File Nos. 33-13021 & 811-5086

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            SCHEDULE 14A INFORMATION

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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

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

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

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

                                 (212) 697-6666
                         (Registrant's Telephone Number)

               Payment of Filing Fee (Check the appropriate box):

[X] No fee required




<PAGE>


Important Notice
Please Read Immediately

Aquilasm Group of Funds

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


                           Notice of Annual Meeting of
                             Shareholders to Be Held
                                on April 28, 2006


To Shareholders of the Fund:

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

Place:            (a)      at Papa John's Cardinal Stadium
                           Brown & Williamson Room
                           2800 South Floyd Street
                           Louisville, Kentucky;

Time:             (b)      on Friday, April 28, 2006
                           at 10:00 a.m. Eastern Daylight Time;

Purposes:         (c)      for the following purposes:

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

                   (ii)  to ratify (that is, to approve) or reject the selection
                         of Tait, Weller & Baker LLP as the Fund's independent
                         registered public accounting firm for the fiscal year
                         ending December 31, 2006 (Proposal No. 2);

                   (iii) to act upon any other matters which may properly come
                         before the Meeting at the scheduled time and place or
                         any adjourned meeting or meetings.


Who Can
Vote What
Shares:           (d)      To vote at the Meeting, you must have been a
                           shareholder on the Fund's records at the close of
                           business on January 30, 2006 (the "record date").
                           Also, the number of shares of each of the Fund's
                           outstanding classes of shares that you held at that
                           time and the respective net asset values of each
                           class of shares at that time determine the number of
                           votes you may cast at the Meeting (or any adjourned
                           meeting or meetings).

                                            By order of the Board of Trustees,

                                            EDWARD M. W. HINES
                                            Secretary

March 24, 2006

Please Note:

If you do not expect to attend the Meeting, please vote by any of three ways: by
the Internet, by telephone or by completing the enclosed proxy card and
returning it in the accompanying stamped envelope. To avoid unnecessary expense
to the Fund, we request your cooperation in voting no matter how large or small
your holding may be.

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

                                 Proxy Statement

                                  Introduction

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


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

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

         This Notice and Proxy Statement are first being mailed on or about
March 24, 2006.

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


         (1) Proxy Card

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

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

         (2) Internet Voting

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

         (3) Telephone Voting

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


                               General Information

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

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

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

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

         On the record date, the Fund had four classes of shares outstanding.
All shareholders of the Fund are entitled to vote at the meeting. Each
shareholder on the record date is entitled to one vote for each dollar (and a
proportionate fractional vote for each fraction of a dollar) of net asset value
(determined as of the record date) represented by full and fractional shares of
any class held on the record date. On the record date, the net asset value per
share of each of the Fund's outstanding classes of shares was as follows: Class
A Shares, $10.59; Class C Shares, $10.59; Class Y Shares, $10.60; and Class I
Shares, $10.59. The meeting is expected to act only upon matters that affect the
Fund as a whole: the election of Trustees and the selection of an independent
registered public accounting firm. On matters that affect the Fund as a whole,
all shareholders of the Fund, including the shareholders of all classes of
shares of the Fund, are entitled to vote at the meeting.

         On the record date, the total number of shares outstanding for each
class of shares was as follows: Class A Shares, 20,984,832; Class C Shares,
687,618; Class Y Shares, 4,510,884 and Class I Shares, 732,899.

         On the record date, the following holders held 5% or more of a class of
the Fund's outstanding shares. On the basis of information received from the
institutional holders, the Fund's management believes that all of the shares
indicated are held by them for the benefit of clients.

Name and address               Number of shares            Percent of class
of the holder of
record

Institutional 5% shareholders::

SYAG
c/o Stock Yards Bank and Trust
P.O. Box 34290
Louisville, KY             2,869,932 Class A Shares          13.68%

MLPF&S for the sole
 benefit of its customers
4800 Deer Lake Dr East
Jacksonville, FL              91,912 Class C Shares          13.37%

UBS Financial Services Inc.
FBO Mrs. Frances Carletta Jewell
Mr. Kenneth Dewany Jewell JTWROS
6971 Mt. Washington Road
Taylorsville, KY              47,647 Class C Shares           6.93%

Glenview Trust Company
4969 US Highway 42
Suite 2000
Louisville, KY             3,040,417 Class Y Shares          67.40%

Bankdan
c/o Kentucky Trust Company
218 W. Main St.
Danville, KY                 442,002 Class Y Shares           9.80%

J.J.B. Hilliard Lyons
FBO Cardinal Aluminum Co.
501 S. 4th St.
Louisville, KY               250,509 Class Y Shares           5.55%

Danky & Co.
P.O. Box 28
Danville, KY                 249,067 Class Y Shares           5.52%

Pershing LLC
P.O. Box 2052
Jersey City, NJ              505,513 Class I Shares          68.97%

Strafe & Co.
FAO Charles Dishman Pciaa
P.O. Box 160
Westerville, OH               82,943 Class I Shares          11.32%


National Investor Services FBO
55 Water Street, 32nd Floor
New York, NY                  49,001 Class I Shares           6.69%


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


                              Election of Trustees
                                (Proposal No. 1)

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


         The following material includes information about each nominee and each
officer of the Fund. All shares of the Fund listed as owned by the Trustees are
Class A Shares unless indicated otherwise. All of the nominees are presently
Trustees and were elected by the shareholders in April, 2005. All nominees have
consented to serve if elected.


Nominees(1)
<TABLE>
<CAPTION>
<S>                    <C>                <C>                              <C>           <C>

                                                                          Number of
                                                                          Portfolios     Other Directorships
                        Positions Held                                    in Fund        Held by Trustee
                        with Fund and                                     Complex        (The position held is a
Name, Address(2) and    Length of      Principal Occupation(s)            Overseen       directorship unless
Date of Birth           Service(3)     During Past 5 Years                by Trustee     indicated otherwise.)
-------------           ----------     -------------------                ----------     ---------------------

Interested
Trustee(4)

Diana P. Herrmann       Trustee        Vice Chair and Chief Executive         11                   None
New York, NY            since 1995     Officer of Aquila Management
(02/25/58)              and            Corporation, Founder of the
                        President      Aquilasm Group of Funds(5) and
                        since 1999     parent of Aquila Investment
                                       Management LLC, Manager, since
                                       2004, President and Chief
                                       Operating Officer since 1997, a
                                       Director since 1984, Secretary
                                       since 1986 and previously its
                                       Executive Vice President, Senior
                                       Vice President or Vice
                                       President, 1986-1997; Chief
                                       Executive Officer and Vice Chair
                                       since 2004 and President, Chief
                                       Operating Officer and Manager of
                                       the Manager since 2003; Vice
                                       Chair, President, Executive Vice
                                       President or Senior Vice
                                       President of funds in the
                                       Aquilasm Group of Funds since
                                       1986; Director of the
                                       Distributor since 1997; trustee,
                                       Reserve Money-Market Funds,
                                       1999-2000 and Reserve Private
                                       Equity Series, 1998-2000;
                                       Governor, Investment Company
                                       Institute and head of its Small
                                       Funds Committee since 2004;
                                       active in charitable and
                                       volunteer organizations.

Non-interested
Trustees

Thomas A.               Chair of the   Vice President of Robinson,             2                    None
Christopher             Board of       Hughes & Christopher, C.P.A.s,
Danville, KY            Trustees       P.S.C., since 1977; President, A
(12/19/47)              since 2005     Good Place for Fun, Inc., a
                        and Trustee    sports facility, since 1987;
                        since 1992     currently or formerly active
                                       with various professional and
                                       community organizations.

Theodore T. Mason       Trustee        Executive Director, East Wind           8        Trustee, Pimco Advisors VIT.
New York, NY            since 1987     Power Partners LTD since 1994
(11/24/35)                             and Louisiana Power Partners,
                                       1999-2003; Treasurer, Alumni
                                       Association of SUNY Maritime
                                       College since 2004 (President,
                                       2002-2003, First Vice President,
                                       2000-2001, Second Vice
                                       President, 1998-2000) and
                                       director of the same
                                       organization since 1997;
                                       Director, STCM Management
                                       Company, Inc., 1973-2004; twice
                                       national officer of Naval
                                       Reserve Association, commanding
                                       officer of four naval reserve
                                       units and Captain, USNR (Ret);
                                       director, The Navy League of the
                                       United States New York Council
                                       since 2002; trustee, The
                                       Maritime Industry Museum at Fort
                                       Schuyler, 2000-2004; and the
                                       Maritime College at Fort
                                       Schuyler Foundation, Inc. since
                                       2000.

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

William J. Nightingale  Trustee        Retired; formerly Chairman,             2              Ring's End, Inc.
Rowayton, CT            since 1993     founder (1975) and Senior
(09/16/29)                             Advisor until 2000 of
                                       Nightingale & Associates,
                                       L.L.C., a general management
                                       consulting firm focusing on
                                       interim management,
                                       divestitures, turnaround of
                                       troubled companies, corporate
                                       restructuring and financial
                                       advisory services.

James R. Ramsey         Trustee        President, University of                2         Community Bank and Trust,
Louisville, KY          since 1987     Louisville since November 2002;                   Pikeville, KY and Texas
(11/14/48)                             Professor of Economics,                           Roadhouse Inc.
                                       University of Louisville,
                                       1999-present; Kentucky
                                       Governor's Senior Policy Advisor
                                       and State Budget Director,
                                       1999-2002; Vice Chancellor for
                                       Finance and Administration, the
                                       University of North Carolina at
                                       Chapel Hill, 1998 to 1999;
                                       previously Vice President for
                                       Finance and Administration at
                                       Western Kentucky University,
                                       State Budget Director for the
                                       Commonwealth of Kentucky, Chief
                                       State Economist and Executive
                                       Director for the Office of
                                       Financial Management and
                                       Economic Analysis for the
                                       Commonwealth of Kentucky,
                                       Adjunct Professor at the
                                       University of Kentucky,
                                       Associate Professor at Loyola
                                       University-New Orleans and
                                       Assistant Professor at Middle
                                       Tennessee State University.

Other Individuals

Trustees Emeritus(6)

Lacy B. Herrmann        Founder and    Founder and Chairman of the            N/A                    N/A
New York, NY            Chairman       Board, Aquila Management
(05/12/29)              Emeritus       Corporation, the sponsoring
                        since 2005,    organization and parent of the
                        Chairman of    Manager or Administrator and/or
                        the Board of   Adviser or Sub-Adviser to each
                        Trustees,      fund of the Aquilasm Group of
                        1987-2005      Funds; Chairman of the Manager
                                       or Administrator and/or Adviser
                                       or Sub-Adviser to each since
                                       2004; Founder and Chairman
                                       Emeritus of Hawaiian Tax-Free
                                       Trust, Pacific Capital Cash
                                       Assets Trust, Pacific Capital
                                       Tax-Free Cash Assets Trust,
                                       Pacific Capital U.S. Government
                                       Securities Cash Assets Trust,
                                       Tax-Free Fund of Colorado,
                                       Churchill Tax-Free Fund of
                                       Kentucky, Narragansett Insured
                                       Tax-Free Income Fund, Tax-Free
                                       Trust of Arizona, Tax-Free Trust
                                       of Oregon, Tax-Free Fund For
                                       Utah and Aquila Rocky Mountain
                                       Equity Fund; previously Chairman
                                       and a Trustee of each fund in
                                       the Aquilasm Group of Funds
                                       since its establishment until
                                       2004 or 2005; Director of the
                                       Distributor since 1981 and
                                       formerly Vice President or
                                       Secretary, 1981-1998; Trustee
                                       Emeritus, Brown University and
                                       the Hopkins School; active in
                                       university, school and
                                       charitable organizations.

Carroll F. Knicely      Trustee        President, Associated                  N/A                    N/A
Glasgow, KY             Emeritus       Publications Inc., Glasgow,
(12/08/28)              since 2004     Kentucky; director and member,
                                       Executive Board of West Kentucky
                                       Corporation and director and
                                       Secretary-Treasurer, South Gate
                                       Plaza, Inc. (owner and developer
                                       of shopping centers and
                                       commercial real estate);
                                       director, Vice President and
                                       Treasurer, Knicely and Knicely,
                                       Inc. (owner and developer of
                                       rental properties and
                                       residential real estate); former
                                       trustee, Cambellsville
                                       University; formerly Secretary
                                       of Commerce and Commissioner of
                                       Commerce, Commonwealth of
                                       Kentucky.
Officers

Charles E.              Executive      Executive Vice President of all        N/A                    N/A
Childs, III             Vice           funds in the Aquilasm Group of
New York, NY            President      Funds and the Manager and the
(04/01/57)              since 2003     Manager's parent since 2003;
                                       formerly Senior Vice President,
                                       corporate development, Vice
                                       President, Assistant Vice
                                       President and Associate of the
                                       Manager's parent since 1987;
                                       Senior Vice President, Vice
                                       President or Assistant Vice
                                       President of the Aquila
                                       Money-Market Funds, 1988-2003.

Thomas S. Albright      Senior Vice    Senior Vice President and              N/A                    N/A
Louisville, KY          President      Portfolio Manager, Churchill
(07/26/52)              since 2000     Tax-Free Fund of Kentucky since
                                       July 2000; Senior Vice
                                       President, Tax-Free Fund For
                                       Utah since 2003, Vice President,
                                       2001-2003 and co-portfolio
                                       manager since 2001; Vice
                                       President and backup portfolio
                                       manager, Tax-Free Trust of
                                       Arizona, since 2004; Vice
                                       President and Portfolio Manager,
                                       Banc One Investment Advisors,
                                       Inc., 1994-2000.

Jerry G. McGrew         Senior Vice    President of the Distributor           N/A                    N/A
New York, NY            President      since 1998, Registered Principal
(06/18/44)              since 1994     since 1993, Senior Vice
                                       President, 1997-1998 and Vice
                                       President, 1993-1997; Senior
                                       Vice President, Aquila Rocky
                                       Mountain Equity Fund and five
                                       Aquila Bond Funds since 1995;
                                       Vice President, Churchill Cash
                                       Reserves Trust, 1995-2001.

Todd W. Curtis          Vice           Senior Vice President and              N/A                    N/A
Phoenix, AZ             President      Portfolio Manager, Tax-Free
(06/08/49)              since 2004     Trust of Arizona, since August
                                       2004; Vice President and backup
                                       portfolio manager, Churchill
                                       Tax-Free Fund of Kentucky, since
                                       2004; Vice President and
                                       Portfolio Manager, Banc One
                                       Investment Advisors, Inc. and
                                       its predecessors, 1981-2004.


Jason T. McGrew         Vice           Vice President, Churchill              N/A                    N/A
Elizabethtown, KY       President      Tax-Free Fund of Kentucky since
(08/14/71)              since 2001     2001, Assistant Vice President,
                                       2000-2001; Investment Broker
                                       with Raymond James Financial
                                       Services 1999-2000 and with J.C.
                                       Bradford and Company 1997-1999;
                                       Associate Broker at Prudential
                                       Securities 1996-1997.

Robert W. Anderson      Chief          Chief Compliance Officer of the        N/A                    N/A
New York, NY            Compliance     Trust, the Manager and the
(08/23/40)              Officer        Distributor since 2004,
                        since 2004     Compliance Officer of the
                        and            Manager or its predecessor and
                        Assistant      current parent since 1998 and
                        Secretary      Assistant Secretary of the
                        since 2000     Aquilasm Group of Funds since
                                       2000.

Joseph P. DiMaggio      Chief          Chief Financial Officer of the         N/A                    N/A
New York, NY            Financial      Aquilasm Group of Funds since
(11/06/56)              Officer        2003 and Treasurer since 2000.
                        since 2003
                        and
                        Treasurer
                        since 2000

Edward M. W. Hines      Secretary      Partner, Hollyer Brady Barrett &       N/A                    N/A
New York, NY            since 1987     Hines LLP, legal counsel to the
(12/16/39)                             Fund, since 1989; Secretary of
                                       the Aquilasm Group of Funds.

John M. Herndon         Assistant      Assistant Secretary of the             N/A                    N/A
New York, NY            Secretary      Aquilasm Group of Funds since
(12/17/39)              since 1995     1995 and Vice President of the
                                       three Aquila Money-Market Funds
                                       since 1990; Vice President of
                                       the Manager or its predecessor
                                       and current parent since 1990.

Lori A. Vindigni        Assistant      Assistant Treasurer of the             N/A                    N/A
New York, NY            Treasurer      Aquilasm Group of Funds since
(11/02/66)              since 2000     2000; Assistant Vice President
                                       of the Manager or its
                                       predecessor and current parent
                                       since 1998; Fund Accountant for
                                       the Aquilasm Group of Funds,
                                       1995-1998.
</TABLE>

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

(2) The mailing address of each Trustee and officer is c/o Churchill Tax-Free
Fund of Kentucky, 380 Madison Avenue, New York, NY 10017.

(3) Each Trustee holds office until the next annual meeting of shareholders or
until his or her successor is elected and qualifies. The term of office of each
officer is one year.

(4) Ms. Herrmann is an interested person of the Fund as an officer of the Fund,
as a director, officer and shareholder of the Manager's corporate parent, as an
officer and Manager of the Manager, and as a shareholder and director of the
Distributor.

(5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila Bond Funds";
Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these
11 funds are called the "Aquilasm Group of Funds."

(6) A Trustee Emeritus may attend Board meetings but has no voting power.



                       Securities Holdings of the Trustees
                                (as of 12/31/05)

<TABLE>
<CAPTION>
<S>                             <C>                              <C>
                              Dollar Range of                Aggregate Dollar Range of
Name of                      Ownership in Churchill          Ownership in the Aquilasm Group of
Trustee                      Tax-Free Fund of Kentucky(1)    Funds Overseen by Trustee(1)
Interested Trustee

Diana P. Herrmann               B                               E(2)

Non-interested Trustees

Thomas A. Christopher           C                               D

Theodore T. Mason               C                               C

Anne J. Mills                   C                               D

William J. Nightingale          C                               C

James R. Ramsey                 D                               D

</TABLE>


(1)      A. None
         B. $1-$10,000
         C. $10,001-$50,000
         D. $50,001-$100,000
         E. over $100,000

(2)      As of January 9, 2006.

         None of the non-interested Trustees or their immediate family members
holds of record or beneficially any securities of the Manager or the
Distributor.

         The Fund does not currently pay fees to any of the Fund's officers or
to Trustees affiliated with the Manager. For its fiscal year ended December 31,
2005, the Fund paid a total of $132,112 in compensation and reimbursement of
expenses to the Trustees. No other compensation or remuneration of any type,
direct or contingent, was paid by the Fund to its Trustees.

         The Fund is one of the 11 funds in the Aquilasm Group of Funds, which
consist of tax-free municipal bond funds, money-market funds and an equity fund.
The following table lists the compensation of all nominees for Trustee who
received compensation from the Fund or from other funds in the Aquilasm Group of
Funds during the Fund's fiscal year. None of such Trustees has any pension or
retirement benefits from the Fund or any of the other funds in the Aquilasm
Group of Funds.


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

Thomas A.
Christopher       $24,862           $42,763                 2

Theodore T.
Mason             $18,400          $111,150                 8

Anne J.
Mills             $15,400           $82,750                 4

William J.
Nightingale       $16,212           $41,438                 2

James R.
Ramsey            $15,400           $29,850                 2


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

         The Fund's Manager is a wholly-owned subsidiary of Aquila Management
Corporation ("AMC"), founder of each fund in the Aquilasm Group of Funds. As of
February 28, 2006, these funds had aggregate assets of approximately $4.4
billion, of which approximately $2.4 billion consisted of assets of the tax-free
municipal bond funds. AMC's address is the same as that of the Manager. AMC is
controlled by Mr. Lacy B. Herrmann, through share ownership directly, through
two trusts and by his wife. During the fiscal year ended December 31, 2005, the
Fund paid $1,183,610 in management fees.

         During the fiscal year ended December 31, 2005, $346,088 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $19,970 was retained by the Distributor. With
respect to Class C shares, during the same period $60,095 was paid under Part II
of the Plan and $20,031 was paid under Part I of the Shareholder Services Plan.
Of these total payments of $80,126 the Distributor retained $15,900. With
respect to Class I Shares, during the same period $15,699 was paid under Part
III of the Plan and $11,775 was paid under Part II of the Shareholder Services
Plan. All of such payments were for compensation.

         The Distributor currently handles the distribution of the shares of the
funds in the Aquilasm Group of Funds, including the Fund. Under the Distribution
Agreement, the Distributor is responsible for the payment of certain printing
and distribution costs relating to prospectuses and reports as well as the costs
of supplemental sales literature, advertising and other promotional activities.
The shares of the Distributor are owned 24% by Diana P. Herrmann, 72% by Mr.
Herrmann and other members of his immediate family and the balance by employees
of Aquila Investment Management LLC.

Other Information on Trustees

         The Trustees have appointed a standing Audit Committee consisting of
all of the Trustees who are "independent" and are not "interested persons" of
the Fund, as that term is defined in the 1940 Act. The members of the Audit
Committee are Thomas A. Christopher, Theodore T. Mason, Anne J. Mills, William
J. Nightingale and James R. Ramsey. The Committee (i) selects the Fund's
independent registered public accounting firm (subject to shareholder
ratification); (ii) reviews the methods, scope and result of audits and the fees
charged; and (iii) reviews the adequacy of the Fund's internal accounting
procedures and controls. Selection of the independent registered public
accounting firm is also ratified by the Board of Trustees. The Audit Committee
held three meetings during the Fund's last fiscal year. The Board of Trustees
has adopted a written charter for the Audit Committee.

         During the Fund's last fiscal year, the Board of Trustees held four
meetings. Each current Trustee was present for at least 75% of the total number
of Board meetings and Audit Committee meetings (if such Trustee was a member of
that committee).

         The Fund's policy is that all Trustees who can do so attend the Annual
Meeting.

         The Fund has a Nominating Committee, consisting of all of the
Independent Trustees. The Nominating Committee held no meetings during the last
fiscal year. The committee will consider nominees recommended by the
shareholders who may send recommendations to the committee in care of the
Manager at 380 Madison Avenue, New York, NY 10017. The charter of the Nominating
Committee is available on the Fund's website at www.aquilafunds.com.

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

                                 Vote Required

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


                            Ratification or Rejection
                           of Selection of Independent
                        Registered Public Accounting Firm
                                (Proposal No. 2)

         Tait, Weller & Baker LLP ("TWB") has been selected as the Fund's
independent registered public accounting firm for the fiscal year ending
December 31, 2006 by the Fund's Audit Committee. The selection has been ratified
by the Board of Trustees, including a majority of the Independent Trustees.

         TWB has concentrated its accounting practice primarily in the mutual
fund industry for more than 40 years and is one of the industry's largest
providers. TWB was selected by the Audit Committee to perform the audit for the
fiscal year ended December 31, 2005.

         KPMG LLP ("KPMG") had served as the Fund's independent registered
public accounting firm for all of the Fund's fiscal years from its inception
through its fiscal year ended 2004. KPMG resigned in mid-2005. KPMG's reports on
the Fund's financial statements, including those for the Fund's two most recent
fiscal years, contained no adverse opinion or disclaimer of opinion. No reports
were qualified or modified as to uncertainty, audit scope, or accounting
principles. Since inception and including the last two fiscal years and the
subsequent period through the date of its resignation, there were no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, and there were
no reportable events of the kinds required to be disclosed under regulations
applicable to proxy statements.

         The following table represents fees for professional audit services
rendered by TWB for the audit of the Fund's annual financial statements for the
fiscal year ended December 31, 2005 and those of KPMG for the audit of the
Fund's annual financial statements for the fiscal year ended December 31, 2004,
and fees billed for other services rendered by TWB and KPMG.


                                         2004             2005

     Audit Fees                         $20,700        $16,000

     Audit related fees                       0              0
                                        -------        -------

         Audit and audit related fees    20,700        $16,000


     Tax fees (1)                         8,350          3,000

     All other fees                           0              0
                                         ------         ------

         Total                          $29,050        $19,000
                                         ======         ======

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

         Neither TWB nor KPMG performed any services during the fiscal year for
the Fund's investment adviser (the Manager) or any entity controlling,
controlled by or under common control with the Manager that provides services to
the Fund.

         All audit and non-audit services performed by either TWB or KPMG on
behalf of the Fund or non-audit services performed on behalf of affiliated
entities within the investment company complex where such engagement relates
directly to the operations and financial reporting of the Fund are pre-approved
by the Audit Committee. Services to be considered between meetings of the
Committee are pre-approved by a selected member of the Committee in accordance
with applicable regulations and subject to additional procedures established by
the Committee.

         The Audit Committee reviewed all services performed and fees charged by
TWB and accepted its representation that it was independent with respect to its
audit of the Fund's financial statements for the year ended December 31, 2005.
The Audit Committee has reviewed all services to be performed and fees to be
charged by TWB and in recommending appointment of TWB for the fiscal year ending
December 31, 2006 has accepted its representation that it is independent.

         It is expected that representatives of TWB will not be present at the
meeting but representatives of the firm will be available should any matter
arise requiring their advice.


                                  Vote Required

         Approval requires the affirmative votes of a majority of the shares
present.


                              Shareholder Proposals

         Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under certain
conditions, be included in the Fund's proxy statement and proxy card for a
particular annual meeting. One of these conditions relates to the timely receipt
by the Fund of any such proposal. Under these rules, proposals submitted for
inclusion in the proxy material for the Fund's next annual meeting after the
meeting to which this Proxy Statement relates must be received by the Fund not
less than 120 days before the anniversary of the date of this Proxy Statement.
Accordingly, a shareholder proposal intended to be presented at the Fund's 2007
annual meeting must be received by the Fund by November 24, 2006 in order to be
included in the Fund's proxy material relating to that meeting. The date for
such submission could change, depending on the scheduled date for the next
annual meeting; if so, shareholders will be notified.

         The fact that the Fund receives a shareholder proposal in a timely
manner does not insure its inclusion in the Fund's proxy material, since there
are other requirements in the proxy rules relating to such inclusion.

         A shareholder wishing to provide notice of a proposal in the manner
prescribed by Rule 14a-4 (c)(1) under the Securities Exchange Act of 1934 must
submit written notice of the proposal to the Fund by February 7, 2007.


                                 Other Business

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

<page>


                                IMPORTANT NOTICE

                             PLEASE READ IMMEDIATELY

                       CHURCHILL TAX-FREE FUND OF KENTUCKY

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                          to be held on APRIL 28, 2006

                                 PROXY STATEMENT

<page>

                       CHURCHILL TAX-FREE FUND OF KENTUCKY
                      VOTE BY INTERNET OR TELEPHONE OR MAIL
                          24 HOURS A DAY, 7 DAYS A WEEK

INTERNET VOTING
www.proxyvote.com/aquila

To vote your shares by the Internet, contact the Fund at
www.proxyvote.com/aquila. Follow the simple instructions at the website, using
this proxy card as a guide. If you vote by the Internet, you need not return the
proxy card by mail.

TELEPHONE VOTING
1-877-587-0761

To vote your shares by telephone, call toll free 1-800-690-6903. Follow the
simple recorded instructions using this proxy card as a guide. If you vote by
phone, you need not return the proxy card by mail.

VOTE BY MAIL

You can vote your shares by completing and returning this proxy card. Please
mark this proxy, date and sign it below and return it promptly in the
accompanying envelope which requires no postage if mailed in the United States.


TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
                                             KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
                                           DETACH AND RETURN THIS PORTION ONLY

              THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.


CHURCHILL TAX-FREE FUND OF KENTUCKY

1. Election of Trustees Nominees:
01) Thomas A. Christopher; 02) Diana P. Herrmann*; 03) Theodore T. Mason; 04)
   Anne J. Mills; 05) William J. Nightingale; 06) James R. Ramsey

* interested Trustee


              For All       Withhold All     For All Except

               [  ]             [  ]            [  ]






INSTRUCTION: To withhold authority to vote for one or more (but not all)
nominees, mark "FOR ALL EXCEPT" and write the nominee number(s) and/ or name(s)
on the line below.

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


[sentences below bolded in printed form]

Management recommends a vote FOR all nominees listed above and FOR the proposal
listed below. The shares represented hereby will be voted as indicated at right
or FOR if no choice is indicated.


2. Action on selection of Tait, Weller & Baker LLP as independent registered
public accounting firm. (Proposal No. 2 in Proxy Statement)

  For   Against  Abstain

  [  ]    [  ]    [  ]

As to any other matter said proxies shall vote in accordance with their best
judgment.


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

PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY CARD. When signing
as a custodian, attorney, executor, administrator, trustee, guardian, etc.,
please sign your full title as such. Joint owners should each sign.

-----------------------------------------   ----
Signature(s) (PLEASE SIGN WITHIN THE BOX) Date

                                                   Yes    No

I plan to attend the annual meeting in Louisville.  [__] [__]


I plan to attend the outreach meeting in Lexington. [__] [__]



                             Aquilasm Group of Funds
                       CHURCHILL TAX-FREE FUND OF KENTUCKY


                 Proxy for Shareholder Meeting - April 28, 2006
               Proxy Solicited on Behalf of the Board of Trustees

     The shareholder(s) of Churchill Tax-Free Fund of Kentucky (the "Fund")
whose signature(s)appear(s) on the reverse does/do hereby appoint DIANA P.
HERRMANN, CHARLES E. CHILDS, III and EDWARD M. W. HINES, or any of them, as
attorneys and proxies of the undersigned, with full power of substitution, to
attend the Annual Meeting of Shareholders of the Fund to be held on Friday,
April 28, 2006 at Papa John's Cardinal Stadium, Brown & Williamson Room, 2800
South Floyd Street, Louisville, Kentucky, at 10:00 a.m. Eastern Daylight Time,
and at all adjournments thereof, and thereat to vote the shares held in the name
of the undersigned on the record date for said meeting on the matters listed on
the reverse side. Such shares are entitled to one vote for every dollar of net
asset value represented by the share balance printed on the reverse.

Please read the proxy statement prior to voting.

Annual Meeting Attendance - You are encouraged to attend the Annual Meeting of
Shareholders. If you can attend, please so indicate on the proxy card or e-mail
us at info@aquilafunds.com

Address Changes/Comments: -------------------------------
---------------------------------------------------------

(If you noted any Address Changes/Comments above, please mark corresponding box
on the reverse side.)

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