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: 3/31/06
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL
REPORT
MARCH 31, 2006
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 THE PACIFIC CAPITAL FUNDS
CAPITAL FUNDS OF CASH OF
ASSETS TRUST: A LION CASH ASSETS TRUST
STANDING ON A TWISTED
ROPE] (R) ANNUAL REPORT
May 18, 2006
Dear Investor:
We are pleased to present the Annual Report for The Pacific Capital Funds
of Cash Assets Trust for the fiscal year ended March 31, 2006.
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.
-----------------------------------
This year's report reflects the continued upward trend in rates indicated
by the Federal Reserve (the "Fed") in terms of direction of the Federal Funds
rate. Over the past 12-month period, the Fed maintained a watchful eye on the
economy and inflation, and as a result, the Fed's monetary policy had an impact
on the short-term debt markets. During the period, the Fed's policy makers
raised the target for its benchmark short-term interest rates to 4.75% as of
March 28, 2006, from a level of 2.75% just a year ago.
The U.S. economy reported better than expected growth during the current
report period, despite facing counterbalancing forces from the impact of the two
major Gulf Coast hurricanes, volatile energy prices and political instability in
many areas around the world. Both consumer and business spending remained
relatively strong in light of rising interest rates and energy prices. The
manufacturing sector of the economy remains modestly upbeat, indicating strength
in both orders and production. This suggests that capital spending by businesses
will continue to expand but will remain cautious due to concerns about the
impact of higher prices for energy and industrial commodities. There were,
however, signs that the real estate market might finally be feeling the sting of
the continued upward trend in interest rates. Rising mortgage rates are expected
to continue to exert downward pressures on residential sales and home
construction over coming quarters.
The rise in short-term interest rates is welcome news for money market
fund investors. You may recall that at March 31, 2004, short-term rates were at
the level of 1.00%. Yet, yields on money market funds like each portfolio in the
Trust, move in concert with rate policies pursued by the Fed. Therefore, by
keeping the average weighted portfolio maturity of each fund relatively short,
the
NOT A PART OF THE ANNUAL REPORT
Trust's Investment Adviser, the Asset Management Group of Bank of Hawaii, has
taken advantage of the rise in short-term interest rates. We beleive each of the
Trust's portfolios continues to provide competitive returns to alternative
short-term investment opportunities without wavering from their conservative
investment guidelines.
We are optimistic that the Pacific Capital Funds of Cash Assets Trust will
seek to provide investors with more attractive yields during the fiscal year
ahead. In managing the portfolios of the Trust, we will strive to continue to be
alert to market opportunities in terms of seeking to produce a higher return
competitive with other short-term alternatives.
On behalf of the Board of Trustees and the Trust's management, thank you
for your continued confidence and trust you have placed in us. We look forward
to serving your investment needs for many years to come.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
President Founder and Chairman Emeritus
NOT A PART OF THE SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
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 statement of assets and liabilities,
including the schedules of investments, 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"), as of March 31, 2006 and the
related statements of operations, changes in net assets, and the financial
highlights for the year 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. The statements of changes in net assets for the year ended
March 31, 2005 and the financial highlights for each of the years in the four
year period ended March 31, 2005 have been audited by other auditors, whose
report dated May 23, 2005 expressed an unqualified opinion on such financial
statements and financial highlights.
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 our audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Trust's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of March 31, 2006, by correspondence with the custodian and brokers. 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, 2006, the results of
their operations, the changes in their net assets and the financial highlights
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
May 15, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACIFIC CAPITAL
CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
FACE
AMOUNT COMMERCIAL PAPER (63.1%) VALUE
- --------------- ------------------------------------------------------------------------ ------------
AUTOMOTIVE (4.4%)
$ 20,000,000 Toyota Motor Credit Corp., 3.98%, 05/22/06 ............................. $ 19,887,233
------------
BANKS (8.8%)
20,000,000 Louis Dreyfus Corp. LOC Barclays Bank PLC, 4.76%, 04/26/06 ............. 19,933,889
20,000,000 Societe Generale N.A., Inc., 4.64%, 06/09/06 ........................... 19,822,325
------------
39,756,214
------------
BORROWING CONDUIT (4.4%)
20,000,000 Abbey National North America Corp., 4.42%, 04/05/06 .................... 19,990,178
------------
BROKERAGE (4.4%)
20,000,000 Bear Stearns & Co., 4.61%, 05/09/06 .................................... 19,902,678
------------
EDUCATION (4.3%)
20,000,000 Harvard University 4.77%, 08/18/06 ..................................... 19,631,650
------------
FINANCE (17.5%)
20,000,000 AIG Funding, 4.46%, 04/05/06 ........................................... 19,990,089
20,000,000 American Express Credit Corp., 4.42% 04/04/06 .......................... 19,992,633
20,000,000 Citigroup Global Markets Holdings, Inc., 4.50%, 06/01/06 ............... 19,847,500
20,000,000 PACCAR Financial Corp., 4.31%, 05/18/06 ................................ 19,878,845
------------
79,709,067
------------
INSURANCE (4.3%)
20,000,000 Prudential Funding, 4.70%, 07/24/06 .................................... 19,702,333
------------
Total Commercial Paper ................................................. 218,579,353
------------
CERTIFICATES OF DEPOSIT (4.4%)
BANK (4.4%)
20,000,000 Wells Fargo, 4.74%, 04/17/06 ........................................... 20,000,000
------------
CORPORATE NOTE (3.3%)
INSURANCE (3.3%)
15,000,000 Peoples Benefit Life Insurance,
Variable Rate Note, 4.78%, 12/22/06* ................................. 15,000,000
------------
FACE
AMOUNT U.S. GOVERNMENT AGENCIES (26.5%) VALUE
- --------------- ------------------------------------------------------------------------ ------------
FEDERAL HOME LOAN MORTGAGE CORP. (17.8%)
$ 40,000,000 4.25%, 04/11/06 ........................................................ $ 39,952,789
42,000,000 4.86%, 08/29/06 ........................................................ 41,150,375
------------
81,103,164
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (8.7%)
40,000,000 4.42%, 06/07/06 ........................................................ 39,670,956
------------
Total U.S. Government Agencies ....................................... 120,774,120
------------
REPURCHASE AGREEMENT (17.6%)
Bank of America
80,000,000 4.70%, 04/03/06 ........................................................ 80,000,000
(Proceeds of $80,031,333 to be received at maturity, Collateral: ------------
$83,590,000 Federal Home Loan Mortgage Corp. 4.125% due
10/18/10; the collateral fair value plus interest receivable
equals $81,703,130)
SHARES INVESTMENT COMPANY (0.3%)
- --------------- ------------------------------------------------------------------------ ------------
1,640,971 JP Morgan U.S. Government Money Market Fund,
Capital Shares ....................................................... 1,640,971
Total Investments (Amortized Cost $455,994,444**) .............. 100.2% 455,994,444
Other assets less liabilities .................................. (0.2) (1,105,045)
NET ASSETS ..................................................... 100.0% $454,889,399
* 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, 2006, and the maturity date reflects the next rate
change date. Represents 3.3% Of net assets.
** Cost for federal income tax and financial reporting purposes is identical.
PERCENT OF
PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO
---------------------------------- ----------
Commercial Paper ....................................... 47.9%
Certificates of Deposit ................................ 4.4
Corporate Note ......................................... 3.3
U.S. Government Agencies ............................... 26.5
Repurchase Agreement ................................... 17.5
Investment Company ..................................... 0.4
----------
100.0%
==========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (99.5%) S&P VALUE
- --------------- --------------------------------------------------------- ----------- -------------
ARIZONA (0.7%)
Phoenix, AZ Civic Improvement Corporation Water
System Revenue Jr. Lien - Prerefunded to 07/01/06
@100, Collateral: State & Local Government Series
$ 1,500,000 5.800%, 07/01/12 ........................................ Aaa/AA $ 1,509,051
-------------
COLORADO (3.4%)
Colorado Housing & Finance Authority Revenue Bonds,
Class I, Series A-1, Weekly Reset VRDO*, SPA: FHLB
7,600,000 3.200%, 10/01/30 ........................................ VMIG1/A-1+ 7,600,000
-------------
FLORIDA (1.2%)
Dade County, FL School Board Certificates of
Participation Series B - Prerefunded to 08/01/06 @101,
AMBAC Insured, Collateral: US Govt. Securities
2,000,000 5.600%, 08/01/26 ........................................ Aaa/AAA 2,035,443
Sarasota County, FL Utility System Revenue -
Prerefunded to 10/01/06 @102, FGIC Insured,
Collateral: State & Local Government Series
750,000 5.250%, 10/01/25 ........................................ Aaa/AAA 772,153
-------------
2,807,596
-------------
HAWAII (25.8%)
Hawaii State Highway Revenue Series B Prerefunded
07/01/06 @102 FGIC Insured, Collateral: State &
Local Government Series
3,705,000 5.600%, 07/01/13 ........................................ Aaa/AAA 3,801,124
State of Hawaii Series CO General Obligation
FGIC Insured
1,000,000 6.000%, 09/01/06 ........................................ Aaa/AAA 1,012,278
Hawaii State Department of Budget and Finance of
the State Special Purpose Revenue Bonds Pacific
Health (Kapiolani Health Care) Prerefunded
07/01/06 @102 MBIA-IBC Insured, Collateral:
State & Local Government Series
1,000,000 6.000%, 07/01/11 ........................................ Aaa/AAA 1,026,835
1,000,000 6.200%, 07/01/16 ........................................ Aaa/AAA 1,027,315
1,000,000 6.250%, 07/01/21 ........................................ Aaa/AAA 1,027,436
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ----------- -------------
HAWAII (CONTINUED)
Hawaii State Department of Budget and Finance
(Queens Health System) Series C, Weekly Reset
VRDO*, AMBAC Insured, SPA: Bank of America N.A.
$ 10,000,000 3.087%, 07/01/28 ........................................ MIG1/AAA $ 10,000,000
Hawaii State Department of Budget and Finance of
the State Special Purpose Revenue Bonds (The
Queen's Health System) Series A, Prerefunded
07/01/06 @102, Collateral: State & Local
Government Series
5,000,000 6.050%, 07/01/16 ........................................ A1/A+ 5,132,612
3,500,000 5.750%, 07/01/26 ........................................ A1/A+ 3,591,420
Hawaii State 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
4,600,000 3.100%, 07/01/29 ........................................ VMIG1/A-1+ 4,600,000
Hawaii State 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
26,990,000 3.170%, 07/01/26 ........................................ VMIG1/A-1 26,990,000
-------------
58,209,020
-------------
ILLINOIS (4.1%)
Chicago, IL General Obligation Bonds, Series B,
Weekly Reset VRDO*, SPA: Landesbank
Baden-Wurttemberg FGIC Insured
3,000,000 3.190%, 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: 70%
Bank of America 30% Lloyds TSB Bank
5,000,000 3.180%, 12/01/31 ........................................ VMIG1/A-1+ 5,000,000
Chicago, IL Park District, General Obligation
Prerefunded to 01/01/07 @101, MBIA Insured
Collateral: State & Local Government Series
1,145,000 5.400%, 01/01/09 ........................................ Aaa/AAA 1,173,223
-------------
9,173,223
-------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ----------- -------------
LOUISIANA (0.4%)
Louisiana St., Refunding, Series A, General Obligation,
Escrowed to Maturity, AMBAC Insured
$ 1,000,000 5.500%, 04/15/06 ........................................ Aaa/AAA $ 1,000,840
-------------
MASSACHUSETTS (5.5%)
Massachusetts State Consolidated Loan, Series B,
General Obligation, Prerefunded to 06/01/06 @101,
FGIC Insured, Collateral: State & Local
Government Series
3,500,000 5.750%, 06/01/13 ........................................ Aaa/AAA 3,549,945
Massachusetts State Health & Educational Facilities
Authority Revenue Wellesley College Series
1999G Daily Reset VRDO*
8,825,000 3.060%, 07/01/39 ........................................ VMIG1/A-1+ 8,825,000
-------------
12,374,945
-------------
MICHIGAN (5.0%)
Eastern Michigan University, MI University Revenue
Bonds, Daily Reset VRDO*, FGIC Insured,
SPA: FGIC-SPI
5,510,000 3.180%, 06/01/27 ........................................ Aaa/A-1+ 5,510,000
Michigan State Trunk Line, Series A, Revenue Bond,
Prerefunded to 11/01/06 @101, FGIC Insured,
Collateral: State & Local Government Series
1,500,000 5.625%, 11/01/26 ........................................ Aaa/AAA 1,535,085
Northern Michigan University Revenue Bonds, Daily
Reset VRDO*, FGIC Insured, SPA: FGIC-SPI
4,310,000 3.180%, 06/01/31 ........................................ VMIG1/A-1+ 4,310,000
-------------
11,355,085
-------------
MISSOURI (14.6%)
Kansas City, MO Industrial Development Authority
Revenue Bonds, (Ewing Marion Kaufman
Foundation), Daily Reset VRDO*
7,110,000 3.180%, 04/01/27 ........................................ NR/A-1+ 7,110,000
1,800,000 3.180%, 04/01/27 ........................................ NR/A-1+ 1,800,000
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 A, Daily Reset VRDO*, SPA:
Bank of America N.A.
$ 1,185,000 3.210%, 10/01/09 ........................................ VMIG1/A-1+ $ 1,185,000
Missouri State, Health & Educational Facilities
Authority Revenue Bonds (St. Louis University),
Series B, Daily Reset VRDO*, SPA:
Bank of America N.A.
5,060,000 3.210%, 10/01/24 ........................................ VMIG1/A-1+ 5,060,000
Missouri State Health & Educational Facilities
Authority (Washington University), Series B, SPA:
JP Morgan Chase Bank, Daily Reset VRDO*
2,600,000 3.180%, 03/01/40 ........................................ VMIG1/A-1+ 2,600,000
Missouri State, Health & Educational Facilities
Authority Revenue Bonds (Washington University),
Series C, Daily Reset VRDO*, SPA:
JP Morgan Chase Bank
2,800,000 3.170%, 09/01/30 ........................................ VMIG1/A-1+ 2,800,000
Missouri State, Health & Educational Facilities
Authority Revenue Bonds (Washington University),
Series D, Daily Reset VRDO*, SPA:
JP Morgan Chase Bank
2,100,000 3.170%, 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*
10,300,000 3.160%, 11/01/32 ........................................ VMIG1/A-1+ 10,300,000
-------------
32,955,000
-------------
MONTANA (3.4%)
Montana State, Health Facilities Authority Revenue
Bonds, Series A, Weekly Reset VRDO*, FGIC
Insured SPA: Wells Fargo
7,655,000 3.190%, 12/01/15 ........................................ VMIG1/A-1+ 7,655,000
-------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ----------- -------------
NEVADA (4.0%)
Clark County, NV Airport Revenue Bonds, Series C,
Weekly Reset VRDO*, FGIC Insured, SPA:
Landesbank Baden-Wurttemberg
$ 9,000,000 3.170%, 07/01/29 ........................................ VMIG1/A-1+ $ 9,000,000
-------------
NEW YORK (8.1%)
Long Island, NY Power Authority Revenue Bonds,
Series 1A, Weekly Reset VRDO*, LOC: 80%
Bayerische Landesbank 20% Landesbank
Baden-Wurttemberg
9,000,000 3.160%, 05/01/33 ........................................ VMIG1/A-1+ 9,000,000
New York, NY City Transitional Finance Authority
Revenue Bonds, Series 3, Daily Reset VRDO*,
SPA: Royal Bank of Canada
9,200,000 3.180%, 11/01/22 ........................................ VMIG1/A-1+ 9,200,000
-------------
18,200,000
-------------
NORTH CAROLINA (8.9%)
Charlotte, NC Airport Revenue Bonds, Series A,
Weekly Reset VRDO*, MBIA Insured, SPA:
JP Morgan Chase
4,420,000 3.160%, 07/01/16 ........................................ VMIG1/A-1+ 4,420,000
Concord, NC Utility Systems Revenue Bonds,
Series B, Weekly Reset VRDO*, FSA Insured, SPA:
Wachovia Bank
8,820,000 3.160%, 12/01/22 ........................................ VMIG1/NR 8,820,000
Durham, NC Public Improvement General
Obligation Bonds Weekly Reset VRDO*,
SPA: Wachovia Bank of NC
2,975,000 3.190%, 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 3.190%, 02/01/09 ........................................ VMIG1/A-1+ 1,150,000
1,270,000 3.190%, 02/01/12 ........................................ VMIG1/A-1+ 1,270,000
1,475,000 3.190%, 02/01/13 ........................................ VMIG1/A-1+ 1,475,000
-------------
20,110,000
-------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ----------- -------------
OHIO (1.3%)
Ohio Housing Finance Agency Mortgage Revenue
Bonds (Residential Mortgage), Series E-AMT,
Weekly Reset VRDO*, SPA: FHLB
$ 2,895,000 3.230%, 09/01/34 ........................................ VMIG1/NR $ 2,895,000
-------------
PENNSYLVANIA (1.8%)
Philadelphia, PA Hospital & Education Facility
Authority Revenue (Children's Hospital) Project C,
MBIA Insured, SPA: JP Morgan Chase Bank Daily
Reset VRDO*
2,400,000 3.140%, 07/01/31 ........................................ Aaa/VMIG1 2,400,000
Philadelphia, PA Hospital & Education Facility
Authority Revenue (Children's Hospital) Project D,
MBIA Insured, SPA: Westdeutsche Landesbank
Daily Reset VRDO*
1,700,000 3.140%, 07/01/31 ........................................ Aaa/VMIG2 1,700,000
-------------
4,100,000
-------------
TEXAS (2.2%)
Texas State, TX Turnpike Authority Central System
Revenue Bonds, Series B, Weekly Reset VRDO*,
AMBAC Insured, SPA: Bank of Nova Scotia
5,000,000 3.160%, 08/15/42 ........................................ Aaa/A-1+ 5,000,000
-------------
UTAH (1.5%)
Timpanagos Special Service District, UT Sewer
Revenue, Series A, Prerefunded to 06/01/06 @101,
AMBAC Insured, Collateral: US Government Securities
3,405,000 6.100%, 06/01/19 ........................................ Aaa/AAA 3,452,738
-------------
VIRGINIA (3.4%)
Chesapeake, VA Public Improvement, General
Obligation, Prerefunded to 05/01/06 @102, State
Aid Withholding, Collateral: US Government Securities
1,700,000 5.500%, 05/01/16 ........................................ Aa2/AA 1,736,778
University of Virginia Revenue Bonds, Series A,
Weekly Reset VRDO*
6,000,000 3.100%, 06/01/34 ........................................ VMIG1/A-1+ 6,000,000
-------------
7,736,778
-------------
RATING
FACE MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ----------- -------------
WASHINGTON (2.2%)
Seattle, WA Water System Revenue Bonds, Series A,
Weekly Reset VRDO*, LOC: Bayerische Landesbank
$ 5,000,000 3.050%, 03/01/32 ....................................... VMIG1/A-1+ $ 5,000,000
-------------
Total Municipal Bonds 220,134,276
-------------
SHARES INVESTMENT COMPANY SHARES (2.0%)
- --------------- ---------------------------------------------------------
4,420,000 Goldman Sachs Financial Square Tax-Free Money
Market Fund Institutional Shares .................... 4,420,000
-------------
Total Investments (Amortized Cost $224,554,276**) ... 99.5% 224,554,276
Other assets less liabilities ....................... 0.5 1,034,547
---------- -------------
NET ASSETS .......................................... 100.0% $ 225,588,823
========== =============
* 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)
PERCENTAGE
OF PORTFOLIO
------------
Hawaii 25.9%
Missouri 14.7
North Carolina 9.0
New York 8.1
Massachusetts 5.5
Michigan 5.1
Illinois 4.1
Nevada 4.0
Colorado 3.4
Montana 3.4
Virginia 3.4
Texas 2.2
Washington 2.2
Investment Company 2.0
Pennsylvania 1.8
Utah 1.5
Florida 1.3
Ohio 1.3
Arizona 0.7
Louisiana 0.4
-----
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
IBC - Insured Bond Certificate
LOC - Letter of Credit
MBIA - Municipal Bond Investors Assurance
SPA - Standby Bond Purchase Agreement
SPI - Securities Purchase, Inc.
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, 2006
- --------------------------------------------------------------------------------
FACE
AMOUNT U.S. GOVERNMENT AGENCIES (99.9%) VALUE
- --------------- -------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK (99.9%)
$ 231,000,000 4.63%, 04/03/06 .............................................. $ 230,940,581
94,000,000 4.47%, 04/05/06 .............................................. 93,953,313
98,000,000 4.44%, 04/06/06 .............................................. 97,939,567
65,000,000 4.49%, 04/07/06 .............................................. 64,951,304
88,000,000 4.46%, 04/12/06 .............................................. 87,880,210
78,000,000 4.46%, 04/17/06 .............................................. 77,845,387
80,000,000 4.49%, 04/19/06 .............................................. 79,820,400
98,000,000 4.50%, 04/26/06 .............................................. 97,693,750
85,000,000 4.52%, 04/28/06 .............................................. 84,711,850
52,000,000 4.63%, 05/01/06 .............................................. 51,799,367
85,000,000 4.54%, 05/05/06 .............................................. 84,635,539
52,000,000 4.65%, 05/19/06 .............................................. 51,677,600
65,000,000 4.36%, 05/24/06 .............................................. 64,582,772
15,000,000 4.36%, 05/31/06 .............................................. 14,891,000
27,936,000 4.68%, 06/09/06 .............................................. 27,685,414
25,000,000 4.68%, 06/14/06 .............................................. 24,759,500
80,000,000 4.73%, 06/21/06 .............................................. 79,149,500
--------------
Total U.S. Government Agencies ............................. 1,314,917,054
--------------
SHARES INVESTMENT COMPANY (0.3%)
- --------------- -------------------------------------------------------------- --------------
3,792,507 JP Morgan U.S. Government Money Market Fund,
Capital Shares ............................................ 3,792,507
--------------
Total Investments
(Amortized Cost $1,318,709,561*) ............ 100.2% 1,318,709,561
Other assets less liabilities ................. (0.2) (2,042,939)
----- --------------
NET ASSETS .................................... 100.0% $1,316,666,622
===== ==============
* 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
MARCH 31, 2006
- --------------------------------------------------------------------------------
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
-------------- -------------- --------------
ASSETS:
Investments at value and amortized cost (note 2) ........ $ 375,994,444 $ 224,554,276 $1,318,709,561
Repurchase agreement (note 2) ........................... 80,000,000 -- --
Cash .................................................... -- 5,555 --
Receivable for investment securities sold ............... -- 3,600,000 --
Interest receivable ..................................... 89,359 1,371,879 11,661
Other assets ............................................ 17,131 7,666 42,517
-------------- -------------- --------------
Total Assets .......................................... 456,100,934 229,539,376 1,318,763,739
-------------- -------------- --------------
LIABILITIES:
Dividends payable ....................................... 925,709 286,616 1,405,424
Payable for investment securities purchased ............. -- 3,523,704 --
Adviser and Administrator fees payable .................. 192,264 78,636 425,384
Distribution fees payable ............................... 37,979 21,936 179,643
Accrued expenses ........................................ 55,583 39,661 86,666
-------------- -------------- --------------
Total Liabilities ..................................... 1,211,535 3,950,553 2,097,117
-------------- -------------- --------------
NET ASSETS .............................................. $ 454,889,399 $ 225,588,823 $1,316,666,622
============== ============== ==============
NET ASSETS CONSIST OF:
Capital Stock - Authorized an unlimited number of shares,
par value $0.01 per share ............................. $ 4,548,750 $ 2,255,765 $ 13,165,967
Additional paid-in capital .............................. 450,339,469 223,322,958 1,303,499,124
Accumulated net realized gain (loss) on investments ..... 1,180 10,100 1,531
-------------- -------------- --------------
$ 454,889,399 $ 225,588,823 $1,316,666,622
============== ============== ==============
SHARES OF BENEFICIAL INTEREST:
Original Shares Class:
Net Assets ............................................ $ 285,723,223 $ 132,562,517 $ 429,420,605
============== ============== ==============
Shares outstanding .................................... 285,421,780 132,554,487 429,390,917
============== ============== ==============
Net asset value per share ............................. $ 1.00 $ 1.00 $ 1.00
============== ============== ==============
Service Shares Class:
Net Assets ............................................ $ 169,166,176 $ 93,026,306 $ 887,246,017
============== ============== ==============
Shares outstanding .................................... 169,453,229 93,022,054 887,205,775
============== ============== ==============
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, 2006
- --------------------------------------------------------------------------------
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
------------ ------------ ------------
INVESTMENT INCOME:
Interest income ................................... $ 17,781,580 $ 5,777,183 $ 39,881,597
------------ ------------ ------------
EXPENSES:
Investment Advis er fees (note 3) ................. 1,745,002 649,291 3,504,214
Administrator fees (note 3) ....................... 661,973 206,817 786,951
Distribution fees (note 3) ........................ 417,067 219,710 1,740,241
Trustees' fees and expenses ....................... 101,603 66,258 156,670
Legal fees (note 3) ............................... 49,805 25,342 109,037
Registration fees and dues ........................ 49,688 13,427 39,786
Insurance ......................................... 44,647 18,626 94,739
Shareholders' reports ............................. 38,081 7,083 33,835
Fund accounting fees .............................. 30,900 28,512 29,400
Auditing and tax fees ............................. 17,056 16,451 20,713
Transfer and shareholder servicing agent fees ..... 15,058 14,262 15,755
Custodian fees .................................... 8,199 12,133 9,935
Chief Compliance Officer (note 3) ................. 5,044 5,044 5,044
Miscellaneous ..................................... 18,445 15,097 65,515
------------ ------------ ------------
Total expenses .................................... 3,202,568 1,298,053 6,611,835
Expenses paid indirectly (note 5) ................. (1,659) (3,767) (9,258)
------------ ------------ ------------
Net expenses ...................................... 3,200,909 1,294,286 6,602,577
------------ ------------ ------------
Net investment income ............................... 14,580,671 4,482,897 33,279,020
Net realized gain (loss) from securities transactions 1,180 10,100 2,274
------------ ------------ ------------
Net change in net assets resulting from operations .. $ 14,581,851 $ 4,492,997 $ 33,281,294
============ ============ ============
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, 2006 March 31, 2005 March 31, 2006 March 31, 2005
--------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................. $ 14,580,671 $ 5,915,623 $ 4,482,897 $ 2,023,379
Net realized gain (loss)
from securities transactions ......... 1,180 -- 10,100 --
--------------- --------------- --------------- ---------------
Net change in net assets
resulting from operations ............ 14,581,851 5,915,623 4,492,997 2,023,379
--------------- --------------- --------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ....................... (9,721,572) (4,534,518) (1,704,092) (549,754)
Service Shares ........................ (4,859,099) (1,381,105) (2,778,805) (1,473,625)
--------------- --------------- --------------- ---------------
Total dividends to shareholders
from net investment income ............ (14,580,671) (5,915,623) (4,482,897) (2,023,379)
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares ....................... 772,407,051 897,374,600 223,627,397 313,771,101
Service Shares ........................ 498,998,950 473,009,866 165,033,651 93,903,240
--------------- --------------- --------------- ---------------
1,271,406,001 1,370,384,466 388,661,048 407,674,341
--------------- --------------- --------------- ---------------
Reinvested dividends:
Original Shares ....................... 217,287 99,479 91,298 65,741
Service Shares ........................ 4,773,677 1,230,616 1,695,763 493,472
--------------- --------------- --------------- ---------------
4,990,964 1,330,095 1,787,061 559,213
--------------- --------------- --------------- ---------------
Cost of shares redeemed:
Original Shares ....................... (853,144,228) (818,780,462) (225,091,397) (278,691,955)
Service Shares ........................ (500,085,192) (427,424,705) (145,858,384) (71,906,960)
--------------- --------------- --------------- ---------------
(1,353,229,420) (1,246,205,167) (370,949,781) (350,598,915)
--------------- --------------- --------------- ---------------
Change in net assets
from capital share transactions ....... (76,832,455) 125,509,394 19,498,328 57,634,639
--------------- --------------- --------------- ---------------
Total change in net assets ............ (76,831,275) 125,509,394 19,508,428 57,634,639
NET ASSETS:
Beginning of period ................... 531,720,674 406,211,280 206,080,395 148,445,756
--------------- --------------- --------------- ---------------
End of period* ........................ $ 454,889,399 $ 531,720,674 $ 225,588,823 $ 206,080,395
=============== =============== =============== ===============
*Includes undistributed (distributions
in excess of) net investment income of: $ -- $ 13,438 $ -- $ (107,877)
=============== =============== =============== ===============
GOVERNMENT FUND
-----------------------------------
Year Ended Year Ended
March 31, 2006 March 31, 2005
--------------- ---------------
INCREASE (DECREASE) IN NET ASSET
OPERATIONS:
Net investment income ................. $ 33,279,020 $ 10,709,831
Net realized gain (loss)
from securities transactions ......... 2,274 (743)
--------------- ---------------
Net change in net assets
resulting from operations ............ 33,281,294 10,709,088
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ....................... (12,231,234) (5,785,972)
Service Shares ........................ (21,047,786) (4,923,859)
--------------- ---------------
Total dividends to shareholders
from net investment income ............ (33,279,020) (10,709,831)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares ....................... 892,335,436 819,559,720
Service Shares ........................ 3,155,652,101 2,125,769,411
--------------- ---------------
4,047,987,537 2,945,329,131
--------------- ---------------
Reinvested dividends:
Original Shares ....................... 139,115 42,138
Service Shares ........................ 21,010,927 5,231,536
--------------- ---------------
21,150,042 5,273,674
--------------- ---------------
Cost of shares redeemed:
Original Shares ....................... (817,340,270) (728,780,568)
Service Shares ........................ (2,867,454,460) (2,128,042,587)
--------------- ---------------
(3,684,794,730) (2,856,823,155)
--------------- ---------------
Change in net assets
from capital share transactions ....... 384,342,849 93,779,650
--------------- ---------------
Total change in net assets ............ 384,345,123 93,778,907
NET ASSETS:
Beginning of period ................... 932,321,499 838,542,592
--------------- ---------------
End of period* ........................ $ 1,316,666,622 $ 932,321,499
=============== ===============
*Includes undistributed (distributions
in excess of) net investment income of: $ -- $ 68,263
=============== ===============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
- --------------------------------------------------------------------------------
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 accounting principles generally accepted in the United States of
America.
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 Fund's 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 accounting principles generally accepted in the United States of
America 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.
h) RECLASSIFICATION OF CAPITAL ACCOUNTS: Accounting principles generally
accepted in the United States of America require that certain components
of net assets relating to permanent differences be reclassified between
financial and tax reporting. These reclassifications have no effect on net
assets or net asset value per share. On March 31, 2006, 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 ........ $ 13,438 $(107,877) $ 68,263
Undistributed net investment income 13,438 107,877 (68,263)
These reclassifications are primarily due to dividend redesignations. Net
assets are not affected by these changes.
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 Administration Agreements 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 year ended March 31,
2006.
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 Distribution Agreements, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of each Fund's 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, 2006, 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 $47,286; Tax-Free Fund $24,270; Government Fund $103,645. 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 2006 and 2005 were as
follows:
Cash Fund Tax-Free Fund Government Fund
-------------------------- -------------------------- --------------------------
2006 2005 2006 2005 2006 2005
----------- ----------- ----------- ----------- ----------- -----------
Net tax-exempt income $ -- $ -- $ 4,452,274 $ 2,023,379 $ -- $ --
Ordinary income ..... 14,497,718 5,915,623 -- -- 33,395,289 10,709,831
Capital gain ........ -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total ............... $14,497,718 $ 5,915,623 $ 4,452,274 $ 2,023,379 $33,395,289 $10,709,831
=========== =========== =========== =========== =========== ===========
As of March 31, 2006, the components of distributable earnings on a tax
basis were as follows:
Tax-Free Government
Cash Fund Fund Fund
---------- ---------- ----------
Undistributed ordinary income ........ $ 926,889 $ 10,100 $1,406,955
Undistributed tax exempt imcome ..... -- 286,616 -
Accumulated net realized loss
on investments ..................... -- -- --
---------- ---------- ----------
$ 926,889 $ 296,716 $1,406,955
========== ========== ==========
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 & Baker LLP was engaged as the
principal accountants to audit the Trust'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 Trust's 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 SERVICE SHARES
------------------------------------------ ------------------------------------------
Year Ended March 31, Year Ended March 31,
------------------------------------------ ------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income ................. 0.03* 0.01 0.01 0.01 0.03 0.03* 0.01 0.01 0.01 0.02
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income .. (0.03) (0.01) (0.01) (0.01) (0.03) (0.03) (0.01) (0.01) (0.01) (0.02)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return ............................ 3.20% 1.36% 0.90% 1.35% 2.52% 2.94% 1.11% 0.65% 1.09% 2.27%
Ratios/supplemental data
Net assets, end of period (in millions) $ 286 $ 366 $ 287 $ 361 $ 353 $ 169 $ 166 $ 119 $ 123 $ 146
Ratio of expenses to average net assets 0.58% 0.37% 0.21% 0.36% 0.58% 0.83% 0.61% 0.46% 0.61% 0.83%
Ratio of net investment income to
average net assets .................. 3.09% 1.39% 0.90% 1.34% 2.51% 2.91% 1.12% 0.65% 1.10% 2.36%
The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees
(note 3) for the three years below were :
Ratio of expenses to average net assets ** 0.57% 0.57% 0.58% ** ** 0.81% 0.82% 0.83% **
Ratio of net investment income to
average net assets .................. ** 1.19% 0.54% 1.12% ** ** 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 0.58% 0.37% 0.21% 0.36% 0.57% 0.83% 0.61% 0.46% 0.61% 0.82%
- ----------
* Per share amounts have been calculated using the monthly average shares
method.
** No reduction in the Advisor's and the Administrator's fees was required
during the year.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES SERVICE SHARES
------------------------------------------ ------------------------------------------
Year Ended March 31, Year Ended March 31,
------------------------------------------ ------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income ................. 0.02* 0.01 0.01 0.01 0.02 0.02* 0.01 0.01 0.01 0.02
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income .. (0.02) (0.01) (0.01) (0.01) (0.02) (0.02) (0.01) (0.01) (0.01) (0.02))
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return ............................ 2.21% 1.16% 0.84% 1.15% 2.00% 1.96% 0.90% 0.59% 0.90% 1.75%
Ratios/supplemental data
Net assets, end of period (in millions) $ 133 $ 134 $ 99 $ 130 $ 100 $ 93 $ 72 $ 50 $ 56 $ 52
Ratio of expenses to average net assets 0.50% 0.29% 0.17% 0.28% 0.51% 0.75% 0.53% 0.42% 0.53% 0.77%
Ratio of net investment income to
average net assets .................... 2.20% 1.17% 0.84% 1.13% 1.94% 1.94% 0.92% 0.59% 0.89% 1.77%
The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees
(note 3) for the three years below were:
Ratio of expenses to average net assets ** 0.49% 0.52% 0.50% ** ** 0.75% 0.77% 0.76% **
Ratio of net investment income to
average net assets .................. ** 0.96% 0.50% 0.90% ** ** 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 0.50% 0.28% 0.17% 0.27% 0.51% 0.75% 0.53% 0.42% 0.52% 0.77%
- ----------
* Per share amounts have been calculated using the monthly average shares
method.
** No reduction in the Advisor's and the Administrator's fees was required
during the year.
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 SERVICE SHARES
------------------------------------------ ------------------------------------------
Year Ended March 31, Year Ended March 31,
------------------------------------------ ------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income ................. 0.03* 0.01 0.01 0.01 0.03 0.03* 0.01 0.01 0.01 0.02
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income .. (0.03) (0.01) (0.01) (0.01) (0.03) (0.03) (0.01) (0.01) (0.01) (0.02)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return ............................ 3.25% 1.41% 0.96% 1.34% 2.73% 3.00% 1.16% 0.71% 1.09% 2.48%
Ratios/supplemental data
Net assets, end of period (in millions) $ 429 $ 354 $ 263 $ 270 $ 306 $ 887 $ 578 $ 575 $ 448 $ 457
Ratio of expenses to average net assets 0.45% 0.27% 0.11% 0.25% 0.45% 0.70% 0.52% 0.36% 0.49% 0.70%
Ratio of net investment income to
average net assets .................... 3.25% 1.42% 0.96% 1.34% 2.47% 3.02% 1.16% 0.71% 1.08% 2.39%
The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees
(note 3) for the three years below were:
Ratio of expenses to average net assets ** 0.45% 0.46% 0.46% ** ** 0.70% 0.71% 0.71% **
Ratio of net investment income to
average net assets .................. ** 1.24% 0.62% 1.12% ** ** 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 0.45% 0.27% 0.11% 0.24% 0.45% 0.70% 0.52% 0.36% 0.49% 0.70%
- ----------
* Per share amounts have been calculated using the monthly average shares
method.
** No reduction in the Advisor's and the Administrator's fees was required
during the year.
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(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
INTERESTED TRUSTEE(6)
Diana P. Herrmann Trustee since 2004, Vice Chair and Chief Executive Officer 12 None
New York, NY President since 1998 of Aquila Management Corporation,
(02/25/58) and Vice Chair since Founder of the Aquila(SM) Group of
2003 Funds(7) and parent of Aquila Investment
Management LLC, 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 and head of its Small Funds
Committee since 2004; active in
charitable and volunteer organizations.
NON-INTERESTED TRUSTEES
Theodore T. Mason Chair of the Board of Executive Director, East Wind Power 8 Trustee, Pimco
New York, NY Trustees since 2004 Partners LTD since 1994 and Louisiana Advisors VIT.
(11/24/35) and Trustee since Power Partners, 1999-2003; Treasurer,
1984 Alumni Association of SUNY Maritime
College since 2004 (President,
2002-2003, First Vice 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.
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(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
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 since 1993 President, Waste Management of Hawaii, 4 Trustee, Pacific
Honolulu, HI Inc. and Corporate Vice President - Capital Funds, which
(04/05/36) Hawaii Area for Waste Management, Inc., includes 11 bond and
2001-2005; Trustee, The King William other stock funds;
Charles Lunalilo Trust Estate since First Insurance Co.
2001; President and Chief Executive of Hawaii, Ltd.,
Officer, The Chamber of Commerce of Lanihau Properties,
Hawaii, 1996-2001; Director PBS - Hawaii Ltd., The Westye
Foundation since 1998; Regent, Chaminade Group - West
University of Honolulu since 1991; (Hawaii), Inc.
Trustee, Heald College since 1998;
Trustee, the Nature Conservancy of
Hawaii since 1998; Trustee, Child and
Family Service since 2005; Director, The
East West Center Foundation since 2006;
and a director of other corporate and
community organizations.
Russell K. Okata Trustee since 1993 Executive Director, Hawaii Government 4 Trustee, Pacific
Honolulu, HI 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;
County and Municipal Employees, AFL-CIO Chairman, Royal State
since 1981; director of various civic Group (insurance).
and charitable organizations.
Douglas Philpotts Trustee since 1992 Retired; formerly director, Chairman of 4 Trustee, Pacific
Honolulu, HI the Board and President of Hawaiian Capital Funds, which
(11/21/31) Trust Company, Limited; present or includes 11 bond and
former director of various Hawaii-based stock funds.
civic and charitable organizations.
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(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
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 stock funds;
of Hawaiian Affairs and a member or director, Grace
trustee of several community Pacific Corporation,
organizations. an asphalt paving
company, and ACE
Trucking Inc.
OTHER INDIVIDUALS
CHAIRMAN EMERITUS(8)
Lacy B. Herrmann Founder, Chairman Founder and Chairman of the Board, N/A N/A
New York, NY Emeritus since 2004, Aquila Management Corporation, the
(05/12/29) Trustee, 1984-2004, sponsoring organization and parent of
and Chairman of the the Manager or Administrator and/or
Board of Trustees, Adviser or Sub-Adviser to each fund of
1984-2003 the Aquila(SM) Group of Funds; Chairman of
the Manager or Administrator and/or
Adviser or Sub-Adviser to each since
2004; Founder and Chairman Emeritus of
each fund in the Aquila(SM) Group of
Funds; 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.
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(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
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 the Administrator'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 the three Aquila
Money-Market Funds; Registered
Representative of the Distributor since
1985.
John M. Herndon Vice President since Assistant Secretary of the Aquila(SM) N/A N/A
New York, NY 1990 and Assistant Group of Funds since 1995 and Vice
(12/17/39) Secretary since 1995 President of the three Aquila
Money-Market Funds since 1990; Vice
President of the Administrator or its
predecessor and current parent since
1990.
Robert W. Anderson Chief Compliance Chief Compliance Officer of the Trust N/A N/A
New York, NY Officer since 2004 and each of the other funds in the
(08/23/40) and Assistant Aquila(SM) Group of Funds, the
Secretary since 2000 Administrator and the Distributor since
2004, Compliance Officer of the
Administrator or its predecessor and
current parent since 1998 and Assistant
Secretary of the Aquila(SM) Group of Funds
since 2000.
Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila(SM) N/A N/A
New York, NY Officer since 2003 Group of Funds since 2003 and Treasurer
(11/06/56) and Treasurer since 2000.
since 2000
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(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.)
- ----------------- ---------- ------------------- ---------- ---------------------
Edward M. W. Hines Secretary since 1984 Partner, Hollyer Brady Barrett & Hines N/A N/A
New York, NY LLP, legal counsel to the Trust, since
(12/16/39) 1989; Secretary of the Aquila(SM) Group of
Funds.
Lori A. Vindigni Assistant Treasurer Assistant Treasurer of the Aquila(SM) N/A N/A
New York, NY since 2000 Group of Funds since 2000; Assistant
(11/02/66) Vice 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 The Pacific Capital
Funds of Cash Assets Trust, 380 Madison Avenue, Suite 2300, 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."
(8) The Chairman Emeritus may attend Board meetings but has no voting power.
- --------------------------------------------------------------------------------
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 October
1, 2005 and held for the six months ended March 31, 2006.
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, 2006
BEGINNING ENDING EXPENSES
ACTUAL ACCOUNT ACCOUNT PAID DURING
TOTAL RETURN(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 1.84% $1,000.00 $1,018.40 $ 2.97
Service Shares 1.71% $1,000.00 $1,017.10 $ 4.22
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 1.22% $1,000.00 $1,012.20 $ 2.56
Service Shares 1.09% $1,000.00 $1,010.90 $ 3.81
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 1.87% $1,000.00 $1,018.70 $ 2.26
Service Chares 1.74% $1,000.00 $1,017.40 $ 3.52
- --------------------------------------------------------------------------------
(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 0.59% AND 0.84%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.51% AND
0.76%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.45% AND 0.70%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND
SERVICE SHARES 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 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 MARCH 31, 2006
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 5.00% $1,000.00 $1,021.99 $ 2.97
Service Shares 5.00% $1,000.00 $1,020.74 $ 4.23
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 5.00% $1,000.00 $1,022.39 $ 2.57
Service Shares 5.00% $1,000.00 $1,021.14 $ 3.83
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 5.00% $1,000.00 $1,022.69 $ 2.27
Service Chares 5.00% $1,000.00 $1,021.44 $ 3.53
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.59% AND 0.84%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.51% AND
0.76%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.45% AND 0.70%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND
SERVICE SHARES 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, 2006, $4,452,274 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, 2006, shareholders were mailed IRS Form 1099-DIV
which contained information on the status of distributions paid for the 2005
CALENDAR YEAR.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
Diana P. Herrmann, Vice Chair
Thomas W. Courtney
Stanley W. Hong
Russell K. Okata
Douglas Philpotts
Oswald K. Stender
CHAIRMAN EMERITUS AND FOUNDER
Lacy B. Herrmann
OFFICERS
Diana P. Herrmann, 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.
101 Sabin Street o Pawtucket, RI 02860
CUSTODIAN
Bank One Trust Company, N.A.
1111 Polaris Parkway o Columbus, Ohio 43240
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Tait, Weller & 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.
(a) As of March 31, 2006 (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:
2005 2006
---- ----
Cash Assets Trust 18,095 13,000
Tax-Free Cash Assets Trust 17,000 13,000
US Government Securities 17,008 13,000
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
for return preparation and tax compliance were:
2005 2006
---- ----
Cash Assets Trust 9,556 1,500
Tax-Free Cash Assets Trust 7,755 1,500
US Government Securities 15,834 1,500
d) All Other Fees - There were no additional fees paid 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, President and Trustee
June 8, 2006
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Chief Financial Officer and Treasurer
June 8, 2006
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, President and Trustee
June 8, 2006
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
June 8, 2006
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.