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
Date of reporting period: 6/30/03
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
NARRAGANSETT INSURED TAX-FREE INCOME FUND
Annual Report June 30, 2003
[Logo of Narragansett Insured Tax-Free Income Fund: rectangle with profile
view of a sailboat on top of waves and three seagulls flying above it]
SERVING RHODE ISLAND INVESTORS FOR MORE THAN A DECADE
NARRAGANSETT INSURED TAX-FREE INCOME FUND
ANNUAL REPORT
MANAGEMENT DISCUSSION
Narragansett Insured Tax-Free Income Fund (the "Fund") seeks to provide the
highest level of double tax free income possible while staying within the self
imposed quality restraints. The Fund strives to accomplish this by purchasing
only municipal securities rated AAA by nationally renowned credit rating
services. As an extra measure of credit protection to shareholders, all
securities owned by the Fund are insured to provide for the timely payment of
principal and interest when due. A maximum average maturity profile of under 15
years has been and will continue to be maintained for the Fund's portfolio in
order to produce a reasonable level of income return with relatively high
stability for the Fund's share price. At the June 2003 fiscal year end, the
portfolio had an average maturity of 12.3 years.
Stock prices continued to climb in June as the Standard & Poor's 500 added
1.3% for the month. This "benchmark" index returned nearly 12% during the first
half of 2003, while the NASDAQ Composite posted an astonishing 22% gain as
investors appeared to focus on both the technology and biotech sectors. Although
we believe the economy still appears sluggish by many measures, shares which are
economically sensitive have, in our view, generally fared better than more
defensive issues in the stock market. Despite the difficult stock market of the
previous three years, we think this year's market run up can be attributed to
investors who sought lower quality investments. For example, the stock
performance of IBM and Microsoft has been rather tepid, while the shares of
numerous unprofitable technology companies have surged.
Therefore, the stock market seems to be discounting a fairly robust
recovery in the second half of the year 2003. While we have argued for some time
that the economy should improve and we agree that technology spending is
trending higher, it is entirely possible that the prices of many stocks have
gotten ahead of the actual fundamentals. A case may be built that more patient
investors may find it an opportune time to accumulate shares in quality
companies that have lagged in the market rally, such as those with rising cash
flows and dividends.
The bond market began to slip during the latter part of June of this year.
Intermediate and long-term interest rates, which fell to historic lows early on,
ended the month above May levels despite another cut in the Federal Funds' rate.
Even the weak June employment data released in early July failed to give bond
prices a lift.
As with the stock market rally, the retrenchment in interest rates appears
to have been a global phenomenon. Given the heavy government-financing calendar
in the coming months of this year as well as investors' rediscovered appetite
for stocks in addition to our country's dependence on foreign capital, gradual
upward pressure on rates could continue. For fixed income investors, this would
be a welcome development.
Given the current Federal income tax rates and the Rhode Island income tax
rate, the Narragansett Insured Tax-Free Income Fund presently produces an
attractive yield for Rhode Island residents when compared to taxable
fixed-income securities.
Management believes that having available to the Fund a locally-based
investment manager, with extensive knowledge and experience in the Rhode Island
municipal market continues to add considerable value to the portfolio and
provides a distinct benefit to Fund shareholders.
The Fund's investment Sub-Adviser intends to continue to oversee the
portfolio with a strong emphasis on achieving a balance between share price
stability, acceptable double tax-free income return, and the highest standards
of credit quality.
PERFORMANCE REPORT
The following graph illustrates the value of $10,000 invested in the Class
A shares of Narragansett Insured Tax-Free Income Fund for the 10-year period
ended June 30, 2003 as compared with the Lehman Brothers Quality Intermediate
Municipal Bond Index and the Consumer Price Index (a cost of living index). The
performance of each of the other classes is not shown in the graph but is
included in the table below. It should be noted that the Lehman Index does not
include any operating expenses nor sales charges and being nationally oriented,
does not reflect state specific bond market performance.
[Graphic of a line chart with the following information:]
Lehman Brothers
Quality Intermediate Fund's Class A Shares
Municipal Bond Index With Sales Charge Without Sales Charge Cost of Living Index
6/93 $10,000 $9,600 $10,000 $10,000
6/94 $10,131 $9,545 $9,943 $10,249
6/95 $10,940 $10,558 $10,998 $10,561
6/96 $11,548 $11,030 $11,490 $10,852
6/97 $12,338 $12,038 $12,540 $11,101
6/98 $13,195 $12,972 $13,514 $11,288
6/99 $13,595 $13,147 $13,696 $11,510
6/00 $14,143 $13,484 $14,046 $11,939
6/01 $15,393 $14,798 $15,415 $12,327
6/02 $16,463 $15,679 $16,333 $12,458
6/03 $17,750 $17,032 $17,743 $12,722
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 2003
----------------------------------------------
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
------ ------- -------- ---------
Class A (9/10/92)
With Sales Charge 4.26% 4.73% 5.47% 5.91%
Without Sales Charge 8.64 5.60 5.90 6.31
Class C (5/1/96)
With CDSC 6.72 4.68 n/a 5.26
Without CDSC 7.72 4.68 n/a 5.26
Class Y (5/1/96)
No Sales Charge 8.80 5.73 n/a 6.47
Class I (11/4/98)
No Sales Charge 8.52 n/a n/a 5.45
Lehman Index 7.82 6.11 5.90 6.16* (Class A)
n/a 6.22** (Class C&Y)
n/a 5.63+ (Class I)
Total return figures shown for the Fund reflect any change in price and assume
all distributions within the period were invested in additional shares. Returns
for Class A shares are calculated with and without the effect of the initial 4%
maximum sales charge. Returns for Class C shares are calculated with and without
the effect of the 1% contingent deferred sales charge (CDSC), imposed on
redemptions made within the first 12 months after purchase. Class Y and Class I
shares are sold without any sales charge. The rates of return will vary and the
principal value of an investment will fluctuate with market conditions. Shares,
if redeemed, may be worth more or less than their original cost. A portion of
each classes' income may be subject to federal and state income taxes. Past
performance is not predictive of future investment results.
* From commencement of operations on September 10, 1992.
** From commencement of operations on May 1, 1996.
+ From commencement of operations on November 4, 1998.
[Logo of KPMG LLP: four solid rectangles with the letters KPMG in front of them]
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
Narragansett Insured Tax-Free Income Fund:
We have audited the accompanying statement of assets and liabilities of
Narragansett Insured Tax-Free Income Fund, including the statement of
investments, as of June 30, 2003, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of June 30, 2003, by correspondence
with the custodian. As to securities sold but not yet delivered, we performed
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Narragansett Insured Tax-Free Income Fund as of June 30, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
New York, New York
August 8, 2003
NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS
JUNE 30, 2003
RATING
FACE MOODY'S, S&P
AMOUNT GENERAL OBLIGATION BONDS (46.5%) OR FITCH VALUE
- ----------- --------------------------------------------------- ------------- -------------
Central Falls, Rhode Island
$ 500,000 4.900%, 11/15/05 MBIA Insured .................. Aaa+/AAA++ $ 516,980
500,000 5.200%, 11/15/09 MBIA Insured .................. Aaa+/AAA++ 512,195
Coventry Rhode Island
550,000 5.000%, 11/01/16 AMBAC Insured ................. Aaa+/AAA+++ 605,687
550,000 5.000%, 11/01/17 AMBAC Insured ................. Aaa+/AAA+++ 601,562
Cranston, Rhode Island
300,000 5.500%, 06/15/07 MBIA Insured .................. Aaa+/AAA++ 330,375
500,000 5.450%, 11/15/11 FGIC Insured .................. Aaa+/AAA++ 576,875
Cumberland, Rhode Island
345,000 5.500%, 09/01/06 MBIA Insured .................. Aaa+/AAA++ 354,463
250,000 3.750%, 2/01/13 FGIC Insured ................... Aaa+/AAA++ 258,437
250,000 4.000%, 2/01/14 FGIC Insured ................... Aaa+/AAA++ 260,625
250,000 4.000%, 2/01/15 FGIC Insured ................... Aaa+/AAA++ 258,750
500,000 5.000%, 08/01/15 MBIA Insured .................. Aaa+/AAA++ 555,625
250,000 4.000%, 2/01/16 FGIC Insured ................... Aaa+/AAA++ 255,937
250,000 4.100%, 2/01/17 FGIC Insured ................... Aaa+/AAA++ 255,937
250,000 4.150%, 2/01/18 FGIC Insured ................... Aaa+/AAA++ 255,000
1,255,000 5.000%, 10/01/18 MBIA Insured .................. Aaa+/AAA++ 1,363,244
1,040,000 5.200%, 10/01/21 MBIA Insured .................. Aaa+/AAA++ 1,121,900
Lincoln, Rhode Island
400,000 5.100%, 01/15/06 MBIA Insured .................. Aaa+/AAA++ 416,656
400,000 5.200%, 08/15/06 MBIA Insured .................. Aaa+/AAA++ 405,492
1,000,000 5.500%, 08/15/10 MBIA Insured .................. Aaa+/AAA++ 1,014,090
250,000 5.750%, 08/01/15 FGIC Insured .................. Aaa+/AAA+++ 275,000
Newport, Rhode Island
250,000 4.900%, 05/15/06 FGIC Insured .................. Aaa+/AAA++ 262,515
500,000 5.000%, 05/15/07 FGIC Insured .................. Aaa+/AAA++ 526,900
150,000 6.550%, 08/15/07 MBIA Insured .................. Aaa+/AAA++ 150,808
500,000 5.100%, 05/15/08 FGIC Insured .................. Aaa+/AAA++ 527,330
1,000,000 4.500%, 11/01/15 AMBAC Insured ................. Aaa+/AAA+++ 1,071,250
1,000,000 4.750%, 11/01/18 AMBAC Insured ................. Aaa+/AAA+++ 1,065,000
800,000 5.000%, 11/01/20 AMBAC Insured ................. Aaa+/AAA+++ 861,000
New Shoreham Rhode Island
$ 245,000 4.000%, 11/15/15 AMBAC Insured ................. AAA++/AAA+++ $ 253,269
255,000 4.250%, 11/15/16 AMBAC Insured ................. AAA++/AAA+++ 266,156
270,000 4.250%, 11/15/17 AMBAC Insured ................. AAA++/AAA+++ 279,450
910,000 4.800%, 04/15/18 AMBAC Insured ................. AAA++/AAA+++ 974,837
285,000 4.500%, 11/15/18 AMBAC Insured ................. AAA++/AAA+++ 298,181
1,105,000 5.000%, 04/15/22 AMBAC Insured ................. AAA++/AAA+++ 1,175,444
North Providence, Rhode Island
400,000 5.700%, 07/01/08 MBIA Insured .................. Aaa+/AAA++ 466,500
500,000 4.700%, 09/15/14 FSA Insured ................... Aaa+/AAA+++ 542,500
Pawtucket, Rhode Island
600,000 4.300%, 09/15/09 AMBAC Insured ................. Aaa+/AAA+++ 660,750
795,000 3.500%, 04/15/10, AMBAC Insured ................ Aaa+/AAA+++ 825,806
250,000 4.400%, 09/15/10 AMBAC Insured ................. Aaa+/AAA+++ 275,000
825,000 3.500%, 04/15/11 AMBAC Insured ................. Aaa+/AAA+++ 848,719
850,000 3.625%, 04/15/12 AMBAC Insured ................. Aaa+/AAA+++ 876,562
880,000 3.750%, 04/15/13 AMBAC Insured ................. Aaa+/AAA+++ 906,400
910,000 4.000%, 04/15/14 AMBAC Insured ................. Aaa+/AAA+++ 944,125
Providence, Rhode Island
700,000 5.500%, 01/15/11 FSA Insured ................... Aaa+/AAA++ 789,250
1,925,000 5.200%, 04/01/11 AMBAC Insured ................. Aaa+/AAA+++ 2,177,656
1,000,000 5.000%, 01/15/16 FGIC Insured .................. Aaa+/AAA++ 1,096,250
1,000,000 5.000%, 01/15/17 FGIC Insured .................. Aaa+/AAA++ 1,090,000
1,000,000 5.000%, 01/15/18 FGIC Insured .................. Aaa+/AAA++ 1,083,750
East Providence, Rhode Island
500,000 5.400%, 05/15/07 MBIA Insured .................. Aaa+/AAA++ 543,125
350,000 3.375%, 05/15/15 MBIA Insured .................. Aaa+/AAA++ 342,125
State of Rhode Island
1,000,000 5.000%, 07/15/05 FGIC Insured .................. Aaa+/AAA++ 1,072,500
1,000,000 5.125%, 07/15/11 FGIC Insured .................. Aaa+/AAA++ 1,112,500
4,000,000 5.000%, 08/01/14 FGIC Insured .................. Aaa+/AAA++ 4,430,000
1,500,000 5.000%, 09/01/15 FGIC Insured .................. Aaa+/AAA++ 1,635,000
2,000,000 5.250%, 11/01/17 FGIC Insured .................. Aaa+/AAA++ 2,230,000
2,500,000 5.000%, 09/01/18 MBIA Insured .................. Aaa+/AAA++ 2,700,000
2,000,000 5.000%, 09/01/19 MBIA Insured .................. Aaa+/AAA++ 2,150,000
1,500,000 5.000%, 09/01/20 MBIA Insured .................. Aaa+/AAA++ 1,601,250
Rhode Island Consolidated Capital Development
Loan, Series A
$ 1,000,000 5.000%, 09/01/14 FGIC Insured .................. Aaa+/AAA++ $ 1,095,000
1,500,000 4.750%, 09/01/17 FGIC Insured .................. Aaa+/AAA++ 1,582,500
Rhode Island Consolidated Capital Development
Loan, Series B
1,000,000 5.000%, 06/01/14 FGIC Insured .................. Aaa+/AAA++ 1,106,250
2,000,000 5.000%, 08/01/15 FGIC Insured .................. Aaa+/AAA++ 2,197,500
State of Rhode Island Consolidated Capital
Development Loan, Series C
1,000,000 5.250%, 11/01/11 MBIA Insured .................. Aaa+/AAA++ 1,158,750
South Kingstown, Rhode Island
400,000 4.900%, 11/15/07 AMBAC Insured ................. Aaa+/AAA++ 409,248
500,000 5.500%, 06/15/12 FGIC Insured .................. Aaa+/AAA+++ 575,625
Warwick, Rhode Island
665,000 4.250%, 07/15/14 AMBAC Insured ................. Aaa+/AAA++ 704,069
195,000 5.600%, 08/01/14 FSA Insured ................... Aaa+/AAA++ 219,619
700,000 4.375%, 07/15/15 AMBAC Insured ................. Aaa+/AAA++ 742,875
735,000 4.500%, 07/15/16 AMBAC Insured ................. Aaa+/AAA++ 779,100
770,000 4.600%, 07/15/17 AMBAC Insured ................. Aaa+/AAA++ 816,200
1,000,000 5.000%, 03/01/18 FGIC Insured .................. Aaa+/AAA++ 1,087,500
810,000 4.700%, 07/15/18 AMBAC Insured ................. Aaa+/AAA++ 858,600
1,000,000 5.000%, 01/15/19 FGIC Insured .................. Aaa+/AAA++ 1,076,250
855,000 4.750%, 07/15/19 AMBAC Insured ................. Aaa+/AAA++ 902,025
500,000 5.000%, 01/15/20 FGIC Insured .................. Aaa+/AAA++ 535,625
West Warwick, Rhode Island
500,000 4.875%, 03/01/16 AMBAC Insured ................. Aaa+/AAA+++ 541,875
670,000 5.000%, 03/01/17 AMBAC Insured ................. Aaa+/AAA+++ 729,462
700,000 5.050%, 03/01/18 AMBAC Insured ................. Aaa+/AAA+++ 762,125
735,000 5.100%, 03/01/19 AMBAC Insured ................. Aaa+/AAA+++ 797,475
Woonsocket, Rhode Island
385,000 5.125%, 03/01/11 MBIA Insured .................. Aaa+/AAA++ 393,778
655,000 4.450%, 12/15/12 FGIC Insured .................. Aaa+/AAA+++ 707,400
685,000 4.550%, 12/15/13 FGIC Insured .................. Aaa+/AAA+++ 736,375
--------------
Total General Obligation Bonds .................... 68,821,964
--------------
REVENUE BONDS (49.1%)
---------------------------------------------------
HIGHER EDUCATION REVENUE BONDS (23.3%)
---------------------------------------------------
Providence Rhode Island Public Building Authority
2003 Series A School Projects
$ 1,395,000 4.000%, 12/15/12 MBIA Insured .................. Aaa+/AAA++ $ 1,480,444
1,450,000 4.000%, 12/15/13 MBIA Insured .................. Aaa+/AAA++ 1,522,500
1,505,000 4.000%, 12/15/14 MBIA Insured .................. Aaa+/AAA++ 1,563,319
1,570,000 4.000%, 12/15/15 MBIA Insured .................. Aaa+/AAA++ 1,617,100
1,630,000 4.000%, 12/15/16 MBIA Insured .................. Aaa+/AAA++ 1,662,600
Providence Rhode Island Pub. Bldg. School &
Public Facs. Proj.
1,500,000 5.250%, 12/15/17 AMBAC Insured ................. Aaa+/AAA++ 1,655,625
1,000,000 5.250%, 12/15/19 AMBAC Insured ................. Aaa+/AAA++ 1,096,250
Rhode Island Health & Education Building Corp.,
Board of Governors, 1993 Series A
450,000 5.300%, 09/15/08 MBIA Insured .................. Aaa+/AAA++ 462,456
Rhode Island Health & Education Building Corp.,
Board of Governors, 1993 Series B
500,000 5.250%, 09/15/23 MBIA Insured .................. Aaa+/AAA++ 512,360
Rhode Island Health & Education Building Corp.,
Brown University, 1993 Series
2,000,000 5.250%, 09/01/17 MBIA Insured .................. Aaa+/AAA+++ 2,217,500
1,000,000 5.000%, 09/01/23 MBIA Insured .................. Aaa+/AAA++ 1,041,250
Rhode Island Health & Education Building Corp.,
Johnson & Wales University, 1999 Series A
465,000 5.500%, 04/01/15 MBIA Insured .................. Aaa+/AAA++ 548,700
900,000 5.500%, 04/01/16 MBIA Insured .................. Aaa+/AAA++ 1,065,375
785,000 5.500%, 04/01/17 MBIA Insured .................. Aaa+/AAA++ 924,338
2,000,000 5.000%, 04/01/29 MBIA Insured .................. Aaa+/AAA++ 2,085,000
Rhode Island Health & Education Building Corp.,
Johnson & Wales University, Series 2003
1,360,000 4.000%, 04/01/12 XLCA Insured .................. Aaa+/AAA++ 1,433,100
3,210,000 4.000%, 04/01/13 XLCA Insured .................. Aaa+/AAA++ 3,358,463
2,000,000 4.000%, 04/01/14 XLCA Insured .................. Aaa+/AAA++ 2,070,000
Rhode Island Health & Education Building Corp.,
Providence College, 1993 Series
300,000 5.600%, 11/01/09 MBIA Insured .................. Aaa+/AAA++ 310,104
300,000 5.600%, 11/01/10 MBIA Insured .................. Aaa+/AAA++ 310,173
1,500,000 5.600%, 11/01/22 MBIA Insured .................. Aaa+/AAA++ 1,548,615
Rhode Island Health & Education Building Corp.,
Rhode Island School of Design, 2001 Series
$ 505,000 4.700%, 06/01/18 MBIA Insured .................. Aaa+/AAA++ $ 536,563
280,000 4.750%, 06/01/19 MBIA Insured .................. Aaa+/AAA++ 296,450
Rhode Island Health & Education Building Corp.,
Roger Williams University
500,000 5.125%, 11/15/11 AMBAC Insured ................. Aaa+/AAA++ 562,500
Rhode Island Health & Education Building Corp.,
Roger Williams University, 1996 Series S
1,000,000 5.500%, 11/15/11 AMBAC Insured ................. NR/AAA++ 1,131,250
1,000,000 5.125%, 11/15/14 AMBAC Insured ................. Aaa+/AAA++ 1,108,750
1,000,000 5.000%, 11/15/18 AMBAC Insured ................. Aaa+/AAA++ 1,090,000
Rhode Island St. Health Education Building,
Bryant College
1,000,000 5.125%, 06/01/19 AMBAC Insured ................. Aaa+/AAA++ 1,085,000
230,000 5.000%, 12/01/21 AMBAC Insured ................. Aaa+/AAA++ 244,375
--------------
Total Higher Education Revenue Bonds ........... 34,540,160
--------------
MORTGAGE REVENUE MULTI-FAMILY BONDS (0.3%)
---------------------------------------------------
Rhode Island Housing & Mortgage Finance Corp.,
1995 Series A
240,000 5.450%, 07/01/04 AMBAC Insured ................. Aaa+/AAA++ 247,534
245,000 5.550%, 07/01/05 AMBAC Insured ................. Aaa+/AAA++ 258,781
--------------
Total Mortgage Revenue Bonds ................... 506,315
--------------
WATER AND SEWER REVENUE BONDS (12.6%)
---------------------------------------------------
Bristol County Rhode Island Water Authority,
1997 Series A
300,000 5.000%, 12/01/08 MBIA Insured .................. Aaa+/AAA++ 328,875
750,000 5.250%, 07/01/17 MBIA Insured .................. Aaa+/AAA++ 828,750
Kent County Water Authority Revenue Bonds,
1994 Series A
250,000 5.700%, 07/15/04 MBIA Insured .................. Aaa+/AAA++ 262,260
Kent County Water Authority Revenue Bonds,
2002 Series A
500,000 4.000%, 07/15/12 MBIA Insured .................. Aaa+/AAA++ 532,500
1,055,000 4.150%, 07/15/14 MBIA Insured .................. Aaa+/AAA++ 1,107,750
Rhode Island Clean Water Finance Agency, Water
Pollution Control Bonds Issue B
$ 1,800,000 5.000%, 10/01/18 MBIA Insured .................. Aaa+/AAA++ $ 1,959,750
Rhode Island Clean Water Finance Agency, Water
Pollution Control Bonds Series 2002 B
4,765,000 4.375%, 10/01/21 MBIA Insured .................. Aaa+/AAA++ 4,806,694
Rhode Island Clean Water Protection Finance
Agency, Series 1999C
1,000,000 5.125%, 10/01/11 MBIA Insured .................. Aaa+/AAA++ 1,123,750
Rhode Island Clean Water Protection Finance
Agency, Series A
500,000 4.600%, 10/01/13 AMBAC Insured ................ Aaa+/AAA++ 534,375
500,000 4.750%, 10/01/14 AMBAC Insured ................. Aaa+/AAA++ 540,625
1,250,000 5.400%, 10/01/15 MBIA Insured .................. Aaa+/AAA++ 1,468,750
2,000,000 4.750%, 10/01/18 AMBAC Insured ................. Aaa+/AAA++ 2,095,000
500,000 4.750%, 10/01/20 AMBAC Insured ................. Aaa+/AAA++ 518,750
Rhode Island Water Resources Board Public
Drinking Water Protection Revenue Bond
1,500,000 4.000%, 03/01/14 MBIA Insured .................. Aaa+/AAA++ 1,561,875
1,000,000 4.250%, 03/01/15 MBIA Insured .................. Aaa+/AAA++ 1,051,250
--------------
Total Water and Sewer Revenue Bonds ............ 18,720,954
--------------
DEVELOPMENT REVENUE BONDS (8.1%)
---------------------------------------------------
Rhode Island Convention Center Authority, 1993
Series A
1,000,000 5.000%, 05/15/20 MBIA Insured-Series B ......... Aaa+/AAA++ 1,005,820
2,000,000 5.000%, 05/15/23 MBIA Insured-Series C ......... Aaa+/AAA++ 2,061,500
Rhode Island Convention Center Authority, 1993
Series B
500,000 5.000%, 05/15/07 MBIA Insured .................. Aaa+/AAA++ 558,750
Rhode Island Public Building Authority State Public
Projects, 1989 Series A
1,000,000 5.250%, 02/01/09 AMBAC Insured
(Escrowed to Maturity) ......................... Aaa+/AAA++ 1,130,000
Rhode Island Public Building Authority State
Public Projects, 1996 School Series B
$ 500,000 5.500%, 12/15/14 MBIA Insured .................. Aaa+/AAA++ $ 566,875
1,000,000 5.250%, 12/15/14 FSA Insured-1998 Series ....... Aaa+/AAA++ 1,121,250
500,000 5.500%, 12/15/15 MBIA Insured .................. Aaa+/AAA++ 566,875
Rhode Island Public Building Authority State
Public Projects, 1999 Series A
500,000 5.000%, 12/15/09 AMBAC Insured ................. Aaa+/AAA++ 573,125
Rhode Island State Economic Development Corp.,
Airport Revenue, Series B
1,000,000 5.000%, 07/01/18 FSA Insured ................... Aaa+/AAA++ 1,071,250
Rhode Island State Economic Development Corp.,
University of Rhode Island Series,
750,000 4.800%, 11/01/11 FSA Insured ................... Aaa+/NR 829,688
750,000 4.900%, 11/01/12 FSA Insured ................... Aaa+/NR 827,813
750,000 4.900%, 11/01/13 FSA Insured ................... Aaa+/NR 824,063
750,000 5.000%, 11/01/14 FSA Insured ................... Aaa+/NR 821,250
--------------
Total Development Revenue Bonds ................ 11,958,259
--------------
POLLUTION CONTROL REVENUE BONDS (0.8%)
---------------------------------------------------
Rhode Island Clean Water Protection, 1993 Series A,
200,000 5.300%, 10/01/07 MBIA Insured .................. Aaa+/AAA++ 227,500
300,000 5.400%, 10/01/09 MBIA Insured .................. Aaa+/AAA++ 349,500
Rhode Island Clean Water Protection, 1993 Series B,
500,000 4.500%, 10/01/11 AMBAC Insured ................. Aaa+/AAA++ 540,000
--------------
Total Pollution Control Revenue Bonds .......... 1,117,000
--------------
OTHER REVENUE BONDS (4.0%)
State of Rhode Island Depositors Economic
Protection Corp., 1992 Series B
135,000 5.500%, 08/01/06 MBIA Insured .................. Aaa+/AAA++ 151,031
500,000 6.000%, 08/01/17 MBIA Insured .................. Aaa+/AAA++ 551,250
State of Rhode Island Depositors Economic
Protection Corp., 1993 Series B
300,000 5.800%, 08/01/09 MBIA Insured .................. Aaa+/AAA++ 356,250
1,045,000 5.250%, 08/01/21 MBIA Insured
(Escrowed to Maturity) ......................... Aaa+/AAA++ 1,206,975
Rhode Island State Capital Development Loan
$ 1,500,000 5.400%, 08/01/08 MBIA Insured .................. Aaa+/AAA++ $ 1,689,375
1,135,000 5.000%, 08/01/11 MBIA Insured .................. Aaa+/AAA++ 1,238,569
State of Rhode Island Certificates of Participation,
Howard Center Improvements
400,000 5.250%, 10/01/10 MBIA Insured .................. Aaa+/AAA++ 447,500
200,000 5.375%, 10/01/16 MBIA Insured .................. Aaa+/AAA++ 224,000
--------------
Total Other Revenue Bonds ...................... 5,864,950
--------------
Total Revenue Bonds .......................... 72,707,638
--------------
Total Investments (cost $132,745,604*) ..... 95.6% 141,529,602
Other assets less liabilities .............. 4.4 6,504,618
------ --------------
Net Assets ................................. 100.0% $ 148,034,220
====== ==============
* See notes 2f and 4.
Rating Services:
+ Moody's Investors Service
++ Standard & Poor's
+++ Fitch
NR- Not rated by two of the ratings services.
PORTFOLIO ABBREVIATIONS:
------------------------
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Co.
FSA - Financial Security Assurance
MBIA - Municipal Bond Investors Assurance Corp.
XLCA - XL Capital Assurance Inc.
See accompanying notes to financial statements.
NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2003
ASSETS
Investments at value (cost $132,745,604) ................................................ $ 141,529,602
Receivable for Fund shares sold ......................................................... 5,567,792
Interest receivable ..................................................................... 1,688,173
Receivable for investment securities sold ............................................... 85,000
Other assets ............................................................................ 6,133
-------------
Total assets ............................................................................ 148,876,700
-------------
LIABILITIES
Cash overdraft .......................................................................... 363,726
Payable for Fund shares redeemed ........................................................ 248,761
Dividends payable ....................................................................... 119,080
Distribution fees payable ............................................................... 63,119
Management fee payable .................................................................. 13,071
Accrued expenses ........................................................................ 34,723
-------------
Total liabilities ....................................................................... 842,480
-------------
NET ASSETS ................................................................................. $ 148,034,220
=============
Net Assets consist of:
Capital Stock - Authorized 80,000,000 shares, par value $.01 per share .................. $ 135,595
Additional paid-in capital .............................................................. 139,911,579
Net unrealized appreciation on investments (note 4) ..................................... 8,783,998
Accumulated net realized loss on investments ............................................ (699,388)
Distributions in excess of net investment income ........................................ (97,564)
-------------
$ 148,034,220
=============
CLASS A
Net Assets .............................................................................. $ 106,886,704
=============
Capital shares outstanding .............................................................. 9,790,410
=============
Net asset value and redemption price per share .......................................... $ 10.92
-------------
Offering price per share (100/96 of $10.92 adjusted to nearest cent) .................... $ 11.38
=============
CLASS C
Net Assets .............................................................................. $ 22,506,244
=============
Capital shares outstanding .............................................................. 2,061,725
=============
Net asset value and offering price per share ............................................ $ 10.92
=============
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) .......................................... $ 10.92*
=============
CLASS I
Net Assets .............................................................................. $ 448,569
=============
Capital shares outstanding .............................................................. 41,115
=============
Net asset value, offering and redemption price per share ................................ $ 10.91
=============
CLASS Y
Net Assets .............................................................................. $ 18,192,703
=============
Capital shares outstanding .............................................................. 1,666,271
=============
Net asset value, offering and redemption price per share ................................ $ 10.92
=============
See accompanying notes to financial statements.
NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2003
INVESTMENT INCOME:
Interest income ........................................... $ 5,785,814
Expenses:
Management fee (note 3) ................................... $ 648,033
Distribution and service fees (note 3) .................... 331,670
Trustees' fees and expenses (note 8) ...................... 83,518
Legal fees ................................................ 53,428
Transfer and shareholder servicing agent fees ............. 47,128
Shareholders' reports and proxy statements ................ 37,823
Fund accounting fees ...................................... 29,630
Auditing fees ............................................. 24,145
Custodian fees ............................................ 16,013
Registration fees and dues ................................ 8,944
Miscellaneous ............................................. 29,243
-----------
Total Expenses ............................................ 1,309,575
Management fee waived (note 3) ............................ (516,239)
Expenses paid indirectly (note 6) ......................... (36,493)
-----------
Net expenses .............................................. 756,843
-----------
Net investment income ..................................... 5,028,971
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions ..... 286,562
Change in unrealized appreciation on investments .......... 5,341,554
-----------
Net realized and unrealized gain (loss) on investments .... 5,628,116
-----------
Net change in net assets resulting from operations ........ $10,657,087
===========
See accompanying notes to financial statements.
NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
------------- -------------
OPERATIONS:
Net investment income ............................................... $ 5,028,971 $ 3,983,638
Net realized gain (loss) from securities transactions ............... 286,562 77,291
Change in unrealized appreciation on investments .................... 5,341,554 1,510,851
------------- -------------
Change in net assets from operations ............................. 10,657,087 5,571,780
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 9):
Class A Shares:
Net investment income ............................................... (3,889,489) (3,331,831)
Class C Shares:
Net investment income ............................................... (607,348) (380,858)
Class I Shares:
Net investment income ............................................... (16,746) (8,912)
Class Y Shares:
Net investment income ............................................... (637,034) (324,361)
------------- -------------
Change in net assets from distributions .......................... (5,150,617) (4,045,962)
------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold ........................................... 44,058,438 39,727,773
Reinvested dividends and distributions .............................. 3,417,773 2,595,440
Cost of shares redeemed ............................................. (19,044,516) (7,869,632)
------------- -------------
Change in net assets from capital share transactions ................ 28,431,695 34,453,581
------------- -------------
Change in net assets ............................................. 33,938,165 35,979,399
NET ASSETS:
Beginning of period ................................................. 114,096,055 78,116,656
------------- -------------
End of period* ...................................................... $ 148,034,220 $ 114,096,055
============= =============
* Includes distributions in excess of net investment income of: $ (97,564) $ (62,147)
============= =============
See accompanying notes to financial statements.
NARRAGANSETT INSURED TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
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 and bear an annual distribution fee. Class C
shares are sold with a level-payment sales charge with no payment at time of
purchase but level service and distribution fees from date of purchase through a
period of six years thereafter. A contingent deferred sales charge of 1% is
assessed to any Class C shareholder who redeems shares of this Class within one
year from the date of purchase. Class C Shares, together with a pro-rata portion
of all Class C Shares acquired through reinvestment of dividends 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 to institutions
acting for an investor in a fiduciary, advisory, agency, custodian or similar
capacity and are not offered directly to retail investors. Class Y shares are
sold at net asset value without any sales charge, redemption fees, contingent
deferred sales charge or distribution or service fees. On 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 without any sales charge, redemption fees,
or contingent deferred sales charge. Class I Shares 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.
a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities
of more than 60 days are valued at fair value 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 at the mean of bid and asked quotations and in the case of other
securities, at fair value determined 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.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Interest
income is recorded on the accrual basis and is adjusted for amortization of
premium and accretion of original issue and market discount.
c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Fund
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) ALLOCATION OF EXPENSES: Expenses, other than class-specific expenses, are
allocated daily to each class of shares based on the relative net assets of
each class. Class-specific expenses, which include distribution and service
fees and any other items that are specifically attributed to a particular
class, are charged directly to such class.
e) USE OF ESTIMATES: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
f) NEW ACCOUNTING PRONOUNCEMENT: In November 2000, the AICPA issued a revised
audit and accounting guide, AUDITS OF INVESTMENT COMPANIES, which is
effective for fiscal years beginning after December 15, 2000. The revised
Guide requires the Fund to amortize premium and all discounts on all
fixed-income securities. The Fund's offices determined to adopt this
requirement effective July 1, 2001. This change does not affect the Fund's
net asset value, but does change the classification of certain amounts in
the statement of operations. The Fund recorded an adjustment to increase
the cost of securities and increase accumulated undistributed net
investment income by $25,252 to reflect the cumulative effect of this
change up to the date of adoption.
3. FEES AND RELATED PARTY TRANSACTIONS
A) MANAGEMENT ARRANGEMENTS:
Aquila Management Corporation (the "Manager"), 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 all the various support
organizations to the Fund such as the shareholder servicing agent, custodian,
legal counsel, fund accounting agent, auditors 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 net assets.
Citizens Investment Advisors, a department of Citizens Bank of Rhode Island
(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.
For the year ended June 30, 2003, the Fund incurred management fees of
$648,033 of which $516,239 was voluntarily waived.
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 service fee at
the annual rate of 0.15% of the Fund's average net assets represented by Class A
Shares. For the year ended June 30, 2003, service fees on Class A Shares
amounted to $142,960, of which the Distributor retained $2,971.
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
year ended June 30, 2003 amounted to $141,378. 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 year ended June 30, 2003, amounted to $47,126. The total of these payments
with respect to Class C Shares amounted to $188,504, of which the Distributor
retained $30,771.
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
0.05%) 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 year ended June 30, 2003,
these payments were made at the average annual rate of 0.20% of such net assets
amounting to $823 of which $206 related to the Plan and $617 related to the
Shareholder Services Plan.
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the exclusive
distributor of the Fund's shares. Through agreements between the Distributor and
various broker-dealer firms ("dealers"), the Fund's shares are sold primarily
through the facilities of these dealers having offices within Rhode Island, with
the bulk of sales commissions inuring to such dealers. For the year ended June
30, 2003, total commissions on sales of Class A Shares amounted to $548,211, of
which the Distributor received $34,003.
C) OTHER RELATED PARTY TRANSACTIONS:
For the year ended June 30, 2003, the Fund incurred $52,981 of legal fees
allocable to Hollyer Brady Smith & Hines LLP, counsel to the Fund for legal fees
in conjunction with the Fund's ongoing operations. The Secretary of the Fund is
a partner of Hollyer Brady Smith & Hines LLP.
4. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 2003, purchases of securities and proceeds
from the sales of securities aggregated $40,432,012 and $14,866,271,
respectively.
At June 30, 2003, the aggregate tax cost for all securities was
$132,724,088. At June 30, 2003, the aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
amounted to $8,818,924 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value amounted to
$13,409, for a net unrealized appreciation of $8,805,515.
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% and possibly the entire number of issues in the portfolio
insured as to timely payment of principal and interest when due by nationally
prominent municipal bond insurance companies. At June 30, 2003, 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.
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 June 30,
2003, the Fund had all of its net assets invested in Rhode Island municipal
issues.
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. It is the general intention of the Fund to invest, to the
extent practicable, some or all of cash balances in income-producing assets
rather than leave cash on deposit.
7. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
Year Ended Year Ended
June 30, 2003 June 30, 2002
---------------------------- -----------------------------
Shares Amount Shares Amount
------ ------ ------ ------
CLASS A SHARES:
Proceeds from shares sold ............. 2,511,973 $ 26,990,482 2,015,970 $ 20,944,728
Reinvested distributions .............. 239,993 2,564,785 205,510 2,134,035
Cost of shares redeemed ............... (1,208,692) (13,117,881) (532,239) (5,535,714)
---------- ------------ ---------- ------------
Net change ........................ 1,543,274 16,437,386 1,689,241 17,543,049
---------- ------------ ---------- ------------
CLASS C SHARES:
Proceeds from shares sold ............. 851,696 9,125,462 922,383 9,563,352
Reinvested distributions .............. 32,560 348,204 23,115 239,961
Cost of shares redeemed ............... (312,631) (3,355,269) (135,993) (1,404,609)
---------- ------------ ---------- ------------
Net change ........................ 571,625 6,118,397 809,505 8,398,704
---------- ------------ ---------- ------------
CLASS I SHARES:
Proceeds from shares sold ............. 4,279 45,721 27,795 285,279
Reinvested distributions .............. 52 560 -- --
Cost of shares redeemed ............... (53) (592) -- --
---------- ------------ ---------- ------------
Net change ........................ 4,278 45,689 27,795 285,279
---------- ------------ ---------- ------------
CLASS Y SHARES:
Proceeds from shares sold ............. 741,749 7,896,773 865,062 8,934,414
Reinvested distributions .............. 47,085 504,224 21,362 221,444
Cost of shares redeemed ............... (242,048) (2,570,774) (89,778) (929,309)
---------- ------------ ---------- ------------
Net change ........................ 546,786 5,830,223 796,646 8,226,549
---------- ------------ ---------- ------------
Total transactions in Fund
shares ................................ 2,665,963 $ 28,431,695 3,323,187 $ 34,453,581
========== ============ ========== ============
8. TRUSTEES' FEES AND EXPENSES
During the fiscal year ended June 30, 2003, there were eight Trustees, one
of which is affiliated with the Manager and is not paid any trustee fees. Each
Trustee's fees paid during the year were at the annual rate of $6,500 for
carrying out their responsibilities and attendance at regularly scheduled Board
Meetings. If additional or special meetings are scheduled for the Fund, separate
meeting fees are paid for each such meeting to those Trustees in attendance. The
Fund also reimburses Trustees for expenses such as travel, accomodations, and
meals incurred in connection with attendance at regularly scheduled or special
Board Meetings and at the Annual Meeting and outreach meetings of Shareholders.
For the fiscal year ended June 30, 2003, such reimbursements averaged
approximately $4,002 per Trustee.
9. DISTRIBUTIONS
The Fund declares dividends daily from net investment income and makes
payments monthly in additional shares at the net asset value per share, in cash,
or in a combination of both, at the shareholder's option. Net realized capital
gains, if any, are distributed annually and are taxable.
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 credited distributions in excess of net investment
income in the amount of $86,229 and debited additional paid in capital in the
amount of $86,229 at June 30, 2003. This adjustment had no impact on the Fund's
aggregate net assests at June 30, 2003. Further, a small portion of the
dividends may, under some circumstances, be subject to taxes at ordinary income
and/or capital gain rates. For certain shareholders, some dividend income may,
under some circumstances, be subject to the alternative minimum tax.
At June 30, 2003, the Fund had a capital loss carryover of $699,388 which
expires on June 30, 2009. 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.
The tax character of distributions during the fiscal years ended June 30,
2003 and 2002 is as follows:
Distributions from
Year Ended June 30,
2003 2002
---------- ----------
Net tax-exempt income $5,052,703 $4,014,083
Ordinary income 97,914 31,879
---------- ----------
$5,150,617 $4,045,962
========== ==========
As of June 30, 2003, the components of distributable earnings on a tax
basis were as follows:
Accumulated net realized loss $ (699,388)
Unrealized appreciation 8,805,515
----------
$8,106,127
==========
NARRAGANSETT INSURED TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class A
-----------------------------------------------------------------
Year Ended June 30,
----------------------------------------------------------------
2003 2002 2001 2000 1999
------- ------- ------- ------- -------
Net asset value, beginning of period .......... $10.47 $10.32 $9.91 $10.16 $10.47
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income+ ..................... 0.42 0.45 0.47 0.49 0.49
Net gain (loss) on securities
(both realized and unrealized) .......... 0.47 0.16 0.44 (0.24) (0.30)
------- ------- ------- ------- -------
Total from investment operations ........... 0.89 0.61 0.91 0.25 0.19
------- ------- ------- ------- -------
Less distributions (note 9):
Dividends from net investment income ....... (0.44) (0.46) (0.50) (0.50) (0.50)
------- ------- ------- ------- -------
Net asset value, end of period ................ $10.92 $10.47 $10.32 $9.91 $10.16
======= ======= ======= ======= =======
Total return (not reflecting sales charge) .... 8.64% 6.07% 9.19% 2.58% 1.74%
Ratios/supplemental data
Net assets, end of period (in thousands) ... $106,887 $86,378 $67,669 $59,899 $66,611
Ratio of expenses to average net assets .... 0.51% 0.49% 0.41% 0.41% 0.39%
Ratio of net investment income to
average net assets ..................... 3.96% 4.34% 4.65% 4.89% 4.61%
Portfolio turnover rate .................... 11.74% 6.02% 3.08% 8.66% 1.36%
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management
fee and the voluntary expense reimbursement were:
Ratio of expenses to average net assets .... 0.88% 0.88% 0.95% 0.95% 0.91%
Ratio of net investment income to
average net assets ...................... 3.59% 3.95% 4.11% 4.36% 4.09%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 0.48% 0.46% 0.40% 0.38% 0.35%
Class I
-------------------------------------------------
Year Ended June 30, Period
-------------------------------------- Ended
2003 2002 2001 2000 6/30/99(1)
------ ------ ------ ------ ----------
Net asset value, beginning of period .......... $10.47 $10.32 $ 9.90 $10.15 $10.54
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income+ ..................... 0.42 0.44 0.47 0.48 0.31
Net gain (loss) on securities
(both realized and unrealized) .......... 0.46 0.17 0.43 (0.23) (0.38)
------ ------ ------ ------ ------
Total from investment operations ........... 0.88 0.61 0.90 0.25 (0.07)
------ ------ ------ ------ ------
Less distributions (note 9):
Dividends from net investment income ....... (0.44) (0.46) (0.48) (0.50) (0.32)
------ ------ ------ ------ ------
Net asset value, end of period ................ $10.91 $10.47 $10.32 $ 9.90 $10.15
====== ====== ====== ====== ======
Total return (not reflecting sales charge) .... 8.52% 6.05% 9.29% 2.56% (0.75)%++
Ratios/supplemental data
Net assets, end of period (in thousands).... $449 $386 $93 $75 $77
Ratio of expenses to average net assets .... 0.52% 0.50% 0.41% 0.43% 0.49%*
Ratio of net investment income to
average net assets ...................... 3.95% 4.32% 4.65% 4.87% 4.54%*
Portfolio turnover rate .................... 11.74% 6.02% 3.08% 8.66% 1.36%++
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management
fee and the voluntary expense reimbursement were:
Ratio of expenses to average net assets .... 0.89% 0.89% 0.96% 0.97% 0.87%*
Ratio of net investment income to
average net assets ...................... 3.58% 3.93% 4.10% 4.34% 4.16%*
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 0.49% 0.48% 0.41% 0.40% 0.46%*
- --------------
(1) For the period November 4, 1998 (commencement of operations) through June
30, 1999.
+ Per share amounts have been calculated using the monthly 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 C
--------------------------------------------------------------
Year Ended June 30,
--------------------------------------------------------------
2003 2002 2001 2000 1999
------ ------ ------ ------ ------
Net asset value, beginning of period .......... $10.47 $10.32 $9.91 $10.16 $10.47
------ ------ ------ ------ ------
Income from investment operations:
Net investment income + .................... 0.33 0.36 0.38 0.40 0.38
Net gain (loss) on securities (both
realized and unrealized) .............. 0.47 0.16 0.43 (0.24) (0.29)
------ ------ ------ ------ ------
Total from investment operations ........... 0.80 0.52 0.81 0.16 0.09
------ ------ ------ ------ ------
Less distributions (note 9):
Dividends from net investment income ....... (0.35) (0.37) (0.40) (0.41) (0.40)
------ ------ ------ ------ ------
Net asset value, end of period ................ $10.92 $10.47 $10.32 $9.91 $10.16
====== ====== ====== ====== ======
Total return (not reflecting sales charge) .... 7.72% 5.16% 8.27% 1.71% 0.76%
Ratios/supplemental data
Net assets, end of period (in thousands).... $22,506 $15,606 $7,023 $4,681 $4,213
Ratio of expenses to average net assets .... 1.35% 1.34% 1.26% 1.26% 1.35%
Ratio of net investment income to
average net assets ...................... 3.10% 3.46% 3.78% 4.04% 3.65%
Portfolio turnover rate .................... 11.74% 6.02% 3.08%+ 8.66% 1.36%
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee
and the voluntary expense reimbursement were:
Ratio of expenses to average net assets .... 1.72% 1.72% 1.80% 1.80% 1.75%
Ratio of net investment income to
average net assets ...................... 2.73% 3.07% 3.24% 3.50% 3.25%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 1.33% 1.31% 1.25% 1.23% 1.32%
Class Y
-------------------------------------------------------------
Year Ended June 30,
-------------------------------------------------------------
2003 2002 2001 2000 1999
------- ------ ------ ------ ------
Net asset value, beginning of period .......... $10.47 $10.32 $9.91 $10.16 $10.47
------ ------ ------ ------ ------
Income from investment operations:
Net investment income + .................... 0.45 0.46 0.48 0.50 0.49
Net gain (loss) on securities (both
realized and unrealized) .............. 0.45 0.17 0.44 (0.24) (0.30)
------ ------ ------ ------ ------
Total from investment operations ........... 0.90 0.63 0.92 0.26 0.19
------ ------ ------ ------ ------
Less distributions (note 9):
Dividends from net investment income ....... (0.45) (0.48) (0.51) (0.51) (0.50)
------ ------ ------ ------ ------
Net asset value, end of period ................ $10.92 $10.47 $10.32 $9.91 $10.16
====== ====== ====== ====== ======
Total return (not reflecting sales charge) .... 8.80% 6.22% 9.35% 2.73% 1.79%
Ratios/supplemental data
Net assets, end of period (in thousands).... $18,193 $11,726 $3,332 $2,277 $4,250
Ratio of expenses to average net assets .... 0.36% 0.34% 0.26% 0.26% 0.33%
Ratio of net investment income to
average net assets ...................... 4.10% 4.47% 4.79% 5.07% 4.65%
Portfolio turnover rate .................... 11.74% 6.02% 3.08%+ 8.66% 1.36%
The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee
and the voluntary expense reimbursement were:
Ratio of expenses to average net assets .... 0.73% 0.73% 0.80% 0.79% 0.70%
Ratio of net investment income to
average net assets ...................... 3.73% 4.08% 4.24% 4.54% 4.29%
The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were:
Ratio of expenses to average net assets .... 0.33% 0.31% 0.26% 0.23% 0.30%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
See accompanying notes to financial statements.
ADDITIONAL INFORMATION (UNAUDITED)
TRUSTEES(1)
AND OFFICERS
NUMBER OF
POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS
HELD WITH IN FUND HELD BY TRUSTEE
NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS
ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS
AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
INTERESTED TRUSTEES(4)
Lacy B. Herrmann Chairman Founder and Chairman of the Board, 12 Director or trustee, OCC
New York, NY of the Board Aquila Management Corporation, the Cash Reserves, Inc., OCC
(05/12/29) of Trustees sponsoring organization and Manager or Accumulation Trust,
since 1992 Administrator and/or Adviser or Oppenheimer Quest Value
Sub-Adviser to each fund of the Aquila(sm) Funds Group, Oppenheimer
Group of Funds(5) and Founder, Chairman Small Cap Value Fund,
of the Board of Trustees and (currently Oppenheimer Midcap Fund,
or until 1998) President of each since and Oppenheimer
its establishment, beginning in 1984; Rochester Group of
Director of the Distributor since 1981 Funds.
and formerly Vice President or
Secretary, 1981-1998; President and a
Director, STCM Management Company, Inc.,
sponsor and investment adviser to
Capital Cash Management Trust since
1973; Trustee Emeritus, Brown University
and active in university, school and
charitable organizations.
David A. Duffy Trustee since Chairman, formerly President, Duffy & 1 Citizens Bank of Rhode
North Kingstown, RI 1995 Shanley, Inc., a marketing Island since 1999.
(08/07/39) communications firm, since 1973;
Transition Chairman for Gov. Donald
Carcieri (R.I.); immediate past National
Chairman, National Conference for
Community and Justice (NCCJ); Chairman,
Providence College President's Council;
officer or director of numerous civic
and non-profit organizations.
John J. Partridge Trustee since Founding Partner, Partridge, Snow & 1 None
Providence, RI 2002 Hahn, LLP, a law firm, Providence, Rhode
(05/05/40) Island, since 1988; director of various
educational, civic and charitable
organizations, including Greater
Providence Chamber of Commerce and
Memorial Hospital of Rhode Island.
NON-INTERESTED TRUSTEES
Vernon R. Alden Trustee since Retired; General Independent Partner, 1 Sonesta International
Boston, MA 1992 Merrill Lynch-Lee Funds; former director Hotels Corporation.
(04/07/23) or trustee of various Fortune 500
companies, as well as various open-end
investment companies, formerly President
of Ohio University and Associate Dean of
the Harvard University Graduate School
of Business Administration; member of
several Japan-related advisory councils;
Honorary Consul General of the Royal
Kingdom of Thailand; trustee of various
cultural, educational and civic
organizations.
Paul Y. Clinton Trustee since Principal, Clinton Management 2 Director or trustee, OCC
Osterville, MA 1996 Associates, a financial and venture Cash Reserves, Inc., OCC
Naples, FL capital consulting firm. Accumulation Trust,
(02/14/31) Oppenheimer Quest Value
Funds Group, Oppenheimer
Small Cap Value Fund,
Oppenheimer Midcap Fund,
and Oppenheimer
Rochester Group of
Funds.
William J. Nightingale Trustee since Retired; formerly Chairman, founder 2 Ring's End, Inc.
Rowayton, CT 1992 (1975) and Senior Advisor until 2000
(09/16/29) of Nightingale & Associates, L.L.C.,
a general management consulting firm
focusing on interim management,
divestitures, turnaround of troubled
companies, corporate restructuring
and financial advisory services.
Cornelius T. Ryan Trustee since Founder and General Partner, Oxford 3 Director of Neuberger &
Westport, CT and 2002 Ventures Partners, a group of Berman Equity Funds.
Sun Valley, ID investment venture capital
(11/14/31) partnerships, since 1981 and Founder
and General Partner, Oxford
Bioscience Partners, a group of
venture capital partnerships focused
on life sciences, genomics,
healthcare information technology
and medical devices, since 1991.
J. William Weeks Trustee since Retired; limited partner and 3 None
Palm Beach, FL 1995 investor in various real estate
(06/22/27) partnerships since 1988; formerly
Senior Vice President or Vice
President of the Aquila Bond Funds;
and Vice President of the
Distributor.
OFFICERS
Diana P. Herrmann President since President and Chief Operating N/A N/A
New York, NY 1998 Officer of the Manager since 1997, a
(02/25/58) Director since 1984, Secretary since
1986 and previously its Executive
Vice President, Senior Vice
President or Vice President,
1986-1997; President, Senior Vice
President or Executive Vice
President of funds in the Aquila(sm)
Group of Funds since 1986; Director
of the Distributor since 1997;
trustee, Reserve Money-Market Funds,
1999-2000 and Reserve Private Equity
Series, 1998-2000; active in mutual
fund and trade organizations and in
charitable and volunteer
organizations.
Stephen J. Caridi Senior Vice Vice President of the Distributor N/A N/A
New York, NY President since since 1995; Vice President, Hawaiian
(05/06/61) 1998 Tax-Free Trust since 1998; Senior
Vice President, Narragansett Insured
Tax-Free Income Fund since 1998,
Vice President 1996-1997; Assistant
Vice President, Tax-Free Fund For
Utah since 1993
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the N/A N/A
New York, NY Officer since Aquila(sm) Group of Funds since 2003
(11/06/56) 2003 and and Treasurer since 2000;
Treasurer since Controller, Van Eck Global Funds,
2000 1993-2000.
Edward M. W. Hines Secretary since Partner, Hollyer Brady Smith & Hines N/A N/A
New York, NY 1982 LLP, legal counsel to the Fund,
(12/16/39) since 1989; Secretary of the
Aquila(sm) Group of Funds.
Robert W. Anderson Assistant Compliance Officer of the Manager N/A N/A
New York, NY Secretary since since 1998 and Assistant Secretary
(08/23/40) 2000 of the Aquila(sm) Group of Funds since
2000; trustee, Alpha Strategies Fund
since July, 2002; Consultant, The
Wadsworth Group, 1995-1998.
John M. Herndon Assistant Assistant Secretary of the Aquila(sm) N/A N/A
New York, NY Secretary since Group of Funds since 1995 and Vice
(12/17/39) 1995 President of the four Aquila
Money-Market Funds since 1990; Vice
President of the Manager since 1990.
Lori A. Vindigni Assistant Assistant Treasurer of the Aquila(sm) N/A N/A
New York, NY Treasurer since Group of Funds since 2000; Assistant
(11/02/66) 2000 Vice President of the Manager since
1998; Fund Accountant for the
Aquila(sm) Group of Funds, 1995-1998.
- ----------
(1) The Fund's Statement of Additional Information includes additional
information about the Trustees and is available, without charge, upon request by
calling 800-437-1020 (toll free).
(2) The mailing address of each Trustee and officer is c/o Narragansett Insured
Tax-Free Income Fund, 380 Madison Avenue, New York, NY 10017.
(3) Each Trustee holds office until the next annual meeting of shareholders or
until his or her successor is elected and qualifies. The term of office of each
officer is one year.
(4) Mr. Herrmann is an interested person of the Fund, as that term is defined in
the 1940 Act, as an officer of the Fund, as a director, officer and shareholder
of the Manager and as a shareholder and director of the Distributor. Mr. Duffy
is an interested person as a director of the Sub-Adviser. Mr. Partridge is an
interested person of the Fund as a partner of the law firm that performs legal
services for the Sub-Adviser.
(5) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust, Pacific Capital Tax-Free Cash Assets
Trust and Capital Cash Management Trust, each of which is a money-market fund,
are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free
Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill
Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and
Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are
called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity
fund; considered together, these 12 funds are called the "Aquila(sm) Group of
Funds."
PRIVACY NOTICE (UNAUDITED)
OUR PRIVACY POLICY. In providing services to you as an individual who owns or is
considering investing in shares of a fund of the Aquila(SM) Group of Funds, we
collect certain nonpublic personal information about you. Our policy is to keep
this information strictly safeguarded and confidential, and to use or disclose
it only as necessary to provide services to you or as otherwise permitted by
law. Our privacy policy applies equally to former shareholders and persons who
inquire about a fund.
INFORMATION WE COLLECT. "Nonpublic personal information" is personally
identifiable financial information about you as an individual or your family.
The kinds of nonpublic personal information we have about you may include the
information you provide us on your share purchase application or in telephone
calls or correspondence with us, and information about your fund transactions
and holdings, how you voted your shares and the account where your shares are
held.
INFORMATION WE DISCLOSE. We disclose nonpublic personal information about you to
companies that provide necessary services to your fund, such as the fund's
transfer agent, distributor, investment adviser or sub-adviser and to our
affiliates, as permitted or required by law, or as authorized by you. We also
may disclose this information to another fund of the Aquila(SM) Group of Funds
or its distributor, or to the broker-dealer that holds your fund shares, under
agreements that permit them to use the information only to provide you
information about your fund, other funds in the Aquila(SM) Group of Funds or new
services we are offering which may be of interest to you. Any other use is
strictly prohibited. We do not sell information about you or any of our fund
shareholders to anyone.
HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to nonpublic personal
information about you to only those persons who need it to provide services to
you or who are permitted by law to receive it. We maintain physical, electronic
and procedural safeguards to protect the confidentiality of all nonpublic
personal information we have about you.
If you have any questions regarding our Privacy Policy, please contact us at
1-800-437-1020.
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
This information is presented in order to comply with a requirement of the
Internal Revenue Code AND NO CURRENT ACTION ON THE PART OF SHAREHOLDERS IS
REQUIRED.
For the fiscal year ended June 30, 2003, $5,023,493 of dividends paid by
Narragansett Insured Tax-Free Income Fund, constituting 98.09% of total
dividends paid during the fiscal year ended June 30, 2003, were exempt-interest
dividends and the balance was ordinary dividend income.
Prior to January 31, 2003, shareholders were mailed IRS Form 1099-DIV which
contained information on the status of distributions paid for the 2002 CALENDAR
YEAR.
Prior to January 31, 2004, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of distributions paid for the 2003
CALENDAR YEAR.
MANAGER AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
CITIZENS INVESTMENT ADVISORS,
A DEPARTMENT OF CITIZENS BANK
OF RHODE ISLAND
One Citizens Plaza
Providence, Rhode Island 02903
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Paul Y. Clinton
David A. Duffy
William J. Nightingale
John J. Partridge
Cornelius T. Ryan
J. William Weeks
OFFICERS
Diana P. Herrmann, President
Stephen J. Caridi, Senior Vice President
Joseph P. DiMaggio, Chief Financial Officer
and Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
1111 Polaris Parkway
Columbus, Ohio 43240
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
INDEPENDENT AUDITORS
KPMG LLP
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus, which must precede or
accompany this report.
ANNUAL
REPORT
JUNE 30, 2003
A TAX-FREE INCOME INVESTMENT
[Logo of Narragansett Insured Tax-Free Income Fund: rectangle with profile
view of a sailboat on top of waves and three seagulls flying above it]
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILA(SM) GROUP OF FUNDS
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
905: Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940) as of a date within 90 days of the fling of this report, the registrant's
chief financial and executive officers have concluded that the disclosure
controls and procedures of the registrant are appropriately designed to ensure
that information required to be disclosed in the registrant's reports that are
filed under the Securities Exchange Act of 1934 are accumulated and communicated
to registrant's management, including its principal executive officer(s) and
principal financial officer(s), to allow timely decisions regarding required
disclosure and is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms adopted by the Securities and Exchange
Commission.
(b) There have been no significant changes in registrant's internal controls or
in other factors that could significantly affect registrant's internal controls
subsequent to the date of the most recent evaluation, including no significant
deficiencies or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of
1940.
(b) Certifications of principal executive officer and principal financial
officer
as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.
NARRAGANSETT INSURED TAX-FREE INCOME FUND
By: /s/ Lacy B. Herrmann
- ---------------------------------
Chairman of the Board
September 8, 2003
By: /s/ Diana P. Herrmann
- ---------------------------------
President
September 8, 2003
By: /s/ Joseph P. DiMaggio
- -----------------------------------
Chief Financial Officer
September 8, 2003
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/ Lacy B. Herrmann
- ---------------------------------
Lacy B. Herrmann
Chairman of the Board
September 8, 2003
By: /s/ Diana P. Herrmann
- ---------------------------------
Diana P. Herrmann
President
September 8, 2003
By: /s/ Joseph P. DiMaggio
- -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer
September 8, 2003
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.