2018 Capital Gains


Actual and Estimated 2018 capital gain distributions

Following are capital gain distributions paid on December 6, 2018, and estimated capital gain distributions payable December 28, 2018.

December 6, 2018 Capital Gail Distributions                        Short-Term           Long-Term

Aquila Three Peaks Opportunity Growth  Fund                    $0.01763                $6.01221


The funds listed below may pay a capital gain distribution in December, 2018.  The amount reflected represents a preliminary estimate as of the date indicated, and is based on information available as of October 31, 2018. Estimates are subject to significant change based on a number of factors, including changes in the number of shares outstanding, certain tax adjustments, market conditions, board approvals, and other circumstances.   These factors may also result in year-end distributions being made by funds which show no estimate as of the date of this report. The amount and character of distributions will be finalized on the record dates.

Aquila Distributors LLC does not provide accounting, tax or legal advice. Shareholders should seek tax advice based upon their particular situation.                                            Printable Version



Aquila Tax-Free Trust of Arizona1                                       $0.00                    $0.02

Aquila Churchill Tax-Free Fund of Kentucky1                      $0.00                    $0.02

1 Represents undistributed realized gains from fiscal 2018 which must be distributed in 2018 and which cannot be reduced.

In the event that capital gains distributions are declared, the funds are anticipated to have a record date of December 27, 2018, an ex-date of December 28, 2018, a payable date of December 28, 2018, and a reinvestment date of December 28, 2018.

Although the funds listed below could pay capital gains distributions in December, 2018, as of the date of this report, a capital gain distribution is not anticipated.

Aquila Tax-Free Fund of Colorado

Hawaiian Tax-Free Trust

Aquila Tax-Free Trust of Oregon

Aquila Narragansett Tax-Free Income Fund (RI)

Aquila Tax-Free Fund for Utah

Aquila Three Peaks High Income Fund


Shares of the Funds may only be sold by offering the Funds’ Prospectus. Before investing in a Fund, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund prospectus.  The prospectus is available from your financial advisor, and when you call 800-437-1020 or visit www.aquilafunds.com.


Sandy Rufenacht on Money Life with Chuck Jaffe


Sandy Rufenacht was interviewed on Money Life with Chuck Jaffe November 19, 2018.  During the interview, Mr. Rufenacht discussed market volatility, the rate environment, managing available returns and risk exposure, and the characteristics his team looks for when selecting securities for Aquila Three Peaks High Income Fund and Aquila Three Peaks Opportunity Growth Fund.

Please listen to the full interview:


Before investing in a Fund, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund prospectus.  The prospectus is available from your financial advisor, and when you call 800-437-1020 or visit www.aquilafunds.com.


IRS announces new contribution levels for retirement accounts


This month the IRS announced tax year 2019 annual cost-of-living adjustments for more than 60 items including tax rate schedules, retirement savings contribution limits and increases to the standard deduction.

The limit on annual contributions to an IRA had its first increase since 2013, going from $5,500 to $6,000 per qualified individual. Catch-up contributions for those age 50 and over remained the same at $1,000.

The maximum elective deferral to 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000, again, with the catch-up contribution remaining at $6,000.

You can review all the inflation related adjustments to retirement plans in Notice 2018-83 from the Internal Revenue Service.

For additional information on all the cost-of-living adjustments, here is their news release: IRS provides tax inflation adjustments for tax year 2019.

In addition, our new release of 2019 tax rates, schedules, and contribution limits is available here: 2019 Tax Facts.


S&P Evaluates Kentucky Turnpike Authority’s Obligations


S&P Global Ratings recently lowered their rating on the Kentucky Turnpike Authority’s economic development road revenue bonds to A- from AA- , and assigned a stable outlook. The bonds maintain their ratings of A+, and Aa3, with Fitch Ratings and Moody’s, respectively. According to S&P, reasoning behind the downgrade is related to their change in issuer credit ratings methodology that was effective in January, 2018, as well as increasing financial pressure; primarily, the Turnpike Authority’s obligation to fund pension contributions for the State Police Retirement System.

The Kentucky Turnpike Authority (KTA) has $1.2 billion of outstanding revenue and refunding bonds, and unlike turnpikes in other states, the debt is not backed by toll revenue. The debt is secured by tax and fee revenue, and payments are subject to legislative appropriation under a lease structure with the State Transportation Cabinet.

In the past, S&P viewed funds from taxes, fees and other turnpike revenue as a dedicated revenue stream for bond payments, but under their revised criteria for credit ratings linked to an obligor’s creditworthiness, they no longer consider these funds to be legally dedicated to bond payments, but rather a general fund revenue source tied to unfunded pension liabilities. Without a dedicated revenue stream for bond payments, S&P’s rating of KTA’s bonds will be linked to the state’s creditworthiness. They will be rated one notch below, and move in tandem with, Kentucky’s issuer credit rating.
Read more “S&P Evaluates Kentucky Turnpike Authority’s Obligations”


Valuable New Resource for Facts on Retirement


On September 5, 2018, FactsOnRetirement.org was launched by the Investment Company Institute. On the new site, extensive research and data is provided on the US retirement system demonstrating the strength and effectiveness of the system, dispelling misconceptions, and providing information and resources for those interested in learning more.

“ICI has a team of experts dedicated to studying the US retirement system and FactsOnRetirement.org will help make their work more readily available and easily accessible to the growing body of academics, policymakers, and the public who are engaged on this important issue,” said ICI President and CEO Paul Schott Stevens. “Whether you’re new to the issue or a seasoned expert, we believe this site will be a valuable resource that shows how we can build on the strengths of the current system to enhance retirement savings—and security—in the United States.”

The site consists of four sections:  Retirement by the Numbers, Myths vs. Facts, Tips for Savers, and Additional Resources.  Whether you are in retirement, planning for retirement, or advising clients, you’ll find interesting and valuable information, well worth your time and attention.

The Investment Company Institute (ICI) is the leading association representing regulated funds globally, including mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the United States, and similar funds offered to investors in jurisdictions worldwide. ICI seeks to encourage adherence to high ethical standards, promote public understanding, and otherwise advance the interests of funds, their shareholders, directors, and advisers. ICI carries out its international work through ICI Global, with offices in London, Hong Kong, and Washington, DC.


2018 Aquila Tax-Free Fund For Utah Annual Shareholder Meeting


Shareholders of Aquila Tax-Free Fund For Utah are cordially invited to attend their annual shareholder meeting Thursday, October 25, 2018 at 8:30 a.m. at the Grand America Hotel in the Imperial Ballroom A and Reception Room A, 555 Main Street, Salt Lake City, Utah. A buffet breakfast will be served prior to the meeting.

Attendees will have the opportunity to visit with Fund Executives, Trustees, the Portfolio Managers and hear Utah State Senator and former Trustee, Lyle Hillyard speak about the Utah economy.

Mr. Hillyard has been a member of the Utah State Senate since 1985 and has practiced law in the state for over 40 years. He has served as the Senate Majority Leader and President of the Utah Senate. Through his illustrious career he has received many awards and recognitions including the Cache Chamber of Commerce Total Citizen of the Year Award in 1996 and the Distinguished Legislator Award from the Utah Trial Lawyers Association in 2003.

We look forward to seeing you in Salt Lake City.


Tony Tanner on Asset TV Fixed Income Masterclass


On June 20, 2018, Tony Tanner, lead Portfolio Manager of Aquila Tax-Free Trust of Arizona, participated in a Fixed Income Masterclass panel for Asset TV.  Co-panelists were Lisa Black, Taxable Fixed Income Senior Managing Director at Nuveen, and Marty Fridson, Chief Investment Officer with Lehman, Livian, Fridson Advisors.

During the program, Tony Tanner discussed opportunities in the municipal bond market, variations among market yields, the continuing advantage of investing with a double-tax exemption, important fixed-income characteristics that investors should pay attention to, and the importance of professional management in the municipal bond market.  Tony concluded his comments by pointing out his view that “municipal bonds are the blue jeans of the (fixed income) asset class.  They’re never the height of fashion, but they’re always in style.”

In addition to Tony’s comments, Lisa Black provides perspective on the high yield corporate bond market, and Marty Fridson provides a broad perspective on global fixed income markets and the importance of portfolio diversification.

We hope you find the program informative.

You’ll find additional information regarding Aquila Tax-Free Trust of Arizona on this site, along with the Fund prospectus.


Muni Market Needs Local Newsrooms


The “watch dogs” keeping an eye on local politics are disappearing and that is resulting in higher borrowing costs for small issuers. A recent study entitled “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance” details the costs associated with issuing debt in small towns that have lost their local newspaper.

Many small town newspapers are closing due to a decline in subscribers and local advertising. Traditionally, these papers invested time and resources in following local governments, and dedicated print space to keeping citizens well-informed regarding the activities of city officials, while holding those officials accountable for their decisions. A Pew Research report indicated that a 27% drop in newspaper subscribers from 2003 to 2014 resulted in a 35% drop in State House reporters. These reporters had been gathering information on local governments and reporting their findings. There is concern that a reduction in, or lack of, reporting may lead to increased government waste, less effective schools, and an increase in incidents of corruption. When local governments are not held accountable for their decisions, investors in the debt issued by these governments are likely to require a higher rate of interest to offset the perceived risks.

There are many examples around the country that highlight the value of political reporting by local newspapers – here are a few that we find interesting. A city in Utah decided to construct a new City Hall, and the construction plans included demolishing a school building and closing a portion of a main road. When the local newspaper reported on the decision, the city’s residents opposed the decisions made by local leaders. After months of pressure, city officials decided to rescind the decision to build the new City Hall. Read more “Muni Market Needs Local Newsrooms”


PERS Liabilities and Local Management of Aquila Tax-Free Trust of Oregon Highlighted by Oregon Business


Tim Iltz

Aquila Tax-Free Trust of Oregon Co-Portfolio Manager and Credit Analyst, Tim Iltz, recently shared his insights on Oregon’s Public Employees Retirement System (PERS) in an article published by Oregon Business, How PERS Liabilities Vary Wildly Across State. Tim’s knowledge of how PERS funding liabilities affect Oregon’s state and local governments illustrates the value of a local management presence, and the ongoing credit analysis provided by Aquila Group of Funds.

Although the PERS system is underfunded, many Oregon local governments have managed to develop budgeting practices and financial management policies specifically addressing this concern. The local management team of Aquila Tax-Free Trust of Oregon consistently monitors all credits in the portfolio.

When researching municipal bond issuers and PERS employers with significant unfunded pension liabilities, credit analysis and due diligence can put pension liabilities into context to determine the potential extent to which PERS funding may be impaired; a situation which varies from employer to employer. Pension concerns and the complexities and nuances of PERS funding heighten the importance of local credit analysis and selective portfolio management.


Seasonality in the Municipal Bond Market


Summertime typically finds municipal bond investors spending more time away from home – and potentially discovering that some of the individual municipal bonds they hold have converted to cash.

In the municipal bond market, summer has come to be known as the season for redemptions, since the months of June through August have a higher proportion of maturity dates and call dates than any other period of the year. During the upcoming summer season, the available supply of municipal bonds may decline significantly. This year, we expect to see maturing outstanding municipal bonds exceed new issue supply by roughly $80 billion; double the $40 billion average of the past few years.

This estimate is being based on forecasts indicating that more than $146 billion in outstanding bonds will either reach their final maturity date or be called on an optional call date. The difference between the volume of new issues and redemptions is often referred to as “net new issuance”. This year, net new issuance of negative $80 billion will leave investors challenged to replace their tax-exempt holdings and maintain their double-tax free income streams. This situation may be particularly problematic in states where the income tax rates are high, creating high demand for in-state municipal bonds.

For example, the State of Arizona is forecast to experience nearly $5 billion in redemptions, making it the 8th highest state in the nation for redemptions during this period – even though it normally ranks near the middle of the 50 states for overall issuance. (Source: Bloomberg)
Read more “Seasonality in the Municipal Bond Market”