-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vcsd+UaqIJMM5lNMR7TlDG8i0jltPEmkZtgtnoG4MLMlPKSQWb7VsFqAA7AXaD4z g4PeU6QgQDJMGIGb6YIUXA== 0000749748-06-000022.txt : 20061208 0000749748-06-000022.hdr.sgml : 20061208 20061208102129 ACCESSION NUMBER: 0000749748-06-000022 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061208 DATE AS OF CHANGE: 20061208 EFFECTIVENESS DATE: 20061208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASH ASSETS TRUST CENTRAL INDEX KEY: 0000749748 IRS NUMBER: 136844974 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04066 FILM NUMBER: 061264432 BUSINESS ADDRESS: STREET 1: 380 MADISON AVE STREET 2: SUITE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126976666 MAIL ADDRESS: STREET 1: 380 MADISON AVENUE STREET 2: SUITE 2300 CITY: NEW YORK STATE: NY ZIP: 10017 0000749748 S000006652 Pacific Capital Cash Assets Trust C000018146 Pacific Capital Cash Assets Trust Original Shares CATXX C000018147 Pacific Capital Cash Assets Trust Service Shares CASXX 0000749748 S000006653 Padific Capital Tax-Free Cash Assets Trust C000018148 Pacific Capital Tax-Free Cash Assets Trust Original Shares TFCXX C000018149 Pacific Capital Tax-Free Cash Assets Trust Service Shares TFAXX 0000749748 S000006654 Pacific Capital U.S. Government Securities Cash Assets Trust C000018150 Pacific Capital U.S.Government Securities Cash Assets Trust Original Shares USCXX C000018151 Pacific Capital U.S. Government Securities Cash Assets Trust Service Shares UCSXX N-CSR 1 catncsr.txt CASH ASSETS TRUST 9/30/2006 FORM NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4066 Cash Assets Trust (Exact name of Registrant as specified in charter) 380 Madison Avenue New York, New York 10017 (Address of principal executive offices) (Zip code) Joseph P. DiMaggio 380 Madison Avenue New York, New York 10017 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 697-6666 Date of fiscal year end: 3/31 Date of reporting period: 9/30/06 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. SEMI-ANNUAL REPORT SEPTEMBER 30, 2006 PACIFIC CAPITAL FUNDS(R) OF CASH ASSETS TRUST PACIFIC CAPITAL CASH ASSETS TRUST PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST PACIFIC CAPITAL U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST [LOGO OF THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST: A LION STANDING ON A TWISTED ROPE AND SALE TO LEFT OF PACIFIC](R) A CASH MANAGEMENT INVESTMENT [LOGO OF THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST: A LION STANDING ON A TWISTED ROPE AND SALE TO LEFT OF PACIFIC](R) PACIFIC CAPITAL FUNDS(R) OF CASH ASSETS TRUST SEMI-ANNUAL REPORT November 17, 2006 Dear Investor: We are pleased to provide you with the Semi-Annual Report for The Pacific Capital Funds of Cash Assets Trust for the six-month period ended September 30, 2006. The enclosed Semi-Annual Report includes the three series of Cash Assets Trust (the "Trust"): Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital U.S. Government Securities Cash Assets Trust and its two classes of shares: Original Shares and Service Shares. During the current six-month reporting period, the U.S. economy continued to grow at a relatively healthy, albeit, slower pace. The growth in the economy was supported by moderate core inflation and generally positive corporate earnings. Counterbalancing the positive factors was what appears to be the beginning of a slump in the housing market and continued weakness in the automotive sector. Citing a possible further slowdown in economic growth, the Federal Reserve (the "Fed") voted to change the course of its monetary policy. At both the August 8th and September 20th Federal Open Market Committee (the "FOMC") meetings, the Fed determined to leave the target on the Federal Funds rate unchanged at 5.25%. In comments released with the August 8th decision, the FOMC said that "economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market" though it forecast continued expansion "at a moderate pace." This decision by the policymakers at the Fed brought a temporary halt to the Fed's two-year inflation fighting policy which had been marked by 17 consecutive interest rate hikes of 0.25% each. You may recall that at September 30, 2004, short-term interest rates were at the low level of 1.50%, compared to the Fed's current target of 5.25%. During the two-year period, the rise in short-term rates was welcome news to money market investors. As mentioned in previous report letters, yields on money market funds like those of the Trust, move in concert with rate policies pursued by the Fed. By keeping each fund's average weighted portfolio maturity relatively short, the Trust's Investment Adviser, the Asset Management Group of Bank of Hawaii, has been able to take advantage of the rise in short-term interest rates. As each portfolio's short-term holdings matured, the funds were well positioned to take advantage of the higher yields paid by newly-issued securities. Each of the Trust's portfolios seeks to continue to provide competitive returns to alternative short-term investment opportunities without wavering from their conservative investment guidelines. Looking forward, we are optimistic that each of the Pacific Capital Funds of Cash Assets Trust will continue to provide investors with competitive returns without compromising safety of principal. All those associated with the management of your cash reserves wish to thank you for the continued support and confidence you have placed in the Pacific Capital Funds of Cash Assets Trust. Sincerely, /s/ Diana P. Herrmann /s/ Lacy B. Herrmann Diana P. Herrmann Lacy B. Herrmann President Founder and Chairman Emeritus NOT A PART OF THE SEMI-ANNUAL REPORT PACIFIC CAPITAL CASH ASSETS TRUST SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2006 (UNAUDITED)
PRINCIPAL AMOUNT COMMERCIAL PAPER (55.8%) VALUE - --------------- --------------------------------------------------------------------- -------------- AUTOMOTIVE (4.0%) --------------------------------------------------------------------- $ 20,000,000 Toyota Motor Credit Corp., 5.24%, 10/25/06 .......................... $ 19,930,133 -------------- BANKS (11.9%) --------------------------------------------------------------------- 20,000,000 Barclays US Funding Corp., 5.33%, 10/04/06 .......................... 19,991,117 20,000,000 Citigroup Global Markets Holdings, Inc., 5.31%, 12/05/06 ............ 19,808,250 20,000,000 Societe Generale N.A., Inc., 5.26%, 11/20/06 ........................ 19,854,028 -------------- 59,653,395 -------------- BORROWING CONDUIT (4.0%) --------------------------------------------------------------------- 20,000,000 Abbey National North America Corp., 5.25%, 11/09/06 ................. 19,886,250 -------------- BROKERAGE (11.9%) --------------------------------------------------------------------- 20,000,000 Bear Stearns & Co., 5.25%, 12/11/06 ................................. 19,792,917 20,000,000 Merrill Lynch 5.23%, 11/28/06 ....................................... 19,831,478 20,000,000 Morgan Stanley Dean Witter, 5.25%, 10/20/06 ......................... 19,944,583 -------------- 59,568,978 -------------- CONGLOMERATE (4.0%) --------------------------------------------------------------------- 20,000,000 General Electric Capital Corp., 5.20%, 11/24/06 ..................... 19,844,000 -------------- FINANCE (12.0%) --------------------------------------------------------------------- 20,000,000 Calyon NA, Inc., 5.23%, 10/10/06 .................................... 19,973,825 20,000,000 PACCAR Financial Corp., 5.24%, 11/15/06 ............................. 19,869,000 20,000,000 UBS Finance, 5.25%, 11/13/06 ........................................ 19,874,583 -------------- 59,717,408 -------------- INSURANCE (4.0%) --------------------------------------------------------------------- 20,000,000 Prudential Funding, 5.23%, 10/12/06 ................................. 19,968,039 -------------- OIL SERVICES (4.0%) --------------------------------------------------------------------- 20,000,000 Chevron Funding Corp., 5.23%, 10/31/06 .............................. 19,912,833 -------------- Total Commercial Paper ........................................... 278,481,036 -------------- CERTIFICATE OF DEPOSIT (4.0%) --------------------------------------------------------------------- 20,000,000 Wells Fargo, 5.40%, 06/15/07 ........................................ 20,000,000 -------------- CORPORATE NOTE (3.0%) --------------------------------------------------------------------- INSURANCE (3.0%) --------------------------------------------------------------------- 15,000,000 Peoples Benefit Life Insurance, Variable Rate Note, 5.50%, 06/22/07* ............................. 15,000,000 -------------- U.S. GOVERNMENT AGENCIES (8.0%) --------------------------------------------------------------------- 40,000,000 Federal National Mortgage Association 5.26%, 12/06/06 ..................................................... 39,614,267 --------------
PRINCIPAL AMOUNT REPURCHASE AGREEMENTS (29.5%) VALUE - --------------- --------------------------------------------------------------------- -------------- Bank of America $ 29,629,000 5.20%, 10/02/06 ..................................................... $ 29,629,000 (Proceeds of $29,641,839 to be received at maturity, Collateral: $30,060,000 Federal Home Loan Bank 5.50% due 08/28/08; the collateral fair value plus interest receivable equals $30,235,358) Bank of America 50,371,000 5.20%, 10/02/06 ..................................................... 50,371,000 (Proceeds of $50,392,827 to be received at maturity, Collateral: $50,000,000 Federal Home Loan Bank 5.25% due 09/13/13; the collateral fair value plus interest receivable equals $51,400,295) Morgan Stanley Dean Witter 67,000,000 5.05%, 10/02/06 ..................................................... 67,000,000 -------------- (Proceeds of $67,028,196 to be received at maturity, Collateral: $68,220,000 US Treasury Note 3.50% due 05/31/07; the collateral fair value plus interest receivable equals $68,373,054) Total Repurchase Agreements ......................................... 147,000,000 -------------- SHARES INVESTMENT COMPANY (0.1%) - --------------- --------------------------------------------------------------------- 541,153 JP Morgan U.S. Government Money Market Fund, Capital Shares 541,153 -------------- Total Investments (Amortized Cost $500,636,456**) 100.4% 500,636,456 Other assets less liabilities ................... (0.4) (1,783,315) ----- -------------- NET ASSETS ...................................... 100.0% $ 498,853,141 ===== ==============
* Illiquid security. Considered illiquid because it may not be sold, and may be redeemed only upon at least ninety days' notice to the issuer. As this security is a variable rate note, the rate shown represents the rate in effect at September 30, 2006, and the maturity date reflects the next rate change date. Represents 3.0% of net assets. ** Cost for Federal income tax and financial reporting purposes is identical. PERCENT OF PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO ---------------------------------- ---------- Commercial Paper ................................ 55.6% Certificate of Deposit .......................... 4.0 Corporate Note .................................. 3.0 U.S. Government Agencies ........................ 7.9 Repurchase Agreements ........................... 29.4 Investment Company .............................. 0.1 ---------- 100.0% ========== See accompanying notes to financial statements. PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2006 (UNAUDITED)
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (99.5%) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- ALASKA (0.3%) --------------------------------------------------------- Anchorage, AK Electric Utility Revenue Senior Lien- Municipal Light & Power Series C, AMBAC Insured, Prerefunded to 12/01/06 @ 102, Collateral: US Government Securities $ 500,000 5.125%, 12/01/26 ........................................ Aaa/AAA $ 511,008 -------------- COLORADO (3.9%) --------------------------------------------------------- Colorado Housing & Finance Authority Revenue Bonds, Class I, Series A-1, Weekly Reset VRDO*, SPA: FHLB 7,600,000 3.750%, 10/01/30 ........................................ VMIG1/A-1+ 7,600,000 -------------- FLORIDA (0.4%) --------------------------------------------------------- Sarasota County, FL Utility System Revenue, FGIC Insured, Prerefunded to 10/01/06 @102, Collateral: State & Local Government Series 750,000 5.250%, 10/01/25 ........................................ Aaa/AAA 765,000 -------------- HAWAII (25.6%) --------------------------------------------------------- City and County Honolulu, HI General Obligation Bonds, Series-A - Escrowed to Maturity, Collateral: US Government Securities 2,870,000 5.600%, 04/01/07 ........................................ #Aaa/AA- 2,897,828 City and County Honolulu, HI General Obligation Commercial Paper Issue W, LOC - Wesdeutsche Landesbank 5,000,000 3.500%, 12/06/06 ........................................ A-1+/P1 5,000,000 Hawaii State Department of Budget and Finance Special Purpose Revenue (Queens Health System) Series C, Weekly Reset VRDO*, AMBAC Insured, SPA: Bank of America N.A. 35,000,000 3.600%, 07/01/28 ........................................ MIG1/AAA 35,000,000 Hawaii State Department of Budget and Finance Special Purpose Revenue Bonds (The Queen's Health System) Series A, Weekly Reset VRDO*, SPA: Bank of Nova Scotia, AMBAC Insured 4,600,000 3.590%, 07/01/29 ........................................ VMIG1/A-1+ 4,600,000
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- HAWAII (CONTINUED) --------------------------------------------------------- Hawaii State General Obligation Series CN, FGIC Insured, Escrowed to Maturity, Prerefunded to 03/01/07 @102, Collateral: US Government Securities, $ 1,750,000 5.250%, 03/01/10 ........................................ Aaa/AAA $ 1,795,854 -------------- 49,293,682 -------------- ILLINOIS (4.0%) --------------------------------------------------------- Chicago, IL General Obligation Bonds, Park District, MBIA Insured, Prerefunded to 01/01/07 @101, Collateral: State & Local Government Series 1,145,000 5.400%, 01/01/09 ........................................ Aaa/AAA 1,162,061 Chicago, IL General Obligation Bonds, Series B, Weekly Reset VRDO*, SPA: Landesbank Baden- Wurttemberg FGIC Insured 3,000,000 3.740%, 01/01/37 ........................................ VMIG1/A-1+ 3,000,000 Chicago IL Housing Authority Capital Program Revenue, Escrowed to Maturity, Collateral: State & Local Government Series 100%, Prerefunded 2,185,000 5.000%, 07/01/07 ........................................ Aa3/NR 2,208,117 Cook County, IL General Obligation Capital Improvement - Prerefunded to 11/15/06 @101, Collateral: US Government Securities, FGIC Insured 1,250,000 5.875%, 11/15/22 ........................................ Aaa/AAA 1,266,022 -------------- 7,636,200 -------------- MARYLAND (0.6%) --------------------------------------------------------- Montgomery County, MD Public Improvement Series General Obligation, Escrowed to Maturity, Prerefunded 05/01/07 @102, Collateral: State & Local Government Series 1,085,000 5.375%, 05/01/13 ........................................ Aaa/AAA 1,116,379 -------------- MASSACHUSETTS (0.4%) --------------------------------------------------------- Massachusetts Health & Educational Facilities Authority Revenue Wellesley College Issue E, Weekly Reset VRDO* 690,000 3.800%, 07/01/22 ........................................ Aa1/AA+ 690,000 --------------
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- MICHIGAN (9.9%) --------------------------------------------------------- Detroit, MI Sewer Disposal Revenue Series A, MBIA Insured, Escrowed to Maturity, Prerefunded to 07/01/07 @101, Collateral: State & Local Government Series 100% $ 250,000 5.000%, 07/01/11 ........................................ Aaa/AAA $ 254,705 Eastern Michigan University, MI University Revenue Bonds, Daily Reset VRDO*, FGIC Insured, SPA: FGIC-SPI 4,760,000 3.850%, 06/01/27 ........................................ Aaa/A-1+ 4,760,000 Michigan State Trunk Line, Series A, Revenue Bond, Prerefunded to 11/01/06 @101, FGIC Insured, Collateral: State & Local Government Series 1,500,000 5.625%, 11/01/26 ........................................ Aaa/AAA 1,517,909 Northern Michigan University Revenue Bonds, Daily Reset VRDO* SPA - DEPFA Bank PLC, AMBAC Insured 1,000,000 3.850%, 12/01/35 ........................................ Aaa/AAA 1,000,000 Northern Michigan University Revenue Bonds, Daily Reset VRDO*, FGIC Insured, SPA: FGIC-SPI 4,210,000 3.850%, 06/01/31 ........................................ VMIG1/A-1+ 4,210,000 Rochester, MI Community School District General Obligation, MBIA Insured, Escrowed to Maturity, Prerefunded 05/01/07 @100, Collateral: State & Local Government Securities 100% 7,315,000 5.250%, 05/01/15 ........................................ #Aaa/AAA 7,383,816 -------------- 19,126,430 -------------- MISSISSIPPI (0.6%) --------------------------------------------------------- Mississippi State Capital Improvement General Obligation, Escrowed to Maturity, Collateral: US Government Securities 100%, Prerefunded 1,220,000 5.500%, 11/01/06 ........................................ #Aaa/AA 1,221,826 -------------- MISSOURI (14.6%) --------------------------------------------------------- Kansas City, MO Industrial Development Authority Revenue Bonds, (Ewing Marion Kaufman Foundation), Daily Reset VRDO* 7,110,000 3.850%, 04/01/27 ........................................ NR/A-1+ 7,110,000 450,000 3.850%, 04/01/27 ........................................ NR/A-1+ 450,000
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- MISSOURI (CONTINUED) --------------------------------------------------------- Missouri State, Health & Educational Facilities Authority Revenue Bonds (St. Louis University), Series B, Daily Reset VRDO*, SPA: Bank of America N.A. $ 5,410,000 3.880%, 10/01/24 ........................................ VMIG1/A-1+ $ 5,410,000 Missouri Sate Health & Educational Facilities Authority Revenue (Washington University), Series B, SPA: JP Morgan Chase Bank, Daily Reset VRDO* 2,600,000 3.890%, 03/01/40 ........................................ VMIG1/A-1+ 2,600,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series C, Daily Reset VRDO*, SPA: JP Morgan Chase Bank 2,800,000 3.850%, 09/01/30 ........................................ VMIG1/A-1+ 2,800,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series D, Daily Reset VRDO*, SPA: JP Morgan Chase Bank 2,100,000 3.850%, 09/01/30 ........................................ VMIG1/A-1+ 2,100,000 University of Missouri, Curators of the University of Missouri System Facilities Revenue Bonds, Series A, Daily Reset VRDO* 4,000,000 3.890%, 11/01/32 ........................................ VMIG1/A-1+ 4,000,000 University of Missouri University Revenue, Daily Reset VRDO* System Facilities-Series B 3,650,000 3.890%, 11/01/30 ........................................ VMIG1/A-1+ 3,650,000 -------------- 28,120,000 -------------- MONTANA (2.6%) --------------------------------------------------------- Montana State, Health Facilities Authority Revenue Bonds, Series A, Weekly Reset VRDO*, FGIC Insured SPA: Wells Fargo 5,000,000 3.750%, 12/01/15 ........................................ VMIG1/A-1+ 5,000,000 -------------- NEVADA (4.6%) --------------------------------------------------------- Clark County, NV Airport Revenue Bonds, Series C, Weekly Reset VRDO*, FGIC Insured, SPA: Landesbank Baden-Wurttemberg 8,800,000 3.740%, 07/01/29 ........................................ VMIG1/A-1+ 8,800,000 --------------
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- NEW JERSEY (1.3%) --------------------------------------------------------- New Jersey Economic Development Authority Revenue 1st Mortgage-Cranes Mill-A, Escrowed to Maturity, Prerefunded 02/01/07 @102, Collateral: US Government Securities $ 1,400,000 7.500%, 02/01/27 ........................................ #Aaa/NR $ 1,456,381 New Jersey Economic Development Authority Health Revenue 1st Mortgage - Winchester Gardens- Series A - Prerefunded to 11/01/06 @102, Collateral: US Government Securities 1,100,000 8.625%, 11/01/25 ........................................ #Aaa/NR 1,126,329 -------------- 2,582,710 -------------- NEW YORK (8.7%) --------------------------------------------------------- Long Island, NY Power Authority Revenue Bonds, Series 1A, Weekly Reset VRDO*, LOC: 80% Bayerische Landesbank 20% Landesbank Baden-Wurttemberg 9,000,000 3.750%, 05/01/33 ........................................ VMIG1/A-1+ 9,000,000 New York, NY City Transitional Finance Authority Revenue Bonds, Series 3, Daily Reset VRDO*, SPA: Royal Bank of Canada 7,800,000 3.870%, 11/01/22 ........................................ VMIG1/A-1+ 7,800,000 -------------- 16,800,000 -------------- NORTH CAROLINA (14.7%) --------------------------------------------------------- Charlotte, NC Airport Revenue Bonds, Series A, Weekly Reset VRDO*, MBIA Insured, SPA: JP Morgan Chase 8,520,000 3.730%, 07/01/16 ....................................... VMIG1/A-1+ 8,520,000 Concord, NC Utility Systems Revenue Bonds, Series B, Weekly Reset VRDO*, FSA Insured, SPA: Wachovia Bank 8,820,000 3.730%, 12/01/22 ........................................ VMIG1/NR 8,820,000 Durham, NC General Obligation Bonds (Public Improvement Project), Weekly Reset VRDO*, SPA: Wachovia Bank of North Carolina 1,150,000 3.750%, 02/01/09 ........................................ VMIG1/A-1+ 1,150,000 2,975,000 3.750%, 02/01/11 ........................................ VMIG1/A-1+ 2,975,000 1,270,000 3.750%, 02/01/12 ........................................ VMIG1/A-1+ 1,270,000 1,475,000 3.750%, 02/01/13 ........................................ VMIG1/A-1+ 1,475,000
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- NORTH CAROLINA (CONTINUED) --------------------------------------------------------- North Carolina East Municipal Power Agency Power System Revenue Refunding -Series B - Prerefunded to 01/01/07 @102, Collateral: US Treasury Securities, MBIA Insured $ 4,000,000 5.875%, 01/01/21 ........................................ Aaa/AAA $ 4,102,631 -------------- 28,312,631 -------------- OHIO (1.3%) --------------------------------------------------------- Ohio Housing Finance Agency Mortgage Revenue Bonds (Residential Mortgage), Series E-AMT, Weekly Reset VRDO*, SPA: FHLB 2,590,000 3.800%, 09/01/34 ........................................ VMIG1/NR 2,590,000 -------------- OREGON (0.5%) --------------------------------------------------------- Josephine County, OR School District #007 General Obligation, FGIC Insured, Escrowed to Maturity, Prerefunded 06/01/07 @100, Collateral: US Government Securities 1,000,000 5.700%, 06/01/13 ........................................ Aaa/AAA 1,014,314 -------------- TEXAS (2.4%) --------------------------------------------------------- Allen, TX Independent School District General Obligation, Escrowed to Maturity, Prerefunded 02/15/07 @100, Collateral: US Government Securities, Permanent School Fund-Guaranteed 1,255,000 5.100%, 02/15/12 ........................................ Aaa/AAA 1,261,372 Austin, TX Utility System Revenue Prerefunded-Combined-Series A - Escrowed to Maturity, Collateral: State & Local Government Series 2,300,000 6.000%, 11/15/06 ........................................ Aaa/AAA 2,306,624 Denton, TX Utility System Revenue Refunding, Series A, MBIA Insured, Prerefunded to 12/01/06 @100, Collateral: US Government Securities 1,000,000 5.950%, 12/01/14 ........................................ Aaa/AAA 1,003,998 -------------- 4,571,994 --------------
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL BONDS (CONTINUED) S&P VALUE - --------------- --------------------------------------------------------- ---------- -------------- VIRGINIA (3.1%) --------------------------------------------------------- University of Virginia Revenue Bonds, Series A, Weekly Reset VRDO* $ 6,000,000 3.720%, 06/01/34 ........................................ VMIG1/A-1+ $ 6,000,000 -------------- Total Municipal Bonds ................................... 191,752,174 -------------- Shares INVESTMENT COMPANY (0.1%) - --------------- --------------------------------------------------------- 155,000 Goldman Sachs Financial Square Tax-Free Money Market Fund Institutional Shares ............. 155,000 -------------- Total Investments (Amortized Cost $191,907,174**) ...................................... 99.6% 191,907,174 Other assets less liabilities ........................... 0.4 812,023 ---------- -------------- NET ASSETS .............................................. 100.0% $ 192,719,197 ========== ==============
* Variable rate demand obligations (VRDOs) are payable upon demand within the same day for securities with daily liquidity or seven days for securities with weekly liquidity. ** Cost for Federal income tax and financial reporting purposes is identical PORTFOLIO DISTRIBUTION (UNAUDITED) ---------------------------------- PERCENTAGE OF PORTFOLIO ------------ Alaska 0.3% Colorado 4.0 Florida 0.4 Hawaii 25.7 Illinois 4.0 Investment Company 0.1 Maryland 0.6 Massachussetts 0.4% Michigan 10.0 Mississipi 0.6 Missouri 14.6 Montana 2.6 Nevada 4.6 New Jersey 1.3 New York 8.8% North Carolina 14.7 Ohio 1.3 Oregon 0.5 Texas 2.4 Virginia 3.1 ----- 100.0% ===== PORTFOLIO ABBREVIATIONS: ------------------------ AMBAC - American Municipal Bond Assurance Corp. AMT - Alternative Minimum Tax FGIC - Financial Guaranty Insurance Corporation FHLB - Federal Home Loan Bank FSA - Financial Security Assurance IBC - Insured Bond Certificate LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance SPA - Standby Bond Purchase Agreement SPI - Securities Purchase, Inc. VRDO - Variable Rate Demand Obligation See accompanying notes to financial statements. PACIFIC CAPITAL U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2006 (UNAUDITED)
PRINCIPAL AMOUNT U.S. GOVERNMENT AGENCIES (100.1%) VALUE - --------------- --------------------------------------------------------------------- -------------- FEDERAL FARM CREDIT BANK (6.2%) --------------------------------------------------------------------- $ 65,000,000 5.16%, 10/10/06 ..................................................... $ 64,916,150 20,000,000 5.04%, 02/27/07 ..................................................... 19,582,800 -------------- 84,498,950 -------------- FEDERAL HOME LOAN BANK (93.9%) --------------------------------------------------------------------- 174,000,000 4.75%, 10/02/06 ..................................................... 173,977,042 110,000,000 5.28%, 10/04/06 ..................................................... 109,951,579 27,000,000 5.24%, 10/06/06 ..................................................... 26,980,339 66,000,000 5.23%, 10/11/06 ..................................................... 65,904,098 22,000,000 5.13%, 10/13/06 ..................................................... 21,962,343 50,000,000 5.15%, 10/18/06 ..................................................... 49,878,403 95,000,000 5.12%, 10/20/06 ..................................................... 94,743,289 60,000,000 5.25%, 10/25/06 ..................................................... 59,789,880 78,000,000 5.15%, 10/27/06 ..................................................... 77,710,165 95,000,000 5.21%, 11/01/06 ..................................................... 94,573,793 20,000,000 5.15%, 11/08/06 ..................................................... 19,891,383 50,000,000 5.16%, 11/15/06 ..................................................... 49,677,500 95,000,000 5.15%, 11/17/06 ..................................................... 94,361,877 58,000,000 5.14%, 11/22/06 ..................................................... 57,568,963 21,431,000 5.15%, 11/24/06 ..................................................... 21,265,606 20,000,000 5.08%, 11/29/06 ..................................................... 19,833,325 33,000,000 5.15%, 12/08/06 ..................................................... 32,679,295 50,000,000 5.09%, 12/22/06 ..................................................... 49,420,306 95,000,000 5.08%, 12/27/06 ..................................................... 93,833,113 75,000,000 5.04%, 03/30/07 ..................................................... 73,110,000 -------------- 1,287,112,299 -------------- Total U.S. Government Agencies ................................... 1,371,611,249 -------------- SHARES INVESTMENT COMPANY (0.3%) - --------------- --------------------------------------------------------------------- 3,978,626 JP Morgan U.S. Government Money Market Fund, Capital Shares ......... 3,978,626 -------------- Total Investments (Amortized Cost $1,375,589,875*) .... 100.4% 1,375,589,875 Other assets less liabilities ......................... (0.4) (5,381,797) ----- -------------- NET ASSETS ............................................ 100.0% $1,370,208,078 ===== ==============
* Cost for Federal income tax and financial reporting purposes is identical. PERCENT OF PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO ---------------------------------- ---------- U.S. Government Agencies ......................... 99.7% Investment Company ............................... 0.3 ---------- 100.0% ========== See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2006 (UNAUDITED)
CASH TAX-FREE GOVERNMENT FUND FUND FUND -------------- -------------- -------------- ASSETS: Investments at value and amortized cost (note 2) ................ $ 353,636,456 $ 191,907,174 $1,375,589,875 Repurchase agreements (note 2) .................................. 147,000,000 -- -- Interest receivable ............................................. 437,507 1,527,826 5,706 Other assets .................................................... 35,952 14,965 87,927 -------------- -------------- -------------- Total Assets ................................................. 501,109,915 193,449,965 1,375,683,508 -------------- -------------- -------------- LIABILITIES: Cash overdraft .................................................. -- 124,914 -- Dividends payable ............................................... 1,927,759 483,693 4,837,810 Adviser and Administrator fees payable .......................... 205,097 65,122 414,480 Distribution fees payable ....................................... 40,060 15,675 175,129 Accrued expenses ................................................ 83,858 41,364 48,011 -------------- -------------- -------------- Total Liabilities ............................................ 2,256,774 730,768 5,475,430 -------------- -------------- -------------- NET ASSETS ...................................................... $ 498,853,141 $ 192,719,197 $1,370,208,078 ============== ============== ============== NET ASSETS CONSIST OF: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share .................................... $ 4,988,388 $ 1,927,067 $ 13,701,381 Additional paid-in capital ...................................... 493,863,573 190,781,858 1,356,505,166 Accumulated net realized gain (loss) on investments ............. 1,180 10,272 1,531 -------------- -------------- -------------- $ 498,853,141 $ 192,719,197 $1,370,208,078 ============== ============== ============== SHARES OF BENEFICIAL INTEREST: Original Shares Class: Net Assets ................................................... $ 325,655,401 $ 126,607,674 $ 445,909,939 ============== ============== ============== Shares outstanding ........................................... 325,873,527 126,599,538 445,880,250 ============== ============== ============== Net asset value per share .................................... $ 1.00 $ 1.00 $ 1.00 ============== ============== ============== Service Shares Class: Net Assets ................................................... $ 173,197,740 $ 66,111,523 $ 924,298,139 ============== ============== ============== Shares outstanding ........................................... 172,965,224 66,107,205 924,257,896 ============== ============== ============== Net asset value per share .................................... $ 1.00 $ 1.00 $ 1.00 ============== ============== ==============
See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
CASH TAX-FREE GOVERNMENT FUND FUND FUND -------------- -------------- -------------- INVESTMENT INCOME: Interest income ................................................. $ 12,307,085 $ 3,555,592 $ 30,793,607 -------------- -------------- -------------- EXPENSES: Investment Advis er fees (note 3) ............................... 872,512 305,728 1,991,826 Administrator fees (note 3) ..................................... 331,506 99,490 444,384 Distribution fees (note 3) ...................................... 216,544 99,066 1,011,990 Trustees' fees and expenses ..................................... 48,978 34,129 87,220 Shareholders' reports ........................................... 24,955 3,536 16,141 Insurance ....................................................... 23,901 9,968 57,945 Legal fees (note 3) ............................................. 22,686 11,399 28,730 Registration fees and dues ...................................... 20,044 5,103 26,308 Fund accounting fees ............................................ 19,459 20,978 20,848 Auditing and tax fees ........................................... 10,825 8,365 12,415 Transfer and shareholder servicing agent fees ................... 5,280 5,271 5,293 Custodian fees .................................................. 2,965 5,666 4,688 Chief Compliance Officer (note 3) ............................... 2,278 2,278 2,278 Miscellaneous ................................................... 8,755 4,097 22,859 -------------- -------------- -------------- Total expenses .................................................. 1,610,688 615,074 3,732,925 Expenses paid indirectly (note 5) ............................... (1,846) (1,369) (3,838) -------------- -------------- -------------- Net expenses ........................................................ 1,608,842 613,705 3,729,087 -------------- -------------- -------------- Net investment income ............................................... 10,698,243 2,941,887 27,064,520 Net realized gain (loss) from securities transactions ............... -- 172 -- -------------- -------------- -------------- Net change in net assets resulting from operations .................. $ 10,698,243 $ 2,942,059 $ 27,064,520 ============== ============== ==============
See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF CHANGES IN NET ASSETS
CASH FUND TAX-FREE FUND -------------------------------------- -------------------------------------- Six Months Ended Six Months Ended September 30, 2006 Year Ended September 30, 2006 Year Ended (unaudited) March 31, 2006 (unaudited) March 31, 2006 ------------------ --------------- ------------------ --------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ................ $ 10,698,243 $ 14,580,671 $ 2,941,887 $ 4,482,897 Net realized gain (loss) from securities transactions ....... -- 1,180 172 10,100 --------------- --------------- --------------- --------------- Net change in net assets resulting from operations .......... 10,698,243 14,581,851 2,942,059 4,492,997 --------------- --------------- --------------- --------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Original Shares ...................... (6,988,064) (9,721,572) (1,852,029) (1,704,092) Service Shares ....................... (3,710,179) (4,859,099) (1,089,858) (2,778,805) --------------- --------------- --------------- --------------- Total dividends to shareholders from net investment income ......... (10,698,243) (14,580,671) (2,941,887) (4,482,897) --------------- --------------- --------------- --------------- CAPITAL SHARE TRANSACTIONS (at $1.00 per share): Proceeds from shares sold: Original Shares ...................... 443,270,516 772,407,051 114,061,178 223,627,397 Service Shares ....................... 264,945,636 498,998,950 69,798,778 165,033,651 --------------- --------------- --------------- --------------- 708,216,152 1,271,406,001 183,859,956 388,661,048 --------------- --------------- --------------- --------------- Reinvested dividends: Original Shares ...................... 133,015 217,287 20,272 91,298 Service Shares ....................... 3,008,826 4,773,677 925,843 1,695,763 --------------- --------------- --------------- --------------- 3,141,841 4,990,964 946,115 1,787,061 --------------- --------------- --------------- --------------- Cost of shares redeemed: Original Shares ...................... (402,951,783) (853,144,228) (120,036,399) (225,091,397) Service Shares ....................... (264,442,468) (500,085,192) (97,639,470) (145,858,384) --------------- --------------- --------------- --------------- (667,394,251) (1,353,229,420) (217,675,869) (370,949,781) --------------- --------------- --------------- --------------- Change in net assets from capital share transactions ...... 43,963,742 (76,832,455) (32,869,798) 19,498,328 --------------- --------------- --------------- --------------- Total change in net assets ........... 43,963,742 (76,831,275) (32,869,626) 19,508,428 NET ASSETS: Beginning of period .................. 454,889,399 531,720,674 225,588,823 206,080,395 --------------- --------------- --------------- --------------- End of period* ....................... $ 498,853,141 $ 454,889,399 $ 192,719,197 $ 225,588,823 =============== =============== =============== =============== * Includes undistributed (distributions in excess of) net investment income of: $ -- $ -- $ -- $ -- =============== =============== =============== ===============
GOVERNMENT FUND ------------------------------------ Six Months Ended September 30, 2006 Year Ended (unaudited) March 31, 2006 ------------------ --------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ................ $ 27,064,520 $ 33,279,020 Net realized gain (loss) from securities transactions ....... -- 2,274 --------------- --------------- Net change in net assets resulting from operations .......... 27,064,520 33,281,294 --------------- --------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Original Shares ...................... (9,424,725) (12,231,234) Service Shares ....................... (17,639,795) (21,047,786) --------------- --------------- Total dividends to shareholders from net investment income ......... (27,064,520) (33,279,020) --------------- --------------- CAPITAL SHARE TRANSACTIONS (at $1.00 per share): Proceeds from shares sold: Original Shares ...................... 723,737,323 892,335,436 Service Shares ....................... 1,381,263,250 3,155,652,101 --------------- --------------- 2,105,000,573 4,047,987,537 --------------- --------------- Reinvested dividends: Original Shares ...................... 72,704 139,115 Service Shares ....................... 14,437,107 21,010,927 --------------- --------------- 14,509,811 21,150,042 --------------- --------------- Cost of shares redeemed: Original Shares ...................... (707,320,692) (817,340,270) Service Shares ....................... (1,358,648,236) (2,867,454,460) --------------- --------------- (2,065,968,928) (3,684,794,730) --------------- --------------- Change in net assets from capital share transactions ...... 53,541,456 384,342,849 --------------- --------------- Total change in net assets ........... 53,541,456 384,345,123 NET ASSETS: Beginning of period .................. 1,316,666,622 932,321,499 --------------- --------------- End of period* ....................... $ 1,370,208,078 $ 1,316,666,622 =============== =============== * Includes undistributed (distributions in excess of) net investment income of: $ -- $ -- =============== =============== See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2006 (UNAUDITED) 1. ORGANIZATION Cash Assets Trust (the "Trust") was organized on May 7, 1984 as a Massachusetts business trust and is registered under the Investment Company Act of 1940 (the "1940 Act") as an open-end investment company. The Trust consists of the following three investment portfolios (referred to individually as a "Fund" and collectively as the "Funds"): Pacific Capital Cash Assets Trust ("Cash Fund") (a diversified portfolio which commenced operations on December 5, 1984), Pacific Capital Tax-Free Cash Assets Trust ("Tax-Free Fund") (a non-diversified portfolio which commenced operations on April 4, 1989), and Pacific Capital U.S. Government Securities Cash Assets Trust ("Goverment Fund") (a diversified portfolio which commenced operations on April 4, 1989). The Trust is authorized to issue for each Fund an unlimited number of shares of $0.01 par value in two classes of shares; the Original Shares Class and the Service Shares Class. The Original Shares Class includes all currently outstanding shares of each Fund that were issued prior to January 20, 1995, the date on which the Capital structure was changed to include two classes rather than one. The two classes of shares are substantially identical, except that Service Shares bear the fees that are payable under the Trust's Distribution Plan. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. a) PORTFOLIO VALUATION: Each Fund's portfolio securities are valued by the amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act, which, after considering accrued interest thereon, approximates market. Under this method, a portfolio security is valued at cost adjusted for amortization of premiums and accretion of discounts. Amortization of premiums and accretion of discounts are included in interest income. b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are reported on the identified cost basis. Interest income is recorded daily on the accrual basis and is adjusted for amortization of premiums and accretion of discounts as discussed in the preceding paragraph. c) DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES: The net asset value per share for each class of the Fund's shares is determined as of 4:00 p.m. New York time on each day that the New York Stock Exchange and the custodian are open by dividing the value of the assets of the Fund allocable to that class less Fund liabilities allocable to the class and any liabilities charged directly to the class, exclusive of surplus, by the total number of shares of the class outstanding. d) MULTIPLE CLASS ALLOCATIONS: Investment income, realized and unrealized gains and losses, if any, and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class. Class specific expenses are borne by the affected class. Service fee payments under Rule 12b-1 are borne solely by and charged to the Service Shares based on net assets of that class. e) FEDERAL INCOME TAXES: It is the policy of each Fund to continue to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code applicable to certain investment companies. Each Fund intends to make distributions of income and securities profits sufficient to relieve it from all, or substantially all, Federal income and excise taxes. f) REPURCHASE AGREEMENTS: It is each Fund's policy to monitor closely the creditworthiness of all firms with which it enters into repurchase agreements, and to take possession of, or otherwise perfect its security interest in, securities purchased under agreements to resell. The securities purchased under agreements to resell are marked to market every business day in order to compare the value of the collateral to the amount of the "loan" (repurchase agreements being defined as "loans" in the 1940 Act), including the accrued interest earned thereon. If the value of the collateral is less than 102% of the loan plus the accrued interest thereon, additional collateral is required from the borrower. g) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. h) RECLASSIFICATION OF CAPITAL ACCOUNTS: Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. On March 31, 2006, a reclassification was made to increase (decrease) undistributed net investment income (distributions in excess of net investment income), accumulated net realized gain (loss) on investments and additional paid-in capital for the Funds as follows: Tax-Free Government Cash Fund Fund Fund --------- --------- ---------- Additional Paid-in Capital ........ $ 13,438 $(107,877) $ 68,263 Undistributed net investment income 13,438 107,877 (68,263) These reclassifications are primarily due to dividend redesignations. Net assets were not affected by these changes. i) NEW ACCOUNTING PRONOUNCEMENT: On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Management believes that the adoption of FIN 48 will have no impact on the financial statements of the Trust. In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management is currently evaluating the effect of SFAS 157 on the Trust's financial statements. 3. FEES AND RELATED PARTY TRANSACTIONS a) MANAGEMENT ARRANGEMENTS: The Asset Management Group of Bank of Hawaii (the "Adviser"), serves as Investment Adviser to the Funds. In this role, under Investment Advisory Agreements, the Adviser supervises the Funds' investments and provides various services. Aquila Investment Management LLC the ("Administrator"), a wholly-owned subsidiary of Aquila Management Corporation, the Trust's founder and sponsor, serves as the Administrator for the Trust under Administration Agreements with the Funds. The Administrator provides all administrative services to the Funds other than those relating to the investment portfolios. Specific details as to the nature and extent of the services provided by the Adviser and the Administrator are more fully defined in the Prospectus and Statement of Additional Information of the Trust. For their services, the Adviser and the Administrator each receive a fee which is payable monthly and computed as of the close of business each day on the net assets of each Fund at the following annual rates: Cash Fund - On net assets up to $325 million, the fee is paid to the Adviser and the Administrator at the annual rate of 0.33% and 0.17%, respectively, and on net assets above that amount at the annual rate of 0.43% and 0.07%, respectively. Tax-Free Fund - On net assets up to $95 million, the fee is paid to the Adviser and the Administrator at the annual rate of 0.27% and 0.13%, respectively, and on net assets above that amount at the annual rate of 0.33% and 0.07%, respectively. Government Fund - On net assets up to $60 million, the fee is paid to the Adviser and the Administrator at the annual rate of 0.27% and 0.13%, respectively, and on net assets above that amount at the annual rate of 0.33% and 0.07%, respectively. The Adviser and the Administrator each agrees that the above fees shall be reduced, but not below zero, by an amount equal to its proportionate share (determined on the basis of the respective fees computed as described above) of the amount, if any, by which the total expenses of a Fund in any fiscal year, exclusive of taxes, interest and brokerage fees, shall exceed the lesser of (i) 2.5% of the first $30 million of average annual net assets of the Fund plus 2% of the next $70 million of such assets and 1.5% of its average annual net assets in excess of $100 million, or (ii) 25% of the Fund's total annual investment income. The payment of the above fees at the end of any month will be reduced or postponed so that at no time will there be any accrued but unpaid liability under this expense limitation. Advisory and administrative fees in a given fiscal year may be recouped prior to the end of such year if interest rates were to increase. Contractual reduction of fees, if any, is calculated on a fiscal year basis. No such reduction in fees was required for the six months ended September 30, 2006. Under a Compliance Agreement with the Administrator, the Administrator is compensated for Chief Compliance Officer related services provided to enable the Trust to comply with Rule 38a-1 of the Investment Company Act of 1940. b) DISTRIBUTION AND SERVICE FEES: Each Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. A part of the Plan authorizes payment of certain distribution or service fees by the Service Shares Class of the respective Fund. Such payments are made to "Designated Payees" - broker-dealers, other financial institutions and service providers who have entered into appropriate agreements with the Distributor and which have rendered assistance in the distribution and/or retention of the respective Fund's Service Shares or in the servicing of Service Share accounts. The total payments under this part of a Fund's Plan may not exceed 0.25% of its average annual assets represented by Service Shares. No such payments will be made by the Original Share Class. Specific details about each Plan are more fully defined in the Prospectus and Statement of Additional Information of the Trust. Under Distribution Agreements, Aquila Distributors, Inc. (the "Distributor") serves as the exclusive distributor of each Fund's shares. No compensation or fees are paid to the Distributor for such share distribution. c) OTHER RELATED PARTY TRANSACTIONS: For the six months ended September 30, 2006, the following amounts were incurred for legal fees allocable to Hollyer Brady Barrett & Hines LLP, counsel to the Trust, for legal services in conjunction with the respective Fund's ongoing operations: Cash Fund $20,660; Tax-Free Fund $10,612; Government Fund $25,757. The Secretary of the Trust is a Partner at that firm. 4. GUARANTEES OF CERTAIN COMMERCIAL PAPER Various banks and other institutions have issued irrevocable letters of credit or guarantees for the benefit of the holders of certain commercial paper. Payment at maturity of principal and interest of certain commercial paper held by the Funds is supported by such letters of credit or guarantees. 5. EXPENSES The Funds have negotiated an expense offset arrangement with their custodian, wherein they receive credit toward the reduction of custodian fees and other expenses whenever there are uninvested cash balances. The Statements of Operations reflect the total expenses before any offset, the amount of offset and the net expenses. It is the general intention of the Funds to invest, to the extent practicable, some or all of cash balances in income-producing assets rather than leave cash uninvested. 6. PORTFOLIO ORIENTATION Since the Tax-Free Fund has a significant portion of its investments in obligations of issuers within Hawaii, it is subject to possible risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting Hawaii and whatever effects these may have upon Hawaii issuers' ability to meet their obligations. 7. INCOME TAX INFORMATION AND DISTRIBUTIONS The Funds declare dividends daily from net investment income and make payments monthly in additional shares at the net asset value per share, in cash, or a combination of both, at the shareholder's option. The tax character of distributions during fiscal 2006 and 2005 were as follows:
Cash Fund Tax-Free Fund Government Fund -------------------------- -------------------------- -------------------------- 2006 2005 2006 2005 2006 2005 ----------- ----------- ----------- ----------- ----------- ----------- Ordinary income ..... $14,497,718 $ 5,915,623 $ -- $ -- $33,395,289 $10,709,831 Net tax-exempt income -- -- 4,452,274 2,023,379 -- -- Capital gain ........ -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total ............... $14,497,718 $ 5,915,623 $ 4,452,274 $ 2,023,379 $33,395,289 $10,709,831 =========== =========== =========== =========== =========== ===========
As of March 31, 2006, the components of distributable earnings on a tax basis were as follows:
Tax-Free Government Cash Fund Fund Fund -------------- -------------- -------------- Undistributed ordinary income .............. $ 926,889 $ 10,100 $ 1,406,955 Undistributed tax exempt income ............ -- 286,616 -- Accumulated net realized loss on investments -- -- -- -------------- -------------- -------------- $ 926,889 $ 296,716 $ 1,406,955 ============== ============== ==============
- -------------------------------------------------------------------------------- PACIFIC CAPITAL CASH ASSETS TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES ---------------------------------------------------------------------------- Six Months Ended Year Ended March 31, 9/30/06 ----------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.03 ------- ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income .. (0.02) (0.03) (0.01) (0.01) (0.01) (0.03) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return ............................ 2.29%* 3.20% 1.36% 0.90% 1.35% 2.52% Ratios/supplemental data Net assets, end of period (in millions) $ 326 $ 286 $ 366 $ 287 $ 361 $ 353 Ratio of expenses to average net assets 0.58%** 0.58% 0.37% 0.21% 0.36% 0.58% Ratio of net investment income to average net assets .................. 4.53%** 3.09% 1.39% 0.90% 1.34% 2.51% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees were (note 3): Ratio of expenses to average net assets ++ ++ 0.57% 0.57% 0.58% ++ Ratio of net investment income to average net assets .................. ++ ++ 1.19% 0.54% 1.12% ++ The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.58%** 0.58% 0.37% 0.21% 0.36% 0.57%
SERVICE SHARES ---------------------------------------------------------------------------- Six Months Ended Year Ended March 31, 9/30/06 ----------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.02 ------- ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income .. (0.02) (0.03) (0.01) (0.01) (0.01) (0.02) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return ............................ 2.16%* 2.94% 1.11% 0.65% 1.09% 2.27% Ratios/supplemental data Net assets, end of period (in millions) $ 173 $ 169 $ 166 $ 119 $ 123 $ 146 Ratio of expenses to average net assets 0.83%** 0.83% 0.61% 0.46% 0.61% 0.83% Ratio of net investment income to average net assets .................. 4.28%** 2.91% 1.12% 0.65% 1.10% 2.36% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees were (note 3): Ratio of expenses to average net assets ++ ++ 0.81% 0.82% 0.83% ++ Ratio of net investment income to average net assets .................. ++ ++ 0.91% 0.29% 0.88% ++ The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.83%** 0.83% 0.61% 0.46% 0.61% 0.82%
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ No reduction in the Adviser's and the Administrator's fees was required during the period. * Not annualized. ** Annualized. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES --------------------------------------------------------------------------- Six Months Ended Year Ended March 31, 9/30/06 ----------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income+ ................ 0.02 0.02 0.01 0.01 0.01 0.02 ------- ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income .. (0.02) (0.02) (0.01) (0.01) (0.01) (0.02) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return ............................ 1.52%* 2.21% 1.16% 0.84% 1.15% 2.00% Ratios/supplemental data Net assets, end of period (in millions) $ 127 $ 133 $ 134 $ 99 $ 130 Ratio of expenses to average net assets 0.51%** 0.50% 0.29% 0.17% 0.28% 0.51% Ratio of net investment income to average net assets .................. 3.00%** 2.20% 1.17% 0.84% 1.13% 1.94% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees were (note 3): Ratio of expenses to average net assets ++ ++ 0.49% 0.52% 0.50% ++ Ratio of net investment income to average net assets .................. ++ ++ 0.96% 0.50% 0.90% ++ The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.51%** 0.50% 0.28% 0.17% 0.27% 0.51%
SERVICE SHARES ---------------------------------------------------------------------------- Six Months Ended Year Ended March 31, 9/30/06 ----------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income+ ................ 0.01 0.02 0.01 0.01 0.01 0.02 ------- ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income .. (0.01) (0.02) (0.01) (0.01) (0.01) (0.02) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return ............................ 1.39%* 1.96% 0.90% 0.59% 0.90% 1.75% Ratios/supplemental data Net assets, end of period (in millions) $ 100 $ 66 $93 $72 $ 50 $ 56 $ 52 Ratio of expenses to average net assets 0.76%** 0.75% 0.53% 0.42% 0.53% 0.77% Ratio of net investment income to average net assets .................. 2.75%** 1.94% 0.92% 0.59% 0.89% 1.77% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees were (note 3): Ratio of expenses to average net assets ++ ++ 0.75% 0.77% 0.76% ++ Ratio of net investment income to average net assets .................. ++ ++ 0.71% 0.25% 0.66% ++ The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.76%** 0.75% 0.53% 0.42% 0.52% 0.77%
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ No reduction in the Adviser's and the Administrator's fees was required during the period. * Not annualized. ** Annualized. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- PACIFIC CAPITAL U.S. GOVERNMENT SECURITIES CASH ASSETS TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES ---------------------------------------------------------------------------- Six Months Ended Year Ended March 31, 9/30/06 ----------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.03 ------- ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income .. (0.02) (0.03) (0.01) (0.01) (0.01) (0.03) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return ............................ 2.33%* 3.25% 1.41% 0.96% 1.34% 2.73% Ratios/supplemental data Net assets, end of period (in millions) $ 446 $ 429 $ 354 $ 263 $ 270 $ 306 Ratio of expenses to average net assets 0.45%** 0.45% 0.27% 0.11% 0.25% 0.45% Ratio of net investment income to average net assets .................. 4.61%** 3.25% 1.42% 0.96% 1.34% 2.47% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees were (note 3): Ratio of expenses to average net assets ++ ++ 0.45% 0.46% 0.46% ++ Ratio of net investment income to average net assets .................. ++ ++ 1.24% 0.62% 1.12% ++ The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.45%** 0.45% 0.27% 0.11% 0.24% 0.45%
SERVICE SHARES ---------------------------------------------------------------------------- Six Months Ended Year Ended March 31, 9/30/06 ----------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ----------- ------- ------- ------- ------- ------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income+ ................ 0.02 0.03 0.01 0.01 0.01 0.02 ------- ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income .. (0.02) (0.03) (0.01) (0.01) (0.01) (0.02) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return ............................ 2.20%* 3.00% 1.16% 0.71% 1.09% 2.48% Ratios/supplemental data Net assets, end of period (in millions) $ 924 $ 887 $ 578 $ 575 $ 448 $ 457 Ratio of expenses to average net assets 0.70%** 0.70% 0.52% 0.36% 0.49% 0.70% Ratio of net investment income to average net assets .................. 4.36%** 3.02% 1.16% 0.71% 1.08% 2.39% The expense and net investment income ratios without the effect of the Adviser's and Administrator's contractual caps on fees were (note 3): Ratio of expenses to average net assets ++ ++ 0.70% 0.71% 0.71% ++ Ratio of net investment income to average net assets .................. ++ ++ 0.98% 0.36% 0.86% ++ The expense ratios after giving effect to the expense offset for uninvested cash balances were: Ratio of expenses to average net assets 0.70%** 0.70% 0.52% 0.36% 0.49% 0.70%
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ No reduction in the Adviser's and the Administrator's fees was required during the period. * Not annualized. ** Annualized. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) As a shareholder of the Trust, you may incur ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. The table below is intended to help you understand your ongoing costs (in dollars) of investing in each of the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The table below is based on an investment of $1,000 invested on April 1, 2006 and held for the six months ended September 30, 2006. ACTUAL EXPENSES This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". SIX MONTHS ENDED SEPTEMBER 30, 2006 BEGINNING ENDING EXPENSES ACTUAL ACCOUNT ACCOUNT PAID DURING TOTAL RETURN(1) VALUE VALUE THE PERIOD(2) - -------------------------------------------------------------------------------- CASH FUND Original Shares 2.29% $1,000.00 $1,022.90 $ 2.94 Service Shares 2.16% $1,000.00 $1,021.60 $ 4.21 - -------------------------------------------------------------------------------- TAX-FREE FUND Original Shares 1.52% $1,000.00 $1,015.20 $ 2.58 Service Shares 1.39% $1,000.00 $1,013.90 $ 3.84 - -------------------------------------------------------------------------------- GOVERNMENT FUND Original Shares 2.33% $1,000.00 $1,023.30 $ 2.28 Service Chares 2.20% $1,000.00 $1,022.00 $ 3.55 - -------------------------------------------------------------------------------- (1) ASSUMES REINVESTMENT OF ALL DIVIDENDS. TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR. (2) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.58% AND 0.83%, RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.51% AND 0.76%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES, AND 0.45% AND 0.70%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND SERVICE SHARES MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 183/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANALYSIS OF EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of each of the respective Funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the portfolios of the Trust and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the respective Fund with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. SIX MONTHS ENDED SEPTEMBER 30, 2006 HYPOTHETICAL ANNUALIZED BEGINNING ENDING EXPENSES TOTAL ACCOUNT ACCOUNT PAID DURING RETURN VALUE VALUE THE PERIOD - -------------------------------------------------------------------------------- CASH FUND Original Shares 5.00% $1,000.00 $1,022.16 $ 2.94 Service Shares 5.00% $1,000.00 $1,020.91 $ 4.20 - -------------------------------------------------------------------------------- TAX-FREE FUND Original Shares 5.00% $1,000.00 $1,022.51 $ 2.59 Service Shares 5.00% $1,000.00 $1,021.26 $ 3.85 - -------------------------------------------------------------------------------- GOVERNMENT FUND Original Shares 5.00% $1,000.00 $1,022.81 $ 2.28 Service Chares 5.00% $1,000.00 $1,021.56 $ 3.55 - -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.58% AND 0.83%, RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.51% AND 0.76%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES, AND 0.45% AND 0.70%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND SERVICE SHARES MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 183/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) RENEWAL OF INVESTMENT ADVISORY AGREEMENT Renewal until June 30, 2007 of the Investment Advisory Agreement (the "Advisory Agreement") for each fund between the Trust and the Adviser was approved by the Board of Trustees and the independent Trustees in June, 2006. At a meeting called and held for that purpose at which a majority of the independent Trustees were present in person, the following materials were considered: o Copies of the agreements to be renewed; o A term sheet describing the material terms of the agreements; o The Annual Report of the Trust for the year ended March 31, 2006; o A report, prepared by the Adviser and Administrator and provided to the Trustees in advance of the meeting for the Trustees' review, containing data about the performance of each of the portfolios and data about their respective fees, expenses and purchases and redemptions of capital stock together with comparisons of such data with similar data about other comparable funds, as well as data as to the profitability of the Adviser and the Administrator; and o Quarterly materials reviewed at prior meetings on each of the portfolio's performance, operations, portfolio and compliance. The Trustees considered each Advisory Agreement separately. The Trustees reviewed materials relevant to, and considered, the following factors as to each agreement and reached the conclusions described. THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE ADVISER. The investment objective of each of the Trust's portfolios is to seek to provide safety of principal while achieving as a high a level of liquidity and of current income (and with respect to the Tax-Free Fund, current income exempt from Federal and Hawaii income taxes). To achieve these objectives, the Adviser has provided management of each fund's portfolio, as well as provided facilities for credit analysis of each of the funds' portfolio securities. With respect to the Government Securities Fund, the Adviser has managed the investment portfolio in order to achieve a Aaa/AAA rating from both Moody's Investors Service and Standard and Poor's, respectively. The Board considered that the Adviser had provided all services the Board deemed necessary or appropriate, including the specific services that the Board has determined are required for the Trust, given that its purpose is to provide shareholders with safety of principal while achieving as a high a level of liquidity and of current income. The Board concluded that the services provided were appropriate and satisfactory and that the Trust would be well served if they continued. Evaluation of this factor weighed in favor of renewal of the Advisory Agreements. THE INVESTMENT PERFORMANCE OF THE TRUST (AND EACH OF ITS PORTFOLIOS) AND ADVISER. The Board reviewed each aspect of each fund's performance and compared its performance with that of their respective benchmarks. It was noted that the materials provided by the Administrator indicated that compared to each fund's respective benchmark, the Trust's portfolios had investment performance that was either comparable to or favorable for one-, five- and ten-year periods as compared with the benchmark. The Board considered these results to be consistent with the purposes of each of the Trust's portfolios. The Board concluded that the performance of each fund, in light of market conditions, was satisfactory. Evaluation of this factor indicated to the Trustees that renewal of the Advisory Agreement would be appropriate. THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE ADVISER AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE TRUST (AND EACH OF ITS PORTFOLIOS). The information provided in connection with renewal contained expense data for each fund and its major local competitor as well as data for each of the funds with respect to their respective peer groups, including data for money market funds of a comparable asset size. The materials also showed the profitability to the Adviser of its services to the Trust. The Board compared the expense and fee data with respect to each of the portfolios to similar data about other funds that it found to be relevant. The Board concluded that the expenses of each of the portfolios and the fees paid were similar to and were reasonable as compared to those being paid by its respective local competitor and other money market funds nationwide. The Board considered that the foregoing indicated the appropriateness of the costs of the services to the Trust, which was being well managed as indicated by the factors considered previously. The Board further concluded that the profitability to the Adviser did not argue against approval of the fees to be paid under each Advisory Agreement. THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE TRUST, AND ITS PORTFOLIOS, GROWS. Data provided to the Trustees showed that the asset size of each of the portfolios had been generally increasing in recent years. However, they concluded that the uncertain interest rate environment might make it difficult to achieve substantial growth in assets in the near future. The Trustees also noted that the materials indicated that each portfolio's fees were generally comparable to those of its peers, including those with breakpoints. Evaluation of this factor indicated to the Board that the Advisory Agreements should be renewed without addition of breakpoints at this time. BENEFITS DERIVED OR TO BE DERIVED BY THE ADVISER AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE TRUST (AND EACH OF ITS PORTFOLIOS). The Board observed that, as is generally true of most fund complexes, the Adviser and its affiliates, by providing services to a number of funds or other investment clients including the Trust's three portfolios, were able to spread costs as they would otherwise be unable to do. The Board noted that while that produces efficiencies and increased profitability for the Adviser and its affiliates, it also makes their services available to the three portfolios of the Trust at favorable levels of quality and cost which are more advantageous to the Trust's portfolios than would otherwise have been possible. - -------------------------------------------------------------------------------- INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquila Group of Fundssm produce is automatically sent to you and all other shareholders. Specifically, you are routinely sent the entire list of portfolio securities of your Trust twice a year in the semi-annual and annual reports you receive. Additionally, we prepare, and have available portfolio listings at the end of each quarter. Whenever you may be interested in seeing a listing of your Trust's portfolios other than in your shareholder reports, please check our website http://www.aquilafunds.com or call us at 1-800-437-1020. The Trust additionally files a complete list of its portfolio holdings for each of the three portfolios with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the SEC website at http://www.sec.gov. You may also review or, for a fee, copy the forms at the SEC's Public Reference Room in Washington, DC or by calling 800-SEC-0330. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROXY VOTING RECORD (UNAUDITED) The three portfolios of the Trust do not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered at any shareholder meeting held during the 12 months ended June 30, 2006 with respect to which any of the three portfolios of the Trust were entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov. - -------------------------------------------------------------------------------- INVESTMENT ADVISER Asset Management Group of Bank of Hawaii P.O. Box 3170 o Honolulu, Hawaii 96802 ADMINISTRATOR Aquila Investment Management LLC 380 Madison Avenue, Suite 2300 o New York, New York 10017 BOARD OF TRUSTEES Theodore T. Mason, Chair Diana P. Herrmann, Vice Chair Thomas W. Courtney Stanley W. Hong Russell K. Okata Douglas Philpotts Oswald K. Stender FOUNDER AND CHAIRMAN EMERITUS Lacy B. Herrmann OFFICERS Diana P. Herrmann, President Charles E. Childs, III, Executive Vice President Sherri Foster, Vice President Robert W. Anderson, Chief Compliance Officer Joseph P. DiMaggio, Chief Financial Officer and Treasurer Edward M.W. Hines, Secretary DISTRIBUTOR Aquila Distributors, Inc. 380 Madison Avenue, Suite 2300 o New York, New York 10017 TRANSFER AND SHAREHOLDER SERVICING AGENT PFPC Inc. 101 Sabin Street o Pawtucket, RI 02860 CUSTODIAN JP Morgan Chase Bank, N.A. 1111 Polaris Parkway o Columbus, Ohio 43240 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker LLP 1818 Market Street, Suite 2400 o Philadelphia, PA 19103 Further information is contained in the Prospectus which must precede or accompany this report. ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable, ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure tat information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated t registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CASH ASSETS TRUST By: /s/ Diana P. Herrmann - - --------------------------------- Vice Chair, President and Trustee December 8, 2006 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Chief Financial Officer and Treasurer December 8, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Diana P. Herrmann - - --------------------------------- Diana P. Herrmann Vice Chair, President and Trustee December 8, 2006 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer December 8, 2006 CASH ASSETS TRUST EXHIBIT INDEX (a)(1) Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002. (a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. (b) Certification of chief executive officer and chief financial officer as required by Rule 30a-2(b) of the Investment Company Act of 1940. EX-99.906 CERT 2 cat906cert.txt SECTION 906 CERTIFICATION CERTIFICATION Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (subsections and (b) of section 1350, chapter 63 of title 18,United States Code), each of the undersigned officers of Cash Assets Trust, do hereby certify to such officer's knowledge, that: The report on Form N-CSR of Cash Assets Trust for the period ended September 30, 2006 (the "Form N-CSR")fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Hawaiian Tax-Free Trust. Dated: December 8, 2006 /s/ Diana P. Herrmann ---------------------- Vice Chair, President and Trustee Cash Assets Trust Dated: December 8, 2006 /s/ Joseph P. DiMaggio ----------------------- Chief Financial Officer and Treasurer Cash Assets Trust A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Hawaiian Tax-Free Trust and will be retained by Hawaiian Tax-Free Trust and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. EX-99.CERT 3 cat306cert.txt SECTION 306 CERTIFICATION I, Diana P. Herrmann, certify that: 1. I have reviewed this report on Form N-CSR of Cash Assets Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: December 8, 2006 /s/ Diana P. Herrmann - - ---------------------- Title: Vice Chair, President and Trustee I, Joseph P. DiMaggio, certify that: 1. I have reviewed this report on Form N-CSR of Cash Assets Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 2. Based on my knowledge, the financial statements, other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report ("Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: December 8, 2006 /s/ Joseph P. DiMaggio - - ------------------------ Title: Chief Financial Officer and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----