Important Notice
Please Read Immediately
Aquilasm
Group of Funds
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 25, 2000
To shareholders of the Trust:
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 the Ritz-Carlton/Phoenix
2401 E. Camelback Road
Phoenix, AZ;
Time: (b) on October 25, 2000
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
(Proposal No. 1);
(ii) to ratify (that is, to approve) or
reject the selection of KPMG LLP as the Trust's
independent auditors for the fiscal year ending
June 30, 2001 (Proposal No. 2);
(iii) to act upon a proposal to change the
fundamental policies of the Trust to allow the use
of additional nationally recognized statistical
rating organizations for rating obligations the
Trust may purchase (Proposal No. 3);
(iv) to act upon any other matters which
may properly come before the Meeting at the
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 1, 2000 (the "record date").
Also, the number of shares of each of the Trust's
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
August 25, 2000
Please Note:
If you do not expect to attend the Meeting, please indicate
voting instructions in any of three ways: by telephone, by e-mail
or by completing the enclosed proxy card and returning it in the
accompanying stamped envelope. To avoid unnecessary expense to
the Trust, we request your cooperation in voting no matter how
large or small your holding may be.
<PAGE>
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 rest
of this document) is to give you information on which you may
base your decisions as to the choices, if any, you make in
voting.
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 founder 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 August 25, 2000.
You should read the Proxy Statement prior to voting. Then,
you may vote in one of three ways:
Proxy Card
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 matters listed on the proxy card, you may
direct the proxy holders to vote your shares on these proposals
by marking the appropriate box "For" or "Against" or instruct
them not to vote your shares on the proposal by marking the
"Abstain" box. If you return your signed proxy card and do not
mark the box on a proposal, the proxy holders will vote your
shares for that proposal.
Telephone Voting
To vote your shares by telephone, call the toll free
number on your proxy card. You will be prompted to enter the
control number on your proxy card. Follow the recorded
instructions using your proxy card as a guide. If you vote by
phone, you need not return the proxy card by mail.
Internet Voting
To vote your shares by the Internet, please contact the
Trust at the address shown on your proxy card. You will be
prompted to enter the control number on your proxy card. Follow
the instructions on the screen, using your proxy card as a guide.
If you vote by the Internet, you need not return the proxy card
by mail.
General Information
You may end the power of the proxy holders to vote your
shares 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); (iii) voting your shares at the meeting in
person or by your duly appointed agent; or (iv) calling the toll
free number described above or contacting the Trust's Internet
address described above, entering your control number and
revoking your previous vote.
Shares held by brokers in "street name" and not voted or
marked as abstentions will not be counted for purposes of
determining a quorum or voted on any matter. This policy may make
it more difficult to obtain the vote required to approve Proposal
No. 3.
The Trust is sending you this Notice and Proxy Statement in
connection with the solicitation by its Trustees of 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. 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.
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
their shares. The Trust will pay these firms 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 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, $10.25; Class C Shares,
$10.25; and Class Y Shares, $10.28. 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 proposals. 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 shares outstanding
for each class of shares was as follows: Class A Shares,
35,150,041; Class C Shares, 300,578; and Class Y Shares,
163,558.
On the record date, the following institutional holders held
5% or more of the Trust's outstanding shares. On the basis of
information received from the holders the Trust's management
believes that all of the shares indicated are held for the
benefit of clients
Name and address Number of shares Percent of class
of the holder of
record
Zions First National Bank
P.O. Box 30880,
Salt Lake City, UT 134,151 Class Y Shares (82%)
(held in 2 accounts)
Donaldson Lufkin Jenrette
Securities Corporation,
P.O. Box 2052,
Jersey City, NJ 211,173 Class C Shares (70%)
(held in 9 accounts)
Additional 5% shareholders
Margaret Zube 27,976 Class Y Shares(1) (17%)
Trustee
7045 Comino De Fosforo
Tucson, AZ
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.
(1) Held as Trustee of 2 Trusts.
Election of Trustees
(Proposal No. 1)
At the Meeting, seven Trustees are to be elected. 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 1999. The Trustees and officers
as a group own less than 1% of the outstanding shares of the
Trust. 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, director and shareholder of the Manager and
a shareholder and director of the Distributor. Each is also an
interested person as a member of the immediate family of the
other. Mr. Carlson is an interested person as a shareholder of
the Sub-Adviser's corporate parent, Banc One Corporation. They
are so designated by an asterisk.
In the following material Hawaiian Tax-Free Trust, Tax-Free
Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of
Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett
Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila
Bond Funds"; Pacific Capital Cash Assets Trust, Capital Cash
Management Trust, Capital Cash U.S. Government Securities Trust,
Churchill Cash Reserves Trust, Pacific Capital U.S. Government
Securities Cash Assets Trust and Pacific Capital Tax-Free Cash
Assets Trust, each of which is a money-market fund, are called
the "Aquila Money-Market Funds"; and Aquila Cascadia Equity Fund
and Aquila Rocky Mountain Equity Fund are called the "Aquila
Equity Funds."
Described in the following material are the name, address,
positions with the Trust, age as of the record date and business
experience during at least the past five years of each nominee
and each officer of the Trust. All shares listed as owned by the
Trustees are Class A Shares unless indicated otherwise.
<TABLE>
<CAPTION>
<S> <C> <C>
Name, Position Business Experience
with the Trust,
Address, Age,
Shares owned
Lacy B. Herrmann* Founder and Chairman of the Board of Aquila
Chairman of the Management Corporation, the sponsoring
Board of Trustees organization and Manager or Administrator
380 Madison Avenue and/or Adviser or Sub-Adviser to the
New York, NY Aquila Money-Market Funds, the Aquila Bond
10017 Funds and the Aquila Equity Funds,
Age: 71 and Founder, Chairman of the Board of Trustees
Shares Owned: 225 and (currently or until 1998) President of each
since its establishment, beginning in
1984; Director of Aquila Distributors,
Inc., distributor of the above funds,
since 1981 and formerly Vice President
or Secretary, 1981-1998; President and a
Director of STCM Management Company,
Inc., sponsor and sub-adviser to Capital
Cash Management Trust and Capital Cash
U.S. Government Securities Trust;
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.
Arthur K. Carlson* Retired; Advisory Director
Trustee of the Renaissance Companies
8702 North Via La Serena (design and construction
Paradise Valley, companies of commercial,
AZ 85253 industrial and upscale residential
Age: 78 properties) since 1996; Senior Vice President
Shares Owned: 5,317(1) and Manager of the Trust Division of The Valley
National Bank of Arizona, 1977-1987;
Trustee of Hawaiian Tax-Free Trust, Tax-
Free Trust of Arizona (this 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, of Aquila Rocky Mountain
Equity Fund since 1993 and of Tax-Free
Fund of Colorado, 1987-2000; 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 Northern Arizona University
Foundation since 1990, present or
formerly an officer and/or director of
various other community and professional
organizations.
(1) Held of record by a nominee
Thomas W. Courtney President of Courtney Associates, Inc.,
Trustee a venture capital firm, since 1988; General
P.O. Box 8186 Partner of Trivest Venture Fund, 1983-1988;
Naples, FL 33941 President of Federated Investment Counseling
Age: 66 Inc., 1975-1982; President of Boston Company
Shares owned: 732 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,
of Tax-Free Trust of Arizona (this
Trust) since 1986 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 Planning and Architectural Consultant;
Trustee Acting Architect of the United States Capital
766 Holly 1995-1997; Assistant Architect of the United
Drive North, States Capital 1980-1995; previously President
Annapolis, and CEO, McLeod Ferrara Ensign, an international
MD 20401 planning and design firm based in Washington DC;
Age: 71 Fellow and former Director of the American Institute
Shares Owned: 755(2) 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 Trust
of Arizona (this Trust) since 1986 and 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* President and Chief Operating Officer of
Trustee and President the Manager since 1997, a
380 Madison Director since 1984, Secretary since 1986
Avenue and previously its Executive Vice
New York, President, Senior Vice President
NY 10017 or Vice President, 1986-1997;
Age: 42 President of various Aquila Bond and
Shares Owned: 536 Money-Market Funds since 1998; Assistant
Vice President, Vice President, Senior
Vice President or Executive Vice
President of Aquila Money-Market, Bond
and Equity Funds since 1986; Trustee of
a number of Aquila Money-Market, Bond
and Equity Funds since 1995; Trustee of
Reserve Money-Market Funds, 1999-2000
and of Reserve Private Equity Series,
1998-2000; Assistant Vice President and
formerly Loan Officer of European
American Bank, 1981-1986; daughter of
the Trust's Chairman; 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 President, Econ-Linc, an economic consulting
Trustee firm, since 1995; Consulting Economist,
7537 North Bank One Arizona(formerly Valley National
Central Avenue Bank of Arizona) 1994-1996; Chief Economist,
Phoenix, AZ 85020 Valley National Bank of Arizona, 1987-1994;
Age: 57 Municipal bond analyst and government
Shares owned: 1,424 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;
Trustee of Tax-Free Trust of Arizona
(this Trust) since 1994 and of Tax-Free
Fund of Colorado since 2000.
Anne J. Mills Vice President for Business Affairs
Trustee of Ottawa University since 1992;
7030 East Shooting IBM Corporation, 1965-1991; Budget
Star Way, Review Officer of the American
Scottsdale, AZ Baptist Churches/USA, 1994-1997;
85262 Director of the American Baptist Foundation,
Age: 61 1985-1996 and since 1998; Trustee of Brown
Shares Owned: 852 University, 1992-1999; Trustee of Churchill
Cash Reserves Trust since 1985, of Tax-
Free Trust of Arizona (this Trust)
since 1986, 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.
Susan A. Cook, Registered Representative of Aquila
Senior Vice Distributors, Inc. since 1993; Senior
President Vice President of Tax-Free Trust of
6220 E. Thomas Arizona (this Trust), and Vice President
Road of Aquila Rocky Mountain Equity Fund; Account
Scottsdale, AZ Executive, SG Cowen & Company,
85251 Members of the New York Stock
Age: 45 Exchange, 1988-1991; Institutional
Sales at Robertson, Stephens, and Montgomery
Securities, 1981-1986.
Kimball L. Young Co-Founder of Lewis Young Robertson &
Senior Vice Burningham, Inc., an NASD licensed
President broker/dealer providing public
2049 Herbert finance services to Utah local
Avenue governments, 1995-present; Senior Vice
Salt Lake City, President of Tax-Free Trust of Arizona
UT 84108 (this Trust), Tax-Free Fund For Utah,
Age: 53 Aquila Cascadia Equity Fund and Aquila
Rocky Mountain Equity Fund; Formerly
Senior Vice President-Public Finance,
Kemper Securities Inc., Salt Lake City, Utah.
Alan R. Stockman Vice President of Tax-Free Trust of
Vice President Arizona (this Trust) and of Aquila Rocky
6220 E. Thomas Mountain Equity Fund since 1999; Bank
Road, Scottsdale One Commercial Client Services
Arizona 85251 representative, 1997-1999; National Bank of
Age: 46 Arizona (Zions Investment Securities Inc.),
Phoenix, Arizona 1996-1997; Investment
Department Manager, National Bank of
Alaska, Anchorage, Alaska 1984-1995.
Rose F. Marotta Chief Financial Officer of the Aquila
Chief Financial Officer Money-Market, Bond and Equity Funds
380 Madison Avenue since 1991 and Treasurer, 1981-1991;
New York, NY formerly Treasurer of the predecessor of
10017 Capital Cash Management Trust; Treasurer
Age: 76 and Director of STCM Management Company,
Inc., since 1974; Treasurer of InCap
Management Corporation since 1982, of
the Manager since 1984 and of the
Distributor, 1985-2000.
Richard F. West Treasurer of the Aquila Money-Market,
Treasurer Bond and Equity Funds and of Aquila
380 Madison Avenue Distributors, Inc. since 1992;
New York, NY Associate Director of Furman Selz
10017 Incorporated, 1991-1992; Vice
Age: 64 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.
Lori A Vindigni Assistant Vice President of Aquila Management
Assistant Treasurer Corporation since 1998, formerly Fund Accountant
380 Madison Avenue for the Aquila Group of Investment Companies
New York, NY since 1995; Staff Officer and Fund Accountant of
10017 Citibank Global Asset Management Group of
Age: 33 Investment Companies, 1994-1995; Fund Accounting
Supervisor of Dean Witter Group of
Investment Companies, 1990-1994; BS Kean
College of New Jersey, 1990.
Edward M. W. Hines Partner of Hollyer Brady Smith & Hines LLP,
Secretary attorneys, since 1989 and counsel,
551 Fifth Avenue 1987-1989; Secretary of the Aquila
New York, NY Money-Market, Bond and Equity Funds since
10176 1982; Secretary of Trinity Liquid Assets Trust,
Age: 60 1982-1985 and Trustee of that Trust,1985-1986;
Secretary of Oxford Cash Management
Fund, 1982-1988.
John M. Herndon Assistant Secretary of the Aquila Money-
Assistant Secretary Market, Bond and Equity Funds since 1995
380 Madison Avenue and Vice President of the Aquila Money-
New York, NY Market Funds since 1990; Vice President of
10017 the Manager since 1990; Investment
Age: 60 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.
Robert W. Anderson Compliance Officer since 1998 and Assistant
Assistant Secretary and Secretary of the Aquila Money-Market Funds
Compliance Officer and the Aquila Bond and Equity Funds;
380 Madison Avenue, Consultant, The Wadsworth Group, 1995-1998;
New York, Executive Vice President of Sheffield
NY 10017 Management Company (investment adviser and
Age: 59 distributor of a mutual fund group), 1986-1995.
The Trust does not currently pay fees to any of the Trust's
officers or to Trustees affiliated with the Manager or the Sub-
Adviser. For its fiscal year ended June 30, 2000 the Trust paid a
total of $47,850 in compensation and reimbursement of expenses to
the Trustees. No other compensation or remuneration of any type,
direct or contingent, was paid by the Trust to its Trustees.
The Trust is one of the 15 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 nominees for Trustees who received
compensation from the fund or from other funds in the Aquilasm
Group of Funds during the Trust's fiscal year. None of such
Trustees has any pension or retirement benefits from the Trust or
any of the other funds in the Aquila group.
Compensation Number of
from all boards on
Compensation funds which the
from the in the Trustee
Trust Aquilasm serves
Name Group of
Funds
Arthur K. Carlson $8,750 $64,750 6
Thomas W. Courtney $9,850 $52,000 5
William L. Ensign $9,650 $13,500 2
John C. Lucking $10,050 $11,100 2
Anne J. Mills $9,550 $39,550 6
Class A Shares may be purchased without a sales charge by
certain of the Trust's Trustees and officers.
The Trust's 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,
2000 these funds had aggregate assets of approximately $3.1
billion, of which approximately $1.8 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. During the fiscal year ended
June 30, 2000 the Trust incurred Management fees of $1,495,669.
During the fiscal year ended June 30, 2000, $554,839 was
paid under Part I of the Trust's Distribution Plan to Qualified
Recipients with respect to the Class A Shares, of which, $23,661
was retained by the Distributor. With respect to Class C Shares,
during the same period $14,821 was paid under Part II of the Plan
and $4,940 was paid under the Shareholder Services Plan.
Of these total payments of $19,761, the Distributor received
$13,630. All of such payments were for compensation.
The Distributor currently handles the distribution of the
shares of fifteen funds (six 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 72% by Mr.
Herrmann and other members of his immediate family, 24% by Diana
P. Herrmann and the balance by a former officer of the
Distributor.
Other Information on Trustees
The Trustees have appointed a standing 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 current 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. 2)
KPMG 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, 2001.
Such selection is submitted to the shareholders for ratification
or rejection.
The firm has no direct or indirect financial interest in the
Trust, the Manager or the Sub-Adviser. It is expected that
representatives of the firm will not be present at the meeting
but will be available should any matter arise requiring their
presence.
Action Regarding a Change
in the Trust's fundamental Policies
to Allow the Use of Additional
Nationally Recognized Statistical Rating Organizations
for Rating Obligations the Trust May Purchase
(Proposal No. 3)
Since beginning operations, the Trust has had a fundamental
policy that defines the "investment-grade" securities the Trust
may purchase as
those rated within the four highest credit ratings
assigned by Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Corporation ("S&P") or, if
unrated, determined to be of comparable quality.
When this fundamental policy was put in place Moody's and
S&P were essentially the only nationally recognized statistical
rating organizations ("NRSROs") with respect to municipal
obligations. In recent years, other organizations, notably Fitch
IBCA, Inc. ("Fitch"), have become active in rating municipal
obligations. Municipal bond issuers pay to have their bonds rated
and there is competition among the NRSROs. If an issuer chooses
to have its bonds rated by an NRSRO other than Moody's or S&P,
the current fundamental policy of the Trust has the effect of
requiring the Trust either to forego purchasing the bonds because
they are not rated by Moody's or S&P or to treat them as
"unrated" when in fact they do have ratings assigned by an NRSRO.
Both results distort the clear intent of the policy.
Accordingly the Board of Trustees has determined that it
would be in the best interest of the Trust and its shareholders
to change the fundamental policy so that the ratings used to
define "investment-grade" securities would include those assigned
by any NRSRO approved from time to time by the Board of Trustees.
At the present time, if the proposed change is adopted, the
Board of Trustees will approve Fitch in addition to Moody's and
S&P. The Board of Trustees has determined that the standards
Fitch employs in rating bonds are comparable to those of Moody's
and S&P and that bonds in the four highest categories rated by
Fitch are of comparable quality to those similarly rated by
Moody's and S&P.
Action Requested
The Board of Trustees recommends that the proposed change in the
Trust's fundamental policies described above be approved.
Vote Required
The favorable vote of the holders of a majority (as defined
in the 1940 Act) of the outstanding shares of the Trust is
required for the approval of this Proposal No. 3. Under the 1940
Act, the vote of the holders of a majority of the outstanding
shares of the Trust means the vote of the holders of the lesser
of (a) 67% or more of the shares of the Trust present at the
Meeting or represented by proxy if the holders of more than 50%
of such shares are so present or represented, or (b) more than
50% of the outstanding shares of the Trust, with 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 all of
the Trust's three classes of shares.
If this proposal is not approved, the Board of Trustees will
consider appropriate action, which could include continuing with
the present policies or calling another meeting of shareholders.
The meeting can be adjourned by the affirmative vote of a
majority of the shares present in person or by proxy. In voting
for an adjournment, the proxy holders will consider all relevant
factors, including possible delay of receipt of proxies and
whether or not a substantial number of negative votes have been
cast with respect to any proposal. The shares of shareholders who
have voted by proxy against a proposal will be voted against
adjournment.
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 your proxy card, telephone or internet vote entitles
them to vote, in accordance with their judgment on such matter or
matters, except as noted above. That is, by signing and returning
your proxy card or by voting by telephone or the Internet, you
give the proxy holders discretionary authority as to any such
matter or matters.
<PAGE>
IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
Arizona
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on October 25, 2000
PROXY STATEMENT
Aquilasm Group of Funds
TAX-FREE TRUST OF ARIZONA
Proxy for Shareholders Meeting October 25, 2000
Proxy Solicited on Behalf of the Board of 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 the Trust to be held
on Wednesday, October 25, 2000 at the Ritz-Carlton/Phoenix, 2401
E. Camelback Road, Phoenix, AZ; 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. Such shares are entitled to one vote
for every dollar of net asset value represented by the share
balance printed below.
Please read the proxy statement prior to voting.
Annual Meeting Attendance
We encourage you to attend the Annual Meeting of Shareholders. If
you can join us, please so indicate on the proxy card or e-mail
us at [email protected]
VOTE BY TELEPHONE OR INTERNET OR MAIL
24 Hours a day, 7 days a week
Telephone
1-800-690-6903
To vote your shares by telephone, call toll free 1-800-690-
6903. You will be prompted to enter the 12-digit control number
on this proxy card. Follow the simple recorded instructions using
this proxy card as a guide. If you vote by phone, you need not
return the proxy card by mail.
Internet
www.proxyvote.com
To vote your shares by the Internet, contact the Trust at
www.proxyvote.com You will be prompted to enter the 12-digit
control number on this proxy card. Follow the simple instructions
at the website, using your proxy card as a guide. If you vote by
the Internet, you need not return the proxy card by mail.
Mail
You can vote your shares by completing and returning this
proxy card. 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.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
_________________________________________________________________
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
TAX-FREE TRUST OF ARIZONA
For address changes and/or comments, please check this box
and write them on the back where indicated.
[_]
Vote on Trustees
(Proposal No.1 in Proxy Statement)
1. Election of Trustees
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
* interested Trustees
__
[__] For all
__
[__] Withhold all
__
[__] For all except
To withhold authority to vote for one or more (but not all)
nominees, mark "For all except" and write the nominee number(s)
and/ or name(s) on the line below.
________________
{Bolded in printed form}
Management recommends a vote for all nominees listed above
and for the proposals listed below. The shares represented hereby
will be voted as indicated below or FOR if no choice is
indicated.
2. Action on selection of KPMG LLP as independent auditors
(Proposal No.2 in Proxy Statement)
FOR [__] AGAINST [__] ABSTAIN [__]
3. Action on change of fundamental policy of the Trust
(Proposal No.3 in Proxy Statement)
FOR [__] AGAINST [__] ABSTAIN [__]
As to any other matter said proxies shall vote in accordance with
their best judgment.
Please indicate if you plan to attend one of the Shareholder
Meetings. If you mark one of the boxes below, you must return the
proxy card by mail to have this information recorded.
P. I plan to attend the annual meeting in Phoenix[__]
T. I plan to attend the outreach meeting in Tucson[__]
S. I plan to attend the outreach meeting in Sun City[__]
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.
_________________________________Dated: _________
Signature
[Please sign within the box]
_________________________________Dated: __________
Signature
(Joint Owners)
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