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 811-4066 					Cash Assets Trust 			(Exact name of Registrant as specified in charter) 					 380 Madison Avenue 					New York, New York 10017 			(Address of principal executive offices) (Zip code) 					 Joseph P. DiMaggio 					 380 Madison Avenue 					New York, New York 10017 				(Name and address of agent for service) 		Registrant's telephone number, including area code:	(212) 697-6666 				Date of fiscal year end:	3/31 				Date of reporting period:	3/31/05 						FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT March 31, 2005 The Pacific Capital Funds of Cash Assets Trust Pacific Capital Cash Assets Trust Pacific Capital Tax-Free Cash Assets Trust Pacific Capital U.S. Government Securities Cash Assets Trust [Logo of The Pacific Capital Funds of Cash Assets Trust: a lion standing on a twisted rope] A cash management investment [Logo of The Pacific Capital Funds of Cash Assets Trust: a lion standing on a twisted rope] THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST May, 2005 Dear Investor: It gives us considerable pleasure to provide you with the Annual Report for The Pacific Capital Funds of Cash Assets Trust for the fiscal year ended March 31, 2005. The enclosed Annual Report includes the three series of Cash Assets Trust (the "Trust"): Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust and its two classes of shares: Original Shares and Service Shares. The Trust was specifically created to meet the short-term investment needs of Hawaii Investors and others. --------------------------- Unlike the downturn in short-term rates that was inaugurated by the Federal Reserve and experienced by your Trust during the previous fiscal year, this year's report reflects the upward trend in rates indicated by the Federal Reserve in terms of direction of Federal Funds rate. As we pointed out to you in our last fiscal year-end letter, the Federal Reserve aggressively pursued the course of lowering short-term rates to the lowest level in four decades. At March 31, 2004, short-term rates were at the level of 1.00%. This low level reflected the concern of the Federal Reserve in terms of a possible slow down of a major nature in the U.S. economy. Fortunately, this slow down did not occur. And, indeed, the consensus is that the economy did well. Consequently, the Federal Reserve reversed its policy and started to increase short-term rates on a measured basis during this past fiscal year ended March 31, 2005. Concerns now appear to be focused upon avoiding inflationary bias to our economy. Accordingly, the Federal Reserve has stepped up its activity in raising short-term rates again to a more normal level through a series of gradual increases in rates. As at March 31, 2005, short-term rates had recovered to the level of 2.75%. Looking forward, our current thinking is that rates will continue to move to a higher level. The economy appears to be moving ahead at a level of approximately 3% for Gross Domestic Product - the measure of all goods and services produced in the U.S. We are optimistic that the Pacific Capital Funds of Cash Assets Trust will provide investors with much more attractive yields during the fiscal year ahead. In managing the portfolios of the Trust, we will continue to be alert to market opportunities in terms of seeking to produce a higher return competitive with other short-term alternatives. NOT A PART OF THE ANNUAL REPORT You can be assured that in our desire to strive to achieve higher returns for investors, the Asset Management Group of the Bank of Hawaii will continually seek to manage investments in a cautious, but aggressive, manner. We believe that there is absolutely no substitute for strict adherence to high quality of securities which possess minimum credit risk. Safety of your cash reserves remains of utmost concern to us. You can rest assured that the Investment Adviser will continue to examine, with great diligence, the marketability and creditworthiness of all securities in each of the Trust's portfolios. We appreciate your continued use of the Pacific Capital Funds of Cash Assets Trust. Every effort will be expended by all associated with the Trust to merit your constant confidence. Sincerely, /s/ Diana P. Herrmann /s/ Lacy B. Herrmann - ---------------------- -------------------- Diana P. Herrmann Lacy B. Herrmann President Chairman Emeritus of the Board of Trustees - -------------------------------------------------------------------------------- [Logo of KPMG: four solid rectangles with the letters KPMG in front] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of The Pacific Capital Funds of Cash Assets Trust: We have audited the accompanying statements of assets and liabilities of The Pacific Capital Funds of Cash Assets Trust (the "Trust") (comprised of Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust, and Pacific Capital U.S. Government Securities Cash Assets Trust) (the "Funds"), including the schedules of investments, as of March 31, 2005, and the related statements of operations for the year then ended, the statements of changes in 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. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits 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 and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2005, by correspondence with the custodian. An audit also includes assessing the accounting principles used, and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds comprising the Trust as of March 31, 2005, the results of their operations for the year then ended, the changes in 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 U.S. generally accepted accounting principles. KPMG LLTP New York, New York May 23, 2005 - -------------------------------------------------------------------------------- PACIFIC CAPITAL CASH ASSETS TRUST SCHEDULE OF INVESTMENTS MARCH 31, 2005 FACE AMOUNT COMMERCIAL PAPER (30.7%) VALUE - ------------- -------------------------------------------------------------------- -------------- AUTOMOTIVE (3.8%) $ 20,000,000 Toyota Motor Credit Corp., 2.66%, 4/25/05 .......................... $ 19,964,533 -------------- BANKS (3.7%) 20,000,000 Societe Generale N.A., Inc., 2.74%, 6/01/05 ........................ 19,907,144 -------------- BROKERAGE (11.2%) 20,000,000 ABN- Amro North America 2.86%, 5/23/05 ............................. 19,917,378 20,000,000 Bear Steans & Co. 2.92%, 6/02/05 ................................... 19,899,422 20,000,000 Morgan Stanley Dean Witter, 2.78%, 4/19/05 ......................... 19,972,200 -------------- 59,789,000 -------------- CONGLOMERATE (4.5%) 24,000,000 General Electric Capital Corp., 2.76%, 6/13/05 ..................... 23,865,680 -------------- FINANCE (7.5%) 20,000,000 Abbey National North America Corp.2.88%, 7/18/05 ................... 19,827,200 20,000,000 AIG Funding, 2.58%, 4/04/05 ........................................ 19,995,700 -------------- 39,822,900 -------------- Total Commercial Paper ............................................. 163,349,257 -------------- CERTIFICATES OF DEPOSIT (7.5%) BANK (7.5%) 20,000,000 Bank of America 3.01%, 7/13/05 ..................................... 20,000,000 20,000,000 Wells Fargo 2.65%, 4/29/05 ......................................... 20,000,000 -------------- 40,000,000 -------------- CORPORATE NOTE (2.8%) INSURANCE (2.8%) 15,000,000 Peoples Benefit Life Insurance, Variable Rate Note, 2.84%, 4/01/05, (b) .................................................... 15,000,000 -------------- U.S. GOVERNMENT AGENCIES (50.5%) FEDERAL HOME LOAN BANK (22.3%) 49,460,000 2.44%, 4/06/05 ..................................................... 49,443,239 12,000,000 2.07%, 4/13/05 ..................................................... 11,991,720 28,000,000 3.07%, 8/24/05 ..................................................... 27,654,336 30,000,000 3.14%, 9/16/05 ..................................................... 29,560,400 -------------- ........................................................... 118,649,695 -------------- FEDERAL HOME LOAN MORTGAGE CORP. (3.8%) 20,000,000 2.63%, 5/10/05 ..................................................... 19,943,125 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION (24.4%) $ 40,000,000 2.58%, 4/11/05 ..................................................... $ 39,971,333 20,000,000 2.62%, 5/04/05 ..................................................... 19,951,967 20,000,000 2.64%, 5/11/05 ..................................................... 19,941,445 50,000,000 2.84%, 5/25/05 ..................................................... 49,787,000 -------------- 129,651,745 -------------- Total U.S. Government Agencies .................................. 268,244,565 -------------- REPURCHASE AGREEMENT (8.5%) 45,000,000 Bank of America 2.77%, 4/01/05 ..................................... 45,000,000 -------------- (Proceeds of $45,003,463 to be received at maturity, Collateral: $46,330,000 FNMA Discount Note, due 7/20/05; Collateral Fair Value $45,913,030) SHARES INVESTMENT COMPANY (0.2%) 1,096,926 JP Morgan U.S. Government Money Market Fund, Capital Shares .................................................. 1,096,926 -------------- Total Investments (Amortized Cost $532,690,748) (a) ... 100.2% 532,690,748 Other assets less liabilities ......................... (0.2) (970,074) ----- -------------- NET ASSETS ............................................ 100.0% $ 531,720,674 ===== ============== (a) Cost for Federal income tax and financial reporting purposes is identical. (b) Illiquid security. Considered illiquid because it may not be sold, and may be redeemed only upon at least ninety days' notice to the issuer. As this security is a variable rate note, the rate shown represents the rate in effect at March 31, 2005, and the maturity date reflects the next rate change date. Represents 2.8% of net assets. PORTFOLIO DISTRIBUTION (UNAUDITED) Commercial Paper....................................... 30.7% Certificates of Deposit................................ 7.5 Corporate Note......................................... 2.8 U.S. Government Agencies............................... 50.4 Investment Company..................................... 0.2 Repurchase Agreement................................... 8.4 ----- 100.0% ===== See accompanying notes to financial statements. PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST SCHEDULE OF INVESTMENTS MARCH 31, 2005 RATING FACE MOODY'S/ AMOUNT MUNICIPAL BONDS (99.9%) S&P VALUE - --------------- ------------------------------------------------------- ---------- -------------- COLORADO (3.7%) Colorado Housing & Financial Authority Revenue Bonds, Class I, Series A-1, Weekly Reset VRDO*, SPA: FHLB $ 7,600,000 2.27%, 10/01/30........................................ VMIG1/A-1+ $ 7,600,000 -------------- HAWAII (22.3%) City and County of Honolulu, Hawaii (Mandatory Put 12/01/05) 5,000,000 2.28%, 12/01/20........................................ VMIG1/A-1+ 5,000,000 City and County of Honolulu, Hawaii Prerefunded 11/01/05 @ 101 1,010,000 5.00%, 11/01/12........................................ Aaa/AAA 1,033,487 City and County of Honolulu, Hawaii Commercial Paper, LOC Hessen-Thuringen Girozentrale 4,000,000 1.87%, 06/09/05........................................ P1/A-1+ 4,000,000 City and County of Honolulu, Hawaii Commercial Paper, LOC Hessen-Thuringen Girozentrale 10,000,000 2.00%, 06/02/05........................................ P1/A-1+ 10,000,000 Department of Budget and Finance of the State of Hawaii Special Purpose Revenue Bonds (The Queen's Health System), Series A, Weekly Reset VRDO*, SPA: Bank of Nova Scotia 22,575,000 2.28%, 07/01/26........................................ VMIG1/A-1 22,575,000 Department of Budget and Finance of the State Special Purpose Revenue Bonds (The Queen's Health System) Series A, Weekly VRDO*, SPA: Bank of Nova Scotia 1,900,000 2.19%, 07/01/29........................................ VMIG1/A-1+ 1,900,000 HAWAII (CONTINUED) State of Hawaii Hawaii State Reveune Refunding Series DC $ 1,500,000 3.00%, 09/01/05........................................ Aa3/AA- $ 1,506,243 -------------- 46,014,730 -------------- IDAHO (3.9%) Idaho Health Facilities Authority Revenue Bonds (St. Lukes Regional Medical Center Project), Daily Reset VRDO*, LOC: Harris Trust & Savings Bank 7,950,000 2.29%, 05/01/22........................................ VMIG1/NR 7,950,000 -------------- ILLINOIS (9.8%) Chicago, IL General Obligation Bonds, Series B, Weekly Reset VRDO*, FGIC Insured 3,000,000 2.29%, 01/01/37........................................ VMIG1/A-1+ 3,000,000 Chicago, IL Metropolitan Water Reclamation District- Greater Chicago General Obligation Bonds, Series A, Weekly Reset VRDO*, SPA: Bank of America 9,500,000 2.29%, 12/01/31........................................ VMIG1/A-1+ 9,500,000 Illinois Development Finance Authority Revenue Bonds (YMCA of Metro Chicago Project), Daily Reset VRDO*, LOC: Harris Trust & Savings Bank 7,600,000 2.30%, 06/01/29........................................ NR/A-1+ 7,600,000 -------------- 20,100,000 -------------- INDIANA (0.8%) Indianapolis, IN Economic Development Revenue Bonds (Jewish Federation Campus), Weekly Reset VRDO*, LOC: Fifth Third Bank 1,680,000 2.30%, 04/01/05........................................ VMIG1/NR 1,680,000 -------------- MICHIGAN (4.1%) Eastern Michigan University, MI University Revenue Bonds, Daily Reset VRDO*, FGIC Insured $ 7,035,000 2.29%, 06/01/27........................................ NR/A-1+ $ 7,035,000 Northern Michigan University Revenue Bonds, Daily Reset VRDO*, FGIC Insured 1,400,000 2.29%, 06/01/31........................................ VMIG1/A-1+ 1,400,000 -------------- 8,435,000 -------------- MINNESOTA (2.4%) Cohasset, MN Revenue Bonds (Minnesota Power & Light Co. Project), Series A, Daily Reset VRDO*, LOC: ABN Amro Bank N.V. 3,875,000 2.29%, 06/01/20........................................ NR/A-1+ 3,875,000 Cohasset, MN Revenue Bonds (Minnesota Power & Light Co. Project), Series B, Daily Reset VRDO*, LOC: ABN Amro Bank N.V. 200,000 2.29%, 06/01/13........................................ NR/A-1+ 200,000 Cohasset, MN Revenue Bonds (Minnesota Power & Light Co. Project), Series C, Daily Reset VRDO*, LOC: ABN Amro Bank N.V. 800,000 2.29%, 06/01/13........................................ NR/A-1+ 800,000 -------------- 4,875,000 -------------- MISSOURI (14.7%) Kansas City, MO Industrial Development Authority Revenue Bonds, (Ewing Marion Kaufman Foundation), Daily Reset VRDO* 7,110,000 2.29%, 04/01/27........................................ NR/A-1+ 7,110,000 MISSOURI (CONTINUED) Kansas City, MO Industrial Development Authority Revenue Bonds, (Ewing Marion Kauffman Foundation), Daily Reset VRDO* $ 2,000,000 2.29%, 04/01/27........................................ .. NR/A-1+ $ 2,000,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (St. Louis University), Series A, Daily Reset VRDO*, SPA: Bank of America N.A. 1,485,000 2.34%, 10/01/09........................................... VMIG1/A-1+ 1,485,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (St. Louis University), Series B, Daily Reset VRDO*, SPA: Bank of America N.A. 5,155,000 2.34%, 10/01/24........................................... VMIG1/A-1+ 5,155,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series C, Daily Reset VRDO*, SPA: JP Morgan Chase Bank 2,800,000 2.29%, 09/01/30........................................... VMIG1/A-1+ 2,800,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series C, Daily Reset VRDO*, SPA: JP Morgan Chase Bank 1,000,000 2.29%, 03/01/40........................................... VMIG1/A-1+ 1,000,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series D, Daily Reset VRDO*, SPA: JP Morgan Chase Bank 2,100,000 2.29%, 09/01/30........................................... VMIG1/A-1+ 2,100,000 University of Missouri, Curators of the University of Missouri System Facilities Revenue Bonds, Series A, Daily Reset VRDO* 8,500,000 2.30%, 11/01/32........................................... VMIG1/A-1+ 8,500,000 ------------- 30,150,000 ------------- MONTANA (3.7%) Montana State, Health Facilities Authority Revenue Bonds, Series A, Weekly Reset VRDO*, FGIC Insured SPA: Wells Fargo $ 7,655,000 2.30%, 12/01/15........................................... VMIG1/A-1+ $ 7,655,000 ------------- NEVADA (4.1%) Clark County, NV Airport Revenue Bonds, Series C, Weekly Reset VRDO*, FGIC Insured, SPA: Landesbank Baden-Wurttm 8,500,000 2.28%, 07/01/29........................................... VMIG1/A-1+ 8,500,000 ------------- NEW YORK (5.6%) Long Island, NY Power Authority Revenue Bonds, Series 1A, Weekly Reset VRDO*, LOC: Bayerische Landesbank 7,500,000 2.28%, 05/01/33........................................... VMIG1/A-1+ 7,500,000 New York, NY City Transitional Finance Authority Revenue Bonds, Series 3, Daily Reset VRDO*, SPA: Bank of New York 4,100,000 2.28%, 11/01/22........................................... VMIG1/A-1+ 4,100,000 ------------- 11,600,000 ------------- NORTH CAROLINA (10.6%) Charlotte, NC VRDO* 8,965,000 2.28%, 07/01/16........................................... VMIG1/A-1+ 8,965,000 Concord, NC Utility Systems Revenue Bonds, Series B, Weekly Reset VRDO*, FSA Insured, SPA: Wachovia Bank 6,065,000 2.28%, 12/01/22........................................... VMIG1/NR 6,065,000 Durham, NC Public Improvement General Obligation Bonds VRDO* 2,975,000 2.31%, 02/01/11........................................... VMIG1/A-1** 2,975,000 NORTH CAROLINA (CONTINUED) Durham, NC General Obligation Bonds (Public Improvement Project), Weekly Reset VRDO*, SPA: Wachovia Bank of North Carolina $ 1,150,000 2.31%, 02/01/09........................................ VMIG1/A-1** $ 1,150,000 1,270,000 2.31%, 02/01/12........................................ VMIG1/A-1** 1,270,000 1,475,000 2.31%, 02/01/13........................................ VMIG1/A-1** 1,475,000 ------------- 21,900,000 ------------- OHIO (1.6%) Ohio Housing Finance Agency Mortgage Revenue Bonds (Residential Mortgage), Series E-AMT, Weekly Reset VRDO*, SPA: FHLB 3,245,000 2.31%, 09/01/34........................................ VMIG1/NR 3,245,000 ------------- TEXAS (4.1%) Texas State, TX Turnpike Authority Central System Revenue Bonds, Series B, Weekly Reset VRDO*, AMBAC Insured, SPA: Bank of Nova Scotia 8,500,000 2.28%, 08/15/42........................................ Aaa/A-1 8,500,000 ------------- UTAH (1.5%) University of Utah, Auxiliary & Campus Facilities Revenue Bonds, Series A, Weekly Reset VRDO*, SPA: Bank of Nova Scotia 3,150,000 2.27%, 04/01/27........................................ VMIG1/A-1 3,150,000 ------------- VIRGINIA (2.9%) University of Virginia Revenue Bonds, Series A, Weekly Reset VRDO* 6,000,000 2.22%, 06/01/34........................................ VMIG1/A-1+ 6,000,000 ------------- WASHINGTON (4.1%) Seattle, WA Water System Revenue Bonds, Series A, Weekly Reset VRDO*, LOC: Bayerische Landesbank $ 8,500,000 2.28%, 03/01/32........................................ VMIG1/A-1+ $ 8,500,000 ------------- Total Investments (Amortized Cost $205,854,730) (a)................................. 99.9% 205,854,730 Other assets less liabilities....................... 0.1 225,665 ----- ------------- NET ASSETS.......................................... 100.0% $ 206,080,395 ===== ============= * Variable rate demand obligations (VRDOs) are payable upon demand within the same day for securities with daily liquidity or seven days for securities with weekly liquidity. ** On April 14, 2005, the S&P rating changed to A-1+. (a) Cost for Federal income tax and financial reporting purposes is identical. PORTFOLIO DISTRIBUTION (UNAUDITED) Colorado 3.7% Nevada 4.1% Hawaii 22.4 New York 5.6 Idaho 3.9 North Carolina 10.6 Illinois 9.8 Ohio 1.6 Indiana 0.8 Texas 4.1 Michigan 4.1 Utah 1.5 Minnesota 2.4 Virginia 2.9 Missouri 14.7 Washington 4.1 Montana 3.7 ----- 100.0% ===== PORTFOLIO ABBREVIATIONS: AMBAC - American Municipal Bond Assurance Corp. AMT - Alternative Minimum Tax FGIC - Financial Guaranty Insurance Corporation FHLB - Federal Home Loan Bank FSA - Financial Security Assurance LOC - Letter of Credit SPA - Standby Bond Purchase Agreement VRDO - Variable Rate Demand Obligation See accompanying notes to financial statements. PACIFIC CAPITAL U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST SCHEDULE OF INVESTMENTS MARCH 31, 2005 FACE AMOUNT U.S. GOVERNMENT AGENCIES (100.0%) VALUE - --------------- --------------------------------------------------------- -------------- FEDERAL FARM CREDIT BANK (19.0%) $ 127,000,000 2.55%, 4/01/05 .......................................... $ 127,000,000 50,000,000 2.65%, 4/11/05 .......................................... 49,963,195 -------------- 176,963,195 -------------- FEDERAL HOME LOAN BANK (81.0%) 65,000,000 2.58%, 4/01/05 .......................................... 65,000,000 40,000,000 2.44%, 4/06/05 .......................................... 39,986,444 65,000,000 2.07%, 4/08/05 .......................................... 64,973,838 50,000,000 2.62%, 4/13/05 .......................................... 49,956,407 70,000,000 2.70%, 4/15/05 .......................................... 69,926,500 50,000,000 2.55%, 4/20/05 .......................................... 49,932,708 40,000,000 2.56%, 4/22/05 .......................................... 39,940,267 75,000,000 2.71%, 4/27/05 .......................................... 74,853,208 59,253,000 2.61%, 4/29/05 .......................................... 59,132,716 59,000,000 2.59%, 5/04/05 .......................................... 58,859,924 50,000,000 2.80%, 5/27/05 .......................................... 49,781,833 25,000,000 2.98%, 7/15/05 .......................................... 24,782,708 60,000,000 3.07%, 8/24/05 .......................................... 59,259,292 49,900,000 3.14%, 9/16/05 .......................................... 49,168,799 -------------- 755,554,644 -------------- Total U.S. Government Agencies ....................... 932,517,839 -------------- SHARES INVESTMENT COMPANY (0.2%) 1,678,605 JP Morgan Government Money Market Fund, Capital Shares........................................ 1,678,605 -------------- Total Investments (Amortized Cost $934,196,444) (a)........ 100.2% 934,196,444 Other assets less liabilities ............... (0.2) (1,874,945) ----- ------------- NET ASSETS................................... 100.0% $ 932,321,499 ===== ============= (a) Cost for Federal income tax purposes and financial reporting is identical. PORTFOLIO DISTRIBUTION (UNAUDITED) U.S. Government Agencies......................... 99.8% Investment Company............................... 0.2 ----- 100.0% ===== See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 2005 CASH TAX-FREE GOVERNMENT FUND FUND FUND ------------- ------------- ------------- ASSETS: Investments at value and amortized cost (note 2) .................. $ 487,690,748 $ 205,854,730 $ 934,196,444 Repurchase agreement (note 2) ..................................... 45,000,000 -- -- Cash .............................................................. -- 21,917 -- Interest receivable ............................................... 121,852 563,509 8,881 Other assets ...................................................... 12,764 4,790 32,490 ------------- ------------- ------------- Total Assets ................................................... 532,825,364 206,444,946 934,237,815 ------------- ------------- ------------- LIABILITIES: Dividends payable ................................................. 829,318 255,993 1,453,431 Adviser and Administrator fees payable ............................ 207,542 54,636 306,698 Distribution fees payable ......................................... 31,273 16,605 115,893 Accrued expenses .................................................. 36,557 37,317 40,294 ------------- ------------- ------------- Total Liabilities .............................................. 1,104,690 364,551 1,916,316 ------------- ------------- ------------- NET ASSETS ........................................................ $ 531,720,674 $ 206,080,395 $ 932,321,499 ------------- ------------- ------------- NET ASSETS CONSIST OF: Capital Stock - Authorized an unlimited number of shares, par value $.01 per share ....................................... $ 5,317,075 $ 2,060,782 $ 9,322,538 Additional paid-in capital ........................................ 526,390,161 204,127,490 922,931,441 Undistributed (distributions in excess of) net investment income .............................................. 13,438 (107,877) 68,263 Accumulated net realized loss on investments ...................... -- -- (743) ------------- ------------- ------------- $ 531,720,674 $ 206,080,395 $ 932,321,499 ============= ============= ============= SHARES OF BENEFICIAL INTEREST: Original Shares Class: Net Assets ..................................................... $ 365,722,878 $ 133,928,646 $ 354,285,665 ============= ============= ============= Shares outstanding ............................................. 365,941,670 133,927,188 354,256,635 ============= ============= ============= Net asset value per share ...................................... $ 1.00 $ 1.00 $ 1.00 ============= ============= ============= Service Shares Class: Net Assets ..................................................... $ 165,997,796 $ 72,151,749 $ 578,035,834 ============= ============= ============= Shares outstanding ............................................. 165,765,794 72,151,025 577,997,206 ============= ============= ============= Net asset value per share ...................................... $ 1.00 $ 1.00 $ 1.00 ============= ============= ============= See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2005 CASH TAX-FREE GOVERNMENT FUND FUND FUND ------------ ------------ ------------ INVESTMENT INCOME: Interest income ............................................... $ 7,871,402 $ 2,697,654 $ 14,261,585 ------------ ------------ ------------ EXPENSES: Investment Adviser fees (note 3) .............................. 1,611,275 553,218 2,755,992 Administrator fees (note 3) ................................... 640,201 186,437 628,238 Distribution fees (note 3) .................................... 308,691 149,014 1,246,209 Trustees' fees and expenses ................................... 86,081 45,789 130,204 Insurance ..................................................... 42,911 16,291 84,684 Legal fees (note 3) ........................................... 42,580 27,551 90,999 Registration fees and dues .................................... 40,389 3,417 9,368 Shareholders' reports ......................................... 20,594 9,702 28,271 Fund accounting fees .......................................... 20,567 21,278 20,434 Auditing and tax fees ......................................... 19,039 20,732 18,894 Transfer and shareholder servicing agent fees ................. 10,415 12,163 10,095 Custodian fees ................................................ 6,456 11,725 5,173 Chief Compliance Officer (note 3) ............................. 2,266 2,266 2,266 Miscellaneous ................................................. 5,126 6,688 31,581 ------------ ------------ ------------ Total expenses ................................................ 2,856,591 1,066,271 5,062,408 Advisory fees contractual reduction (note 3) .................. (640,692) (291,119) (1,227,819) Administrative fees contractual reduction (note 3) ............ (256,008) (98,109) (280,009) Expenses paid indirectly (note 5) ............................. (4,112) (2,768) (2,826) ------------ ------------ ------------ Net expenses .................................................. 1,955,779 674,275 3,551,754 ------------ ------------ ------------ Net investment income ............................................ 5,915,623 2,023,379 10,709,831 Net realized gain (loss) from securities transactions ............ -- -- (743) ------------ ------------ ------------ Net change in net assets resulting from operations ............... $ 5,915,623 $ 2,023,379 $ 10,709,088 ============ ============ ============ See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF CHANGES IN NET ASSETS CASH FUND TAX-FREE FUND ----------------------------------- ----------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2005 MARCH 31, 2004 MARCH 31, 2005 MARCH 31, 2004 --------------- --------------- --------------- --------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ................. $ 5,915,623 $ 3,803,973 $ 2,023,379 $ 1,201,018 Net realized gain (loss) from securities transactions ........ -- 1,319 -- 38 --------------- --------------- --------------- --------------- Net change in net assets resulting from operations ........... 5,915,623 3,805,292 2,023,379 1,201,056 --------------- --------------- --------------- --------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Original Shares ..................... (4,534,518) (3,014,705) (549,754) (891,803) Service Shares ...................... (1,381,105) (789,268) (1,473,625) (309,215) --------------- --------------- --------------- --------------- Total dividends to shareholders from net investment income .......... (5,915,623) (3,803,973) (2,023,379) (1,201,018) --------------- --------------- --------------- --------------- CAPITAL SHARE TRANSACTIONS (at $1.00 per share): Proceeds from shares sold: Original Shares ..................... 897,374,600 710,757,056 313,771,101 127,920,769 Service Shares ...................... 473,009,866 356,252,712 93,903,240 63,986,710 --------------- --------------- --------------- --------------- 1,370,384,466 1,067,009,768 407,674,341 191,907,479 --------------- --------------- --------------- --------------- Reinvested dividends: Original Shares ..................... 99,479 61,263 65,741 69,733 Service Shares ...................... 1,230,616 802,624 493,472 320,397 --------------- --------------- --------------- --------------- 1,330,095 863,887 559,213 390,130 --------------- --------------- --------------- --------------- Cost of shares redeemed: Original Shares ..................... (818,780,462) (784,672,808) (278,691,955) (159,333,530) Service Shares ...................... (427,424,705) (361,048,456) (71,906,960) (70,987,619) --------------- --------------- --------------- --------------- (1,246,205,167) (1,145,721,264) (350,598,915) (230,321,149) --------------- --------------- --------------- --------------- Change in net assets from capital share transactions ..... 125,509,394 (77,847,609) 57,634,639 (38,023,540) --------------- --------------- --------------- --------------- Total change in net assets ........... 125,509,394 (77,846,290) 57,634,639 (38,023,502) NET ASSETS: Beginning of period ................. 406,211,280 484,057,570 148,445,756 186,469,258 --------------- --------------- --------------- --------------- End of period* ...................... $ 531,720,674 $ 406,211,280 $ 206,080,395 $ 148,445,756 =============== =============== =============== =============== *Includes undistributed (distributions in excess of) net investment income of: $ 13,438 $ 13,438 $ (107,877) $ (87,360) =============== =============== =============== =============== GOVERNMENT FUND ----------------------------------- YEAR ENDED YEAR ENDED MARCH 31, 2005 MARCH 31, 2004 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ................. $ 10,709,831 $ 6,140,224 Net realized gain (loss) from securities transactions ........ (743) 421 --------------- --------------- Net change in net assets resulting from operations ........... 10,709,088 6,140,645 --------------- --------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Original Shares ..................... (5,785,972) (2,775,205) Service Shares ...................... (4,923,859) (3,365,022) --------------- --------------- Total dividends to shareholders from net investment income .......... (10,709,831) (6,140,227) --------------- --------------- CAPITAL SHARE TRANSACTIONS (at $1.00 per share): Proceeds from shares sold: Original Shares ..................... 819,559,720 1,035,054,356 Service Shares ...................... 2,125,769,411 1,762,487,853 --------------- --------------- 2,945,329,131 2,797,542,209 --------------- --------------- Reinvested dividends: Original Shares ..................... 42,138 46,240 Service Shares ...................... 5,231,536 3,380,896 --------------- --------------- 5,273,674 3,427,136 --------------- --------------- Cost of shares redeemed: Original Shares ..................... (728,780,568) (1,041,701,880) Service Shares ...................... (2,128,042,587) (1,638,518,517) --------------- --------------- (2,856,823,155) (2,680,220,397) --------------- --------------- Change in net assets from capital share transactions ..... 93,779,650 120,748,948 --------------- --------------- Total change in net assets ........... 93,778,907 120,749,366 NET ASSETS: Beginning of period ................. 838,542,592 717,793,226 --------------- --------------- End of period* ...................... $ 932,321,499 $ 838,542,592 =============== =============== *Includes undistributed (distributions in excess of) net investment income of: $ 68,263 $ 68,263 =============== =============== See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST NOTES TO FINANCIAL STATEMENTS MARCH 31, 2005 1. ORGANIZATION Cash Assets Trust (the "Trust") was organized on May 7, 1984 as a Massachusetts business trust and is registered under the Investment Company Act of 1940 (the "1940 Act") as an open-end investment company. The Trust consists of the following three investment portfolios (referred to individually as a "Fund" and collectively as the "Funds"): Pacific Capital Cash Assets Trust ("Cash Fund") (a diversified portfolio which commenced operations on December 5, 1984), Pacific Capital Tax-Free Cash Assets Trust ("Tax-Free Fund") (a non-diversified portfolio which commenced operations on April 4, 1989), and Pacific Capital U.S. Government Securities Cash Assets Trust ("Goverment Fund") (a diversified portfolio which commenced operations on April 4, 1989). The Trust is authorized to issue for each Fund an unlimited number of shares of $0.01 par value in two classes of shares; the Original Shares Class and the Service Shares Class. The Original Shares Class includes all currently outstanding shares of each Fund that were issued prior to January 20, 1995, the date on which the Capital structure was changed to include two classes rather than one. The two classes of shares are substantially identical, except that Service Shares bear the fees that are payable under the Trust's Distribution Plan. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. The policies are in conformity with U.S. generally accepted accounting principles. a) PORTFOLIO VALUATION: Each Fund's portfolio securities are valued by the amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act, which, after considering accrued interest thereon, approximates market. Under this method, a portfolio security is valued at cost adjusted for amortization of premiums and accretion of discounts. Amortization of premiums and accretion of discounts are included in interest income. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premiums and accretion of discounts as discussed in the preceding paragraph. c) Determination of net asset value and calculation of expenses: The net asset value per share for each class of the Funds' shares is determined as of 4:00 p.m. New York time on each day that the New York Stock Exchange and the custodian are open by dividing the value of the assets of the Fund allocable to that class less Fund liabilities allocable to the class and any liabilities charged directly to the class, exclusive of surplus, by the total number of shares of the class outstanding. d) MULTIPLE CLASS ALLOCATIONS: Investment income, realized and unrealized gains and losses, if any, and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class. Class specific expenses are borne by the affected class. Service fee payments under Rule 12b-1 are borne solely by and charged to the Service Shares based on net assets of that class. e) FEDERAL INCOME TAXES: It is the policy of each Fund to continue to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. Each Fund intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. f) REPURCHASE AGREEMENTS: It is each Fund's policy to monitor closely the creditworthiness of all firms with which it enters into repurchase agreements, and to take possession of, or otherwise perfect its security interest in, securities purchased under agreements to resell. The securities purchased under agreements to resell are marked to market every business day in order to compare the value of the collateral to the amount of the "loan" (repurchase agreements being defined as "loans" in the 1940 Act), including the accrued interest earned thereon. If the value of the collateral is less than 102% of the loan plus the accrued interest thereon, additional collateral is required from the borrower. g) USE OF ESTIMATES: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts 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. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: The Asset Management Group of Bank of Hawaii (the "Adviser"), serves as Investment Adviser to the Funds. In this role, under Investment Advisory Agreements, the Adviser supervises the Funds' investments and provides various services. Aquila Investment Management LLC the ("Administrator"), a wholly-owned subsidiary of Aquila Management Corporation, the Trust's founder and sponsor, serves as the Administrator for the Trust under an Administration Agreement with the Trust. The Administrator provides all administrative services to the Funds other than those relating to the investment portfolios. Specific details as to the nature and extent of the services provided by the Adviser and the Administrator are more fully defined in the Prospectus and Statement of Additional Information of the Funds. For their services, the Adviser and the Administrator each receive a fee which is payable monthly and computed as of the close of business each day on the net assets of each Fund at the following annual rates: Cash Fund - On net assets up to $325 million, the fee is paid to the Adviser and the Administrator at the annual rate of 0.33% and 0.17%, respectively, and on net assets above that amount at the annual rate of 0.43% and 0.07%, respectively. Tax-Free Fund - On net assets up to $95 million, the fee is paid to the Adviser and the Administrator at the annual rate of 0.27% and 0.13%, respectively, and on net assets above that amount at the annual rate of 0.33% and 0.07%, respectively. Government Fund - On net assets up to $60 million, the fee is paid to the Adviser and the Administrator at the annual rate of 0.27% and 0.13%, respectively, and on net assets above that amount at the annual rate of 0.33% and 0.07%, respectively. The Adviser and the Administrator each agrees that the above fees shall be reduced, but not below zero, by an amount equal to its proportionate share (determined on the basis of the respective fees computed as described above) of the amount, if any, by which the total expenses of a Fund in any fiscal year, exclusive of taxes, interest and brokerage fees, shall exceed the lesser of (i) 2.5% of the first $30 million of average annual net assets of the Fund plus 2% of the next $70 million of such assets and 1.5% of its average annual net assets in excess of $100 million, or (ii) 25% of the Fund's total annual investment income. The payment of the above fees at the end of any month will be reduced or postponed so that at no time will there be any accrued but unpaid liability under this expense limitation. Advisory and administrative fees in a given fiscal year may be recouped prior to the end of such year if interest rates were to increase. Contractual reduction of fees, if any, is calculated on a fiscal year basis. For the period April 1, 2002 through March 31, 2005, advisory and administrative fees have been contractually reduced (see ii above) due to the low interest rate environment. For the year ended March 31, 2005: Cash Fund incurred advisory and administration fees of $1,611,275 and $640,201; due to the expense limitation, such fees were reduced by $640,692 and $256,008, respectively. Tax-Free Fund incurred advisory and administration fees of $553,218 and $186,437; due to the expense limitation, such fees were reduced by $291,119 and $98,109, respectively. Government Fund incurred advisory and administration fees of $2,755,992 and $628,238; due to the expense limitation, such fees were reduced by $1,227,819 and $280,009, respectively. Under the October 1, 2004, Compliance Agreement with the Administrator, the Administrator is compensated for Chief Compliance Officer related services provided to enable the Trust to comply with Rule 38a-1 of the Investment Company Act of 1940. b) DISTRIBUTION AND SERVICE FEES: Each Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. A part of the Plan authorizes payment of certain distribution or service fees by the Service Shares Class of the respective Fund. Such payments are made to "Designated Payees" - broker-dealers, other financial institutions and service providers who have entered into appropriate agreements with the Distributor and which have rendered assistance in the distribution and/or retention of the respective Fund's Service Shares or in the servicing of Service Share accounts. The total payments under this part of a Fund's Plan may not exceed 0.25% of its average annual assets represented by Service Shares. No such payments will be made by the Original Share Class. Specific details about each Plan are more fully defined in the Prospectus and Statement of Additional Information of the Trust. Under a Distribution Agreement, Aquila Distributors, Inc. (the "Distributor") serves as the exclusive distributor of the Funds' shares. No compensation or fees are paid to the Distributor for such share distribution. c) OTHER RELATED PARTY TRANSACTIONS: For the year ended March 31, 2005, the following amounts were accrued for legal fees: Cash Fund $42,580; Tax-Free Fund $27,551; Government Fund $90,999. Of these amounts, $37,473, $25,722 and $82,928 respectively, were allocable to Hollyer Brady Barrett & Hines LLP, counsel to the Trust, for legal services in conjunction with the respective Fund's ongoing operations. The Secretary of the Trust is a Partner of Hollyer Brady Barrett & Hines LLP. 4. GUARANTEES OF CERTAIN COMMERCIAL PAPER Various banks and other institutions have issued irrevocable letters of credit or guarantees for the benefit of the holders of certain commercial paper. Payment at maturity of principal and interest of certain commercial paper held by the Funds is supported by such letters of credit or guarantees. 5. EXPENSES The Funds have negotiated an expense offset arrangement with their custodian, wherein they receive credit toward the reduction of custodian fees and other expenses whenever there are uninvested cash balances. The Statements of Operations reflect the total expenses before any offset, the amount of offset and the net expenses. It is the general intention of the Funds to invest, to the extent practicable, some or all of cash balances in income-producing assets rather than leave cash on deposit. 6. PORTFOLIO ORIENTATION Since the Tax-Free Fund has a significant portion of its investments in obligations of issuers within Hawaii, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Hawaii and whatever effects these may have upon Hawaii issuers' ability to meet their obligations. 7. INCOME TAX INFORMATION AND DISTRIBUTIONS The Funds declare dividends daily from net investment income and make payments monthly in additional shares at the net asset value per share, in cash, or a combination of both, at the shareholder's option. The tax character of distributions during 2005 and 2004 were as follows: CASH FUND TAX-FREE FUND GOVERNMENT FUND --------------------------- --------------------------- --------------------------- 2005 2004 2005 2004 2005 2004 ----------- ----------- ----------- ----------- ----------- ----------- Net tax-exempt income .............. $ -- $ -- $ 2,023,379 $ 1,184,399 $ -- $ -- Ordinary income .................... 5,915,623 3,803,973 -- 16,619 10,709,831 6,140,227 Capital gain ....................... -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total .............................. $ 5,915,623 $ 3,803,973 $ 2,023,379 $ 1,201,018 $10,709,831 $ 6,140,227 =========== =========== =========== =========== =========== =========== As of March 31, 2005, the components of distributable earning on a tax basis were as follows: TAX-FREE GOVERNMENT CASH FUND FUND FUND ------------ ------------ ------------ Undistributed ordinary income ......................... $ 13,438 $ -- $ 68,263 Accumulated net realized loss on investments .................................... -- -- (743) ------------ ------------ ------------ $ 13,438 $ -- $ 67,520 ------------ ------------ ------------ RECLASSIFICATION OF CAPITAL ACCOUNTS On the statements of assets and liabilities, as a result of certain differences in the computation of net investment income and net realized capital gains under federal income tax rules and regulations versus U.S. generally accepted accounting principles, a reclassification has been made to increase (decrease) undistributed net investment income (distributions in excess of net investment income), accumulated net realized gain (loss) on investments and additional paid-in capital for the Funds as follows: TAX-FREE GOVERNMENT CASH FUND FUND FUND ------------ ------------ ------------ Additional Paid-in Capital ............................ $ -- $ 20,517 $ -- Undistributed net investment income ................... -- (20,517) -- These reclassifications are primarily due to taxable distributions in excess of net investment income for the Tax-Free Fund. Net assets are not affected by these changes. PACIFIC CAPITAL CASH ASSETS TRUST FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ORIGINAL SHARES ------------------------------------------------------ YEAR ENDED MARCH 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ------ ------ ------ ------ ------ Net asset value, beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from investment operations: Net investment income .................... 0.01 0.01 0.01 0.03 0.06 ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ..... (0.01) (0.01) (0.01) (0.03) (0.06) ------ ------ ------ ------ ------ Net asset value, end of period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return ................................ 1.36% 0.90% 1.35% 2.52% 5.90% Ratios/supplemental data Net assets, end of period (in millions) .. $ 366 $ 287 $ 361 $ 353 $ 364 Ratio of expenses to average net assets .. 0.37% 0.21% 0.36% 0.58% 0.57% Ratio of net investment income to average net assets ..................... 1.39% 0.90% 1.34% 2.51% 5.77% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual cap on fees were (note 3): Ratio of expenses to average net assets .. 0.57% 0.57% 0.58% -- -- Ratio of net investment income to average net assets ..................... 1.19% 0.54% 1.12% -- -- The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets .. 0.37% 0.21% 0.36% 0.57% 0.57% SERVICE SHARES ------------------------------------------------------ YEAR ENDED MARCH 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ------ ------ ------ ------ ------ Net asset value, beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from investment operations: Net investment income .................... 0.01 0.01 0.01 0.02 0.05 ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ..... (0.01) (0.01) (0.01) (0.02) (0.05) ------ ------ ------ ------ ------ Net asset value, end of period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return ................................ 1.11% 0.65% 1.09% 2.27% 5.63% Ratios/supplemental data Net assets, end of period (in millions) .. $ 166 $ 119 $ 123 $ 146 $ 221 Ratio of expenses to average net assets .. 0.61% 0.46% 0.61% 0.83% 0.82% Ratio of net investment income to average net assets ..................... 1.12% 0.65% 1.10% 2.36% 5.49% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual cap on fees were (note 3): Ratio of expenses to average net assets .. 0.81% 0.82% 0.83% -- -- Ratio of net investment income to average net assets ..................... 0.91% 0.29% 0.88% -- -- The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets .. 0.61% 0.46% 0.61% 0.82% 0.82% See accompanying notes to financial statements. PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ORIGINAL SHARES ------------------------------------------------------ YEAR ENDED MARCH 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ------ ------ ---- ------ ------ Net asset value, beginning of period ..... $ 1.00 $ 1.00 1.00 $ 1.00 $ 1.00 ------ ------ ---- ------ ------ Income from investment operations: Net investment income ................. 0.01 0.01 0.01 0.02 0.04 ------ ------ ---- ------ ------ Less distributions: Dividends from net investment income .. (0.01) (0.01) (0.01) (0.02) (0.04) ------ ------ ---- ------ ------ Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return ............................. 1.16% 0.84% 1.15% 2.00% 3.58% Ratios/supplemental data Net assets, end of period (in millions) $ 134 $ 99 $ 130 $ 100 $ 101 Ratio of expenses to average net assets 0.29% 0.17% 0.28% 0.51% 0.53% Ratio of net investment income to average net assets .................. 1.17% 0.84% 1.13% 1.94% 3.50% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual cap on fees were (note 3): Ratio of expenses to average net assets 0.49% 0.52% 0.50% -- -- Ratio of net investment income to average net assets .................. 0.96% 0.50% 0.90% -- -- The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets .. 0.28% 0.17% 0.27% 0.51% 0.53% SERVICE SHARES ------------------------------------------------------ YEAR ENDED MARCH 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ------ ------ ------ ------ ------ Net asset value, beginning of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from investment operations: Net investment income ................. 0.01 0.01 0.01 0.02 0.03 ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income .. (0.01) (0.01) (0.01) (0.02) (0.03) ------ ------ ------ ------ ------ Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return ............................. 0.90% 0.59% 0.90% 1.75% 3.32% Ratios/supplemental data Net assets, end of period (in millions) $ 72 $ 50 $ 56 $ 52 $ 54 Ratio of expenses to average net assets 0.53% 0.42% 0.53% 0.77% 0.78% Ratio of net investment income to average net assets .................. 0.92% 0.59% 0.89% 1.77% 3.26% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual cap on fees were (note 3): Ratio of expenses to average net assets 0.75% 0.77% 0.76% -- -- Ratio of net investment income to average net assets .................. 0.71% 0.25% 0.66% -- -- The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets .. 0.53% 0.42% 0.52% 0.77% 0.78% See accompanying notes to financial statements. PACIFIC CAPITAL U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ORIGINAL SHARES ------------------------------------------------------ YEAR ENDED MARCH 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ------ ------ ------ ------ ------ Net asset value, beginning of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from investment operations: Net investment income ................. 0.01 0.01 0.01 0.03 0.06 ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income .. (0.01) (0.01) (0.01) (0.03) (0.06) ------ ------ ------ ------ ------ Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return ............................. 1.41% 0.96% 1.34% 2.73% 5.88% Ratios/supplemental data Net assets, end of period (in millions) $ 354 $ 263 $ 270 $ 306 $ 151 Ratio of expenses to average net assets 0.27% 0.11% 0.25% 0.45% 0.47% Ratio of net investment income to average net assets .................. 1.42% 0.96% 1.34% 2.47% 5.73% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual cap on fees were (note 3): Ratio of expenses to average net assets 0.45% 0.46% 0.46% -- -- Ratio of net investment income to average net assets .................. 1.24% 0.62% 1.12% -- -- The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.27% 0.11% 0.24% 0.45% 0.47% SERVICE SHARES ------------------------------------------------------ YEAR ENDED MARCH 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ------ ------ ------ ------ ------ Net asset value, beginning of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from investment operations: Net investment income ................. 0.01 0.01 0.01 0.02 0.05 ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income .. (0.01) (0.01) (0.01) (0.02) (0.05) ------ ------ ------ ------ ------ Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return ............................. 1.16% 0.71% 1.09% 2.48% 5.62% Ratios/supplemental data Net assets, end of period (in millions) $ 578 $ 575 $ 448 $ 457 $ 332 Ratio of expenses to average net assets 0.52% 0.36% 0.49% 0.70% 0.72% Ratio of net investment income to average net assets .................. 1.16% 0.71% 1.08% 2.39% 5.47% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual cap on fees were (note 3): Ratio of expenses to average net assets 0.70% 0.71% 0.71% -- -- Ratio of net investment income to average net assets .................. 0.98% 0.36% 0.86% -- -- The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.52% 0.36% 0.49% 0.70% 0.72% See accompanying notes to financial statements. ADDITIONAL INFORMATION (UNAUDITED) TRUSTEES AND OFFICERS(1)(2) NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(6) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- INTERESTED TRUSTEE (6) Diana P. Herrmann Trustee since Vice Chair and Chief Executive Officer of 10 None New York, NY 2004, President Aquila Management Corporation, Founder of (02/25/58) since 1998 and the Aquila(sm) Group of Funds(7) and parent Vice Chair of Aquila Investment Management LLC, since 2003 Administrator, since 2004, President and Chief Operating Officer since 1997, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Chief Executive Officer and Vice Chair since 2004 and President, Chief Operating Officer and Manager of the Administrator since 2003; Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila(sm) Group of Funds since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; Governor, Investment Company Institute (2004) and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. NON-INTERESTED TRUSTEES Theodore T. Mason Chair of the Executive Director, East Wind Power 10 Trustee, Pimco New York, NY Board of Partners LTD since 1994 and Louisiana Power Advisors VIT. (11/24/35) Trustees since Partners, 1999-2003; Treasurer, Alumni 2004 and Association of SUNY Maritime College since Trustee 2004 (President, 2002-2003, First Vice since 1984 President, 2000-2001, Second Vice President, 1998-2000) and director of the same organization since 1997; Director, STCM Management Company, Inc., 1973-2004; twice national officer of Naval Reserve Association, commanding officer of four naval reserve units and Captain, USNR (Ret); director, The Navy League of the United States New York Council since 2002; trustee, The Maritime Industry Museum at Fort Schuyler, 2000-2004; and the Maritime College at Fort Schuyler Foundation, Inc. since 2000. Thomas W. Courtney Trustee President, Courtney Associates, Inc., a 5 Chairman of the Board Sewickley, PA since 1984 venture capital firm, since 1988. of Oppenheimer Quest (08/17/33) Value Funds Group, Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, and Oppenheimer Rochester Group of Funds; Chairman of the Board of Pimco Advisors VIT. Stanley W. Hong Trustee President, Waste Management of Hawaii, Inc. 4 Trustee, Pacific Honolulu, HI since 1993 since 2002; Corporate Vice President, Capital Funds, which (04/05/36) Hawaii Area, Waste Management, Inc. since includes 11 bond and 2002; Trustee, The King William Charles stock funds; director, Lunalilo Trust Estate since 2001; President First Insurance Co. of and Chief Executive Officer, The Chamber of Hawaii, Ltd., Lanihau Commerce of Hawaii, 1996-2001; director, Properties, Ltd. Hawaii Public Television Foundation since 1998; Regent, Chaminade University of Honolulu; Chair - trustees, Heald College; trustee, the Nature Conservancy of Hawaii; and director of other corporate and community organizations. Russell K. Okata Trustee Executive Director, Hawaii Government 4 Trustee, Pacific Honolulu, HI since 1993 Employees Association AFSCME Local 152, Capital Funds, which (03/22/44) AFL-CIO since 1981; International Vice includes 11 bond and President, American Federation of State, stock funds; Chairman, County and Municipal Employees, AFL-CIO Royal State Group. since 1981; director of various civic and charitable organizations. Douglas Philpotts Trustee Retired; formerly director, Chairman of the 4 Trustee, Pacific Honolulu, HI since 1992 Board and President of Hawaiian Trust Capital Funds, which (11/21/31) Company, Limited; present or former includes 11 bond and director of various Hawaii-based civic and stock funds. charitable organizations. Oswald K. Stender Trustee Director, Hawaiian Electric Industries, 4 Trustee, Pacific Honolulu, HI since 1993 Inc., a public utility holding company, Capital Funds, which (10/08/31) 1993-2004; trustee, the Bernice Pauahi includes 11 bond and Bishop Estate 1990-1999; trustee, Office of stock funds; director, Hawaiian Affairs and a member or trustee of Grace Pacific several community organizations. Corporation, an asphalt paving company, and ACE Trucking Inc., a trucking company. CHAIRMAN EMERITUS Because of his importance to the shareholders and to enable the Board of Trustees to continue to have the benefit of his counsel, Mr. Lacy B Herrmann has agreed to continue to be Chairman Emeritus. The Chairman Emeritus may attend Board meetings but has no voting power. Lacy B. Herrmann Founder, Founder and Chairman of the Board, Aquila N/A N/A New York, NY Chairman Management Corporation, the sponsoring (05/12/29) Emeritus since organization and parent of the Manager or 2004, Trustee, Administrator and/or Adviser or Sub-Adviser 1984-2004, to each fund of the Aquila(sm) Group of and Chairman Funds; Chairman of the Manager or of the Board Administrator and/or Adviser or Sub-Adviser of Trustees, to each since 2004; Founder, Chairman 1984-2003 Emeritus and Trustee of Aquila Rocky Mountain Equity Fund, Tax-Free Fund For Utah, Narragansett Insured Tax-Free Income Fund and Tax-Free Trust of Arizona; Founder and Chairman Emeritus of Hawaiian Tax-Free Trust, Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky and Tax-Free Trust of Oregon; previously Chairman and a Trustee of each fund in the Aquila(sm) Group of Funds since its establishment until 2004 or 2005; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations. OFFICERS Charles E. Childs, III Executive Vice Executive Vice President of all funds in N/A N/A New York, NY President the Aquila(sm) Group of Funds and the (04/01/57) since 2003 Administrator and Adminisrator's parent since 2003; formerly Senior Vice President, corporate development, Vice President, Assistant Vice President and Associate of the Administrator's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Sherri Foster Vice President Senior Vice President, Hawaiian Tax-Free N/A N/A Lahaina, HI since 1997 Trust since 1993 and formerly Vice (07/27/50) President or Assistant Vice President; Vice President or Assistant Vice President of three Aquila Money-Market Funds; Registered Representative of the Distributor since 1985. John M. Herndon Vice President Assistant Secretary of the Aquila(sm) Group N/A N/A New York, NY since 1990 and of Funds since 1995 and Vice President of (12/17/39) Assistant the three Aquila Money-Market Funds since Secretary 1990; Vice President of the Administrator since 1995 or its predecessor and current parent since 1990. Robert W. Anderson Chief Compliance Chief Compliance Officer of the Trust, the N/A N/A New York, NY Officer since Administrator and the Distributor since (08/23/40) 2004 and 2004, Compliance Officer of the Assistant Administrator or its predecessor and Secretary current parent since 1998 and Assistant since 2000 Secretary of the Aquila(sm) Group of Funds since 2000; Consultant, The Wadsworth Group, 1995-1998. Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila(sm) N/A N/A (11/06/56) 2003 and Group of Funds since 2003 and Treasurer Treasurer since 2000; Controller, Van Eck Global since 2000 Funds, 1993-2000. Edward M. W. Hines Secretary Partner, Hollyer Brady Barrett & Hines LLP, N/A N/A New York, NY since 1984 legal counsel to the Trust, since 1989; (12/16/39) Secretary of the Aquila(sm) Group of Funds. Lori A. Vindigni Assistant Assistant Treasurer of the Aquila(sm) Group N/A N/A New York, NY Treasurer of Funds since 2000; Assistant Vice (11/02/66) since 2000 President of the Administrator or its predecessor and current parent since 1998; Fund Accountant for the Aquila(sm) Group of Funds, 1995-1998. - ----------- (1) The Trust's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll free). (2) From time to time Bank of Hawaii may enter into normal investment management, commercial banking and lending arrangements with one or more of the Trustees of the Trust and their affiliates. The Asset Management Group of Bank of Hawaii is the Trust's investment adviser. (3) The mailing address of each Trustee and officer is c/o Pacific Capital Funds of Cash Assets Trust, 380 Madison Avenue, New York, NY 10017. (4) Because the Trust does not hold annual meetings, each Trustee holds office for an indeterminate term. The term of office of each officer is one year. (5) Includes certain Aquila-sponsored funds that are dormant and have no public shareholders. (6) Ms. Herrmann is an interested person of the Trust as an officer of the Trust, as a director, officer and shareholder of the Administrator's corporate parent, as an officer and Manager of the Administrator, and as a shareholder and director of the Distributor. (7) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; considered together, these 11 funds, which do not include the dormant funds described in footnote 5, are called the "Aquila(sm) Group of Funds." - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Trust, you may incur ongoing costs, including management fees; distribution (12b-1) fees; and other Trust expenses. The tables below are intended to help you understand your ongoing costs (in dollars) of investing in the Trust and to compare these costs with the ongoing costs of investing in other mutual funds. The tables below are based on an investment of $1,000 invested on October 1, 2004 and held for the six months ended March 31, 2005. ACTUAL EXPENSES This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". FOR THE SIX MONTHS ENDED MARCH 31, 2005 BEGINNING ENDING EXPENSES ACTUAL ACCOUNT ACCOUNT PAID DURING TOTAL RETURN(1) VALUE VALUE THE PERIOD(2) - -------------------------------------------------------------------------------- CASH FUND Original Shares 0.85% $1,000.00 $1,008.50 $2.40 Service Shares 0.73% $1,000.00 $1,007.30 $3.65 - -------------------------------------------------------------------------------- TAX-FREE FUND Original Shares 0.69% $1,000.00 $1,006.90 $1.80 Service Shares 0.57% $1,000.00 $1,005.70 $3.05 - -------------------------------------------------------------------------------- GOVERNMENT FUND Original Shares 0.88% $1,000.00 $1,008.80 $1.95 Service Chares 0.75% $1,000.00 $1,007.50 $3.20 - -------------------------------------------------------------------------------- (1) ASSUMES REINVESTMENT OF ALL DIVIDENDS. TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR. (2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.48% AND 0.73%, RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.36% AND 0.61%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES, AND 0.39% AND 0.64%, RESPECTIVELY, FOR GOVERNMENT Fund Original Shares and Service Shares, respectively, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Trust's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Trust and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the Trust with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. FOR THE SIX MONTHS ENDED MARCH 31, 2005 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD - -------------------------------------------------------------------------------- CASH FUND Original Shares 5.00% $1,000.00 $1,022.54 $2.42 Service Shares 5.00% $1,000.00 $1,021.29 $3.68 - -------------------------------------------------------------------------------- TAX-FREE FUND Original Shares 5.00% $1,000.00 $1,023.14 $1.82 Service Shares 5.00% $1,000.00 $1,021.89 $3.07 - -------------------------------------------------------------------------------- GOVERNMENT FUND Original Shares 5.00% $1,000.00 $1,022.99 $1.97 Service Chares 5.00% $1,000.00 $1,021.74 $3.23 - -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.48% AND 0.73%, RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.36% AND 0.61%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES, AND 0.39% AND 0.64%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND SERVICE SHARES, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code of 1986, as amended. NO CURRENT ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED. For the fiscal year ended March 31, 2005, $2,023,379 of dividends paid by the Tax-Free Fund were exempt-interest dividends. For the Cash Fund and the Government Fund all of the dividends paid were ordinary dividend income. Prior to January 31, 2005, shareholders were mailed IRS Form 1099-DIV which contained information on the status of distributions paid for the 2004 CALENDAR YEAR. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquilasm Group of Funds produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent the entire list of portfolio securities of your Trust twice a year in the semi-annual and annual reports you receive. Additionally, we prepare, and have available portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your Trust's portfolio other than in your shareholder reports, please check our website (www.aquilafunds.com) or call us at 1-800-437-1020. The Trust additionally files a complete list of its portfolio holding with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the SEC website at www.sec.gov. You may also review or, for a fee, copy the forms at the SEC's Public Reference Room in Washington, DC or by calling 800-SEC-0330. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROXY VOTING RECORD (UNAUDITED) The three portfolios Trust do not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2004 with respect to which the three portfolios Trust were entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRIVACY NOTICES (UNAUDITED) PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Trust we collect certain nonpublic personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about a fund. INFORMATION WE COLLECT. "Nonpublic personal information" is personally identifiable financial information about you as an individual or your family. The kinds of nonpublic personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose nonpublic personal information about you to companies that provide necessary services to us, such as the Trust's transfer agent, distributor, investment adviser or sub-adviser, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to nonpublic personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all nonpublic personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all nonpublic information about you that each of these companies may obtain in connection with services provided to the Trust or to you as a shareholder of the Trust. - -------------------------------------------------------------------------------- (THIS PAGE INTENTIONALLY LEFT BLANK) (THIS PAGE INTENTIONALLY LEFT BLANK) INVESTMENT ADVISER Asset Management Group of Bank of Hawaii P.O. Box 3170 o Honolulu, Hawaii 96802 ADMINISTRATOR Aquila Investment Management LLC 380 Madison Avenue, Suite 2300 o New York, New York 10017 BOARD OF TRUSTEES Theodore T. Mason, Chair Thomas W. Courtney Diana P. Herrmann Stanley W. Hong Russell K. Okata Douglas Philpotts Oswald K. Stender CHAIRMAN EMERITUS AND FOUNDER Lacy B. Herrmann OFFICERS Diana P. Herrmann, Vice Chair and President Charles E. Childs, III, Executive Vice President Sherri Foster, Vice President Robert W. Anderson, Chief Compliance Officer Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR Aquila Distributors, Inc. 380 Madison Avenue, Suite 2300 o New York, New York 10017 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC Inc. 760 Moore Road o King of Prussia, Pennsylvania 19406 CUSTODIAN Bank One Trust Company, N.A. 1111 Polaris Parkway o Columbus, Ohio 43240 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 345 Park Avenue o New York, New York 10154 Further information is contained in the Prospectus which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of March 31, 2005 (the end of the reporting period) the Trust has adopted a code of ethics that applies to the Trust's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002; (f)(1) Pursuant to Item 10(a)(1), a copy of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Trust's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various areas, including the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties under the Charter. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES a) Audit Fees - The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements were 5 in 2004 and $ in 2004. b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years. c) Tax Fees - The Registrant was billed by the principal accountant $ and $ in 2005 and 2004, respectively, for return preparation. d) All Other Fees - There were no additional fees plaid for audit and non-audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. 		Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. 		Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure tat information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated t registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS. (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. 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. CASH ASSETS TRUST By: /s/ Diana P. Herrmann - - --------------------------------- Vice Chair, Trustee and President June 6, 2005 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Chief Financial Officer and Treasurer June 6, 2005 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: /s/ Diana P. Herrmann - - --------------------------------- Diana P. Herrmann Vice Chair, Trustee and President June 6, 2005 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer June 6, 2005 CASH ASSETS TRUST EXHIBIT INDEX (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940.