N-CSR 1 tffuncsr.txt TAX-FREE FUND FOR UTAH 6/30/09 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: 6/30/09 Date of reporting period: 6/30/09 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT June 30, 2009 [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](R) SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS TAX-FREE FUND FOR UTAH "A MORE PREDICTABLE RIDE" August, 2009 Dear Fellow Shareholder: We know it. And, you know it too. The United States has seen better economic days. Like it or not, unpleasant market cycles do occur periodically. This tends to distract some people's focus from the longer-term objective that influenced their investment decision in the first place. Our shareholder and financial professional surveys have consistently indicated over the years that the original investment objective and decision for investors in Tax-Free Fund For Utah, has generally been aligned with the Fund's objective: to seek as high a level of current income exempt from Utah state and regular Federal income taxes as is consistent with preservation of capital. How does the Fund seek to fulfill its and your investment objective? Management of Tax-Free Fund For Utah and its municipal bond portfolio management team believe that when you are dealing with investments, quality counts. As you may recall, there are nine separate credit ratings assignable to municipal securities, ranging from the most conservative to the highly speculative. For protection of investors' capital, the Fund intentionally limits its purchases to securities rated (or, if unrated, deemed by the Manager to be) investment grade quality - that is rated within the four highest credit ratings: AAA, AA, A, AND BBB. In general, the higher the quality rating of a municipal security, the greater or more reliable the cash flow there is for the municipality to cover interest and principal payments when due on the security. While exaggerated price changes may occur in emotionally charged securities markets, they normally are not reflective of a municipal issuer's capability to pay interest and principal in a timely manner on any particular security. It is the cash flow and solidness of the municipal issuer that count - and this is reflected in the quality level of the credit rating. NOT A PART OF THE ANNUAL REPORT We can assure you that the Fund's portfolio management team pays considerable attention to this factor before any security is purchased for the portfolio as well as in conducting continuing analysis and evaluation with each and every security once it is a part of the Fund's investment portfolio. It is additionally important for you to know that, with any insured securities, our portfolio management team has always sought to look beyond the insurance to the credit quality of the underlying issuer rather than relying upon any insurance. We fully recognize that the current times can be unsettling. However, we hope that you are comforted to know that we belive you have a knowledgeable team of financial experts, which has continually sought to carefully choose the securities in the Fund's portfolio and seeks to continuously monitor your investment in Tax-Free Fund For Utah. Sincerely, [PHOTO OMITTED] /s/ Lacy B. Herrmann /s/ Diana P. Herrmann Lacy B. Herrmann Diana P. Herrmann Founder and Chairman Emeritus President NOT A PART OF THE ANNUAL REPORT [LOGO OF TAX-FREE FUND FOR UTAH: A RECTANGLE CONTAINING DESERT BOULDERS WITH THE SUN RISING BEHIND THEM](SM) SERVING UTAH INVESTORS FOR MORE THAN 15 YEARS TAX-FREE FUND FOR UTAH ANNUAL REPORT MANAGEMENT DISCUSSION Over the past twelve months, the financial markets have been subjected to some of the most tumultuous events to ever shake the foundations of our traditionally "unshakable" economy. Those are the exact same words used to open this commentary last year. Little did we know at that time that "sub-prime" investing would lead to the disappearance of Lehman Brothers and trigger a decline in asset values for real estate, stocks and non-U.S. Treasury fixed income securities. We now find ourselves in the worst recession since the 1930's with the housing market still weak, the consumer heavily indebted, unemployment near 10%, but the markets rebounding in anticipation of better times ahead. During this period the municipal market has changed as states are facing declining tax revenues and stressed budgets. A variety of questions face our local governments in terms of revenue sources and the ability to provide for governmental services. In addition, municipal bond insurers have lost their financial viability and the safe AAA credit support that they provided is no longer available. However, we believe the difficult decisions being made by our state and local governments, although painful, will provide healthy discipline to the budget processes for years to come. The municipal yield curve during this time has been historically steep, a reflection first of the flight to safety and now the uncertainty of the impact from the enormous fiscal stimulus working through the economy. To illustrate, on June 30, 2008 two-year municipal yields were yielding 2.68% and 30-year municipals were yielding 4.83% for a steepness of 215 basis points (100 basis points=1%). On June 30, 2009 two-year municipals yielded 0.98% and 30-year municipals yielded 4.67% or a curve steepness of 369 basis points. The result has been an inclination to buy at the longer end of the curve. Thus, the Fund's average maturity increased from 14.4 years to 17.0 years. However, the Fund's duration declined from 8.2 years to 7.1 years. Duration is a measure of a bond's price sensitivity to changes in interest rates and probably the better indicator of potential volatility. The Fund's net asset value (Class A shares) declined from $9.73 on June 30, 2008 to $9.35 on June 30, 2009 or 3.91%. Income for the twelve months increased from $0.421 per share to $0.451 per share. The total return for the fiscal year equaled a modest 0.91%. However, as the range of share values extended from a high on July 15, 2008 at $9.86 and a low of $8.41 in mid December for a swing of almost 15%, we are content to have rebounded to breakeven. As a comparison, the municipal bond categories as measured by Lipper had the following twelve month returns as of June 30, 2009: General Municipals -0.5%; Single State Municipals +0.7%; Insured Municipals +0.9%; High Yield Municipals -11.1%. MANAGEMENT DISCUSSION (CONTINUED) The Fund continues to invest across the various states given Utah tax exemption. However, our emphasis remains on Utah obligations with 64% of the portfolio invested in Utah obligations as of June 30, 2009. Over the past year, we have added several non-rated and private placements, primarily charter schools, which we feel have "value-added" in their above market yields. In these uncertain times, credit and liquidity will take on added significance in the coming year. Our investment objective for Tax-Free Fund For Utah is to provide as high a level of double tax-free income as is consistent with the preservation of capital. To meet this objective, we will continue to strive to manage the portfolio in such a way as to take advantage of opportunities in the Utah marketplace which maintain income while endeavoring to minimize the price swings of our net asset value. PERFORMANCE REPORT The following graph illustrates the value of $10,000 invested in the Class A shares of Tax-Free Fund For Utah for the 10-year period ended June 30, 2009 as compared with the Barclays Capital Quality Intermediate Municipal Bond Index (the "Barclays Capital Index") (formerly known as the Lehman Brothers Quality Intermediate Municipal Bond Index) and the Consumer Price Index (a cost of living index). The performance of each of the other classes is not shown in the graph but is included in the table below. It should be noted that the Barclays Capital Index does not include any operating expenses nor sales charges and being nationally oriented, does not reflect state specific bond market performance for the limited number of states in which the Tax-Free Fund for Utah may invest. [Graphic of a line chart with the following information:] TFFU TFFU Cost of Fund Class A Shares Fund Class A Shares Barclays Living Index no sales charge with sales charge Capital Index 6/99 10,000 10,000 9,600 10,000 6/00 10,373 10,014 9,615 10,403 6/01 10,710 10,945 10,509 11,322 6/02 10,824 11,710 11,243 12,110 6/03 11,053 12,890 12,377 13,057 6/04 11,414 12,871 12,358 13,102 6/05 11,703 13,938 13,383 13,807 6/06 12,208 13,953 13,397 13,854 6/07 12,536 14,580 13,999 14,434 6/08 13,166 14,903 14,309 15,214 6/09 12,978 15,128 14,525 16,238
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 2009 --------------------------------------------- SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------ ------- -------- --------- Class A (commenced operations on 7/24/92) With Maximum Sales Charge ....................... (3.17)% 2.39% 3.80% 4.70% Without Sales Charge ............................ 0.91 3.22 4.23 4.95 Class C (commenced operations on 5/21/96) With CDSC ....................................... (0.90) 2.38 3.33 3.68 Without CDSC .................................... 0.10 2.38 3.33 3.68 Class Y (commenced operations on 5/21/96) No Sales Charge ................................. 1.13 3.44 4.44 4.80 Barclays Capital Index ............................ 6.73 4.39 4.97 5.31* (Class A) 4.99** (Class C&Y)
Total return figures shown for the Fund reflect any change in price and assume all distributions within the period were invested in additional shares. Returns for Class A shares are calculated with and without the effect of the initial 4% maximum sales charge. Returns for Class C shares are calculated with and without the effect of the 1% contingent deferred sales charge (CDSC), imposed on redemptions made within the first 12 months after purchase. Class Y shares are sold without any sales charge. The rates of return will vary and the principal value of an investment will fluctuate with market conditions. Shares, if redeemed, may be worth more or less than their original cost. A portion of each class's income may be subject to Federal and state income taxes and/or the Federal alternative minimum tax. Past performance is not predictive of future investment results. * From commencement of operations on 7/24/92. ** From commencement of operations on 5/21/96. -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of Tax-Free Fund For Utah: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Tax-Free Fund For Utah as of June 30, 2009 and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended June 30, 2005 were audited by other auditors, whose report dated August 12, 2005 expressed an unqualified opinion on such financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2009, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Tax-Free Fund For Utah as of June 30, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER LLP Philadelphia, Pennsylvania August 28, 2009 -------------------------------------------------------------------------------- TAX-FREE FUND FOR UTAH SCHEDULE OF INVESTMENTS JUNE 30, 2009
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (12.1%) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ CITY, COUNTY AND STATE (7.1%) Alamo, Texas Community College District $ 595,000 4.375%, 02/15/25 National-re Insured .................... Aa2/AA $ 580,827 Anderson, Indiana San District 505,000 4.600%, 07/15/23 AMBAC Insured .......................... A3/A- 507,469 Cedar City, Utah Special Improvement District Assessment 235,000 5.050%, 09/01/10 ........................................ NR/NR* 230,088 215,000 5.200%, 09/01/11 ........................................ NR/NR* 206,503 Cedar Park, Texas 835,000 4.500%, 02/15/22 National-re Insured .................... A1/AA- 837,722 Coral Canyon, Utah Special Service District 140,000 4.850%, 07/15/17 ........................................ NR/NR* 108,844 580,000 5.700%, 07/15/18 ........................................ NR/NR* 465,862 Dawson County, Texas Hospital District 555,000 4.375%, 02/15/24 AMBAC Insured .......................... NR/BBB+ 529,847 Denton County, Texas 700,000 4.500%, 07/15/24 National-re Insured .................... Aa1/AAA 705,138 400,000 4.500%, 07/15/25 National-re Insured .................... Aa1/AAA 401,252 1,500,000 4.250%, 07/15/27 National-re Insured .................... Aa1/AAA 1,434,360 Harris County, Texas Utility District #268 905,000 4.375%, 09/01/27 Radian Insured ......................... NR/BBB- 754,897 Hurricane, Utah 65,000 5.400%, 11/01/09 Radian Insured ......................... NR/BBB- 65,775 King County, Washington Unlimited Tax 1,000,000 4.500%, 12/01/25 FSA Insured ............................ Aa1/AAA 1,011,130 Laredo, Texas 300,000 4.250%, 08/15/21 AMBAC Insured .......................... A1/AA- 302,076 500,000 4.500%, 02/15/24 AMBAC Insured .......................... Aa3/AA 504,670 McKinney, Texas 1,700,000 4.500%, 08/15/23 Syncora Guarantee Inc. Insured ......... Aa2/AA+ 1,729,903 1,375,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa2/AA+ 1,449,195 695,000 4.375%, 08/15/25 National-re Insured .................... Aa2/AA+ 698,774 Mesquite, Texas 510,000 4.625%, 02/15/22 FSA Insured ............................ Aa3/AAA 526,631 San Antonio, Texas 125,000 4.750%, 02/01/24 FSA Insured ............................ Aa1/AAA 127,628
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ CITY, COUNTY AND STATE (CONTINUED) San Patricio County, Texas $ 450,000 4.600%, 04/01/25 AMBAC Insured .......................... A2/NR $ 456,741 Texas State 415,000 4.500%, 08/01/22 ........................................ Aa1/AA 426,869 Waco, Texas 2,560,000 4.500%, 02/01/24 National-re Insured .................... Aa3/AA 2,567,450 Washington County, Utah 1,250,000 5.000%, 10/01/22 National-re Insured .................... A1/NR 1,281,400 Williamson County, Texas 460,000 4.500%, 02/15/26 FSA Insured ............................ Aa2/AAA 458,914 ------------ Total City, County and State ............................ 18,369,965 ------------ SCHOOL DISTRICT (5.0%) Borger, Texas Independent School District 400,000 4.500%, 02/15/24 ........................................ NR/AAA 407,772 500,000 4.500%, 02/15/25 ........................................ NR/AAA 505,965 Clint, Texas Independent School District 265,000 4.250%, 02/15/28 ........................................ NR/AAA 253,475 Freemont County, Wyoming School District #14 355,000 4.500%, 06/15/26 ........................................ NR/BBB 359,427 Frisco, Texas Independent School District 1,260,000 5.000%, 07/15/26 ........................................ Aaa/NR+ 1,304,075 Galena Park, Texas Independent School District 295,000 4.625%, 08/15/25 ........................................ Aaa/NR+ 300,988 Harrisburg, South Dakota Independent School District No. 41- 2 1,370,000 4.500%, 01/15/24 FSA Insured ............................ Aa3/NR++ 1,370,616 La Feria, Texas Independent School District 210,000 4.400%, 02/15/24 ........................................ Aaa/NR 211,966 Lindale, Texas Independent School District 440,000 4.250%, 02/15/21 ........................................ NR/AAA 447,234 1,000,000 4.250%, 02/15/22 ........................................ NR/AAA 1,011,410 445,000 4.375%, 02/15/23 ........................................ NR/AAA 451,728 Lovejoy, Texas Independent School District 200,000 4.500%, 02/15/24 ........................................ Aaa/AAA 203,092 Navasota, Texas Independent School District 475,000 5.000%, 08/15/23 National-re FGIC Insured ............... A3/NR 486,362
RATING PRINCIPAL MOODY'S/ AMOUNT GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ SCHOOL DISTRICT (CONTINUED) Prosper, Texas Independent School District $ 395,000 4.125%, 08/15/21 ........................................ NR/AAA $ 399,349 Spring, Texas Independent School District 300,000 4.750%, 08/15/23 ........................................ Aaa/AAA 306,495 Uintah County, Utah School District 455,000 4.250%, 02/01/24 ........................................ Aaa/NR 459,978 Van, Texas Independent School District 750,000 4.875%, 02/15/26 ........................................ Aaa/AAA 779,183 Washington County, Utah 440,000 5.000%, 10/01/18 Syncora Guarantee Inc. Insured ......... Aa3/NR 462,273 465,000 5.000%, 10/01/19 Syncora Guarantee Inc. Insured ......... Aa3/NR 484,958 490,000 5.000%, 10/01/20 Syncora Guarantee Inc. Insured ......... Aa3/NR 508,924 510,000 5.000%, 10/01/21 Syncora Guarantee Inc. Insured ......... Aa3/NR 528,722 535,000 5.000%, 10/01/22 Syncora Guarantee Inc. Insured ......... Aa3/NR 550,841 565,000 5.000%, 10/01/23 Syncora Guarantee Inc. Insured ......... Aa3/NR 578,537 320,000 5.000%, 10/01/24 Syncora Guarantee Inc. Insured ......... Aa3/NR 327,069 Washoe County, Nevada School District 200,000 4.625%, 06/01/23 National-re FGIC Insured ............... Aa3/AA 202,448 ------------ Total School District ................................... 12,902,887 ------------ Total General Obligation Bonds .......................... 31,272,852 ------------ REVENUE BONDS (85.3%) --------------------------------------------------------- AIRPORT (2.2%) Clark County, Nevada Passenger Facility Charge 255,000 4.750%, 07/01/22 National-re Insured AMT ................ Aa3/A+ 252,320 Greater Orlando Aviation Authority, Florida Airport 2,000,000 5.500%, 10/01/23 AMT .................................... Aa3/A+ 1,968,820 Hillsborough County, Florida Aviation Authority 2,185,000 5.250%, 10/01/23 National-re Insured AMT ................ Aa3/A+ 2,093,864 Miami-Dade County, Florida Aviation Revenue 1,700,000 5.000%, 10/01/28 Series C National-re Insured AMT ....... A2/A 1,483,539 ------------ Total Airport ........................................... 5,798,543 ------------ EDUCATION (32.4%) Broward County, Florida School Board COP 1,780,000 4.500%, 07/01/23 Series A National-re FGIC Insured ...... A1/A+ 1,633,951
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ EDUCATION (CONTINUED) Carmel, Indiana 2002 School Building Corp. $ 1,235,000 4.300%, 01/15/23 FSA Insured ............................ Aa3/AAA $ 1,217,549 Central Washington State University System Revenue 1,265,000 4.375%, 05/01/26 FSA Insured ........................... Aa3/NR++ 1,242,015 Florida State Board of Education Public Education 210,000 4.500%, 06/01/25 FSA Insured ............................ Aa1/AAA 208,578 Hillsborough County, Florida School Board COP 560,000 4.250%, 07/01/26 National-re Insured .................... Aa3/AA- 495,538 Laredo, Texas Independent School District Public Facility Corp. 190,000 5.000%, 08/01/24 AMBAC Insured .......................... NR/A- 193,543 La Vernia, Texas Higher Education Finance Corp. 3,596,000 6.500%, 03/12/38 ........................................ NR/NR* 2,852,383 Nevada System Higher Education COP 1,000,000 5.000%, 07/01/25 AMBAC Insured .......................... NR/AA- 1,036,960 Salt Lake County, Utah Westminster College Project 870,000 4.750%, 10/01/21 ........................................ NR/BBB 740,144 2,300,000 5.000%, 10/01/22 ........................................ NR/BBB 1,980,093 1,250,000 5.000%, 10/01/25 ........................................ NR/BBB 1,037,163 2,025,000 5.125%, 10/01/28 ........................................ NR/BBB 1,646,973 Spanish Fork City, Utah Charter School Revenue American Leadership Academy 1,900,000 5.550%, 11/15/21 ........................................ NR/NR* 1,524,579 945,000 5.550%, 11/15/26 ........................................ NR/NR* 697,665 Texas A&M University Revenue 1,750,000 5.000%, 07/01/34 ........................................ Aaa/AAA 1,773,118 Texas State College Student Loan Revenue 100,000 5.000%, 08/01/22 AMT .................................... Aa1/AA 95,918 Texas State University System Financing Revenue 655,000 4.375%, 03/15/23 FSA Insured ............................ Aa3/AAA 656,762 Tyler, Texas Independent School District 325,000 5.000%, 02/15/26 FSA Insured ............................ Aa3/AAA 332,638 University of Nevada (University Revenues) 190,000 4.500%, 07/01/24 National-re Insured .................... Aa3/AA- 190,587 University of Utah COP 3,170,000 4.350%, 12/01/26 AMBAC Insured .......................... Aa3/AA- 3,158,398
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ EDUCATION (CONTINUED) Utah County, Utah Charter School Revenue Lakeview Academy $ 315,000 5.350%, 07/15/17 Series A ............................... NR/NR* $ 271,795 Utah County, Utah Charter School Revenue Lincoln Academy 950,000 5.450%, 06/15/17 Series A ............................... NR/NR* 829,312 Utah County, Utah Charter School Revenue Renaissance Academy 340,000 5.350%, 07/15/17 Series A ............................... NR/NR* 286,487 Utah County, Utah School Facility Revenue, Ranches Academy 1,320,000 6.500%, 12/21/25 ........................................ NR/NR* 1,061,465 Utah State Board of Regents Auxiliary & Campus Facility 1,000,000 4.125%, 04/01/20 National-re Insured .................... Aa2/AA 997,800 Utah State Board of Regents Lease Revenue 410,000 4.500%, 05/01/20 AMBAC Insured ......................... NR/AA 422,107 425,000 4.500%, 05/01/21 AMBAC Insured ......................... NR/AA 436,275 450,000 4.625%, 05/01/22 AMBAC Insured ......................... NR/AA 461,750 120,000 4.650%, 05/01/23 AMBAC Insured ......................... NR/AA 122,596 Utah State Board of Regents Office Facility Revenue 450,000 5.050%, 02/01/20 National-re Insured .................... Baa1/AA 460,976 360,000 5.125%, 02/01/22 National-re Insured .................... Baa1/AA 368,636 1,045,000 5.000%, 04/01/23 National-re Insured .................... Aa3/AA- 1,087,155 Utah State Charter School Finance Authority American Prep Academy 6,900,000 8.000%, 03/15/39 ........................................ NR/NR* 6,943,056 Utah State Charter School Finance Authority Channing Hall Academy 1,700,000 5.750%, 07/15/22 Series A ............................... NR/NR* 1,278,961 Utah State Charter School Finance Authority Da Vinci Academy 6,950,000 8.000%, 03/15/39 ........................................ NR/NR* 6,992,604 Utah State Charter School Finance Authority Entheos Academy 5,930,000 6.750%, 08/15/38 ........................................ NR/NR* 4,727,100
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ EDUCATION (CONTINUED) Utah State Charter School Finance Authority Fast Forward High School $ 3,108,800 6.500%, 11/15/37 ........................................ NR/NR* $ 2,330,916 Utah State Charter School Finance Authority G. Washington Academy 1,000,000 6.750%, 07/15/28 ........................................ NR/NR* 832,250 Utah State Charter School Finance Authority Legacy Prep Academy 5,745,000 6.750%, 06/15/38 ........................................ NR/NR* 5,770,335 7,800,000 7.250%, 06/15/39 ........................................ NR/NR* 7,908,732 Utah State Charter School Finance Authority Noah Webster Academy 3,155,000 6.250%, 06/15/28 ........................................ NR/NR* 2,470,050 1,000,000 6.500%, 06/15/38 ........................................ NR/NR* 758,520 Utah State Charter School Finance Authority Rockwell Charter School 1,000,000 6.750%, 08/15/28 ........................................ NR/NR* 831,050 Utah State Charter School Finance Authority Ronald Wilson Reagan Academy 1,250,000 5.750%, 02/15/22 Series A ............................... NR/NR* 1,021,338 Utah State Charter School Finance Authority Summit Academy 1,425,000 5.125%, 06/15/17 ........................................ NR/BBB- 1,233,623 Utah State Charter School Finance Authority Venture Academy 7,305,000 7.250%, 11/15/38 ........................................ NR/NR* 7,105,427 Washington State University Revenue 750,000 5.000%, 10/01/19 FSA Insured ............................ Aa3/AAA 761,813 735,000 4.600%, 10/01/29 FSA Insured ............................ Aa3/AAA 734,949 Wayne Township, Indiana Marion City School Building Corp. 1,120,000 5.000%, 07/15/26 National-Re FGIC Insured ............... NR/AA+ 1,122,296 Weber State University, Utah Student Facilities System 1,825,000 4.400%, 04/01/27 FSA Insured ............................ NR/AAA 1,820,438 ------------ Total Education ......................................... 84,164,367 ------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ HEALTHCARE (0.7%) Harris County, Texas Health Facility Development Corp. $ 145,000 5.000%, 11/15/28 AMBAC Insured .......................... NR/A $ 121,437 Reno, Nevada Hospital Revenue, Washoe Medical Center 725,000 5.000%, 06/01/23 FSA Insured ............................ Aa3/AAA 673,351 680,000 5.000%, 06/01/23 FSA Insured ............................ Aa3/AAA 631,557 Richmond, Indiana Hospital Revenue 250,000 5.000%, 01/01/19 ........................................ NR/AA- 251,123 ------------ Total Healthcare ........................................ 1,677,468 ------------ HOUSING (13.5%) Alaska Housing Finance Corp. Housing Revenue 1,000,000 4.700%, 06/01/27 AMT .................................... Aa2/AA 899,350 1,000,000 5.250%, 12/01/28 AMT .................................... Aa2/AA 955,430 Alaska State Local Housing Authority 500,000 5.125%, 06/01/27 Series A2 AMT .......................... Aaa/AAA 473,670 Florida Housing Finance Corp. 715,000 5.000%, 07/01/21 AMT .................................... Aa1/AA+ 706,120 500,000 6.000%, 07/01/28 ........................................ Aa1/AA+ 520,950 Henderson, Nevada Local Improvement District 150,000 5.000%, 09/01/15 ........................................ NR/NR* 67,848 200,000 5.000%, 09/01/16 ........................................ NR/NR* 90,332 200,000 5.050%, 09/01/17 ........................................ NR/NR* 90,230 200,000 5.100%, 09/01/18 ........................................ NR/NR* 90,152 Indiana State Housing Finance Authority Single Family 245,000 4.850%, 07/01/22 AMT .................................... Aaa/NR+ 241,288 Indianapolis, Indiana Multi-Family 470,000 4.850%, 01/01/21 AMT .................................... Aaa/NR 466,729 Miami-Dade County, Florida Housing Finance Authority 535,000 5.000%, 11/01/23 FSA Insured AMT ........................ Aa3/AAA 520,041 Nevada Housing Multi-Family, LOC: US Bank 995,000 4.750%, 04/01/39 AMT .................................... NR/AA- 872,177 North Dakota Housing Authority Home Mortgage Revenue 2,000,000 5.400%, 07/01/23 AMT .................................... Aa1/NR 2,015,460 1,000,000 5.650%, 07/01/28 AMT .................................... Aa1/NR 1,001,260
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ HOUSING (CONTINUED) North Dakota Housing Authority Home Mortgage Revenue (continued) $ 950,000 5.400%, 07/01/28 ........................................ Aa1/NR $ 969,427 2,000,000 4.750%, 07/01/31 AMT .................................... Aa1/NR 1,736,740 Orange County, Florida Housing Finance Authority 115,000 5.150%, 03/01/22 ........................................ Aaa/NR 114,826 Seattle, Washington Housing Authority 730,000 4.400%, 11/01/21 AMT .................................... NR/AAA 658,599 Snohomish County, Washington Housing Authority 150,000 4.750%, 09/01/10 AMT .................................... NR/NR* 147,005 185,000 4.875%, 09/01/12 AMT .................................... NR/NR* 174,181 225,000 5.000%, 09/01/13 AMT .................................... NR/NR* 207,707 185,000 5.000%, 09/01/14 AMT .................................... NR/NR* 166,831 145,000 5.100%, 09/01/15 AMT .................................... NR/NR* 128,279 South Dakota Housing Development Authority 2,750,000 4.900%, 05/01/26 AMT .................................... Aa1/AAA 2,547,408 500,000 6.000%, 05/01/28 ........................................ Aa1/AAA 523,285 Texas State Housing Revenue 495,000 4.800%, 09/01/27 AMT .................................... Aa1/AAA 447,752 990,000 5.250%, 09/01/32 AMT .................................... Aa1/AAA 960,260 Utah Housing Corporation Single Family Mortgage 25,000 5.250%, 07/01/23 AMT .................................... Aa2/AA 24,926 195,000 4.875%, 07/01/23 AMT .................................... Aa3/AA- 185,683 1,275,000 5.125%, 07/01/24 AMT .................................... Aa3/AA- 1,245,675 1,015,000 5.000%, 07/01/25 AMT .................................... Aa2/AA- 983,494 605,000 5.100%, 01/01/26 AMT .................................... Aa3/AA- 583,426 120,000 5.650%, 07/01/27 AMT .................................... Aa2/AA 120,266 610,000 5.200%, 01/01/28 AMT .................................... Aa3/AA- 582,898 2,305,000 5.800%, 07/01/28 AMT .................................... Aa3/AA- 2,330,055 1,000,000 5.700%, 07/01/28 AMT .................................... Aa3/AA 1,004,820 995,000 5.500%, 07/01/28 AMT .................................... Aa3/AA- 981,160 675,000 4.700%, 07/01/28 AMT .................................... Aa3/AA- 619,205 1,310,000 6.100%, 01/01/29 AMT .................................... Aa3/AA- 1,340,759 805,000 5.000%, 07/01/31 AMT .................................... Aa2/AA 718,776 495,000 5.000%, 01/01/32 AMT .................................... Aa2/AA 434,759
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ HOUSING (CONTINUED) Utah State Housing Finance Agency $ 125,000 5.700%, 07/01/15 AMT .................................... Aa3/AA- $ 124,508 40,000 5.650%, 07/01/16 Series 1994C ........................... Aaa/AAA 40,144 30,000 5.400%, 07/01/16 AMT .................................... Aa2/AA 29,405 15,000 6.000%, 07/01/17 AMT .................................... Aaa/AAA 15,080 560,000 5.500%, 07/01/18 AMT .................................... Aa3/AA- 562,414 35,000 5.300%, 07/01/18 AMT .................................... Aaa/AAA 35,283 60,000 5.000%, 07/01/18 AMT .................................... Aaa/AAA 60,028 75,000 5.400%, 07/01/20 AMT .................................... Aa2/AA 75,605 140,000 5.600%, 07/01/23 AMT .................................... Aa2/AA 141,030 35,000 5.700%, 07/01/26 National-re Insured .................... A2/A 35,069 Wyoming Community Development Authority Housing Revenue 2,000,000 5.000%, 12/01/22 Series 10 AMT .......................... Aa1/AA+ 1,973,020 2,920,000 5.625%, 12/01/38 ........................................ Aa1/AA+ 2,951,186 ------------ Total Housing ........................................... 34,992,011 ------------ 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 250,768 Utah County Environmental Improvement Revenue 1,025,000 5.050%, 11/01/17 ........................................ Baa1/BBB+ 1,046,576 ------------ Total Industrial Development & Pollution Control ........ 1,297,344 ------------ LEASE (11.9%) Celebration Community Development District, Florida 290,000 5.000%, 05/01/22 National-re Insured .................... Baa1/A 238,200 Clark County, Nevada Improvement District Revenue 705,000 5.125%, 12/01/19 ........................................ NR/NR* 529,533 Clark County, Nevada Improvement District Special Local Improvement #128 (Summerlin) 500,000 5.000%, 02/01/21 Series A ............................... NR/NR* 301,850 Davis County, Utah Lease Revenue DMV Project 78,000 5.400%, 11/01/17 ........................................ NR/NR* 67,075 83,000 5.450%, 11/01/18 ........................................ NR/NR* 69,996 87,000 5.500%, 11/01/19 ........................................ NR/NR* 72,117
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ LEASE (CONTINUED) Davis County, Utah Lease Revenue DMV Project (continued) $ 92,000 5.550%, 11/01/20 ........................................ NR/NR* $ 75,170 97,000 5.600%, 11/01/21 ........................................ NR/NR* 77,917 103,000 5.650%, 11/01/22 ........................................ NR/NR* 80,953 108,000 5.700%, 11/01/23 ........................................ NR/NR* 83,433 115,000 5.700%, 11/01/24 ........................................ NR/NR* 87,362 121,000 5.750%, 11/01/25 ........................................ NR/NR* 89,921 128,000 5.750%, 11/01/26 ........................................ NR/NR* 93,510 Marion County, Indiana Convention & Recreational Facilities Authority 405,000 5.000%, 06/01/27 National-re Insured .................... Baa1/A 376,431 Middle Village, Florida Community Development District Special Assessment Revenue 1,130,000 6.750%, 05/01/25 ........................................ NR/NR* 912,622 New Albany, Indiana Development Authority 500,000 4.250%, 02/01/22 ........................................ NR/A- 475,925 Poinciana West, Florida Community Development District Special Assessment Revenue 1,000,000 5.875%, 05/01/22 ........................................ NR/NR* 759,330 Port Saint Lucie, Florida Special Assessment Revenue Southwest Annexation District 1- B 500,000 5.000%, 07/01/27 National-re Insured .................... Baa1/A 436,030 Red River, Texas Higher Education TCU Project 1,000,000 4.375%, 03/15/25 ........................................ Aa3/NR++ 963,070 Salt Lake Valley, Utah Fire Service District Lease Revenue 610,000 5.200%, 04/01/28 ........................................ Aa3/NR++ 624,573 1,000,000 5.250%, 04/01/30 ........................................ Aa3/NR++ 1,014,610 South Dakota State Building Authority Revenue 500,000 4.500%, 06/01/24 National-re FGIC Insured ............... NR/AA- 495,695 Tolomato Community, Florida Development District Special Assessment Revenue 1,000,000 6.450%, 05/01/23 ........................................ NR/NR* 741,800 Tooele County, Utah Municipal Building Authority School District Lease Revenue 1,000,000 5.000%, 06/01/28 ........................................ A3/A+ 946,130
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ LEASE (CONTINUED) Twin Creeks, Utah Special Service District BAN $ 12,000,000 7.250%, 07/15/10 ........................................ NR/NR* $ 11,736,000 Uintah County, Utah Municipal Building Authority Lease Revenue 1,500,000 5.300%, 06/01/28 ........................................ NR/A+ 1,512,630 Utah State Building Ownership Authority 465,000 5.000%, 05/15/21 ........................................ Aa1/AA+ 486,097 1,755,000 5.250%, 05/15/23 ........................................ Aa1/AA+ 1,827,306 510,000 5.000%, 05/15/23 ........................................ Aa1/AA+ 527,921 1,845,000 5.250%, 05/15/24 ........................................ Aa1/AA+ 1,914,464 1,080,000 5.000%, 05/15/25 ........................................ Aa1/AA+ 1,107,529 West Bountiful, Utah Courthouse Revenue 410,000 5.000%, 05/01/19 ........................................ NR/A 456,027 West Valley City, Utah Municipal Building Authority Lease Revenue Refunding 1,890,000 4.375%, 08/01/26 Series A National-re FGIC Insured ...... NR/A+ 1,833,508 ------------ Total Lease ............................................. 31,014,735 ------------ TAX REVENUE (11.0%) Aqua Isles, Florida Community Development District Revenue 945,000 7.000%, 05/01/38 ........................................ NR/NR* 663,910 Bay County, Florida Sales Tax Revenue 175,000 4.750%, 09/01/23 FSA Insured ............................ Aa3/NR++ 165,823 Bountiful, Utah Special Improvement District Special Assessment Revenue 203,000 5.000%, 06/01/14 ........................................ NR/NR* 177,932 213,000 5.150%, 06/01/15 ........................................ NR/NR* 183,059 224,000 5.300%, 06/01/16 ........................................ NR/NR* 188,574 236,000 5.500%, 06/01/17 ........................................ NR/NR* 195,708 249,000 5.650%, 06/01/18 ........................................ NR/NR* 204,735 Clark County, Nevada Improvement District 250,000 5.000%, 08/01/16 ........................................ NR/NR* 170,590 Coral Canyon, Utah Special Service District 110,000 5.000%, 07/15/13 ........................................ NR/NR* 102,738 250,000 5.500%, 07/15/18 ........................................ NR/NR* 197,747
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ TAX REVENUE (CONTINUED) Henderson, Nevada Local Improvement District $ 100,000 4.500%, 09/01/12 ........................................ NR/NR* $ 89,407 300,000 5.000%, 09/01/14 ........................................ NR/NR* 253,098 295,000 5.000%, 09/01/15 ........................................ NR/NR* 241,103 235,000 5.000%, 03/01/16 ........................................ NR/NR* 190,305 Holladay, Utah Redevelopment Agency 2,877,500 4.900%, 12/30/20 ........................................ NR/NR* 2,268,966 Jordanelle, Utah Special Service District 186,000 5.000%, 11/15/14 ........................................ NR/NR* 164,270 196,000 5.100%, 11/15/15 ........................................ NR/NR* 170,022 206,000 5.200%, 11/15/16 ........................................ NR/NR* 175,077 216,000 5.300%, 11/15/17 ........................................ NR/NR* 179,991 228,000 5.400%, 11/15/18 ........................................ NR/NR* 187,993 240,000 5.500%, 11/15/19 ........................................ NR/NR* 194,455 253,000 5.600%, 11/15/20 ........................................ NR/NR* 201,757 268,000 5.700%, 11/15/21 ........................................ NR/NR* 209,691 283,000 5.800%, 11/15/22 ........................................ NR/NR* 217,576 299,000 6.000%, 11/15/23 ........................................ NR/NR* 227,847 Jordanelle, Utah Special Service Improvement District 175,000 8.000%, 10/01/11 ........................................ NR/NR* 175,819 La Verkin, Utah Sales and Franchise Tax Revenue 571,000 5.100%, 07/15/27 ........................................ NR/NR* 451,473 Lehi, Utah Sales Tax 790,000 5.000%, 06/01/24 FSA Insured ............................ Aa3/AAA 821,616 Mesquite, Nevada New Special Improvement District 240,000 5.300%, 08/01/11 ........................................ NR/NR* 227,501 175,000 4.600%, 08/01/11 ........................................ NR/NR* 163,093 185,000 4.750%, 08/01/12 ........................................ NR/NR* 166,863 220,000 4.900%, 08/01/13 ........................................ NR/NR* 192,595 135,000 5.250%, 08/01/17 ........................................ NR/NR* 105,925 300,000 5.350%, 08/01/19 ........................................ NR/NR* 224,058 130,000 5.400%, 08/01/20 ........................................ NR/NR* 95,187 475,000 5.500%, 08/01/25 ........................................ NR/NR* 319,095 Mountain Regional Water District, Utah Special Assessment 1,320,000 7.000%, 12/01/18 ........................................ NR/NR* 1,053,004
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ TAX REVENUE (CONTINUED) Mountain Regional Water, Utah Special Service District $ 2,000,000 5.000%, 12/15/20 National-re Insured .................... Baa1/A+ $ 1,918,420 North Ogden, Utah Sales Tax Revenue 195,000 5.000%, 11/01/24 Syncora Guarantee Inc. Insured ......... NR/A+ 206,838 Payson City, Utah Sales Tax Revenue 445,000 5.000%, 08/01/21 FSA Insured ............................ Aa3/AAA 473,565 Pembroke Harbor, Florida Community Development District Revenue 1,800,000 7.000%, 05/01/38 ........................................ NR/NR* 1,217,160 Salt Lake City, Utah Sales Tax 955,000 5.000%, 02/01/21 ........................................ NR/AAA 1,014,477 1,005,000 5.000%, 02/01/22 ........................................ NR/AAA 1,061,893 1,060,000 5.000%, 02/01/23 ........................................ NR/AAA 1,114,049 1,115,000 5.000%, 02/01/24 ........................................ NR/AAA 1,167,305 Sandy City, Utah Sales Tax 605,000 5.000%, 09/15/20 AMBAC Insured .......................... NR/AA+ 624,941 South Weber City, Utah 525,000 5.000%, 01/15/24 National-re Insured .................... Baa1/A 552,521 Springville, Utah Special Assessment Revenue 2005 Series 400,000 5.500%, 01/15/17 ........................................ NR/NR* 324,444 423,000 5.650%, 01/15/18 ........................................ NR/NR* 336,433 446,000 5.800%, 01/15/19 ........................................ NR/NR* 349,700 472,000 5.900%, 01/15/20 ........................................ NR/NR* 365,446 500,000 6.000%, 01/15/21 ........................................ NR/NR* 383,040 Springville, Utah Special Assessment Revenue 2007 Series 34,000 5.650%, 01/15/18 ........................................ NR/NR* 27,042 37,000 5.800%, 01/15/19 ........................................ NR/NR* 29,011 38,000 5.900%, 01/15/20 ........................................ NR/NR* 29,422 40,000 6.000%, 01/15/21 ........................................ NR/NR* 30,643 Vernal City, Utah Sales Tax Revenue 515,000 4.750%, 09/01/31 Assured Guaranty Insured ............... NR/AAA 491,866 300,000 4.875%, 09/01/34 Assured Guaranty Insured ............... NR/AAA 285,981
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ TAX REVENUE (CONTINUED) Wasatch County, Utah Building Authority $ 130,000 5.000%, 10/01/15 ........................................ A3/NR $ 137,398 135,000 5.000%, 10/01/16 ........................................ A3/NR 141,384 Wasatch County, Utah Sales Tax 205,000 5.000%, 12/01/16 AMBAC Insured .......................... NR/A+ 217,072 210,000 5.000%, 12/01/17 AMBAC Insured .......................... NR/A+ 220,842 225,000 5.000%, 12/01/18 AMBAC Insured .......................... NR/A+ 234,776 Washington City, Utah Sales Tax 680,000 5.250%, 11/15/17 AMBAC Insured .......................... NR/A 732,530 Weber County, Utah Sales Tax 385,000 5.000%, 07/01/23 AMBAC Insured .......................... A2/NR 394,348 West Valley City, Utah Redevelopment Agency 1,625,000 5.000%, 03/01/21 ........................................ NR/A- 1,662,619 320,000 5.000%, 03/01/22 ........................................ NR/A- 325,651 350,000 5.000%, 03/01/23 ........................................ NR/A- 354,270 1,000,000 5.000%, 03/01/24 ........................................ NR/A- 1,008,260 ------------ Total Tax Revenue ....................................... 28,651,950 ------------ TRANSPORTATION (2.2%) Alaska State International Airport Revenue 175,000 5.000%, 10/01/24 AMBAC Insured AMT ...................... Aa3/NR++ 159,484 Florida State Turnpike Authority Turnpike Revenue 500,000 4.500%, 07/01/22 National-re Insured .................... Aa2/AA- 496,115 Indiana Finance Authority Highway Revenue 1,950,000 4.500%, 12/01/25 National-Re FGIC Insured ............... Aa2/AA+ 1,940,971 Miami-Dade County, Florida Aviation Revenue 600,000 5.000%, 10/01/24 National-re FGIC Insured AMT ........... A2/A 543,060 Port of Seattle, Washington Revenue 1,095,000 5.100%, 04/01/24 AMT National-re FGIC Insured ........... Aa2/AA- 1,053,204 Utah Transit Authority Sales Tax & Transportation Revenue 1,450,000 4.125%, 06/15/22 FSA Insured ............................ Aa3/AAA 1,450,377 ------------ Total Transportation .................................... 5,643,211 ------------
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ UTILITY (6.5%) Alaska Industrial Development & Export Authority $ 400,000 4.625%, 12/01/16 AMBAC Insured AMT ...................... NR/BBB $ 357,104 Cowlitz County, Washington Public Utility District Electric Revenue 1,000,000 4.500%, 09/01/26 National-re Insured .................... A3/A 959,500 Eagle Mountain, Utah Gas & Electric 1,385,000 4.250%, 06/01/20 Radian Insured ......................... NR/BBB- 1,204,091 1,440,000 5.000%, 06/01/21 Radian Insured ......................... NR/BBB- 1,334,851 1,515,000 5.000%, 06/01/22 Radian Insured ......................... NR/BBB- 1,389,103 Garland, Texas Water & Sewer 440,000 4.500%, 03/01/21 AMBAC Insured .......................... NR/AA 445,504 Indianapolis, Indiana Gas Utility 505,000 5.000%, 08/15/24 AMBAC Insured .......................... Aa3/A+ 505,096 Intermountain Power Agency Utilities Light & Power Service, Utah 250,000 5.250%, 07/01/23 ........................................ A1/A+ 253,132 JEA, Florida Electric System Revenue 500,000 5.000%, 10/01/26 ........................................ Aa3/A+ 500,905 Manti City, Utah Electric System Revenue 603,000 5.750%, 02/01/17 ........................................ NR/NR* 547,705 Murray City, Utah Utility Electric Revenue 1,340,000 5.000%, 06/01/25 AMBAC Insured .......................... A2/NR 1,401,506 Orem, Utah Water & Storm Sewer Revenue 1,000,000 5.000%, 07/15/26 ........................................ NR/AA 1,051,890 Pleasant Grove City, Utah Water Revenue 760,000 4.625%, 12/01/23 FSA Insured ............................ NR/AAA 787,238 Rockport, Indiana Pollution Control Revenue Indiana Michigan Power Company Project 1,500,000 4.625%, 06/01/25 Series A FGIC Insured .................. Baa2/BBB 1,204,995 Salem, Utah Electric Revenue 140,000 5.400%, 11/01/09 ........................................ NR/NR* 141,281 Santa Clara Utah Storm Drain Revenue 877,000 5.100%, 09/15/26 ........................................ NR/NR* 635,667
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ UTILITY (CONTINUED) Southern Utah Valley Power System $ 210,000 5.250%, 09/15/13 National-re Insured .................... Baa1/A $ 230,038 225,000 5.250%, 09/15/14 National-re Insured .................... Baa1/A 244,436 235,000 5.250%, 09/15/15 National-re Insured .................... Baa1/A 252,303 185,000 5.125%, 09/15/21 National-re Insured .................... Baa1/A 191,786 St. George, Utah Electric Revenue 250,000 5.000%, 06/01/38 FSA Insured ............................ Aa3/NR++ 249,230 Tacoma, Washington Solid Waste Utility Revenue 1,000,000 5.000%, 12/01/23 Syncora Guarantee Inc. Insured ......... A2/AA 1,020,410 Utah Assessed Municipal Power System 1,000,000 5.000%, 04/01/21 FSA Insured ............................ Aa3/AAA 1,033,970 Washington, Utah Electric Revenue 985,000 5.000%, 09/01/21 Syncora Guarantee Inc. Insured ......... Baa1/NR 1,039,796 ------------ Total Utility ........................................... 16,981,537 ------------ WATER AND SEWER (4.4%) Eagle Mountain, Utah Water and Sewer 690,000 4.750%, 11/15/25 National-re Insured .................... Baa1/A+ 706,215 Jacksonville, Florida Water and Sewer System Revenue 160,000 4.625%, 10/01/22 ........................................ Aa3/AA- 156,962 Mesquite, Texas Waterworks & Sewer 225,000 4.500%, 03/01/24 FSA Insured ............................ Aa3/AAA 227,531 Murray City, Utah Sewer and Water 440,000 5.000%, 10/01/19 AMBAC Insured .......................... A2/NR 457,138 Ogden City, Utah Sewer & Water Revenue 750,000 4.625%, 06/15/38 FSA Insured ............................ Aa3/NR++ 685,815 Pleasant Grove, Utah Water Revenue 450,000 4.300%, 12/01/20 National-re Insured .................... Baa1/A+ 450,266 Smithfield, Utah Water Revenue 90,000 4.750%, 06/01/17 ........................................ NR/NR* 78,507 94,000 4.800%, 06/01/18 ........................................ NR/NR* 80,630 99,000 4.850%, 06/01/19 ........................................ NR/NR* 83,530 103,000 4.900%, 06/01/20 ........................................ NR/NR* 85,787 108,000 5.000%, 06/01/21 ........................................ NR/NR* 90,278
RATING PRINCIPAL MOODY'S/ AMOUNT REVENUE BONDS (CONTINUED) S&P VALUE --------------- --------------------------------------------------------- --------- ------------ WATER AND SEWER (CONTINUED) Smithfield, Utah Water Revenue (continued) $ 126,000 5.150%, 06/01/22 ........................................ NR/NR* $ 104,493 132,000 5.200%, 06/01/23 ........................................ NR/NR* 108,701 139,000 5.250%, 06/01/24 ........................................ NR/NR* 113,756 114,000 5.050%, 06/01/25 ........................................ NR/NR* 92,794 120,000 5.100%, 06/01/26 ........................................ NR/NR* 97,324 Upper Trinity Regional Water District, Texas 205,000 4.500%, 08/01/20 AMBAC Insured .......................... A3/A- 207,310 Utah Water Finance Agency Revenue 200,000 5.250%, 07/01/16 AMBAC Insured .......................... NR/NR* 214,298 310,000 5.000%, 10/01/17 AMBAC Insured .......................... NR/NR* 325,159 510,000 5.000%, 07/01/18 AMBAC Insured .......................... A2/NR 532,052 105,000 5.000%, 10/01/20 AMBAC Insured .......................... NR/NR* 108,184 830,000 4.500%, 10/01/22 AMBAC Insured .......................... A1/NR 835,370 740,000 5.125%, 07/01/23 AMBAC Insured .......................... NR/NR* 757,560 870,000 4.500%, 10/01/23 AMBAC Insured .......................... A1/NR 871,253 2,570,000 5.000%, 10/01/25 AMBAC Insured .......................... A2/NR 2,626,334 1,400,000 4.500%, 10/01/28 AMBAC Insured .......................... A1/NR 1,354,374 ------------ Total Water and Sewer ................................... 11,451,621 ------------ Total Revenue Bonds ..................................... 221,672,787 ------------ Total Investments (cost $266,345,809 - note 4) .......... 97.4% 252,945,639 Other assets less liabilities ........................... 2.6 6,831,716 ------- ------------ Net Assets .............................................. 100.0% $259,777,355 ======= ============
PERCENT OF PORTFOLIO DISTRIBUTION BY QUALITY RATING (UNAUDITED) PORTFOLIO** ---------------------------------------------------- ---------- Aaa of Moody's or AAA of S&P ....................... 14.9% Aa of Moody's or AA of S&P ......................... 29.7 A of Moody's or S&P ................................ 12.9 Baa of Moody's or BBB of S&P ....................... 6.3 Not rated* ......................................... 36.2 ----- 100.0% ===== * 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. ** Calculated using the highest rating of the two rating services. FITCH RATINGS ------------- + AAA ++ AA +++ A Note: National Public Finance Guarantee Corporation (National-re) is the new name for Municipal Bond Investors Assurance (MBIA) Inc.'s U.S. public finance platform. PORTFOLIO ABBREVIATIONS: ------------------------ 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 National-re - National Public Finance Guarantee Corporation National-re - FGIC-Reinsured FGIC bonds NR - Not Rated See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2009 ASSETS Investments at value (cost $266,345,809) ................................................... $ 252,945,639 Cash ....................................................................................... 2,820,275 Interest receivable ........................................................................ 3,967,988 Receivable for Fund shares sold ............................................................ 998,570 Receivable from Manager .................................................................... 520,626 Receivable for investment securities sold .................................................. 35,000 Other assets ............................................................................... 15,353 ------------------ Total assets ............................................................................... 261,303,451 ------------------ LIABILITIES Payable for Fund shares redeemed ........................................................... 540,763 Deferred income payable .................................................................... 479,768 Dividends payable .......................................................................... 242,087 Management fees payable .................................................................... 88,571 Distribution and service fees payable ...................................................... 66,537 Accrued expenses ........................................................................... 108,370 ------------------ Total liabilities .......................................................................... 1,526,096 ------------------ NET ASSETS .................................................................................... $ 259,777,355 ================== Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share ........ $ 277,819 Additional paid-in capital ................................................................. 274,875,070 Net unrealized depreciation on investments (note 4) ........................................ (13,400,170) Accumulated net realized loss on investments ............................................... (2,069,547) Accumulated net investment income .......................................................... 94,183 ------------------ $ 259,777,355 ================== CLASS A Net Assets ................................................................................. $ 166,182,505 ================== Capital shares outstanding ................................................................. 17,780,903 ================== Net asset value and redemption price per share ............................................. $ 9.35 ================== Maximum offering price per share (100/96 of $9.35 adjusted to nearest cent) ................ $ 9.74 ================== CLASS C Net Assets ................................................................................. $ 49,700,167 ================== Capital shares outstanding ................................................................. 5,319,409 ================== Net asset value and offering price per share ............................................... $ 9.34 ================== Redemption price per share (*a charge of 1% is imposed on the redemption proceeds of the shares, or on the original price, whichever is lower, if redeemed during the first 12 months after purchase) .............................................. $ 9.34* ================== CLASS Y Net Assets ................................................................................. $ 43,894,683 ================== Capital shares outstanding ................................................................. 4,681,565 ================== Net asset value, offering and redemption price per share ................................... $ 9.38 ==================
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 2009 INVESTMENT INCOME: Interest income .............................................. $ 13,108,548 Other income ................................................. 40,858 ------------- 13,149,406 Expenses: Management fee (note 3) ...................................... $ 1,181,829 Distribution and service fees (note 3) ....................... 665,916 Transfer and shareholder servicing agent fees ................ 141,693 Trustees' fees and expenses (note 8) ......................... 104,563 Shareholders' reports and proxy statements ................... 36,943 Legal fees (note 3) .......................................... 36,927 Fund accounting fees ......................................... 26,112 Custodian fees (note 6) ...................................... 21,113 Auditing and tax fees ........................................ 16,301 Registration fees and dues ................................... 14,030 Insurance .................................................... 10,113 Chief compliance officer (note 3) ............................ 4,040 Miscellaneous ................................................ 32,978 ----------- Total expenses ............................................... 2,292,558 Management fee waived (note 3) ............................... (315,336) Expenses paid indirectly (note 6) ............................ (33,184) ----------- Net expenses ................................................. 1,944,038 ------------- Net investment income ........................................ 11,205,368 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from securities transactions ............... (1,800,263) Change in unrealized depreciation on investments ............. (7,737,307) ----------- Net realized and unrealized gain (loss) on investments ....... (9,537,570) ------------- Net increase in net assets resulting from operations ......... $ 1,667,798 =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED JUNE 30, 2009 JUNE 30, 2008 ------------- ------------- OPERATIONS: Net investment income ........................................... $ 11,205,368 $ 9,139,922 Net realized gain (loss) from securities transactions ........... (1,800,263) 638,898 Change in unrealized depreciation on investments ................ (7,737,307) (4,614,006) ------------- ------------- Change in net assets from operations ......................... 1,667,798 5,164,814 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10): Class A Shares: Net investment income ........................................... (7,531,262) (6,459,904) Class C Shares: Net investment income ........................................... (1,461,117) (1,040,811) Class Y Shares: Net investment income ........................................... (2,370,878) (1,961,979) ------------- ------------- Change in net assets from distributions ...................... (11,363,257) (9,462,694) ------------- ------------- CAPITAL SHARE TRANSACTIONS (NOTE 7): Proceeds from shares sold ....................................... 86,962,093 55,700,331 Reinvested dividends and distributions .......................... 6,415,663 5,703,447 Cost of shares redeemed ......................................... (62,672,341) (45,261,625) ------------- ------------- Change in net assets from capital share transactions ......... 30,705,415 16,142,153 ------------- ------------- Change in net assets ......................................... 21,009,956 11,844,273 NET ASSETS: Beginning of period ............................................... 238,767,399 226,923,126 ------------- ------------- End of period* .................................................... $ 259,777,355 $ 238,767,399 ============= ============= * Includes undistributed net investment income of: ................ $ 94,183 $ 30,192 ============= =============
See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 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 (details of which can be found in the schedule of investments), used to value the Fund's net assets as of June 30, 2009: VALUATION INPUTS INVESTMENTS IN SECURITIES ---------------- ------------------------- Level 1 - Quoted Prices ..................... $ -- Level 2 - Other Significant Observable Inputs Municipal Bonds .......................... 252,945,639 Level 3 - Significant Unobservable Inputs ... -- -------------- Total ....................................... $ 252,945,639 ============== c) ACCOUNTING PRONOUNCEMENTS: In April 2009, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position No. 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP 157-4"). FSP 157-4 provides additional guidance for estimating fair value in accordance with FASB Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. The adoption of FSP 157-4 did not have an impact on the Fund's financial statements and the Fund has made the required additional disclosures. In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" (SFAS No. 165). The Fund adopted SFAS No. 165 which requires an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. For non-recognized subsequent events that must be disclosed to keep financial statements from being misleading, an entity is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. In addition, SFAS No. 165 requires an entity to disclose the date through which subsequent events have been evaluated. The Fund has evaluated subsequent events through the issuance of its financial statements on August 28, 2009. The Fund has adopted the provisions of Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161"), effective June 30, 2009. SFAS 161 requires enhanced disclosures about a fund's derivative and hedging activities, including how such activities are accounted for and their effect on a fund's financial position, performance and cash flows. The Fund does not invest in derivative instruments or engage in hedging activities. As a result, SFAS l61 did not impact the Fund's financial statements. d) 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. In connection with certain bonds, fee income is recognized by the Fund on a daily basis over the life of the bonds. e) 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 (2006-2009) and has determined that implementation of FIN 48 did not have a material impact on the Fund's financial statements. f) 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. g) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: Aquila Investment Management LLC (the "Manager"), a wholly-owned subsidiary of Aquila Management Corporation, the Fund's founder and sponsor, serves as the Manager for the Fund under an Advisory and Administration Agreement with the Fund. Under the Advisory and Administration Agreement, the Manager provides all investment management and administrative services to the Fund. The Manager's services include providing the office of the Fund and all related services as well as managing relationships with all the various support organizations to the Fund such as the shareholder servicing agent, custodian, legal counsel, fund accounting agent, auditors and distributor. For its services, the Manager is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.50 of 1% on the Fund's average net assets. For the year ended June 30, 2009, the Fund incurred management fees of $1,181,829 of which $315,336 was waived. The Manager contractually undertook 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, 0.97% for Class I Shares or 0.63% for Class Y Shares. Comparable expense limitations are in place for fiscal 2010. The Manager has agreed to pay the Fund $520,626 in installments (with interest) over a maximum period of 58 months related to fees paid by the issuers of certain bonds held by the Fund. Under a Compliance Agreement with the Manager, the Manager is compensated for Chief Compliance Officer related services provided to enable the Fund to comply with Rule 38a-1 of the Investment Company Act of 1940. Specific details as to the nature and extent of the services provided by the Manager are more fully defined in the Fund's Prospectus and Statement of Additional Information. b) DISTRIBUTION AND SERVICE FEES: The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended. Under one part of the Plan, with respect to Class A Shares, the Fund is authorized to make distribution fee payments to broker-dealers or others ("Qualified Recipients") selected by Aquila Distributors, Inc. (the "Distributor") including, but not limited to, any principal underwriter of the Fund, with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Fund's shares or servicing of shareholder accounts. The Fund makes payment of this service fee at the annual rate of 0.20% of the Fund's average net assets represented by Class A Shares. For the year ended June 30, 2009, distribution fees on Class A Shares amounted to $307,967, of which the Distributor retained $9,051. Under another part of the Plan, the Fund is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Fund's Class C shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Fund's average net assets represented by Class C Shares and for the year ended June 30, 2009, amounted to $268,462. In addition, under a Shareholder Services Plan, the Fund is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Fund's average net assets represented by Class C Shares and for the year ended June 30, 2009 amounted to $89,487. The total of these payments with respect to Class C Shares amounted to $357,949, of which the Distributor retained $62,617. 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 year ended June 30, 2009, total commissions on sales of Class A Shares amounted to $600,319, of which the Distributor received $50,624. c) OTHER RELATED PARTY TRANSACTIONS: For the year ended June 30, 2009, the Fund incurred $36,847 of legal fees allocable to Butzel Long PC, counsel to the Fund, for legal services in conjunction with the Fund's ongoing operations. The Secretary of the Fund is a shareholder of that firm. 4. PURCHASES AND SALES OF SECURITIES During the year ended June 30, 2009, purchases of securities and proceeds from the sales of securities aggregated $88,447,483 and $57,113,623, respectively. At June 30, 2009, the aggregate tax cost for all securities was $266,292,485. At June 30, 2009, the aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost amounted to $2,246,532 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value amounted to $15,593,378, for a net unrealized depreciation of $13,346,846. 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. At least 50% of the Fund's assets will always consist of obligations of Utah-based issuers. At June 30, 2009, the Fund had 62% of its net assets invested in municipal obligations issued by the State of Utah. 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. 6. EXPENSES The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Fund were as follows:
Year Ended Year Ended June 30, 2009 June 30, 2008 ---------------------------- ---------------------------- Shares Amount Shares Amount ------------ ------------ ------------ ------------ CLASS A SHARES: Proceeds from shares sold ........... 4,236,182 $ 38,937,661 2,834,849 $ 28,003,392 Reinvested distributions ............ 481,016 4,432,815 417,757 4,128,043 Cost of shares redeemed ............. (3,194,513) (28,482,023) (2,020,117) (19,970,653) ------------ ------------ ------------ ------------ Net change ........................ 1,522,685 14,888,453 1,232,489 12,160,782 ------------ ------------ ------------ ------------ CLASS C SHARES: Proceeds from shares sold ........... 2,776,510 25,642,043 796,274 7,849,550 Reinvested distributions ............ 100,741 927,564 64,603 638,158 Cost of shares redeemed ............. (839,404) (7,773,249) (699,234) (6,926,362) ------------ ------------ ------------ ------------ Net change ........................ 2,037,847 18,796,358 161,643 1,561,346 ------------ ------------ ------------ ------------ CLASS Y SHARES: Proceeds from shares sold ........... 2,448,286 22,382,389 2,002,683 19,847,389 Reinvested distributions ............ 114,773 1,055,284 94,661 937,246 Cost of shares redeemed ............. (2,876,167) (26,417,069) (1,843,176) (18,364,610) ------------ ------------ ------------ ------------ Net change ........................ (313,108) (2,979,396) 254,168 2,420,025 ------------ ------------ ------------ ------------ Total transactions in Fund shares .............................. 3,247,424 $ 30,705,415 1,648,300 $ 16,142,153 ============ ============ ============ ============
8. TRUSTEES' FEES AND EXPENSES At June 30, 2009 there were 7 Trustees, one of which is affiliated with the Manager and is not paid any fees. The total amount of Trustees' service and attendance fees paid during the year ended June 30, 2009 was $73,000, 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 year ended June 30, 2009, such meeting-related expenses amounted to $31,563. 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 $221,880, decreased accumulated net realized loss on investments by $796,251 and decreased additional paid-in capital in the amount of $1,018,131 at June 30, 2009. This adjustment had no impact on the Fund's aggregate net assets at June 30, 2009. 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, 2009, the Fund had a capital loss carryover of $902,608 of which $15,469 expires on June 30, 2011, $253,815 expires on June 30, 2012 and $633,324 expires on June 30, 2017. 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. At June 30, 2009 there were post-October capital loss deferrals of $1,166,939, which will be recognized in the following year. The tax character of distributions: Year Ended June 30, 2009 2008 ------------- -------------- Net tax-exempt income $ 11,141,377 $ 9,144,508 Ordinary income 221,880 318,186 ------------- -------------- $ 11,363,257 $ 9,462,694 ============= ============== As of June 30, 2009, the components of distributable earnings on a tax basis were as follows: Undistributed tax-exempt income $ 248,139 Undistributed taxable income 34,807 Accumulated net realized loss (902,608) Unrealized depreciation (13,346,846) Other temporary differences (1,409,026) ------------- $ (15,375,534) ============= The difference between book basis and tax basis unrealized appreciation is attributable primarily to premium/discount adjustments. The difference between book basis and tax basis undistributed income is due to the timing difference in recognizing dividends paid. 11. RECENT DEVELOPMENT Since December 2007, municipal bond insurance companies have been under review by the three major rating agencies: Standard & Poor's, Moody's and Fitch. The ratings of most of the insurance companies have now either been downgraded and/or have a negative outlook. The financial markets continue to assess the severity of the losses caused by the subprime credit crisis and its impact on municipal bond insurance companies and the prices of insured municipal bonds. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class A --------------------------------------------------------------- Year Ended June 30, --------------------------------------------------------------- 2009 2008 2007 2006 2005 --------- --------- --------- --------- --------- Net asset value, beginning of period ........................... $ 9.73 $ 9.91 $ 9.87 $ 10.26 $ 9.91 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income ...................................... 0.44++ 0.41++ 0.40+ 0.40+ 0.41+ Net gain (loss) on securities (both realized and unrealized) ........................................ (0.37) (0.17) 0.05 (0.37) 0.38 --------- --------- --------- --------- --------- Total from investment operations ........................... 0.07 0.24 0.45 0.03 0.79 --------- --------- --------- --------- --------- Less distributions (note 10): Dividends from net investment income ....................... (0.45) (0.42) (0.41) (0.42) (0.44) Distributions from capital gains ........................... -- -- -- -- -- --------- --------- --------- --------- --------- Total distributions ........................................ (0.45) (0.42) (0.41) (0.42) (0.44) --------- --------- --------- --------- --------- Net asset value, end of period ................................. $ 9.35 $ 9.73 $ 9.91 $ 9.87 $ 10.26 ========= ========= ========= ========= ========= Total return (not reflecting sales charge) ..................... 0.91% 2.45% 4.60% 0.28% 8.06% Ratios/supplemental data Net assets, end of period (in thousands) ................... $ 166,182 $ 158,125 $ 148,894 $ 142,227 $ 126,091 Ratio of expenses to average net assets .................... 0.75% 0.63% 0.68% 0.64% 0.59% Ratio of net investment income to average net assets ............................................. 4.80% 4.09% 3.89% 3.90% 3.98% Portfolio turnover rate .................................... 24.64% 18.83% 17.36% 9.61% 8.68% The expense and net investment income ratios without the effect of the waiver of a portion of the management fee were (note 3): Ratio of expenses to average net assets .................... 0.87% 0.90% 0.96% 0.93% 0.97% Ratio of net investment income to average net assets ............................................. 4.68% 3.82% 3.61% 3.61% 3.60% The expense ratios after giving effect to the waiver and expense offset for uninvested cash balances were (note 3): Ratio of expenses to average net assets .................... 0.74% 0.61% 0.66% 0.61% 0.56%
---------- + Per share amounts have been calculated using the monthly average shares method. ++ Per share amounts have been calculated using the daily average shares method. See accompanying notes to financial statements. TAX-FREE FUND FOR UTAH FINANCIAL HIGHLIGHTS (CONTINUED) FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class C ------------------------------------------------------------------- Year Ended June 30, ------------------------------------------------------------------- 2009 2008 2007 2006 2005 --------- --------- --------- --------- --------- Net asset value, beginning of period ............. $ 9.72 $ 9.91 $ 9.87 $ 10.26 $ 9.91 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income ........................ 0.37++ 0.33++ 0.32+ 0.32+ 0.32+ Net gain (loss) on securities (both realized and unrealized) ................. (0.37) (0.18) 0.05 (0.37) 0.38 --------- --------- --------- --------- --------- Total from investment operations ................. -- 0.15 0.37 (0.05) 0.70 --------- --------- --------- --------- --------- Less distributions (note 10): Dividends from net investment income.......... (0.38) (0.34) (0.33) (0.34) (0.35) Distributions from capital gains ............. -- -- -- -- -- --------- --------- --------- --------- --------- Total distributions .......................... (0.38) (0.34) (0.33) (0.34) (0.35) --------- --------- --------- --------- --------- Net asset value, end of period ................... $ 9.34 $ 9.72 $ 9.91 $ 9.87 $ 10.26 ========= ========= ========= ========= ========= Total return (not reflecting sales charge) ....... 0.10% 1.53% 3.77% (0.52)% 7.20% Ratios/supplemental data Net assets, end of period (in thousands) ..... $ 49,700 $ 31,906 $ 30,905 $ 33,791 $ 27,581 Ratio of expenses to average net assets ...... 1.55% 1.43% 1.48% 1.44% 1.39% Ratio of net investment income to average net assets ....................... 3.99% 3.29% 3.10% 3.10% 3.18% Portfolio turnover rate ...................... 24.64% 18.83% 17.36% 9.61% 8.68% The expense and net investment income ratios without the effect of the waiver of a portion of the management fee were (note 3): Ratio of expenses to average net assets ...... 1.67% 1.70% 1.76% 1.72% 1.77% Ratio of net investment income to average net assets ....................... 3.88% 3.02% 2.81% 2.81% 2.80% The expense ratios after giving effect to the waiver and expense offset for uninvested cash balances were (note 3): Ratio of expenses to average net assets ...... 1.54% 1.42% 1.46% 1.41% 1.36% Class Y ------------------------------------------------------------------- Year Ended June 30, ------------------------------------------------------------------- 2009 2008 2007 2006 2005 --------- --------- --------- --------- --------- Net asset value, beginning of period ............. $ 9.76 $ 9.94 $ 9.90 $ 10.29 $ 9.94 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income ........................ 0.46++ 0.43++ 0.41+ 0.42+ 0.42+ Net gain (loss) on securities (both realized and unrealized) ................. (0.37) (0.17) 0.07 (0.37) 0.39 --------- --------- --------- --------- --------- Total from investment operations ................. 0.09 0.26 0.48 0.05 0.81 --------- --------- --------- --------- --------- Less distributions (note 10): Dividends from net investment income.. ....... (0.47) (0.44) (0.44) (0.44) (0.46) Distributions from capital gains ............. -- -- -- -- -- --------- --------- --------- --------- --------- Total distributions .......................... (0.47) (0.44) (0.44) (0.44) (0.46) --------- --------- --------- --------- --------- Net asset value, end of period ................... $ 9.38 $ 9.76 $ 9.94 $ 9.90 $ 10.29 ========= ========= ========= ========= ========= Total return (not reflecting sales charge) ....... 1.13% 2.67% 4.80% 0.49% 8.27% Ratios/supplemental data Net assets, end of period (in thousands) ..... $ 43,895 $ 48,737 $ 47,124 $ 39,791 $ 17,928 Ratio of expenses to average net assets ...... 0.55% 0.43% 0.48% 0.44% 0.39% Ratio of net investment income to average net assets ....................... 5.00% 4.29% 4.09% 4.10% 4.15% Portfolio turnover rate ...................... 24.64% 18.83% 17.36% 9.61% 8.68% The expense and net investment income ratios without the effect of the waiver of a portion of the management fee were (note 3): Ratio of expenses to average net assets ...... 0.67% 0.70% 0.76% 0.72% 0.77% Ratio of net investment income to average net assets ....................... 4.88% 4.02% 3.81% 3.82% 3.78% The expense ratios after giving effect to the waiver and expense offset for uninvested cash balances were (note 3): Ratio of expenses to average net assets ...... 0.54% 0.42% 0.46% 0.41% 0.37%
---------- + Per share amounts have been calculated using the monthly average shares method. ++ Per share amount calculated using the daily average shares method. See accompanying notes to financial statements. -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end sales charges with respect to Class A shares or contingent deferred sales charges ("CDSC") with respect to Class C shares; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The table below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The table below is based on an investment of $1,000 invested on January 1, 2009 and held for the six months ended June 30, 2009. ACTUAL EXPENSES This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". SIX MONTHS ENDED JUNE 30, 2009 ACTUAL TOTAL RETURN BEGINNING ENDING EXPENSES WITHOUT ACCOUNT ACCOUNT PAID DURING SALES CHARGES(1) VALUE VALUE THE PERIOD(2) -------------------------------------------------------------------------------- Class A 9.66% $1,000.00 $1,096.60 $4.11 -------------------------------------------------------------------------------- Class C 9.24% $1,000.00 $1,092.40 $8.25 -------------------------------------------------------------------------------- Class Y 9.75% $1,000.00 $1,097.50 $3.07 -------------------------------------------------------------------------------- (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 0.79%, 1.59% AND 0.59% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 181/365 (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 JUNE 30, 2009 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD(1) -------------------------------------------------------------------------------- Class A 5.00% $1,000.00 $1,020.88 $3.96 -------------------------------------------------------------------------------- Class C 5.00% $1,000.00 $1,016.91 $7.95 -------------------------------------------------------------------------------- Class Y 5.00% $1,000.00 $1,021.87 $2.96 -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.79%, 1.59% AND 0.59% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 181/365 (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 your Fund's entire list of portfolio securities twice a year in the semi-annual and annual reports you receive. Additionally, under Fund policies, the Manager publicly discloses the complete schedule of the Fund's portfolio holdings, as of each calendar quarter, generally by the 15th day after the end of each calendar quarter. Such information remains accessible until the next schedule is made publicly available. You may obtain a copy of the Fund's portfolio holding schedule for the most recently completed period by visiting the Fund's website at www.aquilafunds.com. The Fund also discloses its five largest holdings by value as of the close of the last business day of each calendar month in a posting to its website on the 5th business day following the month end. This information remains on the website until the next such posting. Whenever you wish to see a listing of your Fund's portfolio other than in your shareholder reports, please check our website (www.aquilafunds.com) or call us at 1-800-437-1020. 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, D.C. 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, 2009 with respect to which the Fund was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code AND NO ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED. For the fiscal year ended June 30, 2009, $11,141,377 of dividends paid by Tax-Free Fund For Utah, constituting 98.05% of total dividends paid during the fiscal year ended June 30, 2009, were exempt-interest dividends, and the balance was ordinary dividend income. Prior to January 31, 2009, shareholders were mailed the appropriate tax form(s) which contained information on the status of distributions paid for the 2008 CALENDAR YEAR. Prior to January 31, 2010, shareholders will be mailed the appropriate tax form(s) which will contain information on the status of distributions paid for the 2009 CALENDAR YEAR. -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) TURSTEES AND OFFICERS(1)
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) ----------------- ---------- ------------------- ---------- ----------- INTERESTED TRUSTEE(4) Diana P. Herrmann Trustee Vice Chair and Chief Executive Officer of 12 ICI Mutual Insurance New York, NY since 1997 Aquila Management Corporation, Founder of Company (02/25/58) and President the Aquila Group of Funds(5) and parent of since 1998 Aquila Investment Management LLC, Manager since 2004, President since 1997, Chief Operating Officer, 1997-2008, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Chief Executive Officer and Vice Chair since 2004, President and Manager of the Manager since 2003, and Chief Operating Officer of the Manager, 2003-2008; Chair, Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila Group of Funds since 1986; Director of the Distributor since 1997; Governor, Investment Company Institute (a trade organization for the U.S. mutual fund industry dedicated to protecting shareholder interests and educating the public about investing) and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. NON-INTERESTED TRUSTEES Gary C. Cornia Chair of the Dean, Marriott School of Management, Brigham 4 Lincoln Institute of Orem, UT Board of Young University, since 2008; Director, Land Policy, Cambridge, (06/24/48) Trustees Romney Institute of Public Management, MA since 2005 Marriott School of Management, 2004 - 2008; and Trustee Professor, Marriott School of Management, since 1993 1980 - present; Past President, the National Tax Association; Fellow, Lincoln Institute of Land Policy, 2002 - present; Associate Dean, Marriott School of Management, Brigham Young University, 1991-2000; member, Utah Governor's Tax Review Committee since 1993.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) ----------------- ---------- ------------------- ---------- ----------- Tucker Hart Adams Trustee President, The Adams Group, Inc., an 3 Griffis/Blessings, Inc. Colorado Springs, CO since 2006 economic consulting firm, since 1989; (commercial property (01/11/38) formerly Chief Economist, United Banks of development and Colorado; currently or formerly active with management); Kachi numerous professional and community Partners (middle market organizations. buyouts); Colorado Health Facilities Authority Thomas A. Christopher Trustee Vice President of Robinson, Hughes & 4 None Danville, KY since 2006 Christopher, C.P.A.s, P.S.C., since 1977; (12/19/47) President, A Good Place for Fun, Inc., a sports facility, since 1987; currently or formerly active with various professional and community organizations. Lyle W. Hillyard Trustee President of the law firm of Hillyard, 2 None Logan, UT since 2003 Anderson & Olsen, Logan, Utah, since 1967; (09/25/40) member of Utah Senate, 1985 to present, in the following positions: President, 2000, Senate Majority Leader, 1999-2000, Assistant Majority Whip, 1995-1998; served as Chairman of the following Utah Senate Committees: Tax and Revenue, Senate Judiciary Standing, Joint Executive Appropriations, and Senate Rules; currently serves as Co-Chair, Joint Executive Appropriations. John C. Lucking Trustee President, Econ-Linc, an economic consulting 3 None Phoenix, AZ since 2004 firm, since 1995; formerly Consulting (05/20/43) Economist, Bank One Arizona and Chief Economist, Valley National Bank; member, Arizona's Joint Legislative Budget Committee Economic Advisory Panel and the Western Blue Chip Economic Forecast Panel; Board member, Northern Arizona University Foundation since 1997; member, various historical, civic and economic associations.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) ----------------- ---------- ------------------- ---------- ----------- Anne J. Mills Trustee President, Loring Consulting Company since 4 None Castle Rock, CO since 1994 2001; Vice President for Business Management (12/23/38) and CFO, Ottawa University, 1992-2001, 2006-2008; IBM Corporation, 1965-1991; currently active with various charitable, educational and religious organizations. OTHER INDIVIDUALS CHAIRMAN EMERITUS(6) Lacy B. Herrmann Founder and Founder and Chairman of the Board, Aquila N/A N/A New York, NY Chairman Management Corporation, the sponsoring (05/12/29) Emeritus organization and parent of the Manager or since 2005, Administrator and/or Adviser or Sub-Adviser Chairman of to each fund of the Aquila Group of Funds; the Board Chairman of the Manager or Administrator of Trustees, and/or Adviser or Sub-Adviser to each since 1992-2005 2004; Founder and Chairman Emeritus of each fund in the Aquila Group of Funds; previously Chairman and a Trustee of each fund in the Aquila Group of Funds since its establishment until 2004 or 2005; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Director or trustee, Premier VIT, 1994 - 2009; Director or trustee of Oppenheimer Quest Value Funds Group, Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, 1987 - 2009, and Oppenheimer Rochester Group of Funds, 1995 - 2009; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) ----------------- ---------- ------------------- ---------- ----------- Officers Charles E. Childs, III Executive Vice Executive Vice President of all funds in the N/A N/A New York, NY President Aquila Group of Funds and the Manager and (04/01/57) since 2003 the Manager's parent since 2003; Executive Vice President and Chief Operating Officer of the Manager and the Manager's parent since 2008; formerly Senior Vice President, corporate development, Vice President, Assistant Vice President and Associate of the Manager's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Maryann Bruce Senior Vice President, Aquila Distributors, Inc., since N/A N/A Cornelius, NC President since 2008; Senior Vice President of each of the (04/01/60) 2009 equity and bond funds in the Aquila Group of Funds since 2009; Executive Managing Director, Evergreen Investments, 2004 - 2007, President, Evergreen Investment Services, Inc., 1999 - 2007; President and CEO, Allstate Financial Distributors, Inc., 1998 - 1999; Senior Vice President and Director Financial Institution Division, OppenheimerFunds, Inc., 1990 - 1998, Regional Vice President, 1987 - 1990; Vice President and Mutual Fund Marketing Manager, J.C. Bradford & Company, 1982 - 1987. Todd W. Curtis Vice President Senior Vice President and Portfolio Manager, N/A N/A Phoenix, AZ since 2009 Tax-Free Trust of Arizona, since August (06/08/49) 2004; Vice President and Portfolio Manager, Churchill Tax-Free Fund of Kentucky, since 2009, backup portfolio manager, 2004-2009; Vice President and Portfolio Manager, Tax-Free Fund For Utah, since 2009; Vice President and Portfolio Manager, Banc One Investment Advisors, Inc. and its predecessors, 1981-2004.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) ----------------- ---------- ------------------- ---------- ----------- Mary Kayleen Willis Vice President Vice President, Tax-Free Fund For Utah since N/A N/A Salt Lake City, UT since 2003 September 2003, Assistant Vice President, (06/11/63) 2002-2003; Vice President, Aquila Rocky Mountain Equity Fund, since 2004. Robert W. Anderson Chief Chief Compliance Officer of the Fund and N/A N/A New York, NY Compliance each of the other funds in the Aquila Group (08/23/40) Officer of Funds, the Manager and the Distributor since 2004 since 2004, Compliance Officer of the and Assistant Manager or its predecessor and current Secretary parent 1998-2004; Assistant Secretary of the since 2000 Aquila Group of Funds since 2000. Joseph P. DiMaggio Chief Chief Financial Officer of each fund in the N/A N/A New York, NY Financial Aquila Group of Funds since 2003 and (11/06/56) Officer Treasurer since 2000. since 2003 and Treasurer since 2000 Edward M. W. Hines Secretary Shareholder of Butzel Long, a professional N/A N/A New York, NY since 1992 corporation, counsel to the Fund, since (12/16/39) 2007; Partner of Hollyer Brady Barrett & Hines LLP, its predecessor as counsel, 1989-2007; Secretary of each fund in the Aquila Group of Funds. John M. Herndon Assistant Assistant Secretary of each fund in the N/A N/A New York, NY Secretary Aquila Group of Funds since 1995 and Vice (12/17/39) since 1995 President of the three Aquila Money-Market Funds since 1990; Vice President of the Manager or its predecessor and current parent since 1990.
NUMBER OF OTHER DIRECTORSHIPS POSITIONS PORTFOLIOS HELD BY TRUSTEE (THE HELD WITH IN FUND POSITION HELD IS A NAME, FUND AND PRINCIPAL COMPLEX DIRECTORSHIP UNLESS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN INDICATED AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE OTHERWISE.) ----------------- ---------- ------------------- ---------- ----------- Lori A. Vindigni Assistant Assistant Treasurer of each fund in the N/A N/A New York, NY Treasurer Aquila Group of Funds since 2000; Assistant (11/02/66) since 2000 Vice President of the Manager or its predecessor and current parent since 1998; Fund Accountant for the Aquila Group of Funds, 1995-1998.
---------- (1) The Fund's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll-free) or by visiting www.aquilafunds.com or the EDGAR Database at the SEC's internet site at www.sec.gov. (2) The mailing address of each Trustee and officer is c/o Tax-Free Fund For Utah, 380 Madison Avenue, New York, NY 10017. (3) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (4) Ms. Herrmann is an interested person of the Fund as an officer of the Fund, as a director, officer and shareholder of the Manager's corporate parent, as an officer and Manager of the Manager, and as a shareholder and director of the Distributor. Ms. Herrmann is the daughter of Lacy B. Herrmann, the Founder and Chairman Emeritus of the Fund. (5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Municipal Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks High Income Fund is a high income corporate bond fund; considered together, these 12 funds are called the "Aquila Group of Funds." (6) The Chairman Emeritus may attend Board meetings but has no voting power. -------------------------------------------------------------------------------- PRIVACY NOTICE (UNAUDITED) TAX-FREE FUND FOR UTAH OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Fund, we collect certain non-public personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about the Fund. INFORMATION WE COLLECT. "Non-public personal information" is personally identifiable financial information about you as an individual or your family. The kinds of non-public personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose non-public personal information about you to companies that provide necessary services to us, such as the Fund's transfer agent, distributor, investment adviser or sub-adviser, if any, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. NON-CALIFORNIA RESIDENTS: We also may disclose some of this information to another fund in the Aquila Group of Funds (or its service providers) under joint marketing agreements that permit the funds to use the information only to provide you with information about other funds in the Aquila Group of Funds or new services we are offering that may be of interest to you. CALIFORNIA RESIDENTS ONLY: In addition, unless you "opt-out" of the following disclosures using the form that was mailed to you under separate cover, we may disclose some of this information to another fund in the Aquila Group of Funds (or its service providers) under joint marketing agreements that permit the funds to use the information only to provide you with information about other funds in the Aquila Group of Funds or new services we are offering that may be of interest to you. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to non-public personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all non-public personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all non-public information about you that each of these companies may obtain in connection with services provided to the Fund or to you as a shareholder of the Fund. -------------------------------------------------------------------------------- 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 Tucker Hart Adams Thomas A. Christopher Diana P. Herrmann Lyle W. Hillyard John C. Lucking Officers Diana P. Herrmann, President Maryann Bruce, Senior Vice President Todd W. Curtis, Vice President and Portfolio Manager M. Kayleen Willis, Vice President Robert W. Anderson, Chief Compliance Officer Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 TRANSFER AND SHAREHOLDER SERVICING AGENT PNC Global Investment Servicing 101 Sabin Street Pawtucket, RI 02860 CUSTODIAN JPMorgan Chase Bank, N.A. 1111 Polaris Parkway Columbus, Ohio 43240 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker LLP 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Further information is contained in the Prospectus, which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of June 30, 2009 (the end of the reporting period) the Trust has adopted a code of ethics that applies to the Trust's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002; (f)(1) Pursuant to Item 10(a)(1), a copy of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Trust's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. a) Audit Fees - The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements were $14,000 in 2008 and $14,700 in 2009. b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years. c) Tax Fees - The Registrant was billed by the principal accountant $3,000 and $3,100 in 2008 and 2009, respectively, for return preparation and tax compliance. d) All Other Fees - There were no additional fees paid for audit and non-audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Included in Item 1 above ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Board of Directors of the Registrant has adopted a Nominating Committee Charter which provides that the Nominating Committee (the 'Committee') may consider and evaluate nominee candidates properly submitted by shareholders if a vacancy among the Independent Trustees of the Registrant occurs and if, based on the Board's then current size, composition and structure, the Committee determines that the vacancy should be filled. The Committee will consider candidates submitted by shareholders on the same basis as it considers and evaluates candidates recommended by other sources. A copy of the qualifications and procedures that must be met or followed by shareholders to properly submit a nominee candidate to the Committee may be obtained by submitting a request in writing to the Secretary of the Registrant. ITEM 11. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 12. EXHIBITS. (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAX-FREE FUND FOR UTAH By: /s/ Diana P. Herrmann ----------------------------------- President and Trustee September 8, 2009 By: /s/ Joseph P. DiMaggio ------------------------------------- Chief Financial Officer and Treasurer September 8, 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 September 8, 2009 By: /s/ Joseph P. DiMaggio ------------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer September 8, 2009 TAX-FREE FUND FOR UTAH EXHIBIT INDEX (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940.