TAX-FREE TRUST OF OREGON

                 Supplement to the prospectus 
      for Class A and Class C shares dated April 5, 1996

The following material is added to "Highlights":

     Class A Shares and Class C Shares of the Trust are only offered for
sale in certain states. (See "How to Invest in the Trust.") If shares of the
Trust are sold outside those states the Trust may be required to redeem
them. If your state of residence is not Oregon, the dividends from the Trust
may be subject to income taxes of the state in which you reside.
Accordingly, you should consult your tax adviser before acquiring shares of
the Trust.

The following material is added to "How to Invest in the Trust":

     At the date of this supplement, Class A Shares and Class C Shares of
the Trust are available only in the following states: Oregon, Arizona,
California, Connecticut, District of Columbia, Florida, Hawaii, Idaho,
Illinois, Minnesota, Missouri, New Jersey, New York, Pensylvania, Texas
and Washington. If you do not reside in one of these states you should not
purchase shares of the Trust. If shares are sold outside of these states
the Trust can redeem them. Such a redemption may result in a loss to you and
may have tax consequences. In addition, if your state of residence is not
Oregon, the dividends from the Trust may be subject to income tax of the
state in which you reside. Accordingly, you should consult your tax adviser
before acquiring shares of the Trust.

       The date of this supplement is December 27, 1996

<PAGE>

                    Tax-Free Trust of Oregon
                 380 Madison Avenue, Suite 2300
                    New York, New York 10017
                   800-USA-OREG (800-872-6734)
                          212-697-6666

Prospectus
Class A Shares
Class C Shares                                      April 5, 1996

     The Trust is a mutual fund whose objective is to seek to
provide as high a level of current income exempt from Oregon and
regular Federal income taxes as is consistent with preservation of
capital by investing in municipal obligations which pay interest
exempt from Oregon State and Federal income taxes. These municipal
obligations must, at the time of purchase, either be rated within
the four highest credit ratings (considered as investment grade)
assigned by Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or, if unrated, be determined to be of comparable
quality by the Trust's Adviser, Qualivest Capital Management, Inc.,
a subsidiary of U.S. Bancorp.

     This Prospectus concisely states information about the Trust
that you should know before investing. A Statement of Additional
Information about the Trust (the "Additional Statement") dated
April 5, 1996, has been filed with the Securities and Exchange
Commission and is available without charge upon written request to
Administrative Data Management Corp., the Trust's Shareholder
Servicing Agent, at the address given below, or by calling the
telephone number(s) given below. The Additional Statement contains
information about the Trust and its management not included in this
Prospectus. The Additional Statement is incorporated by reference
in its entirety in this Prospectus. Only when you have read both
the Prospectus and the Additional Statement are all material facts
about the Trust available to you.

     Shares of the Trust are not deposits in, obligations of or
guaranteed or endorsed by, Qualivest Capital Management, Inc., (the
"Adviser"), United States National Bank of Oregon, any of their
affiliates or any other bank. Shares of the Trust are not insured
or guaranteed by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency or
government sponsored agency of the Federal Government or any State.


     An investment in the Trust involves investment risks,
including possible loss of the principal amount invested.

      For Purchase, Redemption or Account inquiries contact
The Trust's Transfer Agent: Administrative Data Management Corp.
           581 Main Street, Woodbridge, NJ 07095-1198
           Call 800-872-6735 toll free or 908-855-5731

           For General Inquiries & Yield Information,
           Call 800-872-6734 toll free or 212-697-6666

This Prospectus Should Be Read and Retained For Future Reference

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.


<PAGE>


                           HIGHLIGHTS

     Tax-Free Trust of Oregon, founded by Aquila Management
Corporation in 1985 and one of the Aquilasm Group of Funds, is an
open-end mutual fund which invests in tax-free municipal bonds, the
kind of obligations issued by the State of Oregon, its counties and
various other local authorities to finance such long-term projects
as schools, airports, roads, hospitals, water facilities and other
vital public purpose projects throughout Oregon. (See
"Introduction.")

     Tax-Free Income - The municipal obligations in which the Trust
invests pay interest which is exempt from both regular Federal and
State of Oregon income taxes. Dividends paid by the Trust from this
income are likewise free of both such taxes. It is, however,
possible that in certain circumstances a small portion of the
dividends paid by the Trust will be subject to income taxes. The
Federal alternative minimum tax may apply to some investors, but
its impact will be limited since not more than 20% of the Trust's
net assets can be invested in obligations paying interest which is
subject to this tax. The receipt of exempt-interest dividends from
the Trust may result in some portion of social security payments or
railroad retirement benefits being included in taxable income.
Capital gains distributions, if any, are taxable. (See "Dividend
and Tax Information.")

     Investment Grade - The Trust will acquire only those municipal
obligations which, at the time of purchase, are within the four
highest credit ratings assigned by Moody's Investors Service, Inc.
or Standard & Poor's Corporation, or are determined by the Adviser
to be of comparable quality. In general there are nine separate
credit ratings, ranging from the highest to the lowest credit
ratings for municipal obligations. Obligations within the top four
ratings are considered "investment grade," but those in the fourth
rating may have speculative characteristics as well. (See
"Investment of the Trust's Assets.")

     Initial Investment - You may open your account with any
purchase of $1,000 or more or by opening an Automatic Investment
Program which makes purchases of $50 or more each month. See the
Application, which is in the back of the Prospectus. (See "How to
Invest in the Trust," which includes applicable sales charge
information.) 

     Additional Investments - You may make additional investments
at any time and in any amount, directly or, if in an amount of $50
or more, through the convenience of having your investment
electronically transferred from your financial institution account
into the Trust by Automatic Investment or Telephone Investment.
(See "How to Invest in the Trust.")

     Alternative Purchase Plans - The Trust provides two
alternative ways for individuals to invest. (See "Alternative
Purchase Plans.") One way permits individual investors to pay
distribution and certain service charges principally at the time
they purchase shares; the other way permits investors to pay such
costs over a period of time, but without paying anything at time of
purchase, much as goods can be purchased on an installment plan.
For this purpose the Trust offers the following classes of shares,
which differ in their expense levels and sales charges:

          * Front-Payment Class Shares ("Class A Shares") are
          offered to anyone at net asset value plus a sales charge,
          paid at the time of purchase, at the maximum rate of 4.0%
          of the public offering price, with lower rates for larger
          purchases. (See "How to Purchase Class A Shares.") Class
          A Shares are subject to an asset retention service fee
          under the Trust's Distribution Plan at the rate of 0.15
          of 1% of the average annual net assets represented by the
          Class A Shares. (See "Distribution Plan.")

          *Level-Payment Class Shares ("Class C Shares") are
          offered to anyone at net asset value with no sales charge
          payable at the time of purchase but with a level charge
          for service and distribution fees for six years after the
          date of purchase at the aggregate annual rate of 1% of
          the average annual net assets of the Class C Shares. (See
          "Distribution Plan" and "Service Plan.") Six years after
          the date of purchase, Class C Shares are automatically
          converted to Class A Shares. In addition, Class C Shares
          are subject to a contingent deferred sales charge
          ("CDSC") if redeemed before they have been held for 12
          months from the date of purchase; this charge is 1%,
          calculated on the net asset value of the Class C Shares
          at the time of purchase or at redemption, whichever is
          less. There is no CDSC after Class C Shares have been
          held beyond the applicable period. (See "Alternative
          Purchase Plans," "Computation of the Holding Periods for
          Class C Shares" and "How to Purchase Class C Shares.")

     The Trust also issues Institutional Class Shares ("Class Y
Shares") that are sold only to certain institutional investors.
Class Y Shares are not offered by this Prospectus.

     Monthly Income - Dividends are declared daily and paid
monthly. At your choice, dividends are paid by check mailed to you,
directly deposited into your financial institution account or
automatically reinvested without sales charge in additional shares
of the Trust at the then-current net asset value. Specific classes
of shares will have different dividend amounts due to their
particular expense levels. (See "Dividend and Tax Information.")

     Many Different Issues - You have the advantages of a portfolio
which consists of over 195 issues with different maturities. (See
"Investment of the Trust's Assets.")

     Local Portfolio Management - Qualivest Capital Management,
Inc., a subsidiary of U.S. Bancorp ("Bancorp") and its subsidiary,
United States National Bank of Oregon ("USNB"), serves as the
Trust's Investment Adviser, providing experienced local
professional management. The Trust pays fees at a rate of 0.20 of
1% of average annual net assets to its Adviser and fees at the same
rate to its Administrator (for total fees at a rate of 0.40 of 1%
of average annual net assets). (See "Table of Expenses,"
"Distribution Plan" and "Management Arrangements.") Bancorp is a
$21 billion superregional financial services holding company
organized under the laws of Oregon in 1968. USNB, headquartered in
Portland, is a national banking association chartered in 1891.
Other services of Bancorp and its subsidiaries include consumer
financing, commercial finance, international banking, investment
advisory, insurance agency and credit life insurance services,
discount brokerage and venture capital. 

     Redemptions - Liquidity - You may redeem any amount of your
account on any business day at the next determined net asset value
by telephone, FAX or mail request, with proceeds being sent to a
predesignated financial institution, if you have elected Expedited
Redemption. Proceeds will be wired or transferred through the
facilities of the Automated Clearing House, wherever possible, upon
request, if in an amount of $1,000 or more, or will be mailed. For
these and other redemption procedures see "How to Redeem Your
Investment." There are no penalties or redemption fees for
redemption of Class A Shares. However, there is a contingent
deferred sales charge with respect to certain Class A Shares which
have been purchased in amounts of $1 million or more (see
"Purchases of $1 Million or More"). If you redeem Class C Shares
before you have held them for 12 months from the date of purchase
you will pay a Contingent Deferred Sales Charge ("CDSC") at the
rate of 1%. (See "Alternative Purchase Plans" -- "Class C Shares.") 

     Certain Stabilizing Measures - The Trust will employ such
traditional measures as varying maturities, upgrading credit
standards for portfolio purchases, broadening diversification and
increasing its position in cash, in an attempt to protect against
declines in the value of its investments and other market risks.
(See "Certain Stabilizing Measures.")

     Exchanges - You may exchange Class A or Class C Shares of the
Trust into corresponding classes of shares of other
Aquila-sponsored tax-free municipal bond mutual funds or an equity
fund. You may also exchange them into shares of the
Aquila-sponsored money market funds. The exchange prices will be
the respective net asset values of the shares. (See "Exchange
Privilege.") 

     Risks and Special Considerations - The share price, determined
on each business day, varies with the market prices of the Trust's
portfolio securities, which fluctuate with market conditions
including prevailing interest rates. Accordingly, the proceeds of
redemptions may be more or less than your original cost. (See
"Factors Which May Affect the Value of the Trust's Investments and
Their Yields.") The Trust's assets, being primarily or entirely
Oregon issues, are subject to economic and other conditions
affecting Oregon. (See "Risks and Special Considerations Regarding
Investment in Oregon Obligations.") Moreover, the Trust is
classified as a "non-diversified" investment company, because it
may choose to invest in the obligations of a relatively limited
number of issuers. (See "Investment of the Trust's Assets.") The
Trust may also, to a limited degree, buy and sell futures contracts
and options on futures contracts, although since inception the
Trust has not done so and has no present intention to do so. There
may be risks associated with these practices. (See "Certain
Stabilizing Measures.")

     Statements and Reports - You will receive statements of your
account monthly as well as each time you add to your account or
take money out. Additionally, you will receive a Semi-Annual Report
and an audited Annual Report.


<PAGE>

<TABLE>
<CAPTION>

                           TAX-FREE TRUST OF OREGON
                               TABLE OF EXPENSES

<S>                                                      <C>        <C>
                                                         Class A    Class C
Shareholder Transaction Expenses                         Shares     Shares

   Maximum Sales Charge Imposed on Purchases              4.00%      None
     (as a percentage of the offering price)
   Maximum Sales Charge Imposed on Reinvested Dividends   None       None
   Deferred Sales Charge                                  None(1)    1.00%(2)
   Redemption Fees                                        None       None
   Exchange Fee                                           None       None

Annual Trust Operating Expenses (3)
  (as a percentage of average net assets)

     Investment Advisory Fee                              0.20%      0.20%
     12b-1 Fee                                            0.15%      0.75%
     All other expenses (4)                               0.38%      0.63%
       Administration Fee                            0.20%     0.20%
       Service Fee                                   None      0.25%
       Other Expenses (4)                            0.18%     0.18%
     Total Trust Operating Expenses (4)                   0.73%      1.58%

Example (5)
You would pay the following expenses on a $1,000 investment, assuming 
a 5% annual return and redemption at the end of each time period:

<S>                           <C>       <C>       <C>       <C>
                              One       Three     Five      Ten
                              Year      Years     Years     Years

Class A Shares                $47       $62       $79       $127

Class C Shares
  With complete redemption
  at end of period            $26       $50       $86       $141 (6)
  With no redemption          $16       $50       $86       $141 (6)

<FN>
(1) Certain shares purchased in transactions of $1 million or more 
without a sales charge may be subject to a contingent deferred sales 
charge of up to 1% upon redemption during the first four years after 
purchase.  See "Purchases of $1 Million or More" on page 17.
</FN>

<FN>
(2) A contingent deferred sales 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.
</FN>

<FN>
(3) Estimated based upon amounts incurred by the Trust during its most 
recent fiscal year, restated to reflect current arrangements.  During 
that period, only Class A Shares were outstanding.
</FN>

<FN>
(4) Does not reflect a 0.02% expense offset in custodian fees received 
for uninvested cash balances.  Reflecting this offset, other expenses, 
all other expenses, and total Trust operating expenses for Class A 
Shares were 0.16%, 0.36% and 0.71%, respectively; for Class C Shares, 
these expenses would have been 0.16%, 0.61% and 1.56%, respectively.
</FN>

<FN>
(5) The expense example is based upon the above shareholder transaction 
expenses (in the case of Class A Shares, this includes a sales charge 
of $40 for a $1,000 investment) and annual Trust operating expenses.  
It is also based upon amounts at the beginning of each year which 
includes the prior year's assumed results.  A year's results consist 
of an assumed 5% annual return less total operating expenses; the 
expense ratio was applied to an assumed average balance (the year's 
starting investment plus one-half the year's results). Each figure 
represents the cumulative expenses so determined for the period specified.
</FN>

<FN>
(6) Six years after the date of purchase, Class C Shares are 
automatically converted to Class A Shares. 
</FN>

</TABLE>

THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST 
OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE 
SHOWN. THE SECURITIES AND EXCHANGE COMMISSION SPECIFIES THAT ALL
MUTUAL 
FUNDS USE THE 5% ANNUAL RATE OF RETURN FOR PURPOSES OF PREPARING
THE 
ABOVE EXAMPLE. THE EXAMPLE ALSO REFLECTS THE MAXIMUM SALES CHARGE.

(SEE "HOW TO INVEST IN THE TRUST").

The purpose of the above table is to assist the investor in 
understanding the various costs that an investor in the Trust will 
bear directly or indirectly. The assumed 5% annual return should not 
be interpreted as a prediction of an actual return, which may be 
higher or lower.


<PAGE>


<TABLE>
<CAPTION>

The following historical financial information applies only to 
shares of the Trust which have been designated Class A Shares, 
upon adoption of the class structure described in the Prospectus.  
Similar information does not exist for Class C Shares.

                             TAX-FREE TRUST OF OREGON
                               FINANCIAL HIGHLIGHTS
                FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

     The following table of Financial Highlights as it relates to the 
five years ended September 30, 1995 has been audited by KPMG Peat 
Marwick LLP,  independent auditors, whose report thereon is included 
in the Trust's financial statements contained in its Annual Report, 
which are incorporated by reference into the Additional Statement.  
The information provided in the table should be read in conjunction 
with the financial statments and related notes.  On April 23, 1990, 
Aquila Management Corporation, originally the Trust's Sub-Adviser and 
Administrator, became Administrator only.


                                     Year ended September 30,

                             1995      1994      1993     1992       1991
<S>                          <C>       <C>       <C>      <C>        <C>
Net Asset Value, Beginning
  of Period                  $10.20    $10.95    $10.48   $10.15     $9.67

Income from Investment
  Operations:                         
  Net investment income      0.55      0.56      0.58      0.65      0.62
  Net gain (loss) on
    securities (both
    realized and
    unrealized)              0.39      (0.75)    0.50      0.29      0.49

  Total from Investment
    Operations               0.94      (0.19)    1.08      0.94      1.11

Less Distributions:                                             
  Dividends from net
    investment income        (0.55)    (0.56)    (0.58)    (0.61)    (0.63)
  Distributions from
    capital gains            (0.04)      -       (0.03)      -         -

  Total Distributions        (0.59)    (0.56)    (0.61)    (0.61)    (0.63)

Net Asset Value, End of
  Period                     $10.55    $10.20    $10.95    $10.48    $10.15

Total Return (not
  reflecting sales load)     9.52%     (1.77)%   10.64%    9.51%     11.83%

Ratios/Supplemental Data
  Net Assets, End of 
    Period (in thousands)    $310,554  $316,317  $331,018  $249,953  $189,734 

  Ratio of Expenses to
     Average Net Assets      0.71%     0.68%     0.66%     0.66%     0.71%
  Ratio of Net Investment
    Income to Average Net
    Assets                   5.38%     5.28%     5.46%     5.87%     6.30%
Portfolio Turnover Rate      13%       11%       8%        11%       21%

Net investment income per share and the ratios of income and expenses to
average net assets before expense offset in custodian fees for uninvested 
cash balances would have been:

  Net Investment Income      $0.55     $0.56     $0.58     $0.65    $0.62
  Ratio of Expenses to
    Average Net Assets       0.73%     0.70%     0.68%     0.66%    0.73%
  Ratio of Net Investment
    Income to Average Net
    Assets                   5.37%     5.26%     5.44%     5.87%    6.28%


<CAPTION>                            
                             1990      1989      1988      1987      1986<F*>
                             <C>       <C>       <C>       <C>       <C>
                             $9.76     $9.67     $9.11     $9.85     $9.60    
                             0.66      0.73      0.61      0.65      0.17
                             (0.11)    0.01      0.60      (0.71)    0.25
                             0.55      0.74      1.21      (0.06)    0.42   
                             (0.64)    (0.65)    (0.65)    (0.68)    (0.17)
                               -         -         -         -        - 
                             (0.64)    (0.65)    (0.65)    (0.68)    (0.17)   
                             $9.67     $9.76     $9.67     $9.11     $9.85
                             5.76%     7.83%     13.66%    (0.59)%   4.06%<F1>
                             $140,713  $122,096  $102,361  $92,990   $36,117
                             0.71%     0.76%     0.80%     0.55%     0.61%<F2>
                             6.55%     6.61%     6.77%     6.88%     6.33%<F2>
                             25%       45%       24%       17%       None
                             $0.66     $0.73     $0.61     $0.62     $0.16
                             0.73%     0.78%     0.82%     0.83%     1.21%<F2>
                             6.53%     6.59%     6.75%     6.60%     5.73%<F2>

<FN>
<F*> For the period from June 16, 1986 (commencement of operations) to 
September 30, 1986.
</FN>

<FN>
<F1> Not annualized.
</FN> 

<FN>
<F2> Annualized.
</FN>

</TABLE>


<PAGE>


                          INTRODUCTION

     The Trust's shares are designed to be a suitable investment
for investors who seek income exempt from Oregon State and regular
Federal income taxes.

     You may invest in shares of the Trust as an alternative to
direct investments in Oregon Obligations, as defined below, which
may include obligations of certain non-Oregon issuers. The Trust
offers you the opportunity to keep assets fully invested in a
vehicle that provides a professionally managed portfolio of Oregon
Obligations which may, but not necessarily will, be more
diversified, higher yielding or more stable and more liquid than
you might be able to obtain on an individual basis by direct
purchase of Oregon Obligations. Through the convenience of a single
security consisting of shares of the Trust, you are also relieved
of the inconvenience associated with direct investments of fixed
denominations, including the selecting, purchasing, handling,
monitoring call provisions and safekeeping of Oregon Obligations.

     Oregon Obligations are a type of municipal obligation.
Municipal obligations are issued by or on behalf of states,
territories and possessions of the United States and their
political subdivisions, agencies and instrumentalities to obtain
funds for various public purposes. The two principal
classifications of municipal obligations are "notes" and "bonds."
Municipal notes are generally used to provide for short-term
capital needs and generally have maturities of one year or less
while municipal bonds have extended maturities. Municipal notes
include: project notes, which sometimes carry a U.S. Government
guarantee; tax anticipation notes; revenue anticipation notes; bond
anticipation notes; construction loan notes and floating and
variable rate demand notes. Municipal obligations include municipal
lease/purchase agreements which are similar to installment purchase
contracts for property or equipment. The purposes for which
municipal obligations such as bonds are issued include the
construction of a wide range of public facilities such as airports,
highways, bridges, schools, hospitals, housing, mass
transportation, streets and water and sewer works. Other public
purposes for which municipal obligations may be issued include the
refunding of outstanding obligations, the obtaining of funds for
general operating expenses and the obtaining of funds to lend to
other public institutions and facilities. The Trust is the only
active portfolio of the Cascades Trust.

                INVESTMENT OF THE TRUST'S ASSETS

     In seeking its objective of providing as high a level of
current income which is exempt from both Oregon State and regular
Federal income taxes as is consistent with the preservation of
capital, the Trust will invest in Oregon Obligations (as defined
below). There is no assurance that the Trust will achieve its
objective, which is a fundamental policy of the Trust. (See
"Investment Restrictions.")

     As used in the Prospectus and the Additional Statement, the
term "Oregon Obligations" means obligations, including those of
certain non-Oregon issuers, of any maturity which pay interest
which, in the opinion of bond counsel or other appropriate counsel,
is exempt from regular Federal income taxes and not subject to
Oregon income taxes. Although exempt from regular Federal income
tax, interest paid on certain types of Oregon Obligations, and
dividends which the Trust might pay from this interest, are
preference items as to the Federal alternative minimum tax; for
further information, see "Dividend and Tax Information." As a
fundamental policy, at least 80% of the Trust's net assets will be
invested in Oregon Obligations the income paid upon which will not
be subject to the alternative minimum tax; accordingly, the Trust
can invest up to 20% of its net assets in obligations which are
subject to the Federal alternative minimum tax. The Trust may
refrain entirely from purchasing these types of Oregon Obligations.
(See "Dividend and Tax Information.")

     The non-Oregon bonds or other obligations the interest on
which is exempt under present law from regular Federal and Oregon
income taxes are those issued by or under the authority of Guam,
the Northern Mariana Islands, Puerto Rico and the Virgin Islands.
The Trust will not purchase Oregon Obligations of non-Oregon
issuers unless Oregon Obligations of Oregon issuers of the desired
quality, maturity and interest rate are not available. As an
Oregon-oriented fund, at least 65% of the Trust's total assets will
be invested in Oregon Obligations of Oregon issuers. The Trust
invests only in Oregon Obligations and, possibly, in Futures and
options on Futures (see below) for protective (hedging) purposes.

     In general, there are nine separate credit ratings ranging
from the highest to the lowest quality standards for municipal
obligations. So that the Trust will have a portfolio of quality
oriented (investment grade) securities, the Oregon Obligations
which the Trust will purchase must, at the time of purchase, either
(i) be rated within the four highest credit ratings assigned by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P"); or (ii) if unrated, be determined to be of
comparable quality to municipal obligations so rated by Qualivest
Capital Management, Inc., the Trust's investment adviser (the
"Adviser"), subject to the direction and control of the Trust's
Board of Trustees. Municipal obligations rated in the fourth
highest credit rating are considered by such rating agencies to be
of medium quality and thus may present investment risks not present
in more highly rated obligations. Such bonds lack outstanding
investment characteristics and may in fact have speculative
characteristics as well; changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case for higher
grade bonds. If after purchase the rating of any rated Oregon
Obligation is downgraded such that it could not then be purchased
by the Trust, or, in the case of an unrated Oregon Obligation, if
the Adviser determines that the unrated obligation is no longer of
comparable quality to those rated obligations which the Trust may
purchase, it is the current policy of the Trust to cause any such
obligation to be sold as promptly thereafter as the Adviser in its
discretion determines to be consistent with the Trust's objectives;
such obligation remains in the Trust's portfolio until it is sold.
In addition, because a downgrade often results in a reduction in
the market price of a downgraded obligation, sale of such an
obligation may result in a loss. See Appendix A to the Additional
Statement for further information as to these ratings. The Trust
can purchase industrial development bonds only if they meet the
definition of Oregon Obligations, i.e., the interest on them is
exempt from Oregon State and regular Federal income taxes.

     The Trust is classified as a "non-diversified" investment
company under the Investment Company Act of 1940 (the "1940 Act").
The Trust also intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code (the "Code").
One of the tests for such qualification under the Code is, in
general, that at the end of each fiscal quarter of the Trust, at
least 50% of its assets must consist of (i) cash; and (ii)
securities which, as to any one issuer, do not exceed 5% of the
value of the Trust's assets. If the Trust had elected to register
under the 1940 Act as a "diversified" investment company, it would
have to meet the same test as to 75% of its assets. The Trust may
therefore not have as much diversification among securities, and
thus diversification of risk, as if it had made this election under
the 1940 Act. In general, the more the Trust invests in the
securities of specific issuers, the more the Trust is exposed to
risks associated with investments in those issuers. The Trust's
assets, being primarily or entirely Oregon issues, are accordingly
subject to economic and other conditions affecting Oregon. (See
"Risk Factors and Special Considerations Regarding Investment in
Oregon Obligations.")

Certain Stabilizing Measures

     The Trust will employ such traditional measures as varying
maturities, upgrading credit standards for portfolio purchases,
broadening diversification and increasing its position in cash and
cash equivalents in attempting to protect against declines in the
value of its investments and other market risks. There can,
however, be no assurance that these will be successful. Although
the Trust has no current intention of using futures and options, to
the limited degree described below, these may be used to attempt to
hedge against changes in the market price of the Trust's Oregon
Obligations caused by interest rate fluctuations. Futures and
options could also provide a hedge against increases in the cost of
securities the Trust intends to purchase.

     Although it does not currently do so, and since inception has
not done so, the Trust may buy and sell futures contracts relating
to indices on municipal bonds ("Municipal Bond Index Futures") and
to U.S. government securities ("U.S. Government Securities
Futures"); both kinds of futures contracts are "Futures." The Trust
may also write and purchase put and call options on Futures.

     As a matter of fundamental policy the Trust will not buy or
sell a Future or an option on a Future if thereafter more than 10%
of its net assets would be in initial or variation margin on such
Futures and options on them, and in premiums on such options. Under
an applicable regulatory rule, the Trust will not enter into
Futures or options for which the aggregate initial margins and
premiums paid for options exceed 5% of the fair market value of the
Trust's assets. (See the Additional Statement.)

     The primary risks associated with the use of Futures and
options are: (i) imperfect correlation between the change in the
market value of the securities held in the Trust's portfolio and
the prices of Futures or options purchased or sold by the Trust;
(ii) incorrect forecasts by the Adviser concerning interest rates
which may result in the hedge being ineffective; and (iii) possible
lack of a liquid secondary market for a Future or option; the
resulting inability to close a Futures or options position could
adversely affect the Trust's hedging ability. 

     For a hedge to be completely effective, the price change of
the hedging instrument should equal the price change of the
security being hedged. The risk of imperfect correlation of these
price changes is increased as the composition of the Trust's
portfolio is divergent from the debt securities underlying the
hedging instrument. To date, the Adviser has had no experience in
the use of Futures or options on them.

     The liquidity of a secondary market in a Future may be
adversely affected by "daily price fluctuation limits" established
by commodity exchanges which restrict the amount of change in the
contract price allowed during a single trading day. Thus, once a
daily limit is reached, no further trades may be entered into
beyond the limit, thereby preventing the liquidation of open
positions. Prices have in the past reached the daily limit on a
number of consecutive trading days. For further information about
Futures and options, see the Additional Statement.

     When and if the Trust determines to use Futures and options,
the Prospectus will be supplemented.

Floating and Variable Rate Demand Notes

     Floating and variable rate demand notes are tax-exempt
obligations which may have a stated maturity in excess of one year,
but permit the holder to demand payment of principal at any time,
or at specified intervals not exceeding one year, in each case upon
not more than 30 days' notice. The issuer of such notes normally
has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the note plus
accrued interest upon a specified number of days' notice to the
noteholders. The interest rate on a floating rate demand note is
based on a known lending rate, such as a bank's prime rate, and is
adjusted automatically each time such rate is adjusted. The
interest rate on a variable rate demand note is adjusted
automatically at specified intervals.

Participation Interests

     The Trust may purchase from financial institutions
participation interests in Oregon Obligations (such as industrial
development bonds and municipal lease/purchase agreements). A
participation interest gives the Trust an undivided interest in the
underlying Oregon Obligations in the proportion that the Trust's
participation interest bears to the total amount of the underlying
Oregon Obligations. All such participation interests must meet the
Trust's credit requirements. See "Limitation to 10% as to Certain
Investments."

When-Issued and Delayed Delivery Purchases

     The Trust may buy Oregon Obligations on a when-issued or
delayed delivery basis when it has the intention of acquiring them.
The Oregon Obligations so purchased are subject to market
fluctuation and no interest accrues to the Trust until delivery and
payment take place; their value at the delivery date may be less
than the purchase price. The Trust cannot enter into when-issued
commitments exceeding in the aggregate 15% of the market value of
the Trust's total assets, less liabilities other than the
obligations created by when-issued commitments. If the Trust
chooses to dispose of the right to acquire a when-issued obligation
prior to its acquisition, it could, as with the disposition of any
other portfolio holding, incur a gain or loss due to market
fluctuation; any such gain would be a taxable short-term gain. The
Trust places an amount of assets equal in value to the amount due
on the settlement date for the when-issued or delayed delivery
securities being purchased in a segregated account with the
Custodian, which is marked to market every business day. See the
Additional Statement for further information.

Limitation to 10% as to Certain Investments

     The Trust cannot purchase Oregon Obligations that are not
readily marketable if thereafter more than 10% of its net assets
would consist of such investments. However, this 10% limit does not
include any Oregon Obligations as to which the Trust can exercise
the right to demand payment in full within three days and as to
which there is a secondary market. Floating and variable rate
demand notes and participation interests (including municipal
lease/purchase obligations) are considered illiquid unless
determined by the Board of Trustees to be readily marketable. (See
the Additional Statement.)

Current Policy as to Certain Obligations

     The Trust will not invest more than 25% of its total assets in
(i) Oregon Obligations the interest on which is paid from  revenues
of similar type projects or (ii) industrial development bonds,
unless this Prospectus and/or the Additional Statement are
supplemented to reflect the change and to give additional
information.

Factors Which May Affect the Value of the Trust's
Investments and Their Yields

     The value of the Oregon Obligations in which the Trust invests
will fluctuate depending in large part on changes in prevailing
interest rates. If the prevailing interest rates go up after the
Trust buys Oregon Obligations, the value of these obligations will
normally go down; if these rates go down, the value of these
obligations will normally go up. Changes in value and yield based
on changes in prevailing interest rates may have different effects
on short-term Oregon Obligations than on long-term obligations.
Long-term obligations (which often have higher yields) may
fluctuate in value more than short-term ones. For this reason, the
Trust may, to achieve a defensive position, shorten the average
maturity of its portfolio.

Risk Factors and Special Considerations Regarding
Investment in Oregon Obligations

     The following is a discussion of the general factors that
might influence the ability of Oregon issuers to repay principal
and interest when due on the Oregon Obligations contained in the
portfolio of the Trust. Such information is derived from sources
that are generally available to investors and is believed by the
Trust to be accurate, but has not been independently verified and
may not be complete.

     Oregon's economy is substantially diversified among many
industries. The lumber and forest products industry, an industry
highly susceptible to recessionary cycles, has long been a
significant component of the State's economy. However, a political
environment supporting the reduction of logging on public lands has
taken its toll on this industry and the pursuit of protection for
the spotted owl and wild salmon runs have severely curtailed
logging in certain areas.

     As employment in the lumber and forest products industries has
declined, other industries have been picking up the slack. 1994 saw
many manufacturing plants lured to the State. The ultimate decision
of whether to locate in the State depends on a company's ability to
secure property tax breaks from the county in which its plant will
be located. A relatively new State property tax exemption program
grants counties the right to offer property tax breaks for new
plants costing more than $100 million to build. The principal
sources of State tax revenues are the personal income and corporate
income taxes; Oregon does not have a sales tax. Recent attempts to
institute a sales tax have been unsuccessful. A recent attempt to
introduce a "transaction tax" was unsuccessful. As a result, State
tax revenues are particularly sensitive to economic recessions.

     In addition to general obligation bonds, the State and its
political subdivisions issue revenue obligations payable from
specific projects or sources, including lease rentals. There can be
no assurance that a material downturn in the State's economy, with
the resulting impact on the financial strength of State and local
entities, will not adversely affect the ability of obligors of the
obligations held in the Trust's portfolio to make the required
payments on these obligations, and consequently, the market value
of such obligations.

     Additionally, certain municipal securities held by the Trust
may rely in whole or in part for repayment on ad valorem property
taxes. There are existing limits under Oregon State law on the
issuance of bonds supported by such taxes. In recent years several
voter initiatives have sought to amend the State Constitution to
"freeze" or roll back such taxes. On November 6, 1990, Oregon
voters approved a property tax limitation measure. The adoption of
the tax limitation measure may have an adverse effect on the
general financial condition of cities, counties, school districts
and other districts and may in some cases impair their ability to
pay principal and interest on obligations. The tax limitation
measure does permit tax levies to pay interest and principal on
bonds issued on or before November 6, 1990, as well as indebtedness
authorized by the Oregon Constitution (bonds issued by the State of
Oregon under specific constitutional provisions), and general
obligation bonds approved by the voters for capital construction or
improvements. (See the Additional Statement for information about
the tax limitation measure.)

     At present, it is difficult to assess the impact of the tax
limitation measure, in part, because it will not be fully phased in
until 1995-1996. In addition, the effect of this measure is also
dependent on whether alternative revenue sources are obtained and,
if so, the type and amount of such revenues. The adoption of the
tax limitation measure may have an adverse effect on the general
financial condition of affected cities, counties, school districts
and other districts, and may, in some cases, impair their ability
to pay obligations other than general obligation bonds. In
addition, the adoption of the tax limitation measure will require
the Legislature to provide funds from its general fund to replace
tax revenues lost by the public school system through fiscal year
1995-96. This could have an adverse effect on the State's credit
rating, particularly if alternative revenue sources are not
obtained. Moreover, the tax limitation measure might contract the
overall size of the Oregon municipal bond market and might have
some adverse effect on the value of the Trust's portfolio. See the
Additional Statement.

     The Oregon Constitution reserves to the people of the State
initiative and referendum powers pursuant to which measures
designed to amend the State Constitution or enact legislation can
be placed on the statewide general election ballot for
consideration by the voters. Over the past decade Oregon has
witnessed increasing activity in the number of initiative petitions
that have qualified for statewide general elections. From the 1988
elections through those of 1994, both the number of such petitions
that qualified and the number of such petitions that were approved
by the voters have increased. It is not possible to predict what
petitions will qualify for submission to the voters in 1996 nor
which will be approved.

     There is a relatively inactive market for municipal bonds of
Oregon issuers other than the general obligations of the State
itself. Consequently, the market price of such other bonds may be
changeable. If the Trust were forced to sell a large volume of
these bonds for any reason, such as redemptions of a large number
of its shares, there is a risk that the large sale itself might
adversely affect the value of the Trust's portfolio.

                     INVESTMENT RESTRICTIONS

     The Trust has a number of policies about what it can and
cannot do. Certain of these policies, identified in the Prospectus
and Additional Statement as "fundamental policies," cannot be
changed unless the holders of a "majority," as defined in the 1940
Act, of the Trust's outstanding shares vote to change them. (See
the Additional Statement for a definition of such a majority.) All
other policies can be changed from time to time by the Board of
Trustees without shareholder approval. Some of the more important
of the Trust's fundamental policies, not otherwise identified in
the Prospectus, are set forth below; others are listed in the
Additional Statement.

1. The Trust invests only in certain limited securities.

     The Trust cannot buy any securities other than the Oregon
Obligations meeting the standards stated under "Investment of the
Trust's Assets"; the Trust can also purchase and sell Futures and
options on them within the limits there discussed.

2. The Trust has industry investment requirements.

     The Trust cannot buy the obligations of issuers in any one
industry if more than 25% of its total assets would then be
invested in securities of issuers of that industry; the Trust will
consider that a non-governmental user of facilities financed by
industrial development bonds is an issuer in an industry.

3. The Trust cannot make loans.

     The Trust can buy those Oregon Obligations which it is
permitted to buy (see "Investment of the Trust's Assets"); this is
investing, not making a loan. The Trust cannot lend its portfolio
securities.

4. The Trust can borrow only in limited amounts for special
purposes.

     The Trust can borrow from banks for temporary or emergency
purposes but only up to 10% of its total assets. It can mortgage or
pledge its assets only in connection with such borrowing and only
up to the lesser of the amounts borrowed or 5% of the value of its
total assets. However, this shall not prohibit margin arrangements
in connection with the purchase or sale of Municipal Bond Index
Futures, U.S. Government Securities Futures or options on them, or
the payment of premiums on those options. The Trust will not borrow
to purchase Oregon Obligations or to increase its income, but only
to meet redemptions so that it will not have to sell Oregon
Obligations to pay for redemptions. Interest on borrowings would
reduce the Trust's income. Except in connection with borrowings,
the Trust will not issue senior securities. The Trust will not
purchase any Oregon Obligations, Futures or options on Futures
while it has any outstanding borrowings which exceed 5% of the
value of its total assets.

                    NET ASSET VALUE PER SHARE

     The Trust's net asset value and offering price per share of
each class are determined as of 4:00 p.m. New York time on each day
that the New York Stock Exchange is open (a "business day"). The
net asset value per share is determined by dividing the value of
the net assets of the Trust (i.e., the value of the assets less
liabilities) by the total number of shares outstanding.
Determination of the value of the Trust's assets is subject to the
direction and control of the Trust's Board of Trustees. In general,
it is based on market value, except that Oregon Obligations
maturing in 60 days or less are generally valued at amortized cost;
see the Additional Statement for further information.

                   ALTERNATIVE PURCHASE PLANS

     In this Prospectus, the Trust provides individual investors
with the option of two alternative ways to purchase shares, through
two separate classes of shares. All classes represent interests in
the same portfolio of Oregon Obligations. The primary distinction
among the classes of shares offered to individuals lies in their
sales charge structures and ongoing expenses, as described below.
You should choose the class that best suits your own circumstances
and needs.

     If you choose to purchase Class A Shares you will pay the
applicable sales charge at the time of your purchase. By purchasing
Class C Shares, you will pay a sales charge over a period of six
years after purchase but without paying anything at time of
purchase, much as goods can be purchased on an installment plan.
You are subject to a conditional deferred sales charge, described
below, but only if you redeem your Class C Shares before they have
been held 12 months from your purchase. (See "Computation of
Holding Periods for Class C Shares.") 

          Class A Shares, "Front-Payment Class Shares," are offered
          to anyone at net asset value plus a sales charge, paid at
          the time of purchase, at the maximum rate of 4.0% of the
          public offering price, with lower rates for larger
          purchases. Under the Trust's Distribution Plan, Class A
          Shares are subject to a fee of 0.15 of 1% of the average
          annual net assets of the Class A Shares. When you
          purchase Class A Shares, the amount of your investment is
          reduced by the applicable sales charge. Certain Class A
          Shares purchased in transactions of $1 million or more
          are subject to a contingent deferred sales charge. (See
          "Purchases of $1 Million or More.")

          Class C Shares, "Level-Payment Class Shares," are offered
          to anyone at net asset value with no sales charge payable
          at purchase but with a level charge for distribution fees
          and service fees for six years after the date of purchase
          at the aggregate annual rate of 1% of the average annual
          net assets of the Class C Shares. (See "Distribution
          Plan" and "Shareholder Services Plan.") Six years after
          the date of purchase, Class C Shares, including Class C
          Shares acquired in exchange for other Class C Shares
          under the Exchange Privilege (see "Exchange Privilege"),
          are automatically converted to Class A Shares. In
          addition, if you redeem Class C Shares before you have
          held them for 12 months from the date of purchase you
          will pay a contingent deferred sales charge ("CDSC")  at
          the rate of 1%, calculated on the net asset value of the
          Class C Shares redeemed at the time of purchase or of
          redemption, whichever is less. The amount of any CDSC
          will be paid to the Distributor. The CDSC does not apply
          to shares acquired through the reinvestment of dividends
          on Class C Shares or to any Class C Shares held for more
          than 12 months after purchase. In the Prospectus,
          12-month and six-year holding periods are considered
          modified by up to one month depending upon when during a
          month your purchase of such shares is made. (See
          "Computation of Holding Periods for Class C Shares" and
          "How to Purchase Class C Shares.") 

     In determining whether a CDSC is payable on a redemption of
Class C Shares, it will be assumed that the redemption is made
first of any shares acquired as dividends or distributions, second
of any Class C Shares you have held for more than 12 months from
the date of purchase and finally of those Class C Shares as to
which the CDSC is payable which you have held the longest. This
will result in your paying the lowest possible CDSC.

Computation of Holding Periods for Class C Shares

     For purposes of determining the holding period for Class C
Shares, all of your purchases made during a calendar month will be
deemed to have been made on the first business day of that month at
the average cost of all purchases made during that month. The
12-month CDSC holding period will end on the first business day of
the 12th calendar month after the date your purchase is deemed to
have been made. Accordingly, the CDSC holding period applicable to
your Class C Shares may be up to one month less than the full 12
months depending upon when your actual purchase was made during a
month. Running of the 12-month CDSC holding period will be
suspended for one month for each period of thirty days during which
you have held shares of a money market fund you have received in
exchange for Class C Shares under the Exchange Privilege. (See
"Exchange Privilege.") 

     Your Class C Shares will automatically convert to Class A
Shares six years after the date of purchase, together with a
pro-rata portion of all Class C Shares representing dividends and
other distributions paid in additional Class C Shares. The Class C
Shares so converted will no longer be subject to the higher
expenses borne by the Class C Shares. The conversion will be
effected at relative net asset values on the first business day of
the month following that in which the sixth anniversary of your
purchase of the Class C Shares occurred, except as noted below.
Accordingly, the holding period applicable to your Class C Shares
may be up to one month more than the six years depending upon when
your actual purchase was made during a month. Because the per share
value of Class A Shares may be higher than that of Class C Shares
at the time of conversion, you may receive fewer Class A Shares
than the number of Class C Shares converted. If you have made one
or more exchanges of Class C Shares among the Aquila-sponsored
tax-free municipal bond funds or equity funds under the Exchange
Privilege, the six-year holding period is deemed to have begun on
the date you purchased your original Class C Shares of the Trust or
of another of the Aquila Bond or Equity funds. The six-year holding
period will be suspended by one month for each period of thirty
days during which you hold shares of a money market fund you have
received in exchange for Class C Shares under the Exchange
Privilege. (See "Exchange Privilege.")

     The following chart summarizes the principal differences
between Class A Shares and Class C Shares.

<TABLE>

<S>                      <C>                      <C>

                         Class A                  Class C

Initial Sales            Maximum of 4% of the     None
Charge                   Public Offering Price


Contingent Deferred      None (except for         Maximum CDSC of 1% if
Sales Charge             certain purchases        shares redeemed before 12 
                         over $1 Million)         months; 0% after 12 months


Distribution and         0.15 of 1%               Distribution fee of 0.75 
Service Fees                                      of 1% and a service fee of
                                                  0.25 of 1% for a total of
                                                  1%, payable for six years

Other Information        Initial Sales Charge     Shares convert to Class A
                         waived or reduced in     Shares after six years
                         some cases

</TABLE>


Factors to Consider in Choosing Classes of Shares

     This discussion relates to the major differences between Class
A Shares and Class C Shares. It is recommended that any investment
in the Trust be considered long-term in nature.

     Over time, the cumulative total cost of the 1% annual service
and distribution fees on the Class C Shares will equal or exceed
the total cost of the initial 4% maximum initial sales charges and
0.15 of 1% annual fee payable for Class A Shares. For example, if
equal amounts were paid at the same time for Class A Shares (where
the amount invested is reduced by the amount of the sales charge)
and for Class C Shares (which carry no sales charge at the time of
purchase) and the net asset value per share remained constant over
time, the total of such costs for Class C Shares would equal the
total of such costs for Class A Shares after approximately four and
two-thirds years. This example assumes no redemptions and
disregards the time value of money. Purchasers of Class C Shares
have all of their investment dollars invested from the time of
purchase, without having their investment reduced at the outset by
the initial sales charge payable for Class A Shares. If you invest
in Class A Shares you will pay the entire sales charge at the time
of purchase. Accordingly, if you expect to redeem your shares
shortly after purchase, you should consider the total cost of such
an investment in Class A Shares compared with a similar investment
in Class C Shares. The example under "Table of Expenses" shows the
effect of Trust expenses for both classes if a hypothetical
investment in each of the classes is held for 1, 3, 5 and 10 years.
(See the Table of Expenses.)

     Dividends and other distributions paid by the Trust with
respect to shares of each class are calculated in the same manner
and at the same time. The dividends actually paid with respect to
Class C Shares will be lower than those paid on Class A because
Class C Shares bear higher distribution and service fees and will
have a higher expense ratio. In addition, the dividends of each
class can vary because each class will bear certain class-specific
charges. For example, each class will bear the costs of printing
and mailing annual reports to its own shareholders.

                   HOW TO INVEST IN THE TRUST

     The Trust's shares may be purchased through any investment
broker or dealer (a "selected dealer") which has a sales agreement
with Aquila Distributors, Inc. (the "Distributor") or through the
Distributor. There are two ways to make an initial investment: (i)
order the shares through your investment broker or dealer, if it is
a selected dealer; or (ii) mail the Application with payment to
Administrative Data Management Corp. (the "Agent") at the address
on the Application. The applicable sales charge will apply in
either instance. Subsequent investments are also subject to the
applicable sales charges. You are urged to complete an Application
and send it to the Agent so that expedited shareholder services can
be established at the time of your investment. Unless your initial
investment is specified to be made in Class C Shares, it will be
made in Class A Shares. 

     The minimum initial investment for Class A Shares and Class C
Shares is $1,000, except as otherwise stated in the Prospectus or
Additional Statement. You may also make an initial investment of at
least $50 by establishing an Automatic Investment Program for
automatic investments of at least $50 per month and paying at least
$50. (See below and "Automatic Investment Program" in the
Application.) Such investment must be drawn in United States
dollars on a United States commercial or savings bank, credit union
or a United States branch of a foreign commercial bank (each of
which is a "Financial Institution"). You may make subsequent
investments in the same class of shares in any amount (unless you
have an Automatic Withdrawal Plan). Your subsequent investment may
be made through a selected dealer or by forwarding payment to the
Agent, with the name(s) of account owner(s), the account number,
the name of the Trust and the class of shares to be purchased. With
subsequent investments, please send the pre-printed stub attached
to the Trust's confirmations.  

     Subsequent investments of $50 or more in shares of the same
class as your initial investment can be made by electronic funds
transfer from your demand account at a Financial Institution. To
use electronic funds transfer for your purchases, your Financial
Institution must be a member of the Automated Clearing House and
the Agent must have received your completed Application designating
this feature, or, after your account has been opened, a Ready
Access Features form available from the Distributor or the Agent.
A pre-determined amount can be regularly transferred for investment
("Automatic Investment"), or single investments can be made upon
receipt by the Agent of telephone instructions from anyone
("Telephone Investment"). The maximum amount of each Telephone
Investment is $50,000. Upon 30 days' written notice to
shareholders, the Trust may modify or terminate these investment
methods at any time or charge a service fee, although no such fee
is currently contemplated.

     The offering price is the net asset value per share for Class
C Shares and the net asset value per share plus the applicable
sales charge for Class A Shares. The offering price determined on
any day applies to all purchase orders received by the Agent from
selected dealers that day, except that orders received by it after
4:00 p.m. New York time will receive that day's offering price only
if such orders were received by selected dealers from customers
prior to such time and transmitted to the Distributor prior to its
close of business that day (normally 5:00 p.m. New York time); if
not so transmitted, such orders will be filled at the next
determined offering price. Selected dealers are required to
transmit orders promptly. Investments by mail are made at the
offering price next determined after receipt of the purchase order
by the Agent. Purchase orders received on other than a business day
will be executed on the next succeeding business day. Purchases by
Automatic Investment and Telephone Investment will be executed on
the first business day occurring on or after the date an order is
considered received by the Agent at the price determined on that
day. In the case of Automatic Investment your order will be
executed on the date you specified for investment at the price
determined on that day. If that day is not a business day your
order will be executed at the price determined on the next business
day. In the case of Telephone Investment your order will be filled
at the next determined offering price. If your order is placed
after the time for determining the net asset value of the Trust
shares for any day it will be executed at the price determined on
the following business day. The sale of shares will be suspended
during any period when the determination of net asset value is
suspended and may be suspended by the Distributor when the
Distributor judges it in the Trust's best interest to do so.

How to Purchase Class A Shares 
(Front-Payment Class Shares)

     The following table shows the amount of the sales charges to
a "single purchaser" (defined below) together with the dealer
discounts paid to dealers and the agency commissions paid to
brokers (collectively called the "commissions"):

<TABLE>
<CAPTION>

<S>                      <C>            <C>            <C>

                         Sales          Sales          Commis-
                         Charge         Charge         sions
                         as             as             as
                         Percentage     Approximate    Percentage
                         of Public      Percentage     of 
Amount of                Offering       of Amount      Offering
Purchase                 Price          Invested       Price

Less than $25,000......  4.00%          4.17%          3.00%
$25,000 but less
   than $50,000........  3.75%          3.90%          3.00%
$50,000 but less
   than $100,000.......  3.50%          3.63%          2.75%
$100,000 but less
   than $250,000.......  3.25%          3.36%          2.75%
$250,000 but less
   than $500,000.......  3.00%          3.09%          2.50%
$500,000 but less
   than $1,000,000.....  2.50%          2.56%          2.25%

For purchases of $1 million or more see "Purchases of $1 Million or
More," below.

</TABLE>


     The table of sales charges is applicable to purchases of Class
A Shares by a "single purchaser," i.e.: (a) an individual; (b) an
individual together with his or her spouse and their children under
the age of 21 purchasing shares for his or their own accounts; (c)
a trustee or other fiduciary purchasing shares for a single trust
estate or a single fiduciary account; and (d) a tax-exempt
organization enumerated in Section 501(c)(3) or (13) of the Code.

     Upon notice to all selected dealers, the Distributor may
reallow up to the full amount of the applicable sales charge as
shown in the above schedule during periods specified in such
notice. During periods when all or substantially all of the entire
sales charge is reallowed, such selected dealers may be deemed to
be underwriters as that term is defined in the Securities Act of
1933.

Purchases of $1 Million or More 

     Class A Shares issued in purchases of $1 million or more by a
single purchaser are called "CDSC Class A Shares." CDSC Class A
Shares also include certain Class A Shares issued in purchases of
$1 million or more under the program captioned "Certain Investment
Companies - Special Dealer Arrangements," below. (CDSC Class A
Shares do not include (i) Class A Shares purchased without sales
charge pursuant to the terms described under "General," below and
(ii) Class A Shares purchased in transactions of less than $1
million and when certain special dealer arrangements are not in
effect under "Certain Investment Companies" set forth under
"Reduced Sales Charges," below.) 

     When you purchase CDSC Class A Shares you will not pay a sales
charge at the time of purchase, and the Distributor will pay to any
dealer effecting such a purchase an amount equal to 1% of the sales
price of the shares purchased for purchases of $1 million but less
than $2.5 million, 0.50 of 1% for purchases of $2.5 million but
less than $5 million, and 0.25 of 1% for purchases of $5 million or
more, if the CDSC Class A Shares remain outstanding for a period of
at least one year. A pro-rata portion of this fee will be payable
for each day the CDSC Class A Shares are outstanding in the first
one-year period following issuance of such shares. The fee payable
for each calendar quarter will be made within fifteen days of the
end of that quarter. 

     If you redeem all or part of your CDSC Class A Shares during
the four years after your purchase of such shares, at the time of
redemption you will be required to pay to the Distributor a special
contingent deferred sales charge based on the lesser of (i) the net
asset value of your redeemed CDSC Class A Shares at the time of
purchase or (ii) the net asset value of your redeemed CDSC Class A
Shares at the time of redemption (the "Redemption Value"). The
special charge will be an amount equal to 1% of the Redemption
Value if the redemption occurs within the first two years after
purchase, and 0.50 of 1% of the Redemption Value if the redemption
occurs within the third or fourth year after purchase. The special
charge will apply to redemptions of CDSC Class A Shares purchased
without a sales charge pursuant to a Letter of Intent, as described
below under "Reduced Sales Charges." The special charge does not
apply to shares acquired through the reinvestment of dividends on
CDSC Class A Shares or to any CDSC Class A Shares held for more
than four years after purchase. In determining whether the special
charge is applicable, it will be assumed that the CDSC Class A
Shares you have held the longest are the first CDSC Class A Shares
to be redeemed, unless you instruct the Agent otherwise. It will
also be assumed that if you have both CDSC Class A Shares and
non-CDSC Class A Shares the non-CDSC Class A Shares will be
redeemed first. 

     For purposes of determining the holding period for CDSC Class
A Shares, all of your purchases made during a calendar month will
be deemed to have been made on the first business day of that month
at the average cost of all purchases made during that month. The
four-year holding period will end on the first business day of the
48th calendar month after the date your purchase is deemed to have
been made. Accordingly, the CDSC holding period applicable to your
CDSC Class A Shares may be up to one month less than the full 48
months depending upon when your actual purchase was made during a
month. Running of the 48-month CDSC holding period will be
suspended for one month for each period of thirty days during which
you have held shares of a money market fund you have received in
exchange for CDSC Class A Shares under the Exchange Privilege. (See
"Exchange Privilege.")

Reduced Sales Charges for Certain Purchases of Class A Shares

     Right of Accumulation: If you are a "single purchaser" you may
benefit from a reduction of the sales charge in accordance with the
above schedule for subsequent purchases of Class A Shares if the
cumulative value (at cost or current net asset value, whichever is
higher) of Class A Shares you have previously purchased with a
sales charge, together with Class A Shares of your subsequent
purchase with such a charge, amounts to $25,000 or more.

     Letters of Intent: The foregoing schedule of reduced sales
charges will also be available to "single purchasers" who enter
into a written Letter of Intent (included in the Application)
providing for the purchase, within a thirteen-month period, of
Class A Shares of the Trust through a single selected dealer or
through the Distributor. Class A Shares of the Trust which you
previously purchased during a 90-day period prior to the date of
receipt by the Distributor of your Letter of Intent and which you
still own may also be included in determining the applicable
reduction. For further details, including escrow provisions, see
the Letter of Intent provisions of the Application.

     General: Class A Shares may be purchased at the next
determined net asset value by the Trust's Trustees and officers, by
the directors, officers and certain employees, retired employees
and representatives of the Adviser and its parent and affiliates,
the Administrator and the Distributor, by selected dealers and
brokers and their officers and employees, by certain persons
connected with firms providing legal, advertising or public
relations assistance, by certain family members of, and plans for
the benefit of, the foregoing, and for the benefit of trust or
similar clients of banking institutions over which these
institutions have full investment authority if the Distributor has
entered into an agreement relating to such purchases. Except for
the last category, purchasers must give written assurance that the
purchase is for investment and that the Class A Shares will not be
resold except through redemption. There may be tax consequences of
these purchases. Such purchasers should consult their own tax
counsel. Class A Shares may also be issued at net asset value in a
merger, acquisition or exchange offer made pursuant to a plan of
reorganization to which the Trust is a party.

     The Trust permits the sale of its Class A Shares at prices
that reflect the reduction or elimination of the sales charge to
investors who are members of certain qualified groups meeting the
following requirements. A qualified group (i) is a group or
association, or a category of purchasers who are represented by a
fiduciary, professional or other representative (other than a
registered broker-dealer), which (ii) satisfies uniform criteria
which enable the Distributor to realize economies of scale in its
costs of distributing shares; (iii) gives its endorsement or
authorization (if it is a group or association) to an investment
program to facilitate solicitation of its membership by a broker or
dealer; and (iv) complies with the conditions of purchase that are
set forth in any agreement entered into between the Trust and the
group, representative or broker or dealer. At the time of purchase
you must furnish the Distributor with information sufficient to
permit verification that the purchase qualifies for a reduced sales
charge, either directly or through a broker or dealer.

     Certain Investment Companies: Class A Shares of the Trust may
be purchased at net asset value without sales charge (except as set
forth below under "Special Dealer Arrangements") to the extent that
the aggregate net asset value of such Class A Shares does not
exceed the proceeds from a redemption (a "Qualified Redemption"),
made within 120 days prior to such purchase, of shares of another
investment company on which a sales charge, including a contingent
deferred sales charge, has been paid. Additional information is
available from the Distributor.

To qualify, the following special procedures must be followed:

          1. A completed Application (included in the Prospectus)
          and payment for the shares to be purchased must be sent
          to the Distributor, Aquila Distributors, Inc., 380
          Madison Avenue, Suite 2300, New York, NY 10017 and should
          not be sent to the Shareholder Servicing Agent of the
          Trust, Administrative Data Management Corp. (This
          instruction replaces the mailing address contained on the
          Application.)

          2. The Application must be accompanied by evidence
          satisfactory to the Distributor that the prospective
          shareholder has made a Qualified Redemption in an amount
          at least equal to the net asset value of the Class A
          Shares to be purchased. Satisfactory evidence includes a
          confirmation of the date and the amount of the redemption
          from the investment company, its transfer agent or the
          investor's broker or dealer, or a copy of the investor's
          account statement with the investment company reflecting
          the redemption transaction.

          3. You must complete and return to the Distributor a
          Transfer Request Form, which is available from the
          Distributor.

     The Trust reserves the right to alter or terminate this
privilege at any time without notice. The Prospectus will be
supplemented to reflect such alteration or termination.

     Special Dealer Arrangements: During certain periods determined
by the Distributor, the Distributor (not the Trust) will pay to any
dealer effecting a purchase of Class A Shares of the Trust using
the proceeds of a Qualified Redemption the lesser of 1% of such
proceeds or the same amounts described under "Purchases of $1
Million or More," above on the same terms and conditions. Class A
Shares of the Trust issued in such a transaction will be CDSC Class
A Shares and if you thereafter redeem all or part of such shares
during the four-year period from the date of purchase you will be
subject to the special contingent deferred sales charge described
under "Purchases of $1 Million or More," above, on the same terms
and conditions. Whenever the Special Dealer Arrangements are in
effect the Prospectus will be supplemented.

How to Purchase Class C Shares 
(Level-Payment Class Shares)

     Level-Payment Class Shares (Class C Shares) are offered at net
asset value with no sales charge payable at purchase. A level
charge is imposed for service and distribution fees for the first
six years after the date of purchase at the aggregate annual rate
of 1% of the average annual net assets of the Trust represented by
the Class C Shares. In addition, Class C Shares are subject to a
contingent deferred sales charge ("CDSC") if redeemed before you
have held them for 12 months from the date of purchase at the rate
of 1%, calculated on the net asset value of the Class C Shares at
the time of purchase or of redemption, whichever is less. There is
no CDSC after Class C Shares have been held beyond the applicable
period. The CDSC does not apply to shares acquired through the
reinvestment of dividends on Class C Shares. 

     The Distributor will pay to any dealer effecting a purchase of
Class C Shares an amount equal to 1% of the sales price of the
Class C Shares purchased.

Additional Compensation for Dealers

     The Distributor, at its own expense, may also provide
additional compensation to dealers in connection with sales of any
class of shares of the Trust. Additional compensation may include
payment or partial payment for advertising of the Trust's shares,
payment of travel expenses, including lodging, incurred in
connection with attendance at sales seminars taken by qualifying
registered representatives to locations within or outside of the
United States, other prizes or financial assistance to securities
dealers in offering their own seminars or conferences. In some
instances, such compensation may be made available only to certain
dealers whose representatives have sold or are expected to sell
significant amounts of such shares. Dealers may not use sales of
the Trust's shares to qualify for the incentives to the extent such
may be prohibited by the laws of any state or any self-regulatory
agency, such as the National Association of Securities Dealers,
Inc. The cost to the Distributor of such promotional activities and
such payments to participating dealers will not exceed the amount
of the sales charges in respect of sales of all classes of shares
of the Trust effected through such participating dealers, whether
retained by the Distributor or reallowed to participating dealers.
No such additional compensation to dealers in connection with sales
of shares of the Trust will affect the price you pay for shares or
the amount that the Trust will receive from such sales. Any of the
foregoing payments to be made by the Distributor may be made
instead by the Administrator out of its own funds, directly or
through the Distributor.

     Brokers and Dealers may receive different levels of
compensation for selling different classes of shares.

Systematic Payroll Investments

     If your employer has established with the Trust a Systematic
Payroll Investment Plan ("Payroll Plan") you may arrange for
systematic investments into the Trust through a Payroll Plan.
Investments can be made in either Class A Shares or Class C Shares.
In order to participate in a Payroll Plan, you should make
arrangements with your own employer's payroll department, and you
must complete and sign any special application forms which may be
required by your employer. You must also complete the Application
included in the Prospectus. Once your application is received and
put into effect, under a Payroll Plan the employer will make a
deduction from payroll checks in an amount you determine, and will
remit the proceeds to the Trust. An investment in the Trust will be
made for you at the offering price, which includes applicable sales
charges determined as described above, when the Trust receives the
funds from your employer. The Trust will send a confirmation of
each transaction to you. To change the amount of or to terminate
your participation in the Payroll Plan (which could take up to ten
days), you must notify your employer.

Confirmations and Share Certificates 

     All purchases of shares will be confirmed and credited to you
in an account maintained for you at the Agent in full and
fractional shares of the Trust (rounded to the nearest 1/1000th of
a share). 

     No share certificates will be issued for Class C Shares. Share
certificates for Class A Shares will be issued only if you so
request in writing to the Agent. All share certificates previously
issued by the Trust represent Class A Shares. No certificates will
be issued for fractional Class A shares or if you have elected
Automatic Investment or Telephone Investment for Class A Shares
(see "How to Invest in the Trust" above) or Expedited Redemption
(see "How to Redeem Your Investment" below). If certificates for
Class A Shares are issued at your request, Expedited Redemption
Methods described below will not be available. In addition, you may
incur delay and expense if you lose the certificates. 

     The Trust and the Distributor reserve the right to reject any
order for the purchase of shares. In addition, the offering of
shares may be suspended at any time and resumed at any time
thereafter.

Distribution Plan

     The Trust has adopted a Distribution Plan (the "Plan") under
Rule 12b-1 (the "Rule") under the 1940 Act. The Rule provides in
substance that an investment company may not engage directly or
indirectly in financing any activity which is primarily intended to
result in the sale of its shares except pursuant to a written plan
adopted under the Rule. The Plan has three parts.

     Under the Plan, the Trust is authorized to make payments with
respect to Class A Shares ("Class A Permitted Payments") to
Qualified Recipients, which Permitted Payments shall be made
through the Distributor or shareholder servicing agent as
disbursing agent, which may not exceed, for any fiscal year of the
Trust (as adjusted for any part or parts of a fiscal year during
which payments under the Plan are not accruable or for any fiscal
year which is not a full fiscal year), 0.15 of 1% of the average
annual net assets represented by the Class A Shares of the Trust.
Such payments shall be made only out of the Trust's assets
allocable to the Class A Shares. "Qualified Recipients" means
broker-dealers or others selected by the Distributor, including but
not limited to any principal underwriter of the Trust, with which
the Distributor has entered into written agreements and which have
rendered assistance (whether direct, administrative, or both) in
the distribution and/or retention of the Trust's Class A Shares or
servicing of accounts of shareholders owning Class A Shares.

     Permitted Payments under the Plan commenced July 1, 1994.
Until April 5, 1996, all outstanding shares of the Trust were what
are currently designated Class A Shares. During the fiscal year
ended September 30, 1995, $230,866 was paid under the Plan as then
in effect to Qualified Recipients, of which $4,260 was paid to the
Distributor. (See the Additional Statement for a description of the
Distribution Plan.)

     Whenever the Trust makes Class A Permitted Payments, the
aggregate annual rate of the advisory fee and administration fee
otherwise payable by the Trust will be reduced from 0.50 of 1% to
0.40 of 1% of the Trust's average annual net assets. (See
"Management Arrangements.")

     Under another part of the Plan, the Trust is authorized to
make payments with respect to Class C Shares ("Class C Permitted
Payments") to Qualified Recipients. Class C Permitted Payments
shall be made through the Distributor or shareholder servicing
agent as disbursing agent, and may not exceed, for any fiscal year
of the Trust (as adjusted for any part or parts of a fiscal year
during which payments under the Plan are not accruable or for any
fiscal year which is not a full fiscal year), 0.75 of 1% of the
average annual net assets represented by the Class C Shares of the
Trust. Such payments shall be made only out of the Trust's assets
allocable to the Class C Shares. "Qualified Recipients" means
broker-dealers or others selected by the Distributor, including but
not limited to any principal underwriter of the Trust, with which
the Distributor has entered into written agreements and which have
rendered assistance (whether direct, administrative, or both) in
the distribution and/or retention of the Trust's Class C Shares or
servicing of accounts of shareholders owning Class C Shares.
Payments with respect to Class C Shares during the first year after
purchase are paid to the Distributor and thereafter to other
Qualified Recipients. 

     Another part of the Plan is designed to protect against any
claim against or involving the Trust that some of the expenses
which might be considered to be sales-related which the Trust pays
or may pay come within the purview of the Rule. The Trust believes
that except for Permitted Payments it is not financing any such
activity and does not consider any payment enumerated in this part
of the Plan as so financing any such activity. However, it might be
claimed that some of the expenses the Trust pays come within the
purview of the Rule. If and to the extent that any payment as
specifically listed in the Plan (see the Additional Statement) is
considered to be primarily intended to result in or as indirect
financing of any activity which is primarily intended to result in
the sale of Trust shares, these payments are authorized under the
Plan. In addition, if the Administrator, out of its own funds,
makes payment for distribution expenses such payments are
authorized. See the Additional Statement.

Shareholder Services Plan for Class C Shares

     Under a Shareholder Services Plan, the Trust is authorized to
make payments with respect to Class C Shares ("Service Fees") to
Qualified Recipients. Service Fees shall be paid through the
Distributor or shareholder servicing agent as disbursing agent, and
may not exceed, for any fiscal year of the Trust (as adjusted for
any part or parts of a fiscal year during which payments under the
Plan are not accruable or for any fiscal year which is not a full
fiscal year), 0.25 of 1% of the average annual net assets
represented by the Class C Shares of the Trust. Such payments shall
be made only out of the Trust's assets represented by the Class C
Shares. "Qualified Recipients" means broker-dealers or others
selected by the Distributor, including but not limited to any
principal underwriter of the Trust, with which the Distributor has
entered into written agreements and which have agreed to provide
personal services to holders of Class C Shares and/or maintenance
of Class C shareholder accounts. See the Additional Statement.
Service Fees with respect to Class C Shares will be paid to the
Distributor.

                  HOW TO REDEEM YOUR INVESTMENT

     You may redeem all or any part of your shares at the net asset
value next determined after acceptance of your redemption request
at the Agent (subject to any applicable contingent deferred sales
charge for redemptions of Class C Shares and CDSC Class A Shares).
For redemptions of Class C Shares and CDSC Class A Shares, at the
time of redemption a sufficient number of additional shares will be
redeemed to pay for any applicable contingent deferred sales
charge. Redemptions can be made by the various methods described
below. There is no minimum period for  any investment in the Trust,
except for shares recently purchased by check, Automatic Investment
or Telephone Investment as discussed below. Except for CDSC Class
A Shares (see "Purchases of $1 Million or More") there are no
redemption fees or withdrawal penalties for Class A Shares. Class
C Shares are subject to a contingent deferred sales charge if
redeemed before they have been held 12 months from the date of
purchase. (See "Alternative Purchase Plans.") A redemption may
result in a transaction taxable to you. If you own both Class A
Shares and Class C Shares and do not specify which you wish to
redeem, it will be assumed that you wish to redeem Class A Shares.

     For your convenience the Trust offers expedited redemption for
all classes of shares to provide you with a high level of liquidity
for your investment.

Expedited Redemption Methods
(Non-Certificate Shares)

     You have the flexibility of two expedited methods of
initiating redemptions. They are available as to shares of any
class not represented by certificates.

          1. By Telephone. The Agent will accept instructions by
          telephone from anyone to redeem shares and make payments 

               a) to a Financial Institution account you have
               predesignated or 

               b) by check in the amount of $50,000 or less,
               mailed to you, if your shares are registered in
               your name at the Trust and the check is sent to
               your address of record, provided that there has not
               been a change of your address of record during the
               30 days preceding your redemption request. You can
               make only one request for telephone redemption by
               check in any 7-day period. 

     See "Redemption Payments" below for payment methods. Your
name, your account number and your address of record must be
supplied.

     To redeem an investment by this method, telephone:

             800-872-6735 toll free or 908-855-5731

     Note: The Trust, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed to
verify the identity of the caller. The Agent will request some or
all of the following information: account name(s) and number, name
of the caller, the social security number registered to the account
and personal identification. The Agent may also record calls. You
should verify the accuracy of confirmation statements immediately
upon receipt.

     2. By FAX or Mail. You may also request redemption payments to
     a predesignated Financial Institution account by a letter of
     instruction sent to: Administrative Data Management Corp.,
     Attn: Aquilasm Group of Funds, by FAX at 908-855-5730 or by
     mail at 581 Main Street, Woodbridge, NJ 07095-1198, indicating
     account name(s), account number, amount to be redeemed, and
     any payment directions, signed by the registered holder(s).
     Signature guarantees are not required. See "Redemption
     Payments" below for payment methods.

     If you wish to use the above procedures you should so elect on
the Expedited Redemption section of the Application or the Ready
Access Features form and provide the required information
concerning your Financial Institution account number. The Financial
Institution account must be in the exclusive name(s) of the
shareholder(s) as registered with the Trust. You may change the
designated Financial Institution account at any time by completing
and returning a Ready Access Features form. For protection of your
assets, this form requires signature guarantees and possible
additional documentation.

Regular Redemption Method
(Certificate and Non-Certificate Shares)

     1. Certificate Shares. Certificates representing Class A
     Shares to be redeemed should be sent in blank (unsigned) to
     the Trust's  Shareholder Servicing Agent: Administrative Data
     Management Corp., Attn: Aquilasm Group of Funds, 581 Main
     Street, Woodbridge, NJ 07095-1198, with payment instructions.
     A stock assignment form signed by the registered
     shareholder(s) exactly as the account is registered must also
     be sent to the Shareholder Servicing Agent.

     For your own protection, it is essential that certificates be
mailed separately from signed redemption documentation. Because of
possible mail problems, it is also recommended that certificates be
sent by registered mail, return receipt requested.

     For a redemption request to be in "proper form," the signature
or signatures must be the same as in the registration of the
account. In a joint account, the signatures of both shareholders
are necessary. Signature guarantees may be required if sufficient
documentation is not on file with the Agent. Additional
documentation may be required where shares are held by certain
types of shareholders such as corporations, partnerships, trustees
or executors, or if redemption is requested by other than the
shareholder of record. If redemption proceeds of $50,000 or less
are payable to the record holder and are to be sent to the record
address, no signature guarantee is required, except as noted above.
In all other cases, signatures must be guaranteed by a member of a
national securities exchange, a U.S. bank or trust company, a
state-chartered savings bank, a federally chartered savings and
loan association, a foreign bank having a U.S. correspondent bank,
a participant in the Securities Transfer Association Medallion
Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or
the New York Stock Exchange, Inc. Medallion Signature Program
(MSP). A notary public is not an acceptable signature guarantor.

     2. Non-Certificate Shares. If you own non-certificate shares
     registered on the books of the Trust, and you have not elected
     Expedited Redemption to a predesignated Financial Institution
     account, you must use the Regular Redemption Method. Under
     this redemption method you should send a letter of instruction
     to: Administrative Data Management Corp., Attn: Aquilasm Group
     of Funds, 581 Main Street, Woodbridge, NJ 07095-1198,
     containing:

               Account Name(s);

               Account Number;

               Dollar amount or number of shares to be redeemed or
               a statement that all shares held in the account are
               to be  redeemed;

               Payment instructions (normally redemption proceeds
               will be mailed to your address as registered with
               the Trust);

               Signature(s) of the registered shareholder(s); and

               Signature guarantee(s), if required, as
               indicated above.

Redemption Payments

     Redemption payments will ordinarily be mailed to you at your
address of record. If you so request and the amount of your
redemption proceeds is $1,000 or more, the proceeds will, wherever
possible, be wired or transferred through the facilities of the
Automated Clearing House to the Financial Institution account
specified in the Expedited Redemption section of your Application
or Ready Access Features form. The Trust may impose a charge, not
exceeding $5.00 per wire redemption, after written notice to
shareholders who have elected this redemption procedure. The Trust
has no present intention of making this charge. Upon 30 days'
written notice to shareholders, the Trust may modify or terminate
the use of the Automated Clearing House to make redemption payments
at any time or charge a service fee, although no such fee is
presently contemplated. If any such changes are made, the
Prospectus will be supplemented to reflect them. If you use a
broker or dealer to arrange for a redemption, it may charge you a
fee for this service.

     The Trust will normally make payment for all shares redeemed
on the next business day (see "Net Asset Value Per Share")
following acceptance of the redemption request made in compliance
with one of the redemption methods specified above. Except as set
forth below, in no event will payment be made more than seven days
after acceptance of such a redemption request. However, the right
of redemption may be suspended or the date of payment postponed (i)
during periods when the New York Stock Exchange is closed for other
than weekends and holidays or when trading on such Exchange is
restricted as determined by the Securities and Exchange Commission
by rule or regulation; (ii) during periods in which an emergency,
as determined by the Securities and Exchange Commission, exists
which causes disposal of, or valuation of the net asset value of,
the portfolio securities to be unreasonable or impracticable; or
(iii) for such other periods as the Securities and Exchange
Commission may permit. Payment for redemption of shares recently
purchased by check (irrespective of whether the check is a regular
check or a certified, cashier's or official bank check) or by
Automatic Investment or Telephone Investment may be delayed up to
15 days or until (i) the purchase check or Automatic Investment or
Telephone Investment has been honored or (ii) the Agent has
received assurances by telephone or in writing from the Financial
Institution on which the purchase check was drawn, or from which
the funds for Automatic Investment or Telephone Investment were
transferred, satisfactory to the Agent and the Trust, that the
purchase check or Automatic Investment or Telephone Investment will
be honored. Possible delays in payment of redemption proceeds can
be eliminated by using wire payments or Federal Reserve drafts to
pay for purchases.

     If the Trustees determine that it would be detrimental to the
best interests of the remaining shareholders of the Trust to make
payment wholly or partly in cash, the Trust may pay the redemption
price in whole or in part by the distribution in kind of securities
from the portfolio of the Trust, in lieu of cash, in conformity
with applicable rules of the Securities and Exchange Commission.
See the Additional Statement for details.

     The Trust has the right to compel the redemption of shares
held in any account if the aggregate net asset value of such shares
is less than $500 as a result of shareholder redemptions or failure
to meet the minimum investment level under an Automatic Purchase
Program. If the Board elects to do this, shareholders who are
affected will receive prior written notice and will be permitted 60
days to bring their accounts up to the minimum before this
redemption is processed.

Reinvestment Privilege

     You may reinvest without payment of any additional sales
charge all or part of any redemption proceeds within 120 days of a
redemption of shares in shares of the Trust of the same class as
the shares redeemed at the net asset value next determined after
the Agent receives your reinvestment order. In the case of Class C
Shares or CDSC Class A Shares on which a contingent deferred sales
charges was deducted at the time of redemption, the Distributor
will refund to you the amount of such sales charge, which will be
added to the amount of the reinvestment. The Class C Shares or CDSC
Class A Shares issued on reinvestment will be deemed to have been
outstanding from the date of your original purchase of the redeemed
shares, less the period from redemption to reinvestment. The
reinvestment privilege for any class may be exercised only once a
year, unless otherwise approved by the Distributor. If you have
realized a gain on the redemption of your shares, the redemption
transaction is taxable, and reinvestment will not alter any capital
gains tax payable. If there has been a loss on the redemption, some
or all of the loss may be tax deductible, depending on the amount
reinvested and the length of time between the redemption and the
reinvestment. You should consult your own tax advisor on this
matter.

                    AUTOMATIC WITHDRAWAL PLAN

     You may establish an Automatic Withdrawal Plan if you own or
purchase Class A Shares of the Trust having a net asset value of at
least $5,000. The Automatic Withdrawal Plan is not available for
Class C Shares.

     Under an Automatic Withdrawal Plan you will receive a monthly
or quarterly check in a stated amount, not less than $50. If such
a plan is established, all dividends and distributions must be
reinvested in your shareholder account. Redemption of Class A
Shares to make payments under the Automatic Withdrawal Plan will
give rise to a gain or loss for tax purposes. See the Automatic
Withdrawal Plan provisions of the Application included in the
Prospectus, the Additional Statement under "Automatic Withdrawal
Plan," and "Dividend and Tax Information" below.

     Purchase of additional Class A Shares concurrently with
withdrawals are undesirable because of sales charges when purchases
are made. Accordingly, a Planholder may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases.
While an occasional lump sum investment may be made, such
investment should normally be an amount at least equal to three
times the annual withdrawal or $5,000, whichever is less.

                     MANAGEMENT ARRANGEMENTS

The Board of Trustees

     The business and affairs of the Trust are managed under the
direction and control of its Board of Trustees. The Additional
Statement lists the Trust's Trustees and officers and provides
further information about them.

The Advisory Agreement

     Qualivest Capital Management, Inc. (the "Adviser"), a
subsidiary of U.S. Bancorp, supervises the investment program of
the Trust and the composition of its portfolio. The principal
subsidiary of U.S. Bancorp is United States National Bank of
Oregon.

     The services of the Adviser are rendered under an Investment
Advisory Agreement (the "Advisory Agreement") which provides,
subject to the control of the Board of Trustees, for investment
supervision and for either keeping the accounting records of the
Trust, including the computation of the net asset value per share
and the dividends, or, at the Adviser's expense and responsibility,
delegating these accounting duties in whole or in part to a company
satisfactory to the Trust. The Advisory Agreement states that the
Adviser shall, at its expense, provide to the Trust all office
space and facilities, equipment and clerical personnel necessary
for the carrying out of the Adviser's duties under the Advisory
Agreement.

     Under the Advisory Agreement, the Adviser pays all
compensation of those officers and employees of the Trust and of
those Trustees, if any, who are affiliated with the Adviser. Under
the Advisory Agreement, the Trust bears the cost of preparing and
setting in type its prospectuses, statements of additional
information, and reports to shareholders and the costs of printing
or otherwise producing and distributing those copies of such
prospectuses, statements of additional information and reports as
are sent to its shareholders. Under the Advisory Agreement, all
costs and expenses not expressly assumed by the Adviser or by the
Administrator under the Administration Agreement or by the Trust's
Distributor (principal underwriter) are paid by the Trust. The
Advisory Agreement lists examples of such expenses borne by the
Trust, the major categories of such expenses being: legal and audit
expenses, custodian and transfer agent or shareholder servicing
agent fees and expenses, stock issuance and redemption costs,
certain printing costs, registration costs of the Trust and its
shares under Federal and State securities laws, interest, taxes and
brokerage commissions, and non-recurring expenses, including
litigation.

     Under the Advisory Agreement, the Trust agrees to pay the
Adviser, and the Adviser agrees to accept as full compensation for
all services rendered by the Adviser as such, an annual fee payable
monthly and computed on the net asset value of the Trust as of the
close of business each business day at the annual rate of 0.25 of
1% of such net asset value provided, however, that for any day that
the Trust pays or accrues a fee under the Distribution Plan of the
Trust based upon the assets of the Trust, such annual fee is
payable at the rate of 0.20 of 1% of all of the Trust's average
annual net assets. (Since the Administrator also receives a fee
from the Trust under the Administration Agreement, the total
investment advisory and administration fees which the Trust pays
are at the annual rate of 0.50 of 1% of such net assets, or, for
any day that the Trust pays or accrues a fee under the Distribution
Plan of the Trust based upon the assets of the Trust at 0.40 of 1%
of such net asset value; see below.) The Adviser and the
Administrator may, in order to attempt to achieve a competitive
yield on the shares of the Trust, each waive all or part of any
such fee.

     Under the Advisory Agreement, the Adviser agrees that the
above fee shall be reduced, but not below zero, by an amount equal
to one-half of the amount, if any, by which the total expenses of
the Trust in any fiscal year, exclusive of taxes, interest and
brokerage fees, shall exceed the lesser of (i) 2.5% of the first
$30 million of average annual net assets of the Trust plus 2% of
the next $70 million of such assets and 1.5% of its average annual
net assets in excess of $100 million, or (ii) 25% of the Trust's
total annual investment income.

     The Advisory Agreement contains provisions as to the
allocation of the portfolio transactions of the Trust; see the
Additional Statement. Under these provisions, the Adviser is
authorized to consider sales of shares of the Trust or of any other
investment company or companies having the same investment adviser,
sub-adviser, administrator or principal underwriter as the Trust.

The Administration Agreement

     Under an Administration Agreement (the "Administration
Agreement"), Aquila Management Corporation as Administrator, at its
own expense, provides office space, personnel, facilities and
equipment for the performance of its functions thereunder and as is
necessary in connection with the maintenance of the headquarters of
the Trust and pays all compensation of the Trust's Trustees,
officers and employees who are affiliated persons of the
Administrator. Prior to April 23, 1990, Aquila Management
Corporation acted as sub-adviser and administrator under a
sub-advisory and administration agreement, performing substantially
the same functions for the same compensation.

     Under the Administration Agreement, subject to the control of
the Trust's Board of Trustees, the Administrator provides all
administrative services to the Trust other than those relating to
its investment portfolio and the maintenance of its accounting
books and records. Such administrative services include but are not
limited to maintaining books and records (other than accounting
books and records) of the Trust, and overseeing all relationships
between the Trust and its shareholder servicing agent, custodian,
legal counsel, auditors and principal underwriter, including the
negotiation of agreements in relation thereto, the supervision and
coordination of the performance of such agreements, and the
overseeing of all administrative matters which are necessary or
desirable for effective operation of the Trust and for the sale,
servicing, or redemption of the Trust's shares. See the Additional
Statement for a further description of functions listed in the
Administration Agreement as part of such duties.

     Under the Administration Agreement, the Trust pays a fee
payable monthly and computed on the net asset value of the Trust at
the end of each business day at the annual rate of 0.25 of 1% of
such net asset value provided, however, that for any day that the
Trust pays or accrues a fee under the Distribution Plan of the
Trust based upon the assets of the Trust, such annual fee is
payable at the rate of 0.20 of 1% of all of the Trust's average
annual net assets. The Administrator has agreed that the above fee
shall be reduced, but not below zero, by an amount equal to
one-half of the amount, if any, by which the total expenses of the
Trust in any fiscal year, exclusive of taxes, interest and
brokerage fees, exceed the lesser of (i) 2.5% of the first $30
million of average annual net assets of the Trust plus 2% of the
next $70 million of such assets and 1.5% of its average annual net
assets in excess of $100 million, or (ii) 25% of the Trust's total
annual investment income.

Information as to the Adviser,
the Administrator and the Distributor

     The Adviser is a subsidiary of U.S. Bancorp ("Bancorp") and
its subsidiary, United States National Bank of Oregon ("USNB").
Bancorp is a $21 billion superregional financial services holding
company organized under the laws of Oregon in 1968. USNB,
headquartered in Portland, is a national banking association,
chartered in 1891. It offers a wide variety of full-service and
commercial banking operations in over 200 locations in Oregon.
Other services of Bancorp and it's subsidiaries include mortgage
banking, lease financing, consumer financing, commercial finance,
international banking, investment advisory, insurance agency and
credit life insurance services, discount brokerage and venture
capital. As of December 31, 1995, the Adviser had under management
nearly $8.8 billion in assets. See the Additional Statement as to
the legality, under the Glass-Steagall Act, of the Adviser acting
as the Trust's investment adviser. In general, under that Act, the
Adviser will not, among other things, be involved in the promotion
or distribution of shares of the Trust.

     Mr. Edgar M. Potts, with the position of Fixed-Income Manager,
is the officer of the Adviser who manages the Trust's portfolio. He
has served as such since the Trust's inception in 1986. He has been
employed by the Adviser since 1977, before that by the Adviser's
parent company, U.S. National Bank. He has 35 years of investment
experience in those positions and in other financial institutions.
He has a B.S. in economics from Georgetown University.

     Mr. Stephen J. Galiani is the backup portfolio manager. Mr.
Galiani has been employed by the Adviser since 1994. He was
president of Galiani Asset Management, a private investment
advisory firm from 1990 to 1994. Prior to owning his own firm, Mr.
Galiani was Vice President and Senior Portfolio Manager of the
municipal bond mutual funds for the Keystone family of mutual funds
with over $2 billion in municipal debt assets. Before managing
Keystone mutual funds, Mr. Galiani was Vice President and Portfolio
Manager of municipal bond portfolios for the Eaton Vance
Corporation. Mr. Galiani has an MBA from Boston University, School
of Management.

     The Trust's Administrator is founder and administrator to the
Aquilasm Group of Funds, which consists of tax-free municipal bond
funds, money market funds and an equity fund. As of December 31,
1995, these funds had aggregate assets of approximately $2.7
billion, of which approximately $1.9 billion consisted of assets of
tax-free municipal bond funds. The Administrator, which was founded
in 1984, is controlled by Mr. Lacy B. Herrmann (directly, through
a trust and through share ownership by his wife). See the
Additional Statement for information on Mr. Herrmann. 

     For the fiscal year of the Trust ended September 30, 1995,
fees of $729,908 were paid or accrued to each of the Adviser and
the Administrator.

     The Distributor currently handles the distribution of the
shares of thirteen funds (seven tax-free municipal bond funds, five
money market funds and an equity fund), including the Trust. Under
the Distribution Agreement, the Distributor is responsible for the
payment of certain printing and distribution costs relating to
prospectuses and reports as well as the costs of supplemental sales
literature, advertising and other promotional activities.

     At the date of this Prospectus, there is a proposed
transaction whereby all of the shares of the Distributor, which are
currently owned by Mr. Herrmann, will be owned by certain directors
and/or officers of the Administrator and/or the Distributor
including Mr. Herrmann. 

                  DIVIDEND AND TAX INFORMATION

Dividends and Distributions

     The Trust will declare all of its net income, as defined
below, as dividends on every day, including weekends and holidays,
on those shares outstanding for which payment was received by the
close of business on the preceding business day. Net income for
dividend purposes includes all interest income accrued by the Trust
since the previous dividend declaration, including accretion of any
original issue discount, less expenses paid or accrued. As such net
income will vary, the Trust's dividends will also vary. Dividends
and other distributions paid by the Trust with respect to Class A
Shares and Class C Shares are calculated at the same time and in
the same manner. The per share dividends of Class C Shares will be
lower than the per share dividends on the Class A Shares as a
result of the higher service and distribution fees applicable to
those shares. In addition, the dividends of each class can vary
because each class will bear certain class-specific charges.

     It is the Trust's present policy to pay dividends so that they
will be received or credited by approximately the first day of each
month. Shareholders may elect to have dividends deposited without
charge by electronic funds transfers into an account at a Financial
Institution which is a member of the Automated Clearing House by
completing a Ready Access Features form.

     Redeemed shares continue to earn dividends through and
including the day which is the earlier of (i) the day before the
day on which the redemption proceeds are mailed, wired or
transferred by the facilities of the Automated Clearing House by
the Agent or paid by the Agent to a selected dealer; or (ii) the
day which is the third day on which the New York Stock Exchange is
open after the day on which the net asset value of the redeemed
shares has been determined. (See "How To Redeem Your Investment.")

     Net investment income includes amounts of income from the
Oregon Obligations in the Trust's portfolio which are allocated as
"exempt-interest dividends." "Exempt-interest dividends" are exempt
from regular Federal income tax. The allocation of "exempt-interest
dividends" will be made by the use of one designated percentage
applied uniformly to all income dividends declared during the
Trust's tax year. Such  designation will normally be made in the
first month after the end of each of the Trust's fiscal years as to
income dividends paid in the prior year. It is possible that in
certain circumstances, a small portion of the dividends paid by the
Trust will be subject to income taxes. During the Trust's fiscal
year ended September 30, 1995, 98.98% of the Trust's dividends were
"exempt-interest dividends." For the calendar year 1995, 0.74% of
the total dividends paid were taxable as ordinary income and 1.76%
were taxable as long-term capital gains. (These amounts relate to
dividends on Class A shares; no Class C Shares were outstanding
during that period.) The percentage of income designated as
tax-exempt for any particular dividend may be different from the
percentage of the Trust's income that was tax-exempt during the
period covered by the dividend.

     Distributions ("short-term gains distributions") from net
realized short-term gains, if any, and distributions ("long-term
gains distributions"), if any, from the excess of net long-term
capital gains over net short-term capital losses realized through
October 31st of each year and not previously paid out will be paid
out after that date; the Trust may also pay supplemental
distributions after the end of its fiscal year. If net capital
losses are realized in any year, they are charged against capital
and not against net investment income which is distributed
regardless of gains or losses. The Trust may be required to impose
backup withholding at a rate of 31% upon payment of redemptions to
shareholders, and from short- and long-term gains distributions (if
any) and any other distributions that do not qualify as
"exempt-interest dividends," if shareholders do not comply with
provisions of the law relating to the furnishing of taxpayer
identification numbers and reporting of dividends.

     Unless you request otherwise by letter addressed to the Agent
or by filing an appropriate application prior to a given
ex-dividend date, dividends and distributions will be automatically
reinvested in full and fractional shares of the Trust at net asset
value on the record date for the dividend or distribution or other
date fixed by the Board of Trustees. An election to receive cash
will continue in effect until written notification of a change is
received by the Agent. All shareholders, whether their dividends
are received in cash or are being reinvested, will receive a
monthly account summary indicating the current status of their
investment. There is no fixed dividend rate. Corporate shareholders
of the Trust are not entitled to any deduction for dividends
received from the Trust.

Tax Information

     The Trust qualified during its last fiscal year as a
"regulated investment company" under the Code, and intends to
continue to so qualify. If it does so qualify, it will not be
liable for Federal income taxes on amounts paid by it as dividends
and distributions. However, the Code contains a number of complex
tests relating to such qualification and it is possible although
not likely that the Trust might not meet one or more of these tests
in any particular year. If it does not so qualify, it would be
treated for tax purposes as an ordinary corporation, would receive
no tax deduction for payments made to shareholders and would be
unable to pay dividends or distributions which would qualify as
"exempt-interest dividends" or "capital gains dividends," as
discussed below.

     The Trust intends to qualify during each fiscal year under the
Code to pay "exempt-interest dividends" to its shareholders.
Exempt-interest dividends which are derived from net income earned
by the Trust on Oregon Obligations will be excludable from gross
income of the shareholders for regular Federal income tax purposes.
Capital gains dividends are not included in exempt-interest
dividends. Although "exempt-interest dividends" are not taxed, each
taxpayer must report the total amount of tax-exempt interest
(including exempt-interest dividends from the Trust) received or
acquired during the year.

     The Omnibus Budget Reconciliation Act of 1993 requires that
either gains realized by the Trust on the sale of municipal
obligations acquired after April 30, 1993 at a price which is less
than face or redemption value be included as ordinary income to the
extent such gains do not exceed such discount or that the discount
be amortized and included ratably in taxable income.  There is an
exception to the foregoing treatment if the amount of the discount
is less than 0.25% of face or redemption value multiplied by the
number of years from acquisition to maturity.  The Trust will
report such ordinary income in the years of sale or redemption
rather than amortize the discount and report it ratably. To the
extent the resultant ordinary taxable income is distributed to
shareholders, it will be taxable to them as ordinary income.

     Capital gains dividends (net long-term gains over net
short-term losses which the Trust distributes and so designates)
are reportable by shareholders as long-term capital gains. This is
the case whether the shareholder takes the distribution in cash or
elects to have the distribution reinvested in Trust shares and
regardless of the length of time the shareholder has held his or
her shares. Capital gains are taxed at the same rates as ordinary
income, except that for individuals, trusts and estates the maximum
tax rate on capital gains distributions is 28% even if the
applicable rate on ordinary income for such taxpayers is higher
than 28%.

     Short-term gains, when distributed, are taxed to shareholders
as ordinary income. Capital losses of the Trust are not distributed
but carried forward by the Trust to offset gains in later years and
thereby lessen the later-year capital gains dividends and amounts
taxed to shareholders.

     The Trust's gains or losses on sales of Oregon Obligations
will be long-term or short-term depending upon the length of time
the Trust has held such obligations. Capital gains and losses of
the Trust will also include gains and losses on Futures and
options, if any, including gains and losses actually realized on
sales and exchanges and gains and losses deemed to be realized.
Those deemed to be realized are on Futures and options held by the
Trust at year-end, which are "marked to the market," that is,
deemed sold for fair market value. Net gains or losses realized and
deemed realized on Futures and options will be reportable by the
Trust as long-term to the extent of 60% of the gains or losses and
short-term to the extent of 40% regardless of the actual holding
period of such investments.

     Information as to the tax status of the Trust's dividends and
distributions will be mailed to shareholders annually.

     Under the Code, interest on loans incurred by shareholders to
enable them to purchase or carry shares of the Trust may not be
deducted for regular Federal tax purposes. In addition, under rules
used by the Internal Revenue Service for determining when borrowed
funds are deemed used for the purpose of purchasing or carrying
particular assets, the purchase of shares of the Trust may be
considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to the purchase of
shares. The receipt of exempt-interest dividends from the Trust by
an individual shareholder may result in some portion of any social
security payments or railroad retirement benefits received by the
shareholder or the shareholder's spouse being included in taxable
income. Persons who are "substantial users" (or persons related
thereto) of facilities financed by industrial development bonds or
private activity bonds should consult their own tax advisers before
purchasing shares.

     While interest from all Oregon Obligations is tax-exempt for
purposes of computing the shareholder's regular tax, interest from
so-called private activity bonds issued after August 7, 1986,
constitutes a tax preference for both individuals and corporations
and thus will enter into a computation of the alternative minimum
tax. Whether or not that computation will result in a tax will
depend on the entire content of the taxpayer's return. The Trust
will not invest in the types of Oregon Obligations which would give
rise to interest that would be subject to alternative minimum
taxation if more than 20% of its net assets would be so invested,
and may refrain from investing in that type of bond completely. The
20% limit is a fundamental policy of the Trust.

     Corporate shareholders must add to or subtract from
alternative minimum taxable income, as calculated before taking
into consideration this adjustment, 75% of the difference between
what is called adjusted current earnings (essentially current
earnings and profits) and alternative minimum taxable income, as
previously calculated. Since tax-exempt bond interest is included
in earnings and profits and therefore in adjusted current earnings,
this adjustment will tend to make it more likely that corporate
shareholders will be subject to the alternative minimum tax.

     As of the date of the Prospectus, Congress is considering a
number of changes affecting taxation. It is not possible to predict
which, if any, of such changes will become law. 

Tax Effects of Redemptions

     Normally, when you redeem shares of the Trust you will
recognize capital gain or loss measured by the difference between
the proceeds received in the redemption and the amount you paid for
the shares. If you are required to pay a conditional deferred sales
charge at the time of redemption, the amount of that charge will
reduce the amount of your gain or increase the amount of your loss
as the case may be. The gain or loss will be long-term if you held
the redeemed shares for over a year, and short-term, if for a year
or less. However, if shares held for six months or less are
redeemed and you have a loss, two special rules apply: the loss is
reduced by the amount of exempt-interest dividends, if any, which
you received on the redeemed shares, and any loss over and above
the amount of such exempt-interest dividends is treated as a
long-term loss to the extent you have received capital gains
dividends on the redeemed shares.

Tax Effect of Conversion

     Class C Shares will automatically convert to Class A Shares
approximately six years after purchase. No gain or loss will be
recognized by the Trust or its shareholders upon such conversions;
each shareholder's adjusted tax basis in the Class A Shares
received upon conversion will equal the shareholder's adjusted tax
basis in the Class C Shares held immediately before the conversion;
and each shareholder's holding period for the Class A Shares
received upon conversion will include the period for which the
shareholder held as capital assets the converted Class C Shares
immediately before conversion.

Oregon Tax Information

     Individual shareholders of the Trust, resident in Oregon, will
not be subject to Oregon personal income tax on distributions
received from the Trust to the extent such distributions are
attributable to interest on tax-exempt obligations of the State of
Oregon and its political subdivisions and authorities or on
obligations issued by or under the authority of the governments of
Puerto Rico, the Virgin Islands, Guam and the Northern Mariana
Islands, provided that the Trust complies with the requirement of
the Code that at least 50% of its assets at the close of each
quarter of its taxable year is invested in state, municipal or
other obligations the interest on which is exempt from federal
income tax under Section 103(a) thereof.

     Other distributions from the Trust, including all long-term
and short-term capital gains, will generally not be exempt from
Oregon income tax.

     Trust distributions are expected to be fully includable in
income in determining the Oregon excise tax on corporations.

     Shares of the Trust will not be subject to the Oregon property
tax.

     Shareholders of the Trust should consult their tax advisers
about other state and local tax consequences of their investment in
the Trust.

                       EXCHANGE PRIVILEGE

     There is an exchange privilege as set forth below among this
Trust and certain tax-free municipal bond funds and an equity fund
(the "Bond or Equity Funds") and certain money market funds (the
"Money-Market Funds"), all of which are sponsored by Aquila
Management Corporation and Aquila Distributors, Inc., and have the
same Administrator and Distributor as the Trust. All exchanges are
subject to certain conditions described below. As of the date of
the Prospectus, the Aquila-sponsored Bond or Equity Funds are this
Trust, Aquila Rocky Mountain Equity Fund, Hawaiian Tax-Free Trust,
Tax-Free Trust of Arizona, Tax-Free Fund of Colorado, Churchill
Tax-Free Fund of Kentucky, Tax-Free Fund For Utah and Narragansett
Insured Tax-Free Income Fund; the Aquila Money-Market Funds are
Capital Cash Management Trust, Pacific Capital Cash Assets Trust
(Original Shares), Pacific Capital Tax-Free Cash Assets Trust
(Original Shares), Pacific Capital U.S. Treasuries Cash Assets
Trust (Original Shares) and Churchill Cash Reserves Trust. 

     Class A Shares of the Trust can be exchanged only into Class
A Shares of any Bond or Equity Fund or into shares of the
Money-Market Funds. Class C Shares can be exchanged only into Class
C Shares of any Bond or Equity Fund that offers Class C Shares or
into shares of the Money-Market Funds. At the date of the
Prospectus, it is expected that all of the Bond and Equity Funds
will offer Class C Shares by April 30, 1996.

Class A Shares Exchange Privilege

     Under the Class A Shares exchange privilege, once any
applicable sales charge has been paid on Class A Shares of any Bond
or Equity Fund, those shares (and any shares acquired as a result
of reinvestment of dividends and/or distributions) may be exchanged
any number of times between Money-Market Funds and Bond or Equity
Funds without the payment of any additional sales charge. 

     CDSC Class A Shares of the Trust (see "Purchases of $1 Million
or More" and "Special Dealer Arrangements") can be exchanged for
CDSC Class A Shares of a Bond or Equity Fund or into a Money-Market
Fund. The CDSC Class A Shares will not be subject to a contingent
deferred sales charge at the time of exchange, but the contingent
deferred sales charge will be payable upon a redemption which
occurs before the expiration of the applicable holding period of
any CDSC Class A Shares or any shares of a Money-Market Fund
received on exchange for CDSC Class A Shares. (The contingent
deferred sales charge does not apply to any shares acquired as a
result of reinvestment of dividends and/or distributions.) For
purposes of computing the time period for the applicable contingent
deferred sales charge, the length of time of ownership of CDSC
Class A Shares will be determined by the time of original purchase
and not by the time of the exchange. Any period of 30 days or more
during which any Money-Market shares received on an exchange of
CDSC Class A Shares are held is not counted in computing the period
of ownership of CDSC Class A Shares. (See "Alternative Purchase
Plans.")

Class C Shares Exchange Privilege

     Under the Class C Shares exchange privilege, Class C Shares
(and any shares acquired as a result of reinvestment of dividends
and/or distributions) may be exchanged any number of times between
Money-Market Funds and for Class C Shares of Bond or Equity Funds.
Class C Shares will not be subject to a contingent deferred sales
charge at the time of exchange, but the contingent deferred sales
charge will be payable upon redemption which occurs before the
expiration of the applicable holding period of any Class C Shares
or any shares of a Money-Market Fund received on exchange for Class
C Shares. (The contingent deferred sales charge does not apply to
any shares acquired as a result of reinvestment of dividends and/or
distributions.) For purposes of computing the time period for the
applicable contingent deferred sales charge or for the conversion
of Class C Shares into Class A Shares, the length of time of
ownership of Class C shares will be determined by time of original
purchase and not by the time of the exchange. Any period of 30 days
or more during which any Money-Market shares received on an
exchange of Class C Shares are held is not counted in computing the
period of ownership of Class C Shares. (See "Alternative Purchase
Plans.") 

Eligible Shares

     The "Class A Eligible Shares" of any Bond or Equity Fund are
those Class A Shares which were (a) acquired by direct purchase
with payment of any applicable sales charge, or which were received
in exchange for shares of another Bond or Equity Fund on which any
applicable sales charge was paid; (b) acquired by exchange for
shares of a Money-Market Fund with payment of the applicable sales
charge; (c) acquired in one or more exchanges between shares of a
Money-Market Fund and a Bond or Equity Fund so long as the shares
of the Bond or Equity Fund were originally purchased as set forth
in (a) or (b); (d) acquired on conversion of Class C Shares or (e)
acquired as a result of reinvestment of dividends and/or
distributions on otherwise Class A Eligible Shares.

     The "CDSC Class A Eligible Shares" of any Bond or Equity Fund
are those CDSC Class A Shares which were (a) acquired by direct
purchase in the amount of $1 million or more without a sales charge
or in certain purchases when Special Dealer Arrangements are in
effect or which were received in exchange for CDSC Class A Shares
of another Bond or Equity Fund acquired under the same conditions;
(b) acquired by exchange for shares of a Money-Market Fund under
the same conditions; (c) acquired in one or more exchanges between
shares of a Money-Market Fund and a Bond or Equity Fund so long as
the shares of the Bond or Equity Fund were originally purchased as
set forth in (a) or (b); or (d) acquired as a result of
reinvestment of dividends and/or distributions on otherwise CDSC
Class A Eligible Shares.

     The "Class C Eligible Shares" of any Bond or Equity Fund are
those shares which were (a) acquired by direct purchase including
by exchange from a Money-Market Fund, or which were received in
exchange for shares of Class C Shares of another Bond or Equity
Fund; or (b) acquired as a result of reinvestment of dividends
and/or distributions on otherwise Class C Eligible Shares.

     If you own Class A or Class C Eligible Shares of any Bond or
Equity Fund, you may exchange them for shares of any Money Market
Fund or the Class A or Class C Shares, respectively, of any other
Bond or Equity Fund without payment of any sales charge or CDSC.
The shares received will continue to be Class A or Class C Eligible
shares. 

     If you own shares of a Money-Market Fund which you have
acquired by exchange for Class A Eligible Shares of any Bond or
Equity Fund, you may exchange these shares, and any shares acquired
as a result of reinvestment of dividends and/or distributions on
these shares, for Class A Shares of any Bond or Equity Fund without
payment of any sales charge.

     If you own shares of a Money-Market Fund which you have
acquired by exchange for CDSC Class A Eligible Shares of any Bond
or Equity Fund, you may exchange these shares, and any shares
acquired as a result of reinvestment of dividends and/or
distributions on these shares, for CDSC Class A shares of any Bond
or Equity Fund but you will be required to pay the applicable
contingent deferred sales charge if you redeem such shares before
you have held CDSC Class A Shares for four years. You will also be
required to pay the applicable contingent deferred sales charge if
you redeem such shares of a Money-Market Fund before you have held
CDSC Class A Shares for four years. The running of the four-year
period is suspended during the period you hold shares of a
Money-Market Fund received in exchange for CDSC Class A Shares.

     If you own shares of a Money-Market Fund which you have
acquired by exchange for Class C Eligible Shares of any Bond or
Equity Fund, you may exchange these shares, and any shares acquired
as a result of reinvestment of dividends and/or distributions on
these shares, for Class C Shares of any Bond or Equity Fund, but
you will be required to pay the applicable contingent deferred
sales charge if you redeem such Class C shares before you have held
Class C Shares for 12 months. You will also be required to pay the
applicable contingent deferred sales charge if you redeem such
shares of a Money-Market Fund before you have held Class C Shares
for 12 months. The running of the 12-month CDSC period and the
six-year conversion period for Class C Shares is suspended during
the period you hold shares of a Money-Market Fund received in
exchange for Class C Shares. (See "Alternative Purchase Plans.")

     Shares of a Money-Market Fund may be exchanged for shares of
another Money-Market Fund or for Class A Shares or Class C Shares
of a Bond or Equity Fund; however, if the shares of a Money-Market
Fund were not acquired by exchange of Eligible Shares of a Bond or
Equity Fund or of shares of a Money-Market Fund acquired in such an
exchange, they may be exchanged for Class A Shares of a Bond or
Equity Fund only upon payment of the applicable sales charge.  

     This Trust, as well as the Money-Market Funds and other Bond
or Equity Funds, reserves the right to reject any exchange into its
shares, if shares of the fund into which exchange is desired are
not available for sale in your state of residence.  The Trust may
also modify or terminate this exchange privilege at any time. In
the case of termination, the Prospectus will be appropriately
supplemented. No such modification or termination shall take effect
on less than 60 days' written notice to shareholders.

     All exercises of the exchange privilege are subject to the
conditions that (i) the shares being acquired are available for
sale in your state of residence; (ii) the aggregate net asset value
of the shares surrendered for exchange are at least equal to the
minimum investment requirements of the investment company whose
shares are being acquired and (iii) the ownership of the accounts
from which and to which the exchange is made are identical.

     The Agent will accept telephone exchange instructions from
anyone. To make a telephone exchange telephone: 

             800-872-6735 toll free or 908-855-5731

     Note: The Trust, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed to
verify the identity of the caller. The Agent will request some or
all of the following information: account name(s) and number, name
of the caller, the social security number registered to the account
and personal identification. The Agent may also record calls. You
should verify the accuracy of confirmation statements immediately
upon receipt.

     Exchanges will be effected at the relative exchange prices of
the shares being exchanged next determined after receipt by the
Agent of your exchange request. The exchange prices will be the
respective net asset values of the shares, unless a sales charge is
to be deducted in connection with an exchange of shares, in which
case the exchange price of shares of a Bond or Equity Fund will be
their public offering price. Prices for exchanges are determined in
the same manner as for purchases of the Trust's shares. See "How to
Invest in the Trust."

     An exchange is treated for Federal tax purposes as a
redemption and purchase of shares and may result in the realization
of a capital gain or loss, depending on the cost or other tax basis
of the shares exchanged and the holding period (see the Additional
Statement); no representation is made as to the deductibility of
any such loss should such occur.

     Dividends paid by the Money-Market Funds are taxable, except
to the extent that a portion or all of the dividends paid by
Pacific Capital Tax-Free Cash Assets Trust (a tax-free Money-Market
Fund) are exempt from regular Federal income tax, and to the extent
that a portion or all of the dividends paid by Pacific Capital U.S.
Treasuries Cash Assets Trust (which invests in U.S. Treasury
obligations) are exempt from state income taxes. Dividends paid by
Aquila Rocky Mountain Equity Fund are taxable. If your state of
residence is not the same as that of the issuers of obligations in
which a tax-free municipal Bond Fund or a tax-free Money-Market
Fund invests, the dividends from that fund may be subject to income
tax of the state in which you reside. Accordingly, you should
consult your tax adviser before acquiring shares of such a Bond
Fund or a tax-free Money-Market Fund under the exchange privilege
arrangement.

     If you are considering an exchange into one of the funds
listed above, you should send for and carefully read its
Prospectus.

                       GENERAL INFORMATION

Performance

     Advertisements, sales literature and communications to
shareholders may contain various measures of the Trust's
performance including current yield, taxable equivalent yield,
various expressions of total return, current distribution rate and
taxable equivalent distribution rate.

     Average annual total return figures, as prescribed by the
Securities and Exchange Commission, represent the average annual
percentage change in value of a hypothetical $1,000 purchase,
invested at the maximum public offering price (offering price
includes the applicable sales charge) for 1- and 5-year periods and
for a period since the inception of the Trust, to the extent
applicable, through the end of such periods, assuming reinvestment
(without sales charge) of all distributions. The Trust may also
furnish total return quotations for other periods or based on
investments at various applicable sales charge levels or at net
asset value. For such purposes total return equals the total of all
income and capital gains paid to shareholders, assuming
reinvestment of all distributions, plus (or minus) the change in
the value of the original investment, expressed as a percentage of
the purchase price. See the Additional Statement.

     Current yield reflects the income per share earned by each of
the Trust's portfolio investments; it is calculated by (i) dividing
the Trust's net investment income per share during a recent 30-day
period by (ii) the maximum public offering price on the last day of
that period and by (iii) annualizing the result. Taxable equivalent
yield shows the yield from a taxable investment that would be
required to produce an after-tax yield equivalent to that of the
Trust, which invests in tax-exempt obligations. It is computed by
dividing the tax-exempt portion of the Trust's yield (calculated as
indicated) by one minus a stated income tax rate and by adding the
product to the taxable portion (if any) of the Trust's yield. See
the Additional Statement.

     Current yield and taxable equivalent yield, which are
calculated according to a formula prescribed by the Securities and
Exchange Commission (see the Additional Statement), are not
indicative of the dividends or distributions which were or will be
paid to the Trust's shareholders. Dividends or distributions paid
to shareholders are reflected in the current distribution rate or
taxable equivalent distribution rate which may be quoted to
shareholders. The current distribution rate is computed by (i)
dividing the total amount of dividends per share paid by the Trust
during a recent 30-day period by (ii) the current maximum offering
price and by (iii) annualizing the result. A taxable equivalent
distribution rate shows the taxable distribution rate that would be
required to produce an after-tax distribution rate equivalent to
the Trust's distribution rate (calculated as indicated above). The
current distribution rate, unlike yield figures, is not limited to
investment performance, but takes into account expenses as well; it
also differs from the current yield computation because it could
include distributions to shareholders from sources, if any, other
than dividends and interest, such as short-term capital gains or
return of capital. If distribution rates are quoted in advertising,
they will be accompanied by calculations of current yield in
accordance with the formula of the Securities and Exchange
Commission.

     In each case performance figures are based upon past
performance, reflect as appropriate all recurring charges against
the Trust's income net of fee waivers and reimbursement of
expenses, if any, and will assume the payment of the maximum sales
charge on the purchase of shares, but not on reinvestment of income
dividends. The investment results of the Trust, like all other
investment companies, will fluctuate over time; thus, performance
figures should not be considered to represent what an investment
may earn in the future or what the Trust's yield, tax equivalent
yield, distribution rate, taxable equivalent distribution rate or
total return may be in any future period. The annual report of the
Trust contains additional performance information that will be made
available upon request and without charge.

Description of the Trust and its Shares

     The Trust is a series of The Cascades Trust (the "Business
Trust") formed in 1985 under the name Tax-Free Trust of Oregon. On
August 10, 1989, the name of the Business Trust was changed to The
Cascades Trust. The Business Trust presently has only one active
series, the original series, which continues to be called Tax-Free
Trust of Oregon.

     The Business Trust is an open-end, non-diversified management
investment company organized as a Massachusetts business trust.
(See "Investment of the Trust Assets" above for further information
about the Trust's status as "non-diversified").

     The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares and to divide or
combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in
the Business Trust. Each share represents an equal proportionate
interest in the Trust with each other share of its class; shares of
the respective classes represent proportionate interests in the
Trust in accordance with their respective net asset values. Income,
direct liabilities and direct operating expenses of each series
will be allocated directly to each series, and general liabilities
and expenses, if any, of the Business Trust will be allocated among
the series in a manner acceptable to the Board of Trustees. Upon
liquidation of a series, shareholders of the series are entitled to
share pro-rata in the net assets of that series available for
distribution to shareholders and upon liquidation of the Business
Trust, the respective series are entitled to share proportionately
in the assets available to the Business Trust after allocation to
the various series. Shareholders of the Trust are entitled to share
pro-rata in the net assets of the Trust available for distribution
to shareholders (and in the assets of the Business Trust otherwise
available to shareholders of the Trust), in accordance with the
respective net asset values of the shares of each of the Trust's 
classes at that time. All shares are presently divided into three
classes; however, if they deem it advisable and in the best
interests of shareholders, the Board of Trustees of the Trust may
create additional classes of shares (subject to rules and
regulations of the Securities and Exchange Commission or by
exemptive order) or the Board of Trustees may, at its own
discretion, create additional series of shares, each of which may
have separate assets and liabilities (in which case any such series
will have a designation including the word "Series"). See the
Additional Statement for further information about possible
additional series. Shares are fully paid and non-assessable, except
as set forth under the caption "General Information" in the
Additional Statement; the holders of shares have no pre-emptive or
conversion rights.

     In addition to Class A and Class C Shares, which are offered
by this Prospectus, the Trust also has Institutional Class Shares
("Class Y Shares"), which are offered only to institutions acting
for investors in a fiduciary, advisory, agency, custodial or
similar capacity and are not offered directly to retail customers.
Class Y Shares are offered by means of a separate prospectus, which
can be obtained by calling the Trust at 800-872-6734.

     The primary distinction among the Trust's three classes of
shares lies in their different sales charge structures and ongoing
expenses, which are likely to be reflected in differing yields and
other measures of investment performance. All three classes
represent interests in the same portfolio of Oregon Obligations and
have the same rights, except that each class bears the separate
expenses, if any, of its Distribution Plan and has exclusive voting
rights with respect to its Plan.

     As of April 2, 1996, BHC Securities, Inc., 2005 Market Street,
Philadelphia, PA held of record 2,590,644 shares (9.7%) of the
Trust and Merrill Lynch, Pierce, Fenner & Smith, Inc., P.O. Box
30561, New Brunswick, NJ held of record 2,590,644 shares (8.9%) of
the Trust, all of which were Class A Shares. The Trust's management
is not aware of any other person owning of record or beneficially
5% or more of the Trust's outstanding shares as of that date. On
the basis of information received from those record owners, the
Trust's management believes that all of such shares are held for
the benefit of brokerage clients.

Voting Rights

     At any meeting of shareholders, shareholders are entitled to
one vote for each dollar of net asset value (determined as of the
record date for the meeting) per share held (and proportionate
fractional votes for fractional dollar amounts). Shareholders will
vote on the election of Trustees and on other matters submitted to
the vote of shareholders. Shares vote by classes on any matter
specifically affecting one or more classes, such as an amendment of
an applicable part of the Distribution Plan.

     Rule 18f-2 under the Investment Company Act of 1940 provides
that matters submitted to shareholders affecting any series must be
approved by a majority of the outstanding voting securities of such
series, voting separately from the other series, unless it is clear
that the interests of each series in the matter are identical or
the matter does not affect a series. However, the rule exempts the
selection of accountants and the election of Trustees from the
separate voting requirement.

     No amendment may be made to the Declaration of Trust without
the affirmative vote of the holders of a majority of the
outstanding shares of the Trust, except that the Trust's Board of
Trustees may change the name of the Trust. The Trust may be
terminated (i) upon the sale of its assets to another issuer, or
(ii) upon liquidation and distribution of the assets of the Trust,
in either case if such action is approved by the vote of the
holders of a majority of the outstanding shares of the Trust. If
not so terminated, the Trust will continue indefinitely.


<PAGE>


                   APPLICATION FOR TAX-FREE TRUST OF OREGON
                      FOR CLASS A OR CLASS C SHARES ONLY
                PLEASE COMPLETE STEPS 1 THROUGH 4 AND MAIL TO:
                      ADM, ATTN: AQUILA SM GROUP OF FUNDS
                  581 MAIN STREET, WOODBRIDGE, NJ 07095-1198
                             Tel.# 1-800-872-6735

STEP 1
A. ACCOUNT REGISTRATION

___Individual Use line 1
___Joint Account*  Use lines 1&2
___For a Minor Use line 3
___For Trust, Corporation, Partnership or other Entity Use line 4

*  Joint Accounts will be Joint Tenants with rights of survivorship
   unless otherwise specified.
** Uniformed Gifts/Transfers to Minors Act.

Please type or print name exactly as account is to be registered
1.________________________________________________________________
  First Name   Middle Initial   Last Name   Social Security Number 
2.________________________________________________________________
  First Name   Middle Initial   Last Name   Social Security Number 
3.________________________________________________________________
  Custodian's First Name      Middle Initial          Last Name 
Custodian for ____________________________________________________
                   Minor's First Name   Middle Initial   Last Name  
Under the ___________UGTMA** _____________________________________
         Name of State       Minors Social Security Number 
4. ____________________________________________________
   ____________________________________________________
(Name of Corporation or Partnership. If a Trust, include the name(s) of 
Trustees in which account will be registered and the name and date of the 
Trust Instrument. Account for a Pension or Profit Sharing Plan or Trust 
may be registered in the name of the Plan or Trust itself.)
___________________________________________________________________
        Tax I.D. Number    Authorized Individual          Title 


B. MAILING ADDRESS AND TELEPHONE NUMBER

____________________________________________________
  Street or PO Box                           City 
_______________________________(______)______________
  State           Zip          Daytime Phone Number

Occupation:________________________Employer:________________________

Employer's Address:__________________________________________________
                   Street Address:               City  State  Zip 
Citizen or resident of: ___  U.S. ___ Other  Check here ___ if you are a 
non-U.S. Citizen or resident and not subject to back-up withholding (See 
certification in Step 4, Section B, below.)

C. INVESTMENT DEALER OR BROKER:
(Important - to be completed by Dealer or Broker)

_______________________   _____________________________
Dealer Name                           Branch Number
_______________________   _____________________________
Street Address                   Rep. Number/Name
_______________________   (_______)_____________________
  City    State    Zip     Area Code        Telephone


STEP 2 
PURCHASES OF SHARES

A. INITIAL INVESTMENT

Indicate method of payment (For either method, make check 
payment to: TAX-FREE TRUST OF OREGON)

Indicate class of shares:
__  Class A Shares (Front-Payment Class)
__  Class C Shares (Level-Payment Class)

IF NO SHARE CLASS IS MARKED, INVESTMENT WILL AUTOMATICALLY BE 
MADE IN CLASS A SHARES.

   __ Initial Investment $_________ (Minimum $1,000)
   __ Automatic Investment $________ (Minimum $50)

For Automatic Investments of at least $50 per month, you must 
complete Step 3, Section A, Step 4, Sections A & B and ATTACH A 
PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK.

B. DISTRIBUTIONS

All income dividends and capital gains distributions are automatically 
reinvested in additional shares at Net Asset Value unless otherwise 
indicated below.

Dividends are to be:___ Reinvested  ___Paid in cash*
Capital Gains Distributions are to be: ___ Reinvested ___ Paid in cash*

    * For cash dividends, please choose one of the following options:
 
___ Deposit directly into my/our Financial Institution account. 
     ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK showing
     the Financial Institution account where I/we would like you to
     deposit the dividend. (A Financial Institution is a commercial 
     bank, savings bank or credit union.)

___ Mail check to my/our address listed in Step 1.


STEP 3
SPECIAL FEATURES

A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___ No

    This option provides you with a convenient way to have amounts 
automatically drawn on your Financial Institution account and invested 
in your Tax-Free Trust of Oregon Account. To establish this program, 
please complete Step 4, Sections A & B of this Application.

I/We wish to make regular monthly investments of $ _________________
(minimum $50) on the ___ 1st day  or ___ 16th day of the month (or 
on the first business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)

B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___ No

    This option provides you with a convenient way to add to your account
(minimum $50 and maximum $50,000) at any time you wish by simply calling
the Trust toll-free at 1-800-872-6735. To establish this program, please
complete Step 4, Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)

C. LETTER OF INTENT

APPLICABLE TO CLASS A SHARES ONLY.
See Terms of Letter of Intent and Escrow at the end of this application
___ Yes ___ No

I/We intend to invest in Class A Shares of the Trust during the 13-month 
period from the date of my/our first purchase pursuant to this Letter 
(which purchase cannot be more than 90 days prior to the date of this 
Letter), an aggregate amount (excluding any reinvestment of dividends or
distributions) of at least $25,000 which, together with my/our present
holdings of Trust shares (at public offering price on date of this 
Letter), will equal or exceed the minimum amount checked below:
___  $25,000   ___  $50,000    ___ $100,000   ___ $250,000
___  $500,000  ___  $1,000,000 ___ $2,500,000 ___ $5,000,000 

D. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)
APPLICABLE TO CLASS A SHARES ONLY.

Application must be received in good order at least 2 weeks prior to 
1st actual liquidation date.
(Check appropriate box)
___ Yes ___ No

    Please establish an Automatic Withdrawal Plan for this account, 
subject to the terms of the Automatic Withdrawal Plan Provisions 
set forth below. To realize the amount stated below, Administrative 
Data Management Corp. (the Agent) is authorized to redeem sufficient 
shares from this account at the then current Net Asset Value, in 
accordance with the terms below:

Dollar Amount of each withdrawal $ ______________beginning________________ .
                                   Minimum: $50             Month/Year
Payments to be made: ___ Monthly or ___ Quarterly

    Checks should be made payable as indicated below. If check is 
payable to a Financial Institution for your account, indicate 
Financial Institution name, address and your account number.
_______________________________     ______________________________________
First Name Middle Initial Last Name   Financial Institution Name
_______________________________     ______________________________________
  Street                             Financial Institution Street Address
_______________________________     ______________________________________
 City   State Zip                   City   State Zip    
                
                                     ____________________________________
                                     Financial Institution Account Number

E. TELEPHONE EXCHANGE
 (Check appropriate box)
___ Yes ___ No
This option allows you to effect exchanges among accounts in your 
name within the Aquila SM Group of Funds by telephone.

    The Agent is authorized to accept and act upon my/our or any other 
persons telephone instructions to execute the exchange of shares of one
Aquila-sponsored fund for shares of another Aquila-sponsored fund with
identical shareholder registration in the manner described in the 
Prospectus. Except for gross negligence in acting upon such telephone
instructions to execute an exchange, and subject to the conditions set 
forth herein, I/we understand and agree to hold harmless the Agent, each
of the Aquila Funds, and their respective officers, directors, trustees,
employees, agents and affiliates against any liability, damage, expense,
claim or loss, including reasonable costs and attorneys fees, resulting 
from acceptance of, or acting or failure to act upon, this Authorization.

F. EXPEDITED REDEMPTION
(Check appropriate box)
___ Yes ___ No
The proceeds will be deposited to your Financial Institution 
account listed.

    Cash proceeds in any amount from the redemption of shares will be 
mailed or wired, whenever possible, upon request, if in an amount of 
$1,000 or more to my/our account at a Financial Institution. The 
Financial Institution account must be in the same name(s) as this Trust 
account is registered.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK).
_______________________________   ____________________________________
  Account Registration            Financial Institution Account Number
_______________________________   ____________________________________
  Financial Institution Name      Financial Institution Transit/Routing 
                                                                Number
_______________________________   ____________________________________
  Street                            City   State Zip      


STEP 4 Section A

DEPOSITORS AUTHORIZATION TO HONOR DEBITS

IF YOU SELECTED AUTOMATIC INVESTMENT OR TELEPHONE INVESTMENT
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.

I/We authorize the Financial Institution listed below to charge to
my/our account any drafts or debits drawn on my/our account initiated 
by the Agent, Administrative Data Management Corp., and to pay such 
sums in accordance therewith, provided my/our account has sufficient 
funds to cover such drafts or debits. I/We further agree that your 
treatment of such orders will be the same as if I/we personally signed
or initiated the drafts or debits. 

I/We understand that this authority will remain in effect until you 
receive my/our written instructions to cancel this service. I/We also 
agree that if any such drafts or debits are dishonored, for any 
reason, you shall have no liabilities.

Financial Institution Account Number _______________________________________

Name and Address where my/our account is maintained

Name of Financial Institution______________________________________________

Street Address_____________________________________________________________

City___________________________________________State _________ Zip ________
Name(s) and Signature(s) of Depositor(s) as they appear where account is 
registered

______________________________________________
        (Please Print)
X_____________________________________________  __________________
        (Signature)                                    (Date)

______________________________________________
        (Please Print)
X_____________________________________________  __________________
        (Signature)                                    (Date)

                        INDEMNIFICATION AGREEMENT

To: Financial Institution Named Above

So that you may comply with your depositor's request, Aquila 
Distributors, Inc. (the "Distributor") agrees:

1 Electronic Funds Transfer debit and credit items transmitted 
  pursuant to the above authorization shall be subject to the 
  provisions of the Operating Rules of the National Automated 
  Clearing House Association.

2 To indemnify and hold you harmless from any loss you may suffer
  in connection with the execution and issuance of any electronic 
  debit in the normal course of business initiated by  the Agent 
  (except any loss due to your payment of any amount drawn against
  insufficient or uncollected funds), provided that you promptly 
  notify us in writing of any claim against you with respect to 
  the same, and further provided that you will not settle or
  pay or agree to settle or pay any such claim without the written 
  permission of the Distributor.

3 To indemnify you for any loss including your reasonable costs and
  expenses in the event that you dishonor, with or without cause, any
  such electronic debit.

STEP 4 Section B

SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED

- The undersigned warrants that he/she has full authority and is of 
  legal age to purchase shares of the Trust and has received and 
  read a current Prospectus of the Trust and agrees to its terms.

- I/We authorize the Trust and its agents to act upon these 
  instructions for the features that have been checked.

- I/We acknowledge that in connection with an Automatic Investment or 
  Telephone Investment, if my/our account at the Financial Institution
  has insufficient funds, the Trust and its agents may cancel the 
  purchase transaction and are authorized to liquidate other shares or
  fractions thereof held in my/our Trust account to make up any 
  deficiency resulting from any decline in the net asset value of 
  shares so purchased and any dividends paid on those shares. I/We 
  authorize the Trust and its agents to correct any transfer error by
  a debit or credit to my/our Financial Institution account and/or 
  Trust account and to charge the account for any related charges. I/We
  acknowledge that shares purchased either through Automatic Investment
  or Telephone Investment are subject to applicable sales charges.

- The Trust, the Agent and the Distributor and their Trustees, directors, 
  employees and agents will not be liable for acting upon instructions
  believed to be genuine, and will not be responsible for any losses
  resulting from unauthorized telephone transactions if the Agent follows
  reasonable procedures designed to verify the identity of the caller. 
  The Agent will request some or all of the following information: 
  account name and number; name(s) and social security number registered
  to the account and personal identification; the Agent may also record 
  calls. Shareholders should verify the accuracy of confirmation 
  statements immediately upon receipt. Under penalties of perjury, the
  undersigned whose Social Security (Tax I.D.) Number is shown above 
  certifies (i) that Number is my correct taxpayer identification number
  and (ii) currently I am not under IRS notification that I am subject 
  to backup withholding (line out (ii) if under notification). If no such
  Number is shown, the undersigned further certifies, under penalties of
  perjury, that either (a) no such Number has been issued, and a Number
  has been or will soon be applied for; if a Number is not provided to 
  you within sixty days, the undersigned understands that all payments
  (including liquidations) are subject to 31% withholding under federal
  tax law, until a Number is provided and the undersigned may be subject
  to a $50 I.R.S. penalty; or (b) that the undersigned is not a citizen
  or resident of the U.S.; and either does not expect to be in the U.S.
  for 183 days during each calendar year and does not conduct a business
  in the U.S. which would receive any gain from the Trust, or is exempt
  under an income tax treaty.

NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW. 
FOR A TRUST, ALL TRUSTEES MUST SIGN.*
__________________________     ____________________________     _________
Individual (or Custodian)      Joint Registrant, if any            Date
__________________________     ____________________________     _________
Corporate Officer, Partner,    Title                               Date
Trustee, etc.    

* For Trust, Corporations or Associations, this form must be accompanied
  by proof of authority to sign, such as a certified copy of the corporate
  resolution or a certificate of incumbency under the trust instrument.


SPECIAL INFORMATION

- Certain features (Automatic Investment, Telephone Investment, Expedited
  Redemption and Direct Deposit of Dividends) are effective 15 days after
  this form is received in good order by the Trust's Agent.

- You may cancel any feature at any time, effective 3 days after the Agent 
  receives written notice from you.

- Either the Trust or the Agent may cancel any  feature, without prior 
  notice, if in its judgment your use of any  feature involves unusual 
  effort or difficulty in the administration of your account.

- The Trust reserves the right to alter, amend or terminate any or all  
  features or to charge a service fee upon 30 days written notice to 
  shareholders except if additional notice is specifically required by 
  the terms of the Prospectus.

BANKING INFORMATION

- If your Financial Institution account changes, you must complete a 
  Ready Access features form which may be obtained from Aquila 
  Distributors at 1-800-872-6734 and send it to the Agent together 
  with a "voided" check or pre-printed deposit slip from the new 
  account. The new Financial Institution change is effective in 15 
  days after this form is received in good order by the Trust's Agent.

TERMS OF LETTER OF INTENT AND ESCROW

      By checking Box 2c and signing the Application, the investor 
is entitled to make each purchase at the public offering price 
applicable to a single transaction of the dollar amount checked 
above, and agrees to be bound by the terms and conditions applicable
to Letters of Intent appearing below.

      The investor is making no commitment to purchase shares, but 
if the investor's purchases within thirteen months from the date of
the investor's first purchase do not aggregate $25,000, or, if such
purchases added to the investor's present holdings do not aggregate
the minimum amount specified above, the investor will pay the increased
amount of sales charge prescribed in the terms of escrow below.

      The commission to the dealer or broker, if any, named 
herein shall be at the rate applicable to the minimum amount of the 
investor's specified intended purchases checked above. If the 
investor's actual purchases do not reach this minimum amount, the 
commissions previously paid to the dealer will be adjusted to the 
rate applicable to the investor's total purchases. If the investor's 
purchases exceed the dollar amount of the investor's intended 
purchases and pass the next commission break-point, the investor 
shall receive the lower sales charge, provided that the dealer 
returns to the Distributor the excess of commissions previously 
allowed or paid to him over that which would be applicable to the 
amount of the investor's total purchases.

      The investor's dealer or broker shall refer to this Letter of 
Intent in placing any future purchase orders for the investor while
this Letter is in effect.

      The escrow shall operate as follows:

1. Out of the initial purchase (or subsequent purchases if necessary),
   3% of the dollar amount specified in the Letter of Intent (computed
   to the nearest full share) shall be held in escrow in shares of the
   Trust by the Agent. All dividends and any capital distributions on 
   the escrowed shares will be credited to the investor's account.
  
2. If the total minimum investment specified under the Letter is 
   completed within a thirteen-month period, the escrowed shares 
   will be promptly released to the investor. However, shares 
   disposed of prior to completion of the purchase requirement 
   under the Letter will be deducted from the amount required to 
   complete the investment commitment.

3. If the total purchases pursuant to the Letter are less than the 
   amount specified in the Letter as the intended aggregate purchases, 
   the investor must remit to the Distributor an amount equal to the 
   difference between the dollar amount of sales charges actually paid 
   and the amount of sales charges which would have been paid if the 
   total amount purchased had been made at a single time. If such 
   difference in sales charges is not paid within twenty days after 
   receipt of a request from the Distributor or the dealer, the 
   Distributor will, within sixty days after the expiration of the 
   Letter, redeem the number of escrowed shares necessary to realize 
   such difference in sales charges. Full shares and any cash proceeds 
   for a fractional share remaining after such redemption will be 
   released to the investor. The escrow of shares will not be released 
   until any additional sales charge due has been paid as stated in 
   this section.
   
4. By checking Box 2c and signing the Application, the investor 
   irrevocably constitutes and appoints the Agent or the Distributor 
   as his attorney to surrender for redemption any or all escrowed 
   shares on the books of the Trust.

AUTOMATIC WITHDRAWAL PLAN PROVISIONS

By requesting an Automatic Withdrawal Plan, the applicant agrees 
to the terms and conditions applicable to such plans, as stated below.

1. The Agent will administer the Automatic Withdrawal Plan (the "Plan") 
   as agent for the person (the "Planholder") who executed the Plan
   authorization.

2. Certificates will not be issued for shares of the Trust purchased 
   for and held under the Plan, but the Agent  will credit all such 
   shares to the Planholder on the records of the Trust. Any share 
   certificates now held by the Planholder may be surrendered 
   unendorsed to the Agent with the application so that the shares 
   represented by the certificate may be held under the Plan.

3. Dividends and distributions will be reinvested in shares of the 
   Trust at Net Asset Value without a sales charge.

4. Redemptions of shares in connection with disbursement payments will 
   be made at the Net Asset Value per share in effect at the close of 
   business on the last business day of the month or quarter.

5. The amount and the interval of disbursement payments and the address
   to which checks are to be mailed may be changed, at any time, by the
   Planholder on written notification to the Agent. The Planholder should
   allow at least two weeks time in mailing such notification before the
   requested change can be put in effect.

6. The Planholder may, at any time, instruct the Agent by written 
   notice (in proper form in accordance with the requirements of 
   the then current Prospectus of the Trust) to redeem all, or any 
   part of, the shares held under the Plan. In such case the Agent 
   will redeem the number of shares requested at the Net Asset Value 
   per share in effect in accordance with the Trust's usual 
   redemption procedures and will mail a check for the proceeds of 
   such redemption to the Planholder.

7. The Plan may, at any time, be terminated by the Planholder on written
   notice to the Agent, or by the Agent upon receiving directions to 
   that effect from the Trust. The Agent will also terminate the Plan 
   upon receipt of evidence satisfactory to it of the death or legal 
   incapacity of the Planholder. Upon termination of the Plan by the 
   Agent or the Trust, shares remaining unredeemed will be held in an  
   uncertificated account in the name of the Planholder, and the account 
   will continue as a dividend-reinvestment, uncertificated account 
   unless and until proper instructions are received from the 
   Planholder, his executor or guardian, or as otherwise appropriate.

8. The Agent shall incur no liability to the Planholder for any action 
   taken or omitted by the Agent in good faith.

9. In the event that the Agent shall cease to act as transfer agent 
   for the Trust, the Planholder will be deemed to have appointed 
   any successor transfer agent to act as his agent in administering 
   the Plan.

10.Purchases of additional shares concurrently with withdrawals are
   undesirable because of sales charges when purchases are made. 
   Accordingly, a Planholder may not maintain this Plan while 
   simultaneously making regular purchases. While an occasional lump
   sum investment may be made, such investment should normally be an
   amount equivalent to three times the annual withdrawal or $5,000,
   whichever is less.


<PAGE>


INVESTMENT ADVISER
Qualivest Capital Management, Inc.
A subsidiary of U.S. Bancorp and its subsidiary,
United States National Bank of Oregon
111 S.W. Fifth Avenue
U.S. Bancorp Tower
Portland, Oregon 97204

ADMINISTRATOR
Aquila Management Corporation
380 Madison Avenue, Suite 2300
New York, New York 10017

BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Warren C. Coloney
James A. Gardner
Diana P. Herrmann
Ann R. Leven
Raymond H. Lung
Richard C. Ross

OFFICERS
Lacy B. Herrmann, President
W. Dennis Cheroutes, Senior Vice President
Sally Wilson Church, Vice President
Nancy Kayani, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary

DISTRIBUTOR
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017

TRANSFER AND SHAREHOLDER SERVICING AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198

CUSTODIAN
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154

COUNSEL
Hollyer Brady Smith Troxell
  Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176

TABLE OF CONTENTS
Highlights                                  2
Table Of Expenses                           5
Financial Highlights                        6
Introduction                                7
Investment Of The Trust's Assets            7
Investment Restrictions                    12
Net Asset Value Per Share                  13
Alternative Purchase Plans                 13
How To Invest In The Trust                 16
How To Redeem Your Investment              23
Automatic Withdrawal Plan                  26
Management Arrangements                    26
Dividend And Tax Information               29
Exchange Privilege                         33
General Information                        36
Application and Letter of Intent

AQUILA
[EAGLE LOGO]
TAX-FREE TRUST
OF OREGON
[LOGO]
A tax-free
income investment

A Series of The Cascades Trust

PROSPECTUS

One of The 
Aquilasm Group of Funds

<PAGE>
                   TAX-FREE TRUST OF OREGON

                 Supplement to the prospectus 
            for Class Y shares dated April 5, 1996

The following material is added to "Highlights":

     Class Y Shares of the Trust are only offered for sale in certain
states. (See "How to Invest in the Trust.") If Class Y Shares of the Trust
are sold outside those states, except to certain institutional investors,
the Trust may be required to redeem them. If your state of residence is not
Oregon, the dividends from the Trust may be subject to income taxes of the
state in which you reside. Accordingly, you should consult your tax adviser
before acquiring shares of the Trust.

The following material is added to "How to Invest in the Trust":

     At the date of this supplement, Class Y Shares of the Trust are
available only in Oregon. If you do not reside in Oregon you should not
purchase shares of the Trust. If shares are sold outside of Oregon, except
to certain institutional investors, the Trust can redeem them. Such a
redemption may result in a loss to you and may have tax consequences. In
addition, if your state of residence is not Oregon, the dividends from
the Trust may be subject to income tax of the state in which you reside.
Accordingly, you should consult your tax adviser before acquiring shares
of the Trust.

       The date of this supplement is December 27, 1996

<PAGE>

                    Tax-Free Trust of Oregon
                 380 Madison Avenue, Suite 2300
                    New York, New York 10017
                   800-USA-OREG (800-872-6734)
                          212-697-6666

Prospectus
Institutional Class Shares
Class Y Shares                                      April 5, 1996

     The Trust is a mutual fund whose objective is to seek to
provide as high a level of current income exempt from Oregon and
regular Federal income taxes as is consistent with preservation of
capital by investing in municipal obligations which pay interest
exempt from Oregon State and Federal income taxes. These municipal
obligations must, at the time of purchase, either be rated within
the four highest credit ratings (considered as investment grade)
assigned by Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or, if unrated, be determined to be of comparable
quality by the Trust's Adviser, Qualivest Capital Management, Inc.,
a subsidiary of U.S. Bancorp. 

     There are three classes of shares of the Trust: Institutional
Class Shares ("Class Y Shares") are offered only to institutions
acting for investors in a fiduciary, advisory, agency, custodial or
similar capacity, and are not offered directly to retail customers.
Class Y Shares are offered at net asset value with no sales charge,
no redemption fee, no contingent deferred sales charge and no
distribution fee. (See "How to Purchase Class Y Shares.") The other
classes, Front-Payment Class Shares ("Class A Shares") and
Level-Payment Class Shares ("Class C Shares"), are not offered by
this Prospectus. See "General Information - Description of
Classes." 

     This Prospectus concisely states information about the Trust
that you should know before investing. A Statement of Additional
Information about the Trust (the "Additional Statement") dated
April 5, 1996, has been filed with the Securities and Exchange
Commission and is available without charge upon written request to
Administrative Data Management Corp., the Trust's Shareholder
Servicing Agent, at the address given below, or by calling the
telephone number(s) given below. The Additional Statement contains
information about the Trust and its management not included in this
Prospectus. The Additional Statement is incorporated by reference
in its entirety in this Prospectus. Only when you have read both
the Prospectus and the Additional Statement are all material facts
about the Trust available to you.

     Shares of the Trust are not deposits in, obligations of or
guaranteed or endorsed by, Qualivest Capital Management, Inc. (the
"Adviser"), United States National Bank of Oregon, any of their
affiliates or any other bank. Shares of the Trust are not insured
or guaranteed by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency or
government sponsored agency of the Federal Government or any State.

An investment in the Trust involves investment risks, including
possible loss of the principal amount invested.

      For Purchase, Redemption or Account inquiries contact
The Trust's Transfer Agent: Administrative Data Management Corp.
           581 Main Street, Woodbridge, NJ 07095-1198
           Call 800-872-6735 toll free or 908-855-5731

           For General Inquiries & Yield Information,
           Call 800-872-6734 toll free or 212-697-6666

This Prospectus Should Be Read and Retained For Future Reference

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.


<PAGE>

                           HIGHLIGHTS

     Tax-Free Trust of Oregon, founded by Aquila Management
Corporation in 1985 and one of the Aquilasm Group of Funds, is an
open-end mutual fund which invests in tax-free municipal bonds, the
kind of obligations issued by the State of Oregon, its counties and
various other local authorities to finance such long-term projects
as schools, airports, roads, hospitals, water facilities and other
vital public purpose projects throughout Oregon. (See
"Introduction.")

     Tax-Free Income - The municipal obligations in which the Trust
invests pay interest which is exempt from both regular Federal and
State of Oregon income taxes. Dividends paid by the Trust from this
income are likewise free of both such taxes. It is, however,
possible that in certain circumstances a small portion of the
dividends paid by the Trust will be subject to income taxes. The
Federal alternative minimum tax may apply to some investors, but
its impact will be limited since not more than 20% of the Trust's
net assets can be invested in obligations paying interest which is
subject to this tax. The receipt of exempt-interest dividends from
the Trust may result in some portion of social security payments or
railroad retirement benefits being included in taxable income.
Capital gains distributions, if any, are taxable. (See "Dividend
and Tax Information.")

     Investment Grade - The Trust will acquire only those municipal
obligations which, at the time of purchase, are within the four
highest credit ratings assigned by Moody's Investors Service, Inc.
or Standard & Poor's Corporation, or are determined by the Adviser
to be of comparable quality. In general there are nine separate
credit ratings, ranging from the highest to the lowest credit
ratings for municipal obligations. Obligations within the top four
ratings are considered "investment grade," but those in the fourth
rating may have speculative characteristics as well. (See
"Investment of the Trust's Assets.")

     Initial Investment - You may open your account with any
purchase of $1,000 or more or by opening an Automatic Investment
Program which makes purchases of $50 or more each month. See the
Application, which is in the back of the Prospectus. (See "How to
Invest in the Trust," which includes applicable sales charge
information.) 

     Additional Investments - You may make additional investments
at any time and in any amount, directly or, if in an amount of $50
or more, through the convenience of having your investment
electronically transferred from your financial institution account
into the Trust by Automatic Investment or Telephone Investment.
(See "How to Invest in the Trust.")

     Alternative Purchase Plans - The Trust provides alternative
ways to invest. (See "Description of the Trust and its Shares.")
For this purpose the Trust offers classes of shares, which differ
in their expense levels and sales charges:

          Institutional Class Shares ("Class Y Shares") are offered
          by this Prospectus. Class Y Shares are offered only to
          institutions acting for investors in a fiduciary,
          advisory, agency, custodial or similar capacity, and are
          not offered directly to retail customers. Class Y Shares
          are offered at net asset value with no sales charge, no
          redemption fee, no contingent deferred sales charge and
          no distribution fee. (See "How to Purchase Class Y
          Shares.") 

     The other classes, Front-Payment Class Shares ("Class A
Shares") and Level-Payment Class Shares ("Class C Shares"), are not
offered by this Prospectus. See "General Information - Description
of Classes." 

     Monthly Income - Dividends are declared daily and paid
monthly. At your choice, dividends are paid by check mailed to you,
directly deposited into your financial institution account or
automatically reinvested without sales charge in additional shares
of the Trust at the then-current net asset value. Specific classes
of shares will have different dividend amounts due to their
particular expense levels. (See "Dividend and Tax Information.")

     Many Different Issues - You have the advantages of a portfolio
which consists of over 195 issues with different maturities. (See
"Investment of the Trust's Assets.")

     Local Portfolio Management - Qualivest Capital Management,
Inc., a subsidiary of U.S. Bancorp ("Bancorp") and its subsidiary,
United States National Bank of Oregon ("USNB"), serves as the
Trust's Investment Adviser, providing experienced local
professional management. The Trust pays fees at a rate of 0.20 of
1% of average annual net assets to its Adviser and fees at the same
rate to its Administrator (for total fees at a rate of 0.40 of 1%
of average annual net assets). (See "Table of Expenses,"
"Distribution Plan" and "Management Arrangements.") Bancorp is a
$21 billion superregional financial services holding company
organized under the laws of Oregon in 1968. USNB, headquartered in
Portland, is a national banking association chartered in 1891.
Other services of Bancorp and its subsidiaries include consumer
financing, commercial finance, international banking, investment
advisory, insurance agency and credit life insurance services,
discount brokerage and venture capital. 

     Redemptions - Liquidity - You may redeem any amount of your
Class Y Shares account on any business day at the next determined
net asset value by telephone, FAX or mail request, with proceeds
being sent to a predesignated financial institution, if you have
elected Expedited Redemption. Proceeds will be wired or transferred
through the facilities of the Automated Clearing House, wherever
possible, upon request, if in an amount of $1,000 or more, or will
be mailed. For these and other redemption procedures see "How to
Redeem Your Investment." There are no penalties or redemption fees
for redemption of Class Y Shares.

     Certain Stabilizing Measures - The Trust will employ such
traditional measures as varying maturities, upgrading credit
standards for portfolio purchases, broadening diversification and
increasing its position in cash, in an attempt to protect against
declines in the value of its investments and other market risks.
(See "Certain Stabilizing Measures.")

     Exchanges - You may exchange Class Y Shares of the Trust into
Class Y Shares of other Aquila-sponsored tax-free municipal bond
mutual funds or an equity fund. You may also exchange them into
shares of the Aquila-sponsored money market funds. The exchange
prices will be the respective net asset values of the shares. (See
"Exchange Privilege.") 

     Risks and Special Considerations - The share price, determined
on each business day, varies with the market prices of the Trust's
portfolio securities, which fluctuate with market conditions
including prevailing interest rates. Accordingly, the proceeds of
redemptions may be more or less than your original cost. (See
"Factors Which May Affect the Value of the Trust's Investments and
Their Yields.") The Trust's assets, being primarily or entirely
Oregon issues, are subject to economic and other conditions
affecting Oregon. (See "Risks and Special Considerations Regarding
Investment in Oregon Obligations.") Moreover, the Trust is
classified as a "non-diversified" investment company, because it
may choose to invest in the obligations of a relatively limited
number of issuers. (See "Investment of the Trust's Assets.") The
Trust may also, to a limited degree, buy and sell futures contracts
and options on futures contracts, although since inception the
Trust has not done so and has no present intention to do so. There
may be risks associated with these practices. (See "Certain
Stabilizing Measures.")

     Statements and Reports - You will receive statements of your
account monthly as well as each time you add to your account or
take money out. Additionally, you will receive a Semi-Annual Report
and an audited Annual Report.


<PAGE>


<TABLE>
<CAPTION>

                           TAX-FREE TRUST OF OREGON
                               TABLE OF EXPENSES

<S>                                                       <C>
                                                          Class Y
Shareholder Transaction Expenses                          Shares

   Maximum Sales Charge Imposed on Purchases              None 
     (as a percentage of the offering price)
   Maximum Sales Charge Imposed on Reinvested Dividends   None
   Deferred Sales Charge                                  None
   Redemption Fees                                        None
   Exchange Fee                                           None

Annual Trust Operating Expenses (1)
  (as a percentage of average net assets)

   Investment Advisory Fee                                0.20%
   All other expenses (2)                                 0.38%
     Administration Fee                              0.20%     
     Other Expenses (2)                              0.18%     
   Total Trust Operating Expenses (2)                     0.58%     

Example (3)
You would pay the following expenses on a $1,000 investment, assuming 
a 5% annual return and redemption at the end of each time period:

       1 Year       3 Years       5 Years       10 Years 
         $6           19            32             73


<FN>
(1) Estimated based upon actual expenses incurred by the Trust during 
its most recent fiscal year.  During that period, only Class A Shares 
were outstanding.
</FN>

<FN>
(2) Does not reflect a 0.02% expense offset in custodian fees received 
for uninvested cash balances.  Reflecting this offset, other expenses, 
all other expenses, and total Trust operating expenses for Class Y Shares 
would have been 0.16%, 0.36% and 0.56%, respectively.
</FN>

<FN>
(3) The expense example is based upon the above annual Trust operating 
expenses.  It is also based upon amounts at the beginning of each year 
which includes the prior year's assumed results.  A year's results 
consist of an assumed 5% annual return less total annual operating 
expenses; the expense ratio was applied to an assumed average balance 
(the year's starting investment plus one-half the year's results).  
Each figure represents the cumulative expenses so determined for the 
period specified.
</FN>

</TABLE>

THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST 
OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE 
SHOWN.  THE SECURITIES AND EXCHANGE COMMISSION SPECIFIES THAT ALL 
MUTUAL FUNDS USE THE 5% ANNUAL RATE OF RETURN FOR PURPOSES OF
PREPARING 
THE ABOVE EXAMPLE.

The purpose of the above table is to assist the investor in 
understanding the various costs that an investor in the Trust will 
bear directly or indirectly.  The assumed 5% annual return should 
not be interpreted as a prediction of an actual return, which may 
be higher or lower.


<PAGE>


<TABLE>
<CAPTION>

The following historical financial information applies only to shares 
of the Trust which have been designated Class A Shares, upon adoption 
of the class structure described in the Prospectus.  Class A Shares 
are not offered by this Prospectus.  Similar information does not 
exist for Class Y Shares which are offered by this Prospectus.

                             TAX-FREE TRUST OF OREGON
                               FINANCIAL HIGHLIGHTS
                FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

     The following table of Financial Highlights as it relates to the 
five years ended September 30, 1995 has been audited by KPMG Peat 
Marwick LLP,  independent auditors, whose report thereon is included 
in the Trust's financial statements contained in its Annual Report, 
which are incorporated by reference into the Additional Statement.  
The information provided in the table should be read in conjunction 
with the financial statements and related notes.  On April 23, 1990, 
Aquila Management Corporation, originally the Trust's Sub-Adviser and 
Administrator, became Administrator only.


                                     Year ended September 30,

                             1995      1994      1993     1992       1991
<S>                          <C>       <C>       <C>      <C>        <C>
Net Asset Value, Beginning
  of Period                  $10.20    $10.95    $10.48   $10.15     $9.67

Income from Investment
  Operations:                         
  Net investment income      0.55      0.56      0.58      0.65      0.62
  Net gain (loss) on
    securities (both
    realized and
    unrealized)              0.39      (0.75)    0.50      0.29      0.49

  Total from Investment
    Operations               0.94      (0.19)    1.08      0.94      1.11

Less Distributions:                                             
  Dividends from net
    investment income        (0.55)    (0.56)    (0.58)    (0.61)    (0.63)
  Distributions from
    capital gains            (0.04)      -       (0.03)      -         -

  Total Distributions        (0.59)    (0.56)    (0.61)    (0.61)    (0.63)

Net Asset Value, End of
  Period                     $10.55    $10.20    $10.95    $10.48    $10.15

Total Return (not
  reflecting sales load)     9.52%     (1.77)%   10.64%    9.51%     11.83%

Ratios/Supplemental Data
  Net Assets, End of 
    Period (in thousands)    $310,554  $316,317  $331,018  $249,953  $189,734 

  Ratio of Expenses to
     Average Net Assets      0.71%     0.68%     0.66%     0.66%     0.71%
  Ratio of Net Investment
    Income to Average Net
    Assets                   5.38%     5.28%     5.46%     5.87%     6.30%
Portfolio Turnover Rate      13%       11%       8%        11%       21%

Net investment income per share and the ratios of income and expenses 
to average net assets before expense offset in custodian fees for 
uninvested cash balances would have been:

  Net Investment Income      $0.55     $0.56     $0.58     $0.65    $0.62
  Ratio of Expenses to
    Average Net Assets       0.73%     0.70%     0.68%     0.66%    0.73%
  Ratio of Net Investment
    Income to Average Net
    Assets                   5.37%     5.26%     5.44%     5.87%    6.28%

<CAPTION>                            
                             1990      1989      1988      1987      1986<F*>
                             <C>       <C>       <C>       <C>       <C>
                             $9.76     $9.67     $9.11     $9.85     $9.60    
                             0.66      0.73      0.61      0.65      0.17
                             (0.11)    0.01      0.60      (0.71)    0.25
                             0.55      0.74      1.21      (0.06)    0.42   
                             (0.64)    (0.65)    (0.65)    (0.68)    (0.17)
                               -         -         -         -        - 
                             (0.64)    (0.65)    (0.65)    (0.68)    (0.17)   
                             $9.67     $9.76     $9.67     $9.11     $9.85
                             5.76%     7.83%     13.66%    (0.59)%   4.06%<F1>
                             $140,713  $122,096  $102,361  $92,990   $36,117
                             0.71%     0.76%     0.80%     0.55%     0.61%<F2>
                             6.55%     6.61%     6.77%     6.88%     6.33%<F2>
                             25%       45%       24%       17%       None

                             $0.66     $0.73     $0.61     $0.62     $0.16
                             0.73%     0.78%     0.82%     0.83%     1.21%<F2>
                             6.53%     6.59%     6.75%     6.60%     5.73%<F2>

<FN>
<F*> For the period from June 16, 1986 (commencement of operations) to 
September 30, 1986.
</FN>

<FN>
<F1> Not annualized.
</FN> 

<FN>
<F2> Annualized.
</FN>

</TABLE>


<PAGE>


                          INTRODUCTION

     The Trust's shares are designed to be a suitable investment
for investors who seek income exempt from Oregon State and regular
Federal income taxes.

     You may invest in shares of the Trust as an alternative to
direct investments in Oregon Obligations, as defined below, which
may include obligations of certain non-Oregon issuers. The Trust
offers you the opportunity to keep assets fully invested in a
vehicle that provides a professionally managed portfolio of Oregon
Obligations which may, but not necessarily will, be more
diversified, higher yielding or more stable and more liquid than
you might be able to obtain on an individual basis by direct
purchase of Oregon Obligations. Through the convenience of a single
security consisting of shares of the Trust, you are also relieved
of the inconvenience associated with direct investments of fixed
denominations, including the selecting, purchasing, handling,
monitoring call provisions and safekeeping of Oregon Obligations.

     Oregon Obligations are a type of municipal obligation.
Municipal obligations are issued by or on behalf of states,
territories and possessions of the United States and their
political subdivisions, agencies and instrumentalities to obtain
funds for various public purposes. The two principal
classifications of municipal obligations are "notes" and "bonds."
Municipal notes are generally used to provide for short-term
capital needs and generally have maturities of one year or less
while municipal bonds have extended maturities. Municipal notes
include: project notes, which sometimes carry a U.S. Government
guarantee; tax anticipation notes; revenue anticipation notes; bond
anticipation notes; construction loan notes and floating and
variable rate demand notes. Municipal obligations include municipal
lease/purchase agreements which are similar to installment purchase
contracts for property or equipment. The purposes for which
municipal obligations such as bonds are issued include the
construction of a wide range of public facilities such as airports,
highways, bridges, schools, hospitals, housing, mass
transportation, streets and water and sewer works. Other public
purposes for which municipal obligations may be issued include the
refunding of outstanding obligations, the obtaining of funds for
general operating expenses and the obtaining of funds to lend to
other public institutions and facilities. The Trust is the only
active portfolio of the Cascades Trust.

                INVESTMENT OF THE TRUST'S ASSETS

     In seeking its objective of providing as high a level of
current income which is exempt from both Oregon State and regular
Federal income taxes as is consistent with the preservation of
capital, the Trust will invest in Oregon Obligations (as defined
below). There is no assurance that the Trust will achieve its
objective, which is a fundamental policy of the Trust. (See
"Investment Restrictions.")

     As used in the Prospectus and the Additional Statement, the
term "Oregon Obligations" means obligations, including those of
certain non-Oregon issuers, of any maturity which pay interest
which, in the opinion of bond counsel or other appropriate counsel,
is exempt from regular Federal income taxes and not subject to
Oregon income taxes. Although exempt from regular Federal income
tax, interest paid on certain types of Oregon Obligations, and
dividends which the Trust might pay from this interest, are
preference items as to the Federal alternative minimum tax; for
further information, see "Dividend and Tax Information." As a
fundamental policy, at least 80% of the Trust's net assets will be
invested in Oregon Obligations the income paid upon which will not
be subject to the alternative minimum tax; accordingly, the Trust
can invest up to 20% of its net assets in obligations which are
subject to the Federal alternative minimum tax. The Trust may
refrain entirely from purchasing these types of Oregon Obligations.
(See "Dividend and Tax Information.")

     The non-Oregon bonds or other obligations the interest on
which is exempt under present law from regular Federal and Oregon
income taxes are the bonds or other obligations issued by or under
the authority of Guam, the Northern Mariana Islands, Puerto Rico
and the Virgin Islands. The Trust will not purchase Oregon
Obligations of non-Oregon issuers unless Oregon Obligations of
Oregon issuers of the desired quality, maturity and interest rate
are not available. As an Oregon-oriented fund, at least 65% of the
Trust's total assets will be invested in Oregon Obligations of
Oregon issuers. The Trust invests only in Oregon Obligations and,
possibly, in Futures and options on Futures (see below) for
protective (hedging) purposes.

     In general, there are nine separate credit ratings ranging
from the highest to the lowest quality standards for municipal
obligations. So that the Trust will have a portfolio of quality
oriented (investment grade) securities, the Oregon Obligations
which the Trust will purchase must, at the time of purchase, either
(i) be rated within the four highest credit ratings assigned by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P"); or (ii) if unrated, be determined to be of
comparable quality to municipal obligations so rated by Qualivest
Capital Management, Inc., the Trust's investment adviser (the
"Adviser"), subject to the direction and control of the Trust's
Board of Trustees. Municipal obligations rated in the fourth
highest credit rating are considered by such rating agencies to be
of medium quality and thus may present investment risks not present
in more highly rated obligations. Such bonds lack outstanding
investment characteristics and may in fact have speculative
characteristics as well; changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case for higher
grade bonds. If after purchase the rating of any rated Oregon
Obligation is downgraded such that it could not then be purchased
by the Trust, or, in the case of an unrated Oregon Obligation, if
the Adviser determines that the unrated obligation is no longer of
comparable quality to those rated obligations which the Trust may
purchase, it is the current policy of the Trust to cause any such
obligation to be sold as promptly thereafter as the Adviser in its
discretion determines to be consistent with the Trust's objectives;
such obligation remains in the Trust's portfolio until it is sold.
In addition, because a downgrade often results in a reduction in
the market price of a downgraded obligation, sale of such an
obligation may result in a loss. See Appendix A to the Additional
Statement for further information as to these ratings. The Trust
can purchase industrial development bonds only if they meet the
definition of Oregon Obligations, i.e., the interest on them is
exempt from Oregon State and regular Federal income taxes.

     The Trust is classified as a "non-diversified" investment
company under the Investment Company Act of 1940 (the "1940 Act").
The Trust also intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code (the "Code").
One of the tests for such qualification under the Code is, in
general, that at the end of each fiscal quarter of the Trust, at
least 50% of its assets must consist of (i) cash; and (ii)
securities which, as to any one issuer, do not exceed 5% of the
value of the Trust's assets. If the Trust had elected to register
under the 1940 Act as a "diversified" investment company, it would
have to meet the same test as to 75% of its assets. The Trust may
therefore not have as much diversification among securities, and
thus diversification of risk, as if it had made this election under
the 1940 Act. In general, the more the Trust invests in the
securities of specific issuers, the more the Trust is exposed to
risks associated with investments in those issuers. The Trust's
assets, being primarily or entirely Oregon issues, are accordingly
subject to economic and other conditions affecting Oregon. (See
"Risk Factors and Special Considerations Regarding Investment in
Oregon Obligations.")

Certain Stabilizing Measures

     The Trust will employ such traditional measures as varying
maturities, upgrading credit standards for portfolio purchases,
broadening diversification and increasing its position in cash and
cash equivalents in attempting to protect against declines in the
value of its investments and other market risks. There can,
however, be no assurance that these will be successful. Although
the Trust has no current intention of using futures and options, to
the limited degree described below, these may be used to attempt to
hedge against changes in the market price of the Trust's Oregon
Obligations caused by interest rate fluctuations. Futures and
options could also provide a hedge against increases in the cost of
securities the Trust intends to purchase.

     Although it does not currently do so, and since inception has
not done so, the Trust may buy and sell futures contracts relating
to indices on municipal bonds ("Municipal Bond Index Futures") and
to U.S. government securities ("U.S. Government Securities
Futures"); both kinds of futures contracts are "Futures." The Trust
may also write and purchase put and call options on Futures.

     As a matter of fundamental policy the Trust will not buy or
sell a Future or an option on a Future if thereafter more than 10%
of its net assets would be in initial or variation margin on such
Futures and options on them, and in premiums on such options. Under
an applicable regulatory rule, the Trust will not enter into
Futures or options for which the aggregate initial margins and
premiums paid for options exceed 5% of the fair market value of the
Trust's assets. (See the Additional Statement.)

     The primary risks associated with the use of Futures and
options are: (i) imperfect correlation between the change in the
market value of the securities held in the Trust's portfolio and
the prices of Futures or options purchased or sold by the Trust;
(ii) incorrect forecasts by the Adviser concerning interest rates
which may result in the hedge being ineffective; and (iii) possible
lack of a liquid secondary market for a Future or option; the
resulting inability to close a Futures or options position could
adversely affect the Trust's hedging ability. 

     For a hedge to be completely effective, the price change of
the hedging instrument should equal the price change of the
security being hedged. The risk of imperfect correlation of these
price changes is increased as the composition of the Trust's
portfolio is divergent from the debt securities underlying the
hedging instrument. To date, the Adviser has had no experience in
the use of Futures or options on them.

     The liquidity of a secondary market in a Future may be
adversely affected by "daily price fluctuation limits" established
by commodity exchanges which restrict the amount of change in the
contract price allowed during a single trading day. Thus, once a
daily limit is reached, no further trades may be entered into
beyond the limit, thereby preventing the liquidation of open
positions. Prices have in the past reached the daily limit on a
number of consecutive trading days. For further information about
Futures and options, see the Additional Statement.

     When and if the Trust determines to use Futures and options,
the Prospectus will be supplemented.

Floating and Variable Rate Demand Notes

     Floating and variable rate demand notes are tax-exempt
obligations which may have a stated maturity in excess of one
year, but permit the holder to demand payment of principal at any
time, or at specified intervals not exceeding one year, in each
case upon not more than 30 days' notice. The issuer of such notes
normally has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the
note plus accrued interest upon a specified number of days'
notice to the noteholders. The interest rate on a floating rate
demand note is based on a known lending rate, such as a bank's
prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand note is
adjusted automatically at specified intervals.

Participation Interests

     The Trust may purchase from financial institutions
participation interests in Oregon Obligations (such as industrial
development bonds and municipal lease/purchase agreements). A
participation interest gives the Trust an undivided interest in
the underlying Oregon Obligations in the proportion that the
Trust's participation interest bears to the total amount of the
underlying Oregon Obligations. All such participation interests
must meet the Trust's credit requirements. See "Limitation to 10%
as to Certain Investments."

When-Issued and Delayed Delivery Purchases

     The Trust may buy Oregon Obligations on a when-issued or
delayed delivery basis when it has the intention of acquiring
them. The Oregon Obligations so purchased are subject to market
fluctuation and no interest accrues to the Trust until delivery
and payment take place; their value at the delivery date may be
less than the purchase price. The Trust cannot enter into
when-issued commitments exceeding in the aggregate 15% of the
market value of the Trust's total assets, less liabilities other
than the obligations created by when-issued commitments. If the
Trust chooses to dispose of the right to acquire a when-issued
obligation prior to its acquisition, it could, as with the
disposition of any other portfolio holding, incur a gain or loss
due to market fluctuation; any such gain would be a taxable
short-term gain. The Trust places an amount of assets equal in
value to the amount due on the settlement date for the
when-issued or delayed delivery securities being purchased in a
segregated account with the Custodian, which is marked to market
every business day. See the Additional Statement for further
information.

Limitation to 10% as to Certain Investments

     The Trust cannot purchase Oregon Obligations that are not
readily marketable if thereafter more than 10% of its net assets
would consist of such investments. However, this 10% limit does
not include any Oregon Obligations as to which the Trust can
exercise the right to demand payment in full within three days
and as to which there is a secondary market. Floating and
variable rate demand notes and participation interests (including
municipal lease/purchase obligations) are considered illiquid
unless determined by the Board of Trustees to be readily
marketable. (See the Additional Statement.)

Current Policy as to Certain Obligations

     The Trust will not invest more than 25% of its total assets
in (i) Oregon Obligations the interest on which is paid from 
revenues of similar type projects or (ii) industrial development
bonds, unless the Prospectus and/or the Additional Statement are
supplemented to reflect the change and to give additional
information.

Factors Which May Affect the Value of the Trust's
Investments and Their Yields

     The value of the Oregon Obligations in which the Trust
invests will fluctuate depending in large part on changes in
prevailing interest rates. If the prevailing interest rates go up
after the Trust buys Oregon Obligations, the value of these
obligations will normally go down; if these rates go down, the
value of these obligations will normally go up. Changes in value
and yield based on changes in prevailing interest rates may have
different effects on short-term Oregon Obligations than on
long-term obligations. Long-term obligations (which often have
higher yields) may fluctuate in value more than short-term ones.
For this reason, the Trust may, to achieve a defensive position,
shorten the average maturity of its portfolio.

Risk Factors and Special Considerations Regarding
Investment in Oregon Obligations

     The following is a discussion of the general factors that
might influence the ability of Oregon issuers to repay principal
and interest when due on the Oregon Obligations contained in the
portfolio of the Trust. Such information is derived from sources
that are generally available to investors and is believed by the
Trust to be accurate, but has not been independently verified and
may not be complete.

     Oregon's economy is substantially diversified among many
industries. The lumber and forest products industry, an industry
highly susceptible to recessionary cycles, has long been a
significant component of the State's economy. However, a
political environment supporting the reduction of logging on
public lands has taken its toll on this industry and the pursuit
of protection for the spotted owl and wild salmon runs have
severely curtailed logging in certain areas.

     As employment in the lumber and forest products industries
has declined, other industries have been picking up the slack.
1994 saw many manufacturing plants lured to the State. The
ultimate decision of whether to locate in the State depends on a
company's ability to secure property tax breaks from the county
in which its plant will be located. A relatively new State
property tax exemption program grants counties the right to offer
property tax breaks for new plants costing more than $100 million
to build. The principal sources of State tax revenues are the
personal income and corporate income taxes; Oregon does not have
a sales tax. Recent attempts to institute a sales tax have been
unsuccessful. A recent attempt to introduce a "transaction tax"
was unsuccessful. As a result, State tax revenues are
particularly sensitive to economic recessions.

     In addition to general obligation bonds, the State and its
political subdivisions issue revenue obligations payable from
specific projects or sources, including lease rentals. There can
be no assurance that a material downturn in the State's economy,
with the resulting impact on the financial strength of State and
local entities, will not adversely affect the ability of obligors
of the obligations held in the Trust's portfolio to make the
required payments on these obligations, and consequently, the
market value of such obligations.

     Additionally, certain municipal securities held by the Trust
may rely in whole or in part for repayment on ad valorem property
taxes. There are existing limits under Oregon State law on the
issuance of bonds supported by such taxes. In recent years
several voter initiatives have sought to amend the State
Constitution to "freeze" or roll back such taxes. On November 6,
1990, Oregon voters approved a property tax limitation measure.
The adoption of the tax limitation measure may have an adverse
effect on the general financial condition of cities, counties,
school districts and other districts and may in some cases impair
their ability to pay principal and interest on obligations. The
tax limitation measure does permit tax levies to pay interest and
principal on bonds issued on or before November 6, 1990, as well
as indebtedness authorized by the Oregon Constitution (bonds
issued by the State of Oregon under specific constitutional
provisions), and general obligation bonds approved by the voters
for capital construction or improvements. (See the Additional
Statement for information about the tax limitation measure.)

     At present, it is difficult to assess the impact of the tax
limitation measure, in part, because it will not be fully phased
in until 1995-1996. In addition, the effect of this measure is
also dependent on whether alternative revenue sources are
obtained and, if so, the type and amount of such revenues. The
adoption of the tax limitation measure may have an adverse effect
on the general financial condition of affected cities, counties,
school districts and other districts, and may, in some cases,
impair their ability to pay obligations other than general
obligation bonds. In addition, the adoption of the tax limitation
measure will require the Legislature to provide funds from its
general fund to replace tax revenues lost by the public school
system through fiscal year 1995-96. This could have an adverse
effect on the State's credit rating, particularly if alternative
revenue sources are not obtained. Moreover, the tax limitation
measure might contract the overall size of the Oregon municipal
bond market and might have some adverse effect on the value of
the Trust's portfolio. See the Additional Statement.

     The Oregon Constitution reserves to the people of the State
initiative and referendum powers pursuant to which measures
designed to amend the State Constitution or enact legislation can
be placed on the statewide general election ballot for
consideration by the voters. Over the past decade Oregon has
witnessed increasing activity in the number of initiative
petitions that have qualified for statewide general elections.
From the 1988 elections through those of 1994, both the number of
such petitions that qualified and the number of such petitions
that were approved by the voters have increased. It is not
possible to predict what petitions will qualify for submission to
the voters in 1996 nor which will be approved.

     There is a relatively inactive market for municipal bonds of
Oregon issuers other than the general obligations of the State
itself. Consequently, the market price of such other bonds may be
changeable. If the Trust were forced to sell a large volume of
these bonds for any reason, such as redemptions of a large number
of its shares, there is a risk that the large sale itself might
adversely affect the value of the Trust's portfolio.

                     INVESTMENT RESTRICTIONS

     The Trust has a number of policies about what it can and
cannot do. Certain of these policies, identified in the
Prospectus and Additional Statement as "fundamental policies,"
cannot be changed unless the holders of a "majority," as defined
in the 1940 Act, of the Trust's outstanding shares vote to change
them. (See the Additional Statement for a definition of such a
majority.) All other policies can be changed from time to time by
the Board of Trustees without shareholder approval. Some of the
more important of the Trust's fundamental policies, not otherwise
identified in the Prospectus, are set forth below; others are
listed in the Additional Statement.

1. The Trust invests only in certain limited securities.

     The Trust cannot buy any securities other than the Oregon
Obligations meeting the standards stated under "Investment of the
Trust's Assets"; the Trust can also purchase and sell Futures and
options on them within the limits there discussed.

2. The Trust has industry investment requirements.

     The Trust cannot buy the obligations of issuers in any one
industry if more than 25% of its total assets would then be
invested in securities of issuers of that industry; the Trust
will consider that a non-governmental user of facilities financed
by industrial development bonds is an issuer in an industry.

3. The Trust cannot make loans.

     The Trust can buy those Oregon Obligations which it is
permitted to buy (see "Investment of the Trust's Assets"); this
is investing, not making a loan. The Trust cannot lend its
portfolio securities.

4. The Trust can borrow only in limited amounts for special
purposes.

     The Trust can borrow from banks for temporary or emergency
purposes but only up to 10% of its total assets. It can mortgage
or pledge its assets only in connection with such borrowing and
only up to the lesser of the amounts borrowed or 5% of the value
of its total assets. However, this shall not prohibit margin
arrangements in connection with the purchase or sale of Municipal
Bond Index Futures, U.S. Government Securities Futures or options
on them, or the payment of premiums on those options. The Trust
will not borrow to purchase Oregon Obligations or to increase its
income, but only to meet redemptions so that it will not have to
sell Oregon Obligations to pay for redemptions. Interest on
borrowings would reduce the Trust's income. Except in connection
with borrowings, the Trust will not issue senior securities. The
Trust will not purchase any Oregon Obligations, Futures or
options on Futures while it has any outstanding borrowings which
exceed 5% of the value of its total assets.

                    NET ASSET VALUE PER SHARE

     The Trust's net asset value and offering price per share of
each class are determined as of 4:00 p.m. New York time on each
day that the New York Stock Exchange is open (a "business day").
The net asset value per share is determined by dividing the value
of the net assets of the Trust (i.e., the value of the assets
less liabilities) by the total number of shares outstanding.
Determination of the value of the Trust's assets is subject to
the direction and control of the Trust's Board of Trustees. In
general, it is based on market value, except that Oregon
Obligations maturing in 60 days or less are generally valued at
amortized cost; see the Additional Statement for further
information.

                   HOW TO INVEST IN THE TRUST

     Institutional Class Shares (Class Y Shares) are offered only
to institutional investors for investments held in a fiduciary,
advisory, agency, custodial or similar capacity, or through them
to their clients, and are not offered directly to retail
customers. Class Y Shares are offered at net asset value with no
sales charge, no redemption fee, no contingent deferred sales
charge and no distribution fee. 

How to Purchase Class Y Shares

     Class Y Shares of the Trust may be purchased through any
investment broker or dealer (a "selected dealer") which has a
sales agreement with Aquila Distributors, Inc. (the
"Distributor") or through the Distributor. There are two ways to
make an initial investment: (i) order the shares through your
investment broker or dealer, if it is a selected dealer; or (ii)
mail the Application with payment to Administrative Data
Management Corp. (the "Agent") at the address on the Application.
There is no sales charge on initial or subsequent investments. 
You are urged to complete an Application and send it to the Agent
so that expedited shareholder services can be established at the
time of your investment.

     The minimum initial investment for Class Y Shares is $1,000,
except as otherwise stated in the Prospectus or Additional
Statement. You may also make an initial investment of at least
$50 by establishing an Automatic Investment Program for automatic
investments of at least $50 per month and paying at least $50.
(See below and "Automatic Investment Program" in the
Application.) Such investment must be drawn in United States
dollars on a United States commercial or savings bank, credit
union or a United States branch of a foreign commercial bank
(each of which is a "Financial Institution"). You may make
subsequent investments in Class Y Shares in any amount (unless
you have an Automatic Withdrawal Plan). Your subsequent
investment may be made through a selected dealer or by forwarding
payment to the Agent, with the name(s) of account owner(s), the
account number and the name of the Trust. With subsequent
investments, please send the pre-printed stub attached to the
Trust's confirmations.

     Subsequent investments of $50 or more in Class Y Shares can
be made by electronic funds transfer from your demand account at
a Financial Institution. To use electronic funds transfer for
your purchases, your Financial Institution must be a member of
the Automated Clearing House and the Agent must have received
your completed Application designating this feature, or, after
your account has been opened, a Ready Access Features form
available from the Distributor or the Agent. A pre-determined
amount can be regularly transferred for investment ("Automatic
Investment"), or single investments can be made upon receipt by
the Agent of telephone instructions from anyone ("Telephone
Investment"). The maximum amount of each Telephone Investment is
$50,000. Upon 30 days' written notice to shareholders, the Trust
may modify or terminate these investment methods at any time or
charge a service fee, although no such fee is currently
contemplated.

     The offering price for Class Y Shares is the net asset value
per share. The offering price determined on any day applies to
all purchase orders received by the Agent from selected dealers
that day, except that orders received by it after 4:00 p.m. New
York time will receive that day's offering price only if such
orders were received by selected dealers from customers prior to
such time and transmitted to the Distributor prior to its close
of business that day (normally 5:00 p.m. New York time); if not
so transmitted, such orders will be filled at the next determined
offering price. Selected dealers are required to transmit orders
promptly. Investments by mail are made at the offering price next
determined after receipt of the purchase order by the Agent.
Purchase orders received on other than a business day will be
executed on the next succeeding business day. Purchases by
Automatic Investment and Telephone Investment will be executed on
the first business day occurring on or after the date an order is
considered received by the Agent at the price determined on that
day. In the case of Automatic Investment your order will be
executed on the date you specified for investment at the price
determined on that day. If that day is not a business day your
order will be executed at the price determined on the next
business day. In the case of Telephone Investment your order will
be filled at the next determined offering price. If your order is
placed after the time for determining the net asset value of the
Trust shares for any day it will be executed at the price
determined on the following business day. The sale of shares will
be suspended during any period when the determination of net
asset value is suspended and may be suspended by the Distributor
when the Distributor judges it in the Trust's best interest to do
so.

Possible Compensation for Dealers

     The Distributor, at its own expense, may also provide
additional compensation to dealers in connection with sales of
any class of shares of the Trust. Additional compensation may
include payment or partial payment for advertising of the Trust's
shares, payment of travel expenses, including lodging, incurred
in connection with attendance at sales seminars taken by
qualifying registered representatives to locations within or
outside of the United States, other prizes or financial
assistance to securities dealers in offering their own seminars
or conferences. In some instances, such compensation may be made
available only to certain dealers whose representatives have sold
or are expected to sell significant amounts of such shares.
Dealers may not use sales of the Trust's shares to qualify for
the incentives to the extent such may be prohibited by the laws
of any state or any self-regulatory agency, such as the National
Association of Securities Dealers, Inc. The cost to the
Distributor of such promotional activities and such payments to
participating dealers will not exceed the amount of the sales
charges in respect of sales of all classes of shares of the Trust
effected through such participating dealers, whether retained by
the Distributor or reallowed to participating dealers. No such
additional compensation to dealers in connection with sales of
shares of the Trust will affect the price you pay for shares or
the amount that the Trust will receive from such sales. Any of
the foregoing payments to be made by the Distributor may be made
instead by the Administrator out of its own funds, directly or
through the Distributor.

     Brokers and Dealers may receive different levels of
compensation for selling different classes of shares.

Confirmations and Share Certificates

     All purchases of shares will be confirmed and credited to
you in an account maintained for you at the Agent in full and
fractional shares of the Trust (rounded to the nearest 1/1000th
of a share). No share certificates will be issued for Class Y
Shares. 

     The Trust and the Distributor reserve the right to reject
any order for the purchase of shares. In addition, the offering
of shares may be suspended at any time and resumed at any time
thereafter.

Distribution Plan

     The Trust has adopted a Distribution Plan (the "Plan") under
Rule 12b-1 (the "Rule") under the 1940 Act. The Rule provides in
substance that an investment company may not engage directly or
indirectly in financing any activity which is primarily intended
to result in the sale of its shares except pursuant to a written
plan adopted under the Rule. No payments under the Plan from
assets represented by Class Y Shares are authorized.

     The Plan contains provisions designed to protect against any
claim against or involving the Trust that some of the expenses
which might be considered to be sales-related which the Trust
pays or may pay come within the purview of the Rule. The Trust
believes that except for payments made with respect to Class A
Shares and Class C Shares it is not financing any such activity
and does not consider any payment enumerated in such provisions
as so financing any such activity. If and to the extent that any
payment as specifically listed in the Plan (see the Additional
Statement) is considered to be primarily intended to result in or
as indirect financing of any activity which is primarily intended
to result in the sale of Trust shares, these payments are
authorized under the Plan. In addition, if the Administrator, out
of its own funds, makes payment for distribution expenses such
payments are authorized. See the Additional Statement.

                  HOW TO REDEEM YOUR INVESTMENT

     You may redeem all or any part of your Class Y Shares at the
net asset value next determined after acceptance of your
redemption request at the Agent. Redemptions can be made by the
various methods described below. There is no minimum period for 
any investment in the Trust, except for shares recently purchased
by check, Automatic Investment or Telephone Investment as
discussed below. There are no redemption fees or penalties on
redemption of Class Y Shares. A redemption may result in a
transaction taxable to you.

     For your convenience the Trust offers expedited redemption
for Class Y Shares to provide you with a high level of liquidity
for your investment.

Expedited Redemption Methods
(Non-Certificate Shares)

     You have the flexibility of two expedited methods of
initiating redemptions. They are available as to shares of any
class not represented by certificates.

     1. By Telephone. The Agent will accept instructions by
     telephone from anyone to redeem shares and make payments 

          a) to a Financial Institution account you have
          predesignated or 

          b) by check in the amount of $50,000 or less, mailed to
          you, if your shares are registered in your name at the
          Trust and the check is sent to your address of record,
          provided that there has not been a change of your
          address of record during the 30 days preceding your
          redemption request. You can make only one request for
          telephone redemption by check in any 7-day period. 

     See "Redemption Payments," below for payment methods. Your
name, your account number and your address of record must be
supplied.

       To redeem an investment by this method, telephone:

             800-872-6735 toll free or 908-855-5731

     Note: The Trust, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed
to verify the identity of the caller. The Agent will request some
or all of the following information: account name(s) and number,
name of the caller, the social security number registered to the
account and personal identification. The Agent may also record
calls. You should verify the accuracy of confirmation statements
immediately upon receipt.

     2. By FAX or Mail. You may also request redemption payments
     to a predesignated Financial Institution account by a letter
     of instruction sent to: Administrative Data Management
     Corp., Attn: Aquilasm Group of Funds, by FAX at 908-855-5730
     or by mail at 581 Main Street, Woodbridge, NJ 07095-1198,
     indicating account name(s), account number, amount to be
     redeemed, and any payment directions, signed by the
     registered holder(s). Signature guarantees are not required.
     See "Redemption Payments" below for payment methods.

     If you wish to use the above procedures you should so elect
on the Expedited Redemption section of the Application or the
Ready Access Features form and provide the required information
concerning your Financial Institution account number. The
Financial Institution account must be in the exclusive name(s) of
the shareholder(s) as registered with the Trust. You may change
the designated Financial Institution account at any time by
completing and returning a Ready Access Features form. For
protection of your assets, this form requires signature
guarantees and possible additional documentation.

Regular Redemption Method

     If you own Class Y Shares registered on the books of the
Trust, and you have not elected Expedited Redemption to a
predesignated Financial Institution account, you must use the
Regular Redemption Method. Under this redemption method you
should send a letter of instruction to: Administrative Data
Management Corp., Attn: Aquilasm Group of Funds, 581 Main Street,
Woodbridge, NJ 07095-1198, containing:

          Account Name(s);

          Account Number;

          Dollar amount or number of shares to be redeemed or a 
          statement that all shares held in the account are to be 
          redeemed;

          Payment instructions (normally redemption proceeds will 
          be mailed to your address as registered with the
          Trust);

          Signature(s) of the registered shareholder(s); and

          Signature guarantee(s), if required, as indicated
          below.

     For a redemption request to be in "proper form," the
signature or signatures must be the same as in the registration
of the account. In a joint account, the signatures of both
shareholders are necessary. Signature guarantees may be required
if sufficient documentation is not on file with the Agent.
Additional documentation may be required where shares are held by
certain types of shareholders such as corporations, partnerships,
trustees or executors, or if redemption is requested by other
than the shareholder of record. If redemption proceeds of $50,000
or less are payable to the record holder and are to be sent to
the record address, no signature guarantee is required, except as
noted above. In all other cases, signatures must be guaranteed by
a member of a national securities exchange, a U.S. bank or trust
company, a state-chartered savings bank, a federally chartered
savings and loan association, a foreign bank having a U.S.
correspondent bank, a participant in the Securities Transfer
Association Medallion Program (STAMP), the Stock Exchanges
Medallion Program (SEMP) or the New York Stock Exchange, Inc.
Medallion Signature Program (MSP). A notary public is not an
acceptable signature guarantor.

Redemption Payments

     Redemption payments will ordinarily be mailed to you at your
address of record. If you so request and the amount of your
redemption proceeds is $1,000 or more, the proceeds will,
wherever possible, be wired or transferred through the facilities
of the Automated Clearing House to the Financial Institution
account specified in the Expedited Redemption section of your
Application or Ready Access Features form. The Trust may impose a
charge, not exceeding $5.00 per wire redemption, after written
notice to shareholders who have elected this redemption
procedure. The Trust has no present intention of making this
charge. Upon 30 days' written notice to shareholders, the Trust
may modify or terminate the use of the Automated Clearing House
to make redemption payments at any time or charge a service fee,
although no such fee is presently contemplated. If any such
changes are made, the Prospectus will be supplemented to reflect
them. If you use a broker or dealer to arrange for a redemption,
it may charge you a fee for this service.

     The Trust will normally make payment for all shares redeemed
on the next business day (see "Net Asset Value Per Share")
following acceptance of the redemption request made in compliance
with one of the redemption methods specified above. Except as set
forth below, in no event will payment be made more than seven
days after acceptance of such a redemption request. However, the
right of redemption may be suspended or the date of payment
postponed (i) during periods when the New York Stock Exchange is
closed for other than weekends and holidays or when trading on
such Exchange is restricted as determined by the Securities and
Exchange Commission by rule or regulation; (ii) during periods in
which an emergency, as determined by the Securities and Exchange
Commission, exists which causes disposal of, or valuation of the
net asset value of, the portfolio securities to be unreasonable
or impracticable; or (iii) for such other periods as the
Securities and Exchange Commission may permit. Payment for
redemption of shares recently purchased by check (irrespective of
whether the check is a regular check or a certified, cashier's or
official bank check) or by Automatic Investment or Telephone
Investment may be delayed up to 15 days or until (i) the purchase
check or Automatic Investment or Telephone Investment has been
honored or (ii) the Agent has received assurances by telephone or
in writing from the Financial Institution on which the purchase
check was drawn, or from which the funds for Automatic Investment
or Telephone Investment were transferred, satisfactory to the
Agent and the Trust, that the purchase check or Automatic
Investment or Telephone Investment will be honored. Possible
delays in payment of redemption proceeds can be eliminated by
using wire payments or Federal Reserve drafts to pay for
purchases.

     If the Trustees determine that it would be detrimental to
the best interests of the remaining shareholders of the Trust to
make payment wholly or partly in cash, the Trust may pay the
redemption price in whole or in part by the distribution in kind
of securities from the portfolio of the Trust, in lieu of cash,
in conformity with applicable rules of the Securities and
Exchange Commission. See the Additional Statement for details.

     The Trust has the right to compel the redemption of shares
held in any account if the aggregate net asset value of such
shares is less than $500 as a result of shareholder redemptions
or failure to meet the minimum investment level under an
Automatic Purchase Program. If the Board elects to do this,
shareholders who are affected will receive prior written notice
and will be permitted 60 days to bring their accounts up to the
minimum before this redemption is processed.

                    AUTOMATIC WITHDRAWAL PLAN

     You may establish an Automatic Withdrawal Plan if you own or
purchase Class Y Shares of the Trust having a net asset value of
at least $5,000. Under an Automatic Withdrawal Plan you will
receive a monthly or quarterly check in a stated amount, not less
than $50. If such a plan is established, all dividends and
distributions must be reinvested in your shareholder account.
Redemption of shares to make payments under the Automatic
Withdrawal Plan will give rise to a gain or loss for tax
purposes. See the Automatic Withdrawal Plan provisions of the
Application included in the Prospectus, the Additional Statement
under "Automatic Withdrawal Plan," and "Dividend and Tax
Information" below.

                     MANAGEMENT ARRANGEMENTS

The Board of Trustees

     The business and affairs of the Trust are managed under the
direction and control of its Board of Trustees. The Additional
Statement lists the Trust's Trustees and officers and provides
further information about them.

The Advisory Agreement

     Qualivest Capital Management, Inc. (the "Adviser"), a
subsidiary of U.S. Bancorp, supervises the investment program of
the Trust and the composition of its portfolio. The principal
subsidiary of U.S. Bancorp is United States National Bank of
Oregon.

     The services of the Adviser are rendered under an Investment
Advisory Agreement (the "Advisory Agreement") which provides,
subject to the control of the Board of Trustees, for investment
supervision and for either keeping the accounting records of the
Trust, including the computation of the net asset value per share
and the dividends, or, at the Adviser's expense and
responsibility, delegating these accounting duties in whole or in
part to a company satisfactory to the Trust. The Advisory
Agreement states that the Adviser shall, at its expense, provide
to the Trust all office space and facilities, equipment and
clerical personnel necessary for the carrying out of the
Adviser's duties under the Advisory Agreement.

     Under the Advisory Agreement, the Adviser pays all
compensation of those officers and employees of the Trust and of
those Trustees, if any, who are affiliated with the Adviser.
Under the Advisory Agreement, the Trust bears the cost of
preparing and setting in type its prospectuses, statements of
additional information, and reports to shareholders and the costs
of printing or otherwise producing and distributing those copies
of such prospectuses, statements of additional information and
reports as are sent to its shareholders. Under the Advisory
Agreement, all costs and expenses not expressly assumed by the
Adviser or by the Administrator under the Administration
Agreement or by the Trust's Distributor (principal underwriter)
are paid by the Trust. The Advisory Agreement lists examples of
such expenses borne by the Trust, the major categories of such
expenses being: legal and audit expenses, custodian and or
shareholder servicing agent fees and expenses, stock issuance and
redemption costs, certain printing costs, registration costs of
the Trust and its shares under Federal and State securities laws,
interest, taxes and brokerage commissions, and non-recurring
expenses, including litigation.

     Under the Advisory Agreement, the Trust agrees to pay the
Adviser, and the Adviser agrees to accept as full compensation
for all services rendered by the Adviser as such, an annual fee
payable monthly and computed on the net asset value of the Trust
as of the close of business each business day at the annual rate
of 0.25 of 1% of such net asset value provided, however, that for
any day that the Trust pays or accrues a fee under the
Distribution Plan of the Trust based upon the assets of the
Trust, such annual fee is payable at the rate of 0.20 of 1% of
all of the Trust's average annual net assets. (Since the
Administrator also receives a fee from the Trust under the
Administration Agreement, the total investment advisory and
administration fees which the Trust pays are at the annual rate
of 0.50 of 1% of such net assets, or, for any day that the Trust
pays or accrues a fee under the Distribution Plan of the Trust
based upon the assets of the Trust at 0.40 of 1% of such net
asset value; see below.). The Adviser and the Administrator may,
in order to attempt to achieve a competitive yield on the shares
of the Trust, each waive all or part of any such fee.

     Under the Advisory Agreement, the Adviser agrees that the
above fee shall be reduced, but not below zero, by an amount
equal to one-half of the amount, if any, by which the total
expenses of the Trust in any fiscal year, exclusive of taxes,
interest and brokerage fees, shall exceed the lesser of (i) 2.5%
of the first $30 million of average annual net assets of the
Trust plus 2% of the next $70 million of such assets and 1.5% of
its average annual net assets in excess of $100 million, or (ii)
25% of the Trust's total annual investment income.

     The Advisory Agreement contains provisions as to the
allocation of the portfolio transactions of the Trust; see the
Additional Statement. Under these provisions, the Adviser is
authorized to consider sales of shares of the Trust or of any
other investment company or companies having the same investment
adviser, sub-adviser, administrator or principal underwriter as
the Trust.

The Administration Agreement

     Under an Administration Agreement (the "Administration
Agreement"), Aquila Management Corporation as Administrator, at
its own expense, provides office space, personnel, facilities and
equipment for the performance of its functions thereunder and as
is necessary in connection with the maintenance of the
headquarters of the Trust and pays all compensation of the
Trust's Trustees, officers and employees who are affiliated
persons of the Administrator. Prior to April 23, 1990, Aquila
Management Corporation acted as sub-adviser and administrator
under a sub-advisory and administration agreement, performing
substantially the same functions for the same compensation.

     Under the Administration Agreement, subject to the control
of the Trust's Board of Trustees, the Administrator provides all
administrative services to the Trust other than those relating to
its investment portfolio and the maintenance of its accounting
books and records. Such administrative services include but are
not limited to maintaining books and records (other than
accounting books and records) of the Trust, and overseeing all
relationships between the Trust and its shareholder servicing
agent, custodian, legal counsel, auditors and principal
underwriter, including the negotiation of agreements in relation
thereto, the supervision and coordination of the performance of
such agreements, and the overseeing of all administrative matters
which are necessary or desirable for effective operation of the
Trust and for the sale, servicing, or redemption of the Trust's
shares. See the Additional Statement for a further description of
functions listed in the Administration Agreement as part of such
duties.

     Under the Administration Agreement, the Trust pays a fee
payable monthly and computed on the net asset value of the Trust
at the end of each business day at the annual rate of 0.25 of 1%
of such net asset value provided, however, that for any day that
the Trust pays or accrues a fee under the Distribution Plan of
the Trust based upon the assets of the Trust, such annual fee is
payable at the rate of 0.20 of 1% of all of the Trust's average
annual net assets. The Administrator has agreed that the above
fee shall be reduced, but not below zero, by an amount equal to
one-half of the amount, if any, by which the total expenses of
the Trust in any fiscal year, exclusive of taxes, interest and
brokerage fees, exceed the lesser of (i) 2.5% of the first $30
million of average annual net assets of the Trust plus 2% of the
next $70 million of such assets and 1.5% of its average annual
net assets in excess of $100 million, or (ii) 25% of the Trust's
total annual investment income.

Information as to the Adviser,
the Administrator and the Distributor

     The Adviser is a subsidiary of U.S. Bancorp ("Bancorp") and
its subsidiary, United States National Bank of Oregon ("USNB").
Bancorp is a $21 billion superregional financial services holding
company organized under the laws of Oregon in 1968. USNB,
headquartered in Portland, is a national banking association,
chartered in 1891. It offers a wide variety of full-service and
commercial banking operations in over 200 locations in Oregon.
Other services of Bancorp and it's subsidiaries include mortgage
banking, lease financing, consumer financing, commercial finance,
international banking, investment advisory, insurance agency and
credit life insurance services, discount brokerage and venture
capital. As of December 31, 1995, the Adviser had under
management nearly $8.8 billion in assets. See the Additional
Statement as to the legality, under the Glass-Steagall Act, of
the Adviser acting as the Trust's investment adviser. In general,
under that Act, the Adviser will not, among other things, be
involved in the promotion or distribution of shares of the Trust.

     Mr. Edgar M. Potts, with the position of Fixed-Income
Manager, is the officer of the Adviser who manages the Trust's
portfolio. He has served as such since the Trust's inception in
1986. He has been employed by the Adviser since 1977, before that
by the Adviser's parent company, U.S. National Bank. He has 35
years of investment experience in those positions and in other
financial institutions. He has a B.S. in economics from
Georgetown University.

     Mr. Stephen J. Galiani is the backup portfolio manager. Mr.
Galiani has been employed by the Adviser since 1994. He was
president of Galiani Asset Management, a private investment
advisory firm from 1990 to 1994. Prior to owning his own firm,
Mr. Galiani was Vice President and Senior Portfolio Manager of
the municipal bond mutual funds for the Keystone family of mutual
funds with over $2 billion in municipal debt assets. Before
managing Keystone mutual funds, Mr. Galiani was Vice President
and Portfolio Manager of municipal bond portfolios for the Eaton
Vance Corporation. Mr. Galiani has an MBA from Boston University,
School of Management.

     The Trust's Administrator is founder and administrator to
the Aquilasm Group of Funds, which consists of tax-free municipal
bond funds, money market funds and an equity fund. As of December
31, 1995, these funds had aggregate assets of approximately $2.7
billion, of which approximately $1.9 billion consisted of assets
of tax-free municipal bond funds. The Administrator, which was
founded in 1984, is controlled by Mr. Lacy B. Herrmann (directly,
through a trust and through share ownership by his wife). See the
Additional Statement for information on Mr. Herrmann. 

     For the fiscal year of the Trust ended September 30, 1995,
fees of $729,908 were paid or accrued to each of the Adviser and
the Administrator.

     The Distributor currently handles the distribution of the
shares of thirteen funds (seven tax-free municipal bond funds,
five money market funds and an equity fund), including the Trust.
Under the Distribution Agreement, the Distributor is responsible
for the payment of certain printing and distribution costs
relating to prospectuses and reports as well as the costs of
supplemental sales literature, advertising and other promotional
activities.

     At the date of this Prospectus, there is a proposed
transaction whereby all of the shares of the Distributor, which
are currently owned by Mr. Herrmann, will be owned by certain
directors and/or officers of the Administrator and/or the
Distributor including Mr. Herrmann. 

                  DIVIDEND AND TAX INFORMATION

Dividends and Distributions

     The Trust will declare all of its net income, as defined
below, as dividends on every day, including weekends and
holidays, on those shares outstanding for which payment was
received by the close of business on the preceding business day.
Net income for dividend purposes includes all interest income
accrued by the Trust since the previous dividend declaration,
including accretion of any original issue discount, less expenses
paid or accrued. As such net income will vary, the Trust's
dividends will also vary. Dividends and other distributions paid
by the Trust with respect to all classes of the Trust's shares
are calculated at the same time and in the same manner. In
addition, the dividends of each class can vary because each class
will bear certain class-specific charges.

     It is the Trust's present policy to pay dividends so that
they will be received or credited by approximately the first day
of each month. Shareholders may elect to have dividends deposited
without charge by electronic funds transfers into an account at a
Financial Institution which is a member of the Automated Clearing
House by completing a Ready Access Features form.

     Redeemed shares continue to earn dividends through and
including the day which is the earlier of (i) the day before the
day on which the redemption proceeds are mailed, wired or
transferred by the facilities of the Automated Clearing House by
the Agent or paid by the Agent to a selected dealer; or (ii) the
day which is the third day on which the New York Stock Exchange
is open after the day on which the net asset value of the
redeemed shares has been determined. (See "How To Redeem Your
Investment.")

     Net investment income includes amounts of income from the
Oregon Obligations in the Trust's portfolio which are allocated
as "exempt-interest dividends." "Exempt-interest dividends" are
exempt from regular Federal income tax. The allocation of
"exempt-interest dividends" will be made by the use of one
designated percentage applied uniformly to all income dividends
declared during the Trust's tax year. Such  designation will
normally be made in the first month after the end of each of the
Trust's fiscal years as to income dividends paid in the prior
year. It is possible that in certain circumstances, a small
portion of the dividends paid by the Trust will be subject to
income taxes. During the Trust's fiscal year ended September 30,
1995, 98.98% of the Trust's dividends were "exempt-interest
dividends." For the calendar year 1995, 0.74% of the total
dividends paid were taxable as ordinary income and 1.76% were
taxable as long-term capital gains. (These amounts relate to
dividends on Class A Shares; no Class Y Shares were outstanding
during that period.) The percentage of income designated as
tax-exempt for any particular dividend may be different from the
percentage of the Trust's income that was tax-exempt during the
period covered by the dividend.

     Distributions ("short-term gains distributions") from net
realized short-term gains, if any, and distributions ("long-term
gains distributions"), if any, from the excess of net long-term
capital gains over net short-term capital losses realized through
October 31st of each year and not previously paid out will be
paid out after that date; the Trust may also pay supplemental
distributions after the end of its fiscal year. If net capital
losses are realized in any year, they are charged against capital
and not against net investment income which is distributed
regardless of gains or losses. The Trust may be required to
impose backup withholding at a rate of 31% upon payment of
redemptions to shareholders, and from short- and long-term gains
distributions (if any) and any other distributions that do not
qualify as "exempt-interest dividends," if shareholders do not
comply with provisions of the law relating to the furnishing of
taxpayer identification numbers and reporting of dividends.

     Unless you request otherwise by letter addressed to the
Agent or by filing an appropriate application prior to a given
ex-dividend date, dividends and distributions will be
automatically reinvested in full and fractional shares of the
Trust at net asset value on the record date for the dividend or
distribution or other date fixed by the Board of Trustees. An
election to receive cash will continue in effect until written
notification of a change is received by the Agent. All
shareholders, whether their dividends are received in cash or are
being reinvested, will receive a monthly account summary
indicating the current status of their investment. There is no
fixed dividend rate. Corporate shareholders of the Trust are not
entitled to any deduction for dividends received from the Trust.

Tax Information

     The Trust qualified during its last fiscal year as a
"regulated investment company" under the Code, and intends to
continue to so qualify. If it does so qualify, it will not be
liable for Federal income taxes on amounts paid by it as
dividends and distributions. However, the Code contains a number
of complex tests relating to such qualification and it is
possible although not likely that the Trust might not meet one or
more of these tests in any particular year. If it does not so
qualify, it would be treated for tax purposes as an ordinary
corporation, would receive no tax deduction for payments made to
shareholders and would be unable to pay dividends or
distributions which would qualify as "exempt-interest dividends"
or "capital gains dividends," as discussed below.

     The Trust intends to qualify during each fiscal year under
the Code to pay "exempt-interest dividends" to its shareholders.
Exempt-interest dividends which are derived from net income
earned by the Trust on Oregon Obligations will be excludable from
gross income of the shareholders for regular Federal income tax
purposes. Capital gains dividends are not included in
exempt-interest dividends. Although "exempt-interest dividends"
are not taxed, each taxpayer must report the total amount of
tax-exempt interest (including exempt-interest dividends from the
Trust) received or acquired during the year.

     The Omnibus Budget Reconciliation Act of 1993 requires that
either gains realized by the Trust on the sale of municipal
obligations acquired after April 30, 1993 at a price which is
less than face or redemption value be included as ordinary income
to the extent such gains do not exceed such discount or that the
discount be amortized and included ratably in taxable income. 
There is an exception to the foregoing treatment if the amount of
the discount is less than 0.25% of face or redemption value
multiplied by the number of years from acquisition to maturity. 
The Trust will report such ordinary income in the years of sale
or redemption rather than amortize the discount and report it
ratably. To the extent the resultant ordinary taxable income is
distributed to shareholders, it will be taxable to them as
ordinary income.

     Capital gains dividends (net long-term gains over net
short-term losses which the Trust distributes and so designates)
are reportable by shareholders as long-term capital gains. This
is the case whether the shareholder takes the distribution in
cash or elects to have the distribution reinvested in Trust
shares and regardless of the length of time the shareholder has
held his or her shares. Capital gains are taxed at the same rates
as ordinary income, except that for individuals, trusts and
estates the maximum tax rate on capital gains distributions is
28% even if the applicable rate on ordinary income for such
taxpayers is higher than 28%.

     Short-term gains, when distributed, are taxed to
shareholders as ordinary income. Capital losses of the Trust are
not distributed but carried forward by the Trust to offset gains
in later years and thereby lessen the later-year capital gains
dividends and amounts taxed to shareholders.

     The Trust's gains or losses on sales of Oregon Obligations
will be long-term or short-term depending upon the length of time
the Trust has held such obligations. Capital gains and losses of
the Trust will also include gains and losses on Futures and
options, if any, including gains and losses actually realized on
sales and exchanges and gains and losses deemed to be realized.
Those deemed to be realized are on Futures and options held by
the Trust at year-end, which are "marked to the market," that is,
deemed sold for fair market value. Net gains or losses realized
and deemed realized on Futures and options will be reportable by
the Trust as long-term to the extent of 60% of the gains or
losses and short-term to the extent of 40% regardless of the
actual holding period of such investments.

     Information as to the tax status of the Trust's dividends
and distributions will be mailed to shareholders annually.

     Under the Code, interest on loans incurred by shareholders
to enable them to purchase or carry shares of the Trust may not
be deducted for regular Federal tax purposes. In addition, under
rules used by the Internal Revenue Service for determining when
borrowed funds are deemed used for the purpose of purchasing or
carrying particular assets, the purchase of shares of the Trust
may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the
purchase of shares. The receipt of exempt-interest dividends from
the Trust by an individual shareholder may result in some portion
of any social security payments or railroad retirement benefits
received by the shareholder or the shareholder's spouse being
included in taxable income. Persons who are "substantial users"
(or persons related thereto) of facilities financed by industrial
development bonds or private activity bonds should consult their
own tax advisers before purchasing shares.

     While interest from all Oregon Obligations is tax-exempt for
purposes of computing the shareholder's regular tax, interest
from so-called private activity bonds issued after August 7,
1986, constitutes a tax preference for both individuals and
corporations and thus will enter into a computation of the
alternative minimum tax. Whether or not that computation will
result in a tax will depend on the entire content of the
taxpayer's return. The Trust will not invest in the types of
Oregon Obligations which would give rise to interest that would
be subject to alternative minimum taxation if more than 20% of
its net assets would be so invested, and may refrain from
investing in that type of bond completely. The 20% limit is a
fundamental policy of the Trust.

     Corporate shareholders must add to or subtract from
alternative minimum taxable income, as calculated before taking
into consideration this adjustment, 75% of the difference between
what is called adjusted current earnings (essentially current
earnings and profits) and alternative minimum taxable income, as
previously calculated. Since tax-exempt bond interest is included
in earnings and profits and therefore in adjusted current
earnings, this adjustment will tend to make it more likely that
corporate shareholders will be subject to the alternative minimum
tax.

     As of the date of the Prospectus, Congress is considering a
number of changes affecting taxation. It is not possible to
predict which, if any, of such changes will become law. 

Tax Effects of Redemptions

     Normally, when you redeem shares of the Trust you will
recognize capital gain or loss measured by the difference between
the proceeds received in the redemption and the amount you paid
for the shares. The gain or loss will be long-term if you held
the redeemed shares for over a year, and short-term, if for a
year or less. However, if shares held for six months or less are
redeemed and you have a loss, two special rules apply: the loss
is reduced by the amount of exempt-interest dividends, if any,
which you received on the redeemed shares, and any loss over and
above the amount of such exempt-interest dividends is treated as
a long-term loss to the extent you have received capital gains
dividends on the redeemed shares.

Oregon Tax Information

     Individual shareholders of the Trust, resident in Oregon,
will not be subject to Oregon personal income tax on
distributions received from the Trust to the extent such
distributions are attributable to interest on tax-exempt
obligations of the State of Oregon and its political subdivisions
and authorities or on obligations issued by or under the
authority of the governments of Puerto Rico, the Virgin Islands,
Guam and the Northern Mariana Islands, provided that the Trust
complies with the requirement of the Code that at least 50% of
its assets at the close of each quarter of its taxable year is
invested in state, municipal or other obligations the interest on
which is exempt from federal income tax under Section 103(a)
thereof.

     Other distributions from the Trust, including all long-term
and short-term capital gains, will generally not be exempt from
Oregon income tax.

     Trust distributions are expected to be fully includable in
income in determining the Oregon excise tax on corporations.

     Shares of the Trust will not be subject to the Oregon
property tax.

     Shareholders of the Trust should consult their tax advisers
about other state and local tax consequences of their investment
in the Trust.

                       EXCHANGE PRIVILEGE

     There is an exchange privilege as set forth below among this
Trust and certain tax-free municipal bond funds and an equity
fund (the "Bond or Equity Funds") and certain money market funds
(the "Money-Market Funds"), all of which are sponsored by Aquila
Management Corporation and Aquila Distributors, Inc., and have
the same Administrator and Distributor as the Trust. All
exchanges are subject to certain conditions described below. As
of the date of the Prospectus, the Aquila-sponsored Bond or
Equity Funds are this Trust, Aquila Rocky Mountain Equity Fund,
Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Fund
of Colorado, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund
For Utah and Narragansett Insured Tax-Free Income Fund; the
Aquila Money-Market Funds are Capital Cash Management Trust,
Pacific Capital Cash Assets Trust (Original Shares), Pacific
Capital Tax-Free Cash Assets Trust (Original Shares), Pacific
Capital U.S. Treasuries Cash Assets Trust (Original Shares) and
Churchill Cash Reserves Trust. 

     Class Y Shares of the Trust may be exchanged only for Class
Y Shares of the Bond or Equity Funds or for shares of a
Money-Market Fund.

     Under the Class Y exchange privilege, once Class Y Shares of
any Bond or Equity Fund have been purchased, those shares (and
any shares acquired as a result of reinvestment of dividends
and/or distributions) may be exchanged any number of times
between Money-Market Funds and Class Y Shares of the Bond or
Equity Funds without the payment of any sales charge.

     The "Class Y Eligible Shares" of any Bond or Equity Fund are
those shares which were (a) acquired by direct purchase including
by exchange by an institutional investor from a Money-Market
Fund, or which were received in exchange for  Class Y Shares of
another Bond or Equity Fund; or (b) acquired as a result of
reinvestment of dividends and/or distributions on otherwise Class
Y Eligible Shares. Shares of a Money-Market Fund not acquired in
exchange for Class Y Eligible Shares of a Bond or Equity Fund can
be exchanged for Class Y Shares of a Bond or Equity Fund only by
persons eligible to make an initial purchase of Class Y Shares.

     This Trust, as well as the Money-Market Funds and other Bond
or Equity Funds, reserves the right to reject any exchange into
its shares, if shares of the fund into which exchange is desired
are not available for sale in your state of residence. The Trust
may also modify or terminate this exchange privilege at any time.
In the case of termination, the Prospectus will be appropriately
supplemented. No such modification or termination shall take
effect on less than 60 days' written notice to shareholders.

     All exercises of the exchange privilege are subject to the
conditions that (i) the shares being acquired are available for
sale in your state of residence; (ii) the aggregate net asset
value of the shares surrendered for exchange are at least equal
to the minimum investment requirements of the investment company
whose shares are being acquired and (iii) the ownership of the
accounts from which and to which the exchange is made are
identical.

     The Agent will accept telephone exchange instructions from
anyone. To make a telephone exchange telephone: 

             800-872-6735 toll free or 908-855-5731

     Note: The Trust, the Agent, and the Distributor will not be
responsible for any losses resulting from unauthorized telephone
transactions if the Agent follows reasonable procedures designed
to verify the identity of the caller. The Agent will request some
or all of the following information: account name(s) and number,
name of the caller, the social security number registered to the
account and personal identification. The Agent may also record
calls. You should verify the accuracy of confirmation statements
immediately upon receipt.

     Exchanges of Class Y Shares will be effected at the relative
net asset values of the Class Y Shares being exchanged next
determined after receipt by the Agent of your exchange request.
Prices for exchanges are determined in the same manner as for
purchases of the Trust's shares. See "How to Invest in the
Trust."

     An exchange is treated for Federal tax purposes as a
redemption and purchase of shares and may result in the
realization of a capital gain or loss, depending on the cost or
other tax basis of the shares exchanged and the holding period
(see the Additional Statement); no representation is made as to
the deductibility of any such loss should such occur.

     Dividends paid by the Money-Market Funds are taxable, except
to the extent that a portion or all of the dividends paid by
Pacific Capital Tax-Free Cash Assets Trust (a tax-free
Money-Market Fund) are exempt from regular Federal income tax,
and to the extent that a portion or all of the dividends paid by
Pacific Capital U.S. Treasuries Cash Assets Trust (which invests
in U.S. Treasury obligations) are exempt from state income taxes.
Dividends paid by Aquila Rocky Mountain Equity Fund are taxable. 
If your state of residence is not the same as that of the issuers
of obligations in which a tax-free municipal Bond Fund or a
tax-free Money-Market Fund invests, the dividends from that fund
may be subject to income tax of the state in which you reside.
Accordingly, you should consult your tax adviser before acquiring
shares of such a Bond Fund or a tax-free Money-Market Fund under
the exchange privilege arrangement.

     If you are considering an exchange into one of the funds
listed above, you should send for and carefully read its
Prospectus.

                       GENERAL INFORMATION

Performance

     Advertisements, sales literature and communications to
shareholders may contain various measures of the Trust's
performance including current yield, taxable equivalent yield,
various expressions of total return, current distribution rate
and taxable equivalent distribution rate.

     Average annual total return figures, as prescribed by the
Securities and Exchange Commission, represent the average annual
percentage change in value of a hypothetical $1,000 purchase,
invested at the maximum public offering price (offering price
includes the applicable sales charge) for 1- and 5-year periods
and for a period since the inception of the Trust, to the extent
applicable, through the end of such periods, assuming
reinvestment (without sales charge) of all distributions. The
Trust may also furnish total return quotations for other periods
or based on investments at various applicable sales charge levels
or at net asset value. For such purposes total return equals the
total of all income and capital gains paid to shareholders,
assuming reinvestment of all distributions, plus (or minus) the
change in the value of the original investment, expressed as a
percentage of the purchase price. See the Additional Statement.

     Current yield reflects the income per share earned by each
of the Trust's portfolio investments; it is calculated by (i)
dividing the Trust's net investment income per share during a
recent 30-day period by (ii) the maximum public offering price on
the last day of that period and by (iii) annualizing the result.
Taxable equivalent yield shows the yield from a taxable
investment that would be required to produce an after-tax yield
equivalent to that of the Trust, which invests in tax-exempt
obligations. It is computed by dividing the tax-exempt portion of
the Trust's yield (calculated as indicated) by one minus a stated
income tax rate and by adding the product to the taxable portion
(if any) of the Trust's yield. See the Additional Statement.

     Current yield and taxable equivalent yield, which are
calculated according to a formula prescribed by the Securities
and Exchange Commission (see the Additional Statement), are not
indicative of the dividends or distributions which were or will
be paid to the Trust's shareholders. Dividends or distributions
paid to shareholders are reflected in the current distribution
rate or taxable equivalent distribution rate which may be quoted
to shareholders. The current distribution rate is computed by (i)
dividing the total amount of dividends per share paid by the
Trust during a recent 30-day period by (ii) the current maximum
offering price and by (iii) annualizing the result. A taxable
equivalent distribution rate shows the taxable distribution rate
that would be required to produce an after-tax distribution rate
equivalent to the Trust's distribution rate (calculated as
indicated above). The current distribution rate, unlike yield
figures, is not limited to investment performance, but takes into
account expenses as well; it also differs from the current yield
computation because it could include distributions to
shareholders from sources, if any, other than dividends and
interest, such as short-term capital gains or return of capital.
If distribution rates are quoted in advertising, they will be
accompanied by calculations of current yield in accordance with
the formula of the Securities and Exchange Commission.

     In each case performance figures are based upon past
performance, reflect as appropriate all recurring charges against
the Trust's income net of fee waivers and reimbursement of
expenses, if any, and will assume the payment of the maximum
sales charge on the purchase of shares, but not on reinvestment
of income dividends. The investment results of the Trust, like
all other investment companies, will fluctuate over time; thus,
performance figures should not be considered to represent what an
investment may earn in the future or what the Trust's yield, tax
equivalent yield, distribution rate, taxable equivalent
distribution rate or total return may be in any future period.
The annual report of the Trust contains additional performance
information that will be made available upon request and without
charge.

Description of the Trust and its Shares

     The Trust is a series of The Cascades Trust (the "Business
Trust") formed in 1985 under the name Tax-Free Trust of Oregon.
On August 10, 1989, the name of the Business Trust was changed to
The Cascades Trust. The Business Trust presently has only one
active series, the original series, which continues to be called
Tax-Free Trust of Oregon.

     The Business Trust is an open-end, non-diversified
management investment company organized as a Massachusetts
business trust. (See "Investment of the Trust Assets" above for
further information about the Trust's status as
"non-diversified").

     The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares and to divide or
combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests
in the Business Trust. Each share represents an equal
proportionate interest in the Trust with each other share of its
class; shares of the respective classes represent proportionate
interests in the Trust in accordance with their respective net
asset values. Income, direct liabilities and direct operating
expenses of each series will be allocated directly to each
series, and general liabilities and expenses, if any, of the
Business Trust will be allocated among the series in a manner
acceptable to the Board of Trustees. Upon liquidation of a
series, shareholders of the series are entitled to share pro-rata
in the net assets of that series available for distribution to
shareholders and upon liquidation of the Business Trust, the
respective series are entitled to share proportionately in the
assets available to the Business Trust after allocation to the
various series. Shareholders of the Trust are entitled to share
pro-rata in the net assets of the Trust available for
distribution to shareholders (and in the assets of the Business
Trust otherwise available to shareholders of the Trust), in
accordance with the respective net asset values of the shares of
each of the Trust's classes at that time. All shares are
presently divided into three classes; however, if they deem it
advisable and in the best interests of shareholders, the Board of
Trustees of the Trust may create additional classes of shares
(subject to rules and regulations of the Securities and Exchange
Commission or by exemptive order) or the Board of Trustees may,
at its own discretion, create additional series of shares, each
of which may have separate assets and liabilities (in which case
any such series will have a designation including the word
"Series"). See the Additional Statement for further information
about possible additional series. Shares are fully paid and
non-assessable, except as set forth under the caption "General
Information" in the Additional Statement; the holders of shares
have no pre-emptive or conversion rights.

     The other two classes of shares of the Trust are
Front-Payment Class Shares ("Class A Shares") and Level-Payment
Class Shares ("Class C Shares"), which are fully described in a
separate prospectus that can be obtained by calling the Trust at
800-872-6734.

     The primary distinction among the Trust's three classes of
shares lies in their different sales charge structures and
ongoing expenses, which are likely to be reflected in differing
yields and other measures of investment performance.  All three
classes represent interests in the same portfolio of Oregon
Obligations and have the same rights, except that each class
bears the separate expenses, if any, of its Distribution Plan and
has exclusive voting rights with respect to its Plan. There are
no distribution fees with respect to Class Y Shares. 

     Dividends and other distributions paid by the Trust with
respect to shares of each class are calculated in the same manner
and at the same time, but may differ depending upon the
distribution and service fees, if any, and other class-specific
expenses borne by each class.

     The Trust's Distribution Plan has three parts. In addition
to the defensive provisions described above, Parts I and II of
the Plan authorize payments, to certain "Qualified Recipients,"
out of the Trust assets allocable to the Class A Shares and Class
C Shares, respectively.  See the Additional Statement. The Trust
has also adopted a Shareholder Services Plan under which the
Trust is authorized to make certain payments out of the Trust's
assets allocable to the Class C Shares. See the Additional
Statement.

Ownership of Shares of the Trust

     As of April 2, 1996, BHC Securities, Inc., 2005 Market
Street, Philadelphia, PA held of record 2,590,644 shares (9.7%)
of the Trust and Merrill Lynch, Pierce, Fenner & Smith, Inc.,
P.O. Box 30561, New Brunswick, NJ held of record 2,590,644 shares
(8.9%) of the Trust, all of which were Class A Shares. The
Trust's management is not aware of any other person owning of
record or beneficially 5% or more of the Trust's outstanding
shares as of that date. On the basis of information received from
those record owners, the Trust's management believes that all of
such shares are held for the benefit of brokerage clients.

Voting Rights

     At any meeting of shareholders, shareholders are entitled to
one vote for each dollar of net asset value (determined as of the
record date for the meeting) per share held (and proportionate
fractional votes for fractional dollar amounts). Shareholders
will vote on the election of Trustees and on other matters
submitted to the vote of shareholders. Shares vote by classes on
any matter specifically affecting one or more classes, such as an
amendment of an applicable part of the Distribution Plan.

     Rule 18f-2 under the Investment Company Act of 1940 provides
that matters submitted to shareholders affecting any series must
be approved by a majority of the outstanding voting securities of
such series, voting separately from the other series, unless it
is clear that the interests of each series in the matter are
identical or the matter does not affect a series. However, the
rule exempts the selection of accountants and the election of
Trustees from the separate voting requirement.

     No amendment may be made to the Declaration of Trust without
the affirmative vote of the holders of a majority of the
outstanding shares of the Trust, except that the Trust's Board of
Trustees may change the name of the Trust. The Trust may be
terminated (i) upon the sale of its assets to another issuer, or
(ii) upon liquidation and distribution of the assets of the
Trust, in either case if such action is approved by the vote of
the holders of a majority of the outstanding shares of the Trust.
If not so terminated, the Trust will continue indefinitely.


<PAGE>



                   APPLICATION FOR TAX-FREE TRUST OF OREGON
                            FOR CLASS Y SHARES ONLY
                PLEASE COMPLETE STEPS 1 THROUGH 4 AND MAIL TO:
                      ADM, ATTN: AQUILA SM GROUP OF FUNDS
                  581 MAIN STREET, WOODBRIDGE, NJ 07095-1198
                             Tel.# 1-800-872-6735

STEP 1
A. ACCOUNT REGISTRATION

___Individual Use line 1
___Joint Account*  Use lines 1&2
___For a Minor Use line 3
___For Trust, Corporation, Partnership or other Entity Use line 4

*  Joint Accounts will be Joint Tenants with rights of survivorship
   unless otherwise specified.
** Uniformed Gifts/Transfers to Minors Act.

Please type or print name exactly as account is to be registered
1.________________________________________________________________
  First Name   Middle Initial   Last Name   Social Security Number 
2.________________________________________________________________
  First Name   Middle Initial   Last Name   Social Security Number 
3.________________________________________________________________
  Custodian's First Name      Middle Initial          Last Name 
Custodian for ____________________________________________________
                   Minor's First Name   Middle Initial   Last Name  
Under the ___________UGTMA** _____________________________________
         Name of State       Minors Social Security Number 
4. ____________________________________________________
   ____________________________________________________
(Name of Corporation or Partnership. If a Trust, include the name(s) of 
Trustees in which account will be registered and the name and date of the 
Trust Instrument. Account for a Pension or Profit Sharing Plan or Trust 
may be registered in the name of the Plan or Trust itself.)
___________________________________________________________________
        Tax I.D. Number    Authorized Individual          Title 

B. MAILING ADDRESS AND TELEPHONE NUMBER

____________________________________________________
  Street or PO Box                           City 
_______________________________(______)______________
  State           Zip          Daytime Phone Number

Occupation:________________________Employer:________________________

Employer's Address:__________________________________________________
                   Street Address:               City  State  Zip 

Citizen or resident of: ___  U.S. ___ Other  Check here ___ if you are
a non-U.S. Citizen or resident and not subject to back-up withholding
(See certification in Step 4, Section B, below.)

C. INVESTMENT DEALER OR BROKER:
(Important - to be completed by Dealer or Broker)

_______________________   _____________________________
Dealer Name                           Branch Number
_______________________   _____________________________
Street Address                   Rep. Number/Name
_______________________   (_______)_____________________
  City    State    Zip     Area Code        Telephone


STEP 2
PURCHASES OF SHARES

A. INITIAL INVESTMENT

Indicate Method of Payment (For either method, make check 
payable to: TAX-FREE TRUST OF OREGON)

___Initial Investment  $ ______________ (Minimum investment $1,000)
                         
___Automatic Investment $______________ (Minimum $50)

For Automatic Investment of at least $50 per month, you must complete 
Step 3, Section A, Step 4, Sections A & B and ATTACH A PRE-PRINTED 
DEPOSIT SLIP OR VOIDED CHECK.

B. DISTRIBUTIONS

All income dividends and capital gains distributions are automatically 
reinvested in additional shares at Net Asset Value unless otherwise 
indicated below.

Dividends are to be:___ Reinvested  ___Paid in cash*
Capital Gains Distributions are to be: ___ Reinvested ___ Paid in cash*
    * For cash dividends, please choose one of the following options:

___ Deposit directly into my/our Financial Institution account. 
    ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK 
    showing the Financial Institution account where I/we would like you
    to deposit the dividend. (A Financial Institution is a commercial 
    bank, savings bank or credit union.)

___ Mail check to my/our address listed in Step 1.


STEP 3
SPECIAL FEATURES

A. AUTOMATIC INVESTMENT PROGRAM
(Check appropriate box)
___ Yes ___ No

    This option provides you with a convenient way to have amounts 
automatically drawn on your Financial Institution account and invested 
in your Tax-Free Trust of Oregon Account. To establish this program, 
please complete Step 4, Sections A & B of this Application.

I/We wish to make regular monthly investments of $ _________________ 
(minimum $50) on the ___ 1st day  or ___ 16th day of the month (or on 
the first business day after that date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)

B. TELEPHONE INVESTMENT
(Check appropriate box)
___ Yes ___ No

    This option provides you with a convenient way to add to your account 
(minimum $50 and maximum $50,000) at any time you wish by simply calling 
the Trust toll-free at 1-800-872-6735. To establish this program, please 
complete Step 4, Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)

C. AUTOMATIC WITHDRAWAL PLAN
(Minimum investment $5,000)

Application must be received in good order at least 2 weeks prior 
to 1st actual liquidation date.
(Check appropriate box)
___ Yes ___ No

    Please establish an Automatic Withdrawal Plan for this account, 
subject to the terms of the Automatic Withdrawal Plan Provisions set 
forth below. To realize the amount stated below, Administrative Data 
Management Corp. (the Agent) is authorized to redeem sufficient shares 
from this account at the then current Net Asset Value, in accordance 
with the terms below:

Dollar Amount of each withdrawal $ ______________beginning________________ .
                                   Minimum: $50             Month/Year
Payments to be made: ___ Monthly or ___ Quarterly

    Checks should be made payable as indicated below. If check is 
payable to a Financial Institution for your account, indicate 
Financial Institution name, address and your account number.
_______________________________     ______________________________________
First Name Middle Initial Last Name   Financial Institution Name
_______________________________     ______________________________________
  Street                             Financial Institution Street Address
_______________________________     ______________________________________
 City   State Zip                   City   State Zip    
                
                                     ____________________________________
                                     Financial Institution Account Number

D. TELEPHONE EXCHANGE
 (Check appropriate box)
___ Yes ___ No

This option allows you to effect exchanges among accounts in your 
name within the Aquila SM Group of Funds by telephone.

    The Agent is authorized to accept and act upon my/our or any other 
persons telephone instructions to execute the exchange of shares of one 
Aquila-sponsored fund for shares of another Aquila-sponsored fund with 
identical shareholder registration in the manner described in the 
Prospectus. Except for gross negligence in acting upon such telephone
instructions to execute an exchange, and subject to the conditions set 
forth herein, I/we understand and agree to hold harmless the Agent, each
of the Aquila Funds, and their respective officers, directors, trustees,
employees, agents and affiliates against any liability, damage, expense,
claim or loss, including reasonable costs and attorneys fees, resulting
from acceptance of, or acting or failure to act upon, this Authorization.

E. EXPEDITED REDEMPTION
(Check appropriate box)
___ Yes ___ No

The proceeds will be deposited to your Financial Institution 
account listed.

    Cash proceeds in any amount from the redemption of shares will be 
mailed or wired, whenever possible, upon request, if in an amount of 
$1,000 or more to my/our account at a Financial Institution. The 
Financial Institution account must be in the same name(s) as this Trust 
account is registered.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK).
_______________________________  ____________________________________
 Account Registration            Financial Institution Account Number
_______________________________  ____________________________________
 Financial Institution Name      Financial Institution Transit/Routing 
                                                               Number
_______________________________  ____________________________________
 Street                            City   State Zip      


STEP 4 Section A
DEPOSITORS AUTHORIZATION TO HONOR DEBITS

IF YOU SELECTED AUTOMATIC INVESTMENT OR TELEPHONE INVESTMENT
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.

I/We authorize the Financial Institution listed below to charge to 
my/our account any drafts or debits drawn on my/our account initiated 
by the Agent, Administrative Data Management Corp., and to pay such 
sums in accordance therewith, provided my/our account has sufficient 
funds to cover such drafts or debits. I/We further agree that your 
treatment of such orders will be the same as if I/we personally signed 
or initiated the drafts or debits.

I/We understand that this authority will remain in effect until you 
receive my/our written instructions to cancel this service. I/We also 
agree that if any such drafts or debits are dishonored, for any reason, 
you shall have no liabilities.

Financial Institution Account Number _______________________________________

Name and Address where my/our account is maintained

Name of Financial Institution______________________________________________

Street Address_____________________________________________________________

City___________________________________________State _________ Zip ________
Name(s) and Signature(s) of Depositor(s) as they appear where account
is registered

______________________________________________
        (Please Print)
X_____________________________________________  __________________
        (Signature)                                    (Date)

______________________________________________
        (Please Print)
X_____________________________________________  __________________
        (Signature)                                    (Date)

                        INDEMNIFICATION AGREEMENT

To: Financial Institution Named Above

So that you may comply with your depositor's request, Aquila 
Distributors, Inc. (the "Distributor") agrees:

1 Electronic Funds Transfer debit and credit items transmitted pursuant
  to the above authorization shall be subject to the provisions of the 
  Operating Rules of the National Automated Clearing House Association.

2 To indemnify and hold you harmless from any loss you may suffer in 
  connection with the execution and issuance of any electronic debit 
  in the normal course of business initiated by  the Agent (except 
  any loss due to your payment of any amount drawn against insufficient 
  or uncollected funds), provided that you promptly notify us in 
  writing of any claim against you with respect to the same, and further
  provided that you will not settle or pay or agree to settle or pay 
  any such claim without the written permission of the Distributor.

3 To indemnify you for any loss including your reasonable costs and 
  expenses in the event that you dishonor, with or without cause, any
  such electronic debit.

STEP 4 
Section B

SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED

- The undersigned warrants that he/she has full authority and is of 
  legal age to purchase shares of the Trust and has received and 
  read a current Prospectus of the Trust and agrees to its terms.

- I/We authorize the Trust and its agents to act upon these instructions 
  for the features that have been checked.

- I/We acknowledge that in connection with an Automatic Investment or 
  Telephone Investment, if my/our account at the Financial Institution 
  has insufficient funds, the Trust and its agents may cancel the 
  purchase transaction and are authorized to liquidate other shares or
  fractions thereof held in my/our Trust account to make up any 
  deficiency resulting from any decline in the net asset value of 
  shares so purchased and any dividends paid on those shares. I/We 
  authorize the Trust and its agents to correct any transfer error by
  a debit or credit to my/our Financial Institution account and/or 
  Trust account and to charge the account for any related charges. I/We 
  acknowledge that shares purchased either through Automatic Investment
  or Telephone Investment are subject to applicable sales charges.

- The Trust, the Agent and the Distributor and their Trustees, 
  directors, employees and agents will not be liable for acting
  upon instructions believed to be genuine, and will not be 
  responsible for any losses resulting from unauthorized telephone
  transactions if the Agent follows reasonable procedures designed
  to verify the identity of the caller. The Agent will request some
  or all of the following information: account name and number; 
  name(s) and social security number registered to the account and
  personal identification; the Agent may also record calls. 
  Shareholders should verify the accuracy of confirmation statements
  immediately upon receipt. Under penalties of perjury, the 
  undersigned whose Social Security (Tax I.D.) Number is shown above
  certifies (i) that Number is my correct taxpayer identification 
  number and (ii) currently I am not under IRS notification that I 
  am subject to backup withholding (line out (ii) if under 
  notification). If no such Number is shown, the undersigned further
  certifies, under penalties of perjury, that either (a) no such 
  Number has been issued, and a Number has been or will soon be 
  applied for; if a Number is not provided to you within sixty days,
  the undersigned understands that all payments (including liquidations)
  are subject to 31% withholding under federal tax law, until a Number
  is provided and the undersigned may be subject to a $50 I.R.S. penalty;
  or (b) that the undersigned is not a citizen or resident of the U.S.;
  and either does not expect to be in the U.S. for 183 days during each
  calendar year and does not conduct a business in the U.S. which would
  receive any gain from the Trust, or is exempt under an income tax treaty.

NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW. 
FOR A TRUST, ALL TRUSTEES MUST SIGN.*
__________________________     ____________________________     _________
Individual (or Custodian)      Joint Registrant, if any            Date
__________________________     ____________________________     _________
Corporate Officer, Partner,    Title                               Date
Trustee, etc.    

* For Trust, Corporations or Associations, this form must be accompanied
by proof of authority to sign, such as a certified copy of the corporate 
resolution or a certificate of incumbency under the trust instrument.


SPECIAL INFORMATION

- Certain features (Automatic Investment, Telephone Investment, 
  Expedited Redemption and Direct Deposit of Dividends) are effective 
  15 days after this form is received in good order by the Trusts Agent.

- You may cancel any feature at any time, effective 3 days after the 
  Agent receives written notice from you.

- Either the Trust or the Agent may cancel any  feature, without prior 
  notice, if in its judgment your use of any  feature involves unusual 
  effort or difficulty in the administration of your account.

- The Trust reserves the right to alter, amend or terminate any or all  
  features or to charge a service fee upon 30 days written notice to 
  shareholders except if additional notice is specifically required by 
  the terms of the Prospectus.

BANKING INFORMATION

- If your Financial Institution account changes, you must complete
  a Ready Access features form which may be obtained from Aquila 
  Distributors at 1-800-872-6734 and send it to the Agent together 
  with a "voided" check or pre-printed deposit slip from the new 
  account. The new Financial Institution change is effective in 15 
  days after this form is received in good order by the Trust's Agent.

AUTOMATIC WITHDRAWAL PLAN PROVISIONS

By requesting an Automatic Withdrawal Plan, the applicant agrees to 
the terms and conditions applicable to such plans, as stated below.

1. The Agent will administer the Automatic Withdrawal Plan 
   (the "Plan") as agent for the person (the "Planholder") who 
   executed the Plan authorization.

2. Certificates will not be issued for shares of the Trust purchased 
   for and held under the Plan, but the Agent  will credit all such 
   shares to the Planholder on the records of the Trust. Any share
   certificates now held by the Planholder may be surrendered 
   unendorsed to the Agent with the application so that the shares
   represented by the certificate may be held under the Plan.

3. Dividends and distributions will be reinvested in shares of the 
   Trust at Net Asset Value without a sales charge.

4. Redemptions of shares in connection with disbursement payments 
   will be made at the Net Asset Value per share in effect at the 
   close of business on the last business day of the month or quarter.

5. The amount and the interval of disbursement payments and the address
   to which checks are to be mailed may be changed, at any time, by the 
   Planholder on written notification to the Agent. The Planholder should
   allow at least two weeks time in mailing such notification before the
   requested change can be put in effect.

6. The Planholder may, at any time, instruct the Agent by written notice
   (in proper form in accordance with the requirements of the then current 
   Prospectus of the Trust) to redeem all, or any part of, the shares held
   under the Plan. In such case the Agent will redeem the number of shares
   requested at the Net Asset Value per share in effect in accordance with
   the Trust's usual redemption procedures and will mail a check for the
   proceeds of such redemption to the Planholder.

7. The Plan may, at any time, be terminated by the Planholder on written
   notice to the Agent, or by the Agent upon receiving directions to that 
   effect from the Trust. The Agent will also terminate the Plan upon 
   receipt of evidence satisfactory to it of the death or legal 
   incapacity of the Planholder. Upon termination of the Plan by the 
   Agent or the Trust, shares remaining unredeemed will be held in an 
   uncertificated account in the name of the Planholder, and the account
   will continue as a dividend-reinvestment, uncertificated account 
   unless and until proper instructions are received from the Planholder,
   his executor or guardian, or as otherwise appropriate.

8. The Agent shall incur no liability to the Planholder for any action 
   taken or omitted by the Agent in good faith.

9. In the event that the Agent shall cease to act as transfer agent 
   for the Trust, the Planholder will be deemed to have appointed 
   any successor transfer agent to act as his agent in administering 
   the Plan.

10.Purchases of additional shares concurrently with withdrawals are
   undesirable because of sales charges when purchases are made. 
   Accordingly, a Planholder may not maintain this Plan while 
   simultaneously making regular purchases. While an occasional lump 
   sum investment may be made, such investment should normally be an
   amount equivalent to three times the annual withdrawal or $5,000, 
   whichever is less.


<PAGE>


INVESTMENT ADVISER
Qualivest Capital Management, Inc.
A subsidiary of U.S. Bancorp and its subsidiary,
United States National Bank of Oregon
111 S.W. Fifth Avenue
U.S. Bancorp Tower
Portland, Oregon 97204

ADMINISTRATOR
Aquila Management Corporation
380 Madison Avenue, Suite 2300
New York, New York 10017

BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Warren C. Coloney
James A. Gardner
Diana P. Herrmann
Ann R. Leven
Raymond H. Lung
Richard C. Ross

OFFICERS
Lacy B. Herrmann, President
W. Dennis Cheroutes, Senior Vice President
Sally Wilson Church, Vice President
Nancy Kayani, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary

DISTRIBUTOR
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300
New York, New York 10017

TRANSFER AND SHAREHOLDER SERVICING AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198

CUSTODIAN
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154

COUNSEL
Hollyer Brady Smith Troxell
  Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176

TABLE OF CONTENTS
Highlights                                  2
Table Of Expenses                           4
Financial Highlights                        5
Introduction                                6
Investment Of The Trust's Assets            6 
Investment Restrictions                    11
Net Asset Value Per Share                  12
How To Invest In The Trust                 12
How To Redeem Your Investment              14
Automatic Withdrawal Plan                  17
Management Arrangements                    17
Dividend And Tax Information               20
Exchange Privilege                         23
General Information                        25
Application

AQUILA
[EAGLE LOGO]
TAX-FREE TRUST
OF OREGON
[LOGO]
A tax-free
income investment

A Series of The Cascades Trust

PROSPECTUS

One of The 
Aquilasm Group of Funds