Important Notice Please Read Immediately Hawaiian Tax-Free Trust 380 Madison Avenue, Suite 2300, New York, N Y 10017 Notice of Annual Meeting of Shareholders to be held on September 15, 2000, 2000 To Shareholders of the Trust: The purpose of this Notice is to advise you that an Annual Meeting of the Shareholders of Hawaiian Tax-Free Trust (the "Trust") will be held: Place: (a) at the Ala Moana Hotel, Hibiscus Ballroom, 10 Atkinson Drive, Honolulu, Hawaii; Time: (b) on September 15, 2000 at 10:00 a.m. local time; Purposes: (c) for the following purposes: (i) to elect eleven Trustees; each Trustee elected will hold office until the next annual meeting of the Trust's shareholders or until his or her successor is duly elected(Proposal No. 1); (ii) to ratify (that is, to approve) or reject the selection of KPMG LLP as the Trust's independent auditors for the fiscal year ending March 31, 2001 (Proposal No. 2); (iii) to act upon a proposal to change the fundamental policies of the Trust to allow the use of additional nationally recognized statistical rating organizations for rating obligations the Trust may purchase (Proposal No. 3); (iv) to act upon any other matters which may properly come before the Meeting at the scheduled time and place or any adjourned meeting or meetings. Who Can Vote What Shares: (d) To vote at the Meeting, you must have been a shareholder on the Trust's records at the close of business on June 19, 2000 (the "record date"). Also, the number of shares of each of the Trust's outstanding classes of shares that you held at that time and the respective net asset values of each class of shares at that time determine the number of votes you may cast at the Meeting (or any adjourned meeting or meetings). By Order of the Board of Trustees, EDWARD M. W. HINES Secretary July 15, 2000 Please Note: If you do not expect to attend the Meeting, please indicate voting instructions in any of three ways: by telephone, by e-mail or by completing the enclosed proxy card and returning it in the accompanying stamped envelope. To avoid unnecessary expense to the Trust, we request your cooperation in voting no matter how large or small your holding may be. Hawaiian Tax-Free Trust 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 Hawaiian Tax-Free Trust (the "Trust"). The purpose of this Proxy Statement (all the rest of this document) is to give you information on which you may base your decisions as to the choices, if any, you make in voting. A copy of the Trust's most recent annual report and most recent semi-annual report will be sent to you without charge upon written request to the Trust's Distributor, Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by calling 800-228-4227 toll-free or 212-697-6666. The Trust's organizer and Administrator (the "Administrator") is Aquila Management Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The Trust's principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017. Pacific Century Trust, Financial Plaza of the Pacific, P.O. Box 3170, Honolulu, Hawaii 96802 is the Trust's Investment Adviser. This Notice and Proxy Statement are first being mailed on or about July 15, 2000. You should read the Proxy Statement prior to voting. Then, you may vote in one of three ways: Proxy Card The enclosed proxy card authorizes the persons named (or their substitutes) to vote your shares; the Trust calls these persons the "proxy holders." As to the election of Trustees you may authorize the proxy holders to vote your shares for the entire slate indicated below by marking the appropriate box on the proxy card or by merely signing and returning your proxy card with no instructions. Or you may withhold the authority of the proxy holders to vote on the election of Trustees by marking the appropriate box. Also, you may withhold that authority as to any particular nominee by following the instructions on the proxy card. As to the other matters listed on the proxy card, you may direct the proxy holders to vote your shares on these proposals by marking the appropriate box "For" or "Against" or instruct them not to vote your shares on the proposal by marking the "Abstain" box. If you return your signed proxy card and do not mark the box on a proposal, the proxy holders will vote your shares for that proposal. Telephone Voting To vote your shares by telephone, call toll free 1-800- 690-6903. You will be prompted to enter the 12-digit control number on the enclosed proxy card. Follow the recorded instructions using your proxy card as a guide. If you vote by phone, you need not return the proxy card by mail. Internet Voting To vote your shares by the Internet, please contact the Trust at http://www.proxyvote.com. You will be prompted to enter the 12-digit control number on the enclosed proxy card. Follow the instructions on the screen, using your proxy card as a guide. If you vote by the Internet, you need not return the proxy card by mail. General Information You may end the power of the proxy holders to vote your shares by: (i) so notifying the Trust in writing; (ii) signing a new and different proxy card (if the Trust receives it before the old one is used); (iii) voting your shares at the meeting in person or by your duly appointed agent; or (iv) calling the toll free number above or contacting the Trust'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. This policy may make it more difficult to obtain the vote required to approve Proposal No. 3. The Trust is sending you this Notice and Proxy Statement in connection with the solicitation by its Trustees of proxies to be used at the Annual Meeting to be held at the time and place and for the purposes indicated in the Notice or any adjourned meeting or meetings. Whenever it is stated in this Proxy Statement that a matter is to be acted on at the Meeting, this means the Meeting held at the scheduled time or any adjourned meeting or meetings. The Trust pays the costs of the solicitation. Proxies are being solicited by the use of the mails; they may also be solicited by telephone, facsimile and personal interviews. Brokerage firms, banks and others may be requested to forward this Notice and Proxy Statement to beneficial owners of the Trust's shares so that these owners may authorize the voting of their shares. The Trust will pay these firms their out-of-pocket expenses for doing so. On the record date, the Trust had three classes of shares outstanding. All shareholders of the Trust are entitled to vote at the meeting. Each shareholder on the record date is entitled to one vote for each dollar (and a proportionate fractional vote for each fraction of a dollar) of net asset value (determined as of the record date) represented by full and fractional shares of any class held on the record date. On the record date, the net asset value per share of each of the Trust's outstanding classes of shares was as follows: Class A Shares, $10.86; Class C Shares, $10.86; and Class Y Shares, $10.88. The meeting is expected to act only upon matters that affect the Trust as a whole: the election of Trustees and the action on the selection of auditors (Proposal No. 1). On matters that affect the Trust as a whole, all shareholders of the Trust, including the shareholders of all classes of the Trust, are entitled to vote at the meeting. On the record date, the total number of shares outstanding for each class of shares was as follows: Class A Shares, 52,244,094; Class C Shares, 1,129,534; and Class Y Shares, 256,813. On the record date, the following institutional holders held 5% or more of the Trust's outstanding shares. On the basis of information received from the holders the Trust's management believes that all of the shares indicated are held for the benefit of clients Name and address Number of shares Percent of class of the holder of record Merrill Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive, Jacksonville, FL 6,195,890 Class A Shares 11.9% 275,371 Class C Shares 24.3% Fiserv Securities Inc. 2005 Market Street STE 1200 Philadelphia, PA 19103 3,798,131 Class A Shares 7.3% Additional 5% shareholders Martha N. Steele, Trustee of the Martha San Nicholas Steele Declaration of Trust, Honolulu, HI 96817 135,910 Class Y Shares 52.9% L.T. Miccio and B.A. Annis, Trustees 1314 Kalakaua Ave. Honolulu, HI 96826 21,257 Class Y Shares 8.3% L.T. Miccio, Trustee 1314 Kalakaua Ave. Honolulu, HI 96826 37,867 Class Y Shares 14.7% Key Trust Co Trustee Lent-Taylor P.O. Box 94871 Cleveland, OH 44101 14,349 Class Y Shares 5.6% The Trust's management is not aware of any other person beneficially owning more than 5% of any class of its outstanding shares as of such date. Election of Trustees (Proposal No. 1) At the Meeting, eleven Trustees are to be elected. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can instruct the proxy holders as to the voting of your shares as to the election of Trustees. All of the nominees are presently Trustees and were elected by the shareholders in October, 1999. The Trustees and officers as a group own less than 1% of the outstanding shares of the Trust. Each of the Trustees holds the same positions with the Pacific Capital Funds of Cash Assets Trust: Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust, and Pacific Capital U.S. Government Securities Cash Assets Trust, money market fund portfolios having the same Adviser and Administrator as the Trust. In the material below and elsewhere in this Proxy Statement, Aquila Management Corporation is referred to as the "Administrator" and the Trust's Distributor, Aquila Distributors, Inc., is referred to as the "Distributor." Mr. Herrmann is an interested person of the Trust as that term is defined in the Investment Company Act of 1940 (the "1940 Act") as an officer of the Trust and a director, officer and shareholder of the Distributor. Mr. Philpotts is an interested person of the Trust as a shareholder of the Adviser's corporate parent. They are so designated by an asterisk. (See "Other Information," below for a description of certain agreements among them and the Trust, including provisions about persons suggested by them to be Trustees.) In the following material Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Pacific Capital Cash Assets Trust, Capital Cash Management Trust, Capital Cash U.S. Government Securities Trust, Churchill Cash Reserves Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; and Aquila Cascadia Equity Fund and Aquila Rocky Mountain Equity Fund are called the "Aquila Equity Funds." Described in the following material are the name, address, positions with the Trust, age as of the record date and business experience during at least the past five years of each nominee and each officer of the Trust. All shares listed as owned by the Trustees are Class A Shares unless indicated otherwise. Name, Position Business Experience with the Trust, Address, Age, Shares owned Lacy B. Herrmann* Founder and Chairman of the Board of Aquila Chairman of the Management Corporation, the sponsoring Board of Trustees organization and Manager or Administrator 380 Madison Avenue and/or Adviser or Sub-Adviser to the New York, NY Aquila Money-Market Funds, the Aquila Bond 10017 Funds and the Aquila Equity Funds, Age: 71 and Founder, Chairman of the Board of Trustees Shares Owned: 791(1) and (currently or until 1998) President of each since its establishment, beginning in 1984; Director of Aquila Distributors, Inc., distributor of the above funds, since 1981 and formerly Vice President or Secretary, 1981-1998; President and a Director of STCM Management Company, Inc., sponsor and sub-adviser to Capital Cash Management Trust; 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 542 shares held of record by his wife. Vernon R. Alden Director of Sonesta International Hotels Trustee Corporation, Boston, Massachusetts 20 Park Place and General Independent Partner of Suite 1010 the Merrill Lynch-Lee Funds; Former Director Boston, MA of Colgate-Palmolive Company, Digital Equipment 02116 Corporation, Intermet Corporation, The McGraw Age: 77 Hill and The Mead Corporations; Chairman of the Shares Owned: 186 Board and Executive Committee of The Boston Company, Inc., a financial services company, 1969-1978; Trustee of Tax-Free Trust of Oregon since 1988, of Hawaiian Tax-Free Trust (this Trust), Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1989, of Cascades Cash Fund, 1989-1994, of Narragansett Insured Tax-Free Income Fund since 1992, and of Aquila Cascadia Equity Fund since 1996; Associate Dean and member of the faculty of Harvard University Graduate School of Business Administration, 1951-1962; member of the faculty and Program Director of Harvard Business School - University of Hawaii Advanced Management Program, summer of 1959 and 1960; President of Ohio University, 1962-1969; Chairman of The Japan Society of Boston, Inc., and member of several Japan-related advisory councils; Chairman of the Massachusetts Business Development Council and the Massachusetts Foreign Business Council, 1978-1983; Trustee Emeritus, Boston Symphony Orchestra; Chairman of the Massachusetts Council on the Arts and Humanities, 1972-1984; Member of the Board of Fellows of Brown University, 1969-1986; Trustee of various other cultural and educational organizations; Honorary Consul General of the Royal Kingdom of Thailand; Received Decorations from the Emperor of Japan (1986) and the King of Thailand (1996 and 1997). Arthur K. Carlson Retired; Advisory Director Trustee of the Renaissance Companies 8702 North Via La Serena (design and construction Paradise Valley, companies of commercial, AZ 85253 industrial and upscale residential Age: 78 properties) since 1996; Senior Vice President Shares Owned: 1,140 (2) and Manager of the Trust Division of The Valley National Bank of Arizona, 1977-1987; Trustee of Hawaiian Tax-Free Trust (this Trust), Tax-Free Trust of Arizona and Pacific Capital Cash Assets Trust since 1987, of Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1988,of Aquila Rocky Mountain Equity Fund since 1993 and of Tax-Free Fund of Colorado, 1987-2000; previously Vice President of Investment Research at Citibank, New York City, and prior to that Vice President and Director of Investment Research of Irving Trust Company, New York City; past President of The New York Society of Security Analysts and currently a member of the Phoenix Society of Financial Analysts; formerly Director of the Financial Analysts Federation; past Chairman of the Board and past Director of Mercy Healthcare of Arizona, Phoenix, Arizona; Director of Northern Arizona University Foundation since 1990, present or formerly an officer and/or director of various other community and professional organizations. (2)Held in street name William M. Cole President of Cole International, Trustee Inc., financial and shipping consultants, 852 Ramapo Way since 1974; President of Cole Associates, Westfield, NJ shopping center and real estate developers, 07090 1974-1976; President of Seatrain Lines, Age: 69 Inc., 1970-1974; former General Partner of Shares owned: 85 Jones & Thompson, international shipping brokers; Trustee of Pacific Capital Cash Assets Trust since 1984, of Hawaiian Tax-Free Trust(this 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 Tax-Free Fund of Colorado, 1987-2000; Chairman of Cole Group, a financial consulting and real estate firm, since 1985. Thomas W. Courtney President of Courtney Associates, Inc., Trustee a venture capital firm, since 1988; General P.O. Box 8186 Partner of Trivest Venture Fund, 1983-1988; Naples, FL 33941 President of Federated Investment Counseling Age: 66 Inc., 1975-1982; President of Boston Company Shares owned:1,848 Institutional Investors, Inc., 1970-1975; formerly a Director of the Financial Analysts Federation; Trustee of Hawaiian Tax-Free Trust (this Trust)and Pacific Capital Cash Assets Trust since 1984, of Tax-Free Trust of Arizona since 1986 and of Pacific Capital Tax- Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1988; Trustee of numerous Oppenheimer Capital and Oppenheimer Management Funds. Richard W. Gushman, II President and Chief Executive Officer of Trustee OKOA, INC., a private Hawaii corporation 700 Bishop Street involved in real estate; adviser to RAMPAC, Suite 222 Inc., a wholly owned subsidiary of the Bank Honolulu, of Hawaii, involved with commercial real HI 96813 estate finance; Trustee of Hawaiian Tax-Free Age: 54 Trust (this Trust) since 1992 and of Pacific Shares owned: 723 Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1993; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of the University of Hawaii Foundation, of Hawaii Pacific University and of The Estate of James Campbell; Member of the Boards of Aloha United Way, Boys and Girls Club of Honolulu and Oceanic Cablevision, Inc.; Chairman of the Real Estate Committee and Director of Crazy Shirts, Inc. and Director of Servco Inc.,a diversified company whose interests include Lexis/Toyota dealerships throughout Hawaii. Stanley W. Hong President and Chief Executive Officer Trustee of The Chamber of Commerce of Hawaii since 4976 Poola Street 1996; business consultant since 1994; Senior Honolulu, Hawaii 96821 Vice President of McCormack Properties, Ltd., Age: 64 1993-1994; President and Chief Executive of the Shares owned: 1,197(3) Hawaii Visitors Bureau, 1984-1993; Vice President, General Counsel and Corporate Secretary at Theo, Davies & Co., Ltd., a multiple business company, 1973-1984; formerly Legislative Assistant to U.S. Senator Hiram L. Fong; member of the Boards of Directors of several community organizations; Trustee of Hawaiian Tax-Free Trust since 1992 and of Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1993; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Director of Central Pacific Bank since 1985 and of Hawaii Public Television Foundation since 1998; Trustee of Nature Conservancy of Hawaii since 1990. (3) Held of record by his wife Theodore T. Mason Executive Director of Louisiana Trustee Power Partners, LLC since 1999 26 Circle Drive, and of East Wind Power Partners Hastings-on-Hudson, since 1994; First Vice President NY 10706 of the Alumni Association of SUNY Age: 64 Maritime College (Second Vice President, Shares Owned: 870 1998-2000) and Director of the same organization since 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 Capital Cash Management Trust 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 (this 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 since 1992; Trustee of OCC Accumulation Trust and the OCC Cash Reserves, Inc. since 1999; 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. Russell K. Okata Executive Director, Hawaii Government Trustee Employees Association AFSCME Local 152, 888 Miliani Street AFL-CIO since 1981; Trustee of Hawaiian Suite 601, Tax-Free Trust (this trust) since 1992 and of Honolulu, HI Pacific Capital Cash Assets Trust,Pacific 96813-2991 Capital Tax-Free Cash Assets Trust and Pacific Age: 56 Capital U.S. Government Securities Cash Assets Shares owned: 654(4) Trust since 1993; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Chairman of the Royal State Insurance Group since 1988; Trustee of the Blood Bank of Hawaii since 1975 (Chair 1982-1984) International Vice President of the American Federation of State, Country and Municipal Employees, AFL-CIO since 1981; Director of the Rehabilitation Hospital of the Pacific since 1981; Trustee of the Public Schools of Hawaii Foundation since 1986; Member of the Judicial Council of Hawaii since 1987; and 1997 chair of the Hawaii Community Foundation. (4) Held jointly with his wife. Douglas Philpotts* Retired; Director of Hawaiian Trust Trustee Company, Limited 1986-1997; Chairman 5061 Maunalani Circle of the Board, 1992-1994 and President, Honolulu, HI 96816 1986-1992; Director of Victoria Ward, Age: 68 Limited; Trustee of Pacific Capital Shares owned: 1,039(5) Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Hawaiian Tax-Free Trust (this Trust) since 1992; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993; Trustee of the Strong Foundation; present or former director or trustee of a number of civic and charitable organizations in Hawaii. (5) Held as trustee of a personal trust. Oswald K. Stender Director of Hawaiian Electric Industries, Trustee Inc., a public utility holding company,since 925 Bethel St. 1993; Trustee of the Bernice Pauahi Bishop Honolulu, HI Estate 1990-1999; Senior Advisor to the 96813 Trustees of The Estate of James Campbell, Age:68 1987-1989 and Chief Executive Officer, 1976- Shares owned: 573 1988; Director of several housing and real estate associations; Director, member or trustee of several community organizations; Trustee of Hawaiian Tax- Free Trust(this Trust) since 1992 and of Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1993; Trustee of Pacific Capital Funds, which includes bond and stock funds, since 1993. Diana P. Herrmann President and Chief Operating Officer of President the Administrator since 1997, a 380 Madison Director since 1984, Secretary since 1986 Avenue and previously its Executive Vice New York, President, Senior Vice President NY 10017 or Vice President, 1986-1997; Age: 42 President of various Aquila Bond and Money-Market Funds since 1998; Assistant Vice President, Vice President, Senior Vice President or Executive Vice President of Aquila Money-Market, Bond and Equity Funds since 1986; Trustee of a number of Aquila Money-Market, Bond and Equity Funds since 1995; Trustee of Reserve Money-Market Funds, 1999-2000 and of Reserve Private Equity Series, 1998-2000; Assistant Vice President and formerly Loan Officer of European American Bank, 1981-1986; daughter of the Trust's Chairman; Trustee of the Leopold Schepp Foundation (academic scholarships) since 1995; actively involved in mutual fund and trade associations and in college and other volunteer organizations. Sherri Foster Senior Vice President of Hawaiian Senior Vice Tax-Free Trust (this Trust) since 1993, President President, Vice President, 1988-1992 100 Ridge Road and Assistant Vice President, 1985-1988; Suite 1813-15 Assistant Vice President of Pacific Lahaina, HI 96761 Capital Cash Assets Trust since 1985 Age: 49 and of Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust since 1988; Vice President of Aquila Cascadia Equity Fund since 1998; Registered Representative of the Distributor since 1985; Realtor- Associate of Tom Soeten Realty; Sherian Bender Realty, successor to John Wilson Enterprises, 1983-1998; Executive Secretary of the Hyatt Regency, Maui, 1981-1983. Stephen J. Caridi Vice President of the Distributor since Vice 1995, Assistant Vice President 1988-1995, President Marketing Associate, 1986-1988; Vice 380 Madison President of Hawaiian Tax-Free Trust (this Avenue Trust) since 1998; Senior Vice President of New York, Narragansett Insured Tax-Free Income Fund since NY 10017 1998, Vice President since 1996; Assistant Vice Age: 39 President of Tax-Free Fund For Utah since 1993; Mutual Funds Coordinator of Prudential Bache Securities, 1984-1986; Account Representative of Astoria Federal Savings and Loan Association, 1979-1984. Rose F. Marotta Chief Financial Officer of the Aquila Chief Financial Officer Money-Market, Bond and Equity Funds 380 Madison Avenue since 1991 and Treasurer, 1981-1991; New York, NY formerly Treasurer of the predecessor of 10017 Capital Cash Management Trust; Treasurer Age: 76 and Director of STCM Management Company, Inc., since 1974; Treasurer of InCap Management Corporation since 1982, of the Administrator since 1984 and of the Distributor, 1985-2000. Richard F. West Treasurer of the Aquila Money-Market, Treasurer Bond and Equity Funds and of Aquila 380 Madison Avenue Distributors, Inc. since 1992; New York, NY Associate Director of Furman Selz 10017 Incorporated, 1991-1992; Vice Age: 64 President of Scudder, Stevens & Clark, Inc. and Treasurer of Scudder Institutional Funds, 1989-1991; Vice President of Lazard Freres Institutional Funds Group, Treasurer of Lazard Freres Group of Investment Companies and HT Insight Funds, Inc., 1986-1988; Vice President of Lehman Management Co., Inc. and Assistant Treasurer of Lehman Money Market Funds, 1981-1985; Controller of Seligman Group of Investment Companies, 1960-1980. Lori A Vindigni Assistant Vice President of Aquila Management Assistant Treasurer Corporation since 1998, formerly Fund Accountant 380 Madison Avenue for the Aquila Group of Investment Companies New York, NY since 1995; Staff Officer and Fund Accountant of 10017 Citibank Global Asset Management Group of Age: 33 Investment Companies, 1994-1995; Fund Accounting Supervisor of Dean Witter Group of Investment Companies, 1990-1994; BS Kean College of New Jersey, 1990. Edward M. W. Hines Partner of Hollyer Brady Smith Troxell Secretary Barrett Rockett Hines & Mone LLP, 551 Fifth Avenue attorneys, since 1989 and counsel, New York, NY 1987-1989; Secretary of the Aquila 10176 Money-Market, Bond and Equity Funds since 1982; Age: 60 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 of the Aquila Money- Assistant Secretary Market, Bond and Equity Funds since 1995 380 Madison Avenue and Vice President of the Aquila Money- New York, NY Market Funds since 1990; Vice President of 10017 the Administrator since 1990; Investment Age: 60 Services Consultant and Bank Services Executive of Wright Investors' Service, a registered investment adviser, 1983- 1989; Member of the American Finance Association, the Western Finance Association and the Society of Quantitative Analysts. Robert W. Anderson Compliance Officer since 1998 and Assistant Assistant Secretary and Secretary of the Aquila Money-Market Funds Compliance Officer and the Aquila Bond and Equity Funds; 380 Madison Avenue, Consultant, The Wadsworth Group, 1995-1998; New York, Executive Vice President of Sheffield NY 10017 Management Company (investment adviser and Age: 59 distributor of a mutual fund group), 1986-1995. The Trust does not currently pay fees to any of the Trust's officers or to Trustees affiliated with the Adviser or Administrator. For its fiscal year ended March 31, 2000, the Trust paid a total of $144,240 in compensation and reimbursement of expenses to the Trustees. No other compensation or remuneration of any type, direct or contingent, was paid by the Trust to its Trustees. The Trust is one of the 15 funds in the Aquilasm Group of Funds, which consist of tax-free municipal bond funds, money- market funds and equity funds. The following table lists the compensation of all nominees for Trustee who received compensation from the Trust or from other funds in the Aquilasm Group of Funds during the Trust's fiscal year. None of such Trustees has any pension or retirement benefits from the Trust or any of the other funds in the Aquila group. Compensation Number of from all boards on Compensation funds in the which the from the Aquilasm Trustee Name Trust Group of Funds serves Arthur K. Carlson $14,900 $64,250 7 William M. Cole $13,900 $46,450 5 Theodore T. Mason $14,600 $53,550 7 Vernon Alden $14,600 $56,750 7 Thomas W. Courtney $14,600 $51,550 5 Richard W Gushman $15,364 $43,750 4 Stanley W. Hong $14,250 $41,450 4 Russell K. Okata $14,250 $41,450 4 Douglas Philpotts $13,175 $36,350 4 Oswald Stender $14,600 41,800 4 Certain Trustees are also trustees of the funds in the Pacific Capital Group of Funds for which the Adviser is also investment adviser. During the calendar year 1999, these funds paid the following Trustees the amounts listed: Mr. Gushman, $16,750; Mr. Hong, $16,750; Mr. Okata, $16,750; Mr. Philpotts, $16,750; and Mr. Stender, $16,750. Class A Shares may be purchased without a sales charge by certain of the Trust's Trustees and officers. The Trust's Administrator is Manager or Administrator to the Aquilasm Group of Trusts, which consists of tax-free municipal bond funds, money-market funds and equity funds. As of May 31,2000 these funds had aggregate assets of approximately $3.1 billion, of which approximately $1.7 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 fiscal year ended March 31, 2000 the Trust paid $1,606,755 in fees to the Administrator. During the fiscal year ended March 31, 2000, $1,205,651 was paid under Part I of the Trust's Distribution Plan to Qualified Recipients with respect to Class A Shares, of which, $68,857 was retained by the Distributor. With respect to Class C Shares, during the same period $89,904 was paid under Part II of the Plan and $29,968 was paid under a Shareholder Services Plan. Of these total payments of $119,872, the Distributor received $62,688. All of such payments were for compensation. The Distributor currently handles the distribution of the shares of fifteen funds (six money-market funds, seven tax-free municipal bond funds and two equity funds), including the Trust. Under the Distribution Agreement, the Distributor is responsible for the payment of certain printing and distribution costs relating to prospectuses and reports as well as the costs of supplemental sales literature, advertising and other promotional activities. The shares of the Distributor are owned 72% by Mr. Herrmann and other members of his immediate family, 24% by Diana P. Herrmann and the balance by a former officer of the Distributor. Other Information on Trustees The Trustees have appointed a standing Audit Committee consisting of all of the Trustees (the "Independent Trustees") who are not "interested persons" of the Trust, as that term is defined in the 1940 Act. The Committee (i) recommends to the Board of Trustees what firm of independent auditors will be selected by the Board of Trustees (subject to shareholder ratification); (ii) reviews the methods, scope and result of audits and the fees charged; and (iii) reviews the adequacy of the Trust's internal accounting procedures and controls. The Committee held one meeting during the Trust's last fiscal year. The Board of Trustees does not have a nominating committee. During the Trust's last fiscal year, the Board of Trustees held four meetings. All current Trustees were present for at least 75% of the total number of Board meetings and Audit Committee meetings (if such Trustee was a member of that committee). Ratification or Rejection of Selection of Independent Auditors (Proposal No. 2) KPMG LLP, which is currently serving as the Trust's auditors, has been selected by the Trust's Board of Trustees, including a majority of the Independent Trustees, as the Trust's independent auditors for the fiscal year ending March 31, 2000 Such selection is submitted to the shareholders for ratification or rejection. The firm has no direct or indirect financial interest in the Trust, the Trust's Administrator or the Trust's Adviser. It is expected that representatives of the firm will not be present at the meeting but will be available should any matter arise requiring their presence. Action Regarding a Change in the Trust's Fundamental Policies to Allow the Use of Additional Nationally Recognized Statistical Rating Organizations for Rating Obligations the Trust May Purchase (Proposal No. 3) Since beginning operations, the Trust has had a Fundamental policy that defines the "investment-grade" securities the Trust may purchase as those rated within the four highest credit ratings assigned by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") or, if unrated, determined to be of comparable quality. When this Fundamental policy was put in place Moody's and S&P were essentially the only nationally recognized statistical rating organizations ("NRSROs") with respect to municipal obligations. In recent years, other organizations, notably Fitch IBCA, Inc. ("Fitch"), have become active in rating municipal obligations. Municipal bond issuers pay to have their bonds rated and there is competition among the NRSROs. If an issuer chooses to have its bonds rated by an NRSRO other than Moody's or S&P, the current Fundamental policy of the Trust has the effect of requiring the Trust either to forego purchasing the bonds because they are not rated by Moody's or S&P or to treat them as "unrated" when in fact they do have ratings assigned by an NRSRO. Both results distort the clear intent of the policy. Accordingly the Board of Trustees has determined that it would be in the best interest of the Trust and its shareholders to change the Fundamental policy so that the ratings used to define "investment-grade" securities would include those assigned by any NRSRO approved from time to time by the Board of Trustees. At the present time, if the proposed change is adopted, the Board of Trustees will approve Fitch in addition to Moody's and S&P. The Board of Trustees has determined that the standards Fitch employs in rating bonds are comparable to those of Moody's and S&P that bonds in the four highest categories rated by Fitch are of comparable quality to those similarly rated by Moody's and S&P. Action Requested The Board of Trustees recommends that the proposed change in the Fund's fundamental policies described above be approved. Vote Required The favorable vote of the holders of a majority (as defined in the 1940 Act) of the outstanding shares of the Trust is required for the approval of this Proposal No. 3. Under the 1940 Act, the vote of the holders of a majority of the outstanding shares of the Trust means the vote of the holders of the lesser of (a) 67% or more of the shares of the Trust present at the Meeting or represented by proxy if the holders of more than 50% of such shares are so present or represented, or (b) more than 50% of the outstanding shares of the Trust, with one vote for each dollar (and a proportionate fractional vote for each fraction of a dollar) of net asset value (determined as of the record date) represented by full and fractional shares of all of the Trust's three classes of shares. If this proposal is not approved, the Board of Trustees will consider appropriate action, which could include continuing with the present policies or calling another meeting of shareholders. The meeting can be adjourned by the affirmative vote of a majority of the shares present in person or by proxy. In voting for an adjournment, the proxy holders will consider all relevant factors, including possible delay of receipt of proxies and whether or not a substantial number of negative votes have been cast with respect to any proposal. The shares of shareholders who have voted by proxy against a proposal will be voted against adjournment. Receipt of Shareholder Proposals Under the proxy rules of the Securities and Exchange Commission, shareholder proposals meeting tests contained in those rules may, under certain conditions, be included in the Trust's proxy statement and proxy card for a particular annual meeting. One of these conditions relates to the timely receipt by the Trust of any such proposal. Under these rules, proposals submitted for inclusion in the proxy material for the Trust's next annual meeting after the meeting to which this Proxy Statement relates must be received by the Trust not less than 120 days before the anniversary of the date stated in this Proxy Statement for the first mailing of this Proxy Statement. The date for such submission could change, depending on the scheduled date for the next annual meeting; if so, the Trust will so advise you. The fact that the Trust receives a shareholder proposal in a timely manner does not insure its inclusion in the Trust's proxy material, since there are other requirements in the proxy rules relating to such inclusion. Other Business The Trust does not know of any other matter which will come up for action at the Meeting. If any other matter or matters properly come up for action at the Meeting, including any adjournment of the Meeting, the proxy holders will vote the shares which your proxy card, telephone or internet vote entitles them to vote, in accordance with their judgment on such matter or matters. That is, by signing and returning your proxy card or by voting by telephone or the Internet, you give the proxy holders discretionary authority as to any such matter or matters. Important Notice Please Read Immediately Hawaiian Tax-Free Trust Notice of Annual Meeting of Shareholders to be held on September 15, 2000 PROXY STATEMENT Aquilasm Group of Funds HAWAIIAN TAX-FREE TRUST Class A Proxy for Shareholders Meeting September 15, 2000 Proxy Solicited on Behalf of the Board of Trustees The undersigned shareholder of HAWAIIAN TAX-FREE TRUST (the "Trust") does hereby appoint LACY B. HERRMANN, DIANA P. HERRMANN and EDWARD M. W. HINES, or any of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of the Trust to be held on Friday, September 15, 2000 at the at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii; at 10.00 a.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed below. Such shares are entitled to one vote for every dollar of net asset value represented by the share balance printed below. Please read the proxy statement prior to voting. Annual Meeting Attendance We encourage you to attend the Annual Meeting of Shareholders. If you can join us, please so indicate on the proxy card or e-mail us at info@aquilafunds.com VOTE BY TELEPHONE OR INTERNET OR MAIL 24 Hours a day, 7 days a week Telephone 1-800-690-6903 To vote your shares by telephone, call toll free 1-800-690- 6903. You will be prompted to enter the 12-digit control number on this proxy card. Follow the simple recorded instructions using this proxy card as a guide. If you vote by phone, you need not return the proxy card by mail. Internet www.proxyvote.com To vote your shares by the Internet, contact the Trust at www.proxyvote.com You will be prompted to enter the 12-digit control number on this proxy card. Follow the simple instructions at the website, using your proxy card as a guide. If you vote by the Internet, you need not return the proxy card by mail. Mail You can vote your shares by completing and returning this proxy card. Please mark your proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. As to any other matter said proxies 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 HAWAIIAN TAX-FREE TRUST CLASS A For address changes and/or comments, please check this box and write them on the back where indicated. [_] Vote on Trustees (Proposal No.1 in Proxy Statement) 1. Election of Trustees 1) Lacy B. Herrmann*; 2) Vernon R. Alden; 3) Arthur K. Carlson; 4) William M. Cole; 5) Thomas W. Courtney; 6) Richard W. Gushman, II; 7) Stanley W. Hong; 8) Theodore T. Mason; 9) Russell K. Okata; 10) Douglas Philpotts*; 11) Oswald K. Stender * interested Trustees __ [__] For all __ [__] Withhold all __ [__] For all except To withhold authority to vote for one or more (but not all) nominees, mark "For all except" and write the nominee number(s) and/ or name(s) on the line below. ________________ MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED ABOVE AND FOR THE PROPOSALS LISTED BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS INDICATED. 2. Action on selection of KPMG LLP as independent auditors (Proposal No.2 in Proxy Statement) FOR [__] AGAINST [__] ABSTAIN [__] 3. Action on change of fundamental policy of the Trust (Proposal No.3 in Proxy Statement) FOR [__] AGAINST [__] ABSTAIN [__] Please indicate if you plan to attend one of the Shareholder Meetings. If you mark one of the boxes below, you must return the proxy card by mail to have this information recorded. H. I plan to attend the annual meeting in Honolulu[__] HO. I plan to attend the outreach meeting in Hilo[__] K. I plan to attend the outreach meeting in Kailua- Kona[__] 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) Aquilasm Group of Funds HAWAIIAN TAX-FREE TRUST Class C Proxy for Shareholders Meeting September 15, 2000 Proxy Solicited on Behalf of the Board of Trustees The undersigned shareholder of HAWAIIAN TAX-FREE TRUST (the "Trust") does hereby appoint LACY B. HERRMANN, DIANA P. HERRMANN and EDWARD M. W. HINES, or any of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of the Trust to be held on Friday, September 15, 2000 at the at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii; at 10.00 a.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed below. Such shares are entitled to one vote for every dollar of net asset value represented by the share balance printed below. Please read the proxy statement prior to voting. Annual Meeting Attendance We encourage you to attend the Annual Meeting of Shareholders. If you can join us, please so indicate on the proxy card or e-mail us at info@aquilafunds.com VOTE BY TELEPHONE OR INTERNET OR MAIL 24 Hours a day, 7 days a week Telephone 1-800-690-6903 To vote your shares by telephone, call toll free 1-800-690- 6903. You will be prompted to enter the 12-digit control number on this proxy card. Follow the simple recorded instructions using this proxy card as a guide. If you vote by phone, you need not return the proxy card by mail. Internet www.proxyvote.com To vote your shares by the Internet, contact the Trust at www.proxyvote.com You will be prompted to enter the 12-digit control number on this proxy card. Follow the simple instructions at the website, using your proxy card as a guide. If you vote by the Internet, you need not return the proxy card by mail. Mail You can vote your shares by completing and returning this proxy card. Please mark your proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. As to any other matter said proxies 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 HAWAIIAN TAX-FREE TRUST CLASS C For address changes and/or comments, please check this box and write them on the back where indicated. [_] Vote on Trustees (Proposal No.1 in Proxy Statement) 1. Election of Trustees 1) Lacy B. Herrmann*; 2) Vernon R. Alden; 3) Arthur K. Carlson; 4) William M. Cole; 5) Thomas W. Courtney; 6) Richard W. Gushman, II; 7) Stanley W. Hong; 8) Theodore T. Mason; 9) Russell K. Okata; 10) Douglas Philpotts*; 11) Oswald K. Stender * interested Trustees __ [__] For all __ [__] Withhold all __ [__] For all except To withhold authority to vote for one or more (but not all) nominees, mark "For all except" and write the nominee number(s) and/ or name(s) on the line below. ________________ MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED ABOVE AND FOR THE PROPOSALS LISTED BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS INDICATED. 2. Action on selection of KPMG LLP as independent auditors (Proposal No.2 in Proxy Statement) FOR [__] AGAINST [__] ABSTAIN [__] 3. Action on change of fundamental policy of the Trust (Proposal No.3 in Proxy Statement) FOR [__] AGAINST [__] ABSTAIN [__] Please indicate if you plan to attend one of the Shareholder Meetings. If you mark one of the boxes below, you must return the proxy card by mail to have this information recorded. H. I plan to attend the annual meeting in Honolulu[__] HO. I plan to attend the outreach meeting in Hilo[__] K. I plan to attend the outreach meeting in Kailua- Kona[__] 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) Aquilasm Group of Funds HAWAIIAN TAX-FREE TRUST Class Y Proxy for Shareholders Meeting September 15, 2000 Proxy Solicited on Behalf of the Board of Trustees The undersigned shareholder of HAWAIIAN TAX-FREE TRUST (the "Trust") does hereby appoint LACY B. HERRMANN, DIANA P. HERRMANN and EDWARD M. W. HINES, or any of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of the Trust to be held on Friday, September 15, 2000 at the at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii; at 10.00 a.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed below. Such shares are entitled to one vote for every dollar of net asset value represented by the share balance printed below. Please read the proxy statement prior to voting. Annual Meeting Attendance We encourage you to attend the Annual Meeting of Shareholders. If you can join us, please so indicate on the proxy card or e-mail us at info@aquilafunds.com VOTE BY TELEPHONE OR INTERNET OR MAIL 24 Hours a day, 7 days a week Telephone 1-800-690-6903 To vote your shares by telephone, call toll free 1-800-690- 6903. You will be prompted to enter the 12-digit control number on this proxy card. Follow the simple recorded instructions using this proxy card as a guide. If you vote by phone, you need not return the proxy card by mail. Internet www.proxyvote.com To vote your shares by the Internet, contact the Trust at www.proxyvote.com You will be prompted to enter the 12-digit control number on this proxy card. Follow the simple instructions at the website, using your proxy card as a guide. If you vote by the Internet, you need not return the proxy card by mail. Mail You can vote your shares by completing and returning this proxy card. Please mark your proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. As to any other matter said proxies 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 HAWAIIAN TAX-FREE TRUST CLASS Y For address changes and/or comments, please check this box and write them on the back where indicated. [_] Vote on Trustees (Proposal No.1 in Proxy Statement) 1. Election of Trustees 1) Lacy B. Herrmann*; 2) Vernon R. Alden; 3) Arthur K. Carlson; 4) William M. Cole; 5) Thomas W. Courtney; 6) Richard W. Gushman, II; 7) Stanley W. Hong; 8) Theodore T. Mason; 9) Russell K. Okata; 10) Douglas Philpotts*; 11) Oswald K. Stender * interested Trustees __ [__] For all __ [__] Withhold all __ [__] For all except To withhold authority to vote for one or more (but not all) nominees, mark "For all except" and write the nominee number(s) and/ or name(s) on the line below. ________________ MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED ABOVE AND FOR THE PROPOSALS LISTED BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS INDICATED. 2. Action on selection of KPMG LLP as independent auditors (Proposal No.2 in Proxy Statement) FOR [__] AGAINST [__] ABSTAIN [__] 3. Action on change of fundamental policy of the Trust (Proposal No.3 in Proxy Statement) FOR [__] AGAINST [__] ABSTAIN [__] Please indicate if you plan to attend one of the Shareholder Meetings. If you mark one of the boxes below, you must return the proxy card by mail to have this information recorded. H. I plan to attend the annual meeting in Honolulu[__] HO. I plan to attend the outreach meeting in Hilo[__] K. I plan to attend the outreach meeting in Kailua- Kona[__] 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)