UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM N-CSRS -------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES INVESTMENT COMPANY ACT FILE NUMBER 811-08572 BISHOP STREET FUNDS (Exact name of registrant as specified in charter) -------- 101 Federal Street Boston, MA 02109 (Address of principal executive offices) SEI Investments One Freedom Valley Drive Oaks, PA 19456 (Name and address of agent for service) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-262-9565 DATE OF FISCAL YEAR END: DECEMBER 31, 2008 DATE OF REPORTING PERIOD: JUNE 30, 2008 ITEM 1. REPORTS TO STOCKHOLDERS. (GRAPHIC) BISHOP STREET FUNDS SEMI-ANNUAL REPORT JUNE 30, 2008 STRATEGIC GROWTH FUND LARGE CAP CORE 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) The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q within sixty days after the end of the period. The Funds' Forms N-Q are available on the Commission's website at http://www.sec.gov, and may be reviewed and copied at the Commission's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. A description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities is available without charge, by calling 1-800-262-9565 or by visiting the Commission's website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, by calling 1-800-262-9565 or by visiting the Funds' website at http://www.bishopstreetfunds.com or the website of the Securities and Exchange Commission. BISHOP STREET TABLE OF CONTENTS FUNDS LETTER TO SHAREHOLDERS .................................................... 2 SCHEDULES OF INVESTMENTS Strategic Growth Fund .................................................. 4 Large Cap Core Equity Fund ............................................. 7 High Grade Income Fund ................................................. 13 Hawaii Municipal Bond Fund ............................................. 22 Money Market Fund ...................................................... 32 Treasury Money Market Fund ............................................. 35 STATEMENTS OF ASSETS AND LIABILITIES ...................................... 36 STATEMENTS OF OPERATIONS .................................................. 38 STATEMENTS OF CHANGES IN NET ASSETS ....................................... 40 FINANCIAL HIGHLIGHTS ...................................................... 44 NOTES TO FINANCIAL STATEMENTS ............................................. 48 DISCLOSURE OF FUND EXPENSES ............................................... 59 APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS ............... 61 1 BISHOP STREET LETTER TO SHAREHOLDERS FUNDS (PHOTO OF MICHAEL K. HIRAI) Dear Shareholder: The first six months of 2008 have proven to be an extraordinary period in the financial markets. The continuation of the credit and liquidity squeeze, weak consumer spending and the prospect of a recession have all weighed heavily on the global equity markets. Investment grade bonds and money markets provided some comfort and protection from the storm, but the rout has continued and has threatened the safety and soundness of our banking system. ECONOMIC WORRIES WEIGHED HEAVILY ON THE U.S. AND GLOBAL EQUITY MARKETS For the first half of the year, the broad U.S. stock market declined 11.9% amid looming fears of an economic recession. The housing market continued its slide putting further pressure on both lenders and borrowers. Home prices have plunged 18% from their recent highs and fell almost 8% during the first quarter 2008 alone -- the biggest quarterly drop in twelve years. International stocks managed to outperform the U.S. markets but nearly all global equity markets registered negative returns. A FLIGHT TO SAFETY IN THE BOND MARKET Year to date, bonds have fared much better than stocks though their performance has not been consistent across all sectors. After a strong showing in the first three months of the year, the broad taxable bond market has returned just +1.1% so far in 2008. Much of that return came from U.S. Treasuries as credit worries in the financial sector continued to weigh heavily on the lending markets. The Federal Reserve responded decisively to the weakness in the credit markets and the broad economy by slashing its target rate five times so far this year, leaving the federal funds rate at 2% -- the lowest level since December 2004. Bishop Street Funds 2 (BISHOP STREET FUNDS LOGO) BALANCE AND FOCUS ARE THE KEYS TO SUCCESSFUL LONG-TERM INVESTING The past six months have been a disappointment to investors, but we wish to remind our shareholders to keep a steady hand and not lose focus on their long-term objectives. As always, the key to investment success lies in holding a diversified mix of stocks, bonds, and money market funds that is consistent with your long-term goals, time horizon, and risk tolerance. The Bishop Street Funds offers you selected stock, bond and money market alternatives that can be used as an integral part of your overall investment program. Many of the stock fund holdings in the Strategic Growth Fund and the Large Cap Core Fund have attractive earnings and income profiles adding to their good long-term growth potential. Our High Grade Income Fund and Hawaii Municipal Bond Fund hold high-quality fixed income securities that provide you with stable and predictable income cash flows and our prime Money Market Fund and Treasury Money Market Fund provide stable values and safety. Balance and focus will help you achieve your long-term investment goals. Thank you for your continued confidence in the Bishop Street Funds. Sincerely, /s/ Michael K. Hirai Michael K. Hirai, CFA, CPA President and Director Bishop Street Capital Management July 22, 2008 June 30, 2008 3 www.bishopstreetfunds.com Strategic Growth Fund (UNAUDITED) TOP TEN EQUITY HOLDINGS+ Percentage of Investments ------------- 1. Williams 2.3% 2. Baxter International 2.3% 3. Transocean 2.3% 4. McDermott International 2.3% 5. Accenture Ltd., Cl A 2.2% 6. Gilead Sciences 2.2% 7. Danaher 2.1% 8. Thermo Fisher Scientific 2.1% 9. National Oilwell Varco 2.1% 10. Molson Coors Brewing, Cl B 2.1% SECTOR WEIGHTINGS+ (BAR CHART) Information Technology 23.2% Health Care 18.7% Industrials 18.1% Consumer Dicretionary 13.5% Energy 10.8% Financials 7.6% Consumer Staples 5.8% Materials 1.9% Short-Term Investments 0.4% + PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. SCHEDULE OF INVESTMENTS Market Value Shares (000) - ------ -------- COMMON STOCK -- 99.9% CONSUMER DISCRETIONARY -- 13.5% 44,400 Apollo Group, Cl A* $ 1,965 61,800 Coach* 1,785 48,000 GameStop, Cl A* 1,939 38,400 McDonald's 2,159 32,100 Nike, Cl B 1,913 65,100 TJX 2,049 115,440 Wyndham Worldwide 2,068 -------- 13,878 -------- Bishop Street Funds 4 Strategic Growth Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Market Value Shares (000) - ------ -------- CONSUMER STAPLES -- 5.9% 53,313 CVS $ 2,110 60,100 Hansen Natural* 1,732 39,800 Molson Coors Brewing, Cl B 2,162 -------- 6,004 -------- ENERGY -- 10.8% 24,400 National Oilwell Varco* 2,165 23,600 Occidental Petroleum 2,121 36,700 Suncor Energy 2,133 15,221 Transocean 2,319 58,700 Williams 2,366 -------- 11,104 -------- FINANCIALS -- 7.7% 36,600 ACE 2,016 65,600 Nasdaq Stock Market* 1,742 23,700 Nymex Holdings 2,002 32,900 State Street 2,105 -------- 7,865 -------- HEALTH CARE -- 18.7% 51,400 Aetna 2,083 36,600 Baxter International 2,340 25,100 Becton Dickinson 2,041 59,900 Cigna 2,120 32,600 Express Scripts* 2,045 28,400 Genzyme* 2,045 42,300 Gilead Sciences* 2,240 108,200 Schering-Plough 2,130 39,100 Thermo Fisher Scientific* 2,179 -------- 19,223 -------- INDUSTRIALS -- 18.1% 28,300 Danaher 2,187 33,600 ITT 2,128 20,300 Lockheed Martin 2,003 34,300 Manpower 1,998 37,300 McDermott International* 2,308 19,600 Precision Castparts 1,889 49,600 Tyco International 1,986 32,200 United Technologies 1,987 25,700 W.W. Grainger 2,102 -------- 18,588 -------- June 30, 2008 5 www.bishopstreetfunds.com Strategic Growth Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Market Value Shares (000) - ------ -------- INFORMATION TECHNOLOGY -- 23.2% 56,500 Accenture Ltd., Cl A $ 2,301 56,700 Akamai Technologies* 1,973 79,900 Corning 1,842 3,800 Google, Cl A* 2,000 46,700 Hewlett-Packard 2,065 29,100 MEMC Electronic Materials* 1,791 68,300 Microsoft 1,879 95,700 Oracle* 2,010 43,700 Qualcomm 1,939 94,100 Red Hat* 1,947 101,700 Symantec* 1,968 60,600 Western Digital* 2,092 -------- 23,807 -------- MATERIALS -- 2.0% 15,800 Monsanto 1,998 -------- TOTAL COMMON STOCK (Cost $98,987) 102,467 -------- CASH EQUIVALENTS (A) -- 0.3% 180,175 Dreyfus Cash Management Fund, Institutional Shares, 2.660% 180 180,175 Fidelity Institutional Money Market Portfolio, Institutional Shares, 2.600% 180 -------- TOTAL CASH EQUIVALENTS (Cost $360) 360 -------- TOTAL INVESTMENTS (Cost $99,347) -- 100.2% $102,827 ======== PERCENTAGES ARE BASED ON NET ASSETS OF $102,586 ($ THOUSANDS). * NON-INCOME PRODUCING SECURITY. (A) THE RATE SHOWN REPRESENTS THE 7-DAY EFFECTIVE YIELD AS OF JUNE 30, 2008. CL -- CLASS LTD. -- LIMITED COST FIGURES ARE SHOWN IN THOUSANDS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. Bishop Street Funds 6 Large Cap Core Equity Fund (UNAUDITED) TOP TEN EQUITY HOLDINGS+ Percentage of Investments ------------- 1. Chevron 2.6% 2. Microsoft 2.4% 3. Johnson & Johnson 2.2% 4. International Business Machines 1.8% 5. AT&T 1.8% 6. Apple 1.8% 7. Procter & Gamble 1.7% 8. JPMorgan Chase 1.7% 9. Cisco Systems 1.7% 10. Wal-Mart Stores 1.6% SECTOR WEIGHTINGS+ (BAR CHART) Information Technology 17.8% Energy 17.2% Financials 13.9% Health Care 13.2% Industrials 12.6% Consumer Staples 9.0% Consumer Discretionary 8.2% Materials 3.8% Telecommunications 2.9% Utilities 1.1% Short-Term Investments 0.3% + PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. SCHEDULE OF INVESTMENTS Market Value Shares (000) - ------ -------- COMMON STOCK -- 99.5% CONSUMER DISCRETIONARY -- 8.3% 14,310 Best Buy $ 567 9,600 Carnival (A) 316 16,510 Coach* 477 25,920 Comcast, Cl A 492 23,200 Expedia* 426 5,400 Garmin (A) 231 8,400 International Game Technology 210 15,700 Johnson Controls 450 June 30, 2008 7 www.bishopstreetfunds.com Large Cap Core Equity Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (continued) Market Value Shares (000) - ------ -------- CONSUMER DISCRETIONARY -- (CONTINUED) 9,000 Kohl's* $ 360 14,820 Liberty Media-Entertainment* 359 19,140 Lowe's 397 30,900 News, Cl A 465 9,100 Omnicom Group 408 5,500 Sherwin-Williams 253 19,100 Staples 454 25,720 Time Warner 381 5,600 VF 398 9,160 Viacom, Cl B* 280 -------- 6,924 -------- CONSUMER STAPLES -- 8.9% 21,390 Archer-Daniels-Midland 722 6,810 Costco Wholesale 478 14,910 PepsiCo 948 16,910 Philip Morris International 835 23,650 Procter & Gamble 1,438 16,820 SYSCO 463 24,650 Tyson Foods, Cl A 368 26,730 Walgreen 869 24,030 Wal-Mart Stores 1,351 -------- 7,472 -------- ENERGY -- 17.1% 9,670 Apache 1,344 12,100 Cameron International* 670 6,500 Canadian Natural Resources 652 17,700 Chesapeake Energy (A) 1,167 21,960 Chevron 2,177 8,700 Devon Energy 1,045 35,300 El Paso 767 19,600 Halliburton 1,040 19,720 Marathon Oil 1,023 10,120 National Oilwell Varco* 898 16,000 Nexen 636 11,600 Peabody Energy (A) 1,021 33,100 Talisman Energy 733 22,600 Weatherford International* 1,121 -------- 14,294 -------- Bishop Street Funds 8 Large Cap Core Equity Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (continued) Market Value Shares (000) - ------ -------- FINANCIALS -- 13.8% 11,970 ACE $ 659 10,400 Allstate 474 43,870 American International Group 1,161 34,290 Bank of America 819 11,300 Bank of New York Mellon 427 15,680 BB&T 357 11,160 Capital One Financial 424 5,200 Chubb 255 60,810 Citigroup 1,019 1,200 CME Group, Cl A 460 8,930 Franklin Resources 818 19,120 Genworth Financial, Cl A 341 2,050 Goldman Sachs Group 359 9,770 Hartford Financial Services Group 631 30,800 Host Hotels & Resorts+ 420 41,820 JPMorgan Chase 1,435 4,030 Legg Mason 176 4,110 Lehman Brothers Holdings (A) 81 16,320 Morgan Stanley 589 3,900 State Street 250 9,040 Travelers 392 -------- 11,547 -------- HEALTH CARE -- 13.1% 11,400 Abbott Laboratories 604 7,300 Allergan 380 8,400 Amgen* 396 4,850 Biogen Idec* 271 8,700 Celgene* 556 3,600 Cephalon* (A) 240 13,640 Coventry Health Care* 415 9,600 Forest Laboratories* 334 7,660 Genentech* 581 10,190 Genzyme* 734 6,800 Gilead Sciences* 360 28,210 Johnson & Johnson 1,815 7,520 Laboratory Corp of America Holdings* 524 8,200 Medtronic 424 19,700 Merck 743 35,260 Schering-Plough 694 7,700 St. Jude Medical* 315 23,370 UnitedHealth Group 613 June 30, 2008 9 www.bishopstreetfunds.com Large Cap Core Equity Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Market Value Shares (000) - ------ -------- HEALTH CARE -- (CONTINUED) 8,910 Wyeth $ 427 7,970 Zimmer Holdings* 542 -------- 10,968 -------- INDUSTRIALS -- 12.7% 12,600 Boeing 828 10,420 Caterpillar 769 16,720 Dover 809 11,220 General Dynamics 945 17,200 General Electric 459 19,750 Illinois Tool Works 938 22,660 Ingersoll-Rand, Cl A 848 8,030 L-3 Communications Holdings 730 18,740 Norfolk Southern 1,174 12,235 Parker Hannifin 873 9,500 Precision Castparts 915 8,900 Questar 632 10,400 United Technologies 642 -------- 10,562 -------- INFORMATION TECHNOLOGY -- 17.8% 7,400 Accenture Ltd., Cl A 301 13,620 Adobe Systems* 537 10,900 Akamai Technologies* 379 8,840 Apple* 1,480 18,200 Applied Materials 347 21,000 Broadcom, Cl A* 573 61,510 Cisco Systems* 1,431 29,360 Corning 677 38,050 EMC* 559 2,390 Google, Cl A* 1,258 29,600 Intel 636 12,890 International Business Machines 1,528 7,930 MEMC Electronic Materials* 488 74,080 Microsoft 2,038 12,845 Nvidia* 240 53,840 Oracle* 1,131 17,900 Qualcomm 794 22,100 Symantec* 428 -------- 14,825 -------- Bishop Street Funds 10 Large Cap Core Equity Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Market Shares/Face Value Amount (000) (000) - ------------ -------- MATERIALS -- 3.8% 8,290 Alcoa $ 295 8,200 Dow Chemical 286 3,200 Eastman Chemical 220 13,380 EI Du Pont de Nemours 574 7,860 Freeport-McMoRan Copper & Gold, Cl B 921 2,100 Monsanto 266 13,590 Teck Cominco Ltd., Cl B (A) 652 -------- 3,214 -------- TELECOMMUNICATION SERVICES -- 2.9% 45,150 AT&T 1,521 6,500 NII Holdings* 309 16,020 Verizon Communications 567 -------- 2,397 -------- UTILITIES -- 1.1% 10,090 Exelon 908 -------- TOTAL COMMON STOCK (Cost $88,493) 83,111 -------- MASTER NOTES (B) -- 1.0% $ 455 American Honda Finance 2.796%, 07/11/08 455 Bear Stearns 341 2.700%, 09/11/08 341 -------- TOTAL MASTER NOTES (Cost $796) 796 -------- CASH EQUIVALENTS (C) -- 1.3% 272,670 AIM Liquid Asset Fund, 2.593% (B) 273 113,074 Dreyfus Cash Management Fund, Institutional Shares, 2.660% 113 545,340 Dreyfus Institutional Cash Advantage Fund, 2.656% (B) 545 113,074 Fidelity Institutional Money Market Portfolio, 2.600% Institutional Shares, 113 -------- TOTAL CASH EQUIVALENTS (Cost $1,044) 1,044 -------- June 30, 2008 11 www.bishopstreetfunds.com Large Cap Core Equity Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- REPURCHASE AGREEMENT (B) -- 2.0% $ 1,681 Lehman Brothers 2.580%, dated 06/30/08, to be repurchased on 07/01/08, repurchase price $1,681,579 (collateralized by various mortgage-backed securities ranging in par value $851,640-$6,801,485, 0.000%-6.500%, 01/25/09-01/15/49, with a total market value of $1,849,618) TOTAL REPURCHASE AGREEMENT (Cost $1,681) $ 1,681 -------- TOTAL INVESTMENTS (Cost $92,014) -- 103.8% $ 86,632 ======== PERCENTAGES ARE BASED ON NET ASSETS OF $83,492 ($ THOUSANDS). * NON-INCOME PRODUCING SECURITY. (A) THIS SECURITY OR PORTION OF THIS SECURITY IS ON LOAN AT JUNE 30, 2008. THE TOTAL VALUE OF SECURITIES ON LOAN AT JUNE 30, 2008 WAS $3,208 ($ THOUSANDS). (B) THESE SECURITIES WERE PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AS OF JUNE 30, 2008, WAS $3,295 ($ THOUSANDS). (C) THE RATE SHOWN REPRESENTS THE 7-DAY EFFECTIVE YIELD AS OF JUNE 30, 2008. + -- REAL ESTATE INVESTMENT TRUST CL -- CLASS LTD. -- LIMITED COST FIGURES ARE SHOWN IN THOUSANDS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. Bishop Street Funds 12 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 4.2% 2. U.S. Treasury Bond 7.500% 11/15/16 2.6% 3. U.S. Treasury Bond 6.250% 08/15/23 2.5% 4. U.S. Treasury Bond 4.500% 02/15/36 2.4% 5. FNMA MTN 7.250% 01/15/10 2.0% 6. General Electric Capital MTN, Ser A 5.450% 01/15/13 1.8% 7. Abbott Laboratories 5.600% 05/15/11 1.7% 8. U.S. Treasury Bond 6.375% 08/15/27 1.6% 9. U.S. Treasury Bond 7.250% 08/15/22 1.5% 10. FMLMC MTN 4.250% 05/22/13 1.4% SECTOR WEIGHTINGS+ (BAR CHART) U.S. Treasury Obligations 25.1% U.S. Government Agency Obligations 21.6% Financials 11.2% Consumer Discretionary 9.8% Energy 5.5% Health Care 5.2% Industrials 4.4% Information Technology 4.3% U.S. Government Mortgage-Backed Obligations 4.3% Utilities 2.2% Materials 2.2% Municipal Bonds 2.0% Telecommunications 1.0% Asset-Backed Security 0.8% Short-Term Investments 0.4% + PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. SCHEDULE OF INVESTMENTS Face Market Amount Value (000) (000) - ------ -------- CORPORATE OBLIGATIONS -- 45.2% AEROSPACE & DEFENSE -- 3.1% Emerson Electric $ 500 5.250%, 10/15/18 $ 493 General Dynamics 1,000 4.500%, 08/15/10 1,021 Rockwell Automation 1,200 6.700%, 01/15/28 1,290 United Technologies 1,200 6.350%, 03/01/11 1,263 -------- 4,067 -------- June 30, 2008 13 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- AUTO FINANCE -- 1.2% Toyota Motor Credit $ 1,500 5.450%, 05/18/11 $ 1,564 -------- AUTOMOTIVE -- 0.5% DaimlerChrysler NA Holding 700 8.000%, 06/15/10 744 -------- BANKS -- 3.0% American Express Bank 1,400 5.500%, 04/16/13 1,369 Bank of Oklahoma (B) 500 5.750%, 05/15/17 495 BHP Billiton Finance 850 5.250%, 12/15/15 823 JPMorgan Chase 1,400 5.875%, 06/13/16 1,367 -------- 4,054 -------- BEVERAGES -- 1.0% PepsiCo 1,350 4.650%, 02/15/13 1,370 -------- BROADCASTING & CABLE -- 1.7% Comcast Cable Holdings 1,200 7.875%, 08/01/13 1,288 Turner Broadcasting System 975 8.375%, 07/01/13 1,048 -------- 2,336 -------- CHEMICALS -- 1.2% Monsanto 1,400 7.375%, 08/15/12 1,542 -------- COMPUTER HARDWARE -- 4.3% Cisco Systems 1,600 5.500%, 02/22/16 1,614 Hewlett-Packard 1,200 4.500%, 03/01/13 1,188 IBM 1,400 8.375%, 11/01/19 1,699 Oracle 1,200 5.250%, 01/15/16 1,181 -------- 5,682 -------- Bishop Street Funds 14 High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- CONSUMER DISCRETIONARY -- 0.8% Costco Wholesale $ 1,000 5.500%, 03/15/17 $ 1,015 -------- FINANCIALS -- 4.9% Bear Stearns 1,400 7.250%, 02/01/18 1,461 Boeing Capital 1,400 6.500%, 02/15/12 1,486 General Electric Capital MTN, Ser A 2,350 5.450%, 01/15/13 2,399 Jefferies Group 675 6.250%, 01/15/36 493 John Deere Capital 550 7.000%, 03/15/12 591 -------- 6,430 -------- FOOD & BEVERAGE -- 1.9% ConAgra Foods 1,475 7.875%, 09/15/10 1,559 General Mills 1,000 6.000%, 02/15/12 1,029 -------- 2,588 -------- FOREIGN GOVERNMENTS -- 1.9% Province of Ontario Canada (F) 1,500 2.750%, 02/22/11 1,467 Republic of Italy 1,000 5.375%, 06/12/17 1,058 -------- 2,525 -------- GENERAL MERCHANDISE -- 0.4% Kohl's 500 6.300%, 03/01/11 506 -------- HEALTH CARE -- 1.2% Johnson & Johnson 1,400 6.950%, 09/01/29 1,631 -------- HOUSEHOLD PRODUCTS -- 1.1% Procter & Gamble 1,200 8.000%, 10/26/29 1,509 -------- June 30, 2008 15 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- INDEPENDENT POWER PRODUCERS & ENERGY TRADER -- 0.4% Constellation Energy Group $ 500 7.000%, 04/01/12 $ 519 -------- INDUSTRIALS -- 0.7% Burlington Northern Santa Fe 320 6.125%, 03/15/09 323 650 5.650%, 05/01/17 635 -------- 958 -------- MEDIA -- 1.0% Walt Disney MTN 1,200 6.200%, 06/20/14 1,294 -------- OIL & GAS - EQUIPMENT/SERVICES -- 1.1% Baker Hughes 1,400 6.000%, 02/15/09 1,415 -------- OIL & GAS - EXPLORATION/PRODUCTION -- 1.8% Anadarko Petroleum 1,250 7.200%, 03/15/29 1,305 Occidental Petroleum 1,000 6.750%, 01/15/12 1,074 -------- 2,379 -------- OIL & GAS - INTEGRATED -- 2.2% Atlantic Richfield 1,385 9.125%, 03/01/11 1,553 ConocoPhillips 1,400 4.750%, 10/15/12 1,406 -------- 2,959 -------- PHARMACEUTICALS -- 3.9% Abbott Laboratories 2,100 5.600%, 05/15/11 2,196 Bristol-Myers Squibb 625 5.450%, 05/01/18 616 Genentech 1,200 4.750%, 07/15/15 1,190 Teva Pharmaceutical Finance LLC 1,200 5.550%, 02/01/16 1,173 -------- 5,175 -------- RETAIL - FOOD -- 1.1% McDonald's MTN 1,400 6.000%, 04/15/11 1,460 -------- Bishop Street Funds 16 High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- SEMI-CONDUCTORS -- 1.0% Duke Energy $ 1,275 4.200%, 10/01/08 $ 1,277 -------- STEEL & STEEL WORKS -- 1.0% Nucor 1,300 4.875%, 10/01/12 1,292 -------- TELECOMMUNICATIONS -- 1.0% AT&T Wireless Services 1,200 8.125%, 05/01/12 1,314 -------- TRANSPORTATION SERVICES -- 0.6% FedEx 800 7.250%, 02/15/11 833 -------- UTILITIES -- 1.2% Hydro-Quebec 1,325 7.500%, 04/01/16 1,570 -------- TOTAL CORPORATE OBLIGATIONS (Cost $60,410) 60,008 -------- U.S. TREASURY OBLIGATIONS -- 24.8% U.S. Treasury Bonds 2,750 7.500%, 11/15/16 (F) 3,435 4,500 7.250%, 05/15/16 (F) 5,529 1,500 7.250%, 08/15/22 (F) 1,933 1,700 6.375%, 08/15/27 (F) 2,083 2,800 6.250%, 08/15/23 (F) 3,331 800 6.250%, 05/15/30 985 1,000 6.000%, 02/15/26 (F) 1,171 1,300 5.250%, 11/15/28 (F) 1,409 1,000 5.000%, 05/15/37 1,075 400 4.750%, 02/15/37 413 3,100 4.500%, 02/15/36 (F) 3,078 1,400 4.375%, 02/15/38 (F) 1,365 U.S. Treasury Notes 700 4.750%, 08/15/17 742 1,250 4.250%, 11/15/14 (F) 1,305 1,400 4.250%, 08/15/15 (F) 1,455 1,000 4.250%, 11/15/17 (F) 1,021 1,325 4.125%, 08/31/12 (F) 1,371 1,200 4.000%, 02/15/14 (F) 1,238 -------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $30,828) 32,939 -------- June 30, 2008 17 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- U.S. GOVERNMENT AGENCY OBLIGATIONS -- 21.3% FHLB $ 1,000 6.000%, 07/10/13 $ 1,028 725 5.600%, 06/28/11 766 450 5.375%, 06/10/11 472 1,000 4.875%, 12/14/12 (F) 1,034 1,000 3.875%, 07/24/09 1,010 FHLB, Ser GH10 200 6.875%, 08/13/10 215 FHLB, Ser KU10 1,300 4.750%, 08/13/10 1,338 FHLB, Ser RH10 1,750 3.875%, 02/12/10 1,773 FHLB, Ser VB15 1,400 5.000%, 12/21/15 (F) 1,442 FHLMC 875 8.250%, 06/01/16 1,065 1,000 5.875%, 05/23/16 1,048 1,000 5.000%, 01/30/14 1,033 1,400 4.375%, 03/01/10 1,429 1,100 4.000%, 06/12/13 1,093 FHLMC MTN 1,400 5.500%, 03/22/22 1,410 1,000 5.375%, 01/09/14 1,008 1,000 5.000%, 10/27/14 1,034 200 5.000%, 06/18/18 (C) 200 1,800 4.250%, 05/22/13 1,809 FNMA 1,000 6.410%, 11/13/12 1,093 1,500 5.750%, 05/11/22 1,527 1,400 5.550%, 02/16/17 1,432 500 5.000%, 03/02/15 514 1,000 4.000%, 04/30/18 (C) 993 FNMA MTN 2,400 7.250%, 01/15/10 2,553 -------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $27,988) 28,319 -------- U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 4.2% FHLMC REMIC, Ser R010, Cl AB 1,022 5.500%, 12/15/19 1,031 FHLMC, Ser 2844, Cl VB 188 5.500%, 12/15/19 187 Bishop Street Funds 18 High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- FHLMC, Ser 3070, Cl DH $ 431 5.500%, 11/15/35 $ 431 FHLMC, Ser 3196, Cl CB 668 5.250%, 08/15/11 670 FNMA 741 3.500%, 08/01/10 738 FNMA REMIC, Ser B1, Cl BE 1,146 5.450%, 12/25/20 1,159 GNMA, Ser 7 1,400 5.500%, 11/16/31 1,416 -------- TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (Cost $5,574) 5,632 -------- MASTER NOTES (D) -- 6.0% American Honda Finance 4,546 2.796%, 07/11/08 4,546 Bear Stearns 3,409 2.700%, 09/11/08 3,409 -------- TOTAL MASTER NOTES (Cost $7,955) 7,955 -------- MUNICIPAL BONDS -- 2.1% 1,000 Honolulu Hawaii City & County, Ser B, GO, FGIC Insured, Pre-Refunded @ 101 (A) 5.125%, 07/01/09 1,043 500 Michigan Municipal Bond Authority, RB (B) 2.950%, 08/14/08 500 1,250 New Jersey State, Turnpike Authority, Ser B, RB, AMBAC Insured, Pre-Refunded @ 100 (A) 4.252%, 01/01/15 1,206 -------- TOTAL MUNICIPAL BONDS (Cost $2,805) 2,749 -------- ASSET-BACKED SECURITY (B) (G) -- 0.7% 1,000 Citibank Omni Master Trust, Ser 2007, Cl A9 3.698%, 08/21/08 1,009 -------- TOTAL ASSET-BACKED SECURITY (Cost $1,000) 1,009 -------- June 30, 2008 19 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Market Shares/Face Value Amount (000) (000) - ------------ -------- CASH EQUIVALENTS (E) -- 6.6% 2,727,330 AIM Liquid Asset Fund, 2.593% (D) $ 2,727 278,220 Dreyfus Cash Management Fund, Institutional Shares, 2.660% 278 5,454,660 Dreyfus Institutional Cash Advantage Fund, 2.656% (D) 5,455 278,220 Fidelity Institutional Money Market Portfolio, Institutional Shares, 2.600% 278 -------- TOTAL CASH EQUIVALENTS (Cost $8,738) 8,738 -------- REPURCHASE AGREEMENT (D) -- 12.7% $ 16,818 Lehman Brothers 2.580%, dated 06/30/08, to be repurchased on 07/01/08, repurchase price $16,819,644 (collateralized by various mortgage-backed obligations, ranging in par value $8,518,360 - $68,030,515, 0.000% - 6.500%, 01/25/09-01/15/49, with a total market value of $18,500,444) 16,818 -------- TOTAL REPURCHASE AGREEMENT (Cost $16,818) 16,818 -------- TOTAL INVESTMENTS (Cost $162,116) -- 123.6% $164,167 ======== PERCENTAGES ARE BASED ON NET ASSETS OF $132,788 ($ THOUSANDS). (A) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE. (B) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE IN EFFECT ON JUNE 30, 2008. THE MATURITY DATE SHOWN IS THE NEXT SCHEDULED RESET DATE. (C) STEP BOND -- COUPON RATE INCREASES IN INCREMENTS TO MATURITY. RATE DISCLOSED IS THE RATE IN EFFECT AS OF JUNE 30, 2008. (D) THESE SECURITIES WERE PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AS OF JUNE 30, 2008 WAS $32,955 ($ THOUSANDS). (E) THE RATE SHOWN REPRESENTS THE 7-DAY EFFECTIVE YIELD AS OF JUNE 30, 2008. (F) THIS SECURITY OR A PORTION OF THIS SECURITY IS ON LOAN AT JUNE 30, 2008. THE TOTAL VALUE OF SECURITIES ON LOAN AT JUNE 30, 2008 WAS $32,452 ($ THOUSANDS). (G) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONS. AT JUNE 30, 2008, THESE SECURITIES AMOUNTED TO $1,009 ($ THOUSANDS), REPRESENTING 0.7% OF THE NET ASSETS OF THE FUND. AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY CL -- CLASS FGIC -- FINANCIAL GUARANTEE INSURANCE CORPORATION FHLB -- FEDERAL HOME LOAN BANK FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION Bishop Street Funds 20 High Grade Income Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION GO -- GENERAL OBLIGATION LLC -- LIMITED LIABILITY COMPANY MTN -- MEDIUM TERM NOTE NA -- NORTH AMERICA RB -- REVENUE BOND REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT SER -- SERIES COST FIGURES ARE SHOWN IN THOUSANDS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2008 21 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) TOP TEN HOLDINGS+ Percentage Coupon Maturity of Rate Date Investments ------ -------- ----------- 1. Honolulu Hawaii City & County GO 5.000% 07/01/17 1.9% 2. Hawaii State, Department of Budget & Finance RB 5.650% 10/01/27 1.8% 3. Honolulu City & County GO 5.000% 07/01/21 1.8% 4. Honolulu City & County, 1st Board Resolution RB 5.000% 07/01/31 1.7% 5. Hawaii State GO 5.250% 05/01/15 1.6% 6. Phoenix Civic Improvement, Senior Lien RB 5.000% 07/01/21 1.5% 7. Hawaii State Highway RB 5.000% 07/01/16 1.4% 8. Honolulu City & County GO 5.125% 07/01/15 1.5% 9. Hawaii State GO 6.500% 12/01/13 1.4% 10. Honolulu City & County, Board of Water Supply RB 4.750% 07/01/17 1.3% SECTOR WEIGHTINGS+ (BAR CHART) General Obligations 37.8% Transportation 12.4% Housing 7.1% Facilities 6.8% Airport 6.4% Water 6.1% Pollution Control 5.2% Power 4.3% General Revenue 4.2% Utilities 2.8% Development 2.6% Single-Family Housing 1.8% Medical 1.5% School District 0.5% Short-Term Investments 0.4% Multi-Family Housing 0.1% + PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. SCHEDULE OF INVESTMENTS Face Market Amount Value (000) (000) - ------- -------- MUNICIPAL BONDS -- 99.4% ALABAMA -- 0.6% Alabama State, Federal Highway Finance Authority, Ser A, RB, MBIA Insured $ 1,000 5.000%, 03/01/16 $ 1,036 -------- ARIZONA -- 1.5% Phoenix Civic Improvement, Senior Lein, Ser A, RB 2,435 5.000%, 07/01/21 2,508 -------- Bishop Street Funds 22 Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------- -------- CALIFORNIA -- 1.0% Highland, Redevelopment Agency, Project Area No. 1, TA, AMBAC Insured $ 1,440 5.650%, 12/01/24 $ 1,588 -------- GEORGIA -- 0.6% Main Street, Natural Gas, Ser B, RB 1,000 5.000%, 03/15/18 927 -------- HAWAII -- 81.8% Hawaii County, Refunding & Improvement Project, Ser A, GO, FGIC Insured 450 5.600%, 05/01/12 485 430 5.600%, 05/01/13 468 Hawaii County, Ser A, GO, AMBAC Insured 1,000 5.000%, 07/15/15 1,075 Hawaii County, Ser A, GO, FSA Insured 1,500 5.000%, 07/15/23 1,543 Hawaii County, Ser A, GO, MBIA Insured 1,055 5.250%, 07/15/18 1,116 1,205 5.000%, 07/15/15 1,284 1,000 5.000%, 07/15/24 1,026 Hawaii State, Airport System, RB, AMT, FGIC Insured 1,000 5.750%, 07/01/15 1,011 280 5.250%, 07/01/21 266 Hawaii State, Airport System, Second Ser, RB, AMT, ETM 60 6.900%, 07/01/12 64 Hawaii State, Airport System, Second Ser, RB, AMT, ETM, MBIA Insured 1,505 6.900%, 07/01/12 1,603 Hawaii State, Airport System, Ser B, RB, AMT, FGIC Insured 1,500 6.625%, 07/01/18 1,540 1,500 6.500%, 07/01/14 1,546 500 6.000%, 07/01/19 504 Hawaii State, Department of Budget & Finance, Chaminade University, RB, Radian Insured 1,000 5.000%, 01/01/26 975 1,000 4.750%, 01/01/36 883 1,000 4.700%, 01/01/31 892 Hawaii State, Department of Budget & Finance, Electric Company & Subsidiary Project, RB, AMT, MBIA Insured 170 5.450%, 11/01/23 170 June 30, 2008 23 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------- -------- HAWAII -- (CONTINUED) Hawaii State, Department of Budget & Finance, Electric Company & Subsidiary Project, Ser A, RB, AMT, FGIC Insured $ 1,500 4.800%, 01/01/25 $ 1,374 Hawaii State, Department of Budget & Finance, Electric Company & Subsidiary Project, Ser B, RB, AMT, XLCA Insured 1,025 5.000%, 12/01/22 952 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser A, RB, AMT, AMBAC Insured 675 5.100%, 09/01/32 643 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser A, RB, AMT, FGIC Insured 1,000 4.650%, 03/01/37 834 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser A, RB, AMT, MBIA Insured 3,000 5.650%, 10/01/27 3,009 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser C, RB, AMT, AMBAC Insured 1,000 6.200%, 11/01/29 1,017 Hawaii State, Department of Budget & Finance, Mid Pacific Institute, RB, Radian Insured 1,000 5.000%, 01/01/26 954 1,000 4.625%, 01/01/31 883 Hawaii State, Department of Hawaiian Home Lands, Kapolei Office Facilities, Ser A, COP, FSA Insured 2,000 5.000%, 11/01/31 2,027 Hawaii State, Harbor System, Ser A, RB, AMT, FSA Insured 2,025 5.750%, 07/01/17 2,111 670 5.750%, 07/01/29 690 1,210 5.700%, 07/01/16 1,262 1,000 5.600%, 07/01/15 1,043 1,000 5.000%, 01/01/31 987 Hawaii State, Harbor System, Ser B, RB, AMT, AMBAC Insured 200 5.500%, 07/01/19 209 Hawaii State, Harbor System, Ser B, RB, AMT, FSA Insured 1,000 5.000%, 01/01/13 1,048 Hawaii State, Highway, RB, FSA Insured 2,000 5.000%, 07/01/12 2,124 Hawaii State, Highway, Ser A, RB, FSA Insured 725 5.000%, 07/01/21 751 1,565 5.000%, 07/01/22 1,615 1,805 5.000%, 07/01/23 1,858 Hawaii State, Highway, Ser B, RB, FSA Insured 2,300 5.000%, 07/01/16 2,451 Bishop Street Funds 24 Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------- -------- HAWAII -- (CONTINUED) Hawaii State, Housing Finance & Development, Ser A, RB, AMT, FNMA Collateral $ 1,000 5.400%, 07/01/29 $ 995 Hawaii State, Housing Finance & Development, Single-Family Housing, Ser A, RB, AMT, FNMA Collateral 285 5.750%, 07/01/30 286 620 5.400%, 07/01/30 604 Hawaii State, Housing Finance & Development, Single-Family Housing, Ser B, RB, FNMA Collateral 1,000 5.450%, 07/01/17 1,009 Hawaii State, Housing Finance & Development, University of Hawaii Faculty Housing Project, RB, AMBAC Insured 645 5.650%, 10/01/16 646 Hawaii State, Kapolei Office Building, Ser A, COP, AMBAC Insured 1,475 5.250%, 05/01/13 1,499 1,100 5.000%, 05/01/15 1,116 1,000 5.000%, 05/01/16 1,014 1,000 5.000%, 05/01/17 1,014 500 5.000%, 05/01/18 507 Hawaii State, No. 1 Capitol District State Office, COP, MBIA Insured 1,000 5.200%, 05/01/14 1,025 175 5.000%, 05/01/11 181 Hawaii State, Ser CL, GO, FGIC-TCRS Insured 1,000 6.000%, 03/01/11 1,071 Hawaii State, Ser CM, GO, FGIC Insured 2,000 6.500%, 12/01/13 2,284 500 6.000%, 12/01/09 524 1,500 6.000%, 12/01/11 1,629 Hawaii State, Ser CU, GO, MBIA Insured 550 5.750%, 10/01/12 583 Hawaii State, Ser CU, GO, MBIA Insured, Pre-Refunded @ 100 (B) 25 5.750%, 10/01/10 27 Hawaii State, Ser CV, GO, FGIC Insured 475 5.375%, 08/01/18 497 1,000 5.250%, 08/01/21 1,026 Hawaii State, Ser CX, GO, FSA Insured 1,000 5.500%, 02/01/16 1,066 1,000 5.500%, 02/01/21 1,048 Hawaii State, Ser CZ, GO, FSA Insured 225 5.250%, 07/01/16 237 Hawaii State, Ser DD, GO, MBIA Insured 2,500 5.250%, 05/01/15 2,678 1,000 5.000%, 05/01/16 1,064 June 30, 2008 25 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------- -------- HAWAII -- (CONTINUED) Hawaii State, Ser DF, GO, AMBAC Insured $ 1,250 5.000%, 07/01/21 $ 1,299 90 5.000%, 07/01/22 93 Hawaii State, Ser DG, GO, AMBAC Insured 1,000 5.000%, 07/01/16 1,069 Hawaii State, Ser DJ, GO, AMBAC Insured 300 5.000%, 04/01/15 321 Honolulu City & County, 1st Board Resolution, Senior Ser C, RB, MBIA Insured 2,850 5.000%, 07/01/31 2,869 Honolulu City & County, 2nd Board Resolution, Junior Ser A-1, RB, MBIA Insured 815 5.000%, 07/01/22 847 1,130 5.000%, 07/01/23 1,171 Honolulu City & County, 2nd Board Resolution, Junior Ser B-1, RB, MBIA Insured 865 5.000%, 07/01/23 896 Honolulu City & County, Board of Water Supply, Ser A, RB, FGIC Insured 1,230 5.000%, 07/01/21 1,252 2,000 5.000%, 07/01/33 1,950 Honolulu City & County, Board of Water Supply, Ser A, RB, FGIC Insured, Pre-Refunded @ 100 (B) 1,700 4.750%, 07/01/14 1,814 2,000 4.750%, 07/01/14 2,134 Honolulu City & County, Board of Water Supply, Ser B, RB, AMT, MBIA Insured 1,000 5.250%, 07/01/20 1,020 1,000 5.250%, 07/01/21 1,016 325 5.000%, 07/01/15 338 Honolulu City & County, GO, ETM, FGIC Insured 1,000 6.000%, 12/01/12 1,108 Honolulu City & County, Junior Ser A-1, RB, MBIA Insured 200 4.500%, 07/01/13 209 Honolulu City & County, Senior Ser A, RB, FGIC Insured 500 5.000%, 07/01/20 519 Honolulu City & County, Ser A, GO 55 6.000%, 01/01/10 58 1,000 5.750%, 04/01/12 1,084 Honolulu City & County, Ser A, GO, ETM 95 6.000%, 01/01/10 100 Bishop Street Funds 26 Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - -------- -------- HAWAII -- (CONTINUED) Honolulu City & County, Ser A, GO, MBIA Insured $ 625 5.250%, 03/01/17 $ 660 500 5.250%, 03/01/28 513 1,100 5.000%, 07/01/14 1,177 2,800 5.000%, 07/01/21 2,909 1,730 5.000%, 07/01/26 1,769 Honolulu City & County, Ser B, GO, ETM, FGIC Insured 635 5.500%, 10/01/11 682 Honolulu City & County, Ser B, GO, MBIA Insured 1,500 5.000%, 07/01/16 1,598 Honolulu City & County, Ser B, RB, MBIA Insured 735 4.250%, 07/01/17 747 Honolulu City & County, Ser C, GO, FGIC - FSA Insured 1,070 5.000%, 07/01/24 1,104 Honolulu City & County, Ser C, GO, FGIC Insured 2,365 5.125%, 07/01/15 2,429 1,020 5.125%, 07/01/17 1,047 600 5.000%, 07/01/19 615 Honolulu City & County, Ser C, GO, MBIA Insured 500 5.000%, 07/01/16 534 Honolulu City & County, Ser D, GO, AMT, FGIC Insured 245 4.850%, 02/01/10 251 Honolulu City & County, Ser D, GO, MBIA Insured 885 5.000%, 07/01/19 928 2,000 5.000%, 07/01/23 2,064 Honolulu City & County, Ser E, GO, FGIC Insured 1,500 5.250%, 07/01/20 1,585 Honolulu City & County, Waipahu Towers Project, Ser A, RB, AMT, GNMA Collateral 200 6.900%, 06/20/35 200 Honolulu City & County, Waste Water, 2nd Board Resolution, Junior Ser, RB, FGIC Insured 1,000 5.000%, 07/01/23 1,010 Honolulu Hawaii City & County, Senior Ser A, RB, MBIA Insured 1,000 5.000%, 07/01/36 1,004 Honolulu Hawaii City & County, Ser A, GO, MBIA Insured 290 5.000%, 07/01/25 297 Honolulu Hawaii City & County, Ser A, RB, FSA Insured 1,000 5.000%, 07/01/23 1,043 500 4.000%, 07/01/14 511 Honolulu Hawaii City & County, Ser B, GO, MBIA Insured 2,950 5.000%, 07/01/17 3,107 June 30, 2008 27 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- HAWAII -- (CONTINUED) Kauai County, Ser A, GO, FGIC Insured $ 1,610 5.000%, 08/01/21 $ 1,659 1,440 5.000%, 08/01/23 1,469 Kauai County, Ser A, GO, FGIC Insured, Pre-Refunded @ 100 (B) 500 6.250%, 08/01/10 536 1,335 6.250%, 08/01/10 1,431 1,050 6.250%, 08/01/10 1,125 Kauai County, Ser A, GO, MBIA Insured 1,500 5.000%, 08/01/25 1,525 Maui County, GO, MBIA Insured 100 5.000%, 03/01/17 106 1,100 5.000%, 03/01/24 1,127 Maui County, Ser A, GO 260 5.375%, 03/01/12 273 Maui County, Ser A, GO, FSA Insured 1,000 3.500%, 07/01/16 982 Maui County, Ser A, GO, MBIA Insured 1,000 4.750%, 07/01/25 1,005 Maui County, Ser A, GO, Pre-Refunded @ 100 (B) 225 5.375%, 03/01/11 238 Maui County, Ser B, GO, MBIA Insured 500 5.000%, 07/01/16 539 500 5.000%, 09/01/17 526 University of Hawaii, Ser A, RB, FGIC Insured, Pre-Refunded @ 100 (B) 1,605 5.500%, 07/15/12 1,737 500 5.125%, 07/15/12 534 University of Hawaii, Ser A, RB, MBIA Insured 150 5.000%, 07/15/19 158 150 5.000%, 07/15/22 155 1,400 5.000%, 10/01/23 1,452 University of Hawaii, Ser B, RB, FSA Insured 320 5.250%, 10/01/16 334 775 5.250%, 10/01/17 807 Wayne Township School Building, Marion County School District, RB, FGIC Insured 1,000 3.500%, 07/15/24 854 -------- 135,446 -------- ILLINOIS -- 1.9% Chicago O'Hare International Airport, General Airport, Ser E, RB, CIFG Insured 1,550 5.250%, 01/01/22 1,575 Bishop Street Funds 28 Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Market Amount Value (000) (000) - ------ -------- ILLINOIS -- (CONTINUED) Illinois State, Educational Facilities Authority, Northwestern University, RB $ 670 5.000%, 12/01/38 $ 674 Illinois State, Finance Authority, Hospital Sisters Services, Ser A, RB 1,000 5.000%, 03/15/27 966 -------- 3,215 -------- INDIANA -- 1.5% Indiana Finance Authority, Highway Revenue, Ser A, RB, FGIC Insured 1,200 4.500%, 06/01/27 1,139 Indiana State, Health & Educational Facilities Financing Authority, Clarion Health Obligation, Ser A, RB 1,500 5.000%, 02/15/39 1,350 -------- 2,489 -------- MASSACHUSETTS -- 0.3% Massachusetts State, Water Resources Authority, Ser J, RB 565 5.000%, 08/01/42 567 -------- NEVADA -- 0.6% Las Vegas New Convention & Visitors Authority, RB, AMBAC Insured 1,055 5.000%, 07/01/28 1,068 -------- NEW MEXICO -- 0.3% New Mexico Finance Authority, Sub Ser B, RB, AMBAC Insured 500 5.000%, 06/15/13 531 -------- OKLAHOMA -- 2.3% Durant Community Facilities Authority, GO, XLCA Insured 1,730 5.750%, 11/01/24 1,833 Tulsa Industrial Authority, University of Tulsa, RB 2,000 5.000%, 10/01/37 1,903 -------- 3,736 -------- PUERTO RICO -- 2.7% Commonwealth of Puerto Rico, GO, MBIA Insured 500 6.500%, 07/01/14 556 1,500 6.000%, 07/01/15 1,635 Commonwealth of Puerto Rico, Public Improvement, GO, FSA Insured 380 5.000%, 07/01/21 384 June 30, 2008 29 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Amount Market (000)/ Value Shares (000) - ------ -------- PUERTO RICO -- (CONTINUED) Commonwealth of Puerto Rico, Public Improvement, GO, FSA Insured, Pre-Refunded @ 100 (B) $ 55 5.000%, 07/01/11 $ 58 Puerto Rico Municipal Finance Agency, Ser B, GO, CIFG Insured 970 5.250%, 07/01/20 959 Puerto Rico, Electric Power Authority, Ser HH, RB, FSA Insured, Pre-Refunded @ 101 (B) 500 5.250%, 07/01/10 530 Puerto Rico, Industrial Tourist Educational Medical Environmental Control Facilities, Hospital Auxilio Mutuo Obligation Group, Ser A, RB, MBIA Insured 300 6.250%, 07/01/24 301 -------- 4,423 -------- SOUTH CAROLINA -- 1.3% Edisto Beach, GO 735 5.000%, 04/01/37 735 Sumter South Carolina, Waterworks & Sewer Improvement Systems, RB, XLCA Insured 500 5.000%, 12/01/21 512 840 5.000%, 12/01/24 849 -------- 2,096 -------- TEXAS -- 3.0% Alamo Community College District, GO, MBIA FGIC Insured 1,000 4.500%, 08/15/26 965 Amarillo Junior College District, GO, FSA Insured 885 5.000%, 02/15/26 899 North Texas Tollway Authority, RB, Assured Guaranty Insured (A) 5,000 5.161%, 01/01/30 1,539 University of Texas, Permanent University Fund, Ser B, RB 1,600 4.500%, 07/01/33 1,493 -------- 4,896 -------- TOTAL MUNICIPAL BONDS (Cost $166,292) 164,526 -------- CASH EQUIVALENTS (C) -- 0.4% 306,899 Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.617% 307 306,899 Fidelity Institutional Tax-Exempt Portfolio, Institutional Shares, 1.670% 307 -------- TOTAL CASH EQUIVALENTS (Cost $614) 614 -------- TOTAL INVESTMENTS (Cost $166,906) -- 99.8% $165,140 ======== Bishop Street Funds 30 Hawaii Municipal Bond Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) PERCENTAGES ARE BASED ON NET ASSETS OF $165,516 ($ THOUSANDS). (A) ZERO COUPON SECURITY -- THE RATE REPORTED ON THE SCHEDULE OF INVESTMENTS IS THE EFFECTIVE YIELD AT TIME OF PURCHASE. (B) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE. (C) THE RATE SHOWN REPRESENTS THE 7-DAY EFFECTIVE YIELD AS OF JUNE 30, 2008. AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY AMT -- ALTERNATIVE MINIMUM TAX CIFG -- CIFG ASSURANCE NORTH AMERICA, INC. COP -- CERTIFICATE OF PARTICIPATION ETM -- ESCROWED TO MATURITY FGIC -- FINANCIAL GUARANTEE INSURANCE 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 TA -- TAX ALLOCATION TCRS -- TEMPORARY CUSTODIAN RECEIPTS XLCA -- XL CAPITAL COST FIGURES ARE SHOWN IN THOUSANDS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2008 31 www.bishopstreetfunds.com Money Market Fund (UNAUDITED) SECTOR WEIGHTINGS+ (BAR CHART) Commercial Paper 80.7% Certificates of Deposit/Bank Nnotes 10.3% Repurchase Agreements 9.0% + PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. SCHEDULE OF INVESTMENTS Face Amount Value (000) (000) - ---------- -------- COMMERCIAL PAPER (A) -- 80.8% BANKS -- 64.6% ANZ National Ltd. (B) $ 12,000 2.995%, 10/22/08 $ 11,889 Bank of Montreal 11,000 2.530%, 08/01/08 10,976 Bank of Scotland PLC 3,000 2.608%, 07/10/08 2,998 1,200 2.578%, 07/23/08 1,198 3,800 2.708%, 08/05/08 3,790 3,500 2.739%, 08/06/08 3,491 Danske (B) 2,500 2.473%, 07/07/08 2,499 1,500 2.506%, 07/14/08 1,499 3,600 2.542%, 07/21/08 3,595 4,000 2.866%, 07/25/08 3,992 Dexia Delaware 3,900 2.728%, 07/10/08 3,897 5,000 2.718%, 07/11/08 4,996 1,200 2.697%, 08/06/08 1,197 1,500 2.647%, 09/02/08 1,493 Fortis Banque Luxembourg 12,000 2.657%, 08/06/08 11,968 JPMorgan Chase 8,000 2.516%, 08/12/08 7,977 Lloyds TSB Bank PLC 11,000 2.490%, 07/01/08 11,000 Royal Bank of Canada 1,500 2.269%, 07/11/08 1,499 10,000 2.516%, 08/27/08 9,961 Societe Generale North America 4,410 2.575%, 07/14/08 4,406 5,500 2.710%, 08/06/08 5,485 1,423 2.641%, 08/08/08 1,419 Bishop Street Funds 32 Money Market Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Amount Value (000) (000) - ------ -------- BANKS -- (CONTINUED) Svenska Handelsbanken $ 2,000 2.622%, 07/07/08 $ 1,999 10,000 2.567%, 08/11/08 9,971 UBS Finance Delaware 1,500 2.556%, 07/16/08 1,498 10,000 3.077%, 10/21/08 9,906 Westpac Banking (B) 12,000 2.633%, 08/08/08 11,967 -------- 146,566 -------- FINANCIALS -- 16.2% Abbey National North America 11,500 2.567%, 07/08/08 11,494 CBA Delaware Finance 4,000 2.728%, 07/07/08 3,998 5,425 2.453%, 07/14/08 5,420 1,500 2.688%, 08/05/08 1,496 General Electric Capital 2,500 2.360%, 08/04/08 2,495 ING US Funding 11,800 2.840%, 07/25/08 11,778 -------- 36,681 -------- TOTAL COMMERCIAL PAPER (Cost $183,247) 183,247 -------- CERTIFICATES OF DEPOSIT/BANK NOTES -- 10.2% Toronto Dominion 5,000 2.600%, 08/27/08 5,000 7,300 2.900%, 08/29/08 7,300 Wells Fargo Bank 11,000 2.440%, 07/07/08 11,000 -------- TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $23,300) 23,300 -------- June 30, 2008 33 www.bishopstreetfunds.com Money Market Fund (UNAUDITED) SCHEDULE OF INVESTMENTS (CONTINUED) Face Amount Value (000) (000) - ------ -------- REPURCHASE AGREEMENTS -- 9.1% $ 11,000 Bank of America 2.450%, dated 06/30/08, to be repurchased on 07/01/08, repurchase price $11,000,749 (collateralized by a U.S. Government obligation, par value $ 23,341,134 5.500%, 06/01/33, with a total market value of $11,220,000) $ 11,000 9,600 Barclays Bank 2.400%, dated 06/30/08, to be repurchased on 07/01/08, repurchase price $9,600,640 (collateralized by a U.S. Government obligation, par value $ 9,870,000 3.850%, 04/17/13, with a total market value of $9,792,885) 9,600 -------- TOTAL REPURCHASE AGREEMENTS (Cost $20,600) 20,600 -------- TOTAL INVESTMENTS (Cost $227,147) -- 100.1% $227,147 ======== PERCENTAGES ARE BASED ON NET ASSETS OF $226,858 (IN THOUSANDS). (A) THE RATE REPORTED ON THE SCHEDULE OF INVESTMENTS IS THE EFFECTIVE YIELD AT TIME OF PURCHASE. (B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED, INSTITUTIONS. AT JUNE 30, 2008, THESE SECURITIES AMOUNTED TO $35,441($ THOUSANDS), REPRESENTING 15.6% OF NET ASSETS OF THE FUND. LTD. -- LIMITED PLC -- PUBLIC LIABILITY COMPANY COST FIGURES ARE SHOWN IN THOUSANDS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. Bishop Street Funds 34 Treasury Money Market Fund (UNAUDITED) (BAR CHART) SECTOR WEIGHTINGS+ Repurchase Agreements 64.1% U.S. Treasury Obligations 35.9% + PERCENTAGES BASED ON TOTAL INVESTMENTS. SCHEDULE OF INVESTMENTS Face Amount Value (000) (000) - ----- -------- U.S. TREASURY OBLIGATIONS (A) -- 36.0% U.S. Treasury Bills $ 20,000 1.283%, 09/11/08 $ 19,949 20,000 1.696%, 09/18/08 19,926 5,000 2.240%, 12/11/08 4,950 -------- TOTAL U.S.TREASURY OBLIGATIONS (Cost $44,825) 44,825 -------- REPURCHASE AGREEMENTS -- 64.2% 40,000 Bank of America 1.500%, dated 06/30/08, to be repurchased on 07/01/08, repurchase price $40,001,667 (collateralized by a U.S. Treasury obligation, par value $39,954,500, 4.875%, 08/31/08, with a total market value of $40,800,005) 40,000 40,000 Barclays Bank 1.700%, dated 06/30/08, to be repurchased on 07/01/08, repurchase price $40,001,889 (collateralized by various U.S. Treasury obligations, ranging in par value $15,900,000-18,861,200, 2.375%, 01/15/25-01/15/27, with a total market value of $40,800,074) 40,000 -------- TOTAL REPURCHASE AGREEMENTS (Cost $80,000) 80,000 -------- TOTAL INVESTMENTS (Cost $124,825) -- 100.2% $124,825 ======== PERCENTAGES ARE BASED ON NET ASSETS OF $124,624 ($ THOUSANDS). (A) THE RATE REPORTED ON THE SCHEDULE OF INVESTMENTS IS THE EFFECTIVE YIELD AT TIME OF PURCHASE. COST FIGURES ARE SHOWN IN THOUSANDS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2008 35 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2008 (IN THOUSANDS) Large High Strategic Cap Core Grade Growth Equity Income Fund Fund Fund --------- -------- ------- ASSETS: Investments, at Cost $ 99,347 $90,333 $145,298 Repurchase Agreements, at Cost -- 1,681 16,818 ======== ======= ======== Investments, at Value $102,827 $84,951(1) $147,349(1) Repurchase Agreements, at Value -- 1,681 16,818 Dividends and Interest Receivable 56 80 1,963 Receivable for Fund Shares Sold 9 8 14 Receivable for Investment Securities Sold -- 800 -- Prepaid Expenses 3 2 3 -------- ------- -------- Total Assets 102,895 87,522 166,147 -------- ------- -------- LIABILITIES: Payable for Fund Shares Redeemed 182 119 75 Payable for Investment Securities Purchased -- 515 -- Income Distribution Payable -- -- 212 Collateral on Securities Loaned -- 3,295 32,955 Advisory Fees Payable 66 52 46 Administrative Fees Payable 10 8 13 Shareholder Servicing Fees Payable 9 7 11 Chief Compliance Officer Fees Payable 3 3 4 Other Accrued Expenses 39 31 43 -------- ------- -------- Total Liabilities 309 4,030 33,359 -------- ------- -------- Net Assets $102,586 $83,492 $132,788 ======== ======= ======== Fund Shares $ 94,741 $89,695 $131,896 Undistributed Net Investment Income (Distributions in Excess of Net Investment Income/Accumulated Net Investment Loss) (176) (9) 4 Accumulated Net Realized Gain (Loss) on Investments 4,541 (812) (1,163) Net Unrealized Appreciation (Depreciation) on Investments 3,480 (5,382) 2,051 -------- ------- -------- Net Assets $102,586 $83,492 $132,788 ======== ======= ======== Class I Shares: Net Assets $102,586 $83,492 $132,788 Outstanding Shares of Beneficial Interest (unlimited authorization -- no par value) 8,365 9,007 13,179 Net Asset Value, Offering and Redemption Price Per Share (Net Assets / Shares Outstanding) $ 12.26 $ 9.27 $ 10.08 ======== ======= ======== (1) INCLUDED IN "INVESTMENTS, AT VALUE" IS THE MARKET VALUE OF SECURITIES ON LOAN IN THE AMOUNTS OF $3,208 ($ THOUSANDS), AND $32,452 ($ THOUSANDS) FOR THE LARGE CAP CORE EQUITY AND HIGH GRADE INCOME FUNDS, RESPECTIVELY. 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 36 Bishop Street Funds (UNAUDITED) STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2008 (IN THOUSANDS) Hawaii Treasury Municipal Money Money Bond Market Market Fund Fund Fund --------- -------- -------- ASSETS: Investments, at Cost $166,906 $206,547 $ 44,825 Repurchase Agreements, at Cost -- 20,600 80,000 ======== ======== ======== Investments, at Value $165,140 $206,547 $ 44,825 Repurchase Agreements, at Value -- 20,600 80,000 Cash -- 76 25 Interest Receivable 3,158 55 3 Prepaid Expenses 3 7 8 -------- -------- -------- Total Assets 168,301 227,285 124,861 -------- -------- -------- LIABILITIES: Payable for Fund Shares Redeemed 2,188 -- -- Income Distribution Payable 468 265 157 Advisory Fees Payable 35 34 8 Shareholder Servicing Fees Payable 13 19 10 Administrative Fees Payable 10 22 12 Distribution Fees Payable 6 15 -- Chief Compliance Officer Fees Payable 5 6 4 Other Accrued Expenses 60 66 46 -------- -------- -------- Total Liabilities 2,785 427 237 -------- -------- -------- Net Assets $165,516 $226,858 $124,624 ======== ======== ======== Fund Shares $167,381 $226,877 $124,607 Undistributed Net Investment Income (Distributions in Excess of Net Investment Income) (2) -- -- Accumulated Net Realized Gain (Loss) on Investments (97) (19) 17 Net Unrealized Depreciation on Investments (1,766) -- -- -------- -------- -------- Net Assets $165,516 $226,858 $124,624 ======== ======== ======== Class I Shares: Net Assets $138,337 $154,803 $124,624 Outstanding Shares of Beneficial Interest (unlimited authorization -- no par value) 13,415 154,827 124,608 Net Asset Value, Offering and Redemption Price Per Share (Net Assets / Shares Outstanding) $ 10.31 $ 1.00 $ 1.00 ======== ======== ======== Class A Shares: Net Assets $ 27,179 $ 72,055 $ -- Outstanding Shares of Beneficial Interest (unlimited authorization -- no par value) 2,635 72,053 -- Net Asset Value, Offering and Redemption Price Per Share (Net Assets / Shares Outstanding) $ 10.31 $ 1.00 $ -- ======== ======== ======== Maximum Offering Price Per Shares -- Class A ($10.31 / 97.00%) $ 10.63 $ -- $ -- ======== ======== ======== 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, 2008 37 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) STATEMENTS OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (IN THOUSANDS) Large High Strategic Cap Core Grade Growth Equity Income Fund Fund Fund --------- --------- ------- INVESTMENT INCOME: Dividend Income $ 416 $ 750 $ 30 Interest Income -- -- 3,272 Securities Lending, Net -- 4 78 Foreign Taxes Withheld (1) (1) -- -------- -------- ------- Total Investment Income 415 753 3,380 -------- -------- ------- EXPENSES: Investment Adviser Fees 411 336 375 Shareholder Servicing Fees 139 113 171 Administrative Fees 111 91 137 Chief Compliance Officer Fees 1 1 2 Transfer Agent Fees 22 20 23 Professional Fees 17 14 21 Printing Fees 6 5 8 Custody Fees 6 7 7 Trustees' Fees 3 2 3 Line of Credit 2 2 -- Registration Fees 1 1 1 Miscellaneous Expenses 3 5 10 -------- -------- ------- Total Expenses 722 597 758 -------- -------- ------- Less Waivers: Investment Adviser Fees -- (12) (79) Shareholder Servicing Fees (83) (68) (102) Administrative Fees (46) (38) (57) -------- -------- ------- Total Waivers (129) (118) (238) -------- -------- ------- Total Net Expenses 593 479 520 -------- -------- ------- Net Investment Income (Loss) (178) 274 2,860 -------- -------- ------- Net Realized Gain (Loss) on Investments 2,922 (893) (152) Change in Unrealized Depreciation on Investments (18,423) (10,991) (902) -------- -------- ------- Net Realized and Unrealized Loss on Investments (15,501) (11,884) (1,054) -------- -------- ------- Increase (Decrease) in Net Assets Resulting from Operations $(15,679) $(11,610) $ 1,806 ======== ======== ======= 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 38 Bishop Street Funds (UNAUDITED) STATEMENTS OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (IN THOUSANDS) Hawaii Treasury Municipal Money Money Bond Market Market Fund Fund Fund --------- ------ -------- INVESTMENT INCOME: Interest Income $ 3,745 $3,993 $1,740 Dividend Income 6 -- -- ------- ------ ------ Total Investment Income 3,751 3,993 1,740 ------- ------ ------ EXPENSES: Investment Adviser Fees 296 368 221 Shareholder Servicing Fees 212 306 184 Administrative Fees 169 245 147 Distribution Fees, Class A 35 88 -- Chief Compliance Officer Fees 2 3 2 Transfer Agent Fees 37 41 25 Professional Fees 26 36 25 Printing Fees 9 13 9 Custody Fees 9 12 8 Trustees' Fees 4 5 4 Registration Fees 2 3 2 Miscellaneous Expenses 17 21 12 ------- ------ ------ Total Expenses 818 1,141 639 ------- ------ ------ Less Waivers: Investment Adviser Fees (80) (150) (142) Shareholder Servicing Fees (127) (184) (111) Administrative Fees (110) (102) (61) ------- ------ ------ Total Waivers (317) (436) (314) ------- ------ ------ Total Net Expenses 501 705 325 ------- ------ ------ Net Investment Income 3,250 3,288 1,415 ------- ------ ------ Net Realized Loss on Investments (57) -- (5) Change in Unrealized Depreciation on Investments (3,889) -- -- ------- ------ ------ Net Realized and Unrealized Loss on Investments (3,946) -- (5) ------- ------ ------ Increase (Decrease) in Net Assets Resulting from Operations $ (696) $3,288 $1,410 ======= ====== ====== 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, 2008 39 www.bishopstreetfunds.com Bishop Street Funds STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2007 (IN THOUSANDS) Strategic Large Cap Core Growth Fund Equity Fund ------------------- ------------------- 2008 2007 2008 2007 -------- -------- -------- -------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income (Loss) $ (178) $ (298) $ 274 $ 404 Net Realized Gain (Loss) on Investments 2,922 19,654 (893) 5,352 Change in Unrealized Depreciation on Investments (18,423) (6,388) (10,991) (407) -------- -------- -------- -------- Increase (Decrease) in Net Assets Resulting from Operations (15,679) 12,968 (11,610) 5,349 -------- -------- -------- -------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Net Investment Income: Class I Shares -- -- (283) (404) Capital Gains: Class I Shares -- (18,469) -- (5,563) -------- -------- -------- -------- Total Dividends and Distributions -- (18,469) (283) (5,967) -------- -------- -------- -------- CAPITAL SHARE TRANSACTIONS: Class I Shares: Proceeds from Shares Issued 4,079 11,212 2,882 11,637 Reinvestments of Cash Distributions -- 13,283 216 4,516 Cost of Shares Redeemed (12,198) (35,539) (9,055) (17,043) -------- -------- -------- -------- Net Decrease in Net Assets From Capital Share Transactions (8,119) (11,044) (5,957) (890) -------- -------- -------- -------- Total Decrease in Net Assets (23,798) (16,545) (17,850) (1,508) -------- -------- -------- -------- NET ASSETS: Beginning of Period 126,384 142,929 101,342 102,850 -------- -------- -------- -------- End of Period $102,586 $126,384 $ 83,492 $101,342 ======== ======== ======== ======== Accumulated Net Investment Loss/Distributions in Excess of Net Investment Income $ (176) $ 2 $ (9) $ -- ======== ======== ======== ======== SHARE TRANSACTIONS: Class I Shares: Shares Issued 319 733 296 1,053 Shares Issued in Lieu of Cash Distributions -- 933 23 422 Shares Redeemed (951) (2,301) (929) (1,542) -------- -------- -------- -------- Net Decrease in Shares Outstanding from Share Transactions (632) (635) (610) (67) ======== ======== ======== ======== 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 40 Bishop Street Funds STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2007 (IN THOUSANDS) High Grade Hawaii Municipal Income Fund Bond Fund ------------------- ------------------- 2008 2007 2008 2007 -------- -------- -------- -------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income $ 2,860 $ 5,904 $ 3,250 $ 6,671 Net Realized Gain (Loss) on Investments (152) (237) (57) 502 Change in Unrealized Appreciation (Depreciation) on Investments (902) 3,129 (3,889) (3,000) -------- -------- -------- -------- Increase (Decrease) in Net Assets Resulting from Operations 1,806 8,796 (696) 4,173 -------- -------- -------- -------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Net Investment Income: Class I Shares (2,858) (5,901) (2,742) (5,627) Class A Shares -- -- (512) (1,099) Capital Gains: Class I Shares -- -- -- (665) Class A Shares -- -- -- (134) -------- -------- -------- -------- Total Dividends and Distributions (2,858) (5,901) (3,254) (7,525) -------- -------- -------- -------- CAPITAL SHARE TRANSACTIONS: Class I Shares: Proceeds from Shares Issued 9,194 17,815 4,306 23,661 Reinvestments of Cash Distributions 1,668 3,274 350 818 Cost of Shares Redeemed (13,245) (29,209) (7,855) (15,222) -------- -------- -------- -------- Total Class I Capital Share Transactions (2,383) (8,120) (3,199) 9,257 -------- -------- -------- -------- Class A Shares: Proceeds from Shares Issued -- -- 1,529 1,924 Reinvestments of Cash Distributions -- -- 210 540 Cost of Shares Redeemed -- -- (3,017) (3,180) -------- -------- -------- -------- Total Class A Capital Share Transactions -- -- (1,278) (716) -------- -------- -------- -------- Net Increase (Decrease) in Net Assets from Capital Share Transactions (2,383) (8,120) (4,477) 8,541 -------- -------- -------- -------- Total Increase (Decrease) in Net Assets (3,435) (5,225) (8,427) 5,189 -------- -------- -------- -------- NET ASSETS: Beginning of Period 136,223 141,448 173,943 168,754 -------- -------- -------- -------- End of Period $132,788 $136,223 $165,516 $173,943 ======== ======== ======== ======== Undistributed Net Investment Income (Distributions in Excess of Net Investment Income) $ 4 $ 2 $ (2) $ 2 ======== ======== ======== ======== SHARE TRANSACTIONS: Class I Shares: Shares Issued 898 1,789 412 2,226 Shares Issued in Lieu of Cash Distributions 164 329 34 77 Shares Redeemed (1,299) (2,934) (748) (1,434) -------- -------- -------- -------- Total Class I Share Transactions (237) (816) (302) 869 -------- -------- -------- -------- Class A Shares: Shares Issued -- -- 147 181 Shares Issued in Lieu of Cash Distributions -- -- 20 51 Shares Redeemed -- -- (289) (300) -------- -------- -------- -------- Total Class A Share Transactions -- -- (122) (68) -------- -------- -------- -------- Net Increase (Decrease) in Shares Outstanding from Share Transactions (237) (816) (424) 801 ======== ======== ======== ======== 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, 2008 41 www.bishopstreetfunds.com Bishop Street Funds STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2007 (IN THOUSANDS) Money Market Treasury Money Fund Market Fund --------------------- --------------------- 2008 2007 2008 2007 --------- --------- --------- --------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income $ 3,288 $ 10,658 $ 1,415 $ 7,077 Net Realized Gain (Loss) on Investments -- 3 (5) 121 --------- --------- --------- --------- Increase in Net Assets Resulting from Operations 3,288 10,661 1,410 7,198 --------- --------- --------- --------- DIVIDENDS TO SHAREHOLDERS: Net Investment Income: Class I Shares (2,418) (7,832) (1,415) (7,077) Class A Shares (870) (2,826) -- Capital Gains: Class I Shares -- -- -- (42) Class A Shares -- -- -- --------- --------- --------- --------- Total Dividends (3,288) (10,658) (1,415) (7,119) --------- --------- --------- --------- CAPITAL SHARE TRANSACTIONS (ALL AT $1.00 PER SHARE): Class I Shares: Proceeds from Shares Issued 241,647 428,470 304,193 543,810 Reinvestments of Cash Distributions 116 305 2 11 Cost of Shares Redeemed (266,685) (408,095) (327,078) (554,752) --------- --------- --------- --------- Total Class I Capital Share Transactions (24,922) 20,680 (22,883) (10,931) --------- --------- --------- --------- Class A Shares: Proceeds from Shares Issued 54,373 110,288 -- -- Reinvestments of Cash Distributions 870 2,826 -- -- Cost of Shares Redeemed (46,756) (108,760) -- -- --------- --------- --------- --------- Total Class A Capital Share Transactions 8,487 4,354 -- -- --------- --------- --------- --------- Net Increase (Decrease) in Net Assets from Capital Share Transactions (16,435) 25,034 (22,883) (10,931) --------- --------- --------- --------- Total Increase (Decrease) in Net Assets (16,435) 25,037 (22,888) (10,852) --------- --------- --------- --------- NET ASSETS: Beginning of Period 243,293 218,256 147,512 158,364 --------- --------- --------- --------- End of Period $ 226,858 $ 243,293 $ 124,624 $ 147,512 ========= ========= ========= ========= Undistributed Net Investment Income $ -- $ -- $ -- $ -- ========= ========= ========= ========= 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 42 This page intentionally left blank. Bishop Street Funds FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (UNAUDITED) AND THE PERIODS ENDED DECEMBER 31, DIVIDENDS AND INVESTMENT ACTIVITIES DISTRIBUTIONS FROM --------------------------- TOTAL -------------------- NET ASSET NET NET REALIZED INVESTMENT TOTAL VALUE, INVESTMENT AND UNREALIZED ACTIVITIES NET DIVIDENDS BEGINNING INCOME GAIN (LOSS) ON FROM INVESTMENT CAPITAL AND OF PERIOD (LOSS)(1) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS --------- ---------- -------------- ---------- ---------- ------- ------------- STRATEGIC GROWTH FUND CLASS I SHARES: 2008 $14.05 $(0.02) $(1.77) $(1.79) $ -- $ -- $ -- 2007 14.84 (0.03) 1.53 1.50 -- (2.29) (2.29) 2006 14.35 (0.03) 1.41 1.38 -- (0.89) (0.89) 2005 13.08 (0.05) 1.56 1.51 -- (0.24) (0.24) 2004 11.93 (0.05) 1.20 1.15 -- -- -- 2003 8.64 (0.06) 3.35 3.29 -- -- -- LARGE CAP CORE EQUITY FUND CLASS I SHARES: 2008 $10.54 $ 0.03 $(1.27) $(1.24) $(0.03) $ -- $(0.03) 2007 10.62 0.04 0.52 0.56 (0.04) (0.60) (0.64) 2006(2) 10.00 0.04 0.62 0.66 (0.04) -- (0.04) HIGH GRADE INCOME FUND CLASS I SHARES: 2008 $10.15 $ 0.21 $(0.07) $ 0.14 $(0.21) $ -- $(0.21) 2007 9.94 0.44 0.21 0.65 (0.44) -- (0.44) 2006 10.06 0.41 (0.12) 0.29 (0.41) -- (0.41) 2005 10.33 0.39 (0.19) 0.20 (0.39) (0.08) (0.47) 2004 10.40 0.38 (0.03) 0.35 (0.38) (0.04) (0.42) 2003 10.67 0.42 (0.07) 0.35 (0.42) (0.20) (0.62) HAWAII MUNICIPAL BOND FUND CLASS I SHARES: 2008 $10.56 $ 0.20 $(0.25) $(0.05) $(0.20) $ -- $(0.20) 2007 10.77 0.42 (0.16) 0.26 (0.42) (0.05) (0.47) 2006 10.77 0.43 0.04 0.47 (0.43) (0.04) (0.47) 2005 11.02 0.43 (0.16) 0.27 (0.43) (0.09) (0.52) 2004 11.21 0.44 (0.07) 0.37 (0.44) (0.12) (0.56) 2003 11.20 0.45 0.13 0.58 (0.45) (0.12) (0.57) CLASS A SHARES: 2008 $10.56 $ 0.19 $(0.25) $(0.06) $(0.19) $ -- $(0.19) 2007 10.77 0.39 (0.16) 0.23 (0.39) (0.05) (0.44) 2006 10.77 0.40 0.04 0.44 (0.40) (0.04) (0.44) 2005 11.02 0.41 (0.16) 0.25 (0.41) (0.09) (0.50) 2004 11.21 0.41 (0.07) 0.34 (0.41) (0.12) (0.53) 2003 11.20 0.42 0.13 0.55 (0.42) (0.12) (0.54) + 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 DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. FEE WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD HAVE BEEN LOWER. * ANNUALIZED. (1) PER SHARE NET INVESTMENT INCOME AMOUNT CALCULATED USING AVERAGE SHARES. (2) COMMENCED OPERATIONS ON MAY 3, 2006. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. Bishop Street Funds 44 RATIO OF RATIO OF EXPENSES RATIO OF NET NET ASSET NET ASSETS, EXPENSES TO TO AVERAGE INVESTMENT VALUE, END OF AVERAGE NET ASSETS INCOME (LOSS) PORTFOLIO END OF TOTAL PERIOD NET EXCLUDING FEE TO AVERAGE TURNOVER PERIOD RETURN+ (000) ASSETS WAIVERS NET ASSETS RATE --------- ------- ----------- ----------- ------------- ------------- --------- STRATEGIC GROWTH FUND CLASS I SHARES: 2008 $12.26 (12.74)% $102,586 1.07%* 1.30%* (0.32)%* 33% 2007 14.05 10.10 126,384 1.07 1.30 (0.22) 61 2006 14.84 9.78 142,929 1.06 1.30 (0.23) 53 2005 14.35 11.52 123,341 1.07 1.31 (0.35) 55 2004 13.08 9.64 79,168 1.05 1.29 (0.38) 59 2003 11.93 38.08 46,845 1.17 1.41 (0.57) 59 LARGE CAP CORE EQUITY FUND CLASS I SHARES: 2008 $ 9.27 (11.76)% $ 83,492 1.05%* 1.32%* 0.60%* 35% 2007 10.54 5.24 101,342 1.05 1.31 0.38 65 2006(2) 10.62 6.63 102,850 1.05* 1.32* 0.64* 51 HIGH GRADE INCOME FUND CLASS I SHARES: 2008 $10.08 1.39% $132,788 0.76%* 1.11%* 4.19%* 23% 2007 10.15 6.67 136,223 0.76 1.11 4.38 26 2006 9.94 2.96 141,448 0.76 1.12 4.12 41 2005 10.06 2.00 141,439 0.76 1.13 3.82 45 2004 10.33 3.41 157,170 0.76 1.11 3.68 45 2003 10.40 3.31 134,845 0.76 1.10 3.91 48 HAWAII MUNICIPAL BOND FUND CLASS I SHARES: 2008 $10.31 (0.45)% $138,337 0.55%* 0.93%* 3.88%* 24% 2007 10.56 2.47 144,828 0.55 0.93 3.92 25 2006 10.77 4.42 138,333 0.55 0.93 3.99 47 2005 10.77 2.51 145,213 0.55 0.93 3.97 41 2004 11.02 3.36 148,575 0.55 0.92 3.97 40 2003 11.21 5.27 150,373 0.45 0.91 4.01 38 CLASS A SHARES: 2008 $10.31 (0.57)% $ 27,179 0.80%* 1.18%* 3.63%* 24% 2007 10.56 2.21 29,115 0.80 1.18 3.67 25 2006 10.77 4.16 30,421 0.80 1.18 3.74 47 2005 10.77 2.25 31,515 0.80 1.18 3.72 41 2004 11.02 3.10 30,484 0.80 1.17 3.72 40 2003 11.21 5.01 30,975 0.70 1.16 3.76 38 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2008 45 www.bishopstreetfunds.com Bishop Street Funds FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED JUNE 30, 2008 (UNAUDITED) AND THE PERIODS ENDED DECEMBER 31, DIVIDENDS AND INVESTMENT ACTIVITIES DISTRIBUTIONS --------------------------- TOTAL -------------------- NET ASSET NET REALIZED INVESTMENT VALUE, NET AND UNREALIZED ACTIVITIES NET BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL TOTAL OF PERIOD INCOME(1) INVESTMENTS OPERATIONS INCOME GAINS DIVIDENDS --------- ---------- -------------- ---------- ---------- ------- --------- MONEY MARKET FUND CLASS I SHARES: 2008 $1.00 $0.01 $-- $0.01 $(0.01) $-- $(0.01) 2007 1.00 0.05 -- 0.05 (0.05) -- (0.05) 2006 1.00 0.05 -- 0.05 (0.05) -- (0.05) 2005 1.00 0.03 -- 0.03 (0.03) -- (0.03) 2004 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2003 1.00 0.01 -- 0.01 (0.01) -- (0.01) CLASS A SHARES: 2008 $1.00 $0.01 $-- $0.01 $(0.01) $-- $(0.01) 2007 1.00 0.05 -- 0.05 (0.05) -- (0.05) 2006 1.00 0.04 -- 0.04 (0.04) -- (0.04) 2005 1.00 0.03 -- 0.03 (0.03) -- (0.03) 2004 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2003 1.00 0.01 -- 0.01 (0.01) -- (0.01) TREASURY MONEY MARKET FUND CLASS I SHARES: 2008 $1.00 $0.01 $-- $0.01 $(0.01) $-- $(0.01) 2007 1.00 0.04 -- 0.04 (0.04) --* (0.04) 2006 1.00 0.04 -- 0.04 (0.04) -- (0.04) 2005 1.00 0.03 -- 0.03 (0.03) -- (0.03) 2004 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2003 1.00 0.01 -- 0.01 (0.01) -- (0.01) + 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 DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. FEE WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD HAVE BEEN LOWER. * AMOUNT REPRESENTS LESS THAN $0.01. ** ANNUALIZED (1) PER SHARE NET INVESTMENT INCOME AMOUNT CALCULATED USING AVERAGE SHARES. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. Bishop Street Funds 46 RATIO OF RATIO OF EXPENSES RATIO OF NET NET ASSET NET ASSETS, EXPENSES TO TO AVERAGE INVESTMENT VALUE, END OF AVERAGE NET ASSETS INCOME END OF TOTAL PERIOD NET EXCLUDING FEE TO AVERAGE PERIOD RETURN+ (000) ASSETS WAIVERS NET ASSETS --------- ------- ----------- ----------- ----------------- ------------ MONEY MARKET FUND CLASS I SHARES: $1.00 1.37% $154,803 0.50%** 0.86%** 2.77%** 2008 1.00 4.86 179,725 0.50 0.86 4.75 2007 1.00 4.63 159,044 0.50 0.86 4.55 2006 1.00 2.78 170,455 0.50 0.87 2.73 2005 1.00 0.92 167,910 0.50 0.84 0.90 2004 1.00 0.76 182,166 0.50 0.83 0.76 2003 CLASS A SHARES: $1.00 1.25% $72,055 0.75%** 1.11%** 2.47%** 2008 1.00 4.60 63,568 0.75 1.11 4.50 2007 1.00 4.37 59,212 0.75 1.11 4.33 2006 1.00 2.53 35,530 0.75 1.12 2.60 2005 1.00 0.67 17,824 0.75 1.09 0.65 2004 1.00 0.50 17,440 0.75 1.08 0.41 2003 TREASURY MONEY MARKET FUND CLASS I SHARES: 2008 $1.00 0.94% $124,624 0.44%** 0.87%** 1.92%** 2007 1.00 4.49 147,512 0.44 0.88 4.38 2006 1.00 4.51 158,364 0.44 0.87 4.39 2005 1.00 2.62 223,614 0.44 0.87 2.61 2004 1.00 0.91 208,153 0.44 0.84 0.89 2003 1.00 0.74 270,365 0.44 0.83 0.75 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2008 47 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) 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 six funds (each a Fund, collectively the "Funds") which includes the Strategic Growth Fund, Large Cap Core Equity Fund, High Grade Income Fund, Hawaii Municipal Bond Fund, Money Market Fund and the Treasury Money Market Fund. Class A Shares of the Hawaii Municipal Bond Fund 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. SECURITY VALUATION The Funds' investments in equity securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ) are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. Debt securities are priced based upon valuations provided by independent, third-party pricing agents, if available. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain a bid price from at least one independent broker. Bishop Street Funds 48 (UNAUDITED) Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Funds' Board of Trustees (the "Board"). The Funds' Fair Value Procedures are implemented through a Fair Value Pricing Committee (the "Committee") designated by the Funds' Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been delisted from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; or the security's primary pricing source is not able or willing to provide a price. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. 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. In September, 2006, the Financial Accounting Standards Board ("FASB") released STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") No. 157, which provides enhanced guidance for using fair value to measure assets and liabilities. The Fund adopted SFAS No. 157 on January 1, 2008. SFAS No. 157 establishes a fair value hierarchy and specifies that a valuation technique used to measure fair value shall maximize the use of observable inputs and minimize the use of unobservable inputs. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under SFAS No. 157 are described below: - Level 1 -- Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date; - Level 2 -- Quoted prices which are not active, or inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and - Level 3 -- Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market activity). As required by SFAS No.157, investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs and may include Level 1 or Level 2 inputs as components of the overall fair value measurement. The table below June 30, 2008 49 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) sets forth information about the level within the fair value hierarchy at which the Fund's investments are measured at June 30, 2008: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL INVESTMENTS IN SECURITIES (000) (000) (000) (000) - ------------------------- --------- -------- ------- -------- Strategic Growth Fund $102,827 $ -- $-- $102,827 Large Cap Core Equity Fund* 83,337 -- -- 83,337 High Grade Income Fund* 556 130,656 -- 131,212 Hawaii Municipal Bond Fund 614 164,526 -- 165,140 Money Market Fund 227,147 -- -- 227,147 Treasury Money Market Fund 124,825 -- -- 124,825 * EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are accounted for on trade date. Costs used in determining net realized capital gains and losses on the sale of securities are on the basis of specific identification. Interest income is recorded on the accrual basis; dividend income is recorded on ex-dividend date. Discounts and premiums are accreted or amortized over the life of each security and are recorded as interest income. The High Grade Income and Hawaii Municipal Bond Funds use the scientific interest method, which approximates the effective interest method. The Money Market and Treasury Money Market Funds use the straight line method. REPURCHASE AGREEMENTS Securities pledged as collateral for repurchase agreements are held by the custodian bank until the respective agreements are repurchased. 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 (as defined in Note 3) monitor 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 Funds may be delayed or limited. CLASSES Class-specific expenses are borne by the applicable 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. Bishop Street Funds 50 (UNAUDITED) EXPENSES Expenses that are directly related to one of the Funds are charged directly to that Fund. Other operating expenses of the Funds are prorated to the Funds on the basis of relative net assets. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are declared daily and paid on a monthly basis for the High Grade Income, Hawaii Municipal Bond, Money Market and Treasury Money Market Funds. The Strategic Growth and Large Cap Core Equity Funds declare and pay dividends from any net investment income, if available, on a quarterly basis. Any net realized capital gains will be distributed at least annually for all Funds. Distributions to shareholders are recorded on the ex-dividend date. 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. At June 30, 2008, there were no illiquid securities held by the Funds. CASH OVERDRAFT CHARGES Per the terms of an informal agreement with Union Bank of California, N.A., the custodian of the Funds, if a Fund has a cash overdraft on a given day, it will be assessed an overdraft charge of 110% of the current Fed funds rate. Cash overdraft charges are included in miscellaneous expenses on the Statements of Operations. For the period ended June 30, 2008, there were no cash overdrafts. 3. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENT Investment advisory services are provided to the Funds by Bishop Street Capital Management (the "Adviser"), a registered adviser and wholly owned subsidiary of First Hawaiian Bank. First Hawaiian Bank is a subsidiary of Banc West Corporation, itself a subsidiary of BNP Paribas. The Adviser is entitled to receive an annual fee of 0.74% of the average daily net assets of the Strategic Growth and the Large Cap Core 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 has voluntarily agreed to waive a portion of its advisory fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. The voluntary expense limitations are as follows: Strategic Growth Fund (Class I) 1.07%, Large Cap Core Equity Fund (Class I) 1.05%, High Grade Income Fund (Class I) 0.76%, Hawaii Municipal Bond Fund (Class I) 0.55%, Hawaii Municipal Bond Fund (Class A) 0.80%, Money Market Fund (Class I) 0.50%, Money Market Fund (Class A) 0.75% and Treasury Money Market Fund (Class I) 0.44%. June 30, 2008 51 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) 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. Fischer Francis Trees & Watts, Inc. ("FFTW") serves as the investment sub-adviser for the Treasury and Money Market Funds, pursuant to a sub-adviser agreement dated December 15, 2006 as approved by shareholders on December 15, 2006. FFTW is entitled to receive from the Adviser a fee, computed daily and paid monthly, at the annual rate of 0.060% 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. Lotsoff Capital Management ("Lotsoff") serves as the investment sub-adviser for the Large Cap Core Equity Fund pursuant to a sub-adviser agreement dated April 28, 2006. Lotsoff is entitled to receive from the Adviser a fee, computed daily and paid monthly, at the annual rate of 0.24% of the average daily net assets of the Large Cap Core Equity Fund up to (but not including) $300 million, 0.225% of the average daily net assets of the Large Cap Core Equity Fund up to (but not including) $1 billion and 0.20% of the average daily net assets of the Large Cap Core Equity Fund in excess of, and including $1 billion. Union Bank of California, N.A. acts as custodian (the "Custodian") for the Funds. The Custodian plays no role in determining the investment policies of the Funds or which securities are to be purchased or sold by the Funds. 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 administrative fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. 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. Bishop Street Funds 52 (UNAUDITED) 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. 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, the Parent Company of Bishop Street Capital Management, for shareholder services performed for the Funds. SIDCO has voluntarily agreed to waive a portion of its shareholder servicing fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. Certain ministerial officers of the Trust are also ministerial 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 Board. These loans may not exceed 33 1/3% 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. Although the risk of lending is mitigated by the collateral, a Fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return them. Securities lending on the Statements of Operations is presented net of commissions to the security lending agent. 6. INVESTMENT TRANSACTIONS The cost of security purchases and the proceeds from the sale and maturities of securities, other than short-term investments, for the six-month period ended June 30, 2008 are presented below for the Funds. June 30, 2008 53 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) Strategic Large High Grade Hawaii Growth Cap Core Income Municipal Fund Equity Fund Fund Bond Fund (000) (000) (000) (000) --------- ----------- ---------- --------- Purchases U.S. Government Securities $ -- $ -- $ 9,979 $ -- Other 36,673 31,596 20,293 40,721 Sales and Maturities U.S. Government Securities $ -- $ -- $15,208 $ -- Other 41,200 36,918 14,288 40,307 7. FEDERAL TAX INFORMATION It is each Fund's intention to continue to qualify as a regulated investment company for federal income tax purposes under Subchapter M of the Internal Revenue Code, as amended, and to distribute substantially all 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 undistributed net investment income/(loss), paid-in capital or accumulated net realized gain/(loss), as appropriate, in the period that the differences arise. Bishop Street Funds 54 (UNAUDITED) The tax character of dividends and distributions declared during the years ended December 31, 2007 and December 31, 2006 were as follows: Ordinary Tax Exempt Long-Term Income Income Capital Gain Total (000) (000) (000) (000) -------- ---------- ------------ ------- Strategic Growth Fund 2007 $ 1,827 $ -- $16,642 $18,469 2006 93 -- 8,233 8,326 Large Cap Core Equity Fund 2007 $ 4,190 $ -- $ 1,777 $ 5,967 2006 318 -- -- 318 High Grade Income Fund 2007 $ 5,901 $ -- $ -- $ 5,901 2006 5,603 -- -- 5,603 Hawaii Municipal Bond Fund 2007 $ 181 $6,697 $ 647 $ 7,525 2006 67 6,717 525 7,309 Money Market Fund 2007 $10,658 $ -- $ -- $10,658 2006 9,879 -- -- 9,879 Treasury Money Market Fund 2007 $ 7,119 $ -- $ -- $ 7,119 2006 8,671 -- -- 8,671 June 30, 2008 55 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) As of December 31, 2007, the components of Distributable Earnings (Accumulated Losses) on a tax basis were as follows: Large Cap Treasury Strategic Core High Grade Hawaii Money Money Growth Equity Income Municipal Market Market Fund Fund Fund Bond Fund Fund Fund (000) (000) (000) (000) (000) (000) --------- --------- ---------- --------- ------ -------- Undistributed net investment income $ -- $ -- $ -- $ -- $ -- $ 22 Undistributed long-term capital gain 1,793 404 -- -- -- -- Capital loss carryforwards -- -- (958) -- (19) -- Post-October losses -- -- -- (37) -- -- Other temporary differences -- -- 2 -- -- -- Unrealized appreciation 21,731 5,286 2,900 2,122 -- -- ------- ------ ------ ------ ---- ---- Total Distributable Earnings (Accumulated Losses) $23,524 $5,690 $1,944 $2,085 $(19) $ 22 ======= ====== ====== ====== ==== ==== Post-October losses represent losses realized on investment transactions from November 1, 2007 through December 31, 2007 that, in accordance with Federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year. 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 follows: High Grade Money Income Market Fund Fund (000) (000) ------ ------ Dec. 2009 $ -- $16 Dec. 2013 -- 3 Dec. 2014 642 -- Dec. 2015 316 -- ---- --- Total $958 $19 ==== === Bishop Street Funds 56 (UNAUDITED) During the year ended December 31, 2007, the Money Market Fund and Treasury Money Market Fund utilized capital loss carryforwards of $3 and $57, respectively, to offset realized capital gains. The aggregate gross unrealized appreciation and depreciation of securities held by the Strategic Growth, Large Cap Core Equity, High Grade Income, and Hawaii Municipal Bond Funds for Federal income tax purposes at June 30, 2008 were as follows: Strategic Large Cap High Grade Hawaii Growth Core Income Municipal Fund Equity Fund Fund Bond Fund (000) (000) (000) (000) --------- ----------- ---------- --------- Federal Tax Cost $ 99,578 $ 92,369 $162,116 $166,896 -------- -------- -------- -------- Gross Unrealized Appreciation 14,223 7,632 3,248 1,716 Gross Unrealized Depreciation (10,974) (13,369) (1,197) (3,472) -------- -------- -------- -------- Net Unrealized Appreciation (Depreciation) $ 3,249 $ (5,737) $ 2,051 $ (1,756) ======== ======== ======== ======== 8. RISKS 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. In the normal course of business, the Funds enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be established; however, based on experience, the risk of loss from such claim is considered remote. 9. LINE OF CREDIT The Funds entered into an agreement which enables them to participate in a $5 million unsecured committed revolving line of credit with Union Bank of California, N.A. (the "Bank"). The proceeds from the borrowings shall be used to finance the Funds short June 30, 2008 57 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) term general working capital requirements, including the funding of shareholder redemptions. Interest is charged to the Funds based on their borrowings at the current reference rate minus 1%. For the six months ended June 30, 2008, the Funds had borrowings costs of $1,944 for the Strategic Growth Fund, $2,118 for the Large Cap Core Equity Fund, $78 for the High Grade Fund, and $490 for the Hawaii Municipal Bond Fund. As of June 30, 2008, there are no outstanding borrowings by the Funds. 10. OTHER At June 30, 2008, the percentage of total shares outstanding held by shareholders for each Fund, which comprised an omnibus account that was held on behalf of several individual shareholders, was as follows: Number of % of Outstanding Shareholders Shares ------------ ---------------- Strategic Growth Fund, Class I Shares 1 92.16% Large Cap Core Equity Fund, Class I Shares 1 94.62 High Grade Income Fund, Class I Shares 2 94.46 Hawaii Municipal Bond Fund, Class I Shares 1 90.96 Hawaii Municipal Bond Fund, Class A Shares 2 21.80 Money Market Fund, Class I Shares 1 93.70 Money Market Fund, Class A Shares 1 99.37 Treasury Money Market Fund, Class I Shares 1 99.78 11. ACCOUNTING PRONOUNCEMENTS On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB INTERPRETATION NO. 48, "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 was required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Based on its analysis, management has determined that the adoption of FIN 48 did not have a material impact to the Fund's financial statements upon adoption. However, management's conclusions regarding FIN 48 may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance expected from the FASB, and on-going analyses of and changes to tax laws, regulations and interpretations thereof. Bishop Street Funds 58 Bishop Street Funds (UNAUDITED) DISCLOSURE OF FUND EXPENSES All mutual funds have operating expenses. As a shareholder of a mutual fund, your investment is affected by these ongoing costs, which include (among others) costs for portfolio management, administrative services, distribution fees, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns. Operating expenses such as these are deducted from a mutual fund's gross income and directly reduce its final investment return. These expenses are expressed as a percentage of the mutual fund's average net assets; this percentage is known as the mutual fund's expense ratio. The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The table on the next page illustrates your Fund's costs in two ways: - - ACTUAL FUND RETURN. This section helps you to estimate the actual expenses after fee waivers that your Fund incurred over the period. The "Expenses Paid During Period" column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the "Ending Account Value" number is derived from deducting that expense cost from the Fund's gross investment return. You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under "Expenses Paid During Period." - - HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with those of other mutual funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Fund's comparative cost by comparing the hypothetical result for your Fund in the "Expenses Paid During Period" column with those that appear in the same charts in the shareholder reports for other funds. NOTE: Because the return is set at 5% for comparison purposes -- NOT your Fund's actual return -- the account values shown may not apply to your specific investment. June 30, 2008 59 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) DISCLOSURE OF FUND EXPENSES Beginning Ending Expenses Account Account Annualized Paid Value Value Expense During 1/1/08 6/30/08 Ratios Period* --------- --------- ---------- -------- STRATEGIC GROWTH FUND -- CLASS I ACTUAL FUND RETURN $1,000.00 $ 875.30 1.07% $4.99 HYPOTHETICAL 5% RETURN 1,000.00 1,019.54 1.07 5.37 LARGE CAP CORE EQUITY FUND -- CLASS I ACTUAL FUND RETURN $1,000.00 $ 882.40 1.05% $4.91 HYPOTHETICAL 5% RETURN 1,000.00 1,019.64 1.05 5.27 HIGH GRADE INCOME FUND -- CLASS I ACTUAL FUND RETURN $1,000.00 $1,013.90 0.76% $3.81 HYPOTHETICAL 5% RETURN 1,000.00 1,021.08 0.76 3.82 HAWAII MUNICIPAL BOND FUND -- CLASS I ACTUAL FUND RETURN $1,000.00 $1,004.50 0.55% $2.74 HYPOTHETICAL 5% RETURN 1,000.00 1,022.13 0.55 2.77 HAWAII MUNICIPAL BOND FUND -- CLASS A ACTUAL FUND RETURN $1,000.00 $ 994.30 0.80% $3.97 HYPOTHETICAL 5% RETURN 1,000.00 1,020.89 0.80 4.02 MONEY MARKET FUND -- CLASS I ACTUAL FUND RETURN $1,000.00 $1,013.70 0.50% $2.50 HYPOTHETICAL 5% RETURN 1,000.00 1,022.38 0.50 2.51 MONEY MARKET FUND -- CLASS A ACTUAL FUND RETURN $1,000.00 $1,012.50 0.75% $3.75 HYPOTHETICAL 5% RETURN 1,000.00 1,021.13 0.75 3.77 TREASURY MONEY MARKET FUND -- CLASS I ACTUAL FUND RETURN $1,000.00 $1,009.40 0.44% $2.20 HYPOTHETICAL 5% RETURN 1,000.00 1,022.68 0.44 2.21 * Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Bishop Street Funds 60 Bishop Street Funds (UNAUDITED) APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS Pursuant to Section 15(c) of the Investment Company Act of 1940 (the "1940 Act"), the Board of Trustees (the "Board") of Bishop Street Funds (the "Trust") must annually review and re-approve the existing Advisory Agreement and Sub-Advisory Agreements (the "Agreements") after their initial two-year terms: (i) by the vote of the Trustees or by a vote of the shareholders of each Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Agreements or "interested persons" of any party thereto, as defined in the 1940 Act (the "Independent Trustees"), cast in person at a meeting called for the purpose of voting on such approval. Each year, the Board calls and holds a meeting to decide whether to renew the Agreements for additional one-year terms. In preparation for the meeting, the Board requests and reviews a wide variety of information from Bishop Street Capital Management, BNP Paribas Asset Management and Lotsoff Capital Management (each, an "Adviser," and, collectively, the "Advisers"). The Trustees use this information, as well as other information that the Advisers and other service providers of the Funds may submit to the Board, to help them decide whether to renew the Agreements for an additional year. Prior to this year's meeting held on February 19-20, 2008, the Board, including the Independent Trustees advised by their independent legal counsel, received and reviewed written materials from the Advisers regarding, among other things: (i) the nature, extent and quality of the services to be provided by the Advisers; (ii) the investment performance of the Funds and the Advisers; (iii) the costs of the services to be provided and profits to be realized by the Advisers and their affiliates from their relationship with the Funds; (iv) the extent to which economies of scale would be realized as the Funds grow; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors, as discussed in further detail below. At the meeting, representatives from the Advisers, along with other Fund service providers, presented additional oral and written information to help the Board evaluate the Advisers' fees and other aspects of the Agreements. Among other things, the representatives presented an overview of the Advisers, discussing each Adviser's investment personnel, assets under management and investment process. The Trustees then discussed the written materials that the Board received before the meeting and the Advisers' oral presentations and any other information that the Board received at the June 30, 2008 61 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) meeting, and deliberated on the renewal of the Agreements in light of this information. In its deliberations, the Board considered the factors and reached the conclusions described below relating to the selection of the Advisers and the re-approval of the Agreements, and did not identify any single piece of information discussed below that was all-important, controlling or determinative of its decision. NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY THE ADVISER In considering the quality, nature and extent of the services provided by the Advisers, the Board reviewed the portfolio management services provided by each Adviser to its respective Fund(s), including the quality and continuity of each Adviser's portfolio management personnel. The most recent investment adviser registration form ("Form ADV") for each Adviser was provided to the Board, as was the response of each Adviser to a detailed series of questions which included, among other things, information about the background and experience of the portfolio managers primarily responsible for the day-to-day management of each respective Fund. The Trustees also considered other services to be provided by each Adviser to its respective Fund(s) by the Advisers, such as selecting broker-dealers for executing portfolio transactions, monitoring adherence to the Funds' investment restrictions, and monitoring compliance with various Fund policies and procedures and with applicable securities regulations. Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Funds by the Advisers. INVESTMENT PERFORMANCE OF THE FUND AND THE ADVISER The Board was provided with information regarding each Fund's performance since the Agreements were last renewed and since inception. The Board also compared each Fund's performance to its benchmark index and other similar mutual funds over various periods of time. Each Adviser provided information regarding and led a discussion of factors impacting the performance of its respective Fund(s) over the past year, focusing on its investment approach and general economic factors. Based on this information, the Board concluded that the Bishop Street Treasury Money Market Fund and the Bishop Street Large Cap Core Equity Fund's performance was favorable and that the Bishop Street Funds 62 Bishop Street Funds (UNAUDITED) Bishop Street High Grade Income Fund and the Bishop Street Money Market Fund's performance was comparable to their peer groups, and was overall satisfied with the investment results that each Adviser had been able to achieve for the respective Fund(s). Although the Bishop Street Hawaii Municipal Bond Fund underperformed its benchmark, a national municipal bond index, the Board took into account that the Fund's performance compared favorably to a peer group of similar Hawaii municipal debt funds and, therefore, concluded it was overall satisfied with the investment result that the Adviser had been able to achieve for the Fund. COSTS OF ADVISORY SERVICES, PROFITABILITY AND ECONOMIES OF SCALE In concluding that the advisory fees payable by each Fund were reasonable, the Trustees reviewed a report of the fees paid to each Adviser and the costs and other expenses incurred by each Adviser in providing advisory services. The Advisers' representatives then discussed the profits realized by the Advisers from their relationship with the Fund. The Trustees considered the information provided and concluded that such profits were not excessive. The Trustees also reviewed reports comparing the expense ratio and advisory fee paid by each Fund to those paid by other comparable mutual funds and concluded that the advisory fees were the result of arm's length negotiations, appeared reasonable in light of the services rendered and, after waivers, were comparable to the average advisory fees paid by similarly managed mutual funds. In addition, the Board considered whether economies of scale were realized during the current contract period, but did not conclude that such economies of scale had yet been achieved with respect to the Funds. Based on the Board's deliberations and its evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously: (a) concluded that terms of each Agreement are fair and reasonable; (b) concluded that each Adviser's fees are reasonable in light of the services that each Adviser provides to the respective Fund(s); and (c) agreed to renew each Agreement for another year. June 30, 2008 63 www.bishopstreetfunds.com NOTES [GRAPHIC] 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 64121 CUSTODIAN UNION BANK OF CALIFORNIA, N.A. SAN FRANCISCO, CA 94101 LEGAL COUNSEL MORGAN, LEWIS & BOCKIUS LLP PHILADELPHIA, PA 19103 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PRICEWATERHOUSECOOPERS LLP PHILADELPHIA, PA 19103 (BISHOP STREET FUNDS LOGO) 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) BISHOP STREET FUNDS P.O. BOX 219721 KANSAS CITY, MO 64121-9721 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 SEI INVESTMENTS 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-004-1400 ITEM 2. CODE OF ETHICS. Not applicable for semi-annual report. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual report. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual report. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. Effective for closed-end management investment companies for fiscal years ending on or after December 31, 2005 ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 11. 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 changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEMS 12. EXHIBITS. (a)(1) Not applicable for semi-annual report. (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)), is 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/ Philip T. Masterson ------------------------ Philip T. Masterson, President Date: September 4, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Philip T. Masterson ------------------------ Philip T. Masterson, President Date: September 4, 2008 By (Signature and Title)* /s/ Michael Lawson ------------------------ Michael Lawson Controller & CFO Date: September 4, 2008 * Print the name and title of each signing officer under his or her signature.