IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
The Aquilasm Group of Funds
AQUILA CASCADIA EQUITY FUND
380 Madison Avenue, Suite 2300, New York, NY 10017
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD
ON AUGUST 15, 2002
TO SHAREHOLDERS OF THE FUND:
The purpose of this Notice is to advise you that a Special Meeting of the
Shareholders of Aquila Cascadia Equity Fund (the "Fund") will be held:
Place: (a) at the offices of the Fund:
380 Madison Avenue
New York, NY 10017
Time: (b) on August 15, 2002
at 2:00 p.m. local time;
Purposes: (c) for the following purposes:
(i) to consider the proposal of the Board of Trustees to close the Fund,
wind up its affairs and distribute its net assets to its shareholders
(Proposal No. 1);
(ii) to act upon any other matters which may properly come before the
Meeting at the scheduled time and place or any adjourned meeting or
meetings.
Who Can
Vote What
Shares: (d) To vote at the Meeting, you must have
been a shareholder on the Fund's records at the
close of business on June 14, 2002 (the "record
date"). Also, the number of shares of each of the
Fund'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 18, 2002
PLEASE NOTE:
If you do not expect to attend the Meeting, please indicate voting instructions
in any of three ways: by telephone, by the Internet or by completing the
enclosed proxy card and returning it in the accompanying stamped envelope. To
avoid unnecessary expense to the Fund, we request your cooperation in voting no
matter how large or small your holding may be.
AQUILA CASCADIA EQUITY FUND
380 Madison Avenue, Suite 2300, New York, NY 10017
PROXY STATEMENT
INTRODUCTION
The purpose of the Notice (the first page of this document) is to advise
you of the time, place and purposes of a Special Meeting of the Shareholders of
Aquila Cascadia Equity Fund (the "Fund"). The purpose of this Proxy Statement
(all the rest of this document) is to give you information on which you may base
your decisions as to the choices, if any, you make in voting.
A copy of the Fund's most recent annual report will be sent to you without
charge upon written request to the Fund's Distributor, Aquila Distributors,
Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by calling
800-437-1020 toll-free or 212-697-6666.
The Fund's organizer, Adviser and Administrator (the "Manager") is Aquila
Management Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The
Fund's principal underwriter (the "Distributor") is Aquila Distributors, Inc.,
380 Madison Avenue, Suite 2300, New York, NY 10017. The Fund's Investment
Sub-Adviser is Ferguson Wellman Capital Management, Inc. (the "Sub-Adviser"),
888 SW Fifth Avenue, Suite 1200, Portland, OR 97204-2026.
This Notice and Proxy Statement are first being mailed on or about July 18,
2002.
You should read the Proxy Statement prior to voting. Then, you may vote in
one of three ways:
(1) Proxy Card
The enclosed proxy card authorizes the persons named (or their substitutes)
to vote your shares; the Fund calls these persons the "proxy holders." You may
direct the proxy holder to vote your shares on this proposal by marking the
appropriate box "For" or "Against" or instruct them not to vote your shares on
the proposal by marking the "Abstain" box. If you return your signed proxy card
and do not mark the box on the proposal, the proxy holders will vote your shares
for the proposal.
(2) Telephone Voting
To vote your shares by telephone, call the toll-free number on your proxy
card. You will be prompted to enter the control number on your 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.
(3) Internet Voting
To vote your shares by the Internet, please contact the Fund at the
Internet address shown on your proxy card. You will be prompted to enter the
control number on your 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.
You may end the power of the proxy holders to vote your shares by (i) so
notifying the Fund in writing; (ii) signing a new and different proxy card (if
the Fund receives it before the old one is used); (iii) voting your shares at
the meeting in person or by your duly appointed agent; or (iv) calling the
toll-free number or contacting the Fund's Internet address, both of which are
detailed on your proxy card, entering your control number and revoking your
previous vote.
Shares held by brokers in "street name" and not voted will not be counted
for purposes of determining a quorum or voted on any matter. Shares marked as
abstentions will be counted as present for quorum purposes and will be counted
as votes against the proposal.
The Fund is sending you this Notice and Proxy Statement in connection with
the solicitation by its Trustees of proxies to be used at the Special 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 Fund pays the costs
of the solicitation. Proxies are being solicited by the use of the mails; they
may also be solicited by telephone, facsimile and personal interviews. Brokerage
firms, banks and others may be requested to forward this Notice and Proxy
Statement to beneficial owners of the Fund's shares so that these owners may
authorize the voting of their shares. The Fund will pay these firms their
out-of-pocket expenses for doing so.
On the record date, the Fund had three classes of shares outstanding. All
shareholders of the Fund are entitled to vote at the meeting. Each shareholder
on the record date is entitled to one vote for each dollar (and a proportionate
fractional vote for each fraction of a dollar) of net asset value (determined as
of the record date) represented by full and fractional shares of any class held
on the record date. On the record date, the net asset value per share of each of
the Fund's outstanding classes of shares was as follows: Class A Shares, $12.61;
Class C Shares, $12.08; and Class Y Shares, $12.77. The meeting is expected to
act only upon matters that affect the Fund as a whole. On matters that affect
the Fund as a whole, all shareholders of the Fund, including the shareholders of
all classes of the Fund, are entitled to vote.
On the record date, the total number of shares outstanding for each class
of shares was as follows: Class A Shares, 87,050; Class C Shares, 76,025; and
Class Y Shares, 450,789.
On the record date, the following institutional holders held 5% or more of
the Fund's outstanding shares. On the basis of information received from the
holders the Fund's management believes that all of the shares indicated are held
for the benefit of clients.
Name and Address
of the holder of Percent
Record Number of Shares of Class
Merrill Lynch Pierce 23,066 Class A Shares 26.5%
Fenner & Smith 64,255 Class C Shares 84.5%
4800 Deer Lake Dr. East 89,575 Class Y Shares 19.9%
Jacksonville, FL
Trustlynx & Co. 4,409 Class A Shares 5.1%
P.O. Box 173736
Denver, CO
Charles Schwab 54,522 Class Y Shares 12.1%
& Co. Inc.
101 Montgomery Street
San Francisco, CA
Currie & Co. 68,933 Class Y Shares 15.3%
P.O. Box 3199
New York, NY
Union Bank 100,000 Class Y Shares 22.2%
P.O. Box 85484
San Diego, CA
Non-institutional 5% shareholders
Anne Jones Gwathmey 25,931 Class Y Shares 5.8%
c/o Ferguson Wellman
Rudd Purdy & VanWinkle Inc.
888 SW 5th Avenue, Suite 1200
Portland, OR
The Fund's management is not aware of any other person beneficially owning more
than 5% of any class of its outstanding shares as of such date.
CLOSING THE FUND
(Proposal No. 1)
At their meeting held on June 9, 2002, the Trustees of the Fund unanimously
determined that it is in the best interests of the Fund's shareholders to close
the Fund. Because the Fund's Supplemental Declaration of Trust permits the
Trustees to take such action only with the approval of the Fund's shareholders,
the Trustees have called this meeting to seek such approval.
Since the Fund's inception, the Manager and the Sub-Adviser have been
waiving all or a portion of their fees and, as and when necessary, have
reimbursed some of the Fund's operating expenses in order to maintain a
competitive expense ratio for the Fund. Their hope was that, in time, the Fund's
assets would grow to a point where the Fund could bear its expenses unaided and
still maintain a competitive expense ratio. However, during the almost six years
since the Fund's inception, its assets have never exceeded approximately $19
million, far short of the necessary level. Assets have declined since their
high. And, as of June 14, 2002, assets totaled less than $7.8 million.
The Manager and Sub-Adviser have agreed with the Fund to continue their fee
waivers through December 31, 2002; however, the Sub-Adviser has informed the
Fund that it will not continue as Sub-Adviser after that date, and the Manager
has advised the Fund that it will not continue to waive its fees or reimburse
other expenses beyond that date as well. Both decisions were based in part on
the judgment that there appears little likelihood that the Fund's assets will
grow substantially in the foreseeable future; the Sub-Adviser's view was that it
would consequently be financially impracticable to continue as Sub-Adviser, even
without the burden of continuing fee waivers, while the Manager's position was
that subsidizing the Fund into the indefinite future with no promise of
improvement would serve no reasonable economic purpose.
Faced with these developments, the Trustees considered a range of choices.
Assuming that the Manager would undertake to manage the Fund's investments, the
impending loss of subsidy for the Fund's portfolio meant that, unless the assets
of the Fund were to increase significantly and rapidly, the expense ratio of the
Fund would soon reach a level that virtually foreclosed the possibility of any
later increase in size and that would unacceptably burden the Fund's existing
shareholders. The Trustees agreed with the Manager and Sub-Adviser that a
significant increase in assets in the near term is extremely unlikely. For these
reasons, the Trustees reluctantly determined that the only realistic option was
to close the Fund and distribute its assets to its remaining shareholders.
The Fund was closed to investments by new investors and additional
investments by existing shareholders on July 3, 2002.
If the shareholders of the Fund approve the proposal to close the Fund, the
Fund will, as soon as practicable, liquidate its portfolio and pay any remaining
liabilities and distribute its assets in cash to its remaining shareholders.
After consultation with the parties that will be called upon to provide services
in connection with the Fund's closure, including the Fund's counsel, independent
auditors and transfer agent, the Fund has set aside an amount of money to meet
the anticipated expenses of closure.
When the Fund is liquidated, your shares will be redeemed. As on any
redemption of shares of the Fund you may recognize a capital gain or loss
measured by the difference between the proceeds received in the redemption and
the amount you paid for the shares. Your gain or loss will be long-term if you
held the redeemed shares for over one year and short-term if the shares were
held for a year or less. Long-term capital gains are currently taxed at a
maximum rate of 20% and short-term gains are currently taxed at ordinary income
tax rates.
The Sub-Adviser has informed the Fund that it will exercise all reasonable
efforts with its own clients to assure that the shareholders of the Fund approve
the proposed plan.
If the shareholders do not approve the proposal to close the Fund, the Fund
will continue in operation and the Trustees will consider other alternatives,
which may include another proxy solicitation to secure approval of closing the
Fund. If the Fund continues operations beyond December 31, 2002, it is highly
likely that its operating expenses will increase dramatically once subsidization
by the Manager and Sub-Adviser is withdrawn.
THE TRUSTEES UNANIMOUSLY RECOMMEND A VOTE FOR PROPOSAL NO. 1.
Vote Required. As set forth in the Supplemental Declaration of Trust,
approval of Proposal No. 1 requires the favorable vote of the holders of more
than 50% of the outstanding shares of the Fund entitled to vote.
OTHER BUSINESS
The Fund does not know of any other matter that 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.
AQUILA CASCADIA EQUITY FUND
THE AQUILASM GROUP OF FUNDS
380 MADISON AVENUE, SUITE 2300
NEW YORK, NY 10017
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 instruction 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 Fund 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 that requires no postage if mailed in the United States.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
AQUILA CASCADIA EQUITY FUND
[bolded in printed form]
Management recommends a vote For Proposal No. 1. The shares represented
hereby will be voted as indicated below or For Proposal No. 1 if no choice is
indicated.
For address changes and/or comments, please check this
box and write them on the back where indicated.
_
[_]
Action on a proposal under which the Fund will be closed, its portfolio
will be liquidated as soon as practicable, it will pay any remaining liabilities
and will distribute its remaining assets in cash to its remaining shareholders;
(Proposal No. 1):
_
[_] For
_
[_] Against
[_] Abstain
As to any other matter said proxies shall vote in accordance with their
best judgment.
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)
<page>
PROXY FOR A SPECIAL MEETING OF THE SHAREHOLDERS
AUGUST 15, 2002
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of AQUILA CASCADIA EQUITY FUND (the "Fund")
does hereby appoint LACY B. HERRMANN, DIANA P. HERRMANN and EDWARD M. W. HINES,
or any of them, as attorneys and proxies of the undersigned, with full power of
substitution, to attend the Special Meeting of Shareholders of the Fund to be
held at the offices of the Fund, 380 Madison Avenue, New York, NY 10017 on
Thursday, August 15, 2002 at 2:00 p.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 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 side.
Please read the proxy statement prior to voting.
Address changes/comments: _______________________________
_________________________________________________________
_________________________________________________________
(If you noted any address changes/comments above, please mark
corresponding box on other side.)