-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TxBKnLztm6BVIhpzCLfTiB7YChwRw3Hb0Kdon18LqFFgTHiPlEOhAW/1RjvNgtwr asMA9BU9Zs7gFFcGjuVq8w== 0000750909-03-000013.txt : 20030722 0000750909-03-000013.hdr.sgml : 20030722 20030722134144 ACCESSION NUMBER: 0000750909-03-000013 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030915 FILED AS OF DATE: 20030722 EFFECTIVENESS DATE: 20030722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN TAX FREE TRUST CENTRAL INDEX KEY: 0000750909 IRS NUMBER: 136845048 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-04084 FILM NUMBER: 03796103 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE #2300 STREET 2: #2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVENUE STREET 2: #2300 CITY: NEW YORK STATE: NY ZIP: 10017 DEF 14A 1 hipx03.txt DEFINITIVE PROXY STATEMENT AND FORM OF CARD File Nos. 2-92583 & 811-4084 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 HAWAIIAN TAX-FREE TRUST (Exact Name of Registrant as Specified in Charter) 380 Madison Avenue, Suite 2300 New York, New York 10017 (Address of Principal Executive Offices) (212) 697-6666 (Registrant's Telephone Number) Payment of Filing Fee (Check the appropriate box): [X] No fee required Important Notice Please Read Immediately Hawaiian Tax-Free Trust 380 Madison Avenue, Suite 2300, New York, NY 10017 Notice of Annual Meeting of Shareholders to Be Held on September 15, 2003 To Shareholders of the Trust: The purpose of this Notice is to advise you that an Annual Meeting of the Shareholders of Hawaiian Tax-Free Trust (the "Trust") will be held: Place: (a) at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii; Time: (b) on September 15, 2003 at 10:00 a.m. Hawaiian Standard Time; Purposes: (c) for the following purposes: (i) to elect nine Trustees; each Trustee elected will hold office until the next annual meeting of the Trust'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 Trust's independent auditors for the fiscal year ending March 31, 2004 (Proposal No. 2); (iii) to act upon any other matters which may properly come before the Meeting at the scheduled time and place or any adjourned meeting or meetings. Who Can Vote What Shares: (d) To vote at the Meeting, you must have been a shareholder on the Trust's records at the close of business on June 19, 2003 (the "record date"). Also, the number of shares of each of the Trust'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 4, 2003 Please Note: If you do not expect to attend the Meeting, please vote by any of three ways: by telephone, by the Internet or by completing the enclosed proxy card and returning it in the accompanying stamped envelope. To avoid unnecessary expense to the Trust, we request your cooperation in voting no matter how large or small your holding may be. Hawaiian Tax-Free Trust 380 Madison Avenue, Suite 2300, New York, New York 10017 Proxy Statement Introduction The purpose of the Notice preceding this Proxy Statement is to advise you of the time, place and purposes of an Annual Meeting of the Shareholders of Hawaiian Tax-Free Trust (the "Trust"). The purpose of this Proxy Statement is to give you information on which you may base your decisions as to the choices, if any, you make in voting. The Trust's founder and Administrator (the "Administrator") is Aquila Management Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The Trust's principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017. Asset Management Group of Bank of Hawaii, Financial Plaza of the Pacific, P.O. Box 3170, Honolulu, Hawaii 96802 is the Trust's Investment Adviser. A copy of the Trust's most recent annual report will be sent to you without charge upon written request to the Distributor, at the above address, or by calling 800-437-1020 toll-free or 212-697-6666. This Notice and Proxy Statement are first being mailed on or about August 4, 2003. You should read this Proxy Statement prior to voting. If your shares are registered in the name of your broker or someone other than yourself, you may authorize that person to vote your shares. If your shares are registered in your name, then you may vote in one of three ways: (1) Proxy Card The enclosed proxy card authorizes the persons named (or their substitutes) to vote your shares; the Trust calls these persons the "proxy holders." As to the election of Trustees you may authorize the proxy holders to vote your shares for the entire slate indicated below by marking the appropriate box on the proxy card or by merely signing and returning your proxy card with no instructions. Or you may withhold the authority of the proxy holders to vote on the election of Trustees by marking the appropriate box. Also, you may withhold that authority as to any particular nominee by following the instructions on the proxy card. As to the other matter listed on the proxy card, you may direct the proxy holders to vote your shares on this proposal by marking the appropriate box "For" or "Against" or instruct them not to vote your shares on the proposal by marking the "Abstain" box. If you return your signed proxy card and do not mark a box on the proposal, the proxy holders will vote your shares for that proposal. (2) Telephone Voting To vote your shares by telephone, call the toll-free number on your proxy card. You will be prompted to enter the control number on your proxy card. Follow the recorded instructions using your proxy card as a guide. If you vote by phone, you need not return the proxy card by mail. (3) Internet Voting To vote your shares by the Internet, please contact the Trust 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 Trust in writing; (ii) signing a new and different proxy card (if the Trust 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 Trust's Internet address, both of which are detailed on your proxy card, entering your control number and revoking your previous vote. Proxies for shares held by brokers in "street name" and not voted or marked as abstentions will be counted for purposes of determining a quorum. They will be counted as present in determining voting results, which will have the same effect as negative votes. The Trust 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 Trust 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 Trust's shares so that these owners may authorize the voting of their shares. The Trust will pay these firms their out-of-pocket expenses for doing so. On the record date, the Trust had three classes of shares outstanding. All shareholders of the Trust 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 Trust's outstanding classes of shares was as follows: Class A Shares, $11.96; Class C Shares, $11.95; and Class Y Shares, $11.98. The meeting is expected to act only upon matters that affect the Trust as a whole: the election of Trustees and the selection of independent auditors. On matters that affect the Trust as a whole, all shareholders of the Trust, including the shareholders of all classes of shares of the Trust, 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, 57,712,990; Class C Shares, 3,088,878; and Class Y Shares, 2,151,837. On the record date, the following holders held 5% or more of the Trust's outstanding shares. On the basis of information received from the institutional holders the Trust's management believes that all of the shares indicated are held by them for the benefit of clients Name and address Number Percent of the holder of of shares of class record Institutional 5% shareholders Merrill Lynch Pierce Fenner & Smith, Inc. 5,755,241 Class A Shares 9.97% 4800 Deer Lake Drive 826,430 Class C Shares 26.76% Jacksonville, FL 32246 488,916 Class Y Shares 22.72% Fiserv Securities Inc. 6,448,659 Class A Shares 11.17% 2005 Market Street STE 1200 Philadelphia, PA 19103 Additional 5% shareholders Bank of Hawaii, Agent Trustee for TT Family Limited Partnership P.O. Box 1930 Honolulu, HI 96805 123,324 Class Y Shares 5.73% Martha N. Steele, Trustee of the Martha San Nicholas Steele Declaration of Trust 2525 Pali Hwy. Honolulu, HI 96817 156,188 Class Y Shares 7.26% R. Dwayne Steele, Member Steele Family Enterprises LLC 2525 Pali Highway Honolulu, HI 96817 236,377 Class Y Shares 10.98% The Trust'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, nine Trustees are to be elected. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can vote your shares in the election of Trustees. The following material includes information about each nominee and each officer of the Trust. All shares of the Trust 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 2002. All nominees have consented to serve if elected.
Trustees and Officers(1)(2) Number of Positions Held Portfolios in Other Directorships with Fund Complex Held by Trustee Trust Overseen by (The position held is Name, Address(3) and and Length of Principal Occupation(s) Trustee a directorship unless Date of Birth Service(4) During Past 5 Years indicated otherwise.) Interested Trustees(5) Lacy B. Herrmann Chairman of Founder and Chairman of the 12 Director or trustee, OCC New York, NY the Board of Board, Aquila Management Cash Reserves, Inc., OCC (05/12/29) Trustees since Corporation, the sponsoring Accumulation Trust, 1984 organization and Manager or Oppenheimer Quest Value Administrator and/or Adviser or Funds Group, Oppenheimer Sub-Adviser to each fund of the Small Cap Value Fund, Aquilasm Group of Funds (6) and Oppenheimer Midcap Fund, and Founder, Chairman of the Board of Oppenheimer Rochester Group Trustees and (currently or until of Funds. 1998) President of each since its establishment, beginning in 1984; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; President and a Director, STCM Management Company, Inc., sponsor and investment adviser to Capital Cash Management Trust since 1973; Trustee Emeritus, Brown University and active in university, school and charitable organizations. Douglas Philpotts Trustee since Retired; formerly director, 4 Trustee, Pacific Capital Honolulu, HI 1992 Chairman of the Board and Funds, which includes 11 (11/21/31) President of Hawaiian Trust bond and stock funds. Company, Limited; present or former director of various Hawaii-based civic and charitable organizations. Non-interested Trustees William M. Cole Trustee since President, Cole International, 4 None Westfield, NJ 1985 Inc., shipping consultants, (05/21/31) since 1974; Chairman, Cole Group, a real estate firm. Thomas W. Courtney Trustee President, Courtney Associates, 5 Director or trustee, OCC Sewickley, PA since 1984 Inc., a venture capital firm, Cash Reserves, Inc., OCC (08/17/33) since 1988. Accumulation Trust, Oppenheimer Quest Value Funds Group, Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, and Oppenheimer Rochester Group of Funds. Richard W. Gushman, Trustee since President and Chief Executive 4 Trustee, Pacific Capital II(7) 1992 Officer, OKOA, Inc., a Funds, which includes 11 Honolulu, HI diversified Hawaii-based real bond and stock funds; (02/28/46) estate organization with director, Outrigger Hotels activities in the western U.S. since 2000; director, Servco and the Pacific Basin, since Pacific, Inc. and Oceanic 1972; Managing Partner of Summit Time-Warner since 1998; Financial Resources, a Salt Lake director, American Savings City, Utah-based financial Bank since 2002. services company; trustee, the Estate of James Campbell since 2000 and Chairman of the Board of Trustees since 2002; trustee, University of Hawaii Foundation and Hawaii Pacific University since 1997; director, United Way of America since 1998; board member of the Boys & Girls Club of Honolulu, Aloha United Way, and other charitable and civic organizations. Stanley W. Hong Trustee since President, Waste Management of 4 Trustee, Pacific Capital Honolulu, HI 1992 Hawaii, Inc. since 2002; Funds, which includes 11 (04/05/36) Corporate Vice President, Hawaii bond and stock funds; Area, Waste Management, Inc. director, First Insurance since 2002; Trustee, The King Co. of Hawaii, Ltd. William Charles Lunalilo Trust Estate since 2001; President and Chief Executive Officer, The Chamber of Commerce of Hawaii, 1996-2001; director, Hawaii Public Television Foundation since 1998; Regent, Chaminade University of Honolulu; Chair - State Judicial Salary Commission since 1998; and director of other corporate and community organizations. Theodore T. Mason Trustee since Executive Director, East Wind 6 Trustee, OCC Accumulation New York, NY 1984 Power Partners LTD since 1994 Trust. (11/24/35) and Louisiana Power Partners, LLC since 1999; President, Alumni Association of SUNY Maritime College since 2002 (First Vice President, 2000-2001, Second Vice President, 1998-2000) and director of the same organization since 1997; Director, STCM Management Company, Inc., since 1973; twice national officer of Naval Reserve Association, commanding officer of four naval reserve units and Captain, USNR (Ret); director, The Navy League of the United States New York Council since 2002; trustee, The Maritime Industry Museum at Fort Schuyler and the Maritime College at Fort Schuyler Foundation, Inc. since 2000. Russell K. Okata Trustee since Executive Director, Hawaii 4 Trustee, Pacific Capital Honolulu, HI 1992 Government Employees Association Funds, which includes 11 (03/22/44) AFSCME Local 152, AFL-CIO since bond and stock funds; 1981; International Vice Chairman, Royal State President, American Federation Companies. of State, County and Municipal Employees, AFL-CIO since 1981; director of various civic and charitable organizations. Oswald K. Stender Trustee since Director, Hawaiian Electric 4 Trustee, Pacific Capital Honolulu, HI 1992 Industries, Inc., a public Funds, which includes 11 (10/08/31) utility holding company, since bond and stock funds; 1993; trustee, the Bernice director, Grace Pacific Pauahi Bishop Estate 1990-1999; Corporation, an asphalt trustee, Office of Hawaiian paving company. Affairs and a member or trustee of several community organizations. Officers Diana P. Herrmann President President and Chief Operating N/A N/A New York, NY since 1998 Officer of the Administrator (02/25/58) since 1997, a Director since 1984, 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 funds in the Aquilasm Group of Funds since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; active in mutual fund and trade organizations and in charitable and volunteer organizations. Sherri Foster Senior Vice Senior Vice President, Hawaiian N/A N/A Lahaina, HI (07/27/50) President Tax-Free Trust since 1993; since 1993 Vice President or Assistant Vice President of three Aquila Money-Market Funds; Registered Representative of the Distributor since 1985. Stephen J. Caridi Vice President Vice President of the N/A N/A New York, NY (05/06/61) since 1998 Distributor since 1995; Vice 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. Joseph P. DiMaggio Chief Chief Financial Officer of the N/A N/A New York, NY Financial Aquilasm Group of Funds since (11/06/56) Officer since 2003 and Treasurer since 2000; 2003 and Controller, Van Eck Global Treasurer Funds, 1993-2000. since 2000 Edward M. W. Hines Secretary Partner, Hollyer Brady Smith & N/A N/A New York, NY since 1984 Hines LLP, legal counsel to the (12/16/39) Trust, 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; trustee, Alpha Strategies Fund since July, 2002; Consultant, The Wadsworth Group, 1995-1998. John M. Herndon Assistant Assistant Secretary of the N/A N/A New York, NY (12/17/39) Secretary Aquilasm Group of Funds since since 1995 1995 and Vice President of the four 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 Trust'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)From time to time Bank of Hawaii may enter into normal investment management, commercial banking and lending arrangements with one or more of the Trustees of the Trust and their affiliates. The Asset Management Group of Bank of Hawaii is the Trust's investment adviser. (3) The mailing address of each Trustee and officer is c/o Hawaiian Tax-Free Trust, 380 Madison Avenue, New York, NY 10017. (4) Each Trustee holds office until the next annual meeting of shareholders or until his successor is elected and qualifies. The term of office of each officer is one year. (5) Mr. Herrmann is an interested person of the Trust as that term is defined in the 1940 Act as an officer of the Trust and a director, officer and shareholder of the Distributor. Mr. Philpotts is an interested person of the Trust, as that term is so defined, as a shareholder of the Adviser's corporate parent. (6) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Capital Cash Management Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these 12 funds are called the "Aquilasm Group of Funds." (7) Mr. Gushman holds minority equity interests in a partnership and limited liability company that have outstanding loans from Bank of Hawaii. He also owns corporate entities that act as general partner and managing member, respectively of the borrowers, and holds majority equity interests in corporate entities that receive fees for services to the borrowers. The partnership's largest aggregate amount of indebtedness during the two years ended December 31, 2002 and the amount outstanding on that date was $13,100,000, and the interest rate is 6.5%. For the limited liability company, the corresponding amounts involved were both $7,200,000 and the interest rate is 7.0%. In addition, the Estate of James Campbell has entered into a credit agreement with a group of commercial banks, one of which is Bank of Hawaii, for which BNP Paribas acts as administrative agent. The agreement provides for a variety of term and revolving loans with a total lending commitment of $430 million, of which Bank of Hawaii's commitment is approximately $45 million, and is for a period of two years with certain rights of extension. Securities Holdings of the Trustees (as of 6/30/03) Dollar Range of Aggregate Dollar Range of Name of Ownership in Hawaiian Ownership in Aquilasm Investment Trustee Tax-Free Trust(1) Companies Overseen by Trustee(1) Interested Trustees Lacy B. Herrmann B E Douglas Philpotts C C Non-interested Trustees William M. Cole B E Thomas W. Courtney C C Richard W. Gushman, II B B Stanley W. Hong C C Theodore T. Mason C C Russell K. Okata B B Oswald K. Stender B 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 Adviser, Administrator or the Distributor. The Trust does not currently pay fees to any of the Trust's officers or to Trustees affiliated with the Adviser or Administrator. For its fiscal year ended March 31, 2003, the Trust paid a total of $151,787 in compensation and reimbursement of expenses to the Trustees. No other compensation or remuneration of any type, direct or contingent, was paid by the Trust to its Trustees. The Trust is one of the 12 funds in the Aquilasm Group of Funds, which consist of tax-free municipal bond funds, money-market funds and an equity fund. The following table lists the compensation of all nominees for Trustee who received compensation from the Trust or from other funds in the Aquilasm Group of Funds during the Trust's fiscal year. None of such Trustees has any pension or retirement benefits from the Trust or any of the other funds in the Aquila group. Compensation Number of from all boards on Compensation funds in the which the from the Aquilasm Trustee Name Trust Group serves* William M. Cole $14,950 $43,200 4 Thomas W. Courtney $15,300 $53,000 5 Richard W. Gushman $16,300 $46,600 4 Stanley W. Hong $15,300 $44,600 4 Theodore T. Mason $15,650 $51,900 6 Russell K. Okata $15,300 $44,600 4 Douglas Philpotts $13,800 $38,600 4 Oswald K. Stender $15,300 $44,600 4 * Certain Trustees are also trustees of the 11 funds in the Pacific Capital Group of Funds for which the Adviser is also investment adviser. For the same period, these funds paid the following Trustees the amounts listed: Mr. Gushman, $29,167; Mr. Hong, $29,167; Mr. Okata, $29,167; Mr. Philpotts, $29,167; and Mr. Stender, $29,167. Class A Shares may be purchased without a sales charge by certain of the Trust's Trustees and officers. The Trust's Administrator is Manager or Administrator to the Aquilasm Group of Funds. As of June 30, 2003 these funds had aggregate assets of approximately $3.9 billion, of which approximately $2.5 billion consisted of assets of the tax-free municipal bond funds. The Administrator is controlled by Mr. Lacy B. Herrmann, through share ownership directly, through a trust and by his wife. During the fiscal year ended March 31, 2003 the Trust paid $1,839,064 in fees to the Administrator. During the fiscal year ended March 31, 2003, $1,311,637 was paid under Part I of the Trust's Distribution Plan to Qualified Recipients with respect to the Class A Shares, of which $73,870 was retained by the Distributor. With respect to Class C Shares, during the same period $220,031 was paid under Part II of the Plan and $73,344 was paid under the Shareholder Services Plan. Of these total payments of $293,375, the Distributor received $51,746. All of such payments were for compensation. During the fiscal year ended March 31, 2003 the Trust paid to Hollyer Brady Smith & Hines, independent counsel to the Trust, $108,482 for legal services. Edward M.W. Hines, Secretary of the Trust, is a partner of that firm. The Distributor currently handles the distribution of the shares of twelve funds (four money-market funds, seven tax-free municipal bond funds and an equity fund), including the Trust. Under the Distribution Agreement, the Distributor is responsible for the payment of certain printing and distribution costs relating to prospectuses and reports as well as the costs of supplemental sales literature, advertising and other promotional activities. The shares of the Distributor are owned 24% by Diana P. Herrmann, 72% by Mr. Herrmann and other members of his immediate family, and the balance by current employees of Aquila Management Corporation. Other Information on Trustees The Trustees have appointed a standing Audit Committee consisting of all of the Trustees who are "independent" and are not "interested persons" of the Trust, as that term is defined in the 1940 Act. The members of the Audit Committee are William M. Cole, Thomas W. Courtney, Richard W. Gushman, II, Stanley W. Hong, Theodore T. Mason, Russell K. Okata and Oswald K. Stender. All of the members of the Committee are "independent" and are not "interested persons" of the Trust. The Committee (i) selects what firm of independent auditors will be the Trust's independent auditors (subject to shareholder ratification); (ii) reviews the methods, scope and result of audits and the fees charged; and (iii) reviews the adequacy of the Trust's internal accounting procedures and controls. Selection of auditors is also ratified by the Board of Trustees. The Audit Committee held one meeting during the Trust's last fiscal year. The Board of Trustees has adopted a written charter for the Audit Committee, a copy of which is attached as an appendix to this Proxy Statement. During the Trust's last fiscal year, the Board of Trustees held seven meetings. Each current Trustee was present for at least 75% of the total number of Board meetings and Audit Committee meetings (if such Trustee was a member of that committee). The Board of Trustees does not have a nominating committee. Since the beginning of the Trust'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 Adviser or its parent or subsidiaries. Vote Required To be elected, each nominee must receive the affirmative votes of a majority of the shares present. Ratification or Rejection of Selection of Independent Auditors (Proposal No. 2) KPMG LLP ("KPMG"), which is currently serving as the Trust's independent auditors, has been selected by the Audit Committee (ratified by the Trust's Board of Trustees), including a majority of the Independent Trustees, as the Trust's independent auditors for the fiscal year ending March 31, 2004. Such selection is submitted to the shareholders for ratification or rejection. The following table represents fees for professional audit services rendered by KPMG for the audit of the Trust's annual financial statements for 2002 and 2003, and fees billed for other services rendered by KPMG. 2002 2003 Audit Fees: $20,000 $20,600 Audit related fees 0 0 Audit and audit related fees 20,000 20,600 Tax fees (1) 9,872 7,392 All other fees 415,000(2) 0 Total $444,872 $27,992 (1) Tax fees consisted of fees for tax consultation and tax compliance services. (2) KPMG performed a commercial lending process redesign project for the Bank of Hawaii (not for the Asset Management Group of Bank of Hawaii, the Investment Adviser to the Trust) for a fee of approximately $415,000. KPMG did not perform any services during the last fiscal year for the Trust's investment adviser, or any entity controlling, controlled by or under common control with the investment adviser that provides services to the Trust. The Audit Committee, which consists of all of the independent and non-interested 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 March 31, 2004. KPMG has no direct or indirect financial interest in the Trust, the Administrator or the Adviser. It is expected that representatives of KPMG will not be present at the meeting but will be available should any matter arise requiring their presence. Receipt of Shareholder Proposals Under the proxy rules of the Securities and Exchange Commission, shareholder proposals meeting tests contained in those rules may, under certain conditions, be included in the Trust's proxy statement and proxy card for a particular annual meeting. One of these conditions relates to the timely receipt by the Trust of any such proposal. Under these rules, proposals submitted for inclusion in the proxy material for the Trust's next annual meeting after the meeting to which this Proxy Statement relates must be received by the Trust not less than 120 days before the anniversary of the date stated in this Proxy Statement for the first mailing of this Proxy Statement. The date for such submission could change, depending on the scheduled date for the next annual meeting; if so, shareholders will be notified. The fact that the Trust receives a shareholder proposal in a timely manner does not insure its inclusion in the Trust's proxy material, since there are other requirements in the proxy rules relating to such inclusion. Other Business The Trust does not know of any other matter which will come up for action at the Meeting. If any other matter or matters properly come up for action at the Meeting, including any adjournment of the Meeting, the proxy holders will vote the shares which your proxy card, telephone or Internet vote entitles them to vote, in accordance with their judgment on such matter or matters, except as noted. That is, by signing and returning your proxy card or by voting by telephone or the Internet, you give the proxy holders discretionary authority as to any such matter or matters. APPENDIX Hawaiian Tax-Free Trust AUDIT COMMITTEE CHARTER 1. The Audit Committee shall be composed entirely of independent Trustees. 2. The purposes of the Audit Committee are: (a) to oversee the Trust's accounting and financial reporting policies. (b) to oversee the quality and objectivity of the Trust's financial statements and the independent audit thereof; and (c) to act as a liaison between the Trust's independent auditors and the full Board of Trustees. The function of the Audit Committee is oversight; it is management's responsibility to maintain appropriate systems for accounting and internal control, and the auditor's responsibility to plan and carry out a proper audit. 3. To carry out its purposes, the Audit Committee shall have the following duties and powers: (a) to recommend the selection, retention or termination of auditors and, in connection therewith, to evaluate the independence of the auditors, including whether the auditors provide any consulting services to the manager, and to receive the auditors' specific representations as to their independence; (b) to meet with the Trust's independent auditors, including private meetings, as necessary (i) to review the arrangements for and scope of the annual audit and any special audits; (ii) to discuss any matters of concern relating to the Trust's financial statements, including any adjustments to such statements recommended by the auditors, or other results of said audit(s); (iii) to consider the auditors' comments with respect to the Trust's financial policies, procedures and internal accounting controls and management's responses thereto; and (iv) to review the form of opinion the auditors propose to render to the Board and shareholders; (c) to consider the effect upon the Trust of any changes in accounting principles or practices proposed by management or the auditors; (d) to review the fees charged by the auditors for audit and non-audit services; (e) to investigate improprieties or suspected improprieties in Trust operations; and (f) to report its activities to the full Board on a regular basis and to make such recommendations with respect to the above and other matters as the Committee may deem necessary or appropriate. 4. The Committee shall meet on a periodic basis and is empowered to hold special meetings as circumstances require. 5. The Committee shall periodically meet with the Chief Financial Officer and/or the Treasurer of the Trust and with internal auditors, if any, for the management company. 6. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to retain special counsel and other experts or consultants at the expense of the Trust. 7. The Committee shall review this Charter at least annually and recommend any changes to the full Board of Trustees. IMPORTANT NOTICE PLEASE READ IMMEDIATELY Hawaiian Tax-Free Trust NOTICE OF ANNUAL MEETING OF SHAREHOLDERS to be held on September 15, 2003 PROXY STATEMENT 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 14-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.proxyweb.com/aquila To vote your shares by the Internet, contact the Trust at www.proxyweb.com/aquila. You will be prompted to enter the 14-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. Please fold and detach card at perforation before mailing. Aquilasm Group of Funds Hawaiian Tax-Free Trust Proxy for Shareholder Meeting September 15, 2003 Proxy Solicited on Behalf of the Board of Trustees The shareholder(s) of Hawaiian Tax-Free Trust (the "Trust") whose signature(s)appears below does/do 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 Trust to be held on Monday, September 15, 2003 at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii, at 10:00 a.m. Hawaiian Standard 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 below. 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.) Dated: __________________, 2003 _________________________________ Signature(s) PLEASE SIGN WITHIN THE BOX 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. please fold and detach card at perforation before MAILING Hawaiian Tax-Free Trust Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X] PLEASE DO NOT USE FINE POINT PENS 1. Election of Trustees 01) Lacy B. Herrmann*; 02) William M. Cole; 03) Thomas W. Courtney; 04) Richard W. Gushman, II; 05) Stanley W. Hong; 06) Theodore T. Mason; 07) Russell K. Okata; 08) Douglas Philpotts*; 09) Oswald K. Stender * interested Trustees __ [__] FOR ALL __ [__] WITHHOLD ALL __ [__] FOR ALL EXCEPT INSTRUCTION: To withhold authority to vote for one or more (but not all) nominees, mark "FOR ALL EXCEPT" and write the nominee number(s) and/ or name(s) on the line below. _______________ [bolded in printed form] Management recommends a vote FOR all nominees listed above and FOR the proposal listed below. The shares represented hereby will be voted as indicated 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 [__] As to any other matter said proxies shall vote in accordance with their best judgment. __ I plan to attend the annual meeting in Honolulu [__] __ I plan to attend the outreach meeting in Hilo [__] __ I plan to attend the outreach meeting in Kailua-Kona [__] For address changes and/or comments, please check this box and write them on the front where indicated. _ [_] THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE. -----END PRIVACY-ENHANCED MESSAGE-----