-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BhSvfXSJljH8a328XsJ3NlJvmoieaTqjMC79Ud9a9jrItDTo50kFGfmlOgcxTnHW 3rnIIrkOx0ECl3tkSnjtZQ== 0000888955-04-000021.txt : 20040908 0000888955-04-000021.hdr.sgml : 20040908 20040908135206 ACCESSION NUMBER: 0000888955-04-000021 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040908 DATE AS OF CHANGE: 20040908 EFFECTIVENESS DATE: 20040908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AQUILA NARRAGANSETT INSURED TAX FREE INCOME FUND CENTRAL INDEX KEY: 0000888955 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06707 FILM NUMBER: 041020301 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE STREET 2: STE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVENUE STREET 2: SUITE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: NARRAGANSETT INSURED TAX FREE INCOME FUND DATE OF NAME CHANGE: 19920929 N-CSR 1 nitfifncsr604.txt NARRAGANSETT INSURED TAX-FREE INCOME FUND 6/30/2004 NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-06707 Narragansett Insured Tax-Free Income Fund (Exact name of Registrant as specified in charter) 380 Madison Avenue New York, New York 10017 (Address of principal executive offices) (Zip code) Joseph P. DiMaggio 380 Madison Avenue New York, New York 10017 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 697-6666 Date of fiscal year end: 6/30 Date of reporting period: 6/30/04 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT JUNE 30, 2004 A TAX-FREE INCOME INVESTMENT [Logo of Narragansett Insured Tax-Free Income Fund: rectangle with profile view of sailboat on top of waves and three seagulls flying above it.] [Logo of the Aquila Group of Funds: an eagle's head] ONE OF THE AQUILA(SM) GROUP OF FUNDS [Logo of Narragansett Insured Tax-Free Income Fund: rectangle with profile view of sailboat on top of waves and three seagulls flying above it.] SERVING RHODE ISLAND INVESTORS FOR MORE THAN A DECADE NARRAGANSETT INSURED TAX-FREE INCOME FUND ANNUAL REPORT MANAGEMENT DISCUSSION Narragansett Insured Tax-Free Income Fund (the "Fund") seeks to provide the highest level of double tax free income possible for Rhode Island residents while staying within the self-imposed quality restraints. The Fund strives to accomplish this by purchasing in-state municipal securities rated AAA by nationally renowned credit rating services. As an extra measure of credit protection to shareholders, all securities owned by the Fund are insured to provide for the timely payment of principal and interest when due. A maximum average maturity profile of under 15 years has been, and we expect will continue to be, maintained for the Fund's portfolio as we strive to produce a reasonable level of income return with relatively high stability for the Fund's share price. At the June 30, 2004 fiscal year end, the portfolio had an average maturity of 11.2 years. The stock market has been sluggish as the summer months approach. Fears about terrorism, oil prices, higher interest rates and inflation seem to have prevented any durable advance in equity prices since the start of the year. Corporate earnings have been strong, and equities remain attractive fundamentally despite these fears. Presently, it is difficult to identify a catalyst for continued growth in consumer spending, which is the key to earnings growth and a sustainable rally. This is the first year in the last four that consumers will not benefit from a tax cut, and at the same time, the mortgage refinancing boom appears to be over and energy prices are higher. Additionally, borrowers with low adjustable rate mortgages may be forced to refinance at higher rates, which would effectively decrease their discretionary income. In our view, strong employment growth will be needed to offset the decrease in liquidity stemming from these various factors. Following good job growth figures in April and May, June employment figures showed only 112,000 job gains versus a consensus estimate of 250,000 with downward revisions to April and May. Despite the recent setback, revisions to second half Gross Domestic Product ("GDP") growth have been lowered to a still respectable 3% - 4%. Job growth seems to be the key figure that the markets will be focusing on to ensure that the recovery can be sustained. With the first Federal Reserve (the "Fed") interest rate hike in several years on June 30, 2004, it appears that the Fed is shifting its stance in the face of a stronger economy and higher inflation. Given the current negative real Federal Funds rate ("Fed Funds"), monetary policy is far from neutral based on historical averages and we would expect further tightening in 2005. Fed Funds has typically averaged 2% above the core Consumer Price Index over the past forty years while the real rate on the 10-year Treasury has been approximately 3%. Inflation could very well drop from its current pace as pressures from energy and housing ease. Since the market has anticipated a tightening of interest rates of between 0.75% to 1.00% before the end of the year, there may be some flattening of the yield curve as the Fed implements its policy at a "measured" pace. An eventual Fed Funds rate of 3% could well be possible. As the market seems to be clearly ahead of the Fed in interest rates, we believe an opportunity exists for investors to buy bonds. If inflation and GDP growth subside from current levels in 2005, fixed income purchases could prove to have been a worthwhile strategy. Given the current Federal income tax rates and the Rhode Island income tax rate, Narragansett Insured Tax-Free Income Fund presently produces an attractive yield for Rhode Island residents. As of June 30, 2004, the Fund's SEC yield for Class A Shares was 3.43%. Management believes that having available to the Fund a locally-based investment portfolio manager, with extensive knowledge and experience in the Rhode Island municipal market continues to add considerable value to the portfolio and provides a distinct benefit to Fund shareholders. The Fund's investment Sub-Adviser intends to continue to oversee the portfolio with a strong emphasis on achieving a balance between share price stability, acceptable double tax-free income return, and the highest standards of credit quality. PERFORMANCE REPORT The following graph illustrates the value of $10,000 invested in the Class A shares of Narragansett Insured Tax-Free Income Fund for the 10-year period ended June 30, 2004 as compared with the Lehman Brothers Quality Intermediate Municipal Bond Index and the Consumer Price Index (a cost of living index). The performance of each of the other classes is not shown in the graph but is included in the table below. It should be noted that the Lehman Index does not include any operating expenses nor sales charges and being nationally oriented, does not reflect state specific bond market performance. [THE FOLLOWING TABLE WAS DEPICTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
Cost of Living Trust's Class A Shares Trust's Class A Shares Lehman Brothers Index With Sales Charge Without Sales Charge Quality Intermediate Municipal Bond Index 6/94 $10,000 $10,000 $ 9,600 $10,000 6/95 $10,304 $11,122 $10,680 $10,799 6/96 $10,588 $11,620 $11,159 $11,399 6/97 $10,831 $12,681 $12,178 $12,178 6/98 $11,014 $13,666 $13,123 $13,025 6/99 $11,230 $13,850 $13,300 $13,419 6/00 $11,649 $14,204 $13,640 $13,960 6/01 $12,027 $15,588 $14,970 $15,194 6/02 $12,155 $16,517 $15,862 $16,250 6/03 $12,412 $18,025 $17,310 $17,521 6/04 $12,818 $17,925 $17,213 $17,581
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 2004 -------------------------------------------- SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------ ------- -------- --------- Class A (9/10/92) With Sales Charge....... (4.14)% 4.37% 5.58% 5.38% Without Sales Charge.... (0.10) 5.21 6.01 5.75 Class C (5/1/96) With CDSC............... (2.04) 4.30 n/a 4.47 Without CDSC............ (1.04) 4.30 n/a 4.47 Class Y (5/1/96) No Sales Charge......... 0.03 5.36 n/a 5.66 Class I (11/4/98) No Sales Charge......... (0.12) 5.20 n/a 4.44 Lehman Index............... 0.34 5.55 5.80 5.65* (Class A) n/a 5.48** (Class C&Y) n/a 4.88+ (Class I)
Total return figures shown for the Fund reflect any change in price and assume all distributions within the period were invested in additional shares. Returns for Class A shares are calculated with and without the effect of the initial 4% maximum sales charge. Returns for Class C shares are calculated with and without the effect of the 1% contingent deferred sales charge (CDSC), imposed on redemptions made within the first 12 months after purchase. Class Y and Class I shares are sold without any sales charge. The rates of return will vary and the principal value of an investment will fluctuate with market conditions. Shares, if redeemed, may be worth more or less than their original cost. A portion of each class's income may be subject to federal and state income taxes. Past performance is not predictive of future investment results. * From commencement of operations on September 10, 1992. ** From commencement of operations on May 1, 1996. + From commencement of operations on November 4, 1998. KPMG REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of Narragansett Insured Tax-Free Income Fund: We have audited the accompanying statement of assets and liabilities of Narragansett Insured Tax-Free Income Fund, including the schedule of investments, as of June 30, 2004, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of June 30, 2004, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Narragansett Insured Tax-Free Income Fund as of June 30, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP New York, New York August 18, 2004 NARRAGANSETT INSURED TAX-FREE INCOME FUND SCHEDULE OF INVESTMENTS JUNE 30, 2004
RATING FACE MOODY'S, S&P AMOUNT GENERAL OBLIGATION BONDS (45.2%) OR FITCH VALUE - ----------- ---------------------------------------------------- ------------ ------------ Coventry, Rhode Island $ 550,000 5.000%, 11/01/16 AMBAC Insured................... Aaa+/AAA+++ $ 580,437 550,000 5.000%, 11/01/17 AMBAC Insured................... Aaa+/AAA+++ 573,722 Cranston, Rhode Island 300,000 5.500%, 06/15/07 MBIA Insured.................... Aaa+/AAA++ 316,944 1,000,000 3.125%, 02/15/11 FSA Insured..................... Aaa+/AAA++ 964,830 500,000 5.450%, 11/15/11 FGIC Insured.................... Aaa+/AAA++ 550,875 Cumberland, Rhode Island 250,000 3.750%, 02/01/13 FGIC Insured.................... Aaa+/AAA++ 246,747 250,000 4.000%, 02/01/14 FGIC Insured.................... Aaa+/AAA++ 248,617 250,000 4.000%, 02/01/15 FGIC Insured.................... Aaa+/AAA++ 245,552 500,000 5.000%, 08/01/15 MBIA Insured.................... Aaa+/AAA++ 520,950 250,000 4.000%, 02/01/16 FGIC Insured.................... Aaa+/AAA++ 242,082 250,000 4.100%, 02/01/17 FGIC Insured.................... Aaa+/AAA++ 241,955 250,000 4.150%, 02/01/18 FGIC Insured.................... Aaa+/AAA++ 240,195 1,255,000 5.000%, 10/01/18 MBIA Insured.................... Aaa+/AAA++ 1,303,518 1,040,000 5.200%, 10/01/21 MBIA Insured.................... Aaa+/AAA++ 1,087,081 East Providence, Rhode Island 500,000 5.400%, 05/15/07 MBIA Insured.................... Aaa+/AAA++ 524,920 Lincoln, Rhode Island 400,000 5.100%, 01/15/06 MBIA Insured.................... Aaa+/AAA++ 408,816 250,000 5.750%, 08/01/15 FGIC Insured.................... Aaa+/AAA+++ 266,010 New Shoreham, Rhode Island 245,000 4.000%, 11/15/15 AMBAC Insured................... Aaa+/AAA++ 240,382 255,000 4.250%, 11/15/16 AMBAC Insured................... Aaa+/AAA++ 254,260 270,000 4.250%, 11/15/17 AMBAC Insured................... Aaa+/AAA++ 266,735 910,000 4.800%, 04/15/18 AMBAC Insured................... Aaa+/AAA++ 929,483 285,000 4.500%, 11/15/18 AMBAC Insured................... Aaa+/AAA++ 285,576 1,105,000 5.000%, 04/15/22 AMBAC Insured................... Aaa+/AAA++ 1,119,840 Newport, Rhode Island 250,000 4.900%, 05/15/06 FGIC Insured.................... Aaa+/AAA++ 257,468 500,000 5.000%, 05/15/07 FGIC Insured.................... Aaa+/AAA++ 511,645 150,000 6.550%, 08/15/07 MBIA Insured.................... Aaa+/AAA++ 152,815 500,000 5.100%, 05/15/08 FGIC Insured.................... Aaa+/AAA++ 511,685 Newport, Rhode Island (continued) $ 1,000,000 4.500%, 11/01/15 AMBAC Insured................... Aaa+/AAA+++ $ 1,022,110 1,000,000 4.750%, 11/01/18 AMBAC Insured................... Aaa+/AAA+++ 1,021,090 800,000 5.000%, 11/01/20 AMBAC Insured................... Aaa+/AAA+++ 824,592 North Providence, Rhode Island 400,000 5.700%, 07/01/08 MBIA Insured.................... Aaa+/AAA++ 443,424 500,000 3.500%, 10/15/13 FSA Insured..................... Aaa+/AAA++ 478,555 500,000 4.700%, 09/15/14 FSA Insured..................... Aaa+/AAA++ 519,440 500,000 3.650%, 10/15/14 FSA Insured..................... Aaa+/AAA++ 477,600 500,000 3.750%, 10/15/15 FSA Insured..................... Aaa+/AAA++ 470,865 Pawtucket, Rhode Island 600,000 4.300%, 09/15/09 AMBAC Insured................... Aaa+/AAA+++ 630,732 795,000 3.500%, 04/15/10 AMBAC Insured................... Aaa+/AAA+++ 797,862 250,000 4.400%, 09/15/10 AMBAC Insured................... Aaa+/AAA+++ 262,700 825,000 3.500%, 04/15/11 AMBAC Insured................... Aaa+/AAA+++ 821,519 850,000 3.625%, 04/15/12 AMBAC Insured................... Aaa+/AAA+++ 841,721 880,000 3.750%, 04/15/13 AMBAC Insured................... Aaa+/AAA+++ 868,296 910,000 4.000%, 04/15/14 AMBAC Insured................... Aaa+/AAA+++ 904,859 Providence, Rhode Island 700,000 5.500%, 01/15/11 FSA Insured..................... Aaa+/AAA++ 751,044 1,925,000 5.200%, 04/01/11 AMBAC Insured................... Aaa+/AAA+++ 2,091,609 1,000,000 5.000%, 01/15/16 FGIC Insured.................... Aaa+/AAA++ 1,056,970 1,000,000 5.000%, 01/15/17 FGIC Insured.................... Aaa+/AAA++ 1,045,860 1,000,000 5.000%, 01/15/18 FGIC Insured.................... Aaa+/AAA++ 1,039,500 Rhode Island Consolidated Capital Development Loan 1,000,000 5.250%, 11/01/11 Series C MBIA Insured........... Aaa+/AAA++ 1,100,560 1,000,000 5.000%, 06/01/14 Series B FGIC Insured........... Aaa+/AAA++ 1,062,240 1,000,000 5.000%, 09/01/14 Series A FGIC Insured........... Aaa+/AAA++ 1,051,840 2,000,000 5.000%, 08/01/15 Series B FGIC Insured........... Aaa+/AAA++ 2,101,920 1,500,000 4.750%, 09/01/17 Series A FGIC Insured........... Aaa+/AAA++ 1,534,200 South Kingstown, Rhode Island 500,000 5.500%, 06/15/12 FGIC Insured.................... Aaa+/AAA+++ 552,465 State of Rhode Island $ 1,000,000 5.000%, 07/15/05 FGIC Insured.................... Aaa+/AAA++ $ 1,034,420 1,000,000 5.125%, 07/15/11 FGIC Insured.................... Aaa+/AAA++ 1,072,710 4,000,000 5.000%, 08/01/14 FGIC Insured.................... Aaa+/AAA++ 4,254,200 1,500,000 5.000%, 09/01/15 FGIC Insured.................... Aaa+/AAA++ 1,570,110 2,000,000 5.250%, 11/01/17 FGIC Insured.................... Aaa+/AAA++ 2,150,400 2,500,000 5.000%, 09/01/18 MBIA Insured.................... Aaa+/AAA++ 2,603,100 2,000,000 5.000%, 09/01/19 MBIA Insured.................... Aaa+/AAA++ 2,075,300 1,500,000 5.000%, 09/01/20 MBIA Insured.................... Aaa+/AAA++ 1,546,245 Warwick, Rhode Island 665,000 4.250%, 07/15/14 AMBAC Insured................... Aaa+/AAA++ 673,120 195,000 5.600%, 08/01/14 FSA Insured..................... Aaa+/AAA++ 210,902 700,000 4.375%, 07/15/15 AMBAC Insured................... Aaa+/AAA++ 707,791 770,000 4.600%, 07/15/17 AMBAC Insured................... Aaa+/AAA++ 781,873 1,000,000 5.000%, 03/01/18 FGIC Insured.................... Aaa+/AAA++ 1,043,920 810,000 4.700%, 07/15/18 AMBAC Insured................... Aaa+/AAA++ 822,442 1,000,000 5.000%, 01/15/19 FGIC Insured.................... Aaa+/AAA++ 1,034,350 855,000 4.750%, 07/15/19 AMBAC Insured................... Aaa+/AAA++ 862,943 500,000 5.000%, 01/15/20 FGIC Insured.................... Aaa+/AAA++ 514,320 West Warwick, Rhode Island 500,000 4.875%, 03/01/16 AMBAC Insured................... Aaa+/AAA+++ 519,215 670,000 5.000%, 03/01/17 AMBAC Insured................... Aaa+/AAA+++ 694,964 700,000 5.050%, 03/01/18 AMBAC Insured................... Aaa+/AAA+++ 728,329 735,000 5.100%, 03/01/19 AMBAC Insured................... Aaa+/AAA+++ 765,172 Woonsocket, Rhode Island 385,000 5.125%, 03/01/11 MBIA Insured.................... Aaa+/AAA++ 393,978 655,000 4.450%, 12/15/12 FGIC Insured.................... Aaa+/AAA+++ 680,630 685,000 4.550%, 12/15/13 FGIC Insured.................... Aaa+/AAA+++ 708,948 ------------ Total General Obligation Bonds................... 64,316,095 ------------ REVENUE BONDS (54.8%) DEVELOPMENT REVENUE BONDS (9.5%) Rhode Island Convention Center Authority 500,000 5.000%, 05/15/07 Series 1993 B MBIA Insured...... Aaa+/AAA++ 532,125 2,000,000 5.000%, 05/15/23 Series 1993 C MBIA Insured...... Aaa+/AAA++ 2,008,320 Rhode Island Public Building Authority State Public Projects $ 1,000,000 5.250%, 02/01/09 Series 1998 A AMBAC Insured..... Aaa+/AAA++ $ 1,086,010 500,000 5.000%, 12/15/09 Series 1999 A AMBAC Insured..... Aaa+/AAA++ 542,790 1,000,000 5.250%, 12/15/14 Series 1998 FSA Insured......... Aaa+/AAA++ 1,070,540 500,000 5.500%, 12/15/14 Series 1996 B MBIA Insured...... Aaa+/AAA++ 541,725 500,000 5.500%, 12/15/15 Series 1996 B MBIA Insured...... Aaa+/AAA++ 541,725 Rhode Island State Economic Development Corp., Airport Revenue 1,000,000 5.000%, 07/01/18 Series B FSA Insured............ Aaa+/AAA++ 1,030,490 Rhode Island State Economic Development Corp., Motor Fuel Tax Revenue (Rhode Island Department of Transportation) 2,000,000 3.875%, 06/15/14 Series A AMBAC Insured.......... Aaa+/AAA++ 1,968,340 1,000,000 4.000%, 06/15/15 Series A AMBAC Insured.......... Aaa+/AAA++ 981,720 Rhode Island State Economic Development Corp., University of Rhode Island 750,000 4.800%, 11/01/11 Series 1999 FSA Insured......... Aaa+/NR 796,762 750,000 4.900%, 11/01/12 Series 1999 FSA Insured......... Aaa+/NR 794,753 750,000 4.900%, 11/01/13 Series 1999 FSA Insured......... Aaa+/NR 790,320 750,000 5.000%, 11/01/14 Series 1999 FSA Insured......... Aaa+/NR 794,610 ------------ Total Development Revenue Bonds.................. 13,480,230 ------------ HIGHER EDUCATION REVENUE BONDS (28.2%) Providence, Rhode Island Public Building Authority, School Projects 1,395,000 4.000%, 12/15/12 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,412,954 1,450,000 4.000%, 12/15/13 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,457,207 1,505,000 4.000%, 12/15/14 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,496,075 1,570,000 4.000%, 12/15/15 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,540,280 1,630,000 4.000%, 12/15/16 Series 2003 A MBIA Insured...... Aaa+/AAA++ 1,575,819 Rhode Island Health & Education Building Corp., Brown University 2,000,000 5.250%, 09/01/17 Series 1993 MBIA Insured........ AAA++/AAA+++ 2,132,300 1,000,000 5.000%, 09/01/23 Series 1993 MBIA Insured........ Aaa+/AAA++ 1,015,360 Rhode Island Health & Education Building Corp., Bryant College 1,000,000 5.125%, 06/01/19 AMBAC Insured................... Aaa+/AAA++ 1,037,100 230,000 5.000%, 12/01/21 AMBAC Insured................... Aaa+/AAA++ 235,561 Rhode Island Health & Education Building Corp. Higher Educational Facilities $ 500,000 3.500%, 09/15/13 Series 2003 B MBIA Insured...... Aaa+/AAA++ $ 478,320 1,010,000 3.625%, 09/15/14 Series 2003 B MBIA Insured...... Aaa+/AAA++ 957,692 600,000 3.625%, 09/15/14 Series 2003 C MBIA Insured...... Aaa+/AAA++ 568,926 1,050,000 4.000%, 09/15/15 Series 2003 B MBIA Insured...... Aaa+/AAA++ 1,030,428 500,000 4.000%, 09/15/15 Series 2003 C MBIA Insured...... Aaa+/AAA++ 488,500 1,040,000 4.000%, 09/15/16 Series 2003 B MBIA Insured...... Aaa+/AAA++ 1,012,513 500,000 4.000%, 09/15/16 Series 2003 C MBIA Insured...... Aaa+/AAA++ 481,120 Rhode Island Health & Education Building Corp., Johnson & Wales University 1,360,000 4.000%, 04/01/12 Series 2003 XLCA Insured........ Aaa+/AAA++ 1,376,198 3,210,000 4.000%, 04/01/13 Series 2003 XLCA Insured........ Aaa+/AAA++ 3,214,526 2,000,000 4.000%, 04/01/14 Series 2003 XLCA Insured........ Aaa+/AAA++ 1,980,800 465,000 5.500%, 04/01/15 1999 Series A MBIA Insured...... Aaa+/AAA++ 516,355 900,000 5.500%, 04/01/16 1999 Series A MBIA Insured...... Aaa+/AAA++ 1,000,413 785,000 5.500%, 04/01/17 1999 Series A MBIA Insured...... Aaa+/AAA++ 870,879 Rhode Island Health & Education Building Corp., Rhode Island School of Design 505,000 4.700%, 06/01/18 Series 2001 MBIA Insured........ Aaa+/AAA++ 513,434 280,000 4.750%, 06/01/19 Series 2001 MBIA Insured........ Aaa+/AAA++ 283,844 Rhode Island Health & Education Building Corp., Roger Williams University 1,000,000 5.500%, 11/15/11 Series 1996 S AMBAC Insured..... NR/AAA++ 1,082,060 500,000 5.125%, 11/15/11 AMBAC Insured................... Aaa+/AAA++ 539,675 1,000,000 5.125%, 11/15/14 Series 1996 S AMBAC Insured..... Aaa+/AAA++ 1,062,610 1,000,000 5.000%, 11/15/18 Series 1996 S AMBAC Insured..... Aaa+/AAA++ 1,029,000 Rhode Island Health & Education Facilities Authority Providence College 1,000,000 4.250%, 11/01/14 XLCA Insured.................... Aaa+/AAA++ 1,009,930 2,500,000 4.375%, 11/01/15 XLCA Insured.................... Aaa+/AAA++ 2,521,800 2,500,000 4.500%, 11/01/16 XLCA Insured.................... Aaa+/AAA++ 2,532,175 1,000,000 4.500%, 11/01/17 XLCA Insured.................... Aaa+/AAA++ 1,002,210 Providence, Rhode Island Public Building School & Public Facilities Project 1,500,000 5.250%, 12/15/17 AMBAC Insured................... Aaa+/AAA++ 1,587,930 1,000,000 5.250%, 12/15/19 AMBAC Insured................... Aaa+/AAA++ 1,049,530 ------------ Total Higher Education Revenue Bonds............. 40,093,524 ------------ POLLUTION CONTROL REVENUE BONDS (4.5%) Rhode Island Clean Water Finance Agency, Water Pollution Control Bonds $ 1,800,000 5.000%, 10/01/18 Series 2002 B MBIA Insured...... Aaa+/AAA++ $ 1,865,016 4,765,000 4.375%, 10/01/21 Series 2002 B MBIA Insured...... Aaa+/AAA++ 4,516,744 ------------ Total Pollution Control Revenue Bonds............ 6,381,760 ------------ WATER AND SEWER REVENUE BONDS (8.6%) Bristol County, Rhode Island Water Authority 300,000 5.000%, 12/01/08 Series 1997 A MBIA Insured...... Aaa+/AAA++ 317,526 750,000 5.250%, 07/01/17 Series 1997 A MBIA Insured...... Aaa+/AAA++ 795,000 Kent County, Rhode Island Water Authority Revenue Bonds 500,000 4.000%, 07/15/12 Series 2002 A MBIA Insured...... Aaa+/AAA++ 506,165 1,055,000 4.150%, 07/15/14 Series 2002 A MBIA Insured...... Aaa+/AAA++ 1,060,718 Rhode Island Clean Water Protection 200,000 5.300%, 10/01/07 1993 Series 1993 A MBIA Insured..................................... Aaa+/AAA++ 215,680 300,000 5.400%, 10/01/09 1993 Series 1993 A MBIA Insured..................................... Aaa+/AAA++ 330,507 500,000 4.500%, 10/01/11 1993 Series 1993 B AMBAC Insured.................................... Aaa+/AAA++ 519,580 Rhode Island Clean Water Protection Finance Agency, 1,000,000 5.125%, 10/01/11 Series 1999 C MBIA Insured...... Aaa+/AAA++ 1,086,050 500,000 4.600%, 10/01/13 Series A AMBAC Insured.......... Aaa+/AAA++ 515,685 500,000 4.750%, 10/01/14 Series A AMBAC Insured.......... Aaa+/AAA++ 515,860 1,250,000 5.400%, 10/01/15 Series A MBIA Insured........... Aaa+/AAA++ 1,382,000 2,000,000 4.750%, 10/01/18 Series A AMBAC Insured.......... Aaa+/AAA++ 2,025,760 500,000 4.750%, 10/01/20 Series A AMBAC Insured.......... Aaa+/AAA++ 503,655 Rhode Island Water Resources Board Public Drinking Water Protection Revenue Bond 1,500,000 4.000%, 03/01/14 MBIA Insured.................... Aaa+/AAA++ 1,491,630 1,000,000 4.250%, 03/01/15 MBIA Insured.................... Aaa+/AAA++ 1,005,800 ------------ Total Water and Sewer Revenue Bonds.............. 12,271,616 ------------ OTHER REVENUE BONDS (4.0%) Rhode Island State Capital Development Loan 1,500,000 5.400%, 08/01/08 MBIA Insured.................... Aaa+/AAA++ 1,613,760 1,135,000 5.000%, 08/01/11 MBIA Insured.................... Aaa+/AAA++ 1,227,082 State of Rhode Island Certificates of Participation, Howard Center Improvements $ 400,000 5.250%, 10/01/10 MBIA Insured.................... Aaa+/AAA++ $ 430,400 200,000 5.375%, 10/01/16 MBIA Insured.................... Aaa+/AAA++ 215,532 State of Rhode Island Depositors Economic Protection Corp. 135,000 5.500%, 08/01/06 Series 1992 B MBIA Insured...... Aaa+/AAA++ 144,218 300,000 5.800%, 08/01/09 Series 1993 B MBIA Insured...... Aaa+/AAA++ 337,122 500,000 6.000%, 08/01/17 Series1992 B MBIA Insured....... Aaa+/AAA++ 517,545 1,045,000 5.250%, 08/01/21 Series 1993 B MBIA Insured (Escrowed to Maturity)........................... Aaa+/AAA++ 1,150,827 ------------ Total Other Revenue Bonds........................ 5,636,486 ------------ Total Revenue Bonds............................ 77,863,616 ------------ Total Investments (cost $139,245,629*)... 100.0% 142,179,711 Other assets less liabilities............ 0.0 37,385 ----- ------------ Net Assets............................... 100.0% $142,217,096 ===== ============
* See note 4. Rating Services: + Moody's Investors Service ++ Standard & Poor's +++ Fitch NR Not rated by two of the three of the ratings services PORTFOLIO ABBREVIATIONS: AMBAC - American Municipal Bond Assurance Corp. FGIC - Financial Guaranty Insurance Co. FSA - Financial Security Assurance MBIA - Municipal Bond Investors Assurance XLCA - XL Capital Assurance See accompanying notes to financial statements. NARRAGANSETT INSURED TAX-FREE INCOME FUND STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2004 ASSETS Investments at value (cost $139,245,629) ............................................... $ 142,179,711 Interest receivable .................................................................... 1,665,468 Receivable for Fund shares sold ........................................................ 270,185 Other assets ........................................................................... 9,395 ------------- Total assets ........................................................................... 144,124,759 ------------- LIABILITIES Cash overdraft ......................................................................... 872,250 Payable for Fund shares redeemed ....................................................... 752,889 Dividends payable ...................................................................... 161,533 Distribution fees payable .............................................................. 75,007 Management fee payable ................................................................. 13,981 Accrued expenses ....................................................................... 32,003 ------------- Total liabilities ...................................................................... 1,907,663 ------------- NET ASSETS ................................................................................ $ 142,217,096 ============= Net Assets consist of: Capital Stock - Authorized 80,000,000 shares, par value $.01 per share ................. $ 135,640 Additional paid-in capital ............................................................. 140,094,815 Net unrealized appreciation on investments (note 4) .................................... 2,934,082 Accumulated net realized loss on investments ........................................... (813,621) Distributions in excess of net investment income ....................................... (133,820) ------------- $ 142,217,096 ============= CLASS A Net Assets ............................................................................. $ 101,413,047 ============= Capital shares outstanding ............................................................. 9,672,213 ============= Net asset value and redemption price per share ......................................... $ 10.49 ============= Offering price per share (100/96 of $10.49 adjusted to nearest cent) ................... $ 10.93 ============= CLASS C Net Assets ............................................................................. $ 17,900,970 ============= Capital shares outstanding ............................................................. 1,707,457 ============= Net asset value and offering price per share ........................................... $ 10.48 ============= Redemption price per share (*a charge of 1% is imposed on the redemption proceeds of the shares, or on the original price, whichever is lower, if redeemed during the first 12 months after purchase) .......................................... $ 10.48* ============= CLASS I Net Assets ............................................................................. $ 789,875 ============= Capital shares outstanding ............................................................. 75,381 ============= Net asset value, offering and redemption price per share ............................... $ 10.48 ============= CLASS Y Net Assets ............................................................................. $ 22,113,204 ============= Capital shares outstanding ............................................................. 2,108,934 ============= Net asset value, offering and redemption price per share ............................... $ 10.49 =============
See accompanying notes to financial statements. NARRAGANSETT INSURED TAX-FREE INCOME FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 INVESTMENT INCOME: Interest income............................................. $ 6,451,901 Expenses: Management fee (note 3)..................................... $ 741,128 Distribution and service fees (note 3)...................... 376,930 Trustees' fees and expenses (note 8)........................ 99,959 Transfer and shareholder servicing agent fees............... 73,617 Fund accounting fees........................................ 49,585 Legal fees.................................................. 49,043 Shareholders' reports and proxy statements.................. 36,611 Auditing and tax fees....................................... 23,109 Registration fees and dues.................................. 11,361 Custodian fees ............................................. 7,235 Miscellaneous............................................... 39,369 ----------- Total Expenses.............................................. 1,507,947 Management fee waived (note 3).............................. (570,009) Expenses paid indirectly (note 6)........................... (7,981) ----------- Net expenses................................................ 929,957 ----------- Net investment income....................................... 5,521,944 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from securities transactions....... (114,233) Change in unrealized appreciation on investments............ (5,849,916) ----------- Net realized and unrealized gain (loss) on investments...... (5,964,149) ----------- Net change in net assets resulting from operations.......... $ (442,205) ===========
See accompanying notes to financial statements. NARRAGANSETT INSURED TAX-FREE INCOME FUND STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED JUNE 30, 2004 JUNE 30, 2003 ------------- ------------- OPERATIONS: Net investment income ................................................. $ 5,521,944 $ 5,028,971 Net realized gain (loss) from securities transactions ................. (114,233) 286,562 Change in unrealized appreciation on investments ...................... (5,849,916) 5,341,554 ------------- ------------- Change in net assets from operations ............................... (442,205) 10,657,087 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 9): Class A Shares: Net investment income ................................................. (4,139,249) (3,889,489) Class C Shares: Net investment income ................................................. (670,058) (607,348) Class I Shares: Net investment income ................................................. (25,311) (16,746) Class Y Shares: Net investment income ................................................. (817,674) (637,034) ------------- ------------- Change in net assets from distributions ............................ (5,652,292) (5,150,617) ------------- ------------- CAPITAL SHARE TRANSACTIONS (NOTE 7): Proceeds from shares sold ............................................. 30,370,186 44,058,438 Reinvested dividends and distributions ................................ 3,474,377 3,417,773 Cost of shares redeemed ............................................... (33,567,190) (19,044,516) ------------- ------------- Change in net assets from capital share transactions .................. 277,373 28,431,695 ------------- ------------- Change in net assets ............................................... (5,817,124) 33,938,165 NET ASSETS: Beginning of period ................................................... 148,034,220 114,096,055 ------------- ------------- End of period* ........................................................ $ 142,217,096 $ 148,034,220 ============= ============= * Includes distributions in excess of net investment income of: ....... $ (133,820) $ (97,564) ============= =============
See accompanying notes to financial statements. NARRAGANSETT INSURED TAX-FREE INCOME FUND NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION Narragansett Insured Tax-Free Income Fund (the "Fund"), a non-diversified, open-end investment company, was organized on January 22, 1992 as a Massachusetts business trust and commenced operations on September 10, 1992. The Fund is authorized to issue 80,000,000 shares and, since its inception to May 1, 1996, offered only one class of shares. On that date, the Fund began offering two additional classes of shares, Class C and Class Y shares. All shares outstanding prior to that date were designated as Class A shares and are sold with a front-payment sales charge and bear an annual distribution fee. Class C shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodian or similar capacity and are not offered directly to retail investors. Class Y shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. On October 31, 1997, the Fund established Class I shares, which are offered and sold only through financial intermediaries and are not offered directly to retail investors. Class I Shares are sold at net asset value without any sales charge, redemption fees, or contingent deferred sales charge. Class I Shares carry a distribution fee and a service fee. All classes of shares represent interests in the same portfolio of investments and are identical as to rights and privileges and differ with respect to the effect of sales charges, the distribution and/or service fees borne by each class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities of more than 60 days are valued each business day based upon information provided by a nationally prominent independent pricing service and periodically verified through other pricing services. In the case of securities for which market quotations are readily available, securities are valued by the pricing service at the mean of bid and asked quotations. If market quotations or a valuation from the pricing service is not readily available, the security is valued at fair value determined under procedures established by and under the general supervision of the Board of Trustees. Securities which mature in 60 days or less are valued at amortized cost if their term to maturity at purchase is 60 days or less, or by amortizing their unrealized appreciation or depreciation on the 61st day prior to maturity, if their term to maturity at purchase exceeds 60 days. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded on the accrual basis and is adjusted for amortization of premium and accretion of original issue and market discount. c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. The Fund intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. d) MULTIPLE CLASS ALLOCATIONS: All income, expenses (other than class-specific expenses), and realized and unrealized gains or losses are allocated daily to each class of shares based on the relative net assets of each class. Class-specific expenses, which include distribution and service fees and any other items that are specifically attributed to a particular class, are charged directly to such class. e) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: Aquila Investment Management LLC (the "Manager"), a wholly owned subsidiary of Aquila Management Corporation, the Fund's founder and sponsor, serves as the Manager for the Fund under an Advisory and Administration Agreement with the Fund. The portfolio management of the Fund has been delegated to a Sub-Adviser as described below. Under the Advisory and Administration Agreement, the Manager provides all administrative services to the Fund, other than those relating to the day-to-day portfolio management. The Manager's services include providing the office of the Fund and all related services as well as overseeing the activities of the Sub-Adviser and managing relationships with all the various support organizations to the Fund such as the shareholder servicing agent, custodian, legal counsel, fund accounting agent, auditors and distributor. For its services, the Manager is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.50% on the Fund's net assets. Citizens Investment Advisors, a department of Citizens Bank of Rhode Island (the "Sub-Adviser") serves as the Investment Sub-Adviser for the Fund under a Sub-Advisory Agreement between the Manager and the Sub-Adviser. Under this agreement, the Sub-Adviser continuously provides, subject to oversight of the Manager and the Board of Trustees of the Fund, the investment program of the Fund and the composition of its portfolio, arranges for the purchases and sales of portfolio securities, and provides for daily pricing of the Fund's portfolio. For its services, the Sub-Adviser is entitled to receive a fee from the Manager which is payable monthly and computed as of the close of business each day at the annual rate of 0.23% on the Fund's average net assets. For the year ended June 30, 2004, the Fund incurred management fees of $741,128 of which $570,009 was voluntarily waived. Such waivers are voluntary and can be terminated in the future at the Manager's discretion. However, the Manager has indicated that it intends to continue waiving fees as necessary in order that the Fund will remain competitive. Specific details as to the nature and extent of the services provided by the Manager and the Sub-Adviser are more fully defined in the Fund's Prospectus and Statement of Additional Information. b) DISTRIBUTION AND SERVICE FEES: The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part of the Plan, with respect to Class A Shares, the Fund is authorized to make distribution fee payments to broker-dealers or others ("Qualified Recipients") selected by Aquila Distributors, Inc., ("the Distributor"), including, but not limited to, any principal underwriter of the Fund, with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Fund's shares or servicing of shareholder accounts. The Fund makes payment of this service fee at the annual rate of 0.15% of the Fund's average net assets represented by Class A Shares. For the year ended June 30, 2004, distribution fees on Class A Shares amounted to $158,530, of which the Distributor retained $3,654. Under another part of the Plan, the Fund is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Fund's Class C shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Fund's average net assets represented by Class C Shares and for the year ended June 30, 2004 amounted to $163,558. In addition, under a Shareholder Services Plan, the Fund is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Fund's average net assets represented by Class C Shares and for the year ended June 30, 2004, amounted to $54,519. The total of these payments with respect to Class C Shares amounted to $218,077, of which the Distributor retained $34,441. Under another part of the Plan, the Fund is authorized to make payments with respect to Class I Shares to Qualified Recipients. Class I payments, under the Plan, may not exceed, for any fiscal year of the Fund a rate (currently 0.05%) set from time to time by the Board of Trustees of not more than 0.25% of the average annual net assets represented by the Class I Shares. In addition, the Fund has a Shareholder Services Plan under which it may pay service fees (currently 0.15%) of not more than 0.25% of the average annual net assets of the Fund represented by Class I Shares. That is, the total payments under both plans will not exceed 0.50% of such net assets. For the year ended June 30, 2004, these payments were made at the average annual rate of 0.20% of such net assets amounting to $1,292 of which $323 related to the Plan and $969 related to the Shareholder Services Plan. Specific details about the Plans are more fully defined in the Fund's Prospectus and Statement of Additional Information. Under a Distribution Agreement, the Distributor serves as the exclusive distributor of the Fund's shares. Through agreements between the Distributor and various broker-dealer firms ("dealers"), the Fund's shares are sold primarily through the facilities of these dealers having offices within Rhode Island, with the bulk of sales commissions inuring to such dealers. For the year ended June 30, 2004, total commissions on sales of Class A Shares amounted to $372,179, of which the Distributor received $34,885. c) OTHER RELATED PARTY TRANSACTIONS: For the year ended June 30, 2004, the Fund incurred $47,846 of legal fees allocable to Hollyer Brady Barrett & Hines LLP, counsel to the Fund for legal fees in conjunction with the Fund's ongoing operations. The Secretary of the Fund is a partner of Hollyer Brady Barrett & Hines LLP. 4. PURCHASES AND SALES OF SECURITIES During the year ended June 30, 2004, purchases of securities and proceeds from the sales of securities aggregated $19,328,770 and $12,572,360, respectively. At June 30, 2004, the aggregate tax cost for all securities was $139,217,916. At June 30, 2004, the aggregate gross unrealized appreciation for all securities in which there is an excess of market value over tax cost amounted to $3,960,428 and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over market value amounted to $998,633, for a net unrealized appreciation of $2,961,795. 5. PORTFOLIO ORIENTATION Since the Fund invests principally and may invest entirely in double tax-free municipal obligations of issuers within Rhode Island, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Rhode Island and whatever effects these may have upon Rhode Island issuers' ability to meet their obligations. However, to mitigate against such risks, the Fund has chosen to have at least 80% and possibly the entire number of issues in the portfolio insured as to timely payment of principal and interest when due by nationally prominent municipal bond insurance companies. At June 30, 2004, all of the securities in the Fund were insured. While such insurance protects against credit risks with portfolio securities, it does not insure against market risk of fluctuations in the Fund's share price and income return. The Fund is also permitted to invest in U.S. territorial municipal obligations meeting comparable quality standards and providing income which is exempt from both regular Federal and Rhode Island income taxes. The general policy of the Fund is to invest in such securities only when comparable securities of Rhode Island issuers are not available in the market. At June 30, 2004, the Fund had all of its net assets invested in Rhode Island municipal issues. 6. EXPENSES The Fund has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Fund expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. It is the general intention of the Fund to invest, to the extent practicable, some or all of cash balances in income-producing assets rather than leave cash on deposit. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Fund were as follows:
YEAR ENDED YEAR ENDED JUNE 30, 2004 JUNE 30, 2003 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ CLASS A SHARES: Proceeds from shares sold ............... 1,501,680 $ 16,143,865 2,511,973 $ 26,990,482 Reinvested distributions ................ 237,866 2,543,682 239,993 2,564,785 Cost of shares redeemed ................. (1,857,743) (19,805,126) (1,208,692) (13,117,881) ---------- ------------ ---------- ------------ Net change ........................... (118,197) (1,117,579) 1,543,274 16,437,386 ---------- ------------ ---------- ------------ CLASS C SHARES: Proceeds from shares sold ............... 526,213 5,626,850 851,696 9,125,462 Reinvested distributions ................ 37,896 405,643 32,560 348,204 Cost of shares redeemed ................. (918,377) (9,748,834) (312,631) (3,355,269) ---------- ------------ ---------- ------------ Net change ........................... (354,268) (3,716,341) 571,625 6,118,397 ---------- ------------ ---------- ------------ CLASS I SHARES: Proceeds from shares sold ............... 33,611 362,059 4,279 45,721 Reinvested distributions ................ 655 7,014 52 560 Cost of shares redeemed ................. -- -- (53) (592) ---------- ------------ ---------- ------------ Net change ........................... 34,266 369,073 4,278 45,689 ---------- ------------ ---------- ------------ CLASS Y SHARES: Proceeds from shares sold ............... 774,201 8,237,412 741,749 7,896,773 Reinvested distributions ................ 48,312 518,038 47,085 504,224 Cost of shares redeemed ................. (379,850) (4,013,230) (242,048) (2,570,774) ---------- ------------ ---------- ------------ Net change ........................... 442,663 4,742,220 546,786 5,830,223 ---------- ------------ ---------- ------------ Total transactions in Fund shares .................................. 4,464 $ 277,373 2,665,963 $ 28,431,695 ========== ============ ========== ============
8. TRUSTEES' FEES AND EXPENSES During the fiscal year ended June 30, 2004, there were eight Trustees, one of which is affiliated with the Manager and is not paid any trustee fees. Each Trustee's fee paid during the year was at the annual rate of $8,350 for carrying out their responsibilities and attendance at regularly scheduled Board Meetings. If additional or special meetings are scheduled for the Fund, separate meeting fees are paid for each such meeting to those Trustees in attendance. The Fund also reimburses Trustees for expenses such as travel, accomodations, and meals incurred in connection with attendance at regularly scheduled or special Board Meetings and at the Annual Meeting of Shareholders. For the fiscal year ended June 30, 2004, such reimbursements averaged approximately $5,204 per Trustee. 9. INCOME TAX INFORMATION AND DISTRIBUTIONS The Fund declares dividends daily from net investment income and makes payments monthly in additional shares at the net asset value per share, in cash, or in a combination of both, at the shareholder's option. Net realized capital gains, if any, are distributed annually and are taxable. The Fund intends to maintain, to the maximum extent possible, the tax-exempt status of interest payments received from portfolio municipal securities in order to allow dividends paid to shareholders from net investment income to be exempt from regular Federal and State of Rhode Island income taxes. However, due to differences between financial statement reporting and Federal income tax reporting requirements, distributions made by the Fund may not be the same as the Fund's net investment income, and/or net realized securities gains. In this regard, the Fund credited distributions in excess of net investment income in the amount of $94,092 and debited additional paid-in capital in the amount of $94,092 at June 30, 2004. This adjustment had no impact on the Fund's aggregate net assests at June 30, 2004. Further, a small portion of the dividends may, under some circumstances, be subject to taxes at ordinary income rates. At June 30, 2004, the Fund had a capital loss carryover of $632,152 which expires on June 30, 2009. This carryover is available to offset future net realized gains on securities transactions to the extent provided for in the Internal Revenue Code. To the extent that this loss is used to offset future realized capital gains, it is probable the gains so offset will not be distributed. The Fund utilized $67,236 of capital loss carryovers from a prior year. In addition, the Fund incurred losses from November 1, 2003 through June 30, 2004 in the amount of $181,469 that will be treated as arising on July 1, 2004. Tax character of distributions: Year Ended June 30, 2004 2003 ---------- ---------- Net tax-exempt income $5,557,238 $5,052,703 Ordinary income 95,054 97,914 ---------- ---------- $5,652,292 $5,150,617 ========== ========== As of June 30, 2004, the components of distributable earnings on a tax basis were as follows: Accumulated net realized loss $ (813,621) Unrealized appreciation 2,961,795 ----------- $ 2,148,174 =========== At June 30, 2004, the difference between book basis and tax basis unrealized appreciation was attributable primarily to the treatment of accretion of discounts and amortization of premiums. NARRAGANSETT INSURED TAX-FREE INCOME FUND FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A CLASS C -------------------------------------------------- ---------------------------------------------- YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, -------------------------------------------------- ---------------------------------------------- 2004 2003 2002 2001 2000 2004 2003 2002 2001 2000 -------- -------- ------- ------- ------- ------- ------- ------- ------ ------ Net asset value, beginning of period .................. $ 10.92 $ 10.47 $ 10.32 $ 9.91 $ 10.16 $ 10.92 $ 10.47 $ 10.32 $ 9.91 $10.16 -------- -------- ------- ------- ------- ------- ------- ------- ------ ------ Income (loss) from investment operations: Net investment income+ .. 0.41 0.42 0.45 0.47 0.49 0.32 0.33 0.36 0.38 0.40 Net gain (loss) on securities (both realized and unrealized) ........... (0.42) 0.47 0.16 0.44 (0.24) (0.43) 0.47 0.16 0.43 (0.24) -------- -------- ------- ------- ------- ------- ------- ------- ------ ------ Total from investment operations ............ (0.01) 0.89 0.61 0.91 0.25 (0.11) 0.80 0.52 0.81 0.16 -------- -------- ------- ------- ------- ------- ------- ------- ------ ------ Less distributions (note 9): Dividends from net investment income ...... (0.42) (0.44) (0.46) (0.50) (0.50) (0.33) (0.35) (0.37) (0.40) (0.41) -------- -------- ------- ------- ------- ------- ------- ------- ------ ------ Net asset value, end of period .................. $ 10.49 $ 10.92 $ 10.47 $ 10.32 $ 9.91 $ 10.48 $ 10.92 $ 10.47 $10.32 $ 9.91 ======== ======== ======= ======= ======= ======= ======= ======= ====== ====== Total return (not reflecting sales charge) ... (0.10)% 8.64% 6.07% 9.19% 2.58% (1.04)% 7.72% 5.16% 8.27% 1.71% Ratios/supplemental data Net assets, end of period (in thousands) . $101,413 $106,887 $86,378 $67,669 $59,899 $17,901 $22,506 $15,606 $7,023 $4,681 Ratio of expenses to average net assets .... 0.53% 0.51% 0.49% 0.41% 0.41% 1.38% 1.35% 1.34% 1.26% 1.26% Ratio of net investment income to average net assets ............ 3.82% 3.96% 4.34% 4.65% 4.89% 2.98% 3.10% 3.46% 3.78% 4.04% Portfolio turnover rate .. 8.61% 11.74% 6.02% 3.08% 8.66% 8.61% 11.74% 6.02% 3.08% 8.66% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets .... 0.91% 0.88% 0.88% 0.95% 0.95% 1.76% 1.72% 1.72% 1.80% 1.80% Ratio of net investment income to average net assets ............ 3.44% 3.59% 3.95% 4.11% 4.36% 2.60% 2.73% 3.07% 3.24% 3.50% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets .... 0.52% 0.48% 0.46% 0.40% 0.38% 1.37% 1.33% 1.31% 1.25% 1.23%
- ---------- + Per share amounts have been calculated using the monthly average shares method. See accompanying notes to financial statements. FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I CLASS Y -------------------------------------------- ---------------------------------------------------- YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, -------------------------------------------- ---------------------------------------------------- 2004 2003 2002 2001 2000 2004 2003 2002 2001 2000 ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ Net asset value, beginning of period ................. $10.91 $10.47 $10.32 $ 9.90 $10.15 $ 10.92 $ 10.47 $ 10.32 $ 9.91 $10.16 ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ Income from investment operations: Net investment income+ .. 0.41 0.42 0.44 0.47 0.48 0.43 0.45 0.46 0.48 0.50 Net gain (loss) on securities (both realized and unrealized) .......... (0.42) 0.46 0.17 0.43 (0.23) (0.43) 0.45 0.17 0.44 (0.24) ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ Total from investment operations ........... (0.01) 0.88 0.61 0.90 0.25 -- 0.90 0.63 0.92 0.26 ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ Less distributions (note 9): Dividends from net investment income .... (0.42) (0.44) (0.46) (0.48) (0.50) (0.43) (0.45) (0.48) (0.51) (0.51) ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ Net asset value, end of period .................... $10.48 $10.91 $10.47 $10.32 $ 9.90 $ 10.49 $ 10.92 $ 10.47 $10.32 $ 9.91 ====== ====== ====== ====== ====== ======= ======= ======= ====== ====== Total return (not reflecting sales charge) ............. (0.12)% 8.52% 6.05% 9.29% 2.56% 0.03% 8.80% 6.22% 9.35% 2.73% Ratios/supplemental data Net assets, end of period (in thousands) ....... $ 790 $ 449 $ 386 $ 93 $ 75 $22,113 $18,193 $11,726 $3,332 $2,277 Ratio of expenses to average net assets ... 0.53% 0.52% 0.50% 0.41% 0.43% 0.38% 0.36% 0.34% 0.26% 0.26% Ratio of net investment income to average net assets ............... 3.82% 3.95% 4.32% 4.65% 4.87% 3.97% 4.10% 4.47% 4.79% 5.07% Portfolio turnover rate . 8.61% 11.74% 6.02% 3.08% 8.66% 8.61% 11.74% 6.02% 3.08% 8.66% The expense and net investment income ratios without the effect of the voluntary waiver of a portion of the management fee and the voluntary expense reimbursement were: Ratio of expenses to average net assets ... 0.91% 0.89% 0.89% 0.96% 0.97% 0.76% 0.73% 0.73% 0.80% 0.79% Ratio of net investment income to average net assets ........... 3.44% 3.58% 3.93% 4.10% 4.34% 3.59% 3.73% 4.08% 4.24% 4.54% The expense ratios after giving effect to the waiver, reimbursement and expense offset for uninvested cash balances were: Ratio of expenses to average net assets ... 0.52% 0.49% 0.48% 0.41% 0.40% 0.37% 0.33% 0.31% 0.26% 0.23%
- ---------- + Per share amounts have been calculated using the monthly average shares method. See accompanying notes to financial statements. ADDITIONAL INFORMATION (UNAUDITED) TRUSTEES(1) AND OFFICERS
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- INTERESTED TRUSTEES(4) Lacy B. Herrmann Founder and Founder, Chief Executive Officer and 11(5) Director or trustee, New York, NY Chairman of Chairman of the Board, Aquila Pimco Advisors VIT, (05/12/29) the Board Management Corporation, the sponsoring Oppenheimer Quest of Trustees organization and parent of the Manager Value Funds Group, since 1992 or Administrator and/or Adviser or Oppenheimer Small Cap Sub-Adviser to each fund of the Value Fund, Aquila(SM) Group of Funds,(6) Chairman Oppenheimer Midcap and Chief Executive Officer of the Fund, and Oppenheimer Manager or Administrator and/or Rochester Group of Adviser or Sub-Adviser to each since Funds. 2004, and Founder, Chairman of the Board of Trustees, Trustee and (currently or until 1998) President of each since its establishment, beginning in 1984, except Chairman of the Board of Trustees of Hawaiian Tax-Free Trust, Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust through 2003; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations. David A. Duffy Trustee Chairman, Rhode Island Convention 1 Citizens Bank of Rhode North Kingstown, RI since 1995 Center Authority since 2003; retired Island since 1999. (08/07/39) Founder, formerly President, Duffy & Shanley, Inc., a marketing communications firm, 1973-2003; Transition Chairman for Gov. Donald Carcieri (R.I.); past National Chairman, National Conference for Community and Justice (NCCJ); Chairman, Providence College President's Council; officer or director of numerous civic and non-profit organizations. John J. Partridge Trustee Founding Partner, Partridge, Snow & 1 None Providence, RI since 2002 Hahn, LLP, a law firm, Providence, (05/05/40) Rhode Island, since 1988; director of various educational, civic and charitable organizations, including Greater Providence Chamber of Commerce and Memorial Hospital of Rhode Island.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- NON-INTERESTED TRUSTEES Vernon R. Alden Trustee Retired; former director or trustee of 1 Sonesta International Boston, MA since 1992 various Fortune 500 companies, Hotels Corporation. (04/07/23) including Colgate-Palmolive and McGraw Hill; formerly President of Ohio University and Associate Dean of the Harvard University Graduate School of Business Administration; member of several Japan-related advisory councils, including Chairman of the Japan Society of Boston; trustee of various cultural, educational and civic organizations. Paul Y. Clinton Trustee Principal, Clinton Management 1(5) Director or trustee Pimco Osterville, MA since 1996 Associates, a financial and venture Advisors VIT, Oppenheimer and Naples, FL capital consulting firm. Quest Value Funds Group, (02/14/31) Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, and Oppenheimer Rochester Group of Funds. William J. Nightingale Trustee Retired; formerly Chairman, founder 2 Ring's End, Inc. Rowayton, CT since 1992 (1975) and Senior Advisor until 2000 (09/16/29) of Nightingale & Associates, L.L.C., a general management consulting firm focusing on interim management, divestitures, turnaround of troubled companies, corporate restructuring and financial advisory services. Cornelius T. Ryan Trustee Founder and General Partner, Oxford 2(5) Director of Neuberger & Westport, CT and since 2002 Ventures Partners, a group of Berman Equity Funds. Sun Valley, ID investment venture capital (11/14/31) partnerships, since 1981 and Founder and General Partner, Oxford Bioscience Partners, a group of venture capital partnerships focused on life sciences, genomics, healthcare information technology and medical devices, since 1991. J. William Weeks Trustee since Retired; limited partner and investor 2 None Palm Beach, FL 1995 in various real estate partnerships (06/22/27) since 1988; formerly Senior Vice President or Vice President of the Aquila Bond Funds; and Vice President of the Distributor.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- --------------------------------------- ---------- --------------------- OFFICERS Diana P. Herrmann President Vice Chair of Aquila Management 6 None New York, NY since 1998 Corporation, Founder of the Aquila(SM) (02/25/58) and Vice Group of Funds and parent of Aquila Chair since Investment Management LLC, Manager, 2003 since 2004, President and Chief Operating Officer since 1997, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Vice Chair since 2004 and President, Chief Operating Officer and Manager of the Manager since 2003; Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila(SM) Group of Funds since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; Governor, Investment Company Institute and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. Charles E. Childs, III Executive Vice Executive Vice President of all funds N/A N/A New York, NY President in the Aquila(SM) Group of Funds and the (04/01/57) since 2003; Manager since 2003; Senior Vice President, corporate development, formerly Vice President, Assistant Vice President and Associate of the Manager's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Stephen J. Caridi Senior Vice Vice President of the Distributor N/A N/A New York, NY President since 1995; Vice President, Hawaiian (05/06/61) since 1998 Tax-Free Trust since 1998; Senior Vice President, Narragansett Insured Tax-Free Income Fund since 1998, Vice President 1996-1997; Senior Vice President, Tax-Free Fund of Colorado since 2004; Assistant Vice President, Tax-Free Fund For Utah since 1993.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, FUND AND PRINCIPAL COMPLEX (THE POSITION HELD IS ADDRESS(2) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(3) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ---------------------------------------- ---------- --------------------- Joseph P. DiMaggio Chief Financial Chief Financial Officer of the N/A N/A New York, NY Officer since Aquila(SM) Group of Funds since 2003 and (11/06/56) 2003 and Treasurer since 2000; Controller, Van Treasurer Eck Global Funds, 1993-2000. since 2000 Edward M. W. Hines Secretary Partner, Hollyer Brady Barrett & Hines N/A N/A New York, NY since 1992 LLP, legal counsel to the Fund, since (12/16/39) 1989; Secretary of the Aquila(SM) Group of Funds. Robert W. Anderson Chief Chief Compliance Officer since 2004, N/A N/A New York, NY Compliance Compliance Officer of the Manager or (08/23/40) Officer since its predecessor and current parent 2004 and since 1998 and Assistant Secretary of Assistant the Aquila(SM) Group of Funds since Secretary 2000; Consultant, The Wadsworth Group, since 2000 1995-1998. John M. Herndon Assistant Assistant Secretary of the Aquila(SM) N/A N/A New York, NY Secretary Group of Funds since 1995 and Vice (12/17/39) since 1995 President of the three Aquila Money-Market Funds since 1990; Vice President of the Manager or its predecessor and current parent since 1990. Lori A. Vindigni Assistant Assistant Treasurer of the Aquila(SM) N/A N/A New York, NY Treasurer Group of Funds since 2000; Assistant (11/02/66) since 2000 Vice President of the Manager or its predecessor and current parent since 1998; Fund Accountant for the Aquila(SM) Group of Funds, 1995-1998.
- ----------- (1) The Fund's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll free). (2) The mailing address of each Trustee and officer is c/o Narragansett Insured Tax-Free Income Fund, 380 Madison Avenue, New York, NY 10017. (3) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (4) Mr. Herrmann is an interested person of the Fund, as that term is defined in the 1940 Act, as an officer of the Fund, as a director, officer and shareholder of the Manager and as a shareholder and director of the Distributor. Mr. Duffy is an interested person as a director of the Sub-Adviser. Mr. Partridge is an interested person of the Fund as a partner of the law firm that performs legal services for the Sub-Adviser. (5) Does not include Funds that are currently inactive. (6) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these 11 funds are called the "Aquila(SM) Group of Funds." PRIVACY NOTICE (UNAUDITED) NARRAGANSETT INSURED TAX-FREE INCOME FUND OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Fund we collect certain nonpublic personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about a fund. INFORMATION WE COLLECT. "Nonpublic personal information" is personally identifiable financial information about you as an individual or your family. The kinds of nonpublic personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose nonpublic personal information about you to companies that provide necessary services to us, such as the fund's transfer agent, distributor, investment adviser or sub-adviser, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to nonpublic personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all nonpublic personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all nonpublic information about you that each of these companies may obtain in connection with services provided to the Fund or to you as a shareholder of the Fund. INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquila(SM) Group of Funds produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent the entire list of portfolio of securities of your fund twice a year in the semi-annual and annual reports you receive. You should know, however, that we prepare, and have available, portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your trust's portfolio other than in your shareholder reports, please check our website (www.aquilafunds.com) or call us at 1-800-437-1020. FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code and no current action on the part of shareholders is required. For the fiscal year ended June 30, 2004, $5,557,238 of dividends paid by Narragansett Insured Tax-Free Income Fund, constituting 98.32% of total dividends paid during the fiscal year ended June 30, 2004, were exempt-interest dividends and the balance was ordinary dividend income. Prior to January 31, 2004, shareholders were mailed IRS Form 1099-DIV which contained information on the status of distributions paid for the 2003 calendar year. Prior to January 31, 2005, shareholders will be mailed IRS Form 1099-DIV which will contain information on the status of distributions paid for the 2004 calendar year. PROXY VOTING RECORD. The Fund does not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2004 with respect to which the Fund was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. FOUNDER AQUILA MANAGEMENT CORPORATION MANAGER AQUILA INVESTMENT MANAGEMENT LLC 380 Madison Avenue, Suite 2300 New York, New York 10017 INVESTMENT SUB-ADVISER CITIZENS INVESTMENT ADVISORS, A DEPARTMENT OF CITIZENS BANK OF RHODE ISLAND One Citizens Plaza Providence, Rhode Island 02903 BOARD OF TRUSTEES Lacy B. Herrmann, Chairman Vernon R. Alden Paul Y. Clinton David A. Duffy William J. Nightingale John J. Partridge Cornelius T. Ryan J. William Weeks OFFICERS Diana P. Herrmann, Vice Chair and President Stephen J. Caridi, Senior Vice President Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 CUSTODIAN BANK ONE TRUST COMPANY, N.A. 1111 Polaris Parkway Columbus, Ohio 43240 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC INC. 760 Moore Road King of Prussia, Pennsylvania 19406 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 757 Third Avenue New York, New York 10017 Further information is contained in the Prospectus, which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of June 30, 2004 (the end of the reporting period) the Trust has adopted a code of ethics that applies to the Fund's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002.; (f)(1) Pursuant to Item 10(a)(1), a copy of the Fund's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Fund's Code of Ethics that applies to the Fund's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Fund's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties under the Charter. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES a) Audit Fees - The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $15,400 in 2004 and $14,950 in 2003. b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years other than stated above. c) Tax Fees - The Registrant was billed by the principal accountant $7,875 and $7,767 in 2004 and 2003, respectively, for tax return preparation, tax compliance and tax planning. d) All Other Fees - There were no additional fees paid for audit and non- audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis. e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years. h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS. (a)(1) (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NARRAGANSETT INSURED TAX-FREE INCOME FUND By: /s/ Lacy B. Herrmann - --------------------------------- Chairman of the Board September 6, 2004 By: /s/ Diana P. Herrmann - --------------------------------- Vice Chair and President September 6, 2004 By: /s/ Joseph P. DiMaggio - ----------------------------------- Chief Financial Officer and Treasurer September 6, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Lacy B. Herrmann - --------------------------------- Lacy B. Herrmann Chairman of the Board September 6, 2004 By: /s/ Diana P. Herrmann - --------------------------------- Diana P. Herrmann Vice Chair and President September 6, 2004 By: /s/ Joseph P. DiMaggio - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer September 6, 2004 EX-99.906 CERT 2 nitfif906cert.txt SECTION 906 CERTIFICATION CERTIFICATION Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18,United States Code), each of the undersigned officers of Narragansett Insured Tax-Free Income Fund, do hereby certify to such officer's knowledge, that: The semi-annual report on Form N-CSR of Narragansett Insured Tax-Free Income Fund for the period ended June 30, 2004 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Narragansett Insured Tax-Free Income Fund. Dated: September 6, 2004 /s/ Lacy B. Herrmann ------------------------------- Lacy B. Herrmann Chairman of the Board Narragansett Insured Tax-Free Income Fund Dated: September 6, 2004 /s/ Diana P. Herrmann ---------------------------------- Vice Chair and President Narragansett Insured Tax-Free Income Fund Dated: September 6, 2004 /s/ Joseph P. DiMaggio ------------------------------------ Chief Financial Officer and Treasurer Narragansett Insured Tax-Free Income Fund A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Narragansett Insured Tax-Free Income Fund and will be retained by Narragansett Insured Tax-Free Income Fund and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. EX-99.CERT 3 nitfif302cert.txt SECTION 302 CERTIFICATION CERTIFICATIONS I, Lacy B. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Narragansett Insured Tax-Free Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 6, 2004 /s/ Lacy B. Herrmann - ---------------------- Title: Chairman of the Board I, Diana P. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Narragansett Insured Tax-Free Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 6, 2004 /s/ Diana P. Herrmann - ---------------------- Title: Vice Chair and President I, Joseph P. DiMaggio, certify that: 1. I have reviewed this report on Form N-CSR of Narragansett Insured Tax-Free Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 6, 2004 /s/ Joseph P. DiMaggio - ------------------------ Title: Chief Financial Officer and Treasurer EX-99.CODE ETH 4 sabcode.txt SARBANES-OXLEY CODE OF ETHICS AQUILASM GROUP OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS UNDER SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 I. Covered Officers/Purpose of the Code This is the code of ethics (the "Code") for the investment companies within the Aquilasm Group of Funds (collectively, "Funds" and each, a "Fund," each of which is detailed in Exhibit A). It applies to the Fund's Principal Executive Officer(s) and Principal Financial Officer(s) (the "Covered Officers," each of whom is listed in Exhibit B), for the purpose of promoting: * honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; * compliance with applicable laws and governmental rules and regulations; * the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and * accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually 'engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. The Fund's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. * * * * Each Covered Officer must: * not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; * not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; There are some conflict of interest situations that should always be discussed with the general counsel of the Fund ("General Counsel"), if material. Examples of these include: * service as a director on the board of any public or private company; * the receipt of any non-nominal gifts; the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business- related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; * any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; * a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance Each Covered Officer should familiarize himself/herself with the disclosure requirements generally applicable to the Fund; each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Trustees and auditors, and to governmental regulators and self-regulatory organizations; each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code; annually thereafter affirm to the Board that he/she has complied with the requirements of the Code; not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and notify the Chair of the Audit Committee of the Fund promptly if he/she knows of any violation of this Code. Failure to do so is itself a violation of this Code; file at least annually a complete and accurate Funds' Trustees and Officers Questionnaire. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers1 sought by the Chairman of the Board or the President will be considered by the Audit Committee (the "Committee"). The Funds will follow these procedures in investigating and enforcing this Code: the General Counsel will take all appropriate action to investigate any potential violations reported to him; if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; any matter that the General Counsel believes is a violation will be reported to the Committee; if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; the Committee will be responsible for granting waivers, as appropriate; and any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act and the adviser's more detailed policies and procedures set forth in their respective codes are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit B, must be approved or ratified by a majority vote of the Board, including a majority of independent Trustees. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and the General Counsel, and if deemed appropriate by the Board, with other Funds in the complex where the Funds share a common Covered Officer. VIII. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. Exhibit A Funds Covered by this Code of Ethics Aquila Equity Fund Aquila Rocky Mountain Equity Fund Capital Cash Management Trust Cash Assets Trust series, consisting of Pacific Capital Cash Assets Trust Pacific Capital Tax-Free Cash Assets Trust Pacific Capital U.S. Government Cash Assets Trust Churchill Cash Reserves Trust Churchill Tax-Free Trust Hawaiian Tax-Free Trust Narragansett Insured Tax-Free Income Fund Prime Cash Fund Tax-Free Fund For Utah Tax-Free Fund of Colorado Tax-Free Trust of Arizona Tax-Free Trust of Oregon Exhibit B Persons Covered by this Code of Ethics The following officers of each Fund, and the identities of such officers as of October 1, 2003: Chairman Lacy B. Herrmann President Diana P. Herrmann Treasurer and Chief Financial Officer Joseph P. DiMaggio 1 Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics" and "implicit waiver," which must also be disclosed, as "the registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer" of the registrant. -----END PRIVACY-ENHANCED MESSAGE-----