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: 9/30/08
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 2008
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 SAIL TO LEFT OF PACIFIC](R)
A CASH MANAGEMENT
INVESTMENT
[LOGO OF THE PACIFIC PACIFIC
CAPITAL FUNDS OF CASH CAPITAL FUNDS(R)
ASSETS TRUST: A LION OF
STANDING ON A TWISTED CASH ASSETS TRUST
ROPE AND SAIL TO
LEFT OF PACIFIC](R) SEMI-ANNUAL REPORT
November, 2008
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,
2008.
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 their two classes of shares: Original Shares and Service Shares.
************************************
Since the Trust's inception in 1984 and throughout numerous business and
financial market cycles, the Trust has sought to provide shareholders with
stability, liquidity and current yield on their cash reserves. And today, these
same objectives have never been more important.
As we report to you today, risks to the global economy - from Wall Street
to Main Street - are the most serious and challenging in recent memory. The
economic and market conditions brought on by credit and sub-prime
mortgage-related issues have proven to be a tremendous challenge for investors
both here and abroad, as they re-evaluate risk. These extraordinary events
required a global response and financial officials from around the world have
worked together, taking action individually and collectively as necessary, to
address these challenges.
ECONOMIC REVIEW
After an extended period of steady economic growth with sustained low
levels of unemployment and inflation, the U.S. economy ran into difficulty as
2007 drew to a close. Despite action taken by the Federal Reserve to inject
liquidity into the banking system by aggressively reducing short-term interest
rates as well as utilizing other less often used monetary tools, the capital
markets came under pressure as investors confronted numerous challenges that
ranged from a crisis in credit markets and deteriorating housing values to
rapidly rising energy costs and intensifying inflationary pressures. Now, in the
past several months, economic activity has slowed dramatically with weaker
consumer and business spending impacting the labor markets. Indeed, economic
growth slowed in the 3rd quarter with real gross domestic product (GDP)
declining by 0.3 percent at an annualized rate. All indications are that the
U.S. economy is now fully in a recession.
In September, the financial market turmoil intensified throughout the
world and credit markets froze, causing a chain reaction resulting in
non-financial companies experiencing difficulties in financing operations. The
persistent tightening in credit conditions, weakness in equity and housing
markets and accelerating job losses have all worked to push consumer confidence
to its lowest level ever recorded. These factors have also resulted in a decline
in real consumer spending during the 3rd quarter of 2008 that was the sharpest
quarterly drop since the 1980s.
ACTION TAKEN
As noted, the financial crisis intensified greatly in September which
required a global response. Here in the U.S., the Treasury Department went to
Congress and asked for broad new authorities to address the current troubles. In
October, just after the Trust's current report period ended, President Bush
signed into law the
NOT A PART OF THE SEMI-ANNUAL REPORT
Emergency Economic Stabilization Act of 2008 (EESA). The EESA empowers the U.S.
Treasury to use up to $700 billion to inject capital into financial
institutions, to purchase or insure mortgage assets, and to purchase any other
troubled assets that the Treasury and the Federal Reserve deem necessary to
promote financial market stability.
Additionally, the U.S. Treasury Department established a Temporary Money
Market Fund Guarantee Program (the "Program") which is intended to add stability
to the financial markets and to reassure money market fund investors. The Board
of Trustees of the Trust approved its participation in the Program with respect
to each of the Trust's three separate portfolios and accordingly applied and
each was accepted to participate in the Program.
All told, the Treasury, Federal Reserve, U.S. Securities and Exchange
Commission (the "SEC") and the Federal Deposit Insurance Corporation intend to
use all their authorities to promote the process of repair and recovery and to
contain risks to the financial system. We are optimistic that the combined
efforts pursued will restore much needed confidence and liquidity to the
financial markets.
YOUR INVESTMENT
As the recent financial and economic events have unfolded, investors are
asking "How safe is my investment?" This is especially true for investors' cash
reserves.
As you have read in previous shareholder report letters, we have used this
opportunity to remind investors that safety of principal is first and foremost
in the eyes of your Board of Trustees, Investment Adviser and Administrator when
managing your cash reserves.
Rest assured, your Trust's Investment Adviser, the Asset Management Group
of Bank of Hawaii believes that the short-term obligations in each of the three
portfolios present minimal credit and that no undue risk was taken in order to
seek higher yield. A solid investment strategy - including investments in money
market funds - is based on in-depth credit analysis and a thorough understanding
of risk and liquidity. Indeed, investments eligible for money market funds not
only must satisfy strict requirements issued by the SEC, they must also meet
stringent internal credit review by the Trust's Investment Adviser to assure
that the investments present minimal credit risk.
This has been the case since the inception of each of the funds beginning
with Pacific Capital Cash Assets Trust in 1984. Indeed, throughout the year, the
Trust's Investment Adviser maintained a watchful eye on the creditworthiness of
the securities purchased for each portfolio. We believe that each of the Trust's
portfolios continues to provide competitive returns to alternative short-term
investment opportunities without wavering from their conservative investment
guidelines.
Looking forward, we are optimistic that each of the Pacific Capital Funds
of Cash Assets Trust will continue to provide investors with competitive returns
without compromising safety of principal.
As always, we again wish to express our appreciation for the confidence
you have shown by your investment in the Pacific Capital Funds of Cash Assets
Trust. We can assure you that we will consistently seek to do our best to merit
your continued level of 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, 2008 (UNAUDITED)
PRINCIPAL
AMOUNT U. S. GOVERNMENT AND AGENCY OBLIGATIONS (37.1%): VALUE
- ------------ -------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATION (8.1%):
$ 50,000,000 U.S. Treasury Bill, 0.75%, 01/08/09 .................... $ 49,896,875
-------------
U. S. GOVERNMENT AGENCY OBLIGATIONS (29.0%):
50,000,000 Federal Home Loan Bank, 0.10%, 10/01/08 ................ 50,000,000
30,000,000 Federal Home Loan Mortgage Corp., 4.75%, 03/05/09 ...... 30,361,828
100,000,000 Federal National Mortgage Association, 1.95%, 11/17/08 . 99,745,417
-------------
180,107,245
-------------
Total U. S. Government and Agency Obligations .......... 230,004,120
-------------
CORPORATE NOTES (6.0%):
--------------------------------------------------------
9,700,000 Genworth Financial, 5.23%, 05/16/09 .................... 8,239,859*
2,600,000 Merrill Lynch & Co., 2.85%, 05/08/09** ................. 2,542,696
17,400,000 Merrill Lynch & Co., 4.61%, 05/20/09** ................. 17,372,800
10,000,000 Morgan Stanley Dean Witter, 3.875%, 01/15/09 ........... 9,200,800*
-------------
Total Corporate Notes .................................. 37,356,155
-------------
COMMERCIAL PAPER (27.3%):
--------------------------------------------------------
BANK (4.0%):
25,000,000 Wells Fargo, 2.63%, 10/31/08 ........................... 24,945,208
-------------
BROKERAGE (1.6%):
10,000,000 Morgan Stanley Dean Witter, 2.30%, 12/12/08 ............ 9,954,000
-------------
EDUCATION (4.0%):
25,000,000 Stanford University, 2.65%, 10/01/08 ................... 25,000,000
-------------
FINANCE (10.5%):
20,000,000 AIG Funding, 2.70%, 11/24/08 ........................... 19,919,000
20,000,000 American Express Credit Corp., 2.50%, 12/12/08 ......... 19,900,000
25,000,000 General Electric Capital Corp., 2.52%, 11/04/08 ........ 24,940,500
-------------
64,759,500
-------------
FOREIGN BANK (4.0%):
25,000,000 Calyon NA, Inc., 2.69%, 12/11/08 ....................... 24,867,122
-------------
INSURANCE (3.2%):
20,000,000 Prudential Funding Corp., 2.50%, 11/06/08 .............. 19,950,000
-------------
Total Commercial Paper ................................. 169,475,830
-------------
PRINCIPAL
AMOUNT MUNICIPAL SECURITY (3.2%): VALUE
- ------------ -------------------------------------------------------- -------------
$ 20,000,000 Municipal Electric Authority, GA Commercial
Paper 3.05%, 10/02/08 .......................................................... $ 20,000,000
-------------
REPURCHASE AGREEMENT (26.0%):
--------------------------------------------------------
161,000,000 Banc of America Securities, LLC 1.70%, 10/01/08 .................................. 161,000,000
(Proceeds of $161,007,603 to be received at maturity, Collateral: -------------
$163,462,000 Federal National Mortgage Association 4.00%
due 07/07/11; the collateral fair value plus interest receivable
equals $165,692,167)
SHARES INVESTMENT COMPANY (0.1%):
- ------------ --------------------------------------------------------
881,810 JP Morgan U.S. Government Money Market Fund, Capital Shares ...................... 881,810
-------------
AFFILIATED INVESTMENT (0.4%):
--------------------------------------------------------
Conditional Credit Pledge (cost $0) (0.4%) note 9 and *: ......................... 2,275,118
-------------
Total Investments (Amortized Cost $620,993,033***) .................... 100.1% 620,993,033
Other assets less liabilities ......................................... (0.1) (687,506)
------ -------------
NET ASSETS ............................................................ 100.0% $ 620,305,527
====== =============
* The value shown is the fair market value as of September 30, 2008. Each
security is supported by a Conditional Credit Pledge (see note 9).
** Variable interest rate - subject to periodic change.
*** Cost for Federal income tax and financial reporting purposes is identical.
PERCENT OF
PORTFOLIO DISTRIBUTION PORTFOLIO
---------------------- ---------
U. S. Government and Agency Obligations ...................... 37.2%
Corporate Notes .............................................. 6.0
Commercial Paper ............................................. 27.4
Municipal Security ........................................... 3.2
Repurchase Agreement ......................................... 26.0
Investment Company ........................................... 0.2
------
100.0%
======
See accompanying notes to financial statements.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2008 (UNAUDITED)
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (84.1%) S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
ALABAMA (1.9%):
Jefferson County, AL Sewer Revenue Bond,
Prerefunded to 2/01/09 @101 VRDO*
$ 2,000,000 5.750%, 02/01/38 ............................................... Aaa/AAA $ 2,043,220
Jefferson County, AL Sewer Revenue Bond,
Prerefunded to 2/01/09 @101 VRDO*
3,660,000 5.375%, 02/01/36 ............................................... Aaa/AAA 3,736,041
--------------
5,779,261
--------------
ARIZONA (2.0%):
Maricopa County, AZ Unified School District No. 48
(Scottsdale), FGIC Insured
5,405,000 5.000%, 07/01/09 ............................................... Aa2/AA 5,535,825
Tucson, AZ Industrial Development Authority VRDO*
425,000 8.400%, 07/15/31 ............................................... Aaa/AAA 425,000
--------------
5,960,825
--------------
CALIFORNIA (2.7%):
Bay Area, CA Toll Authority Toll Bridge Revenue
A-2, VRDO*
5,000,000 7.750%, 04/01/47 ............................................... VMIG1/A-1 5,000,000
California Statewide Communities Development
Authority Revenue Bond (John Muir Health)
Series A VRDO*
3,200,000 3.950%, 08/15/36 ............................................... VMIG1/A-1+ 3,200,000
--------------
8,200,000
--------------
COLORADO (1.6%):
Colorado Educational & Cultural Facilities Authority
Revenue Bond - National Jewish Federation
1,100,000 Series A4 VRDO, 4.250%, 02/01/35* .............................. VMIG1/NR 1,100,000
1,000,000 Series C4 VRDO, 4.250%, 06/01/37* .............................. VMIG1/NR 1,000,000
1,050,000 Series D4 VRDO, 4.250%, 05/01/38* .............................. VMIG1/NR 1,050,000
Denver, CO Health, Prerefunded to 12/01/08
@ 101 VRDO*
1,650,000 5.375%, 12/01/28 ............................................... Prerefunded 1,676,000
--------------
4,826,000
--------------
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
FLORIDA (0.9%):
Miami-Dade, FL Public Facilities Revenue Bond,
MBIA Insured VRDO*
$ 750,000 5.000%, 06/01/09 ............................................... A1/AA $ 761,365
Orange County, FL Housing Financial Authority ,
FNMA Insured VRDO*
1,800,000 8.400%, 06/01/25 ............................................... NR/A-1+ 1,800,000
--------------
2,561,365
--------------
GEORGIA (0.0%):
De Kalb Hospital, GA VRDO*
100,000 7.530%, 10/01/25 ............................................... VMIG1/NR 100,000
--------------
HAWAII (25.8%):
City & County Honolulu, HI General Obligation
Commercial Paper Issue W
2,700,000 1.400%, 11/03/08 ............................................... P1/A1+ 2,700,000
City & County Honolulu, HI VRDO*
6,000,000 5.000%, 07/01/09 ............................................... Aa2/AA 6,139,810
City & County Honolulu, HI, ETM VRDO*
1,995,000 6.000%, 01/01/09 ............................................... Aaa/AA 2,015,962
City & County Honolulu, HI, Prerefunded
to 7/01/09 @101 VRDO*
1,000,000 5.125%, 07/01/10 ............................................... Aa2/AA 1,033,923
City & County Honolulu, HI, Prerefunded
to 7/01/09 @101 VRDO*
2,930,000 5.125%, 07/01/18 ............................................... Aa2/AA 3,029,679
Hawaii County, HI, FSA Insured Prerefunded
to 5/15/09 @101 VRDO*
500,000 5.400%, 05/15/15 ............................................... Aaa/AAA 515,939
Hawaii County, HI, Prerefunded to 5/15/09 @101
VRDO*
545,000 5.625%, 05/15/19 ............................................... Aaa/AAA 563,469
Hawaii Pacific Health Special Purpose VRDO*
Radian Insured
13,500,000 8.120%, 07/01/33 ............................................... Aaa/AAA 13,500,000
Hawaii State, FGIC Insured Series CO
1,100,000 6.000%, 03/01/09 ............................................... Aa2/AA 1,120,151
4,590,000 6.000%, 09/01/09 ............................................... Aa2/AA 4,771,775
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
HAWAII (continued):
Hawaii State, FSA Insured Series CH
$ 1,500,000 6.000%, 11/01/08 ............................................... Aaa/AAA $ 1,505,331
Hawaii State, Series CH, FGIC Insured TCRS VRDO*
3,390,000 6.000%, 11/01/08 ............................................... Aaa/AA 3,403,047
Hawaii State Department of Budget and Finance Special
Purpose Revenue Bond (Palama Meat Company)
Series A VRDO*, Wells Fargo Insured, AMT
6,500,000 7.650%, 10/31/29 ............................................... NR/AAA 6,500,000
Hawaii State Department of Budget and Finance Special
Purpose Revenue Bond (Queens Health Systems)
Series C VRDO*, SPA: Bank of America N.A.,
AMBAC Insured
25,050,000 6.000%, 07/01/28 ............................................... MIG1/AAA 25,050,000
Hawaii State, FGIC Insured VRDO*
1,000,000 5.500%, 10/01/08 ............................................... Aa2/AA 1,000,000
Hawaii State, FGIC Insured VRDO*
2,920,000 6.000%, 03/01/09 ............................................... Aa2/AA 2,971,377
Maui County, HI Prerefunded VRDO*
2,000,000 6.000%, 12/15/08 ............................................... Aa2/A 2,015,950
--------------
77,836,413
--------------
ILLINOIS (5.0%):
Illinois Educational Facilities Authority Revenue
Bond VRDO*
2,245,000 8.280%, 12/01/25 ............................................... Aaa/NR 2,245,000
Illinois Health Facilities Authority (Alexian Brothers
Health System- Presbyterian), FSA Insured VRDO*
4,500,000 5.000%, 01/01/19 ............................................... Aaa/AAA 4,572,492
Peoria County, IL Community Unit School District
No. 323 VRDO*, FSA Insured
6,000,000 8.750%, 04/01/26 ............................................... Aaa/AAA 6,000,000
Romeoville, IL Revenue Bond VRDO*
2,100,000 4.250%, 10/01/36 ............................................... Aaa/NR 2,100,000
--------------
14,917,492
--------------
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
IOWA (0.8%):
Iowa Financial Authority Revenue VRDO* Private
College Revenue (Drake University Project)
$ 2,500,000 6.250%, 04/01/31 ............................................... Aaa/AAA $ 2,500,000
--------------
KENTUCKY (1.0%):
Breckenridge County, KY Lease Program Revenue
VRDO*
3,100,000 9.650%, 02/01/31 ............................................... VMIG1/NR 3,100,000
--------------
MASSACHUSETTS (1.3%):
Massachusetts State Health & Educational Facilities
Authority Revenue (Hillcrest Extended Care)
Series A VRDO*
4,000,000 7.400%, 10/01/26 ............................................... Aaa/NR 4,000,000
--------------
MICHIGAN (1.8%):
Michigan Higher Education Facility Authority, Hope
College VRDO*
665,000 4.250%, 11/01/36 ............................................... Aaa/NR 665,000
Michigan, Prerefunded VRDO*
2,000,000 5.250%, 12/01/13 ............................................... Prerefunded 2,031,797
Michigan State Building Authority Facilities Program
Series I, Prerefunded VRDO*
1,440,000 5.250%, 10/15/13 ............................................... Prerefunded 1,441,975
Michigan State Hospital finance Authority,
Prerefunded VRDO* (Mercy Mt. Clemens) Series A
1,250,000 5.750%, 05/15/29 ............................................... Aa2/AA 1,293,350
--------------
5,432,122
--------------
MINNESOTA (5.4%):
Bloomington, MN Multi-Family Revenue Bond VRDO*
3,000,000 8.400%, 11/15/32 ............................................... Aaa/AAA 3,000,000
Inver Grove Heights, MN Senior VRDO*
1,595,000 8.400%, 05/15/35 ............................................... Aaa/AAA 1,595,000
Oak Park Heights, MN Multi-Family Revenue Bond
VRDO*, FHLMC Insured
6,415,000 8.400%, 11/01/35 ............................................... Aaa/AAA 6,415,000
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
MINNESOTA (continued):
Plymouth, MN Multi-Family Housing VRDO*
$ 1,395,000 8.400%, 04/15/33 ............................................... Aaa/AAA $ 1,395,000
St. Louis Park, MN Multi-Family Revenue Bond
VRDO*, FHLMC Insured
4,000,000 8.400%, 08/01/34 ............................................... Aaa/AAA 4,000,000
--------------
16,405,000
--------------
MISSOURI (11.3%):
Kansas City, MO Industrial Development Authority
Multi-Family - Gatehouse Apartments Project VRDO*
1,260,000 8.400%, 11/15/26 ............................................... Aaa/AAA 1,260,000
Kansas City, MO Industrial Development Authority
Revenue Bond, (Ewing Marion Kaufman
Foundation) VRDO*
12,260,000 6.250%, 04/01/27 ............................................... NR/AAA 12,260,000
Missouri State Development Financial Board Lease
Revenue Bond VRDO*
180,000 6.250%, 06/01/33 ............................................... VMIG1/NR 180,000
Missouri State Health and Education VRDO*
(St. Francis Medical Center) Series A
3,000,000 6.280%, 06/01/26 ............................................... NR/AAA 3,000,000
Missouri State Health & Educational Facilities
Authority Revenue Bond VRDO*
2,350,000 6.280%, 11/01/32 ............................................... NR/A-1+ 2,350,000
Missouri State, Health & Educational Facilities
Authority Revenue Bond (St. Louis University),
Series B VRDO*, SPA: Bank of America N.A.
6,550,000 6.280%, 10/01/24 ............................................... VMIG1/A-1+ 6,550,000
Missouri State Health & Educational Facilities
Authority Educational Facilities Revenue Bond,
St. Louis University, SPA: US Bank NA VRDO*
2,210,000 6.280%, 07/01/32 ............................................... VMIG1/NR 2,210,000
Missouri State Health & Educational Facilities VRDO*
2,730,000 6.280%, 10/01/33 ............................................... NR/A-1+ 2,730,000
University of Missouri University Revenue Bond-
System Facilities Series A VRDO*
1,300,000 4.250%, 11/01/31 ............................................... Aa2/A-1+ 1,300,000
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
MISSOURI (continued):
University of Missouri University System Facilities
Revenue Bond, Series B VRDO*
$ 2,300,000 4.250%, 11/01/30 ............................................... Aa2/A-1+ $ 2,300,000
--------------
34,140,000
--------------
NEVADA (1.7%):
Clark County School District, NV, MBIA Insured
Series C
5,000,000 5.000%, 06/15/09 ............................................... Aa2/AA 5,111,066
--------------
NEW JERSEY (1.6%):
New Jersey Building Authority, Prerefunded VRDO*
1,215,000 5.250%, 06/15/12 ............................................... Prerefunded 1,245,817
New Jersey Building Authority, Prerefunded VRDO*
1,785,000 5.250%, 06/15/12 ............................................... Prerefunded 1,830,274
New Jersey Economic Development Authority,
Prerefunded VRDO* (Transportation Project
Sublease) Series A
1,600,000 5.300%, 05/01/12 ............................................... Aaa/AAA 1,633,990
--------------
4,710,081
--------------
NEW YORK (2.4%):
Long Island, NY Power Authority VRDO* Electric
System Revenue Series N
2,000,000 6.750%, 12/01/29 ............................................... Aaa/AAA 2,000,000
New York, NY, Prerefunded VRDO* Transitional
Finance Authority Revenue Future Tax Section C
1,000,000 5.500%, 05/01/25 ............................................... Aa1/AAA 1,032,005
New York, NY, Prerefunded to 5/01/09 @101 VRDO*
2,940,000 5.000%, 05/01/29 ............................................... Aa1/AAA 3,022,369
New York State Housing - Liberty Street, FHLMC
Insured VRDO*
1,070,000 8.100%, 05/01/35 ............................................... Aaa/AAA 1,070,000
--------------
7,124,374
--------------
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
NORTH CAROLINA (2.4%):
North Carolina Capital Facilities Finance Agency
(Thompson's Children Home) VRDO*
$ 1,080,000 7.530%, 12/01/20 ............................................... NR/NR** $ 1,080,000
North Carolina Educational Facilities Finance Agency
(Wingate University) Series 1999 VRDO*
4,240,000 7.530%, 05/01/22 ............................................... Aaa/NR 4,240,000
North Carolina Medical VRDO*
2,000,000 9.500%, 11/15/28 ............................................... Aaa/AA 2,000,000
--------------
7,320,000
--------------
OREGON (2.1%):
Oregon State Facilities Authority Revenue
Peacehealth VRDO*
5,000,000 8.050%, 05/01/47 ............................................... NR/AAA 5,000,000
Oregon State Health Housing Educational & Cultural
VRDO*
1,300,000 4.250%, 12/01/15 ............................................... NR/AAA 1,300,000
--------------
6,300,000
--------------
PENNSYLVANIA (2.6%):
Emmaus, PA General Authority VRDO*
1,300,000 8.000%, 03/01/24 ............................................... NR/A-1+ 1,300,000
Pennsylvania Economic Industrial Development
Prerefunded
5,000,000 5.800%, 01/01/09 ............................................... Aa3/AA 5,052,795
Pittsburgh, PA Water & Sewer, FSA Insured VRDO*
First Lien Series B-1
1,555,000 8.300%, 09/01/33 ............................................... Aaa/AAA 1,555,000
--------------
7,907,795
--------------
SOUTH DAKOTA (2.0%):
South Dakota State & Educational Facilities Authority
Revenue (Regional Health) VRDO*
6,000,000 6.250%, 09/01/27 ............................................... Aaa/NR 6,000,000
--------------
TENNESSEE (1.6%):
Hamilton, TN, Prerefunded to 11/01/08 @101 VRDO*
2,500,000 5.300%, 11/01/15 ............................................... Prerefunded 2,531,830
RATING
PRINCIPAL MOODY'S/
AMOUNT MUNICIPAL SECURITIES (CONTINUED): S&P VALUE
- ------------ ---------------------------------------------------------------- -------- --------------
TENNESSEE (continued):
Metropolitan Government Nashville & Davidson
County, TN Prerefunded to 5/15/09 @101 VRDO*
$ 2,150,000 5.125%, 11/15/12 ............................................... Aa2/AA $ 2,214,188
--------------
4,746,018
--------------
TEXAS (3.5%):
Houston, TX, Prerefunded to 2/15/09 @100 VRDO*
3,000,000 5.250%, 02/15/18 ............................................... Aaa/AAA 3,036,598
North Texas State University, FSA Insured
840,000 5.250%, 04/15/09 ............................................... Aaa/AAA 856,043
Odesa, TX, Prerefunded VRDO* Water & Sewer Revenue
2,400,000 5.375%, 04/01/13 ............................................... Aaa/AAA 2,443,662
Travis County, TX Housing Financial Corp. VRDO*
4,100,000 8.150%, 12/15/29 ............................................... Aaa/AAA 4,100,000
--------------
10,436,303
--------------
VIRGINIA (2.1%):
Portsmouth, VA, FSA Insured
2,000,000 5.000%, 07/01/09 ............................................... Aaa/AAA 2,049,466
Virginia Commonwealth, Prerefunded to 5/15/09
@101 VRDO*
1,000,000 5.700%, 05/15/19 ............................................... Aa1/AA+ 1,033,247
Virginia State, Prerefunded VRDO* Public School
Authority Financing Series A
2,100,000 5.000%, 08/01/16 ............................................... Aa1/AA+ 2,178,960
York County, VA, Prerefunded to 6/01/09 @101 VRDO*
1,000,000 5.875%, 06/01/24 ............................................... Aa3/NR 1,035,595
--------------
6,297,268
--------------
WASHINGTON (0.3%):
Seattle, WA, Prerefunded to 12/15/08 @100 VRDO*
935,000 5.125%, 12/15/28 ............................................... Aaa/AAA 941,284
--------------
WISCONSIN (0.3%):
Green Bay, WI, Prerefunded to 6/01/09 @100 VRDO*
950,000 5.250%, 06/01/24 ............................................... Prerefunded 971,187
--------------
PRINCIPAL
AMOUNT U.S. GOVERNMENT AGENCY OBLIGATIONS (10.4%): VALUE
- ------------ ---------------------------------------------------------------- --------------
Federal Home Loan Bank
$ 7,500,000 1.930%, 10/01/08 ............................................... $ 7,500,000
20,000,000 0.763%, 10/07/08 ............................................... 19,997,500
3,855,000 1.220%, 10/09/08 ............................................... 3,853,972
--------------
31,351,472
--------------
SHARES INVESTMENT COMPANIES (0.1%):
- ------------ ----------------------------------------------------------------
88,000 Dreyfus Tax-Exempt Cash Management Money Market,
Institutional Shares ......................................... 88,000
83,000 Goldman Sachs Financial Square Tax-Free Money
Market Fund Institutional Shares ............................. 83,000
171,000
Total Investments (Amortized Cost $285,146,326***) ............. 94.6% 285,146,326
Other assets less liabilities .................................. 5.4% 16,274,284
------ --------------
NET ASSETS ..................................................... 100.0% $ 301,420,610
====== ==============
* 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.
** Fitch rating - AA-/F1+
*** Cost for Federal income tax and financial reporting purposes is identical.
PORTFOLIO DISTRIBUTION (UNAUDITED)
----------------------------------
PERCENT OF
PORTFOLIO
---------
Alabama 2.0%
Arizona 2.1
California 2.9
Colorado 1.7
Florida 0.9
Georgia --
Hawaii 27.3
Illinois 5.2
Iowa 0.9
Kentucky 1.1
Massachusetts 1.4
Michigan 1.9
Minnesota 5.7
Missouri 12.0
Nevada 1.8
New Jersey 1.6
New York 2.5
North Carolina 2.6
Oregon 2.2
Pennsylvania 2.8
South Dakota 2.1
Tennessee 1.7
Texas 3.7
Virginia 2.2
Washington 0.3
Wisconsin 0.3
U.S. Government
Agency Obligations 11.0
Investment Companies 0.1
------
100.0%
======
AMBAC - American Municipal Bond Assurance Corp.
AMT - Alternative Minimum Tax
ETM - Escrowed to Maturity
FGIC - Financial Guaranty Insurance Corporation
FHLB - Federal Home Loan Bank
FNMA - Federal National Morgage Association
FSA - Financial Security Assurance
MBIA - Municipal Bond Investors Assurance
NR - Not Rated
SPA - Standby Bond Purchase Agreement
TCRS - Transferable Custodial Receipts
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, 2008 (UNAUDITED)
PRINCIPAL
AMOUNT U.S. GOVERNMENT AND AGENCY OBLIGATIONS (99.8%): VALUE
- ---------------- ----------------------------------------------- ----------------
U.S. TREASURY BILLS (40.3%):
$ 100,000,000 0.02%, 10/02/08 $ 99,999,942
100,000,000 0.02%, 10/09/08 99,999,555
150,000,000 0.02%, 10/23/08 149,998,167
150,000,000 0.48%, 10/30/08 149,942,000
125,000,000 0.60%, 01/08/09 124,793,750
----------------
624,733,414
----------------
FEDERAL FARM CREDIT BANK (13.2%):
100,000,000 3.60%, 01/14/09 100,455,823
25,000,000 2.11%, 03/12/10 (A) 24,957,630
80,000,000 2.22%, 06/17/10 (A) 80,000,000
----------------
205,413,453
----------------
FEDERAL HOME LOAN BANK (46.3%):
198,176,000 2.26%, 10/01/08 198,176,000
37,000,000 0.75%, 10/07/08 36,995,375
131,000,000 2.00%, 10/09/08 130,941,778
28,000,000 2.36%, 10/17/08 27,970,631
100,000,000 2.42%, 10/24/08 99,845,389
100,000,000 2.48%, 11/21/08 99,648,667
125,000,000 2.23%, 12/10/08 124,457,986
----------------
718,035,826
----------------
Total U.S. Government and Agency Obligations 1,548,182,693
----------------
SHARES INVESTMENT COMPANY (0.3%)
- ---------------- -----------------------------------------------
4,099,915 JP Morgan U.S. Government Money Market Fund, Capital Shares 4,099,915
Total Investments (Amortized Cost $1,552,282,608*) 100.1% 1,552,282,608
Other assets less liabilities (0.1) (1,613,070)
------ ----------------
NET ASSETS 100.0% $ 1,550,669,538
====== ================
* Cost for Federal income tax and financial reporting purposes is identical.
(A) Variable interest rate - subject to periodic change.
PERCENT OF
PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO
---------------------------------- ---------
U.S. Government and Agency Obligations .......... 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, 2008 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
-------------- -------------- --------------
ASSETS:
Investments at value and amortized cost (note 2) ........ $ 457,717,915 $ 285,146,326 $1,552,282,608
Repurchase agreements (note 2) .......................... 161,000,000 -- --
Affiliated investment, conditional credit pledge (note 9) 2,275,118 -- --
Receivable for securities sold .......................... -- 15,500,000 --
Interest receivable ..................................... 579,737 1,975,066 902,609
Other assets ............................................ 26,616 16,682 95,757
-------------- -------------- --------------
Total Assets ........................................ 621,599,386 302,638,074 1,553,280,974
-------------- -------------- --------------
LIABILITIES:
Cash overdraft .......................................... -- 378,061 --
Dividends payable ....................................... 958,438 708,412 1,893,226
Adviser and Administrator fees payable .................. 194,749 100,550 505,331
Distribution fees payable ............................... 29,997 15,962 165,679
Accrued expenses ........................................ 110,675 14,479 47,200
Total Liabilities ................................... 1,293,859 1,217,464 2,611,436
-------------- -------------- --------------
NET ASSETS .............................................. $ 620,305,527 $ 301,420,610 $1,550,669,538
============== ============== ==============
NET ASSETS CONSIST OF:
Capital Stock - Authorized an unlimited number of shares,
par value $0.01 per share ........................... $ 6,202,866 $ 3,014,081 $ 15,505,743
Additional paid-in capital .............................. 614,096,923 298,396,176 1,535,137,771
Net unrealized depreciation of non-affiliated
investments (note 9) ................................ (2,275,118) -- --
Net unrealized appreciation of affiliated
investments (note 9) ................................ 2,275,118 -- --
Undistributed net investment income ..................... -- 10,336 --
Accumulated net realized gain on investments ............ 5,738 17 26,024
-------------- -------------- --------------
$ 620,305,527 $ 301,420,610 $1,550,669,538
============== ============== ==============
SHARES OF BENEFICIAL INTEREST:
Original Shares Class:
Net Assets .......................................... $ 443,558,051 $ 224,896,157 $ 747,735,190
============== ============== ==============
Shares outstanding .................................. 443,772,801 224,886,151 747,692,863
============== ============== ==============
Net asset value per share ........................... $ 1.00 $ 1.00 $ 1.00
============== ============== ==============
Service Shares Class:
Net Assets .......................................... $ 176,747,476 $ 76,524,453 $ 802,934,348
============== ============== ==============
Shares outstanding .................................. 176,513,778 76,521,923 802,881,404
============== ============== ==============
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, 2008 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
------------ ------------ ------------
INVESTMENT INCOME:
Interest income ................................... $ 6,968,254 $ 3,424,067 $ 19,234,980
------------ ------------ ------------
EXPENSES:
Investment Adviser fees (note 3) .................. 967,999 463,036 2,917,985
Administrator fees (note 3) ....................... 313,399 128,055 639,939
Distribution fees (note 3) ........................ 203,780 96,656 1,175,894
Trustees' fees and expenses ....................... 48,407 38,898 131,130
Fund accounting fees .............................. 18,840 19,272 19,908
Insurance ......................................... 14,554 7,639 59,776
Legal fees (note 3) ............................... 14,539 20,067 52,119
Auditing and tax fees ............................. 8,750 8,750 8,750
Custodian fees (note 5) ........................... 7,611 6,615 18,834
Transfer and shareholder servicing agent fees ..... 6,726 6,758 7,790
Registration fees and dues ........................ 4,495 1,705 28,938
Shareholders' reports ............................. 3,981 1,559 7,087
Chief Compliance Officer (note 3) ................. 2,014 2,014 2,014
Miscellaneous ..................................... 3,557 3,719 15,977
------------ ------------ ------------
Total expenses .................................... 1,618,652 804,743 5,086,141
Advisory fees contractual reductions (note 3) ..... -- (25,841) (156,519)
Administrative fees contractual reductions (note 3) -- (7,494) (34,309)
Expenses paid indirectly (note 5) ................. (161) (1,287) (233)
------------ ------------ ------------
Net expenses .......................................... 1,618,491 770,121 4,895,080
------------ ------------ ------------
Net investment income ................................. 5,349,763 2,653,946 14,339,900
Net realized gain (loss) from securities transactions . 4,558 -- 24,153
Net change in unrealized appreciation (depreciation)
on/from (note 9):
Non-affiliated investments ........................ (2,275,118) -- --
Affiliated investments ............................ 2,275,118 -- --
------------ ------------ ------------
Net change in net assets resulting from operations .... $ 5,354,321 $ 2,653,946 $ 14,364,053
============ ============ ============
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, 2008 Year Ended September 30, 2008 Year Ended
(unaudited) March 31, 2008 (unaudited) March 31, 2008
--------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .................. $ 5,349,763 $ 18,013,611 $ 2,653,946 $ 7,246,100
Net realized gain (loss)
from securities transactions ......... 4,558 -- -- 17
Net change in unrealized depreciation of
non-affiliated investments (note 9) .. (2,275,118) -- -- --
Net change in unrealized appreciation of
affiliated investments (note 9) ...... 2,275,118 -- -- --
--------------- --------------- --------------- ---------------
Net change in net assets
resulting from operations ............ 5,354,321 18,013,611 2,653,946 7,246,117
--------------- --------------- --------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ...................... (3,811,260) (12,330,517) (2,034,378) (5,399,668)
Service Shares ....................... (1,538,503) (5,683,094) (619,568) (1,818,985)
--------------- --------------- --------------- ---------------
Total dividends to shareholders
from net investment income ......... (5,349,763) (18,013,611) (2,653,946) (7,218,653)
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares ...................... 381,298,386 562,646,046 146,395,257 284,550,654
Service Shares ....................... 377,305,751 528,686,800 55,043,588 102,239,090
--------------- --------------- --------------- ---------------
758,604,137 1,091,332,846 201,438,845 386,789,744
--------------- --------------- --------------- ---------------
Reinvested dividends:
Original Shares ...................... 36,238 208,192 8,657 33,682
Service Shares ....................... 1,298,284 5,683,053 447,842 1,818,753
--------------- --------------- --------------- ---------------
1,334,522 5,891,245 456,499 1,852,435
--------------- --------------- --------------- ---------------
Cost of shares redeemed:
Original Shares ...................... (261,037,530) (526,645,395) (146,627,529) (230,094,077)
Service Shares ....................... (343,136,856) (558,678,949) (49,974,862) (121,406,410)
--------------- --------------- --------------- ---------------
(604,174,386) (1,085,324,344) (196,602,391) (351,500,487)
--------------- --------------- --------------- ---------------
Change in net assets
from capital share transactions ...... 155,764,273 11,899,747 5,292,953 37,141,692
--------------- --------------- --------------- ---------------
Total change in net assets ............. 155,768,831 11,899,747 5,292,953 37,169,156
NET ASSETS:
Beginning of period .................. 464,536,696 452,636,949 296,127,657 258,958,501
--------------- --------------- --------------- ---------------
End of period* ....................... $ 620,305,527 $ 464,536,696 $ 301,420,610 $ 296,127,657
=============== =============== =============== ===============
* Includes undistributed (distributions
in excess of) net investment income of: $ -- $ -- $ 10,336 $ 10,336
=============== =============== =============== ===============
GOVERNMENT FUND
-----------------------------------
Six Months Ended
September 30, 2008 Year Ended
(unaudited) March 31, 2008
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .................. $ 14,339,900 $ 75,571,521
Net realized gain (loss)
from securities transactions ......... 24,153 --
Net change in unrealized depreciation of
non-affiliated investments (note 9) .. -- --
Net change in unrealized appreciation of
affiliated investments (note 9) ...... -- --
--------------- ---------------
Net change in net assets
resulting from operations ............ 14,364,053 75,571,521
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ...................... (7,304,962) (32,166,752)
Service Shares ....................... (7,034,938) (43,404,769)
--------------- ---------------
Total dividends to shareholders
from net investment income ......... (14,339,900) (75,571,521)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares ...................... 582,786,445 1,643,427,314
Service Shares ....................... 1,156,510,456 2,659,302,311
--------------- ---------------
1,739,296,901 4,302,729,625
--------------- ---------------
Reinvested dividends:
Original Shares ...................... 35,638 191,143
Service Shares ....................... 6,111,688 43,404,774
--------------- ---------------
6,147,326 43,595,917
--------------- ---------------
Cost of shares redeemed:
Original Shares ...................... (643,067,578) (1,520,979,513)
Service Shares ....................... (1,458,203,221) (2,683,075,444)
--------------- ---------------
(2,101,270,799) (4,204,054,957)
--------------- ---------------
Change in net assets
from capital share transactions ...... (355,826,572) 142,270,585
--------------- ---------------
Total change in net assets ............. (355,802,419) 142,270,585
NET ASSETS:
Beginning of period .................. 1,906,471,957 1,764,201,372
--------------- ---------------
End of period* ....................... $ 1,550,669,538 $ 1,906,471,957
=============== ===============
* 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, 2008 (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) FAIR VALUE MEASUREMENTS: The Funds adopted Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 157 (FAS 157), "Fair
Value Measurements", effective April 1, 2008. FAS 157 established a
three-tier hierarchy of inputs to establish classification of fair value
measurements for disclosure purposes. Inputs may be observable or
unobservable. Observable inputs reflect the assumptions market
participants would use in pricing the asset or liability developed based
on market data obtained from sources independent of the reporting entity.
Unobservable inputs reflect the reporting entity's own assumptions about
the assumptions market participants would use in pricing the asset or
liability developed based on the best information available in the
circumstances. The Funds' investments in their entirety are assigned
levels based upon the observability.
The three-tier hierarchy of inputs is summarized below:
Level 1 - quoted prices in active markets for identical securities
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 - significant unobservable inputs (including the Funds' own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
The following is a summary of the valuation inputs, representing 100% of
the Funds' investments, used to value the Funds' net assets as of
September 30, 2008:
Valuation Inputs Investments in Securities
---------------- -------------------------
Cash Fund Tax-Free Fund Government Fund
--------------- --------------- ---------------
Level 1 - Quoted Prices ....... $ -- $ -- $ --
Level 2 - Other Significant
Observable Inputs . 618,717,915 285,146,326 1,552,282,608
Level 3 - Significant
Unobservable Inputs -- -- --
--------------- --------------- ---------------
Total ......................... $ 618,717,915 $ 285,146,326 $ 1,552,282,608
=============== =============== ===============
c) 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.
d) DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES: The net
asset value per share for each class of each 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.
e) 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.
f) 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.
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48") was adopted on September 28, 2007. Management has reviewed the
tax positions for each of the open tax years (2004-2008) and has
determined that the implementation of FIN 48 did not have a material
impact on the Funds' financial statements.
g) 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.
h) 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.
i) 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. There were no reclassifications for
the year ended March 31, 2008.
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. Prior to July 16, 2008, the Adviser and the
Administrator each received a fee for their respective services which was paid
monthly and computed on the net assets of each Fund as of the close of business
each day at the following rates:
Cash Fund - On net assets up to $325 million, the fee was 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 was 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 was 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.
Prior to July 16, 2008, the agreements with both the Adviser and the
Administrator contained a provision that the management fees would be reduced,
but not below zero, by an amount equal to the pro-rata portion (based upon the
aggregate fees of the Adviser and the Administrator) of the amount, if any, by
which the total expenses of each Fund in any fiscal year, exclusive of taxes,
interest and brokerage fees, exceeded the lesser of (i) 2.5% of the first $30
million of average annual net assets of such 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. For the
period, April 1, 2008 through July 15, 2008, the contractual reduction required
on Advisory and Administrator fees amounted to $25,841 and $7,494, respectively,
for the Tax-Free Fund, and $156,519 and $34,309, respectively, for the
Government Fund. No such reduction in fees was required for the Cash Fund.
On July 16, 2008, the shareholders approved new Advisory and
Administrative agreements for each Fund. The new agreements eliminated the fee
limitations described above and reduced the overall management fees for assets
exceeding certain thresholds, thereby providing shareholders with the benefits
of economies of scale:
Cash Fund - On net assets up to $400 million, the fee is paid to the
Adviser and the Administrator at the annual rate of 0.397% and
0.103%, respectively, and on net assets above that amount at the
annual rate of 0.364% and 0.086%, respectively.
Tax-Free Fund - On net assets up to $300 million, the fee is paid to
the Adviser and the Administrator at the annual rate of 0.318% and
0.082%, respectively, and on net assets above that amount at the
annual rate of 0.285% and 0.065%, respectively.
Government Fund - On net assets up to $1,900 million, the fee is
paid to the Adviser and the Administrator at the annual rate of
0.328% and 0.072%, respectively, and on net assets above that amount
at the annual rate of 0.295% and 0.055%, respectively.
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.
Specific details as to the nature and extent of the services provided by
the Adviser and the Administrator are more fully defined in the Trust's
Prospectus and Statement of Additional Information.
c) OTHER RELATED PARTY TRANSACTIONS:
For the six months ended September 30, 2008, the following amounts were
incurred for legal fees allocable to Butzel Long PC, counsel to the Trust, for
legal services in conjunction with the respective Fund's ongoing operations:
Cash Fund $14,539; Tax-Free Fund $19,973; Government Fund $51,655. The Secretary
of the Trust is a shareholder in 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.
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 2008 and 2007 were as
follows:
Cash Fund Tax-Free Fund Government Fund
----------- ----------- ----------- ----------- ----------- -----------
2008 2007 2008 2007 2008 2007
----------- ----------- ----------- ----------- ----------- -----------
Ordinary income ..... $18,391,172 $21,537,828 $ 17 $ 10,100 $76,602,203 $60,709,774
Net tax-exempt income -- -- 7,290,811 6,253,366 -- --
Capital gain ........ -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total ............... $18,391,172 $21,537,828 $ 7,290,828 $ 6,263,466 $76,602,203 $60,709,744
=========== =========== =========== =========== =========== ===========
As of March 31, 2008, the components of distributable earnings on a tax
basis were as follows:
Tax-Free Government
Cash Fund Fund Fund
---------- ---------- ----------
Undistributed ordinary income ........ $ 781,580 $ -- $1,812,553
Undistributed tax exempt income ...... -- 378,572 --
Accumulated net realized loss
on investments ..................... -- -- --
---------- ---------- ----------
$ 781,580 $ 378,572 $1,812,553
========== ========== ==========
8. RECENT DEVELOPMENT RELATED TO THE TAX-FREE FUND
In May, 2007, the U. S. Supreme Court agreed to hear an appeal in
Department of Revenue of Kentucky v. Davis, a case concerning the
constitutionality of differential tax treatment for interest from in-state vs.
out-of-state municipal securities, a practice which is common among the majority
of the states. On May 19, 2008, the U. S. Supreme Court upheld the right of
states to tax interest on out-of-state municipal bonds while exempting their own
state's bond interest from taxation. The U.S. Supreme Court said differential
tax treatment for interest from in-state vs. out-of-state municipal securities
does not discriminate against interstate commerce, but rather promotes the
financing of essential governmental services.
9. CONDITIONAL CREDIT PLEDGE
During the reporting period, the Cash Fund was provided with support for
certain of its holdings by Bank of Hawaii Corporation ("BOHC"), a Delaware
Corporation and parent company of the Adviser. As a result, the aggregate market
value of the Cash Fund's holdings increased. This support included conditional
credit pledges ("Pledges"), which were provided on a daily basis as needed. The
Pledges are described below.
On September 30, 2008, the Cash Fund's short-term investments included (a)
a discounted promissory note issued by Morgan Stanley in the principal amount of
$10,000,000 (the "Morgan Note"), with a maturity date of January 15, 2009, and
(b) a discounted promissory note issued by Genworth Financial, Inc. in the
principal amount of $9,700,000 (the "Genworth Note"), with a maturity date of
May 16, 2009.
On September 30, 2008, BOHC provided a Pledge to the Cash Fund to support
the value of the Morgan Note and the Genworth Note at their amortized costs. If
the Cash Fund was required to sell or liquidate the Morgan Note or the Genworth
Note, BOHC pledged to fund the deficiency between the amortized cost of each
note and the proceeds received, up to a limit not to exceed $814,977 for the
Morgan Note and $1,460,141 for the Genworth Note. This Pledge expired on October
1, 2008 at 4 PM EDT and BOHC reserved the right to cancel the Pledges prior to
that time if it determined that extraordinary circumstances affecting its
exposure under the Pledges had occurred. Since September 30, 2008, BOHC has
provided pledges to the Cash Fund as needed. BOHC has no obligation to issue
these pledges in the future.
As of September 30, 2008, the amortized cost of the Morgan Note and the
Genworth Note was $10,015,775 and $9,700,000, respectively. Accordingly, the
support provided by BOHC, including the Pledges, had a value of $2,275,118,
which was the difference between the amortized cost and fair market value of the
Morgan Note and the Genworth Note (the "Notes") as of September 30, 2008. The
Cash Fund recognized the changes in the unrealized components of these
securities and the support provided by BOHC in its results of operations and
financial position.
The mark-to-market net asset value per share is calculated using the
market value of all securities in the Cash Fund. Had the Cash Fund not received
support for the Notes, which had market values less than their amortized cost,
the Cash Fund's mark-to-market net asset value per share (under Rule 2a-7) would
have fallen below $0.9950. The net asset value per share in the financial
statements is calculated using the amortized cost for all securities except the
Notes, for which the market value is used based upon the support received for
the Notes, including the Pledges. The Notes held in the Cash Fund on September
30, 2008 are footnoted on the Schedule of Investments.
10. TREASURY GUARANTEE PROGRAM
In response to recent market volatility, the U.S. Treasury Department
established a Temporary Money Market Fund Guarantee Program (the "Program"),
which is intended to add stability to the financial markets and to reassure
money market fund investors.
The Board of Trustees of the Trust approved its participation in the
Program with respect to each of the Trust's three Funds. The Trust accordingly
applied and has been accepted to participate in the Program.
The Program is designed to protect the value of those shares of any Fund
held by a shareholder of record on September 19, 2008. It does not protect
additions to the accounts of such shareholders after that date, nor does it
protect new shareholders who purchase shares of any Fund after that date.
The Program has other terms, among which is that if on any day the net
asset value per share of any Fund falls below $0.995, that Fund will be required
to liquidate within 29 days unless within five days the net asset value of the
Fund returns to $1.00. In the event of liquidation, a protected shareholder will
receive a payment for each protected share equal to the shortfall between the
amount received in liquidation of the Fund and $1.00. Each protected shareholder
will be protected for the lesser of the number of shares held on liquidation or
for the number of shares held on September 19, 2008. Holders of unprotected
shares may receive less than $1.00 upon liquidation.
The Program is subject to an overall limit of $50 billion for all
participating money market funds.
Each Fund's cost to participate in the initial three months of the Program
(0.01% of the net asset value of the Fund on September 19, 2008) will be borne
by the Fund. The Program will expire on December 18, 2008, unless the Secretary
of the Treasury extends it, potentially through the close of business on
September 18, 2009. If the Program is extended, the Board of Trustees will
consider whether to continue to participate. The cost of such extended
participation may also be borne by the Funds.
PACIFIC CAPITAL
CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
---------------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/08 ---------------------------------------------------------------------
(unaudited) 2008 2007 2006 2005 2004
--------- --------- --------- --------- --------- ---------
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+ ................ 0.011 0.043 0.046 0.032 0.014 0.009
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income .. (0.011) (0.043) (0.046) (0.032) (0.014) (0.009)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total return ............................ 1.08%* 4.35% 4.75% 3.20% 1.36% 0.90%
Ratios/supplemental data
Net assets, end of period (in millions) $ 444 $ 323 $ 287 $ 286 $ 366 $ 287
Ratio of expenses to average net assets 0.54%** 0.57% 0.57% 0.58% 0.37% 0.21%
Ratio of net investment income to
average net assets .................. 2.14%** 4.23% 4.65% 3.09% 1.39% 0.90%
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%
Ratio of net investment income to
average net assets .................. ++ ++ ++ ++ 1.19% 0.54%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.54%** 0.56% 0.57% 0.58% 0.37%# 0.21%#
SERVICE SHARES
---------------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/08 ---------------------------------------------------------------------
(unaudited) 2008 2007 2006 2005 2004
--------- --------- --------- --------- --------- ---------
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+ ................ 0.010 0.040 0.044 0.029 0.011 0.007
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income .. (0.010) (0.040) (0.044) (0.029) (0.011) (0.007)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total return ............................ 0.95%* 4.09% 4.49% 2.94% 1.11% 0.65%
Ratios/supplemental data
Net assets, end of period (in millions) $ 177 $ 141 $ 166 $ 169 $ 166 $ 119
Ratio of expenses to average net assets 0.79%** 0.82% 0.82% 0.83% 0.61% 0.46%
Ratio of net investment income to
average net assets .................. 1.88%** 3.98% 4.40% 2.91% 1.12% 0.65%
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%
Ratio of net investment income to
average net assets .................. ++ ++ ++ ++ 0.91% 0.29%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.79%** 0.81% 0.81% 0.83% 0.61%# 0.46%#
- ----------------
+ 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.
# Net of contractual caps on fees.
* 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,
9/30/08 -----------------------------------------------------------------
(unaudited) 2008 2007 2006 2005 2004
--------- --------- --------- --------- --------- ---------
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+ ...................... 0.009 0.029 0.030 0.022 0.011 0.008
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ........ (0.009) (0.029) (0.030) (0.022) (0.011) (0.008)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total return .................................. 0.93%* 2.90% 3.09% 2.21% 1.16% 0.84%
Ratios/supplemental data
Net assets, end of period (in millions) ..... $ 225 $ 225 $ 171 $ 133 $ 134 $ 99
Ratio of expenses to average net assets ..... 0.46%** 0.47% 0.50% 0.50% 0.29% 0.17%
Ratio of net investment income to
average net assets ........................ 1.86%** 2.80% 3.04% 2.20% 1.17% 0.84%
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 ..... 0.48%** ++ ++ ++ 0.49% 0.52%
Ratio of net investment income to
average net assets ........................ 1.84%** ++ ++ ++ 0.96% 0.50%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets ..... 0.46%**# 0.47% 0.49% 0.50% 0.28%# 0.17%#
SERVICE SHARES
----------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/08 -----------------------------------------------------------------
(unaudited) 2008 2007 2006 2005 2004
--------- --------- --------- --------- --------- ---------
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+ ...................... 0.008 0.026 0.028 0.019 0.009 0.006
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ........ (0.008) (0.026) (0.028) (0.019) (0.009) (0.006)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total return .................................. 0.80%* 2.64% 2.83% 1.96% 0.90% 0.59%
Ratios/supplemental data
Net assets, end of period (in millions) ..... $ 77 $ 71 $ 88 $ 93 $ 72 $ 50
Ratio of expenses to average net assets ..... 0.71%** 0.72% 0.75% 0.75% 0.53% 0.42%
Ratio of net investment income to
average net assets ........................ 1.60%** 2.55% 2.78% 1.94% 0.92% 0.59%
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 ..... 0.73%** ++ ++ ++ 0.75% 0.77%
Ratio of net investment income to
average net assets ........................ 1.58%** ++ ++ ++ 0.71% 0.25%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets ..... 0.71%**# 0.72% 0.75% 0.75% 0.53%# 0.42%#
- ----------------
+ 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.
# Net of contractual caps on fees.
* 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,
9/30/08 ---------------------------------------------------------------------
(unaudited) 2008 2007 2006 2005 2004
--------- --------- --------- --------- --------- ---------
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+ ................ 0.009 0.042 0.047 0.032 0.014 0.010
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income .. (0.009) (0.042) (0.047) (0.032) (0.014) (0.010)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total return ............................ 0.88%* 4.30% 4.80% 3.25% 1.41% 0.96%
Ratios/supplemental data
Net assets, end of period (in millions) $ 748 $ 808 $ 685 $ 429 $ 354 $ 263
Ratio of expenses to average net assets 0.42%** 0.43% 0.44% 0.45% 0.27% 0.11%
Ratio of net investment income to
average net assets .................. 1.74%** 4.18% 4.72% 3.25% 1.42% 0.96%
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 0.44%** ++ ++ ++ 0.45% 0.46%
Ratio of net investment income to
average net assets .................. 1.72%** ++ ++ ++ 1.24% 0.62%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.42%**# 0.43% 0.44% 0.45% 0.27%# 0.11%#
SERVICE SHARES
---------------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
9/30/08 ---------------------------------------------------------------------
(unaudited) 2008 2007 2006 2005 2004
--------- --------- --------- --------- --------- ---------
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+ ................ 0.007 0.040 0.045 0.030 0.012 0.007
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income .. (0.007) (0.040) (0.045) (0.030) (0.012) (0.007)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total return ............................ 0.75%* 4.04% 4.54% 3.00% 1.16% 0.71%
Ratios/supplemental data
Net assets, end of period (in millions) $ 803 $ 1,099 $ 1,079 $ 887 $ 578 $ 575
Ratio of expenses to average net assets 0.67%** 0.68% 0.69% 0.70% 0.52% 0.36%
Ratio of net investment income to
average net assets .................. 1.50%** 3.93% 4.46% 3.02% 1.16% 0.71%
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 0.69%** ++ ++ ++ 0.70% 0.71%
Ratio of net investment income to
average net assets .................. 1.47%** ++ ++ ++ 0.98% 0.36%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.67%**# 0.68% 0.69% 0.70% 0.52%# 0.36%#
- ----------------
+ 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.
# Net of contractual caps on fees.
* 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,
2008 and held for the six months ended September 30, 2008.
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, 2008
BEGINNING ENDING EXPENSES
ACTUAL ACCOUNT ACCOUNT PAID DURING
TOTAL RETURN(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 1.08% $1,000.00 $1,010.80 $2.72
Service Shares 0.95% $1,000.00 $1,009.50 $3.98
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 0.93% $1,000.00 $1,009.30 $2.32
Service Shares 0.80% $1,000.00 $1,008.00 $3.57
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 0.88% $1,000.00 $1,008.80 $2.12
Service Chares 0.75% $1,000.00 $1,007.50 $3.37
- --------------------------------------------------------------------------------
(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 0.54% AND 0.79%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.46% AND
0.71%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.42% AND 0.67%, 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, 2008
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 5.00% $1,000.00 $1,022.36 $2.74
Service Shares 5.00% $1,000.00 $1,021.11 $4.00
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 5.00% $1,000.00 $1,022.76 $2.33
Service Shares 5.00% $1,000.00 $1,021.51 $3.60
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 5.00% $1,000.00 $1,022.96 $2.13
Service Chares 5.00% $1,000.00 $1,021.71 $3.40
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.54% AND 0.79%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.46% AND
0.71%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.42% AND 0.67%, 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).
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Meeting of Shareholders of Pacific Capital Cash Assets Trust, Pacific
Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government
Securities Cash Assets Trust was held on July 16, 2008. The holders of shares
representing 46% of each Fund's total net asset value of the shares entitled to
vote were present in person or by proxy. At the meeting, the following matters
were voted upon and approved by the shareholders (the resulting votes are
presented below).
1. To elect Trustees.
DOLLAR AMOUNT OF VOTES:
-----------------------
Trustee For Withheld
------- --- --------
Thomas W. Courtney $1,341,256,471 $632,779
Diana P. Herrmann $1,341,291,895 $597,355
Stanley W. Hong $1,341,291,895 $597,355
Theodore T. Mason $1,341,291,895 $597,355
Russell K. Okata $1,341,276,267 $612,983
Douglas Philpotts $1,341,291,895 $597,355
Oswald K. Stender $1,341,123,947 $765,303
2. To ratify the selection of Tait, Weller & Baker LLP as the Trust's
independent registered public accounting firm.
DOLLAR AMOUNT OF VOTES:
-----------------------
For Against Abstain
--- ------- -------
$1,340,502,331 $135,180 $1,251,740
A Special Meeting of Shareholders of Pacific Capital Cash Assets Trust was
held on July 16, 2008. The holders of shares representing 57.488% of the total
net asset value of the shares entitled to vote were present in person or by
proxy. At the meeting, the following matters were voted upon and approved by the
shareholders (the resulting votes are presented below).
1. To act on an Advisory and Administration Agreement.
DOLLAR AMOUNT OF VOTES:
-----------------------
For Against Abstain
--- ------- -------
$253,289,480 $218,384 $1,088,071
SHAREHOLDER MEETING RESULTS (CONTINUED) (UNAUDITED)
A Special Meeting of Shareholders of Pacific Capital Tax-Free Cash Assets
Trust was held on July 16, 2008. The holders of shares representing 66.316% of
the total net asset value of the shares entitled to vote were present in person
or by proxy. At the meeting, the following matters were voted upon and approved
by the shareholders (the resulting votes are presented below).
1. To act on an Advisory and Administration Agreement.
DOLLAR AMOUNT OF VOTES:
-----------------------
For Against Abstain
--- ------- -------
$182,886,341 $45,656 $803,907
A Special Meeting of Shareholders of Pacific Capital U.S. Government
Securities Cash Assets Trust was held on July 16, 2008. The holders of shares
representing 50.618% of the total net asset value of the shares entitled to vote
were present in person or by proxy. At the meeting, the following matters were
voted upon and approved by the shareholders (the resulting votes are presented
below).
1. To act on an Advisory and Administration Agreement.
DOLLAR AMOUNT OF VOTES:
-----------------------
For Against Abstain
--- ------- -------
$1,061,595,091 $40,267 $27,126,339
ADDITIONAL INFORMATION (UNAUDITED)
RENEWAL OF INVESTMENT ADVISORY AGREEMENT
Renewal until June 30, 2009 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 May, 2008. 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, 2008;
o A report, prepared by the Adviser and Administrator and provided to
the Trustees for the Trustees' review, containing data about the
performance of each of the portfolios and data about their
respective fees, expenses, 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 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 rating from Standard and Poor's.
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 Agreement.
THE INVESTMENT PERFORMANCE OF THE TRUST (AND EACH OF ITS PORTFOLIOS) AND THE
ADVISER.
The Board reviewed each aspect of each fund's performance and compared its
performance with that of its respective benchmark. 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,
considered to be returns after all fees and expenses, that was either comparable
to or
superior to the benchmark for one-, five- and ten-year periods. 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 each 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 contained expense data for each fund and its major local
competitor as well as data for each of the funds with respect to their
respective peer groups, including data for money market funds of a comparable
asset size. The materials also showed the profitability to the Adviser of its
services to the Trust.
The Board compared the expense and fee data with respect to each of the
portfolios to similar data about other funds that it found to be relevant. The
Board concluded that the expenses of the each of the portfolios and the fees
paid were similar to and were reasonable as compared to those being paid by its
local competitor and by 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. The Trustees also
noted that the materials indicated that the each portfolio's fees were generally
comparable to those of its peers, including those with breakpoints. In addition
it was observed that at a telephonic meeting held on April 22, 2008, and
subsequently at the in-person meeting held on May 31, 2008, the Trustees,
including the Independent Trustees, approved a new Advisory Agreement for each
fund which incorporated breakpoints in fee rates which addressed questions of
economies of scale to the Trustees' satisfaction; these new Advisory Agreements
had been submitted to the shareholders of the funds for approval, and if
approved, would replace the agreements currently in effect. Evaluation of this
factor indicated to the Board that each Advisory Agreement 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.
CONSIDERATION OF NEW ADVISORY AGREEMENT IN CONNECTION WITH PROPOSED CHANGES IN
OWNERSHIP OF THE PARENT COMPANY OF THE ADMINISTRATOR
BACKGROUND AND REASONS FOR THE PROPOSAL
Since the establishment of the each of the Funds, the Adviser, or its
predecessors, have served as each Fund's investment adviser under advisory
agreements (the "Advisory Agreements") with substantially the same provisions,
except for those dealing with fees.
Each Advisory Agreement provided that during each fiscal year the Fund
paid a fee at a stated annual rate computed daily and payable monthly. In
addition, the Administrator was also paid a fee by each Fund. The advisory and
administration fees were collectively referred to as "management fees" below.
Following extensive discussions with the Board, the Adviser and the
Administrator had jointly proposed modifications to their existing fee
arrangements with each Fund, and the Trustees had determined that the changes,
taken together, were in the best interests of each Fund and its respective
shareholders. The modifications were:
o Revision of existing breakpoints in the management fee schedule of
each Fund to better reflect economies of scale, if any, as Fund
assets increased and provided shareholders with the benefit of
reduced management fees for assets exceeding the stated thresholds;
o Changes in the allocation of the management fees between the Adviser
and the Administrator; and
o Elimination of provisions that had reduced the management fees under
certain specified circumstances.
The changes have resulted in new Advisory Agreements (the "New Advisory
Agreements") that were otherwise substantially identical to the previous
Advisory Agreements. Corresponding changes have been reflected in new agreements
between the Administrator and each Fund (the "New Administration Agreements").
While the latter changes had not required shareholder approval, they were
described in order to illustrate the aggregate management fees that were
currently paid by each Fund under the new agreements. *Please refer to Note 3.
a) under Notes to Financial Statements that details two fee schedules which were
in effect separately between (1) April 1, 2008 through July 15, 2008 and between
(2) July 16, 2008 through September 30, 2008. The reason for the change in fee
schedules was attributed to the July 16, 2008 action of the shareholders which
voted approval of a New Advisory Agreement and a New Administration Agreement.
BASIS FOR THE TRUSTEES' APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENTS
At a telephonic meeting held on April 22, 2008, the Trustees, including
all of the non-interested Trustees, approved a new Advisory Agreement (each, a
"New Advisory Agreement") for each Fund and recommended that the shareholders of
each Fund approve the New Advisory Agreement applicable to that Fund. These
actions were subsequently ratified at an in-person meeting held on May 31, 2008.
In considering these actions, the Trustees noted that in connection with
their annual review of each Fund's management arrangements on June 9, 2007 (the
"Annual Review"), they had approved the Advisory Agreement then in effect for
each Fund (each respectively a "Current Advisory Agreement ") for another
one-year term commencing on June 30, 2007. In the Annual Review, the
Trustees were provided with a wide range of information of the type they
regularly consider when determining whether to continue each Fund's advisory
agreement from year to year.
In approving each Fund's New Advisory Agreement, the Trustees considered
the information provided and the conclusions reached in connection with the
Annual Review. In addition, they considered such new information as they
believed appropriate, including more up-to-date performance and expense
information. In considering each Fund's New Advisory Agreement, the Trustees did
not identify any single factor as determinative. The New Advisory Agreements
contain different fee rates and breakpoints which differ from those in the
Current Advisory Agreements and eliminate current fee limitations, all of which
changes operate in conjunction with related changes in the Administration
Agreements of the respective Funds. In their review of each Fund's New Advisory
Agreement, matters considered by the Trustees included the following:
THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE ADVISER.
The investment objective of each of the Funds is to seek to provide safety
of principal while achieving a high 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
portfolio management of each Fund, including determining which securities will
be purchased, retained, or sold, based upon top-down analysis of macroeconomic
trends as well as bottom-up credit analysis of securities. With respect to the
Government Securities Fund, the Adviser has managed the investments in order to
achieve a AAA rating from Standard and Poor's.
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 each Fund, given each Fund's investment
objective, and determined that each Fund would be well served if the Adviser
continued to provide portfolio management services. Furthermore, the Trustees
considered representations by the Adviser that the personnel providing portfolio
management services would not change as a result of the New Advisory Agreements.
Evaluation of these factors weighed in favor of approval of each Fund's New
Advisory Agreement.
THE INVESTMENT PERFORMANCE OF THE FUNDS AND ADVISER.
The Board reviewed each aspect of each Fund's performance and compared its
performance with that of its respective benchmark. It was noted that the
materials provided by the Administrator indicated that each Fund's investment
performance, considered to be returns after all fees and expenses, was either
comparable or superior to the benchmark for one-, five- and ten-year periods.
The Board considered these results to be consistent with the investment
objectives of each of the Funds and concluded that the performance of each Fund,
in light of market conditions, was satisfactory. Evaluation of this factor
indicated to the Trustees that approval of each Fund's New 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 EACH OF THE FUNDS.
The information provided to the Board in connection with approval
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.
Based on those data, the Board concluded that the expenses of each of the
Funds and the fees paid were similar to and were reasonable as compared to those
being paid by its local competitor and by other money market funds in its peer
group. In connection with the New Advisory Agreements, the Board approved fee
rates and breakpoints which differ from those in the Current Advisory Agreements
and also approved the elimination of fee Caps, noting that there would also be
related changes in the Administration Agreements of the respective Funds. These
provisions are described elsewhere in this proxy statement. Among other matters
considered concerning the changes were the nature and scale of the possible
benefits and disadvantages to the Funds and to the Adviser and the
Administrator, as well as the reasonableness of the economic and asset-level
assumptions on which the proposed changes had been based. The Trustees, after
weighing these matters, concluded that the proposed changes were justified and
in the best interests of the Funds and their shareholders. The Board further
concluded that the profitability to the Adviser did not argue against approval
of the fees to be paid under each New Advisory Agreement.
THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUNDS GROW.
Data provided to the Trustees showed that the asset size of each of the
Funds had been generally increasing in recent years. The New Advisory Agreements
incorporated breakpoints in fee rates which addressed questions of economies of
scale to the Trustees' satisfaction.
BENEFITS DERIVED OR TO BE DERIVED BY THE ADVISER AND ITS AFFILIATES FROM THEIR
RELATIONSHIP WITH THE FUNDS.
The Board observed that, as is generally true of most mutual fund
complexes, the Adviser and its affiliates, by providing services to a number of
funds or other investment clients including the three Funds, 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 Funds at
favorable levels of quality and cost which are more advantageous to the Funds
than would otherwise have been possible.
OTHER MATTERS.
The Trustees also considered other factors, including some of those they
had considered in connection with the Annual Review. These factors included but
were not limited to whether each Fund has operated in compliance with its
investment objective and each Fund's record of compliance with its investment
restrictions, and the compliance programs of each Fund and the Adviser. In
evaluating the New Advisory Agreements, the Trustees considered among other
matters ensuring ongoing and future continuity of management of each Fund.
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel, the Trustees, including the non-interested Trustees,
concluded that each Fund's New Advisory Agreement should be approved and
recommended that the shareholders of each Fund vote to approve the New Advisory
Agreement for an initial term through June 30, 2009.
- --------------------------------------------------------------------------------
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila 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 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, 2008 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.
- --------------------------------------------------------------------------------
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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
PNC Global Investment Servicing
101 Sabin Street o Pawtucket, RI 02860
CUSTODIAN
JPMorgan 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. SCHEDULE OF INVESTMENTS.
Included in Item 1 above
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Board of Directors of the Registrant has adopted a Nominating
Committee Charter which provides that the Nominating Committee (the 'Committee')
may consider and evaluate nominee candidates properly submitted by shareholders
if a vacancy among the Independent Trustees of the Registrant occurs and if,
based on the Board's then current size, composition and structure, the Committee
determines that the vacancy should be filled. The Committee will consider
candidates submitted by shareholders on the same basis as it considers and
evaluates candidates recommended by other sources. A copy of the qualifications
and procedures that must be met or followed by shareholders to properly submit
a nominee candidate to the Committee may be obtained by submitting a request
in writing to the Secretary of the Registrant.
ITEM 11. 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 12. 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, 2008
By: /s/ Joseph P. DiMaggio
- ------------------------------------
Chief Financial Officer and Treasurer
December 8, 2008
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, 2008
By: /s/ Joseph P. DiMaggio
- ------------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
December 8, 2008
CASH ASSETS TRUST
EXHIBIT INDEX
(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.