BISHOP STREET
FUNDS
SEMI-ANNUAL REPORT
JUNE 30, 2000
[GRAPHIC OF GLOBAL MAP OMITTED]
EQUITY FUND
HIGH GRADE INCOME FUND
HAWAII MUNICIPAL BOND FUND
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
INVESTMENT ADVISER
BISHOP STREET
CAPITAL MANAGEMENT
[Logo Omitted]
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[GRAPHIC BACKGROUND OF GLOBAL MAP OMITTED]
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 affiliates. 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 or any of its affiliates.
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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
Statement of Net Assets ....................................... 15
HAWAII MUNICIPAL BOND FUND
Investment Adviser's Report & Management Discussion ........... 20
Statement of Net Assets ....................................... 23
MONEY MARKET & TREASURY MONEY MARKET FUNDS
Investment Adviser's Report & Management Discussion ........... 32
Statements of Net Assets ...................................... 34
Statements of Operations ............................................ 40
Statements of Changes in Net Assets ................................. 41
Financial Highlights ................................................ 44
Notes to Financial Statements ....................................... 46
1
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BISHOP STREET
LETTER TO SHAREHOLDERS
FUNDS
[Photo of Robert A. Alm Omitted]
DEAR FELLOW SHAREHOLDER:
We are pleased to present Bishop Street Funds' June 30, 2000 Semi-Annual Report.
The markets entered calendar year 2000 on a high note. Relief that Y2K did not
cause widespread problems and continuing euphoria about the New Economy pushed
equities higher in January and February. Investors continued to watch the
Federal Reserve closely, however, looking for indications that policy makers
would continue their series of interest rate hikes or refrain from more
increases. In mid-March, market sentiment turned decidedly negative, leading to
sharp downturns in Nasdaq and other indices. Among the hardest hit were
previously high-flying e-commerce and Internet content stocks. Investors turned
instead toward defensive consumer-oriented stocks and utilities.
The Bishop Street Equity Fund slightly underperformed the S&P 500 Composite
Index over this period. As a growth-oriented portfolio, the Fund did not have
significant exposure to the utilities and consumer-oriented stocks such as Nike,
Budweiser, Pepsi and Nabisco that performed well as investors retreated to
defensive issues. The downturn in technology stocks did, however, enable the
Fund to invest in some very exciting companies at good prices. We are confident
that this buying opportunity may ultimately help reinforce the Fund's long-term
record of above-average risk-adjusted results, as evidenced by its four-star
rating from Morningstar. That rating places it in the top 33% of 3,642 domestic
stock funds that Morningstar tracks. *
The first half of 2000 was also a generally difficult period for the bond
market. Rising interest rates created a headwind for bonds on the short end of
the yield curve. The ongoing Treasury buyback program and the debate in
Washington over the implied guarantee of government agency debt also affected
the market's performance. On a sector basis, Treasuries outperformed corporates
and agencies over the period.
Despite this challenging environment, the Bishop Street High Grade Income Fund
modestly outperformed its benchmark. The Bishop Street Hawaii Municipal Bond
Fund continued to produce good results as well, even as the supply of
high-quality Hawaii municipal bonds remained tight. The Fund also maintained its
four-star rating, which places it in the top 33% of 1,688 municipal bond funds
tracked by Morningstar.** Additionally, the Fund was ranked the number one
Hawaii Municipal Bond Fund by Lipper for the one-, three-, and five-year periods
ended June 30, 2000.***
At Bishop Street Capital Management, we pride ourselves in attracting some of
the most talented professionals in the business. We would like to take this
opportunity to introduce M'Liss Hualani Moore, CFA, who recently joined the
Bishop Street Funds
2
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[Logo Omitted]
Bishop Street Capital Management team as a Senior Analyst. M'Liss brings 16
years of industry experience to her post. Prior to joining Bishop Street Capital
Management, she held several positions at Kamehameha Schools, Honolulu, most
recently serving as Associate Director of the Financial Asset Division.
Previously, M'Liss was employed as a Business Development Specialist at
Financial Models, New York and as a Senior Portfolio Assistant/Systems Analyst
at Garrison Keogh & Co., New York.
Please take some time to read the following pages. They include a summary of the
economic environment affecting each fund, a discussion of its 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
President
Bishop Street Capital Management,
Investment Adviser
* Morningstar proprietary ratings reflect historical risk-adjusted performance
as of 6/30/00. The ratings are subject to change every month. Past
performance is no guarantee of future results. Morningstar ratings are
calculated from the fund's three-, five-, and ten-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns with
appropriate fee adjustments, and a risk factor that reflects fund
performance below 90 day T-bill returns. The Bishop Street Equity Fund
(Institutional Shares) received 4 stars for the three-year period. The top
10% of the funds in an investment class receive 5 stars, the next 22.5 %
receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2
stars, and the bottom 10% receive 1 star. The fund was rated among 3,642
funds for the three-year period.
** Morningstar proprietary ratings reflect historical risk-adjusted performance
as of 6/30/00. The ratings are subject to change every month. Past
performance is no guarantee of future results. Morningstar ratings are
calculated from the fund's three-, five-, and ten-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns with
appropriate fee adjustments, and a risk factor that reflects fund
performance below 90 day T-bill returns. The Bishop Street Hawaii Municipal
Bond Fund (Institutional Shares) received 4 stars for the three- and
five-year periods. The top 10% of the funds in an investment class receive 5
stars, the next 22.5 % receive 4 stars, the next 35% receive 3 stars, the
next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The fund was
rated among 1,688 and 1,447 funds for the three- and five-year periods
respectively.
*** Lipper Analytical Services ranked the Bishop Street Hawaii Municipal Bond
Fund (Institutional Shares) 1st out of 13, 11 and 9 funds for the one-,
three- and five-year periods, respectively, in the Hawaii Municipal Debt
Average. Past performance is no guarantee of future results. Rankings are
based on total return data provided by Lipper Analytical Services.
Semi-Annual Report -- June 30, 2000
3
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BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
Equity Fund
--------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
The first half of 2000 was a volatile period in the equity market. As the
calendar year began, investors continued to favor technology and
telecommunications stocks, especially high-concept Internet-related issues. That
trend abruptly reversed itself in the second quarter. Led by technology stocks,
the market continued the decline in April and May that had begun in mid-March.
The stocks of concept-driven Internet companies were among the hardest hit.
Shares of technology companies involved in building and maintaining the
Internet's infrastructure continued to perform well as did those of telecom
equipment companies. Defensive stocks also performed well over the spring, but
again ceded market leadership to technology stocks and other growth-oriented
shares in June.
Looking ahead, we believe that U.S. multinationals should benefit from
accelerating global growth, even if the U.S. economy slows. The U.S. market may
remain volatile going into the earnings season as investors assess the impact of
rising interest rates and slower growth. The Fund's continued focus on companies
with high earnings visibility should be an advantage in this climate.
MANAGEMENT DISCUSSION & ANALYSIS
The Bishop Street Equity Fund Institutional Class underperformed the S&P 500
Composite Index over the six-month period ended June 30, 2000, with a total
return of -1.06%.* In comparison, the unmanaged S&P 500 Composite Index returned
-0.43% during the same period. In part, that underperformance reflected the
Fund's underweighting in technology stocks at the start of the period. As the
sector continued to drop, we saw a buying opportunity. Given how difficult it is
to call the market's low, our move into technology stocks was somewhat early.
Toward the end of the second quarter, however, technology stocks rebounded and
helped offset a corresponding slowdown in some of the Fund's cyclical holdings
such as Honeywell International. As a growth-oriented portfolio, the Fund also
did not have significant exposure to utilities and consumer-oriented stocks such
as Nike, Budweiser, Pepsi and Nabisco, which performed well during the spring.
The Fund's best performers over the period included Nortel Networks, Network
Appliance and EMC.
Bishop Street Funds
4
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[Logo Omitted]
The Fund is now overweighted in technology stocks (40% of assets as of 6/30/00),
which we believe will continue to be a good source of strong equity performance
in the periods ahead. We find the prospects of companies involved in building
and maintaining the Internet's infrastructure especially attractive. At the same
time, we have kept the Fund underweighted in basic materials and industrials,
given the economy's apparent slowdown. We also continue to underweight
slower-growth areas such as financials and non-cyclical consumer stocks,
including food producers and restaurants.
As you may know, tactical sector and industry allocation is a key element of our
strategy. We seek excess return from growth stocks by targeting industries and
sectors that we believe have the potential to outperform the overall market. We
then seek to identify companies that are best positioned to capitalize on, or
benefit from, growth in their respective industry and sector.
Overlaying this discipline are a series of active risk constraints, including
parameters that define the portfolio's maximum and minimum sector exposure and a
ceiling on individual holdings (no more than 5% of assets, based on cost). To
ensure ample diversification, we also keep the Fund invested in no fewer than 20
industries at all times. Our objective is to create an optimal level of risk and
return. We also seek to maintain consistent returns relative to the S&P 500
Composite Index, with an annual tracking error of no more than 300 basis points.
The result is a diversified portfolio consisting of approximately 70 holdings.
Our typical holding is a market-leading large-cap company with above-average
earnings prospects.
* The Bishop Street Equity Fund (Class A shares) produced a total return of
-1.29%. Including the maximum sales charge of 5.75%, total return was -6.96%.
Past performance is no guarantee of future results.
Semi-Annual Report -- June 30, 2000
5
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Equity Fund (unaudited)
--------------------------------------------------------------------------------
PERFORMANCE COMPARISON
Comparison of Change in the Value of a $10,000 Investment
in the Bishop Street Equity Fund, Institutional Class or Synthetic 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 are as follows:
Bishop Street Bishop Street Lipper
Equity Fund, Equity Fund, S&P 500 Consumer Domestic
Institutional Synthetic Composite Price Equity Funds
Class+ Class A+ Index Index Aggregate
1/31/97 $10,000 $ 9,425 $10,000 $10,000 $10,000
3/97 9,593 9,042 9,665 10,040 9,441
6/97 11,104 10,466 11,351 10,070 10,835
9/97 11,844 11,163 12,202 10,131 12,098
12/97 12,031 11,339 12,552 10,171 11,955
3/98 13,699 12,912 14,301 10,181 13,336
6/98 14,164 13,349 14,773 10,242 13,284
9/98 12,873 12,133 13,306 10,283 11,420
12/98 16,007 15,086 16,141 10,335 13,626
3/99 17,052 16,072 16,944 10,376 13,798
6/99 17,808 16,784 18,139 10,449 15,178
9/99 16,905 15,931 17,005 10,553 14,420
12/99 19,907 18,740 19,536 10,606 17,224
3/00 20,483 19,589 19,983 10,756 18,457
6/00 19,696 18,497 19,452 10,831 17,962
Past performance is not predictive of future performance.
+ 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
------------------------------------------------
-1.06% 10.61% 21.05% 22.30% Institutional Class*
-1.29% 10.22% 20.91%+ 18.11% Class A**
-6.96% 3.86% 18.55%+ 11.59% Class A, with load***
* Commenced operations on 01/31/97.
** Commenced operations on 06/14/99.
*** Reflects 5.75% sales charge.
+ Prior performance information represents performance of the Institutional
Class, which was offered on 01/31/97. Institutional Class performance has
been adjusted to reflect the Class A sales charge, but has not been adjusted
to reflect Class A Rule 12b-1 fees and expenses. Had that adjustment been
made, performance would be lower than that shown.
Bishop Street Funds
6
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Equity Fund (unaudited)
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TOP TEN EQUITY HOLDINGS
Percentage of
Investments
--------------------------------------------------------------------
1. Cisco Systems 5.5%
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2. General Electric 3.9%
--------------------------------------------------------------------
3. Microsoft 3.6%
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4. Sun Microsystems 3.2%
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5. Intel 3.1%
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6. Nortel Networks 2.4%
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7. AES 2.2%
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8. American International Group 2.0%
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9. Texas Instruments 2.0%
--------------------------------------------------------------------
10. Citigroup 2.0%
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STATEMENT OF NET ASSETS
Market
Value
Shares (000)
--------- ---------
COMMON STOCK -- 99.0%
AIR TRANSPORTATION -- 0.7%
69,800 FedEx* $ 2,652
-------
AUTOMOTIVE -- 0.0%
250 General Motors, Cl H* 22
-------
BANKS -- 4.1%
70,750 Bank of America 3,042
132,900 Bank of New York 6,180
131,481 Chase Manhattan 6,056
-------
15,278
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 4.5%
80,600 Clear Channel Communications* 6,045
104,700 Comcast, Cl A* 4,070
29,100 Omnicom Group 2,592
42,800 Univision Communications, Cl A* 4,430
-------
17,137
-------
Semi-Annual Report -- June 30, 2000
7
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Equity Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
--------- ---------
CHEMICALS -- 0.5%
47,100 E.I. DuPont de Nemours $ 2,061
-------
COMMUNICATIONS EQUIPMENT -- 1.4%
46,200 Echostar Communications, Cl A* 1,530
46,000 Network Appliance* 3,703
-------
5,233
-------
COMPUTERS & SERVICES -- 22.7%
15,900 Adobe Systems 2,067
64,300 America Online* 3,392
324,600 Cisco Systems* 20,632
139,500 Compaq Computer 3,566
71,100 EMC* 5,470
33,600 Hewlett-Packard 4,196
47,700 International Business Machines 5,226
171,400 Microsoft* 13,712
72,500 Oracle Corp.* 6,095
40,750 Siebel Systems* 6,665
132,000 Sun Microsystems* 12,004
21,550 Yahoo* 2,670
-------
85,695
-------
DIVERSIFIED OPERATIONS -- 7.6%
274,500 General Electric 14,549
100,450 Honeywell International 3,384
71,250 Illinois Tool Works 4,061
143,524 Tyco International Ltd. 6,799
-------
28,793
-------
DRUGS -- 11.0%
71,000 Amgen * 4,988
37,900 Biogen* 2,445
69,500 Bristol-Myers Squibb 4,048
86,500 Elan, ADR* 4,190
47,600 Eli Lilly 4,754
25,950 Genentech* 4,463
42,350 Johnson & Johnson 4,314
143,750 Pfizer 6,900
103,400 Schering Plough 5,222
-------
41,324
-------
ELECTRICAL UTILITIES -- 2.2%
179,400 AES* 8,185
-------
Bishop Street Funds
8
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Equity Fund (unaudited)
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STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
--------- ---------
FINANCIAL SERVICES -- 4.9%
113,850 American Express $ 5,934
146,175 Charles Schwab 4,915
125,200 Citigroup 7,543
-------
18,392
-------
HOUSEHOLD PRODUCTS -- 2.5%
68,100 Clorox 3,052
67,250 Kimberly-Clark 3,859
45,450 Proctor & Gamble 2,602
-------
9,513
-------
INSURANCE -- 2.0%
65,637 American International Group 7,712
-------
Marine Transportation -- 0.7%
141,700 Carnival, Cl A 2,763
-------
MEASURING DEVICES -- 0.7%
12,815 Agilent Technologies* 945
25,000 PE Biosystems Group 1,647
-------
2,592
-------
MEDICAL PRODUCTS & SERVICES -- 0.8%
58,300 Guidant* 2,886
-------
PETROLEUM & FUEL PRODUCTS -- 3.9%
54,700 Enron 3,528
95,400 Halliburton 4,502
49,400 Schlumberger Ltd. 3,687
115,550 USX-Marathon Group 2,896
-------
14,613
-------
PETROLEUM REFINING -- 2.7%
64,750 Royal Dutch Petroleum, ADR 3,986
78,000 Total Fina, ADR 5,991
-------
RETAIL -- 5.4%
58,400 Costco Wholesale* 1,927
64,200 CVS 2,568
110,400 Home Depot 5,513
78,300 Target 4,541
102,700 Wal-Mart Stores 5,918
-------
20,467
-------
Semi-Annual Report -- June 30, 2000
9
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Equity Fund (unaudited)
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STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
--------- ---------
SEMI-CONDUCTORS/INSTRUMENTS -- 9.7%
65,850 Amkor Technology* $ 2,325
44,600 Applied Materials* 4,042
22,400 Broadcom, Cl A* 4,904
29,450 Infineon Technologies, ADR* 2,334
87,450 Intel 11,691
65,350 LSI Logic* 3,537
111,600 Texas Instruments 7,666
--------
36,499
--------
TELEPHONE & TELECOMMUNICATIONS -- 11.0%
135,550 AT&T 4,287
67,500 Lucent Technologies 3,999
114,600 Nokia, ADR 5,723
134,950 Nortel Networks 9,210
30,400 Qualcomm* 1,824
51,700 Qwest Communications International* 2,569
79,000 SBC Communications 3,417
96,000 Vodafone Airtouch PLC ADR 3,978
138,275 Worldcom* 6,343
--------
41,350
--------
TOTAL COMMON STOCK (Cost $269,695) 373,144
--------
CASH EQUIVALENTS -- 0.9%
1,280,077 SEI Daily Income Trust Money Market Fund 1,280
2,065,496 SEI Daily Income Trust Prime Obligation Fund 2,066
--------
TOTAL CASH EQUIVALENTS (Cost $3,346) 3,346
--------
TOTAL INVESTMENTS (Cost $273,041) -- 99.9% 376,490
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.1% 369
--------
Bishop Street Funds
10
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Equity Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONCLUDED)
Market
Value
(000)
---------
NET ASSETS:
Fund Shares of Institutional Class (unlimited authorization
-- no par value) based on 21,193,319 outstanding shares
of beneficial interest $234,800
Fund Shares of Class A (unlimited authorization
-- no par value) based on 110,616 outstanding
shares of beneficial interest 1,962
Accumulated net investment loss (291)
Accumulated net realized gain on investments 36,939
Net unrealized appreciation on investments 103,449
--------
TOTAL NET ASSETS -- 100.0% $376,859
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $17.69
--------
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $17.64
--------
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A
($17.64 / 94.25%) $18.72
--------
* Non-income producing securities
ADR -- American Depository Receipt
Cl -- Class
Ltd.-- Limited
PLC -- Public Limited Company
The accompanying notes are an integral part of the financial statements.
Semi-Annual Report -- June 30, 2000
11
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BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
High Grade Income Fund
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INVESTMENT ADVISER'S REPORT
During the first half of the year, the U.S. economy remained on a path of strong
growth, with a tight labor market and robust consumer spending. In response, the
Federal Reserve (the Fed) continued its series of interest rate hikes to cool
the economy. As the period ended, Fed policy makers and investors alike were
awaiting evidence that the U.S. economy might be slowing enough that the Fed
could suspend further interest rate hikes.
In the fixed-income market, rising interest rates created a headwind for bonds
on the short end of the yield curve. Other factors affecting the bond market's
performance included the ongoing Treasury buyback program and the debate in
Washington over the implied guarantee of government agency debt. As a result,
Treasuries outperformed corporates and agencies during the period.
While the economy and consumer spending remained strong over the first half of
2000, we should start to see the impact of the rate hikes. We do not feel that
this level of growth will be sustainable in the second half of the year. We
think that interest rates could be volatile in the short run as policy makers
and investors wait for more evidence that the economy is slowing and that no
further interest rate hikes are warranted. During the third quarter, we will
likely utilize opportunities to extend the Fund's duration if the market pulls
back.
MANAGEMENT DISCUSSION & ANALYSIS
For the six months ended June 30, 2000, the High Grade Income Fund Institutional
Class outperformed its benchmark, the Lehman Brothers U.S. Government/Corporate
Bond Index, with a total return of 4.56%, compared to the Index's 4.16%.*
Bishop Street Funds
12
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[Logo Omitted]
It should be emphasized that a bond fund's total return is not the same as its
SEC 30-Day yield. Total return is the sum of the income a fund distributes 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. As of June
30, 2000, the High Grade Income Fund's SEC 30-Day yield -- a prescribed measure
of income generated by the fund over the last 30 days -- was 6.06%
(Institutional Class).
Several factors contributed to the Fund's results over the first half of 2000.
After shortening the Fund's duration during the first-quarter rally, we extended
it over the second quarter. The Fund's sector positioning was also beneficial.
Debate about the implied government guarantee of agency bonds led spreads on
these issues to widen in April and May. In this environment, the Fund's
conservative positioning in the government agency sector helped its performance.
In addition, the Fund remained underweighted in corporate bonds. Evidence that
the economy was slowing, coupled with dimmer prospects for some technology
companies, put pressure on that sector over the spring.
At the end of the period, the Fund remained underweighted in government agency
bonds, which made up 8% of the portfolio versus the Index weighting of 12.6%.
The Fund's largest sector weighting continued to be Treasuries, at approximately
59% of the portfolio. Corporate debt made up an additional 31%, and the
remainder was in cash. Going into the second half, the Fund's duration is short
to the benchmark, but we will look for opportunities to extend it if the market
pulls back.
* The Bishop Street High Grade Income Fund (Class A shares) produced a total
return of 4.31%. Including the maximum sales charge of 4.75%, total return was
-0.68%. Past performance is no guarantee of future results.
Semi-Annual Report -- June 30, 2000
13
<PAGE>
High Grade Income Fund (unaudited)
--------------------------------------------------------------------------------
PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
BISHOP STREET HIGH GRADE INCOME FUND, INSTITUTIONAL CLASS OR SYNTHETIC CLASS A,
VERSUS THE LEHMAN BROTHERS U.S. GOVERNMENT/CORPORATE BOND INDEX, THE CONSUMER
PRICE INDEX, AND THE LIPPER CORPORATE A-RATED DEBT FUNDS AVERAGE
[Line Graph Omitted]
Plot points are as follows:
Lehman
Bishop Street Bishop Street Brothers Lipper
High Grade High Grade U.S. Govt./ Corporate
Income Fund, Income Fund, Corporate Consumer A-Rated
Institutional Synthetic Bond Price Debt Funds
Class+ Class A+ Index Index Average
1/31/97 $10,000 $ 9,525 $10,000 $10,000 $10,000
3/97 9,902 9,431 9,902 10,040 9,898
6/97 10,216 9,730 10,261 10,070 10,257
9/97 10,514 10,015 10,621 10,131 10,617
12/97 10,793 10,280 10,962 10,171 10,908
3/98 10,937 10,418 11,129 10,181 11,061
6/98 11,191 10,659 11,419 10,242 11,319
9/98 11,798 11,237 11,985 10,283 11,729
12/98 11,774 11,215 12,000 10,335 11,726
3/99 11,495 10,949 11,856 10,376 11,620
6/99 11,316 10,755 11,727 10,449 11,450
9/99 11,359 10,752 11,790 10,553 11,479
12/99 11,263 10,650 11,742 10,606 11,427
3/00 11,584 10,944 12,057 10,756 11,671
6/00 11,778 11,108 12,231 10,831 11,771
Past performance is not predictive of future performance.
+ 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
---------------------------------------------------
4.56% 4.08% 4.86% 4.91% Institutional Class*
4.31% 3.29% 4.51%+ 4.07 Class A**
-0.68% -1.64% 2.83%+ -0.64% Class A, with load***
* Commenced operations on 01/31/97.
** Commenced operations on 06/14/99.
*** Reflects 4.75% sales charge.
+ Prior performance information represents performance of the Institutional
Class, which was offered on 01/31/97. Institutional Class performance has
been adjusted to reflect the Class A sales charge, but has not been adjusted
to reflect Class A Rule 12b-1 fees and expenses. Had that adjustment been
made, performance would be lower than that shown.
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 7.25% May 15, 2016 8.6%
--------------------------------------------------------------------------------
2. United States Treasury Bond 7.50% Nov. 15, 2016 6.2%
--------------------------------------------------------------------------------
3. United States Treasury Note 6.00% Aug. 15, 2009 4.0%
--------------------------------------------------------------------------------
4. United States Treasury Bond 7.25% Aug. 15, 2022 3.3%
--------------------------------------------------------------------------------
5. Shell Oil 6.70% Aug. 15, 2002 3.2%
--------------------------------------------------------------------------------
6. Lucent Technologies 7.25% Jul. 15, 2006 3.0%
--------------------------------------------------------------------------------
7. United States Treasury Note 6.13% Sept. 30, 2000 2.9%
--------------------------------------------------------------------------------
8. United States Treasury Bond 6.00% Feb. 15, 2026 2.9%
--------------------------------------------------------------------------------
9. Federal National Mortgage Association 5.13% Feb. 13, 2004 2.6%
--------------------------------------------------------------------------------
10. United States Treasury Note 7.50% Feb. 15, 2005 2.5%
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face Market
Amount Value
(000) (000)
--------- ---------
U.S. TREASURY OBLIGATIONS -- 59.1%
U.S. Treasury Bonds
$9,900 7.250%, 05/15/16 $ 10,893
7,000 7.500%, 11/15/16 7,884
3,750 7.250%, 08/15/22 4,207
3,750 6.000%, 02/15/26 3,666
U.S. Treasury Notes
500 6.000%, 08/15/00 500
3,677 6.125%, 09/30/00 3,677
350 5.750%, 11/15/00 349
450 8.500%, 11/15/00 454
1,400 5.625%, 11/30/00 1,396
950 7.750%, 02/15/01 958
1,500 6.250%, 04/30/01 1,497
725 6.500%, 05/31/01 725
500 6.625%, 06/30/01 501
2,625 6.625%, 07/31/01 2,629
2,500 6.375%, 09/30/01 2,495
1,200 6.125%, 12/31/01 1,193
Semi-Annual Report -- June 30, 2000
15
<PAGE>
High Grade Income Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- ---------
$1,950 6.250%, 01/31/02 $ 1,943
700 7.500%, 05/15/02 713
700 6.375%, 08/15/02 699
625 5.750%, 10/31/02 616
2,625 5.500%, 01/31/03 2,570
2,825 6.250%, 02/15/03 2,817
625 5.500%, 05/31/03 611
1,700 5.750%, 08/15/03 1,671
500 5.875%, 02/15/04 493
250 7.250%, 05/15/04 258
2,000 7.250%, 08/15/04 2,067
1,625 7.875%, 11/15/04 1,719
3,025 7.500%, 02/15/05 3,172
250 6.500%, 08/15/05 253
1,500 7.000%, 07/15/06 1,554
1,625 6.500%, 10/15/06 1,642
1,800 6.125%, 08/15/07 1,789
3,000 6.625%, 05/15/07 3,062
5,100 6.000%, 08/15/09 5,058
-------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $75,904) 75,731
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.8%
FHLB
200 6.055%, 10/24/00 200
700 7.310%, 07/06/01 703
700 7.570%, 08/19/04 713
FNMA
2,500 6.250%, 11/15/02 2,462
3,500 5.125%, 02/13/04 3,288
1,625 5.750%, 06/15/05 1,540
FNMA, MTN
1,000 6.610%, 05/08/02 994
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $10,186) 9,900
-------
Bishop Street Funds
16
<PAGE>
High Grade Income Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
---------- ---------
CORPORATE OBLIGATIONS -- 30.6%
BEAUTY PRODUCTS -- 1.8%
Procter & Gamble
$2,425 5.250%, 09/15/03 $ 2,319
-------
COMMUNICATIONS EQUIPMENT -- 3.9%
Motorola
2,550 5.800%, 10/15/08 2,314
Rockwell International
300 6.625%, 06/01/05 294
Sony
2,425 6.125%, 03/04/03 2,364
-------
4,972
-------
DIVERSIFIED OPERATIONS -- 1.9%
Honeywell International
2,525 7.000%, 03/15/07 2,468
-------
FOOD, BEVERAGE & TOBACCO -- 1.5%
Philip Morris
2,000 7.125%, 08/15/02 1,965
-------
HOUSEHOLD FURNITURE & FIXTURES -- 1.8%
Leggett & Platt
2,300 7.650%, 02/15/05 2,346
-------
MACHINERY -- 1.8%
Emerson Electric
2,625 5.000%, 10/15/08 2,254
-------
PETROLEUM REFINING -- 4.9%
Halliburton
2,550 5.625%, 12/01/08 2,286
Shell Oil
4,000 6.700%, 08/15/02 4,010
-------
6,296
-------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 2.6%
Xerox
1,000 6.625%, 04/16/01 990
2,525 5.250%, 12/15/03 2,307
-------
3,297
-------
Semi-Annual Report -- June 30, 2000
17
<PAGE>
High Grade Income Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Shares/Face Value
Amount(000) (000)
------------------ ---------
RETAIL -- 5.8%
Gap
$2,625 6.900%, 09/15/07 $ 2,537
Lowes Companies
2,300 6.375%, 12/15/05 2,153
Wal-Mart Stores
2,625 8.000%, 09/15/06 2,730
--------
7,420
--------
TELEPHONE & TELECOMMUNICATIONS -- 3.0%
Lucent Technologies
3,800 7.250%, 07/15/06 3,829
--------
TOYS -- 1.6%
Hasbro
2,325 6.150%, 07/15/08 2,069
--------
TOTAL CORPORATE OBLIGATIONS (Cost $40,842) 39,235
--------
CASH EQUIVALENTS -- 1.2%
1,102,437 SEI Daily Income Trust Money Market Fund 1,102
421,271 SEI Daily Income Trust Prime Obligation Fund 421
--------
TOTAL CASH EQUIVALENTS (Cost $1,523) 1,523
--------
TOTAL INVESTMENTS (Cost $128,455) -- 98.7% 126,389
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.3% 1,699
--------
Bishop Street Funds
18
<PAGE>
High Grade Income Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONCLUDED)
Market
Value
(000)
---------
NET ASSETS:
Fund Shares of Institutional Class (unlimited authorization
-- no par value) based on 13,396,524 outstanding shares
of beneficial interest $133,626
Fund Shares of Class A (unlimited authorizatio
-- no par value) based on 134 outstanding
shares of beneficial interest 1
Distributions in excess of net investment income (1)
Accumulated net realized loss on investments (3,472)
Net unrealized depreciation on investments (2,066)
--------
TOTAL NET ASSETS -- 100.0% $128,088
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $9.56
--------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A $9.51
--------
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A
($9.51 / 95.25%) $9.98
--------
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, 2000
19
<PAGE>
BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
Hawaii Municipal Bond Fund
--------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
During the first half of 2000, the U.S. economy remained on a path of strong
growth, with a tight labor market and robust consumer spending. The Federal
Reserve (the Fed) responded with further interest rate hikes. As the period
ended, Fed policy makers and investors alike were awaiting conclusive evidence
that the U.S. economy was slowing. Some investors viewed recent data as proof
that the Fed's rate hikes over the past year were having their desired effect.
Perhaps as a result, the Fed refrained from raising rates again at its most
recent meeting on June 28, 2000.
Both the U.S. Treasury and municipal bond markets continued to post strong
performances over the first half of the year, thanks to two major factors that
offset the Fed's interest rate hikes: (1) a growing consensus among market
participants that the economy and consumer spending were slowing, and (2)
favorable technical factors, especially the sharply reduced supply of new
Treasury and municipal bond issuance. The U.S. Treasury has dramatically reduced
its issuance of 30-year bonds, as well as its total volume of borrowings because
of the federal government's budget surplus. Likewise, total volume in the
municipal market through the first half of 2000 was down approximately 23% from
1999's levels. However, this reduced supply of municipals was matched in part by
lower demand because traditional institutional buyers of tax-exempt
bonds--municipal bond funds and insurers--were less active buyers than usual.
It now appears that most of the Fed's interest rate hikes are behind us, and
that the municipal market should be relatively stable in the months ahead.
MANAGEMENT DISCUSSION & ANALYSIS
Our major objective continues to be to deliver a high level of current income
exempt from Hawaii and federal income taxes, and we feel that we have met this
objective. The Fund's 30-Day SEC yield as of June 30, 2000 was 5.02%
(Institutional Class), which equates to a taxable equivalent of 9.11% for
individuals in the maximum combined state and federal income tax brackets.*
For the six-month period ended June 30, 2000, the Bishop Street Hawaii
Bishop Street Funds
20
<PAGE>
[Logo Omitted]
Municipal Bond Fund Institutional Class outperformed the Lipper Hawaii Municipal
Debt Average with a total return of 4.66% compared to the Lipper category's
3.97%.** The Lehman Brothers Municipal Bond Index, measuring a portfolio of
national issues mostly not exempt from Hawaii income taxes, reflected a 4.49%
return for the same period.
We continue to maintain an extremely high level of credit quality in the Fund's
portfolio; at mid-year, 92% of its holdings were in the AA/AAA category.
High-quality Hawaii municipal bonds like these remained much in demand. Despite
a lack of supply, we were recently able to increase the Fund's holdings in
Hawaii Harbor and Hawaii Airport Revenue bonds, high-quality issues that come to
market infrequently. At this juncture, there is not a large calendar of
offerings planned for the third quarter, but we expect to see some new
financings later in the year and will strive to take advantage of them if they
meet our criteria.
The yield curve (which describes the relationship between interest rates and
maturity) stayed relatively flat over the period, meaning that extending the
Fund's maturity would not result in significantly higher income for our
shareholders. Our average maturity on June 30, 2000 was 10.7 years. We will
continue this strategy until the yield curve provides sufficient relative value
to our shareholders for extending our average life.
Recently we have seen some encouraging data confirming that Hawaii is recovering
from the recession that persisted through most of the 1990s. Tourism, the
state's main economic engine, is producing increased revenues. At the same time,
there is increasing recognition of the benefits that will accrue to the state
from a more diversified economy. This trend would also have a positive impact on
Hawaii's municipal market and the Fund.
* This information is based on a hypothetical illustration and is not
representative of any investment securities. The taxable equivalent yield of
9.11% is based on a 39.6% federal tax rate and 8.75% Hawaii state tax rate.
** The Bishop Street Hawaii Municipal Bond Fund (Class A shares) produced a
total return of 4.60%. Including the maximum sales charge of 4.25%, total
return was 0.18%. Past performance is no guarantee of future results.
Semi-Annual Report -- June 30, 2000
21
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE BISHOP STREET HAWAII MUNICIPAL BOND FUND, INSTITUTIONAL CLASS OR
SYNTHETIC CLASS A, VERSUS THE LEHMAN BROTHERS MUNICIPAL BOND INDEX, THE
CONSUMER PRICE INDEX, AND THE LIPPER HAWAII MUNICIPAL DEBT AVERAGE
[Line Graph Omitted] Plot points are as follows:
Bishop Street Bishop Street Lehman Lipper
Hawaiii Muni Hawaii Muni Brothers Hawaii
Bond Fund, Bond Fund, Municipal Consumer Municipal
Institutional Synthetic Bond Price Debt
Class+ Class A+ Index Index Average
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
12/99 12,750 12,176 13,199 12,513 11,170
6/00 13,344 12,736 13,791 13,009 11,407
Past performance is not predictive of future performance.
+ Account value if you reinvested income and capital gains
AVERAGE ANNUAL TOTAL RETURNS
SIX ONE ANNUALIZED ANNUALIZED ANNUALIZED
MONTH YEAR 3 YEAR 5 YEAR INCEPTION
RETURN RETURN RETURN RETURN TO DATE
------------------------------------------------------------
4.66% 3.26% 4.41% 5.34% 5.52% Institutional Class*
4.60% 3.02% 4.30%+ 5.27%+ 2.64 Class A**
0.18% -1.35% 2.80%+ 4.36%+ -1.52% Class A, with load***
* Commenced operations on 02/15/95.
** Commenced operations on 06/14/99.
*** Reflects 4.25% sales charge.
+ Prior performance information represents performance of the Institutional
Class, which was offered on 02/15/95. Institutional Class performance has
been adjusted to reflect the Class A sales charge, but has not been adjusted
to reflect Class A Rule 12b-1 fees and expenses. Had that adjustment been
made, performance would be lower than that shown.
Bishop Street Funds
22
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
TOP TEN HOLDINGS
Percentage
Coupon Maturity of
Rate Date Investments
--------------------------------------------------------------------------------
1. Honolulu City & County Waste Water
Revenue Bond 5.25% Jul. 01, 2018 2.9%
--------------------------------------------------------------------------------
2. Hawaii State GO 6.50% Dec. 01, 2013 2.6%
--------------------------------------------------------------------------------
3. Honolulu City & County Waste Water
Revenue Bond 5.25% Jul. 01, 2015 2.2%
--------------------------------------------------------------------------------
4. Hawaii State Highway Revenue Bond 5.25% Jul. 01, 2015 2.2%
--------------------------------------------------------------------------------
5. Hawaii State Highway Revenue Bond 6.00% Jul. 01, 2009 2.2%
--------------------------------------------------------------------------------
6. Honolulu City & County GO 5.25% Jul. 01, 2019 2.2%
--------------------------------------------------------------------------------
7. Honolulu City & County Waste Water
Revenue Bond 5.25% Jul. 01, 2016 2.0%
--------------------------------------------------------------------------------
8. Honolulu City & County GO 5.13% Jul. 01, 2017 1.9%
--------------------------------------------------------------------------------
9. Hawaii State Airport Systems Revenue Bond 6.50% Jul. 01, 2014 1.8%
--------------------------------------------------------------------------------
10. Hawaii Department of Budget & Finance
Kaiser Permanente Revenue Bond 6.50% Mar. 01, 2011 1.7%
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face Market
Amount Value
(000) (000)
--------- ---------
MUNICIPAL BONDS -- 96.5%
HAWAII -- 89.3%
Department of Budget & Finance, Hawaiian Electric,
Ser A, RB, AMBAC Insured
$2,000 5.500%, 12/01/14 $ 2,007
Department of Budget & Finance, Hawaiian Electric,
Ser A, RB, AMT, MBIA Insured
760 6.200%, 05/01/26 772
Department of Budget & Finance, Hawaiian Electric,
Ser A, RB, MBIA Insured
1,670 4.950%, 04/01/12 1,603
Department of Budget & Finance, Hawaiian Electric,
Ser B, RB, AMT, AMBAC Insured
2,000 5.750%, 12/01/18 1,992
Department of Budget & Finance, Queens Health
Systems, Ser A, RB
1,450 5.875%, 07/01/11 1,454
Department of Budget & Finance, Queens Health Systems,
Ser B, RB, MBIA Insured
750 5.250%, 07/01/11 746
1,445 5.250%, 07/01/12 1,427
1,275 5.250%, 07/01/13 1,249
1,000 5.250%, 07/01/14 971
Semi-Annual Report -- June 30, 2000
23
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- -------
Department of Budget & Finance, Special Purpose Mortgage,
Hawaii Electric Project, Ser A, RB, AMT, MBIA Insured
$ 590 6.600%, 01/01/25 $ 611
Department of Budget & Finance, Special Purpose Mortgage,
Kaiser Permanente Project, Ser A, RB
2,500 6.500%, 03/01/11 2,544
Department of Budget & Finance, Special Purpose Mortgage,
Kapiolani Health Care System Project, RB
1,260 6.300%, 07/01/08 1,276
500 6.000%, 07/01/11 491
250 6.400%, 07/01/13 252
Department of Budget & Finance, Special Purpose Mortgage,
St. Francis Medical Center Project, RB, FSA Insured
930 6.500%, 07/01/22 952
Department of Budget & Finance, Wilcox Memorial
Hospital Project, RB
500 5.500%, 07/01/09 462
Harbor Capital Improvement, RB, AMT, MBIA Insured
305 6.200%, 07/01/08 321
500 5.400%, 07/01/09 505
480 7.000%, 07/01/17 490
1,000 5.500%, 07/01/27 939
Harbor Capital Improvement, Ser 1992, RB, AMT, FGIC Insured
225 6.500%, 07/01/19 231
Harbor System, Ser A, RB, AMT, FSA Insured
1,000 5.600%, 07/01/15 994
1,210 5.700%, 07/01/16 1,207
2,025 5.750%, 07/01/17 2,017
Hawaii County, GO, MBIA Insured
250 6.850%, 12/01/02 251
Hawaii County, Ser A, GO, FGIC Insured
400 5.550%, 05/01/09 412
450 5.600%, 05/01/12 462
190 5.600%, 05/01/13 194
Hawaii County, Ser A, GO, FSA Insured
1,000 5.250%, 05/15/11 1,002
1,025 5.250%, 05/15/12 1,021
1,000 5.375%, 05/15/13 1,000
1,000 5.375%, 05/15/14 992
500 5.400%, 05/15/15 494
1,000 5.625%, 05/15/19 987
Bishop Street Funds
24
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- --------
Hawaii State, Airport System, RB, AMT, FGIC Insured
$1,470 7.000%, 07/01/20 $ 1,521
Hawaii State, Airport System, Second Ser, RB, AMT
60 6.900%, 07/01/12 68
Hawaii State, Airport System, Second Ser, RB, AMT,
FGIC Insured
300 7.200%, 07/01/00 300
1,100 6.900%, 07/01/12 1,240
Hawaii State, Airport System, Ser B, RB, AMT,
FGIC Insured
2,500 6.500%, 07/01/14 2,681
Hawaii State, Airport System, Third Ser, RB, AMT,
AMBAC Insured
1,000 5.750%, 07/01/09 1,025
Hawaii State, Highway, RB
3,000 6.000%, 07/01/09 3,191
375 5.250%, 07/01/10 377
510 5.000%, 07/01/11 501
500 5.250%, 07/01/12 498
1,175 5.000%, 07/01/13 1,134
1,000 5.250%, 07/01/16 966
Hawaii State, Highway, RB, FGIC Insured
3,280 5.250%, 07/01/15 3,194
405 5.000%, 07/01/16 377
Hawaii State, Housing & Community Development,
Ser A, RB, AMT
2,000 6.300%, 07/01/20 2,018
Hawaii State, Housing, Finance & Development,
Affordable Rental Housing Program, Ser A, RB
350 6.000%, 07/01/15 353
750 6.050%, 07/01/22 753
Hawaii State, Housing, Finance & Development,
Affordable Rental Housing Program, Ser A, RB, AMT,
FNMA Insured
1,000 5.550%, 07/01/07 1,005
250 5.250%, 07/01/13 237
1,375 5.400%, 07/01/30 1,227
2,075 5.750%, 07/01/30 1,956
Hawaii State, Housing, Finance & Development,
Single-Family Mortgage Purchase, Ser B, RB,
FNMA Collateral
1,000 5.450%, 07/01/17 949
Semi-Annual Report -- June 30, 2000
25
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- ------
Hawaii State, Housing, Finance & Development,
University of Hawaii, Faculty Housing Project, RB,
AMBAC Insured
$ 360 4.650%, 10/01/03 $ 358
380 4.750%, 10/01/04 378
395 4.850%, 10/01/05 394
415 5.000%, 10/01/06 416
700 5.650%, 10/01/16 703
Hawaii State, Kapolei Office Building, Ser A, COP,
AMBAC Insured
1,725 5.250%, 05/01/13 1,706
1,000 5.000%, 05/01/14 947
500 5.000%, 05/01/18 458
2,000 5.000%, 05/01/15 1,880
1,500 5.000%, 05/01/16 1,397
1,000 5.000%, 05/01/17 923
Hawaii State, Ser CL, GO
1,000 6.000%, 03/01/09 1,055
Hawaii State, Ser CM, GO, FGIC Insured
500 6.000%, 12/01/09 533
1,500 6.000%, 12/01/11 1,599
3,500 6.500%, 12/01/13 3,872
Hawaii State, Ser CN, GO, FGIC Insured
1,000 5.250%, 03/01/13 989
500 5.500%, 03/01/14 501
500 5.250%, 03/01/17 479
Hawaii State, Ser CO, GO, FGIC Insured
200 6.000%, 09/01/05 210
Hawaii State, Ser CQ, GO, FGIC Insured
175 5.000%, 10/01/00 175
Hawaii State, Ser CR, GO, MBIA Insured
2,500 5.250%, 04/01/12 2,491
2,500 5.250%, 04/01/13 2,472
Hawaii State, Ser CT, GO, FSA Insured
2,000 5.875%, 09/01/16 2,050
Hawaiian Home Lands Department, RB
1,250 4.000%, 07/01/05 1,164
Honolulu City & County, Board of Water Supply, RB
250 5.250%, 07/01/07 253
1,000 5.800%, 07/01/16 1,014
Bishop Street Funds
26
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- -------
Honolulu City & County, GO
$ 230 6.000%, 12/01/09 $ 245
Honolulu City & County, Halawa Business Park, SA
370 6.400%, 10/15/01 376
Honolulu City & County, Mortgage, Smith Beretania,
Ser A, RB, FHA Insured
95 7.800%, 07/01/24 98
Honolulu City & County, Ser A, GO
55 6.000%, 01/01/10 59
Honolulu City & County, Ser A, GO, ETM
250 5.800%, 03/01/01 252
245 5.700%, 04/01/09 257
95 6.000%, 01/01/10 102
Honolulu City & County, Ser A, GO, ETM, MBIA Insured
135 6.000%, 11/01/10 145
Honolulu City & County, Ser A, GO, MBIA Insured
365 6.000%, 11/01/10 390
Honolulu City & County, Ser B, GO
270 5.600%, 06/01/05 280
1,230 5.600%, 06/01/05 1,265
3,000 5.125%, 07/01/17 2,805
Honolulu City & County, Ser B, GO, FGIC Insured
1,365 5.500%, 10/01/11 1,397
635 5.500%, 10/01/11 654
2,000 5.125%, 07/01/13 1,955
1,000 5.125%, 07/01/15 952
Honolulu City & County, Ser C, GO, FGIC Insured
125 5.500%, 11/01/07 129
1,025 5.500%, 11/01/08 1,054
1,200 5.125%, 07/01/11 1,191
3,500 5.000%, 07/01/19 3,167
Honolulu City & County, Waipahu Towers Project,
Ser A, RB, AMT,
GNMA Insured
200 6.900%, 06/20/35 207
Semi-Annual Report -- June 30, 2000
27
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- ------
Honolulu City & County, Waste Water, 2nd Board
Resolution, Junior Ser, RB, FGIC Insured
$1,000 5.250%, 07/01/12 $ 996
1,900 5.250%, 07/01/13 1,879
3,365 5.250%, 07/01/15 3,277
3,000 5.250%, 07/01/16 2,899
2,000 5.250%, 07/01/17 1,902
4,500 5.250%, 07/01/18 4,247
1,525 5.000%, 07/01/23 1,350
Kauai County, Public Improvement, Ser B, GO,
MBIA Insured
120 4.750%, 08/01/08 117
100 4.850%, 08/01/09 98
135 4.950%, 08/01/10 133
140 5.000%, 08/01/11 138
120 5.050%, 08/01/12 117
155 5.100%, 08/01/13 151
165 5.150%, 08/01/14 160
175 5.200%, 08/01/15 170
Kauai County, Ser A, GO, FGIC Insured
1,135 6.250%, 08/01/18 1,183
1,480 6.250%, 08/01/20 1,534
1,335 6.250%, 08/01/21 1,380
1,050 6.250%, 08/01/22 1,084
Kauai County, Ser B, GO, AMBAC Insured
285 5.750%, 08/01/06 297
Kauai County, Ser B, GO, MBIA Insured
260 5.900%, 02/01/13 267
Maui County, Board of Water Supply, Ser A, RB,
ETM, FGIC Insured
520 6.000%, 12/01/01 530
Maui County, GO, FGIC Insured
1,000 5.100%, 09/01/04 1,009
290 5.125%, 12/15/10 290
Maui County, Ser A, GO, ETM, AMBAC Insured
200 6.800%, 12/01/00 202
Bishop Street Funds
28
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
--------- ------
Maui County, Ser A, GO, FGIC Insured
$ 200 5.000%, 03/01/03 $ 201
500 5.200%, 09/01/12 496
500 4.800%, 03/01/13 467
200 5.000%, 03/01/13 193
500 4.900%, 03/01/14 466
100 5.125%, 03/01/14 97
795 5.000%, 03/01/18 726
615 5.100%, 03/01/19 564
Maui County, Ser A, GO, MBIA Insured
250 5.750%, 06/01/13 256
Maui County, Ser C, GO, FGIC Insured
555 5.150%, 03/01/14 539
790 5.150%, 03/01/15 761
500 5.200%, 03/01/16 481
--------
133,953
--------
Guam -- 0.3%
Guam, Power Authority, Ser A, RB, AMBAC Insured
400 6.375%, 10/01/08 424
--------
Puerto Rico -- 6.9%
Puerto Rico Commonwealth, GO, MBIA Insured
1,500 6.500%, 07/01/10 1,697
1,000 6.500%, 07/01/13 1,130
1,000 6.500%, 07/01/14 1,133
Puerto Rico Commonwealth, Industrial Development,
Ser B, RB, MBIA Insured
1,000 5.375%, 07/01/16 996
Puerto Rico Commonwealth, Public Improvement,
GO, AMBAC Insured
500 5.900%, 07/01/00 500
Puerto Rico, Electric Power Authority, Ser DD,
RB, FSA Insured
1,500 5.000%, 07/01/28 1,354
Puerto Rico, Housing, Banking & Finance Agency,
Single-Family Mortgage, Affordable Housing Mortgage,
Portfolio I, RB, AMT, GNMA/FNMA/FHLMC Collateral
195 6.100%, 10/01/15 197
Semi-Annual Report -- June 30, 2000
29
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Shares/Face Value
Amount (000) (000)
-------------------- -------
Puerto Rico, Industrial Tourist Educational Medical
Environmental Control Facilities, Hospital Auxilio
Muto Obligation Group, Ser A, RB, MBIA Insured
$ 300 6.250%, 07/01/24 $ 310
Puerto Rico, Public Building Authority, Government
Facilities,
Ser B, RB, MBIA Insured
1,000 5.000%, 07/01/09 1,014
1,000 5.100%, 07/01/10 1,019
1,000 5.000%, 07/01/15 964
--------
10,314
--------
TOTAL MUNICIPAL BONDS (Cost $147,456) 144,691
--------
CASH EQUIVALENT -- 1.7%
265,089 Dreyfus Tax Exempt Cash Management Fund 265
2,344,983 SEI Institutional Tax Free Fund 2,345
--------
TOTAL CASH EQUIVALENT (COST $2,610) 2,610
--------
TOTAL INVESTMENTS (COST $150,066)-- 98.2% 147,301
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.8% 2,746
--------
Bishop Street Funds
30
<PAGE>
Hawaii Municipal Bond Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONCLUDED)
Market
Value
(000)
-------
NET ASSETS:
Fund Shares of Institutional Class (unlimited authorization
-- no par value) based on 13,997,660 outstanding shares
of beneficial interest $145,744
Fund Shares of Class A (unlimited authorization -- no par value)
based on 722,614 outstanding shares of beneficial interest 7,369
Accumulated net realized loss on investments (301)
Net unrealized depreciation on investments (2,765)
--------
TOTAL NET ASSETS -- 100.0% $150,047
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $10.19
========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A $10.19
========
MAXIMUM OFFERING PRICE PER SHAR -- CLASS A
($10.19 / 95.75%) $10.64
========
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT -- ALTERNATIVE MINIMUM TAX
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE CORPORATION
FHA -- FEDERAL HOUSING ASSOCIATION
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 INVESTORS ASSURANCE
RB -- REVENUE BOND
SA -- SPECIAL ASSESSMENT
SER -- SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 2000
31
<PAGE>
BISHOP STREET
INVESTMENT ADVISER'S REPORT & MANAGEMENT DISCUSSION
FUNDS
Money Market & Treasury Money Market Funds
--------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
The long-standing economic expansion continued into the Year 2000 on the
heels of a sizzling 7.3% GDP rate for the final quarter of 1999. With the
directive to contain any inflation that may arise from this exceptional growth,
the Federal Reserve's (the Fed) intentions became clear early in the year --
gradually raise rates until consumers' near insatiable appetite for spending
abates, and the economy shows signs of slowing. Responding to the strong
economic data, the Fed increased short-term rates three times in the first half
of the year, by a total of 100 basis points, culminating in a 50 basis point
increase to 6.50% on May 16. This was the sixth rate hike in this tightening
cycle, for a cumulative increase of 175 basis points in the Fed Funds rate since
June of last year. Shortly following the 50 point hike, economic data began to
show a moderation in activity, including the manufacturing, housing and consumer
spending sectors. While this slowdown is more likely attributed to earlier rate
hikes, the weaker data was enough to keep the Fed from raising rates at their
June meeting.
As is typical in periods of an active Fed, market sentiment shifted dramatically
over the course of the six-month period ending June 30, 2000. Up until the rate
hike in May, the market predicted a continuation of aggressive action by the
Fed, while by the end of June, many were wondering if the Fed had finished
raising rates for this cycle. Yields on one-year high quality corporate debt
peaked at 7.40% in May before settling back near 7.00% by the end of June. After
rising considerably early in the year, the yields on the three-month and
one-year Treasury Bills actually dropped by 3 and 18 basis points during the
second quarter to 5.86% and 6.06%, respectively. However, this is most likely a
result of technical factors surrounding the continuation of the government's
debt retirement and buyback program. In fact, as part of this debt reduction
program, the Treasury may eliminate the auction of the one-year bill all
together.
Bishop Street Funds
32
<PAGE>
[Logo Omitted]
MANAGEMENT DISCUSSION & ANALYSIS
During the six months we shortened the average maturity of the Treasury
Money Market Fund to 35 days as overnight repurchase agreements ("repo") offered
more yield than Treasuries. This was partly a result of the shrinking supply of
Treasuries -- a premium was added to the price of the one-year Bill and hence
its yield became somewhat diminished on a relative basis.
In the Money Market Fund we are able to invest in a far larger selection of
instruments and were thus able to take advantage of the relatively attractive
yields of corporate issues. These yields reflect the expectations of investors
surrounding the magnitude and direction of future changes in short-term interest
rates. We look to purchase securities for the Fund when these yields are
stretched to levels that we believe are unsustainable. As the market priced in
overly aggressive Fed policy, we were able to find value in issues with longer
maturities. As a result the Fund's average maturity increased to 53 days over
the course of the six months.
OUTLOOK & STRATEGY
While the current economic data is reflecting slower growth for the second
quarter, the pace is still expected to be at least 3.5% (down from 5.4% in the
first quarter). Inflation also remains a concern to the market as price
pressures could mount from the continuation of a tight labor market and the rise
in fuel prices. The Fed's next meeting is not until August 22, and it will
remain alert to signs that the recent slowdown is only temporary -- in the last
two years the growth rate dipped in the second quarter, only to reaccelerate.
So, while the Fed may not raise rates in August, it remains premature to predict
that their next move will be to lower rates.
In this environment, we feel comfortable managing the Money Market Fund with a
longer average maturity. We will implement this strategy by buying longer
corporate issues when the market predicts more Fed activity, enabling us to
"lock in" higher yields. With fewer options in the Treasury Money Market Fund,
we will continue to rely on repo as the yields of Treasuries with maturities out
to one year remain unattractive on a relative basis.
Semi-Annual Report -- June 30, 2000
33
<PAGE>
Money Market Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face
Amount Value
(000) (000)
--------- --------
COMMERCIAL PAPER -- 52.0%
ASSET BACKED -- 23.6%
Aesop Funding
$10,000 6.660%, 08/16/00 $ 9,915
Apreco
10,000 6.640%, 10/16/00 9,803
Delaware Funding
10,000 6.650%, 07/20/00 9,965
Edison Asset Securities
10,000 6.600%, 09/22/00 9,848
Enterprise Funding
7,000 6.580%, 08/21/00 6,935
Falcon Asset Securities
10,000 6.570%, 08/08/00 9,931
Peacock Funding
2,500 6.600%, 07/05/00 2,498
Preferred Receivables Funding
10,000 6.600%, 09/13/00 9,864
Variable Funding
10,000 6.550%, 08/07/00 9,933
--------
78,692
--------
BROKERAGE -- 3.0%
Goldman Sachs Group
10,000 6.610%, 08/09/00 9,928
--------
CHEMICALS -- 3.0%
E.I. Dupont de Nemours
10,000 6.550%, 08/21/00 9,907
--------
FINANCIAL SERVICES -- 6.0%
National Australia Funding
10,000 6.750%, 07/07/00 9,989
National Rural Utilities
10,000 6.670%, 07/12/00 9,980
--------
19,969
--------
FOOD, BEVERAGE & TOBACCO -- 5.1%
Kellogg
7,000 6.550%, 08/04/00 6,957
Pepsico
10,000 6.900%, 07/03/00 9,996
--------
16,953
--------
Bishop Street Funds
34
<PAGE>
Money Market Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face
Amount Value
(000) (000)
--------- -------
HOUSEHOLD PRODUCTS -- 6.0%
Hubbell
$10,000 6.980%, 07/03/00 $ 9,996
Fortune Brands
10,000 6.580%, 09/08/00 9,874
---------
19,870
---------
RETAIL -- 5.3%
Albertson's
8,000 6.629%, 07/14/00 8,000
Wal-Mart Stores
10,000 6.580%, 09/19/00 9,854
---------
17,854
---------
TOTAL COMMERCIAL PAPER (Cost $173,173) 173,173
---------
FLOATING RATE NOTES -- 8.7%
Allstate (A)
3,000 6.900%, 09/15/00 3,000
AT&T (A) (B)
8,000 6.683%, 08/07/00 8,000
Key Bank NA (A)
8,000 6.893%, 08/31/00 8,000
Monumental Life Insurance (A)
10,000 6.480%, 07/01/00 10,000
---------
TOTAL FLOATING RATE NOTES (Cost $29,000) 29,000
---------
CERTIFICATES OF DEPOSIT/BANK NOTES -- 18.2%
American Express Centurion Bank
10,000 6.580%, 07/20/00 10,000
Bank of Scotland
5,500 5.725%, 07/03/00 5,500
Barclays Bank, NY
5,000 6.710%, 02/09/01 4,998
Deutsche Bank AG
5,000 6.600%, 01/22/01 4,999
3,000 6.750%, 02/22/01 2,999
3,000 6.710%, 02/26/01 2,999
Fifth Third Bancorp
10,000 6.590%, 07/20/00 10,000
Semi-Annual Report -- June 30, 2000
35
<PAGE>
Money Market Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face
Amount Value
(000) (000)
--------- -------
First Tennessee Bank
$7,000 6.730%, 02/23/01 $ 6,998
Metropolitan Life Funding
5,000 6.471%, 05/01/01 5,000
Royal Bank of Canada
4,000 5.700%, 07/03/00 4,000
UBS AG
3,000 6.720%, 02/05/01 2,999
--------
TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $60,492) 60,492
--------
CORPORATE OBLIGATIONS -- 7.4%
Ford Motor Credit
8,000 6.729%, 08/18/00 7,999
SBC Communications (B)
7,000 6.684%, 05/15/01 7,000
SMM Trust 2000-E (B)
3,500 6.669%, 03/14/01 3,500
Travelers Insurance Funding
6,000 6.923%, 05/31/01 6,000
--------
TOTAL CORPORATE OBLIGATIONS (Cost $24,499) 24,499
--------
U.S. GOVERNMENT AGENCY OBLIGATION -- 1.5%
FNMA MTN
5,000 6.520%, 03/16/01 4,997
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION (Cost $4,997) 4,997
--------
Bishop Street Funds
36
<PAGE>
Money Market Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONCLUDED)
Face
Amount Value
(000) (000)
--------- ---------
REPURCHASE AGREEMENTS -- 12.3%
Lehman, 6.700%, dated 06/30/00, matures 07/03/00,
repurchase price $8,504,746 (collateralized by
various U.S. Government obligations, total par value
$10,100,100, 0.000% - 8.050%, 05/24/05 - 08/10/18;
$ 8,500 total market value $8,670,645) $ 8,500
Lehman, 6.550%, dated 06/30/00, matures 07/03/00,
repurchase price $17,797,709 (collateralized by
U.S. Treasury STRIPS, total par value $88,315,000,
17,788 0.000%, 11/15/16; total market value $18,192,890) 17,788
Paribas, 6.850%, dated 06/30/00, matures 07/03/00,
repurchase price $12,507,135 (collateralized by
various U.S. Government obligations, total par
value $16,410,929, 5.500% - 7.000% , 12/01/13 -
12,500 06/01/29; total market value $13,024,619) 12,500
Warburg Dillion, 6.850%, dated 06/30/00, matures
07/03/00, repurchase price $2,201,256 (collateralized
by a U.S. Government obligation, total par value
$2,520,000, 5.500% , 09/01/14; total market
2,200 value $2,247,639) 2,200
--------
TOTAL REPURCHASE AGREEMENTS (Cost $40,988) 40,988
--------
TOTAL INVESTMENTS (COST $333,149) -- 100.1% 333,149
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.1%) (231)
--------
NET ASSETS:
Fund Shares of Institutional Class (unlimited authorization
-- no par value)based on 332,917,175 outstanding shares
of beneficial interest 332,917
Undistributed net investment income 5
Accumulated net realized loss on investments (4)
--------
TOTAL NET ASSETS -- 100.0% $332,918
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
========
(A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON 06/30/00. 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 TRUSTEES.
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
STRIPS -- SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL
OF SECURITIES
The accompanying notes are an integral part of the financial statements.
Semi-Annual Report -- June 30, 2000
37
<PAGE>
Treasury Money Market Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face
Amount Value
(000) (000)
--------- -------
U.S. TREASURY OBLIGATIONS -- 18.4%
U.S. Treasury Notes
$11,000 4.000%, 10/31/00 $ 10,943
12,000 5.750%, 11/15/00 11,999
16,000 4.625%, 11/30/00 15,913
5,000 5.625%, 11/30/00 4,993
10,000 5.000%, 02/28/01 9,915
8,000 5.625%, 02/28/01 7,961
10,000 4.875%, 03/31/01 9,882
--------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $71,606) 71,606
--------
REPURCHASE AGREEMENTS -- 81.9%
ABN Amro, 6.630%, dated 06/30/00, matures 07/03/00,
repurchase price $50,027,625 (collateralized by a
U.S. Treasury Bond, total par value $57,121,000,
50,000 5.250%, 11/15/28; total market value $51,000,571) 50,000
BZW, 6.500%, dated 06/30/00, matures 07/03/00,
repurchase price $80,035,000 (collateralized by a
U.S. Treasury Note, total par value $86,520,000,
80,000 4.250%, 11/15/03; total market value $81,600,689) 80,000
Lehman, 6.550%, dated 06/30/00, matures 07/03/00,
repurchase price $49,772,622 (collateralized by
U.S. Treasury STRIPS, total par value $94,250,000,
49,755 0.000%, 05/15/10; total market value $51,375,675) 49,755
Paribas, 6.620%, dated 06/30/00, matures 07/03/00,
repurchase price $80,044,133 (collateralized by a
U.S. Treasury Bond, total par value $55,356,000,
80,000 13.250%, 05/15/14; total market value $81,600,197) 80,000
Warburg Dillion, 6.430%, dated 06/30/00, matures
07/03/00, repurchase price $59,932,096
(collateralized by a U.S. Treasury Bond, total
par value $48,100,000, 8.750%, 05/15/17;
59,900 total market value $61,102,274) 59,900
--------
TOTAL REPURCHASE AGREEMENTS (Cost $319,655) 319,655
--------
TOTAL INVESTMENTS (COST $391,261) -- 100.3% 391,261
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.3%) (1,121)
--------
Bishop Street Funds
38
<PAGE>
Treasury Money Market Fund (unaudited)
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONCLUDED)
Value
(000)
--------
NET ASSETS:
Fund Shares of Institutional Class (unlimited authorization
-- no par value) based on 390,152,220 outstanding shares
of beneficial interest $390,152
Undistributed net investment income 14
Accumulated net realized loss on investments (26)
--------
TOTAL NET ASSETS -- 100.0% $390,140
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
========
STRIPS -- SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 2000
39
<PAGE>
<TABLE>
<CAPTION>
Bishop Street Funds (unaudited)
------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the six-month period ended 6/30/00
(In Thousands)
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 $ 290 $ 3,905 $3,992 $9,762 $11,316
Dividend Income (Net of withholding
taxes of $12) 1,327 -- -- -- --
--------------------------------------------------------------------------------------------
Total Investment Income 1,617 3,905 3,992 9,762 11,316
--------------------------------------------------------------------------------------------
EXPENSES:
Investment Adviser Fee 1,410 348 258 470 574
Investment Adviser Fee Waiver (52) (56) (145) (134) (262)
Management Fee 381 126 148 313 382
Management Fee Waiver (146) (58) (98) (144) (176)
Shareholder Servicing Fee 476 158 185 391 478
Shareholder Servicing Fee Waiver (286) (95) (111) (235) (287)
Distribution Fees Class A 1 -- 8 -- --
Custody Fees 25 21 17 19 14
Transfer Agent Fees 23 16 20 15 17
Registration Fees 20 8 11 7 9
Trustees Fees 5 3 4 18 16
Printing Fees 15 7 7 25 27
Professional Fees 23 12 15 35 41
Amortization of Deferred
Organizational Costs 3 3 -- -- 3
Miscellaneous Expenses 10 5 3 3 5
---------------------------------------------------------------------------------------------
Total Expenses 1,908 498 322 783 841
---------------------------------------------------------------------------------------------
Net Investment Income (Loss) (291) 3,407 3,670 8,979 10,475
---------------------------------------------------------------------------------------------
Net Realized Gain (Loss) on Investments 28,327 (3,402) (367) (2) (2)
Change in Unrealized Appreciation
(Depreciation) on Investments (32,220) 5,718 3,511 -- --
---------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments (3,893) 2,316 3,144 (2) (2)
---------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Resulting from Operations $(4,184) $ 5,723 $6,814 $8,977 $10,473
=============================================================================================
</TABLE>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds
40
<PAGE>
<TABLE>
<CAPTION>
Bishop Street Funds (unaudited)
---------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
---------------------------------------------------------------------------------------------------------
Equity Fund High Grade Income Fund
---------------------------------------------------------------------------------------------------------
01/01/00 to 01/01/99 to 01/01/00 to 01/01/99 to
06/30/00 12/31/99 06/30/00 12/31/99
---------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (291) $ (6) $ 3,407 $ 2,822
Net Realized Gain (Loss) on Investments 28,327 30,951 (3,402) 7
Change in Unrealized Appreciation
(Depreciation) on Investments (32,220) 26,018 5,718 (4,605)
----------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting
From Operations (4,184) 56,963 5,723 (1,776)
----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class Shares -- -- (3,407) (2,822)
Class A Shares (1) -- -- -- --
Capital Gains:
Institutional Class Shares -- (22,427) -- (376)
Class A Shares (1) -- (30) -- --
----------------------------------------------------------------------------------------------------------
Total Distributions -- (22,457) (3,407) (3,198)
----------------------------------------------------------------------------------------------------------
Changes in Net Assets (4,184) 34,506 2,316 (4,974)
----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Proceeds in Connection with the Acquisition
of Common Trust Fund Assets -- 224,391 -- 97,163
Proceeds from Shares Issued 15,101 30,327 9,321 18,415
Reinvestments of Cash Distributions -- 8,559 662 1,731
Cost of Shares Redeemed (27,276) (8,344) (12,093) (9,355)
----------------------------------------------------------------------------------------------------------
Total Institutional Class Capital
Share Transactions (12,175) 254,933 (2,110) 107,954
----------------------------------------------------------------------------------------------------------
Class A Shares: (1)
Proceeds from Shares Issued 1,573 680 39 1
Reinvestments of Cash Distributions -- 30 -- --
Cost of Shares Redeemed (165) (156) (39) --
----------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 1,408 554 -- 1
----------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
From Capital Share Transactions (10,767) 255,487 (2,110) 107,955
----------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (14,951) 289,993 206 102,981
----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 391,810 101,817 127,882 24,901
----------------------------------------------------------------------------------------------------------
End of Period $376,859 $391,810 $128,088 $127,882
==========================================================================================================
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Shares Issued in Connection with the
Acquisition of Common Trust Fund Assets -- 13,437 -- 10,121
Shares Issued 848 1,772 987 1,898
Shares Issued in Lieu of Cash Distributions -- 497 70 177
Shares Redeemed (1,533) (492) (1,279) (964)
---------------------------------------------------------------------------------------------------------
Total Institutional Class Capital
Share Transactions (685) 15,214 (222) 11,232
---------------------------------------------------------------------------------------------------------
Class A Shares: (1)
Shares Issued 88 40 4 --
Shares Issued in Lieu of Cash Distributions -- 2 -- --
Shares Redeemed (10) (9) (4) --
---------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 78 33 -- --
---------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Capital Shares (607) 15,247 (222) 11,232
=========================================================================================================
</TABLE>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON 06/14/99.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Semi-Annual Report -- June 30, 2000
41
<PAGE>
<TABLE>
<CAPTION>
Bishop Street Funds (unaudited)
--------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Hawaii Municipal
Bond Fund
--------------------------------------------------------------------------------------------------------
01/01/00 01/01/99
to 06/30/00 to 12/31/99
--------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net Investment Income $ 3,670 $ 3,347
Net Realized Gain (Loss) on Investments (367) 143
Change in Unrealized Appreciation
(Depreciation) on Investments 3,511 (5,313)
--------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting From Operations 6,814 (1,823)
--------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares (3,521) (3,279)
Class A Shares (1) (149) (96)
Capital Gains:
Institutional Class Shares -- (88)
Class A Shares (1) -- (6)
--------------------------------------------------------------------------------------------------------
Total Distributions (3,670) (3,469)
--------------------------------------------------------------------------------------------------------
Change in Net Assets 3,144 (5,292)
--------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Proceeds in Connection with the Acquisition of
Common Trust Fund Assets -- 102,397
Proceeds from Shares Issued 9,815 17,832
Reinvestments of Cash Distributions 362 907
Cost of Shares Redeemed (11,830) (10,408)
--------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions (1,653) 110,728
--------------------------------------------------------------------------------------------------------
Class A Shares: (1)
Proceeds from Shares Issued 1,563 6,374
Reinvestments of Cash Distributions 129 101
Cost of Shares Redeemed (608) (190)
--------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 1,084 6,285
--------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets From Capital Share Transactions (569) 117,013
--------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 2,575 111,721
--------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 147,472 35,751
--------------------------------------------------------------------------------------------------------
End of Period $150,047 $147,472
========================================================================================================
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Shares Issued in Connection with the
Acquisition of Common Trust Fund Assets -- 10,049
Shares Issued 980 1,716
Shares Issued in Lieu of Cash Distributions 36 87
Shares Redeemed (1,179) (1,011)
--------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions (163) 10,841
--------------------------------------------------------------------------------------------------------
Class A Shares: (1)
Shares Issued 156 624
Shares Issued in Lieu of Cash Distributions 13 10
Shares Redeemed (61) (19)
--------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions 108 615
--------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Capital Shares (55) 11,456
========================================================================================================
</TABLE>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON 06/14/99.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds
42
<PAGE>
<TABLE>
<CAPTION>
Bishop Street Funds (unaudited)
-----------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Treasury
Money Market Money Market
Fund Fund
------------------------------------------------------------------------------------------------------------
01/01/00 to 01/01/99 to 01/01/00 to 01/01/99 to
06/30/00 12/31/99 06/30/00 12/31/99
------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net Investment Income $8,979 $ 13,452 $ 10,475 $ 14,817
Net Realized Gain (Loss) on Investments (2) 7 (2) 11
------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From Operations 8,977 13,459 10,473 14,828
------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class Shares (8,978) (13,452) (10,475) (14,817)
------------------------------------------------------------------------------------------------------------
Total Distributions (8,978) (13,452) (10,475) (14,817)
------------------------------------------------------------------------------------------------------------
Changes in Net Assets (1) 7 (2) 11
------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (ALL AT $1.00 PER SHARE):
Institutional Class Shares:
Proceeds from Shares Issued 332,910 695,788 635,323 1,290,349
Reinvestments of Cash Distributions 161 373 16 8
Cost of Shares Redeemed (284,443) (680,195) (576,261) (1,259,148)
------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
From Capital Share Transactions 48,628 15,966 59,078 31,209
------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 48,627 15,973 59,076 31,220
------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 284,291 268,318 331,064 299,844
------------------------------------------------------------------------------------------------------------
End of Period $332,918 $284,291 $390,140 $331,064
============================================================================================================
</TABLE>
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, 2000
43
<PAGE>
<TABLE>
<CAPTION>
Bishop Street Funds
----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout the period ended June 30, 2000 (Unaudited) and the periods ended December 31,
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>
2000: $17.88 $ (0.01) $(0.18) $ -- $ -- $17.69
1999(6): 15.28 -- 3.68 -- (1.08) 17.88
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:
2000: $17.87 $(0.01) $(0.22) $ -- $ -- $17.64
1999(2): 15.74 -- 3.19 -- (1.06) 17.87
---------------------
HIGH GRADEINCOME FUND
---------------------
Institutional Class Shares:
2000: $ 9.39 $0.25 $ 0.17 $(0.25) $ -- $ 9.56
1999: 10.43 0.48 (0.92) (0.50) (0.10) 9.39
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:
2000: $ 9.35 $0.27 $ 0.13 $(0.24) $ -- $ 9.51
1999(2): 9.69 0.19 (0.19) (0.24) (0.10) 9.35
--------------------------
HAWAII MUNICIPAL BOND FUND
--------------------------
Institutional Class Shares:
2000: $ 9.98 $ 0.25 $ 0.21 $(0.25) $ -- $10.19
1999: 10.77 0.48 (0.75) (0.50) (0.02) 9.98
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:
2000: $ 9.97 $ 0.24 $ 0.21 $ (0.23 $ -- $10.19
1999(2): 10.42 0.26 (0.44) (0.25) (0.02) 9.97
-----------------
MONEY MARKET FUND
-----------------
2000: $ 1.00 $ 0.03 $ -- $(0.03) $ -- $ 1.00
1999: 1.00 0.05 -- (0.05) -- 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
--------------------------f
2000: $ 1.00 $ 0.03 $ -- $(0.03) $ -- $ 1.00
1999: 1.00 0.05 -- (0.05) -- 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 RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES EXPENSES TO NET INCOME TO
ASSETS, TO AVERAGE INVESTMENT AVERAGE
END OF AVERAGE NET ASSETS INCOME TO NET ASSETS PORTFOLIO
TOTAL PERIOD NET EXCLUDING FEE AVERAGE EXCLUDING FEE TURNOVER
RETURN** (000) ASSETS WAIVERS NET ASSETS WAIVERS RATE
--------- ------ -------- ------------- ---------- ------------- ---------
-----------
EQUITY FUND
-----------
Institutional Class Shares:
<S> <C> <C> <C> <C> <C> <C> <C>
2000: (1.06)%+ $374,908 1.00%* 1.27%* (0.15)%* (0.42)%* 31%
1999(6): 24.37 391,227 1.00 1.27 (0.01) (0.28) 58
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:
2000: (1.29)%+ $ 1,951 1.25%* 1.52%* (0.40)%* (0.67)%* 31%
1999(2): 20.52+ 583 1.25* 1.61* (0.33)* (0.69)* 58
---------------------
HIGH GRADEINCOME FUND
---------------------
Institutional Class Shar
2000: 4.56%+ $128,087 0.78%* 1.11%* 5.37%* 5.04%* 41%
1999: (4.34) 127,881 0.80 1.19 5.12 4.73 56
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:
2000: 4.31%+ $ 1 1.03%* 1.36%* 5.06%* 4.73%* 41%
1999(2): (0.05)+ 1 1.05* 1.87* 4.89* 4.07* 56
--------------------------
HAWAII MUNICIPAL BOND FUND
--------------------------
Institutional Class Shar
2000: 4.66%+ $142,684 0.42%* 0.91%* 4.97%* 4.48%* 12%
1999: (2.65) 141,341 0.41 0.99 4.79 4.21 14
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:
2000: 4.60%+ $ 7,363 0.67%* 1.16%* 4.72%* 4.23%* 12%
1999(2): (1.76)+ 6,131 0.66* 1.24* 4.89* 4.31* 14
-----------------
MONEY MARKET FUND
-----------------
2000: 2.88%+ $332,918 0.50%* 0.83%* 5.72%* 5.39%* n/a
1999: 4.88 284,291 0.50 0.84 4.78 4.44 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
--------------------------
2000: 2.75%+ $390,140 0.44%* 0.82%* 5.46%* 5.08%* n/a
1999: 4.65 331,064 0.44 0.85 4.56 4.15 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
</TABLE>
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
* ANNUALIZED.
** TOTAL RETURN DOES NOT REFLECT THE SALES CHARGE ON CLASS A SHARES.
(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.
(6) PER SHARE NET INVESTMENT INCOME AMOUNT CALCULATED USING AVERAGE SHARES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds Semi-Annual Report -- June 30, 2000
44 & 45
<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. On June 14, 1999, Class A
Shares commenced operations. Class A Shares are subject to a sales load as
disclosed in the prospectus. 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; dividend income is recorded on ex-dividend date.
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 the scientific
interest method, which approximates the effective interest method.
Bishop Street Funds
46
<PAGE>
(unaudited)
--------------------------------------------------------------------------------
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. Class specific expenses, such as the distribution fees, are borne by
that class. Other operating expenses of the Trust are prorated to the Funds on
the basis of relative net assets. Income, other expenses and realized and
unrealized gains and losses of a fund are allocated to the respective classes on
the basis of relative net assets each day.
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 of a fund are redeemed by any holder thereof during the period that such
fund is amortizing its organi-
Semi-Annual Report -- June 30, 2000
47
<PAGE>
Bishop Street Funds
--------------------------------------------------------------------------------
zation costs, the redemption proceeds payable to the holder thereof by the fund
will be reduced by the unamortized organization costs in the same ratio as the
number of initial shares outstanding at the time of the redemption.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. INVESTMENT ADVISORY AGREEMENT
Investment advisory services are provided to the Funds by Bishop Street Capital
Management (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 0.30% 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.
Bishop Street Funds
48
<PAGE>
(unaudited)
--------------------------------------------------------------------------------
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 June 10, 1999. 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, 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, 2000 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 $ -- $ 51,053 $ --
Other 117,900 2,295 19,036
Sales
U.S. Government Securities -- 49,570 --
Other 120,235 -- 16,410
Semi-Annual Report -- June 30, 2000
49
<PAGE>
Bishop Street Funds
--------------------------------------------------------------------------------
The aggregate gross unrealized appreciation and depreciation of securities held
by the Equity Fund, High Grade Income Fund, and Hawaii Municipal Bond Fund for
federal income tax purposes at June 30, 2000 were as follows:
EQUITY HIGH GRADE HAWAII MUNICIPAL
FUND INCOME FUND BOND FUND
-------- ----------- ----------------
Gross Unrealized Appreciation $124,469 $ 968 $ 914
Gross Unrealized Depreciation (21,020) (3,034) (3,679)
-------- -------- -------
Net Unrealized Appreciation
(Depreciation) $103,449 $ (2,066) $(2,765)
======== ======== =======
The total cost of securities and the net realized gains or losses on securities
sold for federal income tax purposes at June 30, 2000 was not materially
different from amounts reported for financial reporting purposes.
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, 2000, the percentage of the
Fund investments by each revenue source was as follows:
HAWAII MUNICIPAL
BOND FUND
----------------
Cash Equivalents 2
Education Bonds 2
General Obligation Bonds 37
Hospital Bonds 10
Housing Bonds 5
Transportation Bonds 16
Utility Bonds 18
Public Facility Bonds 8
Other Revenue Bonds 2
----
100%
====
Bishop Street Funds
50
<PAGE>
(unaudited)
--------------------------------------------------------------------------------
The ratings of long-term debt holdings as a percentage of total value of
long-term debt investments at June 30, 2000 are as follows:
STANDARD & HAWAII MUNICIPAL
POOR'S RATING BOND FUND
------------- ----------------
AAA 82
AA 10
A+ 2
A 3
Not Rated 3
----
100%
====
7. COMMON TRUST FUND CONVERSIONS
On September 17, 1999, certain common trust funds of First Hawaiian Bank were
converted into the Bishop Street Funds pursuant to a plan of reorganization
approved by First Hawaiian Bank shareholders on June 16, 1999. The Funds
involved in the conversion were as follows:
COMMON TRUST BISHOP
FUND STREET FUND
---------------------- --------------------------
FHB Equity Fund Equity Fund
FHB Equity Income Fund Equity Fund
FHB Fixed Income Fund High Grade Income Fund
FHB Tax Exempt Fund Hawaii Municipal Bond Fund
The assets, which consisted of securities and related receivables less
liabilities, were converted on a tax-free basis. The number of shares issued by
each Fund and the net assets (including unrealized appreciation (depreciation))
of each Common Trust Fund immediately before the conversion were as follows:
COMMON NET UNREALIZED COMMON TRUST
TRUST ASSETS APPRECIATION FUND SHARES PRIOR BISHOP STREET
FUND VALUE (DEPRECIATION) TO CONVERSION SHARES ISSUED
-------- ------ ------------ ---------------- -------------
FHB Equity $194,483,008 $ 62,405,848 2,225,655 11,645,689
FHB Equity Income 29,908,418 16,464,775 767,254 1,790,923
FHB Fixed Income 97,162,807 (3,971,262) 10,680,571 10,121,126
FHB Tax Exempt 102,397,433 (2,463,733) 10,695,238 10,048,816
Semi-Annual Report -- June 30, 2000
51
<PAGE>
Bishop Street Funds
--------------------------------------------------------------------------------
BOARD OF TRUSTEES
[Photo Omitted]
MR. MARTIN ANDERSON
PARTNER--Goodsill, Anderson, Quinn & Stifel
[Photo Omitted]
MR. CHARLES E. CARLBOM
CHAIRMAN--B.P.I., Inc.
PRESIDENT AND CEO--United Grocers, Inc. (1997-1999)
PRESIDENT AND CEO--Western Family Food, Inc.
Western Family Holdings Inc. (1982-1997)
[Photo Omitted]
MR. PHILIP H. CHING
VICE CHAIRMAN--First Hawaiian Bank
(through January 1996)
[Photo Omitted]
MR. JAMES L. HUFFMAN
DEAN & PROFESSOR--
Lewis & Clark Law School
[Photo Omitted]
HONORABLE SHUNICHI KIMURA
MEDIATOR--Mediation Specialists of Hawaii (1994-1997)
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
52
<PAGE>
--------------------------------------------------------------------------------
[Photo Omitted]
MR. ROBERT A. NESHER
CHAIRMAN--SEI Mutual Funds
[Photo 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)
[Photo Omitted]
MR. PETER F. SANSEVERO
REGIONAL DIRECTOR OF THE NORTHWESTERN REGION AND FIRST VICE PRESIDENT--
Merrill Lynch (through 1997)
[Photo Omitted]
MR. MANUEL R. SYLVESTER
MANAGING & EXECUTIVE PARTNER--
Coopers & Lybrand (through 1992)
[Photo Omitted]
DR. JOYCE S. TSUNODA
SENIOR VICE PRESIDENT & CHANCELLOR
FOR COMMUNITY COLLEGES--University of Hawaii
Bishop Street Funds
Semi-Annual Report -- June 30, 2000
53
<PAGE>
--------------------------------------------------------------------------------
NOTES
Bishop Street Funds
54
<PAGE>
--------------------------------------------------------------------------------
NOTES
Semi-Annual Report -- June 30, 2000
55
<PAGE>
--------------------------------------------------------------------------------
NOTES
Bishop Street Funds
56
<PAGE>
INVESTMENT ADVISER
BISHOP STREET CAPITAL MANAGEMENT
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 19103
AUDITORS
PRICEWATERHOUSECOOPERS LLP
PHILADELPHIA, PA 19103
[GRAPHIC BACKGROUND OF GLOBAL MAP OMITTED]
FOR MORE INFORMATION ABOUT BISHOP STREET FUNDS, CALL 1-800-262-9565
OR YOUR INVESTMENT SPECIALIST
[Logo Omitted]
<PAGE>
[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 OR ANY OF ITS AFFILIATES. 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 ANY OF ITS AFFILIATES.
BSF-F-004-06
