<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
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus,
which must precede or accompany this report.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 2000
HAWAIIAN
TAX-FREE
TRUST
A TAX-FREE INCOME INVESTMENT
[Logo of Hawaiian Tax-Free Trust: a palm tree in front of a circle which has
an island and water within it]
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILASM GROUP OF FUNDS
</PAGE>
<PAGE>
[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
"CONSISTENCY"
November 10, 2000
Dear Fellow Shareholder:
If there is one word that captures the essence of Hawaiian Tax-Free Trust,
that word is "CONSISTENCY."
The Trust has constantly attempted to provide:
* CONSISTENCY of share value,
* CONSISTENCY in the TAX-FREE return produced by the Trust,
* CONSISTENCY of quality of investments and,
* CONSISTENCY in the type of investments for the Trust.
CONSISTENCY OF SHARE VALUE
As you are aware, management of the Trust cannot control interest rates or
their effect upon the market. Interest rates are primarily controlled by the
Federal Reserve Board (the "Fed"). The Fed increases or decreases rates as they
feel is necessary in order to maintain the stability and growth potential of the
economy of the United States.
When the Fed feels that growth in the economy is increasing at too rapid a
pace, they tend to increase interest rates and reduce the supply of money in
order to slow down the rate of growth. (This is what has happened during the
past year or so.) On the other hand, when the Fed feels that the economy needs
stimulation, there is a tendency to decrease interest rates and increase the
supply of money in order to provide an additional impetus to the overall
economy.
Interest rate changes have the effect in the marketplace of creating
changes in the share value of fixed-income securities such as the Trust. As we
have previously indicated, when interest rates go up, the share value goes down.
And, when interest rates go down, the share value goes up. What we have done is
to use various investment management techniques to dampen the swings that can
occur in the share value of the Trust.
Despite the variations in share price that have taken place since the
inception of the Trust, management of the Trust has constantly strived to
provide, to the maximum extent possible, CONSISTENCY in the value of the Trust's
shares. This you will note from the chart below.
[Graphic of a bar chart with the following information:]
SHARE NET ASSET VALUE
12/31/85 $10.37
12/31/86 $11.09
12/31/87 $10.55
12/31/88 $10.65
12/31/89 $10.93
12/31/90 $10.82
12/31/91 $11.21
12/31/92 $11.38
12/31/93 $11.84
12/31/94 $10.62
12/31/95 $11.61
12/31/96 $11.44
12/31/97 $11.69
12/31/98 $11.73
12/31/99 $10.81
9/30/2000 $10.98
</PAGE>
<PAGE>
Since the majority of investors using the Trust are pre-retirees or
retirees, this action by the Trust of maintaining a stable share value is what
we feel is in the best interest of all shareholders. We want you to know that
when you need money from your investment in the Trust, it is THERE - at
approximately the same value that it has been all along.
CONSISTENCY IN THE TAX-FREE RETURN PRODUCED BY THE TRUST
When you look at the Trust in terms of income produced on a year-by-year
basis, you will observe that we have tried to provide the maximum level of
yearly TAX-FREE return as can be produced by a quality-oriented portfolio of
municipal securities.
As you are aware, this level of return will vary from year to year as
interest rate changes by the Fed affect the overall marketplace. Nevertheless,
there is a CONSISTENCY to the level of return that the Trust would like to
provide for you and other shareholders.
Although the income level received by shareholders will vary from year to
year, it does have a CONSISTENCY to it. And, this is why shareholders buy and
own the Trust - for that CONSISTENCY of TAX-FREE income.
During recent years, the level of SPENDABLE TAX-FREE return provided to
shareholders has ranged between 4.52% to 5.08% based upon an average share value
of the Trust.
As we have emphasized, shareholders of Hawaiian Tax-Free Trust should not
buy or sell the Trust based upon capital appreciation, such as they would with
an equity or stock fund.
Rather, an analogy for a shareholder of Hawaiian Tax-Free Trust would be a
person buying a dairy cow for the steady stream of milk it supplies, not for
what it might be worth when he/she sells it.
What the Trust is providing is a relatively steady stream of TAX-FREE
income together with a relatively stable share value.
Shareholders buy and hold their position in Hawaiian Tax-Free Trust for the
longer term, not for a quick in and out. Therefore, shareholders do NOT and
should NOT look upon the Trust for its total return - but, rather for the income
stream it provides in the form of TAX-FREE dividends.
Also, when you look at the level of TAX-FREE income provided by the Trust
as of September 30, 2000 - 4.72% - and measure that against the taxable income
required to provide the same amount of money in your pocket, here's what things
look like.
[Graphic of a bar chart with the following information:]
HAWAIIAN TAX-FREE TRUST'S DOUBLE TAX-FREE DISTRIBUTION RATE AS COMPARED TO
THE TAXABLE EQUIVALENT RATE AN INVESTOR WOULD HAVE TO EARN AT VARIOUS TAX
BRACKETS
RATE OF RETURN
TAXABLE EQUIVALENT RATE DOUBLE TAX-FREE DISTRIBUTION RATE
TAX BRACKET
28% 7.18% 4.72%
31% 7.60% 4.72%
36% 8.22% 4.72%
39.6% 8.74% 4.72%
</PAGE>
<PAGE>
CONSISTENCY OF QUALITY OF INVESTMENTS
Since inception of the Trust, management has CONSISTENTLY sought
high-quality investments for its shareholders.
We don't like surprises. Nor, do shareholders like surprises. We believe
the best way to avoid surprises is to stick with quality.
The pie chart below gives you a breakdown of the quality of the individual
securities of the Trust as at the Semi-Annual Report date of September 30, 2000.
[Graphic of a pie chart with the following information:]
PORTFOLIO DISTRIBUTION BY QUALITY
AAA% 78.0%
AA% 12.4%
A% 8.1%
Below A and not rated 1.5%
As you will recall, the Trust's prospectus restricts its investments to
only the top four quality securities - AAA, AA, A, Baa - although there are nine
different grades of quality associated with municipal bond investing ranging
from the highest to the lowest. We have always tried to make sure that
shareholders know that, to the maximum extent possible, their invested money
will be there when they need it. The best way we know to accomplish this
objective is by sticking with quality.
This is why we CONSISTENTLY seek to maintain most of the Trust's money in
the upper quality securities - AAA AND AA. There was in excess of 90% of the
Trust's portfolio in these two credit ratings as of the Trust's Semi-Annual
Report date - September 30, 2000. As you will appreciate, the exact level of
quality will vary from time to time based upon availability of securities in the
marketplace to achieve the Trust's objective.
CONSISTENCY IN THE TYPE OF INVESTMENTS FOR THE TRUST
Management of Hawaiian Tax-Free Trust has CONSISTENTLY embraced the idea
that your investment should not only help shareholders financially, but also
help your state and its communities. Thus, investments in the Trust are as
diversified as possible. Diversification geographically and by type of project
is another way of ensuring that your money is doing the best job possible for
not only you, but also for your community and state.
[Graphic of a pie chart with the following information:]
PORTFOLIO DISTRIBUTION BY MARKET SECTOR
General Obligation 43.8%
Housing 13.5%
Hospital 10.8%
Airport 2.6%
Harbor 5.7%
Electric 6.0%
Highway 4.7%
Water and Sewer 4.3%
Improvement District 1.4%
Education 2.0%
Transportation 2.0%
Other 3.2%
</PAGE>
<PAGE>
SUMMARY
As we have tried to illustrate in this report to you, the essence of
Hawaiian Tax-Free Trust is CONSISTENCY. This is what we feel that shareholders
are primarily interested in. And, this is exactly what we are trying to provide
to you and other shareholders.
CONSISTENCY OF APPRECIATION
As always, we again wish to express our appreciation for the confidence you
have shown by your investment in Hawaiian Tax-Free Trust. We can assure you that
we will CONSISTENTLY do our best to merit your continued level of trust.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
----------------------- ---------------------
Diana P. Herrmann Lacy B. Herrmann
President Chairman, Board of Trustees
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT HAWAII (98.1%) 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 $ 2,964,563
4,290,000 5.700%, 10/01/17 4,316,812
Board of Regents, University of Hawaii University Aaa/AAA
System Revenue Bonds, Series I, FGIC Insured,
1,110,000 5.300%, 10/01/08 1,139,138
2,825,000 5.500%, 10/01/18 2,807,344
Board of Water Supply City and County of Honolulu,Aaa/AAA
Hawaii Water System Revenue Bonds, Series 1996
MBIA Insured,
1,090,000 5.400%, 07/01/09 1,128,150
1,750,000 5.800%, 07/01/16 1,791,562
1,500,000 5.800%, 07/01/21 1,516,875
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds, Series A FGIC/MBIA Insured+,
5,385,000 7.300%, 07/01/03 5,761,950
2,895,000 7.350%, 07/01/05 3,227,925
4,790,000 7.350%, 07/01/06 5,424,675
9,970,000 7.350%, 07/01/07 11,453,038
3,600,000 7.350%, 07/01/08 4,189,500
860,000 6.000%, 11/01/09+ 932,025
1,355,000 6.000%, 11/01/09+ 1,468,481
1,090,000 6.000%, 11/01/10+ 1,178,562
410,000 6.000%, 11/01/10+ 445,363
1,715,000 6.000%, 01/01/11 1,841,481
4,110,000 6.000%, 01/01/11 4,433,662
5,000 5.750%, 04/01/11 5,281
3,995,000 5.750%, 04/01/11 4,234,700
920,000 6.000%, 01/01/12 989,000
1,580,000 6.000%, 01/01/12 1,694,550
3,025,000 5.750%, 04/01/13 3,164,906
775,000 5.750%, 04/01/13 812,781
440,000 5.625%, 09/01/14 468,050
2,280,000 5.000%, 11/01/15+ 2,180,250
</PAGE>
<PAGE>
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds, Series B FGIC Insured,
$ 1,245,000 5.000%, 11/01/17 $ 1,274,569
2,490,000 5.500%, 10/01/11 2,592,712
7,310,000 5.500%, 10/01/11 7,574,988
930,000 5.000%, 11/01/13 909,075
1,060,000 5.000%, 11/01/14 1,024,225
530,000 5.000%, 11/01/16 502,175
1,400,000 5.000%, 11/01/17 1,316,000
4,490,000 5.000%, 07/01/19 4,119,575
1,395,000 5.000%, 07/01/20 1,272,937
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds, Series A,
400,000 5.550%, 01/01/17 400,000
500,000 5.550%, 01/01/18 500,000
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds, Series C FGIC Insured,
2,510,000 5.000%, 07/01/18 2,321,750
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Bonds, Series C,
2,750,000 5.125%, 07/01/14 2,691,563
City and County of Honolulu, Hawaii General Aa3/AA-
Obligation Bonds, Series B,
1,500,000 5.000%, 10/01/03 1,518,750
2,595,000 5.125%, 07/01/15 2,513,906
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 1,119,563
City and County of Honolulu, Hawaii General Aaa/AAA
Obligation Water Bonds Series 1992, MBIA Insured,
1,125,000 6.000%, 12/01/12 1,212,187
</PAGE>
<PAGE>
City and County of Honolulu Improvement District NR/NR*
No. 261 (Halawa Business Park), Improvement
District Bonds,
$ 365,000 6.700%, 10/15/04 $ 386,444
355,000 6.800%, 10/15/05 381,625
290,000 6.900%, 10/15/06 313,562
City and County of Honolulu Mortgage Revenue Aaa/AAA
Refunding - FHA District No. 221 Bonds,
MBIA/FHA Insured,
2,845,000 7.800%, 07/01/24 2,926,794
City and County of Honolulu Wastewater Systems Aaa/AAA
Revenue Bonds Second Bond Resolution - Junior
Series FGIC Insured,
1,395,000 5.000%, 07/01/12 1,377,562
6,055,000 5.000%, 07/01/23 5,441,931
Kauai County General Obligation Escrowed to A2/NR
Maturity Bonds,
615,000 9.000%, 08/01/04 705,713
665,000 9.000%, 08/01/05 784,700
Kauai County General Obligation Bonds Series A, Aaa/AAA
FGIC Insured,
1,000,000 6.125%, 08/01/13 1,067,500
1,010,000 6.250%, 08/01/14 1,079,437
1,000,000 6.250%, 08/01/15 1,067,500
1,000,000 6.250%, 08/01/13 1,062,500
1,275,000 6.250%, 08/01/17 1,353,094
County of Kauai, State of Hawaii General Obligation Aaa/AAA
Refunding Bonds, 1992 Series A, B & C,
AMBAC Insured,
930,000 5.250%, 08/01/01 936,966
330,000 5.450%, 08/01/03 337,837
1,030,000 5.450%, 08/01/03 1,054,463
435,000 5.900%, 08/01/08 465,994
1,355,000 5.900%, 08/01/08 1,451,544
1,300,000 5.950%, 08/01/10 1,399,125
</PAGE>
<PAGE>
County of Kauai, State of Hawaii General Obligation Aaa/AAA
Refunding Bonds, Series 1994A & 1994B,
MBIA Insured,
$ 365,000 5.200%, 02/01/02 $ 368,650
460,000 5.300%, 02/01/03 467,475
190,000 5.300%, 02/01/03 193,087
185,000 5.400%, 02/01/04 189,625
215,000 5.500%, 02/01/05 222,256
215,000 5.600%, 02/01/06 224,138
1,010,000 5.700%, 02/01/07 1,055,450
County of Maui, Hawaii General Obligation Refunding Aaa/AAA
Bonds Series A, MBIA Insured,
1,075,000 6.000%, 06/01/15 1,116,656
County of Maui, Hawaii General Obligation Refunding Aaa/AAA
Bonds 1995, FGIC Insured,
930,000 5.050%, 06/01/08 941,625
980,000 5.050%, 06/01/09 989,800
1,040,000 5.150%, 06/01/10 1,049,100
1,100,000 5.200%, 06/01/11 1,106,875
1,160,000 5.200%, 06/01/12 1,162,900
1,230,000 5.200%, 06/01/13 1,225,388
1,300,000 5.250%, 06/01/14 1,288,625
1,380,000 5.250%, 06/01/15 1,355,850
County of Maui, Hawaii General Obligation Refunding Aaa/AAA
Bonds 1993 Series B, 1993 Series C, 1993, Series D,
1993 Series E, FGIC Insured,
1,815,000 5.000%, 09/01/07 1,835,419
2,125,000 5.000%, 09/01/08 2,143,594
1,000,000 5.000%, 09/01/09 1,006,250
1,000,000 5.000%, 09/01/10 1,001,250
3,000,000 5.125%, 12/15/11 3,007,500
1,045,000 5.125%, 12/15/13 1,033,244
</PAGE>
<PAGE>
County of Maui, Hawaii General Obligation 1997 Aaa/AAA
Series A, FGIC Insured,
$ 1,130,000 5.250%, 09/01/13 $ 1,131,412
1,265,000 5.250%, 09/01/15 1,241,281
1,335,000 5.250%, 09/01/16 1,301,625
County of Maui, Hawaii General Obligation 1998 Aaa/AAA
Series A, FGIC Insured,
1,200,000 5.125%, 03/01/14 1,176,000
1,050,000 5.125%, 03/01/16 1,010,625
2,590,000 5.250%, 03/01/18 2,496,113
Maui County Water System Revenue Pre-Refunded Aaa/AAA
Bonds, FGIC Insured,
1,300,000 6.300%, 12/01/04 1,340,625
1,390,000 6.400%, 12/01/05 1,435,175
1,280,000 6.500%, 12/01/06 1,323,200
1,250,000 6.600%, 12/01/07 1,292,187
1,500,000 6.650%, 12/01/08 1,552,500
1,470,000 6.650%, 12/01/09 1,521,450
1,860,000 6.700%, 12/01/10 1,925,100
1,560,000 6.700%, 12/01/11 1,614,600
Department of Budget and Finance of the State of NR/A+
Hawaii Special Purpose Revenue Bonds (Citizens
Utilities Company Project),
3,400,000 6.900%, 11/01/15 3,451,000
2,500,000 6.600%, 07/01/22 2,568,750
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds (Lutheran
Good Samaritan Society Project), AMBAC Insured,
1,525,000 4.700%, 11/01/06 1,519,281
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds (Hawaiian
Electric Company, Inc. Series A), MBIA Insured,
4,000,000 4.950%, 04/01/12 3,930,000
5,500,000 5.650%, 10/01/27 5,321,250
</PAGE>
<PAGE>
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 $ 2,990,944
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds (Hawaiian
Electric Company, Inc. Series D), AMBAC Insured,
2,500,000 6.150%, 01/01/20 2,581,250
Department of Budget and Finance of the State of A1/A+
Hawaii Special Purpose Revenue Bonds (The Queens
Health System, Series A), SPA-Morgan Guaranty Trust,
1,600,000 5.550%, 07/01/26 1,600,000
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 7,360,000
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 7.600%, 07/01/10 699,181
730,000 4.500%, 11/01/02 729,087
Department of Budget and Finance of the State of Aaa/AAA
Hawaii Special Purpose Revenue Bonds (Hawaiian
Electric Co., Inc., and Subsidiaries Projects), AMT -
Series 1995A, MBIA Insured,
13,000,000 6.600%, 01/01/25 13,650,000
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 1,052,500
6,000,000 6.400%, 07/01/13 6,270,000
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 1,060,000
1,000,000 6.200%, 07/01/16 1,048,750
1,000,000 6.250%, 07/01/21 1,038,750
</PAGE>
<PAGE>
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,
$ 5,000,000 7.650%, 07/01/19 $ 5,215,500
Department of Budget and Finance of the State of A1/A+
Hawaii Special Purpose Revenue Bonds (The
Queen's Health System), Series A,
5,000,000 6.050%, 07/01/16 5,031,250
8,625,000 6.000%, 07/01/20 8,592,656
3,500,000 5.750%, 07/01/26 3,311,875
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 20,525,000
Department of Hawaiian Home Lands (State of Hawaii) NR/NR*
Revenue Bonds, Series 1991,
800,000 7.100%, 07/01/01 813,440
855,000 7.200%, 07/01/02 888,439
915,000 7.300%, 07/01/03 951,444
985,000 7.400%, 07/01/04 1,024,942
1,055,000 7.500%, 07/01/05 1,098,540
1,135,000 7.550%, 07/01/06 1,182,250
1,225,000 7.600%, 07/01/07 1,276,438
1,415,000 7.650%, 07/01/09 1,474,925
1,520,000 7.650%, 07/01/10 1,584,372
1,640,000 7.650%, 07/01/11 1,709,454
Department of Hawaiian Home Lands (State of Hawaii) A3/NR
Revenue Bonds, Series 1999,
1,310,000 4.150%, 07/01/08 1,203,563
1,525,000 4.350%, 07/01/10 1,383,937
1,245,000 4.450%, 07/01/11 1,123,613
Department of Transportation of the State of Hawaii NR/A-
Special Facility Revenue Bonds (Matson Terminals,
Inc.), Refunding Series 1993,
11,875,000 5.750%, 03/01/13 11,652,344
</PAGE>
<PAGE>
Housing Finance and Development Corporation (State Aaa/AAA
of Hawaii) University of Hawaii Faculty Housing
Project, AMBAC Insured,
$ 2,125,000 5.650%, 10/01/16 $ 2,146,250
4,000,000 5.700%, 10/01/25 3,990,000
Housing Finance and Development Corporation (StateA1/NR
of Hawaii) Rental Housing System Revenue Bonds
of 1993 Series A,
2,000,000 5.600%, 07/01/12 2,010,000
3,000,000 5.700%, 07/01/18 2,947,500
Housing Finance and Development Corporation (State Aa3/NR
of Hawaii) Rental Housing System Revenue
Bonds of 1989 Series A,
600,000 5.550%, 07/01/24 600,000
1,000,000 5.600%, 07/01/27 1,000,000
Housing Finance and Development Corporation (StateAaa/AAA
of Hawaii) Single Family Mortgage Purchase
Revenue Bonds, Series B
4,400,000 7.000%, 07/01/31 4,535,916
Housing Finance and Development Corporation (StateAaa/AA
of Hawaii) Single Family Mortgage Purchase
Revenue Bonds, AMT - Series A
8,230,000 6.000%, 07/01/26 8,240,287
Housing Finance and Development Corporation (State Aaa/AAA
of Hawaii) Single Family Mortgage Purchase Revenue
Bonds of 1994, Series A & B, FNMA Insured,
2,500,000 5.700%, 07/01/13 2,550,000
16,750,000 5.850%, 07/01/17 16,938,438
Housing Finance and Development Corporation (State Aaa/AAA
of Hawaii) Single Family Mortgage Purchase Revenue
Bonds of 1997, AMT - Series A, FNMA Insured,
19,725,000 5.750%, 07/01/30 19,059,281
Housing Finance and Development Corporation (State Aaa/AAA
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
</PAGE>
<PAGE>
Housing Finance and Development Corporation (State Aaa/AAA
of Hawaii) Single Family Mortgage Purchase Revenue
Bonds of 1998, Series B, FNMA Insured,
$ 6,800,000 5.300%, 07/01/28 $ 6,375,000
Housing Finance and Development Corporation (State Aaa/AAA
of Hawaii) Single Family Mortgage Purchase Revenue
Bonds of 1998, AMT - Series A,FNMA Insured,
2,000,000 5.400%, 07/01/30 1,830,000
County of Hawaii, Hawaii General Obligation Bonds Aaa/AAA
Refunding and Improvement Series 1993A,
FGIC Insured,
1,700,000 5.450%, 05/01/07 1,768,000
3,170,000 5.500%, 05/01/08 3,308,688
2,500,000 5.550%, 05/01/09 2,621,875
4,905,000 5.600%, 05/01/11 5,119,594
1,000,000 5.600%, 05/01/12 1,040,000
1,000,000 5.600%, 05/01/13 1,032,500
County of Hawaii, Hawaii Public Improvement Bonds Aaa/AAA
of 1996 Series A FGIC Insured,
1,440,000 4.500%, 02/01/05 1,432,800
1,900,000 5.000%, 02/01/11 1,890,500
1,970,000 5.100%, 02/01/12 1,962,612
2,205,000 5.200%, 02/01/14 2,174,681
2,440,000 5.200%, 02/01/16 2,366,800
County of Hawaii, General Obligation Bonds - 1999, Aaa/AAA
Series A FSA Insured,
1,000,000 5.400%, 05/15/15 998,750
1,470,000 5.625%, 05/15/18 1,477,350
Hawaii Community Development Authority NR/NR*
Improvement District Bonds (Kakaako Community
Development District Improvement District 3),
825,000 7.300%, 07/01/04 854,238
1,450,000 7.400%, 07/01/10 1,501,548
</PAGE>
<PAGE>
Hawaii Community Development Authority NR/NR*
Improvement District Refunding Bonds (Kakaako
Community Development District Improvement
District 1),
$ 255,000 5.000%, 07/01/01 $ 255,054
270,000 5.100%, 07/01/02 270,337
280,000 5.200%, 07/01/03 280,350
300,000 5.300%, 07/01/04 301,125
230,000 5.400%, 07/01/05 231,438
Hawaii Community Development Authority NR/NR*
Improvement District Refunding Bonds (Kakaako
Community Development District Improvement
District 2),
345,000 5.000%, 07/01/01 345,072
355,000 5.100%, 07/01/02 355,444
375,000 5.200%, 07/01/03 375,469
395,000 5.300%, 07/01/04 396,481
420,000 5.400%, 07/01/05 422,625
435,000 5.500%, 07/01/06 439,350
465,000 5.600%, 07/01/07 470,812
380,000 5.700%, 07/01/08 385,225
State of Hawaii Airport System Revenue Bonds, Aaa/AAA
MBIA/FGIC Insured +AMT,
6,455,000 6.900%, 07/01/12 7,350,631
3,000,000 7.000%, 07/01/18+ 3,096,000
4,025,000 7.000%, 07/01/18 4,153,800
185,000 6.750%, 07/01/21 191,566
815,000 6.750%, 07/01/21 836,850
State of Hawaii General Obligation Bonds, FGIC Insured, Aaa/AAA
2,000,000 5.750%, 01/01/11 2,110,000
3,700,000 6.000%, 10/01/11 3,991,375
3,500,000 6.000%, 10/01/12 3,766,875
</PAGE>
<PAGE>
State of Hawaii General Obligation Bonds of 1997, Aaa/AAA
Series CP, FGIG Insured,
$ 4,195,000 5.000%, 10/01/14 $ 4,053,419
5,000,000 5.000%, 10/01/15 4,756,250
7,195,000 5.000%, 10/01/17 6,763,300
State of Hawaii General Obligation Bonds of 1998, Aaa/AAA
Series CR, MBIA Insured,
5,000,000 5.000%, 04/01/16 4,743,750
State of Hawaii General Obligation Bonds of 1998, Aaa/AAA
Series CS, MBIA Insured,
5,000,000 5.000%, 04/01/09 5,050,000
State of Hawaii General Obligation Bonds of 1998, A1/A+
Series CK,
2,000,000 6.000%, 09/01/03 2,072,500
State of Hawaii General Obligation Bonds of 1996, Aaa/AAA
Series CM, FGIC Insured,
3,000,000 6.500%, 12/01/15 3,352,500
State of Hawaii General Obligation Bonds of 1997, Aaa/AAA
Series CN, FGIC Insured,
3,000,000 5.500%, 03/01/14 3,022,500
4,000,000 5.250%, 03/01/10 4,080,000
1,000,000 5.250%, 03/01/13 1,000,000
6,950,000 5.250%, 03/01/15 6,828,375
2,000,000 5.500%, 03/01/16 2,115,000
1,000,000 5.250%, 03/01/17 967,500
State of Hawaii General Obligation Bonds of 1998, Aaa/AAA
Series CR, MBIA Insured,
16,000,000 5.000%, 04/01/17 15,060,000
State of Hawaii General Obligation Bonds of 1998, Aaa/AAA
Series CR,
1,000,000 5.250%, 04/01/13 1,001,250
State of Hawaii General Obligation Refunding Bonds Aaa/AAA
of 1993, Series CH, FGIC Insured,
5,000,000 6.000%, 11/01/07 5,375,000
3,390,000 6.000%, 11/01/08 3,661,200
</PAGE>
<PAGE>
State of Hawaii General Obligation Refunding Bonds Aaa/AAA
of 1993, Series CH, FGIC Insured,
$ 2,305,000 6.000%, 03/01/11 $ 2,477,875
State of Hawaii General Obligation Refunding BondsA1/A+
of 1993, Series CH,
1,000,000 4.750%, 11/01/11 970,000
State of Hawaii Harbor Capital Improvements Aaa/AAA
Revenue Bonds, MBIA Insured,
2,205,000 6.200%, 07/01/08 2,295,956
3,850,000 5.750%, 07/01/17 3,878,875
State of Hawaii Harbor Revenue Bonds, AMT - Series Aaa/AAA
1992, FGIC Insured,
3,850,000 6.500%, 07/01/19 3,970,313
State of Hawaii Harbor Revenue Bonds, Refunding Aaa/AAA
Series 1993, FGIC Insured,
1,260,000 6.050%, 07/01/04 1,323,000
1,225,000 6.150%, 07/01/05 1,293,906
State of Hawaii Harbor Revenue Bonds, AMT - Series Aaa/AAA
of 1994, FGIC Insured,
1,000,000 6.250%, 07/01/09 1,058,750
1,000,000 6.250%, 07/01/10 1,055,000
3,725,000 6.250%, 07/01/15 3,860,031
10,180,000 6.375%, 07/01/24 10,485,400
State of Hawaii Highway Revenue Bonds Series 1993, Aaa/AAA
FGIC Insured,
2,000,000 4.875%, 07/01/07 2,010,000
3,900,000 5.000%, 07/01/08 3,934,125
2,255,000 5.000%, 07/01/09 2,269,094
4,575,000 5.000%, 07/01/10 4,580,719
2,220,000 5.000%, 07/01/11 2,208,900
3,850,000 5.000%, 07/01/12 3,801,875
2,750,000 5.000%, 07/01/13 2,688,125
</PAGE>
<PAGE>
State of Hawaii Highway Revenue Bonds Series 1996, Aaa/AAA
FGIC Insured,
$ 3,705,000 5.600%, 07/01/13 $ 3,788,363
2,000,000 5.250%, 07/01/16 1,950,000
State of Hawaii Highway Revenue Bonds AMT - Aaa/AAA
Series A, FSA Insured,
2,000,000 5.750%, 07/01/17 2,020,000
1,500,000 5.900%, 07/01/21 1,520,625
Total Hawaii 574,571,853
GUAM (0.3%)
Government of Guam Ltd. Water System Revenue Aaa/AAA
Bonds, FSA Insured,
1,500,000 7.000%, 07/01/09 1,539,810
Total Guam 1,539,810
Total Investments (cost $567,048,686**) 98.4% $ 576,111,663
Other assets in excess of liablilities 1.6% 9,563,975
Net Assets 100.0% $ 585,675,638
</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 Securities 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, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
ASSETS
Investments at value (cost $567,048,686) $ 576,111,663
Cash 1,239,267
Interest receivable 9,562,116
Receivable for Trust shares sold 201,163
Other assets 6,333
Total assets 587,120,542
LIABILITIES
Dividends payable 404,137
Payable for Trust shares redeemed 439,799
Distribution fees payable 320,332
Adviser and Administrator fees payable 193,734
Accrued expenses 86,902
Total liabilities 1,444,904
NET ASSETS $ 585,675,638
Net Assets consist of:
Capital Stock, no par value, authorized an unlimited number of shares $ 582,360,184
Net unrealized appreciation on investments 9,062,977
Accumulated net realized loss on investments (5,747,523)
$ 585,675,638
CLASS A
Net Assets $ 568,611,522
Capital shares outstanding 51,807,299
Net asset value and redemption price per share $ 10.98
Offering price per share (100/96 of $10.98 adjusted to nearest cent) $ 11.44
CLASS C
Net Assets $ 13,190,354
Capital shares outstanding 1,202,495
Net asset value and offering price per share $ 10.97
Redemption price per share (*a charge of 1% is imposed on the redemption
proceeds of the shares, or on the original price, whichever is lower,
if redeemed during the first 12 months after purchase) $ 10.97*
CLASS Y
Net Assets $ 3,873,762
Capital shares outstanding 352,461
Net asset value, offering and redemption price per share $ 10.99
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 16,769,300
Expenses:
Investment Adviser fees (note 3) $ 409,244
Administrator fees (note 3) 760,029
Distribution and service fees (note 3) 630,754
Transfer and shareholder servicing agent fees 146,000
Trustees' fees and expenses 86,000
Legal fees 48,000
Shareholders' reports and proxy statements 38,000
Custodian fees 26,000
Audit and accounting fees 11,000
Insurance 11,000
Registration fees and dues 10,000
Miscellaneous 18,248
2,194,275
Expenses paid indirectly (note 7) (47,000)
Net expenses 2,147,275
Net investment income 14,622,025
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from securities transactions (2,271,673)
Change in unrealized appreciation on investments 4,431,212
Net realized and unrealized gain on investments 2,159,539
Net increase in net assets resulting from operations $ 16,781,564
</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, 2000 MARCH 31, 2000
</CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 14,622,025 $ 30,824,060
Net realized loss from securities transactions (2,271,673) (3,474,381)
Change in unrealized appreciation on investments 4,431,212 (33,467,709)
Change in net assets resulting from operations 16,781,564 (6,118,030)
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income (14,274,237) (30,170,057)
Net realized gain on investments - (3,502,240)
Class C Shares:
Net investment income (259,548) (503,244)
Net realized gain on investments - (70,285)
Class Y Shares:
Net investment income (85,239) (150,344)
Net realized gain on investments - (21,816)
Change in net assets from distributions (14,619,024) (34,417,986)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 19,495,735 45,576,123
Reinvested dividends and distributions 8,002,423 18,757,851
Cost of shares redeemed (33,211,654) (88,026,123)
Change in net assets from capital share transactions (5,713,496) (23,692,149)
Change in net assets (3,550,956) (64,228,165)
NET ASSETS:
Beginning of period 589,226,594 653,454,759
End of period $ 585,675,638 $589,226,594
</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, 2000, 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, 2000.
For the six months ended September 30, 2000, the Trust incurred fees under
the Advisory Agreement and Administration Agreement of $409,244 and $760,029,
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, 2000, service fees on
Class A Shares amounted to $569,015, of which the Distributor received $30,544.
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, 2000, amounted to $46,304. 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, 2000, amounted to $15,435. The total
of these payments made with respect to Class C Shares amounted to $61,739, of
which the Distributor received $26,779.
</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, 2000, total commissions on sales of Class A Shares amounted
to $354,769, of which the Distributor received $49,242.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended September 30, 2000, purchases of securities and
proceeds from the sales of securities aggregated $34,866,022 and $33,059,416,
respectively.
At September 30, 2000, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$15,249,737 and gross unrealized depreciation for all securities in which there
is an excess of tax cost over market value amounted to $6,186,760 for a net
unrealized appreciation of $9,062,977.
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.
At March 31, 2000 Hawaiian Tax-Free Trust had a capital loss carryover of
approximately $111,200 which expires on March 31, 2008. This amount is available
to offset future net gains on securities transactions to the extent provided for
in the Internal Revenue Code and it is probable the gain so offset will not be
distributed.
The Trust intends to maintain, to the maximum extent possible, the
tax-exempt status of interest payments received from portfolio municipal
securities in order to allow dividends paid to shareholders from net investment
income to be exempt from regular Federal and State of Hawaii income taxes.
However, due to differences between financial statement reporting and Federal
income tax reporting requirements, distributions made by the Trust may not be
the same as the Trust's net investment income, and/or net realized securities
gains. Further, a small portion of the dividends may, under some circumstances,
be subject to taxes at ordinary income and/or capital gain rates. For certain
shareholders, some dividend income may, under some circumstances, be subject to
the alternative minimum tax.
</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 the general intention of the Trust to invest, to the
extent practicable, some or all of cash balances in income-producing assets
rather than leave cash on deposit.
8. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Trust were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 1,474,942 $ 16,010,920 3,333,838 $ 37,252,026
Reinvested distributions 718,632 7,825,840 1,661,522 18,368,221
Cost of shares redeemed (2,928,268) (31,887,067) (7,378,408) (81,647,430)
Net change (734,694) (8,050,307) (2,383,048) (26,027,183)
CLASS C SHARES:
Proceeds from shares sold 226,815 2,462,527 401,429 4,566,435
Reinvested distributions 11,537 125,630 23,149 255,368
Cost of shares redeemed (110,760) (1,198,034) (271,263) (3,027,928)
Net change 127,592 1,390,123 153,315 1,793,875
CLASS Y SHARES:
Proceeds from shares sold 93,283 1,022,288 341,620 3,757,662
Reinvested distributions 4,676 50,953 12,082 134,262
Cost of shares redeemed (11,726) (126,553) (309,216) (3,350,765)
Net change 86,233 946,688 44,486 541,159
Total transactions in Trust
shares (520,869) $ (5,713,496) (2,185,247) $ (23,692,149)
</TABLE>
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS CLASS A
ENDED YEAR ENDED MARCH 31,
9/30/00 2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.94 $11.65 $11.67 $11.23 $11.31 $11.13
Income from Investment Operations:
Net investment income 0.27 0.56 0.56 0.57 0.59 0.61
Net gain (loss) on securities (both
realized and unrealized) 0.04 (0.65) 0.03 0.46 (0.08) 0.18
Total from Investment Operations 0.31 (0.09) 0.59 1.03 0.51 0.79
Less Distributions (note 6):
Dividends from net investment income (0.27) (0.55) (0.57) (0.54) (0.58) (0.61)
Distributions from capital gains - (0.07) (0.04) (0.05) (0.01) -
Total Distributions (0.27) (0.62) (0.61) (0.59) (0.59) (0.61)
Net Asset Value, End of Period $10.98 $10.94 $11.65 $11.67 $11.23 $11.31
Total Return (not reflecting sales charge)(%) 2.92+ (0.64) 5.17 9.37 4.67 7.16
Ratios/Supplemental Data
Net Assets, End of Period ($ millions) 569 575 640 648 641 660
Ratio of Expenses to
Average Net Assets (%) 0.73* 0.73 0.74 0.73 0.75 0.73
Ratio of Net Investment Income to
Average Net Assets (%) 5.00* 4.99 4.76 4.96 5.11 5.31
Portfolio Turnover Rate (%) 6+ 4 14 9 9 28
The expense ratios after giving effect to the expense offset for uninvested
cash balances were:
Ratio of Expenses to
Average Net Assets (%) 0.72* 0.71 0.70 0.72 0.73 0.72
</TABLE>
+ Not annualized.
* Annualized.
</PAGE>
<PAGE>
HAWAIIAN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS Y
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED YEAR ENDED DECEMBER 31,
9/30/00 2000 1999 1998 1997 9/30/00 2000 1999 1998 1997
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<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.93 $11.65 $11.66 $11.23 $11.31 $10.95 $11.67 $11.68 $11.24 $11.31
Income from Investment Operations:
Net investment income 0.23 0.47 0.46 0.48 0.46 0.28 0.58 0.59 0.67 0.74
Net gain (loss) on securities
(both realized and unrealized) 0.04 (0.66) 0.05 0.45 (0.08) 0.04 (0.66) 0.03 0.45 (0.07)
Total from Investment Operations 0.27 (0.19) 0.51 0.93 0.38 0.32 (0.08) 0.62 1.12 0.67
Less Distributions (note 6):
Dividends from net investment income (0.23) (0.46) (0.48) (0.45) (0.45) (0.28) (0.57) (0.59) (0.63) (0.73)
Distributions from capital gains - (0.07) (0.04) (0.05) (0.01) - (0.07) (0.04) (0.05) (0.01)
Total Distributions (0.23) (0.53) (0.52) (0.50) (0.46) (0.28) (0.64) (0.63) (0.68) (0.74)
Net Asset Value, End of Period $10.97 $10.93 $11.65 $11.66 $11.23 $10.99 $10.95 $11.67 $11.68 $11.24
Total Return (not reflecting sales charge) (%) 2.51+ (1.53) 4.45 8.40 3.41 3.01+ (0.56) 5.45 10.24 6.14
Ratios/Supplemental Data
Net Assets, End of Period
($ millions) 13.1 11.7 10.7 7.2 5.4 3.9 2.9 2.6 1.3 0.001
Ratio of Expenses to Average
Net Assets (%) 1.53* 1.53 1.53 1.52 1.53 0.54* 0.53 0.54 0.52 0.55
Ratio of Net Investment Income to
Average Net Assets (%) 4.19* 4.18 3.95 4.11 4.04 5.20* 5.15 4.96 5.02 4.90
Portfolio Turnover Rate (%) 6+ 4 14 9 9 6+ 4 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 (%) 1.52* 1.51 1.49 1.51 1.51 0.52* 0.51 0.49 0.51 0.53
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+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
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<PAGE>
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Hawaiian Tax-Free Trust (the "Trust")
was held on September 15, 2000. The holders of shares representing 63% of the
total net asset value of the shares entitled to vote were present in person or
by proxy. At the meeting, the following matters were voted upon and approved by
the shareholders (the resulting votes for each matter are presented below).
1. To elect Trustees.
Number of Votes:
TRUSTEE FOR WITHHELD
Lacy B. Herrmann 34,763,034 388,377
Vernon R. Alden 34,690,911 460,500
Arthur K. Carlson 34,731,694 419,717
William M. Cole 34,748,445 402,966
Thomas W. Courtney 34,797,078 354,333
Richard W. Gushman, II 34,785,557 365,854
Stanley W. Hong 34,685,766 465,645
Theodore T. Mason 34,787,994 363,417
Russsell K. Okata 34,414,474 736,937
Douglas Philpotts 34,713,977 437,434
Oswald K. Stender 34,355,208 796,203
2. To ratify the selection of KPMG LLP as the Trust's independent auditors.
Number of Votes:
FOR AGAINST ABSTAIN
34,661,289 268,360 221,763
3. To act upon a proposal to change the fundamental policies of the Trust to
allow the use of additional nationally recognized statistical rating
organizations.
Number of Votes:
FOR AGAINST ABSTAIN
24,140,582 326,507 919,119
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