DEF 14A 1 orpx03d.txt PROXY STATEMENT AND FORM OF CARD Important Notice Please Read Immediately Aquilasm Group of Funds Tax-Free Trust of Oregon 380 Madison Avenue, Suite 2300, New York, N Y 10017 Notice of Annual Meeting of Shareholders to Be Held on May 19, 2003 To Shareholders of the Trust: The purpose of this Notice is to advise you that an Annual Meeting of the Shareholders of Tax-Free Trust of Oregon (the "Trust"), the only series of the Cascades Trust, will be held: Place: (a) at the Oregon Museum of Science & Industry 1945 SE Water Avenue Portland, Oregon; Time: (b) on Monday, May 19, 2003 at 1:30 p.m. local time; Purposes: (c) for the following purposes: (i) to elect ten 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 September 30, 2003 (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 February 21, 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 March 29, 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. Tax-Free Trust of Oregon 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 Tax-Free Trust of Oregon (the "Trust") the only series of the Cascades 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 Manager (the "Manager") 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. The Trust's Investment Sub-Adviser is U.S. Bancorp Asset Management, Inc. (the "Sub-Adviser"), 555 S.W. Oak Street, Portland, Oregon 97204 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 March 29, 2003. You should read the 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 provided 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, $10.96; Class C Shares, $10.95; and Class Y Shares, $10.95. 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, 31,708,989; Class C Shares, 3,051,300; and Class Y Shares, 2,985,567. 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 for the benefit of clients. Name and address Number of shares Percent of class of the holder of record Institutional 5% shareholders Merrill, Lynch, Pierce, Fenner & Smith, Inc., 4800 Deer Lake Drive East, Jacksonville, FL 381,442 Class C Shares 12.50% National Financial Services Corporation 200 Liberty Street New York, NY 2,328,921 Class Y Shares 78.01% South Valley Bank and Trust P.O. Box 1784 Medford, OR 253,137 Class Y Shares 8.48% Additional 5% shareholders 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, ten Trustees are to be elected. Each Trustee elected will serve until the next annual meeting or until his or her successor is duly elected. The nominees selected by the Trustees are named in the table below. See "Introduction" above for information as to how you can vote your shares in the election of Trustees. The following material includes the name, positions with the Trust, address, date of birth and business experience during at least the past five years of 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 May, 2002, except for Gary C. Cornia, who was elected by the Trustees to take office October 1, 2002. All nominees have consented to serve if elected. Trustees(1) and Officers
Number of Positions Held Portfolios in Other Directorships with Fund Complex Held by Trustee (The Trust Overseen by position held is a Name, Address(2) and and Length of Principal Occupation(s) Trustee directorship unless Date of Birth Service(3 During Past 5 Years indicated otherwise.) Interested Trustees(4) Lacy B. Herrmann Chairman of Founder and Chairman of the 12 Director or trustee, OCC Cash New York, NY the Board of Board, Aquila Management Reserves, Inc., OCC (05/12/29) Trustees since Corporation, the sponsoring Accumulation Trust, Oppenheimer 1985 organization and Manager or Quest Value Funds Group, Administrator and/or Adviser or Oppenheimer Small Cap Value Sub-Adviser to each fund of the Fund, Oppenheimer Midcap Fund, Aquilasm Group of Funds (5) and and Oppenheimer Rochester Group Founder, Chairman of the Board of of Funds. Trustees and (currently or until 1998) President of each since its establishment, beginning in 1984; Director of the Distributor since 1981and formerly Vice President or Secretary, 1981-1998; President and a Director, STCM Management Company, Inc., sponsor and investment adviser to Capital Cash Management Trust since 1973; Trustee Emeritus, Brown University and active in university, school and charitable organizations. Diana P. Herrmann Trustee since President and Chief Operating 7 None New York, NY 1994 and Officer of the Manager since (02/25/58) President 1997, a Director since 1984, since 1998 Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; President, Senior Vice President or Executive Vice President of 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. Raymond H. Lung Trustee since Retired; trustee, Qualivest Group 1 None Portland, OR 1992 of Funds, 1994-1997; former (12/24/26) Executive Vice President and Executive Trust Officer, U.S. National Bank of Oregon; previously active in bank trade organizations and director of certain Pacific Northwest companies. John W. Mitchell Trustee since Principal of M & H Economic 1 None Portland, OR 1999 Consultants; Economist, Western (07/13/44) Region, for U. S. Bancorp since 1998; Chief Economist, U.S. Bancorp, Portland, Oregon, 1983-1998; member, Oregon Governor's Council of Economic Advisors, 1984-1998; Chairman, Oregon Governor's Technical Advisory Committee for Tax Review in 1998. Non-interested Trustees Gary C. Cornia Trustee since President, the National Tax 4 None Orem, UT 2002 Association; Professor and Chair (06/24/48) of the Executive Committee, the International Center for Land Policy Studies and Training Institute, Taipei, Taiwan; formerly Associate Dean, Marriott School of Management, Brigham Young University, 1991-2000; Chair, Utah Governor's Tax Review Committee since 1993; Faculty Associate, the Land Reform Training Institute, Taipei, Taiwan and The Lincoln Institute of Land Policy, Cambridge, Massachusetts. David B. Frohnmayer Trustee since President, University of Oregon 1 Umpqua Holding Company Eugene, OR 1997 since 1994; former Dean of the (07/09/40) University of Oregon Law School and former Attorney General of the State of Oregon. James A. Gardner Trustee since President, Gardner Associates, 1 None Terrebonne, OR 1986 an investment and real estate (07/06/43) firm, since 1989; Partner, the Canyons Ranch, a real estate firm, since 1991; President Emeritus, Lewis and Clark College and Law School; director, Oregon High Desert Museum since 1989, Vice Chairman since 2002; active in civic, business, educational and church organizations in Oregon. Patricia L. Moss Trustee since President and Chief Executive 1 Cascade Bancorp and Bank of Bend, OR 2002 Officer, Cascade Bancorp & Bank the Cascades (6) (07/23/53) of the Cascades since 1998, and Executive Vice President & director, Chief Financial Officer, Chief Operating Officer, 1987-1998; active in community and educational organizations. Ralph R. Shaw Trustee since President, Shaw Management 1 Schnitzer Steel Industries, Portland, OR 2000 Company, an investment counseling Inc., Magni Systems, Inc., (08/23/38) firm, since 1980, General Severon Corporation Partner, Shaw Venture Partners (formerly Micromonitors, since 1983, Shaw Venture Partners Inc.), Integra Telecom, Inc. II since 1987 and Shaw Venture (formerly OGIT Partners III since 1994 (US Communications, Inc.), Bancorp, parent of the Dendreon Corporation Sub-Adviser, is a limited partner (formerly Activated Cell in the last three ventures). Therapy, Inc.), LaTIS, Inc., Telestream, Inc., 3PF.com, Inc. (formerly ComAlliance, Inc.), BMG Seltec Corp. Nancy Wilgenbusch Trustee since President, Marylhurst University 1 Chair, Oregon Regional Marylhurst, OR 2002 since 1984; member, Ethics Advisory Board for (09/17/47) Committee of the American PacifiCorp ; member, Institute of Certified Public PacifiCorp Advisory Board Accountants; active board for Scottish Power, an member of a number of civic international energy organizations. company; member, West Coast Bank's Board; director, Cascade Corporation, a leading international manufacturer of lift truck attachments; former Chair, Portland Branch of the Federal Reserve Bank of San Francisco. Officers James M. McCullough Senior Vice Senior Vice President or Vice N/A N/A Portland, OR (06/11/45) President President of Aquila Rocky since 1999 Mountain Equity Fund and four Aquila Bond Funds; Senior Vice President of the Distributor since 2000; Director of Fixed Income Institutional Sales, CIBC Oppenheimer & Co. Inc., Seattle, WA, 1995-1999. Jerry G. McGrew Senior Vice President of the Distributor N/A N/A New York, NY (06/18/44) President since 1998, Registered Principal since 2002 since 1993, Senior Vice President, 1997-1998 and Vice President, 1993-1997; Senior Vice President, Aquila Rocky Mountain Equity Fund and five Aquila Bond Funds and Vice President, Churchill Cash Reserves Trust, 1995-2001. Sally J. Church Vice President Vice President, Tax-Free Trust of N/A N/A Portland, OR since 2002 Oregon since 2002 and 1989-1997; (10/17/48) retired, 1997-2002; Vice President of Aquila Cascadia Equity Fund, 1996-1997. Christine L. Neimeth Vice President Vice President of Aquila Rocky N/A N/A Portland, OR since 1998 Mountain Equity Fund and Tax-Free (02/10/64) 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. Rose F. Marotta Chief Chief Financial Officer of the N/A N/A New York, NY Financial Aquilasm Group of Funds since (05/08/24) Officer since 1991 and Treasurer, 1981-1991; 1991 Treasurer and Director, STCM Management Company, Inc., since 1974; Treasurer of the Manager since 1984 and of the Distributor, 1985-2000. Joseph P. DiMaggio Treasurer Treasurer of the Aquilasm Group N/A N/A New York, NY since 2000 of Funds and the Distributor (11/06/56) since 2000; Controller, Van Eck Global Funds, 1993-2000. Edward M. W. Hines Secretary Partner, Hollyer Brady Smith & N/A N/A New York, NY since 1985 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 Manager N/A N/A New York, NY (08/23/40) Secretary 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) The mailing address of each Trustee and officer is c/o Tax-Free Trust of Oregon, 380 Madison Avenue, New York, NY 10017. (3) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (4) Mr. Herrmann is an interested person of the Trust as that term is defined in the 1940 Act as an officer of the Trust, as a director, officer and shareholder of the Manager and as a shareholder and director of the Distributor. Ms. Herrmann is an interested person of the Trust as an officer of the Trust, as a director, officer and shareholder of the Manager and as a shareholder and director of the Distributor. Each is also an interested person as a member of the immediate family of the other. Mr. Lung and Mr. Mitchell are interested persons as security holders of the Sub-Adviser's parent. (5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust 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." (6) Bank of the Cascades has a Federal Funds line of credit in the amount of $3.5 million with U.S. Bank NA, an affiliate of the Sub-Adviser. Securities Holdings of the Trustees (as of 12/31/02) Dollar Range of Aggregate Dollar Range Name of Ownership in Tax-Free of Ownership in Aquilasm Trustee Trust of Oregon(1) Investment Companies Overseen by Trustee(1) Interested Trustees Lacy B. Herrmann B E Diana P. Herrmann B E Raymond H. Lung E E John W. Mitchell C C Non-interested Trustees Gary C. Cornia B(2) C David B. Frohnmayer C C James A. Gardner B B Patricia L. Moss D D Ralph R. Shaw E E Nancy Wilgenbusch B B (1) A. None B. $1-$10,000 C. $10,001-$50,000 D. $50,001-$100,000 E. over $100,000 (2) Purchased after 12/31/02. None of the non-interested Trustees or their immediate family members holds of record or beneficially any securities of the Manager, the Sub-Adviser or the Distributor. The Trust does not currently pay fees to any of the Trust's officers or to Trustees affiliated with the Manager or the Sub-Adviser. For its fiscal year ended September 30, 2002, the Trust paid a total of $112,068 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 Gary C. Cornia $ 0 $13,033 4 David B. Frohnmayer 8,150 9,650(1) 1 James A. Gardner 10,000 12,200(1) 1 Raymond H. Lung 8,300 9,800(1) 1 John W. Mitchell 8,300 9,800(1) 1 Patricia L. Moss 6,450 7,600(1) 1 Ralph R. Shaw 8,500 10,100(1) 1 Nancy Wilgenbusch 6,450 7,600(1) 1 (1) These Trustees were Trustees of Aquila Cascadia Equity Fund, which ceased operations in August, 2002. They resigned as Trustees of that fund in September, 2002. Class A Shares may be purchased without a sales charge by certain of the Trust's Trustees and officers. The Trust's Manager is Manager or Administrator to the Aquilasm Group of Funds. As of February 28, 2003 these funds had aggregate assets of approximately $3.7 billion, of which approximately $2.4 billion consisted of assets of the tax-free municipal bond funds. The Manager is controlled by Mr. Lacy B. Herrmann, through share ownership directly, through a trust and by his wife. During the fiscal year ended September 30, 2002 the Trust incurred Management fees of $1,452,102. During the fiscal year ended September 30, 2002, $479,614 was paid under Part I of the Trust's Distribution Plan to Qualified Recipients with respect to the Class A Shares, of which $19,624 was retained by the Distributor. With respect to Class C Shares, during the same period $140,288 was paid under Part II of the Plan and $46,763 was paid under the Shareholder Services Plan. Of these total payments of $187,051, the Distributor received $23,465. All of such payments were for compensation. 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 Gary C. Cornia, David B. Frohnmayer, James A. Gardner, Patricia L. Moss, Ralph R. Shaw and Nancy Wilgenbusch. All of the members of the Committee are "independent" and are not "interested persons" of the Trust. The Committee (i) recommends to the Board of Trustees what firm of independent auditors will be selected by the Board of Trustees (subject to shareholder ratification); (ii) reviews the methods, scope and result of audits and the fees charged; and (iii) reviews the adequacy of the Trust's internal accounting procedures and controls. The Committee held one meeting during the Trust's last fiscal year. During the Trust's last fiscal year, the Board of Trustees held four meetings. Except for Ms. Moss and Ms. Wilgenbusch, who took office January 1, 2002, 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 shares of the Manager, Sub-Adviser or the parents or subsidiaries of either, except for Ms. Moss, whose husband sold all of his shares of the Sub-Adviser's parent before she became a Trustee. 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 Trust's Board of Trustees, including a majority of the Independent Trustees, as the Trust's independent auditors for the fiscal year ending September 30, 2003. 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 2001 and 2002, and fees billed for other services rendered by KPMG. 2001 2002 Audit Fees $17,000 $19,500 Audit related fees 0 0 Audit and audit related fees 17,000 19,500 Tax fees (1) 7,159 8,950 All other fees 0 0 Total $24,159 $28,450 (1) Tax fees consisted of fees for tax consultation and tax compliance services. KPMG did not perform any services during the fiscal year for the Trust's investment adviser (the "Manager") or any entity controlling, controlled by or under common control with the Manager that provides services to the Trust. The Audit Committee of the Trust's Board of Trustees, which consists of all 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 reappointment of it for the fiscal year ending September 30, 2003. KPMG has no direct or indirect financial interest in the Trust, the Manager or the Sub-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. Vote Required Approval requires the affirmative votes of a majority of the shares present. 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, the Trust will so advise you. 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. IMPORTANT NOTICE PLEASE READ IMMEDIATELY Tax-Free Trust of Oregon NOTICE OF ANNUAL MEETING OF SHAREHOLDERS to be held on May 19, 2003 PROXY STATEMENT Aquilasm Group of Funds Tax-Free Trust of Oregon 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 1-888-221-0697 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 Tax-Free Trust of Oregon Class A Proxy for Shareholder Meeting May 19, 2003 Proxy Solicited on Behalf of the Board of Trustees The shareholder(s) of Tax-Free Trust of Oregon (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, May 19, 2003 at the Oregon Museum of Science & Industry, 1945 SE Water Avenue, Portland, OR, at 1:30 p.m. local time, and at all adjournments thereof, and thereat to vote the shares held in the name of the undersigned on the record date for said meeting on the matters listed on the reverse side. Such shares are entitled to one vote for every dollar of net asset value represented by the share balance printed 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 Tax-Free Trust of Oregon 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) Gary C. Cornia; 03) David B. Frohnmayer; 04) James A. Gardner; 05) Diana P. Herrmann*; 06) Raymond H. Lung*; 07) John W. Mitchell*; 08) Patricia L Moss; 09) Ralph R. Shaw; 10) Nancy Wilgenbusch * 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 Portland [__] __ I plan to attend the outreach meeting in Bend [__] 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.