AQUILA
TAX-FREE TRUST OF ARIZONA
380 Madison Avenue, Suite 2300, New York, N.Y. 10017
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
on October 24, 1998
TO OUR SHAREHOLDERS:
The purpose of this Notice is to advise you that an Annual
Meeting of the Shareholders of Tax-Free Trust of Arizona (the
"Trust") will be held:
Place: (a) at Ritz-Carlton/Phoenix
2401 E. Camelback Road
Phoenix, AZ 85016
Time: (b) on October 24, 1998
at 10:00 a.m., local time;
Purposes: (c) for the following purposes:
(i) to elect seven Trustees; each Trustee elected
will hold office until the next annual meeting of
the Trust's shareholders or until his or her
successor is duly elected;
(ii) to ratify (that is, to approve) or reject the
selection of KPMG Peat Marwick LLP as the Trust's
independent auditors for the fiscal year ending
June 30, 1999 (Proposal No. 1); and
PLEASE NOTE:
If you do not expect to attend the Meeting, you are requested to
indicate voting instructions on the enclosed proxy and to date,
sign and return it in the accompanying stamped envelope. To avoid
unnecessary expense to the Trust, your cooperation is requested
in mailing in your proxy no matter how large or small your
holding may be.
(iii) to act upon any other matters which may
properly come before the Meeting at its scheduled
time and place or any adjourned meeting or
meetings.
Who Can
Vote What
Shares: (d) To vote at the Meeting, you must have been a
shareholder on the Trust's records at the close of
business on August 10, 1998 (the "record date").
Also, the number of shares of each of the Trust's
three outstanding classes of shares that you held
at that time and the respective net asset values
of each class of shares at that time determine the
number of votes you may cast at the Meeting (or
any adjourned meeting or meetings).
By Order of the Board of Trustees,
EDWARD M. W. HINES
Secretary
September 8, 1998
<PAGE>
AQUILA
Tax-Free Trust of Arizona
380 Madison Avenue, Suite 2300, New York, New York 10017
PROXY STATEMENT
INTRODUCTION
The purpose of the Notice (the first two pages of this
document) is to advise you of the time, place and purposes of an
Annual Meeting of the Shareholders of Tax-Free Trust of Arizona
(the "Trust"). The purpose of this proxy statement (all the
remainder of this document) is to give you information on which
you may base your decisions as to the choices, if any, you make
on the enclosed proxy card.
A copy of the Trust's most recent annual report and most
recent semi-annual report will be sent to you without charge upon
written request to the Trust's Distributor, Aquila Distributors,
Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by
calling 800-437-1020 toll-free or 212-697-6666.
The Trust's organizer and Manager (the "Manager") is Aquila
Management Corporation, 380 Madison Avenue, Suite 2300, New York,
NY 10017. The Trust's principal underwriter (the "Distributor")
is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New
York, NY 10017. The Trust's Investment Sub-Adviser (the "Sub-
Adviser") is Banc One Investment Advisors Corporation, 241 North
Central Avenue, Phoenix, AZ 85004.
This Notice and Proxy Statement are first being mailed on or
about September 8, 1998.
The enclosed proxy card authorizes the persons named (or
their substitutes) to vote your shares; the Trust calls these
persons the "proxy holders." As to the election of Trustees you
may authorize the proxy holders to vote your shares for the
entire slate indicated below by marking the appropriate box on
the proxy card or by merely signing and returning your proxy card
with no instructions. Or, you may withhold the authority of the
proxy holders to vote on the election of Trustees by marking the
appropriate box. Also, you may withhold that authority as to any
particular nominee by following the instructions on the proxy
card.
As to the other matter listed on the proxy card, you may
direct the proxy holders to vote your shares on that proposal by
checking the appropriate box "For" or "Against" or instruct them
not to vote your shares on the proposal by checking the "Abstain"
box. If you return your signed proxy card and do not check any
box on the proposal, the proxy holders will vote your shares for
the proposal. Shares held by brokers in "street name" and not
voted or marked as abstentions will not be counted for purposes
of determining a quorum.
You may end the power of the proxy holders to vote your
shares, after you have signed and returned your proxy card but
before the power is used, by: (i) so notifying the Trust in
writing; (ii) signing a new and different proxy card (if the
Trust receives it before the old one is used); or (iii) voting
your shares at the meeting in person or by your duly appointed
agent.
The Trust is sending you this Notice and Proxy Statement in
connection with the solicitation by its Trustees of proxy cards
("proxies") to be used at the Annual Meeting to be held at the
time and place and for the purposes indicated in the Notice or
any adjourned meeting or meetings. The Trust pays the costs of
the solicitation. Proxies are being solicited by the use of the
mails; they may also be solicited by telephone, facsimile and
personal interviews. Brokerage firms, banks and others may be
requested to forward this Notice and Proxy Statement to
beneficial owners of the Trust's shares so that these owners may
authorize the voting of these shares. The Trust will pay these
firms for their out-of-pocket expenses for doing so.
On the record date, the Trust had three classes of shares
outstanding. All shareholders of the Trust of all classes are
entitled to vote at the meeting. Each shareholder on the record
date is entitled to one vote for each dollar (and a proportionate
fractional vote for each fraction of a dollar) of net asset value
(determined as of the record date) represented by full and
fractional shares of any class held on the record date. On the
record date, the net asset value per share of each of the Trust's
outstanding classes of shares was as follows: Class A Shares,
$10.85; Class C Shares, $10.87; and Class Y Shares, $10.88. The
meeting is expected to act only upon matters that affect the
Trust as a whole: the election of Trustees and the action on the
selection of auditors (Proposal No. 1). On matters that affect
the Trust as a whole, all shareholders of the Trust, including
the shareholders of all classes of the Trust, are entitled to
vote at the meeting.
On the record date the total number of each class of shares
of the Trust outstanding and entitled to vote was: Class A
Shares, 36,344,478; Class C Shares, 79,167; and Class Y Shares,
11,734. Dean Witter, 5 World Trade center, 6th Floor, New York,
NY held 58,923 C Shares in 7 accounts (74.4% of the class). On
the basis of information received from the holder, the Trust's
management believes that all of the shares indicated are held for
the benefit of clients. R. F. Marotta, Brooklyn, NY held of
record 2,417 Class Y Shares (20.6% of the class); L. Marotta,
Brooklyn, NY held of record 1,965 Class Y Shares (16.7% of the
class); E.H. Zube and M.J. Zube, Trustees, Tucson, AZ held of
record 4,013 Class Y Shares (34.2% of the class) and M. Zube,
Trustee, held of record 3,327 Class Y Shares (28.4% of the
class). The Trust's management is not aware of any other person
beneficially owning more than 5% of any class of its outstanding
shares as of such date.
ELECTION OF TRUSTEES
At the Meeting, seven Trustees are to be elected. Whenever
it is stated in this Proxy Statement that a matter is to be acted
on at the Meeting, this means the Meeting held at the scheduled
time or any adjourned meeting or meetings.
Each Trustee elected will serve until the next annual
meeting or until his or her successor is duly elected. The
nominees selected by the Trustees are named in the table below.
See "Introduction" above for information as to how you can
instruct the proxy holders as to the voting of your shares as to
the election of Trustees.
All of the nominees are presently Trustees and were elected
by the shareholders in November, 1997. Mr. Herrmann, Mr.
Courtney, Mr. Ensign and Ms. Mills have been Trustees since the
beginning of the Trust's operations in 1986. Mr. Carlson has been
a Trustee since 1987. Ms. Herrmann and Mr. Lucking have been
Trustees since 1994. In the material below and elsewhere in this
Proxy Statement, Aquila Management Corporation is referred to as
the "Manager" and the Trust's Distributor, Aquila Distributors,
Inc., is referred to as the "Distributor." Mr. Herrmann is an
interested person of the Trust as that term is defined in the
Investment Company Act of 1940 (the "1940 Act") as an officer of
the Trust and a director, officer and shareholder of the Manager
and the Distributor. Ms. Herrmann is an interested person of the
Trust as an officer of the Trust and the Manager and a
shareholder of the Distributor. Each is also an interested person
as a member of the immediate family of the other. They are so
designated by an asterisk.
Described in the following material are the name, positions
with the Trust, age as of August 10, 1998 and business experience
during at least the past five years (other than with the Trust)
of each nominee and all officers of the Trust. All shares listed
as owned by the Trustees are Class A Shares unless indicated
otherwise.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, Age: 69, Shares Owned: 202 (1)
Founder and Chairman of the Board of Aquila Management
Corporation since 1984, the sponsoring organization and Manager
or Administrator and/or Adviser or Sub-Adviser to the following
open-end investment companies, and Founder, Chairman of the Board
of Trustees, and President of each: Hawaiian Tax-Free Trust since
1984; Tax-Free Trust of Oregon since 1986; Tax-Free Fund of
Colorado since 1987; Churchill Tax-Free Fund of Kentucky since
1987; Tax-Free Fund For Utah since 1992; and Narragansett Insured
Tax-Free Income Fund since 1992; each of which is a tax-free
municipal bond fund, and two equity funds, Aquila Rocky Mountain
Equity Fund since 1993 and Aquila Cascadia Equity Fund since
1996, which, together with this Trust are called the Aquila Bond
and Equity Funds; Pacific Capital Cash Assets Trust since 1984;
Churchill Cash Reserves Trust since 1985; Pacific Capital U.S.
Government Securities Cash Asset Trust since 1988; Pacific
Capital Tax-Free Cash Assets Trust since 1988; each of which is a
money market fund, and together with Capital Cash Management
Trust ("CCMT") are called the Aquila Money-Market Funds; Vice
President and Director, and formerly Secretary, of Aquila
Distributors, Inc. since 1981, distributor of the above funds;
President and Chairman of the Board of Trustees of CCMT, a money
market fund since 1981, and an Officer and Trustee/Director of
its predecessors since 1974; Chairman of the Board of Trustees
and President of Prime Cash Fund (which is inactive), since 1982
and of Short Term Asset Reserves 1984-1996; President and a
Director of STCM Management Company, Inc., sponsor and sub-
adviser to CCMT; Chairman, President, and a Director since 1984,
of InCap Management Corporation, formerly sub-adviser and
administrator of Prime Cash Fund and Short Term Asset Reserves,
and Founder and Chairman of several other money market funds;
Director or Trustee of OCC Cash Reserves, Inc. and Quest For
Value Accumulation Trust, and Director or Trustee of Oppenheimer
Quest Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc.
and Oppenheimer Rochester Group of Funds, each of which is an
open-end investment company; Trustee of Brown University, 1990-
1996 and currently Trustee Emeritus; actively involved for many
years in leadership roles with university, school and charitable
organizations.
(1) In addition, the Manager holds of record 11 Class Y Shares.
Arthur K. Carlson, Trustee, Age: 76, Shares Owned: 4,284
Retired; Advisory Director of the Renaissance Companies (design
and construction companies of commercial, industrial and upscale
residential properties) since 1996; Senior Vice President and
Manager of the Trust Division of The Valley National Bank of
Arizona, 1977-1987; Trustee of Tax-Free Fund of Colorado,
Hawaiian Tax-Free Trust, and Pacific Capital Cash Assets Trust
since 1987, of Pacific Capital Tax-Free Cash Assets Trust and
Pacific Capital U.S. Government Securities Cash Assets Trust
since 1988 and of Aquila Rocky Mountain Equity Fund since 1993;
previously Vice President of Investment Research at Citibank, New
York City, and prior to that Vice President and Director of
Investment Research of Irving Trust Company, New York City; past
President of The New York Society of Security Analysts and
currently a member of the Phoenix Society of Financial Analysts;
formerly Director of the Financial Analysts Federation; past
Chairman of the Board and past Director of Mercy Healthcare of
Arizona, Phoenix, Arizona; Director of St. Joseph's Hospital
Foundation since 1996 and Director of Northern Arizona University
Foundation since 1990, present or formerly an officer and/or
director of various other community and professional
organizations.
Thomas W. Courtney, Trustee, Age: 65, Shares Owned: 656
President of Courtney Associates, Inc., a venture capital firm,
since 1988; General Partner of Trivest Venture Fund, 1983-1988;
President of Federated Investment Counseling Inc., 1975-1982;
President of Boston Company Institutional Investors, Inc., 1970-
1975; formerly a Director of the Financial Analysts Federation;
Trustee of Hawaiian Tax-Free Trust and Pacific Capital Cash
Assets Trust since 1984, and of Pacific Capital Tax-Free Cash
Assets Trust and Pacific Capital U.S. Government Securities Cash
Assets Trust since 1988; Trustee of numerous Oppenheimer Capital
and Oppenheimer Management Funds.
William L. Ensign, Trustee, Age: 69, Shares Owned: 677 (2)
Planning and Architectural Consultant; Acting Architect of the
United States Capital 1995-1997; Assistant Architect of the
United States Capital 1980-1995; previously President and CEO,
McLeod Ferrara Ensign, an international planning and design firm
based in Washington DC; Fellow and former Director of the
American Institute of Architects; District of Columbia Zoning
Commissioner 1989-1997; member, U.S. Capitol Police Board 1995-
1997, National Advisory Council on Historic Preservation 1989-
1997, National Capital Memorial Commission 1989-1997; Acting
Director of the U.S. Botanic Garden 1995-1997; Trustee, National
Building Museum 1995-1997; Trustee of Tax-Free Fund For Utah
since 1991; Trustee of Oxford Cash Management Fund, 1983-1989.
(2) Held jointly with his wife.
Diana P. Herrmann*, Trustee, Age: 40, Shares Owned: 481
Trustee of Tax-Free Trust of Oregon since 1994, of Churchill Tax-
Free Fund of Kentucky and Churchill Cash Reserves Trust since
1995, of Aquila Cascadia Equity Fund since 1996 and of Aquila
Rocky Mountain Equity Fund, Capital Cash Management Trust and
Tax-Free Fund for Utah since 1997; President and Chief Operating
Officer of the Manager since 1997; Senior Vice President and
Secretary, and formerly Vice President, of the Manager since 1986
and Director since 1984; Senior Vice President or Vice President
and formerly Assistant Vice President of the Aquila Money-Market
Funds since 1986; Senior Vice President or Vice President of the
Aquila Bond and Equity Funds since 1997; Vice President of InCap
Management Corporation since 1986 and Director since 1983;
Assistant Vice President of Oxford Cash Management Fund, 1986-
1988 and Prime Cash Fund 1986-1996; Assistant Vice President and
formerly Loan Officer of European American Bank, 1981-1986;
daughter of the Trust's President; Trustee of the Leopold Schepp
Foundation (academic scholarships) since 1995; actively involved
in mutual fund and trade associations and in college and other
volunteer organizations.
John C. Lucking, Trustee, Age: 55, Shares Owned: 1,276
President, Econ-Linc, an economic consulting firm, since 1995;
Consulting Economist, Bank One Arizona (formerly Valley National
Bank of Arizona) 1994-1996; Chief Economist, Valley National Bank
of Arizona, 1987-1994; Municipal bond analyst and government
securities institutional sales representative, Valley National
Bank of Arizona, 1984-1987; Financial Analyst, Phelps Dodge
Corporation (a mining company) 1980-1984; Director of New Mexico
and Arizona Land Company since 1993; Director of Northern Arizona
University Investment Committee since 1997; Director SANU
Resources and SHRI (privately held mining and exploration
companies) since 1996; Director: Arizona Historical Foundation
and The Arizona Mining and Mineral Museum Foundation. Member:
Joint Legislative Budget Committee Economic Advisory Panel;
Western Blue Chip Economic Forecast Panel; The Economic Club of
Phoenix; The Arizona Economic Roundtable; The National
Association of Business Economists and the National Association
of Corporate Directors.
Anne J. Mills, Trustee, Age: 59, Shares Owned: 764
Vice President for Business Affairs of Ottawa University since
1992; Director of Customer Fulfillment, U.S. Marketing and
Services Group, IBM Corporation, 1990-1991; Director of Business
Requirements of that Group, 1988-1990; Director of Phase
Management of that Group, 1985-1988; Budget Review Officer of the
American Baptist Churches/USA, 1994-1997; Director of the
American Baptist Foundation 1985-1986 and since 1998; Trustee of
Brown University; Trustee of Churchill Cash Reserves Trust since
1985,, of Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of
Colorado and Capital Cash Management Trust since 1987 and of Tax-
Free Fund For Utah since 1994.
William C. Wallace, Senior Vice President, Age: 63
Vice President of Capital Cash Management Trust and Pacific
Capital Cash Assets Trust since 1984; Senior Vice President of
Hawaiian Tax-Free Trust since 1985 and Vice President, 1984-1985;
Vice President of Tax-Free Trust of Oregon since 1986, of
Churchill Tax-Free Fund of Kentucky and Tax-Free Fund of Colorado
since 1987, of Pacific Capital Tax-Free Cash Assets Trust and
Pacific Capital U.S. Government Securities Cash Assets Trust
since 1988 and of Narragansett Insured Tax-Free Income Fund since
1992; Secretary and Director of STCM Management Company, Inc.
since 1974; President of the Distributor 1995-1998 formerly Vice
President of the Distributor, 1986-1992; Member of the Panel of
Arbitrators, American Arbitration Association, since 1978;
Assistant Vice President, American Stock Exchange, Market
Development Division, and Director of Marketing, American Gold
Coin Exchange, a subsidiary of the American Stock Exchange, 1976-
1984.
Susan A. Cook, Vice President, Age: 43
Registered Representative of Aquila Distributors, Inc. since
1993; Account Executive, Cowen & Company, Members of the New York
Stock Exchange, 1988-1991. Institutional Sales and Trading at
Robertson, Stephens, & Montgomery Securities in San Francisco,
CA, 1981-1986.
Rose F. Marotta, Chief Financial Officer, Age: 74
Chief Financial Officer of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1991 and Treasurer, 1981-1991;
formerly Treasurer of the predecessor of CCMT; Treasurer and
Director of STCM Management Company, Inc., since 1974; Treasurer
of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash
Management Fund, 1982-1988; Treasurer of InCap Management
Corporation since 1982, of the Manager since 1984 and of the
Distributor since 1985.
Richard F. West, Treasurer, Age: 62
Treasurer of the Aquila Money-Market Funds and the Aquila Bond
and Equity Funds and of Aquila Distributors, Inc. since 1992;
Associate Director of Furman Selz Incorporated, 1991-1992; Vice
President of Scudder, Stevens & Clark, Inc. and Treasurer of
Scudder Institutional Funds, 1989-1991; Vice President of Lazard
Freres Institutional Funds Group, Treasurer of Lazard Freres
Group of Investment Companies and HT Insight Funds, Inc., 1986-
1988; Vice President of Lehman Management Co., Inc. and Assistant
Treasurer of Lehman Money Market Funds, 1981-1985; Controller of
Seligman Group of Investment Companies, 1960-1980.
Edward M. W. Hines, Secretary, Age: 58
Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines &
Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary
of the Aquila Money-Market Funds and the Aquila Bond and Equity
Funds since 1982; Secretary of Trinity Liquid Assets Trust, 1982-
1985 and Trustee of that Trust, 1985-1986; Secretary of Oxford
Cash Management Fund, 1982-1988.
John M. Herndon, Assistant Secretary, Age: 58
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995 and Vice President of the
Aquila Money-Market Funds since 1990; Vice President of the
Manager since 1990; Investment Services Consultant and Bank
Services Executive of Wright Investors' Service, a registered
investment adviser, 1983-1989; Member of the American Finance
Association, the Western Finance Association and the Society of
Quantitative Analysts.
Patricia A. Craven, Assistant Secretary & Compliance Officer
Age: 32
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995; Counsel to the Manager
and the Distributor since 1995; Secretary of the Distributor
since 1997; formerly a Legal Associate for Oppenheimer Management
Corporation, 1993-1995.
Compensation of Trustees
The Trust does not pay fees to Trustees affiliated with the
Manager or to any of the Trust's officers. During the fiscal year
ended June 30, 1998, the Trust paid $92,409 in fees and
reimbursement of expenses to its other Trustees. The Trust is one
of 14 funds in the Aquilasm Group of Funds, which consist of
tax-free municipal bond funds, money market funds and equity
funds. The following table lists the compensation of all Trustees
who received compensation from the Trust and the compensation
they received during the Trust's fiscal year from other funds in
the Aquilasm Group of Funds. None of such Trustees has any
pension or retirement benefits from the Trust or any of the other
funds in the Aquila group.
<TABLE>
<CAPTION>
Compensation Number of
from all boards on
Compensation funds in the which the
from the Aquilasm Trustee
Name Trust Group now serves
<S> <C> <C> <C>
Arthur K. Carlson $9,161 $56,259 7
Thomas W. Courtney $9,815 $49,849 5
William L. Ensign $10,334 $13,928 2
John C. Lucking $8,600 $8,600 1
Anne J. Mills $10,394 $33,911 6
The Manager is manager or administrator to the Aquilasm
Group of Funds which consists of tax-free municipal bond funds,
money market funds and equity funds. As of June 30, 1998, these
funds had aggregate assets of approximately $3.0 billion, of
which approximately $1.9 billion consisted of assets of the tax-
free municipal bond funds. The Manager is controlled by Mr. Lacy
B. Herrmann, through share ownership directly, through a trust
and by his wife. For the Trust's fiscal year ended June 30, 1998
fees of $279,112 were accrued to each of the Manager and Sub-
Adviser under the former advisory and administration agreements
in effect through November 6, 1997, and $1,022,516 was accrued to
the Manager, of which $511,258 was paid to the Sub-Adviser, under
the Advisory and Administration and Sub-Advisory agreements in
effect thereafter.
The Distributor currently handles the distribution of the
shares of fourteen funds (five money market funds, seven tax-free
municipal bond funds and two equity funds), including the Trust.
Under the Distribution Agreement, the Distributor is responsible
for the payment of certain printing and distribution costs
relating to prospectuses and reports as well as the costs of
supplemental sales literature, advertising and other promotional
activities. The shares of the Distributor are owned 75% by Mr.
Herrmann and 25% by Diana P. Herrmann. During the fiscal year
ended June 30, 1998, $592,052 was paid under the Trust's
Distribution Plan to Qualified Recipients with respect to Class A
Shares, of which $21,386 was retained by the Distributor. All of
such payments were for compensation. During the Trust's fiscal
year ended June 30, 1998, under the Plan and under the Trust's
Shareholder Services Plan, $4,622 was paid with respect to the
Trust's Class C Shares of which $4,330 was retained by the
Distributor. All of such payments were for compensation.
At the date of this proxy statement, there is a proposed
transaction whereby all of the shares of the Distributor, which
are currently owned by Mr. Herrmann and Ms. Herrmann, will be
owned by certain directors and/or officers of the Manager and/or
the Distributor including Mr. Herrmann and Ms. Herrmann.
Other Information on Trustees
The Trustees have appointed an Audit Committee consisting of
all of the Trustees (the "Independent Trustees") who are not
"interested persons" of the Trust, as that term is defined in the
1940 Act. The Committee (i) recommends to the Board of Trustees
what firm of independent auditors will be selected by the Board
of Trustees (subject to shareholder ratification); (ii) reviews
the methods, scope and result of audits and the fees charged; and
(iii) reviews the adequacy of the Trust's internal accounting
procedures and controls. The Committee held two meetings during
the Trust's last fiscal year. The Board of Trustees does not have
a nominating committee. During the Trust's last fiscal year, the
Board of Trustees held four meetings. All Trustees were present
for at least 75% of the total number of Board meetings and Audit
Committee Meetings (if such Trustee was a member of that
Committee).
RATIFICATION OR REJECTION
OF SELECTION OF
INDEPENDENT AUDITORS
(Proposal No. 1)
KPMG Peat Marwick LLP, which is currently serving as the
Trust's auditors, has been selected by the Trust's Board of
Trustees, including a majority of the Independent Trustees, as
the Trust's independent auditors for the fiscal year ending June
30, 1999. Such selection is submitted to the shareholders for
ratification or rejection.
The firm has no direct or indirect financial interest in the
Trust, the Trust's Manager or the Trust's Sub-Adviser. It is
expected that representatives of the firm not will be present at
the meeting but will be available should any matter arise
requiring their presence.
RECEIPT OF
SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange
Commission, shareholder proposals meeting tests contained in
those rules may, under certain conditions, be included in the
Trust's proxy statement and proxy card for a particular annual
meeting. One of these conditions relates to the timely receipt by
the Trust of any such proposal. Under these rules, proposals
submitted for inclusion in the proxy material for the Trust's
next annual meeting after the meeting to which this Proxy
Statement relates must be received by the Trust not less than 120
days before the anniversary of the date stated in this Proxy
Statement for the first mailing of this Proxy Statement. The date
for such submission could change, depending on the scheduled date
for the next annual meeting; if so, the Trust will so advise you.
The fact that the Trust receives a shareholder proposal in a
timely manner does not insure its inclusion in the Trust's proxy
material, since there are other requirements in the proxy rules
relating to such inclusion.
OTHER BUSINESS
The Trust does not know of any other matter which will come
up for action at the Meeting. If any other matter or matters
properly come up for action at the Meeting, including any
adjournment of the Meeting, the proxy holders will vote the
shares which the proxy cards entitle them to vote in accordance
with their judgment on such matter or matters. That is, by
signing and returning your proxy card, you give the proxy holders
discretionary authority as to any such matter or matters.
<PAGE>
TAX-FREE TRUST OF ARIZONA
PROXY FOR SHAREHOLDERS MEETING OCTOBER 24, 1998
PROXY SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned shareholder of TAX-FREE TRUST OF ARIZONA
(the "Trust") does hereby appoint LACY B. HERRMANN, DIANA P.
HERRMANN and EDWARD M. W. HINES, or any of them, as attorneys and
proxies of the undersigned, with full power of substitution, to
attend the Annual Meeting of Shareholders of Tax-Free Trust of
Arizona to be held on October 24, 1998, at the Ritz Carlton /
Phoenix, 2401 E. Camelback Road, Phoenix, AZ 85016 at 10:00 a.m.
local time, and at all adjournments thereof, and thereat to vote
the shares held in the name of the undersigned on the record date
for said meeting on the matters listed below.
Please mark your proxy, date and sign it below and return it
promptly in the accompanying envelope which requires no postage
if mailed in the United States.
Management recommends a vote for all nominees listed below
and for the proposal listed below. The shares represented hereby
will be voted as indicated below or FOR if no choice is
indicated.
As to any other matter said attorneys shall vote in
accordance with their best judgment.
Election of Trustees
__
[__] For All
__
[__] Withhold All
__
[__] For All Except
To withhold authority to vote, mark "For All Except" and write
the nominee's number on the line below.
---------------
(1) LACY B. HERRMANN; (2) ARTHUR K. CARLSON;
(3) THOMAS W. COURTNEY; (4) WILLIAM L. ENSIGN;
(5) DIANA P. HERRMANN; (6) JOHN C. LUCKING; (7) ANNE J. MILLS;
Vote On Proposal
Ratification of selection of KPMG Peat Marwick LLP as
independent auditors (Proposal No.1 in Proxy Statement)
__ __ __
FOR [__] AGAINST [__] ABSTAIN [__]
Please check here if planning to attend the Annual Meeting of
Shareholders.
__
[__]
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as a custodian, attorney, executor, administrator, trustee,
guardian, etc., please sign your full title as such. Joint
owners should each sign.
__________________________________
Signature (PLEASE SIGN WITHIN BOX) Date
__________________________________
Signature (Joint Owners) Date
</TABLE>
