UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-8572
BISHOP STREET FUNDS
(Exact name of registrant as specified in charter)
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2 Oliver Street
Boston, MA 02109
(Address of principal executive offices) (Zip code)
DST Systems Inc.
Kansas City, MO 64141
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 610-254-1000
DATE OF FISCAL YEAR END: DECEMBER 31, 2003
DATE OF REPORTING PERIOD: JUNE 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
[Background Compass Graphic Omitted]
BISHOP STREET
FUNDS
SEMI-ANNUAL
REPORT JUNE 30, 2003
EQUITY FUND
STRATEGIC GROWTH FUND
TAX MANAGED EQUITY FUND
HIGH GRADE INCOME FUND
HAWAII MUNICIPAL BOND FUND
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
INVESTMENT ADVISER
BISHOP STREET
CAPITAL MANAGEMENT
[BISHOP STREET FUNDS Logo Omitted]
YOUR AVENUE
TO SOUND INVESTMENT
<page>
[Inside Cover Graphic Omitted]
<page>
BISHOP STREET
TABLE OF CONTENTS
FUNDS
LETTER TO SHAREHOLDERS............................................. 2
INVESTMENT ADVISER'S REPORT........................................ 4
EQUITY FUND
Management Discussion........................................ 6
Statement of Net Assets...................................... 8
STRATEGIC GROWTH FUND
Management Discussion........................................ 14
Statement of Net Assets...................................... 16
TAX MANAGED EQUITY FUND
Management Discussion........................................ 20
Statement of Net Assets...................................... 22
HIGH GRADE INCOME FUND
Management Discussion........................................ 28
Statement of Net Assets...................................... 30
HAWAII MUNICIPAL BOND FUND
Management Discussion........................................ 36
Statement of Net Assets...................................... 38
MONEY MARKET & Treasury Money Market Funds
Management Discussion........................................ 48
Statements of Net Assets..................................... 49
Statements of Operations........................................... 56
Statements of Changes in Net Assets................................ 58
Financial Highlights............................................... 62
Notes to Financial Statements...................................... 66
Board of Trustees and Officers..................................... 72
1
BISHOP STREET
LETTER TO SHAREHOLDERS
FUNDS
[Photo Omitted]
Gregory Ratte
DEAR SHAREHOLDER:
Risk paid off in financial markets in the second quarter. In the U.S. equity
market, the top performing popular benchmark was the technology-heavy NASDAQ
composite, up a whopping 21.1% versus a still very respectable 15.4% for the
broad S&P 500 Composite Index. At the same time, small- and mid-cap stocks
handily beat their more mature large-cap cousins, while on average the much
beleaguered international markets -- led by the riskiest emerging markets --
substantially outpaced the U.S. Finally, in the fixed-income markets, junk
bonds, or "high-yield credits" in polite society, outperformed all other more
conservative fixed-income securities.
On the economic front, the story was much more mixed. While the Federal Reserve
Bank's (Fed) May deflation alert sent interest rates to fresh multi-decade lows,
and the President's tax plan promised immense fiscal stimulus, the economy
itself has remained stubbornly weak. The expected post-war capital spending
recovery has still not materialized and unemployment continues to rise.
Meanwhile, mildly deflationary recessions in both Japan and Germany have added
to U.S. softness despite the near-term salutary effects of a weaker U.S. dollar.
The only bright spot remains the American consumer, who continued to refinance
and spend with abandon, despite declining employment and stagnating incomes.
Given the unprecedented government stimulus, the still vibrant consumer and a
projected recovery in business spending, the second half of the year should show
an economy expanding at more than twice the rate in the first half. This
Bishop Street Funds 2
[BISHOP STREET FUNDS Logo Omitted]
would still be below the normal surge in an economy rebounding from a recession,
but that is to be expected given the mild nature of the recession. Although the
weak international economy and the lingering excesses of the 1990's investment
bubble should cap the economy over the near term, a stronger end to this year
should provide momentum for an even stronger 2004.
On the fixed-income front, we believe that the great bull market in bonds that
began in 1982 is probably over. During that period, the yield on the ten-year
Treasury note dropped from 15% to under 3 1/4% in June as inflation was wrung
out of the system. Given the Fed's promise to aggressively counter any whiff of
deflation, along with a very easy monetary policy, significant fiscal stimulus
and a weak currency, yields on Treasury bonds have likely bottomed. In the near
term, the Fed's stated intention to hold short rates steady will anchor the
yield curve and keep intermediate- and long-term rates from rising too much.
That said, the "salad days" of high-coupons and capital gains on bonds due to
falling interest rates are behind us. As in the stock market, investors should
expect lower nominal bond returns in the years ahead. All in all the outlook is
for steady economic healing, but probably modest financial market returns once
the equity market has stabilized.
Thank you for your continued support and confidence.
Sincerely,
/s/ Gregory Ratte
Gregory Ratte
Chief Investment Officer
Bishop Street Capital Management
June 30, 2003 3 www.bishopstreetfunds.com
BISHOP STREET
INVESTMENT ADVISER'S REPORT
FUNDS
Since the beginning of the year, government authorities have been doing
everything possible to set a recovery in motion. At the June 25th Federal Open
Market Committee (FOMC) meeting, the Fed cut their policy lending rate another
25 basis points to 1%. Mortgage refinancing is back at record levels, which will
result in additional cash in consumer's pockets. The Bush Administration pushed
through another tax cut, which could add $210 billion to the economy over the
next fifteen months. This combined monetary and fiscal stimulus has injected
tremendous additional liquidity into the financial system. In addition,
consumers and corporations alike have been repairing their balance sheets, which
will support economic growth once demand returns.
A decisive military victory in Iraq early in the period helped to reduce
geopolitical uncertainties and kick-start a 4-month climb in U.S. equities. All
major indices surged: the S&P 500 Composite Index advanced 12% for the 6-month
period, and small caps were standouts with the Russell 2000 Index up 18%.
Although early in the year the negative war sentiment influenced money market
yields, in the second quarter yields have been heading higher. Prior to the last
Fed meeting, 2-year Treasury yields reached 1.07%. With the Fed rate decrease
only 1/4 of a point, bond yields rose sharply as investors concluded that
interest rates had bottomed. The money market yield curve, which remained flat
since mid-March, steepened slightly at the end of the period as well.
Through much of the first half of the year, the money market world focused on
potential rate cuts at the FOMC meetings in March and June. Although the Fed
left short-term rates unchanged in March, with the Fed 1/4 point rate cut at the
end of June the Federal funds rate reached the lowest rate in 45 years.
Heightened industry attention to the pending rate cuts was a result of the
Bishop Street Funds 4
[BISHOP STREET FUNDS Logo Omitted]
increasingly small spread between money market yields and expense ratios. With
13 rate reductions since 2001, the industry has been struggling to cut fees and
keep yields positive. Additional pressure has been added by the increased
competition from bank deposits seeking to attract money market fund customers.
Although some industry experts believe that the 1/4 point cut left room for the
Fed to cut rates further should the economic recovery stall, it is likely that
short-term interest rates will remain low for the foreseeable future in order to
protect against potential deflation and allow the economy to gain traction.
June 30, 2003 5 www.bishopstreetfunds.com
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
Equity Fund
- --------------------------------------------------------------------------------
In the second quarter of 2003, U.S. equity markets sustained the rally which
began in mid-March, as investors turned their attention away from Iraq towards
an improving economic picture. Despite some downward pressure in its closing
days, the quarter saw the S&P 500 Composite Index jump 15.4%, the strongest
quarterly performance since 1998 and one of the three best quarters in the past
15 years. For the six months ended June 30, 2003, the Index is up 11.8%. All
sectors of the stock market showed absolute gains for the quarter, led by
economically sensitive sectors (financials, consumer discretion, information
technology) and previously beaten-down sectors (telecom and utilities). More
defensive healthcare, consumer staples, and energy stocks lagged the Index.
Stock prices appear to be discounting significant economic recovery in the
second half of the year, despite scant confirmation that the widely expected
post-war bounce has yet materialized. Investors evidently are betting that the
positive effects of tax cuts, low interest rates, and a weaker dollar will begin
to be seen shortly. We are generally in agreement with that view, but note that
the economic recovery remains fragile.
For the second quarter, the Bishop Street Equity Fund Institutional Class
Shares* returned 14.1%, slightly lagging the S&P 500 Composite Index's total
return of 15.4%. This moderate underperformance was driven primarily by the
Fund's large-cap orientation, as mid-cap and small-cap stocks strongly led the
market during the quarter. Year to date, the Fund is up 11.2%. We remain
confident that our focus on financially strong companies in growing markets will
provide superior return relative to risk, and reward investors with longer-term
time horizons.
* During the second quarter ended June 30, 2003, the Bishop Street Equity Fund
(Class A Shares) produced a total return of 13.9%. Including the maximum
sales charge of 5.75%, total return was 7.5%. Past performance is no
guarantee of future results.
Bishop Street Funds 6
Equity Fund (UNAUDITED)
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PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
BISHOP STREET EQUITY FUND, INSTITUTIONAL CLASS OR CLASS A, VERSUS THE S&P 500
COMPOSITE INDEX AND THE CONSUMER PRICE INDEX.
[Line Graph Omitted] Plot Points as Follows:
Bishop Street Bishop Street
Equity Fund, Equity Fund, S&P 500 Consumer
Institutional Class# Class A#+ Composite Index Price Index
1/31/97 $10,000 $ 9,425 $10,000 $10,000
6/97 11,105 10,466 11,351 10,060
12/97 12,032 11,340 12,551 10,151
6/98 14,165 13,351 14,773 10,201
12/98 16,008 15,088 16,141 10,293
6/99 17,807 16,784 18,139 10,386
12/99 19,909 18,739 19,535 10,553
6/00 19,698 18,497 19,453 10,765
12/00 16,684 15,649 17,757 10,906
6/01 13,901 12,281 16,567 11,115
12/01 12,411 10,947 15,646 11,070
6/02 10,269 9,045 13,587 11,226
12/02 9,301 8,192 12,188 11,338
6/03 10,342 9,091 13,621 11,463
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
#Account value if you reinvested income and capital gains.
AVERAGE ANNUAL TOTAL RETURNS++
- ----------------------------------------------------------
SIX ONE ANNUALIZED ANNUALIZED ANNUALIZED
MONTH YEAR 3 YEAR 5 YEAR INCEPTION
RETURN+++ RETURN RETURN RETURN TO DATE
- ----------------------------------------------------------
11.19% 0.71% -19.33% -6.10% 0.68% Institutional Class*
- ----------------------------------------------------------
10.98% 0.51% -19.52% -6.30%+ -11.14% Class A**
- ----------------------------------------------------------
4.56% -5.22% -21.10% -7.40%+ -12.43% Class A, with load***
- ----------------------------------------------------------
* Commenced operations on 01/30/97.
** Commenced operations on 06/14/99.
*** Reflects 5.75% sales charge.
+ Prior performance information represents performance of the Institutional
Class, which was offered on 01/30/97. Institutional Class performance has
been adjusted to reflect the Class A sales charge, but has not been adjusted
to reflect Class A Rule 12b-1 fees and expenses. Had that adjustment been
made, performance would be lower than that shown.
++ Returns shown do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
+++ The six month return has not been annualized.
June 30, 2003 7 www.bishopstreetfunds.com
Equity Fund (UNAUDITED)
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TOP TEN EQUITY HOLDINGS*
--------------------------------------------------------------------------
Percentage of
Investments*
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1. Pfizer 4.9%
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2. General Electric 3.6%
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3. Amgen 3.3%
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4. American International Group 3.0%
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5. Bank of America 3.0%
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6. Wal-Mart Stores 2.9%
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7. Microsoft 2.8%
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8. Johnson & Johnson 2.7%
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9. Symantec 2.7%
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10. Citigroup 2.7%
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*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
STATEMENT OF NET ASSETS
Market
Value
Shares (000)
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COMMON STOCK -- 96.7%
ADVERTISING -- 1.7%
32,630 Omnicom Group (A) $ 2,340
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AEROSPACE & DEFENSE -- 1.7%
32,810 General Dynamics 2,379
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AIR FREIGHT & COURIERS -- 1.4%
30,890 United Parcel Service, Cl B (A) 1,968
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BANKS -- 8.3%
51,140 Bank of America 4,042
55,720 Mellon Financial 1,546
54,150 Washington Mutual 2,236
71,040 Wells Fargo 3,581
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11,405
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BIOTECHNOLOGY -- 4.8%
67,130 Amgen* 4,460
80,960 Baxter International 2,105
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6,565
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Bishop Street Funds 8
Equity Fund (UNAUDITED)
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STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
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BROADCASTING & CABLE -- 2.7%
53,020 Clear Channel Communications* $ 2,248
45,894 Univision Communications, Cl A* (A) 1,395
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3,643
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CHEMICALS - DIVERSE -- 0.8%
45,680 Ecolab (A) 1,169
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COMPUTER HARDWARE -- 0.8%
35,000 Dell Computer* 1,119
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DIVERSE FINANCIAL SERVICES -- 4.6%
85,193 Citigroup 3,646
15,411 Fannie Mae 1,039
18,740 Goldman Sachs Group 1,570
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6,255
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ELECTRICAL SERVICES -- 0.4%
28,480 Duke Energy 568
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FOOD DISTRIBUTORS -- 1.5%
67,940 Sysco 2,041
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GENERAL MERCHANDISE -- 5.0%
36,690 Michaels Stores* (A) 1,396
40,660 Target 1,539
73,760 Wal-Mart Stores 3,959
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6,894
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HEALTHCARE - DISTRIBUTION/SERVICES -- 1.7%
47,700 UnitedHealth Group 2,397
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HOTELS -- 1.1%
47,310 Carnival (A) 1,538
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HOUSEHOLD PRODUCTS -- 1.8%
27,710 Procter & Gamble 2,471
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INDUSTRIAL CONGLOMERATES -- 5.1%
16,540 3M 2,134
170,405 General Electric 4,887
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7,021
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INDUSTRIAL GASES -- 1.7%
38,100 Praxair 2,290
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June 30, 2003 9 www.bishopstreetfunds.com
Equity Fund (UNAUDITED)
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STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
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INSURANCE - MULTI-LINE -- 6.5%
35,090 Allstate $ 1,251
22,980 AMBAC Financial Group 1,522
73,245 American International Group 4,042
131,107 Travelers Property Casualty, Cl B 2,068
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8,883
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INTEGRATED TELECOMMUNICATION SERVICES -- 2.8%
43,200 SBC Communications 1,104
67,450 Verizon Communications 2,661
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3,765
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MACHINERY - INDUSTRIAL -- 3.2%
33,410 Illinois Tool Works (A) 2,200
50,750 SPX* (A) 2,236
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4,436
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MOVIES & ENTERTAINMENT -- 0.7%
50,660 Walt Disney 1,000
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OIL & GAS - DRILLING -- 1.6%
94,350 GlobalSantaFe 2,202
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OIL & GAS - EQUIPMENT/SERVICES -- 1.2%
35,420 Schlumberger 1,685
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OIL & GAS - EXPLORATION/PRODUCTION -- 1.0%
25,870 Devon Energy 1,381
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OIL & GAS - INTEGRATED -- 2.3%
87,240 Exxon Mobil 3,133
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PHARMACEUTICALS -- 11.2%
41,810 Abbott Laboratories 1,829
12,690 Forest Laboratories* 695
71,338 Johnson & Johnson 3,688
195,042 Pfizer 6,661
53,891 Wyeth 2,455
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15,328
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PRINTING & PUBLISHING -- 0.7%
22,490 Viacom, Cl B* 982
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RETAIL - BEVERAGES -- 0.9%
25,410 Anheuser-Busch 1,297
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Bishop Street Funds 10
Equity Fund (UNAUDITED)
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STATEMENT OF NET ASSETS
(CONTINUED)
Market
Shares/Face Value
Amount (000) (000)
------------ ---------
RETAIL - HOME IMPROVEMENT -- 0.9%
38,760 Home Depot $ 1,284
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RETAIL - TOBACCO -- 1.1%
32,800 Altria Group 1,490
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SEMI-CONDUCTORS -- 2.4%
71,630 Intel 1,489
57,852 Linear Technology (A) 1,863
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3,352
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SEMI-CONDUCTORS EQUIPMENT -- 1.4%
125,150 Applied Materials* 1,985
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SOFT DRINKS -- 1.8%
55,090 PepsiCo 2,451
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SYSTEMS SOFTWARE -- 8.2%
129,710 BEA Systems* (A) 1,409
58,716 Mercury Interactive* (A) 2,267
151,434 Microsoft 3,878
83,412 Symantec* 3,658
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11,212
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TELECOMMUNICATION EQUIPMENT -- 2.1%
171,770 Nokia ADR 2,822
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WIRELESS TELECOMMUNICATION SERVICES -- 1.6%
109,300 Vodafone Group ADR (A) 2,148
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TOTAL COMMON STOCK (Cost $133,289) 132,899
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CORPORATE OBLIGATIONS (B) -- 4.8%
BANKS -- 4.7%
AMEX Centurion Bank, MTN
$1,629 1.054%, 09/24/03 1,629
Bear Stearns, MTN
3,257 1.505%, 02/03/04 3,257
Washington Mutual Bank
1,629 1.180%, 11/26/03 1,629
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TOTAL CORPORATE OBLIGATIONS (Cost $6,515) 6,515
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June 30, 2003 11 www.bishopstreetfunds.com
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Face Amount Value
(000)/Shares (000)
------------ ---------
COMMERCIAL PAPER (B) -- 4.5%
Countrywide Home Loans
$2,932 1.500%, 07/01/03 $ 2,932
Four Winds Funding
3,257 1.550%,07/01/03 3,257
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TOTAL COMMERCIAL PAPER (Cost $6,189) 6,189
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CASH EQUIVALENTS -- 2.5%
1,725,471 Dreyfus Cash Management Fund 1,725
1,725,472 Fidelity Institutional Money Market Fund 1,725
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TOTAL CASH EQUIVALENTS (Cost $3,450) 3,450
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REPURCHASE AGREEMENTS (B) -- 4.1%
Bank of America, 1.440%, dated 06/30/03, due
07/01/03, repurchase price $3,782,239 (collateralized
by a mortgage obligation total par value $5,314,317,
6.000%,
$3,782 05/20/33: total market value $3,971,193) 3,782
Lehman Brothers, 1.455%, dated 06/30/03, due
07/01/03, repurchase price $1,845,721 (collateralized
by a mortgage obligation total par value $1,882,947,
4.000%,
1,846 05/25/33: total market value $1,938,281) 1,846
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TOTAL REPURCHASE AGREEMENTS (Cost $5,628) 5,628
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TOTAL INVESTMENTS (Cost $155,071) -- 112.6% 154,681
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OTHER ASSETS AND LIABILITIES -- (12.6)%
Payable Upon Return of Securities Loaned (18,332)
Investment Adviser Fees Payable (82)
Administrative Fees Payable (13)
Other Assets and Liabilities, Net 1,150
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TOTAL OTHER ASSETS AND LIABILITIES (17,277)
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Bishop Street Funds 12
Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
(000)
---------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 16,279,553 Outstanding Shares of
Beneficial Interest $199,350
Fund Shares of Class A (unlimited authorization -- no par value)
Based on 183,251 Outstanding Shares of Beneficial Interest 6,763
Distributions in Excess of Net Investment Income (9)
Accumulated Net Realized Loss on Investments (68,310)
Net Unrealized Depreciation on Investments (390)
--------
TOTAL NET ASSETS -- 100.0% $137,404
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS
($135,883,293 / 16,279,553 SHARES) $ 8.35
========
NET ASSET VALUE, REDEMPTION
PRICE PER SHARE -- CLASS A
($1,520,980 / 183,251 SHARES) $ 8.30
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($8.30 / 94.25%) $ 8.81
========
* NON-INCOME PRODUCING SECURITY
(A) THE SECURITY OR A PORTION OF THIS SECURITY IS ON LOAN AT JUNE 30, 2003 (SEE
NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS). THE TOTAL VALUE OF SECURITIES
ON LOAN AT JUNE 30, 2003 WAS $17,661,011.
(B) THESE SECURITIES WERE PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING (SEE NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS). THE
TOTAL VALUE OF SUCH SECURITIES AS OF JUNE 30, 2003 WAS $18,332,313.
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
MTN -- MEDIUM TERM NOTE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 13 www.bishopstreetfunds.com
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
Strategic Growth Fund
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The U.S. market performed strongly this quarter, with the S&P 500 Composite and
Nasdaq 100 Indices rising some 15.4% and 18.0%, respectively. Hopes of a
stabilizing economy after the end of the war and a growing number of positive
earnings revisions backed by more confident feedback from corporations fueled
this rally.
The Strategic Growth Fund portfolio strongly outperformed the S&P 500 Composite
Index benchmark for the second quarter, returning 18.9% as compared to 15.4% for
the quarter. Five holdings were replaced in the portfolio during the quarter,
with a globally neutral impact on sector exposures. The portfolio's strong
performance was driven by companies across a wide range of industries: the top
10 performers belonging to 9 different industry groups, ranging from credit
cards to hardware and healthcare services.
While the economic rebound is less strong than we had hoped to see after the
war, we continue to believe that the recovery is on track. Better corporate
earnings will also help market confidence build up gradually for the
medium-term, regardless of any short-term correction following the recent rise.
This makes us confident that the current situation is sustainable, although a
short-term correction would not be abnormal after the strong performance of the
last few months. Both second quarter earnings and the outlook for the rest of
the year should reflect the beneficial effects of exchange rates and interest
rates, and help current valuations look acceptable.
Because we don't know when demand will start picking up, however, we expect our
quantitative model to keep the current global sector exposures unchanged for the
moment, rather than shift further to economically-sensitive holdings. Therefore,
it is likely that portfolio turnover in the near term will be driven primarily
by company-specific factors rather than macroeconomics.
Bishop Street Funds 14
Strategic Growth Fund (UNAUDITED)
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PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE BISHOP STREET
STRATEGIC GROWTH FUND INSTITUTIONAL CLASS VERSUS THE S&P 500/BARRA GROWTH
INDEX, THE S&P 500 COMPOSITE INDEX, THE CONSUMER PRICE INDEX AND THE LIPPER
LARGE CAP GROWTH CLASSIFICATION.
[Line Graph Omitted] Plot Points as Follows:
Bishop Street S&P 500 S&P 500 Consumer Lipper Large
Strategic Growth Fund, /BARRA Composite Price Cap Growth
Institutional Class# Growth Index Index Index Classificiation
7/1/02 $10,000 $10,000 $10,000 $10,000 $10,000
7/02 9,060 9,520 9,220 10,020 9,255
8/02 9,160 9,580 9,281 10,040 9,279
9/02 8,289 8,588 8,272 10,060 8,445
10/02 8,769 9,383 9,000 10,080 9,119
11/02 9,199 9,838 9,530 10,090 9,512
12/02 8,639 9,198 8,970 10,100 8,843
1/03 8,599 8,969 8,735 10,131 8,666
2/03 8,489 8,942 8,604 10,191 8,594
3/03 8,669 9,123 8,687 10,222 8,756
4/03 9,469 9,734 9,403 10,191 9,376
5/03 9,960 10,052 9,898 10,191 9,831
6/03 10,309 10,235 10,025 10,212 9,922
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
#Account value if you reinvested income and capital gains.
AVERAGE ANNUAL TOTAL RETURNS+
-------------------------
SIX CUMULATIVE
MONTH INCEPTION
RETURN++ TO DATE
-------------------------
19.33% 3.10% Institutional Class*
-------------------------
* Commenced operations on 07/01/02.
+ Returns shown do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
++ The six month return has not been annualized.
June 30, 2003 15 www.bishopstreetfunds.com
Strategic Growth Fund (UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS
--------------------------------------------------------------------------
Percentage of
Investments
------------------------------------------------------------------------
1. International Game Technology 2.2%
------------------------------------------------------------------------
2. Gilead Sciences 2.2%
------------------------------------------------------------------------
3. Capital One Financial 2.2%
------------------------------------------------------------------------
4. Apollo Group, Cl A 2.2%
------------------------------------------------------------------------
5. Oxford Health Plans 2.1%
------------------------------------------------------------------------
6. UnitedHealth Group 2.1%
------------------------------------------------------------------------
7. eBay 2.1%
------------------------------------------------------------------------
8. Amgen 2.1%
------------------------------------------------------------------------
9. Hewlett-Packard 2.1%
------------------------------------------------------------------------
10. Barr Laboratories 2.1%
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STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
Market
Value
Shares (000)
--------- ---------
COMMON STOCK -- 99.9%
AEROSPACE & DEFENSE -- 1.9%
7,200 United Technologies $ 510
--------
BANKS -- 4.0%
18,500 SouthTrust 503
13,100 Washington Mutual 541
--------
1,044
--------
BIOTECHNOLOGY -- 2.1%
8,400 Amgen* 558
--------
CASINOS -- 2.2%
5,600 International Game Technology* 573
--------
COMPUTER HARDWARE -- 4.0%
15,200 Dell Computer* 486
26,200 Hewlett-Packard 558
--------
1,044
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Bishop Street Funds 16
Strategic Growth Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
-------- ---------
COMPUTER SYSTEMS & SERVICES -- 5.7%
10,400 Affiliated Computer Services, Cl A* $ 476
29,700 Cendant* 544
11,400 First Data 472
--------
1,492
--------
DIVERSE FINANCIAL SERVICES -- 6.1%
11,600 Capital One Financial 571
7,100 Fannie Mae 479
16,100 JP Morgan Chase 550
--------
1,600
--------
E-COMMERCE -- 2.1%
5,400 eBay* 563
--------
EDUCATIONAL SERVICES -- 2.1%
9,200 Apollo Group, Cl A* 568
--------
ELECTRONIC EQUIPMENT/INSTRUMENTS -- 2.0%
12,300 L-3 Communications Holdings* 535
--------
GENERAL MERCHANDISE -- 11.7%
13,000 Bed Bath & Beyond* 505
12,200 Best Buy* 536
12,400 Lowe's 533
16,200 Sears Roebuck 545
25,800 Staples* 473
17,000 Yum! Brands* 502
--------
3,094
--------
HEALTHCARE - DISTRIBUTION/SERVICES -- 12.4%
20,200 Caremark Rx* 519
8,000 Express Scripts* 546
13,400 Oxford Health Plans* 563
9,500 St. Jude Medical* 546
11,200 UnitedHealth Group 563
6,200 WellPoint Health Networks* 523
--------
3,260
--------
INDUSTRIAL CONGLOMERATES -- 2.0%
27,700 Tyco International 526
--------
INSURANCE - MULTI-LINE -- 5.8%
6,500 Everest Re Group 497
11,400 MGIC Investment 532
10,800 RenaissanceRe Holdings 492
--------
1,521
--------
June 30, 2003 17 www.bishopstreetfunds.com
Strategic Growth Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
-------- ---------
MISCELLANEOUS CONSUMER SERVICES -- 2.1%
12,700 H&R Block $ 549
--------
MOTORCYCLE MANUFACTURERS -- 1.8%
11,800 Harley-Davidson 470
--------
NETWORKING EQUIPMENT -- 1.8%
28,600 Cisco Systems* 477
--------
PHARMACEUTICALS -- 10.3%
8,450 Barr Laboratories* 553
11,000 Biovail* 518
8,500 Cardinal Health 547
9,700 Forest Laboratories* 531
10,300 Gilead Sciences* 572
--------
2,721
--------
RETAIL - AUTOMOTIVE -- 2.0%
7,000 Autozone* 532
--------
SEMI-CONDUCTORS -- 8.0%
21,700 Broadcom, Cl A* 540
24,700 Intel 513
22,000 Microchip Technology 542
10,400 QLogic* 503
--------
2,098
--------
SYSTEMS SOFTWARE -- 3.9%
7,000 Electronic Arts* 518
11,400 Intuit* 508
--------
1,026
--------
TELECOMMUNICATION EQUIPMENT -- 3.8%
27,600 Nextel Communications, Cl A* 499
13,800 Qualcomm 493
--------
992
--------
WHOLESALE - FOOD -- 2.1%
17,550 Dean Foods* 553
--------
TOTAL COMMON STOCK (Cost $21,624) 26,306
--------
TOTAL INVESTMENTS (COST $21,624) -- 99.9% 26,306
--------
Bishop Street Funds 18
Strategic Growth Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
(000)
---------
OTHER ASSETS AND LIABILITIES -- 0.1%
Investment Adviser Fees Payable $ (15)
Administrative Fees Payable (2)
Other Assets and Liabilities, Net 33
--------
TOTAL OTHER ASSETS AND LIABILITIES 16
--------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 2,552,756 Outstanding Shares of
Beneficial Interest 24,940
Accumulated Net Investment Loss (94)
Accumulated Net Realized Loss on Investments (3,206)
Net Unrealized Appreciation on Investments 4,682
--------
TOTAL NET ASSETS -- 100.0% $ 26,322
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $ 10.31
========
* NON-INCOME PRODUCING SECURITY
CL -- CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 19 www.bishopstreetfunds.com
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
Tax Managed Equity Fund
- --------------------------------------------------------------------------------
For the second quarter, the Bishop Street Tax-Managed Fund returned 12.8%,
moderately underperforming the S&P 500 Composite Index total return of 15.4%.
The Fund's conservative structure (favoring less volatile, larger-capitalization
stocks), may have contributed to lagging performance during periods of very
strong rising markets, as was seen in the second quarter. In addition, profits
were actively harvested in the quarter, offset by losses taken earlier in the
year, helping to mitigate ordinary capital gains treatment within the Fund.
Despite the weak U.S. economic results and stagnant corporate earnings, we
continue to believe that our conservative positioning and active tax management
will reward investors over the long-term.
Bishop Street Funds 20
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE BISHOP STREET
TAX MANAGED EQUITY FUND INSTITUTIONAL CLASS VERSUS THE S&P 500 COMPOSITE INDEX,
THE CONSUMER PRICE INDEX AND THE LIPPER LARGE CAP CORE CLASSIFICATION.
[Line Graph Omitted] Plot Points as Follows:
Bishop Street
Tax Managed S&P 500 Lipper Large
Equity Fund, Composite Consumer Cap Core
Institutional Class# Index Price Index Classification
11/13/02 $10,000 $10,000 $10,000 $10,000
11/02 10,480 10,589 10,010 10,507
12/02 9,843 9,966 10,020 9,891
1/03 9,543 9,705 10,050 9,630
2/03 9,402 9,560 10,110 9,486
3/03 9,501 9,652 10,141 9,573
4/03 10,254 10,448 10,110 10,302
5/03 10,665 10,998 10,110 10,812
6/03 10,713 11,139 10,131 10,918
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
#Account value if you reinvested income and capital gains.
AVERAGE ANNUAL TOTAL RETURNS+
-------------------------
SIX CUMULATIVE
MONTH INCEPTION
RETURN++ TO DATE
-------------------------
8.84% 7.13% Institutional Class*
-------------------------
* Commenced operations on 11/13/02.
+ Returns shown do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
++ The six month return has not been annualized.
June 30, 2003 21 www.bishopstreetfunds.com
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS
--------------------------------------------------------------------------
Percentage of
Investments
------------------------------------------------------------------------
1. Pfizer 4.1%
------------------------------------------------------------------------
2. General Electric 3.8%
------------------------------------------------------------------------
3. Microsoft 3.0%
------------------------------------------------------------------------
4. Exxon Mobil 3.0%
------------------------------------------------------------------------
5. Wal-Mart Stores 2.8%
------------------------------------------------------------------------
6. Symantec 2.4%
------------------------------------------------------------------------
7. Citigroup 2.3%
------------------------------------------------------------------------
8. Bank of America 2.2%
------------------------------------------------------------------------
9. Merck 2.1%
------------------------------------------------------------------------
10. Johnson & Johnson 2.1%
--------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Market
Value
Shares (000)
-------- ---------
COMMON STOCK -- 97.3%
ADVERTISING -- 1.1%
4,960 Omnicom Group $ 356
--------
AEROSPACE & DEFENSE -- 1.2%
5,030 General Dynamics 365
--------
AIR FREIGHT & COURIERS -- 1.0%
4,840 United Parcel Service, Cl B 308
--------
ALUMINUM -- 1.1%
12,960 Alcoa 330
--------
BANKS -- 8.4%
8,590 Bank of America 679
18,010 US Bancorp 441
10,970 Wachovia 438
10,540 Washington Mutual 435
12,230 Wells Fargo 617
--------
2,610
--------
Bishop Street Funds 22
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
-------- ---------
BIOTECHNOLOGY -- 1.3%
4,980 Amgen* $ 331
1,910 Biogen* 72
--------
403
--------
BROADCASTING & CABLE -- 1.8%
3,995 Clear Channel Communications* 169
6,630 EchoStar Communications, Cl A* 229
4,920 Univision Communications, Cl A* 150
--------
548
--------
CHEMICALS - DIVERSE -- 0.8%
3,530 Du Pont EI de Nemours 147
3,460 Ecolab 89
--------
236
--------
COMPUTER HARDWARE -- 2.8%
13,060 Dell Computer* 417
5,400 International Business Machines 446
--------
863
--------
DIVERSE FINANCIAL SERVICES -- 6.6%
7,580 American Express 317
16,560 Citigroup 709
3,600 Fannie Mae 243
2,600 Freddie Mac 132
2,000 Goldman Sachs Group 167
5,760 Merrill Lynch 269
5,210 Morgan Stanley 223
--------
2,060
--------
ELECTRICAL SERVICES -- 1.0%
15,800 Duke Energy 315
--------
FOOTWEAR -- 0.6%
3,640 Nike, Cl B 195
--------
GENERAL MERCHANDISE -- 4.5%
4,765 Bed Bath & Beyond* 185
8,600 Target 326
16,440 Wal-Mart Stores 882
--------
1,393
--------
HEALTHCARE - DISTRIBUTION/SERVICES -- 1.2%
7,380 UnitedHealth Group 371
--------
June 30, 2003 23 www.bishopstreetfunds.com
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
-------- ---------
HOTELS -- 0.4%
4,300 Carnival $ 140
--------
HOUSEHOLD PRODUCTS -- 1.7%
5,970 Procter & Gamble 532
--------
INDUSTRIAL CONGLOMERATES -- 5.4%
3,980 3M 513
40,720 General Electric 1,168
--------
1,681
--------
INDUSTRIAL GASES -- 0.5%
2,610 Praxair 157
--------
INSURANCE - MULTI-LINE -- 4.9%
5,420 AFLAC 167
5,500 Allstate 196
1,620 AMBAC Financial Group 107
10,700 American International Group 590
5,820 MBIA 284
12,650 Travelers Property Casualty, Cl B 200
--------
1,544
--------
INTEGRATED TELECOMMUNICATION SERVICES -- 3.0%
3,070 BellSouth 82
11,760 SBC Communications 300
13,830 Verizon Communications 546
--------
928
--------
MACHINERY - INDUSTRIAL -- 1.7%
4,900 Illinois Tool Works 323
4,900 SPX* 216
--------
539
--------
MOTORCYCLE MANUFACTURERS -- 0.7%
5,755 Harley-Davidson 229
--------
MOVIES & ENTERTAINMENT -- 1.2%
14,750 AOL Time Warner* 237
7,580 Walt Disney 150
--------
387
--------
NETWORKING EQUIPMENT -- 1.9%
36,100 Cisco Systems* 602
--------
Bishop Street Funds 24
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
-------- ---------
OIL & GAS - EQUIPMENT/SERVICES -- 1.3%
11,640 Halliburton $ 268
2,810 Schlumberger 133
--------
401
--------
OIL & GAS - EXPLORATION/PRODUCTION -- 1.5%
6,560 Anadarko Petroleum 292
3,320 Devon Energy 177
--------
469
--------
OIL & GAS - INTEGRATED -- 3.5%
2,160 ChevronTexaco 156
25,720 Exxon Mobil 923
--------
1,079
--------
PERSONAL PRODUCTS -- 1.1%
5,690 Avon Products 354
--------
PHARMACEUTICALS -- 13.5%
8,370 Abbott Laboratories 366
13,470 Bristol-Myers Squibb 366
5,360 Forest Laboratories* 294
12,580 Johnson & Johnson 650
5,400 Medtronic 259
11,010 Merck 667
37,388 Pfizer 1,277
7,320 Wyeth 333
--------
4,212
--------
PRINTING & PUBLISHING -- 1.1%
7,810 Viacom, Cl B* 341
--------
RAILROADS -- 1.1%
6,140 Union Pacific 356
--------
RETAIL - BEVERAGES -- 2.7%
7,470 Anheuser-Busch 382
9,940 Coca-Cola 461
--------
843
--------
RETAIL - DRUGS -- 1.0%
11,170 CVS 313
--------
RETAIL - FOOD -- 0.4%
3,800 Kraft Foods, Cl A 124
--------
June 30, 2003 25 www.bishopstreetfunds.com
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
Shares (000)
-------- ---------
RETAIL - HOME IMPROVEMENT -- 1.5%
13,790 Home Depot $ 457
--------
RETAIL - TOBACCO -- 1.5%
10,000 Altria Group 454
--------
SEMI-CONDUCTORS -- 2.0%
21,740 Intel 452
5,070 Linear Technology 163
--------
615
--------
SOFT DRINKS -- 1.0%
6,880 PepsiCo 306
--------
SPECIALTY STORES -- 0.7%
6,730 Tiffany 220
--------
SYSTEMS SOFTWARE -- 6.9%
3,770 Mercury Interactive* 145
36,250 Microsoft 928
28,360 Oracle* 341
17,000 Symantec* 746
--------
2,160
--------
TELECOMMUNICATION EQUIPMENT -- 0.6%
11,000 Nokia ADR 181
--------
WIRELESS TELECOMMUNICATION SERVICES -- 1.1%
18,000 Vodafone Group ADR 354
--------
TOTAL COMMON STOCK (Cost $28,347) 30,331
--------
CASH EQUIVALENTS -- 2.5%
383,722 Dreyfus Cash Management Fund 384
383,722 Fidelity Institutional Money Market Fund 384
--------
TOTAL CASH EQUIVALENTS (Cost $768) 768
--------
TOTAL INVESTMENTS (COST $29,115) -- 99.8% 31,099
--------
Bishop Street Funds 26
Tax Managed Equity Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
(000)
---------
OTHER ASSETS AND LIABILITIES -- 0.2%
Investment Adviser Fees Payable $ (13)
Administrative Fees Payable (3)
Other Assets and Liabilities, Net 75
--------
TOTAL OTHER ASSETS AND LIABILITIES 59
--------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 2,922,540 Outstanding Shares of
Beneficial Interest 29,126
Distributions in Excess of Net Investment Income (4)
Accumulated Net Realized Gain on Investments 52
Net Unrealized Appreciation on Investments 1,984
--------
TOTAL NET ASSETS -- 100.0% $ 31,158
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $ 10.66
========
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 27 www.bishopstreetfunds.com
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
High Grade Income Fund
- --------------------------------------------------------------------------------
With the war in Iraq and any heightened terrorist threat seemingly behind us,
the financial markets focused on the slow pace of the economic recovery during
the second quarter. The fixed-income markets in particular were preoccupied with
the Federal Reserve's possible deflation scenario and interest rates fell to
multi-decade lows. By the end of the quarter, the Fed had eased interest rates
by 25 basis points but also disappointed the bond market by changing their
assessment of the risk of weakness in the economy from negative to neutral. As a
result, the quarter ended with yields significantly off of their all-time lows,
though interest rates were still approximately 20 to 30 basis points lower than
the first quarter 2003.
Corporate bonds outperformed all other sectors as investors reached for higher
yields than historical low-yielding treasuries. The lower investment grade
sector was the place to be as credit risk paid an additional 200+ basis points
of excess return.
During the quarter, bonds with lower credit ratings appreciated more in price
than those with higher credit ratings, leading to higher returns for the
quarter. The performance of the Fund was therefore hindered by its preference
for higher rated credits, and underperformed against the index, which contains a
greater percentage of lower rated credits. Our slightly short positioning on the
curve also worked against us as the longer maturities had better returns. We
remain slightly short duration, however, and we look to add positive performance
going into the second half of the year and into 2004.
Bishop Street Funds 28
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
BISHOP STREET HIGH GRADE INCOME FUND, INSTITUTIONAL CLASS OR CLASS A, VERSUS
THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT INDEX AND THE CONSUMER PRICE INDEX.
[Line Graph Omitted] Plot Points as Follows:
Bishop Street Bishop Street
High Grade High Grade Lehman Brothers
Income Fund, Income Fund, U.S. Government/ Consumer
Institutional Class# Class A#+ Credit Index Price Index
1/31/97 $10,000 $ 9,525 $10,000 $10,000
6/97 10,216 9,731 10,261 10,060
12/97 10,793 10,280 10,962 10,151
6/98 11,191 10,660 11,419 10,201
12/98 11,774 11,215 12,000 10,293
6/99 11,316 10,755 11,727 10,386
12/99 11,264 10,651 11,741 10,553
6/00 11,778 11,110 12,230 10,765
12/00 12,419 11,701 13,131 10,906
6/01 12,690 11,942 13,592 11,115
12/01 13,307 12,523 14,247 11,070
6/02 13,834 12,990 14,711 11,226
12/02 14,843 13,922 15,818 11,338
6/03 15,521 14,543 16,645 11,463
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
#Account value if you reinvested income and capital gains.
AVERAGE ANNUAL TOTAL RETURNS++
- -----------------------------------------------------------
SIX ONE ANNUALIZED ANNUALIZED ANNUALIZED
MONTH YEAR 3 YEAR 5 YEAR INCEPTION
RETURN+++ RETURN RETURN RETURN TO DATE
- -----------------------------------------------------------
4.57% 12.20% 9.64% 6.76% 7.09% Institutional Class*
- -----------------------------------------------------------
4.46% 11.96% 9.39% 6.41%+ 7.99% Class A**
- -----------------------------------------------------------
-0.51% 6.68% 7.65% 5.37%+ 6.71% Class A, with load***
- -----------------------------------------------------------
* Commenced operations on 01/30/97.
** Commenced operations on 06/14/99.
*** Reflects 4.75% sales charge.
+ Prior performance information represents performance of
the Institutional Class, which was offered on 01/30/97.
Institutional Class performance has been adjusted to
reflect the Class A sales charge, but has not been
adjusted to reflect Class A Rule 12b-1 fees and
expenses. Had that adjustment been made, performance
would be lower than that shown.
++ Returns shown do not reflect the deduction of taxes that
a shareholder would pay on fund distributions or the
redemption of fund shares.
+++ The six month return has not been annualized.
June 30, 2003 29 www.bishopstreetfunds.com
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
Percentage
Coupon Maturity of
Rate Date Investments*
------------------------------------------------------------------------------
1. U.S. Treasury Bond 7.250% 05/15/16 9.3%
------------------------------------------------------------------------------
2. U.S. Treasury Bond 6.250% 08/15/23 3.8%
------------------------------------------------------------------------------
3. FNMA 7.250% 01/15/10 3.6%
------------------------------------------------------------------------------
4. U.S. Treasury Bond 7.500% 11/15/16 3.2%
------------------------------------------------------------------------------
5. Pharmacia 5.750% 12/01/05 2.6%
------------------------------------------------------------------------------
6. Pitney Bowes 5.750% 08/15/08 2.5%
------------------------------------------------------------------------------
7. U.S. Treasury Bond 6.375% 08/15/27 2.4%
------------------------------------------------------------------------------
8. Wal-Mart Stores 8.000% 09/15/06 2.3%
------------------------------------------------------------------------------
9. Abbott Laboratories 6.400% 12/01/06 2.3%
------------------------------------------------------------------------------
10. Avon Products 7.150% 11/15/09 2.2%
- --------------------------------------------------------------------------------
*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
STATEMENT OF NET ASSETS
Face Market
Amount Value
(000) (000)
------- ---------
CORPORATE OBLIGATIONS -- 67.9%
AEROSPACE & DEFENSE -- 5.0%
Boeing
$2,700 7.875%, 02/15/05 $ 2,916
Loral
1,650 7.000%, 09/15/23 1,852
United Technologies
1,800 6.350%, 03/01/11 2,087
--------
6,855
--------
ALUMINUM -- 1.9%
Alcoa, Ser B
2,450 6.125%, 06/15/05 2,661
--------
BANKS -- 13.7%
AMEX Centurion Bank, MTN(B)
3,371 1.054%, 09/24/03 3,371
Bank of America (A)
2,600 4.875%, 01/15/13 2,743
Bear Stearns, MTN (B)
6,742 1.505%, 02/03/04 6,742
Bishop Street Funds 30
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
Washington Mutual Bank (B)
$3,371 1.180%, 11/26/03 $ 3,371
Wells Fargo
2,650 3.500%, 04/04/08 2,733
--------
18,960
--------
BIOTECHNOLOGY -- 2.6%
Pharmacia
3,275 5.750%, 12/01/05 3,581
--------
BROADCASTING & CABLE -- 2.4%
Cox Communications
1,400 6.750%, 03/15/11 1,633
TCI Communications
1,400 7.875%, 08/01/13 1,696
--------
3,329
--------
BUILDING & CONSTRUCTION -- 1.1%
Centex
1,400 5.800%, 09/15/09 1,538
--------
DIVERSE FINANCIAL SERVICES -- 8.9%
Citigroup
2,600 6.750%, 12/01/05 2,899
Countrywide Home Loan, MTN, Ser K
1,400 5.500%, 02/01/07 1,533
General Electric Capital, MTN, Ser A (A)
2,600 5.450%, 01/15/13 2,816
General Motors Acceptance
1,400 6.750%, 01/15/06 1,486
525 4.500%, 07/15/06 535
Goldman Sachs Group
2,600 6.600%, 01/15/12 3,021
--------
12,290
--------
FORESTRY -- 1.2%
Weyerhaeuser
1,420 6.750%, 03/15/12 1,612
--------
GENERAL MERCHANDISE -- 5.4%
Costco
2,600 5.500%, 03/15/07 2,870
Target (A)
1,300 6.350%, 01/15/11 1,500
Wal-Mart Stores
2,625 8.000%, 09/15/06 3,091
--------
7,461
--------
June 30, 2003 31 www.bishopstreetfunds.com
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HOUSEHOLD PRODUCTS -- 2.7%
Avon Products
$2,500 7.150%, 11/15/09 $ 3,028
Newell Rubbermaid
650 6.600%, 11/15/06 734
--------
3,762
--------
INTEGRATED TELECOMMUNICATION SERVICES -- 4.2%
AT&T
1,400 7.000%, 11/15/06 1,557
Dominion Resources (A)
1,400 4.125%, 02/15/08 1,465
Verizon Global (A)
2,700 4.000%, 01/15/08 2,819
--------
5,841
--------
MOVIES & ENTERTAINMENT -- 1.1%
Walt Disney, MTN
1,400 5.500%, 12/29/06 1,526
--------
OIL & GAS - EQUIPMENT/SERVICES -- 2.3%
Baker Hughes
1,300 6.000%, 02/15/09 1,481
Global Marine
1,550 7.000%, 06/01/28 1,756
--------
3,237
--------
OIL & GAS - EXPLORATION/PRODUCTION -- 2.3%
Anadarko Petroleum
1,250 7.200%, 03/15/29 1,488
1,400 6.750%, 05/15/08 1,624
--------
3,112
--------
PHARMACEUTICALS -- 4.5%
Abbott Laboratories
2,700 6.400%, 12/01/06 3,082
Wyeth
1,030 5.875%, 03/15/04 1,062
2,000 5.250%, 03/15/13 2,114
--------
6,258
--------
Bishop Street Funds 32
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
RAILROADS -- 1.2%
CSX
$1,400 6.750%, 03/15/11 $ 1,630
--------
RETAIL - DRUGS -- 0.9%
CVS
1,100 5.625%, 03/15/06 1,205
--------
SEMI-CONDUCTORS -- 2.2%
Applied Materials
350 7.125%, 10/15/17 424
Texas Instruments
2,500 7.000%, 08/15/04 2,645
--------
3,069
--------
SERVICES - OFFICE EQUIPMENT -- 2.4%
Pitney Bowes
3,000 5.750%, 08/15/08 3,386
--------
SOFT DRINKS -- 1.9%
PepsiCo
2,500 4.500%, 09/15/04 2,598
--------
TOTAL CORPORATE OBLIGATIONS (Cost $89,214) 93,911
--------
U.S. TREASURY OBLIGATIONS -- 25.1%
U.S. Treasury Bonds
3,250 7.500%, 11/15/16 (A) 4,412
9,500 7.250%, 05/15/16 (A) 12,634
2,600 6.375%, 08/15/27 3,257
4,200 6.250%, 08/15/23 (A) 5,144
1,350 6.000%, 02/15/26 1,614
U.S. Treasury Notes
2,200 7.500%, 02/15/05 2,423
1,000 7.250%, 08/15/04 (A) 1,069
1,000 7.000%, 07/15/06 (A) 1,156
1,000 5.000%, 08/15/11 (A) 1,122
1,735 4.375%, 08/15/12 (A) 1,860
--------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $29,565) 34,691
--------
June 30, 2003 33 www.bishopstreetfunds.com
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000)/Shares (000)
-------- ---------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 15.1%
FFCB
$ 250 3.950%, 10/22/07 $ 252
FHLB
700 7.570%, 08/19/04 750
2,500 6.250%, 08/13/04 2,641
FHLMC
2,650 3.670%, 02/12/08 2,687
FHLMC MTN, Ser 1
625 6.250%, 08/15/16 655
FNMA
4,000 7.250%, 01/15/10 (A) 4,961
700 5.000%, 08/21/09 703
1,250 4.520%, 10/05/06 1,299
1,500 3.875%, 11/21/05 1,517
2,650 2.750%, 12/16/05 2,671
2,650 2.650%, 02/13/06 2,671
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $20,012) 20,807
--------
COMMERCIAL PAPER (B) -- 9.3%
Countrywide Home Loans
6,068 1.500%, 07/01/03 6,068
Four Winds Funding
6,742 1.550%, 07/01/03 6,742
--------
TOTAL COMMERCIAL PAPER (Cost $12,810) 12,810
--------
REPURCHASE AGREEMENTS (B) -- 8.4%
Bank of America, 1.440%, dated 06/30/03, due
07/01/03, repurchase price $7,827,937 (collateralized
by a mortgage obligation total par value $10,998,812,
6.000%,
7,828 05/20/33: total market value $8,219,006) 7,828
Lehman Brothers, 1.455%, dated 06/30/03, due
07/01/03, repurchase price $3,820,008 (collateralized
by a mortgage obligation total par value $3,897,053,
4.000%,
3,820 05/25/33: total market value $4,011,577) 3,820
--------
TOTAL REPURCHASE AGREEMENTS (Cost $11,648) 11,648
--------
CASH EQUIVALENTS -- 0.3%
211,611 Dreyfus Cash Management Fund 212
211,611 Fidelity Institutional Money Market Fund 212
--------
TOTAL CASH EQUIVALENTS (Cost $424) 424
--------
TOTAL INVESTMENTS (COST $163,673) -- 126.1% 174,291
--------
Bishop Street Funds 34
High Grade Income Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Value
(000)
---------
OTHER ASSETS AND LIABILITIES -- (26.1)%
Payable Upon Return of Securities Loaned $(37,942)
Investment Adviser Fees Payable (53)
Administrative Fees Payable (13)
Other Assets and Liabilities, Net 1,955
--------
TOTAL OTHER ASSETS AND LIABILITIES (36,053)
--------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 12,603,091 Outstanding Shares of
Beneficial Interest 125,576
Fund Shares of Class A (unlimited authorization -- no par value)
Based on 35,650 Outstanding Shares of Beneficial Interest 348
Accumulated Net Realized Gain on Investments 1,696
Net Unrealized Appreciation on Investments 10,618
--------
TOTAL NET ASSETS -- 100.0% $138,238
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS
($137,850,052 / 12,603,091 SHARES) $ 10.94
========
NET ASSET VALUE, REDEMPTION PRICE PER SHARE -- CLASS A
($388,210 / 35,650 SHARES) $ 10.89
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($10.89 / 95.25%) $ 11.43
========
(A) THE SECURITY OR A PORTION OF THIS SECURITY IS ON LOAN AT JUNE 30, 2003 (SEE
NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS). THE TOTAL VALUE OF SECURITIES
ON LOAN AT JUNE 30, 2003 WAS $37,134,255.
(B) THESE SECURITIES WERE PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING (SEE NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS). THE
TOTAL VALUE OF SUCH SECURITIES AS OF JUNE 30, 2003 WAS $37,941,594.
FFCB -- FEDERAL FARM CREDIT BANK
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
SER -- SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 35 www.bishopstreetfunds.com
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
Hawaii Municipal Bond Fund
- --------------------------------------------------------------------------------
State budget deficits continued to take center stage in the municipal arena in
the second quarter of 2003. Overly optimistic state revenue projections and
actual state revenues, which fell well below projections, forced many state
legislatures to take severe actions over the past year including massive
spending cuts, tax increases and a pick-up in short-term bond issuance to ease
budget strains. The projected unresolved collective budget gap for the 50 states
is currently greater than $50 billion; California's budget gap makes up roughly
two-thirds of that figure at $38 billion.
Due to its relative fiscal conservatism, the State of Hawaii has not suffered
from the significant budget deficits that are affecting numerous states and
cities throughout the United States. In fact, yields on Hawaii paper are
currently at relative historic lows versus generic national municipal yields, a
reflection of the State's stable fiscal condition.
The Hawaii municipal bond market continues to suffer from a lack of supply as
new issuance remains limited and secondary offerings are scarce due to Hawaii's
relatively decent credit outlook and negligible budget concerns. Hawaii bond
issuance is projected to increase over the second half of the year as local
issuers take advantage of low interest rates.
Over the past six months, we have worked diligently to reduce the portfolio's
duration in anticipation of a modestly higher interest rate environment in 2004
and beyond. To counter the drop in yield due to duration reduction, we have
increased our holdings of hospital and housing related municipal bonds -- issues
that typically pay a higher yield to investors versus state and city general
obligation bonds.
For the quarter ending June 30, 2003, the Bishop Street Hawaii Municipal Bond
Fund Institutional Class Shares* returned 2.6%, outperforming the Lehman
Brothers Municipal Bond Index by 0.1% and the Lipper Hawaii Municipal Debt
Objective by 0.3%.
* During the second quarter ended June 30, 2003, the Bishop Street Hawaii
Municipal Bond Fund (Class A Shares) produced a total return of 2.7%.
Including the maximum sales charge of 4.25%, total return was (1.7)%. Past
performance is no guarantee of future results.
Bishop Street Funds 36
Hawaii Municipal Bond Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE BISHOP STREET HAWAII MUNICIPAL BOND FUND, INSTITUTIONAL CLASS OR
CLASS A, VERSUS THE LEHMAN BROTHERS MUNICIPAL BOND INDEX,
THE CONSUMER PRICE INDEX AND THE LIPPER HAWAII MUNICIPAL DEBT OBJECTIVE.
[Line Graph Omitted] Plot Points as Follows:
Bishop Street Bishop Street
Hawaii Municipal Hawaii Municipal Lehman Brothers Lipper Hawaii
Bond Fund, Bond Fund, Muncipal Bond Consumer Municipal Debt
Institutional Class# Class A#+ Index Price Index Objective
2/28/95 $10,000 $ 9,575 $10,000 $10,000 $10,000
12/95 10,941 10,476 11,097 10,192 10,958
12/96 11,402 10,917 11,589 10,533 11,378
12/97 12,373 11,847 12,656 10,713 12,308
12/98 13,096 12,539 13,476 10,884 12,999
12/99 12,749 12,174 13,197 11,139 12,448
12/00 14,356 13,677 14,740 11,512 13,859
12/01 14,965 14,241 15,496 11,686 14,430
12/02 16,464 15,630 16,983 11,970 15,683
6/03 17,100 16,229 17,630 12,102 16,196
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
#Account value if you reinvested income and capital gains.
AVERAGE ANNUAL TOTAL RETURNS++
- -----------------------------------------------------------
SIX ONE ANNUALIZED ANNUALIZED ANNUALIZED
MONTH YEAR 3 YEAR 5 YEAR INCEPTION
RETURN+++ RETURN RETURN RETURN TO DATE
- -----------------------------------------------------------
3.86% 8.71% 8.62% 6.20% 6.62% Institutional Class*
- -----------------------------------------------------------
3.83% 8.54% 8.41% 6.01%+ 6.89% Class A**
- -----------------------------------------------------------
-0.61% 3.90% 6.86% 5.10%+ 5.76% Class A, with load***
- -----------------------------------------------------------
* Commenced operations on 02/16/95.
** Commenced operations on 06/14/99.
*** Reflects 4.25% sales charge.
+ Prior performance information represents performance of
the Institutional Class, which was offered on 02/16/95.
Institutional Class performance has been adjusted to
reflect the Class A sales charge, but has not been
adjusted to reflect Class A Rule 12b-1 fees and
expenses. Had that adjustment been made, performance
would be lower than that shown.
++ Returns shown do not reflect the deduction of taxes that
a shareholder would pay on fund distributions or the
redemption of fund shares.
+++ The six month return has not been annualized.
June 30, 2003 37 www.bishopstreetfunds.com
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
- --------------------------------------------------------------------------------
Percentage
Coupon Maturity of
Rate Date Investments
------------------------------------------------------------------------------
1. Honolulu City & County RB 5.250% 07/01/18 2.6%
------------------------------------------------------------------------------
2. Honolulu City & County GO 5.000% 07/01/19 2.0%
------------------------------------------------------------------------------
3. Hawaii State Highway RB 5.250% 07/01/15 1.9%
------------------------------------------------------------------------------
4. Hawaii State Highway RB 6.000% 07/01/09 1.9%
------------------------------------------------------------------------------
5. Honolulu City & CountyGO 5.125% 07/01/17 1.7%
------------------------------------------------------------------------------
6. Department of Budget &Finance RB 5.750% 07/01/26 1.7%
------------------------------------------------------------------------------
7. Hawaii State Airport System RB 6.500% 07/01/14 1.6%
------------------------------------------------------------------------------
8. Hawaii State GO 5.250% 04/01/12 1.5%
------------------------------------------------------------------------------
9. Honolulu City & County RB 5.250% 07/01/15 1.4%
------------------------------------------------------------------------------
10. Hawaii State GO 6.500% 12/01/13 1.4%
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face Market
Amount Value
(000) (000)
-------- ---------
MUNICIPAL BONDS -- 98.2%
ARKANSAS -- 0.5%
Alma, Refunding & Construction, School District #30,
Ser B, GO
$1,000 4.700%, 01/01/28 $ 981
--------
CALIFORNIA -- 3.0%
California State, GO
2,000 5.000%, 02/01/12 2,182
2,000 5.000%, 02/01/13 2,178
1,180 5.000%, 10/01/13 1,267
--------
5,627
--------
HAWAII -- 88.0%
Department of Budget & Finance, Electric & Subsidiary
Project, Ser B, RB
2,000 5.000%, 12/01/22 2,035
Department of Budget & Finance, Hawaiian Electric,
Ser A, RB, AMBAC Insured
2,000 5.500%, 12/01/14 2,275
Bishop Street Funds 38
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
Department of Budget & Finance, Hawaiian Electric,
Ser A, RB, AMT, AMBAC Insured
$1,000 5.100%, 09/01/32 $ 1,026
Department of Budget & Finance, Hawaiian Electric,
Ser A, RB, AMT, MBIA Insured
785 6.200%, 05/01/26 874
290 5.650%, 10/01/27 317
Department of Budget & Finance, Hawaiian Electric,
Ser B, RB, AMT, AMBAC Insured
1,000 5.750%, 12/01/18 1,108
Department of Budget & Finance, Hawaiian Electric,
Ser C, RB, AMT, AMBAC Insured
1,000 6.200%, 11/01/29 1,145
Department of Budget & Finance, Queens Health Systems,
Ser A, RB
1,450 5.875%, 07/01/11 1,564
3,000 5.750%, 07/01/26 3,105
Department of Budget & Finance, Queens Health Systems,
Ser B, RB, MBIA Insured
750 5.250%, 07/01/11 828
1,445 5.250%, 07/01/12 1,589
1,275 5.250%, 07/01/13 1,402
1,000 5.250%, 07/01/14 1,094
Department of Budget & Finance, Special Purpose Mortgage,
Hawaiian Electric Project, Ser A, RB, AMT, MBIA Insured
1,090 6.600%, 01/01/25 1,169
Department of Budget & Finance, Special Purpose Mortgage,
Kapiolani Health Care System Project, RB
1,260 6.300%, 07/01/08 1,303
Department of Budget & Finance, Special Purpose Mortgage,
St. Francis Medical Center Project, RB, FSA Insured
930 6.500%, 07/01/22 942
Harbor Capital Improvement, RB, AMT, FGIC Insured
305 6.200%, 07/01/08 324
Harbor Capital Improvement, RB, AMT, MBIA Insured
2,000 5.500%, 07/01/27 2,097
545 5.400%, 07/01/09 619
Harbor System, Ser A, RB, AMT, FSA Insured
2,025 5.750%, 07/01/17 2,276
1,210 5.700%, 07/01/16 1,367
1,000 5.600%, 07/01/15 1,132
Harbor System, Ser B, RB, AMT, AMBAC Insured
200 5.500%, 07/01/19 217
June 30, 2003 39 www.bishopstreetfunds.com
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
Hawaii County, Ser A, GO, FGIC Insured
$ 450 5.600%, 05/01/12 $ 531
430 5.600%, 05/01/13 510
400 5.550%, 05/01/09 464
630 5.500%, 07/15/12 737
Hawaii County, Ser A, GO, FSA Insured
1,000 5.625%, 05/15/19 1,129
500 5.400%, 05/15/15 562
1,000 5.250%, 05/15/11 1,122
1,000 5.000%, 07/15/21 1,062
1,000 5.000%, 07/15/22 1,055
1,000 5.000%, 07/15/23 1,046
Hawaii State, Airport System, First Ser, RB,
MBIA Insured
775 5.600%, 07/01/04 810
Hawaii State, Airport System, Second Ser, RB, AMT, ETM
60 6.900%, 07/01/12 74
Hawaii State, Airport System, Second Ser, RB, AMT, ETM,
MBIA Insured
1,100 6.900%, 07/01/12 1,357
Hawaii State, Airport System, Ser B, RB, AMT,
FGIC Insured
1,500 6.625%, 07/01/18 1,770
2,500 6.500%, 07/01/14 2,947
100 6.000%, 07/01/19 114
Hawaii State, Highway, RB
1,000 6.000%, 07/01/08 1,170
3,000 6.000%, 07/01/09 3,570
375 5.250%, 07/01/10 420
500 5.250%, 07/01/12 556
2,000 5.250%, 07/01/16 2,187
Hawaii State, Highway, RB, FGIC Insured
3,280 5.250%, 07/01/15 3,645
405 5.000%, 07/01/16 442
Hawaii State, Highway, RB, FSA Insured
2,000 5.375%, 07/01/20 2,195
1,000 5.250%, 07/01/13 1,136
1,000 4.500%, 07/01/07 1,092
Hawaii State, Highway, RB, Prerefunded @ 102 (A)
510 5.000%, 07/01/03 520
Hawaii State, Housing & Community Development,
Ser A, RB, AMT, FNMA Collateral
1,900 6.300%, 07/01/20 2,045
470 6.150%, 07/01/12 509
480 6.100%, 07/01/11 519
Bishop Street Funds 40
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
Hawaii State, Housing, Finance & Development,
Affordable Rental Housing Program, Ser A, RB
$ 750 6.050%, 07/01/22 $ 782
340 6.000%, 07/01/15 357
Hawaii State, Housing, Finance & Development,
Affordable Rental Housing Program, Ser A, RB, AMT,
FNMA Collateral
2,030 5.750%, 07/01/30 2,109
247 5.550%, 07/01/07 257
1,355 5.400%, 07/01/30 1,392
250 5.250%, 07/01/13 266
Hawaii State, Housing, Finance & Development,
Single-Family Mortgage Purchase, Ser B, RB,
FNMA Collateral
1,000 5.450%, 07/01/17 1,052
Hawaii State, Housing, Finance & Development,
University of Hawaii, Faculty Housing Project, RB,
AMBAC Insured
700 5.650%, 10/01/16 762
415 5.000%, 10/01/06 452
395 4.850%, 10/01/05 425
380 4.750%, 10/01/04 397
Hawaii State, Kapolei Office Building, Ser A, COP,
AMBAC Insured
1,475 5.250%, 05/01/13 1,654
1,000 5.000%, 05/01/08 1,121
1,000 5.000%, 05/01/14 1,094
1,100 5.000%, 05/01/15 1,191
1,500 5.000%, 05/01/16 1,644
1,000 5.000%, 05/01/17 1,084
500 5.000%, 05/01/18 535
Hawaii State, No. 1 Capitol District State Office,
COP, MBIA Insured
1,000 5.200%, 05/01/14 1,106
175 5.000%, 05/01/11 195
Hawaii State, Ser CC, GO
400 5.125%, 02/01/08 449
Hawaii State, Ser CH, GO, MBIA Insured
1,000 6.000%, 11/01/06 1,138
Hawaii State, Ser CL, GO
1,000 6.000%, 03/01/09 1,180
Hawaii State, Ser CL, GO, MBIA Insured
555 6.000%, 03/01/08 644
Hawaii State, Ser CM, GO, FGIC Insured
2,000 6.500%, 12/01/13 2,548
500 6.000%, 12/01/09 601
1,500 6.000%, 12/01/11 1,821
June 30, 2003 41 www.bishopstreetfunds.com
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
Hawaii State, Ser CN, GO, FGIC Insured
$ 500 5.500%, 03/01/14 $ 563
500 5.250%, 03/01/12 554
535 5.250%, 03/01/17 587
Hawaii State, Ser CO, GO, FGIC Insured
200 6.000%, 09/01/05 220
Hawaii State, Ser CP, GO, FGIC Insured
300 5.000%, 10/01/16 326
Hawaii State, Ser CR, GO, MBIA Insured
1,500 5.750%, 04/01/09 1,753
270 5.250%, 04/01/11 298
2,500 5.250%, 04/01/12 2,781
Hawaii State, Ser CS, GO, MBIA Insured
255 5.000%, 04/01/09 288
Hawaii State, Ser CT, GO, FSA Insured
400 5.500%, 09/01/06 446
Hawaii State, Ser CU, GO, MBIA Insured
500 5.750%, 10/01/07 574
500 5.750%, 10/01/11 586
550 5.750%, 10/01/12 639
Hawaii State, Ser CU, GO, MBIA Insured,
Prerefunded @ 100 (A)
250 5.300%, 10/01/10 292
Hawaii State, Ser CV, GO, FGIC Insured
1,000 5.250%, 08/01/21 1,079
Hawaii State, Ser CX, GO, FSA Insured
1,000 5.500%, 02/01/21 1,115
200 4.250%, 02/01/11 216
Hawaii State, Ser CY, GO, FSA Insured
1,000 5.500%, 02/01/11 1,161
1,000 5.250%, 02/01/07 1,110
Hawaii State, Ser CZ, GO, FSA Insured
1,860 5.250%, 07/01/19 2,046
Hawaiian Home Lands Department, RB
1,250 4.000%, 07/01/05 1,308
Honolulu City & County, Board of Water Supply,
RB, FSA Insured
620 5.500%, 07/01/15 712
340 5.000%, 07/01/08 382
Honolulu City & County, Board of Water Supply, RB,
Prerefunded @ 101 (A)
1,000 5.800%, 07/01/06 1,136
250 5.250%, 07/01/06 280
Honolulu City & County, FHA-Smith-Beretania-8A,
RB, MBIA Insured
1,000 5.450%, 01/01/25 1,017
Bishop Street Funds 42
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
Honolulu City & County, GO
$ 820 5.400%, 09/27/07 $ 930
200 1.250%, 09/11/08 200
Honolulu City & County, GO, ETM
230 6.000%, 12/01/09 278
Honolulu City & County, Ser A, GO
55 6.000%, 01/01/10 65
Honolulu City & County, Ser A, GO, ETM
500 6.000%, 01/01/09 592
95 6.000%, 01/01/10 113
800 5.750%, 04/01/10 947
245 5.700%, 04/01/09 288
Honolulu City & County, Ser A, GO, ETM, MBIA Insured
135 6.000%, 11/01/10 164
Honolulu City & County, Ser A, GO, FGIC Insured
250 5.000%, 07/01/03 250
Honolulu City & County, Ser A, GO, FSA Insured
300 5.125%, 09/01/21 318
Honolulu City & County, Ser A, GO, MBIA Insured
365 6.000%, 11/01/10 440
Honolulu City & County, Ser B, GO, ETM, FGIC Insured
635 5.500%, 10/01/11 752
Honolulu City & County, Ser B, GO, FGIC Insured
2,000 5.125%, 07/01/16 2,188
3,000 5.125%, 07/01/17 3,263
Honolulu City & County, Ser C, GO, FGIC Insured
125 5.500%, 11/01/07 143
1,200 5.125%, 07/01/11 1,343
2,100 5.125%, 07/01/15 2,318
650 5.000%, 07/01/09 738
3,500 5.000%, 07/01/19 3,728
Honolulu City & County, Waipahu Towers Project,
Ser A, RB, AMT, GNMA Collateral
200 6.900%, 06/20/35 210
Honolulu City & County, Waste Water,
2nd Board Resolution, Junior Ser, RB, FGIC Insured
1,000 5.250%, 07/01/12 1,116
1,900 5.250%, 07/01/13 2,121
2,365 5.250%, 07/01/15 2,631
1,000 5.250%, 07/01/17 1,099
4,500 5.250%, 07/01/18 4,916
Honolulu City & County, Waste Water,
2nd Board Resolution, Ser B1, RB, MBIA Insured
1,600 1.000%, 07/01/32 1,600
June 30, 2003 43 www.bishopstreetfunds.com
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
Kauai County, Public Improvement, Ser B, GO,
MBIA Insured
$ 175 5.200%, 08/01/15 $ 193
165 5.150%, 08/01/14 182
155 5.100%, 08/01/13 170
120 5.050%, 08/01/12 132
140 5.000%, 08/01/11 154
135 4.950%, 08/01/10 147
100 4.850%, 08/01/09 110
120 4.750%, 08/01/08 132
Kauai County, Ser A, GO, FGIC Insured,
Prerefunded @ 100 (A)
1,135 6.250%, 08/01/10 1,390
1,480 6.250%, 08/01/10 1,813
1,335 6.250%, 08/01/10 1,635
1,050 6.250%, 08/01/10 1,286
Kauai County, Ser A, GO, MBIA Insured
750 5.625%, 08/01/18 855
Kauai County, Ser B, GO, AMBAC Insured
285 5.750%, 08/01/06 319
Kauai County, Ser B, GO, MBIA Insured,
Prerefunded @ 102 (A)
260 5.900%, 02/01/04 273
Maui County, GO, FGIC Insured,
Prerefunded @ 101 (A)
290 5.125%, 12/15/03 298
Maui County, Ser A, GO
485 5.375%, 03/01/12 555
Maui County, Ser A, GO, FGIC Insured
500 5.200%, 09/01/12 553
100 5.125%, 03/01/14 110
615 5.100%, 03/01/19 657
200 5.000%, 03/01/13 221
795 5.000%, 03/01/18 850
Maui County, Ser A, GO, FGIC Insured,
Prerefunded @ 101 (A)
450 5.800%, 03/01/10 537
Maui County, Ser A, GO, MBIA Insured,
Prerefunded @ 101 (A)
250 5.750%, 06/01/06 283
Maui County, Ser C, GO, FGIC Insured
1,000 5.250%, 03/01/17 1,103
500 5.200%, 03/01/16 548
555 5.150%, 03/01/14 608
790 5.150%, 03/01/15 870
University of Hawaii, Ser A, RB, FGIC Insured
500 5.500%, 07/15/19 567
500 5.500%, 07/15/21 560
Bishop Street Funds 44
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
HAWAII (CONTINUED)
University of Hawaii, Ser B, RB, FSA Insured
$ 320 5.250%, 10/01/16 $ 357
775 5.250%, 10/01/17 860
--------
163,908
--------
IDAHO -- 0.1%
Minidoka, Jerome County Project, GO
95 3.000%, 08/01/03 95
--------
NEW YORK -- 0.6%
New York, Ser J, GO,
1,000 5.500%, 06/01/20 1,068
--------
PUERTO RICO -- 5.2%
Puerto Rico Commonwealth, GO, MBIA Insured
1,500 6.500%, 07/01/10 1,851
500 6.500%, 07/01/14 640
Puerto Rico Commonwealth, Public Improvements,
GO, FSA Insured
1,000 5.250%, 07/01/17 1,164
Puerto Rico Commonwealth, Public Improvements,
Ser A, GO
570 5.500%, 07/01/17 675
Puerto Rico, Electric Power Authority,
Ser DD, RB, FSA Insured
1,000 5.000%, 07/01/28 1,051
Puerto Rico, Electric Power Authority,
Ser HH, RB, FSA Insured
500 5.250%, 07/01/29 542
Puerto Rico, Highway & Transportation Authority Revenue,
Ser D, RB, FSA Insured
500 5.000%, 07/01/32 524
Puerto Rico, Housing, Banking & Finance Agency,
Single-Family Mortgage, Affordable Housing Mortgage,
Portfolio I, RB, AMT, GNMA/FNMA/FHLMC Collateral
180 6.100%, 10/01/15 188
Puerto Rico, Industrial Tourist Educational Medical
Environmental Control Facilities, Hospital Auxilio
Mutuo Obligation Group, Ser A, RB, MBIA Insured
300 6.250%, 07/01/24 325
Puerto Rico, Public Building Authority, Government
Facilities, Ser B, RB, MBIA Insured
1,000 5.000%, 07/01/15 1,084
University of Puerto Rico, Ser O, RB, MBIA Insured
1,500 5.750%, 06/01/19 1,736
--------
9,780
--------
June 30, 2003 45 www.bishopstreetfunds.com
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Market
Face Value
Amount (000)/Shares (000)
-------- ---------
TEXAS -- 0.3%
San Antonio, Independent School District, Ser A, GO
$ 500 5.000%, 08/15/31 $ 518
--------
UTAH -- 0.5%
Washington County, St. George School District,
Ser A, GO
1,000 4.100%, 03/01/18 1,011
--------
TOTAL MUNICIPAL BONDS (Cost $168,858) 182,988
--------
CASH EQUIVALENTS -- 2.6%
2,449,598 Dreyfus Tax-Exempt Cash Management Fund 2,450
2,449,597 Fidelity Institutional Money Market Tax-Exempt Fund 2,450
--------
TOTAL CASH EQUIVALENTS (Cost $4,900) 4,900
--------
TOTAL INVESTMENTS (COST $173,758)-- 100.8% 187,888
--------
OTHER ASSETS AND LIABILITIES -- (0.8)%
Investment Adviser Fees Payable (31)
Administrative Fees Payable (11)
Other Assets and Liabilities, Net (1,551)
--------
TOTAL OTHER ASSETS AND LIABILITIES (1,593)
--------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 13,510,186 Outstanding Shares of
Beneficial Interest 140,697
Fund Shares of Class A (unlimited authorization -- no par value)
Based on 2,824,930 Outstanding Shares of Beneficial Interest 29,619
Undistributed Net Investment Income 51
Accumulated Net Realized Gain on Investments 1,798
Net Unrealized Appreciation on Investments 14,130
--------
TOTAL NET ASSETS -- 100.0% $186,295
========
Bishop Street Funds 46
Hawaii Municipal Bond Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Value
--------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS
($154,074,637 / 13,510,186 SHARES) $ 11.40
========
NET ASSET VALUE, REDEMPTION
PRICE PER SHARE -- CLASS A
($32,220,715 / 2,824,930 SHARES) $ 11.41
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($11.41 / 95.75%) $ 11.92
========
(A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT -- ALTERNATIVE MINIMUM TAX
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTEE INSURANCE CORPORATION
FHA -- FEDERAL HOUSING ADMINISTRATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSURANCE
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
RB -- REVENUE BOND
SER -- SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 47 www.bishopstreetfunds.com
- --------------------------------------------------------------------------------
BISHOP STREET
MANAGEMENT DISCUSSION
FUNDS
- --------------------------------------------------------------------------------
Money Market & Treasury Money Market Funds
- --------------------------------------------------------------------------------
In the Money Market Fund, our emphasis continues to be on high quality, liquid
issues. We continue to invest conservatively and avoid reaching for yield by
buying lower credit quality or leveraged structures that offer higher yields.
In anticipation of lower interest rates, we lengthened the weighted average
maturity of both the Treasury and Money Market Funds during the period. By
extending the maturity of the Funds' positions, we were able to lock in yields
prior to the 1/4 point rate cut in June. With much of the yield curve inverted
during part of this period, this strategy sacrificed a modest level of
short-term returns in order to position the Funds for the longer term. This
strategy is now paying off with strong relative returns for both Funds as the
yield curve shifted down late in the period.
In this low rate environment, some money market funds have searched for
different ways to increase yield. However, we continue to invest conservatively
and avoid reaching for yield by buying lower credit quality or leveraged
structures that offer higher yields. The Funds' consistent strategy during the
first half of the year has been to continue to buy high quality securities
maturing in the nine to twelve month area in order to maintain longer weighted
maturities without sacrificing safety or liquidity. We continue to utilize our
extensive credit research resources to ensure that these longer maturity
instruments are of the highest quality and liquidity.
OUTLOOK AND STRATEGY
The outlook for the second half of 2003 depends greatly on the strength and pace
of business investment. The economy, which will receive a boost from the $350
billion tax cut and additional monetary stimulus, is aligned for stronger
growth, and signs of growth are starting to emerge. Operating profits have been
improving and the consumer will benefit from the latest round of mortgage
financing. The Fed will delay any tightening until the economy has gained
significant momentum and concerns over deflation have subsided. In this
environment we will continue to purchase longer securities in order to take
advantage of any steepness in the money market curve when the market prices in
future Fed tightenings.
Bishop Street Funds 48
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face Market
Amount Value
(000) (000)
-------- ---------
COMMERCIAL PAPER (D) -- 46.0%
ASSET-BACKED -- 20.9%
Apreco
$ 2,000 0.970%, 08/15/03 $ 1,997
Clipper Receivable
4,000 1.240%, 07/07/03 3,999
Corporate Asset Funding
3,600 1.200%, 07/28/03 3,597
Corporate Receivable
5,000 1.230%, 07/09/03 4,999
Edison Asset
4,300 1.240%, 07/09/03 4,299
Eureka Securitization
4,000 1.210%, 08/06/03 3,995
Falcon Asset Securitization
3,500 0.960%, 07/30/03 3,497
Fleet Funding
4,000 1.120%, 08/11/03 3,995
Galaxy Funding
4,072 0.930%, 08/25/03 4,066
Greyhawk Funding
4,000 1.240%, 07/11/03 3,999
Mont Blanc Capital
4,000 1.070%, 07/28/03 3,997
Preferred Receivable Funding
2,500 1.000%, 07/21/03 2,499
--------
44,939
--------
DIVERSE FINANCIAL SERVICES -- 7.9%
General Electric Capital
3,000 1.240%, 07/16/03 2,999
HBOS Treasury Services
3,000 1.250%, 08/01/03 2,997
New York Life Capital
6,000 1.200%, 07/09/03 5,998
Toyota Motor Credit
5,000 1.090%, 08/01/03 4,995
--------
16,989
--------
June 30, 2003 49 www.bishopstreetfunds.com
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
INDUSTRIAL -- 5.5%
Du Pont EI De Nemours
$ 6,000 1.180%, 08/14/03 $ 5,991
TotalFinaElf
6,000 1.220%, 07/15/03 5,997
--------
11,988
--------
PHARMACEUTICALS -- 2.8%
GlaxoSmithKline
6,000 1.170%, 08/19/03 5,990
--------
RETAIL - FOOD -- 3.8%
Coca-Cola Enterprises
2,500 0.930%, 08/07/03 2,498
Nestle Capital
5,700 1.165%, 09/15/03 5,686
--------
8,184
--------
SPECIAL PURPOSE ENTITY -- 5.1%
Societe Generale NA
6,000 1.240%, 07/17/03 5,997
Yale University
5,000 1.060%, 08/15/03 4,993
--------
10,990
--------
TOTAL COMMERCIAL PAPER (Cost $99,080) 99,080
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 24.3%
FHLB
1,400 5.375%, 01/05/04 1,428
2,000 5.715%, 05/12/04 2,075
FHLMC
3,000 1.559%, 12/04/03 (C) 2,980
2,000 1.399%, 12/31/03 (C) 1,986
3,000 3.250%, 01/15/04 3,027
3,000 1.348%, 01/29/04 (C) 2,977
2,750 1.203%, 02/26/04 (C) 2,728
3,500 1.094%, 03/12/04 (C) 3,473
3,000 0.949%, 06/17/04 (C) 2,972
Bishop Street Funds 50
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face Market
Amount Value
(000) (000)
-------- ---------
FNMA
$ 4,000 0.902%, 09/24/03 (C) $ 3,992
6,500 4.750%, 11/14/03 6,581
4,000 1.403%, 12/12/03 (C) 3,975
10,000 1.207%, 02/06/04 (C) 9,927
4,000 5.125%, 02/13/04 4,093
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $52,214) 52,214
--------
CERTIFICATES OF DEPOSIT/BANK NOTES (C) -- 10.0%
Den Danske
4,000 1.570%, 11/06/03 4,000
Dexia Bank of New York
6,000 1.250%, 10/15/03 6,000
State Street Bank & Trust
5,500 1.190%, 08/13/03 5,500
Westdeutsche Landesbank
6,000 1.350%, 01/27/04 6,000
--------
TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $21,500) 21,500
--------
INSURANCE FUNDING AGREEMENTS (A)(B)(E) -- 8.2%
Allstate
3,000 1.209%, 09/16/03 3,000
Metropolitan Life Insurance
5,000 1.390%, 08/01/03 5,000
Monumental Life Insurance
5,500 1.400%, 08/01/03 5,500
Travelers Insurance
4,000 1.350%, 08/31/03 4,000
--------
TOTAL INSURANCE FUNDING AGREEMENTS (Cost $17,500) 17,500
--------
CORPORATE OBLIGATIONS -- 7.1%
DIVERSE FINANCIAL SERVICES -- 5.2%
Abbey National Treasury Services (A)
5,000 1.040%, 03/10/04 5,000
General Electric Capital (A)
2,300 1.191%, 07/08/04 2,300
General Electric Capital, MTN (A)
2,000 1.170%, 07/16/04 2,000
Permanent Financing
2,000 1.070%, 03/10/04 2,000
--------
11,300
--------
June 30, 2003 51 www.bishopstreetfunds.com
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Face
Amount Value
(000) (000)
-------- ---------
INDUSTRIAL GASES -- 1.9%
BP Capital Markets
$ 4,000 1.045%, 03/08/04 $ 4,000
--------
TOTAL CORPORATE OBLIGATIONS (Cost $15,300) 15,300
--------
COLLATERALIZED MORTGAGE OBLIGATION -- 2.3%
Holmes Financing
5,000 1.180%, 10/15/03 5,000
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION (Cost $5,000) 5,000
--------
REPURCHASE AGREEMENT -- 2.1%
Goldman Sachs, 1.210%, dated 06/30/03, due 07/01/03,
repurchase price $4,600,155 (collateralized by a
U.S. Government Obligation, total par value
4,600 $4,589,923, 6.000%, 04/01/33: total market
value $4,692,001 4,600
--------
TOTAL REPURCHASE AGREEMENT (Cost $4,600) 4,600
--------
TOTAL INVESTMENTS (COST $215,194) -- 100.0% 215,194
--------
OTHER ASSETS AND LIABILITIES -- 0.0%
Investment Adviser Fees Payable (38)
Administrative Fees Payable (20)
Other Assets and Liabilities, Net 150
--------
TOTAL OTHER ASSETS AND LIABILITIES 92
--------
Bishop Street Funds 52
Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Value
(000)
-------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 215,185,762 Outstanding Shares of
Beneficial Interest $215,186
Fund Shares of Class A (unlimited authorization -- no par value)
Based on 123,663 Outstanding Shares of Beneficial Interest 123
Accumulated Net Investment Loss (1)
Accumulated Net Realized Loss on Investments (22)
--------
TOTAL NET ASSETS -- 100.0% $215,286
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS
($215,162,395 / 215,185,762 SHARES) $ 1.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS A
($123,535 / 123,663 SHARES) $ 1.00
========
(A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON JUNE 30, 2003. THE MATURITY DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
(B) SECURITIES SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXCEPT
FROM REGISTRATION UNDER SECTION 3A-4, 4(2) OR 144A OF THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER
"ACCREDITED INVESTORS".
(C) REPRESENTS THE EFFECTIVE YIELD AT THE DATE OF PURCHASE. (D) REPRESENTS THE
DISCOUNT YIELD AT THE DATE OF PURCHASE. (E) SECURITY CONSIDERED ILLIQUID.
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
NA -- NATIONAL ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 53 www.bishopstreetfunds.com
Treasury Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
Face Market
Amount Value
(000) (000)
-------- ---------
U.S. TREASURY OBLIGATIONS -- 51.7%
U.S. Treasury Bills (A)
$10,000 0.840%, 07/10/03 $ 9,998
5,000 1.223%, 07/17/03 4,997
15,000 0.800%, 07/24/03 14,992
22,000 1.005%, 08/21/03 21,969
7,500 1.109%, 09/11/03 7,484
17,000 0.843%, 09/18/03 16,969
2,000 1.009%, 09/25/03 1,995
5,000 1.059%, 10/02/03 4,986
3,000 0.988%, 10/16/03 2,991
5,000 1.042%, 11/13/03 4,981
U.S. Treasury Notes
17,000 5.250%, 08/15/03 17,072
20,000 3.000%, 11/30/03 20,126
13,000 3.250%, 12/31/03 13,126
5,000 3.000%, 01/31/04 5,051
4,000 3.625%, 03/31/04 4,070
17,000 3.375%, 04/30/04 17,295
--------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $168,102) 168,102
--------
REPURCHASE AGREEMENTS -- 48.2%
ABN AMRO, 1.100%, dated 06/30/03, due 07/01/03,
repurchase price $13,000,397 (collateralized by
U.S. Government Obligations, total par value
$13,051,000 1.043%-1.140%, 06/30/04-11/30/04:
total market value $13,359,400)
13,000 Goldman Sachs, 1.100%, dated 06/30/03, 13,000
due 07/01/03, repurchase price $68,702,099
(collateralized by U.S. Government Obligations,
total par value $52,442,000, 6.250%-8.125%,
68,700 08/15/19-08/15/23: total market value $70,075,291) 68,700
UBS Warburg Dillion, 1.000%, dated 06/30/03,
due 07/01/03, repurchase price $75,002,083
(collateralized by a U.S. Government Obligation,
total par value $76,835,000, 0%, 12/11/03:
75,000 total market value $76,503,840) 75,000
--------
TOTAL REPURCHASE AGREEMENTS (Cost $156,700) 156,700
--------
TOTAL INVESTMENTS (COST $324,802) -- 99.9% 324,802
--------
Bishop Street Funds 54
Treasury Money Market Fund (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
(CONTINUED)
Value
(000)
-------
OTHER ASSETS AND LIABILITIES -- 0.1%
Investment Adviser Fees Payable $ (41)
Administrative Fees Payable (31)
Other Assets and Liabilities, Net 275
--------
TOTAL OTHER ASSETS AND LIABILITIES 203
--------
NET ASSETS:
Fund Shares of Institutional Shares (unlimited authorization --
no par value) Based on 324,981,943 Outstanding Shares of
Beneficial Interest 324,981
Undistributed Net Investment Income 16
Accumulated Net Realized Gain on Investments 8
--------
TOTAL NET ASSETS -- 100.0% $325,005
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS
$ 1.00
========
(A) REPRESENTS THE EFFECTIVE YIELD AT THE DATE OF PURCHASE. THE ACCOMPANYING
NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 55 www.bishopstreetfunds.com
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003
(IN THOUSANDS)
Tax High
Strategic Managed Grade
Equity Growth Equity Income
Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend Income $ 959 $ 59 $ 233 $ --
Interest Income 24 1 10 3,199
Securities Lending 14 -- -- 24
Less: Foreign Taxes Withheld (10) -- (1) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 987 60 242 3,223
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Adviser Fees 478 84 103 373
Shareholder Servicing Fees 161 28 35 169
Administrative Fees 129 23 28 136
Distribution Fees, Class A 2 -- -- 1
Transfer Agent Fees 24 15 14 25
Professional Fees 10 5 4 15
Trustees Fees 6 2 1 8
Custody Fees 5 2 1 7
Printing Fees 2 1 1 2
Registration Fees 1 1 -- 2
Organizational Costs -- 16 14 --
Miscellaneous Expenses 4 2 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 822 179 203 740
- ------------------------------------------------------------------------------------------------------------------------------------
Less Waivers:
Investment Adviser Fees (19) (11) (31) (62)
Administrative Fees (57) (10) (12) (60)
Shareholder Servicing Fees (97) (17) (21) (102)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Waivers (173) (38) (64) (224)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 649 141 139 516
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 338 (81) 103 2,707
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) on Investments (903) (1,171) 40 3,834
Change in Unrealized Appreciation
(Depreciation) on Investments 14,263 5,515 2,414 (456)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain
on Investments 13,360 4,344 2,454 3,378
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets
Resulting from Operations $13,698 $ 4,263 $2,557 $6,085
====================================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds 56
<page>
Bishop Street Funds (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003
(IN THOUSANDS)
Hawaii Treasury
Municipal Money Money
Bond Market Market
Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest Income $4,204 $1,570 $2,247
- -------------------------------------------------------------------------------------------------------------
Total Investment Income 4,204 1,570 2,247
- -------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Adviser Fees 325 348 525
Shareholder Servicing Fees 232 290 437
Administrative Fees 186 232 350
Distribution Fees, Class A 42 -- --
Transfer Agent Fees 29 30 25
Professional Fees 19 24 46
Trustees Fees 11 15 24
Custody Fees 8 7 14
Printing Fees 4 7 9
Registration Fees 1 2 2
Miscellaneous Expenses 4 5 17
- -------------------------------------------------------------------------------------------------------------
Total Expenses 861 960 1,449
- -------------------------------------------------------------------------------------------------------------
Less Waivers:
Investment Adviser Fees (142) (102) (262)
Administrative Fees (121) (102) (154)
Shareholder Servicing Fees (139) (174) (262)
- -------------------------------------------------------------------------------------------------------------
Total Waivers (402) (378) (678)
- -------------------------------------------------------------------------------------------------------------
Total Net Expenses 459 582 771
- -------------------------------------------------------------------------------------------------------------
Net Investment Income 3,745 988 1,476
- -------------------------------------------------------------------------------------------------------------
Net Realized Gain on Investments 1,633 -- 21
Change in Unrealized Appreciation
on Investments 1,738 -- --
- -------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain
on Investments 3,371 -- 21
- -------------------------------------------------------------------------------------------------------------
Increase in Net Assets
Resulting from Operations $7,116 $ 988 $1,497
=============================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 57 www.bishopstreetfunds.com
<page>
Bishop Street Funds
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003 (UNAUDITED) AND
THE YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS)
Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES FROM OPERATIONS:
Net Investment Income $ 338 $ 428
Net Realized Loss on Investments (903) (21,478)
Change in Unrealized Appreciation (Depreciation)
on Investments 14,263 (31,683)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting From Operations 13,698 (52,733)
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares (352) (420)
Class A Shares (2) --
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions (354) (420)
- ------------------------------------------------------------------------------------------------------------------------------
Changes in Net Assets 13,344 (53,153)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Proceeds from Shares Issued 4,075 19,672
Reinvestments of Cash Distributions 210 246
Cost of Shares Redeemed (11,571) (53,829)
- ------------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions (7,286) (33,911)
- ------------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Proceeds from Shares Issued 47 459
Reinvestments of Cash Distributions 1 --
Cost of Shares Redeemed (286) (1,036)
- ------------------------------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions (238) (577)
- ------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets
From Capital Share Transactions (7,524) (34,488)
- ------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 5,820 (87,641)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 131,584 219,225
- ------------------------------------------------------------------------------------------------------------------------------
End of Period $137,404 $131,584
==============================================================================================================================
SHARE TRANSACTIONS:
Institutional Class Shares:
Issued 525 2,383
Issued in Lieu of Cash Distributions 26 33
Redeemed (1,532) (6,627)
- ------------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Share Transactions (981) (4,211)
- ------------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Shares Issued 6 49
Shares Redeemed (37) (116)
- ------------------------------------------------------------------------------------------------------------------------------
Total Class A Share Transactions (31) (67)
- ------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Shares Outstanding from Share Transactions (1,012) (4,278)
==============================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds 58
<page>
Bishop Street Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003 (UNAUDITED) AND THE
YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS)
Strategic Tax Managed
Growth Fund(1) Equity Fund(2)
- ---------------------------------------------------------------------------------------------------------------------------
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES FROM OPERATIONS:
Net Investment Income (Loss) $ (81) $ (58) $ 103 $ 33
Net Realized Gain (Loss) on Investments (1,171) (2,035) 40 12
Change in Unrealized Appreciation (Depreciation)
on Investments 5,515 (833) 2,414 (430)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting From Operations 4,263 (2,926) 2,557 (385)
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares -- -- (107) (33)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- (107) (33)
- ---------------------------------------------------------------------------------------------------------------------------
Changes in Net Assets 4,263 (2,926) 2,450 (418)
- ---------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Proceeds from Shares Issued 3,029 22,869 6,857 25,278
Reinvestments of Cash Distributions -- -- 2 --
Cost of Shares Redeemed (869) (44) (2,786) (225)
- ---------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions 2,160 22,825 4,073 25,053
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
From Capital Share Transactions 2,160 22,825 4,073 25,053
- ---------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 6,423 19,899 6,523 24,635
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 19,899 -- 24,635 --
- ---------------------------------------------------------------------------------------------------------------------------
End of Period $26,322 $19,899 $31,158 $24,635
===========================================================================================================================
SHARE TRANSACTIONS:
Institutional Class Shares:
Shares Issued 339 2,308 700 2,527
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed (89) (5) (282) (22)
- ---------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Share Transactions 250 2,303 418 2,505
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase in Shares Outstanding from Share Transactions 250 2,303 418 2,505
===========================================================================================================================
(1) COMMENCED OPERATIONS ON JULY 1, 2002.
(2) COMMENCED OPERATIONS ON NOVEMBER 13, 2002.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 59 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003 (UNAUDITED) AND THE
YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS)
High Grade Hawaii Municipal
Income Fund Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES FROM OPERATIONS:
Net Investment Income $ 2,707 $ 5,851 $ 3,745 $ 7,597
Net Realized Gain on Investments 3,834 576 1,633 1,253
Change in Unrealized Appreciation (Depreciation)
on Investments (456) 8,053 1,738 8,384
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From Operations 6,085 14,480 7,116 17,234
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares (2,702) (5,833) (3,106) (6,293)
Class A Shares (7) (17) (641) (1,289)
Capital Gains:
Institutional Class Shares -- -- -- (600)
Class A Shares -- -- -- (133)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (2,709) (5,850) (3,747) (8,315)
- ------------------------------------------------------------------------------------------------------------------------------------
Changes in Net Assets 3,376 8,630 3,369 8,919
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares:
Proceeds from Shares Issued 5,486 23,640 10,109 22,766
Reinvestments of Cash Distributions 968 1,748 423 945
Cost of Shares Redeemed (10,488) (19,891) (9,494) (17,946)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions (4,034) 5,497 1,038 5,765
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Proceeds from Shares Issued 26 169 1,962 4,677
Reinvestments of Cash Distributions 7 14 263 613
Cost of Shares Redeemed (78) (110) (4,080) (3,936)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions (45) 73 (1,855) 1,354
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets From
Capital Share Transactions (4,079) 5,570 (817) 7,119
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (703) 14,200 2,552 16,038
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 138,941 124,741 183,743 167,705
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period $138,238 $138,941 $186,295 $183,743
====================================================================================================================================
SHARE TRANSACTIONS:
Institutional Class Shares:
Shares Issued 510 2,310 901 2,089
Shares Issued in Lieu of Cash Distributions 89 170 37 86
Shares Redeemed (979) (1,934) (843) (1,629)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Share Transactions (380) 546 95 546
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Shares Issued 2 17 174 429
Shares Issued in Lieu of Cash Distributions 1 1 23 56
Shares Redeemed (7) (11) (358) (359)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Class A Share Transactions (4) 7 (161) 126
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Shares Outstanding
from Share Transactions (384) 553 (66) 672
====================================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds 60
Bishop Street Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003 (UNAUDITED) AND THE
YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS)
Money Market Treasury Money Market
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES FROM OPERATIONS:
Net Investment Income $ 988 $ 3,690 $ 1,476 $ 4,508
Net Realized Gain (Loss) on Investments -- 1 21 (9)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From Operations 988 3,691 1,497 4,499
- ------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class Shares (988) (3,687) (1,476) (4,508)
Class A Shares -- (3) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Dividends (988) (3,690) (1,476) (4,508)
- ------------------------------------------------------------------------------------------------------------------------------------
Changes in Net Assets -- 1 21 (9)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (ALL AT $1.00 PER SHARE):
Institutional Class Shares:
Proceeds from Shares Issued 185,542 498,190 415,340 879,834
Reinvestments of Cash Distributions 15 60 7 25
Cost of Shares Redeemed (208,893) (569,687) (422,041) (920,594)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Institutional Class Capital Share Transactions (23,336) (71,437) (6,694) (40,735)
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Proceeds from Shares Issued -- 9 -- --
Reinvestments of Cash Distributions 1 3 -- --
Cost of Shares Redeemed (65) (325) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Class A Capital Share Transactions (64) (313) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets
From Capital Share Transactions (23,400) (71,750) (6,694) (40,735)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Decrease in Net Assets (23,400) (71,749) (6,673) (40,744)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 238,686 310,435 331,678 372,422
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period $215,286 $238,686 $325,005 $331,678
====================================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 61 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, 2003 (UNAUDITED)
AND THE PERIODS ENDED DECEMBER 31,
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS FROM
-------------------------- ------------------------------
TOTAL
NET ASSET NET REALIZED INVESTMENT TOTAL
VALUE, NET AND UNREALIZED ACTIVITIES NET DIVIDENDS
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL AND
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
-------- ------------- ------------- ----------- ---------- ------- ----------
- -----------
EQUITY FUND
- -----------
INSTITUTIONAL CLASS SHARES:
2003(1) $ 7.53 $ 0.02 $ 0.82 $ 0.84 $(0.02) $ -- $(0.02)
2002(1) 10.08 0.02 (2.55) (2.53) (0.02) -- (0.02)
2001 13.55 -- (3.47) (3.47) -- -- --
2000 17.88 -- (2.77) (2.77) -- (1.56) (1.56)
1999(1) 15.28 -- 3.68 3.68 -- (1.08) (1.08)
1998 12.06 0.05 3.88 3.93 (0.05) (0.66) (0.71)
CLASS A SHARES:
2003(1) $ 7.49 $ 0.01 $ 0.81 $ 0.82 $(0.01) $ -- $(0.01)
2002(1) 10.01 -- (2.52) (2.52) -- -- --
2001 13.49 (0.07) (3.41) (3.48) -- -- --
2000 17.87 -- (2.82) (2.82) -- (1.56) (1.56)
1999(2) 15.74 -- 3.19 3.19 -- (1.06) (1.06)
- ---------------------
STRATEGIC GROWTH FUND
- ---------------------
INSTITUTIONAL CLASS SHARES:
2003 $ 8.64 $(0.03) $ 1.70 $ 1.67 $ -- $ -- $ --
2002(3) 10.00 (0.03) (1.33) (1.36) -- -- --
- -----------------------
TAX MANAGED EQUITY FUND
- -----------------------
INSTITUTIONAL CLASS SHARES:
2003 $ 9.83 $ 0.04 $ 0.83 $ 0.87 $(0.04) $ -- $(0.04)
2002(4) 10.00 0.01 (0.17) (0.16) (0.01) -- (0.01)
- ---------------------
HIGH GRADEINCOME FUND
- ---------------------
INSTITUTIONAL CLASS SHARES:
2003 $10.67 $ 0.21 $ 0.27 $ 0.48 $(0.21) $ -- $(0.21)
2002 10.00 0.46 0.67 1.13 (0.46) -- (0.46)
2001 9.81 0.50 0.19 0.69 (0.50) -- (0.50)
2000 9.39 0.52 0.42 0.94 (0.52) -- (0.52)
1999 10.43 0.48 (0.92) (0.44) (0.50) (0.10) (0.60)
1998 10.23 0.54 0.37 0.91 (0.54) (0.17) (0.71)
CLASS A SHARES:
2003 $10.62 $ 0.20 $ 0.27 $ 0.47 $(0.20) $ -- $(0.20)
2002 9.96 0.43 0.66 1.09 (0.43) -- (0.43)
2001 9.76 0.48 0.19 0.67 (0.47) -- (0.47)
2000 9.35 0.52 0.38 0.90 (0.49) -- (0.49)
1999(2) 9.69 0.19 (0.19) -- (0.24) (0.10) (0.34)
<FN>
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED. TOTAL RETURN DOES NOT REFLECT THE SALES CHARGE ON CLASS A
SHARES. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION
OF FUND SHARES.
* ANNUALIZED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
Bishop Street Funds 62
<page>
RATIO OF NET
INVESTMENT
RATIO OF INCOME
RATIO OF EXPENSES RATIO OF NET (LOSS) TO
NET ASSET NET ASSETS, EXPENSES TO TO AVERAGE INVESTMENT AVERAGE
VALUE, END OF AVERAGE NET ASSETS INCOME (LOSS) NET ASSETS PORTFOLIO
END OF TOTAL PERIOD NET EXCLUDING FEE TO AVERAGE EXCLUDING TURNOVER
PERIOD RETURN+ (000) ASSETS WAIVERS NET ASSETS FEE WAIVERS RATE
------ ------- -------- ------ ------- ---------- ----------- --------
- -----------
EQUITY FUND
- -----------
INSTITUTIONAL CLASS SHARES:
2003(1) $ 8.35 11.19% $135,883 1.00%* 1.27%* 0.53%* 0.26%* 18%
2002(1) 7.53 (25.06) 129,981 1.00 1.27 0.24 (0.03) 60
2001 10.08 (25.61) 216,412 1.00 1.27 -- (0.27) 86
2000 13.55 (16.20) 300,565 1.00 1.28 (0.23) (0.51) 52
1999(1) 17.88 24.37 391,227 1.00 1.27 (0.01) (0.28) 58
1998 15.28 33.05 101,817 1.00 1.32 0.38 0.06 41
Class A Shares:
2003(1) $ 8.30 10.98% $ 1,521 1.25%* 1.52%* 0.29%* 0.02%* 18%
2002(1) 7.49 (25.17) 1,603 1.25 1.52 (0.02) (0.29) 60
2001 10.01 (25.80) 2,813 1.25 1.52 (0.29) (0.56) 86
2000 13.49 (16.49) 10,631 1.25 1.53 (0.51) (0.79) 52
1999(2) 17.87 20.52 583 1.25* 1.61* (0.33)* (0.69)* 58
- ---------------------
STRATEGIC GROWTH FUND
- ---------------------
INSTITUTIONAL CLASS SHARES:
2003 $10.31 19.33% $ 26,322 1.25%* 1.58%* (0.72)%* (1.05)%* 35%
2002(3) 8.64 (13.60) 19,899 1.25* 1.67* (0.61)* (1.03)* 50
- -----------------------
TAX MANAGED EQUITY FUND
- -----------------------
INSTITUTIONAL CLASS SHARES:
2003 $10.66 8.84% $ 31,158 1.00%* 1.46%* 0.74%* 0.28%* 15%
2002(4) 9.83 (1.57) 24,635 1.00* 1.50* 0.99* 0.49* 1
- ---------------------
HIGH GRADEINCOME FUND
- ---------------------
INSTITUTIONAL CLASS SHARES:
2003 $10.94 4.57% $137,850 0.76%* 1.09%* 3.99%* 3.66%* 33%
2002 10.67 11.54 138,516 0.76 1.09 4.45 4.12 19
2001 10.00 7.16 124,416 0.76 1.09 5.02 4.69 89
2000 9.81 10.25 127,888 0.77 1.14 5.41 5.04 88
1999 9.39 (4.34) 127,881 0.80 1.19 5.12 4.73 56
1998 10.43 9.09 24,901 0.80 1.21 5.21 4.80 98
CLASS A SHARES:
2003 $10.89 4.46% $ 388 1.01%* 1.34%* 3.77%* 3.44%* 33%
2002 10.62 11.19 425 1.01 1.34 4.21 3.88 19
2001 9.96 7.02 325 1.01 1.34 4.72 4.39 89
2000 9.76 9.85 26 1.02 1.39 5.24 4.87 88
1999(2) 9.35 (0.05) 1 1.05* 1.87* 4.89* 4.07* 56
<FN>
(1) PER SHARE NET INVESTMENT INCOME AMOUNT CALCULATED USING AVERAGE SHARES.
(2) COMMENCED OPERATIONS ON JUNE 14, 1999.
(3) COMMENCED OPERATIONS ON JULY 1, 2002.
(4) COMMENCED OPERATIONS ON NOVEMBER 13, 2002.
</FN>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
June 30, 2003 63 www.bishopstreetfunds.com
<page>
Bishop Street Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, 2003 (UNAUDITED)
AND THE PERIODS ENDED DECEMBER 31,
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS FROM
-------------------------- -----------------------
TOTAL
NET ASSET NET REALIZED INVESTMENT TOTAL
VALUE, NET AND UNREALIZED ACTIVITIES NET DIVIDENDS
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL AND
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTION
---------- ------ ----------- ---------- ------- ------- ------------
- --------------------------
HAWAII MUNICIPAL BOND FUND
- --------------------------
INSTITUTIONAL CLASS SHARES:
2003 $11.20 $ 0.23 $ 0.20 $ 0.43 $(0.23) $ -- (0.23)
2002 10.66 0.47 0.57 1.04 (0.46) (0.04) (0.50)
2001 10.70 0.49 (0.04) 0.45 (0.49) -- (0.49)
2000 9.98 0.50 0.72 1.22 (0.50) -- (0.50)
1999 10.77 0.48 (0.75) (0.27) (0.50) (0.02) (0.52)
1998 10.67 0.51 0.10 0.61 (0.51) -- (0.51)
CLASS A SHARES:
2003 $11.20 $ 0.21 $ 0.21 $ 0.42 $(0.21) $ -- $(0.21)
2002 10.66 0.44 0.58 1.02 (0.44) (0.04) (0.48)
2001 10.69 0.46 (0.02) 0.44 (0.47) -- (0.47)
2000 9.97 0.46 0.73 1.19 (0.47) -- (0.47)
1999(1) 10.42 0.26 (0.44) (0.18) (0.25) (0.02) (0.27)
- -----------------
MONEY MARKET FUND
- -----------------
INSTITUTIONAL CLASS SHARES:
2003 $ 1.00 $ -- $ -- $ -- $ -- $ -- $ --
2002 1.00 0.01 -- 0.01 (0.01) -- (0.01)
2001 1.00 0.04 -- 0.04 (0.04) -- (0.04)
2000 1.00 0.06 -- 0.06 (0.06) -- (0.06)
1999 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1998 1.00 0.05 -- 0.05 (0.05) -- (0.05)
CLASS A SHARES:
2003 $ 1.00 $ -- $ -- $ -- $ -- $ -- $ --
2002 1.00 0.01 -- 0.01 (0.01) -- (0.01)
2001(2) 1.00 0.02 -- 0.02 (0.02) -- (0.02)
- --------------------------
TREASURY MONEY MARKET FUND
- --------------------------
INSTITUTIONAL CLASS SHARES:
2003 $ 1.00 $ -- $ -- $ -- $ -- $ -- $ --
2002 1.00 0.01 -- 0.01 (0.01) -- (0.01)
2001 1.00 0.04 -- 0.04 (0.04) -- (0.04)
2000 1.00 0.06 -- 0.06 (0.06) -- (0.06)
1999 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1998 1.00 0.05 -- 0.05 (0.05) -- (0.05)
<FN>
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND IDISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
* ANNUALIZED.
(1) COMMENCED OPERATIONS ON JUNE 14, 1999.
(2) COMMENCED OPERATIONS ON MAY 1, 2001.
</FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
Bishop Street Funds 64
- --------------------------------------------------------------------------------
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
RATIO EXPENSES NET INCOME
NET ASSET NET ASSETS, EXPENSES TO TO AVERAGE INVESTMENT TO AVERAGE PORT-
VALUE, END OF AVERAGE NET ASSETS INCOME NET ASSETS FOLIO
END OF TOTAL PERIOD NET EXCLUDING FEE TO AVERAGE EXCLUDING TURNOVER
PERIOD RETURN+ (000) ASSETS WAIVERS NET ASSETS FEE WAIVERS RATE
------ ------- -------- ------- ------- ---------- ----------- ------
- --------------------------
HAWAII MUNICIPAL BOND FUND
- --------------------------
INSTITUTIONAL CLASS SHARES:
2003 $11.40 3.86% $154,074 0.45%* 0.88%* 4.08%* 3.65%* 12%
2002 11.20 10.02 150,287 0.45 0.89 4.23 3.79 26
2001 10.66 4.24 137,206 0.45 0.88 4.54 4.11 4
2000 10.70 12.61 134,901 0.44 0.92 4.89 4.41 19
1999 9.98 (2.65) 141,341 0.41 0.99 4.79 4.21 14
1998 10.77 5.84 35,751 0.41 1.01 4.74 4.14 21
CLASS A SHARES:
2003 $11.41 3.83% $ 32,221 0.70%* 1.13%* 3.83%* 3.40%* 12%
2002 11.20 9.75 33,456 0.70 1.14 3.98 3.54 26
2001 10.66 4.13 30,499 0.70 1.13 4.29 3.86 4
2000 10.69 12.34 19,951 0.69 1.17 4.63 4.15 19
1999(1) 9.97 (1.76) 6,131 0.66* 1.24* 4.89* 4.31* 14
- -----------------
MONEY MARKET FUND
- -----------------
INSTITUTIONAL CLASS SHARES:
2003 $ 1.00 0.42% $215,162 0.50%* 0.83%* 0.85%* 0.52%* n/a
2002 1.00 1.34 238,498 0.50 0.81 1.33 1.02 n/a
2001 1.00 3.86 309,935 0.50 0.82 3.71 3.39 n/a
2000 1.00 6.13 305,678 0.50 0.83 5.95 5.62 n/a
1999 1.00 4.88 284,291 0.50 0.84 4.78 4.44 n/a
1998 1.00 5.26 268,318 0.50 0.81 5.12 4.81 n/a
CLASS A SHARES:
2003 $ 1.00 0.30% $ 124 0.75%* 1.08%* 0.61%* 0.28%* n/a
2002 1.00 1.08 188 0.75 1.06 1.10 0.79 n/a
2001(2) 1.00 1.96 500 0.75* 1.07* 2.66* 2.34* n/a
- --------------------------
TREASURY MONEY MARKET FUND
- --------------------------
INSTITUTIONAL CLASS SHARES:
2003 $ 1.00 0.42% $325,005 0.44%* 0.83%* 0.84%* 0.45%* n/a
2002 1.00 1.29 331,678 0.44 0.83 1.28 0.89 n/a
2001 1.00 3.68 372,422 0.44 0.85 3.68 3.27 n/a
2000 1.00 5.89 455,612 0.44 0.82 5.73 5.35 n/a
1999 1.00 4.65 331,064 0.44 0.85 4.56 4.15 n/a
1998 1.00 5.10 299,844 0.44 0.84 4.98 4.58 n/a
June 30, 2003 65 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Bishop Street Funds (the "Trust") are registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Bishop Street Funds consist of a series of seven funds (each a Fund,
collectively the "Funds") which includes the Equity Fund, Strategic Growth Fund,
Tax Managed Equity Fund, High Grade Income Fund, Hawaii Municipal Bond Fund,
Money Market Fund and the Treasury Money Market Fund. Class A Shares of the
Equity, High Grade Income and Hawaii Municipal Bond Funds are subject to a sales
load as disclosed in the prospectus. The assets of each Fund are segregated, and
a shareholder's interest is limited to the Fund in which shares are held. The
Funds' prospectus provides a description of each Fund's investment objectives,
policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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 amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
SECURITY VALUATION
Bishop Street Funds' investments in equity securities which are traded on a
national securities exchange are stated at the last official closing price on
the principal exchange on which they are traded on valuation date or, if there
is none, at the last sales price. Equity securities which are reported on the
NASDAQ national market system are stated at the official closing price. Other
equity securities traded in the over-the-counter market and listed equity
securities for which no sale was reported on that date are stated at the last
quoted bid price. Debt obligations exceeding sixty days to maturity which are
actively traded are valued by an independent pricing service at the most
recently quoted bid price. Debt obligations with sixty days or less remaining
until maturity may be valued at their amortized cost. Restricted securities for
which quotations are not readily available are valued at fair value using
methods determined in good faith under general Trustee supervision.
Investment securities held by the Money Market and Treasury Money Market
Funds are stated at amortized cost, which approximates market value. Under this
valuation method, purchase discounts and premiums are accreted and amortized
ratably to maturity and are included in interest income.
Bishop Street Funds 66
<page>
(UNAUDITED)
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the security is purchased
or sold (trade date). Costs used in determining net realized capital gains and
losses on the sale of securities are those of the specific securities sold
adjusted for the accretion and amortization of the purchase discounts and
premiums during the respective holding periods. Interest income is recorded on
the accrual basis; dividend income is recorded on ex-dividend date.
DISCOUNTS AND PREMIUMS
Discounts and premiums are accreted or amortized over the life of each security
and are recorded as interest income for each of the Funds using the scientific
interest method, which approximates the effective interest method.
REPURCHASE AGREEMENTS
Securities pledged as collateral for repurchase agreements are held by the
custodian bank until the respective agreements mature. The Funds may also invest
in tri-party repurchase agreements. Securities held as collateral for tri-party
repurchase agreements are maintained in a segregated account by the broker's
custodian bank. Provisions of repurchase agreements and procedures adopted by
the Adviser (see Note 3) ensure that the market value of the collateral is
sufficient in the event of default by the counterparty. If the counterparty
defaults and the value of the collateral declines or if the counterparty enters
an insolvency proceeding, realization of the collateral by the Fund may be
delayed or limited.
CLASSES
Class-specific expenses were borne by that class of shares. Income, realized
and unrealized gains/losses and non class-specific expenses are allocated to
the respective class on the basis of relative daily net assets.
EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
that Fund. Other operating expenses of the Trust are prorated to the Funds on
the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are declared daily and paid on a
monthly basis for the High Grade Income Fund, Hawaii Municipal Bond Fund, Money
Market Fund and Treasury Money Market Fund. The Equity Fund, Strategic Income
Fund and Tax Managed Equity Fund declare and pay distributions from net
investment income on a quarterly basis. Any net realized capital gains will be
distributed at least annually for all Funds.
ILLIQUID SECURITIES
Valuations of illiquid securities may differ significantly from the values
that would have been used had an active market value for these securities
existed.
June 30, 2003 67 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT
Investment advisory services are provided to the Funds by Bishop Street
Capital Management (the "Adviser"). The Adviser is entitled to receive an annual
fee of 0.74% of the average daily net assets of the Equity, Strategic Growth and
the Tax Managed Equity Funds, 0.55% of the average daily net assets of the High
Grade Income Fund, 0.35% of the average daily net assets of the Hawaii Municipal
Bond Fund, and 0.30% of the average daily net assets of the Money Market and
Treasury Money Market Funds (collectively, the "Money Market Funds"). The
Adviser may from time to time waive a portion of its fee in order to limit the
operating expenses of a Fund.
BNP Paribas Asset Management, Inc. ("BNP PAM") serves as the investment
sub-adviser for the Strategic Growth Fund, pursuant to a sub-adviser agreement.
BNP PAM is entitled to receive from the Adviser a fee, computed daily and paid
monthly, at the annual rate of 0.37% of the average daily net assets of the
Strategic Growth Fund.
Wellington Management Company, LLP ("Wellington") serves as the investment
sub-adviser for the Money Market Funds, pursuant to a sub-adviser agreement.
Wellington is entitled to receive from the Adviser a fee, computed daily and
paid monthly, at the annual rate of 0.075% of the average daily net assets of
the Money Market Funds up to $500 million and 0.020% of the average daily net
assets of the Money Market Funds in excess of $500 million.
4. ADMINISTRATIVE, TRANSFER AGENT AND DISTRIBUTION SERVICES
Pursuant to an administration agreement dated January 27, 1995, (the
"Agreement") SEI Investments Global Funds Services ("GFS"), a wholly owned
subsidiary of SEI Investments Company, acts as the Trust's Administrator. Under
the terms of the Agreement, GFS is entitled to receive an annual fee of 0.20% of
the average daily net assets of the Funds. GFS has voluntarily agreed to waive a
portion of its fee in order to limit operating expenses.
Pursuant to an agreement dated January 30, 1995, DST Systems, Inc. ("DST")
acts as the Transfer Agent of the Trust. As such, DST provides transfer agency,
dividend disbursing and shareholder services to the Trust.
SEI Investments Distribution Co. ("SIDCO"), a wholly owned subsidiary of SEI
Investments Company, acts as the Trust's Distributor pursuant to a distribution
agreement dated June 10, 1999. The Funds have adopted a Distribution Plan (the
"Plan") on behalf of Class A Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The Plan provides that Class A Shares will bear the cost of
their distribution expenses. SIDCO, as compensation for its services under the
Plan, receives a distribution fee, computed daily and payable monthly, of 0.25%
of the average daily net assets attributable to each Fund's Class A Shares.
Bishop Street Funds 68
(UNAUDITED)
- --------------------------------------------------------------------------------
The Trust has adopted and entered into a shareholder service plan and
agreement with SIDCO. Each Fund pays to SIDCO a shareholder servicing fee at an
annual rate of 0.25% of the average daily net asset value of all shares of each
fund, which is computed daily and paid monthly. Under the shareholder service
plan, SIDCO may perform, or may compensate other service providers for
performing various shareholder and administrative services. SIDCO may also
retain as profit any difference between the fee it receives and amount it pays
to third parties. For the period, SIDCO paid the entire amount of fees received
under the shareholder service plan to First Hawaiian Bank for shareholder
services performed for the Funds. SIDCO has voluntarily agreed to waive a
portion of its fee in order to limit operating expenses.
Certain officers of the Trust are also officers of the Administrator. Such
officers are paid no fees by the Trust.
5. SECURITIES LENDING
Each Fund may lend portfolio securities to brokers, dealers and other
financial organizations that meet capital and other credit requirements or other
criteria established by the Trust's Board of Trustees. These loans may not
exceed 331/3% of the total asset value of the Fund (including the loan
collateral). No Fund will lend portfolio securities to its investment adviser,
sub-adviser or their affiliates unless it has applied for and received specific
authority to do so from the SEC. Loans of portfolio securities will be fully
collateralized by cash, letters of credit or U.S. Government securities, and the
collateral will be maintained in an amount equal to at least 100% of the current
market value of the loaned securities by marking to market daily, although the
borrower will be required to deliver collateral of 102% of the market value of
borrowed securities for domestic and foreign securities, respectively. Although
the risk of lending is mitigated by the collateral, the Fund could experience a
delay in recovering its securities and a possible loss of income or value if the
borrower fails to return them.
6. ORGANIZATION COSTS
Certain costs associated with the organization of the Strategic Growth and
Tax Managed Equity Funds have been paid by the Funds' Investment Adviser. The
Funds will not be required to reimburse the Adviser for such organization costs.
These costs, including initial registration costs, were deferred and were
charged to expenses during the Funds' first twelve months of operation.
June 30, 2003 69 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
7. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments for the period ended June 30, 2003 are
presented below for the Funds.
Strategic Tax High Grade Hawaii
Equity Growth Managed Income Municipal
Fund Fund Equity Fund Fund Bond Fund
(000) (000) (000) (000) (000)
------- -------- ------ ------- -------
Purchases
U.S.
Government
Securities $ -- $ -- $ -- $ -- $ --
Other 22,835 10,154 8,690 41,957 20,964
Sales
U.S.
Government
Securities $ -- $ -- $ -- $ 16,484 $ --
Other 28,283 7,947 3,939 36,408 24,567
8. FEDERAL TAX INFORMATION
It is each Fund's intention to continue to qualify as a regulated investment
company for Federal income tax purposes and to distribute a majority of its
taxable income and net capital gains. Accordingly, no provision for Federal
income taxes is required. The timing and characterization of certain income and
capital gains distributions are determined annually in accordance with Federal
tax regulations which may differ from accounting principles generally accepted
in the United States of America. As a result, net investment income (loss) and
net realized gain (loss) on investment transactions for the reporting period may
differ from distributions during such period. These book/tax differences may be
temporary or permanent in nature. To the extent these differences are permanent,
they are charged or credited to paid-in-capital or accumulated net realized
gain, as appropriate, in the period that the differences arise.
For Federal income tax purposes, capital loss carryforwards represent
realized losses of the Funds that may be carried forward for a maximum period of
eight years and applied against future capital gains. As of December 31, 2002
the Funds had the following capital loss carryforwards.
Bishop Street Funds 70
(UNAUDITED)
- --------------------------------------------------------------------------------
Treasury
Strategic High Grade Money Money
Equity Growth Income Market Market
Fund Fund Fund Fund Fund
(000) (000) (000) (000) (000)
--------- -------- ------- ---- -----
Capital loss carryforwards expiring:
Dec. 2005 $ -- $ -- $ -- $(2) $ --
Dec. 2008 -- -- (2,069) (2) --
Dec. 2009 (38,258) -- -- (19) --
Dec. 2010 (25,686) (1,359) -- -- (12)
Post-October losses (3,363) (227) -- -- --
Post-October losses represent losses realized on investment transactions from
November 1, 2002 through December 31, 2002 that, in accordance with Federal
income tax regulations the Funds have elected to defer and treat as having
arisen in the following fiscal year.
The aggregate gross unrealized appreciation and depreciation of securities
held by the Equity Fund, Strategic Growth Fund, Tax Managed Equity Fund, High
Grade Income Fund, and Hawaii Municipal Bond Fund for Federal income tax
purposes at June 30, 2003 were as follows:
Strategic Tax High Grade Hawaii
Equity Growth Managed Income Municipal
Fund Fund Equity Fund Fund Bond Fund
(000) (000) (000) (000) (000)
-------- ------- ------- -------- --------
Federal Tax Cost $155,152 $21,805 $29,115 $163,680 $173,609
-------- ------- ------- -------- --------
Gross
Unrealized
Appreciation 13,223 5,005 2,490 10,671 14,445
Gross
Unrealized
Depreciation (13,694) (504) (506) (60) (166)
-------- ------- ------- -------- --------
Net
Unrealized
Appreciation
(Depreciation) $ (471) $ 4,501 $ 1,984 $ 10,611 $ 14,279
======== ======= ======= ======== ========
9. CONCENTRATION OF CREDIT RISK
The Hawaii Municipal Bond Fund invests primarily in debt instruments in the
state of Hawaii. The issuers' ability to meet their obligations may be affected
by economic developments in that state.
June 30, 2003 71 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
TERM OF
POSITION OFFICE AND
PERSONAL HELD WITH THE LENGTH OF
INFORMATION(1) COMPANY TIME SERVED(2)
- ----------------------------------------- -------------- ----------
INDEPENDENT BOARD MEMBERS
[PHOTO OMITTED] MR. MARTIN ANDERSON Trustee Since 1994
79
[PHOTO OMITTED] MR. CHARLES E. CARLBOM Trustee Since 1999
68
[PHOTO OMITTED] MR. JAMES L. HUFFMAN Trustee Since 1999
58
[PHOTO OMITTED] MR. PETER F. SANSEVERO Trustee Since 1999
70
[PHOTO OMITTED] MR. MANUEL R. SYLVESTER Trustee Since 1994
73
[PHOTO OMITTED] DR. JOYCE S. TSUNODA Trustee Since 1994
65
Bishop Street Funds 72
(UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
BISHOP STREET OTHER
FUNDS COMPLEX DIRECTORSHIPS
PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DURING PAST 5 YEARS BOARD MEMBER(3) BOARD MEMBER(4)
- ----------------------------------------- -------------------- ------------------
PARTNER -- Goodsill, Anderson, Quinn & Stifel since 1951 7 None
CHAIRMAN -- B.P.I., Inc. since 1999 7 None
PRESIDENT AND CEO -- United Grocers, Inc. (1997-1999)
Western Family Food, Inc.
Western Family Holdings, Inc. (1982-1997)
DEAN & PROFESSOR -- Lewis & Clark Law School since 1973 7 None
REGIONAL DIRECTOR OF THE NORTHWESTERN REGION AND 7 None
FIRST VICE PRESIDENT -- Merrill Lynch (1958-1997)
RETIRED SINCE 1992 7 None
VICE PRESIDENT FOR INTERNATIONAL EDUCATION-- University of Hawaii System 7 None
since January 2003
CHANCELLOR FOR COMMUNITY COLLEGES-- University of Hawaii since 1983
SENIOR VICE PRESIDENT-- University of Hawaii 1989-2003
VICE PRESIDENT, INTERNATIONAL EDUCATION, University of Hawaii, 2003-present
June 30, 2003 73 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
TERM OF
POSITION(S) OFFICE AND
PERSONAL HELD WITH THE LENGTH OF
INFORMATION(1) COMPANY TIME SERVED(2)
- ----------------------------------------- -------------- -------------
INTERESTED BOARD MEMBERS(5)
[PHOTO OMITTED] MR. PHILLIP H. CHING Trustee Since 1994
72
Trustee,
Chairman and
[PHOTO OMITTED] MR. ROBERT A. NESHER President of Since 1998
56 the Board
of Trustees
[PHOTO OMITTED] HONORABLE WILLIAM S. RICHARDSON Trustee Since 1994
83
OFFICERS
Peter J. Golden Treasurer 1
38 and Controller
John Munch Vice President 1
32 and Secretary
Bishop Street Funds 74
(UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
BISHOP STREET OTHER
FUNDS COMPLEX DIRECTORSHIPS
PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DURING PAST 5 YEARS BOARD MEMBER(3) BOARD MEMBER(4)
- -------------------------------------------------------- ------------- -----------------------
RETIRED SINCE 1996 7 None
VICE CHAIRMAN -- First Hawaiian Bank (1968-1996)
TRUSTEE OF: THE ADVISORS' INNER CIRCLE
FUND, THE ARBOR FUND, EXPEDITION
CURRENTLY PERFORMS VARIOUS SERVICES ON BEHALF OF 7 FUNDS, SEI ASSET ALLOCATION TRUST, SEI
SEI INVESTMENTS FOR WHICH MR. NESHER IS COMPENSATED. DAILY INCOME TRUST, SEI INDEX FUNDS,
EXECUTIVE VICE PRESIDENT-- SEI Investments (1986-1994) SEI INSTITUTIONAL INVESTMENTS TRUST,
DIRECTOR AND EXECUTIVE VICE PRESIDENT OF THE ADVISER, SEI INSTITUTIONAL MANAGED TRUST,
THE ADMINISTRATOR AND THE DISTRIBUTOR (1981-1994) SEI INSTITUTIONAL INTERNATIONAL TRUST,
SEI INSURANCE PRODUCTS TRUST,
SEI LIQUID ASSET TRUST
AND SEI TAX EXEMPT TRUST.
RETIRED SINCE 1992 7 None
Fund Accounting Director of the Administrator N/A N/A
since 2001; Vice President, Fund Administration,
J.P. Morgan Chase & Co., 2000-2001; Vice President,
Fund & Pension Accounting, Chase Manhattan Bank,
1997-2000.
Vice President and Assistant Secretary of the N/A N/A
Administrator and Distributor since November 2001;
Associate at Howard Rice Nemorovoski Canady Falk
& Rabin, 1998-2001; Associate at Seward & Kissel,
1996-1998.
June 30, 2003 75 www.bishopstreetfunds.com
Bishop Street Funds
- --------------------------------------------------------------------------------
TERM OF
POSITION(S) OFFICE AND
PERSONAL HELD WITH THE LENGTH OF
INFORMATION(1) COMPANY TIME SERVED(2)
- ----------------------------------------- -------------- ------------
Sherry K. Vetterlein Vice President and 2
41 Assistant Secretary
Todd B. Cipperman Vice President and 6
37 Assistant Secretary
Lydia A. Gavalis Vice President and 4
39 Assistant Secretary
Timothy D. Barto Vice President and 2
35 Assistant Secretary
William E. Zitelli Vice President and 2
35 Assistant Secretary
Christine M. McCullough Vice President and 2
42 Assistant Secretary
Lori Foo Vice President and 1
45 Assistant Secretary
<FN>
1 EACH TRUSTEE MAY BE CONTACTED BY WRITING TO THE TRUSTEE C/O BISHOP STREET FUNDS, PO BOX 3708, HONOLULU, HI 96811. EACH OFFICER MAY
BE CONTACTED BY WRITING TO THE OFFICER C/O SEI INVESTMENTS, ONE FREEDOM VALLEY DRIVE, OAKS, PA 19456.
2 EACH TRUSTEE SHALL HOLD OFFICE DURING THE LIFETIME OF THIS TRUST UNTIL THE ELECTION AND QUALIFICATION OF HIS OR HER SUCCESSOR, OR
UNTIL HE OR SHE SOONER DIES, RESIGNS OR IS REMOVED IN ACCORDANCE WITH THE TRUST'S DECLARATION OF TRUST.
3 THE "BISHOP STREET FUNDS COMPLEX" CONSISTS OF ALL REGISTERED INVESTMENT COMPANIES FOR WHICH BISHOP STREET CAPITAL MANAGEMENT
SERVES AS INVESTMENT ADVISER. AS OF JUNE 30, 2003, THE BISHOP STREET FUNDS COMPLEX CONSISTED OF 7 FUNDS.
</FN>
BISHOP STREET FUNDS 76
(UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
BISHOP STREET OTHER
FUNDS COMPLEX DIRECTORSHIPS
PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DURING PAST 5 YEARS BOARD MEMBER(3) BOARD MEMBER(4)
- --------------------------------------------------------- --------------- -------------------------
Vice President and Assistant Secretary of SEI N/A N/A
Investments Global Funds Services and SEI
Investments Distribution Co. since January 2001;
Shareholder/Partner, Buchanan Ingersoll Professional
Corporation from 1992-2000.
Senior Vice President and General Counsel of SEI N/A N/A
Investments; Senior Vice President, General Counsel
and Secretary of SEI Investments Global Funds Services
and SEI Investments Distribution Co. since 2000;
Vice President and Assistant Secretary of SEI
Investments, SEI Global Funds Services and SEI
Investments Distribution Co. from 1999-2000.
Vice President and Assistant Secretary of SEI N/A N/A
Investments, SEI Investments Global Funds Services
and SEI Investments Distribution Co. since 1998;
Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange from 1989-1998.
Vice President and Assistant Secretary of SEI N/A N/A
Investments Global Funds Services and SEI Investments
Distribution Co. since 1999; Associate, Dechert (law
firm) from 1997-1999.
Vice President and Assistant Secretary of SEI N/A N/A
Investments Global Funds Services and SEI Investments
Distribution Co. since 2000; Vice President, Merrill
Lynch & Co. Asset Management Group from
1998 - 2000; Associate at Pepper Hamilton LLP
from 1997-1998.
Vice President and Assistant Secretary of SEI N/A N/A
Investments Global Funds Services and SEI Investments
Distribution Co. since 1999; Associate at White and
Williams LLP from 1991-1999.
Assistant Vice President of First Hawaiian Bank since N/A N/A
2000; Employed by First Hawaiian Bank since 1994.
<FN>
4 DIRECTORSHIPS OF COMPANIES ARE REQUIRED TO REPORT TO THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF
1934 (I.E., "PUBLIC COMPANIES") OR OTHER INVESTMENT COMPANIES REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
5 MESSRS. CHING, NESHER AND RICHARDSON ARE TRUSTEES WHO MAY BE DEEMED TO BE AN "INTERESTED PERSON" OF THE TRUST, AS THAT TERM IS
DEFINED IN THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
</FN>
FOR MORE INFORMATION REGARDING THE TRUSTEES AND OFFICERS, PLEASE REFER TO THE
STATEMENT OF ADDITIONAL INFORMATION, WHICH ISAVAILABLE UPON REQUEST BY CALLING
1-800-262-9565.
June 30, 2003 77 www.bishopstreetfunds.com
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
NOTES
[BACKGROUND COMPASS GRAPHIC OMITTED]
INVESTMENT ADVISER
BISHOP STREET CAPITAL MANAGEMENT
HONOLULU, HI 96813
ADMINISTRATOR
SEI INVESTMENTS GLOBAL FUNDS SERVICES
OAKS, PA 19456
DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
OAKS, PA 19456
TRANSFER AGENT
DST SYSTEMS, INC.
KANSAS CITY, MO 64141
CUSTODIAN
UNION BANK OF CALIFORNIA, N.A.
SAN FRANCISCO, CA 94101
LEGAL COUNSEL
MORGAN, LEWIS & Bockius LLP
Philadelphia, PA 19103
AUDITORS
PricewaterhouseCoopers LLP
Philadelphia, PA 19103
[BISHOP STREET FUNDS LOGO OMITTED]
YOUR AVENUE
TO SOUND INVESTMENT
FOR MORE INFORMATION ABOUT BISHOP STREET FUNDS, CALL 1-800-262-9565
OR YOUR INVESTMENT SPECIALIST
VISIT US ONLINE AT
WWW.BISHOPSTREETFUNDS.COM
[BISHOP STREET FUNDS LOGO OMITTED]
BISHOP STREET FUNDS
P.O. BOX 3708
HONOLULU, HI 96811
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF BISHOP STREET FUNDS' SHAREHOLDERS. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
SHARES OF BISHOP STREET FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY FIRST HAWAIIAN BANK OR ANY OF ITS AFFILIATES. SUCH SHARES ARE ALSO NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENT IN SHARES OF MUTUAL FUNDS
INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE BISHOP STREET FUNDS
ARE DISTRIBUTED BY SEIINVESTMENTS DISTRIBUTION CO., WHICH IS NOT AFFILIATED WITH
FIRST HAWAIIAN BANK, BANK OF THE WEST OR BANCWEST CORPORATION. BANCWEST
CORPORATION IS A WHOLLY-OWNED SUBSIDIARY OF BNP PARIBAS.
BSF-SA-004-0900
ITEM 2. CODE OF ETHICS.
Not applicable - only effective for annual reports for periods ending on or
after July 15, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable - only effective for annual reports for periods ending on or
after July 15, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable - only effective for annual reports for periods ending on or
after December 15, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. (RESERVED)
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. (RESERVED)
ITEM 9. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEMS 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
- --------------------------------------------------------------------------------
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.
(Registrant) Bishop Street Funds
By (Signature and Title)* /s/ Robert A. Nesher
--------------------
Robert A. Nesher, Trustee, Chairman and
President of the Board of Trustees
Date 08/22/03
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 (Signature and Title)* /s/ Robert A. Nesher
--------------------
Robert A. Nesher, Trustee, Chairman and
President of the Board of Trustees
Date 08/22/03
By (Signature and Title)* /s/ Peter J. Golden
-------------------
Peter J. Golden, Treasurer and Controller
Date 08/22/03
* Print the name and title of each signing officer under his or her signature.