-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LORQDAVXeDRARjBuT//7Bfs822VIe7i1PacA1QdunTk2f04mR8UC7KGGdjUbOJaH aEZkIQxP9NCPZ94nDJTOyA== 0000872032-04-000020.txt : 20040908 0000872032-04-000020.hdr.sgml : 20040908 20040908141032 ACCESSION NUMBER: 0000872032-04-000020 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040908 DATE AS OF CHANGE: 20040908 EFFECTIVENESS DATE: 20040908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAX FREE FUND FOR UTAH CENTRAL INDEX KEY: 0000872032 IRS NUMBER: 133673542 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06239 FILM NUMBER: 041020347 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE STREET 2: SUITE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 2: 380 MADISON AVE SUITE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: PLEIADES TAX FREE FUND DATE OF NAME CHANGE: 19920514 N-CSR 1 tffuncsr604.txt TAX-FREE FUND FOR UTAH 6/30/2004 NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6239 Tax-Free Fund for Utah (Exact name of Registrant as specified in charter) 380 Madison Avenue New York, New York 10017 (Address of principal executive offices) (Zip code) Joseph P. DiMaggio 380 Madison Avenue New York, New York 10017 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 697-6666 Date of fiscal year end: 6/30 Date of reporting period: 6/30/04 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT JUNE 30, 2004 [Logo of Tax-Free for Utah: a rectangle containing desert boulders with the sun rising behind them] TAX-FREE FUND FOR UTAH A TAX-FREE INCOME INVESTMENT [Logo of the Aquila Group of Funds: and eagle's head] ONE OF THE AQUILA(SM) GROUP OF FUNDS [Logo of Tax-Free for Utah: a rectangle containing desert boulders with the sun rising behind them] SERVING UTAH INVESTORS FOR MORE THAN A DECADE TAX-FREE FUND FOR UTAH ANNUAL REPORT MANAGEMENT DISCUSSION OF FUND PERFORMANCE Over the past twelve months, we have certainly seen our share of memorable world events and economic changes. The official handing over of authority to an independent Iraqi government and continued achievements in the ongoing war on terror in Afghanistan have bolstered support for our brave men and women in the nation's armed services. While the ongoing threat of terrorism on a national and global scale remains a real concern, we have found the recent progress to be heartening. As we head into the second half of 2004, we are seeing the early signs of an economic turnaround in our nation's economy. The most recently announced report covering the month ended May 31, 2004, indicates an unemployment rate of 5.5%, with the first real improvement in the manufacturing sector in years. Other measures of economic progress, such as retail sales, housing starts, and industrial production are also pointing to a sustainable recovery. Historically, as we see progress on the economic front, there is the fear that inflation will rear its ugly head. In fact, increases in both the Producer Price Index ("PPI") and the Consumer Price Index ("CPI") in recent months prompted the Federal Reserve to raise the target for the federal funds rate in June to 1.25% from its historically low level of 1.00%. This is the first rate hike seen since May 2000. With this rise in rates, Tax-Free Fund For Utah experienced a decline in share value (Net Asset Value) of approximately 3.88% for the 12-month period ending June 30, 2004. The share value of the Fund's Class A Shares was $10.31 on July 1, 2003 and $9.91 on June 30, 2004. A typical AA-rated general obligation with a 15 year maturity has risen in yield from 4.22% to 4.61% over the 12-month period ended June 30, 2004. The end of accommodative actions by the Federal Reserve (the "Fed") and Fed Chairman Alan Greenspan are popularly believed to be "preemptive moves" in order to minimize the negative impact of inflation on the economy. While it may take some time before the Fed's actions have the desired effect, we are hopeful that the Fed will act swiftly and decisively in putting the threat of rising inflation behind us. Signs that the economy is perking along can be seen in recent stock market index performances: the Dow Jones Industrial Average, is up 18.63% for the twelve months ending June 30, 2004; the S & P 500 Index is up 19.11%; and the NASDAQ Composite Index is up 26.79% for the same time period although recently the stock market has had a rather lackluster performance. Historically, as the economy has grown, commodity prices and interest rates begin to rise. While these increases have been modest to date, we continue to monitor any changes and position the Tax-Free Fund For Utah 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 seek to continue to add high quality, intermediate maturity Utah municipal bonds that best meet our demanding standards. The investment objective of Tax-Free Fund For Utah is to provide as high a level of double tax-exempt current income as is consistent with the preservation of capital. We believe this objective continues to be successfully addressed by our adherence to a discipline of solid fundamental, conservative portfolio management ideals. The Fund continues to maintain an average quality rating of "AA", with over 75% of the portfolio rated "AAA". The Fund's laddered maturity structure helps us manage price volatility. The portfolio has an average life of approximately 13.9 years and a modified duration of 5.75 years. We seek to maintain a well-diversified portfolio, which currently consists of over 210 different issues, of which 100% are in Utah. With the national and local economies showing improvement, we will remain vigilant and do whatever is necessary as we strive to continue to meet the Fund's investment objective. We 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, 2004 as compared with the Lehman Brothers Quality Intermediate Municipal Bond Index and the Consumer Price Index (a cost of living index). The performance of each of the other classes is not shown in the graph but is included in the table below. It should be noted that the Lehman Index does not include any operating expenses nor sales charges and being nationally oriented, does not reflect state specific bond market performance. [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Cost of Living Trust's Class A Shares Trust's Class A Shares Lehman Brothers Index With Sales Charge Without Sales Charge Quality Intermediate Municipal Bond Index 6/94 $10,000 $10,000 $ 9,600 $10,000 6/95 $10,304 $11,050 $10,606 $10,799 6/96 $10,588 $11,613 $11,146 $11,399 6/97 $10,831 $12,636 $12,128 $12,178 6/98 $11,014 $13,666 $13,117 $13,025 6/99 $11,230 $13,773 $13,220 $13,419 6/00 $11,649 $13,846 $13,290 $13,960 6/01 $12,027 $15,133 $14,526 $15,194 6/02 $12,155 $16,191 $15,540 $16,250 6/03 $12,412 $17,823 $17,107 $17,521 6/04 $12,818 $17,851 $17,134 $17,581
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 2004 ------------------------------------------ SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------ ------- -------- --------- Class A (7/24/92) With Sales Charge...... (3.48)% 4.39% 5.53% 5.33% Without Sales Charge... 0.54 5.24 5.97 5.69 Class C (5/21/96) With CDSC.............. (1.12) 4.30 n/a 4.50 Without CDSC........... (0.16) 4.30 n/a 4.50 Class Y (5/21/96) No Sales Charge........ 0.76 5.45 n/a 5.72 Lehman Index.............. 0.34 5.55 5.80 5.70* (Class A) n/a 5.36** (Class C&Y) Total return figures shown for the Fund reflect any change in price and assume all distributions within the period were invested in additional shares. Returns for Class A shares are calculated with and without the effect of the initial 4% maximum sales charge. Returns for Class C shares are calculated with and without the effect of the 1% contingent deferred sales charge (CDSC), imposed on redemptions made within the first 12 months after purchase. Class Y shares are sold without any sales charge. The rates of return will vary and the principal value of an investment will fluctuate with market conditions. Shares, if redeemed, may be worth more or less than their original cost. A portion of each class's income may be subject to federal and state income taxes and/or the federal alternative minimum tax. Past performance is not predictive of future investment results. * From commencement of operations on 7/24/92. ** From commencement of operations on 5/21/96. KPMG REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of Tax-Free Fund For Utah: We have audited the accompanying statement of assets and liabilities of Tax-Free Fund For Utah, including the schedule of investments, as of June 30, 2004, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of June 30, 2004, by correspondence with the custodian. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. 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, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP New York, New York August 18, 2004 TAX-FREE FUND FOR UTAH SCHEDULE OF INVESTMENTS JUNE 30, 2004
RATING FACE MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (15.2%) S&P VALUE - ------------ --------------------------------------------------------- -------- ------------ CITY, COUNTY AND STATE (5.5%) American Fork City, Utah $ 610,000 5.00%, 12/01/14 FGIC Insured ......................... Aaa/NR $ 638,493 645,000 5.00%, 12/01/15 FGIC Insured ......................... Aaa/NR 674,289 Brian Head, Utah 405,000 6.50%, 03/15/24 ...................................... NR/NR* 443,511 Cedar City, Utah Special Improvement District Assessment 235,000 5.05%, 09/01/10 ...................................... NR/NR* 239,839 215,000 5.20%, 09/01/11 ...................................... NR/NR* 220,272 Clearfield City, Utah 2,095,000 5.125%, 02/01/18 MBIA Insured ........................ Aaa/AAA 2,159,945 Coral Canyon, Utah Special Service District 580,000 5.70%, 07/15/18 ...................................... NR/NR* 588,938 Hurricane, Utah 295,000 5.40%, 11/01/09 Radian Insured ....................... NR/AA 320,184 St. George, Utah 100,000 5.375%, 08/01/21 FGIC Insured (pre-refunded) ......... Aaa/AAA 109,213 Salt Lake City, Utah 120,000 5.75%, 06/15/17 (pre-refunded) ....................... Aaa/NR 135,259 Washington County, Utah 1,250,000 5.00%, 10/01/22 MBIA Insured ......................... Aaa/NR 1,263,363 ------------ 6,793,306 ------------ SCHOOL DISTRICT (9.7%) Alpine, Utah School District 375,000 5.00%, 03/15/12 (pre-refunded) ....................... Aaa/NR 410,224 Carbon County, Utah School District 800,000 5.00%, 06/15/21 ...................................... Aaa/NR 813,576 Davis County, Utah School District 575,000 5.00%, 06/01/15 ...................................... Aaa/NR 603,238 250,000 5.10%, 06/01/16 ...................................... Aaa/NR 264,473 675,000 5.15%, 06/01/17 ...................................... Aaa/NR 714,460 Nebo, Utah School District 440,000 5.50%, 07/01/11 ...................................... Aaa/AAA 486,402 2,000,000 5.50%, 07/01/19 ...................................... Aaa/AAA 2,116,820 North Summit County, Utah School District $ 760,000 5.00%, 02/01/23 ...................................... Aaa/NR $ 768,968 800,000 5.00%, 02/01/24 ...................................... Aaa/NR 801,856 Rich County, Utah School District 120,000 5.50%, 12/15/09 ...................................... NR/NR* 124,097 100,000 5.60%, 12/15/10 ...................................... NR/NR* 102,477 Salt Lake City, Utah School District 265,000 5.00%, 03/01/21 ...................................... Aaa/NR 269,873 Tooele County, Utah School District 1,375,000 5.25%, 06/01/17 (pre-refunded) ....................... Aaa/AAA 1,520,296 Weber County, Utah School District 750,000 5.00%, 06/15/18 ...................................... Aaa/NR 776,190 825,000 5.00%, 06/15/20 ...................................... Aaa/NR 850,162 Weber County, Utah School District Series B 1,485,000 5.00%, 06/15/21 ...................................... Aaa/NR 1,510,200 ------------ 12,133,312 ------------ Total General Obligation Bonds ..................... 18,926,618 ------------ REVENUE BONDS (82.2%) EDUCATION (12.5%) Salt Lake County, Utah Westminster College Project 115,000 5.05%, 10/01/10 ...................................... NR/BBB 121,210 100,000 5.50%, 10/01/19 ...................................... NR/BBB 101,785 1,000,000 5.75%, 10/01/27 ...................................... NR/BBB 1,009,610 Southern Utah University Revenue 375,000 6.30%, 06/01/16 ...................................... NR/NR* 389,280 University of Utah Revenue Refunding, (Biology Research Facilities), 200,000 5.50%, 04/01/11 MBIA Insured ......................... Aaa/AAA 212,216 Utah State Board Regents Dixie State College 115,000 5.50%, 05/01/13 MBIA Insured ......................... Aaa/AAA 126,966 120,000 5.50%, 05/01/14 MBIA Insured ......................... Aaa/AAA 132,146 130,000 5.50%, 05/01/15 MBIA Insured ......................... Aaa/AAA 143,066 400,000 5.10%, 05/01/21 MBIA Insured ......................... Aaa/AAA 408,764 Utah State Board Regents Office Facility Revenue $ 450,000 5.05%, 02/01/20 MBIA Insured ......................... Aaa/AAA $ 460,206 360,000 5.125%, 02/01/22 MBIA Insured ........................ Aaa/AAA 366,426 Utah State Board Regents Salt Lake Community College 1,260,000 5.50%, 06/01/16 FSA Insured .......................... Aaa/AAA 1,358,003 Utah State Board Regents University Utah-Auxiliary & Campus Revenue 895,000 5.25%, 04/01/12 MBIA Insured ......................... Aaa/AAA 972,310 1,000,000 5.00%, 04/01/20 MBIA Insured ......................... Aaa/AAA 1,017,200 Utah State Board Regents University Utah Hospital Revenue 1,055,000 5.50%, 08/01/16 FSA Insured .......................... Aaa/AAA 1,138,777 2,030,000 5.50%, 08/01/17 MBIA Insured ......................... Aaa/AAA 2,187,325 905,000 5.00%, 05/01/19 AMBAC Insured ........................ Aaa/AAA 930,286 3,595,000 5.00%, 08/01/19 MBIA Insured ......................... Aaa/AAA 3,678,656 Weber State University, Utah Revenue Student Facilities System Series A 300,000 5.10%, 04/01/16 ...................................... NR/AA 315,912 425,000 5.25%, 04/01/19 ...................................... NR/AA 445,808 ------------ 15,515,952 ------------ HEALTHCARE (2.8%) Murray City, Utah Hospital Revenue 595,000 5.00%, 05/15/22 MBIA Insured ......................... Aaa/AAA 600,641 Salt Lake County, Utah Hospital Revenue - IHC Hospitals, Inc. 500,000 5.50%, 05/15/13 AMBAC Insured ........................ Aaa/AAA 544,925 Utah County, Utah Hospital Revenue, IHC Health Services 1,935,000 5.25%, 08/15/21 MBIA Insured ETM .................... Aaa/AAA 2,012,265 Utah State Board Regents Revenue University Utah Hospital Revenue 310,000 5.00%, 08/01/21 MBIA Insured ......................... Aaa/AAA 314,411 ------------ 3,472,242 ------------ HOUSING (4.3%) Provo City, Utah Housing Authority $ 500,000 5.80%, 07/20/22 GNMA Collateralized .................. Aaa/NR $ 515,145 Utah Housing Corporation Single Family Housing 70,000 5.25%, 07/01/23 AMT .................................. Aa2/AA 69,418 Utah Housing Corporation Single Family Mortgage 515,000 5.15%, 07/01/23 AMT ................................. Aaa/AAA 503,227 Utah State Housing Agency Housing Revenue 160,000 5.65%, 07/01/27 AMT .................................. Aa2/AA 162,952 Utah State Housing Corporation Single Family Housing Revenue 965,000 5.125%, 07/01/24 AMT ................................. Aa3/AA- 945,382 Utah State Housing Finance Agency 35,000 6.35%, 07/01/12 AMBAC Insured AMT .................... Aaa/AAA 35,528 15,000 6.15%, 07/01/16 Senior Issue A-1 ..................... Aaa/AAA 15,320 175,000 5.30%, 07/01/18 AMT .................................. Aaa/AAA 175,534 135,000 5.00%, 07/01/18 AMT .................................. Aaa/AAA 135,414 400,000 5.40%, 07/01/20 AMT .................................. Aa2/AA 403,424 25,000 6.60%, 07/01/11 Series E-1 ........................... NR/AA 25,619 30,000 6.35%, 07/01/11 Mezzanine Series G-1 ................. AAA/NR 30,086 250,000 5.65%, 07/01/16 Series 1994C ......................... Aaa/AAA 255,350 95,000 5.40%, 07/01/16 AMT .................................. Aa2/AA 95,057 170,000 6.00%, 07/01/17 AMT .................................. Aaa/AAA 173,203 945,000 5.50%, 07/01/18 AMT .................................. Aa3/AA- 968,738 445,000 5.60%, 07/01/23 AMT .................................. Aa2/AA 447,697 West Jordan, Utah Multi-Family Housing 360,000 6.80%, 01/01/15 FSA Insured .......................... Aaa/AAA 363,449 ------------ 5,320,543 ------------ INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (0.6%) Sandy City, Utah Industrial Development, H Shirley Wright Project, Refunding Bonds, LOC Olympus Bank 250,000 6.125%, 08/01/16 ..................................... NR/AAA 253,355 Utah County Environmental Improvement Revenue 435,000 5.05%, 11/01/17 ...................................... Baa1/BBB+ 460,056 ------------ 713,411 ------------ LEASE (12.6%) Lehi, Utah Municipal Building Lease Revenue, Building Revenue $ 1,020,000 5.50%, 06/15/15 AMBAC Insured ........................ Aaa/NR $ 1,136,076 Murray City, Utah Municipal Building Revenue 520,000 5.05%, 12/01/15 AMBAC Insured ........................ Aaa/NR 547,175 Salt Lake County, Utah Municipal Building Authority, Lease Revenue 400,000 5.00%, 10/01/11 MBIA Insured (pre-refunded) .......... Aaa/AAA 432,488 1,070,000 6.00%, 10/15/14 ...................................... Aa1/AA 1,094,129 100,000 5.40%, 10/01/19 (pre-refunded) ....................... Aa1/AA+ 110,829 320,000 5.40%, 10/15/19 AMBAC Insured ........................ Aaa/AAA 344,323 3,900,000 5.20%, 10/15/20 AMBAC Insured ........................ Aaa/AAA 4,033,263 Sandy City, Utah Municipal Building Authority 700,000 5.60%, 06/15/15 AMBAC Insured ........................ Aaa/NR 765,268 Tooele City, Utah Municipal Building Lease Revenue 250,000 5.60%, 12/01/15 AMBAC Insured ........................ Aaa/AAA 271,910 Utah County, Utah Municipal Building Authority, Lease Revenue 120,000 5.50%, 11/01/16 AMBAC Insured ........................ Aaa/NR 129,421 240,000 5.50%, 11/01/17 AMBAC Insured ........................ Aaa/NR 258,374 Utah State Building Ownership Authority 1,350,000 5.25%, 05/15/20 FSA Insured .......................... Aaa/AAA 1,402,852 1,080,000 5.00%, 05/15/25 ...................................... Aa1/AA+ 1,071,641 Washington County - Saint George, Utah Interlocal Agency Revenue 1,000,000 5.125%, 12/01/17 AMBAC Insured ....................... NR/AAA 1,050,030 100,000 5.125%, 12/01/22 AMBAC Insured ....................... NR/AAA 100,863 Weber County, Utah Municipal Building Lease Revenue 1,500,000 5.75%, 12/15/19 MBIA Insured ......................... Aaa/AAA 1,639,185 West Bountiful, Utah Courthouse Revenue 410,000 5.00%, 05/01/19 ...................................... NR/A- 420,791 West Valley City, Utah 865,000 5.00%, 08/01/21 AMBAC Insured ........................ Aaa/AAA 878,745 ------------ 15,687,363 ------------ TAX REVENUE (27.1%) Bluffdale, Utah Sales Tax Revenue 2,110,000 5.50%, 08/01/23 ...................................... NR/NR* 2,129,813 Bountiful, Utah Special Improvement District Special Assessment Revenue $ 203,000 5.00%, 06/01/14 ...................................... NR/NR* $ 196,370 213,000 5.15%, 06/01/15 ...................................... NR/NR* 206,088 224,000 5.30%, 06/01/16 ...................................... NR/NR* 216,133 236,000 5.50%, 06/01/17 ...................................... NR/NR* 229,409 249,000 5.65%, 06/01/18 ...................................... NR/NR* 242,904 Brian Head, Utah Special Service Improvement District Revenue 455,000 5.35%, 11/01/12 ...................................... NR/NR* 464,146 Cache County, Utah Sales Tax Revenue 500,000 5.00%, 12/15/14 FGIC Insured ......................... Aaa/AAA 530,725 670,000 5.00%, 12/15/16 FGIC Insured ......................... Aaa/AAA 703,373 600,000 5.00%, 12/15/17 FGIC Insured ......................... Aaa/AAA 624,282 510,000 5.00%, 12/15/18 FGIC Insured ......................... Aaa/AAA 526,646 830,000 5.00%, 12/15/19 FGIC Insured ......................... Aaa/AAA 852,402 Clearfield, Utah Sales Tax Revenue 590,000 5.00%, 07/01/18 FGIC Insured ......................... Aaa/AAA 612,927 620,000 5.00%, 07/01/19 FGIC Insured ......................... Aaa/AAA 637,620 650,000 5.00%, 07/01/20 FGIC Insured ......................... Aaa/AAA 664,632 Coral Canyon, Utah Special Service District 110,000 5.00%, 07/15/13 ...................................... NR/NR* 110,873 250,000 5.50%, 07/15/18 ...................................... NR/NR* 251,055 Davis County, Utah Sales Tax Revenue 1,470,000 5.15%, 10/01/18 AMBAC Insured ....................... NR/AAA 1,536,297 Jordanelle, Utah Special Service District 186,000 5.00%, 11/15/14 ...................................... NR/NR* 185,542 196,000 5.10%, 11/15/15 ...................................... NR/NR* 195,486 206,000 5.20%, 11/15/16 ...................................... NR/NR* 204,504 216,000 5.30%, 11/15/17 ...................................... NR/NR* 214,354 228,000 5.40%, 11/15/18 ...................................... NR/NR* 226,185 240,000 5.50%, 11/15/19 ...................................... NR/NR* 238,018 253,000 5.60%, 11/15/20 ...................................... NR/NR* 250,842 268,000 5.70%, 11/15/21 ...................................... NR/NR* 265,647 283,000 5.80%, 11/15/22 ...................................... NR/NR* 280,453 299,000 6.00%, 11/15/23 ...................................... NR/NR* 296,273 Jordanelle, Utah Special Service Improvement District $ 400,000 8.00%, 10/01/11 ...................................... NR/NR* $ 416,596 Lehi, Utah Sales Tax 610,000 5.00%, 06/01/21 FSA Insured .......................... Aaa/AAA 622,877 790,000 5.00%, 06/01/24 FSA Insured .......................... Aaa/AAA 793,026 Mountain Regional Water District, Utah Special Assessment Revenue 2,000,000 7.00%, 12/01/18 ...................................... NR/NR* 1,950,340 Mountain Regional Water, Utah Special Service District 2,000,000 5.00%, 12/15/20 MBIA Insured ......................... Aaa/AAA 2,046,800 Orem, Utah Special Assessment Revenue 96,000 5.00%, 08/01/15 ...................................... NR/NR* 94,396 101,000 5.15%, 08/01/16 ...................................... NR/NR* 99,128 106,000 5.30%, 08/01/17 ...................................... NR/NR* 104,328 112,000 5.50%, 08/01/18 ...................................... NR/NR* 111,237 118,000 5.65%, 08/01/19 ...................................... NR/NR* 117,757 Pleasant Grove City, Utah Sales Tax Revenue 410,000 5.25%, 12/01/17 MBIA Insured ......................... Aaa/AAA 439,598 Salt Lake City, Utah Sales Tax Revenue 490,000 5.25%, 02/01/12 ...................................... NR/AAA 537,359 265,000 5.25%, 02/01/13 ...................................... NR/AAA 288,609 1,320,000 5.25%, 02/01/15 ...................................... NR/AAA 1,413,456 100,000 5.25%, 02/01/17 ...................................... NR/AAA 105,551 Sandy City, Utah Sales Tax Revenue 520,000 5.00%, 09/15/18 AMBAC Insured ........................ NR/AAA 536,895 605,000 5.00%, 09/15/20 AMBAC Insured ........................ NR/AAA 617,596 South Jordan, Utah Sales Tax 570,000 5.00%, 08/15/15 AMBAC Insured ........................ Aaa/AAA 597,035 South Jordan, Utah Special Assignment 1,000,000 6.875%, 11/01/17 ..................................... NR/NR* 1,010,040 South Weber City, Utah 525,000 5.00%, 01/15/24 MBIA Insured ......................... Aaa/AAA 525,782 Utah Water Finance Agency Revenue 775,000 5.10%, 07/01/18 AMBAC Insured ........................ Aaa/NR 804,318 510,000 5.00%, 07/01/18 AMBAC Insured ........................ Aaa/NR 527,911 250,000 5.00%, 06/01/19 MBIA Insured ......................... Aaa/AAA 255,675 685,000 5.00%, 07/01/19 AMBAC Insured ........................ Aaa/NR 704,468 Wasatch County, Utah Building Authority $ 130,000 5.00%, 10/01/15 ...................................... A3/NR $ 132,397 135,000 5.00%, 10/01/16 ...................................... A3/NR 137,591 Wasatch County, Utah Sales Tax Revenue 205,000 5.00%, 12/01/16 AMBAC Insured ........................ Aaa/AAA 215,170 210,000 5.00%, 12/01/17 AMBAC Insured ........................ Aaa/AAA 218,463 225,000 5.00%, 12/01/18 AMBAC Insured ........................ Aaa/AAA 232,472 Washington City, Utah Sales Tax Revenue 680,000 5.25%, 11/15/17 AMBAC Insured ........................ Aaa/AAA 725,519 Weber County Utah Sales Tax Revenue 385,000 5.00%, 07/01/23 AMBAC Insured ........................ Aaa/NR 388,885 West Valley City, Utah Sales Tax Revenue 800,000 5.50%, 07/15/17 MBIA Insured ......................... Aaa/AAA 859,168 250,000 5.00%, 07/15/20 AMBAC Insured ........................ Aaa/AAA 255,970 130,000 5.00%, 07/15/21 MBIA Insured ......................... Aaa/AAA 132,231 1,400,000 6.00%, 03/01/24 ...................................... NR/A- 1,459,668 Woodland Hills, Utah Special Assessment Revenue 94,000 5.50%, 08/01/09 ...................................... NR/NR* 94,989 224,000 5.50%, 08/01/10 ...................................... NR/NR* 226,753 236,000 5.50%, 08/01/11 ...................................... NR/NR* 239,297 249,000 5.50%, 08/01/12 ...................................... NR/NR* 251,575 263,000 5.50%, 08/01/13 ...................................... NR/NR* 265,044 ------------ 33,648,969 ------------ Transportation (0.9%) Utah Transit Authority Sales Tax & Transportation Revenue 1,000,000 5.40%, 12/15/16 FSA Insured NR/AAA 1,081,040 100,000 5.00%, 06/15/21 FSA Insured Aaa/AAA 101,998 ------------ 1,183,038 ------------ UTILITY (9.4%) Intermountain Power Agency Utilities Light & Power Service, Utah 450,000 5.00%, 07/01/12 MBIA Insured ETM ..................... Aaa/AAA 456,026 1,470,000 5.25%, 07/01/15 MBIA Insured ......................... Aaa/AAA 1,590,290 Intermountain Power Agency Utilities Light & Power Service, Utah (continued) $ 90,000 5.00%, 07/01/16 ...................................... A1/A+ $ 92,651 300,000 5.00%, 07/01/18 FSA Insured .......................... Aaa/AAA 310,536 1,380,000 5.00%, 07/01/19 MBIA Insured ......................... Aaa/AAA 1,411,492 135,000 5.50%, 07/01/20 ETM .................................. A1/A+ 137,641 2,380,000 5.00%, 07/01/21 ...................................... A1/A+ 2,401,349 445,000 5.00%, 07/01/23 FSA Insured .......................... Aaa/AAA 448,030 Manti City, Utah Electric System Revenue 603,000 5.75%, 02/01/17 ...................................... NR/NR* 605,400 Murray City, Utah Utility Electric Revenue 400,000 5.625%, 06/01/18 AMBAC Insured ....................... Aaa/NR 431,596 Salem, Utah Electric Revenue 125,000 5.30%, 11/01/07 ...................................... NR/NR* 131,426 130,000 5.35%, 11/01/08 ...................................... NR/NR* 137,684 140,000 5.40%, 11/01/09 ...................................... NR/NR* 148,817 Southern Utah Valley Power System Revenue 210,000 5.25%, 09/15/13 MBIA Insured ......................... NR/AAA 229,089 225,000 5.25%, 09/15/14 MBIA Insured ......................... NR/AAA 244,796 235,000 5.25%, 09/15/15 MBIA Insured ......................... NR/AAA 253,798 185,000 5.125%, 09/15/21 MBIA Insured ........................ NR/AAA 189,523 Springville, Utah Electric Revenue 550,000 5.60%, 03/01/09 ...................................... Baa1/NR 588,918 Utah Assessed Municipal Power System Revenue 790,000 5.25%, 12/01/09 ...................................... NR/A- 851,446 1,000,000 5.00%, 04/01/21 FSA Insured .......................... Aaa/AAA 1,016,920 ------------ 11,677,428 ------------ WATER AND SEWER (12.0%) Ashley Valley, Utah 310,000 9.50%, 01/01/08 AMBAC Insured ........................ Aaa/AAA 345,743 Eagle Mountain, Utah Water and Sewer 750,000 5.80%, 11/15/16 ACA Insured .......................... NR/A 782,768 Granger and Hunter, Utah Improvement District Water and Sewer $ 350,000 5.00%, 03/01/18 FSA Insured .......................... Aaa/NR $ 359,132 Murray City, Utah Sewer and Water Revenue 465,000 5.00%, 10/01/17 AMBAC Insured ........................ Aaa/NR 485,241 390,000 5.00%, 10/01/18 AMBAC Insured ........................ Aaa/NR 403,982 440,000 5.00%, 10/01/19 AMBAC Insured ........................ Aaa/NR 452,760 North Davis County, Utah Sewer District 1,330,000 5.375%, 03/01/18 AMBAC Insured (pre-refunded) ........ Aaa/NR 1,476,287 1,350,000 5.00%, 03/01/21 AMBAC Insured ........................ Aaa/NR 1,374,759 150,000 5.125%, 03/01/22 AMBAC Insured (pre-refunded) ........ Aaa/NR 164,021 Riverton, Utah Water Revenue 100,000 5.35%, 09/01/15 FGIC Insured (pre-refunded) .......... Aaa/NR 110,915 Salt Lake City, Utah Metropolitan Water Revenue 1,200,000 5.375%, 07/01/24 AMBAC Insured (pre-refunded) ........ Aaa/AAA 1,322,892 125,000 5.375%, 07/01/29 AMBAC Insured (pre-refunded) ........ Aaa/AAA 137,801 Salt Lake City, Utah Water and Sewer Revenue 500,000 5.75%, 02/01/13 AMBAC Insured ........................ Aaa/AAA 511,450 675,000 5.00%, 02/01/19 FSA Insured .......................... Aaa/AAA 695,162 845,000 5.00%, 02/01/20 FSA Insured .......................... Aaa/AAA 864,984 Salt Lake & Sandy, Utah Water District 1,000,000 5.00%, 07/01/20 AMBAC Insured ........................ Aaa/NR 1,024,490 Spanish Fork City, Utah Water Revenue 55,000 5.50%, 06/01/17 FSA Insured (pre-refunded) ........... Aaa/NR 61,688 195,000 5.50%, 06/01/17 FSA Insured .......................... Aaa/NR 211,618 Utah Water Finance Agency Revenue 100,000 5.00%, 06/01/14 MBIA Insured ......................... Aaa/AAA 104,755 200,000 5.25%, 07/01/16 AMBAC Insured ........................ Aaa/NR 214,684 250,000 5.375%, 09/01/17 AMBAC Insured ....................... Aaa/NR 269,750 310,000 5.00%, 10/01/17 AMBAC Insured ........................ Aaa/NR 322,279 500,000 5.25%, 10/01/18 AMBAC Insured ........................ Aaa/NR 535,125 465,000 5.00%, 10/01/20 AMBAC Insured ........................ Aaa/NR 474,723 285,000 5.30%, 10/01/23 MBIA Insured ......................... Aaa/AAA 294,129 450,000 5.40%, 10/01/24 AMBAC Insured ........................ Aaa/AAA 466,974 250,000 5.50%, 10/01/29 AMBAC Insured ........................ Aaa/AAA 258,348 Weber-Box Elder, Utah Conservation District Water Revenue $ 200,000 6.45%, 11/01/14 (pre-refunded) ....................... Baa3/NR $ 232,316 200,000 6.50%, 11/01/19 (pre-refunded) ....................... Baa3/NR 232,878 335,000 6.90%, 11/01/20 (pre-refunded) ....................... Baa3/NR 397,591 White City, Utah Water Improvement 300,000 5.90%, 02/01/22 AMBAC Insured ........................ Aaa/AAA 319,155 ------------ 14,908,400 ------------ Total Revenue Bonds 102,127,346 ------------ Total Investments (cost $119,453,787**) 97.4% 121,053,964 Other assets less liabilities 2.6 3,242,706 -------- ------------ Net Assets 100.0% $124,296,670 ======== ============
* Any security not rated (NR) by either credit rating service must be determined by the Manager to have sufficient quality to be ranked in the top four ratings if a credit rating were to be assigned by a rating service. ** See note 4. PORTFOLIO ABBREVIATIONS: ACA - ACA Financial Guaranty Corp. AMBAC - American Municipal Bond Assurance Corp. AMT - Alternative Minimum Tax ETM - Escrowed to Maturity FGIC - Financial Guaranty Insurance Co. FSA - Financial Security Assurance GNMA - Government National Mortgage Association LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2004 ASSETS Investments at value (cost $119,453,787) ................................................ $ 121,053,964 Cash .................................................................................... 29,485 Receivable for Fund shares sold ......................................................... 2,659,090 Interest receivable ..................................................................... 1,832,095 Receivable for investment securities sold ............................................... 560,000 Other assets ............................................................................ 7,816 ------------- Total assets ............................................................................ 126,142,450 ------------- LIABILITIES Payable for investment securities purchased ............................................. 813,593 Payable for Fund shares redeemed ........................................................ 760,918 Dividends payable ....................................................................... 133,240 Distribution fees payable ............................................................... 85,888 Management fees payable ................................................................. 4,010 Accrued expenses ........................................................................ 48,131 ------------- Total liabilities ....................................................................... 1,845,780 ------------- NET ASSETS ................................................................................. $ 124,296,670 ============= Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $.01 per share ...... $ 125,360 Additional paid-in capital .............................................................. 125,759,573 Net unrealized appreciation on investments (note 4) ..................................... 1,600,177 Accumulated net realized loss on investments ............................................ (3,080,248) Distributions in excess of net investment income ........................................ (108,192) ------------- $ 124,296,670 ============= CLASS A Net Assets .............................................................................. $ 94,103,202 ============= Capital shares outstanding .............................................................. 9,492,043 ============= Net asset value and redemption price per share .......................................... $ 9.91 ============= Offering price per share (100/96 of $9.91 adjusted to nearest cent) ..................... $ 10.32 ============= CLASS C Net Assets .............................................................................. $ 21,960,647 ============= Capital shares outstanding .............................................................. 2,216,030 ============= Net asset value and offering price per share ............................................ $ 9.91 ============= 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) ........................................... $ 9.91* ============= CLASS Y Net Assets .............................................................................. $ 8,232,821 ============= Capital shares outstanding .............................................................. 827,895 ============= Net asset value, offering and redemption price per share ................................ $ 9.94 =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 INVESTMENT INCOME: Interest income ............................................ $ 5,421,421 Expenses: Management fee (note 3) .................................... $ 580,171 Distribution and service fees (note 3) ..................... 387,705 Transfer and shareholder servicing agent fees .............. 52,146 Trustees' fees and expenses (note 8) ....................... 48,314 Fund accounting fee ........................................ 47,997 Legal fees ................................................. 38,867 Shareholders' reports and proxy statements ................. 25,044 Auditing and tax fees ...................................... 22,400 Custodian fees ............................................. 13,370 Registration fees and dues ................................. 6,705 Miscellaneous .............................................. 32,540 ----------- Total expenses ............................................. 1,255,259 Management fee waived (note 3) ............................. (547,293) Expenses paid indirectly (note 6) .......................... (9,374) ----------- Net expenses ............................................... 698,592 ----------- Net investment income ...................................... 4,722,829 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from securities transactions ...... (365,387) Change in unrealized appreciation on investments ........... (3,968,215) ----------- Net realized and unrealized gain (loss) on investments ..... (4,333,602) ----------- Net increase in net assets resulting from operations ............ $ 389,227 ===========
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED JUNE 30, 2004 JUNE 30, 2003 ------------- ------------- OPERATIONS: Net investment income ............................................... $ 4,722,829 $ 3,389,214 Net realized gain (loss) from securities transactions ............... (365,387) (44,103) Change in unrealized appreciation on investments .................... (3,968,215) 3,818,783 ------------- ------------- Change in net assets from operations ............................. 389,227 7,163,894 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10): Class A Shares: Net investment income ............................................... (4,242,881) (3,169,522) Class C Shares: Net investment income ............................................... (733,873) (377,988) Class Y Shares: Net investment income ............................................... (83,837) (11,237) ------------- ------------- Change in net assets from distributions .......................... (5,060,591) (3,558,747) ------------- ------------- CAPITAL SHARE TRANSACTIONS (NOTE 7): Proceeds from shares sold ........................................... 57,964,198 41,782,674 Reinvested dividends and distributions .............................. 2,768,847 1,882,383 Cost of shares redeemed ............................................. (34,397,531) (7,318,351) ------------- ------------- Change in net assets from capital share transactions ............. 26,335,514 36,346,706 ------------- ------------- Change in net assets ............................................. 21,664,150 39,951,853 NET ASSETS: Beginning of period ................................................. 102,632,520 62,680,667 ------------- ------------- End of period* ...................................................... $ 124,296,670 $ 102,632,520 ============= ============= * Includes distributions in excess of net investment income of: ..... $ (108,192) $ (70,824) ============= =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end investment company, was organized on December 12, 1990 as a Massachusetts business trust and commenced operations on July 24, 1992. The Fund is authorized to issue an unlimited number of shares and, since its inception to May 21, 1996, offered only one class of shares. On that date, the Fund began offering two additional classes of shares, Class C and Class Y shares. All shares outstanding prior to that date were designated as Class A shares and are sold with a front-payment sales charge and bear an annual distribution fee. Class C shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodian or similar capacity and are not offered directly to retail investors. Class Y shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. On October 31, 1997, the Fund established Class I shares, which are offered and sold only through financial intermediaries and are not offered directly to retail investors. As of the report date, there were no Class I shares outstanding. All classes of shares, represent interests in the same portfolio of investments and are identical as to rights and privileges but differ with respect to the effect of sales charges, the distribution and/or service fees borne by each class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities of more than 60 days are valued each business day based upon information provided by a nationally prominent independent pricing service and periodically verified through other pricing services. In the case of securities for which market quotations are readily available, securities are valued by the pricing service at the mean of bid and asked quotations. If market quotations or a valuation from the pricing service is not readily available, the security is valued at fair value determined under procedures established by and under the general supervision of the Board of Trustees. Securities which mature in 60 days or less are valued at amortized cost if their term to maturity at purchase is 60 days or less, or by amortizing their unrealized appreciation or depreciation on the 61st day prior to maturity, if their term to maturity at purchase exceeds 60 days. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premium and accretion of original issue and market discount. c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. The Fund intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. d) MULTIPLE CLASS ALLOCATIONS: All income, expenses (other than class-specific expenses), and realized and unrealized gains or losses are allocated daily to each class of shares based on the relative net assets of each class. Class-specific expenses, which include distribution and service fees and any other items that are specifically attributed to a particular class, are charged directly to such class. e) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: Aquila Investment Management LLC (the "Manager"), a wholly owened subsidiary of Aquila Management Corporation, the Fund's founder and sponsor, serves as the Investment Adviser for the Fund under an Advisory and Administration Agreement with the Fund. 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, 2004, the Fund incurred management fees of $580,171 of which $547,293 was voluntarily waived. Such waivers are voluntary and can be terminated in the future at the Manager's discretion. However, the Manager has indicated that it intends to continue waiving fees as necessary in order that the Fund will remain competitive. 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. 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, 2004 distribution fees on Class A Shares amounted to $188,918, of which the Distributor retained $4,033. 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, 2004, amounted to $149,090. 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, 2004 amounted to $49,697. The total of these payments with respect to Class C Shares amounted to $198,787, of which the Distributor retained $20,848. Specific details about the Plans are more fully defined in the Fund's Prospectus and Statement of Additional Information. Under a Distribution Agreement, the Distributor serves as the exclusive distributor of the Fund's shares. Through agreements between the Distributor and various broker-dealer firms ("dealers"), the Fund's shares are sold primarily through the facilities of these dealers having offices within Utah, with the bulk of sales commissions inuring to such dealers. For the year ended June 30, 2004, total commissions on sales of Class A Shares amounted to $555,617, of which the Distributor received $48,225. C) OTHER RELATED PARTY TRANSACTIONS: For the year ended June 30, 2004, the Fund incurred $38,157 of legal fees allocable to Hollyer Brady Barrett & Hines LLP counsel to the Fund for legal services in conjunction with the Fund's ongoing operations. The Secretary of the Fund is a Partner of Hollyer Brady Barrett & Hines LLP. 4. PURCHASES AND SALES OF SECURITIES During the year ended June 30, 2004, purchases of securities and proceeds from the sales of securities aggregated $44,653,490 and $18,248,223, respectively. At June 30, 2004, the aggregate tax cost for all securities was $119,428,738. At June 30, 2004 the aggregate gross unrealized appreciation for all securities in which there is an excess of market value over tax cost amounted to $2,652,363 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over market value amounted to $1,027,137, for a net unrealized appreciation of $1,625,226. 5. PORTFOLIO ORIENTATION Since the Fund invests principally and may invest entirely in double tax-free municipal obligations of issuers within Utah, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Utah and whatever effects these may have upon Utah issuers' ability to meet their obligations. The Fund is also permitted to invest in tax-free municipal obligations of issuers in other states and U.S. territories meeting comparable quality standards and providing income which is exempt from both regular Federal and Utah income taxes. The general policy of the Fund is to invest in such securities only when comparable securities of Utah issuers are not available in the market. At June 30, 2004, the Fund had all of its net assets invested in State of Utah municipal issues. 6. EXPENSES The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. It is the general intention of the Fund to invest, to the extent practicable, some or all of cash balances in income-producing assets rather than leave cash on deposit. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Fund were as follows:
YEAR ENDED YEAR ENDED JUNE 30, 2004 JUNE 30, 2003 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ CLASS A SHARES: Proceeds from shares sold ...... 3,786,483 $ 38,300,080 3,092,149 $ 31,209,525 Reinvested distributions ....... 227,183 2,293,880 165,136 1,665,186 Cost of shares redeemed ........ (2,800,659) (28,028,537) (657,050) (6,646,533) ------------ ------------ ------------ ------------ Net change .................. 1,213,007 12,565,423 2,600,235 26,228,178 ------------ ------------ ------------ ------------ CLASS C SHARES: Proceeds from shares sold ...... 1,087,383 11,056,567 957,135 9,712,558 Reinvested distributions ....... 42,247 426,325 20,771 209,789 Cost of shares redeemed ........ (507,597) (5,107,857) (63,577) (645,935) ------------ ------------ ------------ ------------ Net change .................. 622,033 6,375,035 914,329 9,276,412 ------------ ------------ ------------ ------------ CLASS Y SHARES: Proceeds from shares sold ...... 864,901 8,607,551 84,124 860,591 Reinvested distributions ....... 4,819 48,642 720 7,408 Cost of shares redeemed ........ (127,200) (1,261,137) (2,553) (25,883) ------------ ------------ ------------ ------------ Net change .................. 742,520 7,395,056 82,291 842,116 ------------ ------------ ------------ ------------ Total transactions in Fund shares ......................... 2,577,560 $ 26,335,514 3,596,855 $ 36,346,706 ============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES During the fiscal year ended June 30, 2004 there were seven trustees, two of whom were affiliated with the Manager and are not paid any trustee fees. Each Trustee's fee paid during the year was at the annual rate of $4,950 for carrying out their responsibilities and attendance at regularly scheduled Board Meetings. If additional or special meetings are scheduled for the Fund, separate meeting fees are paid for each such meeting to those Trustees in attendance. The Fund also reimburses Trustees for expenses such as travel, accommodations, and meals incurred in connection with attendance at regularly scheduled or special Board Meetings and at the Annual Meeting of Shareholders. For the fiscal year ended June 30, 2004 such reimbursements averaged approximately $3,613 per Trustee. 9. SECURITIES TRADED ON A WHEN-ISSUED BASIS The Fund may purchase or sell securities on a when-issued basis. When-issued transactions arise when securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. Beginning on the date the Fund enters into a when-issued transaction, cash or other liquid securities are segregated in an amount equal to or greater than the amount of the when-issued transaction. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities. 10. INCOME TAX INFORMATION AND DISTRIBUTIONS The Fund declares dividends daily from net investment income and makes payments monthly in additional shares at the net asset value per share, in cash, or in a combination of both, at the shareholder's option. Net realized capital gains, if any, are distributed annually and are taxable. The Fund intends to maintain, to the maximum extent possible, the tax-exempt status of interest payments received from portfolio municipal securities in order to allow dividends paid to shareholders from net investment income to be exempt from regular Federal and State of Utah income taxes. However, due to differences between financial statement reporting and Federal income tax reporting requirements, distributions made by the Fund may not be the same as the Fund's net investment income, and/or net realized securities gains. In this regard, the Fund credited distributions in excess of net investment income in the amount of $300,394 and debited additional paid-in capital in the amount of $300,394 at June 30, 2004. This adjustment had no impact on the Fund's aggregate net assets at June 30, 2004. Further, a small portion of the dividends may, under some circumstances, be subject to taxes at ordinary income rates. At June 30, 2004, the Fund had a capital loss carryover of $2,939,997 of which $211,315 expires on June 30, 2008, $2,459,398 expires on June 30, 2009, $15,469 expires on June 30, 2011, and $253,815 expires on June 30, 2012. This carryover is available to offset future net realized gains on securities transactions to the extent provided for in the Internal Revenue Code. To the extent that this loss is used to offset future realized capital gains, it is probable that the gains so offset will not be distributed. In addition, the Fund had $140,250 of capital losses realized after October 31, 2003 which were deferred for tax purposes to the first day of the following fiscal year. The tax character of distributions: Year Ended June 30, 2004 2003 ------------ ------------ Net tax-exempt income $ 4,758,187 $ 3,419,849 Ordinary income 302,404 138,898 ------------ ------------ $ 5,060,591 $ 3,558,747 ============ ============ As of June 30, 2004, the components of distributable earnings on a tax basis were as follows: Accumulated net realized loss $ (3,080,248) Unrealized appreciation 1,625,226 ------------ $ (1,455,022) ============ At June 30, 2004, the difference between book basis and tax basis unrealized appreciation was attributable primarily to the treatment of accretion of discounts and amortization of premiums. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A ------------------------------------------------------- YEAR ENDED JUNE 30, ------------------------------------------------------- 2004 2003 2002 2001 2000 ------- ------- ------- ------- ------- Net asset value, beginning of period .................. $ 10.31 $ 9.85 $ 9.65 $ 9.35 $ 9.88 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income .............................. 0.43++ 0.44+ 0.46+ 0.48+ 0.48+ Net gain (loss) on securities (both realized and unrealized) ................................. (0.37) 0.48 0.22 0.32 (0.44) ------- ------- ------- ------- ------- Total from investment operations ................... 0.06 0.92 0.68 0.80 0.04 ------- ------- ------- ------- ------- Less distributions (note 10): Dividends from net investment income ............... (0.46) (0.46) (0.48) (0.50) (0.51) Distributions from capital gains ................... -- -- -- -- (0.06) ------- ------- ------- ------- ------- Total distributions ................................ (0.46) (0.46) (0.48) (0.50) (0.57) ------- ------- ------- ------- ------- Net asset value, end of period ........................ $ 9.91 $ 10.31 $ 9.85 $ 9.65 $ 9.35 ======= ======= ======= ======= ======= Total return (not reflecting sales charge) ............ 0.54% 9.55% 7.22% 8.72% 0.57% Ratios/supplemental data Net assets, end of period (in thousands) ........... $94,103 $85,329 $55,957 $34,321 $34,171 Ratio of expenses to average net assets ............ 0.48% 0.43% 0.46% 0.48% 0.42% Ratio of net investment income to average net assets ...................................... 4.19% 4.31% 4.65% 4.95% 5.06% Portfolio turnover rate ............................ 15.98% 6.43% 27.42% 44.17% 48.99% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets ............ 0.94% 1.02% 1.00% 1.11% 1.11% Ratio of net investment income to average net assets ...................................... 3.73% 3.72% 4.11% 4.32% 4.37% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets ............ 0.47% 0.42% 0.40% 0.39% 0.39%
- ----------------------- Note: Effective August 1, 2001, Aquila Management Corporation became the Fund's Investment Adviser replacing Zions First National Bank which was the sub-adviser. Effective January 1, 2004, Aquila Management Corporation, founder of the Fund, assigned its Advisory and Administration Agreement to its wholly-owned subsidiary, Aquila Investment Management LLC. + Per share amounts have been calculated using the monthly average shares method. ++ Per share amount has 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, ------------------------------------------------------- 2004 2003 2002 2001 2000 ------- ------- ------- ------- ------- Net asset value, beginning of period ................. $ 10.30 $ 9.85 $ 9.64 $ 9.35 $ 9.87 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income ............................. 0.34++ 0.34+ 0.37+ 0.38+ 0.38+ Net gain (loss) on securities (both realized and unrealized) ...................... (0.36) 0.48 0.23 0.31 (0.42) ------- ------- ------- ------- ------- Total from investment operations ..................... (0.02) 0.82 0.60 0.69 (0.04) ------- ------- ------- ------- ------- Less distributions (note 10): Dividends from net investment income .............. (0.37) (0.37) (0.39) (0.40) (0.42) Distributions from capital gains .................. -- -- -- -- (0.06) ------- ------- ------- ------- ------- Total distributions ............................... (0.37) (0.37) (0.39) (0.40) (0.48) ------- ------- ------- ------- ------- Net asset value, end of period ....................... $ 9.91 $ 10.30 $ 9.85 $ 9.64 $ 9.35 ======= ======= ======= ======= ======= Total return (not reflecting sales charge) ........... (0.16)% 8.48% 6.36% 7.52% (0.33)% Ratios/supplemental data Net assets, end of period (in thousands) .......... $21,961 $16,420 $ 6,694 $ 1,874 $ 1,036 Ratio of expenses to average net assets ........... 1.27% 1.31% 1.34% 1.47% 1.43% Ratio of net investment income to average net assets ............................. 3.38% 3.39% 3.72% 3.93% 4.07% Portfolio turnover rate ........................... 15.98% 6.43% 27.42% 44.17% 48.99% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets ........... 1.74% 1.81% 1.78% 1.89% 1.91% Ratio of net investment income to average net assets ............................. 2.93% 2.89% 3.28% 3.51% 3.58% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets ........... 1.27% 1.30% 1.28% 1.39% 1.39% CLASS Y ------------------------------------------------------- YEAR ENDED JUNE 30, ------------------------------------------------------- 2004 2003 2002 2001 2000 ------- ------- ------- ------- ------- Net asset value, beginning of period ................. $ 10.34 $ 9.89 $ 9.68 $ 9.36 $ 9.88 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income ............................. 0.44++ 0.42+ 0.50+ 0.49+ 0.45+ Net gain (loss) on securities (both realized and unrealized) ...................... (0.36) 0.50 0.20 0.34 (0.38) ------- ------- ------- ------- ------- Total from investment operations ..................... 0.08 0.92 0.70 0.83 0.07 ------- ------- ------- ------- ------- Less distributions (note 10): Dividends from net investment income .............. (0.48) (0.47) (0.49) (0.51) (0.53) Distributions from capital gains .................. -- -- -- -- (0.06) ------- ------- ------- ------- ------- Total distributions ............................... (0.48) (0.47) (0.49) (0.51) (0.59) ------- ------- ------- ------- ------- Net asset value, end of period ....................... $ 9.94 $ 10.34 $ 9.89 $ 9.68 $ 9.36 ======= ======= ======= ======= ======= Total return (not reflecting sales charge) ........... 0.76% 9.55% 7.41% 9.05% 0.86% Ratios/supplemental data Net assets, end of period (in thousands) .......... $ 8,233 $ 883 $ 30 $ 5 $ 0.1 Ratio of expenses to average net assets ........... 0.28% 0.30% 0.36% 0.42% 0.42% Ratio of net investment income to average net assets ............................. 4.41% 4.17% 4.75% 4.83% 4.88% Portfolio turnover rate ........................... 15.98% 6.43% 27.42% 44.17% 48.99% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets ........... 0.74% 0.78% 0.80% 0.64% 0.86% Ratio of net investment income to average net assets ............................. 3.95% 3.70% 4.31% 4.62% 4.43% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets ........... 0.27% 0.29% 0.30% 0.36% 0.39%
- ---------------------- Note: Effective August 1, 2001, Aquila Management Corporation became the Fund's Investment Adviser replacing Zions First National Bank which was the sub-adviser. Effective January 1, 2004, Aquila Management Corporation, founder of the Fund, assigned its Advisory and Administration Agreement to its wholly-owned subsidiary, Aquila Investment Management LLC. + Per share amounts have been calculated using the monthly average shares method. ++ Per share amounts have been calculated using the daily average shares method. See accompanying notes to financial statements. ADDITIONAL INFORMATION (UNAUDITED) TRUSTEES(1) AND OFFICERS
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- INTERESTED TRUSTEES(4) Lacy B. Herrmann Founder and Founder, Chief Executive Officer and Chairman 11(5) Director or trustee, New York, NY Chairman of of the Board, Aquila Management Corporation, Pimco Advisors VIT, (05/12/29) the Board of the sponsoring organization and parent of the Oppenheimer Quest Trustees since Manager or Administrator and/or Adviser or Value Funds Group, 1992 Sub-Adviser to each fund of the Aquila(sm) Oppenheimer Small Group of Funds,(6) Chairman and Chief Cap Value Fund, Executive Officer of the Manager or Oppenheimer Midcap Administrator and/or Adviser or Sub-Adviser Fund, and Oppenheimer to each since 2004, and Founder, Chairman of Rochester Group of the Board of Trustees, Trustee and (currently Funds. or until 1998) President of each since its establishment, beginning in 1984, except Chairman of the Board of Trustees of Hawaiian Tax-Free Trust, Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust through 2003; 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. Diana P. Herrmann Trustee since Vice Chair of Aquila Management Corporation, 6 None New York, NY 1997, President Founder of the Aquila(sm) Group of Funds and (02/25/58) since 1998, parent of Aquila Investment Management LLC, and Vice Chair the Manager, since 2004, President and Chief of the Board Operating Officer since 1997, a Director since 2003 since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Vice Chair since 2004 and President, Chief Operating Officer and Manager of the Manager since 2003; Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila(sm) 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 and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- NON-INTERESTED TRUSTEES Gary C. Cornia Trustee since Director, Romney Institute of Public 4 None Orem, UT 1993 Management, Marriott School of Management, (06/24/48) Brigham Young University, 2004 - present; Professor, Marriott School of Management, 1980 - present; Past President, the National Tax Association; Chair of the Executive Committee, the International Center for Land Policy Studies and Training Institute, Taipei, Taiwan; formerly Senior Visiting Fellow, Lincoln Institute of Land Policy, 2002-2003; Associate Dean, Marriott School of Management, Brigham Young University, 1991-2000; Chair, Utah Governor's Tax Review Committee, 1993-2002; member, Governor's Tax Review Committee since 2003; Faculty Associate, the Land Reform Training Institute, Taipei, Taiwan and The Lincoln Institute of Land Policy, Cambridge, Massachusetts. William L. Ensign Trustee since Planning and Architectural Consultant since 2 None Annapolis, MD 1992 1997. (12/14/28) Lyle W. Hillyard Trustee since President of the law firm of Hillyard, 1 None Logan, UT 2003 Anderson & Olsen, Logan, Utah, since 1967; (09/25/40) member of Utah Senate, 1985 to present, in the following positions: President, 2000, Senate Majority Leader, 1999-2000, Assistant Majority Whip, 1995-1998; served as Chairman of the following Senate Committees: Tax and Revenue, Senate Judiciary Standing, Joint Executive Appropriations, and Senate Rules; also Appropriations Subcommittees for Higher Education and for Public Education. John C. Lucking Trustee since President, Econ-Linc, an economic consulting 3 Director, Sanu Resources Phoenix, AZ 2004 firm, since 1995; formerly Consulting (05/20/43) Economist, Bank One Arizona and Chief Economist, Valley National Bank; member, Arizona's Joint Legislative Budget Committee Economic Advisory Panel and the Western Blue Chip Economic Forecast Panel; Board, Northern Arizona University Foundation since 1997; member, various historical, civic and economic associations.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Anne J. Mills Trustee since President, Loring Consulting Company since 4 None Castle Rock, CO 1994 2001; Vice President for Business Affairs, (12/23/38) Ottawa University, 1992-2001; IBM Corporation, 1965-1991; Budget Review Officer, the American Baptist Churches/USA, 1994-1997; director, the American Baptist Foundation; Trustee, Ottawa University; and Trustee Emerita, Brown University. OFFICERS Charles E. Childs, III Executive Vice Executive Vice President of all funds in the N/A N/A New York, NY President since Aquila(sm) Group of Funds and the Manager (04/01/57) 2003 since 2003; Senior Vice President, corporate development, formerly Vice President, Assistant Vice President and Associate of the Manager's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Jerry G. McGrew Senior Vice President of the Distributor since 1998, N/A N/A New York, NY President since Registered Principal since 1993, Senior Vice (06/18/44) 1997 President, 1997-1998 and Vice President, 1993-1997; Senior Vice President, Aquila Rocky Mountain Equity Fund and five Aquila Bond Funds since 1995; Vice President, Churchill Cash Reserves Trust, 1995-2001. Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free Fund For Utah N/A N/A Salt Lake City, UT President since since 2001; Co-founder, Lewis Young Robertson (08/07/46) 1998 & 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.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Thomas S. Albright Senior Vice Senior Vice President and Portfolio Manager, N/A N/A Louisville, KY President since Churchill Tax-Free Fund of Kentucky since (07/26/52) 2003 and Vice July 2000; Senior Vice President, Tax-Free President, Fund For Utah since 2003, Vice President, 2001-2003 2001-2003 and Co-portfolio manager since 2001; Vice President and Portfolio Manager, Banc One Investment Advisors, Inc., 1994-2000. Stephen J. Caridi Assistant Vice Vice President of the Distributor since 1995; N/A N/A New York, NY President since Vice President, Hawaiian Tax-Free Trust since (05/06/61) 1993 1998; Senior Vice President, Narragansett Insured Tax-Free Income Fund since 1998, Vice President 1996-1997; Senior Vice President, Tax-Free Fund of Colorado since 2004; Assistant Vice President, Tax-Free Fund For Utah since 1993. Mary Kayleen Willis Vice President Vice President, Tax-Free Fund For Utah since N/A N/A Salt Lake City, UT since 2003 and September 2003, Assistant Vice President, (06/11/63) Assistant Vice 2002-2003; various securities positions: President, Paine Webber, Inc., Salt Lake City, 2002-2003 1999-2002, Dean Witter Reynolds, Inc., Salt Lake City, 1996-1998. Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila(sm) Group N/A N/A New York, NY Officer since of Funds since 2003 and Treasurer since 2000; (11/06/56) 2003 and Controller, Van Eck Global Funds, 1993-2000. Treasurer since 2000 Edward M. W. Hines Secretary since Partner, Hollyer Brady Barrett & Hines LLP, N/A N/A New York, NY 1992 legal counsel to the Fund, since 1989; (12/16/39) Secretary of the Aquila(sm) Group of Funds. Robert W. Anderson Chief Chief Compliance Officer since 2004, N/A N/A New York, NY Compliance Compliance Officer of the Manager or its (08/23/40) Officer since predecessor and current parent since 1998 and 2004 and Assistant Secretary of the Aquila(sm) Group of Assistant Funds since 2000; Consultant, The Wadsworth Secretary since Group, 1995-1998. 2000
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- John M. Herndon New York, NY Assistant Assistant Secretary of the Aquila(sm) Group N/A N/A (12/17/39) Secretary since of Funds since 1995 and Vice President of the 1995 three Aquila Money-Market Funds since 1990; Vice President of the Manager or its predecessor and current parent since 1990. Lori A. Vindigni Assistant Assistant Treasurer of the Aquila(sm) Group of N/A N/A New York, NY Treasurer since Funds since 2000; Assistant Vice President of (11/02/66) 2000 the Manager or its predecessor and current parent since 1998; Fund Accountant for the Aquila(sm) Group of Funds, 1995-1998.
- ------------------ (1) The Fund's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll free). (2) The mailing address of each Trustee and officer is c/o Tax-Free Fund For Utah, 380 Madison Avenue, New York, NY 10017. (3) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (4) Mr. Herrmann and Ms. Herrmann are interested persons of the Fund, as that term is defined in the 1940 Act, as officers of the Fund and because of their affiliations with both the Manager and the Distributor. Each is also an interested person as a member of the immediate family of the other. (5) Does not include funds that are currently inactive. (6) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these 11 funds are called the "Aquila(sm) Group of Funds." PRIVACY NOTICE (UNAUDITED) TAX-FREE FUND FOR UTAH OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Fund we collect certain nonpublic personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about a fund. INFORMATION WE COLLECT. "Nonpublic personal information" is personally identifiable financial information about you as an individual or your family. The kinds of nonpublic personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose nonpublic personal information about you to companies that provide necessary services to us, such as the fund's transfer agent, distributor, investment adviser or sub-adviser, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to nonpublic personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all nonpublic personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all nonpublic information about you that each of these companies may obtain in connection with services provided to the Fund or to you as a shareholder of the Fund. INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquila(sm) 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. You should know, however, that we prepare, and have available, portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your Fund's portfolio other than in your shareholder reports, please check our website (www.aquilafunds.com) or call us at 1-800-437-1020. FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED. For the fiscal year ended June 30, 2004, $4,758,187 of dividends paid by Tax-Free Fund For Utah, constituting 94.02% of total dividends paid during the fiscal year ended June 30, 2004, were exempt-interest dividends, and the balance was ordinary dividend income. Prior to January 31, 2004, shareholders were mailed IRS Form 1099-DIV which contained information on the status of distributions paid for the 2003 CALENDAR YEAR. Prior to January 31, 2005, shareholders will be mailed IRS Form 1099-DIV which will contain information on the status of distributions paid for the 2004 CALENDAR YEAR. PROXY VOTING RECORD. 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, 2004 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. FOUNDER AQUILA MANAGEMENT CORPORATION MANAGER AQUILA INVESTMENT MANAGEMENT LLC 380 Madison Avenue, Suite 2300 New York, New York 10017 BOARD OF TRUSTEES Lacy B. Herrmann, Chairman Gary C. Cornia William L. Ensign Diana P. Herrmann Lyle W. Hillyard John C. Lucking Anne J. Mills OFFICERS Diana P. Herrmann, Vice Chair and 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 Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 CUSTODIAN BANK ONE TRUST COMPANY, N.A. 1111 Polaris Parkway Columbus, Ohio 43240 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC INC. 760 Moore Road King of Prussia, Pennsylvania 19406 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 757 Third Avenue New York, New York 10017 Further information is contained in the Prospectus, which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of June 30, 2004 (the end of the reporting period) the Trust has adopted a code of ethics that applies to the Fund's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002.; (f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Fund's Code of Ethics that applies to the Fund's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Fund's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various areas, including the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties under the Charter. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES a) Audit Fees - The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $15,450 in 2004 and $15,000 in 2003. b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years other than stated above. c) Tax Fees - The Registrant was billed by the principal accountant $7,300 and $8,392 in 2004 and 2003, respectively, for tax return preparation, tax compliance and tax planning. d) All Other Fees - There were no additional fees paid for audit and non- audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis. e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years. h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS. (a)(1) (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAX-FREE FUND FOR UTAH By: /s/ Lacy B. Herrmann - --------------------------------- Chairman of the Board September 6, 2004 By: /s/ Diana P. Herrmann - --------------------------------- Vice Chair, Trustee and President September 6, 2004 By: /s/ Joseph P. DiMaggio - ----------------------------------- Chief Financial Officer and Treasurer September 6, 2004 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/ Lacy B. Herrmann - --------------------------------- Lacy B. Herrmann Chairman of the Board September 6, 2004 By: /s/ Diana P. Herrmann - --------------------------------- Diana P. Herrmann Vice Chair, Trustee and President September 6, 2004 By: /s/ Joseph P. DiMaggio - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer September 6, 2004 EX-99.906 CERT 2 tffu906cert.txt SECTION 906 CERTIFICATION CERTIFICATION Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18,United States Code), each of the undersigned officers of Tax-Free Fund for Utah, do hereby certify to such officer's knowledge, that: The semi-annual report on Form N-CSR of Tax-Free Fund for Utah for the period ended June 30, 2004 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Tax-Free Fund for Utah. Dated: September 6, 2004 /s/ Lacy B. Herrmann ------------------------------- Lacy B. Herrmann Chairman of the Board Tax-Free Fund for Utah Dated: September 6, 2004 /s/ Diana P. Herrmann ---------------------------------- Vice Chair, Trustee and President Tax-Free Fund for Utah Dated: September 6, 2004 /s/ Joseph P. DiMaggio ------------------------------------ Chief Financial Officer and Treasurer Tax-Free Fund for Utah A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Tax-Free Fund for Utah and will be retained by Tax-Free Fund for Utah and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. EX-99.CERT 3 tffu302cert.txt SECTION 302 CERTIFICATION CERTIFICATIONS I, Lacy B. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Tax-Free Fund for Utah; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 6, 2004 /s/ Lacy B. Herrmann - ---------------------- Title: Chairman of the Board I, Diana P. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Tax-Free Fund for Utah; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 6, 2004 /s/ Diana P. Herrmann - ---------------------- Title: Vice Chair, Trustee and President I, Joseph P. DiMaggio, certify that: 1. I have reviewed this report on Form N-CSR of Tax-Free Fund for Utah; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 6, 2004 /s/ Joseph P. DiMaggio - ------------------------ Title: Chief Financial Officer and Treasurer EX-99.CODE ETH 4 sabcode.txt SARBANES-OXLEY CODE OF ETHICS AQUILASM GROUP OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS UNDER SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 I. Covered Officers/Purpose of the Code This is the code of ethics (the "Code") for the investment companies within the Aquilasm Group of Funds (collectively, "Funds" and each, a "Fund," each of which is detailed in Exhibit A). It applies to the Fund's Principal Executive Officer(s) and Principal Financial Officer(s) (the "Covered Officers," each of whom is listed in Exhibit B), for the purpose of promoting: * honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; * compliance with applicable laws and governmental rules and regulations; * the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and * accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually 'engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. The Fund's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. * * * * Each Covered Officer must: * not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; * not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; There are some conflict of interest situations that should always be discussed with the general counsel of the Fund ("General Counsel"), if material. Examples of these include: * service as a director on the board of any public or private company; * the receipt of any non-nominal gifts; the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business- related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; * any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; * a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance Each Covered Officer should familiarize himself/herself with the disclosure requirements generally applicable to the Fund; each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Trustees and auditors, and to governmental regulators and self-regulatory organizations; each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code; annually thereafter affirm to the Board that he/she has complied with the requirements of the Code; not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and notify the Chair of the Audit Committee of the Fund promptly if he/she knows of any violation of this Code. Failure to do so is itself a violation of this Code; file at least annually a complete and accurate Funds' Trustees and Officers Questionnaire. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers1 sought by the Chairman of the Board or the President will be considered by the Audit Committee (the "Committee"). The Funds will follow these procedures in investigating and enforcing this Code: the General Counsel will take all appropriate action to investigate any potential violations reported to him; if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; any matter that the General Counsel believes is a violation will be reported to the Committee; if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; the Committee will be responsible for granting waivers, as appropriate; and any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act and the adviser's more detailed policies and procedures set forth in their respective codes are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit B, must be approved or ratified by a majority vote of the Board, including a majority of independent Trustees. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and the General Counsel, and if deemed appropriate by the Board, with other Funds in the complex where the Funds share a common Covered Officer. VIII. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. Exhibit A Funds Covered by this Code of Ethics Aquila Equity Fund Aquila Rocky Mountain Equity Fund Capital Cash Management Trust Cash Assets Trust series, consisting of Pacific Capital Cash Assets Trust Pacific Capital Tax-Free Cash Assets Trust Pacific Capital U.S. Government Cash Assets Trust Churchill Cash Reserves Trust Churchill Tax-Free Trust Hawaiian Tax-Free Trust Narragansett Insured Tax-Free Income Fund Prime Cash Fund Tax-Free Fund For Utah Tax-Free Fund of Colorado Tax-Free Trust of Arizona Tax-Free Trust of Oregon Exhibit B Persons Covered by this Code of Ethics The following officers of each Fund, and the identities of such officers as of October 1, 2003: Chairman Lacy B. Herrmann President Diana P. Herrmann Treasurer and Chief Financial Officer Joseph P. DiMaggio 1 Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics" and "implicit waiver," which must also be disclosed, as "the registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer" of the registrant. -----END PRIVACY-ENHANCED MESSAGE-----