File Nos. 33-13021 & 811-5086
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
CHURCHILL 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
Aquila Group of Fundssm
Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, NY 10017
Notice of Annual Meeting of
Shareholders to Be Held
on April 27, 2007
To Shareholders of the Fund:
The purpose of this Notice is to advise you that an Annual Meeting of the
Shareholders of Churchill Tax-Free Fund of Kentucky (the "Fund") will be held:
Place: (a) at Papa John's Cardinal Stadium
Brown & Williamson Room
2800 South Floyd Street
Louisville, Kentucky;
Time: (b) on Friday, April 27, 2007
at 8:30 a.m. Eastern Daylight Time;
Purposes: (c) for the following purposes:
(i) to elect six 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 Tait, Weller & Baker LLP as the Fund's independent
registered public accounting firm for the fiscal year
ending December 31, 2007 (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 January 29, 2007 (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
March 16, 2007
Please Note:
If you do not expect to attend the 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 Fund, we request your cooperation in voting no matter how large or small
your holding may be.
Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, NY 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
Churchill Tax-Free Fund of Kentucky (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.
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
March 16, 2007.
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) 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.
(3) 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.
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, and will therefore
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 four classes of shares outstanding.
All shareholders of the Fund are entitled to vote at the meeting. Each
shareholder on the record date is entitled to one 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, $10.51; Class C Shares, $10.51; Class Y Shares, $10.52; and Class I
Shares, $10.51. The meeting is expected to act only upon matters that affect the
Fund as a whole: the election of Trustees and the selection of an independent
registered public accounting firm. 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, 19,988,735; Class C Shares,
522,952; Class Y Shares, 4,494,676 and Class I Shares, 757,647.
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
of the holder of
record
Institutional 5% shareholders:
SYAG
c/o Stock Yards Bank and Trust
P.O. Box 34290
Louisville, KY 2,763,488 Class A Shares 13.83%
MLPF&S for the sole
benefit of its customers
4800 Deer Lake Dr East
Jacksonville, FL 72,406 Class C Shares 13.85%
Glenview Trust Company
4969 US Highway 42
Suite 2000
Louisville, KY 3,193,369 Class Y Shares 71.05%
Morgan Keegan & Company, Inc.
FBO Bankdan
c/o Kentucky Trust Company
218 W. Main St.
Danville, KY 233,022 Class Y Shares 5.18%
J.J.B. Hilliard Lyons
FBO Cardinal Aluminum Co.
501 S. 4th St.
Louisville, KY 250,509 Class Y Shares 5.57%
Danky & Co.
P.O. Box 28
Danville, KY 260,065 Class Y Shares 5.79%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 524,007 Class I Shares 69.16%
Strafe & Co.
FAO Charles Dishman Pciaa
P.O. Box 160
Westerville, OH 75,195 Class I Shares 9.92%
National Investor Services FBO
55 Water Street, 32nd Floor
New York, NY 50,793 Class I Shares 6.70%
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, six 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 April, 2006, except Timothy J.
Leach. All nominees have consented to serve if elected.
Nominees(1)
Number of
Portfolios Other Directorships
Positions Held in Fund Held by Trustee
with Fund and Complex(4) (The position held is a
Name, Address(2) and Length of Principal Occupation(s) Overseen directorship unless indicated
Date of Birth Service(3) During Past 5 Years by Trustee otherwise.)
- ------------- ---------- ------------------- ---------- -----------
Interested
Trustee(5)
Diana P. Herrmann Trustee Vice Chair and Chief Executive 12 ICI Mutual Insurance Company
New York, NY since 1995 Officer of Aquila Management
(02/25/58) and Corporation, Founder of the
President Aquila Group of Fundssm(6) and
since 1999 parent of Aquila Investment
Management LLC, Manager, 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 Manager since 2003; Chair,
Vice Chair, President, Executive
Vice President or Senior Vice
President of funds in the Aquila
Group of Fundssm 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 and
head of its Small Funds
Committee since 2004; active in
charitable and volunteer
organizations.
Non-interested
Trustees
Thomas A. Chair of the Vice President of Robinson, 3 None
Christopher Board of Hughes & Christopher, C.P.A.s,
Danville, KY Trustees P.S.C., since 1977; President, A
(12/19/47) since 2005 Good Place for Fun, Inc., a
and Trustee sports facility, since 1987;
since 1992 currently or formerly active
with various professional and
community organizations.
Timothy J. Leach None UC Berkeley Haas School of 2 None
Orinda, CA Business Executive Education,
(08/28/55) Lecturer since 2006; Regional
Chief Executive Officer, US
Trust Company, N.A., 2005-2006;
Executive Vice President & Chief
Investment Officer, U.S. Trust
Company, New York, NY,
2004-2005; Executive Vice
President & Chief Investment
Officer, Private Asset
Management Group, Wells Fargo
Bank, San Francisco, CA,
1999-2003; CEO, President and
Chief Investment Officer, ABN
Amro Asset Management (USA),
1998-1999; President & Chief
Investment Officer, Qualivest
Capital Management Inc. and
Senior Vice President & Chief
Investment Officer, Trust &
Investment Group, US Bancorp,
Portland, OR, 1994-1998.
Theodore T. Mason Trustee Executive Director, East Wind 8 Trustee, Premier VIT.
New York, NY since 1987 Power Partners LTD since 1994
(11/24/35) and Louisiana Power Partners,
1999-2003; Treasurer, 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 the
Maritime College at Fort
Schuyler Foundation, Inc. since
2000.
Anne J. Mills Trustee President, Loring Consulting 4 None
Castle Rock, CO since 1987 Company since 2001; Vice
(12/23/38) President for Business
Management and CFO, Ottawa
University, since 2006, Vice
President for Business Affairs,
1992-2001; IBM Corporation,
1965-1991; currently active with
various charitable educational
and religious organizations.
James R. Ramsey Trustee President, University of 2 Community Bank and Trust,
Louisville, KY since 1987 Louisville since November 2002; Pikeville, KY and Texas
(11/14/48) Professor of Economics, Roadhouse Inc.
University of Louisville,
1999-present; Kentucky
Governor's Senior Policy Advisor
and State Budget Director,
1999-2002; Vice Chancellor for
Finance and Administration, the
University of North Carolina at
Chapel Hill, 1998 to 1999;
previously Vice President for
Finance and Administration at
Western Kentucky University,
State Budget Director for the
Commonwealth of Kentucky, Chief
State Economist and Executive
Director for the Office of
Financial Management and
Economic Analysis for the
Commonwealth of Kentucky,
Adjunct Professor at the
University of Kentucky,
Associate Professor at Loyola
University-New Orleans and
Assistant Professor at Middle
Tennessee State University.
Other Individuals
Chairman Emeritus(7)
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 Corporation, the sponsoring
since 2006, organization and parent of the
Chairman of Manager or Administrator and/or
the Board of Adviser or Sub-Adviser to each
Trustees, fund of the Aquila Group of
1987-2005 Fundssm; Chairman of the Manager
or Administrator and/or Adviser
or Sub-Adviser to each since
2004; Founder and Chairman
Emeritus of each fund in the
Aquila Group of Fundssm;
previously Chairman and a
Trustee of each fund in the
Aquila Group of Fundssm 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 Executive Vice President of all N/A N/A
Childs, III Vice funds in the Aquila Group of
New York, NY President Fundssm and the Manager and the
(04/01/57) since 2003 Manager's parent since 2003;
formerly Senior Vice President,
corporate development, Vice
President, Assistant Vice
President and Associate of the
Manager's parent since 1987;
Senior Vice President, Vice
President or Assistant Vice
President of the Aquila
Money-Market Funds, 1988-2003.
Thomas S. Albright Senior Vice Senior Vice President and N/A N/A
Louisville, KY President Portfolio Manager, Churchill
(07/26/52) since 2000 Tax-Free Fund of Kentucky since
July 2000; Senior Vice
President, Tax-Free Fund For
Utah since 2003, Vice President,
2001-2003 and co-portfolio
manager since 2001; Vice
President and backup portfolio
manager, Tax-Free Trust of
Arizona, since 2004; Vice
President and Portfolio Manager,
Banc One Investment Advisors,
Inc., 1994-2000.
Jerry G. McGrew Senior Vice President of the Distributor N/A N/A
New York, NY President since 1998, Registered Principal
(06/18/44) since 1994 since 1993, Senior Vice
President, 1997-1998 and Vice
President, 1993-1997; Senior
Vice President, Aquila Three
Peaks High Income Fund, Aquila
Rocky Mountain Equity Fund and
five Aquila Municipal Bond
Funds; Vice President, Churchill
Cash Reserves Trust, 1995-2001.
Todd W. Curtis Vice Senior Vice President and N/A N/A
Phoenix, AZ President Portfolio Manager, Tax-Free
(06/08/49) since 2004 Trust of Arizona, since August
2004; Vice President and backup
portfolio manager, Churchill
Tax-Free Fund of Kentucky, since
2004; Vice President and
Portfolio Manager, Banc One
Investment Advisors, Inc. and
its predecessors, 1981-2004.
Jason T. McGrew Vice Vice President, Churchill N/A N/A
Elizabethtown, KY President Tax-Free Fund of Kentucky since
(08/14/71) since 2001 2001, Assistant Vice President,
2000-2001; Vice President,
Aquila Rocky Mountain Equity
Fund since 2006; Investment
Broker with Raymond James
Financial Services 1999-2000 and
with J.C. Bradford and Company
1997-1999; Associate Broker at
Prudential Securities 1996-1997.
Robert W. Anderson Chief Chief Compliance Officer of the N/A N/A
New York, NY Compliance Fund and each of the other funds
(08/23/40) Officer in the Aquila Group of Fundssm,
since 2004 the Manager and the Distributor
and since 2004, Compliance Officer
Assistant of the Manager or its
Secretary predecessor and current parent
since 2000 1998-2004; Assistant Secretary
of the Aquila Group of Fundssm
since 2000.
Joseph P. DiMaggio Chief Chief Financial Officer of the N/A N/A
New York, NY Financial Aquila Group of Fundssm since
(11/06/56) Officer 2003 and Treasurer since 2000.
since 2003
and
Treasurer
since 2000
Edward M. W. Hines Secretary Partner, Hollyer Brady Barrett & N/A N/A
New York, NY since 1987 Hines LLP, legal counsel to the
(12/16/39) Fund, since 1989; Secretary of
the Aquila Group of Fundssm.
John M. Herndon Assistant Assistant Secretary of the N/A N/A
New York, NY Secretary Aquila Group of Fundssm since
(12/17/39) 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 Aquila Group of Fundssm since
(11/02/66) since 2000 2000; Assistant Vice President
of the Manager or its
predecessor and current parent
since 1998; Fund Accountant for
the Aquila Group of Fundssm,
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 Churchill Tax-Free
Fund of Kentucky, 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) Includes certain Aquila-sponsored funds that are dormant and have no public
shareholders.
(5) Ms. Herrmann is an interested person of the Fund as an officer of the Fund,
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.
(6) 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; 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 4, are
called the "Aquila Group of Fundssm."
(7) The Chairman Emeritus may attend Board meetings but has no voting power.
Securities Holdings of the Trustees
(as of 12/31/06)
Dollar Range of Aggregate Dollar Range of
Name of Ownership in Churchill Ownership in the Aquila Group of
Trustee Tax-Free Fund of Kentucky(1) Fundssm
Overseen by Trustee(1)
Interested Trustee
Diana P. Herrmann C E
Non-interested Trustees
Thomas A. Christopher D E
Timothy J. Leach B(2) B
Theodore T. Mason C C
Anne J. Mills C D
James R. Ramsey D D
(1) A. None
B. $1-$10,000
C. $10,001-$50,000
D. $50,001-$100,000
E. over $100,000
(2) As of February 23, 2007
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. For its fiscal year ended December 31,
2006, the Fund paid a total of $136,677 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 twelve funds in the Aquila Group of Fundssm,
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
Fund or from other funds in the Aquila Group of Fundssm during the Fund's fiscal
year. None of such nominees has any pension or retirement benefits from the Fund
or any of the other funds in the Aquila Group of Fundssm.
Compensation Number of
from all boards on
Compensation funds in the which the
from the Aquila Trustee
Name Fund Group of Fundssm serves
Thomas A.
Christopher $26,167 $49,750 3
Timothy J.
Leach $ 0 $40,500 2
Theodore T.
Mason $19,250 $119,700 8
Anne J.
Mills $17,917 $81,750 4
James R.
Ramsey $16,500 $31,000 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 Aquila Group of Fundssm. As of
February 28, 2007, these funds had aggregate assets of approximately $4.9
billion, of which approximately $2.4 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, 2006, the
Fund paid $1,110,962 in management fees.
During the fiscal year ended December 31, 2006, $325,999 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $9,125 was retained by the Distributor. With
respect to Class C shares, during the same period $47,553 was paid under Part II
of the Plan and $15,851 was paid under Part I of the Shareholder Services Plan.
Of these total payments of $63,404 the Distributor retained $15,787. With
respect to Class I Shares, during the same period $15,652 was paid under Part
III of the Plan and $11,739 was paid under Part II of the Shareholder Services
Plan. All of such payments were for compensation.
The Distributor currently handles the distribution of the shares of the
funds in the Aquila Group of Fundssm, 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 employees
of Aquila Investment Management LLC.
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 Investment Company Act of 1940. The
members of the Audit Committee are Thomas A. Christopher, Theodore T. Mason,
Anne J. Mills, William J. Nightingale and James R. Ramsey. The Committee (i)
selects the Fund'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 Fund'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 four meetings during the Fund's last fiscal year. The Board of
Trustees has amended the 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. 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 Fund's policy is that all Trustees who can do so attend the Annual
Meeting.
The Fund has a Nominating Committee, consisting of all of the
Independent Trustees. The Nominating Committee held four meetings 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
Manager at 380 Madison Avenue, New York, NY 10017. The charter of the Nominating
Committee is available on the Fund's website at www.aquilafunds.com.
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 or its
parent or subsidiaries.
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 Registered Public Accounting Firm
(Proposal No. 2)
Tait, Weller & Baker LLP ("TWB"), which is currently serving as the
Fund's independent registered public accounting firm, has been selected by the
Fund's Audit Committee and ratified by the Board of Trustees, including a
majority of the non-"interested" Trustees, as the Fund's independent registered
public accounting firm for the fiscal year ending December 31, 2007. 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 Fund's annual financial statements, and
fees billed for other services rendered by TWB, for the fiscal years ended
December 31, 2005 and 2006.
2005 2006
Audit Fees $16,000 $16,000
Audit related fees 0 0
------- ------
Audit and audit related fees $16,000 $16,000
Tax fees (1) 3,000 3,000
All other fees 0 0
------ ------
Total $19,000 $19,000
====== ======
(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
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 performed by TWB on behalf of the Fund
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 Fund 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 December 31, 2007.
TWB has no direct or indirect financial interest in the Fund or the
Manager. 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.
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 of this Proxy Statement.
Accordingly, a shareholder proposal intended to be presented at the Fund's 2008
annual meeting must be received by the Fund by November 16, 2007 in order to be
included in the Fund'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 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.
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 Fund by January 15, 2008.
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, 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.
<page>
Appendix
CHURCHILL TAX-FREE FUND OF KENTUCKY
AUDIT COMMITTEE CHARTER
September 5, 2003
Amended April 27, 2006
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 financial
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.
<page>
IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
CHURCHILL TAX-FREE FUND OF KENTUCKY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on April 27, 2007
PROXY STATEMENT
CHURCHILL TAX-FREE FUND OF KENTUCKY
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 Fund 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.
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.
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.
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.
CHURCHILL TAX-FREE FUND OF KENTUCKY
1. Election of Trustees Nominees:
01) Thomas A. Christopher; 02) Diana P. Herrmann*; 03) Timothy J. Leach; 04)
Theodore T. Mason; 05) Anne J. Mills; 06) James R. Ramsey
* 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. (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
Yes No
-- --
I plan to attend the annual meeting in Louisville. [__] [__]
Aquila Group of Fundssm
CHURCHILL TAX-FREE FUND OF KENTUCKY
Proxy for Shareholder Meeting - April 27, 2007
Proxy Solicited on Behalf of the Board of Trustees
The shareholder(s) of Churchill Tax-Free Fund of Kentucky (the "Fund")
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 Fund to be held on Friday,
April 27, 2007 at Papa John's Cardinal Stadium, Brown & Williamson Room, 2800
South Floyd Street, Louisville, Kentucky, at 8:30 a.m. Eastern Daylight 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.