-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JTKykWm/4VKNkQIinmnDudO7GXN1HnnVLgZAKcT8ybvOzQ+i1iVRn4wT2Ayr28PM xSfi+Qj3C0+YLSsO4J8GDQ== 0000891092-04-002387.txt : 20040510 0000891092-04-002387.hdr.sgml : 20040510 20040510170112 ACCESSION NUMBER: 0000891092-04-002387 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040229 FILED AS OF DATE: 20040510 EFFECTIVENESS DATE: 20040510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMPIRE BUILDER TAX FREE BOND FUND CENTRAL INDEX KEY: 0000730004 IRS NUMBER: 042828342 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03907 FILM NUMBER: 04793967 BUSINESS ADDRESS: STREET 1: BISYS FUND SERVICES STREET 2: 3435 STELZER ROAD CITY: COLUMBUS STATE: OH ZIP: 43219 BUSINESS PHONE: 6144708000 MAIL ADDRESS: STREET 1: BISYS FUND SERVICES STREET 2: 3435 STELZER ROAD CITY: COLUMBUS STATE: OH ZIP: 43219 FORMER COMPANY: FORMER CONFORMED NAME: INVESTMENT TRUST OF BOSTON NEW YORK TAX FREE INCOME FUND DATE OF NAME CHANGE: 19840425 FORMER COMPANY: FORMER CONFORMED NAME: ITB EMPIRE TAX FREE INCOME FUND DATE OF NAME CHANGE: 19831226 N-CSR 1 e17825n_csr.txt FORM N-CSR ----------------------------- OMB APPROVAL OMB Number: 3235-0570 Expires: November 30, 2005 Estimated average burden hours per response. . . . 5.0 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-03907 Empire Builder Tax Free Bond Fund - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 3435 Stelzer Road, Columbus, OH 43219 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) BISYS Fund Services 3435 Stelzer Road, Columbus, OH 43219 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 614-470-8000 Date of fiscal year end: February 29, 2004 Date of reporting period: February 29, 2004 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. Item 1. Reports to Stockholders. - -------------------------------- EMPIRE BUILDER -------------------------------- -------------- 3435 Stelzer Road Columbus, Ohio 43219 1-800-847-5886 Dear Shareholder, We are pleased to present The Empire Builder Tax Free Bond Fund Annual Report for the year ended February 29, 2004. During the past year, the Federal Reserve Board has kept the Discount Rate at an historical low of 1%. In this low interest rate environment, we are pleased to report that the portfolio has had a good year. For the year ended February 29, 2004 the Builder Class was up 4.16%, and the Premier Class was up 4.40%. As we mentioned in the Semi-Annual Report, we have shortened the average maturity of the Fund because of the low Discount Rate. By shortening the maturity of the Fund, we reduce the maturity and interest rate risk for the portfolio. We have continued with this idea and shortened the Fund further still from 5.84 years on August 31, 2003 to 4.06 years as of February 29, 2004. We believe that the Federal Reserve Board will have to raise the Discount Rate in the near future. By having a lower average life on the Fund, we should be able to protect the principal of the Fund. In our opinion, The Empire Builder Tax Free Bond Fund is well positioned for the next year. The no-load structure continues to offer value to the shareholder because there is no charge to purchase shares. We also recommend our automatic investment program (also known as dollar cost averaging*) that allows you to follow a disciplined investment plan. Please call the customer service desk at 1-800-847-5886 for information on how to participate. We look forward to helping you meet your investment needs. Sincerely, /s/ Seth M. Glickenhaus - ----------------------- Seth M. Glickenhaus President *Dollar cost averaging does not insure a profit and does not protect against loss in declining markets. An investor should consider his or her financial ability to continue making additional investments through periods of low share price levels. This report must be preceded or accompanied by a prospectus. For more complete information, including charges and expenses, please call 1-800-847-5886 to receive a prospectus. Read the prospectus carefully before investing or sending money. The Fund's income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax (AMT). Past performance does not guarantee future results. Not FDIC insured. May lose value. No bank guarantee. - -------------------------------- EMPIRE BUILDER -------------------------------- -------------- Market Conditions during the Fund's most recent fiscal year As we mentioned last year, the 10-year Treasury bond is the leading benchmark for long-term interest rates. Interest rates in the 10-year Government Bond Market for the fiscal year ended February 29, 2004 began at approximately 3.70% and ended at 3.99%. These figures suggest a very stable year. This is not the case, however, as we had yet another very volatile market this year. The 10-year traded in a range of approximately 3.17% to 4.46%. Throughout the year, we saw dramatic shifts in the interest rate of the 10-year bond. We try to enhance the value of the Fund whenever possible. We continue to manage the Fund conservatively taking advantage of opportunities that arise in the marketplace due to interest rate movements and quality enhancements. The following graphs illustrate the total return based on a $10,000 investment in Builder Class shares of the Fund made February 28, 1994, and a $20,000* investment in Premier Class shares of the Fund made at the commencement date of April 15, 1996, held in each through February 29, 2004, as well as the performance of the Lehman Municipal Bond Index over the same period. The Lehman Municipal Bond Index includes 25,000 long-term, investment grade, municipal bonds. In the opinion of the Fund's advisor, this index most accurately represents the performance of the broad municipal bond market. However, there are substantial differences between the index and the Fund. First, the index covers municipal bonds nationwide, whereas the Fund invests only in New York tax exempt bonds. Second, the index does not reflect the cost and expenses of actually obtaining the underlying bonds. Third, the index had a higher level of volatility than the Fund during the ten years ended December 31, 2003, as measured by Beta. Finally, the index represents an unmanaged portfolio whereas the Fund is professionally managed. The graphs assume all dividends and distributions are reinvested at net asset value. Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes a shareholder would pay on fund distributions or on the redemption of fund shares. The performance data quoted represents past performance and current returns may be higher or lower. The investment return and net asset value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. The Fund's Builder Class shares' average annual total return for the periods indicated was as follows: 4.16% for the one-year period beginning March 1, 2003 and ended February 29, 2004. 4.90% for the five-year period beginning March 1, 1999 and ended February 29, 2004. 5.13% for the ten-year period beginning March 1, 1994 and ended February 29, 2004. * The minimum initial investment into the Premier Class is $20,000. [The following table represents a line graph in the printed material] Lehman Municipal Bond Index* Empire Builder ------------------ -------------- 2/28/1994 $10,000 $10,000 2/28/1995 10,189 10,109 2/29/1996 11,315 11,014 2/28/1997 11,939 11,487 2/28/1998 13,031 12,382 2/28/1999 13,832 12,982 2/29/2000 13,544 12,411 2/28/2001 15,216 14,044 2/28/2002 16,249 14,850 2/28/2003 17,496 15,833 2/29/2004 $18,598 $16,491 * An unmanaged portfolio. The Fund's Premier Class shares' average annual total return for the periods indicated was as follows: 4.40% for the one-year period beginning March 1, 2003 and ended February 29, 2004. 5.19% for the five-year period beginning March 1, 1999 and ended February 29, 2004. 7.80% for the period beginning April 15, 1996 (commencement of operations) and ended February 29, 2004. [The following table represents a line graph in the printed material] Lehman Municipal Bond Index* Empire Builder Premier ------------------ ---------------------- 4/15/1996 $20,000 $20,000 2/28/1997 21,438 21,280 2/28/1998 23,399 22,992 2/28/1999 24,837 24,178 2/29/2000 24,319 23,182 2/28/2001 27,322 26,319 2/28/2002 29,177 27,902 2/28/2003 31,415 29,827 2/29/2004 $33,393 $31,140 * An unmanaged portfolio. 3 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004
Principal Fair Value Credit Ratings** Municipal Securities (98.1%) Amount (Note 2) - --------------------------------------------- ------ -------- New York City (14.9%) Aa1/AA+ Municipal Assistance Corporation for the City of New York, Series N, 5.00% 7/1/2004, Non Callable, (General Obligation of the Corporation)......................................... $ 200,000 $ 202,628 Aa1/AA+ Municipal Assistance Corporation for the City of New York, Series H, 5.50%, 7/1/2004, Non Callable, (General Obligation of the Corporation).......................................... 400,000 405,908 Aa1/AA+ Municipal Assistance Corporation for the City of New York, Series J, 6.00%, 7/1/2004, Non Callable, (General Obligation of the Corporation).......................................... 2,555,000 2,596,902 Aa1/AA+ Municipal Assistance Corporation for the City of New York, Series E, 6.00%, 7/1/2005, Non Callable...................... 1,085,000 1,154,266 A2/A New York City, General Obligation, Series G, 5.00%, 8/1/2004, Non Callable....................................... 500,000 507,950 Aaa/AAA New York City, General Obligation, Series B, 5.25%, 8/1/2017, Callable 8/1/2007 @ 101, (AMBAC)............................. 750,000 823,913 NR/AAA New York City, General Obligation, Series B, 5.125%, 8/1/2019, Callable 8/1/2010 @ 101, (FGIC).............................. 2,000,000 2,169,920 Aaa/AAA New York City, General Obligation, Series B, 5.375%, 8/1/2022, Callable 8/1/2007 @ 101, (MBIA).............................. 1,250,000 1,338,725 Aaa/AAA New York City, Health & Hospitals Corporation, Health System Revenue, Series A, 5.50%, 2/15/2018, Callable 2/15/2012 @ 100, (FSA)................................................. 1,000,000 1,131,060 Aaa/AAA New York City Municipal Water Finance Authority, Water & Sewer System Revenue, 5.125%, 6/15/2004, (MBIA).................... 480,000 485,650 Aa2/AA New York City Municipal Water Finance Authority, Water & Sewer System Revenue, Series B, 5.00%, 6/15/2018, Callable 6/15/2014 @ 100.............................................. 2,500,000 2,746,550 Aaa/AAA New York City Municipal Water Finance Authority, Water & Sewer System Revenue, Series A, 6.125%, 6/15/2020, Callable 6/15/2005 @ 101.............................................. 1,000,000 1,075,980 Aa2/AA+ New York City Transitional Finance Authority, Future Tax Revenue, Series B, 2.50%, 8/1/2004, Non Callable....................... 2,415,000 2,429,611 Aa2/AA+ New York City Transitional Finance Authority, Future Tax Revenue, Series B, 5.25%, 11/15/2004, Non Callable.................... 300,000 308,781 ------------ Total New York City.............................................. 17,377,844 ------------
The accompanying notes are an integral part of the financial statements. 4 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued
Principal Fair Value Credit Ratings** Municipal Securities -- continuted Amount (Note 2) - --------------------------------------------------- ------ -------- New York State Agencies (55.3%) Long Island Power Authority (2.2%) Aaa/AAA Long Island Power Authority, New York Electric Systems, Series A, 6.00%, 12/1/2007, Non Callable, (AMBAC)............ $1,000,000 $ 1,150,220 Aaa/AAA Long Island Power Authority, New York Electric Systems, Series A, 5.50%, 12/1/2012, Non Callable, (FSA).............. 1,210,000 1,452,436 ------------ Total Long Island Power Authority............................... 2,602,656 ------------ New York State Dormitory Authority (34.2%) A3/AA- Albany County Airport, 5.25%, 4/1/2013, Callable 4/1/2008 @ 101 1,200,000 1,312,536 Aaa/AAA Augustana Lutheran Home for the Aged, Series A, 5.50%, 8/1/2020, Callable 8/1/2010 @ 101, (MBIA)(FHA)......................... 920,000 1,032,185 Aaa/AAA Augustana Lutheran Home for the Aged, Series A, 5.50%, 8/1/2030, Callable 8/1/2010 @ 101, (MBIA)(FHA)......................... 750,000 827,355 A3/AA- City University, Series 3, 6.00%, 7/1/2004, Non Callable........ 1,000,000 1,016,640 A3/AA- City University, Series 3, 6.00%, 7/1/2004, Non Callable........ 380,000 386,145 Aaa/AAA Columbia University, Series B, 5.375%, 7/1/2018, Callable 7/1/2012 @ 100............................................... 500,000 564,880 Aaa/AAA Columbia University, Series B, 5.375%, 7/1/2019, Callable 7/1/2012 @ 100.............................................. 1,000,000 1,122,100 Aaa/AAA Columbia University, Series B, 5.375%, 7/1/2020, Callable 7/1/2012 @ 100............................................... 1,000,000 1,115,260 Aaa/NR Culinary Institute of America, 2.00%, 7/1/2004, Non Callable, (XLCA)....................................................... 305,000 306,034 NR/AAA Heritage House Nursing Center, 7.00%, 8/1/2031, Callable 8/1/2004 @100, (FHA)......................................... 435,000 436,405 Aaa/AAA Lutheran Medical Center, 5.00%, 8/1/2016, Callable 2/1/2013 @ 100, (MBIA)(FHA)........................................... 985,000 1,088,504 NR/AA- Mental Health, Series F-1, 2.00%, 2/15/2005, Non Callable....... 2,520,000 2,541,370 Aaa/AAA New York Medical College, 5.25%, 7/1/2013, Callable 7/1/2008 @ 101, (MBIA)................................................ 1,015,000 1,137,013 NR/AA- New York State Department of Health, 5.25%, 7/1/2014, Non Callable................................................. 1,000,000 1,122,860 Aaa/AAA New York State Rehabilitation Association, Series A, 3.00%, 7/1/2004, Non Callable, (CIFG)............................... 600,000 603,990 Aaa/AAA New York University, Series 2, 5.50%, 7/1/2018, Callable 7/1/2011 @ 100, (AMBAC)...................................... 500,000 568,615 NR/AAA Park Ridge Housing, Inc., 6.375%, 8/1/2020, Callable 8/1/2010 @ 101, (FNMA)..................................... 1,000,000 1,155,580 NR/AAA Park Ridge Housing, Inc., 6.50%, 8/1/2025, Callable 8/1/2010 @ 101, (FNMA)....................................... 1,470,000 1,699,996
The accompanying notes are an integral part of the financial statements. 5 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued
Principal Fair Value Credit Ratings** Municipal Securities -- continuted Amount (Note 2) - --------------------------------------------------- ------ -------- New York State Agencies -- continued New York State Dormitory Authority -- continued Aaa/NR Rochester Institute of Technology, Series A, 5.25%, 7/1/2016, Callable 7/1/2012 @ 100, (AMBAC)............................. $2,045,000 $ 2,292,077 Aaa/NR Rochester Institute of Technology, Series A, 5.25%, 7/1/2017, Callable 7/1/2012 @ 100, (AMBAC)............................. 2,155,000 2,395,670 Aaa/AAA School Districts Financing, Series C, 5.25%, 4/1/2021, Callable 10/1/2012 @ 100, (MBIA)...................................... 1,300,000 1,427,855 Aaa/AAA Special Acts School Districts Program, 6.00%, 7/1/2019, Callable 7/1/2005 @ 102, (MBIA)....................................... 3,540,000 3,825,360 NR/AAA State Service Contract, 5.25%, 4/1/2017, Callable 4/1/2008 @ 101, (MBIA)................................................ 1,000,000 1,087,350 A3/AA- State University, Educational Facilities, 5.40%, 5/15/2005, Non Callable................................................. 2,000,000 2,097,040 NR/NR State University, 5.375%, 7/1/2021, Callable 7/1/2008 @ 102, (MBIA)................................................ 865,000 932,118 NR/NR State University, 5.375%, 7/1/2021, Callable 7/1/2008 @ 102, (MBIA)................................................ 325,000 350,202 NR/AA- Upstate Community Colleges, 5.125%, 7/1/2018, Callable 7/1/2014 @ 100........................................................ 1,000,000 1,091,020 NR/AA- Upstate Community Colleges, 5.125%, 7/1/2019, Callable 7/1/2014 @ 100........................................................ 1,000,000 1,084,030 Aaa/AAA Upstate Community Colleges, Series A, 6.00%, 7/1/2019, Callable 7/1/2010 @ 101, (FSA)......................................... 1,000,000 1,188,240 Aaa/AAA Upstate Community Colleges, Series A, 6.00%, 7/1/2020, Callable 7/1/2010 @ 101, (FSA)........................................ 845,000 1,001,908 NR/AAA Westchester County, Court Facilities, 5.25%, 8/1/2018, Callable 2/1/2009 @ 101, (MBIA)....................................... 2,800,000 3,057,460 ------------ Total New York State Dormitory Authority........................ 39,867,798 ------------ New York State Energy, Research & Development Authority (0.9%) Aaa/AAA Western New York Nuclear Service Center, Series PJ, 5.40%, 4/1/2005, (CAPMAC)........................................... 1,020,000 1,067,195 ------------ New York State Environmental Facilities Corporation (2.8%) Aaa/AAA State Water Pollution Control Revenue, Series C, Revolving Fund, Pooled Loan, 4.50%, 6/15/2004, Non Callable.................. 170,000 171,702 Aaa/AAA State Water Pollution Control Revenue, Revolving Fund, Pooled Loan, 6.60%, 6/15/2009, Callable 6/15/2004 @ 101.5 (POL CTL - SRF).............................................. 1,200,000 1,237,235 Aaa/AAA State Water Pollution Control Revenue, Series B, Revolving Fund, Pooled Loan, 5.80%, 5/15/2011, Callable 5/15/2004 @ 102, (POL CTL - SRF).............................................. 185,000 190,517
The accompanying notes are an integral part of the financial statements. 6 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued
Principal Fair Value Credit Ratings** Municipal Securities -- continuted Amount (Note 2) - --------------------------------------------------- ------ -------- New York State Agencies -- continued New York State Environmental Facilities Corporation -- continued Aaa/AAA State Water Pollution Control Revenue, Revolving Fund, Pooled Loan, 5.90%, 1/15/2018, Callable 1/15/2006 @ 102, (POL CTL - SRF).............................................. $ 725,000 $ 797,022 Aaa/AAA State Water Pollution Control Revenue, Revolving Fund, Pooled Loan, 5.90%, 1/15/2018, Callable 1/15/2006 @ 102, (POL CTL - SRF).............................................. 785,000 868,555 ------------ Total New York State Environmental Facilities Corporation....... 3,265,031 ------------ New York State Housing Finance Agency (2.0%) Aa1/NR Multi-Family Housing, Secured Mortgage Program, 6.45%, 8/15/2014, Callable 2/15/2005 @ 101, (SONYMA)........................... 2,245,000 2,314,415 New York State Local Government Assistance Corporation (2.2%) A1/AA New York State Local Government Assistance Corporation, Series A-1, 2.00%, 4/1/2004, Non Callable, (General Obligation of the Corporation)............................... 1,500,000 1,501,124 Aaa/AAA New York State Local Government Assistance Corporation, Series A, 5.375%, 4/1/2014, Callable 4/1/2004 @ 101.50, (MBIA) (General Obligation of the Corporation)............... 1,000,000 1,018,490 ------------ Total New York State Local Government Assistance Corporation.... 2,519,614 ------------ New York State Medical Care Facilities Finance Agency (0.9%) Aaa/AAA Hospital & Nursing Home, St. Vincent's Hospital Project, 6.20%, 2/15/2021, Callable 2/15/2005 @ 101, (AMBAC)(FHA)............ 1,060,000 1,086,023 New York State Metropolitan Transportation Authority (0.7%) A2/A Metropolitan Transportation Authority Revenue, Series A, 3.00%, 11/15/2004, Non Callable..................................... 250,000 253,248 Aa3/AA- Triborough Bridge & Tunnel Authority Revenue, Series B, 2.00%, 11/15/2004, Non Callable, (General Obligation of the Corporation)................................................. 525,000 528,685 ------------ Total New York State Metropolitan Transportation Authority...... 781,933 ------------ New York State Thruway Authority (6.6%) Aaa/AAA Highway & Bridge Trust Fund Bonds, Series B, 4.00%, 4/1/2004, Non Callable, (FGIC)......................................... 250,000 250,630 Aaa/AAA Highway & Bridge Trust Fund Bonds, Series A, 6.25%, 4/1/2004, Non Callable, (AMBAC)........................................ 1,390,000 1,396,089 Aaa/AAA Highway & Bridge Trust Fund Bonds, Series A, 5.50%, 4/1/2014 Callable 4/1/2011 @ 101, (FGIC).............................. 1,500,000 1,729,934 Aaa/AAA Highway & Bridge Trust Fund Bonds, Series B, 5.25%, 4/1/2017, Callable 10/1/2011 @ 100, (MBIA)............................. 2,500,000 2,766,149 NR/NR Service Contract Revenue, 5.30%, 4/1/2004, Non Callable, (AMBAC) 35,000 35,129 NR/NR Service Contract Revenue, 5.30%, 4/1/2004, Non Callable, (AMBAC) 465,000 466,608
The accompanying notes are an integral part of the financial statements. 7 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued
Principal Fair Value Credit Ratings** Municipal Securities -- continuted Amount (Note 2) - --------------------------------------------------- ------ -------- New York State Agencies -- continued New York State Thruway Authority -- continued A1/AA State Personal Income Tax Revenue, Series A, 4.00%, 3/15/2004, Non Callable...................................... $1,000,000 $ 1,001,177 ------------ Total New York State Thruway Authority.......................... 7,645,716 ------------ New York State Urban Development Corporation (2.8%) A3/AA- Correctional & Youth Facilities Services, Series A, 5.00%, 1/1/2005, Non Callable....................................... 2,000,000 2,063,720 A3/AA- Empire State Development Corporation, University Facilities Grants, 6.00%, 1/1/2009, Non Callable........................ 905,000 1,048,624 A1/AA Personal Income Tax, Series C-1, 3.00%, 3/15/2004, Non Callable...................................... 200,000 200,149 ------------ Total New York State Urban Development Corporation.............. 3,312,493 ------------ Total New York State Agencies................................... 64,462,874 ------------ Other New York State Bonds (25.6%) Aaa/NR Akron Central School District, General Obligation, 4.25%, 6/15/2004, Non Callable, (FSA)............................... 225,000 227,093 Aaa/AAA Albany County, Airport Authority, Series A, 4.00%, 12/15/2004, Non Callable, (FSA).......................................... 460,000 470,810 A3/NR Albany Housing Authority, Limited Obligation, 6.25%, 10/1/2012, Callable 10/1/2005 @ 102..................................... 1,000,000 1,075,080 NR/AAA Auburn City School District, General Obligation, Series B, 2.00%, 6/15/2004, Non Callable, (FGIC).............................. 200,000 200,592 Aaa/NR Averill Park Central School District, General Obligation, 5.25%, 5/1/2004, Non Callable, (FGIC)............................... 500,000 503,525 Aaa/AAA Buffalo Municipal Water Finance Authority, Water System Revenue, 5.75%, 7/1/2019, Callable 7/1/2005 @ 102, (FGIC)............. 500,000 538,665 Aaa/NR Corning, City School District, General Obligation, 5.00%, 6/15/2012, Non Callable, (FSA)............................... 1,000,000 1,142,530 Aaa/NR Corning, City School District, General Obligation, 5.00%, 6/15/2013, Callable 6/15/2012 @ 100, (FSA)................... 970,000 1,093,112 Aaa/NR Corning, City School District, General Obligation, 5.00%, 6/15/2014, Callable 6/15/2012 @ 100, (FSA)................... 600,000 673,374 Aaa/AAA Evans, General Obligation, 6.80%, 4/15/2012, Non Callable, (AMBAC)...................................................... 225,000 284,510 Aaa/AAA Evans, General Obligation, 6.80%, 4/15/2013, Non Callable, (AMBAC)...................................................... 225,000 285,741 Aaa/NR Fayetteville Manlius, Central School District, General Obligation, 5.00%, 6/15/2016, Callable 6/15/2012 @ 101, (FGIC)....................................................... 375,000 417,653 Aaa/NR Harborfields, Central School District, Greenlawn, General Obligation, 4.00%, 6/1/2004, Non Callable, (FSA)............. 850,000 856,299
The accompanying notes are an integral part of the financial statements. 8 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued
Principal Fair Value Credit Ratings** Municipal Securities -- continuted Amount (Note 2) - --------------------------------------------------- ------ -------- Other New York State Bonds -- continued Aaa/NR Honeoye Falls Lima, Central School District, General Obligation, Series B, 2.00%, 6/15/2004, Non Callable, (FSA).............. $ 250,000 $ 250,740 Aaa/NR Ilion, Central School District, General Obligation, Series B, 5.50%, 6/15/2015, Callable 6/15/2012 @ 101, (FGIC)........... 550,000 643,418 Aaa/NR Ilion, Central School District, General Obligation, Series B, 5.50%, 6/15/2016, Callable 6/15/2012 @ 101, (FGIC)........... 500,000 582,550 Aaa/NR Islip Union Free School District 002, General Obligation, 2.50%, 7/15/2004, Non Callable, (MBIA).............................. 460,000 462,585 NR/AAA Lansing, Central School District, 1.75%, 6/15/2004, Non Callable, (FSA).......................................... 1,005,000 1,007,201 NR/AAA Lillian Cooper Housing Development Corporation Mortgage Revenue, Series A, 7.00%, 1/1/2022, Callable 7/1/2004 @ 100, (FNMA)(FHA).................................................. 1,085,000 1,088,960 Aaa/AAA Mount Sinai Union Free School District, General Obligation, 6.20%, 2/15/2012, Non Callable, (AMBAC)...................... 1,065,000 1,301,068 Aaa/NR Nassau County, General Obligation, Series D, 5.25%, 9/1/2004, Non Callable, (FSA)................................ 420,000 428,845 A2/AA New York State, General Obligation, Series D, 5.125%, 7/15/2004, Non Callable ..................................... 1,270,000 1,288,580 Aaa/AAA Niagara Falls Pubic Water Authority, Water & Sewer System Revenue, Series A, 5.50%, 7/15/2028, Callable 7/15/2006 @ 100, (MBIA)....................................................... 1,000,000 1,065,880 Aaa/NR North Hempstead, General Obligation, 3.00%, 7/15/2004, Non Callable, (MBIA).............................. 635,000 639,724 Aaa/AAA North Hempstead, General Obligation, Series B, 6.375%, 4/1/2009, Non Callable, (FGIC)............................... 570,000 679,497 Aaa/AAA North Hempstead, General Obligation, Series B, 6.40%, 4/1/2010, Non Callable, (FGIC)............................... 560,000 677,158 Aaa/AAA Olean, City School District, General Obligation, 2.20%, 6/15/2004, Non Callable, (FGIC).............................. 225,000 225,792 NR/AAA Oneida County Industrial Development Agency, Mohawk Valley Network, St. Luke's Memorial Hospital, 5.00%, 1/1/2013, Callable 1/1/2008 @ 101, (FSA)............................... 2,000,000 2,156,119 Aa1/NR Orange County, General Obligation, Series A, 2.50%, 11/1/2004, Non Callable ................................................ 1,530,000 1,545,178 Aaa/NR Oyster Bay, General Obligation, 5.00%, 3/15/2011, Non Callable, (FSA)........................................................ 430,000 491,778 Aaa/NR Red Hook, Central School District, General Obligation, 2.50%, 6/15/2004, Non Callable, (FSA)............................... 560,000 562,447 Aaa/NR Southern Cayuga, Central School District, General Obligation, 5.00%, 5/15/2014, Callable 5/15/2012 @ 100, (FSA)............ 400,000 448,484
The accompanying notes are an integral part of the financial statements. 9 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued
Principal Fair Value Credit Ratings** Municipal Securities -- continuted Amount (Note 2) - --------------------------------------------------- ------ -------- Other New York State Bonds -- continued Aaa/AAA Suffolk County, General Obligation, Series C, 5.00%, 9/15/2015, Callable 9/15/2008 @ 101, (FGIC)............................. $ 965,000 $ 1,052,516 Aaa/AAA Suffolk County, General Obligation, Series C, 5.00%, 9/15/2016, Callable 9/15/2008 @ 101, (FGIC)............................. 550,000 594,770 Aaa/AAA Suffolk County, General Obligation, Series C, 5.00%, 9/15/2017, Callable 9/15/2008 @ 101, (FGIC)............................. 480,000 517,176 Aaa/AAA Suffolk County, General Obligation, Series D, 5.00%, 11/1/2015, Callable 11/1/2008 @ 101, (FGIC)............................. 1,125,000 1,229,366 Aaa/AAA Suffolk County, General Obligation, Series D, 5.00%, 11/1/2016, Callable 11/1/2008 @ 101, (FGIC)............................. 1,110,000 1,202,396 Aaa/AAA Warren & Washington Counties Industrial Development Agency, Civic Facilities Revenue, Glens Falls Hospital Project, Series B, 2.50%, 12/1/2004, Non Callable, (FSA).............. 1,845,000 1,865,738 ------------ Total Other New York State Bonds................................ 29,776,950 ------------ Other Municipal Bonds (2.3%) Guam (0.2%) Aaa/AAA Guam International Airport Authority Revenue, Series B, 5.25%, 10/1/2022, Callable 10/1/2013 @ 100, (MBIA).................. 250,000 273,405 Puerto Rico (2.1%) Aaa/AAA Puerto Rico Commonwealth, General Obligation, 5.30%, 7/1/2004, Non Callable, (MBIA)......................................... 400,000 405,716 Aaa/AAA Puerto Rico Electric Power Authority Revenue, Series W, 5.00%, 7/1/2004, Non Callable....................................... 2,015,000 2,041,820 ------------ Total Puerto Rico............................................... 2,447,536 ------------ Total Other Municipal Bonds..................................... 2,720,941 ------------ Total Municipal Securities (Cost $108,482,227)-- 98.1%.......... 114,338,609 ------------ Short Term Investments (0.0%) Dreyfus New York Municipal Cash Management Fund................. 10,000 10,000 ------------ Total Investments (Cost $108,492,227) (a) -- 98.1%............... $114,348,609 Other assets in excess of liabilities -- 1.9%.................... 2,203,737 ------------ NET ASSETS-- 100.0%............................................. $116,552,346 ============
- ---------- Percentages indicated are based on net assets of $116,552,346. (a) Represents cost for financial reporting purposes and differs from cost basis for federal income tax purposes by the amount of losses recognized for financial reporting in excess of federal income tax reporting of $40,660. Cost for federal income tax differs from fair value by net unrealized apreciatioon/depreciation of securities as follows:
Unrealized appreciation $5,898,995 Unrealized depreciation (1,953) ---------- Net unrealized appreciation $5,897,042 ==========
** Credit Ratings given by Moody's Investors Service Inc. and Standard & Poor's Corporation (unaudited) The accompanying notes are an integral part of the financial statements. 10 THE EMPIRE BUILDER TAX FREE BOND FUND Portfolio of Investments -- February 29, 2004 -- continued Credit Ratings given by Moody's Investors Service Inc. and Standard & Poor's Corporation (unaudited). Moody's Standard & Poor's Aaa AAA Instrument judged to be of the highest quality and carrying the smallest amount of investment risk. Aa AA Instrument judged to be of high quality by all standards. A A Instrument judged to be adequate quality by all standards. Baa BBB Instrument judged to be moderate quality by all standards. NR NR Not Rated. In the opinion of the Investment Adviser, instrument judged to be of comparable investment quality to rated securities which may be purchased by the Fund. For items possessing the strongest investment attributes of their category, Moody's gives that letter rating followed by a number. The Standard & Poor's ratings may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. Abbreviations used in this statement: AMBAC Insured as to principal and interest by the American Municipal Bond Assurance Corporation. CAPMAC Insured as to principal and interest by Capital Markets Assurance Corp. CIFG Insured as to principal and interest by CDC IXIS Financial Guarantee. FGIC Insured as to principal and interest by the Financial Guarantee Insurance Corporation. FHA Insured as to principal and interest by the Federal Housing Administration. FNMA Insured as to principal and interest by the Federal National Mortgage Association. FSA Insured as to principal and interest by Financial Security Assurance. MBIA Insured as to principal and interest by the Municipal Bond Insurance Association. POL CTL-SRF Insured as to principal and interest by the Pollution Control State Revenue Fund. SONYMA Insured as to principal and interest by the State of New York Mortgage Association. XLCA Insured as to principal and interest by XL Capital Assurance, Inc. The accompanying notes are an integral part of the financial statements. 11 THE EMPIRE BUILDER TAX FREE BOND FUND Statement of Assets and Liabilities February 29, 2004
Assets: Investments in securities, at fair value (cost $108,492,227) (Note 2)..................... $114,348,609 Interest and dividend receivable.......................................................... 1,077,234 Receivable for investments sold........................................................... 6,328,891 Prepaid expenses and other assets......................................................... 63,340 ------------ Total Assets ........................................................................... 121,818,074 Liabilities: Payable to custodian for cash overdraft................................... $ 198,602 Dividends payable......................................................... 23,727 Payable for investments purchased........................................ 4,911,900 Advisory fee payable (Note 4)............................................ 35,851 Administrative services fee payable (Note 4)............................. 1,588 Other accrued expenses................................................... 94,060 ----------- Total Liabilities ...................................................................... 5,265,728 ------------ Net Assets................................................................................... $116,552,346 ============ Net Assets: Net assets consist of: Capital................................................................................... $110,164,281 Undistributed net investment income....................................................... 42,925 Net realized gains from investments....................................................... 488,758 Net unrealized appreciation from investments.............................................. 5,856,382 ------------ Net Assets................................................................................... $116,552,346 ============ Builder Class: Net Assets................................................................ $55,504,464 Shares of beneficial interest outstanding................................. 3,062,404 ----------- Builder Class - Net Asset Value (offering and redemption price per share)........................................................ $ 18.12 =========== Premier Class: Net Assets................................................................ $61,047,882 Shares of beneficial interest outstanding................................. 3,367,515 ----------- Premier Class - Net Asset Value (offering and redemption price per share)........................................................ $ 18.13 ===========
The accompanying notes are an integral part of the financial statements. 12 THE EMPIRE BUILDER TAX FREE BOND FUND Statement of Operations For the Year Ended February 29, 2004
Investment Income: Interest.................................................................................. $4,542,071 Dividend.................................................................................. 16,263 ---------- Total Investment Income................................................................... 4,558,334 Expenses: Advisory fees (Note 4)................................................... $ 456,898 Administrative fees (Note 4).............................................. 200,000 Transfer agency fees (Builder Class) (Note 4)............................. 145,768 Transfer agency fees (Premier Class) (Note 4)............................. 49,005 Custody fees.............................................................. 36,332 Fund accounting fees (Note 4)............................................. 60,453 Trustees' fees ........................................................... 22,114 Other fees................................................................ 148,933 --------- Total Expenses.......................................................... 1,119,503 Less: Custody fee credit............................................... (9,432) --------- Total Net Expenses........................................................................ 1,110,071 ---------- Net Investment Income........................................................................ 3,448,263 ---------- Realized/Unrealized Gains on Investments (Notes 2 and 3) Net realized gains from investment transactions........................... 1,113,657 Change in unrealized appreciation/depreciation from investment transactions................................................. 339,136 --------- Net realized/unrealized gains from investment transactions.............................. 1,452,793 ---------- Change in net assets resulting from operations............................................... $4,901,056 ==========
The accompanying notes are an integral part of the financial statements. 13 THE EMPIRE BUILDER TAX FREE BOND FUND Statements of Changes in Net Assets
Year Ended Year Ended February 29, 2004 February 28, 2003 ----------------- ----------------- From Investment Activities: Operations: Net investment income ......................................... $ 3,448,263 $ 4,124,066 Net realized gains from investment transactions ............... 1,113,657 2,419,769 Change in unrealized appreciation/depreciation from investment transactions .................................... 339,136 1,026,786 ------------- ------------- Change in net assets resulting from operations ................ 4,901,056 7,570,621 ------------- ------------- Distributions to shareholders from: Net investment income -- Builder Class ........................ (1,593,260) (1,891,261) Net investment income -- Premier Class ........................ (1,842,382) (2,218,177) Net realized gains from investment transactions -- Builder Class (559,031) (797,828) Net realized gains from investment transactions -- Premier Class (610,097) (851,523) ------------- ------------- Total distributions ........................................ (4,604,770) (5,758,789) ------------- ------------- Capital Transactions: Proceeds from shares issued -- Builder Class .................. 2,865,115 3,393,769 Proceeds from shares issued -- Premier Class .................. 1,833,457 1,743,930 Dividends reinvested -- Builder Class ......................... 1,929,811 2,408,830 Dividends reinvested -- Premier Class ......................... 2,146,150 2,672,965 Cost of shares redeemed -- Builder Class ...................... (6,113,946) (4,230,739) Cost of shares redeemed -- Premier Class ...................... (4,107,168) (4,260,674) ------------- ------------- Change in net assets from capital share transactions .......... (1,446,581) 1,728,081 ------------- ------------- Change in net assets ....................................... (1,150,295) 3,539,913 Net Assets: Beginning of period ........................................... 117,702,641 114,162,728 ------------- ------------- End of period ................................................. $ 116,552,346 $ 117,702,641 ============= ============= Share Transactions: Issued -- Builder Class ....................................... 158,501 188,963 Issued -- Premier Class ....................................... 101,203 97,318 Reinvested -- Builder Class ................................... 107,001 135,373 Reinvested -- Premier Class ................................... 118,931 150,184 Redeemed -- Builder Class ..................................... (338,191) (237,051) Redeemed -- Premier Class ..................................... (227,524) (237,735) ------------- ------------- Change in shares .............................................. (80,079) 97,052 ------------- ------------- Undistributed net investment income ........................... $ 42,925 $ 42,050 ============= =============
The accompanying notes are an integral part of the financial statements. 14 THE EMPIRE BUILDER TAX FREE BOND FUND Financial Highlights For a share of beneficial interest outstanding throughout each period
Year Ended Year Ended Year Ended Year Ended Year Ended February 29, 2004 February 28, 2003 February 28, 2002 February 28, 2001 February 29, 2000 ----------------- ----------------- ----------------- ----------------- ----------------- Builder Premier Builder Premier Builder Premier Builder Premier Builder Premier Class Class Class Class Class Class Class Class Class Class ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- Net Asset Value, Beginning of Period................. $ 18.08 $ 18.08 $ 17.80 $ 17.80 $ 17.69 $ 17.69 $ 16.32 $ 16.32 $ 17.88 $ 17.88 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Investment Activities: Net investment income...... 0.51 0.55 0.61 0.66 0.72 0.77 0.73 0.79 0.78 0.84 Net realized/ unrealized gains/(losses) on investments.............. 0.22 0.23 0.54 0.54 0.27 0.27 1.37 1.37 (1.55) (1.56) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total from Investment Operations............... 0.73 0.78 1.15 1.20 0.99 1.04 2.10 2.16 (0.77) (0.72) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Distributions: Net investment income...... (0.51) (0.55) (0.61) (0.66) (0.71) (0.76) (0.73) (0.79) (0.76) (0.81) Net realized capital gains. (0.18) (0.18) (0.26) (0.26) (0.17) (0.17) -- -- (0.03) (0.03) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total distributions........ (0.69) (0.73) (0.87) (0.92) (0.88) (0.93) (0.73) (0.79) (0.79) (0.84) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period.................... $ 18.12 $ 18.13 $ 18.08 $ 18.08 $ 17.80 $ 17.80 $ 17.69 $ 17.69 $ 16.32 $ 16.32 ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= Total Return.................. 4.16% 4.40% 6.62% 6.90% 5.74% 6.01% 13.15% 13.53% (4.39)% (4.12)% Ratios/Supplementary Data: Net Assets, End of Period (in thousands).......... $55,504 $61,048 $56,677 $61,025 $54,253 $59,910 $53,937 $60,418 $50,347 $55,636 Ratios of Net Investment Income to Average Net Assets............... 2.85% 3.03% 3.44% 3.71% 4.04% 4.30% 4.31% 4.65% 4.47% 4.75% Ratios of Expenses to Average Net Assets....... 1.04% 0.86% 1.16% 0.89% 1.14% 0.88% 1.20% 0.86% 1.08% 0.79% Ratios of Expenses to Average Net Assets*...... 1.05% 0.87% 1.16% 0.89% 1.14% 0.88% 1.22% 0.88% 1.12% 0.83% Portfolio Turnover Rate (a) 202.77% 202.77% 213.97% 213.97% 98.29% 98.29% 121.96% 121.96% 90.84% 90.84%
- ---------- * The ratio does not include a reduction of expenses for custodian fee credits of cash balances maintained with the custodian. (a) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. The accompanying notes are an integral part of the financial statements. 15 THE EMPIRE BUILDER TAX FREE BOND FUND Notes to Financial Statements 1. Organization: The Empire Builder Tax Free Bond Fund (the "Fund") was established as a Massachusetts business trust by an Agreement and Declaration of Trust dated September 30, 1983. The Fund is registered under the Investment Company Act of 1940, as amended, as an open-end, non-diversified investment company. The Fund has an unlimited number of shares authorized with no par value. The Fund offers two classes of shares; the Builder Class and the Premier Class. Each class of shares outstanding bears the same dividend, liquidation and other rights and conditions, except that the Builder Class shares and the Premier Class shares bear separate transfer agency expenses. Each class of shares has exclusive voting rights with respect to matters affecting only that class. Under the Fund's organizational documents, its' Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with their vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund. 2. Significant Accounting Policies: The following is a summary of significant accounting policies followed by the Fund in the preparation of its' financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. Use of Estimates Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ from these amounts. Security Valuation Tax-exempt securities are valued at their fair value as determined by an independent pricing service approved by the Fund's Board of Trustees. The pricing service uses information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining fair value. The methods used by the pricing service and the quality of valuations so established are reviewed by Officers of the Fund and Glickenhaus & Co. (the "Adviser"), under the general supervision of the Trustees of the Fund. Securities for which quotations are not readily available are stated at fair value using procedures approved by the Trustees of the Fund. Short-term debt securities having remaining maturities of sixty (60) days or less are stated at amortized cost, which approximates fair value. Investments in investment companies are reported at their respective net asset values as reported by those companies. 16 THE EMPIRE BUILDER TAX FREE BOND FUND Notes to Financial Statements -- continued Security Transactions and Investment Income Security transactions are accounted for no later than one day after trade date. However, for financial reporting purposes, security transactions are accounted for on trade date. Interest income, which includes amortization of premium and accretion of discounts, is accrued as earned. Realized gains and losses from security transactions and unrealized appreciation and depreciation of investments are determined on the basis of identified cost. Taxes The Fund qualifies and intends to continue to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code, and to distribute substantially all of its tax-exempt and taxable income. Therefore, no federal income tax provision is required. In addition, by distributing during each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to a federal excise tax. Futures Contracts The Fund may purchase and sell financial futures contracts, options on such futures contracts and options on securities indices to hedge against changes in the fair value of New York tax-exempt bonds the Fund owns or expects to purchase. The Fund may also purchase and sell futures and options on U.S. Treasury securities in order to hedge against interest rate changes or other general changes in market values. Upon entering into a futures contract, the Fund is required to deposit cash or pledge securities in an amount equal to a certain percentage of the purchase price indicated in the futures contract (initial margin). Subsequent payments, which are dependent on the daily fluctuations in the fair value of the underlying security, are made or received by the Fund each day (daily variation margin) and are recorded as unrealized gains or losses until the contracts are closed. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedge assets. No futures were held on February 29, 2004. Distributions and Dividends Distributions to shareholders from net investment income are declared daily and paid monthly. The Fund also distributes at least annually substantially all net capital gains, if any, realized from portfolio transactions. The amounts of distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. 17 THE EMPIRE BUILDER TAX FREE BOND FUND Notes to Financial Statements -- continued Determination of Net Asset Value and Allocation of Expenses In calculating net asset value per share of each class, investment income and expenses, other than class-specific expenses, are allocated daily to each class of shares based on the value of outstanding settled shares. Other The Fund maintains a cash balance with its custodian and receives a reduction of its custody fees and expenses for the amounts of interest earned on such uninvested cash balance. There was no effect on net investment income. The Fund could have invested such cash amounts in an income-producing asset if it had not agreed to a reduction of fees or expenses under the expense offset arrangement with the Fund's custodian. 3. Purchases and Sales of Investment Securities: Purchases and sales of investment securities, excluding short-term investments, during the year ended February 29, 2004, amounted to $201,173,720 and $222,909,142, respectively. 4. Advisory Fees and Other Related Party Transactions: The Fund retains the Adviser to act as investment adviser pursuant to an Investment Advisory Agreement. As compensation for its advisory services, the Adviser receives a fee computed daily and paid monthly, at the annual rates of 0.40% of the first $100,000,000 of average daily net assets and 0.3333% of any excess over $100,000,000. Glickenhaus has agreed to a reduction of advisory fees to the extent that the Fund's expenses, including the advisory fees, exceed 1.50% of the Fund's average annual net assets. For the year ended February 29, 2004, there was no reduction of advisory fees pursuant to this agreement. BISYS Fund Services Ohio, Inc. ("BISYS" or the "Administrator"), a wholly-owned subsidiary of The BISYS Group, Inc., serves as the Fund's Administrator, Transfer Agent, and Fund Accountant and assists the Fund in all aspects of its administration and operation. BISYS is entitled to receive fees as well as be reimbursed for certain expenses incurred for providing these services. As compensation for administration and fund accounting services, BISYS will receive .15% and .03%, respectively, of the average daily net assets of the Fund (subject to certain minimum amounts). Fees received for transfer agency services are class specific and are based on the number of accounts per class. All fees are accrued daily and paid monthly. Certain Officers and Trustees of the Trust are affiliated with the Adviser or the Administrator. Such Officers and Trustees receive no compensation from the Fund for serving in their respective roles. Each of the five Trustees who served both on the Board and the Audit Committee were compensated $6,000 ($30,000 in total) for meeting and retainer fees during the year ended February 29, 2004, and reimbursed for certain expenses. 18 THE EMPIRE BUILDER TAX FREE BOND FUND Notes to Financial Statements -- continued 5. Federal Income Tax Information: The tax characteristics of dividends paid to shareholders during the fiscal year ended February 29, 2004, were as follows:
Distributions paid from ------------------------- Total Ordinary Net Long-Term Total Taxable Tax Exempt Distributions Income Capital Gains Distributions Distributions Paid -------- ------------- ------------- ------------- ------------- Empire Builder Tax Free Bond Fund........................... $450,149 $718,979 $1,169,128 $3,440,551 $4,609,679
The tax characteristics of dividends paid to shareholders during the fiscal year ended February 28, 2003, were as follows:
Distributions paid from ------------------------ Total Ordinary Net Long-Term Total Taxable Tax Exempt Tax Return Distributions Income Capital Gains Distributions Distributions of Capital Paid -------- ------------- ------------- ------------- ---------- ------------- Empire Builder Tax Free Bond Fund.............. $808,613 $847,804 $1,656,417 $4,112,346 $ -- $5,768,763
Total Distributions paid differ from the Statements of Changes in Net Assets because dividends are recognized when paid for tax purposes. As of February 29, 2004 the components of accumulated earnings (deficit) on a tax basis was as follows:
Undistributed Total Undistributed Undistributed Long-Term Accumulated Unrealized Accumulated Ordinary Tax-Exempt Capital Accumulated Distributions Capital and Appreciation/ Earnings/ Income Income Gains/Losses Earnings Payable Other Losses (Depreciation)* (Deficit) ------ ------ ------------ -------- ------- ------------ --------------- --------- Empire Builder Tax Free Bond Fund...... $447,849 $66,652 $249 $514,750 $ (23,727) $ -- $5,897,042 $6,388,065
- ---------- * The difference between the book-basis unrealized appreciation (depreciation) is attributable primarily to the difference between book and tax amortization methods for premium and market discount. 19 Report of Independent Auditors To the Trustees and Shareholders of The Empire Builder Tax Free Bond Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Empire Builder Tax Free Bond Fund (the "Fund") at February 29, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Columbus, Ohio April 20, 2004 20 THE MANAGEMENT Trustees and Officers (Unaudited)
Number of Positions Portfolios Held With Overseen for Directorships Empire Builder Term of Empire Builder Held Outside Name, Address, and Tax Free Office/Length Principal Occupation(s) Tax Free the Fund Birthdate (month/year) Bond Fund of time served During the Past 5 Years Bond Fund Complex - --------------------- ------------- ------------ ------------------------------- ------------ ----------- *SETH M. GLICKENHAUS....... Trustee, since 4/84 Senior Partner of Glickenhaus & Co. 1 None Six East 43rd Street Chairman of New York, NY 10017 the Board 03/14 and President EDWARD A. FALKENBERG....... Trustee, since 6/89 Principal, ACME Real Estate (1998 to 1 None 23 Oak Lane present); retired, Vice President and Scarsdale, NY 10583 Controller, Joseph E. Seagram & Sons, 09/40 Inc.; Controller Seagram Company Ltd. EDWARD A. KUCZMARSKI....... Trustee, since 4/84 Certified Public Accountant, Partner, 1 NY Daily Tax Hays & Company Hays & Company (1980 to present) Free Income Fund 477 Madison Ave., 10th Flr New York, NY 10022 11/49 ELIZABETH B. NEWELL........ Trustee, since 4/84 Director, Park Ave. Christian Church 1 NY Daily Tax 130 East End Avenue Day School (2001 to present); Director, Free Income Fund New York, NY 10028 The American School in Switzerland 07/40 (1991 to present) JOHN P. STEINES............ Trustee, since 8/84 Professor of Law, New York University 1 NY Daily Tax NYU School of Law, Rm 440 School of Law (1978 to present); Free Income Fund 40 Washington Square. So. Counsel, Deloitte & Touche LLP New York, NY 10012 (2001 to present) 10/48
- ---------- * Mr. Glickenhaus is treated by the Fund as an "interested person" (as defined in Section 2(a)(19) of the 1940 Act) of the Fund, Mr. Glickenhaus is an "interested person" because he is a Senior Partner of Glickenhaus & Co., the Adviser. The Trustees receive fees and are reimbursed for expenses in connection with each meeting of the Board of Trustees they attend. However, no officer or employee of BISYS Fund Services Ohio, Inc. or Glickenhaus & Co. receives any compensation from the Empire Builder Fund for acting as a Trustee.
MICHAEL J. LYNCH........... Senior Vice since 3/97 Director, Unit Trust Department Six East 43rd Street President Glickenhaus & Co. (1997 to Present); New York, NY 10017 formerly Divisional Vice President/Desk 07/62 Supervisor, Unit Investment Trust Paine Webber SCOTT M. ZOLTOWSKI......... Vice President since 6/02 Senior Counsel, BISYS Fund Services 100 Summer Street and Secretary since 6/03 (2001 to present ); Attorney Dechert LLP Ste. 1500 (1999 to 2001); Counsel, ALPS, Inc. Boston, MA 02110 (1998 to 1999) 01/69 TROY A. SHEETS............. Treasurer since 10/02 Vice President of Financial Services, 3435 Stelzer Road BISYS Fund Services (2002 to present); Columbus, Ohio 43219 Senior Manager, KPMG LLP 05/71 (1993 to 2002) MICK GRUNEWALD............. Vice President since 6/03 Director, Client Services, BISYS Fund 3435 Stelzer Road Services, Inc. (1993 to Present) Columbus, Ohio 43219 04/70
21 EMPIRE BUILDER 3435 Stelzer Road Columbus, Ohio 43219 1-800-847-5886 EMPIRE BUILDER TAX FREE BOND FUND Annual Report February 29, 2004 Investment Adviser and Distributor Glickenhaus & Co. 6 East 43rd Street New York, New York 10017 Administrator BISYS Fund Services Ohio, Inc. BISYS Fund Services, Inc. 3435 Stelzer Road Columbus, Ohio 43219 Transfer and Shareholder Servicing Agent BISYS Fund Services Inc. 3435 Stelzer Road Columbus, Ohio 43219 Custodian State Street Bank & Trust Co. 800 Pennsylvania Avenue 5th Floor Kansas City, MO 64105-1307 Legal Counsel Ropes & Gray One International Place Boston, Massachusetts 02110 Independent Auditors PricewaterhouseCoopers LLP 100 E. Broad Street Columbus, Ohio 43215 Customer Service 3435 Stelzer Road Columbus, Ohio 43219 1-800-847-5886 This report is submitted for the information of the shareholders of the Empire Builder Tax Free Bond Fund. It is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus, obtainable from an investment dealer, which includes information regarding the Fund's objectives and policies, record, management, sales commission and other data. 530358 Item 2. Code of Ethics. Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as Exhibit 11 (a)(1). During the period covered by the report, with respect to the registrant's code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics. Item 3. Audit Committee Financial Expert. (a) (1) Disclose that the registrant's board of directors has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a- 2(a)(19)). (3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert. 3(a)(1) The registrant's board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee. 3(a)(2) The audit committee financial expert is Edward A. Kuczmarski, who is "independent" for purposes of this Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. 2003 $26,500 2004 $26,500 (b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $2,500 2004 $2,500 Fees for both 2003 & 2004 relate to the review of the annual N-1A update. (c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $3,500 2004 $3,500 Fees for both 2003 & 2004 relate to the preparation of the Fund's tax returns and review of its' excise tax calculations. (d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $0 2004 $0 (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. Registrant's Audit Committee meets with the principal accountants and management to review and pre-approve all audit services to be provided by the principal accountants. The Audit Committee shall pre-approve all auditing services and permissible non-audit services (e.g., tax services) to be provided to the Fund by the Auditor, including the fees therefore and has not adopted pre-approval policies and procedures as described in Rule 2-01(c)(7)(i)(B) of Reg. S-X. (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. 2003 0% 2004 0% (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. Not applicable. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. 2003 $6,000 2004 $6,000 (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of nonaudit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. Not applicable. Item 5. Audit Committee of Listed Registrants. (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. Not applicable. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. Not applicable Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. (a) If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant's equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. Not applicable. Item 10. Controls and Procedures. (a) Disclose the conclusions of the registrant's principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is (i) accumulated and communicated to the investment company's management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) Disclose any change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2). Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) A separate or combined certification for each principal executive officer and principal officer of the registrant as required by Rule 30a-2(b) under the Act. Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Empire Builder Tax Free Bond Fund By (Signature and Title)* /s/ Seth M. Glickenhaus --------------------------------- Seth M. Glickenhaus, President Date May 10, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Seth M. Glickenhaus --------------------------------- Seth M. Glickenhaus, President Date May 10, 2004 By (Signature and Title)* /s/ Troy A. Sheets --------------------------------- Troy A. Sheets, Treasurer Date May 10, 2004 * Print the name and title of each signing officer under his or her signature. EX-11.(A)(1) 2 e17825ex11a_1.txt CODE OF ETHICS Exhibit 11(a)(1) The Empire Builder Tax Free Bond Fund CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND Principal FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code This code of ethics (this "Code") of The Empire Builder Tax Free Bond Fund (the "Trust") applies to the Trust's Principal Executive Officer ("President") and Principal Financial Officer ("Treasurer") (the "Covered Officers" each of whom are set forth in Exhibit A) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Trust; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Trust. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position in the Trust. Certain conflicts of interest arise out of the relationships between Covered Officers and the Trust and already are subject to conflict of interest provisions in the Investment Company Act and, in the case of a Covered Officer employed by the Trust's investment adviser, the Investment Advisers Act. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Trust because of their status as "affiliated persons" of the Trust. Each Covered Officer is an employee of the investment adviser or a service provider ("Service Provider") to the Trust. The Trust's, the investment adviser's and the Service Provider's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Trust and the investment adviser and the Service Provider of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Trust, for the investment adviser or for the Service Provider), be involved in establishing policies and implementing decisions which will have different effects on the investment adviser, the Service Provider and the Trust. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trust and the investment adviser and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of the Trust. Thus, if such participation is performed in conformity with the provisions of the Investment Company Act and/or the Investment Advisers Act, as applicable to the Covered Officer, such activity it will be deemed to have been handled ethically. In addition, it is recognized by the Board of Trustees (the "Board") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other Codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust. * * * * Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Trust whereby the Covered Officer would benefit personally to the detriment of the Trust; o not cause the Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Trust; and o not use material non-public knowledge of portfolio transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. -2- There are some conflict of interest situations that may warrant discussion with the [Board's Audit Committee] if material in order to ensure adherence to the Code. Examples of these include:1 o service as a director on the board of any public or private company; o the receipt of any non-nominal gifts; o the receipt of any entertainment from any company with which the Trust has current or prospective business dealings unless such entertainment is business- related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Trust's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure & Compliance o Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the Trust; o each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Trust to others, whether within or outside the Trust, including to the Trust's directors and auditors, and to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Trust and the Trust's investment adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trust files with, or submits to, the SEC and in other public communications made by the Trust; and o it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. - ---------- 2 Any activity or relationship that would present a conflict for a Covered Officer would likely also present a conflict for the Covered Officer if a member of the Covered Officer's family engages in such an activity or has such a relationship. -3- IV. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he has received, read, and understands the Code; o annually thereafter affirm to the Board that he has complied with the requirements of the Code; o not retaliate against any employee or Covered Officer or their affiliated persons for reports of potential violations that are made in good faith; o notify [a member of the Board's Audit Committee] promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code; and o report at least annually any change in his affiliations from the prior year. The Board's Audit Committee] is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers2 sought by the President will be considered by the Board's Audit Committee. The Trust will follow these procedures in investigating and enforcing this Code: o the Board's Audit Committee will take all appropriate action to investigate any potential violations reported to him; o if, after such investigation, the Board's Audit Committee believes that no violation has occurred, the Board's Audit Committee is not required to take any further action; o any matter that the [Board's Audit Committee believes is a violation will be reported to the Board; o if the Board concurs that a violation has occurred, it will inform and make a recommendation, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Service Provider or the investment adviser or its board; or a recommendation to dismiss the Covered Officer; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. - ---------- 3 Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics" and "implicit waiver," which must also be disclosed, as "the registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer" of the registrant. -4- V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Trust for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Trust, the Trust's investment adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Trust and its investment adviser's principal underwriter's and service providers' codes of ethics under Rule 17j-1 under the Investment Company Act and the investment adviser's more detailed policies and procedures are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of the independent trustees. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and its counsel, the investment adviser and the respective Service Providers. VIII. Internal Use The Code is intended solely for the internal use by the Trust and does not constitute an admission, by or on behalf of the Trust, as to any fact, circumstance, or legal conclusion. Date: September 16, 2003 -5- Exhibit A Persons Covered by this Code of Ethics - As of September 16, 2003 - ----------------------------------------------------------------- Principal Executive Officer and President - Seth Glickenhaus Principal Financial Officer and Treasurer - Troy Sheets -6- The Empire Builder Tax Free Bond Fund CERTIFICATION Code Of Ethics For Principal Executive And Principal Financial Officers I, ___________________, Principal [Executive][Financial] Officer of The Empire Builder Tax Free Bond Fund, hereby certify that I have received and read the Code of Ethics for Principal Executive and Principal Financial Officers ("Code") of The Empire Builder Tax Free Bond Fund. I further certify that I understand and will comply with the requirements of the Code. ------------------------------- NAME: DATE: -7- EX-11.(A)(2) 3 e17825ex11a_2.txt CERTIFICATIONS Exhibit 11(a)(2) CERTIFICATIONS I, Seth M. Glickenhaus, certify that: 1. I have reviewed this report on Form N-CSR of Empire Builder Tax Free Bond Fund (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. April 29,2004 /s/ Seth M. Glickenhaus --------------- --------------------------- Date Seth M. Glickenhaus President CERTIFICATIONS I, Troy A. Sheets, certify that: 1. I have reviewed this report on Form N-CSR of Empire Builder Tax Free Bond Fund (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. April 29,2004 /s/ Troy A. Sheets --------------- --------------------- Date Troy A. Sheets Treasurer EX-11.(B) 4 e17825ex11b.txt CERTIFICATIONS Exhibit 11(b) This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ss. 1350, and accompanies the report on Form N-CSR for the period ended February 29, 2004 of Empire Builder Tax Free Bond Fund (the "Registrant"). I, Seth M. Glickenhaus, the President of the Registrant, certify that, to the best of my knowledge,: 1. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m(a) or 78o(d)); and 2. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. April 29, 2004 - ------------------------------- Date /s/ Seth M. Glickenhaus - ------------------------------- Seth M. Glickenhaus President This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ss. 1350, and accompanies the report on Form N-CSR for the period ended February 29, 2004 of Empire Builder Tax Free Bond Fund (the "Registrant"). I, Troy A. Sheets, the Treasurer of the Registrant, certify that, to the best of my knowledge,: 3. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m(a) or 78o(d)); and 4. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. April 29, 2004 - ----------------------------------- Date /s/ Troy A. Sheets - ------------------------------------ Troy A. Sheets Treasurer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----