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: 6/30/05

FORM N-CSR

ITEM 1. REPORTS TO STOCKHOLDERS.

ANNUAL
REPORT

JUNE 30, 2005

A TAX-FREE INCOME INVESTMENT

[LOGO OF NARRAGANSETT INSURED TAX-FREE INCOME FUND:
RECTANGLE WITH PROFILE VIEW OF A SALILBOAT ON TOP OF
WAVES AND THREE SEAGULLS FLYING ABOVE IT] (R)

[LOGO OF THE AQUILA
GROUP OF FUNDS: ONE OF THE
AN EAGLE'S HEAD] AQUILA(SM) GROUP OF FUNDS

[LOGO OF NARRAGANSETT INSURED TAX-FREE INCOME FUND:
RECTANGLE WITH PROFILE VIEW OF A SALILBOAT ON TOP OF
WAVES AND THREE SEAGULLS FLYING ABOVE IT] (R)

SERVING RHODE ISLAND INVESTORS FOR MORE THAN A DECADE

NARRAGANSETT INSURED TAX-FREE INCOME FUND

"DON'T WAIT UNTIL TOMORROW"

August, 2005

Dear Fellow Shareholder:

Are there things that you wish that you had done today? Yesterday? 10
years ago? We are all guilty of sometimes putting off to tomorrow things we
really should do today. However, when it comes to investing for one's retirement
and future needs, any delay can prove to be extremely costly.

LIFE EXPECTANCY

As you probably know, continuing advances in medicine and a renewed focus
on healthier life styles have contributed to life expectancy in the United
States reaching an all-time high. The average American can now expect to live
77.6 years. It probably won't surprise you to learn that this increase is in
keeping with historical trends. U.S. life expectancies have risen an average of
2/10th of a year, each and every year since 1990.

AN OPTIMISTIC, YET REALISTIC APPROACH

While it is certainly always hoped for, and may be fully expected, that
plans will come to fruition in exactly the manner anticipated, it is always best
to also have a realistic approach to most future dealings - especially when it
comes to investing and one's retirement planning.

INADEQUACY OF SOCIAL SECURITY -- Coupled with a population that is living
longer is a society which is reproducing less. This is creating a phenomenon
known as "global aging." It is anticipated that before too long, the number of
retired persons will outweigh the number of individuals in the workforce. This
situation may well wreak havoc with the Social Security system.

While we may not realize the full impact of global aging in our lifetimes,
it does bring to light that perhaps it may not be wise to rely solely on Social
Security for one's retirement needs. Many financial experts suggest that one
should plan to have 75% - 80% of their current income available at retirement so
that they can maintain their current standard of living. For many people, Social
Security alone will not even come close to providing this suggested percentage,
if it truly is an accurate estimate.

PRECARIOUSNESS OF PENSION PLANS -- When you read about such industry
leaders as Bethlehem Steel, United Airlines, Enron and WorldCom having
significant financial problems, it reminds us all that our corporate pension
plans may not be 100% safe. Therefore, relying solely upon income from corporate
pension plans for retirement may also not necessarily be a wise thing to do.

INFLATION -- With so much uncertainty in this world today, going back to
the olden days of "placing your savings under your mattress for safe-keeping"
might not seem like such a bad idea. However, while this method is better than
not saving at all, it does not take into consideration the effect of an often
overlooked risk factor - inflation. A dollar placed safely under one's mattress

today may still be there in a few years. But, it is unlikely that it will still
have the same purchasing power that it does today. The dollar may still look and
feel the same as it did when it was first tucked away. But, in actuality,
inflation will most likely take a bite out of its purchasing power. In other
words, it will no longer have the same "bang for the buck."

As you probably are aware, the Consumer Price Index (CPI) measures the
average price of a 'basket' of goods and services at regular intervals. It
should come as no surprise to you that the cost for that basket of goods and
services continues to rise year after year. In fact, as you will note from the
chart below, in the past 20 years, the CPI has come very close to doubling.

YEAR CPI
---- ---
1985 $105.5
1990 $127.4
1995 $150.3
2000 $168.8
2005 $190.7

As you can see, each dollar buys substantially less each year. So, while one may
have enough money to cover their living expenses right at the moment, it is also
important to ask oneself if you will be able to say the same thing 10, 20 or
more years from now.

PLAN AHEAD AND DIVERSIFY

Unfortunately, many of us probably know a retired person who has been
forced back to work in order to keep up with their living expenses. And, we may
know someone who has had to adopt a diminished life style in order to keep their
expenses under control.

Our best advice for everyone in order to avoid these types of situations
is to:

1) sit down with a financial professional and develop a sound financial
plan;

2) start saving as early as possible;

3) have a diversified portfolio of investments; and

4) have a diversified pool of resources to rely upon for your
retirement, not depending solely on Social Security or a pension
plan.

No matter where you choose to place your cash reserves - in Narragansett
Insured Tax-Free Income Fund or elsewhere - don't wait until tomorrow to prepare
for your future. If you haven't already done so, start a savings plan today that
will, hopefully, enable you to reach your goals.

Sincerely,

/s/ Diana P. Herrmann /s/ Lacy B. Herrmann

Diana P. Herrmann Lacy B. Herrmann
President Founder

NOT A PART OF THE ANNUAL REPORT

[LOGO OF NARRAGANSETT INSURED TAX-FREE INCOME FUND:
RECTANGLE WITH PROFILE VIEW OF A SALILBOAT ON TOP OF
WAVES AND THREE SEAGULLS FLYING ABOVE IT] (R)

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 our shareholders,
all securities owned by the Fund are insured to provide for the timely payment
of principal and interest when due. We additionally seek to maintain, as we have
in the past, a maximum average maturity profile of under 15 years for the Funds'
portfolio which should, in turn, produce a reasonable level of income return
with relatively high stability for the Fund's share price. At the June 20, 2005
fiscal year end, the portfolio had an average maturity of 10.0 years.

The stock market, as measured by the Standard & Poor's 500 Index, ended
the first half of the year slightly negative at just below one percent. Despite
solid economic growth and surprisingly strong first quarter earnings most market
analysts are at a loss to explain it. A rapid increase in commodity prices
during the first quarter raised some inflationary concerns but the prices eased
as the dollar strengthened against other major world currencies. While earnings
growth has slowed from the 20% gains of 2003 and 2004, we believe high single
digits to low double-digits seem achievable over the next two years. June's
stock market gains erased most of the losses through the month of April.
Positive economic data, earnings results, and resurgence in merger activity
should, in our view, help keep equities moving in a positive direction for the
remainder of the year.

Job growth continued to show uneven increases over the second quarter of
2005. Figures in April increased a robust 292,000, while May and June showed
only 104,000 and 146,000, respectively. Despite the large swing, we find the
180,000 monthly average for the quarter to be an encouraging sign that continued
job growth is sustainable. Even with the encouraging job growth outlook,
revisions to second half GDP growth estimates have remained in the 3% - 4%
range. Job growth is the key figure the markets will be focusing on to ensure
that the recovery can be sustained.

With the Federal Reserve (the "Fed") raising interest rates in nine
consecutive meetings since June 2004, the Fed has established its measured pace
in the face of a stronger economy and potentially higher inflation. The market
anticipates another two or three additional rate hikes. The Federal Funds rate
("Fed Funds") has typically averaged 2% above the core Consumer Price Index
("CPI") over the past forty years, while the real rate on the 10-year Treasury
has been approximately 3%. While inflation has remained low with the core CPI up
about 2.5% for the year ended June30, 2005, the rate is expected to moderate to
about 2% as pressure from energy and housing ease. If this materializes, it
could result in a Fed Funds rate of 4% which would be in line with the
historical relationship.

MANAGEMENT DISCUSSION OF FUND PERFORMANCE (CONTINUED)

Given the current Federal income tax rates and the Rhode Island income tax
rate, we believe 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, 2005 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 REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL]

CPI NITFIF no sales charge NITFIF with sales charge Lehman Intermediate

6/95 10000 10000 9600 10000
6/96 10275 10580 10155 10556
6/97 10511 11547 11083 11278
6/98 10689 12443 11943 12061
6/99 10898 12611 12104 12427
6/00 11305 12933 12414 12928
6/01 11672 14194 13624 14070
6/02 11797 15040 14436 15048
6/03 12046 16413 15754 16225
6/04 12439 16245 15592 16281
6/05 12754 17433 16733 17158

AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 2005
--------------------------------------------
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
------ ------- -------- ---------

Class A (9/10/92)
With Sales Charge ...... 2.51% 5.21% 5.28% 5.49%
Without Sales Charge ... 6.81 6.07 5.72 5.83
Class C (5/1/96)
With CDSC .............. 4.99 5.17 n/a 4.64
Without CDSC ........... 6.01 5.17 n/a 4.64
Class Y (5/1/96)
No Sales Charge ........ 6.98 6.22 n/a 5.80
Class I (11/4/98)
No Sales Charge ........ 6.89 6.07 n/a 4.80
Lehman Index ................... 5.39 5.83 5.55 5.63* (Class A)
5.47** (Class C&Y)
4.92+ (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.

- --------------------------------------------------------------------------------

[LOGO OF KPMG LLP: FOUR SOLID
RECTANGLES WITH THE LETTERS KPMG
IN FRONT]

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, 2005, 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, 2005, by
correspondence with the custodian and brokers, or by other appropriate auditing
procedures where replies from brokers were not received. 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, 2005 and 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 12, 2005

- --------------------------------------------------------------------------------

NARRAGANSETT INSURED TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2005

RATING
FACE MOODY'S, S&P
AMOUNT GENERAL OBLIGATION BONDS (43.5%) OR FITCH VALUE
- ------------ ------------------------------------------------------ ------------ ------------

Coventry, Rhode Island
$ 550,000 5.000%, 11/01/16 AMBAC Insured ....................... Aaa+/AAA+++ $ 598,516
550,000 5.000%, 11/01/17 AMBAC Insured ....................... Aaa+/AAA+++ 593,329
Cranston, Rhode Island
500,000 2.750%, 02/15/09 FSA Insured ......................... Aaa+/AAA++ 496,760
1,000,000 3.125%, 02/15/11 FSA Insured ......................... Aaa+/AAA++ 997,680
500,000 5.450%, 11/15/11 FGIC Insured ........................ Aaa+/AAA++ 554,500
Cumberland, Rhode Island
250,000 3.750%, 02/01/13 FGIC Insured ........................ Aaa+/AAA++ 256,465
250,000 4.000%, 02/01/14 FGIC Insured ........................ Aaa+/AAA++ 258,750
250,000 4.000%, 02/01/15 FGIC Insured ........................ Aaa+/AAA++ 257,405
500,000 5.000%, 08/01/15 MBIA Insured ........................ Aaa+/AAA++ 538,230
250,000 4.000%, 02/01/16 FGIC Insured ........................ Aaa+/AAA++ 256,235
250,000 4.100%, 02/01/17 FGIC Insured ........................ Aaa+/AAA++ 256,877
250,000 4.150%, 02/01/18 FGIC Insured ........................ Aaa+/AAA++ 256,200
1,255,000 5.000%, 10/01/18 MBIA Insured ........................ Aaa+/AAA++ 1,347,217
1,040,000 5.200%, 10/01/21 MBIA Insured ........................ Aaa+/AAA++ 1,140,058
Lincoln, Rhode Island
400,000 5.100%, 01/15/06 MBIA Insured ........................ Aaa+/AAA++ 404,552
250,000 5.750%, 08/01/15 FGIC Insured ........................ Aaa+/AAA+++ 255,570
New Shoreham, Rhode Island
245,000 4.000%, 11/15/15 AMBAC Insured ....................... Aaa+/AAA++ 252,076
255,000 4.250%, 11/15/16 AMBAC Insured ....................... Aaa+/AAA++ 265,287
270,000 4.250%, 11/15/17 AMBAC Insured ....................... Aaa+/AAA++ 279,831
910,000 4.800%, 04/15/18 AMBAC Insured ....................... Aaa+/AAA++ 965,528
285,000 4.500%, 11/15/18 AMBAC Insured ....................... Aaa+/AAA++ 298,250
1,105,000 5.000%, 04/15/22 AMBAC Insured ....................... Aaa+/AAA++ 1,177,366
Newport, Rhode Island
1,000,000 4.500%, 11/01/15 AMBAC Insured ....................... Aaa+/AAA+++ 1,061,320
1,000,000 4.750%, 11/01/18 AMBAC Insured ....................... Aaa+/AAA+++ 1,062,500
800,000 5.000%, 11/01/20 AMBAC Insured ....................... Aaa+/AAA+++ 860,680
North Kingstown, Rhode Island
500,000 3.750%, 10/01/12 FGIC lnsured ........................ Aaa+/AAA++ 515,010
North Providence, Rhode Island
400,000 5.700%, 07/01/08 MBIA Insured ........................ Aaa+/AAA++ 430,880
500,000 3.500%, 10/15/13 FSA Insured ......................... Aaa+/AAA++ 505,000
500,000 4.700%, 09/15/14 FSA Insured ......................... Aaa+/AAA++ 533,980
500,000 3.650%, 10/15/14 FSA Insured ......................... Aaa+/AAA++ 506,405
500,000 3.750%, 10/15/15 FSA Insured ......................... Aaa+/AAA++ 504,950

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

Pawtucket, Rhode Island
$ 600,000 4.300%, 09/15/09 AMBAC Insured ....................... Aaa+/AAA+++ $ 631,938
795,000 3.500%, 04/15/10 AMBAC Insured ....................... Aaa+/AAA+++ 809,692
250,000 4.400%, 09/15/10 AMBAC Insured ....................... Aaa+/AAA+++ 265,713
825,000 3.500%, 04/15/11 AMBAC Insured ....................... Aaa+/AAA+++ 839,240
850,000 3.625%, 04/15/12 AMBAC Insured ....................... Aaa+/AAA+++ 867,655
545,000 3.500%, 07/01/12 FGIC Insured** ...................... Aaa+/AAA+++ 552,428
880,000 3.750%, 04/15/13 AMBAC Insured ....................... Aaa+/AAA+++ 900,073
910,000 4.000%, 04/15/14 AMBAC Insured ....................... Aaa+/AAA+++ 938,856
Providence, Rhode Island
700,000 5.500%, 01/15/11 FSA Insured ......................... Aaa+/AAA++ 733,439
1,925,000 5.200%, 04/01/11 AMBAC Insured ....................... Aaa+/AAA+++ 2,117,442
1,000,000 3.600%, 07/15/13 Series A FSA Insured ................ Aaa+/AAA++ 1,016,750
1,000,000 5.000%, 01/15/16 FGIC Insured ........................ Aaa+/AAA++ 1,084,580
1,000,000 5.000%, 01/15/17 FGIC Insured ........................ Aaa+/AAA++ 1,076,220
1,000,000 5.000%, 01/15/18 FGIC Insured ........................ Aaa+/AAA++ 1,071,030
Rhode Island Consolidated Capital Development Loan
1,000,000 5.250%, 11/01/11 Series C MBIA Insured ............... Aaa+/AAA++ 1,115,190
1,000,000 5.000%, 06/01/14 Series B FGIC Insured ............... Aaa+/AAA++ 1,082,110
1,000,000 5.000%, 09/01/14 Series A FGIC Insured ............... Aaa+/AAA++ 1,074,760
2,000,000 5.000%, 08/01/15 Series B FGIC Insured ............... Aaa+/AAA++ 2,153,640
1,500,000 4.750%, 09/01/17 Series A FGIC Insured ............... Aaa+/AAA++ 1,572,285
South Kingstown, Rhode Island
500,000 5.500%, 06/15/12 FGIC Insured ........................ Aaa+/AAA+++ 561,075
500,000 3.400%, 06/15/12 AMBAC Insured ....................... Aaa+/NR 503,690
State of Rhode Island
1,000,000 5.000%, 07/15/05 FGIC Insured* ....................... Aaa+/AAA++ 1,000,620
1,000,000 5.125%, 07/15/11 FGIC Insured ........................ Aaa+/AAA++ 1,069,240
4,000,000 5.000%, 08/01/14 FGIC Insured ........................ Aaa+/AAA++ 4,336,800
1,500,000 5.000%, 09/01/15 FGIC Insured ........................ Aaa+/AAA++ 1,612,140
2,000,000 5.250%, 11/01/17 FGIC Insured ........................ Aaa+/AAA++ 2,236,500
2,500,000 5.000%, 09/01/18 MBIA Insured ........................ Aaa+/AAA++ 2,701,525
2,000,000 5.000%, 09/01/19 MBIA Insured ........................ Aaa+/AAA++ 2,157,420
1,500,000 5.000%, 09/01/20 MBIA Insured ........................ Aaa+/AAA++ 1,612,065
Warwick, Rhode Island
665,000 4.250%, 07/15/14 AMBAC Insured ....................... Aaa+/AAA++ 697,086
195,000 5.600%, 08/01/14 FSA Insured ......................... Aaa+/AAA++ 204,707

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

Warwick, Rhode Island (continued)
$ 700,000 4.375%, 07/15/15 AMBAC Insured ....................... Aaa+/AAA++ $ 735,623
770,000 4.600%, 07/15/17 AMBAC Insured ....................... Aaa+/AAA++ 813,497
1,000,000 5.000%, 03/01/18 FGIC Insured ........................ Aaa+/AAA++ 1,064,300
810,000 4.700%, 07/15/18 AMBAC Insured ....................... Aaa+/AAA++ 856,105
1,000,000 5.000%, 01/15/19 FGIC Insured ........................ Aaa+/AAA++ 1,081,440
855,000 4.750%, 07/15/19 AMBAC Insured ....................... Aaa+/AAA++ 900,349
500,000 5.000%, 01/15/20 FGIC Insured ........................ Aaa+/AAA++ 539,150
West Warwick, Rhode Island
500,000 4.875%, 03/01/16 AMBAC Insured ....................... Aaa+/AAA+++ 537,090
670,000 5.000%, 03/01/17 AMBAC Insured ....................... Aaa+/AAA+++ 725,851
700,000 5.050%, 03/01/18 AMBAC Insured ....................... Aaa+/AAA+++ 761,698
735,000 5.100%, 03/01/19 AMBAC Insured ....................... Aaa+/AAA+++ 800,584
Woonsocket, Rhode Island
500,000 3.500%, 03/01/12 AMBAC Insured ....................... Aaa+/AAA+++ 506,510
655,000 4.450%, 12/15/12 FGIC Insured ........................ Aaa+/AAA+++ 690,350
685,000 4.550%, 12/15/13 FGIC Insured ........................ Aaa+/AAA+++ 723,257
------------
Total General Obligation Bonds .................... 67,019,120
------------
REVENUE BONDS (55.0%)

DEVELOPMENT REVENUE BONDS (9.1%)
Providence Rhode Island Redevelopment Agency
Revenue Refunding Public Safety Building Project
1,000,000 3.700%, 04/01/13 Series 2005 A AMBAC Insured ......... Aaa+/AAA++ 1,019,540
Rhode Island Convention Center Authority
500,000 5.000%, 05/15/07 Series 1993 B MBIA Insured .......... Aaa+/AAA++ 520,135
1,380,000 5.000%, 05/15/23 Series 1993 C MBIA Insured .......... Aaa+/AAA++ 1,394,021
Rhode Island Public Building Authority
State Public Projects
1,000,000 5.250%, 02/01/09 Series 1998 A AMBAC Insured ......... Aaa+/AAA++ 1,067,560
500,000 5.000%, 12/15/09 Series 1999 A AMBAC Insured ......... Aaa+/AAA++ 541,505
1,000,000 5.250%, 12/15/14 Series 1998 FSA Insured ............. Aaa+/AAA++ 1,086,610
500,000 5.500%, 12/15/14 Series 1996 B MBIA Insured .......... Aaa+/AAA++ 528,395
500,000 5.500%, 12/15/15 Series 1996 B MBIA Insured .......... Aaa+/AAA++ 528,395
Rhode Island State Economic Development Corp.,
Airport Revenue
1,000,000 5.000%, 07/01/18 Series B FSA Insured ................ Aaa+/AAA++ 1,057,030

RATING
FACE MOODY'S, S&P
AMOUNT REVENUE BONDS (CONTINUED) OR FITCH VALUE
- ------------ ------------------------------------------------------ ------------ ------------

DEVELOPMENT REVENUE BONDS (CONTINUED)
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++ $ 2,055,780
1,000,000 4.000%, 06/15/15 Series A AMBAC Insured .............. Aaa+/AAA++ 1,030,890
Rhode Island State Economic Development Corp.,
University of Rhode Island
750,000 4.800%, 11/01/11 Series 1999 FSA Insured ............. Aaa+/NR 801,113
750,000 4.900%, 11/01/12 Series 1999 FSA Insured ............. Aaa+/NR 801,600
750,000 4.900%, 11/01/13 Series 1999 FSA Insured ............. Aaa+/NR 802,223
750,000 5.000%, 11/01/14 Series 1999 FSA Insured ............. Aaa+/NR 806,783
------------
Total Development Revenue Bonds ................... 14,041,580
------------
HIGHER EDUCATION REVENUE BONDS (27.7%)
Providence, Rhode Island Public Building
Authority, School Projects
1,395,000 4.000%, 12/15/12 Series 2003 A MBIA Insured ......... Aaa+/AAA++ 1,456,129
1,450,000 4.000%, 12/15/13 Series 2003 A MBIA Insured ......... Aaa+/AAA++ 1,509,653
1,505,000 4.000%, 12/15/14 Series 2003 A MBIA Insured ......... Aaa+/AAA++ 1,556,892
1,570,000 4.000%, 12/15/15 Series 2003 A MBIA Insured ......... Aaa+/AAA++ 1,615,828
1,630,000 4.000%, 12/15/16 Series 2003 A MBIA Insured ......... Aaa+/AAA++ 1,670,065
Providence, Rhode Island Public Building
School & Public Facilities Project
1,500,000 5.250%, 12/15/17 AMBAC Insured ....................... Aaa+/AAA++ 1,643,220
1,000,000 5.250%, 12/15/19 AMBAC Insured ....................... Aaa+/AAA++ 1,093,300
Rhode Island Health & Education Building Corp.,
Brown University
2,000,000 5.250%, 09/01/17 Series 1993 MBIA Insured ............ AAA++/AAA+++ 2,194,460
1,000,000 5.000%, 09/01/23 Series 1993 MBIA Insured ............ Aaa+/AAA++ 1,045,600
Rhode Island Health & Education Building Corp.,
Bryant College
1,000,000 5.125%, 06/01/19 AMBAC Insured ....................... Aaa+/AAA++ 1,084,810
230,000 5.000%, 12/01/21 AMBAC Insured ....................... Aaa+/AAA++ 246,222
Rhode Island Health & Education Building Corp.,
Higher Educational Facilities
500,000 3.500%, 09/15/13 Series 2003 B MBIA Insured .......... Aaa+/AAA++ 503,175
1,010,000 3.625%, 09/15/14 Series 2003 B MBIA Insured Aaa+/AAA++ 1,013,878
600,000 3.625%, 09/15/14 Series 2003 C MBIA Insured .......... Aaa+/AAA++ 602,304
1,050,000 4.000%, 09/15/15 Series 2003 B MBIA Insured .......... Aaa+/AAA++ 1,075,778
500,000 4.000%, 09/15/15 Series 2003 C MBIA Insured .......... Aaa+/AAA++ 512,275

RATING
FACE MOODY'S, S&P
AMOUNT REVENUE BONDS (CONTINUED) OR FITCH VALUE
- ------------ ------------------------------------------------------ ------------ ------------

HIGHER EDUCATION REVENUE BONDS (CONTINUED)
Rhode Island Health & Education Building Corp.,
Higher Educational Facilities (continued)
$ 1,040,000 4.000%, 09/15/16 Series 2003 B MBIA Insured .......... Aaa+/AAA++ $ 1,060,353
500,000 4.000%, 09/15/16 Series 2003 C MBIA Insured .......... Aaa+/AAA++ 509,785
Rhode Island Health & Education Building Corp.,
Johnson & Wales University
465,000 5.500%, 04/01/15 Series 1999 A MBIA Insured .......... Aaa+/AAA++ 539,065
900,000 5.500%, 04/01/16 Series 1999 A MBIA Insured .......... Aaa+/AAA++ 1,049,355
785,000 5.500%, 04/01/17 Series 1999 A MBIA Insured .......... Aaa+/AAA++ 919,306
1,360,000 4.000%, 04/01/12 Series 2003 XLCA Insured ............ Aaa+/AAA++ 1,414,522
3,210,000 4.000%, 04/01/13 Series 2003 XLCA Insured ............ Aaa+/AAA++ 3,337,694
2,000,000 4.000%, 04/01/14 Series 2003 XLCA Insured ............ Aaa+/AAA++ 2,064,440
Rhode Island Health & Education Building Corp.,
Rhode Island School of Design
505,000 4.700%, 06/01/18 Series 2001 MBIA Insured ............ Aaa+/AAA++ 536,825
280,000 4.750%, 06/01/19 Series 2001 MBIA Insured ............ Aaa+/AAA++ 297,413
Rhode Island Health & Education Building Corp.,
Roger Williams University
1,000,000 5.500%, 11/15/11 Series 1996 S AMBAC Insured ......... NR/AAA++ 1,054,680
500,000 5.125%, 11/15/11 AMBAC Insured ....................... Aaa+/AAA++ 541,560
1,000,000 5.125%, 11/15/14 Series 1996 S AMBAC Insured ......... Aaa+/AAA++ 1,079,440
1,000,000 5.000%, 11/15/18 Series 1996 S AMBAC Insured ......... Aaa+/AAA++ 1,073,820
Rhode Island Health & Education Facilities
Authority Providence College
1,000,000 4.250%, 11/01/14 XLCA Insured ........................ Aaa+/AAA++ 1,052,210
2,500,000 4.375%, 11/01/15 XLCA Insured ........................ Aaa+/AAA++ 2,619,775
2,500,000 4.500%, 11/01/16 XLCA Insured ........................ Aaa+/AAA++ 2,647,500
1,000,000 4.500%, 11/01/17 XLCA Insured ........................ Aaa+/AAA++ 1,050,940
Rhode Island State Health & Educational Building
Corp., University of Rhode Island
1,000,000 3.500%, 9/15/13 Series 2004 AMBAC Insured ............ Aaa+/AAA++ 1,009,920
------------
Total Higher Education Revenue Bonds .............. 42,682,192
------------
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++ 1,938,978
4,765,000 4.375%, 10/01/21 Series 2002 B MBIA Insured .......... Aaa+/AAA++ 4,885,078
------------
Total Pollution Control Revenue Bonds ............. 6,824,056
------------

RATING
FACE MOODY'S, S&P
AMOUNT REVENUE BONDS (CONTINUED) OR FITCH VALUE
- ------------ ------------------------------------------------------ ------------ ------------

WATER AND SEWER REVENUE BONDS (10.1%)
Bristol County, Rhode Island Water Authority
$ 300,000 5.000%, 12/01/08 Series 1997 A MBIA Insured .......... Aaa+/AAA++ $ 308,979
750,000 5.250%, 07/01/17 Series 1997 A MBIA Insured .......... Aaa+/AAA++ 789,218
1,000,000 3.250%, 12/01/12 Series 2004 Refdg. A MBIA Insured ... Aaa+/AAA++ 994,770
1,000,000 3.500%, 12/01/13 Series 2004 Refdg. A MBIA Insured ... Aaa+/AAA++ 1,006,500
1,000,000 3.500%, 12/01/14 Series 2004 Refdg. A MBIA Insured ... Aaa+/AAA++ 999,180
Kent County, Rhode Island Water Authority
500,000 4.000%, 07/15/12 Series 2002 A MBIA Insured ......... Aaa+/AAA++ 522,420
1,055,000 4.150%, 07/15/14 Series 2002 A MBIA Insured ......... Aaa+/AAA++ 1,099,373
Rhode Island Clean Water Protection Finance Agency
200,000 5.300%, 10/01/07 1993 Ser. 1993 A MBIA Insured ....... Aaa+/AAA++ 211,246
300,000 5.400%, 10/01/09 1993 Ser. 1993 A MBIA Insured ....... Aaa+/AAA++ 328,551
500,000 4.500%, 10/01/11 1993 Ser. 1993 B AMBAC Insured ...... Aaa+/AAA++ 523,315
1,000,000 5.125%, 10/01/11 Ser. 1999 C MBIA Insured ............ Aaa+/AAA++ 1,078,940
500,000 4.600%, 10/01/13 Ser. A AMBAC Insured ................ Aaa+/AAA++ 524,065
500,000 4.750%, 10/01/14 Ser. A AMBAC Insured ................ Aaa+/AAA++ 530,045
1,250,000 5.400%, 10/01/15 Ser. A MBIA Insured ................. Aaa+/AAA++ 1,441,150
2,000,000 4.750%, 10/01/18 Ser. A AMBAC Insured ................ Aaa+/AAA++ 2,089,520
500,000 4.750%, 10/01/20 Ser. A AMBAC Insured ................ Aaa+/AAA++ 517,605
Rhode Island Water Resources Board Public
Drinking Water Protection
1,500,000 4.000%, 03/01/14 MBIA Insured ........................ Aaa+/AAA++ 1,546,815
1,000,000 4.250%, 03/01/15 MBIA Insured ........................ Aaa+/AAA++ 1,044,130
------------
Total Water and Sewer Revenue Bonds 15,555,822
------------
OTHER REVENUE BONDS (3.6%)
Rhode Island State Capital Development Loan
1,500,000 5.400%, 08/01/08 MBIA Insured ........................ Aaa+/AAA++ 1,558,245
1,135,000 5.000%, 08/01/11 MBIA Insured ........................ Aaa+/AAA++ 1,197,913
State of Rhode Island Certificates of Participation,
Howard Center Improvements
400,000 5.250%, 10/01/10 MBIA Insured ........................ Aaa+/AAA++ 423,584
200,000 5.375%, 10/01/16 MBIA Insured ........................ Aaa+/AAA++ 212,240

RATING
FACE MOODY'S, S&P
AMOUNT REVENUE BONDS (CONTINUED) OR FITCH VALUE
- ------------ ------------------------------------------------------ ------------ ------------

OTHER REVENUE BONDS (CONTINUED)
State of Rhode Island Depositors Economic
Protection Corp.
$ 135,000 5.500%, 08/01/06 Series 1992 B MBIA Insured .......... Aaa+/AAA++ $ 139,072
300,000 5.800%, 08/01/09 Series 1993 B MBIA Insured .......... Aaa+/AAA++ 332,796
500,000 6.000%, 08/01/17 Series 1992 B MBIA Insured .......... Aaa+/AAA++ 559,645
1,045,000 5.250%, 08/01/21 Series 1993 B MBIA Insured
(Escrowed to Maturity) ............................ Aaa+/AAA++ 1,157,400
------------
Total Other Revenue Bonds ......................... 5,580,895
------------
Total Revenue Bonds ............................. 84,684,545
------------
Total Investments (cost $144,472,623**) ... 98.5% 151,703,665
Other assets less liabilities ............. 1.5 2,332,988
------ ------------
Net Assets ................................ 100.0% $154,036,653
====== ============

* Security pledged as collateral for the Fund's
when-issued commitments.

** Security traded on a "when-issued" basis.

*** See note 4.

Rating Services:

+ Moody's Investors Service
++ Standard & Poor's
+++ Fitch
NR Not rated by two of the three rating services

Portfolio Distribution By Quality Rating (unaudited)

Aaa of Moody's or AAA of S&P or Fitch ............. 100%

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, 2005

ASSETS
Investments at value (cost $144,472,623) ......................................... $ 151,703,665
Cash ............................................................................. 1,387,042
Interest receivable .............................................................. 1,710,012
Receivable for Fund shares sold .................................................. 202,404
Other assets ..................................................................... 2,863
-------------
Total assets ..................................................................... 155,005,986
-------------
LIABILITIES
Payable for investment securities purchased ........................................ 549,711
Dividends payable .................................................................. 173,789
Payable for Fund shares redeemed ................................................... 109,238
Distribution and service fees payable .............................................. 58,317
Management fee payable ............................................................. 17,661
Accrued expenses ................................................................... 60,617
-------------
Total liabilities .................................................................. 969,333
-------------
NET ASSETS ............................................................................ $ 154,036,653
=============

Net Assets consist of:
Capital Stock - Authorized 80,000,000 shares, par value $.01 per share ............. $ 142,728
Additional paid-in capital ......................................................... 147,547,263
Net unrealized appreciation on investments (note 4) ................................ 7,231,042
Accumulated net realized loss on investments ....................................... (743,647)
Distributions in excess of net investment income ................................... (140,733)
-------------
$ 154,036,653
=============

CLASS A
Net Assets ......................................................................... $ 105,910,339
=============
Capital shares outstanding ......................................................... 9,813,299
=============
Net asset value and redemption price per share ..................................... $ 10.79
=============
Offering price per share (100/96 of $10.79 adjusted to nearest cent) ............... $ 11.24
=============
CLASS C
Net Assets ......................................................................... $ 19,030,895
=============
Capital shares outstanding ......................................................... 1,763,599
=============
Net asset value and offering price per share ....................................... $ 10.79
=============
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) ...................................... $ 10.79*
=============
CLASS I
Net Assets ......................................................................... $ 1,097,609
=============
Capital shares outstanding ......................................................... 101,761
=============
Net asset value, offering and redemption price per share ........................... $ 10.79
=============

CLASS Y
Net Assets ......................................................................... $ 27,997,810
=============
Capital shares outstanding ......................................................... 2,594,150
=============
Net asset value, offering and redemption price per share ........................... $ 10.79
=============

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ended JUNE 30, 2005

INVESTMENT INCOME:

Interest income ...................................... $ 6,424,756

Expenses:

Management fee (note 3) .............................. $ 753,282
Distribution and service fees (note 3) ............... 346,176
Trustees' fees and expenses (note 8) ................. 105,874
Transfer and shareholder servicing agent fees ........ 78,155
Fund accounting fees ................................. 73,445
Legal fees (note 3) .................................. 61,408
Shareholders' reports and proxy statements ........... 55,206
Custodian fees ....................................... 25,704
Auditing and tax fees ................................ 23,515
Registration fees and dues ........................... 11,484
Insurance ............................................ 9,856
Chief compliance officer (note 3) .................... 3,399
Miscellaneous ........................................ 32,736
-----------
Total Expenses ....................................... 1,580,240

Management fee waived (note 3) ....................... (579,069)
Expenses paid indirectly (note 6) .................... (16,541)
-----------
Net expenses ......................................... 984,630
-----------
Net investment income ................................ 5,440,126

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain (loss) from securities transactions 69,974
Change in unrealized appreciation on investments ..... 4,296,960
-----------
Net realized and unrealized gain (loss) on investments 4,366,934
-----------
Net change in net assets resulting from operations ... $ 9,807,060
===========

See accompanying notes to financial statements.

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

YEAR ENDED YEAR ENDED
JUNE 30, 2005 JUNE 30, 2004
------------- -------------

OPERATIONS:
Net investment income ......................................... $ 5,440,126 $ 5,521,944
Net realized gain (loss) from securities transactions ......... 69,974 (114,233)
Change in unrealized appreciation on investments .............. 4,296,960 (5,849,916)
------------- -------------
Change in net assets from operations ....................... 9,807,060 (442,205)
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS (NOTE 9):
Class A Shares:
Net investment income ......................................... (3,966,200) (4,139,249)

Class C Shares:
Net investment income ......................................... (552,548) (670,058)

Class I Shares:
Net investment income ......................................... (32,733) (25,311)

Class Y Shares:
Net investment income ......................................... (1,026,562) (817,674)
------------- -------------
Change in net assets from distributions .................... (5,578,043) (5,652,292)
------------- -------------

CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold ..................................... 23,466,693 30,370,186
Reinvested dividends and distributions ........................ 2,641,028 3,474,377
Cost of shares redeemed ....................................... (18,517,181) (33,567,190)
------------- -------------
Change in net assets from capital share transactions .......... 7,590,540 277,373
------------- -------------

Change in net assets ....................................... 11,819,557 (5,817,124)

NET ASSETS:
Beginning of period ........................................... 142,217,096 148,034,220
------------- -------------

End of period* ................................................ $ 154,036,653 $ 142,217,096
============= =============

* Includes distributions in excess of net investment income of: $ (140,733) $ (133,820)
============= =============

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005

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, auditor and
distributor. For its services, the Manager is entitled to receive a fee which is
payable monthly and computed as of the close of business each day at the annual
rate of 0.50% on the Fund's 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, 2005, the Fund incurred management fees of
$753,282 of which $579,069 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.

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

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

b) DISTRIBUTION AND SERVICE FEES:

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part of
the Plan, with respect to Class A Shares, the Fund is authorized to make
distribution fee payments to broker-dealers or others ("Qualified Recipients")
selected by Aquila Distributors, Inc., ("the Distributor"), including, but not
limited to, any principal underwriter of the Fund, with which the Distributor
has entered into written agreements contemplated by the Rule and which have
rendered assistance in the distribution and/or retention of the Fund's shares or
servicing of shareholder accounts. The Fund makes payment of this 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, 2005, distribution fees on Class A Shares
amounted to $157,240, of which the Distributor retained $4,011.

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, 2005 amounted to $141,377. 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, 2005, amounted to $47,126. The total of these payments
with respect to Class C Shares amounted to $188,503, of which the Distributor
retained $45,058.

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, 2005,
these payments were made at the average annual rate of 0.20% of such net assets
amounting to $1,731 of which $433 related to the Plan and $1,298 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, 2005, total commissions on sales of Class A
Shares amounted to $256,332, of which the Distributor received $26,160.

c) OTHER RELATED PARTY TRANSACTIONS:

For the year ended June 30, 2005, the Fund incurred $59,506 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, 2005, purchases of securities and proceeds
from the sales of securities aggregated $8,564,007 and $3,258,300, respectively.

At June 30, 2005, the aggregate tax cost for all securities was
$144,439,566. At June 30, 2005, the aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
amounted to $7,303,722 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value amounted to
$39,623, for a net unrealized appreciation of $7,264,099.

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, 2005, 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,
2005, 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, 2005 JUNE 30, 2004
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------

CLASS A SHARES:
Proceeds from shares sold 931,519 $ 9,994,878 1,501,680 $ 16,143,865
Reinvested distributions 202,028 2,171,443 237,866 2,543,682
Cost of shares redeemed . (992,461) (10,653,817) (1,857,743) (19,805,126)
------------ ------------ ------------ ------------
Net change ........... 141,086 1,512,504 (118,197) (1,117,579)
------------ ------------ ------------ ------------
CLASS C SHARES:
Proceeds from shares sold 401,962 4,311,527 526,213 5,626,850
Reinvested distributions 28,360 304,774 37,896 405,643
Cost of shares redeemed . (374,180) (4,019,022) (918,377) (9,748,834)
------------ ------------ ------------ ------------
Net change ........... 56,142 597,279 (354,268) (3,716,341)
------------ ------------ ------------ ------------
CLASS I SHARES:
Proceeds from shares sold 31,300 335,079 33,611 362,059
Reinvested distributions 954 10,249 655 7,014
Cost of shares redeemed . (5,874) (63,159) -- --
------------ ------------ ------------ ------------
Net change ........... 26,380 282,169 34,266 369,073
------------ ------------ ------------ ------------
CLASS Y SHARES:
Proceeds from shares sold 822,843 8,825,209 774,201 8,237,412
Reinvested distributions 14,389 154,562 48,312 518,038
Cost of shares redeemed . (352,016) (3,781,183) (379,850) (4,013,230)
------------ ------------ ------------ ------------
Net change ........... 485,216 5,198,588 442,663 4,742,220
------------ ------------ ------------ ------------
Total transactions in Fund
shares .................. 708,824 $ 7,590,540 4,464 $ 277,373
============ ============ ============ ============

8. TRUSTEES' FEES AND EXPENSES

At June 30, 2005 there were 8 Trustees, one of which is affiliated with
the Manager and is not paid any fees. The total amount of Trustees'service and
attendance fees paid during the year ended June 30, 2005 was $75,456, to cover
carrying out their responsibilities and attendance at regularly scheduled
quarterly Board Meetings and meetings of the Independent Trustees held prior to
each quarterly Board Meeting. When additional or special meetings are held, the
meeting fees are paid to those Trustees in attendance. Trustees' are reimbursed
for their expenses such as travel, accommodations, and meals incurred in
connection with attendance at Board Meetings and at the Annual Meeting of
Shareholders. For the fiscal year ended June 30, 2005, such meeting-related
expenses amounted to $30,418.

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 $131,004 and debited additional paid-in capital in the
amount of $131,004 at June 30, 2005. This adjustment had no impact on the Fund's
aggregate net assests at June 30, 2005. Further, a small portion of the
dividends may, under some circumstances, be subject to taxes at ordinary income
rates.

At June 30, 2005, the Fund had a capital loss carryover of $743,647 of
which $632,152 expires on June 30, 2009 and $111,495 which expires on June 30,
2013. This carryover is available to offset future net realized gains on
securities transactions to the extent provided for in the Internal Revenue Code.
To the extent that this loss is used to offset future realized capital gains, it
is probable the gains so offset will not be distributed.

Tax character of distributions:

YEAR ENDED JUNE 30,
2005 2004
---------- ----------
Net tax-exempt income $5,444,976 $5,557,238
Ordinary income 133,067 95,054
---------- ----------
$5,578,043 $5,652,292
========== ==========

As of June 30, 2005, the components of distributable earnings on a tax
basis were as follows:

Accumulated net realized loss $ (743,647)
Unrealized appreciation 7,264,099
-----------
$ 6,520,452
===========

At June 30, 2005, the difference between book basis and tax basis
unrealized appreciation was attributable primarily to the treatment of accretion
of discounts and amortization of premiums.

10. CHANGE IN PRINCIPAL ACCOUNTANTS

KPMG LLP was previously the principal accountants for the Narragansett
Insured Tax-Free Income Fund (the "Fund"). On July 27, 2005 KPMG LLP declined to
stand for reelection and Tait, Weller and Baker was engaged as the principal
accountants to audit the Fund's financial statements for the fiscal year of
2006. The decision was made by the Audit Committee of the Board of Trustees.

The audit reports of KPMG LLP on the Fund's financial statements as of and
for the years ended June 30, 2005 and 2004 did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.

In connection with the audits of the two fiscal years ended June 30, 2005
and 2004 and the subsequent interim period through August 12, 2005, there were
no reportable events or disagreements with KPMG LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to the satisfaction of KPMG LLP
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreements.

See accompanying notes to financial statements.

NARRAGANSETT INSURED TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

Class A
-----------------------------------------------------------------------
Year Ended June 30,
-----------------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

Net asset value, beginning of period ......... $ 10.49 $ 10.92 $ 10.47 $ 10.32 $ 9.91
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income + ................... 0.40 0.41 0.42 0.45 0.47
Net gain (loss) on securities
(both realized and unrealized) ......... 0.31 (0.42) 0.47 0.16 0.44
-------- -------- -------- -------- --------
Total from investment operations .......... 0.71 (0.01) 0.89 0.61 0.91
-------- -------- -------- -------- --------
Less distributions (note 9):
Dividends from net investment income ...... (0.41) (0.42) (0.44) (0.46) (0.50)
-------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.79 $ 10.49 $ 10.92 $ 10.47 $ 10.32
======== ======== ======== ======== ========
Total return (not reflecting sales charge) ... 6.81% (0.10)% 8.64% 6.07% 9.19%

Ratios/supplemental data
Net assets, end of period (in thousands) .. $105,910 $101,413 $106,887 $ 86,378 $ 67,669*
Ratio of expenses to average net assets ... 0.58% 0.53% 0.51% 0.49% 0.41%
Ratio of net investment income to
average net assets ..................... 3.68% 3.82% 3.96% 4.34% 4.65%
Portfolio turnover rate ................... 2.20% 8.61% 11.74% 6.02% 3.08%

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

Ratio of expenses to average net assets ... 0.96% 0.91% 0.88% 0.88% 0.95%
Ratio of net investment income to
average net assets ..................... 3.31% 3.44% 3.59% 3.95% 4.11%

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 ... 0.57% 0.52% 0.48% 0.46% 0.40%

Class C
--------------------------------------------------------------------
Year Ended June 30,
--------------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

Net asset value, beginning of period ......... $ 10.48 $ 10.92 $ 10.47 $ 10.32 $ 9.91
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income + ................... 0.31 0.32 0.33 0.36 0.38
Net gain (loss) on securities
(both realized and unrealized) ......... 0.31 (0.43) 0.47 0.16 0.43
-------- -------- -------- -------- --------
Total from investment operations .......... 0.62 (0.11) 0.80 0.52 0.81
-------- -------- -------- -------- --------
Less distributions (note 9):
Dividends from net investment income ...... (0.31) (0.33) (0.35) (0.37) (0.40)
-------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.79 $ 10.48 $ 10.92 $ 10.47 $ 10.32
======== ======== ======== ======== ========
Total return (not reflecting sales charge) ... 6.01% (1.04)% 7.72% 5.16% 8.27%

Ratios/supplemental data
Net assets, end of period (in thousands) .. $ 19,031 $ 17,901 $ 22,506 $ 15,606 $ 7,023
Ratio of expenses to average net assets ... 1.43% 1.38% 1.35% 1.34% 1.26%
Ratio of net investment income to
average net assets ..................... 2.83% 2.98% 3.10% 3.46% 3.78%
Portfolio turnover rate ................... 2.20% 8.61% 11.74% 6.02% 3.08%

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

Ratio of expenses to average net assets ... 1.81% 1.76% 1.72% 1.72% 1.80%
Ratio of net investment income to
average net assets ..................... 2.45% 2.60% 2.73% 3.07% 3.24%

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 ... 1.42% 1.37% 1.33% 1.31% 1.25%

- ----------
+ 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
-----------------------------------------------------------------------
Year Ended June 30,
-----------------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

Net asset value, beginning of period ......... $ 10.48 $ 10.91 $ 10.47 $ 10.32 $ 9.90
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ .................... 0.39 0.41 0.42 0.44 0.47
Net gain (loss) on securities (both
realized and unrealized) ............... 0.32 (0.42) 0.46 0.17 0.43
-------- -------- -------- -------- --------
Total from investment operations .......... 0.71 (0.01) 0.88 0.61 0.90
-------- -------- -------- -------- --------
Less distributions (note 9):
Dividends from net investment income ...... (0.40) (0.42) (0.44) (0.46) (0.48)
-------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.79 $ 10.48 $ 10.91 $ 10.47 $ 10.32
======== ======== ======== ======== ========

Total return (not reflecting sales charge) ... 6.89% (0.12)% 8.52% 6.05% 9.29%

Ratios/supplemental data
Net assets, end of period (in thousands) .. $ 1,098 $ 790 $ 449 $ 386 $ 93
Ratio of expenses to average net assets ... 0.58% 0.53% 0.52% 0.50% 0.41%
Ratio of net investment income to
average net assets ..................... 3.68% 3.82% 3.95% 4.32% 4.65%
Portfolio turnover rate ................... 2.20% 8.61% 11.74% 6.02% 3.08%

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

Ratio of expenses to average net assets ... 0.96% 0.91% 0.89% 0.89% 0.96%
Ratio of net investment income to
average net assets ..................... 3.30% 3.44% 3.58% 3.93% 4.10%

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 ... 0.57% 0.52% 0.49% 0.48% 0.41%

Class Y
--------------------------------------------------------------------
Year Ended June 30,
--------------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

Net asset value, beginning of period ......... $ 10.49 $ 10.92 $ 10.47 $ 10.32 $ 9.91
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income+ .................... 0.41 0.43 0.45 0.46 0.48
Net gain (loss) on securities (both
realized and unrealized) ............... 0.31 (0.43) 0.45 0.17 0.44
-------- -------- -------- -------- --------
Total from investment operations .......... 0.72 -- 0.90 0.63 0.92
-------- -------- -------- -------- --------
Less distributions (note 9):
Dividends from net investment income ...... (0.42) (0.43) (0.45) (0.48) (0.51)
-------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.79 $ 10.49 $ 10.92 $ 10.47 $ 10.32
======== ======== ======== ======== ========

Total return (not reflecting sales charge) ... 6.98% 0.03% 8.80% 6.22% 9.35%

Ratios/supplemental data
Net assets, end of period (in thousands) .. $ 27,998 $ 22,113 $ 18,193 $ 11,726 $ 3,332
Ratio of expenses to average net assets ... 0.43% 0.38% 0.36% 0.34% 0.26%
Ratio of net investment income to
average net assets ..................... 3.83% 3.97% 4.10% 4.47% 4.79%
Portfolio turnover rate ................... 2.20% 8.61% 11.74% 6.02% 3.08%

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

Ratio of expenses to average net assets ... 0.81% 0.76% 0.73% 0.73% 0.80%
Ratio of net investment income to
average net assets ..................... 3.45% 3.59% 3.73% 4.08% 4.24%

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 ... 0.42% 0.37% 0.33% 0.31% 0.26%

- ----------
+ 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(4) (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(5)

Lacy B. Herrmann Trustee since Founder and Chairman of the Board, 8 Director or trustee,
New York, NY 1992 and Aquila Management Corporation, the Pimco Advisors VIT,
(05/12/29) Chairman of sponsoring organization and parent of Oppenheimer Quest Value
the Board of the Manager or Administrator and/or Funds Group, Oppenheimer
Trustees, Adviser or Sub-Adviser to each fund of Small Cap Value Fund,
1992-2005 the Aquila(SM) Group of Funds(6); Oppenheimer Midcap Fund,
Chairman of the Manager or Administrator and Oppenheimer Rochester
and/or Adviser or Sub-Adviser to each Group of Funds.
since 2004; Founder, Chairman Emeritus
and Trustee of Aquila Rocky Mountain
Equity Fund, Tax-Free Fund For Utah,
Narragansett Insured Tax-Free Income
Fund and Tax-Free Trust of Arizona;
Founder and Chairman Emeritus of
Hawaiian Tax-Free Trust, Pacific Capital
Cash Assets Trust, Pacific Capital
Tax-Free Cash Assets Trust, Pacific
Capital U.S. Government Securities Cash
Assets Trust, Tax-Free Fund of Colorado,
Churchill Tax-Free Fund of Kentucky and
Tax-Free Trust of Oregon; previously
Chairman and a Trustee of each fund in
the Aquila(SM) Group of Funds since its
establishment until 2004 or 2005;
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 since Chairman, Rhode Island Convention Center 1 Citizens Bank of Rhode
North Kingstown, RI 1995 Authority since 2003; retired Founder, Island and Connecticut
(08/07/39) formerly President, Duffy & Shanley, since 1999; Delta Dental
Inc., a marketing communications firm, of Rhode Island since
1973-2003; Transition Chairman for Gov. 2004.
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 since Founding Partner, Partridge, Snow & 5 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, Ocean
State Charities Trust and Memorial
Hospital of Rhode Island.

NON-INTERESTED TRUSTEES

William J. Chair of the Retired; formerly Chairman, founder 2 Ring's End, Inc.
Nightingale Board of (1975) and Senior Advisor until 2000 of
Rowayton, CT Trustees since Nightingale & Associates, L.L.C., a
(09/16/29) 2005 and general management consulting firm
Trustee since focusing on interim management,
1992 divestitures, turnaround of troubled
companies, corporate restructuring and
financial advisory services.

Vernon R. Alden Trustee since Retired; former director or trustee of 1 Sonesta International
Boston, MA 1992 various Fortune 500 companies, including Hotels Corporation and
(04/07/23) Colgate-Palmolive and McGraw Hill; College Partnership Inc.
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.

Timothy J. Leach Trustee since Executive Vice President & Chief 2 None
Orinda, CA 2005 Investment Officer, U.S. Trust Company,
(08/28/55) New York, NY, 2004-present; Executive
Vice President & Chief Investment
Officer, Private Asset Management Group,
Wells Fargo Bank, San Francisco, CA,
1999-2003; President and Chief
Investment Officer, ABN Amro Asset
Management (USA), 1998-1999; President &
Chief Investment Officer, Qualivest
Capital Management Inc. and Senior Vice
President & Chief Investment Officer,
Trust & Investment Group, US Bancorp,
Portland, OR, 1994-1998; Trustee of
Tax-Free Trust of Oregon, 2001-2002.

James R. Ramsey Trustee since President, University of Louisville 2 Community Bank and Trust,
Louisville, KY 2004 since November 2002; Professor of Pikeville, KY and Texas
(11/14/48) Economics, University of Louisville, Roadhouse Inc.
1999-present; Kentucky Governor's Senior
Policy Advisor and State Budget
Director, 1999-2002; Vice Chancellor for
Finance and Administration, the
University of North Carolina at Chapel
Hill, 1998 to 1999; previously Vice
President for Finance and Administration
at Western Kentucky University, State
Budget Director for the Commonwealth of
Kentucky, Chief State Economist and
Executive Director for the Office of
Financial Management and Economic
Analysis for the Commonwealth of
Kentucky, Adjunct Professor at the
University of Kentucky, Associate
Professor at Loyola University-New
Orleans and Assistant Professor at
Middle Tennessee State University.

J. William Weeks Trustee since Retired; limited partner and investor in 2 None
Palm Beach, FL 1995 various real estate partnerships since
(06/22/27) 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 Vice Chair and Chief Executive Officer N/A N/A
New York, NY 1998 and Vice of Aquila Management Corporation,
(02/25/58) Chair of the Founder of the Aquila(SM) Group of Funds
Board since and parent of Aquila Investment
2003 Management LLC, Manager 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;
Chief Executive Officer and 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 (2004) and head of its
Small Funds Committee since 2004; active
in charitable and volunteer organizations.

Charles E. Executive Vice Executive Vice President of all funds in N/A N/A
Childs, III President since the Aquila(SM) Group of Funds and the
New York, NY 2003 Manager and the Manager's parent since
(04/01/57) 2003; formerly Senior Vice President,
corporate development, 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 since N/A N/A
New York, NY President since 1995; Vice President, Hawaiian Tax-Free
(05/06/61) 1998 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.

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

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 since Eck Global Funds, 1993-2000.

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

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 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 since Group of Funds since 2000; Assistant
(11/02/66) 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 successor is elected and qualifies. The term of office of each
officer is one year.

(4) Includes certain Aquila-sponsored funds that are dormant and have no
public shareholders.

(5) Mr. Herrmann is an interested person of the Fund as that term is defined
in the 1940 Act as an officer of the Fund and 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.

(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, which do not include the
dormant funds described in footnote 4, are called the "Aquila(SM) Group of
Funds."

- --------------------------------------------------------------------------------

ANALYSIS OF EXPENSES (UNAUDITED)

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

The tables below are based on an investment of $1,000 invested on January
1, 2005 and held for the six months ended June 30, 2005.

ACTUAL EXPENSES

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

FOR THE SIX MONTHS ENDED JUNE 30, 2005

ACTUAL
TOTAL RETURN BEGINNING ENDING EXPENSES
WITHOUT ACCOUNT ACCOUNT PAID DURING
SALES CHARGES(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
Class A 2.08% $1,000.00 $1,020.80 $2.88
- --------------------------------------------------------------------------------
Class C 1.65% $1,000.00 $1,016.50 $7.12
- --------------------------------------------------------------------------------
Class I 2.18% $1,000.00 $1,021.80 $2.89
- --------------------------------------------------------------------------------
Class Y 2.16% $1,000.00 $1,021.60 $2.13
- --------------------------------------------------------------------------------

(1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE
APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES.
TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE
TOTAL RETURN FOR THE YEAR.

(2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.58%, 1.42%, 0.58%
AND 0.43% FOR THE FUND'S CLASS A, C, I AND Y SHARES, RESPECTIVELY,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY
181/365 (TO REFLECT THE ONE-HALF YEAR PERIOD).

- --------------------------------------------------------------------------------

ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED)

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

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

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

FOR THE SIX MONTHS ENDED JUNE 30, 2005

Hypothetical
Annualized Beginning Ending Expenses
Total Account Account Paid During
Return Value Value the Period(1)
- --------------------------------------------------------------------------------
Class A 5.00% $1,000.00 $1,021.94 $2.89
- --------------------------------------------------------------------------------
Class C 5.00% $1,000.00 $1,017.73 $7.13
- --------------------------------------------------------------------------------
Class I 5.00% $1,000.00 $1,021.94 $2.89
- --------------------------------------------------------------------------------
Class Y 5.00% $1,000.00 $1,022.68 $2.13
- --------------------------------------------------------------------------------

(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.58%, 1.42%, 0.58%
AND 0.43% FOR THE TRUST'S CLASS A, C, I AND Y SHARES, RESPECTIVELY,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY
181/365 (TO REFLECT THE ONE-HALF YEAR PERIOD).

- --------------------------------------------------------------------------------

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 securities of your Fund
twice a year in the semi-annual and annual reports you receive. Additionally, we
prepare, and have available, portfolio listings at the end of each quarter.
Whenever you may be interested in seeing a listing of your Fund's portfolio
other than in your shareholder reports, please check our website
(www.aquilafunds.com) or call us at 1-800-437-1020.

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

- --------------------------------------------------------------------------------

PROXY VOTING RECORD. (UNAUDITED)

The Fund does not invest in equity securities. Accordingly, there were no
matters relating to a portfolio security considered at any shareholder meeting
held during the 12 months ended June 30, 2005 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.

- --------------------------------------------------------------------------------

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, 2005, $5,444,976 of dividends paid by
Narragansett Insured Tax-Free Income Fund, constituting 97.61% of total
dividends paid during the fiscal year ended June 30, 2005, were exempt-interest
dividends and the balance was ordinary dividend income.

Prior to January 31, 2005, shareholders were mailed IRS Form 1099-DIV
which contained information on the status of distributions paid for the 2004
CALENDAR YEAR.

Prior to January 31, 2006, shareholders will be mailed IRS Form 1099-DIV
which will contain information on the status of distributions paid for the 2005
CALENDAR YEAR.

- --------------------------------------------------------------------------------

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.

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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

William J. Nightingale, Chair
Lacy B. Herrmann
Vernon R. Alden
David A. Duffy
Timothy J. Leach
John J. Partridge
James R. Ramsey
J. William Weeks

OFFICERS

Diana P. Herrmann, Vice Chair and President
Stephen J. Caridi, Senior Vice President
Robert W. Anderson, Chief Compliance Officer
Joseph P. DiMaggio, Chief Financial Officer and Treasurer
Edward M.W. Hines, Secretary

DISTRIBUTOR

AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017

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
345 Park Avenue
New York, New York 10154

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

ITEM 2. CODE OF ETHICS.

(a) As of June 30, 2005 (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 $17,000 in 2005
and $15,400 in 2004.

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
$8,005 and $7,767 in 2005 and 2004, 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/ Diana P. Herrmann
- - ---------------------------------
Vice Chair and President
September 9,2005

By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Chief Financial Officer and Treasurer
September 9, 2005

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

By: /s/ Diana P. Herrmann
- - ---------------------------------
Diana P. Herrmann
Vice Chair and President
September 9, 2005

By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
September 9, 2005

NARRAGANSETT INSURED TAX-FREE INCOME FUND

EXHIBIT INDEX

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