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[LOGO OF PACIFIC CAPITAL FUNDS]
--------------------------------
Annual Report
To Shareholders
July 31, 1997
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TABLE OF CONTENTS
Letter to Shareholders
Page 1
Fund Performance Review
Page 3
Report of Independent Auditors
Page 19
Statements of Assets and Liabilities
Page 20
Statements of Operations
Page 22
Statements of Changes in Net Assets
Page 24
Schedules of Portfolio Investments
Page 27
Notes to Financial Statements
Page 46
Financial Highlights
Page 57
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PACIFIC CAPITAL FUNDS
ANNUAL REPORT
LETTER TO SHAREHOLDERS
Dear Shareholders:
The stock market's gains during the 12-month period ended July 31, 1997, were
truly extraordinary. At the start of the period, stocks had just come off a
roughly 9% correction, and the Dow Jones Industrial Average stood at around
5600. Our domestic equity funds posted strong gains as well. The Growth Stock
Fund posted a total return of 47.02%,/1/ and the Growth and Income Fund gained
47.59%./1/ The New Asia Growth Fund also performed well. It rose 26.31%/1/ for
the one-year period (Returns are for Retail Class without sales charge).
Bonds also posted gains for the period, but along the way their prices were
volatile as investors worried that economic growth could create inflationary
pressures. The yield on 30-year Treasury bonds began the period at around
6.98%, rose to approximately 7.25% by March and declined to around 6.37% at the
end of July.
CHANGING ECONOMIC FORECASTS
Interest rates began drifting higher during the fourth quarter of 1996, when
the economy grew at a relatively strong 3.8% annual rate, fueling concerns
about the possibility of rising inflation. Investors' concerns intensified
during the first quarter of 1997, when economic growth accelerated to 5.9%. The
Federal Reserve Board responded by raising interest rates in March.
However, economic growth began to slow during the second quarter of 1997,
reflecting events like a strike at General Motors and floods in the Midwest.
Real Gross Domestic Product (GDP) growth during the second quarter was only
3.6%, and inflation remained low at around 2%. As a result, interest rates
declined during the second quarter.
We expect the economy to grow at a rate of 2.5% to 3.0% during the rest of
1997. That should be slow enough to avoid further interest rate increases by
the Federal Reserve. Inflation will likely remain low at a rate of 2% or less
for the rest of the year. Corporate earnings will likely rise 3% to 5% during
the next 12 months--not as strongly as in the past few years.
GOOD NEWS: THE SHRINKING DEFICIT AND LOW INFLATION
The U.S. Government had predicted that the federal deficit would equal around
$60 billion at the end of 1997, but it appears that figure will be more like
$30 billion. As a result, the Treasury will need to issue only around $10
billion to $12 billion in new securities in the third quarter to fund its
deficit. This lack of new Treasury issues should help to reduce interest rates
and bolster the bond market.
What's more, we believe inflation will stay low and perhaps decline going
forward, for the following key reasons: First, as companies invest in new
technology, industrial capacity grows--making it tough for companies to raise
prices. Second, competition from foreign companies will continue to prevent
U.S. firms from raising prices significantly. Third, spending by the U.S.
Government is growing more slowly than government revenues, which will continue
to dampen inflation.
A CAUTIOUS APPROACH
There are many positive economic factors supporting the financial markets
today. In fact, given continued moderate economic growth and low inflation, the
market should continue to post gains. But it's important to remember that
financial markets can be volatile and may suffer temporary setbacks from time
to time.
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Bull markets historically come to an end due to factors such as rising
interest rates, rising inflation or signs of recession. Although we don't
think those events are likely to occur in the next several quarters, it is
important to remember that there have been only 11 times in the last 100 years
when the stock market has posted back-to-back gains of 20% or more.
OPPORTUNITIES IN STOCKS AND BONDS
The Pacific Capital equity funds will remain fully invested, but we will
exercise caution, seeking opportunities among neglected issues--especially in
sectors such as technology and financial stocks, as well as capital goods
stocks. Bonds are attractive at their current yields and should continue to
offer opportunities as the economy slows.
Mutual fund investments now exceed $4 trillion.* While investors pocketed
large gains during the recent period, they also endured considerable
uncertainty and volatility. The market's fluctuations are a reminder that
basic investment principles are the key to long-term gains. Among these
principles:
. Establish your investment objectives and risk tolerance before you
invest.
. Diversify among various asset classes to manage financial risk.
. Consider tax-advantaged strategies.
. Stick with your plan, riding out market fluctuations and boosting your
portfolio with a regular savings program.
Thank you for your confidence in the Pacific Capital family of funds. During
the coming months, we will continue to monitor investment risk and uncover
investment opportunities that will help you meet your long-term goals. If you
have any questions or would like a Fund prospectus, please contact your
registered investment consultant, or call BISYS Fund Services at (800) 722-
2271.
Sincerely,
/s/ Deborah G. Patterson /s/ William J. Barton
Deborah G. Patterson William J. Barton
Senior Vice President, Bank of Hawaii Executive Vice President, Manager
Chairperson, Pacific Capital Funds Investment Management Group
Hawaiian Trust Company, Ltd.
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/1/ With the maximum sales charge of 4.00%, the Growth and Income Fund had a
total return of 41.72%; the Growth Stock Fund had a return of 41.08%; and with
a maximum sales charge of 5.25%, the New Asia Growth Fund had a return of
19.64% for the period.
*Source: ICI, August 1997
AS WITH ALL MUTUAL FUNDS, SHARES IN THE PACIFIC CAPITAL FUNDS
.ARE NOT FDIC INSURED
.HAVE NO BANK GUARANTEE
.MAY LOSE VALUE
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FUND PERFORMANCE REPORT
PACIFIC CAPITAL GROWTH STOCK FUND
Pacific Capital Growth Stock Fund+
Growth of a $10,000 Investment
S&P/BARRA Institutional (B)
Growth Index++ Retail (A)* No Load
7/31/87 10000 9601 10000
7/31/88 8391 7975 8324
7/31/89 11184 9872 10338
7/31/90 12509 11340 11912
7/31/91 14445 12903 13604
7/31/92 16220 14195 15008
7/31/93 16460 14880 15769
7/31/94 17296 15782 16743
7/31/95 22610 19006 20198
7/31/96 26598 20574 21922
7/31/97 41619 30247 32310
Average Annual Total Return
07/31/97 1 Year 5 Year 10 Year
Retail (A)* 41.08% 15.39% 11.70%
Institutional (B) 47.39% 16.58% 12.45%
10/14/94, Commencement of operations
of Institutional Class
11/1/93, Commencement of operations
of Retail Class
* Reflects 4.0% Maximum Sales Charge
Past performance is not predictive of future results.
+The quoted performance of the Pacific Capital Growth Stock Fund ("Fund")
includes the performance of certain common trust fund ("Commingled") accounts
advised by Hawaiian Trust Company and managed the same as the Fund in all
material respects, for periods dating back to July 31, 1987, and prior to the
Fund's commencement of operations on November 1, 1993, for the Retail Class,
and on October 14, 1994, for the Institutional Class as adjusted to reflect
the expenses associated with the Fund. The Commingled accounts were not
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 and therefore were not subject to the investment
restrictions imposed by law on registered mutual funds. If the Commingled
accounts had been registered, the Commingled accounts' performance may have
been adversely affected.
++The Standard & Poor's BARRA Growth Index is unmanaged and is generally
representative of the performance of the growth stock universe. The index does
not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services.
Investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
The Fund posted a total return of 47.02%/1/ during the 12 months ended July
31, 1997 (Returns are for Retail Class without the sales charge). That
performance lagged the S&P/BARRA Growth Index return of 56.48% but exceeded the
Lipper Growth Fund Index return of 43.76%.
Prices of large, more liquid companies rose steadily, fueled by strong
earnings growth, low inflation and stable interest rates. During the period, we
took a more aggressive stance with the Fund. We held shares of larger companies
that were producing good earnings results, as well as some small-company
shares. We increased the Fund's exposure to technology shares from 13.25% to
19.64% of net assets as of July 31. We also increased the Fund's holdings in
financial-company stocks from 3.46% to 8.16%. The Fund's consumer-durables
holdings also were extended slightly from 8.88% to 9.89%.
We reduced the Fund's investment in consumer-staples firms from 24.87% at the
beginning of the period to 20.41%. There is concern about the sustainability of
the strong profit growth of consumer-products firms.
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Shares of these companies are not as attractively valued as stocks in some less
popular sectors of the stock market.
We are positive about the economy's outlook for the months ahead, and we will
continue to emphasize high-growth stocks. With that in mind, we will shift more
of the portfolio's holdings into technology and health-care stocks. We also
will continue to reduce the Fund's weighting in consumer-staples shares. In
general, we will continue to invest in high-quality companies in strong growth
areas.
As of July 31, 1997, the Fund's top five holdings as a percent of total
assets were General Electric (5.07%), Microsoft (3.93%), Merck (3.01%),
American International Group (2.97%) and Coca-Cola (2.96%)./2/
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/1/ With the maximum sales charge of 4.00%, the Fund's Retail Class shares had
a total return of 41.08% for the period.
/2/ The composition of the Fund's holdings is subject to change.
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PACIFIC CAPITAL GROWTH AND INCOME FUND
Pacific Capital Growth and Income Fund+
Growth of a $10,000 Investment
S&P 500 Institutional (B)
Stock Index++ Retail (A)* No Load
7/31/87 10000 9600 10000
7/31/88 8833 8678 9054
7/31/89 11648 10991 11490
7/31/90 12401 11898 12483
7/31/91 13986 12835 13493
7/31/92 15771 14105 14871
7/31/93 17138 14513 15366
7/31/94 18027 14755 15625
7/31/95 22725 17590 18655
7/31/96 26487 19694 20947
7/31/97 40291 29065 30994
Average Annual Total Return
07/31/97 1 Year 5 Year 10 Year
Retail (A)* 41.72% 14.61% 11.27%
Institutional (B) 47.96% 15.82% 11.98%
10/14/94, Commencement of operations of the
Retail and Institutional Classes
* Reflects 4.0% Maximum Sales Charge
Past performance is not predictive of future results.
+ The quoted performance of the Pacific Capital Growth and Income Fund ("Fund")
includes the performance of certain common trust fund ("Commingled") accounts
advised by Hawaiian Trust Company and managed the same as the Fund in all
material respects, for periods dating back to July 31, 1987, and prior to the
Fund's commencement of operations on October 14, 1994, as adjusted to reflect
the expenses associated with the Fund. The Commingled accounts were not
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 and therefore were not subject to the investment
restrictions imposed by law on registered mutual funds. If the Commingled
accounts had been registered, the Commingled accounts' performance may have
been adversely affected.
++The Standard & Poor's 500 Stock Index is unmanaged and is generally
representative of the performance of the domestic stock universe. The index
does not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services.
Investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
During the 12 months ended July 31, 1997, the Fund delivered a total return
of 47.59%/1/ (Returns are for Retail Class without sales charge). That compared
to a return of 52.14% for the Standard & Poor's 500 and a return of 44.14% for
the Lipper Growth & Income Fund Index, the Fund's benchmarks.
Market performance was driven by a number of factors during the period. They
included solid corporate earnings growth, strong investor cash flows into
equities and mutual funds, moderate economic growth, low inflation and
relatively stable interest rates. Corporate earnings growth continued to exceed
economic growth due to gains in productivity and profit margins. Companies are
benefiting from the increased use of technology in areas such as inventory,
currency and process management.
The Fund's strategy was aggressive during the period. We increased the Fund's
exposure in the technology sector from 10.36% to 17.38% of assets by July 31.
The technology sector performed well during the period and continues to be a
rapidly growing area of the U.S. economy. We also increased the Fund's holdings
in the financial sector from 11.41% to 16.92%. The banking industry benefited
from a period of consolidation, acquisitions and cost cutting. As a result,
financial-company shares showed solid earnings growth and were selling at
attractive valuations.
5
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We reduced the Fund's exposure to utility shares from 5.65% at the beginning
of the period to 2.62% as of July 31. Due to deregulation, the earnings outlook
for the sector is not favorable and dividend growth potential is poor. We also
reduced the Fund's consumer-staples holdings from 14.8% to 12.4%, reflecting
valuation concerns.
Going forward, we expect to see moderate economic growth accompanied by
continued productivity gains, reasonable earnings growth and low inflation. We
will continue to take a stock-by-stock approach, maintaining a solid core of
shares with more rapidly growing firms in a variety of sectors, including
financial, technology and health care. As of July 31, 1997, the Fund's top five
holdings as a percent of total assets were Compaq (4.01%), Philip Morris (4%),
General Electric (3.72%), Oracle (3.01%) and Merck (2.99%)./2/
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/1/ With the maximum sales charge of 4.00%, the Fund's Retail Class shares had
a total return of 41.72% for the period.
/2/ The composition of the Fund's holdings is subject to change.
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PACIFIC CAPITAL NEW ASIA GROWTH FUND+
Pacific Capital New Asia Growth Fund
Growth of a $10,000 Investment
Institutional (B) MSCI AC Far East
Retail (A)* No Load Free ex Japan++
2/15/95 9479 10000 10000
7/31/95 10626 11220 10331
7/31/96 10807 11444 10704
7/31/97 13650 14476 12150
Average Annual Total Return
Since Inception
07/31/97 1 Year (2/15/95)
Retail (A)* 19.64% 13.48%
Institutional (B) 26.50% 16.23%
* Reflects 5.25% Maximum Sales Charge
Past performance is not predictive of future results.
++The performance of the Pacific Capital New Asia Growth Fund is measured
against the Morgan Stanley Capital International (MSCI) Far East Index
(excluding Japan), which is unmanaged and is generally representative of the
performance of stock markets in that region. The index does not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The Fund's performance reflects the deduction of
fees for these value-added services. Investment return and NAV will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less than
the original cost.
During the 12 months ended July 31, 1997, the Fund had a total return of
26.31%/1/. That compared favorably to a 13.50% return for the Fund's benchmark,
the MSCI AC Far East Free ex Japan Index.
The Fund's performance in part reflected our decision to overweight shares of
Hong Kong companies. In particular, the Fund benefited from relatively heavy
investments in Hong Kong companies that have exposure to the Chinese markets.
For example, our investment in China Resources (4.2% as a percent of net
assets),/2/ one of the leading People's Republic of China-backed conglomerates
in Hong Kong, helped boost the Fund's performance. The company has a wide array
of businesses, including real estate, breweries and port operations. Moreover,
it continues to add to its investment portfolio through acquisitions. We
believe that China-oriented companies within Hong Kong will continue to deliver
above-average returns, and we expect that China Resources will continue to play
a major role in Hong Kong during the coming years. As a result, the stock
remains one of the largest positions in the portfolio.
The Fund also benefited from its full weighting in the Taiwan stock market,
which performed well. We continue to believe that Taiwanese electronics
companies offer some of the most attractive growth prospects in the region, and
we will concentrate our investments in this sector of the market. Looking
ahead, however, we may trim our investment in Taiwan stocks, which as a group
are trading at relatively high prices.
7
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The Fund's recent investments in Korea have captured some of the recovery in
that country's stock market. We are likely to increase our exposure to Korean
stocks during the coming year. We also may increase our small exposure to the
Indian Subcontinent markets, which have contributed to the Fund's recent gains.
However, the Fund will continue to invest primarily in the North Asian and
Chinese markets.
We maintained a relatively low investment in the stock markets of Southeast
Asia throughout the period, and even reduced those holdings. One reason for
that decision was our concern about the likelihood of currency devaluations in
the region. Those fears proved justified. Thailand, the region's worst
performing market, was the first country to devalue its currency. The
Philippines, Malaysia and Indonesia all followed suit soon after.
Those currency troubles caused most of the Southeast Asian markets to suffer
losses. But we are confident that those countries' decisions to bring their
currencies into line with economic reality will help their economies sustain
superior long-term growth rates. Moreover, we are confident that the recent
declines in Southeast Asia and some other regional markets will offer very
attractive investment opportunities in the years to come. As of July 31, 1997,
the Fund's top five holdings as a percent of total assets were Swire Pacific
(4.8%), China Resources (4.2%), Hutchinson Whampoa (3.4%), Larsen & Toubro
(2.8%) and New World Infra (2.4%)./2/
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/1/ With the maximum sales charge of 5.25%, the New Asia Growth Fund had a
total return of 19.64% for the period.
/2/ The composition of the Fund's holdings is subject to change.
+ International investing involves increased risk and volatility.
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PACIFIC CAPITAL U.S. TREASURY SECURITIES FUND
Pacific Capital U.S. Treasury Securities Fund+
Growth of a $10,000 Investment
Merrill Merrill
Lynch Lynch U.S.
10-15-Yr. Treasuries
Govt./U.S. All Maturity Institutional
Treas. Index++ Index Retail (A)* (B) No Load
7/31/87 10000 9798 9604 10000
7/31/88 10712 10451 9931 10344
7/31/89 12362 12062 11342 11847
7/31/90 13123 12779 11824 12355
7/31/91 14468 14043 12891 13514
7/31/92 16724 16167 14853 15597
7/31/93 18571 17927 16574 17427
7/31/94 18576 17891 16016 16857
7/31/95 20483 19637 17647 18626
7/31/96 21562 20632 18252 19317
7/31/97 23890 22727 19836 21041
Average Annual Total Return
07/31/97 1 Year 5 Year 10 Year
Retail (A)* 4.33% 5.09% 7.09%
Institutional (B) 8.92% 6.17% 7.72%
10/14/94, Commencement of operations
of Institutional Class
11/1/93, Commencement of operations
of Retail Class
* Reflects 4.0% Maximum Sales Charge
Past performance is not predictive of future results.
+The quoted performance of the Pacific Capital U.S. Treasury Securities Fund
("Fund") includes the performance of certain common trust fund ("Commingled")
accounts advised by Hawaiian Trust Company and managed the same as the Fund in
all material respects, for periods dating back to July 31, 1987, and prior to
the Fund's commencement of operations on November 1, 1993, for the Retail
Class, and on October 14, 1994, for the Institutional Class, as adjusted to
reflect the expenses associated with the Fund. The Commingled accounts were
not registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 and therefore were not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled accounts had been registered, the Commingled accounts' performance
may have been adversely affected.
++The Fund has chosen to change the current benchmark of The Merrill Lynch 10-
15-Year Government/U.S. Treasury Index to the Merrill Lynch U.S. Treasuries
All Maturity Index. The Merrill Lynch U.S. Treasuries All Maturity Index
represents the performance of both the short-term and long-term U.S. Treasury
bonds. The indices do not reflect the deduction of expenses associated with a
mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services.
Investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
The recent period was marked by exceptional volatility in the bond market,
with short-term price moves that often failed to reflect the market's
underlying fundamentals. The Fund began the fiscal year that ended July 31,
1997, with a relatively long duration of 6.35 years, and we extended that
duration to 7.42 years in December. We increased duration, which is a measure
of the Fund's share price sensitivity to interest rate changes, because we
expected a weak economy to produce lower interest rates, boosting bond prices--
especially prices of bonds with longer durations.
That strategy helped the Fund when rates declined in November, but stronger-
than-expected fourth-quarter economic growth caused rates to rise. We reduced
the Fund's duration to 6.36 years in March, and reduced it further to 4.36
years in April after the Federal Reserve increased the federal funds rate in
late March. Our aim was to reduce the Fund's exposure to the risk of further
rate hikes by the Fed.
At the end of June, we extended the Fund's duration to 5.25 years, about 10%
longer than its new benchmark index, the Merrill Lynch U.S. Treasuries All
Maturity Index. We believe that this index better
9
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represents the Fund's holdings, because, unlike the old benchmark, it does not
include callable Treasury securities. These securities are rare and difficult
to trade; therefore, it is unlikely we would ever hold them in the Fund's
portfolio. What's more, their callable features shortened the index's duration,
making it a less-appropriate benchmark for the Fund.
Looking ahead, we believe that rates will decline further by the end of the
year. Long-term rates could fall again in 1998 as the economy slows, allowing
the Federal Reserve to reduce the Fed funds rate.
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PACIFIC CAPITAL SHORT INTERMEDIATE U.S. TREASURY SECURITIES FUND
Pacific Capital Short Intermediate U.S. Treasury Securities Fund
Growth of a $10,000 Investment
Merrill Lynch
3-5-Year U.S. Institutional
Treasury Index+ Retail (A)* (B) No Load
12/13/93 10000 9775 10000
7/31/94 9878 9506 9724
7/31/95 10766 10103 10363
7/31/96 11266 10497 10797
7/31/97 12316 11223 11573
Average Annual Total Return
Since Inception
07/31/97 1 Year (12/13/93)
Retail (A)* 4.47% 3.22%
Institutional (B) 7.19% 4.10%
10/14/94, Commencement of operations
of the Institutional Class
* Reflects 2.25% Maximum Sales Charge
Past performance is not predictive of future results.
+ The performance of the Pacific Capital Short Intermediate U.S. Treasury
Securities Fund is measured against the Merrill Lynch 3-5-Year U.S. Treasury
Index, which is unmanaged and is generally representative of the performance
of short-term Treasury bonds. The index does not reflect the deduction of
fees associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for
these value-added services. Investment return and NAV will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than the
original cost.
The 12-month period through July 31, 1997, was marked by sharp fluctuations
in the short-term bond market--fluctuations that did not always reflect current
economic fundamentals. The Fund began the fiscal year with a duration of about
2.84 years, roughly 15% shorter than its benchmark index. That relatively short
duration was designed to protect shareholders against the risk that the Federal
Reserve would increase short-term rates, causing longer duration issues to
perform poorly. As it became apparent that the Fed would not increase rates in
1996, we increased the Fund's duration to around 3.62 years, about 6% longer
than the index.
We reduced the Fund's duration from 3.52 years in January to 3.28 years in
March, which provided some protection from the impact of the Fed's decision to
raise the federal funds rate in late March. After that, we shortened the
duration further, to around 2.6 years in April. However, short-term interest
rates declined late in the period. We again lengthened the duration to around
3.2 years at the end of June in order to participate in the bond market rally.
11
<PAGE>
It seems unlikely that the Federal Reserve will reduce short-term rates again
in 1997. Moreover, the spread between yields on very short-term securities and
two-year Treasury notes is exceptionally narrow. Thus, there is little to be
gained by taking on the additional interest rate risk that longer duration
securities carry. As a result, we probably will maintain a relatively neutral
duration, close to that of our benchmark index.
12
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PACIFIC CAPITAL DIVERSIFIED FIXED INCOME FUND
Pacific Capital Diversified Fixed Income Fund+
Growth of a $10,000 Investment
Merrill Lynch
Corporate &
Government Institutional
Master Index++ Retail (A)* (B) No Load
7/31/87 10000 9601 10000
7/31/88 10712 10199 10633
7/31/89 12362 11810 12359
7/31/90 13123 12292 12887
7/31/91 14468 13471 14172
7/31/92 16724 15598 16443
7/31/93 18571 17641 18644
7/31/94 18576 16976 17975
7/31/95 20483 18713 20017
7/31/96 21562 19403 20788
7/31/97 23890 21189 22721
Average Annual Total Return
07/31/97 1 Year 5 Year 10 Year
Retail (A)* 4.79% 5.46% 7.80%
Institutional (B) 9.30% 6.68% 8.55%
10/14/94, Commencement of operations of the
Retail and Institutional Classes
* Reflects 4.0% Maximum Sales Charge
Past performance is not predictive of future results.
+The quoted performance of the Pacific Capital Diversified Fixed Income Fund
("Fund") includes the performance of certain common trust fund ("Commingled")
accounts advised by Hawaiian Trust Company and managed the same as the Fund in
all material respects, for periods dating back to July 31, 1987, and prior to
the Fund's commencement of operations on October 14, 1994, as adjusted to
reflect the expenses associated with the Fund. The Commingled accounts were
not registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 and therefore were not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled accounts had been registered, the Commingled accounts' performance
may have been adversely affected.
++The Merrill Lynch Corporate & Government Master Index is unmanaged and is
generally representative of the performance of corporate and U.S. Government
bonds. The index does not reflect the deduction of fees associated with a
mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services.
Investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
The 12 months through July 31, 1997, were a volatile period for the bond
market. Although the yield on 30-year Treasury bonds finished the period about
half a percentage point lower, there were wide fluctuations during the period.
For example, the yield on 30-year Treasuries declined to as low as 6.36% last
fall and then rose to as high as 7.25% in April before falling again to finish
the period at 6.37%.
In that environment, we attempted to add value by taking advantage of
opportunities to lengthen or shorten the Fund's average maturity and duration,
depending on market conditions. For example, during the first half of the
fiscal year, we maintained the Fund's duration at about 20% to 30% longer than
the duration of its benchmark, the Merrill Lynch Corporate & Government Master
Index. Since longer duration portfolios generally outperform shorter duration
portfolios during periods of falling rates, that strategy benefited the Fund.
We reduced the duration of the Fund during the spring to dampen the effects
of wide price swings in the bond market. However, we extended the Fund's
duration from about 5 years to 5.5 years in early July. That longer duration
reflects the fact that low inflation and moderate economic activity are likely
to benefit the bond
13
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market going forward. In addition, bond yields are relatively high compared to
inflation, and thus longer term issues offer solid value.
Some 50% of the Fund's assets are invested in the corporate sector, compared
to less than 25% for our benchmark index. However, those investments are
concentrated in high-quality issues with an average credit rating of AAA.
Meanwhile, we are investing new money in U.S. government bonds because most
corporate issues do not offer a yield advantage significant enough to
compensate for their additional credit risk.
14
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PACIFIC CAPITAL TAX-FREE SECURITIES FUND**
Pacific Capital Tax-Free Securities Fund+
Growth of a $10,000 Investment
Lehman Brothers
Municipal Bond Institutional
Index++ Retail (A)* (B) No Load
7/31/87 10000 9598 10000
7/31/88 10703 10231 10688
7/31/89 12006 11421 11950
7/31/90 12838 12009 12606
7/31/91 13959 12952 13622
7/31/92 15877 14652 15459
7/31/93 17281 15935 16852
7/31/94 17605 15795 16737
7/31/95 18991 16856 17956
7/31/96 20244 17790 18985
7/31/97 22319 19453 20804
Average Annual Total Return
07/31/97 1 Year 5 Year 10 Year
Retail (A)* 4.93% 4.96% 6.88%
Institutional (B) 9.58% 6.12% 7.60%
10/14/94, Commencement of operations of the
Retail and Institutional Classes
* Reflects 4.0% Maximum Sales Charge
Past performance is not predictive of future results.
+The quoted performance of the Pacific Capital Tax-Free Securities Fund
("Fund") includes the performance of certain common trust fund ("Commingled")
accounts advised by Hawaiian Trust Company and managed the same as the Fund in
all material respects, for periods dating back to July 31, 1987, and prior to
the Fund's commencement of operations on October 14, 1994, as adjusted to
reflect the expenses associated with the Fund. The Commingled accounts were
not registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 and therefore were not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled accounts had been registered, the Commingled accounts' performance
may have been adversely affected.
++The Lehman Brothers Municipal Bond Index is unmanaged and is generally
representative of a broad range of maturities. The index does not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The fund's performance reflects the deduction of
fees for these value-added services.
Investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
During the past fiscal year, the bond market has seen gains amid much
volatility and uncertainty. Although inflation remained benign throughout the
period, stronger-than-expected economic growth and tightening labor conditions
posed a threat that inflation could be re-ignited. As a result of that, and
concerns over gains in stock market prices, the Federal Reserve Board took a
pre-emptive strike by raising the Federal Funds rate by a quarter percent in
March. Subsequently, speculation that the Federal Reserve Board would take
further action has kept the bond markets restrained.
During the same period, the Municipal market outperformed the Treasury
market, boosted by light supply and a resurgence of demand as flat-tax concerns
continue to dissipate post presidential elections. As a result, the ratio of
Municipal yields relative to Treasury yields dropped and has remained at
historical lows. A stronger economy also helped to improve the credit ratings
of many Municipal issuers, causing credit spreads to narrow as investors
reached for higher yields in lower rated credits.
Hawaii, plagued by a continuing soft economy, did not participate in this
positive credit trend. S&P, citing concerns over increased debt issuance under
a slow-growth environment, downgraded the rating of the state's
15
<PAGE>
general obligation debt to A+ from AA. Fortunately, the Fund was protected from
this downgrade, because we had made a decision to purchase only insured State
of Hawaii general obligation bonds while attaching secondary insurance to
existing bonds. Insured bonds carry the AAA rating of the Municipal bond
insurer, and therefore, the bonds in the Fund were not negatively impacted.
Sensitive to the objective of principal preservation, we were equally diligent
in selecting only high credit quality national Municipal bonds, for the non-
Hawaii portion of the Fund. Key to our strategy is the focus on "specialty
state" bonds--bonds from states that show economic stability and strength
coupled with high wealth concentration to boost demand. As a result of this
emphasis on quality, the Fund has an average portfolio quality rating of AAA,
with approximately 80% of the portfolio rated AAA and 17% rated AA.
For the latest 12-month period, the Fund showed a return of 9.35%/1/ (Returns
are for Retail Class without the sales charge). Looking ahead, we will continue
to maintain a slightly longer duration than the benchmark in anticipation of
further declines in interest rates. As always, we will remain mindful of the
principal-preservation nature of the Fund by being vigilant in our selection of
high credit quality issues and steering clear of sectors that may pose a risk.
- --------
**The Fund's income may be subject to certain state and local taxes and,
dependent on your tax status, the federal alternative minimum tax.
/1/ With the maximum sales charge of 4.00%, the Tax-Free Securities Fund had a
total return of 4.93% for the period.
16
<PAGE>
PACIFIC CAPITAL TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
Pacific Capital Tax-Free Short Intermediate Securities Fund+
Growth of a $10,000 Investment
Lehman Brothers
5-Year Municipal Institutional
Bond Index++ Retail (A)* (B) No Load
3/31/88 10000 9774 10000
7/31/88 10131 9748 9972
7/31/89 10945 10195 10465
7/31/90 11706 10827 11135
7/31/91 12711 11537 11901
7/31/92 14307 12458 12872
7/31/93 15252 12985 13461
7/31/94 15678 13195 13707
7/31/95 16844 13668 14276
7/31/96 17614 14135 14800
7/31/97 18890 14850 15593
Average Annual Total Return
Since
Inception
07/31/97 1 Year 5 Year (3/31/88)
Retail (A)* 2.71% 3.10% 4.33%
Institutional (B) 5.36% 3.91% 4.87%
10/14/94, Commencement of operations of the
Retail and Institutional Classes
* Reflects 2.25% Maximum Sales Charge
Past performance is not predictive of future results.
+The quoted performance of the Pacific Capital Tax-Free Short Intermediate
Securities Fund ("Fund") includes the performance of certain common trust fund
("Commingled") accounts advised by Hawaiian Trust Company and managed the same
as the Fund in all material respects for periods dating back to March 31,
1988, and prior to the Fund's commencement of operations on October 14, 1994,
as adjusted to reflect the expenses associated with the Fund. The Commingled
accounts were not registered with the Securities and Exchange Commission under
the Investment Company Act of 1940 and therefore were not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled accounts had been registered, the Commingled accounts' performance
may have been adversely affected.
++The Lehman Brothers 5-Year Municipal Bond Index is an unmanaged index that
tracks bonds with a maturity range of four to six years. It is important to
note that the Fund may invest only in bonds with a maturity range of five
years or less. Neither index reflects the deduction of fees associated with a
mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services.
Investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Past performance
is not an indication of future results.
During the past fiscal year, short-term Municipal securities significantly
outperformed their taxable counterparts. Municipal securities near the shorter
end of the maturity spectrum were even more expensive relative to Treasuries
when compared to longer term Municipal bonds. In fact, yields on Municipal
bonds maturing in 5 years or less dipped below 70% of the yields on comparable
Treasuries.
The combination of the "richness" of short-term Municipal securities and the
volatility caused by concern over Federal Reserve tightening prompted us to be
very selective and cautious in extending the portfolio, even though our outlook
was for interest rates to decline. We were mindful of the objective of the Fund
to provide lower volatility than a long tax-free fund, and therefore, we opted
for a strategy that would protect shareholders' value.
As with the longer tax-free fund, we also have emphasized quality and
"specialty state" bonds for this Fund. We believe that the higher quality and
greater demand will protect and enhance price values during market downturns.
The portfolio has an average rating of AAA, with 87% of the holdings rated AAA
and 9%
17
<PAGE>
rated AA. While lower quality bonds have outperformed recently, we do not
believe that they offer sufficient yield advantage to compensate for their
added risk and volatility.
Looking ahead, we will remain watchful for signs of further Federal Reserve
tightening, while looking for opportunities to extend and pick up value. We are
committed to maintaining a balance between income generation and principal
preservation.
18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
Pacific Capital Funds
We have audited the accompanying statements of assets and liabilities,
including the schedules of portfolio investments, of the Pacific Capital Funds
(comprising, respectively, the Growth Stock Fund, U.S. Treasury Securities
Fund, Short Intermediate U.S. Treasury Securities Fund, Growth and Income
Fund, Diversified Fixed Income Fund, Tax-Free Securities Fund, Tax-Free Short
Intermediate Securities Fund, and New Asia Growth Fund) as of July 31, 1997,
and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights presented herein for each of the
respective years or periods in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
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 audit 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 July 31, 1997, 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 each
of the respective funds constituting the Pacific Capital Funds as of July 31,
1997, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and the
financial highlights presented herein for each of the respective years or
periods in the period ended July 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Columbus, Ohio
September 12, 1997
19
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
GROWTH U.S. TREASURY U.S. TREASURY
STOCK SECURITIES SECURITIES GROWTH AND
FUND FUND FUND INCOME FUND
------------ ------------- ------------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $125,420,032;
$22,918,222;
$26,669,931; and
$90,175,740,
respectively).......... $208,844,861 $24,392,861 $26,968,639 $127,413,189
Interest and dividends
receivable.............. 152,073 545,520 383,909 175,774
Receivable for capital
shares issued........... 14,381 13,740 16,616 70,210
Prepaid expenses and
other assets............ -- -- 81 291
------------ ----------- ----------- ------------
Total Assets.......... 209,011,315 24,952,121 27,369,245 127,659,464
------------ ----------- ----------- ------------
LIABILITIES:
Dividends payable....... -- 7,508 8,046 --
Payable to brokers for
investments purchased... 666,002 -- -- --
Accrued expenses and
other payables:
Investment advisory
fees................... 137,104 12,374 6,810 83,957
Administration fees.... 5,424 632 660 3,324
Distribution fees--
Retail Class........... 1,992 226 127 733
Fund accounting fees... 1,199 29 460 1,041
Transfer agent fees.... 3,558 2,452 2,124 1,902
Trustees' fees......... 5,738 748 774 2,315
Custodian fees......... 1,289 534 856 --
Legal fees............. 8,864 2,817 3,591 6,273
Audit fees............. 19,380 2,548 2,775 8,065
Printing costs......... 10,564 2,765 2,110 4,285
Other.................. 995 300 465 212
------------ ----------- ----------- ------------
Total Liabilities..... 862,109 32,933 28,798 112,107
------------ ----------- ----------- ------------
NET ASSETS:
Capital................. 110,174,854 27,582,163 27,193,087 83,775,351
Undistributed
(distributions in excess
of) net investment
income.................. (14,687) (35,524) 40 44,608
Accumulated
undistributed net
realized gains (losses)
from investment
transactions........... 14,564,210 (4,102,090) (151,388) 6,489,949
Unrealized appreciation
from investments........ 83,424,829 1,474,639 298,708 37,237,449
------------ ----------- ----------- ------------
Net Assets............ $208,149,206 $24,919,188 $27,340,447 $127,547,357
============ =========== =========== ============
Net Assets
Retail Class........... $ 9,742,529 $ 1,087,438 $ 618,637 $ 3,725,915
Institutional Class.... 198,406,677 23,831,750 26,721,810 123,821,442
------------ ----------- ----------- ------------
Total................. $208,149,206 $24,919,188 $27,340,447 $127,547,357
============ =========== =========== ============
Outstanding units of
beneficial interest
(shares)
Retail Class........... 559,075 116,045 64,800 215,980
Institutional Class.... 11,375,655 2,541,120 2,793,910 7,171,253
------------ ----------- ----------- ------------
Total................. 11,934,730 2,657,165 2,858,710 7,387,233
============ =========== =========== ============
Net Asset Value
Retail Class--
redemption price per
share.................. $ 17.43 $ 9.37 $ 9.55 $ 17.25
============ =========== =========== ============
Retail Class--maximum
sales charge........... 4.00% 4.00% 2.25% 4.00%
------------ ----------- ----------- ------------
Retail Class--maximum
offering price per
share
(100%/(100%-maximum
sales charge) of net
asset value adjusted
to nearest cent)...... $ 18.16 $ 9.76 $ 9.77 $ 17.97
============ =========== =========== ============
Institutional Class--
offering and redemption
price per share......... $ 17.44 $ 9.38 $ 9.56 $ 17.27
============ =========== =========== ============
</TABLE>
See notes to financial statements.
20
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<CAPTION>
TAX-FREE
DIVERSIFIED TAX-FREE SHORT INTERMEDIATE
FIXED INCOME SECURITIES SECURITIES NEW ASIA
FUND FUND FUND GROWTH FUND
------------ ------------ ------------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $127,758,477;
$273,111,775;
$38,681,464; and
$19,750,749,
respectively).......... $131,523,476 $296,205,350 $39,279,168 $21,426,264
Foreign currency (Cost
$700,940).............. -- -- -- 689,471
Interest and dividends
receivable............. 2,302,810 3,421,498 404,664 35,121
Receivable for capital
shares issued.......... 19,834 -- -- 10,502
Receivable from brokers
for investments sold... -- -- -- 290,000
Prepaid expenses and
other assets........... -- 4,947 -- 19,636
------------ ------------ ----------- -----------
Total Assets.......... 133,846,120 299,631,795 39,683,832 22,470,994
------------ ------------ ----------- -----------
LIABILITIES:
Dividends payable....... 40,594 75,538 7,732 --
Payable to brokers for
investments purchased.. -- -- 1,500,000 586,740
Unrealized losses on
forward foreign
currency contracts..... -- -- -- 644
Accrued expenses and
other payables:
Investment advisory
fees.................. 66,691 150,656 16,238 16,230
Administration fees.... 3,460 7,839 935 536
Distribution fees--
Retail Class.......... 225 533 155 712
Fund accounting fees... 1,400 1,354 347
Transfer agent fees.... 3,447 3,250 2,536 1,613
Trustees' fees......... 4,113 8,744 1,140 290
Custodian fees......... 2,221 5,413 1,448 11,974
Legal fees............. 9,655 15,578 5,016 --
Audit fees............. 14,654 30,019 4,300 2,782
Printing costs......... 13,110 23,995 2,959 14,319
Other.................. 471 934 5,657 208
------------ ------------ ----------- -----------
Total Liabilities..... 160,041 322,499 1,549,470 636,395
------------ ------------ ----------- -----------
NET ASSETS:
Capital................. 132,482,157 275,206,266 37,363,214 18,399,844
Undistributed
(distributions in
excess of) net
investment income...... -- -- -- (64,536)
Accumulated
undistributed net
realized gains (losses)
from investment and
foreign currency
transactions........... (2,561,077) 1,009,455 173,444 1,836,687
Unrealized appreciation
from investments....... 3,764,999 23,093,575 597,704 1,675,515
Unrealized depreciation
from translation of
assets
and liabilities in
foreign currency....... -- -- -- (12,911)
------------ ------------ ----------- -----------
Net Assets............ $133,686,079 $299,309,296 $38,134,362 $21,834,599
============ ============ =========== ===========
Net Assets
Retail Class........... $ 1,103,189 $ 2,544,893 $ 724,724 $ 3,458,603
Institutional Class.... 132,582,890 296,764,403 37,409,638 18,375,996
------------ ------------ ----------- -----------
Total................. $133,686,079 $299,309,296 $38,134,362 $21,834,599
============ ============ =========== ===========
Outstanding units of
beneficial interest
(shares)
Retail Class........... 103,034 234,871 71,289 249,040
Institutional Class.... 12,296,236 27,323,380 3,664,505 1,318,129
------------ ------------ ----------- -----------
Total................. 12,399,270 27,558,251 3,735,794 1,567,169
============ ============ =========== ===========
Net Asset Value
Retail Class--
redemption price per
share................. $ 10.71 $ 10.84 $ 10.17 $ 13.89
============ ============ =========== ===========
Retail Class--maximum
sales charge.......... 4.00% 4.00% 2.25% 5.25%
------------ ------------ ----------- -----------
Retail Class--maximum
offering price per
share
(100%/(100%-maximum
sales charge) of net
asset value adjusted
to nearest cent)...... $ 11.16 $ 11.29 $ 10.40 $ 14.66
============ ============ =========== ===========
Institutional Class--
offering and
redemption price per
share................. $ 10.78 $ 10.86 $ 10.21 $ 13.94
============ ============ =========== ===========
</TABLE>
See notes to financial statements.
21
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1997
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
U.S. TREASURY U.S. TREASURY GROWTH AND
GROWTH STOCK SECURITIES SECURITIES INCOME
FUND FUND FUND FUND
------------ ------------- ------------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $ 53,417 $1,624,911 $1,443,919 $ 3,116
Dividend income......... 2,796,184 15,979 13,758 1,791,271
----------- ---------- ---------- -----------
Total Income.......... 2,849,601 1,640,890 1,457,677 1,794,387
----------- ---------- ---------- -----------
EXPENSES:
Investment advisory
fees.................... 1,499,559 145,470 119,586 768,642
Administration fees..... 375,496 48,551 47,835 192,634
Distribution fees--
Retail Class............ 49,247 7,902 5,592 15,806
Custodian fees.......... 10,274 -- -- 4,338
Accounting fees......... 58,423 8,369 8,990 31,379
Legal fees.............. 34,886 5,787 7,072 18,996
Audit fees.............. 21,398 2,555 2,783 10,083
Trustees' fees and
expenses................ 21,030 2,007 2,646 8,622
Transfer agent fees..... 20,668 13,733 13,140 14,874
Registration and filing
fees.................... 11,744 661 2,572 9,216
Printing costs.......... 29,881 1,789 3,152 12,956
Other................... 4,702 776 548 1,963
----------- ---------- ---------- -----------
Total expenses before
voluntary fee
reductions............ 2,137,308 237,600 213,916 1,089,509
Expenses voluntarily
reduced............... (108,462) (15,031) (63,679) (49,464)
----------- ---------- ---------- -----------
Net Expenses.......... 2,028,846 222,569 150,237 1,040,045
----------- ---------- ---------- -----------
Net Investment Income... 820,755 1,418,321 1,307,440 754,342
----------- ---------- ---------- -----------
REALIZED/UNREALIZED
GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains
(losses) on investment
transactions........... 18,904,660 (192,623) (52,500) 7,101,576
Net change in unrealized
appreciation
(depreciation) on
investments............ 54,151,452 873,271 504,853 31,411,841
----------- ---------- ---------- -----------
Net realized/unrealized
gains (losses) on
investments............. 73,056,112 680,648 452,353 38,513,417
----------- ---------- ---------- -----------
Change in net assets
resulting from
operations.............. $73,876,867 $2,098,969 $1,759,793 $39,267,759
=========== ========== ========== ===========
</TABLE>
See notes to financial statements.
22
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1997
<TABLE>
<CAPTION>
TAX-FREE
DIVERSIFIED TAX-FREE SHORT INTERMEDIATE NEW ASIA
FIXED INCOME SECURITIES SECURITIES GROWTH
FUND FUND FUND FUND
------------ ----------- ------------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $ 9,405,764 $16,734,532 $1,804,935 $ --
Dividend income......... 108,622 51,542 16,239 391,949
Foreign tax withholding. -- -- -- (28,545)
----------- ----------- ---------- ----------
Total Income.......... 9,514,386 16,786,074 1,821,174 363,404
----------- ----------- ---------- ----------
EXPENSES:
Investment advisory
fees.................... 867,869 1,756,304 195,480 149,300
Administration fees..... 289,515 586,170 78,274 33,272
Distribution fees--
Retail Class............ 8,426 9,531 6,001 20,429
Custodian fees.......... 7,941 24,869 9,080 57,856
Accounting fees......... 48,581 98,573 17,205 11,733
Legal fees.............. 31,260 55,302 10,433 1,825
Audit fees.............. 16,480 32,850 4,608 2,783
Organization costs...... -- -- -- 12,728
Trustees' fees and
expenses................ 15,638 32,709 4,653 958
Transfer agent fees..... 19,117 25,322 14,326 12,182
Registration and filing
fees.................... 34,949 4,609 5,948 2,829
Printing costs.......... 22,301 41,181 6,250 17,611
Other................... 3,926 7,305 1,050 136
----------- ----------- ---------- ----------
Total expenses before
voluntary fee
reductions and
reimbursements....... 1,366,003 2,674,725 353,308 323,642
Expenses voluntarily
reduced............... (63,704) (124,192) (23,635) (29,803)
----------- ----------- ---------- ----------
Net Expenses.......... 1,302,299 2,550,533 329,673 293,839
----------- ----------- ---------- ----------
Net Investment Income... 8,212,087 14,235,541 1,491,501 69,565
----------- ----------- ---------- ----------
REALIZED/UNREALIZED
GAINS (LOSSES) ON
INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gains
(losses) on investment
transactions............ (2,549,993) 1,060,114 240,632 1,836,689
Net realized gains
(losses) on foreign
currency transactions... -- -- -- (80,544)
Net change in unrealized
appreciation
(depreciation) on
investments............. 7,498,463 11,477,661 306,192 2,113,745
Net change in unrealized
appreciation
(depreciation) on
translation
of assets and
liabilities in foreign
currencies............. -- -- -- (13,022)
----------- ----------- ---------- ----------
Net realized/unrealized
gains (losses) on
investments and
foreign currencies..... 4,948,470 12,537,775 546,824 3,856,868
----------- ----------- ---------- ----------
Change in net assets
resulting from
operations.............. $13,160,557 $26,773,316 $2,038,325 $3,926,433
=========== =========== ========== ==========
</TABLE>
See notes to financial statements.
23
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
GROWTH STOCK FUND U.S. TREASURY SECURITIES FUND U.S. TREASURY SECURITIES FUND
---------------------------- ------------------------------- -------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JULY 31, 1997 JULY 31, 1996 JULY 31, 1997 JULY 31, 1996 JULY 31, 1997 JULY 31, 1996
------------- ------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 820,755 $ 1,444,330 $ 1,418,321 $ 1,665,167 $ 1,307,440 $ 1,106,083
Net realized gains
(losses) on investment
transactions.......... 18,904,660 2,853,413 (192,623) 610,897 (52,500) (66,180)
Net change in
unrealized
appreciation
(depreciation) on
investments........... 54,151,452 9,013,715 873,271 (980,793) 504,853 (370,513)
------------ ------------ -------------- -------------- -------------- --------------
Change in net assets
resulting from
operations............. 73,876,867 13,311,458 2,098,969 1,295,271 1,759,793 669,390
------------ ------------ -------------- -------------- -------------- --------------
DISTRIBUTIONS TO RETAIL
CLASS SHAREHOLDERS:
From net investment
income................ (13,022) (26,967) (52,996) (58,924) (38,945) (44,406)
In excess of net
investment income..... (3,861) -- (7,810) (9,639) -- (3,140)
From net realized
gains................. (24) (73,928) -- -- -- --
In excess of net
realized gains........ -- (168,943) -- -- -- (2,008)
DISTRIBUTIONS TO
INSTITUTIONAL CLASS
SHAREHOLDERS:
From net investment
income................ (857,427) (1,401,180) (1,365,325) (1,606,243) (1,268,495) (1,061,677)
In excess of net
investment income..... (17,466) -- (32,190) (262,742) -- (75,078)
From net realized
gains................. (777) (2,779,485) -- -- -- --
In excess of net
realized gains........ -- (6,351,795) -- -- -- (35,758)
------------ ------------ -------------- -------------- -------------- --------------
Change in net assets
from shareholder
distributions.......... (892,577) (10,802,298) (1,458,321) (1,937,548) (1,307,440) (1,222,067)
------------ ------------ -------------- -------------- -------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 39,726,376 133,828,085 1,643,143 1,647,781 12,120,256 18,121,546
Dividends reinvested... 92,112 6,438,745 1,415,273 1,902,174 92,421 158,516
Cost of shares
redeemed.............. (82,478,968) (105,692,774) (3,007,324) (30,979,541) (10,025,991) (9,729,562)
------------ ------------ -------------- -------------- -------------- --------------
Change in net assets
from share
transactions........... (42,660,480) 34,574,056 51,092 (27,429,586) 2,186,686 8,550,500
------------ ------------ -------------- -------------- -------------- --------------
Change in net assets.... 30,323,810 37,083,216 691,740 (28,071,863) 2,639,039 7,997,823
NET ASSETS:
Beginning of period.... 177,825,396 140,742,180 24,227,448 52,299,311 24,701,408 16,703,585
------------ ------------ -------------- -------------- -------------- --------------
End of period.......... $208,149,206 $177,825,396 $24,919,188 $24,227,448 $27,340,447 $24,701,408
============ ============ ============== ============== ============== ==============
SHARE TRANSACTIONS:
Issued................. 2,786,983 11,098,985 178,092 173,866 1,287,668 1,882,513
Reinvested............. 6,775 541,450 153,769 200,813 9,773 16,520
Redeemed............... (5,810,150) (8,707,702) (325,626) (3,272,020) (1,060,313) (1,016,011)
------------ ------------ -------------- -------------- -------------- --------------
Change in shares........ (3,016,392) 2,932,733 6,235 (2,897,341) 237,128 883,022
============ ============ ============== ============== ============== ==============
</TABLE>
See notes to financial statements.
24
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND DIVERSIFIED FIXED INCOME FUND TAX-FREE SECURITIES FUND
---------------------------- ------------------------------- ----------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JULY 31, 1997 JULY 31, 1996 JULY 31, 1997 JULY 31, 1996 JULY 31, 1997 JULY 31, 1996
------------- ------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 754,342 $ 897,198 $ 8,212,087 $ 7,564,301 $ 14,235,541 $ 14,113,815
Net realized gains
(losses) on investment
transactions.......... 7,101,576 4,517,339 (2,549,993) 1,793,439 1,060,114 2,578,744
Net change in
unrealized
appreciation
(depreciation) on
investments........... 31,411,841 1,140,677 7,498,463 (6,350,290) 11,477,661 (505,505)
------------ ----------- -------------- -------------- ------------ ------------
Change in net assets
resulting from
operations............. 39,267,759 6,555,214 13,160,557 3,007,450 26,773,316 16,187,054
------------ ----------- -------------- -------------- ------------ ------------
DISTRIBUTIONS TO RETAIL
CLASS SHAREHOLDERS:
From net investment
income................ (9,645) (6,661) (61,085) (29,853) (58,439) (36,401)
In excess of net
investment income..... (2,559) (198) -- (1,073) -- (3,016)
From net realized
gains................. (74,382) (10,087) -- -- (3,793) (5,488)
In excess of net
realized gains........ -- -- (10,239) (5,216) -- (2,095)
DISTRIBUTIONS TO
INSTITUTIONAL CLASS
SHAREHOLDERS:
From net investment
income................ (719,837) (890,537) (8,151,002) (7,534,448) (14,177,102) (14,077,414)
In excess of net
investment income..... -- (26,449) -- (270,854) -- (1,166,451)
From net realized
gains................. (3,890,622) (1,430,857) -- -- (1,632,634) (2,573,256)
In excess of net
realized gains........ -- -- (1,342,055) (1,188,466) -- (982,014)
------------ ----------- -------------- -------------- ------------ ------------
Change in net assets
from shareholder
distributions.......... (4,697,045) (2,364,789) (9,564,381) (9,029,910) (15,871,968) (18,846,135)
------------ ----------- -------------- -------------- ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 45,972,983 51,831,280 45,518,283 199,818,303 33,235,182 29,212,660
Dividends reinvested... 2,407,024 1,252,724 669,521 891,166 1,633,767 3,570,050
Cost of shares
redeemed.............. (30,990,437) (23,786,655) (78,932,125) (86,706,905) (35,963,665) (22,829,691)
------------ ----------- -------------- -------------- ------------ ------------
Change in net assets
from
share transactions..... 17,389,570 29,297,349 (32,744,321) 114,002,564 (1,094,716) 9,953,019
------------ ----------- -------------- -------------- ------------ ------------
Change in net assets.... 51,960,284 33,487,774 (29,148,145) 107,980,104 9,806,632 7,293,938
NET ASSETS:
Beginning of period.... 75,587,073 42,099,299 162,834,224 54,854,120 289,502,664 282,208,726
------------ ----------- -------------- -------------- ------------ ------------
End of period.......... $127,547,357 $75,587,073 $133,686,079 $162,834,224 $299,309,296 $289,502,664
============ =========== ============== ============== ============ ============
SHARE TRANSACTIONS:
Issued................. 3,234,048 4,307,112 4,316,676 18,193,814 3,152,571 2,767,223
Reinvested............. 178,441 105,986 62,706 80,018 153,874 333,366
Redeemed............... (2,162,896) (1,958,541) (7,448,705) (7,867,181) (3,412,859) (2,160,738)
------------ ----------- -------------- -------------- ------------ ------------
Change in shares........ 1,249,593 2,454,557 (3,069,323) 10,406,651 (106,414) 939,851
============ =========== ============== ============== ============ ============
</TABLE>
See notes to financial statements.
25
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE SHORT INTERMEDIATE
SECURITIES FUND NEW ASIA GROWTH FUND
--------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
JULY 31, 1997 JULY 31, 1996 JULY 31, 1997 JULY 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss)................ $ 1,491,501 $ 1,577,123 $ 69,565 $ (4,037)
Net realized gains
(losses) on investment
transactions.......... 240,632 247,802 1,836,689 187,718
Net realized gains
(losses) on foreign
currency transactions. -- -- (80,544) (55,916)
Net change in
unrealized
appreciation
(depreciation) on
investments........... 306,192 (381,865) 2,113,745 (603,577)
Net change in
unrealized
appreciation
(depreciation) on
translation
of assets and
liabilities in foreign
currencies............ -- -- (13,022) 3,412
----------- ----------- ----------- -----------
Change in net assets
resulting from
operations.............. 2,038,325 1,443,060 3,926,433 (472,400)
----------- ----------- ----------- -----------
DISTRIBUTIONS TO RETAIL
CLASS SHAREHOLDERS:
From net investment
income................ (28,544) (12,490) (770) --
In excess of net
investment income..... -- (1,065) (714) (1,121)
From net realized
gains................. (986) -- (24,563) (15,201)
DISTRIBUTIONS TO
INSTITUTIONAL CLASS
SHAREHOLDERS:
From net investment
income................ (1,462,957) (1,564,633) (15,241) --
In excess of net
investment income..... -- (133,354) -- (7,846)
From net realized
gains................. (49,244) -- (130,393) (63,590)
----------- ----------- ----------- -----------
Change in net assets
from shareholder
distributions........... (1,541,731) (1,711,542) (171,681) (87,758)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 6,196,477 7,865,169 11,076,770 10,749,362
Dividends reinvested... 67,282 9,183 103,064 59,730
Cost of shares
redeemed.............. (8,549,132) (7,982,805) (3,558,390) (2,981,295)
----------- ----------- ----------- -----------
Change in net assets
from share transactions. (2,285,373) (108,453) 7,621,444 7,827,797
----------- ----------- ----------- -----------
Change in net assets.... (1,788,779) (376,935) 11,376,196 7,267,639
NET ASSETS:
Beginning of period.... 39,923,141 40,300,076 10,458,403 3,190,764
----------- ----------- ----------- -----------
End of period.......... $38,134,362 $39,923,141 $21,834,599 $10,458,403
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................. 613,972 773,603 902,626 910,887
Reinvested............. 6,643 907 8,369 5,614
Redeemed............... (845,154) (788,553) (283,285) (261,382)
----------- ----------- ----------- -----------
Change in shares........ (224,539) (14,043) 627,710 655,119
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
26
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH STOCK FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS (98.2%):
Aerospace/Defense (1.0%):
35,925 General Motors Corp., Class H........................ $ 2,171,217
------------
Banks (2.4%):
39,000 BankAmerica Corp..................................... 2,944,500
17,850 Chase Manhattan Corp................................. 2,027,091
------------
4,971,591
------------
Beverages (6.5%):
68,575 Anheuser Busch Co., Inc.............................. 2,944,439
85,925 Coca-Cola Co......................................... 5,950,306
120,850 PepsiCo, Inc......................................... 4,630,066
------------
13,524,811
------------
Chemicals (2.0%):
48,075 Avery Dennison Corp.................................. 2,121,310
58,250 Sigma-Aldrich........................................ 2,016,906
------------
4,138,216
------------
Computers & Peripherals (7.4%):
70,500 Cisco Systems (b).................................... 5,609,155
95,500 Compaq Computer Corp. (b)............................ 5,455,438
27,050 Hewlett Packard Co................................... 1,895,191
52,200 Sun Microsystems, Inc. (b)........................... 2,384,888
------------
15,344,672
------------
Electrical Equipment (7.1%):
45,525 C-Cube Microsystems Inc. (b)......................... 1,098,291
144,800 General Electric Co.................................. 10,163,149
44,500 SCI Systems, Inc. (b)................................ 3,534,969
------------
14,796,409
------------
Electronic & Electrical (1.5%):
52,875 Emerson Electric Co.................................. 3,119,625
------------
Entertainment (1.4%):
35,400 Walt Disney Co....................................... 2,860,763
------------
Financial Services (2.6%):
57,025 Paine Webber Group, Inc.............................. 2,281,000
21,350 Student Loan Marketing Assoc......................... 3,201,166
------------
5,482,166
------------
Food Distributors (1.6%):
89,000 Sysco Corp........................................... 3,320,813
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Food Processing & Packaging (7.3%):
65,450 ConAgra, Inc. ...................................... $ 4,601,953
46,325 Pioneer Hi-Bred International, Inc.................. 3,428,050
117,900 Sara Lee Corp....................................... 5,165,493
25,000 Wm. Wrigley Jr. Co.................................. 1,923,438
------------
15,118,934
------------
Funeral Services (1.8%):
109,950 Service Corp. International......................... 3,738,300
------------
Health Care (3.2%):
85,075 Columbia HCA Healthcare............................. 2,743,668
46,200 Health Management Assoc. (b)........................ 1,475,513
28,450 Oxford Health Plans Inc. (b)........................ 2,391,578
------------
6,610,759
------------
Insurance (2.9%):
55,875 American International Group, Inc................... 5,950,688
------------
Manufacturing (2.0%):
39,100 Illinois Tool Works, Inc............................ 2,028,313
21,700 Minnesota Mining &
Manufacturing Co................................... 2,056,075
------------
4,084,388
------------
Medical Supplies (1.3%):
30,000 Medtronic, Inc...................................... 2,617,500
------------
Metal & Mineral Production (0.6%):
52,775 Barrick Gold Corp................................... 1,203,930
------------
Oil & Gas Exploration, Production, &
Services (1.8%):
49,000 Mobil Corp.......................................... 3,748,500
------------
Oilfield Equipment & Services (0.7%):
17,800 Schlumberger Ltd.................................... 1,359,475
------------
Paint, Varnishes, Enamels (1.4%):
93,650 Sherwin Williams Co................................. 3,002,653
------------
Pharmaceuticals (12.9%):
64,950 Abbott Laboratories................................. 4,250,166
44,550 American Home Products Corp......................... 3,672,591
40,000 Eli Lilly & Co...................................... 4,519,999
89,000 Johnson & Johnson, Inc.............................. 5,545,812
58,150 Merck & Co. Inc..................................... 6,043,965
</TABLE>
Continued
27
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH STOCK FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals, continued
52,300 Pfizer, Inc......................................... $ 3,118,388
------------
27,150,921
------------
Retail (4.2%):
71,950 Dollar General Corp................................. 3,165,800
37,975 Kohl's Corp. (b).................................... 2,392,425
85,400 Wal-Mart Stores, Inc................................ 3,207,838
------------
8,766,063
------------
Retail--Grocery Stores (1.5%):
85,300 Albertsons, Inc..................................... 3,161,431
------------
Semiconductors (2.0%):
46,300 Intel Corp.......................................... 4,250,919
------------
Services (Commercial/Consumer) (1.1%):
123,500 Sothebys Holdings, Inc., Class A.................... 2,223,000
------------
Soaps & Cleaning Agents (2.1%):
28,075 Procter & Gamble Co................................. 4,270,909
------------
Software & Computer Services (7.7%):
26,675 BMC Software Inc. (b)............................... 1,607,169
41,000 Computer Associates International, Inc.............. 2,790,563
55,725 Microsoft Corp. (b)................................. 7,885,087
72,475 Oracle Systems Corp. (b)............................ 3,945,357
------------
16,228,176
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Steel (0.5%):
15,875 Nucor Corp.......................................... $ 985,242
------------
Technology--Services (Data Processing) (1.2%):
52,550 Automatic Data Processing, Inc...................... 2,601,225
------------
Telecommunications (0.8%):
51,150 Alltel Corp......................................... 1,681,556
------------
Tobacco & Tobacco Products (2.0%):
93,975 Philip Morris Cos., Inc............................. 4,240,622
------------
Transportation--Air (1.2%):
87,575 Southwest Airlines Co............................... 2,556,095
------------
Utilities--Telecommunications (4.5%):
55,825 Century Telephone Enterprises, Inc.................. 2,051,569
42,825 GTE Corp............................................ 1,991,363
32,050 Northern Telecom Ltd................................ 3,351,227
32,100 SBC Communications.................................. 1,899,919
------------
9,294,078
------------
Total Common Stocks 204,575,647
------------
INVESTMENT COMPANY (2.1%):
4,269,214 The One Group Prime Money Market Fund, (Fiduciary
Shares)............................................ 4,269,214
------------
Total Investment Company 4,269,214
------------
Total (Cost--$125,420,032) (a) $208,844,861
============
</TABLE>
- --------
Percentages indicated are based on net assets of $208,149,206.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$4,655. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.. $84,748,254
Unrealized depreciation.. (1,328,080)
-----------
Net unrealized
appreciation............. $83,420,174
===========
</TABLE>
(b) Non income producing securities.
See notes to financial statements.
28
<PAGE>
PACIFIC CAPITAL FUNDS
U.S. TREASURY SECURITIES FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (53.5%):
2,350,000 5.50%, 9/30/97......................................... $ 2,350,234
1,900,000 7.13%, 9/30/99......................................... 1,953,390
2,000,000 7.13%, 2/29/00......................................... 2,063,440
4,000,000 7.75%, 2/15/01......................................... 4,246,119
980,000 8.00%, 5/15/01......................................... 1,051,217
1,000,000 7.50%, 2/15/05......................................... 1,089,220
550,000 6.50%, 5/15/05......................................... 566,154
-----------
Total U.S. Treasury Notes 13,319,774
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BONDS (43.1%):
2,150,000 7.63%, 2/15/07....................................... $ 2,281,688
7,700,000 7.25%, 5/15/16....................................... 8,470,924
-----------
Total U.S. Treasury Bonds 10,752,612
-----------
INVESTMENT COMPANY (1.3%):
320,475 The One Group US Treasury Securities Money Market
Fund
(Fiduciary Shares).................................. 320,475
-----------
Total Investment Company 320,475
-----------
Total (Cost--$22,918,222) (a) $24,392,861
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $24,919,188.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$55,550. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $1,474,639
Unrealized depreciation... (55,550)
----------
Net unrealized
appreciation.............. $1,419,089
==========
</TABLE>
See notes to financial statements.
29
<PAGE>
PACIFIC CAPITAL FUNDS
SHORT INTERMEDIATE U.S. TREASURY SECURITIES FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (97.6%):
2,000,000 5.50%, 9/30/97......................................... $ 2,000,200
2,000,000 6.00%, 12/31/97........................................ 2,004,640
1,100,000 7.25%, 2/15/98......................................... 1,109,625
250,000 5.13%, 12/31/98........................................ 248,288
200,000 6.75%, 6/30/99......................................... 203,780
1,000,000 7.88%, 11/15/99........................................ 1,045,040
5,000,000 6.25%, 5/31/00......................................... 5,060,100
2,000,000 6.13%, 7/31/00......................................... 2,017,660
3,000,000 6.50%, 5/31/01......................................... 3,065,760
4,000,000 6.25%, 2/15/03......................................... 4,063,280
5,700,000 6.50%, 5/15/05......................................... 5,867,409
-----------
Total U.S. Treasury Notes 26,685,782
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANY (1.0%):
282,857 The One Group US Treasury Securities Money Market Fund
(Fiduciary Shares)................................... $ 282,857
-----------
Total Investment Company 282,857
-----------
Total (Cost--$26,669,931) (a) $26,968,639
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $27,340,447.
(a)Represents cost for federal income tax purposes and differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........ $299,125
Unrealized depreciation........ (417)
--------
Net unrealized appreciation.... $298,708
========
</TABLE>
See notes to financial statements.
30
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS (97.0%):
Aerospace/Defense (1.1%):
23,000 Boeing Co........................................... $ 1,352,688
------------
Automotive (0.9%):
28,800 Ford Motor Co....................................... 1,177,200
------------
Automotive Parts (1.3%):
35,825 Lear Corp. (b)...................................... 1,715,122
------------
Banks (4.6%):
44,550 BankAmerica Corp.................................... 3,363,525
29,675 BankBoston.......................................... 2,520,520
------------
5,884,045
------------
Beverages (1.9%):
63,000 PepsiCo, Inc........................................ 2,413,688
------------
Chemicals (2.3%):
18,700 E.I. Du Pont De Nemours Co.......................... 1,251,731
50,225 Sigma-Aldrich....................................... 1,739,041
------------
2,990,772
------------
Computers & Peripherals (8.4%):
34,025 Cisco Systems (b)................................... 2,707,114
86,875 Compaq Computer Corp. (b)........................... 4,962,734
63,425 Sun Microsystems, Inc. (b).......................... 2,897,730
------------
10,567,578
------------
Containers--Metal, Glass, Paper, Plastic (0.9%):
26,325 Bemis, Inc.......................................... 1,209,305
------------
Electrical Equipment (5.4%):
65,600 General Electric Co................................. 4,604,300
29,450 SCI Systems, Inc. (b)............................... 2,339,434
------------
6,943,734
------------
Electronic & Electrical (1.0%):
20,875 Emerson Electric Co. ............................... 1,231,625
------------
Financial Services (6.6%):
50,425 Paine Webber Group, Inc............................. 2,017,000
21,000 Student Loan Marketing Assoc........................ 3,148,688
46,462 Washington Mutual................................... 3,211,685
------------
8,377,373
------------
Food Processing & Packaging (2.2%):
21,375 ConAgra, Inc. ...................................... 1,502,930
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Food Processing & Packaging, continued:
44,325 Hormel Foods Corp................................... $ 1,252,181
------------
2,755,111
------------
Footwear (0.9%):
18,800 Nike, Inc........................................... 1,171,475
------------
Funeral Services (1.2%):
43,475 Service Corp. International......................... 1,478,150
------------
Heavy Machinery--Industrial, Farm,
Construction (1.3%):
24,150 Ingersoll-Rand Co. ................................. 1,643,709
------------
Household Products (1.0%):
29,775 Newell Co........................................... 1,248,689
------------
Insurance (5.2%):
21,112 American International Group, Inc................... 2,248,481
30,225 Travelers Property Casualty......................... 1,299,675
43,350 Travelers, Inc...................................... 3,118,491
------------
6,666,647
------------
Leisure--Recreation, Gaming (1.3%):
40,600 Carnival Corp. Cruise Lines......................... 1,710,275
------------
Medical Supplies (1.0%):
14,675 Medtronic, Inc. .................................... 1,280,394
------------
Metal & Mineral Production (0.5%):
27,950 Barrick Gold Corp................................... 637,609
------------
Oil & Gas Exploration, Production, &
Services (5.8%):
18,250 Amoco Corp. ........................................ 1,715,500
41,150 Exxon Corp.......................................... 2,643,887
23,950 Mobil Corp. ........................................ 1,832,175
47,950 Union Pacific Resources............................. 1,183,766
------------
7,375,328
------------
Oilfield Equipment & Services (2.3%):
26,350 Schlumberger Ltd.................................... 2,012,481
11,475 Transocean Offshore Inc............................. 937,364
------------
2,949,845
------------
Paint, Varnishes, Enamels (0.9%):
37,550 Sherwin Williams Co................................. 1,203,947
------------
</TABLE>
Continued
31
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals (8.6%):
25,200 American Home Products Corp......................... $ 2,077,425
37,450 Johnson & Johnson, Inc.............................. 2,333,603
35,650 Merck & Co. Inc..................................... 3,705,373
20,750 Pfizer, Inc......................................... 1,237,219
40,100 Pharmacia & Upjohn.................................. 1,513,775
------------
10,867,395
------------
Publishing (1.4%):
26,225 McGraw Hill, Inc.................................... 1,778,383
------------
Restaurants (1.7%):
90,625 Wendy's International............................... 2,214,648
------------
Retail (4.4%):
41,737 Dollar General Corp................................. 1,836,428
53,750 Wal-Mart Stores, Inc................................ 2,018,984
31,000 Walgreen Co......................................... 1,751,500
------------
5,606,912
------------
Semiconductors (1.1%):
15,950 Intel Corp.......................................... 1,464,409
------------
Software & Computer Services (7.4%):
33,975 Computer Associates
International, Inc................................. 2,312,423
24,325 Microsoft Corp. (b)................................. 3,441,988
68,425 Oracle Systems Corp. (b)............................ 3,724,886
------------
9,479,297
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- --------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Steel (0.7%):
14,375 Nucor Corp......................................... $ 892,148
------------
Tobacco & Tobacco Products (3.9%):
109,775 Philip Morris Cos., Inc............................ 4,953,597
------------
Toys & Bicycles--Manufacturing (1.5%):
55,425 Mattel, Inc........................................ 1,926,019
------------
Transportation (1.1%):
51,650 Comair Holdings, Inc............................... 1,391,322
------------
Utilities--Electric (2.5%):
50,000 Illinova Corp...................................... 1,178,125
93,775 Southern Co........................................ 2,057,189
------------
3,235,314
------------
Utilities--Telecommunications (4.7%):
31,225 Century Telephone
Enterprises, Inc.................................. 1,147,519
49,350 GTE Corp........................................... 2,294,775
42,050 SBC Communications................................. 2,488,834
------------
5,931,128
------------
Total Common Stocks 123,724,881
------------
INVESTMENT COMPANY (2.9%):
3,688,308 The One Group Prime Money Market Fund, (Fiduciary
Shares)........................................... 3,688,308
------------
Total Investment Company 3,688,308
------------
Total (Cost--$90,175,740) (a) $127,413,189
============
</TABLE>
- --------
Percentages indicated are based on net assets of $127,547,357.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$52,014. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..... $37,764,210
Unrealized depreciation..... (578,775)
-----------
Net unrealized appreciation. $37,185,435
===========
</TABLE>
(b)Non income producing securities.
See notes to financial statements.
32
<PAGE>
PACIFIC CAPITAL FUNDS
DIVERSIFIED FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------ ------------
<C> <S> <C>
CORPORATE BONDS (43.5%):
Automotive (0.8%):
1,000,000 Ford Motor Co., 7.25%,
10/1/08................ $ 1,050,000
------------
Banking (4.4%):
700,000 Interamerica Development
Bank, 8.50%, 3/15/11... 831,250
4,900,000 Suntrust Bank, 6.90%, 5,004,125
7/01/07................ ------------
5,835,375
------------
Banking--Foreign (11.6%):
5,000,000 Abbey National PLC,
6.69%, 10/17/05........ 5,037,500
3,425,000 Bayerische Landesbk--NY,
6.38%, 8/31/00......... 3,459,250
5,000,000 Dresdner Bank--NY,
6.63%, 9/15/05......... 5,031,250
2,000,000 Swiss Bank Corp.--NY,
6.75%, 7/15/05......... 2,030,000
------------
15,558,000
------------
Electric Utility (2.3%):
1,500,000 Duke Power Co., 8.00%,
11/1/99................ 1,558,125
1,500,000 National Rural Utility,
6.45%, 4/1/01.......... 1,513,125
------------
3,071,250
------------
Financial Services (14.0%):
5,000,000 General Electric Capital
Corp., 7.88%, 12/1/06.. 5,512,499
5,000,000 JPM Capital Corp.,
7.54%, 1/15/27,
Callable 1/15/07
@ 104.................. 5,056,250
2,000,000 Merrill Lynch & Co.
Inc., 7.00%, 1/15/07... 2,065,000
3,000,000 Merrill Lynch & Co.
Inc., 7.00%, 4/27/08... 3,093,750
3,000,000 Salomon Inc., 6.70%, 3,030,000
7/5/00................. ------------
18,757,499
------------
Health Care (3.6%):
4,300,000 Johnson & Johnson,
8.72%, 11/1/24......... 4,821,375
------------
Insurance (0.8%):
1,000,000 St. Paul Cos., Inc.,
7.29%, 8/28/07......... 1,042,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Oil & Gas--Exploration & Production Services (1.1%):
1,050,000 Amoco Canada Petroleum Co., 7.95%, 10/1/22........... $ 1,130,063
350,000 Societe Nationale Elf Aquitaine, 8.00%, 10/15/01..... 373,625
------------
1,503,688
------------
Retail (1.2%):
1,400,000 Wal-Mart Stores, Inc., 8.00%, 9/15/06................ 1,554,000
------------
Telecommunications (3.7%):
4,750,000 Bellsouth Telecommunications, Inc., 7.00%, 2/1/05.... 4,940,000
------------
Total Corporate Bonds 58,133,687
------------
U.S. GOVERNMENT AGENCIES (14.0%):
Federal Home Loan Bank (4.8%):
2,500,000 6.30%, 4/29/99....................................... 2,513,575
3,000,000 6.50%, 6/18/99....................................... 3,000,630
935,000 6.70%, 7/22/02....................................... 938,478
------------
6,452,683
------------
Federal National Mortgage Association (9.2%):
2,500,000 5.49%, 8/12/97....................................... 2,495,505
1,300,000 6.38%, 8/14/01....................................... 1,319,045
7,000,000 7.69%, 9/13/06....................................... 7,378,490
1,000,000 6.76%, 7/16/07....................................... 1,017,320
------------
12,210,360
------------
Total U.S. Government Agencies 18,663,043
------------
U.S. TREASURY NOTES (28.0%):
3,250,000 5.63%, 8/31/97....................................... 3,250,363
1,000,000 5.50%, 9/30/97....................................... 1,000,100
8,000,000 6.75%, 4/30/00....................................... 8,191,520
5,000,000 6.63%, 7/31/01....................................... 5,134,550
3,500,000 6.25%, 2/15/03....................................... 3,555,370
8,200,000 7.25%, 8/15/04....................................... 8,795,730
7,300,000 6.50%, 5/15/05....................................... 7,514,401
------------
Total U.S. Treasury Notes 37,442,034
------------
U.S. TREASURY BONDS (10.9%):
10,000,000 7.25%, 5/15/16....................................... 11,001,200
3,650,000 6.25%, 8/15/23....................................... 3,599,083
------------
Total U.S. Treasury Bonds 14,600,283
------------
</TABLE>
Continued
33
<PAGE>
PACIFIC CAPITAL FUNDS
DIVERSIFIED FIXED INCOME FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
PRIVATE PLACEMENT (0.8%):
1,000,000 MIC Financing Trust I, 8.38%,
2/1/27............................................... $ 1,058,750
------------
Total Private Placement 1,058,750
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
INVESTMENT COMPANY (1.2%):
1,625,679 The One Group Prime Money Market Fund (Fiduciary
Shares)............................................. $ 1,625,679
------------
Total Investment Company 1,625,679
------------
Total (Cost--$127,758,477) (a) $131,523,476
============
</TABLE>
- --------
Percentages indicated are based on net assets of $133,686,079.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$39,129. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..... $3,890,609
Unrealized depreciation..... (164,739)
----------
Net unrealized appreciation. $3,725,870
==========
</TABLE>
PLC--Public Limited Company
See notes to financial statements.
34
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER (17.8%):
Hawaii (17.8%):
2,320,000 Hawaii Airports System Revenue, 7.50%, 7/1/20, Second
Series, FGIC, AMT................................... $ 2,557,800
320,000 Hawaii Airports System Revenue, 7.50%, 7/1/09, Second
Series, FGIC, AMT................................... 353,600
740,000 Hawaii Airports System Revenue, 7.00%, 7/1/10, FGIC,
AMT................................................. 822,325
510,000 Hawaii Airports System Revenue, 7.38%, 7/1/11, AMBAC,
AMT................................................. 561,000
10,585,000 Hawaii Airports System Revenue, 6.90%, 7/1/12, Second
Series, MBIA, AMT................................... 12,569,687
1,890,000 Hawaii Airports System Revenue, 7.00%, 7/1/18, Second
Series, MBIA, AMT................................... 2,081,363
640,000 Hawaii Airports System Revenue, 7.30%, 7/1/20, AMBAC,
AMT................................................. 702,400
1,500,000 Hawaii Airports System Revenue, 6.75%, 7/1/21, Second
Series, MBIA........................................ 1,629,375
3,205,000 Hawaii Department of Budget & Finance, Special
Purpose Mortgage Revenue, Citizens Utilities Co.
Project, 6.60%, 7/1/22, AMT......................... 3,417,331
7,000,000 Hawaii Department of Budget & Finance, Special
Purpose Mortgage Revenue, Hawaii Electric Co.,
6.60%, 1/1/25, Series A, MBIA, AMT.................. 7,726,250
1,475,000 Hawaii Department of Budget & Finance, Special
Purpose Mortgage Revenue, Hawaiian Electric Co. &
Subsidiaries, 6.55%, 12/1/22, MBIA, AMT............. 1,589,313
3,000,000 Hawaii Department of Budget & Finance, Special
Purpose Revenue, Hawaii Electric Co., 6.20%, 5/1/26,
Series A, MBIA, AMT................................. 3,198,750
1,825,000 Hawaii Harbor Capital Improvement Revenue, 6.10%,
7/1/07, FGIC, AMT................................... 2,000,656
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER, CONTINUED:
Hawaii, continued:
1,605,000 Hawaii Harbor Capital Improvement Revenue, 7.25%,
7/1/10, MBIA, AMT................................... $ 1,759,481
2,245,000 Hawaii Harbor Capital Improvement Revenue, 7.00%,
7/1/17, MBIA, AMT................................... 2,438,631
1,350,000 Hawaii Harbor Capital Improvement Revenue, 6.50%,
7/1/19, FGIC, AMT................................... 1,458,000
3,205,000 Hawaii Harbor Capital Improvement Revenue, 6.38%,
7/1/24, FGIC, AMT................................... 3,449,381
3,205,000 Hawaii Housing Finance & Development Corp., Single
Family Mortgage Revenue, 6.00%, 7/1/26, Series A,
AMT................................................. 3,281,119
1,445,000 Honolulu City & County, 7.25%, 2/1/08, Series B,
Callable 2/1/00
@ 102 and 2/1/02 @ 100, FGIC,
AMT................................................. 1,564,213
------------
53,160,675
------------
Total Alternative Minimum Tax Paper 53,160,675
------------
MUNICIPAL BONDS (79.5%):
Arizona (0.9%):
1,000,000 Arizona Unified School District, Maricopa County, GO,
5.40%, 7/1/12....................................... 1,033,750
1,650,000 Phoenix Arizona Civic Improvement Corp., 5.25%,
7/1/16, Callable 7/1/07 @ 100, MBIA................. 1,654,125
------------
2,687,875
------------
California (7.5%):
1,500,000 Metropolitan Water District, 5.00%, 7/1/15, MBIA..... 1,494,375
3,000,000 Metropolitan Water District, Southern California,
5.75%, 7/1/21, MBIA................................. 3,120,000
2,565,000 Northern California Transmission, Oregon Transmission
Project, 7.00%, 5/1/13, Series A, MBIA.............. 3,145,331
</TABLE>
Continued
35
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California, continued:
5,450,000 San Diego Public Facilities, 5.38%, 5/15/17, Callable
5/15/07 @ 101 and 5/15/09 @ 100..................... $ 5,531,750
1,745,000 San Francisco California C&C Airport Community,
International Airport Revenues, 5.63%, 5/1/21,
Callable 5/1/06 @ 101 and 5/1/07 @ 100, FGIC........ 1,790,806
1,735,000 San Francisco, Bay Area Rapid Transit, District Sales
Tax Revenue, 5.50%, 7/1/15, FGIC.................... 1,780,544
5,000,000 State Department Water, 6.00%, 12/1/20, Series P,
Callable 6/1/06 @ 101 and 6/1/07 @ 100.............. 5,356,250
------------
22,219,056
------------
Colorado (0.3%):
1,000,000 Adams & Arapaho County, 5.35%, 12/1/15, FGIC......... 1,028,750
------------
Connecticut (0.4%):
1,000,000 Connecticut State, Special Tax Obligation Revenue,
6.25%, 10/1/14, FGIC................................ 1,086,250
------------
Florida (5.3%):
2,000,000 Dade County, Water & Sewer, 5.50%, 10/1/15, FGIC..... 2,032,500
2,000,000 Florida State, Bond Finance Department, General
Services Environmental Revenue, 5.75%, 7/1/13,
AMBAC............................................... 2,115,000
3,500,000 Florida State, Turnpike Authority Revenue, Department
of Transportation, 5.50%, 7/1/17, FGIC.............. 3,600,624
2,000,000 Florida State, Turnpike Revenue, Department of
Transportation, 5.50%, 7/1/21, Series A, FGIC....... 2,050,000
2,875,000 Orange County, Public Tax Service, 6.00%, 10/1/24,
FGIC................................................ 3,083,438
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
2,565,000 Orlando, Utilities Community Water & Electric Revenue
Refunding, 6.75%, 10/1/17, Series D................. $ 3,126,094
------------
16,007,656
------------
Georgia (2.9%):
1,285,000 Georgia State, Municipal Electric Authority Revenue,
6.13%, 1/1/14, Series B, FGIC....................... 1,373,344
1,605,000 Metropolitan Atlanta, Rapid Transportation Authority,
Sales Tax Revenue, 6.25%, 7/1/11, Series P, AMBAC... 1,827,694
4,690,000 Municipal Electric Authority, Special Obligation
Third Crossover, 6.60%, 1/1/18, MBIA................ 5,557,650
------------
8,758,688
------------
Hawaii (37.7%):
2,000,000 Hawaii County, 5.50%, 5/1/08,
Series A, FGIC...................................... 2,145,000
1,375,000 Hawaii County, GO, 4.50%, 2/1/04, Series A, FGIC..... 1,383,594
1,305,000 Hawaii County, GO, 7.30%, 6/1/10, Series A, Pre-
refunded 6/1/00
@ 101, FGIC, (b).................................... 1,432,238
2,095,000 Hawaii County, GO, 5.10%, 2/1/13, Series A, FGIC..... 2,115,950
415,000 Hawaii County, GO, 5.60%, 5/1/13, Series A, FGIC..... 443,013
2,320,000 Hawaii County, GO, 5.20%, 2/1/15..................... 2,343,200
1,810,000 Hawaii County, GO, 5.00%, 2/1/10, Series A, FGIC..... 1,828,100
1,455,000 Hawaii Department Budget & Finance, Queens Health
System, 5.88%, 7/1/11............................... 1,540,481
1,745,000 Hawaii Department Budget & Finance, Queens Health
System, 6.05%, 7/01/16.............................. 1,858,425
2,535,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Hawaii Electric Co., 6.88%,
4/1/12, MBIA........................................ 2,596,727
</TABLE>
Continued
36
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii, continued:
2,820,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Hawaii Electric Light Co. Project,
7.20%, 12/1/14, MBIA.................................. $ 3,084,375
1,285,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Kaiser Permanente, 6.25%, 3/1/21,
Series A.............................................. 1,355,675
965,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Maui Electric Co. Project, 6.88%,
4/1/12, MBIA.......................................... 988,498
1,170,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage, Kapiolani Health Care System, 6.30%, 7/1/08,
Callable 7/1/03 @ 102, MBIA........................... 1,285,538
2,535,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage, Kapiolani Health Care System, 6.40%, 7/1/13,
Callable 7/1/03 @ 102, MBIA........................... 2,782,163
965,000 Hawaii Department Transportation, Special Facility
Revenue, 5.75%, 3/1/13................................ 996,363
965,000 Hawaii Harbor Capital Improvement Revenue, 6.20%,
7/1/08, MBIA.......................................... 1,045,819
4,525,000 Hawaii Housing Finance & Development Corp., 5.85%,
7/1/17................................................ 4,649,437
1,925,000 Hawaii Housing Finance & Development Corp., Federal
National Mortgage Assoc., 5.70%,7/1/13................ 1,989,969
4,185,000 Hawaii Housing Finance & Development Corp., Federal
National Mortgage Assoc., 7.00%, 7/1/31............... 4,441,330
1,580,000 Hawaii Housing Finance & Development Corp., Single
Family Mortgage Purchase Revenue, 6.90%, 7/1/16,
Series B.............................................. 1,676,775
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii, continued:
2,340,000 Hawaii Housing Finance & Development Corp., University
of Hawaii Housing, 5.70%, 10/1/25, AMBAC............. $ 2,439,450
2,000,000 Hawaii State, 6.00%, 10/1/12, Series BZ, FGIC......... 2,237,500
2,000,000 Hawaii State, 6.50%, 12/1/13, Series CM, FGIC......... 2,350,000
3,000,000 Hawaii State, 5.50%, 3/1/16, Series CN, FGIC.......... 3,082,500
5,000,000 Hawaii, GO, 6.05%, 1/1/08, FGIC....................... 5,531,249
640,000 Hawaii, GO, 5.50%, 6/1/08, FGIC....................... 671,200
1,345,000 Hawaii, GO, 6.38%, 2/1/09,
Series BT, Pre-refunded 2/1/01
@ 101, (b)........................................... 1,455,963
640,000 Hawaii, GO, 5.50%, 6/1/09, FGIC....................... 668,000
1,035,000 Hawaii, GO, 5.00%, 7/1/09, FGIC....................... 1,049,231
4,490,000 Hawaii, GO, 6.13%, 2/1/10,
Series BT, Pre-refunded 2/1/01
@ 101, (b)........................................... 4,821,137
640,000 Hawaii, GO, 5.50%, 6/1/10, Series CE, FGIC............ 664,800
4,000,000 Hawaii, GO, 5.25%, 9/1/10, Series CK, FGIC............ 4,099,999
3,145,000 Hawaii, GO, 5.25%, 6/1/13, FGIC....................... 3,200,038
1,000,000 Hawaii, GO, 5.25%, 3/1/16, Series CL, FGIC............ 1,010,000
1,480,000 Honolulu City & County, 7.15%, 6/1/10, Series C,
Prefunded 6/1/00 @ 101, (b).......................... 1,618,750
2,565,000 Honolulu City & County, 7.35%, 7/1/06, Series A, FGIC. 3,090,825
3,000,000 Honolulu City & County, 6.00%, 1/1/11, Series A, FGIC. 3,344,999
3,000,000 Honolulu City & County, 5.75%, 4/1/11, Series A, FGIC. 3,243,750
1,605,000 Honolulu City & County, 5.75%, 4/1/12, FGIC........... 1,759,481
2,890,000 Honolulu City & County, 5.75%, 4/1/13, Series A, FGIC. 3,128,425
2,000,000 Honolulu City & County, 5.63%, 9/1/13, Series A,
Callable 9/1/06 @ 102 and 9/1/08 @ 100,.............. 2,100,000
</TABLE>
Continued
37
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii, continued:
1,280,000 Honolulu City & County Refunding & Improvement, 5.50%,
10/1/11, Series B, FGIC.............................. $ 1,360,000
640,000 Honolulu City & County Refunding & Improvement, 5.25%,
10/1/12, Series B, FGIC.............................. 664,800
1,055,000 Honolulu City & County Water, 6.00%, 12/1/10, FGIC.... 1,180,281
1,595,000 Honolulu City & County Water, 6.00%, 12/1/11, FGIC.... 1,786,400
640,000 Honolulu City & County Water, 6.00%, 12/1/14, FGIC.... 715,200
1,380,000 Honolulu City & County, GO, 5.00%, 11/1/12, Series A,
MBIA................................................. 1,386,900
695,000 Kauai County, 5.55%, 8/1/04........................... 743,650
740,000 Kauai County, 5.65%, 8/1/05........................... 800,125
780,000 Kauai County, 5.75%, 8/1/06........................... 852,150
925,000 Kauai County, 5.90%, 8/1/09, Series C, AMBAC.......... 1,023,281
1,005,000 Maui County, 5.10%, 9/1/11, Series A, Callable 9/1/07
@ 101................................................ 1,020,075
645,000 Maui County Refunding, 5.25%, 9/1/06.................. 674,025
890,000 Maui County Refunding, 5.13%, 12/15/10................ 904,463
355,000 Maui County Water, 6.10%, 12/1/02, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b)..................................... 386,506
375,000 Maui County Water, 6.20%, 12/1/03, Series A, FGIC..... 409,688
400,000 Maui County Water, 6.30%, 12/1/04, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b)..................................... 438,500
425,000 Maui County Water, 6.40%, 12/1/05, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b)..................................... 468,031
390,000 Maui County Water, 6.50%, 12/1/06, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b)..................................... 430,950
380,000 Maui County Water, 6.60%, 12/1/07, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b)..................................... 421,325
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii, continued:
520,000 Maui County Water, 6.65%, 12/1/08, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b).................................... $ 577,200
455,000 Maui County Water, 6.65%, 12/1/09, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b).................................... 505,050
595,000 Maui County Water, 6.70%, 12/1/10, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b).................................... 661,938
535,000 Maui County Water, 6.70%, 12/1/11, Series A, Pre-
refunded 12/1/01
@ 101, FGIC, (b).................................... 595,188
1,020,000 Maui County, GO, 5.90%, 6/1/14....................... 1,085,025
------------
112,640,718
------------
Kansas (1.7%):
2,565,000 Burlington Pollution Control Refunding, Kansas Gas &
Electric Co. Project, 7.00%, 6/1/31................. 2,843,944
2,000,000 Kansas City, Utilities System, Revenue Refunding &
Improvement, 6.38%, 9/1/23.......................... 2,200,000
------------
5,043,944
------------
Maine (0.7%):
1,925,000 Maine State Turnpike Authority, Turnpike Revenue,
6.00%, 7/1/14....................................... 2,069,375
------------
Massachusetts (1.6%):
3,790,000 Commonwealth of Massachusetts, 5.50%, 7/1/15, Series
B................................................... 3,889,488
1,000,000 Massachusetts State Water Pollution Abatement Trust,
5.70%, 2/1/13....................................... 1,047,500
------------
4,936,988
------------
Michigan (2.4%):
4,000,000 Michigan Environmental Protection Program, GO, 5.40%,
11/1/19............................................. 4,074,999
1,545,000 Michigan Strategic Obligations Revenue, 6.95%,
5/1/11.............................................. 1,875,244
1,250,000 Saline Area Schools, GO, 5.50%, 5/1/15, FGIC......... 1,289,063
------------
7,239,306
------------
</TABLE>
Continued
38
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Minnesota (0.8%):
2,000,000 North St. Paul, Maplewood, Independent School
District, No. 622, 6.88%, 2/1/15, Series A,
Prefunded 2/1/05 @ 100.............................. $ 2,327,500
------------
New Jersey (1.3%):
2,000,000 New Jersey Wastewater Treatment Trust, 6.38%, 4/1/14,
Series B............................................ 2,212,500
1,500,000 South Brunswick Township Board of Education, 6.40%,
8/1/14, FGIC........................................ 1,700,625
------------
3,913,125
------------
New Mexico (2.0%):
2,000,000 Rio Rancho Water & Waste Water Systems Revenue,
5.90%, 5/15/15, Series A, FSA....................... 2,095,000
2,085,000 Santa Fe Revenue, 6.25%, 6/1/15, Prefunded 6/1/04 @
100................................................. 2,316,956
1,625,000 Sante Fe, New Mexico, Gross Receipts Tax Revenue,
5.63%, 6/1/16....................................... 1,677,813
------------
6,089,769
------------
New York (0.7%):
2,000,000 Triborough Bridge & Tunnel Authority, New York
Revenues, General Purpose, 5.30%, 1/1/17............ 2,012,500
------------
North Carolina (1.2%):
3,085,000 Easton Municipal Power Agency, 6.50%, 1/1/18, (b).... 3,644,156
------------
Ohio (1.5%):
2,320,000 Cleveland Package Facilities Revenue, 5.50%, 9/15/16. 2,372,200
1,120,000 Cleveland Waterworks Revenue, 6.25%, 1/1/16, MBIA.... 1,191,400
1,000,000 Ohio Water Development Authority, Pollution Control,
5.50%, 12/1/15, MBIA................................ 1,026,250
------------
4,589,850
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Oregon (0.6l%):
1,605,000 Umatilla County, School District Number 016R,
Pendleton, 6.00%, 7/1/14, AMBAC..................... $ 1,727,381
------------
Pennsylvania (1.1%):
3,150,000 Southeastern Pennsylvania Transportation Authority,
6.00%, 3/1/15, Series A, Callable 3/1/05 @ 101,
FGIC................................................ 3,350,813
------------
South Carolina (0.8%):
1,960,000 Piedmont Municipal Power Agency, South Carolina
Electric Refunding, 6.50%, 1/1/14, Series A, FGIC... 2,288,300
------------
Tennessee (2.6%):
1,000,000 Johnson City, School Sales Tax, 6.70%, 5/1/21........ 1,161,250
6,300,000 Shelby County Refunding, 5.63%, 4/1/15, Series A..... 6,544,125
------------
7,705,375
------------
Texas (1.7%):
1,520,000 Harris County, Certificates of Obligation, 6.00%,
10/1/15............................................. 1,634,000
2,000,000 Texas State Refunding, Public Finance Authority,
5.95%, 10/1/15, Series A............................ 2,115,000
1,280,000 Texas State, Public Financial Authority, 6.00%,
10/1/12,
Series A............................................ 1,366,400
------------
5,115,400
------------
Virginia (3.8%):
3,500,000 Commonwealth of Virginia Public School Authority,
Special Obligation, Chesapeake School, 5.63%,
6/1/15.............................................. 3,644,375
2,995,000 Fairfax County Public Improvement, 5.50%, 6/1/14,
Series A............................................ 3,096,081
2,750,000 Norfolk Water Revenue, 5.75%, 11/1/13, MBIA.......... 2,894,375
</TABLE>
Continued
39
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Virginia, continued:
1,750,000 Richmond Refunding, 5.20%, 1/15/14................... $ 1,776,250
------------
11,411,081
------------
Total Municipal Bonds 237,893,856
------------
MUNICIPAL VARIABLE RATE DEMAND OBLIGATIONS (1.6%):
Indiana (0.6%):
1,700,000 Purdue University, 3.50%*, 7/1/11, Series E.......... 1,700,000
------------
New York (0.9%):
1,000,000 New York City Municipal Water Fin. Auth., Water &
Sewer Sys Revenues, 3.60%*, 6/15/25................. 1,000,000
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
MUNICIPAL VARIABLE RATE DEMAND OBLIGATIONS, CONTINUED:
New York, continued:
1,800,000 New York, New York, 3.60%*, 10/1/23................... $ 1,800,000
------------
2,800,000
------------
Washington (0.1%):
400,000 Washington State Health Care, 3.70%*, 1/1/18.......... 400,000
------------
Total Municipal Variable Rate Demand Obligations 4,900,000
------------
INVESTMENT COMPANY (0.1%):
250,819 Nuveen Tax Free Money Market Fund..................... 250,819
------------
Total Investment Company 250,819
------------
Total (Cost--$273,111,775) (a) $296,205,350
============
</TABLE>
- --------
Percentages indicated are based on net assets of $299,309,296.
* Variable rate security. Rate presented represents rate in effect at July 31,
1997. Maturity reflects final maturity date.
(a)Represents cost for federal income tax purposes and differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.. $23,106,595
Unrealized depreciation.. (13,020)
-----------
Net unrealized
appreciation............. $23,093,575
===========
</TABLE>
(b) Collateralized by various U.S. Government Securities.
AMBAC--AMBAC Indemnity Corporation
AMT--Alternative Minimum Tax Paper
FGIC--Insured by Financial Guaranty Insurance Corporation
FSA--Insured by Financial Security Assurance
GO--General Obligation
MBIA--Insured by Municipal Bond Insurance Association
See notes to financial statements.
40
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER (15.8%):
Hawaii (10.3%):
2,000,000 Hawaii State Airports System, Revenue, 5.45%, 7/1/00,
Second Series, MBIA................................. $ 2,074,999
1,270,000 Hawaii State Airports Systems Revenue, 5.60%, 7/1/01. 1,335,088
500,000 Hawaii State Housing Fin & Dev Single Family, 4.55%,
7/1/02, Series A, AMT............................... 500,625
-----------
3,910,712
-----------
Illinois (1.3%):
500,000 Chicago Illinois O'Hare International Airport, 4.90%,
1/1/01.............................................. 508,750
-----------
Texas (4.2%):
550,000 Brazos, Higher Education Authority, 5.60%, 6/1/99,
Series A-2.......................................... 563,063
1,000,000 El Paso Texas Apartment Revenue, 5.00%, 8/15/01...... 1,025,000
-----------
1,588,063
-----------
Total Alternative Minimum Tax Paper 6,007,525
-----------
MUNICIPAL BONDS (82.5%):
Alaska (2.7%):
1,000,000 Alaska State Housing Finance Corp., 4.60%, 6/1/00.... 1,013,750
-----------
Arizona (3.6%):
750,000 Arizona State Transportation Board, 5.50%, 7/1/00.... 780,938
600,000 Salt River Project, Arizona Agricultural, 4.45%,
1/1/00,
Series B............................................ 606,000
-----------
1,386,938
-----------
Hawaii (45.4%):
2,500,000 Hawaii State Airport System Revenue, 5.55%, 7/1/00,
MBIA................................................ 2,612,499
120,000 Hawaii State Community Development Authority,
District #1, Special Tax Assessment, 4.45%, 7/1/98.. 120,641
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii, continued:
165,000 Hawaii State Community Development Authority,
District #2, Special Tax Assessment, 4.45%, 7/1/98.. $ 165,881
1,000,000 Hawaii State Housing Fin & Dev Single Family, 4.80%,
7/1/07, Series B.................................... 1,002,500
3,000,000 Hawaii State, GO, 5.50%, 1/1/00...................... 3,101,249
2,500,000 Hawaii State, GO, 4.60%, 2/1/00, Series Cd........... 2,534,374
1,500,000 Hawaii State, GO, 5.00%, 9/1/00, Series Ck........... 1,541,250
1,200,000 Hawaii State, GO, 4.50%, 3/1/01, Series Cl........... 1,215,000
850,000 Honolulu, City & County, 4.70%, 9/1/01, Series A..... 868,063
800,000 Honolulu, City & County, 5.25%, 9/1/02, Series A,
FGIC................................................ 837,000
700,000 Honolulu, City & County GO, 5.10%, 1/1/00, Series A,
FGIC................................................ 716,625
750,000 Honolulu, City & County GO, 5.10%, 6/1/00, Series B.. 771,563
375,000 Honolulu, City & County Improvement District, 5.85%,
10/15/97............................................ 376,328
370,000 Honolulu, City & County Improvement District, 6.05%,
10/15/98............................................ 378,788
370,000 Honolulu, City & County Improvement District, 6.20%,
10/15/99............................................ 383,875
620,000 Maui County, GO, 5.35%, 6/1/00....................... 641,700
-----------
17,267,336
-----------
Illinois (4.0%):
1,500,000 Metropolitan Pier & Exposition, 4.60%, 12/15/00...... 1,522,500
-----------
Maryland (2.7%):
1,000,000 Maryland State and Local Facilities, GO, 5.00%,
3/1/03.............................................. 1,040,000
-----------
</TABLE>
Continued
41
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Massachusetts (3.4%):
1,265,000 Massachusetts State Construction, 5.13%, 11/1/00,
Series D............................................. $ 1,302,950
-----------
Michigan (2.7%):
1,000,000 Ypsilanti Michigan School District Ref., GO, 4.60%,
5/1/01, FGIC......................................... 1,013,750
-----------
Minnesota (5.9%):
1,500,000 Minnesota State Revenue, 5.00%, 6/30/01, Series A..... 1,546,875
700,000 Minnesota State, GO, 5.00%, 8/1/00.................... 721,000
-----------
2,267,875
-----------
Missouri (2.8%):
1,000,000 Kansas City Water Revenue, 5.50%, 12/1/02............. 1,063,750
-----------
Rhode Island (3.3%):
1,250,000 Rhode Island Housing & Mortgage Financial Corporation,
5.00%, 7/1/00........................................ 1,275,000
-----------
Texas (1.3%):
500,000 Tarrant County Texas Health Facilities Development,
4.75%, 9/1/00, AMBAC................................. 508,750
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Virginia (2.0%):
750,000 Virginia State Public School Authority, 4.50%, 1/1/01. $ 758,438
-----------
Wisconsin (2.7%):
1,000,000 Milwaukee, GO, 5.00%, 2/1/01.......................... 1,032,500
-----------
Total Municipal Bonds 31,453,537
-----------
MUNICIPAL VARIABLE RATE DEMAND
OBLIGATIONS (3.9%):
Washington (3.9%):
1,500,000 Washington State Health Care Facility Hutchinson,
3.70%*, 1/1/18....................................... 1,500,000
-----------
Total Municipal Variable Rate
Demand Obligations 1,500,000
-----------
INVESTMENT COMPANY (0.8%):
318,106 Nuveen Tax Free Money
Market Fund.......................................... 318,106
-----------
Total Investment Company 318,106
-----------
Total (Cost--$38,681,464) (a) $39,279,168
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $38,134,362.
* Variable rate security. Rate presented represents rate in effect at July 31,
1997. Maturity reflects final maturity date.
(a) Represents cost for federal income tax purposes and differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..... $597,704
Unrealized depreciation..... 0
--------
Net unrealized appreciation. $597,704
========
</TABLE>
AMBAC--AMBAC Indemnity Corporation
AMT--Alternative Minimum Tax Paper
FGIC--Insured by Financial Guaranty Insurance Corporation
GO--General Obligation
MBIA--Insured by Municipal Bond Insurance Association
See notes to financial statements.
42
<PAGE>
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (81.6%):
Hong Kong (42.3%):
Chemicals (0.2%):
200,000 Ngai Hing Hong Co. Ltd................................. $ 53,729
-----------
Construction (5.7%):
70,000 Cheung Kong Infrastructure............................. 242,298
170,600 New World Infrastructure Ltd. (b)...................... 542,039
1,500,000 Wai Kee Holdings Ltd................................... 450,434
-----------
1,234,771
-----------
Containers & Packaging (1.4%):
136,000 Cosco Pacific Limited.................................. 304,758
-----------
Diversified--Conglomerates, Holding Companies (10.1%):
62,000 Citic Pacific Limited.................................. 393,179
78,000 Hutchison Whampoa Ltd.................................. 760,604
111,000 Swire Pacific Ltd., Class A............................ 1,053,724
-----------
2,207,507
-----------
Electrical & Electronic (1.0%):
590,000 Elec & Eltek International Holdings Ltd. .............. 213,367
-----------
Financial Services (1.6%):
53,200 Dah Sing Financial Group............................... 339,434
-----------
Forest Products (0.5%):
514,000 Ta Fu International Ltd................................ 100,908
-----------
Real Estate (14.0%):
37,000 Cheung Kong Holdings Ltd............................... 410,977
438,000 China Resources Beijing Land........................... 347,909
186,000 China Resources Enterprise Ltd. ....................... 929,696
794,000 Fairyoung Holdings Ltd. (b)............................ 328,161
289,000 Lai Sun Development Co. Ltd............................ 324,739
60,000 New World Development Co. Ltd.......................... 432,029
120,000 Wheelock & Co. Ltd..................................... 289,828
-----------
3,063,339
-----------
Telecommunications (2.2%):
161,500 Asia Satellite Telecom Holdings, Ltd. ................. 484,967
-----------
Textile/Apparel (0.6%):
865,000 Chaifa Holdings Ltd.................................... 139,651
-----------
Transportation--Air (0.7%):
246,000 China Southern Airlines Co............................. 151,714
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Hong Kong, continued:
Utilities--Electric (4.3%):
42,000 China Light & Power Co. Ltd............................ $ 240,851
480,000 Guangdong Electric Power............................... 359,572
85,500 Hong Kong Electric Holdings Ltd........................ 348,956
-----------
949,379
-----------
9,243,524
-----------
India (2.8%):
Engineering (2.8%):
35,000 Larsen & Toubro--GDR................................... 612,500
-----------
Indonesia (6.5%):
Automotive (1.3%):
73,000 PT Astra International................................. 279,159
-----------
Chemicals (0.2%):
36,000 PT Lautan Luas (b)..................................... 49,904
-----------
Fisheries (2.0%):
263,000 PT Daya Guna Samudera.................................. 434,980
-----------
Food Products (0.7%):
165,100 PT Fiskar Agung Perkasa................................ 156,261
-----------
Hotels & Lodging (1.5%):
490,000 PT Sona Topas Tourism.................................. 318,547
-----------
Utilities--Telecommunications (0.8%):
120,000 PT Telekomunikasi...................................... 183,556
-----------
1,422,407
-----------
Korea (4.7%):
Machinery & Equipment (1.7%):
42,000 Daewoo Heavy Industries................................ 364,314
-----------
Steel (1.3%):
3,360 Pohang Iron & Steel Co................................. 287,959
-----------
Utilities--Electric (1.7%):
12,500 Korea Electric Power Corp.............................. 365,169
-----------
1,017,442
-----------
Malaysia (7.0%):
Construction (0.8%):
100,000 Metacorp Berhad........................................ 173,714
-----------
</TABLE>
Continued
43
<PAGE>
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Malaysia, continued:
Diversified--Conglomerates, Holding Companies (1.9%):
130,000 Multi-Purpose Holdings Berhad.......................... $ 161,728
200,000 Renong Berhad.......................................... 256,398
-----------
418,126
-----------
Engineering (1.1%):
120,000 IJM Corp Berhad........................................ 232,124
-----------
Financial Services (1.0%):
170,000 Public Finance Berhad.................................. 224,387
-----------
Real Estate (0.8%):
175,000 Hong Leong Properties Berhad........................... 179,214
-----------
Telecommunications (0.8%):
135,000 Time Engineering Berhad................................ 171,021
-----------
Transportation (0.6%):
112,000 Johor Port Berhad...................................... 125,742
-----------
1,524,328
-----------
Philippines (1.6%):
Real Estate (1.6%):
1,332,000 Belle Corporation (b).................................. 298,551
325,000 Fil - Estate Land, Inc. (b)............................ 58,276
-----------
356,827
-----------
Singapore (5.3%):
Beverages (1.2%):
40,000 Fraser & Neave Ltd. ................................... 271,920
-----------
Diversified--Conglomerates, Holding Companies (0.6%):
32,500 Keppel Corporation..................................... 139,189
-----------
Electrical Equipment (2.1%):
60,000 Elec & Eltek International Co. Ltd..................... 450,000
-----------
Hotels & Lodging (1.2%):
150,000 Hotel Properties Ltd................................... 257,984
-----------
Real Estate (0.2%):
33,600 Orchard Parade Holdings Ltd............................ 47,281
-----------
1,166,374
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Taiwan (7.2%):
Banks (1.0%):
148,350 Chinatrust Commercial Bank............................. $ 223,394
-----------
Computers & Peripherals (2.9%):
15,000 Asustek Computer Inc. (b).............................. 311,628
36,000 Inventec Co. Ltd.(b)................................... 294,897
-----------
606,525
-----------
Electrical & Electronic (2.5%):
26,400 Compal Electronics (b)................................. 126,534
96,000 Siliconware Precision Industries
Co. (b)............................................... 426,659
-----------
553,193
-----------
Real Estate (0.8%):
82,500 Kindom Construction Co., Ltd. (b)...................... 181,173
-----------
1,564,285
-----------
Thailand (1.2%):
Oil & Gas Exploration, Production, & Services (1.2%):
17,500 PTT Exploration & Production PLC....................... 258,039
-----------
United States (3.0%):
Computers & Peripherals (2.4%):
8,450 Lite-On Technology Corp. GDR (b)....................... 252,951
10,000 Synnex Technology International Corp.--GDR (b)......... 289,500
-----------
542,451
-----------
Construction & Housing (0.6%):
14,938 Dong-Ah Construction Industrial Co. EDR................ 120,624
-----------
663,075
-----------
Total Common Stocks 17,828,801
-----------
WARRANTS (0.2%):
Hong Kong (0.2%):
Construction (0.2%):
225,000 Wai Kee Holdings Ltd., 6/30/00......................... 36,616
-----------
Total Warrants 36,616
-----------
</TABLE>
Continued
44
<PAGE>
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
INVESTMENT COMPANY (16.3%):
United States (16.3%):
3,560,847 Union Bank of California Money Market Fund............. $ 3,560,847
-----------
Total Investment Company 3,560,847
-----------
Total (Cost--$19,750,749) (a) $21,426,264
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $21,834,599.
Forward Currency Contracts:
<TABLE>
<CAPTION>
DELIVERY CONTRACT CONTRACT VALUE
DATE PRICE (U.S. DOLLARS) DEPRECIATION
-------- -------- -------------- ------------
<S> <C> <C> <C> <C>
Currency Purchased:
Hong Kong Dollar.............. 8/4/97 $ 7.74 $586,932 $(219)
Currency Sold:
Indonesia Rupee............... 8/4/97 $2,620.00 $278,408 $(425)
</TABLE>
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.... $ 3,227,362
Unrealized depreciation.... (1,551,847)
-----------
Net unrealized
appreciation............... $ 1,675,515
===========
</TABLE>
(b) Non income producing securities.
EDR--European Depository Receipt
GDR--Global Depository Receipt
PLC--Public Limited Company
See notes to financial statements.
45
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
1. ORGANIZATION
Pacific Capital Funds (the "Trust") was organized on October 30, 1992, and
is registered under the Investment Company Act of 1940, as amended, ("the
1940 Act"), as a diversified, open-end management investment company
established as a Massachusetts business trust. The Trust currently consists
of the following investment portfolios (individually, a "Fund" and
collectively, the "Funds"): Growth Stock Fund, U.S. Treasury Securities
Fund, Short Intermediate U.S. Treasury Securities Fund, Growth and Income
Fund, Diversified Fixed Income Fund, Tax-Free Securities Fund, Tax-Free
Short Intermediate Securities Fund, and New Asia Growth Fund. The Trust is
authorized to issue an unlimited number of shares without par value in two
classes of shares for each Fund: Retail Class and Institutional Class. The
Institutional Class commenced operations October 14, 1994 when the Trust
identified those Institutional Shareholders that were part of the Retail
Class (as of October 13, 1994) and transferred the Shareholders into the
Institutional Class. Retail Class Shares are subject to initial sales
charges, imposed at the time of purchase, in accordance with the Funds'
prospectuses. Each class of shares for each Fund has identical rights and
privileges except with respect to distribution (12b-1) fees paid by Retail
Class Shares, voting rights on matters affecting a single class of shares
and the exchange privileges of each class of shares.
The Funds' investment objectives are as follows: Growth Stock Fund seeks
long-term capital appreciation; U.S. Treasury Securities Fund and Short
Intermediate U.S. Treasury Securities Fund seek a high level of current
income consistent with prudent risk of capital. Growth and Income Fund seeks
primarily current income and secondarily capital appreciation. Diversified
Fixed Income Fund seeks a high level of current income. Tax-Free Securities
Fund and Tax-Free Short Intermediate Securities Fund seek a high level of
current income exempt from federal and Hawaii income taxes. New Asia Growth
Fund seeks long-term growth of capital.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements 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 income and
expenses for the period. Actual results could differ from those estimates.
SECURITIES VALUATION
Investments of the Funds for which the primary market is a national
securities exchange or the National Association of Securities Dealers
Automated Quotation National Market System ("NASDAQ") are valued at last
reported sale price on the day of valuation. In the absence of any sale of
such securities on the valuation date, the valuations are based on the mean
of the latest quoted bid and asked prices. Securities, including thinly
traded, unlisted, and restricted securities, for which market quotations are
not readily available, are valued at fair market value by the investment
adviser under the supervision of the Funds' Board of Trustees. Investments
in investment companies are valued at their respective net asset values as
reported by such companies. Money market instruments and other debt
securities maturing in 60 days or less are valued at amortized cost, which
approximates market value. Investments in foreign securities, currency
holdings and other assets and liabilities of New Asia Growth Fund are valued
based on quotations from the primary market in which they are traded and
translated from the local currency into U.S. dollars using current exchange
rates. The differences between the cost and market values of securities are
reflected as either unrealized appreciation or depreciation.
Continued
46
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
SECURITIES TRANSACTIONS AND RELATED INCOME
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the pro rata amortization of premium
or accretion of discount. Dividend income is recorded on the ex-dividend
date and is reduced by applicable foreign taxes withheld. Gains or losses
realized from sales of securities are determined by comparing the identified
cost of the security lot sold with the net sales proceeds.
FOREIGN CURRENCY TRANSLATION
The New Asia Growth Fund isolates that portion of the results of operations
resulting from changes in currency exchange rates from the fluctuation
arising from changes in market prices of securities held.
Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the exchange rate on the dates of the
transactions. Reported net realized foreign exchange gains or losses arise
from sales and maturities of portfolio securities, sales of foreign
currencies, currency exchange fluctuations between the trade and settlement
dates of securities transactions, and the difference between the amounts of
assets and liabilities recorded and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign currency
appreciation or depreciation arises from changes in the value of assets and
liabilities, including investments in securities, resulting from changes in
currency exchange rates.
RISKS ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of domestic issuers.
Such risks include future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws
and restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, confiscatory taxation, political
or social instability or diplomatic developments which could adversely
affect investments in those countries.
Certain countries may also impose substantial restrictions on investments in
their capital markets by foreign entities, including restrictions on
investments in issuers of industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available in
the New Asia Growth Fund and result in a lack of liquidity and a high price
volatility with respect to securities of issuers from developing countries.
Withholding taxes on foreign dividends have been provided for in accordance
with the New Asia Growth Fund's understanding of applicable countries' tax
rules and rates.
FORWARD CURRENCY EXCHANGE CONTRACTS
The New Asia Growth Fund may from time to time enter into foreign currency
exchange transactions to convert to and from different foreign currencies.
The Fund may enter into currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange
market, or use forward currency contracts to purchase or to sell foreign
currencies. A forward foreign currency contract is an obligation by the Fund
to purchase or to sell a specific currency at a future date at a price set
at the time of the contract. The Fund may use forward foreign currency
exchange contracts in order to protect against uncertainty in fluctuations
of future foreign exchange rates. The use of such forward
Continued
47
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
contracts is limited to hedging against movements in the value of foreign
currencies relative to the U.S. dollar in connection with specific portfolio
transactions or with respect to portfolio positions. The forward foreign
currency exchange contracts are adjusted by the daily exchange rate of the
underlying currency and any appreciation or depreciation is recorded for
financial statement purposes as unrealized until the contract settlement
date, at which time the Fund records realized gains or losses equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a forward foreign exchange
currency contract or if the value of the foreign currency changes
unfavorably.
WHEN-ISSUED AND FORWARD COMMITMENTS
The Funds may purchase securities on a "when-issued" basis and may also
purchase or sell securities on a forward commitment. The Funds record when-
issued securities on the trade date and maintain security positions such
that sufficient liquid assets will be available to make payment for the
securities purchased. The value of securities underlying when-issued or
forward commitments to purchase securities, and any subsequent fluctuation
in their value, is taken into account when determining the net asset value
of the Funds commencing with the date the Funds agree to purchase the
securities. The Funds do not accrue interest or dividends on when-issued
securities until the underlying securities are received.
REPURCHASE AGREEMENTS
The Funds may acquire securities from member banks of the Federal Deposit
Insurance Corporation and from registered broker-dealers which Hawaiian
Trust Company, Limited ("Hawaiian Trust") deems creditworthy under
guidelines approved by the Board of Trustees, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price ("repurchase agreement"). The repurchase price generally equals the
price paid by a Fund plus interest negotiated on the basis of current short-
term rates, which may be more or less than the rate on the underlying
portfolio securities. The seller, under a repurchase agreement, is required
to maintain the value of collateral held pursuant to the agreement at not
less than 102% of the repurchase price (including accrued interest).
Securities subject to repurchase agreements will be held by the Trust's
custodian or another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a
Fund under the 1940 Act.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly for
the U.S. Treasury Securities Fund, Short Intermediate U.S. Treasury
Securities Fund, Diversified Fixed Income Fund, Tax-Free Securities Fund and
Tax-Free Short Intermediate Securities Fund. Dividends from net investment
income are declared and paid monthly for the Growth Stock Fund and Growth
and Income Fund. Dividends from net investment income are declared and paid
quarterly for the New Asia Growth Fund. Distributable net realized capital
gains, if any, are declared and distributed annually.
Dividends from net investment income and net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily
due to differing treatments of foreign currency transactions and deferrals
of certain losses. Permanent book and tax basis differences are reflected in
the components of net assets.
Continued
48
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company
by complying with the provisions available to certain investment companies
as defined in applicable sections of the Internal Revenue Code, and to make
distributions of net investment income and net realized capital gains
sufficient to relieve it from all, or substantially all, federal income
taxes.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with organization, registration
and the initial public offering of shares have been deferred and are
amortized using the straight-line method over a period of two years from the
commencement of the public offering of shares of each Fund.
CONCENTRATION OF CREDIT RISK
The Tax-Free Securities Fund and the Tax-Free Short Intermediate Securities
Fund have a majority of their investments in the securities of issuers in
Hawaii. Such concentration may subject the Fund to the effects of economic
changes occurring within that State.
OTHER
Expenses that are directly related to one Fund are charged directly to that
Fund. Other operating expenses for the Funds or the Trust are prorated to
the Funds on the basis of relative net assets or other appropriate basis.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
year ended July 31, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Growth Stock Fund.................................... $ 58,249,346 $ 92,090,700
U.S. Treasury Securities Fund........................ 10,008,609 10,750,239
Short Intermediate U.S. Treasury Securities Fund..... 13,308,723 11,193,471
Growth and Income Fund............................... 81,708,653 70,234,365
Diversified Fixed Income Fund........................ 110,382,175 147,784,788
Tax-Free Securities Fund............................. 31,839,329 35,193,262
Tax-Free Short Intermediate Securities Fund.......... 11,321,459 12,977,684
New Asia Growth Fund................................. 24,575,698 19,365,912
</TABLE>
4. RELATED PARTY TRANSACTIONS
Investment advisory services are provided to the Trust by Hawaiian Trust
(the "Adviser"). Under the terms of the investment advisory agreement with
the Trust, the Adviser is entitled to receive fees based on a percentage of
the average net assets of the Fund.
Continued
49
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Services") are subsidiaries of The BISYS Group, Inc. BISYS, with whom
certain officers and a trustee of the Trust are affiliated, serves the Trust
as principal underwriter and administrator. Such officers and trustee are
not paid any fees directly by the Funds for serving as officers and trustee
of the Trust. Under the terms of the management and administration
agreement, BISYS' fees are computed at an annual rate of 0.20% of the
average daily net assets of each Fund.
BISYS also serves as the Trust's distributor and receives fees for providing
distribution services in accordance with a Distribution Agreement (the
"Agreement") pursuant to Rule 12b-1 under the 1940 Act. Under the Agreement,
Retail Class Shares pay BISYS a fee not to exceed, on an annual basis, 0.75%
of the average daily net assets attributable to the Retail Class of shares
of each Fund for payments BISYS makes to banks, including the Advisor, other
institutions and broker/dealers, and for expenses BISYS and any of its
affiliates or subsidiaries incur for providing distribution or shareholder
service assistance. For the year ended July 31, 1997, BISYS, as the Trust's
principal underwriter, received approximately $231,831 from commissions on
sales of Retail Class shares of which $210,914 was reallowed to dealers
affiliated with the Advisor and $15,602 was reallowed to other dealers.
BISYS Services serves the Trust as fund accountant. Under the terms of the
fund accounting agreement, BISYS Services is entitled to receive fees based
on a percentage of the average net assets of each Fund and is reimbursed for
certain out-of-pocket expenses incurred in providing fund accounting
services.
Fees may be voluntarily reduced or expenses reimbursed to assist the Funds
in maintaining competitive expense ratios.
Information regarding these transactions for the year ended July 31, 1997 is
as follows:
<TABLE>
<CAPTION>
INVESTMENT ADVISORY FEES
----------------------------
ANNUAL FEE AS A ADMINISTRATION 12B-1 FEES
PERCENTAGE FEES FEES VOLUNTARILY
OF AVERAGE VOLUNTARILY VOLUNTARILY REDUCED-- ACCOUNTING
DAILY NET ASSETS REDUCED REDUCED RETAIL CLASS FEES*
---------------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Growth Stock Fund...... 0.80% $ -- $ 75,584 $32,878 $56,233
U.S. Treasury
Securities Fund........ 0.60% -- 9,759 5,272 7,274
Short Intermediate U.S.
Treasury
Securities Fund....... 0.50% 47,940 12,012 3,727 7,165
Growth and Income Fund. 0.80% -- 38,905 10,559 28,824
Diversified Fixed
Income Fund............ 0.60% -- 58,083 5,621 43,393
Tax-Free Securities
Fund................... 0.60% -- 117,822 6,370 87,816
Tax-Free Short
Intermediate
Securities Fund....... 0.50% -- 19,630 4,005 11,729
New Asia Growth Fund... 0.90% 7,778 8,389 13,636 4,977
</TABLE>
--------
* Accounting fees do not include out-of-pocket expenses.
Continued
50
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
5. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Trust were as follows:
<TABLE>
<CAPTION>
U.S. TREASURY
GROWTH STOCK FUND SECURITIES FUND
------------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
------------- ---------- ------------ ----------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
------------------------- ------------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued........... $ 3,204,633 224,887 $ 262,172 28,434
Dividends reinvested.... 16,102 1,191 48,799 5,310
Shares redeemed......... (1,497,916) (109,496) (228,130) (24,896)
------------- ---------- ------------ ----------
Net increase/(decrease). $ 1,722,819 116,582 $ 82,841 8,848
============= ========== ============ ==========
INSTITUTIONAL CLASS
SHARES:
Shares issued........... $ 36,521,743 2,562,096 $ 1,380,971 149,658
Dividends reinvested.... 76,010 5,584 1,366,474 148,459
Shares redeemed......... (80,981,052) (5,700,654) (2,779,194) (300,730)
------------- ---------- ------------ ----------
Net increase/(decrease). $ (44,383,299) (3,132,974) $ (31,749) (2,613)
============= ========== ============ ==========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1996 JULY 31, 1996
------------------------- ------------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued........... $ 2,212,900 181,079 $ 120,008 12,543
Dividends reinvested.... 269,722 22,667 60,138 6,342
Shares redeemed......... (1,174,009) (94,879) (205,941) (21,534)
------------- ---------- ------------ ----------
Net increase/(decrease). $ 1,308,613 108,867 $ (25,795) (2,649)
============= ========== ============ ==========
INSTITUTIONAL CLASS
SHARES:
Shares issued........... $ 131,615,185 10,917,906 $ 1,527,773 161,323
Dividends reinvested.... 6,169,023 518,783 1,842,036 194,471
Shares redeemed......... (104,518,765) (8,612,823) (30,773,600) (3,250,486)
------------- ---------- ------------ ----------
Net increase/(decrease). $ 33,265,443 2,823,866 $(27,403,791) (2,894,692)
============= ========== ============ ==========
</TABLE>
Continued
51
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
5. CAPITAL SHARE TRANSACTIONS (CONTINUED):
<TABLE>
<CAPTION>
SHORT INTERMEDIATE U.S.
TREASURY SECURITIES FUND GROWTH AND INCOME FUND
-------------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued........... $ 140,921 14,898 $ 2,191,642 153,432
Dividends reinvested.... 36,426 3,858 81,348 6,075
Shares redeemed......... (728,488) (76,854) (527,062) (37,700)
------------ ----------- ------------ ----------
Net increase/(decrease). $ (551,141) (58,098) $ 1,745,928 121,807
============ =========== ============ ==========
INSTITUTIONAL CLASS
SHARES:
Shares issued........... $11,979,335 1,272,770 $ 43,781,341 3,080,616
Dividends reinvested.... 55,995 5,915 2,325,676 172,366
Shares redeemed......... (9,297,503) (983,459) (30,463,375) (2,125,196)
------------ ----------- ------------ ----------
Net increase/(decrease). $ 2,737,827 295,226 $ 15,643,642 1,127,786
============ =========== ============ ==========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1996 JULY 31, 1996
-------------------------- ------------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued........... $ 747,638 76,883 $ 924,629 74,394
Dividends reinvested.... 47,554 4,976 16,890 1,409
Shares redeemed......... (95,449) (9,947) (128,162) (10,325)
------------ ----------- ------------ ----------
Net increase/(decrease). $ 699,743 71,912 $ 813,357 65,478
============ =========== ============ ==========
INSTITUTIONAL CLASS
SHARES:
Shares issued........... $17,373,908 1,805,630 $ 50,906,651 4,232,718
Dividends reinvested.... 110,962 11,544 1,235,834 104,577
Shares redeemed......... (9,634,113) (1,006,064) (23,658,493) (1,948,216)
------------ ----------- ------------ ----------
Net increase/(decrease). $ 7,850,757 811,110 $ 28,483,992 2,389,079
============ =========== ============ ==========
</TABLE>
Continued
52
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
5. CAPITAL SHARE TRANSACTIONS (CONTINUED):
<TABLE>
<CAPTION>
DIVERSIFIED FIXED TAX-FREE
INCOME FUND SECURITIES FUND
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------------ ---------- ------------ ----------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued........... $ 748,361 71,630 $ 2,100,119 201,633
Dividends reinvested.... 70,514 6,720 20,004 1,896
Shares redeemed......... (829,853) (79,822) (241,385) (23,123)
------------ ---------- ------------ ----------
Net increase/(decrease). $ (10,978) (1,472) $ 1,878,738 180,406
============ ========== ============ ==========
INSTITUTIONAL CLASS
SHARES:
Shares issued........... $ 44,769,922 4,245,046 $ 31,135,063 2,950,938
Dividends reinvested.... 599,007 55,986 1,613,763 151,978
Shares redeemed......... (78,102,272) (7,368,883) (35,722,280) (3,389,736)
------------ ---------- ------------ ----------
Net increase/(decrease). $(32,733,343) (3,067,851) $ (2,973,454) (286,820)
============ ========== ============ ==========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1996 JULY 31, 1996
------------------------ ------------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued........... $ 1,199,728 107,934 $ 619,694 58,332
Dividends reinvested.... 35,296 3,293 17,516 1,652
Shares redeemed......... (100,216) (9,260) (608,257) (58,984)
------------ ---------- ------------ ----------
Net increase/(decrease). $ 1,134,808 101,967 $ 28,953 1,000
============ ========== ============ ==========
INSTITUTIONAL CLASS
SHARES:
Shares issued........... $198,618,575 18,085,880 $ 28,592,966 2,708,891
Dividends reinvested.... 855,870 76,725 3,552,534 331,714
Shares redeemed......... (86,606,689) (7,857,921) (22,221,434) (2,101,754)
------------ ---------- ------------ ----------
Net increase/(decrease). $112,867,756 10,304,684 $ 9,924,066 938,851
============ ========== ============ ==========
</TABLE>
Continued
53
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
5. CAPITAL SHARE TRANSACTIONS (CONTINUED):
<TABLE>
<CAPTION>
TAX-FREE
SHORT INTERMEDIATE NEW ASIA
SECURITIES FUND GROWTH FUND
--------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
----------- -------- ----------- --------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
--------------------- ---------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued................... $ 741,966 73,793 $ 1,372,902 111,117
Dividends reinvested............ 15,130 1,502 21,601 1,764
Shares redeemed................. (491,902) (48,887) (527,801) (42,850)
----------- -------- ----------- --------
Net increase/(decrease)......... $ 265,194 26,408 $ 866,702 70,031
=========== ======== =========== ========
INSTITUTIONAL CLASS SHARES:
Shares issued................... $ 5,454,511 540,179 $ 9,703,868 791,509
Dividends reinvested............ 52,152 5,141 81,463 6,605
Shares redeemed................. (8,057,230) (796,267) (3,030,589) (240,435)
----------- -------- ----------- --------
Net increase/(decrease)......... $(2,550,567) (250,947) $ 6,754,742 557,679
=========== ======== =========== ========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1996 JULY 31, 1996
--------------------- ---------------------
<S> <C> <C> <C> <C>
RETAIL CLASS SHARES:
Shares issued................... $ 194,515 19,329 $ 1,841,034 156,856
Dividends reinvested............ 2,672 265 13,647 1,284
Shares redeemed................. (52,273) (5,147) (101,353) (8,592)
----------- -------- ----------- --------
Net increase/(decrease)......... $ 144,914 14,447 $ 1,753,328 149,548
=========== ======== =========== ========
INSTITUTIONAL CLASS SHARES:
Shares issued................... $ 7,670,654 754,274 $ 8,908,328 754,031
Dividends reinvested............ 6,511 642 46,083 4,330
Shares redeemed................. (7,930,532) (783,406) (2,879,942) (252,790)
----------- -------- ----------- --------
Net increase/(decrease)......... $ (253,367) (28,490) $ 6,074,469 505,571
=========== ======== =========== ========
</TABLE>
6. FEDERAL INCOME TAXES (UNAUDITED)
For federal income tax purposes, the following Funds have capital loss
carryforwards as of July 31, 1997, which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
---------- -------
<S> <C> <C>
U.S. Treasury Securities Fund.............................. $ 288,915 2002
U.S. Treasury Securities Fund.............................. 326,761 2003
U.S. Treasury Securities Fund.............................. 3,238,241 2004
U.S. Treasury Securities Fund.............................. 58,103 2005
Short Intermediate U.S. Treasury Securities Fund........... 151,388 2005
Diversified Fixed Income Fund.............................. 405,487 2005
</TABLE>
Continued
54
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the fiscal year ended
July 31, 1998. Diversified Fixed Income Fund and U.S. Treasury Fund deferred
such losses of $2,116,461 and $134,520, respectively. Similarly, New Asia
Growth Fund deferred foreign currency losses of $76,177.
The following table presents distributions from long-term capital gains for
the following Funds for the year ended July 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Growth Stock....................................................... $ 6,971
Growth and Income Fund............................................. 3,674,369
Diversified Fixed Income Fund...................................... 1,347,352
Tax Free Securities Fund........................................... 1,589,719
Tax Free Short Intermediate Securities Fund........................ 50,230
New Asia Growth Fund............................................... 91,852
</TABLE>
Pacific Capital Funds designates the following eligible distribution for the
dividends received deduction for corporations for the Fund's taxable year
ended July 31, 1997.
<TABLE>
<CAPTION>
GROWTH AND
GROWTH STOCK INCOME
FUND FUND
------------ ----------
RETAIL CLASS:
<S> <C> <C>
Dividend income...................................... $ 82,325 $ 32,902
Dividend income per share............................ $ 0.179 $ 0.224
INSTITUTIONAL CLASS:
Dividend income...................................... $2,328,521 $1,519,228
Dividend income per share............................ $ 0.181 $ 0.230
</TABLE>
The Pacific Capital Funds designate the following exempt-interest dividends
for the Fund's taxable year ended July 31, 1997.
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE
SECURITIES SHORT INTERMEDIATE
FUND SECURITIES FUND
----------- ------------------
RETAIL CLASS:
<S> <C> <C>
Exempt-interest distributions.................. $ 61,303 $ 30,354
Exempt-interest distributions per share........ $ 0.505 $ 0.382
INSTITUTIONAL CLASS:
Exempt-interest distributions.................. $14,097,576 $1,454,175
Exempt-interest distributions per share........ $ 0.510 $ 0.384
</TABLE>
Continued
55
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1997
The percentage break-down of the exempt-interest income by state for the
Tax-Free Securities Fund and the Tax-Free Short Intermediate Securities Fund
for the taxable year ended July 31, 1997 were as follows:
<TABLE>
<CAPTION>
TAX-FREE SHORT
TAX-FREE INTERMEDIATE
STATE SECURITIES FUND SECURITIES FUND
----- --------------- ---------------
<S> <C> <C>
Alaska....................................... -- % 2.4%
Arizona...................................... 0.2 5.0
California................................... 6.0 --
Colorado..................................... 0.3 --
Connecticut.................................. 0.4 --
Florida...................................... 6.4 2.5
Georgia...................................... 2.9 --
Hawaii....................................... 57.5 57.1
Idaho........................................ 0.1 --
Illinois..................................... 0.1 4.0
Kansas....................................... 1.8 --
Maine........................................ 0.7 --
Maryland..................................... -- 1.0
Massachusetts................................ 2.0 3.4
Michigan..................................... 2.3 1.7
Minnesota.................................... 0.8 5.8
Missouri..................................... -- 1.2
New Jersey................................... 1.3 1.3
New Mexico................................... 1.9 --
New York..................................... 0.6 --
North Carolina............................... 1.2 --
Ohio......................................... 1.4 --
Oregon....................................... 1.0 1.3
Pennsylvania................................. 1.1
Puerto Rico.................................. -- 0.8
Rhode Island................................. -- 3.3
South Carolina............................... 0.8 --
Tennessee.................................... 3.2
Texas........................................ 2.1 5.2
Virginia..................................... 3.9 --
Washington................................... -- 1.2
West Virginia................................ -- 0.2
Wisconsin.................................... -- 2.6
----- -----
Total..................................... 100.0% 100.0%
===== =====
</TABLE>
7. SPECIAL MEETING
A special meeting was held on May 19, 1997 to approve the change in the sub-
adviser of New Asia Growth Fund (the fund). Credit Lyonnais International
Asset Management (HK) Ltd was acquired in February 1997 by Nicholas
Applegate Capital Management (Hong Kong) LLC. Presented in person or
represented by proxy at the meeting were holders of 907,018 shares of the
fund, who represented a majority and consequently a quorum of the 1,460,284
outstanding shares. All 907,018 voted unanimously for the change in sub-
adviser.
Continued
56
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH STOCK FUND
---------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 1,
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 1993 TO
----------------------- ---------------------- ---------------------------- JULY 31,
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL (C) INSTITUTIONAL (B) 1994 (A)
------- ------------- ------- ------------- ---------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $11.89 $11.89 $11.71 $11.71 $ 9.83 $ 9.89 $10.00
------- -------- ------- -------- ------ -------- -------
Investment Activities
Net investment income.. 0.03 0.07 0.07 0.10 0.12 0.11 0.07
Net realized and
unrealized gain (loss)
from investments...... 5.55 5.55 0.89 0.89 1.87 1.83 (0.18)
------- -------- ------- -------- ------ -------- -------
Total from Investment
Activities........... 5.58 5.62 0.96 0.99 1.99 1.94 (0.11)
------- -------- ------- -------- ------ -------- -------
Distributions
Net investment income.. (0.03) (0.07) (0.07) (0.10) (0.11) (0.12) (0.06)
In excess of net
investment income..... (0.01) -- -- -- -- -- --
Net realized gains..... -- -- (0.22) (0.22) -- -- --
In excess of net
realized gains........ -- -- (0.49) (0.49) -- -- --
------- -------- ------- -------- ------ -------- -------
Total Distributions... (0.04) (0.07) (0.78) (0.81) (0.11) (0.12) (0.06)
------- -------- ------- -------- ------ -------- -------
NET ASSET VALUE, END OF
PERIOD................. $17.43 $17.44 $11.89 $11.89 $11.71 $11.71 $ 9.83
======= ======== ======= ======== ====== ======== =======
Total Return (excludes
sales charges)......... 47.02% 47.39% 8.25% 8.53% 20.43% 20.64%(d) (1.05%)(f)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)........... $9,742 $198,407 $5,261 $172,565 $3,905 $136,837 $56,121
Ratio of expenses to
average net assets..... 1.32% 1.07% 1.34% 1.09% 1.36% 1.13%(e) 1.41%(e)
Ratio of net investment
income to average net
assets................. 0.16% 0.45% 0.60% 0.86% 1.12% 1.30%(e) 0.98%(e)
Ratio of expenses to
average net assets*.... 1.86% 1.11% 1.88% 1.13% 1.98% 1.21%(e) 2.31%(e)
Ratio of net investment
income to average net
assets*................ (0.38%) 0.41% 0.06% 0.82% 0.50% 1.23%(e) 0.07%(e)
Portfolio Turnover (g).. 32.20% 32.20% 61.30% 61.30% 32.40% 32.40% 25.89%
Average Commission Rate
paid (h)............... $0.0893 $0.0893 $0.0895 $0.0895 -- -- --
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. In addition, the
investment adviser reimbursed expenses. If such voluntary fee reductions
and expense reimbursements had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) On October 13, 1994, the Trust identified those Institutional shareholders
that were part of the Retail Class and transferred these shareholders into
the Institutional Class at the prevailing net asset value effective
October 14, 1994. The Financial Highlights presented for the Institutional
Class reflects operations and distributions for the period from October
14, 1994 through July 31, 1995.
(c) The Financial Highlights presented for the Retail Class reflects
operations and distributions for the Fund, as a whole, for the period from
August 1, 1994 through October 13, 1994 combined with the operations and
distributions of the Retail Class only for the period from October 14,
1994 through July 31, 1995.
(d) Represents total return for the Fund, as a whole, for the period from
August 1, 1994 through October 13, 1994 plus total return for the
Institutional Class for the period from October 14, 1994 through July 31,
1995.
(e) Annualized.
(f) Not annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
(h) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements.
57
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S TREASURY SECURITIES FUND
------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 1,
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 1993 TO
--------------------------- --------------------- ---------------------------- JULY 31,
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL (C) INSTITUTIONAL (B) 1994 (A)
--------------------------- ------ ------------- ---------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 9.13 $ 9.14 $ 9.42 $ 9.43 $ 9.04 $ 8.66 $10.00
------- ------- ------ ------- ------ ------- -------
Investment Activities
Net investment income... 0.52 0.53 0.53 0.59 0.50 0.44 0.31
Net realized and
unrealized gain (loss)
from investments....... 0.25 0.26 (0.20) (0.24) 0.38 0.76 (1.00)
------- ------- ------ ------- ------ ------- -------
Total from Investment
Activities............ 0.77 0.79 0.33 0.35 0.88 1.20 (0.69)
------- ------- ------ ------- ------ ------- -------
Distributions
Net investment income... (0.46) (0.54) (0.53) (0.55) (0.50) (0.43) (0.27)
In excess of net
investment income...... (0.07) (0.01) (0.09) (0.09) -- -- --
------- ------- ------ ------- ------ ------- -------
Total Distributions.... (0.53) (0.55) (0.62) (0.64) (0.50) (0.43) (0.27)
------- ------- ------ ------- ------ ------- -------
NET ASSET VALUE, END OF
PERIOD.................. $ 9.37 $ 9.38 $ 9.13 $ 9.14 $ 9.42 $ 9.43 $ 9.04
======= ======= ====== ======= ====== ======= =======
Total Return (excludes
sales charges).......... 8.68% 8.92% 3.43% 3.71% 10.18% 10.49%(d) (6.95%)(f)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)............ $1,087 $23,832 $979 $23,248 $1,035 $51,264 $60,125
Ratio of expenses to
average net assets...... 1.16% 0.91% 1.20% 0.95% 1.19% 1.02%(e) 1.15%(e)
Ratio of net investment
income to
average net assets...... 5.60% 5.85% 5.55% 5.81% 5.57% 5.78%(e) 4.62%(e)
Ratio of expenses to
average net assets*..... 1.70% 0.95% 1.74% 0.99% 1.81% 1.09%(e) 2.09%(e)
Ratio of net investment
income to
average net assets*..... 5.06% 5.81% 5.01% 5.77% 4.96% 5.71%(e) 3.68%(e)
Portfolio Turnover (g)... 44.90% 44.90% 15.75% 15.75% 80.98% 80.98% 11.36%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. In addition, the
investment adviser reimbursed expenses. If such voluntary fee reductions
and expense reimbursements had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) On October 13, 1994, the Trust identified those Institutional shareholders
that were part of the Retail Class and transferred these shareholders into
the Institutional Class at the prevailing net asset value effective
October 14, 1994. The Financial Highlights presented for the Institutional
Class reflects operations and distributions for the period from October
14, 1994 through July 31, 1995.
(c) The Financial Highlights presented for the Retail Class reflects
operations and distributions for the Fund, as a whole, for the period from
August 1, 1994 through October 13, 1994 combined with the operations and
distributions of the Retail Class only for the period from October 14,
1994 through July 31, 1995.
(d) Represents total return for the Fund, as a whole, for the period from
August 1, 1994 through October 13, 1994 plus total return for the
Institutional Class for the period from October 14, 1994 through July 31,
1995.
(e) Annualized.
(f) Not annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
58
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT INTERMEDIATE U.S. TREASURY SECURITIES FUND
-------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 13,
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 1993 TO
--------------------------- --------------------- ---------------------------- JULY 31,
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL (C) INSTITUTIONAL (B) 1994 (A)
--------------------------- ------ ------------- ---------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 9.41 $ 9.42 $ 9.60 $ 9.61 $ 9.52 $ 9.30 $10.00
------- ------- ------ ------- ------ ------- ------
Investment Activities
Net investment income... 0.49 0.52 0.48 0.53 0.52 0.44 0.24
Net realized and
unrealized gain (loss)
from investments....... 0.14 0.14 (0.11) (0.13) 0.05 0.31 (0.52)
------- ------- ------ ------- ------ ------- ------
Total from Investment
Activities............ 0.63 0.66 0.37 0.40 0.57 0.75 (0.28)
------- ------- ------ ------- ------ ------- ------
Distributions
Net investment income... (0.49) (0.52) (0.50) (0.53) (0.49) (0.44) (0.20)
In excess of net
investment income...... -- -- (0.04) (0.04) -- -- --
Net realized gains...... -- -- -- -- -- -- --
In excess of net
realized gains......... -- -- (0.02) (0.02) -- -- --
------- ------- ------ ------- ------ ------- ------
Total Distributions.... (0.49) (0.52) (0.56) (0.59) (0.49) (0.44) (0.20)
------- ------- ------ ------- ------ ------- ------
NET ASSET VALUE, END OF
PERIOD.................. $ 9.55 $ 9.56 $ 9.41 $ 9.42 $ 9.60 $ 9.61 $ 9.52
======= ======= ====== ======= ====== ======= ======
Total Return (excludes
sales charges).......... 6.92% 7.19% 3.90% 4.18% 6.28% 6.57%(d) (2.76%)(f)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)............ $618 $26,722 $1,156 $23,545 $489 $16,214 $3,419
Ratio of expenses to
average
net assets.............. 0.87% 0.62% 0.92% 0.67% 0.99% 0.75%(e) 1.00%(e)
Ratio of net investment
income
to average net assets... 5.22% 5.47% 5.14% 5.40% 5.51% 5.84%(e) 3.96%(e)
Ratio of expenses to
average
net assets*............. 1.62% 0.87% 1.67% 0.92% 1.78% 0.99%(e) 5.39%(e)
Ratio of net investment
income
to average net assets*.. 4.47% 5.22% 4.39% 5.15% 4.72% 5.61%(e) (0.43%)(e)
Portfolio Turnover (g)... 51.56% 51.56% 47.17% 47.17% 62.73% 62.73% 0.00%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. In addition, the
investment adviser reimbursed expenses. If such voluntary fee reductions
and expense reimbursements had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) On October 13, 1994, the Trust identified those Institutional shareholders
that were part of the Retail Class and transferred these shareholders into
the Institutional Class at the prevailing net asset value effective
October 14, 1994. The Financial Highlights presented for the Institutional
Class reflects operations and distributions for the period from October
14, 1994 through July 31, 1995.
(c) The Financial Highlights presented for the Retail Class reflects
operations and distributions for the Fund, as a whole, for the period from
August 1, 1994 through October 13, 1994 combined with the operations and
distributions of the Retail Class only for the period from October 14,
1994 through July 31, 1995.
(d) Represents total return for the Fund, as a whole, for the period from
August 1, 1994 through October 13, 1994 plus total return for the
Institutional Class for the period from October 14, 1994 through July 31,
1995.
(e) Annualized.
(f) Not annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statments.
59
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
-----------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED OCTOBER 14, 1994 TO
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
----------------------- ---------------------- ------------------------
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------- ------------- ------- ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $12.32 $12.32 $11.44 $11.43 $10.00 $10.00
------- -------- ------- ------- ------ -------
Investment Activities
Net investment income.. 0.08 0.11 0.16 0.17 0.17 0.20
Net realized and
unrealized gain from
investments........... 5.57 5.58 1.19 1.21 1.44 1.42
------- -------- ------- ------- ------ -------
Total from Investment
Activities........... 5.65 5.69 1.35 1.38 1.61 1.62
------- -------- ------- ------- ------ -------
Distributions
Net investment income.. (0.08) (0.11) (0.15) (0.17) (0.17) (0.19)
In excess of net
investment income..... (0.01) -- (0.01) (0.01) -- --
Net realized gains..... (0.63) (0.63) (0.31) (0.31) -- --
------- -------- ------- ------- ------ -------
Total Distributions... (0.72) (0.74) (0.47) (0.49) (0.17) (0.19)
------- -------- ------- ------- ------ -------
NET ASSET VALUE, END OF
PERIOD................. $17.25 $17.27 $12.32 $12.32 $11.44 $11.43
======= ======== ======= ======= ====== =======
Total Return (excludes
sales charges)......... 47.59% 47.96% 11.96% 12.29% 16.35%(b) 16.41%(b)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)........... $3,726 $123,821 $1,160 $74,427 $328 $41,771
Ratio of expenses to
average net assets..... 1.32% 1.07% 1.37% 1.11% 1.40%(c) 1.14%(c)
Ratio of net investment
income to average net
assets................. 0.48% 0.79% 1.03% 1.43% 2.08%(c) 2.47%(c)
Ratio of expenses to
average net assets*.... 1.86% 1.12% 1.91% 1.15% 1.99%(c) 1.22%(c)
Ratio of net investment
income to average net
assets*................ (0.06)% 0.75% 0.49% 1.39% 1.49%(c) 2.39%(c)
Portfolio Turnover (d).. 74.83% 74.83% 80.83% 80.83% 12.78% 12.78%
Average Commission Rate
Paid (e)............... $0.0874 $0.0874 $0.0921 $0.0921
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements.
60
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DIVERSIFIED FIXED INCOME FUND
--------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED OCTOBER 14, 1994 TO
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
--------------------------- --------------------- ------------------------
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
--------------------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.45 $10.53 $10.75 $10.84 $10.00 $10.00
------- -------- ------ -------- ------ -------
Investment Activities
Net investment income... 0.57 0.60 0.59 0.58 0.49 0.55
Net realized and
unrealized gain from
investments............ 0.35 0.34 (0.19) (0.16) 0.74 0.78
------- -------- ------ -------- ------ -------
Total from Investment
Activities............ 0.92 0.94 0.40 0.42 1.23 1.33
------- -------- ------ -------- ------ -------
Distributions
Net investment income... (0.57) (0.60) (0.58) (0.61) (0.48) (0.49)
In excess of net
investment income...... -- -- (0.02) (0.02) -- --
In excess of net
realized gains......... (0.09) (0.09) (0.10) (0.10) -- --
------- -------- ------ -------- ------ -------
Total Distributions.... (0.66) (0.69) (0.70) (0.73) (0.48) (0.49)
------- -------- ------ -------- ------ -------
NET ASSET VALUE, END OF
PERIOD.................. $10.71 $10.78 $10.45 $10.53 $10.75 $10.84
======= ======== ====== ======== ====== =======
Total Return (excludes
sales charges).......... 9.20% 9.30% 3.69% 3.85% 12.66%(b) 13.70%(b)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)............ $1,103 $132,583 $1,093 $161,742 $27 $54,827
Ratio of expenses to
average net assets...... 1.15% 0.90% 1.15% 0.88% 1.18%(c) 0.93%(c)
Ratio of net investment
income
to average net assets... 5.44% 5.67% 5.31% 5.56% 6.25%(c) 6.71%(c)
Ratio of expenses to
average net assets*..... 1.69% 0.94% 1.69% 0.92% 1.77%(c) 1.01%(c)
Ratio of net investment
income
to average net assets*.. 4.90% 5.63% 4.77% 5.52% 5.66%(c) 6.63%(c)
Portfolio Turnover (d)... 80.98% 80.98% 58.86% 58.86% 60.47% 60.47%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
61
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX-FREE SECURITIES FUND
--------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED OCTOBER 14, 1994 TO
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
--------------------------- --------------------- ------------------------
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
--------------------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.44 $10.46 $10.53 $10.56 $10.00 $10.00
------- -------- ------ -------- ------ --------
Investment Activities
Net investment income... 0.49 0.51 0.50 0.52 0.39 0.42
Net realized and
unrealized gain from
investments............ 0.46 0.46 0.07 0.07 0.50 0.51
------- -------- ------ -------- ------ --------
Total from Investment
Activities............ 0.95 0.97 0.57 0.59 0.89 0.93
------- -------- ------ -------- ------ --------
Distributions
Net investment income... (0.49) (0.51) (0.49) (0.52) (0.36) (0.37)
In excess of net
investment income...... -- -- (0.04) (0.04) -- --
Net realized gains...... (0.06) (0.06) (0.09) (0.09) -- --
In excess of net
realized gains......... -- -- (0.04) (0.04) -- --
------- -------- ------ -------- ------ --------
Total Distributions.... (0.55) (0.57) (0.66) (0.69) (0.36) (0.37)
------- -------- ------ -------- ------ --------
NET ASSET VALUE, END OF
PERIOD.................. $10.84 $10.86 $10.44 $10.46 $10.53 $10.56
======= ======== ====== ======== ====== ========
Total Return (excludes
sales charges).......... 9.35% 9.58% 5.54% 5.73% 9.06%(b) 9.54%(b)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)............ $2,545 $296,764 $569 $288,934 $563 $281,646
Ratio of expenses to
average net assets...... 1.12% 0.87% 1.14% 0.89% 1.15%(c) 0.89%(c)
Ratio of net investment
income
to average net assets... 4.60% 4.86% 4.66% 4.92% 4.93%(c) 5.16%(c)
Ratio of expenses to
average net assets*..... 1.66% 0.91% 1.68% 0.93% 1.74%(c) 0.98%(c)
Ratio of net investment
income
to average net assets*.. 4.06% 4.82% 4.12% 4.88% 4.34%(c) 5.07%(c)
Portfolio Turnover (d)... 11.07% 11.07% 24.78% 24.78% 49.17% 49.17%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
62
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
--------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED OCTOBER 14, 1994 TO
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
--------------------------- --------------------- ------------------------
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
--------------------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.05 $10.08 $10.11 $10.14 $10.00 $10.00
------- ------- ------ ------- ------ -------
Investment Activities
Net investment income... 0.37 0.39 0.37 0.40 0.30 0.32
Net realized and
unrealized gain from
investments............ 0.13 0.14 (0.03) (0.03) 0.08 0.11
------- ------- ------ ------- ------ -------
Total from Investment
Activities............ 0.50 0.53 0.34 0.37 0.38 0.43
------- ------- ------ ------- ------ -------
Distributions
Net investment income... (0.37) (0.39) (0.37) (0.40) (0.27) (0.29)
In excess of net
investment income...... -- -- (0.03) (0.03) -- --
Net realized gains...... (0.01) (0.01) -- -- -- --
------- ------- ------ ------- ------ -------
Total Distributions.... (0.38) (0.40) (0.40) (0.43) (0.27) (0.29)
------- ------- ------ ------- ------ -------
NET ASSET VALUE, END OF
PERIOD.................. $10.17 $10.21 $10.05 $10.08 $10.11 $10.14
======= ======= ====== ======= ====== =======
Total Return (excludes
sales charges).......... 5.06% 5.36% 3.41% 3.67% 3.90%(b) 4.36%(b)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)............ $724 $37,410 $451 $39,472 $308 $39,993
Ratio of expenses to
average net assets...... 1.09% 0.84% 1.08% 0.83% 1.05%(c) 0.85%(c)
Ratio of net investment
income
to average net assets... 3.57% 3.82% 3.64% 3.90% 3.82%(c) 4.03%(c)
Ratio of expenses to
average net assets*..... 1.64% 0.89% 1.63% 0.88% 1.64%(c) 0.94%(c)
Ratio of net investment
income
to average net assets*.. 3.02% 3.77% 3.09% 3.85% 3.23%(c) 3.94%(c)
Portfolio Turnover (d)... 29.46% 29.46% 54.70% 54.70% 89.98% 89.98%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
63
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NEW ASIA GROWTH FUND
-------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED FEBRUARY 15, 1995 TO
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995(A)
----------------------- ----------------------- -------------------------
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------- ------------- ------- ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $11.11 $11.14 $11.21 $11.22 $10.00 $10.00
------- ------- ------- ------- ------ ------
Investment Activities
Net investment income
(loss)................ 0.03 0.06 (0.02) (0.01) 0.02 0.04
Net realized and
unrealized gain from
investments........... 2.88 2.87 0.20 0.22 1.19 1.18
------- ------- ------- ------- ------ ------
Total from Investment
Activities........... 2.91 2.93 0.18 0.21 1.21 1.22
------- ------- ------- ------- ------ ------
Distributions
Net investment income.. (0.01) (0.01) -- -- -- --
In excess of net
investment income..... -- -- 0.02 0.03 -- --
Net realized gains..... (0.12) (0.12) (0.26) (0.26) -- --
------- ------- ------- ------- ------ ------
Total Distributions... (0.13) (0.13) (0.28) (0.29) -- --
------- ------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $13.89 $13.94 $11.11 $11.14 $11.21 $11.22
======= ======= ======= ======= ====== ======
Total Return (excludes
sales charges)......... 26.31% 26.50% 1.71% 1.99% 12.10%(b) 12.20%(b)
ANNUALIZED RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000)........... $3,459 $18,376 $1,990 $8,469 $330 $2,861
Ratio of expenses to
average net assets..... 1.98% 1.72% 2.22% 1.98% 2.24%(c) 1.97%(c)
Ratio of net investment
income (loss)
to average net assets.. 0.20% 0.46% (0.28%) (0.02%) 0.80%(c) 1.18%(c)
Ratio of expenses to
average net assets*.... 2.58% 1.82% 3.58% 2.84% 3.51%(c) 2.74%(c)
Ratio of net investment
income (loss)
to average net assets*. (0.40%) 0.36% (1.64%) (0.88%) (0.47%)(c) 0.42%(c)
Portfolio Turnover (d).. 134.89% 134.89% 86.53% 86.53% 55.62% 55.62%
Average Commission Rate
Paid (e)............... $0.0059 $0.0059 $0.0069 $0.0069 -- --
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements.
64
<PAGE>
Investment Adviser
Hawaiian Trust Company
111 S. King Street
Honolulu, Hawaii 96813
Administrator and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Legal Counsel
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Auditors
Ernst & Young LLP
One Columbus, Suite 2400
Columbus, Ohio 43215
Transfer Agent
Administrative Data Management Corp.
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
For more complete information on the Pacific Capital Funds, including fees,
expenses and sales charges, please call 1-800-258-9232 for a prospectus, which
you should read carefully before you invest or send money. The Pacific Capital
Funds are distributed by BISYS Fund Services.
9/97
