-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FTzz509IF1losn3bDUj2emNrVy1UOA7cIqvdEJciyem8Ny5//mlSssjQ/NqjAcuB aAt/KoYOfagtPU0fPDFXIA== 0000872032-08-000020.txt : 20080908 0000872032-08-000020.hdr.sgml : 20080908 20080908102730 ACCESSION NUMBER: 0000872032-08-000020 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080908 DATE AS OF CHANGE: 20080908 EFFECTIVENESS DATE: 20080908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAX-FREE FUND FOR UTAH CENTRAL INDEX KEY: 0000872032 IRS NUMBER: 133673542 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06239 FILM NUMBER: 081059988 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE STREET 2: SUITE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVE., STE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: TAX FREE FUND FOR UTAH DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PLEIADES TAX FREE FUND DATE OF NAME CHANGE: 19920514 0000872032 S000009140 TAX-FREE FUND FOR UTAH C000024856 TAX-FREE FUND FOR UTAH CLASS A UTAHX C000024857 TAX-FREE FUND FOR UTAH CLASS C UTACX C000024858 TAX-FREE FUND FOR UTAH CLASS I UTAIX C000024859 TAX-FREE FUND FOR UTAH CLASS Y UTAYX N-CSR 1 tffuncsr.txt TAX-FREE FUND FOR UTAH 6/30/08 NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6239 Tax-Free Fund for Utah (Exact name of Registrant as specified in charter) 380 Madison Avenue New York, New York 10017 (Address of principal executive offices) (Zip code) Joseph P. DiMaggio 380 Madison Avenue New York, New York 10017 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 697-6666 Date of fiscal year end: 6/30 Date of reporting period: 06/30/08 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT June 30, 2008 [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](SM) TAX-FREE FUND FOR UTAH A TAX-FREE INCOME INVESTMENT [LOGO OF THE AQUILA GROUP OF FUNDS: ONE OF THE AN EAGLE'S HEAD] AQUILA GROUP OF FUNDS(SM) [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](SM) SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS TAX-FREE FUND FOR UTAH "A MORE PREDICTABLE RIDE" August, 2008 Dear Fellow Shareholder: If you've read any of our previous shareholder communications, you know that we try to skip the financial jargon and speak in terms with which we believe the average person can relate and understand. The recent movements in the stock market got us to thinking about how risk tolerance mirrors choosing rides at an amusement park. In our younger days, we always enjoyed the thrill of roller coasters. If you're like us, you can vividly remember holding your breath with anticipation as you climbed and climbed to the top, never knowing just when you would finally get there. Then, just as you began to relax, the roller coaster would begin its decline. The ride to the bottom seemed like it would never end as you laughed, screamed, and implored the heavens to let you make it through alive. Much of what has transpired in the stock market over the last year or so has reminded us of our younger roller coaster riding days. Of course, the ride to the "top" of the market is always exhilarating. But, as we've matured, we've come to realize that roller coasters have lost some of their allure. We no longer find adrenaline-pumping adventures so attractive. While you can be brought to dizzying heights, some dramatic lows are also inevitable. For those of us who don't have the stomach for this type of volatility, especially with our investment money, a more stable alternative may be the ticket. We like to think of investing in a tax-free municipal bond fund, such as Tax-Free Fund for Utah, as more like riding the swings at a county fair. There is definitely some up and down movement, but you usually don't go quite that far. In general, you know what to expect next and the ride is fairly pleasant. NOT A PART OF THE ANNUAL REPORT Of course, we believe that there is a place in everyone's life for roller coasters. But, as one matures, it might be prudent to have the more stable predictable swings begin to play a larger role. After all, what good are highs if they are often followed by lows? Sincerely, [PHOTO OMITTED] /s/ Lacy B. Herrmann /s/ Diana P. Herrmann Lacy B. Herrmann Diana P. Herrmann Founder and Chairman Emeritus President NOT A PART OF THE ANNUAL REPORT [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](SM) SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS TAX-FREE FUND FOR UTAH ANNUAL REPORT MANAGEMENT DISCUSSION Over the past twelve months, the financial markets have been subjected to some of the most tumultuous events to ever shake the foundations of our traditionally "unshakable" economy. Among these events are: the screeching halt in new home construction and sales of existing homes brought about by the total collapse of the sub-prime mortgage sector; the loss of confidence in (and loss of AAA ratings of) most of the monoline municipal bond insurers; the evaporation of liquidity at financial intermediaries as a result of failed auction rate security rollovers, as insurers lost their coveted AAA ratings; not to mention all-time record oil prices brought about by increased international consumption - - including India and China - as well as rampant price speculation. Whether or not a recession will develop from all this is still to be determined. One thing is for sure, however, things are not very pleasant right now. To date, we have weathered the storm. That's not to say we haven't suffered a few bumps and bruises along the way - but we are still "alive and kicking" and there is light on the horizon. The Federal Reserve (the "Fed") has acted swiftly and decisively in addressing these various threats to our prosperity. Last year, at this time, the target for the overnight federal funds rate stood at 5.25%. Today, we are at 2.00%. Billions of dollars of reserves have been made available to lenders and financial intermediaries in order to help maintain an orderly, efficient marketplace. Interest rates have drifted up modestly since a year ago, but we are within sight of where we were twelve months ago. The Fed's job of containing inflation has been anything but easy; with both the Consumer Price Index-CPI and the Producer Price Index-PPI both well outside the Fed's tolerance levels (annualized increases of 5.0% and 9.2%, respectively, as of July 2008). We believe we can expect continued vigilance on the part of the Fed. As we head into the second half of 2008, we think it is likely that the Fed will maintain the current target for short-term interest rates. The unemployment rate of 5.5% is the highest rate reported in many years. Other measures of economic progress - retail sales, housing starts, and industrial production are all well off their highs of the past 12 months - clear signs of a faltering economy. Historically, as we see slowing on the economic front, inflation should also show signs of easing. While this cycle is a bit different because of record high energy prices, it is still likely that we will see some growth in the economy this year. Tax-Free Fund For Utah experienced a modest decline in its Class A share value (Net Asset Value) of $0.18 - approximately 1.82% - for the 12-month period ending June 30, 2008. The Class A share value of the Fund was $9.73 on June 30, 2008 - down from $9.91 on June 30, 2007. The yield of a typical AA-rated general obligation bond with a 15 year maturity rose to 4.63% from 4.47% over the same period. The distribution yield on Tax-Free Fund For Utah Class A shares was 4.13% on June 30, 2008. Assuming a 28% federal tax rate, this equates to a taxable equivalent yield of 5.74%. Using the maximum federal tax rate of 35%, the taxable equivalent yield was 6.35%. MANAGEMENT DISCUSSION (CONTINUED) Equity returns for the 12 months ended June 30, 2008 reversed their previous strong showing, providing disappointing performance from last year: the Dow Jones Industrial Average was down 13.21%; the S & P 500 Index was off 13.05%; and the NASDAQ Composite Index was down 11.13%. Tax-Free Fund For Utah had a positive rate of return of 2.45% for the 12 months ended June 30, 2008. Historically, as the economy has grown, commodity prices and interest rates rise. Even in this slow economic period, we are seeing longer-term interest rates drift up slightly. We continue to monitor any changes in the market and position Tax-Free Fund For Utah's portfolio accordingly. To address the concerns raised by an increase in the overall level of interest rates, we take great care in the selection of the individual bonds purchased for the Fund. We will continue to add high quality, intermediate maturity Utah and reciprocal state municipal bonds that best meet our demanding standards. We will also seek out "value-added" non-rated and private placement opportunities that meet our stringent credit requirements and offer above-market yields. The investment objective of Tax-Free Fund For Utah is to provide as high a level of double tax-exempt current income as is consistent with the preservation of capital. We believe this objective continues to be successfully addressed by our adherence to a discipline of solid fundamental, conservative portfolio management ideals. The Fund continues to maintain an average quality rating of "AA", with approximately 68% of the portfolio rated "AA" and "AAA". The Fund's laddered maturity structure helps us manage price volatility. The portfolio has an average life of approximately 14.4 years and a modified duration of 8.19 years. We seek to maintain a well-diversified portfolio, which currently consists of 351 different issues, all of which are 100% exempt from Federal and Utah state income taxes. With the national and local economies continuing to show improvement, we will remain vigilant and do whatever is necessary as we strive to continue to meet the Fund's investment objective. We intend to "stay the course" and manage the portfolio by taking advantage of opportunities in the Utah marketplace that are consistent with the high standards of the Fund. PERFORMANCE REPORT The following graph illustrates the value of $10,000 invested in the Class A shares of Tax-Free Fund For Utah for the 10-year period ended June 30, 2008 as compared with the Lehman Brothers Quality Intermediate Municipal Bond Index and the Consumer Price Index (a cost of living index). The performance of each of the other classes is not shown in the graph but is included in the table below. It should be noted that the Lehman Index does not include any operating expenses nor sales charges and being nationally oriented, does not reflect state specific bond market performance. [Graphic of a line chart with the following information:]
TFFU TFFU Lehman Brothers Cost of Fund Class A Shares Fund Class A Shares Quality Intermediate Living Index no sales charge with sales charge Municipal Bond Index 6/98 10,000 10,000 9,600 10,000 6/99 10,196 10,080 9,674 10,303 6/00 10,577 10,134 9,725 10,718 6/01 10,920 11,076 10,629 11,665 6/02 11,037 11,849 11,372 12,477 6/03 11,270 13,044 12,518 13,452 6/04 11,638 13,025 12,500 13,499 6/05 11,933 14,104 13,536 14,226 6/06 12,448 14,120 13,551 14,274 6/07 12,782 14,754 14,160 14,871 6/08 13,424 15,171 14,560 15,675
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 2008 ---------------------------------------------------- SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION --------- --------- --------- --------- Class A (commenced operations on 7/24/92) With Sales Charge ...................... (1.62)% 2.31% 3.83% 4.94% Without Sales Charge ................... 2.45 3.15 4.26 5.21 Class C (commenced operations on 5/21/96) With CDSC .............................. 0.52 2.33 3.34 3.99 Without CDSC ........................... 1.53 2.33 3.34 3.99 Class Y (commenced operations on 5/21/96) No Sales Charge ........................ 2.67 3.36 4.46 5.11 Lehman Index .............................. 5.40 3.11 4.60 5.22* (Class A) 4.84** (Class C&Y)
Total return figures shown for the Fund reflect any change in price and assume all distributions within the period were invested in additional shares. Returns for Class A shares are calculated with and without the effect of the initial 4% maximum sales charge. Returns for Class C shares are calculated with and without the effect of the 1% contingent deferred sales charge (CDSC), imposed on redemptions made within the first 12 months after purchase. Class Y shares are sold without any sales charge. The rates of return will vary and the principal value of an investment will fluctuate with market conditions. Shares, if redeemed, may be worth more or less than their original cost. A portion of each class's income may be subject to Federal and state income taxes and/or the Federal alternative minimum tax. Past performance is not predictive of future investment results. * From commencement of operations on 7/24/92. ** From commencement of operations on 5/21/96. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of Tax-Free Fund For Utah: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Tax-Free Fund For Utah as of June 30, 2008 and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the years in the two year period ended June 30, 2005 have been audited by other auditors, whose report dated August 12, 2005 expressed an unqualified opinion on such financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2008, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Tax-Free Fund For Utah as of June 30, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER LLP Philadelphia, Pennsylvania August 27, 2008 TAX-FREE FUND FOR UTAH SCHEDULE OF INVESTMENTS JUNE 30, 2008
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (19.6%) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- CITY, COUNTY AND STATE (9.0%) Alamo, Texas Community College District $ 595,000 4.375%, 02/15/25 MBIA Insured ........................... Aa2/AA $ 574,175 Anderson, Indiana San District 505,000 4.600%, 07/15/23 AMBAC Insured .......................... Aa3/AA 499,591 Brian Head, Utah 405,000 6.500%, 03/15/24 (pre-refunded) ......................... NR/NR* 430,523 Cedar City, Utah Special Improvement District Assessment 235,000 5.050%, 09/01/10 ........................................ NR/NR* 236,274 215,000 5.200%, 09/01/11 ........................................ NR/NR* 216,415 Cedar Park, Texas 835,000 4.500%, 02/15/22 MBIA Insured ........................... A1/AA 833,280 Coral Canyon, Utah Special Service District 140,000 4.850%, 07/15/17 ........................................ NR/NR* 127,889 580,000 5.700%, 07/15/18 ........................................ NR/NR* 566,155 Dawson County, Texas Hospital District 555,000 4.375%, 02/15/24 AMBAC Insured .......................... Aa3/AA 536,369 Denton County, Texas 700,000 4.500%, 07/15/24 MBIA Insured ........................... Aa1/AA+ 693,679 400,000 4.500%, 07/15/25 MBIA Insured ........................... Aa1/AA+ 391,604 1,500,000 4.250%, 07/15/27 MBIA Insured ........................... Aa1/AA+ 1,379,835 Harris County, Texas Unlimited Tax 300,000 4.500%, 10/01/23 ........................................ Aa1/AA+ 299,982 Harris County, Texas Utility District #268 905,000 4.375%, 09/01/27 Radian Insured ......................... A3/A 782,291 Hurricane, Utah 125,000 5.400%, 11/01/09 Radian Insured ......................... A3/A 129,135 King County, Washington Unlimited Tax 1,000,000 4.500%, 12/01/25 FSA Insured ............................ Aaa/AAA 995,180 Laredo, Texas 300,000 4.250%, 08/15/21 AMBAC Insured .......................... Aa3/AA 293,781 500,000 4.500%, 02/15/24 AMBAC Insured .......................... Aa3/AA 495,550
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- CITY, COUNTY AND STATE (CONTINUED) McKinney, Texas $ 1,700,000 4.500%, 08/15/23 XLCA Insured ........................... Aa2/AA+ $ 1,676,081 1,375,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa2/AA+ 1,416,167 695,000 4.375%, 08/15/25 MBIA Insured ........................... Aa2/AA+ 670,195 Mesquite, Texas 510,000 4.625%, 02/15/22 FSA Insured ............................ Aaa/AAA 515,916 San Antonio, Texas 125,000 4.750%, 02/01/24 FSA Insured ............................ Aaa/AAA 126,121 San Patricio County, Texas 450,000 4.600%, 04/01/25 AMBAC Insured .......................... Aa3/NR 443,255 Texas State 415,000 4.500%, 08/01/22 ........................................ Aa1/AA 412,846 Waco, Texas 2,560,000 4.500%, 02/01/24 MBIA Insured ........................... Aa3/AA 2,523,264 Washington County, Utah 1,250,000 5.000%, 10/01/22 MBIA Insured ........................... A1/NR 1,274,788 Washington State 1,815,000 4.500%, 01/01/22 MBIA Insured ........................... Aa1/AA+ 1,811,352 705,000 4.500%, 07/01/23 FSA Insured ............................ Aaa/AAA 702,716 Williamson County, Texas 460,000 4.500%, 02/15/26 FSA Insured ............................ Aaa/AAA 447,428 --------------- Total City, County and State ............................ 21,501,837 --------------- SCHOOL DISTRICT (10.6%) Borger, Texas Independent School District 400,000 4.500%, 02/15/24 ........................................ NR/AAA 396,440 500,000 4.500%, 02/15/25 ........................................ NR/AAA 489,660 Canutillo, Texas Independent School District 500,000 4.500%, 08/15/25 ........................................ NR/AAA 489,460 Clint, Texas Independent School District 265,000 4.250%, 02/15/28 ........................................ NR/AAA 241,370 Dallas, Texas Independent School District 2,500,000 5.000%, 08/15/29 ........................................ Aaa/AAA 2,542,000
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- SCHOOL DISTRICT (CONTINUED) Dripping Springs, Texas Independent School District $ 725,000 4.375%, 08/15/22 ........................................ Aaa/AAA $ 721,571 Eagle Mountain & Saginaw, Texas Independent School District 300,000 4.750%, 08/15/21 ........................................ Aaa/AAA 307,080 525,000 4.750%, 08/15/23 ........................................ Aaa/AAA 533,531 Freemont County, Wyoming School District #14 355,000 4.500%, 06/15/26 ........................................ NR/BBB 346,026 Frisco, Texas Independent School District 1,260,000 5.000%, 07/15/26 ........................................ Aaa/NR 1,284,280 Galena Park, Texas Independent School District 295,000 4.625%, 08/15/25 ........................................ Aaa/NR 293,088 Harrisburg, South Dakota Independent School District No. 41-2 1,370,000 4.500%, 01/15/24 FSA Insured ............................ Aaa/NR 1,370,384 Jacksboro, Texas Independent School District 815,000 4.700%, 02/15/23 ........................................ NR/AAA 827,054 La Feria, Texas Independent School District 210,000 4.400%, 02/15/24 ........................................ Aaa/NR 204,662 Lancaster, Texas School District 300,000 4.375%, 02/15/22 ........................................ Aaa/AAA 297,102 Lindale, Texas Independent School District 440,000 4.250%, 02/15/21 ........................................ NR/AAA 433,224 1,000,000 4.250%, 02/15/22 ........................................ NR/AAA 977,700 445,000 4.375%, 02/15/23 ........................................ NR/AAA 437,666 Lovejoy, Texas Independent School District 200,000 4.500%, 02/15/24 ........................................ Aaa/AAA 198,220 Muleshoe, Texas Independent School District 380,000 4.500%, 02/15/22 ........................................ NR/AAA 371,655 250,000 4.500%,0 2/15/23 ........................................ NR/AAA 242,685 200,000 4.500%, 02/15/24 ........................................ NR/AAA 193,024 220,000 4.500%, 02/15/25 ........................................ NR/AAA 211,759 Navasota, Texas Independent School District 475,000 5.000%, 08/15/23 FGIC Insured ........................... A3/NR 479,208
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- SCHOOL DISTRICT (CONTINUED) North Summit County, Utah School District $ 760,000 5.000%, 02/01/23 ........................................ Aaa/NR $ 788,166 800,000 5.000%, 02/01/24 ........................................ Aaa/NR 826,616 Prosper, Texas Independent School District 395,000 4.125%, 08/15/21 ........................................ NR/AAA 383,861 Southern, Texas Independent School District 910,000 4.500%, 02/01/26 ........................................ Aaa/AAA 885,175 Spring, Texas Independent School District 300,000 4.750%, 08/15/23 ........................................ Aaa/AAA 304,338 1,400,000 4.500%, 08/15/27 ........................................ Aaa/AAA 1,342,698 Tooele County, Utah School District 670,000 4.000%, 06/01/20 ........................................ Aaa/AAA 643,535 Van, Texas Independent School District 750,000 4.875%, 02/15/26 ........................................ Aaa/AAA 765,570 Washington County, Utah 440,000 5.000%, 10/01/18 XLCA Insured ........................... A1/NR 453,763 465,000 5.000%, 10/01/19 XLCA Insured ........................... A1/NR 477,760 490,000 5.000%, 10/01/20 XLCA Insured ........................... A1/NR 502,373 510,000 5.000%, 10/01/21 XLCA Insured ........................... A1/NR 521,205 535,000 5.000%, 10/01/22 XLCA Insured ........................... A1/NR 544,138 565,000 5.000%, 10/01/23 XLCA Insured ........................... A1/NR 572,515 320,000 5.000%, 10/01/24 XLCA Insured ........................... A1/NR 323,738 Washoe County, Nevada School District 200,000 4.625%, 06/01/23 FGIC Insured ........................... Aa3/AA 199,458 Waxahachie, Texas Independent School District 605,000 4.400%, 08/15/26 ........................................ Aaa/NR 580,861 630,000 4.400%, 08/15/27 ........................................ Aaa/NR 596,408 Yakima County, Washington School District #208 750,000 4.500%, 12/01/23 FSA Insured ............................ Aaa/NR 731,243 --------------- Total School District ................................... 25,332,270 --------------- Total General Obligation Bonds .......................... 46,834,107 ---------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (77.3%) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- AIRPORT (1.7%) Clark County, Nevada Passenger Facility Charge $ 255,000 4.750%, 07/01/22 MBIA Insured AMT ....................... Aa3/AA $ 253,197 Hillsborough County, Florida Aviation Authority 2,185,000 5.250%, 10/01/23 MBIA Insured AMT ....................... Aa3/AA 2,139,945 Miami-Dade County, Florida Aviation Revenue 1,675,000 5.000%, 10/01/28 Series C MBIA Insured AMT .............. A2/AA 1,550,430 --------------- Total Airport 3,943,572 --------------- COUNTY (0.4%) Davis County, Utah Lease Revenue DMV Project 78,000 5.400%, 11/01/17 ........................................ NR/NR* 77,992 83,000 5.450%, 11/01/18 ........................................ NR/NR* 82,540 87,000 5.500%, 11/01/19 ........................................ NR/NR* 85,769 92,000 5.550%, 11/01/20 ........................................ NR/NR* 90,065 97,000 5.600%, 11/01/21 ........................................ NR/NR* 94,244 103,000 5.650%, 11/01/22 ........................................ NR/NR* 99,270 108,000 5.700%, 11/01/23 ........................................ NR/NR* 103,831 115,000 5.700%, 11/01/24 ........................................ NR/NR* 109,250 121,000 5.750%, 11/01/25 ........................................ NR/NR* 114,274 128,000 5.750%, 11/01/26 ........................................ NR/NR* 119,607 --------------- Total County ............................................ 976,842 --------------- EDUCATION (17.2%) Broward County, Florida School Board COP 1,680,000 4.500%, 07/01/23 Series A FGIC Insured .................. A1/A+ 1,594,774 Carmel, Indiana 2002 School Building Corp. 1,235,000 4.300%, 01/15/23 FSA Insured ............................ NR/AAA 1,196,023 1,525,000 4.300%, 07/15/23 FSA Insured ............................ NR/AAA 1,475,727 Central Washington State University System Revenue 1,265,000 4.375%, 05/01/26 FSA Insured ............................ Aaa/NR 1,217,145 Florida State Board of Education Public Education 210,000 4.500%, 06/01/25 FSA Insured ............................ Aaa/AAA 203,935 Hillsborough County, Florida School Board COP 560,000 4.250%, 07/01/26 MBIA Insured ........................... Aa3/AA 502,090
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- EDUCATION (CONTINUED) Laredo, Texas Independent School District Public Facility Corp. $ 190,000 5.000%, 08/01/24 AMBAC Insured .......................... Aa3/AA $ 193,460 La Vernia, Texas Higher Education Finance Corp. Revenue 3,617,000 4.400%, 03/12/38 ........................................ NR/NR* 3,616,240 Nevada System Higher Education COP 1,000,000 5.000%, 07/01/25 AMBAC Insured .......................... Aa3/AA- 1,023,840 Salt Lake County, Utah Westminster College Project 435,000 4.750%, 10/01/21 ........................................ NR/BBB 398,756 1,200,000 5.000%, 10/01/22 ........................................ NR/BBB 1,128,492 1,250,000 5.000%, 10/01/25 ........................................ NR/BBB 1,144,412 2,025,000 5.125%, 10/01/28 ........................................ NR/BBB 1,838,234 Texas State College Student Loan Revenue 100,000 5.000%, 08/01/22 AMT .................................... Aa1/AA 100,741 Texas State University System Financing Revenue 655,000 4.375%, 03/15/23 FSA Insured ............................ Aaa/AAA 633,221 Tyler, Texas Independent School District 325,000 5.000%, 02/15/26 FSA Insured ............................ Aaa/AAA 331,770 University of Nevada (University Revenues) 190,000 4.500%, 07/01/24 MBIA Insured ........................... Aa3/AA 188,077 University of Utah COP 3,170,000 4.350%, 12/01/26 AMBAC Insured .......................... Aa3/AA 3,037,970 University of Utah (University Revenues) 770,000 5.000%, 04/01/18 MBIA Insured Aa3/AA 805,343 Utah County, Utah Charter School Revenue Lakeview Academy 315,000 5.350%, 07/15/17 Series A ............................... NR/NR* 301,509 Utah County, Utah Charter School Revenue Lincoln Academy 450,000 5.450%, 06/15/17 Series A ............................... NR/NR* 435,758 Utah County, Utah Charter School Revenue Renaissance Academy 340,000 5.350%, 07/15/17 Series A ............................... NR/NR* 324,523
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- EDUCATION (CONTINUED) Utah County, Utah School Facility $ 1,360,000 6.500%, 12/21/25 ........................................ NR/NR* $ 1,282,888 Utah State Board of Regents Auxiliary & Campus Facility 1,000,000 4.125%, 04/01/20 MBIA Insured ........................... Aa2/AA 946,390 Utah State Board of Regents Lease Revenue 410,000 4.500%, 05/01/20 AMBAC Insured .......................... Aa3/AA 412,399 425,000 4.500%, 05/01/21 AMBAC Insured .......................... Aa3/AA 425,531 450,000 4.625%, 05/01/22 AMBAC Insured .......................... Aa3/AA 452,174 120,000 4.650%, 05/01/23 AMBAC Insured .......................... Aa3/AA 120,384 Utah State Board of Regents Office Facility Revenue 1,885,000 4.500%, 08/01/18 MBIA Insured ........................... Aa3/AA 1,911,183 450,000 5.050%, 02/01/20 MBIA Insured ........................... A2/AA 460,319 360,000 5.125%, 02/01/22 MBIA Insured ........................... A2/AA 368,539 1,045,000 5.000%, 04/01/23 MBIA Insured ........................... Aa3/AA 1,070,759 500,000 5.000%, 05/01/26 MBIA Insured (pre-refunded) ............ Aa/AAA 541,325 Utah State Charter School Finance Authority Channing Hall Academy 500,000 5.750%, 07/15/22 Series A ............................... NR/NR* 469,300 Utah State Charter School Finance Authority Fast Forward Academy 3,127,000 6.500%, 11/15/37 144A ................................... NR/NR* 2,896,446 Utah State Charter School Finance Authority Noah Webster Academy 2,155,000 6.250%, 06/15/28 ........................................ NR/NR* 2,042,229 Utah State Charter School Finance Authority Ronald Wilson Reagan Academy 1,250,000 5.750%, 02/15/22 Series A ............................... NR/NR* 1,177,863 Utah State Charter School Finance Authority Summit Academy 1,500,000 5.125%, 06/15/17 ........................................ NR/BBB- 1,482,915 Washington State University Revenue 735,000 4.600%, 10/01/29 FSA Insured ............................ Aaa/AAA 707,923
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- EDUCATION (CONTINUED) Weber State University, Utah Student Facilities System $ 300,000 5.100%, 04/01/16 Series A (pre-refunded) ................ NR/AAA $ 318,942 425,000 5.250%, 04/01/19 Series A (pre-refunded) ................ NR/AAA 453,790 1,825,000 4.400%, 04/01/27 FSA Insured ............................ NR/AAA 1,772,659 --------------- Total Education ......................................... 41,005,998 --------------- HEALTHCARE (0.7%) Harris County, Texas Health Facility Development Corp. 145,000 5.000%, 11/15/28 AMBAC Insured .......................... Aa3/AAA 145,505 Reno, Nevada Hospital Revenue, Washoe Medical Center 725,000 5.000%, 06/01/23 FSA Insured ............................ Aaa/AAA 734,019 680,000 5.000%, 06/01/23 FSA Insured ............................ Aaa/AAA 691,132 --------------- Total Healthcare ........................................ 1,570,656 --------------- Hospital (0.6%) Murray City, Utah Hospital Revenue 1,000,000 5.000%, 05/15/22 MBIA Insured ........................... Aa1/AA 1,004,540 Weber State University, Utah Human Services COP 430,000 5.050%, 01/15/17 AMBAC Insured (pre-refunded) ........... Aaa/AAA 430,473 --------------- Total Hospital .......................................... 1,435,013 --------------- Housing (15.5%) Alaska Housing Finance Corp. Housing Revenue 1,000,000 4.700%, 06/01/27 AMT .................................... Aa2/AA 914,390 1,000,000 5.250%, 12/01/28 AMT .................................... Aa2/AA 954,180 Alaska State Local Housing Authority Revenue 500,000 5.125%, 06/01/27 Series A2 AMT .......................... Aaa/AAA 480,945 Florida Housing Finance Corp. Revenue 430,000 4.750%, 01/01/16 AMT .................................... Aa2/AA 428,658 780,000 5.000%, 07/01/21 AMT .................................... Aa2/AA 746,694 1,605,000 4.550%, 07/01/22 AMT .................................... Aa2/AA 1,447,501
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- HOUSING (CONTINUED) Henderson, Nevada Local Improvement District $ 150,000 5.000%, 09/01/15 ........................................ NR/NR* $ 126,463 200,000 5.000%, 09/01/16 ........................................ NR/NR* 164,940 200,000 5.050%, 09/01/17 ........................................ NR/NR* 162,176 200,000 5.100%, 09/01/18 ........................................ NR/NR* 159,792 Indiana Housing & Community Development Authority 1,415,000 4.900%, 07/01/26 AMT .................................... Aaa/NR 1,316,389 Indiana State Housing Finance Authority Single Family 245,000 4.850%, 07/01/22 AMT .................................... Aaa/NR 229,543 Indianapolis, Indiana Multi-Family 500,000 4.850%, 01/01/21 AMT .................................... Aaa/NR 474,560 Miami-Dade County, Florida Housing Finance Authority 535,000 5.000%, 11/01/23 FSA Insured AMT ........................ NR/AAA 519,902 Nevada Housing Multi-Family, LOC: US Bank 1,000,000 4.750%, 04/01/39 AMT .................................... NR/AA+ 927,650 North Dakota Housing Authority Home Mortgage Revenue 2,000,000 5.400%, 07/01/23 AMT .................................... Aa1/NR 2,019,860 1,000,000 5.650%, 07/01/28 AMT .................................... Aa1/NR 1,006,370 Orange County, Florida Housing Finance Authority 140,000 5.150%, 03/01/22 ........................................ Aaa/NR 139,651 Seattle, Washington Housing Authority 730,000 4.400%, 11/01/21 AMT .................................... NR/AAA 661,563 Snohomish County, Washington Housing Authority 150,000 4.750%, 09/01/10 AMT .................................... NR/NR* 149,657 185,000 4.875%, 09/01/12 AMT .................................... NR/NR* 182,900 225,000 5.000%, 09/01/13 AMT .................................... NR/NR* 221,672 185,000 5.000%, 09/01/14 AMT .................................... NR/NR* 181,058 145,000 5.100%, 09/01/15 AMT .................................... NR/NR* 141,594 South Dakota Housing Development Authority 1,250,000 4.900%, 05/01/26 AMT .................................... Aa1/AAA 1,161,600 Texas State Housing Revenue 2,020,000 4.800%, 09/01/20 AMT .................................... Aaa/AAA 1,899,224 495,000 4.800%, 09/01/27 AMT .................................... Aa1/AAA 450,336 1,000,000 5.250%, 09/01/32 AMT .................................... Aa1/AAA 955,150
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- HOUSING (CONTINUED) Utah Housing Corporation Single Family Mortgage $ 330,000 4.600%, 07/01/15 AMT .................................... Aaa/AAA $ 329,023 235,000 4.650%, 07/01/16 AMT .................................... Aaa/AAA 233,914 25,000 5.250%, 07/01/23 AMT .................................... Aa2/AA 24,757 230,000 4.875%, 07/01/23 AMT .................................... Aa3/AA- 215,131 1,460,000 5.125%, 07/01/24 AMT .................................... Aa3/AA- 1,445,079 1,130,000 5.000%, 07/01/25 AMT .................................... Aa3/AA- 1,084,992 695,000 5.100%, 01/01/26 AMT .................................... Aa3/AA- 670,369 625,000 5.200%, 01/01/28 AMT .................................... Aa3/AA- 607,919 1,000,000 5.800%, 07/01/28 AMT .................................... Aa3/AA- 1,006,660 1,000,000 5.700%, 07/01/28 AMT .................................... Aa3/AA- 1,004,670 1,000,000 5.500%, 07/01/28 AMT .................................... Aa3/AA- 982,160 915,000 5.000%, 07/01/31 AMT .................................... Aa2/AA 828,386 640,000 5.000%, 01/01/32 AMT .................................... Aa2/AA 584,038 Utah State Housing Agency Housing Revenue 125,000 5.650%, 07/01/27 AMT .................................... Aa2/AA 125,105 Utah State Housing Finance Agency 170,000 5.700%, 07/01/15 AMT .................................... Aa3/AA- 170,049 90,000 5.650%, 07/01/16 Series 1994C ........................... Aaa/AAA 90,147 40,000 5.400%, 07/01/16 AMT .................................... Aa2/AA 40,095 30,000 6.000%, 07/01/17 AMT .................................... Aaa/AAA 30,043 640,000 5.500%, 07/01/18 AMT .................................... Aa3/AA- 660,845 45,000 5.300%, 07/01/18 AMT .................................... Aaa/AAA 45,560 75,000 5.000%, 07/01/18 AMT .................................... Aaa/AAA 74,772 95,000 5.400%, 07/01/20 AMT .................................... Aa2/AA 93,739 140,000 5.600%, 07/01/23 AMT .................................... Aa2/AA 140,091 45,000 5.700%, 07/01/26 MBIA Insured A2/AA 45,095 Washington State Housing Finance Commission 2,290,000 4.800%, 12/01/21 AMT .................................... Aaa/NR 2,145,524 Washington State Housing Finance Commission Single Family Mortgage 2,345,000 5.000%, 06/01/22 ........................................ Aaa/NR* 2,307,972
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- HOUSING (CONTINUED) Wyoming Community Development Authority Housing Revenue $ 150,000 4.600%, 12/01/12 AMT .................................... Aa1/AA+ $ 151,116 225,000 4.350%, 12/01/16 AMT .................................... Aa1/AA+ 217,098 580,000 4.700%, 06/01/17 AMT .................................... Aa1/AA+ 573,742 520,000 4.700%, 12/01/17 AMT .................................... Aa1/AA+ 514,140 2,000,000 5.000%, 12/01/22 Series 10 AMT .......................... Aa1/AA+ 1,921,080 120,000 5.000%, 12/01/22 ........................................ Aa1/AA+ 118,178 415,000 5.150%, 06/01/23 AMT .................................... Aa1/AA+ 406,111 --------------- Total Housing ........................................... 37,112,018 --------------- INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (0.5%) Sandy City, Utah Industrial Development, H Shirley Wright Project, Refunding Bonds, LOC Olympus Bank 250,000 6.125%, 08/01/16 ........................................ NR/AAA 250,707 Utah County Environmental Improvement Revenue 935,000 5.050%, 11/01/17 ........................................ Baa1/BBB+ 954,027 --------------- Total Industrial Development & Pollution Control ........ 1,204,734 --------------- LEASE (8.8%) Celebration Community Development District, Florida 290,000 5.000%, 05/01/22 MBIA Insured ........................... A2/AA 296,716 Clark County, Nevada Improvement District Revenue 725,000 5.125%, 12/01/19 ........................................ NR/NR* 658,010 Clark County, Nevada Improvement District Special Local Improvement #128 (Summerlin) 500,000 5.000%, 02/01/21 Series A ............................... NR/NR* 427,345 Marion County, Indiana Convention & Recreational Facilities Authority 390,000 5.000%, 06/01/27 MBIA Insured ........................... A2/AA 391,673 Murray City, Utah Municipal Building Authority 520,000 5.050%, 12/01/15 AMBAC Insured (pre-refunded) ........... Aaa/NR 552,744 New Albany, Indiana Development Authority 500,000 4.250%, 02/01/22 ........................................ NR/A- 462,080
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- LEASE (CONTINUED) Poinciana West, Florida Community Development District Special Assessment Revenue $ 1,000,000 5.875%, 05/01/22 ........................................ NR/NR* $ 903,700 Port Saint Lucie, Florida Special Assessment Revenue Southwest Annexation District 1-B 500,000 5.000%, 07/01/27 MBIA Insured ........................... A2/AA 507,235 Red River, Texas Higher Education TCU Project 1,000,000 4.375%, 03/15/25 ........................................ Aa3/NR 929,890 Salt Lake County, Utah Municipal Building Authority 3,900,000 5.200%, 10/15/20 AMBAC Insured (pre-refunded) ........... Aaa/AA 4,161,144 South Dakota State Building Authority Revenue 500,000 4.500%, 06/01/24 FGIC Insured ........................... Baa3/AA- 483,965 Spanish Fork, Utah Charter School 2,000,000 5.550%, 11/15/21 ........................................ NR/NR* 1,867,360 Tolomato Community, Florida Development District Special Assessment Revenue 1,000,000 6.450%, 05/01/23 ........................................ NR/NR* 975,690 Utah County, Utah Municipal Building Authority 120,000 5.500%, 11/01/16 AMBAC Insured (pre-refunded) ........... Aaa/NR 129,271 240,000 5.500%, 11/01/17 AMBAC Insured (pre-refunded) ........... Aaa/NR 258,542 Utah State Building Ownership Authority 465,000 5.000%, 05/15/21 ........................................ Aa1/AA+ 484,930 1,755,000 5.250%, 05/15/23 ........................................ Aa1/AA+ 1,830,377 510,000 5.000%, 05/15/23 Aa1/AA+ 528,074 1,845,000 5.250%, 05/15/24 ........................................ Aa1/AA+ 1,919,409 1,080,000 5.000%, 05/15/25 ........................................ Aa1/AA+ 1,106,957 West Bountiful, Utah Courthouse Revenue 410,000 5.000%, 05/01/19 ........................................ NR/A 434,247 West Valley City, Utah Municipal Building Authority Lease Revenue Refunding 1,890,000 4.375%, 08/01/26 Series A FGIC Insured .................. Baa3/A+ 1,795,783 --------------- Total Lease ............................................. 21,105,142 ---------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- TAX REVENUE (14.2%) Aqua Isles, Florida Community Development District Revenue $ 955,000 7.000%, 05/01/38 ........................................ NR/NR* $ 931,555 Bay County, Florida Sales Tax Revenue 175,000 4.750%, 09/01/23 FSA Insured ............................ Aaa/NR 175,518 Bluffdale, Utah Sales Tax Revenue 1,900,000 5.500%, 08/01/23 (pre-refunded) ......................... NR/NR* 1,905,586 Bountiful, Utah Special Improvement District Special Assessment Revenue 203,000 5.000%, 06/01/14 ........................................ NR/NR* 195,057 213,000 5.150%, 06/01/15 ........................................ NR/NR* 204,378 224,000 5.300%, 06/01/16 ........................................ NR/NR* 213,548 236,000 5.500%, 06/01/17 ........................................ NR/NR* 225,116 249,000 5.650%, 06/01/18 ........................................ NR/NR* 238,779 Clark County, Nevada Improvement District 250,000 5.000%, 08/01/16 ........................................ NR/NR* 228,027 Coral Canyon, Utah Special Service District 110,000 5.000%, 07/15/13 ........................................ NR/NR* 107,126 250,000 5.500%, 07/15/18 ........................................ NR/NR* 240,307 Henderson, Nevada Local Improvement District 100,000 4.500%, 09/01/12 ........................................ NR/NR* 94,015 300,000 5.000%, 09/01/14 ........................................ NR/NR* 245,295 300,000 5.000%, 09/01/15 ........................................ NR/NR* 273,087 255,000 5.000%, 03/01/16 ........................................ NR/NR* 231,749 Holladay, Utah Redevelopment Agency 3,000,000 4.900%, 12/30/20 ........................................ NR/NR* 2,743,170 Jordanelle, Utah Special Service District 186,000 5.000%, 11/15/14 ........................................ NR/NR* 182,122 196,000 5.100%, 11/15/15 ........................................ NR/NR* 191,870 206,000 5.200%, 11/15/16 ........................................ NR/NR* 200,273 216,000 5.300%, 11/15/17 ........................................ NR/NR* 209,021 228,000 5.400%, 11/15/18 ........................................ NR/NR* 221,297 240,000 5.500%, 11/15/19 ........................................ NR/NR* 230,767
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- TAX REVENUE (CONTINUED) Jordanelle, Utah Special Service District (continued) $ 253,000 5.600%, 11/15/20 ........................................ NR/NR* $ 241,051 268,000 5.700%, 11/15/21 ........................................ NR/NR* 252,670 283,000 5.800%, 11/15/22 ........................................ NR/NR* 265,661 299,000 6.000%, 11/15/23 ........................................ NR/NR* 281,810 Jordanelle, Utah Special Service Improvement District 230,000 8.000%, 10/01/11 ........................................ NR/NR* 241,353 La Verkin, Utah Sales and Franchise Tax Revenue 571,000 5.100%, 07/15/27 ........................................ NR/NR* 514,334 Lehi, Utah Sales Tax 790,000 5.000%, 06/01/24 FSA Insured ............................ Aaa/AAA 814,403 Mesquite, Nevada New Special Improvement District 240,000 5.300%, 08/01/11 ........................................ NR/NR* 236,386 180,000 4.600%, 08/01/11 ........................................ NR/NR* 176,108 190,000 4.750%, 08/01/12 ........................................ NR/NR* 183,840 220,000 4.900%, 08/01/13 ........................................ NR/NR* 211,202 135,000 5.250%, 08/01/17 ........................................ NR/NR* 125,483 305,000 5.350%, 08/01/19 ........................................ NR/NR* 279,392 130,000 5.400%, 08/01/20 ........................................ NR/NR* 117,950 480,000 5.500%, 08/01/25 ........................................ NR/NR* 423,230 Mountain Regional Water District, Utah Special Assessment 1,735,000 7.000%, 12/01/18 ........................................ NR/NR* 1,666,346 Mountain Regional Water, Utah Special Service District 2,000,000 5.000%, 12/15/20 MBIA Insured ........................... A2/AA 2,062,420 North Ogden, Utah Sales Tax Revenue 195,000 5.000%, 11/01/24 XLCA Insured ........................... A3/A+ 204,795 Payson City, Utah Sales Tax Revenue 445,000 5.000%, 08/01/21 FSA Insured ............................ Aaa/AAA 463,588 Pembroke Harbor, Florida Community Development District Revenue 1,820,000 7.000%, 05/01/38 ........................................ NR/NR* 1,775,319
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- TAX REVENUE (CONTINUED) Salt Lake City, Utah Sales Tax $ 265,000 5.250%, 02/01/13 ........................................ NR/AAA $ 281,470 955,000 5.000%, 02/01/21 ........................................ NR/AAA 992,914 1,005,000 5.000%, 02/01/22 ........................................ NR/AAA 1,041,401 1,060,000 5.000%, 02/01/23 ........................................ NR/AAA 1,095,340 1,115,000 5.000%, 02/01/24 ........................................ NR/AAA 1,148,963 Sandy City, Utah Sales Tax 520,000 5.000%, 09/15/18 AMBAC Insured .......................... Aa3/AA+ 536,240 605,000 5.000%, 09/15/20 AMBAC Insured .......................... Aa3/AA+ 621,075 South Weber City, Utah 525,000 5.000%, 01/15/24 MBIA Insured ........................... Aaa/AA 548,436 Springville, Utah Special Assessment Revenue 400,000 5.500%, 01/15/17 ........................................ NR/NR* 380,380 457,000 5.650%, 01/15/18 ........................................ NR/NR* 434,685 483,000 5.800%, 01/15/19 ........................................ NR/NR* 454,334 510,000 5.900%, 01/15/20 ........................................ NR/NR* 475,626 540,000 6.000%, 01/15/21 ........................................ NR/NR* 498,371 Wasatch County, Utah Building Authority 130,000 5.000%, 10/01/15 ........................................ A3/NR 135,090 135,000 5.000%, 10/01/16 ........................................ A3/NR 139,514 Wasatch County, Utah Sales Tax 205,000 5.000%, 12/01/16 AMBAC Insured .......................... Aa3/AA 214,135 210,000 5.000%, 12/01/17 AMBAC Insured .......................... Aa3/AA 218,064 225,000 5.000%, 12/01/18 AMBAC Insured .......................... Aa3/AA 232,353 Washington City, Utah Sales Tax 680,000 5.250%, 11/15/17 AMBAC Insured .......................... Aa3/AA 720,990 Weber County, Utah Sales Tax 385,000 5.000%, 07/01/23 AMBAC Insured .......................... Aa3/NR 392,662 West Valley City, Utah Redevelopment Agency 1,625,000 5.000%, 03/01/21 ........................................ NR/A- 1,666,519 320,000 5.000%, 03/01/22 ........................................ NR/A- 326,150 350,000 5.000%, 03/01/23 ........................................ NR/A- 355,723 1,000,000 5.000%, 03/01/24 ........................................ NR/A- 1,010,650 --------------- Total Tax Revenue ....................................... 33,946,089 ---------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- TRANSPORTATION (3.6%) Alaska State International Airport Revenue $ 110,000 5.000%, 10/01/24 AMBAC Insured AMT ...................... Aa3/AA $ 103,794 Florida State Turnpike Authority Turnpike Revenue 500,000 4.500%, 07/01/22 MBIA Insured ........................... Aa2/AA 499,485 Miami-Dade County, Florida Aviation Revenue 600,000 5.000%, 10/01/24 FGIC Insured AMT ....................... A2/A- 563,700 Port of Seattle, Washington Revenue 1,045,000 5.100%, 04/01/24 AMT FGIC Insured ....................... Aa2/AA- 1,008,728 Utah Transit Authority Sales Tax & Transportation Revenue 3,300,000 4.125%, 06/15/21 FSA Insured ............................ Aaa/AAA 3,217,434 3,450,000 4.125%, 06/15/22 FSA Insured ............................ Aaa/AAA 3,303,168 --------------- Total Transportation .................................... 8,696,309 --------------- UTILITY (8.9%) Alaska Industrial Development & Export Authority 400,000 4.625%, 12/01/16 AMBAC Insured AMT ...................... Aa3/AA 384,440 Cowlitz County, Washington Public Utility District Electric Revenue 1,000,000 4.500%, 09/01/26 MBIA Insured ........................... A2/AA 953,350 Eagle Mountain, Utah Gas & Electric 1,385,000 4.250%, 06/01/20 Radian Insured ......................... A3/A 1,283,466 1,440,000 5.000%, 06/01/21 Radian Insured ......................... A3/A 1,440,763 1,515,000 5.000%, 06/01/22 Radian Insured ......................... A3/A 1,508,925 Garland, Texas Water & Sewer 440,000 4.500%, 03/01/21 AMBAC Insured .......................... Aa3/AA 438,715 Indianapolis, Indiana Gas Utility 290,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa3/AA 290,122 Intermountain Power Agency Utilities Light & Power Service, Utah 1,380,000 5.000%, 07/01/19 MBIA Insured ........................... A2/AA 1,407,407 250,000 5.250%, 07/01/23 ........................................ A1/A 256,393 JEA, Florida Electric System Revenue 500,000 5.000%, 10/01/26 ........................................ Aa3/A+ 504,780
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- UTILITY (CONTINUED) Manti City, Utah Electric System Revenue $ 603,000 5.750%, 02/01/17 ........................................ NR/NR* $ 609,096 Murray City, Utah Utility Electric Revenue 1,340,000 5.000%, 06/01/25 AMBAC Insured .......................... Aa3/NR 1,396,267 Orem, Utah Water & Storm Sewer Revenue 1,000,000 5.000%, 07/15/26 ........................................ NR/AA 1,033,470 Rockport, Indiana Pollution Control Revenue Indiana Michigan Power Company Project 1,500,000 4.625%, 06/01/25 Series A FGIC Insured .................. A3/BBB 1,272,900 St. George, Utah Electric Revenue 1,910,000 4.500%, 06/01/20 FSA Insured ............................ Aaa/NR 1,931,430 Salem, Utah Electric Revenue 130,000 5.350%, 11/01/08 ........................................ NR/NR* 131,066 140,000 5.400%, 11/01/09 ........................................ NR/NR* 142,920 Santa Clara Utah Storm Drain Revenue 877,000 5.100%, 09/15/26 ........................................ NR/NR* 823,468 Southern Utah Valley Power System 210,000 5.250%, 09/15/13 MBIA Insured A2/AA 223,299 225,000 5.250%, 09/15/14 MBIA Insured ........................... A2/AA 239,069 235,000 5.250%, 09/15/15 MBIA Insured ........................... A2/AA 248,943 185,000 5.125%, 09/15/21 MBIA Insured ........................... A2/AA 190,652 Springville, Utah Electric Revenue 550,000 5.600%, 03/01/09 ........................................ Baa1/NR 559,631 Tacoma, Washington Solid Waste Utility Revenue 1,000,000 5.000%, 12/01/23 XLCA Insured A3/AA- 1,007,470 Utah Assessed Municipal Power System 790,000 5.250%, 12/01/09 ........................................ NR/A- 809,726 1,000,000 5.000%, 04/01/21 FSA Insured ............................ Aaa/AAA 1,032,290 Washington, Utah Electric Revenue 985,000 5.000%, 09/01/21 XLCA Insured ........................... A3/NR 1,025,700 --------------- Total Utility ........................................... 21,145,758 ---------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- WATER AND SEWER (5.2%) Eagle Mountain, Utah Water and Sewer $ 750,000 5.800%, 11/15/16 ACA Insured (pre-refunded) ............. NR/A $ 805,485 690,000 4.750%, 11/15/25 MBIA Insured ........................... A2/AA 693,070 Jacksonville, Florida Water and Sewer System Revenue 250,000 4.625%, 10/01/22 ........................................ Aa3/AA- 250,000 Mesquite, Texas Waterworks & Sewer 225,000 4.500%, 03/01/24 FSA Insured ............................ Aaa/AAA 225,099 Murray City, Utah Sewer and Water 440,000 5.000%, 10/01/19 AMBAC Insured .......................... Aa3/NR 453,253 Pleasant Grove, Utah Water Revenue 450,000 4.300%, 12/01/20 MBIA Insured ........................... A2/AA 434,844 Smithfield, Utah Water Revenue 90,000 4.750%, 06/01/17 ........................................ NR/NR* 85,900 94,000 4.800%, 06/01/18 ........................................ NR/NR* 89,226 99,000 4.850%, 06/01/19 ........................................ NR/NR* 92,916 103,000 4.900%, 06/01/20 ........................................ NR/NR* 95,940 108,000 5.000%, 06/01/21 ........................................ NR/NR* 100,302 114,000 5.050%, 06/01/22 ........................................ NR/NR* 105,089 120,000 5.100%, 06/01/23 ........................................ NR/NR* 110,560 126,000 5.150%, 06/01/24 ........................................ NR/NR* 115,717 132,000 5.200%, 06/01/25 ........................................ NR/NR* 120,607 139,000 5.250%, 06/01/26 ........................................ NR/NR* 126,648 Upper Trinity Regional Water District, Texas 205,000 4.500%, 08/01/20 AMBAC Insured .......................... Aa3/AA 203,860 Utah Water Finance Agency Revenue 200,000 5.250%, 07/01/16 AMBAC Insured .......................... Aa3/NR 210,730 310,000 5.000%, 10/01/17 AMBAC Insured .......................... Aa3/NR 322,586 510,000 5.000%, 07/01/18 AMBAC Insured .......................... Aa3/NR 526,585 685,000 5.000%, 07/01/19 AMBAC Insured .......................... Aa3/NR 709,146 105,000 5.000%, 10/01/20 AMBAC Insured .......................... Aa3/NR 107,367 830,000 4.500%, 10/01/22 AMBAC Insured .......................... Aa3/NR 813,691 100,000 5.125%, 07/01/23 AMBAC Insured .......................... Aa3/NR 102,078 870,000 4.500%, 10/01/23 AMBAC Insured .......................... Aa3/NR 847,458 2,570,000 5.000%, 10/01/25 AMBAC Insured .......................... Aa3/NR 2,608,010 1,300,000 4.500%, 10/01/28 AMBAC Insured .......................... Aa3/NR 1,230,177
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- --------- --------------- WATER AND SERWER (CONTINUED) Weber-Box Elder, Utah Conservation District Water Revenue $ 200,000 6.450%, 11/01/14 (pre-refunded) ......................... Aaa/AAA $ 216,424 200,000 6.500%, 11/01/19 (pre-refunded) ......................... Aaa/AAA 216,648 335,000 6.900%, 11/01/20 (pre-refunded) ......................... Aaa/AAA 365,884 --------------- Total Water and Sewer ................................... 12,385,300 --------------- Total Revenue Bonds ..................................... 184,527,431 --------------- Total Investments (cost $237,024,401 - note 4) .......... 96.9% 231,361,538 Other assets less liabilities ........................... 3.1 7,405,861 --------- --------------- Net Assets .............................................. 100.0% $ 238,767,399 ========= =============== PERCENT OF PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO+ ---------------------------------------------------- ---------- Aaa of Moody's or AAA of S&P 30.4% Aa of Moody's or AA of S&P 37.5 A of Moody's or S&P 9.2 Baa of Moody's or BBB of S&P 4.4 Not rated* 18.5 --------- 100.0% =========
+ Calculated using the highest rating of the two rating services. * Any security not rated (NR) by either credit rating service must be determined by the Manager to have sufficient quality to be ranked in the top four ratings if a credit rating were to be assigned by a rating service. PORTFOLIO ABBREVIATIONS: ACA - American Capital Assurance Financial Guaranty Corp. AMBAC - American Municipal Bond Assurance Corp. AMT - Alternative Minimum Tax COP - Certificates of Participation FGIC - Financial Guaranty Insurance Co. FSA - Financial Security Assurance LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance NR - Not Rated XLCA - XL Capital Assurance See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2008 ASSETS Investments at value (cost $237,024,401) ............................................ $ 231,361,538 Cash ................................................................................ 3,118,017 Interest receivable ................................................................. 3,166,816 Receivable for Fund shares sold ..................................................... 1,717,253 Other assets ........................................................................ 23,930 ------------- Total assets ........................................................................ 239,387,554 ------------- LIABILITIES Dividends payable ................................................................... 249,163 Payable for Fund shares redeemed .................................................... 123,760 Management fees payable ............................................................. 52,046 Distribution and service fees payable ............................................... 51,689 Accrued expenses .................................................................... 143,497 ------------- Total liabilities ................................................................... 620,155 ------------- NET ASSETS .............................................................................. $ 238,767,399 ============= Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share . $ 245,345 Additional paid-in capital .......................................................... 245,220,260 Net unrealized depreciation on investments (note 4) ................................. (5,662,863) Accumulated net realized loss on investments ........................................ (1,065,535) Undistributed net investment income ................................................. 30,192 ------------- $ 238,767,399 ============= CLASS A Net Assets .......................................................................... $ 158,124,778 ============= Capital shares outstanding .......................................................... 16,258,218 ============= Net asset value and redemption price per share ...................................... $ 9.73 ============= Offering price per share (100/96 of $9.73 adjusted to nearest cent) ................. $ 10.14 ============= CLASS C Net Assets .......................................................................... $ 31,905,653 ============= Capital shares outstanding .......................................................... 3,281,562 ============= Net asset value and offering price per share ........................................ $ 9.72 ============= Redemption price per share (*a charge of 1% is imposed on the redemption proceeds of the shares, or on the original price, whichever is lower, if redeemed during the first 12 months after purchase) ...................................... $ 9.72* ============= CLASS Y Net Assets .......................................................................... $ 48,736,968 ============= Capital shares outstanding .......................................................... 4,994,673 ============= Net asset value, offering and redemption price per share ............................ $ 9.76 =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 2008 Investment Income: Interest income ...................................... $ 10,685,279 Expenses: Management fee (note 3) .............................. $ 1,132,655 Distribution and service fees (note 3) ............... 606,671 Transfer and shareholder servicing agent fees ........ 138,019 Trustees' fees and expenses (note 8) ................. 100,289 Legal fees (note 3) .................................. 79,334 Shareholders' reports and proxy statements ........... 43,764 Fund accounting fees ................................. 26,112 Custodian fees (note 6) .............................. 21,897 Registration fees and dues ........................... 18,214 Auditing and tax fees ................................ 17,052 Insurance ............................................ 10,275 Chief compliance officer (note 3) .................... 4,426 Miscellaneous ........................................ 28,550 ------------ Total expenses ....................................... 2,227,258 Management fee waived (note 3) ....................... (648,452) Expenses paid indirectly (note 6) .................... (33,449) ------------ Net expenses ......................................... 1,545,357 ------------ Net investment income ................................ 9,139,922 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from securities transactions ....... 638,898 Change in unrealized depreciation on investments ..... (4,614,006) ------------ Net realized and unrealized gain (loss) on investments (3,975,108) ------------ Net increase in net assets resulting from operations . $ 5,164,814 ============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED JUNE 30, 2008 JUNE 30, 2007 ------------- ------------- OPERATIONS: Net investment income .................................. $ 9,139,922 $ 8,511,537 Net realized gain (loss) from securities transactions .. 638,898 686,688 Change in unrealized depreciation on investments ....... (4,614,006) 310,980 ------------- ------------- Change in net assets from operations ............... 5,164,814 9,509,205 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10): Class A Shares: Net investment income .................................. (6,459,904) (5,969,997) Class C Shares: Net investment income .................................. (1,040,811) (1,072,516) Class Y Shares: Net investment income .................................. (1,961,979) (1,896,685) ------------- ------------- Change in net assets from distributions ............ (9,462,694) (8,939,198) ------------- ------------- CAPITAL SHARE TRANSACTIONS (NOTE 7): Proceeds from shares sold .............................. 55,700,331 55,169,672 Reinvested dividends and distributions ................. 5,703,447 5,565,179 Cost of shares redeemed ................................ (45,261,625) (50,191,077) ------------- ------------- Change in net assets from capital share transactions 16,142,153 10,543,774 ------------- ------------- Change in net assets ............................... 11,844,273 11,113,781 NET ASSETS: Beginning of period .................................... 226,923,126 215,809,345 ------------- ------------- End of period* ......................................... $ 238,767,399 $ 226,923,126 ============= ============= * Includes undistributed net investment income: ........ $ 30,192 $ 34,778 ============= =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 1. ORGANIZATION Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end investment company, was organized on December 12, 1990 as a Massachusetts business trust and commenced operations on July 24, 1992. The Fund is authorized to issue an unlimited number of shares and, since its inception to May 21, 1996, offered only one class of shares. On that date, the Fund began offering two additional classes of shares, Class C and Class Y Shares. All shares outstanding prior to that date were designated as Class A Shares and are sold with a front-payment sales charge and bear an annual distribution fee. Class C Shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y Shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodian or similar capacity and are not offered directly to retail investors. Class Y Shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. On October 31, 1997, the Fund established Class I Shares which are offered and sold only through financial intermediaries and are not offered directly to retail investors. As of the report date, there were no Class I Shares outstanding. All classes of shares represent interests in the same portfolio of investments and are identical as to rights and privileges but differ with respect to the effect of sales charges, the distribution and/or service fees borne by each class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities of more than 60 days are valued each business day based upon information provided by a nationally prominent independent pricing service and periodically verified through other pricing services. In the case of securities for which market quotations are readily available, securities are valued by the pricing service at the mean of bid and asked quotations. If market quotations or a valuation from the pricing service is not readily available, the security is valued at fair value determined in good faith under procedures established by and under the general supervision of the Board of Trustees. Securities which mature in 60 days or less are valued at amortized cost if their term to maturity at purchase is 60 days or less, or by amortizing their unrealized appreciation or depreciation on the 61st day prior to maturity, if their term to maturity at purchase exceeds 60 days. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premium and accretion of original issue and market discount. c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. The Fund intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48") was adopted on December 31, 2007. Management has reviewed the tax positions for each of the open tax years (2004-2008) and has determined that the implementation of FIN 48 did not have a material impact on the Fund's financial statements. d) MULTIPLE CLASS ALLOCATIONS: All income, expenses (other than class-specific expenses), and realized and unrealized gains or losses are allocated daily to each class of shares based on the relative net assets of each class. Class-specific expenses, which include distribution and service fees and any other items that are specifically attributed to a particular class, are charged directly to such class. e) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. f) ACCOUNTING PRONOUNCEMENT: In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Fund believes adoption of SFAS 157 will have no material impact on the Fund's financial statements. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: Aquila Investment Management LLC (the "Manager"), a wholly-owned subsidiary of Aquila Management Corporation, the Fund's founder and sponsor, serves as the Manager for the Fund under an Advisory and Administration Agreement with the Fund. Under the Advisory and Administration Agreement, the Manager provides all investment management and administrative services to the Fund. The Manager's services include providing the office of the Fund and all related services as well as managing relationships with all the various support organizations to the Fund such as the shareholder servicing agent, custodian, legal counsel, fund accounting agent, auditors and distributor. For its services, the Manager is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.50 of 1% on the Fund's average net assets. For the year ended June 30, 2008, the Fund incurred management fees of $1,132,655 of which $648,452 was waived. The Manager contractually undertook to waive fees and/or reimburse Fund expenses during the period July 1, 2007 through June 30, 2008 so that total Fund expenses would not exceed 0.85% for Class A Shares, 1.65% for Class C Shares or 0.65% for Class Y Shares. Comparable expense limitations are in place for fiscal 2009. Under a Compliance Agreement with the Manager, the Manager is compensated for Chief Compliance Officer related services provided to enable the Fund to comply with Rule 38a-1 of the Investment Company Act of 1940. Specific details as to the nature and extent of the services provided by the Manager are more fully defined in the Fund's Prospectus and Statement of Additional Information. b) DISTRIBUTION AND SERVICE FEES: The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended. Under one part of the Plan, with respect to Class A Shares, the Fund is authorized to make distribution fee payments to broker-dealers or others ("Qualified Recipients") selected by Aquila Distributors, Inc. (the "Distributor") including, but not limited to, any principal underwriter of the Fund, with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Fund's shares or servicing of shareholder accounts. The Fund makes payment of this service fee at the annual rate of 0.20% of the Fund's average net assets represented by Class A Shares. For the year ended June 30, 2008, distribution fees on Class A Shares amounted to $304,267, of which the Distributor retained $6,951. Under another part of the Plan, the Fund is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Fund's Class C shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Fund's average net assets represented by Class C Shares and for the year ended June 30, 2008, amounted to $226,803. In addition, under a Shareholder Services Plan, the Fund is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Fund's average net assets represented by Class C Shares and for the year ended June 30, 2008 amounted to $75,601. The total of these payments with respect to Class C Shares amounted to $302,404, of which the Distributor retained $64,154. Specific details about the Plans are more fully defined in the Fund's Prospectus and Statement of Additional Information. Under a Distribution Agreement, the Distributor serves as the exclusive distributor of the Fund's shares. Through agreements between the Distributor and various brokerage and advisory firms ("intermediaries"), the Fund's shares are sold primarily through the facilities of these intermediaries having offices within Utah, with the bulk of sales commissions inuring to such intermediaries. For the year ended June 30, 2008, total commissions on sales of Class A Shares amounted to $445,042, of which the Distributor received $39,612. c) OTHER RELATED PARTY TRANSACTIONS: For the year ended June 30, 2008, the Fund incurred $79,158 of legal fees allocable to Butzel Long PC, counsel to the Fund, for legal services in conjunction with the Fund's ongoing operations. The Secretary of the Fund is a shareholder of that firm. 4. PURCHASES AND SALES OF SECURITIES During the year ended June 30, 2008, purchases of securities and proceeds from the sales of securities aggregated $50,415,897 and $40,952,267, respectively. At June 30, 2008, the aggregate tax cost for all securities was $236,994,209. At June 30, 2008, the aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost amounted to $1,176,566 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value amounted to $6,809,237, for a net unrealized depreciation of $5,632,671. 5. PORTFOLIO ORIENTATION Since the Fund may invest entirely in double tax-free municipal obligations of issuers within Utah, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Utah and whatever effects these may have upon Utah issuers' ability to meet their obligations. The Fund is also permitted to invest in tax-free municipal obligations meeting comparable quality standards of issuers in certain states that do not tax the interest on obligations of Utah issuers and that provide income which is exempt from both regular Federal and Utah income taxes. At June 30, 2008, the Fund had 54% of its net assets invested in State of Utah municipal issues. 6. EXPENSES The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Fund were as follows:
YEAR ENDED YEAR ENDED JUNE 30, 2008 JUNE 30, 2007 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ------------ ------------ ------------ ------------ CLASS A SHARES: Proceeds from shares sold 2,834,849 $ 28,003,392 2,804,057 $ 28,292,959 Reinvested distributions 417,757 4,128,043 385,904 3,893,635 Cost of shares redeemed . (2,020,117) (19,970,653) (2,569,962) (25,914,165) ------------ ------------ ------------ ------------ Net change .......... 1,232,489 12,160,782 619,999 6,272,429 ------------ ------------ ------------ ------------ CLASS C SHARES: Proceeds from shares sold 796,274 7,849,550 758,270 7,658,338 Reinvested distributions 64,603 638,158 62,950 634,919 Cost of shares redeemed . (699,234) (6,926,362) (1,125,043) (11,352,553) ------------ ------------ ------------ ------------ Net change .......... 161,643 1,561,346 (303,823) (3,059,296) ------------ ------------ ------------ ------------ CLASS Y SHARES: Proceeds from shares sold 2,002,683 19,847,389 1,898,552 19,218,375 Reinvested distributions 94,661 937,246 102,317 1,036,625 Cost of shares redeemed . (1,843,176) (18,364,610) (1,277,759) (12,924,359) ------------ ------------ ------------ ------------ Net change .......... 254,168 2,420,025 723,110 7,330,641 ------------ ------------ ------------ ------------ Total transactions in Fund shares .................. 1,648,300 $ 16,142,153 1,039,286 $ 10,543,774 ============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES At June 30, 2008 there were 7 Trustees, one of which is affiliated with the Manager and is not paid any fees. The total amount of Trustees' service and attendance fees paid during the year ended June 30, 2008 was $74,833, to cover carrying out their responsibilities and attendance at regularly scheduled quarterly Board Meetings and meetings of the Independent Trustees held prior to each quarterly Board Meeting. When additional meetings (Audit, Nominating, Shareholder and special meetings) are held, the meeting fees are paid to those Trustees in attendance. Trustees are reimbursed for their expenses such as travel, accommodations, and meals incurred in connection with attendance at Board Meetings and the Annual Meeting of Shareholders. For the year ended June 30, 2008, such meeting-related expenses amounted to $25,456. 9. SECURITIES TRADED ON A WHEN-ISSUED BASIS The Fund may purchase or sell securities on a when-issued basis. When-issued transactions arise when securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. Beginning on the date the Fund enters into a when-issued transaction, cash or other liquid securities are segregated in an amount equal to or greater than the amount of the when-issued transaction. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities. 10. INCOME TAX INFORMATION AND DISTRIBUTIONS The Fund declares dividends daily from net investment income and makes payments monthly. Net realized capital gains, if any, are distributed annually and are taxable. These distributions are paid in additional shares at the net asset value per share, in cash, or in a combination of both, at the shareholder's option. The Fund intends to maintain, to the maximum extent possible, the tax-exempt status of interest payments received from portfolio municipal securities in order to allow dividends paid to shareholders from net investment income to be exempt from regular Federal and State of Utah income taxes. However, due to differences between financial statement reporting and Federal income tax reporting requirements, distributions made by the Fund may not be the same as the Fund's net investment income, and/or net realized securities gains. In this regard, the Fund increased undistributed net investment income in the amount of $318,186 and decreased additional paid-in capital in the amount of $318,186 at June 30, 2008. This adjustment had no impact on the Fund's aggregate net assets at June 30, 2008. Further, a small portion of the dividends may, under some circumstances, be subject to taxes at ordinary income rates. For certain shareholders some dividend income may, under some circumstances, be subject to the alternative minimum tax. At June 30, 2008, the Fund had a capital loss carryover of $1,065,535 of which $796,250 expires on June 30, 2009, $15,469 expires on June 30, 2011, and $253,816 expires on June 30, 2012. This carryover is available to offset future net realized gains on securities transactions to the extent provided for in the Internal Revenue Code. To the extent that this loss is used to offset future realized capital gains, it is probable that the gains so offset will not be distributed. The tax character of distributions: YEAR ENDED JUNE 30, 2008 2007 ---------- ---------- Net tax-exempt income $9,144,508 $8,484,772 ---------- ---------- Ordinary income 318,186 454,426 ---------- ---------- $9,462,694 $8,939,198 ========== ========== As of June 30, 2008, the components of distributable earnings on a tax basis were as follows: Undistributed tax-exempt income $ 249,163 Accumulated net realized loss (1,065,535) Unrealized depreciation (5,632,671) Other temporary differences (249,163) ----------- $(6,698,206) =========== At June 30, 2008, the difference between book basis and tax basis unrealized appreciation was attributable primarily to the treatment of accretion of discounts and amortization of premiums. The difference between book basis and tax basis undistributed income is due to the timing of distributions. 11. RECENT DEVELOPMENTS a) THE DAVIS CASE: In May, 2007, the U. S. Supreme Court agreed to hear an appeal in Department of Revenue of Kentucky v. Davis, a case concerning the constitutionality of differential tax treatment for interest from in-state vs. out-of-state municipal securities, a practice which is common among the majority of the states. On May 19, 2008, the U. S. Supreme Court upheld the right of states to tax interest on out-of-state municipal bonds while exempting their own state's bond interest from taxation. The U. S. Supreme Court said differential tax treatment for interest from in-state vs. out-of-state municipal securities does not discriminate against interstate commerce, but rather promotes the financing of essential governmental services. b) INSURERS: Over the past few months, municipal bond insurance companies have been under review by the three major rating agencies: Standard & Poor's, Moody's and Fitch. The ratings of some of the insurance companies have now either been downgraded and/or have a negative outlook. The financial markets continue to assess the severity of the losses caused by the subprime credit crisis and its impact on municipal bond insurance companies and the prices of insured municipal bonds. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A ---------------------------------------------------------------------------- YEAR ENDED JUNE 30, ---------------------------------------------------------------------------- 2008 2007 2006 2005 2004 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period ........... $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.31 ----------- ----------- ----------- ----------- ----------- Income (loss) from investment operations: Net investment income ...................... 0.41++ 0.40+ 0.40+ 0.41+ 0.43++ Net gain (loss) on securities (both realized and unrealized) ........................ (0.17) 0.05 (0.37) 0.38 (0.37) ----------- ----------- ----------- ----------- ----------- Total from investment operations ........... 0.24 0.45 0.03 0.79 0.06 ----------- ----------- ----------- ----------- ----------- Less distributions (note 10): Dividends from net investment income ....... (0.42) (0.41) (0.42) (0.44) (0.46) Distributions from capital gains ........... -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- Total distributions ........................ (0.42) (0.41) (0.42) (0.44) (0.46) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ................. $ 9.73 $ 9.91 $ 9.87 $ 10.26 $ 9.91 =========== =========== =========== =========== =========== Total return (not reflecting sales charge) ..... 2.45% 4.60% 0.28% 8.06% 0.54% Ratios/supplemental data Net assets, end of period (in thousands) ... $ 158,125 $ 148,894 $ 142,227 $ 126,091 $ 94,103 Ratio of expenses to average net assets .... 0.63% 0.68% 0.64% 0.59% 0.48% Ratio of net investment income to average net assets ............................. 4.09% 3.89% 3.90% 3.98% 4.19% Portfolio turnover rate .................... 18.83% 17.36% 9.61% 8.68% 15.98% The expense and net investment income ratios without the effect of the waiver of a portion of the management fee and the expense reimbursement were (note 3): Ratio of expenses to average net assets .... 0.90% 0.96% 0.93% 0.97% 0.94% Ratio of net investment income to average net assets ............................. 3.82% 3.61% 3.61% 3.60% 3.73% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were (note 3): Ratio of expenses to average net assets .... 0.61% 0.66% 0.61% 0.56% 0.47%
+ Per share amounts have been calculated using the monthly average shares method. ++ Per share amounts have been calculated using the daily average shares method. See accompanying notes to financial statements. For a share outstanding throughout each period
Class C --------------------------------------------------------------------------- Year Ended June 30, --------------------------------------------------------------------------- 2008 2007 2006 2005 2004 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.30 ---------- ---------- ---------- ---------- ---------- Income (loss) from investment operations: Net investment income 0.33++ 0.32+ 0.32+ 0.32+ 0.34++ Net gain (loss) on securities (both realized and unrealized) (0.18) 0.05 (0.37) 0.38 (0.36) ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.15 0.37 (0.05) 0.70 (0.02) ---------- ---------- ---------- ---------- ---------- Less distributions (note 10): Dividends from net investment income (0.34) (0.33) (0.34) (0.35) (0.37) Distributions from capital gains -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions (0.34) (0.33) (0.34) (0.35) (0.37) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 9.72 $ 9.91 $ 9.87 $ 10.26 $ 9.91 ========== ========== ========== ========== ========== Total return (not reflecting sales charge) 1.53% 3.77% (0.52)% 7.20% (0.16)% Ratios/supplemental data Net assets, end of period (in thousands) $ 31,906 $ 30,905 $ 33,791 $ 27,581 $ 21,961 Ratio of expenses to average net assets 1.43% 1.48% 1.44% 1.39% 1.27% Ratio of net investment income to average net assets 3.29% 3.10% 3.10% 3.18% 3.38% Portfolio turnover rate 18.83% 17.36% 9.61% 8.68% 15.98% The expense and net investment income ratios without the effect of the waiver of a portion of the management fee and the expense reimbursement were (note 3): Ratio of expenses to average net assets 1.70% 1.76% 1.72% 1.77% 1.74% Ratio of net investment income to average net assets 3.02% 2.81% 2.81% 2.80% 2.93% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were (note 3): Ratio of expenses to average net assets 1.42% 1.46% 1.41% 1.36% 1.27% Class Y --------------------------------------------------------------------------- Year Ended June 30, --------------------------------------------------------------------------- 2008 2007 2006 2005 2004 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 9.94 $ 9.90 $ 10.29 $ 9.94 $ 10.34 ---------- ---------- ---------- ---------- ---------- Income (loss) from investment operations: Net investment income 0.43++ 0.41+ 0.42+ 0.42+ 0.44++ Net gain (loss) on securities (both realized and unrealized) (0.17) 0.07 (0.37) 0.39 (0.36) ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.26 0.48 0.05 0.81 0.08 ---------- ---------- ---------- ---------- ---------- Less distributions (note 10): Dividends from net investment income (0.44) (0.44) (0.44) (0.46) (0.48) Distributions from capital gains -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions (0.44) (0.44) (0.44) (0.46) (0.48) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 9.76 $ 9.94 $ 9.90 $ 10.29 $ 9.94 ========== ========== ========== ========== ========== Total return (not reflecting sales charge) 2.67% 4.80% 0.49% 8.27% 0.76% Ratios/supplemental data Net assets, end of period (in thousands) $ 48,737 $ 47,124 $ 39,791 $ 17,928 $ 8,233 Ratio of expenses to average net assets 0.43% 0.48% 0.44% 0.39% 0.28% Ratio of net investment income to average net assets 4.29% 4.09% 4.10% 4.15% 4.41% Portfolio turnover rate 18.83% 17.36% 9.61% 8.68% 15.98% The expense and net investment income ratios without the effect of the waiver of a portion of the management fee and the expense reimbursement were (note 3): Ratio of expenses to average net assets 0.70% 0.76% 0.72% 0.77% 0.74% Ratio of net investment income to average net assets 4.02% 3.81% 3.82% 3.78% 3.95% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were (note 3): Ratio of expenses to average net assets 0.42% 0.46% 0.41% 0.37% 0.27%
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ Per share amount calculated using the daily average shares method. See accompanying notes to financial statements. ADDITIONAL INFORMATION (UNAUDITED) TRUSTEES AND OFFICERS(1)
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) - ----------------- ---------- ------------------- ---------- ----------- INTERESTED TRUSTEE(4) Diana P. Herrmann Trustee since 1997 Vice Chair and Chief Executive Officer of Aquila 12 ICI Mutual Insurance New York, NY and President since Management Corporation, Founder of the Aquila Group Company (02/25/58) 1998 of Funds(5) and parent of Aquila Investment Management LLC, Manager since 2004, President since 1997, Chief Operating Officer, 1997-2008, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Chief Executive Officer and Vice Chair since 2004, and President and Manager of the Manager since 2003, and Chief Operating Officer of the Manager, 2003-2008; Chair, Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila Group of Funds since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; Governor, Investment Company Institute (a trade organization for the U.S. mutual fund industry dedicated to protecting shareholder interests and educating the public about investing) and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. NON-INTERESTED TRUSTEES Gary C. Cornia Chair of the Board Dean, Mariott School of Management, Brigham Young 4 Lincoln Institute of Orem, UT of Trustees since University since 2008; Director, Romney Institute of Land Policy, (06/24/48) 2005 and Trustee Public Management, Marriott School of Management, Cambridge, MA since 1993 2004-2008; Professor, Marriott School of Management, 1980 - present; Past President, the National Tax Association; Fellow, Lincoln Institute of Land Policy, 2002 - present; Associate Dean, Marriott School of Management, Brigham Young University, 1991-2000; member, Utah Governor's Tax Review Committee since 1993.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) - ----------------- ---------- ------------------- ---------- ----------- Anne J. Mills Vice Chair of the President, Loring Consulting Company since 2001; 4 None Castle Rock, CO Board of Trustees Vice President for Business Management and CFO, (12/23/38) since 2006 and Ottawa University, since 2006, Vice President for Trustee since 1994 Business Affairs, 1992-2001; IBM Corporation, 1965-1991; currently active with various charitable, educational and religious organizations. Tucker Hart Adams Trustee since 2006 President, The Adams Group, Inc., an economic 3 Director, Colorado Colorado Springs, CO consulting firm, since 1989; formerly Chief Health Facilities (01/11/38) Economist, United Banks of Colorado; currently or Authority formerly active with numerous professional and community organizations. Thomas A. Christopher Trustee since 2006 Vice President of Robinson, Hughes & Christopher, 3 None Danville, KY C.P.A.s, P.S.C., since 1977; President, A Good Place (12/19/47) for Fun, Inc., a sports facility, since 1987; currently or formerly active with various professional and community organizations. Lyle W. Hillyard Trustee since 2003 President of the law firm of Hillyard, Anderson & 2 None Logan, UT Olsen, Logan, Utah, since 1967; member of Utah (09/25/40) Senate, 1985 to present, in the following positions: President, 2000, Senate Majority Leader, 1999-2000, Assistant Majority Whip, 1995-1998; served as Chairman of the following Utah Senate Committees: Tax and Revenue, Senate Judiciary Standing, Joint Executive Appropriations, and Senate Rules; currently serves as Co-Chair, Joint Executive Appropriations. John C. Lucking Trustee since 2004 President, Econ-Linc, an economic consulting firm, 3 None Phoenix, AZ since 1995; formerly Consulting Economist, Bank One (05/20/43) Arizona and Chief Economist, Valley National Bank; member, Arizona's Joint Legislative Budget Committee Economic Advisory Panel and the Western Blue Chip Economic Forecast Panel; Board member, Northern Arizona University Foundation since 1997; member, various historical, civic and economic associations.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) - ----------------- ---------- ------------------- ---------- ----------- OTHER INDIVIDUALS CHAIRMAN EMERITUS(6) Lacy B. Herrmann Founder and Chairman Founder and Chairman of the Board, Aquila Management N/A N/A New York, NY Emeritus since 2005, Corporation, the sponsoring organization and parent (05/12/29) Chairman of the of the Manager or Administrator and/or Adviser or Board of Trustees, Sub-Adviser to each fund of the Aquila Group of 1992-2005 Funds; Chairman of the Manager or Administrator and/or Adviser or Sub-Adviser to each since 2004; Founder and Chairman Emeritus of each fund in the Aquila Group of Funds; previously Chairman and a Trustee of each fund in the Aquila Group of Funds since its establishment until 2004 or 2005; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations. OFFICERS Charles E. Childs, III Executive Vice Executive Vice President of all funds in the Aquila N/A N/A New York, NY President since 2003 Group of Funds and the Manager and the Manager's (04/01/57) parent since 2003; Executive Vice President and Chief Operating Officer of the Manager's parent since 2008; formerly Senior Vice President, corporate development, Vice President, Assistant Vice President and Associate of the Manager's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Jerry G. McGrew Senior Vice President of the Distributor since 1998, Registered N/A N/A New York, NY President since 1997 Principal since 1993, Senior Vice President, (06/18/44) 1997-1998 and Vice President, 1993-1997; Senior Vice President, Aquila Three Peaks High Income Fund, Aquila Rocky Mountain Equity Fund and five Aquila Municipal Bond Funds; Vice President, Churchill Cash Reserves Trust, 1995-2001.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) - ----------------- ---------- ------------------- ---------- ----------- Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free Fund For Utah since N/A N/A Salt Lake City, UT President since 1997 2001; Co-founder, Lewis Young Robertson & (08/07/46) Burningham, Inc., a NASD licensed broker/dealer providing public finance services to Utah local governments, 1995-2001; Senior Vice President of two Aquila Bond Funds and Aquila Rocky Mountain Equity Fund; formerly Senior Vice President-Public Finance, Kemper Securities Inc., Salt Lake City, Utah. Thomas S. Albright Senior Vice Senior Vice President and Portfolio Manager, N/A N/A Louisville, KY President since 2003 Churchill Tax-Free Fund of Kentucky since July 2000; (07/26/52) and Vice President, Senior Vice President, Tax-Free Fund For Utah since 2001-2003 2003, Vice President, 2001-2003 and co-portfolio manager since 2001; Vice President and backup portfolio manager, Tax-Free Trust of Arizona, since 2004; Vice President and Portfolio Manager, Banc One Investment Advisors, Inc., 1994-2000. Mary Kayleen Willis Vice President since Vice President, Tax-Free Fund For Utah since N/A N/A Salt Lake City, UT 2003 and Assistant September 2003, Assistant Vice President, 2002-2003; (06/11/63) Vice President, Vice President, Aquila Rocky Mountain Equity Fund, 2002-2003 since 2004. Robert W. Anderson Chief Compliance Chief Compliance Officer of the Fund and each of the N/A N/A New York, NY Officer since 2004 other funds in the Aquila Group of Funds, the (08/23/40) and Assistant Manager and the Distributor since 2004, Compliance Secretary since 2000 Officer of the Manager or its predecessor and current parent 1998-2004; Assistant Secretary of the Aquila Group of Funds since 2000. Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila Group of Funds N/A N/A New York, NY Officer since 2003 since 2003 and Treasurer since 2000. (11/06/56) and Treasurer since 2000
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) - ----------------- ---------- ------------------- ---------- ----------- Edward M. W. Hines Secretary since 1992 Shareholder of Butzel Long, a professional N/A N/A New York, NY corporation, counsel to the Fund, since 2007; (12/16/39) Partner of Hollyer Brady Barrett & Hines LLP, its predecessor as counsel, 1989-2007; Secretary of the Aquila Group of Funds. John M. Herndon Assistant Secretary Assistant Secretary of the Aquila Group of Funds N/A N/A New York, NY since 1995 since 1995 and Vice President of the three Aquila (12/17/39) Money-Market Funds since 1990; Vice President of the Manager or its predecessor and current parent since 1990. Lori A. Vindigni Assistant Treasurer Assistant Treasurer of the Aquila Group of Funds N/A N/A New York, NY since 2000 since 2000; Assistant Vice President of the Manager (11/02/66) or its predecessor and current parent since 1998; Fund Accountant for the Aquila Group of Funds, 1995-1998.
- ---------- (1) The Fund's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll-free) or by visiting www.aquilafunds.com or the EDGAR Database at the SEC's internet site at www.sec.gov. (2) The mailing address of each Trustee and officer is c/o Tax-Free Fund For Utah, 380 Madison Avenue, New York, NY 10017. (3) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (4) Ms. Herrmann is an interested person of the Fund as an officer of the Fund, as a director, officer and shareholder of the Manager's corporate parent, as an officer and Manager of the Manager, and as a shareholder and director of the Distributor. Ms. Herrmann is the daughter of Lacy B. Herrmann, the Founder and Chairman Emeritus of the Fund. (5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Municipal Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks High Income Fund is a high income corporate bond fund; considered together, these 12 funds are called the "Aquila Group of Funds." (6) The Chairman Emeritus may attend Board meetings but has no voting power. - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end sales charges with respect to Class A shares or contingent deferred sales charges ("CDSC") with respect to Class C shares; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The table below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The table below is based on an investment of $1,000 invested on January 1, 2008 and held for the six months ended June 30, 2008. ACTUAL EXPENSES This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". SIX MONTHS ENDED JUNE 30, 2008 ACTUAL TOTAL RETURN BEGINNING ENDING EXPENSES WITHOUT ACCOUNT ACCOUNT PAID DURING SALES CHARGES(1) VALUE VALUE THE PERIOD(2) - -------------------------------------------------------------------------------- Class A (0.29)% $1,000.00 $997.10 $3.03 - -------------------------------------------------------------------------------- Class C (0.79)% $1,000.00 $992.10 $6.93 - -------------------------------------------------------------------------------- Class Y (0.17)% $1,000.00 $998.30 $2.04 - -------------------------------------------------------------------------------- (1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES. TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR. (2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.61%, 1.42% AND 0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/366 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs with respect to Class A shares. The example does not reflect the deduction of contingent deferred sales charges ("CDSC") with respect to Class C shares. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transaction costs were included, your costs would have been higher. SIX MONTHS ENDED JUNE 30, 2008 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD(1) - -------------------------------------------------------------------------------- Class A 5.00% $1,000.00 $1,021.83 $3.07 - -------------------------------------------------------------------------------- Class C 5.00% $1,000.00 $1,017.90 $7.02 - -------------------------------------------------------------------------------- Class Y 5.00% $1,000.00 $1,022.82 $2.06 - -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.61%, 1.42% AND 0.42% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/366 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquila Group of Funds produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent the entire list of portfolio securities of your Fund twice a year in the semi-annual and annual reports you receive. Additionally, we prepare, and have available, portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your Fund's portfolio other than in your shareholder reports, please check our website http://www.aquilafunds.com or call us at 1-800-437-1020. The Fund additionally files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the SEC website at http://www.sec.gov. You may also review or, for a fee, copy the forms at the SEC's Public Reference Room in Washington, DC or by calling 1-800-SEC-0330. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROXY VOTING RECORD (UNAUDITED) The Fund does not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2008 with respect to which the Fund was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code AND NO ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED. For the fiscal year ended June 30, 2008, $9,144,508 of dividends paid by Tax-Free Fund For Utah, constituting 96.64% of total dividends paid during the fiscal year ended June 30, 2008, were exempt-interest dividends, and the balance was ordinary dividend income. Prior to January 31, 2008, shareholders were mailed the appropriate tax form(s) which contained information on the status of distributions paid for the 2007 CALENDAR YEAR. Prior to January 31, 2009, shareholders will be mailed the appropriate tax form(s) which will contain information on the status of distributions paid for the 2008 CALENDAR YEAR. - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) CONSIDERATION OF ADVISORY AND ADMINISTRATION AGREEMENT IN CONNECTION WITH PROPOSED CHANGES IN OWNERSHIP OF THE PARENT COMPANY OF THE MANAGER BASIS FOR THE TRUSTEES' APPROVAL OF THE NEW ADVISORY AGREEMENT At a meeting held on March 1, 2008, the Trustees, including the independent Trustees, approved the New Advisory Agreement and recommended that the Shareholders of the Fund approve such New Advisory Agreement. In considering these actions, the Trustees noted that in connection with their annual review of the Fund's advisory arrangements (the "Annual Review") on December 2, 2007, they had approved the now-current Advisory Agreement (the "Current Advisory Agreement") (which is substantially identical to the New Advisory Agreement) for another one-year term commencing on December 31, 2007. In connection with the Annual Review, the Trustees considered a wide range of information of the type they regularly consider when determining whether to continue the Fund's advisory agreement as in effect from year to year. In approving the New Advisory Agreement, the Trustees considered the information provided and the factors considered in connection with the Annual Review as well as such new information (for example, information about the Transaction) as they considered appropriate. In considering the Advisory Agreements, the Trustees did not identify any single factor as determinative. Matters considered by the Trustees, including the independent Trustees, in connection with their review of the New Advisory Agreement included the following: THE TRANSACTION AND THE IMPLICATIONS FOR THE FUND. In evaluating the Transaction, the Trustees considered a wide range of information, including ensuring, to the maximum extent possible, ongoing and future continuity of management of the Fund. THE NATURE, EXTENT AND QUALITY OF THE SERVICES PROVIDED BY THE MANAGER. The Manager has provided local management of the Fund's portfolio. The Trustees noted that the Manager employed Messrs. Young and Albright as co-portfolio managers for the Fund and has established facilities for credit analysis of the Fund's portfolio securities. Mr. Young, based in Salt Lake City, Utah, has extensive municipal bond underwriting experience and has provided local information regarding specific holdings in the Fund's portfolio. Mr. Albright has over 25 years of investment management experience. The portfolio managers have also been available to and have met with the brokerage and financial planner community and with investors and prospective investors to provide them with information generally about the Fund's portfolio, with which to assess the Fund as an investment vehicle for residents of Utah in light of prevailing interest rates and local economic conditions. In addition, both of them have been present at all regular meetings of the Board and Shareholders. The Board considered that the Manager had provided all services the Board deemed necessary or appropriate, including the specific services that the Board has determined are required for the Fund, given that its purpose is to provide shareholders with as high a level of current income exempt from Utah state and regular Federal income taxes as is consistent with preservation of capital. It noted that the Fund was the only fund of its type in the state. The Manager has additionally provided all administrative services to the Fund. The Board considered the nature and extent of the Manager's supervision of third-party service providers, including the Fund's shareholder servicing agent and custodian. The Board considered that the Manager had established and maintained a strong culture of ethical conduct and regulatory compliance. The Trustees also considered representations by the Manager that the persons at the Manager involved in providing those services would not change as a result of the Transaction. The Board concluded that the services provided were appropriate and satisfactory and that the Fund would be well served if they continued. Evaluation of this factor weighed in favor of approval of the New Advisory Agreement. THE INVESTMENT PERFORMANCE OF THE FUND AND THE MANAGER. The Board reviewed each aspect of the Fund's performance and compared its performance with that of its competitors, with national averages and the benchmark index. It was noted that the materials provided by the Manager indicated that the Fund had investment performance that exceeded or was comparable to that of all single-state tax-free municipal bond funds nationwide, including funds of a comparable asset size for one-, five- and ten-year periods. The Board considered these results to be consistent with the purposes of the Fund. The Trustees also considered representations from the Manager that the Transaction was not expected to result in any changes to the personnel managing the Fund's investment portfolio. The Board concluded that the performance of the Fund, in light of market conditions, was satisfactory. Evaluation of this factor indicated to the Trustees that approval of the New Advisory Agreement would be appropriate. THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE MANAGER FROM ITS RELATIONSHIP WITH THE FUND. The information provided contained expense data for the Fund and its competitors as well as data for all single-state tax-free municipal bond funds nationwide, including data for all such front-end sales charge funds of a comparable asset size. The Board compared the expense and fee data with respect to the Fund to similar data about other funds that it found to be relevant. The Board concluded that the expenses of the Fund and the fees paid were generally lower than those being paid by single-state tax-free municipal bond funds nationwide, and by the Fund's competitors. The Trustees noted that in connection with the Annual Review they had concluded that the costs of the services to be provided supported the renewal of the Current Advisory Agreement, and that the Transaction was not expected to result in any change to the advisory fees paid by the Fund or the Fund's total expense ratio. The materials in connection with the Annual Review had shown the profitability to the Manager of its services to the Fund. The Board noted that the Manager was currently waiving a portion of its fees and had been since the Fund's inception. Additionally, it was noted that the Manager had contractually undertaken to waive fees and/or reimburse Fund expenses during the period July 1, 2007 through June 30, 2008 so that total Fund expenses would not exceed 0.85% for Class A Shares, 1.65% for Class C Shares and 0.65% for Class Y Shares. The Manager had indicated that it intended to continue waiving fees as necessary in order that the Fund would remain competitive. The Trustees considered that the profitability to the Manager of its relationship to the Fund was not expected to change as a result of the Transaction because the Transaction was not expected to result in a change to the fees received by the Manager or of the costs of the services to be provided by the Manager. THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUND GROWS. Data provided to the Trustees showed that the Fund's asset size had been increasing in recent years. The Trustees also noted that the materials indicated that the Fund's fees were already generally lower than those of its peers, including those with breakpoints. Additionally, the Trustees noted that the Manager was currently waiving a substantial portion of its fees. Evaluation of these factors indicated to the Board that the New Advisory Agreement should be approved without addition of breakpoints at this time. BENEFITS DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES FROM THEIR RELATIONSHIPS WITH THE FUND. The Board observed that, as is generally true of most fund complexes, the Manager and its affiliates, by providing services to a number of funds including the Fund, were able to spread costs as they would otherwise be unable to do. The Board noted that while that produces efficiencies and increased profitability for the Manager and its affiliates, it also makes their services available to the Fund at favorable levels of quality and cost which are more advantageous to the Fund than would otherwise have been possible. In addition to considering the factors discussed above, which the Trustees regularly consider on an annual basis, the Trustees also gave particular consideration to matters relating to the change of control at AMC including representations from representatives of AMC and the Manager that the proposed change of control is not expected to result in a change in the personnel or operations of the Manager, the investment approach or style of the Manager with respect to the Fund, or the services provided to the Fund by the Manager. The Trustees also considered other factors, either in connection with the Annual Review or with their approval of the New Advisory Agreement. These factors included but were not limited to whether the Fund has operated in compliance with its investment objective and the Fund's record of compliance with its investment restrictions, and the compliance programs of the Fund and the Manager. Based on their evaluation of all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Trustees, including the independent Trustees, concluded that the New Advisory Agreement should be approved and recommended that the shareholders of the Fund vote to approve the New Advisory Agreement for an initial one-year term. SHAREHOLDER MEETING RESULTS (UNAUDITED) The Annual Meeting of Shareholders of Tax-Free Fund for Utah (the "Fund") was held on June 25, 2008. The holders of shares representing 76% of the total net asset value of the shares entitled to vote were present in person or by proxy. At the meeting, the following matters were voted upon and approved by the shareholders (the resulting votes are presented below). 1. To elect Trustees. DOLLAR AMOUNT OF VOTES TRUSTEE FOR WITHHELD ------- --- -------- Tucker Hart Adams $170,377,875 $1,305,892 Thomas A. Christopher $170,377,875 $1,305,892 Gary C. Cornia $170,377,875 $1,305,892 Diana P. Herrmann $170,325,917 $1,357,507 Lyle W. Hillyard $170,280,994 $1,402,774 John C. Lucking $170,377,875 $1,305,892 Anne J. Mills $170,325,917 $1,357,507 2. To ratify the selection of Tait, Weller & Baker LLP as the Fund's independent registered public accounting firm. DOLLAR AMOUNT OF VOTES FOR AGAINST ABSTAIN --- ------- ------- $168,317,995 $715,544 $2,651,104 A Special Meeting of Shareholders of Tax-Free Fund for Utah (the "Fund") was held on June 25, 2008. The holders of shares representing 60% of the total net asset value of the shares entitled to vote were present in person or by proxy. At the meeting, the following matters were voted upon and approved by the shareholders (the resulting votes are presented below). 1. To act on an Advisory and Administration Agreement. DOLLAR AMOUNT OF VOTES FOR AGAINST ABSTAIN --- ------- ------- $137,197,174 $1,544,589 $2,301,816 - -------------------------------------------------------------------------------- PRIVACY NOTICE (UNAUDITED) TAX-FREE FUND FOR UTAH OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Fund, we collect certain non-public personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about the Fund. INFORMATION WE COLLECT. "Non-public personal information" is personally identifiable financial information about you as an individual or your family. The kinds of non-public personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose non-public personal information about you to companies that provide necessary services to us, such as the Fund's transfer agent, distributor, investment adviser or sub-adviser, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. NON-CALIFORNIA RESIDENTS: We also may disclose some of this information to another fund in the Aquila Group of Funds (or its service providers) under joint marketing agreements that permit the funds to use the information only to provide you with information about other funds in the Aquila Group of Funds or new services we are offering that may be of interest to you. California Residents Only: In addition, unless you "opt-out" of the following disclosures using the form that was mailed to you under separate cover, we may disclose some of this information to another fund in the Aquila Group of Funds (or its service providers) under joint marketing agreements that permit the funds to use the information only to provide you with information about other funds in the Aquila Group of Funds or new services we are offering that may be of interest to you. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to non-public personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all non-public personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all non-public information about you that each of these companies may obtain in connection with services provided to the Fund or to you as a shareholder of the Fund. - -------------------------------------------------------------------------------- (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 Anne J. Mills, Vice Chair Tucker Hart Adams Thomas A. Christopher Diana P. Herrmann Lyle W. Hillyard John C. Lucking OFFICERS Diana P. Herrmann, President Jerry G. McGrew, Senior Vice President Kimball L. Young, Senior Vice President and Co-Portfolio Manager Thomas S. Albright, Senior Vice President and Co-Portfolio Manager M. Kayleen Willis, Vice President Robert W. Anderson, Chief Compliance Officer Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 TRANSFER AND SHAREHOLDER SERVICING AGENT PNC Global Investment Servicing 101 Sabin Street Pawtucket, RI 02860 CUSTODIAN JPMORGAN CHASE BANK, N.A. 1111 Polaris Parkway Columbus, Ohio 43240 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TAIT, WELLER & BAKER LLP 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Further information is contained in the Prospectus, which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of June 30, 2008 (the end of the reporting period) the Fund has adopted a code of ethics that applies to the Fund's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002; (f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of Ethics that applies to the Fund's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Fund's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Fund's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various areas, including the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties under the Charter. ITEM 4. PRINCIPAL ACCOUNTING FEES AND SERVICES. a) Audit Fees - The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements were $16,000 in 2007 and $14,000 in 2008. b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years. c) Tax Fees - The Registrant was billed by the principal accountant $3,000 and $3,000 in 2007 and 2008, respectively, for return preparation and tax compliance. d) All Other Fees - There were no additional fees paid for audit and non-audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Included in Item 1 above ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Board of Directors of the Registrant has adopted a Nominating Committee Charter which provides that the Nominating Committee (the 'Committee') may consider and evaluate nominee candidates properly submitted by shareholders if a vacancy among the Independent Trustees of the Registrant occurs and if, based on the Board's then current size, composition and structure, the Committee determines that the vacancy should be filled. The Committee will consider candidates submitted by shareholders on the same basis as it considers and evaluates candidates recommended by other sources. A copy of the qualifications and procedures that must be met or followed by shareholders to properly submit a nominee candidate to the Committee may be obtained by submitting a request in writing to the Secretary of the Registrant. ITEM 11. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 12. EXHIBITS. (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAX-FREE FUND FOR UTAH By: /s/ Diana P. Herrmann - ----------------------------------- President and Trustee September 8, 2008 By: /s/ Joseph P. DiMaggio - ------------------------------------- Chief Financial Officer and Treasurer September 8, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 And the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Diana P. Herrmann - ----------------------------------- Diana P. Herrmann President and Trustee September 8, 2008 By: /s/ Joseph P. DiMaggio - ------------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer September 8, 2008 TAX-FREE FUND FOR UTAH EXHIBIT INDEX (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940. EX-99.CERT 2 tffu306cert.txt SECTION 306 CERTIFICATION CERTIFICATIONS I, Diana P. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Tax-Free Fund For Utah; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 8, 2008 /s/ Diana P. Herrmann - ------------------------ Title: President and Trustee I, Joseph P. DiMaggio, certify that: 1. I have reviewed this report on Form N-CSR of Tax-Free Fund For Utah; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 8, 2008 /s/ Joseph P. DiMaggio - -------------------------- Title: Chief Financial Officer and Treasurer EX-99.906 CERT 3 tffu906cert.txt SECTION 906 CERTIFICATION CERTIFICATION Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18,United States Code), each of the undersigned officers of Tax-Free Fund For Utah, do hereby certify to such officer's knowledge, that: The report on Form N-CSR of Tax-Free Fund For Utah for the period ended June 30, 2008, (the "Form N-CSR") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Tax-Free Fund For Utah. Dated: September 8, 2008 /s/ Diana P. Herrmann ------------------------- President and Trustee Tax-Free Fund For Utah Dated: September 8, 2008 /s/ Joseph P. DiMaggio ------------------------- Chief Financial Officer and Treasurer Tax-Free Fund For Utah A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Tax-Free Fund For Utah and will be retained by Tax-Free Fund For Utah and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. EX-99.CODE ETH 4 sarbanes.txt SARBANES-OXLEY CODE OF ETHICS AQUILA GROUP OF FUNDSsm CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS UNDER SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 I. Covered Officers/Purpose of the Code This is the code of ethics (the "Code") for the investment companies within the Aquilasm Group of Funds (collectively, "Funds" and each, a "Fund," each of which is detailed in Exhibit A). It applies to the Fund's Principal Executive Officer(s) and Principal Financial Officer(s) (the "Covered Officers," each of whom is listed in Exhibit B), for the purpose of promoting: *honest and ethical conduct, including the ethical handling of actual; *or apparent conflicts of interest between personal and professional relationships; *full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; *compliance with applicable laws and governmental rules and regulations; *the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and *accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. The Fund's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. Each Covered Officer must: *not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; *not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; There are some conflict of interest situations that should always be discussed with the general counsel of the Fund ("General Counsel"), if material. Examples of these include: *service as a director on the board of any public or private company; *the receipt of any non-nominal gifts; *the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business- related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; *any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; *a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance Each Covered Officer should familiarize himself/herself with the disclosure requirements generally applicable to the Fund; *each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Trustees and auditors, and to governmental regulators and self-regulatory organizations; each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: *upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code; *annually thereafter affirm to the Board that he/she has complied with the requirements of the Code; *not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and *notify the Chair of the Audit Committee of the Fund promptly if he/she knows of any violation of this Code. Failure to do so is itself a violation of this Code. *file at least annually a complete and accurate Funds' Trustees and Officers Questionnaire. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers1 sought by the Chairman of the Board or the President will be considered by the Audit Committee (the "Committee"). The Funds will follow these procedures in investigating and enforcing this Code: *the General Counsel will take all appropriate action to investigate any potential violations reported to him; *if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; any matter that the General Counsel believes is a violation will be reported to the Committee; * if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * the Committee will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as othe policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act and the adviser's more detailed policies and procedures set forth in their respective codes are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit B, must be approved or ratified by a majority vote of the Board, including a majority of independent Trustees. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and the General Counsel, and if deemed appropriate by the Board, with other Funds in the complex where the Funds share a common Covered Officer. VIII. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. Exhibit A Funds Covered by this Code of Ethics - ------------------------------------ Aquila Three Peaks High Income Fund Aquila Rocky Mountain Equity Fund Capital Cash Management Trust Cash Assets Trust series, consisting of Pacific Capital Cash Assets Trust Pacific Capital Tax-Free Cash Assets Trust Pacific Capital U.S. Government Cash Assets Trust Churchill Cash Reserves Trust Churchill Tax-Free Trust Hawaiian Tax-Free Trust Narragansett Insured Tax-Free Income Fund Tax-Free Fund For Utah Tax-Free Fund of Colorado Tax-Free Trust of Arizona Tax-Free Trust of Oregon Exhibit B Persons Covered by this Code of Ethics - -------------------------------------- The following officers of each Fund, and the identities of such officers as of June 30, 2008: Chairman and/or Chairman Emeritus And Founder Lacy B. Herrmann Chair, Vice Chair and/or Trustee and/or President Diana P. Herrmann Chief Financial Officer and Treasurer Joseph P. DiMaggio -----END PRIVACY-ENHANCED MESSAGE-----