IMPORTANT NOTICE
PLEASE READ IMMEDIATELY


                             AQUILA
                    TAX-FREE TRUST OF OREGON
      380 Madison Avenue, Suite 2300, New York, N.Y. 10017

                   NOTICE OF ANNUAL MEETING OF
                     SHAREHOLDERS TO BE HELD
                        on April 21, 1997


TO SHAREHOLDERS OF THE TRUST:

     The purpose of this Notice is to advise you that an Annual
Meeting of the Shareholders of Aquila Tax-Free Trust of Oregon
(the "Trust"), the only series of The Cascades Trust, will be
held

Place:    (a)  at the Oregon Convention Center
               777 N.E. Martin Luther King Jr. Boulevard
               Portland, Oregon 97212

Time:     (b)  on April 21, 1997, at 2:00 p.m. local time

Purposes: (c)  for the following purposes:

               (i)  to elect eight Trustees; each Trustee elected
                    will hold office until the next annual
                    meeting of the Trust's shareholders or until
                    his or her successor is duly elected;

               (ii) to ratify (that is, to approve) or reject the
                    selection of KPMG Peat Marwick LLP as the
                    Trust's independent auditors for the fiscal
                    year ending September 30, 1997 (Proposal No.
                    1); and


Please Note:
If you do not expect to attend the Meeting, you are requested to
indicate voting instructions on the enclosed proxy and to date,
sign and return it in the accompanying stamped envelope. To avoid
unnecessary expense to the Trust, your cooperation is requested
in mailing in your proxy no matter how large or small your
holding may be.





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

Who Can 
Vote What 
Shares:   (d)  To vote at the Meeting, you must have been a
               shareholder on the Trust's records at the close of
               business on February 3, 1997 (the "record date").
               Also, the number of shares held by you according
               to such records at the close of business on the
               record date determines the number of shares you
               may vote at the Meeting (or any adjourned meeting
               or meetings).


                    By Order of the Board of Trustees


                         EDWARD M. W. HINES
                         Secretary


February 20, 1997





                              (ii)






                             AQUILA
                    TAX-FREE TRUST OF OREGON

    380 Madison Avenue, Suite 2300, New York, New York 10017

                         PROXY STATEMENT

                          INTRODUCTION


     The purpose of the Notice (the first two pages of this
document) is to advise you of the time, place and purposes of an
Annual Meeting of the Shareholders of Aquila Tax-Free Trust of
Oregon (the "Trust"). The purpose of this Proxy Statement (all
the rest of this document) is to give you information on which
you may base your decisions as to the choices, if any, you make
on the enclosed proxy card.

     This Notice and Proxy Statement are first being mailed on or
about February 20, 1997.

     A copy of the Trust's most recent annual report and most
recent semi-annual report will be sent to you without charge upon
written request to the Trust's Distributor, Aquila Distributors,
Inc., 380 Madison Avenue, Suite 2300, New York, NY 10017 or by
calling 800-872-6734 toll-free or 212-697-6666.

     The Trust's organizer and administrator (the
"Administrator") is Aquila Management Corporation 380 Madison
Avenue, Suite 2300, New York, NY 10017. The Trust's investment
adviser (the "Adviser") is Qualivest Capital Management, Inc., a
subsidiary of U.S. Bancorp and its subsidiary, U.S. National Bank
of Oregon, 111 S.W. Fifth Street, Portland, Oregon 97204. 

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

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

     You may end the power of the proxy holders to vote your
shares after you have signed and returned your proxy card and
before the power is used by (i) so notifying the Trust in
writing; (ii) signing a new and different proxy card (if the
Trust receives it before the old one is used); or (iii) voting
your shares in person or by your duly appointed agent at the
meeting. Shares held by brokers in "street name" and not voted or
marked as abstentions will not be counted for purposes of
determining a quorum.

     The Trust is sending you this Notice and Proxy Statement in
connection with the solicitation by its Trustees of proxy cards
("proxies") to be used at the Annual Meeting to be held at the
time and place and for the purposes indicated in the Notice or
any adjourned meeting or meetings. The Trust pays the costs of
the solicitation. Proxies are being solicited by the use of the
mails; they may also be solicited by telephone, facsimile and
personal interviews. Brokerage firms, banks and others may be
requested to forward this Notice and Proxy Statement to
beneficial owners of the Trust's shares so that these owners may
authorize the voting of these shares. The Trust will pay these
firms for their out-of-pocket expenses for doing so.

     The Trust has three classes of shares outstanding. All
shareholders of the Trust are entitled to vote at the meeting.
Each shareholder on the record date is entitled to one (1) vote
for each dollar (and a proportionate fractional vote for each
fraction of a dollar) of net asset value (determined as of the
record date) represented by full and fractional shares of any
class held on the record date. On the record date the net asset
value per share of each of the three classes of the Trust's
shares was $10.55. The meeting will act upon matters that affect
the Trust as a whole: the election of Trustees and the action on
the selection of auditors (Proposal No. 1). On matters that
affect the Trust as a whole, all shareholders of the Trust,
including the shareholders all three classes of the Trust are
entitled to vote at the meeting.

     On the record date, the total number of shares outstanding
for the Trust was 28,931,478. Of the shares of the Trust
outstanding on the record date, BHC Securities, Inc, 2005 Market
Street, Philadelphia, PA 19103 held of record 2,661,398 Class A
shares (9.2%); Merrill Lynch Pierce Fenner & Smith P.O. Box
30561, New Brunswick, NJ 08989-0561 held 2,308,123 Class A shares
(8.0%) and 46,577 Class C shares (87%) and U.S. National Bank of
Oregon, P.O. Box 3168, 555 S.W. Oak Street, Portland, OR held of
record 54,345 Class Y shares (48.1%) and through a nominee,
53,837 Class Y shares (47.6%). On the basis of information
received from the holders the Trust's management believes that
all of the shares indicated are held for the benefit of clients.
The Trust's management is not aware of any other person
beneficially owning more than 5% of any class of its outstanding
shares as of such date. 

                      ELECTION OF TRUSTEES

     At the Meeting, eight Trustees are to be elected. Whenever
it is stated in this Proxy Statement that a matter is to be acted
on at the Meeting, this means the Meeting held at the scheduled
time or any adjourned meeting or meetings.

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

     Each of the nominees is presently a Trustee and was
reelected by the shareholders at the last annual meeting on April
22, 1996. Mr. Herrmann, Mr. Coloney, and Ms. Leven have been
Trustees since the beginning of the Trust's operations in June
1986. Mr. Gardner has been a Trustee since 1986, Mr. Alden and
Mr. Ross have been Trustees since 1988. Mr. Lung has been a
Trustee since 1992 and Ms. Herrmann has been a Trustee since
1994.

     On February 3, 1997, as a group, the Trustees and officers
owned less than 1% of the outstanding shares of the Trust. In the
information below, the Trust's Administrator, Aquila Management
Corporation, is referred to as the "Administrator" and the
Trust's Distributor, Aquila Distributors, Inc., is referred to as
the "Distributor." The beneficial ownership of shares indicated
below includes voting and investment control unless otherwise
indicated. Mr. Herrmann is an interested person of the Trust as
that term is defined in the Investment Company Act of 1940 (the
"1940 Act") as an officer of the Trust and a Director, officer
and shareholder of the Distributor. Ms. Herrmann is an interested
person as a member of his immediate family. Mr. Lung is an
interested person as a security holder of the Adviser's parent.
Interested persons are so designated by an asterisk.

     Described in the following material are the name, positions
with the Trust, age as of February 3, 1997 and business
experience during at least the past five years (other than with
the Trust) of each nominee and all officers of the Trust.

Lacy B. Herrmann*, President and Chairman of the Board of
Trustees, Age: 67, Shares Owned: 209 (1)

Founder, President and Chairman of the Board of Aquila Management
Corporation since 1984, the sponsoring organization and
Administrator and/or Adviser or Sub-Adviser to the following
open-end investment companies, and Founder, Chairman of the Board
of Trustees, and President of each: Hawaiian Tax-Free Trust since
1984; Tax-Free Trust of Arizona since 1986; Tax-Free Fund of
Colorado since 1987; Churchill Tax-Free Fund of Kentucky since
1987; Tax-Free Fund For Utah since 1992; and Narragansett Insured
Tax-Free Income Fund since 1992; each of which is a tax-free
municipal bond fund, and two equity funds, Aquila Rocky Mountain
Equity Fund since 1993 and Aquila Cascadia Equity Fund, since
1996, which, together with this Trust are called the Aquila Bond
and Equity Funds; and Pacific Capital Cash Assets Trust since
1984; Churchill Cash Reserves Trust since 1985; Pacific Capital
U.S. Treasuries Cash Assets Trust since 1988; Pacific Capital
Tax-Free Cash Assets Trust since 1988; each of which is a money
market fund, and together with Capital Cash Management Trust
("CCMT") are called the Aquila Money-Market Funds; Vice
President, Director, Secretary and formerly Treasurer of Aquila
Distributors, Inc. since 1981, distributor of the above funds;
President and Chairman of the Board of Trustees of CCMT, a money
market fund since 1981, and an Officer and Trustee/Director of
its predecessors since 1974; Chairman of the Board of Trustees
and President of Prime Cash Fund (which is inactive), since 1982
and of Short Term Asset Reserves 1984-1996; President and a
Director of STCM Management Company, Inc., sponsor and sub-
adviser to CCMT; Chairman, President, and a Director since 1984,
of InCap Management Corporation, formerly sub-adviser and
administrator of Prime Cash Fund and Short Term Asset Reserves,
and Founder and Chairman of several other money market funds;
Director or Trustee of OCC Cash Reserves, Inc., Oppenheimer Quest
Global Value Fund, Inc., Oppenheimer Quest Value Fund, Inc., and
Trustee of Quest For Value Accumulation Trust, The Saratoga
Advantage Trust, and of the Rochester Group of Funds, each of
which is an open-end investment company; Trustee of Brown
University, 1990-1996 and currently Trustee Emeritus; actively
involved for many years in leadership roles with university,
school and charitable organizations.

(1) Includes 31 shares owned by the Administrator.

Vernon R. Alden, Trustee, Age: 73, Shares Owned: 1,057

Director of Colgate Palmolive Company since 1974, Digital
Equipment Corporation, a computer manufacturing corporation,
since 1959, Intermet Corporation, an independent foundry, since
1986, and Sonesta International Hotels Corporation since 1978;
Chairman of the Board and Executive Committee of The Boston
Company, Inc., a financial services company, 1969-1978; Trustee
of Hawaiian Tax-Free Trust, Pacific Capital Cash Assets Trust,
Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital
U.S. Treasuries Cash Assets Trust since 1989, of Cascades Cash
Fund, 1989-1994, of Narragansett Insured Tax-Free Income Fund
since 1992, and of Aquila Cascadia Equity Fund since 1996;
Associate Dean and member of the faculty of Harvard University
Graduate School of Business Administration, 1951-1962; member of
the faculty and Program Director of Harvard Business School -
University of Hawaii Advanced Management Program, summer of 1959
and 1960; President of Ohio University, 1962-1969; Chairman of
The Japan Society of Boston, Inc., and member of several Japan-
related advisory councils; Chairman of the Massachusetts Business
Development Council and the Massachusetts Foreign Business
Council, 1978-1983; Trustee of the Boston Symphony Orchestra
since 1975; Chairman of the Massachusetts Council on the Arts and
Humanities, 1972-1984; Member of the Board of Fellows of Brown
University, 1969-1986; Trustee and member of the Executive
Committee, Plimoth Plantation; trustee of various other cultural
and educational organizations; Honorary Consul General of the
Royal Kingdom of Thailand.

Warren C. Coloney, Trustee, Age: 67, Shares Owned: 955 (2)

Consultant to top management and governing boards on issues of  
corporate governance, strategy, organization and human resource
management; Director of the Washington, D.C. office of Management
Practice, Inc., since 1992; President of Coloney & Company, Inc.,
since 1984; Managing Director-Europe of Towers, Perrin, Forster &
Crosby, Inc., 1974-1984; President of Coloney, Cannon, Main &
Pursell, Inc., 1968-1974; Registered Professional Engineer;
Founding Member of the Institute of Management Consultants;
Trustee of Cascades Cash Fund, 1989-1994; active in a number of
professional, social, church, and community service organizations
in England and the United States.

James A. Gardner, Trustee, Age: 53, Shares Owned: 357 (2)

President of Gardner Associates, an investment and real estate
firm, since 1970; President Emeritus of Lewis and Clark College
and Law School since 1989 and President, 1981-1989; Program
Officer and County Representative of the Ford Foundation, 1969-
1981; Lecturer and Assistant Director of Admissions of Harvard
College, 1968-1969; Member of the Oregon Young Presidents
Organization since 1983; Member of the Council on Foreign
Relations since 1988; Founding Member of the Pacific Council
since 1995; Trustee of Cascades Cash Fund, 1989-1994; Trustee of
Aquila Cascadia Equity Fund, since 1996; Director of the Oregon
High Desert Museum since 1989; active in civic, business,
educational and church organizations in Oregon.

(2) Held jointly with his wife.

Diana P. Herrmann*, Trustee, Age: 38, Shares Owned: 554

Senior Vice President and Secretary and formerly Vice President
of the Administrator since 1986 and Director since 1984; Trustee
of Tax-Free Trust of Arizona since 1994 and of Churchill Tax-Free
Fund of Kentucky and Churchill Cash Reserves Trust since 1995;
Vice President of InCap Management Corporation since 1986 and
Director since 1983; Senior Vice President or Vice President and
formerly Assistant Vice President of the Money Funds since 1986;
Vice-President of Prime Cash Fund (which is inactive), since
1986, of Cascades Cash Fund 1989-1994, and of Short Term Asset
Management Fund, 1986-1988; Assistant Vice President of Oxford
Cash Management Fund, 1986-1988; Assistant Vice President and
formerly Loan Officer of European American Bank, 1981-1986;
daughter of the Trust's President; Trustee of the Leopold Schepp
Foundation (academic scholarships) since 1995; actively involved
in mutual fund and trade associations and in college and other
volunteer organizations.

Ann R. Leven, Trustee, Age: 56, Shares Owned: 1,042

Treasurer of the National Gallery of Art, Washington, D.C., since
1994, Deputy Treasurer, 1990-1994; Treasurer of the Smithsonian
Institution, Washington, D.C., 1984-1990; President of ARL
Associates, strategic consultants, since 1983; Vice
President/Senior Corporate Planning Officer of The Chase
Manhattan Bank, N.A., 1979-1983; Treasurer of The Metropolitan
Museum of Art, 1972-1979; Trustee of Short Term Asset Reserves,
1984-1993, of Churchill Tax-Free Fund of Kentucky since 1987, of
Cascades Cash Fund, 1989-1994, of Churchill Cash Reserves Trust
since 1995, and of Aquila Cascadia Equity Fund since 1996;
Trustee of Oxford Cash Management Fund, 1987-1988; Director of
the Delaware Group of mutual funds since 1989; Adjunct Professor
at Columbia University Graduate School of Business Administration
since 1975; Trustee of the American Red Cross Endowment Fund,
1985-1990; Member of the Visiting Committee of Harvard Business
School, 1979-1985; Member of the Board of Overseers of The Amos
Tuck School, Dartmouth College, 1978-1984; Staff Director of the
Presidential Task Force on the Arts and Humanities, 1981;
Director of Alliance Capital Reserves Fund, a money market fund,
1978-1979.

Raymond H. Lung*, Trustee, Age: 70, Shares Owned: 23,348 (3)

Retired; Trustee of Qualivest Group of Funds since 1994;
Executive Vice President and Executive Trust Officer of U.S.
National Bank of Oregon, 1989-1991; Senior Vice President and
Executive Trust Officer, 1980-1989; various other management
positions, 1954-1980; Member of Executive Committee, Trust
Division, American Bankers Association, 1986-1988; Director of
Pacific Securities Depository Trust Company and Pacific Clearing
Corporation (subsidiaries of the Pacific Stock Exchange), 1980-
1987; Director of Collins Pine Company and Ostrander Companies
(lumber and oil), 1980-1990; Trustee of Cascades Cash Fund, 1992-
1994.

(3) Beneficially owned, held of record by a trust of which he is
the Trustee.

Richard C. Ross, Trustee, Age: 75, Shares Owned: 4,437 (2)

President of Richard Ross Communications, a consulting firm,
since 1986; Senior communications consultant to Pihas, Schmidt,
Westerdahl, advertising and public relations, 1986-1988;
Executive News Director of KATU Television, 1975-1986; News
Director of KGW-TV, 1956-1975; Trustee of Cascades Cash Fund,
1989-1994; Director of the Portland Rose Festival since 1972;
Director of the Greater Portland Convention & Visitors
Association, 1982-1985; Director of the Portland Chamber of
Commerce, 1971-1980; President of the Oregon chapter of the
National Multiple Sclerosis Society, 1984-1986; Director of the
Meridian Park Hospital Foundation, 1984-1987; Chairman of the
Broadcasters Group of the Bar-Press-Broadcasters professional
relations committee, 1964-1984; Former President of the Rotary
Club of East Portland and currently a Director of Goodwill
Industries, Metropolitan Youth Symphony and the Lake Oswego
Community Theatre.

(2) Held jointly with his wife.

W. Dennis Cheroutes, Senior Vice President, Age: 55

Senior Vice President of Tax-Free Fund of Colorado since 1995 and
Aquila Rocky Mountain Equity Fund since 1996; Investment
Executive, Dain Bosworth, Inc., 1986-1995; and branch office
mutual fund co-ordinator, 1990-1995; owner of special order
clothing business, 1976-1986.

Sally Wilson Church, Vice President, Age: 48

Vice President of Cascades Cash Fund, 1989-1994; Corporate Vice
President of Shearson Lehman Hutton and Senior Marketing
Coordinator of its Northwest Region, 1985-1989 and an employee in
various capacities at that firm, 1978-1985.

Nancy L. Kayani, Vice President, Age: 39

Vice President of Cascades Cash Fund, 1992-1994; Customer Service
Representative of U.S. National Bank of Oregon, 1990-1991;
Securities Trader of Bidwell & Co., 1988-1989; Securities Trader
and Mutual Fund Regional Representative of Fidelity Investments
Southwest, 1985-1987; Stockbroker of Dean Witter Reynolds, 1983-
1984; Mutual Regional Representative of Columbia Management
Company, 1980-1983; 

William C. Wallace, Vice President, Age: 61

Vice President of Capital Cash Management Trust and Pacific
Capital Cash Assets Trust since 1984; Senior Vice President of
Hawaiian Tax-Free Trust since 1985 and Vice President, 1984-1985;
Senior Vice President of Tax-Free Trust of Arizona since 1989 and
Vice President, 1986-1988; Vice President of Churchill Tax-Free
Fund of Kentucky and Tax-Free Fund of Colorado since 1987, of
Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital
U.S. Treasuries Cash Assets Trust since 1988 and of Narragansett
Insured Tax-Free Income Fund since 1992; Secretary and Director
of STCM Management Company, Inc. since 1974; President of the
Distributor since 1995 and formerly Vice President of the
Distributor, 1986-1992; Member of the Panel of Arbitrators,
American Arbitration Association, since 1978; Assistant Vice
President, American Stock Exchange, Market Development Division,
and Director of Marketing, American Gold Coin Exchange, a
subsidiary of the American Stock Exchange, 1976-1984.

Rose F. Marotta, Chief Financial Officer, Age: 72

Chief Financial Officer of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1991 and Treasurer, 1981-1991;
formerly Treasurer of the predecessor of CCMT; Treasurer and
Director of STCM Management Company, Inc., since 1974; Treasurer
of Trinity Liquid Assets Trust, 1982-1986 and of Oxford Cash
Management Fund, 1982-1988; Treasurer of InCap Management
Corporation since 1982, of the Administrator since 1984 and of
the Distributor since 1985.

Richard F. West, Treasurer, Age: 61

Treasurer of the Aquila Money-Market Funds and the Aquila Bond
and Equity Funds and of Aquila Distributors, Inc. since 1992;
Associate Director of Furman Selz Incorporated, 1991-1992; Vice
President of Scudder, Stevens & Clark, Inc. and Treasurer of
Scudder Institutional Funds, 1989-1991; Vice President of Lazard
Freres Institutional Funds Group, Treasurer of Lazard Freres
Group of Investment Companies and HT Insight Funds, Inc., 1986-
1988; Vice President of Lehman Management Co., Inc. and Assistant
Treasurer of Lehman Money Market Funds, 1981-1985; Controller of
Seligman Group of Investment Companies, 1960-1980.

Edward M. W. Hines, Secretary, Age: 57

Partner of Hollyer Brady Smith Troxell Barrett Rockett Hines &
Mone LLP, attorneys, since 1989 and counsel, 1987-1989; Secretary
of the Aquila Money-Market Funds and the Aquila Bond and Equity
Funds since 1982; Secretary of Trinity Liquid Assets Trust, 1982-
1985 and Trustee of that Trust, 1985-1986; Secretary of Oxford
Cash Management Fund, 1982-1988.

John M. Herndon, Assistant Secretary, Age: 57

Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995 and Vice President of the
Aquila Money-Market Funds since 1990; Vice President of the
Administrator since 1990; Investment Services Consultant and Bank
Services Executive of Wright Investors' Service, a registered
investment adviser, 1983-1989; Member of the American Finance
Association, the Western Finance Association and the Society of
Quantitative Analysts.

Patricia A. Craven, Assistant Secretary & Compliance Officer,
Age: 30

Assistant Secretary of the Aquila Money-Market Funds and the
Aquila Bond and Equity Funds since 1995; Counsel to the
Administrator and the Distributor since 1995; formerly a Legal
Associate for Oppenheimer Management Corporation, 1993-1995.


Compensation of Trustees

     The Trust does not pay fees to Trustees affiliated with the
Administrator or Adviser or to any of the Trust's officers.
During the fiscal year ended September 30, 1996, the Trust paid
$83,145 in fees and reimbursement of expenses to its other
Trustees. The Trust is one of the 14 funds in the Aquilasm Group
of Funds, which consist of tax-free municipal bond funds, money
market funds and two equity funds. The following table lists the
compensation of all Trustees who received compensation from the
Trust and the compensation each received during the Trust's
fiscal year from all funds in the Aquilasm Group of Funds and the
number of such funds. None of such Trustees has any pension or
retirement benefits from the Trust or any of the other funds in
the Aquila Group.




                                   Compensation        Number of 
                                   from all            boards on 
               Compensation        funds in the        which the 
               from the            Aquilasm            Trustee 
Name           Trust               Group               serves
                                              
Vernon R. 
Alden          $7,750              $42,380             7

Warren C. 
Coloney        $8,371              $8,821              2

James A. 
Gardner        $8,350              $8,600              2

Ann R. 
Leven          $7,450              $19,000             4

Raymond H.
Lung           $7,966              $8,366              2

Richard C. 
Ross           $8,282              $8,732              2




Other Information on Trustees

     The Trustees have appointed an Audit Committee consisting of
all of the Trustees (the "Independent Trustees") who are not
"interested persons" of the Trust, as that term is defined in the
1940 Act. The Committee (i) recommends to the Board of Trustees
which firm of independent auditors will be selected by the Board
of Trustees (subject to shareholder ratification); (ii) reviews
the methods, scope and result of audits and the fees charged; and
(iii) reviews the adequacy of the Trust's internal accounting 
procedures and controls. The Committee held one meeting during
the Trust's last fiscal year. The Board of Trustees does not have
a nominating committee. During the Trust's last fiscal year, the
Board of Trustees held seven meetings. Each Trustee was present
at at least 75% of the total number of Board and (if such Trustee
was a member of that Committee) Audit Committee meetings.

     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 two equity funds. As of
December 31, 1996, 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, 1996, fees of $615,409 were paid or accrued
to each of the Adviser and the Administrator.

     The Distributor currently handles the distribution of the
shares of fourteen funds (seven tax-free municipal bond funds,
five money market funds and two equity funds), 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. During the fiscal year, the Distributor
retained $69,664 in commissions on sales of the Trust's shares.
Under the Trust's Distribution Plan the Distributor received
$9,987 with respect to the Trust's Class A Shares and $623 with
respect to the Trust's Class C shares. In addition, it received
$207 under the Trust's Shareholder Services Plan.


                  RATIFICATION OR REJECTION OF
                SELECTION OF INDEPENDENT AUDITORS
                        (Proposal No. 1)

     KPMG Peat Marwick LLP has been selected by the Trust's Board
of Trustees, including a majority of the Independent Trustees, as
the Trust's independent auditors for the fiscal year ending
September 30, 1997; such selection is submitted to the
shareholders for ratification or rejection.

     The firm has no direct or indirect financial interest in the
Trust, the Trust's Adviser or the Trust's Administrator. It is
expected that representatives of the firm will not be present at
the meeting but will be available should any matter arise
requiring their presence.
 

                           RECEIPT OF
                      SHAREHOLDER PROPOSALS

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

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

                         OTHER BUSINESS

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





IMPORTANT NOTICE
PLEASE READ
IMMEDIATELY

AQUILA
TAX-FREE
TRUST OF OREGON

[LOGO]

NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1997

PROXY STATEMENT





                             AQUILA
                    TAX-FREE TRUST OF OREGON

          PROXY FOR SHAREHOLDERS MEETING APRIL 21, 1997

       PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

     The undersigned shareholder of TAX-FREE TRUST OF OREGON (the
"Trust") does hereby appoint LACY B. HERRMANN and EDWARD M. W.
HINES, or either of them, as attorneys and proxies of the
undersigned, with full power of substitution, to attend the
Annual Meeting of Shareholders of the Trust to be held on April
21, 1997, at the Oregon Convention Center, 777 N.E. Martin Luther
King Jr. Boulevard, Portland, Oregon 97212 at 2:00 p.m. local
time, and at all adjournments thereof, and thereat to vote the
shares held in the name of the undersigned on the record date for
said meeting on the matters listed below. Such shares are
entitled to one vote for every dollar of net asset value
represented by the share balance printed on the other side of
this card.

     Please mark your proxy, date and sign it below and return it
promptly in the accompanying envelope which requires no postage
if mailed in the United States.


     MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW
AND FOR THE PROPOSALS LISTED BELOW.  THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR IF NO CHOICE IS
INDICATED.

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

     Please indicate your vote by an "X" in the appropriate box
below.

          Election of Trustees---.
                __ 
               [__]       FOR all nominees listed below
                __ 
               [__]       VOTE WITHHELD for all nominees listed   
                             below    
     
(Instructions:  To withhold authority to vote for any one or more
of the nominees, strike a line through the name of that nominee 
or the names of such nominees in the list below.)

     LACY B. HERRMANN, VERNON R. ALDEN, WARREN C. COLONEY,        
JAMES A. GARDNER, ANN R. LEVEN, DIANA P. HERRMANN, 
                RAYMOND H. LUNG, RICHARD C. ROSS



       Action on selection of KPMG Peat
       Marwick LLP as independent auditors              
                               __           __            __      
(Proposal No. 1)          FOR [__] AGAINST [__]  ABSTAIN [__]



          Dated:  ____________  ______, 1997
                     Month        Day


__________________________________
                    SIGNATURE(S)


                                   
__________________________________
                    SIGNATURE(S)

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