INVESTMENT ADVISER
FIRST SECURITY INVESTMENT
MANAGEMENT, INC.
61 South Main Street
Salt Lake City, Utah 84111
ADMINISTRATOR AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Philip E. Albrecht
Gary C. Cornia
William L. Ensign
D. George Harris
Anne J. Mills
R. Thayne Robson
OFFICERS
Lacy B. Herrmann, President
Jerry G. McGrew, Vice President
Kimball L. Young, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
TRANSFER AND SHAREHOLDER SERVICING AGENT
ADMINISTRATIVE DATA
MANAGEMENT CORP.
581 Main Street
Woodbridge, New Jersey 07095-1198
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus,
which must precede or accompany this report.
ANNUAL
REPORT
JUNE 30, 1997
AQUILA
[Logo of Aquila Group of Funds: an eagle's head]
TAX-FREE FUND FOR
UTAH
A TAX-FREE INCOME INVESTMENT
[Logo of Tax-Free Fund For Utah: a rectangle containing dessert boulders with
a sun rising behind it]
ONE OF THE
AQUILAsm GROUP OF FUNDS
<PAGE>
[Logo of Tax-Free Fund For Utah: a rectangle containing dessert boulders with
a sun rising behind it]
TAX-FREE FUND FOR UTAH
ANNUAL REPORT
"INCREASED SAFETY IN NUMBERS"
August 15, 1997
Dear Investor:
A childhood lesson that is often imparted generation after
generation is "don't wander off by yourself - stick with the crowd." The
underlying premise is that there is "safety in numbers."
The idea of increased safety in numbers is also very appropriate
when discussing municipal bond funds. In fact, one of the most significant
benefits gained by owning shares of a municipal bond mutual fund is that of
"numbers."
Participating in the ownership of many different issues through
such a fund is generally less risky than purchasing individual issues.
Instead of having your money ride on a handful of securities, you can spread
the risk over a larger number of issues. And, you have the advantage of a
skilled and knowledgeable portfolio manager selecting and continuously
monitoring each security in the portfolio.
But, how does the manager decide which security to purchase?
After all, you need to know the crowd with whom you're about to associate.
Being with a large unruly group could be far worse than being alone.
KNOWING THE TERRITORY
Shareholders of Tax-Free Fund For Utah have the added advantage
of having a locally-based portfolio manager. First Security Investment
Management, Inc., located in Salt Lake City, is well aware of the issues
facing the state as a whole, as well as the nuances of many of the cities and
counties.
FINDING THE RIGHT MIX
Unfortunately, there is no foolproof test to follow when
considering an issue for purchase. Security selection is really more art than
science. A portfolio manager needs to look for a security which meets certain
specific criteria and which fits in with the overall mix of the portfolio and
the Fund's investment objective.
Among other things, First Security Investment Management, Inc.
carefully examines a security's yield, quality, maturity, and whether or not
its inclusion in the portfolio enhances overall diversification.
Keeping in mind the Fund's objective of providing as high a level
of current income as is consistent with preservation of capital, let's take a
look at each of these areas.
QUALITY
As you know, the Fund limits its investments to only those
securities in the top four credit ratings or equivalent. We have adopted this
policy since we have found from experience that high quality is best in the
long run. Of course, it is true that securities which possess a lower credit
rating
<PAGE>
generally produce a higher yield, since investors require compensation
for the additional potential risk. However, purchasing solely for yield can
cause feelings of unease for a risk adverse investor. Consequently, Tax-Free
Fund For Utah looks for high quality securities which should produce
relatively good yields. Currently, 97.6% of the investment portfolio is in
the top three credit ratings - AAA, AA, AND A. Such high quality helps
preserve shareholders' capital and promote stability.
MATURITY
The key here is to assemble a blend of maturities which offers a
reasonable level of DOUBLE TAX-FREE* return yet still avoids the problem of
excessive market price volatility. As you probably are aware, short-term
maturities tend to have very little price fluctuation, but generally produce
a substantially lesser rate of return than longer maturity securities.
Conversely, long-term maturities usually produce a higher return level, but
have a much higher price volatility factor than shorter-term issues since
they reflect the risks associated with potential interest rate changes over
the extended life of the municipal bond.
By creating a blend of maturities, the Fund attempts to provide
you with a satisfactory level of return without subjecting the share price to
excessive swings as interest rates move up and down.
The Fund utilizes a spread of maturities for the portfolio which
centers upon the relatively intermediate term average maturity of 13.8 years.
In constructing the portfolio, maturities of securities in the Fund range
from one year and under to over 20 years in length. However, in order to
achieve a reasonably high level of stability for the Fund's share value, in
good markets and bad and in up and down interest rate environments, the focus
has been to keep the average of maturities relatively limited in term.
DIVERSIFICATION
Having a breadth of participation in the portfolio helps to
spread risk and protect against any significant loss of principal in the
event of unforseen problems with any particular security.
Although Tax-Free Fund For Utah is classified a "non-diversified"
fund under the Investment Company Act of 1940, the Fund does attempt to vary
its portfolio in several ways. First, there is the use of a number of issues.
At June 30, 1997, over 60 issues made up the Fund's portfolio, with no one
issue representing more than 4% of the Fund's net assets. Next, there is
investment among different types of municipal projects - universities, basic
services, utilities, health care, pollution control, etc. - so that there is
no undue concentration in any one type of municipal project. And, finally,
there is variety achieved through geographic representation throughout
various cities, counties, and communities within Utah.
Such portfolio mixture by number of issues, by geographic
distribution, and by variety of projects lends itself to a further high level
of preservation and stability for your investment in the Fund.
HOW IS OUR "GROUP" DOING?
As you have seen, selecting investments for the Fund's portfolio
is really a balancing act. On one side, you have yield and, on the other, you
have risk. The Fund strives to construct a portfolio which keeps these two
opposing forces on an even keel - accepting a reasonable level of risk to
achieve a satisfactory return.
<PAGE>
As mentioned, the Fund strives to provide shareholders with as
high a level of DOUBLE TAX-FREE income as practicable, commensurate with the
degree of capital preservation we strive to achieve.
Is our security selection process working well for us? We believe
it is.
RATE OF RETURN
From July 1, 1996 through June 30, 1997, the Fund distributed to
shareholders a DOUBLE TAX-FREE income return, as measured against the maximum
public offering price, at the annualized rate of approximately 5.20%**.
One would have to earn an annualized taxable return of 7.71% at
the 28% tax bracket and the even higher return of 9.17% at the 39.6% tax
bracket in order to match the Fund's DOUBLE TAX-FREE rate. In general, it
would not have been possible for an investor to obtain such levels of taxable
return unless additional risk was taken in the form of lesser quality and/or
longer maturity securities.
COMMITMENT TO CONSISTENCY
Management is committed to providing shareholders with as
consistent investment and overall performance results from Tax-Free Fund For
Utah as are possible to achieve, considering prevailing market forces.
You should be aware, however, that although there is indeed
increased safety in numbers, we are not able to eliminate the fluctuations
from market forces that swirl around us on a continuing basis.
However, as indicated, a number of investment management
techniques are used by the Fund to create a mix of securities which will help
moderate these forces.
OUR PLEDGE TO YOU
All associated with Tax-Free Fund For Utah pledge to you our
continued diligence in the operation of the Fund for your benefit.
Your confidence in the Tax-Free Fund For Utah is most valued and
appreciated.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
* A portion of dividend income may be subject to Federal and state
taxes.
** The performance shown represents that of Class A shares. Such
performance data quoted represents past performance and is not
indicative of future results. The investment return and principal
value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The Fund's average annual total return as of 6/30/97 for the past
one-year period was 3.37%; and since inception was 5.66%. Returns
would be less if full management fees were applied. As of 6/30/97,
the Fund's 30-day SEC yield was 4.90%.
<PAGE>
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The graph below illustrates the value of $10,000 invested in Class A
Shares of Tax-Free Fund For Utah at inception of the Fund in July, 1992 and
maintaining this investment through the Fund's latest fiscal year end, June
30, 1997, as compared with a hypothetical similar size investment in the
Lehman Brothers Municipal Bond Index (the "Index") of municipal securities
and the Consumer Price Index (a cost of living index), over that same period.
The total return of the investment in the Fund is shown after deduction of
the maximum sales charge of 4% at the time of initial investment. It also
reflects deduction of the Fund's annual operating expenses and reinvestment
of monthly dividends and capital gains distributions without sales charge. On
the other hand, the Index does not reflect any sales charge nor operating
expenses but does reflect reinvestment of interest. The performance of the
Fund's other classes, first offered on May 21, 1996, may be greater or less
than the Class A shares performance indicated on the graph, depending on
whether greater or lesser sales charges and fees were incurred by
shareholders investing in the other classes.
It should also be specifically noted that the Index is nationally
oriented and consisted, over the period covered by the graph, of an unmanaged
mix of between 12,000 to 36,000 investment-grade long-term municipal
securities of issuers throughout the United States. However, the Fund's
investment portfolio consisted of a significantly lesser number of
investment-grade tax-free municipal obligations, principally of Utah issuers,
over the same period. The maturities, market prices, and behavior of the
individual securities in the Fund's investment portfolio can be affected by
local and regional factors which might well result in variances from the
market action of the securities in the Index.
Consequently, much of the difference in performance of the Index
versus the Fund can be attributed to the lack of application of annual
operating expenses and initial sales charge to the Index. Additionally, a
portion of the difference in performance can be attributed to the different
characteristics in the single-state market of the securities in the Fund's
portfolio as compared with the national orientation of the securities in the
Index.
[Graphic of a line chart with the following information:]
PERFORMANCE COMPARISON
<TABLE>
<CAPTION>
Lehman Brothers Fund After Sales Cost of
Municipal Bond Index Charge and Expenses Living Index
<S> <C> <C> <C>
7/92 10000 9600 10000
12/92 10148 9782 10128
6/93 10869 10525 10270
12/93 11394 11008 10405
6/94 10891 10404 10533
12/94 10808 10300 10676
6/95 11851 11355 10846
12/95 12695 12234 10953
6/96 12638 12189 11145
12/96 13258 12772 11323
6/97 13684 13126 11401
</TABLE>
[Table setup with the following information:]
FUND'S AVERAGE ANNUAL TOTAL RETURN
<TABLE>
CAPTION>
FOR THE PERIOD ENDED LIFE OF FUND
JUNE 30, 1997 1 YEAR Since 7/24/92
<S> <C> <C>
INCLUDING SALES
CHARGE AND EXPENSES 3.37% 5.66%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS
<PAGE>
Since its inception, the Fund has been managed to provide as stable a
share value as possible consistent with producing a competitive income return
to shareholders. It has not been managed for maximum total return, since one
of the aims of management in structuring the portfolio of the Fund is to
reduce fluctuations in the price of the Fund's shares resulting from changes
in interest rates.
As can be observed, however, the pattern of the Fund's results and
that of the Index over the period since inception of the Fund track quite
similarly, even though they are not entirely comparable in character.
PORTFOLIO MANAGER'S ANALYSIS
FISCAL 1997 REVIEW
For the latest fiscal year - July 1, 1996 through June 30, 1997 -
interest rate fluctuations were relatively minor. The benchmark 30-year U.S.
Treasury yield began the period at 6.90% and ended at 6.78%. Economic growth
in the United States was strong throughout the year, but the forces of
inflation remained quite tame. The Federal Reserve did hike short-term
interest rates in early 1997 by 0.25% in response to strong growth in the
fourth quarter of 1996. However, fears of future rate hikes have dissipated
as the economy has grown in a controlled fashion.
The net asset value of the shares of the Fund fluctuated in a narrow
range of $9.57 to $10.02 throughout the year, closing on June 30, 1997 at
$9.94. The average 30-day yield remained above 5% throughout the year,
providing an attractive double tax-exempt yield to investors when compared to
taxable returns.
FISCAL 1998 STRATEGY
While values in municipal bonds were relatively stable throughout the
past year, the stock market returns exploded upward, with the Standard &
Poor's 500 Stock Index gaining over 32% for the 12-month period. The huge
inflows to the stock market caused demand for municipal bonds by investors to
remain relatively weak.
During this period of weakness in demand for fixed income
investments, a subtle, yet startling, decrease in bond supply occurred.
Through June, 1997, the year-to-date issuance of tax-exempt issuance
throughout the country was down 2.5%. However, some states have experienced
an even more substantial reduction in net new supply due to favorable tax
inflows into municipalities. The leading state reducing its net new issuance
was Connecticut with a 48.6% decline in new paper, as measured on a
year-over-year basis. Utah experienced the next largest decline in municipal
security issuance, with a 44.1% fall off. This means that existing bonds in
Utah will become much more attractive to investors when demand for municipal
securities picks up again.
Looking forward, we anticipate renewed interest in municipal bonds.
Some specific reasons include:
A REFOCUS ON ASSET ALLOCATION. Individual investors, in general,
have allowed the fixed income component of their total asset mix to
decline as the equity portion increased due to the rise of stock
<PAGE>
prices. We anticipate that significant gains in the
stock market are behind us and that the relative attractiveness of
bonds will increase as investors again focus on the merits of
having a better balance between equity and debt investments in
their individual portfolios.
SUPPLY/DEMAND ISSUES. As discussed above, with falling
supply, any increase in demand for municipal bonds will bid up the
price of bonds, enhancing the total return enjoyed by present
owners, including the Fund's shareholders.
LOW INFLATION. With reported inflation running at less
than a 2% rate, the real return on investments in bonds is near
all-time highs.
The Utah economy should continue its tenth straight year of strong
performance. However, the growth rate may well subside from 6% to 4% this
year. It is worth noting that Utah should still be among the top five states
in the United States in terms of its rate of growth. Moreover, Utah's growth
rate should remain positive and steady over the next several years as the
result of expenditures for roads, hotels and infrastructure to prepare for
the 2002 Olympics and other favorable business factors in the state.
<PAGE>
KPMG PEAT MARWICK LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
Tax-Free Fund For Utah:
We have audited the accompanying statement of assets and liabilities of
Tax-Free Fund For Utah, including the statement of investments, as of June
30, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
four-year period then ended and for the period July 24, 1992 (commencement of
operations) to June 30, 1993. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1997, 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, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended and the financial highlights for
each of the years in the four-year period then ended and for the period July
24, 1992 (commencement of operations) to June 30, 1993 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
August 8, 1997
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENT OF INVESTMENTS
JUNE 30, 1997
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (32.9%) S&P VALUE
<C> <S> <C>
City and County General Obligation Bonds (4.8%)
$ 125,000 Blanding City, Utah, San Juan County, Natural
Gas Project G.O., Series 1994, 5.800%, 07/15/13 Baa/NR $ 126,250
290,000 Central Utah Water Conservancy District, Limited
Tax G.O., Series 1993, MBIA Insured, 5.100%,
04/01/07 Aaa/AAA 291,812
235,000 Salt Lake County, Utah Service Area G.O., 5.350%,
12/15/06 A/NR 240,288
100,000 Salt Lake County, Utah G.O., 6.375%, 06/15/11 Aaa/NR 105,625
290,000 Sandy City, Utah Refunding Public Building G.O.,
6.700%, 12/15/10 Aa/NR 314,650
300,000 Weber County, Utah Unlimited Tax G.O., FGIC
Insured, 5.625%, 1/15/11 Aaa/AAA 306,000
1,384,625
School District General Obligation Bonds (27.6%)
535,000 Beaver County, Utah School District G.O.,
Series 1994, AMBAC Insured, 5.200%, 12/15/12 Aaa/AAA 528,981
510,000 Cache County, Utah School District G.O.,
Series A, AMBAC Insured, 5.750%, 06/15/08 Aaa/AAA 531,675
700,000 Cache County, Utah School District G.O.,
Series A, AMBAC Insured, 5.80%, 06/15/09 Aaa/AAA 728,000
1,000,000 Cache County, Utah School District G.O.,
Series A, AMBAC Insured, 5.900%, 06/15/13 Aaa/AAA 1,031,251
595,000 Carbon County, Utah School District G.O.,
Series 1993, MBIA Insured, 5.450%, 06/15/10 Aaa/AAA 602,438
1,000,000 Davis County, Utah School District G.O.,
MBIA Insured, 5.850%, 06/01/09 Aaa/AAA 1,048,750
500,000 Jordan, Utah School District G.O., 5.900%,
06/15/04 Aa3/NR 530,000
665,000 Jordan, Utah School District G.O., 6.000%,
06/15/05 Aa3/NR 709,887
235,000 Jordan, Utah School District G.O., 6.100%,
06/15/07 Aa3/NR 250,862
1,000,000 Nebo County, Utah School District G.O, FGIC
Insured, 5.750%, 06/15/11 Aaa/AAA 1,030,000
770,000 Nebo County, Utah School District , FGIC
Insured, 6.00%, 06/15/18 Aaa/AAA 791,175
<PAGE>
250,000 Washington County, Utah School District G.O,
FGIC Insured, 5.000%, 09/01/06 Aaa/AAA 251,875
8,034,894
Recreational Facilities General Obligation
Bonds (.5%)
150,000 West Bountiful City, Utah Golf Course G.O,
6.350%, 09/01/13 Baa/NR 157,312
Total General Obligation Bonds 9,576,831
REVENUE BONDS (66.2%)
Education Revenue Bonds (6.4%)
200,000 University of Utah Revenue Refunding, (Biology
Research Facilities), MBIA Insured, 5.500%,
04/01/11 Aaa/AAA 204,500
190,000 Utah State Board of Regents, Salt Lake Community
College, AMBAC Insured, 6.000%, 06/01/05 Aaa/AAA 200,925
300,000 Utah State Board of Regents, Student Loan,
Series C, 5.450%, 05/01/05 Aaa/NR 306,375
500,000 Utah State Board of Regents, Utah State
University Revenue Refunding Student Building
Fees, Series 1994B, MBIA Insured, 5.750%,
12/01/07 Aaa/AAA 523,125
300,000 Utah State University Agricultural Education
Facilities, MBIA Insured, 6.150%, 12/01/14 Aaa/AAA 314,625
300,000 Weber County, Utah School District, MBIA
Insured, 6.000%, 06/15/07 Aaa/AAA 315,000
1,864,550
Hospital Revenue Bonds (2.1%)
250,000 Murray City, Utah Hospital Revenue,
Intermountain Health Care, AMBAC Insured,
5.200%, 05/15/08 Aaa/AAA 250,938
250,000 Salt Lake City, Utah Hospital Revenue,
Intermountain Health Care, 8.000%, 05/15/07 NR/AAA 263,092
100,000 Utah State Municipal Finance Corp., University
of Utah Hospital, 6.750%, 05/15/04 NR/AA- 107,625
621,655
<PAGE>
Industrial Development Revenue Bonds (1.3%)
120,000 Salt Lake County, Utah Industrial Development,
Plaza 5400, 6.200%, 09/01/12 NR/AAA 123,900
250,000 Sandy City, Utah Industrial Development,
H Shirl Wright Project, 6.125%, 08/01/16 NR/AAA 257,188
381,088
Lease Revenue Bonds (19.2%)
600,000 Layton City, Utah Municipal Building Authority,
MBIA Insured, 5.700%, 08/15/08 Aaa/AAA 618,000
200,000 Ogden City, Utah Municipal Building Authority,
Series 1992, 6.800%, 12/15/08 NR/NR* 209,250
200,000 Ogden City, Utah Municipal Building Authority,
Series 1992, 7.000%, 12/15/12 NR/NR* 207,750
600,000 Salt Lake City, Utah Municipal Building
Authority, Series 1993A, 5.750%, 10/15/08 A1/A+ 619,500
1,000,000 Salt Lake City, Utah Municipal Building
Authority, 6.000%, 10/15/14 A1/A+ 1,022,500
1,000,000 Salt Lake County, Utah Municipal Building
Authority, Series 1994A, MBIA Insured 6.050%,
10/01/08 Aaa/AAA 1,063,751
475,000 Utah Municipal Building Authority, Logan
Municipal Building, Series 1993, 5.900%,
04/01/11 A/NR 483,906
685,000 Utah State Building Ownership Authority,
Series A, 5.750%, 08/15/07 Aa/AA 703,838
350,000 Utah State Building Ownership Authority,
5.750%, 08/15/08 Aa/AA 358,750
315,000 West Valley City, Utah Municipal Building
Authority, Series 1993, MBIA Insured 6.000%,
01/15/10 Aaa/AAA 327,206
5,614,451
Mortgage Revenue Bonds (6.4%)
255,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series E-1, 5.850%,
07/01/13 Aa/NR 258,506
<PAGE>
190,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series 1994B, 6.200%,
07/01/06 A1/A+ 198,550
875,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series E-1, 6.600%,
07/01/11 NR/AA 916,562
475,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series 1994C, 6.350%,
07/01/11 Aa/NR 495,188
1,868,806
Pollution Control Revenue Bonds (1.3%)
350,000 Box Elder County Pollution Control Revenue, Nucor
Corporation Project, 6.900%, 05/15/17 NR/AA- 378,875
Transportation Revenue Bonds (4.1%)
875,000 Salt Lake City, Utah Airport Revenue, FGIC
Insured, Series B, 5.875%, 12/01/12 Aaa/AAA 903,437
285,000 Salt Lake City, Utah Airport Revenue, FGIC
Insured, Series B, 5.875%, 12/01/18 Aaa/AAA 289,988
1,193,425
Water and Sewer Revenue Bonds (12.2%)
270,000 St. George, Utah Sewer Revenue, AMBAC Insured,
5.500%, 06/15/07 Aaa/AAA 276,750
300,000 St. George, Utah Water Revenue, FGIC Insured,
5.375%, 06/01/16 Aaa/AAA 291,000
500,000 Salt Lake City, Utah Water And Sewer Revenue,
AMBAC Insured 5.750%, 02/01/13 Aaa/AAA 507,500
525,000 Salt Lake County, Utah Water & Sewer Revenue
AMBAC Insured, 6.00%, 02/01/10 Aaa/AAA 548,625
300,000 Salt Lake County, Utah Water & Sewer Revenue
AMBAC Insured, 5.100%, 10/01/08 Aaa/AAA 299,625
290,000 Salt Lake County Utah Conservancy District
Revenue, Series A, AMBAC Insured, 5.350%,
10/01/18 Aaa/AAA 276,587
<PAGE>
800,000 Timpanogos, Utah Water & Sewer Revenue,
Series A, AMBAC Insured, 6.000%, 06/01/16 Aaa/AAA 832,000
200,000 Timpanogos, Utah Water & Sewer Revenue,
Series A, AMBAC Insured, 5.900%, 06/01/11 Aaa/AAA 209,750
300,000 White City Water Improvement District, Utah
Water Revenue, AMBAC Insured, 5.90%, 02/01/22 NR/AAA 306,000
3,547,837
Utility Revenue Bonds (13.2%)
500,000 Provo City, Utah Energy Systems Revenue, MBIA
Insured, Series 1993A, 5.600%, 11/15/07 Aaa/AAA 520,000
790,000 Utah Association Municipal Power Systems Revenue,
5.250%, 12/01/09 NR/A- 782,100
350,000 Utah Association Municipal Power Systems Revenue,
AMBAC Insured, 5.500%, 12/01/13 Aaa/AAA 348,250
695,000 Utah State Municipal Power Agency, Electric
Systems Revenue, FGIC Insured, 5.500%, 07/01/10 Aaa/AAA 711,506
650,000 Utah State Municipal Power Agency, Electric
Systems Revenue, FGIC Insured, 5.500%, 07/01/11 Aaa/AAA 663,000
875,000 Utah State Municipal Power Agency, Electric
Systems Revenue, FGIC Insured, 5.250%, 07/01/18 Aaa/AAA 823,594
3,848,450
Total Revenue Bonds 19,319,137
Total Investments (cost $28,050,077**) 99.1% 28,895,968
Other assets in excess of liabilities 0.9 256,376
Net Assets 100.0% $29,152,344
<FN> * Any security not rated has been determined by the
Investment Adviser to have sufficient quality to be ranked in the
top four ratings if a credit rating were to be assigned by a rating
service. </FN>
<FN> ** Cost for Federal tax purposes is identical.</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments at value (identified cost - $28,050,077) $ 28,895,968
Interest receivable 338,400
Due from Administrator for reimbursement of expenses (note 3) 132,607
Receivable for Fund shares sold 18,263
Total assets 29,385,238
LIABILITIES
Cash overdraft 172,680
Distribution fees payable 14,683
Dividends payable 13,038
Adviser and Administrator fees payable 3,147
Accrued expenses 29,346
Total liabilities 232,894
NET ASSETS 29,152,344
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share $ 29,316
Additional paid-in capital 28,799,021
Accumulated net loss on investments (521,884)
Net unrealized appreciation on investments 845,891
$ 29,152,344
CLASS A
Net Assets $ 29,070,500
Capital shares outstanding 2,923,377
Net asset value and redemption price per share $ 9.94
Offering price per share (100/96 of $9.94 adjusted to
nearest cent) $ 10.35
CLASS C
Net Assets $ 40,997
Capital shares outstanding 4,123
Net asset value and offering price per share $ 9.94
Redemption price per share (*varies by length of time
shares are held) $ *
CLASS Y
Net Assets $ 40,847
Capital shares outstanding 4,105
Net asset value, offering and redemption price per share $ 9.94
</TABLE>
See accompanying notes to financial statements.
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 1,643,817
Expenses:
Investment Adviser fees (note 3) $ 67,588
Administrator fees (note 3) 79,323
Distribution and service fees (note 3) 58,865
Transfer and shareholder servicing agent fees 39,654
Shareholders' reports and proxy statements 34,363
Legal fees 30,374
Trustees' fees and expenses (note 8) 25,174
Audit and accounting fees 20,293
Custodian fees (note 7) 6,639
Registration fees and dues 6,072
Insurance 533
Miscellaneous 21,751
390,629
Investment Adviser fees waived (note 3) (49,962)
Administrator fees waived (note 3) (58,760)
Reimbursement of expenses by Administrator (note 3) (199,119)
Expenses paid indirectly (note 7) (3,311)
Net expenses 79,477
Net investment income 1,564,340
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from securities transactions 870
Change in unrealized appreciation on investments 636,155
Net realized and unrealized gain on investments 637,025
Net increase in net assets resulting from operations $ 2,201,365
</TABLE>
See accompanying notes to financial statements.
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended June 30,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,564,340 $ 1,565,842
Net realized gain (loss) from securities
transactions 870 (46,905)
Change in unrealized appreciation on investments 636,155 442,737
Change in net assets from operations 2,201,365 1,961,674
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income (1,580,556) (1,565,842)
Distributions in excess of net investment income - -
Net realized gain on investments - -
Class C Shares:
Net investment income (670) -
Distributions in excess of net investment income - -
Net realized gain on investments - -
Class Y Shares:
Net investment income (425) -
Distributions in excess of net investment income - -
Net realized gain on investments - -
Change in net assets from distributions (1,581,651) (1,565,842)
CAPITAL SHARE TRANSACTIONS (NOTE 9):
Proceeds from shares sold 3,500,104 3,729,976
Reinvested dividends and distributions 927,229 887,407
Cost of shares redeemed (4,775,558) (3,668,372)
Change in net assets from capital share
transactions (348,225) 949,011
Change in net assets 271,489 1,344,843
NET ASSETS:
Beginning of period 28,880,855 27,536,012
End of period $ 29,152,344 $ 28,880,855
</TABLE>
See accompanying notes to financial statements.
<PAGE>
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end
investment company, was organized on December 12, 1990 as a Massachusetts
business trust and commenced operations on July 24, 1992. The Fund is
authorized to issue an unlimited number of shares and, since its inception to
May 21, 1996, offered only one class of shares. On that date, the Fund began
offering two additional classes of shares, Class C and Class Y shares. All
shares outstanding prior to that date were designated as Class A shares and,
as was the case since inception, are sold with a front-payment sales charge
and bear an annual service 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. The Class Y shares are only offered to institutions acting for
an investor in a fiduciary, advisory, agency, custodian or similar capacity.
They are not available to individual 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. All classes of shares
represent interests in the same portfolio of investments in the Fund and are
identical as to rights and privileges. They differ only with respect to the
effect of sales charges, the distribution and/or service fees borne by the
respective 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 generally accepted accounting principles 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 at the mean of bid and
asked quotations and, in the case of other securities, at fair
value determined under procedures established by and under the
general supervision of the Board of Trustees. Securities which
mature in 60 days or less are valued at amortized cost if their
term to maturity at purchase was 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 exceeded 60
days.
In Fiscal 1997, the Fund began amortizing bond premium using
the constant yield method. Accordingly, net unrealized
appreciation and additional paid-in capital have been adjusted by
<PAGE>
equal amounts at the beginning of the year. This change had no
effect on the Fund's net asset value or distribution policy and
conforms to the amortization policy followed by the Fund for
Federal tax purposes.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and
losses from securities transactions are reported on the identified
cost basis. Interest income is recorded daily on the accrual basis
and is adjusted for amortization of premium and accretion of
original issue discount. Market discount is recognized upon
disposition of the security.
c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of
the Internal Revenue Code applicable to certain investment
companies. The Fund intends to make distributions of income and
securities profits sufficient to relieve it from all, or
substantially all, Federal income and excise taxes.
d) ALLOCATION OF EXPENSES: Expenses, other than class-specific
expenses, are allocated daily to each class of shares based on the
relative net assets of each class. Class-specific expenses, which
include distribution and service fees and any other items that are
specifically attributed to a particular class, are charged directly
to such class.
e) USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of 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:
Management affairs of the Fund are conducted through two separate
management arrangements.
First Security Investment Management, Inc. (the "Adviser"), serves as
Investment Adviser to the Fund. In this role, under an Investment Advisory
Agreement, the Adviser supervises the Fund's investments and provides various
services to the Fund for which it 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 0.23 of 1% of the net assets of the Fund.
The Fund also has an Administration Agreement with Aquila Management
Corporation (the "Administrator"), the Fund's founder and sponsor. Under
this Agreement, the Administrator provides all administrative services,
other than those relating to the management of the Fund's investments.
<PAGE>
These include providing the office of the Fund and all related services as
well as overseeing the activities of all the various support organizations to
the Fund such as the shareholder servicing agent, custodian, legal counsel,
auditors and distributor and additionally maintaining the Fund's accounting
books and records. For its services, the Administrator 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 0.27 of 1% of the net assets of the Fund.
Specific details as to the nature and extent of the services provided by
the Adviser and the Administrator are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
The Adviser and the Administrator each agrees that the above fees shall
be reduced, but not below zero, by an amount equal to its pro-rata portion
(determined on the basis of the respective fees computed as described above)
of the amount, if any, by which the total expenses of the Fund in any fiscal
year, exclusive of taxes, interest and brokerage fees, shall exceed the
lesser of (i) 2.5% of the first $30 million of average annual net assets of
the Fund plus 2% of the next $70 million of such assets and 1.5% of its
average annual net assets in excess of $100 million, or (ii) 25% of the
Fund's total annual investment income. No such reduction in fees was required
during the year ended June 30, 1997.
For the year ended June 30, 1997, the Fund incurred fees under the
Advisory Agreement and Administration Agreement of $67,588 and $79,323
respectively, of which amounts the Adviser and Administrator waived $49,962
and $58,760, respectively. Additionally, the Administrator voluntarily agreed
to reimburse the Fund for other expenses during this period in the amount of
$199,119. Of this amount, $66,512 was paid prior to June 30, 1997 and the
balance of $132,607 was paid in July and early August 1997.
b) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part
of the Plan, with respect to Class A Shares, the Fund is authorized to make
service fee payments to broker-dealers or others ("Qualified Recipients")
selected by 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, 1997, service fees on Class A Shares
amounted to $58,706, of which the Distributor received $1,749.
<PAGE>
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 net assets represented by Class C Shares and for
the year ended June 30, 1997, amounted to $119, of which the Distributor
received $119.
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
net assets represented by Class C Shares and for the year ended June 30,
1997, amounted to $40, of which the Distributor received $40.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Fund's shares.
Through agreements between the Distributor and various broker-dealer firms
("dealers"), the Fund's shares are sold primarily through the facilities of
these dealers having offices within Utah, with the bulk of sales commissions
inuring to such dealers. For the year ended June 30, 1997, the Distributor
received sales commissions in the amount of $1,637.
4. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1997, purchases of securities and proceeds
from the sales of securities aggregated $1,470,576 and $1,468,804,
respectively.
At June 30, 1997, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted
to $915,744 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $69,853,
for a net unrealized appreciation of $845,891.
At June 30, 1997, the Fund had a capital loss carryover of $521,884,
which is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code. Of this
amount, $394,329 expires on June 30, 2003; $114,226 expires on June 30, 2004;
and $13,329 expires on June 30, 2005.
<PAGE>
5. PORTFOLIO ORIENTATION
Since the Fund invests principally and may invest entirely in double
tax-free municipal obligations of issuers within Utah, it is subject to
possible risks associated with economic, political, or legal developments or
industrial or regional matters specifically affecting Utah and whatever
effects these may have upon Utah issuers' ability to meet their obligations.
6. DISTRIBUTIONS
The Fund declares dividends daily from net investment income and makes
payments monthly in additional shares at the net asset value per share or in
cash, at the shareholder's option. Net realized capital gains, if any, are
distributed annually.
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 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. Further, a small portion of the dividends may, under some
circumstances, be subject to ordinary income taxes. Also, annual capital
gains distributions, if any, are taxable.
7. EXPENSES
The Fund has negotiated an expense offset agreement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever
there are uninvested cash balances. During the year ended June 30, 1997, the
Fund's custodian fees amounted to $6,639, of which $3,311 was offset by such
credits. It is the general intention of the Fund to invest, to the extent
practicable, some or all of cash balances in income-producing assets rather
than leave cash on deposit with the custodian.
8. TRUSTEES' FEES AND EXPENSES
During the fiscal year there were seven Trustees. Trustees' fees paid
during the year were at the average annual rate of $1,000 for carrying out
their responsibilities and attendance at regularly scheduled Board Meetings.
If additional or special meetings are scheduled for the Fund, separate
meeting fees are paid for each such meeting to those Trustees in attendance.
The Fund also reimburses Trustees for expenses such as travel,
accommodations, and meals incurred in connection with attendance at regularly
scheduled or special Board Meetings and at the Annual Meeting and outreach
meetings of Shareholders. For the fiscal year ended June 30, 1997, such
reimbursements averaged approximately $2,700 per Trustee. One of the
Trustees, who is affiliated with the Administrator, is not paid any Trustee
fees.
<PAGE>
9. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1997 June 30, 1996
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 346,477 $ 3,420,264 379,526 $ 3,729,776
Reinvested distributions 94,031 926,736 90,296 887,407
Cost of shares redeemed (483,708) (4,775,559) (373,822) (3,668,372)
Net change (43,200) (428,559) 96,000 948,811
<CAPTION>
Period Ended
June 30, 1996*
Shares Amount
<S> <C> <C> <C> <C>
CLASS C SHARES:
Proceeds from shares sold 4,061 39,841 10 100
Reinvested distributions 52 486 - -
Cost of shares redeemed - - - -
Net change 4,113 40,327 10 100
<CAPTION>
Period Ended
June 30, 1996*
Shares Amount
<S> <C> <C> <C> <C>
CLASS Y SHARES:
Proceeds from shares sold 4,094 40,000 10 100
Reinvested distributions 1 7 - -
Cost of shares redeemed - - - -
Net change 4,095 40,007 10 100
Total transactions in Fund
shares (34,992) $ (348,225) 96,020 $ 949,011
<FN> * From May 21, 1996 (date of inception) through June 30, 1996.</FN>
</TABLE>
<PAGE>
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Class A(1)
Period(2)
Year Ended June 30, Ended June
1997 1996 1995 1994 30, 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $9.74 $9.59 $9.32 $10.00 $9.60
Income from Investment Operations:
Net investment income 0.52 0.54 0.55 0.55 0.50
Net gain (loss) on securities (both
realized and unrealized) 0.21 0.15 0.27 (0.65) 0.40
Total from Investment Operations 0.73 0.69 0.82 (0.10) 0.90
Less Distributions (note 6):
Dividends from net investment income (0.53) (0.54) (0.55) (0.55) (0.50)
Distributions from capital gains - - - (0.03) -
Total Distributions (0.53) (0.54) (0.55) (0.58) (0.50)
Net Asset Value, End of Period $9.94 $9.74 $9.59 $9.32 $10.00
Total Return (not reflecting sales
charge) (%) 7.72 7.17 9.09 (1.09) 9.67#
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 29,071 28,881 27,536 26,116 12,938
Ratio of Expenses to Average Net
Assets (%) 0.27 0.19 0.08 0.03 0*
Ratio of Net Investment Income to
Average Net Assets (%) 5.45 5.49 5.85 5.58 5.64*
Portfolio Turnover Rate (%) 5.09 11.15 22.92 27.53 36.52#
<CAPTION>
Net investment income per share and the ratios of income and expenses to
average net assets without the Adviser's and Administrator's voluntary waiver
of fees, the Administrator's voluntary expense reimbursement and the expense
offset in custodian fees for uninvested cash balances would have been:
<S> <C> <C> <C> <C> <C>
Net Investment Income ($) 0.42 0.43 0.43 0.40 0.27
Ratio of Expenses to Average Net
Assets (%) 1.33 1.30 1.30 1.60 2.67*
Ratio of Net Investment Income to
Average Net Assets (%) 4.39 4.37 4.63 4.00 2.97*
<FN> (1) Designated as Class A Shares on May 21, 1996. </FN>
<FN> (2) From July 24, 1992 (commencement of operations) to June 30, 1993.</FN>
<FN> # Not annualized </FN>
<FN> * Annualized. </FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Class C(1) Class Y(1)
Year Period(2) Year Period(2)
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.74 $9.77 $9.74 $9.77
Income from Investment Operations:
Net investment income 0.44 0.05 0.61 0.06
Net gain (loss) on securities
(both realized and unrealized) 0.21 (0.03) 0.21 (0.03)
Total from Investment Operations 0.65 0.02 0.82 0.03
Less Distributions (note 6):
Dividends from net investment
income (0.45) (0.05) (0.62) (0.06)
Distributions from capital gains - - - -
Total Distributions (0.45) (0.05) (0.62) (0.06)
Net Asset Value, End of Period $9.94 $9.74 $9.94 $9.74
Total Return (not reflecting sales
charge) (%) 6.80 0.20# 8.69 0.29#
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 41 0.1 41 0.1
Ratio of Expenses to Average Net
Assets (%) 1.07 0.14# 0.07 0.03#
Ratio of Net Investment Income to
Average Net Assets (%) 4.65 0.50# 5.65 0.61#
Portfolio Turnover Rate (%) 5.09 11.15 5.09 11.15
<CAPTION>
Net investment income per share and the ratios of income and expenses to
average net assets without the Adviser's and Administrator's voluntary waiver
of fees, the Administrator's voluntary expense reimbursement and the expense
offset in custodian fees for uninvested cash balances would have been:
<S> <C> <C> <C> <C>
Net Investment Income ($) 0.35 0.04 0.50 0.05
Ratio of Expenses to Average Net
Assets (%) 2.13 0.23# 1.13 0.11#
Ratio of Net Investment Income to
Average Net Assets (%) 3.59 0.42# 4.59 0.53#
<FN> (1) New Class of Shares established on May 21, 1996. </FN>
<FN> (2) From May 21, 1996 to June 30, 1996. </FN>
<FN> # Not annualized. </FN>
<FN> * Annualized. </FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REPORT ON THE ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
The Annual Meeting of Shareholders of Tax-Free Fund For Utah
(the "Fund") was held on September 27, 1996.* At the meeting, the following
matters were submitted to a shareholder vote and approved:
(i) the election of Lacy B. Herrmann, Philip E. Albrecht, Gary C.
Cornia, William L. Ensign, D. George Harris, Anne J. Mills, and R.
Thayne Robson as Trustees to hold office until the next annual meeting
of the Fund's shareholders or until his or her successor is duly
elected (each Trustee received at least 20,677,457.03 affirmative
votes (98.28%); no more than 362,875.42 votes (1.72%) were withheld
for any Trustee), and
(ii) the ratification of the selection of KPMG Peat Marwick LLP as
the Fund's independent auditors for the fiscal year ending June 30,
1997 (votes for: 20,509,926.19 (97.48%); votes against: 105,991.32
(0.50%); abstentions: 424,414.94 (2.02%); broker non-votes: 0
(0.00%)).
______________________________
* On the record date for this meeting, the holders of 2,964,994 Class A
Shares, 10 Class C Shares and 10 Class Y Shares were outstanding and entitled
to vote representing a total net asset value of $28,819,945.38. The holders
of shares entitled to vote representing a total net asset value of
$21,040,332.45 (73.01%) were present in person or by proxy at the meeting.
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
This information is presented in order to comply with a
requirement of the Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF
SHAREHOLDERS IS REQUIRED.
For the fiscal year ended June 30, 1997, of the total amount of
dividends paid by Tax-Free Fund For Utah, 97.89% was "exempt-interest
dividends" and the balance was ordinary dividend income.
Prior to January 31, 1997, shareholders were mailed IRS Form
1099-DIV which contained information on the status of distributions paid for
the 1996 CALENDAR YEAR.
