IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
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 23, 1999
TO SHAREHOLDERS OF THE FUND:
The purpose of this Notice is to advise you that an Annual
Meeting of the Shareholders of Churchill Tax-Free Fund of
Kentucky (the "Fund") will be held:
Place: (a) at the JB Speed Art Museum
2035 South Third Street
Louisville, Kentucky 40208
Time: (b) on April 23, 1999 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 LLP as the Fund's
independent auditors for the fiscal year
ending December 31, 1999 (Proposal No. 1);
and
_____________
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 and returning it in the
accompanying stamped envelope. To avoid unnecessary expense to
the Fund, we request your cooperation in voting 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 (d) To vote at the Meeting, you must have been a
Vote What shareholder on the Fund's records at the close of
Shares: business on January 29, 1999 (the "record date").
Also, the number of shares of each of the Fund'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
March 13, 1999
ii
<PAGE>
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 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 March 13, 1999.
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 organizer, administrator and investment adviser
(the "Manager") is Aquila Management Corporation, 380 Madison
Avenue, Suite 2300, New York, NY 10017. The Fund's principal
underwriter (the "Distributor") is Aquila Distributors, Inc., 380
Madison Avenue, Suite 2300, New York, NY 10017. The Fund's
Investment Sub-Adviser (the "Sub-Adviser") is Banc One Investment
Advisors Corporation, 416 West Jefferson Street, Louisville, KY
40202.
You can vote in three ways:
Proxy Ballot
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 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
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 any box
on the proposal, the proxy holders will vote your shares for the
proposal.
Telephone Voting
You can vote your shares by telephone. You should first read
the Proxy Statement. To vote, call toll free 1-800-690-6903. You
will be prompted to enter the 12-digit control number in the
upper left corner of the enclosed proxy card. Follow the recorded
instruction using your proxy card as a guide. If you vote by
phone, do not return the proxy card by mail.
Internet voting
You can vote your shares by the internet. You should first
read the Proxy Statement. To vote, contact the Fund at
http://www.proxyvote.com. You will be prompted to enter the 12-
digit control number in the upper left corner of the enclosed
proxy card. Follow the instructions on the screen, using your
proxy card as a guide. If you vote by the internet, do not return
the proxy card by mail.
You may end the power of the proxy holders to vote your
shares, 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); (iii) voting your shares at the meeting in
person or by your duly appointed agent; or (iv) calling the toll
free number above or contacting the Fund's internet address
above, entering your 12-digit 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.
The Fund 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. 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
their shares. The Fund will pay these firms their out-of-pocket
expenses for doing so.
On the record date, the Fund had 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 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 Fund's outstanding classes of
shares was as follows: Class A Shares, $10.87; Class C Shares,
$10.86; and Class Y Shares, $10.87. The meeting is expected to
act only 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
classes of the Fund, 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,
21,284,246; Class C Shares, 90,831; Class Y Shares, 1,434,928. Of
the shares of the Fund outstanding on the record date, BHC
Securities, Inc, 2005 Market Street, Philadelphia, PA held of
record 1,670,004 Class A Shares (7.8% of the class) and 9,593
Class C Shares (10.6% of the class); J.C. Bradford & Co. C/F
Susan M. Berberich, M.D., held of record 10,406 Class C Shares
(11.4% of the class); Merrill Lynch Pierce Fenner & Smith, New
Brunswick, NJ held of record 5,806 Class C Shares (6.4% of the
class); Dean Witter, Church Street Station, New York, NY held of
record 6,702 Class C Shares (7.4% of the class); National City
Bank of Kentucky TTEE Cardinal Aluminum Co., Cleveland, OH held
of record 343,914 Class Y Shares (23.9% of the class) and a
nominee of Central Kentucky Trust Co, Danville, KY held of record
1,007,011 Class Y Shares (70.2% of the class). 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. M.L. Koonce, Mayfield, KY held of record
7,154 Class C Shares (7.9% of the class); Robert E. Hatcher and
Patricia N. Hatcher JTWROS, Monte Carlo, Monaco, held of record
8,865 Class C Shares (9.8% of the class) and M.B. Willock,
Bowling Green, KY held of record 5,245 Class C Shares (5.8% of
the class). 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 reelected by the shareholders at the annual meeting of
the Fund held on April 24, 1998, except that Mr. Knicely was
elected by the Board of Trustees to fill a vacancy on the Board
on June 12, 1998. 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, Ms. Herrmann, who became a Trustee in 1995
and Mr. Knicely who became a Trustee in 1998.
The Trustees and officers as a group own less than 1% of the
outstanding shares of the Fund. In the material below and
elsewhere in this Proxy Statement, Aquila Management Corporation
is referred to as the "Manager" and the Fund's Distributor,
Aquila Distributors, Inc., is referred to as the "Distributor."
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 a director, officer and shareholder of
the Manager and the Distributor. Ms. Herrmann is an interested
person of the Fund as an officer of the Fund 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. Mr. Dean
is an interested person as a trustee of a trust that owns shares
of the parent company of the Sub-Adviser. They are so designated
by an asterisk.
Described in the following material are the name, positions
with the Fund, age as of January 29, 1999, and business
experience during at least the past five years (other than with
the Fund) of each nominee and all officers of the Fund. All
shares shown as owned by the Trustees are Class A Shares.
Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, Age: 69, Shares Owned: 578 (1)
Founder and Chairman of the Board of Aquila Management
Corporation, 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 (currently or until 1998) President of each since
its establishment, beginning in 1984: 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 (this
Fund), Narragansett Insured Tax-Free Income Fund and Tax-Free
Fund For Utah, each of which is a tax-free municipal bond fund
and which together are called Aquila Bond Funds; Pacific Capital
Cash Assets Trust, Churchill Cash Reserves Trust, Pacific Capital
U.S. Government Securities Cash Asset Trust, Pacific Capital Tax-
Free Cash Assets Trust, each of which is a money market fund, and
together with Capital Cash Management Trust ("CCMT") are called
the Aquila Money-Market Funds; and Aquila Cascadia Equity Fund
and Aquila Rocky Mountain Equity Fund, which together are called
Aquila Equity Funds; currently President of Aquila Cascadia
Equity Fund, Aquila Rocky Mountain Equity Fund, Churchill Cash
Reserves Trust, Churchill Tax-Free Fund of Kentucky (this Fund)
and Tax-Free Fund of Colorado; 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;
Vice President and Director, and formerly Secretary, of Aquila
Distributors, Inc., distributor of the above funds, since 1981;
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) Includes 374 shares held of record by Aquila Management
Corporation.
Thomas A. Christopher, Trustee, Age: 51, Shares Owned: 1,659
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 and of Churchill Tax-Free Fund of Kentucky (this
Fund) since 1992; presently active in leadership roles with
various civic, community and church organizations.
Douglas Dean,* Trustee, Age: 49, Shares Owned: 5,265
Founder and President of Dean, Dorton & Ford P.S.C., a public
accounting firm, since 1979; previously employed by Coopers &
Lybrand, a public accounting firm; member of the American
Institute of Certified Public Accountants and Kentucky Society of
Certified Public Accountants; accredited in business valuation by
the American Institute of Certified Public Accountants; Trustee
of Trent Equity Fund, an equity mutual fund, 1992-1994; Trustee
of Churchill Cash Reserves Trust since 1995 and Churchill Tax-
Free Fund of Kentucky (this Fund) since 1987; active as an
officer and board member of various charitable and community
organizations.
Diana P. Herrmann,* Trustee, Vice President, Age: 40, Shares
Owned: 549
President and Chief Operating Officer of the Manager since 1997,
a Director since 1984, Secretary since 1986 and previously its
Executive Vice President, Senior Vice President or Vice
President, 1986-1997; President of various Aquila Bond 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 since 1999 and Reserve Private Equity
Series since 1998; Assistant Vice President and formerly Loan
Officer of European American Bank, 1981-1986; daughter of the
Fund'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.
Carroll F. Knicely, Trustee, Age: 70, Shares Owned: 7,234
Director of Star Banc since 1998; Director of Trans Financial
Bancorp, Trans Financial Bank, N.A., Bowling Green, Kentucky and
Trans Financial Bank, Glasgow, Kentucky and predecessors, 1976-
1998; President of Associated Publications Inc., Glasgow,
Kentucky; Director, Chairman and member of Executive Board of
West Kentucky Corporation and Director and Secretary-Treasurer
of South Gate Plaza, Inc. (owner and developer of shopping
centers and commercial real estate); Director, Vice President and
Treasurer of Knicely and Knicely, Inc. (owner and developer of
rental properties and residential real estate); Trustee of
Churchill Cash Reserves Trust; Trustee of Churchill Tax-Free Fund
of Kentucky (this Fund) since 1998; Editor and Publisher of
Kentucky newspaper group, 1957-1990; Secretary of Commerce of the
Commonwealth of Kentucky, 1983-1988; Commissioner of Commerce of
the Commonwealth of Kentucky, 1978-1979; currently active in real
estate development, commercial and residential subdivision and
regional economic development planning under Kentucky State
government sponsorship.
Theodore T. Mason, Trustee, Age: 63, Shares Owned: 696 (1)
Managing Director of EastWind Power Partners, Ltd. since 1994;
Second Vice President, Alumni Association, SUNY Maritime College
1998; Director for the same organization, 1997; 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, of Pacific Capital Tax-Free Cash
Assets Trust and Pacific Capital U.S. Government Securities Cash
Assets Trust since 1988 and of Churchill Tax-Free Fund of
Kentucky (this Fund) since 1992; 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.
(1) Held jointly with his wife.
Anne J. Mills, Trustee, Age: 60, Shares Owned: 1,089
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 Tax-Free Trust of Arizona since 1986, of Churchill Tax-
Free Fund of Kentucky (this Fund), 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: 69, Shares Owned: 1,143
Chairman and founder (1975) and Senior Advisor since 1995 of
Nightingale & Associates, L.L.C., 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 and Churchill
Tax-Free Fund of Kentucky (this Fund) since 1993; Director of
Kasper A.S.L. Ltd., an apparel company, since 1997, of Ring's
End, Inc., a building materials and construction company, since
1989, and of Furr's/Bishop's Inc., operator of a chain of
restaurants, since 1998.
James R. Ramsey, Trustee, Age: 50, Shares Owned: 1,771 (1)
Vice Chancellor for Finance and Administration, Chapel Hill,
North Carolina; Trustee of Churchill Tax-Free Fund of Kentucky
(this Fund) since 1987 and of Churchill Cash Reserves Trust since
1995. Previously Vice President for Finance and Administration at
Western Kentucky University; State Budget Director for the
Commonwealth of Kentucky; Chief State Economist and Executive
Director for the Office of Financial Management and Economic
Analysis for the Commonwealth of Kentucky; Adjunct Professor at
the University of Kentucky, Associate Professor at Loyola
University-New Orleans and Assistant Professor at Middle
Tennessee State University; served on numerous civic and
corporate boards; consultant to the Federal, State, Local
government and to private business.
(1) Held jointly with his wife.
Jerry G. McGrew, Senior Vice President, Age: 54
President of Aquila Distributors, Inc. since 1998, Registered
Principal since 1993, Senior Vice President, 1997-1998 and Vice
President, 1993-1997; Senior Vice President of Aquila Rocky
Mountain Equity Fund since 1996; Senior Vice President of
Churchill Tax-Free Fund of Kentucky (this Fund) since 1994, and
of Tax-Free Fund of Colorado and Tax-Free Fund For Utah since
1997; Vice President of Churchill Cash Reserves Trust since 1995;
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,
1993-1997; 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; Director-at Large, Houston Alliance for
the Mentally Ill (AMI), since 1998.
Terri M. Priest, Vice President, Age: 34
Vice President of Churchill Tax-Free Fund of Kentucky (this Fund)
since 1996; Corporate Safety Director/Human Resource Manager of
Ramsey & Associates, Inc. 1995-1996; Senior Sales Representative
of Bluegrass Cellular, Inc. 1993-1995.
L. Michele Robbins, Vice President, Age: 34
Vice President of Churchill Tax-Free Fund of Kentucky (this Fund)
since 1996; Assistant Vice President, 1995-1996; Registered
Representative of Aquila Distributors, Inc. since 1995;
Investment Broker, 1990-1994; Sales Assistant, 1984-1990, J.J.B.
Hilliard, W.L. Lyons, Inc.
Rose F. Marotta, Chief Financial Officer, Age: 74
Chief Financial Officer of the Aquila Money-Market, 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: 63
Treasurer of the Aquila Money-Market, 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: 59
Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines &
Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary
of the Aquila Money-Market, 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: 59
Assistant Secretary of the Aquila Money-Market, 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.
Compensation of Trustees
The Fund does not currently pay fees to any of the Fund's
officers or to Trustees affiliated with the Manager or the Sub-
Adviser. For its fiscal year ended December 31, 1998, the Fund
paid a total of $74,368 in compensation and reimbursement of
expenses to those Trustees to whom it pays fees. No other
compensation or remuneration of any type, direct or contingent,
was paid by the Fund to its 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 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 $8,084 $13,809 2
Douglas
Dean $5,450 $10,495 2
Carroll
Knicely $6,608 $11,364 2
Theodore T.
Mason $6,320 $48,276 7
Anne J.
Mills $6,747 $33,522 6
William J.
Nightingale $7,069 $16,260 3
James R.
Ramsey $7,507 $13,479 2
</TABLE>
The Fund'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 December
31, 1998, these funds had aggregate assets of approximately $3.2
billion, of which approximately $2.0 billion consisted of assets
of the tax-free municipal bond funds. The Manager is controlled
by Mr. Lacy B. Herrmann (directly, through a trust and through
share ownership by his wife.) During the fiscal year ended
December 31, 1998, the Fund incurred fees for advisory and
administration services of $958,774.
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. At the date of this proxy statement, the shares of
the Distributor are currently owned by Mr. Herrmann and members
of his immediate family. During the fiscal year, the Distributor
retained $27,253 in commissions on sales of the Fund's Class A
shares. During the fiscal year ended December 31, 1998, $340,056
was paid to Qualified Recipients under the Fund's Distribution
Plan with respect to Class A Shares, of which $8,641 was retained
by the Distributor and $6,637 was paid to Qualified Recipients
under the Plan with respect to the Fund's Class C Shares of which
$5,934 (including amounts retained by the Distributor under the
Shareholder Services Plan) was retained by the Distributor.
Other Information
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, of
the Fund. 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 four meetings. All Trustees were present
at 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 LLP is being recommended as the Fund's independent
auditors for the fiscal year ending December 31, 1999; such
selection is submitted to the shareholders for ratification or
rejection.
The firm has no direct or indirect financial interest in the
Fund or in the Manager, Distributor or 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.
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>
CHURCHILL TAX-FREE FUND OF KENTUCKY
PROXY FOR SHAREHOLDERS MEETING APRIL 23, 1999
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of Churchill Tax-Free Fund of
Kentucky (the "Fund") 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 Fund to be
held on April 23, 1999 at the JB Speed Art Museum, 2035 South
Third Street, Louisville, Kentucky 40208, 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 on the other side of
this card.
Telephone Voting (Touch-tone only)
You can vote you shares by telephone. Read the proxy
statement. To vote, 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 instruction using this proxy card as a
guide. If you vote by phone, do not return the proxy card by
mail.
Internet Voting
You can vote your shares by the internet. Read the proxy
statement. To vote, contact the Fund at www.xxx.com. You will be
prompted to enter the 12-digit control number on this proxy card.
Follow the simple instructions at the web site, using your proxy
card as a guide. If you vote by the internet, do not return the
proxy card by mail.
Proxy Card voting
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.
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.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -----------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
Churchill Tax-Free Fund of Kentucky
Vote on Trustees
__
[__] For all
__
[__] Withhold All
__
[__] For All Except:
To withhold authority to vote with respect to a particular
nominee, mark " For all Except" and write the nominees's number
on the line below.
Vote On Trustees
2. Election of Trustees. 01) LACY B. HERRMANN, 02) THOMAS A.
CHRISTOPHER, 03) DOUGLAS DEAN, 04) DIANA P. HERRMANN, 05) CARROLL
F. KNICELY, 06) THEODORE T. MASON, 07) ANNE J. MILLS, 08) WILLIAM
J. NIGHTINGALE, 09) JAMES R. RAMSEY
Vote On Proposal
1. Action on selection of KPMG LLP as independent auditors
(Proposal No. 1 in Proxy Statement)
__ __ __
FOR [__] AGAINST [__] ABSTAIN [__]
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)
