INVESTMENT ADVISER
Pacific Century Trust
a division of
Bank of Hawaii
Financial Plaza of the Pacific * P.O. Box 3170
Honolulu, Hawaii 96802
ADMINISTRATOR
Aquila Management Corporation
380 Madison Avenue, Suite 2300 * New York, New York 10017
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Vernon R. Alden
Arthur K. Carlson
William M. Cole
Thomas W. Courtney
Richard W. Gushman, II
Stanley W. Hong
Theodore T. Mason
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
OFFICERS
Lacy B. Herrmann, President
Diana P. Herrmann, Senior Vice President
Charles E. Childs, III, Vice President
Sherri Foster, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
Aquila Distributors, Inc.
380 Madison Avenue, Suite 2300 * New York, New York 10017
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC Inc.
400 Bellevue Parkway * Wilmington, Delaware 19809
CUSTODIAN
Bank One Trust Company, N.A.
100 East Broad Street * Columbus, Ohio 43271
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue * New York, New York 10154
Further information is contained in the Prospectus,
which must precede or accompany this report.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 1997
THE PACIFIC CAPITAL FUNDS
OF
CASH ASSETS TRUST
PACIFIC CAPITAL CASH ASSETS TRUST
PACIFIC CAPITAL TAX-FREE
CASH ASSETS TRUST
PACIFIC CAPITAL U.S. TREASURIES
CASH ASSETS TRUST
[Logo of The Pacific Capital Funds of Cash Assets Trust: Side view of a
standing lion above a thick rope]
A CASH MANAGEMENT
INVESTMENT
<PAGE>
THE PACIFIC CAPITAL FUNDS
OF
CASH ASSETS TRUST
SEMI-ANNUAL REPORT
November 17, 1997
Dear Investor:
We are pleased to provide you with the Semi-Annual Report for The
Pacific Capital Funds of Cash Assets Trust for the six-month period ended
September 30, 1997.
The enclosed Semi-Annual Report includes the three series of Cash
Assets Trust (the "Trust"): Pacific Capital Cash Assets Trust, Pacific
Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Treasuries Cash
Assets Trust and its two classes of shares: Original Shares and Service
Shares.
ECONOMIC REVIEW
1997 began with investors wondering whether the brisk U.S.
economic growth of the 4th quarter of 1996 would carry over into the new
year. Indeed, as key indicators revealed continued strength in the economy,
forecasts of economic growth were revised upward as business activity and
consumer spending continued to expand. By the end of the first quarter, the
economy had barrelled ahead at a 4.9% annualized pace, its fastest in recent
years. But as investors have come to realize, good news for the economy is
bad news for the financial markets since strong economic growth can rekindle
higher inflation. Concerned that a continued strong economy and low
unemployment would potentionally put additional upward pressure on wages and
ultimately prices, the Federal Reserve voted on March 25th to raise
short-term interest rates for the first time in more than two years.
However, despite the early warning signs of potentially higher inflation, the
Fed has since left interest rates unchanged in recent months because actual
gauges of prices have remained stable or in some cases have fallen.
MANAGEMENT DISCUSSION
Over the past several months, we have witnessed just how
intertwined the financial markets throughout the world have become in this
new global economy in which money, jobs and investments move with the simple
press of a computer key.
Yet, when the financial markets do become roiled, you can take
considerable comfort in the fact that safety of the principal value of your
investment and ready liquidity have always been, and continue to be, two of
the main goals in the management of investors' assets in The Pacific Capital
Funds of Cash Assets Trust.
<PAGE>
You can rest assured the Trust's Investment Adviser, Pacific
Century Trust, formerly known as Hawaiian Trust Company, Ltd., continues to
manage each of the Trust's investment portfolios with strict adherence to use
of securities having high quality and possessing minimal credit risk in order
to maintain safety for your cash reserves.
Looking forward, we are optimistic that the Trust will continue
to provide investors attractive yields compared to alternative money market
investments. Through alertness to market opportunities, the Trust can
produce a highly competitive return for its investors without compromising
safety.
All associated with The Pacific Capital Funds of Cash Assets
Trust pledge to you our continued diligence in the operation of the Trust for
your benefit. Your confidence in the Trust is most valued and appreciated.
Sincerely,
/s/ Lacy B. Herrmann
Lacy B. Herrmann
President and Chairman
of the Board of Trustees
<PAGE>
PACIFIC CAPITAL
CASH ASSETS TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
FACE
AMOUNT COMMERCIAL PAPER (72.7%) VALUE
Automotive (7.7%)
$20,000,000 Ford Motor Credit, 5.50%, 10/17/97 $19,951,111
16,500,000 Toyota Motor Credit, 5.49%, 11/05/97 16,411,931
36,363,042
Banking (21.5%)
20,000,000 Banco de Credito Nacional S.A. New York
Branch, 5.56%, 01/08/98 19,694,200
Letter of Credit: Barclays Bank PLC
20,000,000 BankAmerica Corp., 5.50%, 11/18/97 19,853,333
20,000,000 Cemex S.A., 5.53%, 10/09/97 19,975,422
Letter of Credit: Credit Suisse
20,000,000 J.P. Morgan & Co. Inc., 5.50%, 10/27/97 19,920,556
21,535,000 Pemex Capital Inc., 5.53%, 11/13/97 21,392,755
Letter of Credit: Swiss Bank Corp. 100,836,266
Broker/Dealer (8.5%)
20,000,000 Merrill Lynch & Company, Inc., 5.52%,
10/02/97 19,996,934
20,000,000 Morgan Stanley - Dean Witter, 5.51%,
10/08/97 19,978,573
39,975,507
Diversified (4.2%)
20,000,000 Cargill Incorporated, 5.50%, 11/13/97 19,868,611
Education (4.3%)
20,000,000 Harvard University, 5.46%, 10/08/97 19,978,689
Finance (17.0%)
20,000,000 Associates Corporation of North
America, 5.50%, 10/06/97 19,984,722
20,000,000 General Electric Capital Corp., 5.50%,
10/20/97 19,941,944
20,000,000 National Rural Utilities, 5.51%, 10/29/97 19,914,289
20,000,000 Norwest Financial Inc., 5.50%, 10/21/97 19,938,889
79,779,844
Insurance (2.1%)
10,000,000 Prudential Funding Corp., 5.54%, 01/20/98 9,829,183
Office Equipment (4.2%)
20,000,000 Pitney Bowes, 5.51%, 11/19/97 19,850,006
Oil & Gas Exploration (3.2%)
15,000,000 Stat Oil, 5.52%, 10/10/97 14,979,300
Total Commercial Paper (cost
$341,460,448) 341,460,448
<PAGE>
NOTES (15.8%)
U.S. Government Agencies (12.6%)
20,000,000 Federal Mortgage Corp., 5.42%, 11/18/97 19,855,467
20,000,000 Federal National Mortgage Association,
5.345%, 12/15/97 19,777,292
20,000,000 Federal Home Loan Bank, 5.39%, 03/06/98 19,532,866
59,165,625
Insurance (3.2%)
15,000,000 Providian Life and Health Insurance
Company, Variable Rate Notes, 5.78%,
12/30/97 (1) 15,000,000
Total Notes (cost $74,165,625) 74,165,625
REPURCHASE AGREEMENTS (12.0%)
28,000,000 Dresdner Kleinwort Benson North America
LLC, 5.90%, due 10/01/97 28,000,000
(Proceeds of $28,004,511 to be received
at maturity)
Collateral: $28,485,000 U.S. Treasury
Notes 5.125%, due 02/28/98
Collateral Market Value $28,560,000
28,490,000 Barclays de Zoete Wedd Securities, Inc.,
5.85%, due 10/01/97 28,490,000
(Proceeds of $28,494,630 to be received
at maturity)
Collateral: $28,000,000 U.S. Treasury
Notes 6.50%, due 05/31/01
Collateral Market Value $29,059,800
Total Repurchase Agreements (cost
$56,490,000) 56,490,000
Total Investments (cost
$472,116,073*) 100.5% 472,116,073
Liabilities in excess of
other assets (0.5) (2,157,290)
Net Assets 100.0% $ 469,958,783
(*) Cost for Federal tax purposes is identical.
(1) Illiquid security. The security is considered illiquid because
it may not be sold, and may be redeemed only upon at least ninety
days' notice to the issuer.
<PAGE>
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/ MARKET
AMOUNT BONDS AND NOTES (99.5%) S&P VALUE
<C> <S> <C> <C>
ARIZONA (1.1%)
Arizona State Transportation Board, Highway
Revenue, Refunding Bond,
$1,000,000 4.25%, 07/01/98 Aa/AAA $ 1,003,242
CALIFORNIA (1.1%)
County of San Mateo, Tax and Revenue
Anticipation Notes, General Obligation,
1,000,000 4.50%, 07/01/98 NR/Sp1+ 1,005,041
FLORIDA (4.6%)
Jacksonville, FL Electric Authority
Revenue Bonds St. Johns River,
1,000,000 5.00%, 10/01/97 Aa1/AA 1,000,000
Jacksonville, FL Electric Authority
Revenue Bonds, Tax Exempt Commercial
Paper Series,
3,000,000 3.60%, 10/09/97 P-1/A-1+ 3,000,000
Total Florida 4,000,000
GEORGIA (3.4%)
Cobb County, GA School District, General
Obligation,
3,000,000 5.00%, 2/1/98 Aa1/AA 3,014,250
HAWAII (46.9%)
Hawaii State, General Obligation Bonds1991
Series BV, Refunding Bonds,
600,000 5.40%, 11/01/97 Aa3/A+ 600,668
Hawaii State, General Obligation Bonds 1993
Series CD, Refunding Bonds,
3,285,000 4.30%, 02/01/98 Aa3/A+ 3,291,272
Hawaii State, General Obligation Bonds 1993
Series CH, Escrowed to Maturity,
3,300,000 3.60%, 11/01/97 AAA/A+ 3,299,777
<PAGE>
Hawaii State, General Obligation Bonds 1992
Series BZ, Escrowed to Maturity,
3,500,000 5.50%, 10/01/97 Aaa/A+ 3,500,000
Hawaii State Department of Budget & Finance
Special Purpose Mortgage Revenue Bonds,
(Kaiser Medical Care Program), Adjustable
Rate Series A,
4,900,000 4.00%, 03/01/15, Putable 10/07/97* MIG1/A-1+ 4,900,000
Hawaii State Department of Budget & Finance
Citizens Utility Project (Tax Exempt
Commercial Paper Series),
1,550,000 3.65%, 10/07/97 NR/A-1+ 1,550,000
Hawaii State Department of Budget & Finance
Citizens Utility Project Series B (Tax
Exempt Commercial Paper Series),
1,190,000 3.75%, 10/17/97 NR/A-1+ 1,190,000
2,810,000 3.80%, 11/14/97 NR/A-1+ 2,810,000
Hawaii State Department Of Budget & Finance
Special Purpose Mortgage Revenue Bonds
(Kaiser Pemanente), Series A,
4,000,000 3.75%, 03/01/14, 6 month Put, next putable
date 03/02/98 NR/A-1+ 4,000,000
Hawaii State Department Of Budget & Finance
Special Purpose Mortgage Revenue Bonds (The
Queens Medical Center Project),
1,345,000 7.00%, 07/01/08, Prerefunded @ 102 07/01/98 Aaa/AAA 1,402,913
Insurance: Financial Guaranty Insurance Co.
Hawaii State Housing Finance & Development
Corp. Revenue Bonds (Rental Housing System)
Series 89 A,
1,900,000 4.15%, 07/01/24, Putable 10/07/97* MIG1/NR 1,900,000
Letter of Credit: Banque Nationale de Paris
Hawaii State Housing Finance & Development
Corp. Revenue Bonds (Affordable Rental
Housing Program) Series A,
5,300,000 4.00%, 07/01/27, Putable 10/07/97* MIG1/NR 5,300,000
Letter of Credit: Banque National de Paris
<PAGE>
Honolulu City & County, HI General Obligation
Bonds, Series A,
1,000,000 7.30%, 04/01/98 Aa2/AA 1,017,638
Honolulu City & County, HI General Obligation
Bonds, Series B, Refunding Bonds,
500,000 4.20%, 10/01/97 Aa2/AA 500,000
Honolulu City & County, HI General Obligation
Bonds, Series B, Escrowed to Maturity,
500,000 6.90%, 10/01/97 Aaa/AA 500,000
Honolulu City & County, HI General Obligation
Bonds, Series D, Escrowed to Maturity,
500,000 6.20%, 12/01/97 Aaa/AA 501,908
Kauai County, HI General Obligation Bonds,
Series A,
450,000 4.00%, 08/01/98 Aaa/AAA 450,722
Insurance: Municipal Bond Investors
Assurance
Secondary Market Services Corporation Hawaii
Student Loan Revenue, Senior Series II,
4,500,000 4.15%, 09/01/10, Putable 10/07/97* MIG1/A-1+ 4,500,000
Letter of Credit: National Westminster,
Guaranteed Student Loans
Total Hawaii 41,214,898
IDAHO (3.1%)
Idaho Health Facilities Authorized Revenue
Bonds (St Lukes Regional Medical Center
Project),
2,750,000 3.85%, 05/01/22, Putable 10/01/97* MIG1/NR 2,750,000
Letter of Credit: Credit Suisse
ILLINOIS (1.8%)
Illinois Health Facilities Authority
Revenue Bonds (Central Dupage Health Corp.
Project),
1,540,000 3.85%, 11/01/20, Putable 10/01/97* MIG1/NR 1,540,000
Letter of Credit: Rabobank Nederland
INDIANA (6.1%)
Gary, IN Environmental Improvement Revenue
Bonds (US Steel Corporation Project),
3,100,000 3.80%, 07/15/02, Putable 10/15/97* P-1/A1+ 3,100,000
Letter of Credit: Bank of Nova Scotia
<PAGE>
Indianapolis, IN Economic Development Revenue
Bonds (Jewish Federation Campus),
2,220,000 4.05%, 04/01/05, Putable 10/01/97* MIG1/NR 2,220,000
Letter of Credit: NBD Bank
Total Indiana 5,320,000
KENTUCKY (2.4%)
Warsaw, KY Industrial Building Revenue Bonds
(Operating Partnership) ,
2,100,000 4.20%, 08/01/09, Putable 10/07/97* NR/A-1+ 2,100,000
Letter of Credit: Fifth Third Bank, Ohio
LOUISIANA (2.8%)
De Soto Parish, LA Pollution Control
Revenue Bonds (Central Louisiana
Electric Company) Series A,
2,500,000 4.00%, 07/01/18, Putable 10/07/97* MIG1/A-1+ 2,500,000
Letter of Credit: Westdeutsche Landesbank
NEW MEXICO (2.3%)
Albuquerque, NM Airport Revenue Bonds
Series A,
2,000,000 4.20%, 07/01/17, Putable 10/07/97* MIG1/A-1+ 2,000,000
Letter of Credit: Bayerische Landesbank
NORTH CAROLINA (1.6%)
Durham County, NC General Obligation Bonds,
Public Improvement Project,
1,400,000 4.15%, 02/01/09, Putable 10/07/97* MIG1/A-1+ 1,400,000
Letter of Credit: Wachovia Bank of NC
OHIO (1.9%)
Ohio State Air Quality Development Authority
Revenue Bonds, Series A,
1,500,000 4.10%, 12/01/15, Putable 10/01/97* NR/A-1+ 1,500,000
Letter of Credit: Union Bank of Switzerland
Ohio State University Revenue Bonds, General
Receipts, Series B,
195,000 3.95%, 12/01/06, Putable 10/07/97* NR/A-1+ 195,000
Letter of Credit: National Westminster
Total Ohio 1,695,000
<PAGE>
OREGON (2.3%)
Multnomah County, Oregon General Obligation,
Tax and Revenue Anticipation Notes,
2,000,000 4.50%, 06/30/98 MIG1/NR 2,009,573
PENNSYLVANIA (2.1%)
Pennsylvania State, Higher Education
Assistance Agency, Student Loan Revenue
Bonds, Series B,
1,800,000 4.10%, 07/01/18, Putable 10/07/97* MIG1/A-1+ 1,800,000
Letter of Credit: Sallie Mae
TEXAS (5.7%)
Lower Neches Valley Authority of Texas
Revenue Bonds (Chevron USA Income
Project),
1,500,000 3.75%, 02/15/17, 6 month put, next putable
date 02/15/98 NR/A-1+ 1,500,000
Texas State Tax & Revenue Anticipation Notes
Series A,
2,000,000 4.75%, 08/31/98 MIG1/Sp1+ 2,016,028
Alamo Texas Comunity College District,
General Obligation Bonds,
1,000,000 7.00%, 02/15/98 Aa2/AA 1,011,661
Austin Texas Independent School District,
General Obligation Bonds,
500,000 5.00%, 08/01/98 Aaa/AAA 504,565
Letter of Credit: PSF - Guaranty
Total Texas 5,032,254
VERMONT (1.3%)
Vermont State Student Assistance Corp.
Revenue Bonds (Student Loan Revenue),
1,100,000 3.75%, 01/01/04, Putable 10/07/97* MIG1/NR 1,100,000
Letter of Credit: National Westminster
VIRGINIA (0.6%)
Virginia State Transportation Board,
Transportation Contract, Revenue Bonds,
(Rte 28 Project),
500,000 5.40%, 04/01/98 Aa/AA 503,945
<PAGE>
WASHINGTON (4.1%)
Washington State Health Care Facility
Authority Variable Rate Demand (Fred
Hutchinson Cancer Research Center,
Seattle) Series 1991 A&B,
2,540,000 3.85%, 01/01/18, Putable 10/01/97* MIG1/NR 2,540,000
1,060,000 3.85%, 01/01/18, Putable 10/01/97* MIG1/NR 1,060,000
Letter of Credit: Morgan Guaranty Trust
Total Washington 3,600,000
WISCONSIN (4.3%)
Milwaukee Wisconsin, General Obligation,
Promisory Notes, Series A5,
1,405,000 5.50%, 02/15/98 Aa1/AA+ 1,413,128
Milwaukee Wisconsin, General Obligation,
Series C,
1,185,000 4.75%, 06/15/98 Aa1/AA+ 1,192,432
Wisconsin State, General Obligation,
Series 1, Refunding Bonds,
1,200,000 4.40%, 05/01/98 Aa2/AA 1,202,208
Total Wisconsin 3,807,768
Total Investments (cost $87,395,971**) 99.5% 87,395,971
Liabilities in excess of other assets .5 438,822
Net Assets 100.0% $ 87,834,793
<FN> (*) Variable rate obligation payable at par on
demand at any time on no more than seven days
notice.</FN>
<FN> (**) Cost for Federal tax purposes is identical. </FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
PACIFIC CAPITAL
U.S. TREASURIES CASH ASSETS TRUST
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
FACE
AMOUNT U.S. TREASURY BILLS (66.92%) VALUE
$20,000,000 4.99%, due 10/09/97 $ 19,977,822
20,000,000 4.98%, due 10/16/97 19,958,500
20,000,000 5.115%, due 10/23/97 19,937,483
10,000,000 4.83%, due 11/06/97 9,951,700
20,000,000 5.095%, due 11/13/97 19,878,286
10,000,000 4.89%, due 11/28/97 9,921,217
20,000,000 4.95%, due 12/11/97 19,804,750
20,000,000 5.04%, due 02/05/98 19,644,400
Total U.S. Treasury Bills (cost
$139,074,158) 139,074,158
U.S. TREASURY NOTES (19.27%)
20,000,000 7.375%, due 11/15/97 20,043,472
20,000,000 5.375%, due 11/30/97 19,995,795
Total U.S. Treasury Notes (cost
$40,039,267) 40,039,267
REPURCHASE AGREEMENTS (13.77%)
14,603,000 Barclays de Zoete Wedd Securities, Inc.,
5.85%, due 10/01/97 14,603,000
(Proceeds of $14,605,373 to be received
at maturity)
Collateral: $14,400,000 U.S. Treasury
Notes 6.50%, due 05/31/01
Collateral Market Value $14,895,060
14,000,000 Dresdner Kleinwort Benson North America
LLC, 5.80%, due 10/01/97 14,000,000
(Proceeds of $14,002,256 to be received at
maturity)
Collateral: $14,245,000 U.S. Treasury
Notes 5.125%, due 02/28/98
Collateral Market Value $14,280,000
Total Repurchase Agreements (cost
$28,603,000) 28,603,000
Total Investments (cost
$207,716,425*) 99.96% 207,716,425
Liabilities in excess of other
assets .04 78,190
Net Assets 100.00% $ 207,794,615
(*) Cost for Federal tax purposes is identical.
See accompanying notes to financial statements
<PAGE>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 (UNAUDITED)
CASH TAX-FREE TREASURIES
FUND FUND FUND
ASSETS:
Investments, at value $ 472,116,073 $ 87,395,971 $ 207,716,425
(cost: $472,116,073,
$87,395,971 and
$207,716,425, respectively)
Cash 523 5,433 (9,995)
Interest receivable 81,349 731,071 922,001
Other assets 10,628 551 356
Total Assets 472,208,573 88,133,026 208,628,787
LIABILITIES:
Dividends payable 1,982,370 225,169 737,793
Adviser and Administrator fees
payable 200,202 27,824 56,418
Distribution fees payable 17,329 4,868 26,076
Accrued expenses 49,889 40,372 13,885
Total Liabilities 2,249,790 298,233 834,172
NET ASSETS $ 469,958,783 $ 87,834,793 $ 207,794,615
NET ASSETS CONSIST OF:
Capital Stock - Authorized an
unlimited number of shares,
par value $.01 per share $ 4,706,281 $ 878,327 $ 2,077,858
Additional paid-in capital 465,921,791 86,954,335 205,707,984
Accumulated net realized gain
(loss) on investments (669,289) 2,131 8,773
$ 469,958,783 $ 87,834,793 $ 207,794,615
SHARES OF BENEFICIAL INTEREST:
Original Shares Class:
Net Assets $ 381,888,927 $ 65,498,871 $ 65,185,678
Shares outstanding 382,577,427 65,497,418 65,178,923
Net asset value per share $1.00 $1.00 $1.00
Service Shares Class:
Net Assets $ 88,069,856 $ 22,335,922 $ 142,608,937
Shares outstanding 88,050,646 22,335,243 142,606,918
Net asset value per share $ 1.00 $ 1.00 $ 1.00
See accompanying notes to financial statements
<PAGE>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
CASH TAX-FREE TREASURIES
FUND FUND FUND
INVESTMENT INCOME:
Interest income $ 13,357,464 $ 1,821,074 $ 4,665,819
EXPENSES:
Investment Adviser fees (note 3) 862,126 133,536 271,958
Administrator fees (note 3) 329,817 62,539 79,566
Distribution fees (note 3) 94,940 29,982 130,928
Trustees' fees and expenses 65,000 30,000 27,000
Legal fees 28,000 13,000 12,000
Shareholders' reports and proxy
statements 25,000 9,000 6,000
Registration fees and dues 18,000 5,000 5,000
Fund accounting fees 15,000 15,000 15,000
Custodian fees (note 6) 14,324 11,085 6,310
Audit and accounting fees 14,000 13,000 11,000
Transfer and shareholder servicing
agent fees 11,000 11,000 8,000
Insurance 6,000 1,000 1,000
Miscellaneous 15,470 5,870 13,197
Total expenses 1,498,677 340,012 586,959
Expenses paid indirectly (note 6) (14,324) (185) (100)
Net expenses 1,484,353 339,827 586,859
Net investment income 11,873,111 1,481,247 4,078,960
Net realized gain (loss) from
securities transactions 46,649 - (781)
Net increase in net assets
resulting from operations $ 11,919,760 $ 1,481,247 $ 4,078,179
See accompanying notes to financial statements
<PAGE>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
CASH FUND TAX-FREE FUND TREASURIES FUND
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
Sept. 30, March 31, Sept. 30, March 31, Sept. 30, March 31,
1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 11,873,111 $ 19,349,816 $ 1,481,247 $ 4,151,691 $ 4,078,960 $ 5,735,313
Net realized gain (loss)
from securities transactions 46,649 46,777 - 2,857 (781) 4,476
Net increase in net assets
resulting from operations 11,919,760 19,396,593 1,481,247 4,154,548 4,078,179 5,739,789
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares (10,065,211) (17,064,462) (1,141,962) (3,599,870) (1,701,252) (3,218,910)
Service Shares (1,807,900) (2,285,354) (339,285) (551,821) (2,377,708) (2,516,403)
Total dividends to
shareholders from net
investment income (11,873,111) (19,349,816) (1,481,247) (4,151,691) (4,078,960) (5,735,313)
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares 521,892,757 1,381,029,520 64,229,710 253,991,606 156,242,957 347,794,907
Service Shares 142,128,229 363,384,239 27,204,392 57,483,211 419,490,892 614,489,280
664,020,986 1,744,413,759 91,434,102 311,474,817 575,733,849 962,284,187
Reinvested dividends and
distributions:
Original Shares 63,480 123,463 62,556 131,295 29,769 58,222
Service Shares 1,726,898 2,156,127 336,922 535,951 2,228,471 2,238,344
1,790,378 2,279,590 399,478 667,246 2,258,240 2,296,566
Cost of shares redeemed:
Original Shares (561,471,995) (1,268,495,494) (89,788,594) (288,308,370) (156,793,179) (356,184,998)
Service Shares (121,555,693) (332,639,067) (30,721,702) (50,112,294) (362,534,228) (545,111,791)
(683,027,688) (1,601,134,561) (120,510,296) (338,420,664) (519,327,407) (901,296,789)
Change in net assets
from capital share
transactions (17,216,324) 145,558,788 (28,676,716) (26,278,601) 58,664,682 63,283,964
Total increase (decrease)
in net assets (17,169,675) 145,605,565 (28,676,716) (26,275,744) 58,663,901 63,288,440
NET ASSETS:
Beginning of period 487,128,458 341,522,893 116,511,509 142,787,253 149,130,714 85,842,274
End of period $469,958,783 $487,128,458 $87,834,793 $116,511,509 $207,794,615 $149,130,714
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Cash Assets Trust (the "Trust") was organized on May 7, 1984 as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940 (the "1940 Act") as an open-end investment company.
The Trust consists of the following three investment portfolios (referred
to individually as a "Fund" and collectively as the "Funds"): Pacific Capital
Cash Assets Trust (a diversified portfolio which commenced operations on
December 5, 1984), Pacific Capital Tax-Free Cash Assets Trust (a
non-diversified portfolio which commenced operations on April 4, 1989), and
Pacific Capital U.S. Treasuries Cash Assets Trust (a diversified portfolio
which commenced operations on April 4, 1989). The Trust is authorized to
issue for each Fund an unlimited number of shares of $.01 par value in two
classes of shares; the Original Shares Class and the Service Shares Class.
The Original Shares Class includes all currently outstanding shares of each
Fund that were issued prior to January 20, 1995, the date on which the
Capital structure was changed to include two classes rather than one. The two
classes of shares are substantially identical, except that Service Shares
bear the fees that are payable under the Trust's Distribution Plan.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. The policies are
in conformity with generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: Each Fund's portfolio securities
are valued by the amortized cost method permitted in
accordance with Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), which, after considering accrued
interest thereon, approximates market. Under this method,
a portfolio security is valued at cost adjusted for
amortization of premiums and accretion of discounts.
Amortization of premiums and accretion of discounts are
included in interest income.
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 premiums and accretion of
discounts as discussed in the preceding paragraph.
c) DETERMINATION OF NET ASSET VALUE AND CALCULATION OF
EXPENSES: The net asset value per share for each class of
the Funds' shares is determined as of 4:00 p.m. New York
time on each day that the New York Stock Exchange is open
by dividing the value of the assets of the Fund allocable
to that class less Fund liabilities allocable to the class
and any liabilities charged directly to the class,
exclusive of surplus, by the total number of shares of the
class outstanding. Investment income, realized and
unrealized gains and losses, if any and expenses other
than class specific expenses, are allocated daily to each
class of shares based upon the proportion of net assets
<PAGE>
of each class. Class specific expenses are borne by the
affected class. Service fee payments under Rule 12b-1 are
borne solely by and charged to the Service Shares based
on net assets of that class.
d) FEDERAL INCOME TAXES: It is the policy of each Fund
to qualify as a regulated investment company by
complying with the provisions of the Internal Revenue Code
applicable to certain investment companies. Each Fund
intends to make distributions of income and securities
profits sufficient to relieve it from all, or
substantially all, Federal income and excise taxes.
e) REPURCHASE AGREEMENTS: It is each Fund's policy
to monitor closely the creditworthiness of all
firms with which it enters into repurchase agreements, and
to take possession of, or otherwise perfect its security
interest in, securities purchased under agreements to
resell. The securities purchased under agreements to
resell are marked to market every business day so that the
value of the "collateral" is at least equal to the value
of the "loan" (repurchase agreements being defined as
"loans" in the 1940 Act), including the accrued interest
earned thereon, plus sufficient additional market value as
is considered necessary to provide a margin of safety.
f) USE OF ESTIMATES: The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial
statements and the reported amounts of increases and
decreases in net assets from operations during the
reporting period. Actual results could differ from those
estimates.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
On September 30, 1997, Pacific Century Trust (the "Adviser"), a division
of Bank of Hawaii, succeeded to the operations of Hawaiian Trust Company,
Limited, a subsidiary of Bank of Hawaii, which had served as Investment
Adviser to the Trust since its inception. In this role, under Investment
Advisory Agreements, the Adviser supervises the Funds' investments and
provides various services. The Funds also have Administration Agreements with
Aquila Management Corporation (the "Administrator", formerly Sub-Adviser and
Administrator) to provide all administrative services to the Funds other than
those relating to the investment portfolio and the maintenance of the
accounting books and records. Specific details as to the nature and extent of
the services provided by the Adviser and the Administrator are more fully
defined in the Prospectus and Statement of Additional Information of the
Funds. For their services, the Adviser and the Administrator each receive a
fee which is payable monthly and computed as of the close of business each
day on the net assets of each Fund at the following annual rates:
Pacific Capital Cash Assets Trust - On net assets up to $325 million, the
fee is paid to the Adviser and the Administrator at the annual rate of 0.33%
and 0.17%, respectively and on net
<PAGE>
assets above that amount at the annual rate of 0.43% and 0.07%, respectively.
For the six months ended September 30, 1997, the Fund incurred fees under the
Advisory Agreement and the Administration Agreement of $862,126 and $329,817,
respectively.
Pacific Capital Tax-Free Cash Assets Trust - On net assets up to $95
million, the fee is paid to the Adviser and the Administrator at the annual
rate of 0.27% and 0.13%, respectively and on net assets above that amount at
the annual rate of 0.33% and 0.07%, respectively. For the six months ended
September 30, 1997, the Fund incurred fees under the Advisory Agreement and
the Administration Agreement of $133,536 and $62,539, respectively.
Pacific Capital U.S. Treasuries Cash Assets Trust - On net assets up to
$60 million, the fee is paid to the Adviser and the Administrator at the
annual rate of 0.27% and 0.13%, respectively and on net assets above that
amount at the annual rate of 0.33% and 0.07%, respectively. For the six
months ended September 30, 1997, the Fund incurred fees under the Advisory
Agreement and the Administration Agreement of $271,958 and $79,566
respectively.
The Adviser and the Administrator each agrees that the above fees shall
be reduced, but not below zero, by an amount equal to its proportionate share
(determined on the basis of the respective fees computed as described above)
of the amount, if any, by which the total expenses of a Fund 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 Fund 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
Fund's total annual investment income. The payment of the above fees at the
end of any month will be reduced or postponed so that at no time will there
be any accrued but unpaid liability under this expense limitation. No such
reduction in fees was required during the six months ended September 30,
1997.
b) DISTRIBUTION AND SERVICE FEES:
Each Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. A part of the Plan authorizes payment of certain
distribution or service fees by the Service Shares class of the Fund. Such
payments are made to "Designated Payees"-broker-dealers, other financial
institutions and service providers who have entered into appropriate
agreements with the Distributor and which have rendered assistance in the
distribution and/or retention of the Funds' Service Shares or in the
servicing of Service Share accounts. The total payments under this part of a
Fund's Plan may not exceed 0.25 of 1% of its average annual assets
represented by Service Shares. No such payments will be made by the Original
Share class. Specific details about each Plan are more fully defined in the
Prospectus and Statement of Additional Information of the Funds.
<PAGE>
Under a Distribution Agreement, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of the Funds' shares. No
compensation or fees are paid to the Distributor for such share distribution.
4. DISTRIBUTIONS
The Funds declare dividends daily from net investment income and make
payments monthly in additional shares at the net asset value per share or in
cash, at the shareholder's option.
At September 30, 1997, the Cash Fund had a capital loss carryover of
approximately $669,289 which expires at March 31, 2003 and is available to
offset future net realized gains on securities transactions to the extent
provided for in the Internal Revenue Code. To the extent that this loss is
used to offset future realized capital gains, it is probable the gains so
offset will not be distributed.
5. GUARANTEES OF CERTAIN COMMERCIAL PAPER
Various banks and other institutions have issued irrevocable letters of
credit or guarantees for the benefit of the holders of certain commercial
paper. Payment at maturity of principal and interest of certain commercial
paper held by the Funds is supported by such letters of credit or guarantees.
6. CUSTODIAN FEES
The Funds have negotiated an offset arrangement with their custodian
wherein they receive credit toward the reduction of custodian fees whenever
there are uninvested cash balances. During the six months ended September 30,
1997, the custodian fees of the Cash Fund, the Tax-Free Fund and the
Treasuries Fund, amounted to $14,324, $11,085 and $6,310, respectively. Of
these amounts, $14,324, $185 and $100, respectively, were offset by such
credits. The Funds could have invested their cash balances in an
income-producing asset if they had not agreed to a reduction in fees under
the expense offset arrangement with the custodian.
<PAGE>
PACIFIC CAPITAL
CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
For a share outstanding throughout each period
<TABLE>
<CAPTION>
SERVICE SHARES(1) ORIGINAL SHARES(2)
Six Six
Months Year Year Period Months
Ended Ended Ended Ended Ended
Sept. 30, March 31, March 31, March 31, Sept. 30, Year ended March 31,
1997 1997 1996 1995** 1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment
Operations:
Net investment income 0.02 0.05 0.05 0.01 0.03 0.05 0.05 0.04 0.03 0.03
Less Distributions:
Dividends from net
investment income (0.02) (0.05) (0.05) (0.01) (0.03) (0.05) (0.05) (0.04) (0.03) (0.03)
Net Asset Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return (%) 2.41# 4.62 5.06 0.85# 2.54# 4.88 5.32 4.40 2.74 3.15
Ratios/Supplemental Data
Net Assets, End of
Period ($ millions) 88.1 65.8 32.9 3.5 381.9 421.4 308.7 486.7 407.1 268.0
Ratio of Expenses to
Average Net Assets
(%) 0.83* 0.85 0.86 0.83* 0.58* 0.60 0.60 0.59 0.59 0.61
Ratio of Net Investment
Income to Average
Net Assets (%) 4.76* 4.53 4.84 5.02* 5.02* 4.79 5.24 4.40 2.71 3.13
<CAPTION>
For periods after April 1, 1995, net investment income per share and the
ratios of income and expenses to average net assets without the expense
offset in custodian fees for uninvested cash balances would have been:
<S> <C> <C> <C> <C> <C> <C>
Net investment
income ($) 0.02 0.05 0.05 0.03 0.05 0.05
Ratio of Expenses
to Average Net
Assets (%) 0.84* 0.85 0.86 0.59* 0.60 0.61
Ratio of Net Investment
Income to Average
Net Assets (%) 4.75* 4.53 4.84 5.01* 4.78 5.23
<FN> (1) New class of shares established on January 20, 1995.</FN>
<FN> (2) Designated as the "Original Shares" class of shares on January
20, 1995.</FN>
<FN> ** For the period from February 1, 1995 (commencement of operations)
to March 31, 1995.</FN>
<FN> # Not annualized.</FN>
<FN> * Annualized.</FN>
</TABLE>
See accompanying notes to financial statements.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
For a share outstanding throughout each period
<TABLE>
<CAPTION>
SERVICE SHARES(1) ORIGINAL SHARES(2)
Six Six
Months Year Year Period Months
Ended Ended Ended Ended Ended
Sept. 30, March 31, March 31, March 31, Sept. 30, Year ended March 31,
1997 1997 1996 1995** 1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment
Operations:
Net investment
income 0.01 0.03 0.03 0.01 0.02 0.03 0.03 0.03 0.02 0.02
Less Distributions:
Dividends from net
investment income (0.01) (0.03) (0.03) (0.01) (0.02) (0.03) (0.03) (0.03) (0.02) (0.02)
Net Asset Value, End
of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return (%) 1.43# 2.75 3.11 0.52# 1.56# 3.00 3.37 2.74 2.02 2.52
Ratios/Supplemental
Data
Net Assets, End of
Period
($ millions) 22.3 25.5 17.6 1.4 65.5 91.0 125.2 138.3 113.9 69.3
Ratio of Expenses
to Average Net
Assets (%) 0.88* 0.80 0.80 0.77* 0.63* 0.55 0.54 0.55 0.56 0.54
Ratio of Net Investment
Income to Average
Net Assets (%) 2.83* 2.70 2.97 3.22* 3.08* 2.97 3.32 2.74 1.99 2.52
<CAPTION>
For the years 1994 and 1993, net investment income per share and the ratios
of income and expenses to average net assets without the Adviser's and
Administrator's voluntary waiver of fees and for periods after April 1, 1995,
without the expense offset in custodian fees for uninvested cash balances,
would have been:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment
Income ($) 0.01 0.03 0.03 0.02 0.03 0.03 0.02 0.02
Ratio of Expenses
to Average Net
Assets (%) 0.88* 0.80 0.80 0.63* 0.55 0.54 0.58 0.59
Ratio of Net
Investment Income
to Average Net
Assets (%) 2.83* 2.70 2.97 3.08* 2.97 3.32 1.97 2.47
<FN> (1) New class of shares established on January 20, 1995. </FN>
<FN> (2) Designated as the "Original Shares" class of shares on January 20,
1995.</FN>
<FN> ** For the period from February 1, 1995 (commencement of operations)
to March 31, 1995.</FN>
<FN> # Not annualized.</FN>
<FN> * Annualized.</FN>
</TABLE>
See accompanying notes to financial statements.
PACIFIC CAPITAL
U.S. TREASURIES CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
For a share outstanding throughout each period
<TABLE>
<CAPTION>
SERVICE SHARES(1) ORIGINAL SHARES(2)
Six Six
Months Year Year Period Months
Ended Ended Ended Ended Ended
Sept. 30, March 31, March 31, March 31, Sept. 30, Year ended March 31,
1997 1997 1996 1995** 1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment
Operations:
Net investment income 0.02 0.04 0.05 0.01 0.02 0.05 0.05 0.04 0.03 0.03
Less Distributions:
Dividends from net
investment income (0.02) (0.04) (0.05) (0.01) (0.02) (0.05) (0.05) (0.04) (0.03) (0.03)
Net Asset Value, End
of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return (%) 2.30# 4.50 4.94 0.94# 2.43# 4.76 5.20 4.20 2.59 2.90
Ratios/Supplemental Data
Net Assets, End of
Period ($ millions) 142.6 83.4 11.8 0.5 65.2 65.7 74.0 64.0 91.7 26.1
Ratio of Expenses
to Average Net
Assets (%) 0.77* 0.79 0.79 0.85* 0.52* 0.55 0.54 0.54 0.52 0.61
Ratio of Net Investment
Income to Average
Net Assets (%) 4.54* 4.43 4.68 5.09* 4.79* 4.66 5.07 4.04 2.58 2.96
<CAPTION>
Net investment income per share and the ratios of income and expenses to
average net assets without the Adviser's and Administrator's voluntary waiver
of fees for periods prior to April 1, 1996, and for periods after April 1,
1995, without the expense offset in custodian fees for uninvested cash
balances, would have been:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment
Income ($) 0.02 0.04 0.05 0.01 0.02 0.05 0.05 0.04 0.03 0.03
Ratio of Expenses
to Average Net
Assets (%) 0.77* 0.80 0.88 0.98* 0.52* 0.56 0.63 0.59 0.52 0.66
Ratio of Net Investment
Income to Average
Net Assets (%) 4.54* 4.42 4.60 4.96* 4.79* 4.65 4.98 3.99 2.58 2.90
<FN> (1) New class of shares established on January 20, 1995.</FN>
<FN> (2) Designated as the "Original Shares" class of shares on January 20,
1995.</FN>
<FN> ** For the period from February 1, 1995 (commencement of operations)
to March 31, 1995.</FN>
<FN> # Not annualized.</FN>
<FN> * Annualized.</FN>
</TABLE>
See accompanying notes to financial statements.
