N-CSR 1 tffuncsr.txt TAX-FREE FUND FOR UTAH 12/31/2008 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: 6/30/08 Date of reporting period: 12/31/08 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. SEMI-ANNUAL REPORT DECEMBER 31, 2008 [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](R) TAX-FREE FUND FOR UTAH A TAX-FREE INCOME INVESTMENT [LOGO OF THE AQUILA GROUP OF FUNDS: ONE OF THE AN EAGLE'S HEAD] AQUILA GROUP OF FUNDS(R) [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](SM) SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS TAX-FREE FUND FOR UTAH "PROPER ASSET ALLOCATION - A STRATEGY FOR ALL SEASONS" February, 2009 The market has definitely been volatile enough recently to cause even the most seasoned investor to ask, "What should I do now?" We believe you will be in a better position to weather this, or any, economic storm, if your portfolio is built with a strong foundation. In short, is your portfolio properly allocated based on your specific needs? As you hopefully already know, asset allocation is an investment strategy that strives to balance risk and reward by diversifying assets according to your specific desires. These include: o investment time horizon (specifically your age and retirement objectives); o risk threshold (how much of your investment capital you are willing to lose during a given time frame); o financial situation (your wealth, income, expenses, tax bracket, liquidity needs, etc.); and o goals (the financial goals you and your family want to achieve). Since the three main asset classes - equities, fixed-income, and cash/cash equivalents - have different levels of risk and return, each is expected to behave differently over time. The objective of asset allocation is to create a diversified portfolio with an acceptable level of risk and the highest possible return given that level of risk. Although there is no simple formula that can find the right asset allocation for every individual, the consensus among most financial professionals is that asset allocation is one of the most important decisions that investors make. NOT A PART OF THE SEMI-ANNUAL REPORT The way you allocate your investment among stocks, bonds, and cash/cash equivalents will be the principal determinant of your investment results - secondary to your selection of individual securities. Once you and your financial professional have developed an appropriate asset allocation for your portfolio, we believe that changes should be made based on need, not on scary headlines. A properly constructed portfolio with sound asset allocation should be in a good position to weather all seasons. Sincerely, /s/ Lacy B. Herrmann /s/ Diana P. Herrmann Lacy B. Herrmann Diana P. Herrmann Founder and Chairman Emeritus President NOT A PART OF THE SEMI-ANNUAL REPORT
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (16.7%) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- CITY, COUNTY AND STATE (7.9%) Alamo, Texas Community College District $ 595,000 4.375%, 02/15/25 MBIA Insured ........................... Aa2/AA $ 549,548 Anderson, Indiana San District 505,000 4.600%, 07/15/23 AMBAC Insured .......................... A3/A 473,993 Cedar City, Utah Special Improvement District Assessment 235,000 5.050%, 09/01/10 ........................................ NR/NR* 225,309 215,000 5.200%, 09/01/11 ........................................ NR/NR* 200,840 Cedar Park, Texas 835,000 4.500%, 02/15/22 MBIA Insured ........................... A1/AA 813,975 Coral Canyon, Utah Special Service District 40,000 4.850%, 07/15/17 ........................................ NR/NR* 102,003 580,000 5.700%, 07/15/18 ........................................ NR/NR* 436,943 Dawson County, Texas Hospital District 555,000 4.375%, 02/15/24 AMBAC Insured .......................... Baa1/A 487,090 Denton County, Texas 700,000 4.500%, 07/15/24 MBIA Insured ........................... Aa1/AA+ 673,484 400,000 4.500%, 07/15/25 MBIA Insured ........................... Aa1/AA+ 376,308 1,500,000 4.250%, 07/15/27 MBIA Insured ........................... Aa1/AA+ 1,315,815 Harris County, Texas Unlimited Tax 300,000 4.500%, 10/01/23 ........................................ Aa1/AAA 294,906 Harris County, Texas Utility District #268 905,000 4.375%, 09/01/27 Radian Insured ......................... A3/BBB+ 725,285 Hurricane, Utah 65,000 5.400%, 11/01/09 Radian Insured ......................... A3/A 66,850 King County, Washington Unlimited Tax 1,000,000 4.500%, 12/01/25 FSA Insured ............................ Aaa/AAA 958,780 Laredo, Texas 300,000 4.250%, 08/15/21 AMBAC Insured .......................... Aa3/AA 291,144 500,000 4.500%, 02/15/24 AMBAC Insured .......................... Aa3/AA 481,390 McKinney, Texas 1,700,000 4.500%, 08/15/23 Syncora Guarantee Inc. Insured ......... Aa2/AA+ 1,636,437 1,375,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa2/AA+ 1,395,460 695,000 4.375%, 08/15/25 MBIA Insured ........................... Aa2/AA+ 641,631
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- CITY, COUNTY AND STATE (CONTINUED) Mesquite, Texas $ 510,000 4.625%, 02/15/22 FSA Insured ............................ Aaa/AAA $ 510,383 San Antonio, Texas 125,000 4.750%, 02/01/24 FSA Insured ............................ Aaa/AAA 124,331 San Patricio County, Texas 450,000 4.600%, 04/01/25 AMBAC Insured .......................... Aa3/NR 426,181 Texas State 415,000 4.500%, 08/01/22 ........................................ Aa1/AA 407,136 Waco, Texas 2,560,000 4.500%, 02/01/24 MBIA Insured ........................... Aa3/AA 2,398,694 Washington County, Utah 1,250,000 5.000%, 10/01/22 MBIA Insured ........................... A1/NR 1,260,912 Williamson County, Texas 460,000 4.500%, 02/15/26 FSA Insured ............................ Aaa/AAA 426,935 -------------- Total City, County and State ............................ 17,701,763 -------------- SCHOOL DISTRICT (8.8%) Borger, Texas Independent School District 400,000 4.500%, 02/15/24 ........................................ NR/AAA 385,112 500,000 4.500%, 02/15/25 ........................................ NR/AAA 469,695 Canutillo, Texas Independent School District 500,000 4.500%, 08/15/25 ........................................ NR/AAA 468,250 Clint, Texas Independent School District 265,000 4.250%, 02/15/28 ........................................ NR/AAA 229,736 Dripping Springs, Texas Independent School District 25,000 4.375%, 08/15/22 ........................................ Aaa/AAA 704,316 Eagle Mountain & Saginaw, Texas Independent School District 300,000 4.750%, 08/15/21 ........................................ Aaa/AAA 304,062 525,000 4.750%, 08/15/23 ........................................ Aaa/AAA 524,428 Freemont County, Wyoming School District #14 355,000 4.500%, 06/15/26 ........................................ NR/BBB 332,759 Frisco, Texas Independent School District 1,260,000 5.000%, 07/15/26 ........................................ Aaa/NR 1,266,010
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- SCHOOL DISTRICT (CONTINUED) Galena Park, Texas Independent School District $ 295,000 4.625%, 08/15/25 ........................................ Aaa/NR $ 283,247 Harrisburg, South Dakota Independent School District No. 41-2 1,370,000 4.500%, 01/15/24 FSA Insured ............................ Aa3/NR 1,323,489 Jacksboro, Texas Independent School District 815,000 4.700%, 02/15/23 ........................................ NR/AAA 814,128 La Feria, Texas Independent School District 210,000 4.400%, 02/15/24 ........................................ Aaa/NR 197,083 Lancaster, Texas School District 300,000 4.375%, 02/15/22 ........................................ Aaa/AAA 291,669 Lindale, Texas Independent School District 440,000 4.250%, 02/15/21 ........................................ NR/AAA 429,396 1,000,000 4.250%, 02/15/22 ........................................ NR/AAA 960,080 445,000 4.375%, 02/15/23 ........................................ NR/AAA 427,520 Lovejoy, Texas Independent School District 200,000 4.500%, 02/15/24 ........................................ Aaa/AAA 192,556 Muleshoe, Texas Independent School District 380,000 4.500%, 02/15/22 ........................................ NR/AAA 363,033 250,000 4.500%,0 2/15/23 ........................................ NR/AAA 235,045 200,000 4.500%, 02/15/24 ........................................ NR/AAA 185,766 220,000 4.500%, 02/15/25 ........................................ NR/AAA 202,792 Navasota, Texas Independent School District 475,000 5.000%, 08/15/23 FGIC Insured ........................... A3/NR 474,487 Prosper, Texas Independent School District 395,000 4.125%, 08/15/21 ........................................ NR/AAA 380,480 Southern, Texas Independent School District 910,000 4.500%, 02/01/26 ........................................ Aaa/AAA 845,608 Spring, Texas Independent School District 300,000 4.750%, 08/15/23 ........................................ Aaa/AAA 299,673 1,400,000 4.500%, 08/15/27 ........................................ Aaa/AAA 1,265,348 Uintah County, Utah School District 455,000 4.250%, 02/01/24 ........................................ Aaa/NR 425,252
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- SCHOOL DISTRICT (CONTINUED) Van, Texas Independent School District $ 750,000 4.875%, 02/15/26 ........................................ Aaa/AAA $ 747,810 Washington County, Utah 440,000 5.000%, 10/01/18 Syncora Guarantee Inc. Insured ......... A1/NR 458,660 465,000 5.000%, 10/01/19 Syncora Guarantee Inc. Insured ......... A1/NR 479,452 490,000 5.000%, 10/01/20 Syncora Guarantee Inc. Insured ......... A1/NR 500,491 510,000 5.000%, 10/01/21 Syncora Guarantee Inc. Insured ......... A1/NR 516,553 535,000 5.000%, 10/01/22 Syncora Guarantee Inc. Insured ......... A1/NR 536,546 565,000 5.000%, 10/01/23 Syncora Guarantee Inc. Insured ......... A1/NR 559,152 320,000 5.000%, 10/01/24 Syncora Guarantee Inc. Insured ......... A1/NR 314,502 Washoe County, Nevada School District 200,000 4.625%, 06/01/23 FGIC Insured ........................... Aa3/AA 194,356 Waxahachie, Texas Independent School District 605,000 4.400%, 08/15/26 ........................................ Aaa/NR 553,200 630,000 4.400%, 08/15/27 ........................................ Aaa/NR 565,148 -------------- Total School District ................................... 19,706,890 -------------- Total General Obligation Bonds .......................... 37,408,653 -------------- REVENUE BONDS (81.3%) --------------------------------------------------------- AIRPORT (1.5%) Clark County, Nevada Passenger Facility Charge 255,000 4.750%, 07/01/22 MBIA Insured AMT ....................... Aa3/AA 235,809 Hillsborough County, Florida Aviation Authority 2,185,000 5.250%, 10/01/23 MBIA Insured AMT ....................... Aa3/AA 1,872,982 Miami-Dade County, Florida Aviation Revenue 1,700,000 5.000%, 10/01/28 Series C MBIA Insured AMT .............. A2/AA 1,193,026 -------------- Total Airport ........................................... 3,301,817 -------------- EDUCATION (23.5%) Broward County, Florida School Board COP 1,680,000 4.500%, 07/01/23 Series A FGIC Insured .................. A1/AA 1,513,243 Carmel, Indiana 2002 School Building Corp. 1,235,000 4.300%, 01/15/23 FSA Insured ............................ Aa3/AAA 1,134,446 1,525,000 4.300%, 07/15/23 FSA Insured ............................ Aa3/AAA 1,398,456
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- EDUCATION (CONTINUED) Central Washington State University System Revenue $ 1,265,000 4.375%, 05/01/26 FSA Insured ........................... Aa3/NR $ 1,135,907 Florida State Board of Education Public Education 210,000 4.500%, 06/01/25 FSA Insured ............................ Aa1/AAA 195,271 Hillsborough County, Florida School Board COP 560,000 4.250%, 07/01/26 MBIA Insured ........................... Aa3/AA 472,858 Laredo, Texas Independent School District Public Facility Corp. 190,000 5.000%, 08/01/24 AMBAC Insured .......................... Aa3/AA 191,404 La Vernia, Texas Higher Education Finance Corp. 3,617,000 6.500%, 03/12/38 ........................................ NR/NR* 2,593,100 Nevada System Higher Education COP 1,000,000 5.000%, 07/01/25 AMBAC Insured .......................... Aa3/AA- 1,000,580 Salt Lake County, Utah Westminster College Project 435,000 4.750%, 10/01/21 ........................................ NR/BBB 314,936 2,300,000 5.000%, 10/01/22 ........................................ NR/BBB 1,661,934 1,250,000 5.000%, 10/01/25 ........................................ NR/BBB 858,662 2,025,000 5.125%, 10/01/28 ........................................ NR/BBB 1,347,577 Texas State College Student Loan Revenue 100,000 5.000%, 08/01/22 AMT .................................... Aa1/AA 98,929 Texas State University System Financing Revenue 655,000 4.375%, 03/15/23 FSA Insured ............................ Aaa/AAA 611,665 Tyler, Texas Independent School District 325,000 5.000%, 02/15/26 FSA Insured ............................ Aaa/AAA 326,680 University of Nevada (University Revenues) 190,000 4.500%, 07/01/24 MBIA Insured ........................... Aa3/AA 180,903 University of Utah COP 3,170,000 4.350%, 12/01/26 AMBAC Insured .......................... Aa3/AA 2,882,291 Utah County, Utah Charter School Revenue Lakeview Academy 315,000 5.350%, 07/15/17 Series A ............................... NR/NR* 255,008
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- EDUCATION (CONTINUED) Utah County, Utah Charter School Revenue Lincoln Academy $ 450,000 5.450%, 06/15/17 Series A ............................... NR/NR* $ 368,941 Utah County, Utah Charter School Revenue Renaissance Academy 340,000 5.350%, 07/15/17 Series A ............................... NR/NR* 268,583 Utah County, Utah School Facility 1,320,000 6.500%, 12/21/25 ........................................ NR/NR* 973,566 Utah State Board of Regents Auxiliary & Campus Facility 1,000,000 4.125%, 04/01/20 MBIA Insured ........................... Aa2/AA 954,250 Utah State Board of Regents Lease Revenue 410,000 4.500%, 05/01/20 AMBAC Insured ......................... Aa3/AA 412,517 425,000 4.500%, 05/01/21 AMBAC Insured Aa3/AA 421,800 450,000 4.625%, 05/01/22 AMBAC Insured ......................... Aa3/AA 444,028 120,000 4.650%, 05/01/23 AMBAC Insured ......................... Aa3/AA 116,930 Utah State Board of Regents Office Facility Revenue 450,000 5.050%, 02/01/20 MBIA Insured ........................... A2/AA 457,780 360,000 5.125%, 02/01/22 MBIA Insured ........................... A2/AA 364,212 1,045,000 5.000%, 04/01/23 MBIA Insured ........................... Aa3/AA 1,054,948 Utah State Charter School Finance Authority Channing Hall Academy 500,000 5.750%, 07/15/22 Series A ............................... NR/NR* 373,370 Utah State Charter School Finance Authority Entheos Academy 5,930,000 6.750%, 08/15/38 ........................................ NR/NR* 4,282,765 Utah State Charter School Finance Authority Fast Forward Academy 3,108,800 6.500%, 11/15/37 144A ................................... NR/NR* 2,114,792 Utah State Charter School Finance Authority G. Washington Academy 1,000,000 6.750%, 07/15/28 ........................................ NR/NR* 759,910
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- EDUCATION (CONTINUED) Utah State Charter School Finance Authority Legacy Prep Academy $ 5,780,000 6.750%, 06/15/38 ........................................ NR/NR* $ 5,743,124 Utah State Charter School Finance Authority Noah Webster Academy 3,155,000 6.250%, 06/15/28 ........................................ NR/NR* 2,250,903 1,000,000 6.500%, 06/15/38 ........................................ NR/NR* 687,500 Utah State Charter School Finance Authority Rockwell Charter School 1,000,000 6.750%, 08/15/28 ........................................ NR/NR* 758,730 Utah State Charter School Finance Authority Ronald Wilson Reagan Academy 1,250,000 5.750%, 02/15/22 Series A ............................... NR/NR* 940,837 Utah State Charter School Finance Authority Summit Academy 1,500,000 5.125%, 06/15/17 ........................................ NR/BBB- 1,241,295 Utah State Charter School Finance Authority Venture Academy 7,305,000 7.250%, 11/15/38 ........................................ NR/NR* 6,389,537 Washington State University Revenue 735,000 4.600%, 10/01/29 FSA Insured ............................ Aaa/AAA 667,608 Weber State University, Utah Student Facilities System 300,000 5.100%, 04/01/16 Series A (pre-refunded) ................ NR/AAA 326,895 425,000 5.250%, 04/01/19 Series A (pre-refunded) ................ NR/AAA 464,797 1,825,000 4.400%, 04/01/27 FSA Insured ............................ NR/AAA 1,669,930 -------------- Total Education ......................................... 52,683,398 -------------- HEALTHCARE (0.6%) Harris County, Texas Health Facility Development Corp. 145,000 5.000%, 11/15/28 AMBAC Insured .......................... Baa1/AAA 112,455
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- HEALTHCARE (CONTINUED) Reno, Nevada Hospital Revenue, Washoe Medical Center $ 725,000 5.000%, 06/01/23 FSA Insured ............................ Aaa/AAA $ 625,740 680,000 5.000%, 06/01/23 FSA Insured ............................ Aaa/AAA 586,901 -------------- Total Healthcare ........................................ 1,325,096 -------------- HOUSING (14.5%) Alaska Housing Finance Corp. Housing Revenue 1,000,000 4.700%, 06/01/27 AMT .................................... Aa2/AA 794,150 1,000,000 5.250%, 12/01/28 AMT .................................... Aa2/AA 784,690 Alaska State Local Housing Authority 500,000 5.125%, 06/01/27 Series A2 AMT .......................... Aaa/AAA 396,575 Florida Housing Finance Corp. 730,000 5.000%, 07/01/21 AMT .................................... Aa1/AA+ 636,195 1,470,000 4.550%, 07/01/22 AMT .................................... Aa1/AA+ 1,141,793 500,000 6.000%, 07/01/28 ........................................ Aa1/AA+ 492,380 Henderson, Nevada Local Improvement District 150,000 5.000%, 09/01/15 ........................................ NR/NR* 67,802 200,000 5.000%, 09/01/16 ........................................ NR/NR* 90,360 200,000 5.050%, 09/01/17 ........................................ NR/NR* 90,326 200,000 5.100%, 09/01/18 ........................................ NR/NR* 90,298 Indiana Housing & Community Development Authority 1,290,000 4.900%, 07/01/26 AMT .................................... Aaa/NR 976,956 Indiana State Housing Finance Authority Single Family 245,000 4.850%, 07/01/22 AMT .................................... Aaa/NR 197,823 Indianapolis, Indiana Multi-Family 470,000 4.850%, 01/01/21 AMT .................................... Aaa/NR 389,292 Miami-Dade County, Florida Housing Finance Authority 535,000 5.000%, 11/01/23 FSA Insured AMT ........................ NR/AAA 441,423 Nevada Housing Multi-Family, LOC: US Bank 1,000,000 4.750%, 04/01/39 AMT .................................... NR/AA+ 781,770
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- HOUSING (CONTINUED) North Dakota Housing Authority Home Mortgage Revenue $ 2,000,000 5.400%, 07/01/23 AMT .................................... Aa1/NR $ 1,733,620 1,000,000 5.650%, 07/01/28 AMT .................................... Aa1/NR 839,300 950,000 5.400%, 07/01/28 ........................................ Aa1/NR 858,943 Orange County, Florida Housing Finance Authority 120,000 5.150%, 03/01/22 ........................................ Aaa/NR 116,057 Seattle, Washington Housing Authority 730,000 4.400%, 11/01/21 AMT .................................... NR/AAA 573,327 Snohomish County, Washington Housing Authority 150,000 4.750%, 09/01/10 AMT .................................... NR/NR* 144,646 185,000 4.875%, 09/01/12 AMT .................................... NR/NR* 169,989 225,000 5.000%, 09/01/13 AMT .................................... NR/NR* 202,081 185,000 5.000%, 09/01/14 AMT .................................... NR/NR* 162,047 145,000 5.100%, 09/01/15 AMT .................................... NR/NR* 124,555 South Dakota Housing Development Authority 1,250,000 4.900%, 05/01/26 AMT .................................... Aa1/AAA 966,800 500,000 6.000%, 05/01/28 ........................................ Aa1/AAA 496,560 Texas State Housing Revenue 2,020,000 4.800%, 09/01/20 AMT .................................... Aaa/AAA 1,654,865 495,000 4.800%, 09/01/27 AMT .................................... Aa1/AAA 372,671 1,000,000 5.250%, 09/01/32 AMT .................................... Aa1/AAA 792,320 Utah Housing Corporation Single Family Mortgage 25,000 5.250%, 07/01/23 AMT .................................... Aa2/AA 21,072 195,000 4.875%, 07/01/23 AMT .................................... Aa3/AA- 155,499 1,275,000 5.125%, 07/01/24 AMT .................................... Aa3/AA- 1,058,008 1,015,000 5.000%, 07/01/25 AMT .................................... Aa3/AA- 808,153 120,000 5.650%, 07/01/27 AMT .................................... Aa2/AA 101,053 605,000 5.100%, 01/01/26 AMT .................................... Aa3/AA- 483,831 610,000 5.200%, 01/01/28 AMT .................................... Aa3/AA- 519,098 2,305,000 5.800%, 07/01/28 AMT .................................... Aa3/AA- 1,979,073 1,000,000 5.700%, 07/01/28 AMT .................................... Aa3/AA- 837,960 995,000 5.500%, 07/01/28 AMT ................................... Aa3/AA- 803,403
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- HOUSING (CONTINUED) Utah Housing Corporation Single Family Mortgage (continued) $ 1,310,000 6.100%, 01/01/29 AMT .................................... Aa3/AA- $ 1,149,839 805,000 5.000%, 07/01/31 AMT .................................... Aa2/AA 603,959 495,000 5.000%, 01/01/32 AMT .................................... Aa2/AA 363,592 Utah State Housing Finance Agency 125,000 5.700%, 07/01/15 AMT .................................... Aa3/AA- 119,906 40,000 5.650%, 07/01/16 Series 1994C ........................... Aaa/AAA 38,416 30,000 5.400%, 07/01/16 AMT .................................... Aa2/AA 28,539 15,000 6.000%, 07/01/17 AMT .................................... Aaa/AAA 14,012 560,000 5.500%, 07/01/18 AMT .................................... Aa3/AA- 555,666 35,000 5.300%, 07/01/18 AMT .................................... Aaa/AAA 32,637 60,000 5.000%, 07/01/18 AMT .................................... Aaa/AAA 53,702 75,000 5.400%, 07/01/20 AMT .................................... Aa2/AA 64,531 140,000 5.600%, 07/01/23 AMT .................................... Aa2/AA 120,110 35,000 5.700%, 07/01/26 MBIA Insured ........................... A2/AA 35,044 Washington State Housing Finance Commission 2,290,000 4.800%, 12/01/21 AMT .................................... Aaa/NR 1,854,465 Washington State Housing Finance Commission Single Family Mortgage 2,345,000 5.000%, 06/01/22 ........................................ Aaa/NR* 1,934,695 Wyoming Community Development Authority Housing Revenue 2,000,000 5.000%, 12/01/22 Series 10 AMT .......................... Aa1/AA+ 1,647,600 120,000 5.000%, 12/01/22 ........................................ Aa1/AA+ 117,558 415,000 5.150%, 06/01/23 AMT .................................... Aa1/AA+ 344,994 -------------- Total Housing ........................................... 32,426,029 -------------- 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 250,110
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL (CONTINUED) Utah County Environmental Improvement Revenue $ 935,000 5.050%, 11/01/17 ........................................ Baa1/BBB+ $ 907,043 -------------- Total Industrial Development & Pollution Control 1,157,153 -------------- LEASE (13.6%) Celebration Community Development District, Florida 290,000 5.000%, 05/01/22 MBIA Insured ........................... Baa1/AA 291,546 Clark County, Nevada Improvement District Revenue 715,000 5.125%, 12/01/19 ........................................ NR/NR* 510,367 Clark County, Nevada Improvement District Special Local Improvement #128 (Summerlin) 500,000 5.000%, 02/01/21 Series A ............................... NR/NR* 331,445 Davis County, Utah Lease Revenue DMV Project 78,000 5.400%, 11/01/17 ........................................ NR/NR* 63,111 83,000 5.450%, 11/01/18 ........................................ NR/NR* 65,606 87,000 5.500%, 11/01/19 ........................................ NR/NR* 67,365 92,000 5.550%, 11/01/20 ........................................ NR/NR* 69,787 97,000 5.600%, 11/01/21 ........................................ NR/NR* 72,137 103,000 5.650%, 11/01/22 ........................................ NR/NR* 74,772 108,000 5.700%, 11/01/23 ........................................ NR/NR* 76,910 115,000 5.700%, 11/01/24 ........................................ NR/NR* 80,375 121,000 5.750%, 11/01/25 ........................................ NR/NR* 82,631 128,000 5.750%, 11/01/26 ........................................ NR/NR* 85,736 Marion County, Indiana Convention & Recreational Facilities Authority 390,000 5.000%, 06/01/27 MBIA Insured ........................... A2/AA 332,994 Middle Village, Florida Community Development District Special Assessment Revenue 1,170,000 6.750%, 05/01/25 ........................................ NR/NR* 911,196 New Albany, Indiana Development Authority 500,000 4.250%, 02/01/22 ........................................ NR/A- 440,400
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* $ 732,740 Port Saint Lucie, Florida Special Assessment Revenue Southwest Annexation District 1-B 500,000 5.000%, 07/01/27 MBIA Insured ........................... A2/AA 445,000 Red River, Texas Higher Education TCU Project 1,000,000 4.375%, 03/15/25 ........................................ Aa3/NR 873,820 Salt Lake Valley, Utah Fire Service District Lease Revenue 610,000 5.200%, 04/01/28 ........................................ Aa3/NR 586,991 1,000,000 5.250%, 04/01/30 ........................................ Aa3/NR 942,550 South Dakota State Building Authority Revenue 500,000 4.500%, 06/01/24 FGIC Insured ........................... Baa3/AA- 455,500 Spanish Fork, Utah Charter School 1,900,000 5.550%, 11/15/21 ........................................ NR/NR* 1,425,152 Tolomato Community, Florida Development District Special Assessment Revenue 1,000,000 6.450%, 05/01/23 ........................................ NR/NR* 703,190 Twin Creeks, Utah Special Service District BAN 12,000,000 7.250%, 07/15/10 ........................................ NR/NR* 11,488,440 Uintah County, Utah Municipal Building Authority Lease Revenue 1,500,000 5.300%, 06/01/28 ........................................ NR/A+ 1,413,240 Utah State Building Ownership Authority 465,000 5.000%, 05/15/21 ........................................ Aa1/AA+ 471,543 1,755,000 5.250%, 05/15/23 ........................................ Aa1/AA+ 1,773,638 510,000 5.000%, 05/15/23 ........................................ Aa1/AA+ 508,934 1,845,000 5.250%, 05/15/24 ........................................ Aa1/AA+ 1,856,845 1,080,000 5.000%, 05/15/25 ........................................ Aa1/AA+ 1,057,493 West Bountiful, Utah Courthouse Revenue 410,000 5.000%, 05/01/19 ........................................ NR/A 446,900
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- LEASE (CONTINUED) West Valley City, Utah Municipal Building Authority Lease Revenue Refunding $ 1,890,000 4.375%, 08/01/26 Series A FGIC Insured .................. Baa3/A+ $ 1,670,911 -------------- Total Lease ............................................. 30,409,265 -------------- TAX REVENUE (12.0%) Aqua Isles, Florida Community Development District Revenue 955,000 7.000%, 05/01/38 ........................................ NR/NR* 659,198 Bay County, Florida Sales Tax Revenue 175,000 4.750%, 09/01/23 FSA Insured ............................ Aa3/NR 165,951 Bountiful, Utah Special Improvement District Special Assessment Revenue 203,000 5.000%, 06/01/14 ........................................ NR/NR* 169,676 213,000 5.150%, 06/01/15 ........................................ NR/NR* 173,810 224,000 5.300%, 06/01/16 ........................................ NR/NR* 178,123 236,000 5.500%, 06/01/17 ........................................ NR/NR* 184,238 249,000 5.650%, 06/01/18 ........................................ NR/NR* 192,168 Clark County, Nevada Improvement District 250,000 5.000%, 08/01/16 ........................................ NR/NR* 162,500 Coral Canyon, Utah Special Service District 110,000 5.000%, 07/15/13 ........................................ NR/NR* 99,321 250,000 5.500%, 07/15/18 ........................................ NR/NR* 185,278 Henderson, Nevada Local Improvement District 100,000 4.500%, 09/01/12 ........................................ NR/NR* 85,739 300,000 5.000%, 09/01/14 ........................................ NR/NR* 240,483 300,000 5.000%, 09/01/15 ........................................ NR/NR* 231,882 240,000 5.000%, 03/01/16 ........................................ NR/NR* 183,257 Holladay, Utah Redevelopment Agency 2,977,500 4.900%, 12/30/20 ........................................ NR/NR* 2,186,021 Jordanelle, Utah Special Service District 186,000 5.000%, 11/15/14 ........................................ NR/NR* 156,499 196,000 5.100%, 11/15/15 ........................................ NR/NR* 161,251 206,000 5.200%, 11/15/16 ........................................ NR/NR* 165,140
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- TAX REVENUE (CONTINUED) Jordanelle, Utah Special Service District (continued) $ 216,000 5.300%, 11/15/17 ........................................ NR/NR* $ 169,115 228,000 5.400%, 11/15/18 ........................................ NR/NR* 176,062 240,000 5.500%, 11/15/19 ........................................ NR/NR* 181,560 253,000 5.600%, 11/15/20 ........................................ NR/NR* 187,301 268,000 5.700%, 11/15/21 ........................................ NR/NR* 194,217 283,000 5.800%, 11/15/22 ........................................ NR/NR* 201,148 299,000 6.000%, 11/15/23 ........................................ NR/NR* 210,454 Jordanelle, Utah Special Service Improvement District 175,000 8.000%, 10/01/11 ........................................ NR/NR* 174,578 La Verkin, Utah Sales and Franchise Tax Revenue 571,000 5.100%, 07/15/27 ........................................ NR/NR* 405,524 Lehi, Utah Sales Tax 790,000 5.000%, 06/01/24 FSA Insured ............................ Aaa/AAA 800,033 Mesquite, Nevada New Special Improvement District 240,000 5.300%, 08/01/11 ........................................ NR/NR* 220,675 175,000 4.600%, 08/01/11 ........................................ NR/NR* 157,560 185,000 4.750%, 08/01/12 ........................................ NR/NR* 160,262 220,000 4.900%, 08/01/13 ........................................ NR/NR* 184,028 135,000 5.250%, 08/01/17 ........................................ NR/NR* 99,411 300,000 5.350%, 08/01/19 ........................................ NR/NR* 208,989 130,000 5.400%, 08/01/20 ........................................ NR/NR* 88,300 475,000 5.500%, 08/01/25 ........................................ NR/NR* 293,403 Mountain Regional Water District, Utah Special Assessment 1,320,000 7.000%, 12/01/18 ........................................ NR/NR* 990,858 Mountain Regional Water, Utah Special Service District 2,000,000 5.000%, 12/15/20 MBIA Insured ........................... A2/AA 1,836,040 North Ogden, Utah Sales Tax Revenue 195,000 5.000%, 11/01/24 Syncora Guarantee Inc. Insured ......... A3/A+ 201,240
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- TAX REVENUE (CONTINUED) Payson City, Utah Sales Tax Revenue $ 445,000 5.000%, 08/01/21 FSA Insured ............................ Aaa/AAA $ 459,703 Pembroke Harbor, Florida Community Development District Revenue 1,820,000 7.000%, 05/01/38 ........................................ NR/NR* 1,256,273 Salt Lake City, Utah Sales Tax 955,000 5.000%, 02/01/21 ........................................ NR/AAA 984,175 1,005,000 5.000%, 02/01/22 ........................................ NR/AAA 1,026,045 1,060,000 5.000%, 02/01/23 ........................................ NR/AAA 1,076,027 1,115,000 5.000%, 02/01/24 ........................................ NR/AAA 1,126,585 Sandy City, Utah Sales Tax 605,000 5.000%, 09/15/20 AMBAC Insured .......................... Aa3/AA+ 619,484 South Weber City, Utah 525,000 5.000%, 01/15/24 MBIA Insured ........................... Aaa/AA 539,773 Springville, Utah Special Assessment Revenue 400,000 5.500%, 01/15/17 ........................................ NR/NR* 313,628 457,000 5.650%, 01/15/18 ........................................ NR/NR* 352,388 483,000 5.800%, 01/15/19 ........................................ NR/NR* 364,177 510,000 5.900%, 01/15/20 ........................................ NR/NR* 376,319 540,000 6.000%, 01/15/21 ........................................ NR/NR* 389,891 Wasatch County, Utah Building Authority 130,000 5.000%, 10/01/15 ........................................ A3/NR 136,352 135,000 5.000%, 10/01/16 ........................................ A3/NR 140,586 Wasatch County, Utah Sales Tax 205,000 5.000%, 12/01/16 AMBAC Insured .......................... Aa3/AA 216,734 210,000 5.000%, 12/01/17 AMBAC Insured .......................... Aa3/AA 220,687 225,000 5.000%, 12/01/18 AMBAC Insured .......................... Aa3/AA 234,119 Washington City, Utah Sales Tax 680,000 5.250%, 11/15/17 AMBAC Insured .......................... Aa3/AA 731,456 Weber County, Utah Sales Tax 385,000 5.000%, 07/01/23 AMBAC Insured .......................... Aa3/NR 385,762
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- TAX REVENUE (CONTINUED) West Valley City, Utah Redevelopment Agency $ 1,625,000 5.000%, 03/01/21 ........................................ NR/A- $ 1,670,792 320,000 5.000%, 03/01/22 ........................................ NR/A- 326,429 350,000 5.000%, 03/01/23 ........................................ NR/A- 355,159 1,000,000 5.000%, 03/01/24 ........................................ NR/A- 1,009,950 -------------- Total Tax Revenue ....................................... 27,033,787 -------------- TRANSPORTATION (2.9%) Alaska State International Airport Revenue 175,000 5.000%, 10/01/24 AMBAC Insured AMT ...................... Aa3/A+ 145,240 Florida State Turnpike Authority Turnpike Revenue 500,000 4.500%, 07/01/22 MBIA Insured ........................... Aa2/AA 477,290 Miami-Dade County, Florida Aviation Revenue 600,000 5.000%, 10/01/24 FGIC Insured AMT ....................... A2/A- 453,300 Port of Seattle, Washington Revenue 1,095,000 5.100%, 04/01/24 AMT FGIC Insured ....................... Aa2/AA- 919,220 Utah Transit Authority Sales Tax & Transportation Revenue 3,300,000 4.125%, 06/15/21 FSA Insured ............................ Aaa/AAA 3,204,432 1,450,000 4.125%, 06/15/22 FSA Insured ............................ Aaa/AAA 1,361,231 -------------- Total Transportation .................................... 6,560,713 -------------- UTILITY (7.9%) Alaska Industrial Development & Export Authority 400,000 4.625%, 12/01/16 AMBAC Insured AMT ...................... Baa1/A 347,628 Cowlitz County, Washington Public Utility District Electric Revenue 1,000,000 4.500%, 09/01/26 MBIA Insured ........................... A3/AA 889,990 Eagle Mountain, Utah Gas & Electric 1,385,000 4.250%, 06/01/20 Radian Insured ......................... A3/BBB+ 1,281,914 1,440,000 5.000%, 06/01/21 Radian Insured ......................... A3/BBB+ 1,424,203 1,515,000 5.000%, 06/01/22 Radian Insured ......................... A3/BBB+ 1,477,383 Garland, Texas Water & Sewer 440,000 4.500%, 03/01/21 AMBAC Insured .......................... Baa1/AA 430,703 Indianapolis, Indiana Gas Utility 290,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa3/AA 289,986
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- UTILITY (CONTINUED) Intermountain Power Agency Utilities Light & Power Service, Utah $ 1,380,000 5.000%, 07/01/19 MBIA Insured ........................... A2/AA $ 1,398,119 250,000 5.250%, 07/01/23 ........................................ A1/A 248,245 JEA, Florida Electric System Revenue 500,000 5.000%, 10/01/26 ........................................ Aa3/A+ 487,335 Manti City, Utah Electric System Revenue 603,000 5.750%, 02/01/17 ........................................ NR/NR* 510,657 Murray City, Utah Utility Electric Revenue 1,340,000 5.000%, 06/01/25 AMBAC Insured .......................... Aa3/NR 1,364,683 Orem, Utah Water & Storm Sewer Revenue 1,000,000 5.000%, 07/15/26 ........................................ NR/AA 1,003,750 Pleasant Grove City, Utah Water Revenue 760,000 4.625%, 12/01/23 FSA Insured ............................ Aaa/AAA 720,206 Rockport, Indiana Pollution Control Revenue Indiana Michigan Power Company Project 1,500,000 4.625%, 06/01/25 Series A FGIC Insured .................. A3/BBB 1,111,650 Salem, Utah Electric Revenue 140,000 5.400%, 11/01/09 ........................................ NR/NR* 142,934 Santa Clara Utah Storm Drain Revenue 877,000 5.100%, 09/15/26 ........................................ NR/NR* 579,776 Southern Utah Valley Power System 210,000 5.250%, 09/15/13 MBIA Insured ........................... A2/AA 228,455 225,000 5.250%, 09/15/14 MBIA Insured ........................... A2/AA 243,949 235,000 5.250%, 09/15/15 MBIA Insured ........................... A2/AA 252,061 185,000 5.125%, 09/15/21 MBIA Insured ........................... A2/AA 189,386 Tacoma, Washington Solid Waste Utility Revenue 1,000,000 5.000%, 12/01/23Syncora Guarantee Inc. Insured .......... A3/AA- 970,310 Utah Assessed Municipal Power System 1,000,000 5.000%, 04/01/21 FSA Insured ............................ Aaa/AAA 1,021,340 Washington, Utah Electric Revenue 985,000 5.000%, 09/01/21 Syncora Guarantee Inc. Insured ......... A3/NR 1,017,722 -------------- Total Utility ........................................... 17,632,385 --------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- WATER AND SEWER (4.3%) Eagle Mountain, Utah Water and Sewer $ 690,000 4.750%, 11/15/25 MBIA Insured ........................... Baa1/AA $ 665,891 Jacksonville, Florida Water and Sewer System Revenue 250,000 4.625%, 10/01/22 ........................................ Aa3/AA- 240,508 Mesquite, Texas Waterworks & Sewer 225,000 4.500%, 03/01/24 FSA Insured ............................ Aaa/AAA 216,137 Murray City, Utah Sewer and Water 440,000 5.000%, 10/01/19 AMBAC Insured .......................... Aa3/NR 453,231 Pleasant Grove, Utah Water Revenue 450,000 4.300%, 12/01/20 MBIA Insured ........................... A2/AA 431,892 Smithfield, Utah Water Revenue 90,000 4.750%, 06/01/17 ........................................ NR/NR* 72,726 94,000 4.800%, 06/01/18 ........................................ NR/NR* 74,270 99,000 4.850%, 06/01/19 ........................................ NR/NR* 76,544 103,000 4.900%, 06/01/20 ........................................ NR/NR* 77,994 108,000 5.000%, 06/01/21 ........................................ NR/NR* 81,747 114,000 5.050%, 06/01/22 ........................................ NR/NR* 85,265 120,000 5.100%, 06/01/23 ........................................ NR/NR* 88,800 126,000 5.150%, 06/01/24 ........................................ NR/NR* 92,362 132,000 5.200%, 06/01/25 ........................................ NR/NR* 95,957 139,000 5.250%, 06/01/26 ........................................ NR/NR* 100,315 Upper Trinity Regional Water District, Texas 205,000 4.500%, 08/01/20 AMBAC Insured .......................... Aa3/AA 202,265 Utah Water Finance Agency Revenue 200,000 5.250%, 07/01/16 AMBAC Insured .......................... Aa3/NR 213,354 310,000 5.000%, 10/01/17 AMBAC Insured .......................... Aa3/NR 325,029 510,000 5.000%, 07/01/18 AMBAC Insured .......................... Aa3/NR 529,477 Utah Water Finance Agency Revenue 105,000 5.000%, 10/01/20 AMBAC Insured .......................... Aa3/NR 107,178 830,000 4.500%, 10/01/22 AMBAC Insured .......................... Aa3/NR 784,981 100,000 5.125%, 07/01/23 AMBAC Insured .......................... Aa3/NR 101,287 870,000 4.500%, 10/01/23 AMBAC Insured .......................... Aa3/NR 806,594
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- -------------- WATER AND SEWER (SCONTINUED) Utah Water Finance Agency Revenue (continued) $ 2,570,000 5.000%, 10/01/25 AMBAC Insured .......................... Aa3/NR $ 2,510,016 1,400,000 4.500%, 10/01/28 AMBAC Insured .......................... Aa3/NR 1,235,640 -------------- Total Water and Sewer ................................... 9,669,460 -------------- Total Revenue Bonds ..................................... 182,199,103 -------------- Total Investments (cost $249,637,356 - note 4) .......... 98.0% 219,607,756 Other assets less liabilities ........................... 2.0 4,405,992 ----- -------------- Net Assets .............................................. 100.0% $ 224,013,748 ===== ============== PERCENT OF PORTFOLIO DISTRIBUTION BY QUALITY RATING PORTFOLIO+ ---------------------------------------- ---------- Aaa of Moody's or AAA of S&P ............................ 22.1% Aa of Moody's or AA of S&P .............................. 36.4 A of Moody's or S&P ..................................... 10.0 Baa of Moody's or BBB of S&P ............................ 3.0 Not rated* .............................................. 28.5 ----- 100.0% =====
+ Calculated using the highest rating of the two rating services. * Any security not rated (NR) by any of the approved credit rating services has been determined by the Manager to have sufficient quality to be ranked in the top four credit 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 See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2008 (unaudited) ASSETS Investments at value (cost $249,637,356) ........................................... $ 219,607,756 Cash ............................................................................... 1,155,587 Interest receivable ................................................................ 3,775,471 Receivable for investment securities sold .......................................... 765,000 Receivable for Fund shares sold .................................................... 357,010 Other assets ....................................................................... 6,157 ------------- Total assets ....................................................................... 225,666,981 ------------- LIABILITIES Dividends payable .................................................................. 1,115,312 Payable for Fund shares redeemed ................................................... 296,255 Management fees payable ............................................................ 74,868 Distribution and service fees payable .............................................. 50,493 Payable for investment securities purchased ........................................ 40,625 Accrued expenses ................................................................... 75,680 ------------- Total liabilities .................................................................. 1,653,233 ------------- NET ASSETS ............................................................................ $ 224,013,748 ============= Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 256,208 Additional paid-in capital ......................................................... 255,825,684 Net unrealized depreciation on investments (note 4) ................................ (30,029,600) Accumulated net realized loss on investments ....................................... (1,972,049) Distrbutions in excess of net investment income .................................... (66,495) ------------- $ 224,013,748 ============= CLASS A Net Assets ......................................................................... $ 139,904,114 ============= Capital shares outstanding ......................................................... 16,012,387 ============= Net asset value and redemption price per share ..................................... $ 8.74 ============= Maximum offering price per share (100/96 of $8.74 adjusted to nearest cent) ........ $ 9.10 ============= CLASS C Net Assets ......................................................................... $ 32,649,374 ============= Capital shares outstanding ......................................................... 3,737,986 ============= Net asset value and offering price per share ....................................... $ 8.73 ============= 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) ...................................... $ 8.73* ============= CLASS Y Net Assets ......................................................................... $ 51,460,260 ============= Capital shares outstanding ......................................................... 5,870,432 ============= Net asset value, offering and redemption price per share ........................... $ 8.77 =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 2008 (unaudited) INVESTMENT INCOME: Interest income $ 6,291,715 Expenses: Management fee (note 3) $ 586,322 Distribution and service fees (note 3) 314,525 Transfer and shareholder servicing agent fees 59,813 Trustees' fees and expenses (note 8) 54,774 Legal fees (note 3) 24,780 Shareholders' reports and proxy statements 21,191 Custodian fees (note 6) 15,172 Fund accounting fees 13,163 Registration fees and dues 9,862 Auditing and tax fees 7,814 Insurance 5,098 Chief compliance officer (note 3) 2,024 Miscellaneous 20,270 ------------ Total expenses 1,134,808 Management fee waived (note 3) (213,054) Expenses paid indirectly (note 6) (32,588) ------------ Net expenses 889,166 ------------ Net investment income 5,402,549 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from securities transactions (906,514) Change in unrealized depreciation on investments (24,366,737) ------------ Net realized and unrealized gain (loss) on investments (25,273,251) ------------ Net increase in net assets resulting from operations $(19,870,702) ============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended December 31, 2008 Year Ended (unaudited) June 30, 2008 ----------------- ----------------- OPERATIONS: Net investment income ......................................... $ 5,402,549 $ 9,139,922 Net realized gain (loss) from securities transactions ......... (906,514) 638,898 Change in unrealized depreciation on investments .............. (24,366,737) (4,614,006) ----------------- ----------------- Change in net assets from operations ....................... (19,870,702) 5,164,814 ----------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS (note 10): Class A Shares: Net investment income ......................................... (3,651,709) (6,459,904) Class C Shares: Net investment income ......................................... (636,448) (1,040,811) Class Y Shares: Net investment income ......................................... (1,211,079) (1,961,979) ----------------- ----------------- Change in net assets from distributions .................... (5,499,236) (9,462,694) ----------------- ----------------- CAPITAL SHARE TRANSACTIONS (note 7): Proceeds from shares sold ..................................... 39,384,658 55,700,331 Reinvested dividends and distributions ........................ 2,516,893 5,703,447 Cost of shares redeemed ....................................... (31,285,264) (45,261,625) ----------------- ----------------- Change in net assets from capital share transactions ....... 10,616,287 16,142,153 ----------------- ----------------- Change in net assets ....................................... (14,753,651) 11,844,273 NET ASSETS: Beginning of period ........................................... 238,767,399 226,923,126 ----------------- ----------------- End of period* ................................................ $ 224,013,748 $ 238,767,399 ================= ================= * Includes distributions in excess of net investment income and undistributed net investment income, respectively, of: ...... $ (66,495) $ 30,192 ================= =================
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2008 (unaudited) 1. ORGANIZATION Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end investment company, was organized on December 12, 1990 as a Massachusetts business trust and commenced operations on July 24, 1992. The Fund is authorized to issue an unlimited number of shares and, since its inception to May 21, 1996, offered only one class of shares. On that date, the Fund began offering two additional classes of shares, Class C and Class Y Shares. All shares outstanding prior to that date were designated as Class A Shares and are sold with a front-payment sales charge and bear an annual distribution fee. Class C Shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y Shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodian or similar capacity and are not offered directly to retail investors. Class Y Shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. On October 31, 1997, the Fund established Class I Shares which are offered and sold only through financial intermediaries and are not offered directly to retail investors. Class I Shares are sold at net asset value without any sales charge, redemption fees, or contingent deferred sale charge. Class I Shares carry a distribution and service fee. 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) FAIR VALUE MEASUREMENTS: The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("SFAS 157"), effective July 1, 2008. SFAS 157 established a three-tier hierarchy of inputs to establish classification of fair value measurements for disclosure purposes. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The Fund's investments are assigned levels based upon the observability. The three-tier hierarchy inputs is summarized below: Level 1 - quoted prices in active markets for identical securities Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities The following is a summary of the valuation inputs, representing 100% of the Fund's investments, used to value the Fund's net assets as of December 31, 2008: Valuation Inputs Investments in Securities ---------------- ------------------------- Level 1 - Quoted Prices ..................... $ -- Level 2 - Other Significant Observable Inputs 219,607,756 Level 3 - Significant Unobservable Inputs ... -- ------------- Total ....................................... $ 219,607,756 ============= c) 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. d) 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. e) 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. f) 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. g) ACCOUNTING PRONOUNCEMENT: In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161") was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operations and financial position. Management is currently evaluating the implications of SFAS 161and its impact, if any, on the Fund's financial statement disclosures. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: Aquila Investment Management LLC (the "Manager"), a wholly-owned subsidiary of Aquila Management Corporation, the Fund's founder and sponsor, serves as the Manager for the Fund under an Advisory and Administration Agreement with the Fund. Under the Advisory and Administration Agreement, the Manager provides all investment management and administrative services to the Fund. The Manager's services include providing the office of the Fund and all related services as well as managing relationships with all the various support organizations to the Fund such as the shareholder servicing agent, custodian, legal counsel, fund accounting agent, auditors and distributor. For its services, the Manager is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.50 of 1% on the Fund's average net assets. For the six months ended December 31, 2008, the Fund incurred management fees of $586,322 of which $213,054 was waived. The Manager has contractually undertaken to waive fees and/or reimburse Fund expenses during the period July 1, 2008 through June 30, 2009 so that total Fund expenses would not exceed 0.83% for Class A Shares, 1.63% for Class C Shares or 0.63% for Class Y Shares. A similar contractual undertaking is intended to be in place through the period ended June 30, 2010. Under a Compliance Agreement with the Manager, the Manager is compensated for Chief Compliance Officer related services provided to enable the Fund to comply with Rule 38a-1 of the Investment Company Act of 1940. Specific details as to the nature and extent of the services provided by the Manager are more fully defined in the Fund's Prospectus and Statement of Additional Information. b) DISTRIBUTION AND SERVICE FEES: The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended. Under one part of the Plan, with respect to Class A Shares, the Fund is authorized to make distribution fee payments to broker-dealers or others ("Qualified Recipients") selected by Aquila Distributors, Inc. (the "Distributor") including, but not limited to, any principal underwriter of the Fund, with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Fund's shares or servicing of shareholder accounts. The Fund makes payment of this service fee at the annual rate of 0.20% of the Fund's average net assets represented by Class A Shares. For the six months ended December 31, 2008, distribution fees on Class A Shares amounted to $153,538, of which the Distributor retained $4,185. Under another part of the Plan, the Fund is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Fund's Class C shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Fund's average net assets represented by Class C Shares and for the six months ended December 31, 2008, amounted to $120,740. In addition, under a Shareholder Services Plan, the Fund is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Fund's average net assets represented by Class C Shares and for the six months ended December 31, 2008 amounted to $40,247. The total of these payments with respect to Class C Shares amounted to $160,987, of which the Distributor retained $30,859. 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 currently sold primarily through the facilities of intermediaries having offices within Utah, with the bulk of sales commissions inuring to such intermediaries. For the six months ended December 31, 2008, total commissions on sales of Class A Shares amounted to $229,347, of which the Distributor received $19,077. c) OTHER RELATED PARTY TRANSACTIONS: For the six months ended December 31, 2008, the Fund incurred $24,577 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 six months ended December 31, 2008, purchases of securities and proceeds from the sales of securities aggregated $46,209,547 and $32,212,280, respectively. At December 31, 2008, the aggregate tax cost for all securities was $249,601,560. At December 31, 2008, the aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost amounted to $411,899 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value amounted to $30,405,703, for a net unrealized depreciation of $29,993,804. 5. PORTFOLIO ORIENTATION Since the Fund may invest entirely in double tax-free municipal obligations of issuers within Utah, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Utah and whatever effects these may have upon Utah issuers' ability to meet their obligations. The Fund is also permitted to invest in tax-free municipal obligations meeting comparable quality standards of issuers in certain states that do not tax the interest on obligations of Utah issuers and that provide income which is exempt from both regular Federal and Utah income taxes. At December 31, 2008, the Fund had 59% of its net assets invested in State of Utah municipal issues. 6. EXPENSES The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Fund were as follows:
Six Months Ended December 31, 2008 Year Ended (unaudited) June 30, 2008 ----------------------------- ----------------------------- Shares Amount Shares Amount ------------ ------------ ------------ ------------ CLASS A SHARES: Proceeds from shares sold 1,819,267 $ 16,713,898 2,834,849 $ 28,003,392 Reinvested distributions 188,903 1,754,990 417,757 4,128,043 Cost of shares redeemed . (2,254,001) (19,837,905) (2,020,117) (19,970,653) ------------ ------------ ------------ ------------ Net change ........... (245,831) (1,369,017) 1,232,489 12,160,782 ------------ ------------ ------------ ------------ CLASS C SHARES: Proceeds from shares sold 783,901 7,194,901 796,274 7,849,550 Reinvested distributions 36,087 334,445 64,603 638,158 Cost of shares redeemed . (363,564) (3,391,960) (699,234) (6,926,362) ------------ ------------ ------------ ------------ Net change ........... 456,424 4,137,386 161,643 1,561,346 ------------ ------------ ------------ ------------ CLASS Y SHARES: Proceeds from shares sold 1,702,873 15,475,859 2,002,683 19,847,389 Reinvested distributions 46,284 427,458 94,661 937,246 Cost of shares redeemed . (873,398) (8,055,399) (1,843,176) (18,364,610) ------------ ------------ ------------ ------------ Net change ........... 875,759 7,847,918 254,168 2,420,025 ------------ ------------ ------------ ------------ Total transactions in Fund shares .................. 1,086,352 $ 10,616,287 1,648,300 $ 16,142,153 ============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES At December 31, 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 six months ended December 31, 2008 was $37,556, 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, meeting fees are paid to those Trustees in attendance. Trustees are reimbursed for their expenses such as travel, accommodations, and meals incurred in connection with attendance at Board Meetings and the Annual Meeting of Shareholders. For the six months ended December 31, 2008, such meeting-related expenses amounted to $17,218. 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 DEVELOPMENT Over the past year, 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 -------------------------------------------------------------------------------- Six Months Ended Year Ended June 30, 12/31/08 ---------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------- -------- -------- -------- -------- -------- Net asset value, beginning of period .......... $ 9.73 $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.31 -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income ...................... 0.22++ 0.41+ 0.40+ 0.40+ 0.41+ 0.43++ Net gain (loss) on securities (both realized and unrealized) ......................... (0.99) (0.17) 0.05 (0.37) 0.38 (0.37) -------- -------- -------- -------- -------- -------- Total from investment operations ........... (0.77) 0.24 0.45 0.03 0.79 0.06 -------- -------- -------- -------- -------- -------- Less distributions (note 10): Dividends from net investment income ....... (0.22) (0.42) (0.41) (0.42) (0.44) (0.46) Distributions from capital gains ........... -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Total distributions ........................ (0.22) (0.42) (0.41) (0.42) (0.44) (0.46) -------- -------- -------- -------- -------- -------- Net asset value, end of period ................ $ 8.74 $ 9.73 $ 9.91 $ 9.87 $ 10.26 $ 9.91 ======== ======== ======== ======== ======== ======== Total return (not reflecting sales charge) .... (7.98)%* 2.45% 4.60% 0.28% 8.06% 0.54% Ratios/supplemental data Net assets, end of period (in thousands) ... $139,904 $158,125 $148,894 $142,227 $126,091 $ 94,103 Ratio of expenses to average net assets .... 0.72%** 0.63% 0.68% 0.64% 0.59% 0.48% Ratio of net investment income to average net assets .............................. 4.63%** 4.09% 3.89% 3.90% 3.98% 4.19% Portfolio turnover rate .................... 14.36%* 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 .... 0.87%** 0.90% 0.96% 0.93% 0.97% 0.94% Ratio of net investment income to average net assets .............................. 4.48%** 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 .... 0.69%** 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. * Not annualized. ** Annualized. See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS (continued) FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class C -------------------------------------------------------------------------------- Six Months Ended Year Ended June 30, 12/31/08 ---------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------- -------- -------- -------- -------- -------- Net asset value, beginning of period ...... $ 9.72 $ 9.91 $ 9.87 $ 10.26 $ 9.91 $ 10.30 -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income .................. 0.18++ 0.33++ 0.32+ 0.32+ 0.32+ 0.34+ Net gain (loss) on securities (both realized and unrealized) ............ (0.99) (0.18) 0.05 (0.37) 0.38 (0.36) -------- -------- -------- -------- -------- -------- Total from investment operations .......... (0.81) 0.15 0.37 (0.05) 0.70 (0.02) -------- -------- -------- -------- -------- -------- Less distributions (note 10): Dividends from net investment income ... (0.18) (0.34) (0.33) (0.34) (0.35) (0.37) Distributions from capital gains ....... -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Total distributions .................... (0.18) (0.34) (0.33) (0.34) (0.35) (0.37) -------- -------- -------- -------- -------- -------- Net asset value, end of period ............ $ 8.73 $ 9.72 $ 9.91 $ 9.87 $ 10.26 $ 9.91 ======== ======== ======== ======== ======== ======== Total return (not reflecting sales charge) (8.37)%* 1.53% 3.77% (0.52)% 7.20% (0.16)% Ratios/supplemental data Net assets, end of period (in thousands) $ 32,649 $ 31,906 $ 30,905 $ 33,791 $ 27,581 $ 21,961 Ratio of expenses to average net assets 1.51%** 1.43% 1.48% 1.44% 1.39% 1.27% Ratio of net investment income to average net assets .................. 3.83%** 3.29 3.10% 3.10% 3.18% 3.38% Portfolio turnover rate ................ 14.36%* 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 1.67%** 1.70% 1.76% 1.72% 1.77% 1.74% Ratio of net investment income to average net assets .................. 3.68%** 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 1.49%** 1.42% 1.46% 1.41% 1.36% 1.27% Class Y -------------------------------------------------------------------------------- Six Months Ended Year Ended June 30, 12/31/08 ---------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------- -------- -------- -------- -------- -------- Net asset value, beginning of period ...... $ 9.76 $ 9.94 $ 9.90 $ 10.29 $ 9.94 $ 10.34 -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income .................. 0.23++ 0.43++ 0.41+ 0.42+ 0.42+ 0.44++ Net gain (loss) on securities (both realized and unrealized) ............ (0.99) (0.17) 0.07 (0.37) 0.39 (0.36) -------- -------- -------- -------- -------- -------- Total from investment operations .......... (0.76) 0.26 0.48 0.05 0.81 0.08 -------- -------- -------- -------- -------- -------- Less distributions (note 10): Dividends from net investment income ... (0.23) (0.44) (0.44) (0.44) (0.46) (0.48) Distributions from capital gains ....... -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Total distributions .................... (0.23) (0.44) (0.44) (0.44) (0.46) (0.48) -------- -------- -------- -------- -------- -------- Net asset value, end of period ............ $8,77 $ 9.76 $ 9.94 $ 9.90 $ 10.29 $ 9.94 ======== ======== ======== ======== ======== ======== Total return (not reflecting sales charge) (7.85)%* 2.67% 4.80% 0.49% 8.27% 0.76% Ratios/supplemental data Net assets, end of period (in thousands) $ 51,460 $ 48,737 $ 47,124 $ 39,791 $ 17,928 $ 8,233 Ratio of expenses to average net assets 0.52%** 0.43% 0.48% 0.44% 0.39% 0.28% Ratio of net investment income to average net assets .................. 4.84%** 4.29% 4.09% 4.10% 4.15% 4.41% Portfolio turnover rate ................ 14.36%* 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 0.67%** 0.70% 0.76% 0.72% 0.77% 0.74% Ratio of net investment income to average net assets .................. 4.69%** 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 0.49%** 0.42% 0.46% 0.41% 0.37% 0.27%
---------- + Per share amounts have been calculated using the monthly average shares method. ++ Per share amounts have been calculated using the daily average shares method. * Not annualized. ** Annualized. See accompanying notes to financial statements. -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end sales charges with respect to Class A shares or contingent deferred sales charges ("CDSC") with respect to Class C shares; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The table below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The table below is based on an investment of $1,000 invested on July 1, 2008 and held for the six months ended December 31, 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 DECEMBER 31, 2008 ACTUAL TOTAL RETURN BEGINNING ENDING EXPENSES WITHOUT ACCOUNT ACCOUNT PAID DURING SALES CHARGES(1) VALUE VALUE THE PERIOD(2) -------------------------------------------------------------------------------- Class A (7.98)% $1,000.00 $920.20 $3.34 -------------------------------------------------------------------------------- Class C (8.37)% $1,000.00 $916.30 $7.20 -------------------------------------------------------------------------------- Class Y (7.85)% $1,000.00 $921.50 $2.37 -------------------------------------------------------------------------------- (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 0.69%, 1.49% AND 0.49% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs with respect to Class A shares. The example does not reflect the deduction of contingent deferred sales charges ("CDSC") with respect to Class C shares. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transaction costs were included, your costs would have been higher. SIX MONTHS ENDED DECEMBER 31, 2008 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD(1) -------------------------------------------------------------------------------- Class A 5.00% $1,000.00 $1,021.73 $3.52 -------------------------------------------------------------------------------- Class C 5.00% $1,000.00 $1,017.69 $7.58 -------------------------------------------------------------------------------- Class Y 5.00% $1,000.00 $1,022.74 $2.50 -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.69%, 1.49% AND 0.49% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) RENEWAL OF THE ADVISORY AND ADMINISTRATION AGREEMENT Renewal until December 31, 2009 of the Advisory and Administration Agreement (the "Advisory Agreement") between the Fund and the Manager was approved by the Board of Trustees and the independent Trustees in December, 2008. At a meeting called and held for that purpose at which a majority of the independent Trustees were present in person, the following materials were considered: o A copy of the agreement to be renewed; o A term sheet describing the material terms of the agreement; o The Annual Report of the Fund for the year ended June 30, 2008; o A report, prepared by the Manager and provided to the Trustees in advance of the meeting for the Trustees' review, containing data about the performance of the Fund, data about its fees, expenses and purchases and redemptions of capital shares together with comparisons of such data with similar data about other comparable funds, as well as data as to the profitability of the Manager; and o Quarterly materials reviewed at prior meetings on the Fund's performance, operations, portfolio and compliance. The Trustees reviewed materials relevant to, and considered the following factors: THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE MANAGER The Manager has provided local management of the Fund's portfolio. The Trustees noted that the Manager employed Mr. Thomas S. Albright and Mr. Kimball Young as co-portfolio managers for the Fund and has established facilities for credit analysis of the Fund's portfolio securities. Mr. Young, based in Salt Lake City, has extensive municipal bond underwriting experience and has provided local information regarding specific holdings in the Fund's portfolio. Mr. Albright has over 25 years of investment management experience. The portfolio managers have also been available to and have met with the brokerage and financial planner community and with investors and prospective investors to provide them with information generally about the Fund's portfolio, with which to assess the Fund as an investment vehicle for residents of Utah in light of prevailing interest rates and local economic conditions. The Board considered that the Manager had provided all services the Board deemed necessary or appropriate, including the specific services that the Board has determined are required for the Fund, given that its purpose is to provide shareholders with as high a level of current income exempt from Utah state and regular Federal income taxes as is consistent with preservation of capital. The Manager has additionally provided all administrative services to the Fund. The Board considered the nature and extent of the Manager's supervision of third-party service providers, including the Fund's shareholder servicing agent and custodian. The Board considered that the Manager had established and maintained a strong culture of ethical conduct and regulatory compliance. The Board concluded that the services provided were appropriate and satisfactory and that the Fund would be well served if they continued. Evaluation of this factor weighed in favor of renewal of the Advisory Agreement. THE INVESTMENT PERFORMANCE OF THE FUND AND THE MANAGER The Board reviewed each aspect of the Fund's performance and compared its performance with that of its competitors, with national averages and the benchmark index. It was noted that the materials provided by the Manager indicated that the Fund had investment performance that was comparable to that of all single-state tax-free municipal bond funds nationwide, including funds of a comparable asset size for one-, five- and ten-year periods. The Board considered these results to be consistent with the purposes of the Fund. The Board concluded that the performance of the Fund, in light of market conditions, was satisfactory. Evaluation of this factor indicated to the Trustees that renewal of the Advisory Agreement would be appropriate. THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE MANAGER AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE FUND The information provided in connection with renewal contained expense data for the Fund and its competitors as well as data for all single-state tax-free municipal bond funds nationwide, including data for all such front-end load funds of a comparable asset size. The materials also showed the profitability to the Manager of its services to the Fund. The Board noted that the Manager was currently waiving a portion of its fees and had been since the Fund's inception. Additionally, it was noted that the Manager had contractually undertaken to waive fees and/or reimburse Fund expenses during the period July 1, 2008 through June 30, 2009 so that total Fund expenses would not exceed 0.83 of 1% for Class A Shares. The Manager had indicated that it intended to continue waiving fees as necessary in order that the Fund would remain competitive. The Board compared the expense and fee data with respect to the Fund to similar data about other funds that it found to be relevant. The Board concluded that the expenses of the Fund and the fees paid were similar to and were reasonable as compared to those being paid by single-state tax-free municipal bond funds nationwide, and by the Fund's competitors. The Board further concluded that the profitability to the Manager and the Distributor did not argue against approval of the fees to be paid under the Advisory Agreement. THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUND GROWS Data provided to the Trustees showed that the Fund's asset size had been increasing in recent years. The Trustees also noted that the materials indicated that the Fund's fees were already lower than those of its peers, including those with breakpoints. Additionally, the Trustees noted that the Manager was currently waiving a substantial portion of its fees. Evaluation of these factors indicated to the Board that the Advisory Agreement should be renewed without addition of breakpoints at this time. BENEFITS DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES FROM THE RELATIONSHIP 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. 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 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. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTING FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Included in Item 1 above ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Board of Directors of the Registrant has adopted a Nominating Committee Charter which provides that the Nominating Committee (the 'Committee') may consider and evaluate nominee candidates properly submitted by shareholders if a vacancy among the Independent Trustees of the Registrant occurs and if, based on the Board's then current size, composition and structure, the Committee determines that the vacancy should be filled. The Committee will consider candidates submitted by shareholders on the same basis as it considers and evaluates candidates recommended by other sources. A copy of the qualifications and procedures that must be met or followed by shareholders to properly submit a nominee candidate to the Committee may be obtained by submitting a request in writing to the Secretary of the Registrant. ITEM 11. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 12. EXHIBITS. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAX-FREE FUND FOR UTAH By: /s/ Diana P. Herrmann ----------------------------------- President and Trustee March 4, 2009 By: /s/ Joseph P. DiMaggio ------------------------------------- Chief Financial Officer and Treasurer March 4, 2009 Pursuant to the requirements of the Securities Exchange Act of 1934 And the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Diana P. Herrmann ----------------------------------- Diana P. Herrmann President and Trustee March 4, 2009 By: /s/ Joseph P. DiMaggio ------------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer March 4, 2009 TAX-FREE FUND FOR UTAH EXHIBIT INDEX (a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940.