IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
AQUILA
CHURCHILL TAX-FREE FUND OF KENTUCKY
380 Madison Avenue, Suite 2300, New York, N.Y. 10017
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
on April 25, 1997
TO SHAREHOLDERS OF THE FUND:
The purpose of this Notice is to advise you that an Annual
Meeting of the Shareholders of Aquila Churchill Tax-Free Fund of
Kentucky (the "Fund") will be held
Place: (a) at the Kentucky Derby Museum,
704 Central Avenue,
Louisville, Kentucky 40201
Time: (b) on April 25, 1997 at 10:00 a.m. local time
Purposes: (c) for the following purposes:
(i) to elect nine Trustees; each Trustee elected
will hold office until the next annual
meeting of the Fund'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
Fund's independent auditors for the fiscal
year ending December 31, 1997 (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 Fund, your cooperation is requested in
mailing in your proxy no matter how large or small your holding
may be.
<PAGE>
(iii) 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 Fund's records at the close of
business on February 3, 1997 (the "record date").
Also, the number of shares held by you according
to such records at the close of business on the
record date determines the number of shares you
may vote at the Meeting (or any adjourned meeting
or meetings).
By Order of the Board of Trustees
EDWARD M. W. HINES
Secretary
February 20, 1997
(ii)
<PAGE>
AQUILA
CHURCHILL TAX-FREE FUND OF KENTUCKY
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 Aquila Churchill Tax-Free
Fund of Kentucky (the "Fund"). 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 on the enclosed proxy card.
This Notice and Proxy Statement are first being mailed on or
about February 20, 1997.
A copy of the Fund's most recent Annual Report and most
recent Semi-Annual Report will be sent to you without charge upon
written request to the Fund's Distributor, Aquila Distributors,
Inc., 380 Madison avenue, Suite 2300, New York, NY 10017 or by
calling 800-872-5859 toll-free or 212-697-6666.
The Fund's founder and administrator (the "Administrator")
is Aquila Management Corporation, 380 Madison Avenue, Suite 2300,
New York, NY 10017. The Fund's investment adviser is Banc One
Investment Advisors Corporation, 416 West Jefferson Street,
Louisville, KY 40202.
The enclosed proxy card authorizes the persons named (or
their substitutes) to vote your shares; the Fund 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 striking a line through the nominee's name
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 that 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.
You may end the power of the proxy holders to vote your
shares after you have signed and returned your proxy card and
before the power is used by (i) so notifying the Fund in writing;
(ii) signing a new and different proxy card (if the Fund receives
it before the old one is used); or (iii) voting your shares in
person or by your duly appointed agent at the meeting. Brokers'
shares held by them in "street name" and not voted or marked as
abstentions will not be counted for purposes of determining a
quorum.
The Fund 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 Fund 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 Fund's shares so that these owners may
authorize the voting of these shares. The Fund will pay these
firms for their out-of-pocket expenses for doing so.
The Fund has three classes of shares outstanding. All
shareholders of the Fund are entitled to vote at the meeting.
Each shareholder on the record date is entitled to one (1) 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 the Fund's Class A shares and Class C shares
was $10.52, and the net asset value of its Class Y shares was
$10.53. The meeting will act upon matters that affect the Fund as
a whole: the election of Trustees and the action on the selection
of auditors (Proposal No. 1). On matters that affect the Fund as
a whole, all shareholders of the Fund, including the shareholders
of all three classes of the Fund are entitled to vote at the
meeting. The Fund is the only operating series of Churchill
Tax-Free Trust, a Massachusetts business trust.
On the record date, the total number of shares outstanding
for the Fund was 21,784,809. Of the shares of the Fund
outstanding on the record date, BHC Securities, Inc, 2005 Market
Street, Philadelphia, PA held of record 1,649,977 Class A shares
(7.8%) and 22,894 Class C shares (45%); J.C. Bradford & Co. C/F
Susan M Berberich, M.D. held 9,557 Class C shares (18.8%);
National City Bank of Kentucky TTEE Cardinal Aluminum Co.,
Cleveland OH held 79,633 Class Y shares (13%) and BankDan c/o
Central Kentucky Trust Co., Danville, KY held 30,675 Class Y
shares (5.%). On the basis of information received from the
holders the Fund's management believes that all of the shares
indicated are held for the benefit of clients. John K. Codey held
7,117 Class C shares (14.1%). The Fund'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, nine 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.
Each of the nominees is presently a Trustee, and was
previously elected by the shareholders at the annual meeting of
the Fund held on April 26, 1996. Each Trustee has been a Trustee
since the beginning of the Fund's operations in 1987 and was
either named as a Trustee in the original Declaration of Trust or
was named as a Trustee by such original Trustees, and was also
elected as a Trustee by the Fund's original sole shareholder,
Aquila Management Corporation, except for Mr. Nightingale who has
been a Trustee since 1993, Messrs. Christopher and Mason, who
have been Trustees since 1992 and Ms. Herrmann, who became a
Trustee in 1995. The Trustees and officers as a group own less
than 1% of the outstanding shares of the Fund. Mr. Herrmann is an
interested person of the Fund as that term is defined in the
Investment Company Act of 1940 (the "1940 Act") as an officer of
the Fund and as a Director, officer and shareholder of the
Distributor. Ms. Herrmann is an interested person of the Fund as
a member of his immediate family. Ms. Leven is an interested
person as a beneficiary of a trust that owns shares of the parent
company of the Adviser. They are so designated by an asterisk.
Described in the following material are the name, positions
with the Fund, age as of February 3, 1997, and business
experience during at least the past five years (other than with
the Fund) of each nominee and all officers of the Fund.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, Age: 67, Shares Owned: 572 (1)
Founder, President and Chairman of the Board of Aquila Management
Corporation since 1984, the sponsoring organization and
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 Arizona since 1986; Tax-Free Trust of
Oregon since 1986; Tax-Free Fund of Colorado 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 Fund are called the Aquila Bond and
Equity Funds; and Pacific Capital Cash Assets Trust since 1984;
Churchill Cash Reserves Trust since 1985; Pacific Capital U.S.
Treasuries Cash Assets 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,
Director, Secretary and formerly Treasurer 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., Oppenheimer Quest
Global Value Fund, Inc., Oppenheimer Quest Value Fund, Inc., and
Trustee of Quest For Value Accumulation Trust, The Saratoga
Advantage Trust, and of the 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) Includes 387 shares held by the Administrator.
Thomas A. Christopher, Trustee, Age: 49, Shares Owned: 1,216
Shareholder of Robinson, Hughes & Christopher, C.P.A.s, P.S.C.,
since 1977; President of A Good Place for Fun, Inc., a sports
facility, since 1987; active member of the American Institute of
Certified Public Accountants; Board of Directors of the Kentucky
Society of CPAs 1991 to 1994; Trustee of Churchill Cash Reserves
Trust since 1985; presently active in leadership roles with
various civic, community and church organizations.
Douglas Dean, Trustee, Age: 47, Shares Owned: 5,639
Founder and President of Dean, Dorton & Ford P.S.C., a public
accounting firm, since 1979; previously Staff Accountant, Tax
Supervisor and Tax Manager with Coopers & Lybrand, a public
accounting firm; Trustee of Trent Equity Fund, an equity mutual
fund, 1992-1994; Trustee of Churchill Cash Reserves Trust since
1995; Active as an officer and board member of various charitable
and community organizations.
Diana P. Herrmann*, Trustee, Age: 38, Shares Owned: 495
Senior Vice President and Secretary and formerly Vice President
of the Administrator since 1986 and Director since 1984; Trustee
of Tax-Free Trust of Arizona and Tax-Free Trust of Oregon since
1994 and of Churchill Cash Reserves Trust since 1995; Vice
President of InCap Management Corporation since 1986 and Director
since 1983; Senior Vice President or Vice President and formerly
Assistant Vice President of the Money Funds since 1986; Vice-
President of Prime Cash Fund (which is inactive), since 1986, of
Cascades Cash Fund 1989-1994, and of Short Term Asset Management
Fund, 1986-1988; Assistant Vice President of Oxford Cash
Management Fund, 1986-1988; Assistant Vice President and formerly
Loan Officer of European American Bank, 1981-1986; daughter of
the Fund'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.
Ann R. Leven*, Trustee, Age: 56, Shares Owned: 1,009
Treasurer of the National Gallery of Art, Washington, D.C., since
1994, Deputy Treasurer, 1990-1994; Treasurer of the Smithsonian
Institution, Washington, D.C., 1984-1990; President of ARL
Associates, strategic consultants, since 1983; Vice
President/Senior Corporate Planning Officer of The Chase
Manhattan Bank, N.A., 1979-1983; Treasurer of The Metropolitan
Museum of Art, 1972-1979; Trustee of Short Term Asset Reserves,
1984-1993, of Tax-Free Trust of Oregon since 1986, of Cascades
Cash Fund, 1989-1994, of Churchill Cash Reserves Trust since
1995, and of Aquila Cascadia Equity Fund since 1996; Trustee of
Oxford Cash Management Fund, 1987-1988; Director of the Delaware
Group of mutual funds since 1989; Adjunct Professor at Columbia
University Graduate School of Business Administration since 1975;
Trustee of the American Red Cross Endowment Fund, 1985-1990;
Member of the Visiting Committee of Harvard Business School,
1979-1985; Member of the Board of Overseers of The Amos Tuck
School, Dartmouth College, 1978-1984; Staff Director of the
Presidential Task Force on the Arts and Humanities, 1981;
Director of Alliance Capital Reserves Fund, a money market fund,
1978-1979.
Theodore T. Mason, Trustee, Age: 61, Shares Owned: 628 (2)
Managing Director of EastWind Power Partners, Ltd. since 1994;
Director of Cogeneration Development of Willamette Industries,
Inc., a forest products company, 1991-1993; Vice President of
Corporate Development of Penntech Papers, Inc., 1978-1991; Vice
President of Capital Projects for the same company, 1977-1978;
Vice Chairman of the Board of Trustees of CCMT since 1981;
Trustee and Vice President, 1976-1981, and formerly Director of
its predecessor; Director of STCM Management Company, Inc.; Vice
Chairman of the Board of Trustees and Trustee of Prime Cash Fund
(which is inactive) since 1982; Trustee of Short Term Asset
Reserves, 1984-1986 and 1989-1996, of Hawaiian Tax-Free Trust and
Pacific Capital Cash Assets Trust since 1984, of Churchill Cash
Reserves Trust since 1985 and of Pacific Capital Tax-Free Cash
Assets Trust and Pacific Capital U.S. Treasuries Cash Assets
Trust since 1988; Vice President and Trustee of Oxford Cash
Management Fund, 1983-1989; Vice President of Trinity Liquid
Assets Trust, 1983-1985; President and Director of Ted Mason
Venture Associates, Inc., a venture capital consulting firm,
1972-1980; Advisor to the Commander, U.S. Maritime Defense Zone
Atlantic, 1984-1988; National Vice President, Surface/Subsurface,
Naval Reserve Association, 1985-1987; National Vice President,
Budget and Finance, for the same Association, 1983-1985;
Commanding Officer of four Naval Reserve Units, 1974-1985;
Captain, USNR, 1978-1988.
Anne J. Mills, Trustee, Age: 58, Shares Owned: 983
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 since 1994; Director of the
American Baptist Foundation since 1985; Trustee of Brown
University; Trustee of Churchill Cash Reserves Trust since 1985,
of Tax-Free Trust of Arizona since 1986, of Tax-Free Fund of
Colorado and Capital Cash Management Trust since 1987 and of Tax-
Free Fund For Utah since 1994.
William J. Nightingale, Trustee, Age: 67, Shares Owned: 556
Chairman and founder (1975) and Senior Advisor since 1995 of
Nightingale & Associates, Inc., a general management consulting
firm focusing on interim management, divestitures, turnaround of
troubled companies, corporate restructuring and financial
advisory services; President, Chief Executive Officer and
Director of Bali Company, Inc., a manufacturer of women's
apparel, which became a subsidiary of Hanes Corporation, 1970-
1975; prior to that, Vice President and Chief Financial Officer
of Hanes Corporation after being Vice President-Corporate
Development and Planning of that company, 1968-1970; formerly
Senior Associate of Booz, Allen & Hamilton, management
consultants, after having been Marketing Manager with General
Mills, Inc.; Trustee of Narragansett Insured Tax-Free Income Fund
since 1992 and of Churchill Cash Reserves Trust since 1993;
Director of Yale International, Inc. (various industrial
manufacturing companies); Glasstech Inc. (glass bending equipment
and engineering) and Ring's End, Inc. (retail lumber and building
supply chain).
James R. Ramsey, Trustee, Age: 48, Shares Owned: 1,471 (2)
Vice President for Finance and Administration, and Professor of
Economics, Western Kentucky University; Trustee of Churchill Cash
Reserves Trust since 1995; Chief State Economist and Executive
Director of the Office for Financial Management and Economic
Analysis of the Commonwealth of Kentucky, 1981-1992; Adjunct
Professor of the University of Kentucky; Assistant Dean and
Director of Public Administration of Loyola University in New
Orleans, Louisiana, 1978-1981; Assistant Professor of Public
Finance and Administration of Loyola University, 1977-1981;
Assistant Professor of Economics, Middle Tennessee State
University, 1975-1977; published numerous articles, monographs
and working papers on economics and fiscal management.
(2) Held jointly with his wife.
Jerry G. McGrew, Senior Vice President, Age: 52
Vice President since 1987; Vice President of Tax-Free Fund For
Utah since 1992; Vice President of Churchill Cash Reserves Trust
since 1995; Registered Principal since 1993; Vice President of
Aquila Distributors, Inc. since 1993; Registered Representative
of J.J.B. Hilliard, W.L. Lyons Inc., 1983-1987; Account Manager
with IBM Corporation, 1967-1981; Gubernatorial appointee,
Kentucky Financial Institutions Board, since 1993; Chairman,
Total Quality Management for Small Business, 1990-1994; President
of Elizabethtown/Hardin County, Kentucky, Chamber of Commerce,
1989-1991; President of Elizabethtown Country Club, 1983-1985.
William C. Wallace, Vice President, Age: 61
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;
Senior Vice President of Tax-Free Trust of Arizona since 1989 and
Vice President, 1986-1988; Vice President of Tax-Free Trust of
Oregon since 1986, of Tax-Free Fund of Colorado since 1987, of
Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital
U.S. Treasuries 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 since 1995 and 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.
L. Michele Crutcher, Vice President, Age: 32
Registered Representative of Aquila Distributors, Inc. since
1995; Investment Broker, 1990-1994; Sales Assistant, 1984-1990,
J.J.B. Hilliard, W.L. Lyons, Inc.; active in Elizabethtown Emmaus
Community, United Way of Hardin County, Elizabethtown Junior
Women's Club, Big Brothers/Big Sisters, and Fund for the Arts.
Teresa M. Wright, Assistant Vice President, Age: 32
Assistant Vice President of Churchill Tax-Free Fund of Kentucky
since 1996; Corporate Safety Director/Human Resource Manager of
Ramsey & Associates, Inc., 1995-1996; Senior Sales Representative
of Bluegrass Cellular, Inc., 1993-1995; Account Executive at Lite
105.5 WASE, 1992; Insurance Agent of Northwestern Mutual Life Insurance
Company, 1991-1992; Sales Assistant of J.J.B. Hilliard, W.L.
Lyons, Inc. 1990-1991.
Rose F. Marotta, Chief Financial Officer, Age: 72
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 Administrator since 1984 and of
the Distributor since 1985.
Richard F. West, Treasurer, Age: 61
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: 57
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: 57
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
Administrator 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: 30
Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995; Counsel to the
Administrator and the Distributor since 1995; formerly a Legal
Associate for Oppenheimer Management Corporation, 1993-1995.
Compensation of Trustees
The Fund does not pay fees to Trustees affiliated with the
Administrator or to any of the Fund's officers. During the fiscal
year ended December 31, 1996, the Fund paid $59,858 in fees and
reimbursement of expenses to its other Trustees. The Fund is one
of the 14 funds in the Aquilasm Group of Funds, which consist of
tax-free municipal bond funds, money market funds and two equity
funds. The following table lists the compensation of all Trustees
who received compensation from the Fund and the compensation they
received during the Fund's fiscal year from other funds in the
Aquilasm Group of Funds. None of such Trustees has any pension or
retirement benefits from the Fund 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 Fund Group serves
<S> <C> <C> <C>
Thomas A.
Christopher $6,650 $11,851 2
Douglas
Dean $7,984 $12,784 2
Ann R.
Leven $5,933 $18,400 3
Theodore T.
Mason $6,703 $47,551 8
Anne J.
Mills $5,300 $28,164 6
William J.
Nightingale $6,478 $13,942 3
James R.
Ramsey $6,050 $10,795 2
</TABLE>
The Fund's Administrator is administrator to the Aquilasm
Group of Funds which consists of tax-free municipal bond funds,
money market funds and two equity funds. As of December 31, 1996,
these funds had aggregate assets of approximately $2.7 billion,
of which approximately $1.9 billion consisted of assets of the
tax- free municipal bond funds. The Administrator is controlled
by Mr. Lacy B. Herrmann, through share ownership directly,
through a trust and by his wife. During the year ended December
31, 1996, the Fund paid or accrued $316,432 in advisory fees to
the Adviser. During the year ended December 31, 1995, fees of
$587,239 were paid or accrued to the Administrator under the
Administration Agreement.
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 Fund.
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. All of the shares of the Distributor are owned by Mr.
Herrmann. During the fiscal year, the Distributor retained
$21,310 in commissions on sales of the Fund's Class A shares.
Under the Fund's Distribution Plan the Distributor received
$4,724 with respect to the Fund's Class A shares and $1,000 with
respect to the Fund's Class C shares. In addition, it received
$333 under the Fund's Shareholder Services Plan.
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," 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 Fund's internal accounting
procedures and controls. The Committee held one meeting during
the Fund's last fiscal year. The Board of Trustees does not have
a nominating committee. During the Fund's last fiscal year, the
Board of Trustees held six meetings. All Trustees were present at
least 75% of the total number of Board and (if such Trustee was a
member of that Committee) Audit Committee meetings.
RATIFICATION OR REJECTION OF SELECTION
OF INDEPENDENT AUDITORS
(Proposal No. 1)
KPMG Peat Marwick LLP is being recommended as the Fund's
independent auditors for the fiscal year ending December 31,
1997; such selection is submitted to the shareholders for
ratification or rejection.
The firm has no direct or indirect financial interest in the
Fund, the Fund's Adviser or the Fund's Administrator. 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.
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
Fund's proxy statement and proxy card for a particular annual
meeting. One of these conditions relates to the timely receipt by
the Fund of any such proposal. Under these rules, proposals
submitted for inclusion in the proxy material for the Fund's next
annual meeting after the meeting to which this Proxy Statement
relates must be received by the Fund not less than 120 days
before the anniversary of the date stated on the first page of
this Proxy Statement relating to 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
Fund will so advise you.
The fact that the Fund receives a shareholder proposal in a
timely manner does not insure its inclusion in the Fund's proxy
material, since there are other requirements in the proxy rules
relating to such inclusion.
OTHER BUSINESS
The Fund 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>
IMPORTANT NOTICE
PLEASE READ
IMMEDIATELY
AQUILA
CHURCHILL TAX-FREE
FUND OF KENTUCKY
[LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON APRIL 25, 1997
PROXY STATEMENT
<PAGE>
AQUILA
CHURCHILL TAX-FREE FUND OF KENTUCKY
PROXY FOR SHAREHOLDERS MEETING APRIL 25, 1997
PROXY SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned shareholder of CHURCHILL TAX-FREE FUND OF
KENTUCKY (the "Fund") does hereby appoint LACY B. HERRMANN and
EDWARD M. W. HINES, or either of them, as attorneys and proxies
of the undersigned, with full power of substitution, to attend
the Annual Meeting of Shareholders of the Fund to be held on
April 25, 1997, at Kentucky Derby Museum, 704 Central Avenue,
Louisville, Kentucky 40201 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 proposals 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.
Please indicate your vote by an "X" in the appropriate box
below.
Election of Trustees---.
__
[__] FOR all nominees listed below
__
[__] VOTE WITHHELD for all nominees listed
below
(Instructions: To withhold authority to vote for any one or more
of the nominees, strike a line through the name of that nominee
or the names of such nominees in the list below.)
LACY B. HERRMANN, THOMAS A. CHRISTOPHER, DOUGLAS DEAN,
DIANA P. HERRMANN, ANN R. LEVEN, THEODORE T. MASON,
ANNE J. MILLS, WILLIAM J. NIGHTINGALE, JAMES R. RAMSEY
Action on selection of KPMG Peat
Marwick LLP as independent auditors
__ __ __
(Proposal No. 1) FOR [__] AGAINST [__] ABSTAIN [__]
Dated: ____________ ______, 1997
Month Day
__________________________________
SIGNATURE(S)
__________________________________
SIGNATURE(S)
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.
