<PAGE>
MANAGER AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
ZIONS FIRST NATIONAL BANK
One South Main Street
Salt Lake City, Utah 84111
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Gary C. Cornia
William L. Ensign
Diana P. Herrmann
Anne J. Mills
R. Thayne Robson
OFFICERS
Diana P. Herrmann, President
Jerry G. McGrew, Senior Vice President
Kimball L. Young, Senior 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
PFPC INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
INDEPENDENT AUDITORS
KPMG LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus, which must precede or
accompany this report.
SEMI-ANNUAL
REPORT
DECEMBER 31, 1999
[Logo of Tax-Free Fund For Utah: a rectangle containing desert boulders with a
sun rising behind it]
TAX-FREE FUND FOR
UTAH
A TAX-FREE INCOME INVESTMENT
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILAsm GROUP OF FUNDS
</PAGE>
<PAGE>
[Logo of Tax-Free Fund For Utah: a rectangle containing desert boulders with a
sun rising behind it]
TAX-FREE FUND FOR UTAH
SEMI-ANNUAL REPORT
"WE TAKE SPECIAL CARE TO ENSURE YOUR SAFETY"
February 15, 2000
Dear Fellow Shareholders:
Every now and then, we come across something that triggers a special
point worth considering. This happened to us on a recent trip on United
Airlines. When a pre-flight announcement was made that stated, "We take special
care to ensure your safety," that remark brought home to us a point that we
practice on a continuous basis with Tax-Free Fund for Utah.
We know from our surveys that most of the shareholders of Tax-Free
Fund for Utah are looking forward to retiring or have already retired. These are
a very special group of people - and we work very hard to make sure that we are
addressing their needs.
Once one is no longer in the work force, it is essential that very
careful attention be paid to whatever financial resources are available to
ensure that these resources are available when needed. It is just as important
that these financial resources produce the kind of return, on a consistent
basis, that our shareholders can count on.
SAFETY
Safety with municipal securities is a very important factor to which
management of your Fund pays considerable attention. Just like the United
Airlines announcement, "we take special care to ensure your safety" with all the
municipal securities in the Fund.
As you probably know, municipal securities have various credit
ratings. These ratings attempt to measure the kind of safety and trustworthiness
that the securities represent. With Tax-Free Fund for Utah, we specifically
limit the credit ratings to those within the top four grades - AAA, AA, A, and
Baa. This world in which we live is changing extremely rapidly. Therefore, we
feel it is important that we ensure that the majority of securities in the
Fund's portfolio are within the top TWO credit grades - AAA and AA - for your
safety. Through our portfolio management, we very carefully monitor the
characteristics of each investment and every type of investment in the
portfolio. Therefore, we do not expect "surprises" from any of the securities
that are in the portfolio of the Fund.
Recently, the marketplace for municipal securities has made it such
that the difference in yield for a AAA or AA credit rating versus a Baa credit
rating is relatively little. Therefore, our approach is to go with the best.
Obviously, if one can buy securities which provide a top rating without paying
any significant premium for them, we prefer to go in that direction.
We want you to know, that at the report date of December 31, 1999,
the combination of AAA and AA securities amounted to over 80% of the total
assets in the portfolio of your Fund.
In this way, we feel that "we take special care to ensure your
safety."
</PAGE>
<PAGE>
MATURITY OF TAX-FREE MUNICIPAL BONDS
Another factor that we feel is important in building quality for
your investment is the maturity structure of the municipal bonds in the
portfolio.
As we have explained to you in the past, longer-term maturity bonds
will usually produce a higher return than short-term bonds. However, such longer
maturity bonds also have a higher degree of volatility of price fluctuations.
Therefore, we have structured the average maturity of Tax-Free Fund
for Utah to be at a somewhat intermediate level - currently 18.5 years. This
level is produced by using a "laddered" approach to the selection of bonds in
terms of their maturity. We have a certain number of short-term bonds and a
certain number of long-term bonds, but the overall average of these maturities
run at an intermediate level. In this way, we can capture a substantial amount
of possible income level available from the bonds, without exposing the
portfolio to an undue level of volatility.
Our goal is to maintain a reasonably high level of stability for the
share net asset value of the Fund, while producing the kind of tax-free return
that people want to see from their investment.
This is another strategy that we use in building quality, safety,
and stability into your investment in Tax-Free Fund for Utah.
RELIABILITY OF PAYMENTS
We also recognize that most of our shareholders depend upon the
monthly tax-free income produced by Tax-Free Fund for Utah. Shareholders want to
know that the income from the Fund is there when the time comes to pay various
bills.
The quality character of the portfolio ensures that this is the
case.
We want to make sure that, to the best of our ability, the monthly
payments add up to a satisfactory level of income that you can be SURE will be
there when you need it.
YOUR CONFIDENCE IS APPRECIATED
As always, we again wish to express our appreciation for the
confidence you have shown by your investment in Tax-Free Fund for Utah. We can
assure you that we will continually do our best to merit your continued level of
trust.
Sincerely,
Diana P. Herrmann
President
Lacy B. Herrmann
Chairman, Board of Trustees
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (16.3%) S&P VALUE
</CAPTION>
<S> <C> <C> <C> <C> <C>
CITY AND COUNTY (8.5%)
$ 405,000 Brian Head, Utah, 6.500%, 03/15/24 NR/NR* $ 397,913
2,095,000 Clearfield City, Utah, MBIA Insured,
5.125%, 02/01/18 NR/AAA 1,880,262
295,000 Hurricane, Utah, Asset Guaranty Insured,
5.400%, 11/01/09 NR/AA 295,000
300,000 Weber County, Utah Unlimited Tax,
FGIC Insured, 5.625%, 1/15/11 Aaa/AAA 302,250
400,000 Washington County Pennsylvania
7.350%, 06/01/13 NR/NR* 386,000
3,261,425
SCHOOL DISTRICT (7.8%)
1,000,000 Jackson & Williamson County, Illinois School District,
AMBAC Insured, 6.250%, 12/01/15 Aaa/AAA 1,035,000
1,000,000 Jackson & Williamson County, Illinois School District,
AMBAC Insured, 6.500%, 12/01/18 Aaa/AAA 1,045,000
1,000,000 Kings Loc School District, Ohio School District G.O
5.650%, 12/01/24 NR/NR* 926,250
3,006,250
Total General Obligation Bonds 6,267,675
REVENUE BONDS (80.4%)
EDUCATION (8.4%)
380,000 New Hampshire Higher Education, Androscoggin
Hospital, 5.800%, 11/01/27 NR/A- 337,725
375,000 Southern Utah University Revenue
6.300%, 06/01/16 NR/NR* 374,063
200,000 University of Utah Revenue Refunding, (Biology Research
Facilities), MBIA Insured, 5.500%, 04/01/11 Aaa/AAA 200,250
2,885,000 Utah State Board of Regents, University of Utah,
MBIA Insured, 4.750%, 04/01/25 Aaa/AAA 2,315,212
3,227,250
HOSPITAL (17.3%)
515,000 Abilene Texas Hospital Authority, Hendrick
Medical Center, escrowed to maturity,
9.600%, 12/01/12 NR/AAA 643,106
2,000,000 Bountiful, Utah Hospital Revenue, IHC Health Services,
5.750%, 12/15/18 NR/NR* 1,707,500
</PAGE>
<PAGE>
315,000 California Health Facilities, Hospital of the Good
Samaritan, 7.000%, 09/01/21 Baa2/BBB 317,363
250,000 Maricopa County Arizona, MBIA Insured, escrowed
to maturity, 7.000%, 12/01/13 Aaa/AAA 259,365
2,000,000 Utah County, Utah Hospital Revenue, IHC Health
Services, MBIA Insured, 5.250%, 08/15/21 Aaa/AAA 1,785,000
1,090,000 Utah County, Utah Hospital Revenue, IHC Health
Services MBIA Insured, 5.250%, 08/15/26 Aaa/AAA 955,112
500,000 Weber County, Utah Hospital Revenue, IHC Health
Services, 5.000%, 08/15/30 Aa2/AA 404,375
500,000 Wisconsin State Health, Hess Memorial Hospital,
7.875%, 11/01/22 NR/NR* 531,875
6,603,696
INDUSTRIAL DEVELOPMENT (1.1%)
250,000 Sandy City, Utah Industrial Development, H Shirl Wright
Project, LOC Olympus Bank, 6.125%, 08/01/16 NR/AAA 254,375
170,000 West Valley City, Utah Development Agency
Tax Inc., 6.000%, 03/01/24 NR/A- 165,750
420,125
LEASE (12.9%)
1,000,000 Logan, Utah Municipal Building Authority,
AMBAC Insured, 5.200%, 04/01/18 Aaa/NR 908,750
700,000 Salt Lake County, Utah Municipal Building
Authority, AMBAC Insured, 5.000%, 10/01/12 Aaa/AAA 663,250
150,000 Salt Lake County, Utah Municipal Building Authority,
Lease Revenue A, 5.850%, 10/01/17 Aa3/AA- 148,875
1,020,000 Salt Lake City, Utah Municipal Building Authority,
6.000%, 10/15/14 Aa3/A+ 1,046,775
350,000 Utah State Building Ownership Authority,
5.750%, 08/15/08 Aa/AA 353,938
2,000,000 Utah State Building Ownership Authority,
FSA Insured, 5.250%, 5/15/20 Aaa/AAA 1,827,500
4,949,088
MORTGAGE (13.3%)
500,000 Boulder County Colorado, Multi Family Housing,
6.250%, 06/01/19 NR/NR* 456,250
630,000 Colorado Housing Authority
6.750%, 10/01/21 Aa2/NR 665,437
</PAGE>
<PAGE>
215,000 Idaho Housing Finance Agency
FHA, VA, FMHA Mortgages 6.400%, 07/01/11 Aa1/NR 218,225
185,000 Idaho Housing Finance Agency
FHA, VA, FMHA Mortgage 6.600%, 07/01/15 Aaa/NR 192,863
275,000 Nevada Housing Division FHA/VA Mortgages
6.55%, 10/01/11 Aa2/NR 284,969
260,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series E-1,
6.600%, 07/01/11 NR/AA 265,525
215,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series 1994C,
6.350%, 07/01/11 Aa2/NR 219,300
310,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, 7.250%, 07/01/11 Aa2/AA 323,562
655,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, 6.900%, 07/01/12 NR/AAA 673,013
960,000 Utah State Housing Finance Agency, Single Family
Housing Mortgage Revenue, Series 1994C,
5.650%, 07/01/16 Aaa/AAA 921,600
650,000 Washington State Housing, Single Family Housing
Mortgage Revenue, 6.050%, 12/01/16 Aaa/NR 649,187
225,000 Wisconsin Housing and Economic Development,
Series C, MBIA Insured 5.800%, 11/01/13 Aaa/AAA 223,875
5,093,806
TRANSPORTATION (5.5%)
875,000 Salt Lake City, Utah Airport Revenue, FGIC Insured,
Series B, 5.875%, 12/01/12 Aaa/AAA 893,594
285,000 Salt Lake City, Utah Airport Revenue, FGIC Insured,
Series B, 5.875%, 12/01/18 Aaa/AAA 286,425
1,000,000 Utah Transit Authority Sales Tax Revenue FSA Insured,
5.375%, 06/15/22 NR/AAA 913,750
2,093,769
WATER AND SEWER (19.0%)
295,000 Ashley Valley, Utah, AMBAC Insured,
9.500%, 01/01/08 Aaa/AAA 348,100
1,000,000 Detroit Michigan Sewer Disp Re Water and Sewer
Services FGIC Insured, zero coupon, 07/01/20 Aaa/AAA 281,250
</PAGE>
<PAGE>
670,000 Granger & Hunter Water Revenue, Utah,
FSA Insured, 4.625%, 03/01/11 Aaa/AAA 616,400
300,000 St. George, Utah Water Revenue, AMBAC Insured,
5.375%, 06/01/16 Aaa/AAA 284,250
1,000,000 St. George, Utah Interlocal Agency Revenue,
AMBAC Insured, 5.125%, 12/01/17 NR/AAA 893,750
500,000 Salt Lake City, Utah Water And Sewer Revenue,
AMBAC Insured 5.750%, 02/01/13 Aaa/AAA 502,500
4,000,000 Timpanogos, Utah Water & Sewer Revenue,
MBIA Insured, 5.00%, 06/01/19 Aaa/AAA 3,470,000
1,000,000 Utah Water Finance Agency Revenue, Series A
MBIA Insured, 5.300%, 10/01/23 Aaa/AAA 902,500
7,298,750
UTILITY (2.9%)
790,000 Utah Association Municipal Power Systems
Revenue, 5.250%, 12/01/09 NR/A 772,225
350,000 Utah Association Municipal Power Systems Revenue,
AMBAC Insured, 5.500%, 12/01/13 Aaa/AAA 345,187
1,117,412
Total Revenue Bonds 30,803,896
Total Investments (cost $39,910,087**) 96.7% 37,071,571
Other assets in excess of liabilities 3.3 1,261,256
Net Assets 100.0% $ 38,332,827
</TABLE>
(*) Any security not rated must be determined by the
Investment Sub-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.
(**) Cost for Federal tax purposes is identical.
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Co.
FSA - Financial Security Assurance
MBIA - Municipal Bond Investors Assurance Corp.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $39,910,087) $ 37,071,571
Cash 88,943
Receivable for investment securities sold 730,000
Interest receivable 550,036
Due from Manager for reimbursement of expenses (note 3) 9,958
Total assets 38,450,508
LIABILITIES
Dividends payable 47,148
Payable for Fund shares redeemed 29,461
Distribution fees payable 24,235
Accrued expenses 16,315
Management fee payable 522
Total liabilities 117,681
NET ASSETS $ 38,332,827
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share $ 41,617
Additional paid-in capital 42,157,617
Net unrealized depreciation on investments (2,838,516)
Accumulated net realized loss on investments (865,620)
Distributions in excess of net investment income (162,271)
$ 38,332,827
CLASS A
Net Assets $ 37,339,212
Capital shares outstanding 4,053,713
Net asset value and redemption price per share $ 9.21
Offering price per share (100/96 of $9.21 adjusted to nearest cent) $ 9.59
CLASS C
Net Assets $ 989,338
Capital shares outstanding 107,485
Net asset value and offering price per share $ 9.20
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) $ 9.20*
CLASS Y
Net Assets $ 4,277
Capital shares outstanding 464
Net asset value, offering and redemption price per share $ 9.22
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 1,207,318
Expenses:
Management fee (note 3) $ 114,651
Distribution and service fees (note 3) 51,512
Legal fees 23,000
Shareholders' reports and proxy statements 14,000
Custodian fees 13,041
Transfer and shareholder servicing agent fees 12,500
Trustees' fees and expenses 10,000
Audit and accounting fees 9,000
Registration fees and dues 5,000
Insurance 1,000
Miscellaneous 7,000
260,704
Management fee waived (note 3) (89,249)
Reimbursement of expenses by Manager (note 3) (64,645)
Expenses paid indirectly (note 7) (10,302)
Net expenses 96,508
Net investment income 1,110,810
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from securities transactions (865,616)
Change in unrealized depreciation on investments (1,895,103)
Net realized and unrealized loss on investments (2,760,719)
Net decrease in net assets resulting from operations $ (1,649,909)
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
</CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,110,810 $ 2,327,932
Net realized gain (loss) from securities transactions (865,616) 762,330
Change in unrealized depreciation on investments (1,895,103) (2,618,527)
Change in net assets from operations (1,649,909) 471,735
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income (1,198,042) (2,298,984)
Net realized gain on investments (232,324) -
Class C Shares:
Net investment income (31,218) (65,213)
Net realized gain on investments (6,289) -
Class Y Shares:
Net investment income (120) (20,603)
Net realized gain on investments (27) -
Change in net assets from distributions (1,468,020) (2,384,800)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 2,326,318 45,921,189
Reinvested dividends and distributions 901,254 1,427,466
Cost of shares redeemed (10,700,011) (28,989,047)
Change in net assets from capital share transactions (7,472,439) 18,359,608
Change in net assets (10,590,368) 16,446,543
NET ASSETS:
Beginning of period 48,923,195 32,476,652
End of period $ 38,332,827 $ 48,923,195
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Tax-Free Fund For Utah (the "Fund"), a non-diversified, open-end
investment company, was organized on December 12, 1990 as a Massachusetts
business trust and commenced operations on July 24, 1992. The Fund is authorized
to issue an unlimited number of shares and, since its inception to May 21, 1996,
offered only one class of shares. On that date, the Fund began offering two
additional classes of shares, Class C and Class Y shares. All shares outstanding
prior to that date were designated as Class A shares and are sold with a
front-payment sales charge and bear an annual 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
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. At December 31, 1999, 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 generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities
of more than 60 days are valued at fair value 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.
</PAGE>
<PAGE>
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 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 Management Corporation (the "Manager"), the Fund's founder and
sponsor, serves as the Manager for the Fund under an Advisory and Administration
Agreement with the Fund. The portfolio management of the Fund has been delegated
to a Sub-Adviser as described below. Under the Advisory and Administration
Agreement, the Manager provides all administrative services to the Fund, other
than those relating to the day-to-day portfolio management. The Manager's
services include providing the office of the Fund and all related services as
well as overseeing the activities of the Sub-Adviser and all the various support
organizations to theFund 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 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 net assets.
Zions First National Bank (the "Sub-Adviser") serves as the Investment
Sub-Adviser for the Fund under a Sub-Advisory Agreement between the Manager and
the Sub-Adviser. Under this agreement, the Sub-Adviser continuously provides,
subject to oversight of the Manager and the Board of Trustees of the Fund, the
investment program of the Fund and the composition of its portfolio, arranges
for the purchases and sales of portfolio securities, and provides for daily
pricing of the Fund's portfolio. For its services, the Sub-Adviser is entitled
to receive a fee from the Manager which is payable monthly and computed as of
the close of business each day at the annual rate of 0.23 of 1% on the Fund's
net assets.
</PAGE>
<PAGE>
For the six months ended December 31, 1999, the Fund incurred fees for
advisory and administrative services of $114,651 of which $89,249 was
voluntarily waived. Additionally, the Manager voluntarily agreed to reimburse
the Fund for other expenses during this period in the amount of $64,645. Of this
amount, $54,687 was paid prior to December 31, 1999 and the balance of $9,958
was paid in early January 2000.
Specific details as to the nature and extent of the services provided
by the Manager and the Sub-Adviser 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. 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
Aquila Distributors, Inc. (the "Distributor") including, but not limited to, any
principal underwriter of the Fund, with which the Distributor has entered into
written agreements contemplated by the Rule and which have rendered assistance
in the distribution and/or retention of the Fund's shares or servicing of
shareholder accounts. The Fund makes payment of this service fee at the annual
rate of 0.20% of the Fund's average net assets represented by Class A Shares.
For the six months ended December 31, 1999, service fees on Class A Shares
amounted to $44,442, of which the Distributor received $980.
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 six months ended December 31, 1999, amounted to $5,303. 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 six months ended December 31, 1999, amounted to $1,767. The
total of these payments with respect to Class C Shares amounted to $7,070, of
which the Distributor received $3,906.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the
exclusive distributor of the Fund's shares. Through agreements between the
Distributor and various broker-dealer firms ("dealers"), the Fund's shares are
sold primarily through the facilities of these dealers having offices within
Utah, with the bulk of sales commissions inuring to such dealers. For the six
months ended December 31, 1999, the Distributor received commissions of $6,218
on sales of Class A Shares.
</PAGE>
<PAGE>
4. PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1999, purchases of securities
and proceeds from the sales of securities aggregated $13,237,056 and
$23,093,627, respectively.
At December 31, 1999, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$183,692 and aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over market value amounted to $3,022,208, for a
net unrealized depreciation of $2,838,516.
5. PORTFOLIO ORIENTATION
Since the Fund invests principally and may invest entirely in double
tax-free municipal obligations of issuers within Utah, it is subject to possible
risks associated with economic, political, or legal developments or industrial
or regional matters specifically affecting Utah and whatever effects these may
have upon Utah issuers' ability to meet their obligations.
The Fund is also permitted to invest in tax-free municipal obligations
of issuers in other states and U.S. territories meeting comparable quality
standards and providing income which is exempt from both regular Federal and
Utah income taxes. The general policy of the Fund is to invest in such
securities only when comparable securities of Utah issuers are not available in
the market. At December 31, 1999, the Fund had 22.1% of its net assets invested
in 17 such municipal issues.
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, in cash,
or in a combination of both, at the shareholder's option. Net realized capital
gains, if any, are distributed annually and are taxable.
The Fund intends to maintain, to the maximum extent possible, the
tax-exempt status of interest payments received from portfolio municipal
securities in order to allow dividends paid to shareholders from net investment
income to be exempt from regular Federal and State of Utah income taxes.
However, due to differences between financial statement reporting and Federal
income tax reporting requirements, distributions made by the Fund may not be the
same as the Fund's net investment income, and/or net realized securities gains.
Further, a small portion of the dividends may, under some circumstances, be
subject to taxes at ordinary income and/or capital gain rates.
7. EXPENSES
The Fund has negotiated an expense offset arrangement with its
custodian wherein it receives credit toward the reduction of custodian fees and
other Fund expenses whenever there are uninvested cash balances. The Statement
of Operations reflects the total expenses before any offset, the amount of
offset and the net expenses. It is the general intention of the Fund to invest,
to the extent practicable, some or all of cash balances in income-producing
assets rather than leave cash on deposit.
</PAGE>
<PAGE>
8. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 234,458 $ 2,240,966 4,369,607 $ 44,913,787
Reinvested distributions 92,701 876,862 135,169 1,383,403
Cost of shares redeemed (1,057,721) (10,006,546) (2,553,748) (26,188,074)
Net change (730,562) (6,888,718) 1,951,028 20,109,116
CLASS C SHARES:
Proceeds from shares sold 8,983 85,352 98,144 1,007,402
Reinvested distributions 2,579 24,392 4,308 44,057
Cost of shares redeemed (73,034) (693,465) (77,697) (797,214)
Net change (61,472) (583,721) 24,755 254,245
CLASS Y SHARES:
Proceeds from shares sold - - - -
Reinvested distributions - - 1 6
Cost of shares redeemed - - (193,611) (2,003,759)
Net change - - (193,610) (2,003,753)
Total transactions in Fund shares (792,034) $ (7,472,439) 1,782,173 $ 18,359,608
</TABLE>
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS CLASS A(1)
ENDED YEAR ENDED JUNE 30,
12/31/99 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.88 $10.24 $9.94 $9.74 $9.59 $9.32
Income from Investment Operations:
Net investment income 0.24 0.49 0.52 0.52 0.54 0.55
Net gain (loss) on securities (both realized
and unrealized) (0.59) (0.36) 0.30 0.21 0.15 0.27
Total from Investment Operations (0.35) 0.13 0.82 0.73 0.69 0.82
Less Distributions (note 6):
Dividends from net investment income (0.26) (0.49) (0.52) (0.53) (0.54) (0.55)
Distributions from capital gains (0.06) - - - - -
Total Distributions (0.32) (0.49) (0.52) (0.53) (0.54) (0.55)
Net Asset Value, End of Period $9.21 $9.88 $10.24 $9.94 $9.74 $9.59
Total Return (not reflecting sales charge)(%) (3.60)+ 1.19 8.41 7.72 7.17 9.09
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 37,339 47,251 29,013 29,071 28,881 27,536
Ratio of Expenses to Average Net Assets (%) 0.43* 0.45 0.34 0.28 0.20 0.09
Ratio of Net Investment Income to Average
Net Assets (%) 4.83* 4.57 5.06 5.44 5.48 5.84
Portfolio Turnover Rate (%) 29.04+ 87.49 11.31 5.09 11.15 22.92
The expense and net investment income ratios without the effect of the voluntary
waiver of a portion of the management fee and the voluntary expense
reimbursement were:
Ratio of Expenses to Average Net Assets (%) 1.07* 1.04 1.30 1.32 1.29 1.29
Ratio of Net Investment Income to
Average Net Assets (%) 4.20* 3.98 4.10 4.40 4.39 4.64
The expense ratios after giving effect to the waiver, reimbursement and expense
offset for uninvested cash balances were:
Ratio of Expenses to Average Net Assets (%) 0.39* 0.38 0.33 0.27 0.19 0.08
</TABLE>
(1) Designated as Class A Shares on May 21, 1996.
+ Not annualized.
* Annualized.
Note: Effective July 16, 1998, Zions First National Bank became the Fund's
Investment Sub-Adviser replacing First Security Investment Management, Inc.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND FOR UTAH
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C(1) CLASS Y(1)
SIX MONTHS PERIOD(2) SIX MONTHS PERIOD(2)
ENDED YEAR ENDED JUNE 30, ENDED ENDED YEAR ENDED JUNE 30, ENDED
12/31/99 1999 1998 1997 6/30/96 12/31/99 1999 1998 1997 6/30/96
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.87 $10.23 $9.94 $9.74 $9.77 $9.88 $10.24 $9.94 $9.74 $9.77
Income from Investment Operations:
Net investment income 0.19 0.38 0.41 0.44 0.05 0.23 0.45 0.53 0.61 0.06
Net gain (loss) on securities (both
realized and unrealized) (0.59) (0.35) 0.29 0.21 (0.03) (0.57) (0.32) 0.30 0.21 (0.03)
Total from Investment Operations (0.40) 0.03 0.70 0.65 0.02 (0.34) 0.13 0.83 0.82 0.03
Less Distributions (note 6):
Dividends from net investment income (0.21) (0.39) (0.41) (0.45) (0.05) (0.26) (0.49) (0.53) (0.62) (0.06)
Distributions from capital gains (0.06) - - - - (0.06) - - - -
Total Distributions (0.27) (0.39) (0.41) (0.45) (0.05) (0.32) (0.49) (0.53) (0.62) (0.06)
Net Asset Value, End of Period $9.20 $9.87 $10.23 $9.94 $9.74 $9.22 $9.88 $10.24 $9.94 $9.74
Total Return (not reflecting sales charge) (%) (4.09)+ 0.18 7.20 6.80 0.20+ (3.50)+ 1.19 8.52 8.69 0.29+
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 989 1,667 1,476 41 0.1 4 5 1,988 41 0.1
Ratio of Expenses to Average Net
Assets (%) 1.44* 1.45 1.36 1.08 0.14+ 0.44* 0.43 0.37 0.08 0.03+
Ratio of Net Investment Income to
Average Net Assets (%) 3.86* 3.57 3.94 4.64 0.50+ 4.83* 4.45 5.02 5.64 0.61+
Portfolio Turnover Rate (%) 29.04+ 87.49 11.31 5.09 11.15+ 29.04+ 87.49 11.31 5.09 11.15+
The expense and net investment income ratios without the effect of the voluntary
waiver of a portion of the management fee and the voluntary expense
reimbursement were:
Ratio of Expenses to Average Net
Assets (%) 1.87* 1.85 2.08 2.12 0.23+ 0.87* 0.96 1.10 1.12 0.11+
Ratio of Net Investment Income
to Average Net Assets (%) 3.42* 3.17 3.22 3.60 0.41+ 4.39* 3.92 4.29 4.60 0.53+
The expense ratios after giving effect to the waiver, reimbursement and expense
offset for uninvested cash balances were:
Ratio of Expenses to Average Net
Assets (%) 1.39* 1.37 1.35 1.07 0.14+ 0.39* 0.34 0.36 0.07 0.03+
</TABLE>
(1) New Class of Shares established on May 21, 1996.
(2) From May 21, 1996 to June 30, 1996.
+ Not annualized.
* Annualized.
Note: Effective July 16, 1998, Zions First National Bank became the Fund's
Investment Sub-Adviser replacing First Security Investment Management, Inc.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Tax-Free Fund for Utah (the "Fund") was
held on October 22, 1999. The holders of shares representing 80% of the total
net asset value of the shares entitled to vote were present in person or by
proxy. At the meeting, the following matters were voted upon and approved by the
shareholders (the resulting votes for each matter are presented below).
1. To elect Trustees.
NUMBER OF VOTES:
TRUSTEE FOR WITHHELD
Lacy B. Herrmann 39,125,264.18 423,632.68
Gary C. Cornia 39,125,264.18 423,632.68
William L. Ensign 39,125,264.18 423,632.68
Diana P. Herrmann 39,125,264.18 423,632.68
Anne J. Mills 39,125,264.18 423,632.68
R. Thayne Robson 39,125,264.18 423,632.68
2. To ratify the selection of KPMG LLP as the Fund's independent auditors.
NUMBER OF VOTES:
FOR AGAINST ABSTAIN
38,914,915.03 11,743.35 622,011.06
</PAGE>
