Aquila Narragansett Tax-Free Income Fund NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number 811-06707

Narragansett Insured Tax-Free Income Fund

(Exact name of Registrant as specified in charter)

380 Madison Avenue

New York, New York 10017

(Address of principal executive offices) (Zip code)

Joseph P. DiMaggio

380 Madison Avenue

New York, New York 10017

(Name and address of agent for service)

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

Date of fiscal year end: 6/30/09

Date of reporting period: 12/31/09

FORM N-CSR

ITEM 1.

REPORTS TO STOCKHOLDERS.

Semi-Annual
Report

December 31, 2009

A tax-free income investment

Serving Rhode Island Investors For More Than 15 Years

Narragansett Insured Tax-Free Income Fund

“Preservation”

February, 2010

Dear Fellow Shareholder:

A topic which is frequently in the headlines these days is preservation - preservation of natural resources, the environment and ecological status quos. And, lately, with the severe recession we have had to endure, self-preservation rightfully seems to be on everyone’s mind.

Indeed, preservation is the cornerstone of our investment philosophy for Narragansett Insured Tax-Free Income Fund. The Fund’s very objective is to seek to provide you as high a level of current income exempt from Rhode Island state and regular Federal income taxes as is consistent with preservation of capital.

In our opinion, this simple word – preservation – speaks volumes. The Management of Narragansett Insured Tax-Free Income Fund strives to not only give our shareholders a tax-free return ON their money, but also a return OF their money.

Action Plan

With the Fund’s objective clearly defined, how do we go about endeavoring to fulfill this goal?

The Fund employs very distinct techniques in the construction of the Fund’s portfolio as we strive, to the maximum extent possible, to never have “surprises” with any of the securities in the Fund’s portfolio. To help limit the degree of uncertainty, our knowledgeable and experienced portfolio managers seek to construct the Fund’s portfolio with high quality, intermediate maturity and geographic diversification in mind.

Quality

In our judgment, a key element in striving to preserve your investment is that of quality. As you may know, there are nine separate credit ratings. However, by prospectus, Narragansett Insured Tax-Free Income Fund can only purchase securities deemed to be investment grade – those within the top four credit ratings - AAA, AA, A and Baa.

In general, the higher the quality rating of a municipal security, the greater and more reliable the cash flow there is for the municipality to cover interest and principal payments when due on the security. Of course, no matter what quality rating exists with any security, it still is going to be subject to market fluctuations. However, our experience has been that top-quality ratings tend to have less fluctuation than lower quality ratings. Furthermore, when they do fluctuate, they often return to their base market price at a quicker rate than lower-grade securities.

Maturity

Another factor that we very strongly embrace in striving to preserve your investment is the maturity structure of the portfolio of Narragansett Insured Tax-Free Income Fund.

NOT A PART OF THE SEMI-ANNUAL REPORT

As you know, long-term bonds generally tend to produce a higher return than short-term bonds. However, such longer maturity bonds may also experience a higher degree of volatility in their price. This higher price volatility normally associated with longer-term maturity bonds exists because it reflects the risks associated with the unpredictability of future events and the potential interest rate changes over the extended life of the municipal bond.

Thus, your Fund’s portfolio managers generally seek to balance out longer-term maturities with a portion of the Fund’s investments in shorter-term maturities. Through utilizing a blend of maturities –both shorter-term and longer-term – Narragansett Insured Tax-Free Income Fund attempts to provide a satisfactory level of return without subjecting the share price to excessive swings as interest rates increase and decrease. We feel that this focus on keeping the average of maturities relatively intermediate in term takes the best that each investment has to offer – gaining stability from the shorter-term maturities and higher yields from the longer-term maturities.

Diversification

We also strive to employ diversification in the construction of the Fund’s portfolio - both in terms of the type of project as well as geographic characteristics within the State. To the maximum extent possible, we endeavor to include in the portfolio securities representing locations throughout Rhode Island and all types of public purpose projects. In this way, we increase the odds that no one project or area of the State will have any significant adverse influence upon your investment in the Fund.

Your Confidence Continues to be Appreciated

All in all, we have tried to make sure that we are preserving your investment in Narragansett Insured Tax-Free Income Fund to as high a degree as possible.

We appreciate your continued confidence in the Fund through your investment.

Sincerely,


Lacy B. Herrmann Founder and Chairman Emeritus		Diana P. Herrmann President

Consideration should be given to the risks of investing, including: potential loss of value, market risk, interest rate risk, credit risk, and geographic concentration. Past performance does not guarantee future stability. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. For certain investors, some dividends may be subject to Federal and state taxes.

NOT A PART OF THE SEMI-ANNUAL REPORT

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		General Obligation Bonds (39.5%)	and Fitch	Value
		Bristol, Rhode Island
$	2,200,000	4.000%, 02/15/26 AGMC Insured	Aa3/AAA/NR	$	2,295,568
	2,500,000	4.375%, 02/15/29 AGMC Insured	Aa3/AAA/NR		2,635,325
		Coventry, Rhode Island
	550,000	5.000%, 11/01/16 AMBAC Insured	A1/NR/NR		577,731
	550,000	5.000%, 11/01/17 AMBAC Insured	A1/NR/NR		575,723
		Cranston, Rhode Island
	1,000,000	4.250%, 04/01/18 NPFG Insured	Baa1/A/BBB+		1,032,020
	1,000,000	4.250%, 04/01/19 NPFG Insured	Baa1/A/BBB+		1,021,940
	1,000,000	4.300%, 04/01/20 NPFG Insured	Baa1/A/BBB+		1,020,790
	250,000	5.000%, 02/15/22 AGMC Insured	Aa3/AAA/AA		258,895
	1,000,000	4.500%, 04/01/23 NPFG Insured	Baa1/A/BBB+		1,036,240
	250,000	5.000%, 02/15/24 AGMC Insured	Aa3/AAA/AA		257,180
	2,455,000	4.625%, 07/01/25 AGMC Insured	Aa3/AAA/NR		2,518,241
	1,500,000	4.500%, 04/01/26 NPFG Insured	Baa1/A/BBB+		1,521,090
		Cumberland, Rhode Island
	250,000	4.000%, 02/01/14 NPFG FGIC Insured	A3/A/NR		266,350
	250,000	4.000%, 02/01/15 NPFG FGIC Insured	A3/A/NR		261,992
	250,000	4.000%, 02/01/16 NPFG FGIC Insured	A3/A/NR		259,432
	250,000	4.100%, 02/01/17 NPFG FGIC Insured	A3/A/NR		259,417
	1,000,000	4.250%, 08/01/17 AGMC Insured	Aa3/AAA/NR		1,076,340
	250,000	4.150%, 02/01/18 NPFG FGIC Insured	A3/A/NR		258,590
	600,000	4.250%, 08/01/18 AGMC Insured	Aa3/AAA/NR		640,386
	1,255,000	5.000%, 10/01/18 NPFG Insured	A3/A/NR		1,288,935
	1,040,000	5.200%, 10/01/21 NPFG Insured	A3/A/NR		1,070,358
		Lincoln, Rhode Island
	1,000,000	4.500%, 08/01/24 NPFG Insured	Aa3/NR/AA-		1,066,070
	1,775,000	4.500%, 08/01/25 NPFG Insured	Aa3/NR/AA-		1,881,535
	2,000,000	4.500%, 08/01/26 NPFG Insured	Aa3/NR/AA-		2,110,420
		New Shoreham, Rhode Island
	245,000	4.000%, 11/15/15 AMBAC Insured	NR/AA/NR		255,346
	255,000	4.250%, 11/15/16 AMBAC Insured	NR/AA/NR		265,152
	270,000	4.250%, 11/15/17 AMBAC Insured	NR/AA/NR		279,995
	910,000	4.800%, 04/15/18 AMBAC Insured	NR/AA/NR		945,108
	285,000	4.500%, 11/15/18 AMBAC Insured	NR/AA/NR		296,300
	1,105,000	5.000%, 04/15/22 AMBAC Insured	NR/AA/NR		1,153,443

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		General Obligation Bonds (continued)	and Fitch	Value
		Newport, Rhode Island
$	1,000,000	4.500%, 11/01/15 AMBAC Insured	Aa3/NR/NR	$	1,046,350
	1,000,000	4.750%, 11/01/18 AMBAC Insured	Aa3/NR/NR		1,044,920
	800,000	5.000%, 11/01/20 AMBAC Insured	Aa3/NR/NR		844,448
		North Kingstown, Rhode Island
	500,000	3.750%, 10/01/12NPFG FGIC Insured	Aa3/AA/NR		535,610
		North Providence, Rhode Island
	500,000	4.700%, 09/15/14 AGMC Insured	Aa3/AAA/NR		522,675
	500,000	3.650%, 10/15/14 AGMC Insured	Aa3/AAA/NR		530,590
	500,000	3.750%, 10/15/15 AGMC Insured	Aa3/AAA/NR		520,900
	250,000	4.000%, 10/15/17 AGMC Insured	Aa3/AAA/NR		257,857
		Pawtucket, Rhode Island
	250,000	4.400%, 09/15/10 AMBAC Insured	A3/NR/BBB+		254,982
	910,000	4.000%, 04/15/14 AMBAC Insured	A3/NR/BBB+		948,602
	1,950,000	4.500%, 07/15/26 AGMC Insured	Aa3/NR/NR		2,015,637
	1,500,000	4.750%, 07/15/29 AGMC Insured	Aa3/NR/NR		1,559,415
		Providence, Rhode Island
	700,000	5.500%, 01/15/11 AGMC Insured	Aa3/AAA/NR		700,203
	500,000	5.000%, 07/15/14 AGMC Insured	Aa3/AAA/AA		573,685
	1,000,000	5.000%, 01/15/16 FGIC Insured (pre-refunded)	A3/A/A		1,057,290
	1,000,000	5.000%, 01/15/17 FGIC Insured (pre-refunded)	A3/A/A		1,057,290
	1,000,000	5.000%, 01/15/18 FGIC Insured (pre-refunded)	A3/A/A		1,057,290
		State of Rhode Island
	4,000,000	5.000%, 08/01/14 Series A NPFG FGIC Insured	Aa3/AA/AA-		4,211,840
	2,000,000	5.000%, 08/01/12 Series B NPFG Insured	Aa3/AA/AA-		2,199,200
	1,000,000	5.000%, 06/01/14 Series B NPFG FGIC Insured	Aa3/AA/AA-		1,047,820
	2,000,000	5.000%, 08/01/15 Series B NPFG FGIC Insured	Aa3/AA/AA-		2,089,680
	1,000,000	5.250%, 11/01/11 Series C NPFG Insured	Aa3/AA/AA-		1,079,830
	3,000,000	5.000%, 09/01/18 Series C NPFG Insured	Aa3/AA/AA-		3,152,400
	2,000,000	5.000%, 09/01/19 Series C NPFG Insured	Aa3/AA/AA-		2,102,940
	1,500,000	5.000%, 09/01/20 Series C NPFG Insured	Aa3/AA/AA-		1,577,700
	2,000,000	4.500%, 02/01/17 NPFG Insured	Aa3/AA/AA-		2,110,160
	2,000,000	5.250%, 11/01/17 FGIC Insured (pre-refunded)	Aa3/AA/AA-		2,241,040

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		General Obligation Bonds (continued)	and Fitch	Value
		Warwick, Rhode Island
$	250,000	4.000%, 07/15/11 AMBAC Insured	A1/AA-/NR	$	262,415
	250,000	4.125%, 07/15/13 AMBAC Insured	A1/AA-/NR		266,073
	665,000	4.250%, 07/15/14 AMBAC Insured	A1/AA-/NR		703,517
	700,000	4.375%, 07/15/15 AMBAC Insured	A1/AA-/NR		734,195
	1,000,000	4.000%, 08/01/16 AGMC Insured Series 2008	Aa3/AAA/NR		1,089,710
	770,000	4.600%, 07/15/17 AMBAC Insured	A1/AA-/NR		798,975
	1,015,000	4.000%, 08/01/17 AGMC Insured Series 2008	Aa3/AAA/NR		1,096,829
	905,000	4.250%, 01/15/18 Syncora Guarantee, Inc. Insured	A1/AA-/NR		956,694
	810,000	4.700%, 07/15/18 AMBAC Insured	A1/AA-/NR		841,833
	1,000,000	5.000%, 01/15/19 NPFG FGIC Insured	A1/AA-/NR		1,038,930
	855,000	4.750%, 07/15/19 AMBAC Insured	A1/AA-/NR		882,069
	500,000	5.000%, 01/15/20 NPFG FGIC Insured	A1/AA-/NR		519,105
		West Warwick, Rhode Island
	500,000	4.875%, 03/01/16 AMBAC Insured	Baa1/NR/BBB		527,310
	670,000	5.000%, 03/01/17 AMBAC Insured	Baa1/NR/BBB		704,438
	700,000	5.050%, 03/01/18 AMBAC Insured	Baa1/NR/BBB		733,404
	735,000	5.100%, 03/01/19 AMBAC Insured	Baa1/NR/BBB		768,325
	1,900,000	4.625%, 04/01/26 AGMC Insured	Aa3/NR/NR		1,995,342
	1,400,000	4.750%, 04/01/29 AGMC Insured	Aa3/NR/NR		1,460,536
		Westerly, Rhode Island
	900,000	4.000%, 07/01/17 NPFG Insured	Aa3/AA-/NR		951,597
	900,000	4.000%, 07/01/18 NPFG Insured	Aa3/AA-/NR		937,584
		Woonsocket, Rhode Island
	655,000	4.450%, 12/15/12 NPFG FGIC Insured	Baa2/NR/A-		662,513
	685,000	4.550%, 12/15/13 NPFG FGIC Insured	Baa2/NR/A-		692,795
		Total General Obligation Bonds			83,350,455

		Revenue Bonds (57.1%)

		Development Revenue Bonds (11.2%)
		Providence, Rhode Island Redevelopment Agency
		Revenue Refunding Public Safety Building Project
	2,000,000	4.750%, 04/01/22 Series A AMBAC Insured	Baa1/A-/NR		1,990,680
	1,000,000	5.000%, 04/01/28 Series A AMBAC Insured	Baa1/A-/NR		984,640

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		Revenue Bonds (continued)	and Fitch	Value
		Development Revenue Bonds (continued)
		Rhode Island Convention Center Authority Revenue
		Refunding
$	1,350,000	5.000%, 05/15/10 NPFG Insured Series 1993 B	Baa1/A/NR	$	1,360,881
	2,000,000	5.000%, 05/15/21 AGMC Insured	Aa3/AAA/AA		2,062,400
	1,500,000	5.500%, 05/15/27 AGMC Insured Series A	Aa3/AAA/AA-		1,580,625
		Rhode Island State Economic Development Corp.,
		Airport Revenue
	540,000	4.625%, 07/01/26 AGMC Insured Series B	Aa3/AAA/AA-		548,905
	1,670,000	5.000%, 07/01/13 NPFG Insured Series C	A2/A/A		1,811,466
	1,000,000	5.000%, 07/01/18 AGMC Insured Series C	Aa3/AAA/AA-		1,091,650
	1,500,000	5.000%, 07/01/22 NPFG Insured Series C	A2/A/A		1,556,010
		Rhode Island State Economic Development Corp.,
		Motor Fuel Tax Revenue (Rhode Island Department
		of Transportation)
	1,000,000	4.000%, 06/15/15 Series A AMBAC Insured	A2/A+/A		1,032,780
	500,000	3.750%, 06/15/13 Series 2003A AMBAC Insured	A2/A+/A		526,230
	1,000,000	4.000%, 06/15/18 Series 2006A AMBAC Insured	A2/A+/A		1,002,800
	2,385,000	4.700%, 06/15/23 Series 2003A AMBAC Insured	A2/A+/A		2,411,354
		Rhode Island State Economic Development Corp.,
		(Rhode Island Airport Corp. Intermodal Facility
		Project)
	1,000,000	4.250%, 07/01/17 CIFG Assurance North America,
		Inc. Insured	Baa1/BBB+/NR		989,890
		Rhode Island Economic Development Corp. (Rhode
		Island Department of Transportation)
	1,500,000	5.250%, 06/15/21 AGMC Insured	Aa3/AAA/AA-		1,658,625
		Rhode Island State Economic Development Corp.,
		University of Rhode Island
	750,000	4.800%, 11/01/11 Series 1999 AGMC Insured	Aa3/NR/NR		758,858
	750,000	4.900%, 11/01/12 Series 1999 AGMC Insured	Aa3/NR/NR		758,783
	750,000	4.900%, 11/01/13 Series 1999 AGMC Insured	Aa3/NR/NR		758,753
	750,000	5.000%, 11/01/14 Series 1999 AGMC Insured	Aa3/NR/NR		758,790
		Total Development Revenue Bonds			23,644,120

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		Revenue Bonds (continued)	and Fitch	Value
		Higher Education Revenue Bonds (32.8%)
		Providence, Rhode Island Public Building Authority,
		School Projects
$	500,000	5.500%, 12/15/14 Series 1996 B NPFG Insured	Baa1/A/NR	$	500,175
	500,000	5.500%, 12/15/15 Series 1996 B NPFG Insured	Baa1/A/NR		500,180
	1,000,000	5.250%, 12/15/14 Series 1998 A AGMC Insured	Aa3/AAA/NR		1,012,110
	685,000	5.000%, 12/15/18 Series 1998 A AGMC Insured	Aa3/AAA/NR		692,556
	500,000	5.125%, 12/15/14 Series 1999 A AMBAC Insured	Baa1/A-/NR		509,925
	250,000	5.250%, 12/15/15 Series 1999 A AMBAC Insured	Baa1/A-/NR		254,372
	1,500,000	5.250%, 12/15/17 Series 1999 A AMBAC Insured	Baa1/A-/NR		1,516,485
	1,000,000	5.250%, 12/15/19 Series 1999 A AMBAC Insured	Baa1/A-/NR		1,002,520
	1,395,000	4.000%, 12/15/12 Series 2003 A NPFG Insured	Baa1/A/NR		1,460,035
	1,450,000	4.000%, 12/15/13 Series 2003 A NPFG Insured	Baa1/A/NR		1,509,203
	1,505,000	4.000%, 12/15/14 Series 2003 A NPFG Insured	Baa1/A/NR		1,548,329
	1,570,000	4.000%, 12/15/15 Series 2003 A NPFG Insured	Baa1/A/NR		1,595,685
	1,630,000	4.000%, 12/15/16 Series 2003 A NPFG Insured	Baa1/A/NR		1,640,318
	150,000	5.500%, 12/15/13 NPFG Insured 2006 Series B	Baa1/A/NR		150,046
		Rhode Island Economic Development Corp. Rhode
		Island Department of Transportation
	395,000	5.000%, 06/15/10 NPFG FGIC Insured Series 2006 A	Aa3/A+/AA-		402,758
		Rhode Island Health & Education Building Corp.,
		Brown University
	2,000,000	5.250%, 09/01/17 Series 1993 NPFG Insured	Aa1/AA+/NR		2,117,880
		Rhode Island Health & Education Building Corp.,
		Bryant College
	1,000,000	5.125%, 06/01/19 AMBAC Insured	A2/A/NR		1,027,110
	230,000	5.000%, 12/01/21 AMBAC Insured	A2/A/NR		234,715
		Rhode Island Health & Education Building Corp.,
		Higher Educational Facilities
	1,010,000	3.625%, 09/15/14 Series 2003 B NPFG Insured	Baa1/A/NR		1,029,392
	1,050,000	4.000%, 09/15/15 Series 2003 B NPFG Insured	Baa1/A/NR		1,069,814
	1,040,000	4.000%, 09/15/16 Series 2003 B NPFG Insured	Baa1/A/NR		1,046,698
	600,000	3.625%, 09/15/14 Series 2003 C NPFG Insured	Baa1/A/NR		611,520
	500,000	4.000%, 09/15/15 Series 2003 C NPFG Insured	Baa1/A/NR		509,435
	500,000	4.000%, 09/15/16 Series 2003 C NPFG Insured	Baa1/A/NR		503,220
	1,500,000	4.250%, 05/15/21 Series A AGMC Insured	Aa3/NR/NR		1,494,585
	1,500,000	4.375%, 05/15/22 Series A AGMC Insured	Aa3/NR/NR		1,502,535

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		Revenue Bonds (continued)	and Fitch	Value
		Higher Education Revenue Bonds (continued)
		Rhode Island Health & Education Building Corp.,
		Johnson & Wales University
$	465,000	5.500%, 04/01/15 Series 1999 A NPFG Insured	Baa1/A/NR	$	488,436
	900,000	5.500%, 04/01/16 Series 1999 A NPFG Insured	Baa1/A/NR		940,437
	785,000	5.500%, 04/01/17 Series 1999 A NPFG Insured	Baa1/A/NR		820,144
	1,360,000	4.000%, 04/01/12 Series 2003 Syncora Guarantee,
		Inc. Insured	NR/NR/NR*		1,366,868
	3,210,000	4.000%, 04/01/13 Series 2003 Syncora Guarantee,
		Inc. Insured	NR/NR/NR*		3,208,876
	500,000	5.250%, 04/01/14 Series 2003 Syncora Guarantee,
		Inc. Insured	NR/NR/NR*		516,310
	2,000,000	4.000%, 04/01/14 Series 2003 Syncora Guarantee,
		Inc. Insured	NR/NR/NR*		1,979,940
	1,300,000	5.000%, 04/01/29 NPFG Insured	Baa1/A/NR		1,210,196
		Rhode Island Health & Educational Building Corp.,
		Higher Education Facility, Rhode Island School
		of Design
	250,000	4.400%, 06/01/15 NPFG Insured	A1/A/NR		259,528
	585,000	4.600%, 06/01/17 NPFG Insured	A1/A/NR		604,130
	505,000	4.700%, 06/01/18 Series 2001 NPFG Insured	A1/A/NR		519,524
	280,000	4.750%, 06/01/19 Series 2001 NPFG Insured	A1/A/NR		286,787
	1,310,000	5.625%, 08/15/22 Syncora Guarantee, Inc. Insured
		Series D	A1/NR/NR		1,378,998
	900,000	5.000%, 08/15/23 Syncora Guarantee, Inc. Insured
		Series D	A1/NR/NR		921,510
		Rhode Island Health & Educational Building Corp.,
		Higher Education Facility, Roger Williams
		University
	500,000	5.000%, 11/15/24 AMBAC Insured	NR/NR/NR*		501,095
		Rhode Island Health & Education Building Corp.,
		Lifespan Obligation
	2,500,000	5.000%, 05/15/20 AGMC Insured Series A	Aa3/AAA/NR		2,583,675
	1,900,000	5.250%, 05/15/26 NPFG Insured	A3/A/NR		1,861,088
	2,500,000	5.000%, 05/15/26 Series A AGMC Insured	Aa3/AAA/NR		2,533,800

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		Revenue Bonds (continued)	and Fitch	Value
		Higher Education Revenue Bonds (continued)
		Rhode Island Health & Education Building Corp.,
		Public School Financing
$	1,000,000	5.000%, 05/15/17 Series 2006 A AGMC Insured	Aa3/AAA/AA	$	1,077,710
	500,000	5.000%, 05/15/20 Series 2007 A AGMC Insured	Aa3/NR/AA		527,660
	1,000,000	4.250%, 05/15/21 Series 2007 B AGMC Insured	Aa3/AAA/NR		997,280
	500,000	5.000%, 05/15/17 Series A AGMC Insured 2008	Aa3/NR/NR		537,515
	2,000,000	4.750%, 05/15/29 Series A AGMC Insured	Aa3/NR/NR		1,977,440
		Rhode Island Health & Education Building Corp.,
		Roger Williams University
	500,000	5.125%, 11/15/11 AMBAC Insured	NR/NR/NR*		505,935
	1,000,000	5.125%, 11/15/14 Series 1996 S AMBAC Insured	NR/NR/NR*		1,011,700
	1,000,000	5.000%, 11/15/18 Series 1996 S AMBAC Insured	NR/NR/NR*		1,006,960
		Rhode Island Health & Educational Building Corp.,
		University of Rhode Island
	300,000	5.200%, 09/15/16 Series 2000 B AMBAC Insured
		(pre-refunded)	NR/A+/NR		312,582
	800,000	5.000%, 09/15/23 Series 2003 C Refunding NPFG
		Insured	Baa1/A/NR		810,424
	1,200,000	4.000%, 09/15/11 Series 2005 G AMBAC Insured	A1/A+/NR		1,251,552
	1,200,000	4.125%, 09/15/12 Series 2005 G AMBAC Insured	A1/A+/NR		1,271,340
	1,200,000	4.125%, 09/15/13 Series 2005 G AMBAC Insured	A1/A+/NR		1,278,372
	1,000,000	4.500%, 09/15/26 Series 2005 G Refunding
		AMBAC Insured	A1/A+/NR		991,830
		Rhode Island Health & Education Facilities
		Authority, Providence College
	1,000,000	4.250%, 11/01/14 Syncora Guarantee, Inc. Insured	A2/NR/NR		1,045,860
	2,500,000	4.375%, 11/01/15 Syncora Guarantee, Inc. Insured	A2/NR/NR		2,591,050
	2,500,000	4.500%, 11/01/16 Syncora Guarantee, Inc. Insured	A2/NR/NR		2,569,625
	1,000,000	4.500%, 11/01/17 Syncora Guarantee, Inc. Insured	A2/NR/NR		1,020,340
	1,000,000	5.000%, 11/01/24 Syncora Guarantee, Inc. Insured
		Series 2003 A	A2/NR/NR		1,015,900
		Total Higher Education Revenue Bonds			69,224,018

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		Revenue Bonds (continued)	and Fitch	Value
		Housing Revenue Bonds (0.5%)
		Rhode Island Housing & Mortgage Finance Corp.
		Homeowner Opportunity
$	1,000,000	3.750%, 10/01/13 Series 50-A NPFG Insured	A2/AA+/NR	$	1,045,750

		Lease Revenue Bonds (1.4%)
		Providence, Rhode Island Redevelopment Agency
		Revenue Refunding Public Safety Building Project
		Rhode Island Certificates of Participation (Central
		Power Plant)
	1,000,000	4.000%, 10/01/20 Series D AGMC Insured	Aa3/AAA/AA		1,025,400
		Rhode Island Certificates of Participation (Kent
		County Court House Project)
	250,000	5.000%, 10/01/22NPFG Insured Series 2004	AA1/AA-/A+		263,430
		Rhode Island Certificates of Participation (School
		for the Deaf Project)
	1,000,000	5.500%, 04/01/27 Series C 2009 AGMC Insured	Aa3/AAA/AA-		1,059,310
	500,000	5.625%, 04/01/29 Series C 2009 AGMC Insured	Aa3/AAA/AA-		528,915
		Total Lease Revenue Bonds			2,877,055

		Pollution Control Revenue Bonds (3.2%)
		Rhode Island Clean Water Finance Agency, Water
		Pollution Control Bonds
	1,800,000	5.000%, 10/01/18 Series 2002 B NPFG Insured	Aaa/AA/NR		1,914,786
	4,765,000	4.375%, 10/01/21 Series 2002 B NPFG Insured	Aaa/AA/NR		4,895,227
		Total Pollution Control Revenue Bonds			6,810,013

		Water and Sewer Revenue Bonds (6.6%)
		Bristol County, Rhode Island Water Authority
	750,000	5.250%, 07/01/17 Series 1997 A NPFG Insured	Baa1/A/NR		750,465
	1,000,000	3.500%, 12/01/13 Series 2004 Refunding A NPFG
		Insured	Baa1/A/NR		1,042,630
	1,000,000	3.500%, 12/01/14 Series 2004 Refunding A NPFG
		Insured	Baa1/A/NR		1,033,230
		Kent County, Rhode Island Water Authority
	500,000	4.000%, 07/15/12 Series 2002 A NPFG Insured	Baa1/A/NR		536,660
	1,055,000	4.150%, 07/15/14 Series 2002 A NPFG Insured	Baa1/A/NR		1,107,381

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 2009 (unaudited)

			Rating
Principal			Moody’s, S&P
Amount		Revenue Bonds (continued)	and Fitch	Value
		Water and Sewer Revenue Bonds (continued)
		Narragansett, Rhode Island Bay Commission Water
		Authority
$	365,000	5.000%, 08/01/27 NPFG Insured Series A	Baa1/AA-/NR	$	378,071
		Rhode Island Clean Water Protection Finance Agency
	500,000	4.600%, 10/01/13 Series A AMBAC Insured	Aa1/NR/NR		500,695
	500,000	4.750%, 10/01/14 Series A AMBAC Insured	Aa1/NR/NR		500,720
	2,000,000	4.750%, 10/01/18 Series A AMBAC Insured	Aa1/NR/NR		2,001,960
	1,250,000	5.400%, 10/01/15 1993 Series A NPFG Insured	Aaa/A/NR		1,388,413
	500,000	4.500%, 10/01/11 1993 Series B AMBAC Insured	Aa1/NR/NR		500,815
	500,000	4.750%, 10/01/20 1999 Series A AMBAC Insured	Aa1/NR/NR		500,410
	1,000,000	5.125%, 10/01/11 1999 Series C NPFG Insured	Aaa/AA/NR		1,002,060
		Rhode Island Water Resources Board Public
		Drinking Water Protection
	1,500,000	4.000%, 03/01/14 Series 2002 NPFG Insured	Baa1/A/NR		1,562,235
	595,000	4.250%, 03/01/15 Series 2002 NPFG Insured	Baa1/AA-/NR		614,147
	405,000	4.250%, 03/01/15 Series 2002 NPFG Insured
		(pre-refunded)	NR/AA-/NR		435,752
		Total Water and Sewer Revenue Bonds			13,855,644

		Other Revenue Bonds (1.4%)
		Rhode Island Refunding Bond Authority State
		Public Projects
	500,000	5.250%, 02/01/10 AMBAC Insured Series 1998 A	A1/AA-/NR		501,375
		State of Rhode Island Depositors Economic
		Protection Corp.
	235,000	6.550%, 08/01/10 NPFG Insured ETM	NR/A/NR		243,129
	500,000	6.000%, 08/01/17 Series 1992 B NPFG Insured ETM	NR/A/NR		547,625
	250,000	5.750%, 08/01/21 Series A AGMC Insured ETM	NR/NR/NR*		306,340
	1,045,000	5.250%, 08/01/21 Series 1993 B NPFG Insured
		ETM (pre-refunded)	NR/A/NR		1,096,487
	215,000	6.375%, 08/01/22 Series A NPFG Insured ETM	NR/AAA/A		278,182
		Total Other Revenue Bonds			2,973,138
		Total Revenue Bonds			120,429,738

NARRAGANSETT INSURED TAX-FREE INCOME FUND

SCHEDULE OF INVESTMENTS (continued)

DECEMBER 31, 2009 (unaudited)

Total Investments (cost $197,527,924-note 4)		96.6	%	$	203,780,193
Other assets less liabilities		3.4			7,238,213
Net Assets		100.0	%	$	211,018,406

	Percent of
Portfolio Distribution By Quality Rating	Investment †
Aaa of Moody’s or AAA of S&P		21.1	%
Aa of Moody’s or AA of S&P or Fitch		33.5
A of Moody’s or S&P or Fitch		38.5
Baa of Moody’s or BBB of S&P or Fitch		1.8
Not rated*		5.1
		100.0	%

† Calculated using the highest rating of the three rating services.

* Any security not rated (NR) by any of the approved credit rating services has been determined by the Investment Sub-Adviser to have sufficient quality to be ranked in the top four credit ratings if a credit rating were to be assigned by a credit rating service.

PORTFOLIO ABBREVIATIONS:

AGMC - Assured Guaranty Municipal Corp. AMBAC - American Municipal Bond Assurance Corp. CIFG - CDC IXIS Financial Guaranty ETM - Escrowed to Maturity FGIC - Financial Guaranty Insurance Co. NPFG - National Public Finance Guarantee NR - Not rated

Note: National Public Finance Guarantee was formerly known as National-re and Assured Guaranty Municipal Corp. was formerly known as Financial Security Assurance Inc. (FSA) or Assured Guaranty Corp.

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2009 (unaudited)

ASSETS
Investments at value (cost $197,527,924)	$	203,780,193
Cash		6,793,855
Interest receivable		2,417,341
Receivable for Fund shares sold		243,681
Other assets		9,309
Total assets		213,244,379
LIABILITIES
Payable for Fund shares redeemed		1,391,309
Dividends payable		733,151
Management fee payable		41,090
Accrued expenses		60,423
Total liabilities		2,225,973
NET ASSETS	$	211,018,406
Net Assets consist of:
Capital Stock - Authorized 80,000,000 shares, par value $0.01 per share	$	199,261
Additional paid-in capital		205,208,714
Net unrealized appreciation on investments (note 4)		6,252,269
Accumulated net realized loss on investments		(630,016	)
Distributions in excess of net investment income		(11,822	)
	$	211,018,406

CLASS A
Net Assets	$	141,522,106
Capital shares outstanding		13,363,711
Net asset value and redemption price per share	$	10.59
Maximum offering price per share (100/96 of $10.59 adjusted to nearest cent)	$	11.03

CLASS C
Net Assets	$	17,092,683
Capital shares outstanding		1,614,230
Net asset value and offering price per share	$	10.59
Redemption price per share (*a charge of 1% is imposed on the redemption
proceeds of the shares, or on the original price, whichever is lower, if redeemed
during the first 12 months after purchase)	$	10.59	*

CLASS I
Net Assets	$	273,471
Capital shares outstanding		25,835
Net asset value, offering and redemption price per share	$	10.59
CLASS Y
Net Assets	$	52,130,146
Capital shares outstanding		4,922,314
Net asset value, offering and redemption price per share	$	10.59

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2009 (unaudited)

Investment Income:

Interest income				$	4,366,339

Expenses:

Management fee (note 3)	$	519,276
Distribution and service fees (note 3)		182,313
Transfer and shareholder servicing agent fees (note 3)		59,978
Trustees’ fees and expenses (note 8)		56,550
Legal fees (note 3)		34,599
Shareholders’ reports and proxy statements		14,633
Auditing and tax fees		10,353
Fund accounting fees		9,977
Custodian fees (note 6)		8,488
Registration fees and dues		5,872
Insurance		5,399
Chief compliance officer (note 3)		2,271
Miscellaneous		23,059
Total expenses		932,768

Management fee waived (note 3)		(308,046	)
Expenses paid indirectly (note 6)		(299	)
Net expenses					624,423
Net investment income					3,741,916

Realized and Unrealized Gain (Loss) on Investments:

Net realized gain (loss) from securities transactions		125,561
Change in unrealized appreciation on investments		2,709,430

Net realized and unrealized gain (loss) on investments					2,834,991
Net change in net assets resulting from operations				$	6,576,907

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS

	Six Months Ended December 31, 2009			Year Ended
	(unaudited)			June 30, 2009
OPERATIONS:
Net investment income	$	3,741,916		$	6,782,172
Net realized gain (loss) from securities transactions		125,561			132,126
Change in unrealized appreciation on investments		2,709,430			1,940,606
Change in net assets from operations		6,576,907			8,854,904

DISTRIBUTIONS TO SHAREHOLDERS (note 9):
Class A Shares:
Net investment income		(2,576,134	)		(4,658,407	)

Class C Shares:
Net investment income		(212,558	)		(316,526	)

Class I Shares:
Net investment income		(4,845	)		(11,043	)

Class Y Shares:
Net investment income		(978,775	)		(1,876,092	)
Change in net assets from distributions		(3,772,312	)		(6,862,068	)

CAPITAL SHARE TRANSACTIONS (note 7):
Proceeds from shares sold		23,356,974			34,987,531
Net asset value of shares issued in connection
with acquisition (note 11)		–			18,325,315
Reinvested dividends and distributions		1,430,990			3,073,562
Cost of shares redeemed		(12,607,032	)		(24,715,396	)
Change in net assets from capital share transactions		12,180,932			31,671,012
Change in net assets		14,985,527			33,663,848

NET ASSETS:
Beginning of period		196,032,879			162,369,031

End of period*	$	211,018,406		$	196,032,879

* Includes distributions in excess of net investment income and
undistributed net investment income of:	$	(11,822	)	$	18,574

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 (unaudited)

1. Organization

Narragansett Insured Tax-Free Income Fund (the “Fund”), a non-diversified, open-end investment company, was organized on January 22, 1992 as a Massachusetts business trust and commenced operations on September 10, 1992. The Fund is authorized to issue 80,000,000 shares and, since its inception to May 1, 1996, offered only one class of shares. On that date, the Fund began offering two additional classes of shares, Class C and Class Y Shares. All shares outstanding prior to that date were designated as Class A Shares and are sold with a front-payment sales charge, paid at the time of purchase, and bear an annual distribution fee. Class C Shares are sold 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. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y Shares are only offered and sold through institutions acting for an investor in a fiduciary, advisory, agency, custodial or similar capacity and are not offered directly to retail investors. Class Y Shares are sold at net asset value with no sales charge, no redemption fees, no contingent deferred sales charge and no distribution or service fees. On October 31, 1997, the Fund established Class I Shares, which are offered and sold only through financial intermediaries and are not offered directly to retail investors. Class I Shares are sold at net asset value with no sales charge, no redemption fees, or contingent deferred sales charge. Class I Shares may carry a distribution fee and a service fee. All classes of shares represent interests in the same portfolio of investments and are identical as to rights and privileges and differ with respect to the effect of sales charges, the distribution and/or service fees borne by each class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class.

2. Significant Accounting Policies

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

Portfolio valuation: Municipal securities which have remaining maturities of more than 60 days are valued each business day based upon information provided by a nationally prominent independent pricing service and periodically verified through other pricing services. In the case of securities for which market quotations are readily available, securities are valued by the pricing service at the mean of bid and asked quotations. If market quotations or a valuation from the pricing service is not readily available, the security is valued at fair value determined in good faith under procedures established by and under the general supervision of the Board of Trustees. Securities which mature in 60 days or less are valued at amortized cost if their term to maturity at purchase is 60 days or less, or by amortizing their unrealized appreciation or depreciation on the 61st day prior to maturity, if their term to maturity at purchase exceeds 60 days.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

Fair Value Measurements: The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s investments and are summarized in the following fair value hierarchy.

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

Level 2 – Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities The following is a summary of the valuation inputs, representing 100% of the Fund’s investments (details of which can be found in the schedule of investments) used to value the Fund’s net assets as of December 31, 2009:

Valuation Inputs	Investments in Securities
Level 1 – Quoted Prices	$	—
Level 2 – Other Significant Observable Inputs — Municipal Bonds		203,780,193
Level 3 – Significant Unobservable Inputs		—
Total	$	203,780,193

c)	Subsequent events: In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through February 26, 2010, the date the financial statements were issued.

Securities transactions and related investment income: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded on the accrual basis and is adjusted for amortization of premium and accretion of original issue and market discount.

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

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

Management has reviewed the tax positions for each of the open tax years (2006-2009) and has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements

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

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

Accounting pronouncement: In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “Improving Disclosures about Fair Value Measurements” that requires additional disclosures regarding fair value measurements. Certain required disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, and other required disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management is currently evaluating the impact it will have on its financial statement disclosures

3. Fees and Related Party Transactions

a) Management Arrangements:

Aquila Investment Management LLC (the “Manager”), a wholly-owned subsidiary of Aquila Management Corporation, the Fund’s founder and sponsor, serves as the Manager for the Fund under an Advisory and Administration Agreement with the Fund. The portfolio management of the Fund has been delegated to a Sub-Adviser as described below. Under the Advisory and Administration Agreement, the Manager provides all administrative services to the Fund, other than those relating to the day-to-day portfolio management. The Manager’s services include providing the office of the Fund and all related services as well as overseeing the activities of the Sub-Adviser and managing relationships with all the various support organizations to the Fund such as the shareholder servicing agent, custodian, legal counsel, fund accounting agent, auditor and distributor. For its services, the Manager is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.50% on the Fund’s average net assets.

Citizens Investment Advisors, a department of RBS Citizens, N.A. (the “Sub-Adviser”), serves as the Investment Sub-Adviser for the Fund under a Sub-Advisory Agreement between the Manager and the Sub-Adviser. Under this agreement, the Sub-Adviser continuously provides, subject to oversight of the Manager and the Board of Trustees of the Fund, the investment program of the Fund and the composition of its portfolio, arranges for the purchases and sales of portfolio securities, and provides for daily pricing of the Fund’s portfolio. For its services, the Sub-Adviser is entitled to receive a fee from the Manager which is payable monthly and computed as of the close of business each day at the annual rate of 0.23% on the Fund’s average net assets.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

For the six months ended December 31, 2009, the Fund incurred management fees of $519,276 of which $308,046 was waived. The Manager has contractually undertaken to waive fees and/or reimburse Fund expenses during the period July 1, 2009 through October 31, 2010 so that total Fund expenses would not exceed 0.82% for Class A Shares, 1.67% for Class C Shares, 1.00% for Class I Shares or 0.67% for Class Y Shares. A similar contractual undertaking is expected to be in place through the period ended October 31, 2011.

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

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

b) Distribution and Service Fees:

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 (the “Rule”) under the Investment Company Act of 1940. Under one part of the Plan, with respect to Class A Shares, the Fund is authorized to make distribution fee payments to broker-dealers or others (“Qualified Recipients”) selected by Aquila Distributors, Inc. (“the Distributor”), including, but not limited to, any principal underwriter of the Fund with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Fund’s shares or servicing of shareholder accounts. The Fund makes payment of this distribution fee at the annual rate of 0.15% of the Fund’s average net assets represented by Class A Shares. For the six months ended December 31, 2009, distribution fees on Class A Shares amounted to $105,579, of which the Distributor retained $2,406.

Under another part of the Plan, the Fund is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Fund’s Class C Shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Fund’s average net assets represented by Class C Shares and for the six months ended December 31, 2009 amounted to $57,344. In addition, under a Shareholder Services Plan, the Fund is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Fund’s average net assets represented by Class C Shares and for the six months ended December 31, 2009, amounted to $19,115. The total of these payments with respect to Class C Shares amounted to $76,459, of which the Distributor retained $12,053.

Under another part of the Plan, the Fund is authorized to make payments with respect to Class I Shares to Qualified Recipients. Class I payments, under the Plan, may not exceed, for any fiscal year of the Fund a rate (currently 0.20%) set from time to time by the Board of Trustees of not more than 0.25% of the average annual net assets represented by the Class I Shares. In addition, the Fund has a Shareholder Services Plan under which it may pay service fees (currently 0.15%) of not more than 0.25% of the average annual net assets of the Fund represented by Class I Shares. That is, the total payments under both plans will not exceed 0.50% of such net assets. For the six months ended December 31, 2009, these payments were made at the average annual rate of 0.35% of such net assets amounting to $481 of which $275 related to the Plan and $206 related to the Shareholder Services Plan.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

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

Under a Distribution Agreement, the Distributor serves as the exclusive distributor of the Fund’s shares. Through agreements between the Distributor and various brokerage and advisory firms (“intermediaries”), the Fund’s shares are sold primarily through the facilities of intermediaries having offices within Rhode Island, with the bulk of any sales commissions inuring to such intermediaries. For the six months ended December 31, 2009, total commissions on sales of Class A Shares amounted to $273,161, of which the Distributor received $22,902.

c) Other Related Party Transactions:

For the six months ended December 31, 2009, the Fund incurred $34,451 of legal fees allocable to Butzel Long PC, counsel to the Fund, for legal services in conjunction with the Fund’s ongoing operations. The Secretary of the Fund is a shareholder of that firm.

4. Purchases and Sales of Securities

During the six months ended December 31, 2009, purchases of securities and proceeds from the sales of securities aggregated $10,951,580 and $3,256,831, respectively.

At December 31, 2009, the aggregate tax cost for all securities was $197,502,891. At December 31, 2009, the aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost amounted to $6,515,764 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value amounted to $238,462 for a net unrealized appreciation of $6,277,302.

5. Portfolio Orientation

Since the Fund invests principally and may invest entirely in double tax-free municipal obligations of issuers within Rhode Island, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Rhode Island and whatever effects these may have upon Rhode Island issuers’ ability to meet their obligations. However, to mitigate against such risks, the Fund has chosen to have at least 80% of net assets and possibly the entire portfolio insured as to timely payment of principal and interest when due by nationally prominent municipal bond insurance companies. At December 31, 2009, all of the securities in the Fund were insured. While such insurance protects against credit risks with portfolio securities, it does not insure against market risk of fluctuations in the Fund’s share price and income return (see note 12).

The Fund is also permitted to invest in U.S. territorial municipal obligations meeting comparable quality standards and providing income which is exempt from both regular Federal and Rhode Island income taxes. The general policy of the Fund is to invest in such securities only when comparable securities of Rhode Island issuers are not available in the market. At December 31, 2009, the Fund had all of its net assets invested in Rhode Island municipal issues.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

6. Expenses

The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses.

7. Capital Share Transactions

Transactions in Capital Shares of the Fund were as follows:

	Six Months Ended
	December 31, 2009						Year Ended
	(unaudited)						June 30, 2009
	Shares			Amount			Shares			Amount
Class A Shares:
Proceeds from shares sold		1,109,620		$	11,757,003			1,706,352		$	17,704,511
Shares issued in acquisition*		–			–			1,856,329			18,325,315
Reinvested distributions		112,502			1,192,064			251,861			2,620,356
Cost of shares redeemed		(697,541	)		(7,428,160	)		(1,113,426	)		(11,518,205	)
Net change		524,581			5,520,907			2,701,116			27,131,977

Class C Shares:
Proceeds from shares sold		621,734			6,573,027			391,685			4,081,253
Reinvested distributions		7,840			83,108			12,753			132,607
Cost of shares redeemed		(147,618	)		(1,562,569	)		(347,338	)		(3,595,851	)
Net change		481,956			5,093,566			57,100			618,009

Class I Shares:
Proceeds from shares sold		4			40			–			–
Reinvested distributions		381			4,042			1,064			11,043
Cost of shares redeemed		(295	)		(3,126	)		(27,004	)		(282,093	)
Net change		90			956			(25,940	)		(271,050	)

Class Y Shares:
Proceeds from shares sold		473,777			5,026,904			1,285,732			13,201,767
Reinvested distributions		14,308			151,776			29,805			309,556
Cost of shares redeemed		(341,417	)		(3,613,177	)		(902,759	)		(9,319,247	)
Net change		146,668			1,565,503			412,778			4,192,076
Total transactions in Fund
shares		1,153,295		$	12,180,932			3,145,054		$	31,671,012

* See note 11.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

8. Trustees’ Fees and Expenses

At December 31, 2009 there were 8 Trustees, one of which is affiliated with the Manager and is not paid any fees. The total amount of Trustees’ service and attendance fees paid during the six months ended December 31, 2009 was $43,605, to cover carrying out their responsibilities and attendance at regularly scheduled quarterly Board Meetings and meetings of the Independent Trustees held prior to each quarterly Board Meeting. When additional meetings (Audit, Nominating, Shareholder and special meetings) are held, meeting fees are paid to those Trustees in attendance. Trustees are reimbursed for their expenses such as travel, accommodations, and meals incurred in connection with attendance at Board Meetings and at the Annual Meeting of Shareholders. For the six months ended December 31, 2009, such meeting-related expenses amounted to $12,945.

9. Securities Traded on a When-Issued Basis

The Fund may purchase or sell securities on a when-issued basis. When-issued transactions arise when securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. Beginning on the date the Fund enters into a when-issued transaction, cash or other liquid securities are segregated in an amount equal to or greater than the value of the when-issued transaction. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities.

10. Income Tax Information and Distributions

The Fund declares dividends daily from net investment income and makes payments monthly. Net realized capital gains, if any, are distributed annually and are taxable. These distributions are paid in additional shares at the net asset value per share, in cash, or in a combination of both, at the shareholder’s option.

The Fund intends to maintain, to the maximum extent possible, the tax-exempt status of interest payments received from portfolio municipal securities in order to allow dividends paid to shareholders from net investment income to be exempt from regular Federal and State of Rhode Island income taxes. However, due to differences between financial statement reporting and Federal income tax reporting requirements, distributions made by the Fund may not be the same as the Fund’s net investment income, and/or net realized securities gains. In this regard, the Fund decreased undistributed net investment loss in the amount of $90,370, decreased additional paid-in capital in the amount of $20,372 and decreased accumulated realized loss in the amount of $69,998 at June 30, 2009. This adjustment had no impact on the Fund’s aggregate net assets at June 30, 2009. Further, a small portion of the dividends may, under some circumstances, be subject to taxes at ordinary income rates.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

At June 30, 2009, the Fund had a capital loss carryover of $405,450 of which $111,495 expires on June 30, 2013, $25,706 expires on June 30, 2014, $175,218 expires on June 30, 2015 and $93,031 expires on June 30, 2016. The Fund acquired $118,737 capital loss carryover related to the acquisition of Ocean State Tax-Exempt Fund. Due to loss limitation tax rules, an additional capital loss carryover of $350,127 becomes available during the year ending June 30, 2010. This carryover is available to offset future net realized gains on securities transactions to the extent provided for in the Internal Revenue Code. To the extent that this loss is used to offset future realized capital gains, it is probable the gains so offset will not be distributed.

Tax character of distributions:
	Year Ended June 30,
	2009		2008
Net tax-exempt income	$	6,771,698	$	5,598,407
Ordinary income		90,370		128,881
	$	6,862,068	$	5,727,288

As of June 30, 2009, the components of distributable earnings on a tax basis were as follows:

Undistributed tax-exempt income	$	209,597
Accumulated net realized loss		(405,450	)
Unrealized appreciation		3,560,166
Other temporary differences		(558,477	)
	$	2,805,836

The difference between book basis and tax basis unrealized appreciation is attributable primarily to premium/discount adjustments. The difference between book basis and tax basis undistributed income is due to the timing difference in recognizing dividends paid.

11. Transfer of Net Assets Transaction

On October 17, 2008, the Fund acquired the assets and liabilities of Ocean State Tax-Exempt Fund (“Ocean State”) pursuant to an agreement and plan of reorganization approved by the shareholders of Ocean State. Total shares issued by the Fund and total net assets of Ocean State and the Fund on the date of the transfer were as follows:

Acquired Fund		Shares Issued by the Fund				Total Nets Assets of Ocean State			Total Net Assets of the Fund
Ocean State			1,856,329			$18,325,315			$176,365,957

The total net assets of the Ocean State portfolio before acquisition included unrealized appreciation of $133,026 and accumulated net realized loss of $468,864. Total net assets of the Fund immediately after the transfer were $194,691,272. The transaction was structured to qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2009 (unaudited)

12. Ongoing Development

Since December, 2007, municipal bond insurance companies have been under review by the three major rating agencies: Standard & Poor’s, Moody’s and Fitch. The loss of capital due to investments in subprime mortgages by the municipal insurance companies forced the rating agencies to downgrade or eliminate the ratings on most of the major municipal bond insurers. As such, only the ratings of Assured Guaranty and National Public Finance (formerly MBIA) have applicability to the Fund’s holdings. Some insurance companies have had their ratings withdrawn by the rating agencies. A good example is AMBAC whose ratings were withdrawn by all the rating agencies. Thus, while certain bonds still have insurance, they are no longer rated based upon the ratings of their insurers.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period

	Class A																		Class C
	Six Months																		Six Months
	Ended			Year Ended June 30,															Ended			Year Ended June 30,
	12/31/09																		12/31/09
	(unaudited)			2009			2008			2007			2006			2005			(unaudited)			2009			2008			2007			2006			2005
Net asset value, beginning of period	$	10.44		$	10.39		$	10.37		$	10.34		$	10.79		$	10.49		$	10.44		$	10.39		$	10.37		$	10.34		$	10.79		$	10.48
Income (loss) from investment operations:
Net investment income		0.19	††		0.38	††		0.38	††		0.38	†		0.38	†		0.40	†		0.15	††		0.29	††		0.29	††		0.30	†		0.29	†		0.31	†
Net gain (loss) on securities
(both realized and unrealized)		0.15			0.06			0.03			0.04			(0.44	)		0.31			0.15			0.06			0.03			0.03			(0.44	)		0.31
Total from investment operations		0.34			0.44			0.41			0.42			(0.06	)		0.71			0.30			0.35			0.32			0.33			(0.15	)		0.62
Less distributions (note 9):
Dividends from net investment income		(0.19	)		(0.39	)		(0.39	)		(0.39	)		(0.39	)		(0.41	)		(0.15	)		(0.30	)		(0.30	)		(0.30	)		(0.30	)		(0.31	)
Net asset value, end of period	$	10.59		$	10.44		$	10.39		$	10.37		$	10.34		$	10.79		$	10.59		$	10.44		$	10.39		$	10.37		$	10.34		$	10.79
Total return (not reflecting sales charge)		3.32	%*		4.30	%		4.00	%		4.10	%		(0.56	)%		6.81	%		2.88	%*		3.42	%		3.12	%		3.22	%		(1.40	)%		6.01	%
Ratios/supplemental data
Net assets, end of period (in thousands)	$	141,522		$	134,071		$	105,330		$	98,749		$	103,222		$	105,910		$	17,093		$	11,822		$	11,169		$	14,034		$	16,602		$	19,031
Ratio of expenses to average net assets		0.58	%**		0.60	%		0.64	%		0.68	%		0.67	%		0.58	%		1.42	%**		1.45	%		1.51	%		1.53	%		1.52	%		1.43	%
Ratio of net investment income to average net assets		3.63	%**		3.68	%		3.63	%		3.63	%		3.61	%		3.68	%		2.75	%**		2.82	%		2.76	%		2.78	%		2.76	%		2.83	%
Portfolio turnover rate		1.64	%*		6.17	%		2.87	%		2.37	%		7.25	%		2.20	%		1.64	%*		6.17	%		2.87	%		2.37	%		7.25	%		2.20	%

The expense and net investment income ratios without the effect of the waiver of a portion of the management fee were (note 3):

Ratio of expenses to average net assets		0.87	%**		0.90	%		0.97	%		1.03	%		1.03	%		0.96	%		1.72	%**		1.75	%		1.82	%		1.88	%		1.88	%		1.81	%
Ratio of net investment income to average net assets		3.33	%**		3.38	%		3.29	%		3.28	%		3.25	%		3.31	%		2.45	%**		2.52	%		2.45	%		2.43	%		2.40	%		2.45	%

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

Ratio of expenses to average net assets		0.58	%**		0.59	%		0.63	%		0.68	%		0.67	%		0.57	%		1.42	%**		1.44	%		1.48	%		1.53	%		1.52	%		1.42	%

___________________

†

Per share amounts have been calculated using the monthly average shares method.

††

Per share amounts have been calculated using the daily average shares method.

Not annualized.

Annualized.

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND

FINANCIAL HIGHLIGHTS (continued)

For a share outstanding throughout each period

	Class I																		Class Y
	Six Months																		Six Months
	Ended			Year Ended June 30,															Ended			Year Ended June 30,
	12/31/09																		12/31/09
	(unaudited)			2009			2008			2007			2006			2005			(unaudited)			2009			2008			2007			2006			2005
Net asset value, beginning of period	$	10.44		$	10.39		$	10.37		$	10.34		$	10.79		$	10.48		$	10.44		$	10.39		$	10.37		$	10.34		$	10.79		$	10.49
Income from investment operations:
Net investment income		0.19	††		0.37	††		0.37	††		0.38	†		0.37	†		0.39	†		0.20	††		0.40	††		0.40	††		0.40	†		0.40	†		0.41
Net gain (loss) on securities (both realized and unrealized)		0.15			0.06			0.03			0.03			(0.44	)		0.32			0.15			0.05			0.03			0.04			(0.44	)		0.31
Total from investment operations		0.34			0.43			0.40			0.41			(0.07	)		0.71			0.35			0.45			0.43			0.44			(0.04	)		0.72
Less distributions (note 9):
Dividends from net investment income		(0.19	)		(0.38	)		(0.38	)		(0.38	)		(0.38	)		(0.40	)		(0.20	)		(0.40	)		(0.41	)		(0.41	)		(0.41	)		(0.42	)
Net asset value, end of period	$	10.59		$	10.44		$	10.39		$	10.37		$	10.34		$	10.79		$	10.59		$	10.44		$	10.39		$	10.37		$	10.34		$	10.79
Total return (not reflecting sales charge)		3.25	%*		4.17	%		3.84	%		3.96	%		(0.67	)%		6.89	%		3.40	%*		4.46	%		4.16	%		4.25	%		(0.40	)%		6.98	%
Ratios/supplemental data
Net assets, end of period (in thousands)	$	273		$	269		$	537		$	826		$	761		$	1,098		$	52,130		$	49,871		$	45,332		$	34,409		$	32,239		$	27,998
Ratio of expenses to average net assets		0.72	%**		0.74	%		0.81	%		0.81	%		0.79	%		0.58	%		0.43	%**		0.45	%		0.51	%		0.53	%		0.52	%		0.43	%
Ratio of net investment income to average net assets		3.49	%**		3.54	%		3.47	%		3.50	%		3.48	%		3.68	%		3.78	%**		3.83	%		3.75	%		3.77	%		3.76	%		3.83	%
Portfolio turnover rate		1.64	%*		6.17	%		2.87	%		2.37	%		7.25	%		2.20	%		1.64	%*		6.17	%		2.87	%		2.37	%		7.25	%		2.20	%

The expense and net investment income ratios without the effect of the waiver of a portion of the management fee were (note 3):

Ratio of expenses to average net assets		1.02	%**		1.04	%		1.12	%		1.15	%		1.15	%		0.96	%		0.72	%**		0.75	%		0.82	%		0.87	%		0.88	%		0.81	%
Ratio of net investment income to average net assets		3.20	%**		3.24	%		3.16	%		3.15	%		3.12	%		3.30	%		3.48	%**		3.53	%		3.44	%		3.43	%		3.39	%		3.45	%

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

Ratio of expenses to average net assets		0.72	%**		0.73	%		0.77	%		0.80	%		0.79	%		0.57	%		0.43	%**		0.44	%		0.47	%		0.52	%		0.52	%		0.42	%

___________________

†

Per share amounts have been calculated using the monthly average shares method.

††

Per share amounts have been calculated using the daily average shares method.

Not annualized.

Annualized.

See accompanying notes to financial statements.

Analysis of Expenses (unaudited)

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

The table below is based on an investment of $1,000 invested on July 1, 2009 and held for the six months ended December 31, 2009.

Actual Expenses

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

Six months ended December 31, 2009
	Actual
	Total Return	Beginning	Ending	Expenses
	Without	Account	Account	Paid During
	Sales Charges(1)	Value	Value	the Period(2)
Class A	3.32%	$1,000.00	$1,033.20	$2.97
Class C	2.88%	$1,000.00	$1,028.80	$7.26
Class I	3.25%	$1,000.00	$1,032.50	$3.69
Class Y	3.40%	$1,000.00	$1,034.00	$2.20

(1)

Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charges with respect to Class A shares or the applicable contingent deferred sales charges (“CDSC”) with respect to Class C shares. Total return is not annualized, as it may not be representative of the total return for the year.

(2)	Expenses are equal to the annualized expense ratio of 0.58%, 1.42%, 0.72% and 0.43% for the Fund’s Class A, C, I and Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Analysis of Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

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

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

Six months ended December 31, 2009
	Hypothetical
	Annualized	Beginning	Ending	Expenses
	Total	Account	Account	Paid During
	Return	Value	Value	the Period(1)
Class A	5.00%	$1,000.00	$1,022.28	$2.96
Class C	5.00%	$1,000.00	$1,018.05	$7.22
Class I	5.00%	$1,000.00	$1,021.58	$3.67
Class Y	5.00%	$1,000.00	$1,023.04	$2.19

(1)	Expenses are equal to the annualized expense ratio of 0.58%, 1.42%, 0.72% and 0.43% for the Trust’s Class A, C, I and Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Shareholder Meeting Results (unaudited)

The Annual Meeting of Shareholders of Narragansett Insured Tax-Free Income Fund (the “Fund”) was held on October 6, 2009. The holders of shares representing 87% of the total net asset value of the shares entitled to vote were present in person or by proxy. At the meeting, the following matters were voted upon and approved by the shareholders (the resulting votes for each matter are presented below).

1. To elect Trustees.

	Dollar Amount of Votes:
Trustee	For		Withheld
Thomas A. Christopher	$	171,248,179	$	740,976
David A. Duffy	$	171,258,594	$	730,561
Diana P. Herrmann	$	171,248,589	$	740,566
Theodore T. Mason	$	170,929,738	$	1,059,417
Anne J. Mills	$	170,929,738	$	1,059,417
John J. Partridge	$	171,258,594	$	730,561
James R. Ramsey	$	170,929,728	$	1,059,417
Laureen L. White	$	171,199,103	$	790,052

2. To act on the selection of Tait, Weller & Baker LLP as the Fund’s independent registered public accounting firm.


Dollar Amount of Votes:
For		Against		Abstain
$	169,861,401	$	687,608	$	1,440,146

Information Available (unaudited)

Much of the information that the funds in the Aquila Group of Funds produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent your Fund’s entire list of portfolio securities twice a year in the semi-annual and annual reports you receive. Additionally, under Fund policies, the Manager publicly discloses the complete schedule of the Fund’s portfolio holdings, as of each calendar quarter, generally by the 15th day after the end of each calendar quarter. Such information remains accessible until the next schedule is made publicly available. You may obtain a copy of the Fund’s portfolio holding schedule for the most recently completed period by visiting the Fund’s website at www.aquilafunds.com. The Fund may also disclose other portfolio holdings as of a specified date (currently the Fund discloses its five largest holdings by value as of the last business day of each calendar month in a posting to its website on approximately the 5th business day following the month end). This information remains on the website until the next such posting. Whenever you wish to see a listing of your Fund’s portfolio other than in your shareholder reports, please check our website at www.aquilafunds.com or call us at 1-800-437-1020.

The Fund additionally files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the SEC website at www.sec.gov. You may also review or, for a fee, copy the forms at the SEC’s Public Reference Room in Washington, D.C. or by calling 1-800-SEC-0330.

Proxy Voting Record (unaudited)

The Fund does not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2009 with respect to which the Fund was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at www.sec.gov.

Additional Information (unaudited)

Renewal of the Advisory and Administration Agreement and the Sub-Advisory Agreement

Renewal until December 31, 2010 of the Advisory and Administration Agreement (the “Advisory Agreement”) between the Fund and the Manager and the Sub-Advisory Agreement (the “Sub-Advisory Agreement”) between the Manager and Citizens Investment Advisors, a department of RBS Citizens, N.A. (the “Sub-Adviser”), was approved by the Board of Trustees and the independent Trustees in December, 2009.

At a meeting called and held for that purpose at which a majority of the independent Trustees were present in person, the following materials were considered:

Copies of the agreements to be renewed;

A term sheet describing the material terms of the agreements;

The Annual Report of the Fund for the year ended June 30, 2009

A report, prepared by the Manager and provided to the Trustees for the Trustees’ review, containing data about the performance of the Fund, data about its fees, expenses and purchases and redemptions of capital shares together with comparisons of such data with similar data about other comparable funds, as well as data as to the profitability of the Manager and the Sub-Adviser; and

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

The Trustees considered the Advisory Agreement and the Sub-Advisory Agreement separately as well as in conjunction with each other to determine their combined effects on the Fund. The Trustees reviewed materials relevant to, and considered, the factors set forth below, and as to each agreement reached the conclusions described.

The nature, extent, and quality of the services provided by the Manager and the Sub-Adviser.

The Manager and Sub-Adviser have provided local management of the Fund’s portfolio. The Trustees noted that the Sub-Adviser employed Salvatore C. DiSanto and Jeffrey K. Hanna as co-portfolio managers for the Fund and had provided facilities for credit analysis of the Fund’s portfolio securities. Messrs. DiSanto and Hanna, based in Providence, have provided local information regarding specific holdings in the Fund’s portfolio. The portfolio managers have also been available to and have met with the brokerage and financial planner community and with investors and prospective investors to provide them with information generally about the Fund’s portfolio, with which to assess the Fund as an investment vehicle for residents of Rhode Island in light of prevailing interest rates and local economic conditions. In addition, one or both of them have been present at all regular meetings of the Board and Shareholders.

The Board considered that the Manager and the Sub-Adviser had provided all services the Board deemed necessary or appropriate, including the specific services that the Board has determined are required for the Fund, given that its purpose is to provide shareholders with as high a level of current income exempt from Rhode Island state and regular Federal income taxes as is consistent with preservation of capital. It noted that compared to other Rhode Island state-specific municipal bond funds, the portfolio of the Fund was of higher quality, was the only fund in the state with 100% of its portfolio instruments insured or pre-refunded, and contained no securities subject to the alternative minimum tax.

The Manager has additionally provided all administrative services to the Fund. The Board considered the nature and extent of the Manager’s supervision of third-party service providers, including the Fund’s shareholder servicing agent and custodian. The Board considered that the Manager had established and maintained a strong culture of ethical conduct and regulatory compliance.

The Board concluded that the services provided were appropriate and satisfactory and that the Fund would be well served if they continued. Evaluation of this factor weighed in favor of renewal of the Advisory Agreement and approval of the Sub-Advisory Agreement.

The investment performance of the Fund, the Manager and Sub-Adviser.

The Board reviewed each aspect of the Fund’s performance and compared its performance with that of its local competitors, with national averages and with the benchmark index. It was noted that the materials provided by the Manager indicated that compared to the two competitive Rhode Island funds, the Fund’s average annual total return outperformed that of both of its peers for the five- and ten-year periods while underperforming its peers for the one-year period, with rates of return explained in part by the Fund’s generally higher-quality portfolio and generally shorter average maturities. Furthermore, the Trustees noted that in the past year the Fund’s net asset value generally fluctuated modestly compared to the local competitors. The Board considered these results to be consistent with the purposes of the Fund.

The Board concluded that the performance of the Fund was good in light of market conditions, the length of its average maturities, its investment objectives and its long-standing emphasis on minimizing risk. Evaluation of this factor indicated to the Trustees that renewal of the Advisory Agreement and the Sub-Advisory Agreement would be appropriate.

The costs of the services to be provided and profits to be realized by the Manager and Sub-Adviser and their affiliates from their relationships with the Fund.

The information provided in connection with renewal contained expense data for the Fund and its local competitors as well as data for insured single-state funds and all single-state tax-free municipal bond funds nationwide, including data for all such front-end load funds of a comparable asset size. The materials also showed the profitability to the Manager and the Sub-Adviser of their services to the Fund. The Board noted that both the Manager and Sub-Adviser were currently waiving a portion of their respective fees and had been since the Fund’s inception. Additionally, it was noted that the Manager had contractually undertaken to waive fees and/or reimburse Fund expenses during the period July 1, 2009 through October 31, 2010 so that total Fund expenses would not exceed 0.82 of 1% for Class A Shares. The Manager had indicated that it intended to continue waiving fees as necessary in order that the Fund would remain competitive.

The Board compared the expense and fee data with respect to the Fund to similar data about other funds that it found to be relevant. The Board concluded that the expenses of the Fund and the fees paid were generally lower than those being paid by single-state tax-free municipal bond funds nationwide, and by the Fund’s local competitors.

The Board further concluded that the profitability to the Manager, Sub-Adviser and Distributor did not argue against approval of the fees to be paid under the Advisory Agreement or the Sub-Advisory Agreement.

The extent to which economies of scale would be realized as the Fund grows.

Data provided to the Trustees showed that the Fund’s asset size had been increasing in recent years. The Trustees also noted that the materials indicated that the Fund’s fees were comparable to those of its peers, including those with breakpoints. Additionally, the Trustees noted that both the Manager and Sub-Adviser were currently waiving a substantial portion of their respective fees. Evaluation of these factors indicated to the Board that the Advisory Agreement and the Sub-Advisory Agreement should be renewed without addition of breakpoints at this time.

Benefits derived or to be derived by the Manager and Sub-Adviser and their affiliates from their relationships with the Fund.

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

Founders

Lacy B. Herrmann, Chairman Emeritus

Aquila Management Corporation

Manager

AQUILA INVESTMENT MANAGEMENT LLC

380 Madison Avenue, Suite 2300

New York, New York 10017

Investment Sub-Adviser

CITIZENS INVESTMENT ADVISORS,

A DEPARTMENT OF RBS CITIZENS, N. A.

One Citizens Plaza

Providence, Rhode Island 02903

Board of Trustees

David A. Duffy, Chair

Thomas A. Christopher

Diana P. Herrmann

Theodore T. Mason

Anne J. Mills

John J. Partridge

James R. Ramsey

Laureen L. White

Officers

Diana P. Herrmann, President

Maryann Bruce, Senior Vice President

Stephen J. Caridi, Senior Vice President

Robert S. Driessen, Chief Compliance Officer

Joseph P. DiMaggio, Chief Financial Officer and Treasurer

Edward M.W. Hines, Secretary

Distributor

AQUILA DISTRIBUTORS, INC.

380 Madison Avenue, Suite 2300

New York, New York 10017

Transfer and Shareholder Servicing Agent

PNC Global Investment Servicing

101 Sabin Street

Pawtucket, RI 02860

Custodian

JPMORGAN CHASE BANK, N.A.

1111 Polaris Parkway

Columbus, OH 43240

Independent Registered Public Accounting Firm

TAIT, WELLER & BAKER LLP

1818 Market Street, Suite 2400

Philadelphia, PA 19103

Further information is contained in the Prospectus,

which must precede or accompany this report.

ITEM 2.

CODE OF ETHICS.

Not applicable.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6.

SCHEDULE OF INVESTMENTS.

Included in Item 1 above

ITEM 7.

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

Not applicable.

ITEM 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Board of Directors of the Registrant has adopted a Nominating Committee Charter which provides that the Nominating Committee (the 'Committee') may consider and evaluate nominee candidates properly submitted by shareholders if a vacancy among the Independent Trustees of the Registrant occurs and if, based on the Board's then current size, composition and structure, the Committee determines that the vacancy should be filled. The Committee will consider candidates submitted by shareholders on the same basis as it considers and evaluates candidates recommended by other sources. A copy of the qualifications and procedures that must be met or followed by shareholders to properly submit a nominee candidate to the Committee may be obtained by submitting a request in writing to the Secretary of the Registrant.

ITEM 11.

CONTROLS AND PROCEDURES.

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

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

ITEM 12.

EXHIBITS.

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

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

SIGNATURES

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

NARRAGANSETT INSURED TAX-FREE INCOME FUND

By: /s/ Diana P. Herrmann

President and Trustee

March 11, 2010

By: /s/ Joseph P. DiMaggio

Chief Financial Officer and Treasurer

March 11, 2010

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

By: /s/ Diana P. Herrmann

Diana P. Herrmann

President and Trustee

March 11, 2010

By: /s/ Joseph P. DiMaggio

Joseph P. DiMaggio

Chief Financial Officer and Treasurer

March 11, 2010

NARRAGANSETT INSURED TAX-FREE INCOME FUND

EXHIBIT INDEX

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

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

Aquila Narragansett Tax-Free Income Fund (NIFFX) Inactive N-CSRCertified annual shareholder report (management investment company)