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: 6/30/04

FORM N-CSR

ITEM 1. REPORTS TO STOCKHOLDERS.

ANNUAL
REPORT

JUNE 30, 2004

A TAX-FREE INCOME INVESTMENT

[Logo of Narragansett Insured Tax-Free Income Fund: rectangle with profile view
of 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

[Logo of Narragansett Insured Tax-Free Income Fund: rectangle with profile view
of 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 for Rhode Island residents
while staying within the self-imposed quality restraints. The Fund strives to
accomplish this by purchasing in-state 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 we expect will continue
to be, maintained for the Fund's portfolio as we strive to produce a reasonable
level of income return with relatively high stability for the Fund's share
price. At the June 30, 2004 fiscal year end, the portfolio had an average
maturity of 11.2 years.

The stock market has been sluggish as the summer months approach. Fears
about terrorism, oil prices, higher interest rates and inflation seem to have
prevented any durable advance in equity prices since the start of the year.
Corporate earnings have been strong, and equities remain attractive
fundamentally despite these fears. Presently, it is difficult to identify a
catalyst for continued growth in consumer spending, which is the key to earnings
growth and a sustainable rally. This is the first year in the last four that
consumers will not benefit from a tax cut, and at the same time, the mortgage
refinancing boom appears to be over and energy prices are higher. Additionally,
borrowers with low adjustable rate mortgages may be forced to refinance at
higher rates, which would effectively decrease their discretionary income. In
our view, strong employment growth will be needed to offset the decrease in
liquidity stemming from these various factors.

Following good job growth figures in April and May, June employment
figures showed only 112,000 job gains versus a consensus estimate of 250,000
with downward revisions to April and May. Despite the recent setback, revisions
to second half Gross Domestic Product ("GDP") growth have been lowered to a
still respectable 3% - 4%. Job growth seems to be the key figure that the
markets will be focusing on to ensure that the recovery can be sustained.

With the first Federal Reserve (the "Fed") interest rate hike in several
years on June 30, 2004, it appears that the Fed is shifting its stance in the
face of a stronger economy and higher inflation. Given the current negative real
Federal Funds rate ("Fed Funds"), monetary policy is far from neutral based on
historical averages and we would expect further tightening in 2005. Fed Funds
has typically averaged 2% above the core Consumer Price Index over the past
forty years while the real rate on the 10-year Treasury has been approximately
3%. Inflation could very well drop from its current pace as pressures from
energy and housing ease. Since the market has anticipated a tightening of
interest rates of between 0.75% to 1.00% before the end of the year, there may
be some flattening of the yield curve as the Fed implements its policy at a
"measured" pace. An eventual Fed Funds rate of 3% could well be possible. As the
market seems to be clearly ahead of the Fed in interest rates, we believe an
opportunity exists for investors to buy bonds. If inflation and GDP growth
subside from current levels in 2005, fixed income purchases could prove to have
been a worthwhile strategy.

Given the current Federal income tax rates and the Rhode Island income tax
rate, Narragansett Insured Tax-Free Income Fund presently produces an attractive
yield for Rhode Island residents. As of June 30, 2004, the Fund's SEC yield for
Class A Shares was 3.43%.

Management believes that having available to the Fund a locally-based
investment portfolio 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, 2004 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.

[THE FOLLOWING TABLE WAS DEPICTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]

Cost of Living Trust's Class A Shares Trust's Class A Shares Lehman Brothers
Index With Sales Charge Without Sales Charge Quality Intermediate
Municipal Bond Index

6/94 $10,000 $10,000 $ 9,600 $10,000
6/95 $10,304 $11,122 $10,680 $10,799
6/96 $10,588 $11,620 $11,159 $11,399
6/97 $10,831 $12,681 $12,178 $12,178
6/98 $11,014 $13,666 $13,123 $13,025
6/99 $11,230 $13,850 $13,300 $13,419
6/00 $11,649 $14,204 $13,640 $13,960
6/01 $12,027 $15,588 $14,970 $15,194
6/02 $12,155 $16,517 $15,862 $16,250
6/03 $12,412 $18,025 $17,310 $17,521
6/04 $12,818 $17,925 $17,213 $17,581

AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 2004
--------------------------------------------
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
------ ------- -------- ---------

Class A (9/10/92)
With Sales Charge....... (4.14)% 4.37% 5.58% 5.38%
Without Sales Charge.... (0.10) 5.21 6.01 5.75

Class C (5/1/96)
With CDSC............... (2.04) 4.30 n/a 4.47
Without CDSC............ (1.04) 4.30 n/a 4.47

Class Y (5/1/96)
No Sales Charge......... 0.03 5.36 n/a 5.66

Class I (11/4/98)
No Sales Charge......... (0.12) 5.20 n/a 4.44

Lehman Index............... 0.34 5.55 5.80 5.65* (Class A)

n/a 5.48** (Class C&Y)
n/a 4.88+ (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 class's 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.

KPMG

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 schedule of
investments, as of June 30, 2004, 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 the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, by
correspondence with the custodian. 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, 2004, 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 U.S. generally
accepted accounting principles.

/s/ KPMG LLP

New York, New York
August 18, 2004

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2004

RATING
FACE MOODY'S, S&P
AMOUNT GENERAL OBLIGATION BONDS (45.2%) OR FITCH VALUE
- ----------- ---------------------------------------------------- ------------ ------------

Coventry, Rhode Island
$ 550,000 5.000%, 11/01/16 AMBAC Insured................... Aaa+/AAA+++ $ 580,437
550,000 5.000%, 11/01/17 AMBAC Insured................... Aaa+/AAA+++ 573,722
Cranston, Rhode Island
300,000 5.500%, 06/15/07 MBIA Insured.................... Aaa+/AAA++ 316,944
1,000,000 3.125%, 02/15/11 FSA Insured..................... Aaa+/AAA++ 964,830
500,000 5.450%, 11/15/11 FGIC Insured.................... Aaa+/AAA++ 550,875
Cumberland, Rhode Island
250,000 3.750%, 02/01/13 FGIC Insured.................... Aaa+/AAA++ 246,747
250,000 4.000%, 02/01/14 FGIC Insured.................... Aaa+/AAA++ 248,617
250,000 4.000%, 02/01/15 FGIC Insured.................... Aaa+/AAA++ 245,552
500,000 5.000%, 08/01/15 MBIA Insured.................... Aaa+/AAA++ 520,950
250,000 4.000%, 02/01/16 FGIC Insured.................... Aaa+/AAA++ 242,082
250,000 4.100%, 02/01/17 FGIC Insured.................... Aaa+/AAA++ 241,955
250,000 4.150%, 02/01/18 FGIC Insured.................... Aaa+/AAA++ 240,195
1,255,000 5.000%, 10/01/18 MBIA Insured.................... Aaa+/AAA++ 1,303,518
1,040,000 5.200%, 10/01/21 MBIA Insured.................... Aaa+/AAA++ 1,087,081
East Providence, Rhode Island
500,000 5.400%, 05/15/07 MBIA Insured.................... Aaa+/AAA++ 524,920
Lincoln, Rhode Island
400,000 5.100%, 01/15/06 MBIA Insured.................... Aaa+/AAA++ 408,816
250,000 5.750%, 08/01/15 FGIC Insured.................... Aaa+/AAA+++ 266,010
New Shoreham, Rhode Island
245,000 4.000%, 11/15/15 AMBAC Insured................... Aaa+/AAA++ 240,382
255,000 4.250%, 11/15/16 AMBAC Insured................... Aaa+/AAA++ 254,260
270,000 4.250%, 11/15/17 AMBAC Insured................... Aaa+/AAA++ 266,735
910,000 4.800%, 04/15/18 AMBAC Insured................... Aaa+/AAA++ 929,483
285,000 4.500%, 11/15/18 AMBAC Insured................... Aaa+/AAA++ 285,576
1,105,000 5.000%, 04/15/22 AMBAC Insured................... Aaa+/AAA++ 1,119,840
Newport, Rhode Island
250,000 4.900%, 05/15/06 FGIC Insured.................... Aaa+/AAA++ 257,468
500,000 5.000%, 05/15/07 FGIC Insured.................... Aaa+/AAA++ 511,645
150,000 6.550%, 08/15/07 MBIA Insured.................... Aaa+/AAA++ 152,815
500,000 5.100%, 05/15/08 FGIC Insured.................... Aaa+/AAA++ 511,685
Newport, Rhode Island (continued)
$ 1,000,000 4.500%, 11/01/15 AMBAC Insured................... Aaa+/AAA+++ $ 1,022,110
1,000,000 4.750%, 11/01/18 AMBAC Insured................... Aaa+/AAA+++ 1,021,090
800,000 5.000%, 11/01/20 AMBAC Insured................... Aaa+/AAA+++ 824,592
North Providence, Rhode Island
400,000 5.700%, 07/01/08 MBIA Insured.................... Aaa+/AAA++ 443,424
500,000 3.500%, 10/15/13 FSA Insured..................... Aaa+/AAA++ 478,555
500,000 4.700%, 09/15/14 FSA Insured..................... Aaa+/AAA++ 519,440
500,000 3.650%, 10/15/14 FSA Insured..................... Aaa+/AAA++ 477,600
500,000 3.750%, 10/15/15 FSA Insured..................... Aaa+/AAA++ 470,865
Pawtucket, Rhode Island
600,000 4.300%, 09/15/09 AMBAC Insured................... Aaa+/AAA+++ 630,732
795,000 3.500%, 04/15/10 AMBAC Insured................... Aaa+/AAA+++ 797,862
250,000 4.400%, 09/15/10 AMBAC Insured................... Aaa+/AAA+++ 262,700
825,000 3.500%, 04/15/11 AMBAC Insured................... Aaa+/AAA+++ 821,519
850,000 3.625%, 04/15/12 AMBAC Insured................... Aaa+/AAA+++ 841,721
880,000 3.750%, 04/15/13 AMBAC Insured................... Aaa+/AAA+++ 868,296
910,000 4.000%, 04/15/14 AMBAC Insured................... Aaa+/AAA+++ 904,859
Providence, Rhode Island
700,000 5.500%, 01/15/11 FSA Insured..................... Aaa+/AAA++ 751,044
1,925,000 5.200%, 04/01/11 AMBAC Insured................... Aaa+/AAA+++ 2,091,609
1,000,000 5.000%, 01/15/16 FGIC Insured.................... Aaa+/AAA++ 1,056,970
1,000,000 5.000%, 01/15/17 FGIC Insured.................... Aaa+/AAA++ 1,045,860
1,000,000 5.000%, 01/15/18 FGIC Insured.................... Aaa+/AAA++ 1,039,500
Rhode Island Consolidated Capital
Development Loan
1,000,000 5.250%, 11/01/11 Series C MBIA Insured........... Aaa+/AAA++ 1,100,560
1,000,000 5.000%, 06/01/14 Series B FGIC Insured........... Aaa+/AAA++ 1,062,240
1,000,000 5.000%, 09/01/14 Series A FGIC Insured........... Aaa+/AAA++ 1,051,840
2,000,000 5.000%, 08/01/15 Series B FGIC Insured........... Aaa+/AAA++ 2,101,920
1,500,000 4.750%, 09/01/17 Series A FGIC Insured........... Aaa+/AAA++ 1,534,200
South Kingstown, Rhode Island
500,000 5.500%, 06/15/12 FGIC Insured.................... Aaa+/AAA+++ 552,465
State of Rhode Island
$ 1,000,000 5.000%, 07/15/05 FGIC Insured.................... Aaa+/AAA++ $ 1,034,420
1,000,000 5.125%, 07/15/11 FGIC Insured.................... Aaa+/AAA++ 1,072,710
4,000,000 5.000%, 08/01/14 FGIC Insured.................... Aaa+/AAA++ 4,254,200
1,500,000 5.000%, 09/01/15 FGIC Insured.................... Aaa+/AAA++ 1,570,110
2,000,000 5.250%, 11/01/17 FGIC Insured.................... Aaa+/AAA++ 2,150,400
2,500,000 5.000%, 09/01/18 MBIA Insured.................... Aaa+/AAA++ 2,603,100
2,000,000 5.000%, 09/01/19 MBIA Insured.................... Aaa+/AAA++ 2,075,300
1,500,000 5.000%, 09/01/20 MBIA Insured.................... Aaa+/AAA++ 1,546,245
Warwick, Rhode Island
665,000 4.250%, 07/15/14 AMBAC Insured................... Aaa+/AAA++ 673,120
195,000 5.600%, 08/01/14 FSA Insured..................... Aaa+/AAA++ 210,902
700,000 4.375%, 07/15/15 AMBAC Insured................... Aaa+/AAA++ 707,791
770,000 4.600%, 07/15/17 AMBAC Insured................... Aaa+/AAA++ 781,873
1,000,000 5.000%, 03/01/18 FGIC Insured.................... Aaa+/AAA++ 1,043,920
810,000 4.700%, 07/15/18 AMBAC Insured................... Aaa+/AAA++ 822,442
1,000,000 5.000%, 01/15/19 FGIC Insured.................... Aaa+/AAA++ 1,034,350
855,000 4.750%, 07/15/19 AMBAC Insured................... Aaa+/AAA++ 862,943
500,000 5.000%, 01/15/20 FGIC Insured.................... Aaa+/AAA++ 514,320
West Warwick, Rhode Island
500,000 4.875%, 03/01/16 AMBAC Insured................... Aaa+/AAA+++ 519,215
670,000 5.000%, 03/01/17 AMBAC Insured................... Aaa+/AAA+++ 694,964
700,000 5.050%, 03/01/18 AMBAC Insured................... Aaa+/AAA+++ 728,329
735,000 5.100%, 03/01/19 AMBAC Insured................... Aaa+/AAA+++ 765,172
Woonsocket, Rhode Island
385,000 5.125%, 03/01/11 MBIA Insured.................... Aaa+/AAA++ 393,978
655,000 4.450%, 12/15/12 FGIC Insured.................... Aaa+/AAA+++ 680,630
685,000 4.550%, 12/15/13 FGIC Insured.................... Aaa+/AAA+++ 708,948
------------
Total General Obligation Bonds................... 64,316,095
------------
REVENUE BONDS (54.8%)

DEVELOPMENT REVENUE BONDS (9.5%)
Rhode Island Convention Center Authority
500,000 5.000%, 05/15/07 Series 1993 B MBIA Insured...... Aaa+/AAA++ 532,125
2,000,000 5.000%, 05/15/23 Series 1993 C MBIA Insured...... Aaa+/AAA++ 2,008,320
Rhode Island Public Building Authority State
Public Projects
$ 1,000,000 5.250%, 02/01/09 Series 1998 A AMBAC Insured..... Aaa+/AAA++ $ 1,086,010
500,000 5.000%, 12/15/09 Series 1999 A AMBAC Insured..... Aaa+/AAA++ 542,790
1,000,000 5.250%, 12/15/14 Series 1998 FSA Insured......... Aaa+/AAA++ 1,070,540
500,000 5.500%, 12/15/14 Series 1996 B MBIA Insured...... Aaa+/AAA++ 541,725
500,000 5.500%, 12/15/15 Series 1996 B MBIA Insured...... Aaa+/AAA++ 541,725
Rhode Island State Economic Development Corp.,
Airport Revenue
1,000,000 5.000%, 07/01/18 Series B FSA Insured............ Aaa+/AAA++ 1,030,490
Rhode Island State Economic Development Corp.,
Motor Fuel Tax Revenue (Rhode Island
Department of Transportation)
2,000,000 3.875%, 06/15/14 Series A AMBAC Insured.......... Aaa+/AAA++ 1,968,340
1,000,000 4.000%, 06/15/15 Series A AMBAC Insured.......... Aaa+/AAA++ 981,720
Rhode Island State Economic Development Corp.,
University of Rhode Island
750,000 4.800%, 11/01/11 Series 1999 FSA Insured......... Aaa+/NR 796,762
750,000 4.900%, 11/01/12 Series 1999 FSA Insured......... Aaa+/NR 794,753
750,000 4.900%, 11/01/13 Series 1999 FSA Insured......... Aaa+/NR 790,320
750,000 5.000%, 11/01/14 Series 1999 FSA Insured......... Aaa+/NR 794,610
------------
Total Development Revenue Bonds.................. 13,480,230
------------
HIGHER EDUCATION REVENUE BONDS (28.2%)
Providence, Rhode Island Public Building
Authority, School Projects
1,395,000 4.000%, 12/15/12 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,412,954
1,450,000 4.000%, 12/15/13 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,457,207
1,505,000 4.000%, 12/15/14 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,496,075
1,570,000 4.000%, 12/15/15 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,540,280
1,630,000 4.000%, 12/15/16 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,575,819
Rhode Island Health & Education Building Corp.,
Brown University
2,000,000 5.250%, 09/01/17 Series 1993 MBIA Insured........ AAA++/AAA+++ 2,132,300
1,000,000 5.000%, 09/01/23 Series 1993 MBIA Insured........ Aaa+/AAA++ 1,015,360
Rhode Island Health & Education Building Corp.,
Bryant College
1,000,000 5.125%, 06/01/19 AMBAC Insured................... Aaa+/AAA++ 1,037,100
230,000 5.000%, 12/01/21 AMBAC Insured................... Aaa+/AAA++ 235,561
Rhode Island Health & Education Building Corp.
Higher Educational Facilities
$ 500,000 3.500%, 09/15/13 Series 2003 B MBIA Insured...... Aaa+/AAA++ $ 478,320
1,010,000 3.625%, 09/15/14 Series 2003 B MBIA Insured...... Aaa+/AAA++ 957,692
600,000 3.625%, 09/15/14 Series 2003 C MBIA Insured...... Aaa+/AAA++ 568,926
1,050,000 4.000%, 09/15/15 Series 2003 B MBIA Insured...... Aaa+/AAA++ 1,030,428
500,000 4.000%, 09/15/15 Series 2003 C MBIA Insured...... Aaa+/AAA++ 488,500
1,040,000 4.000%, 09/15/16 Series 2003 B MBIA Insured...... Aaa+/AAA++ 1,012,513
500,000 4.000%, 09/15/16 Series 2003 C MBIA Insured...... Aaa+/AAA++ 481,120
Rhode Island Health & Education Building Corp.,
Johnson & Wales University
1,360,000 4.000%, 04/01/12 Series 2003 XLCA Insured........ Aaa+/AAA++ 1,376,198
3,210,000 4.000%, 04/01/13 Series 2003 XLCA Insured........ Aaa+/AAA++ 3,214,526
2,000,000 4.000%, 04/01/14 Series 2003 XLCA Insured........ Aaa+/AAA++ 1,980,800
465,000 5.500%, 04/01/15 1999 Series A MBIA Insured...... Aaa+/AAA++ 516,355
900,000 5.500%, 04/01/16 1999 Series A MBIA Insured...... Aaa+/AAA++ 1,000,413
785,000 5.500%, 04/01/17 1999 Series A MBIA Insured...... Aaa+/AAA++ 870,879
Rhode Island Health & Education Building Corp.,
Rhode Island School of Design
505,000 4.700%, 06/01/18 Series 2001 MBIA Insured........ Aaa+/AAA++ 513,434
280,000 4.750%, 06/01/19 Series 2001 MBIA Insured........ Aaa+/AAA++ 283,844
Rhode Island Health & Education Building Corp.,
Roger Williams University
1,000,000 5.500%, 11/15/11 Series 1996 S AMBAC Insured..... NR/AAA++ 1,082,060
500,000 5.125%, 11/15/11 AMBAC Insured................... Aaa+/AAA++ 539,675
1,000,000 5.125%, 11/15/14 Series 1996 S AMBAC Insured..... Aaa+/AAA++ 1,062,610
1,000,000 5.000%, 11/15/18 Series 1996 S AMBAC Insured..... Aaa+/AAA++ 1,029,000
Rhode Island Health & Education Facilities
Authority Providence College
1,000,000 4.250%, 11/01/14 XLCA Insured.................... Aaa+/AAA++ 1,009,930
2,500,000 4.375%, 11/01/15 XLCA Insured.................... Aaa+/AAA++ 2,521,800
2,500,000 4.500%, 11/01/16 XLCA Insured.................... Aaa+/AAA++ 2,532,175
1,000,000 4.500%, 11/01/17 XLCA Insured.................... Aaa+/AAA++ 1,002,210
Providence, Rhode Island Public Building School
& Public Facilities Project
1,500,000 5.250%, 12/15/17 AMBAC Insured................... Aaa+/AAA++ 1,587,930
1,000,000 5.250%, 12/15/19 AMBAC Insured................... Aaa+/AAA++ 1,049,530
------------
Total Higher Education Revenue Bonds............. 40,093,524
------------

POLLUTION CONTROL REVENUE BONDS (4.5%)
Rhode Island Clean Water Finance Agency, Water
Pollution Control Bonds
$ 1,800,000 5.000%, 10/01/18 Series 2002 B MBIA Insured...... Aaa+/AAA++ $ 1,865,016
4,765,000 4.375%, 10/01/21 Series 2002 B MBIA Insured...... Aaa+/AAA++ 4,516,744
------------
Total Pollution Control Revenue Bonds............ 6,381,760
------------
WATER AND SEWER REVENUE BONDS (8.6%)
Bristol County, Rhode Island Water Authority
300,000 5.000%, 12/01/08 Series 1997 A MBIA Insured...... Aaa+/AAA++ 317,526
750,000 5.250%, 07/01/17 Series 1997 A MBIA Insured...... Aaa+/AAA++ 795,000
Kent County, Rhode Island Water Authority
Revenue Bonds
500,000 4.000%, 07/15/12 Series 2002 A MBIA Insured...... Aaa+/AAA++ 506,165
1,055,000 4.150%, 07/15/14 Series 2002 A MBIA Insured...... Aaa+/AAA++ 1,060,718
Rhode Island Clean Water Protection
200,000 5.300%, 10/01/07 1993 Series 1993 A
MBIA Insured..................................... Aaa+/AAA++ 215,680
300,000 5.400%, 10/01/09 1993 Series 1993 A
MBIA Insured..................................... Aaa+/AAA++ 330,507
500,000 4.500%, 10/01/11 1993 Series 1993 B
AMBAC Insured.................................... Aaa+/AAA++ 519,580
Rhode Island Clean Water Protection Finance Agency,
1,000,000 5.125%, 10/01/11 Series 1999 C MBIA Insured...... Aaa+/AAA++ 1,086,050
500,000 4.600%, 10/01/13 Series A AMBAC Insured.......... Aaa+/AAA++ 515,685
500,000 4.750%, 10/01/14 Series A AMBAC Insured.......... Aaa+/AAA++ 515,860
1,250,000 5.400%, 10/01/15 Series A MBIA Insured........... Aaa+/AAA++ 1,382,000
2,000,000 4.750%, 10/01/18 Series A AMBAC Insured.......... Aaa+/AAA++ 2,025,760
500,000 4.750%, 10/01/20 Series A AMBAC Insured.......... Aaa+/AAA++ 503,655
Rhode Island Water Resources Board Public
Drinking Water Protection Revenue Bond
1,500,000 4.000%, 03/01/14 MBIA Insured.................... Aaa+/AAA++ 1,491,630
1,000,000 4.250%, 03/01/15 MBIA Insured.................... Aaa+/AAA++ 1,005,800
------------
Total Water and Sewer Revenue Bonds.............. 12,271,616
------------
OTHER REVENUE BONDS (4.0%)
Rhode Island State Capital Development Loan
1,500,000 5.400%, 08/01/08 MBIA Insured.................... Aaa+/AAA++ 1,613,760
1,135,000 5.000%, 08/01/11 MBIA Insured.................... Aaa+/AAA++ 1,227,082
State of Rhode Island Certificates of Participation,
Howard Center Improvements
$ 400,000 5.250%, 10/01/10 MBIA Insured.................... Aaa+/AAA++ $ 430,400
200,000 5.375%, 10/01/16 MBIA Insured.................... Aaa+/AAA++ 215,532
State of Rhode Island Depositors Economic
Protection Corp.
135,000 5.500%, 08/01/06 Series 1992 B MBIA Insured...... Aaa+/AAA++ 144,218
300,000 5.800%, 08/01/09 Series 1993 B MBIA Insured...... Aaa+/AAA++ 337,122
500,000 6.000%, 08/01/17 Series1992 B MBIA Insured....... Aaa+/AAA++ 517,545
1,045,000 5.250%, 08/01/21 Series 1993 B MBIA Insured
(Escrowed to Maturity)........................... Aaa+/AAA++ 1,150,827
------------
Total Other Revenue Bonds........................ 5,636,486
------------
Total Revenue Bonds............................ 77,863,616
------------
Total Investments (cost $139,245,629*)... 100.0% 142,179,711
Other assets less liabilities............ 0.0 37,385
----- ------------
Net Assets............................... 100.0% $142,217,096
===== ============

* See note 4.

Rating Services:

+ Moody's Investors Service

++ Standard & Poor's

+++ Fitch

NR Not rated by two of the three 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

XLCA - XL Capital Assurance

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004

ASSETS
Investments at value (cost $139,245,629) ............................................... $ 142,179,711
Interest receivable .................................................................... 1,665,468
Receivable for Fund shares sold ........................................................ 270,185
Other assets ........................................................................... 9,395
-------------
Total assets ........................................................................... 144,124,759
-------------
LIABILITIES
Cash overdraft ......................................................................... 872,250
Payable for Fund shares redeemed ....................................................... 752,889
Dividends payable ...................................................................... 161,533
Distribution fees payable .............................................................. 75,007
Management fee payable ................................................................. 13,981
Accrued expenses ....................................................................... 32,003
-------------
Total liabilities ...................................................................... 1,907,663
-------------
NET ASSETS ................................................................................ $ 142,217,096
=============
Net Assets consist of:
Capital Stock - Authorized 80,000,000 shares, par value $.01 per share ................. $ 135,640
Additional paid-in capital ............................................................. 140,094,815
Net unrealized appreciation on investments (note 4) .................................... 2,934,082
Accumulated net realized loss on investments ........................................... (813,621)
Distributions in excess of net investment income ....................................... (133,820)
-------------
$ 142,217,096
=============
CLASS A
Net Assets ............................................................................. $ 101,413,047
=============
Capital shares outstanding ............................................................. 9,672,213
=============
Net asset value and redemption price per share ......................................... $ 10.49
=============
Offering price per share (100/96 of $10.49 adjusted to nearest cent) ................... $ 10.93
=============
CLASS C
Net Assets ............................................................................. $ 17,900,970
=============
Capital shares outstanding ............................................................. 1,707,457
=============
Net asset value and offering price per share ........................................... $ 10.48
=============
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) .......................................... $ 10.48*
=============
CLASS I
Net Assets ............................................................................. $ 789,875
=============
Capital shares outstanding ............................................................. 75,381
=============
Net asset value, offering and redemption price per share ............................... $ 10.48
=============
CLASS Y
Net Assets ............................................................................. $ 22,113,204
=============
Capital shares outstanding ............................................................. 2,108,934
=============
Net asset value, offering and redemption price per share ............................... $ 10.49
=============

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2004

INVESTMENT INCOME:

Interest income............................................. $ 6,451,901

Expenses:

Management fee (note 3)..................................... $ 741,128
Distribution and service fees (note 3)...................... 376,930
Trustees' fees and expenses (note 8)........................ 99,959
Transfer and shareholder servicing agent fees............... 73,617
Fund accounting fees........................................ 49,585
Legal fees.................................................. 49,043
Shareholders' reports and proxy statements.................. 36,611
Auditing and tax fees....................................... 23,109
Registration fees and dues.................................. 11,361
Custodian fees ............................................. 7,235
Miscellaneous............................................... 39,369
-----------
Total Expenses.............................................. 1,507,947

Management fee waived (note 3).............................. (570,009)
Expenses paid indirectly (note 6)........................... (7,981)
-----------
Net expenses................................................ 929,957
-----------
Net investment income....................................... 5,521,944

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain (loss) from securities transactions....... (114,233)
Change in unrealized appreciation on investments............ (5,849,916)
-----------
Net realized and unrealized gain (loss) on investments...... (5,964,149)
-----------
Net change in net assets resulting from operations.......... $ (442,205)
===========

See accompanying notes to financial statements.

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

YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
------------- -------------

OPERATIONS:
Net investment income ................................................. $ 5,521,944 $ 5,028,971
Net realized gain (loss) from securities transactions ................. (114,233) 286,562
Change in unrealized appreciation on investments ...................... (5,849,916) 5,341,554
------------- -------------
Change in net assets from operations ............................... (442,205) 10,657,087
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS (NOTE 9):
Class A Shares:
Net investment income ................................................. (4,139,249) (3,889,489)

Class C Shares:
Net investment income ................................................. (670,058) (607,348)

Class I Shares:
Net investment income ................................................. (25,311) (16,746)

Class Y Shares:
Net investment income ................................................. (817,674) (637,034)
------------- -------------
Change in net assets from distributions ............................ (5,652,292) (5,150,617)
------------- -------------

CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold ............................................. 30,370,186 44,058,438
Reinvested dividends and distributions ................................ 3,474,377 3,417,773
Cost of shares redeemed ............................................... (33,567,190) (19,044,516)
------------- -------------
Change in net assets from capital share transactions .................. 277,373 28,431,695
------------- -------------
Change in net assets ............................................... (5,817,124) 33,938,165

NET ASSETS:
Beginning of period ................................................... 148,034,220 114,096,055
------------- -------------
End of period* ........................................................ $ 142,217,096 $ 148,034,220
============= =============

* Includes distributions in excess of net investment income of: ....... $ (133,820) $ (97,564)
============= =============

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 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 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) 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.

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.

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, 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, 2004, the Fund incurred management fees of
$741,128 of which $570,009 was voluntarily waived. Such waivers are voluntary
and can be terminated in the future at the Manager's discretion. However, the
Manager has indicated that it intends to continue waiving fees as necessary in
order that the Fund will remain competitive.

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, 2004, distribution fees on Class A Shares
amounted to $158,530, of which the Distributor retained $3,654.

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, 2004 amounted to $163,558. 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, 2004, amounted to $54,519. The total of these payments
with respect to Class C Shares amounted to $218,077, of which the Distributor
retained $34,441.

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, 2004,
these payments were made at the average annual rate of 0.20% of such net assets
amounting to $1,292 of which $323 related to the Plan and $969 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, 2004, total commissions on sales of Class A Shares amounted to $372,179, of
which the Distributor received $34,885.

c) OTHER RELATED PARTY TRANSACTIONS:

For the year ended June 30, 2004, the Fund incurred $47,846 of legal fees
allocable to Hollyer Brady Barrett & 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 Barrett & Hines LLP.

4. PURCHASES AND SALES OF SECURITIES

During the year ended June 30, 2004, purchases of securities and proceeds
from the sales of securities aggregated $19,328,770 and $12,572,360,
respectively.

At June 30, 2004, the aggregate tax cost for all securities was
$139,217,916. At June 30, 2004, the aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
amounted to $3,960,428 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value amounted to
$998,633, for a net unrealized appreciation of $2,961,795.

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, 2004, 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,
2004, 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, 2004 JUNE 30, 2003
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------

CLASS A SHARES:
Proceeds from shares sold ............... 1,501,680 $ 16,143,865 2,511,973 $ 26,990,482
Reinvested distributions ................ 237,866 2,543,682 239,993 2,564,785
Cost of shares redeemed ................. (1,857,743) (19,805,126) (1,208,692) (13,117,881)
---------- ------------ ---------- ------------
Net change ........................... (118,197) (1,117,579) 1,543,274 16,437,386
---------- ------------ ---------- ------------
CLASS C SHARES:
Proceeds from shares sold ............... 526,213 5,626,850 851,696 9,125,462
Reinvested distributions ................ 37,896 405,643 32,560 348,204
Cost of shares redeemed ................. (918,377) (9,748,834) (312,631) (3,355,269)
---------- ------------ ---------- ------------
Net change ........................... (354,268) (3,716,341) 571,625 6,118,397
---------- ------------ ---------- ------------
CLASS I SHARES:
Proceeds from shares sold ............... 33,611 362,059 4,279 45,721
Reinvested distributions ................ 655 7,014 52 560
Cost of shares redeemed ................. -- -- (53) (592)
---------- ------------ ---------- ------------
Net change ........................... 34,266 369,073 4,278 45,689
---------- ------------ ---------- ------------
CLASS Y SHARES:
Proceeds from shares sold ............... 774,201 8,237,412 741,749 7,896,773
Reinvested distributions ................ 48,312 518,038 47,085 504,224
Cost of shares redeemed ................. (379,850) (4,013,230) (242,048) (2,570,774)
---------- ------------ ---------- ------------
Net change ........................... 442,663 4,742,220 546,786 5,830,223
---------- ------------ ---------- ------------
Total transactions in Fund
shares .................................. 4,464 $ 277,373 2,665,963 $ 28,431,695
========== ============ ========== ============

8. TRUSTEES' FEES AND EXPENSES

During the fiscal year ended June 30, 2004, there were eight Trustees, one
of which is affiliated with the Manager and is not paid any trustee fees. Each
Trustee's fee paid during the year was at the annual rate of $8,350 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 of Shareholders. For the fiscal year ended
June 30, 2004, such reimbursements averaged approximately $5,204 per Trustee.

9. INCOME TAX INFORMATION AND 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 $94,092 and debited additional paid-in capital in the
amount of $94,092 at June 30, 2004. This adjustment had no impact on the Fund's
aggregate net assests at June 30, 2004. Further, a small portion of the
dividends may, under some circumstances, be subject to taxes at ordinary income
rates.

At June 30, 2004, the Fund had a capital loss carryover of $632,152 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 Fund utilized $67,236 of capital loss carryovers from a prior
year. In addition, the Fund incurred losses from November 1, 2003 through June
30, 2004 in the amount of $181,469 that will be treated as arising on July 1,
2004.

Tax character of distributions:

Year Ended June 30,
2004 2003
---------- ----------
Net tax-exempt income $5,557,238 $5,052,703
Ordinary income 95,054 97,914
---------- ----------
$5,652,292 $5,150,617
========== ==========

As of June 30, 2004, the components of distributable earnings on a tax
basis were as follows:

Accumulated net realized loss $ (813,621)
Unrealized appreciation 2,961,795
-----------
$ 2,148,174
===========

At June 30, 2004, the difference between book basis and tax basis
unrealized appreciation was attributable primarily to the treatment of accretion
of discounts and amortization of premiums.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CLASS A CLASS C
-------------------------------------------------- ----------------------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
-------------------------------------------------- ----------------------------------------------
2004 2003 2002 2001 2000 2004 2003 2002 2001 2000
-------- -------- ------- ------- ------- ------- ------- ------- ------ ------

Net asset value, beginning
of period .................. $ 10.92 $ 10.47 $ 10.32 $ 9.91 $ 10.16 $ 10.92 $ 10.47 $ 10.32 $ 9.91 $10.16
-------- -------- ------- ------- ------- ------- ------- ------- ------ ------
Income (loss) from investment
operations:
Net investment income+ .. 0.41 0.42 0.45 0.47 0.49 0.32 0.33 0.36 0.38 0.40
Net gain (loss) on
securities (both
realized and
unrealized) ........... (0.42) 0.47 0.16 0.44 (0.24) (0.43) 0.47 0.16 0.43 (0.24)
-------- -------- ------- ------- ------- ------- ------- ------- ------ ------
Total from investment
operations ............ (0.01) 0.89 0.61 0.91 0.25 (0.11) 0.80 0.52 0.81 0.16
-------- -------- ------- ------- ------- ------- ------- ------- ------ ------
Less distributions (note 9):
Dividends from net
investment income ...... (0.42) (0.44) (0.46) (0.50) (0.50) (0.33) (0.35) (0.37) (0.40) (0.41)
-------- -------- ------- ------- ------- ------- ------- ------- ------ ------
Net asset value, end
of period .................. $ 10.49 $ 10.92 $ 10.47 $ 10.32 $ 9.91 $ 10.48 $ 10.92 $ 10.47 $10.32 $ 9.91
======== ======== ======= ======= ======= ======= ======= ======= ====== ======

Total return (not
reflecting sales charge) ... (0.10)% 8.64% 6.07% 9.19% 2.58% (1.04)% 7.72% 5.16% 8.27% 1.71%

Ratios/supplemental data
Net assets, end of
period (in thousands) . $101,413 $106,887 $86,378 $67,669 $59,899 $17,901 $22,506 $15,606 $7,023 $4,681
Ratio of expenses to
average net assets .... 0.53% 0.51% 0.49% 0.41% 0.41% 1.38% 1.35% 1.34% 1.26% 1.26%
Ratio of net investment
income to average
net assets ............ 3.82% 3.96% 4.34% 4.65% 4.89% 2.98% 3.10% 3.46% 3.78% 4.04%
Portfolio turnover rate .. 8.61% 11.74% 6.02% 3.08% 8.66% 8.61% 11.74% 6.02% 3.08% 8.66%

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 .... 0.91% 0.88% 0.88% 0.95% 0.95% 1.76% 1.72% 1.72% 1.80% 1.80%
Ratio of net investment
income to average
net assets ............ 3.44% 3.59% 3.95% 4.11% 4.36% 2.60% 2.73% 3.07% 3.24% 3.50%

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 .... 0.52% 0.48% 0.46% 0.40% 0.38% 1.37% 1.33% 1.31% 1.25% 1.23%

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

See accompanying notes to financial statements.

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CLASS I CLASS Y
-------------------------------------------- ----------------------------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
-------------------------------------------- ----------------------------------------------------
2004 2003 2002 2001 2000 2004 2003 2002 2001 2000
------ ------ ------ ------ ------ ------- ------- ------- ------ ------

Net asset value, beginning
of period ................. $10.91 $10.47 $10.32 $ 9.90 $10.15 $ 10.92 $ 10.47 $ 10.32 $ 9.91 $10.16
------ ------ ------ ------ ------ ------- ------- ------- ------ ------

Income from investment
operations:
Net investment income+ .. 0.41 0.42 0.44 0.47 0.48 0.43 0.45 0.46 0.48 0.50
Net gain (loss) on
securities (both
realized and
unrealized) .......... (0.42) 0.46 0.17 0.43 (0.23) (0.43) 0.45 0.17 0.44 (0.24)
------ ------ ------ ------ ------ ------- ------- ------- ------ ------
Total from investment
operations ........... (0.01) 0.88 0.61 0.90 0.25 -- 0.90 0.63 0.92 0.26
------ ------ ------ ------ ------ ------- ------- ------- ------ ------
Less distributions (note 9):
Dividends from net
investment income .... (0.42) (0.44) (0.46) (0.48) (0.50) (0.43) (0.45) (0.48) (0.51) (0.51)
------ ------ ------ ------ ------ ------- ------- ------- ------ ------
Net asset value, end of
period .................... $10.48 $10.91 $10.47 $10.32 $ 9.90 $ 10.49 $ 10.92 $ 10.47 $10.32 $ 9.91
====== ====== ====== ====== ====== ======= ======= ======= ====== ======
Total return (not reflecting
sales charge) ............. (0.12)% 8.52% 6.05% 9.29% 2.56% 0.03% 8.80% 6.22% 9.35% 2.73%

Ratios/supplemental data
Net assets, end of period
(in thousands) ....... $ 790 $ 449 $ 386 $ 93 $ 75 $22,113 $18,193 $11,726 $3,332 $2,277
Ratio of expenses to
average net assets ... 0.53% 0.52% 0.50% 0.41% 0.43% 0.38% 0.36% 0.34% 0.26% 0.26%
Ratio of net investment
income to average net
assets ............... 3.82% 3.95% 4.32% 4.65% 4.87% 3.97% 4.10% 4.47% 4.79% 5.07%
Portfolio turnover rate . 8.61% 11.74% 6.02% 3.08% 8.66% 8.61% 11.74% 6.02% 3.08% 8.66%

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 ... 0.91% 0.89% 0.89% 0.96% 0.97% 0.76% 0.73% 0.73% 0.80% 0.79%
Ratio of net investment
income to average
net assets ........... 3.44% 3.58% 3.93% 4.10% 4.34% 3.59% 3.73% 4.08% 4.24% 4.54%

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 ... 0.52% 0.49% 0.48% 0.41% 0.40% 0.37% 0.33% 0.31% 0.26% 0.23%

- ----------
+ 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 Founder and Founder, Chief Executive Officer and 11(5) Director or trustee,
New York, NY Chairman of Chairman of the Board, Aquila Pimco Advisors VIT,
(05/12/29) the Board Management Corporation, the sponsoring Oppenheimer Quest
of Trustees organization and parent of the Manager Value Funds Group,
since 1992 or Administrator and/or Adviser or Oppenheimer Small Cap
Sub-Adviser to each fund of the Value Fund,
Aquila(SM) Group of Funds,(6) Chairman Oppenheimer Midcap
and Chief Executive Officer of the Fund, and Oppenheimer
Manager or Administrator and/or Rochester Group of
Adviser or Sub-Adviser to each since Funds.
2004, and Founder, Chairman of the
Board of Trustees, Trustee and
(currently or until 1998) President of
each since its establishment,
beginning in 1984, except Chairman of
the Board of Trustees of Hawaiian
Tax-Free Trust, Pacific Capital Cash
Assets Trust, Pacific Capital Tax-Free
Cash Assets Trust and Pacific Capital
U.S. Government Securities Cash Assets
Trust through 2003; Director of the
Distributor since 1981 and formerly
Vice President or Secretary,
1981-1998; Trustee Emeritus, Brown
University and the Hopkins School;
active in university, school and
charitable organizations.

David A. Duffy Trustee Chairman, Rhode Island Convention 1 Citizens Bank of Rhode
North Kingstown, RI since 1995 Center Authority since 2003; retired Island since 1999.
(08/07/39) Founder, formerly President, Duffy &
Shanley, Inc., a marketing
communications firm, 1973-2003;
Transition Chairman for Gov. Donald
Carcieri (R.I.); 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 Founding Partner, Partridge, Snow & 1 None
Providence, RI since 2002 Hahn, LLP, a law firm, Providence,
(05/05/40) Rhode 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 Retired; former director or trustee of 1 Sonesta International
Boston, MA since 1992 various Fortune 500 companies, Hotels Corporation.
(04/07/23) including Colgate-Palmolive and McGraw
Hill; formerly President of Ohio
University and Associate Dean of the
Harvard University Graduate School of
Business Administration; member of
several Japan-related advisory
councils, including Chairman of the
Japan Society of Boston; trustee of
various cultural, educational and
civic organizations.

Paul Y. Clinton Trustee Principal, Clinton Management 1(5) Director or trustee Pimco
Osterville, MA since 1996 Associates, a financial and venture Advisors VIT, Oppenheimer
and Naples, FL capital consulting firm. Quest Value Funds Group,
(02/14/31) Oppenheimer Small Cap Value
Fund, Oppenheimer Midcap
Fund, and Oppenheimer
Rochester Group of Funds.

William J. Nightingale Trustee Retired; formerly Chairman, founder 2 Ring's End, Inc.
Rowayton, CT since 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 Founder and General Partner, Oxford 2(5) Director of Neuberger &
Westport, CT and since 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 investor 2 None
Palm Beach, FL 1995 in various real estate partnerships
(06/22/27) 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 Vice Chair of Aquila Management 6 None
New York, NY since 1998 Corporation, Founder of the Aquila(SM)
(02/25/58) and Vice Group of Funds and parent of Aquila
Chair since Investment Management LLC, Manager,
2003 since 2004, President and Chief
Operating Officer since 1997, a
Director since 1984, Secretary since
1986 and previously its Executive Vice
President, Senior Vice President or
Vice President, 1986-1997; Vice Chair
since 2004 and President, Chief
Operating Officer and Manager of the
Manager since 2003; Vice Chair,
President, Executive Vice President or
Senior Vice President of funds in the
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; Governor,
Investment Company Institute and head
of its Small Funds Committee since
2004; active in charitable and
volunteer organizations.

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

Stephen J. Caridi Senior Vice Vice President of the Distributor N/A N/A
New York, NY President since 1995; Vice President, Hawaiian
(05/06/61) since 1998 Tax-Free Trust since 1998; Senior Vice
President, Narragansett Insured
Tax-Free Income Fund since 1998, Vice
President 1996-1997; Senior Vice
President, Tax-Free Fund of Colorado
since 2004; 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 and
(11/06/56) 2003 and Treasurer since 2000; Controller, Van
Treasurer Eck Global Funds, 1993-2000.
since 2000

Edward M. W. Hines Secretary Partner, Hollyer Brady Barrett & Hines N/A N/A
New York, NY since 1992 LLP, legal counsel to the Fund, since
(12/16/39) 1989; Secretary of the Aquila(SM) Group
of Funds.

Robert W. Anderson Chief Chief Compliance Officer since 2004, N/A N/A
New York, NY Compliance Compliance Officer of the Manager or
(08/23/40) Officer since its predecessor and current parent
2004 and since 1998 and Assistant Secretary of
Assistant the Aquila(SM) Group of Funds since
Secretary 2000; Consultant, The Wadsworth Group,
since 2000 1995-1998.

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

Lori A. Vindigni Assistant Assistant Treasurer of the Aquila(SM) N/A N/A
New York, NY Treasurer Group of Funds since 2000; Assistant
(11/02/66) since 2000 Vice President of the Manager or its
predecessor and current parent 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) Does not include Funds that are currently inactive.

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

PRIVACY NOTICE (UNAUDITED)

NARRAGANSETT INSURED TAX-FREE INCOME FUND

OUR PRIVACY POLICY. In providing services to you as an individual who owns or is
considering investing in shares of the Fund 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 us, such as the fund's transfer
agent, distributor, investment adviser or sub-adviser, as permitted or required
by law, or as authorized by 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.

AQUILA DISTRIBUTORS, INC.
AQUILA INVESTMENT MANAGEMENT LLC

This Privacy Policy also has been adopted by Aquila Distributors, Inc. and
Aquila Investment Management LLC and applies to all nonpublic information about
you that each of these companies may obtain in connection with services provided
to the Fund or to you as a shareholder of the Fund.

INFORMATION AVAILABLE (UNAUDITED)

Much of the information that the funds in the Aquila(SM) Group of Funds
produce is automatically sent to you and all other shareholders. Specifically,
you are routinely sent the entire list of portfolio of securities of your fund
twice a year in the semi-annual and annual reports you receive. You should know,
however, that we prepare, and have available, portfolio listings at the end of
each quarter.

Whenever you may be interested in seeing a listing of your trust's
portfolio other than in your shareholder reports, please check our website
(www.aquilafunds.com) or call 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, 2004, $5,557,238 of dividends paid by
Narragansett Insured Tax-Free Income Fund, constituting 98.32% of total
dividends paid during the fiscal year ended June 30, 2004, were exempt-interest
dividends and the balance was ordinary dividend income.

Prior to January 31, 2004, shareholders were mailed IRS Form 1099-DIV
which contained information on the status of distributions paid for the 2003
calendar year.

Prior to January 31, 2005, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of distributions paid for the 2004
calendar year.

PROXY VOTING RECORD. 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, 2004 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 http://www.sec.gov.

FOUNDER
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 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, Vice Chair and 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.
760 Moore Road
King of Prussia, Pennsylvania 19406

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
757 Third Avenue
New York, New York 10017

Further information is contained in the Prospectus, which must precede or
accompany this report.

ITEM 2. CODE OF ETHICS.

(a) As of June 30, 2004 (the end of the reporting period) the
Trust has adopted a code of ethics that applies to the Fund's
principal executive officer(s)and principal financial officer(s)
and persons performing similar functions ("Covered Officers") as
defined in the Aquila Group of Funds Code of Ethics for Principal
Executive and Senior Financial Officers under Section 406 of the
Sarbanes-Oxley Act of 2002.;

(f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of
Ethics that applies to the Trust's principal executive officer(s)
and principal financial officer(s) and persons performing similar
functions is included as an exhibit to its annual report on this
Form N-CSR;

(f)(2) The text of the Fund's Code of Ethics that applies to the
Fund's principal executive officer(s) and principal financial
officer(s) and persons performing similar functions has been
posted on its Internet website which can be found at the Fund's
Internet address at aquilafunds.com.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1)(ii) The Board of Trustees of the Fund has determined that
it does not have at least one audit committee financial expert
serving on its audit committee. The Fund does not have such a
person serving on the audit committee because none of the persons
currently serving as Trustees happens to have the technical
accounting and auditing expertise included in the definition of
"audit committee financial expert" recently adopted by the Securities
and Exchange Commission in connection with this Form N-CSR, and the
Board has not heretofore deemed it necessary to seek such a person
for election to the Board.

The primary mission of the Board, which is that of oversight over
the operations and affairs of the Fund, confronts the Trustees with
a wide and expanding range of issues and responsibilities. The
Trustees believe that, accordingly, it is essential that the Board's
membership consist of persons with as extensive experience as possible
in fulfilling the duties and responsibilities of mutual fund directors
and audit committee members and, ideally, with extensive experience
and background relating to the economic and financial sectors and
securities in which the Fund invests, including exposure to the
financial and accounting matters commonly encountered with respect
to those sectors and securities. The Board believes that its current
membership satisfies those criteria. It recognizes that it would
also be helpful to have a member with the relatively focused accounting
and auditing expertise reflected in the applicable definition of
"audit committee financial expert," just as additional members with
similarly focused technical expertise in other areas relevant to
the Fund's operations and affairs would also contribute added value.
However, the Board believes that the Fund is better served, and its
assets better employed, by a policy of hiring experts in various
the specialized area of technical accounting and
auditing matters, if and as the Board identifies the need, rather
than by seeking to expand its numbers by adding technical experts
in the areas constituting its domain of responsibility. The Fund's
Audit Committee Charter explicitly authorizes the Committee to
retain such experts as it deems necessary in fulfilling its duties
under the Charter.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

a) Audit Fees - The aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal
accountant for the audit of the Registrant's annual financial statements
or services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements were $15,400 in
2004 and $14,950 in 2003.

b) Audit Related Fees - There were no amounts billed for audit-related
fees over the past two years other than stated above.

c) Tax Fees - The Registrant was billed by the principal accountant
$7,875 and $7,767 in 2004 and 2003, respectively, for tax return
preparation, tax compliance and tax planning.

d) All Other Fees - There were no additional fees paid for audit and non-
audit services other than those disclosed in a) thorough c) above.

e)(1) Currently, the audit committee of the Registrant pre-approves audit
services and fees on an engagement-by-engagement basis.

e)(2) None of the services described in b) through d) above were approved
by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X, all were pre-approved on an engagement-by-engagement basis.

f) No applicable.

g) There were no non-audit services fees billed by the Registrant's accountant
to the Registrant's investment adviser or distributor over the past two years.

h) 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.

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) (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and
Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002.

(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 6, 2004

By: /s/ Diana P. Herrmann
- ---------------------------------
Vice Chair and President
September 6, 2004

By: /s/ Joseph P. DiMaggio
- -----------------------------------
Chief Financial Officer and Treasurer
September 6, 2004

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 6, 2004

By: /s/ Diana P. Herrmann
- ---------------------------------
Diana P. Herrmann
Vice Chair and President
September 6, 2004

By: /s/ Joseph P. DiMaggio
- -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 6, 2004