For the six months ended December 31, 2007, the Fund incurred $41,541 of
legal fees allocable to Butzel Long PC, counsel to the Fund, for legal services
in conjunction with the Fund's ongoing operations. The Secretary of the Fund is
a shareholder in that firm.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 2007, purchases of securities and
proceeds from the sales of securities aggregated $22,070,229 and $31,727,610,
respectively.
At December 31, 2007, the aggregate tax cost for all securities was
$217,293,540. At December 31, 2007, the aggregate gross unrealized appreciation
for all securities in which there is an excess of value over tax cost amounted
to $2,686,632 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $2,466,906, for a
net unrealized appreciation of $219,726.
5. PORTFOLIO ORIENTATION
Since the Fund 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 December 31, 2007,
the Fund had 56% 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.
7. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
SIX MONTHS ENDED
DECEMBER 31, 2007 YEAR ENDED
(UNAUDITED) JUNE 30, 2007
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
CLASS A SHARES:
Proceeds from shares sold 1,197,531 $ 11,898,893 2,804,057 $ 28,292,959
Reinvested distributions 206,076 2,047,474 385,904 3,893,635
Cost of shares redeemed . (1,214,843) (12,045,543) (2,569,962) (25,914,165)
------------ ------------ ------------ ------------
Net change ........... 188,764 1,900,824 619,999 6,272,429
------------ ------------ ------------ ------------
CLASS C SHARES:
Proceeds from shares sold 199,360 1,988,312 758,270 7,658,338
Reinvested distributions 30,961 307,570 62,950 634,919
Cost of shares redeemed . (425,063) (4,224,504) (1,125,043) (11,352,553)
------------ ------------ ------------ ------------
Net change ........... (194,742) (1,928,622) (303,823) (3,059,296)
------------ ------------ ------------ ------------
CLASS Y SHARES:
Proceeds from shares sold 827,131 8,273,895 1,898,552 19,218,375
Reinvested distributions 43,862 438,170 102,317 1,036,625
Cost of shares redeemed . (1,431,413) (14,282,007) (1,277,759) (12,924,359)
------------ ------------ ------------ ------------
Net change ........... (560,420) (5,569,942) 723,110 7,330,641
------------ ------------ ------------ ------------
Total transactions in Fund
shares .................. (566,398) $ (5,597,740) 1,039,286 $ 10,543,774
============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES
At December 31, 2007 there were 7 Trustees, one of which is affiliated
with the Manager and is not paid any fees. The total amount of Trustees' service
and attendance fees paid during the six months ended December 31, 2007 was
$37,619, 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 meetings
(audit, nominating and special meetings) are held, the meeting fees are paid to
those Trustees in attendance. Trustees are reimbursed for their expenses such as
travel, accommodations, and meals incurred in connection with attendance at
Board Meetings and the Annual Meeting of Shareholders. For the six months ended
December 31, 2007, such meeting-related expenses amounted to $12,223.
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. Net realized capital gains, if any, are distributed annually
and are taxable. These distributions are paid in additional shares at the net
asset value per share, in cash, or in a combination of both, at the
shareholder's option.
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 $582,040 and debited additional paid-in capital in the
amount of $582,040 at June 30, 2007. This adjustment had no impact on the Fund's
aggregate net assets at June 30, 2007. 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, 2007, the Fund had a capital loss carryover of $1,704,433 of
which $1,435,148 expires on June 30, 2009, $15,469 expires on June 30, 2011, and
$253,816 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,
2007 2006
---------- ----------
Net tax-exempt income $8,484,772 $7,658,064
Ordinary income 454,426 459,466
---------- ----------
$8,939,198 $8,117,530
========== ==========
As of June 30, 2007, the components of distributable earnings on a tax
basis were as follows:
Undistributed tax-exempt income $ 175,158
Accumulated net realized loss (1,704,433)
Unrealized depreciation (1,014,079)
Other temporary differences (175,158)
-----------
$(2,718,512)
===========
At June 30, 2007, the difference between book basis and tax basis
unrealized appreciation was attributable primarily to the treatment of accretion
of discounts and amortization of premiums.
11. RECENT DEVELOPMENTS
In late May, 2007, the U. S. Supreme Court agreed to hear an appeal in
Department of Revenue of Kentucky v. Davis, a case concerning the
constitutionality of differential tax treatment for interest from in-state vs.
out-of-state municipal securities, a practice which is common among the majority
of the states. If the U.S. Supreme Court affirms the prior decision, Kentucky
(and all other states that differentially tax interest on municipal bonds) may
then be required to accord equal income tax treatment to all municipal bond
interest. While it is impossible to predict the consequences of such an outcome,
they may include effects on the net asset values of the shares, and/or on the
tax treatment of the dividends, of some or all single-state municipal bond
funds, including the Fund. The U.S. Supreme Court heard the case on November 5,
2007 and is expected to hand a decision down in 2008.
Over the past few months, municipal bond insurance companies have been
under review by the three major rating agencies Standard & Poor's, Moody's and
Fitch. The ratings of some of the insurance companies have now either been
downgraded and/or have a negative outlook. The financial markets continue to
assess the severity of the losses caused by the subprime credit crisis and its
impact on municipal bond insurance companies and insured municipal bond prices.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class A
----------------------------------------------------------------------------
Six Months
Ended Year Ended June 30,
12/31/07 ------------------------------------------------------------
(unaudited) 2007 2006 2005 2004 2003
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period .......... $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.31 $ 9.85
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ...................... 0.20++ 0.40+ 0.40+ 0.41+ 0.43++ 0.44+
Net gain (loss) on securities (both realized
and unrealized) ......................... 0.07 0.05 (0.37) 0.38 (0.37) 0.48
-------- -------- -------- -------- -------- --------
Total from investment operations ........... 0.27 0.45 0.03 0.79 0.06 0.92
-------- -------- -------- -------- -------- --------
Less distributions (note 10):
Dividends from net investment income ....... (0.21) (0.41) (0.42) (0.44) (0.46) (0.46)
Distributions from capital gains ........... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions ........................ (0.21) (0.41) (0.42) (0.44) (0.46) (0.46)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................ $ 9.97 $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.31
======== ======== ======== ======== ======== ========
Total return (not reflecting sales charge) .... 2.75%* 4.60% 0.28% 8.06% 0.54% 9.55%
Ratios/supplemental data
Net assets, end of period (in thousands) ... $151,714 $148,894 $142,227 $126,091 $ 94,103 $ 85,329
Ratio of expenses to average net assets .... 0.64%** 0.68% 0.64% 0.59% 0.48% 0.43%
Ratio of net investment income to average
net assets .............................. 4.03%** 3.89% 3.90% 3.98% 4.19% 4.31%
Portfolio turnover rate .................... 10.27%* 17.36% 9.61% 8.68% 15.98% 6.43%
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%** 0.96% 0.93% 0.97% 0.94% 1.02%
Ratio of net investment income to average
net assets .............................. 3.75%** 3.61% 3.61% 3.60% 3.73% 3.72%
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 .... 0.62%** 0.66% 0.61% 0.56% 0.47% 0.42%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amounts have been calculated using the daily average shares
method.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class C
------------------------------------------------------------------------------
Six Months
Ended Year Ended June 30,
12/31/07 -------------------------------------------------------------
(unaudited) 2007 2006 2005 2004 2003
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ..... $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.30 $ 9.85
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income .................. 0.16++ 0.32+ 0.32+ 0.32+ 0.34++ 0.34+
Net gain (loss) on securities (both
realized and unrealized) ............. 0.07 0.05 (0.37) 0.38 (0.36) 0.48
-------- -------- -------- -------- -------- --------
Total from investment operations ......... 0.23 0.37 (0.05) 0.70 (0.02) 0.82
-------- -------- -------- -------- -------- --------
Less distributions (note 10):
Dividends from net investment income ... (0.17) (0.33) (0.34) (0.35) (0.37) (0.37)
Distributions from capital gains ....... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions .................... (0.17) (0.33) (0.34) (0.35) (0.37) (0.37)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ........... $ 9.97 $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.30
======== ======== ======== ======== ======== ========
Total return (not reflecting sales charge) 2.34%* 3.77% (0.52)% 7.20% (0.16)% 8.48%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 29,159 $ 30,905 $ 33,791 $ 27,581 $ 21,961 $ 16,420
Ratio of expenses to average net assets 1.44%** 1.48% 1.44% 1.39% 1.27% 1.31%
Ratio of net investment income to
average net assets ................... 3.23%** 3.10% 3.10% 3.18% 3.38% 3.39%
Portfolio turnover rate ................ 10.27%* 17.36% 9.61% 8.68% 15.98% 6.43%
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 1.73%** 1.76% 1.72% 1.77% 1.74% 1.81%
Ratio of net investment income to
average net assets ................... 2.95%** 2.81% 2.81% 2.80% 2.93% 2.89%
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 1.43%** 1.46% 1.41% 1.36% 1.27% 1.30%
Class Y
------------------------------------------------------------------------------
Six Months
Ended Year Ended June 30,
12/31/07 -------------------------------------------------------------
(unaudited) 2007 2006 2005 2004 2003
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ..... $ 9.94 $ 9.90 $ 10.29 $ 9.94 $ 10.34 $ 9.89
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income .................. 0.21++ 0.41+ 0.42+ 0.42+ 0.44++ 0.42+
Net gain (loss) on securities (both
realized and unrealized) ............. 0.07 0.07 (0.37) 0.39 (0.36) 0.50
-------- -------- -------- -------- -------- --------
Total from investment operations ......... 0.28 0.48 0.05 0.81 0.08 0.92
-------- -------- -------- -------- -------- --------
Less distributions (note 10):
Dividends from net investment income ... (0.22) (0.44) (0.44) (0.46) (0.48) (0.47)
Distributions from capital gains ....... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions .................... (0.22) (0.44) (0.44) (0.46) (0.48) (0.47)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ........... $ 10.00 $ 9.94 $ 9.90 $ 10.29 $ 9.94 $ 10.34
======== ======== ======== ======== ======== ========
Total return (not reflecting sales charge) 2.85%* 4.80% 0.49% 8.27% 0.76% 9.55%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 41,818 $ 47,124 $ 39,791 $ 17,928 $ 8,233 $ 883
Ratio of expenses to average net assets 0.44%** 0.48% 0.44% 0.39% 0.28% 0.30%
Ratio of net investment income to
average net assets ................... 4.23%** 4.09% 4.10% 4.15% 4.41% 4.17%
Portfolio turnover rate ................ 10.27%* 17.36% 9.61% 8.68% 15.98% 6.43%
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 0.72%** 0.76% 0.72% 0.77% 0.74% 0.78%
Ratio of net investment income to
average net assets ................... 3.94%** 3.81% 3.82% 3.78% 3.95% 3.70%
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 0.42%** 0.46% 0.41% 0.37% 0.27% 0.29%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amounts have been calculated using the daily average shares
method.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED)
As a shareholder of the Fund, you may incur two types of costs: (1)
transaction costs, including front-end sales charges with respect to Class A
shares or contingent deferred sales charges ("CDSC") with respect to Class C
shares; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other Fund expenses. The 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 July 1,
2007 and held for the six months ended December 31, 2007.
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".
SIX MONTHS ENDED DECEMBER 31, 2007
ACTUAL
TOTAL RETURN BEGINNING ENDING EXPENSES
WITHOUT ACCOUNT ACCOUNT PAID DURING
SALES CHARGES(1) VALUE VALUE THE PERIOD(2)
- -------------------------------------------------------------------------------
Class A 2.75% $1,000.00 $1,027.50 $ 3.16
- -------------------------------------------------------------------------------
Class C 2.34% $1,000.00 $1,023.40 $ 7.27
- -------------------------------------------------------------------------------
Class Y 2.85% $1,000.00 $1,028.50 $ 2.14
- -------------------------------------------------------------------------------
(1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE
APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES.
TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE
TOTAL RETURN FOR THE YEAR.
(2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.62%, 1.43% AND
0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (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.
SIX MONTHS ENDED DECEMBER 31, 2007
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD(1)
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Class A 5.00% $1,000.00 $1,022.02 $ 3.15
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Class C 5.00% $1,000.00 $1,017.95 $ 7.25
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Class Y 5.00% $1,000.00 $1,023.03 $ 2.14
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(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.62%, 1.43% AND
0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
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INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila Group of Funds(R)
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 1-800-SEC-0330.
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PROXY VOTING RECORD (UNAUDITED)
The Fund does not invest in equity securities. Accordingly, there were no
matters relating to a portfolio security considered at any shareholder meeting
held during the 12 months ended June 30, 2007 with respect to which the Fund was
entitled to vote. Applicable regulations require us to inform you that the
foregoing proxy voting information is available on the SEC website at
http://www.sec.gov.
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ADDITIONAL INFORMATION (UNAUDITED)
RENEWAL OF THE ADVISORY AND ADMINISTRATION AGREEMENT
Renewal until December 31, 2008 of the Advisory and Administration
Agreement (the "Advisory Agreement") between the Fund and the Manager was
approved by the Board of Trustees and the independent Trustees in December,
2007. At a meeting called and held for that purpose at which a majority of the
independent Trustees were present in person, the following materials were
considered:
o Copies of the agreements to be renewed; o A term sheet describing
the material terms of the agreements;
o The Annual Report of the Fund for the year ended June 30, 2007;
o A report, prepared by the Manager and provided to the Trustees in
advance of the meeting for the Trustees' review, containing data
about the performance of the Fund, data about its fees, expenses and
purchases and redemptions of capital stock together with comparisons
of such data with similar data about other comparable funds, as well
as data as to the profitability of the Manager; and
o Quarterly materials reviewed at prior meetings on the Fund's
performance, operations, portfolio and compliance.
The Trustees reviewed materials relevant to, and considered the following
factors:
THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE MANAGER.
The Manager has provided local management of the Fund's portfolio. The
Trustees noted that the Manager employed Mr. Thomas S. Albright and Mr. Kimball
Young as co-portfolio managers for the Fund and has established facilities for
credit analysis of the Fund's portfolio securities. Mr. Young, based in Salt
Lake City, has extensive municipal bond underwriting experience and has provided
local information regarding specific holdings in the Fund's portfolio. Mr.
Albright has over 25 years of investment management experience. The portfolio
managers have also been available to and have met with the brokerage and
financial planner community and with investors and prospective investors to
provide them with information generally about the Fund's portfolio, with which
to assess the Fund as an investment vehicle for residents of Utah in light of
prevailing interest rates and local economic conditions.
The Board considered that the Manager had provided all services the Board
deemed necessary or appropriate, including the specific services that the Board
has determined are required for the Fund, given that its purpose is to provide
shareholders with as high a level of current income exempt from Utah state and
regular Federal income taxes as is consistent with preservation of capital.
The Manager has additionally provided all administrative services to the
Fund. The Board considered the nature and extent of the Manager's supervision of
third-party service providers, including the Fund's shareholder servicing agent
and custodian. The Board considered that the Manager had established and
maintained a strong culture of ethical conduct and regulatory compliance.
The Board concluded that the services provided were appropriate and
satisfactory and that the Fund would be well served if they continued.
Evaluation of this factor weighed in favor of renewal of the Advisory Agreement.
THE INVESTMENT PERFORMANCE OF THE FUND AND THE MANAGER.
The Board reviewed each aspect of the Fund's performance and compared its
performance with that of its competitors, with national averages and the
benchmark index. It was noted that the
materials provided by the Manager indicated that the Fund had investment
performance that exceeded or was comparable to that of all single-state tax-free
municipal bond funds nationwide, including funds of a comparable asset size for
one-, five- and ten-year periods. The Board considered these results to be
consistent with the purposes of the Fund.
The Board concluded that the performance of the Fund, in light of market
conditions, was satisfactory. Evaluation of this factor indicated to the
Trustees that renewal of the Advisory Agreement would be appropriate.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
MANAGER AND ITS AFFILIATES AND FROM THE RELATIONSHIP WITH THE FUND.
The information provided in connection with renewal contained expense data
for the Fund and its competitors as well as data for all single-state tax-free
municipal bond funds nationwide, including data for all such front-end load
funds of a comparable asset size. The materials also showed the profitability to
the Manager of its services to the Fund.
The Board noted that the Manager was currently waiving a portion of its
fees and had been since the Fund's inception. Additionally, it was noted that
the Manager had contractually undertaken to waive fees and/or reimburse Fund
expenses during the period July 1, 2007 through June 30, 2008 so that total Fund
expenses would not exceed 0.85 of 1% for Class A Shares, 1.65 of 1% for Class C
Shares and 0.65 of 1% for Class Y Shares. The Manager had indicated that it
intended to continue waiving fees as necessary in order that the Fund would
remain competitive.
The Board compared the expense and fee data with respect to the Fund to
similar data about other funds that it found to be relevant. The Board concluded
that the expenses of the Fund and the fees paid were similar to and were
reasonable as compared to those being paid by single-state tax-free municipal
bond funds nationwide, and by the Fund's competitors.
The Board further concluded that the profitability to the Manager and the
Distributor did not argue against approval of the fees to be paid under the
Advisory Agreement.
THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUND GROWS.
Data provided to the Trustees showed that the Fund's asset size had been
increasing in recent years. The Trustees also noted that the materials indicated
that the Fund's fees were already lower than those of its peers, including those
with breakpoints. Additionally, the Trustees noted that the Manager was
currently waiving a substantial portion of its fees. Evaluation of these factors
indicated to the Board that the Advisory Agreement should be renewed without
addition of breakpoints at this time.
BENEFITS DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES FROM THE
RELATIONSHIPS WITH THE FUND.
The Board observed that, as is generally true of most fund complexes, the
Manager and its affiliates, by providing services to a number of funds including
the Fund, were able to spread costs as they would otherwise be unable to do. The
Board noted that while that produces efficiencies and increased profitability
for the Manager and its affiliates, it also makes their services available to
the Fund at favorable levels of quality and cost which are more advantageous to
the Fund than would otherwise have been possible.
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FOUNDERS
Lacy B. Herrmann, Chairman Emeritus
Aquila Management Corporation
MANAGER
AQUILA INVESTMENT MANAGEMENT LLC
380 Madison Avenue, Suite 2300
New York, New York 10017
BOARD OF TRUSTEES
Gary C. Cornia, Chair
Anne J. Mills, Vice Chair
Tucker Hart Adams
Thomas A. Christopher
Diana P. Herrmann
Lyle W. Hillyard
John C. Lucking
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
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC INC.
101 Sabin Street
Pawtucket, RI 02860
CUSTODIAN
JPMORGAN CHASE BANK, N.A.
1111 Polaris Parkway
Columbus, Ohio 43240
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TAIT, WELLER & BAKER LLP
1818 Market Street, Suite 2400
Philadelphia, PA 19103
Further information is contained in the Prospectus, which must precede or
accompany this report.
ITEM 2. CODE OF ETHICS.
Not. applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included in Item 1 above
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Board of Directors of the Registrant has adopted a Nominating
Committee Charter which provides that the Nominating Committee (the 'Committee')
may consider and evaluate nominee candidates properly submitted by shareholders
if a vacancy among the Independent Trustees of the Registrant occurs and if,
based on the Board's then current size, composition and structure, the Committee
determines that the vacancy should be filled. The Committee will consider
candidates submitted by shareholders on the same basis as it considers and
evaluates candidates recommended by other sources. A copy of the qualifications
and procedures that must be met or followed by shareholders to properly submit
a nominee candidate to the Committee may be obtained by submitting a request
in writing to the Secretary of the Registrant.
ITEM 11. 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 filing 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 12. EXHIBITS.
(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
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President and Trustee
March 7, 2008
By: /s/ Joseph P. DiMaggio
- - - -----------------------------------
Chief Financial Officer and Treasurer
March 7, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934
And the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Diana P. Herrmann
- - - ---------------------------------
Diana P. Herrmann
President and Trustee
March 7, 2008
By: /s/ Joseph P. DiMaggio
- - - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
March 8, 2008
TAX-FREE FUND FOR UTAH
EXHIBIT INDEX
(a) (2) Certifications of principal executive officer
and principal financial officer as required by Rule 30a-2(a)
under the Investment Company Act of 1940.
(b) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.