UNITED STATES
				SECURITIES AND EXCHANGE COMMISSION
					WASHINGTON, D.C. 20549


						FORM N-CSR

		CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
					INVESTMENT COMPANIES

			Investment Company Act file number 811-5086

					Churchill Tax-Free Trust
			(Exact name of Registrant as specified in charter)

					   380 Madison Avenue
					New York, New York 10017
			(Address of principal executive offices)  (Zip code)

					  Joseph P. DiMaggio
					  380 Madison Avenue
					New York, New York 10017
				(Name and address of agent for service)

		Registrant's telephone number, including area code:	(212) 697-6666


				Date of fiscal year end:	12/31

				Date of reporting period:	6/30/05

						FORM N-CSR

ITEM 1.  REPORTS TO STOCKHOLDERS.


SEMI-ANNUAL
REPORT

JUNE 30, 2005

                  [LOGO OF AQUILA ROCKY MOUNTAIN EQUITY FUND:
                       A RECTANGLE WITH A DRAWING OF TWO
          MOUNTAINS AND THE WORDS "AQUILA ROCKY MOUNTAIN EQUITY FUND"]

                             AN INVESTMENT DESIGNED
                        FOR GROWTH AT A REASONABLE PRICE

[LOGO OF THE AQUILA
GROUP OF FUNDS:                     ONE OF THE
AN EAGLE'S HEAD]            AQUILA(SM) GROUP OF FUNDS

<PAGE>

[LOGO OF AQUILA ROCKY MOUNTAIN EQUITY FUND:
A RECTANGLE WITH A DRAWING OF TWO
MOUNTAINS AND THE WORDS "AQUILA ROCKY MOUNTAIN EQUITY FUND"]

                       AQUILA ROCKY MOUNTAIN EQUITY FUND

                           "OUR STRATEGY IS WORKING"

                                                                    August, 2005

Dear Fellow Shareholder:

      It was just over eleven years ago that we started  Aquila  Rocky  Mountain
Equity Fund. Our strategic  work in the early part of the 1990's  suggested that
the Rocky Mountain region offered a variety of attractive advantages in terms of
quality of life and an outdoors lifestyle.  In addition, we felt that the region
might attract independent-minded, entrepreneurial types who were business people
with lots of energy. We were willing to take a long term perspective in terms of
the dynamism of the area.

      We believe our  assessment of the region has proven valid.  A recent study
conducted by the  Department of Labor for the period of 1990-2003  ranked all 50
states by job  growth  over the  period  studied.  Seven out of the eight  Rocky
Mountain  States  (Arizona,  Colorado,  Utah,  Idaho,  New Mexico,  Nevada,  and
Montana) all ranked in the top 10 in terms of job growth.

      Just as we wanted to take a long term  perspective with your Fund, we have
sought to be strategic in our investment  management of your Fund. The portfolio
turnover of the Fund is well below that of the  average  mutual  fund.  Although
Wall Street tends to be short term in its  thinking,  we prefer to shift out our
time  frame.  We look for young,  emerging  companies  that  appear to have good
growth opportunities over a two to five year time frame or more.

      Since Aquila Rocky  Mountain  Equity Fund is classified as a regional fund
(investing in the Rocky Mountain states of Arizona,  Colorado,  Idaho,  Montana,
Nevada,  New Mexico,  Utah and  Wyoming),  it is  difficult to provide a similar
benchmark with which to compare relative performance.  However, we are providing
you with the results of various well-know indices during the first six months of
2005 so that you can see how the market has fared in  general in  comparison  to
Aquila Rocky Mountain Equity Fund.

                      NOT A PART OF THE SEMI-ANNUAL REPORT

<PAGE>

PERSPECTIVE AS TO CUMULATIVE RETURNS - 1 AND 5 YEARS

                          AQUILA                                       Dow Jones
                          ROCKY MOUNTAIN     S&P     Russell          Industrial
                          EQUITY FUND*       500     2000     NASDAQ   Average

6 months ended 6/30/05       -0.86%        -0.81%    -1.21%   -5.12%    -3.65%

      For the first half of 2005, the stock market has been consolidating as the
Federal Reserve has continued to raise short term interest rates.

ABSOLUTE AVERAGE ANNUAL RETURNS

      To give you a better  indication of how Aquila Rocky Mountain Equity Fund*
has performed over its lifetime, the absolute average annual returns for 1 year,
3 years, 5 years and since inception follow:

                     1 year                  6.17%
                     3 years                12.15%
                     5 years                 5.72%
                     Since inception         9.61%

      In dollars and cents, the "since inception" average annual return of 9.61%
equates to a holding of $27,317 if you had  invested  $10,000  into Aquila Rocky
Mountain Equity Fund at its launch in July, 1994.

THE ECONOMY OF THE COUNTRY REMAINS POSITIVE

      In considering the various economic indicators for the country as a whole,
we conclude that the United States is doing  reasonably well. The number of jobs
has been  increasing  to the  highest  level in a number of years,  the  country
continues to enjoy increased productivity,  new home sales are up, and inflation
continues  to be under  control.  All in all,  the  country  is  operating  in a
positive manner.

THE ROCKY MOUNTAIN AREA CONTINUES TO SHOW ENTREPRENEURIAL ACTIVITY

      According to a recent  "Business  Week" survey,  the Rocky Mountain region
possesses  3 of the top 100  growth  companies  in the United  States.  "Fortune
Magazine" also recently  released a list of the fastest  growing  companies with
revenues  below $200 million and 4 of your Fund's  holdings were on the list. We
have also seen over ten new companies headquartered in the Rocky Mountain Region
go public over the past twelve months.

                      NOT A PART OF THE SEMI-ANNUAL REPORT

<PAGE>

STAY THE COURSE

      Despite the lackluster market  performance of the first six months of this
calendar  year,  we feel that you,  our  shareholders,  may be well  rewarded by
staying the course with your investment in Aquila Rocky Mountain Equity Fund.

YOUR CONFIDENCE IS APPRECIATED

      We are gratified by the continued  confidence  you have placed in the Fund
through your investment.

                                   Sincerely,


/s/ Barbara S. Walchli                              /s/ Lacy B. Herrmann

Barbara S. Walchli                                  Lacy B. Herrmann
Senior Vice President and                           Founder
Portfolio Manager

*In keeping with industry  standards,  total return figures do not include sales
charges, but do reflect  reinvestment of dividends and capital gains.  Different
classes  of  shares  are  offered  by the Fund and their  performance  will vary
because of differences in sales charges and fees paid by shareholders  investing
in these different  classes.  The performance  shown  represents that of Class A
shares,  adjusted to reflect the absence of sales charges,  which is currently a
maximum amount of 4.25% for this Class.  From time to time,  management fees and
other expenses have been waived or absorbed by Aquila Investment Management LLC,
Manager of the Fund.  Returns would be less if sales charges,  waived management
fees,  and absorbed  expenses,  were applied.  Share price (net asset value) and
investment return fluctuate so that upon redemption an investor may receive more
or less  than  their  original  investment.  The  indices  noted  above  are not
available for direct investment.  Therefore,  their performance does not reflect
the expenses  associated with the active management of an actual portfolio.  The
prospectus of the Fund,  which  contains more  complete  information,  including
management fees and expenses and which discusses the special risk considerations
of the geographic  concentration  strategy of the Fund,  should,  of course,  be
carefully reviewed before investing.  Past performance does not guarantee future
results.

                      NOT A PART OF THE SEMI-ANNUAL REPORT

<PAGE>

[LOGO OF AQUILA ROCKY MOUNTAIN EQUITY FUND:
A RECTANGLE WITH A DRAWING OF TWO
MOUNTAINS AND THE WORDS "AQUILA ROCKY MOUNTAIN EQUITY FUND"]

                       AQUILA ROCKY MOUNTAIN EQUITY FUND

                               SEMI-ANNUAL REPORT

                             MANAGEMENT DISCUSSION

      Aquila Rocky  Mountain  Equity Fund's Class A shares had a total return of
-0.86%,  without provision for sales charges,  for the six months ended June 30,
2005.  This  compares to a total return of -0.81% for the S&P 500 and -1.21% for
the Russell 2000.

      Flat to down stock market  performance  is  consistent  historically  with
periods when the Federal  Reserve has been raising  interest rates  mid-cycle to
slow the economy.  The Fed has been raising  interest  rates for the past twelve
months. Often when the Fed finishes raising interest rates, the stock market has
an upward bias.

      For the five years cumulatively ended June 30, 2005, Aquila Rocky Mountain
Fund A shares,  before provision for sales charges, had a total return of 31.97%
compared to -11.32% for the S&P 500 and 32.48% for the Russell 2000.

      We do not have a perfect benchmark or performance  comparison for the Fund
since we invest in a specific  region rather than specific  size  companies.  At
mid-year  2005,  18.8% of the  Fund  was  invested  in  companies  with a market
capitalization of over $10 billion (large cap companies),  33.8% was invested in
companies  with a market  capitalization  between  $2  billion  and $10  billion
(mid-cap),   38.1%  of  the  Fund  was  invested  in  companies  with  a  market
capitalization  between $300 million and $2 billion  (small cap) and 9.3% of the
Fund was invested in companies with a market  capitalization  below $300 million
(micro cap). We participate  in all sizes of companies,  with roughly 50% of the
Fund in large  and mid cap  stocks  and 50% of the Fund in small  and  micro cap
stocks.

      At mid-year we had holdings of 56 companies across a number of industries.
We work to hold our  maximum  position  size to  around 5% of the  Fund's  total
portfolio.  As a percentage of net assets Coldwater Creek ended the quarter with
a 5.7%  weight in the  portfolio  since  the  stock  spiked up at the end of the
quarter.  Consequently, we subsequently sold some Coldwater Creek to reduce this
holding to 5% or less. Our next largest position was Microchip Technologies with
a weighting of 3.9%. Our median position size for the fund was 1.7%.

      The five best  performers  in the Fund  during the first half of 2005 were
headquartered in Arizona or Colorado and came from five different industries.

      o     Rocky Mountain Chocolate Factory,  based in Durango,  Colorado had a
            total return of 112.0%.  The company's  earnings growth has recently
            benefited from a new kiosk business.

      o     The second best  performer was Unisource  Energy,  headquartered  in
            Tucson,  Arizona  with a total  return  of  29.2%.  Unisource  is an
            electric  utility in  southern  Arizona,  which has  benefited  from
            growth in its service territory and increased  interest in its solar
            cell business, Global Solar.

<PAGE>

MANAGEMENT DISCUSSION OF FUND PERFORMANCE (CONTINUED)

      o     The third best  performing  stock was Ventana  Medical  with a total
            return of 25.7%. Ventana Medical is also a Tucson based company that
            manufactures  instruments  and reagents that help analyze tissue for
            the diagnosis and treatment of cancer.

      o     The fourth best  performing  company was MDC  Holdings  with a total
            return of 24.3%.  MDC  Holdings,  based in  Denver,  Colorado,  owns
            Richmond  American Homes which has been  benefiting from rising home
            prices.

      o     The fifth best performing company was Intrado with a total return of
            23.2%.  Intrado,  based in  Longmont,  Colorado  provides  emergency
            notification  services and data management for telecom providers and
            public safety agencies.  Intrado stock moved up on the news that the
            FCC would require  telephone  services provided over the internet to
            have 911 services.

      Our three worst performing stocks all came from the pharmaceutical/biotech
industries.  Pharmion,  a Boulder,  Colorado based company declined 45.0% during
the first half. NPS Pharmaceuticals  declined 37.9% and Myriad Genetics declined
30.5%.  These  are all  developmental  stage  companies  that are  either in the
process  of  becoming  profitable  or  that  have  not  yet  become  profitable.
Developmental stage companies tend to be more volatile. For this reason, we seek
to limit the weightings of developmental stage companies in the Fund. At the end
of June, the weighting of Pharmion was 0.4% of the Fund, NPS  Pharmaceutical was
0.3% and Myriad  Genetics was 1.3% of the Fund.  These companies are all working
on portfolios of new  pharmaceutical  products.  Myriad Genetics is in Phase III
clinical trials with Flurizan, a drug for Alzheimer's.

      During the first half of 2005, we had eight  companies  with stock splits.
While stock splits and stock dividends are really just an accounting  adjustment
to lower the price of a stock, they often attract investor attention. On January
11, MDC Holdings split their shares 13 for 10, on January 18 Shufflemaster split
their shares 3 for 2, on March 10 First State Bancorp split their shares 2 for 1
and on March 15 Ventana  Medical  split their  shares 2 for 1.  Coldwater  Creek
split their shares 3 for 2 on March 21, MGM Mirage split their shares 2 for 1 on
May 19, Glacier  Bancorp split their shares 5 for 4 on May 27 and Rocky Mountain
Chocolate Factory split their shares 4 for 3 on June 14.

      Over the past twelve  months,  the Federal  Reserve has raised  short term
interest  rates nine times from 1.00% to 3.25% to slow the  economy.  During Fed
tightenings,  stocks tend to correct, anticipating slowing earnings growth. Once
the Fed  tightening is completed,  market  leadership  often moves from economic
sensitive groups to consistent  growers,  such as health care stocks.  Sometimes
investors  also focus on emerging  growth  stocks,  smaller  companies  that are
enjoying a high growth phase at an early stage of their growth. We have recently
begun to see a pick-up in performance of technology stocks. Factors which may be
contributing  to this include 1) the shift from 32 bit to 64 bit  computing,  2)
strong  spending  on  computers  for  anti-terrorism  intelligence,  3) computer
requirements  under  the  Sarbanes  Oxley  Act for  corporate  internal  control
purposes and 4) it has now been six or seven years since  corporations  upgraded
computer systems for Y2K.

<PAGE>

MANAGEMENT DISCUSSION OF FUND PERFORMANCE (CONTINUED)

      Over the past 12 months we have seen over ten new  companies  go public in
the Rocky Mountain Region, including one which we purchased.  Bill Barrett Corp.
is a Denver based oil and gas company which went public in December.  During the
first half of 2005 we had one of our energy companies  acquired,  Patina Oil and
Gas. We replaced it with Cimarex Energy,  another Denver based company.  Liberty
Media,  run by John Malone in  Englewood,  Colorado  has been busy  spinning off
companies.  Last year Liberty spun off its  international  cable  businesses  as
Liberty  International.  In July,  Liberty  will  spin off its  holdings  of the
Discovery  Channel.  We  anticipate  retaining  this spin-off in the Fund as its
headquarters will also be in Colorado.

<PAGE>

                       AQUILA ROCKY MOUNTAIN EQUITY FUND
                            SCHEDULE OF INVESTMENTS
                           JUNE 30, 2005 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                              MARKET
     SHARES       COMMON STOCKS - 88.9%                                                        VALUE
---------------   ------------------------------------------------------------------      --------------
<S>               <C>                                                                     <C>
                  BASIC INDUSTRY - 8.5%
         16,000   Allied Waste Industries, Inc.+ ...................................      $      126,880
          8,000   Ball Corp. .......................................................             287,680
         17,000   Knight Transportation, Inc. ......................................             413,610
          5,000   Newmont Mining Corp. .............................................             195,150
          3,500   Phelps Dodge Corp. ...............................................             323,750
          8,000   SkyWest, Inc. ....................................................             145,440
                                                                                          --------------
                                                                                               1,492,510
                                                                                          --------------

                  BUSINESS SERVICES - 2.4%
         12,000   Intrado, Inc. + ..................................................             178,920
          5,000   OfficeMax, Inc. ..................................................             148,850
          3,000   Viad Corp. .......................................................              85,020
                                                                                          --------------
                                                                                                 412,790
                                                                                          --------------

                  CAPITAL SPENDING - 3.5%
         22,000   Mity Enterprises, Inc. + .........................................             341,000
          8,000   Mobile Mini, Inc.+ ...............................................             275,840
                                                                                          --------------
                                                                                                 616,840
                                                                                          --------------

                  CONSUMER CYCLICALS - 2.3%
          5,000   M.D.C. Holdings, Inc. ............................................             411,250
                                                                                          --------------

                  CONSUMER SERVICES - 23.7%
          5,000   Apollo Group, Inc. (Class A)+ ....................................             391,100
         40,000   Coldwater Creek, Inc.+ ...........................................             996,400
          3,400   Comcast Corp. (Special Class A)+ .................................             101,830
         11,000   Echostar Communications Corp. (Class A) ..........................             331,760
         15,000   International Game Technology ....................................             422,250
          1,100   Liberty Global, Inc. Series A ....................................              51,271
         25,000   Liberty Media Corp. (Class A)+ ...................................             254,750
         12,000   MGM Mirage+ ......................................................             474,960
         10,000   PETsMART, Inc. ...................................................             303,500
         10,500   Shuffle Master, Inc. + ...........................................             294,315
          8,000   Station Casinos, Inc. ............................................             531,200
                                                                                          --------------
                                                                                               4,153,336
                                                                                          --------------

                  CONSUMER STAPLES - 3.7%
         10,000   Albertson's, Inc. ................................................             206,800
          6,000   P.F. Chang's China Bistro, Inc.+ .................................             353,880
          4,200   Rocky Mountain Chocolate Factory, Inc. ...........................              92,400
                                                                                          --------------
                                                                                                 653,080
                                                                                          --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                              MARKET
     SHARES       COMMON STOCKS (CONTINUED)                                                    VALUE
---------------   ------------------------------------------------------------------      --------------
<S>               <C>                                                                     <C>
                  ENERGY - 5.5%
          7,000   Bill Barrett Corp.+ ..............................................      $      207,060
          2,000   Cimarex Energy Co. + .............................................              77,820
         10,000   Headwaters, Inc.+ ................................................             343,800
          5,000   Questar Corp. ....................................................             329,500
                                                                                          --------------
                                                                                                 958,180
                                                                                          --------------

                  FINANCIAL - 12.0%
         24,000   First State Bancorporation .......................................             462,960
         15,625   Glacier Bancorp, Inc. ............................................             408,281
         11,000   Janus Capital Group, Inc. ........................................             165,440
          9,000   MoneyGram International, Inc. ....................................             172,080
          5,000   Wells Fargo & Company ............................................             307,900
          8,000   Zions Bancorporation .............................................             588,240
                                                                                          --------------
                                                                                               2,104,901
                                                                                          --------------

                  HEALTH CARE -  10.6%
         14,000   Medicis Pharmaceutical Corp. (Class A) ...........................             444,220
         36,000   Merit Medical Systems, Inc.+ .....................................             554,760
         14,000   Myriad Genetics, Inc. + ..........................................             219,100
          4,000   NPS Pharmaceuticals, Inc. + ......................................              45,400
          3,000   Pharmion Corp.+ ..................................................              69,630
          9,000   QLT, Inc.+ .......................................................              93,780
         22,000   Sonic Innovations, Inc.+ .........................................             105,380
          8,000   Ventana Medical Systems, Inc.+ ...................................             321,840
                                                                                          --------------
                                                                                               1,854,110
                                                                                          --------------

                  TECHNOLOGY - 13.3%
         14,000   Avnet, Inc.+ .....................................................             315,420
         20,000   CIBER, Inc.+ .....................................................             159,600
         12,000   First Data Corp. .................................................             481,680
          5,000   Inter-Tel, Inc. ..................................................              93,050
         10,000   JDA Software Group, Inc. + .......................................             113,800
         23,000   Microchip Technology, Inc. .......................................             681,260
         20,000   Micron Technology, Inc.+ .........................................             204,200
         16,000   SBS Technologies, Inc.+ ..........................................             148,480
         12,000   SpectraLink Corp. ................................................             126,240
                                                                                          --------------
                                                                                               2,323,730
                                                                                          --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                              MARKET
     SHARES       COMMON STOCKS (CONTINUED)                                                    VALUE
---------------   ------------------------------------------------------------------      --------------
<S>               <C>                                                                     <C>
                  UTILITIES - 3.4%
          4,000   Kinder Morgan, Inc. ..............................................      $      332,800
          3,000   Pinnacle West Capital Corp. ......................................             133,350
          4,000   UniSource Energy Corp. ...........................................             123,000
                                                                                          --------------
                                                                                                 589,150
                                                                                          --------------
                     Total Common Stocks (cost $9,761,610) .........................          15,569,877
                                                                                          --------------

      FACE
     AMOUNT       SHORT-TERM INVESTMENTS - 8.9%
---------------   ------------------------------------------------------------------
$       800,000   AIM S-T Invest. Co. Prime Port. Inst. Cl. Money Market Fund ......             800,000
        750,000   JP Morgan Liquid Assets Money Market Fund ........................             750,000
                                                                                          --------------
                     Total Short-Term Investments (cost $1,550,000) ................           1,550,000
                                                                                          --------------

                  Total Investments (cost $11,311,610*) ............       97.8%              17,119,877
                  Other assets less liabilities ....................        2.2                  383,925
                                                                          -----           --------------
                  Net Assets .......................................      100.0%          $   17,503,802
                                                                          =====           ==============
</TABLE>

            PORTFOLIO DISTRIBUTION (UNAUDITED)
            ----------------------------------
            Arizona .........................................       26.3%
            California ......................................        1.8
            Canada ..........................................        0.5
            Colorado ........................................       18.1
            Idaho ...........................................        8.2
            Illinois ........................................        0.9
            Minnesota .......................................        1.0
            Montana .........................................        2.4
            Nevada ..........................................       10.1
            New Mexico ......................................        3.6
            Pennsylvania ....................................        0.6
            Texas ...........................................        1.9
            Utah ............................................       15.6
            Short-Term Investments ..........................        9.0
                                                                   -----
                                                                   100.0%
                                                                   =====

      *     Cost for Federal income tax and financial purposes is identical.
      +     Non-income producing security.

                See accompanying notes to financial statements.

<PAGE>

                       AQUILA ROCKY MOUNTAIN EQUITY FUND
                      STATEMENT OF ASSETS AND LIABILITIES
                           JUNE 30, 2005 (UNAUDITED)

<TABLE>
<S>                                                                                        <C>
ASSETS
     Investments at market value (cost $11,311,610) ...................................    $17,119,877
     Cash .............................................................................        335,328
     Receivable for Fund shares sold ..................................................         87,172
     Receivable for investment securities sold ........................................         50,682
     Due from Manager for reimbursement of expenses (note 3) ..........................          8,100
     Dividends and interest receivable ................................................          6,733
     Prepaid expenses .................................................................         23,326
     Other assets .....................................................................         25,623
                                                                                           -----------
         Total assets .................................................................     17,656,841
                                                                                           -----------
LIABILITIES
   Payable for investment securities purchased ........................................        114,380
   Payable for Fund shares redeemed ...................................................         15,611
   Distribution and service fees payable ..............................................          9,136
   Accrued expenses ...................................................................         13,912
                                                                                           -----------
      Total liabilities ...............................................................        153,039
                                                                                           -----------
NET ASSETS ............................................................................    $17,503,802
                                                                                           ===========

   Net Assets consist of:
   Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share     $     6,358
   Additional paid-in capital .........................................................     11,690,492
   Net unrealized appreciation on investments (note 4) ................................      5,808,267
   Accumulated net realized gain on investments .......................................         47,417
   Net investment loss ................................................................        (48,732)
                                                                                           -----------
                                                                                           $17,503,802
                                                                                           ===========

CLASS A
   Net Assets .........................................................................    $13,681,330
                                                                                           ===========
   Capital shares outstanding .........................................................        494,007
                                                                                           ===========
   Net asset value and redemption price per share .....................................    $     27.69
                                                                                           ===========
   Offering price per share (100/95.75 of $27.69 adjusted to nearest cent) ............    $     28.92
                                                                                           ===========
CLASS C
   Net Assets .........................................................................    $ 2,111,682
                                                                                           ===========
   Capital shares outstanding .........................................................         81,228
                                                                                           ===========
   Net asset value and offering price per share .......................................    $     26.00
                                                                                           ===========
   Redemption price per share (*a charge of 1% is imposed on the redemption
      proceeds of the shares, or on the original price, whichever is lower, if redeemed
      during the first 12 months after purchase) ......................................    $     26.00*
                                                                                           ===========
CLASS Y
   Net Assets .........................................................................    $ 1,710,790
                                                                                           ===========
   Capital shares outstanding .........................................................         60,563
                                                                                           ===========
   Net asset value, offering and redemption price per share ...........................    $     28.25
                                                                                           ===========
</TABLE>

                See accompanying notes to financial statements.

<PAGE>

                       AQUILA ROCKY MOUNTAIN EQUITY FUND
                            STATEMENT OF OPERATIONS
                   SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)

<TABLE>
<S>                                                           <C>                     <C>
INVESTMENT INCOME:

     Dividends ...........................................                            $    83,608

Expenses:

     Management fee (note 3) .............................    $   123,533
     Distribution and service fees (note 3) ..............         27,148
     Trustees' fees and expenses .........................         30,948
     Legal fees (note 3) .................................         26,301
     Registration fees and dues ..........................         18,515
     Transfer and shareholder servicing agent fees .......         12,402
     Shareholders' reports ...............................          8,776
     Auditing and tax fees ...............................          8,465
     Chief compliance officer (note 3) ...................          2,253
     Custodian fees ......................................          1,521
     Insurance ...........................................            586
     Miscellaneous .......................................         11,191
                                                              -----------
     Total expenses ......................................        271,639

     Management fee waived (note 3) ......................       (123,533)
     Reimbursement of expenses by Manager (note 3) .......        (10,858)
     Expenses paid indirectly (note 5) ...................         (4,908)
                                                              -----------
     Net expenses ........................................                                132,340
                                                                                      -----------

     Net investment loss .................................                                (48,732)

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

     Net realized gain (loss) from securities transactions         49,833
     Change in unrealized appreciation on investments ....       (153,319)
                                                              -----------

     Net realized and unrealized gain (loss) on investments                              (104,486)
                                                                                      -----------
     Net change in net assets resulting from operations ..                            $  (153,218)
                                                                                      ===========
</TABLE>

                See accompanying notes to financial statements.

<PAGE>

                       AQUILA ROCKY MOUNTAIN EQUITY FUND
                      STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED
                                                             JUNE 30, 2005
                                                              (UNAUDITED)          DECEMBER 31, 2004
                                                            ----------------       -----------------
<S>                                                           <C>                     <C>
OPERATIONS:
   Net investment loss ...................................    $   (48,732)            $  (115,803)
   Net realized gain (loss) from securities transactions .         49,833                 245,325
   Change in unrealized appreciation on investments ......       (154,319)              1,671,939
                                                              -----------             -----------
      Change in net assets from operations ...............       (153,218)              1,801,461
                                                              -----------             -----------

DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
   Class A Shares:
   Net realized gain on investments ......................             --                      --

   Class C Shares:
   Net realized gain on investments ......................             --                      --

   Class Y Shares:
   Net realized gain on investments ......................             --                      --
                                                              -----------             -----------
      Change in net assets from distributions ............             --                      --
                                                              -----------             -----------

CAPITAL SHARE TRANSACTIONS (NOTE 7):
   Proceeds from shares sold .............................      2,942,180               4,941,240
   Short-term trading redemption fee .....................          1,986                   1,476
   Reinvested dividends and distributions ................             --                      --
   Cost of shares redeemed ...............................     (2,901,497)             (2,709,144)
                                                              -----------             -----------
      Change in net assets from capital share transactions         42,669               2,233,572
                                                              -----------             -----------

      Change in net assets ...............................       (110,549)              4,035,033

NET ASSETS:
   Beginning of period ...................................     17,614,351              13,579,318
                                                              -----------             -----------

   End of period .........................................    $17,503,802             $17,614,351
                                                              ===========             ===========
</TABLE>

                See accompanying notes to financial statements.

<PAGE>

                       AQUILA ROCKY MOUNTAIN EQUITY FUND
                         NOTES TO FINANCIAL STATEMENTS
                           JUNE 30, 2005 (UNAUDITED)

1. ORGANIZATION

      Aquila Rocky Mountain  Equity Fund (the "Fund"),  a diversified,  open-end
investment  company,  was  organized  on  November  3,  1993 as a  Massachusetts
business trust and commenced operations on July 22, 1994. The Fund is authorized
to issue an unlimited  number of shares and, since its inception to May 1, 1996,
offered  only one class of shares.  On that date,  the Fund began  offering  two
additional classes of shares, Class C and Class Y shares. All shares outstanding
prior  to that  date  were  designated  as Class A  shares  and are sold  with a
front-payment  sales charge and bear an annual  distribution fee. Class C shares
are sold with a  level-payment  sales charge with no payment at time of purchase
but level service and  distribution  fees from date of purchase through a period
of six years thereafter. A contingent deferred sales charge of 1% is assessed to
any Class C  shareholder  who redeems  shares of this Class within one year from
the date of purchase.  Class C Shares,  together  with a pro rata portion of all
Class C Shares acquired through reinvestment of dividends or other distributions
paid in additional Class C Shares, automatically convert to Class A Shares after
6 years.  The Class Y shares  are only  offered  to  institutions  acting for an
investor in a fiduciary, advisory, agency, custodian or similar capacity and are
not offered directly to retail  investors.  Class Y shares are sold at net asset
value without any sales  charge,  redemption  fees,  contingent  deferred  sales
charge or distribution  or service fees. On April 30, 1998 the Fund  established
Class I shares, which are offered and sold only through financial intermediaries
and are not offered directly to retail  investors.  As of the report date, there
were no Class I shares outstanding. All classes of shares represent interests in
the same portfolio of investments  and are identical as to rights and privileges
but differ with respect to the effect of sales charges,  the distribution and/or
service fees borne by each class, expenses specific to each class, voting rights
on matters affecting a single class and the exchange privileges of each class.

2. SIGNIFICANT ACCOUNTING POLICIES

      The following is a summary of significant  accounting policies followed by
the Fund in the  preparation  of its financial  statements.  The policies are in
conformity with accounting principles generally accepted in the United States of
America for investment companies.

a)    PORTFOLIO  VALUATION:  Securities listed on a national securities exchange
      or designated as national market system  securities are valued at the last
      sale  price on such  exchanges  or market  system or, if there has been no
      sale that day, at the bid price.  Securities  for which market  quotations
      are not readily  available  are valued at fair value as determined in good
      faith  by or at  the  direction  of  the  Board  of  Trustees.  Short-term
      investments maturing in 60 days or less are valued at amortized cost.

b)    SECURITIES   TRANSACTIONS  AND  RELATED  INVESTMENT   INCOME:   Securities
      transactions  are  recorded on the trade date.  Realized  gains and losses
      from  securities  transactions  are reported on the identified cost basis.
      Dividend  income is recorded on the ex-dividend  date.  Interest income is
      recorded daily on the accrual basis.

c)    FEDERAL  INCOME  TAXES:  It is the  policy  of the  Fund to  qualify  as a
      regulated  investment  company by  complying  with the  provisions  of the
      Internal Revenue Code applicable to certain investment companies. The Fund
      intends to make  distributions of income and securities profits sufficient
      to relieve it from all, or  substantially  all,  Federal income and excise
      taxes.

<PAGE>

d)    MULTIPLE   CLASS   ALLOCATIONS:   All   income,   expenses   (other   than
      class-specific  expenses), and realized and unrealized gains or losses are
      allocated  daily to each class of shares  based on the relative net assets
      of each class.  Class-specific  expenses,  which include  distribution and
      service  fees and any other items that are  specifically  attributed  to a
      particular class, are charged directly to such class.

e)    USE OF ESTIMATES:  The  preparation of financial  statements in conformity
      with  accounting  principles  generally  accepted in the United  States of
      America requires  management to make estimates and assumptions that affect
      the  reported   amounts  of  assets  and  liabilities  and  disclosure  of
      contingent assets and liabilities at the date of the financial  statements
      and the  reported  amounts of increases  and  decreases in net assets from
      operations during the reporting  period.  Actual results could differ from
      those estimates.

3. FEES AND RELATED PARTY TRANSACTIONS

a)    MANAGEMENT ARRANGEMENTS:

      The Fund has a  Sub-Advisory  and  Administration  Agreement  with  Aquila
Investment Management LLC (the "Manager"),  a wholly-owned  subsidiary of Aquila
Management  Corporation,  the Fund's founder and sponsor.  Under this agreement,
the Manager  supervises the  investments of the Fund and the  composition of its
portfolio,  arranges for the  purchases and sales of portfolio  securities,  and
provides for daily  pricing of the Fund's  portfolio.  Besides its  sub-advisory
services, it also provides all administrative  services. This includes providing
the  office  of  the  Fund  and  all  related   services  as  well  as  managing
relationships with all the various support organizations to the Fund such as the
shareholder servicing agent, custodian,  legal counsel, auditors and distributor
and additionally  maintaining the Fund's  accounting books and records.  For its
services,  the Manager is entitled to receive a fee which is payable monthly and
computed as of the close of  business  each day on the net assets of the Fund at
the following  annual rates;  1.50% on the first $15 million;  1.20% on the next
$35 million and 0.90% on the excess over $50 million.

      For the six months ended June 30, 2005, the Fund incurred  Management fees
of  $123,533,  of which all were  waived.  Additionally,  during this period the
Manager reimbursed the Fund for other expenses in the amount of $10,858. Of this
amount,  $2,758  was paid prior to June 30,  2005 and the  balance of $8,100 was
paid in early July 2005. The Manager has contractually  undertaken to waive fees
and/or  reimburse  Fund  expenses  during  the period  January  1, 2005  through
December 31, 2005 so that total Fund expenses would not exceed 1.50% for Class A
Shares, 2.25% for Class C Shares or 1.25% for Class Y Shares.

      Under a Compliance  Agreement with the Manager, the Manager is compensated
for Chief  Compliance  Officer related  services  provided to enable the Fund to
comply with Rule 38a-1 of the Investment Company Act of 1940.

      Specific  details as to the nature and extent of the services  provided by
the Manager are more fully  defined in the Fund's  Prospectus  and  Statement of
Additional Information.

b)    DISTRIBUTION AND SERVICE FEES:

      The Fund has adopted a  Distribution  Plan (the  "Plan")  pursuant to Rule
12b-1 (the "Rule") under the Investment  Company Act of 1940.  Under one part of
the Plan, with respect to Class A Shares, the Fund is authorized to make service
fee payments to broker-dealers or others ("Qualified

<PAGE>

Recipients")   selected  by  Aquila  Distributors,   Inc.  (the  "Distributor"),
including, but not limited to, any principal underwriter of the Fund, with which
the Distributor has entered into written agreements contemplated by the Rule and
which have  rendered  assistance  in the  distribution  and/or  retention of the
Fund's shares or servicing of  shareholder  accounts.  The Fund makes payment of
this  service fee at the annual  rate of 0.25% of the Fund's  average net assets
represented  by  Class A  Shares.  For the  six  months  ended  June  30,  2005,
distribution fees on Class A Shares amounted to $16,412 of which the Distributor
retained $1,445.

      Under  another part of the Plan,  the Fund is  authorized to make payments
with  respect to Class C Shares to  Qualified  Recipients  which  have  rendered
assistance in the distribution  and/or retention of the Fund's Class C shares or
servicing of shareholder accounts. These payments are made at the annual rate of
0.75% of the Fund's average net assets represented by Class C Shares and for the
six months  ended  June 30,  2005,  amounted  to $8,052.  In  addition,  under a
Shareholder  Services  Plan, the Fund is authorized to make service fee payments
with respect to Class C Shares to Qualified  Recipients  for providing  personal
services and/or maintenance of shareholder accounts.  These payments are made at
the annual rate of 0.25% of the Fund's average net assets represented by Class C
Shares and for the six months ended June 30, 2005, amounted to $2,684. The total
of these  payments  with respect to Class C Shares  amounted to $10,736 of which
the Distributor retained $2,359.

      Specific  details  about the Plans are more  fully  defined  in the Fund's
Prospectus and Statement of Additional Information.

      Under a Distribution  Agreement,  the Distributor  serves as the exclusive
distributor of the Fund's shares. Through agreements between the Distributor and
various  broker-dealer  firms ("dealers"),  the Fund's shares are sold primarily
through the  facilities of these dealers having offices within the general Rocky
Mountain region, with the bulk of sales commissions inuring to such dealers. For
the six months ended June 30, 2005, total commissions on sales of Class A Shares
amounted to $32,672 of which $3,090 was received by the Distributor.

c)    OTHER RELATED PARTY TRANSACTIONS:

      For the six months ended June 30, 2005, the Fund incurred $22,919 of legal
fees  allocable to Hollyer Brady Barrett & Hines LLP,  counsel to the Fund,  for
legal services in conjunction with the Fund's ongoing operations.  The Secretary
of the Fund is a Partner of Hollyer Brady Barrett & Hines LLP.

4. PURCHASES AND SALES OF SECURITIES

      During the six months ended June 30, 2005,  purchases  of  securities  and
proceeds  from  the  sales  of  securities  (excluding  short-term  investments)
aggregated $965,856 and $794,579, respectively.

      At  June  30,  2005,  aggregate  gross  unrealized  appreciation  for  all
securities in which there is an excess of market value over tax cost amounted to
$6,173,307 and aggregate  gross  unrealized  depreciation  for all securities in
which there is an excess of tax cost over market value  amounted to $365,040 for
a net unrealized appreciation of $5,808,267.

<PAGE>

5. EXPENSES

      The Fund has negotiated an expense offset  arrangement  with its custodian
wherein it receives credit toward the reduction of custodian fees and other Fund
expenses  whenever  there  are  uninvested  cash  balances.   The  Statement  of
Operations  reflects the total expenses before any offset,  the amount of offset
and the net expenses.  It is the general intention of the Fund to invest, to the
extent  practicable,  some or all of cash balances in equity  securities  rather
than leave cash on deposit.

6. PORTFOLIO ORIENTATION

      The  Fund's  investments  are  primarily  invested  in the  securities  of
companies  within the eight state Rocky Mountain region  consisting of Colorado,
Arizona, Idaho, Montana,  Nevada, New Mexico, Utah and Wyoming and therefore are
subject to economic  and other  conditions  affecting  the various  states which
comprise the region.  Accordingly,  the investment performance of the Fund might
not be comparable with that of a broader universe of companies.

7. CAPITAL SHARE TRANSACTIONS

a)    Transactions in Capital Shares of the Fund were as follows:

<TABLE>
<CAPTION>
                                     SIX MONTHS ENDED
                                       JUNE 30, 2005                     YEAR ENDED
                                        (UNAUDITED)                  DECEMBER 31, 2004
                                -----------     -----------     -----------     -----------
                                  SHARES           AMOUNT         SHARES           AMOUNT
                                  ------           ------         ------           ------
<S>                                 <C>         <C>                 <C>         <C>
CLASS A SHARES:
   Proceeds from shares sold         47,947     $ 1,296,984         154,717     $ 3,972,093
   Reinvested dividends and
      distributions ........             --              --              --              --
   Cost of shares redeemed .        (45,191)     (1,218,306)        (78,544)     (1,999,023)
                                -----------     -----------     -----------     -----------
      Net change ...........          2,756          78,678          76,173       1,973,070
                                -----------     -----------     -----------     -----------
CLASS C SHARES:
   Proceeds from shares sold         10,081         254,759          32,243         783,083
   Reinvested dividends and
      distributions ........             --              --              --              --
   Cost of shares redeemed .        (13,792)       (352,244)        (24,862)       (605,856)
                                -----------     -----------     -----------     -----------
      Net change ...........         (3,711)        (97,485)          7,381         177,227
                                -----------     -----------     -----------     -----------
CLASS Y SHARES:
   Proceeds from shares sold         49,700       1,390,437           7,124         186,064
   Reinvested dividends and
      distributions ........             --              --              --              --
   Cost of shares redeemed .        (47,546)     (1,330,947)         (4,003)       (104,265)
                                -----------     -----------     -----------     -----------
      Net change ...........          2,154          59,490           3,121          81,799
                                -----------     -----------     -----------     -----------
Total transactions in Fund
   shares ..................          1,199     $    40,683          86,675     $ 2,232,096
                                ===========     ===========     ===========     ===========
</TABLE>



<PAGE>

b)    SHORT-TERM TRADING REDEMPTION FEE: The Fund and the Distributor may reject
      any order for the purchase of shares,  on a temporary or permanent  basis,
      from investors  exhibiting a pattern of frequent or short-term  trading in
      Fund shares.  In addition,  the Fund imposes a redemption  fee of 2.00% of
      the shares'  redemption value on any redemption of Class A Shares on which
      a sales  charge is not  imposed  or of Class Y Shares,  if the  redemption
      occurs  within 120 days of purchase.  The fee will be paid to the Fund and
      is designed to offset the costs to the Fund caused by  short-term  trading
      in Fund  shares.  The fee will not apply to shares sold under an Automatic
      Withdrawal Plan, or sold due to the shareholder's death or disability. For
      the six months ended June 30, 2005, fees collected did not have a material
      effect on the financial highlights.

8. INCOME TAX INFORMATION AND DISTRIBUTIONS

      The Fund declares annual distributions to shareholders from net investment
income,  if any, and from net realized capital gains, if any.  Distributions are
recorded by the Fund on the  ex-dividend  date and paid in additional  shares at
the net asset value per share,  in cash,  or in a  combination  of both,  at the
shareholder's  option.  Dividends from net investment  income and  distributions
from realized gains from  investment  transactions  are determined in accordance
with Federal income tax regulations, which may differ from investment income and
realized gains determined under generally accepted accounting principles.  These
"book/tax"  differences are either considered  temporary or permanent in nature.
To the extent  these  differences  are  permanent  in nature,  such  amounts are
reclassified  within  the  capital  accounts  based on their  federal  tax-basis
treatment; temporary differences do not require reclassification.  Dividends and
distributions  which exceed net investment income and net realized capital gains
for  financial  reporting  purposes,  but not for tax  purposes  are reported as
dividends in excess of net investment  income or  distributions in excess of net
realized capital gains. To the extent they exceed net investment  income and net
realized  capital gains for tax purposes,  they are reported as distributions of
paid-in capital.  As of December 31, 2004 due to a net investment  loss,  Aquila
Rocky Mountain Equity Fund reclassified $115,803 from accumulated  undistributed
net investment  loss to paid-in  capital.  Net assets were not affected by these
changes.

      At  December  31,  2004,   the  Fund  had  a  capital  loss  carryover  of
approximately  $2,072,  which  expires on December 31, 2011.  This  carryover is
available to offset  future net gains on securities  transactions  to the extent
provided for in the Internal  Revenue Code and it is probable the gain so offset
will not be  distributed.  In addition,  the Fund  generated a net  post-October
capital loss of $344.

      As of December 31, 2004, the components of distributable earnings on a tax
basis were as follows:

        Accumulated net realized loss ......    $    (2,416)
        Unrealized appreciation ............      5,962,586
                                                -----------
                                                $ 5,960,170
                                                ===========

<PAGE>

9. CHANGE IN PRINCIPAL ACCOUNTANTS

      KPMG LLP was  previously  the principal  accountants  for the Aquila Rocky
Mountain  Equity Fund (the  "Fund").  On July 27, 2005 KPMG LLP  resigned as the
principal  accountants of the Fund and Tait, Weller and Baker was engaged as the
principal  accountants to audit the Fund's  financial  statements for the fiscal
year of 2005.  The  decision  was made by the  Audit  Committee  of the Board of
Trustees.

      The audit reports of KPMG LLP on the Fund's financial statements as of and
for the years  ended  December  31,  2004 and 2003 did not  contain  an  adverse
opinion or  disclaimer  of opinion,  nor were they  qualified  or modified as to
uncertainty, audit scope, or accounting principles.

      In connection  with the audits of the two fiscal years ended  December 31,
2004 and 2003 and the subsequent  interim  period  through July 27, 2005,  there
were no  reportable  events  or  disagreements  with  KPMG LLP on any  matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures,  which disagreements if not resolved to the satisfaction of
KPMG LLP would have  caused  them to make  reference  in  connection  with their
opinion to the subject matter of the disagreements.

<PAGE>

                       AQUILA ROCKY MOUNTAIN EQUITY FUND
                              FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
                                                                                   CLASS A
                                              ----------------------------------------------------------------------------
                                              SIX MONTHS
                                                 ENDED                            YEAR ENDED DECEMBER 31,
                                                6/30/05        -----------------------------------------------------------
                                              (UNAUDITED)        2004         2003         2002         2001         2000
                                              -----------      -------      -------      -------      -------      -------
<S>                                             <C>            <C>          <C>          <C>          <C>          <C>
Net asset value, beginning of period .......    $ 27.93        $ 24.92      $ 17.74      $ 20.96      $ 19.64      $ 19.96
                                                -------        -------      -------      -------      -------      -------
Income (loss) from investment operations:
    Net investment income (loss) + .........      (0.07)         (0.17)       (0.16)       (0.15)       (0.07)       (0.03)
    Net gain (loss) on securities (both
       realized and unrealized) ............      (0.17)          3.18         7.34        (3.07)        1.58        (0.09)
                                                -------        -------      -------      -------      -------      -------
    Total from investment operations .......      (0.24)          3.01         7.18        (3.22)        1.51        (0.12)
                                                -------        -------      -------      -------      -------      -------

Less distributions (note 8):
    Dividends from net investment income ...         --             --           --           --           --           --
    Distributions from capital gains .......         --             --           --           --        (0.19)       (0.20)
                                                -------        -------      -------      -------      -------      -------
    Total distributions ....................         --             --           --           --        (0.19)       (0.20)
                                                -------        -------      -------      -------      -------      -------
Net asset value, end of period .............    $ 27.69        $ 27.93      $ 24.92      $ 17.74      $ 20.96      $ 19.64

Total return (not reflecting sales charge) .      (0.86)%*       12.08%       40.47%      (15.36)%       7.73%       (0.55)%

Ratios/supplemental data
    Net assets, end of period (in thousands)    $13,681        $13,718      $10,345      $ 4,242      $ 2,403      $ 2,109
                                                =======        =======      =======      =======      =======      =======
    Ratio of expenses to average net assets        1.56%**        1.54%        1.50%        1.52%        1.60%        1.57%
    Ratio of net investment loss to average
       net assets ..........................      (0.56)%**      (0.72)%      (0.77)%      (0.82)%      (0.44)%      (0.20)%
    Portfolio turnover rate ................       5.26%*         8.38%        3.01%        1.81%       28.54%       29.27%

The expense and net investment income ratios without the effect of the waiver of fees and the expense reimbursement were:

    Ratio of expenses to average net assets        3.09%**        2.82%        3.25%        4.15%        4.81%        5.57%
    Ratio of net investment loss to average
       net assets ..........................      (2.10)%**      (1.99)%      (2.51)%      (3.45)%      (3.66)%      (4.20)%

The expense ratios after giving effect to the waivers, reimbursements and expense offset for uninvested cash balances were (note 3):

    Ratio of expenses to average net assets        1.50%**        1.50%        1.48%        1.50%        1.50%        1.51%
</TABLE>

----------
+     Per share amounts have been calculated using the monthly average shares
      method.
*     Not Annualized
**    Annualized

                See accompanying notes to financial statements.

<PAGE>

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
                                                                                CLASS C
                                              ----------------------------------------------------------------------
                                              SIX MONTHS
                                                 ENDED                         YEAR ENDED JUNE 30,
                                                6/30/05       ------------------------------------------------------
                                              (UNAUDITED)      2004        2003        2002        2001        2000
                                              -----------     ------      ------      ------      ------      ------
<S>                                             <C>           <C>         <C>         <C>         <C>         <C>
Net asset value, beginning of period .......    $26.31        $23.66      $16.96      $20.19      $19.07      $19.53
                                                ------        ------      ------      ------      ------      ------

Income (loss) from investment operations:
    Net investment income (loss) + .........     (0.16)        (0.35)      (0.30)      (0.28)      (0.21)      (0.17)
    Net gain (loss) on securities
       (both realized and unrealized) ......     (0.15)         3.00        7.00       (2.95)       1.52       (0.09)
                                                ------        ------      ------      ------      ------      ------
    Total from investment operations .......     (0.31)         2.65        6.70       (3.23)       1.31       (0.26)
                                                ------        ------      ------      ------      ------      ------

Less distributions (note 8):
    Distributions from net investment income        --            --          --          --          --          --
    Distributions from capital gains .......        --            --          --          --       (0.19)      (0.20)
                                                ------        ------      ------      ------      ------      ------
    Total distributions ....................        --            --          --          --       (0.19)      (0.20)
                                                ------        ------      ------      ------      ------      ------

Net asset value, end of period .............    $26.00        $26.31      $23.66      $16.96      $20.19      $19.07
                                                ======        ======      ======      ======      ======      ======
Total return (not reflecting sales charge) .     (1.18)%*      11.20%      39.50%     (16.00)%      6.91%      (1.28)%

Ratios/supplemental data
    Net assets, end of period
       (in thousands) ......................    $2,112        $2,235      $1,835      $  858      $  372      $  242
    Ratio of expenses to average net assets       2.31%**       2.29%       2.26%       2.26%       2.34%       2.29%
    Ratio of net investment income (loss)
       to average net assets ...............     (1.31)%**     (1.47)%     (1.53)%     (1.56)%     (1.23)%     (0.94)%

    Portfolio turnover rate ................      5.26%*        8.38%       3.01%       1.81%      28.54%      29.27%

The expense and net investment income ratios without the effect of the waiver of fees and the expense reimbursement were (note 3):

    Ratio of expenses to average net assets       3.84%**       3.56%       4.02%       4.95%       5.52%       6.32%
    Ratio of net investment loss to
       average net assets ..................     (2.85)%**     (2.74)%     (3.29)%     (4.25)%     (4.40)%     (4.97)%

The expense ratios after giving effect to the waivers, reimbursements and expense offset for uninvested cash balances were:

    Ratio of expenses to average net assets       2.25%**       2.25%       2.24%       2.25%       2.25%       2.23%

<CAPTION>
                                                                                CLASS Y
                                              ----------------------------------------------------------------------
                                              SIX MONTHS
                                                 ENDED                         YEAR ENDED JUNE 30,
                                                6/30/05       ------------------------------------------------------
                                              (UNAUDITED)      2004        2003        2002        2001        2000
                                              -----------     ------      ------      ------      ------      ------
<S>                                             <C>           <C>         <C>         <C>         <C>         <C>
Net asset value, beginning of period .......    $28.45        $25.32      $17.97      $21.19      $19.81      $20.07
                                                ------        ------      ------      ------      ------      ------

Income (loss) from investment operations:
    Net investment income (loss) + .........     (0.04)        (0.11)      (0.10)      (0.10)      (0.02)       0.03
    Net gain (loss) on securities
       (both realized and unrealized) ......     (0.16)         3.24        7.45       (3.12)       1.59       (0.09)
                                                ------        ------      ------      ------      ------      ------
    Total from investment operations .......     (0.20)         3.13        7.35       (3.22)       1.57       (0.06)
                                                ------        ------      ------      ------      ------      ------

Less distributions (note 8):
    Distributions from net investment income        --            --          --          --          --          --
    Distributions from capital gains .......        --            --          --          --       (0.19)     (0.20))
                                                ------        ------      ------      ------      ------      ------
    Total distributions ....................        --            --          --          --       (0.19)      (0.20)
                                                ------        ------      ------      ------      ------      ------

Net asset value, end of period .............    $28.25        $28.45      $25.32      $17.97      $21.19      $19.81
                                                ======        ======      ======      ======      ======      ======
Total return (not reflecting sales charge) .     (0.70)%*      12.36%      40.90%     (15.20)%      7.97%      (0.25)%

Ratios/supplemental data
    Net assets, end of period
       (in thousands) ......................    $1,711        $1,661      $1,400      $  918      $1,040      $  962
    Ratio of expenses to average net assets       1.31%**       1.29%       1.25%       1.26%       1.35%       1.29%
    Ratio of net investment income (loss)
       to average net assets ...............     (0.32)%**     (0.47)%     (0.51)%     (0.56%)     (0.18)%      0.06%

    Portfolio turnover rate ................      5.26%*        8.38%       3.01%       1.81%      28.54%      29.27%

The expense and net investment income ratios without the effect of the waiver of fees and the expense reimbursement were (note 3):

    Ratio of expenses to average net assets       2.84%**       2.56%       3.05%       3.87%       4.59%       5.32%
    Ratio of net investment loss to
       average net assets ..................     (1.86)%**     (1.75)%     (2.32)%     (3.16)%     (3.42)%     (3.96)%

The expense ratios after giving effect to the waivers, reimbursements and expense offset for uninvested cash balances were:

    Ratio of expenses to average net assets       1.25%**       1.25%       1.23%       1.25%       1.25%       1.23%
</TABLE>

----------
+     Per share amounts have been calculated using the monthly average shares
      method.
*     Not annualized
**    Annualized

                See accompanying notes to financial statements.

<PAGE>

ANALYSIS OF EXPENSES (UNAUDITED)

      As a  shareholder  of the Fund,  you may  incur  two  types of costs:  (1)
transaction  costs,  including  front-end  sales charges with respect to Class A
shares or contingent  deferred  sales  charges  ("CDSC") with respect to Class C
shares; and (2) ongoing costs,  including  management fees;  distribution and/or
service (12b-1) fees; and other Fund expenses.  The tables below are intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare  these  costs with the ongoing  costs of  investing  in other  mutual
funds.

      The tables below are based on an investment of $1,000  invested on January
1, 2005 and held for the six months ended June 30, 2005.

ACTUAL EXPENSES

      This table  provides  information  about actual  account values and actual
expenses.  You may use the information provided in this table, together with the
amount you invested,  to estimate the expenses that you paid over the period. To
estimate the expenses you paid on your account, divide your ending account value
by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During the Period".

FOR THE SIX MONTHS ENDED JUNE 30, 2005

                       ACTUAL
                    TOTAL RETURN       BEGINNING       ENDING        EXPENSES
                      WITHOUT           ACCOUNT       ACCOUNT       PAID DURING
                  SALES CHARGES(1)       VALUE         VALUE       THE PERIOD(2)
--------------------------------------------------------------------------------
Class A               (0.86)%         $1,000.00       $991.40         $7.39
--------------------------------------------------------------------------------
Class C               (1.18)%         $1,000.00       $988.20         $11.08
--------------------------------------------------------------------------------
Class Y               (0.70)%         $1,000.00       $993.00         $6.10
--------------------------------------------------------------------------------

(1)   ASSUMES  REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS,  IF
      ANY,  AT NET  ASSET  VALUE  AND  DOES NOT  REFLECT  THE  DEDUCTION  OF THE
      APPLICABLE  SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE
      CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES.
      TOTAL RETURN IS NOT  ANNUALIZED,  AS IT MAY NOT BE  REPRESENTATIVE  OF THE
      TOTAL RETURN FOR THE YEAR.

(2)   EXPENSES ARE EQUAL TO THE  ANNUALIZED  EXPENSE  RATIO OF 1.50%,  2.25% AND
      1.25% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY,  MULTIPLIED BY
      THE  AVERAGE  ACCOUNT  VALUE OVER THE  PERIOD,  MULTIPLIED  BY 181/365 (TO
      REFLECT THE ONE-HALF YEAR PERIOD).

<PAGE>

ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED)

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

      The table below provides information about hypothetical account values and
hypothetical  expenses  based on the actual expense ratio and an assumed rate of
return of 5.00% per year before expenses, which is not the Fund's actual return.
The  hypothetical  account  values and  expenses may not be used to estimate the
actual ending account  balance or expenses you paid for the period.  You may use
the information provided in this table to compare the ongoing costs of investing
in the Fund and other mutual funds.  To do so,  compare this 5.00%  hypothetical
example relating to the Fund with the 5.00% hypothetical examples that appear in
the shareholder reports of other mutual funds.

      Please  note  that the  expenses  shown in the  table  below  are meant to
highlight  your ongoing costs only and do not reflect any  transactional  costs,
with respect to Class A shares.  The example  does not reflect the  deduction of
contingent  deferred  sales  charges  ("CDSC")  with  respect to Class C shares.
Therefore,  the table is useful in comparing  ongoing  costs only,  and will not
help you determine the relative total costs of owning different mutual funds. In
addition,  if these transaction costs were included,  your costs would have been
higher.

FOR THE SIX MONTHS ENDED JUNE 30, 2005

                   HYPOTHETICAL
                    ANNUALIZED        BEGINNING        ENDING       EXPENSES
                      TOTAL            ACCOUNT         ACCOUNT     PAID DURING
                     RETURN             VALUE           VALUE     THE PERIOD(1)
--------------------------------------------------------------------------------
Class A               5.00%           $1,000.00       $1,017.37       $7.49
--------------------------------------------------------------------------------
Class C               5.00%           $1,000.00       $1,013.65       $11.22
--------------------------------------------------------------------------------
Class Y               5.00%           $1,000.00       $1,018.61       $6.24
--------------------------------------------------------------------------------

(1)   EXPENSES ARE EQUAL TO THE  ANNUALIZED  EXPENSE  RATIO OF 1.50%,  2.25% AND
      1.25% FOR THE FUND'S CLASS A, C AND Y SHARES, RESPECTIVELY,  MULTIPLIED BY
      THE  AVERAGE  ACCOUNT  VALUE OVER THE  PERIOD,  MULTIPLIED  BY 181/365 (TO
      REFLECT THE ONE-HALF YEAR PERIOD).

<PAGE>

ADDITIONAL INFORMATION (UNAUDITED)

RENEWAL OF THE SUB-ADVISORY AND ADMINISTRATION AGREEMENT

      Renewal  until  June  30,  2006  of the  Sub-Advisory  and  Administration
Agreement  (the  "Sub-Advisory  Agreement")  between the Aquila  Rocky  Mountain
Equity Fund (the  "Fund") and the Manager was  approved by the Board of Trustees
and the  lndependent  Trustees in June,  2005. At a meeting  called and held for
that  purpose at which a majority of the  lndependent  Trustees  were present in
person, the following materials were considered:

      o     Copies of the agreements to be renewed;

      o     A term sheet describing the material terms of the agreements;

      o     The Annual Report of the Fund for the year ended December 31, 2004;

      o     A report by the Manager containing data about the performance of the
            Fund compared to various  benchmarks,  data about its fees, expenses
            and purchases and redemptions together with comparisons of such data
            with similar data about other  comparable  funds, as well as data as
            to the profitability of the Manager; and

      o     Quarterly  materials  reviewed  at  prior  meetings  on  the  Fund's
            performance, operations, portfolio and compliance.

      The Trustees  reviewed  materials  relevant to, and considered the factors
      set forth below.

THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE MANAGER.

      The Manager's  portfolio  management  operation with respect to the Fund's
investment  securities is based within the investment region. The Trustees noted
that the Manager  employed as  portfolio  manager for the Fund,  Ms.  Barbara S.
Walchli,  who focuses on approximately  300-400 Rocky  Mountain-based  companies
from which she selects investments for the Fund's portfolio.  Ms. Walchli, based
in Phoenix,  Arizona,  provides regional information regarding specific holdings
in the Fund's portfolio as well as economic and business developments within the
region.  The portfolio  manager has also been  available to and has met with the
brokerage and financial  planner  community and with  investors and  prospective
investors to provide them with information generally about the Fund's portfolio,
with which to assess the Fund as an investment opportunity.

      The Board  considered  that the Manager  provided  all  services the Board
deemed necessary or appropriate,  including the specific services that the Board
has determined  are required for the Fund,  given that its purpose is to provide
shareholders  with capital  appreciation  primarily  through investing in equity
securities  of companies  having a  significant  business  presence in the Rocky
Mountain region.

      The Board  concluded  that a commendable  quality of services was provided
and that the Fund would be well  served if they  continued.  Evaluation  of this
factor weighed in favor of renewal of the Sub-Advisory Agreement.

THE INVESTMENT PERFORMANCE OF THE FUND AND THE MANAGER.

      The Board  determined it appropriate  to consider the Fund's  performance.
The Board  reviewed  each  aspect of the Fund's  performance  and  compared  its
performance  with that of  various  benchmark  indices.  It was  noted  that the
materials  provided  by the Manager  indicated  that  compared to the  benchmark
indices, the Fund has had investment performance that is comparable

<PAGE>

to that of the benchmarks  for one-,  three-,  five- and ten-year  periods ended
March 31, 2005.  The Board  considered  these results to be consistent  with the
purposes of the Fund.

      The Board  concluded that the  performance of the Fund, in light of market
conditions,  was  satisfactory.  Evaluation  of  this  factor  indicated  to the
Trustees that renewal of the Sub-Advisory Agreement would be appropriate.

THE COSTS OF THE  SERVICES  TO BE  PROVIDED  AND  PROFITS TO BE  REALIZED BY THE
MANAGER AND ITS AFFILIATES AND THE RELATIONSHIP WITH THE FUND.

      The information provided in connection with renewal contained expense data
for the Fund and a peer group selected by a detailed screening process which was
provided to the Trustees for their review and  discussion.  The  materials  also
showed the profitability to the Manager of its services to the Fund.

      The Board  compared  the expense and fee data with  respect to the Fund to
similar data about other funds that it found to be relevant. The Board concluded
that  the  expenses  of the  Fund and the fees  paid  were  similar  to and were
reasonable as compared to those being paid by the peer group.

      The Board noted that the entire  sub-advisory fee had been waived,  except
for  $26,572.  Additionally,  it was noted that the  Manager  had  contractually
undertaken  to waive  fees  and/or  reimburse  Fund  expenses  during the period
January 1, 2004 through  December  31, 2004 so that the total Fund  expenses did
not  exceed  1.50% for Class A  Shares,  2.25% for Class C Shares  and 1.25% for
Class Y Shares.

      The Board considered that the foregoing  indicated the  appropriateness of
the costs of the services to the Fund, which was being well managed as indicated
by the factors considered previously.

      The Board further  concluded that the profitability to the Manager and the
Distributor  did not argue  against  approval  of the fees to be paid  under the
Sub-Advisory  Agreement.   (In  this  connection,   the  Board  noted  that  the
Distributor did not derive profits from its relationship with the Fund.)

THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUND GROWS.

      The Fund has in place  breakpoints  in the  management  fee which would be
realized as the Fund grows. For its services, the Manager is entitled to receive
a fee which is payable monthly and computed as of the close of business each day
on the net assets of the Fund at the following annual rates;  1.50% on the first
$5  million;  1.20% on the next $35  million  and 0.90% on the  excess  over $50
million.

      Evaluation  of this factor  indicated  to the Board that the  Sub-Advisory
Agreement should be renewed at this time.

BENEFITS  DERIVED OR TO BE DERIVED BY THE MANAGER AND ITS AFFILIATES  FROM THEIR
RELATIONSHIPS WITH THE FUND.

      The Board observed that, as is generally true of most fund complexes,  the
Manager and its affiliates,  by providing services to a number of funds or other
investment  clients  including the Fund, were able to spread costs as they would
otherwise be unable to do. The Board noted that while that produces efficiencies
and increased  profitability  for the Manager and its affiliates,  it also makes
their  services  available to the Fund at  favorable  levels of quality and cost
which are more advantageous to the Fund than would otherwise have been possible.

<PAGE>

--------------------------------------------------------------------------------

INFORMATION AVAILABLE (UNAUDITED)

      Much of the  information  that the  funds in the  Aquilasm  Group of Funds
produce is automatically sent to you and all other  shareholders.  Specifically,
you are  routinely  sent the entire list of  portfolio  securities  of your Fund
twice a year in the semi-annual and annual reports you receive. Additionally, we
prepare,  and have  available,  portfolio  listings at the end of each  quarter.
Whenever  you may be  interested  in seeing a listing of your  Fund's  portfolio
other   than  in  your   shareholder   reports,   please   check   our   website
(www.aquilafunds.com) or call us at 1-800-437-1020.

      The Fund additionally files a complete list of its portfolio holdings with
the SEC for the first and third  quarters of each fiscal year on Form N-Q. Forms
N-Q are available free of charge on the SEC website at www.sec.gov. You may also
review  or,  for a fee,  copy the forms at the SEC's  Public  Reference  Room in
Washington, DC or by calling 800-SEC-0330.

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Proxy Voting and  Procedures  of the Fund are  available  without  charge,  upon
request, by calling our toll free number  (1-800-437-1020).  This information is
also available at  http://www.aquilafunds.com/EquityFunds/armef/armefmain.htm or
on the SEC's Web site - www.sec.gov

--------------------------------------------------------------------------------

<PAGE>

FOUNDER

  AQUILA MANAGEMENT CORPORATION

MANAGER

  AQUILA INVESTMENT MANAGEMENT LLC
  380 Madison Avenue, Suite 2300
  New York, New York 10017

BOARD OF TRUSTEES

  Tucker Hart Adams, Chair
  Lacy B. Herrmann
  Arthur K. Carlson
  Gary C. Cornia
  Grady Gammage, Jr.
  Diana P. Herrmann

OFFICERS

  Diana P. Herrmann, President
  Barbara S. Walchli, Senior Vice President and Portfolio Manager
  Marie E. Aro, Senior Vice President
  James M. McCullough, Senior Vice President
  Kimball L. Young, Senior Vice President
  Christine L. Neimeth, Vice President
  Emily T. Rae, Vice President
  Alan R. Stockman, Vice President
  M. Kayleen Willis, Vice President
  Robert W. Anderson, Chief Compliance Officer
  Joseph P. DiMaggio, Chief Financial Officer
  and Treasurer
  Edward M.W. Hines, Secretary

DISTRIBUTOR

  AQUILA DISTRIBUTORS, INC.
  380 Madison Avenue, Suite 2300
  New York, New York 10017

CUSTODIAN

  BANK ONE TRUST COMPANY, N.A.
  1111 Polaris Parkway
  Columbus, Ohio 43240

TRANSFER AND SHAREHOLDER SERVICING AGENT

  PFPC Inc.
  760 Moore Road
  King of Prussia, Pennsylvania 19406

Further  information  is  contained  in the  Prospectus,  which must  precede or
accompany this report.

ITEM 2.  CODE OF ETHICS.
		Not applicable.

ITEM 3.  AUDIT COMMITTEE FINANCIAL EXPERT.
		Not applicable.

ITEM 4.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
		Not applicable.

ITEM 5.  AUDIT COMMITTEE OF LISTED REGISTRANTS.
		Not applicable.

ITEM 6.  [RESERVED]

ITEM 7.  DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
         CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

905:   	Not applicable.

ITEM 8. [RESERVED]

ITEM 9.  CONTROLS AND PROCEDURES.

(a)  Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing of this report, the registrant's
chief financial and executive officers have concluded that the disclosure
controls and procedures of the registrant are appropriately designed to ensure
that information required to be disclosed in the registrant's reports that are
filed under the Securities Exchange Act of 1934 are accumulated and communicated
to registrant's management, including its principal executive officer(s) and
principal financial officer(s), to allow timely decisions regarding required
disclosure and is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms adopted by the Securities and Exchange
Commission.

(b)  There have been no significant changes in registrant's internal controls or
in other factors that could significantly affect registrant's internal controls
subsequent to the date of the most recent evaluation, including no significant
deficiencies or material weaknesses that required corrective action.

ITEM 10.  EXHIBITS.

(a)(1) Not applicable.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of
1940.

(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940.


SIGNATURES

	Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

CHURCHILL TAX-FREE TRUST


By:  /s/  Diana P. Herrmann
- ---------------------------------
President and Trustee
September 9,2005


By:  /s/  Joseph P. DiMaggio
- -----------------------------------
Chief Financial Officer and Treasurer
September 9, 2005


Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.


By:  /s/  Diana P. Herrmann
- ---------------------------------
Diana P. Herrmann
President and Trustee
September 9, 2005



By:  /s/  Joseph P. DiMaggio
- -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 9, 2005


CHURCHILL TAX-FREE TRUST

EXHIBIT INDEX

(a) (2) Certifications of principal executive officer
and principal financial officer as required by Rule 30a-2(a)
under the Investment Company Act of 1940.

(b) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.