November 24, 1999
Dear Fellow Shareholder,
Tax-free investing provides more than an opportunity to generate State of
Hawaii and federal tax-free income. Tax-free investing offers Hawaii investors a
unique means of supporting local projects designed to enrich our community. The
money raised through municipal bonds is commonly used to build schools,
hospitals, roads, airports, harbors, and water and electrical systems that serve
to create jobs, boost the local economy and improve the quality of life here in
our islands.
As we begin our 12th year of operations, we are pleased to provide you with
our Funds' 1999 Annual Report.
An expanding U.S. economy coupled with a tight labor market contributed to
rising interest rates in 1999. The primary investment strategy of the First
Hawaii Municipal Bond Fund's investment manager was to purchase high quality
long term Hawaii municipal bonds. The primary investment strategy of the First
Hawaii Intermediate Municipal Fund's investment manager was to purchase high
quality four to eight year Hawaii municipal bonds. The rise in interest rates
was the primary factor producing the past year's performance results.
If you have any questions about this Annual Report or would like us to
provide information about the Funds to your family or friends, please call us at
988-8088.
Thank you for your business as well as the many referrals. As always, we
look forward to providing you with the high level of service and performance
that you have come to expect.
On behalf of the staff and management of the Funds, I would like to extend
to you and your family best wishes for a safe and happy holiday season.
Warmest Aloha,
Terrence K.H. Lee
President
First Pacific Securities, Inc./Member SIPC
Before investing, read the prospectus carefully for complete information
including all fees and expenses. Call 988-8088 for a free prospectus. Funds'
yields, share prices and investment returns fluctuate so that you may receive
more or less than your original investment upon redemption. Past performance is
no guarantee of future results. Some income may be subject to the federal
alternative minimum tax for certain investors. First Hawaii Municipal Bond Fund
and First Hawaii Intermediate Municipal Fund are series of First Pacific Mutual
Fund, Inc.
<PAGE>
(The following are numerical reprsentations of charts included with the report.)
Muncicipal Lehman
Bond Muni Bond
Fund Index
09/30/89 $10,000.00 $10,000.00
09/30/90 $10,387.00 $10,662.00
09/30/91 $11,645.00 $11,989.00
09/30/92 $12,828.00 $13,078.00
09/30/93 $14,253.00 $14,657.00
09/30/94 $13,942.00 $14,409.00
09/30/95 $15,116.00 $16,021.00
09/30/96 $15,966.00 $17,089.00
09/30/97 $17,098.00 $18,632.00
09/30/98 $18,172.00 $20,255.00
09/30/99 $18,159.00 $19,994.00
First Hawaii Municipal Bond Fund
(verbiage under Lehman Graph)
The graph above compares the increase in value of a $10,000 investment in the
First Hawaii Municipal Bond Fund with the performance of the Lehman Muni Bond
Index. The objective of the graph is to permit you to compare the performance of
the Fund with the current market and to give perspective to market conditions
and investment strategies and techniques pursued by the investment manager that
materially affected the performance of the Fund. The Lehman Muni Bond Index
reflects reinvestment of dividends but not the expenses of the Fund. The return
and principal value of an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Past performance is not indicative of future results.
Intermediate Lehman
Municipal Muni Bond
Fund Index
07/07/94 $10,000.00 $10,000.00
09/30/94 $10,072.00 $10,389.00
09/30/95 $10,864.00 $11,198.00
09/30/96 $11,293.00 $12,565.00
09/30/97 $11,877.00 $11,915.00
09/30/98 $12,480.00 $13,995.00
09/30/99 $12,668.00 $14,590.00
First Hawaii Intermediate Municipal Fund
(verbiage under Lehman Graph)
The graph above compares the increase in value of a $10,000 investment in the
First Hawaii Intermediate Municipal Fund with the performance of the Lehman Muni
Bond Index. The objective of the graph is to permit you to compare the
performance of the Fund with the current market and to give perspective to
market conditions and investment strategies and techniques pursued by the
investment manager that materially affected the performance of the Fund. The
Lehman Muni Bond Index reflects reinvestment of dividends but not the expenses
of the Fund. The return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Past performance is not indicative of future results.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
First Pacific Mutual Fund, Inc.
Honolulu, Hawaii
We have audited the accompanying statements of assets and liabilities of First
Hawaii Municipal Bond Fund and First Hawaii Intermediate Municipal Fund (each a
series of shares of First Pacific Mutual Fund, Inc.) including the schedules of
investments, as of September 30, 1999, and the related statements of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers. 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 audits provide 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 First
Hawaii Municipal Bond Fund and First Hawaii Intermediate Municipal Fund as of
September 30, 1999, the results of their operations for the year then ended, the
changes in their net assets and the financial highlights for the periods
indicated thereon, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 21, 1999
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
HAWAII MUNICIPAL BONDS (91.97%)
<S> <C> <C>
Hawaii County
General Obligation Bonds (4.16%)
$1,150,000 7.050% 6/01/01 $ 1,185,719
100,000 6.800% 12/01/01 100,964
200,000 7.200% 6/01/05 206,404
1,030,000 7.200% 6/01/06 1,062,981
300,000 5.600% 5/01/11 309,000
1,000,000 5.625% 5/15/18 991,250
1,000,000 5.625% 5/15/19 986,250
--------------
4,842,568
--------------
Hawaii State
General Obligation Bonds (1.76%)
100,000 7.200% 9/01/06 104,033
150,000 7.000% 6/01/07 153,147
135,000 6.000% 10/01/08 144,281
330,000 7.125% 9/01/09 343,091
125,000 7.000% 6/01/10 127,622
100,000 7.125% 9/01/10 103,967
200,000 6.000% 11/01/10 213,500
500,000 6.250% 1/01/13 537,500
300,000 6.250% 1/01/14 322,500
--------------
2,049,641
--------------
Airport Systems Revenue Bonds (6.50%)
500,000 5.125% 7/01/00 504,860
150,000 5.800% 7/01/01 154,125
345,000 6.300% 7/01/01 357,075
200,000 7.000% 7/01/07 212,250
175,000 7.000% 7/01/10 185,281
385,000 6.900% 7/01/12 430,719
510,000 7.000% 7/01/18 534,862
1,400,000 7.000% 7/01/20 1,480,500
2,500,000 7.500% 7/01/20 2,603,150
1,050,000 6.750% 7/01/21 1,105,125
--------------
7,567,947
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
<S> <C> <C>
Department of Budget & Finance
Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc.) (8.06%)
$3,000,000 5.750% 12/01/18 $ 2,981,250
620,000 7.600% 7/01/20 642,977
565,000 6.550% 12/01/22 599,606
625,000 6.200% 5/01/26 645,312
600,000 5.875% 12/01/26 600,750
4,000,000 5.650% 10/01/27 3,910,000
--------------
9,379,895
--------------
(Kaiser Permanente) (4.15%)
850,000 6.500% 3/01/11 879,750
3,875,000 6.250% 3/01/21 3,957,344
--------------
4,837,094
--------------
(Kapiolani Health Care System) (3.72%)
400,000 6.300% 7/01/08 421,500
1,650,000 6.400% 7/01/13 1,728,375
600,000 6.200% 7/01/16 618,750
1,185,000 6.000% 7/01/19 1,208,700
340,000 6.250% 7/01/21 350,625
--------------
4,327,950
--------------
(The Queen's Health Systems) (4.36%)
300,000 5.200% 7/01/04 304,500
250,000 6.125% 7/01/11 266,250
1,020,000 6.000% 7/01/20 1,022,550
600,000 6.200% 7/01/22 639,750
2,735,000 5.750% 7/01/26 2,625,600
250,000 5.000% 7/01/28 218,125
--------------
5,076,775
--------------
(Pali Momi Medical Center Project) (3.37%)
3,120,000 7.600% 7/01/10 3,357,900
525,000 7.650% 7/01/19 565,687
--------------
3,923,587
--------------
(St. Francis Medical Center) (2.51%)
2,765,000 6.500% 7/01/22 2,923,987
--------------
(Wahiawa General Hospital) (2.65%)
2,915,000 7.500% 7/01/12 3,089,900
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
<S> <C> <C>
(Wilcox Hospital) (1.92%)
$ 250,000 4.800% 7/01/04 $ 245,000
500,000 4.900% 7/01/05 486,875
700,000 5.250% 7/01/13 651,000
845,000 5.350% 7/01/18 753,106
115,000 5.500% 7/01/28 101,344
--------------
2,237,325
--------------
Department of Transportation
Matson Terminals, Inc. (2.37%)
2,760,000 5.750% 3/01/13 2,760,000
--------------
Harbor Capital Improvements
Revenue Bonds (3.74%)
400,000 5.650% 7/01/02 411,500
205,000 6.200% 7/01/03 216,531
310,000 6.300% 7/01/04 328,987
200,000 6.200% 7/01/08 209,500
225,000 7.250% 7/01/10 233,847
300,000 6.250% 7/01/15 315,750
810,000 7.000% 7/01/17 839,727
800,000 6.500% 7/01/19 844,000
1,000,000 5.500% 7/01/27 957,500
--------------
4,357,342
--------------
Highway Revenue Bonds (2.04%)
200,000 5.000% 7/01/09 197,750
150,000 5.000% 7/01/11 145,125
1,000,000 5.600% 7/01/14 1,008,750
1,100,000 5.000% 7/01/16 1,021,625
--------------
2,373,250
--------------
Housing Authority Single Family
Mortgage Purpose Revenue Bonds (7.61%)
405,000 7.000% 7/01/11 422,212
100,000 5.700% 7/01/13 100,500
555,000 6.900% 7/01/16 579,281
215,000 6.750% 7/01/20 222,525
540,000 7.100% 7/01/24 560,250
2,235,000 5.900% 7/01/27 2,248,969
2,250,000 5.900% 7/01/27 2,269,687
40,000 7.800% 7/01/29 40,650
2,500,000 5.750% 7/01/30 2,421,875
--------------
8,865,949
--------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
See accompanying notes to financial statements
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
<S> <C> <C>
Department of Hawaiian Homelands (2.26%)
$1,355,000 4.100% 7/01/07 $ 1,275,394
1,465,000 4.250% 7/01/09 1,349,631
--------------
2,625,025
--------------
Housing Authority Multi-Family
Mortgage Purpose Revenue Bonds (3.63%)
200,000 4.800% 1/01/01 200,750
205,000 4.800% 7/01/01 206,537
210,000 4.900% 1/01/02 210,787
215,000 4.900% 7/01/02 216,881
1,000,000 5.700% 7/01/18 998,750
2,365,000 6.100% 7/01/30 2,397,519
--------------
4,231,224
--------------
Kapolei State Office Building (1.23%)
1,000,000 5.000% 5/01/16 930,000
555,000 5.000% 5/01/18 502,275
--------------
1,432,275
--------------
Public Housing Authority Bonds (.38%)
185,000 5.750% 8/01/00 188,032
250,000 5.750% 8/01/04 256,065
--------------
444,097
--------------
University Faculty Housing (2.63%)
90,000 4.350% 10/01/00 90,545
330,000 4.450% 10/01/01 332,062
345,000 4.550% 10/01/02 346,725
800,000 5.650% 10/01/16 806,000
1,500,000 5.700% 10/01/25 1,488,750
--------------
3,064,082
--------------
University of Hawaii - Revenue Bonds (.52%)
100,000 5.450% 10/01/06 103,250
500,000 5.700% 10/01/17 502,500
--------------
605,750
--------------
Honolulu City & County
Board of Water Supply (1.26%)
200,000 5.000% 7/01/04 203,750
500,000 5.800% 7/01/16 506,875
750,000 5.800% 7/01/21 751,875
--------------
1,462,500
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
<S> <C> <C>
Waste & Water System (3.09%)
$1,000,000 4.750% 7/01/18 $ 870,000
1,000,000 5.250% 7/01/18 938,750
2,000,000 5.000% 7/01/23 1,787,500
--------------
3,596,250
--------------
General Obligation Bonds (8.00%)
100,000 7.300% 7/01/03 109,500
375,000 6.700% 8/01/05 395,156
200,000 7.350% 7/01/06 229,000
300,000 6.900% 12/01/06 313,500
180,000 7.250% 2/01/07 185,434
200,000 7.100% 6/01/07 206,210
100,000 7.250% 2/01/08 103,019
820,000 6.700% 8/01/08 864,075
1,000,000 7.300% 2/01/09 1,030,340
985,000 6.700% 8/01/09 1,037,944
250,000 7.300% 2/01/10 257,585
200,000 6.000% 6/01/10 213,500
525,000 6.700% 8/01/10 553,219
250,000 7.150% 6/01/11 257,843
725,000 6.700% 8/01/11 763,969
460,000 6.100% 6/01/12 493,350
240,000 5.500% 9/01/16 251,738
1,350,000 5.000% 7/01/20 1,220,063
930,000 5.000% 4/01/24 831,188
--------------
9,316,633
--------------
Halawa Business Park (.81%)
170,000 6.300% 10/15/00 173,242
370,000 6.500% 10/15/02 387,113
365,000 6.600% 10/15/03 386,444
--------------
946,799
--------------
Housing Authority Multi-Family
Mortgage Purpose Revenue Bonds
(Hale Pauahi) (.30%)
320,000 6.800% 7/01/28 342,800
--------------
(Waipahu Project) (1.07%)
1,200,000 6.900% 6/20/35 1,248,000
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
<S> <C> <C>
Kauai County
General Obligation Bonds (2.52%)
$ 300,000 5.100% 2/01/01 $ 303,750
410,000 5.850% 8/01/07 435,625
1,280,000 5.850% 8/01/07 1,360,000
250,000 5.900% 2/01/10 262,188
250,000 5.900% 2/01/11 261,250
295,000 5.900% 2/01/12 307,538
--------------
2,930,351
--------------
Housing Authority Paanau Project (1.46%)
1,815,000 7.250% 4/01/12 1,703,831
--------------
Maui County
General Obligation Bonds (2.94%)
740,000 8.000% 1/01/01 774,225
250,000 6.800% 12/01/05 260,938
175,000 6.800% 12/01/08 182,656
250,000 5.700% 1/01/09 257,188
735,000 5.750% 1/01/12 756,131
235,000 5.750% 6/01/13 244,694
500,000 5.300% 9/01/14 490,625
500,000 5.000% 9/01/17 460,625
--------------
3,427,082
--------------
Water System Revenue (.95%)
355,000 5.850% 12/01/00 363,431
300,000 6.500% 12/01/06 317,250
400,000 6.600% 12/01/07 424,000
--------------
1,104,681
--------------
Total Hawaii Municipal Bonds 107,094,590
--------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
PUERTO RICO MUNICIPAL BONDS (5.45%)
<S> <C> <C>
Puerto Rico Commonwealth
Electric Power Authority
Revenue Bonds (.28%)
$ 300,000 6.250% 7/01/17 $ 320,625
--------------
General Obligation Bonds (1.84%)
250,000 6.250% 7/01/10 262,813
100,000 6.250% 7/01/10 105,625
250,000 7.250% 7/01/10 261,503
750,000 6.450% 7/01/17 826,875
100,000 7.300% 7/01/20 104,637
300,000 6.500% 7/01/23 331,500
250,000 5.750% 7/01/24 253,125
--------------
2,146,078
--------------
Highway & Transportation Authority (.93%)
225,000 6.750% 7/01/05 234,623
200,000 7.750% 7/01/10 209,998
630,000 6.000% 7/01/20 640,792
--------------
1,085,413
--------------
Housing Finance Corp.
Multi-Family Mortgage
Revenue Bonds (.50%)
175,000 7.500% 10/01/15 179,678
390,000 7.500% 4/01/22 400,425
--------------
580,103
--------------
Single-Family Mortgage
Revenue Bonds (.26%)
45,000 7.650% 10/15/22 46,504
245,000 6.250% 4/01/29 252,656
--------------
299,160
--------------
Industrial, Medical & Environmental
Pollution Control
(Abbott Laboratories) (.26%)
300,000 6.500% 7/01/09 301,653
--------------
(Hospital Auxilio Mutuo) (.40%)
440,000 6.250% 7/01/24 465,850
--------------
(Pila Hospital Project) (.40%)
455,000 6.250% 8/01/32 469,219
--------------
Public Building Authority
Health Facilities & Services (.58%)
665,000 5.750% 7/01/15 673,313
--------------
Total Puerto Rico Municipal Bonds 6,341,414
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
VIRGIN ISLANDS MUNICIPAL BONDS (.10%)
<S> <C> <C> <C>
Virgin Islands
Public Finance Authority, Series A (.10%)
$ 100,000 7.300% 10/01/18 $ 119,875
--------------
Total Virgin Islands Municipal Bonds 119,875
--------------
Total Investments (Cost $112,611,500) (a) 97.52% 113,555,879
--------------
Other Assets Less Liabilities 2.48% 2,893,045
--------------
Net Assets 100.00% $ 116,448,924
==============
</TABLE>
<TABLE>
<S> <C>
(a)Aggregate cost for federal income tax purposes is $112,611,500.
At September 30, 1999, unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
Gross unrealized appreciation $ 2,474,287
Gross unrealized depreciation (1,529,908)
--------------
Net unrealized appreciation $ 944,379
==============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
SCHEDULE OF INVESTMENTS
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
HAWAII MUNICIPAL BONDS (92.48%)
<S> <C> <C>
Hawaii County
General Obligation Bonds (4.84%)
$ 65,000 6.350% 5/15/01 $ 65,045
100,000 6.800% 12/01/01 100,964
100,000 6.500% 5/15/06 100,075
--------------
266,084
--------------
Hawaii State
General Obligation Bonds (4.77%)
100,000 5.500% 7/01/01 102,125
150,000 5.900% 10/01/06 159,938
--------------
262,063
--------------
Airport Systems Revenue Bonds (15.95%)
500,000 5.125% 7/01/00 504,860
105,000 6.400% 7/01/02 110,250
250,000 5.700% 7/01/07 260,937
--------------
876,047
--------------
Department of Budget & Finance
Special Purpose Revenue Bonds
(Kapiolani Health Care Systems) (3.69%)
200,000 5.500% 7/01/05 202,500
--------------
(The Queen's Health Systems) (3.70%)
200,000 5.200% 7/01/04 203,000
--------------
(St. Francis Medical Center) (3.79%)
200,000 6.000% 7/01/02 208,250
--------------
(Wilcox Hospital) (4.46%)
250,000 4.800% 7/01/04 245,000
--------------
Harbor Capital Improvements
Revenue Bonds (3.76%)
100,000 5.650% 7/01/02 102,875
100,000 5.850% 7/01/02 103,875
--------------
206,750
--------------
Highway & Transportation Authority (5.07%)
275,000 5.000% 7/01/06 278,437
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
<S> <C> <C>
Housing Authority
Single Family Mortgage Purpose
Revenue Bonds (5.39%)
$300,000 4.800% 7/01/07 $ 295,875
--------------
Public Housing Authority Bonds (3.70%)
200,000 5.750% 8/01/00 203,278
--------------
University Faculty Housing (4.21%)
230,000 4.350% 10/01/00 231,394
--------------
University of Hawaii (3.38%)
University Revenue Bonds
180,000 5.450% 10/01/06 185,850
--------------
Honolulu City & County
Board of Water Supply (3.71%)
200,000 5.000% 7/01/04 203,750
--------------
General Obligation Bonds (1.85%)
100,000 5.000% 10/01/02 101,750
--------------
Halawa Business Park (3.71%)
200,000 6.300% 10/15/00 203,814
--------------
Kauai County
General Obligation Bonds (3.63%)
100,000 4.400% 8/01/03 99,750
100,000 4.550% 8/01/05 99,375
--------------
199,125
--------------
Maui County
General Obligation Bonds (9.01%)
190,000 8.000% 01/01/01 198,788
300,000 4.650% 03/01/07 295,875
--------------
494,663
--------------
Water System Revenue (3.86%)
100,000 6.600% 12/01/07 106,000
100,000 6.700% 12/01/11 106,125
--------------
212,125
--------------
Total Hawaii Municipal Bonds 5,079,755
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
SCHEDULE OF INVESTMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
Value
Par Value (Note 1)
PUERTO RICO MUNICIPAL BONDS (1.32%)
<S> <C> <C> <C>
Housing Finance Corp.
Single Family Mortgage Revenue Bonds (1.32%)
$ 70,000 6.150%, 8/01/03 $ 72,625
--------------
Total Puerto Rico Municipal Bonds 72,625
--------------
Total Investments (Cost $5,122,301) (a) 93.80% 5,152,380
--------------
Other Assets Less Liabilities 6.20% 340,652
--------------
Net Assets 100.00% $ 5,493,032
==============
</TABLE>
<TABLE>
<S> <C>
(a)Aggregate cost for federal income tax purposes is $5,122,301.
At September 30, 1999, unrealized appreciation
(depreciation) of securities for federal income tax purposes
is as follows:
Gross unrealized appreciation $ 60,653
Gross unrealized depreciation (30,574)
--------------
Net unrealized appreciation $ 30,079
==============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
- --------------------------------------------------------------------------------
Municipal Intermediate
Bond Municipal
Fund Fund
<S> <C> <C>
ASSETS
Investments at market value
(Identified cost $112,611,500 and $5,122,301,
respectively) (Note 1 (A)) $ 113,555,879 $ 5,152,380
Cash 827,482 268,645
Receivable for investment securities sold 491,096 -
Interest receivable 1,777,329 78,511
Subscriptions receivable 55,300 500
Other assets 23,394 252
--------------- -------------
Total assets 116,730,480 5,500,288
--------------- -------------
LIABILITIES
Distributions payable 164,994 2,290
Redemptions payable 59,100 -
Advisory fee payable 47,885 2,260
Shareholder servicing fee payable 9,577 -
Accrued expenses - 2,706
--------------- -------------
Total liabilities 281,556 7,256
--------------- -------------
NET ASSETS
(Applicable to 10,905,305 and 1,091,038 shares outstanding,
$.01 par value, 20,000,000 shares authorized) $ 116,448,924 $ 5,493,032
=============== =============
NET ASSET VALUE OFFERING AND REPURCHASE
PRICE PER SHARE
($116,448,924 ) 10,905,305 shares) $10.68
======
($5,493,032 ) 1,091,038 shares) $5.03
=====
NET ASSETS
At September 30, 1999, net assets consisted of:
Paid-in capital $ 115,709,527 $ 5,459,140
Accumulated net realized gain (loss) on investments (204,982) 3,813
Net unrealized appreciation 944,379 30,079
--------------- -------------
$ 116,448,924 $ 5,493,032
=============== =============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
STATEMENT OF OPERATIONS
For the year ended September 30, 1999
- --------------------------------------------------------------------------------
Municipal Intermediate
Bond Municipal
Fund Fund
<S> <C> <C>
INVESTMENT INCOME
Interest income $ 6,747,190 $ 290,925
------------- -----------
Expenses
Management fee (Note 2) 581,901 28,733
Distribution costs (Note 2) 165,047 -
Transfer agent fees (Note 2) 70,112 4,687
Shareholder services (Note 2) 116,380 -
Accounting fees 57,829 3,911
Legal and audit fees 29,617 8,764
Printing 8,334 -
Miscellaneous 36,279 6,270
Custodian fees 17,508 3,000
Insurance 5,819 1,150
Registration fees 6,713 11
Director's fees 1,782 -
------------- -----------
Total expenses 1,097,321 56,526
Fee reductions (Note 4) (80,950) (8,275)
Expenses reimbursed or waived (Note 2) - (5,147)
------------- -----------
Net expenses 1,016,371 43,104
------------- -----------
Net investment income 5,730,819 247,821
------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security transactions 26,191 5,108
Change in unrealized appreciation of investments (5,909,543) (159,764)
------------- -----------
Net loss on investments (5,883,352) (154,656)
------------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (152,533) $ 93,165
============= ===========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income $ 5,730,819 $ 5,398,377
Net realized gain (loss) on investments 26,191 (21,415)
Increase (decrease) in unrealized appreciation of investments (5,909,543) 1,310,803
-------------- ---------------
Net increase (decrease) in net assets
resulting from operations (152,533) 6,687,765
Distributions to shareholders from:
Net investment income
($0.55 and $0.55 per share, respectively) (5,730,819) (5,398,377)
Capital share transactions (a)
Increase in net assets resulting from capital share transactions 9,986,554 4,676,094
-------------- ---------------
Total increase in net assets 4,103,202 5,965,482
NET ASSETS
Beginning of year 112,345,722 106,380,240
-------------- ---------------
End of year $ 116,448,924 $ 112,345,722
============== ===============
</TABLE>
(a) Summary of capital share activity follows:
<TABLE>
<CAPTION>
For the year ended For the year ended
September 30, 1999 September 30, 1998
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 1,881,327 $ 20,588,320 1,871,699 $ 20,798,408
Shares issued on
reinvestment of distributions 356,643 3,925,201 335,571 3,742,788
--------- --------------- --------- ---------------
2,237,970 24,513,521 2,207,270 24,541,196
Shares redeemed (1,339,933) (14,526,967) (1,786,284) (19,865,102)
--------- --------------- --------- ---------------
Net increase 898,037 $ 9,986,554 420,986 $ 4,676,094
========= =============== ========= ===============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income $ 247,821 $ 249,557
Net realized gain on investments 5,108 7,143
Increase (decrease) in unrealized appreciation of investments (159,764) 30,165
------------ -------------
Net increase in net assets resulting from operations 93,165 286,865
Distributions to shareholders from
Net investment income
($.22 and $.22 per share, respectively) (247,821) (249,557)
Capital gains
($.01 and $.01 per share, respectively) (7,321) (5,389)
Capital share transactions (a)
Decrease in net assets resulting from capital share transactions (256,438) (522,264)
------------ -------------
Total decrease in net assets (418,415) (490,345)
NET ASSETS
Beginning of year 5,911,447 6,401,792
------------ -------------
End of year $ 5,493,032 $ 5,911,447
============ =============
</TABLE>
(a) Summary of capital share activity follows:
<TABLE>
<CAPTION>
For the year ended For the year ended
September 30, 1999 September 30, 1998
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 342,050 $ 1,749,232 282,264 $ 1,451,895
Shares issued on
reinvestment of distributions 43,853 224,588 43,202 222,275
------- -------------- ------- -------------
385,903 1,973,820 325,466 1,674,170
Shares redeemed (435,722) (2,230,258) (426,663) (2,196,434)
------- -------------- ------- -------------
Net decrease (49,819) $ (256,438) (101,197) $ (522,264)
======= ============== ======= =============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the year)
Years Ended September 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value
Beginning of year $11.23 $11.10 $10.89 $10.84 $10.62
------ ------ ------ ------ ------
Income from investment operations
Net investment income .55 .55 .54 .55 .55
Net gain (loss) on securities
(both realized and unrealized) (.55) .13 .21 .05 .31
------ ------ ------ ------ ------
Total from investment operations - .68 .75 .60 .86
------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (.55) (.55) (.54) (.55) (.55)
Distributions from capital gains - - - - (.09)
Total distributions (.55) (.55) (.54) (.55) (.64)
------ ------ ------ ------ ------
End of year $10.68 $11.23 $11.10 $10.89 $10.84
====== ====== ====== ====== ======
Total return (.07)% 6.28% 7.09% 5.62% 8.42%
Ratios/Supplemental Data
Net assets, end of year (in 000's) $116,449 $112,346 $106,380 $54,165 $51,131
Ratio of expenses to average net assets
Before expense reimbursements .94% .89% .98% .98% 1.00%
After expense reimbursements .94%(a) .89%(a) .98%(a) .98%(a) .97%(a)
Ratio of net investment income to average net assets
Before expense reimbursements 4.88% 4.90% 4.99% 5.03% 5.19%
After expense reimbursements 4.88% 4.90% 4.99% 5.03% 5.22%
Portfolio turnover 10.83% 7.35% 3.21% 15.16% 17.08%
</TABLE>
(a) Ratios of expenses to average net assets after the reduction of custodian
fees under a custodian arrangement were .87%, .85%, .94%, .95% and .95% for
the years ended September 30, 1999, 1998, 1997, 1996 and 1995,
respectively.
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the year)
Years Ended September 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value
Beginning of year $5.18 $5.15 $5.12 $5.14 $4.99
------ ------ ------ ------ ------
Income from investment operations
Net investment income .22 .22 .22 .22 .23
Net gain (loss) on securities
(both realized and unrealized) (.14) .04 .04 (.02) .15
------ ------ ------ ------ ------
Total from investment operations .08 .26 .26 .20 .38
------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (.22) (.22) (.22) (.22) (.23)
Distributions from capital gains (.01) (.01) (.01) - -
Total distributions (.23) (.23) (.23) (.22) (.23)
------ ------ ------ ------ ------
End of year $5.03 $5.18 $5.15 $5.12 $5.14
====== ====== ====== ====== ======
Total return 1.51% 5.08% 5.17% 3.95% 7.86%
Ratios/Supplemental Data
Net assets, end of year (in 000's) $5,493 $5,911 $6,402 $6,624 $4,760
Ratio of expenses to average net assets
Before expense reimbursements .98% 1.49% 1.43% 1.50% 1.90%
After expense reimbursements .89%(a) .85%(a) .86%(a) .84%(a) .66%(a)
Ratio of net investment income to average net assets
Before expense reimbursements 4.07% 3.53% 3.67% 3.66% 3.39%
After expense reimbursements 4.18% 4.17% 4.24% 4.32% 4.63%
Portfolio turnover 3.32% 14.57% 17.36% 17.76% 10.04%
</TABLE>
(a) Ratios of expenses to average net assets after the reduction of custodian
fees under a custodian arrangement were .75%, .73%, .75%, .75% and .64% for
the years ended September 30, 1999, 1998, 1997, 1996 and 1995,
respectively.
See accompanying notes to financial statements
<PAGE>
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Hawaii Municipal Bond Fund and First Hawaii Intermediate Municipal
Fund ("Funds") are each a series of shares of First Pacific Mutual Fund,
Inc. which is registered under the Investment Company Act of 1940, as a
non-diversified open-end management company.
The investment objective of the Funds is to provide investors with the
maximum level of income exempt from federal and Hawaii income taxes
consistent with the preservation of capital. The Funds seek to achieve
their objective by investing primarily in municipal securities which pay
interest that is exempt from federal and Hawaii income taxes.
The Funds are subject to the risk of price fluctuation of the municipal
securities held in their portfolios which is generally a function of the
underlying credit rating of an issuer, the maturity length of the
securities, the securities' yield, and general economic and interest rate
conditions.
Since the Funds invest primarily in obligations of issuers located in
Hawaii, the marketability and market value of these obligations may be
affected by certain Hawaiian constitutional provisions, legislative
measures, executive orders, administrative regulations, voter initiatives,
and other political and economic developments. If any such problems arise,
they could adversely affect the ability of various Hawaiian issuers to meet
their financial obligation.
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, as well as the reported amounts of income and
expenses during the reported period. Actual results could differ from those
estimates.
(A) SECURITY VALUATION
Portfolio securities, which are fixed income securities, are valued by an
independent pricing service using market quotations, prices provided by
market-makers, or estimates of market values obtained from yield data
relating to instruments or securities with similar characteristics, in
accordance with procedures established in good faith by the Board of
Directors. Securities with remaining maturities of 60 days or less are
valued on the amortized cost basis as reflecting fair value. All other
securities are valued at their fair value as determined in good faith by
the Board of Directors.
(B) FEDERAL INCOME TAXES
It is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
their taxable income, if any, to their shareholders. Therefore, no federal
income tax provision is required. At September 30, 1999, the First Hawaii
Municipal Bond Fund had an unused capital loss carryforward of
approximately $218,123 of which $189,123 expires in 2004 and $29,000
expires in 2005.
- --------------------------------------------------------------------------------
<PAGE>
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
- --------------------------------------------------------------------------------
(C) SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS TO
SHAREHOLDERS
Security transactions are recorded on the trade date. Interest income
is recorded on the accrual basis. Bond discounts and premiums are
amortized as required by the Internal Revenue Code. Distributions to
shareholders are declared daily and reinvested or paid in cash
monthly. Premiums and discounts are amortized in accordance with
income tax regulations.
(2) INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
First Pacific Management Corporation ("FPMC") provides the Funds with
management and administrative services pursuant to a management
agreement. In accordance with the terms of the management agreement,
FPMC receives compensation at the annual rate of .50% of each Fund's
average daily net assets.
The Funds' distributor, First Pacific Securities, Inc. ("FPS"), a
wholly-owned subsidiary of FPMC, received $165,047 for costs incurred
in connection with the sale of First Hawaii Municipal Bond Fund's
shares (See Note 3).
First Pacific Recordkeeping, Inc. ("FPR"), a wholly-owned subsidiary
of FPMC, serves as the transfer agent for the Funds. FPR also provides
the First Hawaii Municipal Bond Fund with certain clerical,
bookkeeping and shareholder services pursuant to a service agreement
approved by the Fund's directors. As compensation for these services
FPR receives a fee, computed daily and payable monthly, at an
annualized rate of .10% of average daily net assets.
For the year ended September 30, 1999, FPMC and FPR voluntarily waived
certain management and transfer agent fees in the amount of $5,147 for
First Hawaii Intermediate Municipal Fund.
Certain officers and directors of the Funds are also officers of FPMC,
FPS and FPR.
(3) DISTRIBUTION COSTS
The Funds' Board of Directors, including a majority of the Directors
who are not "interested persons" of the Funds, as defined in the
Investment Company Act of 1940, adopted a distribution plan pursuant
to Rule 12b-1 of the Act. The Plan regulates the manner in which a
regulated investment company may assume costs of distributing and
promoting the sales of its shares.
The Plan provides that the Funds may incur certain costs, which may
not exceed .25% per annum of the Funds' average daily net assets, for
payment to the distributor for items such as advertising expenses,
selling expenses, commissions or travel reasonably intended to result
in sales of shares of the Funds.
- --------------------------------------------------------------------------------
<PAGE>
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
September 30, 1999
- --------------------------------------------------------------------------------
(4) PURCHASES AND SALES/CUSTODY OF SECURITIES
Purchases and sales of securities aggregated $23,187,210 and
$12,267,114 respectively for the First Hawaii Municipal Bond Fund.
Purchases and sales of securities for the First Hawaii Intermediate
Municipal Fund aggregated $184,667 and $586,369, respectively. Under
an agreement with the Custodian Bank, custodian fees are reduced by
credits for cash balances. During the year ended September 30, 1999,
such reductions amounted to $80,950 and $8,275 for the First Hawaii
Municipal Bond Fund and the First Hawaii Intermediate Municipal Fund,
respectively.
<PAGE>
