IMPORTANT NOTICE
PLEASE READ IMMEDIATELY Preliminary Proxy Material
TAX-FREE FUND FOR UTAH
380 Madison Avenue, Suite 2300, New York, N.Y. 10017
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD
on July 15, 1998
TO SHAREHOLDERS OF THE FUND
The purpose of this Notice is to advise you that a Special Meeting
of the Shareholders of Tax-Free Fund For Utah (the "Fund") will be
held
Place: (a) at the offices of the Fund
380 Madison Avenue
New York, NY 10017
Time: (b) on July 15, 1998 at 10:00 a.m. local time
Purposes: (c) for the following purposes:
(i) to consider a proposed new sub-advisory
agreement between Aquila Management Corporation as
Manager and Zions First National Bank as Sub-
Adviser (Proposal No. 1);
(ii) 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.
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.
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 April 20, 1998 (the "record date"). The
number of shares of each of the Fund's classes of
shares that you held at that time and the
respective net asset values of each class of shares
at that time determines 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
June 1, 1998
<PAGE>
AQUILA
TAX-FREE FUND FOR UTAH
380 Madison Avenue, Suite 2300, New York, New York 10017
PROXY STATEMENT
This special meeting of the shareholders of Tax-Free Fund
For Utah will consider a proposal of vital importance to the
Fund:
Action on a proposed new sub-advisory agreement between
Aquila Management Corporation as the Fund's Manager,
and Zions First National Bank as Sub-Adviser. (Proposal
No. 1)
The Board of Trustees believes that this proposal is in the
best interest of the Fund and its shareholders. Please read the
proxy statement and then indicate your vote on the enclosed proxy
card as soon as possible.
INTRODUCTION
The purpose of the Notice (the first two pages of this
document) is to advise you of the time, place and purposes of a
Special Meeting of the Shareholders of Tax-Free Fund For Utah
(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 you make on the enclosed
proxy card.
This Notice and Proxy Statement are first being mailed on or
about June 1, 1998.
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 800-887-4537 toll-free or 212-697-6666.
The Fund's founder and Manager (the "Manager") is Aquila
Management Corporation, 380 Madison Avenue, Suite 2300, New York,
NY 10017. The Fund's investment sub-adviser is currently First
Security Investment Management, Inc. 61 South Main Street, Salt
Lake City, Utah 84111.
The enclosed proxy card authorizes the persons named (or
their substitutes) to vote your shares; the Fund calls these
persons the "proxy holders." You may direct the proxy holders to
vote your shares on the proposal by checking the appropriate box
"For" or "Against" or instruct them not to vote your shares on a
proposal by checking the "Abstain" box. If you return your signed
proxy card and do not check any box on the proposal, the proxy
holders will vote your shares for the proposal. Shares held by
brokers in "street name" and not voted or marked as abstentions
will not be counted for purposes of determining a quorum or the
vote on any matter.
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.
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 Special 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, for a portion of which it may be reimbursed by
Zions First National Bank. 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 four 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 was $10.19, of its
Class C shares was $10.18 and of its Class Y Shares was $10.19.
No Class I Shares were outstanding on the record date. The
meeting will act upon a matter that affects the Fund as a whole:
action on a proposed new sub-advisory agreement (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 the Fund was 3,197,515. Of the shares of the Fund outstanding
on the record date Merrill Lynch Pierce Fenner & Smith, P.O. Box
30561, New Brunswick, NJ held of record 496,887 Class A Shares
(17.3% of the class) and 33,634 Class C Shares (24.6% of the
class); BCH Securities Inc., 2005 Market Street, Philadelphia, PA
held of record 497,217 Class A Shares (17.3% of the class) and
9,781 Class C Shares (7.2% of the class); Dean Witter, Church
Street Station held of record 47,273 Class C Shares in 4 accounts
(34.9% of the class). The Fund's management is not aware of any
other person who beneficially owned 5% or more of its outstanding
shares on such date. On the basis of information received from
the record owners listed above, the Fund's management believes
that all of the shares indicated are held for the benefit of
clients.
BACKGROUND AND REASONS FOR
PROPOSAL NO. 1
From the commencement of operations of the Fund on July 24,
1992 until the present, the investment adviser or sub-adviser of
the Fund has been First Security Investment Management, Inc. (the
"Current Sub-Adviser"), which in the opinion of the Board has
performed and is performing its functions in a highly
satisfactory manner. However, for the reasons set forth below,
the Board of Trustees of the Fund has determined that it would be
in the best interests of the Fund and its shareholders to approve
the Manager's recommendation that Zions First National Bank
("Zions") become the Fund's investment Sub-Adviser.
Zions is the second largest bank in Utah and one of the
largest banks in the intermountain region. In addition it is the
largest underwriter in the state of Utah of securities of the
type purchased by the Fund and as such it is well familiar with
the characteristics of obligations of issuers in the State of
Utah. Unlike the Current Sub-Adviser, which advises a proprietary
family of mutual funds, Zions advises no other mutual funds at
this time and accordingly is expected to concentrate its
portfolio management attention to a comparatively greater extent
on the Fund. Moreover, it has advised the Board that it intends
to invest in the Fund approximately $30 million in client funds
that are currently invested in other types of tax-exempt
securities. Such an investment if made would increase the size of
the Fund and possibly lower its expense ratios, although there is
no assurance that this will occur. In addition, Zions is willing
to agree to the fee waiver and expense reimbursement provisions
described in the proposed Sub-Advisory Agreement below.
The Board of Trustees of the Fund believes that for these
and other reasons as set forth below, if Zions becomes its Sub-
Adviser it is possible that the Fund will attract the interest
and assets of additional investors, thereby benefitting all of
the shareholders of the Fund by reason of economies of scale.
There is no assurance that this will occur.
Various Trustees have visited the offices and operations of
Zions and have interviewed the portfolio manager who is
anticipated to manage the portfolio of the Fund. Also, the Board
of Trustees have taken into account the matters referred to below
as to the Proposed Sub-Adviser.
The Manager, which serves as investment adviser and
administrator to the Fund, has proposed to the Board that they
approve and submit to shareholders this Proposal No. 1. The Board
of Trustees approved the Proposal at a meeting duly called and
held for the purpose on March 7, 1998. Because the Board of
Trustees has already approved the material provisions of the Sub-
Advisory Agreement, it is expected to give formal approval to the
proposed Sub-Advisory Agreement at a meeting called and held for
the purpose in June, 1998. If this should not occur, the
shareholders meeting will be canceled.
It is anticipated that if Zions becomes Sub-Adviser to the
Fund, the Fund will seek an exemptive order from the Securities
and Exchange Commission so that the Fund may purchase securities
from Zions and from underwriting syndicates of which it is a
part. There is no assurance that the exemptive order can be
obtained.
The Proposed Sub-Advisory Agreement between the Manager and
Zions contains certain new provisions not in the current sub-
advisory agreement which have the effect of strengthening Zions'
obligation to provide local portfolio management and of limiting
the fees payable to Zions if the asset size of the Fund is less
than $58 million. The asset size of the Fund is currently
approximately $28 million. (See "Proposal No. 1.")
Other Information About Zions
Zions was founded in 1873 and is a wholly-owned subsidiary
of Zions Bancorporation, a Utah-headquartered financial services
company with consolidated assets of $10.6 billion as of March 31,
1998. In addition to advising the Fund, Zions' advisory
experience includes investment management services to affiliate
banks, corporate foundations and profit-sharing trusts,
retirement funds, charitable foundations, endowments and
individual investors throughout the United States. While Zions is
exempt as a national bank from registration as investment adviser
under the Investment Advisers Act of 1940, as amended, its
wholly-owned subsidiary, Zions Investment Securities, Inc.
("ZISI"), a member firm of NASD/SIPC, is so registered. The
management of Zions' advisory activities and ZISI are the same.
Zions and its parent, Zions Bancorporation, have offices at One
South Main Street, Salt Lake City, Utah 84111.
Zions is the second largest bank in the state of Utah and
one of the largest banks in the intermountain region. Zions will
not be permitted to purchase securities of, or enter into
principal transactions with, any of its affiliates when acting on
behalf of the Fund. The above restrictions do not apply, however,
to securities issued or underwritten by banks or other financial
institutions which are not themselves affiliates of Zions,
although they may have a correspondent banking or other business
relationship with one or more of the banks of Zions
Bancorporation. Zions has advised the Fund that it does not know
of any person holding more than 10% of the stock of Zions
Bancorporation.
Zions has designated Christopher P. Foley to manage the
Fund's portfolio. Mr. Foley is an Assistant Vice President of
Zions and has been employed in the investment management business
for 13 years. He is a member of the Association of Investment
Management and Research (AIMR) and is in the process of earning
the professional designation of Chartered Financial Analyst
(CFA). He received his B.S. degree (Finance/Economics) from the
University of Cincinnati, and is in the process of completing his
M.B.A. degree from Westminster College, Salt Lake City, Utah.
Banking laws and regulations, including the Glass-Steagall
Act as currently interpreted by the Board of Governors of the
Federal Reserve System, prohibit a bank holding company
registered under the Bank Holding Company Act of 1956 or any
affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment
company continuously engaged in the issuance of its shares, and
prohibit banks generally from issuing, underwriting, selling or
distributing securities, but do not prohibit such a bank holding
company or affiliate from acting as investment adviser, transfer
agent or custodian to such an investment adviser, or from
purchasing shares of such a company as agent for and upon the
order of a customer. Zions believes that Zions can perform the
advisory services for the Fund described in this proxy statement.
However, future changes in legal requirements relating to the
permissible activities of banks and their affiliates, as well as
future interpretations of present requirements, could prevent it
from continuing to perform investment advisory services for the
Fund. If Zions were prohibited from performing investment
advisory services for the Fund, it is expected that the Manager
would recommend to the Board of Trustees of the Fund and to the
Fund's shareholders that they approve new agreements with another
entity or entities qualified to perform such services.
The names, principal occupations and addresses of the
principal officer and every director of Zions are as follows:
Name Positions and Offices with Zions
A. Scott Anderson President, Chief Executive
Officer and Director
Harris H. Simmons Chairman of the Board and
Director
R. D. Cash Director; Chairman and Chief
Executive Officer, Questar
Corporation (an energy
services company)
Robert C. Fuehr Director; Vice President,
Public Policy, U.S. West
(telecommunications company)
Ronald S. Hanson Director;
Retired; Former
Vice Chairman, Zions First
National Bank
James T. Jensen Director; Executive Vice
President, General Counsel,
Secretary and Director, the
Savage Companies (trucking)
Susan Mooney Johnson Director; President, Futura
Industries, Daw Technologies
(ultraclean manufacturing
environments)
Dixie L. Leavitt Director; Chairman of the
Board, Security Enterprises
dba the Leavitt Group
(insurance brokerage)
Robert A. Madsen Director; Chairman of the
Board, Madsen Furniture
D. Gill Warner Director; retired; former
President and Chief Executive
Officer, Associated Foods
The address of these individuals is One South Main Street, Salt
Lake City, Utah 84111.
Zions does not act as investment adviser to any other
investment companies.
<PAGE>
Annual Fee Rates
(Fee rates are annual rates as a percentage of the Fund's average
daily net assets.)
Under
arrangements
Type of payment Under arrangements if Proposal 1
made by the Fund currently in effect is adopted
Advisory fee 0.50 of 1% 0.50 of 1%
(Sub-Advisory fee
paid by the Adviser) (0.23 of 1%) (0.23
of 1%)
Total Payments
by the Fund 0.50 of 1% 0.50 of 1%
Because there will be no change in fees, the amounts the
Proposed Sub-Adviser will be paid will be the same as those paid
to the current Sub-Adviser.
ACTION UPON A PROPOSED NEW
SUB-ADVISORY AGREEMENT BETWEEN AQUILA MANAGEMENT CORPORATION
AS MANAGER AND ZIONS FIRST NATIONAL BANK AS SUB-ADVISER
(PROPOSAL NO. 1)
The proposed new sub-advisory agreement (the "Sub-Advisory
Agreement") has the same terms and fees structure as the current
sub-advisory agreement between the Manager and the Current Sub-
Adviser except as noted below.
Description of the Proposed Sub-Advisory Agreement
The Sub-Advisory Agreement provides that the Manager
appoints Zions as Sub-Adviser to render, to the Manager and to
the Fund, investment research and advisory services as set forth
below under the supervision of the Manager and subject to the
approval and direction of the Board of Trustees of the Fund. The
Sub-Advisory Agreement provides that the Sub-Adviser will act as
managerial investment adviser to the Fund with respect to the
investment of the Fund's assets, and will supervise and arrange
the purchase of securities for and the sale of securities held in
the portfolio of the Fund.
The Sub-Advisory Agreement provides in general that subject
to the direction and control of the Manager and the Board of
Trustees of the Fund, the Sub-Adviser shall:
(i) supervise continuously the investment program of the
Fund and the composition of its portfolio;
(ii) determine what securities shall be purchased or sold by
the Fund;
(iii) arrange for the purchase and the sale of securities
held in the portfolio of the Fund;
(iv) at its expense provide for pricing of the Fund's
portfolio daily using a pricing service or other source of
pricing information satisfactory to the Fund and, unless
otherwise directed by the Board of Trustees, provide for
pricing of the Fund's portfolio at least quarterly using
another such source satisfactory to the Fund; and
(v) consult with the Manager in connection with its duties
thereunder.
The Sub-Advisory Agreement provides that any investment
program furnished by the Sub-Adviser shall at all times conform
to, and be in accordance with, any requirements imposed by: (1)
the Investment Company Act of 1940 (the "Act") and any rules or
regulations in force thereunder; (2) any other applicable laws,
rules and regulations; (3) the Declaration of Trust and By-Laws
of the Fund as amended from time to time; (4) any policies and
determinations of the Board of Trustees of the Fund; and (5) the
fundamental policies of the Fund, as reflected in its
registration statement under the Act or as amended by the
shareholders of the Fund.
The Sub-Advisory Agreement provides that the Sub-Adviser
shall give to the Manager and to the Fund the benefit of its best
judgment and effort in rendering services thereunder, but the
Sub-Adviser shall not be liable for any loss sustained by reason
of the adoption of any investment policy or the purchase, sale or
retention of any security, whether or not such purchase, sale or
retention shall have been based upon (i) its own investigation
and research or (ii) investigation and research made by any other
individual, firm or corporation, if such purchase, sale or
retention shall have been made and such other individual, firm or
corporation shall have been selected in good faith by the Sub-
Adviser. Under the Sub-Advisory Agreement, the Sub-Adviser will
not be liable for any error in judgment or for any loss suffered
by the Fund or its security holders in connection with the
matters to which the Agreement relates, except a loss resulting
from wilful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard
by it of its obligations and duties under the Agreement.
The Sub-Advisory Agreement provides that nothing in it shall
prevent the Sub-Adviser or any affiliated person (as defined in
the Act) of the Sub-Adviser from acting as investment adviser or
manager for any other person, firm or corporation and shall not
in any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any securities
for its own or their own accounts or for the accounts of others
for whom it or they may be acting, provided, however, that the
Sub-Adviser expressly represents that, while acting as Sub-
Adviser, it will undertake no activities which, in its judgment,
will adversely affect the performance of its obligations to the
Fund under the Agreement. It is agreed that the Sub-Adviser shall
have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act
and the Securities Act of 1933, except for information supplied
by the Sub-Adviser for inclusion therein. The Sub-Adviser shall
promptly inform the Fund as to any information concerning the
Sub-Adviser appropriate for inclusion in such Registration
Statement, or as to any transaction or proposed transaction which
might result in an assignment (as defined in the Act) of the
Agreement. To the extent that the Manager is indemnified under
the Fund's Declaration of Trust with respect to the services
provided under the Agreement by the Sub-Adviser, the Manager
agrees to provide the Sub-Adviser the benefits of such
indemnification.
The Sub-Advisory Agreement provides that in connection with
its duties to arrange for the purchase and sale of the Fund's
portfolio securities, the Sub-Adviser shall select such broker-
dealers ("dealers") as shall, in the Sub-Adviser's judgment,
implement the policy of the Fund to achieve "best execution,"
i.e., prompt, efficient, and reliable execution of orders at the
most favorable net price. The Sub-Adviser shall cause the Fund to
deal directly with the selling or purchasing principal or market
maker without incurring brokerage commissions unless the Sub-
Adviser determines that better price or execution may be obtained
by paying such commissions; the Fund expects that most
transactions will be principal transactions at net prices and
that the Fund will incur little or no brokerage costs. The Fund
understands that purchases from underwriters include a commission
or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread
between the bid and asked prices. In allocating transactions to
dealers, the Sub-Adviser is authorized to consider, in
determining whether a particular dealer will provide best
execution, the dealer's reliability, integrity, financial
condition and risk in positioning the securities involved, as
well as the difficulty of the transaction in question, and thus
need not pay the lowest spread or commission available if the
Sub-Adviser determines in good faith that the amount of
commission is reasonable in relation to the value of the
brokerage and research services provided by the dealer, viewed
either in terms of the particular transaction or the Sub-
Adviser's overall responsibilities. If, on the foregoing basis,
the transaction in question could be allocated to two or more
dealers, the Sub-Adviser is authorized, in making such
allocation, to consider (i) whether a dealer has provided
research services, as further discussed below; and (ii) whether a
dealer has sold shares of the Fund. Such research may be in
written form or through direct contact with individuals and may
include quotations on portfolio securities and information on
particular issuers and industries, as well as on market,
economic, or institutional activities. The Fund recognizes that
no dollar value can be placed on such research services or on
execution services and that such research services may or may not
be useful to the Fund and may be used for the benefit of the Sub-
Adviser or its other clients.
The Sub-Advisory Agreement provides that the Sub-Adviser
agrees to maintain, and to preserve for the periods prescribed,
such books and records with respect to the portfolio transactions
of the Fund as are required by applicable law and regulation, and
agrees that all records which it maintains for the Fund on behalf
of the Manager shall be the property of the Fund and shall be
surrendered promptly to the Fund or the Manager upon request. The
Sub-Adviser agrees to furnish to the Manager and to the Board of
Trustees of the Fund such periodic and special reports as each
may reasonably request.
The Sub-Advisory Agreement provides that the Sub-Adviser
shall bear all of the expenses it incurs in fulfilling its
obligations under the Agreement. In particular, but without
limiting the generality of the foregoing: the Sub-Adviser shall
furnish the Fund, at the Sub-Adviser's expense, all office space,
facilities, equipment and clerical personnel necessary for
carrying out its duties under the Agreement. The Sub-Adviser
shall supply, or cause to be supplied, to any investment adviser,
administrator or principal underwriter of the Fund all necessary
financial information in connection with such adviser's,
administrator's or principal underwriter's duties under any
agreement between such adviser, administrator or principal
underwriter and the Fund. The Sub-Adviser will also pay all
compensation of the Fund's officers, employees, and Trustees, if
any, who are affiliated persons of the Sub-Adviser.
The Sub-Advisory Agreement provides that the Manager agrees
to pay the Sub-Adviser, and the Sub-Adviser agrees to accept as
full compensation for all services rendered by the Sub-Adviser as
such, a management fee payable monthly and computed on the net
asset value of the Fund as of the close of business each business
day at the annual rate of 0.23 of 1% of such net asset value.
In a new provision, the Sub-Advisory Agreement also provides
that notwithstanding the foregoing, the Sub-Adviser acknowledges
that the Manager intends from time to time to waive some or all
of the fee payable under the Advisory and Administration
Agreement as the Manager deems necessary to maintain a
competitive yield for the Fund; in connection therewith, the Sub-
Adviser agrees to waive all or part of its fee under this
Agreement on the following terms and conditions: The Manager
shall from time to time determine, in its sole discretion, how
much, if any, of the fee payable by the Fund under the Advisory
and Administration Agreement shall be waived and how much of such
waiver shall be borne by the Sub-Adviser, provided, however, that
1. In no period (each a "Cumulative Period") measured from
the effective date of the Agreement shall the waiver borne
by the Sub-Adviser constitute more than 46% of the total fee
payable under the Administration and Advisory Agreement that
is waived by the Manager during such Cumulative Period (46%
being the proportion, expressed as a percent, of the annual
fee rate payable to the Sub-Adviser to that payable to the
Manager); and
2. In no event shall the compensation actually paid to the
Sub-Adviser, net of such waivers and stated as an annual
percentage of the average net assets of the Fund during the
relevant period, be less than
(i) 0.13 of 1% for any period in which the net assets
of the Fund equal or exceed $58 million; or
(ii) 0.06 of 1% for any period during the first 365
days following the effectiveness of the Agreement in
which the minimum net compensation provision in (i)
above is inapplicable (i.e., when Fund assets equal or
exceed $58 million).
In another new provision in the Sub-Advisory Agreement, the
Sub-Adviser further acknowledges that the Manager may from time
to time determine that, in addition to the fee waivers discussed
above, reimbursement of some of the Fund's expenses, including
expenses attributable to Sub-Advisory fees, is necessary in order
to maintain a competitive yield for the Fund. The Sub-Adviser
agrees to share the costs of such reimbursements, as allocated in
the Manager's discretion between the Manager and the Sub-Adviser,
during any period in which the minimum net compensation
provisions discussed above do not apply, provided, however, that
in no event shall the Sub-Adviser's share of such reimbursements
in any Cumulative Period exceed 46% of the total expense
reimbursements for that Cumulative Period.
The Sub-Adviser further acknowledges that in addition to the
waivers and reimbursements contemplated by the foregoing
provisions, there may be such additional and voluntary waivers
and reimbursements by the Sub-Adviser as it may, in consultation
with the Manager, determine to be appropriate from time to time.
The Sub-Advisory Agreement provides that it will become
effective upon approval by the shareholders of the Fund and
shall, unless terminated as thereinafter provided, continue in
effect until the December 31 next preceding the first anniversary
of the effective date of the Agreement, and from year to year
thereafter, but only so long as such continuance is specifically
approved at least annually (1) by a vote of the Fund's Board of
Trustees, including a vote of a majority of the Trustees who are
not parties to the Agreement or "interested persons" (as defined
in the Act) of any such party, with votes cast in person at a
meeting called for the purpose of voting on such approval, or (2)
by a vote of the holders of a "majority" (as so defined) of the
outstanding voting securities of the Fund and by such a vote of
the Trustees.
The Sub-Advisory Agreement provides that it may be
terminated by the Sub-Adviser at any time without penalty upon
giving the Manager and the Fund sixty days' written notice (which
notice may be waived). The Sub-Adviser agrees not to exercise
this right for three years after the Sub-Advisory Agreement
becomes effective, except for regulatory reasons. It may be
terminated by the Manager or the Fund at any time without penalty
upon giving the Sub-Adviser sixty days' written notice (which
notice may be waived by the Sub-Adviser), provided that such
termination by the Fund shall be directed or approved by a vote
of a majority of its Trustees in office at the time or by a vote
of the holders of a majority (as defined in the Act) of the
voting securities of the Fund outstanding and entitled to vote.
The Sub-Advisory Agreement will automatically terminate in the
event of its assignment (as defined in the Act) or the
termination of the Advisory and Administration Agreement.
Another new provision in the Sub-Advisory Agreement provides
that for so long as the Sub-Adviser provides investment services
to the Fund, neither the Sub-Adviser nor any subsidiary, parent
or affiliated company of the Sub-Adviser (a "Sub-Advisory
Affiliate") will develop or market a proprietary or other tax-
exempt municipal bond fund which is competitive with the Fund.
However, the Sub-Adviser or a Sub-Advisory Affiliate may became a
provider of services to such a municipal bond fund upon and
solely by reason of the fact that a person, firm, or corporation
that provides such investment company services has been directly
or indirectly acquired by, or merged with, the Sub-Adviser or
Sub-Advisory Affiliate, as long as such investment company does
not operate in a manner that permits ready exchange with an
investment company the investment adviser of which is the Sub-
Adviser or Sub-Advisory Affiliate.
Another new provision of the Sub-Advisory Agreement provides
that the Sub-Adviser, under the supervision of the Manager, shall
provide at its expense portfolio management particularly
qualified to manage investments in which the Fund primarily
invests, and such portfolio management shall be located in the
state of issuers of such investments.
In approving of the proposed new arrangements, the Board of
Trustees stipulated that the Sub-Advisory Agreement could provide
for its termination by the Adviser upon reasonable notice,
provided, however, that the Adviser should not terminate the Sub-
Advisory Agreement (and any attempt by the Adviser to terminate
such agreement would be null and void) unless, prior to giving
notice to the Sub-Adviser of such termination, either (i) the
Advisory Agreement had been reapproved by the Board of Trustees
of the Trust, in the manner described in Section 15 of the 1940
Act, in contemplation of the Adviser's managing the investment
portfolio of the Trust without the assistance of a Sub-Adviser;
(ii) a new Sub-Advisory Agreement, to take effect upon the
termination of the existing Sub-Advisory Agreement, had been
approved by the Board of Trustees and the shareholders of the
Trust as contemplated by Section 15 of the 1940 Act; (iii) the
Board had authorized such termination; or (iv) the Adviser had
complied with such other or additional directives and
authorizations of the Board with respect to such termination as
may from time to time be in effect.
Action Requested
THE BOARD OF TRUSTEES RECOMMENDS THAT THE PROPOSED SUB-ADVISORY
AGREEMENT DESCRIBED ABOVE BE APPROVED.
Vote Required
The favorable vote of the holders of a majority (as defined
in the Act) of the outstanding shares of the Fund, is required
for the approval of this Proposal No. 1. Under the 1940 Act, the
vote of the holders of a majority of the outstanding shares of
the Fund means the vote of the holders of the lesser of (a) 67%
or more of the shares of the Fund 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 Fund, with 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 all of the Fund's
classes of shares. If the required vote is not obtained the Board
of Trustees will consider what further action might be
appropriate, which could include calling another meeting of the
shareholders of the Fund.
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 proxies 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.
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>
TAX-FREE FUND FOR UTAH
PROXY FOR SHAREHOLDERS MEETING JULY 15, 1998
PROXY SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned shareholder of TAX-FREE FUND FOR UTAH (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 a
Special Meeting of Shareholders of the Fund to be held on July
15, 1998, at the offices of the Fund, 380 Madison Avenue, Suite
2300, New York, NY 10017, 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 the proposal listed below.
The shares represented hereby will be voted as indicated below or
FOR if no choice is indicated.
As to any other matter said attorneys shall vote in
accordance with their best judgment.
Please indicate your vote by an "X" in the appropriate box
below.
Action on proposed Sub-Advisory
Agreement with Zions First
National Bank
__ __ __
(Proposal No. 1) FOR [__] AGAINST [__] ABSTAIN [__]
Dated: ____________ ______, 1998
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.
C:\WP51\P\TFFUPX1.984
