<PAGE>
BISHOP STREET FUNDS
BISHOP STREET TREASURY MONEY MARKET FUND
Supplement dated September 5, 1996
to the Prospectus dated February 17, 1996
The Prospectus dated February 17, 1996 is hereby amended by the addition of the
following unaudited financial information for the Bishop Street Treasury Money
Market Fund for the period ended June 30, 1996.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Bishop Street Treasury
Money Market Fund - Class A (1)
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . ---
Investment Activities
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . 0.01
Net Realized and Unrealized Gain (Loss) on Investments . . . . . . . ---
Distributions
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . .(0.01)
Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . ---
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . 1.00
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10%
Net Assets, End of Period (000) . . . . . . . . . . . . . . . . . . . . $173,023
Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . . . . 0.44%
Expenses to Average Net Assets Excluding Fee Waivers and Reimbursements 0.56%
Ratio of Net Investment Income to Average Net Assets . . . . . . . . . 4.91%
Ratio of Net Investment Income to Average Net Assets Excluding Fee
Waivers and Reimbursements . . . . . . . . . . . . . . . . . . . . . . 4.79%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . ---
Amounts Designated as "---" are either $0 or have been rounded to $0.
(1) The Fund commenced operations on May 1, 1996.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
iv
<PAGE>
BISHOP STREET FUNDS
SUPPLEMENT DATED SEPTEMBER 5, 1996 TO THE
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information for the Bishop Street Funds is hereby
amended and supplemented by the following unaudited financial statements of
the Bishop Street Treasury Money Market Fund for the period ended June 30,
1996.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
v
<PAGE>
JUNE 30, 1996 (Unaudited)
STATEMENT OF NET ASSETS
TREASURY MONEY MARKET FUND
- ----------------------------------------------------------
FACE
AMOUNT VALUE
DESCRIPTION (000) (000)
- ----------------------------------------------------------
U.S. TREASURY OBLIGATIONS (31.8%)
U.S. Treasury Bill
0.000%, 09/05/96 $30,000 $ 29,720
U.S. Treasury Note
7.500%, 01/31/97 25,000 25,274
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $54,994) 54,994
--------
REPURCHASE AGREEMENTS (68.1%)
Chase
5.47%, dated 06/28/96, matures
07/01/96, repurchase price
$30,004,558 (collateralized by
U.S. Treasury Note, par value
$31,665,000, 5.75%, matures
08/15/03: market value
$30,603,512) 30,000 30,000
DWR
5.30%, dated 06/28/96, matures
07/01/96, repurchase price
$7,000,000 (collateralized by
U.S. Treasury Note, par value
$7,001,031, 5.50%, matures
04/15/97: market value
$7,200,686) 7,000 7,000
Goldman Sachs
5.35%, dated 06/28/96, matures
07/01/96, repurchase price
$7,001,040 (collateralized by
U.S. Treasury Bond, par value
$6,820,000, 7.50%, matures
11/15/16: market value
$7,212,500) 7,000 7,000
JP Morgan
5.43%, dated 06/28/96, matures
07/01/96, repurchase price
$7,001,056 (collateralized by
U.S. Treasury Note, par value
$6,800,000, 8.75%, matures
10/15/97: market value
$7,155,176) 7,000 7,000
Lanstan
5.45%, dated 06/28/96, matures
07/01/96, repurchase price
$6,878,041 (collateralized by
U.S. Treasury Note, par value
$6,770,000, 6.375%, matures
06/30/97: market value
$7,019,644) 6,877 6,877
- --------------------------------------------------------------
FACE
AMOUNT VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------
Lehman Brothers
5.50%, dated 06/28/96, matures
07/01/96, repurchase price
$23,003,514 (collateralized by
U.S. Treasury Note, par value
$30,470,000, 5.875%, matures
04/30/98: market value
$30,595,206) $23,000 $ 23,000
Morgan Stanley
5.32%, dated 06/28/96, matures
07/01/96, repurchase price
$7,001,034 (collateralized by
U.S. Treasury Note, par value
$5,245,000, 11.75%, matures
02/15/10: market value
$7,139,291) 7,000 7,000
UBS
5.48%, dated 06/28/96, matures
07/01/96, repurchase price
$30,004,568 (collateralized by
various U.S. Treasury Notes,
total par value $28,983,000,
6.875% - 8.50%, 01/31/00 -
03/31/00: total market value
$30,600,876) 30,000 30,000
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $117,877) 117,877
--------
TOTAL INVESTMENTS (99.9%)
(Cost $172,871) 172,871
--------
OTHER ASSETS AND LIABILITIES, NET (0.1%) 152
--------
NET ASSETS:
Fund Shares of Institutional Class
(unlimited authorization -- no par
value) based on 173,023,020
outstanding shares of
beneficial interest 173,023
--------
TOTAL NET ASSETS (100.0%) $173,023
========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE --
INSTITUTIONAL CLASS $1.00
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
FOR THE PERIOD ENDED JUNE 30, 1996
STATEMENT OF OPERATIONS (000)
(Unaudited)
- --------------------------------------------------------------------------------
TREASURY MONEY
MARKET FUND(1)
==============
INTEREST INCOME: $1,344
------
EXPENSES:
Investment Adviser Fee 75
Investment Adviser Fee Waiver (30)
Contribution by Investment
Adviser --
Management Fee 50
Management Fee Waiver (25)
Custody Fees 7
Transfer Agent Fees 7
Registration Fees 17
Trustees Fees 3
Printing Fees 2
Professional Fees 4
Amortization of Deferred
Organizational Costs --
Miscellaneous Expenses --
------
Total Expenses 110
------
Net Investment Income 1,234
------
Net Realized Loss on Investments --
Change in Unrealized Depreciation
on Investments --
------
Net Realized and Unrealized Loss
on Investments --
------
Increase (Decrease) in Net Assets
Resulting from Operations $1,234
======
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON MAY 1, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
BISHOP STREET FUNDS
STATEMENT OF CHANGES IN NET ASSETS (000)
(UNAUDITED)
- --------------------------------------------------------------------------------
TREASURY
MONEY MARKET
FUND
=============
5/01/96 (1)
TO 06/30/96
-------------
INVESTMENT ACTIVITIES:
Net Investment Income $ 1,234
Net Realized Gain (Loss) on
Investments --
Change in Unrealized Appreciation
on Investments --
--------
Increase in Net Assets Resulting
From Operations 1,234
--------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class A (1,234)
Retail Class B --
--------
Total Distributions (1,234)
--------
Change in Net Assets --
--------
CAPITAL SHARE TRANSACTIONS:
(ALL AT $1.00 PER SHARE)
Institutional Class A Shares:
Proceeds from Shares Issued 317,866
Reinvestment of Cash Distribution --
Cost of Shares Redeemed (144,843)
--------
Total Institutional Capital
Share Transactions 173,023
Retail Class B Shares:
Proceeds from Shares Issued --
Reinvestment of Cash Distribution --
Cost of Shares Redeemed --
--------
Total Retail Capital Share
Transactions --
--------
Net Increase in Net Assets From
Share Transactions 173,023
--------
Total Increase in Net Assets 173,023
NET ASSETS:
Beginning of Period --
--------
End of Period $173,023
========
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON MAY 1, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
BISHOP STREET FUNDS
FINANCIAL HIGHLIGHTS
(Unaudited)
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
--------------------- -------------
NET
NET REALIZED NET
ASSET AND ASSET
VALUE, NET UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT CAPITAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN
--------- ---------- -------------- ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------
TREASURY MONEY MARKET FUND
- --------------------------
INSTITUTIONAL CLASS A
FOR THE PERIOD ENDED JUNE 30,
1996(1): -- $0.01 -- $(0.01) -- $1.00 5.10%
- --------------------------
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET INVESTMENT
RATIO OF EXPENSES TO RATIO OF INCOME TO
NET EXPENSES AVERAGE NET AVERAGE
ASSETS, TO NET ASSETS INVESTMENT NET ASSETS
END OF AVERAGE EXCLUDING FEE INCOME TO EXCLUDING FEE PORTFOLIO
PERIOD NET WAIVERS AND AVERAGE WAIVERS AND TURNOVER
(000) ASSETS REIMBURSEMENTS NET ASSETS REIMBURSEMENTS RATE
------- -------- -------------- ----------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------
TREASURY MONEY MARKET FUND
- --------------------------
INSTITUTIONAL CLASS A
FOR THE PERIOD ENDED JUNE 30,
1996(1): $173,023 0.44% 0.56% 4.91% 4.79% --
- --------------------------
HAWAII MUNICIPAL BOND FUND
- --------------------------
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON MAY 1, 1996.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
JUNE 30, 1996 (Unaudited)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
================================================================================
The Bishop Street Funds (the "Trust") are registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Bishop Street Funds consists of a series of five funds (the "Funds") which
includes the High Grade Income Fund, Hawaii Municipal Bond Fund (formerly Hawaii
Tax-Free Fund), Equity Fund, the Treasury Money Market Fund and the Money Market
Fund. Effective January 29, 1996, the Hawaii Tax Free Bond Fund officially
changed its name to the Hawaii Municipal Bond Fund. The Bishop Street Funds
Declaration of Trust permits the Trust to offer separate portfolios of shares
and different classes of each portfolio. The assets of each Fund are segregated,
and a shareholder's interest is limited to the Fund in which shares are held.
Each Fund, with the exception of the High Grade Income Fund and Equity Fund, has
commenced operations prior to June 30, 1996. This report pertains only to the
Treasury Money Market Fund, Money Market Fund and the Hawaii Municipal Bond
Fund. The Funds' prospectus provides a description of each Fund's investment
objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
================================================================================
The following is a summary of significant accounting policies followed by
the Trust.
SECURITY VALUATION -- Investment securities held by the Money Market Fund are
stated at amortized cost, which approximates market value. Under this
valuation method, purchase discounts and premiums are accreted and amortized
ratably to maturity and are included in interest income.
Debt obligations exceeding sixty days to maturity for which market
quotations are readily available are valued at the most recently quoted bid
price. Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost. Restricted securities for which quotations are
not readily available are valued at fair value using methods determined in good
faith under general Trustee supervision.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date). Costs
used in determining net realized capital gains and losses on the sale of
securities are those of the specific securities sold adjusted for the accretion
and amortization of the purchase discounts and premiums during the respective
holding periods. Interest income is recorded on the accrual basis.
DISCOUNTS AND PREMIUMS -- Discounts and premiums are accreted or amortized over
the life of each security and are recorded as interest income for each of the
Funds using a method which approximates the effective interest method.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for Repurchase
Agreements are held by the custodian bank until the respective agreements
mature. Provisions of repurchase agreements and
<PAGE>
BISHOP STREET FUNDS
procedures adopted by the Adviser ensure that the market value of the collateral
is sufficient in the event of default by the counterparty. If the counterparty
defaults and the value of the collateral declines or if the counterparty enters
an insolvency proceeding, realization of the collateral by the Fund may be
delayed or limited.
CLASSES -- Class specific expenses are borne by that class. Income, nonclass
specific expenses and realized/unrealized gains and losses are allocated to the
respective classes on the basis of the relative daily net assets.
EXPENSES -- Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses of the Trust are prorated to the
Funds on the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared daily and paid on a monthly basis for the Hawaii Municipal Bond Fund
and the Money Market Fund. Any net realized capital gains will be distributed
at least annually for all Funds.
FEDERAL INCOME TAXES -- It is each Fund's intention to qualify as a regulated
investment company for Federal income tax purposes and to distribute all of its
taxable income and net capital gains. Accordingly, no provision for Federal
income taxes is required.
ORGANIZATION COSTS -- Organization costs of approximately $134,000 have been
capitalized by the Funds and are being amortized over sixty months commencing
with operations. In the event any of the initial shares are redeemed by any
holder thereof during the period that the fund is amortizing its organization
costs, the redemption proceeds payable to the holder thereof by the Fund will be
reduced by the unamortized organization costs in the same ratio as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of the redemption.
3. INVESTMENT ADVISORY AGREEMENT
================================================================================
Investment advisory services are provided to the Funds by First Hawaiian
Bank (the "Adviser"). The Adviser is entitled to receive an annual fee of 0.30%
of the average daily net assets of the Treasury Money Market Fund, 0.30% of the
average daily net assets of the Money Market Fund and 0.35% of the average daily
net assets of the Hawaii Municipal Bond Fund. The Adviser has voluntarily agreed
for an indefinite period of time to waive a portion of its fee in the Treasury
Money Market Fund, the Money Market Fund and the Hawaii Municipal Bond Fund, in
order to limit the operating expenses of the Funds to 0.44%, 0.50% and 0.21%,
respectively.
Wellington Management Company (The "Sub-Adviser") serves as the
investment sub-adviser for the Money Market Fund and the Treasury Money Market
Fund pursuant to a sub-adviser agreement. The Sub-Adviser is entitled to
receive from the Adviser a fee, computed daily and paid monthly, at the annual
rate of 0.075% of the average daily net assets of the Fund up to $500 million
and 0.020% of the average daily net assets of the Fund in excess of $500
million.
<PAGE>
JUNE 30, 1996 (Unaudited)
4. ADMINISTRATIVE, TRANSFER AGENT AND DISTRIBUTION SERVICES
================================================================================
Pursuant to an administration agreement dated January 27, 1995, (the
"Agreement") SEI Financial Management Corporation ("SFM"), a wholly owned
subsidiary of SEI Corporation ("SEI"), acts as the Trust's Administrator. Under
the terms of the Agreement, SFM is entitled to receive an annual fee of 0.20% of
the average daily net assets of each Fund. SFM has voluntarily agreed to waive
a portion of its fee in order to limit operating expenses.
Pursuant to an agreement dated January 30, 1995, DST Systems, Inc. ("DST")
acts as the Transfer Agent of the Trust. As such, DST provides transfer agency,
dividend disbursing and shareholder services to the Trust.
SEI Financial Services Company ("SFS"), wholly owned subsidiary of SEI,
acts as the Trust's Distributor pursuant to a distribution agreement dated
January 27, 1995. The Retail Class B shares of the Trust have a Rule 12b-1
Distribution Plan under which such shares of the Funds bear distribution
expenses and related service fees at the annual rate of 0.10% and 0.25% of their
average daily net assets for the Money Market Fund and Hawaii Municipal Bond
Fund, respectively. SFS has voluntarily agreed to waive a portion of the
distribution charge for the Hawaii Municipal Bond Fund in order to limit
operating expenses for the Retail Class B shares.
Certain officers of the Trust are also officers of the Administrator. Such
officers are paid no fees by the Trust.
<PAGE>
BISHOP STREET FUNDS
5. INVESTMENT TRANSACTIONS
================================================================================
The cost of security purchases and the proceeds from the sale of
securities, other than temporary cash investments for the period ended June 30,
1996 are presented below for the Hawaii Municipal Bond Fund.
FUND INVESTMENT TRANSACTIONS
HAWAII MUNICIPAL BOND
FUND
=====================
Purchases
U.S. Government Securities $ --
Other 11,220,360
Sales
U.S. Government Securities $ --
Other 2,352,058
At June 30, 1996 the total cost of securities and the net realized gains
and losses on securities sold for federal income tax purposes were not
materially different from amounts reported for financial reporting purposes. The
aggregate unrealized appreciation/depreciation on securities at June 30, 1996
for the Hawaii Municipal Bond Fund is as follows:
Gross Unrealized Appreciation $ 148,468
Gross Unrealized Depreciation (234,241)
---------
Net Unrealized Depreciation $ (85,773)
=========
<PAGE>
JUNE 30, 1996 (Unaudited)
6. CONCENTRATION OF CREDIT RISK (Unaudited)
================================================================================
The Hawaii Tax Free Bond Fund invests primarily in debt instruments in
the state of Hawaii. The issuers' ability to meet their obligations may be
affected by economic developments in that state. At June 30, 1996, the
percentage of the Fund investments by each revenue source was as follows:
HAWAII MUNICIPAL BOND
FUND
=====================
Cash Equivalents 2.5%
Education Bonds 4.7%
General Obligation Bonds 22.5%
Hospital Bonds 17.1%
Housing Bonds 16.2%
Mortgage Revenue Bonds 1.1%
Transportation Bonds 21.8%
Utility Bonds 13.4%
Other Revenue Bonds 0.7%
-----
100.0%
======
The ratings of long-term debt holdings as a percentage of total value of
investments at June 30, 1996 are as follows:
HAWAII MUNICIPAL BOND
STANDARD & POOR'S RATING FUND
======================== =====================
AAA 56.9%
AA 18.7%
A 16.4%
A- 3.2%
Not Rated 4.8%
------
100.0%
======
