N-CSR 1 tffuncsr1205.txt TAX-FREE FUND FOR UTAH 12/31/05 SEMI UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6239 Tax-Free Fund for Utah (Exact name of Registrant as specified in charter) 380 Madison Avenue New York, New York 10017 (Address of principal executive offices) (Zip code) Joseph P. DiMaggio 380 Madison Avenue New York, New York 10017 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 697-6666 Date of fiscal year end: 6/30 Date of reporting period: 12/31/05 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. SEMI-ANNUAL REPORT DECEMBER 31, 2005 [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM] TAX-FREE FUND FOR UTAH A TAX-FREE INCOME INVESTMENT [LOGO OF THE AQUILA GROUP OF FUNDS: ONE OF THE AN EAGLE'S HEAD] AQUILA(SM) GROUP OF FUNDS [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM] SERVING UTAH INVESTORS FOR MORE THAN A DECADE TAX-FREE FUND FOR UTAH "THE BENEFITS OF TAX-FREE INVESTING" February, 2006 Dear Fellow Shareholder: As the name of your fund clearly states, Tax-Free Fund For Utah is tax-free* - free from Utah state and regular Federal income taxes. This tax-free status serves many purposes. It obviously provides you, and our other shareholders, with tax-free income. But, it also provides municipalities with an attractive motivator to help them raise revenue. Additionally, the projects funded by these tax-free securities enhance the quality of life for all community residents. Many individuals pay as much as 30% to 40% of their income in Federal and state taxes. Obviously, if you have to pay that much in taxes, it significantly reduces what you get to keep in your pocket. BENEFITS TO INVESTORS As an investor seeking tax-free income, do you have to forego higher yields? Not necessarily. [BAR CHART] Hypothetical Tax-Free Yield 3% Hypothetical Taxable Equivalent Yield 5.0% Hypothetical Tax-Free Yield 4% Hypothetical Taxable Equivalent Yield 6.7% Hypothetical Tax-Free Yield 5% Hypothetical Taxable Equivalent Yield 8.4% This chart assumes a 35% federal and 7% state tax-rate and is for illustration purposes only; it does not represent past or future performance of any investment. The chart above shows that you would have to earn significantly more from a taxable investment in order to be equal to what you get to keep from a tax-free investment. As you can clearly see from the chart, you would have to earn 6.7% on a taxable investment in order to equal the tax-free level of 4%. Keep this illustration in mind the next time you examine the yield that Tax-Free Fund For Utah offers you. You will find that a 3%, 4% or 5% tax-free yield looks considerably more attractive to you when you consider the implications of taxes. NOT A PART OF THE SEMI-ANNUAL REPORT BENEFITS TO MUNICIPALITIES As you are most likely aware, states, counties, cities, towns, and other forms of municipalities issue tax-free bonds to raise monies. These issues generally take two forms - general obligation securities and revenue securities. General obligation municipal securities are primarily those securities used to finance the general needs of such municipalities. General obligation securities are secured by the tax-raising power of the specific municipality in terms of its ability to pay interest and repay principal on a timely basis. Thus, these securities are considered to be "backed by the full faith and credit" of the issuer. Revenue securities are issued to finance specific projects, such as a hospital or airport. In this instance, the municipal issuer pledges the operating revenues derived from the specific project to pay the interest and repay the principal when due. In many cases, smaller municipalities would have difficulty selling these securities to the marketplace were it not for the added attractiveness of tax-free status. BENEFITS TO QUALITY OF LIFE The benefit you may not have considered - when you made your investment in the Fund - was that in the process of having the Fund provide you with tax-free income, it also provides help to a variety of others within your community and Utah. This is a benefit in which you can take real pride. Municipal bonds, such as those in which Tax-Free Fund For Utah invests, are the primary way infrastructure is financed. Infrastructure is a relatively obscure word that by itself doesn't mean much to most people. But, when you translate the word "infrastructure" into projects such as schools, roads, bridges, water facilities, pollution control, airports, hospitals, and fire and police stations, then you are speaking in terms that people more easily understand. As the economy of Utah grows, new and additional municipal projects are needed for the benefit of the citizens of Utah and the various communities throughout the state. In essence, your money invested in the Fund helps pay for that new school, road, airport, etc. that you and your neighbors now enjoy. So, as an investor in Tax-Free Fund For Utah, you can take pride in knowing that you are playing a vital role and a very real part in enhancing the quality of life for your family, friends, neighbors and future generations of Utahns. SUMMARY So the next time that you receive your statement from Tax-Free Fund For Utah, remember that the benefits that are reaped from your investment are more than just what is evident on that piece of paper. Sincerely, /s/ Diana P. Herrmann /s/ Lacy B. Herrmann Diana P. Herrmann Lacy B. Herrmann President Chair of the Board of Trustees * For certain investors, some dividends may be subject to Federal and State taxes, including the Alternative Minimum Tax. NOT A PART OF THE SEMI-ANNUAL REPORT TAX-FREE FUND FOR UTAH SCHEDULE OF INVESTMENTS DECEMBER 31, 2005 (UNAUDITED)
RATING FACE MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (21.7%) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- CITY, COUNTY AND STATE (9.1%) Anderson, Indiana San District $ 505,000 4.600%, 07/15/23 AMBAC Insured ............................... Aaa/AAA $ 514,630 Brian Head, Utah 405,000 6.500%, 03/15/24 ............................................. NR/NR* 452,158 Cedar City, Utah Special Improvement District Assessment 235,000 5.050%, 09/01/10 ............................................. NR/NR* 240,955 215,000 5.200%, 09/01/11 ............................................. NR/NR* 223,299 Cedar Park, Texas 835,000 4.500%, 02/15/22 MBIA Insured ................................ Aaa/AAA 842,882 Clearfield City, Utah 2,095,000 5.125%, 02/01/18 MBIA Insured (pre-refunded) ................. Aaa/AAA 2,171,782 Coral Canyon, Utah Special Service District 580,000 5.700%, 07/15/18 ............................................. NR/NR* 596,837 Dawson County, Texas Hospital District 555,000 4.375%, 02/15/24 AMBAC Insured ............................... NR/AAA 543,750 Draper, Utah 370,000 4.500%, 02/01/18 AMBAC Insured ............................... Aaa/NR 379,250 Hurricane, Utah 240,000 5.400%, 11/01/09 Radian Insured .............................. NR/AA 254,494 Laredo, Texas 300,000 4.250%, 08/15/21 AMBAC Insured ............................... Aaa/AAA 295,611 Mckinney, Texas 1,700,000 4.500%, 08/15/23 XLCA Insured ................................ Aaa/AAA 1,713,141 Mesquite, Texas 510,000 4.625%, 02/15/22 FSA Insured ................................. Aaa/AAA 521,980 Nevada State 965,000 4.500%, 08/01/21 FSA Insured ................................. Aaa/AAA 982,331 St. George, Utah 100,000 5.375%, 08/01/21 FGIC Insured (pre-refunded) ................. Aaa/AAA 104,179 Salt Lake City, Utah 120,000 5.750%, 06/15/17 (pre-refunded) .............................. Aaa/NR 131,435 San Antonio, Texas 125,000 4.750%, 02/01/24 FSA Insured ................................. Aaa/AAA 128,089 Spokane County, Washington 420,000 4.500%, 12/01/23 MBIA Insured ................................ Aaa/AAA 424,200
RATING FACE MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- CITY, COUNTY AND STATE (CONTINUED) Waco, Texas $ 2,560,000 4.500%, 02/01/24 MBIA Insured ................................ Aaa/AAA $ 2,576,896 Washington County, Utah 1,250,000 5.000%, 10/01/22 MBIA Insured ................................ Aaa/NR 1,314,825 Washington State 3,315,000 4.500%, 01/01/22 MBIA Insured ................................ Aaa/AAA 3,345,995 705,000 4.500%, 07/01/23 FSA Insured ................................. Aaa/AAA 706,473 ------------- Total City, County and State 18,465,192 ------------- SCHOOL DISTRICT (12.6%) Alpine, Utah School District 375,000 5.000%, 03/15/12 (pre-refunded) .............................. Aaa/NR 403,395 Carbon County, Utah School District 800,000 5.000%, 06/15/21 ............................................. Aaa/NR 837,976 Dallas, Texas Independent School District 2,500,000 5.000%, 08/15/29 ............................................. Aaa/AAA 2,606,425 Davis County, Utah School District 575,000 5.000%, 06/01/15 (pre-refunded) .............................. Aaa/NR 619,051 250,000 5.100%, 06/01/16 (pre-refunded) .............................. Aaa/NR 271,275 675,000 5.150%, 06/01/17 (pre-refunded) .............................. Aaa/NR 734,353 Dripping Springs, Texas 725,000 4.375%, 08/15/22 ............................................. Aaa/AAA 725,747 Eagle Mountain & Saginaw, Texas Independent School District 300,000 4.750%, 08/15/21 ............................................. Aaa/AAA 309,807 525,000 4.750%, 08/15/23 ............................................. Aaa/AAA 541,328 Frisco, Texas Independent School District 1,260,000 5.000%, 07/15/26 ............................................. Aaa/NR 1,321,475 Iron County, Utah School District 1,375,000 4.000%, 01/15/18 ............................................. Aaa/AAA 1,354,334 2,115,000 4.000%, 01/15/20 ............................................. Aaa/AAA 2,057,345 La Feria, Texas Independent School District 210,000 4.400%, 02/15/24 ............................................. Aaa/NR 208,954 Lancaster, Texas School District 300,000 4.375%, 02/15/22 ............................................. Aaa/AAA 298,785
RATING FACE MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- SCHOOL DISTRICT (CONTINUED) Lindale, Texas Independent School District $ 690,000 4.250%, 02/15/21 ............................................. NR/AAA $ 680,133 1,000,000 4.250%, 02/15/22 ............................................. NR/AAA 981,650 445,000 4.375%, 02/15/23 ............................................. NR/AAA 441,013 200,000 4.500%, 02/15/24 ............................................. NR/AAA 201,554 Navasota, Texas Independent School District 475,000 5.000%, 08/15/23 FGIC Insured ................................ Aaa/NR 501,496 Nebo, Utah School District 440,000 5.500%, 07/01/11 (pre-refunded) .............................. Aaa/AAA 477,783 North Summit County, Utah School District 760,000 5.000%, 02/01/23 ............................................. Aaa/NR 807,302 800,000 5.000%, 02/01/24 ............................................. Aaa/NR 846,240 Prosper, Texas Independent School District 395,000 4.125%, 08/15/21 ............................................. NR/AAA 383,679 Salt Lake City, Utah School District 265,000 5.000%, 03/01/21 (pre-refunded) .............................. Aaa/NR 285,916 Spring, Texas Independent School District 300,000 4.750%, 08/15/23 ............................................. Aaa/AAA 308,670 Tooele County, Utah School District 670,000 4.000%, 06/01/20 ............................................. Aaa/AAA 642,992 Washington County, Utah 440,000 5.000%, 10/01/18 XLCA Insured ................................ Aaa/NR 469,480 465,000 5.000%, 10/01/19 XLCA Insured ................................ Aaa/NR 495,802 490,000 5.000%, 10/01/20 XLCA Insured ................................ Aaa/NR 520,978 510,000 5.000%, 10/01/21 XLCA Insured ................................ Aaa/NR 541,085 535,000 5.000%, 10/01/22 XLCA Insured ................................ Aaa/NR 565,602 565,000 5.000%, 10/01/23 XLCA Insured ................................ Aaa/NR 596,047 320,000 5.000%, 10/01/24 XLCA Insured ................................ Aaa/NR 336,630 Weber County, Utah School District 750,000 5.000%, 06/15/18 ............................................. Aaa/NR 792,360 825,000 5.000%, 06/15/20 ............................................. Aaa/NR 879,285 Weber County, Utah School District Series B 1,485,000 5.000%, 06/15/21 ............................................. Aaa/NR 1,555,493 ------------- Total School District 25,601,440 ------------- Total General Obligation Bonds 44,066,632 -------------
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (77.0%) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- EDUCATION (14.2%) Carmel, Indiana 2002 School Building Corp. $ 1,235,000 4.300%, 01/15/23 FSA Insured ................................. NR/AAA $ 1,208,695 1,525,000 4.300%, 07/15/23 FSA Insured ................................. NR/AAA 1,491,892 Clinton Prairie, Indiana Community School Building 675,000 4.625%, 01/15/19 FGIC Insured ................................ NR/AAA 697,329 Florida State Board Education Public Education 210,000 4.500%, 06/01/25 FSA Insured ................................. NR/AAA 212,890 Laredo, Texas Independent School District Public Facility Corp. 190,000 5.000%, 08/01/24 AMBAC Insured ............................... Aaa/AAA 198,339 Raven Hills, Texas Higher Education Housing & Education Revenue 215,000 5.000%, 06/01/26 AMBAC Insured ............................... Aaa/NR 221,867 St. Joseph County, Indiana Educational Facilities Revenue 100,000 5.000%, 03/01/27 ............................................. Aaa/NR 101,771 Salt Lake County, Utah Westminster College Project 115,000 5.050%, 10/01/10 ............................................. NR/BBB 119,254 100,000 5.500%, 10/01/19 ............................................. NR/BBB 103,785 1,200,000 5.000%, 10/01/22 ............................................. NR/BBB 1,217,472 1,250,000 5.000%, 10/01/25 ............................................. NR/BBB 1,263,363 1,000,000 5.750%, 10/01/27 ............................................. NR/BBB 1,038,720 Southern Utah University Revenue 375,000 6.300%, 06/01/16 ............................................. NR/NR* 383,141 Texas State College Student Loan Revenue 100,000 5.000%, 08/01/22 AMT ......................................... Aa1/AA 102,445 Texas State University System Financing Revenue 655,000 4.375%, 03/15/23 FSA Insured ................................. Aaa/AAA 649,878 Tyler, Texas Independent School District 325,000 5.000%, 02/15/26 FSA Insured ................................. Aaa/AAA 341,734 University of Nevada University Revenues 190,000 4.500%, 07/01/24 MBIA Insured ................................ Aaa/AAA 192,272 University of Utah Revenue Refunding (Biology Research Facilities) 200,000 5.500%, 04/01/11 MBIA Insured (pre-refunded) ................. Aaa/AAA 203,044 University of Utah University Revenues 575,000 5.000%, 04/01/18 MBIA Insured ................................ Aaa/AAA 615,802
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- EDUCATION (CONTINUED) Utah County, Utah School Facility Revenue $ 1,440,000 6.500%, 12/01/25 ............................................. NR/NR* $ 1,440,115 Utah State Board Regents Auxiliary & Campus Facility 1,000,000 4.125%, 04/01/20 MBIA Insured ................................ Aaa/AAA 975,210 Utah State Board Regents Dixie State College 115,000 5.500%, 05/01/13 MBIA Insured ................................ Aaa/AAA 126,432 120,000 5.500%, 05/01/14 MBIA Insured ................................ Aaa/AAA 132,142 130,000 5.500%, 05/01/15 MBIA Insured ................................ Aaa/AAA 143,539 400,000 5.100%, 05/01/21 MBIA Insured ................................ Aaa/AAA 420,692 Utah State Board Regents Office Facility Revenue 450,000 5.050%, 02/01/20 MBIA Insured ................................ Aaa/AAA 471,528 360,000 5.125%, 02/01/22 MBIA Insured ................................ Aaa/AAA 378,857 Utah State Board Regents Revenue 2,885,000 4.500%, 08/01/18 MBIA Insured ................................ Aaa/AAA 2,945,700 Utah State Board Regents Revenue Salt Lake Community College 1,260,000 5.500%, 06/01/16 FSA Insured ................................. Aaa/AAA 1,365,008 Utah State Board Regents Revenue University Utah 1,045,000 5.000%, 04/01/23 MBIA Insured ................................ Aaa/AAA 1,103,489 Utah State Board Regents Revenue University Utah-Auxiliary & Campus Revenue 1,015,000 5.000%, 04/01/20 MBIA Insured (pre-refunded) ................. Aaa/AAA 1,061,781 Utah State Board Regents Revenue University Utah Hospital Revenue 2,030,000 5.500%, 08/01/17 MBIA Insured (pre-refunded) ................. Aaa/AAA 2,231,701 905,000 5.000%, 05/01/19 AMBAC Insured ............................... Aaa/AAA 956,024 3,595,000 5.000%, 08/01/19 MBIA Insured ................................ Aaa/AAA 3,754,618 Weber State University, Utah Revenue 100,000 5.250%, 04/01/24 FSA Insured ................................. NR/AAA 105,403 Weber State University, Utah Revenue Student Facilities System Series A 300,000 5.100%, 04/01/16 ............................................. NR/AA 319,446 425,000 5.250%, 04/01/19 ............................................. NR/AA 456,255 ------------- Total Education 28,751,633 -------------
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- HEALTHCARE (2.1%) Harris County, Texas Health Facility Development Corp. $ 145,000 5.000%, 11/15/28 AMBAC Insured ............................... NR/AAA $ 148,252 Lee Memorial Health System, Florida Hospital Revenue 450,000 4.250%, 04/01/22 MBIA Insured ................................ Aaa/AAA 443,741 Murray City, Utah Hospital Revenue 595,000 5.000%, 05/15/22 MBIA Insured ................................ Aaa/AAA 603,009 Salt Lake County, Utah Hospital Revenue - IHC Hospitals, Inc. 500,000 5.500%, 05/15/13 AMBAC Insured ............................... Aaa/AAA 543,165 Tarrant County, Texas Health Facilities Revenue 230,000 5.000%, 02/15/26 MBIA Insured ................................ Aaa/AAA 234,933 Utah County, Utah Hospital Revenue, IHC Health Services 1,935,000 5.250%, 08/15/21 MBIA Insured ETM ............................ Aaa/AAA 1,995,662 Utah State Board Regents Revenue University Utah Hospital Revenue 310,000 5.000%, 08/01/21 MBIA Insured ................................ Aaa/AAA 322,822 ------------- Total Healthcare 4,291,584 ------------- HOUSING (4.0%) Indiana State Housing Finance Authority Single Family 245,000 4.850%, 07/01/22 AMT ......................................... Aaa/NR 248,815 Provo City, Utah Housing Authority 500,000 5.800%, 07/20/22 GNMA Collateralized ......................... Aaa/NR 517,230 Snohomish County, Washington Housing Authority Revenue 225,000 5.000%, 09/01/13 AMT ......................................... NR/NR* 224,984 185,000 5.000%, 09/01/14 AMT ......................................... NR/NR* 184,345 145,000 5.100%, 09/01/15 AMT ......................................... NR/NR* 144,990 Utah Housing Corporation Single Family Housing 280,000 4.000%, 07/01/11 AMT ......................................... Aaa/AAA 279,042 65,000 5.250%, 07/01/23 AMT ......................................... Aa2/AA 65,831 Utah Housing Corporation Single Family Mortgage 235,000 4.000%, 07/01/11 AMT ......................................... Aaa/AAA 235,562 50,000 5.150%, 07/01/23 AMT ......................................... Aaa/AAA 50,392 1,340,000 5.000%, 07/01/25 AMT ......................................... Aa3/AA- 1,364,267 900,000 5.100%, 01/01/26 AMT ......................................... Aa3/AA- 911,952
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- HOUSING (CONTINUED) Utah State Housing Agency Housing Revenue $ 140,000 5.650%, 07/01/27 AMT ......................................... Aa2/AA $ 144,456 Utah State Housing Corporation Single Family Housing Revenue 1,425,000 5.125%, 07/01/24 AMT ......................................... Aa3/AA- 1,442,000 Utah State Housing Finance Agency 10,000 6.350%, 07/01/11 Mezzanine Series G-1 ........................ AAA/NR 10,037 10,000 6.350%, 07/01/12 AMBAC Insured AMT ........................... Aaa/AAA 10,000 5,000 6.150%, 07/01/16 Senior Issue A-1 ............................ Aaa/AAA 5,106 140,000 5.650%, 07/01/16 Series 1994C ................................ Aaa/AAA 142,299 55,000 5.400%, 07/01/16 AMT ......................................... Aa2/AA 55,673 85,000 6.000%, 07/01/17 AMT ......................................... Aaa/AA 86,875 845,000 5.500%, 07/01/18 AMT ......................................... Aa3/AA- 874,330 105,000 5.300%, 07/01/18 AMT ......................................... Aaa/AAA 109,432 100,000 5.000%, 07/01/18 AMT ......................................... Aaa/AAA 101,565 195,000 5.400%, 07/01/20 AMT ......................................... Aa2/AA 199,701 400,000 5.600%, 07/01/23 AMT ......................................... Aa2/AA 408,552 120,000 5.700%, 07/01/26 MBIA Insured ................................ Aaa/AAA 120,448 Wyoming Community Development Authority Housing Revenue 120,000 5.000%, 12/01/22 ............................................. Aa1/AA+ 123,522 ------------- Total Housing 8,061,406 ------------- INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (0.6%) Sandy City, Utah Industrial Development, H Shirley Wright Project, Refunding Bonds, LOC Olympus Bank 250,000 6.125%, 08/01/16 ............................................. NR/AAA 250,605 Utah County Environmental Improvement Revenue 935,000 5.050%, 11/01/17 ............................................. Baa1/BBB+ 985,135 ------------- Total Industrial Development & Pollution Control 1,235,740 ------------- LEASE (5.7%) Celebration Community Development District, Florida 290,000 5.000%, 05/01/22 MBIA Insured ................................ Aaa/AAA 305,973 Draper, Utah Municipal Building Authority 355,000 5.000%, 11/15/20 AMBAC Insured ............................... Aaa/NR 378,902
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- LEASE (CONTINUED) Marion County, Indiana Convention & Recreational Facilities Authority Revenue $ 390,000 5.000%, 06/01/27 MBIA Insured ................................ Aaa/AAA $ 399,411 Murray City, Utah Municipal Building Revenue 520,000 5.050%, 12/01/15 AMBAC Insured ............................... Aaa/NR 552,100 Salt Lake County, Utah Municipal Building Authority, Lease Revenue 320,000 5.400%, 10/15/19 AMBAC Insured (pre-refunded) ................ Aaa/AAA 345,901 3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) ................ Aaa/AAA 4,239,651 Utah County, Utah Municipal Building Authority, Lease Revenue 120,000 5.500%, 11/01/16 AMBAC Insured ............................... Aaa/NR 132,204 240,000 5.500%, 11/01/17 AMBAC Insured ............................... Aaa/NR 264,408 Utah State Building Ownership Authority 1,350,000 5.250%, 05/15/20 FSA Insured (pre-refunded) .................. Aaa/AAA 1,409,900 1,080,000 5.000%, 05/15/25 ............................................. Aa1/AA+ 1,139,551 Washington County - St. George, Utah Interlocal Agency Revenue 1,000,000 5.125%, 12/01/17 AMBAC Insured ............................... NR/AAA 1,041,480 100,000 5.125%, 12/01/22 AMBAC Insured ............................... NR/AAA 103,790 West Bountiful, Utah Courthouse Revenue 410,000 5.000%, 05/01/19 ............................................. NR/A- 436,281 West Valley City, Utah 865,000 5.000%, 08/01/21 AMBAC Insured ............................... Aaa/AAA 906,382 ------------- Total Lease 11,655,934 ------------- TAX REVENUE (25.1%) Bay County, Florida Sales Tax Revenue 175,000 4.750%, 09/01/23 FSA Insured ................................. Aaa/NR 178,162 Bluffdale City, Utah Series 2004 295,000 6.000%, 12/01/13 ............................................. NR/NR* 297,749 310,000 6.000%, 12/01/14 ............................................. NR/NR* 312,957 330,000 6.000%, 12/01/15 ............................................. NR/NR* 330,551 350,000 6.000%, 12/01/16 ............................................. NR/NR* 350,585 370,000 6.000%, 12/01/17 ............................................. NR/NR* 370,651 395,000 6.000%, 12/01/18 ............................................. NR/NR* 395,731 420,000 6.000%, 12/01/19 ............................................. NR/NR* 420,815
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- TAX REVENUE (CONTINUED) Bluffdale, Utah Sales Tax Revenue $ 2,045,000 5.500%, 08/01/23 ............................................. NR/NR* $ 2,125,021 Bountiful, Utah Special Improvement District Special Assessment Revenue 203,000 5.000%, 06/01/14 ............................................. NR/NR* 203,014 213,000 5.150%, 06/01/15 ............................................. NR/NR* 213,089 224,000 5.300%, 06/01/16 ............................................. NR/NR* 224,056 236,000 5.500%, 06/01/17 ............................................. NR/NR* 236,160 249,000 5.650%, 06/01/18 ............................................. NR/NR* 249,229 Brian Head, Utah Special Service Improvement District Revenue 290,000 5.350%, 11/01/12 ............................................. NR/NR* 299,396 Cache County, Utah Sales Tax Revenue 500,000 5.000%, 12/15/14 FGIC Insured ................................ Aaa/AAA 535,050 670,000 5.000%, 12/15/16 FGIC Insured ................................ Aaa/AAA 712,766 600,000 5.000%, 12/15/17 FGIC Insured ................................ Aaa/AAA 635,310 510,000 5.000%, 12/15/18 FGIC Insured ................................ Aaa/AAA 537,484 830,000 5.000%, 12/15/19 FGIC Insured ................................ Aaa/AAA 874,729 Clark County, Nevada Improvement District Revenue 250,000 5.000%, 08/01/16 ............................................. NR/NR* 253,450 Clearfield, Utah Sales Tax Revenue 590,000 5.000%, 07/01/18 FGIC Insured ................................ Aaa/AAA 626,285 620,000 5.000%, 07/01/19 FGIC Insured ................................ Aaa/AAA 655,669 650,000 5.000%, 07/01/20 FGIC Insured ................................ Aaa/AAA 685,250 Coral Canyon, Utah Special Service District 110,000 5.000%, 07/15/13 ............................................. NR/NR* 114,117 250,000 5.500%, 07/15/18 ............................................. NR/NR* 259,025 Davis County, Utah Sales Tax Revenue 1,470,000 5.150%, 10/01/18 AMBAC Insured ............................... NR/AAA 1,572,665 Fishers, Indiana Redevelopment Authority Lease Revenue 175,000 4.500%, 07/15/20 AMBAC Insured ............................... Aaa/AAA 178,696 Henderson, Nevada Local Improvement District Revenue 300,000 5.000%, 09/01/14 ............................................. NR/NR* 307,608 300,000 5.000%, 09/01/15 ............................................. NR/NR* 305,970
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- TAX REVENUE (CONTINUED) Jordanelle, Utah Special Service District $ 186,000 5.000%, 11/15/14 ............................................. NR/NR* $ 188,161 196,000 5.100%, 11/15/15 ............................................. NR/NR* 198,587 206,000 5.200%, 11/15/16 ............................................. NR/NR* 208,276 216,000 5.300%, 11/15/17 ............................................. NR/NR* 218,439 228,000 5.400%, 11/15/18 ............................................. NR/NR* 230,631 240,000 5.500%, 11/15/19 ............................................. NR/NR* 242,827 253,000 5.600%, 11/15/20 ............................................. NR/NR* 255,841 268,000 5.700%, 11/15/21 ............................................. NR/NR* 270,932 283,000 5.800%, 11/15/22 ............................................. NR/NR* 286,090 299,000 6.000%, 11/15/23 ............................................. NR/NR* 302,175 Jordanelle, Utah Special Service Improvement District 320,000 8.000%, 10/01/11 ............................................. NR/NR* 330,464 Lehi, Utah Sales Tax 610,000 5.000%, 06/01/21 FSA Insured ................................. Aaa/AAA 647,344 790,000 5.000%, 06/01/24 FSA Insured ................................. Aaa/AAA 831,483 Mesquite New Special Improvement District, Nevada 185,000 4.600%, 08/01/11 ............................................. NR/NR* 184,715 195,000 4.750%, 08/01/12 ............................................. NR/NR* 194,809 230,000 4.900%, 08/01/13 ............................................. NR/NR* 229,689 140,000 5.250%, 08/01/17 ............................................. NR/NR* 139,551 315,000 5.350%, 08/01/19 ............................................. NR/NR* 313,573 135,000 5.400%, 08/01/20 ............................................. NR/NR* 134,361 500,000 5.500%, 08/01/25 ............................................. NR/NR* 496,660 Mountain Regional Water District, Utah Special Assessment Revenue 1,870,000 7.000%, 12/01/18 ............................................. NR/NR* 1,944,763 Mountain Regional Water, Utah Special Service District 2,000,000 5.000%, 12/15/20 MBIA Insured ................................ Aaa/AAA 2,114,000 North Ogden, Utah Sales Tax Revenue 195,000 5.000%, 11/01/24 XLCA Insured ................................ Aaa/AAA 204,485 Plainfield Independent Redevelopment Authority, Indiana 500,000 4.250%, 08/01/18 CIFG Insured ................................ Aaa/NR 497,580 1,070,000 4.375%, 08/01/20 CIFG Insured ................................ Aaa/NR 1,067,111
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- TAX REVENUE (CONTINUED) Salt Lake City, Utah Sales Tax Revenue $ 490,000 5.250%, 02/01/12 ............................................. NR/AAA $ 533,733 265,000 5.250%, 02/01/13 ............................................. NR/AAA 287,448 1,320,000 5.250%, 02/01/15 ............................................. NR/AAA 1,421,402 100,000 5.250%, 02/01/17 ............................................. NR/AAA 107,066 Salt Lake County, Utah Sales Tax Revenue 955,000 5.000%, 02/01/21 ............................................. NR/AAA 1,017,304 1,725,000 5.000%, 08/01/21 ............................................. NR/AAA 1,842,611 1,005,000 5.000%, 02/01/22 ............................................. NR/AAA 1,068,225 1,060,000 5.000%, 02/01/23 ............................................. NR/AAA 1,123,388 1,115,000 5.000%, 02/01/24 ............................................. NR/AAA 1,182,547 Sandy City, Utah Sales Tax Revenue 520,000 5.000%, 09/15/18 AMBAC Insured ............................... NR/AAA 547,435 605,000 5.000%, 09/15/20 AMBAC Insured ............................... NR/AAA 634,754 South Jordan, Utah Municipal Building Authority Revenue 290,000 5.375%,10/01/20 AMBAC Insured ................................ NR/AAA 314,044 South Jordan, Utah Sales Tax 570,000 5.000%, 08/15/15 AMBAC Insured ............................... Aaa/AAA 602,182 South Jordan, Utah Special Assignment 1,000,000 6.875%, 11/01/17 ............................................. NR/NR* 1,024,760 South Weber City, Utah 525,000 5.000%, 01/15/24 MBIA Insured ................................ Aaa/AAA 550,447 Springville, Utah Special Improvement District Revenue 400,000 5.500%, 1/15/2017 ............................................ NR/NR* 400,504 423,000 5.650%, 1/15/2018 ............................................ NR/NR* 423,533 446,000 5.800%, 1/15/2019 ............................................ NR/NR* 446,562 472,000 5.900%, 1/15/2020 ............................................ NR/NR* 472,595 500,000 6.000%, 1/15/2021 ............................................ NR/NR* 500,630 Utah Water Finance Agency Revenue 775,000 5.100%, 07/01/18 AMBAC Insured ............................... Aaa/NR 818,764 510,000 5.000%, 07/01/18 AMBAC Insured ............................... Aaa/NR 539,677 260,000 5.000%, 06/01/19 MBIA Insured ................................ Aaa/AAA 266,799 685,000 5.000%, 07/01/19 AMBAC Insured ............................... Aaa/NR 724,408
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- TAX REVENUE (CONTINUED) Wasatch County, Utah Building Authority $ 130,000 5.000%, 10/01/15 ............................................. A3/NR $ 136,189 135,000 5.000%, 10/01/16 ............................................. A3/NR 140,885 Wasatch County, Utah Sales Tax Revenue 205,000 5.000%, 12/01/16 AMBAC Insured ............................... Aaa/AAA 218,020 210,000 5.000%, 12/01/17 AMBAC Insured ............................... Aaa/AAA 222,295 225,000 5.000%, 12/01/18 AMBAC Insured ............................... Aaa/AAA 237,202 Washington City, Utah Sales Tax Revenue 680,000 5.250%, 11/15/17 AMBAC Insured ............................... Aaa/AAA 738,249 Washoe County, Nevada Tax Revenue 210,000 5.000%, 12/01/23 MBIA Insured ................................ Aaa/AAA 216,688 Weber County Utah Sales Tax Revenue 385,000 5.000%, 07/01/23 AMBAC Insured ............................... Aaa/NR 404,866 West Valley City, Utah Redevelopment Agency Revenue 1,625,000 5.000%, 03/01/21 ............................................. NR/A- 1,687,790 320,000 5.000%, 03/01/22 ............................................. NR/A- 331,635 350,000 5.000%, 03/01/23 ............................................. NR/A- 361,666 1,000,000 5.000%, 03/01/24 ............................................. NR/A- 1,030,310 West Valley City, Utah Sales Tax Revenue 800,000 5.500%, 07/15/17 MBIA Insured ................................ Aaa/AAA 863,912 250,000 5.000%, 07/15/20 AMBAC Insured ............................... Aaa/AAA 262,770 180,000 5.000%, 07/15/21 MBIA Insured ................................ Aaa/AAA 187,848 Woodland Hills, Utah Special Assessment Revenue 18,000 5.500%, 08/01/09 ............................................. NR/NR* 18,243 221,000 5.500%, 08/01/10 ............................................. NR/NR* 225,097 233,000 5.500%, 08/01/11 ............................................. NR/NR* 239,850 246,000 5.500%, 08/01/12 ............................................. NR/NR* 254,059 261,000 5.500%, 08/01/13 ............................................. NR/NR* 270,631 ------------- Total Tax Revenue 51,092,810 ------------- TRANSPORTATION (4.2%) Florida State Turnpike Authority Turnpike Revenue 500,000 4.500%, 07/01/22 MBIA Insured Aaa/AAA 510,615 Port of Seattle, Washington Revenue 100,000 5.100%, 04/01/24 AMT FGIC Insured Aaa/AAA 101,781
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- TRANSPORTATION (CONTINUED) Utah Transit Authority Sales Tax & Transportation Revenue $ 1,000,000 5.400%, 12/15/16 FSA Insured ................................. NR/AAA $ 1,049,570 100,000 5.000%, 06/15/21 FSA Insured ................................. Aaa/AAA 105,327 3,300,000 4.125%, 06/15/21 FSA Insured ................................. Aaa/AAA 3,253,569 3,450,000 4.125%, 06/15/22 FSA Insured ................................. Aaa/AAA 3,379,275 100,000 5.000%, 06/15/25 FSA Insured ................................. Aaa/AAA 104,101 ------------- Total Transportation 8,504,238 ------------- UTILITY (11.2%) Eagle Mountain, Utah Gas & Electric Revenue 1,385,000 4.250%, 06/01/20 Radian Insured .............................. NR/AA 1,347,106 1,440,000 5.000%, 06/01/21 Radian Insured .............................. Aa3/AA 1,494,662 1,515,000 5.000%, 06/01/22 Radian Insured .............................. NR/AA 1,567,798 Indianapolis, Indiana Gas Utility Revenue 290,000 5.000%, 08/15/24 AMBAC Insured ............................... Aaa/AAA 295,237 Intermountain Power Agency Utilities Light & Power Service, Utah 450,000 5.000%, 07/01/12 MBIA Insured ETM ............................ Aaa/AAA 454,311 1,470,000 5.250%, 07/01/15 MBIA Insured ................................ Aaa/AAA 1,546,808 90,000 5.000%, 07/01/16 ............................................. A1/A+ 92,471 675,000 5.000%, 07/01/18 FSA Insured ................................. Aaa/AAA 716,958 1,380,000 5.000%, 07/01/19 MBIA Insured ................................ Aaa/AAA 1,433,309 2,450,000 5.000%, 07/01/21 ............................................. A1/A+ 2,502,822 550,000 5.000%, 07/01/23 FSA Insured ................................. Aaa/AAA 561,726 Lower Colorado River Authority, Texas Revenue 175,000 5.000%, 05/15/26 FSA Insured ................................. Aaa/AAA 182,759 Manti City, Utah Electric System Revenue 603,000 5.750%, 02/01/17 ............................................. NR/NR* 626,366 Murray City, Utah Utility Electric Revenue 400,000 5.625%, 06/01/18 AMBAC Insured ............................... Aaa/NR 434,132 1,340,000 5.000%, 06/01/25 AMBAC Insured ............................... Aaa/NR 1,409,399 St. George, Utah Electric Revenue 1,910,000 4.500%, 06/01/20 FSA Insured ................................. Aaa/NR 1,945,144 Salem, Utah Electric Revenue 125,000 5.300%, 11/01/07 ............................................. NR/NR* 126,919 130,000 5.350%, 11/01/08 ............................................. NR/NR* 133,792 140,000 5.400%, 11/01/09 ............................................. NR/NR* 144,817
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- UTILITY (CONTINUED) Seattle, Washington Municipal Light & Power Revenue $ 1,360,000 4.500%, 08/01/19 FSA Insured ................................. Aaa/AAA $ 1,393,021 Southern Utah Valley Power System Revenue 210,000 5.250%, 09/15/13 MBIA Insured ................................ NR/AAA 228,875 225,000 5.250%, 09/15/14 MBIA Insured ................................ NR/AAA 245,639 235,000 5.250%, 09/15/15 MBIA Insured ................................ NR/AAA 255,830 185,000 5.125%, 09/15/21 MBIA Insured ................................ NR/AAA 196,104 Springville, Utah Electric Revenue 550,000 5.600%, 03/01/09 ............................................. Baa1/NR 572,501 Utah Assessed Municipal Power System Revenue 790,000 5.250%, 12/01/09 ............................................. NR/A- 827,091 1,000,000 5.000%, 04/01/21 FSA Insured ................................. Aaa/AAA 1,051,980 Washington, Utah Electric Revenue 985,000 5.000%, 09/01/21 XLCA Insured ................................ Aaa/NR 1,040,909 ------------- Total Utility 22,828,486 ------------- WATER AND SEWER (9.9%) Ashley Valley, Utah 140,000 9.500%, 01/01/08 AMBAC Insured ............................... Aaa/AAA 145,873 Eagle Mountain, Utah Water and Sewer 750,000 5.800%, 11/15/16 ACA Insured ................................. NR/A 793,763 Granger and Hunter, Utah Improvement District Water and Sewer 350,000 5.000%, 03/01/18 FSA Insured (pre-refunded) .................. Aaa/NR 362,415 Jordan Valley Water Conservancy District, Utah 715,000 4.375%, 10/01/18 AMBAC Insured ............................... Aaa/AAA 723,165 Mesquite, Texas Waterworks & Sewer Revenue 225,000 4.500%, 03/01/24 FSA Insured ................................. Aaa/AAA 225,292 Murray City, Utah Sewer and Water Revenue 465,000 5.000%, 10/01/17 AMBAC Insured ............................... Aaa/NR 495,020 390,000 5.000%, 10/01/18 AMBAC Insured ............................... Aaa/NR 413,318 440,000 5.000%, 10/01/19 AMBAC Insured ............................... Aaa/NR 466,004 North Davis County, Utah Sewer District 1,330,000 5.375%, 03/01/18 AMBAC Insured (pre-refunded) ................ Aaa/NR 1,462,322 1,350,000 5.000%, 03/01/21 AMBAC Insured ............................... Aaa/NR 1,427,679 150,000 5.125%, 03/01/22 AMBAC Insured (pre-refunded) ................ Aaa/NR 162,867 Orem, Utah Water & Storm Sewer Revenue 1,720,000 4.500%, 07/15/17 MBIA Insured ................................ Aaa/AAA 1,769,691
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- WATER AND SEWER (CONTINUED) Riverton, Utah Water Revenue $ 100,000 5.350%, 09/01/15 FGIC Insured (pre-refunded) ................. Aaa/NR $ 108,237 Salt Lake City, Utah Metropolitan Water Revenue 1,200,000 5.375%, 07/01/24 AMBAC Insured (pre-refunded) ................ Aaa/AAA 1,279,380 125,000 5.375%, 07/01/29 AMBAC Insured (pre-refunded) ................ Aaa/AAA 133,269 Salt Lake City, Utah Water and Sewer Revenue 675,000 5.000%, 02/01/19 FSA Insured ................................. Aaa/AAA 716,371 845,000 5.000%, 02/01/20 FSA Insured ................................. Aaa/AAA 893,816 Salt Lake & Sandy, Utah Water District 1,000,000 5.000%, 07/01/20 AMBAC Insured ............................... Aaa/NR 1,060,290 South Valley Water Reclamation Facility, Utah 710,000 4.375%, 08/15/18 ............................................. NR/AAA 718,030 Spanish Fork City, Utah Water Revenue 195,000 5.500%, 06/01/17 FSA Insured ................................. Aaa/NR 213,451 55,000 5.500%, 06/01/17 FSA Insured (pre-refunded) .................. Aaa/NR 60,928 Upper Trinity Regional Water District, Texas 205,000 4.500%, 08/01/20 AMBAC Insured ............................... Aaa/AAA 207,761 Utah Water Finance Agency Revenue 100,000 5.000%, 06/01/14 MBIA Insured ................................ Aaa/AAA 103,686 200,000 5.250%, 07/01/16 AMBAC Insured ............................... Aaa/NR 216,418 250,000 5.375%, 09/01/17 AMBAC Insured ............................... Aaa/NR 273,843 310,000 5.000%, 10/01/17 AMBAC Insured ............................... Aaa/NR 327,760 750,000 5.250%, 10/01/18 AMBAC Insured ............................... Aaa/NR 814,073 465,000 5.000%, 10/01/20 AMBAC Insured ............................... Aaa/NR 487,999 830,000 4.500%, 10/01/22 AMBAC Insured ............................... Aaa/NR 839,338 100,000 5.125%, 07/01/23 AMBAC Insured ............................... Aaa/NR 105,322 285,000 5.300%, 10/01/23 MBIA Insured (pre-refunded) ................. Aaa/AAA 299,948 870,000 4.500%, 10/01/23 AMBAC Insured ............................... Aaa/NR 877,151 450,000 5.400%, 10/01/24 AMBAC Insured (pre-refunded) ................ Aaa/AAA 482,144 250,000 5.500%, 10/01/29 AMBAC Insured (pre-refunded) ................ Aaa/AAA 268,727 Weber-Box Elder, Utah Conservation District Water Revenue 200,000 6.450%, 11/01/14 (pre-refunded) .............................. Baa3/NR 225,298 200,000 6.500%, 11/01/19 (pre-refunded) .............................. Baa3/NR 225,736 335,000 6.900%, 11/01/20 (pre-refunded) .............................. Baa3/NR 383,994
RATING FACE MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE ------------ -------------------------------------------------------------- -------- ------------- WATER AND SEWER (CONTINUED) White City, Utah Water Improvement $ 300,000 5.90%, 02/01/22 AMBAC Insured (pre-refunded) ................. Aaa/AAA $ 303,555 ------------- Total Water and Sewer 20,073,934 ------------- Total Revenue Bonds 156,495,765 ------------- Total Investments (cost $162,234,383**) ...................... 98.7% 200,562,397 Other assets less liabilities ................................ 1.3 2,561,223 ------- ------------- Net Assets ................................................... 100.0% $ 203,123,620 ======= ============= PERCENT OF PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO ------------------------------------------------------------------ ---------- Aaa of Moody's or AAA of S&P ..................................... 75.8% Aa of Moody's or AA of S&P ....................................... 6.1 A of Moody's or S&P .............................................. 4.1 Baa of Moody's or BBB of S&P ..................................... 2.6 Not rated* ....................................................... 11.4 ------- 100.0% =======
* Any security not rated (NR) by either credit rating service must be determined by the Manager to have sufficient quality to be ranked in the top four ratings if a credit rating were to be assigned by a rating service. ** See note 4. PORTFOLIO ABBREVIATIONS: ------------------------ ACA - American Capital Assurance Financial Guaranty Corp. AMBAC - American Municipal Bond Assurance Corp. AMT - Alternative Minimum Tax CIFG - CDC IXIS Financial Guaranty ETM - Escrowed to Maturity FGIC - Financial Guaranty Insurance Co. FSA - Financial Security Assurance GNMA - Government National Mortgage Association LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance NR - Not Rated XLCA - XL Capital Assurance See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2005 (UNAUDITED) ASSETS Investments at value (cost $197,057,492) ........................................... $ 200,562,397 Interest receivable ................................................................ 3,116,255 Receivable for investment securities sold .......................................... 815,000 Receivable for Fund shares sold .................................................... 244,958 Other assets ....................................................................... 6,804 ------------- Total assets ....................................................................... 204,745,414 ------------- LIABILITIES Cash overdraft ..................................................................... 705,738 Payable for Fund shares redeemed ................................................... 466,227 Dividends payable .................................................................. 290,354 Distribution and service fees payable .............................................. 97,586 Management fees payable ............................................................ 30,718 Accrued expenses ................................................................... 31,171 ------------- Total liabilities .................................................................. 1,621,794 ------------- NET ASSETS ............................................................................. $ 203,123,620 ============= Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 200,912 Additional paid-in capital ......................................................... 202,344,129 Net unrealized appreciation on investments (note 4) ................................ 3,504,905 Accumulated net realized loss on investments ....................................... (2,591,003) Distributions in excess of net investment income ................................... (335,323) ------------- $ 203,123,620 ============= CLASS A Net Assets ......................................................................... $ 137,751,773 ============= Capital shares outstanding ......................................................... 13,631,406 ============= Net asset value and redemption price per share ..................................... $ 10.11 ============= Offering price per share (100/96 of $10.11 adjusted to nearest cent) ............... $ 10.53 ============= CLASS C Net Assets ......................................................................... $ 32,057,902 ============= Capital shares outstanding ......................................................... 3,173,477 ============= Net asset value and offering price per share ....................................... $ 10.10 ============= Redemption price per share (*a charge of 1% is imposed on the redemption proceeds of the shares, or on the original price, whichever is lower, if redeemed during the first 12 months after purchase) ...................................... $ 10.10* ============= CLASS Y Net Assets ......................................................................... $ 33,313,945 ============= Capital shares outstanding ......................................................... 3,286,931 ============= Net asset value, offering and redemption price per share ........................... $ 10.14 =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED) INVESTMENT INCOME: Interest income ............................................................... $ 4,298,404 Expenses: Management fee (note 3) ....................................................... $ 479,507 Distribution and service fees (note 3) ........................................ 283,953 Legal fees (note 3) ........................................................... 56,956 Trustees' fees and expenses (note 8) .......................................... 49,757 Transfer and shareholder servicing agent fees ................................. 45,760 Custodian fees ................................................................ 32,367 Fund accounting fees .......................................................... 29,661 Shareholders' reports and proxy statements .................................... 16,248 Auditing and tax fees ......................................................... 10,846 Registration fees and dues .................................................... 10,058 Insurance ..................................................................... 5,466 Chief compliance officer (note 3) ............................................. 2,291 Miscellaneous ................................................................. 14,714 ------------ Total expenses ................................................................ 1,037,584 Management fee waived (note 3) ................................................ (306,884) Expenses paid indirectly (note 6) ............................................. (41,276) ------------ Net expenses .................................................................. 689,424 ------------ Net investment income ......................................................... 3,608,980 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from securities transactions ......................... 149,546 Change in unrealized appreciation on investments .............................. (2,832,933) ------------ Net realized and unrealized gain (loss) on investments ........................ (2,683,387) ------------ Net increase in net assets resulting from operations ................................ $ 925,593 ============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED DECEMBER 31, 2005 YEAR ENDED (UNAUDITED) JUNE 30, 2005 ----------------- ------------- OPERATIONS: Net investment income ....................................... $ 3,608,980 $ 5,597,480 Net realized gain (loss) from securities transactions ....... 149,546 339,699 Change in unrealized appreciation on investments ............ (2,832,933) 4,737,661 ------------- ------------- Change in net assets from operations ...................... 925,593 10,674,840 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (note 10): Class A Shares: Net investment income ....................................... (2,735,693) (4,664,445) Class C Shares: Net investment income ....................................... (492,503) (844,820) Class Y Shares: Net investment income ....................................... (598,937) (481,279) ------------- ------------- Change in net assets from distributions ................... (3,827,133) (5,990,544) ------------- ------------- CAPITAL SHARE TRANSACTIONS (note 7): Proceeds from shares sold ................................... 51,533,137 61,124,699 Reinvested dividends and distributions ...................... 2,344,001 3,507,838 Cost of shares redeemed ..................................... (19,451,609) (22,013,872) ------------- ------------- Change in net assets from capital share transactions ...... 34,425,529 42,618,665 ------------- ------------- Change in net assets ...................................... 31,523,989 47,302,961 NET ASSETS: Beginning of period ........................................... 171,599,631 124,296,670 ------------- ------------- End of period* ................................................ $ 203,123,620 $ 171,599,631 ============= ============= * Includes distributions in excess of net investment income of: $ (335,323) $ (117,170) ============= =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 (UNAUDITED) 1. ORGANIZATION Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end investment company, was organized on December 12, 1990 as a Massachusetts business trust and commenced operations on July 24, 1992. The Fund is authorized to issue an unlimited number of shares and, since its inception to May 21, 1996, offered only one class of shares. On that date, the Fund began offering two additional classes of shares, Class C and Class Y Shares. All shares outstanding prior to that date were designated as Class A Shares and are sold with a front-payment sales charge and bear an annual distribution fee. Class C Shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y Shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodian or similar capacity and are not offered directly to retail investors. Class Y Shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. On October 31, 1997, the Fund established Class I Shares which are offered and sold only through financial intermediaries and are not offered directly to retail investors. As of the report date, there were no Class I Shares outstanding. All classes of shares represent interests in the same portfolio of investments and are identical as to rights and privileges but differ with respect to the effect of sales charges, the distribution and/or service fees borne by each class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities of more than 60 days are valued each business day based upon information provided by a nationally prominent independent pricing service and periodically verified through other pricing services. In the case of securities for which market quotations are readily available, securities are valued by the pricing service at the mean of bid and asked quotations. If market quotations or a valuation from the pricing service is not readily available, the security is valued at fair value determined in good faith under procedures established by and under the general supervision of the Board of Trustees. Securities which mature in 60 days or less are valued at amortized cost if their term to maturity at purchase is 60 days or less, or by amortizing their unrealized appreciation or depreciation on the 61st day prior to maturity, if their term to maturity at purchase exceeds 60 days. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premium and accretion of original issue and market discount. c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. The Fund intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. d) MULTIPLE CLASS ALLOCATIONS: All income, expenses (other than class-specific expenses), and realized and unrealized gains or losses are allocated daily to each class of shares based on the relative net assets of each class. Class-specific expenses, which include distribution and service fees and any other items that are specifically attributed to a particular class, are charged directly to such class. e) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: Aquila Investment Management LLC (the "Manager"), a wholly-owned subsidiary of Aquila Management Corporation, the Fund's founder and sponsor, serves as the Manager for the Fund under an Advisory and Administration Agreement with the Fund. Under the Advisory and Administration Agreement, the Manager provides all investment management and administrative services to the Fund. The Manager's services include providing the office of the Fund and all related services as well as managing relationships with all the various support organizations to the Fund such as the shareholder servicing agent, custodian, legal counsel, fund accounting agent, auditors and distributor. For its services, the Manager is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.50 of 1% on the Fund's average net assets. For the six months ended December 31, 2005, the Fund incurred management fees of $479,507 of which $306,884 was voluntarily waived. Such waivers are voluntary and can be terminated in the future at the Manager's discretion. However, the Manager has indicated that it intends to continue waiving fees as necessary in order that the Fund will remain competitive. Under a Compliance Agreement with the Manager, the Manager is compensated for Chief Compliance Officer related services provided to enable the Fund to comply with Rule 38a-1 of the Investment Company Act of 1940. Specific details as to the nature and extent of the services provided by the Manager are more fully defined in the Fund's Prospectus and Statement of Additional Information. b) DISTRIBUTION AND SERVICE FEES: The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended. Under one part of the Plan, with respect to Class A Shares, the Fund is authorized to make distribution fee payments to broker-dealers or others ("Qualified Recipients") selected by Aquila Distributors, Inc. (the "Distributor") including, but not limited to, any principal underwriter of the Fund, with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Fund's shares or servicing of shareholder accounts. The Fund makes payment of this service fee at the annual rate of 0.20% of the Fund's average net assets represented by Class A Shares. For the six months ended December 31, 2005, distribution fees on Class A Shares amounted to $133,871, of which the Distributor retained $2,039. Under another part of the Plan, the Fund is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Fund's Class C shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Fund's average net assets represented by Class C Shares and for the six months ended December 31, 2005, amounted to $112,562. In addition, under a Shareholder Services Plan, the Fund is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Fund's average net assets represented by Class C Shares and for the six months ended December 31, 2005 amounted to $37,521. The total of these payments with respect to Class C Shares amounted to $150,083, of which the Distributor retained $26,664. Specific details about the Plans are more fully defined in the Fund's Prospectus and Statement of Additional Information. Under a Distribution Agreement, the Distributor serves as the exclusive distributor of the Fund's shares. Through agreements between the Distributor and various broker-dealer firms ("dealers"), the Fund's shares are sold primarily through the facilities of these dealers having offices within Utah, with the bulk of sales commissions inuring to such dealers. For the six months ended December 31, 2005, total commissions on sales of Class A Shares amounted to $288,089, of which the Distributor received $24,084. c) OTHER RELATED PARTY TRANSACTIONS: For the six months ended December 31, 2005, the Fund incurred $56,099 of legal fees allocable to Hollyer Brady Barrett & Hines LLP, counsel to the Fund, for legal services in conjunction with the Fund's ongoing operations. The Secretary of the Fund is a Partner of that firm. 4. PURCHASES AND SALES OF SECURITIES During the six months ended December 31, 2005, purchases of securities and proceeds from the sales of securities aggregated $42,252,484 and $7,365,128, respectively. At December 31, 2005, the aggregate tax cost for all securities was $197,018,177. At Dececember 31, 2005, the aggregate gross unrealized appreciation for all securities in which there is an excess of market value over tax cost amounted to $3,984,866 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over market value amounted to $440,646, for a net unrealized appreciation of $3,544,220. 5. PORTFOLIO ORIENTATION Since the Fund invests principally and may invest entirely in double tax-free municipal obligations of issuers within Utah, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Utah and whatever effects these may have upon Utah issuers' ability to meet their obligations. The Fund is also permitted to invest in tax-free municipal obligations of issuers in other states meeting comparable quality standards and providing income which is exempt from both regular Federal and Utah income taxes. The general policy of the Fund is to invest in such securities only when comparable securities of Utah issuers are not available in the market. At December 31, 2005, the Fund had 80% of its net assets invested in State of Utah municipal issues. 6. EXPENSES The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. It is the general intention of the Fund to invest, to the extent practicable, some or all of cash balances in income-producing assets rather than leave cash on deposit. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Fund were as follows:
SIX MONTHS ENDED DECEMBER 31, 2005 YEAR ENDED (UNAUDITED) JUNE 30, 2005 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ CLASS A SHARES: Proceeds from shares sold 1,966,551 $ 19,928,051 3,901,386 $ 39,687,818 Reinvested distributions 171,273 1,734,525 277,575 2,823,980 Cost of shares redeemed . (793,209) (8,002,058) (1,384,213) (14,072,096) ------------ ------------ ------------ ------------ Net change ............ 1,344,615 13,660,518 2,794,748 28,439,702 ------------ ------------ ------------ ------------ CLASS C SHARES: Proceeds from shares sold 637,118 6,449,876 825,234 8,390,613 Reinvested distributions 29,091 294,451 48,338 491,581 Cost of shares redeemed . (181,314) (1,835,646) (401,020) (4,069,806) ------------ ------------ ------------ ------------ Net change ............ 484,895 4,908,681 472,552 4,812,388 ------------ ------------ ------------ ------------ CLASS Y SHARES: Proceeds from shares sold 2,462,364 25,155,210 1,275,070 13,046,268 Reinvested distributions 31,081 315,025 18,832 192,277 Cost of shares redeemed . (948,795) (9,613,905) (380,156) (3,871,970) ------------ ------------ ------------ ------------ Net change ............ 1,544,650 15,856,330 913,746 9,366,575 ------------ ------------ ------------ ------------ Total transactions in Fund shares .................. 3,374,160 $ 34,425,529 4,181,046 $ 42,618,665 ============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES At December 31, 2005 there were 5 Trustees, one of which is affiliated with the Manager and is not paid any fees. The total amount of Trustees' service and attendance fees paid during the six months ended December 31, 2005 was $40,833, to cover carrying out their responsibilities and attendance at regularly scheduled quarterly Board Meetings and meetings of the Independent Trustees held prior to each quarterly Board Meeting. When additional or special meetings are held, the meeting fees are paid to those Trustees in attendance. Trustees are reimbursed for their expenses such as travel, accommodations, and meals incurred in connection with attendance at Board Meetings and the Annual Meeting of Shareholders. For the six months ended December 31, 2005, such meeting-related expenses amounted to $8,924. 9. SECURITIES TRADED ON A WHEN-ISSUED BASIS The Fund may purchase or sell securities on a when-issued basis. When-issued transactions arise when securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. Beginning on the date the Fund enters into a when-issued transaction, cash or other liquid securities are segregated in an amount equal to or greater than the amount of the when-issued transaction. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities. 10. INCOME TAX INFORMATION AND DISTRIBUTIONS The Fund declares dividends daily from net investment income and makes payments monthly in additional shares at the net asset value per share, in cash, or in a combination of both, at the shareholder's option. Net realized capital gains, if any, are distributed annually and are taxable. The Fund intends to maintain, to the maximum extent possible, the tax-exempt status of interest payments received from portfolio municipal securities in order to allow dividends paid to shareholders from net investment income to be exempt from regular Federal and State of Utah income taxes. However, due to differences between financial statement reporting and Federal income tax reporting requirements, distributions made by the Fund may not be the same as the Fund's net investment income, and/or net realized securities gains. In this regard, the Fund credited distributions in excess of net investment income in the amount of $384,086 and debited additional paid-in capital in the amount of $384,086 at June 30, 2005. This adjustment had no impact on the Fund's aggregate net assets at June 30, 2005. Further, a small portion of the dividends may, under some circumstances, be subject to taxes at ordinary income rates. For certain shareholders some dividend income may, under some circumstances, be subject to the alternative minimum tax. At June 30, 2005, the Fund had a capital loss carryover of $2,740,548 of which $11,866 expires on June 30, 2008, $2,459,398 expires on June 30, 2009, $15,469 expires on June 30, 2011, and $253,815 expires on June 30, 2012. This carryover is available to offset future net realized gains on securities transactions to the extent provided for in the Internal Revenue Code. To the extent that this loss is used to offset future realized capital gains, it is probable that the gains so offset will not be distributed. The tax character of distributions: Year Ended June 30, 2005 2004 ---------- ---------- Net tax-exempt income $5,604,701 $4,758,187 Ordinary income 385,843 302,404 ---------- ---------- $5,990,544 $5,060,591 ========== ========== As of June 30, 2005, the components of distributable earnings on a tax basis were as follows: Accumulated net realized loss $(2,740,549) Unrealized appreciation 6,376,398 ----------- $ 3,635,849 =========== At June 30, 2005, the difference between book basis and tax basis unrealized appreciation was attributable primarily to the treatment of accretion of discounts and amortization of premiums. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A -------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 12/31/05 -------------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 ----------- -------- -------- -------- -------- -------- Net asset value, beginning of period ........... $ 10.26 $ 9.91 $ 10.31 $ 9.85 $ 9.65 $ 9.35 -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income ...................... 0.20+ 0.41+ 0.43++ 0.44+ 0.46+ 0.48+ Net gain (loss) on securities (both realized and unrealized) ......................... (0.14) 0.38 (0.37) 0.48 0.22 0.32 -------- -------- -------- -------- -------- -------- Total from investment operations ........... 0.06 0.79 0.06 0.92 0.68 0.80 -------- -------- -------- -------- -------- -------- Less distributions (note 10): Dividends from net investment income ....... (0.21) (0.44) (0.46) (0.46) (0.48) (0.50) Distributions from capital gains ........... -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Total distributions ........................ (0.21) (0.44) (0.46) (0.46) (0.48) (0.50) -------- -------- -------- -------- -------- -------- Net asset value, end of period ................. $ 10.11 $ 10.26 $ 9.91 $ 10.31 $ 9.85 $ 9.65 ======== ======== ======== ======== ======== ======== Total return (not reflecting sales charge) ..... 0.59%* 8.06% 0.54% 9.55% 7.22% 8.72% Ratios/supplemental data Net assets, end of period (in thousands) ... $137,752 $126,091 $ 94,103 $ 85,329 $ 55,957 $ 34,321 Ratio of expenses to average net assets .... 0.67%** 0.59% 0.48% 0.43% 0.46% 0.48% Ratio of net investment income to average net assets .............................. 3.81%** 3.98% 4.19% 4.31% 4.65% 4.95% Portfolio turnover rate .................... 7.33%* 8.68% 15.98% 6.43% 27.42% 44.17% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets .... 0.94%** 0.97% 0.94% 1.02% 1.00% 1.11% Ratio of net investment income to average net assets .............................. 3.54%** 3.60% 3.73% 3.72% 4.11% 4.32% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets .... 0.62%** 0.56% 0.47% 0.42% 0.40% 0.39%
---------- Note: Effective August 1, 2001, Aquila Management Corporation became the Fund's Investment Adviser replacing Zions First National Bank which was the sub-adviser. Effective January 1, 2004, Aquila Management Corporation, founder of the Fund, assigned its Advisory and Administration Agreement to its wholly-owned subsidiary, Aquila Investment Management LLC. + Per share amounts have been calculated using the monthly average shares method. ++ Per share amount calculated using the daily average shares method. * Not annualized. ** Annualized. See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period
CLASS C -------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 12/31/05 ------------------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period ....... $ 10.26 $ 9.91 $ 10.30 $ 9.85 $ 9.64 $ 9.35 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income .................. 0.16+ 0.32+ 0.34++ 0.34+ 0.37+ 0.38+ Net gain (loss) on securities (both realized and unrealized) ............ (0.15) 0.38 (0.36) 0.48 0.23 (0.31) ------- ------- ------- ------- ------- ------- Total from investment operations ........... 0.01 0.70 (0.02) 0.82 0.60 0.69 ------- ------- ------- ------- ------- ------- Less distributions (note 10): Dividends from net investment income ... (0.17) (0.35) (0.37) (0.37) (0.39) (0.40) Distributions from capital gains ....... -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Total distributions .................... (0.17) (0.35) (0.37) (0.37) (0.39) (0.40) ------- ------- ------- ------- ------- ------- Net asset value, end of period ............. $ 10.10 $ 10.26 $ 9.91 $ 10.30 $ 9.85 $ 9.64 ======= ======= ======= ======= ======= ======= Total return (not reflecting sales charge) . 0.00%* 7.20% (0.16)% 8.48% 7.86% 7.52% Ratios/supplemental data Net assets, end of period (in thousands) $32,058 $27,581 $21,961 $16,420 $ 6,694 $ 1,874 Ratio of expenses to average net assets 1.46%** 1.39% 1.27% 1.31% 1.84% 1.47% Ratio of net investment income to average net assets .................. 3.01%** 3.18% 3.38% 3.39% 3.72% 3.93% Portfolio turnover rate ................ 7.33%* 8.68% 15.98% 6.43% 27.42% 44.17% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets 1.74%** 1.77% 1.74% 1.81% 1.78% 1.89% Ratio of net investment income to average net assets .................. 2.73%** 2.80% 2.93% 2.89% 3.28% 3.51% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets 1.42%** 1.36% 1.27% 1.30% 1.28% 1.39% CLASS Y ------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 12/31/05 ------------------------------------------------------------ (UNAUDITED) 2005 2004 2003 2002 2001 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period ....... $ 10.29 $ 9.94 $ 10.34 $ 9.89 $ 9.68 $ 9.36 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income .................. 0.21+ 0.42+ 0.44++ 0.42+ 0.50+ 0.49+ Net gain (loss) on securities (both realized and unrealized) ............ (0.14) 0.39 (0.36) 0.50 0.20 0.34 ------- ------- ------- ------- ------- ------- Total from investment operations ........... 0.07 0.81 0.08 0.92 0.70 0.83 ------- ------- ------- ------- ------- ------- Less distributions (note 10): Dividends from net investment income ... (0.22) (0.46) (0.48) (0.47) (0.49) (0.51) Distributions from capital gains ....... -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Total distributions .................... (0.22) (0.46) (0.48) (0.47) (0.49) (0.51) ------- ------- ------- ------- ------- ------- Net asset value, end of period ............. $ 10.14 $ 10.29 $ 9.94 $ 10.34 $ 9.89 $ 9.68 ======= ======= ======= ======= ======= ======= Total return (not reflecting sales charge) . 0.69%* 8.27% 0.76% 9.55% 7.41% 9.05% Ratios/supplemental data Net assets, end of period (in thousands) $33,314 $17,928 $ 8,233 $ 883 $ 30 $ 5 Ratio of expenses to average net assets 0.46%** 0.39% 0.28% 0.30% 0.36% 0.42% Ratio of net investment income to average net assets .................. 4.01%** 4.15% 4.41% 4.17% 4.75% 4.83% Portfolio turnover rate ................ 7.33%* 8.68% 15.98% 6.43% 27.42% 44.17% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets 0.74%** 0.77% 0.74% 0.78% 0.80% 0.64% Ratio of net investment income to average net assets .................. 3.73%** 3.78% 3.95% 3.70% 4.31% 4.62% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.42%** 0.37% 0.27% 0.29% 0.30% 0.36%
Note: Effective August 1, 2001, Aquila Management Corporation became the Fund's Investment Adviser replacing Zions First National Bank which was the sub-adviser. Effective January 1, 2004, Aquila Management Corporation, founder of the Fund, assigned its Advisory and Administration Agreement to its wholly-owned subsidiary, Aquila Investment Management LLC. + Per share amounts have been calculated using the monthly average shares method. ++ Per share amount calculated using the daily average shares method. * Not annualized. ** Annualized. See accompanying notes to financial statements. -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end sales charges with respect to Class A shares or contingent deferred sales charges ("CDSC") with respect to Class C shares; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The tables below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The tables below are based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005. ACTUAL EXPENSES This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 ACTUAL TOTAL RETURN BEGINNING ENDING EXPENSES WITHOUT ACCOUNT ACCOUNT PAID DURING SALES CHARGES(1) VALUE VALUE THE PERIOD(2) -------------------------------------------------------------------------------- Class A 0.59% $1,000.00 $1,005.90 $ 3.13 -------------------------------------------------------------------------------- Class C 0.00% $1,000.00 $1,000.00 $ 7.16 -------------------------------------------------------------------------------- Class Y 0.69% $1,000.00 $1,006.90 $ 2.12 -------------------------------------------------------------------------------- (1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES. TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR. (2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.62%, 1.42% AND 0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, with respect to Class A shares. The example does not reflect the deduction of contingent deferred sales charges ("CDSC") with respect to Class C shares. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transaction costs were included, your costs would have been higher. For The Six Months Ended December 31, 2005 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD(1) ------------------------------------------------------------------------------- Class A 5.00% $1,000.00 $1,022.05 $3.16 ------------------------------------------------------------------------------- Class C 5.00% $1,000.00 $1,018.05 $7.22 ------------------------------------------------------------------------------- Class Y 5.00% $1,000.00 $1,023.09 $2.14 ------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.62%, 1.42% AND 0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). -------------------------------------------------------------------------------- SHAREHOLDER MEETING RESULTS (UNAUDITED) The Annual Meeting of Shareholders of Tax-Free Fund For Utah (the "Fund") was held on September 24, 2005. The holders of shares representing 81% of the total net asset value of the shares entitled to vote were present in person or by proxy. At the meeting, the following matters were voted upon and approved by the shareholders (the resulting votes are presented below). 1. To elect Trustees. DOLLAR AMOUNT OF VOTES ---------------------------------- TRUSTEE FOR WITHHELD ------- --- -------- Gary C. Cornia $137,194,397 $ 790,636 Diana P. Herrmann $137,623,177 $ 361,845 Lyle W. Hillyard $137,187,031 $ 798,001 John C. Lucking $137,744,464 $ 240,569 Anne J. Mills $137,615,413 $ 369,620 -------------------------------------------------------------------------------- INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquilasm Group of Funds produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent the entire list of portfolio securities of your Fund twice a year in the semi-annual and annual reports you receive. Additionally, we prepare, and have available, portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your Fund's portfolio other than in your shareholder reports, please check our website http://www.aquilafunds.com or call us at 1-800-437-1020. The Fund additionally files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the SEC website at http://www.sec.gov. You may also review or, for a fee, copy the forms at the SEC's Public Reference Room in Washington, DC or by calling 800-SEC-0330. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PROXY VOTING RECORD (UNAUDITED) The Fund does not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2005 with respect to which the Fund was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) TAX-FREE FUND FOR UTAH (THE "FUND"): Renewal of the Advisory and Administration Agreement Renewal until December 31, 2006 of the Advisory and Administration Agreement (the "Advisory Agreement") between the Fund and the Manager was approved by the Board of Trustees and the independent Trustees in December, 2005. At a meeting called and held for that purpose at which a majority of the independent Trustees were present in person, the following materials were considered: o Copies of the agreements to be renewed; o A term sheet describing the material terms of the agreements; o The Annual Report of the Fund for the year ended June 30, 2005; o A report, prepared by the Manager and provided to the Trustees in advance of the meeting for the Trustees review, containing data about the performance of the Fund, data about its fees, expenses and purchases and redemptions together with comparisons of such data with similar data about other comparable funds, as well as data as to the profitability of the Manager; and o Quarterly materials reviewed at prior meetings on the Fund's performance, operations, portfolio and compliance. The Trustees reviewed materials relevant to, and considered, the factors set forth below, and as to each agreement reached the conclusions described. THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE MANAGER. The Manager has provided local management of the Fund's portfolio, employing Mr. Thomas S. Albright and Mr. Kimball Young as co-portfolio managers for the Fund. It had also provided facilities for credit analysis of the Fund's portfolio securities. Mr. Young, based in Salt Lake City, has extensive municipal bond underwriting experience and has provided local information regarding specific holdings in the Fund's portfolio. Mr. Albright has over 25 years of investment management experience. The portfolio managers have also been available to and have met with the brokerage and financial planner community and with investors and prospective investors to provide them with information generally about the Fund's portfolio, with which to assess the Fund as an investment vehicle for residents of Utah in light of prevailing interest rates and local economic conditions. The Board considered that the Manager had provided all services the Board deemed necessary or appropriate, including the specific services that the Board has determined are required for the Fund, given that its purpose is to provide shareholders with as high a level of current income exempt from Utah state and regular Federal income taxes as is consistent with preservation of capital. The Board considered that the Manager had established and maintained a strong culture of ethical conduct and regulatory compliance, and had not been subject to the kinds of regulatory and legal difficulties recently affecting a significant number of other investment advisers. The Board concluded that a commendable quality of services was provided and that the Fund would be well served if they continued. Evaluation of this factor weighed in favor of renewal of the Advisory Agreement. THE INVESTMENT PERFORMANCE OF THE FUND AND THE MANAGER. The Board determined it appropriate to consider the Fund's performance. For the one, five and ten-year periods ended September 30, 2005 the Fund's average annual rate of return for Class A Shares was 3.79%, 6.23% and 5.46%, respectively. Performance for the other classes was similar. The Board reviewed each aspect of the Fund's performance and compared its performance with that of its competitors, national averages and benchmark index. It was noted that the materials provided by the Manager indicated that the Fund had investment performance that exceeded or was comparable to that of its peers for one-, five- and ten-year periods, with lower rates of return explained by the Fund's generally higher-quality portfolio and generally shorter average maturities. The Board considered these results to be consistent with the purposes of the Fund. The Board concluded that the performance of the Fund, in light of market conditions, was satisfactory. Evaluation of this factor indicated to the Trustees that renewal of the Advisory Agreement would be appropriate. THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE MANAGER AND ITS AFFILIATES AND FROM THE RELATIONSHIP WITH THE FUND. The information provided in connection with renewal contained expense data for the Fund and its competitors as well as data for all single-state tax-free municipal bond funds nationwide, including data for all such front-end load funds of a comparable asset size. The materials also showed the profitability to the Manager of its services to the Fund. The Board noted that the Manager was currently waiving a portion of its fees and had been since the Fund's inception. For the year ended June 30, 2005, the Fund incurred management fees of $720,074 of which $585,160 was voluntarily waived. Additionally, it was noted that the Manager had contractually undertaken to waive fees and/or reimburse Fund expenses during the period July 1, 2005 through June 30, 2006 so that total Fund expenses would not exceed 0.86 of 1% for Class A Shares, 1.55 of 1% for Class C Shares and 0.66 of 1% for Class Y Shares. The Manager had indicated that it intended to continue waiving fees as necessary in order that the Fund would remain competitive. The Board compared the expense and fee data with respect to the Fund to similar data about other funds that it found to be relevant. The Board concluded that the expenses of the Fund and the fees paid were similar to and were reasonable as compared to those being paid by single-state tax-free municipal bond funds nationwide, and by the Fund's competitors. The Board considered that the foregoing indicated the appropriateness of the costs of the services to the Fund, which was being well managed as indicated by the factors considered previously. The Board further concluded that the profitability to the Manager and the Distributor did not argue against approval of the fees to be paid under the Advisory Agreement. THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUND GROWS. Data provided to the Trustees showed that the Fund's asset size had been increasing in recent years. The Trustees also noted that the materials indicated that the Fund's fees were already lower than those of its peers, including those with breakpoints. Additionally, the Trustees noted that the Manager was currently waiving a substantial portion of its fees. Evaluation of these factors indicated to the Board that the Advisory Agreement should be renewed without addition of breakpoints at this time. BENEFITS DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES FROM THE RELATIONSHIPS WITH THE FUND. The Board observed that, as is generally true of most fund complexes, the Manager and its affiliates, by providing services to a number of funds or other investment clients including the Fund, were able to spread costs as they would otherwise be unable to do. The Board noted that while that produces efficiencies and increased profitability for the Manager and its affiliates, it also makes their services available to the Fund at favorable levels of quality and cost which are more advantageous to the Fund than would otherwise have been possible. (THIS PAGE INTENTIONALLY LEFT BLANK) (THIS PAGE INTENTIONALLY LEFT BLANK) FOUNDERS Lacy B. Herrmann, Chairman Emeritus AQUILA MANAGEMENT CORPORATION MANAGER AQUILA investment MANAGEMENT LLC 380 Madison Avenue, Suite 2300 New York, New York 10017 BOARD OF TRUSTEES Gary C. Cornia, Chair Diana P. Herrmann Lyle W. Hillyard John C. Lucking Anne J. Mills OFFICERS Diana P. Herrmann, President Jerry G. McGrew, Senior Vice President Kimball L. Young, Senior Vice President and Co-Portfolio Manager Thomas S. Albright, Senior Vice President and Co-Portfolio Manager M. Kayleen Willis, Vice President Robert W. Anderson, Chief Compliance Officer Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 CUSTODIAN BANK ONE TRUST COMPANY, N.A. 1111 Polaris Parkway Columbus, Ohio 43240 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC INC. 101 Sabin Street Pawtuckett, RI 02860 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker LLP 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Further information is contained in the Prospectus, which must precede or accompany this report. ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS. (a)(1) Not applicable. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAX-FREE FUND FOR UTAH By: /s/ Diana P. Herrmann - - --------------------------------- President and Trustee March 9, 2006 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Chief Financial Officer and Treasurer March 9, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 And the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Diana P. Herrmann - - --------------------------------- Diana P. Herrmann President and Trustee March 9, 2006 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer March 9, 2006 TAX-FREE FUND FOR UTAH EXHIBIT INDEX (a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940.