File Nos. 33-12381 & 811-5047
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
TAX-FREE FUND OF COLORADO
(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
<page>
Important Notice
Please Read Immediately
Aquilasm
Group of Funds
Tax-Free Fund of Colorado
380 Madison Avenue, Suite 2300, New York, NY 10017
Notice of Annual Meeting of
Shareholders to Be Held
on May 25, 2004
To Shareholders of the Fund:
The purpose of this Notice is to advise you that an Annual Meeting of the
Shareholders of Tax-Free Fund of Colorado (the "Fund"), will be held:
Place: (a) Wyndham Denver Tech Hotel
7675 East Union Avenue
Denver, Colorado;
Time: (b) on Tuesday, May 25, 2004
at 10:00 a.m. Mountain Daylight Time;
Purposes: (c) for the following purposes:
(i) to elect eight Trustees; each Trustee elected
will hold office until the next annual meeting of
the Fund's shareholders or until his or her
successor is duly elected (Proposal No. 1);
(ii) to ratify (that is, to approve) or reject the
selection of KPMG LLP as the Fund's independent auditors for
the fiscal year ending December 31, 2004 (Proposal No. 2);
(iii) to act upon any other matters which may
properly come before the Meeting at the scheduled
time and place or any adjourned meeting or meetings.
Who Can
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 February 27, 2004 (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
April 13, 2004
Please Note:
If you do not expect to attend the Meeting, please vote by 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.
Tax-Free Fund of Colorado
380 Madison Avenue, Suite 2300, New York, New York 10017
Proxy Statement
Introduction
The purpose of the Notice preceding this Proxy Statement is to advise you
of the time, place and purposes of an Annual Meeting of the Shareholders of
Tax-Free Fund of Colorado (the "Fund"). The purpose of this Proxy Statement is
to give you information on which you may base your decisions as to the choices,
if any, you make in voting.
The Fund's Manager (the "Manager") is Aquila Investment Management LLC, 380
Madison Avenue, Suite 2300, New York, NY 10017, a subsidiary of the Fund's
founder, Aquila Management Corporation. The Fund's principal underwriter (the
"Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New
York, NY 10017. The Fund's Investment Sub-Adviser (the "Sub-Adviser") is
Kirkpatrick Pettis Investment Management, Inc., 1600 Broadway, Denver, Colorado
80202.
A copy of the Fund'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.
This Notice and Proxy Statement are first being mailed on or about April
13, 2004.
You should read this 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 Card
The enclosed proxy card authorizes the persons named (or their substitutes)
to vote your shares; the Fund calls these persons the "proxy holders." As to the
election of Trustees you may authorize the proxy holders to vote your shares for
the entire slate indicated below by marking the appropriate box on the proxy
card or by merely signing and returning your proxy card with no instructions. Or
you may withhold the authority of the proxy holders to vote on the election of
Trustees by marking the appropriate box. Also, you may withhold that authority
as to any particular nominee by following the instructions on the proxy card.
As to the other matter listed on the proxy card, you may direct the proxy
holders to vote your shares on 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
a box on the proposal, the proxy holders will vote your shares for that
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.
General Information
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 provided 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.
Proxies for shares held by brokers in "street name" and not voted or marked
as abstentions will be counted for purposes of determining a quorum. They will
be counted as present in determining voting results, which will have the same
effect as negative votes.
The Fund is sending you this Notice and Proxy Statement in connection with
the solicitation by its Trustees of proxies to be used at the Annual Meeting to
be held at the time and place and for the purposes indicated in the Notice or
any adjourned meeting or meetings. 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, $10.97;
Class C Shares, $10.95; and Class Y Shares, $11.00. The meeting is expected to
act only upon matters that affect the Fund as a whole: the election of Trustees
and the selection of independent auditors. On matters that affect the Fund as a
whole, all shareholders of the Fund, including the shareholders of all classes
of shares of the Fund, are entitled to vote at the meeting.
On the record date, the total number of shares outstanding for each class
of shares was as follows: Class A Shares, 21,728,898; Class C Shares, 1,519,130;
and Class Y Shares, 1,274,241.
On the record date, the following holders held 5% or more of a class of the
Fund's outstanding shares. On the basis of information received from the
institutional holders the Fund's management believes that all of the shares
indicated are held by them for the benefit of clients.
Name and address Number of shares Percent of Class
Merrill Lynch Pierce Fenner
& Smith Inc. 282,376 Class C Shares 18.59%
FBO its Customers 137,591 Class Y Shares 10.80%
4800 Deer Lake Drive East
Jacksonville, FL 32246
Armstrong Ventures LLC 522,180 Class Y Shares 40.98%
700 17th Street, Suite 1400
Denver, CO
Alpine Trust & Asset
Management 375,372 Class Y Shares 29.46%
225 N. Fifth Street
Grand Junction, CO 81501
Additional 5% Shareholders
The Fund's management is not aware of any other person beneficially owning more
than 5% of any class of its outstanding shares as of such date.
Election of Trustees
(Proposal No. 1)
At the Meeting, eight 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 Fund. All shares of the Fund 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 May 2003 except Mr. Christopher
who was elected by the Trustees in March 2004 to fill a vacancy.
Trustees(1)
and Officers
Number of
Positions Held Portfolios in
with Fund Complex
Fund Overseen by
Name, Address(2) and and Length of Principal Occupation(s) Trustee Other Directorships
Date of Birth Service(3) During Past 5 Years Held by Trustee
Interested Trustees(4)
Lacy B. Herrmann Chairman of Founder and Chairman of the 11 Director or trustee, Pimco
New York, NY the Board of Board, Aquila Management Advisors VIT, Oppenheimer
(05/12/29) Trustees since Corporation, the sponsoring Quest Value Funds Group,
1987 organization and parent of the Oppenheimer Small Cap Value
Manager or Administrator and/or Fund, Oppenheimer Midcap
Adviser or Sub-Adviser to each Fund, and Oppenheimer
fund of the Aquilasm Group of Rochester Group of Funds.
Funds,(5) Chairman and Chief
Executive Officer and Manager of
the Manager or Administrator
and/or Adviser or Sub-Adviser to
each since 2003, and Founder,
Chairman of the Board of
Trustees and (currently or until
1998) President of each since
its establishment, beginning in
1984; 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.
Diana P. Herrmann Trustee since Vice Chair of Aquila Management 6 None
New York, NY 2000, Corporation, Founder of the
(02/25/58) President Aquilasm Group of Funds and
since 1999, parent of the Manager , since
and Vice Chair 2004, President and Chief
since 2004 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; Vice Chair
since 2004 and President, Chief
Operating Officer and Manager of
the Manager since 2003; Vice
Chair, President, Senior Vice
President or Executive Vice
President of funds in the
Aquilasm 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; active
in mutual fund and trade
organizations and in charitable
and volunteer organizations.
Non-Interested
Trustees
Tucker Hart Adams Trustee since President, The Adams Group, 2 Director, Touch America,
Colorado Springs, 1989 Inc., an economic consulting Colorado Health Facilities
CO firm, since 1989; formerly Chief Authority and Mortgage
(01/11/38) Economist, United Banks of Analysis Computer Corp.
Colorado; currently or formerly
active with numerous
professional and community
organizations.
Thomas A. Trustee since Vice President of Robinson, 2 None
Christopher 2004 Hughes & Christopher, C.P.A.s,
Danville, KY P.S.C., since 1977; President, A
(12/19/47) Good Place for Fun, Inc., a
sports facility, since 1987.
Gary C. Cornia Trustee since Director, Romney Institute of 4 None
Orem, UT 2000 Public Management, Marriott
(06/24/48) School of Management, Brigham
Young University, 2004 -
present; Professor, Marriott
School of Management, 1980 -
present; Past President, the
National Tax Association; Chair
of the Executive Committee, the
International Center for Land
Policy Studies and Training
Institute, Taipei, Taiwan;
formerly Senior Visiting Fellow,
Lincoln Institute of Land
Policy, 2002-2003; Associate
Dean, Marriott School of
Management, Brigham Young
University, 1991-2000; Chair,
Utah Governor's Tax Review
Committee, 1993-2002; member,
Governor's Tax Review Committee
since 2003; Faculty Associate,
the Land Reform Training
Institute, Taipei, Taiwan and
The Lincoln Institute of Land
Policy, Cambridge, Massachusetts.
.
John C. Lucking Trustee President, Econ-Linc, an 3 Director, Sanu Resources
Phoenix, AZ since 2000 economic consulting firm, since
(05/20/43) 1995; formerly Consulting
Economist, Bank One Arizona and
Chief Economist, Valley National
Bank; member, Arizona's Joint
Legislative Budget Committee
Economic Advisory Panel and the
Western Blue Chip Economic
Forecast Panel; Board, Northern
Arizona University Foundation
since 1997; member, various
historical, civic and economic
associations.
Anne J. Mills Trustee since President, Loring Consulting 4 None
Castle Rock, CO 1987 Company since 2001; Vice
(12/23/38) President for Business Affairs,
Ottawa University, 1992-2001;
IBM Corporation, 1965-1991;
Budget Review Officer, the
American Baptist Churches/USA,
1994-1997; director, the
American Baptist Foundation;
Trustee, Ottawa University; and
Trustee Emerita, Brown
University.
J. William Weeks Trustee since Retired; limited partner and 2 None
Palm Beach, FL 1995 investor in various real estate
(06/22/27) partnerships since 1988;
formerly Senior Vice President
or Vice President of the Aquila
Bond Funds; and Vice President
of the Distributor.
Officers
Charles E. Executive Vice Executive Vice President of all N/A N/A
Childs, III President Funds since 2003; Senior Vice
New York, NY since 2003 President, corporate
(04/01/57) development, formerly Vice
President, Assistant Vice
President and Associate of the
Manager since 1987; Senior Vice
President, Vice President or
Assistant Vice President of the
Money-Market Funds since 1988.
Stephen J. Caridi Senior Vice Vice President of the N/A N/A
New York, NY (05/06/61) President Distributor since 1995; Vice
since 2004 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; Assistant
Vice President, Tax-Free Fund
For Utah since 1993.
James M. McCullough Senior Vice Senior Vice President or Vice N/A N/A
Portland, OR (06/11/45) President President of Aquila Rocky
since 1999 Mountain Equity Fund and four
Aquila Bond Funds; Senior Vice
President of the Distributor
since 2000; Director of Fixed
Income Institutional Sales, CIBC
Oppenheimer & Co. Inc., Seattle,
WA, 1995-1999.
Jerry G. McGrew Senior Vice President of the Distributor N/A N/A
New York, NY (06/18/44) President since 1998, Registered Principal
since 1997 since 1993, Senior Vice
President, 1997-1998 and Vice
President, 1993-1997; Senior
Vice President, Aquila Rocky
Mountain Equity Fund and five
Aquila Bond Funds since 1995;
Vice President, Churchill Cash
Reserves Trust, 1995-2001.
Emily T. Rae Vice President Vice President of Aquila Rocky N/A N/A
Aurora, CO since 2002 Mountain Equity Fund and
(03/02/74) Tax-Free Fund of Colorado since
2002; investment analyst,
Colorado State Bank and Trust,
2001-02; financial analyst, J.P.
Morgan, 2000-01, senior
registered associate,
Kirkpatrick Pettis, 1998-2000;
registered associate, FBS
Investments (now U.S. Bancorp
Piper Jaffray), 1997-98.
John T. Volk Assistant Vice Marketing representative for the N/A N/A
New York, NY President Distributor since 1998; mutual
(04/15/71) since 2002 fund services representative ,
Prudential Securities, 1996-98.
Joseph P. DiMaggio Chief Chief Financial Officer of the N/A N/A
New York, NY Financial Aquilasm Group of Funds since
(11/06/56) Officer since 2003 and Treasurer since 2000;
2003 and Controller, Van Eck Global
Treasurer Funds, 1993-2000.
since 2000
Edward M. W. Hines Secretary Partner, Hollyer Brady Smith & N/A N/A
New York, NY since 1987 Hines LLP, legal counsel to the
(12/16/39) Fund, since 1989; Secretary of
the Aquilasm Group of Funds.
Robert W. Anderson Assistant Compliance Officer of the N/A N/A
New York, NY (08/23/40) Secretary Manager or its predecessor and
since 2000 current parent since 1998 and
Assistant Secretary of the
Aquilasm Group of Funds since
2000; trustee, Alpha Strategies
Fund since July, 2002;
Consultant, The Wadsworth Group,
1995-1998.
John M. Herndon Assistant Assistant Secretary of the N/A N/A
New York, NY (12/17/39) Secretary Aquilasm Group of Funds since
since 1995 1995 and Vice President of the
three Aquila Money-Market Funds
since 1990; Vice President of
the Manager 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 Aquilasm Group of Funds since
(11/02/66) 2000 2000; Assistant Vice President
of the Manager or its
predecessor and current parent
since 1998; Fund Accountant for
the Aquilasm Group of Funds,
1995-1998.
(1)The Fund'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).
(2) The mailing address of each Trustee and officer is c/o Tax-Free Fund of
Colorado, 380 Madison Avenue, New York, NY 10017.
(3) 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.
(4) Mr. Herrmann is an interested person of the Fund as that term is defined in
the 1940 Act as an officer of the Fund and a director, officer and shareholder
of the Manager's corporate parent, as an officer and Manager of the Manager, and
as a shareholder and director of the Distributor. Ms. Herrmann is an interested
person of the Trust as an officer of the Trust, as a director, officer and
shareholder of the Manager's corporate parent, as an officer and Manager of the
Manager, and as a shareholder and director of the Distributor. Each is also an
interested person as a member of the immediate family of the other.
(5) 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 Bond Funds";
Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these
11 funds are called the "Aquilasm Group of Funds."
Securities Holdings of the Trustees
(as of 12/31/03)
Name of Aggregate Dollar Range
Trustee Dollar Range of Of Ownership in Aquilasm Investment
Ownership in Tax-Free Fund of Companies Overseen by Trustee (1)
Colorado (1)
Interested Trustees
Lacy B. Herrmann B E
Diana P. Herrmann B E
Non-interested Trustees
Tucker H. Adams B B
Thomas A. Christopher B(2) C
Gary C. Cornia B D
John C. Lucking C C
Anne J. Mills D D
J. William Weeks B C
(1) A. None
B. $1-$10,000
C. $10,001-$50,000
D. $50,001-$100,000
E. over $100,000
(2) Purchased after 12/31/03.
None of the non-interested Trustees or their immediate family members holds
of record or beneficially any securities of the Manager or the Distributor.
The Fund does not currently pay fees to any of the Fund's officers or to
Trustees affiliated with the Manager or the Sub-Adviser. For its fiscal year
ended December 31, 2003, the Fund paid a total of $82,462 in compensation and
reimbursement of expenses to the Trustees. No other compensation or remuneration
of any type, direct or contingent, was paid by the Fund to its Trustees.
The Fund is one of the 11 funds in the Aquilasm Group of Funds, which
consist of tax-free municipal bond funds, money-market funds and an equity fund.
The following table lists the compensation of all nominees for Trustee who
received compensation from the Fund or from other funds in the Aquilasm Group of
Funds during the Fund's fiscal year. None of such Trustees has any pension or
retirement benefits from the Fund 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 now
Name Fund Group of Funds serves
Tucker H.
Adams $8,950 $11,950 2
Thomas A.
Christopher $ 100 $9,050 2
Gary C.
Cornia $8,350 $25,750 4
John C.
Lucking $8,700 $19,050 3
Anne J.
Mills $8,700 $37,550 4
J. William
Weeks $9,700 $22,300 2
Class A Shares may be purchased without a sales charge by certain of the
Fund's Trustees and officers.
The Fund's Manager is a wholly-owned subsidiary of Aquila Management
Corporation ("AMC"), founder of each fund in the Aquilasm Group of Funds. As of
February 29, 2004, these funds had aggregate assets of approximately $3.9
billion, of which approximately $2.5 billion consisted of assets of the tax-free
municipal bond funds. AMC's address is the same as that of the Manager. AMC is
controlled by Mr. Lacy B. Herrmann, through share ownership directly, through
two trusts and by his wife. During the fiscal year ended December 31, 2003, the
Fund paid $1,240,722 in management fees.
During the fiscal year ended December 31, 2003, $112,266 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $4,333 was retained by the Distributor. With
respect to Class C Shares, during the same period, $97,930 was paid under Part
II of the Plan and $32,643 was paid under the Fund's Shareholder Services Plan.
Of these total payments of $130,573, the Distributor retained $15,359. All of
such payments were for compensation.
The Distributor currently handles the distribution of the shares of eleven
funds (three money-market funds, seven tax-free municipal bond funds and an
equity fund), including the Fund. Under the Distribution Agreement, the
Distributor is responsible for the payment of certain printing and distribution
costs relating to prospectuses and reports as well as the costs of supplemental
sales literature, advertising and other promotional activities. The shares of
the Distributor are owned 24% by Diana P. Herrmann, 72% by Mr. Herrmann and
other members of his immediate family and the balance by current employees of
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 Fund,
as that term is defined in the 1940 Act. The members of the Audit Committee are
Tucker Hart Adams, Thomas A. Christopher, Gary C. Cornia, John C. Lucking, Anne
J. Mills and J. William Weeks. The Committee (i) selects the Fund's independent
auditors (subject to shareholder ratification); (ii) reviews the methods, scope
and result of audits and the fees charged; and (iii) reviews the adequacy of the
Fund's internal accounting procedures and controls. Selection of auditors is
also ratified by the Board of Trustees. The Audit Committee held one meeting
during the Fund's last fiscal year. The Board of Trustees has adopted a written
charter for the Audit Committee, a copy of which is attached as an appendix to
this Proxy Statement.
During the Fund's last fiscal year, the Board of Trustees held four
meetings. Except for Mr. Christopher, who took office March 7, 2004, each
current Trustee was 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). The Board of Trustees does not have a nominating committee.
The Fund has not yet formed a nominating committee nor adopted a nominating
committee charter. It expects to do so before the next annual meeting of
shareholders. Since 1998, the Fund has had a Trustee Retirement and Replacement
Policy, last reviewed by the Board in September 2001 which covers many of the
issues facing any nominating committee, including matters to be considered in
connection with candidates for election to the Board of Trustees. In accordance
with regulatory requirements, the selection and nomination of all independent
Trustees has been committed to the independent Trustees, and suggestions for new
Trustees are provided from management and other interested Trustees only upon
request of the independent Trustees. It was considered that there was not enough
time to form a nominating committee at the Board meeting in December 2003, and
the Board intends to establish nominating committee policies and procedures only
after more deliberation has been carried out.
Since the beginning of the Fund's most recently completed fiscal year, no
Trustee purchased or sold any shares of any class of the Manager, Sub-Adviser or
the parents or subsidiaries of either.
Vote Required
To be elected, each nominee must receive the affirmative votes of a
majority of the shares present.
Ratification or Rejection
of Selection of
Independent Auditors
(Proposal No. 2)
KPMG LLP ("KPMG"), which is currently serving as the Fund's independent
auditors, has been selected by the Fund's Audit Committee and ratified by the
Board of Trustees, including a majority of the Independent Trustees, as the
Fund's independent auditors for the fiscal year ending December 31, 2004. Such
selection is submitted to the shareholders for ratification or rejection.
The following table represents fees for professional audit services
rendered by KPMG for the audit of the Fund's annual financial statements for
2002 and 2003, and fees billed for other services rendered by KPMG.
2002 2003
Audit Fees: $19,500 20,100
Audit related fees 0 0
______ ______
Audit and audit related fees 19,500 20,100
Tax fees (1) 8,950 6,792
All other fees 0 0
______ ______
Total fees $28,450 26,892
______ ______
(1) Tax fees consisted of fees for tax consultation and tax compliance services.
KPMG did not perform any services during the last fiscal year for the
Fund's investment adviser (the Manager) or any entity controlling, controlled by
or under common control with the Manager that provides services to the Fund.
All audit and non-audit services by KPMG are pre-approved by the Audit
Committee, except that 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
KPMG and has accepted its representation that it is independent in recommending
re-appointment of it for the fiscal year ending December 31, 2004.
KPMG has no direct or indirect financial interest in the Fund, the Manager
or the Sub-Adviser. It is expected that representatives of KPMG will not be
present at the meeting but will be available should any matter arise requiring
their presence.
Receipt of
Shareholder Proposals
Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under certain
conditions, be included in the Fund's proxy statement and proxy card for a
particular annual meeting. One of these conditions relates to the timely receipt
by the Fund of any such proposal. Under these rules, proposals submitted for
inclusion in the proxy material for the Fund's next annual meeting after the
meeting to which this Proxy Statement relates must be received by the Fund not
less than 120 days before the anniversary of the date stated 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, shareholders will be notified.
The fact that the Fund receives a shareholder proposal in a timely manner
does not insure its inclusion in the Fund's proxy material, since there are
other requirements in the proxy rules relating to such inclusion.
Other Business
The Fund does not know of any other matter which will come up for action at
the Meeting. If any other matter or matters properly come up for action at the
Meeting, including any adjournment of the Meeting, the proxy holders will vote
the shares which your proxy card, telephone or Internet 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
telephone or the Internet, you give the proxy holders discretionary authority as
to any such matter or matters.
APPENDIX
TAX-FREE FUND OF COLORADO
AUDIT COMMITTEE CHARTER
September 6, 2003
1. The Audit Committee shall be composed entirely of independent Trustees.
2. The purposes of the Audit Committee are:
(a) to oversee the Fund's accounting and financial reporting policies.
(b) to oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof; and
(c) to act as a liaison between the Fund's independent auditors and the
full Board of Trustees.
The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control, and the auditor's responsibility to plan and carry out a proper audit
and such other functions as deemed appropriate by the Audit Committee.
3. To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) to select, retain or terminate the auditors and, in connection
therewith, to evaluate the independence of the auditors, including whether the
auditors provide any consulting services to the manager, and to receive the
auditors' specific representations as to their independence;
(b) to meet with the Fund's independent auditors, including private
meetings, as necessary (i) to review and approve the audit plan, detailing the
arrangements for and scope of the annual audit, any special audits and any other
services deemed appropriate; (ii) to discuss any matters of concern relating to
the Fund's financial statements, including any adjustments to such statements
recommended by the auditors, or other results of said audit(s); (iii) to
consider the auditors' comments with respect to the Fund's financial policies,
procedures and internal accounting controls and management's responses thereto;
and (iv) to review the form of opinion the auditors propose to render to the
Board and shareholders;
(c) to consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors;
(d) to review and approve the fees charged by the auditors for audit and
non-audit services;
(e) to investigate improprieties or suspected improprieties in Fund
operations;
(f) to establish a complaint mechanism about accounting, internal
accounting controls or auditing matters, including a procedure to receive
confidential, anonymous submissions regarding questionable accounting and audit
matters;
(g) to establish procedures if it believes appropriate for delegation of
pre-approvals of services by auditors to a member or members of the Committee;
and
(h) to report its activities to the full Board on a regular basis and to
make such recommendations with respect to the above and other matters as the
Committee may deem necessary or appropriate.
4. The Committee shall meet on a periodic basis and is empowered to hold
special meetings as circumstances require.
5. The Committee shall periodically meet with the Chief Financial Officer
and/or the Treasurer of the Fund and with internal auditors, if any, for
the management company.
6. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the Fund.
7. The Committee shall review this Charter regularly and recommend any changes
to the full Board of Trustees.
IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
Tax-Free Fund of Colorado
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on May 25, 2004
PROXY STATEMENT