<PAGE>
FOUNDER AND ADMINISTRATOR
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue,
Suite 2300 New York, New York 10017
INVESTMENT ADVISER
PACIFIC CENTURY TRUST
a division of
BANK OF HAWAII
Financial Plaza of the Pacific
P.O. Box 3170
Honolulu, Hawaii 96802
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Arthur K. Carlson
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
Rose F. Marotta, Chief Financial Officer
Richard F. West, 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.
100 East Broad Street
Columbus, Ohio 43271
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
INDEPENDENT AUDITORS
KPMG LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus, which must precede or
accompany this report.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 1999
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 Aquilasm Group of Funds: an eagle's head in an oval]
ONE OF THE
AQUILASM GROUP OF FUNDS
</PAGE>
<PAGE>
SERVING HAWAII INVESTORS FOR OVER A DECADE
{Logo of Hawaiian Tax-Free Trust: a palm tree in front of a circle which has
an island and water within it]
HAWAIIAN TAX-FREE TRUST
SEMI-ANNUAL REPORT
"TAKE PRIDE IN HOW YOUR INVESTMENT IS HELPING OTHERS -
WHILE PRIMARILY HELPING YOU"
Dear Fellow Shareholders: November 15, 1999
Our surveys of shareholders of Hawaiian Tax-Free Trust have shown that
you and other owners of the Trust bought your shares primarily for TAX-FREE
INCOME. And, secondarily, the knowledge - provided through the price STABILITY
of the shares of the Trust - that your money would be there when YOU needed it.
Additionally, our surveys showed that most of our shareholders are
pre-retirees or retirees. These are people who are looking forward to making
sure that they have the security of a sound income source from the Trust when
they are no longer in the workforce.
The point you may not have fully appreciated - when you made your
investment in the Trust - was that in the process of having the Trust provide
YOU with these benefits, it also provides help to a variety of OTHERS within
your community and Hawaii. And, this is a factor in which you can take real
PRIDE.
The economy of Hawaii seems to be turning around and growing once again.
As this growth takes place, new and additional municipal projects are needed for
the benefit of the citizens of Hawaii and the various communities in the State.
These projects include schools, highways, recreational facilities, and a whole
array of useful public purpose projects. These projects are what help economic
development and provide a high quality of life for the citizens of Hawaii.
We think it is important for you to realize this. The projects that the
Trust helped finance are all ones that you and others can reach out and touch.
We are illustrating for you some of the various kinds of municipal projects that
your investment in the Trust has helped create in Hawaii.
[Photo]
Honolulu Harbor
[Photo]
Honolulu International
& Interisland Airports
[Photo]
Kahului Fire Station
[Photo]
Kona Community Aqua Center
</PAGE>
<PAGE>
As you know, interest rates continuously change - both up and down.
However, the value of Hawaiian Tax-Free Trust is that it provides you with a
decent DOUBLE TAX-FREE return, plus high stability and a high level of safety
for your capital - regardless of such interest rate changes - by having a high
quality portfolio of a variety of municipal bonds with differing maturities.
The tax laws of Hawaii, as well as those of the Federal government,
allow you to receive income from your investment in the Trust DOUBLE TAX-FREE.
It is realized by the State and Federal governmental authorities that it is
essential that various municipal projects be built with an advantage to the
investor. This advantage is primarily one of TAX-FREE income for you.
More specifically, though, you can take comfort in the knowledge that
your investment in the Trust is comprised of a portfolio of municipal securities
which possess extremely high quality. Many of these securities have the added
benefit of being insured, by specialized insurance companies, as to payment of
interest and principal when due. Therefore, you can "SLEEP WELL AT NIGHT"
knowing that the chances of anything happening to these high quality bonds is
very slight indeed. The reason for this, of course, is that the various
municipal projects represented in the Trust have behind them a very sound stream
of income from taxes and revenues generated by the projects themselves.
We again wish to emphasize that while primarily HELPING YOU, Hawaiian
Tax-Free Trust is also HELPING OTHERS in your communities and Hawaii.
Consequently, you can take great PRIDE in your investment in Hawaiian
Tax-Free Trust.
You can rest assured that the overall management of the Trust is doing a
very careful job of "MINDING THE STORE" for you.
We appreciate the continued confidence that you have placed in the Trust
through your investment in Hawaiian Tax-Free Trust.
Sincerely,
/s/ Diana P. Herrmann
- -----------------------
Diana P. Herrmann
President
/s/ Lacy B. Herrmann
- ----------------------
Lacy B. Herrmann
Chairman, Board of Trustees
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT HAWAII (96.6%) S&P VALUE
</CAPTION>
<S> <C> <C> <C> <C> <C>
Board of Regents, University of Hawaii University Aaa/AAA
System Revenue Bonds, Series G, AMBAC Insured,
$ 2,910,000 5.650%, 10/01/12 $ 2,975,475
4,290,000 5.700%, 10/01/17 4,311,450
Board of Regents, University of Hawaii University Aaa/AAA
System Revenue Bonds, Series I, FGIC Insured,
1,110,000 5.300%, 10/01/08 1,132,200
2,825,000 5.500%, 10/01/18 2,775,563
Board of Water Supply, City and County Aaa/AAA
of Honolulu, Hawaii Water System
Revenue Bonds, Series 1996, MBIA Insured,
1,090,000 5.400%, 07/01/09 1,111,800
1,750,000 5.800%, 07/01/16 1,780,625
1,500,000 5.800%, 07/01/21 1,503,750
City and County of Honolulu Multifamily Housing NR/NR+
Revenue Bonds (Cambridge Park Project)
1988 Series A,
8,000,000 5.850%, 12/01/02 8,020,400
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds Series A, FGIC/MBIA Insured*
5,385,000 7.300%, 07/01/03 5,903,306
2,895,000 7.350%, 07/01/05 3,278,588
4,790,000 7.350%, 07/01/06 5,490,537
9,970,000 7.350%, 07/01/07 11,540,275
850,000 5.000%, 11/01/07* 859,563
270,000 5.250%, 11/01/07* 277,425
500,000 5.500%, 11/01/07* 521,875
3,600,000 7.350%, 07/01/08 4,198,500
560,000 5.625%, 09/01/08 588,000
860,000 6.000%, 11/01/09* 921,275
1,355,000 6.000%, 11/01/09* 1,460,013
1,090,000 6.000%, 11/01/10* 1,167,663
410,000 6.000%, 11/01/10* 440,750
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds Series A, FGIC/MBIA Insured*
(continued)
1,715,000 6.000%, 01/01/11 1,822,188
4,110,000 6.000%, 01/01/11 4,382,288
5,000 5.750%, 04/01/11 5,212
3,995,000 5.750%, 04/01/11 4,159,794
920,000 6.000%, 01/01/12 978,650
1,580,000 6.000%, 01/01/12 1,680,725
775,000 5.750%, 04/01/13 802,125
3,025,000 5.750%, 04/01/13 3,138,437
730,000 5.250%, 11/01/13 759,200
440,000 5.625%, 09/01/14 469,150
1,335,000 5.500%, 11/01/14 1,406,756
2,280,000 5.000%, 11/01/15* 2,140,350
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds Series B, FGIC Insured
1,245,000 5.000%, 11/01/07 1,266,787
470,000 5.000%, 11/01/07 478,225
940,000 5.000%, 11/01/07 956,450
820,000 5.000%, 11/01/07 834,350
2,490,000 5.500%, 10/01/11 2,552,250
7,310,000 5.500%, 10/01/11 7,474,475
930,000 5.000%, 11/01/13 891,637
1,060,000 5.000%, 11/01/14 1,005,675
530,000 5.000%, 11/01/16 494,225
1,400,000 5.000%, 11/01/17 1,288,000
4,090,000 5.000%, 07/01/19 4,085,900
1,395,000 5.000%, 07/01/20 1,260,731
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds Series C, FGIC Insured,
2,510,000 5.000%, 07/01/18 2,302,925
City and County of Honolulu Hawaii General Aaa/AAA
Obligation Bonds, Refunding and Improvement
Series, 1993B Fixed Rate Bonds, FGIC Insured,
1,050,000 6.000%, 12/01/15 1,113,000
City and County of Honolulu, Hawaii General Aaa/AAA
General Obligation Water Bonds, Series 1992,
MBIA Insured,
1,125,000 6.000%, 12/01/12 1,199,531
City and County of Honolulu Improvement District NR/NR+
No. 261 (Halawa Business Park), Improvement
District Bonds,
365,000 6.700%, 10/15/04 391,463
355,000 6.800%, 10/15/05 384,731
345,000 6.900%, 10/15/06 374,756
City and County of Honolulu Mortgage Revenue Aaa/AAA
Refunding-FHA District No. 221 Bonds
MBIA FHA Insured
2,910,000 7.800%, 07/01/24 3,011,219
City and County of Honolulu Wastewater Systems Aaa/AAA
Revenue Bonds, First Bond Resolution
FGIC Insured
12,000,000 4.750%, 07/01/28 10,050,000
City and County of Honolulu Wastewater Systems Aaa/AAA
Revenue Bonds, Second Bond Resolution-
Junior Series, FGIC Insured
6,055,000 5.000%, 07/01/23 5,411,656
Kauai County General Obligation Escrowed to A/NR
Maturity Bonds,
615,000 9.000%, 08/01/04 730,312
665,000 9.000%, 08/01/05 807,975
County of Kauai, State of Hawaii General Aaa/AAA
Obligation Refunding Bonds, 1992 Series A,B & C,
AMBAC Insured,
930,000 5.250%, 08/01/01 948,600
330,000 5.450%, 08/01/03 341,138
County of Kauai, State of Hawaii General Aaa/AAA
Obligation Refunding Bonds, 1992 Series A,B & C,
AMBAC Insured, (continued)
1,030,000 5.450%, 08/01/03 1,064,762
435,000 5.900%, 08/01/08 463,275
1,355,000 5.900%, 08/01/08 1,443,075
1,300,000 5.950%, 08/01/10 1,386,125
County of Kauai, State of Hawaii General Aaa/AAA
Obligation Refunding Bonds,
Series 1994A & 1994B, MBIA Insured,
365,000 5.200%, 02/01/02 371,844
460,000 5.300%, 02/01/03 471,500
190,000 5.300%, 02/01/03 194,750
185,000 5.400%, 02/01/04 191,012
215,000 5.500%, 02/01/05 223,331
215,000 5.600%, 02/01/06 224,406
1,010,000 5.700%, 02/01/07 1,054,188
County of Maui, Hawaii General Obligation Aaa/AAA
Refunding Bonds Series A, MBIA Insured,
1,075,000 6.000%, 06/01/15 1,124,719
County of Maui, Hawaii General Obligation Aaa/AAA
Refunding Bonds 1995, FGIC Insured,
930,000 5.050%, 06/01/08 933,487
980,000 5.050%, 06/01/09 977,550
1,040,000 5.150%, 06/01/10 1,037,400
1,100,000 5.200%, 06/01/11 1,090,375
1,160,000 5.200%, 06/01/12 1,145,500
1,230,000 5.200%, 06/01/13 1,203,862
1,300,000 5.250%, 06/01/14 1,270,750
1,380,000 5.250%, 06/01/15 1,338,600
County of Maui, Hawaii General Obligation Aaa/AAA
Refunding Bonds 1993 Series B, 1993 Series C,
1993 Series D, 1993 Series E, FGIC Insured,
1,815,000 5.000%, 09/01/07 1,826,344
2,125,000 5.000%, 09/01/08 2,127,656
1,000,000 5.000%, 09/01/09 993,750
1,000,000 5.000%, 09/01/10 985,000
County of Maui, Hawaii General Obligation Aaa/AAA
Refunding Bonds 1993 Series B, 1993 Series C,
1993 Series D, 1993 Series E, FGIC Insured,
(continued)
3,000,000 5.125%, 12/15/11 2,951,250
1,045,000 5.125%, 12/15/13 1,014,956
County of Maui, Hawaii General Obligation Aaa/AAA
1997 Series A, FGIC Insured,
1,130,000 5.250%, 09/01/13 1,111,637
1,265,000 5.250%, 09/01/15 1,227,050
1,335,000 5.250%, 09/01/16 1,284,938
County of Maui, Hawaii General Obligation Aaa/AAA
1998 Series A, FGIC Insured,
1,200,000 5.125%, 03/01/14 1,155,000
1,050,000 5.125%, 03/01/16 994,875
2,590,000 5.250%, 03/01/18 2,457,263
Maui County Water System Revenue Pre-Refunded Aaa/AAA
Bonds, FGIC Insured,
1,225,000 6.200%, 12/01/03 1,287,781
1,300,000 6.300%, 12/01/04 1,369,875
1,390,000 6.400%, 12/01/05 1,466,450
1,280,000 6.500%, 12/01/06 1,353,600
1,250,000 6.600%, 12/01/07 1,325,000
1,500,000 6.650%, 12/01/08 1,590,000
1,470,000 6.650%, 12/01/09 1,558,200
1,860,000 6.700%, 12/01/10 1,973,925
1,560,000 6.700%, 12/01/11 1,655,550
Department of Budget and Finance of the State of NR/AA-
Hawaii Special Purpose Revenue Bonds
(Citizens Utilities Company Project),
3,400,000 6.900%, 11/01/15 3,430,396
5,000,000 6.600%, 07/01/22 5,250,000
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(Lutheran Good Samaritan Society Project),
AMBAC Insured,
1,705,000 4.700%, 11/01/06 1,692,212
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc. Series A),
MBIA Insured,
5,000,000 5.650%, 10/01/27 4,887,500
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc. Series A),
AMBAC Insured,
2,965,000 5.500%, 12/01/14 2,953,881
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(The Queens Health System, Series A),
SPA-Morgan Guaranty Trust,
1,840,000 3.750%, 07/01/26 1,840,000
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds (The
Queens Health System, Series B), MBIA Insured,
8,000,000 5.250%, 07/01/23 7,430,000
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(The Evangelical Lutheran Good Samaritan
Society), Refunding Series 1993, AMBAC Insured,
700,000 4.400%, 11/01/01 703,500
730,000 4.500%, 11/01/02 734,563
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Light Company, Inc. Project),
MBIA Insured,
5,600,000 7.200%, 12/01/14 5,768,000
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(Hawaiian Electric Co., Inc., and Subsidiaries
Projects), Series 1995A, MBIA Insured,
13,000,000 6.600%, 01/01/25 13,747,500
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue (Kapiolani
Health Care System) Series 1993, MBIA Insured,
1,000,000 6.300%, 07/01/08 1,068,750
6,000,000 6.400%, 07/01/13 6,405,000
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue (Kapiolani
Health Care System) Series 1996, MBIA Insured,
1,000,000 6.000%, 07/01/11 1,047,500
1,000,000 6.200%, 07/01/16 1,046,250
1,000,000 6.250%, 07/01/21 1,043,750
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Pre-Refunded
Bonds - Kapiolani Health Care System (Pali
Momi Medical Center Project), Series 1991,
3,000,000 7.600%, 07/01/10 3,228,750
11,200,000 7.650%, 07/01/19 12,068,000
Department of Budget and Finance of the State of Aa3/AA
Hawaii Special Purpose Revenue Bonds
(The Queens Health System), Series A,
4,000,000 6.050%, 07/01/16 4,070,000
8,625,000 6.000%, 07/01/20 8,646,562
3,500,000 5.750%, 07/01/26 3,360,000
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds
(St. Francis Medical Centers), Refunding
Series 1992, FSA Insured,
20,000,000 6.500%, 07/01/22 21,150,000
Department of Hawaiian Home Lands (State of NR/NR+
Hawaii) Revenue Bonds, Series 1991,
745,000 7.000%, 07/01/00 758,701
800,000 7.100%, 07/01/01 833,000
855,000 7.200%, 07/01/02 912,712
915,000 7.300%, 07/01/03 979,050
985,000 7.400%, 07/01/04 1,055,181
1,055,000 7.500%, 07/01/05 1,131,487
1,135,000 7.550%, 07/01/06 1,218,706
Department of Hawaiian Home Lands (State of NR/NR+
Hawaii) Revenue Bonds, Series 1991, (continued)
1,225,000 7.600%, 07/01/07 1,316,875
1,415,000 7.650%, 07/01/09 1,521,125
1,520,000 7.650%, 07/01/10 1,634,000
1,640,000 7.650%, 07/01/11 1,763,000
Department of Hawaiian Home Lands (State of A3/NR
Hawaii) Revenue Bonds, Series 1999,
1,310,000 4.150%, 07/01/08 1,218,300
1,525,000 4.350%, 07/01/10 1,395,375
1,245,000 4.450%, 07/01/11 1,131,394
Department of Transportation of the State of NR/A-
Hawaii Special Facility Revenue Bonds
(Matson Terminals, Inc.), Refunding Series 1993,
11,875,000 5.750%, 03/01/13 11,875,000
Housing Finance and Development Corporation Aaa/AAA
(State of Hawaii) University of Hawaii Faculty
Housing Project, AMBAC Insured,
2,125,000 5.650%, 10/01/16 2,140,937
4,000,000 5.700%, 10/01/25 3,970,000
Housing Finance and Development Corporation A1/NR
(State of Hawaii) Rental Housing System Revenue
Bonds of 1993 Series A,
2,000,000 5.600%, 07/01/12 2,012,500
3,000,000 5.700%, 07/01/18 2,996,250
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds, Series B
4,805,000 7.000%, 07/01/31 5,015,219
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds, AMT-Series A
8,295,000 6.000%, 07/01/26 8,300,700
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds of 1994 Series A & B,
2,500,000 5.700%, 07/01/13 2,512,500
16,750,000 5.850%, 07/01/17 16,875,625
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds of 1997 Series A,
FNMA Insured,
19,735,000 5.750%, 07/01/30 19,118,281
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds of 1997 Series B,
FNMA Insured,
9,350,000 5.450%, 07/01/17 9,139,625
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds of 1998 Series B,
FNMA Insured,
6,800,000 5.300%, 07/01/28 6,392,000
Housing Finance and Development Corporation Aa1/AA
(State of Hawaii) Single Family Mortgage
Purchase Revenue Bonds of 1998, AMT-Series A,
FNMA Insured,
4,200,000 5.400%, 07/01/30 3,890,250
County of Hawaii, Hawaii General Obligation Aaa/AAA
Bonds Refunding and Improvement Series 1993A,
FGIC Insured,
1,000,000 5.200%, 05/01/04 1,026,250
2,700,000 5.450%, 05/01/07 2,797,875
3,170,000 5.500%, 05/01/08 3,284,913
2,500,000 5.550%, 05/01/09 2,587,500
4,905,000 5.600%, 05/01/11 5,052,150
1,000,000 5.600%, 05/01/12 1,028,750
1,000,000 5.600%, 05/01/13 1,023,750
County of Hawaii, Hawaii Public Improvement Aaa/AAA
Bonds of 1996 Series A, FGIC Insured,
1,440,000 4.500%, 02/01/05 1,427,400
1,900,000 5.000%, 02/01/11 1,852,500
1,970,000 5.100%, 02/01/12 1,928,138
2,205,000 5.200%, 02/01/14 2,144,362
2,440,000 5.200%, 02/01/16 2,336,300
County of Hawaii, General Obligation Bonds - 1999, Aaa/AAA
Series A, FSA Insured
1,000,000 5.400%, 05/15/15 985,000
1,470,000 5.600%, 05/15/18 1,457,138
Hawaii Community Development Authority NR/NR+
Improvement District Bonds (Kakaako Community
Development District Improvement District 3),
995,000 7.300%, 07/01/04 1,042,611
1,490,000 7.400%, 07/01/10 1,557,557
Hawaii Community Development Authority NR/NR+
Improvement District Refunding Bonds
(Kakaako Community Development District
Improvement District 1),
245,000 4.850%, 07/01/00 245,635
255,000 5.000%, 07/01/01 256,594
270,000 5.100%, 07/01/02 271,688
280,000 5.200%, 07/01/03 282,100
300,000 5.300%, 07/01/04 303,000
230,000 5.400%, 07/01/05 232,587
Hawaii Community Development Authority NR/NR+
Improvement District Refunding Bonds
(Kakaako Community Development District
Improvement District 2),
325,000 4.850%, 07/01/00 325,842
345,000 5.000%, 07/01/01 347,156
Hawaii Community Development Authority NR/NR+
Improvement District Refunding Bonds
(Kakaako Community Development District
Improvement District 2), (continued)
355,000 5.100%, 07/01/02 357,219
375,000 5.200%, 07/01/03 377,813
395,000 5.300%, 07/01/04 398,950
420,000 5.400%, 07/01/05 424,725
435,000 5.500%, 07/01/06 440,437
465,000 5.600%, 07/01/07 470,813
390,000 5.700%, 07/01/08 395,850
State of Hawaii Airport System Revenue Bonds, Aaa/AAA
MBIA/FGIC Insured*,
1,150,000 5.250%, 07/01/00 1,162,638
6,455,000 6.900%, 07/01/12 7,245,737
3,000,000 7.000%, 07/01/18* 3,176,250
4,025,000 7.000%, 07/01/18 4,261,469
1,000,000 6.750%, 07/01/21 1,052,500
State of Hawaii General Obligation Bonds, Aaa/AAA
FGIC Insured,
2,000,000 5.750%, 01/01/11 2,085,000
3,700,000 6.000%, 10/01/11 3,945,125
3,500,000 6.000%, 10/01/12 3,731,875
State of Hawaii General Obligation Bonds of 1997, Aaa/AAA
Series CP, FGIC Insured,
4,195,000 5.000%, 10/01/14 3,974,762
3,000,000 5.000%, 10/01/15 2,816,250
7,195,000 5.000%, 10/01/17 6,628,394
State of Hawaii General Obligation Bonds of 1998, Aaa/AAA
Series CR, MBIA Insured,
5,000,000 5.000%, 04/01/16 4,668,750
State of Hawaii General Obligation Bonds of 1996, Aaa/AAA
Series CM, FGIC Insured,
3,000,000 6.500%, 12/01/15 3,337,500
State of Hawaii General Obligation Bonds of 1997, Aaa/AAA
Series CN, FGIC Insured,
1,000,000 5.250%, 03/01/13 983,750
5,950,000 5.250%, 03/01/15 5,771,500
2,000,000 5.500%, 03/01/16 2,110,000
1,000,000 5.250%, 03/01/17 957,500
State of Hawaii General Obligation Bonds of 1998, Aaa/AAA
Series CR, MBIA Insured,
16,000,000 5.000%, 04/01/17 14,760,000
State of Hawaii General Obligation Refunding Aaa/AAA
Bonds of 1993, Series CH, FGIC Insured,
5,000,000 6.000%, 11/01/07 5,368,750
3,390,000 6.000%, 11/01/08 3,640,013
State of Hawaii General Obligation Refunding Aaa/AAA
Bonds of 1993, Series CL, FGIC Insured,
2,305,000 6.000%, 03/01/11 2,451,944
State of Hawaii Harbor Capital Improvements Aaa/AAA
Revenue Bonds, MBIA Insured,
2,205,000 6.200%, 07/01/08 2,323,519
3,850,000 5.750%, 07/01/17 3,859,625
State of Hawaii Harbor Capital Improvements Aaa/AAA
Revenue Bonds, MBIA Insured,
14,000,000 7.250%, 07/01/10 14,550,480
1,200,000 7.000%, 07/01/17 1,244,040
State of Hawaii Harbor Revenue Bonds, Aaa/AAA
Series 1992, FGIC Insured,
3,850,000 6.500%, 07/01/19 4,061,750
State of Hawaii Harbor Revenue Bonds, Refunding Aaa/AAA
Series 1993, FGIC Insured,
1,260,000 6.050%, 07/01/04 1,340,325
1,225,000 6.150%, 07/01/05 1,307,688
State of Hawaii Harbor Revenue Bonds, Aaa/AAA
Series of 1994, FGIC Insured,
1,000,000 6.250%, 07/01/09 1,067,500
1,000,000 6.250%, 07/01/10 1,061,250
3,725,000 6.250%, 07/01/15 3,920,562
10,180,000 6.375%, 07/01/24 10,701,725
State of Hawaii Highway Revenue Bonds, Aaa/AAA
Series 1993, FGIC Insured,
4,000,000 4.875%, 07/01/07 4,000,000
3,900,000 5.000%, 07/01/08 3,909,750
2,255,000 5.000%, 07/01/09 2,243,725
4,575,000 5.000%, 07/01/10 4,506,375
2,220,000 5.000%, 07/01/11 2,158,950
3,850,000 5.000%, 07/01/12 3,705,625
2,750,000 5.000%, 07/01/13 2,629,687
1,000,000 5.000%, 07/01/16 928,750
State of Hawaii Highway Revenue Bonds Aaa/AAA
Series 1996, FGIC Insured,
3,705,000 5.600%, 07/01/13 3,742,050
2,000,000 5.250%, 07/01/16 1,915,000
State of Hawaii Highway Revenue Bonds NR/AAA
Series 1996, MBIA-IBC Insured,
1,000,000 5.250%, 07/01/16 957,500
Total Hawaii 600,188,623
GUAM (0.3%)
Government of Guam Ltd. Aaa/AAA
Water System Revenue Bonds, FSA Insured,
1,500,000 7.000%, 07/01/09 1,554,105
Total Guam 1,554,105
PUERTO RICO (1.6%)
Puerto Rico Commonwealth Highway & Transit Auth., Aaa/AAA
Series A, Revenue Bonds, AMBAC Insured,
6,000,000 5.000%, 07/01/28 5,362,500
Puerto Rico Electric Power Authority Power Aaa/AAA
Revenue Bonds, FSA Insured,
1,000,000 4.750%, 07/01/21 866,250
Puerto Rico Electric Power Authority Power Aaa/AAA
Revenue Bonds, Series DD, MBIA-IBC Insured,
4,305,000 5.000%, 07/01/28 3,847,594
Total Puerto Rico 10,076,344
Total Investments (cost $603,759,193**) 98.5% $ 611,819,072
Other assets in excess of liabilities 1.5 9,422,307
Net Assets 100.0% $621,241,379
</TABLE>
+ Any security not rated has 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.
** Cost for Federal tax purposes is identical.
PORTFOLIO ABBREVIATIONS:
AMBAC American Municipal Bond Assurance Corp.
FSA Financial Security Assurance Co.
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
MBIA Municipal Bond Investors Assurance Corp.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $603,759,193) $ 611,819,072
Cash 576,201
Interest receivable 10,288,945
Receivable for Trust shares sold 349,917
Other assets 6,601
Total assets 623,040,736
LIABILITIES
Dividends payable 606,155
Payable for Trust shares redeemed 539,941
Distribution fees payable 340,270
Adviser and Administrator fees payable 204,538
Accrued expenses 108,453
Total liabilities 1,799,357
NET ASSETS $ 621,241,379
Net Assets consist of:
Capital Stock, no par value, authorized an unlimited number of shares $ 607,709,330
Undistributed net realized gains on investments 3,392,562
Undistributed net investment income 2,079,608
Net unrealized appreciation on investments 8,059,879
$ 621,241,379
CLASS A
Net Assets $ 605,161,793
Capital shares outstanding 54,437,947
Net asset value and redemption price per share $ 11.12
Offering price per share (100/96 of $11.12 adjusted to nearest cent) $ 11.58
CLASS C
Net Assets $ 12,139,054
Capital shares outstanding 1,092,523
Net asset value and offering price per share $ 11.11
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) $ 11.11*
CLASS Y
Net Assets $ 3,940,532
Capital shares outstanding 354,028
Net asset value, offering and redemption price per share 11.13
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 17,890,899
Expenses:
Investment Adviser fees (note 3) $ 447,596
Administrator fees (note 3) 831,255
Distribution and service fees (note 3) 685,250
Transfer and shareholder servicing agent fees 155,000
Trustees' fees and expenses 85,000
Shareholders' reports and proxy statements 43,000
Legal fees 38,000
Custodian fees 29,431
Registration fees and dues 15,000
Insurance 13,000
Audit and accounting fees 12,750
Miscellaneous 30,000
2,385,282
Expenses paid indirectly (note 7) (54,881)
Net expenses 2,330,401
Net investment income 15,560,498
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from securities transactions (201,776)
Change in unrealized appreciation on investments (30,039,595)
Net realized and unrealized loss on investments (30,241,371)
Net decrease in net assets resulting from operations $ (14,680,873)
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
</CAPTION>
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 15,560,498 $ 31,251,960
Net realized gain from securities transactions (201,776) 6,224,420
Change in unrealized appreciation on investments (30,039,595) (4,388,807)
Change in net assets resulting from operations (14,680,873) 33,087,573
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income, tax-exempt (15,230,405) (30,838,116)
Net investment income, taxable - (4,256)
Net realized gain on investments - (2,577,865)
Class C Shares:
Net investment income, tax-exempt (249,472) (339,168)
Net investment income, taxable - (72)
Net realized gain on investments - (37,852)
Class Y Shares:
Net investment income, tax-exempt (81,677) (99,065)
Net investment income, taxable - (17)
Net realized gain on investments - (9,383)
Change in net assets from distributions (15,561,554) (33,905,794)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 26,878,436 45,134,896
Reinvested dividends and distributions 8,285,625 17,971,550
Cost of shares redeemed (37,135,014) (65,256,694)
Change in net assets from capital share transactions (1,970,953) (2,150,248)
Change in net assets (32,213,380) (2,968,469)
NET ASSETS:
Beginning of period 653,454,759 656,423,228
End of period (including undistributed net
investment income of $2,079,608 and
$2,080,663, respectively) $ 621,241,379 $ 653,454,759
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
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, since 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 service 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. 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. At September 30, 1999, 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 generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities
of more than 60 days are valued at fair value 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 was 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 exceeded 60 days.
</PAGE>
<PAGE>
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. Market
discount is recognized upon disposition of the security.
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 generally accepted accounting principles 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:
Management affairs of the Trust are conducted through two separate
management arrangements.
Pacific Century Trust (the "Adviser"), a division of Bank of Hawaii,
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, including maintenance of the Trust's accounting
books and records, 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 1% 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 1% of the net assets of the Trust.
</PAGE>
<PAGE>
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, 1999.
For the six months ended September 30, 1999, the Trust incurred fees
under the Advisory Agreement and Administration Agreement of $447,596 and
$831,255, respectively.
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, 1999, service fees on
Class A Shares amounted to $623,974, of which the Distributor received $34,036.
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, 1999, amounted to $45,957. 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, 1999, amounted to $15,319.
The total of these payments made with respect to Class C Shares amounted to
$61,276, of which the Distributor received $37,174.
</PAGE>
<PAGE>
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, 1999, the Distributor received commissions of $40,460
on sales of Class A Shares.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended September 30, 1999, purchases of
securities and proceeds from the sales of securities aggregated $9,866,789 and
$19,674,078, respectively.
At September 30, 1999, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$18,098,612 and gross unrealized depreciation for all securities in which there
is an excess of tax cost over market value amounted to $10,038,733 for a net
unrealized appreciation of $8,059,879.
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. 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.
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.
</PAGE>
<PAGE>
7. 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 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.
8. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Trust were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 1,895,243 $ 21,628,288 3,332,950 $ 38,989,739
Reinvested distributions 715,947 8,122,458 1,509,482 17,670,897
Cost of shares redeemed (3,098,284) (35,209,177) (5,443,402) (63,676,622)
Net change (487,094) (5,458,431) (600,970) (7,015,986)
CLASS C SHARES:
Proceeds from shares sold 331,244 3,805,987 421,329 4,931,665
Reinvested distributions 9,468 107,245 16,958 198,529
Cost of shares redeemed (169,777) (1,925,665) (135,233) (1,580,072)
Net change 170,935 1,987,567 303,054 3,550,122
CLASS Y SHARES:
Proceeds from shares sold 127,387 1,444,161 103,622 1,213,492
Reinvested distributions 4,914 55,922 8,702 102,124
Cost of shares redeemed (15) (172) - -
Net change 132,286 1,499,911 112,324 1,315,616
Total transactions in Trust
shares (183,873) $ (1,970,953) (185,592) $ (2,150,248)
</TABLE>
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A(1)
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
SEPT. 30, 1999 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.65 $11.67 $11.23 $11.31 $11.13 $11.19
Income from Investment Operations:
Net investment income 0.28 0.56 0.57 0.59 0.61 0.62
Net gain (loss) on securities (both
realized and unrealized) (0.53) 0.03 0.46 (0.08) 0.18 (0.01)
Total from Investment Operations (0.25) 0.59 1.03 0.51 0.79 0.61
Less Distributions (note 6):
Dividends from net investment income (0.28) (0.57) (0.54) (0.58) (0.61) (0.62)
Distributions from capital gains - (0.04) (0.05) (0.01) - (0.05)
Total Distributions (0.28) (0.61) (0.59) (0.59) (0.61) (0.67)
Net Asset Value, End of Period $11.12 $11.65 $11.67 $11.23 $11.31 $11.13
Total Return (not reflecting
sales charge)(%) (2.18)+ 5.17 9.37 4.67 7.16 5.75
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 605,162 640,131 647,930 640,989 659,925 642,556
Ratio of Expenses to Average
Net Assets (%) 0.73* 0.74 0.73 0.75 0.73 0.77
Ratio of Net Investment Income
to Average Net Assets (%) 4.86* 4.76 4.96 5.11 5.31 5.63
Portfolio Turnover Rate (%) 2+ 14 9 9 28 33
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of Expenses to Average
Net Assets (%) 0.71* 0.70 0.72 0.73 0.72 0.75
</TABLE>
(1) Designated as Class A Shares on April 1, 1996.
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C(1) CLASS Y(1)
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED MARCH 31, ENDED YEAR ENDED MARCH 31,
SEPT. 30, 1999 1999 1998 1997 SEPT. 30, 1999 1999 1998 1997
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.65 $11.66 $11.23 $11.31 $11.67 $11.68 $11.24 $11.31
Income from Investment Operations:
Net investment income 0.23 0.46 0.48 0.46 0.29 0.59 0.67 0.74
Net gain (loss) on securities
both realized and unrealized) (0.54) 0.05 0.45 (0.08) (0.54) 0.03 0.45 (0.07)
Total from Investment Operations (0.31) 0.51 0.93 0.38 (0.25) 0.62 1.12 0.67
Less Distributions (note 6):
Dividends from net investment income (0.23) (0.48) (0.45) (0.45) (0.29) (0.59) (0.63) (0.73)
Distributions from capital gains - (0.04) (0.05) (0.01) - (0.04) (0.05 (0.01)
Total Distributions (0.23) (0.52) (0.50) (0.46) (0.29) (0.63) (0.68) (0.74)
Net Asset Value, End of Period $11.11 $11.65 $11.66 $11.23 $11.13 $11.67 $11.68 $11.24
Total Return (not reflecting
sales charge) (%) (2.66)+ 4.45 8.40 3.41 (2.17)+ 5.45 10.24 6.14
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 12,139 10,736 7,215 5,367 3,941 2,588 1,278 0.1
Ratio of Expenses to Average Net
Assets (%) 1.53* 1.53 1.52 1.53 0.53* 0.54 0.52 0.55
Ratio of Net Investment Income
to Average Net Assets (%) 4.05* 3.95 4.11 4.04 5.08* 4.96 5.02 4.90
Portfolio Turnover Rate (%) 2+ 14 9 9 2+ 14 9 9
The expense ratios after giving effect to the expense offset for uninvested cash
balances were:
Ratio of Expenses to Average
Net Assets (%) 1.51* 1.49 1.51 1.51 0.52* 0.49 0.51 0.53
</TABLE>
(1) New Class of Shares established on April 1, 1996.
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
PREPARING FOR YEAR 2000 (UNAUDITED)
The Trustees and officers of the Trust have been monitoring issues
involving preparedness for the turn of the century for some time in an effort to
minimize or eliminate any potential impact upon the Trust and its shareholders.
Our officers have focussed significant time and effort in order that the various
computerized functions that could affect the Trust are ready by the beginning of
the year 2000.
The Trust is highly reliant on certain mission-critical suppliers'
services. Each supplier of these services has provided the Trust's officers with
assurances that it is actively addressing potential problems relating to the
year 2000. The officers, in turn, are monitoring and will continue to monitor
the progress of its suppliers.
The Trust has NOT incurred, nor is anticipated to incur, any costs
related to Y2K. All such costs are being incurred by the respective vendors.
As you can well understand, we cannot directly control our supplier
operations. We assure you, however, that we recognize a responsibility to inform
our shareholders if in the future we become aware of any developments which
would lead us to believe that the Trust will be significantly affected by year
2000 problems.
We will continue to keep you up-to-date through future
communications.
</PAGE>
