File Nos. 33-72212 and 811-8168
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
AQUILA ROCKY MOUNTAIN EQUITY FUND
(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 Aquila
Please Read Immediately Group of Funds
AQUILA ROCKY MOUNTAIN EQUITY FUND 380 Madison Avenue, Suite
2300, New York, New York 10017
Notice of Annual Meeting of
Shareholders to Be Held
on July 15, 2008
To Shareholders of the Fund:
The purpose of this Notice is to advise you that an Annual Meeting of the
Shareholders of Aquila Rocky Mountain Equity Fund (the "Fund") will be held:
Place: (a) at the offices of the Fund:
380 Madison Avenue
Suite 2300
New York, New York;
Time: (b) on Tuesday, July 15, 2008
at 10:00 a.m. Eastern Daylight 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 (Annual Meeting 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,
2008 (Annual Meeting Proposal No. 2);
(iii) to act upon any other matters which may properly come
before the Annual Meeting at the scheduled time and place or
any adjourned meeting or meetings.
Who Can
Vote What
Shares: (d) To vote at the Annual Meeting, you must have
been a shareholder on the Fund's records at
the close of business on April 18, 2008 (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 Annual
Meeting(or any adjourned meeting or
meetings).
By order of the Board of Trustees,
EDWARD M. W. HINES
Secretary
June 6, 2008
Please Note:
If you do not expect to attend the Annual 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.
Important Notice Aquila
Please Read Immediately Group of Funds
AQUILA ROCKY MOUNTAIN EQUITY FUND
380 Madison Avenue, Suite 2300, New York, New York 10017
Notice of Special Meeting of
Shareholders to Be Held
on July 15, 2008
To Shareholders of the Fund:
The purpose of this Notice is to advise you that a Special Meeting of the
Shareholders of Aquila Rocky Mountain Equity Fund (the "Fund") will be held:
Place: (a) at the offices of the Fund:
380 Madison Avenue
Suite 2300
New York, New York;
Time: (b) on Tuesday, July 15, 2008
at 11:00 a.m. Eastern Daylight Time;
Purposes: (c) for the following purpose:
to act upon a new Advisory and Administration
Agreement (Special Meeting Proposal No. 1)
Who Can
Vote What
Shares: (d) To vote at the Special Meeting, you must
have been a shareholder on the Fund's
records at the close of business on April
18, 2008 (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 Special Meeting(or any adjourned
meeting or meetings).
By order of the Board of Trustees,
EDWARD M. W. HINES
Secretary
June 6, 2008
Please Note:
If you do not expect to attend the Special 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.
Aquila Rocky Mountain Equity Fund
380 Madison Avenue, Suite 2300, New York, NY 10017
Joint Proxy Statement
Introduction
The two Notices preceding this Joint Proxy Statement are to advise you
of the times, place and purposes of an Annual Meeting of the Shareholders of
Aquila Rocky Mountain Equity Fund (the "Fund"), and a Special Meeting of the
Shareholders that will take place immediately after the Annual Meeting. The
purpose of this Joint Proxy Statement is to give you information on which you
may base your voting decisions at both meetings.
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.
These Notices and Joint Proxy Statement are first being mailed on or
about June 6, 2008.
You should read this Joint 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 Cards
The enclosed proxy cards authorize the persons named (or their
substitutes) to vote your shares; the Fund calls these persons the "proxy
holders." There are two proxy cards, one for each meeting. 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 for the
Annual Meeting 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 each proxy card, you may direct the
proxy holders to vote your shares on a proposal by marking the appropriate box
"For" or "Against" or instruct them not to vote your shares on a 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 cards. You will be prompted to enter the
control numbers on your proxy cards. Follow the instructions on the screen,
using your proxy cards as guides. If you vote by the Internet, you need not
return the proxy cards by mail.
(3) Telephone Voting
To vote your shares by telephone, call the toll free number on your
proxy cards. You will be prompted to enter the control numbers on your proxy
cards. Follow the recorded instructions using your proxy cards as guides. If you
vote by phone, you need not return the proxy cards by mail.
General Information
You may end the power of the proxy holders to vote your shares at
either meeting 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 quorums at the
meetings. They will be counted as present at the meeting in determining voting
results, and will therefore have the same effect as negative votes. Quorums for
the two meetings will be determined separately.
The Fund is sending you the Notices and Joint Proxy Statement in
connection with the solicitation by its Trustees of proxies to be used at the
Annual Meeting and Special Meeting to be held at the times and place and for the
purposes indicated in the Notices or any adjourned meeting or meetings. Whenever
it is stated in this Joint Proxy Statement that a matter is to be acted on at
the Annual or Special 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 these Notices and Joint 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. Because your vote is important, the Fund may telephone you to urge you
to vote.
On the record date, the Fund had four classes of shares outstanding.
All shareholders of the Fund are entitled to vote at the Annual Meeting and the
Special 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, $28.10; Class C
Shares, $25.69; Class Y Shares, $28.93; and Class I Shares, $28.29. Both
meetings are expected to act only upon matters that affect the Fund as a whole:
at the Annual Meeting, the election of Trustees and the selection of an
independent registered public accounting firm, and at the Special Meeting,
action on a new Advisory and Administration Agreement. 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, 631,715; Class C Shares, 88,645;
Class Y Shares, 40,391; and Class I Shares, 355.
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 shares Percent of class
of the holder of record
Institutional 5% shareholders
MLPF&S for the sole benefit of
its customers 89,933 Class A Shares 14.24%
4800 Deer Lake Drive East 45,291 Class C Shares 51.09%
Jacksonville, FL 7,904 Class Y Shares 19.57%
Reliance Trust Co. Cust.
FBO Aquila Management 32,890 Class A Shares 5.21%
P.O. Box 48529
Atlanta, GA
Charles Schwab & Co. Inc.
Special Custody Account 355 Class I Shares 100.00%
FBO Customers
101 Montgomery Street
San Francisco, CA
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.
Management Ownership
The officers and Trustees of the Fund as a group owned approximately 3.3%
of the Fund's outstanding shares as of March 31, 2008.
Election of Trustees
(Proposal No. 1 at the Annual Meeting)
At the Annual Meeting, five Trustees are to be elected. Each Trustee
elected will serve until his or her successor is duly elected. The nominees
selected by the Trustees are named in the table below. See "Introduction" above
for information as to how you can vote your shares in the election of Trustees.
The following material includes information about each nominee and each
officer of the Fund. All shares of the Fund listed as owned by the Trustees are
Class A Shares unless indicated otherwise. All of the nominees are presently
Trustees and were elected by the shareholders, except for Mr. O'Flaherty. 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 (The position held is a
Name, Address(2) Length of Principal Occupation(s) Overseen directorship unless
and Date of Birth Service(3) During Past 5 Years by Trustee indicated otherwise.)
- ------------- ---------- ------------------- ---------- -----------
Interested
Trustee(4)
Diana P. Herrmann Trustee Vice Chair and Chief Executive 12 ICI Mutual Insurance Company
New York, NY since 1997 Officer of Aquila Management
(02/25/58) and Corporation, Founder of the
President Aquila Group of Funds (5) and
since 2002 parent of Aquila Investment
Management LLC, Manager , since 2004,
President and Chief Operating Officer
since 1997, a Director since 1984,
Secretary since 1986 and previously its
Executive Vice President, Senior Vice
President or Vice President, 1986-1997;
Chief Executive Officer and Vice Chair
since 2004 and President, Chief Operating
Officer and Manager of the Manager since
2003; Chair, Vice Chair, President,
Executive Vice President or Senior Vice
President of funds in the Aquila Group of
Funds since 1986; Director of the
Distributor since 1997; trustee, Reserve
Money-Market Funds, 1999-2000 and Reserve
Private Equity Series, 1998-2000;
Governor, Investment Company Institute (a
trade organization for the U.S. 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
Tucker Hart Adams Chair of the President, The Adams Group, 3 Director, Colorado Health
Colorado Springs, Board of Inc., an economic consulting Facilities Authority
CO Trustees firm, since 1989; formerly Chief
(01/11/38) since 2005 Economist, United Banks of
and Trustee Colorado; currently or formerly
since 1993 active with numerous
professional and community
organizations.
Gary C. Cornia Trustee Director, Romney Institute of 4 Lincoln Institute of Land
Orem, UT since 2002 Public Management, Marriott Policy, Cambridge, MA
(06/24/48) School of Management, Brigham
Young University, 2004 - present;
Professor, Marriott School of Management,
1980 - present; Past President, the
National Tax Association; Fellow, Lincoln
Institute of Land Policy, 2002 - present;
Associate Dean, Marriott School of
Management, Brigham Young University,
1991-2000; Utah Governor's Tax Review
Committee since 1993.
.
Grady Gammage, Jr. Trustee Founding partner, Gammage & 2 None
Phoenix, AZ since 2004 Burnham, PLC, a law firm,
(10/01/51) Phoenix, Arizona, since 1983; director,
Central Arizona Water Conservation
District, 1992-2004; director, Arizona
State University Foundation since 1998;
Manicopa Partnership for Arts & Culture;
Public Architecture; Arizona Historical
Foundation.
Glenn P. O'Flaherty Trustee Co-Founder, Chief Financial 2 None
Denver, CO since 2007 Officer and Chief Compliance
(08/03/58) Officer of Three Peaks Capital
Management, LLP, 2003-2005; Vice
President - Investment Accounting, Global
Trading and Trade Operations, Janus
Capital Corporation, and Chief Financial
Officer and Treasurer, Janus Funds,
1991-2002.
Other Individuals
Chairman Emeritus (6)
Lacy B. Herrmann Founder and Founder and Chairman of the N/A N/A
New York, NY Chairman Board, Aquila Management
(05/12/29) Emeritus Corporation, the sponsoring
since 2006, organization and parent of the
Chairman of Manager or Administrator and/or
the Board of Adviser or Sub-Adviser to each
Trustees, fund of the Aquila Group of
1993-2005 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;
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.
Marie E. Aro Senior Vice Senior Vice President, Aquila N/A N/A
Denver, CO President Rocky Mountain Equity Fund, and
(02/10/55) since 2004 Vice President, Tax-Free Trust
of Arizona, since 2004; Senior
Vice President, Aquila Three
Peaks High Income Fund, since
2006; Vice President, INVESCO
Funds Group, 1998-2003; Vice
President, Aquila Distributors,
Inc., 1993-1997.
Jerry G. McGrew Senior Vice President of the Distributor N/A N/A
New York, NY President since 1998, Registered Principal
(06/18/44) since 1996 since 1993, Senior Vice
President, 1997-1998 and Vice President,
1993-1997; Senior Vice President, Aquila
Three Peaks High Income Fund, Aquila
Rocky Mountain Equity Fund and five
Aquila Municipal Bond Funds; Vice
President, Churchill Cash Reserves Trust,
1995-2001.
James M. McCullough Senior Vice Senior Vice President or Vice N/A N/A
Portland, OR President President of Aquila Rocky
(06/11/45) since 1999 Mountain Equity Fund and
Tax-Free Trust of Oregon; Senior
Vice President of the
Distributor since 2000; Director
of Fixed Income Institutional
Sales, CIBC Oppenheimer & Co.
Inc., Seattle, WA, 1995-1999.
Barbara S. Walchli Senior Vice Senior Vice President and N/A N/A
Phoenix, AZ President Portfolio Manager of Aquila
(09/24/52) since 1999 Rocky Mountain Equity Fund since
1999; Fund Co-manager, One Group Large
Company Growth Fund and One Group Income
Equity Fund, Banc One Investment
Advisors, 1996-1997; Director of
Research, Senior Vice President, First
Interstate Capital Management, 1995-1996;
Investment Committee, Arizona Community
Foundation 1986-2007; member, Institute
of Chartered Financial Analysts,
Association for Investment Management and
Research and the Phoenix Society of
Financial Analysts; formerly Senior
Analyst, Banc One Investment Advisors and
Director of Research, Valley National
Bank.
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 1999 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 two Aquila
Bond Funds and Aquila Rocky
Mountain Equity Fund; formerly
Senior Vice President-Public
Finance, Kemper Securities Inc.,
Salt Lake City, Utah.
R. Lynn Yturri Senior Vice Senior Vice President N/A N/A
Scottsdale, AZ President Investments, Aquila Investment
(08/29/42) since 2006 Management LLC since 2005,
Senior Vice President, Aquila
Rocky Mountain Equity Fund since
2006; Senior Vice President and
equity fund manager, JP Morgan
Chase, formerly One Group, Bank
One's mutual fund family,
1992-2004.
Stephen J. Caridi Vice Vice President of the N/A N/A
New York, NY President Distributor since 1995; Vice
(05/06/61) since 2006 President, Hawaiian Tax-Free
Trust since 1998; Senior Vice President,
Narragansett Insured Tax-Free Income Fund
since 1998, Vice President 1996-1997;
Senior Vice President, Tax-Free Fund of
Colorado since 2004; Vice President,
Aquila Rocky Mountain Equity Fund since
2006.
Sherri Foster Vice Senior Vice President, Hawaiian N/A N/A
Lahaina, HI (07/27/50) President Tax-Free Trust since 1993 and
since 2006 formerly Vice President or
Assistant Vice President;
Vice President since 1997 and
formerly Assistant Vice
President of the three Aquila
Money-Market Funds; Vice
President, Aquila Rocky Mountain
Equity Fund since 2006;
Registered Representative of the
Distributor since 1985.
Jason T. McGrew Vice Vice President, Churchill N/A N/A
Elizabethtown, KY President Tax-Free Fund of Kentucky since
(08/14/71) since 2006 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.
Christine L. Neimeth Vice Vice President of Aquila Rocky N/A N/A
Portland, OR President Mountain Equity Fund and
(02/10/64) since 1999 Tax-Free Trust of Oregon;
Management Information Systems
consultant, Hillcrest Ski and
Sport, 1997; Institutional
Municipal Bond Salesperson,
Pacific Crest Securities, 1996;
active in college alumni and
volunteer organizations.
Alan R. Stockman Vice Senior Vice President, Tax-Free N/A N/A
Glendale, AZ President Trust of Arizona since 2001,
(07/31/54) since 1999 Vice President, 1999-2001; Vice
President, Aquila Rocky Mountain Equity
Fund since 1999; Bank One, Commercial
Client Services representative,
1997-1999; Trader and Financial
Consultant, National Bank of Arizona
(Zions Investment Securities Inc.),
Phoenix, Arizona 1996-1997.
M. Kayleen Willis Vice Vice President, Tax-Free Fund N/A N/A
Salt Lake City, UT President For Utah since September 2003,
(06/11/63) since 2004 Assistant Vice President,
2002-2003; Vice President,
Aquila Rocky Mountain Equity
Fund, since 2004.
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 1993 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 Aquila Rocky Mountain
Equity Fund, 380 Madison Avenue, New York, NY 10017.
(3) Because the Fund does not hold regular annual meetings, each Trustee holds
office for an indeterminate term. The term of office of each officer is one
year.
(4) 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.
(5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila 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 are called the "Aquila Group of Funds."
(6) The Chairman Emeritus may attend Board meetings but has no voting power.
Securities Holdings of the Nominees
(as of 12/31/07)
Dollar Range of Aggregate Dollar Range of Ownership
Ownership in Aquila Rocky Mountain in the Aquila
Name of Trustee Equity Fund(1) Group of Funds(1)
--------------- ------- -----------------
Interested Trustee
Diana P. Herrmann C E
Non-interested Trustees
Tucker Hart Adams B C
Gary C. Cornia E E
Grady Gammage, Jr. D E
Glenn P. O'Flaherty C C
(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 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,
2007 the Fund paid a total of $78,955 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 from all Number of Boards
Compensation from Funds in the Aquila on which the Trustee now
Name the Fund Group of Funds Serves
Tucker H. Adams, $25,500 $46,500 3
Gary C. Cornia, $16,000 $65,500 4
Grady Gammage, Jr. $16,625 $35,125 2
Glenn P. O'Flaherty $15,986 $35,486 2
Class A Shares may be purchased without a sales charge by the Fund's
Trustees and officers.
The Fund's Manager serves as Manager for three other funds oriented to
the Rocky Mountain Region: Tax-Free Trust of Arizona, with assets of $315
million, Tax-Free Fund of Colorado, with assets of $206 million and Tax-Free
Fund For Utah, with assets of $231 million, all as of April 30, 2008. The
Manager is a wholly-owned subsidiary of Aquila Management Corporation ("AMC"),
founder of each fund in the Aquila Group of Funds, which consists of tax-free
municipal bond funds (including among others those named above), money-market
funds, a high-income corporate bond fund and this equity fund. As of April 30,
2008, these funds had aggregate assets of approximately $5.1 billion. 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, although
it is anticipated that these arrangements will change as described in Proposal
No. 1 at the Special Meeting. During the fiscal year ended December 31, 2007,
the Fund incurred management fees of $389,891, of which $352,549 was waived.
During the fiscal year ended December 31, 2007, $58,853 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $6,692 was retained by the Distributor. With
respect to Class C Shares, during the same period $25,758 was paid under Part II
of the Plan and $8,586 was paid under the Shareholder Services Plan. Of these
total payments of $34,344, the Distributor received $8,020. All of such payments
were for compensation.
During the fiscal year ended December 31, 2007, the Fund paid $20,627
to Butzel Long, a professional corporation ("Butzel Long"), independent counsel
to the Fund, and $15,908 to Hollyer Brady Barrett & Hines LLP, predecessor to
Butzel Long, for legal services. Edward M.W. Hines, Secretary of the Fund, is a
shareholder of Butzel Long, and was a partner of Hollyer Brady Barrett & Hines
LLP.
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
"1940 Act"). The members of the Audit Committee are Tucker Hart Adams, Gary C.
Cornia, Grady Gammage, Jr., and Glenn P. O'Flaherty. The Committee (i) selects
the Fund's independent registered public accounting firm (subject to shareholder
ratification); (ii) reviews the methods, scope and result of audits and the fees
charged; and (iii) reviews the adequacy of the Fund's internal accounting
procedures and controls. Selection of the independent registered public
accounting firm is also ratified by the Board of Trustees. The Audit Committee
held four meetings during the Fund's last fiscal year. The Board of Trustees has
adopted a written charter for the Audit 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 meetings of committees of which such Trustee was a member.
The Fund does not hold regular annual meetings.
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, 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 more than 1% of the outstanding shares of any class
of shares of the Manager.
Vote Required
To be elected, each nominee must receive the affirmative votes of a
majority of the shares present at the Annual Meeting.
Ratification or Rejection
of Selection of
Independent Registered Public Accounting Firm
(Proposal No. 2 at the Annual Meeting)
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, 2008. 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, 2006 and 2007.
2006 2007
Audit Fees $10,000 $10,000
Audit related fees 0 0
------ ------
Audit and audit related fees 10,000 10,000
Tax fees (1) 3,000 3,000
All other fees 0 0
------ ------
Total $13,000 $13,000
====== ======
(1) Tax fees consisted of fees for tax consultation and tax compliance services.
TWB did not perform any services during the last fiscal year for the
Fund's investment adviser (the Manager) or any entity controlling, controlled by
or under common control with the Manager that provides services to the Fund.
All audit and non-audit services performed by TWB on behalf of the Fund
or non-audit services performed on behalf of affiliated entities within the
investment company complex where such engagement relates directly to the
operations and financial reporting of the Fund are pre-approved by the Audit
Committee. Services to be considered between meetings of the Committee are
pre-approved by a selected member of the Committee in accordance with applicable
regulations and subject to additional procedures established by the Committee.
The Audit Committee has reviewed all services performed and fees
charged by TWB and has accepted TWB's representation that it is independent in
recommending re-appointment of TWB for the fiscal year ending December 31, 2008.
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 at the Annual Meeting.
Consideration of
A New Advisory and Administration Agreement
(Proposal No. 1 at the Special Meeting)
Background and Reasons for the Proposal
The Manager is the Fund's investment adviser under a Sub-Advisory and
Administration Agreement (the "Current Sub-Advisory Agreement"). The Current
Sub-Advisory Agreement was approved by the shareholders of the Fund on June 2,
1994 and has been renewed annually thereafter by the Board of Trustees, most
recently on June 11, 2007.
The Manager is a wholly-owned subsidiary of AMC. AMC, which was founded
in 1984, is currently controlled by Mr. Lacy B. Herrmann ("LBH") and his wife,
Mrs. Elizabeth B. Herrmann ("EBH"), directly and through certain trusts. These
ownership arrangements are described in detail below. Collectively, the current
owners of the shares of AMC are called the "Owners."
The Owners wish to ensure, to the maximum extent possible, the ongoing
continuity of management of the Manager and the Fund. Consistent with their
estate planning and tax objectives, they have sought through prudent planning to
structure an orderly generational transition of ownership changes of AMC among
the Owners (the "Transaction").
Although the proposed changes in ownership of AMC will not result in
any changes in the day-to-day operation of the Fund, the services provided to
it, the investment approach or style of the Manager with respect to the Fund, or
any increase in its advisory fees, the changes could be considered to result in
an "assignment" of the Current Sub-Advisory Agreement under the provisions of
the 1940 Act. The 1940 Act provides generally that an advisory agreement of a
mutual fund must provide for its automatic termination in the event of an
assignment (as that term is defined in the 1940 Act), such as when a controlling
block of the Fund's investment adviser's voting securities is transferred. Under
the 1940 Act, a person who does not own more than 25% of the voting securities
of a company shall be presumed not to control such company, while control is
presumed in an owner of more than 25%. As required by the 1940 Act, the Current
Sub-Advisory Agreement provides that in the event of an assignment, it
terminates. Under the current ownership arrangements such an assignment could
also occur upon the deaths of certain of the Owners.
In order to provide continuity of management services to the Fund, on
March 2, 2008, the Trustees considered that it would be necessary to approve a
new Sub-Advisory Agreement. However, they concluded that it would be appropriate
to replace the Sub-Advisory Agreement with a new Advisory and Administration
Agreement (the "New Advisory Agreement") with substantially the same terms. The
New Advisory Agreement for the Fund between the Manager and the Fund, will
replace the Current Sub-Advisory Agreement when it terminates by reason of the
expected assignment. The Trustees are recommending that shareholders of the Fund
approve the New Advisory Agreement for the Fund. As described below, the New
Advisory Agreement has substantially the same terms as the Current Sub-Advisory
Agreement. The Current Sub-Advisory Agreement contained various provisions that
applied in the Fund's early days, when another entity acted as investment
adviser; and provisions that applied when the former advisory agreement
terminated and the Manager assumed the role of investment adviser under the
Current Sub-Advisory Agreement. These provisions no longer serve any purpose and
are omitted.
Under the 1940 Act a fund cannot enter into an advisory agreement, such
as the New Advisory Agreement, unless the shareholders of that fund vote to
approve the new agreement. The Trustees have carefully considered the matter,
and have concluded that it is appropriate to approve the New Advisory Agreement.
Under the New Advisory Agreement, the Manager shall continue, following the
Transaction, to manage the Fund on the same terms as are now in effect, thereby
promoting stability of the Fund's management. No change in the Fund's advisory
fees or expenses is being proposed. Furthermore, no changes are being proposed
with respect to the services provided for the Fund, the investment approach or
style of the Manager with respect to the Fund, or the personnel or operations of
the Manager.
Information Regarding the Manager
The Manager is the Fund's investment adviser under the Current Advisory
Agreement. The Manager provides for investment supervision, including
supervising continuously the investment program of the Fund and the composition
of its portfolio, determining what securities will be purchased or sold by the
Fund and arranging for the purchase and the sale of securities held in the
portfolio of the Fund, and, at the Manager's expense, providing for pricing of
the Fund's portfolio daily. The Manager is also responsible for administrative
services, including providing for the maintenance of the headquarters of the
Fund, overseeing relationships between the Fund and the service providers to the
Fund and providing other administrative services.
Names, Addresses and Principal Occupations of Each Manager of the Manager
LBH is the Founder and Chairman Emeritus of each of the funds in the
Aquila Group of Funds. He previously served as Chairman of the Board of Trustees
of each of the funds in the Aquila Group of Funds. Additionally, LBH is the
Founder and Chairman of the Board of AMC (the sponsoring organization and parent
of the Manager or administrator of each of the funds in the Aquila Group of
Funds), as well as the Chairman of the Manager. LBH has served as a Director of
the Aquila Group of Funds' distributor since 1981. LBH is a Trustee Emeritus of
Brown University and the Hopkins School, and remains active in university,
school and charitable organizations.
EBH is a Director of AMC and a Manager of the Manager. She does not
have any other position with AMC or the Manager. She is active with various
charitable and volunteer organizations. EBH is the wife of LBH.
Diana P. Herrmann ("DPH") is President and, in some instances, Vice
Chair of each of the funds in the Aquila Group of Funds. She serves as Vice
Chair, President, Chief Executive Officer and Director of AMC; Chief Executive
Officer, Vice Chair, President, Chief Operating Officer and Manager of the
Manager; and as Director of the distributor. She previously served as Trustee to
the Reserve Money-Market Funds (1999-2000) and Reserve Private Equity Series
(1998-2000). DPH currently serves as Governor, Investment Company Institute and
head of its Small Funds Committee, as well as Director of ICI Mutual Insurance
Company. She is active in charitable and volunteer organizations. DPH is the
daughter of LBH and EBH.
The address of each of the Managers of the Manager is c/o Aquila
Investment Management LLC, 380 Madison Avenue, Suite 2300, New York, NY 10017.
The Transaction
At the time of the Transaction, the AMC shares will be divided into two classes:
voting (the "Voting Shares") and non-voting. Prior to dividing its share capital
into two classes of shares, AMC has one class of common shares, all of which are
Voting Shares. 99.5% of the Voting Shares are held directly by or in trust for
the benefit of members of the Herrmann family. The Voting Shares are held as
follows:
Owner Direct Ownership Indirect Ownership* Total
LBH 24.9% 20.0% 44.9%
EBH 27.5% -- 27.5%
DPH 4.9% 20.0% 24.9%
Conrad B. Herrmann ("CBH") -- 0.2% 0.2%
Catherine E. Wolff ("CEW") -- 2.0% 2.0%
Other 0.5% -- 0.5%
Total 100.0%
* Indicates Voting Shares for which the indicated Owner has voting rights but does not directly own.
o LBH currently holds 24.9% of the Voting Shares directly; additionally
in his role as trustee (with voting rights) of a family trust for the
benefit of Conrad B. Herrmann ("CBH") (the "CBH Trust"), his son, LBH
holds voting rights with respect to an additional 20.0% of the Voting
Shares.
o EBH currently holds 27.5% of the Voting Shares directly.
o DPH holds 4.9% of the Voting Shares directly and, through her position
as trustee (with voting rights) of a family trust for her benefit (the
"DPH Trust"), holds voting rights with respect to an additional 20.0%
of the Voting Shares.
o CBH serves as trustee (with voting rights) of a trust for his own
benefit, and through his role as trustee (with voting rights) of that
trust holds voting rights with respect to 0.2% of the Voting Shares.
o Two family trusts (the "Family Trusts") hold 2.0% of the Voting Shares;
Catherine E. Wolff ("CEW"), a first cousin of DPH and CBH, currently
serves as trustee (with voting rights) of the Family Trusts.
In connection with their estate planning, LBH and EBH wish to (i)
transfer ownership of some of their Voting Shares, and (ii) appoint a new
trustee to serve as trustee for one of the trusts. Upon the consummation of the
Transaction, the ownership of the Voting Shares would be as follows:
Owner Direct Ownership Indirect Ownership* Total
LBH 24.9% -- 24.9%
T. Randolph Harris ("TRH") -- 24.9% 24.9%
EBH -- -- --
DPH 4.9% 20.0% 24.9%
CBH -- 0.2% 0.2%
CEW -- 24.6% 24.6%
Other 0.5% -- 0.5%
Total 100.0%
* Indicates Voting Shares for which the indicated Owner has voting rights but does not directly own.
o LBH will continue to hold 24.9% of the Voting Shares directly.
o 24.9% of the Voting Shares previously held by EBH will be held in a
trust for the benefit of EBH (the "EBH Trust"), with T. Randolph Harris
("TRH") serving as trustee (with voting rights).
o DPH's ownership will remain unchanged, such that she will continue to
hold, either directly or through her position as trustee (with voting
rights) of the DPH Trust, 24.9% of the Voting Shares.
o CBH's ownership will remain unchanged, such that he will continue to
hold voting rights with respect to 0.2% of the Voting Shares through
his position as trustee (with voting rights) of a trust for his own
benefit.
o CEW will replace LBH as trustee of the CBH Trust, such that she will
serve as trustee (with voting rights) with respect to 20.0% of the
Voting Shares. The Family Trusts will hold 4.6% of the Voting Shares
(including 2.6% of the Voting Shares previously held by EBH), with CEW
continuing as trustee (with voting rights) of the Family Trusts.
Through her position as trustee (with voting rights) of the CBH Trust
and of the Family Trusts, CEW will serve as trustee (with voting
rights) with respect to 24.6% of the Voting Shares in the aggregate.
Upon consummation of the Transaction, no individual will hold with
power to vote, directly or indirectly, more than 24.9% of the Voting Shares. As
previously stated, the Transaction 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.
Although the Owners currently intend to consummate the Transaction, the
Transaction may not necessarily occur. For example, approval or disapproval by
the Fund's shareholders of the New Advisory Agreement, taken together with
consents or approvals for other funds in the Aquila Group of Funds, could affect
whether or not the Transaction occurs. It is possible, however, that the Owners
may proceed with the Transaction even if new contracts are approved by the
shareholders of less than all the funds in the Aquila Group of Funds for which
the Manager serves as investment adviser (either because the shareholders of one
or more of such funds do not approve such fund's new advisory agreement or
because LBH or EBH dies before approvals are obtained for all such funds). AMC
currently expects that the Transaction will occur during the fourth quarter of
2008 (or upon the earlier death of either LBH or EBH, as described below), but
the Transaction could be delayed. If for some reason the Transaction does not
occur, the automatic termination of the Current Advisory Agreement will not
occur and the New Advisory Agreement will not be entered into, even if it has
been approved by the Fund's shareholders.
Performance of the Current Advisory Agreement is currently guaranteed
by AMC. If the Transaction occurs, AMC will provide an identical guarantee of
performance of the New Advisory Agreement.
Notwithstanding the foregoing, if one or more of LBH or EBH dies after
the Fund's shareholders approve the New Advisory Agreement but before the
Manager obtains the approval or consent of all of the other funds in the Aquila
Group of Funds for which the Manager serves as investment adviser, the surviving
Herrmann family members may elect to proceed with the contemplated direct and
indirect ownership changes (as modified to reflect such deaths, as described
below), and the Fund's shareholders will be considered to have approved the
entry into the New Advisory Agreement after such death and the resulting direct
and indirect ownership changes. In such event, the ownership of the Voting
Shares would be as follows:
(A) If LBH dies before EBH:
Owner Direct Ownership Indirect Ownership Total
LBH -- -- --
BAS and then TRH -- 24.9% 24.9%
EBH 24.9% -- 24.9%
DPH 4.9% 20.0% 24.9%
CBH -- 0.2% 0.2%
CEW -- 24.6% 24.6%
Other 0.5% -- 0.5%
Total 100.0%
o 24.9% of the Voting Shares will be held first in LBH's estate, with
Barbara A. Sloan ("BAS") serving as executor (with voting rights), and
then in a marital trust for the benefit of EBH, with TRH serving as
trustee (with voting rights).
o EBH will hold 24.9% of the Voting Shares directly.
o DPH's ownership will remain unchanged, such that she will continue to
hold, either directly or through her position as trustee (with voting
rights) of the DPH Trust, 24.9% of the Voting Shares.
o CBH's ownership will remain unchanged, such that he will continue to
hold voting rights with respect to 0.2% of the Voting Shares through
his position as trustee (with voting rights) of a trust for his own
benefit.
o CEW will replace LBH as trustee of the CBH Trust, such that she serves
as trustee (with voting rights) with respect to 20.0% of the Voting
Shares. The Family Trusts will hold 4.6% of the Voting Shares, with CEW
continuing as trustee (with voting rights) of the Family Trusts.
Through her position as trustee (with voting rights) of the CBH Trust
and of the Family Trusts, CEW will serve as trustee (with voting
rights) with respect to 24.6% of the Voting Shares in the aggregate.
In such event, no individual will hold, directly or indirectly, more than
24.9% of the Voting Shares. The changes in ownership of the Voting Shares
will not result in any changes in the Fund's advisory fees and expenses,
services provided, the investment approach or style of the Manager with
respect to the Fund, or personnel or operations of the Manager (except that
LBH would no longer serve as a Manager or officer).
(B) If EBH dies before LBH:
Owner Direct Ownership Indirect Ownership Total
LBH 24.9% -- 24.9%
EBH -- -- --
BAS and then TRH -- 24.9% 24.9%
DPH 4.9% 20.0% 24.9%
CBH -- 0.2% 0.2%
CEW -- 24.6% 24.6%
Other 0.5% -- 0.5%
Total 100.0%
o LBH will continue to hold 24.9% of the Voting Shares directly.
o 24.9% of the Voting Shares will be held first in EBH's estate, with BAS
serving as executor (with voting rights), and then in a marital trust
for the benefit of LBH, with TRH serving as trustee (with voting
rights).
o DPH's ownership will remain unchanged, such that she will continue to
hold, either directly or through her position as trustee (with voting
rights) of the DPH Trust, 24.9% of the Voting Shares.
o CBH's ownership will remain unchanged, such that he will continue to
hold voting rights with respect to 0.2% of the Voting Shares through
his position as trustee (with voting rights) of a trust for his own
benefit.
o CEW will replace LBH as trustee of the CBH Trust, such that she serves
as trustee (with voting rights) with respect to 20.0% of the Voting
Shares. The Family Trusts will hold 4.6% of the Voting Shares, with CEW
continuing as trustee (with voting rights) of the Family Trusts.
Through her position as trustee (with voting rights) of the CBH Trust
and of the Family Trusts, CEW will serve as trustee (with voting
rights) with respect to 24.6% of the Voting Shares in the aggregate.
In such event, no individual will hold, directly or indirectly, more than
24.9% of the Voting Shares. The changes in ownership of the Voting Shares
will not result in any changes in the Fund's advisory fees and expenses,
services provided, the investment approach or style of the Manager with
respect to the Fund, or personnel or operations of the Manager (except that
EBH would no longer serve as a Manager).
Description of the New Advisory Agreement
The Manager provides the Fund with local advisory services. Under the
New Advisory Agreement, the Fund will pay the Manager a fee payable monthly and
computed on the net asset value of the Fund as of the close of business each
business day at the following annual rates: 1.50% on the first $15 million;1.20%
on the next $35 million and 0.90% on the excess over $50 million.
The proposed New Advisory Agreement for the Fund is substantially
identical to the Current Sub-Advisory Agreement (together, the "Advisory
Agreements") except for the omission of obsolete provisions mentioned above. For
a complete understanding of the proposed New Advisory Agreement, please refer to
the form of New Advisory Agreement provided as Appendix A.
Basis for the Trustees' Approval of the New Advisory Agreement
At a meeting held on March 2, 2008, the Trustees, including the
Independent Trustees, approved the New Advisory Agreement and recommended that
the shareholders of the Fund approve such New Advisory Agreement. In considering
these actions, the Trustees noted that in connection with their annual review of
the Fund's advisory arrangements (the "Annual Review") on June 11, 2007, they
had approved the Current Sub-Advisory Agreement (which, as discussed above, is
substantially identical to the New Advisory Agreement) for another one-year term
commencing on July 1, 2007. In connection with the Annual Review, the Trustees
considered a wide range of information of the type they regularly consider when
determining whether to continue the Fund's advisory agreement as in effect from
year to year. In approving the New Advisory Agreement, the Trustees considered
the information provided and the factors considered in connection with the
Annual Review as well as such new information (for example, information about
the Transaction) as they considered appropriate. In considering the Advisory
Agreements, the Trustees did not identify any single factor as determinative.
Matters considered by the Trustees, including the Independent Trustees, in
connection with their review of the New Advisory Agreement included the
following:
The Transaction and the implications for the Fund. In evaluating the
Transaction, the Trustees considered a wide range of information, including
ensuring, to the maximum extent possible, ongoing and future continuity of
management of the Fund.
The nature, extent and quality of the services provided by the Manager.
The Manager's portfolio management operation with respect to the Fund's
investment securities is based within the investment region. The Trustees noted
that Ms. Barbara Walchli, whom the Manager employs as portfolio manager for the
Fund, focuses on approximately 300-400 Rocky Mountain-based companies from which
she selects investments for the Fund's portfolio. Ms. Walchli, based in Phoenix,
Arizona, provides regional information regarding specific holdings in the Fund's
portfolio as well economic and business developments within the region. She has
also been available to and has met with the brokerage and financial planner
community and with investors and prospective investors to provide them with
information generally about the Fund's portfolio, with which to assess the Fund
as an investment opportunity. In addition, she has been present at all regular
meetings of the Board.
The Board considered that the Manager had provided all services the
Board deemed necessary or appropriate, including the specific services that the
Board has determined are required for the Fund, given that its purpose is to
provide shareholders with capital appreciation primarily through investing in
equity securities of companies having a significant business presence in the
Rocky Mountain region.
The Manager has additionally provided all administrative services to
the Fund. The Board considered the nature and extent of the Manager's
supervision of third-party service providers, including the Fund's shareholder
servicing agent and custodian. The Board considered that the Manager had
established and maintained a strong culture of ethical conduct and regulatory
compliance.
The Trustees also considered representations by the Manager that the
persons at the Manager involved in providing those services would not change as
a result of the Transaction. The Board concluded that the services provided were
appropriate and satisfactory and that the Fund would be well served if they
continued. Evaluation of this factor weighed in favor of approval of the New
Advisory Agreement.
The investment performance of the Fund and the Manager. The Board
reviewed each aspect of the Fund's performance and compared its performance with
that of its competitors, with national averages and with the benchmark index. It
was noted that the materials provided by the Manager indicated that the Fund has
had investment performance that is generally comparable to that of the
benchmarks for the period 1998-2007. The Board considered these results to be
consistent with the purposes of the Fund.
The Board concluded that the performance of the Fund, in light of
market conditions, was satisfactory. Evaluation of this factor indicated to the
Trustees that approval of the New Advisory Agreement would be appropriate.
The costs of the services to be provided and profits to be realized by
the Manager from its relationship with the Fund. The information provided in
connection with renewal contained expense data for the Fund and a peer group
selected by a detailed screening process which was provided to the Trustees for
their review and discussion. The materials also showed the lack of profitability
to the Manager of its services to the Fund.
The Trustees noted that in connection with the Annual Review they had
concluded that the costs of the services to be provided supported the renewal of
the Current Advisory Agreement, and that the Transaction would not result in any
change to the advisory fees paid by the Fund or the Fund's total expense ratio.
The materials in connection with the Annual Review had shown the
profitability to the Manager of its services to the Fund. The Board noted that
the Manager was currently waiving a portion of its fee and had been since the
Fund's inception. Additionally, it was noted that the Manager had contractually
undertaken to waive fees and/or reimburse Fund expenses during the period
January 1, 2008 through December 31, 2008 so that the total Fund expenses would
not exceed 1.50% for Class A Shares, 2.25% for Class C Shares, 1.52% for Class I
Shares and 1.25% for Class Y Shares. The Manager had indicated that it intended
to continue waiving fees as necessary in order that the Fund would remain
competitive.
The Trustees considered that the lack of profitability to the Manager
of its relationship to the Fund would not change as a result of the Transaction
because the Transaction would not result in a change to the fees received by the
Manager or of the costs of the services to be provided by the Manager.
The extent to which economies of scale would be realized as the Fund
grows. The Fund has in place breakpoints in the management fee which would be
realized as the Fund grows. For its services, the Manager is entitled to receive
a fee which is payable monthly and computed as of the close of business each day
on the net assets of the Fund at the following annual rates; 1.50% on the first
$15 million; 1.20% on the next $35 million and 0.90% on the excess over $50
million.
Benefits derived or to be derived by the Manager and its affiliates
from their relationships with the Fund. The Board observed that, as is generally
true of most fund complexes, the Manager and its affiliates, by providing
services to a number of funds including the Fund, were able to spread costs as
they would otherwise be unable to do. The Board noted that while that produces
efficiencies and increased profitability for the Manager and its affiliates, it
also makes their services available to the Fund at favorable levels of quality
and cost which are more advantageous to the Fund than would otherwise have been
possible.
In addition to considering the factors discussed above, which the
Trustees regularly consider on an annual basis, the Trustees also gave
particular consideration to matters relating to the change of control at Aquila
Management Corporation (AMC), the parent company of the Manager, including
representations from representatives of AMC and the Manager that the proposed
change of control is not expected to result in a change in the personnel or
operations of the Manager, the investment approach or style of the Manager with
respect to the Fund, or the services provided to the Fund by the Manager.
The Trustees also considered other factors, either in connection with
the Annual Review or with their approval of the New Advisory Agreement. These
factors included but were not limited to whether the Fund has operated in
compliance with its investment objective and the Fund's record of compliance
with its investment restrictions, and the compliance programs of the Fund and
the Manager.
Based on their evaluation of all factors that they deemed to be
material, including those factors described above, and assisted by the advice of
independent counsel, the Trustees, including the Independent Trustees, concluded
that the New Advisory Agreement should be approved and recommended that the
shareholders of the Fund vote to approve the New Advisory Agreement for an
initial one-year term.
Action Requested
THE TRUSTEES OF THE FUND RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE THE NEW ADVISORY AGREEMENT.
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
Special Meeting Proposal No. 1. 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 four outstanding
classes of shares.
If necessary or desirable, the meeting can be adjourned by the
affirmative vote of a majority of the shares present in person or by proxy. In
voting for an adjournment, the proxies will consider all relevant factors,
including possible delay of receipt of proxies and whether or not a substantial
number of negative votes have been cast with respect to any proposal. The
proxies of shareholders who have voted by proxy against a proposal will be voted
against adjournment.
If this proposal is not approved by the shareholders the Board of
Trustees will consider what further action is appropriate, which could include
calling another shareholder meeting.
Other Business
The Fund does not know of any other matter which will come up for
action at the Annual Meeting. If any other matter or matters properly come up
for action at the Annual Meeting, including any adjournment of the Annual
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 except as noted.
The Fund does not know of any other matter which will come up for
action at the Special Meeting. If any other matter or matters properly come up
for action at the Special Meeting, including any adjournment of the Special
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 except as noted.
Appendix A
AQUILA ROCKY MOUNTAIN EQUITY FUND
ADVISORY AND ADMINISTRATION AGREEMENT
THIS AGREEMENT, made as of _______, 2008 by and between AQUILA ROCKY
MOUNTAIN EQUITY FUND (the "Fund"), a Massachusetts business trust, 380 Madison
Avenue, Suite 2300, New York, New York 10017 and AQUILA INVESTMENT MANAGEMENT
LLC (the "Manager"), a Delaware limited liability company, 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 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;
(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 whether a dealer has provided research services, as
further discussed below. 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 of its Trustees other
than those affiliated with the Manager or such adviser, administrator or
principal underwriter and expenses of all its Trustees; (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 its 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
hereunder, a fee payable monthly and computed on the net asset value of the Fund
at the end of each business day at the annual rate of 0.80 of 1% of such net
asset value on net assets of the Fund up to $15,000,000, 0.65 of 1% on net
assets of the Fund above $15,000,000 to $50,000,000 and 0.50 of 1% of the Fund's
net assets above $50,000,000.
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
June 30 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 0.30 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 AQUILA ROCKY MOUNTAIN EQUITY FUND
________________________ By:___________________________________
ATTEST AQUILA INVESTMENT MANAGEMENT LLC
________________________ By:___________________________________
Important Notice
Please Read Immediately
Aquila Rocky Mountain Equity Fund
Notice of Annual Meeting of Shareholders
and
Notice of Special Meeting of Shareholders
to be held on July 15, 2008
PROXY STATEMENT
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.
AQUILA ROCKY MOUNTAIN EQUITY FUND Proxy for Annual
Meeting of Shareholders - July 15, 2008
Proxy Solicited on Behalf of the Board of Trustees
The shareholder(s) of Aquila Rocky Mountain Equity Fund (the "Fund") whose
signature(s) appear(s) below 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 Tuesday, July 15, 2008 at the
offices of the Fund, 380 Madison Avenue, Suite 2300, New York, New York at 10:00
a.m. Eastern Daylight Time, and 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 below.
Management recommends a vote FOR all nominees in Proposal No. 1 and FOR Proposal
No. 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_____________________________________________
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ABOVE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
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:
AQUILA ROCKY MOUNTAIN EQUITY FUND ANNUAL MEETING
01. Tucker Hart Adams 02. Gary C. Cornia 03. Grady Gammage, Jr.
04. Diana P. Herrmann* 05. Glenn P. O'Flaherty
*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.
HAS YOUR ADDRESS CHANGED DO YOU HAVE ANY COMMENTS
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE.
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
AQUILA ROCKY MOUNTAIN EQUITY FUND
Proxy for Special Meeting of Shareholders - July 15, 2008
Proxy Solicited on Behalf of the Board of Trustees
The shareholder(s) of Aquila Rocky Mountain Equity Fund (the "Fund") whose
signature(s) appear(s) below 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 Special
Meeting of Shareholders of the Fund to be held on Tuesday, July 15, 2008 at the
offices of the Fund, 380 Madison Avenue, Suite 2300, New York, New York at 11:00
a.m. Eastern Daylight Time, and 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 matter 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 below.
Management recommends a vote FOR Special Meeting Proposal No. 1. 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_____________________________________________
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ABOVE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
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:
AQUILA ROCKY MOUNTAIN EQUITY FUND SPECIAL MEETING
1. Action on a new Advisory and Administration Agreement. (Special Meeting
Proposal No. 1 in Proxy Statement)
For Against Abstain
-- -- --
[--] [--] [--]
As to any other matter said proxies shall vote in accordance with their
best judgment.
HAS YOUR ADDRESS CHANGED DO YOU HAVE ANY COMMENTS
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE.