Frequently Asked Questions |
What is Narragansett Insured Tax-Free Income Fund? |
| What are tax-free municipal bonds? |
| How does the Fund operate? |
| What are some of the benefits I receive from buying shares of a municipal bond fund? |
| What size investment can be made in the Fund? |
| Who manages the Fund's portfolio? |
| Who maintains the Fund's portfolio securities? |
| How often does the Fund pay dividends? |
| What rate of return will the Fund yield? |
| How can I find out what the Fund's yield is? |
| What's the difference between an SEC yield and a distribution yield? |
| How can I keep track of my investment in the Fund? |
| How liquid is my investment in the Fund? |
| Is the Fund right for me? |
| How can I invest in the Fund? |
| How can I get answers to any other questions I might have? |
| What is Narragansett Insured Tax-Free Income Fund? Narragansett Insured Tax-Free Income Fund is a mutual fund which invests in municipal bonds. The Fund seeks to provide as high a level of current income that is exempt from both State of Rhode Island and Federal income taxes as is consistent with preservation of investors' capital. To achieve this objective, the Fund invests primarily in tax-free municipal obligations of Rhode Island issuers which are insured by nationally-recognized insurers of municipal obligations. Municipal obligations are the kind of securities that finance schools, highways, hospitals, and water and sewer facilities here in Rhode Island. The Fund has been created especially for the benefit of Rhode Island residents. |
What are tax-free municipal bonds?They are bonds issued by the various states in our country and their political subdivisions, such as counties, cities, school districts, and local public authorities and agencies to finance various vital infrastructure needs. As an investment, municipal bonds are generally considered to provide the second highest degree of credit quality available - second only to U.S. Government obligations - due to the taxing or revenue raising power of municipal issuers. Interest on most municipal bonds is exempt, under present tax laws, from Federal income tax and generally from the income taxes of the states in which they are issued. However, a portion of the income from the Fund may be subject to Federal and state taxes, including the Alternative Minimum Tax, for certain investors. |
| How
does the Fund operate? The Fund combines your investment with that of many other Rhode Island investors. It purchases and maintains a continuously managed portfolio consisting of a diverse number of insured tax-exempt Rhode Island municipal bonds and similar type obligations having various maturities. Any municipal obligations which the Fund may purchase which are not insured must meet select quality standards. |
| What are some of the benefits
I receive from buying shares of a municipal bond fund? The Fund's professional management monitors the investments on a continuing basis and can react to changing credit and economic conditions and the varying interest rate environment. You also benefit from greater diversification and from economies of scale provided by the Fund's overall size. Additionally, through ownership of a municipal bond fund you avoid certain administrative problems and transaction costs associated with the purchase and maintenance of individual municipal bonds. |
| What size investment can be made
in the Fund ? The minimum initial investment in the Fund is $1,000 - a far smaller amount than if you were to buy a municipal bond directly. You may also open an account by establishing an Automatic Investment Program which permits purchases of $50 or more each month. You may make any size investment you wish above the initial minimum amount. Just as important, any subsequent investment you make may be of any amount - there is no minimum. Class I and Class Y shares are available to investors only through a professional financial advisor or a financial institution. Please see the prospectus for details. |
| Who manages the Fund's portfolio? CITIZENS INVESTMENT ADVISORS, a department of RBS Citizens, N.A., is the Fund's Investment Sub-Adviser, providing the Fund with experienced Rhode Island-based professional management. As an open-end mutual fund, the Fund is actively managed on a continuous basis. Attention is paid by the portfolio managers to interest rate trends as well as to the quality, diversification and maturity distribution of municipal obligations used in the Fund's portfolio. |
| Who
maintains the Fund's portfolio securities? All securities owned by the Fund are kept in a separately segregated custody account at JPMorgan Chase, N.A., which maintains custody of $14.4 trillion of clients' assets. |
| How often does the Fund pay dividends? Dividends are declared daily and paid monthly. Unless you specifically request otherwise, your dividends and distributions will be reinvested automatically for you in full and fractional shares of the Fund at the then current Net Asset Value per share, without any sales charge and will compound tax-free. You can, of course, if you wish, have any or all of the dividends or distributions paid to you by check each month, or electronically transferred to your personal bank account. Alternatively, you may direct all of your distributions to another one of your existing accounts in the Aquila Group of Funds. |
| What
rate of return will the Fund yield? The Fund does not have a fixed rate of return. The rate of return will vary with market conditions as well as the composition of the Fund's portfolio. The Fund's portfolio manager will, however, seek to achieve as high a return as possible consistent with preservation of capital. Investors should realize that because the Fund has a continuously managed portfolio, it will have operating expenses, including a management fee. These expenses are deducted from the gross income of the Fund's portfolio in determining the dividend rate declared daily and paid monthly. |
| How
can I find out what the Fund's yield is? You may call the Fund, toll-free at 1-800-437-1020. The latest 30-day SEC yield is available to you on any business day between 9:00 a.m. and 5:00 p.m. (Eastern Time). |
What's the difference between an SEC yield and a distribution yield? The distribution yield reflects the fund dividend distributions relative to the fund price per share/ The total of the per share dividend payments for a 30-day period of time is then annualized. |
How can I keep track of my investment
in the Fund ? For your further convenience, if your shares are kept with the Fund, you may click here or call the Fund's Shareholder Servicing Agent, toll-free at 1-800-437-1000, on any business day to get an update of your account. |
| How liquid is my investment in the Fund? While you have ready liquidity, you should consider the Fund as a long-term investment. You may redeem all or part of your investment on any business day at the next-determined Net Asset Value of the Fund's shares after acceptance of your redemption request. You should be aware, however, that, because municipal bonds which comprise the Fund's portfolio vary in market price with prevailing interest rates and economic factors within the State, and since the Fund's price per share is determined by the market value of the bonds in the Fund's portfolio at the time of liquidation, the per share price you receive may be more or less than what you originally paid. The prospectus outlines a number of different ways you may redeem your shares. There are no redemption fees or withdrawal penalties on regular Class A Shares. A 1% contingent deferred sales charge (CDSC) applies to Class C Shares redeemed within the first 12 months of purchase. |
| Is the Fund right for me? This is something which you must ultimately decide for yourself. The Fund is intended as a long-term investment seeking to provide tax-free income while providing preservation of your invested capital. To help you judge the specific benefits of such triple tax-free income, please click here to see how much a taxable investment would have to yield to match double tax-free income from the Fund under present State of Rhode Island and Federal tax laws. |
| How can I invest in the Fund ? You may do so easily through your local financial professional at the public offering price as described in the Prospectus. You may invest in Class A or Class C shares by completing the Fund's application. Class I and Class Y shares are available to investors only through a professional financial advisor or a financial institution. Please see the prospectus for details. The Prospectus, provided free by your financial professional, contains complete details about the Fund. You should read it carefully before you invest. There is a sales charge, maximum of 4%, included in the offering price of Class A Shares. Class C Shares do not have a sales charge, but do have a contingent deferred sales charge (CDSC) of 1% if a redemption occurs within the first 12 months of purchase. |
| How can I get answers to any other questions
I might have? Your local financial professional should be able to help you with any questions you have. Or, you may call the Fund, toll-free at 1-800-437-1020 or contact us by e-mail. |
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