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: 9/30/09
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 2009
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 A SALE TO THE LEFT OF
PACIFIC]]
A CASH MANAGEMENT
INVESTMENT
[LOGO OF THE PACIFIC CAPITAL
FUNDS OF CASH ASSETS TRUST: A
LION STANDING ON A TWISTED ROPE
AND A SALE TO THE LEFT OF
PACIFIC]]
PACIFIC
CAPITAL FUNDS(R)
OF
CASH ASSETS TRUST
SEMI-ANNUAL REPORT
November, 2009
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,
2009.
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
(the "Funds") and their two classes of shares, Original Shares and Service
Shares.
***************************************************
YOUR INVESTMENT
We want to take this opportunity to reiterate 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. As such, the Trust's investment
management team continues to follow carefully economic developments, financial
markets and interest rate movements for each of the Trust's portfolios.
It is expected that the Federal Reserve will continue to keep its historically
low overnight lending rate, which began in December of 2008, close to zero
percent for the near-term future in order to aid the nation's economic recovery.
While competitive returns are sought, they have been challenging to achieve in
the current economic environment in which the historically low federal funds
rate has contributed to lower yields.
ACTION TAKEN
In continued response to current economic conditions, a) the Adviser and
Administrator continued to waive, and may continue to waive, portions of their
management fees for each of the Funds; and b) payments of certain fees under
each of the Funds' Distribution Plans for Service Shares have continued to be
reduced and may continue to be reduced.
As previously reported, while there is no contractual or other requirement that
such waivers and/or reductions in fees occur or continue, the Adviser and the
Administrator have informed the Trust that for the benefit of the shareholders,
they intend to continue to take reasonably practicable steps in an effort to
continue to achieve a positive yield for the shareholders of each of the Funds.
GOVERNMENT RESPONSE
As previously reported to you in the Trust's Annual Report and the prior
Semi-Annual Report, the U.S. Treasury Department instituted a temporary money
market funds guarantee program (the "Program") on September 19, 2008 to add
stability to the financial markets and to reassure money market fund investors.
This Program guaranteed a Net Asset Value of $1.00 for those investor assets
that were invested in a participating money market fund as of September 19,
2008. The insurance was available for all taxable and tax-free money market
funds that are registered with the U.S. Securities and Exchange Commission and
maintain a stable share price of $1.00.
NOT A PART OF THE SEMI-ANNUAL REPORT
As discussed elsewhere in this Report, the U.S. Treasury extended its Program
twice. The final phase began on April 30, 2009 and expired on September 18,
2009.
The Board of Trustees of the Pacific Capital Funds of Cash Assets Trust
unanimously approved participation in the Program. All three Funds were covered
under the Program through April 30, 2009. Cash Assets Trust and Tax-Free Cash
Assets Trust were further covered through September 18, 2009. Since the U.S.
Government Securities Cash Assets Trust invests primarily in agencies and direct
obligations of the U.S. Government, it was determined that it would not
participate in the final phase of the Program.
Each of the participating Funds paid their own costs to participate in each
phase of the Program.
ECONOMIC REVIEW
The U.S. economy shrank less than expected in the second quarter. Real gross
domestic product ("GDP") fell at an annual rate of 0.7%, the fourth consecutive
quarter of real GDP decline. The second quarter real GDP, however, was far
better than the first quarter's real GDP decline at an annual rate of 6.4%. In
the second quarter, consumer spending declined somewhat and the unemployment
rate increased.
The U.S. economy then grew at a rapid rate in the third quarter. Real GDP
increased at an annual rate of 3.5%, the highest in two years. Some experts
believe that this was largely due to the success of the government's
cash-for-clunkers program and the government's support for home buyers.
The September employment report showed an increase in the unemployment rate but
a slowing of job losses. During an economic recovery, unemployment is a lagging
indicator.
As noted above, it is expected that the Federal Reserve will keep its overnight
lending rate close to zero percent for the near future in order to aid the
nation's economic recovery.
Some experts have tentatively reported that what is now being called the Great
Recession has ended. Overall, it appears that the U.S. economy has begun to
stabilize following its biggest decline since the Great Depression. We remain
cautiously optimistic despite what appears to be a jobless recovery thus far.
While unemployment is expected to rise, we look forward to a gradual improvement
in the U.S. economy.
As always, we 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 very best to merit your
continued level of trust.
Sincerely,
/s/ Diana P. Herrmann /s/ Lacy B. Herrmann
Diana P. Herrmann Lacy B. Herrmann
Vice Chair and President Founder and Chairman Emeritus
NOT A PART OF THE SEMI-ANNUAL REPORT
PACIFIC CAPITAL
CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2009 (UNAUDITED)
PRINCIPAL
AMOUNT U. S. GOVERNMENT AGENCY OBLIGATIONS (76.3%) VALUE
- ------------ --------------------------------------------------------- -------------
$ 40,000,000 Federal Home Loan Mortgage Corp., 0.14%, 10/20/09 ....... $ 39,997,044
35,000,000 Federal Home Loan Mortgage Corp., 0.24%, 11/16/09 ....... 34,989,267
30,000,000 Federal Home Loan Mortgage Corp., 0.26%, 12/14/09 ....... 29,983,967
30,000,000 Federal Home Loan Mortgage Corp., 0.22%, 01/04/10 ....... 29,982,583
15,000,000 Federal National Mortgage Association, 0.22%, 10/01/09 .. 15,000,000
18,000,000 Federal National Mortgage Association, 0.14%, 12/02/09 .. 17,995,660
50,000,000 Federal National Mortgage Association, 0.13%, 12/16/09 .. 49,986,278
24,200,000 Federal National Mortgage Association, 0.12%, 12/30/09 .. 24,192,740
-------------
Total U.S. Government Agency Obligations ................ 242,127,539
-------------
CORPORATE NOTES (7.9%)
25,000,000 Toyota Series B, 1.75%, 01/29/10 (A) .................... 24,999,997
-------------
FDIC GUARANTEED SECURITIES (4.4%)
8,500,000 Bank of America TLGP, 0.47%, 12/23/10 (A) ............... 8,500,000
3,000,000 General Electric Capital Corp. TLGP, 0.60%, 07/08/10 (A) 3,000,000
2,500,000 SunTrust Bank Note, 0.95%, 12/16/10 (A) ................. 2,502,999
-------------
Total FDIC Guaranteed Securities ........................ 14,002,999
-------------
MUNICIPAL SECURITIES (8.7%)
10,750,000 Chicago, IL, Taxable Commercial Paper, 0.75%, 01/01/10 .. 10,750,000
17,000,000 Municipal Electric Authority of Georgia Taxable
Commercial Paper, 1.60%, 11/04/09 ................. 17,000,000
-------------
Total Municipal Securities .............................. 27,750,000
-------------
REPURCHASE AGREEMENT (10.1%)
32,000,000 Bank of America, 0.03%, 10/01/09
(Proceeds of $32,000,027 to be received at maturity,
Collateral: $33,658,000 Federal National Mortgage
Assocation 5.00% due 06/18/24; the collateral fair value
plus interest receivable equals $34,192,713) ............ 32,000,000
-------------
Total Investments (Amortized Cost $340,880,535*) ........ 107.4% 340,880,535
Other assets less liabilities ........................... (7.4) (23,505,206)
----- -------------
NET ASSETS .............................................. 100.0% $ 317,375,329
===== =============
(A) Variable interest rate - subject to periodic change.
* Cost for Federal income tax and financial reporting purposes is
identical.
Abbreviations:
FDIC - Federal Deposit Insurance Corp.
TLGP - Temporary Liquidity Guarantee Program
PERCENT OF
PORTFOLIO DISTRIBUTION PORTFOLIO
---------------------- ---------
U. S. Government Agency Obligations .......... 71.0%
Corporate Notes .............................. 7.3
FDIC Guaranteed Securities ................... 4.1
Municipal Securities ......................... 8.2
Repurchase Agreement ......................... 9.4
-----
100.0%
=====
See accompanying notes to financial statements.
PACIFIC CAPITAL
TAX-FREE CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2009 (UNAUDITED)
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (90.1%) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
$ 750,000 Houston County, AL, Prerefunded to 10/15/09
@ 102, 6.250%, 10/15/09 ............................. Prerefunded $ 766,544
Montgomery, AL Downtown Redevelopment,
3,500,000 National Public Finance Guarantee Insured,
5.000%, 10/01/09 .................................... Aa3/AA- 3,500,000
425,000 Tucson, AZ Industrial Development Authority
FNMA Insured VRDO*, 0.350%, 07/15/31 ................ Aaa/AAA 425,000
5,000,000 Bay Area, CA Toll Authority Toll Bridge Revenue
A-2, VRDO*, 0.300%, 04/01/47 ........................ VMIG1/A-1 5,000,000
California Statewide Communities Development
3,200,000 Authority Revenue Bond (John Muir Health)
Series A VRDO*, 0.270%, 08/15/36 .................... VMIG1/A-1+ 3,200,000
Colorado Educational & Cultural Facilities Authority
1,135,000 Revenue Bond - Boulder Country Day School,
VRDO*, 0.340%, 09/01/24 ............................. NR/AAA 1,135,000
Colorado Educational & Cultural Facilities Authority
1,000,000 Revenue Bond - National Jewish Federation
Series C4 VRDO*, 0.350%, 06/01/37 ................... VMIG1/NR 1,000,000
Colorado Educational & Cultural Facilities Authority
1,050,000 Revenue Bond - National Jewish Federation
Series D4 VRDO*, 0.350%, 05/01/38 ................... VMIG1/NR 1,050,000
Colorado Health Facilities, Poudre Valley Health
4,000,000 Care Prerefunded to 12/1/09 @ 101 FSA Insured
5.750%, 12/01/23 .................................... Prerefunded 4,074,705
10,500,000 Connecticut State Special Tax, FSA Insured VRDO*
0.390%, 12/01/10 .................................... Aa2/AAA 10,500,000
2,080,000 District of Columbia Revenue American Geophysical
3,000,000 Union, VRDO*, 0.370%, 09/01/23 ...................... Aaa/NR 2,080,000
Broward County, FL Series B, 5.000%, 01/01/10 ............. Aa1/AA+ 3,034,029
Orange County, FL Housing Financial Authority,
1,800,000 Post Apartment Homes, FNMA Insured VRDO*
0.300%, 06/01/25 .................................... NR/A-1+ 1,800,000
2,285,000 Polk County, FL School District Sales, FSA Insured
4.000%, 10/01/09 .................................... Aa3/AAA 2,285,000
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
Tampa, FL, Water & Sewer Revenue, Prerefunded
$ 4,850,000 to 10/01/09 @ 101, National Public Guarantee
IBC-BNY, 5.500%, 10/01/29 ........................... Prerefunded $ 4,898,500
4,070,000 Georgia State, Series A, Prerefunded 03/01/10
10,000,000 @100, 5.000%, 03/01/19 .............................. Prerefunded 4,145,522
City & County Honolulu, HI, 0.320%, 11/10/09 .............. A-1+/P-1 10,000,000
Hawaii Pacific Health Wilcox Memorial Hospital
12,000,000 Special Purpose Radian Insured VRDO*,
0.490%, 07/01/33 .................................... Aaa/AAA 12,000,000
Hawaii State, Escrowed to Maturity National
300,000 Public Finance Guarantee Insured,
5.750%, 01/01/10 .................................... Prerefunded 303,968
500,000 Hawaii State, National Public Finance Guarantee
FGIC Insured Series, 5.500%, 10/01/09 ............... Aa2/AA 500,000
1,000,000 Hawaii State, National Public Finance Guarantee
IBC Insured, 6.000%, 11/01/09 ....................... Aa2/AA 1,004,446
Hawaii State Department of Budget and Finance
Special Purpose Revenue Bond (Palama Meat
6,500,000 Company) Series A, Wells Fargo Insured,
AMT VRDO*, 0.640%, 10/31/29 ......................... NR/AAA 6,500,000
Hawaii State Department of Budget and Finance
Special Purpose Revenue Refunding Queens
Health System, Series B, Bank of America,
14,210,000 Insured VRDO*, 0.260%, 07/01/29
1,000,000 weekly reset Wednesday .............................. Aaa/AAA 14,210,000
Hawaii State Highway Revenue, 4.000%, 01/01/10 ............ Aa3/AA+ 1,003,697
1,100,000 Hawaii State Highway Revenue, Prerefunded to
07/01/10 @ FSA Insured, 5.500%, 07/01/20 ............ Prerefunded 1,143,237
Hawaii State Housing & Community Development
Corp., Multi Family, Sunset Villas, Prerefunded to
780,000 07/20/10 @102, GNMA Collateralized, 5.750%,
01/20/36 ............................................ Prerefunded 827,248
Hawaii State Housing Finance & Development Corp.,
2,300,000 Multi Family, Lokahi Kau, FHLMC Insured VRDO*
0.370%, 12/01/41 .................................... Aaa/NR 2,300,000
1,500,000 Chicago, IL, Series A Prerefunded to 07/01/10
@ 101, FGIC Insured, 6.750%, 01/01/35 ............... Prerefunded 1,587,375
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
Cook County, IL, Capital Improvement-Series A,
$ 1,000,000 Prerefunded to 11/15/09 @101 FGIC Insured
5.250%, 11/15/16 .................................... Prerefunded $ 1,015,704
2,245,000 Illinois Educational Facilities Authority Revenue
Bond VRDO*, 0.330%, 12/01/25 ........................ Aaa/NR 2,245,000
Kane, Cook & DuPage Counties, IL, (Elgin) School
1,000,000 District No. 46 Refunding, Assured Guaranty
Insured, 2.500%, 01/01/10 ........................... Aa2/AAA 1,004,253
6,000,000 Peoria County, IL, Community Unit School District
No. 323 FSA Insured VRDO*, 0.680%, 04/01/26 ......... Aaa/AAA 6,000,000
2,100,000 Romeoville, IL, Lewis University Revenue Bond
VRDO*, 0.350%, 10/01/36 ............................. Aaa/NR 2,100,000
Indiana Financial Authority Health System Revenue,
2,000,000 Sisters St. Francis Health, VRDO*, 0.360%,
09/01/48 ............................................ Aaa/NR 2,000,000
1,975,000 Indiana Health Facilities Financial Authority, Clark
Memorial Hospital, VRDO*, 0.450%, 12/01/21 .......... NR/NR* 1,975,000
Iowa Financial Authority Revenue Private College
2,400,000 Revenue (Drake University Project) VRDO*
0.350%, 04/01/31 .................................... Aaa/AAA 2,400,000
2,900,000 Breckenridge County, KY Lease Program Revenue
VRDO*, 0.260%, 02/01/31 ............................. VMIG1/NR 2,900,000
Kentucky Economic Development Finance Authority
2,000,000 Revenue, Catholic Health Initiatives, Prerefunded
to 06/01/10 @101, 5.750%, 12/01/15 .................. Prerefunded 2,089,814
665,000 Michigan Higher Education Facility Authority, Hope
College VRDO*, 0.350%, 11/01/36 ..................... Aaa/NR 665,000
Michigan Municipal Bond Authority Revenue Clean
1,990,000 Water Revolving Fund, Prerefunded 10/01/10
@101, 5.500%, 10/01/20 .............................. Prerefunded 2,113,081
Bloomington, MN, Bristol Apartments Multi-Family
3,000,000 Revenue Bond FNMA Insured, VRDO*
0.400%, 11/15/32 .................................... Aaa/AAA 3,000,000
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
$ 1,595,000 Inver Grove Heights, MN Senior Housing Revenue
FNMA Insured VRDO*, 0.350%, 05/15/35 ................ Aaa/AAA $ 1,595,000
500,000 Minneapolis, MN Revenue Guthrie Theater Project
Series A, VRDO*, 0.290%, 10/01/23 ................... Aa2/NR 500,000
Oak Park Heights, MN, VSSA Boutwells Landing
6,330,000 Multi-Family Revenue Bond, FHLMC Insured
VRDO*, 0.350%, 11/01/35 ............................. Aaa/AAA 6,330,000
1,395,000 Plymouth, MN Parkside II Multi-Family Housing
FNMA Insured VRDO*, 0.350%, 04/15/33 ................ Aaa/AAA 1,395,000
St. Louis Park, MN, Parkshore Campus Multi-Family
4,000,000 Revenue Bond, FHLMC Insured, VRDO*
0.350%, 08/01/34 .................................... Aaa/AAA 4,000,000
St. Paul, MN Housing & Redevelopment Authority,
2,000,000 Multi Family Housing, Highland Ridge Project,
FHLMC Insured VRDO*, 0.350%, 10/01/33 ............... Aaa/NR 2,000,000
Kansas City, MO Industrial Development Authority
1,260,000 Multi-Family - Gatehouse Apartments Project
FNMA Insured VRDO*, 0.350%, 11/15/26 ................ Aaa/AAA 1,260,000
Kansas City, MO Industrial Development Authority
12,260,000 Revenue Bond, (Ewing Marion Kaufman
Foundation) VRDO*, 0.350%, 04/01/27 ................. NR/AAA 12,260,000
Missouri State Development Financial Board
1,440,000 Infrastructure Facility St. Louis Convention Center -
C, FGIC Insured VRDO*, 0.350%, 12/01/20 ............. NR/AA- 1,440,000
180,000 Missouri State Development Financial Board Lease
Revenue Bond VRDO*, 0.350%, 06/01/33 ................ VMIG1/NR 180,000
Missouri State Health & Educational Facilities
Authority Educational Facilities Revenue Bond,
2,120,000 St. Louis University SPA: US Bank NA, VRDO*,
0.270%, 07/01/32 .................................... VMIG1/NR 2,120,000
1,000,000 Missouri State Health & Educational Facilities
Rockhurst University VRDO*, 0.350%, 11/01/32 ........ NR/A+ 1,000,000
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
Missouri State Health & Educational Facilities
$ 2,630,000 Southwest Baptist University VRDO*,
0.350% 10/01/33 ..................................... NR/A-1+ $ 2,630,000
University of Missouri University Revenue
1,275,000 Bond-System Facilities Series A VRDO*
0.300%, 11/01/31 .................................... Aa2/A-1+ 1,275,000
University of Missouri University System Facilities
2,300,000 Revenue Bond, Series B VRDO*
0.300%, 11/01/30 .................................... Aa2/A-1+ 2,300,000
Washoe County, NV, Reno-Sparks Convention,
2,000,000 Series A, Prerefunded to 01/01/10 @ 100
FSA Insured, 6.30%, 07/01/21 ........................ Prerefunded 2,028,278
1,710,000 Washoe, NV, Prerefunded to 12/1/09 @ 100
FSA Insured, 5.875%, 06/01/17 ....................... Prerefunded 1,725,613
1,300,000 Washoe, NV, Prerefunded to 12/1/09 @ 100
FSA Insured, 5.875%, 06/01/19 ....................... Prerefunded 1,311,694
Trenton, NJ, Parking Authority Revenue,
3,000,000 Prerefunded to 04/01/10 @100 FGIC Insured
VRDO*, 6.100%, 04/01/26 ............................. Prerefunded 3,087,649
3,500,000 NY. Facilities Improvement, Prerefunded to
8/15/10 @ 100 FSA Insured, 5.250%, 08/15/30 ......... Prerefunded 3,646,526
1,070,000 New York State Housing - Liberty Street, FHLMC
Insured VRDO*, 0.270%, 05/01/35 ..................... Aaa/AAA 1,070,000
North Carolina Capital Facilities Finance Agency
2,400,000 Educational Facilities (Queens College) VRDO*
0.370%, 03/01/21 .................................... NR/NR** 2,400,000
North Carolina Capital Facilities Finance Agency
1,080,000 (Thompson's Children Home) VRDO*
0.370%, 12/01/20 .................................... NR/NR** 1,080,000
2,000,000 North Carolina Medical Catholic Health East VRDO*
0.250%, 11/15/28 .................................... Aaa/AA 2,000,000
5,385,000 Union County, NC, Enterprise System, FSA Insured
VRDO*, 0.350%, 06/01/21 ............................. Aa3/AAA 5,385,000
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
Grand Forks, ND, Health Care System Revenue
$ 1,000,000 Altru Health System Obligation Group, Prerefunded
to 08/15/10 @ 101, 7.125%, 08/15/24 ................. Prerefunded $ 1,066,553
Ohio State Highway Higher Education Capital
5,000,000 Facilities Series A Escrowed to Maturity, ........... Escrowed to
5.200%, 02/01/10 .................................... Maturity 5,078,691
2,500,000 Multnomah County, OR Hospital Facilities VRDO*
0.280%, 11/01/34 .................................... Aa1/NR 2,500,000
5,000,000 Oregon State Facilities Authority Revenue
Peacehealth VRDO*, 0.290%, 05/01/47 ................. NR/AAA 5,000,000
1,200,000 Emmaus, PA General Authority VRDO*
2,500,000 0.300%, 03/01/24 .................................... NR/A-1+ 1,200,000
Pennsylvania State, 5.000%, 01/15/10 ...................... Aa2/AA 2,532,911
Puerto Rico Commonwealth Infrastructure Financing
Authority Special Series A, Special Obligations,
2,750,000 Prerefunded to 10/01/10 @ 101, 5.500%
10/10/19 ............................................ Prerefunded 2,920,971
Providence, RI, Redevelopment Agency Revenue
Public Safety & Municipal Buildings, Series A ,
5,000,000 Prerefunded 04/01/10 @101, AMBAC Insured,
5.750%, 04/01/29 .................................... Prerefunded 5,182,031
3,000,000 Columbia, SC, Waterworks &Sewer System
Revenue Prerefunded @100, 5.700%, 02/01/19 .......... Prerefunded 3,052,880
South Dakota State & Educational Facilities Authority
3,000,000 Revenue (Regional Health) VRDO*
0.350%, 09/01/27 .................................... Aaa/NR 3,000,000
Bell County, TX, Health Facilities Development
Corp., Scott & White Memorial Hospital,
890,000 Prerefunded to 2/15/10 @101 National Public
Finance Guarantee Insured, 6.500%, 08/15/16 ......... Prerefunded 919,303
Bexar County, TX Housing Financial Corp., Multi-
Family Housing Revenue, Northwest Trails
1,800,000 Apartments, FNMA Insured VRDO*
0.350%, 12/15/34 .................................... Aaa/NR 1,800,000
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
Garland, TX Independent School District, Texas
$ 2,000,000 Permanent School Fund Guarantee Program,
5.000%, 02/15/10 .................................... Aaa/AAA $ 2,033,583
Humble, TX School District, Texas Permanent
3,245,000 School Fund Guarantee Program Prerefunded to
2/15/10 @ 100, 5.500%, 02/15/19 ..................... Prerefunded 3,306,162
McKinney, TX, Permanent School Fund Guarantee
5,505,000 Program Prerefunded to 2/15/10 @ 100
5.375%, 02/15/20 .................................... Prerefunded 5,606,183
New Braunfels, TX, Independent School District,
Texas Permanent School Fund Guarantee Program
2,000,000 Prerefunded to 02/01/10 @100, 6.000%,
01/01/17 ............................................ Prerefunded 2,037,335
Port Houston Authority, TX, Harris County, Series
1,500,000 A, Prerefunded 10/01/09 @100, 5.750%,
10/01/24 ............................................ Prerefunded 1,500,000
Travis, TX, Ascension Health Prerefunded to
4,600,000 11/15/09 @ 101, National Public Finance Guarantee
Insured, 6.250%, 11/15/14 ................................. Prerefunded 4,679,064
1,925,000 Seattle, WA, Drain & Wastewater Utility Revenue
Prerefunded 11/01/09 @101, 5.750%, 11/10/18 ......... Prerefunded 1,952,717
1,785,000 Seattle, WA, Drain & Wastewater Utility Revenue
Prerefunded 11/01/09 @101, 5.750%, 11/10/18 ......... Prerefunded 1,810,701
Snohomish County, WA Prerefunded to 12/1/09
1,000,000 @ 100, National Public Finance Guarantee Insured,
5.700%, 12/01/14 .................................... Prerefunded 1,007,755
Washington State Housing Finance Commission,
2,210,000 Northwest School Project, VRDO*
0.349%, 06/01/32 .................................... Aaa/NR 2,210,000
5,350,000 Monona Grove, WI, School District, Prerefunded
4,720,000 05/01/10 @100 FGIC Insured, 5.850%, 05/01/18 ........ Prerefunded 5,511,351
Wausau, WI, School District, Refunding,
Prerefunded to 03/01/10 @ 100, 5.900%, 03/01/19 ..... Prerefunded 4,827,075
MOODY'S/
PRINCIPAL S&P RATINGS OR
AMOUNT MUNICIPAL SECURITIES (CONTINUED) PREREFUNDED++ VALUE
- ----------- ----------------------------------------------------------- ----------- -------------
$ 8,635,000 Wisconsin State, Series A Prerefunded 05/01/10
@100, 5.600%, 05/01/16 .................................... Prerefunded $ 8,884,532
-------------
Total Investments (Amortized Cost $273,421,681+) .......... 101.2% 273,421,681
Other assets less liabilities ............................. (1.2) (3,359,999)
----------- -------------
NET ASSETS ................................................ 100.0% $ 270,061,682
=========== =============
* 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 - A+/F1+
+ Cost for Federal income tax and financial reporting purposes is identical.
++ Prerefunded bonds are bonds for which U.S. Government Obligations have
been placed in escrow to retire the bonds at their earliest call date.
PORTFOLIO DISTRIBUTION
----------------------
PERCENT OF PERCENT OF
PORTFOLIO PORTFOLIO
--------- ---------
Alabama 1.6% Iowa 0.9%
Arizona 0.2 Kentucky 1.8
California 3.0 Michigan 1.0
Colorado 2.7 Minnesota 6.9
Connecticut 3.8 Missouri 8.9
District of Columbia 0.8 Nevada 1.8
Florida 4.4 New Jersey 1.1
Georgia 1.5 New York 1.7
Hawaii 18.2 North Carolina 4.0
Illinois 5.1 North Dakota 0.4
Indiana 1.5 Ohio 1.9
PERCENT OF
PORTFOLIO
---------
Oregon 2.7%
Pennsylvania 1.4
Puerto Rico 1.1
Rhode Island 1.9
South Carolina 1.1
South Dakota 1.1
Texas 8.0
Washington 2.5
Wisconsin 7.0
-----
100.0%
=====
PORTFOLIO ABBREVIATIONS
-----------------------
AMBAC - American Municipal Bond Assurance Corp.
AMT - Alternative Minimum Tax
FGIC - Financial Guaranty Insurance Corporation
FHLMC - Federal Home Loan Mortgage Corp.
FNMA - Federal National Morgage Association
FSA - Financial Security Assurance
GNMA - Government National Mortgage Association
NR - Not Rated
SPA - Standby Bond Purchase Agreement
VRDO - Variable Rate Demand Obligation
Note: National Public Finance Guarantee was formerly known as National-re.
On November 2, 2009, Assured Guaranty Ltd., the holding company for Assured
Guaranty Corp. and Financial Security Assurance Inc. ("FSA"), announed that
pending regulatory approval, it will change the name of its subsidiary FSA to
Assured Guaranty Municipal Corp. The Company also plans to changes the names of
the FSA companies worldwide.
See accompanying notes to financial statements.
PACIFIC CAPITAL
U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2009 (UNAUDITED)
PRINCIPAL
AMOUNT U.S. GOVERNMENT AGENCY OBLIGATIONS (96.5%): VALUE
- ------------ ----------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (50.5%):
$ 60,000,000 0.20%, 10/05/09 ............................... $ 59,998,667
52,166,000 0.15%, 10/13/09 ............................... 52,163,479
110,000,000 0.09%, 10/19/09 ............................... 109,995,050
50,000,000 0.22%, 11/09/09 ............................... 49,988,084
53,000,000 0.17%, 11/23/09 ............................... 52,987,126
40,000,000 0.08%, 12/03/09 ............................... 39,994,400
40,000,000 0.14%, 12/14/09 ............................... 39,988,489
------------
405,115,295
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (45.9%):
80,000,000 0.22%, 10/01/09 ............................... 80,000,000
70,000,000 0.08%, 10/15/09 ............................... 69,997,822
40,000,000 0.12%, 10/30/09 ............................... 39,996,133
30,000,000 0.09%, 11/02/09 ............................... 29,997,600
43,500,000 0.14%, 11/04/09 ............................... 43,494,248
30,000,000 0.11%, 11/16/09 ............................... 29,995,783
75,000,000 0.12%, 12/30/09 ............................... 74,977,500
------------
368,459,086
------------
Total U.S. Government Agency Obligations ...... 773,574,381
------------
FDIC GUARANTEED SECURITIES (5.1%):
-----------------------------------------------
Bank of America TLGP
21,500,000 0.47%, 12/23/10 (A) ........................... 21,500,000
General Electric TLGP
7,000,000 0.60%, 07/08/10 (A) ........................... 7,000,000
Keycorp
5,000,000 0.95%, 12/15/10 (A) ........................... 5,002,746
Suntrust Bank FDIC
7,500,000 0.95%, 12/16/10 (A) ........................... 7,508,998
------------
41,011,744
------------
PRINCIPAL
AMOUNT REPURCHASE AGREEMENT (7.7%): VALUE
- ------------ ---------------------------------------------------- -------------
$ 62,000,000 Bank of America 0.03%, 10/01/09
(Proceeds of $62,000,052 to be received at maturity,
Collateral: $56,658,000 Federal National Mortgage
Association 5.00% due 06/18/24; the collateral fair
value plus interest receivable equals $66,248,001) . $ 62,000,000
-------------
Total Investments (Amortized Cost $876,586,125*) ... 109.3% 876,586,125
Other assets less liabilities ...................... (9.3) (74,553,275)
----- -------------
NET ASSETS ......................................... 100.0% $ 802,032,850
===== =============
* Cost for Federal income tax and financial reporting purposes is identical.
(A) Variable interest rate - subject to periodic change.
Abbreviations:
FDIC - Federal Deposit Insurance Corp.
TLGP - Temporary Liquidity Guarantee Program
PERCENT OF
PORTFOLIO DISTRIBUTION PORTFOLIO
---------------------- ---------
U.S. Government Agency Obligations ..................... 88.2%
FDIC Guaranteed Securities ............................. 4.7
Repurchase Agreement ................................... 7.1
-----
100.0%
=====
See accompanying notes to financial statements.
THE PACIFIC CAPITAL FUNDS
OF CASH ASSETS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2009 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
------------- ------------- -------------
ASSETS:
Investments at value and amortized cost (note 2) $ 340,880,535 $ 273,421,681 $ 876,586,125
Cash ........................................... 589,457 -- 433,087
Interest receivable ............................ 167,619 1,846,415 17,218
Other assets ................................... 28,305 47,302 82,947
------------- ------------- -------------
Total Assets ........................... 341,665,916 275,315,398 877,119,377
------------- ------------- -------------
LIABILITIES:
Cash overdraft ................................. -- 1,484,109 --
Payable for investment securities purchased .... 24,192,740 3,700,456 74,977,500
Adviser and Administrator fees payable ......... 62,425 41,027 29,472
Dividends payable .............................. 16,194 13,256 29,130
Distribution fees payable ...................... 5,343 3,223 10,216
Accrued expenses ............................... 13,885 11,645 40,209
------------- ------------- -------------
Total Liabilities ...................... 24,290,587 5,253,716 75,086,527
------------- ------------- -------------
NET ASSETS ..................................... $ 317,375,329 $ 270,061,682 $ 802,032,850
============= ============= =============
NET ASSETS CONSIST OF:
Capital Stock - Authorized an unlimited number
of shares, par value $0.01 per share ... $ 3,170,886 $ 2,700,114 $ 8,020,897
Additional paid-in capital ............................. 313,930,953 267,313,424 794,138,011
Accumulated net realized gain (loss) on investments .... 273,490 48,144 (126,058)
------------- ------------- -------------
$ 317,375,329 $ 270,061,682 $ 802,032,850
============= ============= =============
SHARES OF BENEFICIAL INTEREST:
Original Shares Class:
Net Assets ............................. $ 244,652,144 $ 217,398,306 $ 549,334,235
============= ============= =============
Shares outstanding ..................... 244,667,037 217,359,321 549,368,915
============= ============= =============
Net asset value per share .............. $ 1.00 $ 1.00 $ 1.00
============= ============= =============
Service Shares Class:
Net Assets ............................. $ 72,723,185 $ 52,663,376 $ 252,698,615
============= ============= =============
Shares outstanding ..................... 72,421,592 52,652,034 252,720,746
============= ============= =============
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, 2009 (UNAUDITED)
CASH TAX-FREE GOVERNMENT
FUND FUND FUND
----------- ----------- -----------
INVESTMENT INCOME:
Interest income ............................. $ 1,209,281 $ 862,516 $ 1,271,632
----------- ----------- -----------
EXPENSES:
Investment Adviser fees (note 3) ............ 780,215 485,024 1,415,144
Administrator fees (note 3) ................. 201,767 124,609 310,641
Distribution fees (note 3) .................. 143,508 76,316 348,067
Treasury Guarantee Program (note 9) ......... 129,114 56,269 59,259
Insurance ................................... 20,938 10,151 54,054
Trustees' fees and expenses ................. 56,014 42,514 128,294
Legal fees (note 3) ......................... 35,674 25,545 67,576
Registration fees and dues .................. 18,209 6,495 36,168
Fund accounting fees ........................ 17,697 17,745 18,603
Auditing and tax fees ....................... 8,822 8,822 8,822
Shareholders' reports ....................... 7,587 2,919 12,521
Transfer and shareholder servicing agent fees 6,128 6,725 7,415
Custodian fees (note 5) ..................... 5,046 4,862 5,189
Chief Compliance Officer (note 3) ........... 2,158 2,158 2,158
Miscellaneous ............................... 7,552 4,826 24,349
----------- ----------- -----------
Total expenses .............................. 1,440,429 874,980 2,498,260
Advisory fees waived (note 3) ............... (244,440) (109,975) (931,939)
Administrative fees waived (note 3) ......... (63,415) (28,317) (204,573)
Distribution fees waived (note 3) ........... (90,340) (42,186) (278,446)
Expenses paid indirectly (note 5) ........... -- (256) --
----------- ----------- -----------
Net expenses ........................................ 1,042,234 694,246 1,083,302
----------- ----------- -----------
Net investment income ............................... 167,047 168,270 188,330
Net realized gain (loss) from securities transactions -- -- 510
----------- ----------- -----------
Net change in net assets resulting from operations .. $ 167,047 $ 168,270 $ 188,840
=========== =========== ===========
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, 2009 YEAR ENDED SEPTEMBER 30, 2009 YEAR ENDED
(UNAUDITED) MARCH 31, 2009 (UNAUDITED) MARCH 31, 2009
------------------ ------------------ ------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .................. $ 167,047 $ 7,073,809 $ 168,270 $ 3,916,945
Net realized gain (loss)
from securities transactions ......... -- 272,310 -- 48,127
------------------ ------------------ ------------------ ------------------
Net change in net assets
resulting from operation ............. 167,047 7,346,119 168,270 3,965,072
------------------ ------------------ ------------------ ------------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ...................... (155,438) (5,234,452) (160,915) (3,080,560)
Service Shares ....................... (11,609) (1,839,357) (7,355) (846,721)
------------------ ------------------ ------------------ ------------------
Total dividends to shareholders
from net investment income .. (167,047) (7,073,809) (168,270) (3,927,281)
------------------ ------------------ ------------------ ------------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares .................. 183,897,265 586,094,563 95,887,620 297,423,045
Service Shares ................... 207,902,016 661,761,287 23,357,482 84,233,267
------------------ ------------------ ------------------ ------------------
391,799,281 1,247,855,850 119,245,102 381,656,312
------------------ ------------------ ------------------ ------------------
Reinvested dividends:
Original Shares .................. 1,029 54,292 679 16,421
Service Shares ................... 10,162 1,839,320 6,560 846,669
------------------ ------------------ ------------------ ------------------
11,191 1,893,612 7,239 863,090
------------------ ------------------ ------------------ ------------------
Cost of shares redeemed:
Original Shares .................. (272,305,562) (576,550,258) (146,283,329) (254,794,881)
Service Shares ................... (263,732,362) (676,405,429) (41,182,525) (85,614,774)
------------------ ------------------ ------------------ ------------------
(536,037,924) (1,252,955,687) (187,465,854) (340,409,655)
------------------ ------------------ ------------------ ------------------
Change in net assets
from capital share transactions .. (144,227,452) (3,206,225) (68,213,513) 42,109,747
------------------ ------------------ ------------------ ------------------
Total change in net assets ............. (144,227,452) (2,933,915) (68,213,513) 42,147,538
NET ASSETS:
Beginning of period .................. 461,602,781 464,536,696 338,275,195 296,127,657
------------------ ------------------ ------------------ ------------------
End of period* ....................... $ 317,375,329 $ 461,602,781 $ 270,061,682 $ 338,275,195
================== ================== ================== ==================
* Includes undistributed (distributions
in excess of) net investment income of: $ -- $ -- $ -- $ --
================== ================== ================== ==================
GOVERNMENT FUND
----------------------------------------
SIX MONTHS ENDED
SEPTEMBER 30, 2009 YEAR ENDED
(UNAUDITED) MARCH 31, 2009
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .................. $ 188,330 $ 16,155,662
Net realized gain (loss)
from securities transactions ......... 510 (128,439)
------------------ ------------------
Net change in net assets
resulting from operation ............. 188,840 16,027,223
------------------ ------------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Original Shares ...................... (174,722) (8,441,617)
Service Shares ....................... (13,608) (7,714,045)
------------------ ------------------
Total dividends to shareholders
from net investment income .. (188,330) (16,155,662)
------------------ ------------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Proceeds from shares sold:
Original Shares .................. 431,962,328 1,048,227,518
Service Shares ................... 740,103,579 1,910,256,960
------------------ ------------------
1,172,065,907 2,958,484,478
------------------ ------------------
Reinvested dividends:
Original Shares .................. 310 49,069
Service Shares ................... 11,642 7,714,011
------------------ ------------------
11,952 7,763,080
------------------ ------------------
Cost of shares redeemed:
Original Shares .................. (507,484,297) (1,231,324,372)
Service Shares ................... (812,302,695) (2,691,525,231)
------------------ ------------------
(1,319,786,992) (3,922,849,603)
------------------ ------------------
Change in net assets
from capital share transactions .. (147,709,133) (956,602,045)
------------------ ------------------
Total change in net assets ............. (147,708,623) (956,730,484)
NET ASSETS:
Beginning of period .................. 949,741,473 1,906,471,957
------------------ ------------------
End of period* ....................... $ 802,032,850 $ 949,741,473
================== ==================
* 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, 2009 (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, "Fair Value
Measurements" ("SFAS 157"), effective April 1, 2008. SFAS 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 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 based on the best information available in the circumstances.
The Funds' investments 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 (details of which can be found in the schedules of
investments), used to value the Funds' net assets as of September 30,
2009:
VALUATION INPUTS INVESTMENTS IN SECURITIES
---------------- -------------------------
CASH FUND TAX-FREE FUND GOVERNMENT FUND
------------ ------------- ---------------
Level 1 - Quoted Prices $ -- $ -- $ --
Level 2 - Other Significant Observable Inputs
Short-term Instruments 340,880,535 273,421,681 876,586,125
Level 3 - Significant Unobservable Inputs -- -- --
------------ ------------- ---------------
Total $340,880,535 $ 273,421,681 $ 876,586,125
============ ============= ===============
c) ACCOUNTING PRONOUNCEMENTS: In April 2009, the Financial Accounting
Standards Board ("FASB") issued FASB Staff Position No. 157-4,
"Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly" ("FSP 157-4"). FSP 157-4 provides
additional guidance for estimating fair value in accordance with FASB
Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements" ("FAS 157"), when the volume and level of activity for the
asset or liability have significantly decreased as well as guidance on
identifying circumstances that indicate a transaction is not orderly. FSP
157-4 is effective for fiscal years and interim periods ending after June
15, 2009. The adoption of FSP 157-4 did not have an impact on the Funds'
financial statements and the Funds have made the required additional
disclosures.
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" (SFAS No.
165). The Funds adopted SFAS No. 165 which requires an entity to recognize
in the financial statements the effects of all subsequent events that
provide additional evidence about conditions that existed at the date of
the balance sheet. For non-recognized subsequent events that must be
disclosed to keep financial statements from being misleading, an entity is
required to disclose the nature of the event as well as an estimate of its
financial effect, or a statement that such an estimate cannot be made. In
addition, SFAS No. 165 requires an entity to disclose the date through
which subsequent events have been evaluated. The Funds have evaluated
subsequent events through the issuance of their financial statements on
November 23, 2009.
The Funds have adopted the provisions of Statement of Financial Accounting
Standards No. 161, "Disclosures about Derivative Instruments and Hedging
Activities" ("SFAS 161"), effective June 30, 2009. SFAS 161 requires
enhanced disclosures about a fund's derivative and hedging activities,
including how such activities are accounted for and their effect on a
fund's financial position, performance and cash flows. The Funds do not
invest in derivative instruments or engage in hedging activities. As a
result, SFAS 161 did not impact the Fund's financial statements.
d) 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 2a
above.
e) 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.
f) 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.
g) 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.
The Funds adopted FASB Interpretation No. 48 "Accounting for Uncertainty
in Income Taxes" ("FIN 48"). Management has reviewed the tax positions for
each of the open tax years (2006-2009) and has determined that
implementation of FIN 48 did not have a material impact on the Funds'
financial statements.
h) 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.
i) 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.
j) 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 the net asset value per share. There were no reclassifications
for the year ended March 31, 2009.
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. For their services, the
Adviser and the Administrator each receive a fee which is payable 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 $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.
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.
During the six months ended September 30, 2009, the Adviser and the
Administrator took action to maintain a positive yield for shareholders of the
Funds. In response to current market conditions, the Adviser and the
Administrator have waived and may continue to waive management fees.
Additionally, distribution and service fees have been waived (see note 3b
below). While there is no contractual or other requirement that such waivers
and/or reductions in fees occur or continue, the Adviser and the Administrator
have informed the Trust that they intend to continue to take reasonably
practicable steps to maintain a positive yield for shareholders of each of the
Funds. Details of the waivers during the period are as follows:
Advisory Administration Distribution Total Fees
Fund Fees Waived Fees Waived Fees Waived (note 3b) Waived
- --------------------------------------------------------------------------------
Cash Fund $ 244,440 $ 63,415 $ 90,340 $ 398,195
Tax-Free Fund 109,975 28,317 42,186 180,478
Government Fund 931,939 204,573 278,446 1,414,958
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. For the six months ended
September 30, 2009, the fees incurred pursuant to the Plan were as follows: the
Cash Fund incurred fees of $143,508 of which $90,340 was waived; the Tax-Free
Fund incurred fees of $76,316 of which $42,186 was waived; and the Government
Fund incurred fees of $348,067 of which $278,446 was waived. Specific details
about each Plan are more fully defined in the Prospectus and Statement of
Additional Information of the Trust.
Under Distribution Agreements, Aquila Distributors, Inc. (the
"Distributor") serves as the exclusive distributor of each Fund's shares. No
compensation or fees are paid to the Distributor for such share distribution.
c) OTHER RELATED PARTY TRANSACTIONS:
For the six months ended September 30, 2009, 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 $35,593; Tax-Free Fund $25,485; Government Fund $67,409. 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.
In the Government Fund as of March 31, 2009, there were post-October
capital loss deferrals of $152,592, which will be recognized in the following
year.
The tax character of distributions during fiscal 2009 and 2008 were as
follows:
CASH FUND TAX-FREE FUND GOVERNMENT FUND
-------------------------- -------------------------- --------------------------
2009 2008 2009 2008 2009 2008
----------- ----------- --------- ----------- ----------- -----------
Ordinary income ..... $ 7,073,809 $18,391,172 $ -- $ 17 $16,155,662 $76,602,203
----------- ----------- --------- ----------- ----------- -----------
Net tax-exempt income -- -- 3,927,281 7,290,811 -- --
Capital gain ........ -- -- -- -- -- --
----------- ----------- --------- ----------- ----------- -----------
Total ............... $ 7,073,809 $18,391,172 $ 3,927,281 $ 7,290,828 $16,155,662 $76,602,203
=========== =========== =========== =========== =========== ===========
As of March 31, 2009, the components of distributable earnings on a tax
basis were as follows:
TAX-FREE GOVERNMENT
CASH FUND FUND FUND
--------- --------- ---------
Undistributed ordinary income ......... $ 350,878 $ 48,144 $ 59,902
Undistributed tax exempt income ....... -- 79,058 --
Post October capital loss ............. -- -- (152,592)
Accumulated net realized loss
on investments .................... -- -- --
--------- --------- ---------
$ 350,878 $ 127,202 $ (92,690)
========= ========= =========
8. ONGOING DEVELOPMENT RELATED TO THE TAX-FREE FUND
Since December 2007, municipal bond insurance companies have been under
review by the three major rating agencies: Standard & Poor's, Moody's and Fitch.
The ratings of most of the insurance companies have either been downgraded
and/or have a negative outlook. The financial markets continue to assess the
severity of the losses caused by the subprime credit crisis and its impact on
municipal bond insurance companies and the prices of insured municipal
securities.
9. TREASURY GUARANTEE PROGRAM
In September 2008, the U. S. Treasury announced the establishment of a
Temporary Money Market Funds Guarantee Program (the "Program"). The Program was
intended to add stability to the financial markets and to reassure money market
fund investors by protecting the value of those shares of participating money
market funds regulated by the Securities and Exchange Commission's Rule 2a-7 as
of the close of business on September 19, 2008.
The Program was subject to expiration on December 18, 2008 unless extended
by the Secretary of the Treasury, potentially through the close of business on
September 18, 2009. The initial three-month phase of the Program cost 0.01% of
the net asset value of participating funds.
The U.S. Treasury subsequently announced two extensions of its Program,
the final phase of which began on April 30, 2009 and expired at the close of
business on September 18, 2009. Each of the two extensions cost 0.015% of the
net asset value of the participating Funds on September 19, 2008.
The Pacific Capital Funds of Cash Assets Trust viewed the Program as
helpful in bringing additional stability to the credit markets of which money
market funds are a critical component. Accordingly, the Board of Trustees of the
Pacific Capital Funds of Cash Assets Trust unanimously approved participation in
the Program. All three money market funds, Cash Assets Trust, Tax-Free Cash
Assets Trust and U.S. Government Securities Cash Assets Trust (the "Funds"),
were covered under the Program through April 30, 2009. Cash Assets Trust and
Tax-Free Cash Assets Trust were additionally covered through September 18, 2009.
Since U.S. Government Securities Cash Assets Trust invests primarily in agencies
and direct obligations of the U.S. Government, it was determined that the Fund
would not participate in the final phase of the Program.
Costs to participate in each of the phases of the Program were borne by
the participating Funds.
PACIFIC CAPITAL
CASH ASSETS TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/09 ------------------------------------------------------------
(UNAUDITED) 2009 2008 2007 2006 2005
-------- -------- -------- -------- -------- --------
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 .................. 0.001 0.014 0.043+ 0.046+ 0.032+ 0.014+
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... (0.001) (0.014) (0.043) (0.046) (0.032) (0.014)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return ................................... 0.05%* 1.42% 4.35% 4.75% 3.20% 1.36%
Ratios/supplemental data
Net assets, end of period (in millions) $ 245 $ 333 $ 323 $ 287 $ 286 $ 366
Ratio of expenses to average net assets 0.50%** 0.57% 0.57% 0.57% 0.58% 0.37%
Ratio of net investment income to
average net assets ............. 0.11%** 1.39% 4.23% 4.65% 3.09% 1.39%
The expense and net investment income ratios without the effect of the 2005 Adviser's and Administrator's contractual caps on fees
and the 2009 waiver of a portion of Adviser, Administrator and distribution fees were (note 3):
Ratio of expenses to average net assets 0.66%** 0.57% ++ ++ ++ 0.57%
Ratio of net investment income (loss) to
average net assets ............. (0.05)%** 1.39% ++ ++ ++ 1.19%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.50%#** 0.57%# 0.56% 0.57% 0.58% 0.37%#
SERVICE SHARES
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/09 ------------------------------------------------------------
(UNAUDITED) 2009 2008 2007 2006 2005
-------- -------- -------- -------- -------- --------
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 .................. 0.000a 0.012 0.040+ 0.044+ 0.029+ 0.011+
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... (0.000)a (0.012) (0.040) (0.044) (0.029) (0.011)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return ................................... 0.01%* 1.18% 4.09% 4.49% 2.94% 1.11%
Ratios/supplemental data
Net assets, end of period (in millions) $ 73 $ 129 $ 141 $ 166 $ 169 $ 166
Ratio of expenses to average net assets 0.60%** 0.82% 0.82% 0.82% 0.83% 0.61%
Ratio of net investment income to
average net assets ............. 0.02%** 1.20% 3.98% 4.40% 2.91% 1.12%
The expense and net investment income ratios without the effect of the 2005 Adviser's and Administrator's contractual caps on fees
and the 2009 waiver of a portion of Adviser, Administrator and distribution fees were (note 3):
Ratio of expenses to average net assets 0.91%** 0.82% ++ ++ ++ 0.81%
Ratio of net investment income (loss) to
average net assets ............. (0.29)%** 1.20% ++ ++ ++ 0.91%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.60%#** 0.82%# 0.81% 0.81% 0.83% 0.61%#
- ----------
a Amount represents less than $.001 per share.
+ 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 and/or fee waivers.
* 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,
9/30/09 ------------------------------------------------------------
(UNAUDITED) 2009 2008 2007 2006 2005
-------- -------- -------- -------- -------- --------
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 .................. 0.001 0.013 0.029+ 0.030+ 0.022+ 0.011+
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... (0.001) (0.013) (0.029) (0.030) (0.022) (0.011)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return ................................... 0.06%* 1.35% 2.90% 3.09% 2.21% 1.16%
Ratios/supplemental data
Net assets, end of period (in millions) $ 217 $ 268 $ 225 $ 171 $ 133 $ 134
Ratio of expenses to average net assets 0.43%** 0.48% 0.47% 0.50% 0.50% 0.29%
Ratio of net investment income to
average net assets ............. 0.13%** 1.28% 2.80% 3.04% 2.20% 1.17%
The expense and net investment income ratios without the effect of the 2005 Adviser's and Administrator's contractual caps on fees
and the 2009 waiver of a portion of Adviser, Administrator and distribution fees were (note 3):
Ratio of expenses to average net assets 0.52%** 0.49% ++ ++ ++ 0.49%
Ratio of net investment income (loss) to
average net assets ............. 0.04%** 1.27% ++ ++ ++ 0.96%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.43%#** 0.48%# 0.47% 0.49% 0.50% 0.28%#
SERVICE SHARES
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/09 ------------------------------------------------------------
(UNAUDITED) 2009 2008 2007 2006 2005
-------- -------- -------- -------- -------- --------
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 .................. 0.000a 0.011 0.026+ 0.028+ 0.019+ 0.009+
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... (0.000)a (0.011) (0.026) (0.028) (0.019) (0.009)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return ................................... 0.01%* 1.10% 2.64% 2.83% 1.96% 0.90%
Ratios/supplemental data
Net assets, end of period (in millions) $ 53 $ 70 $ 71 $ 88 $ 93 $ 72
Ratio of expenses to average net assets 0.55%** 0.73% 0.72% 0.75% 0.75% 0.53%
Ratio of net investment income to
average net assets ............. 0.02%** 1.10% 2.55% 2.78% 1.94% 0.92%
The expense and net investment income ratios without the effect of the 2005 Adviser's and Administrator's contractual caps on fees
and the 2009 waiver of a portion of Adviser, Administrator and distribution fees were (note 3):
Ratio of expenses to average net assets 0.77%** 0.74% ++ ++ ++ 0.75%
Ratio of net investment income (loss) to
average net assets ............. (0.20)%** 1.09% ++ ++ ++ 0.71%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.55%#** 0.73%# 0.72% 0.75% 0.75% 0.53%#
- ----------
a Amount represents less than $.001 per share.
+ 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 and/or fee waivers.
* 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,
9/30/09 ------------------------------------------------------------
(UNAUDITED) 2009 2008 2007 2006 2005
-------- -------- -------- -------- -------- --------
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 .................. 0.000a 0.010 0.042+ 0.047+ 0.032+ 0.014+
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... (0.000)a (0.010) (0.042) (0.047) (0.032) (0.014)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return ................................... 0.03%* 1.03% 4.30% 4.80% 3.25% 1.41%
Ratios/supplemental data
Net assets, end of period (in millions) $ 549 $ 625 $ 808 $ 685 $ 429 $ 354
Ratio of expenses to average net assets 0.23%** 0.43% 0.43% 0.44% 0.45% 0.27%
Ratio of net investment income to
average net assets ............. 0.06%** 1.06% 4.18% 4.72% 3.25% 1.42%
The expense and net investment income ratios without the effect of the 2005 Adviser's and Administrator's contractual caps on fees
and the 2009 wiaver of a portion of Adviser, Administrator and distribution fees were (note 3):
Ratio of expenses to average net assets 0.50%** 0.47% ++ ++ ++ 0.45%
Ratio of net investment income (loss) to
average net assets ............. (0.21)%** 1.03% ++ ++ ++ 1.24%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.23%#** 0.43%# 0.43% 0.44% 0.45% 0.27%#
SERVICE SHARES
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
9/30/09 ------------------------------------------------------------
(UNAUDITED) 2009 2008 2007 2006 2005
-------- -------- -------- -------- -------- --------
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 .................. 0.000a 0.008 0.040+ 0.045+ 0.030+ 0.012+
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ... (0.000)a (0.008) (0.040) (0.045) (0.030) (0.012)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return ................................... 0.00%* 0.84% 4.04% 4.54% 3.00% 1.16%
Ratios/supplemental data
Net assets, end of period (in millions) $ 253 $ 325 $ 1,099 $ 1,079 $ 887 $ 578
Ratio of expenses to average net assets 0.29%** 0.64% 0.68% 0.69% 0.70% 0.52%
Ratio of net investment income to
average net assets ............. 0.01%** 1.00% 3.93% 4.46% 3.02% 1.16%
The expense and net investment income ratios without the effect of the 2005 Adviser's and Administrator's contractual caps on fees
and the 2009 wiaver of a portion of Adviser, Administrator and distribution fees were (note 3):
Ratio of expenses to average net assets 0.74%** 0.71% ++ ++ ++ 0.70%
Ratio of net investment income (loss) to
average net assets ............. (0.44)%** 0.92% ++ ++ ++ 0.98%
The expense ratios after giving effect to the expense offset for uninvested cash balances were:
Ratio of expenses to average net assets 0.29%#** 0.64%# 0.68% 0.69% 0.70% 0.52%#
- ----------
a Amount represents less than $.001 per share.
+ 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 and/or fee waivers.
* 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,
2009 and held for the six months ended September 30, 2009.
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, 2009
BEGINNING ENDING EXPENSES
ACTUAL ACCOUNT ACCOUNT PAID DURING
TOTAL RETURN(1) VALUE VALUE THE PERIOD(2)
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 0.05% $1,000.00 $1,000.50 $2.51
Service Shares 0.01% $1,000.00 $1,000.10 $3.01
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 0.06% $1,000.00 $1,000.60 $2.16
Service Shares 0.01% $1,000.00 $1,000.10 $2.76
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 0.03% $1,000.00 $1,000.30 $1.15
Service Chares 0.00% $1,000.00 $1,000.00 $1.45
- --------------------------------------------------------------------------------
(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 0.50% AND 0.60%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.43% AND
0.55%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.23% AND 0.29%, 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, 2009
HYPOTHETICAL
ANNUALIZED BEGINNING ENDING EXPENSES
TOTAL ACCOUNT ACCOUNT PAID DURING
RETURN VALUE VALUE THE PERIOD
- --------------------------------------------------------------------------------
CASH FUND
Original Shares 5.00% $1,000.00 $1,022.56 $2.54
Service Shares 5.00% $1,000.00 $1,022.06 $3.04
- --------------------------------------------------------------------------------
TAX-FREE FUND
Original Shares 5.00% $1,000.00 $1,022.91 $2.18
Service Shares 5.00% $1,000.00 $1,022.31 $2.79
- --------------------------------------------------------------------------------
GOVERNMENT FUND
Original Shares 5.00% $1,000.00 $1,023.92 $1.17
Service Chares 5.00% $1,000.00 $1,023.61 $1.47
- --------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.50% AND 0.60%,
RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.43% AND
0.55%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES,
AND 0.23% AND 0.29%, 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)
A 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 (collectively the "Trust") was held on September
23, 2009. The holders of shares representing 69.5% of the Trust's total net
asset value of the Trust's 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 $1,058,398,463 $2,421,459
Diana P. Herrmann $1,058,422,395 $2,397,528
Stanley W. Hong $1,058,422,395 $2,397,528
Richard L. Humphreys $1,058,406,550 $2,413,373
Bert A. Kobayashi, Jr. $1,058,422,395 $2,397,538
Theodore T. Mason $1,058,422,395 $2,397,528
Glenn P. O'Flaherty $1,058,422,395 $2,397,528
Russell K. Okata $1,058,406,550 $2,413,373
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
--- ------- -------
$1,060,137,375 $234,411 $448,137
ADDITIONAL INFORMATION (UNAUDITED)
RENEWAL OF INVESTMENT ADVISORY AGREEMENT
Renewal until June 30, 2010 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, 2009. At
a meeting called and held for the foregoing 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, 2009;
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 their shares
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.
The Board noted that the Adviser, with the intent of addressing risk in
the financial markets, had modified its current investment strategy for each of
the funds by:
1) Selling securities when appropriate to reduce risk, while
deemphasizing yield;
2) Utilizing new permitted investments, including securities issued or
guaranteed by the Federal Deposit Insurance Corporation and
Treasury-backed municipal bonds to be repaid by government
securities held in escrow; and
3) Making expanded use of money-market funds in order to capture higher
rates of return as short-term interest rates continued to fall.
Furthermore, with respect to the Cash Fund and the Government Securities
Fund, the Adviser has managed the investment portfolios in order to achieve AAA
ratings 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
exemplary in light of the severe market conditions, 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
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 comparable 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 noted that the Adviser had recently taken action to maintain a
positive yield for shareholders of the Funds. In response to interest rates
which had declined to historically low levels, a) the Adviser had waived, and
may continue to waive, a portion of its management fees for the Government
Securities Fund and, subsequent to the time of the contract renewal, the Adviser
waived a portion of its management fees for the other two funds; and b) payments
of certain fees under each of the funds' Distribution Plans for Service Shares
had been, and may continue to be, reduced. It had informed the Trust that it
intends to continue to take reasonably practicable steps to maintain a positive
yield for shareholders of each of the funds.
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 until the fourth quarter of 2008. The
Trustees also noted that the materials indicated that each portfolio's fees were
generally comparable to those of its peers, including those with breakpoints. In
addition it was observed that on July 23, 2008 a new Advisory Agreement for each
fund incorporating breakpoints in fee rates had become effective; it addressed
questions of economies of scale to the Trustees' satisfaction and had been
approved by shareholders on July 16, 2008. Evaluation of this factor indicated
to the Board that each Advisory Agreement should be renewed without a change of
breakpoints at this time.
BENEFITS DERIVED OR TO BE DERIVED BY THE ADVISER AND ITS AFFILIATES FROM THE
RELATIONSHIP WITH THE TRUST (AND EACH OF ITS PORTFOLIOS).
The Board observed that, as is generally true of most fund complexes, the
Adviser and its affiliates, by providing services to a number of funds or other
investment clients including the Trust's three portfolios, were able to spread
costs as they would otherwise be unable to do. The Board noted that while that
produces efficiencies and increased profitability for the Adviser and its
affiliates, it also makes their services available to the three portfolios of
the Trust at favorable levels of quality and cost which are more advantageous to
the Trust's portfolios than would otherwise have been possible.
INFORMATION AVAILABLE (UNAUDITED)
Much of the information that the funds in the Aquila Group of Funds
produce is automatically sent to you and all other shareholders. Specifically,
you are routinely sent your Trust's entire list of portfolio securities twice a
year in the semi-annual and annual reports you receive. Additionally, under
Trust policies, the Administrator publicly discloses the complete schedule of
the Trust's portfolio holdings, as of each calendar quarter, generally by the
15th day after the end of each calendar quarter. Such information remains
accessible until the next schedule is made publicly available. You may obtain a
copy of the Trust's portfolio holding schedule for the most recently completed
period by visiting the Trust's website at www.aquilafunds.com. This information
remains on the website until the next such posting. Whenever you wish to see a
listing of your Trust's portfolio other than in your shareholder reports, please
check our website at 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 quarter ends
of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the
SEC website at www.sec.gov. You may also review or, for a fee, copy the forms at
the SEC's Public Reference Room in Washington, D.C. or by calling
1-800-SEC-0330.
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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, 2009 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 www.sec.gov.
INVESTMENT ADVISER
Asset Management Group of Bank of Hawaii
P.O. Box 3170 o Honolulu, Hawaii 96802
ADMINISTRATOR
Aquila Investment Management LLC
380 Madison Avenue, Suite 2300 o New York, New York 10017
BOARD OF TRUSTEES
Theodore T. Mason, Chair
Diana P. Herrmann, Vice Chair
Thomas W. Courtney
Stanley W. Hong
Richard L. Humphreys
Bert A. Kobayashi, Jr.
Glenn P. O'Flaherty
Russell K. Okata
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, NY 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, OH 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 filing 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
that information required to be disclosed in the registrant's reports that are
filed under the Securities Exchange Act of 1934 are accumulated and communicated
to 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 3, 20009
By: /s/ Joseph P. DiMaggio
- ------------------------------------
Chief Financial Officer and Treasurer
December 3, 2009
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 3, 2009
By: /s/ Joseph P. DiMaggio
- ------------------------------------
Joseph P. DiMaggio
Chief Financial Officer and Treasurer
December 3, 2009
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.