<PAGE>
[Logo Pacific Capital Funds]
Annual Report
to Shareholders
July 31, 1998
<PAGE>
TABLE OF CONTENTS
Letter to Shareholders
Page 1
Fund Performance Review
Page 4
Report of Independent Auditors
Page 12
Statements of Assets and Liabilities
Page 13
Statements of Operations
Page 15
Statements of Changes in Net Assets
Page 17
Schedules of Portfolio Investments
Page 20
Notes to Financial Statements
Page 39
Financial Highlights
Page 52
<PAGE>
PACIFIC CAPITAL FUNDS
ANNUAL REPORT
LETTER TO SHAREHOLDERS
Dear Shareholders:
The 12-month period ended July 31, 1998, was an eventful time for the U.S.
stock and bond markets. The Dow Jones Industrial Average reached several new
highs during the period and gained 8.04%.
Shares of large-company stocks continued to outperform small-company stocks
during the period. One major reason: The Asian financial crisis that began in
1997 created volatility in the U.S. stock market, causing investors to favor
shares of relatively large, stable firms in select industries. For example,
shares of large companies in the health-care and technology sectors performed
well.
The bond market rallied during the period, with the yield on the 30-year
Treasury bond declining from 6.30% in August 1997 to 5.72% by late July 1998.
Similarly, short-term bond yields fell from 5.25% at the beginning of the
period to 5.09% by the end. One reason: Investors anticipated that the Asian
crisis would slow the growth of the U.S. economy, helping to push rates down.
Economic growth remained strong during most of the period, and inflation
remained in check. The U.S. economy grew at a rapid pace of 5.5% in the first
quarter of 1998, as low interest rates lead to strong spending on new housing
construction. However, the combined effects of the Asian financial crisis and
the strike by General Motors' workers slowed domestic economic growth to 1.6%
in the second quarter of 1998.
STRONG PERFORMANCE FROM OUR FUNDS
During the period, the Pacific Capital Funds posted impressive gains. Both
the Pacific Capital Growth and Income Fund and the Pacific Capital Growth Stock
Fund (Class A) posted returns in the top 28th percentile of their peer groups
as measured by Lipper Analytical Services./1/ For the 12-month period ended
July 31, 1998, the Pacific Capital Growth and Income Fund (Class A Shares
without sales charge) performed in line with the S&P 500/2/, gaining 19.10%
versus 19.31% for the index.
The performance of the Pacific Capital stock funds reflected our approach of
investing in solid companies with above-average growth potential in the fastest
growing sectors of the economy. The Funds benefited from an overweighting,
compared to the S&P 500, in the health-care and technology sectors. We were
underweighted in the consumer staples, utilities and transportation sectors,
which did not offer attractive growth prospects.
Among our fixed income funds the Diversified Fixed Income Fund (Class A)
performed in the top 10th percentile and the U.S. Treasury Securities Fund
(Class A) ranked in the top third of its peer group, as tracked by Morningstar,
for the 1 year period ending 7/31/98./3/ Throughout the period, our bond funds'
durations were approximately 20% longer than the durations of their benchmarks,
due to our belief that the Asian crisis would lead to slower U.S. economic
growth, low inflation and lower interest rates. That approach benefited the
Funds' performances as rates did indeed decline during much of the period.
- --------
/1/ The Pacific Capital Growth and Income Fund ranked 67th out of 688 Growth
and Income Funds, and the Pacific Capital Growth Stock Fund ranked 250th out
of 907 Growth Stock Funds as reported by Lipper Analytical Services for the
one-year period ended 7/31/98. The Funds are not ranked for 5- and 10-year
periods due to commingled performance. The Lipper ranking is based on total
return and does not include a sales charge.
/2/ The Standard & Poor's 500 Index is an unmanaged index generally
representative of the U.S. stock market.
/3/ For their 12-month performance, as tracked by Morningstar, the Diversified
Fixed Income Fund ranked 28 out of 220 funds in the Corporate Bond--High
Quality Prospectus Objective Category, and the U.S. Government Securities Fund
ranked 22 out of 71 in the Government Treasury Prospectus Objective Category.
The Funds are not ranked for 5- and 10-year periods due to commingled
performance. The Morningstar ranking is based on total return and does not
include a sales charge.
1
<PAGE>
A CHALLENGING ENVIRONMENT AHEAD
We expect the overall environment for stocks and bonds to remain positive in
the months ahead. We believe the economy will likely grow at a rate of 2% to 3%
during the second half of 1998; inflation will remain low; and interest rates
may decline. Furthermore, the private sector represents more than 80% of the
U.S. Gross Domestic Product; since the private sector is more efficient than
the government sector, the economy can grow at a rapid pace without triggering
a rise in inflation. Demographic factors also are creating a positive
environment for stocks. The baby boomers continue to act more like savers and
investors than borrowers, and that group may continue to invest major inflows
of capital into the stock market as they prepare for their retirement.
That said, we are pessimistic about Asia. The problems in that region will
likely continue for some time, which could dampen U.S. economic growth and
inflation. Already we see an increase in low-priced imports from Asian nations
into this country, a situation that will prevent U.S. firms from raising their
prices and will put pressure on profit margins. As a result, some companies may
have a tough time posting strong earnings in the months ahead. We expect
corporate earnings to grow by a relatively modest 2% to 4% in 1998.
In that environment, the team of managers and analysts at the Pacific Capital
Funds are focusing on identifying companies that, in our view, can continue to
post strong revenues and earnings. We believe that shares of mid-sized and
large companies will continue to outperform small-company shares, because
modest Gross Domestic Product growth creates a tough environment for small-cap
stocks. However, some small-company stocks may perform well, since smaller
firms typically have less exposure to foreign markets.
A LONG-TERM APPROACH
Shareholders can expect increased volatility in the stock market in the near
term, due to continued concerns over the effects of the Asian crisis on the
U.S. economy and domestic firms' profits. What's more, stocks have posted an
unprecedented three consecutive calendar years of 20% or better returns, as
reported by the S&P 500.
Periods of stock market volatility such as the current one can be unsettling.
But such times also offer an opportunity to revisit the principles that guide
our investment strategy. One principle is consistency: We will maintain our
strategy regardless of temporary fluctuations in securities prices, and will
continue to invest in portfolios designed to meet the Pacific Capital Funds
stated long-term objectives.
In that environment, we remind shareholders that investing requires a long-
term approach. During periods of volatility, investors are sometimes tempted to
exit the stock market completely. However, over long periods, stocks
historically have outperformed other asset classes such as bonds and cash and
therefore may offer the best chance of meeting your long-term financial goals.
2
<PAGE>
We continually seek to bring to our shareholders new funds that offer
exposure to various segments of the financial markets. In the near future, we
hope to introduce three new funds to the Pacific Capital fund family, perhaps
including a small-company stock fund and an international equity fund.
Thank you for your continued confidence in the Pacific Capital family of
funds. As always, we will continue to seek investment opportunities that may
help you meet your long-term goals, while monitoring investment risk. If you
have any questions or would like a Fund prospectus, with information including
sales charge information, fees and expenses, please contact your registered
investment consultant, or call Pacific Capital Funds at (800) 258-9232. Please
read it carefully before you invest or send money.
Sincerely,
/s/ Walter J. Laskey /s/ William J. Barton
Walter J. Laskey William J. Barton
Executive Vice President, Bank of Hawaii Senior Vice President, Manager
Chairman, Pacific Capital Funds Chief Investment Officer
Investment Management Group
Pacific Century Trust
AS WITH ALL MUTUAL FUNDS, SHARES IN THE PACIFIC CAPITAL FUNDS
.ARE NOT FDIC INSURED
.HAVE NO BANK GUARANTEE
.MAY LOSE VALUE
3
<PAGE>
FUND PERFORMANCE REVIEW
PACIFIC CAPITAL GROWTH STOCK FUND+
PORTFOLIO TEAM MANAGER: ROGER KHLOPIN
Growth of a $10,000 Investment
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S&P 500 S&P/BARRA
Measurement period Stock Growth Class (Y)
(Fiscal year Covered) Index++ Index++ Class (A)* Class (B)** No Load
- --------------------- -------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Measurement PT -
FYE 1/31/88 $10000 $10000 $ 9600 $10000 $10000
FYE 1/31/89 $12013 $11760 $10907 $11800 $11435
FYE 1/31/90 $13742 $13848 $12601 $12000 $13233
FYE 1/31/91 $14893 $15619 $14395 $14800 $15161
FYE 1/31/92 $18274 $20021 $18044 $19500 $19079
FYE 1/31/93 $20195 $21565 $18811 $20500 $19936
FYE 1/31/94 $22790 $22641 $20499 $21500 $21772
FYE 1/31/95 $22920 $23427 $20459 $22000 $21762
FYE 1/31/96 $31757 $32783 $26391 $27500 $28117
FYE 1/31/97 $40132 $42208 $31586 $35000 $33760
FYE 1/31/98 $50932 $55232 $39387 $40000 $42193
</TABLE>
For the 12 months ended 7/31/98,
the Growth Stock Fund
outperformed both of its
benchmarks, delivering a return
of 19.58% (returns are for Class
A without sales charge), versus
19.31% for the S&P 500 Index and
17.19% for the Lipper Growth
Fund Index./1/
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
AS OF
07/31/98 1 YEAR 5 YEAR 10 YEAR
---------------------------------------
<S> <C> <C> <C>
Class A Shares* 14.78% 18.47% 15.85%
Class B Shares** 15.38% 19.30% 16.30%
Class Y Shares
(No Load) 19.96% 19.71% 16.63%
</TABLE>
*Reflects 4.0% Maximum Front-End
Sales Charge.
**Reflects 5.0% Maximum Contingent
Deferred Sales Charge.
During the period, we increased
the Fund's exposure to the
technology and
telecommunications services
sectors with money raised
through selective sales in
the financial services and consumer staples sectors. Within the technology
sector, we increased exposure to personal computer manufacturers as signs
emerged that the industry's inventory glut had been worked down to manageable
levels.
Looking forward, we believe that the best investment returns can be achieved
by remaining focused on leading companies participating in the highest growth
sectors. With that in mind, we will continue to overweight the Fund in the
technology, health-care and financial services sectors compared to the Funds
benchmarks.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
/1/The Lipper Growth Funds Index consists of funds that generally invest in
companies with long-term earnings expected to grow significantly faster than
the earnings of the stocks represented in the major unmanaged stock indices.
+The quoted performance of the Pacific Capital Growth Stock Fund ("Fund")
includes the performance of certain common trust fund ("Commingled") accounts
advised by Pacific Century Trust and managed the same as the Fund in all
material respects, for periods dating back to July 31, 1988, and prior to the
Fund's commencement of operations on November 1, 1993, for the A Class, and
on October 14, 1994, for the Y 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.
Class B Shares were not in existence prior to March 2, 1998. Performance
calculated for any period up to and through March 2, 1998, is based upon the
performance of the Class A Shares, which does not reflect the higher 12b-1
fees or the contingent deferred sales charge ("CDSC"). Had the CDSC and
higher 12b-1 fees been incorporated, total return figures may have been
adversely affected.
++The Fund has changed its benchmark from the S&P/BARRA Growth Index to the
S&P 500 Stock Index, to better reflect the Fund's investment latitude. The
Standard & Poor's 500 Stock Index is generally representative of the broad
domestic stock universe, and the S&P/BARRA Index is representative of a less
diversified index of large-growth stocks; they are both unmanaged and do not
reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees.
4
<PAGE>
PACIFIC CAPITAL GROWTH AND INCOME FUND+
PORTFOLIO TEAM MANAGER: CLYDE POWERS
Growth of a $10,000 Investment
<TABLE>
<CAPTION>
[PERFORMANCE GRAPH APPEARS HERE]
Measurement period S&P 500 Class Y
(Fiscal year Covered) Stock Index++ Class (A)* Class (B)** (No Load)
- --------------------- -------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
FYE 7/31/88 $10000 $ 9600 $10000 $10000
FYE 7/31/89 $13187 $12158.88 $12665.50 $12690.26
FYE 7/31/90 $14040 $13162.37 $13710.80 $13787.61
FYE 7/31/91 $15834 $14199.30 $14790.94 $14902.65
FYE 7/31/92 $17854 $15604.18 $16254.35 $16424.78
FYE 7/31/93 $19403 $16055.75 $16724.74 $16938.05
FYE 7/31/94 $20409 $16323.34 $17003.48 $17256.64
FYE 7/31/95 $25727 $19453.45 $20264.11 $20596.53
FYE 7/31/96 $29986 $21778.78 $22686.29 $23125.72
FYE 7/31/97 $45615 $32143.23 $33482.66 $34218.76
FYE 7/31/98 $54440 $38283.21 $39782.24 $40846.47
</TABLE>
For the 12 months ended 7/31/98,
the Growth and Income Fund
delivered a return of 19.10%
(returns are for Class A without
sales charge), versus its
benchmarks--the S&P 500 Index
and the Lipper Growth and Income
Fund Index/1/, which returned
19.31% and 17.19%, respectively.
The Fund's Class A performance
placed it in the upper 10th
percentile of Lipper Growth and
Income Funds/2/ for the 12-month
period ended 7/31/98.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
AS OF
07/31/98 1 YEAR 5 YEAR 10 YEAR
---------------------------------------
<S> <C> <C> <C>
Class A Shares* 14.33% 18.01% 14.37%
Class B Shares** 14.81% 18.82% 14.81%
Class Y Shares
(No Load) 19.37% 19.25% 15.11%
</TABLE>
*Reflects 4.0% Maximum Front-End Sales Charge.
**Reflects 5.0% Maximum Contingent Deferred Sales Charge.
During the last quarter, we maintained the Fund's emphasis on beneficiaries of
three major trends: first, the financial industry's ongoing consolidation and
asset-gathering capabilities; second, improved consumer confidence and
employment levels; and third, strong technology related capital spending.
We believe the Fund, with its low cash position and strong growth orientation,
is positioned to do well in the current environment of continued moderate
economic growth and projected low inflation.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
/1/The Lipper Growth and Income Funds Index combines a growth-of-earnings
orientation and an income requirement for level and/or rising dividends.
/2/The Pacific Capital Growth and Income Fund ranked 67th out of 688 Growth
and Income Funds for the 1-year period as reported by Lipper Analytical
Services. The Fund is not ranked for 5- and 10-year periods due to commingled
performance. Lipper ranking is based on total return and does not include a
sales charge.
+The quoted performance of the Pacific Capital Growth and Income Fund ("Fund")
includes the performance of certain common trust fund ("Commingled") accounts
advised by Pacific Century Trust and managed the same as the Fund in all
material respects, for periods dating back to July 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.
Class B Shares were not in existence prior to March 2, 1998. Performance
calculated for any period up to and through March 2, 1998, is based upon the
performance of the Class A Shares, which does not reflect the higher 12b-1
fees or the contingent deferred sales charge ("CDSC"). Had the CDSC and
higher 12b-1 fees been incorporated, total return figures 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.
5
<PAGE>
PACIFIC CAPITAL NEW ASIA GROWTH FUND+
PORTFOLIO TEAM MANAGER: TIM GREATON
Growth of a $10,000 Investment
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MSCI AC
Far East
Measurement period Free Class (Y)
(Fiscal year Covered) e-Japan++ Class (A)* Class (B)** No Load
- --------------------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C>
FYE 2/15/95 $10000 $ 9479 $10000 $10000
FYE 7/31/95 $10331 $10626 $11210 $11220
FYE 7/31/96 $10704 $10807 $11397 $11444
FYE 7/31/97 $12150 $13650 $14395 $14476
FYE 7/31/98 $ 4675 $ 6617 $ 7163 $ 7418
</TABLE>
For the 12-month period ended
7/31/98, the New Asia Growth
Stock Fund delivered a return of
- -48.84% (returns are for Class A
without sales charge), compared
to a return of -61.52% for its
benchmark, the MSCI AC Far East
Free ex-Japan Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------
AS OF SINCE INCEPTION
07/31/98 1 YEAR (2/15/95)
-----------------------------------------
<S> <C> <C>
Class A Shares* -51.53% -9.88%
Class B Shares** -50.75% -9.21%
Class Y Shares
(No Load) -48.76% -8.30%
</TABLE>
*Reflects 5.25% Maximum Front-End
Sales Charge.
**Reflects 5.0% Maximum Contingent
Deferred Sales Charge.
During the second quarter, we
watched as first quarter gains
were eroded, with January's lows
re-tested and in most cases
broken. We continue
to focus on sectors where we see stable cash flows and continued long-term
growth potential, such as investments in telecommunications, power and
infrastructure, which currently account for over 25% of the Fund's portfolio.
We are focusing on sectors that we believe benefited from the Asian crisis,
e.g., Asian electronic manufacturers, as many have U.S. dollar revenues and
Asian-currency based costs. Going forward, we will continue to expand the
Fund's exposure to Asian exports, particularly in the electronics sector,
which to date has continued to show robust sales and profit growth.
Update: After the date of this report, the Malaysian Government announced an
imposition of capital controls. Although shares held in Malaysian stocks can
be traded, shares purchased prior to September 1, 1998 need to be held until
September 1, 1999, before sales proceeds can be converted into another
currency. As of September 4, 1998, Malaysian shares constituted 1.14% of the
Fund's holdings. Due to the small percentage of Malaysian holdings, the
controls are unlikely to have any material negative impact.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
+International investing involves increased risk and volatility.
Class B Shares were not in existence prior to March 2, 1998. Performance
calculated for any period up to and through March 2, 1998, is based upon the
performance of the Class A Shares, which does not reflect the higher 12b-1
fees or the contingent deferred sales charge ("CDSC"). Had the CDSC and
higher 12b-1 fees been incorporated, total return figures may have been
adversely affected.
++The performance of the Pacific Capital New Asia Growth Fund is measured
against the Morgan Stanley Capital International (MSCI) AC Far East Free
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.
6
<PAGE>
PACIFIC CAPITAL DIVERSIFIED FIXED INCOME FUND+
PORTFOLIO TEAM MANAGER: JANET E. KATAKURA
Growth of a $10,000 Investment
<TABLE>
<CAPTION>
[PERFORMANCE GRAPH APPEARS HERE]
Merrill Lynch
Measurement period Corporate & Government Class Y
(Fiscal year Covered) Master Index++ Class (A)* Class (B)** (No Load)
- --------------------- ---------------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
FYE 7/31/88 $10000 $ 9600 $ 10000 $10000
FYE 7/31/89 $11540 $11116.62 $11579.80 $11622.51
FYE 7/31/90 $12251 $11570.04 $12052.11 $12119.21
FYE 7/31/91 $13507 $12680.13 $13208.47 $13327.82
FYE 7/31/92 $15612 $14681.44 $15293.16 $15463.57
FYE 7/31/93 $17336 $16604.57 $17296.41 $17533.11
FYE 7/31/94 $17341 $15979.16 $16644.94 $16903.97
FYE 7/31/95 $19122 $17604.41 $18337.88 $18813.16
FYE 7/31/96 $20130 $18246.08 $19006.22 $19529.19
FYE 7/31/97 $21137 $19926.06 $20756.52 $21347.43
FYE 7/31/98 $22145 $21441.87 $22286.86 $23043.51
</TABLE>
For the 12-month period ended
7/31/98, the Diversified Fixed
Income Fund delivered a return
of 7.61% (returns are for Class
A without sales charge),
compared to a total return of
8.15% for its benchmark, the
Merrill Lynch Corporate and
Government Master Index. As of
7/31/98, the Fund's Class A
performance placed it in the top
10th percentile in the
Morningstar Corporate Bond--High
Quality Prospectus Objective
Category/1/.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
AS OF
07/31/98 1 YEAR 5 YEAR 10 YEAR
---------------------------------------
<S> <C> <C> <C>
Class A Shares* 3.27% 4.40% 7.92%
Class B Shares** 3.37% 5.04% 8.34%
Class Y Shares
(No Load) 7.94% 5.62% 8.71%
</TABLE>
*Reflects 4.0% Maximum Front-End Sales Charge.
**Reflects 5.0% Maximum Contingent Deferred Sales Charge.
The international economic situation caused a "flight to quality," which
resulted in a widening spread for corporate debt instruments versus Treasury
securities. This widening was most pronounced in the lower quality (BBB and
lower) credits. We have concentrated the Funds holdings in the AA and AAA
credits, which have widened slightly but have outperformed lower quality
issues.
We continue to focus on high-quality names, and we will use the widening
spread opportunities to slightly increase our corporate and government agency
bond positions. Portfolio duration is 1.2 times the index duration,
commensurate with our forecast for lower rates.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
/1/The Fund was rated number 28 out of 270 for its 12-month performance, as
tracked in the Morningstar Corporate Bond--High Quality Prospectus Objective
Category. The Fund is not ranked for 5- and 10-year periods due to commingled
performance. The Morningstar ranking is based upon the total return and does
not include a sales charge.
+The quoted performance of the Pacific Capital Diversified Fixed Income Fund
("Fund") includes the performance of certain common trust fund ("Commingled")
accounts advised by Pacific Century Trust and managed the same as the Fund in
all material respects, for periods dating back to July 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.
Class B Shares were not in existence prior to March 2, 1998. Performance
calculated for any period up to and through March 2, 1998, is based upon the
performance of the Class A Shares, which does not reflect the higher 12b-1
fees or the contingent deferred sales charge ("CDSC"). Had the CDSC and
higher 12b-1 fees been incorporated, total return figures 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.
7
<PAGE>
PACIFIC CAPITAL U.S. TREASURY SECURITIES FUND+
PORTFOLIO TEAM MANAGER: DAVE TODANI
Growth of a $10,000 Investment
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Merrill
Lynch U.S.
Treasuries
Measurement period All Maturity Class (Y)
(Fiscal year Covered) Index++ Class (A)* No Load
- --------------------- ------------ ---------- ---------
<S> <C> <C> <C>
FYE 7/31/88 $10000 $ 9600 $ 10000
FYE 7/31/89 $11541 $10964.30 $11453.59
FYE 7/31/90 $12227 $11430.16 $11943.96
FYE 7/31/91 $13436 $12461.70 $13064.80
FYE 7/31/92 $15467 $14358.40 $15078.81
FYE 7/31/93 $17152 $16022.18 $16847.64
FYE 7/31/94 $17117 $15484.17 $16298.89
FYE 7/31/95 $18788 $17055.56 $18002.54
FYE 7/31/96 $19740 $17633.41 $18659.22
FYE 7/31/97 $21744 $19162.71 $20323.77
FYE 7/31/98 $23571 $20691.55 $21998.86
</TABLE>
For the 12-month period ended
7/31/98, the U.S. Treasury
Securities Fund outperformed its
bench- mark, delivering a return
of 7.98% (returns are for Class
A without sales charge), versus
8.40% for the Merrill Lynch U.S.
Treasuries All Maturity Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
AS OF
07/31/98 1 YEAR 5 YEAR 10 YEAR
---------------------------------------
<S> <C> <C> <C>
Class A Shares* 3.66% 4.39% 7.54%
Class Y Shares
(No Load) 8.24% 5.48% 8.20%
</TABLE>
*Reflects 4.0% Maximum
Front-End Sales Charge.
The robust growth in the U.S.
economy showed signs of slowing
during May and July as problems
in Asia began to impact the
export sectors of the
economy. We believe market participants' growing recognition that the world
economy could slow, and that earnings expectations for many companies were too
high, proved favorable for the bond markets.
In our view, falling commodity prices, the lack of demand pressures, and
austere fiscal policy around the world argue for a strong bond market in the
months ahead. With the deflationary pressures growing, we will use periods of
bond market weakness to extend duration to near the top of our strategic
policy range.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
+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 Pacific Century Trust and managed the same as the Fund in
all material respects, for periods dating back to July 31, 1988, and prior to
the Fund's commencement of operations on November 1, 1993, for the A Class,
and on October 14, 1994, for the Y 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 Merrill Lynch U.S. Treasuries All Maturity Index represents the
performance of both short-term and long-term U.S. 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.
8
<PAGE>
PACIFIC CAPITAL SHORT INTERMEDIATE U.S. TREASURY SECURITIES FUND
PORTFOLIO TEAM MANAGER: DAVE TODANI
Growth of a $10,000 Investment
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Merrill Lynch
Measurement period 3-5 Year U.S. Class (Y)
(Fiscal year Covered) Treasury Index+ Class (A)* No Load++
- --------------------- --------------- --------- ----------
<S> <C> <C> <C>
FYE 12/13/93 $10000 $ 9775 $10000
FYE 7/31/94 $ 9878 $ 9506 $ 9724
FYE 7/31/95 $10766 $10103 $10363
FYE 7/31/96 $11266 $10497 $10797
FYE 7/31/97 $12316 $11223 $11573
FYE 7/31/98 $13171 $11657 $12340
</TABLE>
For the 12-month period ended
7/31/98, the Short Intermediate
U.S. Treasury Securities Fund
delivered a return of 6.27%
(returns are for Class A without
sales charge), versus a total
return of 6.94% for its
benchmark, the Merrill Lynch 3-
to 5-Year U.S. Treasury Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------
AS OF SINCE INCEPTION
07/31/98 1 YEAR (12/13/93)
----------------------------------------
<S> <C> <C>
Class A Shares* 3.87% 3.87%
Class Y Shares
(No Load) 6.62% 4.66%
</TABLE>
*Reflects 2.25% Maximum Front-End
Sales Charge.
As stated in the U.S. Treasury
Securities Fund, the robust
growth in the U.S. economy
showed signs of
slowing during May and July as problems in Asia began to impact the export
sectors of the economy. We believe market participants' growing recognition
that the world economy could slow, and that earnings expectations for many
companies were too high, proved favorable for the bond markets.
We will attempt to push the Fund's duration toward its upper limit, based upon
our belief that it would be difficult for the Federal Reserve to maintain its
tightening bias due to worldwide economic weakness and the lack of
inflationary pressure. In fact, with the financial meltdown in Russia, the
prospects of devaluation in Latin America and a second round in Asia, it may
be more likely that the next Federal Reserve move will be toward easing
interest rates.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
+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.
++The performance for the Class Y Shares of the Pacific Capital Short
Intermediate U.S. Treasury Securities Fund prior to 10/14/94 is based on the
performance of the Class A Shares.
9
<PAGE>
PACIFIC CAPITAL TAX-FREE SECURITIES FUND/1/, /2/
PORTFOLIO TEAM MANAGER: YVONNE LIM
Growth of a $10,000 Investment
<TABLE>
<CAPTION>
[PERFORMANCE GRAPH APPEARS HERE]
Lehman
Brothers
Measurement period Municipal Class (Y)
(Fiscal year Covered) Bond Index+ Class (A)* Class (B)** No Load
- --------------------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
FYE 7/31/88 $10000 $ 9600 $ 10000 $ 10000
FYE 7/31/89 $11217 $10716.62 $11163.14 $11180.98
FYE 7/31/90 $11994 $11267.68 $11737.16 $11794.48
FYE 7/31/91 $13041 $12152.27 $12658.62 $12745.39
FYE 7/31/92 $14833 $13747.44 $14320.24 $14463.18
FYE 7/31/93 $16145 $14951.06 $15574.03 $15766.86
FYE 7/31/94 $16447 $14820.55 $15438.07 $15659.50
FYE 7/31/95 $17741 $15811.19 $16469.89 $16794.90
FYE 7/31/96 $18912 $16681.65 $17376.80 $17751.64
FYE 7/31/97 $20083 $18241.18 $19001.41 $19453.03
FYE 7/31/98 $21254 $19183.70 $19967.24 $20548.09
</TABLE>
For the 12-month period ended
7/31/98, the Tax-Free Securities
Fund delivered a return of 5.17%
(returns are for Class A without
sales charge), versus a total
return of 5.99% for its
benchmark, the Lehman Brothers
Municipal Bond Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
AS OF
07/31/98 1 YEAR 5 YEAR 10 YEAR
---------------------------------------
<S> <C> <C> <C>
Class A Shares* 0.98% 4.26% 6.73%
Class B Shares** 1.09% 4.93% 7.16%
Class Y Shares
(No Load) 5.63% 5.44% 7.47%
</TABLE>
*Reflects 4.0% Maximum Front-End Sales Charge.
**Reflects 5.0% Maximum Contingent Deferred Sales Charge.
During the past quarter, the
U.S. bond market benefited from
the "flight to quality"
generated by the deepening
crisis in Asia, Russia and Latin
America. The municipal market,
however, did not
fully participate in the rally, as it did not benefit from the "flight to
quality" that boosted the Treasury market. Unabated supply pressures, coupled
with lackluster cashflows in municipal bond funds, have contributed to the
weaker performance. Hawaii municipal bonds continue to trade cheap relative to
the AAA curve. The yen's weakness has imposed hardship on the tourism sector,
as it has curbed the number of Japanese visitors. We believe hopes of a
recovery are tied to Asia's ability to implement financial reform.
We are still positioned longer than the index duration, and are actively
looking for bonds with good call protection to replace refunded issues. The
portfolio has a heavy emphasis on quality, as extremely tight spreads do not
support the argument for credit sacrifice.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
/1/The Shareholder's income from the Fund may be subject to certain state and
local taxes and, depending on your tax status, the Federal Alternative
Minimum Tax.
/2/The quoted performance of the Pacific Capital Tax-Free Securities Fund
("Fund") includes the performance of certain common trust fund ("Commingled")
accounts advised by Pacific Century Trust and managed the same as the Fund in
all material respects, for periods dating back to July 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. Class B Shares were not in existence prior
to March 2, 1998. Performance calculated for any period up to and through
March 2, 1998, is based upon the performance of the Class A Shares, which
does not reflect the higher 12b-1 fees or the contingent deferred sales
charge ("CDSC"). Had the CDSC and higher 12b-1 fees been incorporated, total
return figures 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.
10
<PAGE>
PACIFIC CAPITAL TAX-FREE SHORT INTERMEDIATE SECURITIES FUND/1/, /2/
PORTFOLIO TEAM MANAGER: YVONNE LIM
Growth of a $10,000 Investment
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers
Measurement period 5-Year Municipal Class Y
(Fiscal year Covered) Bond Index++ Class (A)* (No Load)
- --------------------- ---------------- ---------- ---------
<S> <C> <C> <C>
FYE 7/31/88 $10000 $ 9775 $10000
FYE 7/31/89 $10802 $10223.52 $10493.82
FYE 7/31/90 $11555 $10856.72 $11165.98
FYE 7/31/91 $12547 $11569.07 $11934.15
FYE 7/31/92 $14121 $12492.48 $12908.09
FYE 7/31/93 $15054 $13020.15 $13497.94
FYE 7/31/94 $15475 $13231.21 $13744.85
FYE 7/31/95 $16626 $13704.07 $14313.63
FYE 7/31/96 $17386 $14170.76 $14838.83
FYE 7/31/97 $18646 $14886.92 $15633.43
FYE 7/31/98 $19538 $15387.82 $16232.54
</TABLE>
For the 12-month period ended
7/31/98, the Tax Free Short
Intermediate Securities Fund
delivered a return of 3.36%
(returns are for Class A without
sales charge), versus a total
return of 4.78% for its
benchmark, the Lehman Brothers
5-Year Municipal Bond Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
AS OF
07/31/98 1 YEAR 5 YEAR 10 YEAR
---------------------------------------
<S> <C> <C> <C>
Class A Shares* 1.08% 2.92% 4.40%
Class Y Shares
(No Load) 3.83% 3.76% 4.96%
</TABLE>
*Reflects 2.25% Maximum Front-End Sales Charge.
As stated in the Tax-Free
Securities Fund, the U.S. bond
market benefited from the
"flight to quality"
generated by the deepening crisis in Asia, Russia and Latin America. The
municipal market, however, did not fully participate in the rally as it did
not benefit from the "flight to quality" that boosted the Treasury market.
Unabated supply pressures, coupled with lackluster cashflows in municipal bond
funds, have contributed to the weaker performance. Hawaii municipal bonds
continue to trade cheap relative to the AAA curve. The yen's weakness has
imposed hardship on the tourism sector, as it has curbed the number of
Japanese visitors. We believe hopes of a recovery are tied to Asia's ability
to implement financial reform.
We continue to maintain the maximum average maturity allowable by prospectus
guidelines, because of our belief that the Federal Reserve will ease to
prevent a global recession. The portfolio remains committed to very high
quality, as credit and sector spreads are almost non-existent on the shorter
end of the yield curve.
- ------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND NET
ASSET VALUE (NAV) WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
/1/The Shareholder's income from the Fund may be subject to certain state and
local taxes and, depending on your tax status, the Federal Alternative
Minimum Tax.
/2/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 Pacific Century Trust and managed the
same as the Fund in all material respects, for periods dating back to July
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. 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.
11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Pacific Capital Funds
We have audited the accompanying statements of assets and liabilities,
including the schedules of portfolio investments, of Pacific Capital Funds
(comprised of Growth Stock Fund, Growth and Income Fund, New Asia Growth Fund,
Diversified Fixed Income Fund, U.S. Treasury Securities Fund, Short
Intermediate U.S. Treasury Securities Fund, Tax-Free Securities Fund, and Tax-
Free Short Intermediate Securities Fund) (the Funds) as of July 31, 1998, and
the related statements of operations for the year then ended, statements of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 and financial highlights. Our procedures included
confirmation of securities owned as of July 31, 1998, by correspondence with
the custodian and others. 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 portfolios constituting Pacific Capital Funds as of July 31,
1998, 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 their
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Columbus, Ohio
September 4, 1998
12
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<CAPTION>
GROWTH GROWTH AND NEW ASIA DIVERSIFIED
STOCK INCOME GROWTH FIXED INCOME
FUND FUND FUND FUND
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $278,592,228;
$135,532,907;
$19,167,904; and
$152,120,874,
respectively).......... $390,269,101 $172,765,472 $15,738,697 $157,868,950
Foreign currency (Cost
$134,543)............... -- -- 135,938 --
Interest and dividends
receivable.............. 163,099 160,276 63,299 2,926,002
Receivable for capital
shares issued........... 24,509 20,953 -- 10,870
Receivable from brokers
for investments sold.... 3,571,187 822,553 356,884 --
Prepaid expenses and
other assets............ 14,012 8,946 855 3,378
------------ ------------ ----------- ------------
Total Assets.......... 394,041,908 173,778,200 16,295,673 160,809,200
------------ ------------ ----------- ------------
LIABILITIES:
Dividends payable....... -- -- -- 72,039
Payable for capital
shares redeemed......... 2,108 973 -- 1,000
Payable to brokers for
investments purchased... 3,307,646 -- -- --
Unrealized losses on
forward foreign currency
contracts............... -- -- 10 --
Accrued expenses and
other payables:
Investment advisory
fees.................. 276,026 122,375 7,092 61,444
Administration fees.... 6,920 3,089 265 2,826
Distribution fees--A
Class................. 2,997 1,452 359 317
Distribution fees--B
Class................. 1,111 1,642 58 158
Fund accounting fees... 1,031 139 102 26
Custodian fees......... 1,727 1,954 31,282 2,195
Legal fees............. 25,010 10,345 486 10,249
Audit fees............. 22,894 8,204 2,479 8,070
Registration and filing
fees.................. 30,270 5,209 1,933 4,314
Other.................. 11,227 3,407 2,162 4,315
------------ ------------ ----------- ------------
Total Liabilities..... 3,688,967 158,789 46,228 166,953
------------ ------------ ----------- ------------
NET ASSETS:
Capital (no par value).. 214,516,016 115,871,150 26,859,667 155,959,801
Undistributed
(distributions in excess
of) net investment
income (loss)........... (2,939) 4,407 (99,662) --
Accumulated
undistributed net
realized gains (losses)
from investment
transactions............ 64,162,991 20,511,289 (7,081,708) (1,065,630)
Unrealized appreciation
(depreciation) from
investments............. 111,676,873 37,232,565 (3,429,207) 5,748,076
Unrealized appreciation
(depreciation) from
foreign currency
transactions............ -- -- 355 --
------------ ------------ ----------- ------------
Net Assets............ $390,352,941 $173,619,411 $16,249,445 $160,642,247
============ ============ =========== ============
Net Assets
A Class................ $ 13,777,233 $ 6,730,172 $ 1,614,261 $ 1,496,751
B Class................ 1,458,509 2,183,667 66,380 236,314
Y Class................ 375,117,199 164,705,572 14,568,804 158,909,182
------------ ------------ ----------- ------------
Total................. $390,352,941 $173,619,411 $16,249,445 $160,642,247
============ ============ =========== ============
Outstanding units of
beneficial interest
(shares)
A Class................ 775,975 359,541 254,254 137,069
B Class................ 82,329 116,921 10,473 21,654
Y Class................ 21,066,498 8,785,704 2,286,069 14,448,098
------------ ------------ ----------- ------------
Total................. 21,924,802 9,262,166 2,550,796 14,606,821
============ ============ =========== ============
Net Asset Value
A Class--redemption
price per share....... $ 17.75 $ 18.72 $ 6.35 $ 10.92
============ ============ =========== ============
A Class--maximum sales
charge................ 4.00% 4.00% 5.25% 4.00%
------------ ------------ ----------- ------------
A Class--maximum
offering price per
share (100%/(100%-
maximum sales charge)
of net asset value
adjusted to nearest
cent)................. $ 18.49 $ 19.50 $ 6.70 $ 11.38
============ ============ =========== ============
B Class--offering price
per share*............ $ 17.72 $ 18.68 $ 6.34 $ 10.91
============ ============ =========== ============
Y Class--offering and
redemption price per
share................. $ 17.81 $ 18.75 $ 6.37 $ 11.00
============ ============ =========== ============
</TABLE>
- --------
* Redemption price per share varies based on length of time shares are held
(Note 4).
See notes to financial statements.
13
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<CAPTION>
SHORT INTERMEDIATE TAX-FREE
U.S. TREASURY U.S. TREASURY TAX-FREE SHORT INTERMEDIATE
SECURITIES SECURITIES SECURITIES SECURITIES
FUND FUND FUND FUND
------------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $20,963,201;
$24,676,544;
$382,668,660; and
$51,722,164,
respectively).......... $22,749,809 $25,172,367 $413,675,058 $52,161,604
Interest and dividends
receivable.............. 537,011 350,279 4,659,424 551,127
Receivable for capital
shares issued........... 3,839 -- -- --
Receivable from brokers
for investments sold.... -- -- 1,960,413 --
Prepaid expenses and
other assets............ 649 844 6,625 1,454
----------- ----------- ------------ -----------
Total Assets.......... 23,291,308 25,523,490 420,301,520 52,714,185
----------- ----------- ------------ -----------
LIABILITIES:
Dividends payable....... 10,713 10,721 163,032 15,958
Accrued expenses and
other payables:
Investment advisory
fees.................. 6,915 6,870 160,332 17,825
Administration fees.... 407 424 7,359 865
Distribution fees--A
Class................. 230 139 554 102
Distribution fees--B
Class................. -- -- 226 --
Fund accounting fees... -- -- 576 --
Custodian fees......... 828 911 4,901 2,470
Legal fees............. 1,562 2,345 27,895 4,434
Audit fees............. 2,155 2,137 23,796 3,204
Registration and filing
fees.................. -- 1,798 29,701 4,471
Other.................. 269 1,021 13,362 2,140
----------- ----------- ------------ -----------
Total Liabilities..... 23,079 26,366 431,734 51,469
----------- ----------- ------------ -----------
NET ASSETS:
Capital (no par value).. 25,455,448 24,988,144 386,491,279 52,023,228
Undistributed
(distributions in
excess of) net
investment income
(loss)................. (16,315) 40 -- --
Accumulated
undistributed net
realized gains (losses)
from
investment
transactions........... (3,957,512) 13,117 2,372,109 200,048
Unrealized appreciation
(depreciation) from
investments............. 1,786,608 495,823 31,006,398 439,440
----------- ----------- ------------ -----------
Net Assets............ $23,268,229 $25,497,124 $419,869,786 $52,662,716
=========== =========== ============ ===========
Net Assets
A Class................ $ 1,090,358 $ 653,874 $ 3,054,248 $ 478,094
B Class................ -- -- 271,847 --
Y Class................ 22,177,871 24,843,250 416,543,691 52,184,622
----------- ----------- ------------ -----------
Total................. $23,268,229 $25,497,124 $419,869,786 $52,662,716
=========== =========== ============ ===========
Outstanding units of
beneficial interest
(shares)
A Class................ 113,832 67,852 281,810 47,363
B Class................ -- -- 25,091 --
Y Class................ 2,313,582 2,572,899 38,297,933 5,142,262
----------- ----------- ------------ -----------
Total................. 2,427,414 2,640,751 38,604,834 5,189,625
=========== =========== ============ ===========
Net Asset Value
A Class--redemption
price per share....... $ 9.58 $ 9.64 $ 10.84 $ 10.09
=========== =========== ============ ===========
A Class--maximum sales
charge................ 4.00% 2.25% 4.00% 2.25%
----------- ----------- ------------ -----------
A Class--maximum
offering price per
share
(100%/(100%-maximum
sales charge) of net
asset
value adjusted to
nearest cent)......... $ 9.98 $ 9.86 $ 11.29 $ 10.32
=========== =========== ============ ===========
Net Asset Value
B Class--offering price
per share*............ $ -- $ -- $ 10.83 $ --
=========== =========== ============ ===========
Y Class--offering and
redemption price per
share................. $ 9.59 $ 9.66 $ 10.88 $ 10.15
=========== =========== ============ ===========
</TABLE>
- --------
* Redemption price per share varies based on length of time shares are held
(Note 4).
See notes to financial statements.
14
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
<TABLE>
<CAPTION>
GROWTH AND NEW ASIA DIVERSIFIED
GROWTH STOCK INCOME GROWTH FIXED INCOME
FUND FUND FUND FUND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $ -- $ 5,787 $ -- $ 9,444,163
Dividend income......... 3,051,276 2,115,440 617,808 100,433
Withholding tax......... (3,988) (275) (23,732) --
------------ ------------ ------------ -----------
Total Income.......... 3,047,288 2,120,952 594,076 9,544,596
------------ ------------ ------------ -----------
EXPENSES:
Investment advisory
fees.................... 2,468,860 1,153,390 164,957 897,228
Administration fees..... 618,214 288,600 36,657 299,076
Distribution fees--A
Class................... 82,920 37,528 18,021 10,345
Distribution fees--B
Class................... 3,029 3,871 215 380
Custodian fees.......... 25,992 16,369 92,514 12,315
Accounting fees......... 95,895 46,806 15,396 50,336
Legal fees.............. 45,031 20,272 22,802 17,752
Audit fees.............. 27,305 14,754 2,896 8,680
Trustees' fees and
expenses................ 22,034 9,858 1,313 8,886
Transfer agent fees..... 35,498 33,972 26,370 32,655
Registration and filing
fees.................... 33,126 6,239 2,934 5,340
Printing costs.......... 42,656 19,582 24,259 12,586
Other................... 7,601 4,588 414 5,279
------------ ------------ ------------ -----------
Total expenses before
voluntary fee
reductions............ 3,508,161 1,655,829 408,748 1,360,858
Expenses voluntarily
reduced............... (179,745) (82,959) (48,676) (202,819)
------------ ------------ ------------ -----------
Net Expenses.......... 3,328,416 1,572,870 360,072 1,158,039
------------ ------------ ------------ -----------
Net Investment Income
(Loss).................. (281,128) 548,082 234,004 8,386,557
------------ ------------ ------------ -----------
REALIZED/UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains
(losses) from investment
transactions............ 80,853,461 25,362,538 (7,081,708) 1,495,447
Net realized gains
(losses) from foreign
currency transactions... -- -- (234,378) --
Net change in unrealized
appreciation
(depreciation) from
investments............. (13,215,903) (4,884) (5,104,722) 1,593,062
Net change in unrealized
appreciation
(depreciation) from
foreign currency
transactions........... -- -- 13,266 --
------------ ------------ ------------ -----------
Net realized/unrealized
gains (losses) from
investments............. 67,637,558 25,357,654 (12,407,542) 3,088,509
------------ ------------ ------------ -----------
Change in net assets
resulting from
operations.............. $ 67,356,430 $ 25,905,736 $(12,173,538) $11,475,066
============ ============ ============ ===========
</TABLE>
See notes to financial statements.
15
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
<TABLE>
<CAPTION>
SHORT INTERMEDIATE TAX-FREE
U.S. TREASURY U.S. TREASURY TAX-FREE SHORT INTERMEDIATE
SECURITIES SECURITIES SECURITIES SECURITIES
FUND FUND FUND FUND
------------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $1,484,270 $1,782,413 $20,499,344 $2,119,509
Dividend income......... 11,517 14,426 59,233 31,603
---------- ---------- ----------- ----------
Total Income.......... 1,495,787 1,796,839 20,558,577 2,151,112
---------- ---------- ----------- ----------
EXPENSES:
Investment advisory
fees.................... 137,647 149,837 2,237,411 238,731
Administration fees..... 45,882 59,935 745,804 95,492
Distribution fees--A
Class................... 7,955 4,560 18,328 4,318
Distribution fees--B
Class................... -- -- 579 --
Custodian fees.......... 4,272 4,994 31,413 12,600
Accounting fees......... 8,904 11,124 140,761 19,894
Legal fees.............. 1,761 2,307 52,342 2,529
Audit fees.............. 2,806 2,561 28,273 3,292
Trustees' fees and
expenses................ 1,287 2,076 25,247 3,303
Transfer agent fees..... 26,023 26,604 37,329 23,529
Registration and filing
fees.................... 357 2,045 31,470 4,671
Printing costs.......... 2,033 3,774 40,929 9,172
Other................... 595 1,287 12,875 3,110
---------- ---------- ----------- ----------
Total expenses before
voluntary fee
reductions............ 239,522 271,104 3,402,761 420,641
Expenses voluntarily
reduced............... (47,633) (77,936) (527,043) (58,373)
---------- ---------- ----------- ----------
Net Expenses.......... 191,889 193,168 2,875,718 362,268
---------- ---------- ----------- ----------
Net Investment Income
(Loss).................. 1,303,898 1,603,671 17,682,859 1,788,844
---------- ---------- ----------- ----------
REALIZED/UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains
(losses) from investment
transactions............ 144,578 164,505 2,987,336 244,498
Net change in unrealized
appreciation
(depreciation) from
investments............ 311,969 82,834 (459,271) (310,212)
---------- ---------- ----------- ----------
Net realized/unrealized
gains (losses) from
investments............. 456,547 247,339 2,528,065 (65,714)
---------- ---------- ----------- ----------
Change in net assets
resulting from
operations.............. $1,760,445 $1,851,010 $20,210,924 $1,723,130
========== ========== =========== ==========
</TABLE>
See notes to financial statements.
16
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH STOCK FUND GROWTH AND INCOME FUND NEW ASIA GROWTH 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, 1998 JULY 31, 1997 JULY 31, 1998 JULY 31, 1997 JULY 31, 1998 JULY 31, 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss)................. $ (281,128) $ 820,755 $ 548,082 $ 754,342 $ 234,004 $ 69,565
Net realized gains
(losses) from
investment
transactions.......... 80,853,461 18,904,660 25,362,538 7,101,576 (7,081,708) 1,836,689
Net realized gains
(losses) on foreign
currency transactions. -- -- -- -- (234,378) (80,544)
Net change in
unrealized
appreciation
(depreciation) from
investments........... (13,215,903) 54,151,452 (4,884) 31,411,841 (5,104,722) 2,113,745
Net change in
unrealized
appreciation
(depreciation) from
foreign currency
transactions.......... -- -- -- -- 13,266 (13,022)
------------ ------------ ------------ ------------ ----------- -----------
Change in net assets
resulting from
operations............. 67,356,430 73,876,867 25,905,736 39,267,759 (12,173,538) 3,926,433
------------ ------------ ------------ ------------ ----------- -----------
DISTRIBUTIONS TO A CLASS
SHAREHOLDERS:
From net investment
income................. -- (13,022) (11,210) (9,645) -- (770)
In excess of net
investment income...... (3,666) (3,861) -- (2,559) -- (714)
From net realized
gains.................. (1,563,676) (24) (376,436) (74,382) (256,220) (24,563)
DISTRIBUTIONS TO B CLASS
SHAREHOLDERS:
From net investment
income................. -- -- (16) -- -- --
DISTRIBUTIONS TO Y CLASS
SHAREHOLDERS:
From net investment
income................. -- (857,427) (577,057) (719,837) (34,752) (15,241)
In excess of net
investment income...... (207,716) (17,466) -- -- -- --
From net realized
gains.................. (29,415,345) (777) (10,964,762) (3,890,622) (1,580,467) (130,393)
------------ ------------ ------------ ------------ ----------- -----------
Change in net assets
from shareholder
distributions.......... (31,190,403) (892,577) (11,929,481) (4,697,045) (1,871,439) (171,681)
------------ ------------ ------------ ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 61,390,872 39,726,376 61,397,118 45,972,983 10,910,662 11,076,770
Proceeds from shares
issued in conjunction
with common trust
fund conversion....... 120,286,123 -- -- -- -- --
Dividends reinvested... 30,004,614 92,112 11,214,838 2,407,024 1,781,940 103,064
Cost of shares
redeemed............... (65,643,901) (82,478,968) (40,516,157) (30,990,437) (4,232,779) (3,558,390)
------------ ------------ ------------ ------------ ----------- -----------
Change in net assets
from share
transactions........... 146,037,708 (42,660,480) 32,095,799 17,389,570 8,459,823 7,621,444
------------ ------------ ------------ ------------ ----------- -----------
Change in net assets.... 182,203,735 30,323,810 46,072,054 51,960,284 (5,585,154) 11,376,196
NET ASSETS:
Beginning of period.... 208,149,206 177,825,396 127,547,357 75,587,073 21,834,599 10,458,403
------------ ------------ ------------ ------------ ----------- -----------
End of period.......... $390,352,941 $208,149,206 $173,619,411 $127,547,357 $16,249,445 $21,834,599
============ ============ ============ ============ =========== ===========
Undistributed
(distributions in
excess of) net
investment income
(loss)................ $ (2,939) $ (14,687) $ 4,407 $ 44,608 $ (99,662) $ (64,536)
------------ ------------ ------------ ------------ ----------- -----------
SHARES TRANSACTIONS:
Issued................. 3,654,051 2,786,983 3,473,316 3,234,048 1,257,574 902,626
Shares issued in
conjunction with
common trust
fund conversion....... 8,205,056 -- -- -- -- --
Reinvested............. 1,991,083 6,775 692,899 178,441 202,979 8,369
Redeemed............... (3,860,118) (5,810,150) (2,291,282) (2,162,896) (476,926) (283,285)
------------ ------------ ------------ ------------ ----------- -----------
Change in shares........ 9,990,072 (3,016,392) 1,874,933 1,249,593 983,627 627,710
============ ============ ============ ============ =========== ===========
</TABLE>
See notes to financial statements.
17
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
DIVERSIFIED FIXED U.S. TREASURY U.S. TREASURY
INCOME FUND SECURITIES FUND 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, 1998 JULY 31, 1997 JULY 31, 1998 JULY 31, 1997 JULY 31, 1998 JULY 31, 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss)................. $ 8,386,557 $ 8,212,087 $ 1,303,898 $ 1,418,321 $ 1,603,671 $ 1,307,440
Net realized gains
(losses) from
investment
transactions.......... 1,495,447 (2,549,993) 144,578 (192,623) 164,505 (52,500)
Net change in
unrealized
appreciation
(depreciation) from
investments........... 1,593,062 7,498,463 311,969 873,271 82,834 504,853
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets
resulting from
operations............. 11,475,066 13,160,557 1,760,445 2,098,969 1,851,010 1,759,793
------------ ------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO A CLASS
SHAREHOLDERS:
From net investment
income................. (73,933) (61,085) (57,773) (52,996) (31,037) (38,945)
In excess of net
investment income...... -- -- -- (7,810) -- --
From net realized
gains.................. -- (10,239) -- -- -- --
DISTRIBUTIONS TO B CLASS
SHAREHOLDERS:
From net investment
income................. (1,753) -- -- -- -- --
DISTRIBUTIONS TO Y CLASS
SHAREHOLDERS:
From net investment
income................. (8,310,871) (8,151,002) (1,246,125) (1,365,325) (1,572,634) (1,268,495)
In excess of net
investment income...... -- -- -- (32,190) -- --
From net realized
gains.................. -- (1,342,055) -- -- -- --
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets
from shareholder
distributions.......... (8,386,557) (9,564,381) (1,303,898) (1,458,321) (1,603,671) (1,307,440)
------------ ------------ ----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 49,530,803 45,518,283 543,006 1,643,143 7,264,845 12,120,256
Proceeds from shares
issued in conjunction
with common trust
fund conversion....... 8,914,400 -- -- -- 9,573,342 --
Dividends reinvested... 133,327 669,521 1,250,973 1,415,273 62,108 92,421
Cost of shares
redeemed............... (34,710,871) (78,932,125) (3,901,485) (3,007,324) (18,990,957) (10,025,991)
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets
from share
transactions........... 23,867,659 (32,744,321) (2,107,506) 51,092 (2,090,662) 2,186,686
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets.... 26,956,168 (29,148,145) (1,650,959) 691,740 (1,843,323) 2,639,039
NET ASSETS:
Beginning of period.... 133,686,079 162,834,224 24,919,188 24,227,448 27,340,447 24,701,408
------------ ------------ ----------- ----------- ----------- -----------
End of period.......... $160,642,247 $133,686,079 $23,268,229 $24,919,188 $25,497,124 $27,340,447
============ ============ =========== =========== =========== ===========
Undistributed
(distributions in
excess of) net
investment income
(loss)................ -- -- $ (16,315) $ (35,524) $ 40 $ 40
------------ ------------ ----------- ----------- ----------- -----------
SHARE TRANSACTIONS:
Issued................. 4,558,111 4,316,676 56,958 178,092 755,987 1,287,668
Shares issued in
conjunction with
common trust
fund conversion....... 817,085 -- -- -- 995,150 --
Reinvested............. 12,291 62,706 132,081 153,769 6,482 9,773
Redeemed............... (3,179,936) (7,448,705) (418,790) (325,626) (1,975,578) (1,060,313)
------------ ------------ ----------- ----------- ----------- -----------
Change in shares........ 2,207,551 (3,069,323) (229,751) 6,235 (217,959) 237,128
============ ============ =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
18
<PAGE>
PACIFIC CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE SHORT INTERMEDIATE
TAX-FREE SECURITIES FUND SECURITIES FUND
---------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
JULY 31, 1998 JULY 31, 1997 JULY 31, 1998 JULY 31, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss)................. $ 17,682,859 $ 14,235,541 $ 1,788,844 $ 1,491,501
Net realized gains
(losses) from
investment
transactions.......... 2,987,336 1,060,114 244,498 240,632
Net change in
unrealized
appreciation
(depreciation) from
investments........... (459,271) 11,477,661 (310,212) 306,192
------------ ------------ ----------- -----------
Change in net assets
resulting from
operations.............. 20,210,924 26,773,316 1,723,130 2,038,325
------------ ------------ ----------- -----------
DISTRIBUTIONS TO A CLASS
SHAREHOLDERS:
From net investment
income................. (109,666) (58,439) (20,127) (28,544)
From net realized
gains.................. (12,546) (3,793) (3,439) (986)
DISTRIBUTIONS TO B CLASS
SHAREHOLDERS:
From net investment
income................. (2,202) -- -- --
DISTRIBUTIONS TO Y CLASS
SHAREHOLDERS:
From net investment
income................. (17,570,991) (14,177,102) (1,768,717) (1,462,957)
From net realized
gains.................. (1,612,136) (1,632,634) (214,455) (49,244)
------------ ------------ ----------- -----------
Change in net assets
from shareholder
distributions........... (19,307,541) (15,871,968) (2,006,738) (1,541,731)
------------ ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 47,935,386 33,235,182 11,343,317 6,196,477
Proceeds from shares
issued in conjunction
with common trust
fund conversion....... 104,600,137 -- 12,804,860 --
Dividends reinvested... 1,683,385 1,633,767 233,743 67,282
Cost of shares
redeemed............... (34,561,801) (35,963,665) (9,569,958) (8,549,132)
------------ ------------ ----------- -----------
Change in net assets
from share transactions. 119,657,107 (1,094,716) 14,811,962 (2,285,373)
------------ ------------ ----------- -----------
Change in net assets.... 120,560,490 9,806,632 14,528,354 (1,788,779)
NET ASSETS:
Beginning of period.... 299,309,296 289,502,664 38,134,362 39,923,141
------------ ------------ ----------- -----------
End of period.......... $419,869,786 $299,309,296 $52,662,716 $38,134,362
============ ============ =========== ===========
SHARE TRANSACTIONS:
Issued................. 4,423,856 3,152,571 1,113,577 613,972
Shares issued in
conjunction with
common trust
fund conversion....... 9,658,369 -- 1,259,082 --
Reinvested............. 156,129 153,874 23,054 6,643
Redeemed............... (3,191,771) (3,412,859) (941,882) (845,154)
------------ ------------ ----------- -----------
Change in shares........ 11,046,583 (106,414) 1,453,831 (224,539)
============ ============ =========== ===========
</TABLE>
See notes to financial statements.
19
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH STOCK FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (97.61%)
Beverages (3.23%)
70,323 Coca-Cola Co.......................................... $ 5,674,187
178,374 PepsiCo, Inc.......................................... 6,923,141
------------
12,597,328
------------
Chemicals (2.31%)
71,083 Praxair, Inc.......................................... 3,500,837
91,468 Sherwin Williams Co................................... 2,915,543
90,039 Sigma-Aldrich......................................... 2,599,876
------------
9,016,256
------------
Computers & Peripherals (6.84%)
133,451 Cisco Systems (b)..................................... 12,777,933
225,665 Compaq Computer Corp.................................. 7,418,737
18,070 Dell Computer Corp. (b)............................... 1,962,289
95,698 Sun Microsystems, Inc. (b)............................ 4,521,731
------------
26,680,690
------------
Electrical Equipment (4.98%)
81,160 Emerson Electric Co................................... 4,823,948
128,391 General Electric Co................................... 11,466,920
79,994 SCI Systems, Inc. (b)................................. 3,149,764
------------
19,440,632
------------
Environmental Services (1.29%)
91,525 Waste Management Inc. (b)............................. 5,045,316
------------
Financial Services (2.89%)
153,760 Firstplus Financial Group (b)......................... 5,996,640
38,660 Franklin Resources, Inc............................... 1,684,126
107,845 MBNA Corp............................................. 3,612,808
------------
11,293,574
------------
Food Processing & Packaging (3.75%)
168,421 Sara Lee Corp......................................... 8,442,103
120,545 Suiza Foods Corp. (b)................................. 6,177,931
------------
14,620,034
------------
Funeral Services (2.17%)
223,583 Service Corp. International........................... 8,468,206
------------
Health Care (2.09%)
48,825 Guidant Corp.......................................... 3,628,308
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Health Care, continued
192,046 Health Management Associates,
Inc. (b)............................................. $ 4,513,081
------------
8,141,389
------------
Household Products (2.47%)
187,313 Newell Co............................................. 9,646,620
------------
Insurance (8.17%)
397,791 Conseco, Inc.......................................... 16,707,216
226,831 Travelers, Inc........................................ 15,197,677
------------
31,904,893
------------
Medical Supplies (1.12%)
110,405 Arterial Vascular Engineering (b)..................... 4,360,998
------------
Miscellaneous Manufacturer (0.90%)
62,798 Illinois Tool Works, Inc.............................. 3,520,613
------------
Oil & Gas Exploration, Production, & Services (0.78%)
115,590 Ultramar Diamond Shamrock Corp........................ 3,027,013
------------
Pharmaceuticals (14.28%)
95,386 Abbott Laboratories................................... 3,964,481
76,360 Bristol Myers Squibb Co............................... 8,700,267
121,072 Lilly (Eli) & Co...................................... 8,142,092
155,768 Pfizer, Inc........................................... 17,134,479
70,261 Pharmacia & Upjohn.................................... 3,328,615
61,330 Schering-Plough Corp.................................. 5,933,678
113,370 Warner Lambert Co..................................... 8,566,521
------------
55,770,133
------------
Retail (8.04%)
208,261 Dollar General Corp................................... 8,538,701
61,690 Gap, Inc.............................................. 3,678,266
141,926 Kohl's Corp. (b)...................................... 6,954,374
88,635 Ross Stores, Inc...................................... 3,728,210
134,630 Wal-Mart Stores, Inc.................................. 8,498,519
------------
31,398,070
------------
Savings & Loans (1.57%)
153,337 Washington Mutual..................................... 6,123,896
------------
Semiconductors (1.69%)
78,210 Intel Corp............................................ 6,603,857
------------
</TABLE>
Continued
20
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH STOCK FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Software & Computer Services (17.40%)
151,384 America Online, Inc. (b).............................. $ 17,711,928
121,320 BMC Software, Inc. (b)................................ 5,982,593
98,146 Computer Associates International, Inc................ 3,257,220
120,081 Compuware Corp. (b)................................... 6,461,859
243,320 HBO & Co.............................................. 7,170,336
105,778 Microsoft Corp. (b)................................... 11,648,802
91,552 Networks Associates (b)............................... 4,365,910
84,480 Peoplesoft, Inc. (b).................................. 3,183,840
206,765 Sterling Commerce, Inc. (b)........................... 8,180,140
------------
67,962,628
------------
Telecommunications-Services and Equipment (5.87%)
55,465 Ciena Corp. (b)....................................... 4,107,877
98,410 Lucent Technologies, Inc.............................. 9,096,773
63,200 Nokia Corp.--ADR...................................... 5,506,300
71,410 Northern Telecom Ltd.................................. 4,195,338
------------
22,906,288
------------
Transportation--Air (1.69%)
200,113 Southwest Airlines Co................................. 6,591,222
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Utilities--Telecommunications (4.08%)
130,334 Century Telephone Enterprises, Inc................... $ 6,484,117
178,460 WorldCom, Inc. (b)................................... 9,436,072
------------
15,920,189
------------
Total Common Stocks (Cost--$269,358,494) 381,039,845
------------
DEPOSITORY RECEIPTS (0.52%)
18,000 S & P 500 Depository Receipt......................... 2,013,750
------------
Total Depository Receipts (Cost--$2,018,228) 2,013,750
------------
INVESTMENT COMPANY (1.85%)
7,215,506 The One Group Prime Money Market Fund (Fiduciary
Shares)............................................. 7,215,506
------------
Total Investment Company (Cost--$7,215,506) 7,215,506
------------
Total Investments (Cost--$278,592,228)
(a)--99.98% 390,269,101
------------
Other assets in excess of liabilities--0.02% 83,840
------------
Total Net Assets--100.0% $390,352,941
============
</TABLE>
- --------
(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
$16,155. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized
appreciation........... $120,852,828
Unrealized
depreciation........... (9,192,110)
------------
Net unrealized
appreciation........... $111,660,718
============
</TABLE>
(b)Non income producing security
ADR--American Depository Receipt
See notes to financial statements.
21
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH AND INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (97.24%)
Aerospace/Defense (0.47%)
20,000 B. F. Goodrich Co..................................... $ 811,250
------------
Automotive (0.94%)
28,800 Ford Motor Co......................................... 1,639,800
------------
Banks (4.70%)
27,375 BankAmerica Corp...................................... 2,456,906
20,000 Chase Manhattan Corp.................................. 1,512,500
40,000 North Fork Bancorp.................................... 975,000
69,925 U.S. Bancorp.......................................... 3,216,550
------------
8,160,956
------------
Beverages (1.72%)
76,975 PepsiCo, Inc.......................................... 2,987,592
------------
Business Equipment & Services (1.98%)
35,000 Miller (Herman), Inc.................................. 971,250
19,687 Paychex, Inc. ........................................ 796,093
33,000 Pitney Bowes, Inc..................................... 1,666,500
------------
3,433,843
------------
Chemicals (1.91%)
60,750 Air Products & Chemical, Inc.......................... 2,126,250
37,550 Sherwin Williams Co................................... 1,196,906
------------
3,323,156
------------
Computers & Peripherals (7.09%)
61,700 Cisco Systems (b)..................................... 5,907,775
61,550 Compaq Computer Corp. ................................ 2,023,456
45,800 EMC Corp. (b)......................................... 2,244,200
45,075 Sun Microsystems, Inc. (b)............................ 2,129,794
------------
12,305,225
------------
Electrical Equipment (4.17%)
42,750 General Electric Co................................... 3,818,110
38,950 SCI Systems, Inc. (b)................................. 1,533,656
39,450 Solectron Corp. (b)................................... 1,893,600
------------
7,245,366
------------
Environmental Services (2.16%)
63,625 U. S. Filter Corp. (b)................................ 1,717,875
36,825 Waste Management, Inc. (b)............................ 2,029,978
------------
3,747,853
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Financial Services (6.88%)
106,995 Alliance Capital Management........................... $ 2,741,746
30,000 Federal Home Loan Services............................ 1,417,500
41,000 Franklin Resources, Inc............................... 1,786,063
32,550 Household International, Inc.......................... 1,619,363
60,012 MBNA Corp............................................. 2,010,402
66,850 T. Rowe Price Associates, Inc......................... 2,373,175
------------
11,948,249
------------
Food Processing & Packaging (0.59%)
19,000 Campbell Soup Co. .................................... 1,026,000
------------
Funeral Services (1.22%)
55,740 Service Corp. International........................... 2,111,153
------------
Health Care (3.35%)
30,925 Guidant Corp.......................................... 2,298,114
104,100 Health Management Associates,
Inc. (b)............................................. 2,446,350
35,000 Total Renal Care Holdings, Inc. (b)................... 1,065,313
------------
5,809,777
------------
Household Products (2.47%)
29,775 Avery Dennison Corp. ................................. 1,713,923
50,000 Newell Co............................................. 2,575,000
------------
4,288,923
------------
Insurance (6.93%)
103,592 Conseco, Inc.......................................... 4,350,884
32,700 Exel Ltd.............................................. 2,552,644
62,250 Marsh & McLennan Co., Inc............................. 3,801,141
19,750 Travelers, Inc........................................ 1,323,250
------------
12,027,919
------------
Leisure--Recreation, Gaming (1.30%)
61,200 Carnival Corp. Cruise Lines........................... 2,260,575
------------
Machinery--Diversified (0.67%)
22,125 Sundstrand Corp....................................... 1,157,414
------------
Oil & Gas Exploration, Production, & Services (4.64%)
20,000 Diamond Offshore Drilling............................. 656,250
41,150 Exxon Corp. .......................................... 2,885,644
14,400 Mobil Corp. .......................................... 1,004,400
30,375 Schlumberger Ltd...................................... 1,839,586
64,000 Ultramar Diamond Shamrock Corp........................ 1,676,000
------------
8,061,880
------------
</TABLE>
Continued
22
<PAGE>
PACIFIC CAPITAL FUNDS
GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Pharmaceuticals (9.22%)
37,000 Lilly (Eli) & Co...................................... $ 2,488,250
20,000 Merck & Co. Inc....................................... 2,466,250
42,550 Pfizer, Inc........................................... 4,680,499
34,950 Pharmacia & Upjohn.................................... 1,655,756
27,850 Schering-Plough Corp.................................. 2,694,488
26,925 Warner Lambert Co..................................... 2,034,520
------------
16,019,763
------------
Publishing (1.59%)
33,675 McGraw Hill, Inc...................................... 2,759,245
------------
Restaurants (0.59%)
24,424 Starbucks Corp. (b)................................... 1,022,755
------------
Retail (6.06%)
72,784 Dollar General Corp................................... 2,984,144
45,000 Gap, Inc. ............................................ 2,683,125
58,500 Kohl's Corp. (b)...................................... 2,866,500
46,000 Walgreen Co........................................... 1,986,625
------------
10,520,394
------------
Savings & Loans (2.34%)
32,200 Greenpoint Financial Corp............................. 1,277,938
69,693 Washington Mutual..................................... 2,783,364
------------
4,061,302
------------
Semiconductors (0.81%)
16,575 Intel Corp............................................ 1,399,552
------------
Software & Computer Services (8.24%)
10,000 America Online, Inc. (b).............................. 1,170,000
46,400 Cadence Design Systems, Inc. (b)...................... 1,336,900
44,300 Compuware Corp. (b)................................... 2,383,894
90,300 HBO & Co.............................................. 2,661,028
37,175 Microsoft Corp. (b)................................... 4,093,896
25,000 Peoplesoft, Inc. (b).................................. 942,188
43,400 Sterling Commerce, Inc. (b)........................... 1,717,013
------------
14,304,919
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Telecommunications--Services and Equipment (4.13%)
25,000 Ciena Corp. (b)...................................... $ 1,851,563
34,000 Lucent Technologies, Inc............................. 3,142,875
25,000 Nokia Corp.--ADR..................................... 2,178,125
------------
7,172,563
------------
Tobacco & Tobacco Products (2.78%)
110,000 Philip Morris Cos., Inc.............................. 4,819,375
------------
Transportation (0.99%)
34,875 Kansas City Southern Industries...................... 1,713,234
------------
Utilities--Electric (1.38%)
93,775 Southern Co.......................................... 2,391,263
------------
Utilities--Telecommunications (5.92%)
33,937 Century Telephone Enterprises, Inc................... 1,688,366
43,025 Cincinnati Bell, Inc................................. 1,382,178
65,650 GTE Corp. ........................................... 3,569,719
63,150 SBC Communications................................... 2,581,256
20,000 WorldCom, Inc. (b)................................... 1,057,500
------------
10,279,019
------------
Total Common Stocks (Cost--$131,575,262) 168,810,315
------------
DEPOSITORY RECEIPTS (0.64%)
10,000 S & P 500 Depository Receipt......................... 1,118,750
------------
Total Depository Receipts (Cost--$1,121,238) 1,118,750
------------
INVESTMENT COMPANY (1.63%)
2,836,407 The One Group Prime Money Market Fund, (Fiduciary
Shares)............................................. 2,836,407
------------
Total Investment Company (Cost--$2,836,407) 2,836,407
------------
Total Investments (Cost--$135,532,907) (a)--99.51% 172,765,472
------------
Other assets in excess of liabilities--0.49% 853,939
------------
Total Net Assets--100.0% $173,619,411
============
</TABLE>
- --------
(a) Represents cost for financial reporting purposes and for federal income tax
purposes and differs from market value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $40,647,758
Unrealized depreciation... (3,415,193)
-----------
Net unrealized
appreciation.............. $37,232,565
===========
</TABLE>
(b) Non income producing security.
ADR--American Depository Receipts
See notes to financial statements.
23
<PAGE>
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (73.74%)
China (2.62%)
Manufacturing--Appliances (1.26%)
323,000 Guangdong Kelon Electrical Holdings, Class H........... $ 204,285
-----------
Electricity--Generation (1.10%)
39,900 Shandong Huaneng Power-ADR............................. 179,550
-----------
Utilities--Electric (0.26%)
128,777 Guangdong Electric Power............................... 41,721
-----------
425,556
-----------
Hong Kong (37.90%)
Commercial Services (1.57%)
836,000 Jiangsu Expressway Co. Ltd............................. 141,356
756,000 Zhejiang Expressway Co. Ltd............................ 113,193
-----------
254,549
-----------
Construction (5.26%)
289,000 Cheung Kong Infrastructure............................. 453,224
261,600 New World Infrastructure Ltd. (b)...................... 241,425
1,028,000 Wai Kee Holdings Ltd................................... 160,553
-----------
855,202
-----------
Consumer Products--Cosmetics and Toiletries (0.37%)
402,000 Sa Sa International Holdings........................... 60,709
-----------
Diversified--Conglomerates, Holding Companies (3.22%)
109,000 Hutchison Whampoa Ltd.................................. 523,369
-----------
Electrical & Electronic (4.73%)
320,000 Elec & Eltek International Holdings Ltd................ 61,956
150,000 Varitronix International Ltd........................... 327,203
84,000 Vtech Holdings Ltd..................................... 379,477
-----------
768,636
-----------
Electronics (1.12%)
42,500 Johnson Electric Holdings.............................. 182,672
-----------
Food Products (1.80%)
420,000 Ng Fung Hong Ltd....................................... 292,740
-----------
Foreign Banks (3.66%)
24,400 HSBC Holdings Ltd...................................... 595,238
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Real Estate (2.14%)
80,000 Cheung Kong Holdings Ltd............................... $ 346,951
-----------
Telecommunications (6.95%)
161,500 Asia Satellite Telecom Holdings Ltd.................... 258,484
392,000 China Telecommunication Ltd............................ 574,275
102,000 Smartone Telecommunications............................ 295,567
-----------
1,128,326
-----------
Textile/Apparel (0.56%)
374,000 Lung Kee Metal Holdings Ltd............................ 91,630
-----------
Utilities--Electric (6.52%)
149,000 CLP Holdings Ltd....................................... 665,427
125,500 Hong Kong Electric Holdings Ltd........................ 393,631
-----------
1,059,058
-----------
6,159,080
-----------
India (2.80%)
Telecommunications (2.80%)
39,000 Mahanager Telephone Nigam Ltd-GDR (b).................. 454,350
-----------
Indonesia (0.61%)
Fisheries (0.58%)
130,000 Daya Guna Samudera..................................... 92,930
-----------
Retail (0.03%)
490,000 PT Sona Topas Tourism Industry Tbk..................... 5,590
-----------
98,520
-----------
Korea (3.09%)
Health Care (1.37%)
24,700 Medison Co. Ltd........................................ 222,819
-----------
Machinery & Equipment (1.72%)
61,900 Daewoo Heavy Industries................................ 278,696
-----------
501,515
-----------
Malaysia (1.97%)
Construction (0.40%)
247,000 Metacorp Berhad........................................ 64,788
-----------
Electricity--Generation (0.68%)
174,000 YTL Power International Berhad (b)..................... 109,875
-----------
</TABLE>
Continued
24
<PAGE>
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Engineering (0.89%)
200,000 Gamuda Berhad.......................................... $ 97,148
200,000 IJM Corp. Berhad....................................... 48,331
-----------
145,479
-----------
320,142
-----------
Philippines (3.25%)
Real Estate (2.43%)
2,725,000 SM Prime Holdings...................................... 394,845
-----------
Restaurant (0.82%)
417,000 Jollibee Foods Corp. (b)............................... 133,721
-----------
528,566
-----------
Singapore (6.32%)
Defense Engineering (1.71%)
373,916 Sing Tech Engineering.................................. 277,221
-----------
Electrical & Electronic (0.99%)
396,000 Wong's Circuits Holdings Ltd........................... 160,380
-----------
Real Estate (1.16%)
294,000 Keppel Land Ltd........................................ 189,022
-----------
Telecommunications (2.46%)
104,000 Datacraft Asia Ltd..................................... 248,560
100,000 Singapore Telecommunications Ltd....................... 151,176
-----------
399,736
-----------
1,026,359
-----------
Taiwan (11.56%)
Banks (0.72%)
240,171 Bank Sinopac (b)....................................... 115,319
30,021 Bank Sinopac--Rights (b)............................... 1,310
-----------
116,629
-----------
Computers & Peripherals (3.48%)
23,000 Asustek Computer Inc. (b).............................. 195,437
22,500 Synnex Technology International Corp.--GDR (b)......... 370,688
-----------
566,125
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Electrical & Electronic (7.36%)
226,800 Compal Electronics..................................... $ 798,592
60,000 Hon Hai Precision Industry (b)......................... 398,091
-----------
1,196,683
-----------
1,879,437
-----------
Thailand (3.62%)
Electrical & Electronic (0.43%)
24,000 Hana Microelectronics.................................. 70,504
-----------
Entertainment--Television (2.74%)
110,100 Bec World Public Co. Ltd............................... 444,726
-----------
Telecommunications (0.45%)
250,600 Telecomasia Corp....................................... 73,618
-----------
588,848
-----------
Total Common Stocks (Cost--$15,421,455) 11,982,373
-----------
WARRANTS (0.06%)
Hong Kong (0.06%)
Construction (0.06%)
225,000 Wai Kee Holdings Ltd., 6/30/00......................... 9,875
-----------
Total Warrants (Cost--$0) 9,875
-----------
INVESTMENT COMPANY (23.05%)
United States (23.05%)
3,746,449 Union Bank of California Money Market Fund............. 3,746,449
-----------
Total Investment Company (Cost--$3,746,449) 3,746,449
-----------
Total Investments (Cost $19,167,904) (a)--96.85% 15,738,697
-----------
Other assets in excess of liabilities--3.15% 510,748
-----------
Total Net Assets--100.00% $16,249,445
===========
</TABLE>
Continued
25
<PAGE>
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1998
- --------
Forward Currency Contracts:
<TABLE>
<CAPTION>
DELIVERY CONTRACT CONTRACT VALUE (DEPRECIATION)
POSITION DATE PRICE (U.S. DOLLARS) APPRECIATION
-------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Malaysian Ringitt....... short 8/3/98 $4.13 $ 22,806 $ (68)
short 8/4/98 $4.15 22,650 (179)
-------- ------
$ 45,456 $ (247)
Singapore Dollar........ short 8/6/98 $1.73 $107,652 $ 237
</TABLE>
(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
$214,526. Cost for federal income tax purposes differs from market value
by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $ 377,894
Unrealized depreciation... (4,021,627)
-----------
Net unrealized
depreciation.............. $(3,643,733)
===========
</TABLE>
(b) Non income producing security.
ADR--American Depository Receipt
GDR--Global Depository Receipt
See notes to financial statements
26
<PAGE>
PACIFIC CAPITAL FUNDS
DIVERSIFIED FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
CORPORATE BONDS (44.14%)
Automotive (0.67%)
1,000,000 Ford Motor Co., 7.25%, 10/1/08....................... $ 1,072,500
------------
Banking (1.35%)
950,000 Interamerica Development Bank, 8.50%, 3/15/11........ 1,155,438
1,000,000 Nationsbank Corporation, 6.38%, 5/15/05.............. 1,012,500
------------
2,167,938
------------
Banking--Foreign (11.75%)
5,000,000 Abbey National PLC, 6.69%, 10/17/05.................. 5,100,000
5,000,000 Bayerische Landesbk--NY, 6.38%, 8/31/00.............. 5,056,250
5,525,000 Dresdner Bank--NY, 6.63%, 9/15/05.................... 5,635,500
3,000,000 Swiss Bank Corp.--NY, 6.75%, 7/15/05................. 3,086,250
------------
18,878,000
------------
Electric Utility (4.06%)
1,500,000 Duke Power Co., 8.00%, 11/1/99....................... 1,535,625
5,000,000 Natural Rural Utility, 6.20%, 2/1/08................. 4,987,500
------------
6,523,125
------------
Financial Services (15.02%)
500,000 Associates Corp N.A., 7.75%, 2/15/05................. 538,750
2,000,000 Associates Corp N.A., 6.00%, 4/15/03................. 1,992,500
1,125,000 Ford Motor Credit Corp., 7.57%, 5/16/05.............. 1,147,500
500,000 General Electric Capital Corp., 8.25%, 11/1/04....... 555,625
5,000,000 General Electric Capital Corp., 7.88%, 12/1/06....... 5,581,249
5,000,000 JPM Capital Corp., 7.54%, 1/15/27.................... 5,137,500
125,000 MBIA, Inc., 8.20%, 10/1/22........................... 137,188
5,000,000 Merrill Lynch & Co., Inc., 7.00%, 4/27/08............ 5,231,249
825,000 Merrill Lynch & Co., Inc., 7.15%, 7/30/12............ 848,719
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
CORPORATE BONDS, CONTINUED
400,000 Pitney Bowes Credit, 6.80%, 10/1/01.................. $ 410,000
2,500,000 Salomon, Inc., 6.70%, 7/5/00......................... 2,537,500
------------
24,117,780
------------
Health Care (3.02%)
4,300,000 Johnson & Johnson, 8.72%, 11/1/24.................... 4,859,000
------------
Industrial (0.64%)
1,000,000 EI Dupont De Nemours, 6.50%, 9/1/02.................. 1,022,500
------------
Insurance (0.66%)
1,000,000 St. Paul Cos., Inc., 7.29%, 8/28/07.................. 1,061,250
------------
Oil & Gas--Exploration & Production Services (1.29%)
1,450,000 Amoco Canada Petroleum Co., 7.95%, 10/1/22........... 1,569,625
475,000 Societe Nationale Elf Aquitaine, 8.00%, 10/15/01..... 505,281
------------
2,074,906
------------
Restaurants (3.11%)
4,005,000 McDonald's Corp., 5.95%, 1/15/08..................... 3,959,944
1,000,000 McDonald's Corp., 6.50%, 8/1/07...................... 1,031,250
------------
4,991,194
------------
Retail (2.57%)
2,000,000 Wal-Mart Stores, Inc., 5.85%, 6/1/00................. 2,000,000
1,900,000 Wal-Mart Stores, Inc., 8.00%, 9/15/06................ 2,132,750
------------
4,132,750
------------
Total Corporate Bonds (Cost--$68,553,332) 70,900,943
------------
YANKEE BOND (2.00%)
1,000,000 Japan Finance Corp., 9.13%, 10/11/00................. 1,067,500
2,000,000 Tokyo Metro Government, 9.25%, 11/08/00.............. 2,145,000
------------
Total Yankee Bond (Cost--$3,185,650) 3,212,500
------------
U.S. GOVERNMENT AGENCIES (13.66%)
Federal Home Loan Bank (3.74%)
3,500,000 6.81%, 9/4/02........................................ 3,502,100
</TABLE>
Continued
27
<PAGE>
PACIFIC CAPITAL FUNDS
DIVERSIFIED FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED
2,500,000 6.05%, 3/12/03....................................... $ 2,503,350
------------
6,005,450
------------
Federal National Mortgage Association (4.41%)
1,450,000 6.38%, 8/14/01....................................... 1,476,840
1,000,000 6.375%, 1/16/02...................................... 1,020,520
2,100,000 7.69%, 9/13/06....................................... 2,203,992
1,300,000 6.76%, 7/16/07....................................... 1,329,198
1,000,000 6.88%, 9/10/12....................................... 1,053,430
------------
7,083,980
------------
Private Export Funding (3.27%)
5,000,000 6.49%, 7/15/07....................................... 5,250,000
------------
Tennessee Valley Authority (2.24%)
3,500,000 6.38%, 6/15/05....................................... 3,605,000
------------
Total U.S. Government Agencies (Cost--$21,649,263) 21,944,430
------------
U.S. TREASURY NOTES (9.84%)
1,750,000 6.75%, 4/30/00....................................... 1,785,928
4,000,000 6.125% 12/31/01...................................... 4,070,320
8,200,000 7.25%, 8/15/04....................................... 8,901,756
1,000,000 6.50%, 8/15/05....................................... 1,054,070
------------
Total U.S. Treasury Notes (Cost--$15,273,221) 15,812,074
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
U.S. TREASURY BONDS (24.62%)
15,370,000 7.25%, 5/15/16...................................... $ 17,839,037
20,500,000 6.25%, 8/15/23...................................... 21,709,500
------------
Total U.S. Treasury Bonds (Cost--$37,100,416) 39,548,537
------------
PRIVATE PLACEMENT (3.17%)
Financial Services (3.17%)
5,000,000 Bayer Corporation, 6.50%, 10/1/02 (b), acquisition
date 10/21/97...................................... 5,100,000
------------
Total Private Placement (Cost--$5,008,526) 5,100,000
------------
INVESTMENT COMPANY (0.84%)
1,350,466 The One Group Prime Money Market Fund (Fiduciary
Shares)............................................ 1,350,466
------------
Total Investment Company (Cost--$1,350,466) 1,350,466
------------
Total Investments (Cost--$152,120,874) (a)--98.27% 157,868,950
------------
Other assets in excess of liabilities--1.73% 2,773,297
------------
Total Net Assets--100.0% $160,642,247
============
</TABLE>
- --------
(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
$54,142. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..... $5,769,077
Unrealized depreciation..... (75,143)
----------
Net unrealized appreciation. $5,693,934
==========
</TABLE>
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
See notes to financial statements.
28
<PAGE>
PACIFIC CAPITAL FUNDS
U.S. TREASURY SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (47.01%)
1,550,000 7.13%, 9/30/99......................................... $ 1,578,226
2,000,000 7.125%, 2/29/00........................................ 2,048,780
4,000,000 7.75%, 2/15/01......................................... 4,209,999
980,000 8.00%, 5/15/01......................................... 1,041,769
450,000 5.75%, 8/15/03......................................... 454,091
1,000,000 7.50%, 2/15/05......................................... 1,103,870
500,000 5.625%, 2/15/06........................................ 501,045
-----------
Total U.S. Treasury Notes (Cost--$10,570,340) 10,937,780
-----------
U.S. TREASURY BONDS (49.83%)
2,150,000 7.63%, 2/15/07......................................... 2,284,225
6,700,000 7.25%, 5/15/16......................................... 7,776,288
1,450,000 6.25%, 8/15/23......................................... 1,535,550
-----------
Total U.S. Treasury Bonds (Cost--$10,176,895) 11,596,063
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANY (0.93%)
215,966 The One Group U.S. Treasury Securities Money Market
Fund (Fiduciary Shares).............................. $ 215,966
-----------
Total Investment Company (Cost--$215,966) 215,966
-----------
Total Investments (Cost--$20,963,201) (a)--97.77% 22,749,809
-----------
Other assets in excess of liabilities--2.23% 518,420
-----------
Total Net Assets--100.0% $23,268,229
===========
</TABLE>
- --------
(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
$7,252. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..... $1,779,968
Unrealized depreciation..... (612)
----------
Net unrealized appreciation. $1,779,356
==========
</TABLE>
See notes to financial statements.
29
<PAGE>
PACIFIC CAPITAL FUNDS
SHORT INTERMEDIATE U.S. TREASURY SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (98.04%)
150,000 7.875%, 11/15/99....................................... $ 154,410
5,000,000 6.25%, 5/31/00......................................... 5,065,600
3,000,000 6.50%, 5/31/01......................................... 3,075,660
3,500,000 5.875%, 11/30/01....................................... 3,534,825
1,700,000 6.125% 12/31/01........................................ 1,729,886
1,200,000 6.25%, 8/31/02......................................... 1,228,884
250,000 5.50%, 1/31/03......................................... 249,405
2,000,000 6.25%, 2/15/03......................................... 2,054,560
5,700,000 6.50%, 5/15/05......................................... 5,998,737
1,900,000 5.625%, 2/15/06........................................ 1,903,971
-----------
Total U.S. Treasury Notes (Cost--$24,500,115) 24,995,938
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANY (0.69%)
176,429 The One Group U.S. Treasury Securities Money Market
Fund (Fiduciary Shares).............................. $ 176,429
-----------
Total Investment Company (Cost--$176,429) 176,429
-----------
Total Investments (Cost--$24,676,544) (a)--98.73% 25,172,367
Other assets in excess of liabilities--1.27% 324,757
-----------
Total Net Assets--100.00% $25,497,124
===========
</TABLE>
- --------
(a) Represents cost for financial reporting purposes and for federal income tax
purposes and differs from market value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..... $497,171
Unrealized depreciation..... (1,348)
--------
Net unrealized appreciation. $495,823
========
</TABLE>
See notes to financial statements.
30
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER (18.33%)
Hawaii (18.33%)
2,465,000 Hawaii Airports System Revenue, Second Series,
7.50%, 7/1/20, FGIC, AMT........................... $ 2,652,956
1,075,000 Hawaii Airports System Revenue, 7.00%, 7/1/10, FGIC. 1,177,125
745,000 Hawaii Airports System Revenue, 7.38%, 7/1/11,
AMBAC.............................................. 801,806
935,000 Hawaii Airports System Revenue, 7.30%, 7/1/20,
AMBAC.............................................. 1,007,463
465,000 Hawaii Airports System Revenue, Second Series,
7.50%, 7/1/09, FGIC................................ 501,619
15,375,000 Hawaii Airports System Revenue, Second Series,
6.90%, 7/1/12, MBIA................................ 18,200,155
1,890,000 Hawaii Airports System Revenue, Second Series,
7.00%, 7/1/18, MBIA................................ 2,057,738
1,500,000 Hawaii Airports System Revenue, Second Series,
6.75%, 7/1/21, MBIA................................ 1,621,875
4,660,000 Hawaii Department of Budget & Finance, Special
Purpose Mortgage Revenue, Citizens Utilities Co.
Project, 6.60%, 7/1/22............................. 4,957,075
11,000,000 Hawaii Department of Budget & Finance, Special
Purpose Mortgage Revenue, Hawaii Electric Co.,
Series A, 6.60%, 1/1/25, MBIA...................... 12,237,499
2,145,000 Hawaii Department of Budget & Finance, Special
Purpose Mortgage Revenue, Hawaiian Electric Co. &
Subsidiaries, 6.55%, 12/1/22, MBIA................. 2,343,413
5,000,000 Hawaii Department of Budget & Finance, Special
Purpose Revenue, Hawaii Electric Co., Series A,
6.20%, 5/1/26, MBIA................................ 5,400,000
2,650,000 Hawaii Harbor Capital Improvement Revenue, 6.10%,
7/1/07, FGIC....................................... 2,891,813
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER, CONTINUED
Hawaii, continued
2,330,000 Hawaii Harbor Capital Improvement Revenue, 7.25%,
7/1/10, MBIA....................................... $ 2,504,750
3,260,000 Hawaii Harbor Capital Improvement Revenue, 7.00%,
7/1/17, MBIA....................................... 3,471,900
1,350,000 Hawaii Harbor Capital Improvement Revenue, 6.50%,
7/1/19, FGIC....................................... 1,456,313
4,660,000 Hawaii Harbor Capital Improvement Revenue, 6.38%,
7/1/24, FGIC....................................... 5,067,750
4,660,000 Hawaii Housing Finance & Development Corp., Single
Family Mortgage Revenue, Series A, 6.00%, 7/1/26... 4,799,800
1,500,000 Hawaii Department of Budget & Finance, 5.65%,
10/1/27, Callable 10/1/12 @ 101.................... 1,586,250
2,095,000 Honolulu City & County, Series B, 7.25%, 2/1/08,
Callable 2/1/00 @ 102, FGIC........................ 2,218,081
------------
76,955,381
------------
Total Alternative Minimum Tax Paper (Cost--$69,783,169) 76,955,381
------------
MUNICIPAL BONDS (79.73%)
Arizona (1.05%)
1,000,000 Arizona Unified School District, Maricopa County,
GO, 5.40%, 7/1/12.................................. 1,038,750
2,150,000 Phoenix Arizona Civic Improvement Corp., 5.25%,
7/1/16, Callable 7/1/07 @ 100, MBIA................ 2,171,500
1,000,000 Tempe Arizona GO, 4.90%, 7/1/12..................... 1,005,000
200,000 Tucson Arizona Street And Highway User Revenue,
5.00%, 7/1/15...................................... 201,500
------------
4,416,750
------------
California (10.21%)
1,700,000 California State Department of Water Resources
Central Valley Project Revenue, 5.00%, 12/1/22,
Callable 12/1/07 @ 101............................. 1,655,375
</TABLE>
Continued
31
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
California, continued
2,190,000 East Bay California Municipal Utility District Water
Systems, 5.00%, 6/1/26............................. $ 2,129,775
1,850,000 Los Angeles Cnty Calif Pub Wks Fin. Auth Rev, 5.00%,
10/1/19, Callable 10/1/07 @101..................... 1,806,063
2,000,000 Metropolitan Water District, 5.00%, 7/1/15, MBIA.... 1,985,000
4,000,000 Metropolitan Water District, Southern California,
5.75%, 7/1/21, MBIA................................ 4,215,000
1,000,000 Modesto District Finance Authority Revenue-Series A,
5.00%, 9/1/16, Callable 9/1/08 @ 101............... 991,250
3,725,000 Northern California Transmission, Oregon
Transmission Project, 7.00%, 5/1/13, Series A,
MBIA............................................... 4,544,499
5,450,000 San Diego Public Facilities, 5.38%, 5/15/17,
Callable 5/15/07 @ 101............................. 5,565,812
1,950,000 San Francisco City & County International Airport
Revenue, 4.90%, 5/1/20............................. 1,874,438
2,250,000 San Francisco City & County Redevelopment Agency
Hotel Tax, 5.00%, 7/1/25........................... 2,188,125
2,745,000 San Francisco C&C Airport Community, International
Airport Revenues, 5.63%, 5/1/21, Callable 5/1/06 @
101, FGIC.......................................... 2,847,938
2,770,000 San Francisco District Sales, 5.00%, 7/1/28......... 2,690,363
1,735,000 San Francisco, Bay Area Rapid Transit, District
Sales Tax Revenue, 5.50%, 7/1/15, FGIC............. 1,800,063
1,000,000 Saratoga Unified School District, 5.38%, 9/1/17,
Callable 9/1/07 @ 102.............................. 1,021,250
7,000,000 State Department Water, Series P, 6.00%, 12/1/20,
Callable 6/1/06 @ 101.............................. 7,551,249
------------
42,866,200
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Colorado (0.25%)
1,000,000 Adams & Arapaho County, 5.35%, 12/1/15, FGIC........ $ 1,028,750
------------
Connecticut (0.53%)
2,000,000 Connecticut State, Special Tax Obligation Revenue,
6.25%, 10/1/14, FGIC............................... 2,235,000
------------
Florida (5.51%)
2,750,000 Dade County, Water & Sewer, 5.50%, 10/1/15, FGIC.... 2,863,438
3,000,000 Florida State, Bond Finance Department, General
Services Environmental Revenue, 5.75%, 7/1/13,
AMBAC.............................................. 3,225,000
5,000,000 Florida State, Turnpike Authority Revenue,
Department of Transportation, 5.50%, 7/1/17, FGIC.. 5,187,500
2,000,000 Florida State, Turnpike Revenue, Department of
Transportation, Series A, 5.50%, 7/1/21, FGIC...... 2,050,000
4,875,000 Orange County, Public Tax Service, 6.00%, 10/1/24,
FGIC............................................... 5,295,468
3,725,000 Orlando, Utilities Community Water & Electric
Revenue Refunding, Series D, 6.75%, 10/1/17........ 4,507,250
------------
23,128,656
------------
Georgia (3.04%)
6,810,000 Georgia Municipal Electric Authority, 6.60%, 1/1/18,
MBIA............................................... 8,095,388
1,865,000 Georgia State, Municipal Electric Authority Revenue,
Series B, 6.13%, 1/1/14, FGIC...................... 2,007,206
2,330,000 Metropolitan Atlanta, Rapid Transportation
Authority, Sales Tax Revenue, Series P, 6.25%,
7/1/11, AMBAC...................................... 2,679,500
------------
12,782,094
------------
</TABLE>
Continued
32
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------ ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Hawaii (35.74%)
1,000,000 Hawaii County Hawaii, 4.60%, 2/1/06................... $ 1,010,000
1,000,000 Hawaii County Hawaii, 4.70%, 2/1/07................... 1,015,000
1,000,000 Hawaii County Hawaii, 4.90%, 2/1/09................... 1,020,000
2,320,000 Hawaii County, GO, 5.20%, 2/1/15...................... 2,340,300
1,375,000 Hawaii County, GO, Series A, 4.50%, 2/1/04, FGIC...... 1,387,031
1,810,000 Hawaii County, GO, Series A, 5.00%, 2/1/10, FGIC...... 1,848,463
2,095,000 Hawaii County, GO, Series A, 5.10%, 2/1/13, FGIC...... 2,113,331
605,000 Hawaii County, GO, Series A, 5.60%, 5/1/13, FGIC...... 650,375
2,000,000 Hawaii County, Series A, 5.50%, 5/1/08, FGIC.......... 2,152,500
1,455,000 Hawaii Department Budget & Finance, Queens Health
System, 5.88%, 7/1/11................................ 1,558,669
1,745,000 Hawaii Department Budget & Finance, Queens Health
System, 6.05%, 7/1/16................................ 1,882,419
4,105,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Hawaii Electric Light Co. Project,
7.20%, 12/1/14, MBIA................................. 4,376,956
2,500,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Queens Health System, 3.50%*,
7/1/26, LOC Morgan Guaranty.......................... 2,500,000
1,700,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage, Kapiolani Health Care System, 6.30%,
7/1/08, Callable 7/1/03 @ 102, MBIA.................. 1,859,375
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------ ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Hawaii, continued
3,680,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage, Kapiolani Health Care System, 6.40%,
7/1/13, Callable 7/1/03 @ 102, MBIA.................. $ 4,043,400
1,400,000 Hawaii Department Transportation, Special Facility
Revenue, 5.75%, 3/1/13............................... 1,459,500
1,400,000 Hawaii Harbor Capital Improvement Revenue, 6.20%,
7/1/08, MBIA......................................... 1,508,500
5,980,000 Hawaii Housing Finance & Development Corp., 5.85%,
7/1/17............................................... 6,166,874
6,080,000 Hawaii Housing Finance & Development Corp., 7.00%,
7/1/31, FNMA......................................... 6,535,999
2,795,000 Hawaii Housing Finance & Development Corp., 5.70%,
7/1/13, FNMA......................................... 2,882,344
2,300,000 Hawaii Housing Finance & Development Corp., Single
Family Mortgage Purchase Revenue, Series B, 6.90%,
7/1/16, FNMA......................................... 2,469,625
2,340,000 Hawaii Housing Finance & Development Corp., University
of Hawaii Housing, 5.70%, 10/1/25, AMBAC............. 2,457,000
3,500,000 Hawaii St Dept Bud & Fin., Special Purpose Revenue the
Queens Health System, Series B, 5.25%, 07/01/23,
Callable 7/1/08 @ 102................................ 3,530,625
3,000,000 Hawaii State, 5.00%, 4/1/17........................... 2,951,250
2,850,000 Hawaii State Department Of Budget & Finance, 4.95%,
4/1/12............................................... 2,874,938
1,000,000 Hawaii State Highway Revenue, 5.00%, 7/1/16, FGIC..... 982,500
2,000,000 Hawaii State, Series BZ, 6.00%, 10/1/12, FGIC......... 2,237,500
3,000,000 Hawaii State, Series CM, 6.50%, 12/1/13, FGIC......... 3,521,250
</TABLE>
Continued
33
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Hawaii, continued
3,500,000 Hawaii State, Series CN, 5.50%, 3/1/16, FGIC......... $ 3,806,250
2,800,000 Hawaii State, Series CP, 5.00%, 10/1/13, FGIC........ 2,803,500
3,200,000 Hawaii State, Series CP, 5.00%, 10/1/15, FGIC........ 3,168,000
3,000,000 Hawaii State, Series CP, 5.00%, 10/1/16, Callable
10/1/07 @ 101, FGIC................................. 2,958,750
2,050,000 Hawaii State, Series CP, 5.00%, 10/1/17, FGIC........ 2,014,125
7,500,000 Hawaii, GO, 6.05%, 1/1/08, Pre-refunded 1/1/05 @ 100,
FGIC................................................ 8,231,249
4,555,000 Hawaii, GO, Series CK, 5.25%, 9/1/10, FGIC........... 4,799,830
1,000,000 Hawaii, GO, Series CL, 5.25%, 3/1/16, FGIC........... 1,061,250
1,860,000 Honolulu City & County Refunding & Improvement,
Series B, 5.50%, 10/1/11, FGIC...................... 1,992,525
935,000 Honolulu City & County Refunding & Improvement,
Series B, 5.25%, 10/1/12, FGIC...................... 974,738
1,535,000 Honolulu City & County Water, 6.00%, 12/1/10, FGIC... 1,723,038
2,320,000 Honolulu City & County Water, 6.00%, 12/1/11, FGIC... 2,598,400
935,000 Honolulu City & County Water, 6.00%, 12/1/14, FGIC... 1,048,369
1,380,000 Honolulu City & County, GO, Series A, 5.00%, 11/1/12,
MBIA................................................ 1,385,175
3,725,000 Honolulu City & County, Series A, 7.35%, 7/1/06,
FGIC................................................ 4,428,094
3,000,000 Honolulu City & County, Series A, 6.00%, 1/1/11,
FGIC................................................ 3,341,250
4,820,000 Honolulu City & County, Series A, 5.75%, 4/1/11,
FGIC................................................ 5,271,874
2,330,000 Honolulu City & County, Series A, 5.75%, 4/1/12,
FGIC................................................ 2,542,613
4,195,000 Honolulu City & County, Series A, 5.75%, 4/1/13,
FGIC................................................ 4,572,550
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Hawaii, continued
3,000,000 Honolulu City & County, Series A, 5.63%, 9/1/13,
Callable 9/1/06 @ 102............................... $ 3,176,250
2,000,000 Honolulu City & County, Series B, 5.00%, 11/1/15,
Callable 11/1/07 @ 101, FGIC........................ 1,980,000
1,010,000 Kauai County, 5.55%, 8/1/04.......................... 1,074,388
1,075,000 Kauai County, 5.65%, 8/1/05.......................... 1,155,625
1,130,000 Kauai County, 5.75%, 8/1/06.......................... 1,228,875
1,340,000 Kauai County, Series C, 5.90%, 8/1/09, AMBAC......... 1,487,400
935,000 Maui County Refunding, 5.25%, 9/1/06................. 977,075
1,180,000 Maui County Refunding, 5.13%, 12/15/10............... 1,208,025
515,000 Maui County Water, Series A, 6.10%, 12/1/02, Pre-
refunded 12/1/01 @ 101, FGIC, (b)................... 551,694
545,000 Maui County Water, Series A, 6.20%, 12/1/03, FGIC.... 585,875
580,000 Maui County Water, Series A, 6.30%, 12/1/04, Pre-
refunded 12/1/01 @ 101, FGIC, (b)................... 624,950
620,000 Maui County Water, Series A, 6.40%, 12/1/05, Pre-
refunded 12/1/01 @ 101, FGIC, (b)................... 670,375
565,000 Maui County Water, Series A, 6.50%, 12/1/06, Pre-
refunded 12/1/01 @ 101, FGIC, (b)................... 612,319
550,000 Maui County Water, Series A, 6.60%, 12/1/07, Pre-
refunded 12/1/01 @ 101, FGIC, (b)................... 598,125
655,000 Maui County Water, Series A, 6.65%, 12/1/09, Pre-
refunded 12/1/01 @ 101, FGIC, (b)................... 713,131
1,020,000 Maui County, GO, 5.90%, 6/1/14....................... 1,091,400
1,005,000 Maui County, Series A, 5.10%, 9/1/11, Callable 9/1/07
@ 101............................................... 1,027,613
1,160,000 Maui County Hawaii, Series A, 5.125%, 3/1/15......... 1,162,900
</TABLE>
Continued
34
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Hawaii, continued
2,040,000 Maui County Hawaii, Series A, 5.375%, 3/1/17........ $ 2,080,800
------------
150,064,124
------------
Kansas (1.83%)
3,725,000 Burlington Pollution Control Refunding, Kansas Gas &
Electric Co. Project, 7.00%, 6/1/31................ 4,064,906
3,260,000 Kansas City, Utilities System, Revenue Refunding &
Improvement, 6.38%, 9/1/23......................... 3,630,825
------------
7,695,731
------------
Maine (0.74%)
2,795,000 Maine State Turnpike Authority, Turnpike Revenue,
6.00%, 7/1/14...................................... 3,091,969
------------
Massachusetts (1.89%)
4,790,000 Commonwealth of Massachusetts, Series B, 5.50%,
7/1/15............................................. 4,975,613
1,965,000 Massachusetts State Port Authority Revenue, Series
A, 5.00%, 7/1/23, Callable 7/1/08 @ 101............ 1,906,050
1,000,000 Massachusetts State Water Pollution Abatement Trust,
5.70%, 2/1/13...................................... 1,065,000
------------
7,946,663
------------
Michigan (2.88%)
6,900,000 Michigan Environmental Protection Program, GO,
5.40%, 11/1/19..................................... 7,055,250
2,245,000 Michigan Strategic Obligations Revenue, 6.95%,
5/1/11............................................. 2,722,063
2,250,000 Saline Area Schools, GO, 5.50%, 5/1/15, FGIC........ 2,323,125
------------
12,100,438
------------
Minnesota (0.55%)
2,000,000 North St. Paul, Maplewood, Independent School
District, No. 622, Series A, 6.88%, 2/1/15,
Prefunded 2/1/05 @ 100............................. 2,307,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
New Jersey (0.80%)
3,000,000 New Jersey Wastewater Treatment Trust, Series B,
6.38%, 4/1/14...................................... $ 3,371,250
------------
New Mexico (1.17%)
3,000,000 Rio Rancho Water & Waste Water Systems Revenue,
Series A, 5.90%, 5/15/15, FSA...................... 3,202,500
1,625,000 Sante Fe, New Mexico, Gross Receipts Tax Revenue,
5.63%, 6/1/16...................................... 1,708,281
------------
4,910,781
------------
New York (1.18%)
2,950,000 New York State Environmental Facilities Pollution
Control, 5.125%, 6/15/16........................... 2,950,000
2,000,000 Triborough Bridge & Tunnel Authority, New York
Revenues, General Purpose, 5.30%, 1/1/17........... 2,022,500
------------
4,972,500
------------
North Carolina (1.27%)
4,480,000 Easton Municipal Power Agency, 6.50%, 1/1/18, (b)... 5,314,400
------------
Ohio (1.99%)
2,320,000 Cleveland Package Facilities Revenue, 5.50%,
9/15/16............................................ 2,412,800
1,630,000 Cleveland Waterworks Revenue, 6.25%, 1/1/16, MBIA... 1,750,213
3,165,000 Columbus Airport Authority, 5.00%, 1/1/16........... 3,141,262
1,000,000 Ohio Water Development Authority, Pollution Control,
5.50%, 12/1/15, MBIA............................... 1,042,500
------------
8,346,775
------------
Oregon (0.61%)
2,330,000 Umatilla County, School District Number 016R,
Pendleton, 6.00%, 7/1/14, AMBAC.................... 2,571,738
------------
</TABLE>
Continued
35
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Pennsylvania (1.45%)
2,505,000 Southeastern Pennsylvania Transportation Authority,
6.00%, 3/1/14,..................................... $ 2,696,006
3,150,000 Southeastern Pennsylvania Transportation Authority,
Series A, 6.00%, 3/1/15, Callable 3/1/05 @ 101,
FGIC............................................... 3,382,313
------------
6,078,319
------------
South Carolina (0.80%)
2,890,000 Piedmont Municipal Power Agency, South Carolina
Electric Refunding, Series A, 6.50%, 1/1/14, FGIC.. 3,374,075
------------
Tennessee (2.88%)
2,000,000 Metropolitan Govt Nashville & Davidson County,
5.00%, 1/1/19...................................... 1,970,000
2,000,000 Metropolitan Govt Nashville & Davidson County,
4.75%, 1/1/22...................................... 1,890,000
6,300,000 Shelby County Refunding, Series A, 5.63%, 4/1/15.... 6,599,250
1,600,000 Shelby County Refunding, Series B, 5.25%, 8/1/17,
Callable 8/1/07 @ 101.............................. 1,626,000
------------
12,085,250
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Virginia (3.36%)
5,000,000 Commonwealth of Virginia Public School Authority,
Special Obligation, Chesapeake School, 5.63%,
6/1/15............................................. $ 5,274,999
2,995,000 Fairfax County Public Improvement, Series A, 5.50%,
6/1/14............................................. 3,148,494
3,650,000 Norfolk Water Revenue, 5.75%, 11/1/13, MBIA......... 3,896,375
1,750,000 Richmond Refunding, 5.20%, 1/15/14.................. 1,778,438
------------
14,098,306
------------
Total Municipal Bonds (Cost--$310,953,083) 334,787,269
------------
INVESTMENT COMPANY (0.46%)
1,932,408 Nuveen Tax Free Money Market Fund................... 1,932,408
------------
Total Investment Company (Cost--$1,932,408) 1,932,408
------------
Total Investments (Cost--$382,668,660) (a)--98.52% 413,675,058
Other assets in excess of liabilities--1.48% 6,194,728
------------
Total Net Assets--100.00% $419,869,786
============
</TABLE>
- --------
*Variable rate security. Rate presented represents rate in effect at July 31,
1998. Maturity reflects final maturity date.
(a) Represents cost for financial reporting purposes and for federal income tax
purposes and differs from market value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.... $31,132,947
Unrealized depreciation.... (126,549)
-----------
Net unrealized
appreciation............... $31,006,398
===========
</TABLE>
(b) Collaterized by various U.S. Government Securities.
AMBAC--AMBAC Indemnity Corporation
AMT--Alternative Minimum Tax Paper
FGIC--Insured by the Financial Guaranty Insurance Corporation
FNMA--Insured by Federal National Mortgage Association
FSA--Insured by Financial Security Assurance
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Insurance Association
See notes to financial statements.
36
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER (15.49%)
Hawaii (13.67%)
2,070,000 Hawaii State Airports Systems Revenue, 5.60%, 7/1/01.. $ 2,142,450
2,000,000 Hawaii State Airports Systems Revenue, Second Series,
5.45%, 7/1/00, MBIA.................................. 2,045,000
1,000,000 Hawaii State Housing Fin & Dev, Single Family, Series
A, 4.55%, 7/1/02..................................... 1,008,750
1,940,000 Hawaii State Housing Fin & Dev, Single Family, Series
A, 4.75%, 7/1/06..................................... 1,935,150
-----------
7,131,350
-----------
Texas (1.96%)
1,000,000 El Paso Apartment Revenue, 5.00%, 8/15/01, FGIC....... 1,023,750
-----------
Total Alternative Minimum Tax Paper (Cost--$8,072,059) 8,155,100
-----------
MUNICIPAL BONDS (82.78%)
Arizona (1.99%)
1,000,000 Mesa Arizona Utility Systems Revenue, 5.00%, 7/1/08,
MBIA................................................. 1,040,000
-----------
Connecticut (1.95%)
1,000,000 Connecticut State, GO, Series E, 4.75%, 3/15/08,
Callable 3/15/04 @ 101.50............................ 1,017,500
-----------
Hawaii (44.49%)
1,300,000 Hawaii Department Budget & Finance, Special Purpose
Mortgage Revenue, Queens Health System, 3.50%*,
7/1/26, LOC Morgan Guaranty.......................... 1,300,000
3,000,000 Hawaii State Airport System Revenue, 5.60%, 7/1/04.... 3,183,749
1,000,000 Hawaii State Highway Revenue, 6.00%, 7/1/04........... 1,078,750
1,200,000 Hawaii State Housing Fin & Dev, Single Family, Series
B, 4.80%, 7/1/07, FNMA............................... 1,218,000
1,750,000 Hawaii State, GO, Series CJ, 5.50%, 1/1/00............ 1,789,375
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Hawaii, continued
2,000,000 Hawaii State, GO, Series CP, 5.00%, 10/1/04, FGIC..... $ 2,072,500
2,000,000 Hawaii State, GO, Series CL, 4.50%, 3/1/01............ 2,020,000
1,300,000 Hawaii State, GO, Series CP, 5.00%, 10/1/05, FGIC..... 1,348,750
1,500,000 Hawaii State, GO, Series CP, 5.50%, 10/1/07, FGIC..... 1,612,500
370,000 Honolulu, City & County Improvement District, 6.05%,
10/15/98............................................. 371,569
370,000 Honolulu, City & County Improvement District, 6.20%,
10/15/99............................................. 377,400
700,000 Honolulu, City & County, GO, Series A, 5.10%, 1/1/00,
FGIC................................................. 710,500
1,400,000 Honolulu, City & County, GO, Series A, 5.25%, 9/1/02,
FGIC................................................. 1,456,000
1,000,000 Honolulu, City & County, GO, Series A, 5.10%, 11/1/08. 1,047,500
1,450,000 Honolulu, City & County, GO, Series B, 5.00%,11/1/05,
FGIC................................................. 1,504,375
620,000 Maui County, GO, 5.35%, 6/1/00........................ 634,725
1,400,000 Maui County, GO, Series A, 5.25%, 3/1/08.............. 1,478,750
-----------
23,204,443
-----------
Maine (1.99%)
1,000,000 Maine Muni Bond Bank, 5.00%, 11/1/05, FSA............. 1,037,500
-----------
Maryland (1.99%)
1,000,000 Maryland State and Local Facilities, GO, 5.00%,
3/1/03............................................... 1,037,500
-----------
Massachusetts (1.97%)
1,000,000 Massachusetts State Construction, Series D, 5.13%,
11/1/00, FGIC........................................ 1,026,250
-----------
Michigan (1.99%)
1,000,000 Farmington Public School District, 5.00%, 5/1/06...... 1,037,500
-----------
</TABLE>
Continued
37
<PAGE>
PACIFIC CAPITAL FUNDS
TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Minnesota (5.70%)
1,900,000 Minnesota State Revenue, Series A, 5.00%, 6/30/01,
AMBAC................................................ $ 1,949,875
1,000,000 Minnesota State, GO, 5.00%, 8/1/00.................... 1,022,500
-----------
2,972,375
-----------
Missouri (2.02%)
1,000,000 Kansas City Water Revenue, 5.50%, 12/1/02............. 1,053,750
-----------
New York (5.62%)
2,000,000 New York City, Sub-Series A-10, 3.85%*, 8/1/16, LOC
Morgan Guaranty Trust................................ 2,000,000
900,000 New York State Environmental Facilities Pollution
Control Revenue, 5.00%, 6/15/03...................... 932,625
-----------
2,932,625
-----------
Oregon (2.03%)
1,065,000 Oregon State Dept, Admin Services Lottery Revenue,
State Park Projects, Series A, 4.25%, 4/1/05, FSA.... 1,059,675
-----------
Rhode Island (3.42%)
1,750,000 Rhode Island Housing & Mortgage Financial Corporation,
5.00%, 7/1/00, AMBAC................................. 1,782,813
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED
Tennessee (2.49%)
1,290,000 Nashville & Davidson County, Health & Education
Facility Board Revenue, Series A, 4.625%, 11/1/08,
Callable 5/1/08 @ 101, MBIA.......................... $ 1,301,288
-----------
Texas (1.95%)
1,000,000 Tarrant County Texas Health Facilities Development,
4.75%, 9/1/00, AMBAC................................. 1,017,500
-----------
Utah (2.02%)
1,000,000 Jordan Utah School District, Series A, 5.25%, 6/15/05. 1,052,500
-----------
Wisconsin (1.96%)
1,000,000 Milwaukee, GO, 5.00%, 2/1/01.......................... 1,022,500
-----------
Total Municipal Bonds (Cost--$43,239,320) 43,595,719
-----------
INVESTMENT COMPANY (0.78%)
410,785 Nuveen Tax Free Money Market
Fund................................................. 410,785
-----------
Total Investment Company (Cost--$410,785) 410,785
-----------
Total Investments (Cost--$51,722,164) (a)--99.05% 52,161,604
-----------
Other assets in excess of liabilities--0.95% 501,112
-----------
Total Net Assets--100.0% $52,662,716
===========
</TABLE>
- --------
* Variable rate security. Rate presented represents rate in effect at July 31,
1998. Maturity reflects final maturity date.
(a) Represents cost for financial reporting purposes and for federal income tax
purposes and differs from market value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...... $500,305
Unrealized depreciation...... (60,865)
--------
Net unrealized appreciation.. $439,440
========
</TABLE>
AMBAC--AMBAC Indemnity Corporation
FGIC--Insured by the Financial Guaranty Insurance Corporation
FSA--Insured by Financial Security Assurance
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Insurance Association
See notes to financial statements.
38
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998
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 an 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 three
classes of shares for each Fund: A Class (formerly known as Retail Class), B
Class and Y Class (formerly known as Institutional Class). The Y Class
commenced operations October 14, 1994 when the Trust identified those
Institutional Shareholders that were part of the A Class (as of October 13,
1994) and transferred the Shareholders into the Y Class. Currently, only the
Growth Stock Fund, Growth and Income Fund, New Asia Growth Fund, Diversified
Fixed Income Fund, and Tax-Free Securities Fund offer B Class Shares, which
commenced operations on March 2, 1998. A Class Shares are subject to initial
sales charges, imposed at the time of purchase, in accordance with the
Funds' prospectuses. B Class Shares are subject to a contingent deferred
sales charge (CDSC) on sales of shares made within six years of the date of
purchase. Each class of shares for each Fund has identical rights and
privileges except with respect to distribution (12b-1) fees paid by A and B
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 seeks a high level of current income exempt from federal and Hawaii
income taxes. Tax-Free Short Intermediate Securities Fund seeks a high level
of current income exempt from federal and Hawaii income taxes with a greater
price stability than a long-term bond fund. 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
Continued
39
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
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 costs and market values of securities are reflected
as either unrealized appreciation or depreciation.
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 to
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 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
Continued
40
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
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 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 basis. 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 (the Adviser) 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 from net realized capital gains are
determined in accordance with income tax regulations, which may differ from
generally accepted accounting principles.
Continued
41
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the composition of net assets based on their
federal tax-basis treatment; temporary differences do not require
reclassifications. Dividends and distributions to shareholders which exceed
net investment income and net realized gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized gains. To the
extent they exceed net investment income and realized gains for tax
purposes, they are reported as distribution of capital. During the current
fiscal year, permanent differences were primarily due to differing
treatments for foreign currency transactions and different book/tax
accreation of certain income items.
As of July 31, 1998, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to
additional paid-in-capital:
<TABLE>
<CAPTION>
UNDISTRIBUTED ACCUMULATED UNDISTRIBUTED NET
(DISTRIBUTIONS IN EXCESS OF) REALIZED GAINS (LOSSES) FROM INVESTMENTS
NET INVESTMENT INCOME (LOSS) (AND FOREIGN CURRENCY TRANSACTIONS)
---------------------------- ----------------------------------------
<S> <C> <C>
Growth Stock Fund....... $ 504,258 $(275,659)
New Asia Growth Fund.... $(234,378) $ 234,378
U.S. Treasury Securities
Fund.................... $ 19,209 --
</TABLE>
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.
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.
Continued
42
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
year ended July 31, 1998 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Growth Stock Fund................................... $290,978,283 $297,644,026
Growth and Income Fund.............................. 129,901,396 106,805,979
New Asia Growth Fund................................ 25,127,689 18,611,143
Diversified Fixed Income Fund....................... 104,998,875 83,265,425
U.S. Treasury Securities Fund....................... 2,979,563 2,590,297
Short Intermediate U.S. Treasury Securities Fund.... 4,961,148 14,293,731
Tax-Free Securities Fund............................ 52,569,279 39,102,177
Tax-Free Short Intermediate Securities Fund......... 21,759,847 22,989,429
</TABLE>
4. RELATED PARTY TRANSACTIONS
Investment advisory services are provided to the Trust by Hawaiian Trust
Company, Limited (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 Funds. Nicholas Applegate
Capital Management LLC serves as Sub Adviser for the New Asia Growth Fund.
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 a 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 pursuant
to Rule 12b-1 under the 1940 Act. Under the Distribution Agreement, A and B
Class Shares pay BISYS a fee, not to exceed, on an annual basis, 0.75% and
1.00%, respectively, of the average daily net assets attributable to the A
and B Class of shares of each Fund. These fees are for payments BISYS makes
to banks, including the Adviser, other institutions and broker/dealers, and
for expenses BISYS and any of its affiliates or subsidiaries incur for
providing distribution or shareholder service assistance.
Continued
43
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
A Class shares are subject to a 4.00% sales charge at the time of purchase.
B Class shares are subject to a Contingent Deferred Sales Charge (CDSC) on
redemptions of shares made within six years of purchase. The applicable CDSC
is equal to a percentage of the lesser of the net asset value per share
(NAV) at the date of the original purchase or at the date of redemption,
according to the following chart:
<TABLE>
<CAPTION>
YEAR OF REDEMPTION CDSC
------------------ ----
<S> <C>
First.................................................................. 5%
Second................................................................. 4
Third.................................................................. 3
Fourth................................................................. 3
Fifth.................................................................. 2
Sixth.................................................................. 1
</TABLE>
For the year ended July 31, 1998, BISYS, as the Trust's principal
underwriter, received approximately $224,544 from commissions on sales of A
and B Class shares which was reallowed to other dealers.
BISYS Services serves the Trust as fund accountant. Under the terms of a
fund accounting agreement, BISYS Services is entitled to receive fees based
on a percentage of average daily net assets of each Fund and is reimbursed
for certain out-of-pocket expenses incurred in providing fund accounting
services.
As of February 2, 1998, BISYS Services serves as the Transfer Agent for the
Funds. Under the terms of the transfer agent agreement BISYS Services is
entitled to receive fees and reimbursement for certain out-of-pocket
expenses incurred in providing transfer agent 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, 1998 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-- TOTAL
DAILY NET ASSETS REDUCED REDUCED A CLASS WAIVERS
---------------- ----------- -------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Growth Stock Fund....... 0.80% $ -- $124,437 $55,308 179,745
Growth and Income Fund.. 0.80% -- 57,920 25,039 82,959
New Asia Growth Fund.... 0.90% 27,534 9,140 12,002 48,676
Diversified Fixed Income
Fund.................... 0.60% 135,988 59,931 6,900 202,819
U.S. Treasury Securities
Fund.................... 0.60% 33,161 9,169 5,303 47,633
Short Intermediate U.S.
Treasury
Securities Fund........ 0.50% 59,920 14,976 3,040 77,936
Tax-Free Securities
Fund.................... 0.60% 365,137 149,684 12,222 527,043
Tax-Free Short
Intermediate
Securities Fund........ 0.50% 31,564 23,933 2,876 58,373
</TABLE>
Continued
44
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares for the Trust were as follows:
<TABLE>
<CAPTION>
GROWTH STOCK FUND GROWTH AND INCOME FUND
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------------ ---------- ------------ ----------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1998 JULY 31, 1998
------------------------ ------------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 3,744,760 216,021 $ 2,912,762 164,933
Dividends reinvested......... 1,239,385 82,407 372,456 23,296
Shares redeemed.............. (1,370,344) (81,528) (771,818) (44,668)
------------ ---------- ------------ ----------
Net increase/(decrease)...... $ 3,613,801 216,900 $ 2,513,400 143,561
============ ========== ============ ==========
B CLASS SHARES:
Shares issued................ $ 1,456,711 83,868 $ 2,203,968 119,054
Dividends reinvested......... -- -- 16 1
Shares redeemed.............. (26,704) (1,539) (39,676) (2,134)
------------ ---------- ------------ ----------
Net increase/(decrease)...... $ 1,430,007 82,329 $ 2,164,308 116,921
============ ========== ============ ==========
Y CLASS SHARES:
Shares issued................ $ 56,189,401 3,354,162 $ 56,280,388 3,189,329
Shares issued in conjunction
with
common trust fund conversion. 120,286,123 8,205,056 -- --
Dividends reinvested......... 28,765,229 1,908,676 10,842,366 669,602
Shares redeemed.............. (64,246,853) (3,777,051) (39,704,663) (2,244,480)
------------ ---------- ------------ ----------
Net increase/(decrease)...... $140,993,900 9,690,843 $ 27,418,091 1,614,451
============ ========== ============ ==========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 3,204,633 224,887 $ 2,191,642 153,432
Dividends reinvested......... 16,102 1,191 81,348 6,075
Shares redeemed.............. (1,497,916) (109,496) (527,062) (37,700)
------------ ---------- ------------ ----------
Net increase/(decrease)...... $ 1,722,819 116,582 $ 1,745,928 121,807
============ ========== ============ ==========
Y CLASS SHARES:
Shares issued................ 36,521,743 2,562,096 $ 43,781,341 3,080,616
Dividends reinvested......... 76,010 5,584 2,325,676 172,366
Shares redeemed.............. (80,981,052) (5,700,654) (30,463,375) (2,125,196)
------------ ---------- ------------ ----------
Net increase/(decrease)...... $(44,383,299) (3,132,974) $ 15,643,642 1,127,786
============ ========== ============ ==========
</TABLE>
Continued
45
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
NEW ASIA DIVERSIFIED FIXED
GROWTH FUND INCOME FUND
---------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
----------- --------- ------------ ----------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1998 JULY 31, 1998
---------------------- ------------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 469,353 46,993 $ 817,809 76,334
Dividends reinvested......... 228,503 26,391 70,402 6,514
Shares redeemed.............. (613,470) (68,170) (529,156) (48,813)
----------- --------- ------------ ----------
Net increase/(decrease)...... $ 84,386 5,214 $ 359,055 34,035
=========== ========= ============ ==========
B CLASS SHARES:
Shares issued................ $ 88,860 10,584 $ 235,079 21,588
Dividends reinvested......... -- -- 1,660 152
Shares redeemed.............. (943) (111) (945) (86)
----------- --------- ------------ ----------
Net increase/(decrease)...... $ 87,917 10,473 $ 235,794 21,654
=========== ========= ============ ==========
Y CLASS SHARES:
Shares issued................ $10,352,449 1,199,997 $ 48,477,915 4,460,189
Shares issued in conjunction
with
common trust fund conversion. -- -- 8,914,400 817,085
Dividends reinvested......... 1,553,437 176,588 61,265 5,625
Shares redeemed.............. (3,618,366) (408,645) (34,180,770) (3,131,037)
----------- --------- ------------ ----------
Net increase/(decrease)...... $ 8,287,520 967,940 $ 23,272,810 2,151,862
=========== ========= ============ ==========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
---------------------- ------------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 1,372,902 111,117 $ 748,361 71,630
Dividends reinvested......... 21,601 1,764 70,514 6,720
Shares redeemed.............. (527,801) (42,850) (829,853) (79,822)
----------- --------- ------------ ----------
Net increase/(decrease)...... $ 866,702 70,031 $ (10,978) (1,472)
=========== ========= ============ ==========
Y CLASS SHARES:
Shares issued................ $ 9,703,868 791,509 $ 44,769,922 4,245,046
Dividends reinvested......... 81,463 6,605 599,007 55,986
Shares redeemed.............. (3,030,589) (240,435) (78,102,272) (7,368,883)
----------- --------- ------------ ----------
Net increase/(decrease)...... $ 6,754,742 557,679 $(32,733,343) (3,067,851)
=========== ========= ============ ==========
</TABLE>
Continued
46
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
U.S. TREASURY SHORT INTERMEDIATE U.S.
SECURITIES FUND TREASURY SECURITIES FUND
--------------------- --------------------------
AMOUNT SHARES AMOUNT SHARES
----------- -------- ------------ ------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1998 JULY 31, 1998
--------------------- --------------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 142,785 15,083 $ 324,234 33,871
Dividends reinvested......... 49,496 5,226 29,263 3,051
Shares redeemed.............. (212,310) (22,522) (324,935) (33,870)
----------- -------- ------------ -----------
Net increase/(decrease)...... $ (20,029) (2,213) $ 28,562 3,052
=========== ======== ============ ===========
Y CLASS SHARES:
Shares issued................ $ 400,221 41,875 $ 6,940,611 722,116
Shares issued in conjunction
with
common trust fund conversion. -- -- 9,573,342 995,150
Dividends reinvested......... 1,201,477 126,855 32,845 3,431
Shares redeemed.............. (3,689,175) (396,268) (18,666,022) (1,941,708)
----------- -------- ------------ -----------
Net increase/(decrease)...... $(2,087,477) (227,538) $ (2,119,224) (221,011)
=========== ======== ============ ===========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
--------------------- --------------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 262,172 28,434 $ 140,921 14,898
Dividends reinvested......... 48,799 5,310 36,426 3,858
Shares redeemed.............. (228,130) (24,896) (728,488) (76,854)
----------- -------- ------------ -----------
Net increase/(decrease)...... $ 82,841 8,848 $ (551,141) (58,098)
=========== ======== ============ ===========
Y CLASS SHARES:
Shares issued................ $ 1,380,971 149,658 $ 11,979,335 1,272,770
Dividends reinvested......... 1,366,474 148,459 55,995 5,915
Shares redeemed.............. (2,779,194) (300,730) (9,297,503) (983,459)
----------- -------- ------------ -----------
Net increase/(decrease)...... $ (31,749) (2,613) $ 2,737,827 295,226
=========== ======== ============ ===========
</TABLE>
Continued
47
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
TAX-FREE
TAX-FREE SHORT INTERMEDIATE
SECURITIES FUND SECURITIES FUND
------------------------ ----------------------
AMOUNT SHARES AMOUNT SHARES
------------ ---------- ----------- ---------
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1998 JULY 31, 1998
------------------------ ----------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 1,640,252 151,580 $ 130,400 12,916
Dividends reinvested......... 38,731 3,587 16,719 1,653
Shares redeemed.............. (1,167,839) (108,228) (389,729) (38,495)
------------ ---------- ----------- ---------
Net increase/(decrease)...... $ 511,144 46,939 $ (242,610) (23,926)
============ ========== =========== =========
B CLASS SHARES:
Shares issued................ $ 267,860 24,963 $ -- --
Dividends reinvested......... 1,483 137 -- --
Shares redeemed.............. (100) (9) -- --
------------ ---------- ----------- ---------
Net increase/(decrease)...... $ 269,243 25,091 $ -- --
============ ========== =========== =========
Y CLASS SHARES:
Shares issued................ $ 46,027,274 4,247,313 $11,212,917 1,100,661
Shares issued in conjunction
with
common trust fund conversion. 104,600,137 9,658,369 12,804,860 1,259,082
Dividends reinvested......... 1,643,171 152,405 217,024 21,401
Shares redeemed.............. (33,393,862) (3,083,534) (9,180,229) (903,387)
------------ ---------- ----------- ---------
Net increase/(decrease)...... $118,876,720 10,974,553 $15,054,572 1,477,757
============ ========== =========== =========
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1997 JULY 31, 1997
------------------------ ----------------------
<S> <C> <C> <C> <C>
A CLASS SHARES:
Shares issued................ $ 2,100,119 201,633 $ 741,966 73,793
Dividends reinvested......... 20,004 1,896 15,130 1,502
Shares redeemed.............. (241,385) (23,123) (491,902) (48,887)
------------ ---------- ----------- ---------
Net increase/(decrease)...... $ 1,878,738 180,406 $ 265,194 26,408
============ ========== =========== =========
Y CLASS SHARES:
Shares issued................ $ 31,135,063 2,950,938 $ 5,454,511 540,179
Dividends reinvested......... 1,613,763 151,978 52,152 5,141
Shares redeemed.............. (35,722,280) (3,389,736) (8,057,230) (796,267)
------------ ---------- ----------- ---------
Net increase/(decrease)...... $ (2,973,454) (286,820) $(2,550,567) (250,947)
============ ========== =========== =========
</TABLE>
Continued
48
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
6. ACQUISITION OF COMMON TRUST FUNDS
On December 14, 1997, the Diversified Fixed Income Fund issued Y Class
shares in a tax free conversion to acquire the assets and liabilities of the
Pacific Century Trust Taxable Bond Common Trust Fund. The following is a
summary of Y Class shares issued, net assets acquired, net asset value per
share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Y Class Shares.................................................. 817,085
Net assets of Mutual Fund before the acquisition................ $145,624,704
Net assets acquired............................................. $ 8,914,400
Net asset value................................................. $ 10.91
Unrealized appreciation......................................... $ 390,015
</TABLE>
On December 14, 1997, the Growth Stock Fund issued Y Class shares in a tax
free conversion to acquire the assets and liabilities of the Pacific Century
Trust Growth Stock Common Trust Fund. The following is a summary of Y Class
shares issued, net assets acquired, net asset value per share and unrealized
appreciation as of the date acquired:
<TABLE>
<S> <C>
Y Class Shares.................................................. 8,205,056
Net assets of Mutual Fund before the acquisition................ $204,709,990
Net assets acquired............................................. $120,286,123
Net asset value................................................. $ 14.66
Unrealized appreciation......................................... $ 41,467,947
</TABLE>
On December 14, 1997, the Tax Free Securities Fund issued Y Class shares in
a tax free conversion to acquire the assets and liabilities of the Pacific
Century Trust Tax Exempt Bond Common Trust Fund. The following is a summary
of Y Class shares issued, net assets acquired, net asset value per share and
unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Y Class Shares.................................................. 9,658,369
Net assets of Mutual Fund before the acquisition................ $303,241,433
Net assets acquired............................................. $104,600,137
Net asset value................................................. $ 10.83
Unrealized appreciation......................................... $ 8,372,094
</TABLE>
On December 14, 1997, the Tax Free Short Intermediate Fund issued Y Class
shares in a tax free conversion to acquire the assets and liabilities of the
Pacific Century Trust Tax Exempt Intermediate Common Trust Fund. The
following is a summary of Y Class shares issued, net assets acquired, net
asset value per share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Y Class Shares................................................... 1,259,082
Net assets of Mutual Fund before the acquisition................. $37,311,626
Net assets acquired.............................................. $12,804,860
Net asset value.................................................. $ 10.17
Unrealized appreciation.......................................... $ 151,948
</TABLE>
Continued
49
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
On December 14, 1997, the Short Intermediate U.S. Treasury Fund issued Y
Class shares in a tax free conversion to acquire the assets and liabilities
of the Pacific Century Trust Short Intermediate Term Common Trust Fund. The
following is a summary of Y Class shares issued, net assets acquired, net
asset value per share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Y Class Shares................................................... 995,150
Net assets of Mutual Fund before the acquisition................. $24,954,307
Net assets acquired.............................................. $ 9,573,342
Net asset value.................................................. $ 9.62
Unrealized appreciation.......................................... $ 114,281
</TABLE>
7. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
CAPITAL LOSS CARRYFORWARD
At July 31, 1998 the following Funds had net capital loss carryforwards to
offset future net capital gains, if any, to the extent provided by the
Treasury regulations:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
---------- -------
<S> <C> <C>
New Asia Growth Fund....................................... $1,915,732 2006
Diversified Fixed Income Fund.............................. 405,487 2005
Diversified Fixed Income Fund.............................. 606,001 2006
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
U.S. Treasury Securities Fund.............................. 38,240 2006
</TABLE>
To the extent that these carryforwards are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.
LONG TERM CAPITAL GAINS DISTRIBUTIONS
During the fiscal year ended July 31, 1998 the Funds declared mid term and
long term capital gain distributions as follows:
<TABLE>
<CAPTION>
MID-TERM LONG-TERM
28% 20%
----------- -----------
<S> <C> <C>
Growth Stock Fund.................................... $15,096,164 $16,094,239
Growth and Income Fund............................... 4,819,193 3,107,112
New Asia Growth Fund................................. 97,721 --
Tax-Free Securities Fund............................. 723,215 901,467
Tax-Free Short Intermediate Securities Fund.......... 119,749 98,145
</TABLE>
Continued
50
<PAGE>
PACIFIC CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JULY 31, 1998
DIVIDEND RECEIVED DEDUCTION
For corporate shareholders the following percentages of the total ordinary
income distributions paid during the fiscal year ended July 31, 1998 qualify
for the corporate dividends received deduction for the following Funds:
<TABLE>
<CAPTION>
PERCENTAGE
----------
<S> <C>
Growth and Income Fund............................................. 61.97%
</TABLE>
TAX EXEMPT INCOME DISTRIBUTIONS
During the fiscal year ended July 31, 1998 the Funds declared tax-exempt
income distributions as follows:
<TABLE>
<CAPTION>
TAX-EXEMPT
DISTRIBUTION
------------
<S> <C>
Tax-Free Securities Fund......................................... $17,575,335
Tax-Free Short Intermediate Securities Fund...................... 1,786,229
</TABLE>
POST OCTOBER LOSS DEFERRAL
Capital (and foreign currency) losses incurred after October 31 within a
Fund's fiscal year are deemed to arise on the first business day of the
following fiscal year for tax purposes. The following Funds have incurred
and will elect to defer such capital losses (and foreign currency losses):
<TABLE>
<CAPTION>
POST OCTOBER FOREIGN
CAPITAL LOSSES CURRENCY LOSSES
-------------- ---------------
<S> <C> <C>
New Asia Growth Fund........................... $4,894,762 175,768
</TABLE>
51
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
GROWTH STOCK FUND
-----------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995
---------------------------------- ------------------ ----------------- -----------------------
A CLASS B CLASS (H) Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS (C) Y CLASS (B)
------- ----------- -------- ------- -------- ------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............. $17.43 $16.36 $17.44 $11.89 $11.89 $11.71 $11.71 $ 9.83 $ 9.89
------- ------ -------- ------ -------- ------ -------- ------ --------
Investment
Activities
Net investment
income (loss)..... (0.04) (0.05) -- 0.03 0.07 0.07 0.10 0.12 0.11
Net realized and
unrealized gain
(loss) from
investments....... 2.99 1.41 3.01 5.55 5.55 0.89 0.89 1.87 1.83
------- ------ -------- ------ -------- ------ -------- ------ --------
Total from
Investment
Activities........ 2.95 1.36 3.01 5.58 5.62 0.96 0.99 1.99 1.94
------- ------ -------- ------ -------- ------ -------- ------ --------
Distributions
Net investment
income............. -- -- -- (0.03) (0.07) (0.07) (0.10) (0.11) (0.12)
In excess of net
investment income. (0.01) -- (0.02) (0.01) -- -- -- -- --
Net realized gains. (2.62) -- (2.62) -- -- (0.22) (0.22) -- --
In excess of net
realized gains.... -- -- -- -- -- (0.49) (0.49) -- --
------- ------ -------- ------ -------- ------ -------- ------ --------
Total
Distributions...... (2.63) -- (2.64) (0.04) (0.07) (0.78) (0.81) (0.11) (0.12)
------- ------ -------- ------ -------- ------ -------- ------ --------
NET ASSET VALUE,
END OF PERIOD...... $17.75 $17.72 $17.81 $17.43 $17.44 $11.89 $11.89 $11.71 $11.71
======= ====== ======== ====== ======== ====== ======== ====== ========
Total Return
(excludes sales
charges)........... 19.58% 8.31%(f) 19.96% 47.02% 47.39% 8.25% 8.53% 20.43% 20.64%(d)
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000)....... $13,777 $1,459 $375,117 $9,742 $198,407 $5,261 $172,565 $3,905 $136,837
Ratio of expenses to
average net assets. 1.32% 2.07%(e) 1.07% 1.32% 1.07% 1.34% 1.09% 1.36% 1.13%(e)
Ratio of net
investment income
to average
net assets......... (0.30%) (1.31%)(e) (0.08%) 0.16% 0.45% 0.60% 0.86% 1.12% 1.30%(e)
Ratio of expenses to
average net
assets*............ 1.86% 2.11%(e) 1.11% 1.86% 1.11% 1.88% 1.13% 1.98% 1.21%(e)
Ratio of net
investment income
to average
net assets*........ (0.84%) (1.35%)(e) (0.12%) (0.38%) 0.41% 0.06% 0.82% 0.50% 1.23%(e)
Portfolio Turnover
(g)................. 97.03% 97.03% 97.03% 32.20% 32.20% 61.30% 61.30% 32.40% 32.40%
<CAPTION>
NOVEMBER 1,
1993 TO
JULY 31,
1994 (A)
--------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............. $10.00
--------------
Investment
Activities
Net investment
income (loss)..... 0.07
Net realized and
unrealized gain
(loss) from
investments....... (0.18)
--------------
Total from
Investment
Activities........ (0.11)
--------------
Distributions
Net investment
income............. (0.06)
In excess of net
investment income. --
Net realized gains. --
In excess of net
realized gains.... --
--------------
Total
Distributions...... (0.06)
--------------
NET ASSET VALUE,
END OF PERIOD...... $9.83
==============
Total Return
(excludes sales
charges)........... (1.05%)(f)
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000)....... $56,121
Ratio of expenses to
average net assets. 1.41%(e)
Ratio of net
investment income
to average
net assets......... 0.98%(e)
Ratio of expenses to
average net
assets*............ 2.31%(e)
Ratio of net
investment income
to average
net assets*........ 0.07%(e)
Portfolio Turnover
(g)................. 25.89%
</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 A Class and transferred these shareholders into the
Y Class at the prevailing net asset value effective October 14, 1994. The
Financial Highlights presented for the Y Class reflects operations and
distributions for the period from October 14, 1994 through July 31, 1995.
(c) The Financial Highlights presented for the A 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 A 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 Y 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) Period from commencement of operations on March 2, 1998.
See notes to financial statements.
52
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
--------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE OCTOBER 14, 1994
YEAR ENDED YEAR ENDED YEAR ENDED TO
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
----------------------------------- -------------------- ----------------- -----------------------
A CLASS B CLASS (E) Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS
------- ----------- ---------- ------- ---------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $17.25 $17.58 $17.27 $12.32 $12.32 $11.44 $11.43 $10.00 $10.00
------ ------ ------ ------ ------ ------ ------ -------- --------
Investment Activities
Net investment income... 0.03 (0.02) 0.07 0.08 0.11 0.16 0.17 0.17 0.20
Net realized and
unrealized gain
from investments....... 3.01 1.12 3.01 5.57 5.58 1.19 1.21 1.44 1.42
------ ------ ------ ------ ------ ------ ------ -------- --------
Total from Investment
Activities............. 3.04 1.10 3.08 5.65 5.69 1.35 1.38 1.61 1.62
------ ------ ------ ------ ------ ------ ------ -------- --------
Distributions
Net investment income... (0.04) -- (0.07) (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...... (1.53) -- (1.53) (0.63) (0.63) (0.31) (0.31) -- --
------ ------ ------ ------ ------ ------ ------ -------- --------
Total Distributions..... (1.57) -- (1.60) (0.72) (0.74) (0.47) (0.49) (0.17) (0.19)
------ ------ ------ ------ ------ ------ ------ -------- --------
NET ASSET VALUE,
END OF PERIOD........... $18.72 $18.68 $18.75 $17.25 $17.27 $12.32 $12.32 $11.44 $11.43
====== ====== ====== ====== ====== ====== ====== ======== ========
Total Return (excludes
sales charges).......... 19.10% 6.27%(b) 19.37% 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)............ $6,730 $2,184 $164,706 $3,726 $123,821 $1,160 $74,427 $328 $41,771
Ratio of expenses to
average net assets...... 1.33% 2.08%(c) 1.08% 1.32% 1.07% 1.37% 1.11% 1.40%(c) 1.14%(c)
Ratio of net investment
income to average
net assets.............. 0.13% (0.73%)(c) 0.38% 0.48% 0.79% 1.03% 1.43% 2.08%(c) 2.47%(c)
Ratio of expenses to
average net assets*..... 1.87% 2.12%(c) 1.12% 1.86% 1.12% 1.91% 1.15% 1.99%(c) 1.22%(c)
Ratio of net investment
income to average
net assets*............. (0.41%) (0.77%)(c) 0.34% (0.06)% 0.75% 0.49% 1.39% 1.49%(c) 2.39%(c)
Portfolio Turnover (d)... 75.92% 75.92% 75.92% 74.83% 74.83% 80.83% 80.83% 12.78% 12.78%
</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) Period from commencement of operations on March 2, 1998.
See notes to financial statements.
53
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
NEW ASIA GROWTH FUND
----------------------------------------------------------------------------------------------
FEBRUARY 15,
FOR THE FOR THE FOR THE 1995 TO
YEAR ENDED YEAR ENDED YEAR ENDED JULY 31, 1995
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 (A)
--------------------------------- ------------------ ----------------- --------------------
A CLASS B CLASS (E) Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS
------- ----------- -------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $13.89 $ 9.09 $13.94 $11.11 $11.14 $11.21 $11.22 $10.00 $10.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Activities
Net investment
income(loss)........... 0.09 0.04 0.12 0.03 0.06 (0.02) (0.01) 0.02 0.04
Net realized and
unrealized gain (loss)
from investments....... (6.59) (2.79) (6.63) 2.88 2.87 0.20 0.22 1.19 1.18
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Activities............. (6.50) (2.75) (6.51) 2.91 2.93 0.18 0.21 1.21 1.22
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
Net investment income... -- -- (0.02) (0.01) (0.01) -- -- -- --
In excess of net
investment income...... -- -- -- -- -- (0.02) (0.03) -- --
Net realized gains...... (1.04) -- (1.04) (0.12) (0.12) (0.26) (0.26) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions..... (1.04) -- (1.06) (0.13) (0.13) (0.28) (0.29) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD.................. $ 6.35 $ 6.34 $ 6.37 $13.89 $13.94 $11.11 $11.14 $11.21 $11.22
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return (excludes
sales charges).......... (48.84%) (30.25%)(b) (48.76%) 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)............ $1,614 $66 $14,569 $3,459 $18,376 $1,990 $8,469 $330 $2,861
Ratio of expenses to
average net assets...... 2.18% 2.89%(c) 1.93% 1.98% 1.72% 2.22% 1.98% 2.24%(c) 1.97%(c)
Ratio of net investment
income (loss) to average
net assets.............. 0.98% 1.70%(c) 1.32% 0.20% 0.46% (0.28%) (0.02%) 0.80%(c) 1.18%(c)
Ratio of expenses to
average net assets*..... 2.86% 3.35%(c) 2.13% 2.58% 1.82% 3.58% 2.84% 3.51%(c) 2.74%(c)
Ratio of net investment
income (loss) to average
net assets*............. 0.30% 1.24%(c) 1.12% (0.40%) 0.36% (1.64%) (0.88%) (0.47%)(c) 0.42%(c)
Portfolio Turnover (d)... 129.77% 129.77% 129.77% 134.89% 134.89% 86.53% 86.53% 55.62% 55.62%
</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) Period from commencement of operations on March 2, 1998.
See notes to financial statements.
54
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
DIVERSIFIED FIXED INCOME FUND
-------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE OCTOBER 14, 1994
YEAR ENDED YEAR ENDED YEAR ENDED TO
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
------------------------------- ----------------- ----------------- -----------------------
A CLASS B CLASS (E) Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS
------- ----------- -------- ------- -------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.71 $10.79 $10.78 $10.45 $10.53 $10.75 $10.84 $10.00 $10.00
------ ------ -------- ------ -------- ------ -------- -------- ---------
Investment Activities
Net investment income... 0.58 0.23 0.61 0.57 0.60 0.59 0.58 0.49 0.55
Net realized and
unrealized gain (loss)
from investments....... 0.21 0.12 0.22 0.35 0.34 (0.19) (0.16) 0.74 0.78
------ ------ -------- ------ -------- ------ -------- -------- ---------
Total from Investment
Activities............. 0.79 0.35 0.83 0.92 0.94 0.40 0.42 1.23 1.33
------ ------ -------- ------ -------- ------ -------- -------- ---------
Distributions
Net investment income... (0.58) (0.23) (0.61) (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..... (0.58) (0.23) (0.61) (0.66) (0.69) (0.70) (0.73) (0.48) (0.49)
------ ------ -------- ------ -------- ------ -------- -------- ---------
NET ASSET VALUE, END OF
PERIOD................... $10.92 $10.91 $11.00 $10.71 $10.78 $10.45 $10.53 $10.75 $10.84
====== ====== ======== ====== ======== ====== ======== ======== =========
Total Return
(excludes
sales charges).......... 7.61% 3.25%(b) 7.94% 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)............ $1,497 $236 $158,909 $1,103 $132,583 $1,093 $161,742 $27 $54,827
Ratio of expenses to
average net assets...... 1.02% 1.71%(c) 0.77% 1.15% 0.90% 1.15% 0.88% 1.18%(c) 0.93%(c)
Ratio of net investment
income to average net
assets.................. 5.36% 4.54%(c) 5.61% 5.44% 5.67% 5.31% 5.56% 6.25%(c) 6.71%(c)
Ratio of expenses to
average net assets*..... 1.65% 1.90%(c) 0.90% 1.69% 0.94% 1.69% 0.92% 1.77%(c) 1.01%(c)
Ratio of net investment
income to average net
assets*................. 4.73% 4.35%(c) 5.48% 4.90% 5.63% 4.77% 5.52% 5.66%(c) 6.63%(c)
Portfolio Turnover (d)... 57.58% 57.58% 57.58% 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.
(e) Period from commencement of operations on March 2, 1998.
See notes to financial statements.
55
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES FUND
-------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 1,
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 1993 TO
---------------- ---------------- ---------------- ----------------------- JULY 31,
A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS (C) Y CLASS (B) 1994 (A)
------- ------- ------- ------- ------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.37 $ 9.38 $ 9.13 $ 9.14 $ 9.42 $ 9.43 $ 9.04 $ 8.66 $10.00
------ ------- ------ ------- ------ ------- ------ ------- -------
Investment Activities
Net investment income.. 0.52 0.54 0.52 0.53 0.53 0.59 0.50 0.44 0.31
Net realized and
unrealized gain (loss)
from investments...... 0.21 0.21 0.25 0.26 (0.20) (0.24) 0.38 0.76 (1.00)
------ ------- ------ ------- ------ ------- ------ ------- -------
Total from Investment
Activities............ 0.73 0.75 0.77 0.79 0.33 0.35 0.88 1.20 (0.69)
------ ------- ------ ------- ------ ------- ------ ------- -------
Distributions
Net investment income.. (0.52) (0.54) (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.... (0.52) (0.54) (0.53) (0.55) (0.62) (0.64) (0.50) (0.43) (0.27)
------ ------- ------ ------- ------ ------- ------ ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 9.58 $ 9.59 $ 9.37 $ 9.38 $ 9.13 $ 9.14 $ 9.42 $ 9.43 $ 9.04
====== ======= ====== ======= ====== ======= ====== ======= =======
Total Return (excludes
sales charges)......... 7.98% 8.24% 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)........... $1,090 $22,178 $1,087 $23,832 $979 $23,248 $1,035 $51,264 $60,125
Ratio of expenses to
average net assets..... 1.07% 0.82% 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............. 5.45% 5.70% 5.60% 5.85% 5.55% 5.81% 5.57% 5.78%(e) 4.62%(e)
Ratio of expenses to
average net assets*.... 1.76% 1.01% 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*............ 4.76% 5.51% 5.06% 5.81% 5.01% 5.77% 4.96% 5.71%(e) 3.68%(e)
Portfolio Turnover (g).. 11.82% 11.82% 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 A Class and transferred these shareholders into the
Y Class at the prevailing net asset value effective October 14, 1994. The
Financial Highlights presented for the Y Class reflects operations and
distributions for the period from October 14, 1994 through July 31, 1995.
(c) The Financial Highlights presented for the A 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 A 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 Y 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.
56
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
SHORT INTERMEDIATE U.S. TREASURY SECURITIES FUND
--------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 13,
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 1993 TO
---------------- ---------------- ---------------- ----------------------- JULY 31,
A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS (C) Y CLASS (B) 1994 (A)
------- ------- ------- ------- ------- ------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.55 $ 9.56 $ 9.41 $ 9.42 $ 9.60 $ 9.61 $ 9.52 $ 9.30 $10.00
------ ------- ------ ------- ------ ------- ------ ------- ------
Investment Activities
Net investment income.. 0.49 0.51 0.49 0.52 0.48 0.53 0.52 0.44 0.24
Net realized and
unrealized gain (loss)
from investments....... 0.09 0.10 0.14 0.14 (0.11) (0.13) 0.05 0.31 (0.52)
------ ------- ------ ------- ------ ------- ------ ------- ------
Total from Investment
Activities........... 0.58 0.61 0.63 0.66 0.37 0.40 0.57 0.75 (0.28)
------ ------- ------ ------- ------ ------- ------ ------- ------
Distributions
Net investment income.. (0.49) (0.51) (0.49) (0.52) (0.50) (0.53) (0.49) (0.44) (0.20)
In excess of net
investment income..... -- -- -- -- (0.04) (0.04) -- -- --
In excess of net
realized gains........ -- -- -- -- (0.02) (0.02)
------ ------- ------ ------- ------ ------- ------ ------- ------
Total Distributions... (0.49) (0.51) (0.49) (0.52) (0.56) (0.59) (0.49) (0.44) (0.20)
------ ------- ------ ------- ------ ------- ------ ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 9.64 $ 9.66 $ 9.55 $ 9.56 $ 9.41 $ 9.42 $ 9.60 $ 9.61 $ 9.52
====== ======= ====== ======= ====== ======= ====== ======= ======
Total Return
(excludes sales
charges)............... 6.27% 6.62% 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)........... $654 $24,843 $618 $26,722 $1,156 $23,545 $489 $16,214 $3,419
Ratio of expenses to
average net assets..... 0.89% 0.64% 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................. 5.11% 5.36% 5.22% 5.47% 5.14% 5.40% 5.51% 5.84%(e) 3.96%(e)
Ratio of expenses to
average net assets*.... 1.64% 0.89% 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*................ 4.36% 5.11% 4.47% 5.22% 4.39% 5.15% 4.72% 5.61%(e) (0.43%)(e)
Portfolio Turnover (g).. 17.33% 17.33% 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 A Class and transferred these shareholders into the
Y Class at the prevailing net asset value effective October 14, 1994. The
Financial Highlights presented for the Y Class reflects operations and
distributions for the period from October 14, 1994 through July 31, 1995.
(c) The Financial Highlights presented for the A 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 A 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 Y 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.
57
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
TAX-FREE SECURITIES FUND
-------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE OCTOBER 14, 1994
YEAR ENDED YEAR ENDED YEAR ENDED TO
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
--------------------------------- ------------------ ------------------ ----------------------
A CLASS B CLASS (E) Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS
------- ----------- ---------- ------- --------- ------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.84 $10.84 $10.86 $10.44 $10.46 $10.53 $10.56 $10.00 $10.00
------- ------ ---------- ------- --------- ------ --------- ------ ----------
Investment Activities
Net investment income... 0.48 0.21 0.51 0.49 0.51 0.50 0.52 0.39 0.42
Net realized and
unrealized gain (loss)
from investments....... 0.06 (0.01) 0.08 0.46 0.46 0.07 0.07 0.50 0.51
------- ------ ---------- ------- --------- ------ --------- ------ ----------
Total from Investment
Activities............. 0.54 0.20 0.59 0.95 0.97 0.57 0.59 0.89 0.93
------- ------ ---------- ------- --------- ------ --------- ------ ----------
Distributions
Net investment income... (0.48) (0.21) (0.51) (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) (0.06) (0.06) (0.09) (0.09) -- --
In excess of net
realized gains......... -- -- -- -- -- (0.04) (0.04) -- --
------- ------ ---------- ------- --------- ------ --------- ------ ----------
Total Distributions..... (0.54) (0.21) (0.57) (0.55) (0.57) (0.66) (0.69) (0.36) (0.37)
------- ------ ---------- ------- --------- ------ --------- ------ ----------
NET ASSET VALUE,
END OF PERIOD........... $10.84 $10.83 $10.88 $10.84 $10.86 $10.44 $10.46 $10.53 $10.56
======= ====== ========== ======= ========= ====== ========= ====== ==========
Total Return (excludes
sales charges).......... 5.17% 1.82%(b) 5.63% 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)............ $3,054 $272 $416,544 $2,545 $296,764 $569 $288,934 $563 $281,646
Ratio of expenses to
average net assets...... 1.02% 1.71%(c) 0.77% 1.12% 0.87% 1.14% 0.89% 1.15%(c) 0.89%(c)
Ratio of net investment
income to average
net assets.............. 4.49% 3.75%(c) 4.74% 4.60% 4.86% 4.66% 4.92% 4.93%(c) 5.16%(c)
Ratio of expenses to
average net assets*..... 1.65% 1.90%(c) 0.90% 1.66% 0.91% 1.68% 0.93% 1.74%(c) 0.98%(c)
Ratio of net investment
income to average
net assets*............. 3.86% 3.56%(c) 4.61% 4.06% 4.82% 4.12% 4.88% 4.34%(c) 5.07%(c)
Portfolio Turnover (d)... 10.73% 10.73% 10.73% 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.
(e) Period from commencement of operations on March 2, 1998.
See notes to financial statements.
58
<PAGE>
PACIFIC CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
TAX-FREE SHORT INTERMEDIATE SECURITIES FUND
-------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 14, 1994 TO
JULY 31, 1998 JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 (A)
-------------------- -------------------- -------------------- -------------------------
A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y CLASS
--------- --------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...... $10.17 $10.21 $10.05 $10.08 $10.11 $10.14 $10.00 $10.00
-------- --------- -------- --------- -------- --------- --------- ----------
Investment Activities
Net investment income... 0.35 0.38 0.37 0.39 0.37 0.40 0.30 0.32
Net realized and
unrealized gain (loss)
from investments....... (0.02) -- 0.13 0.14 (0.03) (0.03) 0.08 0.11
-------- --------- -------- --------- -------- --------- --------- ----------
Total from Investment
Activities............. 0.33 0.38 0.50 0.53 0.34 0.37 0.38 0.43
-------- --------- -------- --------- -------- --------- --------- ----------
Distributions
Net investment income... (0.35) (0.38) (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...... (0.06) (0.06) (0.01) (0.01) -- -- -- --
-------- --------- -------- --------- -------- --------- --------- ----------
Total Distributions..... (0.41) (0.44) (0.38) (0.40) (0.40) (0.43) (0.27) (0.29)
-------- --------- -------- --------- -------- --------- --------- ----------
NET ASSET VALUE, END OF
PERIOD................... $10.09 $10.15 $10.17 $10.21 $10.05 $10.08 $10.11 $10.14
======== ========= ======== ========= ======== ========= ========= ==========
Total Return (excludes
sales charges)........... 3.36% 3.83% 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)............. $478 $52,185 $724 $37,410 $451 $39,472 $308 $39,993
Ratio of expenses to
average net assets....... 1.01% 0.76% 1.09% 0.84% 1.08% 0.83% 1.05%(c) 0.85%(c)
Ratio of net investment
income to average net
assets.................. 3.50% 3.75% 3.57% 3.82% 3.64% 3.90% 3.82%(c) 4.03%(c)
Ratio of expenses to
average net assets*...... 1.62% 0.87% 1.64% 0.89% 1.63% 0.88% 1.64%(c) 0.94%(c)
Ratio of net investment
income to average net
assets*................. 2.89% 3.64% 3.02% 3.77% 3.09% 3.85% 3.23%(c) 3.94%(c)
Portfolio Turnover (d)... 47.55% 47.55% 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.
59
<PAGE>
Investment Adviser
Pacific Century Trust
111 S. King Street
Honolulu, Hawaii 96813
Administrator and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street, 20th Floor
Los Angeles, California 90071
Independent Auditors
Ernst & Young LLP
One Columbus, Suite 2400
10 West Broad Street
Columbus, Ohio 43215
Transfer Agent
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
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. This document must be preceded or
accompanied by a current prospectus for the Pacific Capital Funds.
PCR-0007
9/98
