UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4066
Cash Assets Trust
(Exact name of Registrant as specified in charter)
380 Madison Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
Joseph P. DiMaggio
380 Madison Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 697-6666
Date of fiscal year end: 3/31
Date of reporting period: 9/30/06
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 2006
PACIFIC
CAPITAL FUNDS(R)
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 AND SALE TO LEFT OF PACIFIC](R)
A CASH MANAGEMENT
INVESTMENT
[LOGO OF THE PACIFIC
CAPITAL FUNDS OF CASH
ASSETS TRUST: A LION
STANDING ON A TWISTED
ROPE AND SALE TO
LEFT OF PACIFIC](R)
PACIFIC
CAPITAL FUNDS(R)
OF
CASH ASSETS TRUST
SEMI-ANNUAL REPORT
November 17, 2006
Dear Investor:
We are pleased to provide you with the Semi-Annual Report for The Pacific
Capital Funds of Cash Assets Trust for the six-month period ended September 30,
2006.
The enclosed Semi-Annual Report includes the three series of Cash Assets
Trust (the "Trust"): Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free
Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets
Trust and its two classes of shares: Original Shares and Service Shares.
During the current six-month reporting period, the U.S. economy continued
to grow at a relatively healthy, albeit, slower pace. The growth in the economy
was supported by moderate core inflation and generally positive corporate
earnings. Counterbalancing the positive factors was what appears to be the
beginning of a slump in the housing market and continued weakness in the
automotive sector.
Citing a possible further slowdown in economic growth, the Federal Reserve
(the "Fed") voted to change the course of its monetary policy. At both the
August 8th and September 20th Federal Open Market Committee (the "FOMC")
meetings, the Fed determined to leave the target on the Federal Funds rate
unchanged at 5.25%. In comments released with the August 8th decision, the FOMC
said that "economic growth has slowed over the course of the year, partly
reflecting a cooling of the housing market" though it forecast continued
expansion "at a moderate pace." This decision by the policymakers at the Fed
brought a temporary halt to the Fed's two-year inflation fighting policy which
had been marked by 17 consecutive interest rate hikes of 0.25% each.
You may recall that at September 30, 2004, short-term interest rates were
at the low level of 1.50%, compared to the Fed's current target of 5.25%. During
the two-year period, the rise in short-term rates was welcome news to money
market investors. As mentioned in previous report letters, yields on money
market funds like those of the Trust, move in concert with rate policies pursued
by the Fed. By keeping each fund's average weighted portfolio maturity
relatively short, the Trust's Investment Adviser, the Asset Management Group of
Bank of Hawaii, has been able to take advantage of the rise in short-term
interest rates. As each portfolio's short-term holdings matured, the funds were
well positioned to take advantage of the higher yields paid by newly-issued
securities. Each of the Trust's portfolios seeks to continue to provide
competitive returns to alternative short-term investment opportunities without
wavering from their conservative investment guidelines.
Looking forward, we are optimistic that each of the Pacific Capital Funds
of Cash Assets Trust will continue to provide investors with competitive returns
without compromising safety of principal.
All those associated with the management of your cash reserves wish to
thank you for the continued support and confidence you have placed in the
Pacific Capital Funds of Cash Assets Trust.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
President Founder and Chairman Emeritus
NOT A PART OF THE SEMI-ANNUAL REPORT
PACIFIC CAPITAL
CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006 (UNAUDITED)
PRINCIPAL
AMOUNT COMMERCIAL PAPER (55.8%) VALUE
- --------------- --------------------------------------------------------------------- --------------
AUTOMOTIVE (4.0%)
---------------------------------------------------------------------
$ 20,000,000 Toyota Motor Credit Corp., 5.24%, 10/25/06 .......................... $ 19,930,133
--------------
BANKS (11.9%)
---------------------------------------------------------------------
20,000,000 Barclays US Funding Corp., 5.33%, 10/04/06 .......................... 19,991,117
20,000,000 Citigroup Global Markets Holdings, Inc., 5.31%, 12/05/06 ............ 19,808,250
20,000,000 Societe Generale N.A., Inc., 5.26%, 11/20/06 ........................ 19,854,028
--------------
59,653,395
--------------
BORROWING CONDUIT (4.0%)
---------------------------------------------------------------------
20,000,000 Abbey National North America Corp., 5.25%, 11/09/06 ................. 19,886,250
--------------
BROKERAGE (11.9%)
---------------------------------------------------------------------
20,000,000 Bear Stearns & Co., 5.25%, 12/11/06 ................................. 19,792,917
20,000,000 Merrill Lynch 5.23%, 11/28/06 ....................................... 19,831,478
20,000,000 Morgan Stanley Dean Witter, 5.25%, 10/20/06 ......................... 19,944,583
--------------
59,568,978
--------------
CONGLOMERATE (4.0%)
---------------------------------------------------------------------
20,000,000 General Electric Capital Corp., 5.20%, 11/24/06 ..................... 19,844,000
--------------
FINANCE (12.0%)
---------------------------------------------------------------------
20,000,000 Calyon NA, Inc., 5.23%, 10/10/06 .................................... 19,973,825
20,000,000 PACCAR Financial Corp., 5.24%, 11/15/06 ............................. 19,869,000
20,000,000 UBS Finance, 5.25%, 11/13/06 ........................................ 19,874,583
--------------
59,717,408
--------------
INSURANCE (4.0%)
---------------------------------------------------------------------
20,000,000 Prudential Funding, 5.23%, 10/12/06 ................................. 19,968,039
--------------
OIL SERVICES (4.0%)
---------------------------------------------------------------------
20,000,000 Chevron Funding Corp., 5.23%, 10/31/06 .............................. 19,912,833
--------------
Total Commercial Paper ........................................... 278,481,036
--------------
CERTIFICATE OF DEPOSIT (4.0%)
---------------------------------------------------------------------
20,000,000 Wells Fargo, 5.40%, 06/15/07 ........................................ 20,000,000
--------------
CORPORATE NOTE (3.0%)
---------------------------------------------------------------------
INSURANCE (3.0%)
---------------------------------------------------------------------
15,000,000 Peoples Benefit Life Insurance,
Variable Rate Note, 5.50%, 06/22/07* ............................. 15,000,000
--------------
U.S. GOVERNMENT AGENCIES (8.0%)
---------------------------------------------------------------------
40,000,000 Federal National Mortgage Association
5.26%, 12/06/06 ..................................................... 39,614,267
--------------
PRINCIPAL
AMOUNT REPURCHASE AGREEMENTS (29.5%) VALUE
- --------------- --------------------------------------------------------------------- --------------
Bank of America
$ 29,629,000 5.20%, 10/02/06 ..................................................... $ 29,629,000
(Proceeds of $29,641,839 to be received at maturity, Collateral:
$30,060,000 Federal Home Loan Bank 5.50% due 08/28/08; the
collateral fair value plus interest receivable equals $30,235,358)
Bank of America
50,371,000 5.20%, 10/02/06 ..................................................... 50,371,000
(Proceeds of $50,392,827 to be received at maturity, Collateral:
$50,000,000 Federal Home Loan Bank 5.25% due 09/13/13; the
collateral fair value plus interest receivable equals $51,400,295)
Morgan Stanley Dean Witter
67,000,000 5.05%, 10/02/06 ..................................................... 67,000,000
--------------
(Proceeds of $67,028,196 to be received at maturity, Collateral:
$68,220,000 US Treasury Note 3.50% due 05/31/07; the
collateral fair value plus interest receivable equals $68,373,054)
Total Repurchase Agreements ......................................... 147,000,000
--------------
SHARES INVESTMENT COMPANY (0.1%)
- --------------- ---------------------------------------------------------------------
541,153 JP Morgan U.S. Government Money Market Fund, Capital Shares 541,153
--------------
Total Investments (Amortized Cost $500,636,456**) 100.4% 500,636,456
Other assets less liabilities ................... (0.4) (1,783,315)
----- --------------
NET ASSETS ...................................... 100.0% $ 498,853,141
===== ==============
* Illiquid security. Considered illiquid because it may not be sold, and may
be redeemed only upon at least ninety days' notice to the issuer. As this
security is a variable rate note, the rate shown represents the rate in
effect at September 30, 2006, and the maturity date reflects the next rate
change date. Represents 3.0% of net assets.
** Cost for Federal income tax and financial reporting purposes is identical.
PERCENT OF
PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO
---------------------------------- ----------
Commercial Paper ................................ 55.6%
Certificate of Deposit .......................... 4.0
Corporate Note .................................. 3.0
U.S. Government Agencies ........................ 7.9
Repurchase Agreements ........................... 29.4
Investment Company .............................. 0.1
----------
100.0%
==========
See accompanying notes to financial statements.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006 (UNAUDITED)
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (99.5%) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
ALASKA (0.3%)
---------------------------------------------------------
Anchorage, AK Electric Utility Revenue Senior Lien-
Municipal Light & Power Series C, AMBAC
Insured, Prerefunded to 12/01/06 @ 102,
Collateral: US Government Securities
$ 500,000 5.125%, 12/01/26 ........................................ Aaa/AAA $ 511,008
--------------
COLORADO (3.9%)
---------------------------------------------------------
Colorado Housing & Finance Authority Revenue Bonds,
Class I, Series A-1, Weekly Reset VRDO*, SPA: FHLB
7,600,000 3.750%, 10/01/30 ........................................ VMIG1/A-1+ 7,600,000
--------------
FLORIDA (0.4%)
---------------------------------------------------------
Sarasota County, FL Utility System Revenue, FGIC
Insured, Prerefunded to 10/01/06 @102, Collateral:
State & Local Government Series
750,000 5.250%, 10/01/25 ........................................ Aaa/AAA 765,000
--------------
HAWAII (25.6%)
---------------------------------------------------------
City and County Honolulu, HI General Obligation
Bonds, Series-A - Escrowed to Maturity, Collateral:
US Government Securities
2,870,000 5.600%, 04/01/07 ........................................ #Aaa/AA- 2,897,828
City and County Honolulu, HI General Obligation
Commercial Paper Issue W, LOC - Wesdeutsche
Landesbank
5,000,000 3.500%, 12/06/06 ........................................ A-1+/P1 5,000,000
Hawaii State Department of Budget and Finance
Special Purpose Revenue (Queens Health System)
Series C, Weekly Reset VRDO*, AMBAC Insured,
SPA: Bank of America N.A.
35,000,000 3.600%, 07/01/28 ........................................ MIG1/AAA 35,000,000
Hawaii State Department of Budget and Finance
Special Purpose Revenue Bonds (The Queen's Health
System) Series A, Weekly Reset VRDO*, SPA:
Bank of Nova Scotia, AMBAC Insured
4,600,000 3.590%, 07/01/29 ........................................ VMIG1/A-1+ 4,600,000
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
HAWAII (CONTINUED)
---------------------------------------------------------
Hawaii State General Obligation Series CN, FGIC
Insured, Escrowed to Maturity, Prerefunded to
03/01/07 @102, Collateral: US Government
Securities,
$ 1,750,000 5.250%, 03/01/10 ........................................ Aaa/AAA $ 1,795,854
--------------
49,293,682
--------------
ILLINOIS (4.0%)
---------------------------------------------------------
Chicago, IL General Obligation Bonds, Park District,
MBIA Insured, Prerefunded to 01/01/07 @101,
Collateral: State & Local Government Series
1,145,000 5.400%, 01/01/09 ........................................ Aaa/AAA 1,162,061
Chicago, IL General Obligation Bonds, Series B,
Weekly Reset VRDO*, SPA: Landesbank Baden-
Wurttemberg FGIC Insured
3,000,000 3.740%, 01/01/37 ........................................ VMIG1/A-1+ 3,000,000
Chicago IL Housing Authority Capital Program Revenue,
Escrowed to Maturity, Collateral: State & Local
Government Series 100%, Prerefunded
2,185,000 5.000%, 07/01/07 ........................................ Aa3/NR 2,208,117
Cook County, IL General Obligation Capital
Improvement - Prerefunded to 11/15/06 @101,
Collateral: US Government Securities, FGIC Insured
1,250,000 5.875%, 11/15/22 ........................................ Aaa/AAA 1,266,022
--------------
7,636,200
--------------
MARYLAND (0.6%)
---------------------------------------------------------
Montgomery County, MD Public Improvement Series
General Obligation, Escrowed to Maturity,
Prerefunded 05/01/07 @102, Collateral: State &
Local Government Series
1,085,000 5.375%, 05/01/13 ........................................ Aaa/AAA 1,116,379
--------------
MASSACHUSETTS (0.4%)
---------------------------------------------------------
Massachusetts Health & Educational Facilities
Authority Revenue Wellesley College Issue E,
Weekly Reset VRDO*
690,000 3.800%, 07/01/22 ........................................ Aa1/AA+ 690,000
--------------
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
MICHIGAN (9.9%)
---------------------------------------------------------
Detroit, MI Sewer Disposal Revenue Series A, MBIA
Insured, Escrowed to Maturity, Prerefunded to
07/01/07 @101, Collateral: State & Local
Government Series 100%
$ 250,000 5.000%, 07/01/11 ........................................ Aaa/AAA $ 254,705
Eastern Michigan University, MI University Revenue
Bonds, Daily Reset VRDO*, FGIC Insured,
SPA: FGIC-SPI
4,760,000 3.850%, 06/01/27 ........................................ Aaa/A-1+ 4,760,000
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 1,517,909
Northern Michigan University Revenue Bonds,
Daily Reset VRDO* SPA - DEPFA Bank PLC,
AMBAC Insured
1,000,000 3.850%, 12/01/35 ........................................ Aaa/AAA 1,000,000
Northern Michigan University Revenue Bonds, Daily
Reset VRDO*, FGIC Insured, SPA: FGIC-SPI
4,210,000 3.850%, 06/01/31 ........................................ VMIG1/A-1+ 4,210,000
Rochester, MI Community School District General
Obligation, MBIA Insured, Escrowed to Maturity,
Prerefunded 05/01/07 @100, Collateral: State &
Local Government Securities 100%
7,315,000 5.250%, 05/01/15 ........................................ #Aaa/AAA 7,383,816
--------------
19,126,430
--------------
MISSISSIPPI (0.6%)
---------------------------------------------------------
Mississippi State Capital Improvement General
Obligation, Escrowed to Maturity, Collateral: US
Government Securities 100%, Prerefunded
1,220,000 5.500%, 11/01/06 ........................................ #Aaa/AA 1,221,826
--------------
MISSOURI (14.6%)
---------------------------------------------------------
Kansas City, MO Industrial Development Authority
Revenue Bonds, (Ewing Marion Kaufman
Foundation), Daily Reset VRDO*
7,110,000 3.850%, 04/01/27 ........................................ NR/A-1+ 7,110,000
450,000 3.850%, 04/01/27 ........................................ NR/A-1+ 450,000
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
MISSOURI (CONTINUED)
---------------------------------------------------------
Missouri State, Health & Educational Facilities Authority
Revenue Bonds (St. Louis University), Series B,
Daily Reset VRDO*, SPA: Bank of America N.A.
$ 5,410,000 3.880%, 10/01/24 ........................................ VMIG1/A-1+ $ 5,410,000
Missouri Sate Health & Educational Facilities Authority
Revenue (Washington University), Series B, SPA:
JP Morgan Chase Bank, Daily Reset VRDO*
2,600,000 3.890%, 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 3.850%, 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 3.850%, 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*
4,000,000 3.890%, 11/01/32 ........................................ VMIG1/A-1+ 4,000,000
University of Missouri University Revenue, Daily Reset
VRDO* System Facilities-Series B
3,650,000 3.890%, 11/01/30 ........................................ VMIG1/A-1+ 3,650,000
--------------
28,120,000
--------------
MONTANA (2.6%)
---------------------------------------------------------
Montana State, Health Facilities Authority
Revenue Bonds, Series A, Weekly Reset VRDO*,
FGIC Insured SPA: Wells Fargo
5,000,000 3.750%, 12/01/15 ........................................ VMIG1/A-1+ 5,000,000
--------------
NEVADA (4.6%)
---------------------------------------------------------
Clark County, NV Airport Revenue Bonds, Series C,
Weekly Reset VRDO*, FGIC Insured, SPA:
Landesbank Baden-Wurttemberg
8,800,000 3.740%, 07/01/29 ........................................ VMIG1/A-1+ 8,800,000
--------------
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
NEW JERSEY (1.3%)
---------------------------------------------------------
New Jersey Economic Development Authority
Revenue 1st Mortgage-Cranes Mill-A, Escrowed
to Maturity, Prerefunded 02/01/07 @102,
Collateral: US Government Securities
$ 1,400,000 7.500%, 02/01/27 ........................................ #Aaa/NR $ 1,456,381
New Jersey Economic Development Authority
Health Revenue 1st Mortgage - Winchester
Gardens- Series A - Prerefunded to 11/01/06
@102, Collateral: US Government Securities
1,100,000 8.625%, 11/01/25 ........................................ #Aaa/NR 1,126,329
--------------
2,582,710
--------------
NEW YORK (8.7%)
---------------------------------------------------------
Long Island, NY Power Authority Revenue Bonds,
Series 1A, Weekly Reset VRDO*, LOC:
80% Bayerische Landesbank 20%
Landesbank Baden-Wurttemberg
9,000,000 3.750%, 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
7,800,000 3.870%, 11/01/22 ........................................ VMIG1/A-1+ 7,800,000
--------------
16,800,000
--------------
NORTH CAROLINA (14.7%)
---------------------------------------------------------
Charlotte, NC Airport Revenue Bonds, Series A,
Weekly Reset VRDO*, MBIA Insured, SPA:
JP Morgan Chase
8,520,000 3.730%, 07/01/16 ....................................... VMIG1/A-1+ 8,520,000
Concord, NC Utility Systems Revenue Bonds,
Series B, Weekly Reset VRDO*, FSA Insured,
SPA: Wachovia Bank
8,820,000 3.730%, 12/01/22 ........................................ VMIG1/NR 8,820,000
Durham, NC General Obligation Bonds
(Public Improvement Project), Weekly Reset
VRDO*, SPA: Wachovia Bank of North Carolina
1,150,000 3.750%, 02/01/09 ........................................ VMIG1/A-1+ 1,150,000
2,975,000 3.750%, 02/01/11 ........................................ VMIG1/A-1+ 2,975,000
1,270,000 3.750%, 02/01/12 ........................................ VMIG1/A-1+ 1,270,000
1,475,000 3.750%, 02/01/13 ........................................ VMIG1/A-1+ 1,475,000
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
NORTH CAROLINA (CONTINUED)
---------------------------------------------------------
North Carolina East Municipal Power Agency
Power System Revenue Refunding -Series B -
Prerefunded to 01/01/07 @102, Collateral:
US Treasury Securities, MBIA Insured
$ 4,000,000 5.875%, 01/01/21 ........................................ Aaa/AAA $ 4,102,631
--------------
28,312,631
--------------
OHIO (1.3%)
---------------------------------------------------------
Ohio Housing Finance Agency Mortgage Revenue
Bonds (Residential Mortgage), Series E-AMT,
Weekly Reset VRDO*, SPA: FHLB
2,590,000 3.800%, 09/01/34 ........................................ VMIG1/NR 2,590,000
--------------
OREGON (0.5%)
---------------------------------------------------------
Josephine County, OR School District #007 General
Obligation, FGIC Insured, Escrowed to Maturity,
Prerefunded 06/01/07 @100, Collateral:
US Government Securities
1,000,000 5.700%, 06/01/13 ........................................ Aaa/AAA 1,014,314
--------------
TEXAS (2.4%)
---------------------------------------------------------
Allen, TX Independent School District General
Obligation, Escrowed to Maturity,
Prerefunded 02/15/07 @100, Collateral:
US Government Securities, Permanent School
Fund-Guaranteed
1,255,000 5.100%, 02/15/12 ........................................ Aaa/AAA 1,261,372
Austin, TX Utility System Revenue
Prerefunded-Combined-Series A - Escrowed
to Maturity, Collateral: State & Local
Government Series
2,300,000 6.000%, 11/15/06 ........................................ Aaa/AAA 2,306,624
Denton, TX Utility System Revenue Refunding,
Series A, MBIA Insured, Prerefunded to 12/01/06
@100, Collateral: US Government Securities
1,000,000 5.950%, 12/01/14 ........................................ Aaa/AAA 1,003,998
--------------
4,571,994
--------------
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE
- --------------- --------------------------------------------------------- ---------- --------------
VIRGINIA (3.1%)
---------------------------------------------------------
University of Virginia Revenue Bonds, Series A,
Weekly Reset VRDO*
$ 6,000,000 3.720%, 06/01/34 ........................................ VMIG1/A-1+ $ 6,000,000
--------------
Total Municipal Bonds ................................... 191,752,174
--------------
Shares INVESTMENT COMPANY (0.1%)
- --------------- ---------------------------------------------------------
155,000 Goldman Sachs Financial Square Tax-Free
Money Market Fund Institutional Shares ............. 155,000
--------------
Total Investments (Amortized Cost
$191,907,174**) ...................................... 99.6% 191,907,174
Other assets less liabilities ........................... 0.4 812,023
---------- --------------
NET ASSETS .............................................. 100.0% $ 192,719,197
========== ==============
* 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
------------
Alaska 0.3%
Colorado 4.0
Florida 0.4
Hawaii 25.7
Illinois 4.0
Investment Company 0.1
Maryland 0.6
Massachussetts 0.4%
Michigan 10.0
Mississipi 0.6
Missouri 14.6
Montana 2.6
Nevada 4.6
New Jersey 1.3
New York 8.8%
North Carolina 14.7
Ohio 1.3
Oregon 0.5
Texas 2.4
Virginia 3.1
-----
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
SEPTEMBER 30, 2006 (UNAUDITED)
PRINCIPAL
AMOUNT U.S. GOVERNMENT AGENCIES (100.1%) VALUE
- --------------- --------------------------------------------------------------------- --------------
FEDERAL FARM CREDIT BANK (6.2%)
---------------------------------------------------------------------
$ 65,000,000 5.16%, 10/10/06 ..................................................... $ 64,916,150
20,000,000 5.04%, 02/27/07 ..................................................... 19,582,800
--------------
84,498,950
--------------
FEDERAL HOME LOAN BANK (93.9%)
---------------------------------------------------------------------
174,000,000 4.75%, 10/02/06 ..................................................... 173,977,042
110,000,000 5.28%, 10/04/06 ..................................................... 109,951,579
27,000,000 5.24%, 10/06/06 ..................................................... 26,980,339
66,000,000 5.23%, 10/11/06 ..................................................... 65,904,098
22,000,000 5.13%, 10/13/06 ..................................................... 21,962,343
50,000,000 5.15%, 10/18/06 ..................................................... 49,878,403
95,000,000 5.12%, 10/20/06 ..................................................... 94,743,289
60,000,000 5.25%, 10/25/06 ..................................................... 59,789,880
78,000,000 5.15%, 10/27/06 ..................................................... 77,710,165
95,000,000 5.21%, 11/01/06 ..................................................... 94,573,793
20,000,000 5.15%, 11/08/06 ..................................................... 19,891,383
50,000,000 5.16%, 11/15/06 ..................................................... 49,677,500
95,000,000 5.15%, 11/17/06 ..................................................... 94,361,877
58,000,000 5.14%, 11/22/06 ..................................................... 57,568,963
21,431,000 5.15%, 11/24/06 ..................................................... 21,265,606
20,000,000 5.08%, 11/29/06 ..................................................... 19,833,325
33,000,000 5.15%, 12/08/06 ..................................................... 32,679,295
50,000,000 5.09%, 12/22/06 ..................................................... 49,420,306
95,000,000 5.08%, 12/27/06 ..................................................... 93,833,113
75,000,000 5.04%, 03/30/07 ..................................................... 73,110,000
--------------
1,287,112,299
--------------
Total U.S. Government Agencies ................................... 1,371,611,249
--------------
SHARES INVESTMENT COMPANY (0.3%)
- --------------- ---------------------------------------------------------------------
3,978,626 JP Morgan U.S. Government Money Market Fund, Capital Shares ......... 3,978,626
--------------
Total Investments (Amortized Cost $1,375,589,875*) .... 100.4% 1,375,589,875
Other assets less liabilities ......................... (0.4) (5,381,797)
----- --------------
NET ASSETS ............................................ 100.0% $1,370,208,078
===== ==============
* Cost for Federal income tax and financial reporting purposes is identical.
PERCENT OF
PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO
---------------------------------- ----------
U.S. Government Agencies ......................... 99.7%
Investment Company ............................... 0.3
----------
100.0%
==========
See accompanying notes to financial statements.
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2006 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
-------------- -------------- --------------
ASSETS:
Investments at value and amortized cost (note 2) ................ $ 353,636,456 $ 191,907,174 $1,375,589,875
Repurchase agreements (note 2) .................................. 147,000,000 -- --
Interest receivable ............................................. 437,507 1,527,826 5,706
Other assets .................................................... 35,952 14,965 87,927
-------------- -------------- --------------
Total Assets ................................................. 501,109,915 193,449,965 1,375,683,508
-------------- -------------- --------------
LIABILITIES:
Cash overdraft .................................................. -- 124,914 --
Dividends payable ............................................... 1,927,759 483,693 4,837,810
Adviser and Administrator fees payable .......................... 205,097 65,122 414,480
Distribution fees payable ....................................... 40,060 15,675 175,129
Accrued expenses ................................................ 83,858 41,364 48,011
-------------- -------------- --------------
Total Liabilities ............................................ 2,256,774 730,768 5,475,430
-------------- -------------- --------------
NET ASSETS ...................................................... $ 498,853,141 $ 192,719,197 $1,370,208,078
============== ============== ==============
NET ASSETS CONSIST OF:
Capital Stock - Authorized an unlimited number of shares,
par value $0.01 per share .................................... $ 4,988,388 $ 1,927,067 $ 13,701,381
Additional paid-in capital ...................................... 493,863,573 190,781,858 1,356,505,166
Accumulated net realized gain (loss) on investments ............. 1,180 10,272 1,531
-------------- -------------- --------------
$ 498,853,141 $ 192,719,197 $1,370,208,078
============== ============== ==============
SHARES OF BENEFICIAL INTEREST:
Original Shares Class:
Net Assets ................................................... $ 325,655,401 $ 126,607,674 $ 445,909,939
============== ============== ==============
Shares outstanding ........................................... 325,873,527 126,599,538 445,880,250
============== ============== ==============
Net asset value per share .................................... $ 1.00 $ 1.00 $ 1.00
============== ============== ==============
Service Shares Class:
Net Assets ................................................... $ 173,197,740 $ 66,111,523 $ 924,298,139
============== ============== ==============
Shares outstanding ........................................... 172,965,224 66,107,205 924,257,896
============== ============== ==============
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
SIX MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
-------------- -------------- --------------
INVESTMENT INCOME:
Interest income ................................................. $ 12,307,085 $ 3,555,592 $ 30,793,607
-------------- -------------- --------------
EXPENSES:
Investment Advis er fees (note 3) ............................... 872,512 305,728 1,991,826
Administrator fees (note 3) ..................................... 331,506 99,490 444,384
Distribution fees (note 3) ...................................... 216,544 99,066 1,011,990
Trustees' fees and expenses ..................................... 48,978 34,129 87,220
Shareholders' reports ........................................... 24,955 3,536 16,141
Insurance ....................................................... 23,901 9,968 57,945
Legal fees (note 3) ............................................. 22,686 11,399 28,730
Registration fees and dues ...................................... 20,044 5,103 26,308
Fund accounting fees ............................................ 19,459 20,978 20,848
Auditing and tax fees ........................................... 10,825 8,365 12,415
Transfer and shareholder servicing agent fees ................... 5,280 5,271 5,293
Custodian fees .................................................. 2,965 5,666 4,688
Chief Compliance Officer (note 3) ............................... 2,278 2,278 2,278
Miscellaneous ................................................... 8,755 4,097 22,859
-------------- -------------- --------------
Total expenses .................................................. 1,610,688 615,074 3,732,925
Expenses paid indirectly (note 5) ............................... (1,846) (1,369) (3,838)
-------------- -------------- --------------
Net expenses ........................................................ 1,608,842 613,705 3,729,087
-------------- -------------- --------------
Net investment income ............................................... 10,698,243 2,941,887 27,064,520
Net realized gain (loss) from securities transactions ............... -- 172 --
-------------- -------------- --------------
Net change in net assets resulting from operations .................. $ 10,698,243 $ 2,942,059 $ 27,064,520
============== ============== ==============
See accompanying notes to financial statements.
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
CASH FUND TAX-FREE FUND
-------------------------------------- --------------------------------------
Six Months Ended Six Months Ended
September 30, 2006 Year Ended September 30, 2006 Year Ended
(unaudited) March 31, 2006 (unaudited) March 31, 2006
------------------ --------------- ------------------ ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................ $ 10,698,243 $ 14,580,671 $ 2,941,887 $ 4,482,897
Net realized gain (loss)
from securities transactions ....... -- 1,180 172 10,100
--------------- --------------- --------------- ---------------
Net change in net assets
resulting from operations .......... 10,698,243 14,581,851 2,942,059 4,492,997
--------------- --------------- --------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ...................... (6,988,064) (9,721,572) (1,852,029) (1,704,092)
Service Shares ....................... (3,710,179) (4,859,099) (1,089,858) (2,778,805)
--------------- --------------- --------------- ---------------
Total dividends to shareholders
from net investment income ......... (10,698,243) (14,580,671) (2,941,887) (4,482,897)
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares ...................... 443,270,516 772,407,051 114,061,178 223,627,397
Service Shares ....................... 264,945,636 498,998,950 69,798,778 165,033,651
--------------- --------------- --------------- ---------------
708,216,152 1,271,406,001 183,859,956 388,661,048
--------------- --------------- --------------- ---------------
Reinvested dividends:
Original Shares ...................... 133,015 217,287 20,272 91,298
Service Shares ....................... 3,008,826 4,773,677 925,843 1,695,763
--------------- --------------- --------------- ---------------
3,141,841 4,990,964 946,115 1,787,061
--------------- --------------- --------------- ---------------
Cost of shares redeemed:
Original Shares ...................... (402,951,783) (853,144,228) (120,036,399) (225,091,397)
Service Shares ....................... (264,442,468) (500,085,192) (97,639,470) (145,858,384)
--------------- --------------- --------------- ---------------
(667,394,251) (1,353,229,420) (217,675,869) (370,949,781)
--------------- --------------- --------------- ---------------
Change in net assets
from capital share transactions ...... 43,963,742 (76,832,455) (32,869,798) 19,498,328
--------------- --------------- --------------- ---------------
Total change in net assets ........... 43,963,742 (76,831,275) (32,869,626) 19,508,428
NET ASSETS:
Beginning of period .................. 454,889,399 531,720,674 225,588,823 206,080,395
--------------- --------------- --------------- ---------------
End of period* ....................... $ 498,853,141 $ 454,889,399 $ 192,719,197 $ 225,588,823
=============== =============== =============== ===============
* Includes undistributed (distributions
in excess of) net investment income of: $ -- $ -- $ -- $ --
=============== =============== =============== ===============
GOVERNMENT FUND
------------------------------------
Six Months Ended
September 30, 2006 Year Ended
(unaudited) March 31, 2006
------------------ ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................ $ 27,064,520 $ 33,279,020
Net realized gain (loss)
from securities transactions ....... -- 2,274
--------------- ---------------
Net change in net assets
resulting from operations .......... 27,064,520 33,281,294
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ...................... (9,424,725) (12,231,234)
Service Shares ....................... (17,639,795) (21,047,786)
--------------- ---------------
Total dividends to shareholders
from net investment income ......... (27,064,520) (33,279,020)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares ...................... 723,737,323 892,335,436
Service Shares ....................... 1,381,263,250 3,155,652,101
--------------- ---------------
2,105,000,573 4,047,987,537
--------------- ---------------
Reinvested dividends:
Original Shares ...................... 72,704 139,115
Service Shares ....................... 14,437,107 21,010,927
--------------- ---------------
14,509,811 21,150,042
--------------- ---------------
Cost of shares redeemed:
Original Shares ...................... (707,320,692) (817,340,270)
Service Shares ....................... (1,358,648,236) (2,867,454,460)
--------------- ---------------
(2,065,968,928) (3,684,794,730)
--------------- ---------------
Change in net assets
from capital share transactions ...... 53,541,456 384,342,849
--------------- ---------------
Total change in net assets ........... 53,541,456 384,345,123
NET ASSETS:
Beginning of period .................. 1,316,666,622 932,321,499
--------------- ---------------
End of period* ....................... $ 1,370,208,078 $ 1,316,666,622
=============== ===============
* Includes undistributed (distributions
in excess of) net investment income of: $ -- $ --
=============== ===============
See accompanying notes to financial statements.
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 (UNAUDITED)
1. ORGANIZATION
Cash Assets Trust (the "Trust") was organized on May 7, 1984 as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940 (the "1940 Act") as an open-end investment company.
The Trust consists of the following three investment portfolios (referred
to individually as a "Fund" and collectively as the "Funds"): Pacific Capital
Cash Assets Trust ("Cash Fund") (a diversified portfolio which commenced
operations on December 5, 1984), Pacific Capital Tax-Free Cash Assets Trust
("Tax-Free Fund") (a non-diversified portfolio which commenced operations on
April 4, 1989), and Pacific Capital U.S. Government Securities Cash Assets Trust
("Goverment Fund") (a diversified portfolio which commenced operations on April
4, 1989). The Trust is authorized to issue for each Fund an unlimited number of
shares of $0.01 par value in two classes of shares; the Original Shares Class
and the Service Shares Class. The Original Shares Class includes all currently
outstanding shares of each Fund that were issued prior to January 20, 1995, the
date on which the Capital structure was changed to include two classes rather
than one. The two classes of shares are substantially identical, except that
Service Shares bear the fees that are payable under the Trust's Distribution
Plan.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. The policies are in
conformity with 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
was 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 were not affected by these changes.
i) NEW ACCOUNTING PRONOUNCEMENT: On July 13, 2006, the Financial Accounting
Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting
for Uncertainty in income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements.
FIN 48 requires the evaluation of tax positions taken or expected to be
taken in the course of preparing the Trust's tax returns to determine
whether the tax positions are "more-likely-than-not" of being sustained by
the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax benefit or
expense in the current year. Adoption of FIN 48 is required for fiscal
years beginning after December 15, 2006 and is to be applied to all open
tax years as of the effective date. Management believes that the adoption
of FIN 48 will have no impact on the financial statements of the Trust.
In September 2006, FASB issued FASB Statement No. 157, "Fair Value
Measurement" ("SFAS 157"), which defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair
value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years.
Management is currently evaluating the effect of SFAS 157 on the Trust's
financial statements.
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 six months ended
September 30, 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 six months ended September 30, 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 $20,660; Tax-Free Fund $10,612; Government Fund
$25,757. The Secretary of the Trust is a Partner at 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 uninvested.
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
----------- ----------- ----------- ----------- ----------- -----------
Ordinary income ..... $14,497,718 $ 5,915,623 $ -- $ -- $33,395,289 $10,709,831
Net tax-exempt income -- -- 4,452,274 2,023,379 -- --
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 income ............ -- 286,616 --
Accumulated net realized loss on investments -- -- --
-------------- -------------- --------------
$ 926,889 $ 296,716 $ 1,406,955
============== ============== ==============
- --------------------------------------------------------------------------------
PACIFIC CAPITAL
CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/06 -----------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.03
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .. (0.02) (0.03) (0.01) (0.01) (0.01) (0.03)
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................ 2.29%* 3.20% 1.36% 0.90% 1.35% 2.52%
Ratios/supplemental data
Net assets, end of period (in millions) $ 326 $ 286 $ 366 $ 287 $ 361 $ 353
Ratio of expenses to average net assets 0.58%** 0.58% 0.37% 0.21% 0.36% 0.58%
Ratio of net investment income to
average net assets .................. 4.53%** 3.09% 1.39% 0.90% 1.34% 2.51%
The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual
caps on fees were (note 3):
Ratio of expenses to average net assets ++ ++ 0.57% 0.57% 0.58% ++
Ratio of net investment income to
average net assets .................. ++ ++ 1.19% 0.54% 1.12% ++
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.58%** 0.58% 0.37% 0.21% 0.36% 0.57%
SERVICE SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/06 -----------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.02
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .. (0.02) (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
======= ======= ======= ======= ======= =======
Total return ............................ 2.16%* 2.94% 1.11% 0.65% 1.09% 2.27%
Ratios/supplemental data
Net assets, end of period (in millions) $ 173 $ 169 $ 166 $ 119 $ 123 $ 146
Ratio of expenses to average net assets 0.83%** 0.83% 0.61% 0.46% 0.61% 0.83%
Ratio of net investment income to
average net assets .................. 4.28%** 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 were (note 3):
Ratio of expenses to average net assets ++ ++ 0.81% 0.82% 0.83% ++
Ratio of net investment income to
average net assets .................. ++ ++ 0.91% 0.29% 0.88% ++
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.83%** 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 Adviser's and the Administrator's fees was required
during the period.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
---------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/06 -----------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+ ................ 0.02 0.02 0.01 0.01 0.01 0.02
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .. (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
======= ======= ======= ======= ======= =======
Total return ............................ 1.52%* 2.21% 1.16% 0.84% 1.15% 2.00%
Ratios/supplemental data
Net assets, end of period (in millions) $ 127 $ 133 $ 134 $ 99 $ 130
Ratio of expenses to average net assets 0.51%** 0.50% 0.29% 0.17% 0.28% 0.51%
Ratio of net investment income to
average net assets .................. 3.00%** 2.20% 1.17% 0.84% 1.13% 1.94%
The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual
caps on fees were (note 3):
Ratio of expenses to average net assets ++ ++ 0.49% 0.52% 0.50% ++
Ratio of net investment income to
average net assets .................. ++ ++ 0.96% 0.50% 0.90% ++
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.51%** 0.50% 0.28% 0.17% 0.27% 0.51%
SERVICE SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/06 -----------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+ ................ 0.01 0.02 0.01 0.01 0.01 0.02
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .. (0.01) (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
======= ======= ======= ======= ======= =======
Total return ............................ 1.39%* 1.96% 0.90% 0.59% 0.90% 1.75%
Ratios/supplemental data
Net assets, end of period (in millions) $ 100 $ 66 $93 $72 $ 50 $ 56 $ 52
Ratio of expenses to average net assets 0.76%** 0.75% 0.53% 0.42% 0.53% 0.77%
Ratio of net investment income to
average net assets .................. 2.75%** 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 were (note 3):
Ratio of expenses to average net assets ++ ++ 0.75% 0.77% 0.76% ++
Ratio of net investment income to
average net assets .................. ++ ++ 0.71% 0.25% 0.66% ++
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.76%** 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 Adviser's and the Administrator's fees was required
during the period.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PACIFIC CAPITAL
U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/06 -----------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.03
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .. (0.02) (0.03) (0.01) (0.01) (0.01) (0.03)
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total return ............................ 2.33%* 3.25% 1.41% 0.96% 1.34% 2.73%
Ratios/supplemental data
Net assets, end of period (in millions) $ 446 $ 429 $ 354 $ 263 $ 270 $ 306
Ratio of expenses to average net assets 0.45%** 0.45% 0.27% 0.11% 0.25% 0.45%
Ratio of net investment income to
average net assets .................. 4.61%** 3.25% 1.42% 0.96% 1.34% 2.47%
The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual
caps on fees were (note 3):
Ratio of expenses to average net assets ++ ++ 0.45% 0.46% 0.46% ++
Ratio of net investment income to
average net assets .................. ++ ++ 1.24% 0.62% 1.12% ++
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.45%** 0.45% 0.27% 0.11% 0.24% 0.45%
SERVICE SHARES
----------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/06 -----------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------- -------
Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.02
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .. (0.02) (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
======= ======= ======= ======= ======= =======
Total return ............................ 2.20%* 3.00% 1.16% 0.71% 1.09% 2.48%
Ratios/supplemental data
Net assets, end of period (in millions) $ 924 $ 887 $ 578 $ 575 $ 448 $ 457
Ratio of expenses to average net assets 0.70%** 0.70% 0.52% 0.36% 0.49% 0.70%
Ratio of net investment income to
average net assets .................. 4.36%** 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 were (note 3):
Ratio of expenses to average net assets ++ ++ 0.70% 0.71% 0.71% ++
Ratio of net investment income to
average net assets .................. ++ ++ 0.98% 0.36% 0.86% ++
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.70%** 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 Adviser's and the Administrator's fees was required
during the period.
* Not annualized.
** Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
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 table
below is 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 table below is based on an investment of $1,000 invested on April 1,
2006 and held for the six months ended September 30, 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".
SIX MONTHS ENDED SEPTEMBER 30, 2006
BEGINNING ENDING EXPENSES
ACTUAL ACCOUNT ACCOUNT PAID DURING
TOTAL RETURN(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 2.29% $1,000.00 $1,022.90 $ 2.94
Service Shares 2.16% $1,000.00 $1,021.60 $ 4.21
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 1.52% $1,000.00 $1,015.20 $ 2.58
Service Shares 1.39% $1,000.00 $1,013.90 $ 3.84
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 2.33% $1,000.00 $1,023.30 $ 2.28
Service Chares 2.20% $1,000.00 $1,022.00 $ 3.55
- --------------------------------------------------------------------------------
(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 0.58% AND 0.83%,
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 183/365 (TO REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio and an assumed rate of
return of 5.00% per year before expenses, which is not the actual return of each
of the respective Funds. 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 portfolios of 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.
SIX MONTHS ENDED SEPTEMBER 30, 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 $1,022.16 $ 2.94
Service Shares 5.00% $1,000.00 $1,020.91 $ 4.20
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 5.00% $1,000.00 $1,022.51 $ 2.59
Service Shares 5.00% $1,000.00 $1,021.26 $ 3.85
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 5.00% $1,000.00 $1,022.81 $ 2.28
Service Chares 5.00% $1,000.00 $1,021.56 $ 3.55
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.58% AND 0.83%,
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 183/365 (TO REFLECT THE ONE-HALF YEAR PERIOD).
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
RENEWAL OF INVESTMENT ADVISORY AGREEMENT
Renewal until June 30, 2007 of the Investment Advisory Agreement (the
"Advisory Agreement") for each fund between the Trust and the Adviser was
approved by the Board of Trustees and the independent Trustees in June, 2006. At
a meeting called and held for that purpose at which a majority of the
independent Trustees were present in person, the following materials were
considered:
o Copies of the agreements to be renewed;
o A term sheet describing the material terms of the agreements;
o The Annual Report of the Trust for the year ended March 31, 2006;
o A report, prepared by the Adviser and Administrator and provided to
the Trustees in advance of the meeting for the Trustees' review,
containing data about the performance of each of the portfolios and
data about their respective fees, expenses and purchases and
redemptions of capital stock together with comparisons of such data
with similar data about other comparable funds, as well as data as
to the profitability of the Adviser and the Administrator; and
o Quarterly materials reviewed at prior meetings on each of the
portfolio's performance, operations, portfolio and compliance.
The Trustees considered each Advisory Agreement separately. The Trustees
reviewed materials relevant to, and considered, the following factors as to each
agreement and reached the conclusions described.
THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE ADVISER.
The investment objective of each of the Trust's portfolios is to seek to
provide safety of principal while achieving as a high a level of liquidity and
of current income (and with respect to the Tax-Free Fund, current income exempt
from Federal and Hawaii income taxes). To achieve these objectives, the Adviser
has provided management of each fund's portfolio, as well as provided facilities
for credit analysis of each of the funds' portfolio securities. With respect to
the Government Securities Fund, the Adviser has managed the investment portfolio
in order to achieve a Aaa/AAA rating from both Moody's Investors Service and
Standard and Poor's, respectively.
The Board considered that the Adviser had provided all services the Board
deemed necessary or appropriate, including the specific services that the Board
has determined are required for the Trust, given that its purpose is to provide
shareholders with safety of principal while achieving as a high a level of
liquidity and of current income.
The Board concluded that the services provided were appropriate and
satisfactory and that the Trust would be well served if they continued.
Evaluation of this factor weighed in favor of renewal of the Advisory
Agreements.
THE INVESTMENT PERFORMANCE OF THE TRUST (AND EACH OF ITS PORTFOLIOS) AND
ADVISER.
The Board reviewed each aspect of each fund's performance and compared its
performance with that of their respective benchmarks. It was noted that the
materials provided by the
Administrator indicated that compared to each fund's respective benchmark, the
Trust's portfolios had investment performance that was either comparable to or
favorable for one-, five- and ten-year periods as compared with the benchmark.
The Board considered these results to be consistent with the purposes of each of
the Trust's portfolios.
The Board concluded that the performance of each fund, in light of market
conditions, was satisfactory. Evaluation of this factor indicated to the
Trustees that renewal of the Advisory Agreement would be appropriate.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
ADVISER AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE TRUST (AND EACH OF ITS
PORTFOLIOS).
The information provided in connection with renewal contained expense data
for each fund and its major local competitor as well as data for each of the
funds with respect to their respective peer groups, including data for money
market funds of a comparable asset size. The materials also showed the
profitability to the Adviser of its services to the Trust.
The Board compared the expense and fee data with respect to each of the
portfolios to similar data about other funds that it found to be relevant. The
Board concluded that the expenses of each of the portfolios and the fees paid
were similar to and were reasonable as compared to those being paid by its
respective local competitor and other money market funds nationwide.
The Board considered that the foregoing indicated the appropriateness of
the costs of the services to the Trust, which was being well managed as
indicated by the factors considered previously.
The Board further concluded that the profitability to the Adviser did not
argue against approval of the fees to be paid under each Advisory Agreement.
THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE TRUST, AND
ITS PORTFOLIOS, GROWS.
Data provided to the Trustees showed that the asset size of each of the
portfolios had been generally increasing in recent years. However, they
concluded that the uncertain interest rate environment might make it difficult
to achieve substantial growth in assets in the near future. The Trustees also
noted that the materials indicated that each portfolio's fees were generally
comparable to those of its peers, including those with breakpoints. Evaluation
of this factor indicated to the Board that the Advisory Agreements should be
renewed without addition of breakpoints at this time.
BENEFITS DERIVED OR TO BE DERIVED BY THE ADVISER AND ITS AFFILIATES FROM
THE RELATIONSHIP WITH THE TRUST (AND EACH OF ITS PORTFOLIOS).
The Board observed that, as is generally true of most fund complexes, the
Adviser and its affiliates, by providing services to a number of funds or other
investment clients including the Trust's three portfolios, were able to spread
costs as they would otherwise be unable to do. The Board noted that while that
produces efficiencies and increased profitability for the Adviser and its
affiliates, it also makes their services available to the three portfolios of
the Trust at favorable levels of quality and cost which are more advantageous to
the Trust's portfolios than would otherwise have been possible.
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila Group of Fundssm
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 portfolios
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 holdings for
each of the three portfolios 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, 2006 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.
- --------------------------------------------------------------------------------
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
FOUNDER AND CHAIRMAN EMERITUS
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
JP Morgan Chase Bank, 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.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable,
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the
Investment Company Act of 1940) as of a date within 90 days of
the fling of this report, the registrant's chief financial and
executive officers have concluded that the disclosure controls
and procedures of the registrant are appropriately designed to
ensure tat information required to be disclosed in the
registrant's reports that are filed under the Securities Exchange
Act of 1934 are accumulated and communicated t registrant's
management, including its principal executive officer(s) and
principal financial officer(s), to allow timely decisions regarding
required disclosure and is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms
adopted by the Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation, including no significant deficiencies or material
weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(a)(2) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(a) under the Investment
Company Act of 1940.
(b) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(b) under the Investment
Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the registrant has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CASH ASSETS TRUST
By: /s/ Diana P. Herrmann
- - ---------------------------------
Vice Chair, President and Trustee
December 8, 2006
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Chief Financial Officer and Treasurer
December 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
December 8, 2006
By: /s/ Joseph P. DiMaggio
- - -----------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
December 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.