File Nos. 2-92583 & 811-4084 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [.] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Sec. 240.14a-12 HAWAIIAN TAX-FREE TRUST (Exact Name of Registrant as Specified in Charter) 380 Madison Avenue, Suite 2300 New York, New York 10017 (Address of Principal Executive Offices) (212) 697-6666 (Registrant's Telephone Number) Payment of Filing Fee (Check the appropriate box): [X] No fee required Important Notice Please Read Immediately Hawaiian Tax-Free Trust 380 Madison Avenue, Suite 2300, New York, New York 10017 Notice of Annual Meeting of Shareholders to Be Held on September 12, 2008 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, 410 Atkinson Drive, Honolulu, Hawaii; Time: (b) on Friday, September 12, 2008 at 10:00 a.m. Hawaiian Standard Time; Purposes: (c) for the following purposes: (i) to elect seven Trustees; each Trustee elected will hold office until the next annual meeting of the Trust's shareholders or until his or her successor is duly elected (Annual Meeting Proposal No. 1); (ii) to ratify (that is, to approve) or reject the selection of Tait, Weller & Baker LLP as the Trust's independent registered public accounting firm for the fiscal year ending March 31, 2009 (Annual Meeting Proposal No. 2); (iii) to act upon any other matters which may properly come before the Annual Meeting at the scheduled time and place or any adjourned meeting or meetings. Who Can Vote What Shares: (d) To vote at the Annual Meeting, you must have been a shareholder on the Trust's records at the close of business on June 16, 2008 (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 Annual Meeting (or any adjourned meeting or meetings). By order of the Board of Trustees, EDWARD M. W. HINES Secretary July 18, 2008 Please Note: If you do not expect to attend the Annual Meeting, please vote by any of three ways: by the Internet, by telephone 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. Important Notice Please Read Immediately Hawaiian Tax-Free Trust 380 Madison Avenue, Suite 2300, New York, New York 10017 Notice of Special Meeting of Shareholders to Be Held on September 12, 2008 To Shareholders of the Trust: The purpose of this Notice is to advise you that a Special Meeting of the Shareholders of Hawaiian Tax-Free Trust (the "Trust") will be held: Place: (a) at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii; Time: (b) on Friday, September 12, 2008 at 10:10 a.m. Hawaiian Standard Time; Purpose: (c) for the following purpose: Consideration of a revision of the Trust's Fundamental Policies to expand the types of tax-free obligations in which the Trust can invest (Special Meeting Proposal No. 1). Who Can Vote What Shares: (d) To vote at the Special Meeting, you must have been a shareholder on the Trust's records at the close of business on June 16, 2008 (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 Special Meeting (or any adjourned meeting or meetings). By order of the Board of Trustees, EDWARD M. W. HINES Secretary July 18, 2008 Please Note: If you do not expect to attend the Special Meeting, please vote by any of three ways: by the Internet, by telephone 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 Joint Proxy Statement Introduction The two Notices preceding this Joint Proxy Statement are to advise you of the times, place and purposes of an Annual Meeting of the Shareholders of Hawaiian Tax-Free Trust(the "Trust"), and a Special Meeting of the Shareholders that will take place immediately after the Annual Meeting. The purpose of this Joint Proxy Statement is to give you information on which you may base your voting decisions at both meetings. The Trust's Administrator (the "Administrator") is Aquila Investment Management LLC, 380 Madison Avenue, Suite 2300, New York, NY 10017, a subsidiary of the Trust's founder, Aquila Management Corporation. The Trust's principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017. The Trust's Investment Adviser (the "Adviser") is Asset Management Group of Bank of Hawaii, Financial Plaza of the Pacific, P.O. Box 3170, Honolulu, HI 96802. A copy of the Trust's most recent annual report will be sent to you without charge upon written request to the Distributor, at the above address, or by calling 800-437-1020 toll-free or 212-697-6666. These Notices and Joint Proxy Statement are first being mailed on or about July 18, 2008. You should read this Joint Proxy Statement prior to voting. If your shares are registered in the name of your broker or someone other than yourself, you may authorize that person to vote your shares. If your shares are registered in your name, then you may vote in one of three ways: (1) Proxy Cards The enclosed proxy cards authorize the persons named (or their substitutes) to vote your shares; the Trust calls these persons the "proxy holders." There are two proxy cards, one for each meeting. 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 for the Annual Meeting 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 each proxy card, you may direct the proxy holders to vote your shares on a proposal by marking the appropriate box "For" or "Against" or instruct them not to vote your shares on a proposal by marking the "Abstain" box. If you return your signed proxy card and do not mark a box on the proposal, the proxy holders will vote your shares for that proposal. (2) Internet Voting To vote your shares by the Internet, please contact the Trust at the Internet address shown on your proxy cards. You will be prompted to enter the control numbers on your proxy cards. Follow the instructions on the screen, using your proxy cards as guides. If you vote by the Internet, you need not return the proxy cards by mail. (3) Telephone Voting To vote your shares by telephone, call the toll-free number on your proxy cards. You will be prompted to enter the control numbers on your proxy cards. Follow the recorded instructions using your proxy cards as guides. If you vote by phone, you need not return the proxy cards by mail. General Information You may end the power of the proxy holders to vote your shares at either meeting 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 provided or contacting the Trust's Internet address, both of which are detailed on your proxy card, entering your control number and revoking your previous vote. Proxies for shares held by brokers in "street name" and not voted or marked as abstentions will be counted for purposes of determining quorums at the meetings. They will be counted as present at the meeting in determining voting results, and will therefore have the same effect as negative votes. Quorums for the two meetings will be determined separately. The Trust is sending you the Notices and Joint Proxy Statement in connection with the solicitation by its Trustees of proxies to be used at the Annual Meeting and Special Meeting to be held at the times and place and for the purposes indicated in the Notices or any adjourned meeting or meetings. Whenever it is stated in this Joint Proxy Statement that a matter is to be acted on at the Annual or Special 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 these Notices and Joint 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. Because your vote is important, the Trust may telephone you to urge you to vote. On the record date, the Trust had three classes of shares outstanding. All shareholders of the Trust are entitled to vote at the Annual Meeting and the Special 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, $11.10; Class C Shares, $11.09; and Class Y Shares, $11.11. Both meetings are expected to act only upon matters that affect the Trust as a whole: at the Annual Meeting, the election of Trustees and the selection of an independent registered public accounting firm, and at the Special Meeting, action on a revision of the Trust's Fundamental Policies. On matters that affect the Trust as a whole, all shareholders of the Trust, including the shareholders of all classes of shares 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, 57,084,941; Class C Shares, 2,823,117; and Class Y Shares, 2,720,706. On the record date, the following holders held 5% or more of a class of the Trust's outstanding shares. On the basis of information received from the institutional holders, the Trust's management believes that all of the shares indicated are held by them for the benefit of clients. Name and Address of the holder of record Number of shares Percent of class Institutional 5% shareholders: Merrill Lynch Pierce Fenner & Smith, Inc., 5,325,595 Class A Shares 9.33% 4800 Deer Lake Drive, 660,915 Class C Shares 23.41% Jacksonville, FL 32246 202,282 Class Y Shares 7.43% Strobro P.O. Box 1930 Honolulu, HI 96805 1,033,931 Class Y Shares 38.00% Additional 5% shareholders: Martha N. Steele, Trustee of the Martha San Nicholas Steele Declaration of Trust, Honolulu, HI 96817 279,403 Class Y Shares 10.27% 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 Annual Meeting) At the Annual Meeting, seven Trustees are to be elected. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can vote your shares in the election of Trustees. The following material includes information about each nominee and each officer of the Trust. All shares of the Trust listed as owned by the Trustees are Class A Shares unless indicated otherwise. All of the nominees are presently Trustees and were elected by the shareholders in September 2007. All nominees have consented to serve if elected. Nominees(1)(2) Number of Portfolios in Other Directorships Positions Held Fund Held by Trustee with Trust and Complex(5) (The position held is Name, Address(3) Length of Principal Occupation(s) Overseen by a directorship unless and Date of Birth Service(4) During Past 5 Years Trustee indicated otherwise.) Interested Trustee (6) Diana P. Herrmann Vice Chair of Vice Chair and Chief Executive 12 ICI Mutual Insurance New York, NY the Board of Officer of Aquila Management Company (02/25/58) Trustees since Corporation, Founder of the 2003, President Aquila Group of Funds(7) and since 1998 and parent of Aquila Investment Trustee since Management LLC, Administrator 2004 since 2004, President and Chief Operating Officer since 1997, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Chief Executive Officer and Vice Chair since 2004 and President, Chief Operating Officer and Manager of the Administrator since 2003; Chair, Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila Group of Funds since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; Governor, Investment Company Institute (a trade organization for the U.S. fund industry dedicated to protecting shareholder interests and educating the public about investing) and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. Non-interested Trustees Theodore T. Mason Chair of the Executive Director, East Wind 8 Trustee, Premier VIT. New York, NY Board of Power Partners LTD since 1994 (11/24/35) Trustees since and Louisiana Power Partners, 2004 and 1999-2003; Treasurer, Fort Trustee since Schuyler Maritime Alumni 1984 Association, Inc., successor to Alumni Association of SUNY Maritime College, since 2004 (President, 2002-2003, First Vice President, 2000-2001, Second Vice President, 1998-2000) and director of the same organization since 1997; Director, STCM Management Company, Inc., 1973-2004; twice national officer of Naval Reserve Association, Commanding Officer of four naval reserve units and Captain, USNR (Ret); director, The Navy League of the United States New York Council since 2002; trustee, The Maritime Industry Museum at Fort Schuyler, 2000-2004; and Fort Schuyler Maritime Foundation, Inc., successor to the Maritime College at Fort Schuyler Foundation, Inc., since 2000. Thomas W. Courtney Trustee President, Courtney Associates, 5 Chairman of the Board of Sewickley, PA since 1984 Inc., a venture capital firm, Oppenheimer Quest Value Funds (08/17/33) since 1988. Group, Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, and Oppenheimer Rochester Group of Funds; Chairman of the Board of Premier VIT. Stanley W. Hong Trustee since President, Waste Management of 4 Trustee, Pacific Capital Honolulu, HI 1992 Hawaii, Inc. and Corporate Vice Funds(R), which includes 12 bond (04/05/36) President - Hawaii Area for and stock funds; First Waste Management, Inc., Insurance Co. of Hawaii, Ltd., 2001-2005; Trustee, The King Lanihau Properties, Ltd., The William Charles Lunalilo Trust Westye Group - West (Hawaii), Estate since 2001; President and Inc., Heald Education LLC. Chief Executive Officer, The Chamber of Commerce of Hawaii, 1996-2001; Director PBS - Hawaii Foundation since 1998; Regent, Chaminade University of Honolulu since 1991; Trustee, the Nature Conservancy of Hawaii since 1998; Trustee, Child and Family Service since 2005; Director, The East West Center Foundation since 2006; St. Louis School since 2007; and a director of other corporate and community organizations. Russell K. Okata Trustee since Executive Director, Hawaii 5 Trustee, Pacific Capital Honolulu, HI 1992 Government Employees Association Funds(R), which includes 12 bond (03/22/44) AFSCME Local 152, AFL-CIO and stock funds; Chairman, 1981-2007; International Vice Royal State Group (insurance). President, American Federation of State, County and Municipal Employees, AFL-CIO 1981-2007; director of various civic and charitable organizations. Douglas Philpotts Trustee since Retired; formerly director, 4 Trustee, Pacific Capital Honolulu, HI 1992 Chairman of the Board and Funds(R), which includes 12 bond (11/21/31) President of Hawaiian Trust and stock funds. Company, Limited, a predecessor of The Asset Management Group of Bank of Hawaii; present or former director of various Hawaii-based civic and charitable organizations. Oswald K. Stender Trustee since Director, Hawaiian Electric 4 Trustee, Pacific Capital Honolulu, HI 1992 Industries, Inc., a public Funds(R), which includes 12 bond (10/08/31) utility holding company, and stock funds; director, 1993-2004; trustee, the Bernice Grace Pacific Corporation, an Pauahi Bishop Estate 1990-1999; asphalt paving company, ACE trustee, Office of Hawaiian Trucking Inc. and Hawaiian Affairs and a member or trustee Telecom, a telephone company of several community (communications). organizations. Other Individuals Chairman Emeritus(8) Lacy B. Herrmann Founder and Founder and Chairman of the N/A N/A New York, NY Chairman Board, Aquila Management (05/12/29) Emeritus since Corporation, the sponsoring 2004, Trustee, organization and parent of the 1984-2004, and Manager or Administrator and/or Chairman of the Adviser or Sub-Adviser to each Board of fund of the Aquila Group of Trustees, Funds; Chairman of the Manager 1984-2003 or Administrator and/or Adviser or Sub-Adviser to each since 2004; Founder and Chairman Emeritus of each fund in the Aquila Group of Funds; previously Chairman and a Trustee of each fund in the Aquila Group of Funds since its establishment until 2004 or 2005; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations. Officers Charles E. Executive Vice Executive Vice President of all N/A N/A Childs, III President since funds in the Aquila Group of New York, NY 2003 Funds and the Administrator and (04/01/57) the Administrator's parent since 2003; formerly Senior Vice President, corporate development, Vice President, Assistant Vice President and Associate of the Administrator's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Sherri Foster Senior Vice Senior Vice President, Hawaiian N/A N/A Lahaina, HI President Tax-Free Trust since 1993 and (07/27/50) since 1993 formerly Vice President or Assistant Vice President; Vice President since 1997 and formerly Assistant Vice President of the three Aquila Money-Market Funds; Vice President, Aquila Rocky Mountain Equity Fund since 2006; Registered Representative of the Distributor since 1985. Stephen J. Caridi Vice President Vice President of the N/A N/A New York, NY (05/06/61) since 1998 Distributor since 1995; Vice President, Hawaiian Tax-Free Trust since 1998; Senior Vice President, Narragansett Insured Tax-Free Income Fund since 1998, Vice President 1996-1997; Senior Vice President, Tax-Free Fund of Colorado since 2004; Vice President, Aquila Rocky Mountain Equity Fund since 2006. Robert W. Anderson Chief Chief Compliance Officer of the N/A N/A New York, NY Compliance Trust and each of the other (08/23/40) Officer since funds in the Aquila Group of 2004 and Funds, the Administrator and the Assistant Distributor since 2004, Secretary Compliance Officer of the since 2000 Administrator or its predecessor and current parent 1998-2004; Assistant Secretary of the Aquila Group of Funds since 2000. Joseph P. DiMaggio Chief Financial Chief Financial Officer of the N/A N/A New York, NY Officer since Aquila Group of Funds since 2003 (11/06/56) 2003 and and Treasurer since 2000. Treasurer since 2000 Edward M. W. Hines Secretary since Shareholder of Butzel Long, a N/A N/A New York, NY 1984 professional corporation, (12/16/39) counsel to the Trust, since 2007; Partner of Hollyer Brady Barrett & Hines LLP, its predecessor as counsel, 1989-2007; Secretary of the Aquila Group of Funds. John M. Herndon Assistant Assistant Secretary of the N/A N/A New York, NY (12/17/39) Secretary since Aquila Group of Funds since 1995 1995 and Vice President of the three Aquila Money-Market Funds since 1990; Vice President of the Administrator or its predecessor and current parent since 1990. Lori A. Vindigni Assistant Assistant Treasurer of the N/A N/A New York, NY Treasurer since Aquila Group of Funds since (11/02/66) 2000 2000; Assistant Vice President of the Administrator or its predecessor and current parent since 1998; Fund Accountant for the Aquila Group of Funds, 1995-1998. (1) The Trust's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll-free) or by visiting the EDGAR Database at the SEC's internet site at www.sec.gov. (2)From time to time Bank of Hawaii may enter into normal investment management, commercial banking and lending arrangements with one or more of the Trustees of the Trust and their affiliates. The Asset Management Group of Bank of Hawaii is the Trust's investment adviser. (3) The mailing address of each Trustee and officer is c/o Hawaiian Tax-Free Trust, 380 Madison Avenue, Suite 2300, New York, NY 10017. (4) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (5) Includes certain Aquila-sponsored funds that are dormant and have no public shareholders. (6) Ms. Herrmann is an interested person of the Trust as an officer of the Trust, as a director, officer and shareholder of the Administrator's corporate parent, as an officer and Manager of the Administrator, and as a shareholder and director of the Distributor. Ms. Herrmann is the daughter of Lacy B. Herrmann, the Founder and Chairman Emeritus of the Trust. (7) In this material Pacific Capital Cash Assets 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"; 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 Municipal Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks High Income Fund is a high income corporate bond fund; considered together, these 12 funds, which do not include the dormant funds described in footnote 5, are called the "Aquila Group of Funds." (8) The Chairman Emeritus may attend Board meetings but has no voting power. Securities Holdings of the Nominees (as of 06/30/08) Dollar Range of Aggregate Dollar Range of Name of Ownership in Hawaiian Ownership in funds in the Trustee Tax-Free Trust(1) Aquila Group of Funds (1) - ------- -------------- --------------------- Interested Trustees Diana P. Herrmann C E Non-interested Trustees Theodore T. Mason C C Thomas W. Courtney C C Stanley W. Hong C C Russell K. Okata C C Douglas Philpotts C C Oswald K. Stender B C (1) A. None B. $1-$10,000 C. $10,001-$50,000 D. $50,001-$100,000 E. over $100,000 None of the non-interested Trustees or their immediate family members holds of record or beneficially any securities of the Adviser, Administrator or Distributor. 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, 2008, the Trust paid a total of $144,962 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 twelve funds in the Aquila Group of Funds, which consist of three money-market funds, seven tax-free municipal bond funds, a high-income corporate bond fund and an equity fund. The following table lists the compensation of all nominees for Trustee who received compensation from the Trust or from other funds in the Aquila Group of Funds during the Trust's fiscal year. None of such nominees has any pension or retirement benefits from the Trust or any of the other funds in the Aquila Group of Funds. Compensation Number of from all boards on Compensation funds in the which the from the Aquila Group Trustee Name Trust of Funds serves* Theodore T. Mason $21,883 $134,500 8 Thomas W. Courtney $21,800 $96,500 5 Stanley W. Hong $18,300 $69,000 4 Russell K. Okata $17,800 $79,333 4 Douglas Philpotts $18,300 $69,000 4 Oswald K. Stender $18,300 $69,000 4 * Messrs. Hong, Okata, Philpotts and Stender are also trustees of the 12 funds in the Pacific Capital Funds(R) for which the Adviser is also investment adviser. For the same period, these funds paid Trustee Hong $39,000, Trustee Okata $44,000, Trustee Philpotts $41,500 and Trustee Stender $39,000. Class A Shares may be purchased without a sales charge by the Trust's Trustees and officers. The Trust's Administrator is a wholly-owned subsidiary of Aquila Management Corporation ("AMC"), founder of each fund in the Aquila Group of Funds. As of June 30, 2008 these funds had aggregate assets of approximately $4.9 billion, of which approximately $2.3 billion consisted of assets of the tax-free municipal bond funds. AMC, which was founded in 1984, is currently controlled by Mr. Lacy B. Herrmann and his wife, Mrs. Elizabeth B. Herrmann, directly and through certain trusts, although it is anticipated that these arrangements will change. During the fiscal year ended March 31, 2008 the Trust paid $1,801,002 in fees to the Administrator. During the fiscal year ended March 31, 2008, $1,269,862 was paid under Part I of the Trust's Distribution Plan to Qualified Recipients with respect to the Class A Shares, of which $65,568 was retained by the Distributor. With respect to Class C Shares, during the same period $240,327 was paid under Part II of the Plan and $80,109 was paid under the Shareholder Services Plan. Of these total payments of $320,436, the Distributor received $71,610. All of such payments were for compensation. During the fiscal year ended March 31, 2008, the Trust paid $102,900 to Butzel Long, a professional corporation ("Butzel Long"), independent counsel to the Fund, and $2,061 to Hollyer Brady Barrett & Hines LLP, predecessor to Butzel Long, for legal services. Edward M.W. Hines, Secretary of the Fund, is a shareholder of Butzel Long, and was a partner of Hollyer Brady Barrett & Hines LLP. The Distributor currently handles the distribution of the shares of the funds in the Aquila Group of 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 24% by Diana P. Herrmann, 74% by Mr. Herrmann and other members of his immediate family, and the balance by Aquila Management Corporation. Other Information on Trustees The Trustees have appointed a standing Audit Committee consisting of all of the Trustees who are "independent" and are not "interested persons" of the Trust, as that term is defined in the Investment Company Act of 1940. The members of the Audit Committee are Thomas W. Courtney, Stanley W. Hong, Theodore T. Mason, Russell K. Okata, Douglas Philpotts and Oswald K. Stender. The Committee (i) selects the Trust's independent registered public accounting firm (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. Selection of the independent registered public accounting firm is also ratified by the Board of Trustees. The Audit Committee held two meetings during the Trust's last fiscal year. The Board of Trustees has adopted a written charter for the Audit Committee. During the Trust's last fiscal year, the Board of Trustees held four meetings. Each current Trustee was present for at least 75% of the total number of Board meetings and meetings of committees of which such Trustee was a member. The Trust's policy is that all Trustees who can do so attend the Annual Meeting. At the last Annual Meeting all of the Trustees were present. The Trust has a Nominating Committee, consisting of all of the Independent Trustees. The Nominating Committee held one meeting during the last fiscal year. The committee will consider nominees recommended by the shareholders who may send recommendations to the committee in care of the Administrator at 380 Madison Avenue, New York, NY 10017. Recommendations of nominees from shareholders are not treated differently than proposals from other sources. The charter of the Nominating Committee is available on the Trust's website at www.aquilafunds.com. Shareholder communications intended for the Board of Trustees (or one or more specified Trustees) may be sent to them in care of the Administrator at the above address. Since the beginning of the Trust's most recently completed fiscal year, no Trustee purchased or sold more than 1% of the outstanding shares of any class of shares of the Adviser or its parent or subsidiaries. Vote Required To be elected, each nominee must receive the affirmative votes of a majority of the shares present at the Annual Meeting. Ratification or Rejection of Selection of Independent Registered Public Accounting Firm (Proposal No. 2 at the Annual Meeting) Tait, Weller & Baker LLP ("TWB"), which is currently serving as the Trust's independent registered public accounting firm, has been selected by the Trust's Audit Committee and ratified by the Board of Trustees, including a majority of the Independent Trustees, as the Trust's independent registered public accounting firm for the fiscal year ending March 31, 2009. Such selection is submitted to the shareholders for ratification or rejection. The following table represents fees for professional audit services rendered by TWB for the audit of the Trust's annual financial statements, and fees billed for other services rendered by TWB, for the fiscal years ended March 31, 2007 and 2008. 2007 2008 Audit Fees $18,000 $18,000 Audit related fees 0 0 ------- ------ Audit and audit related fees $18,000 $18,000 Tax fees (1) 3,000 3,000 All other fees 0 0 ------ ------ Total $21,000 $21,000 ====== ====== (1) Tax fees consisted of fees for tax consultation and tax compliance services. TWB did not perform any services during the last fiscal year for the Trust's investment adviser (the Adviser) or any entity controlling, controlled by or under common control with the Adviser that provides services to the Trust. All audit and non-audit services performed by TWB on behalf of the Trust or non-audit services performed on behalf of affiliated entities within the investment company complex where such engagement relates directly to the operations and financial reporting of the Trust are pre-approved by the Audit Committee. Services to be considered between meetings of the Committee are pre-approved by a selected member of the Committee in accordance with applicable regulations and subject to additional procedures established by the Committee. The Audit Committee has reviewed all services performed and fees charged by TWB and has accepted TWB's representation that it is independent in recommending re-appointment of it for the fiscal year ending March 31, 2009. TWB has no direct or indirect financial interest in the Trust, the Administrator or the Adviser. It is expected that representatives of TWB will not be present at the meeting but will be available should any matter arise requiring their presence. Vote Required Approval requires the affirmative votes of a majority of the shares present at the Annual Meeting. CONSIDERATION OF A REVISION TO THE TRUST'S FUNDAMENTAL POLICIES TO EXPAND THE TYPES OF TAX-FREE OBLIGATIONS IN WHICH THE TRUST CAN INVEST (Proposal No. 1 of the Special Meeting) Background and Reasons for the Proposal The Trust's Prospectuses currently provide that the Trust invests in "Hawaiian Obligations," which are tax-free municipal obligations which pay interest exempt from Hawaiian state and regular Federal income taxes. In general, all or almost all of these obligations are issued by the State of Hawaii, its counties and various other local authorities. At least 80% of the Trust's assets will always consist of such obligations of these issuers. The Prospectuses further provide that Hawaiian Obligations are a type of municipal obligation. They pay interest which bond counsel or other appropriate counsel deems to be exempt from regular Federal and State of Hawaii income taxes. Municipal obligations are issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies and instrumentalities to obtain funds for public purposes. Hawaiian Obligations include obligations of Hawaiian issuers and certain non-Hawaiian issuers, of any maturity. The obligations of non-Hawaiian issuers that the Trust can purchase as Hawaiian Obligations are those issued by or under the authority of Guam, the Northern Mariana Islands, Puerto Rico and the Virgin Islands. Interest paid on these obligations is currently exempt from regular Federal and State of Hawaii income taxes. The Trust purchases the obligations of these issuers only when obligations of Hawaiian issuers with the appropriate characteristics of quality, maturity and coupon rate are unavailable. There are two principal classifications of municipal obligations: "notes" and "bonds." Notes generally have maturities of one year or less, while bonds are paid back over longer periods. The various public purposes for which municipal obligations are issued include: * obtaining funds for general operating expenses, * refunding outstanding obligations, * obtaining funds for loans to other public institutions and facilities, and * funding the construction of highways, bridges, schools, hospitals, housing, mass transportation, streets and water and sewer works. Municipal obligations include: * tax, revenue or bond anticipation notes, * construction loan notes, * project notes, which sometimes carry a U.S. government guarantee, * municipal lease/purchase agreements, which are similar to installment purchase contracts for property or equipment, and * floating and variable rate demand notes. Inverse Floaters The Trustees have determined that it would be in the best interests of the Trust and its shareholders if the Trust had the authority to invest, under appropriate market conditions, in certain derivative instruments known as "inverse floaters." Although volatile, these instruments typically offer the potential for yields exceeding the yields available on comparable fixed-rate municipal bonds. The Trust would invest only in inverse floaters qualifying as "Hawaiian Obligations" because their yields are exempt from Hawaiian state and regular Federal income taxes. Inverse floaters are instruments that pay interest at rates that bear an inverse relationship to the interest rate on another security (inverse floaters). An investment in inverse floaters may involve greater risk than an investment in fixed-rate obligations because changes in the interest rate on the other security inversely affect the residual interest paid on the inverse floater. The value of the inverse floater is accordingly generally more volatile than that of a fixed-rate municipal bond. Inverse floaters have interest rate adjustment formulas which generally reduce or, in the extreme, eliminate the interest rate received when short-term interest rates rise and increase the interest received when short-term rates fall. For these reasons, tax-free inverse floaters tend to underperform the market for fixed-rate municipal bonds in a rising interest rate environment, but tend to outperform the market for fixed-rate municipal bonds when interest rates decline. Shifts in long-term interest rates may, however, alter this tendency. Inverse floaters may be issued by the types of issuers - Hawaii, Guam, the Northern Mariana Islands, Puerto Rico, the Virgin Islands and their political subdivisions, agencies and instrumentalities - that issue the Hawaiian Obligations in which the Trust normally invests and are already mentioned in the Trust's Prospectus. In addition to these "municipal issuer inverse floaters," however, are "synthetic" tax-free inverse floaters, which are created by investment banks and other companies by depositing municipal bonds in a trust, which then issues certificates some of which have the characteristics of inverse floaters. The Trust has a number of policies concerning what it can and cannot invest in. One of those policies, which cannot be changed without approval by the Trust's shareholders, is that the Trust cannot buy any securities other than those discussed in certain specified sections of the Trust's Prospectus and Statement of Additional Information. Because municipal issuer inverse floaters are issued by the kinds of issuers already discussed in the prospectus, the Trust could gain the ability to invest in those securities simply by amplifying the already-existing prospectus disclosure to inform investors of the characteristic and risks of these distinctive instruments. However, because synthetic tax-free inverse floaters are not issued by the issuers identified in the current prospectus, inclusion of them in the prospectus will constitute a change in the investment policy and will therefore require shareholder approval. Synthetic inverse floaters that would qualify as Hawaiian Obligations are generally more plentiful than municipal issuer inverse floaters that would qualify as Hawaiian Obligations. Accordingly, the Trustees request the shareholders to approve adding synthetic inverse floaters to the descriptions in the Prospectuses of the types of Hawaiian Obligations that the Trust can purchase, together with appropriate disclosure of the risks associated with such investments. The Trustees will authorize the purchase of inverse floaters only when they are satisfied that relevant questions concerning investment in these securities have been appropriately addressed. The proposal is submitted to the shareholders at this time in order to permit the Trust to invest in synthetic as well as municipal issuer inverse floaters if and when the Trustees so determine. Action Requested THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE TO APPROVE CHANGE TO THE TRUST'S PROSPOECTUSES 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. 1. 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 (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 Trust's four outstanding classes of shares. If necessary or desirable, 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 proxies of shareholders who have voted by proxy against a proposal will be voted against adjournment. If this proposal is not approved by the shareholders the Board of Trustees will consider what further action is appropriate, which could include calling another shareholder meeting. 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 of this Proxy Statement. Accordingly, a shareholder proposal intended to be presented at the Trust's 2009 annual meeting must be received by the Trust by March 19, 2009 in order to be included in the Trust's proxy material relating to that meeting. The date for such submission could change, depending on the scheduled date for the next annual meeting; if so, shareholders will be notified. 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. A shareholder wishing to provide notice of a proposal in the manner prescribed by Rule 14a-4 (c)(1) under the Securities Exchange Act of 1934 must submit written notice of the proposal to the Trust by June 2, 2009. Other Business The Trust does not know of any other matter which will come up for action at the Annual Meeting. If any other matter or matters properly come up for action at the Annual Meeting, including any adjournment of the Annual Meeting, the proxy holders will vote the shares which your proxy card, Internet or telephone vote entitles them to vote, in accordance with their judgment on such matter or matters, except as noted. That is, by signing and returning your proxy card or by voting by the Internet or telephone, you give the proxy holders discretionary authority as to any such matter or matters. The Trust does not know of any other matter which will come up for action at the Special Meeting. If any other matter or matters properly come up for action at the Special Meeting, including any adjournment of the Special Meeting, the proxy holders will vote the shares which your proxy card, Internet or telephone vote entitles them to vote, in accordance with their judgment on such matter or matters except as noted. That is, by signing and returning your proxy card or by voting by the Internet or telephone, you give the proxy holders discretionary authority as to any such matter or matters. Outreach Meeting To enable shareholders who live a distance from Honolulu, the Trust customarily holds outreach meetings at which shareholders can participate in all activities of the annual meeting except the corporate business of voting on the proposals discussed in the proxy statement. The outreach meeting this year will be held on Wednesday, September 10, 2008 in Lihue, Kauai at 5:00 p.m. IMPORTANT NOTICE PLEASE READ IMMEDIATELY Hawaiian Tax-Free Trust NOTICE OF ANNUAL MEETING OF SHAREHOLDERS and NOTICE OF SPEICAL MEETING OF SHAREHOLDERS to be held on September 12, 2008 PROXY STATEMENT HAWAIIAN TAX-FREE TRUST VOTE BY INTERNET OR TELEPHONE OR MAIL 24 HOURS A DAY, 7 DAYS A WEEK INTERNET VOTING www.proxyvote.com/aquila To vote your shares by the Internet, contact the Trust at www.proxyvote.com/aquila. Follow the simple instructions at the website, using this proxy card as a guide. If you vote by the Internet, you need not return the proxy card by mail. TELEPHONE VOTING 1-877-587-0761 To vote your shares by telephone, call toll-free 1-877-587-0761. 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. VOTE BY MAIL You can vote your shares by completing and returning this proxy card. Please mark this proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Hawaiian Tax-Free Trust 1. Election of Trustees Nominees: 01) Thomas W. Courtney; 02) Diana P. Herrmann*; 03) Stanley W. Hong; 04) Theodore T. Mason; 05) Russell K. Okata; 06) Douglas Philpotts; 07) Oswald K. Stender * Interested Trustee For All Withhold All For All Except -- -- -- [--] [--] [--] INSTRUCTION: 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. - -------------------- [sentences below bolded in printed form] Management recommends a vote FOR all nominees listed above and FOR the proposal listed below. The shares represented hereby will be voted as indicated at right or FOR if no choice is indicated. 2. Action on selection of Tait, Weller & Baker LLP as independent registered public accounting firm. (Annual Meeting Proposal No. 2 in Proxy Statement) For Against Abstain -- -- -- [--] [--] [--] As to any other matter said proxies shall vote in accordance with their best judgment. For address changes and/or comments, please check this box and write them on the back where indicated. - [-] PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY CARD. When signing as a custodian, attorney, executor, administrator, trustee, guardian, etc., please sign your full title as such. Joint owners should each sign. - ----------------------------------------- ---- Signature(s) (PLEASE SIGN WITHIN THE BOX) Date -- I plan to attend the annual meeting in Honolulu [__] -- I plan to attend the outreach meeting in Lihue, Kauai [__] Aquila Group of Funds Hawaiian Tax-Free Trust Proxy for Annual Meeting of Shareholders - September 12, 2008 Proxy Solicited on Behalf of the Board of Trustees The shareholder(s) of Hawaiian Tax-Free Trust (the "Trust") whose signature(s)appear(s) on the reverse does/do hereby appoint DIANA P. HERRMANN, CHARLES E. CHILDS, III 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 12, 2008 at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii, at 10:00 a.m. Hawaiian Standard 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 on the reverse side. Such shares are entitled to one vote for every dollar of net asset value represented by the share balance printed on the reverse. Please read the proxy statement prior to voting. Annual Meeting Attendance - You are encouraged to attend the Annual Meeting of Shareholders. If you can attend, please so indicate on the proxy card or e-mail us at info@aquilafunds.com Address Changes/Comments: _______________________________ - --------------------------------------------------------- (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE. HAWAIIAN TAX-FREE TRUST VOTE BY INTERNET OR TELEPHONE OR MAIL 24 HOURS A DAY, 7 DAYS A WEEK INTERNET VOTING www.proxyvote.com/aquila To vote your shares by the Internet, contact the Trust at www.proxyvote.com/aquila. Follow the simple instructions at the website, using this proxy card as a guide. If you vote by the Internet, you need not return the proxy card by mail. TELEPHONE VOTING 1-877-587-0761 To vote your shares by telephone, call toll-free 1-877-587-0761. 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. VOTE BY MAIL You can vote your shares by completing and returning this proxy card. Please mark this proxy, date and sign it below and return it promptly in the accompanying envelope which requires no postage if mailed in the United States. TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Hawaiian Tax-Free Trust 1. Action on a revision of the Trust's Fundamental Policies to expand the types of tax-free obligations in which the Trust can invest. (Special Meeting Proposal No. 1 in Proxy Statement) For All Withhold All For All Except -- -- -- [--] [--] [--] INSTRUCTION: 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. - -------------------- As to any other matter said proxies shall vote in accordance with their best judgment. For address changes and/or comments, please check this box and write them on the back where indicated. - [-] PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY CARD. When signing as a custodian, attorney, executor, administrator, trustee, guardian, etc., please sign your full title as such. Joint owners should each sign. - ----------------------------------------- ---- Signature(s) (PLEASE SIGN WITHIN THE BOX) Date I plan to attend the special meeting in Honolulu [__] Aquila Group of Funds Hawaiian Tax-Free Trust Proxy for Special Meeting of Shareholders - September 12, 2008 Proxy Solicited on Behalf of the Board of Trustees The shareholder(s) of Hawaiian Tax-Free Trust (the "Trust") whose signature(s)appear(s) on the reverse does/do hereby appoint DIANA P. HERRMANN, CHARLES E. CHILDS, III and EDWARD M. W. HINES, or any of them, as attorneys and proxies of the undersigned, with full power of substitution, to attend the Special Meeting of Shareholders of the Trust to be held on Friday, September 12, 2008 at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii, at 10:10 a.m. Hawaiian Standard 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 matter listed on the reverse side. Such shares are entitled to one vote for every dollar of net asset value represented by the share balance printed on the reverse. Please read the proxy statement prior to voting. Special Meeting Attendance - You are encouraged to attend the Special Meeting of Shareholders. If you can attend, please so indicate on the proxy card or e-mail us at info@aquilafunds.com Address Changes/Comments: _______________________________ - --------------------------------------------------------- (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE.