CHURCHILL TAX-FREE FUND OF KENTUCKY
                         Supplement to the Prospectuses
                     and Statement of Additional Information
                       Dated April 24, 2004, as Previously
                            Supplemented May 19, 2004


     Effective 60 days after the date of this supplement, the Exchange Privilege
described in the Prospectuses and Statement of Additional Information is
modified as follows:

     Prospectus for Class A Shares and Class C Shares:

     The material under the caption "Exchange Privilege" is replaced by the
following:

     Generally, you can exchange shares of this Fund into the tax-free municipal
bond funds and the equity fund (together with the Fund, the "Bond or Equity
Funds") and money-market funds (the "Money-Market Funds") in the Aquilasm Group
of Funds (collectively, the "Aquila Funds") for shares of the same class of any
other Bond or Equity Fund, or for Original Shares of any Money-Market Fund,
without the payment of a sales charge or any other fee. Because excessive
trading in Fund shares can be harmful to the Fund and its other shareholders,
the right is reserved to revise or terminate the exchange privilege, to limit
the number of exchanges or to reject any exchange if (i) the Fund or any of the
other Aquila Funds believe that it or they would be harmed or be unable to
invest effectively or (ii) it or they receive or anticipate receiving
simultaneous orders that may significantly affect the Fund or any other Aquila
Fund.

     Prospectus for Class I Shares and Class Y Shares:

     The material under the caption "Exchange Privilege" is replaced by the
following:

     Generally, you can exchange Class Y shares of this Fund into the tax-free
municipal bond funds and the equity fund (together with the Fund, the "Bond or
Equity Funds") and money-market funds (the "Money-Market Funds") in the Aquilasm
Group of Funds (collectively, the "Aquila Funds") for shares of the same class
of any other Bond or Equity Fund, or for Original Shares of any Money-Market
Fund, without the payment of a sales charge or any other fee.

     The exchange privilege is also available to Class I Shares to the extent
that other Aquila Funds are made available to its customers by your financial
intermediary. All exchanges of Class I Shares must be made through your
financial intermediary.

     Because excessive trading in Fund shares can be harmful to the Fund and its
other shareholders, the right is reserved to revise or terminate the exchange
privilege, to limit the number of exchanges or to reject any exchange if (i) the
Fund or any of the other Aquila Funds believe that it or they would be harmed or
be unable to invest effectively or (ii) it or they receive or anticipate
receiving simultaneous orders that may significantly affect the Fund or any
other Aquila Fund.

Statement of Additional Information:

     The second paragraph under the caption "Exchange Privilege" is replaced by
the following:

     Generally, you can exchange shares of a given class of a Bond or Equity
Fund including the Fund for shares of the same class of any other Bond or Equity
Fund, or for Original Shares of any Money-Market Fund, without the payment of a
sales charge or any other fee. The exchange privilege is available to Class I
Shares to the extent that other Aquila Funds are made available to its customers
by your financial intermediary. All exchanges of Class I Shares must be made
through your financial intermediary.

     Because excessive trading in Fund shares can be harmful to the Fund and its
other shareholders, the right is reserved to revise or terminate the exchange
privilege, to limit the number of exchanges or to reject any exchange if (i) the
Fund or any of the other Aquila Funds believe that it or they would be harmed or
be unable to invest effectively or (ii) it or they receive or anticipate
receiving simultaneous orders that may significantly affect the Fund or any
other Aquila Fund.


                         The date of this supplement is
                                  July 13, 2004