File Nos. 33-13021 & 811-5086

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12

CHURCHILL TAX-FREE TRUST
(Exact Name of Registrant as Specified in Charter)

380 Madison Avenue, Suite 2300
New York, New York 10017
(Address of Principal Executive Offices)

(212) 697-66667
(Registrant's Telephone Number)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

<page>

Important Notice
Please Read Immediately

Aquilasm Group of Funds

Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, NY 10017

Notice of Annual Meeting of
Shareholders to Be Held
on April 23, 2004

To Shareholders of the Fund:

The purpose of this Notice is to advise you that an Annual Meeting of the
Shareholders of Churchill Tax-Free Fund of Kentucky (the "Fund") will be held:

Place: (a) at the Kentucky Derby Museum;
704 Central Avenue,
Louisville, Kentucky;

Time: (b) on April 23, 2004
at 10:00 a.m. Eastern Daylight Time;

Purposes: (c) for the following purposes:

(i) to elect eight Trustees; each Trustee elected will
hold office until the next annual meeting of the
Fund's shareholders or until his or her successor
is duly elected(Proposal No. 1);

(ii) to ratify (that is, to approve) or reject the selection
of KPMG LLP as the Fund's independent auditors for the
fiscal year ending December 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 Fund's records at the close of
business on January 26, 2004 (the "record date").
Also, the number of shares of each of the Fund's
outstanding classes of shares that you held at that
time and the respective net asset values of each
class of shares at that time determine the number of
votes you may cast at the Meeting (or any adjourned
meeting or meetings).

By order of the Board of Trustees,

EDWARD M. W. HINES
Secretary

March 12, 2004

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 Fund, we request your cooperation in voting no matter how large or small
your holding may be.

Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, NY 10017

Proxy Statement

Introduction

The purpose of the Notice preceding this Proxy Statement is to advise you
of the time, place and purposes of an Annual Meeting of the Shareholders of
Churchill Tax-Free Fund of Kentucky (the "Fund"). The purpose of this Proxy
Statement is to give you information on which you may base your decisions as to
the choices, if any, you make in voting.

The Fund's Manager (the "Manager") is Aquila Investment Management LLC, 380
Madison Avenue, Suite 2300, New York, NY 10017, a subsidiary of the Fund's
founder, Aquila Management Corporation. The Fund's principal underwriter (the
"Distributor") is Aquila Distributors, Inc., 380 Madison Avenue, Suite 2300, New
York, NY 10017.

A copy of the Fund's most recent annual report will be sent to you without
charge upon written request to the Distributor, at the above address, or by
calling 800-437-1020 toll-free or 212-697-6666.

This Notice and Proxy Statement are first being mailed on or about March
12, 2004.

You should read this Proxy Statement prior to voting. If your shares are
registered in the name of your broker or someone other than yourself, you may
authorize that person to vote your shares. If your shares are registered in your
name, then you may vote in one of three ways:

(1) Proxy Card

The enclosed proxy card authorizes the persons named (or their substitutes)
to vote your shares; the Fund calls these persons the "proxy holders." As to the
election of Trustees you may authorize the proxy holders to vote your shares for
the entire slate indicated below by marking the appropriate box on the proxy
card or by merely signing and returning your proxy card with no instructions. Or
you may withhold the authority of the proxy holders to vote on the election of
Trustees by marking the appropriate box. Also, you may withhold that authority
as to any particular nominee by following the instructions on the proxy card.

As to the other matter listed on the proxy card, you may direct the proxy
holders to vote your shares on this proposal by marking the appropriate box
"For" or "Against" or instruct them not to vote your shares on the proposal by
marking the "Abstain" box. If you return your signed proxy card and do not mark
a box on the proposal, the proxy holders will vote your shares for that
proposal.

(2) Telephone Voting

To vote your shares by telephone, call the toll-free number on your proxy
card. You will be prompted to enter the control number on your proxy card.
Follow the recorded instructions using your proxy card as a guide. If you vote
by phone, you need not return the proxy card by mail.

(3) Internet Voting

To vote your shares by the Internet, please contact the Fund at the
Internet address shown on your proxy card. You will be prompted to enter the
control number on your proxy card. Follow the instructions on the screen, using
your proxy card as a guide. If you vote by the Internet, you need not return the
proxy card by mail.

General Information

You may end the power of the proxy holders to vote your shares by: (i) so
notifying the Fund in writing; (ii) signing a new and different proxy card (if
the Fund receives it before the old one is used); (iii) voting your shares at
the meeting in person or by your duly appointed agent; or (iv) calling the toll
free number provided or contacting the Fund's Internet address, both of which
are detailed on your proxy card, entering your control number and revoking your
previous vote.

Proxies for shares held by brokers in "street name" and not voted or marked
as abstentions will be counted for purposes of determining a quorum. They will
be counted as present in determining voting results, which will have the same
effect as negative votes.

The Fund is sending you this Notice and Proxy Statement in connection with
the solicitation by its Trustees of proxies to be used at the Annual Meeting to
be held at the time and place and for the purposes indicated in the Notice or
any adjourned meeting or meetings. Whenever it is stated in this Proxy Statement
that a matter is to be acted on at the Meeting, this means the Meeting held at
the scheduled time or any adjourned meeting or meetings.

The Fund pays the costs of the solicitation. Proxies are being solicited by
the use of the mails; they may also be solicited by telephone, facsimile and
personal interviews. Brokerage firms, banks and others may be requested to
forward this Notice and Proxy Statement to beneficial owners of the Fund's
shares so that these owners may authorize the voting of their shares. The Fund
will pay these firms their out-of-pocket expenses for doing so.

On the record date, the Fund had four classes of shares outstanding. All
shareholders of the Fund are entitled to vote at the meeting. Each shareholder
on the record date is entitled to one vote for each dollar (and a proportionate
fractional vote for each fraction of a dollar) of net asset value (determined as
of the record date) represented by full and fractional shares of any class held
on the record date. On the record date, the net asset value per share of each of
the Fund's outstanding classes of shares was as follows: Class A Shares, $10.73;
Class C Shares, $10.72; Class Y Shares, $10.73; and Class I Shares, $10.72. The
meeting is expected to act only upon matters that affect the Fund as a whole:
the election of Trustees and the selection of independent auditors. 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, 21,478,063; Class C Shares, 687,556;
Class Y Shares, 4,436,024 and Class I Shares, 410,202.

On the record date, the following holders held 5% or more 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

SYAG
c/o Stock Yards Bank and Trust
P.O. Box 34290
Louisville, KY 2,062,067 Class A Shares 9.60%

MLPF&S for the sole
benefit of its customers
4800 Deer Lake Dr East

Jacksonville, FL 88,489 Class C Shares 12.87%

National Financial
Services Corp.
200 Liberty Street
New York NY 2,254,145 Class Y Shares 50.81%

Bankdan
c/o Kentucky Trust Company
218 W. Main St.
Danville, KY 1,071,185 Class Y Shares 24.15%

J.J.B. Hilliard Lyons
FBO Cardinal Aluminum Co.
501 S. 4th St.
Louisville, KY 250,509 Class Y Shares 5.65%

Danky & Co.
P.O. Box 28
Danville, KY 239,299 Class Y Shares 5.39%

Wexford Clearing Services
Corp FBO
Ms. L. Anne H. Dishman
123 Arrowhead Road 245,533 Class I Shares
Louisville, KY (held in two accounts) 59.86%

Charles Schwab & Co.
Special Custody Account
FBO Customers
101 Montgomery St.
San Francisco, CA 81,124 Class I Shares 19.78%

Additional 5% shareholders

Mark A. Campisano TTEE
Patricia E. Campisano Rev. Trust
P.O. Box 34006
Louisville, KY 29,724 Class I Shares 7.25%

The Fund's management is not aware of any other person beneficially owning
more than 5% of any class of its outstanding shares as of such date.

Election of Trustees
(Proposal No. 1)

At the Meeting, eight Trustees are to be elected. Each Trustee elected will
serve until the next annual meeting or until his or her successor is duly
elected. The nominees selected by the Trustees are named in the table below. See
"Introduction" above for information as to how you can vote your shares in the
election of Trustees.

The following material includes information about each nominee and each
officer of the Fund. All shares of the Fund listed as owned by the Trustees are
Class A Shares unless indicated otherwise. All of the nominees are presently
Trustees and were elected by the shareholders in April, 2003. All nominees have
consented to serve if elected.

Trustees(1)
and Officers

Number of
Positions Held Portfolios in
with Fund Complex
Fund Overseen by
Name, Address(2) and and Length of Principal Occupation(s) Trustee Other Directorships
Date of Birth Service(3) During Past 5 Years Held by Trustee

Interested Trustees(4)

Lacy B. Herrmann Chairman of Founder and Chairman of the 11 Director or trustee, Pimco
New York, NY the Board of Board, Aquila Management Advisors VIT, Oppenheimer
(05/12/29) Trustees since Corporation, the sponsoring Quest Value Funds Group,
1987 organization and parent of the Oppenheimer Small Cap Value
Manager or Administrator and/or Fund, Oppenheimer Midcap
Adviser or Sub-Adviser to each Fund, and Oppenheimer
fund of the Aquilasm Group of Rochester Group of Funds.
Funds,(5) Chairman and Chief
Executive Officer and Manager of
the Manager or Administrator
and/or Advisor or Sub-Adviser to
each since 2003, and Founder,
Chairman of the Board of Trustees
and (currently or until 1998)
President of each since its
establishment, beginning in 1984;
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.

Diana P. Herrmann Trustee since Vice Chair of Aquila Management 6 None
New York, NY 1995, Corporation, Founder of the
(02/25/58) President Aquilasm Group of Funds and
since 1999, parent of the Manager, since
and Vice Chair 2004, President and Chief
since 2004 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; Vice Chair
since 2004 and President, Chief
Operating Officer and Manager of
the Manager since 2003; Vice
Chair, 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.

Non-Interested
Trustees

Thomas A. Trustee Vice President of Robinson, 1 None
Christopher since 1992 Hughes & Christopher, C.P.A.s,
Danville, KY P.S.C., since 1977; President, A
(12/19/47) Good Place for Fun, Inc., a
sports facility, since 1987.

Douglas Dean Trustee Founder and Chairman of the 1 None
Lexington, since 1987 Board of Directors, Dean, Dorton
KY & Ford P.S.C., a public
(03/21/49) accounting firm, since 1982;
active as an officer and member
of various charitable and
community organizations.

Theodore T. Mason Trustee since Executive Director, East Wind 5 Trustee, Pimco Advisors VIT.
New York, NY 1992 Power Partners LTD since 1994
(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.

Anne J. Mills Trustee since President, Loring Consulting 4 None
Castle Rock, CO 1987 Company since 2001; Vice
(12/23/38) President for Business Affairs,
Ottawa University, 1992-2001;
IBM Corporation, 1965-1991;
Budget Review Officer, the
American Baptist Churches/USA,
1994-1997; director, the
American Baptist Foundation;
Trustee, Ottawa University; and
Trustee Emerita, Brown
University.

William J. Nightingale Trustee since Retired; formerly Chairman, 2 Ring's End, Inc.
Rowayton, CT 1993 founder (1975) and Senior
(09/16/29) Advisor until 2000 of
Nightingale & Associates,
L.L.C., a general management
consulting firm focusing on
interim management,
divestitures, turnaround of
troubled companies, corporate
restructuring and financial
advisory services.
James R. Ramsey Trustee since President, University of 1 Community Bank and Trust,
Louisville, KY 1987 Louisville since Nov. 2002; Pikeville, KY
(11/14/48) Professor of Economics,
University of Louisville,
1999-present; Kentucky
Governor's Senior Policy Advisor
and State Budget Director,
1999-2002; Vice Chancellor for
Finance and Administration, the
University of North Carolina at
Chapel Hill, 1998 to 1999;
previously Vice President for
Finance and Administration at
Western Kentucky University,
State Budget Director for the
Commonwealth of Kentucky, Chief
State Economist and Executive
Director for the Office of
Financial Management and
Economic Analysis for the
Commonwealth of Kentucky,
Adjunct Professor at the
University of Kentucky,
Associate Professor at Loyola
University-New Orleans and
Assistant Professor at Middle
Tennessee State University.

Officers

Charles E. Executive Vice Executive Vice President of all N/A N/A
Childs, III President Funds since 2003; Senior Vice
New York, NY since 2003 President, corporate development,
(04/01/57) formerly 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
Money-Market Funds since 1988.
Thomas S. Albright Senior Vice Senior Vice President and N/A N/A
Louisville, KY President Portfolio Manager, Churchill
(07/26/52) since 2000 Tax-Free Fund of Kentucky since
July 2000; Vice President and
Co-portfolio manager, Tax-Free
Fund For Utah since 2001; Vice
President and Portfolio Manager,
Banc One Investment Advisors,
Inc., 1994-2000.

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 1994 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 since 1995; Vice President,
Churchill Cash Reserves Trust,
1995-2001.
James M. McCullough Vice President Senior Vice President or Vice N/A N/A
Portland, OR (06/11/45) since 2000 President of Aquila Rocky
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.

Jason T. McGrew Vice President Vice President, Churchill N/A N/A
Elizabethtown, KY since 2001 Tax-Free Fund of Kentucky since
(08/14/71) 2001, Assistant Vice President,
2000-2001; 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.

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 1987 Hines LLP, legal counsel to the
(12/16/39) Fund, since 1989; Secretary of
the Aquilasm Group of Funds.

Robert W. Anderson Assistant Compliance Officer of the N/A N/A
New York, NY (08/23/40) Secretary Manager or its predecessor and
since 2000 current parent since 1998 and
Assistant 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
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 Aquilasm 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 Aquilasm Group of Funds,
1995-1998.
Trustee Emeritus
Carroll F. Knicely(6) Trustee President, Associated N/A West Kentucky Corporation;
Glasgow, KY Emeritus since Publications Inc, Glasgow, South Gate Plaza, Inc.;
(12/08/28) 2004 Kentucky; director and member, Knicely and Knicely, Inc.
Executive Board of West Kentucky
Corporation and director and
Secretary-Treasurer, South Gate
Plaza, Inc. (owner and developer
of shopping centers and
commercial real estate);
director, Vice President and
Treasurer, Knicely and Knicely,
Inc. (owner and developer of
rental properties and
residential real estate); former
trustee, Cambellsville
University; formerly Secretary
of Commerce and Commissioner of
Commerce, Commonwealth of
Kentucky.

(1)The Fund's Statement of Additional Information includes additional
information about the Trustees and is available, without charge, upon request by
calling 800-437-1020 (toll free).

(2) The mailing address of each Trustee and officer is c/o Churchill Tax-Free
Fund of Kentucky, 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 Fund as that term is defined in
the 1940 Act as an officer of the Fund and 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 an interested
person of the Trust as an officer of the Trust, 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. Each is also an
interested person as a member of the immediate family of the other.

(5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust 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 Bond Funds";
Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these
11 funds are called the "Aquilasm Group of Funds."

(6) Mr. Knicely will cease to be a Trustee of the Trust at the close of the
Annual Meeting on April 23, 2004. A Trustee Emeritus may attend Trustee meetings
but has no voting power.

Securities Holdings of the Trustees
(as of 12/31/03)

Dollar Range of Aggregate Dollar Range of
Name of Ownership in Churchill of Ownership in Aquilasm
Trustee Tax-Free Fund of Kentucky(1) Investment Companies
Overseen by Trustee(1)

Interested Trustees

Lacy B. Herrmann B E

Diana P. Herrmann B E

Non-interested Trustees

Thomas A. Christopher C C

Douglas Dean D D

Theodore T. Mason B C

Anne J. Mills B D

William J. Nightingale C C

James R. Ramsey 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,
2003, the Fund paid a total of $87,053 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 11 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 Fund or from other funds in the Aquilasm Group of
Funds during the Fund's fiscal year. None of such Trustees has any pension or
retirement benefits from the Fund or any of the other funds in the Aquila group.

Compensation Number of
from all boards on
Compensation funds in the which the
from the Aquilasm Trustee
Name Fund Group of Funds serves

Thomas A.
Christopher $7,950 $9,050(1) 1

Douglas
Dean $8,850 $8,850 1

Theodore T.
Mason $7,850 $54,775 5

Anne J.
Mills $7,850 $37,550 4

William J.
Nightingale $8,450 $16,650 2

James R.
Ramsey $7,850 $7,850 1

(1) Includes compensation from each of the funds in the Aquilasm Group of Funds
for services as Chair of a committee of Trustees of all such funds.

Class A Shares may be purchased without a sales charge by certain of the
Fund's Trustees and officers.

The Fund's Manager is a wholly-owned subsidiary of Aquila Management
Corporation ("AMC"), founder of each fund in the Aquilasm Group of Funds. As of
January 31, 2004, these funds had aggregate assets of approximately $4.0
billion, of which approximately $2.5 billion consisted of assets of the tax-free
municipal bond funds. AMC's address is the same as that of the Manager. AMC is
controlled by Mr. Lacy B. Herrmann, through share ownership directly, through
two trusts and by his wife. During the fiscal year ended December 31, 2003, the
Fund paid $1,129,293 in management fees.

During the fiscal year ended December 31, 2003, $340,461 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $8,968 was retained by the Distributor. With
respect to Class C shares, during the same period $46,125 was paid under Part II
of the Plan and $15,375 was paid under Part I of the Shareholder Services Plan.
Of these total payments of $61,500 the Distributor retained $10,904. With
respect to Class I Shares, during the same period $7,415 was paid under Part III
of the Plan and $5,561 was paid under Part II of the Shareholder Services Plan.
All of such payments were for compensation.

The Distributor currently handles the distribution of the shares of eleven
funds (three money-market funds, seven tax-free municipal bond funds and an
equity fund), including the Fund. Under the Distribution Agreement, the
Distributor is responsible for the payment of certain printing and distribution
costs relating to prospectuses and reports as well as the costs of supplemental
sales literature, advertising and other promotional activities. The shares of
the Distributor are owned 24% by Diana P. Herrmann, 72% by Mr. Herrmann and
other members of his immediate family and the balance by current employees of
Aquila Management Corporation.

Other Information on Trustees

The Trustees have appointed a standing Audit Committee consisting of all of
the Trustees who are "independent" and are not "interested persons" of the Fund,
as that term is defined in the 1940 Act. The members of the Audit Committee are
Thomas A. Christopher, Douglas Dean, Theodore T. Mason, Anne J. Mills, William
J. Nightingale and James R. Ramsey. The Committee selects the Fund'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
Fund'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 Fund'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 Fund's last fiscal year, the Board of Trustees held four
meetings. Each current Trustee was present for at least 75% of the total number
of Board meetings and Audit Committee meetings (if such Trustee was a member of
that committee).

The Fund has not yet formed a nominating committee nor adopted a nominating
committee charter. It expects to do so before the next annual meeting of
shareholders. Since 1998, the Fund has had a Trustee Retirement and Replacement
Policy, last reviewed by the Board in September 2001 which covers many of the
issues facing any nominating committee, including matters to be considered in
connection with candidates for election to the Board of Trustees. In accordance
with regulatory requirements, the selection and nomination of all independent
Trustees has been committed to the independent Trustees, and suggestions for new
Trustees are provided from management and other interested Trustees only upon
request of the independent Trustees. It was considered that there was not enough
time to form a nominating committee at the Board meeting in December 2003, and
the Board intends to establish nominating committee policies and procedures only
after more deliberation has been carried out.

Since the beginning of the Fund's most recently completed fiscal year, no
Trustee purchased or sold any shares of any class of the Manager or its parent
or subsidiaries.

Vote Required

To be elected, each nominee must receive the affirmative votes of a
majority of the shares present.

Ratification or Rejection of Selection of Independent Auditors
(Proposal No. 2)

KPMG LLP ("KPMG"), which is currently serving as the Fund's independent
auditors, has been selected by the Fund's Audit Committee and ratified by the
Board of Trustees, including a majority of the Independent Trustees, as the
Fund's independent auditors for the fiscal year ending December 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 Fund's annual financial statements for
2002 and 2003, and fees billed for other services rendered by KPMG.

2002 2003

Audit Fees: $19,500 20,100

Audit related fees 0 0
______ ______
Audit and audit related fees 19,500 20,100

Tax fees (1) 9,500 8,942

All other fees 0 0
______ _____
Total fees $29,000 $29,042
_______ ______

(1) Tax fees consisted of fees for tax consultation and tax compliance
services.

KPMG 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 by KPMG are pre-approved by the Audit
Committee, except that 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
KPMG and has accepted its representation that it is independent in recommending
re-appointment of it for the fiscal year ending December 31, 2004.

KPMG has no direct or indirect financial interest in the Fund or the
Manager. It is expected that representatives of KPMG will not be present at the
meeting but will be available should any matter arise requiring their presence.

Receipt of Shareholder Proposals

Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under certain
conditions, be included in the Fund's proxy statement and proxy card for a
particular annual meeting. One of these conditions relates to the timely receipt
by the Fund of any such proposal. Under these rules, proposals submitted for
inclusion in the proxy material for the Fund's next annual meeting after the
meeting to which this Proxy Statement relates must be received by the Fund not
less than 120 days before the anniversary of the date stated in this Proxy
Statement for the first mailing of this Proxy Statement. The date for such
submission could change, depending on the scheduled date for the next annual
meeting; if so, shareholders will be notified. The fact that the Fund receives a
shareholder proposal in a timely manner does not insure its inclusion in the
Fund's proxy material, since there are other requirements in the proxy rules
relating to such inclusion.

Other Business

The Fund does not know of any other matter which will come up for action at
the Meeting. If any other matter or matters properly come up for action at the
Meeting, including any adjournment of the Meeting, the proxy holders will vote
the shares which your proxy card, telephone or Internet vote entitles them to
vote, in accordance with their judgment on such matter or matters, except as
noted. That is, by signing and returning your proxy card or by voting by
telephone or the Internet, you give the proxy holders discretionary authority as
to any such matter or matters.

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Appendix

CHURCHILL TAX-FREE FUND OF KENTUCKY
AUDIT COMMITTEE CHARTER
September 5, 2003

1. The Audit Committee shall be composed entirely of independent Trustees.

2. The purposes of the Audit Committee are:

(a) to oversee the Fund's accounting and financial reporting policies.

(b) to oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof; and

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
and such other functions as deemed appropriate by the Audit Committee.

3. To carry out its purposes, the Audit Committee shall have the following
duties and powers:

(a) to select, retain or terminate the 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 Fund's independent auditors, including private
meetings, as necessary (i) to review and approve the audit plan, detailing
the arrangements for and scope of the annual audit, any special audits and
any other services deemed appropriate; (ii) to discuss any matters of
concern relating to the Fund'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 Fund'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 Fund of any changes in accounting
principles or practices proposed by management or the auditors;

(d) to review and approve the fees charged by the auditors for audit
and non-audit services;

(e) to investigate improprieties or suspected improprieties in Fund
operations;

(f) to establish a complaint mechanism about accounting, internal
accounting controls or auditing matters, including a procedure to receive
confidential, anonymous submissions regarding questionable accounting and
audit matters;

(g) to establish procedures if it believes appropriate for delegation
of pre-approvals of services by auditors to a member or members of the
Committee; and

(h) 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 Fund 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 Fund.

7. The Committee shall review this Charter regularly and recommend any changes
to the full Board of Trustees.

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IMPORTANT NOTICE

PLEASE READ IMMEDIATELY

CHURCHILL TAX-FREE FUND OF KENTUCKY

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

to be held on APRIL 23, 2004

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
1-888-221-0697

To vote your shares by telephone, call toll free 1-888-221-0697. 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 Fund at
www.proxyweb.com/aquila. 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
Churchill Tax-Free Fund of Kentucky

Proxy for Shareholder Meeting April 23, 2004
Proxy Solicited on Behalf of the Board of Trustees

The shareholder(s) of Churchill Tax-Free Fund of Kentucky (the "Fund")
whose signature(s)appear(s) 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 Fund to be held on Friday, April 23, 2004 at the Kentucky
Derby Museum, 704 Central Avenue, Louisville, Kentucky, at 10:00 a.m. Eastern
Daylight Time, and at all adjournments thereof, and thereat to vote the shares
held in the name of the undersigned on the record date for said meeting on the
matters listed on the reverse side. Such shares are entitled to one vote for
every dollar of net asset value represented by the share balance printed 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: __________________, 2004

_________________________________
Signature(s) (SIGN IN THE BOX)

PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) 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.

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Churchill Tax-Free Fund of Kentucky

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) Thomas A. Christopher; 03) Douglas Dean;
04) Diana P. Herrmann*; 05) Theodore T. Mason; 06) Anne J. Mills;
07)William J. Nightingale; 08) James R. Ramsey

* 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 above.

[bolded in printed form]

Management recommends a vote FOR all nominees listed above and FOR the proposal
listed at right. 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 [__]

For address changes and/or comments, please check the box at right and write
them on the front where indicated. _
[_]

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED ON THE REVERSE SIDE.

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