UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-08572
Bishop Street Funds
(Exact name of registrant as specified in charter)
101 Federal Street
Boston, MA 02110
(Address of principal executive offices)
SEI Investments
One Freedom Valley Drive
Oaks, PA 19456
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-262-9565
Date of fiscal year end: December 31, 2014
Date of reporting period: December 31, 2014
Item 1. | Reports to Stockholders. |
The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q within sixty days after the end of the period. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities is available without charge, by calling 1-800-262-9565 or by visiting the Commission’s website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, by calling 1-800-262-9565 or by visiting the Funds’ website at http://www.bishopstreetfunds.com or the website of the Securities and Exchange Commission.
BISHOP STREET
TABLE OF CONTENTS
FUNDS
2 | ||||
4 | ||||
Strategic Growth Fund | ||||
6 | ||||
12 | ||||
Dividend Value Fund | ||||
14 | ||||
18 | ||||
High Grade Income Fund | ||||
22 | ||||
25 | ||||
Hawaii Municipal Bond Fund | ||||
34 | ||||
37 | ||||
47 | ||||
49 | ||||
51 | ||||
54 | ||||
56 | ||||
68 | ||||
69 | ||||
72 | ||||
74 |
1
BISHOP STREET
FUNDS
Dear Shareholder:
2014 was a good year for U.S. investors. Financial markets were relatively calm and U.S. stocks and bonds produced returns that were above expectations. While the U.S. stock market experienced two modest pullbacks during the year, the S&P 500 rose 13.7%, including dividends. Contrary to popular belief, long-term interest rates declined with the Barclays Aggregate Bond Index gaining a surprising 6.0% for the year.
Despite the effects of a severe winter storm at the start of the year, U.S. economic growth accelerated supported by rising earnings and profits. European economies continued to struggle under the pressure of austerity programs, with labor markets and consumer demand remaining weak. Commodities experienced their second-worst year since 1971, as crude oil prices fell more than 45% in the second half of 2014, due to rising oil production and slowing demand. Falling commodity prices and weak overseas demand helped push inflation and long-term interest rates lower, leaving the Federal Reserve (Fed) in a quandary and waiting patiently for the “right” moment to move short-term interest rates higher following the end of quantitative easing.
Job growth was a bright spot in the U.S., with the economy creating 2.9 million new jobs in 2014; the largest increase in over fifteen years. Unemployment fell to 5.6% and though many are still out of work, labor market indicators appeared to provide a boost to business confidence increasing the odds of further hiring and future wage increases. Lower oil and commodity prices helped slow the rate of consumer price inflation to 0.8% in December despite higher food and medical costs. Overseas, deflation, negative interest rates and the strong U.S. dollar remained the center of attention as the European Central Bank contemplated strategies to help boost Eurozone economies, while slowing growth in Asia also pointed to potential trouble ahead.
Looking Ahead
We expect interest rates to remain low and the economic expansion in the U.S. to moderate this year and while corporate profits should remain healthy enough to support future growth, Fed policy moves will be a wild card. The Fed’s plan to move interest rates higher later this year will be dependent upon success in Europe, the effect of a strong U.S. dollar and the containment of geopolitical risks that have to date been
Bishop Street Funds |
2
troubling. We think stock prices will continue to rise in 2015, though not at the double-digit pace of the past several years. As volatility increases and the probability of a significant decline growing more likely, we believe it is best to approach the markets with an appropriate mix of stocks and bonds to weather the storm. Consequently, diversification will continue to play an important role and we believe that our Bishop Street Fund strategies will offer attractive core U.S. stock and bond strategies to serve as the foundation of your investment portfolio.
Thank you for investing with Bishop Street Funds. We value your continued trust and confidence.
Sincerely,
Michael K. Hirai, CFA, CPA
President and Chief Investment Officer
Bishop Street Capital Management
January 28, 2015
The performance data quoted represents past performance. Past performance does not guarantee future results. Index returns are for illustrative purposes only and do not represent actual Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Investing involves risk including possible loss of principal. Diversification does not protect against market loss.
December 31, 2014 | www.bishopstreetfunds.com |
3
BISHOP STREET
DEFINITIONS OF COMPARATIVE INDICES
FUNDS
Definitions of Comparative Indices
Barclays U.S. Government/Credit Index is a widely-recognized, market value weighted index of U.S. Treasury securities, U.S. government agency obligations, corporate debt backed by the U.S. government and fixed-rate non-convertible corporate debt securities issued or guaranteed by foreign governments and agencies. All securities in the Index are rated investment grade (BBB) or higher, with maturities of at least one year.
Barclays Municipal Bond Index is a widely-recognized index of municipal bonds with maturities of at least one year.
Lipper Corporate A – Rated Debt Funds Objective – Funds that invest primarily in corporate debt issues rated “A” or better or government issues.
Lipper Large-Cap Core Funds Classification – Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) above Lipper’s USDE large-cap floor. Large-cap core funds have more latitude in the companies in which they invest. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index.
Lipper Multi-Cap Growth Funds Classification – Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year salesperson- share growth value, compared to the S&P Super Composite 1500 Index.
Lipper Other States Municipal Debt Funds Objective – Funds that invest in municipal debt issues with dollar-weighted average maturities of five to ten years and are exempt from taxation on a specified city or state basis.
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the large cap growth segment. The Russell 1000 Growth Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect growth characteristics.
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The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics.
December 31, 2014 | www.bishopstreetfunds.com |
5
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
Strategic Growth Fund
For the 12-month period that ended December 31, 2014, the Fund returned 7.94%. The Fund underperformed its benchmark, the Russell 1000® Growth Index (Russell Index), which returned 13.05% for the period.
The Fund delivered a strong year on an absolute basis, but trailed its benchmark the Russell 1000 Growth Index for the period.
Overall, stock selection was mixed for the year. The portfolio performed particularly well in the health care sector which added to relative results. The Fund’s positioning in the consumer discretionary, industrials, and information technology sectors held the portfolio back on a relative basis.
The portfolio got off to a fast start to begin the year, as our high growth companies fared well through the first quarter’s earnings season with a number of companies outperforming expectations while the rest of the market struggled on emerging markets concerns and the strength of the U.S. economy.
Even with this strong start, relative performance came under pressure as the market focused on the polar vortex’s effect on the U.S. economy and the general surprise of lower interest rates, which resulted in selling the highest growth companies indiscriminately in favor of more value oriented fare.
This shift in investor preference toward value oriented fare was quite pronounced and was the sharpest we have encountered. In this environment the Fund struggled. As the year progressed and corporate earnings came back into focus, the portfolio fared well overall and outperformed in the second half of 2014, but could not make up enough ground to overcome the spring sell off.
The underlying fundamentals of our high-quality, high-growth stocks remained very much intact, as the majority of our holdings exceeded earnings and revenues expectations, with top- and bottom-line growth in excess of 20% vs. the muted growth of the broader market.
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6
With the confirmation of company fundamentals and a generally positive tone of better economic activity ahead, investors returned to high-growth companies as some of the names that had pulled back the most early in the high-growth sell off, including select biotechnology and internet related companies, moved meaningfully higher.
In health care, our positions in the biotechnology including Vertex Pharmaceuticals (cystic fibrosis therapies), Gilead Sciences (HIV and Hepatitis C treatments), Alexion Pharmaceuticals (rare blood disorders) and Celgene (treatments for multiple myeloma) were all notable contributors.
Many biotechnology companies which were strong performers in 2013 came under pressure in the spring on concerns of a speculative bubble in biotech and a request for information on pricing methodology regarding Gilead’s new treatment Sovaldi for Hepatitis C from members of the U.S. House of Representatives Energy and Commerce Committee.
Throughout this challenging period we maintained our long term investment approach remaining confident in our positions as we believed that our large cap biotech positions were attractively valued with compelling growth opportunities. We maintained our positions and ultimately these stocks recovered well, which added significant value to the Fund.
In consumer discretionary, our positions in Tesla Motor and Tractor Supply were relative outperformers. Electric vehicle manufacturer Tesla Motors was a notable contributor as the company delivered more cars than expected with solid margins. We remained invested in this unique growth story, but took the opportunity to trim our position throughout the year as shares moved higher.
Tractor Supply Company, a holding we established during the summer, was also a relative outperformer. Tractor Supply Company is a rural-lifestyle retailer which announced results with better-than-expected comparable store sales and raised guidance sending the stock sharply higher.
These positives were outweighed by lesser results in e-commerce leader Amazon.com, online travel booking site Priceline.com and media company Discovery Communications which all pulled back during the year.
Amazon disappointed investors, as the company came in shy of consensus revenue estimates late in the period and continued to reinvest in its business at levels that the
December 31, 2014 | www.bishopstreetfunds.com |
7
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
market was hoping to see slow. We maintained our position and will monitor the situation closely, as we continue to believe in the company’s long-term growth story.
Priceline.com trended lower in the second half of the year even after releasing a solid fourth quarter as weakness in Europe and foreign currency effects weighed on the near-term guidance.
Media company Discovery Communications was a notable detractor in consumer discretionary. Shares fell in excess of 20% for the year, as the company announced disappointing results and lowered forward guidance. Ultimately we sold our position due to changing fundamentals in the media industry.
In industrials, holdings in industrial fastener distributor Fastenal and aerospace metal component supplier Precision Castparts held back relative results, as both companies lagged for the year.
In information technology, our positions in Splunk (an enterprise software company focused on machine-generated log data), ARM Holdings (energy efficient semiconductors), MercadoLibre (South American e-commerce leader) and Twitter (social media) were all notable detractors and held back relative performance.
Even after posting solid results throughout the year with strong revenue growth, the market placed downward pressure on Splunk shares as well as many other big data, cloud-related names during the spring high growth sell off. MercadoLibre was not immune to the sell-off across the emerging markets early in the year, and the stock sold off. Both companies performed well late in the period, but were still detractors for the year.
ARM Holdings shares declined on near-term concerns of lower-than-expected royalty streams while smartphone inventories continue to correct coupled with a slower than anticipated build out of the Chinese 4G market. We continue to like ARM Holdings, as we believe it is one of the industry’s best opportunities for long-term secular growth.
In the fourth quarter, our position in Twitter reported a mixed quarter with better-than-expected revenues rates but came up light on user growth metrics. Additionally, the company’s guidance for the fourth quarter came in below expectations. Shares of the company sold off sharply, we maintained our position, as we believe this growth story will continue to play out.
Bishop Street Funds |
8
Outlook
As we enter 2015, we continue to believe that U.S. equities, growth stocks in particular, are an attractive investment opportunity while anxiety regarding overall global growth is likely to persist. 2015 will probably be more of the same of what we witnessed in 2014 – modest and steady growth domestically with more challenged growth internationally.
We do believe there are positives that should not be overlooked. Namely, the influence of potentially lower energy prices that aid consumer spending (which drives over 70% of the U.S. economy) and its benefits to reducing business costs. Lower energy and input costs should keep a lid on inflationary pressures that will allow the Federal Reserve (Fed) to remain accommodative with low interest rates longer, which will help the housing market and capital expenditures. After more than five years since corporate America tightened its belt and reduced spending, we do believe we should see an increase in capital spending going forward.
The worldwide deleveraging process that has taken place since the great recession has lowered the overall growth trajectory for the global economy. This environment has its drawbacks for many companies, but also creates advantages for those that have unique products and services to take wallet/market share. After years of cost cutting, there isn’t much low hanging fruit remaining to increase profitability, so organic growth will be essential to sustain increased earnings.
We believe the best path to navigate this environment is to seek out unique business models that offer differentiated products and services that can grow regardless of the overall economic environment. Companies that offer the right product, at the right price, at the right time, can garner an increased percentage wallet share of consumer and business spending and take market share from more traditional commoditized competitors.
Currently, we are finding attractive growth opportunities in a range of areas such as groundbreaking biotechnology therapies treating illnesses, information technology companies, disruptive e-commerce models and retailers that offer must have items. We continue to approach our strategy with a long-term focus, maintaining our high-conviction growth names and allowing this growth to compound for years to come, which we believe will translate into attractive returns going forward.
December 31, 2014 | www.bishopstreetfunds.com |
9
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be higher or lower than the performance quoted. For performance data current to the most recent month end, please visit www.bishopstreetfunds.com or call 1-800-262-9565.
Index returns are for illustrative purposes only and do not represent actual Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.
Investing involves risk including possible loss of principal. Diversification does not protect against market loss.
Bishop Street Funds |
10
Strategic Growth Fund |
Performance Comparison
Comparison of Change in the Value of a $10,000 Investment in the Strategic Growth Fund, Class I, versus the Russell 1000 Growth Index and the Lipper Multi-Cap Growth Funds Classification.
# Account value if you reinvested income and capital gains.
(1) See page 4 for definitions of comparative indices.
Average Annual Total Returns‡ | ||||||||||||||||
One Year Return | Annualized 3 Year Return | Annualized 5 Year Return | Annualized 10 Year Return | |||||||||||||
7.94 | % | 17.41 | % | 13.24 | % | 6.82 | % | Class I | ||||||||
13.05 | % | 20.26 | % | 15.81 | % | 8.49 | % | Russell 1000 Growth Index | ||||||||
9.10 | % | 19.34 | % | 14.57 | % | 7.94 | % | Lipper Multi-Cap Growth Funds Classification |
‡ | Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Fee waivers are in effect; if they had not been in effect, performance would have been lower. |
December 31, 2014 | www.bishopstreetfunds.com |
11
Strategic Growth Fund |
Top Ten Equity Holdings (Unaudited)†
Percentage of Investments | ||||||||
| ||||||||
1. | Illumina | 4.6% | ||||||
| ||||||||
2. | 4.6% | |||||||
| ||||||||
3. | priceline.com | 4.5% | ||||||
| ||||||||
4. | Vertex Pharmaceuticals | 4.1% | ||||||
| ||||||||
5. | Biogen Idec | 4.0% | ||||||
| ||||||||
6. | Bristol-Myers Squibb | 3.9% | ||||||
| ||||||||
7. | Visa | 3.9% | ||||||
| ||||||||
8. | Celgene | 3.9% | ||||||
| ||||||||
9. | Amazon.com | 3.8% | ||||||
| ||||||||
10. | Baidu | 3.7% |
† | Percentages based on total investments. Top ten holdings do not include short-term investments. |
Shares | Value (000) | |||||||
| COMMON STOCK†— 99.4% |
| ||||||
| Consumer Discretionary — 18.9% | |||||||
6,227 | Amazon.com* | $ | 1,932 | |||||
20,379 | Michael Kors Holdings* | 1,530 | ||||||
12,270 | Nike | 1,180 | ||||||
1,997 | priceline.com* | 2,277 | ||||||
4,609 | Tesla Motors* | 1,025 | ||||||
19,939 | Tractor Supply | 1,572 | ||||||
|
| |||||||
9,516 | ||||||||
|
| |||||||
| Energy — 5.5% |
| ||||||
59,310 | Cabot Oil & Gas | 1,756 | ||||||
21,288 | FMC Technologies* | 997 | ||||||
|
| |||||||
2,753 | ||||||||
|
|
Bishop Street Funds |
12
Strategic Growth Fund |
Schedule of Investments
(concluded)
Shares | Value (000) | |||||||
| Health Care — 27.0% | |||||||
7,917 | Alexion Pharmaceuticals* | $ | 1,465 | |||||
5,933 | Biogen Idec* | 2,014 | ||||||
33,557 | Bristol-Myers Squibb | 1,981 | ||||||
17,330 | Celgene* | 1,939 | ||||||
12,460 | Illumina* | 2,300 | ||||||
14,742 | Pharmacyclics* | 1,802 | ||||||
17,385 | Vertex Pharmaceuticals* | 2,065 | ||||||
|
| |||||||
13,566 | ||||||||
|
| |||||||
| Industrials — 5.9% | |||||||
36,738 | Fastenal | 1,747 | ||||||
5,138 | Precision Castparts | 1,238 | ||||||
|
| |||||||
2,985 | ||||||||
|
| |||||||
| Information Technology — 38.8% | |||||||
12,363 | Alibaba Group Holding* | 1,285 | ||||||
31,150 | ARM Holdings PLC | 1,442 | ||||||
8,175 | Baidu* | 1,864 | ||||||
31,521 | Cognizant Technology Solutions* | 1,660 | ||||||
22,796 | Facebook* | 1,778 | ||||||
9,998 | LinkedIn* | 2,297 | ||||||
9,350 | MercadoLibre | 1,194 | ||||||
30,754 | Salesforce.com* | 1,824 | ||||||
23,216 | Splunk* | 1,369 | ||||||
41,460 | Twitter* | 1,487 | ||||||
7,433 | Visa | 1,949 | ||||||
15,952 | VMware* | 1,316 | ||||||
|
| |||||||
19,465 | ||||||||
|
| |||||||
| Materials — 3.3% | |||||||
13,700 | Monsanto | 1,637 | ||||||
|
| |||||||
TOTAL COMMON STOCK (Cost $43,773) | 49,922 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT (A) — 0.8% | ||||||||
397,851 | Dreyfus Cash Management Fund, Institutional Shares, 0.040% (Cost $398) | 398 | ||||||
|
| |||||||
TOTAL INVESTMENTS (Cost $44,171) — 100.2% | $ | 50,320 | ||||||
|
|
Percentages are based on Net Assets of $50,241 (000).
* | Non-income producing security. |
(A) | The rate shown is the 7-day effective yield as of December 31, 2014. |
† | More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes. |
PLC — Public Limited Company
Cost figures are shown in thousands.
The accompanying notes are an integral part of the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
13
BISHOP STREET
FUNDS
Dividend Value Fund
In 2014, the U.S. economy made its strongest showing since 2010. The stock market as measured by the S&P 500 reached record levels during the year and ended the year with a double digit return. The stock market’s appreciation was driven by a combination of mid-single digit earnings growth and investors’ willingness to pay a higher multiple for earnings. The S&P closed the year at over 17X trailing earnings. The major U.S. stock market indexes such as the S&P 500 and the Russell 1000 now have posted their 6th straight year of positive total returns and their 3rd consecutive year of double digit total returns. The surprises for 2014 were the dramatic moves in U.S. Treasury yields and oil prices during the year.
The Bishop Street Dividend Value Fund produced a net total return of 12.08% versus a total return of 13.45% for the Russell 1000 Value Index for 2014. Although the Fund lagged its benchmark index, the Fund performed well relative to its mutual fund peers as measured by the Morningstar Large Value Category. The Morningstar Large Value peer group return was 10.21% for the calendar year 2014.
In reviewing 2014 performance attribution, six sectors in the Russell 1000 Value Index produced returns in excess of 10%. The six sectors were Information Technology (+28.8%), Utilities (+27.4%), Health Care (+22.5%), Consumer Staples (+17.3%), Financials (+15.3%) and Consumer Discretionary (+14.4%). Energy (-7.7%) was the only sector that was down in 2014. The investor surprises of lower Treasury yields and sharply declining oil prices impacted sector and sub sector performance.
For the Fund, overall sector allocation was modestly positive on a relative basis given our underweight to the Energy sector and overweight to the Information Technology sector. The strategy performed well relative to the Russell 1000 Value Index in the Energy, Materials and Consumer Discretionary sectors.
In Energy, only Kinder Morgan produced a positive return but in general our high quality, energy stocks were down less. The Consumer Discretionary sector benefited from allocation and selection. Time Warner, Hanes Brands, and Home Depot were standouts in this sector. Relative performance in Materials was driven by stock selection. Sherwin Williams was the top performing stock in Materials. This sector in the portfolio also benefited from no exposure to metals and mining stocks.
Bishop Street Funds |
14
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
Relative to Russell 1000 Value Index, the strategy did not keep pace in the Health Care, Financials and Telecommunications sectors. In Health Care, Amgen and AbbVie outperformed the sector, but Roche Holdings Ltd-Spons ADR accounted for most of the relative underperformance. Roche Holdings Ltd-Spons ADR declined in December due to results of a study on a triple combination used in a breast cancer that disappointed investors. We believe the company continues to be a leader in oncology. In Financials, not owning Berkshire Hathaway, which pays no dividend, accounted for the majority of the underperformance. Also, Telecom did not respond to a decline in Treasury yields due to a price war in the wireless business. Our holding in Verizon Communications was impacted by investor concerns and detracted in the Telecommunications sector.
Outlook
Although many investors are excited about the strength of the U.S. dollar and the decline in oil prices, we would expect that a strong dollar and weak oil prices will impact the growth of S&P 500 earnings. For 2015, we look for modest earnings growth. Over the past 3 years, increases in the multiple investors are willing to pay for earnings has been a major factor driving prices higher. Price advances going forward will be more dependent on earnings growth.
Given the progress in the domestic labor market, there is a high probability that the Federal Reserve (Fed) will raise rates for the first time in 9 years over the coming year. In the short term, this could create volatility as the market adjusts. Given that we invest in dividend paying stocks, we want to be as agnostic as possible to potential interest rate changes. We are mindful of how our portfolio yield is generated and plan to stay diversified across sectors.
In a market environment where valuations and expectations are elevated, we will continue to focus on quality. Return on invested capital, balance sheet quality and sustainable profitability are key quality metrics that are important to future valuations. We remain consistent in our approach of investing in leading business franchises generating high levels of free cash flow from operations which sustains dividend growth. Ultimately, we believe these companies have the potential to offer compelling risk-adjusted returns in most market environments, and just as importantly can offer some downside protection with lower volatility.
December 31, 2014 | www.bishopstreetfunds.com |
15
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be higher or lower than the performance quoted. For performance data current to the most recent month end, please visit www.bishopstreetfunds.com or call 1-800-262-9565.
Index returns are for illustrative purposes only and do not represent actual Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.
Investing involves risk including possible loss of principal. Diversification does not protect against market loss.
Bishop Street Funds |
16
Dividend Value Fund |
Performance Comparison
Comparison of Change in the Value of a $10,000 Investment in the Dividend Value Fund, Class I, versus the Russell 1000 Value Index, and the Lipper Large-Cap Core Funds Classification.
# Account value if you reinvested income and capital gains.
‡ Performance begins on April 30, 2006.
(1) See page 4 for definitions of comparative indices.
Average Annual Total Returns† | ||||||||||||||||
One Year Return | Annualized 3 Year Return | Annualized 5 Year Return | Annualized Inception to Date | |||||||||||||
12.08 | % | 17.06 | % | 14.08 | % | 5.95 | % | Class I* | ||||||||
13.45 | % | 20.89 | % | 15.42 | % | 6.65 | % | Russell 1000 Value Index | ||||||||
11.32 | % | 19.12 | % | 13.90 | % | 6.79 | % | Lipper Large-Cap Core Funds Classification |
* | Commenced operations on 05/03/06. |
† | Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Fee waivers are in effect; if they had not been in effect, performance would have been lower. |
December 31, 2014 | www.bishopstreetfunds.com |
17
Dividend Value Fund |
Top Ten Equity Holdings (Unaudited)†
Percentage of Investments | ||||||||
| ||||||||
1. | Microsoft | 2.8% | ||||||
| ||||||||
2. | Johnson & Johnson | 2.7% | ||||||
| ||||||||
3. | Exxon Mobil | 2.6% | ||||||
| ||||||||
4. | JPMorgan Chase | 2.6% | ||||||
| ||||||||
5. | Comcast | 2.5% | ||||||
| ||||||||
6. | Wells Fargo | 2.5% | ||||||
| ||||||||
7. | Pfizer | 2.5% | ||||||
| ||||||||
8. | Apple | 2.4% | ||||||
| ||||||||
9. | Merck | 2.3% | ||||||
| ||||||||
10. | Verizon Communications | 2.3% |
† | Percentages based on total investments. Top ten holdings do not include short-term investments. |
Shares | Value (000) | |||||||
COMMON STOCK — 96.7% | ||||||||
| Consumer Discretionary — 8.6% | |||||||
24,570 | Comcast | $ | 1,425 | |||||
2,600 | Hanesbrands | 290 | ||||||
10,240 | Home Depot | 1,075 | ||||||
7,675 | Macy’s | 505 | ||||||
8,000 | McDonald’s | 750 | ||||||
3,150 | Time Warner | 269 | ||||||
5,960 | VF | 446 | ||||||
|
| |||||||
4,760 | ||||||||
|
|
Bishop Street Funds |
18
Dividend Value Fund |
Schedule of Investments
(continued)
Shares | Value (000) | |||||||
| Consumer Staples — 12.2% | |||||||
17,350 | Altria Group | $ | 855 | |||||
2,375 | Anheuser-Busch InBev NV | 267 | ||||||
9,425 | Coca-Cola Co. | 398 | ||||||
6,350 | Coca-Cola Enterprises | 281 | ||||||
8,875 | CVS | 855 | ||||||
7,700 | General Mills | 411 | ||||||
5,650 | Kimberly-Clark | 653 | ||||||
4,600 | Kraft Foods Group | 288 | ||||||
13,300 | Philip Morris International | 1,083 | ||||||
10,950 | Procter & Gamble | 997 | ||||||
8,205 | Wal-Mart Stores | 704 | ||||||
|
| |||||||
6,792 | ||||||||
|
| |||||||
| Energy — 8.9% | |||||||
5,700 | BP PLC | 217 | ||||||
7,250 | Chevron | 813 | ||||||
3,475 | ConocoPhillips | 240 | ||||||
15,825 | Exxon Mobil | 1,463 | ||||||
9,950 | Kinder Morgan | 421 | ||||||
7,600 | Occidental Petroleum | 613 | ||||||
7,725 | Royal Dutch Shell PLC ADR | 517 | ||||||
8,050 | Schlumberger | 688 | ||||||
|
| |||||||
4,972 | ||||||||
|
| |||||||
| Financials — 17.8% | |||||||
4,723 | ACE | 542 | ||||||
5,425 | American Express | 505 | ||||||
2,410 | BlackRock | 862 | ||||||
4,264 | Chubb | 441 | ||||||
5,958 | CME Group | 528 | ||||||
7,280 | Duke Realty‡ | 147 | ||||||
23,134 | JPMorgan Chase | 1,448 | ||||||
13,083 | Marsh & McLennan | 749 | ||||||
5,125 | MetLife | 277 | ||||||
6,215 | Northern Trust | 419 | ||||||
6,389 | PNC Financial Services Group | 583 | ||||||
2,152 | Public Storage‡ | 398 | ||||||
1,815 | Simon Property Group‡ | 330 | ||||||
4,260 | T Rowe Price Group | 366 | ||||||
19,860 | US Bancorp | 893 | ||||||
25,859 | Wells Fargo | 1,417 | ||||||
|
| |||||||
9,905 | ||||||||
|
|
December 31, 2014 | www.bishopstreetfunds.com |
19
Dividend Value Fund |
Schedule of Investments
(continued)
Shares | Value (000) | |||||||
| Health Care — 13.5% | |||||||
10,470 | AbbVie | $ | 685 | |||||
7,185 | Amgen | 1,145 | ||||||
3,470 | Covidien PLC | 355 | ||||||
14,425 | Johnson & Johnson | 1,508 | ||||||
5,520 | Medtronic | 398 | ||||||
23,200 | Merck | 1,318 | ||||||
44,250 | Pfizer | 1,378 | ||||||
21,725 | Roche Holding AG | 739 | ||||||
|
| |||||||
7,526 | ||||||||
|
| |||||||
| Industrials — 12.0% | |||||||
5,050 | Boeing | 656 | ||||||
6,630 | Dover | 475 | ||||||
16,940 | General Electric | 428 | ||||||
9,725 | Honeywell International | 972 | ||||||
3,400 | Illinois Tool Works | 322 | ||||||
2,900 | Lockheed Martin | 558 | ||||||
3,575 | Parker Hannifin | 461 | ||||||
9,550 | Raytheon | 1,033 | ||||||
5,900 | United Parcel Service | 656 | ||||||
6,100 | United Technologies | 702 | ||||||
8,100 | Waste Management | 416 | ||||||
|
| |||||||
6,679 | ||||||||
|
| |||||||
| Information Technology — 13.6% | |||||||
12,100 | Apple | 1,336 | ||||||
7,400 | Automatic Data Processing | 617 | ||||||
26,200 | Cisco Systems | 729 | ||||||
19,675 | EMC | 585 | ||||||
33,025 | Intel | 1,198 | ||||||
3,710 | International Business Machines | 595 | ||||||
5,825 | Kla-Tencor | 410 | ||||||
34,000 | Microsoft | 1,579 | ||||||
10,000 | Texas Instruments | 535 | ||||||
|
| |||||||
7,584 | ||||||||
|
| |||||||
| Materials — 3.2% | |||||||
9,800 | EI du Pont de Nemours | 725 | ||||||
1,875 | LyondellBasell Industries NV | 149 | ||||||
2,300 | Sherwin-Williams | 605 | ||||||
6,850 | Sonoco Products | 299 | ||||||
|
| |||||||
1,778 | ||||||||
|
|
Bishop Street Funds |
20
Dividend Value Fund |
Schedule of Investments
(concluded)
Shares | Value (000) | |||||||
| Telecommunication Services — 2.3% | |||||||
27,080 | Verizon Communications | $ | 1,267 | |||||
|
| |||||||
| Utilities — 4.6% | |||||||
5,500 | American Electric Power | 334 | ||||||
9,550 | CMS Energy | 332 | ||||||
4,225 | Dominion Resources | 325 | ||||||
3,475 | Duke Energy | 290 | ||||||
3,125 | NextEra Energy | 332 | ||||||
6,250 | Northeast Utilities | 335 | ||||||
2,600 | Sempra Energy | 289 | ||||||
6,175 | Wisconsin Energy | 326 | ||||||
|
| |||||||
2,563 | ||||||||
|
| |||||||
TOTAL COMMON STOCK (Cost $36,841) | 53,826 | |||||||
|
| |||||||
EXCHANGE TRADED FUND — 0.5% | ||||||||
1,500 | SPDR S&P 500 ETF Trust, Ser 1 (Cost $312) | 308 | ||||||
|
| |||||||
PREFERRED STOCK — 0.5% | ||||||||
| Financials — 0.5% | |||||||
13,395 | Fifth Third Bancorp, 8.50% (Cost $236) | 273 | ||||||
|
| |||||||
SHORT-TERM INVESTMENT (A) — 3.0% | ||||||||
1,675,164 | Dreyfus Cash Management Fund, Institutional Shares, 0.040% (Cost $1,675) | 1,675 | ||||||
|
| |||||||
TOTAL INVESTMENTS (Cost $39,064) — 100.7% | $ | 56,082 | ||||||
|
|
Percentages are based on Net Assets of $55,665 (000).
‡ | Real Estate Investment Trust |
(A) | The rate shown is the 7-day effective yield as of December 31, 2014. |
ADR — American Depositary Receipt
ETF — Exchange Traded Fund
PLC — Public Limited Company
Ser — Series
SPDR — Standard & Poor’s Depositary Receipt
Cost figures are shown in thousands.
The accompanying notes are an integral part of the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
21
BISHOP STREET
FUNDS
High Grade Income Fund
Amidst expectations that interest rates would rise, the broader fixed income market continued its rally into 2014 and surprised investors with a 6% return for the year. The U.S. stock market remained resilient and produced better than a 13% return for the year spurred by incremental improvements to the domestic economy and fund flows driven by a strengthening dollar, global economic malaise and growing geopolitical tensions.
The U.S. economy appears to be the bright spot among global economies as economic weakness persisted overseas, causing Central Banks to look towards further stimulus to support their declining growth profiles. As a consequence, government bond rates continued to fall with the 10-year German and Japanese debt trading below 1%. U.S. treasuries (20+ years) led the bond market with a return of 27.5% for the year. Meanwhile a strengthening U.S. economy convinced the Federal Reserve to end its bond purchasing program in October and to begin preparing the market for a gradual rise in the Fed Funds rate.
The Bishop Street High Grade Income Fund modestly underperformed the Barclays Government/Credit Index for the year due to its defensive duration position and an overweight concentration to corporate bonds. Looking ahead, the Fund is positioned for a modest rise in interest rates and should perform well. Although current rates reflect a low growth and low inflation environment we expect interest rates to rise modestly in the second half of 2015 as domestic economic fundamentals continue to improve.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be higher or lower than the performance quoted. For performance data current to the most recent month end, please visit www.bishopstreetfunds.com or call 1-800-262-9565
Index returns are for illustrative purposes only and do not represent actual Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Bishop Street Funds |
22
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular
Investing involves risk including possible loss of principal. Diversification does not protect against market loss.
December 31, 2014 | www.bishopstreetfunds.com |
23
High Grade Income Fund |
Performance Comparison
Comparison of Change in the Value of a $10,000 Investment in the High Grade Income Fund, Class I, versus the Barclays U.S. Government/Credit Index, and the Lipper Corporate A-Rated Debt Funds Objective.
# Account value if you reinvested income and capital gains.
(1) See page 4 for definitions of comparative indices.
Average Annual Total Returns† | ||||||||||||||||
One Year Return | Annualized 3 Year Return | Annualized 5 Year Return | Annualized 10 Year Return | |||||||||||||
5.77 | % | 2.64 | % | 4.08 | % | 4.88 | % | Class I | ||||||||
6.01 | % | 2.76 | % | 4.69 | % | 4.70 | % | Barclays U.S. Government/Credit Index | ||||||||
7.66 | % | 4.14 | % | 5.75 | % | 4.75 | % | Lipper Corporate A-Rated Debt Funds Objective |
† | Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Fee waivers are in effect; if they had not been in effect, performance would have been lower. |
Bishop Street Funds |
24
High Grade Income Fund |
Top Ten Holdings (Unaudited)†
Coupon Rate | Maturity Date | Percentage of Investments | ||||||||||||||
| ||||||||||||||||
1. | U.S. Treasury Bond | 4.500% | 08/15/39 | 2.4% | ||||||||||||
| ||||||||||||||||
2. | St. Louis School District, Qualified School Construction Boards | 6.100% | 04/01/25 | 1.8% | ||||||||||||
| ||||||||||||||||
3. | International Business Machines | 8.375% | 11/01/19 | 1.7% | ||||||||||||
| ||||||||||||||||
4. | Aflac | 8.500% | 05/15/19 | 1.7% | ||||||||||||
| ||||||||||||||||
5. | Little Blue Valley Sewer District | 6.200% | 09/01/30 | 1.6% | ||||||||||||
| ||||||||||||||||
6. | FHLB | 5.125% | 03/10/17 | 1.6% | ||||||||||||
| ||||||||||||||||
7. | FHLB | 3.750% | 12/14/18 | 1.6% | ||||||||||||
| ||||||||||||||||
8. | U.S. Treasury Bond | 3.625% | 08/15/43 | 1.6% | ||||||||||||
| ||||||||||||||||
9. | MetLife | 6.817% | 08/15/18 | 1.6% | ||||||||||||
| ||||||||||||||||
10. | Halliburton | 6.150% | 09/15/19 | 1.6% | ||||||||||||
|
|
|
|
|
|
† | Percentages based on total investments. Top ten holdings do not include short-term investments. |
Face Amount (000) | Value (000) | |||||||
CORPORATE OBLIGATIONS — 59.6% | ||||||||
| Banks — 4.3% |
| ||||||
Bank of Oklahoma | ||||||||
$ | 500 | 0.922%, 05/15/17 (A) | $ | 499 | ||||
Barclays Bank PLC | ||||||||
500 | 6.750%, 05/22/19 | 588 | ||||||
Citigroup | ||||||||
520 | 6.000%, 08/15/17 Goldman Sachs Group MTN | 575 | ||||||
500 | 7.500%, 02/15/19 | 595 |
December 31, 2014 | www.bishopstreetfunds.com |
25
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
| Banks — (continued) | |||||||
JPMorgan Chase | ||||||||
$ | 450 | 3.150%, 07/05/16 | $ | 463 | ||||
US Bancorp MTN | ||||||||
500 | 3.000%, 03/15/22 | 505 | ||||||
|
| |||||||
3,225 | ||||||||
|
| |||||||
| Consumer Discretionary — 7.1% | |||||||
Amazon.com | ||||||||
250 | 4.800%, 12/05/34 | 262 | ||||||
Anheuser-Busch InBev Finance | ||||||||
425 | 1.250%, 01/17/18 | 420 | ||||||
Anheuser-Busch InBev Worldwide | ||||||||
160 | 7.750%, 01/15/19 | 194 | ||||||
AutoZone | ||||||||
250 | 4.000%, 11/15/20 | 266 | ||||||
Comcast | ||||||||
550 | 3.600%, 03/01/24 | 577 | ||||||
DIRECTV Holdings LLC | ||||||||
275 | 3.800%, 03/15/22 | 280 | ||||||
Dollar General | ||||||||
500 | 1.875%, 04/15/18 | 483 | ||||||
Ford Motor Credit LLC | ||||||||
500 | 2.375%, 03/12/19 | 497 | ||||||
Home Depot | ||||||||
700 | 5.875%, 12/16/36 | 914 | ||||||
Johnson Controls | ||||||||
500 | 4.250%, 03/01/21 | 540 | ||||||
McDonald’s MTN | ||||||||
350 | 1.875%, 05/29/19 | 348 | ||||||
Target | ||||||||
525 | 2.300%, 06/26/19 | 532 | ||||||
|
| |||||||
5,313 | ||||||||
|
| |||||||
| Consumer Staples — 4.9% | |||||||
Campbell Soup | ||||||||
500 | 4.250%, 04/15/21 | 541 | ||||||
Coca-Cola | ||||||||
200 | 2.450%, 11/01/20 | 203 | ||||||
Colgate-Palmolive MTN | ||||||||
500 | 1.950%, 02/01/23 | 473 | ||||||
ConAgra Foods | ||||||||
250 | 1.900%, 01/25/18 | 248 |
Bishop Street Funds |
26
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
| Consumer Staples — (continued) | |||||||
Genentech | ||||||||
$ | 1,000 | 4.750%, 07/15/15 | $ | 1,022 | ||||
Hershey | ||||||||
250 | 2.625%, 05/01/23 | 245 | ||||||
Teva Pharmaceutical Finance BV | ||||||||
500 | 2.400%, 11/10/16 | 510 | ||||||
Walgreens Boots Alliance | ||||||||
400 | 3.300%, 11/18/21 | 403 | ||||||
|
| |||||||
3,645 | ||||||||
|
| |||||||
| Energy — 7.7% | |||||||
BP Capital Markets PLC | ||||||||
265 | 3.814%, 02/10/24 | 267 | ||||||
Cameron International | ||||||||
375 | 4.500%, 06/01/21 | 397 | ||||||
Devon Energy | ||||||||
400 | 6.300%, 01/15/19 | 457 | ||||||
Halliburton | ||||||||
1,000 | 6.150%, 09/15/19 | 1,158 | ||||||
Hess | ||||||||
400 | 8.125%, 02/15/19 | 476 | ||||||
Kinder Morgan Energy Partners | ||||||||
500 | 9.000%, 02/01/19 | 606 | ||||||
Murphy Oil | ||||||||
500 | 2.500%, 12/01/17 | 497 | ||||||
Occidental Petroleum | ||||||||
375 | 2.700%, 02/15/23 | 356 | ||||||
ONEOK Partners | ||||||||
500 | 3.200%, 09/15/18 | 507 | ||||||
Schlumberger Investment SA | ||||||||
400 | 3.650%, 12/01/23 | 418 | ||||||
Valero Energy | ||||||||
500 | 6.625%, 06/15/37 | 590 | ||||||
|
| |||||||
5,729 | ||||||||
|
| |||||||
| Financials — 13.7% | |||||||
Aflac | ||||||||
1,000 | 8.500%, 05/15/19 | 1,250 | ||||||
American International Group | ||||||||
120 | 2.300%, 07/16/19 | 120 | ||||||
Aon | ||||||||
500 | 3.125%, 05/27/16 | 513 | ||||||
Bank of America | ||||||||
750 | 2.600%, 01/15/19 | 756 |
December 31, 2014 | www.bishopstreetfunds.com |
27
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
| Financials — (continued) | |||||||
Bank of New York Mellon MTN | ||||||||
$ | 500 | 4.150%, 02/01/21 | $ | 545 | ||||
Branch Banking & Trust | ||||||||
400 | 1.000%, 04/03/17 | 396 | ||||||
General Electric Capital MTN | ||||||||
600 | 1.234%, 03/15/23 (A) | 609 | ||||||
Lincoln National | ||||||||
500 | 8.750%, 07/01/19 | 625 | ||||||
MetLife | ||||||||
1,000 | 6.817%, 08/15/18 | 1,163 | ||||||
Morgan Stanley MTN | ||||||||
500 | 5.750%, 10/18/16 | 537 | ||||||
500 | 0.681%, 10/18/16 (A) | 498 | ||||||
Principal Financial Group | ||||||||
500 | 8.875%, 05/15/19 | 629 | ||||||
Prudential Financial MTN | ||||||||
320 | 7.375%, 06/15/19 | 385 | ||||||
Royal Bank of Canada MTN | ||||||||
500 | 2.150%, 03/15/19 | 502 | ||||||
State Street | ||||||||
425 | 4.956%, 03/15/18 | 460 | ||||||
Toyota Motor Credit MTN | ||||||||
500 | 1.375%, 01/10/18 | 497 | ||||||
Ventas Realty | ||||||||
415 | 2.700%, 04/01/20‡ | 411 | ||||||
Wells Fargo | ||||||||
300 | 2.150%, 01/15/19 | 301 | ||||||
|
| |||||||
10,197 | ||||||||
|
| |||||||
| Health Care — 7.7% | |||||||
Amgen | ||||||||
350 | 5.700%, 02/01/19 | 394 | ||||||
520 | 2.200%, 05/22/19 | 518 | ||||||
AstraZeneca PLC | ||||||||
1,000 | 5.900%, 09/15/17 | 1,121 | ||||||
Becton Dickinson and | ||||||||
500 | 3.125%, 11/08/21 | 502 | ||||||
Cigna Corp | ||||||||
600 | 8.500%, 05/01/19 | 742 | ||||||
Gilead Sciences | ||||||||
875 | 3.050%, 12/01/16 | 908 | ||||||
Merck Sharp & Dohme | ||||||||
750 | 5.000%, 06/30/19 | 846 |
Bishop Street Funds |
28
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
| Health Care — (continued) | |||||||
UnitedHealth Group | ||||||||
$ | 700 | 2.875%, 03/15/22 | $ | 702 | ||||
|
| |||||||
5,733 | ||||||||
|
| |||||||
| Industrials — 2.1% | |||||||
Caterpillar | ||||||||
500 | 7.900%, 12/15/18 | 610 | ||||||
Emerson Electric | ||||||||
500 | 2.625%, 02/15/23 | 493 | ||||||
Raytheon | ||||||||
475 | 2.500%, 12/15/22 | 463 | ||||||
|
| |||||||
1,566 | ||||||||
|
| |||||||
| Information Technology — 5.5% | |||||||
Affiliated Computer Services | ||||||||
250 | 5.200%, 06/01/15 | 254 | ||||||
EMC | ||||||||
250 | 1.875%, 06/01/18 | 249 | ||||||
Ingram Micro | ||||||||
170 | 5.000%, 08/10/22 | 181 | ||||||
Intel | ||||||||
550 | 3.300%, 10/01/21 | 577 | ||||||
International Business Machines | ||||||||
1,000 | 8.375%, 11/01/19 | 1,280 | ||||||
Microsoft | ||||||||
500 | 3.625%, 12/15/23 | 535 | ||||||
Symantec | ||||||||
500 | 4.200%, 09/15/20 | 518 | ||||||
Texas Instruments | ||||||||
500 | 1.000%, 05/01/18 | 491 | ||||||
|
| |||||||
4,085 | ||||||||
|
| |||||||
| Materials — 3.7% | |||||||
BHP Billiton Finance | ||||||||
700 | 5.250%, 12/15/15 | 731 | ||||||
Mosaic | ||||||||
500 | 5.625%, 11/15/43 | 573 | ||||||
10 | 3.750%, 11/15/21 | 10 | ||||||
Praxair | ||||||||
500 | 2.200%, 08/15/22 | 479 | ||||||
Rio Tinto Finance USA | ||||||||
750 | 9.000%, 05/01/19 | 949 | ||||||
|
| |||||||
2,742 | ||||||||
|
|
December 31, 2014 | www.bishopstreetfunds.com |
29
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
| Telecommunication Services — 0.9% | |||||||
AT&T | ||||||||
$ | 305 | 5.500%, 02/01/18 | $ | 336 | ||||
Verizon Communications | ||||||||
375 | 2.625%, 02/21/20 (B) | 371 | ||||||
|
| |||||||
707 | ||||||||
|
| |||||||
| Transportation — 1.5% | |||||||
Burlington Northern Santa Fe LLC | ||||||||
625 | 4.450%, 03/15/43 | 653 | ||||||
Continental Airlines | ||||||||
448 | 9.000%, 07/08/16 | 492 | ||||||
|
| |||||||
1,145 | ||||||||
|
| |||||||
| Utilities — 0.5% | |||||||
CenterPoint Energy | ||||||||
350 | 5.950%, 02/01/17 | 382 | ||||||
|
| |||||||
TOTAL CORPORATE OBLIGATIONS (Cost $42,936) | 44,469 | |||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS — 16.8% | ||||||||
U.S. Treasury Bond | ||||||||
700 | 7.250%, 05/15/16 | 765 | ||||||
800 | 6.000%, 02/15/26 | 1,096 | ||||||
500 | 5.375%, 02/15/31 | 697 | ||||||
700 | 4.750%, 02/15/37 | 966 | ||||||
1,350 | 4.500%, 08/15/39 | 1,799 | ||||||
245 | 4.375%, 05/15/41 | 325 | ||||||
335 | 3.750%, 08/15/41 | 404 | ||||||
1,000 | 3.625%, 08/15/43 | 1,176 | ||||||
1,000 | 2.875%, 05/15/43 | 1,023 | ||||||
U.S. Treasury Note | ||||||||
275 | 3.750%, 11/15/18 | 300 | ||||||
350 | 3.625%, 02/15/21 | 385 | ||||||
625 | 3.125%, 10/31/16 | 653 | ||||||
500 | 3.125%, 01/31/17 | 525 | ||||||
600 | 2.875%, 03/31/18 | 631 | ||||||
405 | 2.625%, 04/30/16 | 417 | ||||||
250 | 2.375%, 02/28/15 | 251 | ||||||
750 | 2.375%, 07/31/17 | 777 | ||||||
325 | 1.375%, 02/28/19 | 323 | ||||||
|
| |||||||
TOTAL U.S. TREASURY OBLIGATIONS (Cost $11,376) | 12,513 | |||||||
|
|
Bishop Street Funds |
30
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
MUNCIPAL BONDS — 10.2% | ||||||||
California State, Educational Facilities Authority, Build America | ||||||||
Bonds, Ser B, RB | ||||||||
$ | 225 | 2.250%, 10/01/21 | $ | 214 | ||||
California State, GO | ||||||||
560 | 6.509%, 04/01/39 | 670 | ||||||
City of San Antonio Texas Water System Revenue | ||||||||
250 | 5.502%, 05/15/29 | 301 | ||||||
Houston, Independent School District, GO | ||||||||
250 | 6.125%, 02/15/28 | 286 | ||||||
Hudson County, Improvement Authority, RB, AGM Insured | ||||||||
575 | 7.400%, 12/01/25 | 699 | ||||||
Little Blue Valley Sewer District | ||||||||
1,000 | 6.200%, 09/01/30 | 1,208 | ||||||
Maryland State, Transportation Authority, RB | ||||||||
500 | 5.788%, 07/01/29 | 616 | ||||||
Napa Valley Unified School District, GO | ||||||||
225 | 6.507%, 08/01/43 | 318 | ||||||
New York City Water & Sewer System | ||||||||
1,000 | 6.124%, 06/15/42 | 1,140 | ||||||
New York City, GO | ||||||||
300 | 6.268%, 03/01/31 | 346 | ||||||
Rutgers The State, University of New Jersey, RB | ||||||||
500 | 3.896%, 05/01/20 | 530 | ||||||
St. Louis School District, Qualified School Construction Boards, GO | ||||||||
1,070 | 6.100%, 04/01/25 | 1,312 | ||||||
|
| |||||||
TOTAL MUNICIPAL BONDS (Cost $7,316) | 7,640 | |||||||
|
| |||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS — 7.4% | ||||||||
FHLB | ||||||||
1,100 | 5.125%, 03/10/17 | 1,198 | ||||||
475 | 4.750%, 03/10/23 | 556 | ||||||
1,000 | 4.125%, 03/13/20 | 1,112 | ||||||
1,100 | 3.750%, 12/14/18 | 1,192 | ||||||
FHLMC | ||||||||
875 | 8.250%, 06/01/16 | 967 | ||||||
FHLMC MTN | ||||||||
550 | 1.250%, 12/29/17 | 549 | ||||||
|
| |||||||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $5,385) | 5,574 | |||||||
|
|
December 31, 2014 | www.bishopstreetfunds.com |
31
High Grade Income Fund |
Schedule of Investments
(continued)
Face Amount (000) | Value (000) | |||||||
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS — 3.3% | ||||||||
FHLMC, Ser E01488 | ||||||||
$ | 157 | 5.000%, 10/01/18 | $ | 164 | ||||
FHLMC, Ser G12710 | ||||||||
174 | 5.500%, 07/01/22 | 184 | ||||||
FNMA, Ser 2003-33, Cl AB | ||||||||
226 | 3.750%, 03/25/33 | 231 | ||||||
FNMA, Ser 2003-58, Cl D | ||||||||
93 | 3.500%, 07/25/33 | 96 | ||||||
FNMA, Ser 2013-92, Cl MT | ||||||||
108 | 4.000%, 07/25/41 | 115 | ||||||
FNMA, Ser 889958 | ||||||||
78 | 5.000%, 10/01/23 | 86 | ||||||
GNMA, Ser 2011-112, Cl JP | ||||||||
556 | 2.000%, 02/20/40 | 558 | ||||||
GNMA, Ser 2012-91, Cl QL | ||||||||
765 | 2.000%, 09/20/41 | 659 | ||||||
GNMA, Ser 2013-109, Cl GA | ||||||||
352 | 3.500%, 07/16/43 | 352 | ||||||
|
| |||||||
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (Cost $2,422) | 2,445 | |||||||
|
| |||||||
NON-AGENCY MORTGAGE-BACKED OBLIGATION (A) — 1.1% | ||||||||
GSR Mortgage Loan Trust, Ser 2004-4, Cl 3A2 | ||||||||
872 | 1.880%, 04/25/32 (Cost $788) | 825 | ||||||
|
| |||||||
SHORT-TERM INVESTMENT (C) — 0.8% | ||||||||
Dreyfus Cash Management Fund, Institutional Shares, 0.040% | ||||||||
587,853 | (Cost $588) | 588 | ||||||
|
| |||||||
TOTAL INVESTMENTS (Cost $70,811) — 99.2% | $ | 74,054 | ||||||
|
|
Percentages are based on Net Assets of $74,642 (000).
‡ | Real Estate Investment Trust |
(A) | Floating Rate Security — The rate reflected on the Schedule of Investments is the rate in effect on December 31, 2014. The maturity date shown is the final maturity date. |
(B) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutions. At December 31, 2014, these securities amounted to $371($ Thousands), representing 0.50% of net assets of the Fund. |
(C) | The rate shown is the 7-day effective yield as of December 31, 2014. |
Bishop Street Funds |
32
High Grade Income Fund |
Schedule of Investments
(concluded)
AGM — Assured Guaranty Municipal Corp.
Cl — Class
FHLB — Federal Home Loan Bank
FHLMC — Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Corporation
GNMA — Government National Mortgage Corporation
GO — General Obligation
LLC — Limited Liability Corporation
MTN — Medium Term Note
PLC — Public Limited Company
RB — Revenue Bond
Ser — Series
Cost figures are shown in thousands.
The accompanying notes are an integral part of the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
33
BISHOP STREET
FUNDS
Hawaii Municipal Bond Fund
The municipal bond market posted strong gains during the year generating a 9.05% return that surpassed high grade fixed income returns by a significant margin. As the U.S. economic recovery strengthened, gains in consumer and business spending translated into additional tax revenues for states and local governments. Similar to U.S. treasuries, longer-dated municipal bonds generated significant gains as falling interest rates and yield curve flattening attracted investors to extend maturities and take advantage of higher yield opportunities. Longer-dated municipal bonds gained 15.4% as issuers took advantage of the opportunity to refinance existing debt and raise additional funds to finance spending plans. Inflows into municipal bond mutual funds remained strong throughout the year. Lower-quality issues generated a 10.1% return in 2014, led by revenue bonds issued by hospitals, transportation and educational-related entities. We expect that investors’ preferences for revenue bonds will continue in 2015 with a defined revenue stream that is tied to the economic viability of the particular entity.
The Bishop Street Hawaii Municipal Bond Fund underperformed the Barclays Municipal Index in 2014 as forty of fifty states outperformed the State of Hawaii during the year. A positive influence was the Fund’s overweight to longer-dated municipal bonds but looking ahead, we are expecting a modest rise in interest rates and will position the Fund’s duration accordingly.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be higher or lower than the performance quoted. For performance data current to the most recent month end, please visit www.bishopstreetfunds.com or call 1-800-262-9565.
Index returns are for illustrative purposes only and do not represent actual Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.
Investing involves risk including possible loss of principal. Diversification does not protect against market loss.
Bishop Street Funds |
34
Hawaii Municipal Bond Fund |
Performance Comparison
Comparison of Change in the Value of a $10,000 Investment in the Hawaii Municipal Bond Fund,
Class I or Class A, versus the Barclays Municipal Bond Index,
and the Lipper Other States Municipal Debt Funds Objective.
# Account value if you reinvested income and capital gains.
(1) See page 4 for definitions of comparative indices.
Average Annual Total Returns† | ||||||||||||||||
One Year Return | Annualized 3 Year Return | Annualized 5 Year Return | Annualized 10 Year Return | |||||||||||||
6.36 | % | 2.91 | % | 3.80 | % | 3.67 | % | Class I | ||||||||
6.10 | % | 2.65 | % | 3.54 | % | 3.41 | % | Class A | ||||||||
2.87 | % | 1.61 | % | 2.91 | % | 3.10 | % | Class A, with load** | ||||||||
9.05 | % | 4.30 | % | 5.16 | % | 4.74 | % | Barclays Municipal Bond Index | ||||||||
9.65 | % | 3.60 | % | 4.36 | % | 3.83 | % | Lipper Other States Municipal Debt Funds Objective |
** | Reflects 3.00% sales charge. |
† | Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Fee waivers are in effect; if they had not been in effect, performance would have been lower. |
December 31, 2014 | www.bishopstreetfunds.com |
35
Hawaii Municipal Bond Fund |
Top Ten Holdings (Unaudited)†
Coupon Rate | Maturity Date | Percentage of Investments | ||||||||||||||
| ||||||||||||||||
1. | Hawaii Department of Budget & Finance State, Sub-Ser | 6.500% | 07/01/39 | 3.1% | ||||||||||||
| ||||||||||||||||
2. | Hawaii State, Ser EA | 5.000% | 12/01/22 | 2.3% | ||||||||||||
| ||||||||||||||||
3. | Hawaii State, Airport System Authority, Ser A | 5.250% | 07/01/27 | 1.9% | ||||||||||||
| ||||||||||||||||
4. | Hawaii State, Ser A | 5.000% | 01/01/31 | 1.6% | ||||||||||||
| ||||||||||||||||
5. | Hawaii State, Airport System Authority, AMT | 5.000% | 07/01/24 | 1.5% | ||||||||||||
| ||||||||||||||||
6. | Honolulu Hawaii City & County, Ser A | 4.000% | 11/01/19 | 1.5% | ||||||||||||
| ||||||||||||||||
7. | Hawaii State, Housing Finance & Development, Rental Housing System, Ser B, AGM Insured | 6.500% | 07/01/33 | 1.4% | ||||||||||||
| ||||||||||||||||
8. | Honolulu Hawaii City & County, Board of Water Supply, Ser A, NATL Insured | 5.000% | 07/01/26 | 1.4% | ||||||||||||
| ||||||||||||||||
9. | Hawaii State, Department of Hawaiian Home Lands, Kapolei Office Facilities, Ser A, AGM Insured | 5.000% | 11/01/31 | 1.4% | ||||||||||||
| ||||||||||||||||
10. | University of Hawaii, Ser A, NATL Insured | 4.500% | 07/15/23 | 1.4% |
Bishop Street Funds |
36
Hawaii Municipal Bond Fund |
Face Amount | Value (000) | |||||||
MUNICIPAL BONDS — 98.3% | ||||||||
| Alabama — 0.2% | |||||||
Huntsville, Electric System Revenue, RB | ||||||||
$ | 225 | 5.250%, 12/01/29 | $ | 269 | ||||
|
| |||||||
| Alaska — 0.8% | |||||||
Alaska Municipal Bond Bank Authority, Ser 3, RB, Bond Bank Moral Obligation Insured | ||||||||
1,000 | 5.000%, 09/01/22 | 1,189 | ||||||
|
| |||||||
| Arkansas — 0.4% | |||||||
Little Rock, Sewer Revenue, RB | ||||||||
500 | 5.000%, 08/01/20 | 582 | ||||||
|
| |||||||
| California — 3.3% | |||||||
California State, GO | ||||||||
200 | 5.000%, 02/01/21 | 238 | ||||||
500 | 5.000%, 10/01/24 | 619 | ||||||
420 | 5.000%, 11/01/32 | 493 | ||||||
1,000 | 5.000%, 04/01/38 | 1,090 | ||||||
170 | 4.500%, 03/01/21 | 194 | ||||||
150 | 4.500%, 08/01/30 | 160 | ||||||
Sonoma County, Junior College District, GO | ||||||||
1,000 | 5.000%, 08/01/27 | 1,211 | ||||||
University of California, Ser AF, RB | ||||||||
1,000 | 5.000%, 05/15/36 | 1,154 | ||||||
|
| |||||||
5,159 | ||||||||
|
| |||||||
| Florida — 0.7% | |||||||
Jacksonville, Capital Improvement Revenue Funding, RB | ||||||||
1,000 | 5.000%, 10/01/30 | 1,145 | ||||||
|
| |||||||
| Hawaii — 82.1% | |||||||
City & County, Honolulu Hawaii Wastewater System Revenue, Ser B, RB | ||||||||
500 | 4.000%, 07/01/21 | 569 | ||||||
Hawaii County, Ser A, GO | ||||||||
500 | 5.000%, 09/01/20 | 592 | ||||||
1,000 | 5.000%, 07/15/22 | 1,126 | ||||||
250 | 5.000%, 09/01/22 | 304 | ||||||
500 | 4.000%, 03/01/22 | 548 | ||||||
Hawaii County, Ser A, GO, AMBAC Insured | ||||||||
1,000 | 5.000%, 07/15/15 | 1,025 | ||||||
Hawaii County, Ser B, GO | ||||||||
200 | 5.000%, 09/01/22 | 243 |
December 31, 2014 | www.bishopstreetfunds.com |
37
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Hawaii — (continued) | |||||||
Hawaii Department of Budget & Finance State, Sub-Ser, RB | ||||||||
$ | 4,050 | 6.500%, 07/01/39 | $ | 4,730 | ||||
Hawaii State, Airport System Authority, RB, AGM Insured | ||||||||
1,000 | 5.250%, 07/01/27 | 1,170 | ||||||
Hawaii State, Airport System Authority, Ser A, RB | ||||||||
375 | 5.250%, 07/01/21 | 442 | ||||||
250 | 5.250%, 07/01/23 | 293 | ||||||
2,500 | 5.250%, 07/01/27 | 2,923 | ||||||
900 | 5.250%, 07/01/30 | 1,047 | ||||||
1,250 | 5.000%, 07/01/22 | 1,453 | ||||||
Hawaii State, Airport System Authority, RB, AMT | ||||||||
2,000 | 5.000%, 07/01/24 | 2,291 | ||||||
1,500 | 4.125%, 07/01/24 | 1,632 | ||||||
1,000 | 3.000%, 07/01/17 | 1,052 | ||||||
Hawaii State, Department of Budget & Finance, Mid Pacific Institute, RB, Radian Insured | ||||||||
1,000 | 5.000%, 01/01/26 | 1,011 | ||||||
Hawaii State, Department of Budget & Finance, Pacific Health Project, Ser A, RB | ||||||||
425 | 6.000%, 07/01/33 | 513 | ||||||
1,000 | 4.625%, 07/01/21 | 1,104 | ||||||
Hawaii State, Department of Budget & Finance, Pacific Health Project, Ser B, RB | ||||||||
225 | 5.000%, 07/01/18 | 251 | ||||||
55 | 3.000%, 07/01/19 | 57 | ||||||
Hawaii State, Department of Budget & Finance, RB | ||||||||
300 | 3.600%, 11/15/20 | 304 | ||||||
300 | 3.350%, 11/15/19 | 305 | ||||||
Hawaii State, Department of Hawaiian Home Lands, Kapolei Office Facilities, Ser A, COP, AGM Insured | ||||||||
2,000 | 5.000%, 11/01/31 | 2,124 | ||||||
110 | 4.250%, 11/01/26 | 115 | ||||||
Hawaii State, Department of Transportation, COP, AMT | ||||||||
1,525 | 5.000%, 08/01/21 | 1,800 | ||||||
1,085 | 5.000%, 08/01/27 | 1,257 | ||||||
Hawaii State, Harbor System Revenue, Ser A, RB | ||||||||
100 | 5.000%, 07/01/25 | 114 | ||||||
1,125 | 4.250%, 07/01/21 | 1,270 | ||||||
Hawaii State, Harbor System Revenue, Ser B, RB, AMT, AGM Insured | ||||||||
500 | 5.000%, 01/01/23 | 501 | ||||||
Hawaii State, Highway Authority, RB | ||||||||
500 | 5.750%, 01/01/28 | 579 |
Bishop Street Funds |
38
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Hawaii — (continued) | |||||||
$ | 605 | 5.500%, 07/01/18 | $ | 695 | ||||
1,000 | 5.500%, 01/01/25 | 1,151 | ||||||
Hawaii State, Highway Authority, RB, BHAC Insured | ||||||||
550 | 4.750%, 01/01/22 | 615 | ||||||
Hawaii State, Highway Authority, Ser A, RB | ||||||||
700 | 5.000%, 01/01/31 | 810 | ||||||
Hawaii State, Highway Authority, Ser B, RB, AGM Insured | ||||||||
1,250 | 5.250%, 07/01/18 | 1,429 | ||||||
1,600 | 5.250%, 07/01/19 | 1,872 | ||||||
500 | 5.000%, 07/01/16, Pre-Refunded @ 100 (A) | 512 | ||||||
Hawaii State, Housing Finance & Development, Halelauwila Place Project, Ser A, RB | ||||||||
700 | 0.700%, 12/01/15 | 700 | ||||||
Hawaii State, Housing Finance & Development, Kuhio Park Terrace Multi-Family Housing, Ser A, RB, FHLMC Insured | ||||||||
200 | 3.900%, 04/01/22 | 214 | ||||||
115 | 3.750%, 04/01/21 | 122 | ||||||
180 | 3.500%, 04/01/20 | 189 | ||||||
115 | 3.000%, 04/01/18 | 119 | ||||||
Hawaii State, Housing Finance & Development, Rental Housing System, Ser B, RB, AGM Insured | ||||||||
2,000 | 6.500%, 07/01/33 | 2,183 | ||||||
Hawaii State, Housing Finance & Development, Single-Family Housing, Ser B, RB, GNMA/FNMA Insured | ||||||||
490 | 3.450%, 01/01/22 | 512 | ||||||
Hawaii State, Housing Finance & Development, Wilikina Apartments Project, Ser A, RB | ||||||||
1,000 | 5.000%, 05/01/34 | 1,010 | ||||||
Hawaii State, Ser A, RB | ||||||||
700 | 5.000%, 01/01/23 | 853 | ||||||
1,600 | 5.000%, 01/01/30 | 1,917 | ||||||
2,100 | 5.000%, 01/01/31 | 2,506 | ||||||
500 | 5.000%, 01/01/33 | 594 | ||||||
500 | 5.000%, 01/01/34 | 592 | ||||||
Hawaii State, Ser DF, GO, AMBAC Insured | ||||||||
90 | 5.000%, 07/01/15, Pre-Refunded @ 100 (A) | 92 | ||||||
Hawaii State, Ser DG, GO, AMBAC Insured | ||||||||
1,110 | 5.000%, 07/01/16, Pre-Refunded @ 100 (A) | 1,136 | ||||||
Hawaii State, Ser DI, GO, AGM Insured | ||||||||
375 | 5.000%, 03/01/25, Pre-Refunded @ 100 (A) | 396 | ||||||
Hawaii State, Ser DK, GO | ||||||||
280 | 5.000%, 05/01/18 | 316 | ||||||
675 | 5.000%, 05/01/25 | 758 |
December 31, 2014 | www.bishopstreetfunds.com |
39
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Hawaii — (continued) | |||||||
$ | 1,000 | 5.000%, 05/01/27 | $ | 1,123 | ||||
Hawaii State, Ser DN, GO | ||||||||
200 | 5.250%, 08/01/25 | 229 | ||||||
Hawaii State, Ser DO, GO | ||||||||
850 | 5.000%, 08/01/17 | 942 | ||||||
Hawaii State, Ser DQ, GO | ||||||||
100 | 5.000%, 06/01/21 | 116 | ||||||
Hawaii State, Ser DR, GO | ||||||||
1,095 | 5.000%, 06/01/17 | 1,206 | ||||||
1,000 | 5.000%, 06/01/19 | 1,156 | ||||||
505 | 4.250%, 06/01/19 | 568 | ||||||
Hawaii State, Ser DT, GO | ||||||||
270 | 5.000%, 11/01/19 | 315 | ||||||
225 | 4.500%, 11/01/19 | 257 | ||||||
Hawaii State, Ser DY, GO | ||||||||
825 | 5.000%, 02/01/19 | 948 | ||||||
1,000 | 5.000%, 02/01/20 | 1,171 | ||||||
125 | 4.000%, 02/01/20 | 140 | ||||||
Hawaii State, Ser DZ, GO | ||||||||
1,025 | 5.000%, 12/01/17 | 1,147 | ||||||
900 | 5.000%, 12/01/21 | 1,083 | ||||||
1,000 | 5.000%, 12/01/22 | 1,205 | ||||||
960 | 5.000%, 12/01/23 | 1,153 | ||||||
120 | 5.000%, 12/01/26 | 143 | ||||||
250 | 5.000%, 12/01/28 | 297 | ||||||
250 | 5.000%, 12/01/30 | 295 | ||||||
1,000 | 5.000%, 12/01/31 | 1,176 | ||||||
Hawaii State, Ser EA, GO | ||||||||
935 | 5.000%, 12/01/21 | 1,125 | ||||||
2,950 | 5.000%, 12/01/22 | 3,554 | ||||||
Hawaii State, Ser EF, GO | ||||||||
1,275 | 5.000%, 11/01/22 | 1,550 | ||||||
300 | 5.000%, 11/01/23 | 365 | ||||||
Hawaii State, Ser EH, GO | ||||||||
1,000 | 5.000%, 08/01/18 | 1,136 | ||||||
300 | 5.000%, 08/01/20 | 354 | ||||||
200 | 5.000%, 08/01/24 | 243 | ||||||
500 | 5.000%, 08/01/32 | 589 | ||||||
Hawaii State, Ser EO, GO | ||||||||
1,000 | 5.000%, 08/01/33 | 1,192 | ||||||
Hawaii State, Ser EP, GO | ||||||||
150 | 5.000%, 08/01/20 | 177 |
Bishop Street Funds |
40
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Hawaii — (continued) | |||||||
$ | 1,000 | 5.000%, 08/01/22 | $ | 1,212 | ||||
Hawaii State, COP, AMT | ||||||||
1,000 | 5.250%, 08/01/25 | 1,194 | ||||||
Honolulu City & County, Board of Water Supply, Ser A, RB | ||||||||
525 | 5.000%, 07/01/31 | 624 | ||||||
Honolulu Hawaii City & County, Board of Water Supply, Ser A, RB | ||||||||
1,050 | 5.000%, 07/01/19 | 1,220 | ||||||
100 | 4.000%, 07/01/18 | 110 | ||||||
400 | 3.000%, 07/01/17 | 423 | ||||||
Honolulu Hawaii City & County, Board of Water Supply, Ser A, | ||||||||
RB, NATL Insured | ||||||||
2,000 | 5.000%, 07/01/26, Pre-Refunded @ 100 (A) | 2,136 | ||||||
Honolulu Hawaii City & County, Board of Water Supply, Ser B, | ||||||||
RB, AMT, NATL Insured | ||||||||
1,000 | 5.250%, 07/01/20, Pre-Refunded @ 100 (A) | 1,068 | ||||||
1,000 | 5.250%, 07/01/21, Pre-Refunded @ 100 (A) | 1,068 | ||||||
325 | 5.000%, 07/01/15 | 332 | ||||||
50 | 5.000%, 07/01/16 | 53 | ||||||
Honolulu Hawaii City & County, Ser A, GO | ||||||||
275 | 5.250%, 08/01/31 | 322 | ||||||
1,100 | 5.250%, 04/01/32 | 1,256 | ||||||
680 | 5.000%, 11/01/21 | 821 | ||||||
500 | 5.000%, 11/01/22 | 610 | ||||||
1,000 | 5.000%, 04/01/33 | 1,126 | ||||||
1,170 | 5.000%, 11/01/33 | 1,373 | ||||||
1,000 | 4.250%, 08/01/32 | 1,072 | ||||||
2,000 | 4.000%, 11/01/19 | 2,244 | ||||||
325 | 4.000%, 08/01/22 | 363 | ||||||
500 | 4.000%, 11/01/37 | 527 | ||||||
Honolulu Hawaii City & County, Ser A, GO, AGM Insured | ||||||||
60 | 5.000%, 07/01/19 | 66 | ||||||
1,000 | 5.000%, 07/01/22 | 1,101 | ||||||
Honolulu Hawaii City & County, Ser B, GO | ||||||||
300 | 5.000%, 12/01/16 | 326 | ||||||
250 | 5.000%, 12/01/18 | 287 | ||||||
375 | 5.000%, 08/01/21 | 452 | ||||||
350 | 5.000%, 08/01/22 | 417 | ||||||
Honolulu Hawaii City & County, Ser B, GO, AGM Insured | ||||||||
1,015 | 5.250%, 07/01/16 | 1,088 | ||||||
575 | 5.250%, 07/01/18 | 657 | ||||||
Honolulu Hawaii City & County, Ser C, GO | ||||||||
200 | 4.750%, 09/01/18 | 226 |
December 31, 2014 | www.bishopstreetfunds.com |
41
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Hawaii — (continued) | |||||||
Honolulu Hawaii City & County, Ser D, GO | ||||||||
$ | 1,000 | 5.250%, 09/01/22 | $ | 1,173 | ||||
200 | 5.250%, 09/01/23 | 234 | ||||||
Honolulu Hawaii City & County, Ser D, GO, NATL Insured | ||||||||
500 | 5.000%, 07/01/15, Pre-Refunded @ 100 (A) | 512 | ||||||
Honolulu Hawaii City & County, Wastewater System Authority, | ||||||||
Ser A, RB | ||||||||
635 | 5.000%, 07/01/20 | 730 | ||||||
1,000 | 5.000%, 07/01/25 | 1,169 | ||||||
100 | 5.000%, 07/01/31 | 116 | ||||||
1,000 | 5.000%, 07/01/38 | 1,111 | ||||||
Honolulu Hawaii City & County, Wastewater System Authority, | ||||||||
Ser Junior A-1, RB, NATL Insured | ||||||||
815 | 5.000%, 07/01/22 | 867 | ||||||
Honolulu Hawaii City & County, Wastewater System Authority, | ||||||||
Ser Senior A, RB, NATL Insured | ||||||||
1,650 | 5.000%, 07/01/31 | 1,741 | ||||||
Honolulu Hawaii City & County, Wastewater System Authority, | ||||||||
Waipahu Towers Project, Ser A, RB, AMT, GNMA Insured | ||||||||
170 | 6.900%, 06/20/35 | 170 | ||||||
Kauai County, Ser A, GO | ||||||||
250 | 5.000%, 08/01/21 | 299 | ||||||
150 | 5.000%, 08/01/23 | 180 | ||||||
250 | 4.000%, 08/01/24 | 278 | ||||||
250 | 3.250%, 08/01/23 | 264 | ||||||
Kauai County, Ser A, GO, NATL Insured | ||||||||
3,195 | 5.000%, 08/01/15, Pre-Refunded @ 100 (A) | 3,282 | ||||||
415 | 5.000%, 08/01/21 | 426 | ||||||
Maui County, GO | ||||||||
250 | 5.000%, 06/01/20 | 295 | ||||||
150 | 5.000%, 06/01/21 | 179 | ||||||
Maui County, GO, NATL Insured | ||||||||
15 | 5.000%, 03/01/15, Pre-Refunded @ 100 (A) | 15 | ||||||
205 | 5.000%, 03/01/24 | 206 | ||||||
Maui County, Ser A, GO | ||||||||
1,000 | 5.000%, 07/01/19 | 1,100 | ||||||
Maui County, Ser A, GO, AGM Insured | ||||||||
1,000 | 3.500%, 07/01/16 | 1,046 | ||||||
Maui County, Ser A, GO, NATL Insured | ||||||||
1,000 | 4.750%, 07/01/25, Pre-Refunded @ 100 (A) | 1,064 | ||||||
Maui County, Ser B, GO | ||||||||
375 | 4.000%, 06/01/16 | 394 | ||||||
500 | 4.000%, 06/01/21 | 556 |
Bishop Street Funds |
42
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Hawaii — (continued) | |||||||
Maui County, Ser B, GO, NATL Insured | ||||||||
$ | 500 | 5.000%, 07/01/16 | $ | 534 | ||||
University of Hawaii, College Improvements Project, Ser A, RB, AGC Insured | ||||||||
1,400 | 5.000%, 10/01/23 | 1,498 | ||||||
University of Hawaii, College Improvements Project, Ser A, RB, NATL Insured | ||||||||
200 | 5.000%, 07/15/19 | 213 | ||||||
150 | 5.000%, 07/15/22 | 159 | ||||||
University of Hawaii, Ser A, RB | ||||||||
100 | 6.000%, 10/01/38 | 119 | ||||||
University of Hawaii, Ser A, RB, NATL Insured | ||||||||
975 | 5.000%, 07/15/21 | 1,036 | ||||||
2,000 | 4.500%, 07/15/23 | 2,107 | ||||||
University of Hawaii, Ser A-2, RB | ||||||||
1,030 | 4.000%, 10/01/18 | 1,129 | ||||||
|
| |||||||
126,969 | ||||||||
|
| |||||||
| Indiana — 0.1% | |||||||
Indiana State, Housing & Community Development Authority, Ser C, RB, GNMA/FNMA/FHLMC Insured | ||||||||
80 | 4.100%, 06/01/27 | 85 | ||||||
|
| |||||||
| Kansas — 0.4% | |||||||
Sedgwick County, Unified School District No. 260 Derby, GO | ||||||||
500 | 5.000%, 10/01/29 | 584 | ||||||
|
| |||||||
| Kentucky — 0.4% | |||||||
Kentucky Asset Liability Commission, Ser A, RB | ||||||||
575 | 5.000%, 09/01/21 | 675 | ||||||
|
| |||||||
| Maine — 0.5% | |||||||
Maine State, Health & Higher Educational Facilities Authority, Ser A, RB | ||||||||
750 | 5.250%, 07/01/31 | 835 | ||||||
|
| |||||||
| Maryland — 0.8% | |||||||
Baltimore, Ser B, RB | ||||||||
500 | 5.000%, 07/01/27 | 599 | ||||||
Maryland State, GO | ||||||||
575 | 5.000%, 03/01/22 | 675 | ||||||
|
| |||||||
1,274 | ||||||||
|
| |||||||
| Massachusetts — 0.5% | |||||||
Massachusetts Bay, Transportation Authority, Ser A, RB | ||||||||
600 | 5.250%, 07/01/29 | 775 | ||||||
|
|
December 31, 2014 | www.bishopstreetfunds.com |
43
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Nebraska — 0.1% | |||||||
Omaha, GO | ||||||||
$ | 100 | 5.250%, 10/15/19 | $ | 115 | ||||
|
| |||||||
| New Jersey — 0.4% | |||||||
New Jersey Transportation Trust Fund Authority, Ser A, RB | ||||||||
500 | 5.500%, 06/15/41 | 561 | ||||||
|
| |||||||
| New York — 2.0% | |||||||
Metropolitan Transportation Authority, Ser A, RB | ||||||||
1,000 | 4.000%, 11/15/20 | 1,118 | ||||||
New York City Trust for Cultural Resources, Ser S, RB | ||||||||
1,000 | 5.000%, 07/01/41 | 1,145 | ||||||
New York, New York, Ser H, GO | ||||||||
500 | 5.000%, 08/01/20 | 587 | ||||||
New York, New York, Ser J, GO | ||||||||
275 | 5.000%, 08/01/33 | 322 | ||||||
|
| |||||||
3,172 | ||||||||
|
| |||||||
| North Carolina — 0.5% | |||||||
Charlotte, Ser E, COP | ||||||||
725 | 5.000%, 06/01/34 | 813 | ||||||
|
| |||||||
| Ohio — 0.9% | |||||||
Akron, RB | ||||||||
1,000 | 5.000%, 12/01/33 | 1,145 | ||||||
Ohio State, Ser B, GO | ||||||||
300 | 5.000%, 08/01/22 | 364 | ||||||
|
| |||||||
1,509 | ||||||||
|
| |||||||
| Oklahoma — 0.1% | |||||||
Oklahoma City Water Utilities Trust, RB | ||||||||
125 | 5.000%, 07/01/40 | 141 | ||||||
|
| |||||||
| Oregon — 0.2% | |||||||
Oregon State, Facilities Authority, Providence Health Services, RB | ||||||||
225 | 5.000%, 10/01/19 | 261 | ||||||
|
| |||||||
| Texas — 2.1% | |||||||
Arlington Higher Education Finance, RB | ||||||||
750 | 5.000%, 08/15/27 | 902 | ||||||
Dallas Area Rapid Transit, RB | ||||||||
500 | 5.000%, 12/01/36 | 570 | ||||||
Midland County, Fresh Water Supply District No. 1, Ser A, RB | ||||||||
1,000 | 5.000%, 09/15/37 (B) | 355 | ||||||
North East Independent School District, GO | ||||||||
275 | 5.250%, 02/01/28 | 352 |
Bishop Street Funds |
44
Hawaii Municipal Bond Fund |
Schedule of Investments
(continued)
Face Amount | Value (000) | |||||||
| Texas — (continued) | |||||||
Port of Houston Authority, Ser D-1, GO | ||||||||
$ | 1,000 | 5.000%, 10/01/35 | $ | 1,139 | ||||
|
| |||||||
3,318 | ||||||||
|
| |||||||
| Utah — 0.1% | |||||||
Central Utah Water Conservancy District, Ser B, GO | ||||||||
200 | 5.250%, 04/01/23 | 238 | ||||||
|
| |||||||
| Washington — 1.7% | |||||||
Port of Seattle Washington, Ser A, RB | ||||||||
750 | 5.000%, 08/01/26 | 884 | ||||||
Snohomish County, School District No. 306 Lakewood, GO | ||||||||
1,000 | 5.000%, 12/01/26 | 1,215 | ||||||
Washington State, Ser R-2015, GO | ||||||||
450 | 5.000%, 07/01/20 | 531 | ||||||
|
| |||||||
2,630 | ||||||||
|
| |||||||
TOTAL MUNICIPAL BONDS (Cost $146,578) | 152,299 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT (C) — 0.4% | ||||||||
Dreyfus Tax-Exempt Cash Management Fund, Institutional | ||||||||
542,876 | Shares, 0.000% (Cost $543) | 543 | ||||||
|
| |||||||
TOTAL INVESTMENTS (Cost $147,121) — 98.7% | $ | 152,842 | ||||||
|
|
Percentages are based on Net Assets of $154,864 (000).
(A) | Pre-Refunded Security — The maturity date shown is the pre-refunded date. |
(B) | Zero coupon security. The rate reported on the Schedule of Investments is the effective yield at time of purchase. |
(C) | The rate reported is the 7-day effective yield as of December 31, 2014. |
AGC — American Guarantee Corporation
AGM — Assured Guaranty Municipal Corp.
AMBAC — American Municipal Bond Assurance Company
AMT — Alternative Minimum Tax
BHAC — Berkshire Hathaway Assurance Corporation
COP — Certificate of Participation
FHLMC — Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Corporation
GNMA — Government National Mortgage Corporation
December 31, 2014 | www.bishopstreetfunds.com |
45
Hawaii Municipal Bond Fund |
Schedule of Investments
(concluded)
GO — General Obligation
NATL — National Public Finance Guarantee Corporation
RB — Revenue Bond
Ser — Series
Cost figures are shown in thousands.
The accompanying notes are an integral part of the financial statements.
Bishop Street Funds |
46
Bishop Street Funds |
Statements of Assets and Liabilities (000)
December 31, 2014
Strategic Growth Fund | Dividend Value Fund | High Grade Income Fund | ||||||||||
Assets: | ||||||||||||
Investments, at Cost | $ | 44,171 | $ | 39,064 | $ | 70,811 | ||||||
| ||||||||||||
Investments, at Value | $ | 50,320 | $ | 56,082 | $ | 74,054 | ||||||
Dividends and Interest Receivable | 17 | 97 | 731 | |||||||||
Reclaim Receivable | — | 5 | 2 | |||||||||
Receivable for Investment Securities Sold | — | 37 | — | |||||||||
Prepaid Expenses | 2 | 2 | 8 | |||||||||
| ||||||||||||
Total Assets | 50,339 | 56,223 | 74,795 | |||||||||
| ||||||||||||
Liabilities: | ||||||||||||
Advisory Fees Payable | 32 | 32 | 25 | |||||||||
Payable for Fund Shares Redeemed | 21 | — | 20 | |||||||||
Administrative Fees Payable | 5 | 9 | 7 | |||||||||
Shareholder Servicing Fees Payable | 4 | 5 | 6 | |||||||||
Chief Compliance Officer Fees Payable | 1 | 1 | 1 | |||||||||
Payable for Investment Securities Purchased | — | 483 | — | |||||||||
Income Distribution Payable | — | — | 50 | |||||||||
Other Accrued Expenses Payable | 35 | 28 | 44 | |||||||||
| ||||||||||||
Total Liabilities | 98 | 558 | 153 | |||||||||
| ||||||||||||
Net Assets | $ | 50,241 | $ | 55,665 | $ | 74,642 | ||||||
| ||||||||||||
Paid-in Capital | $ | 43,710 | $ | 46,350 | $ | 71,310 | ||||||
Accumulated Net Realized Gain (Loss) on Investments | 382 | (7,703 | ) | 89 | ||||||||
Net Unrealized Appreciation on Investments | 6,149 | 17,018 | 3,243 | |||||||||
| ||||||||||||
Net Assets | $ | 50,241 | $ | 55,665 | $ | 74,642 | ||||||
| ||||||||||||
Class I Shares: | ||||||||||||
Net Assets | $ | 50,241 | $ | 55,665 | $ | 74,642 | ||||||
Outstanding Shares of Beneficial Interest | 3,518 | 4,089 | 7,430 | |||||||||
Net Asset Value, Offering and Redemption Price Per Share — Class I (Net Assets / Shares Outstanding) | $ | 14.28 | $ | 13.62 | $ | 10.05 | ||||||
|
Amounts | designated as “—” are either $0 or have been rounded to $0. |
The accompanying notes are an integral part of the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
47
Bishop Street Funds |
Statement of Assets and Liabilities (000)
December 31, 2014
Hawaii Municipal Bond Fund | ||||
Assets: | ||||
Investments, at Cost | $ | 147,121 | ||
| ||||
Investments, at Value | $ | 152,842 | ||
Dividends and Interest Receivable | 2,374 | |||
Receivable for Fund Shares Sold | 52 | |||
Prepaid Expenses | 7 | |||
| ||||
Total Assets | 155,275 | |||
| ||||
Liabilities: | ||||
Income Distribution Payable | 258 | |||
Advisory Fees Payable | 33 | |||
Shareholder Servicing Fees Payable | 13 | |||
Administrative Fees Payable | 9 | |||
Chief Compliance Officer Fees Payable | 2 | |||
Other Accrued Expenses Payable | 96 | |||
| ||||
Total Liabilities | 411 | |||
| ||||
Net Assets | $ | 154,864 | ||
| ||||
Paid-in Capital | $ | 149,060 | ||
Undistributed Net Investment Income | 15 | |||
Accumulated Net Realized Gain on Investments | 68 | |||
Net Unrealized Appreciation on Investments | 5,721 | |||
| ||||
Net Assets | $ | 154,864 | ||
| ||||
Class I Shares: | ||||
Net Assets | $ | 132,540 | ||
Outstanding Shares of Beneficial Interest | 12,184 | |||
Net Asset Value, Offering and Redemption Price Per Share — Class I | $ | 10.88 | ||
| ||||
Class A Shares: | ||||
Net Assets | $ | 22,324 | ||
Outstanding Shares of Beneficial Interest | 2,053 | |||
Net Asset Value, Offering and Redemption Price Per Share — Class I | $ | 10.88 | ||
| ||||
Maximum Offering Price Per Shares — Class A ($10.88/ 97.00%) | $ | 11.22 | ||
|
The accompanying notes are an integral part of the financial statements.
Bishop Street Funds |
48
Bishop Street Funds |
Statements of Operations (000)
For the year ended December 31, 2014
Strategic Growth Fund | Dividend Value Fund | High Grade Income Fund | ||||||||||
Investment Income: | ||||||||||||
Dividend Income | $ | 173 | $ | 1,898 | $ | — | ||||||
Interest Income | — | 3 | 2,307 | |||||||||
Less: Foreign Taxes Withheld | (1 | ) | (13 | ) | — | |||||||
| ||||||||||||
Total Investment Income | 172 | 1,888 | 2,307 | |||||||||
| ||||||||||||
Expenses: | ||||||||||||
Investment Adviser Fees | 392 | 421 | 412 | |||||||||
Shareholder Servicing Fees | 133 | 142 | 187 | |||||||||
Administrative Fees | 106 | 114 | 150 | |||||||||
Chief Compliance Officer Fees | 3 | 3 | 4 | |||||||||
Transfer Agent Fees | 42 | 43 | 47 | |||||||||
Audit Fees | 15 | 16 | 22 | |||||||||
Printing Fees | 12 | 13 | 17 | |||||||||
Legal Fees | 10 | 11 | 14 | |||||||||
Trustees’ Fees | 6 | 6 | 8 | |||||||||
Custody Fees | 5 | 5 | 5 | |||||||||
Registration Fees | 4 | 3 | 16 | |||||||||
Pricing Fees | 1 | 1 | 14 | |||||||||
Line of Credit | 1 | — | — | |||||||||
Miscellaneous Expenses | 2 | 2 | 6 | |||||||||
| ||||||||||||
Total Expenses | 732 | 780 | 902 | |||||||||
| ||||||||||||
Less Waivers: | ||||||||||||
Shareholder Servicing Fees | (80 | ) | (85 | ) | (112 | ) | ||||||
Administrative Fees | (42 | ) | (46 | ) | (60 | ) | ||||||
Investment Adviser Fees | — | (53 | ) | (160 | ) | |||||||
| ||||||||||||
Total Waivers | (122 | ) | (184 | ) | (332 | ) | ||||||
| ||||||||||||
Total Net Expenses | 610 | 596 | 570 | |||||||||
| ||||||||||||
Net Investment Income (Loss) | (438 | ) | 1,292 | 1,737 | ||||||||
| ||||||||||||
Net Realized Gain on Investments | 4,990 | 8,108 | 498 | |||||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments | (846 | ) | (2,978 | ) | 1,911 | |||||||
| ||||||||||||
Net Realized and Unrealized Gain on Investments | 4,144 | 5,130 | 2,409 | |||||||||
| ||||||||||||
Increase in Net Assets Resulting from Operations | $ | 3,706 | $ | 6,422 | $ | 4,146 | ||||||
|
Amounts designated as “—” are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
49
Bishop Street Funds |
Statement of Operations (000)
For the year ended December 31, 2014
Hawaii Municipal Bond Fund | ||||
Investment Income: | ||||
Interest Income | $ | 4,892 | ||
| ||||
Total Investment Income | 4,892 | |||
| ||||
Expenses: | ||||
Investment Adviser Fees | 533 | |||
Shareholder Servicing Fees | 381 | |||
Administrative Fees | 305 | |||
Distribution Fees, Class A | 57 | |||
Chief Compliance Officer Fees | 7 | |||
Transfer Agent Fees | 92 | |||
Audit Fees | 45 | |||
Printing Fees | 35 | |||
Pricing Fees | 30 | |||
Legal Fees | 29 | |||
Trustees’ Fees | 16 | |||
Registration Fees | 10 | |||
Custody Fees | 8 | |||
Miscellaneous Expenses | 12 | |||
| ||||
Total Expenses | 1,560 | |||
| ||||
Less Waivers: | ||||
Investment Adviser Fees | (237 | ) | ||
Shareholder Servicing Fees | (228 | ) | ||
Administrative Fees | (198 | ) | ||
| ||||
Total Waivers | (663 | ) | ||
| ||||
Total Net Expenses | 897 | |||
| ||||
Net Investment Income | 3,995 | |||
| ||||
Net Realized Gain on Investments | 1,128 | |||
Net Change in Unrealized Appreciation on Investments | 4,107 | |||
| ||||
Net Realized and Unrealized Gain on Investments | 5,235 | |||
| ||||
Increase in Net Assets Resulting from Operations | $ | 9,230 | ||
|
The accompanying notes are an integral part of the financial statements.
Bishop Street Funds |
50
Bishop Street Funds |
Statements of Changes in Net Assets (000)
For the years ended December 31,
Strategic Growth Fund | Dividend Value Fund | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Investment Activities from Operations: | ||||||||||||||||
Net Investment Income (Loss) | $ | (438 | ) | $ | (135 | ) | $ | 1,292 | $ | 1,089 | ||||||
Net Realized Gain on Investments | 4,990 | 14,858 | 8,108 | 4,630 | ||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments | (846 | ) | 840 | (2,978 | ) | 9,171 | ||||||||||
| ||||||||||||||||
Increase in Net Assets Resulting from Operations | 3,706 | 15,563 | 6,422 | 14,890 | ||||||||||||
| ||||||||||||||||
Dividends and Distributions to Shareholders: | ||||||||||||||||
Net Investment Income: | ||||||||||||||||
Class I Shares | — | — | (1,298 | ) | (1,091 | ) | ||||||||||
Capital Gains: | ||||||||||||||||
Class I Shares | (4,859 | ) | (11,683 | ) | — | — | ||||||||||
| ||||||||||||||||
Total Dividends and Distributions to Shareholders | (4,859 | ) | (11,683 | ) | (1,298 | ) | (1,091 | ) | ||||||||
| ||||||||||||||||
Capital Share Transactions: | ||||||||||||||||
Proceeds from Shares Issued | 5,067 | 3,189 | 1,238 | 925 | ||||||||||||
Reinvestments of Cash Distributions | 3,677 | 8,843 | 897 | 781 | ||||||||||||
Cost of Shares Redeemed | (14,348 | ) | (5,558 | ) | (13,054 | ) | (11,182 | ) | ||||||||
| ||||||||||||||||
Net Increase (Decrease) in Net Assets from Capital Share Transactions | (5,604 | ) | 6,474 | (10,919 | ) | (9,476 | ) | |||||||||
| ||||||||||||||||
Total Increase (Decrease) in Net Assets | (6,757 | ) | 10,354 | (5,795 | ) | 4,323 | ||||||||||
| ||||||||||||||||
Net Assets: | ||||||||||||||||
Beginning of Year | 56,998 | 46,644 | 61,460 | 57,137 | ||||||||||||
| ||||||||||||||||
End of Year | $ | 50,241 | $ | 56,998 | $ | 55,665 | $ | 61,460 | ||||||||
| ||||||||||||||||
Undistributed (Accumulated Net Investment Loss/) Net Investment Income | $ | — | $ | — | $ | — | $ | 2 | ||||||||
| ||||||||||||||||
Share Transactions: | ||||||||||||||||
Shares Issued | 339 | 197 | 99 | 83 | ||||||||||||
Shares Issued in Lieu of Cash Distributions | 250 | 641 | 70 | 68 | ||||||||||||
Shares Redeemed | (986 | ) | (363 | ) | (1,025 | ) | (1,021 | ) | ||||||||
| ||||||||||||||||
Net Increase (Decrease) in Shares Outstanding from Share Transactions | (397 | ) | 475 | (856 | ) | (870 | ) | |||||||||
|
Amounts designated as “—” are either $0, or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
51
Bishop Street Funds |
Statements of Changes in Net Assets (000)
For the years ended December 31,
High Grade Income Fund | Hawaii Municipal Bond Fund | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Investment Activities from Operations: | ||||||||||||||||
Net Investment Income | $ | 1,737 | $ | 1,753 | $ | 3,995 | $ | 4,225 | ||||||||
Net Realized Gain (Loss) on Investments | 498 | 1,338 | 1,128 | (830 | ) | |||||||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments | 1,911 | (5,307 | ) | 4,107 | (7,489 | ) | ||||||||||
| ||||||||||||||||
Increase (Decrease) in Net Assets Resulting from Operations | 4,146 | (2,216 | ) | 9,230 | (4,094 | ) | ||||||||||
| ||||||||||||||||
Dividends and Distributions to Shareholders: | ||||||||||||||||
Net Investment Income: | ||||||||||||||||
Class I Shares | (1,739 | ) | (1,729 | ) | (3,436 | ) | (3,598 | ) | ||||||||
Class A Shares | — | — | (551 | ) | (623 | ) | ||||||||||
Capital Gains: | ||||||||||||||||
Class I Shares | (423 | ) | (1,742 | ) | (198 | ) | (531 | ) | ||||||||
Class A Shares | — | — | (33 | ) | (100 | ) | ||||||||||
| ||||||||||||||||
Total Dividends and Distributions to Shareholders | (2,162 | ) | (3,471 | ) | (4,218 | ) | (4,852 | ) | ||||||||
| ||||||||||||||||
Capital Share Transactions: | ||||||||||||||||
Class I Shares: | ||||||||||||||||
Proceeds from Shares Issued | 5,020 | 5,470 | 15,402 | 19,570 | ||||||||||||
Reinvestments of Cash Distributions | 1,447 | 2,240 | 612 | 704 | ||||||||||||
Cost of Shares Redeemed | (7,816 | ) | (13,787 | ) | (13,999 | ) | (20,664 | ) | ||||||||
| ||||||||||||||||
Total Class I Capital Share Transactions | (1,349 | ) | (6,077 | ) | 2,015 | (390 | ) | |||||||||
| ||||||||||||||||
Class A Shares: | ||||||||||||||||
Proceeds from Shares Issued | — | — | 899 | 2,503 | ||||||||||||
Reinvestments of Cash Distributions | — | — | 446 | 603 | ||||||||||||
Cost of Shares Redeemed | — | — | (4,156 | ) | (2,961 | ) | ||||||||||
| ||||||||||||||||
Total Class A Capital Share Transactions | — | — | (2,811 | ) | 145 | |||||||||||
| ||||||||||||||||
Net Decrease in Net Assets from Capital Share Transactions | (1,349 | ) | (6,077 | ) | (796 | ) | (245 | ) | ||||||||
| ||||||||||||||||
Total Increase (Decrease) in Net Assets | 635 | (11,764 | ) | 4,216 | (9,191 | ) | ||||||||||
| ||||||||||||||||
Net Assets: | ||||||||||||||||
Beginning of Year | 74,007 | 85,771 | 150,648 | 159,839 | ||||||||||||
| ||||||||||||||||
End of Year | $ | 74,642 | $ | 74,007 | $ | 154,864 | $ | 150,648 | ||||||||
| ||||||||||||||||
Undistributed Net Investment Income | $ | — | $ | 1 | $ | 15 | $ | 7 | ||||||||
| ||||||||||||||||
Share Transactions: | ||||||||||||||||
Class I Shares: | ||||||||||||||||
Shares Issued | 503 | 534 | 1,427 | 1,806 | ||||||||||||
Shares Issued in Lieu of Cash Distributions | 144 | 224 | 57 | 66 | ||||||||||||
Shares Redeemed | (783 | ) | (1,357 | ) | (1,302 | ) | (1,921 | ) | ||||||||
| ||||||||||||||||
Total Class I Transactions | (136 | ) | (599 | ) | 182 | (49 | ) | |||||||||
| ||||||||||||||||
Class A Shares: | ||||||||||||||||
Shares Issued | — | — | 83 | 228 | ||||||||||||
Shares Issued in Lieu of Cash Distributions | — | — | 41 | 56 | ||||||||||||
Shares Redeemed | — | — | (387 | ) | (274 | ) | ||||||||||
| ||||||||||||||||
Total Class A Transactions | — | — | (263 | ) | 10 | |||||||||||
| ||||||||||||||||
Net Decrease in Shares Outstanding from Share Transactions | (136 | ) | (599 | ) | (81 | ) | (39 | ) | ||||||||
|
Amounts designated as “—” are either $0 or zero shares, or have been rounded to $0 or zero shares.
The accompanying notes are an integral part of the financial statements.
Bishop Street Funds |
52
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Bishop Street Funds |
For a share outstanding throughout the years ended December 31,
Investment Activities | Total Investment Activities from Operations | Dividends and Distributions from | |||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Year | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain(Loss) on Investments | Net Investment Income | Capital Gains | Total Dividends and Distributions | ||||||||||||||||||||||||||||||
STRATEGIC GROWTH FUND | |||||||||||||||||||||||||||||||||||
Class I Shares: |
| ||||||||||||||||||||||||||||||||||
2014 | $ | 14.56 | $ | (0.12 | ) | $ | 1.30 | $ | 1.18 | $ | — | $ | (1.46 | ) | $ | (1.46 | ) | ||||||||||||||||||
2013 | 13.56 | (0.04 | ) | 4.59 | 4.55 | — | (3.55 | ) | (3.55 | ) | |||||||||||||||||||||||||
2012 | 12.24 | 0.03 | 1.32 | †† | 1.35 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||||||||
2011 | 12.65 | (0.01 | ) | (0.40 | ) | (0.41 | ) | — | — | — | |||||||||||||||||||||||||
2010 | 10.64 | (0.01 | ) | 2.02 | 2.01 | — | — | — | |||||||||||||||||||||||||||
DIVIDEND VALUE FUND | |||||||||||||||||||||||||||||||||||
Class I Shares: |
| ||||||||||||||||||||||||||||||||||
2014 | $ | 12.43 | $ | 0.29 | $ | 1.20 | $ | 1.49 | $ | (0.30 | ) | $ | — | $ | (0.30 | ) | |||||||||||||||||||
2013 | 9.83 | 0.21 | 2.61 | 2.82 | (0.22 | ) | — | (0.22 | ) | ||||||||||||||||||||||||||
2012 | 9.05 | 0.21 | 0.79 | 1.00 | (0.22 | ) | — | (0.22 | ) | ||||||||||||||||||||||||||
2011 | 8.68 | 0.19 | 0.37 | 0.56 | (0.19 | )‡ | — | (0.19 | ) | ||||||||||||||||||||||||||
2010 | 7.83 | 0.16 | 0.85 | 1.01 | (0.16 | )‡ | — | (0.16 | ) | ||||||||||||||||||||||||||
HIGH GRADE INCOME FUND | |||||||||||||||||||||||||||||||||||
Class I Shares: |
| ||||||||||||||||||||||||||||||||||
2014 | $ | 9.78 | $ | 0.23 | $ | 0.33 | $ | 0.56 | $ | (0.23 | ) | $ | (0.06 | ) | $ | (0.29 | ) | ||||||||||||||||||
2013 | 10.51 | 0.22 | (0.50 | ) | (0.28 | ) | (0.22 | ) | (0.23 | ) | (0.45 | ) | |||||||||||||||||||||||
2012 | 10.44 | 0.26 | 0.26 | 0.52 | (0.26 | ) | (0.19 | ) | (0.45 | ) | |||||||||||||||||||||||||
2011 | 10.42 | 0.35 | 0.36 | 0.71 | (0.34 | ) | (0.35 | ) | (0.69 | ) | |||||||||||||||||||||||||
2010 | 10.65 | 0.41 | 0.18 | 0.59 | (0.40 | ) | (0.42 | ) | (0.82 | ) | |||||||||||||||||||||||||
HAWAII MUNICIPAL BOND FUND | |||||||||||||||||||||||||||||||||||
Class I Shares: | |||||||||||||||||||||||||||||||||||
2014 | $ | 10.52 | $ | 0.29 | $ | 0.38 | $ | 0.67 | $ | (0.29 | ) | $ | (0.02 | ) | $ | (0.31 | ) | ||||||||||||||||||
2013 | 11.13 | 0.29 | (0.57 | ) | (0.28 | ) | (0.29 | ) | (0.04 | ) | (0.33 | ) | |||||||||||||||||||||||
2012 | 10.94 | 0.32 | 0.23 | 0.55 | (0.32 | ) | (0.04 | ) | (0.36 | ) | |||||||||||||||||||||||||
2011 | 10.41 | 0.36 | 0.53 | 0.89 | (0.36 | ) | — | (0.36 | ) | ||||||||||||||||||||||||||
2010 | 10.62 | 0.38 | (0.20 | ) | 0.18 | (0.38 | ) | (0.01 | ) | (0.39 | ) | ||||||||||||||||||||||||
Class A Shares: | |||||||||||||||||||||||||||||||||||
2014 | $ | 10.52 | $ | 0.26 | $ | 0.38 | $ | 0.64 | $ | (0.26 | ) | $ | (0.02 | ) | $ | (0.28 | ) | ||||||||||||||||||
2013 | 11.13 | 0.27 | (0.57 | ) | (0.30 | ) | (0.27 | ) | (0.04 | ) | (0.31 | ) | |||||||||||||||||||||||
2012 | 10.94 | 0.29 | 0.23 | 0.52 | (0.29 | ) | (0.04 | ) | (0.33 | ) | |||||||||||||||||||||||||
2011 | 10.41 | 0.33 | 0.53 | 0.86 | (0.33 | ) | — | (0.33 | ) | ||||||||||||||||||||||||||
2010 | 10.62 | 0.35 | (0.20 | ) | 0.15 | (0.35 | ) | (0.01 | ) | (0.36 | ) |
(1) | Per share net investment income calculated using average shares. |
** | Amount represents less than $0.01. |
† | Total return is for the period indicated and has not been annualized. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Fee waivers are in effect; if they had not been in effect, performance would have been lower. |
†† | Includes payment by affiliate of $0.03 per share. If payments by affiliates were not made, total return would have been decreased by 0.27%. (See Note 5) |
‡ | Includes return of capital of less than $0.01. |
Amounts | designated as “—” are either $0 or have been rounded to $0. |
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Net Asset Value, End of Year | Total Return† | Net Assets End of Year (000) | Ratio of Expenses to Average Net Assets | Ratio of Expenses to Average Net Assets (Excluding Waivers) | Ratio of Net Investments Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||
$ | 14.28 | 7.94 | % | $ | 50,241 | 1.15 | % | 1.38 | % | (0.83 | )% | 44 | % | |||||||||||||||||||||
14.56 | 35.03 | 56,998 | 1.17 | 1.40 | (0.26 | ) | 130 | |||||||||||||||||||||||||||
13.56 | 11.05 | †† | 46,644 | 1.17 | 1.40 | 0.21 | 68 | |||||||||||||||||||||||||||
12.24 | (3.24 | ) | 50,413 | 1.16 | 1.39 | (0.12 | ) | 53 | ||||||||||||||||||||||||||
12.65 | 18.89 | 50,054 | 1.14 | 1.37 | (0.12 | ) | 53 | |||||||||||||||||||||||||||
$ | 13.62 | 12.08 | % | $ | 55,665 | 1.05 | % | 1.37 | % | 2.27 | % | 21 | % | |||||||||||||||||||||
12.43 | 28.84 | 61,460 | 1.05 | 1.38 | 1.87 | 13 | ||||||||||||||||||||||||||||
9.83 | 11.07 | 57,137 | 1.05 | 1.38 | 2.19 | 17 | ||||||||||||||||||||||||||||
9.05 | 6.53 | 58,686 | 1.05 | 1.38 | 2.16 | 11 | ||||||||||||||||||||||||||||
8.68 | 13.07 | 53,864 | 1.05 | 1.47 | 1.98 | 84 | ||||||||||||||||||||||||||||
$ | 10.05 | 5.77 | % | $ | 74,642 | 0.76 | % | 1.20 | % | 2.32 | % | 28 | % | |||||||||||||||||||||
9.78 | (2.69 | ) | 74,007 | 0.76 | 1.21 | 2.18 | 35 | |||||||||||||||||||||||||||
10.51 | 5.05 | 85,771 | 0.76 | 1.20 | 2.47 | 39 | ||||||||||||||||||||||||||||
10.44 | 6.94 | 93,106 | 0.76 | 1.17 | 3.31 | 52 | ||||||||||||||||||||||||||||
10.42 | 5.63 | 103,885 | 0.76 | 1.16 | 3.79 | 39 | ||||||||||||||||||||||||||||
$ | 10.88 | 6.36 | % | $ | 132,540 | 0.55 | % | 0.99 | % | 2.66 | % | 27 | % | |||||||||||||||||||||
10.52 | (2.47 | ) | 126,289 | 0.55 | 1.01 | 2.72 | 29 | |||||||||||||||||||||||||||
11.13 | 5.06 | 134,179 | 0.55 | 0.99 | 2.86 | 23 | ||||||||||||||||||||||||||||
10.94 | 8.72 | 130,345 | 0.55 | 0.97 | 3.41 | 32 | ||||||||||||||||||||||||||||
10.41 | 1.70 | 132,392 | 0.55 | 0.97 | 3.54 | 35 | ||||||||||||||||||||||||||||
$ | 10.88 | 6.10 | % | $ | 22,324 | 0.80 | % | 1.24 | % | 2.41 | % | 27 | % | |||||||||||||||||||||
10.52 | (2.72 | ) | 24,359 | 0.80 | 1.26 | 2.47 | 29 | |||||||||||||||||||||||||||
11.13 | 4.80 | 25,660 | 0.80 | 1.24 | 2.61 | 23 | ||||||||||||||||||||||||||||
10.94 | 8.45 | 23,381 | 0.80 | 1.22 | 3.16 | 32 | ||||||||||||||||||||||||||||
10.41 | 1.44 | 28,160 | 0.80 | 1.22 | 3.29 | 35 |
The accompanying notes are an integral part of the financial statements.
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Bishop Street Funds |
December 31, 2014
The amounts included in the Notes to Financial Statements are in thousands unless otherwise noted.
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 four funds (each a Fund, collectively the “Funds”) which includes the Strategic Growth Fund, Dividend Value Fund, High Grade Income Fund, and the Hawaii Municipal Bond Fund. Each Fund is diversified, with the exception of Hawaii Municipal Bond Fund, which is non-diversified. Class A Shares of the Hawaii Municipal Bond Fund 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.
Use of Estimates in the Preparation of Financial Statements
The Trust is an investment company in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Therefore, the Trust follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of assets, 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.
Security Valuation
The Funds’ investments in equity securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ) including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. Debt securities are priced based upon valuations provided by independent, third-party pricing agents, if available. Such values generally reflect the last reported sales price in the most advantageous market, if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the fair value for such securities. Such
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methodologies typically include matrix systems which reflect such factors as security prices, yields, maturities and ratings. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents.
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain a bid price from at least one independent broker.
Securities for which market prices are not the above methods are valued in accordance with Fair Value Procedures established by the Funds’ Board of Trustees (the “Board”). The Funds’ Fair Value Procedures are implemented through a Fair Value Pricing Committee (the “Committee”) designated by the Funds’ Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security’s trading has been halted or suspended; the security has been delisted from a national exchange; the security’s primary trading market is temporarily closed at a time when under normal conditions it would be open; or the security’s primary pricing source is not able or willing to provide a price. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee.
In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Funds disclose fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
• | Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Funds have the ability to access at the measurement date; |
• | Level 2 — Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, referenced indices, quoted prices in inactive markets, adjusted quoted prices in active markets, etc.); and |
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Bishop Street Funds |
• | Level 3 — Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
Investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement.
As of December 31, 2014, all investments in the Strategic Growth Fund and Dividend Value Fund were considered level 1. There were no significant transfers between Level 1, Level 2 and Level 3 assets and liabilities. For the year ended December 31, 2014 there were no Level 3 investments.
The following is a summary of the inputs used as of December 31, 2014 in valuing the following Fund’s investments carried at value:
High Grade Income Fund | ||||||||||||||||
Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Obligations | $ | — | $ | 44,469 | $ | — | $ | 44,469 | ||||||||
U.S. Treasury Obligations | — | 12,513 | — | 12,513 | ||||||||||||
Municipal Bonds | — | 7,640 | — | 7,640 | ||||||||||||
U.S. Government Agency | ||||||||||||||||
Obligations | — | 5,574 | — | 5,574 | ||||||||||||
U.S. Government Mortgage-Backed | ||||||||||||||||
Obligations | — | 2,445 | — | 2,445 | ||||||||||||
Non-Agency Mortgage-Backed | ||||||||||||||||
Obligation | — | 825 | — | 825 | ||||||||||||
Short-Term Investment | 588 | — | — | 588 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 588 | $ | 73,466 | $ | — | $ | 74,054 | ||||||||
|
| |||||||||||||||
Hawaii Municipal Bond Fund | ||||||||||||||||
Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Municipal Bonds | $ | — | $ | 152,299 | $ | — | $ | 152,299 | ||||||||
Short-Term Investment | 543 | — | — | 543 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 543 | $ | 152,299 | $ | — | $ | 152,842 | ||||||||
|
|
For the year ended December 31, 2014, there were no transfers between Level 1 and Level 2 assets and liabilities. For the year ended December 31, 2014, there have been no significant changes to the Funds’ fair value methodologies. For the year ended December 31, 2014 there were no Level 3 investments.
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Federal Income Taxes
It is each Fund’s intention to continue to qualify as a regulated investment company for federal income tax purposes under Subchapter M of the Internal Revenue Code, as amended, and to distribute substantially all of its taxable income and net capital gains. Accordingly, no provision for federal income taxes is required.
The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether it is “more-likely-than- not” (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax provision in the current period. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., the last 3 open tax year ends, as applicable), on-going analysis of and changes to tax laws, regulations and interpretations thereof.
Security Transactions and Investment Income
Security transactions are accounted for on trade date. Costs used in determining net realized capital gains and losses on the sale of securities are on the basis of specific identification. Interest income is recorded on the accrual basis from settlement date and dividend income is recorded on ex-dividend date.
Discounts and premiums are accreted or amortized over the life of each security and are recorded as interest income. The High Grade Income and Hawaii Municipal Bond Funds use the effective interest method.
Classes
Class-specific expenses are borne by the applicable class of shares. Income, realized and unrealized gains/losses and non class-specific expenses are allocated to the respective class on the basis of relative daily net assets. Distribution fees are the only class-specific expense.
Expenses
Expenses that are directly related to one of the Funds are charged directly to that Fund. Other operating expenses of the Trust are prorated to each of the Funds on the basis of relative net assets.
Dividends and Distributions to Shareholders
The Strategic Growth and Dividend Value Funds declare and pay dividends from net investment income, if available, on a quarterly basis. Dividends from net investment income are declared daily and paid on a monthly basis for the High Grade Income and
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Bishop Street Funds |
Hawaii Municipal Bond. Any net realized capital gains will be distributed at least annually for all Funds. Distributions to shareholders are recorded on the ex-dividend date.
Front-End Sales Commission
Front-end sales commissions (the “sales charges”) are not recorded as expenses of the Hawaii Municipal Bond Fund. Sales charges are deducted from proceeds from the sales of Hawaii Municipal Bond Fund shares prior to investment in Class A shares.
Cash Overdraft Charges
Per the terms of the agreement with MUFG Union Bank, N.A. (formerly Union Bank, N.A.) the custodian of the Funds (the “Custodian”), if a Fund has a cash overdraft on a given day, it will be assessed an overdraft charge of the Prime Rate plus 4.00%. Cash overdraft charges are included in miscellaneous expenses on the Statements of Operations. For the year ended December 31, 2014, there were no cash overdraft charges.
3. | INVESTMENT ADVISORY AGREEMENT |
Investment advisory services are provided to the Funds by Bishop Street Capital Management (the “Adviser”), a registered adviser and wholly owned subsidiary of First Hawaiian Bank. First Hawaiian Bank is a subsidiary of BancWest Corporation, itself a subsidiary of BNP Paribas. The Adviser is entitled to receive an annual fee of 0.74% of the average daily net assets of the Strategic Growth and the Dividend Value Funds, 0.55% of the average daily net assets of the High Grade Income Fund, and 0.35% of the average daily net assets of the Hawaii Municipal Bond Fund. The Adviser has contractually agreed to waive a portion of its advisory fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. The contractual expense limitations are as follows:
Strategic Growth Fund, Class I Shares | 1.25% | |||
Dividend Value Fund, Class I Shares | 1.05% | |||
High Grade Income Fund, Class I Shares | 0.76% | |||
Hawaii Municipal Bond Fund, Class I Shares | 0.55% | |||
Hawaii Municipal Bond Fund, Class A Shares | 0.80% |
These fees and waivers are labeled on the Statement of Operations as “Investment Adviser Fees/Waivers.”
If at any point it becomes unnecessary for the Adviser to reduce fees and make expense reimbursements, the Board may permit the Adviser to retain the difference between the Total Annual Fund Operating Expenses and contractual expense limitations to recapture all or a portion of its prior expense reductions or reimbursements
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made during the preceding three year period during which this agreement was in place. During the year ended December 31, 2014, the Adviser did not recapture any previously waived fees.
As of December 31, 2014, fees which were previously waived by the Investment Manager which may be subject to possible future reimbursement to the Adviser were as follows:
Dividend | High Grade Income Fund | Hawaii Municipal Bond Fund | Total | Expires | ||||||||||||||
$ | 62 | $ | 193 | $ | 250 | $ | 505 | 12/31/2015 | ||||||||||
56 | 179 | 282 | 517 | 12/31/2016 | ||||||||||||||
53 | 160 | 237 | 450 | 12/31/2017 |
Columbia Management Investment Advisers, LLC (“Columbia”) serves as the investment sub-adviser for the Strategic Growth Fund and the Dividend Value Fund, pursuant to a sub-adviser agreement. Columbia is entitled to receive from the Adviser a fee, computed daily and paid monthly, at the annual rate based on the average daily net assets of the Strategic Growth Fund and the Dividend Value Fund, under the following fee schedule: 0.360% on the first $75 million; 0.350% on the next $75 million; 0.325% on the next $100 million; 0.300% on the next $250 million; and 0.250% on assets over $500 million.
4. | ADMINISTRATIVE, CUSTODIAN, TRANSFER AGENT AND DISTRIBUTION SERVICES |
The Funds and the Administrator are parties to an Administration Agreement under which the Administrator provides administrative services to the Funds. For these services, the Administrator is paid an asset based fee which will vary depending the number of share classes and the on the average daily net assets of the Funds. For the fiscal year ended December 31, 2014, the Funds were charged as follows for these services: $106 in the Strategic Growth Fund, $114 in the Dividend Value Fund, $150 in the High Grade Income Fund and $305 in the Hawaii Municipal Bond Fund.
MUFG Union Bank, N.A. (formerly Union Bank, N.A.) acts as custodian for the Funds. The Custodian plays no role in determining the investment policies of the Funds or which securities are to be purchased or sold by the Funds. These fees are labeled on the Statement of Operations as “Custody Fees.”
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. These fees are disclosed on the Statement of Operations as “Transfer Agent Fees.”
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Bishop Street Funds |
SEI Investments Distribution Co. (“SIDCO”), the “Distributer” a wholly owned subsidiary of SEI Investments Company, acts as the Trust’s Distributor pursuant to the distribution agreement. The Funds have adopted a Distribution Plan (the “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. SIDCO, 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. This fee is disclosed as “Distribution Fees, Class A” on the Statement of Operations.
The Trust has adopted and entered into a shareholder service plan and agreement with SIDCO. Each Fund pays to SIDCO a shareholder servicing fee not to exceed 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. Under the shareholder service plan, SIDCO may perform, or may compensate other service providers for performing various shareholder and administrative services. SIDCO may also retain as profit any difference between the fee it receives and amount it pays to third parties. For the period, SIDCO paid the entire amount of fees received under the shareholder service plan to First Hawaiian Bank, the Parent Company of Bishop Street Capital Management, for shareholder services performed for the Funds. SIDCO has voluntarily agreed to waive 0.15% of its shareholder servicing fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. These fees and waivers are represented as “Shareholder Servicing Fees/Waivers” on the Statement of Operations.
5. | TRANSACTIONS WITH AFFILIATES |
Certain officers of the Trust are also officers of SEI Investments Global Funds Services (the “Administrator”), a wholly owned subsidiary of SEI Investments Company, and/or SIDCO. Such officers are paid no fees by the Trust other than the Chief Compliance Officer (“CCO”) as described below, for serving as officers of the Trust.
A portion of the services provided by the CCO and his staff, who are employees of the Administrator, are paid for by the Trust as incurred. The services include regulatory oversight of the Trust’s Advisers and service providers as required by SEC regulations. The CCO’s services and expenses have been approved by and are reviewed by the Board. These fees are disclosed on the Statement of Operations as “Chief Compliance Officer Fees.”
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6. | INVESTMENT TRANSACTIONS |
The cost of security purchases and the proceeds from the sale and maturities of securities, other than short-term investments, for the year ended December 31, 2014 are presented below for the Funds.
Strategic Growth Fund | Dividend Value Fund | High Grade Income Fund | Hawaii Municipal Bond Fund | |||||||||||||
Purchases | ||||||||||||||||
U.S. Government Securities | $ | — | $ | — | $ | 3,514 | $ | — | ||||||||
Other | 23,408 | 11,906 | 16,747 | 42,342 | ||||||||||||
Sales and Maturities | ||||||||||||||||
U.S. Government Securities | $ | — | $ | — | $ | 2,722 | $ | — | ||||||||
Other | 34,467 | 23,355 | 17,071 | 40,862 |
7. | FEDERAL TAX INFORMATION |
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with Federal tax regulations which may differ from accounting principles generally accepted in the United States of America.
As a result, net investment income (loss) and net realized gain (loss) on investment transactions for the reporting period may differ from distributions during such period. These book/tax differences may be temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to undistributed net investment income/(loss), paid-in capital or accumulated net realized gain/(loss), as appropriate, in the period that the differences arise.
Accordingly, the following permanent differences, primarily attributable to investments in paydown gains and losses, market discount, REIT adjustments, net operating loss offsetting short term capital gain, and distributions have been reclassified:
Undistributed Net Investment Income | Accumulated Net Realized Loss | |||||||
Strategic Growth Fund | 438 | (438 | ) | |||||
Dividend Value Fund | 4 | (4 | ) | |||||
High Grade Income Fund | 1 | (1 | ) | |||||
Hawaii Municipal Bond Fund | — | — |
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Bishop Street Funds |
The tax character of dividends and distributions declared during the years ended December 31, 2014 and 2013 were as follows:
Ordinary Income | Tax Exempt Income | Long Term Capital Gain | Total | |||||||||||||
Strategic Growth Fund | ||||||||||||||||
2014 | $ | 2,358 | $ | — | $ | 2,501 | $ | 4,859 | ||||||||
2013 | 745 | — | 10,938 | 11,683 | ||||||||||||
Dividend Value Fund | ||||||||||||||||
2014 | $ | 1,298 | $ | — | $ | — | $ | 1,298 | ||||||||
2013 | 1,091 | — | — | 1,091 | ||||||||||||
High Grade Income Fund | ||||||||||||||||
2014 | $ | 1,762 | $ | — | $ | 400 | $ | 2,162 | ||||||||
2013 | 1,746 | — | 1,725 | 3,471 | ||||||||||||
Hawaii Municipal Bond Fund | ||||||||||||||||
2014 | $ | — | $ | 3,987 | $ | 231 | $ | 4,218 | ||||||||
2013 | 4 | 4,217 | 631 | 4,852 |
As of December 31, 2014, the components of Distributable Earnings (Accumulated Losses) on a tax basis were as follows:
Strategic Growth Fund | Dividend Value Fund | High Grade Income Fund | Hawaii Municipal Bond Fund | |||||||||||||
Undistributed Tax Exempt Income | — | — | — | 4 | ||||||||||||
Undistributed Long-Term Capital Gain Income | 633 | — | 89 | 70 | ||||||||||||
Capital Loss Carryforwards | — | (7,703 | ) | — | — | |||||||||||
Post October Losses | (194 | ) | — | — | — | |||||||||||
Unrealized Appreciation | 6,092 | 17,018 | 3,243 | 5,729 | ||||||||||||
Other Temporary Differences | — | — | — | 1 | ||||||||||||
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Total Distributable Earnings | $ | 6,531 | $ | 9,315 | $ | 3,332 | $ | 5,804 | ||||||||
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Post-October losses represent losses realized on investment transactions from November 1, 2014 through December 31, 2014 that, in accordance with Federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
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For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward for a maximum period of eight years and applied against future capital gains as follows:
Dividend Value Fund | ||||
Dec. 2017 | $ | 5,865 | ||
Dec. 2018 | 1,838 | |||
Total | $ | 7,703 |
During the period ended December 31, 2014, the Dividend Value Fund utilized capital loss carryforwards of $8,095.
For Federal income tax purposes, capital losses incurred may be carried forward and applied against future capital gains. Under the Regulated Investment Company Modernization Act of 2010, Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Additionally, postenactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
During the fiscal year ending December 31, 2014, the Hawaii Municipal Bond Fund fully utilized unlimited capital loss carryforwards $260 to offset realized capital gains, and there were no Capital loss carryforwards that were not subject to expiration.
For Federal income tax purposes, the cost of securities owned at December 31, 2014, and the net realized gains or losses on securities sold for the period were not materially different from amounts reported for financial reporting purposes. These differences are primarily due to wash sales which cannot be used for Federal income tax purposes in the current year and have been deferred for use in future years. The aggregate gross unrealized appreciation and depreciation of securities held by the Strategic Growth, Dividend Value, High Grade Income, and Hawaii Municipal Bond Funds for Federal income tax purposes at December 31, 2014 were as follows:
Strategic Growth Fund | Dividend Value Fund | High Grade Income Fund | Hawaii Municipal Bond Fund | |||||||||||||
Federal Tax Cost | $ | 44,228 | $ | 39,064 | $ | 70,811 | $ | 147,113 | ||||||||
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Gross Unrealized Appreciation | 7,176 | 17,255 | 3,505 | 5,904 | ||||||||||||
Gross Unrealized Depreciation | (1,084 | ) | (237 | ) | (262 | ) | (175 | ) | ||||||||
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Net Unrealized Appreciation | $ | 6,092 | $ | 17,018 | $ | 3,243 | $ | 5,729 | ||||||||
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December 31, 2014 | www.bishopstreetfunds.com |
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Bishop Street Funds |
8. | RISKS |
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. In addition, each Fund’s investments in debt securities are subject to “credit risk,” which is the risk that an issuer will be unable, or will be perceived to be unable, to repay its obligations at maturity. Funds that invest primarily in high quality debt securities generally are subject to less credit risk than funds that invest in lower quality debt securities.
Certain debt securities are backed by credit enhancements from various financial institutions and financial guarantee assurance agencies. These credit enhancements reinforce the credit quality of the individual securities; however, if any of the financial institutions or financial guarantee assurance agencies’ credit quality should deteriorate, it could cause the individual security’s credit quality to change. Additionally, if any of the Funds concentrate their credit enhancements in any one financial institution, the risk of credit quality deterioration increases. The following table provides detail on the approximate percentage of each fund’s investments in securities with these types of enhancements, as well as the name of the entity providing the largest proportion of enhancements in the Fund.
Hawaii Municipal Bond Fund | ||
% of investments in securities with credit enhancements or liquidity enhancements | 27.70% | |
Largest % of investments in securities with credit enhancements or liquidity enhancements from a single institution | 8.60% (National Public Finance Guarentee Corporation) |
The value of asset-backed securities may be affected by the credit risk of the servicing agent for the pool, the originator of the loans or receivables, or the financial institution(s) providing the credit support. In addition to credit risk, asset-backed securities and other securities with early redemption features are subject to pre-payment risk. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate or an issuer may retire an outstanding bond early to reduce interest costs. A Fund’s ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to the general prevailing interest rates at that time.
Bishop Street Funds |
66
In the normal course of business, the Funds enter into contracts that provide general indemnifications. The Funds’ maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be established; however, based on experience, the risk of loss from such claims is considered remote.
9. | LINE OF CREDIT |
The Funds, which are not jointly liable, entered into an agreement which enables them to participate in a $5 million unsecured committed revolving line of credit on a first come, first served basis, with MUFG Union Bank, N.A. (formerly Union Bank, N.A.) (the “Bank”). The proceeds from the borrowings shall be used to finance the Funds’ short term general working capital requirements, including the funding of shareholder redemptions. Interest is charged to the Funds based on their borrowings during the period at the Bank current reference rate minus 1%.
For the year ended December 31, 2014, the Funds had the following borrowings under the line of credit:
Fund | Average Borrowings (000) | Borrowing Costs (000) | Number of Days outstanding | Weighted Average Interest Rate | ||||||||||||
Strategic Growth Fund | $ | 5 | $ | 1 | 9 | 2.25 | % |
10. | OTHER |
At December 31, 2014, the percentage of total shares outstanding held by shareholders for each Fund, which comprised omnibus accounts that were held on behalf of several individual shareholders, was as follows:
Number of Shareholders | % of Outstanding Shares | |||||||
Strategic Growth Fund, Class I Shares | 3 | 96.48 | % | |||||
Dividend Value Fund, Class I Shares | 2 | 98.17 | ||||||
High Grade Income Fund, Class I Shares | 3 | 91.98 | ||||||
Hawaii Municipal Bond Fund, Class A Shares | 1 | 65.59 | ||||||
Hawaii Municipal Bond Fund, Class I Shares | 1 | 5.13 |
11. | SUBSEQUENT EVENTS |
The Funds have evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were available to be issued. Based on this evaluation, no additional disclosures or adjustments were required to the financial statements.
December 31, 2014 | www.bishopstreetfunds.com |
67
Bishop Street Funds |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Bishop Street Funds and Shareholders of the Funds as defined:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Strategic Growth Fund, Dividend Value Fund, High Grade Income Fund, and Hawaii Municipal Bond Fund (constituting Bishop Street Funds, hereafter referred to as the “Funds”) at December 31, 2014, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 2, 2015
Bishop Street Funds |
68
Bishop Street Funds | (unaudited) |
All mutual funds have operating expenses. As a shareholder of a mutual fund you incur two types of costs: (1) transaction costs, including applicable sales charges (loads); and (2) ongoing costs, which include (among others) costs for portfolio management, administrative services, distribution and service (12b-1), shareholder service fees, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns.
Operating expenses such as these are deducted from a mutual fund’s gross income and directly reduce its final investment return. These expenses are expressed as a percentage of the mutual fund’s average net assets; this percentage is known as the mutual fund’s expense ratio.
The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The table on the next page illustrates your Fund’s costs in two ways:
• | Actual Fund Return. This section helps you to estimate the actual expenses after fee waivers that your Fund incurred over the period. The “Expenses Paid During Period” column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the “Ending Account Value” number is derived from deducting that expense cost from the Fund’s gross investment return. |
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under “Expenses Paid During Period.”
• | Hypothetical 5% Return. This section helps you compare your Fund’s costs with those of other mutual funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Fund’s comparative cost by comparing the hypothetical result for your Fund in the “Expenses Paid During Period” column with those that appear in the same charts in the shareholder reports for other funds. |
Note: Because the return is set at 5% for comparison purposes — NOT your Fund’s actual return — the account values shown may not apply to your specific investment.
December 31, 2014 | www.bishopstreetfunds.com |
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Bishop Street Funds | (unaudited) |
Beginning Account Value 7/1/14 | Ending Account Value 12/31/14 | Annualized Expense Ratios | Expenses Paid During Period* | |||||||||||||
Strategic Growth Fund — Class I |
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Actual Fund Return | $ | 1,000.00 | $ | 1,066.20 | 1.15 | % | $ | 5.98 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,019.42 | 1.15 | 5.84 | ||||||||||||
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Dividend Value Fund — Class I |
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Actual Fund Return | $ | 1,000.00 | $ | 1,059.30 | 1.05 | % | $ | 5.45 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,019.91 | 1.05 | 5.35 | ||||||||||||
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High Grade Income Fund — Class I |
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Actual Fund Return | $ | 1,000.00 | $ | 1,017.70 | 0.76 | % | $ | 3.87 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.37 | 0.76 | 3.87 | ||||||||||||
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Hawaii Municipal Bond Fund — Class I |
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Actual Fund Return | $ | 1,000.00 | $ | 1,021.40 | 0.55 | % | $ | 2.80 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,022.43 | 0.55 | 2.80 | ||||||||||||
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Hawaii Municipal Bond Fund — Class A |
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Actual Fund Return | $ | 1,000.00 | $ | 1,021.10 | 0.80 | % | $ | 4.08 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.17 | 0.80 | 4.08 | ||||||||||||
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* | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
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Bishop Street Funds | (unaudited) |
Notice to Shareholders of Bishop Street Funds
For shareholders that do not have a December 31, 2014 taxable year end, this notice is for informational purposes only. For shareholders with a December 31, 2014 tax year end, please consult your tax adviser as to the pertinence of this notice.
Fund | (A)* Long Term Capital Gains Distributions (Tax Basis) | (B)* Ordinary Income Distributions (Tax Basis) | (C)* Tax Exempt Interest | (A+B+C) (D) Total Distributions (Tax Basis) | ||||||||||||
Strategic Growth Fund | 51.47 | % | 48.53 | % | 0.00 | % | 100.00 | % | ||||||||
Dividend Value Fund | 0.00 | % | 100.00 | % | 0.00 | % | 100.00 | % | ||||||||
High Grade Income Fund | 18.48 | % | 81.52 | % | 0.00 | % | 100.00 | % | ||||||||
Hawaii Municipal Bond Fund | 5.47 | % | 0.00 | % | 94.53 | % | 100.00 | % |
* | Items (A), (B) and (C) are based on the percentage of each fund’s total distribution. |
(1) | Qualifying dividends represent dividends which qualify for the corporate dividends received deduction and is reflected as a percentage of ordinary income distributions (the total of short-term capital gain and net investment income distributions). |
(2) | The percentage in this column represents the amount of “Qualifying Dividend Income” as created by the Jobs and Growth Tax Relief Reconciliation Act of 2003 and is reflected as a percentage of “Ordinary Income Distributions” (the total of short term capital gain and net investment income distributions). It is the intention of the Fund to designate the maximum amount permitted by the law. |
(3) | “U.S. Government Interest” represents the amount of interest that was derived from direct U.S. Government Obligations and distributed during the fiscal year. This amount is reflected as a percentage of total ordinary income distributions (the total of short term capital gain and net investment income distributions). Generally, interest from direct U.S. Government Obligations is exempt from state income tax. However, for residents of California, Connecticut and New York, the statutory threshold requirements were not satisfied to permit exemption of these amounts from state income. |
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For the fiscal year ended December 31, 2014, each fund has designated the following items with regard to distributions paid during the year.
(E) for Corporate | (F) Qualifying Dividend Income(2) | (G) U.S. Government Interest(3) | (H) Interest Related Dividends(4) | (I) Short-Term Capital Gain Dividends (5) | ||||||||||||||
13.03 | % | 13.23 | % | 0.00 | % | 0.00 | % | 100.00 | % | |||||||||
100.00 | % | 100.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
0.00 | % | 0.00 | % | 20.74 | % | 98.28 | % | 100.00 | % | |||||||||
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % |
(4) | The percentage in this column represents the amount of “Interest Related Dividends” as created by the American Jobs Creation Act of 2004 and is reflected as a percentage of net investment income distributions that is exempt from U.S. withholding tax when paid to foreign investors. |
(5) | The percentage in this column represents the amount of “Short-Term Capital Gain Dividends” as created by the American Jobs Creation Act of 2004 and is reflected as a percentage of short-term capital gain distributions that is exempt from U.S. withholding tax when paid to foreign investors. |
December 31, 2014 | www.bishopstreetfunds.com |
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Bishop Street Funds |
Board of Trustees and Officers
Set forth below are the names, age, position with the Trust, length of term of office, and the principal occupations for the last five years of each of the persons currently serving as Trustees and Officers of the Trust. Trustees who are deemed not to be “interested persons” of the Trust are referred to as “Independent Board Members.” Messrs. Nesher and Doran are Trustees who may be deemed to be “interested” persons of the Trust as that term is defined in the 1940 Act
Name, Address, Age1 | Position(s) Held with the Trust and Length of Time Served2 | Principal Occupation(s) During the Past 5 Years | ||
INTERESTED BOARD MEMBERS3,4 | ||||
ROBERT NESHER 68 yrs. old | Chairman of the Board of Trustees (Since 1991) | SEI employee 1974 to present; currently performs various services on behalf of SEI Investments for which Mr. Nesher is compensated. Vice Chairman of the Advisors’ Inner Circle Fund III, O’Connor EQUUS and Winton Series Trust. President and Director of SEI Structured Credit Fund, LP. President and Chief Executive Officer of SEI Alpha Strategy Portfolios, LP, June 2007 to present. President and Director of SEI Opportunity Fund, L.P. to 2010. | ||
WILLIAM M. DORAN 1701 Market Street Philadelphia, PA 19103 74 yrs. old | Trustee (Since 1991) | Self-Employed Consultant since 2003. Partner at Morgan, Lewis & Bockius LLP (law firm) from 1976 to 2003, counsel to the Trust, SEI Investments, SIMC, the Administrator and the Distributor. | ||
INDEPENDENT BOARD MEMBERS4 | ||||
JOHN K. DARR 70 yrs. old | Trustee (Since 2008) | Retired. CEO, Office of Finance, Federal Home Loan Bank, from 1992 to 2007. | ||
JOSEPH T. GRAUSE, JR. 62 yrs. old | Trustee (Since 2011) | Self-employed consultant since January 2012. Director of Endowments and Foundations, Morningstar Investment Management, Morningstar, Inc., February 2010 to May 2011; Director of International Consulting and Chief Executive Officer of Morningstar Associates Europe Limited, Morningstar, Inc., May 2007 to February 2010. |
1 | Unless otherwise noted, the business address of each trustee is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. |
2 | Each Trustee shall hold office during the lifetime of this trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns, or is removed in accordance with the Trust’s Declaration of Trust |
3 | Denotes Trustees who may be deemed to be “interested” persons of the Fund as that term is defined in the 1940 Act by virtue of their affiliation with the Distributor and/or its affiliates. |
4 | Board Members oversee 4 funds in the Bishop Street Funds. |
Bishop Street Funds |
74
(unaudited) |
by virtue of their affiliation with the Trust’s Distributor. The Trust’s Statement of Additional Information (“SAI”) includes additional information about the Trustees and Officers. The SAI may be obtained without charge by calling 1-800-262-9565. The following chart lists Trustees and Officers as of December 31, 2014.
Other Directorships Held by Board Member5 |
Current Directorships: Trustee of The Advisor’s Inner Circle Fund., The Advisor’s Inner Circle Fund II, The KP Funds, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Asset Allocation Trust, SEI Tax Exempt Trust, Adviser Managed Trust, New Covenant Funds and SEI Insurance Products Trust . President and Director of SEI Structured Credit Fund, L.P. Director of SEI Global Master Fund PLC, SEI Global Assets Fund PLC, SEI Global Investments Fund PLC, SEI Investments — Global Funds Services, Limited, SEI Investments Global, Limited, SEI Investments (Europe) Ltd., SEI Investments — Unit Trust Management (UK) Limited, SEI Multi-Strategy Funds PLC and SEI Global Nominee Ltd.
Former Directorships: Director of SEI Opportunity Fund, L.P. to 2010 and Director of the SEI Alpha Strategy Portfolio LP to 2013. |
Current Directorships: Trustee of The Advisor’s Inner Circle Fund, The Advisors’ Inner Circle Fund II, Advisors’ Inner Circle Fund III, O’Connor EQUUS, Winton Series Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Asset Allocation Trust, SEI Tax Exempt Trust, Adviser Managed Trust, New Covenant Funds, SEI Insurance Products Trust and The KP Funds. Director of SEI Investments (Europe), Limited, SEI Investments — Global Funds Services, Limited, SEI Investments Global, Limited, SEI Investments (Asia), Limited, SEI Global Nominee Ltd. and SEI Investments — Unit Trust Management (UK) Limited. Director of the Distributor since 2003.
Former Directorships: Director of the SEI Alpha Strategy Portfolio LP to 2013. |
Current Directorships: Trustee of The Advisor’s Inner Circle Fund, The Advisors’ Inner Circle Fund II, and The KP Funds. Director, Federal Home Loan Bank of Pittsburgh. Director, Manna, Inc. (non-profit developer of affordable housing for ownership). |
Current Directorships: Trustee of The Advisor’s Inner Circle Fund, The Advisors’ Inner Circle Fund II, and The KP Funds. Director, The Korea Fund, Inc. |
5 | Directorships of Companies required to report to the securities and Exchange Commission under the Securities Exchange act of 1934 (i.e., “public companies”) or other investment companies under the 1940 act. |
December 31, 2014 | www.bishopstreetfunds.com |
75
Bishop Street Funds |
Name, Address, Age1 | Position(s) Held and Length of Time Served2 | Principal Occupation(s) During the Past 5 Years | ||
INDEPENDENT BOARD MEMBERS3 (continued) | ||||
MITCHELL A. JOHNSON 72 yrs. old | Trustee (Since 2005) | Retired. Private investor and self-employed consultant (strategic investments). | ||
BETTY L. KRIKORIAN 71 yrs. old | Trustee (Since 2005) | Vice President, Compliance, AARP Financial Inc. from 2008 – 2010. Self-Employed Legal and Financial Services Consultant since 2003. | ||
BRUCE R. SPECA 58 yrs. old | Trustee (Since 2011) | Global Head of Asset Allocation, Manulife Asset Management (subsidiary of Manulife Financial), June 2010 to May 2011; Executive Vice President — Investment Management Services, John Hancock Financial Services (subsidiary of Manulife Financial), June 2003 to June 2010. | ||
GEORGE J. SULLIVAN, JR. 71 yrs. old | Trustee Lead Independent Trustee (Since 1999) | Retired since January 2012. Self-employed Consultant, Newfound Consultants Inc. April 1997 to December 2011. | ||
OFFICERS | ||||
MICHAEL BEATTIE 49 yrs. old | President (Since 2011) | Director of Client Service at SEI from 2004 to 2011. Vice President at SEI from 2009 to November 2011. | ||
RAMI ABDEL-RAHMAN 40 yrs. old | Treasurer, Controller and Chief Financial Officer (Since 2014) | Director, SEI Investments, Fund Accounting since June 2014. Fund Accounting Director, BNY Mellon from 2006 to 2014. |
1 | Unless otherwise noted, the business address of each trustee is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. |
2 | Each Trustee shall hold office during the lifetime of this trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns, or is removed in accordance with the Trust’s Declaration of Trust |
3 | Board Members oversee 4 funds in the Bishop Street Funds. |
Bishop Street Funds |
76
(unaudited) |
Other Directorships Held by Board Member/Trustee4 |
Current Directorships: Trustee of The Advisors’ Inner Circle Fund, The Advisors’ Inner Circle Fund II, The KP Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Managed Trust, SEI Institutional Investments Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, Adviser Managed Trust, New Covenant Funds and SEI Insurance Products Trust. Director, Federal Agricultural Mortgage Corporation (Farmer Mac) since 1997.
Former Directorships: Director of the SEI Alpha Strategy Portfolio LP to 2013. |
Current Directorships: Trustee of The Advisors’ Inner Circle Fund, The Advisors’ Inner Circle Fund II and The KP Funds. |
Current Directorships: Trustee of The Advisors’ Inner Circle Fund, The Advisors’ Inner Circle Fund II and The KP Funds. |
Current Directorships: Trustee/ Director of State Street Navigator Securities Lending Trust, The Advisors’ Inner Circle Fund, The Advisors’ Inner Circle Fund II, SEI Structured Credit Fund, LP, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Asset Allocation Trust, SEI Tax Exempt Trust, Adviser Managed Trust, New Covenant Funds, SEI Insurance Products Trust and The KP Funds; Member of the independent review committee for SEI’s Canadian-registered mutual funds.
Former Directorships: Director of SEI Opportunity Fund, L.P. to 2010, Director of the SEI Alpha Strategy Portfolio LP to 2013. |
None. |
None. |
4 | Directorships of Companies required to report to the securities and Exchange Commission under the Securities Exchange act of 1934 (i.e., “public companies”) or other investment companies under the 1940 act. |
December 31, 2014 | www.bishopstreetfunds.com |
77
Bishop Street Funds |
Name, Address, Age1 | Position(s) Held and Length of | Principal Occupation(s) During the Past 5 Years | ||
OFFICERS (continued) | ||||
RUSSELL EMERY 52 yrs. old | Chief Compliance Officer (Since 2006) | Chief Compliance Officer of SEI Structured Credit Fund, LP since 2007. Chief Compliance Officer of SEI Opportunity Fund, L.P., SEI Institutional Managed Trust, SEI Asset Allocation Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, The Advisors’ Inner Circle Fund, The Advisors’ Inner Circle Fund II and Bishop Street Funds since 2006; SEI Adviser Managed Trust since 2010, New Covenant Funds since 2012; SEI Insurance Products Trust and The KP Funds since 2013; The Advisors’ Inner Circle Fund III and O’Connor EQUUS. Winton Series Trust since 2014. | ||
DIANNE M. DESCOTEAUX 37 yrs. old | Vice President and Secretary (Since 2011) | Counsel at SEI Investments since 2010. Associate at Morgan, Lewis & Bockius LLP from 2006 to 2010.. | ||
LISA WHITTAKER 35yrs. old | Vice President and Assistant Secretary (Since 2013) | Attorney, SEI Investments Company (2012 – present). Associate Counsel, The Glenmede Trust Company (2011 – 2012). Associate, Drinker Biddle & Reath LLP (2006 – 2011). | ||
JOHN MUNCH 43 yrs. old | Vice President and Assistant Secretary (Since 2012) | Attorney at SEI Investments Company since 2001. | ||
JOHN Y. KIM 33 yrs. old | Vice President and Assistant Secretary (Since 2014) | Attorney. SEI Investments Company 2014 – present. Associate Stradley Ronon Stevens & Young (2009 – 2014). |
1 | Unless otherwise noted, the business address of each trustee is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. |
2 | Each Trustee shall hold office during the lifetime of this trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns, or is removed in accordance with the Trust’s Declaration of Trust |
Bishop Street Funds |
78
(unaudited) |
Held by Trustee |
None. |
None. |
None. |
None. |
None. |
December 31, 2014 | www.bishopstreetfunds.com |
79
INVESTMENT ADVISER
BISHOP STREET CAPITAL MANAGEMENT
HONOLULU, HI 96813
ADMINISTRATOR
SEI INVESTMENTS GLOBAL FUNDS SERVICES
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
TRANSFER AGENT
DST SYSTEMS, INC.
KANSAS CITY, MO 64121
CUSTODIAN
MUFG UNION BANK, N.A.
SAN FRANCISCO, CA 94101
LEGAL COUNSEL
MORGAN, LEWIS & BOCKIUS LLP
PHILADELPHIA, PA 19103
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRICEWATERHOUSECOOPERS LLP
PHILADELPHIA, PA 19103
FORMOREINFORMATIONABOUT BISHOP STREET FUNDS,CALL 1-800-262-9565ORYOUR INVESTMENT SPECIALISTVISITUSONLINEATWWW.BISHOPSTREETFUNDS.COM
![]() | BISHOP STREET FUNDS P.O. BOX 219721 KANSAS CITY, MO 64121-9721 |
THISREPORTANDTHEFINANCIALSTATEMENTSCONTAINEDHEREINARESUBMITTEDFORTHEGENERALINFORMATIONOF BISHOP STREET FUNDS’SHAREHOLDERS. THISREPORTISNOTAUTHORIZEDFORDISTRIBUTIONTOPROSPECTIVEINVESTORSUNLESSPRECEDEDORACCOMPANIEDBYANEFFECTIVEPROSPECTUS.
SHARESOF BISHOP STREET FUNDSARE NOTDEPOSITSOROBLIGATIONSOF,ORGUARANTEEDBY FIRST HAWAIIAN BANKORANYOFITSAFFILIATES. SUCHSHARESAREALSO NOTFEDERALLYINSUREDBYTHE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,ORANYOTHERAGENCY. INVESTMENTINSHARESOFMUTUALFUNDSINVOLVESRISK,INCLUDINGTHEPOSSIBLELOSSOFPRINCIPAL. THE BISHOP STREET FUNDSAREDISTRIBUTEDBY SEI INVESTMENTS DISTRIBUTION CO.,WHICHIS NOTAFFILIATEDWITH FIRST HAWAIIAN BANK, BANKOFTHE WESTOR BANCWEST CORPORATION. BANCWEST CORPORATIONISAWHOLLY-OWNEDSUBSIDIARYOF BNP PARIBAS.
BSF-AR-006-2000
Item 2. | Code of Ethics. |
The Registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, controller or principal accounting officer, and any person who performs a similar function. There have been no amendments to or waivers granted to this code of ethics during the past fiscal year.
Item 3. | Audit Committee Financial Expert. |
(a)(1) The registrant’s board of trustees has determined that the registrant has at least one audit committee financial expert serving on the audit committee.
(a) (2) The audit committee financial experts are George Sullivan and John Darr, and are independent as defined in Form N-CSR Item 3 (a) (2).
Item 4. | Principal Accountant Fees and Services. |
Fees billed by PricewaterhouseCoopers (PwC LLP) Related to the Trust
PwC LLP billed the Trust aggregate fees for services rendered to the Trust for the last two fiscal years as follows:
2014 | 2013 | |||||||||||||||||||||||
All fees and services to the Trust that were pre- approved | All fees and services to service affiliates that were pre- approved | All other fees and services to service affiliates that did not require pre- approval | All fees and services to the Trust that were pre- approved | All fees and services to service affiliates that were pre- approved | All other fees and services to service affiliates that did not require pre- approval | |||||||||||||||||||
(a) | Audit Fees (1) | $92,700 | N/A | N/A | $ | 92,700 | N/A | N/A | ||||||||||||||||
(b) | Audit-Related Fees | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
(c) | Tax Fees | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
(d) | All Other Fees | N/A | N/A | N/A | N/A | N/A | N/A |
Notes:
(1) | Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. |
(e)(1)
(e)(1) The Trust’s Audit Committee has adopted and the Board of Trustees has ratified an Audit and Non-Audit Services Pre-Approval Policy (the “Policy”), which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent auditor of the Funds may be pre-approved.
The Policy provides that all requests or applications for proposed services to be provided by the independent auditor must be submitted to the Registrant’s Chief Financial Officer (“CFO”) and must include a detailed description of the services proposed to be rendered. The CFO will determine whether such services:
(1) require specific pre-approval; (2) are included within the list of services that have received the general pre-approval of the Audit Committee pursuant to the Policy; or (3) have been previously pre-approved in connection with the independent auditor’s annual engagement letter for the applicable year or otherwise. In any instance where services require pre-approval, the Audit Committee will consider whether such services are consistent with SEC’s rules and whether the provision of such services would impair the auditor’s independence.
Requests or applications to provide services that require specific pre-approval by the Audit Committee will be submitted to the Audit Committee by the CFO. The Audit Committee will be informed by the CFO on a quarterly basis of all services rendered by the independent auditor. The Audit Committee has delegated specific pre-approval authority to either the Audit Committee Chair or financial expert, provided that the estimated fee for any such proposed pre-approved service does not exceed $100,000 and any pre-approval decisions are reported to the Audit Committee at its next regularly scheduled meeting.
Services that have received the general pre-approval of the Audit Committee are identified and described in the Policy. In addition, the Policy sets forth a maximum fee per engagement with respect to each identified service that has received general pre-approval.
All services to be provided by the independent auditor shall be provided pursuant to a signed written engagement letter with the Registrant, the investment advisor or applicable control affiliate (except that matters as to which an engagement letter would be impractical because of timing issues or because the matter is small may not be the subject of an engagement letter) that sets forth both the services to be provided by the independent auditor and the total fees to be paid to the independent auditor for those services.
In addition, the Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the independent auditor and to assure the auditor’s independence from the Registrant, such as reviewing a formal written statement from the independent auditor delineating all relationships between the independent auditor and the Registrant, and discussing with the independent auditor its methods and procedures for ensuring independence.
(e)(2) Percentage of fees billed applicable to non-audit services approved pursuant to the “de minimis” exception of Rule 2-01(c)(7)(i)(C) were as follows:
2014 | 2013 | |||||
Audit-Related Fees | N/A | N/A | ||||
Tax Fees | N/A | N/A | ||||
All Other Fees | N/A | N/A |
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by PwC LLP for the last two fiscal years were $2,302,978 and $2,782,883 for 2014 and 2013, respectively.
(h) During the past fiscal year, all non-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant were pre-approved by the audit committee of Registrant’s Board of Trustees. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence.
Item 5. | Audit Committee of Listed Registrants. |
Not applicable to open-end management investment companies.
Item 6. | Schedule of Investments |
Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable to open-end management investment companies.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies |
Not applicable. Effective for closed-end management investment companies for fiscal years ending on or after December 31, 2005
Item 9. | Purchases of Equity Securities by Closed-End Management Company and Affiliated Purchasers. |
Not applicable to open-end management investment companies.
Item 10. | Submission of Matters to a Vote of Security Holders. |
Not applicable.
Item 11. | Controls and Procedures. |
((a) The Registrant’s principal executive and principal financial officers, or persons performing similar functions have concluded that the Registrant’s disclosure controls and procedures, as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c)) as of a date within 90 days of the filing date of the report, are effective based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 270.30a-15(b)) or 240.15d-15(b)).
(b) There has been no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the
Act (17CFR 270.3a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Items 12. | Exhibits. |
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), is filed herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing as an exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Bishop Street Funds | |||||
By (Signature and Title)* | /s/ Michael Beattie | |||||
Michael Beattie, President |
Dated: March 10, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Michael Beattie | |||||
Michael Beattie, President |
Dated: March 10, 2015
By (Signature and Title)* | /s/ Rami Abdel-Rahman | |||||
Rami Abdel-Rahman | ||||||
Treasurer, Controller & CFO |
Dated: March 10, 2015
* | Print the name and title of each signing officer under his or her signature. |