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 Funds
Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, New York 10017
Notice of Annual Meeting of
Shareholders to Be Held
on April 24, 2009
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 24, 2009
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, 2009 (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 26, 2009 (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 13, 2009
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 voting
decisions.
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
13, 2009.
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, $9.70;
Class C Shares, $9.70; Class Y Shares, $9.71; and Class I Shares, $9.70. 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, 17,937,570; Class C Shares, 283,031;
Class Y Shares, 4,005,499 and Class I Shares, 829,035.
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:
NFS LLC FEBO
Stock Yards Bank
200 S. 5th St.
Louisville, KY 2,425,197 Class A Shares 13.52%
MLPF&S for the sole
benefit of its customers
4800 Deer Lake Dr East 26,659 Class C Shares 9.42%
Jacksonville, FL
VALLEE & CO FBO SG
c/o M&I TRUST CO NA
11270 W Park Pl
Milwaukee, WI 2,820,585 Class Y Shares 70.42%
Morgan Keegan & Company, Inc.
FBO Bankdan
c/o Kentucky Trust Company
218 W. Main St.
Danville, KY 314,474 Class Y Shares 7.85%
Danky & Co.
P.O. Box 28
Danville, KY 260,070 Class Y Shares 6.49%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 617,082 Class I Shares 74.43%
Ameritrade Inc. for the sole
benefit of its customers
P.O. Box 2226
Omaha, NE 64,543 Class I Shares 7.79%
Strafe & Co.
FAO Charles Dishman Living Tr.
P.O. Box 160
Westerville, OH 61,454 Class I Shares 7.41%
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, except for Mr.
Duffy, are presently Trustees and were elected by the shareholders in April,
2008. The Nominating Committee is proposing the election of Mr. Duffy at the
suggestion of Trustees of another of the funds in the Aquila Group of Funds. 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
Date of Birth Service(3) During Past 5 Years by Trustee indicated 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 Funds((6)) and
since 1999 parent of Aquila Investment
Management LLC, Manager since
2004, President since 1997,
Chief Operating Officer,
1997-2008, 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, President and
Manager of the Manager since
2003, and Chief Operating
Officer of the Manager,
2003-2008; 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; Governor, Investment
Company Institute (a trade
organization for the U.S. mutual
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
Thomas A. Chair of the Vice President of Robinson, 4 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.
David A. Duffy Nominee Chairman, Rhode Island 1 Delta Dental of Rhode Island
North Kingstown, RI Convention Center Authority
(08/07/39) since 2003; director (advisory
board) of Citizens Bank of Rhode
Island and Connecticut since
1999; retired Founder, formerly
President, Duffy & Shanley,
Inc., a marketing communications
firm, 1973-2003; Transition
Chairman for Gov. Donald
Carcieri (R.I.); past National
Chairman, National Conference
for Community and Justice
(NCCJ); Past Chair, Providence
College President's Council;
Past Vice Chair, Providence
College Board of Trustees;
officer or director of numerous
civic and non-profit
organizations including Rhode
Island Hospital.
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, Fort
Schuyler Maritime Alumni
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.
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, 1992-2001;2006-2008;
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 2005, 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 Funds; 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 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 Executive Vice President of all N/A N/A
Childs, III Vice funds in the Aquila Group of
New York, NY President Funds and the Manager and the
(04/01/57) since 2003 Manager's parent since 2003;
Executive Vice President and
Chief Operating Officer of the
Manager's parent since 2008;
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.
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 Funds,
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 Funds
since 2000.
Joseph P. DiMaggio Chief Chief Financial Officer of the N/A N/A
New York, NY Financial Aquila Group of Funds since 2003
(11/06/56) Officer and Treasurer since 2000.
since 2003
and
Treasurer
since 2000
Edward M. W. Hines Secretary Shareholder of Butzel Long, a N/A N/A
New York, NY since 1987 professional corporation,
(12/16/39) counsel to the Fund, 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 Secretary Aquila Group of Funds since 1995
(12/17/39) since 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 Funds 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 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) or by visiting the EDGAR Database at the SEC's
internet site at www.sec.gov.
(2) The mailing address of each Trustee and officer is c/o Churchill Tax-Free
Fund of Kentucky, 380 Madison Avenue, Suite 2300, 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. Ms. Herrmann is the daughter of Lacy B. Herrmann, the Founder and
Chairman Emeritus of the Fund.
(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 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 4,
are called the "Aquila Group of Funds."
(7) The Chairman Emeritus may attend Board meetings but has no voting power.
Securities Holdings of the Nominees
(as of 12/31/08)
Dollar Range of Aggregate Dollar Range of
Name of Ownership in Churchill Ownership in the Aquila Group of Funds
Trustee Tax-Free Fund of Kentucky(1) Overseen by Trustee(1)
Interested Trustee
Diana P. Herrmann C E
Non-interested Trustees
Thomas A. Christopher E E
David A. Duffy B(2) C
Theodore T. Mason C D
Anne J. Mills C D
James R. Ramsey E E
(1) A. None
B. $1-$10,000
C. $10,001-$50,000
D. $50,001-$100,000
E. over $100,000
(2) As of January 14, 2009
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,
2008, the Fund paid a total of $106,185 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 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 Fund
or from other funds in the Aquila Group of Funds 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 Funds.
Compensation Number of
from all boards on
Compensation funds in the which the
from the Aquila Trustee
Name Fund Group of Funds serves
Thomas A.
Christopher $28,357 $73,500 4
David A.
Duffy $0 $16,000 1
Theodore T.
Mason $16,500 $133,313 8
Anne J.
Mills $19,000 $77,000 4
James R.
Ramsey $15,500 $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 Funds. As of
February 28, 2009, these funds had aggregate assets of approximately $4.3
billion, of which approximately $2.3 billion consisted of assets of the tax-free
municipal bond funds. AMC's address is the same as that of the Manager. 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.
Under proposed transactions, which are expected to occur in 2009, no
individual will hold with the power to vote, directly or indirectly, more than
24.9% of the voting shares of the Manager. The shareholders of the Fund, as well
as those of all of the other funds in the Aquila Group of Funds, have approved
new advisory and administration agreements and, if applicable, new sub-advisory
agreements, in anticipation of the expected change of control of the Manager.
The transactions will not result in any changes in the Fund's advisory fees and
expenses, the services provided, the investment approach or style of the Manager
with respect to the Fund, or the personnel or operations of the Manager.
During the fiscal year ended December 31, 2008, the Fund paid $956,228 in
management fees.
During the fiscal year ended December 31, 2008, $278,370 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $11,430 was retained by the Distributor. With
respect to Class C shares, during the same period $26,048 was paid under Part II
of the Plan and $8,682 was paid under Part I of the Shareholder Services Plan.
Of these total payments of $34,730 the Distributor retained $8,251. With respect
to Class I Shares, during the same period $16,288 was paid under Part III of the
Plan and $12,216 was paid under Part II of the Shareholder Services Plan. All of
such payments were for compensation.
During the fiscal year ended December 31, 2008, the Fund paid $95,229 to
Butzel Long, a professional corporation, independent counsel to the Fund, for
legal services. Edward M.W. Hines, Secretary of the Fund, is a shareholder of
that firm.
The Distributor currently handles the distribution of the shares of the
funds in the Aquila Group of Funds, 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, 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 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
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 three meetings during the Fund's last
fiscal year. The Board of Trustees has adopted a written charter for the Audit
Committee.
During the Fund's last fiscal year, the Board of Trustees held seven
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 Fund's policy is that all Trustees who can do so attend the Annual
Meeting. At the last Annual Meeting all of the current Trustees were present.
The Fund has a Nominating Committee, consisting of all of the
non-"interested" 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
Manager at 380 Madison Avenue, Suite 2300, 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
Fund'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 Manager at the above
address.
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, 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 Fund's annual financial statements, and
fees billed for other services rendered by TWB, for the fiscal years ended
December 31, 2007 and 2008.
2007 2008
Audit Fees $16,000 $16,800
Audit related fees 0 0
------- ------
Audit and audit related fees $16,000 $16,800
Tax fees (1) 3,000 3,100
All other fees 0 0
------ ------
Total $19,000 $19,900
====== ======
(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, 2009.
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 2010
annual meeting must be received by the Fund by November 12, 2009 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 22, 2010.
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>
IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
CHURCHILL TAX-FREE FUND OF KENTUCKY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on April 24, 2009
PROXY STATEMENT
<page>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
Your Proxy Vote is important!
And now you can Vote your Proxy on the PHONE or the INTERNET.
It saves Money! Telephone and Internet voting saves postage costs.
Savings which can help minimize expenses.
It saves Time! Telephone and Internet voting is instantaneous - 24 hours a day.
It's Easy! Just follow these simple steps:
1. Read your Proxy Statement and have it at hand.
2. Call toll-free 1-866-241-6192, or go to website: www.proxy-direct.com
3. Follow the recorded or on-screen directions.
4. Do not mail your Proxy Card when you vote by phone or Internet.
Please detach at perforation before mailing.
PROXY AQUILA GROUP OF FUNDS PROXY
CHURCHILL TAX-FREE FUND OF KENTUCKY
Proxy for Annual Meeting of Shareholders - April 24, 2009
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 24, 2009
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.
Management recommends a vote FOR all nominees in Proposal 1 and FOR Proposal 2.
The shares represented hereby will be voted as indicated on the reverse or FOR
if no choice is indicated.
VOTE VIA THE TELEPHONE: 1-866-241-6192
VOTE VIA THE INTERNET: www.proxy-direct.com
Note: PLEASE SIGN EXACTLY AS YOUR NAMES(S) APPEAR(S) ON THIS
PROXY CARD. When signing as custodian, attorney, executor,
administrator, trustee, guardian, etc., please sign your
title as such. Joint owners should each sign.
________________________________________________
Signature
_________________________________________________
Signature (if held jointly)
_________________________________________________
Date_____________________________________________
Yes No
__ __
I plan to attend the Annual Meeting in Louisville. [__] [__]
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ABOVE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
Important Notice Regarding the Availability of Proxy Materials
for the Aquila Group of Funds Churchill Tax-Free Fund of Kentucky
Shareholder Meeting to Be Held on April 24, 2009.
The Proxy Statement for this meeting is available at:
https://www.proxy-direct.com/aqu19895
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY
Please detach at perforation before mailing.
Please read the proxy statement prior to voting.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS IN THIS EXAMPLE:
CHURCHILL TAX-FREE FUND OF KENTUCKY ANNUAL MEETING
1. Election of Trustee Nominees:
01) Thomas A. Christopher; 02) David A. Duffy; 03) Diana P. Herrmann*;
04) Theodore T. Mason; 05) Anne J. Mills; 06) James R. Ramsey
*Interested Trustee
For All Withhold All For All Except
__ __ __
[__] [__] [__]
To withhold authority to vote for one or more (but not all) nominees, mark "FOR
ALL EXCEPT" and write the nominee number(s) and/ or name(s) on the line below.
____________________
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.
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
HAS YOUR ADDRESS CHANGED DO YOU HAVE ANY COMMENTS
- ------------------------- ------------------------------
- ------------------------- ------------------------------
- ------------------------- ------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE.