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 811-4084
Hawaiian Tax-Free Trust
(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: 3/31
Date of reporting period: 9/30/03
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SERVING HAWAII INVESTORS
FOR OVER 15 YEARS
HAWAIIAN
TAX-FREE TRUST
380 MADISON AVENUE, SUITE 2300 * NEW YORK, NY 10017
800-437-1020 * 212-697-6666
[Logo of Hawaiian Tax-Free Trust: a palm tree in front of a circle which has an
island and water within it]
SEMI-ANNUAL REPORT
HAWAIIAN TAX-FREE TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 2003
(UNAUDITED)
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (97.5%) S&P VALUE
- ----------- ------------------------------------------------------- ---------- ------------
HAWAII (95.0%)
-------------------------------------------------------
Board of Regents, University of Hawaii, University
System Revenue Bonds, Series A, FGIC Insured,
$ 2,000,000 5.500%, 07/15/19 ................................ Aaa/AAA $ 2,226,480
2,000,000 5.500%, 07/15/21 ................................ Aaa/AAA 2,192,280
2,000,000 5.500%, 07/15/22 ................................ Aaa/AAA 2,175,420
3,000,000 5.500%, 07/15/29 ................................ Aaa/AAA 3,197,520
Board of Regents, University of Hawaii, University
System Revenue Bonds, Series B, FSA Insured,
1,110,000 5.250%, 10/01/12 ................................ Aaa/AAA 1,247,729
1,000,000 5.250%, 10/01/13 ................................ Aaa/AAA 1,118,900
1,140,000 5.250%, 10/01/14 ................................ Aaa/AAA 1,264,648
1,395,000 5.250%, 10/01/15 ................................ Aaa/AAA 1,553,667
Board of Regents, University of Hawaii, University
System Revenue Bonds, Series I, Prerefunded
10/01/04 @ 102, FGIC Insured,
1,110,000 5.300%, 10/01/08 ................................ Aaa/AAA 1,162,747
2,825,000 5.500%, 10/01/18 ................................ Aaa/AAA 3,009,360
City and County of Honolulu, Hawaii General
Obligation Bonds, Public Refunding and
Improvements Bonds, Series A, Weekly Reset
VRDN(1), LOC: Landesbank Hessen Thuringen,
2,500,000 1.050%, 01/01/04 ................................ VMIG1/A-1+ 2,500,000
400,000 1.050%, 01/01/05 ................................ VMIG1/A-1+ 400,000
3,000,000 1.050%, 01/01/06 ................................ VMIG1/A-1+ 3,000,000
3,700,000 1.050%, 01/01/07 ................................ VMIG1/A-1+ 3,700,000
8,145,000 1.050%, 01/01/13 ................................ VMIG1/A-1+ 8,145,000
6,225,000 1.050%, 01/01/16 ................................ VMIG1/A-1+ 6,225,000
1,655,000 1.050%, 01/01/18 ................................ VMIG1/A-1+ 1,655,000
1,400,000 1.050%, 01/01/20 ................................ VMIG1/A-1+ 1,400,000
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, Escrowed to Maturity,
FGIC Insured,
3,995,000 5.750%, 04/01/11 ................................ Aaa/NR 4,706,909
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, Escrowed to Maturity,
FGIC Insured,
$ 4,110,000 6.000%, 01/01/11 ................................ Aaa/AAA $ 4,886,667
920,000 6.000%, 01/01/12 ................................ Aaa/AAA 1,099,437
775,000 5.750%, 04/01/13 ................................ Aaa/AAA 921,033
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, Escrowed to Maturity,
MBIA Insured,
1,355,000 6.000%, 11/01/09 ................................ Aaa/AAA 1,618,304
410,000 6.000%, 11/01/10 ................................ Aaa/AAA 490,791
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, FGIC Insured,
9,970,000 7.350%, 07/01/07 ................................ Aaa/AAA 11,888,627
3,600,000 7.350%, 07/01/08 ................................ Aaa/AAA 4,405,284
1,715,000 6.000%, 01/01/11 ................................ Aaa/AAA 2,017,149
5,000 5.750%, 04/01/11 ................................ Aaa/AAA 5,829
1,580,000 6.000%, 01/01/12 ................................ Aaa/AAA 1,865,632
3,025,000 5.750%, 04/01/13 ................................ Aaa/AAA 3,549,414
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, FSA Insured,
2,500,000 5.000%, 09/01/09 ................................ Aaa/AAA 2,825,275
3,500,000 5.375%, 09/01/18 ................................ Aaa/AAA 3,858,400
2,000,000 5.125%, 09/01/20 ................................ Aaa/AAA 2,115,080
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, MBIA Insured,
860,000 6.000%, 11/01/09 ................................ Aaa/AAA 1,022,850
1,090,000 6.000%, 11/01/10 ................................ Aaa/AAA 1,297,863
3,000,000 5.250%, 03/01/15 ................................ Aaa/AAA 3,392,070
2,280,000 5.000%, 11/01/15 ................................ Aaa/AAA 2,435,542
2,000,000 5.250%, 03/01/18 ................................ Aaa/AAA 2,209,260
City and County of Honolulu, Hawaii General
Obligation Bonds, Series A, Prerefunded
09/01/06 @ 102, FGIC Insured,
440,000 5.625%, 09/01/14 ................................ Aaa/AAA 501,292
City and County of Honolulu, Hawaii General
Obligation Bonds, Series B, FGIC Insured,
$ 7,310,000 5.500%, 10/01/11 ................................ Aaa/AAA $ 8,459,790
930,000 5.000%, 11/01/13 ................................ Aaa/AAA 1,006,121
1,060,000 5.000%, 11/01/14 ................................ Aaa/AAA 1,141,260
2,595,000 5.125%, 07/01/15 ................................ Aaa/AAA 2,819,701
530,000 5.000%, 11/01/16 ................................ Aaa/AAA 566,432
1,400,000 5.000%, 11/01/17 ................................ Aaa/AAA 1,490,174
4,490,000 5.000%, 07/01/19 ................................ Aaa/AAA 4,751,543
1,395,000 5.000%, 07/01/20 ................................ Aaa/AAA 1,468,907
City and County of Honolulu, Hawaii General
Obligation Bonds, Series C, FGIC Insured,
7,750,000 5.125%, 07/01/14 ................................ Aaa/AAA 8,459,048
2,510,000 5.000%, 07/01/18 ................................ Aaa/AAA 2,669,485
City and County of Honolulu, Hawaii General
Obligation Bonds, Series C, Weekly Reset
VRDN(1), FGIC Insured,
2,000,000 1.300%, 12/01/13 ................................ VMIG1/A-1+ 2,000,340
City and County of Honolulu, Hawaii General
Obligation Bonds, Series D-AMT, FGIC Insured,
2,000,000 4.750%, 02/01/09 ................................ Aaa/AAA 2,202,120
City and County of Honolulu, Hawaii General
Obligation Bonds, Water Utility Refunding and
Improvement, Escrowed to Maturity, FGIC Insured,
1,125,000 6.000%, 12/01/12 ................................ Aaa/AAA 1,355,501
1,050,000 6.000%, 12/01/15 ................................ Aaa/AAA 1,281,263
City and County of Honolulu, Hawaii Improvement
District No. 261 (Halawa Business Park), Special
Assessment Bonds,
365,000 6.700%, 10/15/04 ................................ NR/NR(2) 383,148
355,000 6.800%, 10/15/05 ................................ NR/NR(2) 380,251
290,000 6.900%, 10/15/06 ................................ NR/NR(2) 309,952
City and County of Honolulu, Hawaii Wastewater
Systems Revenue Bonds, FGIC Insured,
1,395,000 5.000%, 07/01/12 ................................ Aaa/NR 1,548,227
City and County of Honolulu, Hawaii Wastewater
Systems Revenue Bonds, FSA Insured,
$ 3,000,000 5.125%, 07/01/21 ................................ Aaa/AAA $ 3,145,260
5,450,000 5.250%, 07/01/23 ................................ Aaa/AAA 5,721,683
City and County of Honolulu, Hawaii Wastewater
Systems Revenue Bonds, Junior Series, FGIC Insured,
1,000,000 5.250%, 07/01/13 ................................ Aaa/AAA 1,107,850
1,000,000 5.250%, 07/01/15 ................................ Aaa/AAA 1,101,230
2,400,000 5.250%, 07/01/16 ................................ Aaa/AAA 2,628,504
2,000,000 5.250%, 07/01/18 ................................ Aaa/AAA 2,168,700
5,055,000 5.000%, 07/01/23 ................................ Aaa/AAA 5,191,384
City and County of Honolulu, Hawaii Wastewater
Systems Revenue Bonds, Senior Series,
AMBAC Insured,
1,810,000 5.500%, 07/01/11 ................................ Aaa/NR 2,086,767
1,065,000 5.500%, 07/01/16 ................................ Aaa/NR 1,199,872
3,000,000 5.500%, 07/01/17 ................................ Aaa/NR 3,356,280
2,310,000 5.500%, 07/01/18 ................................ Aaa/NR 2,569,552
2,000,000 5.250%, 07/01/19 ................................ Aaa/NR 2,156,680
City and County of Honolulu, Multifamily Revenue
Bonds (Moanalua Hillside Apartments), Weekly
Reset VRDN1, AMT, FNMA Insured,
8,500,000 1.150%, 09/15/32 ................................ NR/A-1+ 8,500,000
County of Hawaii, Hawaii General Obligation
Bonds, Series A, FGIC Insured,
1,700,000 5.450%, 05/01/07 ................................ Aaa/AAA 1,908,386
3,170,000 5.500%, 05/01/08 ................................ Aaa/AAA 3,617,192
2,500,000 5.550%, 05/01/09 ................................ Aaa/AAA 2,879,175
1,900,000 5.000%, 02/01/11 ................................ Aaa/AAA 2,045,293
4,905,000 5.600%, 05/01/11 ................................ Aaa/AAA 5,673,564
1,970,000 5.100%, 02/01/12 ................................ Aaa/AAA 2,135,913
1,000,000 5.600%, 05/01/12 ................................ Aaa/AAA 1,157,630
1,000,000 5.600%, 05/01/13 ................................ Aaa/AAA 1,162,540
2,205,000 5.200%, 02/01/14 ................................ Aaa/AAA 2,343,540
2,440,000 5.200%, 02/01/16 ................................ Aaa/AAA 2,581,935
1,465,000 5.500%, 07/15/16 ................................ Aaa/AAA 1,651,333
County of Hawaii, Hawaii General Obligation
Bonds, Series A, FSA Insured,
$ 1,000,000 5.375%, 05/15/13 ................................ Aaa/AAA $ 1,114,960
1,000,000 5.400%, 05/15/15 ................................ Aaa/AAA 1,109,710
1,000,000 5.000%, 07/15/16 ................................ Aaa/AAA 1,092,100
1,000,000 5.000%, 07/15/17 ................................ Aaa/AAA 1,082,770
1,470,000 5.625%, 05/15/18 ................................ Aaa/AAA 1,637,683
1,000,000 5.000%, 07/15/18 ................................ Aaa/AAA 1,075,210
County of Kauai, Hawaii General Obligation Bonds,
Escrowed to Maturity,
615,000 9.000%, 08/01/04 ................................ A1/NR 655,178
665,000 9.000%, 08/01/05 ................................ A1/NR 759,131
County of Kauai, Hawaii General Obligation Bonds,
Series A, Prerefunded 08/01/10 @ 100, FGIC Insured,
1,000,000 6.125%, 08/01/13 ................................ Aaa/AAA 1,205,290
1,010,000 6.250%, 08/01/14 ................................ Aaa/AAA 1,225,140
1,000,000 6.250%, 08/01/15 ................................ Aaa/AAA 1,213,010
1,000,000 6.250%, 08/01/16 ................................ Aaa/AAA 1,213,010
1,275,000 6.250%, 08/01/17 ................................ Aaa/AAA 1,546,588
County of Kauai, Hawaii General Obligation
Refunding Bonds, Series A, MBIA Insured,
1,010,000 5.700%, 02/01/07 ................................ Aaa/AAA 1,044,128
1,125,000 5.625%, 08/01/13 ................................ Aaa/AAA 1,293,210
1,620,000 5.625%, 08/01/14 ................................ Aaa/AAA 1,846,703
1,035,000 5.625%, 08/01/17 ................................ Aaa/AAA 1,167,780
1,000,000 5.625%, 08/01/18 ................................ Aaa/AAA 1,121,790
2,360,000 5.500%, 08/01/20 ................................ Aaa/AAA 2,585,805
County of Kauai, Hawaii General Obligation Refunding
Bonds, Series B & C, AMBAC Insured,
435,000 5.900%, 08/01/08 ................................ Aaa/AAA 506,370
1,355,000 5.900%, 08/01/08 ................................ Aaa/AAA 1,577,315
1,300,000 5.950%, 08/01/10 ................................ Aaa/AAA 1,536,002
County of Kauai, Hawaii General Obligation Refunding
Bonds, Series B, Escrowed to Maturity, MBIA Insured,
$ 185,000 5.400%, 02/01/04 ................................ Aaa/AAA $ 187,716
County of Kauai, Hawaii General Obligation Refunding
Bonds, Series B, Prerefunded 02/01/04 @ 102,
MBIA Insured,
215,000 5.500%, 02/01/05 ................................ Aaa/AAA 222,514
215,000 5.600%, 02/01/06 ................................ Aaa/AAA 222,583
County of Maui, Hawaii General Obligation Bonds,
Series A, FGIC Insured,
1,130,000 5.250%, 09/01/13 ................................ Aaa/AAA 1,240,672
1,200,000 5.125%, 03/01/14 ................................ Aaa/AAA 1,314,600
1,265,000 5.250%, 09/01/15 ................................ Aaa/AAA 1,382,974
1,050,000 5.125%, 03/01/16 ................................ Aaa/AAA 1,141,182
1,335,000 5.250%, 09/01/16 ................................ Aaa/AAA 1,453,815
2,590,000 5.250%, 03/01/18 ................................ Aaa/AAA 2,822,556
County of Maui, Hawaii General Obligation Bonds,
Series A, MBIA Insured,
1,105,000 5.250%, 03/01/15 ................................ Aaa/AAA 1,236,263
1,205,000 5.250%, 03/01/16 ................................ Aaa/AAA 1,337,984
1,000,000 5.250%, 03/01/18 ................................ Aaa/AAA 1,095,230
1,750,000 5.250%, 03/01/19 ................................ Aaa/AAA 1,897,070
County of Maui, Hawaii General Obligation Bonds,
Series A, MBIA Insured,
1,000,000 5.500%, 03/01/18 ................................ NR/AAA 1,108,190
County of Maui, Hawaii General Obligation Bonds,
Series B, FGIC Insured,
1,065,000 5.250%, 03/01/11 ................................ Aaa/AAA 1,204,249
County of Maui, Hawaii General Obligation Bonds,
Series C, FGIC Insured,
1,020,000 5.250%, 03/01/16 ................................ Aaa/AAA 1,120,929
1,250,000 5.250%, 03/01/20 ................................ Aaa/AAA 1,336,088
County of Maui, Hawaii General Obligation Refunding
Bonds, FGIC Insured,
$ 3,000,000 5.125%, 12/15/11 ................................ Aaa/AAA $ 3,055,170
1,045,000 5.125%, 12/15/13 ................................ Aaa/AAA 1,064,218
County of Maui, Hawaii General Obligation Refunding
Bonds, Series B, MBIA Insured,
1,445,000 5.375%, 09/01/12 ................................ Aaa/AAA 1,655,594
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc.), Series A,
AMBAC Insured,
2,965,000 5.500%, 12/01/14 ................................ Aaa/AAA 3,313,150
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc.), Series A-AMT,
AMBAC Insured,
1,000,000 5.100%, 09/01/32 ................................ Aaa/AAA 1,002,790
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc.), Series A,
MBIA Insured,
3,000,000 4.950%, 04/01/12 ................................ Aaa/AAA 3,326,550
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc.), Series D-AMT,
AMBAC Insured,
2,500,000 6.150%, 01/01/20 ................................ Aaa/AAA 2,794,800
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc., and Subsidiaries
Projects), Series A-AMT, MBIA Insured,
13,000,000 6.600%, 01/01/25 ................................ Aaa/AAA 13,859,299
5,700,000 5.650%, 10/01/27 ................................ Aaa/AAA 6,123,225
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc., and Subsidiaries
Projects), Series B-AMT,
$ 1,000,000 5.000%, 12/01/22 ................................ Aaa/AAA $ 1,016,630
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds (Kapiolani
Health Care System), MBIA Insured,
1,000,000 6.300%, 07/01/08 ................................ Aaa/AAA 1,022,500
1,000,000 6.000%, 07/01/11 ................................ Aaa/AAA 1,120,890
6,000,000 6.400%, 07/01/13 ................................ Aaa/AAA 6,135,240
1,000,000 6.200%, 07/01/16 ................................ Aaa/AAA 1,123,040
1,000,000 6.250%, 07/01/21 ................................ Aaa/AAA 1,119,210
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds (St.
Francis Medical Centers), FSA Insured,
17,000,000 6.500%, 07/01/22 ................................ Aaa/AAA 17,214,709
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds (The
Evangelical Lutheran Good Samaritan Society),
AMBAC Insured,
930,000 4.700%, 11/01/06 ................................ Aaa/AAA 1,016,527
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds (The
Queen's Health System), Series A,
5,000,000 6.050%, 07/01/16 ................................ A1/A+ 5,264,800
8,625,000 6.000%, 07/01/20 ................................ A1/A+ 8,984,490
3,500,000 5.750%, 07/01/26 ................................ A1/A+ 3,615,325
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds (The
Queen's Health System), Series A, Weekly Reset
VRDN(1), SPA: Morgan Guaranty Trust,
8,025,000 1.050%, 07/01/26 ................................ VMIG1/A-1 8,025,000
Department of Budget and Finance of the State of
Hawaii Special Purpose Revenue Bonds (The
Queen's Health System), Series B, MBIA Insured,
$ 8,000,000 5.250%, 07/01/23 ................................ Aaa/AAA $ 8,402,080
Department of Hawaiian Home Lands (State of
Hawaii) Revenue Bonds,
1,310,000 4.150%, 07/01/08 ................................ A3/NR 1,397,023
1,525,000 4.350%, 07/01/10 ................................ A3/NR 1,618,208
1,245,000 4.450%, 07/01/11 ................................ A3/NR 1,307,051
Hawaii Community Development Authority
Improvement District Revenue Bonds (Kakaako
Community Development District 3),
230,000 7.300%, 07/01/04 ................................ NR/NR(2) 234,669
1,360,000 7.400%, 07/01/10 ................................ NR/NR(2) 1,387,608
Hawaii Community Development Authority
Improvement District Special Assessment Bonds
(Kakaako Community Development District 1),
300,000 5.300%, 07/01/04 ................................ NR/NR(2) 305,127
200,000 5.400%, 07/01/05 ................................ NR/NR(2) 204,772
Hawaii Community Development Authority
Improvement District Special Assessment Bonds
(Kakaako Community Development District 2),
395,000 5.300%, 07/01/04 ................................ NR/NR(2) 401,751
420,000 5.400%, 07/01/05 ................................ NR/NR(2) 430,021
435,000 5.500%, 07/01/06 ................................ NR/NR(2) 445,057
465,000 5.600%, 07/01/07 ................................ NR/NR(2) 475,583
365,000 5.700%, 07/01/08 ................................ NR/NR(2) 373,026
Housing Finance and Development Corporation
(State of Hawaii) Affordable Rental Housing
Program Revenue Bonds, Series A, Weekly Reset
VRDN(1), LOC: BNP Paribas,
12,095,000 1.150%, 07/01/27 ................................ VMIG1/NR 12,094,999
Housing Finance & Development Corporation (State
of Hawaii) Rental Housing Revenue Bonds, Series
89A, Weekly Reset VRDN(1), LOC: BNP Paribas,
2,600,000 1.100%, 07/01/24 ................................ VMIG1/NR 2,600,000
Housing Finance and Development Corporation
(State of Hawaii) Rental Housing System Revenue
Bonds, Series A,
$ 2,000,000 5.600%, 07/01/12 ................................ A1/NR $ 2,031,320
3,000,000 5.700%, 07/01/18 ................................ A1/NR 3,045,480
Housing Finance and Development Corporation
(State of Hawaii) Single Family Mortgage Revenue
Bonds, Series A-AMT,
6,700,000 6.000%, 07/01/26 ................................ Aaa/AAA 6,845,122
17,535,000 5.750%, 07/01/30 ................................ Aaa/AAA 18,077,181
Housing Finance and Development Corporation (State
of Hawaii) Single Family Mortgage Revenue Bonds,
Series A-AMT, FNMA Insured,
3,125,000 5.300%, 07/01/22 ................................ Aaa/AAA 3,227,156
1,985,000 5.400%, 07/01/30 ................................ Aaa/AAA 2,025,276
Housing Finance and Development Corporation (State
of Hawaii) Single Family Mortgage Revenue Bonds,
Series B, FNMA Insured,
2,500,000 5.700%, 07/01/13 ................................ Aaa/AAA 2,577,375
9,350,000 5.450%, 07/01/17 ................................ Aaa/AAA 9,760,933
16,750,000 5.850%, 07/01/17 ................................ Aaa/AAA 17,213,974
6,800,000 5.300%, 07/01/28 ................................ Aaa/AAA 6,950,144
4,025,000 7.000%, 07/01/31 ................................ Aaa/AAA 4,064,888
Housing Finance and Development Corporation (State
of Hawaii) University of Hawaii Faculty Housing
Project, Revenue Bonds, AMBAC Insured,
2,125,000 5.650%, 10/01/16 ................................ Aaa/AAA 2,311,660
4,000,000 5.700%, 10/01/25 ................................ Aaa/AAA 4,267,760
State of Hawaii Airport System Revenue Bonds,
AMT, FGIC Insured,
4,000,000 5.750%, 07/01/17 ................................ Aaa/AAA 4,394,880
6,000,000 5.625%, 07/01/18 ................................ Aaa/AAA 6,506,220
6,000,000 5.250%, 07/01/21 ................................ Aaa/AAA 6,199,920
State of Hawaii Airport System Revenue Bonds,
AMT, Second Series, Escrowed to Maturity,
MBIA Insured,
$ 6,455,000 6.900%, 07/01/12 ................................ Aaa/AAA $ 7,847,537
State of Hawaii Airport System Revenue Bonds,
Series B-AMT, FGIC Insured,
3,000,000 8.000%, 07/01/10 ................................ Aaa/AAA 3,796,290
State of Hawaii General Obligation Bonds, Series
BZ, FGIC Insured,
3,700,000 6.000%, 10/01/11 ................................ Aaa/AAA 4,411,288
3,500,000 6.000%, 10/01/12 ................................ Aaa/AAA 4,182,115
State of Hawaii General Obligation Bonds, Series
CA, FGIC Insured,
2,000,000 5.750%, 01/01/11 ................................ Aaa/AAA 2,320,320
State of Hawaii General Obligation Bonds, Series CH,
1,000,000 4.750%, 11/01/11 ................................ Aa3/AA- 1,106,540
State of Hawaii General Obligation Bonds, Series
CH, FGIC Insured,
5,000,000 6.000%, 11/01/07 ................................ Aaa/AAA 5,792,100
3,390,000 6.000%, 11/01/08 ................................ Aaa/AAA 3,989,589
State of Hawaii General Obligation Bonds, Series
CL, FGIC Insured,
2,305,000 6.000%, 03/01/11 ................................ Aaa/AAA 2,719,416
State of Hawaii General Obligation Bonds, Series
CM, FGIC Insured,
3,000,000 6.500%, 12/01/15 ................................ Aaa/AAA 3,799,560
State of Hawaii General Obligation Bonds, Series
CN, FGIC Insured,
4,000,000 5.250%, 03/01/10 ................................ Aaa/AAA 4,464,520
4,000,000 5.250%, 03/01/13 ................................ Aaa/AAA 4,385,240
3,000,000 5.500%, 03/01/14 ................................ Aaa/AAA 3,310,050
7,950,000 5.250%, 03/01/15 ................................ Aaa/AAA 8,682,911
1,000,000 5.250%, 03/01/17 ................................ Aaa/AAA 1,081,290
State of Hawaii General Obligation Bonds, Series
CP, FGIC Insured,
$ 5,000,000 5.000%, 10/01/13 ................................ Aaa/AAA $ 5,402,450
2,195,000 5.000%, 10/01/14 ................................ Aaa/AAA 2,360,525
5,000,000 5.000%, 10/01/15 ................................ Aaa/AAA 5,359,550
7,195,000 5.000%, 10/01/17 ................................ Aaa/AAA 7,651,163
State of Hawaii General Obligation Bonds, Series
CR, MBIA Insured,
1,000,000 5.250%, 04/01/13 ................................ Aaa/AAA 1,110,270
5,000,000 5.000%, 04/01/16 ................................ Aaa/AAA 5,371,650
16,000,000 5.000%, 04/01/17 ................................ Aaa/AAA 17,113,119
2,500,000 4.750%, 04/01/18 ................................ Aaa/AAA 2,585,875
State of Hawaii General Obligation Bonds, Series
CS, MBIA Insured,
5,000,000 5.000%, 04/01/07 ................................ Aaa/AAA 5,523,450
5,500,000 5.000%, 04/01/09 ................................ Aaa/AAA 6,168,800
State of Hawaii General Obligation Bonds, Series
CU, MBIA Insured,
1,250,000 5.750%, 10/01/08 ................................ Aaa/AAA 1,453,013
1,000,000 5.750%, 10/01/09 ................................ Aaa/AAA 1,173,200
State of Hawaii General Obligation Bonds, Series
CU, Prerefunded 10/01/10 @ 100, MBIA Insured,
3,000,000 5.600%, 10/01/19 ................................ Aaa/AAA 3,509,460
State of Hawaii General Obligation Bonds, Series
CV, FGIC Insured,
13,000,000 5.000%, 08/01/20 ................................ Aaa/AAA 13,633,879
1,015,000 5.000%, 08/01/21 ................................ Aaa/AAA 1,056,260
5,000,000 5.250%, 08/01/21 ................................ Aaa/AAA 5,319,400
State of Hawaii General Obligation Bonds, Series
CX, FSA Insured,
2,000,000 5.250%, 02/01/12 ................................ Aaa/AAA 2,257,020
8,725,000 5.500%, 02/01/13 ................................ Aaa/AAA 10,023,280
2,500,000 5.500%, 02/01/21 ................................ Aaa/AAA 2,729,925
State of Hawaii General Obligation Bonds, Series
CZ, FSA Insured,
$ 1,500,000 5.250%, 07/01/12 ................................ Aaa/AAA $ 1,701,030
3,000,000 5.250%, 07/01/17 ................................ Aaa/AAA 3,316,200
3,000,000 5.250%, 07/01/18 ................................ Aaa/AAA 3,295,140
State of Hawaii Harbor Capital Improvement Revenue
Bonds, AMT, FGIC Insured,
1,000,000 6.250%, 07/01/09 ................................ Aaa/AAA 1,051,920
1,000,000 6.250%, 07/01/10 ................................ Aaa/AAA 1,051,770
3,725,000 6.250%, 07/01/15 ................................ Aaa/AAA 3,917,843
10,180,000 6.375%, 07/01/24 ................................ Aaa/AAA 10,712,414
State of Hawaii Harbor Capital Improvement Revenue
Bonds, AMT, MBIA Insured,
3,850,000 5.750%, 07/01/17 ................................ Aaa/AAA 4,259,101
State of Hawaii Harbor Capital Improvement Revenue
Bonds, FGIC Insured,
1,260,000 6.050%, 07/01/04 ................................ Aaa/AAA 1,288,325
1,225,000 6.150%, 07/01/05 ................................ Aaa/AAA 1,252,452
State of Hawaii Harbor Capital Improvement Revenue
Bonds, Series B-AMT, AMBAC Insured,
3,000,000 5.500%, 07/01/19 ................................ Aaa/AAA 3,269,010
State of Hawaii Harbor System Revenue Bonds, Series
A-AMT, FSA Insured,
2,000,000 5.750%, 07/01/17 ................................ Aaa/AAA 2,236,640
1,500,000 5.900%, 07/01/21 ................................ Aaa/AAA 1,644,825
State of Hawaii Highway Revenue Bonds, FGIC Insured,
3,705,000 5.600%, 07/01/13 ................................ Aaa/AAA 4,122,072
2,000,000 5.250%, 07/01/16 ................................ Aaa/AAA 2,151,160
State of Hawaii Highway Revenue Bonds, FSA Insured,
2,000,000 4.500%, 07/01/10 ................................ Aaa/AAA 2,183,140
2,000,000 4.500%, 07/01/11 ................................ Aaa/AAA 2,169,860
1,605,000 5.000%, 07/01/12 ................................ Aaa/AAA 1,790,057
1,530,000 5.375%, 07/01/14 ................................ Aaa/AAA 1,710,938
2,720,000 5.500%, 07/01/19 ................................ Aaa/AAA 2,965,643
2,000,000 5.375%, 07/01/20 ................................ Aaa/AAA 2,166,220
1,110,000 5.500%, 07/01/20 ................................ Aaa/AAA 1,203,407
------------
705,783,126
------------
PUERTO RICO (2.5%)
-------------------------------------------------------
Puerto Rico Commonwealth Aqueduct and Sewer
Authority Revenue Bonds, MBIA Insured,
$ 2,500,000 5.000%, 07/01/15 ................................ Aaa/AAA $ 2,687,925
Puerto Rico Commonwealth Public Finance Corp.
Revenue Bonds, Series A, MBIA Insured,
5,000,000 5.500%, 08/01/17 ................................ Aaa/AAA 5,650,050
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds, MBIA Insured,
1,800,000 5.250%, 07/01/13 ................................ Aaa/AAA 2,075,220
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds, Series A, FGIC Insured,
4,000,000 5.500%, 07/01/13 ................................ Aaa/AAA 4,666,280
2,000,000 5.500%, 07/01/16 ................................ Aaa/AAA 2,340,820
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds, Series CR, FSA Insured,
1,060,000 5.250%, 07/01/17 ................................ Aaa/AAA 1,209,852
------------
18,630,147
------------
Total Municipal Bonds ........................ 724,413,273
------------
Total Investments (Cost $675,304,482(3)) .............. 97.5% 724,413,273
Other assets less liabilities ......................... 2.5 18,533,374
------ ------------
Net Assets ............................................ 100.0% $742,946,647
====== ============
(1) Variable rate demand notes (VRDNs) are payable upon demand within the same
day for securities with daily liquidity or seven days for securities with
weekly liquidity.
(2) Any securities not rated (NR) have been determined by the Investment
Adviser to have sufficient quality to be ranked in the top four credit
ratings if a credit rating were to be assigned by a rating service.
(3) See footnote 4 to the financial statements.
PORTFOLIO ABBREVIATIONS:
------------------------
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Co.
FNMA Federal National Mortgage Assoc.
FSA Financial Securities Assurance Co.
LOC Letter of Credit
MBIA MBIA Insurance Corporation
SPA Standby Bond Purchase Agreement
See accompanying notes to financial statements.
HAWAIIAN TAX-FREE TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2003
(UNAUDITED)
ASSETS
Investments at value (cost $675,304,482) ............................... $724,413,273
Cash ................................................................... 11,339,027
Interest receivable .................................................... 9,596,565
Receivable for Trust shares sold ....................................... 17,242
Other assets ........................................................... 38,491
------------
Total assets ........................................................... 745,404,598
------------
LIABILITIES
Payable for Trust shares redeemed ...................................... 1,239,554
Dividends payable ...................................................... 597,538
Distribution fees payable .............................................. 343,634
Adviser and Administrator fees payable ................................. 240,241
Accrued expenses ....................................................... 36,984
------------
Total liabilities ...................................................... 2,457,951
------------
NET ASSETS ................................................................ $742,946,647
============
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value
$.01 per share ...................................................... $ 630,430
Additional paid-in capital ............................................. 690,890,284
Net unrealized appreciation on investments (note 4) .................... 49,108,791
Accumulated net realized gain on investments ........................... 233,065
Undistributed net investment income .................................... 2,084,077
------------
$742,946,647
============
CLASS A
Net Assets ............................................................. $682,058,465
============
Capital shares outstanding ............................................. 57,877,491
============
Net asset value and redemption price per share ......................... $ 11.78
============
Offering price per share (100/96 of $11.78 adjusted to nearest cent) ... $ 12.27
============
CLASS C
Net Assets ............................................................. $ 36,557,562
============
Capital shares outstanding ............................................. 3,103,929
============
Net asset value and offering price per share ........................... $ 11.78
============
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) .............. $ 11.78*
============
CLASS Y
Net Assets ............................................................. $ 24,330,620
============
Capital shares outstanding ............................................. 2,061,600
============
Net asset value, offering and redemption price per share ............... $ 11.80
============
See accompanying notes to financial statements.
HAWAIIAN TAX-FREE TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED)
INVESTMENT INCOME:
Interest income ......................................... $17,169,386
Expenses:
Investment Adviser fees (note 3) ........................ $ 517,651
Administrator fees (note 3) ............................. 961,359
Distribution and service fees (note 3) .................. 857,763
Transfer and shareholder servicing agent fees ........... 160,419
Trustees' fees and expenses (note 8) .................... 80,488
Shareholders' reports and proxy statements .............. 63,949
Legal fees .............................................. 58,843
Insurance ............................................... 32,799
Custodian fees .......................................... 24,483
Registration fees and dues .............................. 15,839
Auditing fees ........................................... 14,352
Miscellaneous ........................................... 15,578
----------
2,803,523
Expenses paid indirectly (note 6) ....................... (32,280)
----------
Net expenses ............................................ 2,771,243
-----------
Net investment income ................................... 4,398,143
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from securities transactions ... 778,701
Change in unrealized appreciation on investments ........ 2,285,030
----------
Net realized and unrealized gain (loss) on investments .. 3,063,731
-----------
Net change in net assets resulting from operations ...... $17,461,874
===========
See accompanying notes to financial statements.
HAWAIIAN TAX-FREE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
SEPTEMBER 30, 2003 YEAR ENDED
(UNAUDITED) MARCH 31, 2003
------------------ --------------
OPERATIONS:
Net investment income ............................................. $ 14,398,143 $ 29,061,836
Net realized gain (loss) from securities transactions ............. 778,701 1,086,092
Change in unrealized appreciation on investments .................. 2,285,030 27,318,482
------------ ------------
Change in net assets resulting from operations .................... 17,461,874 57,466,410
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10):
Class A Shares:
Net investment income ............................................. (13,323,951) (27,129,722)
Class C Shares:
Net investment income ............................................. (558,373) (973,006)
Class Y Shares:
Net investment income ............................................. (515,819) (959,109)
------------ ------------
Change in net assets from distributions ........................ (14,398,143) (29,061,837)
------------ ------------
CAPITAL SHARE TRANSACTIONS (NOTE 7):
Proceeds from shares sold ......................................... 34,500,252 78,179,467
Reinvested dividends and distributions ............................ 7,986,840 16,030,825
Cost of shares redeemed ........................................... (36,578,599) (56,989,659)
------------ ------------
Change in net assets from capital share transactions .............. 5,908,493 37,220,633
------------ ------------
Change in net assets ........................................... 8,972,224 65,625,206
NET ASSETS:
Beginning of period ............................................... 733,974,423 668,349,217
------------ ------------
End of period* .................................................... $742,946,647 $733,974,423
============ ============
* Includes undistributed net investment income of: $ 2,084,077 $ 2,084,077
============ ============
See accompanying notes to financial statements.
HAWAIIAN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Hawaiian Tax-Free Trust (the "Trust"), a non-diversified, open-end
investment company, was organized on May 7, 1984, as a Massachusetts business
trust and commenced operations on February 20, 1985. The Trust is authorized to
issue an unlimited number of shares and, from its inception to April 1, 1996,
offered only one class of shares. On that date, the Trust 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, custodial 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 July 21, 1998, the
Trust established Class I shares, which are offered and sold only through
financial intermediaries and are not offered directly to retail investors. As of
the report date, there were no Class I Shares outstanding. All classes of shares
represent interests in the same portfolio of investments and are identical as to
rights and privileges but 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 Trust 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 at the mean of bid and asked quotations and, in the case of
other securities, at fair value determined under procedures established by
and under the general supervision of the Board of Trustees. Securities
which mature in 60 days or less are valued at amortized cost if their term
to maturity at purchase is 60 days or less, or by amortizing their
unrealized appreciation or depreciation on the 61st day prior to maturity,
if their term to maturity at purchase exceeds 60 days.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Interest
income is recorded daily on the accrual basis and is adjusted for
amortization of premium and accretion of original issue discount and market
discount on a daily basis.
c) FEDERAL INCOME TAXES: It is the policy of the Trust to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Trust
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) ALLOCATION OF EXPENSES: Expenses, other than class-specific expenses, are
allocated daily to each class of shares based on the relative net assets of
each class. Class-specific expenses, which include distribution and service
fees and any other items that are specifically attributed to a particular
class, are charged directly to such class.
e) USE OF ESTIMATES: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
Asset Management Group of Bank of Hawaii (the "Adviser"), serves as
Investment Adviser to the Trust. In this role, under an Investment Advisory
Agreement, the Adviser supervises the Trust's investments and provides various
services to the Trust, for which it 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 0.14% of the net assets of the Trust.
The Trust also has an Administration Agreement with Aquila Management
Corporation (the "Administrator"), the Trust's founder and sponsor. Under this
Agreement, the Administrator provides all administrative services, other than
those relating to the management of the Trust's investments. These include
providing the office of the Trust and all related services as well as overseeing
the activities of all the various support organizations to the Trust such as the
shareholder servicing agent, custodian, legal counsel, auditors and distributor.
For its services, the Administrator 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 0.26% of the net assets of the Trust.
Specific details as to the nature and extent of the services provided by
the Adviser and the Administrator are more fully defined in the Trust's
Prospectus and Statement of Additional Information.
The Adviser and the Administrator each agrees that the above fees shall be
reduced, but not below zero, by an amount equal to its pro-rata portion
(determined on the basis of the respective fees computed as described above) of
the amount, if any, by which the total expenses of the Trust in any fiscal year,
exclusive of taxes, interest and brokerage fees, shall exceed the lesser of (i)
2.5% of the first $30 million of average annual net assets of the Trust plus 2%
of the next $70 million of such assets and 1.5% of its average annual net assets
in excess of $100 million, or (ii) 25% of the Trust's total annual investment
income. The payment of the above fees at the end of any month will be reduced or
postponed so that at no time will there be any accrued but unpaid liability
under this expense limitation. No such reduction in fees was required during the
six months ended September 30, 2003.
b) DISTRIBUTION AND SERVICE FEES:
The Trust 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 Trust is authorized to make
service 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 Trust, 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 Trust's shares
or servicing of shareholder accounts. The Trust makes payment of this service
fee at the annual rate of 0.20% of the Trust's average net assets represented by
Class A Shares. For the six months ended September 30, 2003, service fees on
Class A Shares amounted to $678,713, of which the Distributor retained $40,455.
Under another part of the Plan, the Trust 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 Trust's Class C shares or
servicing of shareholder accounts. These payments are made at the annual rate of
0.75% of the Trust's net assets represented by Class C Shares and for the six
months ended September 30, 2003, amounted to $134,288. In addition, under a
Shareholder Services Plan, the Trust 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 Trust's net assets represented by Class C Shares
and for the six months ended September 30, 2003, amounted to $44,762. The total
of these payments made with respect to Class C Shares amounted to $179,050 of
which the Distributor retained $32,990.
Specific details about the Plans are more fully defined in the Trust's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the exclusive
distributor of the Trust's shares. Through agreements between the Distributor
and various broker-dealer firms ("dealers"), the Trust's shares are sold
primarily through the facilities of these dealers having offices within Hawaii,
with the bulk of sales commissions inuring to such dealers. For the six months
ended September 30, 2003, total commissions on sales of Class A Shares amounted
to $711,818, of which the Distributor received $71,494.
c) OTHER RELATED PARTY TRANSACTIONS:
For the six months ended September 30, 2003, the Trust incurred $57,351 of
legal fees allocable to Hollyer Brady Smith &Hines LLP, counsel to the Trust,
for legal services in conjunction with the Trust's ongoing operations. The
Secretary of the Fund is a Partner of Hollyer Brady Smith & Hines LLP.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended September 30, 2003, purchases of securities and
proceeds from the sales of securities aggregated $34,231,335 and $38,609,004,
respectively.
At September 30, 2003, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$49,128,185 and gross unrealized depreciation for all securities in which there
is an excess of tax cost over market value amounted to $19,394 for a net
unrealized appreciation of $49,108,791. The tax cost of the Trust's securities
at September 30, 2003 equaled $675,304,482.
5. PORTFOLIO ORIENTATION
Since the Trust invests principally and may invest entirely in double
tax-free municipal obligations of issuers within Hawaii, it is subject to
possible risks associated with economic, political, or legal developments or
industrial or regional matters specifically affecting Hawaii and whatever
effects these may have upon Hawaii issuers' ability to meet their obligations.
6. EXPENSES
The Trust has negotiated an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees and other
Trust 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 Trust 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 Trust were as follows:
SIX MONTHS ENDED
SEPTEMBER 30, 2003 YEAR ENDED
(UNAUDITED) MARCH 31, 2003
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS A SHARES:
Proceeds from shares sold ... 2,162,826 $ 25,405,505 4,970,648 $ 57,675,498
Reinvested distributions .... 642,576 7,547,832 1,309,874 15,200,088
Cost of shares redeemed ..... (2,446,521) (28,725,345) (4,252,320) (49,305,178)
---------- ------------ ---------- ------------
Net change .................. 358,881 4,227,992 2,028,202 23,570,408
---------- ------------ ---------- ------------
CLASS C SHARES:
Proceeds from shares sold ... 498,961 5,858,347 1,086,453 12,622,577
Reinvested distributions .... 24,280 307,969 44,331 514,367
Cost of shares redeemed ..... (298,675) (3,498,647) (395,979) (4,603,669)
---------- ------------ ---------- ------------
Net change ............... 224,566 2,667,669 734,805 8,533,275
---------- ------------ ---------- ------------
CLASS Y SHARES:
Proceeds from shares sold ... 274,535 3,236,400 677,585 7,881,392
Reinvested distributions .... 11,156 131,039 27,148 316,370
Cost of shares redeemed ..... (372,632) (4,354,607) (263,739) (3,080,812)
---------- ------------ ---------- ------------
Net change ............... (86,941) (987,168) 440,994 5,116,950
---------- ------------ ---------- ------------
Total transactions in Trust
shares ...................... 496,506 $ 5,908,493 3,204,001 $ 37,220,633
========== ============ ========== ============
8. TRUSTEES' FEES AND EXPENSES
During the previous fiscal year ended March 31, 2003 there were 9 Trustees,
one of which is affiliated with the Administrator and is not paid any trustee
fees. Each Trustee was paid during the year fees at the annual rate of $12,400
for carrying out their responsibilities and attendance at regularly scheduled
quarterly Board Meetings. A meeting of the independent trustees is often held
prior to each quarterly Board Meeting for which each independent trustee is paid
a fee of $350. If additional or special meetings are scheduled for the Trust,
separate meeting fees are paid for each such meeting to those Trustees in
attendance. The Trust also covers Trustees' expenses such as travel,
accomodations, and meals incurred in connection with attendance at regularly
scheduled or special Board Meetings and at the Annual Meeting and outreach
meetings of Shareholders. For the previous fiscal year ended March 31, 2003,
such meeting-related expenses averaged approximately $3,300 per Trustee.
9. SECURITIES TRADED ON A WHEN-ISSUED BASIS
The Trust may purchase or sell securities on a when-issued basis.
When-issued transactions arise when securities are purchased or sold by the Fund
with payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Trust at the time of
entering into the transaction. Beginning on the date the Trust enters into a
when-issued transaction, cash or other liquid securities are segregated in an
amount equal to or greater than the value of the when-issued transaction. These
transactions are subject to market fluctuations and their current value is
determined in the same manner as for other securities.
10. DISTRIBUTIONS
The Trust 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.
At March 31, 2003, Hawaiian Tax-Free Trust had a capital loss carryover of
approximately $545,636 which expires March 31, 2011. This amount is available to
offset future net gains on securities transactions to the extent provided for in
the Internal Revenue Code and it is probable the gain so offset will not be
distributed.
The Trust 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 Hawaii income taxes.
However, due to differences between financial statement reporting and Federal
income tax reporting requirements, distributions made by the Trust may not be
the same as the Trust's net investment income, and/or net realized securities
gains. Further, a small portion of the dividends may, under some circumstances,
be subject to taxes at ordinary income and/or capital gain rates. For certain
shareholders, some dividend income may, under some circumstances, be subject to
the alternative minimum tax.
The tax character of distributions paid by the Trust during its fiscal
years ended March 31, 2003 and 2002 is as follows:
Distributions paid from
YEAR ENDED MARCH 31,
2003 2002
----------- -----------
Net tax-exempt income $29,063,283 $28,930,722
Ordinary income 7,544 70,182
Capital gain - -
----------- -----------
$29,070,827 $29,000,904
=========== ===========
As of March 31, 2003, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income $ 0
Accumulated net realized loss (545,636)
Unrealized appreciation 46,873,933
Undistributed tax-exempt income 2,662,130
-----------
$48,990,427
===========
HAWAIIAN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
--------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/03 ------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
----------- ------ ------ ------ ------ ------
Net asset value, beginning of period .............. $11.73 $11.26 $11.37 $10.94 $11.65 $11.67
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income + ........................ 0.23 0.48 0.51 0.54 0.56 0.56
Net gain (loss) on securities (both realized
and unrealized) ............................. 0.05 0.47 (0.10) 0.43 (0.65) 0.03
------ ------ ------ ------ ------ ------
Total from investment operations ............... 0.28 0.95 0.41 0.97 (0.09) 0.59
------ ------ ------ ------ ------ ------
Less distributions (note 10):
Dividends from net investment income ........... (0.23) (0.48) (0.52) (0.54) (0.55) (0.57)
Distributions from capital gains ............... - - - - (0.07) (0.04)
------ ------ ------ ------ ------ ------
Total distributions ............................ (0.23) (0.48) (0.52) (0.54) (0.62) (0.61)
------ ------ ------ ------ ------ ------
Net asset value, end of period .................... $11.78 $11.73 $11.26 $11.37 $10.94 $11.65
====== ====== ====== ====== ====== ======
Total return (not reflecting sales charge) ........ 2.39%* 8.57% 3.62% 9.14% (0.64)% 5.17%
Ratios/supplemental data
Net assets, end of period (in millions) ........ $682 $675 $625 $593 $575 $640
Ratio of expenses to average net assets ........ 0.73%** 0.71% 0.72% 0.74% 0.73% 0.74%
Ratio of net investment income to average
net assets .................................. 3.93%** 4.15% 4.51% 4.88% 4.99% 4.76%
Portfolio turnover rate ........................ 5%* 5% 13% 11% 4% 14%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets ........ 0.72%** 0.70% 0.70% 0.72% 0.71% 0.70%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
HAWAIIAN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
--------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/03 ------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
----------- ------ ------ ------ ------ ------
Net asset value, beginning of period......... $11.73 $11.26 $11.36 $10.93 $11.65 $11.66
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income + .................. 0.18 0.38 0.41 0.45 0.47 0.46
Net gain (loss) on securities (both
realized and unrealized)............... 0.05 0.48 (0.08) 0.43 (0.66) 0.05
------ ------ ------ ------ ------ ------
Total from investment operations.......... 0.23 0.86 0.33 0.88 (0.19) 0.51
------ ------ ------ ------ ------ ------
Less distributions (note 10):
Dividends from net investment income...... (0.18) (0.39) (0.43) (0.45) (0.46) (0.48)
Distributions from capital gains.......... - - - - (0.07) (0.04)
------ ------ ------ ------ ------ ------
Total distributions....................... (0.18) (0.39) (0.43) (0.45) (0.53) (0.52)
------ ------ ------ ------ ------ ------
Net asset value, end of period............... $11.78 $11.73 $11.26 $11.36 $10.93 $11.65
====== ====== ====== ====== ====== ======
Total return (not reflecting sales charge)... 1.99%* 7.70% 2.91% 8.28% (1.53)% 4.45%
Ratios/supplemental data
Net assets, end of period (in millions)... $36.6 $33.8 $24.1 $15.0 $11.7 $10.7
Ratio of expenses to average
net assets............................. 1.52%** 1.51% 1.51% 1.54% 1.53% 1.53%
Ratio of net investment income to
average net assets..................... 3.13%** 3.33% 3.68% 4.06% 4.18% 3.95%
Portfolio turnover rate................... 5%* 5% 13% 11% 4% 14%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average
net assets............................. 1.52%** 1.50% 1.50% 1.51% 1.51% 1.49%
CLASS Y
--------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/03 ------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
----------- ------ ------ ------ ------ ------
Net asset value, beginning of period......... $11.75 $11.28 $11.39 $10.95 $11.67 $11.68
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income +................... 0.24 0.50 0.52 0.55 0.58 0.59
Net gain (loss) on securities (both
realized and unrealized)............... 0.05 0.47 (0.09) 0.45 (0.66) 0.03
------ ------ ------ ------ ------ ------
Total from investment operations.......... 0.29 0.97 0.43 1.00 (0.08) 0.62
------ ------ ------ ------ ------ ------
Less distributions (note 10):
Dividends from net investment income...... (0.24) (0.50) (0.54) (0.56) (0.57) (0.59)
Distributions from capital gains.......... - -- - - (0.07) (0.04)
------ ------ ------ ------ ------ ------
Total distributions....................... (0.24) (0.50) (0.54) (0.56) (0.64) (0.63)
------ ------ ------ ------ ------ ------
Net asset value, end of period............... $11.80 $11.75 $11.28 $11.39 $10.95 $11.67
====== ====== ====== ====== ====== ======
Total return (not reflecting sales charge)... 2.52%* 8.77% 3.80% 9.44% (0.56)% 5.45%
Ratios/supplemental data
Net assets, end of period (in millions)... $24.3 $25.2 $19.3 $7.9 $2.9 $2.6
Ratio of expenses to average
net assets............................. 0.53%** 0.51% 0.52% 0.54% 0.53% 0.54%
Ratio of net investment income to
average net assets..................... 4.14%** 4.33% 4.69% 5.00% 5.15% 4.96%
Portfolio turnover rate................... 5%* 5% 13% 11% 4% 14%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average
net assets............................. 0.52%** 0.50% 0.50% 0.51% 0.51% 0.49%
- ----------
+ Per share amounts have been calculated using the monthly average shares
method.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Hawaiian Tax-Free Trust (the "Trust")
was held on September 15, 2003. The holders of shares representing approximately
80% of the total net asset value of the shares entitled to vote were present in
person or by proxy. At the meeting, the following matters were voted upon and
approved by the shareholders (the resulting votes are presented below).
1. To elect Trustees.
Number of Votes:
TRUSTEE FOR WITHHELD
------- --- --------
Lacy B. Herrmann 49,320,268 1,400,362
William M. Cole 50,242,775 477,855
Thomas W. Courtney 50,258,231 462,398
Richard W. Gushman, II 50,288,801 431,829
Stanley W. Hong 50,262,238 458,392
Theodore T. Mason 50,253,305 467,325
Russell K. Okata 49,949,313 771,316
Douglas Philpotts 49,228,025 1,492,605
Oswald K. Stender 49,850,800 869,830
2. To ratify the selection of KPMG LLP as the Trust's independent auditors.
Number of Votes:
FOR AGAINST ABSTAIN
--- ------- -------
50,154,057 308,560 258,012
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.
FOUNDER AND ADMINISTRATOR
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT ADVISER
ASSET MANAGEMENT GROUP of
BANK of HAWAII
P.O. Box 3170
Honolulu, Hawaii 96802
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
William M. Cole
Thomas W. Courtney
Richard W. Gushman, II
Stanley W. Hong
Theodore T. Mason
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
OFFICERS
Diana P. Herrmann, President
Sherri Foster, Senior Vice President
Stephen J. Caridi, 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 AUDITORS
KPMG LLP
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus, which must precede or
accompany this report.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 2003
HAWAIIAN
TAX-FREE
TRUST
A TAX-FREE INCOME INVESTMENT
[Logo of Hawaiian Tax-Free Trust: a palm tree in front of a circle which has an
island and water within it]
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILA(SM) GROUP OF FUNDS
ITEM 2. CODE OF ETHICS.
Not applicable
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
905: Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940) as of a date within 90 days of the fling of this report, the registrant's
chief financial and executive officers have concluded that the disclosure
controls and procedures of the registrant are appropriately designed to ensure
that information required to be disclosed in the registrant's reports that are
filed under the Securities Exchange Act of 1934 are accumulated and communicated
to registrant's management, including its principal executive officer(s) and
principal financial officer(s), to allow timely decisions regarding required
disclosure and is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms adopted by the Securities and Exchange
Commission.
(b) There have been no significant changes in registrant's internal controls or
in other factors that could significantly affect registrant's internal controls
subsequent to the date of the most recent evaluation, including no significant
deficiencies or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(a)(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.
HAWAIIAN TAX-FREE TRUST
By: /s/ Lacy B. Herrmann
- ---------------------------------
Chairman of the Board
December 8, 2003
By: /s/ Diana P. Herrmann
- ---------------------------------
President
December 8, 2003
By: /s/ Joseph P. DiMaggio
- -----------------------------------
Chief Financial Officer
December 8, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Lacy B. Herrmann
- ---------------------------------
Lacy B. Herrmann
Chairman of the Board
December 8, 2003
By: /s/ Diana P. Herrmann
- ---------------------------------
Diana P. Herrmann
President
December 8, 2003
By: /s/ Joseph P. DiMaggio
- -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer
December 8, 2003
HAWAIIAN TAX-FREE TRUST
EXHIBIT INDEX
(a) (2) Certifications of principal executive officer
and principal financial officer as required by Rule 30a-2(a)
under the Investment Company Act of 1940.
(b) Certification of chief executive officer and chief financial
officer as required by Rule 30a-2(b) of the Investment Company Act
of 1940.