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Previous: CENTURY HILLCRESTE APARTMENT INVESTORS L P, 10-Q, 1999-05-24 |
Next: MALLON RESOURCES CORP, 8-K, 1999-05-24 |
May 1, 1999
Dear Fellow Shareholder,
The April 15th tax deadline has just passed and as a Hawaii taxpayer you
probably felt the impact of paying high taxes. By investing in tax-free funds
like the First Hawaii Municipal Bond Fund and the First Hawaii Intermediate
Municipal Fund you may have realized how important these funds can be in
reducing your tax burden. In this tough economy, everything you save makes a
difference.
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. Take a bite out of taxes while investing in our community.
On the following pages you will find our 1999 semi-annual report. If you
have any questions 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 always, we look forward to providing you
with the same high levels of service and performance you have come to expect.
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. Fund's
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.
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 1)
HAWAII MUNICIPAL BONDS (90.04%)
Hawaii County
General Obligation Bonds (2.48%)
<S> <C> <C> <C>
$1,150,000 7.050%, 6/01/01 $ 1,208,937
100,000 6.800%, 12/01/01 101,231
200,000 7.200%, 6/01/05 210,500
1,030,000 7.200%, 6/01/06 1,084,075
300,000 5.600%, 5/01/11 327,375
2,932,118
Hawaii State
General Obligation Bonds (1.79%)
100,000 7.200%, 9/01/06 106,125
150,000 7.000%, 6/01/07 156,187
135,000 6.000%, 10/01/08 151,200
330,000 7.125%, 9/01/09 350,212
125,000 7.000%, 6/01/10 130,156
100,000 7.125%, 9/01/10 106,125
200,000 6.000%, 11/01/10 225,000
500,000 6.250%, 11/01/10 556,250
300,000 6.250%, 1/01/14 333,750
2,115,005
Airport Systems Revenue Bonds (6.48%)
500,000 5.125%, 7/01/00 509,375
150,000 5.800%, 7/01/01 157,125
345,000 6.300%, 7/01/01 363,544
200,000 7.000%, 7/01/07 215,750
175,000 7.000%, 7/01/10 188,781
385,000 6.900%, 7/01/12 458,150
500,000 7.000%, 7/01/18 535,000
2,460,000 7.000%, 7/01/20 2,607,600
1,400,000 7.500%, 7/01/20 1,510,250
1,050,000 6.750%, 7/01/21 1,126,125
7,671,700
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
Department of Budget & Finance Special Purpose Revenue Bonds
(Hawaiian Electric Company, Inc.) (7.99%)
$2,725,000 7.625%, 12/01/18 $ 2,834,218
620,000 7.600%, 7/01/20 654,875
365,000 6.550%, 12/01/22 399,675
625,000 6.200%, 5/01/26 682,031
600,000 5.875%, 12/01/26 647,250
4,000,000 5.650%, 10/01/27 4,250,000
9,468,049
(Kapiolani Health Care System) (7.04%)
400,000 6.300%, 7/01/08 432,500
3,120,000 7.600%, 7/01/10 3,447,600
1,650,000 6.400%, 7/01/13 1,775,812
600,000 6.200%, 7/01/16 647,250
1,030,000 6.000%, 7/01/19 1,087,937
525,000 7.650%, 7/01/19 580,781
340,000 6.250%, 7/01/21 367,625
8,339,505
(Kaiser Permanente) (4.18%)
850,000 6.500%, 3/01/11 897,813
3,875,000 6.250%, 3/01/21 4,059,063
4,956,876
(The Queen's Health Systems) (4.59%)
300,000 5.200%, 7/01/04 316,125
250,000 6.125% 7/01/11 272,812
1,020,000 6.000%, 7/01/20 1,099,050
600,000 6.200%, 7/01/22 656,250
2,735,000 5.750%, 7/01/26 2,854,656
250,000 5.000%, 7/01/28 243,750
5,442,643
(St. Francis Medical Center) (2.53%)
2,765,000 6.500%, 7/01/22 3,003,481
(Wahiawa General Hospital) (2.82%)
3,090,000 7.500%, 7/01/12 3,344,925
(Wilcox Hospital) (2.01%)
250,000 4.800%, 7/01/04 254,062
500,000 4.900% 7/01/05 507,500
700,000 5.250%, 7/01/13 696,500
845,000 5.350%, 7/01/18 817,538
115,000 5.500%, 7/01/28 112,125
2,387,725
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
Department of Transportation
Matson Terminals Inc. (2.41%)
$2,760,000 5.750%, 3/01/13 $ 2,853,150
Harbor Capital Improvements Revenue Bonds (3.77%)
400,000 5.650%, 7/01/02 420,500
205,000 6.200%, 7/01/03 221,913
310,000 6.300%, 7/01/04 336,350
200,000 6.200%, 7/01/08 214,250
225,000 7.250%, 7/01/10 237,938
250,000 6.250%, 7/01/15 272,813
810,000 7.000%, 7/01/17 853,537
800,000 6.500%, 7/01/19 867,000
1,000,000 5.500%, 7/01/27 1,042,500
4,466,801
Highway Revenue Bonds (2.12%)
200,000 5.000%, 7/01/09 205,250
150,000 5.000%, 7/01/11 152,625
1,000,000 5.600%, 7/01/14 1,058,750
1,100,000 5.000%, 7/01/16 1,101,375
2,518,000
Housing Authority Single Family
Mortgage Purpose Revenue Bonds (6.65%)
145,000 6.300%, 7/01/99 145,757
405,000 7.000%, 7/01/11 428,794
100,000 5.700%, 7/01/13 103,375
555,000 6.900%, 7/01/16 588,300
1,000,000 5.450%, 7/01/17 1,026,250
310,000 6.750%, 7/01/20 324,337
540,000 7.100%, 7/01/24 571,050
2,235,000 5.900%, 7/01/27 2,310,431
2,250,000 5.900%, 7/01/27 2,337,188
50,000 7.800%, 7/01/29 51,214
7,886,696
Department of Hawaiian Homelands (2.34%)
1,355,000 4.100%, 7/01/07 1,334,675
1,465,000 4.250%, 7/01/09 1,435,700
2,770,375
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
Housing Authority Multi-Family
Mortgage Purpose Revenue Bonds (3.68%)
$ 200,000 4.800%, 1/01/01 $ 202,750
205,000 4.800%, 7/01/01 209,356
210,000 4.900%, 1/01/02 213,675
215,000 4.900%, 7/01/02 220,912
1,000,000 5.700%, 7/01/18 1,026,250
2,365,000 6.100%, 7/01/30 2,486,206
4,359,149
Kapolei State Office Building (1.31%)
1,000,000 5.000%, 5/01/16 1,001,250
555,000 5.000%, 5/01/18 553,612
1,554,862
Public Housing Authority Bonds (.38%)
185,000 5.750%, 8/01/00 190,171
250,000 5.750%, 8/01/04 256,512
446,683
University Faculty Housing (2.70%)
90,000 4.350%, 10/01/00 91,125
330,000 4.450%, 10/01/01 336,187
345,000 4.550%, 10/01/02 352,762
800,000 5.650%, 10/01/16 843,000
1,500,000 5.700%, 10/01/25 1,582,500
3,205,574
University of Hawaii - Revenue Bonds (.53%)
100,000 5.450%, 10/01/06 106,000
500,000 5.700%, 10/01/17 522,500
628,500
Honolulu City & County
Board of Water Supply (1.30%)
200,000 5.000%, 7/01/04 209,000
500,000 5.800%, 7/01/16 532,500
750,000 5.800%, 7/01/21 798,750
1,540,250
Waste & Water System (2.52%)
1,000,000 5.250%, 7/01/18 1,018,620
2,000,000 5.000%, 7/01/23 1,970,000
2,988,620
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
General Obligation Bonds (8.16%)
$ 100,000 7.300%, 7/01/03 $ 113,000
375,000 6.700%, 8/01/05 404,531
200,000 7.350%, 7/01/06 238,000
300,000 6.900%, 12/01/06 319,875
180,000 7.250%, 2/01/07 188,757
200,000 7.100%, 6/01/07 210,250
100,000 7.250%, 2/01/08 104,781
920,000 6.700%, 8/01/08 884,575
1,000,000 7.300%, 2/01/09 1,047,210
985,000 6.700%, 8/01/09 1,062,569
250,000 7.300%, 2/01/10 261,530
200,000 6.000%, 6/01/10 220,750
525,000 6.700%, 8/01/10 566,344
250,000 7.150%, 6/01/11 262,812
725,000 6.700%, 8/01/11 782,094
460,000 6.100%, 6/01/12 510,025
240,000 5.500%, 9/01/16 257,887
1,350,000 5.000%, 7/01/20 1,327,361
930,000 5.000%, 4/01/24 911,353
9,673,704
Halawa Business Park (.82%)
170,000 6.300%, 10/15/00 175,950
370,000 6.500%, 10/15/02 397,288
365,000 6.600%, 10/15/03 399,218
972,456
Housing Authority Multi-Family
Mortgage Purpose Revenue Bonds
(Hale Pauahi) (.30%)
320,000 6.800%, 7/01/28 353,200
(Waipahue Project) (1.09%)
1,200,000 6.900%, 6/20/35 1,293,000
Kauai County
General Obligation Bonds (2.55%)
300,000 5.100%, 2/01/01 308,250
410,000 5.850%, 8/01/07 453,050
1,280,000 5.850%, 8/01/07 1,414,400
250,000 5.900%, 2/01/10 268,437
250,000 5.900%, 2/01/11 268,438
295,000 5.900%, 2/01/12 315,281
3,027,856
Housing Authority Paanau Project (1.56%)
1,900,000 7.250%, 4/01/12
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
Maui County
General Obligation Bonds (2.99%)
$ 740,000 8.000%, 1/01/01 $ 794,575
250,000 6.800%, 12/01/05 266,655
175,000 6.800%, 12/01/08 186,375
250,000 5.700%, 1/01/09 261,562
735,000 5.750%, 1/01/12 769,913
235,000 5.750%, 6/01/13 250,862
500,000 5.300%, 9/01/14 517,500
500,000 5.000%, 9/01/17 497,100
3,544,542
Water System Revenue (.95%)
355,000 5.850%, 12/01/00 369,644
300,000 6.500%, 12/01/06 324,750
400,000 6.600%, 12/01/07 434,000
1,128,394
Total Hawaii Municipal Bonds 106,726,339
PUERTO RICO MUNICIPAL BONDS (7.33%)
Puerto Rico Commonwealth
Electric Power Authority Revenue Bonds (1.21%)
120,000 7.000%, 7/01/07 122,897
110,000 7.125%, 7/01/14 112,687
190,000 7.125%, 7/01/14 194,666
100,000 7.125%, 7/01/14 102,456
55,000 7.125%, 7/01/14 56,344
300,000 6.250%, 7/01/17 328,125
500,000 5.500%, 7/01/25 513,750
1,430,925
General Obligation Bonds (1.95%)
250,000 6.250%, 7/01/10 269,688
100,000 6.250%, 7/01/10 108,000
250,000 7.250%, 7/01/10 266,563
750,000 6.450%, 7/01/17 853,125
90,000 7.750%, 7/01/17 92,340
100,000 7.300%, 7/01/20 106,750
300,000 6.500%, 7/01/23 341,250
250,000 5.750%, 7/01/24 267,187
2,304,903
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
Highway & Transportation Authority (.93%)
$ 225,000 6.750%, 7/01/05 $ 238,781
200,000 7.750%, 7/01/10 214,750
630,000 6.000%, 7/01/20 650,475
1,104,006
Housing Finance Corp.
Multi-Family Mortgage Revenue Bonds (.50%)
175,000 7.500%, 10/01/15 181,545
390,000 7.500%, 4/01/22 404,586
586,131
Single-Family Mortgage Revenue Bonds (.28%)
70,000 7.650%, 10/15/22 73,238
245,000 6.250%, 4/01/29 261,844
335,082
Industrial, Medical & Environmental Pollution Control
(Abbott Laboratories) (.25%)
300,000 6.500%, 7/01/09 302,109
(Hospital Auxilio Mutual Obligation) (1.21%)
440,000 6.250%, 7/01/24 488,950
900,000 5.500%, 7/01/26 942,750
1,431,700
(Pila Hospital Project) (.41%)
455,000 6.250%, 8/01/32 491,400
Public Building Authority
Health Facilities & Services (.59%)
665,000 5.750%, 7/01/15 699,913
Total Puerto Rico Municipal Bonds 8,686,169
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
VIRGIN ISLANDS MUNICIPAL BONDS (.11%)
Virgin Islands
Public Finance Authority, Series A (.11%)
$100,000 7.300%, 10/01/18 $ 127,875
Total Virgin Islands Municipal Bonds 127,875
Total Investments (Cost $110,006,555) (a) 97.48% 115,540,383
Other Assets Less Liabilities 2.52% 2,987,772
Net Assets 100.00% $ 118,528,155
(a) Aggregate cost for federal income tax purposes is $110,006,555.
At March 31, 1999, unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
Gross unrealized appreciation $ 5,582,466
Gross unrealized depreciation (48,638)
Net unrealized appreciation $ 5,533,828
</TABLE>
See accompanying notes to financial statements
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
SCHEDULE OF INVESTMENTS
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 1)
HAWAII MUNICIPAL BONDS (96.13%)
Hawaii County
General Obligation Bonds (4.74%)
<S> <C> <C> <C>
$ 65,000 6.350%, 5/15/01 $ 65,116
100,000 6.800%, 12/01/01 101,231
100,000 6.500%, 5/15/06 100,208
266,555
Hawaii State
General Obligation Bonds (4.80%)
100,000 5.500%, 7/01/01 103,875
150,000 5.900%, 10/01/06 165,937
269,812
Airport Systems Revenue Bonds (15.86%)
105,000 6.400%, 7/01/02 112,350
500,000 5.125%, 7/01/00 509,375
250,000 5.700%, 7/01/07 270,000
891,725
Department of Budget and Finance
Special Purpose Revenue Bonds
(Kapiolani Health Care Systems) (3.76%)
200,000 5.500%, 7/01/19 211,250
(The Queen's Health Systems) (3.75%)
200,000 5.200%, 7/01/04 210,750
(St. Francis Medical Center) (3.78%)
200,000 6.000%, 7/01/02 212,750
(Wilcox Hospital) (4.52%)
250,00 4.800% 7/01/04 254,063
Harbor Capital Improvements Revenue Bonds (3.75%)
100,000 5.650%, 7/01/02 105,125
100,000 5.850%, 7/01/02 106,000
211,125
Highway & Transportation Authority (5.15%)
275,000 5.000%, 7/01/06 289,437
See accompanying notes to financial statements
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
Housing Authority
Single Family Mortgage Purpose Revenue Bonds (9.03%)
$200,000 6.300%, 7/01/99 $ 201,044
300,000 4.800%, 7/01/07 306,750
507,794
Public Housing Authority Bonds (3.66%)
200,000 5.750%, 8/01/00 205,590
University Faculty Housing (4.14%)
230,000 4.350%, 10/01/00 232,875
University of Hawaii (3.39%)
University Revenue Bonds
180,000 5.450%, 10/01/06 190,800
Honolulu City & County
Board of Water Supply (3.72%)
200,000 5.000%, 7/01/04 209,000
General Obligation Bonds (1.85%)
100,000 5.000%, 10/01/02 103,750
Halawa Business Park (3.68%)
200,000 6.300%, 10/15/00 207,000
Kauai County
General Obligation Bonds (3.62%)
100,000 4.400%, 8/01/03 102,000
100,000 4.550%, 8/01/05 102,375
204,375
Maui County
General Obligation Bonds (9.07%)
190,000 8.000%, 1/01/01 204,013
300,000 4.650%, 3/01/07 306,375
510,388
Water System Revenue (3.86%)
100,000 6.600%, 12/01/07 108,500
100,000 6.700%, 12/01/11 108,875
217,375
Total Hawaii Municipal Bonds 5,406,414
See accompanying notes to financial statements
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Value
Par Value (Note 1)
PUERTO RICO MUNICIPAL BONDS (1.32%)
Housing Finance Corp.
Single Family Mortgage Revenue Bonds (1.32%)
$70,000 6.150%, 8/01/03 74,025
Total Puerto Rico Municipal Bonds 74,025
Total Investments (Cost $5,325,602) (a) 97.45% 5,480,439
Other Assets less Liabilities 2.55% 143,185
Net Assets 100.00% $ 5,623,624
(a) Aggregate cost for federal income tax purposes is $5,325,602.
At March 31, 1999, unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
Gross unrealized appreciation $ 156,894
Gross unrealized depreciation (2,057)
Net unrealized appreciation $ 154,837
</TABLE>
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
March 31, 1999 (Unaudited)
Municipal Intermediate
Bond Municipal
Fund Fund
ASSETS
<S> <C> <C>
Investments at market value
(Identified cost $110,006,555 and $5,325,602,
respectively) (Note 1 (A)) $ 115,540,383 $ 5,480,439
Cash 4,519,915 77,194
Interest receivable 1,784,222 81,537
Subscriptions receivable 178,113 12,967
Other assets 9,140 935
Total assets 122,031,773 5,653,072
LIABILITIES
Distributions payable 184,973 24,916
Redemptions payable 14,663 -
Payable for investment purchased 3,279,679 -
Accrued expenses 24,303 4,532
Total liabilities 3,503,618 29,448
NET ASSETS
(Applicable to 10,676,599 and 1,092,070 shares outstanding,
$.01 par value, 20,000,000 shares authorized) $ 118,528,155 $ 5,623,624
NET ASSET VALUE, OFFERING AND REPURCHASE
PRICE PER SHARE
($118,528,155 ) 10,676,599 shares) $11.10
($5,623,624 ) 1,092,070 shares) $5.15
NET ASSETS
At March 31, 1999, net assets consisted of:
Paid-in capital $ 113,240,579 $ 5,464,686
Accumulated net realized gain (loss) on investments (246,252) 4,101
Net unrealized appreciation 5,533,828 154,837
$ 118,528,155 $ 5,623,624
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
STATEMENT OF OPERATIONS
For the six months ended March 31, 1999 (Unaudited)
Municipal Intermediate
Bond Municipal
Fund Fund
INVESTMENT INCOME
Interest income $ 3,291,225 $ 151,642
Expenses
Management fee (Note 2) 286,428 14,870
Distribution costs (Note 2) 80,065 2,333
Transfer agent fees (Note 2) 30,586 7,200
Shareholder services (Note 2) 57,286 -
Accounting fees (Note 2) 16,399 4,465
Legal and audit fees 8,593 2,976
Custodian fees 9,667 1,500
Printing 2,864 -
Miscellaneous 14,381 4,307
Insurance 2,864 596
Registration fees 2,864 11
Total expenses 511,997 38,258
Fee reductions (Note 4) (21,183) (3,735)
Expenses reimbursed or waived (Note 2) - (12,200)
Net expenses 490,814 22,323
Net investment income 2,800,411 129,319
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security transactions 28,036 5,396
Change in unrealized appreciation of investments (1,320,094) (35,006)
Net loss on investments (1,292,058) (29,610)
Net increase in net assets resulting
from operations $ 1,508,353 $ 99,709
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For The Six
Months Ended
March 31, Year Ended
1999 September 30,
(Unaudited) 1998
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income $ 2,800,411 $ 5,398,377
Net realized gain (loss) on investments 28,036 (21,415)
Change in unrealized appreciation of investments (1,320,094) 1,310,803
Net increase in net assets resulting from operations 1,508,353 6,687,765
Distributions to shareholders from:
Net investment income
($0.27 and $0.55 per share, respectively) (2,800,411) (5,398,377)
Capital share transactions (a)
Increase in net assets resulting from capital share transactions 7,474,491 4,676,094
Total increase in net assets 6,182,433 5,965,482
NET ASSETS
Beginning of period 112,345,722 106,380,240
End of period $ 118,528,155 $ 112,345,722
</TABLE>
(a) Summary of capital share activity follows:
<TABLE>
<CAPTION>
For The Six Months Ended
March 31, 1999 Year Ended
(Unaudited) September 30, 1998
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 1,060,709 $ 11,768,272 1,871,699 $ 20,798,408
Shares issued on reinvestment
of distributions 172,484 1,925,212 335,571 3,742,788
1,233,193 13,693,484 2,207,270 24,541,196
Shares redeemed (563,862) (6,218,993) (1,786,284) (19,865,102)
Net increase 669,331 $ 7,474,491 420,986 $ 4,676,094
</TABLE>
See accompanying notes to financial statements
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For The Six
Months Ended
March 31, Year Ended
1999 September 30,
(Unaudited) 1998
----------- ----
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
<S> <C> <C>
Net investment income $ 129,319 $ 249,557
Net realized gain on investments 5,396 7,143
Change in unrealized appreciation of investments (35,006) 30,165
Net increase in net assets resulting from operations 99,709 286,865
Distributions to shareholders from
Net investment income
($.11 and $.22 per share, respectively) (129,320) (249,557)
Capital gains
($.01 and $.01 per share, respectively) (7,320) (5,389)
Capital share transactions (a)
Decrease in net assets resulting from capital share transactions (250,892) (522,264)
Total decrease in net assets (287,823) (490,345)
NET ASSETS
Beginning of period 5,911,447 6,401,792
End of period $ 5,623,624 $ 5,911,447
</TABLE>
(a) Summary of capital share activity follows:
<TABLE>
<CAPTION>
For The Six Months Ended
March 31, 1999 Year Ended
(Unaudited) September 30, 1998
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 58,625 $ 698,566 282,264 $ 1,451,895
Shares issued on reinvestment
of distributions 27,084 118,409 43,202 222,275
85,709 816,975 325,466 1,674,170
Shares redeemed (134,767) (1,067,867) (426,663) (2,196,434)
Net decrease (49,058) $ (250,892) (101,197) $ (522,264)
</TABLE>
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For The Six Months
Ended March 31,
1999 Years Ended September 30,
(Unaudited) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
Net asset value
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $ 11.23 $11.10 $10.89 $10.84 $ 10.62 $11.48
------- ------ ------ ------ ------- ------
Income from investment operations
Net investment income .27 .55 .54 .55 .55 .55
Net gain (loss) on securities
(both realized and unrealized) (.13) .13 .21 .05 .31 (.80)
Total from investment operations .14 .68 .75 .60 .86 (.25)
Less distributions
Dividends from net investment income (.27) (.55) (.54) (.55) (.55) (.55)
Distributions from capital gains - - - - (.09) (.06)
Total distributions (.27) (.55) (.54) (.55) (.64) (.61)
End of period $11.10 $11.23 $11.10
$ 10.89 $ 10.84 $10.62
Total return 1.28% 6.28% 7.09% 5.62% 8.42% (2.18)%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $118,528 $112,346 $106,380 $54,165 $51,131 $52,230
Ratio of expenses to average net assets
Before expense reimbursements 0.89%(a) .89% .98% .98% 1.00% .97%
After expense reimbursements 0.89%(a)(b) .89%(b) .98%(b) .98%(b) .97%(b) .95%
Ratio of net investment income
to average net assets
Before expense reimbursements 4.88% (a) 4.90% 4.99% 5.03% 5.19% 4.99%
After expense reimbursements 4.88% (a) 4.90% 4.99% 5.03% 5.22% 5.01%
Portfolio turnover 5.32% 7.35% 3.21% 15.16% 17.08% 40.22%
</TABLE>
(a) Annualized
(b) Ratios of expenses to average net assets after the reduction of custodian
fees under a custodian arrangement were .86% for the six months ended March
31, 1999 and .85%, .94%, .95% and .95% for the years ended September 30,
1998, 1997, 1996 and 1995, respectively. Prior to 1995, such reductions
were reflected in the expense ratios.
See accompanying notes to financial statements
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For The Six Months
Period
Ended March 31,
1999 July 5, 1994* To
(Unaudited) Years Ended September 30, September 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Net asset value
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $5.18 $5.15 $5.12 $5.14 $4.99 $5.00
----- ----- ----- ----- ----- -----
Income from investment operations
Net investment income .11 .22 .22 .22 .23 .05
Net gain (loss) on securities
(both realized and unrealized) (.02) .04 .04 (.02) .15 (.01)
Total from investment operations .09 .26 .26 .20 .38 .04
Less distributions
Dividends from net investment income (.11) (.22) (.22) (.22) (.23) (.05)
Distributions from capital gains (.01) (.01) (.01) - - -
Total distributions (.12) (.23) (.23) (.22) (.23) (.05)
End of period $5.15 $5.18 $5.15 $5.12 $5.14 $4.99
===== ===== ===== ===== ===== =====
Total return 2.18% 5.08% 5.17% 3.95% 7.86% .72%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $5,624 $5,911 $6,402 $6,624 $4,760 $2,447
Ratio of expenses to average net assets
Before expense reimbursements 1.29% (a) 1.49% 1.43% 1.50% 1.90% 4.48% (a)
After expense reimbursements .88% (a)(b) .85% (b) .86% (b) .84% (b) .66% (b) 0% (a)
Ratio of net investment income
to average net assets
Before expense reimbursements 3.60% (a) 3.53% 3.67% 3.66% 3.39% .12% (a)
After expense reimbursements 4.34% (a) 4.17% 4.24% 4.32% 4.63% 4.60% (a)
Portfolio turnover 3.18% 14.57% 17.36% 17.76% 10.04% 0%
* Commencement of operations
</TABLE>
(a) Annualized
(b) Ratios of expenses to average net assets after the reduction of custodian
fees under a custodian arrangement were .75% for the six months ended March
31, 1999 and .73%, .75%, .75% and .64% for the years ended September 30,
1998, 1997, 1996 and 1995, respectively. Prior to 1995, such reductions
were reflected in the expense ratios.
See accompanying notes to financial statements
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (Unaudited)
(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 a high
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 its portfolio 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, 1998, the First Hawaii
Municipal Fund had an unused capital loss carryforward of approximately
$239,800 of which $210,800 expires in 2004 and $29,000 expires in 2005.
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (Unaudited)
(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.
(D)USE OF ESTIMATES IN FINANCIAL STATEMENTS
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 revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(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 $80,065 for costs incurred
in connection with the sale of First Hawaii Municipal Bond Fund's
shares for the six months ended March 31, 1999. FPS also received
$2,333 for costs incurred with the sale of First Hawaii Intermediate
Municipal 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 Funds with certain clerical, book-keeping and shareholder services
pursuant to a service agreement approved by the Funds' directors. As
compensation for these services FPR receives a fee, computed daily and
payable monthly, at an annualized rate of .10% of First Hawaii
Municipal Bond Fund's average daily net assets. FPR served as
accounting agent through November 23, 1998. During the period, FPR
received accounting fees amounting to $6,855 and $728 for First Hawaii
Municipal Bond Fund and First Hawaii Intermediate Municipal Bond Fund.
For the six months ended March 31, 1999, FPMC and FPR voluntarily
waived certain management, transfer agent, shareholder services, and
accounting fees in the amount of $12,200 for First Hawaii Intermediate
Municipal Fund. In addition, FPMC also has agreed to be voluntarily
subject to an expense limit of .85% of average daily net assets for
the First Hawaii Municipal Bond Fund for the two year period beginning
August 1, 1997.
Certain officers and directors of the Funds are also officers of FPMC,
FPS and FPR.
FIRST HAWAII MUNICIPAL BOND FUND
FIRST HAWAII INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
March 31, 1999 (Unaudited)
(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.
(4) PURCHASES AND SALES/CUSTODY OF SECURITIES
Purchases and sales of securities aggregated $14,295,413 and
$5,962,315, respectively for the First Hawaii Municipal Bond Fund.
Purchases and sales of securities for the First Hawaii Intermediate
Municipal Fund aggregated $184,667 and $386,369, respectively. Under
an agreement with the Custodian Bank, custodian fees are reduced by
credits for cash balances. During the six months ended March 31, 1999,
such reductions amounted to $21,183 and $3,735 for the First Hawaii
Municipal Bond Fund and the First Hawaii Intermediate Municipal Fund,
respectively.
INVESTMENT MANAGER
First Pacific Management Corporation
2756 Woodlawn Drive, #6-201
Honolulu, Hawaii 96822-1856
DISTRIBUTOR
First Pacific Securities, Inc.
2756 Woodlawn Drive, #6-201
Honolulu, Hawaii 96822-1856
CUSTODIAN
Union Bank of California, N.A.
475 Sansome Street, 15th Floor
San Francisco, California 94111
LEGAL COUNSEL TO FUND
Drinker, Biddle & Reath, LLP
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
INDEPENDENT AUDITORS
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103-2108
TRANSFER AGENT
First Pacific Recordkeeping, Inc.
2756 Woodlawn Drive, #6-201
Honolulu, Hawaii 96822-1856
May 1, 1999
Dear Shareholder,
The April 15th tax deadline has just passed and as an Idaho taxpayer you
probably felt the impact of paying high taxes. By investing in tax-free funds
like the First Idaho Tax-Free Fund you may have realized how important this Fund
can be in reducing your tax burden. In this tough economy, everything you save
makes a difference.
Tax-free investing provides more than an opportunity to generate State of
Idaho and federal tax-free income. Tax-free investing offers Idaho investors a
unique means of supporting local projects designed to enrich your 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 in your
neighborhood. Take a bite out of taxes while investing in your community.
On the following pages you will find our 1999 semi-annual report. If you
have any questions or would like us to provide information about the Fund to
your family or friends, please call us toll-free at (877) 829-8412.
Thank you for your business. As always, we look forward to providing you
with the same high levels of service and performance you have come to expect.
Sincerely,
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 (877) 829-8412 for a free prospectus.
Fund's yield, share price and investment return 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 Idaho Tax-Free Fund
is a series of First Pacific Mutual Fund, Inc.
FIRST IDAHO TAX-FREE FUND
SCHEDULE OF INVESTMENTS
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Par Value
Value (Note 1)
IDAHO MUNICIPAL BONDS (96.15%)
Ada & Canyon Counties
Joint School District (1.14%)
<S> <C> <C> <C> <C>
$10,000 5.500%, 7/30/12 $ 10,875
Adams County (2.69%)
25,000 5.20%, 08/01/17 25,406
Boise City
Convention Center (2.71%)
25,000 6.250%, 12/01/09 25,656
Independent School District (1.10%)
10,000 5.300%, 7/30/09 10,438
Public Housing Authority (2.70%)
25,000 5.250%, 8/01/11 25,541
Boise State University
Revenue Bond (2.80%)
10,000 5.050%, 4/01/08 10,513
15,000 6.200%, 4/01/10 15,938
26,451
Boise-Kuna-Irrigation District
Lucky Peak Hydroelectric (4.97%)
45,000 6.000%, 7/01/08 46,969
Bonneville County
General Obligation Bonds (1.09%)
10,000 5.200%, 8/01/12 10,338
Cassia & Twin Falls County
General Obligation Bonds (2.76%)
25,000 5.375%, 8/01/13 26,125
Central Shoshone County
Water District Revenue Bond (1.11%)
10,000 6.150%, 12/01/17 10,500
Elmore County
School District #193 (2.60%)
25,000 4.500%, 7/31/13 24,563
Gooding County
School District #232 Wendell (1.10%)
10,000 5.800%, 8/01/06 10,450
Hayden Lake (2.16%)
Water and Sewer District
20,000 6.650%, 2/01/02 20,392
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Par Value
Value (Note 1)
Idaho Falls
Idaho Electric Revenue Bonds (8.40%)
$20,000 6.750%, 4/01/09 $ 22,700
40,000 10.375%, 4/01/13 56,700
79,400
Idaho Health Facilities Revenue Bonds
(Bannock Regional Medical Center) (2.15%)
15,000 5.000%, 5/01/00 15,201
5,000 6.000%, 5/01/14 5,106
20,307
(Holy Cross Health Systems) (7.05%)
25,000 6.100%, 12/01/06 27,500
40,000 5.000%, 12/01/28 39,200
66,700
(Intermountain Health Care Inc.) (3.15%)
25,000 6.500%, 4/01/10 29,781
(Magic Valley Regional Medical Center) (1.12%)
10,000 5.500%, 12/01/10 10,613
(Mercy Medical Center) (2.82%)
25,000 7.400%, 10/01/05 26,686
(Elks Rehabilitation Hospital) (4.21%)
40,000 5.300%, 7/15/18 39,800
Idaho Housing Agency
Single Family Mortgage (17.84%)
10,000 5.625%, 7/01/05 10,237
25,000 6.600%, 7/01/12 26,375
10,000 5.700%, 7/01/13 10,363
25,000 5.500%, 7/01/25 25,250
45,000 6.500%, 1/01/27 47,475
50,000 5.150%, 7/01/28 49,062
168,762
Idaho State
Board of Education (0.54%)
5,000 7.100%, 10/01/17 5,100
Water Reserve Board (5.12%)
45,000 7.250%, 12/01/21 48,431
Student Loan Marketing Association - Series C (1.06%)
10,000 4.750%, 4/01/99 10,000
Jerome
Sewer Revenue (1.62%)
15,000 6.800%, 11/01/06 15,319
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
SCHEDULE OF INVESTMENTS - (Continued)
March 31, 1999 (Unaudited)
Par Value
Value (Note 1)
Nampa Urban Renewal Agency (1.16%)
$10,000 5.700%, 8/01/05 $ 10,975
Payette & Washington Counties
School District #371 (2.15%)
20,000 6.300%, 10/01/03 20,321
Twin Falls County
Solid Waste Disposal (2.13%)
20,000 4.500%, 9/01/99 20,106
Idaho State University (2.83%)
25,000 5.800%, 4/01/20 26,780
University of Idaho
University Commons Project (3.87%)
25,000 5.350%, 4/01/22 25,875
10,000 5.650%, 4/01/22 10,700
36,575
Total Idaho Municipal Bonds 909,360
Total Investments (cost $890,414) (a) 96.15% 909,360
Other Assets Less Liabilities 3.85 36,382
Net Assets 100.00% $ 945,742
(a) Aggregate cost for federal income tax purposes is $890,414.
At March 31, 1999, unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
Gross unrealized appreciation $ 21,290
Gross unrealized depreciation (2,344)
Net unrealized appreciation $ 18,946
</TABLE>
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999 (Unaudited)
ASSETS
Investments at market value
(Identified cost $890,414) (Note 1(A)) $ 909,360
Interest receivable 18,263
Receivable for investments sold 61,396
Other assets 617
Total assets 989,636
LIABILITIES
Cash overdraft 41,480
Distributions payable 2,414
Total liabilities 43,894
NET ASSETS
(Applicable to 90,266 shares outstanding,
$.01 par value, 20,000,000 shares authorized) $ 945,742
NET ASSET VALUE, OFFERING AND REPURCHASE PRICE PER SHARE
Net asset value and repurchase price per share
($945,742 ) 90,266 shares) $ 10.48
NET ASSETS
At March 31, 1999, net assets consisted of:
Paid-in capital $ 926,160
Accumulated net realized gain on investments 636
Net unrealized appreciation of investments 18,946
$ 945,742
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
STATEMENT OF OPERATIONS
For the six months ended March 31, 1999 (Unaudited)
INVESTMENT INCOME
Interest income $ 26,322
Expenses
Management fee (Note 2) 2,612
Transfer agent fees (Note 2) 7,200
Accounting fees (Note 2) 500
Legal and audit 1,000
Miscellaneous 2,914
Custodian fees 1,500
Insurance 512
---
Total expenses 16,238
Fee reduction (Note 4) (4,345)
Expenses reimbursed or waived (Note 2) (11,312)
Net expenses 581
Net investment income 25,741
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from security transactions 913
Change in unrealized appreciation of investments (12,830)
Net loss on investments (11,917)
Net increase in net assets resulting from operations $ 13,824
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For The Six
Months Ended
March 31, Year Ended
1999 September 30,
(Unaudited) 1998
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
<S> <C> <C>
Net investment income $ 25,741 $ 40,562
Net realized gain (loss) from security transactions 913 (277)
Change in unrealized appreciation of investments (12,830) 19,179
Net increase in net assets resulting from operations 13,824 59,464
Distributions to shareholders from
Net investment income
($.25 and $.52 per share, respectively) (25,741) (40,562)
Capital share transactions (a)
Increase in net assets resulting from capital share transactions 5,492 272,106
Total increase (decrease) in net assets (6,425) 291,008
NET ASSETS
Beginning of period 952,167 661,159
End of period $ 945,742 $ 952,167
</TABLE>
<TABLE>
<CAPTION>
(a) Summary of capital share activity follows:
For The Six
Months Ended
March 31, 1999 Year Ended
(Unaudited) September 30, 1998
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 14,772 $ 160,198 30,410 $ 317,797
Shares issued on acquisition of distributions 1,322 13,909 2,560 26,831
16,094 174,107 32,970 344,628
Shares redeemed (15,607) (168,615) (6,827) (72,522)
Net increase 487 $ 5,492 26,143 $ 272,106
</TABLE>
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For The Six Period
Months Ended July 1, 1996*
March 31, Year Ended Year Ended To
1999 September 30, September 30, September 30,
(Unaudited) 1998 1997 1996
----------- ---- ---- ----
Net asset value
<S> <C> <C> <C> <C>
Beginning of period $ 10.61 $10.39 $10.15 $10.00
Income from investment operations
Net investment income 0.25 0.52 0.49 0.05
Net realized and unrealized gain (loss)
on securities (0.13) 0.22 0.24 0.15
Total from investment operations 0.12 0.74 0.73 0.20
Less distributions
Dividends from net investment income (0.25) (0.52) (0.49) (0.05)
End of period $ 10.48 $10.61 $10.39 $10.15
Total return 1.16% 7.29% 7.38% 2.05%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $946 $952 $661 $111
Ratio of expenses to average net assets
Before expense reimbursements 3.12% (a) 6.27% 12.74% 222.98% (a)
After expense reimbursements 0.95% (a)(b) 1.16% (b) 1.59% (b) 0.02% (a)
Ratio of net investment income (loss)
to average net assets
Before expense reimbursements (0.03)% (a) (1.23)% (6.23%) (219.93)% (a)
After expense reimbursements 4.94% (a) 4.93% 4.92% 3.03% (a)
Portfolio turnover 14.94% 6.44% 0% 0%
</TABLE>
* Commencement of operations
(a) Annualized
(b) Ratio of expenses to average net assets after the reduction of custodian
fees under a custodian arrangement was 0.11% for the six months ended March
31, 1999 and 0.11% and 0.05% for the years ended September 30, 1998 and
1997, respectively.
See accompanying notes to financial statements
FIRST IDAHO TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Idaho Tax-Free Fund is 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 Fund is to provide investors with a high
level of income exempt from federal and Idaho income taxes consistent with
the preservation of capital. The Fund seeks to achieve its objective by
investing primarily in municipal securities which pay interest that is
exempt from federal and Idaho income taxes.
The Fund is subject to the risk of price fluctuation of the municipal
securities held in its portfolio 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 Fund invests primarily in obligations of issuers located in
Idaho, the marketability and market value of these obligations may be
affected by certain Idahoan 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 Idahoan 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 Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
its taxable income, if any, to its shareholders. Therefore, no federal
income tax provision is required. At September 30, 1998, the Fund had a
capital loss carryforward of approximately $300 which expires in 2006.
(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.
FIRST IDAHO TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
March 31, 1999 (Unaudited)
(D) USE OF ESTIMATES IN FINANCIAL STATEMENTS
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 revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(2) INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
FirstPacific Management Corporation ("FPMC") provides the Fund 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 the Fund's average daily net
assets.
The Fund's distributor, First Pacific Securities, Inc. ("FPS"), a
wholly-owned subsidiary of FPMC, may be reimbursed for costs incurred in
connection with the sale of the Fund's shares (See Note 3). No
reimbursements were received during the six months ended March 31, 1999.
First Pacific Recordkeeping, Inc. ("FPR"), a wholly-owned subsidiary of
FPMC, serves as the transfer agent for the Fund. FPR also provides the Fund
with certain clerical, bookkeeping and shareholder services pursuant to a
service agreement approved by the Fund's directors. FPR served as
accounting agent through November 23, 1998. During this period, FPR waived
all fees.
For the six months ended March 31, 1999, FPMC and FPR voluntarily waived
certain management, transfer agent, and accounting fees in the amount of
$11,312 for the Fund.
Certain officers and directors of the Fund are also officers of FPMC, FPS
and FPR.
(3) DISTRIBUTION COSTS
The Fund's Board of Directors, including a majority of the Directors who
are not "interested persons" of the Fund, 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 Fund may incur certain costs, which may not
exceed .25% per annum of the Fund's 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 Fund. Prior to February 1, 1999, the Plan expenses could not
exceed .50% per annum of the Fund's average daily net assets.
FIRST IDAHO TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
March 31, 1999 (Unaudited)
(4) PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities aggregated $174,392 and $148,091,
respectively. Under an agreement with the Custodian Bank, custodian fees
are reduced by credits for cash balances. During the six months ended March
31, 1999, such reductions amounted to $4,345.
INVESTMENT MANAGER
First Pacific Management Corporation
2756 Woodlawn Drive, #6-201
Honolulu, Hawaii 96822-1856
DISTRIBUTOR
First Pacific Securities, Inc.
2756 Woodlawn Drive, #6-201
Honolulu, Hawaii 96822-1856
CUSTODIAN
Union Bank of California, N.A.
475 Sansome Street, 15th Floor
San Francisco, California 94111
LEGAL COUNSEL TO FUND
Drinker, Biddle & Reath, LLP
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
INDEPENDENT AUDITORS
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103-2108
TRANSFER AGENT
First Pacific Recordkeeping, Inc.
2756 Woodlawn Drive, #6-201
Honolulu, Hawaii 96822-1856
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