Important Notice Aquilasm
Please Read Immediately Group of Funds
TAX-FREE FUND FOR UTAH 380
Madison Avenue, Suite 2300, New York, NY 10017
Notice of Annual Meeting of
Shareholders To Be held
on September 27, 2002
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 For Utah (the "Fund") will be held:
Place: (a) at the Little America Hotel
500 South Main Street
Salt Lake City, Utah;
Time: (b) on September 27, 2002
at 9:30 a.m. local time;
Purposes: (c) for the following purposes:
(i) to elect five 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 June 30, 2003 (Proposal No. 2);
(iii) to act upon a proposed new revised and amended
Investment Advisory and Administration Agreement under which
the Fund will become responsible for Fund accounting
expenses (Proposal No. 3);
(iv) 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 July 3, 2002 (the "record date"). Also,
the number of shares of each of the Fund's
outstanding classes of shares that you held at that
time and the respective net asset values of each
class of shares at that time determine the number of
votes you may cast at the Meeting (or any adjourned
meeting or meetings).
By order of the Board of Trustees,
EDWARD M. W. HINES
Secretary
August 12, 2002
Please Note:
If you do not expect to attend the Meeting, please vote 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 For Utah
380 Madison Avenue, Suite 2300, New York, New York 10017
Proxy Statement
Introduction
The purpose of the Notice (the first two pages of this document) is to
advise you of the time, place and purposes of an Annual Meeting of the
Shareholders of Tax-Free Fund For Utah (the "Fund"). The purpose of this Proxy
Statement (all the rest of this document) is to give you information on which
you may base your decisions as to the choices, if any, you make in voting.
The Fund's founder and Manager (the "Manager") is Aquila Management
Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. Since August 1,
2001 the Manager has acted as the Fund's investment adviser. 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 that 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
August 12, 2002.
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, 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 matters listed on the proxy card, you may direct the
proxy holders to vote your shares on the proposals by marking the appropriate
box "For" or "Against" or instruct them not to vote your shares on the proposals
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 or contacting the Fund's Internet address, both of which are
detailed on your proxy card, entering your control number and revoking your
previous vote.
Shares held by brokers in "street name" and not voted or marked as
abstentions will not be counted for purposes of determining a quorum or voted on
any matter or otherwise counted as present in determining voting results.
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, $9.86; Class C Shares, $9.85; and Class Y Shares, $9.43. The meeting
is expected to act only upon matters that affect the Fund as a whole. On matters
that affect the Fund as a whole, all shareholders of the Fund, including the
shareholders of all classes of 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, 5,683,556; Class C Shares,
706,603; and Class Y Shares, 3,084.
On the record date, the following institutional 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 Percent of
the holder of shares class
record
Merrill Lynch Pierce 407,839 Class A Shares 6.4%
Fenner & Smith 239,209 Class C Shares 33.8%
4800 Deer Lake Dr., 3,069 Class Y Shares 99.5%
Jacksonville, FL 32246
Zions First National Bank 761,194 Class A Shares 11.9%
P.O. Box 30880,
Salt Lake City, UT 84130
Donaldson Lufkin 67,162 Class C Shares 9.5%
Jenrette Securities
Corporation, Inc.
P.O. Box 2052,
Jersey City, NJ 07303
McDonald Investments Inc FBO 126,231 Class C Shares 17.9%
4900 Tiedeman Road
Brooklyn, OH 44144
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, five 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 the name, positions with the Fund,
address, date of birth and business experience during at least the past five
years of 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 September, 2001.
Trustees and Officers(1)
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 14 Director or trustee, OCC Cash
New York, NY the Board of Board, Aquila Management Reserves, Inc., OCC
(05/12/29) Trustees since Corporation, the sponsoring Accumulation Trust,
1992 organization and Manager or Oppenheimer Quest Value Funds
Administrator and/or Adviser or Group, Oppenheimer Small Cap
Sub-Adviser to each of the Value Fund, Oppenheimer Midcap
Aquilasm Group of Funds (5) and Fund, and Oppenheimer
Founder, Chairman of the Board Rochester Group of Funds.
of Trustees and (currently or
until 1998) President of each
since its establishment,
beginning in 1984; Director of
the Distributor since 1981and
formerly Vice President or
Secretary, 1981-1998; President
and a Director, STCM Management
Company, Inc., sponsor and
investment adviser to Capital
Cash Management Trust and
Capital Cash U.S. Government
Securities Trust, since 1973;
Trustee Emeritus, Brown
University and active in
university, school and
charitable organizations.
Diana P. Herrmann Trustee since President and Chief Operating 9 None
New York, NY 1997 and Officer of the Manager since
(02/25/58) President 1997, a Director since 1984,
since 1998 Secretary since 1986 and
previously its Executive Vice
President, Senior Vice President
or Vice President, 1986-1997;
President, Senior Vice President
or Executive Vice President of
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
Gary C. Cornia Trustee President, the National Tax 2 None
Orem, UT since 1993 Association; Professor and Chair
(06/24/48) of the Executive Committee, the
International Center for Land Policy
Studies and Training Institute,
Taipei, Taiwan; formerly Associate
Dean, Marriott School of Management,
Brigham Young University, 1991-2000;
Chair, Utah Governor's Tax Review
Committee since 1993; Faculty
Associate, the Land Reform Training
Institute, Taipei, Taiwan and The
Lincoln Institute of Land Policy,
Cambridge, Massachusetts.
.
William L. Ensign Trustee Planning and Architectural 2 None
Annapolis, MD since 1991 Consultant; Acting Architect,
(12/14/28) United States Capitol 1995-1997;
formerly Assistant Architect;
former trustee of various
cultural organizations.
Anne J. Mills Trustee since President, Loring Consulting 6 None
Castle Rock, CO 1994 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 since 1985
and formerly trustee, Brown
University.
Officers
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 four
Aquila Bond Funds and Vice
President, Churchill Cash
Reserves Trust, 1995-2001.
Kimball L. Young Senior Vice Co-portfolio manager, Tax-Free N/A N/A
Salt Lake City, UT President Fund For Utah since 2001;
(08/07/46) since 1998 Co-founder, Lewis Young
Robertson & Burningham, Inc., a
NASD licensed broker/dealer
providing public finance
services to Utah local
governments, 1995-2001; Senior
Vice President of four Aquila
Bond and Equity Funds; formerly
Senior Vice President-Public
Finance, Kemper Securities Inc.,
Salt Lake City, Utah.
Thomas S. Albright Vice President Vice President and Co-portfolio N/A N/A
Louisville, KY since 2001 manager, Tax-Free Fund For Utah
(07/26/52) since 2001; Senior Vice
President and Portfolio Manager,
Churchill Tax-Free Fund of
Kentucky since July 2000; Vice
President and Portfolio Manager,
Banc One Investment Advisors,
Inc., 1994-2000.
Stephen J. Caridi Assistant Vice Vice President of the N/A N/A
New York, NY (05/06/61) President Distributor since 1995; Vice
since 1993 President, Hawaiian Tax-Free
Trust since 1998; Senior Vice
President, Narragansett Insured
Tax-Free Income Fund since 1998,
Vice President 1996-1997;
Assistant Vice President,
Tax-Free Fund For Utah since
1993.
Mary Kayleen Willis Assistant Vice Assistant Vice President of N/A N/A
Salt Lake City, UT President Tax-Free Fund For Utah since
(06/11/63) since 2002 January, 2002, various
securities positions: Paine
Webber, Inc., Salt Lake City,
2002-2001, Dean Witter Reynolds,
Inc., Salt Lake City, 1996-1998.
Rose F. Marotta Chief Chief Financial Officer of the N/A N/A
New York, NY Financial Aquilasm Group of Funds since
(05/08/24) Officer since 1991 and Treasurer, 1981-1991;
1991 Treasurer and director, STCM
Management Company, Inc., since
1974; Treasurer of the Manager
since 1984 and the Distributor,
1985-2000.
Joseph P. DiMaggio Treasurer Treasurer of the Aquilasm Group N/A N/A
New York, NY since 2000 of Funds and the Distributor
(11/06/56) since 2000; Controller, Van Eck
Global Funds, 1993-2000.
Edward M. W. Hines Secretary Partner, Hollyer Brady Smith & N/A N/A
New York, NY since 1990 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 since 1998 and Assistant
since 2000 Secretary of the Aquilasm Group
of Funds since 2000; 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 and Vice President of the
1995 five Aquila Money-Market Funds
since 1990; Vice President of
the Manager since 1990.
Lori A. Vindigni Assistant Assistant Treasurer of the N/A N/A
New York, NY Treasurer Aquilasm Group of Funds since
(11/02/66) since 2000 2000; Assistant Vice President
of the Manager 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 For
Utah, 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 and Ms. Herrmann are interested persons of the Fund, as that
term is defined in the 1940 Act, as officers of the Fund and their affiliations
with both the Manager and 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, Pacific Capital Tax-Free Cash Assets
Trust, Capital Cash Management Trust and Capital Cash U.S. Government Securities
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"; and
Aquila Cascadia Equity Fund and Aquila Rocky Mountain Equity Fund are called the
"Aquila Equity Funds"; considered together, these 14 funds are called the
"Aquilasm Group of Funds."
Securities Holdings of the Trustees
(as of 6/01/02)
Dollar Range of Aggregate Dollar Range of
Name of Ownership in the Ownership in Aquilasm Investment
Trustee Fund(1) Companies Overseen by Trustee(1)
Interested Trustees
Lacy B. Herrmann A E
Diana P. Herrmann B D
Non-interested Trustees
Gary C. Cornia A B
William L. Ensign B B
Anne J. Mills B D
(1) A. None
B. $1-$10,000
C. $10,001-$50,000
D. $50,001-$100,000
E. over $100,000
None of the non-interested Trustees or their immediate family members
holds of record or beneficially any securities of 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 June 30, 2002
the Fund paid a total of $***** 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 14 funds in the Aquilasm Group of Funds, which
consist of tax-free municipal bond funds, money-market funds and equity funds.
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 which the
from the in the Trustee
Fund Aquilasm serves
Name Group of
Funds
Gary C. Cornia $4,200 $12,150 2
William L. Ensign $3,850 $13,800 2
Anne J. Mills $5,200 $36,200 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 Manager or Administrator to each member of the
Aquilasm Group of Funds, which consists of tax-free municipal bond funds,
money-market funds and equity funds. As of June 30, 2002 these funds had
aggregate assets of approximately $3.6 billion, of which approximately $2.1
billion consisted of assets of the tax-free municipal bond funds. The Manager is
controlled by Mr. Lacy B. Herrmann, through share ownership directly, through a
trust and by his wife. During the fiscal year ended June 30, 2002, the Fund
incurred Management fees of $****, of which $**** was waived and the balance was
paid to the Fund's former sub-adviser.
During the fiscal year ended June 30, 2002, $**** was paid under Part I
of the Fund's Distribution Plan to Qualified Recipients with respect to the
Class A Shares, of which $**** was retained by the Distributor. With respect to
Class C Shares, during the same period $**** was paid under Part II of the Plan
and $**** was paid under the Shareholder Services Plan. Of these total payments
of $****, the Distributor received $****. All of such payments were for
compensation.
The Distributor currently handles the distribution of the shares of
fourteen funds (five money-market funds, seven tax-free municipal bond funds and
two equity 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, 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 (the "Independent Trustees") who are not "interested
persons" of the Fund, as that term is defined in the 1940 Act. The Committee (i)
recommends to the Board of Trustees what firm of independent auditors will be
selected by the Board of Trustees (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.
The Committee held one meeting during the Fund's last fiscal year. The Board of
Trustees does not have a nominating committee. 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).
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 Board of Trustees, including a
majority of the Independent Trustees, as the Fund's independent auditors for the
fiscal year ending June 30, 2002. Such selection is submitted to the
shareholders for ratification or rejection.
The Fund paid the following fees to KPMG during the fiscal year ended
June 30, 2002:
Audit Fees: $****
Financial Information
Systems Design and Implementation 0
All Other Fees $****
(Fees for preparation
of the Fund's tax
returns and correspondence
tax-equivalent yield.)
KPMG did not perform any services during the 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.
The Audit Committee of the Fund's Board of Trustees, which consists of
all of the independent Trustees, 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 June 30, 2002.
KPMG has no direct or indirect financial interest in the Fund or the
Manager. 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.
Consideration of a New Revised and Amended
Advisory and Administration Agreement
Which will Provide that the Fund
Will pay for Fund Accounting services
Currently paid for by the Manager
Proposal No. 3
Background and Reasons for the Proposal
The purpose of this proposal is to authorize a new revised and amended
Advisory and Administration Agreement (the "Proposed Agreement") between the
Fund and Aquila Management Corporation, the Manager. The only change between the
current Advisory and Administration Agreement (the "Current Agreement") and the
Proposed Agreement is that the payment for the cost of fund accounting,
currently the responsibility of the Manager, will become the responsibility of
the Fund under the Proposed Agreement.
The Current Agreement provides that the Manager shall either keep the
accounting records of the Fund, including the computation of net asset value per
share and the dividends or, at its expense and responsibility, delegate such
duties in whole or in part to a company satisfactory to the Fund. These services
are called "Fund Accounting." The Fund Accounting services for the Fund are
currently delegated to an outside service provider and are currently supervised
and paid for by the Manager. It is proposed that while an outside service
provider will continue to provide accounting services to the Fund under the
Manager's continued supervision, the costs of the Fund Accounting services will
be shifted from the Manager to the Fund. If the Proposal is approved, these
costs will be borne by the Fund and not by the Manager.
What is Fund Accounting?
Fund Accounting is the routine bookkeeping function under which the Fund's
per share price (net asset value) is computed each day for the purposes of sales
and redemptions of the Fund's shares. Fund Accounting also tracks the Fund's
income and expenses for the purpose of calculating the Fund's daily dividends.
What are the current and anticipated costs
of Fund Accounting?
The cost of providing Fund Accounting to the Fund at its current asset
level of approximately $66 million, is approximately $52,200 per year. Based on
the Fund's current net assets, this equates to approximately 8 basis points
(0.08%) in annual expenses.
At the present time there would be no change in the Fund's net expenses
because the Manager is currently reimbursing a majority of Fund expenses and
waiving its management fee. The Manager has assured the Board of Trustees that
it intends to continue such support in order that the Fund remains competitive
in the marketplace. Thus, while the Fund would become responsible for the Fund
Accounting fee, that fee would currently continue to be reimbursed by the
Manager under the current arrangements.
Under the current Fund Accounting fee structure, the maximum fee paid
by the Fund would be as follows at various asset sizes:
Net Assets Annual Expense % of Net Assets
($MM)
66 (Current) $52,200 0.079
100 $52,200 0.052
150 $52,200 0.035
200 $56,200 0.028
250 $66,200 0.026
300 $76,200 0.025
At present, there would be no change in the Fund's net expenses because
the Manager intends to continue to waive its management fee and reimburse
expenses as necessary.
What will happen if the Fund grows?
As stated above, the Manager intends to continue to subsidize the Fund
in order that it will remain competitive within the marketplace, although it is
not obligated to do so. As such, it expects to continue to waive fees and
reimburse fund expenses, as necessary. Over time, as Fund assets grow, however,
the Manager intends to reduce its subsidization of fund expenses, while at the
same time assuring that the Fund continues to remain competitive with its yield
in the marketplace. Initially the subsidization would be reduced with respect to
regular fund operating expenses, followed by reduction of the waiver of
management fees. Assuming continued growth of the Fund, at some point, the full
Fund Accounting fee would be borne by the Fund.
When will the Manager cease to subsidize the Fund?
The Fund's yield is dependent on market factors, particularly the level
of interest rates, as well as its expenses, which are dependent upon the
competitive environment. Accordingly, it is difficult to specify the asset level
at which subsidization would be completely eliminated. Similarly, growth of the
asset size of the Fund is dependent on market factors, including competing funds
and the relative desirability of alternative investments. It is accordingly
difficult to predict when the Fund will reach a given level of assets.
It should be noted that since inception of the Fund in 1992, the
Manager has spent approximately $2 million in subsidization of Fund expenses to
ensure that the Fund has a competitive return. The Manager intends to continue
such subsidization as necessary. Based on past experience, the Manager currently
estimates that when Fund assets exceed approximately $100 million, reimbursement
of fund operating expenses would cease and the Manager would begin to take a
modest part of the Management fee that is now being waived. Depending on the
competitive environment, the Manager could continue to waive some portion of the
Management fee until Fund assets reach as much as $300 million.
What are the reasons for the Proposal?
The Manager is seeking this change to reduce its costs and thereby
effectively increase its net income without an increase in its management fee.
The Manager has advised the Board of Trustees that it has had increasing costs
of operations, particularly within the past year due to its internalization of
the Fund's portfolio research and management function. An increase would assist
the Manager in retaining experienced investment professionals. It has advised
the Board of Trustees that a high quality portfolio management team is critical
to the success of the Fund, particularly in light of the increased necessity to
scrutinize the credit quality of issues. Compliance with new regulations
regarding privacy, combating money laundering and protecting against terrorism
is requiring new systems and additional resources. Additional income would also
assist the Manager in maintaining new and/or upgraded systems and other
technology investments and related support, an area of growing criticality for
all mutual fund companies.
What changes in the Fund's expenses will result from the change?
Under the Proposed Agreement, the contractual advisory fee (currently being
waived) will continue to accrue at the annual rate of 0.50 of 1% of the Fund's
net asset value. The following table shows the Management fee and Fund
Accounting fee under the Current Agreement and the Proposed Agreement.
Annual Fee Rates
(as a percentage of the Fund's average daily net assets)
Fee Under
Fee arrangements
Type of Under current if Proposal
Fund Fee arrangements No. 3 is
adopted
Management fee 0.50 of 1%(1) 0.50 of 1%(1)
Fund Accounting fee N/A 0.079 of 1%(2)
Total 0.50 of 1%(1) 0.579 of 1%(1)(2)
(1) Currently being waived.
(2) To be reimbursed by the Manager as long as it continues expense
reimbursement.
The following table shows the contractual Management fees and Fund
Accounting fees during the Fund's latest fiscal year, the contractual fees if
the proposed arrangements had been in effect during that fiscal year and the
percentage change.
Type of Fund Actually Fee accrued Percent
Fee accrued if new change
arrangements
had been
in effect
Management fee $258,558(1) $258,558(1) 0%
Fund Accounting fee N/A $52,200 (2) N/A
Total $258,558 (1) $310,758(1)(2) 20%
(1) Waived.
(2) Would have been reimbursed by the Manager. Fund Accounting fee
reflects a recent contractual increase.
What information about the Manager should I know?
The Fund's Manager is founder and Manager and/or administrator of each
fund in the Aquilasm Group of Funds, which consists of tax-free municipal bond
funds, money-market funds and equity funds. As of July 24, 2002 these funds had
aggregate assets of approximately $3.6 billion, of which approximately $2.2
billion consisted of assets of seven tax-free municipal bond funds. The Manager,
founded in 1984, is controlled by Mr. Lacy B. Herrmann, directly, through a
trust and through share ownership by his wife and daughter as follows:
Elizabeth B. Herrmann 27.5%
Lacy B. Herrmann 25%
Elizabeth B. Herrmann
1993 Annuity Trust 40%
Diana P. Herrmann 5%
The names, addresses and principal occupations of the principal executive
officer and each director of Aquila are as follows:
Name Position with Aquila
Lacy B. Herrmann Chairman, Chief Executive Officer
and Director
Diana P. Herrmann President, Chief Operating Officer
and Director
Elizabeth B. Herrmann Director
The address of all of these individuals is 380 Madison Avenue, Suite 2300,
New York, NY 10017.
When was the Current Agreement last approved?
The Current Agreement between the Fund and the Manager was approved by
the shareholders of the Fund in October, 1997. It has been renewed annually by
the Board of Trustees since that time, most recently in December, 2001.
What changes are proposed in the Proposed Agreement?
The complete text of the Proposed Agreement, marked to show the
proposed changes, is attached to this Proxy Statement.
What factors did the Board of Trustees consider
in approving the Proposed Agreement?
The Trustees noted that the Manager had presented for the Board's
consideration materials including, among other things: conditions and trends in
the municipal securities markets; an analysis of the Fund's current and
historical expenses, originally included in the contract evaluation material
reviewed by the Board in connection with renewal of the current agreement in
December, 2001; information about the non-profitability of the Manager's mutual
fund operations with respect to the Fund due to its fee waiver and subsidization
of Fund operating expenses; performance of the Fund as related to various
industry indices; and a statement of the rationale underlying the proposed
advisory fee structure, including conforming with a trend within the industry.
Copies of the Proposed Agreement were also provided.
The Trustees also noted that at their request, the Manager had retained at
the Manager's expense, a recognized independent outside consulting firm to
analyze the frequency with which investment managers have unbundled Fund
Accounting from the management fee. The report of that firm indicated that there
is a trend in this regard in the mutual fund industry. While the analysis noted
that 21 - 25% of funds disclose Fund Accounting as a separate fund expense, it
also noted that the frequency is higher in actuality because fund accounting
costs are often bundled into custody fees. The Manager advised the Board that
this is particularly the case with some of the larger custodian banks based upon
its discussions with a number of industry representatives. The independent
consultant's analysis also noted that a number of comparable funds treat fund
accounting as a fund expense.
Within the Aquilasm Group of Funds, Fund Accounting has previously been
unbundled from the advisory fee to become a fund expense with respect to three
funds. This change resulted in part from the fact that there was a trend in this
direction within the industry.
From the foregoing, the Board of Trustees derived the following
considerations:
o Due to the current and prior management fee waiver and the
subsidization of the majority of Fund's expenses by the Manager, the
performance and expense ratio of the Fund continued to be at a highly
competitive level.
o Consistent with previous determinations by the Board of Trustees, the
contracted Advisory and Administration fees were both reasonable and
well in line with industry standards and the Fund's peer group, being
in general below those of comparable Funds. As of March 31, 2002, the
Fund's gross management fee was 0.50 of 1% versus the average and
median of 0.57 and 0.55 of 1%, respectively, of those of comparable
funds.
o Since inception of the Fund in 1992, the Manager has spent
approximately $2 million on subsidization of Fund expenses to ensure
that the Fund has a competitive return. The waiver and expense
reimbursement by the Manager would continue until such time that the
Fund reaches a size significant enough that these fees and expenses
can be phased in without adversely affecting the Fund and its
performance.
o A comparison of the Fund's net operating expenses vis-a-vis comparable
funds reflected that most of the comparable funds have higher expense
structures than the Fund, based upon data provided by outside
consultants and fund financial reports. The Fund's net expense ratio
of 0.38 of 1% was also significantly lower than the 0.84 of 1% average
and 0.85 of 1% median for all front-end load shares of single-state
municipal bond funds (466 funds).
o The overall nature and quality of the services provided by the Manager
had historically been, and continued to be, very high.
o The proposal was representative of a trend within the mutual fund
industry.
o The Fund has traditionally had a relatively low net ratio of expenses.
The Manager has assured through subsidization that the Fund has had
consistent performance relative to comparable funds
o The Manager has had increasing costs of its operations, particularly
within the past year due to its internalization of the Fund's
portfolio research and management function. Being relieved of Fund
Accounting costs would assist the Manager in retaining experienced
investment professionals and would also assist in the Manager's
maintaining new and/or upgraded systems and other technology
investments and related support and in providing resources for
compliance with the new regulatory and other requirements, an area of
growing criticality for all mutual fund companies.
o The Fund currently has no competitors in the Utah single-state
municipal bond fund marketplace. Upcoming tax law changes (in January
2003) could very well be attractive to competitors. It would,
therefore, be advantageous for the Manager to assist in growing the
Fund as quickly as possible in order to achieve economies of scale and
ensure the Fund's viability for the long-term future.
o The Manager had agreed to share the costs with the Fund relating to
the proxy statement preparation.
o Due to the Manager's subsidization, the proposed change would have no
current impact on the Fund's net expense ratio.
o If the Fund's asset size increases, the cost of Fund Accounting
services as a percentage of its operating expenses will be well within
the range of expense ratios of comparable funds and is not expected to
adversely affect its competitive position in the future.
On the basis of the foregoing considerations, the Board of Trustees,
including all of the Independent Trustees, voted to approve the proposed change
and recommend that the shareholders of the Fund approve it.
The Board of Trustees will consider the proposal again at an in-person
meeting immediately preceding the Shareholder's Meeting, at which time the above
action is expected to be re-approved. If the Board of Trustees should not
approve the Proposed Agreement at that meeting, the proposal will be withdrawn
from the shareholder's meeting and will not be voted on by the shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE NEW REVISED AND AMENDED ADVISORY AND
ADMINISTRATION AGREEMENT DESCRIBED ABOVE BE APPROVED.
Vote Required
The favorable vote of the holders of a majority (as defined in the 1940
Act) of the outstanding shares of the Fund, is required for the approval of this
Proposal No. 3. Under the 1940 Act, the vote of the holders of a majority of the
outstanding shares of the Fund means the vote of the holders of the lesser of
(a) 67% or more of the shares of the Fund present at the Meeting or represented
by proxy if the holders of more than 50% of such shares are so present or
represented, or (b) more than 50% of the outstanding shares of the Fund, with
one (1) vote for each dollar (and a proportionate fractional vote for each
fraction of a dollar) of net asset value (determined as of the record date)
represented by full and fractional shares of all of the Fund's three classes of
shares.
If the shareholders of the Fund fail to approve Proposal No. 3, the
Board of Trustees will consider what action might be appropriate, including
calling another meeting of the shareholders or continuing with the present
arrangements.
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, the Fund will so advise you.
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.
Important Notice
Please Read Immediately
Tax-Free Fund For Utah
Notice of Annual Meeting of Shareholders
to be held on September 27, 2002
PROXY STATEMENT
<page>
Attachment A
TAX-FREE FUND FOR UTAH
ADVISORY AND ADMINISTRATION AGREEMENT
THIS AGREEMENT, made as of by and between TAX-FREE FUND FOR
UTAH (the "Fund"), a Massachusetts business trust, 380 Madison Avenue,
Suite 2300, New York, New York 10017 and AQUILA MANAGEMENT CORPORATION
(the "Manager"), a New York corporation, 380 Madison Avenue, Suite 2300,
New York, New York 10017
W I T N E S S E T H:
WHEREAS, the Fund and the Manager wish to enter into an Advisory and
Administration Agreement referred to hereafter as "this Agreement," with respect
to the Fund;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General
The Manager shall perform (at its own expense) the functions set forth more
fully herein for the Fund.
2. Duties and Obligations of the Manager
(a) Investment Advisory Services Subject to the succeeding provisions
of this section and subject to the direction and control of the Board of
Trustees of the Fund, the Manager shall:
(i) supervise continuously the investment program of the Fund and the
composition of its portfolio;
(ii) determine what securities shall be purchased or sold by the Fund;
(iii) arrange for the purchase and the sale of securities held in the
portfolio of the Fund;
(iv) at its expense provide for pricing of the Fund's portfolio daily using
a pricing service or other source of pricing information satisfactory to
the Fund and, unless otherwise directed by the Board of Trustees, provide
for pricing of the Fund's portfolio at least quarterly using another such
source satisfactory to the Fund; and
Subject to the provisions of Section 5 hereof, the Manager may at its own
expense delegate to a qualified organization ("Sub-Adviser"), affiliated or not
affiliated with the Manager, any or all of the above duties. Any such delegation
of the duties set forth in (i), (ii) or (iii) above shall be by a written
agreement (the "Sub-Advisory Agreement") approved as provided in Section 15 of
the Investment Company Act of 1940.
(b) Administration. Subject to the succeeding provisions of this
section and subject to the direction and control of the Board of Trustees of the
Fund, the Manager shall provide all administrative services to the Fund other
than those relating to its investment portfolio delegated to a Sub-Adviser of
the Fund under a Sub-Advisory Agreement; as part of such administrative duties,
the Manager shall:
(i) provide office space, personnel, facilities and equipment for the
performance of the following functions and for the maintenance of the
headquarters of the Fund;
(ii) oversee all relationships between the Fund and any sub-adviser,
transfer agent, custodian, legal counsel, auditors, fund accounting agent
and principal underwriter, including the negotiation of agreements in
relation thereto, the supervision and coordination of the performance of
such agreements, and the overseeing of all administrative matters which are
necessary or desirable for the effective operation of the Fund and for the
sale, servicing or redemption of the Fund's shares;
(iii) maintain the Fund's books and records, and prepare (or assist counsel
and auditors in the preparation of) all required proxy statements, reports
to the Fund's shareholders and Trustees, reports to and other filings with
the Securities and Exchange Commission and any other governmental agencies,
and tax returns, and oversee the insurance relationships of the Fund;
(iv) prepare, on behalf of the Fund and at the Fund's expense, such
applications and reports as may be necessary to register or maintain the
registration of the Fund and/or its shares under the securities or
"Blue-Sky" laws of all such jurisdictions as may be required from time to
time; and
(v) respond to any inquiries or other communications of shareholders of the
Fund and broker-dealers, or if any such inquiry or communication is more
properly to be responded to by the Fund's shareholder servicing and
transfer agent or distributor, oversee such shareholder servicing and
transfer agent's or distributor's response thereto.
(c) Compliance with Requirements. Any investment program furnished, and
any activities performed, by the Manager or by a Sub-Adviser under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by: (1) the Investment Company Act of 1940 (the "Act") and any rules or
regulations in force thereunder; (2) any other applicable laws, rules and
regulations; (3) the Declaration of Trust and By-Laws of the Fund as amended
from time to time; (4) any policies and determinations of the Board of Trustees
of the Fund; and (5) the fundamental policies of the Fund, as reflected in its
registration statement under the Act or as amended by the shareholders of the
Fund.
(d) Best Efforts; Responsibility. The Manager shall give the Fund the
benefit of its best judgment and effort in rendering services hereunder, but the
Manager shall not be liable for any loss sustained by reason of the adoption of
any investment policy or the purchase, sale or retention of any security,
whether or not such purchase, sale or retention shall have been based upon (i)
its own investigation and research or (ii) investigation and research made by
any other individual, firm or corporation, if such purchase, sale or retention
shall have been made and such other individual, firm or corporation shall have
been selected in good faith by the Manager or a Sub-Adviser.
(e) Other Customers. Nothing in this Agreement shall prevent the Manager or
any officer thereof from acting as investment adviser, sub-adviser,
administrator or manager for any other person, firm, or corporation, and shall
not in any way limit or restrict the Manager or any of its officers,
stockholders or employees from buying, selling or trading any securities for its
own or their own accounts or for the accounts of others for whom it or they may
be acting, provided, however, that the Manager expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations under this Agreement.
(f) Order Allocation. In connection with any duties for which it may
become responsible to arrange for the purchase and sale of the Fund's portfolio
securities, the Manager shall select, and shall cause any Sub-Adviser to select,
such broker-dealers ("dealers") as shall, in the Manager's judgment, implement
the policy of the Fund to achieve "best execution," i.e., prompt, efficient, and
reliable execution of orders at the most favorable net price. The Manager shall
cause the Fund to deal directly with the selling or purchasing principal or
market maker without incurring brokerage commissions unless the Manager
determines that better price or execution may be obtained by paying such
commissions; the Fund expects that most transactions will be principal
transactions at net prices and that the Fund will incur little or no brokerage
costs. The Fund understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread between the bid
and asked prices. In allocating transactions to dealers, the Manager is
authorized and shall authorize any Sub-Adviser, to consider, in determining
whether a particular dealer will provide best execution, the dealer's
reliability, integrity, financial condition and risk in positioning the
securities involved, as well as the difficulty of the transaction in question,
and thus need not pay the lowest spread or commission available if the Manager
determines in good faith that the amount of commission is reasonable in relation
to the value of the brokerage and research services provided by the dealer,
viewed either in terms of the particular transaction or the Manager's overall
responsibilities. If, on the foregoing basis, the transaction in question could
be allocated to two or more dealers, the Manager is authorized, in making such
allocation, to consider (i) whether a dealer has provided research services, as
further discussed below; and (ii) whether a dealer has sold shares of the Fund.
Such research may be in written form or through direct contact with individuals
and may include quotations on portfolio securities and information on particular
issuers and industries, as well as on market, economic, or institutional
activities. The Fund recognizes that no dollar value can be placed on such
research services or on execution services and that such research services may
or may not be useful to the Fund and may be used for the benefit of the Manager
or its other clients. The Manager shall cause the foregoing provisions, in
substantially the same form, to be included in any Sub-Advisory Agreement.
(g) Registration Statement; Information. It is agreed that the Manager
shall have no responsibility or liability for the accuracy or completeness of
the Fund's Registration Statement under the Act and the Securities Act of 1933,
except for information supplied by the Manager for inclusion therein. The
Manager shall promptly inform the Fund as to any information concerning the
Manager appropriate for inclusion in such Registration Statement, or as to any
transaction or proposed transaction which might result in an assignment of the
Agreement.
(h) Liability for Error. The Manager shall not be liable for any error in
judgment or for any loss suffered by the Fund or its security holders in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Nothing in this Agreement shall, or
shall be construed to, waive or limit any rights which the Fund may have under
federal and state securities laws which may impose liability under certain
circumstances on persons who act in good faith.
(j) Indemnification. The Fund shall indemnify the Manager to the full
extent permitted by the Fund's Declaration of Trust. 3. Allocation of Expenses
The Manager shall, at its own expense, provide office space, facilities,
equipment, and personnel for the performance of its functions hereunder and
shall pay all compensation of Trustees, officers, and employees of the Fund who
are affiliated persons of the Manager.
The Fund agrees to bear the costs of preparing and setting in type its
prospectuses, statements of additional information and reports to its
shareholders, and the costs of printing or otherwise producing and distributing
those copies of such prospectuses, statements of additional information and
reports as are sent to its shareholders. All costs and expenses not expressly
assumed by the Manager under this sub-section or otherwise by the Manager,
administrator or principal underwriter or by any Sub-Adviser shall be paid by
the Fund, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Trustees other than those affiliated with the Manager or such adviser,
administrator or principal underwriter; (v) legal and audit expenses; (vi)
custodian and transfer agent, or shareholder servicing agent, fees and expenses;
(vii) expenses incident to the issuance of its shares (including issuance on the
payment of, or reinvestment of, dividends); (viii) fees and expenses incident to
the registration under Federal or State securities laws of the Fund or its
shares; (ix) expenses of preparing, printing and mailing reports and notices and
proxy material to shareholders of the Fund; (x) all other expenses incidental to
holding meetings of the Fund's shareholders; (xi) expenses of keeping the Fund's
accounting records including the computation of net asset value per share and
the dividends; and (xii) such non-recurring expenses as may arise, including
litigation affecting the Fund and the legal obligations for which the Fund may
have to indemnify its officers and Trustees.
4. Compensation of the Manager The Fund agrees to pay the Manager, and the
Manager agrees to accept as full compensation for all services rendered by the
Manager as such, an annual fee payable monthly and computed on the net asset
value of the Fund as of the close of business each business day at the annual
rate of 0.50 of 1% of such net asset value.
5. Termination of Sub-Advisory Agreement
The Sub-Advisory Agreement may provide for its termination by the
Manager upon reasonable notice, provided, however, that the Manager agrees not
to terminate the Sub-Advisory Agreement except in accordance with such
authorization and direction of the Board of Trustees, if any, as may be in
effect from time to time.
6. Duration and Termination of this Agreement
(a) Duration. This Agreement shall become effective as of the date
first written above following approval by the shareholders of the Fund and
shall, unless terminated as hereinafter provided, continue in effect until the
December 31 next preceding the first anniversary of the effective date of this
Agreement, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (1) by a vote of the
Fund's Board of Trustees, including a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, with votes cast in person at a meeting called for the purpose of
voting on such approval, or (2) by a vote of the holders of a "majority" (as so
defined) of the outstanding voting securities of the Fund and by such a vote of
the Trustees.
(b) Termination. This Agreement may be terminated by the Manager at any
time without penalty upon giving the Fund sixty days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Manager sixty days' written notice (which notice
may be waived by the Manager), provided that such termination by the Fund shall
be directed or approved by a vote of a majority of its Trustees in office at the
time or by a vote of the holders of a majority (as defined in the Act) of the
voting securities of the Fund outstanding and entitled to vote. The portions of
this Agreement which relate to providing investment advisory services (Sections
2(a), (c), (d) and (e)) shall automatically terminate in the event of the
assignment (as defined in the Act) of this Agreement, but all other provisions
relating to providing services other than investment advisory services shall not
terminate, provided however, that upon such an assignment the annual fee payable
monthly and computed on the net asset value of the Fund as of the close of
business each business day shall be reduced to the annual rate of 0.27 of 1% of
such net asset value.
7. Disclaimer of Shareholder Liability
The Manager understands that the obligations of this Agreement are not
binding upon any shareholder of the Fund personally, but bind only the Fund's
property; the Manager represents that it has notice of the provisions of the
Fund's Declaration of Trust disclaiming shareholder liability for acts or
obligations of the Fund.
8. Notices of Meetings
The Fund agrees that notice of each meeting of the Board of
Trustees of the Fund will be sent to the Manager and that the Fund will make
appropriate arrangements for the attendance (as persons present by invitation)
of such person or persons as the Manager may designate.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
ATTEST: TAX-FREE FUND FOR UTAH
________________________ By:___________________________________
ATTEST: AQUILA MANAGEMENT CORPORATION
_______________________ By:___________________________________
<page>
THE AQUILASM GROUP OF FUNDS
380 MADISON AVENUE, SUITE 2300
NEW YORK, NY 10017
VOTE BY TELEPHONE OR INTERNET OR MAIL 24 hours a day, 7 days a week
Telephone
1-800-690-6903
To vote your shares by telephone, call toll free 1-800-690-6903. You
will be prompted to enter the 12-digit control number on this proxy card. Follow
the simple recorded instructions using this proxy card as a guide. If you vote
by phone, you need not return the proxy card by mail.
Internet voting
www.proxyvote.com
To vote your shares by the Internet, contact the Fund at
www.proxyvote.com You will be prompted to enter the 12-digit control number on
this proxy card. Follow the simple instructions at the website, using your proxy
card as a guide. If you vote by the Internet, you need not return the proxy card
by mail.
Mail
You can vote your shares by completing and returning this proxy card.
Please mark your proxy, date and sign it below and return it promptly in the
accompanying envelope which requires no postage if mailed in the United States.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -----------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
TAX-FREE FUND FOR UTAH
Vote on Trustees
(Proposal No.1 in Proxy Statement)
1. Election of Trustees
01) Lacy B. Herrmann* 02) Gary C. Cornia 03) William L. Ensign
04) Diana P. Herrmann* 05) Anne J. Mills
*interested Trustees
__
[__] 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.
____________________
[bolded in printed form]
Management recommends a vote For all nominees listed above and For the
proposals listed below. The shares represented hereby will be voted as indicated
below or For if no choice is indicated.
2. Action on selection of KPMG LLP as independent auditors
(Proposal No. 2 in Proxy Statement)
__ __ __
FOR [__] AGAINST [__] ABSTAIN [__]
3. Action on a proposed new revised and amended Investment
Advisory and Administration Agreement under which the Fund
will become responsible for Fund accounting expenses
(Proposal No. 3 in Proxy Statement)
__ __ __
FOR [__] AGAINST [__] ABSTAIN [__]
As to any other matter said proxies shall vote in accordance with
their best judgment.
Please indicate if you plan to attend the Shareholder Meeting. If you mark the
box below, you must return the proxy card by mail to have this information
recorded.
__
I plan to attend the annual meeting. [__]
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) APPEARS 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.
_________________________________Dated: _________
Signature
[Please sign within the box]
_________________________________Dated: __________
Signature
(Joint Owners)
<page>
Aquilasm Group of Funds
TAX-FREE FUND FOR UTAH
Proxy for Shareholders Meeting September 27, 2002
Proxy Solicited on Behalf of the Board of Trustees
The shareholder of TAX-FREE FUND FOR UTAH (the "Fund") whose signature(s)
appears on the reverse hereof does hereby appoint LACY B. HERRMANN, DIANA P.
HERRMANN and EDWARD M. W. HINES, or any of them, as attorneys and proxies of the
undersigned, with full power of substitution, to attend the Annual Meeting of
Shareholders of the Fund to be held on Friday, September 27, 2002, at Little
America Hotel, 500 South Main Street, Salt Lake City, Utah; at 9:30 a.m. local
time, and at all adjournments thereof, and thereat to vote the shares held in
the name of the undersigned on the record date for said meeting on the matters
listed on the reverse side. Such shares are entitled to one vote for every
dollar of net asset value represented by the share balance printed on the
reverse side.
Please read the proxy statement prior to voting.
Annual Meeting Attendance
We encourage you to attend the Annual Meeting of Shareholders. If you can join
us, 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 other side.)