[graphic of compass on world map omitted]
BISHOP STREET
FUNDS
SEMI-ANNUAL REPORT
JUNE 30, 1999
EQUITY FUND
HIGH GRADE INCOME FUND
HAWAII MUNICIPAL BOND FUND
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
INVESTMENT ADVISER
FIRST HAWAIIAN BANK
A SUBSIDIARY OF
BANCWEST CORPORATION
[BISHOP STREET LOGO OMITTED]
<PAGE>
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[BOUNDING BOX]
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF BISHOP STREET FUNDS' SHAREHOLDERS.
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
SHARES OF BISHOP STREET FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY FIRST HAWAIIAN BANK OR ANY OF ITS SUBSIDIARIES. SUCH SHARES ARE
ALSO NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENT IN SHARES OF MUTUAL
FUNDS INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SEI
INVESTMENTS DISTRIBUTION CO. SERVES AS DISTRIBUTOR FOR BISHOP STREET FUNDS
AND IS NOT AFFILIATED WITH FIRST HAWAIIAN BANK.
[END BOUNDING BOX]
<PAGE>
BISHOP STREET
TABLE OF CONTENTS
FUNDS
Letter to Shareholders ............................................... 2
Equity Fund
Investment Adviser's Report & Management Discussion ............ 4
Statement of Net Assets ........................................ 7
High Grade Income Fund
Investment Adviser's Report & Management Discussion ............ 12
Schedule of Investments ........................................ 15
Hawaii Municipal Bond Fund
Investment Adviser's Report & Management Discussion ............ 18
Statement of Net Assets ........................................ 21
Money Market & Treasury Money Market Funds
Investment Adviser's Report & Management Discussion ............ 26
Statements of Net Assets ....................................... 28
Statement of Assets and Liabilities .................................. 33
Statements of Operations ............................................. 34
Statements of Changes in Net Assets .................................. 35
Financial Highlights ................................................. 38
Notes to Financial Statements ........................................ 40
1
<PAGE>
BISHOP STREET
LETTER TO SHAREHOLDERS
FUNDS
[photo of Robert A. Alm omitted]
DEAR FELLOW SHAREHOLDER:
We're pleased to present Bishop Street Funds' Semi-Annual Report for the first
half of 1999.
The stock market continued to post remarkable gains during the first half of the
year, as investors were pleasantly surprised by the strong U.S. economy and
better-than-expected corporate earnings. While large cap growth companies
continued to dominate investor preferences during the first quarter, the market
broadened out to include small and mid-size companies in economically cyclical
industries that had not participated in recent years. Although inflation
remained under control, interest rates rose steadily during the period, which
made the environment difficult for bonds.
The Bishop Street Funds performed in line with their benchmarks during the
period. The Bishop Street Equity Fund, with its focus on large growth stocks,
produced a total return of 11.24%.* Strong performers within the portfolio
included energy and telecommunications stocks. Rising interest rates produced
slightly negative total returns for the bond funds, but we believe that the more
appropriate focus for fixed income investments is on yield. The Bishop Street
High Grade Income Fund's total return was -3.89%*, but its June 30, 1999 yield
was 5.46%*. Similarly, the Bishop Street Hawaii Municipal Bond Fund's total
return was -1.34%*, but its yield was 4.86%*, which is equivalent to a taxable
yield of 8.77%** for an individual in the highest combined federal and state
income tax bracket. If interest rates should fall during the next six months,
then bond prices-and total returns-should rise.
Bishop Street Funds
2
<PAGE>
Please take some time to read the following pages. They include a summary of the
economic environment affecting each fund, a discussion of performance,
statements of net assets and other financial information. If you have any
questions about this report or the Bishop Street Funds, please call your
investment professional or Bishop Street Funds Investor Services at
1-800-262-9565.
Thank you for choosing the Bishop Street Funds.
Sincerely,
/s/signature omitted
Robert A. Alm
Executive Vice President and Manager
Financial Management Group
First Hawaiian Bank, Investment Adviser
* The performance data quoted represents past performance for the Institutional
Shares and does not guarantee future results. The investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
** This information is based on a hypothetical illustration and is not
representative of any investment securities.
Semi-Annual Report -- June 30, 1999
3
<PAGE>
BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
Equity Fund
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT:
Despite steadily rising interest rates, the U.S. stock market produced another
strong performance during the first half of 1999, as the U.S. economy entered
its ninth consecutive year of expansion.
Although the first quarter continued to favor large capitalization growth
stocks, the second quarter saw the market broaden to include economically
sensitive basic industries as well as small and mid-cap companies. This is
primarily because the Asian economic crisis appeared to be over and the global
economy appeared to be re-accelerating. That gave investors confidence to shift
into stocks that had been out of favor and selling at low valuations.
As a result, the Dow Jones Industrial Average, which includes a heavy weighting
in traditional manufacturers, rose 20.45%. The Russell 2000 Index, which
measures small companies, rose 9.29% during the period--still lagging, but
ending a streak of significant underperformance over the past three years.
In Europe, a new currency, the euro, was launched with much fanfare. However,
the euro's performance was disappointing, as it devalued from $1.18 to $1.02
during the six-month period. The reason had as much to do with Europe's sluggish
economy as the booming U.S. business climate. The strong dollar also was partly
due to rising U.S. interest rates, as the 30-year Treasury bond rose above 6%,
drawing capital from around the world.
Although inflation remained low during the period, investors became concerned
when the consumer price index was reported to have increased 0.7% in April, the
highest monthly increase in nine years. However, much of the increase was pegged
to rising oil prices, which rebounded from $11 to $18 a barrel during the
six-month period. The Federal Reserve Board, ever vigilant to stamp out
inflation, reacted prudently by raising short-term rates just 0.25% on June 30,
1999.
Bishop Street Funds
4
<PAGE>
[Bishop Street Logo Omitted]
MANAGEMENT DISCUSSION & ANALYSIS OF FUND PERFORMANCE:
During the six-month period ending June 30, 1999, the Equity Fund Institutional
Class produced a total return of 11.24%. In comparison, the Lipper Domestic
Equity Funds Aggregate was up 11.25%, while the unmanaged S&P 500 Index rose
12.38%.
With an emphasis on large cap growth stocks, second quarter performance lagged
the broader-market average as investor sentiment shifted from growth to value
stocks. Investors, seeing signs of a global market recovery, invested in
commodity-related goods such as energy, chemical, and paper stocks, forecasting
an increase in demand for U.S. produced raw materials. The Bishop Street Equity
Fund's under-weighted allocation in these industries caused the Fund to lag the
market index in the second quarter.
The Fund's performance was also hurt by an over-weighted allocation in the
pharmaceutical industry. In recent months, Congress has begun debating the
merits of having Medicare cover prescription drugs. If such legislation were
enacted, pharmaceutical companies would be negatively impacted due to
restrictive pricing flexibility. However, we feel that the aging baby boomer
generation, which comprise 1/3 of the U.S. population, will continue to drive
the pharmaceutical industry's earnings growth by 15-20% per year.
Even though investor preference may have rotated from growth to value-oriented
stocks in the second quarter, we will not deviate from our strategy of investing
in large cap growth stocks. With consumer confidence near all-time highs,
interest rates at historical lows and inflation benign, we feel that growth
stocks will continue to drive the market's overall performance well into the
next millennium.
Semi-Annual Report -- June 30, 1999
5
<PAGE>
Equity Fund
- --------------------------------------------------------------------------------
Performance Comparison
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE BISHOP STREET EQUITY FUND, INSTITUTIONAL CLASS OR CLASS A,
VERSUS THE S&P 500 COMPOSITE INDEX, THE CONSUMER PRICE
INDEX, AND THE LIPPER DOMESTIC EQUITY FUNDS AGGREGATE
[LINE GRAPH OMITTED PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
BISHOP STREET BISHOP STREET , S&P 500 LIPPER CONSUMER
EQUITY FUND, EQUITY FUND COMPOSITE DOMESTIC PRICE
INSTITUTIONAL SYNTHETIC INDEX EQUITY FUNDS INDEX
CLASS++ CLASS A++ AGGREGATE
<S> <C> <C> <C> <C> <C>
JAN 97 10,000 9,425 10,000 10,000 10,000
MAR 97 9,593 9,042 9,665 9,427 10,040
JUN 97 11,104 10,466 11,351 10,832 10,070
SEP 97 11,844 11,163 12,202 12,112 10,131
DEC 97 12,031 11,339 12,552 11,937 10,171
MAR 98 13,699 12,912 14,301 13,324 10,181
JUNE 98 14,164 13,349 14,773 13,252 10,242
SEP 98 12,873 12,133 13,306 11,339 10,283
DEC 98 16,007 15,086 16,141 13,544 10,335
MAR 99 17,052 16,072 16,944 13,716 10,376
JUN 99 17,808 16,784 18,139 15,105 10,449
</TABLE>
++ Account value if you reinvested income and capital gains.
Average Annual Total Returns
SIX ONE ANNUALIZED
MONTH YEAR INCEPTION
RETURN RETURN TO DATE
- -------------------------------------------
11.24% 25.72% 27.53% Institutional Class*
- -------------------------------------------
11.24%+ 25.72%+ 27.53%+ Class A**
- -------------------------------------------
4.86%+ 18.52%+ 24.44%+ Class A, with load
*Commenced operations on 01/31/97.
**Commenced operations on 06/14/99.
+Synthetic, not actual.
Bishop Street Funds
6
<PAGE>
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Top Ten Equity Holdings
Percentage of
Investments
- --------------------------------------------------------------------------------
1. Microsoft Corp. 4.6%
- --------------------------------------------------------------------------------
2. Cisco Systems Inc. 4.5%
- --------------------------------------------------------------------------------
3. Lucent Technologies Inc. 3.5%
- --------------------------------------------------------------------------------
4. General Electric Co. 3.4%
- --------------------------------------------------------------------------------
5. Schering Plough Corp. 2.9%
- --------------------------------------------------------------------------------
6. Eli Lilly &Co. 2.7%
- --------------------------------------------------------------------------------
7. AT&T Corp. 2.6%
- --------------------------------------------------------------------------------
8. MCI WorldCom Inc. 2.6%
- --------------------------------------------------------------------------------
9. MediaOne Group Inc. 2.4%
- --------------------------------------------------------------------------------
10. American Express Co. 1.8%
- --------------------------------------------------------------------------------
Statement of Net Assets
Market
Value
Shares (000)
------- ------
COMMON STOCK -- 98.0%
AEROSPACE / DEFENSE -- 1.7%
26,200 Lockheed Martin Corp. $ 976
14,800 United Technologies Corp. 1,061
------
2,037
------
AUTOMOTIVE -- 0.9%
18,550 General Motors, Cl H 1,043
------
BANKS -- 5.1%
43,600 Bank of New York 1,600
19,750 Chase Manhattan 1,711
30,000 Fleet Financial Group 1,331
44,300 U.S. Bancorp 1,506
------
6,148
------
BEAUTY PRODUCTS -- 2.1%
10,700 Colgate-Palmolive 1,057
16,850 Procter & Gamble 1,504
------
2,561
------
Semi-Annual Report -- June 30, 1999
7
<PAGE>
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONTINUED)
Market
Value
Shares (000)
------- -------
COMMON STOCK -- CONTINUED
BROADCASTING, NEWSPAPERS & ADVERTISING -- 4.3%
32,600 Comcast Cl A $ 1,167
38,150 Mediaone Group Inc.* 2,837
17,750 Univision Communications* 1,171
-------
5,175
-------
CHEMICALS -- 1.8%
18,950 E.I. DuPont de Nemours 1,295
22,700 Monsanto Co. 895
-------
2,190
-------
COMMUNICATIONS EQUIPMENT -- 3.5%
62,700 Lucent Technologies Inc. 4,228
-------
COMPUTERS & SERVICES -- 15.2%
14,600 America Online* 1,613
83,800 Cisco Systems, Inc.* 5,400
30,650 Dell Computer* 1,134
14,200 EMC* 781
15,100 International Business Machine Corp. 1,952
61,600 Microsoft Corp.* 5,556
26,700 Sun Microsystems Inc.* 1,839
-------
18,275
-------
DRUGS -- 12.6%
17,650 Bristol-Myers Squibb Co. 1,243
60,000 Elan, ADR* 1,665
44,900 Eli Lilly & Co. 3,216
15,100 Johnson & Johnson 1,480
14,200 Merck & Co. Inc. 1,051
14,900 Pfizer Inc. 1,635
65,500 Schering Plough Corp. 3,471
19,900 Warner Lambert Co. 1,381
-------
15,142
-------
ELECTRICAL UTILITIES -- 1.7%
34,200 AES Corp.* 1,988
-------
ENTERTAINMENT -- 0.8%
53,700 Mirage Resorts* 899
-------
Bishop Street Funds
8
<PAGE>
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONTINUED)
Market
Value
Shares (000)
------- -------
COMMON STOCK -- CONTINUED
FINANCIAL SERVICES -- 5.7%
16,850 American Express Co. $ 2,193
16,100 Charles Schwab 1,769
37,325 Citigroup 1,773
15,750 Fannie Mae 1,077
-------
6,812
-------
FOOD, BEVERAGE & TOBACCO -- 2.7%
22,100 Coca-Cola Co. 1,381
19,350 H.J. Heinz 970
12,232 Unilever Nv* 853
-------
3,204
-------
GAS/NATURAL GAS -- 0.8%
21,800 Williams Companies Inc. 928
-------
HOUSEHOLD PRODUCTS -- 0.8%
9,250 Clorox 988
-------
INSURANCE -- 3.0%
21,250 American General 1,602
17,325 American International Group Inc. 2,028
-------
3,630
-------
MACHINERY -- 4.0%
10,400 Applied Materials* 768
35,800 General Electric Co. 4,045
-------
4,813
-------
MARINE TRANSPORTATION -- 1.5%
36,000 Carnival, Cl A 1,746
-------
MEDICAL PRODUCTS & SERVICES -- 0.3%
8,000 Biomet* 318
-------
MISCELLANEOUS BUSINESS SERVICES -- 1.0%
28,700 Automatic Data Processing 1,263
-------
MISCELLANEOUS MANUFACTURING -- 1.8%
22,300 Tyco International 2,113
-------
PAPER & PAPER PRODUCTS -- 0.8%
17,750 Kimberly-Clark Corp. 1,012
-------
Semi-Annual Report -- June 30, 1999
9
<PAGE>
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONTINUED)
Market
Value
Shares (000)
------- -------
COMMON STOCK -- CONTINUED
PETROLEUM & FUEL PRODUCTS -- 4.5%
16,200 Enron $ 1,324
37,200 Halliburton 1,683
29,000 Schlumberger Ltd. 1,847
15,900 Weatherford International* 582
--------
5,436
--------
PETROLEUM REFINING -- 2.5%
17,400 Royal Dutch Petroleum Co., ADR, New York Registry 1,048
6,000 Tosco 156
28,800 Total Fina SA, ADR 1,856
--------
3,060
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.6%
12,050 Xerox 712
--------
PRINTING & PUBLISHING -- 1.5%
24,100 Time Warner 1,771
--------
RETAIL -- 8.2%
8,700 Albertson's Inc. 449
18,100 Costco Companies Inc.* 1,449
25,150 CVS Corp. 1,276
22,300 Dayton-Hudson Corp. 1,450
27,000 Home Depot Inc. 1,740
48,000 Kroger* 1,341
18,400 McDonald's Corp. 760
29,400 Wal-Mart Stores, Inc. 1,419
--------
9,884
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.3%
25,800 Intel Corp. 1,535
--------
TELEPHONES & TELECOMMUNICATION -- 7.3%
55,375 AT&T Corp. 3,091
27,600 BellSouth Corp. 1,294
35,600 MCI WorldCom Inc.* 3,064
40,800 Qwest Communications International* 1,349
--------
8,798
--------
TOTAL COMMON STOCK (Cost $83,660) 117,709
--------
Bishop Street Funds
10
<PAGE>
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONCLUDED)
Market
Shares Value
(000) (000)
------- -------
CASH EQUIVALENTS -- 2.6%
2,679 SEI Daily Income Trust Money Market Fund $ 2,679
491 SEI Daily Income Trust Prime Obligation Fund 491
--------
TOTAL CASH EQUIVALENTS (Cost $3,170) 3,170
--------
TOTAL INVESTMENTS (Cost $86,830) -- 100.6% 120,879
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.6%) (754)
--------
NET ASSETS:
Fund shares of Institutional Class (unlimited authorization --
no par value) based on 7,072,758 outstanding shares of
beneficial interest 77,475
Fund shares of Class A (unlimited authorization -- no par value)
based on 360 outstanding shares of beneficial interest 6
Accumulated net realized gain on investments 8,595
Net unrealized appreciation on investments 34,049
--------
TOTAL NET ASSETS -- 100.0% $120,125
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $16.98
--------
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE -- CLASS A $16.99
--------
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A ($16.99 / 94.25%) $18.03
--------
*NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 1999
11
<PAGE>
BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
High Grade Income Fund
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT:
The U.S. economy was far stronger than expected during the first half of 1999.
Early in the period, a report that fourth quarter 1998 growth was more than 6%
sent bond yields soaring. Investors, who had anticipated a possible recession
due to the Asian economic crisis, suddenly began to fear a return of inflation.
The Federal Reserve Board, which had cut short-term interest rates three times
in the fall to stimulate the economy, quickly shifted away from an easing bias.
The expectation that the Fed would raise interest rates solidified when the
first quarter GDP growth was reported at more than 4% (annualized). In early
May, the government reported that the April Consumer Price Index (CPI) had risen
0.7%, the highest monthly rate increase in nine years.
By June 30, 1999, the 30-year U.S. Treasury bond yield had risen by 87 basis
points (a basis point equals 0.01%) from the start of the year. The intermediate
part of the yield curve was even more volatile, with the ten-year Treasury
rising 1.14%.
Despite rising interest rates, corporate bond issuance was particularly strong
as issuers sought to take care of their financing needs early in 1999 in case
the markets are disrupted due to potential computer problems when the calendar
flips from 1999 to 2000.
However, as the first half of 1999 came to a close, there were indications
that the economy was moderating. The May CPI was flat as higher interest rates
had taken a toll on the housing industry, as new construction slowed. Although
investors eagerly awaited the Fed's action on June 30, it turned out to be a
modest 25 basis point (0.25%) increase and marked a shift in bias from
tightening to neutral.
Bishop Street Funds
12
<PAGE>
[bishop Street Logo Omitted}
MANAGEMENT DISCUSSION & ANALYSIS OF FUND PERFORMANCE:
Because of very low inflation and the weak global economy coming into 1999, the
portfolio was positioned for a continuation of declining interest rates by
having a longer-than-average duration. A portfolio's duration is a measure of
its sensitivity to changes in interest rates. Since bond prices move inversely
to the direction of interest rates, a longer-than-average duration would be
advantageous in a period of declining interest rates.
However, the recovery in Asia and the stronger than expected U.S. economy caused
interest rates to rise sharply, particularly in the month of February 1999, the
worst month for bonds in nearly 20 years. Although the rest of the period was
not as adverse, the direction was essentially the same. As a result, for the
six-months ended June 30, 1999, the Institutional Class of the Fund produced a
total return of -3.89% while the unmanaged Lehman Government/ Corporate Bond
Index returned -2.27%.
As of June 30, 1999, the High Grade Income Fund's effective yield was 5.46%. It
should be emphasized that a bond fund's total return is not the same as its
effective yield. Total return is the sum of the income a fund generates plus or
minus changes in its net asset value (NAV). Like the price of an individual
bond, a fund's NAV falls when interest rates rise and vice versa.
Our decision to have a light position in corporate bonds was a positive for the
Fund during the period. Corporate bond issuance was very heavy in the second
quarter, depressing prices, particularly in the lower-quality sectors where we
have very little exposure.
Our outlook for the rest of 1999 is positive for bonds. Inflation is still very
low and the higher level of interest rates is likely to slow the economy. We
will continue to manage the High Grade Income Fund with a longer-than-average
duration, focusing on high quality securities and an eye towards income for our
shareholders.
Semi-Annual Report -- June 30, 1999
13
<PAGE>
High Grade Income Fund
- --------------------------------------------------------------------------------
Performance Comparison
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE BISHOP
STREET HIGH GRADE INCOME FUND, INSTITUTIONAL CLASS OR CLASS A, VERSUS THE
LEHMAN GOVERNMENT/CORPORATE INDEX, THE CONSUMER INDEX, AND THE LIPPER DOMESTIC
FIXED INCOME FUNDS AGGREGATE
[LINE GRAPH OMITTED] PLOT POINTS AS FOLLOWS:
<TABLE>
<CAPTION>
BISHOP STREET BISHOP STREET LEHMAN LIPPER CONSUMER
HIGH GRADE HIGH GRADE GOVERNMENT DOMESTIC PRICE
INCOME FUND, INCOME FUND CORPORATE TAXABLE FIXED INDEX
INSTITUTIONAL SYNTHETIC INDEX INCOME FUNDS
CLASS++ CLASS A++ AGGREGATE
<S> <C> <C> <C> <C> <C>
JAN 97 10,000 9,525 10,000 10,000 10,000
MAR 97 9,902 9,431 9,902 9,937 10,040
JUN 97 10,216 9,730 10,261 10,279 10,070
SEP 97 10,514 10,015 10,621 10,611 10,131
DEC 97 10,793 10,280 10,962 10,828 10,171
MAR 98 10,937 10,418 11,129 11,031 10,181
JUN 98 11,191 10,659 11,419 11,203 10,242
SEP 98 11,798 11,237 11,985 11,359 10,283
DEC 98 11,774 11,215 12,000 11,441 10,335
MAR 99 11,495 10,949 11,856 11,506 10,376
JUN 99 11,316 10,755 11,727 11,474 10,499
</TABLE>
++ Account value if you reinvested income and capital gains.
Average Annual Total Returns
SIX ONE ANNUALIZED
MONTH YEAR INCEPTION
RETURN RETURN TO DATE
- ---------------------------------------
-3.89% 1.11% 5.26% Institutional Class*
- ---------------------------------------
-4.10%+ 0.89%+ 5.16%+ Class A**
- ---------------------------------------
-8.66%+ -3.95%+ 3.06%+ Class A, with load
- ---------------------------------------
*Commenced operations on 01/31/97.
**Commenced operations on 06/14/99.
+Synthetic, not actual.
Bishop Street Funds
14
<PAGE>
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Top Ten Holdings
- --------------------------------------------------------------------------------
Percentage
Coupon Maturity of
Rate Date Investments
- --------------------------------------------------------------------------------
1. United States Treasury Bond 7.13% Feb. 15, 2023 9.5%
- --------------------------------------------------------------------------------
2. United States Treasury Bond 7.50% Nov. 15, 2016 7.1%
- --------------------------------------------------------------------------------
3. United States Treasury Bond 6.75% Aug. 15, 2026 4.6%
- --------------------------------------------------------------------------------
4. Federal National Mortgage Association 6.61% May 08, 2002 4.3%
- --------------------------------------------------------------------------------
5. United States Treasury Note 7.75% Feb. 15, 2001 4.1%
- --------------------------------------------------------------------------------
6. United States Treasury Bond 7.25% Aug. 15, 2022 3.2%
- --------------------------------------------------------------------------------
7. United States Treasury Bond 6.25% Aug. 15, 2023 3.2%
- --------------------------------------------------------------------------------
8. Federal Home Loan Bank 7.57% Aug. 19, 2004 3.1%
- --------------------------------------------------------------------------------
9. Federal Home Loan Bank 7.31% Jul. 06, 2001 3.0%
- --------------------------------------------------------------------------------
10. United States Treasury Note 6.38% Aug. 15, 2002 3.0%
- --------------------------------------------------------------------------------
Schedule of Investments
Face Market
Amount Value
(000) (000)
------- -------
U.S. TREASURY OBLIGATIONS -- 66.9%
U.S. Treasury Bonds
$ 500 7.250%, 05/15/16 $ 550
1,500 7.500%, 11/15/16 1,689
150 7.875%, 02/15/21 178
675 7.250%, 08/15/22 756
2,025 7.125%, 02/15/23 2,243
750 6.250%, 08/15/23 753
725 6.000%, 02/15/26 707
1,025 6.750%, 08/15/26 1,096
500 6.500%, 11/15/26 519
600 6.125%, 11/15/27 595
U.S. Treasury Notes
500 6.125%, 09/30/00 504
450 8.500%, 11/15/00 468
950 7.750%, 02/15/01 983
450 6.500%, 05/31/01 458
500 6.625%, 06/30/01 510
275 6.625%, 07/31/01 280
300 6.250%, 02/28/02 304
Semi-Annual Report -- June 30, 1999
15
<PAGE>
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Schedule of Investments
(CONTINUED)
Face Market
Amount Value
(000) (000)
------- -------
U.S. TREASURY OBLIGATIONS -- CONTINUED
U.S. Treasury Notes -- CONTINUED
$ 525 7.500%, 05/15/02 $ 550
700 6.375%, 08/15/02 712
500 5.750%, 08/15/03 499
500 5.875%, 02/15/04 502
250 7.250%, 05/15/04 265
250 6.500%, 08/15/05 257
250 6.500%, 10/15/06 258
250 5.625%, 05/15/08 245
-------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $16,734) 15,881
-------
CORPORATE OBLIGATIONS -- 19.2%
BEAUTY PRODUCTS -- 2.0%
Procter and Gamble
500 5.250%, 09/15/03 480
-------
COMMUNICATIONS EQUIPMENT -- 5.5%
Motorola
525 5.800%, 10/15/08 488
Rockwell International Corp.
300 6.625%, 06/01/05 300
Sony
525 6.125%, 03/04/03 519
-------
1,307
-------
MACHINERY -- 1.9%
Emerson Electric
500 5.000%, 10/15/08 446
-------
MEASURING DEVICES -- 2.1%
Honeywell, Inc.
500 7.000%, 03/15/07 504
-------
Bishop Street Funds
16
<PAGE>
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Schedule of Investments
(CONTINUED)
Face Market
Amount/Shares Value
(000) (000)
------------- -------
CORPORATE OBLIGATIONS -- CONTINUED
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 2.1%
Xerox
$ 525 5.250%, 12/15/03 $ 502
-------
RETAIL -- 3.5%
Gap, Inc.
525 6.900%, 09/15/07 532
Lowes Companies Inc.
300 6.375%, 12/15/05 294
-------
826
-------
TOYS -- 2.1%
Hasbro
525 6.150%, 07/15/08 497
-------
TOTAL CORPORATE OBLIGATIONS (Cost $4,710) 4,562
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 13.5%
FHLB
700 7.170%, 03/29/00 709
700 7.310%, 07/06/01 719
700 7.570%, 08/19/04 743
FNMA
1,000 6.610%, 05/08/02, MTN 1,017
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $3,151) 3,188
-------
CASH EQUIVALENTS -- 0.4%
93 SEI Daily Income Trust Money Market Fund 93
3 SEI Daily Income Trust Prime Obligation Fund 3
-------
TOTAL CASH EQUIVALENTS (Cost $96) 96
-------
TOTAL INVESTMENTS (Cost $24,691) -- 100.0% 23,727
=======
FHLB -- FEDERAL HOME LOAN BANK
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 1999
17
<PAGE>
BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
Hawaii Municipal Bond Fund
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT:
Because of the continued strength of the U.S. economy during the first half of
1999, and the resulting fear that the Federal Reserve Board would likely
intervene to raise interest rates, the fixed-income markets came under sustained
pressure throughout the period. By June 30, the 30-year U.S. Treasury bond yield
had risen 87 basis points (a basis point equals 0.01%) from the start of the
year. The Federal Reserve, after a number of hints that they might act
pre-emptively to ward off inflation that had yet to materialize, did finally
raise interest rates on June 30, raising the targeted Fed Funds rate to 5.00%
from 4.75%.
During the first half of 1999, municipals dramatically outperformed Treasury
securities. At the mid-year point, AAA munis as measured by the Bloomberg
20-Year Insured Index had risen only 47 basis points in yield, which means muni
bond prices didn't fall nearly as far as Treasury bonds. This outperformance by
municipals was attributable to two technical factors: 1) sharply reduced demand
for Treasury bonds by foreign buyers, and 2) lower supply of municipals. The
large international flow of funds seeking the safe haven of U.S. Treasury bonds
slowed dramatically as there were good indications that the economies of Japan
and the other Asian nations were starting to stabilize, thereby reducing the
unusually strong demand which sent Treasury prices soaring during 1998. In
addition, there was a 25% reduction in total municipal issuance for the first
half of 1999 compared to the year-ago period, as bond issuers became discouraged
by the rising interest rate environment.
Although the Federal Reserve Board has been unequivocal in stating their desire
to pre-empt inflationary pressures before they become a threat, we don't
anticipate further tightenings over the summer as we see U.S. GDP growth of
4%-4.5% tapering off in the second half. However, substantial recoveries in Asia
and elsewhere could eventually offset any natural cooling off of our economy,
which could force the Fed to consider further tightening.
Bishop Street Funds
18
<PAGE>
[Bishop Street Logo Omitted]
MANAGEMENT DISCUSSION & ANALYSIS OF FUND PERFORMANCE:
The Fund's major objective continues to be to deliver a high level of current
income exempt from both State of Hawaii and federal income taxes. We believe
that we accomplished this objective during the first half of 1999, particularly
when our yield is compared to comparable investments on a taxable equivalent
basis. On June 30, 1999, the Institutional Class of the Fund was yielding 4.86%,
which would equate to a yield of 8.77%* for an individual in the highest
combined federal and state income tax brackets. At mid-year, over 88% of our
holdings fell into the AA/AAA category.
There have been no significant changes to the structure of our portfolio during
the first half of the year. The new issue calendar was negligible, and the
secondary market offered few opportunities to enhance our return. Although our
portfolio remains highly diversified in sectors such as transportation,
utilities, general obligations, housing and healthcare, we expect to be able to
participate in some new financings which should reach the market during the
third and fourth quarters of 1999.
Our strategy will continue to stay short of the maximum maturity range as long
as the yield curve does not provide sufficient opportunities to increase
shareholder's income. In other words, bonds with longer maturities presently do
not pay enough extra income to compensate us for the additional volatility they
sustain from changes in interest rates. Because of this so-called "flatness of
the yield curve," our average weighted maturity life was shortened slightly from
to 11.5 years from 12 at the end of last year.
For the six months ending June 30, 1999, the Hawaii Municipal Bond Fund
Institutional Class produced a total return of -1.34%. In comparison, the
return of the Lipper Hawaii Municipal Debt Average was -1.57%. The
Lehman Municipal Bond Index, of broader, unmanaged national issues mostly
non-exempt from Hawaii income taxes reflected a -0.90% return for the same
period. A negative total return reflects the impact of rising interest rates on
bond prices.
Hawaii's economy remains sluggish, and there are not yet concrete signs of a
recovery. Tourism, the state's main economic engine, shows no increase from the
end of 1998. We are hopeful that the improved economies in Japan and the rest of
Asia will result in stronger tourist traffic as 1999 progresses.
* This information is based on a hypothetical illustration and is not
representative of any investment securities.
Semi-Annual Report -- June 30, 1999
19
<PAGE>
Hawaii Municipal Bond Fund
- --------------------------------------------------------------------------------
Performance Comparison
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
BISHOP STREET HAWAII MUNICIPAL BOND FUND INSTITUTIONAL CLASS OR
CLASS A,VERSUS THE LEHMAN MUNICIPAL BOND INDEX, THE
CONSUMER PRICE INDEX, AND THE LIPPER HAWAII MUNICIPAL DEBT AVERAGE
[LINE GRAPH OMITTED] PLOT POINTS AS FOLLOWS:
<TABLE>
<CAPTION>
BISHOP STREET BISHOP STREET LEHMAN LIPPER CONSUMER
HAWAII MUNICIPAL HAWAII MUNICIPAL BROTHERS HAWAII PRICE
BOND FUND BOND FUND MUNICIPAL MUNICIPAL INDEX
INSTITUTIONAL SYNTHETIC BOND DEBT FUNDS
CLASS++ CLASS A++ INDEX AVERAGE
<S> <C> <C> <C> <C> <C>
2/28/95 10,000 9,575 10,000 10,000 10,000
6/95 10,288 9,851 10,304 10,359 10,100
12/95 10,941 10,476 11,005 11,097 10,191
6/96 10,849 10,388 10,893 11,047 10,376
12/96 11,401 10,916 11,420 11,589 10,522
6/97 11,722 11,224 11,727 11,961 10,606
12/97 12,373 11,847 12,362 12,656 10,712
6/98 12,661 12,123 12,647 12,997 10,787
12/98 13,097 12,540 13,070 13,478 10,884
6/99 12,921 12,362 12,865 13,356 11,004
</TABLE>
++ Account value if you reinvested income and capital gains.
Average Annual Total Returns
SIX ONE ANNUALIZED ANNUALIZED
MONTH YEAR 3 YEAR INCEPTION
RETURN RETURN RETURN TO DATE
- ----------------------------------------------------
-1.34% 2.05% 6.00% 6.05% Institutional Class*
- ----------------------------------------------------
-1.42%+ 1.97%+ 5.97%+ 6.02%+ Class A**
- ----------------------------------------------------
-5.63%+ -2.34%+ 4.44%+ 4.99%+ Class A, with load
- ----------------------------------------------------
*Commenced operations on 02/15/95.
**Commenced operations on 06/14/99.
+Synthetic, not actual.
Bishop Street Funds
20
<PAGE>
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Top Ten Holdings
Percentage
Coupon Maturity of
Rate Date Investments
- --------------------------------------------------------------------------------
1. Honolulu Wast-Water Revenue Bond 5.25% Jul. 01, 2018 6.2%
- --------------------------------------------------------------------------------
2. Honolulu Hawaii City &County 5.00% Jul. 01, 2019 3.8%
- --------------------------------------------------------------------------------
3. Hawaii State Airports Sys Revenue Bond 7.00% Jul. 01, 2020 3.5%
- --------------------------------------------------------------------------------
4. Honolulu Hawaii City &Country 5.13% Jul. 01, 2011 3.0%
- --------------------------------------------------------------------------------
5. Commonwealth of Puerto Rico, 6.50% Jul. 01, 2013 2.9%
- --------------------------------------------------------------------------------
6. Hawaii State Airports Sys Revenue Bond 5.75% Jul. 01, 2009 2.7%
- --------------------------------------------------------------------------------
7. Hawaii Budget &Fin/Queens Health Sys 6.00% Jul. 01, 2020 2.6%
- --------------------------------------------------------------------------------
8. Honolulu Board of Water Supply 5.80% Jul. 01, 2016 2.6%
- --------------------------------------------------------------------------------
9. Hawaii Housing Fin &Develop/Single Family 5.55% Jul. 01, 2007 2.6%
- --------------------------------------------------------------------------------
10. Hawaii Budget &FIn/Sr. Francis Med Ctr. 6.50% Jul. 01, 2022 2.5%
- --------------------------------------------------------------------------------
Statement of Net Assets
Face Market
Amount Value
(000) (000)
------- -------
MUNICIPAL BONDS -- 94.1%
HAWAII -- 86.1%
County, GO, MBIA Insured
$ 250 6.850%, 12/01/02 $ 252
County, Ser A, GO, FGIC Insured
400 5.550%, 05/01/09 418
450 5.600%, 05/01/12 468
190 5.600%, 05/01/13 198
Department of Budget & Finance,
Hawaiian Electric, RB, MBIA Insured
760 6.200%, 05/01/26 810
Department of Budget & Finance,
Queens Health Systems, Ser A, RB
250 5.875%, 07/01/11 260
1,000 6.000%, 07/01/20 1,039
Department of Budget & Finance,
Special Purpose Mortgage, Kaiser
Permanente Project, Ser A, RB
300 6.500%, 03/01/11 312
Department of Budget & Finance,
Special Purpose Mortgage, Hawaii
Electric Incorporated Project, Ser A, RB, MBIA Insured
590 6.600%, 01/01/25 639
Department of Budget & Finance, Special Purpose Mortgage,
Hawaiian Electric Company, Ser A, RB, MBIA Insured
370 4.950%, 04/01/12 364
Semi-Annual Report -- June 30, 1999
21
<PAGE>
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Face Market
Amount Value
(000) (000)
------- -------
MUNICIPAL BONDS -- CONTINUED
Department of Budget & Finance, Special Purpose Mortgage,
Kapiolani Health Care System Project, RB
$ 760 6.300%, 07/01/08 $ 807
250 6.000%, 07/01/11 260
250 6.400%, 07/01/13 264
Department of Budget & Finance, Special Purpose Mortgage,
St. Francis Medical Center Project, RB, FSA Insured
930 6.500%, 07/01/22 994
Department of Budget & Finance, Special Purpose Mortgage,
Wilcox Memorial Hospital Projects, RB
500 5.500%, 07/01/09 503
Harbor Capital Improvement, RB, MBIA Insured
500 5.400%, 07/01/09 510
480 7.000%, 07/01/17 500
Harbor Capital Improvement, Ser 1992, RB, FGIC Insured
225 6.500%, 07/01/19 240
Honolulu City & County Board of Water Supply, RB
250 5.250%, 07/01/07 256
1,000 5.800%, 07/01/16 1,038
Honolulu City & County Mortgage, Smith Berentia, Ser A, RB,
FHA & MBIA Insured
100 7.800%, 07/01/24 105
Honolulu City & County Waipahu Towers Project, Ser A, RB, GNMA
Collateral
200 6.900%, 06/20/35 210
Honolulu City & County, GO
230 6.000%, 12/01/09 248
Honolulu City & County, GO, FGIC Insured
125 5.500%, 11/01/07 131
1,200 5.125%, 07/01/11 1,194
1,600 5.000%, 07/01/19 1,510
Honolulu City & County, GO, Ser A
50 5.700%, 04/01/09 53
195 5.700%, 04/01/09 205
150 6.000%, 01/01/10 161
Honolulu City & County, GO, Ser A, MBIA Insured
135 6.000%, 11/01/10 146
365 6.000%, 11/01/10 394
Honolulu City & County, Waste Water, Junior Ser, FGIC Insured
415 5.000%, 07/01/23 386
Honolulu Waste-Water RB, FGIC Insured
1,000 5.250%, 07/01/17 980
Bishop Street Funds
22
<PAGE>
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONTINUED)
Face Market
Amount Value
(000) (000)
------- -------
MUNICIPAL BONDS -- CONTINUED
$2,500 5.250%, 07/01/18 $ 2,441
Kapolei, Hawaii, COP, AMBAC Insured
500 5.000%, 05/01/18 474
Kauai County, Ser B, GO, AMBAC Insured
285 5.750%, 08/01/06 302
Kauai County, Ser B, GO, MBIA Insured
120 5.050%, 08/01/12 118
260 5.900%, 02/01/13 271
155 5.100%, 08/01/13 152
165 5.150%, 08/01/14 162
175 5.200%, 08/01/15 172
Maui County, Board of Water Supply, Ser A, RB, FGIC Insured
520 6.000%, 12/01/01 542
Maui County, GO, FGIC Insured
615 5.100%, 03/01/19 588
Maui County, GO, MBIA Insured
250 5.750%, 06/01/13 263
Maui County, Refunding GO, FGIC Insured
290 5.125%, 12/15/10 290
Maui County, Ser A, GO, FGIC Insured
500 5.200%, 09/01/12 499
200 5.000%, 03/01/13 195
100 5.125%, 03/01/14 98
State Airport Systems, RB, FGIC Insured
300 7.200%, 07/01/00 310
1,300 7.000%, 07/01/20 1,381
State Airport Systems, Ser 2, RB
60 6.900%, 07/01/12 68
State Airport Systems, Ser 3, RB, AMBAC Insured
1,000 5.750%, 07/01/09 1,050
State Certificate of Participation, AMBAC Insured
500 5.000%, 05/01/16 479
1,000 5.000%, 05/01/17 953
State GO, FGIC Insured
500 5.250%, 03/01/17 491
State GO, MBIA Insured
500 5.250%, 04/01/13 499
State GO, Ser CM, FGIC Insured
500 6.000%, 12/01/09 541
State GO, Ser CN, FGIC Insured
500 5.500%, 03/01/14 509
Semi-Annual Report -- June 30, 1999
23
<PAGE>
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONTINUED)
Face Market
Amount Value
(000) (000)
------- -------
MUNICIPAL BONDS -- CONTINUED
State GO, Ser CO, FGIC Insured
$ 200 6.000%, 09/01/05 $ 215
State Harbor Capital Improvement, RB, FGIC Insured
305 6.200%, 07/01/08 328
State Highway Project, RB
375 5.250%, 07/01/10 379
510 5.000%, 07/01/11 502
500 5.250%, 07/01/12 500
State Highway RB, FGIC Insured
500 5.250%, 07/01/15 494
405 5.000%, 07/01/16 387
State Housing, Finance & Development Corporation,
Affordable Rental Housing Program, Ser 1995 A, RB
350 6.000%, 07/01/15 359
750 6.050%, 07/01/22 768
State Housing, Finance & Development Corporation, Single
Family Mortgage Purchase, RB
1,005 5.550%, 07/01/07 1,024
State Housing, Finance & Development Corporation, Single
Family Mortgage Purchase, RB, AMT, Ser A, FNMA Collateral
250 5.250%, 07/01/13 244
State Housing, Finance & Development Corporation,
University of Hawaii Faculty Housing Project, RB,
AMBAC Insured
700 5.650%, 10/01/16 720
-------
34,623
-------
PUERTO RICO -- 6.9%
Commonwealth Highway & Transportation Authority, Ser Z,
RB, FSA Insured
500 6.000%, 07/01/18 546
Commonwealth of Puerto Rico, GO, MBIA Insured
1,000 6.500%, 07/01/13 1,145
Commonwealth of Puerto Rico, Public Improvements,
GO, MBIA Insured
350 4.875%, 07/01/23 327
Housing, Banking & Finance Agency, Single
Family Mortgage, Affordable
Housing Mortgage Portfolio I, RB, GNMA/FNMA/FHLMC Collateral
200 6.100%, 10/01/15 205
Industrial Tourist Educational Medical Environmental
Control Facilities
Hospital Auxilio Muto Obligation Group, RB, MBIA Insured
300 6.250%, 07/01/24 324
Industrial Tourist Educational Medical Environmental
Control Facilities
Inter American University, Ser A, MBIA Insured
250 5.000%, 10/01/22 237
-------
2,784
-------
Bishop Street Funds
24
<PAGE>
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONCLUDED)
Face Market
Amount/Shares Value
(000) (000)
------- -------
MUNICIPAL BONDS -- CONTINUED
GUAM -- 1.1%
Guam Power Authority, Ser A, RB, AMBAC Insured
$ 400 6.375%, 10/01/08 $ 434
-------
TOTAL MUNICIPAL BONDS (Cost $37,792) 37,841
-------
CASH EQUIVALENTS -- 4.0%
530 Dreyfus Tax Exempt Cash Management Fund 530
1,094 SEI Institutional Tax Free Fund 1,094
-------
TOTAL CASH EQUIVALENTS (Cost $1,624) 1,624
-------
TOTAL INVESTMENTS (Cost $39,416) -- 98.1% 39,465
-------
OTHER ASSETS AND LIABILITIES, NET -- 1.9% 746
-------
NET ASSETS:
FundShares of Institutional Class
(unlimited authorization -- no par value)
based on 3,826,363 outstanding shares of beneficial interest 39,612
FundShares of Class A (unlimited authorization -- no par value) 47,608
based on outstanding shares of beneficial interest 493
Undistributed Net Investment Income 28
Accumulated net realized gain on investments 29
Net unrealized appreciation on investments 49
-------
TOTAL NET ASSETS -- 100.0% $40,211
=======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE --
INSTITUTIONAL CLASS $10.38
-------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A $10.37
-------
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A ($10.37 / 95.75%) $10.83
-------
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT -- ALTERNATIVE MINIMUM TAX
COP -- CERTIFICATE OF PARTICIPATION
FGIC -- FEDERAL GUARANTY INSURANCE CORPORATION
FHA -- FEDERAL HOUSING AUTHORITY
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSURANCE
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
SER -- SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 1999
25
<PAGE>
BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
Money Market & Treasury Money Market Funds
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT:
The six month period ending June 30, 1999 saw a continuation of the eight year
long economic expansion, propelled by strong U.S. domestic demand within a low
inflationary environment. Buoyed by the strong employment environment, solid
wage gains and growing net worth created by continued positive equity returns,
consumer spending remains the strongest driver of the domestic economy.
Productivity gains have continued to thwart an advance in wage pressures that
would have historically been expected with such a low level of unemployment.
While the momentum of the U.S. economy remains positive, the global situation
has rebounded from the dire straits of last year. With little evidence of a
slowdown coming in the U.S. and improving situation globally, the Fed raised the
Fed Funds rate by 25 basis points in a preemptive effort to slow the economy.
The rate hike is also an attempt to undo some of the 75 basis point rate
reduction implemented last year to provide liquidity during the financial
crisis.
MANAGEMENT DISCUSSION & ANALYSIS OF FUND PERFORMANCE:
During the six months we shortened the average maturity of both the Money &
Analysis Market Fund and Treasury Money Market Fund to respond quickly in the
rising interest rate environment. In anticipation of the Fed's move to raise the
short term rate, we wanted to have ample liquidity to invest at the higher rates
so we allowed the maturity of each Fund to generally roll down over the period.
As of June 30th, the weighted average maturity was 28 days and 44 days for the
Treasury and Money Market Fund, respectively.
A growing concern in the markets is the effect that Y2K issues will have on
funding around the year-end period. While normal year-end uncertainties have
always caused liquidity constraints and afforded investment opportunities, turn
of the century issues will cause this year's situation to be far more extreme.
Institutions such as the Investment Company Institute (ICI) and the Bond Market
Association have issued Y2K policy statements and have asked for a curtailment
of issuance around the turn of the year. We are already seeing issuers trying to
secure funding into next year in both fixed and floating rate securities.
Bishop Street Funds
26
<PAGE>
[Bishop Street Logo Omitted]
We anticipate that the dealer community will be less willing to provide
liquidity and will pare down their inventories in both corporate and government
holdings over year-end. This should add to the liquidity squeeze, resulting in
both a widening of the bid/ask spread on securities (much like the credit crisis
of last year), and downward pressure on repo rates. Similar to last year's
crisis when the market had limited liquidity options, we expect to be forced to
build liquidity into the portfolios, by holding more repo and overnight
positions and limiting the exposure to less liquid issuers.
The prospect of continued healthy economic activity raises the likelihood of
additional rate hikes in the months ahead. In this environment we tend to keep
average maturities short and maintain needed liquidity, but will look for
opportunities to invest into next year when the market prices in additional rate
hikes and a premium for year end pressures. We continue to favor floating rate
securities indexed to LIBOR, a market determined rate which we feel will
incorporate market fears around Year 2000 and provide superior returns compared
to other indices in the months ahead.
Semi-Annual Report -- June 30, 1999
27
<PAGE>
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
Face
Amount Value
(000) (000)
------- -------
COMMERCIAL PAPER -- 56.8%
ASSET BACKED -- 18.3%
Apreco
$ 2,800 4.820%, 08/16/99 $ 2,783
Corporate Asset Funding
9,000 5.300%, 07/21/99 8,973
Corporate Receivables
8,000 4.820%, 07/26/99 7,973
Park Avenue Receivables
7,500 4.820%, 10/18/99 7,390
Prefco
7,385 4.870%, 07/13/99 7,373
Riverwoods Funding
9,000 5.090%, 07/20/99 8,976
Variable Funding Capital
9,000 5.560%, 07/01/99 9,000
-------
52,468
-------
BROKERAGE -- 3.2%
Goldman Sachs Group
9,000 5.500%, 07/01/99 9,000
-------
COMMUNICATIONS EQUIPMENT -- 2.8%
Motorola Credit
8,000 4.800%, 07/06/99 7,995
-------
DRUGS -- 3.1%
Zeneca Wilmington
9,000 4.810%, 07/21/99 8,976
-------
FINANCE COMPANY -- 2.8%
Island Finance Puerto Rico
8,000 4.800%, 08/05/99 7,963
-------
FINANCIAL SERVICES -- 2.8%
Prudential Funding
8,000 4.790%, 10/07/99 7,896
-------
HOUSEHOLD PRODUCTS -- 2.4%
Gillette
7,000 5.700%, 07/01/99 7,000
-------
ELECTRIC LIGHTING & EQUIPMENT -- 6.3%
Electricite de France
9,000 5.750%, 07/01/99 9,000
Hubbell
9,000 5.550%, 07/01/99 9,000
-------
18,000
-------
MISCELLANEOUS BUSINESS SERVICES -- 2.6%
Halifax PLC
7,500 4.800%, 10/01/99 7,408
-------
Bishop Street Funds
28
<PAGE>
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONTINUED)
Face
Amount Value
(000) (000)
------- -------
COMMERCIAL PAPER -- CONTINUED
MORTGAGE LENDER -- 2.1%
Countrywide Home Loans
$ 5,925 5.810%, 07/01/99 $ 5,925
--------
PETROLEUM & FUEL PRODUCTS -- 3.1%
BP America
9,000 5.700%, 07/01/99 9,000
--------
PETROLEUM REFINING -- 2.4%
Shell Oil
7,000 5.700%, 07/01/99 7,000
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 2.8%
Xerox Capital (Europe), PLC
5,000 5.250%, 07/08/99 4,995
3,011 4.720%, 07/14/99 3,006
--------
8,001
--------
SPIRITS, FOOD & BREWERY -- 2.1%
Diageo PLC
6,100 4.820%, 09/13/99 6,040
--------
TOTAL COMMERCIAL PAPER (Cost $162,672) 162,672
--------
FLOATING RATE NOTES -- 20.8%
All-State Corporation GISA (A)
3,000 5.234%, 09/28/99 3,000
American Express Centurion Bank (A)
7,000 4.939%, 07/16/99 7,000
Asset-Backed Security Investment Trust 97-E 144A (A) (B)
5,000 4.988%, 08/15/99 5,000
General Electric Capital (A) MTN
6,000 4.945%, 05/03/00 6,000
Key Bank
8,000 5.140%, 09/16/99 7,999
Monumental Life Insurance (A)
10,000 5.100%, 09/28/99 10,000
National Rural (A)
4,000 5.177%, 06/26/00 3,998
PNC Bank
2,500 4.810%, 07/01/99 2,500
Travelers Insurance Co. (A)
6,000 5.129%, 05/31/00 6,000
US Bank - Minnesota
8,000 5.070%, 08/31/99 8,000
--------
TOTAL FLOATING RATE NOTES (Cost $59,497) 59,497
--------
Semi-Annual Report -- June 30, 1999
29
<PAGE>
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONCLUDED)
Face
Amount Value
(000) (000)
------- -------
CERTIFICATES OF DEPOSIT/BANK NOTES -- 9.3%
Bank of Scotland
$ 5,500 5.725%, 07/03/00 $ 5,498
Chase Manhattan DE
5,000 5.685%, 08/03/99 5,000
Royal Bank of Canada
4,000 5.700%, 07/03/00 3,998
Societe Generale NY
8,000 4.980%, 02/01/00 7,996
Westpac Banking
4,000 5.030%, 02/07/00 3,999
--------
TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $26,491) 26,491
--------
REPURCHASE AGREEMENTS -- 16.6%
J.P. Morgan, 5.00%, dated 06/30/99, matures 07/01/99,
repurchase price $42,005,833 (collateralized by FNMA
Bond, total par value $46,333,187, 6.00%, 02/01/2029:
42,000 total market value $ 42,840,001) 42,000
Lehman Brothers Inc., 4.90%, dated 06/30/99,
matures 07/01/99, repurchase price $5,640,768
(collateralized by various FNMA bonds, par value
$7,075,000, 6.21% - 6.50%, 05/01/05 - 04/01/2026: total
5,640 market value $5,754,703) 5,640
--------
TOTAL REPURCHASE AGREEMENTS (COST $47,640) 47,640
--------
TOTAL INVESTMENTS (COST $296,300)-- 103.5% 296,300
--------
OTHER ASSETS AND LIABILITIES, NET -- (3.5%) (9,921)
--------
NET ASSETS:
Fund Shares (unlimited authorization -- no par value)
based on 286,377,263 outstanding shares
of beneficial interest 286,377
Accumulated net realized gain on investments 2
--------
TOTAL NET ASSETS -- 100.0% $286,379
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $1.00
--------
(A) FLOATING RATE SECURITY--THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON JUNE 30, 1999. THE MATURITY DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
(B) SECURITIES SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXCEPT
FROM REGISTRATION UNDER SECTION 3A-4, 4(2) OR 144A OF THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR
OTHER "ACCREDITED INVESTORS." THIS SECURITY HAS BEEN DETERMINED TO BE LIQUID
UNDER GUIDELINES ESTABLISHED BY THE BOARD OF DIRECTORS
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GISA -- GUARANTEED INDEX SEPARATE ACCOUNT
MTN -- MEDIUM TERM NOTE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds
30
<PAGE>
Treasury Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
Face
Amount Value
(000) (000)
------- -------
U.S. TREASURY OBLIGATIONS -- 14.1%
U.S. Treasury Bill
$ 1,000 4.769%, 11/12/99 (A) $ 983
U.S. Treasury Notes
5,000 5.875%, 11/15/99 5,020
5,000 7.875%, 11/15/99 5,057
10,000 5.625%, 11/30/99 10,035
10,000 5.625%, 12/31/99 10,043
12,000 5.875%, 02/15/00 12,080
7,000 6.875%, 03/31/00 7,097
--------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $50,315) 50,315
--------
REPURCHASE AGREEMENTS -- 86.1%
BZW, 4.85%, dated 06/30/99, matures 07/01/99,
repurchase price $61,008,218 (collateralized by
U.S. Treasury Bond, total par value $62,904,000, 6.125%,
61,000 11/15/27: total market value $62,220,878) 61,000
First Boston, 4.90%, dated 06/30/99, matures 07/01/99,
repurchase price $50,006,806 (collateralized by
U.S. Treasury Bill, total par value $53,455,000, 0.00%,
50,000 05/25/00: total market value $51,115,274) 50,000
Goldman Sachs, 4.85%, dated 06/30/99, matures 07/01/99,
repurchase price $80,210,805 (collateralized by
U.S. Treasury Note, total par value $83,601,000, 5.625%,
80,200 05/15/08: total market value $81,804,853) 80,200
Lehman Brothers, 4.85%, dated 06/30/99, matures 07/01/99,
repurchase price $37,004,985 (collateralized by U.S.
Treasury STRIPS, total par value $75,100,000, 0.00%,
37,000 05/15/2010: total market value $38,174,067) 37,000
Morgan Stanley Dean Witter, 4.65%, dated 06/30/99,
matures 0701/99, repurchase price $45,005,813
(collateralized by U.S. Treasury Note, par value
$44,620,000, 8.00%, matures 08/15/99: total market value
45,000 $46,131,469) 45,000
Paribas Capital Markets, 4.83%, dated 06/30/99,
matures 07/01/99, repurchase price $34,984,693
(collateralized by U.S. Treasury Note, total par value
$34,486,000, 6.25%, matures 02/15/07:
34,980 total market value $35,645,437) 34,980
--------
TOTAL REPURCHASE AGREEMENTS (Cost $308,180) 308,180
--------
Semi-Annual Report -- June 30, 1999
31
<PAGE>
Treasury Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Net Assets
(CONCLUDED)
Value
(000)
-------
Total Investments (Cost $358,495) -- 100.2% $358,495
--------
Other Assets and Liabilities, Net -- (0.2%) (720)
--------
NET ASSETS:
Fund Shares (unlimited authorization -- no par value)
based on 357,784,935 outstanding
shares of beneficial interest 357,784
Undistributed net investment income 14
Accumulated net realized loss on investments (23)
--------
TOTAL NET ASSETS -- 100.0% $357,775
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 1.00
--------
STRIPS -- SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES.
(A) REPRESENTS THE YIELD TO MATURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds
32
<PAGE>
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
HIGH GRADE INCOME FUND
AS OF 06/30/99
(IN THOUSANDS)
- -------------------------------------------------------------------------------
ASSETS:
Investments at value (cost $24,691) $ 23,727
Income Receivable 433
Investment Securities Sold 1,080
Capital Shares Sold 5,314
Other Assets 52
- -------------------------------------------------------------------------------
TOTAL ASSETS 30,606
===============================================================================
LIABILITIES:
Distributions Payable 101
Payable for Investment Securities Purchased 1,014
Accrued Expenses Payable 30
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 1,145
- -------------------------------------------------------------------------------
TOTAL NET ASSETS $29,461
===============================================================================
NET ASSETS:
Fund Shares of Institutional Class
(unlimited authorization -- no par value)
based on 3,011,936 outstanding shares of beneficial interest 29,962
Fund Shares of Class A (unlimited authorization --
no par value) based on 11 outstanding shares of
beneficial interest --
Accumulated net realized gain on investments 463
Net unrealized depreciation on investments (964)
- -------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $29,461
===============================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $ 9.78
- -------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS A $ 9.78
- --------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A ($9.78 / 95.25%) $ 10.27
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 1999
33
<PAGE>
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
Statements of Operations
FOR THE SIX MONTHS ENDED 06/30/99
(IN THOUSANDS)
<TABLE>
<CAPTION>
High Hawaii Treasury
Grade Municipal Money Money
Equity Income Bond Market Market
Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Interest Income $ 130 $707 $968 $7,012 $7,605
Dividend Income 541 -- -- -- --
- ----------------------------------------------------------------------------------------
Total Investment Income 671 707 968 7,012 7,605
- ----------------------------------------------------------------------------------------
EXPENSES:
Investment Adviser Fee 404 67 66 415 473
Investment Adviser Fee Waiver (2) (18) (57) (36) (191)
Management Fee 110 25 38 277 315
Management Fee Waiver (44) (10) (28) (111) (126)
Shareholder Servicing Fee 137 30 47 346 394
Shareholder Servicing Fee Waiver (82) (18) (28) (208) (236)
Custody Fees 18 6 14 10 14
Amortization of Deferred
Organizational Costs 3 3 3 3 3
Other Expenses 3 13 22 (4) 48
- ----------------------------------------------------------------------------------------
Total Expenses 547 98 77 692 694
- ----------------------------------------------------------------------------------------
Net Investment Income 124 609 891 6,320 6,911
- ----------------------------------------------------------------------------------------
Net Realized Gain on Investments 8,471 165 12 8 12
Change in Unrealized Appreciation/
(Depreciation) on Investments 3,269 (1,756) (1,452) -- --
- ----------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments 11,740 (1,591) (1,440) 8 12
- ----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Resulting from Operations $11,864 ($982) ($549) $6,328 $6,923
========================================================================================
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. THE
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
Bishop Street Funds
34
<PAGE>
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
Equity Fund High Grade Income Fund
- ---------------------------------------------------------------------------------------------------------
01/01/99 to 01/01/98 to 01/01/99 to 01/01/98 to
06/30/99 12/31/98 06/30/99 12/31/98
- ---------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net Investment Income $ 124 $ 304 $ 609 $ 1,342
Net Realized Gain on Investments 8,471 4,270 165 655
Change in Unrealized Appreciation
(Depreciation) on Investments 3,269 18,838 (1,756) 252
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting
From Operations 11,864 23,412 (982) 2,249
- --------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class Shares (124) (304) (609) (1,342)
Class A Shares (1) -- -- -- --
Capital Gains
Institutional Class Shares -- (3,962) -- (391)
Class A Shares (1) -- -- -- --
- --------------------------------------------------------------------------------------------------------
Total Distributions (124) (4,266) (609) (1,733)
- --------------------------------------------------------------------------------------------------------
Changes in Net Assets 11,740 19,146 (1,591) 516
- --------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares
Proceeds from Shares Issued 6,726 8,970 7,255 1,225
Reinvestments of Cash Distributions 144 4,234 675 1,615
Cost of Shares Redeemed (308) (500) (1,779) (4,697)
- --------------------------------------------------------------------------------------------------------
Total Institutional Class Capital
Share Transactions 6,562 12,704 6,151 (1,857)
- --------------------------------------------------------------------------------------------------------
Class A Shares (1)
Proceeds from Shares Issued 6 -- -- --
Reinvestments of Cash Distributions -- -- -- --
Cost of Shares Redeemed -- -- -- --
- --------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 6 -- -- --
- --------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
From Capital Share Transactions 6,568 12,704 6,151 (1,857)
- --------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 18,308 31,850 4,560 (1,341)
- --------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 101,817 69,967 24,901 26,242
- --------------------------------------------------------------------------------------------------------
End of Period $129,125 $101,817 $29,461 $24,901
========================================================================================================
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares
Shares Issued 419 605 733 118
Shares Issued in Lieu of Cash Distributions 9 296 67 155
Shares Redeemed (19) (38) (175) (452)
- --------------------------------------------------------------------------------------------------------
Total Institutional Class Capital
Share Transactions 409 863 625 (179)
- --------------------------------------------------------------------------------------------------------
Class A Shares (1)
Shares Issued -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed -- -- -- --
- --------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions -- -- -- --
- --------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Capital Shares 409 863 625 (179)
========================================================================================================
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON JUNE 14, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
Semi-Annual Report -- June 30, 1999
35
<PAGE>
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
Hawaii Municipal
Bond Fund
- -------------------------------------------------------------------------------------------
01/01/99 01/01/98
to 06/30/99 to 12/31/98
- -------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net Investment Income $ 891 $ 1,503
Net Realized Gain on Investments 12 78
Change in Unrealized Appreciation (Depreciation) on Investments (1,452) 206
- -------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting From Operations (549) 1,787
- -------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares (891) (1,503)
Class A Shares (1) -- --
Capital Gains:
Institutional Class Shares -- --
Class A Shares (1) -- --
- -------------------------------------------------------------------------------------------
Total Distributions (891) (1,503)
- -------------------------------------------------------------------------------------------
Change in Net Assets (1,440) 284
- -------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Proceeds from Shares Issued 8,517 10,520
Reinvestments of Cash Distributions 462 705
Cost of Shares Redeemed (3,572) (4,763)
- -------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions 5,407 6,462
- -------------------------------------------------------------------------------------------
Class A Shares: (1)
Proceeds from Shares Issued 493 --
Reinvestments of Cash Distributions -- --
Cost of Shares Redeemed -- --
- -------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 493 --
- -------------------------------------------------------------------------------------------
Net Increase in Net Assets From Capital Share Transactions 5,900 6,462
- -------------------------------------------------------------------------------------------
Total Increase in Net Assets 4,460 6,746
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 35,751 29,005
- -------------------------------------------------------------------------------------------
End of Period $40,211 $35,751
===========================================================================================
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Shares Issued 797 984
Shares Issued in Lieu of Cash Distributions 43 63
Shares Redeemed (334) (445)
- -------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions 506 602
- -------------------------------------------------------------------------------------------
Class A Shares: (1)
Shares Issued 48 --
Shares Issued in Lieu of Cash Distributions -- --
Shares Redeemed -- --
- -------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 48 --
- -------------------------------------------------------------------------------------------
Net Increase in Capital Shares 554 602
===========================================================================================
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON JUNE 14, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
Bishop Street Funds
36
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
Treasury
Money Market Money Market
Fund Fund
- ------------------------------------------------------------------------------------------------------
01/01/99 01/01/98 01/01/99 01/01/98
to 06/30/99 to 12/31/98 to 06/30/99 to 12/31/98
- ------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net Investment Income $ 6,320 $ 13,120 $ 6,911 $ 16,063
Net Realized Gain (Loss) on Investments 8 25 12 2
- ------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From
Operations 6,328 13,145 6,923 16,065
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares (6,321) (13,120) (6,911) (16,061)
Capital Gains:
Institutional Class Shares -- -- -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (6,321) (13,120) (6,911) (16,061)
- ------------------------------------------------------------------------------------------------------
Changes in Net Assets 7 25 12 4
- ------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: ALL AT $1.00 PER SHARE:
Institutional Class Shares:
Proceeds from Shares Issued 323,931 709,477 644,187 1,801,697
Reinvestments of Cash Distributions 170 214 3 --
Cost of Shares Redeemed (306,047) (688,069) (586,271) (1,775,776)
- ------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share
Transactions 18,054 21,622 57,919 25,921
- ------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
From Capital Share Transactions 18,054 21,622 57,919 25,921
- ------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 18,061 21,647 57,931 25,925
- ------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 268,318 246,671 299,844 273,919
- ------------------------------------------------------------------------------------------------------
End of Period $286,379 $ 268,318 $ 357,775 $ 299,844
======================================================================================================
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 1999
</FN>
</TABLE>
37
<PAGE>
Bishop Street Funds
- --------------------------------------------------------------------------------
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
AND THE PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Investment Activities Distributions from
------------------------------------ -------------------
Net
Net Realized Net
Asset and Asset
Value, Net Unrealized Net Value,
Beginning Investment Gain (Loss) on Investment Capital End of
of Period Income Investments Income Gains Period
- -----------------------------------------------------------------------------------------------------
EQUITY FUND
- -----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES:
<S> <C> <C> <C> <C> <C> <C>
1999: $15.28 $0.01 $ 1.70 $(0.01) $ -- $16.98
1998: $12.06 $0.05 $ 3.88 $(0.05) $(0.66) $15.28
1997(1): $10.00 $0.08 $ 2.06 $(0.08) -- $12.06
CLASS A SHARES:
1999(2): $15.74 $ -- $ 1.25 $ -- $ -- $16.99
- -----------------------------------------------------------------------------------------------------
HIGH GRADEINCOME FUND
- -----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES:
1999: $10.43 $0.25 $(0.65) $(0.25) $ -- $ 9.78
1998: $10.23 $0.54 $ 0.37 $(0.54) $(0.17) $10.43
1997(1): $10.00 $0.51 $ 0.26 $(0.51) $(0.03) $10.23
CLASS A SHARES:
1999(2): $ 9.69 $ -- $ 0.09 $ -- $ -- $ 9.78
- ----------------------------------------------------------------------------------------------------
HAWAII MUNICIPAL BOND FUND
- ----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES:
1999: $10.77 $0.25 $(0.39) $(0.25) $ -- $10.38
1998: $10.67 $0.51 $ 0.10 $(0.51) -- $10.77
1997: $10.34 $0.53 $ 0.33 $(0.53) -- $10.67
1996: $10.47 $0.55 $(0.12) $(0.55) $(0.01) $10.34
1995(3): $10.00 $0.45 $ 0.47 $(0.45) -- $10.47
CLASS A SHARES:
1999(2): $10.42 $0.01 $(0.05) $(0.01) $ -- $10.37
- ----------------------------------------------------------------------------------------------------
MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------
1999: $ 1.00 $0.02 $ -- $(0.02) $ -- $ 1.00
1998: $ 1.00 $0.05 -- $(0.05) -- $ 1.00
1997: $ 1.00 $0.05 -- $(0.05) -- $ 1.00
1996: $ 1.00 $0.05 -- $(0.05) -- $ 1.00
1995(4): $ 1.00 $0.05 -- $(0.05) -- $ 1.00
- ---------------------------------------------------------------------------------------------------
TREASURY MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------
1999: $ 1.00 $0.02 $ -- $(0.02) $ -- $ 1.00
1998: $ 1.00 $0.05 -- $(0.05) -- $ 1.00
1997: $ 1.00 $0.05 -- $(0.05) -- $ 1.00
1996(5): $ 1.00 $0.03 -- $(0.03) -- $ 1.00
</TABLE>
<TABLE>
<CAPTION>
Ratio of
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
Total Period Net Waivers and Average Waivers and Turnover
Return (000) Assets Reimbursements Net Assets Reimbursements Rate
- ---------------------------------------------------------------------------------------------------------------
EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES:
<S> <C> <C> <C> <C> <C> <C> <C>
1999: 11.24%+ $120,119 1.00%* 1.23%* 0.24%* (0.01)%* 37%
1998: 33.05% $101,817 1.00% 1.32% 0.38% 0.06% 41%
1997(1): 21.52%+ $ 69,967 0.99%* 1.39%* 0.83%* 0.43%* 30%
CLASS A SHARES:
1999(2): 11.24%+ $ 6 1.25%* 1.48%* (0.01)%* (0.26)%* 37%
- ---------------------------------------------------------------------------------------------------------------
HIGH GRADEINCOME FUND
- ---------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES:
1999: (3.89)%+ $ 29,461 0.80%* 1.18%* 4.97%* 4.59%* 30%
1998: 9.09% $ 24,901 0.80% 1.21% 5.21% 4.80% 98%
1997(1): 7.94%+ $ 26,242 0.80%* 1.30%* 5.58%* 5.08%* 32%
CLASS A SHARES:
1999(2): (4.10)%+ $ -- 1.05%* 1.43%* 4.72%* 4.34%* 30%
- ---------------------------------------------------------------------------------------------------------------
HAWAII MUNICIPAL BOND FUND
- ---------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES:
1999: (1.34)%+ $ 39,717 0.41%* 1.01%* 4.72%* 4.12%* 3%
1998: 5.84% $ 35,751 0.41% 1.01% 4.74% 4.14% 21%
1997: 8.52% $ 29,005 0.34% 0.99% 5.05% 4.40% 29%
1996: 4.21% $ 15,408 0.21% 0.85% 5.33% 4.68% 27%
1995(3): 10.91%++ $ 9,411 0.27%* 1.10%* 5.24%* 4.40%* 68%
CLASS A SHARES:
1999(2): (1.42)%+ $ 494 0.66%* 1.26%* 4.47%* 3.87%* 3%
- ---------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------
1999: 2.29%+ $286,379 0.50%* 0.76%* 4.57%* 4.31%* n/a
1998: 5.26% $268,318 0.50% 0.81% 5.12% 4.81% n/a
1997: 5.29% $246,671 0.51% 0.85% 5.18% 4.84% n/a
1996: 5.12% $274,125 0.49% 0.60% 5.01% 4.90% n/a
1995(4): 5.67%++ $305,120 0.50%* 0.66%* 5.50%* 5.34%* n/a
- ---------------------------------------------------------------------------------------------------------------
TREASURY MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------
1999: 2.19%+ $357,775 0.44%* 0.79%* 4.38%* 4.03%* n/a
1998: 5.10% $299,844 0.44% 0.84% 4.98% 4.58% n/a
1997: 5.22% $273,919 0.43% 0.86% 5.11% 4.68% n/a
1996(5): 5.08%++ $180,201 0.42%* 0.65%* 4.96%* 4.74%* n/a
<FN>
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
++ TOTAL RETURN HAS BEEN ANNUALIZED.
* ANNUALIZED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(2) COMMENCED OPERATIONS ON JUNE 14, 1999.
(3) COMMENCED OPERATIONS ON FEBRUARY 15, 1995.
(4) COMMENCED OPERATIONS ON JANUARY 30, 1995.
(5) COMMENCED OPERATIONS ON MAY 1, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds
Semi-Annual Report -- June 30, 1999
</FN>
</TABLE>
38 & 39
<PAGE>
Bishop Street Funds
- --------------------------------------------------------------------------------
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 consist of a series of five funds (the "Funds") which
includes the Equity Fund, High Grade Income Fund, Hawaii Municipal Bond Fund,
Money Market Fund and the Treasury Money Market Fund. Effective July 20, 1997
the Retail Class B for the Hawaii Municipal Bond Fund and Money Market Fund was
closed. All Retail Class B shareholders were exchanged into the Institutional
Class for the equivalent number of shares of that class. On June 14, 1999, Class
A Shares commenced operations. 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
Bishop Street Fund investments in equity securities which are traded on a
national securities exchange (or reported on the NASDAQ national market system)
are stated at the last quoted sale price on the principal exchange on which they
are traded on valuation date, 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. Debt obligations
exceeding sixty days to maturity which are actively traded are valued by an
independent pricing service 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.
Investment securities held by the Money Market and Treasury Money Market
Funds 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.
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.
Bishop Street Funds
40
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(UNAUDITED)
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REPURCHASE AGREEMENTS
Securities pledged as collateral for Repurchase Agreements are held by the
custodian bank until the respective agreements mature. The Funds may also invest
in tri-party repurchase agreements. Securities held as collateral for tri-party
repurchase agreements are maintained in a segregated account by the broker's
custodian bank until the maturity of the repurchase agreement. 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.
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, Hawaii Municipal Bond Fund, the
Money Market Fund and the Treasury Money Market Fund. The Equity Fund declares
and pays such dividends on a quarterly basis. 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 a majority of its taxable income
and net capital gains. Accordingly, no provision for Federal income taxes is
required. the timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
that may differ from generally accepted accounting principles. These differences
relate primarily to paydowns on asset-backed securities and certain securities
sold at a loss. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ from
distributions during such period. Accordingly, the Funds may periodically make
reclassifications among certain capital accounts without impacting the net asset
value of the Funds.
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.
Semi-Annual Report -- June 30, 1999
41 <PAGE>
Bishop Street Funds
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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, 0.55% of the average daily net
assets of the High Grade Income Fund, 0.35% of the average daily net assets of
the Hawaii Municipal Bond Fund, and .30% of the Money Market and Treasury Money
Market Funds. The Adviser may from time to time waive a portion of its fee in
order to limit the operating expenses of a Fund.
Wellington Management Company, LLP (the "Sub-Adviser") serves as the
investment sub-adviser for the Money Market Fund and the Treasury Money Market
Fund (collectively, the "Money Market Funds"), 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 Money Market Funds up to $500 million and 0.020% of the
average daily net assets of the Money Market Funds in excess of $500 million.
4. Administrative, Transfer Agent and Distribution Services
Pursuant to an administration agreement dated January 27, 1995, (the
"Agreement") SEI Investments Mutual Funds Services ("SEI"), a wholly owned
subsidiary of SEI Investments Company, 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.
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. ("SEI Investments"), a wholly owned
subsidiary of SEI Investments Company, acts as the Trust's Distributor pursuant
to a distribution agreement dated January 27, 1995. The Funds have adopted a
Distribution Plan on behalf of Class A Shares pursuant to rule 12b-1 under the
Investment Company Act of 1940. The Plan provides that Class A Shares will bear
the cost of their distribution expenses. The Distributor,
Bishop Street Funds
42
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(UNAUDITED)
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as compensation for its services under the Plan, receives a distribution fee,
computed daily and payable monthly, of 0.25% of the average daily net assets
attributable to each Fund's Class A Shares.
The Trust has adopted and entered into a shareholder service plan and
agreement with SEI Investments. Each Fund pays to SEI Investments a shareholder
servicing fee at an annual rate of 0.25% of the average daily net asset value of
all shares of each fund, which is computed daily and paid monthly. SEI
Investments has voluntarily agreed to waive a portion of its fee in order to
limit operating expenses.
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,
1999 are presented below for the Funds.
FUND INVESTMENT TRANSACTIONS (000)
EQUITY HIGH GRADE HAWAII MUNICIPAL
FUND INCOME FUND BOND FUND
--------- ------------- -----------------
Purchases
U.S. Government Securities $ -- $7,723 $ --
Other 51,107 501 6,170
Sales
U.S. Government Securities -- 4,001 --
Other 38,214 3,237 1,114
EQUITY HIGH GRADE HAWAII MUNICIPAL
FUND INCOME FUND BOND FUND
--------- ------------- -----------------
Gross Unrealized Appreciation $35,904 $ 86 $ 634
Gross Unrealized Depreciation (1,855) (1,050) (585)
-------- ------- ------
Net Unrealized Appreciation/
(Depreciation) $34,049 $ (964) $ 49
======== ======= ======
Semi-Annual Report -- June 30, 1999
43
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Bishop Street Funds
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6. Concentration of Credit Risk
The Hawaii Municipal 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, 1999, the
percentage of the Fund investments by each revenue source was as follows:
HAWAII MUNICIPAL
BOND FUND
--------------------
Cash Equivalents 4
Education Bonds 2
General Obligation Bonds 31
Hospital Bonds 12
Housing Bonds 8
Transportation Bonds 18
Utility Bonds 20
Public Facility Bonds 5
--------------------
100%
====================
The ratings of long-term debt holdings as a percentage of total value of
long-term debt investments at June 30, 1999 are as follows:
STANDARD & HAWAII MUNICIPAL
POOR'S RATING BOND FUND
------------- ----------------
AAA 76
AA 16
A 4
BBB+ 1
Not Rated 3
----------------
100%
================
Bishop Street Funds
44
<PAGE>
(UNAUDITED)
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7. Shareholder Voting Results
At a shareholder meeting held on March 31, 1999, the shareholders of the
Bishop Street High Grade Income Fund, Hawaii Municipal Bond Fund, Equity Fund,
Money Market Fund, and Treasury Money Market Fund Voted: (1) to elect a new
Board of Trustees; (2) to approve an Investment Advisory Agreement between First
Hawaiian Bank and the Trust; and (3) to approve an Investment Sub-Advisory
Agreement between Wellington Management Company, LLP and First Hawaiian Bank,
relating to the Money Market Fund and the Treasury Money Market Fund. The
results of the voting were as follows:
Proposal 1 To elect a new Board of Trustees.
PORTFOLIO % OF VOTED % OF TOTAL % OF VOTED % OF TOTAL
FOR FOR WITHHELD WITHHELD
High Grade
Income Fund
Martin Anderson 100.00% 97.38% 0.00% 0.00%
Charles E. Carlbom 100.00% 97.38% 0.00% 0.00%
Philip H. Ching 100.00% 97.38% 0.00% 0.00%
James L. Huffman 100.00% 97.38% 0.00% 0.00%
Shunichi Kimura 100.00% 97.38% 0.00% 0.00%
Robert A. Nesher 100.00% 97.38% 0.00% 0.00%
William S. Richardson 100.00% 97.38% 0.00% 0.00%
Peter F. Sansevero 100.00% 97.38% 0.00% 0.00%
Manual R. Sylvester 100.00% 97.38% 0.00% 0.00%
Joyce S. Tsunoda 100.00% 97.38% 0.00% 0.00%
Hawaii Municipal
Bond Fund
Martin Anderson 99.63% 80.18% 0.37% 0.30%
Charles E. Carlbom 99.63% 80.18% 0.37% 0.30%
Philip H. Ching 99.63% 80.18% 0.37% 0.30%
James L. Huffman 99.63% 80.18% 0.37% 0.30%
Shunichi Kimura 99.63% 80.18% 0.37% 0.30%
Robert A. Nesher 99.63% 80.18% 0.37% 0.30%
William S. Richardson 99.63% 80.18% 0.37% 0.30%
Peter F. Sansevero 99.63% 80.18% 0.37% 0.30%
Manual R. Sylvester 99.63% 80.18% 0.37% 0.30%
Joyce S. Tsunoda 99.63% 80.18% 0.37% 0.30%
Semi-Annual Report -- June 30, 1999
45
<PAGE>
Bishop Street Funds
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Proposal 1 To elect a new Board of Trustees. (CONTINUED)
PORTFOLIO % OF VOTED % OF TOTAL % OF VOTED % OF TOTAL
FOR FOR WITHHELD WITHHELD
Equity Fund
Martin Anderson 100.00% 89.21% 0.00% 0.00%
Charles E. Carlbom 100.00% 89.21% 0.00% 0.00%
Philip H. Ching 100.00% 89.21% 0.00% 0.00%
James L. Huffman 100.00% 89.21% 0.00% 0.00%
Shunichi Kimura 100.00% 89.21% 0.00% 0.00%
Robert A. Nesher 100.00% 89.21% 0.00% 0.00%
William S. Richardson 100.00% 89.21% 0.00% 0.00%
Peter F. Sansevero 100.00% 89.21% 0.00% 0.00%
Manual R. Sylvester 100.00% 89.21% 0.00% 0.00%
Joyce S. Tsunoda 100.00% 89.21% 0.00% 0.00%
Money Market Fund
Martin Anderson 99.75% 77.15% 0.25% 0.19%
Charles E. Carlbom 99.77% 77.17% 0.23% 0.18%
Philip H. Ching 99.78% 77.18% 0.22% 0.17%
James L. Huffman 99.78% 77.18% 0.22% 0.17%
Shunichi Kimura 99.89% 77.26% 0.11% 0.09%
Robert A. Nesher 99.89% 77.26% 0.11% 0.09%
William S. Richardson 99.89% 77.26% 0.11% 0.09%
Peter F. Sansevero 99.89% 77.26% 0.11% 0.09%
Manual R. Sylvester 99.89% 77.26% 0.11% 0.08%
Joyce S. Tsunoda 99.89% 77.26% 0.11% 0.08%
Treasury Money
Market Fund
Martin Anderson 100.00% 57.01% 0.00% 0.00%
Charles E. Carlbom 100.00% 57.01% 0.00% 0.00%
Philip H. Ching 100.00% 57.01% 0.00% 0.00%
James L. Huffman 100.00% 57.01% 0.00% 0.00%
Shunichi Kimura 100.00% 57.01% 0.00% 0.00%
Robert A. Nesher 100.00% 57.01% 0.00% 0.00%
William S. Richardson 100.00% 57.01% 0.00% 0.00%
Peter F. Sansevero 100.00% 57.01% 0.00% 0.00%
Manual R. Sylvester 100.00% 57.01% 0.00% 0.00%
Joyce S. Tsunoda 100.00% 57.01% 0.00% 0.00%
Bishop Street Funds
46
<PAGE>
(UNAUDITED)
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Proposal 2 To approve an Investment Advisory Agreement between First Hawaiian
Bank and the Trust.
High Grade Income Fund
For 2,338,128 100.00% of shares voted 97.38% of shares outstanding
Against 0 0.00% of shares voted 0.00% of shares outstanding
Abstain 0 0.00% of shares voted 0.00% of shares outstanding
Hawaii Municipal Bond Fund
For 2,647,152 99.01% of shares voted 79.69% of shares outstanding
Against 0 0.00% of shares voted 0.00% of shares outstanding
Abstain 26,580 0.99% of shares voted 0.80% of shares outstanding
Equity Fund
For 5,946,974 99.98% of shares voted 89.19% of shares outstanding
Against 466 0.01% of shares voted 0.01% of shares outstanding
Abstain 810 0.01% of shares voted 0.01% of shares outstanding
Money Market Fund
For 210,960,070 99.91% of shares voted 77.27% of shares outstanding
Against 0 0.00% of shares voted 0.00% of shares outstanding
Abstain 196,363 0.09% of shares voted 0.07% of shares outstanding
Treasury Money Market Fund
For 158,667,490 99.99% of shares voted 57.01% of shares outstanding
Against 0 0.00% of shares voted 0.00% of shares outstanding
Abstain 8,000 0.01% of shares voted 0.00% of shares outstanding
Semi-Annual Report -- June 30, 1999
47
<PAGE>
Bishop Street Funds
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Proposal 3 To approve an Investment Sub-Advisory Agreement between Wellington
Management Company, LLP and First Hawaiian Bank, relating to the Money Market
Fund and the Treasury Money Market Fund.
Money Market Fund
For 210,695,517 99.78% of shares voted 77.18% of shares outstanding
Against 0 0.00% of shares voted 0.00% of shares outstanding
Abstain 460,917 0.22% of shares voted 0.17% of shares outstanding
Treasury Money Market Fund
For 158,667,490 99.99% of shares voted 57.01% of shares outstanding
Against 0 0.00% of shares voted 0.00% of shares outstanding
Abstain 8,000 0.01% of shares voted 0.00% of shares outstanding
Bishop Street Funds
48
<PAGE>
Investment Team
[picture of investment team omitted]
BISHOP STREET FUNDS' INVESTMENT TEAM (LEFT TO RIGHT):
MICHAEL MASUDA, VICE-PRESIDENT; JENNY CARIAS,ASSISTANT VICE-PRESIDENT;
LORI FOO, COMPLIANCE OFFICER; LOU LEVITAS, PORTFOLIO MANAGER;
TONY GOO, SENIOR VICE-PRESIDENT.
Semi-Annual Report -- June 30, 1999
49
<PAGE>
Bishop Street Funds
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Board of Trustees
[Picture of Martin Anderson Omitted]
MR. MARTIN ANDERSON
PARTNER--Goodsill, Anderson, Quinn & Stifel
[Picture of CHARLES E. CARLBOM Omitted]
MR. CHARLES E. CARLBOM
CHAIRMAN--B.P.I.
[Picture of PHILIP H. CHING Omitted]
MR. PHILIP H. CHING
VICE CHAIRMAN--First Hawaiian Bank
(through January 1996)
[Picture of JAMES L. HUFFMAN Omitted]
MR. JAMES L. HUFFMAN
DEAN & PROFESSOR--
Lewis & Clark Law School
[Picture of SHUNICHI KIMURA Omitted]
HONORABLE SHUNICHI KIMURA REGENT--University of Hawaii (1995-1996) JUDGE--State
of Hawaii Judiciary (1974-1994) MAYOR--County of Hawaii (1968-1974)
CHAIRMAN & CHIEF EXECUTIVE--County of Hawaii (1964-1968)
Bishop Street Funds
50
<PAGE>
[Picture of ROBERT A. NESHER Omitted]
MR. ROBERT A. NESHER
CHAIRMAN--SEI Mutual Funds
[Picture of WILLIAM S. RICHARDSON Omitted]
HONORABLE WILLIAM S. RICHARDSON
TRUSTEE--Kamehameha Schools Bishop Estate (through 1992) CHIEF JUSTICE--Supreme
Court of Hawaii (through 1983) LIEUTENANT GOVERNOR--State of Hawaii (1962-1966)
[Picture of PETER F. SANSEVERO Omitted]
MR. PETER F. SANSEVERO
REGIONAL DIRECTOR OF THE NORTHWESTERN REGION AND FIRST VICE PRESIDENT--
Merrill Lynch (through 1997)
Picture of MANUEL R. SYLVESTER Omitted]
MR. MANUEL R. SYLVESTER
MANAGING & EXECUTIVE PARTNER--
Coopers & Lybrand (through 1992)
Picture of JOYCE S. TSUNODA Omitted]
DR. JOYCE S. TSUNODA
SENIOR VICE PRESIDENT & CHANCELLOR
FOR COMMUNITY COLLEGES--University of Hawaii
Semi-Annual Report -- June 30, 1999
51
<PAGE>
Bishop Street Funds
- --------------------------------------------------------------------------------
Notes
Bishop Street Funds
52
<PAGE>
[Graphic of Compass on World Map Omitted]
Investment Advisor
First Hawaiian Bank
A Subsidiary of BancWest Corp.
Honolulu, HI 96813
Administrator
SEI Investments Mutual Funds Services
Oaks, PA 19456
Distributor
SEI Investments Distribution Co.
Oaks, PA 19456
Transfer Agent
DST Systems Inc.
Kansas City, MO 64141
Custodian
Chase Manhattan Bank
New York, NY 10041
Legal Counsel
Morgan, Lewis & Bockius LLP
Philadelphia, PA 20036
Auditors
PricewaterhouseCoopers LLP
Philadelphia, PA 19103
[Bishop Street Logo Omitted]
For more information about Bishop Street Funds, Call 1-800-262-9565
or your Investment Specialist
<PAGE>
[Bishop Street Logo Omitted]
Bishop Street Funds
P.O. Box 3708
Honolulu, HI 96811
This report and the financial statements contained herein are submitted for the
general information of Bishop Street Funds' shareholders. This report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus.
Shares of Bishop Street Funds are NOT deposits or obligations of, or guaranteed
by First Hawaiian Bank, Bank of the West, or any of its subsidiaries. Such
shares are also NOT federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency. Investment in
shares of mutual funds involves risk, including the possible loss of principal.
SEI Investments Distribution CO. serves as Distributor for the Bishop Street
Funds and is not affiliated with First Hawaiian Bank or Bank of the West.
BSF-F-004-05
