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 811-03907
The Empire Builder Tax Free Bond Fund
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
3435 Stelzer Road, Columbus, OH 43219
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(Address of principal executive offices) (Zip code)
BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 847-5886
Date of fiscal year end: February 28, 2006
Date of reporting period: August 31, 2005
Item 1. Reports to Stockholders.
------------------------- [LOGO] EMPIRE BUILDER -----------------------
----------
3435 Stelzer Road
Columbus, Ohio 43219
1-800-847-5886
Dear Shareholder,
We are pleased to present The Empire Builder Tax Free Bond Fund
Semi-Annual Report for the six months ended August 31, 2005.
The portfolio continues to have a good year. For the period January 1
through August 31, 2005 the Builder portfolio was up 1.44%, while the Premier
portfolio was up 1.52%. Last year we shortened the duration of the Fund, in
order to reduce our maturity and interest rate risk for the portfolio. When the
right opportunities present themselves, we will extend the maturity of the
portfolio in an effort to enhance our returns. Since our Annual Report, the
Federal Reserve has raised the Discount Rate four times, which now stands at
3.75%. We will continue to keep the average duration of the portfolio short in
the near future to protect the capital of the Fund. We feel that inflation will
increase, and the Federal Reserve Board will continue to raise the Federal Fund
Rate in the near future.
In our opinion, The Empire Builder Tax Free Bond Fund is well positioned
for the next year. The no-load structure continues to offer value to the
shareholder because there is no charge to purchase units. We also recommend our
automatic investment program (also known as dollar cost averaging*) that allows
you to follow a disciplined investment plan. Please call the customer service
desk at 1-800-847-5886 for information on how to participate. We look forward to
helping you meet your investment needs.
Sincerely,
/s/ Seth M. Glickenhaus
- -----------------------
Seth M. Glickenhaus
President
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Average Annual Total Return
---------------------------
As of June 30, 2005
1 Year 5 Year 10 Year
Builder Class 3.98% 5.44% 4.93%
Premier Class 4.16% 5.70% 5.17%
- -----------------------------------------------
Past performance is no guarantee of future results. The performance data quoted
represents past performance and current returns may be lower or higher. Total
return figures include change in share price, reinvestment of dividends and
capital gains and do not reflect taxes that a shareholder would pay on fund
distributions or on the redemption of fund shares. The investment return and net
asset value will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost. To obtain performance information for
the most recent month end, please call 1-800-847-5886.
*Dollar cost averaging does not insure a profit and does not protect against
loss in declining markets. An investor should consider his or her financial
ability to continue making additional investments through periods of low share
price levels.
For more complete information on The Empire Builder Tax Free Bond Fund, you may
request additional prospectuses by calling 1-800-547-5886. You should consider
the fund's investment objectives, risk, charges and expenses carefully before
you invest. Information about these and other important information is in the
fund's prospectus which you should read carefully before investing.
The Fund's income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT).
Past performance does not guarantee future results.
Not FDIC insured. May lose value. No bank guarantee.
Expense Examples (Unaudited):
As a shareholder of The Empire Builder Tax Free Bond Fund, you incur two types
of costs: (1) transaction costs, including exchange fees; and (2) ongoing costs,
including management fees; and other Fund expenses.
This example is intended to help you understand your ongoing costs (in dollars)
of investing in The Empire Builder Tax Free Bond Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from March 1, 2005 through August 31,
2005.
Actual Return The table below provides information about actual account values
and actual expenses. You may use the information below, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
Beginning Ending Expense Paid Expense Ratio
Account Value Account Value During Period* During Period
3/1/05 8/31/05 3/1/05 - 8/31/05 3/1/05 - 8/31/05
------------- ------------- ---------------- ----------------
The Empire Builder Tax Free Bond Fund Builder Class $1,000.00 $1,013.10 $6.09 1.20%
Premier Class 1,000.00 1,014.10 5.08 1.00%
Hypothetical Return for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on The Empire Builder Tax Free Bond Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Beginning Ending Expense Paid Expense Ratio
Account Value Account Value During Period* During Period
3/1/05 8/31/05 3/1/05 - 8/31/05 3/1/05 - 8/31/05
------------- ------------- ---------------- ----------------
The Empire Builder Tax Free Bond Fund Builder Class $1,000.00 $1,019.16 $6.11 1.20%
Premier Class 1,000.00 1,020.16 5.09 1.00%
- ----------
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
The Empire Builder Tax Free Bond Fund invested, as a percentage of net
assets, in the following sectors, as of August 31, 2005:
Percent of
The Empire Builder Tax Free Bond Fund Net Assets
- ------------------------------------- ----------
New York City 17.6%
New York State Agencies 49.4
Other New York State Bonds 28.0
Puerto Rico 0.5
Short Term Investments 4.6
-----
100.1%
=====
2
THE EMPIRE BUILDER TAX FREE BOND FUND
Portfolio of Investments -- August 31, 2005
(Unaudited)
Principal Fair Value
Credit Ratings** Municipal Securities (95.5%) Amount (Note 2)
- ---------------- ---------------------------- --------- ----------
New York City (17.6%)
Aaa/AAA New York City Municipal Water Finance Authority,
Water & Sewer System Revenue, Series B, 5.80%,
6/15/2029, Callable 6/15/2007 @ 101, (MBIA) ................... $ 5,000,000 $ 5,283,850
Aaa/AAA New York City Municipal Water Finance Authority,
Water & Sewer System Revenue, Series B, 5.75%,
6/15/2026, Prerefunded 6/15/2006 @ 101, (MBIA) ................ 1,415,000 1,461,454
Aaa/AAA New York City, General Obligation, Series B, 5.25%,
8/1/2017, Callable 8/1/2007 @ 101, (AMBAC) .................... 750,000 785,768
A1/AAA New York City, General Obligation, Series B, 5.125%,
8/1/2019, Callable 8/1/2010 @ 101, (FGIC) ..................... 2,000,000 2,152,680
Aaa/AAA New York City, General Obligation, Series B, 5.375%,
8/1/2022, Callable 8/1/2007 @ 101, (MBIA) ..................... 1,235,000 1,295,552
Aaa/AAA New York City, General Obligation, Series B2,
Subseries B5, Variable Rate, 2.26%*, 8/15/2011,
Non Callable, (MBIA) (SPA - Bank of Nova Scotia) .............. 1,050,000 1,050,000
Aaa/AAA New York City, General Obligation, Series F, 6.00%,
8/1/2016, Prerefunded 8/1/2006 @ 101.50, (MBIA) ............... 3,590,000 3,746,739
Aaa/AAA New York City, General Obligation, Series H, Variable Rate,
2.26%*, 8/1/2013, Non Callable, (MBIA) ........................ 1,800,000 1,800,000
Aaa/AAA New York City, Health & Hospitals Corporation,
Health System Revenue, Series A, 5.50%, 2/15/2018,
Callable 2/15/2012 @ 100, (FSA) ............................... 1,000,000 1,110,170
-----------
Total New York City .............................................. 18,686,213
===========
New York State Agencies (49.4%)
Long Island Power Authority (1.3%)
Aaa/AAA Long Island Power Authority, Electric System General
Revenue, Series A, 5.50%, 12/1/2012, Non Callable,
Escrowed to Maturity, (FSA) ................................... 1,210,000 1,377,537
-----------
New York State Dormitory Authority (27.9%)
A3/AA- Albany County, Airport Project, State Service Contract,
5.25%, 4/1/2013, Prerefunded 4/1/2008 @ 101 ................... 1,200,000 1,280,772
NR/AAA Albany County, Airport Project, State Service Contract,
5.25%, 4/1/2017, Prerefunded 4/1/2008 @ 101, (MBIA) ........... 1,000,000 1,067,310
Aaa/AAA Albany County, Hospital Project, State Service Contract,
2.00%, 8/15/2006, Non Callable, (FHA) (FSA) ................... 1,250,000 1,234,438
Aaa/AAA Augustana Lutheran Home for the Aged, Series A,
5.50%, 8/1/2020, Callable 8/1/2010 @ 101, (FHA) (MBIA) ........ 890,000 971,141
Aaa/AAA Augustana Lutheran Home for the Aged, Series A,
5.50%, 8/1/2030, Callable 8/1/2010 @ 101, (FHA) (MBIA) ........ 750,000 813,105
Aaa/AAA Columbia University, Series B, 5.375%, 7/1/2018,
Callable 7/1/2012 @ 100 ....................................... 500,000 559,305
Aaa/AAA Columbia University, Series B, 5.375%, 7/1/2019,
Callable 7/1/2012 @ 100 ....................................... 1,000,000 1,116,040
The accompanying notes are an integral part of the financial statements.
3
THE EMPIRE BUILDER TAX FREE BOND FUND
Portfolio of Investments -- August 31, 2005 -- continued
(Unaudited)
Principal Fair Value
Credit Ratings** Municipal Securities (95.5%) Amount (Note 2)
- ---------------- ---------------------------- --------- ----------
New York State Agencies--continued
New York State Dormitory Authority--continued
Aaa/AAA Columbia University, Series B, 5.375%, 7/1/2020,
Callable 7/1/2012 @ 100 ....................................... $ 1,000,000 $ 1,112,820
Aaa/AAA Lutheran Medical Center, 5.00%, 8/1/2016,
Callable 2/1/2013 @ 100, (MBIA) ............................... 985,000 1,066,558
Aaa/AAA New York Medical College, 5.25%, 7/1/2013,
Callable 7/1/2008 @ 101, (MBIA) ............................... 1,015,000 1,084,162
Aaa/AAA New York University, Series 2, 5.50%, 7/1/2018,
Callable 7/1/2011 @ 100, (AMBAC) .............................. 500,000 551,380
NR/AAA Park Ridge Housing, Inc., 6.375%, 8/1/2020,
Callable 8/1/2010 @ 100, (FNMA) (AMBAC) ....................... 1,000,000 1,131,090
NR/AAA Park Ridge Housing, Inc., 6.50%, 8/1/2025,
Callable 8/1/2010 @ 100, (FNMA) (AMBAC) ....................... 1,470,000 1,670,890
Aaa/NR Rochester Institute of Technology, Series A, 5.25%,
7/1/2016, Callable 7/1/2012 @ 100, (AMBAC) .................... 2,045,000 2,246,024
Aaa/NR Rochester Institute of Technology, Series A, 5.25%,
7/1/2017, Callable 7/1/2012 @ 100, (AMBAC) .................... 2,155,000 2,353,217
Aaa/AAA School Districts Financing, Series C, 5.25%, 4/1/2021,
Callable 10/1/2012 @ 100, (MBIA) .............................. 1,300,000 1,420,081
Aaa/AAA Special Acts School Districts Program, 6.00%, 7/1/2019,
Callable 7/1/06 @ 101, (MBIA) ................................. 3,540,000 3,631,438
NR/AAA State University, 5.375%, 7/1/2021, Prerefunded
7/1/2008 @ 102 ................................................ 325,000 352,420
NR/AAA State University, 5.375%, 7/1/2021, Prerefunded
7/1/2008 @ 102 ................................................ 865,000 937,980
Aaa/AAA Upstate Community Colleges, Series A, 6.00%,
7/1/2019, Prerefunded 7/1/2010 @ 101, (FSA) ................... 1,000,000 1,136,030
Aaa/AAA Upstate Community Colleges, Series A, 6.00%,
7/1/2020, Prerefunded 7/1/2010 @ 101, (FSA) ................... 845,000 959,945
NR/AAA Westchester County, Court Facilities, 5.25%, 8/1/2018,
Callable 2/1/2009 @ 101, (MBIA) ............................... 2,800,000 2,974,188
-----------
Total New York State Dormitory Authority ......................... 29,670,334
===========
New York State Environmental Facilities Corp. (1.5%)
Aaa/AAA State Water Pollution Control Revenue, Revolving Fund,
Pooled Loan, 5.90%, 1/15/2018, Prerefunded
1/15/2006 @ 102, (POL CTL-SRF) ................................ 785,000 809,578
Aaa/AAA State Water Pollution Control Revenue, Revolving Fund,
Pooled Loan, 5.90%, 1/15/2018, Callable
1/15/2006 @ 102, (POL CTL-SRF) ................................ 725,000 747,055
-----------
Total New York State Environmental Facilities Corp. .............. 1,556,633
-----------
The accompanying notes are an integral part of the financial statements.
4
THE EMPIRE BUILDER TAX FREE BOND FUND
Portfolio of Investments -- August 31, 2005 -- continued
(Unaudited)
Principal Fair Value
Credit Ratings** Municipal Securities (95.5%) Amount (Note 2)
- ---------------- ---------------------------- --------- ----------
New York State Agencies--continued
New York State Metropolitan Transportation Authority (11.6%)
Aaa/AAA Metropolitan Transportation Authority, Transportation
Revenue, Series A, 5.00%, 11/15/2006,
Non Callable, (FSA) ........................................... $12,000,000 $12,311,040
-----------
New York State Power Authority (0.6%)
Aa2/AA- New York State Power Authority, Series A, 4.40%,
11/15/2007, Callable 12/15/2005 @ 100 ......................... 600,000 602,442
-----------
New York State Thruway Authority (5.6%)
Aaa/AAA Highway & Bridge Trust Fund Bonds, Series A, 5.25%,
4/1/2006, Non Callable, (FGIC) ................................ 1,500,000 1,521,525
Aaa/AAA Highway & Bridge Trust Fund Bonds, Series A, 5.50%,
4/1/2014, Prerefunded 4/1/2011 @ 101, (FGIC) .................. 1,500,000 1,689,705
Aaa/AAA Highway & Bridge Trust Fund Bonds, Series B, 5.25%,
4/1/2017, Prerefunded 10/1/2011 @ 100, (MBIA) ................. 2,500,000 2,779,175
-----------
Total New York State Thruway Authority ........................... 5,990,405
-----------
New York State Urban Development Corp. (0.9%)
A2/AA- Empire State Development Corp., University Facilities
Grants, 6.00%, 1/1/2009, Non Callable ......................... 905,000 984,450
-----------
Total New York State Agencies .................................... 52,492,841
-----------
Other New York State Bonds (28.0%)
A3/NR Albany Housing Authority, Limited Obligation, 6.25%,
10/1/2012, Callable 10/1/2005 @ 102 ........................... 1,000,000 1,022,080
Aaa/AAA Babylon, General Obligation, 5.00%, 8/1/2006,
Non Callable, (AMBAC) ......................................... 1,000,000 1,019,720
Aaa/NR Brentwood, Union Free School District, General
Obligation, 4.00%, 5/1/2020, Callable 5/1/2015 @ 100,
(MBIA) (State Aid Withholding) ................................ 830,000 833,934
Aaa/NR Brentwood, Union Free School District, General
Obligation, 4.00%, 5/1/2021, Callable 5/1/2015 @ 100,
(MBIA) (State Aid Withholding) ................................ 1,000,000 1,001,550
Aaa/NR Brentwood, Union Free School District, General
Obligation, 4.00%, 5/1/2022, Callable 5/1/2015 @ 100,
(MBIA) (State Aid Withholding) ................................ 1,000,000 997,550
Aaa/AAA Buffalo, Municipal Water Finance Authority, Water System
Revenue, 5.75%, 7/1/2019, Callable 7/1/2006 @ 101, (FGIC) ..... 500,000 514,405
Aaa/AAA Buffalo, Sewer System Revenue Authority, 4.00%,
7/1/2006, Non Callable, (FSA) ................................. 1,095,000 1,105,983
Aaa/NR Corning, City School District, General Obligation, 5.00%,
6/15/2012, Non Callable, (FSA) ................................ 1,000,000 1,100,490
The accompanying notes are an integral part of the financial statements.
5
THE EMPIRE BUILDER TAX FREE BOND FUND
Portfolio of Investments -- August 31, 2005 -- continued
(Unaudited)
Principal Fair Value
Credit Ratings** Municipal Securities (95.5%) Amount (Note 2)
- ---------------- ---------------------------- --------- ----------
Other New York State Bonds--continued
Aaa/NR Corning, City School District, General Obligation, 5.00%,
6/15/2013, Callable 6/15/2012 @ 100, (FSA) .................... $ 970,000 $ 1,062,548
Aaa/NR Corning, City School District, General Obligation, 5.00%,
6/15/2014, Callable 6/15/2012 @ 100, (FSA) .................... 600,000 654,594
Aa2/NR Dutchess County, Public Improvement, General
Obligation, 3.50%, 12/15/2005, Non Callable ................... 1,365,000 1,368,167
Aaa/AAA Erie County, Industrial Development Agency, Buffalo
School District Project, 5.00%, 5/1/2006,
Non Callable, (FSA) ........................................... 3,175,000 3,221,609
Aaa/AAA Evans, General Obligation, 6.80%, 4/15/2012,
Non Callable, (AMBAC) ......................................... 225,000 268,751
Aaa/AAA Evans, General Obligation, 6.80%, 4/15/2013,
Non Callable, (AMBAC) ......................................... 225,000 273,204
Aaa/NR Fayetteville Manlius, Central School District, General
Obligation, 5.00%, 6/15/2016, Callable 6/15/2012 @ 101,
(FGIC) ........................................................ 375,000 409,001
Aaa/NR Ilion, Central School District, General Obligation, Series B,
5.50%, 6/15/2015, Callable 6/15/2012 @ 101, (FGIC) ............ 550,000 622,287
Aaa/NR Ilion, Central School District, General Obligation, Series B,
5.50%, 6/15/2016, Callable 6/15/2012 @ 101, (FGIC) ............ 500,000 563,455
Aaa/AAA Mount Sinai, Union Free School District, General
Obligation, 6.20%, 2/15/2012, Non Callable, (AMBAC) ........... 1,065,000 1,230,852
Aaa/AAA Niagara Falls Public Water Authority, Water & Sewer
System Revenue, 5.50%, 7/15/2034, Prerefunded
7/15/2015 @ 100, (XLCA) ....................................... 500,000 561,880
Aaa/AAA Niagara Falls Public Water Authority, Water and Sewer
System Revenue, Series A, 5.50%, 7/15/2028,
Callable 7/15/2006 @ 100, (MBIA) .............................. 1,000,000 1,021,240
Aaa/AAA North Hempstead, General Obligation, Series B, 6.375%,
4/1/2009, Non Callable, (FGIC) ................................ 570,000 631,993
Aaa/AAA North Hempstead, General Obligation, Series B, 6.40%,
4/1/2010, Non Callable, (FGIC) ................................ 560,000 632,044
NR/AAA Oneida County, Industrial Development Agency, Mohawk
Valley Network, St. Luke's Memorial Hospital, 5.00%,
1/1/2013, Callable 1/1/2008 @ 101, (FSA) ...................... 2,000,000 2,091,480
Aaa/NR Oyster Bay, General Obligation, 5.00%, 3/15/2011,
Non Callable, (FSA) ........................................... 430,000 466,640
Aaa/NR Poughkeepsie Town, General Obligation, Series B, 2.00%,
12/15/2005, Non Callable, (MBIA) .............................. 610,000 608,414
Aaa/NR Southern Cayuga Central School District, General
Obligation, 5.00%, 5/15/2014, Callable 5/15/2012 @ 100,
(FSA) ......................................................... 400,000 435,996
The accompanying notes are an integral part of the financial statements.
6
THE EMPIRE BUILDER TAX FREE BOND FUND
Portfolio of Investments -- August 31, 2005 -- continued
(Unaudited)
Principal Fair Value
Credit Ratings** Municipal Securities (95.5%) Amount (Note 2)
- ---------------- ---------------------------- --------- ----------
Other New York State Bonds--continued
Aaa/AAA Suffolk County, General Obligation, Series C, 5.00%,
9/15/2015, Callable 9/15/2008 @ 101, (FGIC) ................... $ 965,000 $ 1,028,072
Aaa/AAA Suffolk County, General Obligation, Series C, 5.00%,
9/15/2016, Callable 9/15/2008 @ 101, (FGIC) ................... 550,000 584,793
Aaa/AAA Suffolk County, General Obligation, Series C, 5.00%,
9/15/2017, Callable 9/15/2008 @ 101, (FGIC) ................... 480,000 509,506
Aaa/AAA Suffolk County, General Obligation, Series D, 5.00%,
11/1/2015, Callable 11/1/2008 @ 101, (FGIC) ................... 1,125,000 1,201,005
Aaa/AAA Suffolk County, General Obligation, Series D, 5.00%,
11/1/2016, Callable 11/1/2008 @ 101, (FGIC) ................... 1,110,000 1,182,572
Aaa/AAA Yonkers, General Obligation, Series A, 2.00%, 12/1/2005,
Non Callable, (MBIA) .......................................... 750,000 748,395
Aaa/AAA Yonkers, General Obligation, Series E, 5.00%, 12/1/2006,
Non Callable, (MBIA) .......................................... 750,000 769,695
------------
Total Other New York State Bonds ................................. 29,743,905
------------
Puerto Rico (0.5%)
A3/A- Puerto Rico Electric Power Authority, Revenue,
Series OO, 4.00%, 7/1/2006, Non Callable ...................... 500,000 503,880
------------
Total Municipal Securities (Cost $97,578,584) .................... 101,426,839
------------
Short Term Investments (4.6%)
Dreyfus New York Municipal Cash Management Fund .................. 4,910,000 4,910,000
------------
Total Short Term Investments (Cost $4,910,000) ................... 4,910,000
------------
Total Investments (Cost $102,488,584) (a) -- 100.1% .............. $106,336,839
Net Other Assets (Liabilities) -- (0.1%) ......................... (101,929)
------------
NET ASSETS --100.0% .............................................. $106,234,910
============
- ----------
** Credit Ratings given by Moody's Investors Service Inc. and Standard &
Poor's Corporation (unaudited).
The accompanying notes are an integral part of the financial statements.
7
THE EMPIRE BUILDER TAX FREE BOND FUND
Portfolio of Investments -- August 31, 2005 -- continued
Moody's Standard & Poor's
Aaa AAA Instrument judged to be of the highest
quality and carrying the smallest amount
of investment risk.
Aa AA Instrument judged to be of high quality
by all standards.
A A Instrument judged to be adequate quality
by all standards.
Baa BBB Instrument judged to be moderate quality
by all standards.
NR NR Not Rated. In the opinion of the
Investment Adviser, instrument judged to
be of comparable investment quality to
rated securities which may be purchased
by the Fund.
For items possessing the strongest investment attributes of their category,
Moody's gives that letter rating followed by a number. The Standard & Poor's
ratings may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
Abbreviations used in this statement:
AMBAC Insured as to principal and interest by the American Municipal
Bond Assurance Corporation.
FGIC Insured as to principal and interest by the Financial
Guarantee Insurance Corporation.
FHA Insured by the Federal Housing Administration.
FNMA Insured by the Federal National Mortgage Association.
FSA Insured as to principal and interest by Financial Security
Assurance.
MBIA Insured as to principal and interest by the Municipal Bond
Insurance Association.
POL CTL-SRF Insured as to principal and interest by the Pollution Control
State Revenue Fund.
The accompanying notes are an integral part of the financial statements.
8
THE EMPIRE BUILDER TAX FREE BOND FUND
Statement of Assets and Liabilities
August 31, 2005
(Unaudited)
Assets:
Investments in securities, at fair value (cost $102,488,584) (Note 2) .............................. $106,336,839
Interest and dividends receivable .................................................................. 1,082,813
Receivable for investments sold .................................................................... 1,727,250
Prepaid expenses and other assets .................................................................. 63,149
------------
Total Assets .............................................................. 109,210,051
Liabilities:
Payable to custodian for cash overdraft ..................................... $ 22,892
Dividends payable ........................................................... 45,768
Payable for investments purchased ........................................... 2,780,462
Advisory fee payable (Note 4) ............................................... 35,682
Administration fee payable (Note 4) ......................................... 19,656
Fund accounting fee payable (Note 4) ........................................ 5,237
Compliance services fee payable (Note 4) .................................... 4,167
Transfer agency fee payable (Note 4) ........................................ 30,429
Other accrued expenses ...................................................... 30,848
------------
Total Liabilities ......................................................... 2,975,141
------------
Net Assets ..................................................................... $106,234,910
============
Net Assets:
Capital ............................................................................................ $102,098,296
Undistributed net investment income ................................................................ 77,525
Accumulated realized gains (losses) from investments ............................................... 210,834
Net unrealized appreciation/depreciation from investments .......................................... 3,848,255
------------
Net Assets ....................................................................................... $106,234,910
============
Builder Class:
Net Assets .................................................................. $ 51,150,164
Shares of Beneficial Interest Outstanding ................................... 2,875,697
------------
Builder Class -- Net Asset Value
(offering and redemption price per share) ................................. $ 17.79
============
Premier Class:
Net Assets .................................................................. $ 55,084,746
Shares of Beneficial Interest Outstanding ................................... 3,096,238
------------
Premier Class -- Net Asset Value
(offering and redemption price per share) ................................. $ 17.79
============
The accompanying notes are an integral part of the financial statements.
9
THE EMPIRE BUILDER TAX FREE BOND FUND
Statement of Operations
For the Period March 1, 2005 through August 31, 2005
(Unaudited)
Investment Income:
Interest .............................................................................................. $ 1,952,540
Dividend .............................................................................................. 11,910
-----------
Total Investment Income ............................................................................... 1,964,450
Expenses:
Advisory fees (Note 4) ....................................................... $ 213,915
Administration fees (Note 4) ................................................. 100,832
Transfer agency fees (Builder Class) (Note 4) ................................ 75,552
Transfer agency fees (Premier Class) (Note 4) ................................ 24,635
Audit fees ................................................................... 16,930
Compliance services fees (Note 4) ............................................ 25,000
Custody fees ................................................................. 22,979
Fund accounting fees (Note 4) ................................................ 32,320
Trustees' fees ............................................................... 26,000
Other fees ................................................................... 61,971
-----------
Total Expenses ............................................................. 600,134
Less: Custody fee credit ................................................... (6,834)
-----------
Total Net Expenses .................................................................................... 593,300
-----------
Net Investment Income .................................................................................... 1,371,150
-----------
Realized/Unrealized Gains (Losses) on Investments
(Notes 2 and 3)
Net realized gains (losses) from investment transactions ..................... 106,695
Change in net unrealized appreciation/depreciation
from investment transactions ............................................... (23,007)
-----------
Net realized/unrealized gains (losses) from investment transactions ................................. 83,688
-----------
Change in net assets resulting from operations ........................................................... $ 1,454,838
===========
The accompanying notes are an integral part of the financial statements.
10
THE EMPIRE BUILDER TAX FREE BOND FUND
Statements of Changes in Net Assets
For the Period
March 1, 2005
through
August 31, 2005 Year Ended
(Unaudited) February 28, 2005
--------------- -----------------
From Investment Activities:
Operations:
Net investment income .................................................... $ 1,371,150 $ 2,709,269
Net realized gains (losses) from investment transactions ................. 106,695 501,510
Change in unrealized appreciation/depreciation from
investment transactions ................................................ (23,007) (1,985,120)
------------- -------------
Change in net assets resulting from operations ......................... 1,454,838 1,225,659
------------- -------------
Distributions to shareholders from:
Net investment income -- Builder Class ................................... (614,769) (1,242,130)
Net investment income -- Premier Class ................................... (721,036) (1,456,573)
Net realized gains from investment transactions -- Builder Class ......... -- (398,748)
Net realized gains from investment transactions -- Premier Class ......... -- (424,895)
------------- -------------
Total distributions ...................................................... (1,335,805) (3,522,346)
------------- -------------
Capital Transactions:
Proceeds from shares issued -- Builder Class ............................. 512,166 2,263,421
Proceeds from shares issued -- Premier Class ............................. 452,848 1,217,483
Dividends reinvested -- Builder Class .................................... 541,109 1,479,069
Dividends reinvested -- Premier Class .................................... 590,817 1,620,288
Value of shares redeemed -- Builder Class ................................ (2,181,753) (5,932,632)
Value of shares redeemed -- Premier Class ................................ (2,333,818) (6,368,780)
------------- -------------
Change in net assets from capital share transactions ................... (2,418,631) (5,721,151)
------------- -------------
Change in net assets ................................................... (2,299,598) (8,017,838)
Net Assets:
Beginning of period ...................................................... 108,534,508 116,552,346
------------- -------------
End of period ............................................................ $ 106,234,910 $ 108,534,508
============= =============
Share Transactions:
Issued -- Builder Class .................................................. 28,847 126,398
Issued -- Premier Class .................................................. 25,513 68,205
Reinvested -- Builder Class .............................................. 30,488 82,927
Reinvested -- Premier Class .............................................. 33,289 90,826
Redeemed -- Builder Class ................................................ (122,999) (332,368)
Redeemed -- Premier Class ................................................ (131,545) (357,565)
------------- -------------
Change in shares ......................................................... (136,407) (321,577)
------------- -------------
Undistributed net investment income ...................................... $ 77,525 $ 42,180
============= =============
The accompanying notes are an integral part of the financial statements.
11
THE EMPIRE BUILDER TAX FREE BOND FUND
Financial Highlights
For a share of beneficial interest outstanding throughout each period
For the Period
March 1, 2005 Through Year Ended Year Ended Year Ended
August 31, 2005 ------------------- ------------------- -------------------
(Unaudited) February 28, 2005 February 29, 2004 February 28, 2003
------------------- ------------------- ------------------- -------------------
Builder Premier Builder Premier Builder Premier Builder Premier
Class Class Class Class Class Class Class Class
------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
Beginning of Period ...... $17.77 $17.77 $18.12 $18.13 $18.08 $18.08 $17.80 $17.80
------- ------- ------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income .... 0.21 0.23 0.41 0.45 0.51 0.55 0.61 0.66
Net realized/unrealized
gains (losses) on
investments ............ 0.02 0.02 (0.22) (0.23) 0.22 0.23 0.54 0.54
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations ............... 0.23 0.25 0.19 0.22 0.73 0.78 1.15 1.20
------- ------- ------- ------- ------- ------- ------- -------
Distributions:
Net investment income .... (0.21) (0.23) (0.41) (0.45) (0.51) (0.55) (0.61) (0.66)
Net realized capital gains -- -- (0.13) (0.13) (0.18) (0.18) (0.26) (0.26)
------- ------- ------- ------- ------- ------- ------- -------
Total distributions ...... (0.21) (0.23) (0.54) (0.58) (0.69) (0.73) (0.87) (0.92)
------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period ............ $17.79 $17.79 $17.77 $17.77 $18.12 $18.13 $18.08 $18.08
======= ======= ======= ======= ======= ======= ======= =======
Total Return (a) ........... 1.31% 1.41% 1.11% 1.29% 4.16% 4.40% 6.62% 6.90%
Ratios/Supplementary Data:
Net Assets, End of Period
(in thousands) ......... $51,150 $55,085 $52,222 $56,313 $55,504 $61,048 $56,677 $61,025
Ratios of Net Investment
Income to Average
Net Assets (b) ......... 2.43% 2.63% 2.32% 2.55% 2.85% 3.03% 3.44% 3.71%
Ratios of Expenses to
Average Net Assets (b) . 1.20% 1.00% 1.18% 0.95% 1.04% 0.86% 1.16% 0.89%
Ratios of Expenses to
Average Net Assets* (b) 1.21% 1.01% 1.22% 0.99% 1.05% 0.87% 1.16% 0.89%
Portfolio Turnover
Rate (a)(c) ............ 20.19% 20.19% 100.38% 100.38% 202.77% 202.77% 213.97% 213.97%
Year Ended Year Ended
------------------- -------------------
February 28, 2002 February 28, 2001
------------------- -------------------
Builder Premier Builder Premier
Class Class Class Class
------- ------- ------- -------
Net Asset Value,
Beginning of Period ...... $17.69 $17.69 $16.32 $16.32
------- ------- ------- -------
Investment Activities:
Net investment income .... 0.72 0.77 0.73 0.79
Net realized/unrealized
gains (losses) on
investments ............ 0.27 0.27 1.37 1.37
------- ------- ------- -------
Total from Investment
Operations ............... 0.99 1.04 2.10 2.16
------- ------- ------- -------
Distributions:
Net investment income .... (0.71) (0.76) (0.73) (0.79)
Net realized capital gains (0.17) (0.17) -- --
------- ------- ------- -------
Total distributions ...... (0.88) (0.93) (0.73) (0.79)
------- ------- ------- -------
Net Asset Value,
End of Period ............ $17.80 $17.80 $17.69 $17.69
======= ======= ======= =======
Total Return (a) ........... 5.74% 6.01% 13.15% 13.53%
Ratios/Supplementary Data:
Net Assets, End of Period
(in thousands) ......... $54,253 $59,910 $53,937 $60,418
Ratios of Net Investment
Income to Average
Net Assets (b) ......... .04% 4.30% 4.31% 4.65%
Ratios of Expenses to
Average Net Assets (b) . 1.14% 0.88% 1.20% 0.86%
Ratios of Expenses to
Average Net Assets* (b) 1.14% 0.88% 1.22% 0.88%
Portfolio Turnover
Rate (a)(c) ............ 98.29% 98.29% 121.96% 121.96%
- ----------
* The ratio does not include a reduction of expenses for custodian fee
credits of cash balances maintained with the custodian, or amounts
reimbursed by the Administrator.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
12
THE EMPIRE BUILDER TAX FREE BOND FUND
Notes to Financial Statements
(Unaudited)
1. Organization:
The Empire Builder Tax Free Bond Fund (the "Fund") was established as a
Massachusetts business trust by an Agreement and Declaration of Trust dated
September 30, 1983. The Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, non-diversified investment
company. The Fund has an unlimited number of shares authorized with no par
value.
The Fund offers two classes of shares; the Builder Class and the Premier
Class. Each class of shares outstanding bears the same dividend, liquidation and
other rights and conditions, except that the Builder Class shares and the
Premier Class shares bear separate transfer agency expenses. Each class of
shares has exclusive voting rights with respect to matters affecting only that
class.
Under the Fund's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business, the Fund may
enter into contracts with its vendors and others that provide for general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund.
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.
Use of Estimates
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ from these amounts.
Security Valuation
Tax-exempt securities are valued at their fair value as determined by an
independent pricing service approved by the Fund's Board of Trustees. The
pricing service uses information with respect to transactions in bonds,
quotations from bond dealers, market transactions in comparable securities and
various relationships between securities in determining fair value. The methods
used by the pricing service and the quality of valuations so established are
reviewed by Glickenhaus & Co. (the "Adviser"), under the general supervision of
the Trustees of the Fund.
Securities for which quotations are readily available are stated at fair
value using procedures approved by the Trustees of the Fund. Short-term debt
securities having remaining maturities of sixty (60) days or less are stated at
amortized cost, which approximates market value. Investments in investment
companies are reported at their respective net asset values as reported by those
companies.
13
THE EMPIRE BUILDER TAX FREE BOND FUND
Notes to Financial Statements -- continued
(Unaudited)
Security Transactions and Investment Income
Security transactions are accounted for no later than one business day
after trade date. However, for financial reporting purposes, security
transactions are accounted for on trade date. Interest income, which includes
amortization of premium and accretion of discounts, is accrued as earned.
Realized gains and losses from security transactions and unrealized appreciation
and depreciation of investments are determined on the basis of identified cost.
Taxes
The Fund qualifies and intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, and to
distribute substantially all of its tax-exempt and taxable income. Therefore, no
federal income tax provision is required.
In addition, by distributing during each calendar year substantially all
of its net investment income, capital gains and certain other amounts, if any,
the Fund will not be subject to a federal excise tax.
Distributions and Dividends
Distributions to shareholders from net investment income are declared
daily and paid monthly. The Fund also distributes at least annually
substantially all net capital gains, if any, realized from portfolio
transactions.
The amounts of distributions from net investment income and net realized
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature (i.e. reclass of market
discounts, gain/loss, paydowns, and distributions), such amounts are
reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Determination of Net Asset Value and Allocation of Expenses
In calculating net asset value per share of each class, investment income
and expenses, other than class-specific expenses, are allocated daily to each
class of shares based on the value of outstanding shares. Realized and
unrealized gains and losses are allocated on relative net assets.
Other
The Fund maintains a cash balance with its custodian and receives a
reduction of its custody fees and expenses for the amounts of interest earned on
such uninvested cash balance. There was no effect on net investment income for
the period ended August 31, 2005. The Fund could have invested such cash amounts
in an income-producing asset if it had not agreed to a reduction of fees or
expenses under the expense offset arrangement with the Fund's custodian.
14
THE EMPIRE BUILDER TAX FREE BOND FUND
Notes to Financial Statements -- continued
(Unaudited)
3. Purchases and Sales of Investment Securities:
Purchases and sales of investment securities, excluding short-term
investments, during the period ended August 31, 2005, amounted to $27,222,115
and $19,169,606, respectively. During the same period, there were no purchases
or sales of long-term U.S. Government securities.
4. Advisory Fees and Other Related Party Transactions:
The Fund retains the Adviser to act as investment adviser pursuant to an
Investment Advisory Agreement. As compensation for its advisory services, the
Adviser receives a fee computed daily and paid monthly, at the annual rates of
0.40% of the first $100,000,000 of average daily net assets and 0.3333% of any
excess over $100,000,000.
The Adviser has agreed to a reduction of advisory fees to the extent that
the Fund's expenses, including the advisory fees, exceed 1.50% of the Fund's
average annual net assets. For the period ended August 31, 2005, there was no
reduction of advisory fees pursuant to this agreement.
BISYS Fund Services Ohio, Inc. ("BISYS Ohio" or the "Administrator") and
BISYS Fund Services, Inc. ("BISYS"), subsidiaries of The BISYS Group, Inc.,
serve as the Fund's administrator, transfer agent and fund accountant. BISYS
Ohio and BISYS receive compensation for administration and fund accounting
services at a rate of 0.15% and 0.03%, respectively, of the average daily net
assets of the Fund (subject to certain minimum amounts), including reimbursement
for certain expenses incurred. Fees received for transfer agency services are
class specific and are based on the number of accounts per class. All fees are
accrued daily and paid monthly.
Under a Compliance Services Agreement between the Fund and BISYS Ohio (the
"CCO Agreement"), BISYS Ohio makes an employee available to serve as the Fund's
Chief Compliance Officer (the "CCO"). Under the CCO Agreement, BISYS Ohio also
provides infrastructure and support in implementing the written policies and
procedures comprising the Fund's compliance program, including support services
to the CCO. For the services provided under the CCO Agreement, the Fund paid
BISYS Ohio $25,000 for the period ended August 31, 2005, plus certain out of
pocket expenses. BISYS Ohio pays the salary and other compensation earned by any
such individuals as employees of BISYS Ohio.
Certain Officers and Trustees of the Fund are affiliated with the Adviser
or the Administrator. Such Officers and Trustees receive no compensation from
the Fund for serving in their respective roles. Each of the four Trustees who
serve both on the Board and the Audit Committee were compensated $2,500 ($26,000
in total) for meeting and retainer fees during the period ended August 31, 2005,
and reimbursed for certain expenses.
At August 31, 2005, the cost, gross unrealized appreciation and gross
unrealized depreciation on securities, for federal income tax purposes, were as
follows:
Net Unrealized
Tax Unrealized Tax Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
------------ -------------- -------------- --------------
The Empire Builder Tax Free Bond Fund $102,430,916 $4,081,043 $(175,120) $3,905,923
15
THE EMPIRE BUILDER TAX FREE BOND FUND
Notes to Financial Statements -- continued
(Unaudited)
5. Concentration of Credit Risk:
The Fund invests primarily in debt instruments of municipal issuers in New
York State. The issuers' abilities to meet their obligations may be affected by
economic developments in New York State or its region.
Investment Advisory Contract Approval (Unaudited)
The 1940 Act requires that the Board of Trustees of the Fund, including a
majority of its Trustees who are not "interested persons" of the Fund, as such
term is defined in the 1940 Act (the "Independent Trustees"), voting separately,
approve the continuance of the Investment Advisory Agreement of the Fund on an
annual basis at a meeting called for that purpose. At a meeting held in person
on June 7, 2005 (the "Meeting"), the Trustees met to discuss, among other
things, the renewal of the Investment Advisory Agreement with its Adviser,
Glickenhaus & Co.
In considering whether to approve the continuation of the Investment
Advisory Agreement, the Trustees reviewed materials provided by the Adviser and
Fund counsel, which included, among other things, materials that contained
relevant industry averages and a peer group analysis compiled by Lipper Inc.
("Lipper"). The Trustees reviewed contractual advisory fees and total expenses
for the Fund as compared to other New York municipal debt funds for year-to-date
and over one-, three-, five-year periods and total returns for those same
periods. They also reviewed the Statement of Financial Condition of the Adviser.
As part of their evaluations, the Independent Trustees held discussions with
experienced counsel independent of the Adviser.
The Trustees evaluated the information presented and considered various
factors relevant to the decision whether or not to continue the Investment
Advisory Agreement. The Trustees considered all information they deemed
reasonably necessary to evaluate the terms thereof, including the following: (i)
the Fund's long- and short-term performance compared to that of comparable
funds; (ii) the services provided by the Adviser to the Fund and the nature and
quality of those services; (iii) the investment performance of the Fund in
relation to the composition and risk of the Fund's investment portfolio; (iv)
the amount of the investment advisory fees paid by the Fund to the Adviser and
the Fund's overall expenses and the level of such fees and expenses on a
comparative basis with comparable funds; (v) the extent to which economies of
scale would be realized as the Fund grows; and (vi) whether fee levels reflect
such economies of scale for the benefit of the shareholders. The Trustees also
took note of the expense limitation the Adviser adheres to in order to limit the
total expenses of the Fund and the Adviser's commitment to the overall success
and continued growth of the Fund. Throughout the process, the Trustees were
afforded the opportunity to ask questions of and request additional materials
from the Adviser.
The Trustees also considered the comparative performance information from
Lipper that was provided in advance of the Meeting. The Trustees noted that the
long-term performance of the Fund was relatively strong, although below the
median and average performance of a group of New York municipal debt funds
selected by Lipper. They further noted that although the Fund's medium- and
short-term
16
THE EMPIRE BUILDER TAX FREE BOND FUND
Notes to Financial Statements -- continued
(Unaudited)
performance also lagged that of its peers, the Adviser had provided reasons for
the performance disparity, including the Adviser's belief that it was prudent to
reduce the risk of the Fund by causing the Fund to take a relatively defensive
investment approach, which reduced Fund returns. After considering these and
other relevant factors, the Trustees concluded that the investment performance
of the Fund and the Adviser were satisfactory and supported the renewal of the
Investment Advisory Agreement.
The Trustees also considered the comparative fee and expense information
that had been provided to them before the Meeting. The information compared the
Fund's advisory fee and total expense ratio to those of other New York municipal
debt funds selected by Lipper. The Trustees noted that the Fund's advisory fee
was below the median and the average of the comparative fund group. They also
noted that the Fund's total expense ratio was higher than the median and average
expense ratio of the group. The Trustees considered that the Fund, because it
was smaller than most of the funds to which it was being compared, could not
take advantage of economies of scale (which can reduce fund expenses) to the
same extent as those larger funds. The Trustees also received information from
the Adviser about the profit margin to the Adviser from its management of the
Fund, and information from Fund counsel regarding court cases in which
investment adviser profitability was at issue, in whole or in part. In reviewing
the fees payable under the Investment Advisory Agreement, the Trustees also took
into account so-called "fallout benefits" to the Adviser, such as the
convenience to investors in the Adviser's New York tax exempt unit investment
trusts of the availability of the Fund for automatic investment of amounts
distributed from the unit investment trusts. They also considered the demands
and complexity of the investment management of the Fund, and the fact that
profitability could be effected by the salaries paid to persons with an
ownership interest in the Adviser. After considering these and other relevant
factors, the Trustees concluded that the fees and expenses of the Fund, the
costs of the services to be provided and the profits to be realized by the
Adviser and its affiliates from their relationship with the Fund were
satisfactory and supported the renewal of the Investment Advisory Agreement.
In considering the nature, extent and quality of the services provided by
the Adviser, the Trustees considered the scope and quality of in-house research
capability of the Adviser. They also considered the business reputation of the
Adviser and its financial resources. The Trustees evaluated the procedures and
systems of the Adviser that are designed to fulfill the Adviser's fiduciary duty
to the Fund with respect to possible conflicts of interest, including the
Adviser's Code of Ethics. The Trustees also considered information concerning
the policies and procedures of the Adviser with respect to the execution of
portfolio transactions. After considering these and other relevant factors, the
Trustees concluded that the nature, extent and quality of the services provided
by the Adviser were satisfactory and supported the renewal of the Investment
Advisory Agreement.
With considering the extent to which economies of scale would be realized
as the Fund grows, the Trustees noted that the advisory fee is currently subject
to a breakpoint, and that the advisory fee is subject to further reduction if
the Fund's total expenses exceed an expense cap. As noted above, the Trustees
also considered that the Fund's small size did not permit it to take advantage
of economies of scale to the same extent as other funds. After considering these
and other relevant factors, the Trustees concluded that these factors supported
the renewal of the Investment Advisory Agreement.
17
THE EMPIRE BUILDER TAX FREE BOND FUND
Notes to Financial Statements -- continued
(Unaudited)
Based upon the Trustees' review and consideration of the above stated
factors and other matters deemed relevant, the Trustees concluded that the terms
of the Investment Advisory Agreement were fair and reasonable. No single factor
was considered in isolation or to be determinative of the decision of the
Trustees to approve the Investment Advisory Agreement. Rather, the Trustees,
including the Independent Trustees, concluded in light of a weighing and
balancing of all factors considered that it was in the best interest of the Fund
to approve the Investment Advisory Agreement, including the fees to be charged
for services thereunder, for an additional one-year period.
Other Information (Unaudited)
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is available (i)
without charge, upon request, by calling 1-800-847-5886; and (ii) on the
Securities and Exchange Commission's (the "Commission") website at
http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available
(i) without charge, upon request, by calling 1-800-847-5886; and (ii) on the
Commission's website at http://www.sec.gov.
The Fund files complete Schedule of Portfolio Holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available without charge on the Commission's website at
http://www.sec.gov, or may be reviewed and copied at the Commission's Public
Reference Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
18
[LOGO] EMPIRE BUILDER
3435 Stelzer Road
Columbus, Ohio 43219
1-800-847-5886
[LOGO] EMPIRE BUILDER
TAX FREE BOND FUND
Semi-Annual Report
August 31, 2005
Investment Adviser and Distributor
Glickenhaus & Co.
546 Fifth Avenue
7th Floor
New York, New York 10036
Fund Accountant
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Transfer Agent and Administrator
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
State Street Bank & Trust Co.
800 Pennsylvania Avenue
5th Floor
Kansas City, Missouri 64105-1307
Legal Counsel
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
100 E. Broad Street
Columbus, Ohio 43215
Customer Service
3435 Stelzer Road
Columbus, Ohio 43219
1-800-847-5886
This report is submitted for the information of the shareholders of The Empire
Builder Tax Free Bond Fund. It is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective prospectus,
obtainable from an investment dealer, which includes information regarding the
Fund's objectives and policies, record, management, sales commission and other
data.
534821
Item 2. Code of Ethics.
Not applicable - only for annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable - only for annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable - only for annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a)The registrant's principal executive officer and principal financial officer
have concluded, based on their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date of this
report, that these disclosure controls and procedures are adequately designed
and are operating effectively to ensure that information required to be
disclosed by the registrant on Form N-CSR is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.
(b)There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that
occurred during the second fiscal quarter of the period covered by this report
that have materially affected or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1)
Not applicable - Only effective for annual reports.
(a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) are furnished herewith.
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.
(Registrant) The Empire Builder Tax Free Bond Fund
By (Signature and Title)* /s/ Aaron J. Masek
--------------------------
Aaron J. Masek, Treasurer
Date October 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Seth M. Glickenhaus
--------------------------
Seth M. Glickenhaus, President
Date October 28, 2005
By (Signature and Title)* /s/ Aaron J. Masek
--------------------------
Aaron J. Masek, Treasurer
Date October 28, 2005
* Print the name and title of each signing officer under his or her signature.