<PAGE>
BISHOP STREET FUNDS
EQUITY FUND
HIGH GRADE INCOME FUND
Supplement dated July 31, 1997
to Prospectus dated April 30, 1997
The Prospectus dated April 30, 1997, is hereby amended by the addition of
the following unaudited financial information for the Equity Fund and the High
Grade Income Fund for the period ended June 30, 1997.
FINANCIAL HIGHLIGHTS BISHOP STREET FUNDS
For the Period from Inception Through June 30, 1997 UNAUDITED
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
EQUITY HIGH GRADE
FUND (1) INCOME FUND(1)
--------- ---------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.00
Income from Investment Operations:
Net Investment Income 0.04 0.23
Net Realized and Unrealized Gain (Loss) on Investments 1.17 (0.02)
Distributions from Net Investment Income (0.04) (0.23)
NET ASSET VALUE, END OF PERIOD $11.17 $9.98
Total Return* 12.16% 2.17%
Period Net Assets, End of Period (000's) $63,296 $24,909
Ratio of Expenses to Average Net Assets** 1.00% 0.80%
Ratio of Net Investment Income to Average Net Assets** 0.99% 5.67%
Ratio of Expenses to Average Net Assets (Excluding Waivers and Contributions)** 1.23% 1.12%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers and
Contributions)** 0.76% 5.35%
Portfolio Turnover Rate 13% 11%
Average Commission Rate(A) $0.0705 $0.0000
</TABLE>
* Return is for the period indicated and has not been annualized.
** Annualized.
(A) Average commission rate paid per share for the security purchases and sales
during the period.
(1) Commenced operations January 31, 1997.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
BISHOP STREET FUNDS
SUPPLEMENT DATED JULY 31, 1997 TO
THE STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 1997
The Statement of Additional Information for the Bishop Street Funds is
hereby amended and supplemented by the following unaudited financial statements
of the Equity Fund and the High Grade Income Fund for the period ended June 30,
1997.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
BISHOP STREET FUNDS
SEMI-ANNUAL REPORT -- JUNE 30, 1997
EQUITY FUND
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------- ---------
<C> <S> <C>
COMMON STOCK -- 95.2%
AIR TRANSPORTATION -- 0.5%
5,400 Federal Express Corp.*....................................................................... $ 312
---------
AIRCRAFT -- 4.1%
7,200 Allied Signal, Inc........................................................................... 605
23,800 Boeing Co.................................................................................... 1,263
8,500 United Technologies Corp..................................................................... 705
---------
2,573
---------
APPAREL/TEXTILES -- 0.5%
7,200 Liz Claiborne Inc............................................................................ 336
---------
AUTOMOTIVE -- 0.8%
8,100 Chrysler Corp................................................................................ 266
4,700 General Motors Corp.......................................................................... 262
---------
528
---------
BANKS -- 8.2%
9,300 Chase Manhattan Corp......................................................................... 903
9,500 Citicorp..................................................................................... 1,145
10,000 First Chicago NBD Corp....................................................................... 605
9,100 First Union Corp............................................................................. 842
16,400 NationsBank Corp............................................................................. 1,058
11,300 Norwest Corp................................................................................. 636
---------
5,189
---------
BEAUTY PRODUCTS -- 2.3%
7,600 Gillette Co.................................................................................. 720
5,300 Proctor & Gamble Co.......................................................................... 749
---------
1,469
---------
CHEMICALS -- 2.2%
5,500 Air Products & Chemicals, Inc................................................................ 447
22,100 Monsanto Co.................................................................................. 952
---------
1,399
---------
COMMUNICATIONS EQUIPMENT -- 2.1%
13,100 GTE Corp..................................................................................... 575
9,900 Motorola, Inc................................................................................ 752
---------
1,327
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------- ---------
<C> <S> <C>
COMMON STOCK -- CONTINUED
COMPUTERS & SERVICES -- 3.8%
8,400 Cisco Systems, Inc.*......................................................................... $ 564
3,000 Compaq Computer Corp.*....................................................................... 298
10,700 Hewlett Packard Co........................................................................... 599
10,200 International Business Machine Corp.......................................................... 920
---------
2,381
---------
DRUGS -- 10.6%
7,900 Abbott Laboratories.......................................................................... 527
7,400 American Home Products Corp.................................................................. 566
4,000 Amgen Inc.*.................................................................................. 232
10,600 Bristol-Myers Squibb Co...................................................................... 859
7,100 Eli Lilly & Co............................................................................... 776
11,600 Johnson & Johnson............................................................................ 747
10,600 Merck & Co., Inc............................................................................. 1,097
5,700 Pfizer Inc................................................................................... 681
10,000 Schering Plough Corp......................................................................... 479
6,200 Warner Lambert Co............................................................................ 770
---------
6,734
---------
ELECTRICAL UTILITIES -- 0.4%
5,900 FPL Group, Inc............................................................................... 272
---------
ENTERTAINMENT -- 0.8%
6,100 Walt Disney Co............................................................................... 490
---------
ENVIRONMENTAL SERVICES -- 0.5%
9,100 Waste Management, Inc........................................................................ 292
---------
FINANCIAL SERVICES -- 3.3%
6,300 American Express Co.......................................................................... 469
9,800 Federal Home Loan Mortgage Corp.............................................................. 337
16,500 Federal National Mortgage Association........................................................ 720
9,800 Merrill Lynch & Co., Inc..................................................................... 584
---------
2,110
---------
FOOD, BEVERAGE & TOBACCO -- 4.9%
13,800 Campbell Soup, Co............................................................................ 690
14,600 Coca Cola, Co................................................................................ 1,018
23,400 Philip Morris Companies Inc.................................................................. 1,038
7,700 Sara Lee Corp................................................................................ 321
---------
3,067
---------
GAS/NATURAL GAS -- 0.9%
13,600 Williams Companies Inc....................................................................... 595
---------
</TABLE>
2
<PAGE>
EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------- ---------
<C> <S> <C>
COMMON STOCK -- CONTINUED
HOTELS & LODGING -- 0.7%
17,500 Hilton Hotels Corp........................................................................... $ 465
---------
INSURANCE -- 4.4%
4,900 American International Group, Inc............................................................ 732
5,200 Chubb Corp................................................................................... 348
1,600 Cigna Corp................................................................................... 284
1,600 General Re Corp.............................................................................. 291
4,100 Hartford Financial Services Group Inc........................................................ 339
12,000 Travelers Group Inc.......................................................................... 757
---------
2,751
---------
MACHINERY -- 5.5%
12,450 Baker Hughes, Inc............................................................................ 482
7,100 Deere & Co................................................................................... 390
5,000 Emerson Electric Co.......................................................................... 275
35,800 General Electric, Co......................................................................... 2,340
---------
3,487
---------
MEDICAL PRODUCTS & SERVICES -- 0.7%
11,600 Columbia/HCA Healthcare Corp................................................................. 456
---------
METALS & MINING -- 0.5%
4,000 Phelps Dodge Corp............................................................................ 341
---------
MISCELLANEOUS BUSINESS SERVICES -- 5.4%
12,900 First Data Corp.............................................................................. 567
14,300 Microsoft, Corp.*............................................................................ 1,807
13,400 Oracle Corp.*................................................................................ 675
9,100 Sun Microsystems, Inc.*...................................................................... 339
---------
3,388
---------
MISCELLANEOUS CONSUMER SERVICES -- 0.4%
8,300 Service Corp International................................................................... 273
---------
OFFICE FURNITURE & FIXTURES -- 0.9%
14,000 Johnson Controls, Inc........................................................................ 575
---------
PAPER & PAPER PRODUCTS -- 0.9%
6,200 Kimberly-Clark Corp.......................................................................... 308
4,600 Mead Corp.................................................................................... 286
---------
594
---------
PETROLEUM & FUEL PRODUCTS -- 1.1%
5,400 Schlumberger Ltd............................................................................. 675
---------
</TABLE>
3
<PAGE>
EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------- ---------
<C> <S> <C>
COMMON STOCK -- CONTINUED
PETROLEUM REFINING -- 9.7%
7,300 Amoco Corp................................................................................... $ 635
20,800 Royal Dutch Petroleum Co. New York Registry.................................................. 1,131
7,800 British Petroleum, ADR....................................................................... 584
9,200 Chevron, Corp................................................................................ 680
25,400 Exxon Corp................................................................................... 1,562
8,800 Mobil Corp................................................................................... 615
8,700 Texaco, Inc.................................................................................. 946
---------
6,153
---------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.4%
3,200 Eastman Kodak Co............................................................................. 246
---------
RAILROADS -- 0.9%
15,700 Illinois Central, Corp....................................................................... 549
---------
RETAIL -- 5.6%
8,700 Albertson's Inc.............................................................................. 318
13,900 Dayton-Hudson Corp........................................................................... 739
10,400 Home Depot, Inc.............................................................................. 717
9,200 McDonald's Corp.............................................................................. 444
18,800 Pepsico, Inc................................................................................. 706
11,500 Sears Roebuck & Co........................................................................... 618
---------
3,542
---------
RUBBER & PLASTIC -- 0.8%
8,200 Nike, Inc., Cl B............................................................................. 479
---------
SEMI-CONDUCTORS/INSTRUMENTS -- 4.0%
17,850 Intel Corp................................................................................... 2,531
---------
TELEPHONES & TELECOMMUNICATION -- 6.9%
21,700 Airtouch Communications Inc.*................................................................ 594
15,600 AT & T Corp.................................................................................. 547
5,800 Bell Atlantic Corp........................................................................... 440
12,000 Bellsouth Corp............................................................................... 556
10,300 Lucent Technologies Inc...................................................................... 742
3,700 NYNEX, Corp.................................................................................. 213
5,800 SBC Communications, Inc...................................................................... 359
5,000 US West Communications Group................................................................. 188
22,200 Worldcom Inc.*............................................................................... 710
---------
4,349
---------
WHOLESALE -- 0.5%
1,600 Unilever NV, ADR............................................................................. 342
---------
TOTAL COMMON STOCK (Cost $52,972)............................................................ 60,270
---------
</TABLE>
4
<PAGE>
EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------- ---------
<C> <S> <C>
CASH EQUIVALENT -- 4.7%
$ 2,602 SEI Daily Income Trust Money Market Portfolio................................................ $ 2,603
384 SEI Daily Income Trust Prime Obligation Portfolio............................................ 385
---------
TOTAL CASH EQUIVALENT (Cost $2,988).......................................................... 2,988
---------
TOTAL INVESTMENTS (COST $55,960) -- 99.9%............................................................... 63,258
---------
OTHER ASSETS AND LIABILITIES, NET -- 0.1%............................................................... 38
---------
NET ASSETS:
Fund shares of Institutional Class A (unlimited authorization -- no par value) based on 5,668,039
outstanding shares of beneficial interest............................................................. 56,634
Accumulated net realized loss on investments............................................................ (636)
Net unrealized appreciation on investments.............................................................. 7,298
---------
TOTAL NET ASSETS -- 100.0%.............................................................................. $ 63,296
---------
---------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS A.............................................................. $ 11.17
---------
---------
</TABLE>
- ------------------------
* Non-Income producing security
Cl -- Class
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
BISHOP STREET FUNDS
SEMI-ANNUAL REPORT -- JUNE 30, 1997
HIGH GRADE INCOME FUND
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT MARKET
(000) VALUE
- --------- ---------
<C> <S> <C>
CORPORATE OBLIGATIONS -- 28.1%
AIRCRAFT -- 2.3%
Boeing
$ 600 6.350%, 06/15/03............................................................................. $ 586
---------
BANKS -- 1.2%
Bayerische Landesbank
300 6.375%, 10/15/05............................................................................. 289
---------
CHEMICALS -- 4.3%
Hercules
600 6.625%, 06/01/03............................................................................. 588
PPG Industries, Inc.
500 6.875%, 02/15/12............................................................................. 487
---------
1,075
---------
COMMUNICATIONS EQUIPMENT -- 1.2%
Rockwell International Corp.
300 6.625%, 06/01/05............................................................................. 295
---------
FOOD, BEVERAGE & TOBACCO -- 5.4%
Pet Inc.
700 6.500%, 07/01/03............................................................................. 678
Philip Morris Companies, Inc.
700 6.375%, 02/01/06............................................................................. 659
---------
1,337
INSURANCE -- 2.7%
Aon Corp.
700 6.300%, 01/15/04............................................................................. 671
---------
MACHINERY -- 1.2%
Dresser Industries, Inc.
300 6.250%, 06/01/00............................................................................. 298
---------
PRINTING & PUBLISHING -- 2.8%
Tribune Co.
700 6.875%, 11/01/06............................................................................. 694
---------
RETAIL -- 1.1%
Lowes Companies Inc.
300 6.375%, 12/15/05............................................................................. 287
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
HIGH GRADE INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT MARKET
(000) VALUE
- --------- ---------
<C> <S> <C>
CORPORATE OBLIGATIONS -- CONTINUED
SEMI-CONDUCTORS/INSTRUMENTS -- 3.1%
Texas Instruments, Inc.
700 8.750%, 04/01/07............................................................................. 778
---------
TELEPHONES & TELECOMMUNICATION -- 2.8%
US West Communications Group, Inc.
$ 700 6.625%, 09/15/05............................................................................. $ 686
---------
TOTAL CORPORATE OBLIGATIONS (Cost $7,020).................................................... 6,996
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 34.3%
FHLB
700 7.170%, 03/29/00............................................................................. 714
FHLB
400 6.000%, 07/05/00............................................................................. 395
FHLB
700 7.310%, 07/06/01............................................................................. 719
FHLB
700 7.570%, 08/19/04............................................................................. 735
FHLMC
1,100 5.690%, 01/24/01............................................................................. 1,070
FHLMC
700 6.220%, 03/24/03............................................................................. 686
FNMA
2,000 6.605%, 05/08/02............................................................................. 2,004
FNMA
800 7.400%, 07/01/04............................................................................. 833
FNMA
300 6.350%, 06/10/05............................................................................. 292
FNMA
400 6.440%, 06/21/05............................................................................. 392
FNMA
700 6.590%, 05/21/02............................................................................. 704
---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $8,555)....................................... 8,544
---------
CASH EQUIVALENT -- 3.4%
622 SEI Daily Income Trust Money Market Portfolio................................................ 623
223 SEI Daily Income Trust Prime Obligation Portfolio............................................ 224
---------
TOTAL CASH EQUIVALENT (Cost $847)............................................................ 847
---------
</TABLE>
7
<PAGE>
HIGH GRADE INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT MARKET
(000) VALUE
- --------- ---------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 32.6%
U.S. Treasury Bond
$ 700 7.500%, 11/15/16............................................................................. $ 748
U.S. Treasury Notes
1,500 5.750%, 12/31/98............................................................................. 1,495
U.S. Treasury Notes
1,000 6.375%, 01/15/99............................................................................. 1,005
U.S. Treasury Notes
500 7.500%, 10/31/99............................................................................. 514
U.S. Treasury Notes
1,500 5.875%, 11/15/99............................................................................. 1,490
U.S. Treasury Notes
700 8.500%, 11/15/00............................................................................. 746
U.S. Treasury Notes
700 7.750%, 02/15/01............................................................................. 732
U.S. Treasury Notes
700 6.125%, 12/31/01............................................................................. 693
U.S. Treasury Notes
700 6.375%, 08/15/02............................................................................. 700
---------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $8,147)................................................ 8,123
---------
TOTAL INVESTMENTS (COST $24,569) -- 98.4%............................................................... 24,510
---------
OTHER ASSETS AND LIABILITIES, NET -- 1.6%............................................................... 399
---------
NET ASSETS:
Fund shares of Institutional Class A (unlimited authorization -- no par value) based on 2,496,881
outstanding shares of beneficial interest............................................................. 24,967
Accumulated net realized gain on investments............................................................ 1
Net unrealized depreciation on investments.............................................................. (59)
---------
TOTAL NET ASSETS -- 100.0%.............................................................................. $ 24,909
---------
---------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS A.............................................................. $ 9.98
---------
</TABLE>
- ------------------------
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
BISHOP STREET FUNDS
SEMI-ANNUAL REPORT -- JUNE 30, 1997
STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY HIGH GRADE
FUND(2) INCOME FUND(2)
----------- -----------------
<S> <C> <C>
INTEREST INCOME:....................................................................... $ 79 $ 650
Dividend Income...................................................................... 408 --
----------- -----
Total Investment Income............................................................ 487 650
----------- -----
EXPENSES:
Investment Adviser Fee............................................................... 181 61
Investment Adviser Fee Waiver........................................................ (46) (27)
Management Fee....................................................................... 49 20
Management Fee Waiver................................................................ (12) (5)
Shareholder Servicing Fee............................................................ 50 21
Shareholder Servicing Fee Waiver..................................................... (30) (12)
Custody Fees......................................................................... 8 2
Transfer Agent Fees.................................................................. 11 6
Registration Fees.................................................................... 10 4
Distribution Fees (1)................................................................ -- --
Distribution Fee Waiver.............................................................. -- --
Trustees Fees........................................................................ 4 1
Printing Fees........................................................................ 3 2
Professional Fees.................................................................... 6 2
Amortization of Deferred Organizational Costs........................................ 1 1
Miscellaneous Expenses............................................................... 9 4
----------- -----
Total Expenses..................................................................... 244 80
----------- -----
Net Investment Income................................................................ 243 570
----------- -----
Net Realized Gain (Loss) on Investments................................................ (636) 1
Change in Unrealized Appreciation on Investments....................................... 7,297 (59)
----------- -----
Net Realized and Unrealized Gain (Loss) on Investments................................. 6,661 (58)
----------- -----
Increase in Net Assets Resulting from Operations....................................... $ 6,904 $ 512
----------- -----
----------- -----
</TABLE>
- ------------------------
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) All distribution fees are incurred in the Retail Class B.
(2) Commenced operations on January 31, 1997.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
BISHOP STREET FUNDS
SEMI-ANNUAL REPORT -- JUNE 30, 1997
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
HIGH GRADE
EQUITY FUND INCOME FUND
------------ ------------
01/31/97 01/31/97
TO TO
06/30/97(1) 06/30/97(1)
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
Net Investment Income.............................................................. $ 243 $ 570
Net Realized Gain (Loss) on Investments............................................ (636) 1
Change in Unrealized Appreciation (Depreciation) on Investments.................... 7,298 (59)
------------ ------------
Increase (Decrease) in Net Assets Resulting From Operations.......................... 6,905 512
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class A Shares..................................................... (243) (570)
Capital Gains:
Institutional Class A Shares..................................................... -- --
Total Distributions............................................................ (243) (570)
------------ ------------
Change in Net Assets................................................................. 6,662 (58)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class A Shares:
Proceeds from Shares Issued...................................................... 57,491 24,397
Reinvestments of Cash Distributions.............................................. 243 570
Cost of Shares Redeemed.......................................................... (1,100) --
------------ ------------
Total Institutional Capital Share Transactions................................. 56,634 24,967
------------ ------------
Net Increase (Decrease) in Net Assets
From Share Transactions............................................................ 56,634 24,967
------------ ------------
Total Increase (Decrease) in Net Assets............................................ 63,296 24,909
------------ ------------
NET ASSETS:
Beginning of Period................................................................ -- --
------------ ------------
End of Period...................................................................... $ 63,296 $ 24,909
------------ ------------
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class A Shares:
Shares Issued.................................................................... 5,748 2,439
Shares Issued in Lieu of Cash Distributions...................................... 23 58
Shares Redeemed.................................................................. (103) --
------------ ------------
Total Institutional Capital Share Transactions................................. 5,668 2,497
------------ ------------
Net Increase (Decrease) in Capital Shares............................................ $ 5,668 $ 2,497
------------ ------------
------------ ------------
</TABLE>
- ------------------------
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commenced operations on January 31, 1997.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
BISHOP STREET FUNDS
SEMI-ANNUAL REPORT -- JUNE 30, 1997
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED
<TABLE>
<CAPTION>
EQUITY FUND
-----------
1/31/97 TO
6/30/97(1)
-----------
<S> <C>
INSTITUTIONAL CLASS A
Net asset value, beginning of period............................................................... $ 10.00
Net investment income.............................................................................. 0.04
Net realized and unrealized gain (loss) on investments............................................. 1.17
Distributions from net investment income........................................................... (0.04)
Distributions from capital gains................................................................... --
Net asset value, end of period..................................................................... $ 11.17
Total return+...................................................................................... 12.16%
Net assets, end of period (000).................................................................... $ 63,296
Ratio of expenses to average net assets*........................................................... 1.00%
Ratio of expenses to average net assets excluding fee waivers and reimbursements*.................. 1.23%
Ratio of net investment income to average net assets*.............................................. 0.99%
Ratio of net investment income to average net assets excluding fee waivers and reimbursements*..... 0.76%
Portfolio turnover rate............................................................................ 13%
Average commission rate............................................................................ $ 0.0705
</TABLE>
- ------------------------
+ Total return is for the period indicated and has not been annualized.
* Annualized
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commenced operations on January 31, 1997.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED
<TABLE>
<CAPTION>
HIGH GRADE
INCOME FUND
-----------
1/31/97 TO
6/30/97(1)
-----------
<S> <C>
INSTITUTIONAL CLASS A
Net asset value, beginning of period............................................................... $ 10.00
Net investment income.............................................................................. 0.23
Net realized and unrealized gain (loss) on investments............................................. (0.02)
Distributions from net investment income........................................................... (0.23)
Distributions from capital gains................................................................... --
Net asset value, end of period..................................................................... $ 9.98
Total return+...................................................................................... 2.17%
Net assets, end of period (000).................................................................... $ 24,909
Ratio of expenses to average net assets*........................................................... 0.80%
Ratio of expenses to average net assets excluding fee waivers and reimbursements*.................. 1.12%
Ratio of net investment income to average net assets*.............................................. 5.67%
Ratio of net investment income to average net assets excluding fee waivers and reimbursements*..... 5.35%
Portfolio turnover rate............................................................................ 11%
Average commission rate............................................................................ $ 0.0000
</TABLE>
- ------------------------
+ Total return is for the period indicated and has not been annualized.
* Annualized
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commenced operations on January 31, 1997.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
BISHOP STREET FUNDS
SEMI-ANNUAL REPORT -- JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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 which includes the
Equity Fund and the High Grade Income Fund (the "Funds"). The Funds commenced
operations on January 31, 1997. The other Funds in the series which are not
being reported at this time include the Hawaii Municipal Bond Fund (formerly the
Hawaii Tax-Free Fund), the Treasury Money Market Fund and the Money Market 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. 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
For the Equity Fund investment securities which are traded on a national
securities exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the over-the-
counter market and listed equity securities for which no sale was reported on
that date are stated at the last quoted bid price.
For the High Grade Income Fund 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 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.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 High Grade Income Fund. The Equity Fund declares and pays
such distributions on a quarterly basis. Any net realized capital gains will be
distributed at least annually for both 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 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 prior to the end of the amortization period, the proceeds
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.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
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 0.74%
of the average daily net assets of the Equity Fund and 0.55% of the average
daily net assets of the High Grade Income Fund. The Adviser may from time to
time waive a portion of its fee in order to limit the operating expenses of the
Fund.
4. ADMINISTRATIVE, TRANSFER AGENT AND DISTRIBUTION SERVICES
Pursuant to an administration agreement dated January 27, 1995, (the
"Agreement") SEI Fund Resources ("SEI"), a wholly owned subsidiary of SEI
Investments, acts as the Trust's Administrator. Under the terms of the
Agreement, SEI is entitled to receive an annual fee of 0.20% of the average
daily net assets of each Fund. SEI has voluntarily agreed to waive a portion of
its fee in order to limit operating expenses.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. ADMINISTRATIVE, TRANSFER AGENT AND DISTRIBUTION SERVICES (CONTINUED)
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 Investments Distribution Co., a wholly owned subsidiary of SEI
Investments, acts as the Trust's Distributor pursuant to a distribution
agreement dated January 27, 1995.
Certain officers of the Trust are also officers of the Administrator. Such
officers are paid no fees by the Trust.
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, 1997 are
presented below for the Funds.
FUND INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
HIGH GRADE
EQUITY FUND INCOME FUND
------------- -------------
<S> <C> <C>
Purchases
U.S. Government Securities................................... $ -- $ 18,418,398
Other........................................................ 60,788,932 7,698,976
Sales
U.S. Government Securities................................... $ -- $ 1,701,531
Other........................................................ 7,180,012 680,106
</TABLE>
At June 30, 1997 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, 1997 for the
Funds is as follows:
<TABLE>
<CAPTION>
HIGH GRADE
EQUITY FUND INCOME FUND
------------ ------------
<S> <C> <C>
Gross Unrealized Appreciation..................................... $ 7,830,920 $ 17,600
Gross Unrealized Depreciation..................................... (533,258) (76,987)
------------ ------------
Net Unrealized Appreciation....................................... $ 7,297,662 $ (59,387)
------------ ------------
------------ ------------
</TABLE>
15
