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: 9/30/05
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 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] (R)
A CASH MANAGEMENT
INVESTMENT
[LOGO OF THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST:
A LION STANDING ON A TWISTED ROPE] (R)
THE PACIFIC CAPITAL FUNDS
OF
CASH ASSETS TRUST
November, 2005
Dear Investor:
We are pleased to provide you with the Semi-Annual Report for The Pacific
Capital Funds of Cash Assets Trust for the six-month period ended September 30,
2005.
The enclosed Semi-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.
As always, the Federal Reserve (the "Fed") kept an ever-watchful eye on
the economy and as a result, the Fed's monetary policy had an impact on the
short-term debt markets.
Despite the devastation caused by hurricanes Katrina and Rita, the U.S.
economy registered better than expected growth during the current report period.
Both consumer and business spending remained relatively strong in light of
rising interest rates and energy prices. The manufacturing sector was upbeat,
indicating strength in both orders and production that suggests capital spending
by businesses will continue to expand at a reasonable pace. Real estate remained
a particular area of strength as housing starts kept rising and mortgage rates
stayed relatively low. Additionally, the labor market was quite resilient with
payrolls declining less than expected given the effects of the two hurricanes.
While acknowledging the extraordinary damage from this year's hurricanes,
the Fed's policy makers raised the target for its benchmark short-term interest
rates to 3.75%, the 11th such increase in the past two years. (The Fed
subsequently raised the Federal Funds rate yet again on November 2nd to a level
of 4.00%.) The Federal Funds rate is the interest rate banks charge one another
on overnight loans and the Fed's primary tool for influencing economic activity.
As you are aware, rises in interest rates usually mean higher borrowing cost for
consumers and businesses and a slowdown in economic activity.
In raising short-term interest rates on the heels of the devastation
caused by the hurricanes, the Fed concluded that the prospects of higher
inflation, due in large part to rising energy prices, remained more worrisome
than the possibility of slower economic growth.
As mentioned in previous report letters, yields on money market funds like
the Trust, move in concert with rate policies pursued by the Fed. By keeping
each of the funds' average weighted portfolio maturity relatively short, the
Trust's Investment Adviser, the Asset Management Group of
Bank of Hawaii, has taken advantage of the rise in short-term interest rates.
Each of the Trust's portfolios continues to provide competitive returns to
alternative short-term investment opportunities without wavering from their
conservative investment guidelines.
Looking forward, we are optimistic that each of the Pacific Capital Funds
of Cash Assets Trust will continue to provide investors with competitive returns
without compromising safety of principal.
All those associated with the management of your cash reserves wish to
thank you for the continued support and confidence you have placed in the
Pacific Capital Funds of Cash Assets Trust.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
Vice Chair & President Chairman Emeritus & Founder
NOT A PART OF THE SEMI-ANNUAL REPORT
PACIFIC CAPITAL
CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2005 (UNAUDITED)
FACE
AMOUNT COMMERCIAL PAPER (63.1%) VALUE
- ---------------- ----------------------------------------------------------------------------- --------------
Automotive (4.7%)
$ 20,000,000 Toyota Motor Credit Corp., 3.95%, 05/22/06 .................................. $ 19,484,811
--------------
Banks (9.7%)
20,000,000 Barclays US Funding Corp., 3.00%, 10/11/05 .................................. 19,980,111
20,000,000 Societe Generale N.A., Inc., 2.67%, 10/07/05 ................................ 19,988,067
--------------
39,968,178
--------------
Borrowing Conduit (4.8%)
20,000,000 Abbey National North America Corp., 3.12%, 10/17/05 ......................... 19,968,889
--------------
Brokerage (14.4%)
20,000,000 Bear Stearns & Co. 2.46%, 10/06/05 .......................................... 19,990,444
20,000,000 Goldman Sachs Group, Inc., 3.06%, 10/13/05 .................................. 19,976,200
20,000,000 Morgan Stanley Dean Witter, 3.73%, 11/23/05 ................................. 19,886,050
--------------
59,852,694
--------------
Conglomerate (4.8%)
20,000,000 General Electric Capital Corp., 3.28%, 10/24/05 ............................. 19,954,511
--------------
Finance (20.2%)
20,000,000 American Express Credit Corp., 3.65% 12/15/05 ............................... 19,843,750
20,000,000 American General Finance Corp. , 3.12% 10/18/05 ............................. 19,966,945
22,000,000 Citigroup Global Markets Holdings, Inc., 3.11%, 10/14/05 .................... 21,971,479
22,000,000 UBS Finance, 2.91%, 10/14/05 ................................................ 21,973,227
--------------
83,755,401
--------------
Pressed and Blown Glass (4.5%)
18,790,000 DuPont (E.I.) de Nemours & Co., 3.04% 10/13/05 .............................. 18,767,765
--------------
Total Commercial Paper ...................................................... 261,752,249
--------------
CERTIFICATES OF DEPOSIT (4.8%)
Bank (4.8%)
20,000,000 Wells Fargo, 3.72%, 10/12/05 ................................................ 20,000,000
--------------
CORPORATE NOTE (3.6%)
Insurance (3.6%)
15,000,000 Peoples Benefit Life Insurance,
Variable Rate Note, 3.84%, 10/01/05* ..................................... 15,000,000
--------------
FACE
AMOUNT U.S. GOVERNMENT AGENCIES (24.2%) VALUE
- ---------------- ----------------------------------------------------------------------------- --------------
Federal Home Loan Bank (15.6%)
$ 25,000,000 3.32%, 11/02/05 ............................................................. $ 24,921,556
30,000,000 3.55%, 11/25/05 ............................................................. 29,831,196
10,000,000 3.72%, 12/28/05 ............................................................. 9,907,111
--------------
64,659,863
--------------
Federal Home Loan Mortgage Corp. (8.6%)
36,000,000 3.48% 11/21/05 .............................................................. 35,815,380
--------------
Total U.S. Government Agencies ........................................... 100,475,243
--------------
REPURCHASE AGREEMENT (4.4%)
Bank of America
18,000,000 3.77%, 10/03/05 ............................................................. 18,000,000
--------------
(Proceeds of $18,005,655 to be received at maturity, Collateral:
$18,180,000 Federal Home Loan Mortgage Corp. 4.875% due
03/15/07; Collateral Fair Value $18,316,350)
SHARES INVESTMENT COMPANY (0.2%)
- ---------------- -----------------------------------------------------------------------------
889,389 JP Morgan U.S. Government Money Market Fund,
Capital Shares ........................................................... 889,389
--------------
Total Investments (Amortized Cost $416,116,881**) 100.3% 416,116,881
Other assets less liabilities ................... (0.3) (1,183,319)
----- --------------
NET ASSETS ...................................... 100.0% $ 414,933,562
===== ==============
* 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 September 30, 2005, and the maturity date reflects the next rate
change date. Represents 3.6% of net assets.
** Cost for Federal income tax and financial reporting purposes is identical.
PERCENT OF
PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO
---------------------------------- ----------
Commercial Paper ............................ 62.9%
Certificates of Deposit ..................... 4.8
Corporate Note .............................. 3.6
U.S. Government Agencies .................... 24.2
Repurchase Agreement ........................ 4.3
Investment Company .......................... 0.2
-----
100.0%
=====
See accompanying notes to financial statements.
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (98.0%) S&P VALUE
- ---------------- ----------------------------------------------------------- ---------- --------------
COLORADO (3.8%)
Colorado Housing & Financial Authority Revenue
Bonds, Class I, Series A-1, Weekly Reset VRDO*,
SPA: FHLB
$ 7,600,000 2.790%, 10/01/30 .......................................... VMIG1/A-1+ $ 7,600,000
--------------
HAWAII (22.0%)
City and County of Honolulu, Hawaii
(Mandatory Put 12/01/05) SPA: FGIC Insured
5,000,000 2.280%, 12/01/20 .......................................... VMIG1/A-1+ 5,000,000
City and County of Honolulu, Hawaii Commerical
Paper LOC: Wesdeutsche Landesbank
10,000,000 2.650%, 12/01/2005 ........................................ VMIG1/A-1+ 10,000,000
City and County of Honolulu, Hawaii
Prerefunded 11/01/05 @ 101
1,010,000 5.000%, 11/01/12 .......................................... Aaa/A-1+ 1,013,403
City and County of Honolulu, Hawaii- Putable
Series C; SPA: FGIC Insured
1,000,000 2.280%, 12/01/16 .......................................... VMIG1/Aaa 998,813
Department of Budget and Finance of the State
Special Purpose Revenue Bonds (The Queen's
Health System) Series A, Weekly Reset VRDO*,
SPA: Bank of Nova Scotia, AMBAC Insured
23,675,000 2.740%, 07/01/26 .......................................... VMIG1/A-1 23,675,000
3,600,000 2.630%, 07/01/29 .......................................... VMIG1/A-1+ 3,600,000
--------------
44,287,216
--------------
ILLINOIS (4.5%)
Chicago, IL General Obligation Bonds, Series B,
Weekly Reset VRDO*, SPA: Landesbank
Baden-Wuerttemberg FGIC Insured
3,000,000 2.750%, 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
6,000,000 2.750%, 12/01/31 .......................................... VMIG1/A-1+ 6,000,000
--------------
9,000,000
--------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- ---------------- ----------------------------------------------------------- ---------- --------------
MASSACHUSETTS (4.7%)
Massachusetts State Health & Educational Facilities
Authority Revenue Wellesley College Series 1999G
Daily Reset VRDO*
$ 9,425,000 2.740%, 07/01/39 .......................................... VMIG1/A-1+ $ 9,425,000
--------------
MICHIGAN (5.0%)
Eastern Michigan University, MI University Revenue
Bonds, Daily Reset VRDO*, FGIC Insured
7,035,000 2.800%, 06/01/27 .......................................... Aaa/A-1+ 7,035,000
Northern Michigan University Revenue Bonds, Daily
Reset VRDO*, FGIC Insured
3,010,000 2.800%, 06/01/31 .......................................... VMIG1/A-1+ 3,010,000
--------------
10,045,000
--------------
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 2.800%, 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 2.800%, 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 2.800%, 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 2.800%, 04/01/27 .......................................... NR/A-1+ 7,110,000
700,000 2.800%, 04/01/27 .......................................... NR/A-1+ 700,000
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 2.850%, 10/01/09 .......................................... VMIG1/A-1+ 1,485,000
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- ---------------- ----------------------------------------------------------- ---------- --------------
MISSOURI (CONTINUED)
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 2.850%, 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 2.790%, 09/01/30 .......................................... VMIG1/A-1+ 2,800,000
1,000,000 2.790%, 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 2.790%, 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*
9,100,000 2.800%, 11/01/32 .......................................... VMIG1/A-1+ 9,100,000
--------------
29,450,000
--------------
MONTANA (3.8%)
Montana State, Health Facilities Authority Revenue
Bonds, Series A, Weekly Reset VRDO*,
FGIC Insured SPA: Wells Fargo
7,655,000 2.740%, 12/01/15 .......................................... VMIG1/A-1+ 7,655,000
--------------
NEVADA (4.2%)
Clark County, NV Airport Revenue Bonds, Series C,
Weekly Reset VRDO*, FGIC Insured,
SPA: Landesbank Baden-Wuerttemberg
8,500,000 2.740%, 07/01/29 .......................................... VMIG1/A-1+ 8,500,000
--------------
NEW YORK (7.7%)
Long Island, NY Power Authority Revenue Bonds,
Series 1A, Weekly Reset VRDO*,
LOC: Bayerische Landesbank
6,000,000 2.760%, 05/01/33 .......................................... VMIG1/A-1+ 6,000,000
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- ---------------- ----------------------------------------------------------- ---------- --------------
NEW YORK (CONTINUED)
New York, NY City Transitional Finance Authority
Revenue Bonds, Series 3, Daily Reset VRDO*,
SPA: Bank of New York
$ 9,400,000 2.790%, 11/01/22 .......................................... VMIG1/A-1+ $ 9,400,000
--------------
15,400,000
--------------
NORTH CAROLINA (9.7%)
Charlotte, NC Airport Revenue Bonds, Series A,
Weekly Reset VRDO*, MBIA Insured,
SPA: JP Morgan Chase
6,565,000 2.730%, 07/01/16 .......................................... VMIG1/A-1+ 6,565,000
Concord, NC Utility Systems Revenue Bonds, Series B,
Weekly Reset VRDO*, FSA Insured,
SPA: Wachovia Bank
6,065,000 2.730%, 12/01/22 .......................................... VMIG1/NR 6,065,000
Durham, NC Public Improvement General
Obligation Bonds Weekly Reset VRDO*,
SPA: Wachovia Bank of North Carolina
2,975,000 2.760%, 02/01/11 .......................................... VMIG1/A-1+ 2,975,000
Durham, NC General Obligation Bonds (Public
Improvement Project), Weekly Reset VRDO*,
SPA: Wachovia Bank of North Carolina
1,150,000 2.760%, 02/01/09 .......................................... VMIG1/A-1+ 1,150,000
1,270,000 2.760%, 02/01/12 .......................................... VMIG1/A-1+ 1,270,000
1,475,000 2.760%, 02/01/13 .......................................... VMIG1/A-1+ 1,475,000
--------------
19,500,000
--------------
OHIO (1.6%)
Ohio Housing Finance Agency Mortgage Revenue
Bonds (Residential Mortgage), Series E-AMT,
Weekly Reset VRDO*, SPA: FHLB Insured
3,175,000 2.800%, 09/01/34 .......................................... VMIG1/NR 3,175,000
--------------
PENNSYLVANIA (2.5%)
Philadelphia, PA Hospital & Education Facility
Authority Children's Hospital Series 2003A D
Daily Reset VRDO*; SPA: JP Morgan Chase
5,100,000 2.810%, 02/15/14 .......................................... VMIG1/Aa2 5,100,000
--------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- ---------------- ----------------------------------------------------------- ---------- --------------
TEXAS (4.2%)
Texas State, TX Turnpike Authority Central System
Revenue Bonds, Series B, Weekly Reset VRDO*,
AMBAC Insured, SPA: Bank of Nova Scotia
$ 8,500,000 2.730%, 08/15/42 .......................................... Aaa/A-1 $ 8,500,000
--------------
VIRGINIA (3.0%)
University of Virginia Revenue Bonds, Series A,
Weekly Reset VRDO*
6,000,000 2.740%, 06/01/34 .......................................... VMIG1/A-1+ 6,000,000
--------------
WASHINGTON (4.2%)
Seattle, WA Water System Revenue Bonds, Series A,
Weekly Reset VRDO*, LOC: Bayerische Landesbank
8,500,000 2.680%, 03/01/32 .......................................... VMIG1/A-1+ 8,500,000
--------------
INVESTMENT COMPANY (1.8%)
3,563,000 Dreyfus Tax-Exempt Money Market Institutional Shares 3,563,000
--------------
197,012,216
--------------
Total Investments (Amortized Cost
$200,575,216**) ..................................... 99.8% 200,575,216
Other assets less liabilities .......................... 0.2 404,661
----- --------------
NET ASSETS ............................................. 100.0% $ 200,979,877
===== ==============
* 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.
** Cost for Federal income tax and financial reporting purposes is identical.
PORTFOLIO DISTRIBUTION (UNAUDITED)
----------------------------------
Colorado 3.8%
Hawaii 22.1
Illinois 4.5
Massachusetts 4.7
Michigan 5.1
Minnesota 2.4
Missouri 14.7
Montana 3.8
Nevada 4.2
New York 7.7
North Carolina 9.7
Ohio 1.6
Pennsylvania 2.5
Texas 4.2
Virginia 3.0
Washington 4.2
Investment Company 1.8
-----
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
MBIA - Municipal Bond Investors Assurance
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
SEPTEMBER 30, 2005 (UNAUDITED)
FACE
AMOUNT U.S. GOVERNMENT AGENCIES (100.0%) VALUE
- ---------------- ----------------------------------------------------------------------------- --------------
Federal Farm Credit Bank (2.9%)
$ 32,000,000 3.32%, 10/25/05 ............................................................. $ 31,923,200
--------------
Federal Home Loan Bank (97.1%)
98,000,000 1.59%, 10/03/05 ............................................................. 97,982,687
65,000,000 2.28%, 10/05/05 ............................................................. 64,975,300
70,000,000 2.60%, 10/07/05 ............................................................. 69,959,633
97,647,000 3.08%, 10/12/05 ............................................................. 97,538,395
60,000,000 3.13%, 10/14/05 ............................................................. 59,921,675
75,000,000 3.21%, 10/21/05 ............................................................. 74,852,917
94,000,000 3.32%, 10/24/05 ............................................................. 93,783,199
80,000,000 3.27%, 10/26/05 ............................................................. 79,803,611
44,000,000 3.32%, 11/02/05 ............................................................. 43,861,938
70,000,000 3.45%, 11/04/05 ............................................................. 69,758,694
84,000,000 3.41%, 11/09/05 ............................................................. 83,674,220
82,000,000 3.56%, 11/25/05 ............................................................. 81,538,260
30,000,000 3.62%, 11/30/05 ............................................................. 29,813,000
25,000,000 3.62%, 12/07/05 ............................................................. 24,826,684
72,000,000 3.64%, 12/21/05 ............................................................. 71,395,740
23,000,000 3.72%, 12/28/05 ............................................................. 22,786,356
--------------
1,066,472,309
--------------
Total U.S. Government Agencies ........................................... 1,098,395,509
--------------
SHARES INVESTMENT COMPANY (0.3%)
- ---------------- -----------------------------------------------------------------------------
3,507,720 JP Morgan U.S. Government Money Market Fund,
Capital Shares ........................................................... 3,507,720
--------------
Total Investments
(Amortized Cost $1,101,903,229*) ...... 100.3% 1,101,903,229
Other assets less liabilities ............. (0.3) (2,876,511)
----- --------------
NET ASSETS ................................ 100.0% $1,099,026,718
===== ==============
* Cost for Federal income tax and financial reporting purposes is identical.
PERCENT OF
PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO
---------------------------------- ----------
U.S. Government Agencies .................... 99.7%
Investment Company .......................... 0.3
-----
100.0%
=====
See accompanying notes to financial statements.
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2005 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
--------------- --------------- ---------------
ASSETS:
Investments at value and amortized cost (note 2) ........ $ 398,116,881 $ 200,575,216 $ 1,101,903,229
Repurchase agreement (note 2) ........................... 18,000,000 -- --
Cash .................................................... -- 7,008 --
Interest receivable ..................................... 85,456 797,365 7,896
Other assets ............................................ 33,363 14,053 71,615
--------------- --------------- ---------------
Total Assets ......................................... 416,235,700 201,393,642 1,101,982,740
--------------- --------------- ---------------
LIABILITIES:
Dividends payable ....................................... 1,063,474 314,258 2,455,120
Adviser and Administrator fees payable .................. 181,388 67,003 334,662
Distribution fees payable ............................... 35,734 17,264 136,984
Accrued expenses ........................................ 21,542 15,240 29,256
--------------- --------------- ---------------
Total Liabilities .................................... 1,302,138 413,765 2,956,022
--------------- --------------- ---------------
NET ASSETS .............................................. $ 414,933,562 $ 200,979,877 $ 1,099,026,718
=============== =============== ===============
NET ASSETS CONSIST OF:
Capital Stock - Authorized an unlimited number of shares,
par value $.01 per share ............................. $ 4,149,184 $ 2,009,777 $ 10,989,591
Additional paid-in capital .............................. 410,768,991 199,077,961 1,087,969,607
Undistributed (distributions in excess of) net
investment income .................................... 13,391 (107,861) 68,263
Accumulated net realized (gain/loss) on investments ..... 1,996 -- (743)
--------------- --------------- ---------------
$ 414,933,562 $ 200,979,877 $ 1,099,026,718
=============== =============== ===============
SHARES OF BENEFICIAL INTEREST:
Original Shares Class:
Net Assets ........................................... $ 255,904,569 $ 125,133,246 $ 348,369,901
=============== =============== ===============
Shares outstanding ................................... 256,122,175 125,131,778 348,340,870
=============== =============== ===============
Net asset value per share ............................ $ 1.00 $ 1.00 $ 1.00
=============== =============== ===============
Service Shares Class:
Net Assets ........................................... $ 159,028,993 $ 75,846,631 $ 750,656,817
=============== =============== ===============
Shares outstanding ................................... 158,796,228 75,845,902 750,618,190
=============== =============== ===============
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 SIX MONTHS ENDED SEPTEMBER 30, 2005 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
------------ ------------ ------------
INVESTMENT INCOME:
Interest income ................................. $ 8,269,265 $ 2,639,666 $ 15,570,889
------------ ------------ ------------
EXPENSES:
Investment Advis er fees (note 3) ............... 945,234 326,380 1,603,588
Administrator fees (note 3) ..................... 343,345 103,871 362,032
Distribution fees (note 3) ...................... 210,866 116,791 785,078
Trustees' fees and expenses ..................... 48,709 29,596 75,702
Legal fees (note 3) ............................. 22,791 11,280 54,786
Insurance ....................................... 22,402 9,345 47,534
Fund accounting fees ............................ 19,251 18,806 18,746
Shareholders' reports ........................... 17,963 3,388 15,168
Registration fees and dues ...................... 16,619 4,347 16,877
Auditing and tax fees ........................... 12,108 9,343 15,184
Transfer and shareholder servicing agent fees ... 6,516 6,361 6,204
Custodian fees .................................. 3,465 7,092 8,045
Chief Compliance Officer (note 3) ............... 2,278 2,278 2,278
Miscellaneous ................................... 2,491 4,086 23,381
------------ ------------ ------------
Total expenses .................................. 1,674,038 652,964 3,034,603
Expenses paid indirectly (note 5) ............... (558) (2,740) (4,451)
------------ ------------ ------------
Net expenses .................................... 1,673,480 650,224 3,030,152
------------ ------------ ------------
Net investment income ............................... 6,595,785 1,989,442 12,540,737
Net realized gain (loss) from securities transactions 1,996 -- --
------------ ------------ ------------
Net change in net assets resulting from operations .. $ 6,597,781 $ 1,989,442 $ 12,540,737
============ ============ ============
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
----------------------------------- -------------------------------------
Six Months Ended Six Months Ended
September 30, 2005 Year Ended September 30, 2005 Year Ended
(unaudited) March 31, 2005 (unaudited) March 31, 2005
------------------ -------------- ------------------ --------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................ $ 6,595,785 $ 5,915,623 $ 1,989,442 $ 2,023,379
Net realized gain (loss)
from securities transactions ....... 1,996 -- -- --
--------------- --------------- --------------- ---------------
Net change in net assets
resulting from operations .......... 6,597,781 5,915,623 1,989,442 2,023,379
--------------- --------------- --------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares .................... (4,563,323) (4,534,518) (1,189,145) (549,754)
Service Shares ..................... (2,032,509) (1,381,105) (800,282) (1,473,625)
--------------- --------------- --------------- ---------------
Total dividends to shareholders
from net investment income ......... (6,595,832) (5,915,623) (1,989,427) (2,023,379)
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares .................... 429,682,071 897,374,600 95,958,798 313,771,101
Service Shares ..................... 275,178,772 473,009,866 88,706,274 93,903,240
--------------- --------------- --------------- ---------------
704,860,843 1,370,384,466 184,665,072 407,674,341
--------------- --------------- --------------- ---------------
Reinvested dividends:
Original Shares .................... 84,572 99,479 47,002 65,741
Service Shares ..................... 1,784,697 1,230,616 758,742 493,472
--------------- --------------- --------------- ---------------
1,869,269 1,330,095 805,744 559,213
--------------- --------------- --------------- ---------------
Cost of shares redeemed:
Original Shares .................... (539,586,137) (818,780,462) (104,801,210) (278,691,955)
Service Shares ..................... (283,933,036) (427,424,705) (85,770,139) (71,906,960)
--------------- --------------- --------------- ---------------
(823,519,173) (1,246,205,167) (190,571,349) (350,598,915)
--------------- --------------- --------------- ---------------
Change in net assets
from capital share transactions .. (116,789,061) 125,509,394 (5,100,533) 57,634,639
--------------- --------------- --------------- ---------------
Total change in net assets ......... (116,787,112) 125,509,394 (5,100,518) 57,634,639
NET ASSETS:
Beginning of period ................ 531,720,674 406,211,280 206,080,395 148,445,756
--------------- --------------- --------------- ---------------
End of period* ..................... $ 414,933,562 $ 531,720,674 $ 200,979,877 $ 206,080,395
=============== =============== =============== ===============
*Includes undistributed (distributions
in excess of) net investment income of: $ 13,391 $ 13,438 $ (107,861) $ (107,877)
=============== =============== =============== ===============
GOVERNMENT FUND
------------------------------------
Six Months Ended
September 30, 2005 Year Ended
(unaudited) March 31, 2005
------------------ --------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................ $ 12,540,737 $ 10,709,831
Net realized gain (loss)
from securities transactions ....... -- (743)
--------------- ---------------
Net change in net assets
resulting from operations .......... 12,540,737 10,709,088
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares .................... (4,799,583) (5,785,972)
Service Shares ..................... (7,741,154) (4,923,859)
--------------- ---------------
Total dividends to shareholders
from net investment income ......... (12,540,737) (10,709,831)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares .................... 321,999,082 819,559,720
Service Shares ..................... 1,418,311,180 2,125,769,411
--------------- ---------------
1,740,310,262 2,945,329,131
--------------- ---------------
Reinvested dividends:
Original Shares .................... 52,193 42,138
Service Shares ..................... 6,980,203 5,231,536
--------------- ---------------
7,032,396 5,273,674
--------------- ---------------
Cost of shares redeemed:
Original Shares .................... (327,967,039) (728,780,568)
Service Shares ..................... (1,252,670,400) (2,128,042,587)
--------------- ---------------
(1,580,637,439) (2,856,823,155)
--------------- ---------------
Change in net assets
from capital share transactions .. 166,705,219 93,779,650
--------------- ---------------
Total change in net assets ......... 166,705,219 93,778,907
NET ASSETS:
Beginning of period ................ 932,321,499 838,542,592
--------------- ---------------
End of period* ..................... $ 1,099,026,718 $ 932,321,499
=============== ===============
*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
SEPTEMBER 30, 2005 (UNAUDITED)
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 Funds. 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 Trust. 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. No such reduction in fees was required for the six months ended
September 30, 2005.
Under a 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 six months ended September 30, 2005, the following amounts were
incurred for legal fees allocable to Hollyer Brady Barrett & Hines LLP, counsel
to the Trust, for legal services in conjunction with the respective Fund's
ongoing operations: Cash Fund $21,579; Tax-Free Fund $8,447; Government Fund
$50,564. The Secretary of the Trust is a Partner of that firm.
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 fiscal 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 earnings 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.
8. CHANGE IN PRINCIPAL ACCOUNTANTS
KPMG LLP was previously the principal accountants for the Pacific Captial
Funds of Cash Assets Trust. On July 27, 2005 KPMG LLP resigned as the principal
accountants of the Trust and Tait, Weller and Baker LLP was engaged as the
principal accountants to audit the Fund's financial statements for the fiscal
year of 2006. The decision was made by the Audit Committee of the Board of
Trustees.
The audit reports of KPMG LLP on the Funds' financial statements as of and
for the years ended March 31, 2005 and 2004 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.
In connection with the audits of the two fiscal years ended March 31, 2005
and 2004 and the subsequent interim period through the opinion date of May 23,
2005 there were no reportable events or disagreements with KPMG LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements if not resolved to the
satisfaction of KPMG LLP would have caused them to make reference in connection
with their opinion to the subject matter of the disagreements.
PACIFIC CAPITAL
CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/05 -----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ................... 0.01 0.01 0.01 0.01 0.03 0.06
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .... (0.01) (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 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................... 1.34%* 1.36% 0.90% 1.35% 2.52% 5.90%
Ratios/supplemental data
Net assets, end of period (in millions) . $ 256 $ 366 $ 287 $ 361 $ 353 $ 364
Ratio of expenses to average net assets . 0.57%** 0.37% 0.21% 0.36% 0.58% 0.57%
Ratio of net investment income to
average net assets ................... 2.63%** 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 caps 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 . 0.57%** 0.37% 0.21% 0.36% 0.57% 0.57%
SERVICE SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/05 -----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ................... 0.01 0.01 0.01 0.01 0.02 0.05
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .... (0.01) (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 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................... 1.21%* 1.11% 0.65% 1.09% 2.27% 5.63%
Ratios/supplemental data
Net assets, end of period (in millions) . $ 159 $ 166 $ 119 $ 123 $ 146 $ 221
Ratio of expenses to average net assets . 0.82%** 0.61% 0.46% 0.61% 0.83% 0.82%
Ratio of net investment income to
average net assets ................... 2.41%** 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 caps 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 . 0.82%** 0.61% 0.46% 0.61% 0.82% 0.82%
- ----------
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
PACIFIC CAPITAL
TAX FREE CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/05 -----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ................... 0.01 0.01 0.01 0.01 0.02 0.04
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .... (0.01) (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 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................... 0.98%* 1.16% 0.84% 1.15% 2.00% 3.58%
Ratios/supplemental data
Net assets, end of period (in millions) . $ 125 $ 134 $ 99 $ 130 $ 100 $ 101
Ratio of expenses to average net assets . 0.50%** 0.29% 0.17% 0.28% 0.51% 0.53%
Ratio of net investment income to
average net assets ................... 1.95%** 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 caps 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 .... 0.50%** 0.28% 0.17% 0.27% 0.51% 0.53%
SERVICE SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/05 -----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ................... 0.01 0.01 0.01 0.01 0.02 0.03
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .... (0.01) (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 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................... 0.86%* 0.90% 0.59% 0.90% 1.75% 3.32%
Ratios/supplemental data
Net assets, end of period (in millions) . $ 76 $ 72 $ 50 $ 56 $ 52 $ 54
Ratio of expenses to average net assets . 0.75%** 0.53% 0.42% 0.53% 0.77% 0.78%
Ratio of net investment income to
average net assets ................... 1.71%** 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 caps 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 .... 0.75%** 0.53% 0.42% 0.52% 0.77% 0.78%
- ----------
* Not annualized.
** Annualized.
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
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/05 -----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ................... 0.01 0.01 0.01 0.01 0.03 0.06
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .... (0.01) (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 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................... 1.36%* 1.41% 0.96% 1.34% 2.73% 5.88%
Ratios/supplemental data
Net assets, end of period (in millions) . $ 348 $ 354 $ 263 $ 270 $ 306 $ 151
Ratio of expenses to average net assets . 0.46%** 0.27% 0.11% 0.25% 0.45% 0.47%
Ratio of net investment income to
average net assets ................... 2.71%** 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 caps 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 . 0.46%** 0.27% 0.11% 0.24% 0.45% 0.47%
SERVICE SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/05 -----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ................... 0.01 0.01 0.01 0.01 0.02 0.05
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .... (0.01) (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 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................... 1.23%* 1.16% 0.71% 1.09% 2.48% 5.62%
Ratios/supplemental data
Net assets, end of period (in millions) . $ 751 $ 578 $ 575 $ 448 $ 457 $ 332
Ratio of expenses to average net assets . 0.71%** 0.52% 0.36% 0.49% 0.70% 0.72%
Ratio of net investment income to
average net assets ................... 2.46%** 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 caps 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 . 0.71%** 0.52% 0.36% 0.49% 0.70% 0.72%
- ----------
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
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ANALYSIS OF EXPENSES (UNAUDITED)
As a shareholder of the Trust, you may incur ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. The tables
below are intended to help you understand your ongoing costs (in dollars) of
investing in each of the Funds 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 April 1,
2005 and held for the six months ended September 30, 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 SEPTEMBER 30, 2005
BEGINNING ENDING EXPENSES
ACTUAL ACCOUNT ACCOUNT PAID DURING
TOTAL RETURN(1) VALUE VALUE THE PERIOD(2)
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CASH FUND
- --------------------------------------------------------------------------------
Original Shares 1.34% $1,000.00 $1,013.40 $2.88
Service Shares 1.21% $1,000.00 $1,012.10 $4.14
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TAX-FREE FUND
Original Shares 0.98% $1,000.00 $1,009.80 $2.52
Service Shares 0.86% $1,000.00 $1,008.60 $3.78
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GOVERNMENT FUND
Original Shares 1.36% $1,000.00 $1,013.60 $2.32
Service Chares 1.23% $1,000.00 $1,012.30 $3.58
- --------------------------------------------------------------------------------
(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 0.57% AND 0.82%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.50% AND
0.75%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.46% AND 0.71%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND
SERVICE SHARES MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD,
MULTIPLIED BY 183/365 (TO REFLECT THE ONE-HALF YEAR PERIOD).
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- --------------------------------------------------------------------------------
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 each of the respective
Funds' 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 respective Fund with the
5.00% hypothetical examples that appear in the shareholder reports of other
mutual funds.
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 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 $1,022.21 $2.89
Service Shares 5.00% $1,000.00 $1,020.96 $4.15
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 5.00% $1,000.00 $1,022.56 $2.54
Service Shares 5.00% $1,000.00 $1,021.31 $3.80
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 5.00% $1,000.00 $1,022.76 $2.33
Service Chares 5.00% $1,000.00 $1,021.51 $3.60
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.57% AND 0.82%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.50% AND
0.75%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.46% AND 0.71%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND
SERVICE SHARES MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD,
MULTIPLIED BY 183/365 (TO REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila(sm) 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
(http://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 http://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 of the 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, 2005 with
respect to which any of the three portfolios of the 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.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
RENEWAL OF INVESTMENT ADVISORY AGREEMENT
Renewal until June 30, 2006 of the Investment Advisory Agreement (the
"Advisory Agreement") for each fund between the Trust and the Adviser was
approved by the Board of Trustees and the independent Trustees in June, 2005. At
a meeting called and held for that purpose at which a majority of the
independent Trustees were present in person, the following materials were
considered:
o Copies of the agreements to be renewed;
o A term sheet describing the material terms of the agreements;
o The Annual Report of the Trust for the year ended March 31, 2005;
o A Report by the Administrator containing data about the performance
of each of the portfolios and data about their respective fees,
expenses, purchases and redemptions together with comparisons of
such data with similar data about other comparable funds, as well as
data as to the profitability of the Adviser and the Administrator;
and
o Quarterly materials reviewed at prior meetings on each of the
portfolio's performance, operations, portfolio and compliance.
The Trustees considered each Advisory Agreement separately. The Trustees
reviewed materials relevant to, and considered, the factors set forth below, and
as to each agreement reached the conclusions described.
THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE ADVISER.
The investment objective of each of the Trust's portfolios is to seek to
provide safety of principal while achieving as a high a level of liquidity and
of current income (and with respect to the Tax-Free Fund, current income exempt
from Federal and Hawaii income taxes). To achieve these objectives, the Adviser
has provided management of each fund's portfolio, as well as provided facilities
for credit analysis of each of the funds' portfolio securities. With respect to
the Government Securities Fund, the Adviser has managed the investment portfolio
in order to achieve a Aaa/AAA rating from both Moody's Investors Service and
Standard and Poor's, respectively.
The Board considered that the Adviser had provided all services the Board
deemed necessary or appropriate, including the specific services that the Board
has determined are required for the Trust, given that its purpose is to provide
shareholders with safety of principal while achieving as a high a level of
liquidity and of current income.
The Board concluded that a commendable quality of services was provided
and that the Trust would be well served if they continued. Evaluation of this
factor weighed in favor of renewal of the Advisory Agreements.
THE INVESTMENT PERFORMANCE OF THE TRUST (AND EACH OF ITS PORTFOLIOS) AND
ADVISER.
The Board determined it appropriate to consider each fund's performance.
For the fiscal year ended March 31, 2005 each fund's average annual rate of
return was:
Cash Fund (Original Shares): 1.36%
Cash Fund (Service Shares): 1.11%
Tax-Free Fund (Original Shares): 1.16%
Tax-Free Fund (Service Shares): 0.90%
Government Securities Fund (Original Shares): 1.41%
Government Securities Fund (Service Shares): 1.16%
The Board reviewed each aspect of each fund's performance and compared its
performance with that of their respective benchmarks. It was noted that the
materials provided by the Administrator indicated that compared to each fund's
respective benchmark, the Trust's portfolios had investment performance that was
either comparable to or favorable for one-, five- and ten-year periods as
compared with the benchmark. The Board considered these results to be consistent
with the purposes of each of the Trust's portfolios.
The Board concluded that the performance of each fund, in light of market
conditions, was satisfactory. Evaluation of this factor indicated to the
Trustees that renewal of the Advisory Agreements would be appropriate.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
ADVISER AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE TRUST (AND EACH OF ITS
PORTFOLIOS).
The information provided in connection with renewal contained expense data
for each fund and its major local competitor as well as data for each of the
funds with respect to their respective peer groups, including data for money
market funds of a comparable asset size. The materials also showed the
profitability to the Adviser of its services to the Trust.
The Board compared the expense and fee data with respect to each of the
portfolios to similar data about other funds that it found to be relevant. The
Board concluded that the expenses of the each of the portfolios and the fees
paid were similar to and were reasonable as compared to those being paid by its
respective local competitor and other money market funds nationwide.
The Board considered that the foregoing indicated the appropriateness of
the costs of the services to the Trust, which was being well managed as
indicated by the factors considered previously.
The Board further concluded that the profitability to the Adviser did not
argue against approval of the fees to be paid under each Advisory Agreement.
THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE TRUST, AND ITS
PORTFOLIOS, GROWS.
Data provided to the Trustees showed that the asset size of each of the
portfolios had been generally increasing in recent years. However, they
concluded that the uncertain interest rate environment might make it difficult
to achieve substantial growth in assets in the near future. The Trustees also
noted that the materials indicated that the each portfolio's fees were generally
comparable to those of its peers, including those with breakpoints. Evaluation
of this factor indicated to the Board that the Advisory Agreements should be
renewed without addition of breakpoints at this time.
BENEFITS DERIVED OR TO BE DERIVED BY THE ADVISER AND ITS AFFILIATES FROM THE
RELATIONSHIP WITH THE TRUST (AND EACH OF ITS PORTFOLIOS).
The Board observed that, as is generally true of most fund complexes, the
Adviser and its affiliates, by providing services to a number of funds or other
investment clients including the Trust's three portfolios, were able to spread
costs as they would otherwise be unable to do. The Board noted that while that
produces efficiencies and increased profitability for the Adviser and its
affiliates, it also makes their services available to the three portfolios of
the Trust at favorable levels of quality and cost which are more advantageous to
the Trust's portfolios than would otherwise have been possible.
(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
Tait, Weller and Baker LLP
1818 Market Street, Suite 2400 o Philadelphia, PA 19103
Further information is contained in the Prospectus
which must precede or accompany this report.
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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)(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
December 7, 2005
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Chief Financial Officer and Treasurer
December 7, 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
December 7, 2005
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
December 7, 2005
CASH ASSETS TRUST
EXHIBIT INDEX
(a)(1) Not applicable.
(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.