-----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, Fz4hAOjo5SOMk3rP9a7W2r0yfeGEkuuW0O9qMrh7QqFjGiTkuwASarzasZXS6Xap UEe+OnL/iCxgCBdcnRvNcA== 0000750909-06-000009.txt : 20060608 0000750909-06-000009.hdr.sgml : 20060608 20060608093022 ACCESSION NUMBER: 0000750909-06-000009 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060608 DATE AS OF CHANGE: 20060608 EFFECTIVENESS DATE: 20060608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN TAX FREE TRUST CENTRAL INDEX KEY: 0000750909 IRS NUMBER: 136845048 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04084 FILM NUMBER: 06892906 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE #2300 STREET 2: #2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVENUE STREET 2: #2300 CITY: NEW YORK STATE: NY ZIP: 10017 0000750909 S000009108 HAWAIIAN TAX-FREE TRUST C000024774 HAWAIIAN TAX-FREE TRUST CLASS A HULAX C000024775 HAWAIIAN TAX-FREE TRUST CLASS C HULCX C000024776 HAWAIIAN TAX-FREE TRUST CLASS I HULIX C000024777 HAWAIIAN TAX-FREE TRUST CLASS Y HULYX N-CSR 1 htftnsar.txt HAWAIIAN TAX-FREE TRUST 3/31/06 NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4084 Hawaiian Tax-Free Trust (Exact name of Registrant as specified in charter) 380 Madison Avenue New York, New York 10017 (Address of principal executive offices) (Zip code) Joseph P. DiMaggio 380 Madison Avenue New York, New York 10017 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 697-6666 Date of fiscal year end: 3/31 Date of reporting period: 3/31/06 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS ANNUAL REPORT MARCH 31, 2006 HAWAIIAN TAX-FREE TRUST A TAX-FREE INCOME INVESTMENT [LOGO OF HAWAIIAN TAX-FREE TRUST: A PALM TREE IN FRONT OF A CIRCLE WHICH HAS AN ISLAND AND WATER WITHIN IT] (R) [LOGO OF THE AQUILA GROUP OF FUNDS: ONE OF THE AN EAGLE'S HEAD] AQUILA(SM) GROUP OF FUNDS [LOGO OF HAWAIIAN TAX-FREE TRUST: A PALM TREE IN FRONT OF A CIRCLE WHICH HAS AN ISLAND AND WATER WITHIN IT] (R) SERVING HAWAII INVESTORS FOR MORE THAN TWO DECADES HAWAIIAN TAX-FREE TRUST "THE BENEFITS OF TAX-FREE INVESTING" May 2006 Dear Fellow Shareholder: As the name of your Trust clearly states, Hawaiian Tax-Free Trust is tax-free - free from Hawaii state and regular Federal income taxes. This tax-free status serves many purposes. It obviously provides you, and our other shareholders, with tax-free income. But, it also provides municipalities with an attractive motivator to help them raise revenue. Additionally, the projects funded by these tax-free securities enhance the quality of life for all community residents. Many individuals pay as much as 30% to 40% of their income in Federal and state taxes. Obviously, if you have to pay that much in taxes, it significantly reduces what you get to keep in your pocket. BENEFITS TO INVESTORS As an investor seeking tax-free income, do you have to forego higher yields? Not necessarily. This chart assumes a 35% Federal and 8.25% state tax-rate and is for illustration purposes only; it does not represent past or future performance of any investment. The chart above shows that you would have to earn significantly more from a taxable investment in order to be equal to what you get to keep from a tax-free investment. As you can clearly see from the chart, you would have to earn 6.7% on a taxable investment in order to equal the tax-free level of 4%. Keep this illustration in mind the next time you examine the yield that Hawaiian Tax-Free Trust provides you. You will find that a 3%, 4% or 5% tax-free yield looks considerably more attractive to you when you consider the implications of taxes. NOT A PART OF THE ANNUAL REPORT BENEFITS TO MUNICIPALITIES As you are likely aware, states, counties, cities, towns, and other forms of municipalities issue tax-free bonds to raise monies. These issues generally take two forms - general obligation securities and revenue securities. General obligation municipal securities are primarily those securities used to finance the general needs of municipalities. General obligation securities are secured by the tax-raising power of the specific municipality in terms of its ability to pay interest and repay principal on a timely basis. Thus, these securities are considered to be "backed by the full faith and credit" of the issuer. Revenue securities are issued to finance specific projects, such as a hospital or airport. In this instance, the municipal issuer pledges the operating revenues derived from the specific project to pay the interest and repay the principal when due. In many cases, smaller municipalities would have difficulty selling these securities in the marketplace were it not for the added attractiveness of the tax-free status. BENEFITS TO QUALITY OF LIFE The benefit you may not have considered - when you invested in the Trust - was that in the process of having the Trust provide you with tax-free income, it also provides help to a variety of others within your community and Hawaii. This is a benefit in which you can take real pride. Municipal bonds, such as those in which Hawaiian Tax-Free Trust invests, are the primary way infrastructure is financed. Infrastructure is a relatively obscure word that by itself doesn't mean much to most people. But, when you translate the word "infrastructure" into projects such as schools, roads, bridges, water facilities, pollution control, airports, hospitals, and fire and police stations, then you are speaking in terms that people more easily understand. As the economy of Hawaii grows, new and additional municipal projects are needed for the benefit of the citizens of Hawaii and the various communities throughout the state. In essence, your money invested in the Trust helps pay for that new school, road, airport, etc. that you and your neighbors now enjoy. So, as an investor in Hawaiian Tax-Free Trust, you can take pride in knowing that you are playing a vital role and a very real part in enhancing the quality of life for your family, friends, neighbors and future generations of Hawaiians. SUMMARY So, the next time that you receive your statement from Hawaiian Tax-Free Trust, remember that the benefits that are reaped from your investment are more than just what is evident on that piece of paper. Sincerely, /s/ Diana P. Herrmann /s/ Lacy B. Herrmann Diana P. Herrmann Lacy B. Herrmann President Founder and Chairman Emeritus For certain investors, some dividends may be subject to Federal and State taxes, including the Alternative Minimum Tax. NOT A PART OF THE ANNUAL REPORT [LOGO OF HAWAIIAN TAX-FREE TRUST: A PALM TREE IN FRONT OF A CIRCLE WHICH HAS AN ISLAND AND WATER WITHIN IT] (R) SERVING HAWAII INVESTORS FOR NEARLY TWO DECADES HAWAIIAN TAX-FREE TRUST ANNUAL REPORT MANAGEMENT DISCUSSION ECONOMY Over the past year ended March 31, 2006, the US economy defied headwinds from rising petroleum prices, Gulf Coast hurricanes, and from an inverted yield curve to prove that US real Gross Domestic Product (GDP) growth, productivity growth and `well-anchored' inflationary expectations are all intact. In the end, long-term interest rates have risen just as expected for an economy approaching cruising speed, and short-term interest rates have risen just as expected given a removal of monetary policy accommodation, a transition to a neutral rate environment and a new Fed Chairman. Sector-specific problems in the auto complex and in homebuilding and residential real estate reflect idiosyncratic conditions, but we believe the corresponding adjustments in those industries will probably constrain 2006 US real GDP growth to remain around 3.0%, with core Consumer Price Index (CPI) inflation just above 2.0%, and the unemployment rate in the mid- to upper- 4% range, but under 5%. Bond market performance, consistent with the continuing rise in short and intermediate interest rates, produced a small gain for the fiscal year. Equity markets, on the other hand, experienced a strong advance as enthusiasm for stocks reflected investor confidence that profit growth will remain healthy in a world-wide economic growth pattern marked by limited inflation. Hawaii came through 2005 with a good head of steam but entered 2006 by finding out that more of its economic energy went up in inflation smoke. The Honolulu consumer price index measure posted a 4.5% inflation rate in the second half of 2005, on a year-over-year basis, eroding Hawaii real personal income growth right down to the 2 to 3% forecast range for the next several years. Hawaii payroll employment growth continued at a scorching 2.7% into the first quarter 2006, but rising housing costs, dependency on imported crude petroleum and labor markets showing an ultra-tight 2.5% unemployment rate almost certainly mean that the outlook for Hawaii's economy from this point forward is essentially capacity-constrained. In our view, Hawaii's eight year-long expansion in residential investment and residential construction probably will see median single-family home prices top out around $700,000 this year, with homebuilding volumes flattening in 2006 before declining in 2007. This year will be one of transition from positive to negative for residential investment. However, other construction segments that have remained sidelined look to be warming up. Office construction has been helped by rising office rents and falling vacancies, the latter now breaking back into the single-digits. Medium-term military construction and spending initiatives seem to be poised to benefit from ongoing strategic realignments benefiting rapid deployment jumping off points like Hawaii. Thus, Hawaii's forecast has a somewhat less robust character for the next two years than its actual experience the last two years, however, the forecast predicts growth nonetheless. Real Hawaii MANAGEMENT DISCUSSION (CONTINUED) personal income growth will subside from 3.2% in 2005 (just under our 3.5% forecast), to 2.6% in 2006 and 2.4% in 2007. Decent macroeconomic conditions in the US mainland and Japan seem supportive of continued tourism growth although the pass-through of aviation fuel costs will eventually weigh on travel demand, as it has historically, and our forecasts for 3.5% visitor arrivals growth in 2006 and 3.1% in 2007 are looking somewhat optimistic in light of recent Hawaii bad weather and reputation effects from a resulting Waikiki sewage spill. Slower growth surely is better than no growth, particularly after eight years of economic expansion which will sustain a positive outlook for Hawaii bonds. MUNICIPAL MARKET AND FUND PERFORMANCE During the 12 months ended March 31, 2006, the municipal bond markets responded to the continuing Federal Reserve operations to hike the short-term Fed Funds rate from 2.75% in March 2005 to 4.75% by March 2006. Municipal rates on the short end of the curve were higher by about 100 basis points; however at the long end of the municipal rate curve, rates were little changed and maybe lower by a few basis points. These changes represented continued yield curve "flattening" with short-term yield rising closer to long-term yields. Hawaiian Tax-Free Trust had a total return, without sales charges, of 1.79% for its Class A shares, 0.97% for Class C shares, and 1.99% for Class Y shares for the calendar year ending December 31, 2005. For the fiscal year ending March 31, 2006, the total return, without sales charges, was 2.19% for Class A shares, 1.37% for Class C shares, and 2.48% for Class Y shares. Total return reflects the market fluctuation of the share price as well as reinvested dividends. The Lehman Brothers Quality Intermediate Municipal Bond Index had a total return of 1.66% for the calendar year 2005 and 2.53% for the Trust's fiscal year. OUTLOOK AND STRATEGY Reasonable economic growth where unemployment remains under 5% and inflationary expectations are controlled are positive for the financial market, particularly equities. Consumer confidence measures are at relatively high levels lifted by job creation, higher stock wealth, and still strong home values. It seems that the rise in commodity prices, particularly gasoline prices, have yet to impact consumers. While there is an expectation for an additional Fed Funds rate hike, the Federal Reserve is close to the end of that tightening regime. The end of short-term rate hikes will spell some relief for the bond markets. Potential low probability, high risk geopolitical events remain as market threats along with the continuing presence of Chinese exchange rate realignment to pressure the US dollar in currency markets. In managing Hawaiian Tax-Free Trust, we keep in mind the Trust's goal of maintaining a relatively high level of double tax-free income together with reasonable principal preservation. Accordingly, we continually seek to manage the Trust conservatively both in terms of credit quality and interest rate risk by investing primarily in highly rated municipal bonds with intermediate maturities. PERFORMANCE REPORT The following graph illustrates the value of $10,000 invested in the Class A shares of Hawaiian Tax-Free Trust for the 10-year period ended March 31, 2006 as compared with the Lehman Brothers Quality Intermediate Municipal Bond Index (the "Lehman Index") and the Consumer Price Index (a cost of living index). The performance of each of the other classes is not shown in the graph but is included in the table below. It should be noted that the Lehman Index does not include any operating expenses nor sales charges and being nationally oriented, does not reflect state specific bond market performance. [GRAPHIC OF A LINE CHART WITH THE FOLLOWING INFORMATION:] TRUST'S CLASS A SHARES LEHMAN QUALITY MONTH/YEAR COST OF WITHOUT WITH INTERMEDIATE LIVING SALES SALES MUNICIPAL INDEX CHARGE CHARGE BOND INDEX MARCH - 96 $10,000 $10,000 $ 9,600 $10,000 MARCH - 97 10,276 10,458 10,041 10,453 MARCH - 98 10,417 11,448 10,991 11,336 MARCH - 99 10,597 12,034 11,554 11,994 MARCH - 00 10,996 11,919 11,444 12,114 MARCH - 01 11,317 13,082 12,561 12,963 MARCH - 02 11,484 13,508 12,969 13,786 MARCH - 03 11,830 14,579 13,997 15,095 MARCH - 04 12,036 15,491 14,873 15,824 MARCH - 05 12,415 15,579 14,957 15,951 MARCH - 06 12,832 15,931 14,296 16,355 Average Annual Total Return for periods ended March 31, 2006 ----------------------------------------- Since 1 Year 5 Years 10 Years Inception ------ ------- -------- --------- Class A (2/20/85) With Sales Charge ..... (1.90)% 3.24% 4.34% 6.43% Without Sales Charge .. 2.19% 4.08% 4.77% 6.64% Class C (4/01/96) With CDSC ............. 0.36% 3.25% 3.89% 3.89% Without CDSC .......... 1.37% 3.25% 3.89% 3.89% Class Y (4/01/96) No Sales Charge ....... 2.48% 4.28% 5.17% 5.17% Lehman Index ............. 2.53% 4.25% 5.04% 5.99%* (Class A) 5.04% (Class C&Y) * From commencement of the index on 1/1/87. Total return figures shown for the Trust reflect any change in price and assume all distributions within the period were invested in additional shares. Returns for Class A shares are calculated with and without the effect of the initial 4% maximum sales charge. Returns for Class C shares are calculated with and without the effect of the 1% contingent deferred sales charge (CDSC) imposed on redemptions made within the first 12 months after purchase. Class Y shares are sold without any sales charge. The rates of return will vary and the principal value of an investment will fluctuate with market conditions. Shares, if redeemed, may be worth more or less than their original cost. Dividend income may be subject to Federal and state income taxes and/or the Federal alternative minimum tax. Past performance is not predictive of future investment results. - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of Hawaiian Tax-Free Trust: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Hawaiian Tax-Free Trust and the related statement of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statements of changes in net assets for the year ended March 31, 2005 and the financial highlights for each of the years in the four year period ended March 31, 2005 have been audited by other auditors, whose report dated May 23, 2005 expressed an unqualified opinion on such financial statements and financial highlights. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Trust's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. Our procedures included confirmation of securities owned as of March 31, 2006, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Hawaiian Tax-Free Trust as of March 31, 2006, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER LLP Philadelphia, Pennsylvania May 15, 2006 - -------------------------------------------------------------------------------- HAWAIIAN TAX-FREE TRUST SCHEDULE OF INVESTMENTS MARCH 31, 2006
RATING FACE MOODY'S/ AMOUNT MUNICIPAL BONDS (98.7%) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ HAWAII (93.7%) HAWAII GENERAL OBLIGATION BONDS (60.9%) City and County of Honolulu, Hawaii, Series A, FGIC Insured $ 9,970,000 7.350%, 07/01/07 ..................................... Aaa/AAA $ 10,420,744 3,600,000 7.350%, 07/01/08 ..................................... Aaa/AAA 3,883,572 1,715,000 6.000%, 01/01/11 ..................................... Aaa/AAA 1,879,434 5,000 5.750%, 04/01/11 ..................................... Aaa/AAA 5,439 1,580,000 6.000%, 01/01/12 ..................................... Aaa/AAA 1,751,604 3,025,000 5.750%, 04/01/13 ..................................... Aaa/AAA 3,352,759 City and County of Honolulu, Hawaii, Series A, Prerefunded 09/01/06 @102, FGIC Insured 440,000 5.625%, 09/01/14 ..................................... Aaa/AAA 452,566 City and County of Honolulu, Hawaii Prerefunded- 1993 Series A, Escrowed to Maturity, FGIC - TCRS Insured 4,110,000 6.000%, 01/01/11 ..................................... Aaa/AAA 4,513,438 920,000 6.000%, 01/01/12 ..................................... Aaa/AAA 1,022,920 City and County of Honolulu, Hawaii 1994 Series A, March 31, 2005 Escrowed to Maturity, FGIC Insured 3,995,000 5.750%, 04/01/11 ..................................... Aaa/NR 4,361,142 775,000 5.750%, 04/01/13 ..................................... Aaa/AAA 861,971 City and County of Honolulu, Hawaii, Series A, FSA Insured 2,500,000 5.000%, 09/01/09 ..................................... Aaa/AAA 2,606,275 City and County of Honolulu, Hawaii, Series A, Prerefunded 09/01/11 @100, FSA Insured 3,500,000 5.375%, 09/01/18 ..................................... Aaa/AAA 3,772,265 2,000,000 5.125%, 09/01/20 ..................................... Aaa/AAA 2,131,340 City and County of Honolulu, Hawaii, Series A, MBIA Insured 9,335,000 5.000%, 07/01/21 ..................................... Aaa/AAA 9,813,699 City and County of Honolulu, Hawaii, Prerefunded Series A, Escrowed to Maturity, MBIA Insured 630,000 5.250%, 03/01/12 ..................................... Aaa/AAA 677,546
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ City and County of Honolulu, Hawaii, Prerefunded 03/01/13 @100, Series A, MBIA Insured $ 1,885,000 5.250%, 03/01/15 ..................................... Aaa/AAA $ 2,037,685 2,885,000 5.250%, 03/01/16 ..................................... Aaa/AAA 3,118,685 3,005,000 5.250%, 03/01/17 ..................................... Aaa/AAA 3,248,405 1,255,000 5.250%, 03/01/18 ..................................... Aaa/AAA 1,356,655 City and County of Honolulu, Hawaii Refunded - 1995 Series A, Escrowed to Maturity, MBIA Insured 1,355,000 6.000%, 11/01/09 ..................................... Aaa/AAA 1,460,704 860,000 6.000%, 11/01/09 ..................................... Aaa/AAA 927,089 1,090,000 6.000%, 11/01/10 ..................................... Aaa/AAA 1,194,051 410,000 6.000%, 11/01/10 ..................................... Aaa/AAA 449,139 City and County of Honolulu, Hawaii, Unrefunded Portion 2003- Series A, MBIA Insured 370,000 5.250%, 03/01/12 ..................................... Aaa/AAA 396,714 1,115,000 5.250%, 03/01/15 ..................................... Aaa/AAA 1,196,941 1,715,000 5.250%, 03/01/16 ..................................... Aaa/AAA 1,839,972 1,775,000 5.250%, 03/01/17 ..................................... Aaa/AAA 1,898,824 745,000 5.250%, 03/01/18 ..................................... Aaa/AAA 795,124 City and County of Honolulu, Hawaii, 2004 - Series A, MBIA Insured, Prerefunded 07/01/14 @100 4,655,000 5.000%, 07/01/16 ..................................... Aaa/AAA 4,985,458 City and County of Honolulu, Hawaii, 2005-Series A, MBIA Insured 7,650,000 5.000%, 07/01/18 ..................................... Aaa/AAA 8,102,115 6,250,000 5.000%, 07/01/19 ..................................... Aaa/AAA 6,604,688 City and County of Honolulu, Hawaii, Series B, FGIC Insured 7,310,000 5.500%, 10/01/11 ..................................... Aaa/AAA 7,920,458 City and County of Honolulu, Hawaii, Series B, MBIA Insured 2,930,000 5.000%, 07/01/18 ..................................... Aaa/AAA 3,103,163 City and County of Honolulu, Hawaii, Series B, Prerefunded 11/01/07 @101, FGIC Insured 930,000 5.000%, 11/01/13 ..................................... Aaa/AAA 959,221 1,060,000 5.000%, 11/01/14 ..................................... Aaa/AAA 1,093,305 530,000 5.000%, 11/01/16 ..................................... Aaa/AAA 546,653 1,400,000 5.000%, 11/01/17 ..................................... Aaa/AAA 1,443,988
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ City and County of Honolulu, Hawaii, Series B, Prerefunded 07/01/09 @101, FGIC Insured $ 600,000 5.125%, 07/01/11 ..................................... Aaa/AAA $ 632,106 2,595,000 5.125%, 07/01/15 ..................................... Aaa/AAA 2,733,858 4,490,000 5.000%, 07/01/19 ..................................... Aaa/AAA 4,713,288 1,395,000 5.000%, 07/01/20 ..................................... Aaa/AAA 1,464,373 City and County of Honolulu, Hawaii, Series C, FGIC Insured 7,750,000 5.125%, 07/01/14 ..................................... Aaa/AAA 8,128,355 2,510,000 5.000%, 07/01/18 ..................................... Aaa/AAA 2,617,579 City and County of Honolulu, Hawaii, Series C, MBIA Insured 740,000 5.000%, 07/01/18 ..................................... Aaa/AAA 783,734 6,945,000 5.000%, 07/01/19 ..................................... Aaa/AAA 7,339,129 City and County of Honolulu, Hawaii, Series D, MBIA Insured 1,100,000 5.000%, 07/01/14 ..................................... Aaa/AAA 1,174,107 3,750,000 5.000%, 07/01/19 ..................................... Aaa/AAA 3,962,813 6,450,000 5.000%, 07/01/20 ..................................... Aaa/AAA 6,795,849 6,080,000 5.000%, 07/01/21 ..................................... Aaa/AAA 6,391,782 City and County of Honolulu, Hawaii, Series F, FGIC Insured 5,335,000 5.250%, 07/01/20 ..................................... Aaa/AAA 5,743,021 City and County of Honolulu, Hawaii, Water Utility Refunding and Improvement, Escrowed to Maturity, FGIC Insured 1,125,000 6.000%, 12/01/12 ..................................... Aaa/AAA 1,265,760 1,050,000 6.000%, 12/01/15 ..................................... Aaa/AAA 1,212,215 County of Hawaii, Series A, CIFG Insured 1,515,000 5.000%, 07/15/07 ..................................... Aaa/AAA 1,541,558 1,595,000 5.000%, 07/15/08 ..................................... Aaa/AAA 1,643,328 2,715,000 5.000%, 07/15/19 ..................................... Aaa/AAA 2,882,977 2,850,000 5.000%, 07/15/20 ..................................... Aaa/AAA 3,016,582 County of Hawaii, Series A, FGIC Insured 1,700,000 5.450%, 05/01/07 ..................................... Aaa/AAA 1,732,742 3,170,000 5.500%, 05/01/08 ..................................... Aaa/AAA 3,285,927
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ County of Hawaii, Series A, FGIC Insured (continued) $ 2,500,000 5.550%, 05/01/09 ..................................... Aaa/AAA $ 2,636,050 4,905,000 5.600%, 05/01/11 ..................................... Aaa/AAA 5,315,745 1,000,000 5.600%, 05/01/12 ..................................... Aaa/AAA 1,092,790 1,000,000 5.600%, 05/01/13 ..................................... Aaa/AAA 1,100,270 1,465,000 5.500%, 07/15/16 ..................................... Aaa/AAA 1,572,853 County of Hawaii, Series A, FSA Insured 1,000,000 5.375%, 05/15/13 ..................................... Aaa/AAA 1,055,260 1,000,000 5.400%, 05/15/15 ..................................... Aaa/AAA 1,055,990 1,000,000 5.000%, 07/15/16 ..................................... Aaa/AAA 1,054,150 2,000,000 5.000%, 07/15/17 ..................................... Aaa/AAA 2,101,880 1,470,000 5.625%, 05/15/18 ..................................... Aaa/AAA 1,564,594 1,000,000 5.000%, 07/15/18 ..................................... Aaa/AAA 1,048,380 1,000,000 5.625%, 05/15/19 ..................................... Aaa/AAA 1,063,440 County of Kauai, Hawaii, Prerefunded 08/01/11 @100, MBIA Insured 140,000 5.625%, 08/01/13 ..................................... NR/AAA 152,410 560,000 5.625%, 08/01/14 ..................................... NR/AAA 609,638 355,000 5.625%, 08/01/17 ..................................... NR/AAA 386,467 345,000 5.625%, 08/01/18 ..................................... NR/AAA 375,581 805,000 5.500%, 08/01/20 ..................................... NR/AAA 871,541 County of Kauai, Hawaii, Unrefunded Portion, MBIA Insured 985,000 5.625%, 08/01/13 ..................................... NR/AAA 1,069,346 1,060,000 5.625%, 08/01/14 ..................................... NR/AAA 1,149,178 680,000 5.625%, 08/01/17 ..................................... NR/AAA 734,148 655,000 5.625%, 08/01/18 ..................................... NR/AAA 706,182 1,555,000 5.500%, 08/01/20 ..................................... NR/AAA 1,660,351 County of Kauai, Hawaii, Series A, FGIC Insured 1,000,000 5.000%, 08/01/23 ..................................... Aaa/AAA 1,047,760 County of Kauai, Hawaii, 2005-Series A, FGIC Insured 1,560,000 5.000%, 08/01/16 ..................................... Aaa/AAA 1,664,036 2,010,000 5.000%, 08/01/17 ..................................... Aaa/AAA 2,136,047 2,060,000 5.000%, 08/01/18 ..................................... Aaa/AAA 2,182,652 1,075,000 5.000%, 08/01/19 ..................................... Aaa/AAA 1,136,458
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ County of Kauai, Hawaii, Series A, Prerefunded 08/01/10 @100, FGIC Insured $ 1,000,000 6.125%, 08/01/13 ..................................... Aaa/AAA $ 1,095,560 1,010,000 6.250%, 08/01/14 ..................................... Aaa/AAA 1,111,515 1,000,000 6.250%, 08/01/15 ..................................... Aaa/AAA 1,100,510 1,000,000 6.250%, 08/01/16 ..................................... Aaa/AAA 1,100,510 1,275,000 6.250%, 08/01/17 ..................................... Aaa/AAA 1,403,150 County of Kauai, Hawaii Refunding Bonds, Series A, MBIA Insured 1,010,000 5.700%, 02/01/07 ..................................... Aaa/AAA 1,011,313 County of Kauai, Hawaii Refunding Bonds, Series B & C, AMBAC Insured 1,355,000 5.900%, 08/01/08 ..................................... Aaa/AAA 1,423,753 435,000 5.900%, 08/01/08 ..................................... Aaa/AAA 457,072 1,300,000 5.950%, 08/01/10 ..................................... Aaa/AAA 1,414,140 County of Maui, Hawaii, MBIA Insured 4,000,000 5.000%, 03/01/17 ..................................... Aaa/AAA 4,241,640 2,500,000 5.000%, 03/01/18 ..................................... Aaa/AAA 2,643,425 1,105,000 5.000%, 03/01/19 ..................................... Aaa/AAA 1,165,874 County of Maui, Hawaii, Series A, Prerefunded 09/01/07 @101, FGIC Insured 1,130,000 5.250%, 09/01/13 ..................................... Aaa/AAA 1,166,827 1,265,000 5.250%, 09/01/15 ..................................... Aaa/AAA 1,306,226 1,335,000 5.250%, 09/01/16 ..................................... Aaa/AAA 1,378,508 County of Maui, Hawaii, Series A, FGIC Insured, Prerefunded 03/01/08 @101 250,000 5.000%, 03/01/10 ..................................... Aaa/AAA 258,857 1,200,000 5.125%, 03/01/14 ..................................... Aaa/AAA 1,245,264 1,050,000 5.125%, 03/01/16 ..................................... Aaa/AAA 1,089,606 2,590,000 5.250%, 03/01/18 ..................................... Aaa/AAA 2,693,600 County of Maui, Hawaii, 2001 - Series A, MBIA Insured 1,000,000 5.500%, 03/01/18 ..................................... NR/AAA 1,066,170 County of Maui, Hawaii, 2002 - Series A, MBIA Insured 1,105,000 5.250%, 03/01/15 ..................................... Aaa/AAA 1,178,770 1,205,000 5.250%, 03/01/16 ..................................... Aaa/AAA 1,284,795
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ County of Maui, Hawaii, 2002 - Series A, MBIA Insured (continued) $ 1,000,000 5.250%, 03/01/18 ..................................... Aaa/AAA $ 1,058,660 1,750,000 5.250%, 03/01/19 ..................................... Aaa/AAA 1,849,837 1,000,000 5.000%, 03/01/20 ..................................... Aaa/AAA 1,036,650 County of Maui, Hawaii, Unrefunded Series A, FGIC Insured 750,000 5.000%, 03/01/10 ..................................... Aaa/AAA 774,892 County of Maui, Hawaii, Series B, FGIC Insured 1,065,000 5.250%, 03/01/11 ..................................... Aaa/AAA 1,134,949 County of Maui, Hawaii, Series B, MBIA Insured 825,000 5.375%, 09/01/13 ..................................... Aaa/AAA 893,846 County of Maui, Hawaii Refunding Bonds, Series B, MBIA Insured 1,445,000 5.375%, 09/01/12 ..................................... Aaa/AAA 1,564,733 County of Maui, Hawaii, Series C, FGIC Insured 1,020,000 5.250%, 03/01/16 ..................................... Aaa/AAA 1,079,966 1,000,000 5.250%, 03/01/17 ..................................... Aaa/AAA 1,058,340 1,250,000 5.250%, 03/01/20 ..................................... Aaa/AAA 1,319,500 State of Hawaii, Series BW, FSA Insured Escrowed to maturity 1,000,000 6.400%, 03/01/09 ..................................... Aaa/AAA 1,075,690 State of Hawaii, Series BZ, FGIC Insured 3,700,000 6.000%, 10/01/11 ..................................... Aaa/AAA 4,099,859 3,500,000 6.000%, 10/01/12 ..................................... Aaa/AAA 3,917,795 State of Hawaii, Series CA, FGIC Insured 2,000,000 5.750%, 01/01/11 ..................................... Aaa/AAA 2,170,260 State of Hawaii, Series CC 590,000 5.125%, 02/01/07 ..................................... Aa2/AA- 597,192 State of Hawaii, Series CH 1,000,000 4.750%, 11/01/11 ..................................... Aa2/AA- 1,047,280 State of Hawaii, Series CH, FGIC Insured 5,000,000 6.000%, 11/01/07 ..................................... Aaa/AAA 5,182,450 3,390,000 6.000%, 11/01/08 ..................................... Aaa/AAA 3,588,078 State of Hawaii, Series CL, FGIC Insured 2,305,000 6.000%, 03/01/11 ..................................... Aaa/AAA 2,533,149 State of Hawaii, Series CM, FGIC Insured 3,000,000 6.500%, 12/01/15 ..................................... Aaa/AAA 3,574,410
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ State of Hawaii, Series CN, FGIC Insured, Prerefunded 03/01/07 @102 $ 4,000,000 5.250%, 03/01/10 ..................................... Aaa/AAA $ 4,137,440 4,000,000 5.250%, 03/01/13 ..................................... Aaa/AAA 4,137,440 3,000,000 5.500%, 03/01/14 ..................................... Aaa/AAA 3,109,680 7,950,000 5.250%, 03/01/15 ..................................... Aaa/AAA 8,223,162 1,000,000 5.250%, 03/01/17 ..................................... Aaa/AAA 1,034,360 State of Hawaii, Series CP, Prerefunded to 10/01/07 @101, FGIC Insured 3,565,000 5.000%, 10/01/13 ..................................... Aaa/AAA 3,673,126 1,565,000 5.000%, 10/01/14 ..................................... Aaa/AAA 1,612,466 3,565,000 5.000%, 10/01/15 ..................................... Aaa/AAA 3,673,126 5,135,000 5.000%, 10/01/17 ..................................... Aaa/AAA 5,290,745 State of Hawaii, Series CP, Unrefunded, FGIC Insured 1,435,000 5.000%, 10/01/13 ..................................... Aaa/AAA 1,476,845 630,000 5.000%, 10/01/14 ..................................... Aaa/AAA 648,371 1,435,000 5.000%, 10/01/15 ..................................... Aaa/AAA 1,477,261 2,060,000 5.000%, 10/01/17 ..................................... Aaa/AAA 2,119,452 State of Hawaii, Series CR, MBIA Insured, Prerefunded 04/01/08 @101 1,000,000 5.250%, 04/01/13 ..................................... Aaa/AAA 1,041,300 5,000,000 5.000%, 04/01/16 ..................................... Aaa/AAA 5,182,700 9,600,000 5.000%, 04/01/17 ..................................... Aaa/AAA 9,950,784 State of Hawaii, Series CS, MBIA Insured 5,500,000 5.000%, 04/01/09 ..................................... Aaa/AAA 5,706,855 State of Hawaii, Series CU, MBIA Insured 1,250,000 5.750%, 10/01/08 ..................................... Aaa/AAA 1,313,425 1,000,000 5.750%, 10/01/09 ..................................... Aaa/AAA 1,067,870 State of Hawaii, Series CU, Prerefunded 10/01/10 @100, MBIA Insured 3,000,000 5.600%, 10/01/19 ..................................... Aaa/AAA 3,232,470 State of Hawaii, Series CV, FGIC Insured 11,000,000 5.000%, 08/01/20 ..................................... Aaa/AAA 11,420,530 5,000,000 5.250%, 08/01/21 ..................................... Aaa/AAA 5,291,750 1,015,000 5.000%, 08/01/21 ..................................... Aaa/AAA 1,049,886
RATING FACE MOODY'S/ AMOUNT HAWAII GENERAL OBLIGATION BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ State of Hawaii, Series CX, FSA Insured $ 2,000,000 5.250%, 02/01/12 ..................................... Aaa/AAA $ 2,142,540 8,725,000 5.500%, 02/01/13 ..................................... Aaa/AAA 9,450,047 500,000 5.000%, 02/01/19 ..................................... Aaa/AAA 519,135 2,500,000 5.500%, 02/01/21 ..................................... Aaa/AAA 2,690,225 State of Hawaii, Series CY, FSA Insured 1,000,000 5.500%, 02/01/12 ..................................... Aaa/AAA 1,084,190 2,000,000 5.750%, 02/01/15 ..................................... Aaa/AAA 2,245,260 State of Hawaii, Series CZ, Prerefunded to 07/01/12 @100, FSA Insured 1,255,000 5.250%, 07/01/16 ..................................... NR/AAA 1,351,547 State of Hawaii, Series CZ, Unrefunded, FSA Insured 8,135,000 5.250%, 07/01/16 ..................................... NR/AAA 8,677,198 State of Hawaii, Series CZ, FSA Insured 1,500,000 5.250%, 07/01/12 ..................................... Aaa/AAA 1,613,670 3,000,000 5.250%, 07/01/18 ..................................... Aaa/AAA 3,184,650 State of Hawaii, Series CZ, FSA Insured Prerefunded to 07/01/12 @ 100 3,000,000 5.250%, 07/01/17 ..................................... Aaa/AAA 3,230,790 State of Hawaii, Series DD, Prerefunded to 05/01/14 @100, MBIA Insured 2,530,000 5.000%, 05/01/18 ..................................... Aaa/AAA 2,710,212 State of Hawaii, Series DD, Unrefunded, MBIA Insured 1,470,000 5.000%, 05/01/18 ..................................... Aaa/AAA 1,547,704 State of Hawaii, Series DE, MBIA Insured 5,000,000 5.000%, 10/01/21 ..................................... Aaa/AAA 5,239,450 Hawaii State Series DF, AMBAC Insured 3,500,000 5.000%, 07/01/23 ..................................... Aaa/AAA 3,665,900 Hawaii State Series DG, AMBAC Insured, Refunding 5,000,000 5.000%, 07/01/09 ..................................... Aaa/AAA 5,202,600 Hawaii State Series DI, FSA Insured 2,500,000 5.000%, 03/01/15 ..................................... Aaa/AAA 2,670,200 5,000,000 5.000%, 03/01/20 ..................................... Aaa/AAA 5,300,400 2,750,000 5.000%, 03/01/21 ..................................... Aaa/AAA 2,899,297 5,000,000 5.000%, 03/01/22 ..................................... Aaa/AAA 5,259,100 ------------ 438,739,811 ------------
RATING FACE MOODY'S/ AMOUNT HAWAII REVENUE BONDS (32.8%) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ Board of Regents, University of Hawaii, University System, Series A, FGIC Insured $ 1,805,000 5.500%, 07/15/14 ..................................... Aaa/AAA $ 1,958,046 1,090,000 5.500%, 07/15/16 ..................................... Aaa/AAA 1,184,318 2,000,000 5.500%, 07/15/19 ..................................... Aaa/AAA 2,164,960 2,000,000 5.500%, 07/15/21 ..................................... Aaa/AAA 2,162,660 2,000,000 5.500%, 07/15/22 ..................................... Aaa/AAA 2,156,900 3,000,000 5.500%, 07/15/29 ..................................... Aaa/AAA 3,206,220 Board of Regents, University of Hawaii, University System, Series B, FSA Insured 1,110,000 5.250%, 10/01/12 ..................................... Aaa/AAA 1,183,393 1,000,000 5.250%, 10/01/13 ..................................... Aaa/AAA 1,064,090 1,140,000 5.250%, 10/01/14 ..................................... Aaa/AAA 1,206,143 1,395,000 5.250%, 10/01/15 ..................................... Aaa/AAA 1,482,285 City and County of Honolulu, Hawaii Board of Water Supply & System, FSA Insured 620,000 5.500%, 07/01/15 ..................................... Aaa/AAA 665,341 3,000,000 5.125%, 07/01/21 ..................................... Aaa/AAA 3,156,450 5,450,000 5.250%, 07/01/23 ..................................... Aaa/AAA 5,776,728 City and County Board of Honolulu, Hawaii Water Supply, Series A, FGIC Insured 700,000 4.750%, 07/01/15 ..................................... Aaa/AAA 732,998 City and County of Honolulu, Hawaii Board of Water Supply & System, Series A, FGIC Insured 600,000 4.000%, 07/01/13 ..................................... Aaa/AAA 601,470 1,365,000 4.000%, 07/01/14 ..................................... Aaa/AAA 1,362,079 2,700,000 4.750%, 07/01/16 ..................................... Aaa/AAA 2,815,749 2,805,000 4.750%, 07/01/17 ..................................... Aaa/AAA 2,915,293 2,970,000 4.750%, 07/01/18 ..................................... Aaa/AAA 3,078,405 3,095,000 4.750%, 07/01/19 ..................................... Aaa/AAA 3,201,437 3,265,000 4.750%, 07/01/20 ..................................... Aaa/AAA 3,368,109 1,230,000 5.000%, 07/01/21 ..................................... Aaa/AAA 1,287,380 City and County of Honolulu, Hawaii Improvement District No. 261 (Halawa Business Park), Special Assessment Bonds 290,000 6.900%, 10/15/06 ..................................... NR/NR1 293,367
RATING FACE MOODY'S/ AMOUNT HAWAII REVENUE BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ City and County of Honolulu, Hawaii Wastewater Systems, FGIC Insured $ 1,395,000 5.000%, 07/01/12 ..................................... Aaa/NR $ 1,459,142 City and County of Honolulu, Hawaii Wastewater Systems, Series A, FGIC Insured 3,950,000 5.000%, 07/01/16 ..................................... Aaa/AAA 4,195,887 1,000,000 5.000%, 07/01/17 ..................................... Aaa/AAA 1,058,320 2,825,000 5.000%, 07/01/22 ..................................... Aaa/AAA 2,952,351 City and County of Honolulu, Hawaii Wastewater Systems, Junior Series, FGIC Insured 1,000,000 5.250%, 07/01/15 ..................................... Aaa/AAA 1,053,220 2,400,000 5.250%, 07/01/16 ..................................... Aaa/AAA 2,527,728 2,000,000 5.250%, 07/01/18 ..................................... Aaa/AAA 2,107,060 5,055,000 5.000%, 07/01/23 ..................................... Aaa/AAA 5,255,987 City and County of Honolulu, Hawaii Wastewater Systems, Senior Series, AMBAC Insured 1,810,000 5.500%, 07/01/11 ..................................... Aaa/NR 1,957,497 1,065,000 5.500%, 07/01/16 ..................................... Aaa/NR 1,140,796 3,000,000 5.500%, 07/01/17 ..................................... Aaa/NR 3,207,660 2,310,000 5.500%, 07/01/18 ..................................... Aaa/NR 2,466,526 2,000,000 5.250%, 07/01/19 ..................................... Aaa/NR 2,118,920 Department of Budget and Finance of the State of Hawaii (Chaminade University, Honolulu), Radian Insured 1,000,000 5.000%, 01/01/26 ..................................... NR/NR2 1,034,220 Department of Budget and Finance of the State of Hawaii (Mid Pacific Institute), Radian Insured 2,000,000 4.625%, 01/01/31 ..................................... NR/AA 1,958,000 1,210,000 4.625%, 01/01/36 ..................................... NR/AA 1,172,841 Department of Budget and Finance of the State of Hawaii Special Purpose (Hawaiian Electric Company, Inc.), Series A, AMBAC Insured 4,965,000 5.500%, 12/01/14 ..................................... Aaa/AAA 5,288,271 Department of Budget and Finance of the State of Hawaii Special Purpose (Hawaiian Electric Company, Inc.), Series A, MBIA Insured 4,125,000 4.950%, 04/01/12 ..................................... Aaa/AAA 4,361,115
RATING FACE MOODY'S/ AMOUNT HAWAII REVENUE BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ Department of Budget and Finance of the State of Hawaii Special Purpose (Hawaiian Electric Company, Inc.) Refunding Series A-AMT, FGIC Insured $ 3,000,000 4.800%, 01/01/25 ..................................... Aaa/AAA $ 2,996,100 Department of Budget and Finance of the State of Hawaii Special Purpose (Hawaiian Electric Company, Inc., and Subsidiaries Projects), Series A-AMT, MBIA Insured 5,700,000 5.650%, 10/01/27 ..................................... Aaa/AAA 6,134,682 Department of Budget and Finance of the State of Hawaii Special Purpose (Hawaiian Electric Company, Inc., and Subsidiaries Projects), Series B-AMT, XL Capital Insured 1,000,000 5.000%, 12/01/22 ..................................... Aaa/AAA 1,023,670 Department of Budget and Finance of the State of Hawaii Special Purpose (Hawaiian Electric Company, Inc.), Series D-AMT, AMBAC Insured 2,500,000 6.150%, 01/01/20 ..................................... Aaa/AAA 2,673,150 Department of Budget and Finance of the State of Hawaii (North Hawaii Community Hospital) Special Purpose , VRDO3 Enhancement LOC - First Hawaiian Bank expiring 05/26/09 1,675,000 3.240%, 05/01/19 ..................................... VMIG1/Aa3 1,675,000 Department of Budget and Finance of the State of Hawaii Special Purpose (The Evangelical Lutheran Good Samaritan Society), AMBAC Insured 250,000 4.700%, 11/01/06 ..................................... Aaa/AAA 251,522 Department of Budget and Finance of the State of Hawaii Special Purpose (The Queen's Health System), Series A, Prerefunded 07/01/06 @ 102 8,625,000 6.000%, 07/01/20 ..................................... A1/A+ 8,848,129 Department of Budget and Finance of the State of Hawaii Special Purpose (The Queen's Health System), Series B, MBIA Insured Prerefunded to 07/01/08 @ 102 8,000,000 5.250%, 07/01/23 ..................................... Aaa/AAA 8,360,160
RATING FACE MOODY'S/ AMOUNT HAWAII REVENUE BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ Department of Hawaiian Home Lands (State of Hawaii) $ 1,310,000 4.150%, 07/01/08 ..................................... A3/NR $ 1,310,210 1,525,000 4.350%, 07/01/10 ..................................... A3/NR 1,538,435 1,245,000 4.450%, 07/01/11 ..................................... A3/NR 1,259,305 Housing Finance and Development Corporation (State of Hawaii) Single Family Mortgage, Series A-AMT, FNMA Insured 2,800,000 5.300%, 07/01/22 ..................................... Aaa/AAA 2,862,384 4,925,000 5.750%, 07/01/30 ..................................... Aaa/AAA 4,967,059 1,015,000 5.400%, 07/01/30 ..................................... Aaa/AAA 1,043,511 Housing Finance and Development Corporation (State of Hawaii) Single Family Mortgage, Series B, FNMA Insured 9,350,000 5.450%, 07/01/17 ..................................... Aaa/AAA 9,573,745 6,800,000 5.300%, 07/01/28 ..................................... Aaa/AAA 6,983,532 Housing Finance and Development Corporation (State of Hawaii) University of Hawaii Faculty Housing Project, AMBAC Insured 2,125,000 5.650%, 10/01/16 ..................................... Aaa/AAA 2,148,503 4,000,000 5.700%, 10/01/25 ..................................... Aaa/AAA 4,044,320 State of Hawaii Airport System, AMT, FGIC Insured 4,000,000 5.750%, 07/01/17 ..................................... Aaa/AAA 4,288,560 6,000,000 5.625%, 07/01/18 ..................................... Aaa/AAA 6,374,700 6,000,000 5.250%, 07/01/21 ..................................... Aaa/AAA 6,207,540 State of Hawaii Airport System, AMT, Second Series, Escrowed to Maturity, MBIA Insured 6,455,000 6.900%, 07/01/12 ..................................... Aaa/AAA 7,127,869 State of Hawaii Airport System, Series B-AMT, FGIC Insured 3,000,000 8.000%, 07/01/10 ..................................... Aaa/AAA 3,454,500 State of Hawaii Airport System , Series B-AMT, FGIC Insured, Refunding 6,095,000 6.500%, 07/01/14 ..................................... Aaa/AAA 6,727,234 State of Hawaii Harbor Capital Improvement, AMT, MBIA Insured 3,850,000 5.750%, 07/01/17 ..................................... Aaa/AAA 4,001,305 State of Hawaii Harbor Capital Improvement, Series B-AMT, AMBAC Insured 3,000,000 5.500%, 07/01/19 ..................................... Aaa/AAA 3,186,510
RATING FACE MOODY'S/ AMOUNT HAWAII REVENUE BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ State of Hawaii Harbor System, Series A-AMT, FSA Insured $ 2,000,000 5.750%, 07/01/17 ..................................... Aaa/AAA $ 2,137,460 1,500,000 5.900%, 07/01/21 ..................................... Aaa/AAA 1,612,350 State of Hawaii Harbor System, Series B-AMT, FSA Insured 870,000 5.000%, 01/01/07 ..................................... Aaa/AAA 877,804 3,275,000 4.500%, 01/01/09 ..................................... Aaa/AAA 3,328,808 2,000,000 5.000%, 01/01/11 ..................................... Aaa/AAA 2,088,080 State of Hawaii Highway, FGIC Insured, Prerefunded 07/01/06 @102 2,000,000 5.250%, 07/01/16 ..................................... Aaa/AAA 2,048,480 State of Hawaii Highway, FSA Insured 825,000 4.800%, 07/01/08 ..................................... Aaa/AAA 846,070 State of Hawaii Highway, FSA Insured 750,000 3.000%, 07/01/09 ..................................... Aaa/AAA 728,220 1,500,000 3.000%, 07/01/11 ..................................... Aaa/AAA 1,426,140 State of Hawaii Highway, Series A, FSA Insured 1,000,000 5.000%, 07/01/20 ..................................... Aaa/AAA 1,053,620 State of Hawaii Highway, Callable 07/01/10 @100, FSA Insured 2,000,000 4.500%, 07/01/10 ..................................... Aaa/AAA 2,059,760 2,000,000 4.500%, 07/01/11 ..................................... Aaa/AAA 2,068,720 State of Hawaii Highway, FSA Insured, Prerefunded 07/01/11 @100 250,000 5.125%, 07/01/14 ..................................... Aaa/AAA 263,742 2,720,000 5.500%, 07/01/19 ..................................... Aaa/AAA 2,909,176 1,110,000 5.500%, 07/01/20 ..................................... Aaa/AAA 1,187,201 State of Hawaii Highway Prerefunded 07/01/11 @100, FSA Insured 500,000 5.250%, 07/01/13 ..................................... Aaa/AAA 536,080 1,530,000 5.375%, 07/01/14 ..................................... Aaa/AAA 1,649,432 1,000,000 5.375%, 07/01/19 ..................................... Aaa/AAA 1,078,060 2,000,000 5.375%, 07/01/20 ..................................... Aaa/AAA 2,156,120 State of Hawaii Housing & Community Development, FSA Insured 910,000 2.900%, 01/01/09 ..................................... Aaa/NR 889,571 895,000 3.400%, 01/01/11 ..................................... Aaa/NR 879,105 670,000 3.450%, 07/01/11 ..................................... Aaa/NR 662,060
RATING FACE MOODY'S/ AMOUNT HAWAII REVENUE BONDS (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ State of Hawaii Housing & Community Development, FSA Insured (continued) $ 925,000 3.600%, 01/01/12 ..................................... Aaa/NR $ 918,802 960,000 3.600%, 07/01/12 ..................................... Aaa/NR 952,013 1,055,000 3.700%, 07/01/13 ..................................... Aaa/NR 1,045,041 ------------ 236,802,912 ------------ PUERTO RICO (5.0%) ------------------------------------------------------ Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue Bonds, MBIA Insured 2,500,000 5.000%, 07/01/15 ..................................... Aaa/AAA 2,546,425 Puerto Rico Commonwealth Government Facilities Revenue Bonds, Series A, FSA Insured 1,600,000 5.250%, 07/01/19 ..................................... NR/AAA 1,765,744 Puerto Rico Commonwealth Highway & Transportation Authority Revenue Bonds, Series J, Callable 07/01/14 @100, MBIA Insured 5,745,000 5.000%, 07/01/17 ..................................... Aaa/AAA 6,115,438 Puerto Rico Commonwealth Public Finance Corp. Revenue Bonds, Series A, Prerefunded 08/01/11 @100, MBIA Insured 5,000,000 5.500%, 08/01/17 ..................................... Aaa/AAA 5,425,850 Puerto Rico Commonwealth Public Improvement General Obligation Bonds, Series A, FGIC Insured 4,000,000 5.500%, 07/01/13 ..................................... Aaa/AAA 4,402,640 2,000,000 5.500%, 07/01/16 ..................................... Aaa/AAA 2,237,400 Puerto Rico Commonwealth Public Improvement General Obligation Bonds, Series A, FSA Insured 5,000,000 5.000%, 07/01/16 ..................................... Aaa/AAA 5,336,850 Puerto Rico Commonwealth Public Improvement General Obligation Bonds, MBIA Insured 1,800,000 5.250%, 07/01/13 ..................................... Aaa/AAA 1,904,076 Puerto Rico Commonwealth Public Improvement General Obligation Bonds, Series A, MBIA Insured 1,000,000 5.500%, 07/01/15 ..................................... NR/AAA 1,109,140 Puerto Rico Municipal Finance Agency Public Improvement General Obligation Bonds, Series A, FSA Insured 3,900,000 5.000%, 08/01/20 ..................................... Aaa/AAA 4,153,890
RATING FACE MOODY'S/ AMOUNT PUERTO RICO (CONTINUED) S&P VALUE - ------------ ------------------------------------------------------ -------- ------------ Puerto Rico Commonwealth Public Improvement General Obligation Bonds, Series CR, FSA Insured $ 1,060,000 5.250%, 07/01/17 ..................................... Aaa/AAA $ 1,167,823 ------------- 36,165,276 ------------- Total Investments (Cost $692,932,642)(4) ............. 98.7% 711,707,999 Other assets less liabilities ........................ 1.3 9,295,810 ----- ------------- Net Assets ........................................... 100.0% $ 721,003,809 ===== =============
Percent of Portfolio Distribution by Quality Rating (unaudited) Portfolio ------------------------------------------------------ ---------- Aaa of Moody's and/or AAA of S&P. 97.1% Aa of Moody's and/or AA of S&P. 0.9 A of Moody's and/or S&P. 1.8 Not rated (2) 0.2 ----- 100.0% ===== (1) Any securities not rated (NR) have been determined by the Investment Adviser to have sufficient quality to be ranked in the top four credit ratings if a credit rating were to be assigned by a rating service. (2) Rated AA by Fitch. (3) Variable rate demand obligations (VRDOs) are payable upon demand within the same day for securities with daily liquidity or seven days for securities with weekly liquidity. (4) See footnote 4 to the financial statements. PORTFOLIO ABBREVIATIONS: ------------------------ AMBAC - American Municipal Bond Assurance Corporation AMT - Alternative Minimum Tax CIFG - CIFG Assurance Co. FGIC - Financial Guaranty Insurance Co. FNMA - Federal National Mortgage Association FSA - Financial Securities Assurance LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance TCRS - Transferable Custodial Receipts VRDO - Variable Rate Demand Obligation See accompanying notes to financial statements. HAWAIIAN TAX-FREE TRUST STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2006 ASSETS Investments at value (cost $692,932,642) ........................................... $711,707,999 Cash ............................................................................... 1,227,457 Interest receivable ................................................................ 9,578,640 Receivable for Trust shares sold ................................................... 339,533 Other assets ....................................................................... 25,385 ------------ Total assets ....................................................................... 722,879,014 ------------ LIABILITIES Dividends payable .................................................................. 628,522 Payable for Trust shares redeemed .................................................. 562,177 Distribution and service fees payable .............................................. 275,614 Adviser and Administrator fees payable ............................................. 245,774 Accrued expenses ................................................................... 163,118 ------------ Total liabilities .................................................................. 1,875,205 ------------ NET ASSETS ............................................................................ $721,003,809 ============ Net Assets consist of: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share $ 636,940 Additional paid-in capital ......................................................... 698,931,357 Net unrealized appreciation on investments (note 4) ................................ 18,775,357 Accumulated net realized gain on investments ....................................... 569,372 Undistributed net investment income ................................................ 2,090,783 ------------ $721,003,809 ============ CLASS A Net Assets ......................................................................... $665,875,742 ============ Capital shares outstanding ......................................................... 58,824,050 ============ Net asset value and redemption price per share ..................................... $ 11.32 ============ Offering price per share (100/96 of $11.32 adjusted to nearest cent) ............... $ 11.79 ============ CLASS C Net Assets ......................................................................... $ 36,655,202 ============ Capital shares outstanding ......................................................... 3,240,418 ============ Net asset value and offering price per share ....................................... $ 11.31 ============ Redemption price per share (*a charge of 1% is imposed on the redemption proceeds of the shares, or on the original price, whichever is lower, if redeemed during the first 12 months after purchase) ...................................... $ 11.31* ============ CLASS Y Net Assets ......................................................................... $ 18,472,865 ============ Capital shares outstanding ......................................................... 1,629,517 ============ Net asset value, offering and redemption price per share ........................... $ 11.34 ============
See accompanying notes to financial statements. HAWAIIAN TAX-FREE TRUST STATEMENT OF OPERATIONS FOR THE YEAR ENDED ENDED MARCH 31, 2006 Investment Income: Interest income ......................................... $ 33,192,065 Expenses: Investment Adviser fees (note 3) ........................ $ 1,031,161 Administrator fees (note 3) ............................. 1,915,025 Distribution and service fees (note 3) .................. 1,726,146 Transfer and shareholder servicing agent fees ........... 421,174 Trustees' fees and expenses (note 8) .................... 144,358 Shareholders' reports and proxy statements .............. 126,897 Legal fees (note 3) ..................................... 125,467 Custodian fees .......................................... 74,549 Insurance ............................................... 69,264 Registration fees and dues .............................. 33,575 Auditing and tax fees ................................... 22,648 Chief compliance officer (note 3) ....................... 5,044 Miscellaneous ........................................... 43,634 ------------- 5,738,942 Expenses paid indirectly (note 6) ....................... (68,448) ------------- Net expenses ............................................ 5,670,494 ------------- Net investment income ................................... 27,521,571 Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) from securities transactions ... 569,433 Change in unrealized appreciation on investments ........ (12,134,913) ------------- Net realized and unrealized gain (loss) on investments .. (11,565,480) ------------- Net change in net assets resulting from operations ...... $ 15,956,091 =============
See accompanying notes to financial statements. HAWAIIAN TAX-FREE TRUST STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended March 31, 2006 March 31, 2005 -------------- -------------- OPERATIONS: Net investment income ................................... $ 27,521,571 $ 28,686,242 Net realized gain (loss) from securities transactions ... 569,433 1,286,593 Change in unrealized appreciation on investments ........ (12,134,913) (20,663,429) ------------- ------------- Net change in net assets resulting from operations ...... 15,956,091 9,309,406 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 10): Class A Shares: Net investment income ................................... (25,641,795) (26,594,626) Net realized gain on investments ........................ (424,504) (1,165,988) Class C Shares: Net investment income ................................... (1,087,576) (1,158,762) Net realized gain on investments ........................ (22,878) (65,029) Class Y Shares: Net investment income ................................... (791,736) (926,612) Net realized gain on investments ........................ (11,663) (37,109) ------------- ------------- Change in net assets from distributions ................. (27,980,152) (29,948,126) ------------- ------------- CAPITAL SHARE TRANSACTIONS (NOTE 7): Proceeds from shares sold ............................... 55,348,246 62,021,734 Reinvested dividends and distributions .................. 15,434,343 17,008,650 Cost of shares redeemed ................................. (77,015,557) (74,491,462) ------------- ------------- Change in net assets from capital share transactions .... (6,232,968) 4,538,922 ------------- ------------- Change in net assets ................................. (18,257,029) (16,099,798) NET ASSETS: Beginning of period ..................................... 739,260,838 755,360,636 ------------- ------------- End of period* .......................................... $ 721,003,809 $ 739,260,838 ============= ============= * Includes undistributed net investment income of: ...... $ 2,090,783 $ 2,090,319 ============= =============
See accompanying notes to financial statements. HAWAIIAN TAX-FREE TRUST NOTES TO FINANCIAL STATEMENTS MARCH 31, 2006 1. ORGANIZATION Hawaiian Tax-Free Trust (the "Trust"), a non-diversified, open-end investment company, was organized on May 7, 1984, as a Massachusetts business trust and commenced operations on February 20, 1985. The Trust is authorized to issue an unlimited number of shares and, from its inception to April 1, 1996, offered only one class of shares. On that date, the Trust began offering two additional classes of shares, Class C and Class Y shares. All shares outstanding prior to that date were designated as Class A shares and are sold with a front-payment sales charge and bear an annual distribution fee. Class C shares are sold with a level-payment sales charge with no payment at time of purchase but level service and distribution fees from date of purchase through a period of six years thereafter. A contingent deferred sales charge of 1% is assessed to any Class C shareholder who redeems shares of this Class within one year from the date of purchase. Class C Shares, together with a pro-rata portion of all Class C Shares acquired through reinvestment of dividends and other distributions paid in additional Class C Shares, automatically convert to Class A Shares after 6 years. The Class Y shares are only offered to institutions acting for an investor in a fiduciary, advisory, agency, custodial or similar capacity and are not offered directly to retail investors. Class Y shares are sold at net asset value without any sales charge, redemption fees, contingent deferred sales charge or distribution or service fees. On July 21, 1998, the Trust established Class I shares, which are offered and sold only through financial intermediaries and are not offered directly to retail investors. As of the report date, there were no Class I Shares outstanding. All classes of shares represent interests in the same portfolio of investments and are identical as to rights and privileges but differ with respect to the effect of sales charges, the distribution and/or service fees borne by each class, expenses specific to each class, voting rights on matters affecting a single class and the exchange privileges of each class. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities of more than 60 days are valued each business day based upon information provided by a nationally prominent independent pricing service and periodically verified through other pricing services. In the case of securities for which market quotations are readily available, securities are valued at the mean of bid and asked quotations. If market quotations or a valuation from the pricing service is not readily available, the security is valued at fair value determined in good faith under procedures established by and under the general supervision of the Board of Trustees. Securities which mature in 60 days or less are valued at amortized cost if their term to maturity at purchase is 60 days or less, or by amortizing their unrealized appreciation or depreciation on the 61st day prior to maturity, if their term to maturity at purchase exceeds 60 days. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premium and accretion of original issue discount and market discount on a daily basis. c) FEDERAL INCOME TAXES: It is the policy of the Trust to continue to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. The Trust intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. d) MULTIPLE CLASS ALLOCATION: All income, expenses (other than class-specific expenses), and unrealized gains or losses are allocated daily to each class of shares based on the relative net assets of each class. Class-specific expenses, which include distribution and service fees and any other items that are specifically attributed to a particular class, are charged directly to such class. e) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. f) RECLASSIFICATION OF CAPITAL ACCOUNTS: Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: The Asset Management Group of Bank of Hawaii (the "Adviser"), serves as Investment Adviser to the Trust. In this role, under an Investment Advisory Agreement, the Adviser supervises the Trust's investments and provides various services to the Trust, for which it is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.14% of the net assets of the Trust. Aquila Investment Management LLC the ("Administrator"), a wholly-owned subsidiary of Aquila Management Corporation, the Trust's founder and sponsor, serves as the Administrator for the Trust under an Administration Agreement with the Trust. Under this Agreement, the Administrator provides all administrative services, other than those relating to the management of the Trust's investments. These include providing the office of the Trust and all related services as well as overseeing the activities of all the various support organizations to the Trust such as the shareholder servicing agent, custodian, legal counsel, auditors and distributor. For its services, the Administrator is entitled to receive a fee which is payable monthly and computed as of the close of business each day at the annual rate of 0.26% of the net assets of the Trust. The Adviser and the Administrator each agree that the above fees shall be reduced, but not below zero, by an amount equal to its pro-rata portion (determined on the basis of the respective fees computed as described above) of the amount, if any, by which the total expenses of the Trust in any fiscal year, exclusive of taxes, interest and brokerage fees, shall exceed the lesser of (i) 2.5% of the first $30 million of average annual net assets of the Trust plus 2% of the next $70 million of such assets and 1.5% of its average annual net assets in excess of $100 million, or (ii) 25% of the Trust's total annual investment income. The payment of the above fees at the end of any month will be reduced or postponed so that at no time will there be any accrued but unpaid liability under this expense limitation. No such reduction in fees was required during the year ended March 31, 2006. Under a Compliance Agreement with the Administrator, the Administrator is additionally compensated for Chief Compliance Officer related services provided to enable the Trust to comply with Rule 38a-1 of the Investment Company Act of 1940. Specific details as to the nature and extent of the services provided by the Adviser and the Administrator are more fully defined in the Trust's Prospectus and Statement of Additional Information. b) DISTRIBUTION AND SERVICE FEES: The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part of the Plan, with respect to Class A Shares, the Trust is authorized to make service fee payments to broker-dealers or others ("Qualified Recipients") selected by Aquila Distributors, Inc. (the "Distributor"), including, but not limited to, any principal underwriter of the Trust, with which the Distributor has entered into written agreements contemplated by the Rule and which have rendered assistance in the distribution and/or retention of the Trust's shares or servicing of shareholder accounts. The Trust makes payment of this service fee at the annual rate of 0.20% of the Trust's average net assets represented by Class A Shares. For the year ended March 31, 2006, service fees on Class A Shares amounted to $1,359,974 of which the Distributor retained $82,680. Under another part of the Plan, the Trust is authorized to make payments with respect to Class C Shares to Qualified Recipients which have rendered assistance in the distribution and/or retention of the Trust's Class C shares or servicing of shareholder accounts. These payments are made at the annual rate of 0.75% of the Trust's net assets represented by Class C Shares and for the year ended March 31, 2006, amounted to $274,629. In addition, under a Shareholder Services Plan, the Trust is authorized to make service fee payments with respect to Class C Shares to Qualified Recipients for providing personal services and/or maintenance of shareholder accounts. These payments are made at the annual rate of 0.25% of the Trust's net assets represented by Class C Shares and for the year ended March 31, 2006, amounted to $91,543. The total of these payments made with respect to Class C Shares amounted to $366,172 of which the Distributor retained $80,316. Specific details about the Plans are more fully defined in the Trust's Prospectus and Statement of Additional Information. Under a Distribution Agreement, the Distributor serves as the exclusive distributor of the Trust's shares. Through agreements between the Distributor and various broker-dealer firms ("dealers"), the Trust's shares are sold primarily through the facilities of these dealers having offices within Hawaii, with the bulk of sales commissions inuring to such dealers. For the year ended March 31, 2006, total commissions on sales of Class A Shares amounted to $1,091,800, of which the Distributor received $106,470. c) OTHER RELATED PARTY TRANSACTIONS: For the year ended March 31, 2006, the Trust incurred $120,986 of legal fees allocable to Hollyer Brady Barrett & Hines LLP, counsel to the Trust, for legal services in conjunction with the Trust's ongoing operations. The Secretary of the Trust is a Partner at that firm. 4. PURCHASES AND SALES OF SECURITIES During the year ended March 31, 2006, purchases of securities and proceeds from the sales of securities aggregated $159,187,951 and $161,547,068, respectively. At March 31, 2006 aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost amounted to $21,875,778 and gross unrealized depreciation for all securities in which there is an excess of tax cost over value amounted to $3,100,421 for a net unrealized appreciation of $18,775,357. The tax cost of the Trust's securities at March 31, 2006 equaled $692,932,642. 5. PORTFOLIO ORIENTATION Since the Trust invests principally and may invest entirely in double tax-free municipal obligations of issuers within Hawaii, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Hawaii and whatever effects these may have upon Hawaii issuers' ability to meet their obligations. 6. EXPENSES The Trust has negotiated an expense offset arrangement with its custodian wherein it receives credit toward the reduction of custodian fees and other Trust expenses whenever there are uninvested cash balances. The Statement of Operations reflects the total expenses before any offset, the amount of offset and the net expenses. It is the general intention of the Trust to invest, to the extent practicable, some or all of cash balances in income-producing assets rather than leave cash on deposit. 7. CAPITAL SHARE TRANSACTIONS Transactions in Capital Shares of the Trust were as follows:
Year Ended Year Ended March 31, 2006 March 31, 2005 --------------------------------- --------------------------------- Shares Amount Shares Amount ----------- ------------ ----------- ------------ CLASS A SHARES: Proceeds from shares sold ............... 3,926,945 $ 45,218,301 4,327,393 $ 50,338,345 Reinvested distributions ................ 1,260,039 14,507,021 1,374,724 16,002,996 Cost of shares redeemed ................. (5,540,604) (63,720,316) (5,178,326) (60,145,678) ----------- ------------ ----------- ------------ Net change .............................. (353,620) (3,994,994) 523,791 6,195,663 ----------- ------------ ----------- ------------ CLASS C SHARES: Proceeds from shares sold ............... 668,607 7,668,853 808,399 9,429,910 Reinvested distributions ................ 52,402 603,838 56,505 657,317 Cost of shares redeemed ................. (750,126) (8,622,247) (823,950) (9,543,036) ----------- ------------ ----------- ------------ Net change ........................... (29,117) (349,556) 40,954 544,191 ----------- ------------ ----------- ------------ CLASS Y SHARES: Proceeds from shares sold ............... 213,435 2,461,092 193,962 2,253,479 Reinvested distributions ................ 28,085 323,484 29,901 348,337 Cost of shares redeemed ................. (407,103) (4,672,994) (410,603) (4,802,748) ----------- ------------ ----------- ------------ Net change ........................... (165,583) (1,888,418) (186,740) (2,200,932) ----------- ------------ ----------- ------------ Total transactions in Trust shares ......... (548,320) $ (6,232,968) 378,005 $ 4,538,922 =========== ============ =========== ============
8. TRUSTEES' FEES AND EXPENSES At March 31, 2006 there were 7 Trustees, one of whom is affiliated with the Administrator and is not paid any fees. The total amount of Trustees' service and attendance fees paid during the year ended March 31, 2006 was $126,550, to cover carrying out their responsibilities and attendance at regularly scheduled quarterly Board Meetings and meetings of the Independent Trustees held prior to each quarterly Board Meeting. When additional or special meetings are held, the meeting fees are paid to those Trustees in attendance. Trustees are reimbursed for their expenses such as travel, accommodations and meals incurred in connection with attendance at Board Meetings and the Annual Meeting of Shareholders. For the year ended March 31, 2006, such meeting-related expenses amounted to $17,808. 9. SECURITIES TRADED ON A WHEN-ISSUED BASIS The Trust may purchase or sell securities on a when-issued basis. When-issued transactions arise when securities are purchased or sold by the Trust with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Trust at the time of entering into the transaction. Beginning on the date the Trust enters into a when-issued transaction, cash or other liquid securities are segregated in an amount equal to or greater than the value of the when-issued transaction. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities. 10. INCOME TAX INFORMATION AND DISTRIBUTIONS The Trust declares dividends daily from net investment income and makes payments monthly in additional shares at the net asset value per share, in cash, or in a combination of both, at the shareholder's option. Net realized capital gains, if any, are distributed annually and are taxable. The Trust intends to maintain, to the maximum extent possible, the tax-exempt status of interest payments received from portfolio municipal securities in order to allow dividends paid to shareholders from net investment income to be exempt from regular Federal and State of Hawaii income taxes. However, due to differences between financial statement reporting and Federal income tax reporting requirements, distributions made by the Trust may not be the same as the Trust's net investment income, and/or net realized securities gains. Further, a portion of the dividends and distributions may, under some circumstances, be subject to taxes at ordinary income and/or capital gain rates. For certain shareholders, some dividend income may, under some circumstances, be subject to the alternative minimum tax. The tax character of distributions: Year Ended March 31, 2006 2005 ----------- ----------- Net tax-exempt income $27,503,747 $28,668,394 Ordinary income 17,360 11,607 Long term capital gain 459,045 1,268,125 ----------- ----------- $27,980,152 $29,948,126 =========== =========== The difference between book basis and tax basis unrealized appreciation is attributable primarily to the deferral of losses incurred after October 31, 2005. As of March 31, 2006, the components of distributable earnings on a tax basis were as follows: Undistributed long term capital gain $ 875,012 Unrealized appreciation 18,469,717 Undistributed tax-exempt income 2,090,783 ----------- $21,435,512 =========== As of March 31, 2006 there were post-October capital loss deferrals of $305,640 which will be recognized in the following year. 11. CHANGE IN PRINCIPAL ACCOUNTANTS KPMG LLP was previously the principal accountants for Hawaiian Tax-Free Trust. On July 27, 2005 KPMG LLP declined to stand for re-election as the principal accountants of the Trust and Tait, Weller & Baker LLP was engaged as the principal accountants to audit the Trust's financial statements for the fiscal year of 2006. The decision was made by the Audit Committee of the Board of Trustees. The audit reports of KPMG LLP on the Trust's financial statements as of and for the years ended March 31, 2005 and 2004 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audits of the two fiscal years ended March 31, 2005 and 2004 and the subsequent interim period through the opinion date of May 23, 2005, there were no reportable events or disagreements with KPMG LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to the satisfaction of KPMG LLP would have caused them to make reference in connection with their opinion to the subject matter of the disagreements. HAWAIIAN TAX-FREE TRUST FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class A --------------------------------------------------------------- Year Ended March 31, --------------------------------------------------------------- 2006 2005 2004 2003 2002 ------- ------- ------- ------- ------- Net asset value, beginning of period $ 11.51 $ 11.83 $ 11.73 $ 11.26 $ 11.37 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income + ................................... 0.43 0.45 0.46 0.48 0.51 Net gain (loss) on securities (both realized and unrealized) ............................................. (0.18) (0.30) 0.10 0.47 (0.10) ------- ------- ------- ------- ------- Total from investment operations .......................... 0.25 0.15 0.56 0.95 0.41 ------- ------- ------- ------- ------- Less distributions (note 10): Dividends from net investment income ...................... (0.43) (0.45) (0.46) (0.48) (0.52) Distributions from capital gains .......................... (0.01) (0.02) -- -- -- ------- ------- ------- ------- ------- Total distributions ....................................... (0.44) (0.47) (0.46) (0.48) (0.52) ------- ------- ------- ------- ------- Net asset value, end of period ............................... $ 11.32 $ 11.51 $ 11.83 $ 11.73 $ 11.26 ======= ======= ======= ======= ======= Total return (not reflecting sales charge) ................... 2.19% 1.33% 4.83% 8.57% 3.62% Ratios/supplemental data Net assets, end of period (in millions) ................... $ 666 $ 681 $ 694 $ 675 $ 625 Ratio of expenses to average net assets ................... 0.74% 0.74% 0.73% 0.71% 0.72% Ratio of net investment income to average net assets ............................................. 3.76% 3.90% 3.89% 4.15% 4.51% Portfolio turnover rate ................................... 22% 10% 8% 5% 13% The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets ................... 0.74% 0.74% 0.72% 0.70% 0.70%
- ---------- + Per share amounts have been calculated using the monthly average shares method. See accompanying notes to financial statements. FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Class C Year Ended March 31, ---------------------------------------------------------------------- 2006 2005 2004 2003 2002 ------ ------ ------ ------ ------ Net asset value, beginning of period ............... $11.50 $11.82 $11.73 $11.26 $11.36 ------ ------ ------ ------ ------ Income (loss) from investment operations: Net investment income + ......................... 0.34 0.36 0.36 0.38 0.41 Net gain (loss) on securities (both realized and unrealized) ...................... (0.18) (0.30) 0.09 0.48 (0.08) ------ ------ ------ ------ ------ Total from investment operations ................ 0.16 0.06 0.45 0.86 0.33 ------ ------ ------ ------ ------ Less distributions (note 10): Dividends from net investment income ............ (0.34) (0.36) (0.36) (0.39) (0.43) Distributions from capital gains ................ (0.01) (0.02) -- -- -- ------ ------ ------ ------ ------ Total distributions ............................. (0.35) (0.38) (0.36) (0.39) (0.43) ------ ------ ------ ------ ------ Net asset value, end of period ..................... $11.31 $11.50 $11.82 $11.73 $11.26 ====== ====== ====== ====== ====== Total return (not reflecting sales charge) ......... 1.37% 0.53% 3.91% 7.70% 2.91% Ratios/supplemental data Net assets, end of period (in millions) ......... $ 36.7 $ 37.6 $ 38.2 $ 33.8 $ 24.1 Ratio of expenses to average net assets ......... 1.54% 1.54% 1.54% 1.51% 1.51% Ratio of net investment income to average net assets ............................ 2.96% 3.10% 3.08% 3.33% 3.68% Portfolio turnover rate ......................... 22% 10% 8% 5% 13% The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets ......... 1.54% 1.54% 1.52% 1.50% 1.50%
Class Y Year Ended March 31, ---------------------------------------------------------------------- 2006 2005 2004 2003 2002 ------ ------ ------ ------ ------ Net asset value, beginning of period ............... $11.52 $11.84 $11.75 $11.28 $11.39 ------ ------ ------ ------ ------ Income (loss) from investment operations: Net investment income + ......................... 0.46 0.48 0.48 0.50 0.52 Net gain (loss) on securities (both realized and unrealized) ...................... (0.18) (0.30) 0.09 0.47 (0.09) ------ ------ ------ ------ ------ Total from investment operations ................ 0.28 0.18 0.57 0.97 0.43 ------ ------ ------ ------ ------ Less distributions (note 10): Dividends from net investment income ............ (0.45) (0.48) (0.48) (0.50) (0.54) Distributions from capital gains ................ (0.01) (0.02) -- -- -- ------ ------ ------ ------ ------ Total distributions ............................. (0.46) (0.50) (0.48) (0.50) (0.54) ------ ------ ------ ------ ------ Net asset value, end of period ..................... $11.34 $11.52 $11.84 $11.75 $11.28 ====== ====== ====== ====== ====== Total return (not reflecting sales charge) ......... 2.48% 1.54% 4.97% 8.77% 3.80% Ratios/supplemental data Net assets, end of period (in millions) ......... $ 18.5 $ 20.7 $ 23.5 $ 25.2 $ 19.3 Ratio of expenses to average net assets ......... 0.54% 0.54% 0.53% 0.51% 0.52% Ratio of net investment income to average net assets ............................ 3.96% 4.09% 4.09% 4.33% 4.69% Portfolio turnover rate ......................... 22% 10% 8% 5% 13% The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets ......... 0.54% 0.54% 0.52% 0.50% 0.50%
- ---------- + Per share amounts have been calculated using the monthly average shares method. See accompanying notes to financial statements. ADDITIONAL INFORMATION (UNAUDITED) TRUSTEES AND OFFICERS(1)(2)
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- INTERESTED TRUSTEE(6) Diana P. Herrmann Trustee since Vice Chair and Chief Executive Officer 12 None New York, NY 2004, President of Aquila Management Corporation, (02/25/58) since 1998 and Founder of the Aquilasm Group of Vice Chair since Funds(7) and parent of Aquila Investment 2003 Management LLC, Administrator, since 2004, President and Chief Operating Officer since 1997, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Chief Executive Officer and Vice Chair since 2004 and President, Chief Operating Officer and Manager of the Administrator since 2003; Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquilasm Group of Funds since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; Governor, Investment Company Institute and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. NON-INTERESTED TRUSTEES Theodore T. Mason Chair of the Executive Director, East Wind Power 8 Trustee, Pimco New York, NY Board of Trustees Partners LTD since 1994 and Louisiana Advisors VIT. (11/24/35) since 2004 and Power Partners, 1999-2003; Treasurer, Trustee since 1984 Alumni Association of SUNY Maritime College since 2004 (President, 2002-2003, First Vice President, 2000-2001, Second Vice President, 1998-2000) and director of the same organization since 1997; Director, STCM Management Company, Inc., 1973-2004; twice national officer of Naval Reserve Association, commanding officer of four naval reserve units and Captain, USNR (Ret); director, The Navy League of the United States New York Council since 2002; trustee, The Maritime Industry Museum at Fort Schuyler, 2000-2004; and the Maritime College at Fort Schuyler Foundation, Inc. since 2000.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Thomas W. Courtney Trustee President, Courtney Associates, 5 Chairman of the Board Sewickley, PA since 1984 Inc., a venture capital firm, since 1988. of Oppenheimer Quest (08/17/33) Value Funds Group, Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, and Oppenheimer Rochester Group of Funds; Chairman of the Board of Pimco Advisors VIT. Stanley W. Hong Trustee President, Waste Management of Hawaii, 4 Trustee, Pacific Honolulu, HI since 1992 Inc. and Corporate Vice President - Capital Funds, which (04/05/36) Hawaii Area for Waste Management, Inc., includes bond and 2001-2005; Trustee, The King William other stock funds; Charles Lunalilo Trust Estate since First Insurance Co. 2001; President and Chief Executive of Hawaii, Ltd., Officer, The Chamber of Commerce of Lanihau Properties, Hawaii, 1996-2001; Director PBS - Hawaii Ltd., The Westye Foundation since 1998; Regent, Chaminade Group - West University of Honolulu since 1991; (Hawaii), Inc. Trustee, Heald College since 1998; Trustee, the Nature Conservancy of Hawaii since 1998; Trustee, Child and Family Service since 2005; Director, The East West Center Foundation since 2006; and a director of other corporate and community organizations. Russell K. Okata Trustee Executive Director, Hawaii Government 4 Trustee, Pacific Honolulu, HI since 1992 Employees Association AFSCME Local 152, Capital Funds, which (03/22/44) AFL-CIO since 1981; International Vice includes 11 bond and President, American Federation of State, stock funds; Chairman, County and Municipal Employees, AFL-CIO Royal State Group since 1981; director of various civic (insurance). and charitable organizations. Douglas Philpotts Trustee Retired; formerly director, Chairman of 4 Trustee, Pacific Honolulu, HI since 1992 the Board and President of Hawaiian Capital Funds, which (11/21/31) Trust Company, Limited; present or includes 11 bond and former director of various Hawaii-based stock funds. civic and charitable organizations.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Oswald K. Stender Trustee Director, Hawaiian Electric Industries, 4 Trustee, Pacific Honolulu, HI since 1992 Inc., a public utility holding company, Capital Funds, which (10/08/31) 1993-2004; trustee, the Bernice Pauahi includes 11 bond and Bishop Estate 1990-1999; trustee, Office stock funds; of Hawaiian Affairs and a member or director, Grace trustee of several community Pacific Corporation, organizations. an asphalt paving company, and ACE Trucking Inc. OTHER INDIVIDUALS CHAIRMAN EMERITUS(8) Lacy B. Herrmann Founder, Chairman Founder and Chairman of the Board, N/A N/A New York, NY Emeritus since 2004, Aquila Management Corporation, the (05/12/29) Trustee, 1984-2004, sponsoring organization and parent of and Chairman of the the Manager or Administrator and/or Board of Trustees, Adviser or Sub-Adviser to each fund of 1984-2003 the Aquilasm Group of Funds; Chairman of the Manager or Administrator and/or Adviser or Sub-Adviser to each since 2004; Founder and Chairman Emeritus of each fund in the Aquilasm group of Funds. Previously Chairman and a Trustee of each fund in the Aquilasm Group of Funds since its establishment until 2004 or 2005; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- OFFICERS Charles E. Executive Vice Executive Vice President of all funds in N/A N/A Childs, III President since the Aquilasm Group of Funds and the New York, NY 2003 Administrator and the Administrator's (04/01/57) parent since 2003; formerly Senior Vice President, corporate development, Vice President, Assistant Vice President and Associate of the Administrator's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Sherri Foster Senior Vice Senior Vice President, Hawaiian Tax-Free N/A N/A Lahaina, HI President since Trust since 1993 and formerly Vice (07/27/50) 1993 President or Assistant Vice President; Vice President or Assistant Vice President of three Aquila Money-Market Funds; Registered Representative of the Distributor since 1985. Stephen J. Caridi Vice President Vice President of the Distributor since N/A N/A New York, NY since 1998 1995; Vice President, Hawaiian Tax-Free (05/06/61) Trust since 1998; Senior Vice President, Narragansett Insured Tax-Free Income Fund since 1998, Vice President 1996-1997; Senior Vice President, Tax-Free Fund of Colorado since 2004; Assistant Vice President, Tax-Free Fund For Utah since 1993. Robert W. Anderson Chief Compliance Chief Compliance Officer of the Trust N/A N/A New York, NY Officer since 2004 and each of the other funds in the (08/23/40) and Assistant Aquilasm Group of Funds, the Secretary since Administrator and the Distributor since 2000 2004, Compliance Officer of the Administrator or its predecessor and current parent since 1998 and Assistant Secretary of the Aquilasm Group of Funds since 2000. Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquilasm N/A N/A New York, NY Officer since 2003 Group of Funds since 2003 and Treasurer (11/06/56) and Treasurer since since 2000. 2000
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Edward M. W. Hines Secretary since Partner, Hollyer Brady Barrett & Hines N/A N/A New York, NY 1984 LLP, legal counsel to the Trust, since (12/16/39) 1989; Secretary of the Aquilasm Group of Funds. John M. Herndon Assistant Secretary Assistant Secretary of the Aquilasm N/A N/A New York, NY since 1995 Group of Funds since 1995 and Vice (12/17/39) President of the three Aquila Money-Market Funds since 1990; Vice President of the Administrator or its predecessor and current parent since 1990. Lori A. Vindigni Assistant Treasurer Assistant Treasurer of the Aquilasm N/A N/A New York, NY since 2000 Group of Funds since 2000; Assistant (11/02/66) Vice President of the Administrator or its predecessor and current parent since 1998; Fund Accountant for the Aquilasm Group of Funds, 1995-1998.
- ---------- (1) The Trust's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll free). (2) From time to time Bank of Hawaii may enter into normal investment management, commercial banking and lending arrangements with one or more of the Trustees of the Trust and their affiliates. The Asset Management Group of Bank of Hawaii is the Trust's investment adviser. (3) The mailing address of each Trustee and officer is c/o Hawaiian Tax-Free Trust, 380 Madison Avenue, Suite 2300, New York, NY 10017. (4) Each Trustee holds office until the next annual meeting of shareholders or until his or her successor is elected and qualifies. The term of office of each officer is one year. (5) Includes certain Aquila-sponsored funds that are dormant and have no public shareholders. (6) Ms. Herrmann is an interested person of the Trust as an officer of the Trust, as a director, officer and shareholder of the Administrator's corporate parent, as an officer and Manager of the Administrator, and as a shareholder and director of the Distributor. (7) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these 11 funds, which do not include the dormant funds described in footnote 5, are called the "Aquilasm Group of Funds." (8) The Chairman Emeritus may attend Board meetings but has no voting power. - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Trust, you may incur two types of costs: (1) transaction costs, including front-end sales charges with respect to Class A shares or contingent deferred sales charges ("CDSC") with respect to Class C shares; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Trust expenses. The tables below are intended to help you understand your ongoing costs (in dollars) of investing in the Trust and to compare these costs with the ongoing costs of investing in other mutual funds. The tables below are based on an investment of $1,000 invested on October 1, 2005 and held for the year ended March 31, 2006. ACTUAL EXPENSES This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". FOR THE SIX MONTHS ENDED MARCH 31, 2006 ACTUAL TOTAL RETURN BEGINNING ENDING EXPENSES WITHOUT ACCOUNT ACCOUNT PAID DURING SALES CHARGES(1) VALUE VALUE THE PERIOD(2) - -------------------------------------------------------------------------------- Class A 0.28% $1,000.00 $1,002.80 $ 3.65 - -------------------------------------------------------------------------------- Class C (0.12)% $1,000.00 $ 998.80 $ 7.62 - -------------------------------------------------------------------------------- Class Y 0.48% $1,000.00 $1,004.80 $ 2.65 - -------------------------------------------------------------------------------- (1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY, AT NET ASSET VALUE AND DOES NOT REFLECT THE DEDUCTION OF THE APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS C SHARES. TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR. (2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.73%, 1.53% AND 0.53% FOR THE TRUST'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Trust's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Trust and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the Trust with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, with respect to Class A shares. The example does not reflect the deduction of the applicable sales charges or contingent deferred sales charges ("CDSC") with respect to Class C shares. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transaction costs were included, your costs would have been higher. FOR THE SIX MONTHS ENDED MARCH 31, 2006 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD(1) - -------------------------------------------------------------------------------- Class A 5.00% $1,000.00 $1,021.29 $ 3.68 - -------------------------------------------------------------------------------- Class C 5.00% $1,000.00 $1,017.30 $ 7.62 - -------------------------------------------------------------------------------- Class Y 5.00% $1,000.00 $1,022.29 $ 2.65 - -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.73%, 1.53% AND 0.53% FOR THE TRUST'S CLASS A, C AND Y SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code and no action on the part of shareholders is required. For the fiscal year ended March 31, 2006, $27,503,747 of dividends paid by Hawaiian Tax-Free Trust, constituting 98.3% of total dividends paid during fiscal 2006, were exempt-interest dividends, exempt from regular Federal income tax and Hawaii state income tax; $459,045 of dividends paid by the Trust constituting 1.64% of total dividends paid during the fiscal year were capital gain distributions; and the balance was ordinary dividend income. Prior to January 31, 2006, shareholders were mailed IRS Form 1099-DIV which contained information on the status of distributions paid for the 2005 calendar year. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquilasm Group of Funds produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent the entire list of portfolio securities of your Trust twice a year in the semi-annual and annual reports you receive. Additionally, we prepare, and have available, portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your Trust's portfolio other than in your shareholder reports, please check our website http://www.aquilafunds.com or call us at 1-800-437-1020. The Trust additionally files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the SEC website at http://www.sec.gov. You may also review or, for a fee, copy the forms at the SEC's Public Reference Room in Washington, DC or by calling 800-SEC-0330. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROXY VOTING RECORD (UNAUDITED) The Trust does not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2005 with respect to which the Trust was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRIVACY NOTICES (UNAUDITED) HAWAIIAN TAX-FREE TRUST OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Trust we collect certain nonpublic personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about a fund. INFORMATION WE COLLECT. "Nonpublic personal information" is personally identifiable financial information about you as an individual or your family. The kinds of nonpublic personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose nonpublic personal information about you to companies that provide necessary services to us, such as the Trust's transfer agent, distributor, investment adviser or sub-adviser, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to nonpublic personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all nonpublic personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all nonpublic information about you that each of these companies may obtain in connection with services provided to the Trust or to you as a shareholder of the Trust. - -------------------------------------------------------------------------------- (THIS PAGE INTENTIONALLY LEFT BLANK) FOUNDERS Lacy B. Herrmann, Chairman Emeritus AQUILA MANAGEMENT CORPORATION ADMINISTRATOR AQUILA INVESTMENT MANAGEMENT LLC 380 Madison Avenue, Suite 2300 New York, New York 10017 INVESTMENT ADVISER ASSET MANAGEMENT GROUP of BANK of HAWAII P.O. Box 3170 Honolulu, Hawaii 96802 BOARD OF TRUSTEES Theodore T. Mason, Chair Diana P. Herrmann, Vice Chair Thomas W. Courtney Stanley W. Hong Russell K. Okata Douglas Philpotts Oswald K. Stender OFFICERS Diana P. Herrmann, President Sherri Foster, Senior Vice President Stephen J. Caridi, Vice President Robert W. Anderson, Chief Compliance Officer Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR AQUILA DISTRIBUTORS, INC. 380 Madison Avenue, Suite 2300 New York, New York 10017 CUSTODIAN BANK ONE TRUST COMPANY, N.A. 1111 Polaris Parkway Columbus, Ohio 43240 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC Inc. 101 Sabin Street Pawtucket, RI 02860 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker LLP 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Further information is contained in the Prospectus, which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of March 31, 2006 (the end of the reporting period) the Trust has adopted a code of ethics that applies to the Trust's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002; (f)(1) Pursuant to Item 10(a)(1), a copy of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Trust's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various areas, including the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties under the Charter. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES a) Audit Fees - The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements were $23,320 in 2005 and $18,000 in 2006. b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years. c) Tax Fees - The Registrant was billed by the principal accountant $8,279 and $3,000 in 2005 and 2006, respectively, for return preparation and tax compliance. d) All Other Fees - There were no additional fees paid for audit and non-audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure that information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated to registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS. (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HAWAIIAN TAX-FREE TRUST By: /s/ Diana P. Herrmann - - --------------------------------- Vice Chair, President and Trustee June 8, 2006 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Chief Financial Officer and Treasurer June 8, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Diana P. Herrmann - - --------------------------------- Diana P. Herrmann Vice Chair, President and Trustee June 8, 2006 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer June 8, 2006 HAWAIIAN TAX-FREE TRUST EXHIBIT INDEX (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a) (2)Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940. EX-99.CODE ETH 2 sarbanes.txt SARBANES OXLEY CODE OF ETHICS AQUILASM GROUP OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS UNDER SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 I. Covered Officers/Purpose of the Code This is the code of ethics (the "Code") for the investment companies within the Aquilasm Group of Funds (collectively, "Funds" and each, a "Fund," each of which is detailed in Exhibit A). It applies to the Fund's Principal Executive Officer(s) and Principal Financial Officer(s) (the "Covered Officers," each of whom is listed in Exhibit B), for the purpose of promoting: *honest and ethical conduct, including the ethical handling of actual; *or apparent conflicts of interest between personal and professional relationships; *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 Fund; *compliance with applicable laws and governmental rules and regulations; *the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and *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/her service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("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 Fund because of their status as "affiliated persons" of the Fund. The Fund's and the investment adviser'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 Fund and the investment adviser 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 Fund or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Trustees ("Boards") 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 Fund. Each Covered Officer must: *not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; *not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; There are some conflict of interest situations that should always be discussed with the general counsel of the Fund ("General Counsel"), if material. Examples of these include: *service as a director on the board of any public or private company; *the receipt of any non-nominal gifts; *the receipt of any entertainment from any company with which the Fund 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; *any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; *a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund 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 and Compliance Each Covered Officer should familiarize himself/herself with the disclosure requirements generally applicable to the Fund; *each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Trustees and auditors, and to governmental regulators and self-regulatory organizations; each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: *upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code; *annually thereafter affirm to the Board that he/she has complied with the requirements of the Code; *not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and *notify the Chair of the Audit Committee of the Fund promptly if he/she knows of any violation of this Code. Failure to do so is itself a violation of this Code. *file at least annually a complete and accurate Funds' Trustees and Officers Questionnaire. The General Counsel 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, any approvals or waivers1 sought by the Chairman of the Board or the President will be considered by the Audit Committee (the "Committee"). The Funds will follow these procedures in investigating and enforcing this Code: *the General Counsel will take all appropriate action to investigate any potential violations reported to him; *if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; any matter that the General Counsel believes is a violation will be reported to the Committee; * if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * the Committee will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as othe policies or procedures of the Funds, the Funds' 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 superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act and the adviser's more detailed policies and procedures set forth in their respective codes 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 B, must be approved or ratified by a majority vote of the Board, including a majority of 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 the General Counsel, and if deemed appropriate by the Board, with other Funds in the complex where the Funds share a common Covered Officer. VIII. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. Exhibit A Funds Covered by this Code of Ethics - ------------------------------------ Aquila Three Peaks High Income Fund Aquila Rocky Mountain Equity Fund Capital Cash Management Trust Cash Assets Trust series, consisting of Pacific Capital Cash Assets Trust Pacific Capital Tax-Free Cash Assets Trust Pacific Capital U.S. Government Cash Assets Trust Churchill Cash Reserves Trust Churchill Tax-Free Trust Hawaiian Tax-Free Trust Narragansett Insured Tax-Free Income Fund Tax-Free Fund For Utah Tax-Free Fund of Colorado Tax-Free Trust of Arizona Tax-Free Trust of Oregon Exhibit B Persons Covered by this Code of Ethics - -------------------------------------- The following officers of each Fund, and the identities of such officers as of March 31, 2006: Chairman and/or Chairman Emeritus And Founder Lacy B. Herrmann Vice Chair and/or Trustee and/or President Diana P. Herrmann Chief Financial Officer and Treasurer Joseph P. DiMaggio EX-99.CERT 3 htf306tcert.txt SECTION 306 CERTIFICATION CERTIFICATIONS I, Diana P. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Hawaiian Tax-Free Trust; 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; 2. 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 8, 2006 /s/ Diana P. Herrmann - - ---------------------- Title: Vice Chair, President and Trustee I, Joseph P. DiMaggio, certify that: 1. I have reviewed this report on Form N-CSR of Hawaiian Tax-Free Trust; 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; 2. Based on my knowledge, the financial statements, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 8, 2006 /s/ Joseph P. DiMaggio - - ------------------------ Title: Chief Financial Officer and Treasurer EX-99.906 CERT 4 htft906cert.txt SECTION 906 CERTIFICATION CERTIFICATIONS Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (subsections and (b) of section 1350, chapter 63 of title 18,United States Code), each of the undersigned officers of Hawaiian Tax-Free Trust, do hereby certify to such officer's knowledge, that: The report on Form N-CSR of Hawaiian Tax-Free Trust for the period ended March 31, 2006 (the "Form N-CSR")fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Hawaiian Tax-Free Trust. Dated: June 8, 2006 /s/ Diana P. Herrmann ---------------------- Vice Chair, President and Trustee Hawaiian Tax-Free Trust Dated: June 8, 2006 /s/ Joseph P. DiMaggio ----------------------- Chief Financial Officer and Treasurer Hawaiian Tax-Free Trust A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Hawaiian Tax-Free Trust and will be retained by Hawaiian Tax-Free Trust and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----