UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6239
Tax-Free Fund for Utah
(Exact name of Registrant as specified in charter)
380 Madison Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
Joseph P. DiMaggio
380 Madison Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 697-6666
Date of fiscal year end: 6/30
Date of reporting period: 06/30/08
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL
REPORT
June 30, 2008
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](SM)
TAX-FREE FUND FOR
UTAH
A TAX-FREE INCOME INVESTMENT
[LOGO OF THE AQUILA
GROUP OF FUNDS: ONE OF THE
AN EAGLE'S HEAD] AQUILA GROUP OF FUNDS(SM)
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BOULDERS
WITH THE SUN RISING BEHIND THEM](SM)
SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS
TAX-FREE FUND FOR UTAH
"A MORE PREDICTABLE RIDE"
August, 2008
Dear Fellow Shareholder:
If you've read any of our previous shareholder communications, you know
that we try to skip the financial jargon and speak in terms with which we
believe the average person can relate and understand.
The recent movements in the stock market got us to thinking about how risk
tolerance mirrors choosing rides at an amusement park.
In our younger days, we always enjoyed the thrill of roller coasters. If
you're like us, you can vividly remember holding your breath with anticipation
as you climbed and climbed to the top, never knowing just when you would finally
get there. Then, just as you began to relax, the roller coaster would begin its
decline. The ride to the bottom seemed like it would never end as you laughed,
screamed, and implored the heavens to let you make it through alive.
Much of what has transpired in the stock market over the last year or so
has reminded us of our younger roller coaster riding days. Of course, the ride
to the "top" of the market is always exhilarating. But, as we've matured, we've
come to realize that roller coasters have lost some of their allure.
We no longer find adrenaline-pumping adventures so attractive. While you
can be brought to dizzying heights, some dramatic lows are also inevitable. For
those of us who don't have the stomach for this type of volatility, especially
with our investment money, a more stable alternative may be the ticket.
We like to think of investing in a tax-free municipal bond fund, such as
Tax-Free Fund for Utah, as more like riding the swings at a county fair. There
is definitely some up and down movement, but you usually don't go quite that
far. In general, you know what to expect next and the ride is fairly pleasant.
NOT A PART OF THE ANNUAL REPORT
Of course, we believe that there is a place in everyone's life for roller
coasters. But, as one matures, it might be prudent to have the more stable
predictable swings begin to play a larger role. After all, what good are highs
if they are often followed by lows?
Sincerely,
[PHOTO OMITTED]
/s/ Lacy B. Herrmann /s/ Diana P. Herrmann
Lacy B. Herrmann Diana P. Herrmann
Founder and Chairman Emeritus President
NOT A PART OF THE ANNUAL REPORT
[LOGO OF TAX-FREE FUND FOR UTAH:
A RECTANGLE CONTAINING DESERT BOULDERS
WITH THE SUN RISING BEHIND THEM](SM)
SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS
TAX-FREE FUND FOR UTAH
ANNUAL REPORT
MANAGEMENT DISCUSSION
Over the past twelve months, the financial markets have been subjected to
some of the most tumultuous events to ever shake the foundations of our
traditionally "unshakable" economy. Among these events are: the screeching halt
in new home construction and sales of existing homes brought about by the total
collapse of the sub-prime mortgage sector; the loss of confidence in (and loss
of AAA ratings of) most of the monoline municipal bond insurers; the evaporation
of liquidity at financial intermediaries as a result of failed auction rate
security rollovers, as insurers lost their coveted AAA ratings; not to mention
all-time record oil prices brought about by increased international consumption
- - including India and China - as well as rampant price speculation. Whether or
not a recession will develop from all this is still to be determined. One thing
is for sure, however, things are not very pleasant right now.
To date, we have weathered the storm. That's not to say we haven't
suffered a few bumps and bruises along the way - but we are still "alive and
kicking" and there is light on the horizon. The Federal Reserve (the "Fed") has
acted swiftly and decisively in addressing these various threats to our
prosperity. Last year, at this time, the target for the overnight federal funds
rate stood at 5.25%. Today, we are at 2.00%. Billions of dollars of reserves
have been made available to lenders and financial intermediaries in order to
help maintain an orderly, efficient marketplace. Interest rates have drifted up
modestly since a year ago, but we are within sight of where we were twelve
months ago. The Fed's job of containing inflation has been anything but easy;
with both the Consumer Price Index-CPI and the Producer Price Index-PPI both
well outside the Fed's tolerance levels (annualized increases of 5.0% and 9.2%,
respectively, as of July 2008). We believe we can expect continued vigilance on
the part of the Fed.
As we head into the second half of 2008, we think it is likely that the
Fed will maintain the current target for short-term interest rates. The
unemployment rate of 5.5% is the highest rate reported in many years. Other
measures of economic progress - retail sales, housing starts, and industrial
production are all well off their highs of the past 12 months - clear signs of a
faltering economy. Historically, as we see slowing on the economic front,
inflation should also show signs of easing. While this cycle is a bit different
because of record high energy prices, it is still likely that we will see some
growth in the economy this year.
Tax-Free Fund For Utah experienced a modest decline in its Class A share
value (Net Asset Value) of $0.18 - approximately 1.82% - for the 12-month period
ending June 30, 2008. The Class A share value of the Fund was $9.73 on June 30,
2008 - down from $9.91 on June 30, 2007. The yield of a typical AA-rated general
obligation bond with a 15 year maturity rose to 4.63% from 4.47% over the same
period. The distribution yield on Tax-Free Fund For Utah Class A shares was
4.13% on June 30, 2008. Assuming a 28% federal tax rate, this equates to a
taxable equivalent yield of 5.74%. Using the maximum federal tax rate of 35%,
the taxable equivalent yield was 6.35%.
MANAGEMENT DISCUSSION (CONTINUED)
Equity returns for the 12 months ended June 30, 2008 reversed their
previous strong showing, providing disappointing performance from last year: the
Dow Jones Industrial Average was down 13.21%; the S & P 500 Index was off
13.05%; and the NASDAQ Composite Index was down 11.13%. Tax-Free Fund For Utah
had a positive rate of return of 2.45% for the 12 months ended June 30, 2008.
Historically, as the economy has grown, commodity prices and interest
rates rise. Even in this slow economic period, we are seeing longer-term
interest rates drift up slightly. We continue to monitor any changes in the
market and position Tax-Free Fund For Utah's portfolio accordingly. To address
the concerns raised by an increase in the overall level of interest rates, we
take great care in the selection of the individual bonds purchased for the Fund.
We will continue to add high quality, intermediate maturity Utah and reciprocal
state municipal bonds that best meet our demanding standards. We will also seek
out "value-added" non-rated and private placement opportunities that meet our
stringent credit requirements and offer above-market yields.
The investment objective of Tax-Free Fund For Utah is to provide as high a
level of double tax-exempt current income as is consistent with the preservation
of capital. We believe this objective continues to be successfully addressed by
our adherence to a discipline of solid fundamental, conservative portfolio
management ideals. The Fund continues to maintain an average quality rating of
"AA", with approximately 68% of the portfolio rated "AA" and "AAA". The Fund's
laddered maturity structure helps us manage price volatility. The portfolio has
an average life of approximately 14.4 years and a modified duration of 8.19
years. We seek to maintain a well-diversified portfolio, which currently
consists of 351 different issues, all of which are 100% exempt from Federal and
Utah state income taxes.
With the national and local economies continuing to show improvement, we
will remain vigilant and do whatever is necessary as we strive to continue to
meet the Fund's investment objective. We intend to "stay the course" and manage
the portfolio by taking advantage of opportunities in the Utah marketplace that
are consistent with the high standards of the Fund.
PERFORMANCE REPORT
The following graph illustrates the value of $10,000 invested in the Class
A shares of Tax-Free Fund For Utah for the 10-year period ended June 30, 2008 as
compared with the Lehman Brothers Quality Intermediate Municipal Bond Index and
the Consumer Price Index (a cost of living index). The performance of each of
the other classes is not shown in the graph but is included in the table below.
It should be noted that the Lehman Index does not include any operating expenses
nor sales charges and being nationally oriented, does not reflect state specific
bond market performance.
[Graphic of a line chart with the following information:]
TFFU TFFU Lehman Brothers
Cost of Fund Class A Shares Fund Class A Shares Quality Intermediate
Living Index no sales charge with sales charge Municipal Bond Index
6/98 10,000 10,000 9,600 10,000
6/99 10,196 10,080 9,674 10,303
6/00 10,577 10,134 9,725 10,718
6/01 10,920 11,076 10,629 11,665
6/02 11,037 11,849 11,372 12,477
6/03 11,270 13,044 12,518 13,452
6/04 11,638 13,025 12,500 13,499
6/05 11,933 14,104 13,536 14,226
6/06 12,448 14,120 13,551 14,274
6/07 12,782 14,754 14,160 14,871
6/08 13,424 15,171 14,560 15,675
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 2008
----------------------------------------------------
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
--------- --------- --------- ---------
Class A (commenced operations on 7/24/92)
With Sales Charge ...................... (1.62)% 2.31% 3.83% 4.94%
Without Sales Charge ................... 2.45 3.15 4.26 5.21
Class C (commenced operations on 5/21/96)
With CDSC .............................. 0.52 2.33 3.34 3.99
Without CDSC ........................... 1.53 2.33 3.34 3.99
Class Y (commenced operations on 5/21/96)
No Sales Charge ........................ 2.67 3.36 4.46 5.11
Lehman Index .............................. 5.40 3.11 4.60 5.22* (Class A)
4.84** (Class C&Y)
Total return figures shown for the Fund reflect any change in price and assume
all distributions within the period were invested in additional shares. Returns
for Class A shares are calculated with and without the effect of the initial 4%
maximum sales charge. Returns for Class C shares are calculated with and without
the effect of the 1% contingent deferred sales charge (CDSC), imposed on
redemptions made within the first 12 months after purchase. Class Y shares are
sold without any sales charge. The rates of return will vary and the principal
value of an investment will fluctuate with market conditions. Shares, if
redeemed, may be worth more or less than their original cost. A portion of each
class's income may be subject to Federal and state income taxes and/or the
Federal alternative minimum tax. Past performance is not predictive of future
investment results.
* From commencement of operations on 7/24/92.
** From commencement of operations on 5/21/96.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Tax-Free Fund For Utah:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Tax-Free Fund For Utah as of June 30,
2008 and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the years in the two year period
ended June 30, 2005 have been audited by other auditors, whose report dated
August 12, 2005 expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
the Fund's internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 2008, by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Tax-Free Fund For Utah as of June 30, 2008, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the three years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
August 27, 2008
TAX-FREE FUND FOR UTAH
SCHEDULE OF INVESTMENTS
JUNE 30, 2008
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (19.6%) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
CITY, COUNTY AND STATE (9.0%)
Alamo, Texas Community College District
$ 595,000 4.375%, 02/15/25 MBIA Insured ........................... Aa2/AA $ 574,175
Anderson, Indiana San District
505,000 4.600%, 07/15/23 AMBAC Insured .......................... Aa3/AA 499,591
Brian Head, Utah
405,000 6.500%, 03/15/24 (pre-refunded) ......................... NR/NR* 430,523
Cedar City, Utah Special Improvement District
Assessment
235,000 5.050%, 09/01/10 ........................................ NR/NR* 236,274
215,000 5.200%, 09/01/11 ........................................ NR/NR* 216,415
Cedar Park, Texas
835,000 4.500%, 02/15/22 MBIA Insured ........................... A1/AA 833,280
Coral Canyon, Utah Special Service District
140,000 4.850%, 07/15/17 ........................................ NR/NR* 127,889
580,000 5.700%, 07/15/18 ........................................ NR/NR* 566,155
Dawson County, Texas Hospital District
555,000 4.375%, 02/15/24 AMBAC Insured .......................... Aa3/AA 536,369
Denton County, Texas
700,000 4.500%, 07/15/24 MBIA Insured ........................... Aa1/AA+ 693,679
400,000 4.500%, 07/15/25 MBIA Insured ........................... Aa1/AA+ 391,604
1,500,000 4.250%, 07/15/27 MBIA Insured ........................... Aa1/AA+ 1,379,835
Harris County, Texas Unlimited Tax
300,000 4.500%, 10/01/23 ........................................ Aa1/AA+ 299,982
Harris County, Texas Utility District #268
905,000 4.375%, 09/01/27 Radian Insured ......................... A3/A 782,291
Hurricane, Utah
125,000 5.400%, 11/01/09 Radian Insured ......................... A3/A 129,135
King County, Washington Unlimited Tax
1,000,000 4.500%, 12/01/25 FSA Insured ............................ Aaa/AAA 995,180
Laredo, Texas
300,000 4.250%, 08/15/21 AMBAC Insured .......................... Aa3/AA 293,781
500,000 4.500%, 02/15/24 AMBAC Insured .......................... Aa3/AA 495,550
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 ........................... Aa2/AA+ $ 1,676,081
1,375,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa2/AA+ 1,416,167
695,000 4.375%, 08/15/25 MBIA Insured ........................... Aa2/AA+ 670,195
Mesquite, Texas
510,000 4.625%, 02/15/22 FSA Insured ............................ Aaa/AAA 515,916
San Antonio, Texas
125,000 4.750%, 02/01/24 FSA Insured ............................ Aaa/AAA 126,121
San Patricio County, Texas
450,000 4.600%, 04/01/25 AMBAC Insured .......................... Aa3/NR 443,255
Texas State
415,000 4.500%, 08/01/22 ........................................ Aa1/AA 412,846
Waco, Texas
2,560,000 4.500%, 02/01/24 MBIA Insured ........................... Aa3/AA 2,523,264
Washington County, Utah
1,250,000 5.000%, 10/01/22 MBIA Insured ........................... A1/NR 1,274,788
Washington State
1,815,000 4.500%, 01/01/22 MBIA Insured ........................... Aa1/AA+ 1,811,352
705,000 4.500%, 07/01/23 FSA Insured ............................ Aaa/AAA 702,716
Williamson County, Texas
460,000 4.500%, 02/15/26 FSA Insured ............................ Aaa/AAA 447,428
---------------
Total City, County and State ............................ 21,501,837
---------------
SCHOOL DISTRICT (10.6%)
Borger, Texas Independent School District
400,000 4.500%, 02/15/24 ........................................ NR/AAA 396,440
500,000 4.500%, 02/15/25 ........................................ NR/AAA 489,660
Canutillo, Texas Independent School District
500,000 4.500%, 08/15/25 ........................................ NR/AAA 489,460
Clint, Texas Independent School District
265,000 4.250%, 02/15/28 ........................................ NR/AAA 241,370
Dallas, Texas Independent School District
2,500,000 5.000%, 08/15/29 ........................................ Aaa/AAA 2,542,000
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
SCHOOL DISTRICT (CONTINUED)
Dripping Springs, Texas Independent School District
$ 725,000 4.375%, 08/15/22 ........................................ Aaa/AAA $ 721,571
Eagle Mountain & Saginaw, Texas Independent
School District
300,000 4.750%, 08/15/21 ........................................ Aaa/AAA 307,080
525,000 4.750%, 08/15/23 ........................................ Aaa/AAA 533,531
Freemont County, Wyoming School District #14
355,000 4.500%, 06/15/26 ........................................ NR/BBB 346,026
Frisco, Texas Independent School District
1,260,000 5.000%, 07/15/26 ........................................ Aaa/NR 1,284,280
Galena Park, Texas Independent School District
295,000 4.625%, 08/15/25 ........................................ Aaa/NR 293,088
Harrisburg, South Dakota Independent School
District No. 41-2
1,370,000 4.500%, 01/15/24 FSA Insured ............................ Aaa/NR 1,370,384
Jacksboro, Texas Independent School District
815,000 4.700%, 02/15/23 ........................................ NR/AAA 827,054
La Feria, Texas Independent School District
210,000 4.400%, 02/15/24 ........................................ Aaa/NR 204,662
Lancaster, Texas School District
300,000 4.375%, 02/15/22 ........................................ Aaa/AAA 297,102
Lindale, Texas Independent School District
440,000 4.250%, 02/15/21 ........................................ NR/AAA 433,224
1,000,000 4.250%, 02/15/22 ........................................ NR/AAA 977,700
445,000 4.375%, 02/15/23 ........................................ NR/AAA 437,666
Lovejoy, Texas Independent School District
200,000 4.500%, 02/15/24 ........................................ Aaa/AAA 198,220
Muleshoe, Texas Independent School District
380,000 4.500%, 02/15/22 ........................................ NR/AAA 371,655
250,000 4.500%,0 2/15/23 ........................................ NR/AAA 242,685
200,000 4.500%, 02/15/24 ........................................ NR/AAA 193,024
220,000 4.500%, 02/15/25 ........................................ NR/AAA 211,759
Navasota, Texas Independent School District
475,000 5.000%, 08/15/23 FGIC Insured ........................... A3/NR 479,208
RATING
PRINCIPAL MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
SCHOOL DISTRICT (CONTINUED)
North Summit County, Utah School District
$ 760,000 5.000%, 02/01/23 ........................................ Aaa/NR $ 788,166
800,000 5.000%, 02/01/24 ........................................ Aaa/NR 826,616
Prosper, Texas Independent School District
395,000 4.125%, 08/15/21 ........................................ NR/AAA 383,861
Southern, Texas Independent School District
910,000 4.500%, 02/01/26 ........................................ Aaa/AAA 885,175
Spring, Texas Independent School District
300,000 4.750%, 08/15/23 ........................................ Aaa/AAA 304,338
1,400,000 4.500%, 08/15/27 ........................................ Aaa/AAA 1,342,698
Tooele County, Utah School District
670,000 4.000%, 06/01/20 ........................................ Aaa/AAA 643,535
Van, Texas Independent School District
750,000 4.875%, 02/15/26 ........................................ Aaa/AAA 765,570
Washington County, Utah
440,000 5.000%, 10/01/18 XLCA Insured ........................... A1/NR 453,763
465,000 5.000%, 10/01/19 XLCA Insured ........................... A1/NR 477,760
490,000 5.000%, 10/01/20 XLCA Insured ........................... A1/NR 502,373
510,000 5.000%, 10/01/21 XLCA Insured ........................... A1/NR 521,205
535,000 5.000%, 10/01/22 XLCA Insured ........................... A1/NR 544,138
565,000 5.000%, 10/01/23 XLCA Insured ........................... A1/NR 572,515
320,000 5.000%, 10/01/24 XLCA Insured ........................... A1/NR 323,738
Washoe County, Nevada School District
200,000 4.625%, 06/01/23 FGIC Insured ........................... Aa3/AA 199,458
Waxahachie, Texas Independent School District
605,000 4.400%, 08/15/26 ........................................ Aaa/NR 580,861
630,000 4.400%, 08/15/27 ........................................ Aaa/NR 596,408
Yakima County, Washington School District #208
750,000 4.500%, 12/01/23 FSA Insured ............................ Aaa/NR 731,243
---------------
Total School District ................................... 25,332,270
---------------
Total General Obligation Bonds .......................... 46,834,107
---------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (77.3%) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
AIRPORT (1.7%)
Clark County, Nevada Passenger Facility Charge
$ 255,000 4.750%, 07/01/22 MBIA Insured AMT ....................... Aa3/AA $ 253,197
Hillsborough County, Florida Aviation Authority
2,185,000 5.250%, 10/01/23 MBIA Insured AMT ....................... Aa3/AA 2,139,945
Miami-Dade County, Florida Aviation Revenue
1,675,000 5.000%, 10/01/28 Series C MBIA Insured AMT .............. A2/AA 1,550,430
---------------
Total Airport 3,943,572
---------------
COUNTY (0.4%)
Davis County, Utah Lease Revenue DMV Project
78,000 5.400%, 11/01/17 ........................................ NR/NR* 77,992
83,000 5.450%, 11/01/18 ........................................ NR/NR* 82,540
87,000 5.500%, 11/01/19 ........................................ NR/NR* 85,769
92,000 5.550%, 11/01/20 ........................................ NR/NR* 90,065
97,000 5.600%, 11/01/21 ........................................ NR/NR* 94,244
103,000 5.650%, 11/01/22 ........................................ NR/NR* 99,270
108,000 5.700%, 11/01/23 ........................................ NR/NR* 103,831
115,000 5.700%, 11/01/24 ........................................ NR/NR* 109,250
121,000 5.750%, 11/01/25 ........................................ NR/NR* 114,274
128,000 5.750%, 11/01/26 ........................................ NR/NR* 119,607
---------------
Total County ............................................ 976,842
---------------
EDUCATION (17.2%)
Broward County, Florida School Board COP
1,680,000 4.500%, 07/01/23 Series A FGIC Insured .................. A1/A+ 1,594,774
Carmel, Indiana 2002 School Building Corp.
1,235,000 4.300%, 01/15/23 FSA Insured ............................ NR/AAA 1,196,023
1,525,000 4.300%, 07/15/23 FSA Insured ............................ NR/AAA 1,475,727
Central Washington State University System Revenue
1,265,000 4.375%, 05/01/26 FSA Insured ............................ Aaa/NR 1,217,145
Florida State Board of Education Public Education
210,000 4.500%, 06/01/25 FSA Insured ............................ Aaa/AAA 203,935
Hillsborough County, Florida School Board COP
560,000 4.250%, 07/01/26 MBIA Insured ........................... Aa3/AA 502,090
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
EDUCATION (CONTINUED)
Laredo, Texas Independent School District Public
Facility Corp.
$ 190,000 5.000%, 08/01/24 AMBAC Insured .......................... Aa3/AA $ 193,460
La Vernia, Texas Higher Education Finance Corp.
Revenue
3,617,000 4.400%, 03/12/38 ........................................ NR/NR* 3,616,240
Nevada System Higher Education COP
1,000,000 5.000%, 07/01/25 AMBAC Insured .......................... Aa3/AA- 1,023,840
Salt Lake County, Utah Westminster College Project
435,000 4.750%, 10/01/21 ........................................ NR/BBB 398,756
1,200,000 5.000%, 10/01/22 ........................................ NR/BBB 1,128,492
1,250,000 5.000%, 10/01/25 ........................................ NR/BBB 1,144,412
2,025,000 5.125%, 10/01/28 ........................................ NR/BBB 1,838,234
Texas State College Student Loan Revenue
100,000 5.000%, 08/01/22 AMT .................................... Aa1/AA 100,741
Texas State University System Financing Revenue
655,000 4.375%, 03/15/23 FSA Insured ............................ Aaa/AAA 633,221
Tyler, Texas Independent School District
325,000 5.000%, 02/15/26 FSA Insured ............................ Aaa/AAA 331,770
University of Nevada (University Revenues)
190,000 4.500%, 07/01/24 MBIA Insured ........................... Aa3/AA 188,077
University of Utah COP
3,170,000 4.350%, 12/01/26 AMBAC Insured .......................... Aa3/AA 3,037,970
University of Utah (University Revenues)
770,000 5.000%, 04/01/18 MBIA Insured Aa3/AA 805,343
Utah County, Utah Charter School Revenue Lakeview
Academy
315,000 5.350%, 07/15/17 Series A ............................... NR/NR* 301,509
Utah County, Utah Charter School Revenue Lincoln
Academy
450,000 5.450%, 06/15/17 Series A ............................... NR/NR* 435,758
Utah County, Utah Charter School Revenue
Renaissance Academy
340,000 5.350%, 07/15/17 Series A ............................... NR/NR* 324,523
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
EDUCATION (CONTINUED)
Utah County, Utah School Facility
$ 1,360,000 6.500%, 12/21/25 ........................................ NR/NR* $ 1,282,888
Utah State Board of Regents Auxiliary & Campus Facility
1,000,000 4.125%, 04/01/20 MBIA Insured ........................... Aa2/AA 946,390
Utah State Board of Regents Lease Revenue
410,000 4.500%, 05/01/20 AMBAC Insured .......................... Aa3/AA 412,399
425,000 4.500%, 05/01/21 AMBAC Insured .......................... Aa3/AA 425,531
450,000 4.625%, 05/01/22 AMBAC Insured .......................... Aa3/AA 452,174
120,000 4.650%, 05/01/23 AMBAC Insured .......................... Aa3/AA 120,384
Utah State Board of Regents Office Facility Revenue
1,885,000 4.500%, 08/01/18 MBIA Insured ........................... Aa3/AA 1,911,183
450,000 5.050%, 02/01/20 MBIA Insured ........................... A2/AA 460,319
360,000 5.125%, 02/01/22 MBIA Insured ........................... A2/AA 368,539
1,045,000 5.000%, 04/01/23 MBIA Insured ........................... Aa3/AA 1,070,759
500,000 5.000%, 05/01/26 MBIA Insured (pre-refunded) ............ Aa/AAA 541,325
Utah State Charter School Finance Authority
Channing Hall Academy
500,000 5.750%, 07/15/22 Series A ............................... NR/NR* 469,300
Utah State Charter School Finance Authority
Fast Forward Academy
3,127,000 6.500%, 11/15/37 144A ................................... NR/NR* 2,896,446
Utah State Charter School Finance Authority
Noah Webster Academy
2,155,000 6.250%, 06/15/28 ........................................ NR/NR* 2,042,229
Utah State Charter School Finance Authority
Ronald Wilson Reagan Academy
1,250,000 5.750%, 02/15/22 Series A ............................... NR/NR* 1,177,863
Utah State Charter School Finance Authority
Summit Academy
1,500,000 5.125%, 06/15/17 ........................................ NR/BBB- 1,482,915
Washington State University Revenue
735,000 4.600%, 10/01/29 FSA Insured ............................ Aaa/AAA 707,923
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
EDUCATION (CONTINUED)
Weber State University, Utah Student Facilities System
$ 300,000 5.100%, 04/01/16 Series A (pre-refunded) ................ NR/AAA $ 318,942
425,000 5.250%, 04/01/19 Series A (pre-refunded) ................ NR/AAA 453,790
1,825,000 4.400%, 04/01/27 FSA Insured ............................ NR/AAA 1,772,659
---------------
Total Education ......................................... 41,005,998
---------------
HEALTHCARE (0.7%)
Harris County, Texas Health Facility Development Corp.
145,000 5.000%, 11/15/28 AMBAC Insured .......................... Aa3/AAA 145,505
Reno, Nevada Hospital Revenue, Washoe
Medical Center
725,000 5.000%, 06/01/23 FSA Insured ............................ Aaa/AAA 734,019
680,000 5.000%, 06/01/23 FSA Insured ............................ Aaa/AAA 691,132
---------------
Total Healthcare ........................................ 1,570,656
---------------
Hospital (0.6%)
Murray City, Utah Hospital Revenue
1,000,000 5.000%, 05/15/22 MBIA Insured ........................... Aa1/AA 1,004,540
Weber State University, Utah Human Services COP
430,000 5.050%, 01/15/17 AMBAC Insured (pre-refunded) ........... Aaa/AAA 430,473
---------------
Total Hospital .......................................... 1,435,013
---------------
Housing (15.5%)
Alaska Housing Finance Corp. Housing Revenue
1,000,000 4.700%, 06/01/27 AMT .................................... Aa2/AA 914,390
1,000,000 5.250%, 12/01/28 AMT .................................... Aa2/AA 954,180
Alaska State Local Housing Authority Revenue
500,000 5.125%, 06/01/27 Series A2 AMT .......................... Aaa/AAA 480,945
Florida Housing Finance Corp. Revenue
430,000 4.750%, 01/01/16 AMT .................................... Aa2/AA 428,658
780,000 5.000%, 07/01/21 AMT .................................... Aa2/AA 746,694
1,605,000 4.550%, 07/01/22 AMT .................................... Aa2/AA 1,447,501
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
HOUSING (CONTINUED)
Henderson, Nevada Local Improvement District
$ 150,000 5.000%, 09/01/15 ........................................ NR/NR* $ 126,463
200,000 5.000%, 09/01/16 ........................................ NR/NR* 164,940
200,000 5.050%, 09/01/17 ........................................ NR/NR* 162,176
200,000 5.100%, 09/01/18 ........................................ NR/NR* 159,792
Indiana Housing & Community Development Authority
1,415,000 4.900%, 07/01/26 AMT .................................... Aaa/NR 1,316,389
Indiana State Housing Finance Authority Single Family
245,000 4.850%, 07/01/22 AMT .................................... Aaa/NR 229,543
Indianapolis, Indiana Multi-Family
500,000 4.850%, 01/01/21 AMT .................................... Aaa/NR 474,560
Miami-Dade County, Florida Housing Finance Authority
535,000 5.000%, 11/01/23 FSA Insured AMT ........................ NR/AAA 519,902
Nevada Housing Multi-Family, LOC: US Bank
1,000,000 4.750%, 04/01/39 AMT .................................... NR/AA+ 927,650
North Dakota Housing Authority Home Mortgage
Revenue
2,000,000 5.400%, 07/01/23 AMT .................................... Aa1/NR 2,019,860
1,000,000 5.650%, 07/01/28 AMT .................................... Aa1/NR 1,006,370
Orange County, Florida Housing Finance Authority
140,000 5.150%, 03/01/22 ........................................ Aaa/NR 139,651
Seattle, Washington Housing Authority
730,000 4.400%, 11/01/21 AMT .................................... NR/AAA 661,563
Snohomish County, Washington Housing Authority
150,000 4.750%, 09/01/10 AMT .................................... NR/NR* 149,657
185,000 4.875%, 09/01/12 AMT .................................... NR/NR* 182,900
225,000 5.000%, 09/01/13 AMT .................................... NR/NR* 221,672
185,000 5.000%, 09/01/14 AMT .................................... NR/NR* 181,058
145,000 5.100%, 09/01/15 AMT .................................... NR/NR* 141,594
South Dakota Housing Development Authority
1,250,000 4.900%, 05/01/26 AMT .................................... Aa1/AAA 1,161,600
Texas State Housing Revenue
2,020,000 4.800%, 09/01/20 AMT .................................... Aaa/AAA 1,899,224
495,000 4.800%, 09/01/27 AMT .................................... Aa1/AAA 450,336
1,000,000 5.250%, 09/01/32 AMT .................................... Aa1/AAA 955,150
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
HOUSING (CONTINUED)
Utah Housing Corporation Single Family Mortgage
$ 330,000 4.600%, 07/01/15 AMT .................................... Aaa/AAA $ 329,023
235,000 4.650%, 07/01/16 AMT .................................... Aaa/AAA 233,914
25,000 5.250%, 07/01/23 AMT .................................... Aa2/AA 24,757
230,000 4.875%, 07/01/23 AMT .................................... Aa3/AA- 215,131
1,460,000 5.125%, 07/01/24 AMT .................................... Aa3/AA- 1,445,079
1,130,000 5.000%, 07/01/25 AMT .................................... Aa3/AA- 1,084,992
695,000 5.100%, 01/01/26 AMT .................................... Aa3/AA- 670,369
625,000 5.200%, 01/01/28 AMT .................................... Aa3/AA- 607,919
1,000,000 5.800%, 07/01/28 AMT .................................... Aa3/AA- 1,006,660
1,000,000 5.700%, 07/01/28 AMT .................................... Aa3/AA- 1,004,670
1,000,000 5.500%, 07/01/28 AMT .................................... Aa3/AA- 982,160
915,000 5.000%, 07/01/31 AMT .................................... Aa2/AA 828,386
640,000 5.000%, 01/01/32 AMT .................................... Aa2/AA 584,038
Utah State Housing Agency Housing Revenue
125,000 5.650%, 07/01/27 AMT .................................... Aa2/AA 125,105
Utah State Housing Finance Agency
170,000 5.700%, 07/01/15 AMT .................................... Aa3/AA- 170,049
90,000 5.650%, 07/01/16 Series 1994C ........................... Aaa/AAA 90,147
40,000 5.400%, 07/01/16 AMT .................................... Aa2/AA 40,095
30,000 6.000%, 07/01/17 AMT .................................... Aaa/AAA 30,043
640,000 5.500%, 07/01/18 AMT .................................... Aa3/AA- 660,845
45,000 5.300%, 07/01/18 AMT .................................... Aaa/AAA 45,560
75,000 5.000%, 07/01/18 AMT .................................... Aaa/AAA 74,772
95,000 5.400%, 07/01/20 AMT .................................... Aa2/AA 93,739
140,000 5.600%, 07/01/23 AMT .................................... Aa2/AA 140,091
45,000 5.700%, 07/01/26 MBIA Insured A2/AA 45,095
Washington State Housing Finance Commission
2,290,000 4.800%, 12/01/21 AMT .................................... Aaa/NR 2,145,524
Washington State Housing Finance Commission
Single Family Mortgage
2,345,000 5.000%, 06/01/22 ........................................ Aaa/NR* 2,307,972
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
HOUSING (CONTINUED)
Wyoming Community Development Authority
Housing Revenue
$ 150,000 4.600%, 12/01/12 AMT .................................... Aa1/AA+ $ 151,116
225,000 4.350%, 12/01/16 AMT .................................... Aa1/AA+ 217,098
580,000 4.700%, 06/01/17 AMT .................................... Aa1/AA+ 573,742
520,000 4.700%, 12/01/17 AMT .................................... Aa1/AA+ 514,140
2,000,000 5.000%, 12/01/22 Series 10 AMT .......................... Aa1/AA+ 1,921,080
120,000 5.000%, 12/01/22 ........................................ Aa1/AA+ 118,178
415,000 5.150%, 06/01/23 AMT .................................... Aa1/AA+ 406,111
---------------
Total Housing ........................................... 37,112,018
---------------
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (0.5%)
Sandy City, Utah Industrial Development, H Shirley
Wright Project, Refunding Bonds, LOC Olympus Bank
250,000 6.125%, 08/01/16 ........................................ NR/AAA 250,707
Utah County Environmental Improvement Revenue
935,000 5.050%, 11/01/17 ........................................ Baa1/BBB+ 954,027
---------------
Total Industrial Development & Pollution Control ........ 1,204,734
---------------
LEASE (8.8%)
Celebration Community Development District, Florida
290,000 5.000%, 05/01/22 MBIA Insured ........................... A2/AA 296,716
Clark County, Nevada Improvement District Revenue
725,000 5.125%, 12/01/19 ........................................ NR/NR* 658,010
Clark County, Nevada Improvement District Special
Local Improvement #128 (Summerlin)
500,000 5.000%, 02/01/21 Series A ............................... NR/NR* 427,345
Marion County, Indiana Convention & Recreational
Facilities Authority
390,000 5.000%, 06/01/27 MBIA Insured ........................... A2/AA 391,673
Murray City, Utah Municipal Building Authority
520,000 5.050%, 12/01/15 AMBAC Insured (pre-refunded) ........... Aaa/NR 552,744
New Albany, Indiana Development Authority
500,000 4.250%, 02/01/22 ........................................ NR/A- 462,080
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
LEASE (CONTINUED)
Poinciana West, Florida Community Development
District Special Assessment Revenue
$ 1,000,000 5.875%, 05/01/22 ........................................ NR/NR* $ 903,700
Port Saint Lucie, Florida Special Assessment Revenue
Southwest Annexation District 1-B
500,000 5.000%, 07/01/27 MBIA Insured ........................... A2/AA 507,235
Red River, Texas Higher Education TCU Project
1,000,000 4.375%, 03/15/25 ........................................ Aa3/NR 929,890
Salt Lake County, Utah Municipal Building Authority
3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) ........... Aaa/AA 4,161,144
South Dakota State Building Authority Revenue
500,000 4.500%, 06/01/24 FGIC Insured ........................... Baa3/AA- 483,965
Spanish Fork, Utah Charter School
2,000,000 5.550%, 11/15/21 ........................................ NR/NR* 1,867,360
Tolomato Community, Florida Development District
Special Assessment Revenue
1,000,000 6.450%, 05/01/23 ........................................ NR/NR* 975,690
Utah County, Utah Municipal Building Authority
120,000 5.500%, 11/01/16 AMBAC Insured (pre-refunded) ........... Aaa/NR 129,271
240,000 5.500%, 11/01/17 AMBAC Insured (pre-refunded) ........... Aaa/NR 258,542
Utah State Building Ownership Authority
465,000 5.000%, 05/15/21 ........................................ Aa1/AA+ 484,930
1,755,000 5.250%, 05/15/23 ........................................ Aa1/AA+ 1,830,377
510,000 5.000%, 05/15/23 Aa1/AA+ 528,074
1,845,000 5.250%, 05/15/24 ........................................ Aa1/AA+ 1,919,409
1,080,000 5.000%, 05/15/25 ........................................ Aa1/AA+ 1,106,957
West Bountiful, Utah Courthouse Revenue
410,000 5.000%, 05/01/19 ........................................ NR/A 434,247
West Valley City, Utah Municipal Building Authority
Lease Revenue Refunding
1,890,000 4.375%, 08/01/26 Series A FGIC Insured .................. Baa3/A+ 1,795,783
---------------
Total Lease ............................................. 21,105,142
---------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
TAX REVENUE (14.2%)
Aqua Isles, Florida Community Development
District Revenue
$ 955,000 7.000%, 05/01/38 ........................................ NR/NR* $ 931,555
Bay County, Florida Sales Tax Revenue
175,000 4.750%, 09/01/23 FSA Insured ............................ Aaa/NR 175,518
Bluffdale, Utah Sales Tax Revenue
1,900,000 5.500%, 08/01/23 (pre-refunded) ......................... NR/NR* 1,905,586
Bountiful, Utah Special Improvement District
Special Assessment Revenue
203,000 5.000%, 06/01/14 ........................................ NR/NR* 195,057
213,000 5.150%, 06/01/15 ........................................ NR/NR* 204,378
224,000 5.300%, 06/01/16 ........................................ NR/NR* 213,548
236,000 5.500%, 06/01/17 ........................................ NR/NR* 225,116
249,000 5.650%, 06/01/18 ........................................ NR/NR* 238,779
Clark County, Nevada Improvement District
250,000 5.000%, 08/01/16 ........................................ NR/NR* 228,027
Coral Canyon, Utah Special Service District
110,000 5.000%, 07/15/13 ........................................ NR/NR* 107,126
250,000 5.500%, 07/15/18 ........................................ NR/NR* 240,307
Henderson, Nevada Local Improvement District
100,000 4.500%, 09/01/12 ........................................ NR/NR* 94,015
300,000 5.000%, 09/01/14 ........................................ NR/NR* 245,295
300,000 5.000%, 09/01/15 ........................................ NR/NR* 273,087
255,000 5.000%, 03/01/16 ........................................ NR/NR* 231,749
Holladay, Utah Redevelopment Agency
3,000,000 4.900%, 12/30/20 ........................................ NR/NR* 2,743,170
Jordanelle, Utah Special Service District
186,000 5.000%, 11/15/14 ........................................ NR/NR* 182,122
196,000 5.100%, 11/15/15 ........................................ NR/NR* 191,870
206,000 5.200%, 11/15/16 ........................................ NR/NR* 200,273
216,000 5.300%, 11/15/17 ........................................ NR/NR* 209,021
228,000 5.400%, 11/15/18 ........................................ NR/NR* 221,297
240,000 5.500%, 11/15/19 ........................................ NR/NR* 230,767
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
TAX REVENUE (CONTINUED)
Jordanelle, Utah Special Service District (continued)
$ 253,000 5.600%, 11/15/20 ........................................ NR/NR* $ 241,051
268,000 5.700%, 11/15/21 ........................................ NR/NR* 252,670
283,000 5.800%, 11/15/22 ........................................ NR/NR* 265,661
299,000 6.000%, 11/15/23 ........................................ NR/NR* 281,810
Jordanelle, Utah Special Service Improvement District
230,000 8.000%, 10/01/11 ........................................ NR/NR* 241,353
La Verkin, Utah Sales and Franchise Tax Revenue
571,000 5.100%, 07/15/27 ........................................ NR/NR* 514,334
Lehi, Utah Sales Tax
790,000 5.000%, 06/01/24 FSA Insured ............................ Aaa/AAA 814,403
Mesquite, Nevada New Special Improvement District
240,000 5.300%, 08/01/11 ........................................ NR/NR* 236,386
180,000 4.600%, 08/01/11 ........................................ NR/NR* 176,108
190,000 4.750%, 08/01/12 ........................................ NR/NR* 183,840
220,000 4.900%, 08/01/13 ........................................ NR/NR* 211,202
135,000 5.250%, 08/01/17 ........................................ NR/NR* 125,483
305,000 5.350%, 08/01/19 ........................................ NR/NR* 279,392
130,000 5.400%, 08/01/20 ........................................ NR/NR* 117,950
480,000 5.500%, 08/01/25 ........................................ NR/NR* 423,230
Mountain Regional Water District, Utah Special
Assessment
1,735,000 7.000%, 12/01/18 ........................................ NR/NR* 1,666,346
Mountain Regional Water, Utah Special Service District
2,000,000 5.000%, 12/15/20 MBIA Insured ........................... A2/AA 2,062,420
North Ogden, Utah Sales Tax Revenue
195,000 5.000%, 11/01/24 XLCA Insured ........................... A3/A+ 204,795
Payson City, Utah Sales Tax Revenue
445,000 5.000%, 08/01/21 FSA Insured ............................ Aaa/AAA 463,588
Pembroke Harbor, Florida Community
Development District Revenue
1,820,000 7.000%, 05/01/38 ........................................ NR/NR* 1,775,319
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
TAX REVENUE (CONTINUED)
Salt Lake City, Utah Sales Tax
$ 265,000 5.250%, 02/01/13 ........................................ NR/AAA $ 281,470
955,000 5.000%, 02/01/21 ........................................ NR/AAA 992,914
1,005,000 5.000%, 02/01/22 ........................................ NR/AAA 1,041,401
1,060,000 5.000%, 02/01/23 ........................................ NR/AAA 1,095,340
1,115,000 5.000%, 02/01/24 ........................................ NR/AAA 1,148,963
Sandy City, Utah Sales Tax
520,000 5.000%, 09/15/18 AMBAC Insured .......................... Aa3/AA+ 536,240
605,000 5.000%, 09/15/20 AMBAC Insured .......................... Aa3/AA+ 621,075
South Weber City, Utah
525,000 5.000%, 01/15/24 MBIA Insured ........................... Aaa/AA 548,436
Springville, Utah Special Assessment Revenue
400,000 5.500%, 01/15/17 ........................................ NR/NR* 380,380
457,000 5.650%, 01/15/18 ........................................ NR/NR* 434,685
483,000 5.800%, 01/15/19 ........................................ NR/NR* 454,334
510,000 5.900%, 01/15/20 ........................................ NR/NR* 475,626
540,000 6.000%, 01/15/21 ........................................ NR/NR* 498,371
Wasatch County, Utah Building Authority
130,000 5.000%, 10/01/15 ........................................ A3/NR 135,090
135,000 5.000%, 10/01/16 ........................................ A3/NR 139,514
Wasatch County, Utah Sales Tax
205,000 5.000%, 12/01/16 AMBAC Insured .......................... Aa3/AA 214,135
210,000 5.000%, 12/01/17 AMBAC Insured .......................... Aa3/AA 218,064
225,000 5.000%, 12/01/18 AMBAC Insured .......................... Aa3/AA 232,353
Washington City, Utah Sales Tax
680,000 5.250%, 11/15/17 AMBAC Insured .......................... Aa3/AA 720,990
Weber County, Utah Sales Tax
385,000 5.000%, 07/01/23 AMBAC Insured .......................... Aa3/NR 392,662
West Valley City, Utah Redevelopment Agency
1,625,000 5.000%, 03/01/21 ........................................ NR/A- 1,666,519
320,000 5.000%, 03/01/22 ........................................ NR/A- 326,150
350,000 5.000%, 03/01/23 ........................................ NR/A- 355,723
1,000,000 5.000%, 03/01/24 ........................................ NR/A- 1,010,650
---------------
Total Tax Revenue ....................................... 33,946,089
---------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
TRANSPORTATION (3.6%)
Alaska State International Airport Revenue
$ 110,000 5.000%, 10/01/24 AMBAC Insured AMT ...................... Aa3/AA $ 103,794
Florida State Turnpike Authority Turnpike Revenue
500,000 4.500%, 07/01/22 MBIA Insured ........................... Aa2/AA 499,485
Miami-Dade County, Florida Aviation Revenue
600,000 5.000%, 10/01/24 FGIC Insured AMT ....................... A2/A- 563,700
Port of Seattle, Washington Revenue
1,045,000 5.100%, 04/01/24 AMT FGIC Insured ....................... Aa2/AA- 1,008,728
Utah Transit Authority Sales Tax & Transportation
Revenue
3,300,000 4.125%, 06/15/21 FSA Insured ............................ Aaa/AAA 3,217,434
3,450,000 4.125%, 06/15/22 FSA Insured ............................ Aaa/AAA 3,303,168
---------------
Total Transportation .................................... 8,696,309
---------------
UTILITY (8.9%)
Alaska Industrial Development & Export Authority
400,000 4.625%, 12/01/16 AMBAC Insured AMT ...................... Aa3/AA 384,440
Cowlitz County, Washington Public Utility District
Electric Revenue
1,000,000 4.500%, 09/01/26 MBIA Insured ........................... A2/AA 953,350
Eagle Mountain, Utah Gas & Electric
1,385,000 4.250%, 06/01/20 Radian Insured ......................... A3/A 1,283,466
1,440,000 5.000%, 06/01/21 Radian Insured ......................... A3/A 1,440,763
1,515,000 5.000%, 06/01/22 Radian Insured ......................... A3/A 1,508,925
Garland, Texas Water & Sewer
440,000 4.500%, 03/01/21 AMBAC Insured .......................... Aa3/AA 438,715
Indianapolis, Indiana Gas Utility
290,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa3/AA 290,122
Intermountain Power Agency Utilities Light & Power
Service, Utah
1,380,000 5.000%, 07/01/19 MBIA Insured ........................... A2/AA 1,407,407
250,000 5.250%, 07/01/23 ........................................ A1/A 256,393
JEA, Florida Electric System Revenue
500,000 5.000%, 10/01/26 ........................................ Aa3/A+ 504,780
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
UTILITY (CONTINUED)
Manti City, Utah Electric System Revenue
$ 603,000 5.750%, 02/01/17 ........................................ NR/NR* $ 609,096
Murray City, Utah Utility Electric Revenue
1,340,000 5.000%, 06/01/25 AMBAC Insured .......................... Aa3/NR 1,396,267
Orem, Utah Water & Storm Sewer Revenue
1,000,000 5.000%, 07/15/26 ........................................ NR/AA 1,033,470
Rockport, Indiana Pollution Control Revenue
Indiana Michigan Power Company Project
1,500,000 4.625%, 06/01/25 Series A FGIC Insured .................. A3/BBB 1,272,900
St. George, Utah Electric Revenue
1,910,000 4.500%, 06/01/20 FSA Insured ............................ Aaa/NR 1,931,430
Salem, Utah Electric Revenue
130,000 5.350%, 11/01/08 ........................................ NR/NR* 131,066
140,000 5.400%, 11/01/09 ........................................ NR/NR* 142,920
Santa Clara Utah Storm Drain Revenue
877,000 5.100%, 09/15/26 ........................................ NR/NR* 823,468
Southern Utah Valley Power System
210,000 5.250%, 09/15/13 MBIA Insured A2/AA 223,299
225,000 5.250%, 09/15/14 MBIA Insured ........................... A2/AA 239,069
235,000 5.250%, 09/15/15 MBIA Insured ........................... A2/AA 248,943
185,000 5.125%, 09/15/21 MBIA Insured ........................... A2/AA 190,652
Springville, Utah Electric Revenue
550,000 5.600%, 03/01/09 ........................................ Baa1/NR 559,631
Tacoma, Washington Solid Waste Utility Revenue
1,000,000 5.000%, 12/01/23 XLCA Insured A3/AA- 1,007,470
Utah Assessed Municipal Power System
790,000 5.250%, 12/01/09 ........................................ NR/A- 809,726
1,000,000 5.000%, 04/01/21 FSA Insured ............................ Aaa/AAA 1,032,290
Washington, Utah Electric Revenue
985,000 5.000%, 09/01/21 XLCA Insured ........................... A3/NR 1,025,700
---------------
Total Utility ........................................... 21,145,758
---------------
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
WATER AND SEWER (5.2%)
Eagle Mountain, Utah Water and Sewer
$ 750,000 5.800%, 11/15/16 ACA Insured (pre-refunded) ............. NR/A $ 805,485
690,000 4.750%, 11/15/25 MBIA Insured ........................... A2/AA 693,070
Jacksonville, Florida Water and Sewer System Revenue
250,000 4.625%, 10/01/22 ........................................ Aa3/AA- 250,000
Mesquite, Texas Waterworks & Sewer
225,000 4.500%, 03/01/24 FSA Insured ............................ Aaa/AAA 225,099
Murray City, Utah Sewer and Water
440,000 5.000%, 10/01/19 AMBAC Insured .......................... Aa3/NR 453,253
Pleasant Grove, Utah Water Revenue
450,000 4.300%, 12/01/20 MBIA Insured ........................... A2/AA 434,844
Smithfield, Utah Water Revenue
90,000 4.750%, 06/01/17 ........................................ NR/NR* 85,900
94,000 4.800%, 06/01/18 ........................................ NR/NR* 89,226
99,000 4.850%, 06/01/19 ........................................ NR/NR* 92,916
103,000 4.900%, 06/01/20 ........................................ NR/NR* 95,940
108,000 5.000%, 06/01/21 ........................................ NR/NR* 100,302
114,000 5.050%, 06/01/22 ........................................ NR/NR* 105,089
120,000 5.100%, 06/01/23 ........................................ NR/NR* 110,560
126,000 5.150%, 06/01/24 ........................................ NR/NR* 115,717
132,000 5.200%, 06/01/25 ........................................ NR/NR* 120,607
139,000 5.250%, 06/01/26 ........................................ NR/NR* 126,648
Upper Trinity Regional Water District, Texas
205,000 4.500%, 08/01/20 AMBAC Insured .......................... Aa3/AA 203,860
Utah Water Finance Agency Revenue
200,000 5.250%, 07/01/16 AMBAC Insured .......................... Aa3/NR 210,730
310,000 5.000%, 10/01/17 AMBAC Insured .......................... Aa3/NR 322,586
510,000 5.000%, 07/01/18 AMBAC Insured .......................... Aa3/NR 526,585
685,000 5.000%, 07/01/19 AMBAC Insured .......................... Aa3/NR 709,146
105,000 5.000%, 10/01/20 AMBAC Insured .......................... Aa3/NR 107,367
830,000 4.500%, 10/01/22 AMBAC Insured .......................... Aa3/NR 813,691
100,000 5.125%, 07/01/23 AMBAC Insured .......................... Aa3/NR 102,078
870,000 4.500%, 10/01/23 AMBAC Insured .......................... Aa3/NR 847,458
2,570,000 5.000%, 10/01/25 AMBAC Insured .......................... Aa3/NR 2,608,010
1,300,000 4.500%, 10/01/28 AMBAC Insured .......................... Aa3/NR 1,230,177
RATING
PRINCIPAL MOODY'S/
AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- --------- ---------------
WATER AND SERWER (CONTINUED)
Weber-Box Elder, Utah Conservation District Water
Revenue
$ 200,000 6.450%, 11/01/14 (pre-refunded) ......................... Aaa/AAA $ 216,424
200,000 6.500%, 11/01/19 (pre-refunded) ......................... Aaa/AAA 216,648
335,000 6.900%, 11/01/20 (pre-refunded) ......................... Aaa/AAA 365,884
---------------
Total Water and Sewer ................................... 12,385,300
---------------
Total Revenue Bonds ..................................... 184,527,431
---------------
Total Investments (cost $237,024,401 - note 4) .......... 96.9% 231,361,538
Other assets less liabilities ........................... 3.1 7,405,861
--------- ---------------
Net Assets .............................................. 100.0% $ 238,767,399
========= ===============
PERCENT OF
PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO+
---------------------------------------------------- ----------
Aaa of Moody's or AAA of S&P 30.4%
Aa of Moody's or AA of S&P 37.5
A of Moody's or S&P 9.2
Baa of Moody's or BBB of S&P 4.4
Not rated* 18.5
---------
100.0%
=========
+ Calculated using the highest rating of the two rating services.
* 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
JUNE 30, 2008
ASSETS
Investments at value (cost $237,024,401) ............................................ $ 231,361,538
Cash ................................................................................ 3,118,017
Interest receivable ................................................................. 3,166,816
Receivable for Fund shares sold ..................................................... 1,717,253
Other assets ........................................................................ 23,930
-------------
Total assets ........................................................................ 239,387,554
-------------
LIABILITIES
Dividends payable ................................................................... 249,163
Payable for Fund shares redeemed .................................................... 123,760
Management fees payable ............................................................. 52,046
Distribution and service fees payable ............................................... 51,689
Accrued expenses .................................................................... 143,497
-------------
Total liabilities ................................................................... 620,155
-------------
NET ASSETS .............................................................................. $ 238,767,399
=============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share . $ 245,345
Additional paid-in capital .......................................................... 245,220,260
Net unrealized depreciation on investments (note 4) ................................. (5,662,863)
Accumulated net realized loss on investments ........................................ (1,065,535)
Undistributed net investment income ................................................. 30,192
-------------
$ 238,767,399
=============
CLASS A
Net Assets .......................................................................... $ 158,124,778
=============
Capital shares outstanding .......................................................... 16,258,218
=============
Net asset value and redemption price per share ...................................... $ 9.73
=============
Offering price per share (100/96 of $9.73 adjusted to nearest cent) ................. $ 10.14
=============
CLASS C
Net Assets .......................................................................... $ 31,905,653
=============
Capital shares outstanding .......................................................... 3,281,562
=============
Net asset value and offering price per share ........................................ $ 9.72
=============
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) ...................................... $ 9.72*
=============
CLASS Y
Net Assets .......................................................................... $ 48,736,968
=============
Capital shares outstanding .......................................................... 4,994,673
=============
Net asset value, offering and redemption price per share ............................ $ 9.76
=============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 2008
Investment Income:
Interest income ...................................... $ 10,685,279
Expenses:
Management fee (note 3) .............................. $ 1,132,655
Distribution and service fees (note 3) ............... 606,671
Transfer and shareholder servicing agent fees ........ 138,019
Trustees' fees and expenses (note 8) ................. 100,289
Legal fees (note 3) .................................. 79,334
Shareholders' reports and proxy statements ........... 43,764
Fund accounting fees ................................. 26,112
Custodian fees (note 6) .............................. 21,897
Registration fees and dues ........................... 18,214
Auditing and tax fees ................................ 17,052
Insurance ............................................ 10,275
Chief compliance officer (note 3) .................... 4,426
Miscellaneous ........................................ 28,550
------------
Total expenses ....................................... 2,227,258
Management fee waived (note 3) ....................... (648,452)
Expenses paid indirectly (note 6) .................... (33,449)
------------
Net expenses ......................................... 1,545,357
------------
Net investment income ................................ 9,139,922
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from securities transactions ....... 638,898
Change in unrealized depreciation on investments ..... (4,614,006)
------------
Net realized and unrealized gain (loss) on investments (3,975,108)
------------
Net increase in net assets resulting from operations . $ 5,164,814
============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2008 JUNE 30, 2007
------------- -------------
OPERATIONS:
Net investment income .................................. $ 9,139,922 $ 8,511,537
Net realized gain (loss) from securities transactions .. 638,898 686,688
Change in unrealized depreciation on investments ....... (4,614,006) 310,980
------------- -------------
Change in net assets from operations ............... 5,164,814 9,509,205
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10):
Class A Shares:
Net investment income .................................. (6,459,904) (5,969,997)
Class C Shares:
Net investment income .................................. (1,040,811) (1,072,516)
Class Y Shares:
Net investment income .................................. (1,961,979) (1,896,685)
------------- -------------
Change in net assets from distributions ............ (9,462,694) (8,939,198)
------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold .............................. 55,700,331 55,169,672
Reinvested dividends and distributions ................. 5,703,447 5,565,179
Cost of shares redeemed ................................ (45,261,625) (50,191,077)
------------- -------------
Change in net assets from capital share transactions 16,142,153 10,543,774
------------- -------------
Change in net assets ............................... 11,844,273 11,113,781
NET ASSETS:
Beginning of period .................................... 226,923,126 215,809,345
------------- -------------
End of period* ......................................... $ 238,767,399 $ 226,923,126
============= =============
* Includes undistributed net investment income: ........ $ 30,192 $ 34,778
============= =============
See accompanying notes to financial statements.
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
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.
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48") was adopted on December 31, 2007. Management has reviewed the
tax positions for each of the open tax years (2004-2008) and has
determined that the implementation of FIN 48 did not have a material
impact on the Fund's financial statements.
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 PRONOUNCEMENT: 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 year ended June 30, 2008, the Fund incurred management fees of
$1,132,655 of which $648,452 was waived. The Manager contractually undertook 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. Comparable expense
limitations are in place for fiscal 2009.
Under a Compliance Agreement with the Manager, the Manager is compensated
for Chief Compliance Officer related services provided to enable the Fund to
comply with Rule 38a-1 of the Investment Company Act of 1940.
Specific details as to the nature and extent of the services provided by
the Manager are more fully defined in the Fund's Prospectus and Statement of
Additional Information.
b) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended. Under
one part of the Plan, with respect to Class A Shares, the Fund is authorized to
make distribution fee payments to broker-dealers or others ("Qualified
Recipients") selected by Aquila Distributors, Inc. (the "Distributor")
including, but not limited to, any principal underwriter of the Fund, with which
the Distributor has entered into written agreements contemplated by the Rule and
which have rendered assistance in the distribution and/or retention of the
Fund's shares or servicing of shareholder accounts. The Fund makes payment of
this service fee at the annual rate of 0.20% of the Fund's average net assets
represented by Class A Shares. For the year ended June 30, 2008, distribution
fees on Class A Shares amounted to $304,267, of which the Distributor retained
$6,951.
Under another part of the Plan, the Fund is authorized to make payments
with respect to Class C Shares to Qualified Recipients which have rendered
assistance in the distribution and/or retention of the Fund's Class C shares or
servicing of shareholder accounts. These payments are made at the annual rate of
0.75% of the Fund's average net assets represented by Class C Shares and for the
year ended June 30, 2008, amounted to $226,803. In addition, under a Shareholder
Services Plan, the Fund is authorized to make service fee payments with respect
to Class C Shares to Qualified Recipients for providing personal services and/or
maintenance of shareholder accounts. These payments are made at the annual rate
of 0.25% of the Fund's average net assets represented by Class C Shares and for
the year ended June 30, 2008 amounted to $75,601. The total of these payments
with respect to Class C Shares amounted to $302,404, of which the Distributor
retained $64,154.
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 brokerage and advisory firms ("intermediaries"), the Fund's shares are
sold primarily through the facilities of these intermediaries having offices
within Utah, with the bulk of sales commissions inuring to such intermediaries.
For the year ended June 30, 2008, total commissions on sales of Class A Shares
amounted to $445,042, of which the Distributor received $39,612.
c) OTHER RELATED PARTY TRANSACTIONS:
For the year ended June 30, 2008, the Fund incurred $79,158 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 of that firm.
4. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 2008, purchases of securities and proceeds
from the sales of securities aggregated $50,415,897 and $40,952,267,
respectively.
At June 30, 2008, the aggregate tax cost for all securities was
$236,994,209. At June 30, 2008, the aggregate gross unrealized appreciation for
all securities in which there is an excess of value over tax cost amounted to
$1,176,566 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $6,809,237, for a
net unrealized depreciation of $5,632,671.
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 June 30, 2008, the
Fund had 54% 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:
YEAR ENDED YEAR ENDED
JUNE 30, 2008 JUNE 30, 2007
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
CLASS A SHARES:
Proceeds from shares sold 2,834,849 $ 28,003,392 2,804,057 $ 28,292,959
Reinvested distributions 417,757 4,128,043 385,904 3,893,635
Cost of shares redeemed . (2,020,117) (19,970,653) (2,569,962) (25,914,165)
------------ ------------ ------------ ------------
Net change .......... 1,232,489 12,160,782 619,999 6,272,429
------------ ------------ ------------ ------------
CLASS C SHARES:
Proceeds from shares sold 796,274 7,849,550 758,270 7,658,338
Reinvested distributions 64,603 638,158 62,950 634,919
Cost of shares redeemed . (699,234) (6,926,362) (1,125,043) (11,352,553)
------------ ------------ ------------ ------------
Net change .......... 161,643 1,561,346 (303,823) (3,059,296)
------------ ------------ ------------ ------------
CLASS Y SHARES:
Proceeds from shares sold 2,002,683 19,847,389 1,898,552 19,218,375
Reinvested distributions 94,661 937,246 102,317 1,036,625
Cost of shares redeemed . (1,843,176) (18,364,610) (1,277,759) (12,924,359)
------------ ------------ ------------ ------------
Net change .......... 254,168 2,420,025 723,110 7,330,641
------------ ------------ ------------ ------------
Total transactions in Fund
shares .................. 1,648,300 $ 16,142,153 1,039,286 $ 10,543,774
============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES
At June 30, 2008 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 year ended June 30, 2008 was $74,833, to cover
carrying out their responsibilities and attendance at regularly scheduled
quarterly Board Meetings and meetings of the Independent Trustees held prior to
each quarterly Board Meeting. When additional meetings (Audit, Nominating,
Shareholder 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 year ended June
30, 2008, such meeting-related expenses amounted to $25,456.
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 increased undistributed net investment income in the
amount of $318,186 and decreased additional paid-in capital in the amount of
$318,186 at June 30, 2008. This adjustment had no impact on the Fund's aggregate
net assets at June 30, 2008. 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, 2008, the Fund had a capital loss carryover of $1,065,535 of
which $796,250 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,
2008 2007
---------- ----------
Net tax-exempt income $9,144,508 $8,484,772
---------- ----------
Ordinary income 318,186 454,426
---------- ----------
$9,462,694 $8,939,198
========== ==========
As of June 30, 2008, the components of distributable earnings on a tax
basis were as follows:
Undistributed tax-exempt income $ 249,163
Accumulated net realized loss (1,065,535)
Unrealized depreciation (5,632,671)
Other temporary differences (249,163)
-----------
$(6,698,206)
===========
At June 30, 2008, the difference between book basis and tax basis
unrealized appreciation was attributable primarily to the treatment of accretion
of discounts and amortization of premiums. The difference between book basis and
tax basis undistributed income is due to the timing of distributions.
11. RECENT DEVELOPMENTS
a) THE DAVIS CASE: In 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. On May 19, 2008, the U. S. Supreme Court
upheld the right of states to tax interest on out-of-state municipal bonds
while exempting their own state's bond interest from taxation. The U. S.
Supreme Court said differential tax treatment for interest from in-state
vs. out-of-state municipal securities does not discriminate against
interstate commerce, but rather promotes the financing of essential
governmental services.
b) INSURERS: 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 the prices of insured municipal bonds.
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
----------------------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------
2008 2007 2006 2005 2004
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ........... $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.31
----------- ----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income ...................... 0.41++ 0.40+ 0.40+ 0.41+ 0.43++
Net gain (loss) on securities (both realized
and unrealized) ........................ (0.17) 0.05 (0.37) 0.38 (0.37)
----------- ----------- ----------- ----------- -----------
Total from investment operations ........... 0.24 0.45 0.03 0.79 0.06
----------- ----------- ----------- ----------- -----------
Less distributions (note 10):
Dividends from net investment income ....... (0.42) (0.41) (0.42) (0.44) (0.46)
Distributions from capital gains ........... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions ........................ (0.42) (0.41) (0.42) (0.44) (0.46)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ................. $ 9.73 $ 9.91 $ 9.87 $ 10.26 $ 9.91
=========== =========== =========== =========== ===========
Total return (not reflecting sales charge) ..... 2.45% 4.60% 0.28% 8.06% 0.54%
Ratios/supplemental data
Net assets, end of period (in thousands) ... $ 158,125 $ 148,894 $ 142,227 $ 126,091 $ 94,103
Ratio of expenses to average net assets .... 0.63% 0.68% 0.64% 0.59% 0.48%
Ratio of net investment income to average
net assets ............................. 4.09% 3.89% 3.90% 3.98% 4.19%
Portfolio turnover rate .................... 18.83% 17.36% 9.61% 8.68% 15.98%
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 .... 0.90% 0.96% 0.93% 0.97% 0.94%
Ratio of net investment income to average
net assets ............................. 3.82% 3.61% 3.61% 3.60% 3.73%
The expense ratios after giving effect to the waiver, reimbursement and expense
offset for uninvested cash balances were (note 3):
Ratio of expenses to average net assets .... 0.61% 0.66% 0.61% 0.56% 0.47%
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amounts have been calculated using the daily average shares
method.
See accompanying notes to financial statements.
For a share outstanding throughout each period
Class C
---------------------------------------------------------------------------
Year Ended June 30,
---------------------------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.30
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.33++ 0.32+ 0.32+ 0.32+ 0.34++
Net gain (loss) on securities (both
realized and unrealized) (0.18) 0.05 (0.37) 0.38 (0.36)
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.15 0.37 (0.05) 0.70 (0.02)
---------- ---------- ---------- ---------- ----------
Less distributions (note 10):
Dividends from net investment income (0.34) (0.33) (0.34) (0.35) (0.37)
Distributions from capital gains -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (0.34) (0.33) (0.34) (0.35) (0.37)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.72 $ 9.91 $ 9.87 $ 10.26 $ 9.91
========== ========== ========== ========== ==========
Total return (not reflecting sales charge) 1.53% 3.77% (0.52)% 7.20% (0.16)%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 31,906 $ 30,905 $ 33,791 $ 27,581 $ 21,961
Ratio of expenses to average net assets 1.43% 1.48% 1.44% 1.39% 1.27%
Ratio of net investment income to
average net assets 3.29% 3.10% 3.10% 3.18% 3.38%
Portfolio turnover rate 18.83% 17.36% 9.61% 8.68% 15.98%
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 1.70% 1.76% 1.72% 1.77% 1.74%
Ratio of net investment income to
average net assets 3.02% 2.81% 2.81% 2.80% 2.93%
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 1.42% 1.46% 1.41% 1.36% 1.27%
Class Y
---------------------------------------------------------------------------
Year Ended June 30,
---------------------------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 9.94 $ 9.90 $ 10.29 $ 9.94 $ 10.34
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.43++ 0.41+ 0.42+ 0.42+ 0.44++
Net gain (loss) on securities (both
realized and unrealized) (0.17) 0.07 (0.37) 0.39 (0.36)
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.26 0.48 0.05 0.81 0.08
---------- ---------- ---------- ---------- ----------
Less distributions (note 10):
Dividends from net investment income (0.44) (0.44) (0.44) (0.46) (0.48)
Distributions from capital gains -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (0.44) (0.44) (0.44) (0.46) (0.48)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.76 $ 9.94 $ 9.90 $ 10.29 $ 9.94
========== ========== ========== ========== ==========
Total return (not reflecting sales charge) 2.67% 4.80% 0.49% 8.27% 0.76%
Ratios/supplemental data
Net assets, end of period (in thousands) $ 48,737 $ 47,124 $ 39,791 $ 17,928 $ 8,233
Ratio of expenses to average net assets 0.43% 0.48% 0.44% 0.39% 0.28%
Ratio of net investment income to
average net assets 4.29% 4.09% 4.10% 4.15% 4.41%
Portfolio turnover rate 18.83% 17.36% 9.61% 8.68% 15.98%
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 0.70% 0.76% 0.72% 0.77% 0.74%
Ratio of net investment income to
average net assets 4.02% 3.81% 3.82% 3.78% 3.95%
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%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
++ Per share amount calculated using the daily average shares method.
See accompanying notes to financial statements.
ADDITIONAL INFORMATION (UNAUDITED)
TRUSTEES AND OFFICERS(1)
NUMBER OF OTHER DIRECTORSHIPS
POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE
HELD WITH IN FUND POSITION HELD IS A
NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.)
- ----------------- ---------- ------------------- ---------- -----------
INTERESTED TRUSTEE(4)
Diana P. Herrmann Trustee since 1997 Vice Chair and Chief Executive Officer of Aquila 12 ICI Mutual Insurance
New York, NY and President since Management Corporation, Founder of the Aquila Group Company
(02/25/58) 1998 of Funds(5) and parent of Aquila Investment
Management LLC, Manager since 2004, President since
1997, Chief Operating Officer, 1997-2008, a Director
since 1984, Secretary since 1986 and previously its
Executive Vice President, Senior Vice President or
Vice President, 1986-1997; Chief Executive Officer
and Vice Chair since 2004, and President and Manager
of the Manager since 2003, and Chief Operating
Officer of the Manager, 2003-2008; Chair, Vice
Chair, President, Executive Vice President or Senior
Vice President of funds in the Aquila Group of Funds
since 1986; Director of the Distributor since 1997;
trustee, Reserve Money-Market Funds, 1999-2000 and
Reserve Private Equity Series, 1998-2000; Governor,
Investment Company Institute (a trade organization
for the U.S. mutual fund industry dedicated to
protecting shareholder interests and educating the
public about investing) and head of its Small Funds
Committee since 2004; active in charitable and
volunteer organizations.
NON-INTERESTED TRUSTEES
Gary C. Cornia Chair of the Board Dean, Mariott School of Management, Brigham Young 4 Lincoln Institute of
Orem, UT of Trustees since University since 2008; Director, Romney Institute of Land Policy,
(06/24/48) 2005 and Trustee Public Management, Marriott School of Management, Cambridge, MA
since 1993 2004-2008; Professor, Marriott School of Management,
1980 - present; Past President, the National Tax
Association; Fellow, Lincoln Institute of Land
Policy, 2002 - present; Associate Dean, Marriott
School of Management, Brigham Young University,
1991-2000; member, Utah Governor's Tax Review
Committee since 1993.
NUMBER OF OTHER DIRECTORSHIPS
POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE
HELD WITH IN FUND POSITION HELD IS A
NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.)
- ----------------- ---------- ------------------- ---------- -----------
Anne J. Mills Vice Chair of the President, Loring Consulting Company since 2001; 4 None
Castle Rock, CO Board of Trustees Vice President for Business Management and CFO,
(12/23/38) since 2006 and Ottawa University, since 2006, Vice President for
Trustee since 1994 Business Affairs, 1992-2001; IBM Corporation,
1965-1991; currently active with various charitable,
educational and religious organizations.
Tucker Hart Adams Trustee since 2006 President, The Adams Group, Inc., an economic 3 Director, Colorado
Colorado Springs, CO consulting firm, since 1989; formerly Chief Health Facilities
(01/11/38) Economist, United Banks of Colorado; currently or Authority
formerly active with numerous professional and
community organizations.
Thomas A. Christopher Trustee since 2006 Vice President of Robinson, Hughes & Christopher, 3 None
Danville, KY C.P.A.s, P.S.C., since 1977; President, A Good Place
(12/19/47) for Fun, Inc., a sports facility, since 1987;
currently or formerly active with various
professional and community organizations.
Lyle W. Hillyard Trustee since 2003 President of the law firm of Hillyard, Anderson & 2 None
Logan, UT Olsen, Logan, Utah, since 1967; member of Utah
(09/25/40) Senate, 1985 to present, in the following positions:
President, 2000, Senate Majority Leader, 1999-2000,
Assistant Majority Whip, 1995-1998; served as
Chairman of the following Utah Senate Committees:
Tax and Revenue, Senate Judiciary Standing, Joint
Executive Appropriations, and Senate Rules;
currently serves as Co-Chair, Joint Executive
Appropriations.
John C. Lucking Trustee since 2004 President, Econ-Linc, an economic consulting firm, 3 None
Phoenix, AZ since 1995; formerly Consulting Economist, Bank One
(05/20/43) Arizona and Chief Economist, Valley National Bank;
member, Arizona's Joint Legislative Budget Committee
Economic Advisory Panel and the Western Blue Chip
Economic Forecast Panel; Board member, Northern
Arizona University Foundation since 1997; member,
various historical, civic and economic associations.
NUMBER OF OTHER DIRECTORSHIPS
POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE
HELD WITH IN FUND POSITION HELD IS A
NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.)
- ----------------- ---------- ------------------- ---------- -----------
OTHER INDIVIDUALS
CHAIRMAN EMERITUS(6)
Lacy B. Herrmann Founder and Chairman Founder and Chairman of the Board, Aquila Management N/A N/A
New York, NY Emeritus since 2005, Corporation, the sponsoring organization and parent
(05/12/29) Chairman of the of the Manager or Administrator and/or Adviser or
Board of Trustees, Sub-Adviser to each fund of the Aquila Group of
1992-2005 Funds; Chairman of the Manager or Administrator
and/or Adviser or Sub-Adviser to each since 2004;
Founder and Chairman Emeritus of each fund in the
Aquila Group of Funds; previously Chairman and a
Trustee of each fund in the Aquila Group of Funds
since its establishment until 2004 or 2005; Director
of the Distributor since 1981 and formerly Vice
President or Secretary, 1981-1998; Trustee Emeritus,
Brown University and the Hopkins School; active in
university, school and charitable organizations.
OFFICERS
Charles E. Childs, III Executive Vice Executive Vice President of all funds in the Aquila N/A N/A
New York, NY President since 2003 Group of Funds and the Manager and the Manager's
(04/01/57) parent since 2003; Executive Vice President and
Chief Operating Officer of the Manager's parent
since 2008; formerly Senior Vice President,
corporate development, Vice President, Assistant
Vice President and Associate of the Manager's parent
since 1987; Senior Vice President, Vice President or
Assistant Vice President of the Aquila Money-Market
Funds, 1988-2003.
Jerry G. McGrew Senior Vice President of the Distributor since 1998, Registered N/A N/A
New York, NY President since 1997 Principal since 1993, Senior Vice President,
(06/18/44) 1997-1998 and Vice President, 1993-1997; Senior Vice
President, Aquila Three Peaks High Income Fund,
Aquila Rocky Mountain Equity Fund and five Aquila
Municipal Bond Funds; Vice President, Churchill Cash
Reserves Trust, 1995-2001.
NUMBER OF OTHER DIRECTORSHIPS
POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE
HELD WITH IN FUND POSITION HELD IS A
NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.)
- ----------------- ---------- ------------------- ---------- -----------
Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free Fund For Utah since N/A N/A
Salt Lake City, UT President since 1997 2001; Co-founder, Lewis Young Robertson &
(08/07/46) Burningham, Inc., a NASD licensed broker/dealer
providing public finance services to Utah local
governments, 1995-2001; Senior Vice President of two
Aquila Bond Funds and Aquila Rocky Mountain Equity
Fund; formerly Senior Vice President-Public Finance,
Kemper Securities Inc., Salt Lake City, Utah.
Thomas S. Albright Senior Vice Senior Vice President and Portfolio Manager, N/A N/A
Louisville, KY President since 2003 Churchill Tax-Free Fund of Kentucky since July 2000;
(07/26/52) and Vice President, Senior Vice President, Tax-Free Fund For Utah since
2001-2003 2003, Vice President, 2001-2003 and co-portfolio
manager since 2001; Vice President and backup
portfolio manager, Tax-Free Trust of Arizona, since
2004; Vice President and Portfolio Manager, Banc One
Investment Advisors, Inc., 1994-2000.
Mary Kayleen Willis Vice President since Vice President, Tax-Free Fund For Utah since N/A N/A
Salt Lake City, UT 2003 and Assistant September 2003, Assistant Vice President, 2002-2003;
(06/11/63) Vice President, Vice President, Aquila Rocky Mountain Equity Fund,
2002-2003 since 2004.
Robert W. Anderson Chief Compliance Chief Compliance Officer of the Fund and each of the N/A N/A
New York, NY Officer since 2004 other funds in the Aquila Group of Funds, the
(08/23/40) and Assistant Manager and the Distributor since 2004, Compliance
Secretary since 2000 Officer of the Manager or its predecessor and
current parent 1998-2004; Assistant Secretary of the
Aquila Group of Funds since 2000.
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila Group of Funds N/A N/A
New York, NY Officer since 2003 since 2003 and Treasurer since 2000.
(11/06/56) and Treasurer since
2000
NUMBER OF OTHER DIRECTORSHIPS
POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE
HELD WITH IN FUND POSITION HELD IS A
NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.)
- ----------------- ---------- ------------------- ---------- -----------
Edward M. W. Hines Secretary since 1992 Shareholder of Butzel Long, a professional N/A N/A
New York, NY corporation, counsel to the Fund, since 2007;
(12/16/39) Partner of Hollyer Brady Barrett & Hines LLP, its
predecessor as counsel, 1989-2007; Secretary of the
Aquila Group of Funds.
John M. Herndon Assistant Secretary Assistant Secretary of the Aquila Group of Funds N/A N/A
New York, NY since 1995 since 1995 and Vice President of the three Aquila
(12/17/39) Money-Market Funds since 1990; Vice President of the
Manager or its predecessor and current parent since
1990.
Lori A. Vindigni Assistant Treasurer Assistant Treasurer of the Aquila Group of Funds N/A N/A
New York, NY since 2000 since 2000; Assistant Vice President of the Manager
(11/02/66) or its predecessor and current parent since 1998;
Fund Accountant for the Aquila Group of Funds,
1995-1998.
- ----------
(1) The Fund's Statement of Additional Information includes additional
information about the Trustees and is available, without charge, upon request by
calling 800-437-1020 (toll-free) or by visiting www.aquilafunds.com or the EDGAR
Database at the SEC's internet site at www.sec.gov.
(2) The mailing address of each Trustee and officer is c/o Tax-Free Fund For
Utah, 380 Madison Avenue, New York, NY 10017.
(3) Each Trustee holds office until the next annual meeting of shareholders or
until his or her successor is elected and qualifies. The term of office of each
officer is one year.
(4) Ms. Herrmann is an interested person of the Fund as an officer of the Fund,
as a director, officer and shareholder of the Manager's corporate parent, as an
officer and Manager of the Manager, and as a shareholder and director of the
Distributor. Ms. Herrmann is the daughter of Lacy B. Herrmann, the Founder and
Chairman Emeritus of the Fund.
(5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila Municipal Bond
Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks
High Income Fund is a high income corporate bond fund; considered together,
these 12 funds are called the "Aquila Group of Funds."
(6) The Chairman Emeritus may attend Board meetings but has no voting power.
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED)
As a shareholder of the Fund, you may incur two types of costs: (1)
transaction costs, including front-end sales charges with respect to Class A
shares or contingent deferred sales charges ("CDSC") with respect to Class C
shares; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other Fund expenses. The table below is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The table below is based on an investment of $1,000 invested on January 1,
2008 and held for the six months ended June 30, 2008.
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 JUNE 30, 2008
ACTUAL
TOTAL RETURN BEGINNING ENDING EXPENSES
WITHOUT ACCOUNT ACCOUNT PAID DURING
SALES CHARGES(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
Class A (0.29)% $1,000.00 $997.10 $3.03
- --------------------------------------------------------------------------------
Class C (0.79)% $1,000.00 $992.10 $6.93
- --------------------------------------------------------------------------------
Class Y (0.17)% $1,000.00 $998.30 $2.04
- --------------------------------------------------------------------------------
(1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE
APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES.
TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE
TOTAL RETURN FOR THE YEAR.
(2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.61%, 1.42% AND
0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/366 (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 JUNE 30, 2008
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD(1)
- --------------------------------------------------------------------------------
Class A 5.00% $1,000.00 $1,021.83 $3.07
- --------------------------------------------------------------------------------
Class C 5.00% $1,000.00 $1,017.90 $7.02
- --------------------------------------------------------------------------------
Class Y 5.00% $1,000.00 $1,022.82 $2.06
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.61%, 1.42% AND
0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/366 (TO
REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila Group of Funds
produce is automatically sent to you and all other shareholders. Specifically,
you are routinely sent the entire list of portfolio securities of your Fund
twice a year in the semi-annual and annual reports you receive. Additionally, we
prepare, and have available, portfolio listings at the end of each quarter.
Whenever you may be interested in seeing a listing of your Fund's portfolio
other than in your shareholder reports, please check our website
http://www.aquilafunds.com or call us at 1-800-437-1020.
The Fund additionally files a complete list of its portfolio holdings with
the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms
N-Q are available free of charge on the SEC website at http://www.sec.gov. You
may also review or, for a fee, copy the forms at the SEC's Public Reference Room
in Washington, DC or by calling 1-800-SEC-0330.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY VOTING RECORD (UNAUDITED)
The Fund does not invest in equity securities. Accordingly, there were no
matters relating to a portfolio security considered at any shareholder meeting
held during the 12 months ended June 30, 2008 with respect to which the Fund was
entitled to vote. Applicable regulations require us to inform you that the
foregoing proxy voting information is available on the SEC website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
This information is presented in order to comply with a requirement of the
Internal Revenue Code AND NO ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED.
For the fiscal year ended June 30, 2008, $9,144,508 of dividends paid by
Tax-Free Fund For Utah, constituting 96.64% of total dividends paid during the
fiscal year ended June 30, 2008, were exempt-interest dividends, and the balance
was ordinary dividend income.
Prior to January 31, 2008, shareholders were mailed the appropriate tax
form(s) which contained information on the status of distributions paid for the
2007 CALENDAR YEAR.
Prior to January 31, 2009, shareholders will be mailed the appropriate tax
form(s) which will contain information on the status of distributions paid for
the 2008 CALENDAR YEAR.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
CONSIDERATION OF ADVISORY AND ADMINISTRATION AGREEMENT IN CONNECTION WITH
PROPOSED CHANGES IN OWNERSHIP OF THE PARENT COMPANY OF THE MANAGER
BASIS FOR THE TRUSTEES' APPROVAL OF THE NEW ADVISORY AGREEMENT
At a meeting held on March 1, 2008, the Trustees, including the
independent Trustees, approved the New Advisory Agreement and recommended that
the Shareholders of the Fund approve such New Advisory Agreement. In considering
these actions, the Trustees noted that in connection with their annual review of
the Fund's advisory arrangements (the "Annual Review") on December 2, 2007, they
had approved the now-current Advisory Agreement (the "Current Advisory
Agreement") (which is substantially identical to the New Advisory Agreement) for
another one-year term commencing on December 31, 2007. In connection with the
Annual Review, the Trustees considered a wide range of information of the type
they regularly consider when determining whether to continue the Fund's advisory
agreement as in effect from year to year. In approving the New Advisory
Agreement, the Trustees considered the information provided and the factors
considered in connection with the Annual Review as well as such new information
(for example, information about the Transaction) as they considered appropriate.
In considering the Advisory Agreements, the Trustees did not identify any single
factor as determinative. Matters considered by the Trustees, including the
independent Trustees, in connection with their review of the New Advisory
Agreement included the following:
THE TRANSACTION AND THE IMPLICATIONS FOR THE FUND.
In evaluating the Transaction, the Trustees considered a wide range of
information, including ensuring, to the maximum extent possible, ongoing and
future continuity of management of the Fund.
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 Messrs. Young and Albright 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,
Utah, 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. In addition, both of
them have been present at all regular meetings of the Board and Shareholders.
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. It
noted that the Fund was the only fund of its type in the state.
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 Trustees also considered representations by the Manager that the
persons at the Manager involved in providing those services would not change as
a result of the Transaction. 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 approval of the New
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 Trustees also considered representations from the Manager that the
Transaction was not expected to result in any changes to the personnel managing
the Fund's investment portfolio.
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 approval of the New Advisory Agreement would be appropriate.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
MANAGER FROM ITS RELATIONSHIP WITH THE FUND.
The information provided 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 sales charge funds of a
comparable asset size. 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 generally
lower than those being paid by single-state tax-free municipal bond funds
nationwide, and by the Fund's competitors.
The Trustees noted that in connection with the Annual Review they had
concluded that the costs of the services to be provided supported the renewal of
the Current Advisory Agreement, and that the Transaction was not expected to
result in any change to the advisory fees paid by the Fund or the Fund's total
expense ratio.
The materials in connection with the Annual Review had shown 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%
for Class A Shares, 1.65% for Class C Shares and 0.65% 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 Trustees considered that the profitability to the Manager of its
relationship to the Fund was not expected to change as a result of the
Transaction because the Transaction was not expected to result in a change to
the fees received by the Manager or of the costs of the services to be provided
by the Manager.
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 generally 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 New Advisory Agreement should be
approved without addition of breakpoints at this time.
BENEFITS DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES FROM THEIR
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.
In addition to considering the factors discussed above, which the Trustees
regularly consider on an annual basis, the Trustees also gave particular
consideration to matters relating to the change of control at AMC including
representations from representatives of AMC and the Manager that the proposed
change of control is not expected to result in a change in the personnel or
operations of the Manager, the investment approach or style of the Manager with
respect to the Fund, or the services provided to the Fund by the Manager.
The Trustees also considered other factors, either in connection with the
Annual Review or with their approval of the New Advisory Agreement. These
factors included but were not limited to whether the Fund has operated in
compliance with its investment objective and the Fund's record of compliance
with its investment restrictions, and the compliance programs of the Fund and
the Manager.
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel, the Trustees, including the independent Trustees, concluded
that the New Advisory Agreement should be approved and recommended that the
shareholders of the Fund vote to approve the New Advisory Agreement for an
initial one-year term.
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Tax-Free Fund for Utah (the "Fund") was
held on June 25, 2008. The holders of shares representing 76% of the total net
asset value of the shares entitled to vote were present in person or by proxy.
At the meeting, the following matters were voted upon and approved by the
shareholders (the resulting votes are presented below).
1. To elect Trustees.
DOLLAR AMOUNT OF VOTES
TRUSTEE FOR WITHHELD
------- --- --------
Tucker Hart Adams $170,377,875 $1,305,892
Thomas A. Christopher $170,377,875 $1,305,892
Gary C. Cornia $170,377,875 $1,305,892
Diana P. Herrmann $170,325,917 $1,357,507
Lyle W. Hillyard $170,280,994 $1,402,774
John C. Lucking $170,377,875 $1,305,892
Anne J. Mills $170,325,917 $1,357,507
2. To ratify the selection of Tait, Weller & Baker LLP as the Fund's
independent registered public accounting firm.
DOLLAR AMOUNT OF VOTES
FOR AGAINST ABSTAIN
--- ------- -------
$168,317,995 $715,544 $2,651,104
A Special Meeting of Shareholders of Tax-Free Fund for Utah (the "Fund") was
held on June 25, 2008. The holders of shares representing 60% of the total net
asset value of the shares entitled to vote were present in person or by proxy.
At the meeting, the following matters were voted upon and approved by the
shareholders (the resulting votes are presented below).
1. To act on an Advisory and Administration Agreement.
DOLLAR AMOUNT OF VOTES
FOR AGAINST ABSTAIN
--- ------- -------
$137,197,174 $1,544,589 $2,301,816
- --------------------------------------------------------------------------------
PRIVACY NOTICE (UNAUDITED)
TAX-FREE FUND FOR UTAH
OUR PRIVACY POLICY. In providing services to you as an individual who owns or is
considering investing in shares of the Fund, we collect certain non-public
personal information about you. Our policy is to keep this information strictly
safeguarded and confidential, and to use or disclose it only as necessary to
provide services to you or as otherwise permitted by law. Our privacy policy
applies equally to former shareholders and persons who inquire about the Fund.
INFORMATION WE COLLECT. "Non-public personal information" is personally
identifiable financial information about you as an individual or your family.
The kinds of non-public personal information we have about you may include the
information you provide us on your share purchase application or in telephone
calls or correspondence with us, and information about your fund transactions
and holdings, how you voted your shares and the account where your shares are
held.
INFORMATION WE DISCLOSE. We disclose non-public personal information about you
to companies that provide necessary services to us, such as the Fund's transfer
agent, distributor, investment adviser or sub-adviser, as permitted or required
by law, or as authorized by you. Any other use is strictly prohibited. We do not
sell information about you or any of our fund shareholders to anyone.
NON-CALIFORNIA RESIDENTS: We also may disclose some of this information to
another fund in the Aquila Group of Funds (or its service providers) under joint
marketing agreements that permit the funds to use the information only to
provide you with information about other funds in the Aquila Group of Funds or
new services we are offering that may be of interest to you. California
Residents Only: In addition, unless you "opt-out" of the following disclosures
using the form that was mailed to you under separate cover, we may disclose some
of this information to another fund in the Aquila Group of Funds (or its service
providers) under joint marketing agreements that permit the funds to use the
information only to provide you with information about other funds in the Aquila
Group of Funds or new services we are offering that may be of interest to you.
HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to non-public personal
information about you to only those persons who need it to provide services to
you or who are permitted by law to receive it. We maintain physical, electronic
and procedural safeguards to protect the confidentiality of all non-public
personal information we have about you.
If you have any questions regarding our Privacy Policy, please contact us at
1-800-437-1020.
AQUILA DISTRIBUTORS, INC.
AQUILA INVESTMENT MANAGEMENT LLC
This Privacy Policy also has been adopted by Aquila Distributors, Inc. and
Aquila Investment Management LLC and applies to all non-public information about
you that each of these companies may obtain in connection with services provided
to the Fund or to you as a shareholder of the Fund.
- --------------------------------------------------------------------------------
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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
PNC Global Investment Servicing
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.
(a) As of June 30, 2008 (the end of the reporting period) the
Fund has adopted a code of ethics that applies to the Fund's
principal executive officer(s)and principal financial officer(s)
and persons performing similar functions ("Covered Officers") as
defined in the Aquila Group of Funds Code of Ethics for Principal
Executive and Senior Financial Officers under Section 406 of the
Sarbanes-Oxley Act of 2002;
(f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of
Ethics that applies to the Fund's principal executive officer(s)
and principal financial officer(s) and persons performing similar
functions is included as an exhibit to its annual report on this
Form N-CSR;
(f)(2) The text of the Fund's Code of Ethics that applies to the
Trust's principal executive officer(s) and principal financial
officer(s) and persons performing similar functions has been
posted on its Internet website which can be found at the Fund's
Internet address at aquilafunds.com.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1)(ii) The Board of Trustees of the Fund has determined that
it does not have at least one audit committee financial expert
serving on its audit committee. The Fund does not have such a
person serving on the audit committee because none of the persons
currently serving as Trustees happens to have the technical
accounting and auditing expertise included in the definition of
"audit committee financial expert" recently adopted by the Securities
and Exchange Commission in connection with this Form N-CSR, and the
Board has not heretofore deemed it necessary to seek such a person
for election to the Board.
The primary mission of the Board, which is that of oversight over
the operations and affairs of the Fund, confronts the Trustees with
a wide and expanding range of issues and responsibilities. The
Trustees believe that, accordingly, it is essential that the Board's
membership consist of persons with as extensive experience as possible
in fulfilling the duties and responsibilities of mutual fund directors
and audit committee members and, ideally, with extensive experience
and background relating to the economic and financial sectors and
securities in which the Fund invests, including exposure to the
financial and accounting matters commonly encountered with respect
to those sectors and securities. The Board believes that its current
membership satisfies those criteria. It recognizes that it would
also be helpful to have a member with the relatively focused accounting
and auditing expertise reflected in the applicable definition of
"audit committee financial expert," just as additional members with
similarly focused technical expertise in other areas relevant to
the Fund's operations and affairs would also contribute added value.
However, the Board believes that the Fund is better served, and its
assets better employed, by a policy of hiring experts in various
areas, including the specialized area of technical accounting and
auditing matters, if and as the Board identifies the need, rather
than by seeking to expand its numbers by adding technical experts
in the areas constituting its domain of responsibility. The Fund's
Audit Committee Charter explicitly authorizes the Committee to
retain such experts as it deems necessary in fulfilling its duties
under the Charter.
ITEM 4. PRINCIPAL ACCOUNTING FEES AND SERVICES.
a) Audit Fees - The aggregate fees billed for professional services
rendered by the principal accountant for the audit of the Registrant's
annual financial statements were $16,000 in 2007 and $14,000 in 2008.
b) Audit Related Fees - There were no amounts billed for audit-related
fees over the past two years.
c) Tax Fees - The Registrant was billed by the principal accountant
$3,000 and $3,000 in 2007 and 2008, respectively, for return preparation
and tax compliance.
d) All Other Fees - There were no additional fees paid for audit and
non-audit services other than those disclosed in a) thorough c) above.
e)(1) Currently, the audit committee of the Registrant pre-approves audit
services and fees on an engagement-by-engagement basis
e)(2) None of the services described in b) through d) above were approved
by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X, all were pre-approved on an engagement-by-engagement basis.
f) No applicable.
g) There were no non-audit services fees billed by the Registrant's accountant
to the Registrant's investment adviser or distributor over the past two years
h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. 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)(1) Aquila Group of Funds Code of Ethics for Principal Executive and
Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act
of 2002.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of
1940.
(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the registrant has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TAX-FREE FUND FOR UTAH
By: /s/ Diana P. Herrmann
- -----------------------------------
President and Trustee
September 8, 2008
By: /s/ Joseph P. DiMaggio
- -------------------------------------
Chief Financial Officer and Treasurer
September 8, 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
September 8, 2008
By: /s/ Joseph P. DiMaggio
- -------------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 8, 2008
TAX-FREE FUND FOR UTAH
EXHIBIT INDEX
(a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and
Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act
of 2002.
(a) (2) Certifications of principal executive officer
and principal financial officer as required by Rule 30a-2(a)
under the Investment Company Act of 1940.
(b) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.